ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED

31 DECEMBER 2019

According to Article 4 of the Law 3556/2007

I. Statements of the members of the Board of Directors (according to the article 4, par. 2 of l. 3556/2007)
ΙΙ. Report of the Directors and Corporate Governance Statement
III Independent Auditor's Report (on the Consolidated Financial Statements)
IV. Consolidated Financial Statements for the year ended 31 December 2019
V. Ιndependent Auditor's Report (on the Financial Statements of the Bank)
VI. Financial Statements οf the Bank for the year ended 31 December 2019
VII. Website Address for Information on Subsidiaries of the Bank
VIII. Information of Eurobank Ergasias S.Α. group for the period 1.1-31.12.2019 pursuant to article 6 of l. 4374/2016

I. Statements of the members of the Board of Directors (according to the article 4, par. 2 of l. 3556/2007)

Statements of Members of the Board of Directors (according to the article 4 par. 2 of the Law 3556/2007)

We declare that to the best of our knowledge:

the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with the applicable accounting standards, present fairly the assets, liabilities, equity and annual results of the Bank and the companies included in the consolidation, and
the annual report of the Board of Directors presents fairly the development, the performance and the position of the Bank and of the companies included in the consolidation, including the description of the main risks and uncertainties they face.

Athens, 12 March 2020

Georgios P. Zanias I.D. No AI – 414343

CHAIRMAN OF THE BOARD OF DIRECTORS

Fokion C. Karavias I.D. No ΑΙ - 677962

Stavros E. Ioannou I.D. No AH - 105785

CHIEF EXECUTIVE OFFICER

DEPUTY CHIEF EXECUTIVE OFFICER

II. Report of the Directors and Corporate Governance Statement

The directors present their report together with the financial statements for the year ended 31 December 2019.

Profit or Loss

The net profit attributable to Eurobank (or "the Bank") shareholders for 2019 amounted to €127m (2018: €93 ¹m) as set out in the consolidated income statement on page 2.

Financial Results Review and Outlook²

In 2019, the Group, acting in an environment of positive growth rates both in Greece and the other countries, in which it has a substantial presence, demonstrated positive operating results, strengthened its capital base, improved further its liquidity position and reduced substantially the Non Performing Exposures (NPEs) stock.

As at 31 December 2019 total assets, including the impact from the merger with Grivalia and the acquisition of Piraeus Bank Bulgaria A.D. (PBB) increased by €6.8bn to €64.8bn (Dec. 2018: €58.0¹bn). At the end of December 2019, gross customer loans reached €44.5bn (Dec. 2018: €45.0bn), of which €36.9bn in Greece (Dec. 2018: €38.6bn) and €7.6bn in International Operations, including €0.7bn from the acquisition of PBB (Dec. 2018: €6.4bn). Business (wholesale and small business) loans stood at €26.6bn, including €1.1bn senior notes of the Pillar securitization (Dec. 2018: €24.8bn) and accounted for 60% of total Group loans, while loans to households reached €17.8bn (Dec. 2018: €20.2bn), with mortgage portfolio constituting 31% and consumer loans 9% of the total portfolio. Group deposits reached €44.8bn (Dec. 2018: €39.1bn) with deposits from Greek operations increasing by €3.6bn to €32.4bn (Dec. 2018: €28.8m), while International Operations added €2.1bn, of which €1.1bn from PBB, totalling €12.4bn (Dec. 2018: €10.3m). As a result, the (net) loan– to–deposit (L/D) ratio further improved to 83% for the Group (Dec. 2018: 93%) and to 92%² for Greek operations (Dec. 2018: 105%). The Bank has eliminated the use of Emergency Liquidity Assistance (ELA) since the end of January 2019, while at 31 December 2019 the funding from Eurosystem stood at €1.9bn (Dec. 2018: €2.1bn, of which €0.5bn funding from ELA).

Within an improving but still challenging business environment, pre-provision Income (PPI) decreased by 1.6% to €943m (2018: €958¹m), while core pre-provision income (Core PPI) was declined by 2.7% to €830m (2018: €853¹m). Net interest income (NII) receded by 2.7% to €1,377m (2018: €1,416m), carrying the negative impact from the lower lending spreads in Greece and lower NII from NPEs partially offset by the positive effect from the decreased funding cost due to the elimination of dependency from the ELA mechanism and the higher NII from international operations. Net interest margin (NIM) stood at 2.24% (2018: 2.47%) with the fourth quarter reaching 2.15%. Fees and commissions increased by 13.6% to €354m (2018: €311m) positively affected by the higher rental income due to the merger with Grivalia in the second quarter of 2019 and the increased income from network activities and assets under management partially offset by the lower capital market and lending fees. Trading and other activities recorded €113m gain (2018: €105¹m gain), including a) €57m net income on bonds, equities and derivatives positions, b) €61m gain from changes in fair value of investment properties, c) €42m loss on de-recognition of Pillar loan portfolio including related costs, and d) €29m gain on acquisition of PBB in June 2019. Operating expenses in Greece decreased by 0.8% to €684m (2018: €6891,2m) or 1.7%² on a like for like basis, following the reduction in the number of personnel. The Group's operating expenses increased by 3.1% amounting to €901m (2018: €874 ¹m) or by 0.7%² on a like for like basis. The cost to income (C/I) ratio for the Group reached 48.9% (2018: 47.7%¹ ), while the International Operations C/I ratio stood at 42.2%² (2018: 43.3%1,2 ).

At the end of 2019, the Group's NPEs were reduced by €3.7bn to €13.0bn (Dec. 2018: €16.7bn), through the sale of 95% of the subordinated notes of the Pillar €2bn loans (primarily NPEs) securitization, the negative NPE formation amounting to €0.9bn, (2018: €0.9bn negative) and other initiatives, which drove the NPE ratio down by 7.8ppts to 29.2% on y-o-y basis (Dec. 2018: 37%). The loan provisions (charge) reached €624m or 1.70% of average net loans (2018: €680m or 1.89%) and the coverage ratio for NPEs stood at 55.3% (Dec. 2018: 53.2%).

Furthermore, the Group recognised other impairment losses, provisions and restructuring costs amounting to €182m (2018: €71¹m), of which a) €62m impairment against the goodwill related to the acquisition of Grivalia, b) €51m impairment and valuation losses on real estate properties, including €39m for the

¹ Restated due to the change in accounting policy regarding the measurement of investment property from cost to fair value model (note 2.3.2 of the consolidated financial statements).

² Definitions of the selected financial ratios and the source of the financial data are provided in the Appendix.

properties' portfolios classified as held for sale as of 30 November 2019, c) €35m income mainly due to the decrease in the impairment allowance of the investment securities in the fourth quarter of 2019, following the improvement of the credit quality of the Hellenic Republic, d) €16m impairment on other assets and provisions for litigations and other operational risk events, e) €63m cost for Voluntary Exit Schemes (VES) that were designed for the Group's employees in Greece including the one launched by the Bank in May 2019, which has been offered to employees over an age limit as well as to employees of specific eligible Bank units independent of age and f) €25m other restructuring costs, including €17m that was associated with the acquisition of PBB.

Overall, in 2019, the Group executed successfully the major part of its Transformation Plan and remained on a track of sustained profitability, well supported by the steadily profitable International Operations, the improved fee and commission income, the cost containment efforts and the effective NPEs management. Adjusted net profit amounted to €257m (2018: €202 ¹m) for the Group of which €168m (2018: €145m) was related to International business. The net profit attributable to shareholders amounted to €127m (2018: €93 ¹m).

Going forward, the priorities of the Group for 2020 include the successful execution of the NPE reduction acceleration plan, in combination with the sustainable organic profitability aiming at a high single digit return on tangible equity (RoTBV) based mainly on the following initiatives and actions:

a) Completion of the transactions, within the set timeline as per the binding agreements for: a) the sale of 20% of the mezzanine and part of junior notes of a securitization of a mixed assets portfolio of NPEs with a gross book value of ca. €7.5bn (project Cairo) and b) the sale of a majority stake in Financial Planning Services S.A. (FPS), the licensed 100%-owned loan servicer of Eurobank (project Europe), including the Bank's Troubled Asset Group ("TAG"), as well as the implementation of the remaining steps for the accelerated NPEs reduction.
b) Cost of risk decline mainly as a result of the envisaged material decrease of NPEs; achievement of the yearly NPEs reduction targets, as submitted to Single Supervisory Mechanism (SSM),
c) Improving the funding structure with increase of deposits and further access to the markets,
d) Funding cost reduction following the improvement in the domestic financial conditions,
e) Growth of fee and commission income in a number of fee business segments following the expected increase of the economic activity and the further penetration of the Bank to its core markets; higher revenues are expected from lending, network and asset management activities as well as the current and new investment property portfolio,
f) Organic increase of Group's performing loans mainly through accelerating new lending of credit-worthy enterprises both in Greece and abroad,
g) Initiatives for pursuing further operating efficiency and proceeding with further simplification and digitalisation in Greece and abroad.

Overall, having delivered on the Bank's 2019 Transformation Plan, profitability and business growth are becoming Group's focus for 2020, onwards. The ultimate depth and duration of the coronavirus economic impact³ are highly uncertain, but it is expected to be temporary. As the outbreak will eventually dissipate, the economic activity in Greece should accelerate and remain robust in Bulgaria and Cyprus. Taking a perspective beyond the short term, the Bank is in strong position to enter a growth phase and create value for its shareholders and customers.

Capital adequacy

The capital position of Eurobank has been substantially strengthened with a) the merger with Grivalia completed in May 2019 and b) the increase in fair value of GGBs classified at FVOCI, as a result in the improvement of the credit spreads of Hellenic Republic debt. As at 31 December 2019, the Group's Total Regulatory Capital amounted to €8.0bn and accounted for 19.2% (total CAD) of Risk Weighted Assets (RWA) (Dec. 2018: 16.7%⁴ ), compared to 2019 CAD Overall Capital Requirements (OCR) ratio of 13.84%⁵ . Respectively, the Common Equity Tier 1 (CET1) stood at 16.7% of RWA (Dec. 2018: 14.2%⁴ ) compared to 2019 CET1 OCR ratio of 10.34%⁵ , while the fully loaded CET 1 (based on the full implementation of the Basel III rules

³ See more analysis under "Macroeconomic Outlook and Risks".

⁴ The capital adequacy ratios for the year ended 31 December 2018 have not been adjusted following the change in accounting policy for investment property.

⁵ The 'Overall capital requirement (OCR)' is the sum of the total SREP capital requirement (TSCR) and the combined capital buffer requirement.

in 2024) at the same date would be 14.6% (Dec. 2018: 11.3%³ ). In response to the coronavirus outbreak, on 12 March 2020, the ECB announced a number of temporary capital and operational relief measures to ensure that its directly supervised banks can continue to fulfil their role in funding the real economy. Banks will be allowed to use capital and liquidity buffers and cover Pillar 2 requirements with other than CET 1 instruments (note 4 to the consolidated financial statements).

Pursuant to the Regulation (EU) No 575/2013 CRR, the deferred tax assets (DTAs) that rely on future profitability and exceed certain limits shall be deducted in the calculation of the CET1 capital. This deduction should be applied gradually by 2024. The enactment of the article 27A of Law 4172/2013, as in force, provided for the Greek credit institutions that the eligible DTAs are accounted on a) the losses from the Private Sector Involvement (PSI) and the Greek State Debt Buyback Program and b) on the sum of (i) the unamortized part of the crystallized loan losses from write-offs and disposals, (ii) the accounting debt write-offs and (iii) the remaining accumulated provisions and other losses in general due to credit risk recorded up to 30 June 2015 and can be converted into directly enforceable claims (tax credits) against the Greek State, provided that the Bank's after tax accounting result for the period is a loss. This legislative provision enabled the Greek credit institutions, including the Bank, not to deduct the eligible DTAs from CET1 capital but recognise them as a 100% weighted asset, with a positive effect on the capital position. As at 31 December 2019, the Bank's eligible DTAs for conversion to tax credits amounted to €3,821m.

In addition, in May 2017, according to article 82 of Law 4472/2017, which further amended article 27A of Law 4172/2013, an annual fee of 1.5% is imposed on the excess amount of DTAs guaranteed by the Greek State, stemming from the difference between the current tax rate for credit institutions (i.e. 29%) and the tax rate applicable on 30 June 2015 (i.e. 26%). For the year ended 31 December 2019, an amount of €6.6m has been recognized in "Other income/ (expenses)" (note 13 to the consolidated financial statements).

A potential change in the regulatory treatment of eligible DTAs as tax credits may have an adverse effect in the Group's capital position.

2020 European Union (EU) – wide stress test postponed to 2021

An EU - wide stress test was announced by the European Banking Authority (EBA), launched in January 2020, to assess the resilience of EU banks to an adverse economic shock. This was initiated and coordinated by the EBA, in close cooperation with the European Systemic Board (ESRB), the competent Authorities (including the Single Supervisory Mechanism – SSM) and the European Central Bank (ECB).

The 2020 EU-wide stress test consisted of two stress-testing exercises – the EBA EU-wide stress test and the ECB SREP stress test – the results of which would be factored into its overall assessment within the 2020 Supervisory Review and Evaluation Process (SREP).

The scope of the 2020 ECB SREP stress test would complement the 2020 EBA EU-wide stress test in order to address those ECB supervised entities which are not included in the 2020 EBA EU-wide stress test. Eurobank would participate in the ECB SREP stress test of 2020.

These supervisory stress tests had the following objectives:

a) Provide an input to the SREP assessment process,
b) Fostering banks' own stress testing and risk management capabilities,
c) Providing an assessment of banks' risks profiles with a view to identifying vulnerabilities both for individual banks and horizontally,
d) Enhancing market discipline and contributing to market confidence.

On 12 March 2020, the EBA decided to postpone the EU-wide stress test exercise to 2021 to mitigate the impact of coronavirus on the EU banking sector and thus allow banks to focus on and ensure continuity of their core operations, including support for their customers. For 2020, the EBA announced that it will carry out an additional EU-wide transparency exercise in order to provide updated information on banks' exposures and asset quality to market participants. In the light of the operational pressure on banks, the ECB stated that it supports the above decision by the EBA and will extend the postponement to all banks subject to the 2020 stress test.

Corporate Transformation Plan

Merger Agreement of the Bank with Grivalia

On 26 November 2018, the Boards of Directors ("BoD") of the Bank and Grivalia Properties REIC ("Grivalia") announced that they unanimously decided to commence the merger of the two companies by absorption of Grivalia by Eurobank (the "Merger"). Grivalia was a real estate investment company under Law 2778/1999, as in force, incorporated in Greece. The business of Grivalia along with its subsidiaries and its joint ventures was the acquisition, management and leasing out of investment property portfolio located in Greece, Central Eastern Europe and Central America.

On 7 February 2019, the European Commission (DG Competition) decided that the Merger is in line with Eurobank's commitments and Stade Aid rules considering that the strengthening of its capital base through the Merger will enable Eurobank to significantly reduce its non-performing loans in the near future. On 22 February 2019, the BoD of Eurobank and Grivalia approved the Draft Merger Agreement for the absorption of Grivalia by Eurobank according to the provisions of Greek laws 2166/1993 and 2515/1997, as in force, as well as the applicable Company Law. The proposed share exchange ratio was 15.80000000414930 new Eurobank ordinary registered shares for every 1 Grivalia ordinary registered share, while Eurobank shareholders retain the number of Eurobank ordinary shares they held before the Merger. Accordingly, with respect to the new share capital of Eurobank, 2,185,998,765 shares are allocated to the shareholders of Eurobank and 1,523,163,087 to the shareholders of Grivalia.

On 5 April 2019, the Extraordinary General Meeting of the shareholders of Eurobank resolved, among others (a) the approval of the Merger of the Bank with Grivalia by absorption of the latter by the former, (b) the approval of the Draft Merger Agreement, as it was approved by the BoD of the merging companies and (c) the increase of the share capital of the Bank by €197m.

The Merger was accounted for as a business combination using the purchase method of accounting. The date on which the Shareholders General Meetings of both companies approved the merger, i.e. 5 April 2019 has been determined as the acquisition date as it is considered the date that Eurobank obtained control of Grivalia.

The consideration of the transaction amounting to €1,093.9m has been calculated as the fair value of the 1,523,163,087 Eurobank new ordinary shares with reference to Eurobank's share market price on the acquisition date (i.e. € 0.7185) less the fair value of the new Eurobank shares issued corresponding to the Grivalia shares held by the Bank's subsidiary ERB Equities. The difference between: (a) the total consideration of €1,093.9m and the fair value of the Group's previously held equity interest in Grivalia of €0.4m, and (b) the net identifiable assets acquired (fair values of assets and liabilities) of €872m, results to the recognition of a goodwill of €222m, which was impaired by €62m in the year ended 31 December 2019. This is not deductible for income tax purposes and is included in intangible assets. Following the Merger, Eurobank's equity increased by € 1,087m net of €7m related costs. The Merger enhances Eurobank's capital position and its earnings capacity, which in turn enables the acceleration of its NPEs reduction plan. In addition, through the Merger the Group is allowed to deploy Grivalia's best in class real estate management skills to the Bank's real estate assets, in particular to its repossessed assets, which is critical for the management of NPEs. The results of Grivalia group operations are incorporated in the Group's financial statements prospectively as of 1 April 2019. The revenues from the investment property portfolio acquired from Grivalia group are presented within the line "Income from non banking services" of the income statement. The Merger was approved on 17 May 2019 by the Ministry of Finance and Development and was registered, on the same day, in the General Commercial Registry. The trading of the 1,523,163,087 new common voting shares of nominal value €0.23 each was initiated at Athens Exchange on 23 May 2019.

As a result of the Merger, Fairfax group, which before the Merger held 18.40% and 54.02% in Eurobank and Grivalia, respectively, became the largest shareholder in the merged entity with a 31.27% shareholding as at 31 December 2019. Fairfax obtained the required regulatory approvals in relation to the aforementioned increase of its shareholding in December 2019.

Agreement with the Real estate management company

On 22 February 2019, the BoD of Eurobank also approved the upcoming agreement (SLA), pursuant to article 100 of Greek Law 4548/2018, of the Bank with the company to be incorporated under the name "Grivalia Management Company SA" ("the Company"). The Company was established in March 2019 and is a related

party to Eurobank, since a member of the Bank's BoD holds the majority (70%) of the shares of the company and is an executive member of the board of directors of the Company.

The Bank has concluded a 10-year advisory services agreement with the Company for the combined real estate portfolio of the merging entities, that came into force upon completion of the Merger. The related services that have been assigned to the Company under this agreement mainly refer to advisory services relating to the acquisition, transfer, lease, management development and strategic planning of the management of real estate assets, including the preparation of the annual budget and the supervision of Eurobank's contractors and advisors. Following a specific mandate, the Company will also undertake certain implementation actions. According to the SLA, total fees that will be charged by the Company based on cost and performance criteria, including a minimum service fee of €9.35m for the combined own used and investment property portfolio and a fee related to repossessed assets, shall not exceed €12m (excluding VAT) per annum.

Acceleration Plan for NPEs reduction and Hive down

In 2019, the Group has been implemented a new 3-year NPE reduction plan as submitted to SSM in March 2019, which has taken into account the Bank's Transformation Plan as announced in November 2018. In this context, following the completion of the merger with Grivalia, the Group has proceeded with the implementation of the below initiatives/actions:

a) In June 2019, the Bank executed the securitization of ca. €7.5bn of NPEs (Project Cairo) and the ca. €2bn mortgage NPEs (Project Pillar) ("Securitized NPEs") according to Law 3156/2003 via their transfer to a special purpose vehicle ("SPV") and the issuance of senior, mezzanine and junior notes. All issued notes were initially retained by the Group.
b) In June 2019, the Bank announced that it has entered into a binding agreement with Celidoria S.A R.L, an entity ultimately owned by funds whose investment manager is the global investment management firm Pimco for the sale of 95% of the mezzanine and junior notes of the securitization of a residential mortgage loan portfolio of ca. €2bn gross book value (Project Pillar comprising primarily NPEs). Eurobank would retain 100% of the senior notes, as well as 5% of the mezzanine and junior notes issued. In September 2019, the above sale transaction was completed and the Group de-recognized the underlying loan portfolio in its entirety. The notes of the Pillar securitization that were retained by the Bank are presented within loans and advances to customers (note 20 to the consolidated financial statements).
c) In December 2019, the Bank announced that it has entered into binding agreements with doValue S.p.A. for: (a) the sale of 80% of its subsidiary Eurobank Financial Planning Services ("FPS"), including the Bank's Troubled Asset Group ("TAG") and (b) the sale of a portion of mezzanine and junior notes of the aforementioned NPE Securitization. In particular, it has been agreed that 20% of the mezzanine notes and the minimum required percentage of the junior notes will be sold to the above investor for a consideration of €15m in cash. The Group will retain 100% of the senior notes and the 5% of the mezzanine and junior notes. The completion of the transactions with doValue S.p.A is expected to take place within the first half of 2020, subject to obtaining of the relevant regulatory approvals in line with the market practice (note 34 to the consolidated financial statements).
d) On 28 June 2019, the BoD of the Bank ("The Demerged Entity") decided the initiation of the hive down process of the banking business sector of Eurobank and its transfer to a new company-credit institution that will be established ("the Beneficiary"). On 31 July 2019, the BoD of the Bank approved the Draft Demerger Deed through the aforementioned hive down and establishment of a new company-credit institution, pursuant to Article 16 of Law 2515/1997 and Articles 57 (3) and 59-74 of Law 4601/2019, as currently in force. In particular, the demerger will involve the hive-down of the banking business sector of Eurobank, to which the assets and the liabilities, as described on the transformation balance sheet of the hived-down sector as at 30 June 2019 ("Transformation Date"), are included. All actions that have taken place after the Transformation Date and concern the hived down sector shall be treated as occurring on behalf of the Beneficiary.

retain the majority stake of Cairo mezzanine and junior notes, the preferred securities (note 39 to the consolidated financial statements) and participations in certain subsidiaries including Be Business Exchanges S.A. and real estate companies related to projects Pillar and Cairo In case of any assets or liabilities that will not be possible to be transferred, in the context of the above mentioned Draft Demerger Deed, the Demerged Entity will undertake the obligation to collect or liquidate the assets in accordance with the Beneficiary's instructions whereas the Beneficiary will undertake the obligation to indemnify the Demerged Entity for the settlement of the liabilities including any arising costs or losses. On 31 January 2020, the Bank's Extraordinary General Meeting (EGM) resolved, among others, a) the approval of the aforementioned demerger of Eurobank through the business banking sector's hive down and the establishment of a new company-credit institution under the corporate name "Eurobank S.A.", b) the approval of the Draft Demerger Deed as well as the Articles of Association of the Beneficiary, as they were approved by the Bank's BoD and, c) the adjustment of the Articles of Association of the Demerged Entity which will cease to be a credit institution by amending its object and corporate name, as was also approved by the Bank's BoD.

Upon completion of the demerger (i.e. the date of registration with the General Commercial Registry of the relevant approval by the competent Authority), the following shall take place: a) The Beneficiary will be incorporated and the Demerged Entity shall become the shareholder of the Beneficiary by acquiring all the shares issued by the Beneficiary and more specifically 3,683,244,830 common registered shares, of a nominal value of €1.10 each and b) the Beneficiary will substitute the Demerged Entity, by way of universal succession, to all the transferred assets and liabilities, as set out in the transformation balance sheet of the hived down sector and formed up to the completion of the demerger. As of 9 August 2019, the Draft Demerger Deed of the Bank, is available on its website as well as the website of the General Commercial Registry. The completion of the demerger is expected take place by the end of March 2020, subject to the receipt of the necessary approvals by the competent Authorities.

e) Furthermore, the Group will contemplate the potential sale of an additional 75% of mezzanine and the remaining of junior notes of Cairo securitization to an SPV and the transfer of SPV's shares to third party investors or their distribution to shareholders or any combination thereof.

The key benefits from the successful execution of the acceleration plan for NPE reduction will be a) focus on core banking activities, after the legal separation of the core and non-core operations of the Bank, b) the significant balance sheet de-risking, following the targeted de-recognition of a significant part of deep delinquency, denounced NPEs, retaining those that have better recovery and curing potential and c) the targeted NPE ratio reduction to 16% in the first quarter of 2020 and a single digit NPE ratio by 2021. The completion of the Acceleration Plan, subject to the relevant approvals, is expected in 2020.

International Activities

Eurobank Group has a significant presence in four countries apart from Greece. In Cyprus it offers Corporate Banking, Private Banking, International Business Banking, and Shipping services, while in Luxembourg it provides Private Banking and Corporate Banking services. In Bulgaria and Serbia, it operates in Retail and Corporate Banking, Wealth Management and Investment Banking through a network of 291 branches and business centres. Additionally, the subsidiary bank in Luxembourg operates a branch in London.

In November 2018, the Bank announced that it has concluded an agreement with Piraeus Bank S.A. for the acquisition of 99.98% of voting rights of Piraeus Bank Bulgaria A.D. ("PBB"), a subsidiary of Piraeus Bank, by Eurobank's subsidiary in Bulgaria, Eurobank Bulgaria A.D. ("Postbank") (the "Transaction"). On 13 June 2019, the Transaction was concluded, following the receipt of the relevant regulatory approvals. In September 2019, the General meeting of the shareholders of Postbank approved the merger of the company with PBB. The merger was completed in November 2019, following the receipt of the relevant regulatory approvals. The acquisition of PPB by Eurobank Bulgaria A.D. along with their subsequent merger, is in line with the Group's strategy to focus on the expansion of its international activities in markets which are deemed core and will strengthen its position in the Bulgarian banking sector, in both the retail and mainly corporate business segments (note 23.3 to the consolidated financial statements).

Risk management

The Group acknowledges that taking risks is an integral part of its operations in order to achieve its strategic and business objectives. Therefore, the Group's Management has established adequate mechanisms to

identify, assess and monitor these risks early in a timely manner and evaluates their impact on meeting its corporate objectives.

Due to the fact that the economic, industry, regulatory and operating conditions will continue to change, risk management mechanisms are set in a manner that enable the Group to identify and deal with the risks associated with those changes. The Bank's structure, internal processes and existing control mechanisms ensure both the independence principle and the exercise of sufficient supervision.

The Group's Management considers effective risk management as a top priority, as well as a major competitive advantage, for the organization. The Group's Management has allocated adequate means for updating its policies, methods and infrastructure, in order to ensure Group's compliance to the requirements of the European Central Bank (ECB), the Single Supervisory Mechanism (SSM), the Single Resolution Mechanism (SRM), the guidelines of the European Banking Authority (EBA) and the Basel Committee for banking supervision as well as with the best international banking practices. The Group implements a wellstructured credit approval process, independent credit reviews and effective risk management policies for credit, market, liquidity and operational risk, both in Greece and in each country of its international operations. The risk management policies implemented by the Bank and its subsidiaries are reviewed annually.

The Group risk and capital strategy, which is formally documented, outlines the Group's overall direction regarding risk and capital management issues, risk management mission and objectives, risk definitions, risk management principles, risk appetite framework, risk governance framework, strategic objectives and key management initiatives for the improvement of the risk management framework in place.

The maximum risk the Group is willing to undertake in order to pursue its strategic objectives is stipulated in an internal document, the Risk Appetite Framework (RAF), and is determined by means of quantitative and qualitative criteria/parameters, which also include specific tolerance levels, both in terms of each risk type and in overall. The main objectives that determine the risk appetite are complying with the regulatory requirements, safeguarding the Group's ability to smoothly continue its activities, and balancing a strong capital adequacy with high returns on equity. The RAF is communicated within the Group, and shapes its risk undertaking and management culture, forming the foundation on which risk policies and risk thresholds are established both overall and per business activity.

The Board Risk Committee (BRC) is a committee of the Board of Directors (BoD) and its task is assisting the BoD to ensure that the Group has a well-defined risk and capital strategy in line with its business plan and an adequate and robust risk appetite. The BRC assesses the Group's risk profile, monitors compliance with the approved risk appetite and risk tolerance levels, and ensures that the Group has developed an appropriate risk management framework with appropriate methodologies, modelling tools, data sources and sufficient and competent staff to identify, assess, monitor and mitigate risks. The BRC consists of five (5) non-executive directors, meets at least on a monthly basis and reports to the BoD on a quarterly basis and on ad hoc instances if it is needed.

The Management Risk Committee (MRC) is a management committee established by the Chief Executive Officer (CEO) in 2016 and it operates as an advisory committee to the BRC. The main responsibility of the MRC is to oversee the risk management framework of the Group. As part of its responsibility, the MRC facilitates reporting to the BRC on the range of risk-related topics under its purview. The MRC ensures that material risks are identified and promptly escalated to the BRC and that the necessary policies and procedures are in place to prudently manage risks and to comply with regulatory requirements. Additionally, the MRC determines appropriate management actions which are discussed and presented to the Executive Board ("EXBO") for information and submitted to BRC for approval.

The Group's Risk Management General Division is headed by the Group Chief Risk Officer (GCRO), operates independently from the business units and is responsible for monitoring credit, market, operational and liquidity risks. It comprises of the Group Credit General Division, the Group Credit Control Sector (GCCS), the Group Credit Risk Capital Adequacy Control Sector (GCRCACS), the Group Model Validation & Governance Sector, the Group Market & Counterparty Risk Sector (GMCRS), the Group Operational Risk Sector (GORS), the Group Strategic Planning and Operations Unit and the Supervisory Relations and Resolution Planning Division (with dual reporting line to the Group Chief Financial Officer).

The most important types of risk that are addressed by the risk management functions of the Group are:

Credit Risk

The Group is exposed to credit risk, which is the risk that a counterparty will be unable to fulfil its payment obligations in full when due. The credit risk arises principally from the wholesale and retail lending activities of the Group, including from credit enhancements provided, such as financial guarantees and letters of credit, as well as from other activities, such as investments in debt securities, trading, capital markets and settlement activities. Taking into account that credit risk is the primary risk the Group is exposed to, it is very closely managed and monitored by centralized dedicated risk units, reporting to the GCRO.

The credit approval and credit review processes are centralised both in Greece and in the International operations. The segregation of duties ensures independence among executives responsible for the customer relationship, the approval process and the loan disbursement, as well as loan monitoring during its lifecycle. The credit approval process in Corporate Banking is centralised through establishment of Credit Committees with escalating Credit Approval Levels, in order to manage the corporate credit risk. Various rating models are used in order to determine the credit rating of corporate customers. The most significant ones are the MRA (Moody's Risk Analyst) applied for companies operating in industrial, commercial and tourist services and the slotting which is used for specialised lending portfolios (shipping, real estate and project finance).

The approval process for loans to Small Businesses (turnover up to €5m) is centralised following specific guidelines and applying the 'four-eyes' principle. The assessment is based on an analysis of the borrower's financial position and statistical scorecards. The credit approval process for Individual Banking (consumer and mortgage loans) is also centralised and differentiated between performing and non-performing businesses. It is based on specialized credit scoring models and credit criteria taking into account the payment behavior, personal wealth and financial position of the borrowers, including the existence of real estate property, the type and quality of securities and other factors as well. The ongoing monitoring of the portfolio quality and of any other deviations that may arise, leads to an immediate adjustment of the credit policy and procedures, when deemed necessary. The quality of all of the Group's loans portfolios (business, consumer and mortgage in Greece and abroad) is monitored and assessed by the Group Credit Control Sector (GCCS). GCCS operates independently from all the business units of the Bank and reports directly to the GCRO.

The measurement, monitoring and reporting of the Group's exposure to counterparty risk, which is the risk of loss due to the customer's failure to meet its contractual obligations in the context of treasury activities, such as securities, derivatives, repos, reverse repos, interbank placings, etc. are performed by the Group Market and Counterparty Risk Sector (GMCRS). The Group sets limits on the level of counterparty risk that may be undertaken based mainly on the counterparty's credit rating, as provided by international rating agencies, and the product type (e.g. control limits on net open derivative positions by both amount and term, sovereign bonds exposure, asset backed securities). The utilization of the abovementioned limits, any excess of them, as well as the aggregate exposure per Group's entity, counterparty and product type are monitored by GMCRS on a daily basis.

Market Risk

The Group takes on exposure to market risk, which is the risk of potential financial loss due to an adverse change in market variables. Changes in interest rates, foreign exchange rates, credit spreads, equity prices and other relevant factors, such as the implied volatilities of the above, can affect the Group's income or the fair value of its financial instruments. The market risks the Group is exposed to are measured and monitored by GMCRS. GMCRS is responsible for the measurement, monitoring and reporting of the exposure on market risksincluding the interest rate risk in the Banking Book (IRRBB) of the Group. The Sector reports to the GCRO.

Market risk in Greece and Cyprus is measured and monitored using the Value at Risk (VaR) methodology. Market risk in International operations, excluding Cyprus, is managed and monitored using mainly sensitivity analyses. VaR is a methodology used in measuring financial risk by estimating the potential negative change in the market value of a portfolio at a given confidence level and over a specified time horizon. The VaR that the Group measures is an estimate based upon a 99% confidence level and a holding period of 1 day and the methodology used for the calculation is Monte Carlo simulation (full re-pricing of each position is applied). Since VaR constitutes an integral part of the Group's market risk control regime, VaR limits have been established for all (trading and investment portfolios) operations and actual exposure is reviewed daily by

management. However, the use of this approach does not prevent losses outside of these limits in the event of extraordinary market movements.

Liquidity Risk

The Group is exposed to daily calls on its available cash resources due to deposits withdrawals, maturity of medium or long term notes, maturity of secured or unsecured funding (interbank repos and money market takings), collateral revaluation as a result of market movements, loan draw-downs and forfeiture of guarantees. The Board Risk Committee sets liquidity limits to ensure that sufficient funds are available to meet such contingencies.

BRC role is to approve all strategic liquidity risk management decisions and monitor the quantitative and qualitative aspects of liquidity risk. Group Assets and Liabilities Committee (G-ALCO) has the mandate to form and implement the liquidity policies and guidelines in conformity with Group's risk appetite, and to review at least monthly the overall liquidity position of the Group. Group Treasury is responsible for the implementation of the Group's liquidity strategy, the daily management of the Group's liquidity and for the preparation and monitoring of the Group's liquidity budget, while GMCRS is responsible for measuring, monitoring and reporting the liquidity of the Group.

Operational Risk

Operational risk is embedded in every business activity undertaken by the Group. The primary aim of operational risk management is to ensure the integrity of the Group's operations and its reputation by mitigating its impact. To manage operational risk more efficiently, the Group operates an Operational Risk Management Framework, which defines its approach to identifying, assessing, monitoring and reporting operational risks.

Governance responsibility for operational risk management stems from the Board of Directors (BoD), through the Executive Board and Senior Management, and passes down to the Heads and staff of every business unit. The BoD establishes the mechanisms used by the Group to manage operational risk, by setting the tone and expectations at top management and delegating relevant responsibility. The Board Risk Committee and the Audit Committee monitor the operational risk level and profile, including the level of operational losses, their frequency and severity.

The Heads of each Business Unit have the primary responsibility for the day-to-day management of operational risk arising in their units and for the adherence to relevant controls. An Operational Risk Unit operates in every subsidiary of the Bank, being responsible for applying the Group's operational risk strategy and framework.

Each Business Unit has appointed an Operational Risk Partner (OpRisk Partner) who is responsible for coordinating the internal operational risk management efforts of the Business Unit while acting as a liaison to Group Operational Risk Sector and the local Operational Risk Unit.

Certain business units have established a dedicated Anti-Fraud Unit or Function, according to the fraud risk to which their operations are exposed. Their main objective is to continuously identify fraud risks and to undertake all appropriate actions in addressing and mitigating those risks in a timely manner.

Further information on the Group's financial risk management objectives and policies, including the policy for hedging each major type of transaction for which hedge accounting is used is set out in the notes 2, 5 and 22 to the consolidated financial statements for the year ended 31 December 2019.

Non Performing Exposures (NPEs) management

A strategic priority for Eurobank remains the active and effective management of NPEs with the aim to substantially reduce the NPEs stock in accordance with its operational targets agreed with the supervisory authorities, leveraging on its internal infrastructure, the important legislative changes and the external partnerships that have taken or are expected to take place.

Troubled Assets Group (TAG) General Division

Following the Bank of Greece Executive Committee's Act No.42/30.5.2014 and its amendments, that details the supervisory directives for the administration of exposures in arrears and non-performing loans, the Bank

has proceeded with a number of initiatives to adopt the regulatory requirements and empower the management of troubled assets. In particular, the Bank transformed its troubled assets operating model into a vertical organizational structure through the establishment of the Troubled Assets Committee (TAC) and Troubled Assets Group General Division (TAG). TAG structure is completely segregated from the Bank's business units both in terms of account management, as well as credit approval process, which ensures transparency, flexibility, better prioritization and management accountability and shifts the management from bad debt minimization to bad debt value management, in line with the Group's risk appetite. Further information is presented in note 5 to the consolidated financial statements for the year ended 31 December 2019.

The targets of the operating model are to reinstate customers' solvency, reduce overall handling costs for delinquent accounts and improve the portfolio profitability by maintaining low portfolio delinquency rates and facilitating negotiations with delinquent customers. In order to ensure the efficient management of the troubled assets portfolio, more than 2,500 full-time equivalent employees are involved in NPLs management operations across the Bank, of whom ca 1,200 are dedicated professionals within the various TAG operating units. TAG, by employing best-in-class strategies, tools, technical resources and human capital, aims to significantly contribute to the Group's profitability, in a socially responsible manner. To this end, the main actions undertaken by TAG in 2019 were the following:

a) Similarly with 2018, TAG has overall achieved in 2019 the key regulatory targets for NPEs reduction.
b) Continued and strengthened the strategic focus towards long-term viable restructuring solutions, offered through a wide array of products, segmentation criteria and decision trees.
c) Further development of decision support systems in the context of managing the troubled portfolios that aim to improve decision making, facilitate the offering of optimum solutions and limit uncertainty.
d) Reinforcement of the key functions of the General Division in order to accommodate the new legislative developments towards the reduction of NPEs and to ensure the efficient management of the troubled assets portfolio. Specifically, designed and developed the process needed to comply with Law 4605/2019 regulatory framework for the protection of the primary residential property.
e) Staff was further developed through additional training programs and e-learning courses; especially, through the completion of the first Certification Program on Strategic Troubled Assets Management for both Retail and Corporate professionals, in cooperation with Moody's and the Hellenic Banking Institute.
f) Evolved and further developed a comprehensive program for the purpose of supporting and monitoring, in a structured manner, all business and Information Technology (IT) actions and initiatives serving the reduction of NPEs, which is a top priority for the Bank.
g) Participated in key interbank initiatives to establish a solid governance framework and a collaborative partnership among all banks.
h) Enhanced strategic segmentation of the customer base that links borrowers to actions and channels and designed tailor made strategies.
i) Continued to closely monitor the performance of both Greek and foreign subsidiaries in close cooperation with the respective Greek and International Divisions, in order to ensure alignment of all actions towards the achievement of the Group regulatory annual targets.

Following the Corporate transformation Hive-down and the Pillar and Cairo securitizations, the Bank will assign the management of its remaining NPE portfolio to FPS, through a 10-year agreement. Eurobank will retain the business ownership and responsibility for the performance of the NPEs and will manage the relationship with FPS through a structured governance and a solid control framework. In this context, a dedicated Eurobank team will devise the NPE reduction plan, actively set the strategic principles and KPIs framework under which FPS will manage the portfolio, closely monitor the execution of the approved strategies and service level agreements and ensure compliance with regulatory requirements.

Operational targets for Non-Performing Exposures (NPEs)

In March 2019, Eurobank and the other Greek systemic banks responded to the new regulatory framework and SSM requirements for NPE management and submitted their new NPE Management Strategy for 2019- 21, along bank and, for the first time, group level. Specifically for Eurobank, the new submission has taken into account the NPE reduction acceleration plan that was announced in the context of its transformation plan. The Greek government in order to support the reduction of non-performing loans (NPL) of banks, has designed an asset protection scheme ('APS') to assist them in securitizing and moving non-performing loans off their balance sheets. In October 2019, the European Commission approved the Greek APS, stating that state guarantees are to be remunerated at market terms according to the risk taken. Following the enactment

of the Law 4649/2019 related to the APS and the agreement with an international investor on the projects Cairo and Europe, Eurobank aims to achieve the targeted Group's NPE ratio of ca. 16% in the first quarter of 2020 and a single digit ratio by 2021.

The Bank has fully embedded the NPEs strategy into its management processes and operational plan. The supervisory authority reviews the course to meeting the operational targets on a quarterly basis and might request additional corrective measures if deemed necessary.

On 12 March 2020, the EBA announced actions to mitigate the impact of coronavirus on the EU banking sector stating allowing, among others, that there is flexibility in the implementation of the EBA Guidelines on management of non-performing and forborne exposures. Additionally, EBA called for a close dialogue between supervisors and banks, also on their non-performing exposure strategies, on a case by case basis.

Legal framework

A new protection scheme on primary residence was voted by the Greek Parliament in March 2019 (Law 4605/2019), aimed to bolster the Banks' efforts to reduce NPEs through a more effective mechanism to work out troubled loans, a restriction of strategic defaulters and, ultimately, an improvement in payment discipline. The scheme expires in April 2020, after which the Government has announced that it will duly devise a comprehensive Individual Insolvency framework.

Transactions on Non-performing loans

As mentioned in the note "Acceleration Plan for NPEs reduction and Hive down", in June 2019, the Bank entered into a binding agreement with an international investor for the sale of 95% of the mezzanine and junior notes of a securitization of a residential mortgage loan portfolio of ca. € 2 bn gross book value (project Pillar comprising primarily NPEs,). In September 2019, following the completion of the above sale transaction, the Group ceased to consolidate the SPV ('Pillar Finance Designated Activity Company') and de-recognized the underlying loan portfolio in its entirety, on the basis that the Bank transferred the SPV's control and transferred substantially all risk and rewards of the underlying loan portfolio's ownership.

Non-performing loans classified as held for sale

In the fourth quarter of 2019, the Bank has received a binding offer for the disposal of non-performing corporate loans. Accordingly, loans with gross carrying amount of €7.6 million, which carried an impairment allowance of € 5.3 million, were classified as held for sale.

Macroeconomic Outlook and Risks

In the context of the Enhanced Surveillance (ES), the first four consecutive quarterly reviews were successfully completed by December 2019, while the conclusion of the fifth review is expected by mid-March 2020. In that context, in May 2019, following the respective endorsement by the Eurogroup, Greece received the first ES disbursement of €970 million. On 4 December 2019, Eurogroup approved the release of the second ES instalment of €767m, the disbursement of which is expected in early 2020.

On 24 January 2020, Fitch upgraded Greece to BB from BB- with a positive outlook on the basis of the improved economic activity prospects, the stable political environment, the improved debt sustainability and the continuation of the prudent fiscal policy. On 25 October 2019, Standard & Poors, raised Greece's sovereign credit rating from B+ to BB- with a positive outlook, on the basis of reduced budgetary risks for the period ahead, the strong budgetary performance, the favorable debt structure and the full abolition of capital controls. On 1 March 2019, Moody's upgraded the Greek sovereign rating from B3 to B1 on the basis of, among others, the improved economic performance, the ongoing ES scheme, the track of strong fiscal performance, and the public debt sustainability. The sovereign's rating is still significantly below the investment grade rating but the ratings upgrades, the successful graduation from the Third Economic Adjustment Programme, the conclusion of the four consecutive ES reviews and the developments in the fiscal front together with the pro-reform government formed after the 7 July 2019 general elections, led to the improvement of the yield of the Greek 10-years bonds to 1.46% on 31 December 2019, compared to 4.40% on 31 December 2018. On the back of this environment, the Greek state in 2019 managed to normalize and achieve continuous market access with the issuance of four bonds of various maturities (for a total amount of €9.0bn). In January 2020, the Greek Public Debt Management Agency (PDMA) issued a 15-year bond of €2.5bn at a yield of 1.9%. Additionally, according to the ECB's decision notified to the Bank on 6 March 2020, it has been concluded that the reasons to impose sovereign limits on the Greek banks' (including Eurobank)

exposure towards the Hellenic Republic have ceased to exist and therefore its previous decision on those limits shall be repealed.

According to the ELSTAT data the real GDP growth was at 1.9% for 2019 (2018: 1.9%). At the same time, according to the 2020 Budget, the real GDP growth for 2020 was estimated at 2.8%, conditional on the prompt ES implementation, ownership of reforms and a benign external environment. According to the recent European Commission's 2020 Winter Forecasts (13 February 2020), the 2020 real GDP growth for Greece was estimated at 2.4%. However, the recent coronavirus outbreak is very possible to slash these forecasts (see relevant topic later in this section).

On the fiscal front, according to the 2020 Budget, the primary surplus for 2019 is estimated at 3.7% of GDP while the respective forecast for 2020 was estimated at 3.6% of GDP both figures were above the 3.5% threshold required by the ES. Public debt for 2019 and 2020 is expected at 173.3% and 167.0% of GDP respectively. Under the ES baseline scenario, public debt is expected below 90% of GDP in 2060. The European Commission, in its 2018 Fiscal Stability Report (January 2019) expected – conditional on the continuation of the ES implementation – limited short term risks in terms of fiscal sustainability as a result of the structure of Greek debt (long maturities and high official sector ownership), the medium term debt relief measures decided on the 21 June 2018 Eurogroup, the primary surpluses achieved so far and the commitment of the Greek authorities to continue this performance.

Risks continue to surround the near-term domestic economic outlook. Based on ELSTAT data, the unemployment rate in December 2019 was at 16.3% from 18.5% in December 2018, pointing towards a slow path of decline, conditional on no unforeseen negative developments in the upcoming period. According to the 2020 Budget, the unemployment rate in 2020 was estimated at 14%. Based on ELSTAT data, the general price level (the harmonized index of consumer prices-HICP) was at 1.1% in January 2020 from 0.5% in January 2019. On an annual basis, according to the European Commission's Winter forecasts the HICP for 2020 is expected at 1.0%.

The ongoing deleveraging in the Greek economy can be considered as a major drag for recovery. According to the BoG data, i.e. in December 2019, the private sector domestic credit balance stood at €153.9bn from €169.9bn in December 2018, a decrease of -9.4%. A significant part of this deleveraging was due to the reduction of the stock of NPEs. On the other side of the ledger, private sector domestic deposits amounted to €143.1bn at the end of December 2019 from €134.5bn in December 2018, registering an increase of 6.4%.

Factoring in the announcements for the performance of fourth quarter 2019, it is important to mention that the broader Central, Eastern and South-eastern Europe (CESEE) group of economies outperformed initial official forecasts in terms of GDP growth in 2019. In 2020, the CESEE region will continue expanding at a more moderate pace than in previous years in response primarily to rising external and internal headwinds. Having passed their cyclical peak, GDP growth dynamics in the regional economies are expected to slow down further in most cases due to weaker net exports and domestic demand dynamics. Net exports are expected to come under more pressure in a less friendly global economic environment due to persisting trade tensions. At the same time, domestic demand will remain the key source of growth. However, it is not expected to make a higher contribution, as income growth decelerates, and the room for domestic fiscal and monetary policy responses becomes more limited. However, the economies, in which the Group has a substantial presence, continue to be among the top-performers in European Union (EU-28).

At a country level, Bulgaria expanded by 3.4% in 2019 compared to 3.1% in 2018, more than three times higher than the EA-19 average. Despite external headwinds, the economy is expected to register another year of relatively solid growth, taking advantage of an improving labour market, a strong real wage growth, an accelerating credit activity, a moderate expansionary fiscal policy stance, increased tourism flows and improved EU-funds absorption. Bulgaria has been running either a balanced current account or a surplus since 2013. In addition, it has been running a general government budget surplus in European System of Accounts (ESA2010) terms in 2016-2019, so that it's public debt is still the third lowest in EU-28. In November 2019, Standard and Poor's raised the long-term sovereign rating of the country by one notch to BBB with a positive outlook. In February 2019, the government had made solid progress in the Exchange Rate Mechanism (ERM II) entry requirements application checklist. Addressing the capital shortfalls identified in the Asset Quality Review (AQR) and stress test for two domestic banks was also considered as an integral part of the checklist. Nevertheless, the government decided to delay the ERM II entry application most probably until July 2020

from April 2020 as initially scheduled, amid concerns that the current foreign exchange rate of the existing currency board could be changed, citing the lack of unanimous public consensus behind ERM II entry.

The growth prospects in Cyprus are decelerating towards more sustainable levels in 2019-2020. The growth dynamics are expected to remain relatively strong in 2020- yet still below 3% - for the first time after graduation from the economic adjustment programme. Economic activity is supported by sustained sentiment improvement, improved labour market conditions, record-high tourist arrivals, further property market recovery, the impact from fiscal relaxation and a stream of ongoing residential and tourism infrastructure construction projects underpinned by the program "citizenship by investment". The latter has helped Cyprus to attract significant foreign funded investment in the real estate sector. Even though the latest high frequency real estate and construction activity are strong, concerns for the future of this activity remain. Those stem from the decline in program applications post May 2019 following the government amendments in response to EU institutions' criticism. Meanwhile, in mid-January 2020, Cyprus proceeded with two bond issuances at a relatively low yield demonstrating its uninterrupted funding capacity. In addition, following a series of sovereign rating upgrades, S&P, Fitch and DBRS rate Cyprus at investment grade, with only Moody's remaining below investment grade (currently at Ba2), but with a positive outlook.

Having expanded by 4.4% in 2018 by the fastest rate in the last ten years, the economy of Serbia decelerated to 4.2% in 2019, due to the negative base effects from the extraordinary performance of agriculture and energy sectors in the past year and external environment headwinds. Domestic demand is widely expected to remain the key driver of growth. Private consumption will most probably receive further support from the rise of disposable incomes as a result of the wage increases and pensions hikes. The planned increase in public investments together with the sustained performance of foreign direct investment (FDI) inflows will maintain total investments relatively strong. However, net exports will remain a drag. Moreover, the 30-month nonfinancial advisory in the form of "Policy Coordination Instrument" (PCI) that has been established by the IMF is broadly on track, enabling the country to continue structural and institutional reforms and providing a valuable policy anchor going forward. Finally, the country is heading for parliamentary elections in mid to late April.

Regarding the outlook for the next 12 months, the major macroeconomic risks and uncertainties in Greece are associated with (a) the implementation of the reforms and privatizations' agenda in order to meet the ES targets and milestones, (b) the implementation of the Public Investments Program according to the respective 2020 Budget targets, (c) the attraction of new investments in the country and (d) the geopolitical and macroeconomic conditions in the near or in broader region, including the impacts of a persistent low/negative rates' environment and the external shocks from a slowdown in the regional and / or global economy. Materialization of those risks would have potentially adverse effects on the fiscal planning of the Greek sovereign and on the liquidity, solvency and profitability of the Greek banking sector, as well as on the realisation of their NPEs reduction plan. The Group monitors closely the developments in the Greek and regional macroeconomic environment taking into account its direct and indirect exposure to sovereign risk.

Furthermore, a major challenge for the international community is the recent coronavirus (Covid-19) outbreak, whose expansion worldwide is expected to cause a transitory negative impact in the global economy. The effects of the Covid-19 on the economic activity depend heavily on the range of its possible world expansion and the timing of its curbing. Countries worldwide- and Greece among them- have already taken measures to contain the virus' expansion (e.g. travel restrictions, quarantine measures), strengthen the health systems' ability to deal with the outbreak and cushion the shock on both economic supply and demand via fiscal measures. In addition certain Central Banks, including the US Fed, have implemented measures of monetary accommodation. In the euroarea context, the Eurogroup held on 4 March 2020 decided that nonpermanent deviations of member states from the agreed fiscal paths due to unusual effects outside the control of their governments, i.e. the effects of the epidemic, are acceptable. Conditional on the above, the baseline scenario is that the expansion of the virus globally, EU-wide and in Greece will be contained and gradually slows down (as is already the case in China) until the end of the first half of 2020. In such a case, the outbreak is expected to have a notable negative economic impact mainly on the first and, to a lesser extent on the second quarter of 2020. The European and Greek economy are expected to rebound in the second half of 2020, as confidence returns. In such a case, an adverse impact on certain industries of the Greek economy cannot be ruled out, such as a) lower tourism revenues, b) reductions in the demand for the manufacturing sector's product, as a result of the slowdown in key markets, c) disruptions in the manufacturing sector's supply chains and d) decrease in shipping activity due to the expected decline in global trade. Continuation

of the slowdown in economic activity could affect the NPE reduction plans of the Greek banks and put pressure on the revenue side from lower fees, commission and interest income. The Bank is continuously monitoring the developments on the Covid -19 front and has increased its level of readiness, so as to accommodate decisions, initiatives and policies to protect its capital and liquidity standing as well as the fulfilment, to the maximum possible degree, of its strategic and business plan for the quarters ahead. Such initiatives and actions will be specified over time when the consequences of Covid-19 outbreak become more tangible.

With regard to the Brexit process, on 31 January 2020 the United Kingdom (UK) left from the EU and entered to a 11-month transition period during which the UK will continue its contribution on the EU budget and will remain both in the EU customs union and the single market. During this period both parties have to agree on a new trade agreement. The main risks for Greece stem a) from the external balance of goods and services between Greece and the UK and b) in terms of the EU budget impact i.e. the UK exit from the EU might create a risk regarding the actual size of available funds for Greece.

On the other hand, the decisive implementation of the reforms agreed in the context of the ES, the mobilization of EU funding to support domestic investment and job creation, the attraction of foreign and domestic capital and the adoption of an extrovert economic development model will improve the confidence in the prospects of the Greek economy and the further stabilization of the domestic economic environment, which are necessary conditions for the return of the country to a strong and sustainable growth path.

Share Capital

As at 31 December 2018, the Bank's share capital amounted to €655,799,629.50, divided into 2,185,998,765 ordinary registered voting shares of a nominal value of €0.30 each, which represented the total share capital of the Bank. On 5 April 2019, the Extraordinary General Meeting of the Bank's Shareholders approved the merger of the Bank with Grivalia by absorption of the latter by the former and resolved the increase of the share capital of the Bank by the amount of €164,848,663.17, which corresponded to the share capital of Grivalia, and by the amount of €32,458,933.29, derived from taxed profits for rounding reasons of the nominal value of the new common share of the Bank, which is amended from €0.30 to €0.23. Following the above increases, the Bank's total share capital amounted on 31 December 2019 (and amounts up to date) to €853,107,225.96 divided into 3,709,161,852 common voting shares of nominal value of €0.23 each. All shares are registered, listed on the Athens Exchange and incorporate all the rights and obligations set by the Greek legislation. As at 31 December 2019, the number of Eurobank shares held by the Group's subsidiaries in the ordinary course of their business was 2,815,312 (31 December 2018: 1,194,032) (note 37 to the consolidated financial statements).

Finally, as at 31 December 2019, the percentage of the ordinary voting shares of the Bank held by the Hellenic Financial Stability Fund (HFSF) amounted (and amounts up to date) to 1.40%. It is noted that, according to the Law 3864/2010 as in force, the HFSF has restricted voting rights⁶ .

Dividends

Based on the 2019 results in combination with the article 159 of Company Law 4548/2018, the distribution of dividends is not permitted. Under article 10 par.3 of Law 3864/2010 for the "establishment of a Hellenic Financial Stability Fund", for as long the HFSF participates in the share capital of the Bank, the amount of dividends that may be distributed to shareholders of the Bank cannot exceed 35% of the profits as provided in article 161 par. 2 of Company Law 4548/2018.

Major Shareholders

Based on the:

a) relevant published regulatory announcement of Eurobank, the percentage of Eurobank's voting rights held indirectly by the company "The Capital Group Companies, Inc", on 13 January 2020, amounted to 5.01% out of the total number of Eurobank's voting rights, excluding those held by the HFSF, corresponding to 183,336,267 voting rights of Eurobank' shares,
b) relevant published regulatory announcements of Eurobank, the percentage of Eurobank's voting rights held directly and indirectly by the company "Fairfax Financial Holdings Limited", on 7 November 2019, through its controlled subsidiaries, amounted to 31.71%, out of the total number of Eurobank's voting

⁶ Information regarding HFSF's rights as owner of Bank's ordinary shares, according to Law 3864/2010 and the Relationship Framework Agreement (RFA), is included in Corporate Governance Code and Statement.

rights, excluding those held by the HFSF, corresponding to 1,159,833,335 voting rights of Eurobank's ordinary shares.

Also, following the merger of the Bank with Grivalia by absorption of the latter by the former and the relevant increase of the share capital of the Bank, which were approved by the Extraordinary General Meeting of the Bank's Shareholders on 5 April 2019, the percentage of the ordinary shares with voting rights held by the HFSF out of the total number of ordinary shares with voting rights issued by Eurobank amounted to 1.40%, which corresponds to 52,080,673 ordinary shares with voting rights out of total 3,709,161,852 ordinary shares with voting rights issued by Eurobank. The provisions of article 7a par. 2, 3 and 6 of Law 3864/2010 are applicable on the above mentioned ordinary shares of HFSF (restricted voting rights). In the context of the above Law, HFSF exercises its voting rights in the Bank's General Meetings only for decisions concerning the amendment of the Bank's Articles of Association, including the increase or decrease of the Bank's capital or the granting of a corresponding authorization to the Bank's Board, decisions concerning the mergers, divisions, conversions, revivals, extension of duration or dissolution of the Bank, the transfer of assets (including the sale of subsidiaries), or any other issue requiring approval by an increased majority as provided for in Company Law 4548/2018.

Board of Directors

The Board of Directors (BoD) was elected by the Annual General Meeting of the Shareholders of the Bank (AGM) held on 10 July 2018 for a three years term of office that will expire on 10 July 2021, prolonged until the end of the period the AGM for the year 2021 will take place.

Furthermore, following the decision of the Chairman of Eurobank's BoD Mr. Nikolaos Karamouzis to step down from the position of the Chairman and member of Eurobank's BoD at the end of March 2019, the BoD at its meetings held on 29 March and 1 April 2019 appointed Mr. George Zanias as the new non-executive Chairman of the Bank's BoD in replacement and for an equal term to the remaining term of the resigned member.

In addition, following the resignation of Ms. Lucrezia Reichlin, effective as of 1 April 2019, the BoD of the Bank decided on 1 April 2019 not to replace her and the continuation of the management and representation of the Bank by the BoD without her replacement.

The Extraordinary General Meeting of the Shareholders of the Bank (EGM) held on 5 April 2019 approved the appointment of Mr. Nikolaos Bertsos as new independent non-executive member of the Bank's BoD, whose term of office will expire concurrently with the term of office of the other members of the BoD. Same day (5 April 2019), the BoD decided on its constitution, on the appointment of the Chief Executive Officer and the Deputy Chief Executive Officers and on the determination of its executive and non-executive Directors.

Following the submission of the resignation from the Bank's BoD of Ms. Aikaterini Beritsi, representative of the HFSF to the Bank's BoD, effective on 15 July 2019, the Bank's BoD decided on 31 July 2019 the integration of the new representative of the HFSF Mr. Konstantinos Angelopoulos to the Bank's BoD, in replacement of Ms. Aikaterini Beritsi, and his appointment as non-executive member of the BoD. Finally, following the HFSF's letter of 28 November 2019 informing the Bank on the termination of the term of office since 16 December 2019 as the HFSF representative to the Bank's BoD of Mr. Konstantinos Angelopoulos, the Bank's BoD decided on 16 December 2019, the integration of the new representative of the HFSF Mr. Dimitrios Miskou to the Bank's BoD, in replacement of Mr. Konstantinos Angelopoulos, and his appointment as non-executive member of the BoD. The appointment of both those two BoD members was announced at the Extraordinary General Meeting of the Shareholders of the Bank, which took place on 31 January 2020.

The Bank's Board is set out in note 48_to the consolidated financial statements. Personal details of the Directors are available on the website of Eurobank (www.eurobank.gr).

Authority to issue new shares

A. The authority that the BoD has regarding the issuance of new shares (without further prior decision of the Shareholders' General Meeting), is to issue new ordinary shares as a result of the exercise of the right to convert the convertible bonds (note 39 to the consolidated financial statements) as follows:

The BoD is authorised to issue ordinary shares to those convertible bonds holders who exercise their rights within the rules set by the convertible bond loan issued by the Bank. As authorised by the General Meeting of 30 June 2009, the BoD issued in 2009 €400m of callable bonds convertible to ordinary shares of the Bank after 5 years from their issue, upon a written declaration of the bondholder to the Bank, in accordance with the specifications of the resolution of the above General Meeting, €350m of which were allocated. Following the Bank's voluntary liability management exercise-LME, announced on 29 October 2015, callable bonds of principal amount €19.5m were held by ERB Hellas Funding Ltd, which on 29 October 2019 were bought back by the Bank and redeemed.

B. The members of the BoD are not authorized to issue new shares.

Sundry information required under Law 3556/2007 (article 4, par.7)

By derogation of the ordinary shares held by HFSF which carry special rights and restrictions under the legislation in force and the Relationship Framework Agreement signed by the Bank on 4 December 2015 with HFSF (note 46 to the consolidated financial statements), according to the Bank's Articles of Association:

a) there are no restrictions on the transfer of the Bank's shares
b) there are no shares with special controlling or voting rights
c) there are no restrictions on voting rights
d) the rules related to the appointment and replacement of directors as well as to the amendment of the Articles of Association are in accordance with the provisions of company law.

The Bank is not aware of any shareholders' agreements resulting in restrictions in the transfer of its shares or in the exercise of the shares' voting rights.

There are no significant agreements that enter into force, are amended or expire if there is change in the control of the Bank following a public offer.

There are no agreements between the Bank and the Directors or the staff for compensation in the event of departure as a result of a public offer.

Information required under Law 4548/2018 (article 97, par.1 (b))

In the context of the merger of the Bank with the company Grivalia Properties REIC by absorption of the latter by the former, the following members of the BoD were not entitled to vote, according to the provisions of par. 3 of art. 97 of the Law 4548/2018, due to conflict of interest, on items related to the said merger, which took place during the BoD meetings:

a) Mr. Georgios Chryssikos, due to the position of the CEO he held in Grivalia Properties REIC;
b) Mr Stavros Ioannou, due to the position of the non-executive Director he held in Grivalia Properties REIC; and
c) Mr. Bradley Paul Martin, due to his position as Vice President Strategic Investments in Fairfax Financial Holdings Limited, which in turn had a controlling interest in Grivalia Properties REIC.

For the purposes of approval for granting a credit facility to the company "VALUE TOURISTIKI S.A.", which was an affiliated company of Grivalia Properties REIC, the following BoD members were not entitled to vote, according to the provisions of par. 3 of art. 97 of the Law 4548/2018, due to conflict of interest:

a) Mr. Georgios Chryssikos, due to the position of the CEO he held in Grivalia Properties REIC;
b) Mr Stavros Ioannou, due to the position of the non-executive Director he held in Grivalia Properties REIC;
c) Mr. Bradley Paul Martin, due to his position as Vice President Strategic Investments in Fairfax Financial Holdings Limited, which in turn had a controlling interest in Grivalia Properties REIC, and
d) Mr. Nikolaos Bertsos, due to the position of the Chairman of the Board he held in Grivalia Properties REIC.

In the framework of the approval of the revision of the Bank's Separation Policy, which concerns Senior Executives of Eurobank at the level of CEO, Deputy CEO and General Manager, given that the Executive members of the BoD are related parties with Eurobank, within the meaning of paragraph 2(a) of article 99 of Law 4548/2018 and in accordance with the International Accounting Standard 24, the BoD's approval was granted based on a fairness opinion report provided by a certified auditor in accordance with article 101 of Law 4548/2018, while all the necessary disclosure procedures were adhered to as provided for in articles 100

par. 3 and 101 par. 2 and 3 of Law 4548/2018. Furthermore, for the same issue the executive BoD members Messrs. Fokion Karavias, Stavros Ioannou, Theodoros Kalantonis and Konstantinos Vassiliou were not entitled to vote, according to the provisions of par. 3 of art. 97 of the Law 4548/2018, due to conflict of interest, since the relevant decision related to a financial transaction of the Bank with themselves.

Finally, on the occasion of the approval of the remuneration adjustments of the Bank's Deputies CEOs, given that the Deputies CEOs are related parties with the Bank within the meaning of paragraph 2(a) of article 99 of Law 4548/2018 and in accordance with the International Accounting Standard 24, the BoD's approval was granted based on a fairness opinion report provided by a certified auditor in accordance with article 101 of Law 4548/2018, while all the necessary disclosure procedures were adhered to as provided for in articles 100 par. 3 and 101 par. 2 and 3 of Law 4548/2018. Furthermore, for the same issue the executive BoD members Messrs. Stavros Ioannou, Theodoros Kalantonis and Konstantinos Vassiliou were not entitled to vote, according to the provisions of par. 3 of art. 97 of the Law 4548/2018, due to conflict of interest, since the relevant decision related to adjustments to their remuneration.

The Auditors

The Bank's Shareholders Annual General Meeting held on 24 July 2019 approved the appointment of KPMG, as statutory auditor for the financial statements (standalone and consolidated) for the year ending 31 December 2019.

During 2019 the Audit Committee reviewed the independence and effectiveness of KPMG, including its relationship with the Group, and monitored on a quarterly basis the Group's use of the auditors for non-audit services and the balance of audit and non-audit fees paid to the auditors, according to the Bank's External Auditor's Independence Policy.

Non financial information

Eurobank, driven by its sense of responsibility and commitment to giving back to society, has made corporate responsibility one of the foundations of its strategic planning, which is directly linked to UN Sustainable Development Goals (SDGs). Responding to the needs of today's ever-changing environment, Eurobank, through its corporate responsibility strategy, aims to actively contribute to the improvement of the economy and society within which it operates, adopting responsible practices that promote transparency and business ethics.

In September 2019, Eurobank affirmed its commitment to play an active role in the implementation of the SDGs and the Paris Agreement on Climate Change, signing the Principles of Responsible Banking that set the framework for the future development of a sustainable banking system with a strong positive mark on society and the environment. Eurobank also signed the UN Global Compact in 2008 actively supporting its 10 principles. Moreover, Eurobank Asset Management MFMC, Bank's subsidiary, is the first asset management company in Greece to sign the PRI (Principles for Responsible Investment) initiative in 2018, as part of the broader policy of the Eurobank Group to support sustainability and responsible entrepreneurship.

In this context, the Group has developed initiatives to support entrepreneurship, reward excellence, promote innovative products and services as well as minimising the Group's environmental footprint and also the Group strives to ensure better prospects for its employees.

Materiality Analysis

The Group adopts and follows the Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI Standards) international framework, for the development of its Sustainability Report. In this context and in order to respond to the expectations, concerns and needs of its stakeholders, in 2018 the Bank has carried out the process of materiality analysis to update the most important issues related to sustainable development. In order to carry out the materiality analysis, a dedicated project team was set up which, in cooperation with representatives of the units that regularly interact with stakeholders, carried out a questionnaire survey of 22 sustainability issues regarding the economy, society, the environment and people. For the preparation of the material issues were taken into account issues concerning the banking sector, the Greek economy as well as the prospects for the development of entrepreneurship. The materiality questionnaire was sent to stakeholder groups and the participants were asked to rate on a standard scale (from 1 = no significant to 10 = extremely important) each topic. Through electronic and telephone surveys, a total of 598 completed questionnaires were collected from all stakeholder groups of the Bank.

At the same time, the material issues were also prioritized by the Bank's Management. The results of the survey helped in the documented analysis of the Bank's material issues as well as in the thorough understanding of the expectations of the participant stakeholder groups. Following a review of the findings, the project team identified the material issues presented in the Materiality Matrix.

On the diagram, the vertical axis indicates how stakeholders perceive the materiality of each issue, while the horizontal axis indicates Eurobank's management view of the same issues. Through this process, 10 material issues were identified and approved by the project team and the Bank's Management. The boundaries of these issues have been identified and aligned with the UN Sustainable Development Goals (SDGs) and linked with the GRI indicators to ensure the measurement and the evaluation of their impacts.

	Identified Material Topics	Boundaries	Alignment with Sustainable Development Goals (SDGs)	GRI Indicator
3	Responsible provision of information and customer service	Eurobank Employees Investment & Investor Analysts Customers Business Community Government& Regulatory Authorities		GRI 417-1 GRI 417-2 GRI 417-3
(9)	Supporting and financing the Greek Economy	Eurobank Employees Suppliers Young Entrepreneurs Local Communities Media Business Community Government & Regulatory Authorities NGOs & Associations	B ECONOMIC GROWTH AND INFRASTRUC POVERTY 11:44 PM #1 10 REDUCED ONEQUALITIES STAINABLE CITI 1 = 1	GRI 203-2 GRI 204-1 FS7 FS8
1	Financial growth / performance	Eurobank Employees Investment & Investor Analysts Customers Suppliers Business Organisations Government & Regulatory Authorities	8 ECONOMIC GROWTH 1 POVERTY MUNGER 2 111 1184 11 AND INFRASTRUCTURE વિત્ત 120	GRI 201-1
ধ	Stakeholder personal data protection	Eurobank Employees Investment & Investor Analysts Customers Suppliers Young Entrepreneurs Government & Regulatory Authorities Media Business Community Local Communities NGOs & Associations		https://www. eurobank.gr/en/ gdpr-general- data-protection- regulation/
(10)	Supporting Start Up entrepreneurship & innovation	Eurobank Young Entrepreneurs Business Community Local Communities	8 ECONOMIC GROWTH EDUCATION	GRI 203-1 GRI 203-2
17	Human resources education & learning	Eurobank Employees Investment & Investor Analysts Customers Suppliers Young Entrepreneurs	8 ECONOMIC GROW QUALITY COUCATION FOUALITY	GRI 404-1 GRI 404-2 GRI 404-3
(16)	Attracting talented individuals with deep knowledge	Eurobank Employees Investment & Investor Analysts Customers Suppliers Young Entrepreneurs Local Communities	8 ECONOMIC GROWTH	GRI 401-1 GRI 401-2 GRI 404-1 GRI 404-2 GRI 404-3
(15)	Deployment of human resources	Furobank Employees Investment & Investor Analysts Customers	8 ECONOMIC GROWTH 5 EQUALITY	GRI 401-1 GRI 401-2 GRI 404-1 GRI 404-2 GRI 404-3
11	Education & Excellence	Eurobank Employees Analysts & Investors Customers Local Communities NGOs & Associations	8 DECENT WORK AN 4 EDUCATION	GRI 203-2
(7	Corporate Governance	Furobank Employees Investment & Investor Analysts Government & Regulatory Authorities Customers Suppliers Media NGOs & Associations		General Disclosures GRI 102-18 GRI 102-19 GRI 102-20 GRI 102-21 GRI 102-23 GRI 102-33

Employee Engagement

The Group's employees constitute its greatest asset as far as development and sustainability are concerned. The recruitment process marks the beginning of a long-lasting and mutually beneficial partnership between the employee and the Group. As of 31 December 2019, the Group employed 13,456 employees of which 4,900 abroad. Gender and age distribution present a quite balanced picture, reflecting the equal opportunities approach that the Group adopts. More specifically, 64% of the total population for the Group are below 45 years old, while 63% are women.

In order to ensure equal and fair opportunities of all employees, the Group implements a number of policies in Greece and abroad in the areas of Remuneration, Recruitment, People & Talent Development, Performance Management, Learning, Engagement & Communication, Relatives and Health & Safety. The Group respects human rights, equal opportunities and diversity vis à vis clients, suppliers and employees while the Group's objective is to recruit and retain its employees regardless of race, religion, age, gender, sexual orientation or disability. The Group strives to ensure that its workforce reflects the communities in which it operates and the international profile of the organization. The Group recognizes that diversity is a key component of a responsible business strategy in support of its international operations.

The Bank is constantly revising its compensation and benefits framework taking into consideration market trends and aiming to create a competitive offering that will attract, engage and retain its employees while at the same time comply to all regulatory and legal requirements. As a result, the basic principles of the compensation and benefits framework, which ensure alignment between individual objectives and the Bank's business strategy, as well as the long-term value creation for the shareholders, are the following:

a) Safeguard that total reward is sufficient to retain and attract executives with high skill and expertise
b) Ensure internal equity between Business Units
c) Mitigate risk
d) Link compensation with long-term performance

Investment in continuous learning constitutes a major priority for the Group with two main areas of focus. Building and strengthening professional expertise with current skills and capabilities, as well as providing an umbrella of modern learning curriculums and methodologies. In 2019, the leading Learning Management System, SAP Success Factors, was implemented for Group employees. The new platform offers new enhanced self-service capabilities to all employees while managers can monitor and manage their team's learning end to end.

In alignment with the wider, digital transformation strategy of the Group, the following initiatives were materialized:

a) Mapping of employees' digital skills through the deployment of a survey (My digital skills). Eurobank is the first Greek bank to ever-conduct such type of survey for its employees.
b) Development of digital learning with authoring tools, which greatly reflects the need of digitizing learning content.
c) Creation of learning paths for key roles within the Group through LinkedIn Learning.
d) Virtual classroom courses on "Basic Principles of Digital Marketing for Enterprises" for approximately 500 Retail and Commercial Banking Relationship managers.

The Group's training key performance indicators for 2019 are:

a) Average training days per employee: 5
b) Percentage of employees who participated in training: 91,4%
c) E-learning training in Greece 39,6% and 31,7 % for the Group

Strengthening Group's continuous learning mindset, a talent development "Retail Leadership Experience" program was designed. In addition, a certification on NPL Management (STAMP) was successfully completed, while a number of initiatives have been implemented for the strengthening of self-directed learning "Choosing my Learning" programs.

The Group's Performance Management process in Greece and Cyprus is based on a tailor-made employee development system named "Axiopoio" ("Capitalize") whose two main pillars streamline employee's performance with the Group's strategy and its culture. Moreover, the Group's strategic priority is to offer

career development opportunities to its employees, thus the majority of the Group job vacancies are filled from within.

Eurobank implements a company-wide digital transformation – with a people-first approach. To accomplish this, the Bank turned to SAP Success Factorsto radically transform its work environment. SAP Success Factors allows for the adoption of a modern, transparent, agile and reliable HRMS (Human Resources Management System) model which radically upgrades the working environment, widens collaboration and communication capabilities as well as enhances information flow on learning content and participation in learning and career development activities and programs. The goals of the project were to deploy a technologically sound solution, in combination with the redesigning of internal processes, so-as to achieve agility and efficiency, the provision of targeted and fast HR services, the application of flexible, digital approval workflows as well as the further enhancement and development of digital skills and capabilities by the employees.

Employees are systematically kept informed on a series of issues of interest and/or corporate issues through a variety of means including print, interpersonal and online ways. In 2018, the Group in Greece launched its new Intranet Portal named "Connected" and social network Yammer, providing timely corporate and workrelated information to all employees. Within 2019, a number of corporate campaigns, articles and videos as well as Yammer posts have been uploaded. In addition, specialized content sections were designed, in order to host focused areas of interest and raise awareness on matters like Operational Risk and Customer Excellence. Furthermore, several town hall meetings with the participation of Senior Management members take place, strengthening the internal dialogue between senior management and the employees.

In the scope of Recognition and Reward, the Bank has established the institution of the "Sto Epikentro" awards, comprised of the "Customer Centricity", "Collaboration" and "Innovation" categories which are in alignment with the Bank's culture, corporate values and strategy. In 2019, more than 650 employees participated in the awards, which concluded during a corporate ceremony with the contribution of higher management. Within the same framework, the Bank recognizes long-term commitment and awards employees with 15 and 25 years of service within the Group. For the last 18 years, Eurobank has recognized and rewarded over 2,100 students of secondary and higher education through the scheme "Awarding Excellence". Through this scheme, the Bank invests in the young generation and recognizes excellence in achievement for the children of all employees that have outclassed in performance at upper school and university. The scheme also applies to all bank employees that have undergone and topped in postgraduate degrees during their tenure in the organization. The Bank traditionally designs and implements initiatives that support employees and their families. In 2019, among others, the following initiatives were implemented: summer camps, theatre and event tickets, gift vouchers and annual drawing contest for employees' children. In the context of giving back to society, Eurobank has established and supports the "Team Up" initiative. This is an employee volunteerism program that has been active in the organization since 2018. Up to 2019, 726 employees have joined the group while over the last 2 years the team accounts for 16 individual events and over 1,400 volunteer man-hours.

The Group respects employees' constitutional right to membership in Labour Unions. Six such Unions are currently active within the Bank, representing 89% of the staff. The most multitudinous of these Unions is recognized as the official representative Union in labour negotiations with the Bank's Management. The employees are covered by (industry-wide and enterprise-level) collective labour agreements, while for the Bank, labour relations are regulated by the current laws and the Bank's Statute of Internal Service.

Finally, the Bank takes particular care of health and safety measures, implementing preventive health programs, by maintaining a blood bank for employees' blood donations and by operating a psychological support line in cooperation with an Employee Assistant Program (EAP) specialist center. Last but not least, the Bank implements a certified Health & Safety Management System in order to promote a workplace of high safety and well-being standards.

Corporate Social Responsibility

Since its formation, the Group has embraced social responsibility activities, which address the concerns of society and local communities. The Bank actively contributes to economic growth and recognizes the importance of entrepreneurship as a major lever for the expansion of the Greek economy. The Bank focuses on supporting the extroversion of Greek businesses and encouraging new business initiatives. Within this framework, the Bank designs and implements actions contributing to the enhancement of extraversion

through trade missions (Trade Corridors). Ιn 2019, and continuing previous successful business missions (e.g. In Spain), the Bank organised a trade mission to Poland where 50 Greek and Polish companies in total, came into contact, completing professional partnerships. In addition, the Bank, in collaboration with the three leading export agents of Greece (PanHellenic Exporters Association, Greek International Business Association, Exporters' Association of Crete) and SEV-Hellenic Federation of Enterprises, created Exportgate, a pioneering international web trade portal offering to Greek and Cypriot companies connectivity opportunities in the global market and providing access to advanced tools for their international business operations. Exportgate, as a founding member has joined the Trade Club Alliance, the first global digital business interconnection network supported by international banks in more than 50 countries.

Since 2016, Eurobank, in partnership with Grant Thornton, established the Growth Awards to award business excellence as a growth leverage of the Greek economy. The awards aspire to become one of the leading ways of acknowledging business excellence and supporting the growth of robust enterprises in Greece. The Growth Awards award enterprises that manage to combine high financial performance with a successful corporate history, and have the potential to contribute to shaping the new corporate and work culture landscape. Up to now, the 3 Growth Awards ceremonies have awarded 20 of the most dynamic Greek enterprises. More than 2,000 guests attend the award ceremony every year, 3 internationally renowned speakers have been hosted, and around 80 enterprises apply every year. The Award Committee is consisted of 19 distinguished individuals from the Greek business and academic arena.

In the area of innovative youth entrepreneurship, the Bank, in collaboration with Corallia, an organization which offers management services to Greek innovation clusters, developed the "egg-enter•grow•go" programme, which provides to teams of young entrepreneurs an integrated framework for business incubation, acceleration and co-operation. In 2019, the 7th cycle of the program was launched, with the emphasis on the development of innovative companies, through the provision of financial tools, with the aim of enhancing their competitiveness. In its seven years of operation, the egg-enter•grow•go Program has become one of the most comprehensive business acceleration programs in Greece. Also, it has a strong image in Greece and abroad whilst being a model for all new initiatives of innovative start-ups in Greece. Egg has left its business and social footprint as follows (date as of August 2019):

a) 800 people have been hosted by egg
b) 204 business teams have been integrated in it
c) 121 teams have become businesses and 62 of these had a combined turnover of €3.5 million
d) 31 companies have applied for patents
e) 58 businesses have travelled to the largest technology ecosystems worldwide
f) €12m have been invested in egg by Eurobank
g) Over €10m in equity funding have been received by 26 businesses
h) €75k have been distributed by Eurobank as cash prizes to the egg companies
i) €70k have been donated to NGOs by the egg teams

The Bank has also undertaken a series of initiatives in order to support society in the critical field of Education. Since 2003, a program entitled, "The Great Moment for Education", has been running, in which the top high school graduates from all over the country are awarded every year. By 2019, the 17th year of its operation the Bank has awarded more than 18,586 top pupils throughout the country. The Bank supports a significant number of non-governmental organizations and institutions supporting mainly children and vulnerable population groups. Additionally, the Bank actively promotes cultural and athletic events throughout the country.

An integral part of Eurobank's approach to corporate responsibility is the fostering of strong relationships, cooperation and mutual benefit with all stakeholders affected directly or indirectly by its activities. In this context, Eurobank promotes two-way communication and develops an ongoing dialogue with stakeholders, so as to be able to offer tangible responses to the expectations, concerns and issues raised by all its stakeholders. More specifically, the Bank's Corporate Social Responsibility actions are described in the Annual Report 2019-Business and Sustainability edition, which is published on www.eurobank.gr.

The Annual Report 2019-Business and Sustainability edition prepare in line with the Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) international framework, while account has also been taken of the 10 Principles of the United Nations Global Compact, the 7 fundamental Corporate Responsibility Principles of ISO 26000:2010 International Standard, and the AccountAbility AA1000:2008 Principles .

Protection of environment

The sustainable business growth is an essential part of the corporate culture of the Group. As a financial group, it is aware of the direct and indirect environmental impacts of its operations and therefore the Group seeks and sets specific objectives and targets for the optimal use of natural resources, the minimization of waste production, the protection of the environment, the mitigation and adaptation to climate change and the protection of biodiversity and ecosystems. Moreover, the Group encourages its customers, suppliers, employees, shareholders, stakeholder groups and the society at large, towards the adoption of sustainability best practices in accordance with International Organizations' Guidelines and Initiatives.

The Group is committed to minimize its environmental footprint and to promote green economy. In this context, the Group implements a Sustainability Policy, an Environmental Policy and an Energy Management Policy, towards the protection of the environment in all aspects of its operations. Furthermore, the Group within the framework of the implementation of the Environmental Policy, has established a Green Procurement Policy, aiming to evaluate and select suppliers based on environmental criteria.

In the context of these policies, the Group implements certified management systems, in accordance with International Standards, such as a Quality Management System (ISO 9001), an Environmental Management System (ISO 14001, EMAS) and an Energy Management System (ISO 50001). The implementation of these management systems is supported by relevant e-learning training programs. Additionally, for the integration of the Environmental and Social (E&S) issues into its business model, the Group implements an Environmental and Social Management System (ESMS) in accordance, among others, with the requirements and expectations of Group's institutional investors, shareholders and other stakeholders. The responsibility of the sustainable development and environmental issues is assigned to the Group Environmental and Sustainability Committee, chaired by a Deputy Chief Executive Officer.

The Group is actively involved in a series of International and European Initiatives for environmental protection, sustainable development and responsible entrepreneurship such as the United Nations Environment Program Finance Initiative (UNEP FI), the EU Eco-Management and Audit Scheme (EMAS) and the Energy Efficiency Financial Institutions Group (EEFIG). Additionally, it participates at the Sustainable Development Committee of the Hellenic Bank Association, the Hellenic Network for Corporate Social Responsibility (CSR Hellas) and as an ambassador at the Sustainable Greece 2020 Initiative.

In September 2019, Eurobank as a Founding Signatory affirmed its commitment to play an active role in the implementation of the United Nations Global Sustainable Development Goals (SDGs) and the Paris Agreement on Climate Change, signing the Responsible Banking Principles, that were developed by the global community through United Nations Environment Program Finance Initiative - UNEP FI, and set the framework for the future development of a sustainable banking system with a strong positive mark on society and the environment.

Indicative of the Bank's philosophy and strategy regarding investing policy towards boosting "green" economy, Eurobank served as one of the lead underwriters in the issuance of the first certified "green" corporate bond in the Greek market. In 2018, the Bank, at the Bravo Sustainability Awards, was distinguished for the "Sustainable Development at Eurobank" initiative in the "Bravo Governance" pillar, which rewards the overall contribution for sustainable development, as well as the pillar "Bravo Environment" for the "Electrical and Electronic Equipment Management Program" initiative. Additionally, Eurobank remains a constituent of the Financial Times Stock Exchange 4Good (FTSE4GOOD) Emerging Index. The Group is also actively involved in the development of green products and services such as the WWF VISA, the "Green" Home Loan, and the Renewable Energy Investment Loan as well as in issuing e-Statements to reduce its environmental footprint. The environmental performance, with respect to the improvement of the operational environmental footprint, is monitored through specific environmental indicators in order to identify any deviations and corrective actions, and is included in the Annual Corporate Responsibility Report and in the Environmental Report (EMAS). It is noted that this Environmental Report (EMAS) is verified by a certification body.

In this context, in 2018 total energy consumption decreased by 7.85% relative to 2017, paper supply decreased by 37.45% respectively, while total greenhouse gas emissions in carbon equivalents (tCO2e) decreased by 50.92% in 2018, relative to 2017. Overall, during the period between 2014 (baseline) and 2018, the total greenhouse gas emissions in carbon dioxide equivalents (tCO2e) were decreased by 61.91%. It should be noted that the fact that the targets set by the Bank for 2020 regarding reducing both total energy

consumption and total greenhouse gas emissions, have already been achieved, is mainly due to the ISO 50001 certified Energy Management System implementation. For 2018, the Bank has also obtained "Guarantees of Origin" for the 95% of the electricity consumed, certifying the fact that it comes from Renewable Energy Sources (RES), while the same process will also be followed for 2019. Pertinent indicative environmental management targets was for 2019 a 2% reduction in electricity relative to 2018, and a 30% reduction of greenhouse gas emissions for 2020 relative to the base year (2014)

The Annual Corporate Responsibility Reports and in the Environmental Report (EMAS), are available at the website (www.eurobank.gr).

Actions against corruption and bribery incidents

The Group is committed to pursuing the fundamental values of integrity, transparency and accountability. It is also committed to safeguarding its reputation and client base.

The Group follows best business practices, having accepted and integrated in its culture the ten principles of the UN Global Compact. The 10th principle on Anti-Corruption states that "Businesses should work against corruption in all its forms, including extortion and bribery".

The Group has adopted a zero tolerance approach against all types of fraud, including bribery. In accordance with the relevant legislation, the Group prohibits bribery in any form either direct or indirect (through a third party). The principle of zero tolerance applies to all staff and prohibits all forms of bribery, whether active or passive, direct or indirect and is also reflected in contractual documents adopted when entering into relationships with third parties, either natural or legal.

In this context, the Group has adopted the following policies and procedures to govern the treatment of bribery and corruption cases encountered:

a) Code of Professional Conduct
b) Anti Bribery & Corruption Policy
c) Policy for Reporting Unethical Conduct
d) Client Entertainment and Gifts Policy
e) Management of Sponsorships and Donations

Recognizing that any involvement in cases of bribery not only constitutes a crime, but also reflects adversely on its reputation and client base, the Group takes the following measures aimed at limiting its exposure to bribery:

a) Setting out a clear approach to deal with the risk of bribery.
b) Establishing a robust system of internal controls that does not tolerate bribery and corruption.

Group Compliance is responsible for issuing policies and procedures to combat bribery and corruption cases. Each unit of the Bank is responsible for complying with the existing policies. The Market & Internal Conduct Division of Group Compliance carries out risk assessment exercises on anti-bribery and anti-corruption issues and performs specialized monitoring exercises for potential violations. The Forensic Audit Division of Internal Audit investigates all cases of suspected internal fraud / corruption.

Related party transactions

As at 31 December 2019, the Group's outstanding balances of the transactions and the relating net income / expense for 2019 with (a) the key management personnel (KMP) and the entities controlled or jointly controlled by KMP are: compensation €8.4m, receivables €6.2m, liabilities €20.4m, guarantees received €0.03m, guarantees issued €0.01m, net expense €7.6m (mainly related to the services agreement with Grivalia Management Company S.A.) and (b) the associates and joint ventures are: receivables €34.4m, liabilities €51.5m, guarantees issued €2.0m net expense €14.8m.

At the same date, the Bank's outstanding balances of the transactions and the relating net income / expense for 2019 with (a) the KMP and the entities controlled or jointly controlled by KMP are: compensation €7.9m, receivables €6.2m, liabilities €13.9m, guarantees received €0.03m, guarantees issued €0.01m, net expense €7.6m (mainly related to the services agreement with Grivalia Management Company S.A.), (b) the associates and joint ventures are: receivables €21.4m, liabilities €50.0m, guarantees issued €2.0m net expense €2.5m and (c) the subsidiaries are: receivables €2,219m, liabilities €4,024m, guarantees issued €1,271m, net income

€58.8m. The major balances⁷ of the Bank's transactions with (a) its subsidiaries and (b) its associates are presented in the below table:

€ million	Assets	Liabilities	Income	Expenses	Guarantees (Net)
A. SUBSIDIARIES
Eurobank Ergasias Leasing Single Member S.A.	734	47	16	(31)	1
Eurobank Equities Single Member S.A.	32	80	2	(1)	2
Eurobank Asset Management Mutual Fund Mngt Company
S.A.	1	9	4	(3)	-
Eurobank Factors Single Member S.A.	502	4	25	(1)	200
Eurobank FPS Loans and Credits Claim Management S.A.	7	8	10	(32)	-
Be Business Exchanges S.A. of Business Exchanges
Networks and Accounting and Tax Services	0	3	0	(6)	-
Eurobank Bulgaria A.D.	5	775	3	(20)	-
Eurobank Fund Management Company (Luxembourg) S.A.	1	0	8	(0)	-
ERB New Europe Holding B.V.	-	63	100	(0)	-
Eurobank Cyprus Ltd	77	2,319	5	(23)	41
Eurobank Private Bank Luxembourg S.A.	689	524	30	(26)	894
Hellenic Post Credit S.A.	128	33	1	(0)	-
B. ASSOCIATES
Eurolife ERB Insurance Group Holdings S.A.	10	25	31	(33)	-

Following the completion of the merger of Eurobank with Grivalia Properties REIC, Fairfax group has increased its percentage holding in the Bank's share capital, which as at 31 December 2019 stands at 31.27%. As at 31 December 2019, the Group's outstanding balances of the transactions with Fairfax group mainly refer to loans granted of €3.3m, deposits received of €3.7m and guarantees issued of €0.4m. At the same date, the Bank's outstanding balances of the transactions with Fairfax group mainly refer to loans granted of €0.02m, deposits received of €3.7m and guarantees issued of €0.4m.

All transactions with related parties are entered into the normal course of business and are conducted on an arm's length basis. Further information is provided in the note 46 to the consolidated financial statements and note 44 to the financial statements of the Bank.

Corporate Governance Statement

Eurobank's Corporate Governance Code and Practices are on the website (www.eurobank.gr). The Corporate Governance Statement attached herewith, is an integral part of the Directors' Report.

Georgios Zanias Fokion Karavias

Chairman Chief Executive Officer

12 March 2020

⁷ Exceeding an amount of €100m in assets/liabilities or €1m in income/expenses for the Bank's transactions with its subsidiaries and associates.

APPENDIX

Definition of Alternative Performance Measures (APMs) in accordance with European Securities and Markets Authority (ESMA) guidelines, which are included in the Report of Directors for 2019:

a) Loans to Deposits ratio: Loans and advances to customers at amortised cost divided by due to customers at the end of the reported period,
b) Pre-Provision Income (PPI): Profit from operations before impairments, provisions and restructuring costs as disclosed in the financial statements for the reported period,
c) Core Pre-provision Income (Core PPI): The total of net interest income, net banking fee and commission income and income from non banking services minus the operating expenses of the reported period,
d) Net Interest Margin (NIM): The net interest income of the reported period, annualised and divided by the average balance of continued operations' total assets (the arithmetic average of total assets, excluding discontinued operations', at the end of the reported period, at the end of interim quarters (for 2019) and at the end of the previous period),
e) Fees and commissions: The total of net banking fee and commission income and income from non banking services of the reported period,
f) Income from trading and other activities: The total of net trading income, gains less losses from investment securities and other income/ (expenses) of the reported period,
g) Cost to Income ratio: Total operating expenses divided by total operating income,
h) Adjusted net profit⁸ : Net profit from continuing operations after deducting restructuring costs, Goodwill impairment and gains/losses related to the transformation plan, net of tax,
i) Non-performing exposures (NPEs): Non Performing Exposures (in compliance with EBA Guidelines) are the Group's material exposures which are more than 90 days past-due or for which the debtor is assessed as unlikely to pay its credit obligations in full without realization of collateral, regardless of the existence of any past due amount or the number of days past due. The NPEs, as reported herein, refer to the gross loans at amortised cost except for those that have been classified as held for sale,
j) NPEs ratio: Non Performing Exposures (NPEs) divided by gross loans and advances to customers at amortised cost at the end of the reported period,
k) NPEs formation: Net increase/decrease of NPEs in the reported period excluding the impact of write offs, sales and other movements,
l) NPEs Coverage ratio: Impairment allowance for loans and advances to customers, including impairment allowance for credit related commitments (off balance sheet items), divided by NPEs at the end of the reported period,
m) Provisions (charge) to average Net Loans ratio (Cost of Risk): Impairment losses relating to loans and advances charged in the reported period, annualised and divided by the average balance of loans and advances to customers at amortised cost (the arithmetic average of loans and advances to customers at amortised cost, including those that have been classified as held for sale, at the end of the reported period, at the end of interim quarters (for 2019) and at the end of the previous period),
n) Return on tangible book value (RoTBV): Adjusted net profit divided by tangible book value. Tangible book value is the total equity excluding preference shares, preferred securities and non controlling interests minus intangible assets.

Definition of capital ratios in accordance with the regulatory framework, which are included in the Report of Directors for 2019:

a) Total Capital Adequacy ratio: Total regulatory capital as defined by Regulations (EU) No 575/2013 and No 2395/2017 based on the transitional rules for the reported period, divided by total Risk Weighted Assets (RWA). The RWA are the Group's assets and off-balance-sheet exposures, weighted according to risk factors based on Regulation (EU) No 575/2013, taking into account credit, market and operational risk,
b) Common Equity Tier 1 (CET1): Common Equity Tier I regulatory capital as defined by Regulations (EU) No 575/2013 and No 2395/2017 based on the transitional rules for the reported period, divided by total Risk Weighted Assets (RWA),
c) Fully loaded Common Equity Tier I (CET1): Common Equity Tier I regulatory capital as defined by Regulations No 575/2013 and No 2395/2017 without the application of the relevant transitional rules, divided by total RWA.

⁸ The APM "Adjusted net profit", which provides information on the Group's business performance, has updated the previously reported APM "Net profit from continuing operations, before restructuring costs" to accommodate additional items arising mainly from the transformation plan.

In the following table are set out the components of the calculation of the above APMs, which are derived from the consolidated financial statements for the years ended 31 December 2019 and 31 December 2018:

Components of Alternative Performance Measures
	FY19	FY18	FY18 (Restated)
Net Interest Income (1)	1,377	1,416
Total Operating income (2)	1,844	1,845	1,832
Total Operating expenses (3)	(901)	(879)	(874)
Total Operating expenses Like for Like (4)	(881)
Core Pre-provision income (Core PPI)	830	848	853
Restructuring costs after tax	(66)	(44)
Goodwill impairment loss	(62)	-
Non performing exposures (NPEs) Impairment losses relating to loans and advances	12,950 (624)	16,653 (680)
Due to customers	44,841	39,083
Gross loans and advances to customers	44,464	45,032
Gross Loans and advances to customers at amorized cost Cumulative impairment allowance for loans and advances to	44,406	44,973
customers	(7,099)	(8,800)
Due to customers (Greek operations)	32,444	28,785
Gross loans and advances to customers (Greek operations) Gross Loans and advances to customers at amorized cost (Greek	36,900	38,649
operations) Cumulative impairment allowance for loans and advances to	36,857	38,602
customers (Greek operations)	(6,840)	(8,505)
Cumulative impairment allowance for credit related commitments	(64)	(58)
Average balance of continued operations' total assets	61,603	57,372	57,378
Average balance of net loans and advances to customers at amortised cost (5)	36,464	36,094

(1) 4Q2019 NIM: Net interest income of the fourth quarter 2019 (€346m), annualised, divided by the average balance of continued operations' total assets (€64,394m).

(2) International Operations: Operating income: €515m (2018 restated: €427m). Greek operations: Operating income: €1,329m (2018 restated: €1,405m).

(3) International Operations: Operating expenses: €217m, (2018 restated: €185m). Greek operations: Operating expenses: €684m, (2018 restated: €689m).

(4) For comparability purposes, the 2019 figure has been adjusted to exclude €7m and €14m expenses of Grivalia and PBB for Greece and Group respectively.

(5) The average balance of loans and advances to customers measured at amortized cost, including those that have been classified as held for sale for the period ended 31 December 2019, is calculated as the arithmetic average of their balances at the end of the reporting period (31 December 2019) €37,307m, at the end of interim quarters (30 September 2019: €36,915m, 30 June 2019: €35,772m, 31 March 2019: €36,154m) and at the end of the previous period (31 December 2018) €36,172m (1 January 2018: €36,015m adjusted by the application of IFRS 9).

As a result of the implementation of IFRS 16 on 1 January 2019, there have been no material changes to the aforementioned Group's APMs (note 41 consolidated financial statements).

Source of financial Information

The Directors' Report includes financial data and measures as derived from the Bank's consolidated financial statements for the year ended 31 December 2019 and the consolidated financial statements for the year ended 31 December 2018, which have been prepared in accordance with International Financial Reporting Standards (IFRS). In addition, it includes information as derived from internal information systems, consistent with the Group's accounting policies, such as the selected financial information for the Group's two main reportable segments a) Greek Operations, which incorporate the business activities originated from the Bank and the Greek subsidiaries and b) International Operations, which incorporate the business activities originated from the banks and the local subsidiaries operating in Bulgaria, Serbia, Cyprus and Luxembourg (as described at the relevant section on page 6).

CORPORATE GOVERNANCE STATEMENT 2019

1. Corporate Governance Code and Practices

In compliance with the Greek legislation as well as with the Bank's contractual obligations to the Hellenic Financial Stability Fund (HFSF) and based on the international best practices on corporate governance, Eurobank Ergasias S.A. (Bank or Eurobank), has adopted and implements a Corporate Governance Code (Code), which describes its basic corporate governance principles. The Code and relevant corporate governance practices are available on the Bank's website (www.eurobank.gr).

2. Board of Directors¹

2.1 General

The Bank is headed by a Board of Directors (Board or BoD) which is collectively responsible for the long-term success of the Bank. The Board exercises its responsibilities effectively and in accordance with the Greek legislation, international best practices and the Bank's contractual obligations to the HFSF under the Relationship Framework Agreement (RFA) signed between the Bank and the HFSF.

The Board's role is to provide entrepreneurial leadership to the Bank and its subsidiaries (collectively the "Group") within a framework of prudent and effective controls which enables risk to be assessed and managed. The Board sets the Group's strategic goals, ensures that the necessary financial and human resources are in place for the Group to meet its objectives and reviews management performance. The Board sets the Group's values and standards and ensures that its obligations to its shareholders and others are understood and met. All Directors must act in what they consider to be the best interests of the Group, consistent with their statutory duties.

2.2 Composition of the Board

The members of the Board are elected by the Bank's General Meeting which also determines the exact number of the directors, within the limits of the Law and of the Bank's Articles of Association, their term of office and designates the independent non-executive directors. The current Board, as of the date of approval of the here-in Statement, consists of thirteen (13) Directors of whom, four (4) executives, three (3) non-executives, five (5) independent non-executives and one (1) representative of the HFSF, who has been appointed (as non-executive Director) in accordance with relevant legal requirements.

Following the decision of the Chairman of Eurobank's BoD Mr. Nikolaos Karamouzis to step down from the position of the Chairman and member of Eurobank's BoD at the end of March 2019, the BoD at its meetings held in March 29th and April 1 st, 2019, appointed Mr. Georgios Zanias as the new Chairman of the Bank's BoD, non-executive member, in replacement and for an equal term to the remaining term of the stepping down member.

In addition, following the resignation of Ms. Lucrezia Reichlin, effective as of April 1st, 2019, the BoD of the Bank decided, on the same day, the non-replacement of the resigned BoD member and the continuation of the management and representation of the Bank by the BoD without her replacement.

The Extraordinary General Meeting of the Shareholders of the Bank (EGM) held on 5 April 2019 was informed of the appointment by the BoD of Mr. Georgios Zanias in replacement of Mr. Nikolaos Karamouzis and also elected Mr. Nikolaos Bertsos as new independent non-executive member of the Bank's BoD, whose term of office will expire concurrently with the term of office of the other members of the BoD. Furthermore, in the context of the merger between Eurobank and Grivalia Properties REIC (Grivalia) the EGM was also informed that following the assessment by the Bank's Nomination Committee, the BoD ascertained that Mr. Bradley Paul L. Martin, a non-executive Independent Director of Eurobank's BoD, post-merger does not fulfil the relevant independence criteria under the applicable national and European legal and regulatory framework and therefore was informed of the change of his status (from non-executive Independent member to non-executive member of the Bank's BoD). Same day (5 April 2019), the BoD decided on its constitution, on the appointment of the Chief Executive Officer and the Deputy Chief Executive Officers and on the determination of its executive and non-executive Directors, where Mr. Georgios Chryssikos previously non-executive director of Eurobank was appointed as Vice Chairman of the Bank's BoD, non-executive member.

Finally the BoD a) by its decision dated 31 July 2019, appointed Mr. Konstantinos Angelopoulos as the new representative of the HFSF to Eurobank's BoD in replacement of the resigned Ms. Aikaterini Beritsi and b) by its decision dated 16 December 2019, appointed Mr. Dimitrios Miskou as the new representative of the HFSF to Eurobank's BoD in replacement of Mr. Konstantinos Angelopoulos. Both appointments were effected according to the provisions of Law 3864/2010 and the Relationship Framework Agreement signed between Eurobank and HFSF. The appointment of both BoD members was announced at the Extraordinary General Meeting of the Shareholders of the Bank, held on 31 January 2020.

The Board as of the date of the approval of the Report of the Directors consists of the following members:

¹ Information regarding the Board's composition is included in note 48 of the consolidated accounts and short biographical details of its members may be found at the bank's website (www.eurobank.gr).

		First appointment	End of Term
Georgios P. Zanias	Chairperson, Non-Executive Director	March 2019	2021
Georgios K. Chryssikos	Vice-Chairperson, Non-Executive Director	Jun. 2014	2021
Fokion C. Karavias	Chief Executive Officer	Jun. 2014	2021
Stavros E. Ioannou	Deputy Chief Executive Officer	Apr. 2015	2021
Theodoros A. Kalantonis	Deputy Chief Executive Officer	Apr. 2015	2021
Konstantinos V. Vassiliou	Deputy Chief Executive Officer	July 2018	2021
Bradley Paul L. Martin	Non-Executive Director	Jun. 2014	2021
Nikolaos A. Bertsos	Non-Executive Independent Director	April 2019	2021
Richard P. Boucher	Non-Executive Independent Director	Jan. 2017	2021
Rajeev K. L. Kakar	Non-Executive Independent Director	July 2018	2021
Jawaid A. Mirza	Non-Executive Independent Director	Jun. 2016	2021
George E. Myhal	Non-Executive Independent Director	Oct. 2016	2021
Dimitrios C. Miskou	Non-Executive Director, HFSF Representative	Dec. 2019	2021

There are no restrictions in the re-election and cessation of Directors in the Bank's Articles of Association. In any case of members whose membership has lapsed, the Board is entitled to continue the management and representation of the Bank, without being obliged to replace the lapsed members, provided that the number of the remaining members exceeds half of the number of the members prior to the event that led to the lapse of their membership and, in any case, is not less than three (3).

According to the Bank's Articles of Association, the Board may consist of three (3) to twenty (20) members² , while, under the RFA, this range has been specifically set to be between seven (7) and fifteen (15) members (including the representative of the HFSF). In addition, according to the RFA, (a) the number of the Board's members must always be odd, (b) the majority of the directors must be non-executive members with at least half of the non-executive members (rounded to the nearest integer) and in any case not less than three (3) (excluding the representative of the HFSF), being independent non-executive members in accordance with the provisions of Law 3016/2002 on corporate governance and the European Commission Recommendation 2005/162/EC and (c) the Board should include at least two (2) executive members. For any differentiations from RFA's provisions the HFSF's prior consent should be received. Furthermore, according to the HFSF corporate governance review criteria developed as per the relevant provisions of Law 3864/2010, the target size of the Board should be up to thirteen (13) members.

2.3 Provisions of Law 3864/2010, as in force, regarding the composition of the Board

Law 3864/2010, as in force, has introduced certain minimum requirements with respect to the size, the structure and the members of the Board and the Board Committees of the credit institutions whose corporate governance framework may be assessed by the HFSF according to the relevant provisions of Law 3864/2010. In particular, Board members must (i) have a minimum of ten years of experience as senior executives in banking, auditing, risk management or management of riskbearing assets, with three years of experience, with respect to the non-executive members, as board members of a credit institution, a financial sector enterprise or an international financial institution, (ii) not serve or have been entrusted during the last four years with prominent public functions, such as heads of state or of government, senior politicians, senior government, judicial or military officials or prominent positions as senior executives of state owned corporations or political party officials, and (iii) have declared any economic connections with the credit institution prior to their appointment. In addition, the Board must comprise at least: (i) three experts as independent non-executive directors, with sufficient knowledge and international experience of at least 15 years with financial institutions of which at least three years as members of an international banking group which is not active in the Greek market unrelated to any Greek credit institution during the past decade, which shall chair all board committees, and (ii) one member with at least five years of international

² The Extraordinary General Meeting of Eurobank's Shareholders held on 31.01.2020, resolved among others, on the approval of the amendment of the Articles of Association of Eurobank, with amendment, addition and renumbering of its articles, aiming inter alia to its harmonization with Law 4548/2018. In this framework, the new Articles of Association provide that "The Company is governed by a Board of Directors consisting of a minimum of three (3) and a maximum of fifteen (15) members, elected by the General Meeting, also determining their term of office, which must not exceed the maximum term of office provided by law." It is noted that the new Articles of Association will become effective after the completion of the demerger of Eurobank through its banking sector's hive down, as this was approved by the aforementioned Extraordinary General Meeting.

experience and specialisation in risk or NPL management, who shall be responsible for NPL management at board level and shall chair any special board committee for NPL management, which regarding the Bank, HFSF, after consultation with European Central Bank (ECB) and Single Supervisory Mechanism (SSM), acknowledged that such committee is the Board Risk Committee. Furthermore, and based on the provisions of article 10, par. 6 of Law 3864/2010, the HFSF with the assistance of an independent consultant has developed additional criteria as to the eligibility of individual Board members.

2.4 HFSF's rights according to Law 3864/2010 and the RFA

According to the Law 3864/2010 the HFSF for the realization of its objectives and the exercise of its rights a) determines the framework of the RFA or of the amended RFA, as the case may be, with all credit institutions that are or have been beneficiaries of financial assistance provided by the European Financial Stability Fund (EFSF) or the European Stability Mechanism (ESM) and b) the credit institutions should sign the mentioned RFA. In this context, a new RFA was signed between the Bank and the HFSF on 4.12.2015 with immediate effect, replacing the previous one dated 26.8.2014.

The RFA, signed between the Bank and the HFSF on 4.12.2015, regulates, among others, (a) the corporate governance of the Bank, (b) the Restructuring Plan³ and its monitoring, (c) the monitoring of the implementation of the Bank's Non-Performing Loans (NPL) management framework and of the Bank's performance on NPL resolution. Furthermore it deals with (d) the Material Obligations and the switch to full voting rights, (e) the monitoring of Bank's actual risk profile against the approved Risk and Capital Strategy, (f) the HFSF's prior written consent for the Bank's Group Risk and Capital Strategy and for the Bank's Group Strategy, Policy and Governance regarding the management of its arrears and non-performing loans and any amendment, extension, revision or deviation thereof, and (g) the duties, rights and obligations of HFSF's Representative in the Board.

According to the RFA provisions, HFSF appoints its Representative by a simple written notice addressed to the Chairperson of the Board. The Board shall immediately approve his/her appointment and take all necessary actions according the Bank's Articles of Association and Company Law 4548/2018 for the completion of this appointment, including the required notification to the General Meeting. In case such appointment exceeds the number of the elected Board members by the General Meeting or goes beyond the maximum number of members of which, according to the Bank's Articles of Association, may be elected in its Board, the Bank should immediately convene an Extraordinary General Meeting for the election of the new member in the Board and proceed if necessary, with a relevant amendment to its Articles of Association for the increase of the number of the Board's members in the Board.

Furthermore, according to the RFA provisions, HFSF is entitled to appoint one Observer in the Bank's Board, who has no voting rights in the Board. HFSF appoints its Observer or his/her replacement by a simple written request addressed to the Chairperson of the Board. His/her appointment is completed immediately from the receipt by the Bank of the said written request with no further procedures to be required. The Observer is HFSF's portfolio manager acting as the contact person with the Bank and explicitly charged with the monitoring of the Bank.

Regarding the Board operations, the HFSF's Representative has the right to: a) request the convocation of the Board, b) add items on its agenda, c) request the postponement of a Board meeting for three (3) business days so as to receive directions from the HFSF's Executive Board, d) veto any resolution of the Board (i) related to dividend distributions and the remuneration policy and the additional compensation (bonus) of Board members, of General Managers or of those to whom the duties of a General Manager have been assigned as well as of their deputies, (ii) that may jeopardise depositors' interests or seriously impact the liquidity or the solvability or in general the prudent and concise operation of the Bank (such as business strategy, asset/liability management etc), (iii) concerning corporate actions resulting in the amendment of the Bank's Articles of Association, including the increase or reduction of the capital or the corresponding authorization to the Board, the mergers, divisions, conversions, revivals, extension of term or dissolution of the Bank, the transfer of assets, including the sale of subsidiaries, or for any other issue requiring increased majority as provided for in Company Law 4548/2018 which may materially impact HFSF's participation in the Bank's share capital, e) approve the Bank's Chief Financial Officer.

HFSF is entitled to review the Bank's annual Board and the Board Committees' self-assessment for the purpose of identifying weaknesses and improving working methods and effectiveness as well to perform its own evaluation of the corporate governance arrangements of the Board and its Committees, with the assistance of independent consultants of international reputation and established experience and expertise, in accordance with the article 10 of Law 3864/2010. This review will be in line with prudent international practices by applying criteria that go beyond supervisory fit and proper requirements.

2.5 Division of responsibilities

There is a clear division of responsibilities at the head of the Bank between the proper operation of the Board and the dayto-day management and control of the Bank's business. The roles of Chairperson and CEO are not exercised by the same person.

The Executive Directors have responsibility for the day-to-day management and control of the Group and the implementation of its strategy. The non-Executive Directors are responsible for the overall promotion and safeguarding of the Bank's

³ As per Eurobank's Restructuring Plan approved by the European Commission on 26 November 2015, the end of the restructuring period was the 31st December 2018.

interests, constructively challenge and help develop proposals on strategy and approve, revise and oversee the implementation of the remuneration policy both at Bank and Group level. The Independent non-Executive Directors have the duty, if they consider it necessary; to submit each one of them or jointly to the General Meeting their own reports other than those of the Board on a specific subject.

2.6 Operation of the Board

The Chairperson of the Board chairs the Board and ensures its effectiveness on all aspects of its role. He is non-executive and does not serve as Chairperson of either the Board Risk or the Audit Committees. The CΕΟ is accountable for and manages strategy development and implementation in line with the vision of the Bank. He is responsible for leading the organisation to the achievement of its objectives.

The Board meets regularly every quarter and on an ad hoc basis, whenever the law or the Bank's needs necessitate it, given at least two (2) business days' notice or at least five (5) business days' notice, if the meeting is held outside the Bank's registered office, as per Company Law 4548/2018 provisions. The invitation must also mention with clarity the agenda subjects, otherwise a decision is taken only when all members of the Board are present or represented and nobody objects to the convocation of the meeting and to the taking of decisions. In addition, according to the RFA provisions the Board informs the HFSF's Representative and the Observer on the activities and the decisions of the Board and to that end it shall notify to them the agenda together with the relevant supporting material at least three (3) business days prior to the Board meeting, otherwise, unless an emergency case unforeseeable by the Bank exists, the HFSF Representative is entitled to request a postponement of the Board meeting which shall be resumed the earliest after three (3) business days, provided that the aforementioned documents are provided to him/her on time. In case where an item on the agenda requires, as per RFA provisions, the prior HFSF consent, the Bank should not submit it for approval to the Board before HFSF consent is granted, unless otherwise agreed between the Bank and HFSF. For urgent matters, the Board may approve matters subject to subsequent HFSF consent.

The Board is considered to be in quorum and meets validly when at least half plus one of its members are present or represented. The number of the present or represented members is not allowed to be less than three (3). For defining the quorum any resulting fraction is omitted. Decisions of the Board are taken by absolute majority of the Directors that are present or represented. In case of parity of votes, the vote of the Chairperson of the Board does not prevail. During 2019 the Board held twenty-seven (27) meetings (2018: 21) and the average ratio of the Directors attendance was 97% (2018: 97%). Submissions to the Board are normally circulated together with the agenda. Decisions are taken following discussions which exhaust the agenda items to the satisfaction of all Directors present. Board meetings minutes are kept by the Secretary of the Board, are approved at subsequent Board meetings and signed by all Directors present. The RFA provides for, on an individual basis, compulsory attendance of Board members of at least 85%. Each member may miss up to 15% of individual meetings if a valid excuse is provided. Finally, the drawing up and signing of minutes by all the members of the Board of Directors or their representatives is equal to a decision of the Board of Directors, even if no meeting has preceded.

2.7 Directorships of Board members

The number of directorships which may be held by the Board members at the same time comply with the provisions of Law 4261/2014 (art. 83), according to which the Directors shall not hold more than one (1) of the following combinations of directorships at the same time: a) one (1) executive directorship with two (2) non-executive directorships; and b) four (4) non-executive directorships. This restriction is not applied to directorships within the Group. Bank of Greece (BoG) as the competent authority may authorize Board members to hold one (1) additional non-executive directorship. Based on their declared information, all members are compliant with the provisions of Law 4261/2014.

2.8 Conflict of interest

The Group, based on the "Conflict of Interest Policy and Rules for Personal Transactions" has adopted a series of Policies, measures and procedures that must be followed in order to prevent and manage conflict of interest situations, as encountered in the provision of investment or ancillary services to its clients and in the general business activities of the Group.

To avoid situations of conflicting duties, each company within the Group, segregates the executive and supervisory responsibilities of the members of the Board of Directors, including the division of the responsibilities of the Chairperson of the Board of Directors with the executive responsibilities of the Managing Director. More specifically, by adopting appropriate procedures, effective segregation of duties is ensured, so as to avoid cases of incompatible roles, conflict of interests between the members of the Board of Directors, Management and Executives, but also between the aforementioned and those of the Bank and its transacting parties, as well as the unlawful use of inside information or assets.

The Board members:

must comply with the high standards and principles of professional ethics in the performance of their duties, apply the principles of the "Conflict of Interest Policy and Rules for Personal Transactions" and refrain from any activity or conduct that is inconsistent with it.
according to article 97 par. 1 of Company Law 4548/2018, are prohibited from pursuing personal interests that run counter to the interests of the Bank (or the Group) and must timely and adequately disclose to the other members of the Board of Directors of any personal/own interests that may arise from the Bank's transactions which fall within their line

of responsibility, as well as any other potential, perceived or actual conflict of interests that may exist between Eurobank or its affiliated undertakings (under article 32 of Greek Law 4308/2014) and themselves. Furthermore they have to disclose to the other members of the Board any conflict of interests between Eurobank and their associated parties under article 99 par. 2 of the Company Law 4548/2018. Adequate disclosure on behalf of the Board members, as per the above, is considered the one that includes a description of both the transaction and the own interests.

must ensure the privacy and the confidentiality of non-publicly available information and refrain from behaviors that would constitute market abuse and conflict of interest.

2.9 Remuneration

The remuneration governance of the Bank is consisted by the Remuneration Policy and the Eurobank Directors' & General Managers' Remuneration Policy.The Bank's Remuneration Policy promotes sound and effective risk management and is consistent with the objectives of the Bank's business and risk strategy, corporate culture and values, long term interests of the Bank and the measures used to avoid conflicts of interest and should not encourage excessive risk-taking on behalf of the Bank. The Eurobank Directors' & General Managers' Remuneration Policy describes the key components and considerations of the remuneration framework for the Bank's BoD and the General Managers of the Bank as per the requirements of Company Law 4548/2018. The 2019 Board and key management remuneration disclosure is included in note 46 of the consolidated accounts. In addition, in compliance with the provisions of the Company Law 4548/2018 and in order to ensure adequate transparency to the market of the remuneration structures and the associated risks, the Bank discloses in its website www.eurobank.gr, the Eurobank Directors' & General Managers' Remuneration Policy as well as detailed information on the remuneration policies, practices and, for confidentiality reasons, aggregated amounts for those members of staff whose professional activities have a material impact on the risk profile of the Bank, and publishes accordingly all information as per current legislation.

2.10 Main issues the Board dealt with during 2019

In discharging its responsibilities for 2019 the main issues the Board dealt with related to:

a) Governance:

election of new Board members and approval of Board Committees' composition,
preparation and convocation of the Bank's Shareholders General Meetings,
annual evaluation of the Board and the Board Committees,
CEO's performance evaluation
approval of the revised External Engagements Policy and the revised Separation Policy, the revised AML/CFT and Sanctions Policy as well as of the Related Party Transactions Policy,
approval of the Remuneration Policy for Eurobank's Directors and General Managers (L. 4548/2018) and further submission for approval by the Bank's Annual General Meeting,
approval of the updated Internal Governance Control Manual,
review Senior Executives succession plan,
approval of the revised Terms of Reference of the Nomination Committee and of the Remuneration Committee,
approval of the bank's Corporate Governance Code and Practices,
regular update on Board Committees' matters,
various remuneration issues.

b) Corporate and other actions:

approved the following:

an agreement with the HFSF in view of the completion of the Bank's transformation plan consisting of the merger with Grivalia and the Non Performing Exposure (NPE) reduction Acceleration Plan,
the necessary actions for the conclusion of the merger by absorption of Grivalia,
the Service Level Agreement with the Grivalia Management Company,
the hive down of the banking sector of the Bank with the establishment of a new company pursuant to the relevant legal provisions,
the signing of binding agreements for the sale of 80% of its subsidiary Eurobank Financial Planning Services (FPS) and the sale of a portion of the Mezzanine and Junior Securitization Notes of the €7.5 billion multi-asset Non-Performing Exposures (NPE) Securitization,
the provision of guarantees by the Hellenic Republic addressed to the European Investment Bank ("EIB") in favour of the Bank, related to the granting of loans from EIB to the Bank,
the acquisition and sale of real estate assets.
c) Capital adequacy:
- approval of the 2019 Internal Capital & Liquidity Adequacy Assessment Process (ICAAP & ILAAP 2019),
- approval of the securitization of the Bank's receivables from portfolios of business and other loans.

d) Business monitoring:

approval of the 2018 annual financial statements and the 2019 interim financial statements,
approval of the annual budget 2019 and the 3-Years Business Plan for the period 2019-2021,
review and discussion of the Annual Budget 2020 and the 3-Years Business Plan for the period 2020-2022,
approval of the Group's NPE Targets for the period 2019-2021 and the NPE management Strategy (SSM targets),
update on significant subsidiaries activities and strategic priorities,
review of business developments and liquidity.

e) Risk Management and Internal Control:

briefing on the assessment on Internal Audit Group and Group Compliance annual regulatory reports,
update on significant audit issues
approval of Group Risk and Capital Strategy and Risk Appetite Statements,
update on the Group Chief Risk Officer's Annual Report for the year 2018,
update on TAG report and Group Chief Risk Officer's opinion thereof,
update on credit related issues through various reports
approval of the 2018 consolidated Pillar 3 Report (capital and risk management disclosures),
regular briefing on Risk and Audit Committees matters,
update on the 2018 Annual Activity Report of the Audit Committee,
approval of new or revised policies as per the legal or regulatory framework and internal processes,
approval of the Group Recovery Plan.

2.11 Evaluation of the Board's structure, size, composition and performance

The Nomination Committee in discharging its responsibility for the annual assessment of the structure, size, composition and performance of the Board, assisted by an independent external expert on corporate governance, proceeded with the Board's evaluation for 2019.

In accordance with the Bank's Board and Board Committees Evaluation Policy, 2019 Board evaluation covered the following areas:

Board's performance in setting and monitoring strategy (including the business plan),
Board's performance in overseeing, engaging with, evaluating, incentivizing and retaining key management personnel,
Board's performance in overseeing risk management and internal control,
adequacy of the Board's profile and composition,
adequacy of Board dynamics and functioning,
role and performance of the Board Chairperson,
adequacy of Board secretarial support,
effectiveness of Board Committees.

Overall the evaluation concluded that the Board continued to function effectively in 2019 as in 2018, Improvement was noted in the areas of "Role of the Chairman", Relationship with Management", "Board Functioning and Dynamics" and "Strategy", while " Human Resources and Remuneration" although showed an improvement still remains the lowest ranked area. In the context of the Board's evaluation, the Board is also called to approve an action plan as proposed by the Nomination Committee, to further strengthen the assessed areas.

2.12 Directors' Induction and Continuous Professional Development Process

The new Board members appointed during 2019 have received a full and formal Induction Program whose main objectives were to (a) communicate the Bank's vision and culture, (b) communicate practical procedural duties, (c) reduce the time taken for them to become productive in their duties, d) assimilate them as welcomed members of the Board, e) become familiar with the Bank's organizational structure and f) give them an understanding of Bank's business and strategy and the markets in which it operates, a link with the Bank's people and an understanding of its main relationships. Also, the new Board members, upon their appointment received a Manual of Obligations towards Supervisory Authorities and the Bank, aiming to inform them on their main obligations under the local regulations and the Board's procedures, while meetings and presentations were arranged with the Bank's Key Executives, in order for the new Directors to acquire a real overview of the Bank.

Furthermore, given that the Bank acknowledges the need to provide resources for developing and refreshing the knowledge and skills of the Directors, during 2019 and in the framework of its Continuous Professional Development program, all the Board members a) participated in training sessions which covered various areas such as the supervisory priorities of the ECB in 2019, the credit underwriting criteria and exposure quality, the future of risk management and matters regarding Anti-Money Laundering (AML), Counter-Terrorism Financing (CFT) and sanctions, b) received regular updates, including reports and presentations, from senior management regarding the operations and strategic targets of business units, c) were updated on a regular basis on risk, audit, compliance, financial, human resources, legal and regulatory issues, and d) received regular and ad-hoc research and economic bulletins prepared by Eurobank's Economic Analysis and Financial Markets Research Division.

3. Board Committees

The Board is assisted in carrying out its duties by Board Committees. The Board delegates some of its responsibilities to such Board Committees and approves their mandate and composition, save for the composition of the Audit Committee whose members are appointed by the General Meeting. The Board receives regular and ad hoc reports from the Audit Committee, Board Risk Committee, Nomination Committee, Remuneration Committee and Strategic Planning Committee, and assesses their performance as per the provisions of the Bank's Board and Board Committees Evaluation Policy. According to the RFA, the HFSF appoints its Representative as well as its Observer (who has no voting rights in the Board's Committees) or replaces them with a written request addressed to the Chairperson of the Board and their appointment is completed immediately from the receipt by the Bank of the HSFS's written request and no further procedures are required. HFSF provided its consent to the Bank's request to exclude the Strategic Planning Committee from the RFA provisions regarding the appointment of its representative and observer to all Board Committees. Pursuant to the RFA, the HFSF Representative has the right to participate in, request the convocation of, and include items on the agendas of, the Audit Committee, Board Risk Committee, Remuneration Committee and Nomination Committee. In addition, HFSF is entitled to the assistance by an independent consultant of international reputation and established experience and expertise, to perform its own evaluation of the Board Committees, in accordance with the article 10 of L. 3864/2010 as in force.

According to the RFA provisions, the members of the Audit, Board Risk, Remuneration and Nomination Committees should be at least three (3) and should not exceed 40% (rounded to the nearest integer) of the total number of Board members, excluding the representative of the HFSF. The Committees' Chairpersons should be independent non-executive members and shall meet the requirements provided for in Law 3864/2010. The Committees' members should be non-executives with the majority of them, excluding the representative of the HFSF, independent non-executives, except for the Audit and Board Risk Committees where 75% and 1/3, respectively, of their members (excluding the representative of the HFSF and rounded to the nearest integer) should be independent non-executives. For any deviations from the RFA provisions, the prior consent of HFSF should be received.

3.1 Audit Committee⁴

The primary function of the Audit Committee (AC) is to assist the Board in discharging its oversight responsibilities primarily relating to:

the review of the adequacy of the Internal Control and Risk Management systems and the compliance with rules and regulations monitoring process,
the review of the financial reporting process and satisfaction as to the integrity of the Bank's Financial Statements,
the External Auditors' selection, performance and independence,
the effectiveness and performance of the Internal Audit and of the Compliance function.

The Shareholders' General Meeting appoints the Audit Committee members upon the Board's proposal to the General Meeting, following the recommendation of the Nomination Committee to the Board. The tenure of the Committee members coincides with the tenure of the Bank's Board, with the option to renew their appointment, but in any case the service in the Committee should not be more that twelve (12) years in total. The Chairperson of the Committee is appointed by the members of the Committee or by the Shareholders' General Meeting, while the Committee's members may also appoint a Vice Chairperson. The appointment of the Chairperson and the Vice-Chairperson shall go through the Nomination Committee's proposal process and approved by the Board. The current Audit Committee consists of five (5) non-executive Directors, three (3) of whom are independent, including the Chairperson. One (1) of the Audit Committee members is the HFSF Representative. The HFSF appointed an Observer in the Audit Committee, in line with the requirements of the RFA.

All AC members have sufficient knowledge in the field of Eurobank's activity and the necessary skills and experience to carry out its duties, The Chairman of the Audit Committee and the Chairman of the BRC, who is also appointed as member of the Audit Committee, are the appointed financial/audit/risk expert members.

The Audit Committee meets at least eight (8) times per year or more frequently, as circumstances require, reports to the Board on a quarterly basis on its activities, submits the minutes of its meetings to the Board and submits annually an Activity Report of the Audit Committee to the Board. The Audit Committee's meeting is in quorum and meets validly when half of its members plus one are present or represented, provided that at least three (3), including the Chairperson or the Vice Chairperson, are present. Each member of the Committee may validly represent only one of the other Committee members. Representation in the Committee may not be entrusted to persons other than the members thereof. The Audit Committee resolutions are validly taken by an absolute majority of the members who are present and represented. In case of a tie of votes, the Chairperson and in case of his/her absence the Vice Chairperson has the casting vote. The Board is informed whenever a decision of the Audit Committee is not reached unanimously. During 2019 the Audit Committee held twelve (12) meetings (2018: 13) and the average ratio of attendance was 88% (2018: 94%).

The Audit Committee appoints its Secretary, who reports to the Group Company Secretariat and cooperates with the Chairperson of the Committee. The Secretary is responsible to minute the proceedings and decisions of all Audit Committees' meetings, including the names of those present and in attendance and the action plans and follow ups for

⁴ Information regarding the Committee's main duties and responsibilities as well as composition are included in the Bank's Code. Additionally, information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

assignments, as well as for the issuance of extracts. Decisions, actions and follow ups are disseminated to the Bank's responsible Units, as required.

The Audit Committee's Terms of Reference (ToR) are reviewed every two (2) years and revised if necessary, unless significant changes necessitate earlier revision (last review performed in July 2017). The ToR are approved by the Board. The Committee's performance is evaluated annually according to the provisions of the Board and Board Committees Evaluation Policy of the Bank. According to the Committee's 2019 self-evaluation it was determined that the Committee continuous to function effectively, including the areas of leadership, good planning and scheduling of the meetings as well as effective coordination with the Board Risk Committee, while Anti-Money Laundering (AML), IT and Compliance issues are areas of continuous focus.

For 2019 the Audit Committee has, amongst others:

reviewed and discussed reports with information relating to the System of Internal Controls, including quarterly reports from Internal Audit Group, Compliance, Operational Risk Sector, Clients Relations Office, etc.,
ensured that an annual evaluation of the System of Internal Controls has been performed, by the Internal Audit Group for the year 2018. Results are documented in the latter's report of the System of Internal Controls. The Audit Committee has prepared its own assessment report on Internal Audit Group's evaluation. The reports were submitted to the Board in May and in June 2019 respectively, and subsequently to the BoG in line with the BoG Act 2577/2006 requirements,
focused particularly on the AML function and reviewed the annual Group Compliance Sector's reports over AML and compliance activities of the Bank for the year 2018, and prepared its own assessment report thereon. The reports were submitted to the Board and the BoG in March, in May and in June 2019, in line with the BoG Governors Act 2577/2006 and Decision 281/2009 requirements,
reviewed and approved the updated AML Policy,
discussed with Management, Internal Audit and External Auditors issues relating to the financial results,
reviewed and cleared the financial statements and other financial reports and trading updates prior to their release,
discussed with Management the implementation of corrective actions to recommendations made by Internal and External
Auditors and Regulatory Authorities, discussed with the Audit Committee Chairpersons of Eurobank Cyprus, Eurobank Private Bank Luxembourg and Eurobank Serbia the key audit issues of the International Subsidiaries,
assessed the effectiveness of the External Auditors, their objectivity and independence, discussed results with Management and Internal Audit and communicated final results to the Board and to the External Auditors,
assessed the performance of the Head of Internal Audit and the Head of Group Compliance Sector,
approved the remuneration of External Auditors and approved in line with the External Auditor's Independence Policy non-audit services provided in 2019,
approved the annual Plans of Internal Audit Group and of Group Compliance and monitored their progress,
approved changes to the memberships of the Audit Committees of the subsidiaries, as required, and reviewed their Activity Reports,
received updates on the progress of the Annual Budget,
in accordance with the provisions of Law 2533/1997, the Audit Committee reviewed reports on substantial stock transactions performed by the Bank's Directors and General Managers which meet the criteria set in Law 2533/1997 and notified the Board,
reviewed and proposed to the Board for approval the Bank's Internal Governance Control Manual.

3.2 Board Risk Committee⁵

The Board Risk Committee's (BRC) purpose is to assist the Board in the following risk-related issues:

to ensure that the Group has a well-defined risk strategy and risk appetite in line with its business plan, and that the risk appetite is articulated in a set of qualitative and quantitative statements and risk tolerance levels for all relevant risks,
to ensure that the Group has developed an appropriate risk management framework which is embedded in the decision making process (e.g. products and services introduction, risk adjusted pricing, internal risk models, risk adjusted performance measures and capital allocation) throughout the Bank and its subsidiaries,
to define the Group risk management principles and ensure that the Bank has the appropriate methodologies, modeling tools, data sources and sufficient and competent staff to identify, assess, monitor and mitigate risks,
to review and assess, at least on a monthly basis, the Bank's and Group's risk profile and effectiveness of its risk management policies and advise the Board accordingly (this review is supported by the Management Risk Committee (MRC) regular reporting, including aspects of operational risk),
to ensure that appropriate stress tests are performed, at least on an annual basis, in relation to all major Group risks,
to review and approve the Bank's internal risk models development (framework, policies, etc.) as well as regularly monitor internal risk models results, including validation and back testing,
to review and approve the Bank's Internal Ratings Based (IRB) rating systems and estimation processes including IRB roll-out plan status and progress report, as well as monitor and report differences between the realized and expected default rates,
to maintain a sound and effective overall architecture for the implementation of the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process (ILAAP), ensuring that the ICAAP and the ILAAP are integral parts of the Bank's overall management framework,

⁵ Information regarding the Committee's main duties and responsibilities are included in the Bank's Code. Additionally, information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

to provide its assessment of the capital adequacy and liquidity adequacy of the Group,
to assess in compliance with the approved risk appetite and risk tolerance levels, the appropriateness of risk limits, the adequacy of provisions and, in general, the capital adequacy in relation to the risks undertaken by the Group, through, amongst others, the annual report prepared by the Group Risk Management General Division and relevant extract of the report prepared by the Internal Audit Division,
to keep the Board and Audit Committee updated on relevant risk matters and recommend to the Board on an annual basis the future risk strategy and risk appetite,
to provide oversight of, review and approve the Bank's Interest Rate Risk in Banking Book (IRRBB) framework, strategy, policies and processes.

The BRC members are appointed by the BoD, following the recommendation of the Nomination Committee, in accordance with the legal and regulatory framework where applicable. The Chairperson, qualifies as independent member with a solid experience in commercial banking and preferably risk and/or Non-Performing Exposures management and is familiar with the Greek and international regulatory framework. The appointment of the Chairperson and the Vice-Chairperson shall go through the Nomination Committee's proposal process and approved by the Board. The tenure of the BRC members coincides with the tenure of the Bank's Board, with the option to renew their appointment, but in any case the service in the BRC should not be more that twelve (12) years in total. The current BRC consists of five (5) non-executive Directors, three (3) of whom are independent Directors. One (1) of the BRC members is the HFSF Representative. The HFSF appointed an Observer in the BRC, in line with the requirements of the RFA.

The BRC meets at least on a monthly basis and) the Chairperson updates the BoD members on the material matters covered by the Committee during the previous period (if any) at the quarterly meetings of the BoD. Quorum requires the majority of members (half plus one) to be present or represented, provided that no less than three (3) Committee members, including the Chairperson or the Vice Chairperson, are present. Each member of the Committee may validly represent only one of the other Committee members. Representation in the Committee may not be entrusted to persons other than the members thereof. In determining the number of members for the quorum, fractions, if any, will not be counted. The BRC resolutions require a majority vote of the members who are present or represented. In case of a tie, the Chairperson and in case of his/her absence the Vice Chairperson has the casting vote. In case of non-unanimous decisions, the views of the minority are also minuted. The Board is informed of the BRC's minutes. Apart from the BRC members, the Audit Committee's members may also attend BRC sessions when common issues are discussed (i.e. on operational risk matters, on IT security and cyber risks). The Chairperson of the BRC may also invite to the meetings other executives of the Group or external advisors or experts, as deemed appropriate. During 2019 the BRC held thirteen (13) meetings (2018: 16) with 93% attendance (2018: 93%).

The BRC appoints its Secretary, who reports to the Group Company Secretariat and cooperates with the Chairperson of the Committee and the Group Chief Risk Officer ("GCRO"). The Secretary is responsible to minute the proceedings and resolutions of all BRC meetings, including the names of those present and in attendance and the action plans and follow ups for assignments, as well as for issuance of extracts. Decisions, actions and follow ups are disseminated to the Bank's responsible Units, as required.

BRC's Terms of Reference (ToR) are reviewed at least every two (2) years (last review performed in October 2018) and revised if necessary, unless significant changes in the role, responsibilities, organization and/or regulatory requirements necessitate earlier revision. The ToR are approved by the Board. The Committee's performance is evaluated annually according to the provisions of the Board and Board Committees Evaluation Policy of the Bank. According to the Committee's self-evaluation, it was determined that it continues to function effectively, including the areas of leadership and effective coordination with the Audit Committee, while continuous monitoring of NPLs as well as the shift to a growth agenda, well supported in terms of risk attitude and appetite, were noted.

For 2019 the BRC has, amongst others:

monitored qualitative and quantitative aspects of credit, market, liquidity and operational risks,
updated the Board on the adequacy of the risk management policy and risk appetite framework,
recognized material risks, including the aforementioned risks,
monitored the progress of the Bank's Transformation Program including the NPE reduction acceleration plan, the merger with Grivalia, the Pillar/Cairo securitisations and the FPS carve out project,
monitored the progress of regulatory projects such as the New Definition of Default project, the Retail new origination application scorecards project, etc.
approved, among others, the following regulatory and other reports, including risk policies and frameworks
- NPE targets submission 2019-2021 and NPE Management Strategy
- Internal Capital & Liquidity Adequacy Assessment processes (ICAAP/ILAAP) 2019:
  - Macroeconomic, liquidity and operational risk scenarios,
  - Pillar 2 results (economic perspective) and methodological assumptions
  - ICAAP Framework update
  - Capital Adequacy Statements , Liquidity Adequacy Statements
  - Group Risk and Capital Strategy and Risk Appetite Framework as well as Risk Appetite Statements
- Minimum Requirement for Own Funds and Eligible Liabilities issuance plan, targets and Resolution planning priorities
- Group Recovery Plan update
Group CRO's Annual Risk report for 2018
Operational Risk Appetite Framework and Statements
Model Risk and Internal Validation framework
New Market Risk policy
IFRS9 accounting policies update
Collateral Valuation Policy
Unlikely to Pay Criteria policy update
Policy for the treatment of Speculative Immovable Property Financing
Reputational Risk Management Framework

3.3 Remuneration Committee⁶

The Board has delegated to the Remuneration Committee (RemCo) the responsibilities (a) to provide specialized and independent advice for matters relating to remuneration policy and its implementation at Bank and Group level and for the incentives created while managing risks, capital and liquidity, (b) to safeguard the proper exercise of its duties and responsibilities, the efficient alignment of the personnel's remuneration with the risks the Bank undertakes and manages and the required alignment between the Bank and the Group, and (c) to approve or propose for approval all exposures of Senior Executives⁷ and their relatives (spouses, children, siblings). The Non-Executive Directors have the responsibility to approve and periodically review Bank's remuneration policy and oversee its implementation both at Bank and Group level.

The implementation of the remuneration policy is in line with the provisions of Laws 3864/2010, 4261/2014 and Bank of Greece Governor's Act 2650/2012.

The RemCo members are appointed by the Board. The tenure of the RemCo members coincides with the tenure of the Bank's Board, with the option to renew their appointment, but in any case the service in RemCo should not be more than twelve (12) years in total. The current RemCo consists of four (4) non- executive Directors two (2) of whom are independent Directors, including the Chairperson. One (1) of the RemCo members is the HFSF Representative. The HFSF appointed an Observer in the RemCo, in line with the requirements of the RFA.

RemCo meets at least twice a year and minutes are kept. RemCo is in quorum and meets validly when half of its members plus one (1) are present or represented (fractions, if any, are not counted), provided that no less than three (3) members, including the Chairperson or the Vice Chairperson are present. Each member of RemCo may validly represent only one of the other RemCo members. Representation in RemCo may not be entrusted to persons other than the members thereof. RemCo's resolutions are validly taken by an absolute majority of the members who are present or represented. In case of a tie, the Chairperson and in case of his/her absence the Vice Chairperson of RemCo shall have the casting vote. In case of non-unanimous decisions, the views of the minority should also be minuted. The Board shall be informed whenever a decision of the Committee is not reached unanimously. During 2019 RemCo held seven (7) meetings (2018: 7) and the ratio of attendance was 93% (2018: 96%).

RemCo appoints its Secretary, who reports to the Group Company Secretariat and cooperates with the Chairperson of RemCo and the Group Human Resources Deputy General Manager. The Secretary is responsible to minute the proceedings and resolutions of all RemCo's meetings, including the names of those present and in attendance and the action plans and follow ups for assignments, as well as for issuance of extracts. Decisions, actions and follow ups are disseminated to the Bank's responsible Units, as required.

RemCo's Terms of Reference (ToR) are reviewed at least once every two (2) years (last review performed in January 2019) and revised if necessary, unless significant changes in the role, responsibilities, organization and/or regulatory requirements necessitate earlier revision. The ToR are approved by the Board. RemCo's performance is evaluated annually according to the provisions of the Board and Board Committees Evaluation Policy of the Bank. According to RemCo's self-evaluation, it was determined that RemCo continues to function effectively, including the area of leadership, while remuneration under the strict legal framework and the ability to retain talent are areas of focus for the RemCo in discharging its responsibilities.

For 2019, RemCo has amongst others:

proposed to the BoD for approval the Remuneration Policy for Eurobank's Directors and General Managers (as per Company Law 4548/2018 requirements),
reviewed the remuneration policy implementation at Bank and Group level,
approved the Benefits Policy of the Bank and proposed to the Non-Executive Directors of the Bank for approval the revised Separation Policy,
proposed to the Board for approval the Board and Board Committees' Fees 2019 for Directors of the Bank,
approved Senior Executives' Remuneration,
proposed to the Non-Executive Directors of the Bank for approval the CEO's Performance Evaluation for 2018 & CEO's Financial and Non-Financial objectives for 2019,
reviewed the implementation of the Board and Board Committees' attendance policy,

6 Information regarding the Committee's main duties and responsibilities are included in the Bank's Code. Additionally, information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

⁷ Senior Executives are: Bank and Greek subsidiaries' BoD members, Executive Board (ExBo) members, Heads of Group Internal Audit, Group Compliance, Group Risk Management, as well as the Bank's General Managers, Heads of General Divisions and the direct reports to the Bank's BoD Chairman and the CEO.

proposed to the Board for approval the revised RemCo ToR,
approved the Remuneration Disclosures,
discussed the review of the Remuneration Policy for the year 2017, conducted by Internal Audit Group.

3.4 Nomination Committee⁸

The Board has delegated to the Nomination Committee (NomCo) the responsibilities (a) to lead the process for Board and Board Committees appointments, (b) to identify, nominate and recommend candidates for appointment to the Board and (c) to consider matters related to the Board's adequacy, efficiency and effectiveness, and to the appointment, replacement and dismissal of all executives of the Bank at the level of General Manager and above, as well as Heads of General Divisions (senior executives). NomCo, in carrying out its duties, is accountable to the Board.

NomCo members are appointed by the Board. The tenure of NomCo members coincides with the tenure of the Board, with the option to renew their appointment, but in any case the service in NomCo should not be more that twelve (12) years in total. The current NomCo consists of six (6) non-executive Directors, three (3) of whom are independent Directors, including the Chairperson. The BoD Chairman is also a member of NomCo, while one (1) of the NomCo members is the HFSF Representative. The HFSF appointed an Observer in the NomCo, in line with the requirements of the RFA.

NomCo meets at least twice a year and minutes are kept. NomCo is in quorum and meets validly when half of its members plus one (1) are present or represented (fractions, if any, are not counted), provided that no less than three (3) members, including the Chairperson or the Vice Chairperson are present. Each member of NomCo may validly represent only one of the other NomCo members. Representation in the NomCo may not be entrusted to persons other than the members thereof. NomCo's resolutions are validly taken by an absolute majority of the members who are present or represented. In case of a tie, the Chairperson and in case of his/her absence the Vice Chairperson of NomCo shall have the casting vote. In case of non-unanimous decisions, the views of the minority should also be minuted. The Board shall be informed whenever a decision of the Committee is not reached unanimously. During 2019 NomCo held eight (8) meetings (2018: 9) and the average ratio of attendance was 93% (2018: 92%).

NomCo appoints its Secretary, who reports to the Group Company Secretariat and cooperates with the Chairperson of NomCo. The Secretary is responsible to minute the proceedings and resolutions of all NomCo's meetings, including the names of those present and in attendance and the action plans and follow ups for assignments, as well as for issuance of extracts. Decisions, actions and follow ups are disseminated to the Bank's responsible Units, as required.

NomCo's Terms of Reference (ToR) are reviewed at least once every two (2) years (last review performed in June 2019) and revised if necessary, unless significant changes in the role, responsibilities, organization and/or regulatory requirements necessitate earlier revision. The ToR are approved by the Board while NomCo's performance is evaluated annually according to the provisions of the Board and Board Committees Evaluation Policy of the Bank. According to NomCo's selfevaluation, it was determined that NomCo continues to function effectively, including the area of leadership. In addition, it was suggested that there should be more focus on the enhancement of succession planning.

For 2019, NomCo has amongst others:

Discussed nomination issues pertaining to the merger with Grivalia and proposed to the BoD for approval the BoD and BoD Committees composition post-merger with Grivalia,
proposed to the Board for approval the revised NomCo ToR,
proposed to the BoD for approval the BoD and BoD Committees 2018 self-evaluation,
proposed to the Board for approval the appointment of new Board members,
reviewed and proposed to the Board for approval the amended External Engagements Policy, the revised Board Nomination Policy and the Senior Management Selection and Appointment Policy,
reviewed and updated the Board on Senior Executives succession plan,
reviewed the Board and Board Committees' Evaluation Policy,
reviewed the independence of the Independent Non-Executive directors,
reviewed the attendance of Directors to the Board and its Committees.

Board of Directors Diversity Policy

The Board of Directors Diversity Policy ("Policy") sets out the approach to diversity on the Board and it is in accordance with international best practices and the EU and Greek banking law provisions⁹ .

As declared in the Policy, the Board's diversity is one of the factors which, according to the Board Nomination Policy, the Committee shall consider when examining composition and structure of the Board. A diverse Board includes and makes good use of variety in the skills, educational and professional background, geographical provenance (nationality), gender, age and other qualities of Directors.

⁸ Information regarding the Committee's main duties and responsibilities are included in the Bank's Code. Additionally, information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

⁹ The Board of Directors Diversity Policy may be found at the bank's website https://www.eurobank.gr/-/media/eurobank/omilos/poioieimaste/etairiki-diakubernisi/dioikitiko-sumboulio/o-rolos-tou-dioikitikou-sumbouliou/politiki-diaforopoiisis.pdf?la=el).

NomCo members discuss and agree all measurable objectives for achieving diversity on the Board during the review process of the Board profile matrix according to the Board Nomination Policy and for proposing the (re)appointment/succession planning of individual Board members according to the Board and Board Committees Evaluation Policy, taking into consideration the balance of all diversity aspects mentioned in the Policy. At any given time the Board may seek to improve one or more aspects of its diversity and measure progress accordingly.

According to the Policy, NomCo's priority is to ensure that the Board continues to have strong leadership and the right mix of skills to deliver the business strategy. Within this context and in regard to the less represented gender in the Board, NomCo's aim is that the percentage of the female gender representation in Eurobank's Board shall be at least 20% calculated on the total Board size in the next 3 years in the context of the BoD tenure renewal, with a minimum of two (2) female members, also considering industry trends and best practices. As of 31 December 2018 the representation of the female gender in the Bank's Board stood at 15.4%, while following the resignations of Ms. L. Reichlin (March 2019) and of Ms. A. Beritsi (July 2019), the female gender as of today is not represented in the Bank's BoD. In line with the Bank's Policy the NomCo implements all necessary actions and processes to improve the representation of the female gender on the Board.

Assessment of the knowledge, skills and experience (KSE) of the Board collectively as well as the KSE and contribution of individual Board members

In accordance with the respective legal framework and the Board and Board Committees Evaluation Policy, the Board Chair conducted an assessment of the contribution of the Non-Executive Board Members for 2019 and presented the results to NomCo.

Specific focus areas were applied as follows:

contribution to overall Board profile skillset,
Board participation and quality of contributions to Board deliberations,
punctuality and attendance,
team spirit and demeanour,
independent thinking and constructive challenge.

The overall assessment demonstrated quite positive results across all focus areas and has confirmed that the assessed Non-Executive Board Members adequately meet expectations for effectively accomplishing their role as Directors of the Bank.

Furthermore, the Bank's 2019 Target Board profile matrix has revealed that the desired KSEs are overall met for all the Board members. The Target Board profile matrix is the instrument to identify the specific characteristics the Board needs on the basis of its strategic objectives and risk management priorities, purposed to track the current profile of the Board against the desirable KSEs, through the assessment of the existing KSEs of all Board members (Executives and Non-Executives Directors).

Board Nomination Policy

The Board Nomination Policy sets out the guidelines and formal process for the identification, selection and nomination of candidates for the Board of the Bank. The Policy ensures that such appointments are made: (a) in accordance with legal and regulatory requirements; (b) with due regard to the expectations of the Bank's major shareholders, (c) in line with the Bank's contractual obligations with the HFSF and (d) on the basis of individual merit and ability, following a best practice process.

The Board supported by NomCo shall nominate candidates who meet the following nomination criteria:

Reputation along with honesty, integrity and trust
- a) Reputation: Sufficiently good repute, high social esteem and adherence to the reputation, honesty, and integrity criteria of the Joint ESMA and EBA Guidelines on the assessment of suitability of members of the management board and key function holders under Directive 2013/36/EU and Directive 2014/65/EU
- b) Honesty, integrity and trust: Demonstration of the highest standards of ethics, honesty, integrity, fairness, and personal discipline, through personal history, professional track record or other public commitments
Knowledge, skills, experience (KSE) and other general suitability requirements
- a) Understanding of the Bank: Sufficient KSE for the development of a proper understanding of the business, culture, supervisory and regulatory context, product and geographic markets of operations, and stakeholders of the Bank and its subsidiaries
- b) Seniority: Several years of experience in a generally recognised position of leadership in the candidate's field of endeavour
- c) Independent mind-set and ability to challenge: Ability of forming and expressing an independent judgement on all matters that reach the Board and candour to challenge proposals and views on these matters by management and other candidates
d) Collegiality, team skills and leadership: Ability to contribute constructively and productively to Board discussions and decision making along with ability of leading such discussions as chair or vice-chair of specific committees or the Board as a whole
e) Additional criteria for the nomination of Executive Directors: Proven, through current and previous executive positions, knowledge, skills, experience and character to lead the Bank and its subsidiaries in the achievement of strategic objectives, along with willingness to enter into full time employment with the Bank.
Conflicts of interest and independence of mind

NomCo examines the personal, professional, financial, political and any other possible interests and affiliations of candidates, ensuring that the candidates do not have actual, potential or perceived conflicts of interest which cannot be prevented, adequately mitigated or managed under the written policies of the Bank, that would impair their ability to represent the interests of all shareholders of the Bank, fulfil their responsibilities as Directors and make sound, objective and independent decisions (act with independence of mind).

In particular, NomCo shall ensure that candidates are not linked to borrowers of the Bank with an exposure above EUR 1 million or any exposures in arrears. NomCo shall also examine relevant direct and indirect monetary interests and nonmonetary interests, including those arising from affiliations with and membership in other organisations.

Time commitment

NomCo ensures that all nominees are able to commit the time necessary to effectively discharge their responsibilities as Directors, including regularly attending and participating in meetings of the Board and its Committees.

Collective suitability

The Target Board Profile Matrix is updated in accordance with the strategic objectives and risk management priorities of the Bank, assisting in identifying the desirable KSE of the members to ensure collective suitability.

The Board Nomination Policy is approved by the Board and reviewed at least once every two (2) years by NomCo and revised if necessary, unless material changes, regulatory or other, necessitate earlier revision.

3.5 Strategic Planning Committee¹⁰

The Strategic Planning Committee (SPC) is established by the Board and its purpose is to:

a) assist the Board's Executive Officers in planning, developing and implementing the Group's Strategy and
b) recommend to the Board certain initiatives in relation to the Group's Strategy.

The key tasks and responsibilities of the SPC are:

to ensure that the Group develops a well-defined planned medium term strategy in line with the Board's guidance and its approved business plan,
to review, within the framework of which the Executive Board draws up the annual budget and the business plan, the key objectives and goals contained therein and review major business initiatives, before their submission for approval to the Board.
to review, analyze and deliberate issues concerning the Group's strategic choices (e.g. strategic partnerships, share capital increase, issuing convertibles and/or launching debt issuance programs, mergers, acquisitions or disposals, the formation of joint ventures, creation or dissolution of special purpose vehicles, dividend distribution and all other major investments or disinvestments by the Group etc.), ensuring these being in line with the approved Group's strategy. The SPC shall formulate relevant proposals to the Board, if:
- a) the issue under discussion exceeds € 40 million, while for lower amounts approval will be provided by the Executive Board;
- b) a decision of the Board is obligatory by Law or by the Bank's contractual commitments;
- c) it is deemed necessary by the SPC, taking into account the complexity and nature of the strategic choices under discussion.
to submit to the Board for approval proposals relating to the strategy and the budget of the Property Portfolio as described in the Service Level Agreement between Eurobank and Grivalia Management Company.
to submit to the Board for approval proposals for the acquisition and disposal of assets other than repossessed assets (as these are defined in the Service Level Agreement between Eurobank and Grivalia Management Company) with book value above € 10 million.
to submit to the Board for approval proposals for the disposal of repossessed assets (as these are defined in the Service Level Agreement between Eurobank and Grivalia Management Company) with gross book value above € 20 million.
to maintain and take all necessary actions on regulatory and internal capital required to cover all types of risks (incl. strategic and reputational risks, as well as other non-quantifiable risks) and to ensure that capital requirements are met at all times,
to review and evaluate all major Group's initiatives aiming at transforming the business and operating model,
to monitor on a regular basis the strategic and the key performance indicators of the Group, including the segmental view,

¹⁰ Information regarding the Committee's main duties and responsibilities are included in the Bank's Code. Additionally, information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

to review and, as needed, make proposals to the Board on all other issues of strategic importance to the Group.

The SPC members are appointed by the Board, on the recommendation of its Chairperson, following the proposal by the Nomination Committee. The Committee's members are appointed for a term of three (3) years that can be renewed up to three (3) times.

The Committee is chaired by the Chairperson of the Board and in case of absence or impediment of the Chairperson by the Vice-Chairperson of the Board and is composed of the following members with voting rights:

The Chairperson of the Board
The Vice-Chairperson of the Board
The Chief Executive Officer (CEO)
The Deputy CEOs
The Group Chief Risk Officer
The Group Chief Financial Officer

The General Manager Group Strategy participates in the Committee as a permanent attendee with no voting rights. The Committee may delegate specific responsibilities and authorities within the purview of its responsibilities and authorities to one (1) or more individual Committee members.

The SPC meets biweekly or ad hoc when necessary, keeps minutes of its meetings and reports to the Board on a quarterly basis and as required. During 2019 the SPC held fifty two (52) meetings (2018: 54) and the ratio of attendance was 88% (2018: 85%).The Committee is in quorum and meets validly when half of its members plus one, including the Chairperson or the Vice-Chairperson and the CEO, are present. Resolutions of the Committee are reached unanimously by the members who are present.

The SPC appoints its Secretary, who reports to the Group Company Secretariat and cooperates with the Chairperson of the Committee. The Secretary is responsible to minute the proceedings and resolutions of all SPC meetings, including the names of those present and in attendance and the action plans and follow up assignments, as well as for issuance of extracts. Decisions, actions and follow ups are disseminated to the Bank's responsible Units, as required. The minutes of the SPC are submitted to the Board on a quarterly basis.

The Terms of Reference (ToR) of the Committee are reviewed once every three (3) years and revised if necessary, unless significant changes in the role, responsibilities, organization and / or regulatory requirements necessitate earlier revision. The revised ToR are approved as stated above (last review performed in April 2019). The Committee evaluates its performance at least annually and establishes criteria for such evaluation. The results are submitted to the Nomination Committee, so that the latter makes proposals to the Board, as required.

4. Management Committees

The CEO establishes committees to assist him, as required, in discharging his duties and responsibilities. The most important Committees established by the CEO are the Executive Board, the Management Risk Committee, the Group Asset and Liability Committee, the Central Credit Committees (I & II) and the Troubled Assets Committee.

Executive Board¹¹

The Executive Board (ExBo) manages the implementation of Group's strategy, as developed by the SPC, in line with the Board's guidance. The functioning of ExBo is subject to the provisions of the RFA. The ExBo is established by the CEO and its members are appointed by the CEO. The ExBo meets on a weekly basis or ad hoc when necessary. Other executives of the Group, depending on the subject to be discussed, may be invited to attend.

The ExBo is in quorum and meets validly when half of its members plus one are present or represented. In determining the number of members for the quorum, fractions, if any, shall not be counted. The ExBo resolutions require a majority vote. The ExBo appoints its Secretary, who reports to the Group Company Secretariat and cooperates with the Chairperson of the Committee. The Secretary is responsible to minute the proceedings and resolutions of all ExBo meetings, including the names of those present and in attendance and the action plans and follow ups for assignments, as well as for issuance of extracts. Decisions, actions and follow ups are disseminated to the Bank's responsible Units, as required. The ExBo Terms of Reference (ToR) are approved by the CEO, and revised as appropriate.

The ExBo's key tasks and responsibilities are to:

manage the implementation of Group's strategy as developed by the SPC, in line with the BoD's guidance
draw up the annual budget and the business plan. The SPC reviews the key objectives and the goals contained therein, as well as the major business initiatives, and submits them to the Board for approval,
approve issues concerning the Group's strategic choices (e.g. partnerships, share capital increase, issuing convertibles and/or launching debt issuance programs, mergers, acquisitions or disposals, the formation of joint ventures, creation or dissolution of special purpose vehicles, dividend distribution and all other investments or disinvestments by the Group

¹¹ Information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

etc.), ensuring these being in line with the approved Group's strategy, if the issue under discussion is less than or equal to €40 million. In case though:

a) the issue under discussion exceeds € 40 million;
b) a decision of the Board is obligatory by Law or by the Bank's contractual commitments;
c) it is deemed necessary by the SPC, taking into account the complexity and nature of the strategic choices under discussion;

the issues concerning the Group's strategic choices are approved by the Board following a relevant proposal by the SPC (as per its Terms of Reference),

monitor the performance of each business unit and country against budget and ensure corrective measures are in place wherever required,
decide on all major Group's initiatives aiming at transforming the business and operating model, enhancing the operating efficiency and cost rationalization, improving organizational and business structure,
ensure that adequate systems of internal controls are properly maintained,
review and approve Bank's Policies (other than Credit Policies that are approved by Management Risk Committee and/or Troubled Assets Committee and/or BRC) that are related to its responsibilities and/or are of critical importance to the Bank, including but not limited to those requiring BoD approval as per the RFA,
review the performance of any Committee and /or individuals to whom it has delegated part of its responsibilities, as approved,
approve write-offs (on a pool basis) higher than €10 million and lower than €100 million for corporate loans and higher than €10 million and lower than €70 million for retail loans,
for the Non Performing Sensitive Borrowers (as those are defined in the respective Group's Policy), authorise limits for amounts > 5% of the Group's regulatory capital and Write-Offs / Debt forgiveness from amounts higher than € 20 million and smaller than € 50 million,
ensure adequacy of Resolution Planning governance, processes and systems
hire and retain external consulting firms in its sole judgment, and approve their compensation and terms of engagement in accordance with Bank's policies and procedures,
hire and retain investment banking advisors, in its sole judgment, and approve their compensation and terms of engagement, in accordance with Bank's policies and procedures, where applicable.

Management Risk Committee¹²

The Management Risk Committee (MRC) oversees the risk management framework of Eurobank Ergasias S.A. The MRC ensures that material risks are identified and promptly escalated to the BRC and that the necessary policies and procedures are in place to prudently manage risk and to comply with regulatory requirements. The MRC members should have the ability to identify, assess and manage the Group's risks.

As part of its mandate, the MRC:

reviews the Bank's and its subsidiaries' risk profile vis-à-vis its declared risk appetite and examines any proposed modifications to the risk appetite,
reviews and approves the methodology, the parameters and the results of the Bank's stress testing programme,
determines appropriate management actions which are discussed and presented to the ExBo for information and submitted to the BRC for approval, and maintains at all times a pro-active approach to Risk Management, understands and evaluates risks, addresses escalated issues, provides oversight to the Group's risk management framework – including the implementation of risk policies – and informs the BRC of the Group's risk profile
assists the BRC in defining risk management principles and methodologies thereby ensuring that the Group's Risk Management Framework contains processes for identifying, measuring, monitoring, mitigating and reporting the current risk profile against its risk appetite, limits, and performance targets.

The MRC does not conflict with the GCRO or the Risk Management General Division's responsibilities for Risk governance as prescribed under the HFSF Relationship Framework Agreement or the Bank of Greece's Governor Act no. 2577/2006. The CEO serves as the Chairperson of the MRC and the GCRO as the Vice Chairman. They have responsibility to escalate material risks and issues to the BRC and to update ExBo on material risks and issues on a periodical basis.

The MRC is in quorum and meets validly when half of its members, including the Chairperson or the Vice-Chairperson, plus one are present or represented. Selected attendees can be invited to the MRC meetings, when the topics for discussion fall under their remit or they have the requisite expertise to constructively participate. The finalized minutes are distributed to

¹² Information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

the BRC, SPC and ExBo members, as prepared by the committee's secretary and approved by its Chairperson. Abstracts of resolutions reached and actions to be taken are provided to Management, SPC and/or ExBo members, as necessary.

Changes to the ToR of the MRC are reviewed by the MRC at least every two (2) years and revised if necessary, unless significant changes in the composition, role, responsibilities, organization and / or regulatory requirements necessitate earlier revision and are approved by the CEO. The ToR of MRC are also submitted to the BRC for information purposes.

Group Asset and Liability Committee (G-ALCO) 13

G-ALCO's primary mandate is to i) approve, formulate, implement and monitor - as may be appropriate - the Group's a) liquidity and funding strategies and policies, b) interest rate guidelines and interest rate risk policies, c) Group's capital investments, as well as FX exposure and hedging strategy, and d) Group's business initiatives and/or investments that meaningfully affect the Bank's market and liquidity risk profile, ii) approve at a first stage and recommend to the BRC for final approval the respective country limits (with special attention given for the approval / monitoring of the limits for countries where Eurobank has a local presence) and iii) approve or propose –as may be appropriate - changes to these policies that conform to the Bank's risk appetite and levels of exposure as determined by the BRC & Management while complying with the framework established by regulatory authorities and/or supervising bodies.

G-ALCO convenes once a month and/or whenever required. Other executives or managers of the Group, depending on the subject to be discussed, may be invited to attend as required.

Required quorum for G-ALCO meetings to be effective is six members. In order to have a quorum the presence of its Chairperson and a minimum of three (3) SPC members is required. Decisions on issues are taken by majority and communicated to the relevant / affected business areas, while meetings are minuted by the Committee's Secretary and distributed to G-ALCO members, the CEO, the Board's Chairman and the Single Supervisory Mechanism (SSM).

Central Credit Committees

Central Credit Committee I

The main objective of the Central Credit Committee I (CCCI) is to ensure objective credit underwriting for all Greek corporate performing portfolios, as stipulated in the Credit Policy Manual for performing exposures and in the Risk Appetite Framework of the Bank, so that undertaking risks can be effected in a balanced way between satisfactory return on equity and credit quality.

The CCCI convenes at least once a week and all meetings are minuted. Decisions are taken unanimously. If unanimity is not achieved, the request is escalated by the Chairperson to the next (higher) approval level requiring a unanimous decision. In case of non-unanimity the final decision lies with the Management Risk Committee (MRC), by majority voting.

The main duty and responsibility of the CCCI is to assess and approve all credit requests of the Greek corporate performing portfolio for total exposure above €50mio and unsecured exposure above €35mio. For total exposure exceeding €75mio and unsecured exposure exceeding €50mio, additional approval by the GCRO is required, while for total exposure exceeding €150mio and unsecured exposure exceeding €100mio, additional approval by the CEO is required. Furthermore, for exposures higher than 10% of the Bank's regulatory capital the additional approval of the Management Risk Committee (MRC) is required. Subsequently, the consent of Hellenic Financial Stability Fund (HFSF) is necessary, whereas final approval is granted by the Board Risk Committee (BRC). Central Credit Committee II

The main objective of the Central Credit Committee II (CCCII) is the same as for the CCCI for lower levels of exposure.

The CCCII convenes at least once a week and all meetings are minuted. Decisions are taken unanimously. If unanimity is not achieved, the request is escalated by the Chairperson to the next approval level.

The main duty and responsibility of CCCII is to assess and approve all credit requests of the Greek corporate performing portfolio for total exposure from €20mio up to €50mio and unsecured exposure from €10mio up to €35mio.

Troubled Assets Committee¹⁴

The Troubled Assets Committee (TAC) is established according to the provisions of the BoG Executive Committee Act No. 42/30.5.2014, as in force. TAC's main responsibility is to provide strategic guidance and monitor troubled assets management, ensuring independence from business and compliance with the requirements of BoG Act 42. The Deputy CEO of the Bank and Executive member of the Board of Directors is specifically entrusted with the close monitoring of the troubled assets management strategy. Its members are senior managers with sufficient knowledge and experience in the Management of Troubled Assets and Risk Management. The number of the Committee's members, who cannot be less

¹³ Information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

¹⁴ Information regarding current composition and short biographical details of its members may be found at the Bank's website (www.eurobank.gr).

than two, as well as its composition are defined by the CEO of the Bank. Decisions are taken by majority and minutes are kept and circulated as appropriate. In case of a tie of votes, the Chairperson has a casting vote.

The Committee meets at least once per month, while informs the Board and relevant committees on the results of its activities, at least quarterly. The Committee closely interacts with Group Risk Management General Division for the common understanding and development of the appropriate risk assessment methodology for each forbearance type and delinquency status by portfolio. Committee's propositions and reports to Board of Directors are also submitted to the Group Chief Risk Officer, who expresses his opinion to the Board by submitting the relevant report to the Board Risk Committee.

Main responsibilities of the Committee are, among others, the following:

processes centrally all the internal reports regarding troubled assets management under the provisions of BoG Acts 42/30.05.2014, 47/09.02.2015 and 102/30.08.2016
approves the available forbearance, resolution and closure solutions by loan sub-portfolio, and monitors their performance through suitable KPIs
defines criteria to assess the sustainability of credit and collateral workout solutions (design and use of "decision trees")
determines the parameters and the range of responsibilities of the bodies and officers involved in the assessment of viability and sustainability of the proposed modifications and the subsequent monitoring of their implementation
designs, monitors and assesses pilot modification programs (in cooperation with other business units)
evaluates proposals for the sale of the Bank's distressed assets portfolio, as well as for the potential provision of services of managing troubled assets of third parties
supervises and provides guidance and know-how to the respective troubled assets units of the Bank's subsidiaries abroad.

5. Key Control Functions

As part of its overall system of internal controls the Bank has established a number of dedicated control functions whose main responsibility is to act as independent control mechanisms thus reinforcing the control structure of the Bank. The most important functions and their key responsibilities are described below.

5.1 Internal Audit

Internal Audit Group ("IAG") is an independent, objective assurance and consulting function designed to add value and improve the operations of Eurobank and its subsidiaries. IAG has adequate organisation structure and appropriate resources to ensure that it can fulfil its roles and responsibilities.

IAG comprises the "Internal Audit Sector", the "Forensic Audit Division", the "International Audit Division" and the "Business Monitoring and Organisational Support Division". IAG also has a Centre of Excellence for Audit Standards & Methodology, which monitors and adopts best practices and drives the ongoing improvement in audit methodologies, and a Quality Assurance function, to assess the effectiveness of the Group's internal audit activities and conformance with IIA Standards.

In order to safeguard its independence, IAG reports functionally to the Audit Committee and administratively to the CEO. The Board has delegated the responsibility for monitoring the activity of the IAG to the Audit Committee of the Bank. IAG is headed by the Group Chief Audit Executive (CAE) who is appointed by the Audit Committee. The latter also assesses the CAE's performance.

The mission of IAG is to enhance and protect organisational value by providing risk-based and objective assurance, advice and insight. The key assurance and consulting responsibilities of IAG are to:

provide reasonable assurance, in the form of an independent opinion, as to the adequacy and effectiveness of the internal control framework of the Bank and its subsidiaries. IAG has a periodic plan and budget approved by the Audit Committee. IAG ensures establishment of risk based audit plan and priorities in consistency with the Bank's strategic plan and adherence to regulatory requirements,
assist and advise Management on the prevention and detection of fraud or defalcation or unethical practices and undertake such special projects as required,
assist Management in enhancing the system of internal control by making recommendations to address weaknesses and improve existing policies and procedures,
follow-up to ascertain that appropriate action is taken on reported audit findings within agreed deadlines,
participate in Bank projects in an assurance or consulting capacity.

5.2 Risk Management

The Group Risk Management General Division, which is headed by the Group Chief Risk Officer (GCRO), is independent from the business units and has full responsibility for monitoring credit, market, liquidity and operational risks undertaken by the Eurobank Group.

It comprises the Group Credit General Division, the Group Credit Control Sector, the Group Credit Risk Capital Adequacy Control Sector, the Group Market & Counterparty Risk Sector, the Group Operational Risk Sector, the Group Model Validation & Governance Sector, the Group Risk Management Strategy Planning & Operations and the Supervisory Relations & Resolution Planning Division¹⁵ . In the Risk Management General Division there is a position of a Senior Advisor who reports directly to the Group CRO.

The GCRO serves as a pivotal point for the risk management functions of the Group and is responsible for developing the Risk Appetite Framework and overseeing and coordinating the development and implementation of adequate risk measurement and management policies in relation to credit, market, liquidity, and operational risks.

The GCRO reviews the credit policies prepared by the responsible Risk Units before their submission for final approval to the BRC or to the BoD and oversees their implementation thereafter. The GCRO promptly reports any deviation from the credit policy or potential conflict with the approved risk strategy and risk appetite to the Board Risk Committee.

The GCRO is responsible to provide to the Board Risk Committee, on a monthly basis, adequate information so that the Committee can properly oversee and advise the BoD on the Bank's risk exposures / profile and future risk strategy. Additionally, the GCRO oversees compliance with approved Risk Appetite Limits and reports compliance status as well as any deviations to the Board Risk Committee.

Eurobank has clear risk management objectives and a well-established strategy to deliver them, through core risk management processes. At a strategic level, the risk management objectives are to:

Identify Eurobank's material risks;
Ensure that business plan is consistent with Eurobank's risk appetite;
Optimize risk/return decisions by taking them as closely as possible to the business, while establishing strong and independent review;
Ensure that business growth plans are properly supported by effective risk infrastructure;
Manage risk profile to ensure that specific financial deliverables remain possible under a range of adverse business conditions;
Assist senior executives improve the control and co-ordination of risk taking across the business;
Embed risk management into the Bank's culture and existing processes and raise awareness of risk management throughout the Bank;
Provide the framework, procedures and guidance to enable all employees to manage risk in their own areas across the Business Units.

5.3 Compliance

Group Compliance is established with the approval of the Board of Directors and the Audit Committee as a permanent and independent function. In order to safeguard its independence, it reports functionally to the Audit Committee of the Bank and for administrative purposes to the CEO.

Its mission is to promote, within the Bank and its subsidiaries, an organizational culture that encourages ethical conduct through integrity, and a commitment to compliance with laws and regulations as well as international governance standards.

Group Compliance supervises the overall compliance function in the Group. Within this framework, it supervises, monitors, coordinates and evaluates the activities of the Compliance Divisions / Units of the Bank's local and international Subsidiaries, to ensure compliance with group standards.

The main objective of Group Compliance is to ensure that the Group has established an adequate system of internal controls that allows it to operate in accordance with the ethical set of values as set in its "Code of Professional Conduct" and in compliance with applicable laws, regulations and internal policies, as well as international best practices. More specifically, Group Compliance is mandated to:

advice the Board of Directors and Senior Management on the bank's compliance with applicable laws, rules and standards and keeping them informed of developments in the area
issue policies, procedures and other documents in order to provide guidance to staff on the appropriate implementation of applicable laws, rules and standards
assist the business to develop and implement regulatory compliant policies and procedures
review high risk clients, products and services, and advise on potential compliance risks and their mitigation
ensure that staff is adequately trained and frequently updated about compliance issues by designing training programs and co-operating with HR for their implementation. Provide guidance on the application of regulations in practice
develop a robust compliance risk identification and assessment framework. Support and challenge, if required, business line management regarding the completeness and accuracy of the compliance risk management activities
monitor and test whether staff effectively applies the internal processes and procedures aimed at achieving regulatory compliance. Report on potential breaches and required improvements and follow up on implementation
review staff accounts in order to monitor staff adherence to internal policies and the code of conduct and or indications of fraudulent activity
monitor timely submission of reports to Regulators and report any delays and fines for any alleged breaches of regulations to the AC

¹⁵ The Supervisory Relations & Resolution Planning Division has a dual reporting line to both the GCRO & the Group Chief Financial Officer

fulfil any statutory responsibilities and liaise with regulators and external bodies.

The scope of activities of Group Compliance covers the following regulatory topics:

Financial Crime including laws and regulations on AML and CFT and legislation aimed at combatting Tax evasion such as FATCA and CRS. The scope includes the provision of timely and accurate responses to requests arising from regulatory and judicial authorities for the lifting of banking secrecy or freezing of assets and co-operation with them to facilitate their work. The Board appoints the Money Laundering Reporting Officer and his/her Deputy
Market Integrity related regulation regarding the provision of investment products and services to clients including laws and regulations on Market Manipulation and Insider Trading
Business and internal conduct rules including Conflict of interest regulatory provisions, internal codes of conduct antibribery and anti-corruption legislation and Antitrust and Competition laws and regulations
Consumer protection laws and regulations (including dormant accounts legislation, BoG's Code of Conduct for loans, the Payment Services Directive and the Deposit Guarantee scheme)
Any other topic for which there is a law / regulation explicitly assigning a responsibility to the Compliance function.

6. Principles of Internal Controls

The Group has established a System of Internal Controls that is based on international good practices and COSO terminology and is designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

efficient and effective operations,
reliability and completeness of financial and management information,
compliance with applicable laws and regulations.

The key principles underlying the Group's system of internal controls are described below:

Control Environment: The control environment is the foundation for all components of Internal Control System, providing discipline and structure and influencing the control consciousness of employees. Integrity and high ethical values stem from management's philosophy and operating style and appropriate recruitment and training policies ensure the competence of the Group's people. The Group's organisation structure is suitable for its size and complexity with clearly defined responsibilities and reporting lines and clearly specified delegation of authority.
Risk Management: the Group acknowledges that taking risks is an integral part of its business. It therefore sets mechanisms to identify those risks and assess their potential impact on the achievement of the Group's objectives. Because economic, industry, regulatory and operating conditions will continue to change, risk management mechanisms in place shall be set (and evolve) in a manner that enables to identify and deal with the specific and new risks associated with changes.
Control Activities: Internal control activities are documented in the policies and detailed procedures that are designed to ensure that operations are carried out safely and all transactions are recorded accurately in compliance with Management's directives and regulations. They occur throughout the organisation and business processes, at all levels and in all functions. One of the prime organisational measures to ensure control effectiveness in the Group is segregation of duties. Functions that shall be separated include those of approval (limits, limit excesses, specific transactions), dealing, administration (administrative input, settlement, confirmation checks, transaction approval check, documentation check, file keeping, custody) and controlling (reconciliation, limit monitoring, excess approval check, risk management, compliance checks, physical counts).
Information and Communication: Information must be identified, captured and communicated in a form and timeframe that enables people to carry out their responsibilities. The Group has set effective communication channels to ensure that information is communicated down, across and up within the organisation. Mechanisms are also in place to obtain appropriate external information as well as to communicate effectively with outside parties including regulators, shareholders and customers.
Monitoring: the Group has established mechanisms for the ongoing monitoring of activities as part of the normal course of operations. These include regular management and supervisory activities and other actions personnel take in performing their duties that assess the performance of internal control systems. There are also independent evaluations of the internal control system by the Internal Audit function, the scope and frequency of which depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies are reported upstream, with serious matters reported to top management, the Audit Committee and the Board. Every three years the efficiency of the internal control system on a solo and consolidated basis is independently evaluated by a third auditing firm, other than the statutory auditor, as provided for in BoG Governor's Act 2577/2006. The evaluation report is submitted for assessment to the Bank's Audit Committee and acknowledgment of the Board and is further submitted to the BoG.

7. Shareholders' General Meeting

The Shareholders' General Meeting ("General Meeting") is the supreme body of the Bank, convened by the Board and entitled to resolve upon any matter concerning the Bank and is the only competent body to resolve on issues described in article 117 of Company Law 4548/2018 (such as amendments to the Articles of Association). All shareholders have the right to participate and vote at the General Meeting either in person or by their legal representatives according to the proposed legal procedure each time in force.

The General Meeting is in quorum and meets validly when the shareholders, present or represented, represent at least 20% (1/5) of the paid-in share capital that corresponds to the shares with voting rights ("share capital"). Resolutions are reached by absolute majority. Exceptionally, with regard to certain significant decisions such as most decisions related to share capital, mergers etc.(para 3, art. 130, Company Law 4548/2018), the General Meeting is in quorum and meets validly when the shareholders, present or represented, represent at least 50.00% (1/2) of the paid-in share capital. Resolutions on the aforementioned issues are reached by two-thirds (2/3) majority. If such quorum is not reached, the General Meeting is convened again in a repeat Meeting where lower quorum is required for all categories of resolutions.

The HFSF's Representative has the right to request the convocation of the Shareholder's General Meeting. Such right was not exercised during 2019.

Following the completion of the Bank's share capital increase during the second half of 2015, fully covered by institutional and other investors, the percentage of the ordinary shares with voting rights held by the HFSF decreased from 35.41% to 2.38%. Furthermore, following the merger of the Bank with Grivalia by absorption of the latter by the former and the relevant increase of the share capital of the Bank, which were approved by the Extraordinary General Meeting of the Bank's Shareholders on 5 April 2019, the percentage of the ordinary shares with voting rights held by the HFSF out of the total number of ordinary shares with voting rights issued by Eurobank was further decreased to 1.40%. In this context and under Law 3864/2010 as in force, the HFSF exercises its voting rights in the General Meetings only for decisions concerning the amendment of the Bank's Articles of Association, including the increase or reduction of the capital or the corresponding authorization to the Board, the mergers, divisions, conversions, revivals, extension of term or dissolution of the Bank, the transfer of assets (including the sale of subsidiaries), or any other issue requiring increased majority as provided for in Company Law 4548/2018.

The Annual General Meeting is held every year before the 10th of September. An Extraordinary General Meeting may be convened by the Board when it is deemed appropriate or necessary or when required by law.

The minutes of the General Meeting are signed by the Chairperson and the Secretary of the General Meeting.

All persons appearing as shareholders of ordinary shares of the Bank in the registry of the Dematerialized Securities System (DSS) managed by Hellenic Central Securities Depository S.A. on the Record Date, namely at the start of the fifth day before the General Meeting, have the right to participate and vote in the General Meeting. The aforementioned record date is applicable for the Repeat Meeting as well. For each General Meeting, the Board arranges for the detailed invitation, including date, place, record date, issues on the agenda and related papers to be available to shareholders at least 20 full days before the meeting, including the proposed resolution or commenting by the Board on each issue. The detailed invitation also defines the procedure to be followed for voting by proxy, the minority shareholders rights and any available documentation relating to the General Meeting.

Standard minority rights, as described in Company Law 4548/2018, apply.

8. Other information required by Directive 2004/25/EU

Holders of securities with special control rights

The HFSF's participation interest in the Bank's share capital, through the ordinary shares it possesses, confers to HFSF the rights according to the legislation in force and the RFA that has been signed between the Bank and the HFSF.

Treasury Shares

The Shareholders' General Meeting can authorize the Board, under article 49 of Company Law 4548/2018, to implement a program of acquisition of treasury shares. However, according to paragraph 1 of Article 16C of Law 3864/2010, during the period of the participation of the HFSF in the share capital of the Bank it is not permitted to the Bank to purchase treasury shares without the approval of the HFSF (note 37 of the consolidated accounts).

For other information required by Directive 2004/25/EU regarding the: a) Major shareholdings, b) Authority to issue new shares, and c) Restrictions of voting rights, please refer to the relevant sections of the Directors' Report.

IΙΙ. Independent Auditor's Report (on the Consolidated Financial Statements)

KPMG Certified Auditors S.A. 3 Stratigou Tombra Street Aghia Paraskevi 153 42 Athens, Greece Telephone: +30 210 60 62 100 Fax: +30 210 60 62 111

Independent Auditor's Report

To the Shareholders of Eurobank Ergasias S.A.

Report on the Audit of the consolidated financial statements

Opinion

We have audited the accompanying consolidated financial statements of Eurobank Ergasias S.A. (the "Bank") which comprise the consolidated Balance Sheet as at 31 December 2019, the consolidated statements of Income and Comprehensive Income, Changes in Equity and Cash Flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Eurobank Ergasias S.A. and its subsidiaries (the "Group") as at 31 December 2019 and its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA), which have been incorporated in Greek legislation. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the consolidated financial statements section of our report. We are independent of the Bank and its consolidated subsidiaries in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants, as it has been incorporated into Greek legislation, and the ethical requirements that are relevant to the audit of the consolidated financial statements in Greece and we have fulfilled our ethical responsibilities in accordance with the requirements of the applicable legislation and the aforementioned Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters, that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters and the relevant significant assessed risks of material misstatement were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Allowance for credit losses

Refer to Note 2.2.13 and 3.1 to the consolidated financial statements. Total impairment charge for loans and advances to customers for the year amounted to EUR 624 million (2018: 680 million). Total estimated credit losses as of 31 December 2019 amounted to EUR 7 099 million (2018:8 800 million).

The key audit matter	How this matter was addressed in our audit manner
The estimation of expected credit losses (ECL) on loans and advances to customers involves significant judgment and estimates.	Our audit procedures included, among others:
The carrying value of financial instruments within the scope of IFRS 9 ECL may be materially misstated if judgments or estimates made by the Group are inappropriate.
The most significant areas where we identified greater levels of management judgment in the Group's estimation of ECLs and therefore required greater levels of audit focus are:
A. Significant Increase in Credit Risk (SICR) –the identification of	Control design, observation and operation:
qualitative indicators for identifying a significant increase in credit risk is highly judgmental and can materially impact the ECL recognized for facilities with a	We tested the design, implementation and operating effectiveness of key controls relating to the assessment and calculation of material SICR indicators and criteria.
tenor greater than 12 months as	Assessing application of methodology:
these determine whether a 12 month or lifetime provision is recorded.	We obtained a selection of loans to test the appropriateness of classification made by management.
	We involved our financial risk management specialists to assist us in

Disclosures: The disclosures regarding the Group's application of IFRS 9 are key to explaining the key judgements and material inputs to the IFRS 9 ECL results.

We assessed whether the disclosures appropriately disclose and address the uncertainty which exists when determining the expected credit losses.

Recoverability of deferred tax assets

Refer to Note 2.2.16 (ii) and 3.5 to the consolidated financial statements. Total deferred tax recognized as of 31 December 2019 amounted to EUR 4 757 million (2018: EUR 4 909 million).

The key audit matter	How the matter was addressed in our audit
Recognition and measurement of deferred tax assets requires judgement and besides objective factors also numerous estimates regarding future taxable profit and the recoverability of temporary differences. Management's assessment regarding whether there will be sufficient tax profits requires significant judgments and estimates such as: — Assumptions based on the business plan of the Bank regarding future performance that will generate tax profits in the future. — Estimates that cover the time period until the deferred tax assets can be used.	Our audit procedures included, among others: Based on our understanding of the applicable tax laws and regulations to the Group we performed substantive audit procedures with the assistance of KPMG tax specialists. We performed substantive audit procedures that include but is not limited to: — Assessment of the appropriateness of parameters applied to the business plans, — We tested the adjustments performed by management to calculate taxable profits and we checked their consistency with prior years. In addition, we assessed the historical accuracy of management's assumptions by comparing them to actual results reported.
Use of IT systems relevant to the financial information
The key audit matter	How the matter was addressed in our audit
The Group's financial reporting processes are highly reliant on information produced by the Group's Information Technology (IT) systems,	Our audit procedures included, among others:

and / or automated processes and controls (i.e. calculations, reconciliations) implemented in these systems.

The nature, complexity and the increased use of these information systems combined with the large volume of transactions being processed daily, increase the risk over the effective inter-connectivity of the IT systems and data and the risk around the degree of reliability of the financial reporting information. The banking environment is also subject to a number of internal and external threats relating to cyber security particularly due to the significant increase in the volume of transactions through internet.

The above is a key audit matter as the Group's financial reporting systems rely heavily on complex information systems that process huge amount of transactions and are functioning based on the operating effectiveness of internal controls in place to assure the completeness and accuracy of financial information and security information of the Group that produce the financial information.

We assessed the information security resilience of the Group by evaluating the design of key IT processes and controls over financial reporting.

More specifically, involving our own specialists, we assessed the administration of access, changes and daily IT operations for key layers of underlying infrastructure (i.e. application, operating system and database) for the systems in scope of the audit, and tested the operating effectiveness of the processes and controls.

In addition, to place reliance on the system generated information (i.e. data and reports) and any automated controls (i.e. calculations, reconciliations) implemented in these systems, we have relied on business process controls, and performed additional substantive procedures as part of our audit.

Derecognition of loans following transfer through securitization

Refer to Note 20 to the consolidated financial statements.

The key audit matter	How the matter was addressed in our audit
Due to the complexity of the transaction and the significance of the relating accounting effect we have considered derecognition of financial assets through securitisation as a key audit matter.	Our audit procedures included, among others in order to evaluate the Group's position on derecognition of transferred loans: a) We examined relevant asset transfer agreements and other related legal documents including the operational agreement of the related securitization vehicles to ascertain whether the criteria for derecognition according to IFRS are met.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Board of Directors' Report for which reference is made in the "Report on Other Legal and Regulatory Requirements" and the Declarations of the Members of the Board of Directors but does not include the consolidated financial statements and our Auditor's Report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Audit Committee (article 44 of L. 4449/2017) of the Bank is responsible for overseeing the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs which have been incorporated in Greek legislation will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, which have been incorporated in Greek legislation, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
Conclude on the appropriateness of Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on these consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. Board of Directors' Report

Taking into consideration that Management is responsible for the preparation of the Board of Directors' Report and the Corporate Governance Statement that is included in this report for listed entities, pursuant to the provisions of paragraph 5 of Article 2 of Law 4336/2015 (part B), we note that:

(a) The Board of Directors' Report includes a Corporate Governance Statement which provides the information set by Article 152 of L. 4548/2018.
(b) In our opinion, the Board of Directors' Report has been prepared in accordance with the applicable legal requirements of Articles 150 and 151 and 153 and 154 and of paragraph 1 (cases c and d) of article 152 of L. 4548/2018 and its contents correspond with the accompanying consolidated financial statements for the year ended 31 December 2019.
(c) Based on the knowledge acquired during our audit, relating to Eurobank Ergasias S.A. and its environment, we have not identified any material misstatements in the Board of Directors' Report.

2. Additional Report to the Audit Committee

Our audit opinion on the consolidated financial statements is consistent with the Additional Report to the Audit Committee of the Bank dated 11 March 2020, pursuant to the requirements of article 11 of the Regulation 537/2014 of the European Union (EU).

3. Provision of non Audit Services

We have not provided to the Group any prohibited non – audit services referred to in article 5 of regulation (EU) 537/2014.

The permissible non-audit services that we have provided to the Group and its subsidiaries during the year ended 31 December 2019 are disclosed in Note 47 of the accompanying consolidated financial statements.

4. Appointment of Auditors

We were appointed for the first time as Certified Auditors of the Bank based on the decision of the Annual General Shareholders' Meeting dated 10 July 2018. From then onwards our appointment has been renewed uninterruptedly for a total period of 2 years based on the annual decisions of the General Shareholders' Meeting.

Athens, 13 March 2020

KPMG Certified Auditors S.A. AM SOEL 114

Harry Sirounis, Certified Auditor AM SOEL 19071

IV. Consolidated Financial Statements for the year ended 31 December 2019

EUROBANK ERGASIAS S.A.

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

FOR THE YEAR ENDED

31 DECEMBER 2019

8 Othonos Street, Athens 105 57, Greece www.eurobank.gr, Tel.: (+30) 210 333 7000 General Commercial Registry No: 000223001000

Index to the Consolidated Financial Statements Page
Consolidated Balance Sheet 1
Consolidated Income Statement 2
Consolidated Statement of Comprehensive Income3
Consolidated Statement of Changes in Equity4
Consolidated Cash Flow Statement5

1.	General information 6
2.	Basis of preparation and principal accounting policies 6
2.1	Basis of preparation6
2.2	Principal accounting policies12
2.3	Impact of significant changes in applying accounting policies37
3.	Critical accounting estimates and judgments in applying accounting policies41
4.	Capital Management 48
5.	Financial risk management and fair value 50
	5.2.1 Credit Risk 53
	5.2.2 Market risk84
	5.2.3 Liquidity risk88
	5.2.4 Interest Rate Benchmark reform – IBOR reform 91
5.3	Fair value of financial assets and liabilities92
6.	Net interest income 96
7.	Net banking fee and commission income97
8.	Income from non banking services97
9.	Net trading income and gains less losses from investment securities 97
10.	Other income/ (expenses) 98
11.	Operating expenses98
12.	Other impairments, restructuring costs and provisions99
13.	Income tax 99
14.	Earnings per share 104
15.	Cash and balances with central banks104
16.	Cash and cash equivalents and other information on cash flow statement105
17.	Due from credit institutions105
18.	Securities held for trading106
19.	Derivative financial instruments and hedge accounting106
20.	Loans and advances to customers109
21.	Impairment allowance for loans and advances to customers111
22.	Investment securities113

23.	Group composition 116
	23.1 Shares in subsidiaries116
	23.2 Merger of Eurobank with Grivalia121
	23.3 Acquisition of Piraeus Bank Bulgaria A.D. by Eurobank Bulgaria A.D. 123
24.	Investments in associates and joint ventures125
25.	Structured Entities128
26.	Property, plant and equipment 130
27.	Investment property131
28.	Goodwill and other intangible assets 133
29.	Other assets134
30.	Disposal groups classified as held for sale and discontinued operations135
31.	Due to central banks136
32.	Due to credit institutions137
33.	Due to customers137
34.	Debt securities in issue 137
35.	Other liabilities 139
36.	Standard legal staff retirement indemnity obligations140
37.	Ordinary share capital, share premium and treasury shares141
38.	Reserves and retained earnings142
39.	Preferred securities 143
40.	Transfers of financial assets143
41.	Leases 144
42.	Contingent liabilities and other commitments147
43.	Operating segment information 148
44.	Corporate Transformation-Hive down152
45.	Post balance sheet events 153
46.	Related parties153
47.	External Auditors155
48.	Board of Directors155
	APPENDIX – Disclosures under Law 4261/2014 157

Consolidated Balance Sheet

		31 December
		2019	2018
			Restated (1)
	Note	€ million	€ million
ASSETS
Cash and balances with central banks	15	4,679	1,924
Due from credit institutions	17	3,007	2,307
Securities held for trading	18	110	43
Derivative financial instruments	19	2,262	1,871
Loans and advances to customers	20	37,365	36,232
Investment securities	22	7,951	7,772
Investments in associates and joint ventures	24	235	113
Property, plant and equipment	26	746	353
Investment property	27	1,184	331
Goodwill and other intangible assets	28	378	183
Deferred tax assets	13	4,766	4,914
Other assets	29	2,003	1,934
Assets of disposal groups classified as held for sale	30	75	20
Total assets		64,761	57,997
LIABILITIES
Due to central banks	31	1,900	2,050
Due to credit institutions	32	5,022	6,376
Derivative financial instruments	19	2,726	1,893
Due to customers	33	44,841	39,083
Debt securities in issue	34	2,406	2,707
Other liabilities	35	1,191	845
Liabilities of disposal groups classified as held for sale	30	8	-
Total liabilities		58,094	52,954
EQUITY
Share capital	37	852	655
Share premium	37	8,054	8,055
Reserves and retained earnings	38	(2,241)	(3,709)
Preferred securities	39	2	42
Total equity		6,667	5,043
Total equity and liabilities		64,761	57,997

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

Consolidated Income Statement

		Year ended 31 December
		2019	2018
			Restated (1)
	Note	€ million	€ million

Interest income		2,105	2,186
Interest expense		(728)	(770)
Net interest income	6	1,377	1,416
Banking fee and commission income		413	422
Banking fee and commission expense		(119)	(124)
Net banking fee and commission income	7	294	298

Income from non banking services	8	60	13
Net trading income/(loss)	9	(20)	37
Gains less losses from investment securities	9	78	83
Other income/(expenses)	10	55	(15)
Operating income		1,844	1,832
Operating expenses	11	(901)	(874)
Profit from operations before impairments,
provisions and restructuring costs		943	958
Impairment losses relating to loans and
advances to customers	21	(624)	(680)
Impairment losses on goodwill	28	(62)	-
Other impairment losses and provisions	12	(32)	(9)
Restructuring costs	12	(88)	(62)
Share of results of associates and joint ventures	24	23	29
Profit before tax		160	236

Income tax	13	(31)	(78)
Net profit from continuing operations		129	158
Net profit/(loss) from discontinued operations	30	(2)	(65)
Net profit attributable to shareholders		127	93

		€	€
Earnings per share
-Basic and diluted earnings per share	14	0.04	0.04
Earnings per share from continuing operations
-Basic and diluted earnings per share	14	0.04	0.07

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

Consolidated Statement of Comprehensive Income

		Year ended 31 December
		2019		2018 Restated (1)

	€ million		€ million
Net profit		127		93
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Cash flow hedges
- changes in fair value, net of tax	12		22
- transfer to net profit, net of tax	(17)	(5)	(19)	3
Debt securities at FVOCI
- changes in fair value, net of tax (notes 5.2.1.3 and 22)	705		(88)
- transfer to net profit, net of tax (note 22)	(290)	415	(75)	(163)
Foreign currency translation
- foreign operations' translation differences	2		(10)
- transfer to net profit on disposal of
foreign operations (note 30)	0	2	34	24
Associates and joint ventures
- changes in the share of other comprehensive
income, net of tax (note 24)	47	47	(33)	(33)
		459		(169)
Items that will not be reclassified to profit or loss:
- Actuarial gains/(losses) on post employment
benefit obligations, net of tax	(4)	(4)	0	0
Other comprehensive income		455		(169)
Total comprehensive income attributable
to shareholders:
- from continuing operations		584		(57)
- from discontinued operations		(2)		(19)
		582		(76)

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

Consolidated Statement of Changes in Equity

Notes on pages 6 to 156 form an integral part of these consolidated financial statements

Note 37 Note 37 Note 38 Note 34 Note 39

Consolidated Cash Flow Statement

		Year ended 31 December
		2019	2018 Restated (1)
	Note	€ million	€ million
Cash flows from continuing operating activities
Profit before income tax from continuing operations (note 2.3.2) Adjustments for :		160	236
Impairment losses relating to loans and advances to customers	21	624	680
Impairment losses on goodwill	28	62	-
Other impairment losses, provisions and restructuring costs (note 2.3.2)	12	120	71
Depreciation and amortisation (note 2.3.2)	11	109	58
Other (income)/losses οn investment securities	16	(73)	(166)
Valuation of investment property	27	(61)	13
Other adjustments	24,23.3	(50)	(58)
Changes in operating assets and liabilities		891	834
Net (increase)/decrease in cash and balances with central banks		19	(74)
Net (increase)/decrease in securities held for trading		(67)	3
Net (increase)/decrease in due from credit institutions		(768)	(99)
Net (increase)/decrease in loans and advances to customers		(1,223)	(822)
Net (increase)/decrease in derivative financial instruments		150	(82)
Net (increase)/decrease in other assets		(180)	(185)
Net increase/(decrease) in due to central banks and credit institutions		(1,710)	(5,698)
Net increase/(decrease) in due to customers		4,655	5,240
Net increase/(decrease) in other liabilities		(68)	(13)
		808	(1,730)
Income tax paid		(41)	(34)
Net cash from/(used in) continuing operating activities		1,658	(930)

Cash flows from continuing investing activities
Acquisition of fixed and intangible assets		(144)	(114)
Proceeds from sale of fixed and intangible assets		40	37
(Purchases)/sales and redemptions of investment securities		966	(205)
Acquisition of subsidiaries and Grivalia, net of cash acquired	23	450	(7)
Acquisition of holdings in associates and joint ventures, participations in
capital increases and capital return	24	(4)	23
Disposal of subsidiaries, net of cash disposed	23	10	(114)
Dividends from investment securities, associates and joint ventures		13	18
Net cash from/(used in) continuing investing activities		1,331	(362)
Cash flows from continuing financing activities
(Repayments)/proceeds from debt securities in issue	34	(303)	1,210
Capital return from discontinued operations		-	50
Repayment of lease liabilities	16	(39)	-
Redemption/ buy back of preferred securities	39	(42)	(1)
Preferred securities' dividend paid	39	(3)	(3)
(Purchase)/sale of treasury shares		(1)	0
Redemption of preference shares, net of expenses	34	-	(4)
Net cash from/(used in) continuing financing activities		(388)	1,252
Effect of exchange rate changes on cash and cash equivalents		1	(0)
Net increase/(decrease) in cash and cash equivalents from continuing operations		2,602	(40)

Net cash flows from discontinued operating activities		-	(104)
Net cash flows from discontinued investing activities		-	1
Net cash flows from discontinued financing activities		-	(51)
Net increase/(decrease) in cash and cash equivalents from discontinued operations		-	(154)
Cash and cash equivalents at beginning of year	16	1,949	2,143
Cash and cash equivalents at end of year	16	4,551	1,949

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

1. General information

Eurobank Ergasias S.A. (the Bank) and its subsidiaries (the Group) are active in retail, corporate and private banking, asset management, treasury, capital markets and other services. The Bank is incorporated in Greece and its shares are listed on the Athens Stock Exchange. The Group operates mainly in Greece and in Central and Southeastern Europe.

These consolidated financial statements, which include the Appendix, were approved by the Board of Directors on 12 March 2020. The Independent Auditor's Report of the Financial Statements is included in the section III of the Annual Financial Report.

2. Basis of preparation and principal accounting policies

The principal accounting policies applied in the preparation of the consolidated financial statements are set out below:

2.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the IASB, as endorsed by the European Union (EU), and in particular with those standards and interpretations, issued and effective or issued and early adopted as at the time of preparing these consolidated financial statements.

The consolidated financial statements are prepared under the historical cost basis except for the financial assets measured at fair value through other comprehensive income, financial assets and financial liabilities (including derivative instruments) at fair-valuethrough-profit-or-loss and investment property measured at fair value.

The accounting policies for the preparation of the consolidated financial statements have been consistently applied to the years 2019 and 2018, after taking into account the amendments in IFRSs as described in section 2.1.1 "New and amended standards and interpretations" and the amendments described in section 2.2 "Principal accounting policies" following changes in the Group's accounting policies. The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2). In addition, where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

The preparation of financial statements in accordance with IFRS requires the use of estimates and judgementsthat affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates.

The Group's presentation currency is the Euro (€) being the functional currency of the parent company. Except as indicated, financial information presented in Euro has been rounded to the nearest million.

Going concern considerations

The annual financial statements have been prepared on a going concern basis, as the Board of the Directors considered as appropriate, taking into consideration the following:

The Group operates in an environment of positive growth rates both in Greece (Group's main market) and the other countries, in which it has a substantial presence. Specifically, Greece's 2019 real GDP growth was at 1.9% according to the Hellenic Statistical Authority (ELSTAT) data (2018: 1.9%), while it was estimated at 2.4% in 2020, according to the European Commission's 2020 winter forecasts. The unemployment rate in December 2019 was at 16.3% (December 2018: 18.5%) based on ELSTAT data. On the fiscal front, according to the 2020 Budget, the primary surplus of Greece for 2019 is estimated at 3.7% of GDP, while the respective forecast for 2020 was estimated at 3.6% of GDP. However, the recent coronavirus outbreak is very possible to slash the above forecasts for 2020. In the context of the Enhanced Surveillance (ES), the first four consecutive quarterly reviews were successfully completed by December 2019, while the conclusion of the fifth review is expected by mid-March 2020. The capital controls imposed in July 2015 were fully abolished from 1 September 2019 onwards. On the back of this environment, the Greek state in 2019 managed to normalize and achieve continuous market access with the issuance of four bonds of various maturities. In January 2020, the Greek government issued a 15-year bond of € 2.5 billion at a yield of 1.9%. The yield of the 10-year benchmark bond was at 1.46% on 31 December 2019, compared to 4.40% on 31 December 2018. Additionally, according to the ECB's decision notified to the Bank on 6 March 2020, it has been concluded that the reasons to impose sovereign limits on the Greek banks' (including Eurobank) exposure towards the Hellenic Republic have ceased to exist and therefore its previous decision on those limits shall be repealed.

Regarding the outlook for the next 12 months, the major macroeconomic risks and uncertainties in Greece are associated with (i) the implementation of the reforms and privatizations' agenda in order to meet the ES targets and milestones, (ii) the implementation of the Public Investments Program according to the respective 2020 Budget targets, (iii) the attraction of new investments in the country and (iv) the geopolitical and macroeconomic conditions in the near or in broader region, including the impact of a persistent low/negative rates' environment and the external shocks from a slowdown in the regional and/ or global economy. A major challenge for the international community is the recent coronavirus outbreak whose economic effect is mainly related with the disruption of trade and global supply chains and the risks that it might create for the world growth for 2020. In case of a global slowdown in economic activity, an adverse impact on certain industries of the Greek economy, such as tourism, manufacturing sector and shipping cannot be ruled out. Materialization of those risks would have potentially adverse effects on the fiscal planning of the Greek sovereign and on the liquidity, solvency and profitability of the Greek banking sector, as well as on the realization of their NPE's reduction plans. The Group monitors closely the developments in the Greek and regional macroeconomic environment taking into account its direct and indirect exposure to sovereign risk.

The merger with Grivalia completed in May 2019 has further enhanced Eurobank's capital with the total CAD and the CET1 ratios amounting to 19.2% and 16.7% respectively as at 31 December 2019. The net profit attributable to shareholders amounted to € 127 million (€ 257 million net profit from continuing operations before € 66 million restructuring costs after tax and € 62 million goodwill impairment) for the year ended 31 December 2019. Furthermore, the Bank has eliminated the use of ELA as of end January 2019. As at 31 December 2019, the Group deposits have increased by € 5.7 billion (out of which € 1.1 billion is associated with the acquisition of Piraeus Bank Bulgaria) to € 44.8 billion (2018: € 39.1 billion), improving the Group's (net) loans to deposits (L/D) ratio to 83.2% as at 31 December 2019 (2018: 92.6%). In the context of the internal liquidity stress test framework, which is part of the 2019 ILAAP (Internal Liquidity Adequacy Assessment Process), the results of the short and medium term liquidity stress tests indicate that the Bank has adequate liquidity buffer to withstand to all of the stress test scenario effects.

In 2019, the Group, after completing in September the sale of 95% of the mezzanine and junior notes of a securitization of a residential mortgage loan portfolio with a gross book value of ca. € 2 billion (project Pillar comprising primarily NPEs - note 20) and executing its organic NPE reduction strategy, managed to decrease its NPEs at amortised cost by € 3.7 billion to € 13.0 billion, driving the NPE ratio to 29% (2018: 37%).

The Greek government in order to support the reduction of non-performing loans (NPL) of banks designed an asset protection scheme ('APS'), approved by European Commission in October 2019, to assist them in securitizing and moving non-performing loans off their balance sheets. In December 2019 the Bank, following the enactment of the 'APS' law (note 5) and its decision to opt-in for all the senior notes of the Cairo transaction, has entered into binding agreements for: a) the sale of 20% of the mezzanine and the minimum required percentage (as per 'APS') of junior notes of a securitization of a mixed assets portfolio with a gross book value of ca. € 7.5 billion (project Cairo comprising primarily NPEs - note 34) and b) the sale of a majority stake in Financial Planning Services S.A. (FPS), the licensed 100%-owned loan servicer of Eurobank (project Europe - note 30). The above projects are a key component of the Group's frontloaded NPE reduction plan for the achievement of the targeted NPE ratio of ca. 16% in the first quarter of 2020 and a single digit ratio by 2021.

In response to the coronavirus outbreak, on 12 March 2020, the ECB announced a number of temporary capital and operational relief measures to ensure that its directly supervised banks can continue to fulfil their role in funding the real economy. Banks will be allowed to use capital and liquidity buffers and cover Pillar 2 requirements with other than CET 1 instruments. On the same date the EBA decided to postpone the EU-wide stress test exercise to 2021 to allow banks to focus on and ensure continuity of their core operations, including support for their customers. The ECB stated that it supports the above EBA decision and will extend the postponement to all banks (including Eurobank) subject to the 2020 stress test (note 4). In addition, the EBA stated that there is flexibility in the implementation of the EBA Guidelines on management of non-performing and forborne exposures and called for a close dialogue between supervisors and banks, also on their non-performing exposure strategies, on a case by case basis (note 5.2).

Going concern assessment

The Board of Directors, taking into account the above factors relating to the adequacy of the Group's capital and liquidity position as well as the progress that has been made in executing its NPE reduction acceleration plan, has been satisfied that the financial statements of the Group can be prepared on a going concern basis.

2.1.1 New and amended standards and interpretations

New and amended standards adopted by the Group as of 1 January 2019

The following new standards, amendments to standards and new interpretations as issued by the International Accounting Standards Board (IASB) and the IFRS Interpretations Committee (IC) and endorsed by the European Union (EU), apply from 1 January 2019:

IFRS 9, Amendments–Prepayment Features with Negative Compensation

The amendments in IFRS 9 requirements allow the measurement of a financial asset at amortised cost, or at fair value through other comprehensive income (FVOCI), depending on the business model, even in the case of prepayment options which could result in the party that triggers the early termination, receiving compensation from the other party (negative compensation). Therefore, these financial assets can now be measured at amortised cost or at FVOCI, regardless of the event or circumstance that caused the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination. Applying IFRS 9 before the amendments would probably result in these financial assets failing the "Solely Payments of Principal and Interest" criterion and thus being measured at FVTPL.

The amendments also confirm the modification accounting of financial liabilities under IFRS 9. Specifically, when a financial liability measured at amortised cost is modified without this to result in derecognition, a gain or loss, calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate, should be recognized in profit or loss.

The adoption of the amendments had no impact on the consolidated financial statements.

IFRIC 23, Uncertainty over Income Tax Treatments

The interpretation clarifies the application of the recognition and measurement requirements of IAS 12 'Income Taxes' when there is uncertainty over income tax treatments. In such a circumstance, recognition and measurement of current or deferred tax asset or liability according to IAS 12 is based on taxable profit (tax loss), tax bases, unused tax losses and tax credits and tax rates as determined by applying IFRIC 23.

According to the interpretation, each uncertain tax treatment is considered separately or together as a group, depending on which approach better predicts the resolution of the uncertainty. The entity also assumesthat the taxation authority that will examine these uncertain tax amounts, has a right to examine and has full knowledge of all related information when making those examinations.

If an entity concludes that it is probable that the taxation authority will accept an uncertain tax treatment, it will determine its taxable profits, tax bases, tax losses, tax credits and tax rates consistently with that treatment. If it concludes that it is not probable that the uncertain tax treatment will be accepted, the effect of the uncertainty in its income tax accounting should be reflected in the period in which that determination is made, using the method that best predicts the resolution of the uncertainty (i.e. the single most likely amount, or the expected value method which follows a probability weighted approach).

Judgments and estimates that are made for the recognition and measurement of the effect of the uncertain tax treatments should be reassessed whenever circumstances change or new information that affects those judgments arise (e.g. actions by the tax authority, evidence that it has taken a particular position in connection with a similar item or the expiry of its right to examine a particular tax treatment).

The adoption of the interpretation had no impact on the consolidated financial statements.

IFRS 16, Leases

IFRS 16, which supersedes IAS 17 'Leases' and related interpretations, introduces a single, on-balance sheet lease accounting model for lessees, under which the classification of leases for a lessee, as either operating leases or finance leases, is eliminated and all leases are treated similarly to finance leases under IAS 17.

The definition of a lease under IFRS 16 mainly relates to the concept of control. The new standard distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:

The right to obtain substantially all of the economic benefits from the use of an identified asset; and
The right to direct the use of that asset.

IFRS 16 provides for the recognition of a 'right-of-use-asset' and a 'lease liability' upon lease commencement in case that there is a contract, or part of a contract, that conveys to the lessee the right to use an asset for a period of time in exchange for a consideration.

The right-of-use-asset is, initially, measured at cost, consisting of the amount of the lease liability, plus any lease payments made to the lessor at or before the commencement date less any lease incentives received, the initial estimate of restoration costs and any initial direct costs incurred by the lessee and, subsequently, at cost less accumulated depreciation and impairment. The lease liability is initially recognized at an amount equal to the present value of the lease payments during the lease term that are not yet paid.

Consequently, the typical straight line operating lease expense of operating leases under IAS 17 is replaced by the depreciation charge of the 'right-of-use-asset' and the interest expense on the 'lease liability'. The recognition of assets and liabilities by lessees, as described above, is not required for certain short-term leases and leases of low value assets. The accounting treatment for lessors is not substantially affected by the requirements of IFRS 16.

Adoption of IFRS 16

The Group implemented the requirements of IFRS 16 on 1 January 2019. The Group has chosen the modified retrospective application of IFRS 16 and therefore the comparative information was not restated.

Upon transition, the Group adopted the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, existing contracts previously classified as service contracts such as ATMs, APSs and printing services were not classified as leases under IFRS 16, while the definition set out in IFRS 16 is applied to all lease contracts entered into or modified on or after 1 January 2019.

In accordance with IFRS 16, at the commencement date of the lease, the Group as a lessee recognises right-of-use assets and lease liabilities in the balance sheet, initially measured at the present value of the future lease payments.

The Group applied this initial measurement principle to all leases, except for those with a lease term of 12 months or less, and leases of low value (i.e. less than € 5,000) - making use of the relevant short-term leases and leases of low-value assets exemptions. The Group also adopted the practical expedient not to separate non-lease components from lease components.

In applying the modified retrospective transition approach, the Group used the following main estimates and judgments:

In determining the lease term for the leases in which the Group is the lessee, including those leases having an indefinite life, all relevant facts and circumstances, such as future housing needs and expected use, were considered and judgment was exercised. Furthermore, options to extend or terminate the lease that are reasonably certain to exercise were considered. These estimates will be revisited on a regular basis over the lease term.
The present value of the lease liabilities was measured by using the incremental borrowing rate on the transition date, since the interest rate implicit in the leases was not readily determinable. For the Bank and Greek subsidiaries ("Greek Operations") the incremental borrowing rate was derived from the estimated covered bonds yield curve, which is constructed based on observable Greek Government Bond yields. For Greek Operations, the weighted average discount rate was 2.6%. For international subsidiaries, the incremental borrowing rate was determined on a country basis, taking into consideration specific local conditions. The discount rate used to determine the lease liabilities will be recalculated on a regular basis, using updated input.
Applicable taxes, Value Added Tax and stamp duties were excluded from the scope of IFRS 16 calculations.

The quantitative impact of applying IFRS 16 as at 1 January 2019 is disclosed in note 2.3.1.

IAS 28, Amendments – Long-Term Interests in Associates and Joint Ventures

The amendments clarify that IFRS 9 'Financial Instruments' including its impairment requirements, applies to long-term interests in associates or joint ventures that form part of the entity's net investment in the associate or joint venture but are not accounted for using the equity method of accounting.

According to the amendments, an entity should not take into account any adjustments to the carrying amount of long-term interests (net investment in the associate or joint venture), resulting from the application of IAS 28 'Investments in Associates and Joint Ventures' when applying IFRS 9.

The adoption of the amendments had no impact on the consolidated financial statements.

IAS 19, Amendments –Plan Amendment, Curtailment or Settlement

The amendments clarify that when a change to a defined benefit plan i.e. an amendment, curtailment or settlement takes place and a remeasurement of the net defined benefit liability or asset is required, the updated actuarial assumptions from the remeasurement should be used to determine current service cost and net interest for the remainder of the reporting period after that event. Additionally, the amendments include clarifications about the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

The adoption of the amendments had no impact on the consolidated financial statements.

Annual Improvements to IFRSs 2015-2017 Cycle

The improvements introduce key changes to several standards as set out below:

The amendments to IFRS 3 'Business Combinations' and IFRS 11 'Joint Arrangements' clarified how an entity accounts for increasing its interest in a joint operation that meets the definition of a business. Specifically, when an entity obtains control of a business that is a joint operation, then the transaction constitutes a business combination achieved in stages and the acquiring party re-measures the entire previously held interest in the assets and liabilities of the joint operation at fair value. In case when a party that participates in, but does not have joint control of, a joint operation obtains joint control of the joint operation, then the previously held interest is not re-measured.

The improvement to IAS 12 'Income Taxes' clarified that all income tax consequences of dividends, including payments on financial instruments classified as equity, should be recognized in profit or loss, other comprehensive income or equity, according to where the originating transaction or event that generated distributable profits giving rise to the dividend, was recognized.

IAS 23 'Borrowing costs' amendments clarified that any borrowing originally performed to develop a qualifying asset should be treated as part of the funds that the entity borrowed generally, when substantially all of the activities necessary to prepare that asset for its intended use or sale are complete.

The adoption of the amendments had no impact on the consolidated financial statements.

New standards, amendments to standards and interpretations not yet adopted by the Group

A number of new standards, amendments to existing standards and interpretations are effective after 2019, as they have not yet been endorsed by the European Union, or have not been early applied by the Group. Those that may be relevant to the Group are set out below:

Interest Rate Benchmark Reform: Amendments to IFRS 9, IAS 39 and IFRS 7 (effective 1 January 2020)

In September 2019, the IASB issued amendments to IFRS 9 'Financial Instruments', IAS 39 'Financial Instruments: Recognition and Measurement' and IFRS 7 'Financial Instruments: Disclosures' to address the implications for certain hedge accounting requirements related to the uncertainties arising from the market-wide reform of several interest rate benchmarks (referred to as 'IBOR reform'). As a result of the IBOR reform, there may be uncertainties about: a) the interest rate benchmark designated as a hedged risk and/or b) the timing or amount of the benchmark-based cash flows of the hedged item or the hedging instrument, during the period before the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate (an 'RFR'). The amendments modify certain hedge accounting requirements under IAS 39 or IFRS 9 to provide temporary reliefs from the potential effect of uncertainty, during the transition period. These reliefs are related mainly to the highly probable requirement for the cash flows hedges, the compliance with the identifiable nature of the risk component and the application of prospective and retrospective effectiveness tests.

The IASB addressesthe IBOR reform and its potential effects on financial reporting in two phases. These amendments conclude phase one that focuses on hedge accounting issues affecting financial reporting in the period before the interest rate benchmark reform, while the second phase focuses on potential issues that might affect financial reporting once the existing rates are replaced with an RFR.

As described in note 2.2.3, the Group elected, as a policy choice permitted under IFRS 9, to continue to apply hedge accounting in accordance with IAS 39. Therefore, the amendments to IAS 39 and IFRS 7 will be applicable for the Group.

The Group has set up an IBOR transition program to implement the transition to alternative interest rates that focuses on key areas of impact on customers' contracts, systems and processes, financial reporting, valuation, capital and liquidity planning and communication (refer to note 5.2.4).

The Group is currently assessing the amendments in order to define the extent to which the reliefs provided will be applied in its hedging relationships.

Amendments to the Conceptual Framework for Financial Reporting, including amendments to references to the Conceptual Framework in IFRS Standards (effective 1 January 2020)

In March 2018, the IASB issued its revised "Conceptual Framework for Financial Reporting" (Conceptual Framework). The revised Conceptual Framework is not a standard nor overrides any requirements of individual standards. This replaces the previous version of the Conceptual Framework issued in 2010. Revisions performed by IASB introduced guidance on measurement, presentation and disclosure on derecognition concepts. In addition, the revision includes updated definitions of an asset/liability and of recognition criteria, as well as clarifications on important areas.

Alongside the revised Conceptual Framework, the IASB has published an accompanying document "Amendments to References to the Conceptual Framework in IFRS Standards" which contains consequential amendments to affected standards so that they refer to the revised Framework.

The adoption of the amended Framework is not expected to impact the consolidated financial statements.

Amendments to IFRS 3 Business Combinations (effective 1 January 2020, not yet endorsed by EU)

The IASB issued amendments to the definition of a business in IFRS 3 "Business Combinations" to help entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing any missing elements and add guidance to help entities assess whether an acquired process is substantive. In addition, with the introduction of the amendments the definitions of a business and of outputs are narrowed, while an optional fair value concentration test is introduced.

The adoption of the amendments is not expected to impact the consolidated financial statements.

Amendments to IAS 1 and IAS 8: Definition of Material (effective 1 January 2020)

The amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" aim to align the definition of 'material' across the standards and to clarify certain aspects of the definition. According to the new definition, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information, or both.

The adoption of the amendments is not expected to impact the consolidated financial statements.

IAS 1, Amendments, Classification of Liabilities as Current or Non-Current (effective 1 January 2022, not yet endorsed by EU)

The amendments affect only the presentation of liabilities in the balance sheet and provide clarifications over the definition of the right to defer the settlement of a liability, while they make clear that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. In addition, it is clarified that the assessment for liabilities classification made at the end of the reporting period is not affected by the expectations about whether an entity will exercise its right to defer settlement of a liability. The Board also clarified that when classifying liabilities as current or non-current, a entity can ignore only those conversion options that are recognised as equity.

The adoption of the amendments is not expected to impact the consolidated financial statements.

IFRS 17, Insurance Contracts (effective 1 January 2021, not yet endorsed by EU)

IFRS 17, which supersedes IFRS 4 'Insurance Contracts' provides a comprehensive and consistent accounting model for insurance contracts. It applies to insurance contracts issued, all reinsurance contracts and to investment contracts with discretionary participating features provided that the entity also issues insurance contracts. Financial guarantee contracts are allowed to be within the scope of IFRS 17 if the entity has previously asserted that it regarded them as insurance contracts.

According to IFRS 17 general model, groups of insurance contracts which are managed together and are subject to similar risks, are measured based on building blocks of discounted, probability-weighted estimates of future cash flows, a risk adjustment and a contractual service margin ('CSM') representing the unearned profit of the contracts. Under the model, estimates are remeasured at each reporting period. A simplified measurement approach may be used if it is expected that doing so a reasonable approximation of the general model is produced, or if the contracts are of short duration.

Revenue is allocated to periods in proportion to the value of expected coverage and other services that the insurer provides during the period, claims are presented when incurred and any investment components i.e. amounts repaid to policyholders even if the insured event does not occur, are not included in revenue and claims. Insurance services results are presented separately from the insurance finance income or expense.

In June 2019, the IASB issued exposure draft Amendments to IFRS 17, including a deferral of the effective date by one year, so that entities would be required to apply IFRS 17 for annual periods beginning on or after 1 January 2022.

IFRS 17 is not relevant to the Group's activities, other than through its associate Eurolife ERB Insurance Group Holdings S.A.

2.2 Principal accounting policies

2.2.1 Consolidation

(i) Subsidiaries

Subsidiaries are all entities controlled by the Group. The Group controls an entity when it is exposed, or has rights to, variable returns from its involvement with the entity, and has the ability to affect those returns through its power over the entity. The Group consolidates an entity only when all the above three elements of control are present.

Power is considered to exist when the Group's existing rights give it the current ability to direct the relevant activities of the entity, i.e. the activities that significantly affect the entity's returns, and the Group has the practical ability to exercise those rights. Power over the entity may arise from voting rights granted by equity instruments such as shares or, in other cases, may result from contractual arrangements.

Where voting rights are relevant, the Group is deemed to have control where it holds, directly or indirectly, more than half of the voting rights over an entity, unless there is evidence that another investor has the practical ability to unilaterally direct the relevant activities.

The Group may have power, even when it holds less than a majority of the voting rights of the entity, through a contractual arrangement with other vote holders, rights arising from other contractual arrangements, substantive potential voting rights, ownership of the largest block of voting rights in a situation where the remaining rights are widely dispersed ('de facto power'), or a combination of the above. In assessing whether the Group has de facto power, it considers all relevant facts and circumstances including the relative size of the Group's holding of voting rights and dispersions of holdings of other vote holders to determine whether the Group has the practical ability to direct the relevant activities.

The Group is exposed or has rights to variable returns from its involvement with an entity when these returns have the potential to vary as a result of the entity's performance.

In assessing whether the Group has the ability to use its power to affect the amount of returns from its involvement with an entity, the Group determines whether in exercising its decision-making rights, it is acting as an agent or as a principal. The Group acts as an agent when it is engaged to act on behalf and for the benefit of another party, and as a result does not control an entity. Therefore, in such cases, the Group does not consolidate the entity. In making the above assessment, the Group considers the scope of its decision-making authority over the entity, the rights held by other parties, the remuneration to which the Group is entitled from its involvement, and its exposure to variability of returns from other interests in that entity.

The Group has interests in certain entities which are structured so that voting rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual rights. In determining whether the Group has control over such structured entities, it considers the following factors:

The purpose and design of the entity;
Whether the Group has certain rights that give it the ability to direct the relevant activities of the entity unilaterally, as a result of existing contractual arrangements that give it the power to govern the entity and direct its activities;
In case another entity is granted decision making rights, the Group assesses whether this entity acts as an agent of the Group or another investor;
The existence of any special relationships with the entity; and
The extent of the Group's exposure to variability of returns from its involvement with the entity, including its exposure in the most subordinated securitized notes issued by the entity as well as subordinated loans or other credit enhancements that may be granted to the entity, and if the Group has the power to affect such variability.

Information about the Group's structured entities is set out in note 25.

The Group reassesses whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more elements of control. This includes circumstances in which the rights held by the Group and intended to be protective in nature become substantive upon a breach of a covenant or default on payments in a borrowing arrangement, and lead to the Group having power over the investee.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's ownership interest in subsidiaries that do not result in a loss of control are recorded as equity transactions. Any difference between the consideration and the share of the new net assets acquired is recorded directly in equity. Gains or losses arising from disposals of ownership interests that do not result in a loss of control by the Group are also recorded directly in equity. For disposals of ownership interests that result in a loss of control, the Group derecognizes the assets and liabilities of the subsidiary and any related non-controlling interest and other components of equity, and recognizes gains and losses in the income statement. When the Group ceases to have control, any retained interest in the former subsidiary is re-measured to its fair value, with any changes in the carrying amount recognized in the income statement.

Intercompany transactions, balances and intragroup gains on transactions between Group entities are eliminated; intragroup losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.

(ii) Business combinations

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The consideration transferred for an acquisition is measured at the fair value of the assets given, equity instruments issued or exchanged and liabilities undertaken at the date of acquisition, including the fair value of assets or liabilities resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date irrespective of the extent of any non-controlling interest. Any previously held interest in the acquiree is remeasured to fair value at the acquisition date with any gain or loss recognized in the income statement. The Group recognizes on an acquisition-by-acquisition basis any non-controlling interest in the acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets of the subsidiary acquired, is recorded as goodwill. If this is less than the fair value of the net assets of the acquiree, the difference is recognized directly in the income statement.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which it occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period to reflect the new information obtained about the facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. The measurement period adjustments, as mentioned above, affect accordingly the amount of goodwill that was initially recognized, while the measurement period cannot exceed one year from the acquisition date.

Commitments to purchase non-controlling interests through derivative financial instruments with the non-controlling interests, as part of a business combination are accounted for as a financial liability, with no non-controlling interest recognized for reporting purposes. The financial liability is measured at fair value, using valuation techniques based on best estimates available to management. Any difference between the fair value of the financial liability upon initial recognition and the nominal non-controlling interest's share of net assets is recognized as part of goodwill. Subsequent revisions to the valuation of the derivatives are recognized in the income statement.

For acquisitions of subsidiaries not meeting the definition of a business, the Group allocates the consideration to the individual identifiable assets and liabilities based on their relative fair values at the date of acquisition. Such transactions or events do not give rise to goodwill.

Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies of the Group.

A listing of the Bank's subsidiaries is set out in note 23.1.

(iii) Business combinations involving entities under common control

Pursuant to IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors', since business combinations between entities under common control are excluded from the scope of IFRS 3 'Business Combinations', such transactions are accounted for in the Group's financial statements by using the pooling of interests method (also known as merger accounting), with reference to the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework and comply with the IFRS general principles, as well as accepted industry practices.

Under the pooling of interests method, the Group incorporates the assets and liabilities of the acquiree at their pre-combination carrying amounts from the highest level of common control, without any fair value adjustments. Any difference between the cost of the transaction and the carrying amount of the net assets acquired is recorded in Group's equity.

The Group accounts for the cost of such business combinations at the fair value of the consideration given, being the amount of cash or shares issued or if that cannot be reliably measured, the consideration received.

Formation of a new Group entity to effect a business combination

Common control transactions that involve the formation of a new Group entity to effect a business combination by bringing together two or more previously uncombined businesses under the new Group entity are also accounted for by using the pooling of interests method.

Other common control transactions that involve the acquisition of a single existing Group entity or a single group of businesses by a new entity formed for this purpose are accounted for as capital reorganizations, on the basis that there is no business combination and no substantive economic change in the Group. Under a capital reorganization, the acquiring entity incorporates the assets and liabilities of the acquired entity at their carrying amounts, as presented in the books of that acquired entity, rather than those from the highest level of common control. Any difference between the cost of the transaction and the carrying amount of the net assets acquired is recognized in the equity of the new entity. Capital reorganization transactions do not have any impact on the Group's consolidated financial statements.

(iv) Associates

Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements. These are undertakings over which the Group exercises significant influence but which are not controlled.

Equity accounting involves recognizing in the income statement the Group's share of the associate's profit or loss for the year. The Group's interest in the associate is carried on the balance sheet at an amount that reflects its share of the net assets of the associate and any goodwill identified on acquisition net of any accumulated impairment losses. If the Group's share of losses of an associate equals or exceeds its interest in the associate, the Group discontinues recognizing its share of further losses, unless it has incurred obligations or made payments on behalf of the associate. Where necessary the accounting policies used by the associates have been changed to ensure consistency with the policies of the Group.

When the Group obtains or ceases to have significant influence, any previously held or retained interest in the entity is remeasured to its fair value, with any change in the carrying amount recognized in the income statement, except in cases where an investment in associate becomes an investment in a joint venture where no remeasurement of the interest retained is performed and use of the equity method continues to apply.

(v) Joint arrangements

A joint arrangement is an arrangement under which the Group has joint control with one or more parties. Joint control is the contractually agreed sharing of control and exists only when decisions about relevant activities require the unanimous consent of the parties sharing control. Investments in joint arrangements are classified as either joint ventures whereby the parties who share

control have rights to the net assets of the arrangement or joint operations where two or more parties have rights to the assets and obligations for the liabilities of the arrangement.

The Group evaluates the contractual terms of joint arrangements to determine whether a joint arrangement is a joint operation or a joint venture. All joint arrangements in which the Group has an interest are joint ventures.

As investments in associates, the Group's interest in joint ventures is accounted for by using the equity method of accounting. Therefore, the accounting policy described in note 2.2.1 (iv) applies also for joint ventures. Where necessary the accounting policies used by the joint ventures have been changed to ensure consistency with the policies of the Group.

When the Group ceases to have joint control over an entity, it discontinues the use of the equity method. Any retained interest in the entity is remeasured to its fair value, with any change in the carrying amount recognized in the income statement, except in cases where an investment in a joint venture becomes an investment in an associate, where no remeasurement of the interest retained is performed and use of the equity method continues to apply.

A listing of the Group's associates and joint ventures is set out in note 24.

2.2.2 Foreign currencies

(i) Translation of foreign subsidiaries

Assets and liabilities of foreign subsidiaries are translated into the Group's presentation currency at the exchange rates prevailing at each reporting date whereas income and expenses are translated at the average exchange rates for the period reported. Exchange differences arising from the translation of the net investment in a foreign subsidiary, including exchange differences of monetary items receivable or payable to the foreign subsidiary for which settlement is neither planned nor likely to occur that form part of the net investment in the foreign subsidiaries, are recognized in other comprehensive income.

Exchange differences from the Group's foreign subsidiaries are released to the income statement on the disposal of the foreign subsidiary while for monetary items that form part of the net investment in the foreign subsidiary, on repayment or when settlement is expected to occur.

(ii) Transactions in foreign currency

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the income statement.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at each reporting date and exchange differences are recognized in the income statement, except when deferred in equity as qualifying cash flow or net investment hedges.

Non-monetary assets and liabilities are translated into the functional currency at the exchange rates prevailing at initial recognition, except for non-monetary items denominated in foreign currencies that are measured at fair value which are translated at the rate of exchange at the date the fair value is determined. The exchange differences relating to these items are treated as part of the change in fair value and are recognized in the income statement or recorded directly in equity depending on the classification of the nonmonetary item.

2.2.3 Derivative financial instruments and hedging

Derivative financial instruments, including foreign exchange contracts, forward currency agreements and interest rate options (both written and purchased), currency and interest rate swaps, and other derivative financial instruments, are initially recognized in the balance sheet at fair value on the date on which a derivative contract is entered into and subsequently are re-measured at their fair value. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.

Fair values of derivatives are determined based on quoted market prices, including recent market transactions, or by using other valuation techniques, as appropriate. The principles for the fair value measurement of financial instruments, including derivative financial instruments, are described in notes 2.2.12 and 5.3.

Embedded derivatives

Financial assets that contain embedded derivatives are recognised in the balance sheet in their entirety in the appropriate classification category, following instruments' assessment of their contractual cash flows and their business model as described in note 2.2.9.

On the other hand, derivatives embedded in financial liabilities, are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contract and the host contract is not carried at fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in the income statement.

The use of derivative financial instruments is inherent in the Group's activities and aims principally at managing risk effectively.

Accordingly, the Group, as part of its risk management strategy, may enter into transactions with external counterparties to hedge partially or fully interest rate, foreign currency, equity and other exposures that are generated from its activities.

The objectives of hedging with derivative financial instruments include:

Reduction of interest rate exposure that is in excess of the Group's interest rate limits
Efficient management of interest rate risk and fair value exposure
Management of future variable cash flows
Reduction of foreign currency risk or inflation risk

Hedge accounting

The Group has elected, as a policy choice permitted under IFRS 9, to continue to apply hedge accounting in accordance with IAS 39, until the project of accounting of macro hedging activities is completed by the IASB.

For hedge accounting purposes, the Group forms a hedging relationship between a hedging instrument and a related item or group of items to be hedged. A hedging instrument is a designated derivative or a designated non-derivative financial asset or financial liability whose fair value or cash flows are expected to offset changes in the fair value or cash flows of a designated hedged item.

Specifically, the Group designates certain derivatives as: (a) hedges of the exposure to changes in fair value of recognized assets or liabilities or unrecognized firm commitments (fair value hedge), (b) hedges of the exposure to variability in cash flows of recognized assets or liabilities or highly probable forecasted transactions (cash flow hedge) or, (c) hedges of the exposure to variability in the value of a net investment in a foreign operation which is associated with the translation of the investment's net assets in the Group's functional currency.

In order to apply hedge accounting, specified criteria should be met. Accordingly, at the inception of the hedge accounting relationship, the Group documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions, together with the method that will be used to assess the effectiveness of the hedging relationship. The Group also documents its assessment, both at inception of the hedge and on an ongoing basis, of whether the derivatives that are used in the hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items and whether the actual results of each hedge are within a range of 80-125%. If a relationship does not meet the abovementioned hedge effectiveness criteria, the Group discontinues hedge accounting prospectively. Similarly, if the hedging derivative expires or is sold, terminated or exercised, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. In addition, the Group uses other derivatives, not designated in a qualifying hedge relationship, to manage its exposure primarily to interest rate and foreign currency risks. Non qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied. The said derivative instruments are classified along with those held for trading purposes.

The method of recognizing the resulting fair value gain or loss depends on whether the derivatives are designated and qualify as hedging instruments, and if so, the nature of the item being hedged.

Furthermore, the Group may designate groups of items as hedged items, by aggregating recognized assets or liabilities or unrecognized but highly probable transactions of similar risk characteristics that share the exposure for which they are hedged. Although the overall risk exposures may be different for the individual items in the group, the specific risk being hedged will be inherent in each of the items in the group.

(i) Fair value hedge

The Group applies fair value hedging to hedge exposures primarily to changes in the fair value attributable to interest rate risk and currency risk.

The items that qualify for fair value hedge accounting include fixed rate debt securities classified as FVOCI and amortized cost financial assets, fixed rate term deposits or term loans measured at amortized cost, as well as fixed rate debt securities in issue.

The interest rate and currency risk with respect to the applicable benchmark rate may be hedged using interest rate swaps and cross currency swaps.

The Group uses the dollar-offset method in order to assess the effectiveness of fair value hedges. This is a quantitative method that involves the comparison of the change in the fair value of the hedging instrument with the change in the fair value of the hedged item attributable to the hedged risk. Even if a hedge is not expected to be highly effective in a particular period, hedge accounting is not precluded if effectiveness is expected to remain sufficiently high over the life of the hedge.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with the changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk.

The Group discontinues hedge accounting in case the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the qualifying criteria for hedge accounting, or designation is revoked. In such cases, any adjustment to the carrying amount of the hedged item, for which the effective interest method is applied, is amortized to profit or loss over the period to maturity. Hedge ineffectiveness may arise in case of potential differences in the critical terms between the hedged item and the hedging instrument such as maturity, interest rate reset frequency and discount curves.

(ii) Cash flow hedge

The Group applies cash flow hedging to hedge exposures to variability in cash flows primarily attributable to the interest rate risk and currency risk associated with a recognized asset or liability or a highly probable forecast transaction.

The items that qualify for cash flow hedging include recognized assets and liabilities such as variable rate deposits or loans measured at amortized cost, variable rate debt securities in issue and foreign currency variable rate loans. The interest rate risk with respect to the applicable benchmark rate may be hedged using interest rate swaps and cross currency swaps. The foreign currency risk may be hedged using currency forwards and currency swaps.

Furthermore, cash flow hedging is used for hedging highly probable forecast transactions such as the anticipated future rollover of short-term deposits or repos measured at amortized cost. Specifically, the forecast variable interest payments of a series of anticipated rollovers of these financial liabilities are aggregated and hedged as a group with respect to changes in the benchmark interest rates, eliminating cash flow variability. In addition, cash flow hedging applies to hedges of currency risk arising from probable forecasted sales of financial assets or settlement of financial liabilities in foreign currency.

If the hedged item is documented as a forecast transaction, the Group assesses and verifies that there is a high probability of the transaction occurring.

In order to assess the effectiveness of cash flow hedges of interest rate risk, the Group uses regression analysis which demonstrates that there is high historical and expected future correlation between the interest rate risk designated as being hedged and the interest rate risk of the hedging instrument. For assessing the effectiveness of cash flow hedges of currency risk, the Group uses the dollaroffset method.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income whereas the ineffective portion is recognized in the income statement.

Amounts accumulated in equity are recycled to the income statement in the periods in which the hedged item will affect profit or loss (for example, when the forecast sale that is hedged takes place).

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, the cumulative gain or loss existing in equity at that time remains in equity until the forecast transaction affects the income statement.

When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

(iii) Net investment hedge

The Group applies net investment hedging to hedge exposures to variability in the value of a net investment in foreign operation associated with the translation of the investment's carrying amount into the Group's presentation currency.

The Group invests in foreign subsidiaries, associates or other foreign operations with functional currencies different from the Group's presentation and functional currency which upon consolidation, their carrying amount is translated from the functional currency to the Group's presentation currency and any exchange differences are deferred in OCI until the net investment is disposed of or liquidated, at which time they are recognized in the profit or loss.

The item that qualifies for net investment hedge accounting is the carrying amount of the net investment in a foreign operation, including monetary items that form part of the net investment.

The foreign currency exposure that arises from the fluctuation in spot exchange rates between the net investment's functional currency and the Group's presentation currency may be hedged using currency swaps, currency forward contracts and their economic equivalents, as well as cash instruments.

The effectiveness of net investment hedges is assessed with the Dollar-Offset Method as described above for fair value hedge.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity; the gain or loss relating to the ineffective portion is recognized in the income statement. Gains and losses accumulated in equity are included in the income statement when the foreign operation is disposed of as part of the gain or loss on the disposal.

(iv) Derivatives not designated as hedging instruments for hedge accounting purposes

Changes in the fair value of derivative financial instruments that are not designated as hedging instruments or do not qualify for hedge accounting are recognized in the income statement.

The fair values of derivative instruments held for trading and hedging purposes are disclosed in note 19.

2.2.4 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Group currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

2.2.5 Income statement

(i) Interest income and expense

Interest income and expense is recognized in the income statement for all interest bearing financial instruments on an accrual basis, using the effective interest rate (EIR) method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the EIR for financial instruments other than purchased or originated credit-impaired, the Group estimates cash flows considering all contractual terms of the financial instrument but does not consider expected credit losses. For purchased or originated credit impaired (POCI) financial assets, the Group calculates the credit-adjusted EIR, which is the interest rate that upon the original recognition of the POCI financial asset discounts the estimated future cash flows (including expected credit losses) to the fair value of the POCI asset.

The amortized cost of a financial asset or liability is the amount at which it is measured upon initial recognition minus principal repayments, plus or minus cumulative amortization using the EIR (as described above) and for financial assets it is adjusted for the expected credit loss allowance. The gross carrying amount of a financial asset is its amortized cost before adjusting for ECL allowance.

The EIR calculation includes all fees and points paid or received that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or liability.

The Group calculates interest income and expense by applying the EIR to the gross carrying amount of non-impaired financial assets (exposures in Stage 1 and 2) and to the amortized cost of financial liabilities respectively.

For financial assets that were credit-impaired on initial recognition (POCI) interest income is calculated by applying the credit-adjusted EIR (calculated as described above) to the POCI asset's amortized cost. For such assets even if the credit risk improves, interest income does not revert to gross basis calculation. For inflation-linked instruments the Group recognizes interest income and expense by adjusting the effective interest rate on each reporting period due to changes in expected future cash flows, incorporating changes in inflation expectations over the term of the instruments. The adjusted effective interest rate is applied in order to calculate the new gross carrying amount on each reporting period.

Interest income and expense is presented separately in the income statement for all interest bearing financial instruments within net interest income.

(ii) Fees and commissions

Fee and commission received or paid that are integral to the effective interest rate on a financial asset or financial liability are included in the effective interest rate.

Other fee and commission income such as account servicing and asset management fees (including performance based fees) is recognised over time as the related services are being provided to the customer, to the extent that it is highly probable that a significant reversal of the revenue amount recognized will not occur. Transaction-based fees such as foreign exchange transactions, imports-exports, remittances, bank charges and brokerage activities are recognised at the point in time when the transaction takes place. Other fee and commission expenses relate mainly to transaction and service fees, which are expensed as the services are received.

In the case of a contract with a customer that results in the recognition of a financial instrument in the Group's financial statements which may be partially in the scope of IFRS 9 and partially in the scope of IFRS 15, the Group first applies IFRS 9 to separate and measure the part of the contract that is in the scope of IFRS 9 and subsequently applies IFRS 15 to the residual part.

2.2.6 Property, plant and equipment and Investment property

(i) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent expenditure is recognized in the asset's carrying amount only when it is probable that future economic benefits will flow to the Group and the cost of the asset can be measured reliably. All other repair and maintenance costs are recognized in the income statement as incurred.

Depreciation is calculated using the straight-line method to write down the cost of property, plant and equipment, to their residual values over their estimated useful life as follows:

Land: no depreciation;
Freehold buildings: 40-50 years;
Leasehold improvements: over the lease term or the useful life of the asset if shorter;
Computer hardware and software: 4-10 years;
Other furniture and equipment: 4-20 years; and
Motor vehicles: 5-7 years.

(ii) Investment property

In the fourth quarter of 2019, the Group voluntarily changed its accounting policy regarding the measurement of Investment Property from cost model to fair value model according to IAS 40 "Investment property". In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", the above change in the Group's accounting policy on Investment Property was applied retrospectively as of 1 January 2018 (note2.3.2).

Property held for rental yields and/or capital appreciation that is not occupied by the Group's entities is classified as investment property.

Investment property is measured initially at its cost, including related transaction costs. Under fair value model of IAS 40 "Investment property" after initial recognition, investment property is carried at fair value as determined by independent certified valuers, with any change therein recognized in income statement. Investment property under construction is measured at fair value only if it can be measured reliably.

Subsequent expenditure is charged to the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized to the income statement during the financial period in which they are incurred.

Investment property is derecognised when disposed or when it is permanently withdrawn from use and there is no future economic benefit expected from its disposal. Any arising gain or loss (calculated as the difference between the net proceeds from disposal and the carrying amount of the asset) is recognized in income statement.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification becomes its deemed cost. If an item of property, plant and equipment becomes an investment property because its use has changed, any resulting decrease between the carrying amount and the fair value of this item at the date of transfer is recognized in income statement while any resulting increase, to the extent that the increase reverses previous impairment loss for that property, is recognized in income statement while any remaining part of the increase is recognized in other comprehensive income and increases the revaluation surplus within equity.

If a repossessed asset becomes investment property, any difference between the fair value of the property at the date of transfer and its previous carrying amount is recognized in profit or loss.

Reclassifications among own used, repossessed assets and investment properties may occur when there is a change in the use of such properties. Additionally, an investment property may be reclassified to 'non-current assets held for sale' category to the extent that the criteria described in note 2.2.25 are met.

2.2.7 Intangible assets

(i) Goodwill

Goodwill represents the excess of the aggregate of the fair value of the consideration transferred, the amount of any non-controlling interest and the acquisition date fair value of any previously held equity interest in the acquiree over the fair value of the Group's share of net identifiable assets and contingent liabilities acquired. Goodwill arising on business combinations is included in 'intangible assets' and is measured at cost less accumulated impairment losses.

Goodwill arising on acquisitions of associates and jointly controlled entities is neither disclosed nor tested separately impairment, but instead is included in 'investments in associates' and 'investments in jointly controlled entities'.

(ii) Computer software

Costs associated with the maintenance of existing computer software programs are expensed as incurred. Development costs associated with the production of identifiable assets controlled by the Group are recognized as intangible assets when they are expected to generate economic benefits and can be measured reliably. Internally generated computer software assets are amortized using the straight-line method over 4 years, except for core systems whose useful life may extend up to 15 years.

(iii) Other intangible assets

Other intangible assets are assets that are separable or arise from contractual or other legal rights and are amortized over their estimated useful lives. These include intangible assets acquired in business combinations.

Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

2.2.8 Impairment of non-financial assets

(i) Goodwill

Goodwill arising on business combinations is not amortized but tested for impairment annually or more frequently if there are any indications that impairment may have occurred. The Group's impairment test is performed each year end. The Group considers external information such as prevailing economic conditions, persistent slowdown in financial markets, volatility in markets and changes in levels of market and exchange risk, an unexpected decline in an asset's market value or market capitalization being below

the book value of equity, together with a deterioration in internal performance indicators, in assessing whether there is any indication of impairment.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each Cash Generating Unit (CGU) or groups of CGUs that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Group at which goodwill is monitored for internal management purposes. The Group monitors goodwill either at the separate legal entity level or group of legal entities consistent with the internal monitoring of operating segments.

The Group impairment model compares the carrying value of a CGU or group of CGUs with its recoverable amount. The carrying value of a CGU is based on the assets and liabilities of each CGU. The recoverable amount is determined on the basis of the value-in-use which is the present value of the future cash flows expected to be derived from the CGU or group of CGUs. The estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU and the countries where the CGUs operate.

An impairment loss arises if the carrying amount of an asset or CGU exceeds its recoverable amount, and is recognized in the income statement. Impairment losses are not subsequently reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(ii) Other non-financial assets

Other non- financial assets, including property, plant and equipment and other intangible assets, are assessed for indications of impairment at each reporting date. When events or changes in circumstances indicate that the carrying amount may not be recoverable, an impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows, where applicable. Nonfinancial assets, other than goodwill, for which an impairment loss was recognized in prior reporting periods, are reviewed for possible reversal of such impairment at each reporting date.

Impairment losses arising from the Group's associates and joint ventures are determined in accordance with this accounting policy.

2.2.9 Financial assets

Financial assets - Classification and measurement

The Group classifies financial assets based on the business model for managing those assets and their contractual cash flow characteristics. Accordingly, financial assets are classified into one of the following measurement categories: amortized cost, fair value through other comprehensive income or fair value through profit or loss.

Purchases and sales of financial assets are recognized on trade date, which is the date the Group commits to purchase or sell the assets. Loans originated by the Group are recognized when cash is advanced to the borrowers.

Financial Assets measured at Amortized Cost ('AC')

The Group classifies and measures a financial asset at AC only if both of the following conditions are met and is not designated as at FVTPL:

(a) The financial asset is held within a business model whose objective is to collect contractual cash flows (hold-to-collect business model) and

(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

These financial assets are recognized initially at fair value plus direct and incremental transaction costs, and are subsequently measured at amortized cost, using the effective interest rate (EIR) method (as described in 2.2.5 above).

Interest income, realized gains and losses on derecognition, and changes in expected credit losses from assets classified at AC, are included in the income statement.

Financial Assets measured at Fair Value through Other Comprehensive Income ('FVOCI')

The Group classifies and measures a financial asset at FVOCI only if both of the following conditions are met and is not designated as at FVTPL:

(a) The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (hold-to-collect-and-sell business model) and

(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

Financial assets that meet these criteria are debt instruments and are measured initially at fair value, plus direct and incremental transaction costs.

Subsequent to initial recognition, FVOCI debt instruments are re-measured at fair value through OCI, except for interest income, related foreign exchange gains or losses and expected credit losses, which are recognized in the income statement. Cumulative gains and losses previously recognized in OCI are transferred from OCI to the income statement when the debt instrument is derecognised.

Equity Instruments designated at FVOCI

The Group may make an irrevocable election to designate an equity instrument at FVOCI. This designation, if elected, is made at initial recognition and on an instrument by instrument basis. Gains and losses on these instruments, including when derecognized, are recorded in OCI and are not subsequently reclassified to the income statement. Dividends received are recorded in the income statement.

Financial Assets measured at Fair Value through Profit and Loss ("FVTPL")

The Group classifies and measures all other financial assets that are not classified at AC or FVOCI, at FVTPL. Accordingly, this measurement category includes debt instruments such as loans and debt securities that are held within the hold–to-collect (HTC) or hold-to-collect-and-sell models (HTCS), but fail the SPPI assessment, equities that are not designated at FVOCI and financial assets held for trading. Derivative financial instruments are measured at FVTPL, unless they are designated and effective hedging instruments, in which case hedge accounting requirements under IAS 39 continue to apply.

Furthermore, a financial asset that meets the above conditions to be classified at AC or FVOCI, may be irrevocably designated by the Group at FVTPL at initial recognition, if doing so eliminates, or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets measured at FVTPL are initially recorded at fair value and any unrealized gains or losses arising due to changes in fair value are included in the income statement.

Business model and contractual characteristics assessment

The business model assessment determines how the Group manages a group of assets to generate cash flows. That is, whether the Group's objective is solely to collect contractual cash flows from the asset, to realize cash flows from the sale of assets, or both to collect contractual cash flows and cash flows from the sale of assets. In addition, the business model is determined after aggregating the financial assets into groups (business lines) which are managed similarly rather than at an individual instrument's level.

The business model is determined by the Group's key management personnel consistently with the operating model, considering how financial assets are managed in order to generate cash flows, the objectives and how performance of each portfolio is monitored and reported and any available information on past sales and on future sales' strategy, where applicable.

Accordingly, in making the above assessment, the Group will consider a number of factors including the risks associated with the performance of the business model and how those risks are evaluated and managed, the related personnel compensation, and the frequency, volume and reasons of past sales, as well as expectations about future sales activity.

Types of business models

The Group's business models fall into three categories, which are indicative of the key strategies used to generate returns.

the objective of hold-to-collect contractual cash flows regardless of value and frequency. Sales for other reasons may be consistent with the HTC model such as liquidity needs in any stress case scenario or sales made to manage high concentration level of credit risk. Such sales are monitored and assessed depending on frequency and value to conclude whether they are consistent with the HTC model. Debt instruments classified within this business model include bonds, due from banks and loans and advances to customers including securitized notes issued by special purpose vehicles established by the Group and recognized in its balance sheet, which are measured at amortized cost, subject to meeting the SPPI assessment criteria.

The hold-to-collect-and-sell business model (HTC&S) has the objective both to collect contractual cash flows and sell the assets. Activities such as liquidity management, interest yield and duration are consistent with this business model, while sales of assets are integral to achieving the objectives of this business model. Debt instruments classified within this business model include investment securities which are measured at FVOCI, subject to meeting the SPPI assessment criteria.

Other business models include financial assets which are managed and evaluated on a fair value basis as well as portfolios that are held for trading. This is a residual category for financial assets not meeting the criteria of the business models of HTC or HTC&S, while the collection of contractual cash flows may be incidental to achieving the business models' objective.

The Group's business models are reassessed at least annually or earlier, if there is a sales' assessment trigger or if there are any changes in the Bank's strategy and main activities, as evidenced by the Bank's business plan, budget and NPE strategy.

Cash flow characteristics assessment

For a financial instrument to be measured at AC or FVOCI, its contractual terms must give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

In assessing whether the contractual cash flows are SPPI, the Group will consider whether the contractual terms of the instrument are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin. On the initial recognition of a financial asset, an assessment is performed of whether the financial asset contains a contractual term that could change the amount or timing of contractual cash flows in a way that it would not be consistent with the above condition. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is considered to have failed the SPPI assessment and will be measured at FVTPL.

For the purpose of the SPPI assessment, the Group considers the existence of various features, including among others, contractually linked terms, prepayment terms, deferred interest-free payments, extension and equity conversion options and terms that introduce leverage including index linked payments. Moreover, for the securitized notes issued by special purpose vehicles and held by the Group, the cash flow characteristics of the underlying pool of financial assets as well as the credit risk inherent in each securitization's tranche compared to the credit risk of all of the underlying pool of financial assets, are considered.

In case of special lending arrangements such as non-recourse loans, in its assessment of the SPPI criterion, the Group considers various factors such as the nature of the borrower and its business, the pricing of the loans, whether it participates in the economic performance of the underlying asset and the extent to which the collateral represents all or a substantial portion of the borrower's assets. Moreover, for special purpose entities, the Group takes into consideration the borrower's adequacy of loss absorbing capital by assessing jointly the criteria of equity sufficiency, Loan to Value ratio (LTV), the Average Debt Service Coverage ratio (ADSCR) as well as the existence of corporate and personal guarantees.

In certain cases when the time value of money element is modified in that the financial asset's interest rate is periodically reset but the reset frequency does not match the tenor of the interest rate or when a financial asset's interest rate is periodically reset to an average of particular short-term and long-term interest rates, a quantitative assessment is performed (the "Benchmark Test") in order to determine whether the contractual cash flows are SPPI.

In particular, the Group assesses the contractual cash flows of the "real instrument", whose interest rate is reset with a frequency that does not match the tenor of the interest rate, and those of the "benchmark instrument", which are identical in all respects except that the tenor of the interest rate matches exactly the interest period. If the undiscounted cash flows of the former are significantly different from the benchmark cash flows due to the modified time value of money element, the financial asset does not meet the SPPI criterion. In its assessment, the Group considers both the effect of the modified time value of money element in each reporting period and cumulatively over the life of the instrument. This is done, as far as the lifetime of the instrument is concerned, by comparing the cumulative projected undiscounted cash flows of the real and the benchmark instrument, and for each quarterly

reporting period, by comparing the projected undiscounted cash flows of the two instruments for that quarterly reporting period, based on predefined thresholds.

In addition, for the purposes of the SPPI assessment, if a contractual feature could have an effect that is de-minimis on the contractual cash flows of the financial asset, it does not affect its classification. Moreover, a contractual feature is considered as not genuine by the Group, if it affects the instrument's contractual cash flows only on the occurrence of an event that is extremely rare, highly abnormal and very unlikely to occur. In such a case, it does not affect the instrument's classification.

The Group performs the SPPI assessment for its lending exposures on a product basis for the retail and part of the wholesale portfolio where contracts are of standardized form, whereas for the remaining wholesale portfolio, securitized notes issued by special purpose vehicles established by the Group and debt securities the assessment is performed on an individual basis.

Derecognition of financial assets

The Group derecognizes a financial asset when its contractual cash flows expire, or the rights to receive those cash flows are transferred in an outright sale in which substantially all risks and rewards of ownership have been transferred. In addition, a financial asset is derecognized even if rights to receive cash flows are retained but at the same time the Group assumes an obligation to pay the received cash flows without a material delay (pass through agreement) or when substantially all the risks and rewards are neither transferred nor retained but the Group has transferred control of the asset. Control is transferred if, and only if, the transferee has the practical ability to sell the asset in its entirety to unrelated third party.

The main transactions that are subject to the above de-recognition rules are securitization transactions, repurchase agreements and stock lending transactions. In the case of securitization transactions, in order to assess the application of the above mentioned derecognition principles, the Group considers the structure of each securitization transaction including its exposure to the more subordinated tranches of the notes issued and/or credit enhancements provided to the special purposes vehicles, as well as the securitization's contractual terms that may indicate that the Group retains control of the underlying assets. In the case of repurchase transactions and stock lending, the assets transferred are not derecognised since the terms of the transaction entail the retention of all their risks and rewards.

On derecognition of a financial asset, the difference between the carrying amount of the asset and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in OCI for financial assets at FVOCI, is recognized in income statement.

Modification of financial assets that may result in derecognition

In addition, derecognition of financial asset arises when its contractual cash flows are modified and the modification is considered substantial enough so that the original asset is derecognized and a new one is recognised. The Group records the modified asset as a 'new' financial asset at fair value and the difference with the carrying amount of the existing one is recorded in the income statement as derecognition gain or loss.

The Group may modify the contractual terms of a lending exposure either as a concession granted to a client facing or that is about to face financial difficulties or due to other commercial reasons such as changes in market conditions, competition or customer retention.

Modifications that may result in derecognition include:

change in borrower,
change in the currency that the lending exposure is denominated,
debt consolidation features where two or more consumer unsecured lending contracts are consolidated into a single new secured lending agreement,
the removal or addition of conversion features and/or profit sharing mechanisms and similar terms which are relevant to the SPPI assessment;

In addition, the Group may occasionally enter, in the context of loans' modifications, into debt-for-equity transactions. These are transactions where the terms of a lending exposure are renegotiated and as a result, the borrower issues equity instruments (voting or no voting) in order to extinguish part or all of its financial liability to the Group. Such transactions may include also exercise of conversion rights embedded into convertible or exchangeable bonds and enforcement of shares held as collateral.

In debt-for-equity transactions, the modified loan is derecognized while the equity instruments received in exchange are recognized at their fair value, with any resulting gain or loss recognized in the Group's income statement.

2.2.10 Reclassifications of financial assets

The Group reclassifies a financial asset only when it changes its business model for managing financial assets. Generally, a change in the business model is expected to be rare and occurs when the Group either begins or ceases to perform an activity that is significant to its operations; for example, when a business line is acquired, disposed of or terminated. In the rare event when there is a change to the existing business models, the updated assessment is approved by the Group's competent Committees and the amendment is reflected appropriately in the Group's budget and business plan.

Changes in intention related to particular financial assets (even in circumstances of significant changes in market conditions), the temporary disappearance of a particular market for financial assets or a transfer of financial assets between parts of the Group with different business models, are not considered by the Group changes in business model.

The reclassification is applied prospectively from the reclassification date, therefore previously recognized gains, losses (including impairment losses) or interest are not restated.

2.2.11 Financial liabilities

Financial liabilities - Classification and measurement

The Group classifies its financial liabilities in the following categories: financial liabilities measured at amortized cost and financial liabilities measured at fair-value-through-profit-or-loss.

Financial liabilities at fair-value-through-profit-or-loss comprise two sub categories: financial liabilities held for trading and financial liabilities designated at fair-value-through-profit-or-loss upon initial recognition.

Financial liabilities held for trading are those liabilities that the Group incurs principally for the purpose of repurchasing in the near term for short term profit.

The Group may, at initial recognition, irrevocably designate financial liabilities at fair-value-through-profit-or-loss when one of the following criteria is met:

the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; or
a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis; or
the financial liability contains one or more embedded derivatives as components of a hybrid contract which significantly modify the cash flows that otherwise would be required by the contract.

Financial liabilities designated at FVTPL are initially recognized at fair value. Changes in fair value are recognized in the income statement, except for changes in fair value attributable to changes in the Group's own credit risk, which are recognised in OCI and are not subsequently reclassified to the income statement upon derecognition of the liabilities. However, if such treatment creates or enlarges an accounting mismatch in the income statement, all gains or losses of this financial liability, including the effects of changes in the credit risk, are recognized in the income statement.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability of the Group is replaced by another from the same counterparty on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as an extinguishment of the original liability and the recognition of a new liability and any difference arising is recognized in the income statement.

The Group considers the terms to be substantially different, if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability.

Similarly, when the Group repurchases any debt instruments issued by the Group, it accounts for such transactions as an extinguishment of debt.

2.2.12 Fair value measurement of financial instruments

Fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Group uses other valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Group has elected to use mid-market pricing as a practical expedient for fair value measurements within a bid-ask spread.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price, i.e. the fair value of the consideration given or received unless the Group determines that the fair value at initial recognition differs from the transaction price. In this case, if the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. Level 1 input) or based on a valuation technique that uses only data from observable markets, a day one gain or loss is recognized in the income statement. On the other hand, if the fair value is evidenced by a valuation technique that uses unobservable inputs, the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price (day one gain or loss). Subsequently the deferred gain or loss is amortized on an appropriate basis over the life of the instrument or released earlier if a quoted price in an active market or observable market data become available or the financial instrument is closed out.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole (note 5.3).

For assets and liabilities that are measured at fair value on a recurring basis, the Group recognizes transfers into and out of the fair value hierarchy levels at the beginning of the quarter in which a financial instrument's transfer was effected.

2.2.13 Impairment of financial assets

The Group recognizes allowance for expected credit losses (ECL) that reflect changes in credit quality since initial recognition to financial assets that are measured at AC and FVOCI, including loans, securitized notes issued by special purpose vehicles established by the Group, lease receivables, debt securities, financial guarantee contracts, and loan commitments. No ECL are recognized on equity investments. ECL are a probability-weighted average estimate of credit losses that reflects the time value of money. Upon initial recognition of the financial instruments in scope of the impairment policy, the Group records a loss allowance equal to 12 month ECL, being the ECL that result from default events that are possible within the next twelve months. Subsequently, for those financial instruments that have experienced a significant increase in credit risk (SICR) since initial recognition, a loss allowance equal to lifetime ECL is recognized, arising from default events that are possible over the expected life of the instrument. If upon initial recognition, the financial asset meets the definition of purchased or originated credit impaired (POCI), the loss allowance is based on the change in the ECL over the life of the asset.

Loss allowances for trade receivables are always measured at an amount equal to lifetime ECL. For all other financial assets subject to impairment, the general three-stage approach applies.

Accordingly, ECL are recognized using a three-stage approach based on the extent of credit deterioration since origination:

Stage 1 When there is no significant increase in credit risk since initial recognition of a financial instrument, an amount equal to 12-months ECL is recorded. The 12 – month ECL represent a portion of lifetime losses, that result from default events that are possible within the next 12 months after the reporting date and is equal to the expected cash shortfalls over the life of the instrument or group of instruments, due to loss events probable within the next 12 months. Not credit-impaired financial assets that are either newly originated or purchased, as well as, assets recognized following a substantial modification accounted for as a derecognition, are classified initially in Stage 1.
Stage 2 When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. Lifetime ECL represent the expected credit losses that result from all possible default events over the expected life of the financial instrument.
Stage 3 Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected credit losses.
POCI Purchased or originated credit impaired (POCI) assets are financial assets that are credit impaired on initial recognition. They are not subject to stage allocation and are always measured on the basis of lifetime expected credit losses. Accordingly, ECL are only recognized to the extent that there is a subsequent change in the assets' lifetime expected credit losses. Any subsequent favorable change to their expected cash flows is recognized as impairment gain in the income statement even if the resulting expected cash flows exceed the estimated cash flows at initial recognition. Apart from purchased assets, POCI assets may also include financial instruments that are considered new assets, following a substantial modification accounted for as a derecognition (see section 2.2.9).

Definition of default

To determine the risk of default, the Group applies a default definition for accounting purposes, which is consistent with the European Banking Authority (EBA) definition for non-performing exposure (refer to note 5.2.1.2). The accounting definition of default is consistent with the one used for internal credit risk management purposes.

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that exposure have occurred:

The borrower faces a significant difficulty in meeting his financial obligations.
There has been a breach of contract, such as a default or past due event.
The Group, for economic or contractual reasons relating to the borrower's financial difficulty, has granted to the borrower a concession(s) that the Group would not otherwise consider.
There is a probability that the borrower will enter bankruptcy or other financial re-organization.
For POCI financial assets, a purchase or origination at a deep discount that reflects incurred credit losses is considered a detrimental event. The Group assesses the deep discount criterion following a principle -based approach with the aim to incorporate all reasonable and supportable information which reflects market conditions that exist at the time of the assessment.

For debt securities, the Group determines the risk of default using an internal credit rating scale. The Group considers debt securities as credit impaired if the internal rating of the issuer/counterparty corresponds to a rating equivalent to "C" (Moody's rating scale) or the external rating of the issuer/counterparty at the reporting date is equivalent to "C" (Moody's rating scale) and the internal rating is not available.

Significant increase in credit risk (SICR) and staging allocation

Determining whether a loss allowance should be based on 12-month expected credit losses or lifetime expected credit losses depends on whether there has been a significant increase in credit risk (SICR) of the financial assets, issued loan commitments and financial guarantee contracts, since initial recognition.

At each reporting date, the Group performs an assessment as to whether the risk of a default occurring over the remaining expected lifetime of the exposure has increased significantly from the expected risk of a default estimated at origination for that point in time.

well as historical experience. Furthermore, regardless of the outcome of the SICR assessment based on the above indicators, the credit risk of a financial asset is deemed to have increased significantly when contractual payments are more than 30 days past due.

As a primary criterion for SICR assessment, the Group compares the residual lifetime probability of default (PD) at each reporting date to the residual lifetime PD for the same point in time which was expected at the origination.

The Group may also consider as a SICR indicator when the residual lifetime PD at each reporting date exceeds certain predetermined values. The criterion may be applied in order to capture cases where the relative PD comparison does not result to the identification of SICR although the absolute value of PD is at levels which are considered high based on the Group's risk appetite framework.

For a financial asset's risk, a threshold may be applied, normally reflected through the asset's forecasted PD, below which it is considered that no significant increase in credit risk compared to the asset's expected PD at origination date has taken place. In such a case the asset is classified at Stage 1 irrespectively of whether other criteria would trigger its classification at Stage 2. This criterion primarily applies to debt securities.

Internal credit risk rating (on a borrower basis) is also used as a basis for the identification of SICR with regards to lending exposures of the Wholesale portfolio. Specifically, the Group takes into consideration the changes of internal ratings by a certain number of notches. In addition, a watchlist status is also considered by the Group as a trigger for SICR identification. Internal credit risk ratings models include borrower specific information as well as, forward-looking information including macroeconomic variables.

Assessment of SICR for debt securities is performed on an individual basis based on the number of notches downgrade in the internal credit rating scale since the origination date.

Forbearance measures as monitored by the Group are considered as a SICR indicator and thus the exposures are allocated into Stage 2 upon forbearance, unless they are considered credit-impaired in which case they are classified as stage 3. Furthermore, regardless of the outcome of the SICR assessment based on the above indicators, the credit risk of a financial asset is deemed to have increased significantly when contractual payments are more than 30 days past due.

Furthermore, Management may apply temporary collective adjustments when determining whether credit risk has increased significantly since initial recognition on exposures that share the same credit risk characteristics to reflect macro-economic or other factors which are not adequately addressed by the current credit risk models. These factors may depend on information such as the type of the exposure, counterparty's specific information and the characteristics of the financial instrument, while their application requires the application of significant judgment.

Transfers from Stage 2 to Stage 1

A financial asset, which is classified to Stage 2 due to Significant Increase in Credit Risk (SICR), is reclassified to Stage 1, as long as it does not meet anymore any of the Stage 2 Criteria.

Where forbearance measures have been applied, the Group uses a probation period of two years, in order to fulfill the requirements for a transfer back to Stage 1. If at the end of that period the borrowers have made regular payments of a significant aggregate amount, there are no past due amounts over 30 days and the loans are neither credit impaired, nor any other SICR criteria are met, they exit forborne status and are classified as stage 1.

Transfers from Stage 3 to Stage 2

A financial asset is transferred from Stage 3 to Stage 2, when the criteria based on which the financial asset was characterized as credit impaired, are no longer valid.

Criteria for grouping of exposures based on shared credit risk characteristics

The assessment of loss allowance is performed either on an individual basis or on a collective basis for groups of similar items with homogeneous credit risk characteristics. The Group applies the same principles for assessing SICR since initial recognition when estimating ECL on a collective or on an individual basis.

The Group segments its lending exposures on the basis of shared credit risk characteristics for the purposes of both assessing significant increase in credit risk and measuring loan loss allowance on a collective basis. The different segments aim to capture differences in PDs and in the rates of recovery in the event of default.

The shared credit risk characteristics used for the segmentation of exposures include several elements such as: instrument type, portfolio type, asset class, product type, industry, originating entity, credit risk rating, remaining term to maturity, geographical location of the borrower, value of collateral to the financial asset, forbearance status and days in arrears.

The Group identifies individually significant exposures and performs the ECL measurement based on borrower specific information for both retail and wholesale portfolios. This measurement is performed at a borrower level, hence the criteria are defined at this level, while both qualitative and quantitative factors are taken into consideration including forward looking information.

For the remaining retail and wholesale exposures, ECL are measured on a collective basis. This incorporates borrower specific information, collective historical experience of losses and forward-looking information. For debt securities and securitized notes issued by special purpose entities established by the Group, the measurement of impairment losses is performed on an individual basis.

Measurement of Expected Credit Losses

The measurement of ECL is an unbiased probability-weighted average estimate of credit losses that reflects the time value of money, determined by evaluating a range of possible outcomes. A credit loss is the difference between the cash flows that are due to the Group in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive (i.e. cash shortfalls) discounted at the original effective interest rate (EIR) of the same instrument, or the credit-adjusted EIR in case of purchased or originated credit impaired assets (POCI). In measuring ECL, information about past events, current conditions and reasonable and supportable forecasts of future conditions are considered. For undrawn commitments, ECL are calculated as the present value of the difference between the contractual cash flows due if the commitment was drawn and the cash flows expected to be received, while for financial guarantees ECL are measured as the expected payments to reimburse the holder less any amounts that the Group expects to receive.

The Group estimates expected cash shortfalls, which reflect the cash flows expected from all possible sources, including collateral and other credit enhancements that are part of the contractual terms and are not recognized separately. In case of a collateralized financial instrument, the estimated expected cash flows related to the collateral reflect the amount and timing of cash flows that are expected from liquidation less the discounted costs of obtaining and selling the collateral, irrespective of whether liquidation is probable.

ECL are calculated over the maximum contractual period over which the Group is exposed to credit risk, which is determined based on the substantive terms of the instrument, or in case of revolving credit facilities, by taking into consideration factors such as the Group's expected credit risk management actions to mitigate credit risk and past practice.

Receivables from customers arising from the Group's activities other than lending, are presented under Other Assets and are typically short term. Therefore, considering that usually there is no significant financing component, the loss allowance for such financial assets is measured at an amount equal to the lifetime expected credit losses under the simplified approach.

ECL Key Inputs

The ECL calculations are based on the term structures of the probability of default (PD), the loss given default (LGD), the exposure at default (EAD) and other input parameters such as the credit conversion factor (CCF) and the prepayment rate. Generally, the Group derives these parameters from internally developed statistical models and observed point-in-time and historical data, leveraging the existing infrastructure development for the regulatory framework and risk management practices.

The PD, LGD and EAD used for accounting purposes may differ from those used for regulatory purposes. For the purposes of impairment measurement, PD is a point-in-time estimate whereas for regulatory purposes PD is a 'through-the-cycle' estimate. In addition, LGD and EAD for regulatory purposes are based on loss severity experienced during economic downturn conditions, while for impairment purposes, LGD and EAD reflect an unbiased and probability-weighted amount.

The PD represents the likelihood of default assessed on the prevailing economic conditions at the reporting date, adjusted to take into account estimates of future economic conditions that are likely to impact the risk of default, over a given time horizon.

The Group uses Point in Time (PiT) PDs in order to remove any bias towards historical data thus aiming to reflect management's view of the future as at the reporting date, incorporating relevant forward looking information including macroeconomic scenarios.

Two types of PD are used for calculating ECL:

12-month PD, which is the estimated probability of default occurring within the next 12 months (or over the remaining life of the financial asset if this is less than 12 months). It is used to calculate 12-month ECL for Stage 1 exposures.
Lifetime PD, which is the estimated probability of a default occurring over the remaining life of the financial asset. It is used to calculate lifetime ECL for Stage 2, Stage 3 and POCI exposures.

For debt securities, PDs are obtained by an international rating agency using risk methodologies that maximize the use of objective non-judgmental variables and market data. The Group assigns internal credit ratings to each issuer/counterparty based on these PDs. In case of counterparties for which no information is available, the Group assigns PDs which are derived from internal models.

The Exposure at default (EAD) is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after the reporting date, including repayments of principal and interest and expected drawdowns on committed facilities. The EAD includes both on and off balance sheet exposures. The on balance sheet exposure corresponds to the total amount that has been withdrawn and is due to be paid, which includes the outstanding principal, accrued interest and any past due amounts. The off balance sheet exposure represents the credit that is available to be withdrawn, in excess of the on balance sheet exposure.

Furthermore, the CCF factor is used to convert the amount of a credit facility and other off-balance sheet amounts to an EAD amount. It is a modelled assumption which represents a proportion of any undrawn exposure that is expected to be drawn prior to a default event occurring.

In addition, the prepayment rate is an estimate of early prepayments on loan exposure in excess of the contractual repayment according to the repayment schedule and is expressed as a percentage applied to the EAD at each period, reducing the latter amount accordingly.

LGD represents the Group's expectation of the extent of loss on a defaulted exposure and it is the difference between the contractual cash flows due and those that the Group expects to receive including any amounts from collateral liquidation. LGD varies by type of counterparty, type and seniority of claim, availability of collateral or other credit support, and is usually expressed as a percentage of EAD. The Group distinguishes its loan portfolios into two broad categories i.e. secured and unsecured. The Group estimates the LGD component using cure rates that reflect cash recoveries, estimated proceeds from collateral liquidation, estimates for timing realization, realization costs, etc. Where the LGD's component values are dependent on macro – economic data, such types of dependencies are reflected by incorporating forward looking information, such as forecasted price indices into the respective models. The estimation of the aforementioned component values within LGD reflects available historical data which cover a reasonable period, i.e. a full economic cycle.

For debt securities, the LGD is typically based on historical data derived mainly from rating agencies' studies but may also be determined considering the existing and expected liabilities structure of the obligor and macroeconomic environment.

Furthermore, the seniority of the debt security, any potential collaterals by the obligor or any other type of coverage is taken into account for the calculation.

Forward-looking information

The measurement of expected credit losses for each stage and the assessment of significant increases in credit risk consider information about reasonable and supportable forecasts of future events and macroeconomic conditions. The estimation and application of forward-looking information requires significant judgment.

The Group uses, at a minimum, three macroeconomic scenarios (i.e. base, adverse and optimistic) to achieve the objective of measuring ECL in a way that reflects an unbiased and probability weighted outcome. The base scenario represents the most likely scenario and is aligned with the information used by the Group for strategic planning and budgeting purposes.

The scenarios are reflected in the risk parameters, and, namely 12-month PD, Lifetime PD and LGD, hence 3 sets of each of these parameters are used, in line with the scenarios developed.

The Group then proceeds to the calculation of weights for each scenario, which represent the probability of occurrence for each of these scenarios. These weights are applied on the 3 sets of calculations of the parameters in order to produce a single scenario weighted risk parameter value which is subsequently used in both SICR assessment and ECL measurement. ECL calculation incorporates forward-looking macroeconomic variables, including GDP growth rates, house price indices, unemployment rates,

interest rates, etc. In order to capture material non – linearities in the ECL model, in the case of individually significant exposures, the Group considers the relevance of forward looking information to each specific group of borrowers primarily on the basis of the business sector they belong and other drivers of credit risk (if any). As such, different scenario weights are determined per groups of borrowers with the objective of achieving an unbiased ECL amount which incorporates all relevant and supportable information.

Modified Financial Assets

In cases where the contractual cash flows of a financial asset have been modified and the modification is considered substantial enough (for the triggers of derecognition, refer to Derecognition of Financial assets in section 2.2.9 above), the modification date is considered to be the date of initial recognition for impairment calculation purposes, including for the purposes of determining whether a significant increase in credit risk has occurred. Such a modified asset is typically classified as Stage 1 for ECL measurement purposes. However, in some circumstances following a modification that results in derecognition of the original financial asset, there may be evidence that the new financial asset is credit-impaired at initial recognition, and thus, the financial asset is recognized as an originated credit-impaired financial asset (POCI).

In cases where the contractual cash flows of a financial asset have been modified and the modification is not considered substantial enough, the Group recalculates the gross carrying amount of the financial asset and recognizes the difference as a modification gain or loss in the income statement and determines if the financial asset's credit risk has increased significantly since initial recognition by comparing the risk of a default occurring at initial recognition based on the original unmodified contractual terms and the risk of a default occurring at the reporting date, based on the modified contractual terms.

Presentation of impairment allowance

For financial assets measured at amortized cost, impairment allowance is recognized as a loss allowance reducing the gross carrying amount of the financial assets in the balance sheet. For debt instruments measured at FVOCI, impairment allowance is recognized in other comprehensive income and does not reduce the carrying amount of the debt instruments in the balance sheet. For off-balance sheet financial items arising from lending activities, impairment allowance is presented in Other Liabilities. The respective ECL for the above financial items is recognised within impairment losses.

Write-off of financial assets

Where the Group has no reasonable expectations of recovering a financial asset either in its entirety or a portion of it, the gross carrying amount of that instrument is reduced directly, partially or in full, against the impairment allowance. The amount written-off is considered as derecognized. Subsequent recoveries of amounts previously written off decrease the amount of the impairment losses in the income statement.

Financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due.

2.2.14 Sale and repurchase agreements and securities lending

(i) Sale and repurchase agreements

Securities sold subject to repurchase agreements (repos) continue to be recorded in the Group's Balance Sheet as the Group retains substantially all risks and rewards of ownership, while the counterparty liability is included in amounts due to other banks or due to customers, as appropriate. Securities purchased under agreements to resell (reverse repos) are recorded as loans and advances to other banks or customers, as appropriate. The difference between the sale and repurchase price in case of repos and the purchase and resale price in case of reverse repos is recognized as interest and accrued over the period of the repo or reverse repo agreements using the effective interest method.

(ii) Securities lending

Securities lent to counterparties are retained in the financial statements. Securities borrowed are not recognized in the financial statements, unless these are sold to third parties, in which case the obligation to return them is recorded at fair value as a trading liability.

2.2.15 Leases

Policy applicable after 1 January 2019

(i) Accounting for leases as lessee

When the Group becomes the lessee in a lease arrangement, it recognizes a lease liability and a corresponding right-of-use (RoU) asset at the commencement of the lease term when the Group acquires control of the physical use of the asset.

Lease liabilities are presented within Other liabilities and RoU assets within Property, plant and equipment and investment property. Lease liabilities are measured based on the present value of the future lease payments over the lease term, discounted using an incremental borrowing rate. The interest expense on lease liabilities is presented within Net interest income.

The RoU asset is initially recorded at an amount equal to the lease liability and is adjusted for rent prepayments, initial direct costs, or lease incentives received. Subsequently, the RoU asset is depreciated over the shorter of the lease term or the useful life of the underlying asset, with the depreciation presented within Operating expenses.

When a lease contains extension or termination options that the Group considers reasonably certain to be exercised, the expected future lease payments or costs of early termination are included within the lease payments used to calculate the lease liability.

(ii) Accounting for leases as lessor

At inception date of the lease, the Group, acting as a lessor, classifies each of its leases as either an operating lease or a finance lease based on certain criteria.

Finance leases

At commencement date, the Group derecognizes the carrying amount of the underlying assets held under finance lease, recognizes a receivable at an amount equal to the net investment in the lease and recognizes, in profit or loss, any profit or loss from the derecognition of the asset and the recognition of the net investment. The net investment in the lease is calculated as the present value of the future lease payments in the same way as for the lessee.

After commencement date, the Group recognizes finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease. The Group also recognizes income from variable payments that are not included in the net investment in the lease. After lease commencement, the net investment in a lease is not remeasured unless the lease is modified or the lease term is revised.

Operating leases

The Group continues to recognize the underlying asset and does not recognize a net investment in the lease on the balance sheet or initial profit (if any) on the income statement.

The Group recognizes lease payments from the lessees as income on a straight-line basis. Also it recognizes costs, including depreciation, incurred in earning the lease income as an expense. The Group adds initial direct costs incurred in obtaining an operating lease to the carrying amount of the underlying asset and recognizes those costs as an expense over the lease term on the same basis as the lease income.

Subleases

The Group, acting as a lessee, may enter into arrangements to sublease a leased asset to a third party while the original lease contract is in effect. The Group acts as both the lessee and lessor of the same underlying asset. The sublease is a separate lease agreement, in which the intermediate lessor classifies the sublease as a finance lease or an operating lease as follows:

if the head lease is a short-term lease, the sublease is classified as an operating lease; or
otherwise, the sublease is classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.

Policy applicable before 1 January 2019

(i) Accounting for leases as lessee

Finance leases:

Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognized, at the inception of the lease term, at the lower of the fair value of the leased asset or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charge so as to achieve a constant rate of interest on the liability outstanding. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term.

Operating leases:

Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases under which the leased asset is not recognized on balance sheet. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

(ii) Accounting for leases as lessor

Finance leases:

When assets are leased out under finance leases, the present value of the lease payments is recognized under loans and receivables. The difference between the gross receivable (gross investment) and the present value of minimum lease payments (net investment) is recognized as unearned future finance income and is deducted from loans and advances. Lease income is recognized over the term of the lease using the net investment method, which reflects a constant periodic rate of return. Finance lease receivables are assessed for impairment losses in accordance with Group's impairment policy for financial assets as described in note 2.2.13.

Operating leases:

Assets leased out under operating leases are included in property, plant and equipment or investment property, as appropriate, in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognized on a straight-line basis over the lease term.

2.2.16 Income tax

Income tax consists of current and deferred tax.

(i) Current income tax

Income tax payable on profits, based on the applicable tax law in each jurisdiction, is recognized as an expense in the period in which profits arise.

(ii) Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The principal temporary differences arise from impairment/valuation relating to loans, Private Sector Initiative (PSI+) tax related losses, losses from disposals and crystallized writeoffs of loans, depreciation of property, plant and equipment, fair value adjustment of investment property, pension and other retirement benefit obligations, and revaluation of certain financial assets and liabilities, including derivative financial instruments.

Deferred tax assets are recognized where it is probable that future taxable profit will be available against which the temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax related to investment securities at FVOCI and cash flow hedges is recognized to other comprehensive income, and is subsequently recognized in the income statement together with the deferred gain or loss.

The deferred tax asset on income tax losses carried forward is recognized as an asset when it is probable that future taxable profits will be available against which these losses can be utilized.

(iii) Uncertain tax positions

The Group determines and assesses all material tax positions taken, including all, if any, significant uncertain positions, in all tax years that are still subject to assessment (or when the litigation is in progress) by relevant tax authorities. In evaluating tax positions in various states, local, and foreign jurisdictions, the Group examines all supporting evidence (Ministry of Finance circulars, individual rulings, case law, past administrative practices, ad hoc tax/legal opinions etc.) to the extent they are applicable to the facts and circumstances of the particular Group's case/ transaction.

In addition, judgments concerning the recognition of a provision against the possibility of losing some of the tax positions are highly dependent on advice received from internal/ external legal counselors. For uncertain tax positions with a high level of uncertainty, the Group recognizes, on a transaction by transaction basis, or together as a group, depending on which approach better predicts the resolution of the uncertainty using an expected value (probability-weighted average) approach: (a) a provision against tax receivable which has been booked for the amount of income tax already paid but further pursued in courts or (b) a liability for the amount which is expected to be paid to the tax authorities. The Group presents in its balance sheet all uncertain tax balances as current or deferred tax assets or liabilities.

The Group as a general rule has opted to obtain for the Group's Greek companies an 'Annual Tax Certificate', which is issued after a tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. Further information in respect of the Annual Tax Certificate and the related tax legislation, as well as the unaudited tax years for the Group's companies is provided in note 13.

2.2.17 Employee benefits

(i) Short term benefits

Short term employee benefits are those expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services and are expensed as these services are provided.

(ii) Pension obligations

The Group provides a number of defined contribution pension plans where annual contributions are invested and allocated to specific asset categories. Eligible employees are entitled to the overall performance of the investment. The Group's contributions are recognized as employee benefit expense in the year in which they are paid.

(iii) Standard legal staff retirement indemnity obligations (SLSRI) and termination benefits

The Group operates unfunded defined benefit plans in Greece, Bulgaria and Serbia, under broadly similar regulatory frameworks. In accordance with the local labor legislation, the Group provides for staff retirement indemnity obligation for employees which are entitled to a lump sum payment based on the number of years of service and the level of remuneration at the date of retirement, if they remain in the employment of the Group until normal retirement age. Provision has been made for the actuarial value of the lump sum payable on retirement (SLSRI) using the projected unit credit method. Under this method the cost of providing retirement indemnities is charged to the income statement so as to spread the cost over the period of service of the employees, in accordance with the actuarial valuations which are performed every year.

The SLSRI obligation is calculated as the present value of the estimated future cash outflows using interest rates of high quality corporate bonds. In countries where there is no deep market in such bonds, the yields on government bonds are used. The currency and term to maturity of the bonds used are consistent with the currency and estimated term of the retirement benefit obligations. Actuarial gains and losses that arise in calculating the Group's SLSRI obligations are recognized directly in other comprehensive income in the period in which they occur and are not reclassified to the income statement in subsequent periods.

Interest on the staff retirement indemnity obligations and service cost, consisting of current service cost, past service cost and gains or losses on settlement are recognized in the income statement. In calculating the SLSRI obligation, the Group also considers potential separations before normal retirement based on the terms of previous voluntary exit schemes.

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits (including those in the context of the Voluntary Exit Schemes implemented by the Group). The Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the Group recognizes costs for a restructuring that involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Termination benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

(iv) Performance-based cash payments

The Group's Management awards high performing employees with bonuses in cash, from time to time, on a discretionary basis. Cash payments requiring only Management approval are recognized as employee benefit expenses on an accrual basis. Cash payments requiring General Meeting approval as distribution of profits to staff are recognized as employee benefit expense in the accounting period that they are approved by the Group's shareholders.

(v) Performance-based share-based payments

The Group's Management awards employees with bonuses in the form of shares and share options on a discretionary basis. Nonperformance related shares vest in the period granted. Share based payments that are contingent upon the achievement of a performance and service condition, vest only if both conditions are satisfied.

The fair value of the shares granted is recognized as an employee benefit expense with a corresponding increase in share capital (par value) and share premium.

The fair value of the options granted is recognized as an employee benefit expense with a corresponding increase in a nondistributable reserve over the vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital (par value) and share premium when the options are exercised, with a transfer of the non distributable reserve to share premium.

2.2.18 Repossessed properties

Land and buildings repossessed through an auction process to recover impaired loans are, except where otherwise stated, included in 'Other Assets'. Assets acquired from an auction process are held temporarily for liquidation and are valued at the lower of cost and net realizable value, which is the estimated selling price, in the ordinary course of business, less costs necessary to make the sale.

In cases where the Group makes use of repossessed properties as part of its operations, they may be reclassified to own occupied or investment properties, as appropriate.

Any gains or losses on liquidation are included in the income statement.

2.2.19 Related party transactions

Related parties of the Group include:

(a) an entity that has control over the Group and entities controlled, jointly controlled or significantly influenced by this entity, as well as members of its key management personnel and their close family members;

(b) an entity that has significant influence over the Group and entities controlled by this entity,

(c) members of key management personnel of the Group, their close family members and entities controlled or jointly controlled by the abovementioned persons;

(d) associates and joint ventures of the Group; and

(e) fellow subsidiaries.

Transactions of similar nature are disclosed on an aggregate basis. All banking transactions entered into with related parties are in the normal course of business and are conducted on an arm's length basis.

2.2.20 Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and reliable estimates of the amount of the obligation can be made.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at each reporting date, taking into account the risks and uncertainties surrounding the amount of such expenditure.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If, subsequently, it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

2.2.21 Operating segment

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses within a particular economic environment. Operating segments are identified on the basis of internal reports, regarding operating results, of components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The chief operating decision maker has been identified as the Strategic Planning Committee that is responsible for strategic decision making. Segment revenue, segment expenses and segment performance include transfers between business segments. Such transfers are accounted for at competitive prices in line with charges to unaffiliated customers for similar services.

2.2.22 Share capital

Ordinary shares and preference shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds, net of tax.

Dividend distribution on shares is recognized as a deduction in the Group's equity when approved by the General Meeting of shareholders. Interim dividends are recognized as a deduction in the Group's equity when approved by the Board of Directors.

Where any Group entity purchases the Bank's equity share capital (treasury shares), the consideration paid including any directly attributable incremental costs (net of income taxes), is deducted from shareholders' equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders' equity.

2.2.23 Preferred securities

Preferred securities issued by the Group are classified as equity when there is no contractual obligation to deliver to the holder cash or another financial asset.

Incremental costs directly attributable to the issue of new preferred securities are shown in equity as a deduction from the proceeds, net of tax.

Dividend distribution on preferred securities is recognized as a deduction in the Group's equity on the date it is due.

Where preferred securities, issued by the Group, are repurchased, the consideration paid including any directly attributable incremental costs (net of income taxes), is deducted from shareholders' equity. Where such securities are subsequently called or sold, any consideration received is included in shareholders' equity.

2.2.24 Financial guarantees and commitments to extend credit

Financial guarantees

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are granted to banks, financial institutions and other bodies on behalf of customers to secure loans, overdrafts and other banking facilities.

Financial guarantees are initially recognized at fair value. Subsequent to initial recognition, such guarantees are measured at the higher of the amount of the impairment loss allowance, and the amount initially recognised less any cumulative amortization of the fee earned, where appropriate.

Commitments to extend credit

Commitments represent off-balance sheet items where the Group commits, over the duration of the agreement, to provide a loan with pre-specified terms to the customer. Such contractual commitments represent commitments to extend credit and standby letters and they are part of the normal lending activities of the Group, for which an impairment allowance is recognised under IFRS 9.

Impairment allowance for off-balance sheet exposures (financial guarantees and commitments) is included within Other Liabilities.

2.2.25 Non-current assets classified as held for sale and discontinued operations

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For a non- current asset to be classified as held for sale, it is available for immediate sale in its present condition, subject to terms that are usual and customary for sales of such assets, and the sale is considered to be highly probable. In such cases, management is committed to the sale and actively markets the property for sale at a price that is reasonable in relation to the current fair value. The sale is also expected to qualify for recognition as a completed sale within one year from the date of classification. Before their classification as held for sale, assets are remeasured in accordance with the respective accounting standard.

Assets held for sale are subsequently remeasured at the lower of their carrying amount and fair value less cost to sell. Any loss arising from the above measurement is recorded in profit or loss and can be reversed in the future. When the loss relates to a disposal group, it is allocated to the assets within that disposal group.

The Group presents discontinued operations in a separate line in the consolidated income statement if a Group entity or a component of a Group entity has been disposed of or is classified as held for sale and:

(a) Represents a separate major line of business or geographical area of operations;

(b) Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or (c) Is a subsidiary acquired exclusively with a view to resale.

Profit or loss from discontinued operations includes the profit or loss before tax from discontinued operations, the gain or loss on disposal before tax or measurement to fair value less costs to sell and discontinued operations tax expense. Intercompany transactions between continuing and discontinued operations are presented on a gross basis in the income statement. Upon classification of a Group entity as a discontinued operation, the Group restates prior periods in the consolidated income statement.

2.2.26 Cash and cash equivalents

Cash and cash equivalents include cash in hand, unrestricted deposits with central banks, due from credit institutions and other shortterm highly liquid investments with original maturities of three months or less.

2.2.27 Fiduciary activities

The Group provides custody, trustee, corporate administration, investment management and advisory services to third parties. This involves the Group making allocation, purchase and sale decisions in relation to a wide range of financial instruments. The Group receives fee income for providing these services. Those assets that are held in a fiduciary capacity are not assets of the Group and are not recognized in the financial statements. In addition, the Group does not guarantee these investments and as a result it is not exposed to any credit risk in relation to them.

2.3 Impact of significant changes in applying accounting policies

2.3.1 IFRS 16 'Leases' – Impact of adoption

The Group implemented the requirements of IFRS 16 on 1 January 2019, as further analyzed in note 2.1.1. The impact of the transitioning to the new standard is discussed below.

On 1 January 2019, the Group recognised right-of-use assets of € 358 million and lease liabilities of an equivalent amount arising from leases of properties and vehicles, with no impact on shareholders' equity. The capital impact arising primarily from the increase in risk-weighted assets was a reduction of approximately 13 bps on the Group's common equity Tier I ratio by applying regulatory transitional arrangements (approximately -10 bps on the Group's CET1 ratio, on a fully loaded basis).

It is noted that € 132 million of the above mentioned right-of-use assets and of the corresponding lease liabilities were related to properties on lease from Grivalia. Following the merger of Eurobank with Grivalia (note 23.2), these assets and liabilities have been derecognized in the second quarter of 2019, as the related properties have become own used assets of the combined group.

With regard to subsequent measurement, the Group, acting as a lessee, applies the cost model for the measurement of right-of-use asset. Accordingly, the right-of-use asset is measured at cost less any accumulated depreciation and accumulated impairment losses as determined in accordance with IAS 36, and is adjusted for the remeasurement of the lease liability.

On the other hand, interest expense is recognized on the lease liabilities, while their carrying amount is reduced to reflect the lease payments made. In case of any reassessments or lease modifications specified, the carrying amount of the lease liabilities is remeasured to reflect revised lease payments. For the year ended 31 December 2019, the depreciation charge for right-of-use assets was € 41 million and the interest expense recognised on lease liabilities was € 5 million.

The following table presents the reconciliation between the operating lease commitments, as disclosed under IAS 17 in the financial statements for the year ended 31 December 2018 and the lease liabilities recognised under IFRS 16 on 1 January 2019:

	€ million
Non-cancellable operating lease rentals payable under IAS 17	134
Plus: Future contractual lease payments (in excess of non-cancellable term)	206
Total future contractual operating lease payments	340
Plus: Re-estimation of lease term (1)	109
Adjusted total operating lease commitments as at 31 December 2018	449
Less: Recognition exemption for short term leases and leases of low value	(5)
Less: Exclusion of Stamp Duty, VAT and other applicable taxes from the lease payments	(20)
Undiscounted lease liabilities as at 31 December 2018	424
Less: Discounting effect of the lease liabilities using the incremental borrowing
rate as at 1 January 2019	(66)
Total lease liabilities recognised as at 1 January 2019 under IFRS 16	358

(1) The re-estimation of total future contractual lease payments includes primarily:

a) contracts that expire in 2019 but the Group expects to renew and has reset their term,
b) contracts with indefinite duration for which the Group has determined the term that it expects to occupy the leased asset, and
c) re-assessment of extension and termination options.

There was no impact from the adoption of IFRS 16 for the leases in which the Group is a lessor.

2.3.2 IAS 40 'Investment property' – Impact of change in accounting policy to Fair value model

The Group deems the fair value model to be currently more appropriate for measuring Group's investment property portfolio, which was significantly expanded following Grivalia's merger, also considering the positive real-estate market prospects. As such the adoption of fair value model provides more relevant and reliable information since it better reflects the current value of Group's investment property.

In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", the above change in the Group's accounting policy on Investment Property was applied retrospectively. The tables below show the adjustments recognized for each individual line item as at 1 January 2018, 31 December 2018 and 31 December 2019. Line items that were not affected by the changes have not been included.

	31 December 2019			31 December 2018			1 January 2018
Consolidated Balance Sheet	IP under cost model	FV model adjustment	As presented	As published	Restatement	Restated		As published Restatement	Restated
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
ASSETS
Investment property	1,091		93 1,184	316	15	331	277	11	288
Investments in associates and
joint ventures	231		4 235	113	-	113	156	-	156
Deferred tax assets	4,783	(17)	4,766	4,916	(2)	4,914	4,859	(1)	4,858
Total assets	64,681	80	64,761	57,984	13	57,997	60,029	10	60,039
LIABILITIES
Other liabilities	1,184		1,191 7	844	1	845	684	(0)	684
Total liabilities	58,087	7	58,094	52,953	1	52,954	52,879	(0)	52,879
EQUITY
Reserves and retained earnings	(2,314)		(2,241) 73	(3,721)	12	(3,709)	(2,556)	10	(2,546)
Total equity	6,594	73	6,667	5,031	12	5,043	7,150	10	7,160
Total equity and liabilities	64,681	80	64,761	57,984	13	57,997	60,029	10	60,039

		31 December 2019			31 December 2018
Consolidated Income Statement	IP under cost model	FV model adjustment	As presented	As published	Restatement	Restated
	€ million	€ million	€ million	€ million	€ million	€ million
Other income/(expenses)	(6)	61	55	(2)	(13)	(15)
Operating income	1,783	61	1,844	1,845	(13)	1,832
Operating expenses	(912)	11	(901)	(879)	5	(874)
Profit from operations before impairments, provisions and restructuring costs	871	72	943	966	(8)	958
Other impairment losses and provisions Share of results of associates and	(38)	6	(32)	(21)	12	(9)
joint ventures	19	4	23	29	-	29
Profit before tax	78	82	160	232	4	236
Income tax	(10)	(21)	(31)	(76)	(2)	(78)
Net profit from continuing operations	68	61	129	156	2	158
Net profit attributable to
shareholders	66	61	127	91	2	93
	€	€	€	€	€	€
Earnings per share -Basic and diluted earnings per share	0.02	0.02	0.04	0.04	0.00	0.04
Earnings per share from continuing operations -Basic and diluted earnings per
share	0.02	0.02	0.04	0.07	0.00	0.07

2.3.3 IFRS 9 'Financial Instruments' – Impact of adoption

The Group adopted IFRS 9 in the first quarter of 2018, whereas the Standard's requirements were applied retrospectively by adjusting the Group's balance sheet on the date of transition on 1 January 2018. The effect on the carrying amounts of financial assets and liabilities at the date of transition to IFRS 9 was recognized as an adjustment to opening reserves and retained earnings as further discussed below.

The impact of transitioning to IFRS 9, before tax, amounted to € 1,090 million as depicted in the table below and it was mainly attributed to the impact on the Greek lending portfolio which amounted to € 949 million. The transition to IFRS 9 resulted in a decrease of the Group's total shareholders' equity by € 1,085 million, which was recognised as an opening balance adjustment at 1 January 2018.

	IFRS 9 impact
Impact attributed to :	€ million
Impairment
- Loans and advances to customers	(1,022)
- Other financial assets	(64)
Total impairment	(1,086)
Classification & Measurement	(4)
Hedging	-
Total IFRS 9 impact, before tax	(1,090)
Deferred Tax	5
Total IFRS 9 impact, net of tax	(1,085)

The Group, based on the Management's relevant assessment at 1 January 2018, did not recognize a deferred tax asset (DTA) of € 300 million approximately arising from the IFRS 9 transition impact ca. € 285 million for the Bank and ca. € 15 million for its Greek subsidiaries. Up to 31 December 2019, following the reassessment of the recoverability of deferred tax assets, the Group has recognized the deferred tax asset relative to the Bank of which € 260 million in 2019, affecting the income statement accordingly (note 13).

The table below presents the impact of transition to IFRS 9 to Fair value reserve and Retained earnings:

	IFRS 9 impact
	€ million
Special reserves
Closing balance under IAS 39	8,005
of which AFS reserve	282
Remeasurement under IFRS 9 measurement categories	4
Remeasurement under IFRS 9 ECL impairment for FVOCI portfolio	14
Deferred tax	(4)
Remeasurement under IFRS 9 for discontinued operations (net of tax)	(5)
Opening balance under IFRS 9	8,014
Retained earnings
Closing balance under IAS 39	(10,561)
Remeasurement under IFRS 9 measurement categories	(8)
Remeasurement under IFRS 9 ECL impairment including FVOCI portfolio	(1,100)
Deferred tax	9
Remeasurement under IFRS 9 for discontinued operations (net of tax)	5
Opening balance under IFRS 9	(11,655)

Regulatory capital

The Group's capital impact from the initial application of IFRS 9 as shown in the table below:

	As at
Capital impact from the initial			1 January 2018
application of IFRS 9	31 December 2017	1 January 2018	IFRS 9 transitional
	IAS 39	IFRS 9 full impact	arrangements
	€ million	€ million	€ million
Common equity Tier 1 Capital	6,887	5,731	6,757
Risk weighted assets	38,387	37,864	38,097
	%	%	%
Common equity Tier 1 (CET 1) Ratio	17.9	15.1	17.7

The Group's capital impact on the pro-forma fully loaded CET1 ratio as at 1 January 2018, based on the full implementation of the Basel III rules in 2024, considering the completion of the sale of the Romanian disposal group (note 30) is shown in the table below:

	As at
	31 December 2017	1 January 2018	IFRS 9
Pro-forma fully loaded with the completion of the	IAS 39	IFRS 9 full impact	Impact
disposal of the Romanian subsidiaries	€ million	€ million	€ million
Common equity Tier 1 Capital	5,653	4,498	(1,155)
Risk weighted assets	37,154	36,631	(523)
	%	%	%
Common equity Tier 1 (CET 1) Ratio	15.2	12.3	(2.9)

The Group has elected to apply the phase-in approach as per EU legislation (Regulation EU 2017/2395) for mitigating the impact of IFRS 9 transition on the regulatory capital. The transition period is for five years, with the proportion of the impact to be included being 5% in 2018 and 15%, 30%, 50% and 75% in the subsequent four years (note 4). The full impact is expected as of 1 January 2023.

3. Critical accounting estimates and judgments in applying accounting policies

In the process of applying the Group's accounting policies, the Group's Management makes various judgments, estimates and assumptions that may affect the reported amounts of assets and liabilities, revenues and expenses recognized in the financial statements within the next financial year and the accompanying disclosures. Estimates and judgments are continually evaluated and are based on current conditions, historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are recognized prospectively. The most significant areas in which the Group makes judgments, estimates and assumptions in applying its accounting policies are set out below:

3.1 Impairment losses on loans and advances to customers

ECL measurement

The ECL measurement requires management to apply significant judgment, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in significant changes to the timing and amount of allowance for credit loss to be recognized.

The Group's ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and estimates include:

Determination of a significant increase of credit risk

IFRS 9 does not include a definition of what constitutes a significant increase in credit risk (SICR). An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering primarily the change in the risk of default occurring over the remaining life of the financial instrument. The Group assesses whether a SICR has occurred since initial recognition based on qualitative and quantitative reasonable and supportable forward-looking information that includes significant management judgment. More stringent criteria could significantly increase the number of instruments migrating to stage 2.

For retail lending exposures the primary criterion is the change in the residual cumulative lifetime PD above specified thresholds. These thresholds are set and vary per portfolio, modification status (modified/non-modified), product type as well as per origination PD level. In general, thresholds for lower origination PDs are higher than those assessed for higher origination PDs.

As at 31 December 2019 and 31 December 2018, the range of lifetime PD thresholds based on the above segmentation, that triggers allocation to stage 2 for Greece's retail exposures are set out below:

Retail exposures	Range of SICR thresholds
Mortgage	30%-50%
Home Equity	10%-80%
SBB	10%-65%
Consumer	60%-100%

For wholesale portfolios, the origination PD curves and the residual lifetime PD curves at each reporting date are mapped to credit rating bands. Accordingly, SICR thresholds are based on the comparison of the origination and reporting date credit ratings, whereby rating downgrades represent changes in residual lifetime PD. Similar to retail exposures, the Group segments the wholesale portfolios based on asset class, loan type and credit rating at origination.

As at 31 December 2019 and 31 December 2018, the credit rating deterioration thresholds as per applicable borrower internal rating scale, that trigger allocation to stage 2 per rating bands for Greece's wholesale portfolio are set out in the tables below:

Wholesale internal rating bands	SICR threshold range
1-2	Two to Three notches
3-4	Two notches or more
5-8	One notch or more

Determination of scenarios, scenario weights and macroeconomic factors

To achieve the objective of measuring ECL, the Group evaluates a range of possible outcomes in line with the requirements of IFRS 9 through the application of a minimum three macroeconomic scenarios i.e. baseline, adverse and optimistic, in a way that reflects an unbiased and probability weighted outcome. Each of the scenarios is based on management's assumptions around future economic conditions in the form of macroeconomic, market and other factors. As at 31 December 2019 and 31 December 2018, the probability weights for the above mentioned scenarios applied by the Group in the ECL measurement calculations are 50% for the baseline scenario and 25% for the adverse and optimistic scenarios.

The Group ensures that impairment estimates and macroeconomic forecasts applicable for business and regulatory purposes are fully consistent. Accordingly, the baseline scenario applied in the ECL calculation coincides with the one used for ICAAP, business planning and internal stress testing purposes. In addition, all experience gained from the stress tests imposed by the regulator, have been taken into account in the process of developing the macroeconomic scenarios, as well as, impairments for stress testing purposes have been forecasted in line with IFRS 9 ECL methodology.

In terms of macroeconomic assumptions, the Group assesses a number of indicators in projecting the risk parameters, namely Residential and Commercial Property Price Indices, unemployment, Gross Domestic Product (GDP), Greek Government Bond (GGB) spread over Euribor and inflation as well as Interest and FX rates. Regarding the key macroeconomic indicators used in the ECL measurement of Greek lending portfolios for the year ended 31 December 2019 and 31 December 2018, the arithmetic averages of the scenarios' probability-weighted annual forecasts for the next four year period following the reporting date, are set in the following table:

	As at 31 December 2019	As at 31 December 2018
Key macroeconomic indicator	Average (2020-2023)	Average (2019-2022)
	annual forecast	annual forecast
Gross Domestic Product growth	2.47%	1.74%
Unemployment rate	14.70%	17.72%
Residential property prices' index	3.96%	1.70%
Commercial property prices' index	4.17%	2.20%

Changes in the scenarios and weights, the corresponding set of macroeconomic variables and the assumptions made around those variables for the forecast horizon would have a significant effect on the ECL amount. The Group independently validates all models and underlying methodologies used in the ECL measurement through competent resources, who are independent of the model development process.

Development of ECL models, including the various formulas, choice of inputs and interdependencies

For the purposes of ECL measurement the Group performs the necessary model parameterization based on observed point-in-time data on a granularity of monthly intervals. The ECL calculations are based on input parameters, i.e. EAD, PDs, LGDs, CCFs, etc. incorporating management's view of the future. The Group also determines the links between macroeconomic scenarios and, economic inputs, such as unemployment levels and collateral values, and the effect on PDs, EADs and LGDs.

Furthermore, the PDs are unbiased rather than conservative and incorporate relevant forward looking information including macroeconomic scenarios. The forecasting risk parameters models incorporate a number of explanatory variables, such as GDP, unemployment etc. which are used as independent variables for optimum predictive capability. The models are based on logistic regressions and run under the different macroeconomic scenarios and relevant changes and shocks in the macro environment reflected accordingly in a non-linear manner.

Segmentation of financial assets when their ECL is assessed on a collective basis

The Group segments its exposures on the basis of shared credit risk characteristics upon initial recognition for the purposes of both assessing significant increase in credit risk and measuring loan loss allowance on a collective basis. The different segments aim to capture differences in PDs and in the rates of recovery in the event of default. On subsequent periods, the Group re-evaluates the grouping of its exposures at least on an annual basis, in order to ensure that the groups remain homogeneous in terms of their response to the identified shared credit risk characteristics. Re-segmentation reflects management's perception in respect to the change of credit risk associated with the particular exposures compared to initial recognition.

Modeling and Management overlays / adjustments

A number of sophisticated models have been developed or modified to calculate ECL, while temporary management adjustments may be required to capture new developments and information available, which are not yet reflected in the ECL calculation through the risk models. Internal counterparty rating changes, new or revised models and data may significantly affect ECL. The models are governed by the Group's validation framework, which aim to ensure independent verification, and are approved by the Board Risk Committee (BRC).

Sensitivity analysis on lending portfolios

The tables below depicts the estimated effect in the Group's ECL measurement (including off-balance sheet items) upon potential reasonable combined changes of forecasts in key macroeconomic indicators over the next 5 years (2020-2024 and 2019-2023, respectively):

	As at 31 December 2019		As at 31 December 2019
Sensitivity scenario				Impact
			Combined change %			in € million	% of allowance
Key macroconomic	Positive	Adverse			Positive	Adverse	Positive	Adverse
indicators	change	change		Lending Portfolio	change	change	change	change
GDP growth	+30%	-30%	change of annual forecasts	Wholesale lending	-34	33	-1.24	+1.24
Unemployment Rate	-6.5%	+6.5%	change of annual forecasts	Retail lending	-61	70	-1.38	+1.57
Property indices			change of index adjusted
(RRE/CRE)	+3%	-3%	real estate collateral market values	Total Group	-95	103	-1.33	+1.44

	As at 31 December 2018		As at 31 December 2018
	Sensitivity scenario Impact
			Combined change %		in € million % of allowance
Key macroconomic	Positive	Adverse			Positive	Adverse	Positive	Adverse
indicators	change	change		Lending Portfolio	change	change	change	change
GDP growth	+30%	-30%	change of annual forecasts	Wholesale lending	-48	60	-1.47	+1.85
Unemployment Rate	-6.5%	+6.5%	change of annual forecasts	Retail lending	-114	133	-1.99	+2.33
Property indices (RRE/CRE)	+2%	-2%	change of index adjusted real estate collateral market values	Total Group	-162	193	-1.80	+2.14

It is noted that sensitivity analysis when performed on certain key parameters can provide meaningful information only for portfolios where the risk parameters have a significant impact on the overall credit risk of a lending portfolio, particularly where such sensitivities are also used for internal credit risk management purposes. Otherwise, a sensitivity on certain combinations of some risk parameters may not produce meaningful results, as in reality there are interdependencies between the various economic inputs, rendering any changes in the parameters, changes correlated in other factors.

The Group updates and reviews the reasonability and performs back-testing of the main assumptions used in its methodology assessment for SICR and ECL measurement, at least on an annual basis or earlier, based on facts and circumstances. In this context, experienced and dedicated staff within the Group's Risk Management function monitors the risk parameters applied for the estimation of ECL. Furthermore, as part of the well-defined governance framework, any revisions to the methodology used are approved by the Group competent committees and ultimately the Board Risk Committee (BRC).

3.2 Fair value of financial instruments

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

The fair value of financial instruments that are not quoted in an active market are determined by using other valuation techniques that include the use of valuation models. In addition, for financial instruments that trade infrequently and have little price transparency, fair value is less objective and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument. In these cases, the fair values are estimated from observable data in respect of similar financial instruments or using other valuation techniques.

The valuation models used include present value methods and other models based mainly on observable inputs and to a lesser extent to non-observable inputs, in order to maintain the reliability of the fair value measurement.

Valuation models are used mainly to value over-the-counter derivatives and securities measured at fair value.

Where valuation techniques are used to determine the fair values of financial instruments that are not quoted in an active market, they are validated and periodically reviewed by qualified personnel independent of the personnel that created them. All models are certified before they are used, and are calibrated to ensure that outputs reflect actual data and comparative market prices. The main assumptions and estimates, considered by management when applying a valuation model include:

the likelihood and expected timing of future cash flows;
the selection of the appropriate discount rate, which is based on an assessment of what a market participant would regard as an appropriate spread of the rate over the risk-free rate; and
judgment to determine what model to use in order to calculate fair value.

To the extent practicable, models use only observable data, however areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates to reflect uncertainties in fair values resulting from the lack of market data inputs. Inputs into valuations based on unobservable data are inherently uncertain because there is little or no current market data available. However, in most cases there will be some historical data on which to base a fair value measurement and consequently even when unobservable inputs are used, fair values will use some market observable inputs.

Information in respect of the fair valuation of the Group's financial assets and liabilities is provided in note 5.3.

3.3 Classification of financial instruments

The Group applies significant judgment in assessing the classification of its financial instruments and especially, in the below areas:

Business model assessment

Judgment is exercised in order to determine the appropriate level at which to assess the business model. In assessing the business model of financial instruments, these are aggregated into groups (business lines) based on their characteristics, and the way they are managed in order to achieve the Group's business objectives. In general the assessment is performed at the business unit level for lending exposures including securitized notes issued by special purpose entities established by the Group and debt securities. However, further disaggregation may be performed by business strategy/ region, etc.

In assessing the business model for financial instruments, the Group performs a past sales evaluation of the financial instruments and assesses their expected evolution in the future. Judgment is exercised in determining the effect of sales to a "hold to collect" business model depending on their objective and their acceptable level and frequency.

Contractual cash flow characteristics test (SPPI test)

The Group performs the SPPI assessment of lending exposures including securitized notes issued by special purpose entities established by the Group and debt securities by considering all the features which might potentially lead to SPPI failure. Judgment is applied by the responsible Business Units when considering whether certain contractual features significantly affect future cash flows. Accordingly, for non-recourse financial assets, the Group assesses jointly criteria such as the adequacy of equity, LTV (Loan-to-Value) and DSCR (Debt-Service-Coverage-Ratio) ratios as well as the existence of corporate and personal guarantees. Furthermore, in order to assess whether any variability in the cash flows is introduced by the modified time value of money element, the Group performs a quantitative assessment (as described in note 2). Moreover, the Group evaluates certain cases on whether the existence of performance-related terms exposes the Group to asset risk rather to the borrower's credit risk.

The Group has established a robust framework to perform the necessary assessments in accordance with Group's policies in order to ensure appropriate classification of financial instruments, including reviews by experienced staff for lending exposures and debt securities.

3.4 Assess control over investees

The management exercises judgment in order to assess if the Group has control over another entity including structured entities based on the control elements set out in note 2.2.1 (i).

(a) Subsidiaries

The Group holds more than half of the voting rights in all subsidiaries, except from Hellenic Post Credit S.A. Further information in respect of the control assessment for the said subsidiary is provided in note 23.1.

(b) Structured entities

As part of its funding activity and non-performing loans' management strategy, the Group sponsors certain securitization vehicles, the relevant activities of which have been predetermined as part of their initial design by the Group. The Group is exposed to variability of returns from these vehicles through the holding of debt securities issued by them or by providing credit enhancements in accordance with the respective contractual terms. In assessing whether it has control, the Group considers whether it manages the substantive decisions that could affect these vehicles' returns. Accordingly, the Group assesses on a case-by-case basis the structure of securitization transaction, including the respective contractual arrangements, in order to conclude if it controls these vehicles.

Furthermore, the Group is involved in the initial design of various mutual funds in order to provide customers with investment opportunities. The Group primarily acts as an agent in exercising its decision making authority as it is predefined by the applicable regulated framework. As a result, the Group has concluded that it does not control these funds.

Further information in respect of the structured entities the Group is involved, either consolidated or not, is provided in note 25.

3.5 Income tax

The Group is subject to income taxes in various jurisdictions and estimates are required in determining the liability for income taxes. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due or for anticipated tax disputes. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax in the period in which such determination is made. Further information in relation to the above is provided in note 13.

In addition, the Group recognizes deferred tax assets to the extent that it is probable that sufficient taxable profit will be available against which unused tax losses and deductible temporary differences can be utilized. Recognition therefore involves judgment regarding the future financial performance of the particular Group legal entity in which the deferred tax asset has been recognized. Particularly, in order to determine the amount of deferred tax assets that can be recognized, significant management judgments are required regarding the likely timing and level of future taxable profits. In making this evaluation, the Group has considered all available evidence, including management's projections of future taxable income and the tax legislation in each jurisdiction.

The most significant judgment exercised by Management relates to the recognition of deferred tax assets in respect of losses realized in Greece. In the event that, the Group assesses that it would not be able to recover any portion of the recognized deferred tax assets in the future, the unrecoverable portion would impact the deferred tax balances in the period in which such judgment is made.

As at 31 December 2019, the Group revisited its estimates regarding the level of future taxable profits against which the unused tax losses and the deductible temporary differences can be utilized and evaluated accordingly the recoverability of the recognized deferred tax assets based on a) its three- year Business Plan, which was approved by the Board of Directors in March 2019 and has been submitted to the Hellenic Financial Stability Fund (HFSF) and to the Single Supervisory Mechanism (SSM), providing outlook of its profitability and capital position for the period up to the end of 2021 and b) the update of this Plan for the period till the end of 2022 that was submitted to the Board of Directors and the Hellenic Financial Stability Fund (HFSF) in December 2019. The implementation of the abovementioned Business Plan and its update largely depend on the risks and uncertainties that stem from the macroeconomic environment in Greece as well as in the countries that the Group operates.

As at 31 December 2019, an amount of € 2 million (2018: € 63 million) has been recognized in respect to unused tax losses using the Group's best estimation and judgment as described above. Further information in respect of the recognized deferred tax assets and the Group's assessment for their recoverability is provided in note 13.

3.6 Retirement benefit obligations

The present value of the retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions, such as the discount rate and future salary increases. Any changes in these assumptions will impact the carrying amount of pension obligations.

The Group determines the appropriate discount rate used to calculate the present value of the estimated retirement obligations, at the end of each year based on interest rates of high quality corporate bonds. In countries where there is no deep market in such bonds, the yields on government bonds are used. The currency and term to maturity of the bonds used are consistent with the currency and estimated term to maturity of the retirement benefit obligations. The salary rate increase assumption is based on future inflation estimates reflecting also the Group's reward structure and expected market conditions.

Other assumptions for pension obligations, such as the inflation rate, are based in part on current market conditions.

For information in respect of the sensitivity analysis of the Group's retirement benefit obligations to reasonably possible, at the time of preparation of these financial statements, changes in the abovementioned key actuarial assumptions, refer to note 36.

3.7 Investment properties

Investment property is carried at fair value, as determined by external, independent, certified valuators on an annual basis.

The main factors underlying the determination of fair value are related with rental income from current leases and assumptions about rental income from future leases in the light of current market conditions, future vacancy rates and periods, discount rates or rates of return, the terminal values as well as the level of future maintenance and other operating costs.

Additionally, where the fair value is determined based on market prices of comparable transactions those prices are subject to appropriate adjustments, in order to reflect current economic conditions and management's best estimate regarding the future trend of properties market based on advice received from its independent external valuers.

Further information in respect of the fair valuation of the Group's investment properties is included in note 27.

3.8 Provisions and contingent liabilities

The Group recognizes provisions when it has a present legal or constructive obligation, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of its amount.

A provision is not recognized and a contingent liability is disclosed when it is not probable that an outflow of resources will be required to settle the obligation, when the amount of the obligation cannot be measured reliably or in case that the obligation is considered possible and is subject to the occurrence or non -occurrence of one or more uncertain future events.

Considering the subjectivity and uncertainty inherent in the determination of the probability and amount of the abovementioned outflows, the Group takes into account a number of factors such as legal advice, the stage of the matter and historical evidence from similar cases. In the case of an offer made within the context of the Group's voluntary exit scheme, the number of employees expected to accept the abovementioned offer along with their age cluster is a significant factor affecting the measurement of the outflow for the termination benefits.

Further information in relation to the Group's provisions and contingent liabilities is provided in note 35 and note 42.

3.9 Leases

The Group, as a lessee, determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group applies judgement in evaluating whether it is reasonably certain or not to exercise an option to renew or terminate the lease, by considering all relevant factors and economic aspects that create an economic incentive. The Group reassesses the lease term if there is a significant event or change in circumstances that is within its control that affects its ability to exercise or not to exercise the option to renew or to terminate, such as significant leasehold improvements or significant customization of the leased asset.

In measuring lease liabilities, the Group uses the lessees' incremental borrowing rate ('IBR') when it cannot readily determine the interest rate implicit in the lease. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

Therefore, estimation is required when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease. The Group estimates the IBR using observable inputs (such as government bond yields) as a starting point when available, and performs certain additional entity-specific adjustments, such as credit spread adjustments or adjustments to reflect the lease terms and conditions. For the Bank and Greek subsidiaries, the IBR is derived from the estimated covered bonds yield curve, which is constructed based on observable Greek Government Bond yields, while for international subsidiaries the IBR is determined on a country basis, taking into consideration specific local conditions.

3.10 Other significant accounting estimates and judgments

Information in respect of other estimates and judgments that are made by the Group is provided in notes 28 and 30.

4. Capital Management

The Group's capital adequacy position is presented in the following table:

	2019	2018 (1)
	€ million	€ million
Total equity	6,667	5,031
Add: Adjustment due to IFRS 9 transitional arrangements	897	1,003
Less: Preferred securities	(2)	(42)
Less: Goodwill	(161)	(1)
Less: Other regulatory adjustments	(484)	(482)
Common Equity Tier 1 Capital	6,917	5,509
Add: Preferred securities subject to phase-out	-	17
Total Tier 1 Capital	6,917	5,526
Tier 2 capital-subordinated debt	950	950
Add: Other regulatory adjustments	97	25
Total Regulatory Capital	7,964	6,501
Risk Weighted Assets	41,407	38,849
Ratios:	%	%
Common Equity Tier 1	16.7	14.2
Tier 1	16.7	14.2
Total Capital Adequacy Ratio	19.2	16.7

(1) The capital adequacy ratios for the year ended 31 December 2018 have not been adjusted following the change in accounting policy (note 2.3.2).

Note: The Group's CET1 as at 31 December 2019, based on the full implementation of the Basel III rules in 2024 (fully loaded CET1), would be 14.6% (2018: 11.3%).

The Group has sought to maintain an actively managed capital base to cover risks inherent in the business. The adequacy of the Group's capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision (BIS rules/ratios) as adopted by the European Central Bank and the Bank of Greece in supervising the Bank. The capital adequacy framework, as in force, was incorporated in the European Union (EU) legislation through the Directive 2013/36/EU (known as CRD IV), along with the Regulation No 575/2013/EU (known as CRR). Directive 2013/36/EU was transposed into Greek legislation by Law 4261/2014. Supplementary to that, in the context of Internal Capital Adequacy Assessment Process (ICAAP), the Group considers a broader range of risk types and the Group's risk management capabilities. ICAAP aims ultimately to ensure that the Group has sufficient capital to cover all material risks that it is exposed to, over a three-year horizon.

to ensure a sound management and coverage of their risks, to which they are or might be exposed, including those revealed by stress testing and risks the institution may pose to the financial system. According to the 2018 SREP decision, starting from 1 March 2019, the Bank is required to meet on a consolidated basis a Common Equity Tier 1 ratio of at least 10.25% and a Total Capital Adequacy Ratio of at least 13.75% (Overall Capital Requirements including the Capital Conservation Buffer and the Other Systemically Important Institutions Buffer), plus the applicable Countercyclical Capital Buffer (0.09% for the last quarter of 2019 mainly stemming from the exposures in Bulgaria and Ireland) analyzed as follows:

	31 December 2019
	CET1 Capital Total Capital
	Requirements	Requirements
Minimum regulatory requirement	4.5%	8.0%
Pillar 2 Requirement (P2R)	3.0%	3.0%
Total SREP Capital Requirement (TSCR)	7.5%	11.0%
Combined Buffer Requirement (CBR)
Capital conservation buffer (CCoB)	2.5%	2.5%
Countercyclical capital buffer (CCyB)	0.09%	0.09%
Other systemic institutions buffer (O-SII)	0.25%	0.25%
Overall Capital Requirement (OCR)	10.34%	13.84%

Pillar 2 additional own fund requirement of 3% for 2019, must be held in the form of CET1 capital and amounts to € 1,242 million for the Bank on a consolidated basis.

According to the 2019 SREP decision, for 2020, the Bank is required to meet on a consolidated basis a Common Equity Tier 1 ratio of at least 10.60% and a Total Capital Adequacy Ratio of at least 14.10% (Overall Capital Requirements including Capital Conservation Buffer of 2.5%, Other Systemically Important Institution Buffer of 0.5% and Countercyclical Buffer of 0.1% mainly stemming from the exposures in Bulgaria).

In response to the coronavirus outbreak, on 12 March 2020, the ECB announced a number of measures to ensure that its directly supervised banks can continue to fulfil their role in funding the real economy (note 2). Specifically, banks will be allowed, among others, to operate temporarily below the level of capital defined by the Pillar 2 Guidance and the capital conservation buffer (CCB). Banks will also be allowed to partially use capital instruments that do not qualify as CET1 capital, for example Additional Tier 1 or Tier 2 instruments, to meet the Pillar 2 Requirements.

2020 EU – wide stress test postponed to 2021

5. Financial risk management and fair value

5.1 Use of financial instruments

By their nature the Group's activities are principally related to the use of financial instruments including derivatives. The Group accepts deposits from customers, at both fixed and floating rates, and for various periods and seeks to earn above average interest margins by investing these funds in high quality assets. The Group seeks to increase these margins by consolidating short-term funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.

The Group also seeks to raise its interest margins by obtaining above average margins, net of provisions, through lending to commercial and retail borrowers within a range of credit standing. Such exposures include both on-balance sheet loans and advances and off-balance sheet guarantees and other commitments such as letters of credit.

The Group also trades in financial instruments where it takes positions in traded and over the counter financial instruments, including derivatives, to take advantage of short-term market movements in the equity and bond markets and in currency and interest rates.

5.2 Financial risk factors

Due to its activities, the Group is exposed to a number of financial risks, such as credit risk, market risk (including currency and interest rate risk), liquidity and operational risks. The Group's overall risk management strategy seeks to minimize any potential adverse effects on its financial performance, financial position and cash flows.

Risk Management objectives and policies

The Group acknowledges that taking risks is an integral part of its operations in order to achieve its business objectives. Therefore, the Group's management sets adequate mechanisms to identify those risks at an early stage and assesses their potential impact on the achievement of these objectives.

Due to the fact that economic, industry, regulatory and operating conditions will continue to change, risk management mechanisms are set in a manner that enable the Group to identify and deal with the risks associated with those changes. The Bank's structure, internal processes and existing control mechanisms ensure both the independence principle and the exercise of sufficient supervision.

The Group's Management considers effective risk management as a top priority, as well as a major competitive advantage, for the organization. As such, the Group has allocated significant resources for upgrading its policies, methods and infrastructure, in order to ensure compliance with the requirements of the European Central Bank (ECB), the guidelines of the European Banking Authority (EBA) and the Basel Committee for Banking Supervision and the best international banking practices. The Group implements a wellstructured credit approval process, independent credit reviews and effective risk management policies for credit, market, liquidity and operational risk, both in Greece and in each country of its international operations. The risk management policies implemented by the Bank and its subsidiaries are reviewed annually.

The Group Risk and Capital Strategy, which has been formally documented, outlines the Group's overall direction regarding risk and capital management issues, the risk management mission and objectives, risk definitions, risk management principles, risk appetite framework, risk governance framework, strategic objectives and key management initiatives for the improvement of the risk management framework in place.

The maximum amount of risk which the Group is willing to assume in the pursuit of its strategic objectives is articulated via a set of quantitative and qualitative statements for specific risk types, including specific tolerance levels as described in the Group's Risk Appetite Framework. The objectives are to support the Group's business growth, balance a strong capital position with higher returns on equity and to ensure the Group's adherence to regulatory requirements.

Risk appetite that is clearly communicated throughout the Group, determines risk culture and forms the basis on which risk policies and risk limits are established at Group and regional level.

Board Risk Committee (BRC)

The Board Risk Committee (BRC) is a committee of the BoD and its task is to assist the BoD to ensure that the Group has a well-defined risk and capital strategy in line with its business plan and an adequate and robust risk appetite.

Τhe BRC assesses the Group's risk profile, monitors compliance with the approved risk appetite and risk tolerance levels and ensures that the Group has developed an appropriate risk management framework with appropriate methodologies, modelling tools, data sources and sufficient and competent staff to identify, assess, monitor and mitigate risks.

The BRC consists of five (5) non-executive directors, meets at least on a monthly basis and reports to the BoD on a quarterly basis and on ad hoc instances if it is needed.

Management Risk Committee

The Management Risk Committee (MRC) is a management committee established by the CEO and operates as an advisory committee to the BRC.

The main responsibility of the MRC is to oversee the risk management framework of the Group. As part of its responsibility, the MRC facilitates reporting to the BRC on the range of risk-related topics under its purview. The MRC ensures that material risks are identified and promptly escalated to the BRC and that the necessary policies and procedures are in place to prudently manage risks and to comply with regulatory requirements. Additionally, the MRC determines appropriate management actions which are discussed and presented to the Executive Board ('EXBO') for information and submitted to BRC for approval.

Group Risk Management General Division

The Group's Risk Management General Division which is headed by the Group Chief Risk Officer (GCRO), operates independently from the business units and is responsible for the monitoring, measurement and management of credit, market, operational and liquidity risks of the Group. It comprises of the Group Credit General Division, the Group Credit Control Sector (GCCS), the Group Credit Risk Capital Adequacy Control Sector (GCRCACS), the Group Market and Counterparty Risk Sector (GMCRS), the Group Operational Risk Sector, the Group Model Validation and Governance Sector, the Group Risk Management Strategy Planning and Operations Unit and the Supervisory Relations and Resolution Planning Division (dual reporting also to the Group Chief Financial Officer).

Non-Performing Exposures (NPEs) management

Following the Bank of Greece (BoG) Executive Committee's Act No.42/30.05.2014 and its amendments, that detail the supervisory directives for the administration of exposures in arrears and non-performing loans, the Bank has proceeded with a number of initiatives to adopt the regulatory requirements and empower the management of troubled assets. In particular, the Bank transformed its troubled assets operating model into a vertical organizational structure through the establishment of the Troubled Assets Committee (TAC) and Troubled Assets Group General Division (TAG).

Troubled Assets Committee (TAC)

The Troubled Assets Committee (TAC), with direct reporting line to the BRC, has been established in order to provide strategic guidance and monitoring of the troubled assets of Eurobank ensuring independence from business and compliance with the requirements of Decision 42/2014. In particular, the main competencies that have been delegated to TAC relate to the monitoring of loans in arrears and the management of non-performing loans, the determination and implementation of the troubled assets' management strategy, as well as approving and assessing the sustainability of the forbearance and closure procedure measures.

Troubled Assets Group General Division (TAG)

The TAG, which has been established as an independent body, is headed by the Deputy Chief Executive Officer and Executive member of the BoD and is responsible for the management of the Group's troubled assets portfolio, for the whole process, from the predelinquency status in case of high risk exposures up to legal workout. It ensures close monitoring, tight control and course adjustment taking into account the continuous developments in the macro environment, the regulatory and legal requirements, the international best practices and new or evolved internal requirements.

TAG comprises the Retail Remedial General Division, the Corporate Remedial General Division, the Collaterals Recovery Sector, the TAG Business Planning Sector, the TAG Risk Management and Business Policies Sector, the TAG Operational Risk Management Sector and the Business Improvement Program Management Sector. TAG structure is completely segregated from the Bank's business units both in terms of account management, as well as credit approval process, which ensures transparency, flexibility, better prioritization and management accountability and shifts the management from bad debt minimization to bad debt value management, in line with the Group's risk appetite.

The TAG cooperates with Group Risk Management to reach a mutual understanding of the implemented practices and to develop appropriate methodologies for the assessment of risks that may be inherent in any type of forbearance and, generally, troubled assets strategy deployment for all portfolios managed. The TAG's recommendations and reports to the Board of Directors and its Committees are also submitted to the GCRO who expresses an opinion.

The key governing principles of the TAG are to:

Preserve the clear demarcation line between business units and troubled assets management;
Ensure direct top management involvement in troubled assets management and close monitoring of the respective portfolio;
Deploy a sound credit workout strategy through innovative propositions that will lead to viable solutions, ensuring a consistent approach for managing troubled assets across portfolios;
Engineer improvements in monitoring and offering targeted solutions by segmenting delinquent borrowers and tailoring the remedial and workout approach to specific segment;
Prevent non performing loans formation through early intervention and clear definition of primary financial objectives of troubled assets;
Monitor the loan delinquency statistics, as well as define targeted risk mitigating actions to ensure portfolio risk reduction;
Target maximization of borrowers who return to current status through modifications or collections;
Monitor losses related to troubled assets; and
Define criteria to assess the sustainability of proposed forbearance or resolution and closure measures and design decision trees.

Following the Corporate Transformation Hive-down, the Pillar and Cairo securitizations and the FPS agreement (notes 30, 34 and 44), the Bank will assign the management of its remaining NPE portfolio to FPS, through a 10-year agreement.

Eurobank will retain the business ownership and responsibility for the performance of the NPEs and will manage the relationship with FPS through a structured governance and a solid control framework.

In this context, a dedicated Eurobank team will devise the NPE reduction plan, actively set the strategic principles and KPIs (Key Performance Indicators) framework under which FPS will manage the portfolio, closely monitor the execution of the approved strategies and service level agreements and ensure compliance with regulatory requirements.

Operational targets for Non-Performing Exposures (NPEs)

In March 2019, Eurobank and the other Greek systemic banks responded to the new regulatory framework and SSM requirements for the NPEs management and submitted their new NPE Management Strategy for 2019-21, at both bank and, for the first time, group level. Specifically for Eurobank, the new submission has taken into account the NPE reduction acceleration plan that was announced in the context of its Transformation plan.

The Greek government in order to support the reduction of non-performing loans of banks, has designed an asset protection scheme ('APS') to assist them in securitizing and moving non-performing loans off their balance sheets. In October 2019, the European Commission approved the Greek APS, stating that state guarantees are to be remunerated at market terms according to the risk taken. Following the enactment of the Law 4649/2019 related to the APS and the agreement with an international investor on the projects Cairo (note 34) and FPS sale (note 30), Eurobank aims to achieve the targeted Group's NPE ratio of ca. 16% in the first quarter of 2020 and a single digit ratio by 2021.

As at 31 December 2019, the Group's NPEs' stock amounted to € 13 billion, reduced by € 3.7 billion compared to 31 December 2018.

The Bank has fully embedded the NPEs strategy into its management processes and operational plan. The supervisory authorities review the Group's progress to meet its operational targets on a quarterly basis and request additional corrective measures if deemed necessary.

On 12 March 2020, the EBA announced actions to mitigate the impact of coronavirus on the EU banking sector stating among others that there is flexibility in the implementation of the EBA Guidelines on management of non-performing and forborne exposures. Additionally, the EBA called for a close dialogue between supervisors and banks, also on their non-performing exposure strategies, on a case by case basis (note 2).

Legal Framework

A new protection scheme on primary residence was voted by the Greek Parliament in March 2019 (Law 4605/2019), aimed to bolster the banks' efforts to reduce NPEs through a more effective mechanism to work out troubled loans, a restriction of strategic defaulters and, ultimately, an improvement in payment discipline. The scheme expires in April 2020, after which the Government has announced that it will duly devise a comprehensive Individual Insolvency framework.

5.2.1 Credit Risk

Credit risk is the risk that a counterparty will be unable to fulfill its payment obligations in full when due.

Country risk is the risk of losses arising from cross-border lending and investment activities and refers to the uncertainty associated with exposure in a particular country. This uncertainty may relate to a number of factors including the risk of losses following nationalization, expropriation, debt restructuring and foreign exchange rates' movement.

Settlement risk is the risk arising when payments are settled, for example for trades in financial instruments, including derivatives and currency transactions. The risk arises when the Group remits payments before it can ascertain that the counterparties' payments have been received.

Credit risk arises principally from the wholesale and retail lending activities of the Group, including from credit enhancements provided, such as financial guarantees and letters of credit. The Group is also exposed to credit risk arising from other activities such as investments in debt securities, trading, capital markets and settlement activities. Taking into account that credit risk is the primary risk the Group is exposed to, it is very closely managed and monitored by centralized dedicated risk units, reporting to the GCRO.

(a) Credit approval process

The credit approval and credit review processes are centralized both in Greece and in the International operations. The segregation of duties ensures independence among executives responsible for the customer relationship, the approval process and the loan disbursement, as well as monitoring of the loan during its lifecycle.

Credit Committees

The credit approval process in Corporate Banking is centralized through establishment of Credit Committees with escalating Credit Approval Levels, in order to manage the corporate credit risk. Main Committees of the Bank are considered to be the following:

Credit Committees (Central and Local) authorized to approve new financing, renewals or amendments in the existing credit limits, in accordance with their approval authority level, depending on total limit amount and customer risk category (i.e. high, medium or low), as well as the value and type of security;
Special Handling Credit Committees authorized to approve credit requests and take actions for distressed clients;
International Credit Committees (Regional and Country) established for credit underwriting to wholesale borrowers for the Group's international Bank subsidiaries, authorized to approve new limits, renewals or amendments to existing limits, in accordance with their approval authority level, depending on total customer exposure and customer risk category (i.e. high, medium or low), as well as the value and type of security; and
International Special Handling Committees established for handling distressed wholesale borrowers of the Group's international bank subsidiaries.

The Credit Committees meet on a weekly basis or more frequently, if needed.

Group Credit General Division (GCGD)

The main responsibilities of the GCGD of the Risk Management General Division are:

Review and evaluation of credit requests of:
- (a) Domestic large and medium scale corporate entities of every risk category;
- (b) Specialized units, such as Shipping, Structured Finance; and
- (c) Retail sector's customers (small business and individual banking) above a predetermined threshold.

Issuance of an independent risk opinion for each credit request, which includes:
- (a) Assessment of the customer credit profile based on the qualitative and quantitative risk factors identified (market, operations, structural and financial);
- (b) A focused sector analysis; and
- (c) Recommendations to structure a bankable, well-secured and well-controlled transaction.
Review and confirmation of the ratings of each separate borrower, to reflect the risks acknowledged;
Participation with voting rights in all credit committees, as per the credit approval procedures (except for Special Handling Committee I-no voting rights);
Active participation in all external/regulatory audits of the Bank;
Preparation of specialized reports to Management on a regular basis, with regards to Top 25 biggest Borrower groups and statistics on the new approved financings;
Safeguard compliance of the Lending Units with specific policies (such as SPPI/ derecognition process, assessment of individual customers for impairment review purposes, environmental and social policy); and
Provision of specialized knowledge, expertise and support to other divisions of the Bank, in relation to operational and credit procedures, security policies, new lending products and restructuring schemes.

The GCGD through its specialized International Credit Sector (ICS) is also responsible to actively participate in the design, implementation and review of the credit underwriting function for the wholesale portfolio of the International Subsidiaries. Moreover, ICS advises and supports Risk Divisions of the International Subsidiaries.

In this context, ICS is responsible for the implementation, among others, of the below activities:

Participation with voting right in all International Committees (Regional and Special Handling);
Participation in the sessions of Special Handling Monitoring Committees which monitor and decide on the strategy of problematic corporate relationships with loan outstanding exceeding a certain threshold, that is jointly set by ICS and Country TAG;
Advice on best practices to the Credit Risk Units of international subsidiaries and implementation of Group Risk's credit related special projects such as acquisition and /or sale of wholesale portfolio; and
In cooperation with Group Credit Control Sector (GCCS), it conducts field reviews regarding the quality of the loan portfolios and specific loan segments.

The Group's international subsidiaries in Bulgaria, Serbia, Cyprus and Luxembourg apply the same credit risk management structure and control procedures as the Bank and report directly to the GCRO. Risk management policies and processes are approved and monitored by the credit risk divisions of the Bank ensuring that the Group guidelines are in place and credit risk strategy is uniformly applied across the Group.

Furthermore, information on credit risk monitoring of troubled assets is also provided in the section of Non-Performing Exposures (NPEs) management.

Retail Banking approval process

The approval process for loans to small businesses (turnover up to € 5 million) is centralized following specific guidelines for eligible collaterals as well as the 'four-eyes' principle. The assessment is based on an analysis of the borrower's financial position and statistical scorecards.

The credit approval process for Individual Banking (consumer and mortgage loans) is also centralized and differentiated between performing and non-performing businesses. It is based on specialized credit scoring models and credit criteria taking into account the payment behavior, personal wealth and financial position of the borrowers, including the existence of real estate property, the type and quality of securities and other factors as well. The ongoing monitoring of the portfolio quality and of any other deviations that may arise, leads to an immediate adjustment of the credit policy and procedures, when deemed necessary.

(b) Credit risk monitoring

Group Credit Control Sector

The Group Credit Control Sector (GCCS) monitors and assesses the quality of all of the Group's loan portfolios and operates independently from the business units of the Bank. The GCCS reports directly to the GCRO.

The main responsibilities of the GCCS are to:

supervise, support and maintain the credit rating and impairment systems used to assess the wholesale lending customers;
develop, supervise and support the Transactional Rating (TR) application used to measure the overall risk of wholesale credit relationships, taking into account both the creditworthiness of the borrower and required collaterals;
monitor and review the performance of all of the Group's loan portfolios;
supervise and control the foreign subsidiaries' credit risk management units;
monitor on a regular basis and report on a quarterly basis to the Board of Directors and the BRC of risk exposures, along with accompanying analyses;
monitor and evaluate the efficiency of adopted strategies and proposed solutions in terms of dealing with Non Performing Exposures (NPEs) and the achievement of targets for NPEs reduction, as communicated and agreed with the Supervisory Authorities;
conduct field reviews and prepare written reports to the Management on the quality of all of the Group's loan portfolios and adherence with EBA prevailing regulations;
ensure that EBA classifications are made in accordance with the relevant provisions and guidelines;
participate in the approval of new credit policies and new loan products;
participate in the Troubled Asset Committee;
attend meetings of Credit Committees and Special Handling Committees, without voting right;
formulate the Group's credit impairment policy and regularly review the adequacy of provisions of all of the Group's loan portfolios;
formulate, in collaboration with the responsible lending Units the credit policy manuals for performing borrowers; and
provide guidance and monitor the process of designing and reviewing credit policies before approved by Management.

Furthermore, in the context of reviewing performance of Group's wholesale portfolio, GCCS through its specialized Early Warning Unit (EWU), is also responsible to assess the wholesale portfolio and detect distress signals for specific borrowers. EWU has developed a multi-criterion delinquency application that is operating in parallel to the Bank's rating systems and targets to identify those borrowers whose financial performance may deteriorate significantly in the future and consequently the Bank should take actions for close monitoring and effective management.

Group Credit Risk Capital Adequacy Control Sector

The Group Credit Risk Capital Adequacy Control Sector implements and maintains the Internal Ratings Based (IRB) approach in accordance with the Basel framework and the Capital Requirements Directive (CRD) and maintains the credit risk assessment models for the loans portfolio of the Group. The Sector reports directly to the GCRO.

Specifically, the main responsibilities of the Group Credit Risk Capital Adequacy Control Sector are to:

control, measure and monitor the capital requirements arising from the Bank's loan portfolio along with the relevant reporting to Management and regulators (ECB/SSM);
measure and monitor the risk parameters (PD, LGD, EAD) for the purposes of capital adequacy calculations, as well as, the estimation of risk related parameters (such as forecast 12-m PD, forecast lifetime PD) for impairment calculation purposes;
reviewing the grouping of lending exposures and ensuring their homogeneity under IFRS , re-assessing and re-developing the significant increase in credit risk (SICR) threshold;
prepare monthly capital adequacy calculations (Pillar 1) and relevant management, as well as, regulatory reports (COREPs, SREP) on a quarterly basis;
perform stress tests, both internal and external (EBA/SSM), and maintain the credit risk stress testing infrastructure;
coordinate the stress testing exercises for the loan portfolios at Group Level;
monitoring of the regulatory framework in relation to the IRB framework performing impact assessment by initiating and managing relevant projects;
manage the models development, implementation, monitoring of the IRB models of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) for evaluating credit risk;
prepare the credit risk analyses for Internal Capital Adequacy Assessment (ICAAP)/ Pillar 2 purposes;
implement the IRB roll-out plan of the Group;
prepare the Basel Pillar 3 disclosures for credit risk;
monitor the regulatory framework in relation to the above, to perform impact assessment, to initiate and manage relevant projects;
regularly report to the GCRO, to the Management Risk Committee and to the Board Risk Committee on: risk models performance, risk parameters (PD, LGD, EAD), updates on regulatory changes and impact assessment and asset quality reviews;
guide, monitor and supervise the Credit Risk divisions of the subsidiaries on modelling, credit stress testing and other credit risk related regulatory issues.
monitor and guide Group's international subsidiaries on credit risk related ICAAP, stress testing and other regulatory credit risk related issues, based on Group standards. Review of local credit risk stress test exercises;
participate in the preparation of the business plan, the NPE targets plan and the recovery plan of the Group in relation to asset quality and capital requirements for the loan book (projected impairments and RWAs), as well as participate in the relevant committees;
support the business units in the use of credit risk models in business decisions, for funding purposes, in the capital impact assessment of strategic initiatives and the development and usage of risk related metrics such as risk adjusted pricing, Risk Adjusted Return on Capital (RAROC) etc.; and
assist Troubled Asset Group in the risk assessment and risk impact of various programs and products.

Group Model Validation and Governance Sector

The Group Model Validation and Governance Sector was established in September 2018, with key mandates:

the establishment of a comprehensive model governance and validation framework, and
the independent validation of the technical and operational completeness of all models used by the Group and their parameters, as well as their compliance with the provisions of the regulatory framework.

In more detail, the tasks of the Sector are outlined as follows:

Prepare and update the Group's Models Framework (to include model definition, roles involved per model, model classification principles and methodology, model validation principles, materiality classifications and thresholds, models' registry governance, etc.);
Establish and update the Group's Models Registry;
Review models' classification, in accordance with the methodology provided in the Group Models Framework;
Prepare and update the Group Models Validation Framework, while providing support to Group's subsidiaries in its implementation;
Monitor changes in ECB guidelines on models' validation;
Propose and escalate for approval the quantitative thresholds, in order to assess the results of the validation tests;
Conduct model validation tests in alignment with the Group Model Validation Framework and regulatory requirements;
Prepare detailed reports of the model valuation results according to the specific requirements of the model validated, if any, which are communicated to BRC on an annual basis along with any related proposed remediation plan;
Disseminate models' validation test results within the Group's BRC or MRC following reporting to Group CRO, as appropriate;
Prepare action plan for remediation actions, if any, as a result of the model validation tests implemented, and escalate the plan for its approval by the appropriate Management Authority;
Participate in the approval process of new models for assessing ratings' system accuracy and suitability; and
Monitor industry practices on the development and use of models as well as related ECB guidelines and restrictions.

Group Market and Counterparty Risk Sector

Group Market and Counterparty Risk Sector (GMCRS) is responsible for the measurement, monitoring and regular reporting of the Group's exposure to counterparty risk, which is the risk of loss due to the customer's failure to meet its contractual obligations in the context of treasury activities, such as securities, derivatives, repos, reverse repos, interbank placings, etc.

In addition, GMCRS monitors, controls and regularly reports country limits, exposures and escalates breaches to the Management. GMCRS uses a comprehensive methodology approved by the BRC, for determining the acceptable country risk level, including the countries in which the Group has a strategic presence.

The Group sets limits on the level of counterparty risk that are based mainly on the counterparty's credit rating, as provided by international rating agencies, the product type and the maturity of the transaction (e.g. control limits on net open derivative positions by both amount and term, sovereign bonds exposure, asset backed securities etc.). In addition, the Group sets limits that are applicable for investment on tradable instruments. For non- tradable instruments, the applicable limits are determined by the appropriate Credit Committees.

GMCRS maintains and updates the limits' monitoring systems and ensures the correctness and compliance of all financial institutions limits with the Bank's policies as approved by the Bank's relevant bodies.

The utilization of the abovementioned limits, any excess of them, as well as the aggregate exposure per Group's entity, counterparty and product type are monitored by GMCRS on a daily basis. Risk mitigation contracts are taken into account for the calculation of the final exposure.

Also, GMCRS ensures that the exposure arising from counterparties complies with the approved country limits framework. The GMCRS's exposure measurement and reporting tool is also available to the Group's subsidiaries treasury divisions, thus enabling them to monitor each counterparty's exposure and the limit availability.

Additionally, for the banks' corporate bond portfolio, GMCRS measures and monitors daily the total notional limits, the sectoral concentration and the maximum size per issuer. It uses a measurement tool for monitoring any downgrades and any idiosyncratic spread widening from purchase and any breach is communicated to the Management.

GMCRS implements the market's best practices and safeguards the compliance of all involved parties to limits' policies and procedures. To this direction, for various units and International subsidiaries, GMCRS provides support and guidance for implementation of the limits' guidelines and policies.

Furthermore, GMCRS prepares specialized reports for the Management along with regular reporting that includes the exposure to the Hellenic Republic, which is also provided to regulators (ECB/SSM).

(c) Credit related commitments

The primary purpose of credit related commitments is to ensure that funds are available to a customer as agreed. Financial guarantee contracts carry the same credit risk as loans since they represent irrevocable assurances that the Group will make payments in the event that a customer cannot meet its obligations to third parties. Documentary and commercial letters of credit, which are written undertakings by the Group on behalf of a customer authorizing a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions, are secured by the underlying shipment of goods to which they relate and therefore carry less risk than a loan. Commitments to extend credit represent contractual commitments to provide credit under pre-specified terms and conditions (note 42) in the form of loans, guarantees or letters of credit for which the Group usually receives a commitment fee. Such commitments are irrevocable over the life of the facility or revocable only in response to a material adverse effect.

(d) Concentration risk

The Group structures the levels of credit risk it undertakes by placing exposure limits by borrower, or groups of borrowers, and by industry segments. The exposure to each borrower is further restricted by sub-limits covering on and off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts.

Such risks are monitored on a revolving basis and are subject to an annual or more frequent review. Risk concentrations are monitored regularly and reported to the BRC. Such reports include the 25 largest exposures, major watch list and problematic customers, industry analysis, analysis by rating/risk class, by delinquency bucket, and loan portfolios by country.

(e) Rating systems

Rating of wholesale lending exposures

The Group has decided upon the differentiation of rating models for wholesale lending activities, in order to reflect appropriately the risks arising from customers with different characteristics. Accordingly, the Group employs the following rating models for the wholesale portfolio:

Moody's Risk Analyst model ("MRA" or "Fundamental Analysis"-"FA") is used to assess the risk of borrowers for Corporate Lending.
Internal Credit Rating model ("ICR") is used for those customers that cannot be rated by MRA.
Transactional Rating model ("TR") has been developed in order to assess the risk of transactions taking into consideration their specific factors. Specifically, aiming to facilitate its understanding of the Expected Loss (EL) when approving a credit limit, the Bank has developed a relevant application, whereby a borrower's credit rating along with proposed credit limit and provided collaterals/guarantees are considered for the calculation of the TR.
Slotting rating models are employed in view of assessing the risk of specialized exposures, which are part of the Specialized Lending corporate portfolio.
Finally, an assessment of the borrowers' viability and the identification of impairment triggers is performed using the Viability and the Impairment scorecards.

MRA, ICR, Slotting, Viability and Impairment scorecards functions are supported by the Risk Analyst ("RA") computing platform provided by an external provider (Moody's Analytics), while the TR is internally developed and is being supported by the core applications of the Bank.

MRA follows the Moody's fundamental analysis (FA) approach. The FA models belong to a family of models defined as Knowledge Based Systems and rely on a probabilistic reasoning approach. They use quantitative and qualitative information of individual obligors in order to assess their creditworthiness and determine their credit rating. In particular, MRA takes into account the entity's balance sheets, profit & loss accounts and cash flow statements to calculate key ratios. Its ratio analysis includes assessments of each ratio's trend across multiple periods, both in terms of the slope and volatility of the trend. It also compares the value of the ratio for the most recent period with the quartile values for a comparable peer group. Moreover, MRA is supplied with a commonly used set of qualitative factors relating to the quality of the company's management, the standing of the company within its industry and the perceived riskiness of the industry. MRA is used for the assessment of all legal entities with full accountancy tax books irrespective of their legal form, and is calibrated on the Greek corporate environment.

The MRA is not employed for certain types of entities that use different accounting methods to prepare their financial statements, such as Insurance companies and brokerage firms. Moreover, entities such as start-ups that have not produced financial information for at least two annual accounting periods are not rated with MRA. In such cases, the Internal Credit Rating ("ICR") is utilized, which is a scorecard consisting of a set of factors grouped into 3 main sections corresponding to particular areas of analysis: Financial Information, Qualitative Criteria, and Behavior Analysis.

In addition, the Group performs an overall assessment of wholesale customers, based both on their rating (MRA or ICR) and the collaterals and guarantees referred to the respective approved credit relationship, using a 14-grade rating scale. Credit exposures are subject to detailed reviews by the appropriate Credit Committee based on the respective transactional rating (TR). Low risk wholesale customers are reviewed at least once a year, whereas higher risk customers are reviewed either on a semi-annual or a quarterly basis.

With reference to Specialized Lending portfolio (for which the Bank is using Slotting rating models) and in line with European Banking Authority (EBA) definitions, it comprises types of exposures towards entities specifically created to finance or operate physical assets, where the primary source of income and repayment of the obligation lies directly with the assets being financed. Accordingly, three of its product lines that are included in the Specialized Lending exposure class: Project Finance (assessed with the Project Finance Scorecard), Commercial Real Estate (assessed with the CRE investor & CRE Developer Scorecards) and Object Finance (assessed with the Object Finance Scorecard tailored for the Shipping portfolio).

Regarding the assessment of a borrower's viability and the corresponding classification into Viable-Non-Viable, it is performed by the responsible relationship manager at least annually, as a part of a credit review process. The assessment is made through the RA platform, as part of the credit limit application, renewal or amendment process. The criteria considered for the classification of a

borrower as "Viable" or "Non-Viable" include the level of turnover, the values of specific financial ratios, the future cash flow generation capacity, as well as a number of qualitative characteristics.

In addition, the Group has developed an Impairment Rating Scorecard in accordance to which borrowers should be assessed and classified as impaired or not. The Impairment Rating Scorecard is embedded in the RA platform, in order to depict and archive in the most effective way, the information which is taken into consideration during credit limit reviews, especially in respect to the assessment of impairment triggers.

The Bank has further enhanced its wholesale credit risk assessment models linking risk parameters estimation with macro-economic factors allowing the forecasting of rating transitions under different macroeconomic scenarios (base, adverse and optimistic).

The rating systems described above are an integral part of the wholesale banking decision-making and risk management processes:

the credit approval or rejection, both at the origination and review process;
the allocation of competence levels for credit approval;
risk-adjusted pricing;
the calculation of Economic Value Added (EVA) and internal capital allocation; and
the impairment calculation (staging criteria and subsequent ECL estimation of forecasted risk parameters).

Rating of retail lending exposures

The Group assigns credit scores to its retail customers using a number of statistically-based models both at the origination and on ongoing basis through behavioral scorecards. These models have been developed to predict, on the basis of available information, the probability of default, the loss given default and the exposure at default. They cover the entire spectrum of retail products (credit cards, consumer lending, unsecured revolving credits, car loans, personal loans, mortgages and small business loans).

The Bank's models were developed based on historical data and credit bureau data. Behavioral scorecards are calculated automatically on a monthly basis, thus ensuring that the credit risk assessment is up to date.

The models are applied in the credit approval process, the credit limits management, as well as the collection process for the prioritization of the accounts in terms of handling. Furthermore, the models are often used for the risk segmentation of the customers and the risk based pricing of particular segments or new products introduced as well as in the calculation of the Economic Value Added (EVA) and Risk Adjusted Return On Capital (RaRoC) measures.

The rating systems employed by the Bank meets the requirements of the Basel III-Internal Ratings Based (IRB) approach. The Bank is IRB certified since 2008 for the Greek portfolios, both wholesale and retail (as detailed in Basel III, Pillar 3 disclosures available at the Bank's website).

In the context of IFRS9 implementation, the Bank has further enhanced its retail credit risk assessment models linking risk parameters estimation with macro-economic factors allowing their forecasting over one year and lifetime horizon under different macroeconomic scenarios (base, adverse and optimistic) and supporting the staging analysis and allocation to risk classes under homogeneous pools.

The Group Credit Risk Capital Adequacy Control Sector monitors the capacity of rating models and scoring systems to classify customers according to risk, as well as to predict the probability of default and loss given default and exposure at default on an ongoing basis. The Group Models Validation and Governance Sector implements the Bank's validation policy which complies with international best practices and regulatory requirements. The Bank verifies the validity of the rating models and scoring systems on an annual basis and the validation includes both quantitative and qualitative aspects. The validation procedures are documented, and regularly reviewed and reported to the BRC.

The Group's Internal Audit Division also independently reviews the validation process in wholesale and retail rating systems annually.

(f) Credit risk mitigation

A key component of the Group's business strategy is to reduce risk by utilizing various risk mitigating techniques. The most important risk mitigating means are collaterals' pledges, guarantees and master netting arrangements.

Types of collateral commonly accepted by the Group

The Group has internal policies in place which set out the following types of collateral that are usually accepted in a credit relationship:

residential real estate, commercial real estate (offices, shopping malls, etc.), industrial buildings and land;
receivables (trade debtors) and post dated cheques;
securities, including listed shares and bonds;
deposits;
guarantees and letters of support;
insurance policies; and
equipment, mainly, vehicles and vessels.

A specific coverage ratio is pre-requisite, upon the credit relationship's approval and on ongoing basis, for each collateral type, as specified in the Group's credit policy.

For exposures, other than loans to customers (i.e. reverse repos, derivatives), the Group accepts as collateral only cash or liquid bonds.

Valuation principles of collaterals

In defining the maximum collateral ratio for loans, the Group considers all relevant information available, including the collaterals' specific characteristics, if market participants would take those into account when pricing the relevant assets. The valuation and hence eligibility is based on the following factors:

the collateral's fair value, i.e. the exit price that would be received to sell the asset in an orderly transaction under current market conditions;
the fair value reflects market participants' ability to generate economic benefits by using the asset in its highest and best use or by selling it;
a reduction in the collateral's value is considered if the type, location or condition (such as deterioration and obsolescence) of the asset indicate so; and
no collateral value is assigned if a pledge is not legally enforceable.

The Group performs collaterals' valuation in accordance with its processes and policies. With the exception of special cases (e.g. syndicated loans), the real estate collaterals of all units are valued by Cerved Property Services S.A. ("CPS") who is the successor of the Bank's former subsidiary, Eurobank Property Services S.A. CPS is regulated by the Royal Institute of Chartered Surveyors and employs internal or external qualified appraisers based on predefined criteria (qualifications and expertise). All appraisals take into account factors such as the region, age and marketability of the property, and are further reviewed and countersigned by experienced staff. The valuation methodology employed is based on International Valuation Standards (IVS), while quality controls are in place, such as reviewing mechanisms, independent sample reviews by independent well established valuation companies.

In order to monitor the valuation of residential property held as collateral, the Bank uses the Residential Property Index developed in collaboration with other major banks in Greece. This methodology, has been approved by the Bank of Greece, and its use enables a dynamic monitoring of residential properties' values and market trends, on an annual basis. The Residential Property Index is used in combination with physical inspection and desktop valuation, depending on the EBA status and the balance of the loan.

For commercial real estates, the Bank uses the Commercial Real Estate Index developed by CPS. This index is based on internationally accepted methodology and constitutes a tool for the statistical monitoring of possible changes of the values of the commercial properties as well as for the trends in the particular market. It is updated on an annual basis. The Commercial Real Estate Index is used in combination with physical inspection and desktop valuation, depending on the EBA status and the balance of the loan.

To ensure the quality of the post-dated cheques accepted as collateral, the Bank has developed a pre-screening system, which takes into account a number of criteria and risk parameters, so as to evaluate their eligibility. Furthermore, the post-dated cheques' valuation is monitored through the use of advanced statistical reports and through the review of detailed information regarding the recoverability of cheques, referrals and bounced cheques, per issuer broken down.

Collateral policy and documentation

Regarding collaterals, Group's policy emphasizes the need that collaterals and relevant processes are timely and prudently executed, in order to ensure that collaterals and relevant documentation are legally enforceable at any time. The Group holds the right to liquidate collateral in the event of the obligor's financial distress and can claim and control cash proceeds from the liquidation process.

Guarantees

The guarantees used as credit risk mitigation by the Group are largely issued by central and regional governments in the countries in which it operates. The National Fund for Entrepreneurship and Development (ETEAN SA) and similar funds, banks and insurance companies are also significant guarantors of credit risk.

Management of repossessed properties

The objective of the repossessed assets' management is to minimize the time cycle of the asset's disposal and to maximize the recovery of the capital engaged.

To this end, the management of repossessed assets aims at improving rental and other income from the exploitation of such assets, and at the same time reducing the respective holding and maintenance costs. Additionally, the Group is actively engaged in identifying suitable potential buyers for its portfolio of repossessed assets (including specialized funds involved in acquiring specific portfolios of properties repossessed), both in Greece and abroad, in order to reduce its stock of properties with a time horizon of 3-5 years.

Repossessed assets are closely monitored based on technical and legal due diligence reports, so that their market value is accurately reported and updated in accordance with market trends.

Counterparty risk

The Group mitigates counterparty risk arising from treasury activities by entering into master netting arrangements and similar agreements, as well as collateral agreements with counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in the offset of balance sheet assets and liabilities, as the transactions are usually settled on a gross basis. However, the respective credit risk is reduced through a master netting agreement to the extent that if an event of default occurs, all amounts with the counterparty are terminated and settled on a net basis.

In the case of derivatives, the Group makes use of International Swaps and Derivatives Association (ISDA) contracts, which limit the exposure via the application of netting, and Credit Support Annex (CSAs), which further reduce the total exposure with the counterparty. Under these agreements, the total exposure with the counterparty is calculated on a daily basis taking into account any netting arrangements and collaterals.

The same process is applied in the case of repo transactions where standard Global Master Repurchase Agreements (GMRAs) are used. The exposure (the net difference between repo cash and the market value of the securities) is calculated on a daily basis and collateral is transferred between the counterparties thus minimizing the exposure.

Following the European Market Infrastructure Regulation (EMIR), the Bank performs centrally cleared transactions for eligible derivative contracts through an EU authorized European central counterparty (CCP), recorded in trade repositories. The use of CCP increases market transparency and reduces counterparty credit and operational risks inherent in derivatives markets.

The Bank uses a comprehensive collateral management system for the monitoring of ISDA, CSAs and GMRAs, i.e. the daily valuation of the derivatives and the market value of the securities are used for the calculation of each counterparty's exposure. The collateral which should be posted or requested by the relevant counterparty is calculated daily.

With this system, the Bank monitors and controls the collateral flow in case of derivatives and repos, independently of the counterparty. The effect of any market movement that increases the Bank's exposure is reported and the Bank proceeds to collateral call accordingly.

5.2.1.1 Maximum exposure to credit risk before collateral held

	2019		2018
	€ million		€ million
Credit risk exposures relating to on-balance
sheet assets are as follows:
Due from credit institutions	3,008		2,309
Less: Impairment allowance	(1)	3,007	(2)	2,307
Debt securities held for trading		53		22
Derivative financial instruments		2,262		1,871
Loans and advances to customers at amortised cost:
- Wholesale lending (1)	20,106		18,302
- Mortgage lending	13,982		16,262
- Consumer lending	3,838		3,988
- Small business lending	6,480		6,421
Less: Impairment allowance	(7,099)	37,307	(8,800)	36,173
Loans and advances to customers measured at FVTPL		58		59
Investment securities:
- Debt securities measured at amortised cost	1,542		1,451
Less: Impairment allowance	(3)	1,539	(31)	1,420
Debt securities measured at FVOCI		6,278		6,248
Investment securities at FVTPL		134		104
Other financial assets (2)	111		71
Less: Impairment allowance	(26)	85	(18)	53
Credit risk exposures relating to off-balance
sheet items (note 42):
- Loan commitments		4,095		3,585
- Financial guarantee contracts and other commitments		1,230		1,122
Total		56,048		52,964

(1) Includes loans to public sector.

(2) Refers to financial assets subject to IFRS 9 impairment requirements, which are recognised within other assets.

The above table represents the Group's maximum credit risk exposure as at 31 December 2019 and 31 December 2018 respectively, without taking account of any collateral held or other credit enhancements that do not qualify for offset in the Group's financial statements.

For on-balance sheet assets, the exposures set out above are based on the carrying amounts as reported in the balance sheet. For off-balance sheet items, the maximum exposure is the nominal amount that the Group may be required to pay if the financial guarantee contracts and other commitments are called upon and the loan commitments are drawn down. Off-balance sheet loan commitments presented above, include revocable commitments to extend credit of € 3 billion (2018: € 3 billion) that are subject to ECL measurement.

5.2.1.2 Loans and advances to customers

The section below provides an overview of the Group's exposure to credit risk arising from its customer lending portfolios, in line with the guidelines set by the Hellenic Capital Markets Commission and the Bank of Greece (BoG) released on 30 September 2013, as updated by the Group in order to comply with the revised IFRS 7 'Financial Instruments: Disclosures', following the adoption of IFRS 9 from 1 January 2018. In addition, the types of the Group's forbearance programs are in line with the BoG's Executive Committee Act 42/30.05.2014 and its amendments.

(a) Credit quality of loans and advances to customers

Loans and advances to customers carried at amortised cost are classified depending on how ECL is measured.

Accordingly, loans reported as non-impaired include loans for which a '12-month ECL allowance' is recognized as they exhibit no significant increase in credit risk since initial recognition and loans for which a 'Lifetime ECL allowance' is recognized as they exhibit a significant increase in credit risk since initial recognition but are not considered to be in default.

Credit impaired loans category includes loans that are considered to be in default, for which a loss allowance equal to 'Lifetime ECL' is recognized and loans classified as 'Purchased or originated credit impaired' (POCI) which are always measured on the basis of 'lifetime ECL'.

Loans and advances to customers carried at FVTPL are not subject to ECL measurement and therefore are not included in the quantitative information provided in the below sections for loans and advances measured at amortised cost, except where indicated.

The Group's accounting policy regarding impairment of financial assets is set out in note 2.2.13.

Regulatory definitions

'Default exposures', in line with the regulatory definition of default as adopted by the Group, include material exposures that are past due more than 90 days, exposures that are assessed by the Group as unlikely to pay as well as those that are assessed for impairment individually and carry an individual impairment allowance. As at 31 December 2019, the Group's default exposures amounted to € 12,295 million (2018: € 15,655 million).

'Non-performing exposures' as currently monitored and reported by the Group, in line with the guidelines set by the European Banking Authority (EBA Implementing Technical Standards), include material exposures that are in arrears for more than 90 days or assessed as unlikely to pay, impaired exposures under individual or collective impairment assessment, exposures categorized as defaulted for regulatory purposes, as well as forborne non performing exposures. As at 31 December 2019, the Group's non performing exposures included in loans and advances to customers at amortised cost amounted to € 12,950 million (2018: € 16,653 million). Correspondingly, 'Performing exposures' include exposures without arrears, those that are less than 90 days past due or are not assessed as unlikely to pay, non-impaired and non-defaulted exposures. As at 31 December 2019, the Group's performing exposures included in loans and advances to customers at amortised cost amounted to € 31,456 million (2018: € 28,320 million).

'Unlikely to pay' category refers to exposures where a borrower's ability to repay his credit obligations in full without realization of collateral is assessed as unlikely, regardless the existence of any past due amounts or the number of days past due.

Quantitative information

The following tables present the total gross carrying and nominal amount, representing the maximum exposure to credit risk before the impairment allowance, of loans and advances including securitized notes issued by special purpose vehicles established by the Group and credit related commitments respectively, that are classified as non-impaired (stage 1 and stage 2) and those classified as credit-impaired (stage 3 and POCI). They also present the impairment allowance recognized in respect of all loans and advances and credit related commitments, analyzed into individually or collectively assessed, based on how the respective impairment allowance has been calculated, the carrying amount of loans and advances, as well as the value of collateral held to mitigate credit risk.

Public Sector lending exposures include exposures to the central government, local authorities, state-linked companies and entities controlled and fully or partially owned by the state, excluding public and private companies with commercial activity. For credit risk management purposes, exposures to Public Sector are incorporated in wholesale lending.

In addition, the value of collateral presented in the tables below is capped to the respective gross loan amount.

Notes to the Consolidated Financial Statements

The following tables present information about the credit quality of the gross carrying amount of loans and advances to customers carried at amortised cost, the nominal exposure of credit related commitments and the respective impairment allowance as well as the carrying amount of loans and advances to customers carried at FVTPL:

	31 December 2019
						Impairment allowance
			Lifetime ECL					Lifetime ECL
				credit-impaired (1)				credit-impaired (1)
	12-month ECL Stage 1 € million	Lifetime ECL - Stage 2 € million	Individually assessed € million	Collectively assessed € million	Total gross carrying amount/nominal exposure € million	12-month ECL Stage 1 € million	Lifetime ECL - Stage 2 € million	Individually assessed € million	Collectively assessed € million	Carrying amount € million	Value of collateral € million
Retail Lending	11,545	4,449	561	7,745	24,300	(72)	(317)	(301)	(3,756)	19,854	15,452
- Mortgage	6,980	3,129	262	3,611	13,982	(13)	(174)	(130)	(1,387)	12,278
Value of collateral	6,306	2,538	153	2,341							11,338
- Consumer	1,555	324	1	951	2,831	(18)	(39)	(0)	(801)	1,973
Value of collateral	86	7	1	121							215
- Credit card	742	65	0	200	1,007	(19)	(5)	(0)	(173)	810
Value of collateral	1	0	0	-							1
- Small business	2,268	931	298	2,983	6,480	(22)	(99)	(171)	(1,395)	4,793
Value of collateral	1,497	640	156	1,605							3,898
Wholesale Lending	13,606	1,799	3,368	1,274	20,047	(63)	(90)	(1,828)	(670)	17,396	11,802
- Large corporate	9,515	996	1,567	74	12,152	(43)	(44)	(785)	(34)	11,246
Value of collateral	5,058	810	925	31							6,824
- SMEs	3,033	803	1,801	1,200	6,837	(20)	(46)	(1,043)	(636)	5,092
Value of collateral	2,037	574	857	452							3,920
- Securitized notes (2)	1,058	-	-	-	1,058	(0)	-	-	-	1,058
Value of collateral	1,058	-	-	-							1,058
Public Sector	54	3	-	2	59	(1)	(0)	-	(1)	57	2
- Greece	44	3	-	1	48	(1)	(0)	-	(1)	46
Value of collateral	1	1	-	0							2
- Other countries	10	-	-	1	11	(0)	-	-	(0)	11
Loans and advances to customers at FVTPL										58	58
Total	25,205	6,251	3,929	9,021	44,406	(136)	(407)	(2,129)	(4,427)	37,365	27,314
Total value of collateral	16,044	4,570	2,092	4,550
Credit related commitments	4,935	284	77	29	5,325	(25)	(2)	(31)	(6)
Loan commitments Financial guarantee contracts	3,956	131	8	0	4,095	(20)	(1)	(0)	(0)
and other commitments	979	153	69	29	1,230	(5)	(1)	(31)	(6)
Value of collateral	417	55	6	4

	31 December 2018
						Impairment allowance
			Lifetime ECL					Lifetime ECL
			credit-impaired (1)					credit-impaired (1)
	12-month ECL	Lifetime ECL	Individually	Collectively	Total gross carrying amount/nominal	12-month ECL	Lifetime ECL			Carrying	Value of
						Stage 1	Stage 2	Individually assessed	Collectively assessed	amount	collateral
	€ million	assessed assessed Stage 1 Stage 2 € million € million € million		exposure € million	€ million	€ million	€ million	€ million	€ million	€ million
Retail Lending	10,535	5,080	615	10,441	26,671	(89)	(600)	(307)	(4,644)	21,031	16,565
- Mortgage	6,706	3,513	297	5,746	16,262	(35)	(284)	(143)	(2,085)	13,715
Value of collateral	5,959	2,751	175	3,837							12,722
- Consumer	1,468	308	2	1,008	2,786	(32)	(90)	(1)	(771)	1,892
Value of collateral	44	5	2	128							179
- Credit card	757	51	0	394	1,202	(7)	(13)	(0)	(321)	861
Value of collateral	0	0	0	0							0
- Small business	1,604	1,208	316	3,293	6,421	(15)	(213)	(163)	(1,467)	4,563
Value of collateral	1,014	800	168	1,682							3,664
Wholesale Lending	10,759	1,880	4,280	1,316	18,235	(56)	(111)	(2,394)	(597)	15,077	9,924
- Large corporate	8,332	1,166	2,299	71	11,868	(40)	(63)	(1,264)	(33)	10,468
Value of collateral	4,374	918	1,105	28							6,425
- SMEs	2,427	714	1,981	1,245	6,367	(16)	(48)	(1,130)	(564)	4,609
Value of collateral	1,580	503	960	456							3,499
Public Sector	65	1	0	1	67	(1)	(0)	(0)	(1)	65	5
- Greece	56	-	0	1	57	(1)	-	(0)	(1)	55
Value of collateral	5	-	-	0							5
- Other countries	9	1	-	-	10	-	(0)	-	-	10
Loans and advances to
customers at FVTPL										59	52
Total	21,359	6,961	4,895	11,758	44,973	(146)	(711)	(2,701)	(5,242)	36,232	26,546
Total value of collateral	12,976	4,977	2,410	6,131
Credit related commitments	4,406	194	96	11	4,707	(12)	(1)	(42)	(3)
Loan commitments	3,511	69	4	1	3,585	(7)	(0)	(1)	(0)
Financial guarantee contracts
and other commitments	895	125	92	10	1,122	(5)	(1)	(41)	(3)
Value of collateral	448	30	3	2

(1) As at 31 December 2019, total gross carrying amount of credit impaired loans includes POCI loans of € 54 million which carry an impairment allowance of € 3.5 million, of which € 49 million arise from the acquisition of Piraeus Bank Bulgaria (note 23.3) (2018: € 5 million gross carrying amount and € 0.1 million impairment allowance).

(2) It refers to the notes of Pillar securitization (note 20).

The Group assesses the credit quality of its loans and advances to customers and credit related commitments that are subject to ECL using internal credit rating systems for the wholesale portfolio, which are based on a variety of quantitative and qualitative factors, while the credit quality of the retail portfolio is based on the allocation of risk classes into homogenous pools.

The following tables present the distribution of the gross carrying amount of loans and advances and the nominal exposure of credit related commitments based on the credit quality classification categories and stage allocation:

			31 December 2019		31 December 2018
	12-month ECL	Lifetime ECL	Lifetime ECL	Total gross	12-month ECL	Lifetime ECL	Lifetime ECL	Total gross
Internal credit rating	Stage 1	Stage 2	credit-impaired	carrying amount	Stage 1	Stage 2	credit-impaired	carrying amount
Retail Lending	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
- Mortgage
PD<2.5%	6,422	622	-	7,044	3,509	49	-	3,558
2.5%<=PD<4%	331	396	-	727	2,119	593	-	2,712
4%<=PD<10%	193	767	-	960	915	616	-	1,531
10%<=PD<16%	22	262	-	284	57	392	-	449
16%<=PD<99.99%	12	1,082	-	1,094	106	1,863	-	1,969
100%	-	-	3,873	3,873	-	-	6,043	6,043
- Consumer
PD<2.5%	761	14	-	775	712	5	-	717
2.5%<=PD<4%	541	34	-	575	440	11	-	451
4%<=PD<10%	253	105	-	358	141	31	-	172
10%<=PD<16%	0	68	-	68	170	9	-	179
16%<=PD<99.99%	0	103	-	103	5	252	-	257
100%	-	-	952	952	-	-	1,010	1,010
- Credit card
PD<2.5%	47	6	-	53	540	-	-	540
2.5%<=PD<4%	196	3	-	199	167	17	-	184
4%<=PD<10%	499	36	-	535	25	7	-	32
10%<=PD<16%	0	3	-	3	21	3	-	24
16%<=PD<99.99%	0	17	-	17	4	24	-	28
100%			200	200			394	394
- Small business	-	-			-	-
PD<2.5%	239	4		243	254	3		257
2.5%<=PD<4%		21	-			8	-
4%<=PD<10%	1,212 674	189	-	1,233 863	1,188 70	23	-	1,196 93
10%<=PD<16%	143	196	-	339	46	12	-	58
16%<=PD<99.99%	0	521	-	521	46		-
100%			-			1,162	-	1,208
	-	-	3,281	3,281	-	-	3,609	3,609
Wholesale Lending
- Large corporate
Strong	6,139	152	-	6,291	5,015	26	-	5,041
Satisfactory	3,062	515	-	3,577	3,304	523	-	3,827
Watch list	314	329	-	643	13	617	-	630
Impaired (Defaulted)	-	-	1,641	1,641	-	-	2,370	2,370
- SMEs
Strong	1,354	51	-	1,405	979	27	-	1,006
Satisfactory	1,501	245	-	1,746	1,404	220	-	1,624
Watch list	178	507	-	685	44	467	-	511
Impaired (Defaulted)	-	-	3,001	3,001	-	-	3,226	3,226
- Securitized notes
Strong	1,058	-	-	1,058	-	-	-	-
Public Sector
All countries
Strong	1	-	-	1	6	0	-	6
Satisfactory	53	-	-	53	59	1	-	60
Watch list	-	3	-	3	0	0	-	0
Impaired (Defaulted)	-	-	2	2	-	-	1	1
Total	25,205	6,251	12,950	44,406	21,359	6,961	16,653	44,973

			31 December 2019		31 December 2018
Internal credit rating	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-impaired € million	Total nominal amount € million	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-impaired € million	Total nominal amount € million
Credit Related
Commitments
Retail Lending
Loan commitments
PD<2.5%	257	6	-	263	1,513	2	-	1,515
2.5%<=PD<4%	646	2	-	648	1,034	1	-	1,035
4%<=PD<10%	1,405	65	-	1,470	72	13	-	85
10%<=PD<16%	166	4	-	170	21	2	-	23
16%<=PD<99.99%	0	10	-	10	1	11	-	12
100%	-	-	0	0	-	-	1	1
Financial guarantee
contracts and other
commitments
PD<2.5%	13	0	-	13	38	0	-	38
2.5%<=PD<4%	93	-	-	93	93	0	-	93
4%<=PD<10%	40	0	-	40	0	0	-	0
10%<=PD<16%	-	0	-	0	-	0	-	0
16%<=PD<99.99%	-	0	-	0	-	-	-	-
100%	-	-	0	0	-	-	1	1
Wholesale Lending
Loan commitments
Strong	900	6	-	906	315	9	-	324
Satisfactory	572	34	-	606	545	20	-	565
Watch list	10	4	-	14	10	11	-	21
Impaired (Defaulted)	-	-	8	8	-	-	4	4
Financial guarantee
contracts and other
commitments
Strong	523	2	-	525	496	0	-	496
Satisfactory	298	85	-	383	261	64	-	325
Watch list	12	66	-	78	7	61	-	68
Impaired (Defaulted)	-	-	98	98	-	-	101	101
Total	4,935	284	106	5,325	4,406	194	107	4,707

The table below depicts the internal credit rating bands (MRA rating scale or equivalent) for the wholesale portfolio that correspond to the credit quality classification categories presented in the above tables:

Wholesale Lending
Credit Quality
classification categories	Internal Credit Rating
Strong	1-4
Satisfactory	5-6
Watch list	7-9
Impaired (Defaulted)	10

The following tables present the movement of the gross carrying amounts for loans and advances to customers by product line and stage and is calculated by reference to the opening and closing balances for the reporting years from 1 January 2019 to 31 December 2019 and 1 January 2018 to 31 December 2018:

	31 December 2019
	Wholesale Mortgage							Consumer			Small business
	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at
1 January	10,824	1,881	5,597	6,706	3,513	6,043	2,225	359	1,404	1,604	1,208	3,609	44,973
New loans and advances
originated or purchased	3,070	-	-	374	-	-	561	-	-	332	-	-	4,337
Arising from
acquisition (note 23.3)	429	-	65	116	-	7	75	-	0	36	-	1	729
Securitized notes	1,058	-	-	-	-	-	-	-	-	-	-	-	1,058
Transfers between stages
-to 12-month ECL	212	(199)	(13)	668	(657)	(11)	107	(104)	(3)	505	(502)	(3)	-
-to lifetime ECL	(563)	740	(177)	(239)	783	(544)	(195)	260	(65)	(70)	395	(325)	-
-to lifetime ECL credit
impaired loans	(112)	(91)	203	(58)	(365)	423	(45)	(67)	112	(27)	(139)	166	-
Loans and advances
derecognised/ reclassified
as held for sale during the
year	(180)	(9)	(85)	(7)	(93)	(1,898)	(105)	(15)	(2)	(28)	(2)	(2)	(2,426)
Amounts written-off (1)	-	-	(514)	-	-	(144)	-	-	(264)	-	-	(161)	(1,083)
Repayments	(1,348)	(492)	(321)	(679)	(143)	(85)	(303)	(41)	(58)	(214)	(55)	(51)	(3,790)
Foreign exchange
differences and other
movements	270	(28)	(111)	99	91	82	(23)	(3)	28	130	26	47	608
Gross Carrying amount at
31 December	13,660	1,802	4,644	6,980	3,129	3,873	2,297	389	1,152	2,268	931	3,281	44,406
Impairment allowance	(64)	(90)	(2,499)	(13)	(174)	(1,517)	(37)	(44)	(974)	(22)	(99)	(1,566)	(7,099)
Carrying amount at 31
December	13,596	1,712	2,145	6,967	2,955	2,356	2,260	345	178	2,246	832	1,715	37,307

	31 December 2018
		Wholesale			Mortgage			Consumer			Small business
	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at 1
January	9,209	2,464	6,558	6,657	3,557	6,453	2,148	441	2,662	1,506	1,118	4,349	47,122
New loans and advances
originated or purchased	3,222	-	-	310	-	-	484	-	-	297	-	-	4,313
Transfers between stages
-to 12-month ECL	873	(853)	(20)	559	(536)	(23)	140	(136)	(4)	123	(116)	(7)	-
-to lifetime ECL	(434)	518	(84)	(191)	973	(782)	(107)	200	(93)	(75)	416	(341)	-
-to lifetime ECL credit
impaired loans	(53)	(289)	342	(73)	(430)	503	(57)	(86)	143	(29)	(177)	206	-
Loans and advances
derecognised/ reclassified
as held for sale during the
year	(2)	(0)	(190)	(0)	-	(6)	(11)	(2)	(995)	(6)	(1)	(6)	(1,219)
Amounts written-off (1)	-	-	(566)	-	-	(105)	-	-	(265)	-	-	(536)	(1,472)
Repayments	(1,668)	(138)	(509)	(709)	(186)	(136)	(407)	(73)	(86)	(219)	(87)	(107)	(4,325)
Foreign exchange
differences and other
movements	(323)	179	66	153	135	139	35	15	42	7	55	51	554
Gross Carrying amount at
31 December	10,824	1,881	5,597	6,706	3,513	6,043	2,225	359	1,404	1,604	1,208	3,609	44,973
Impairment allowance	(57)	(111)	(2,992)	(35)	(284)	(2,228)	(39)	(103)	(1,093)	(15)	(213)	(1,630)	(8,800)
Carrying amount at 31
December	10,767	1,770	2,605	6,671	3,229	3,815	2,186	256	311	1,589	995	1,979	36,173

(1) The contractual amount outstanding on lending exposures that were written off during the year ended 31 December 2019 and that are still subject to enforcement activity is € 927 million (2018: € 1,238 million).

Note 1: Wholesale product line category includes also Public sector loans portfolio.

Note 2: "Loans and advances derecognised/ reclassified as held for sale during the year" presents loans derecognized during the year due to a) securitization/ sale transactions (note 20) and b) substantial modifications of the loans' contractual terms and those that have been reclassified as held for sale during the year (note 30).

Credit impaired loans and advances to customers

The following tables present the ageing analysis of credit impaired (Stage 3 and POCI) loans and advances by product line at their gross carrying amounts, as well as the respective impairment allowance and the value of collaterals held to mitigate credit risk.

For denounced loans, the Group ceases to monitor the delinquency status and therefore the respective balances have been included in the 'over 360 days' time band, with the exception of consumer exposures which continue to be monitored up to 360 days past due.

	31 December 2019
		Retail lending			Wholesale lending		Public sector
	Mortgage € million	Consumer € million	Credit card € million	Small business € million	Large corporate € million	SMEs € million	Greece and other countries € million	Lifetime ECL credit-impaired € million
up to 90 days	850	118	25	362	551	515	-	2,421
90 to 179 days	124	34	11	65	105	58	-	397
180 to 360 days	111	40	12	69	37	46	-	315
more than 360 days	2,788	760	152	2,785	948	2,382	2	9,817
Total gross
carrying amount	3,873	952	200	3,281	1,641	3,001	2	12,950
Impairment allowance	(1,517)	(801)	(173)	(1,566)	(819)	(1,679)	(1)	(6,556)
Carrying amount	2,356	151	27	1,715	822	1,322	1	6,394
Value of Collateral	2,494	122	0	1,761	956	1,309	0	6,642

	31 December 2018
		Retail lending			Wholesale lending		Public sector
					Large			Lifetime ECL
	Mortgage	Consumer	Credit card	Small business	corporate	SMEs	Greece	credit-impaired
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
up to 90 days	1,280	135	25	574	885	573	-	3,472
90 to 179 days	250	51	12	84	40	56	-	493
180 to 360 days	175	67	16	73	35	46	-	412
more than 360 days	4,338	757	341	2,878	1,410	2,551	1	12,276
Total gross
carrying amount	6,043	1,010	394	3,609	2,370	3,226	1	16,653
Impairment allowance	(2,228)	(772)	(321)	(1,630)	(1,297)	(1,694)	(1)	(7,943)
Carrying amount	3,815	238	73	1,979	1,073	1,532	0	8,710
Value of Collateral	4,012	130	0	1,850	1,133	1,416	0	8,541

Note: As at 31 December 2019, total gross carrying amount of credit impaired loans includes POCI loans of € 54 million (2018: € 5 million).

(b) Collaterals and repossessed assets

Collaterals

The Loan-to-Value (LTV) ratio of the mortgage lending reflects the gross loan exposure at the balance sheet date over the market value of the property held as collateral.

The LTV ratio of the mortgage portfolio is presented below:

	2019 € million	2018 € million
Mortgages
Less than 50%	3,407	3,366
50%-70%	2,300	2,101
71%-80%	1,505	1,445
81%-90%	1,139	1,250
91%-100%	2,072	2,625
101%-120%	1,023	1,554
121%-150%	887	1,362
Greater than 150%	1,649	2,559
Total exposure	13,982	16,262
Average LTV	76.79%	89.79%

The breakdown of collateral and guarantees for loans and advances to customers at amortised cost is presented below:

	31 December 2019
		Value of collateral received
	Real Estate	Financial Other Total
	€ million	€ million	€ million	€ million	€ million
Retail Lending	14,825	423	204	15,452	291
Wholesale Lending (1)	5,517	879	5,405	11,802	180
Public sector	1	1	0	2	-
Total	20,343	1,303	5,609	27,256	471

	31 December 2018
		Value of collateral received
	Real Estate Financial Other Total
	€ million	€ million	€ million	€ million	€ million
Retail Lending	15,979	361	225	16,565	215
Wholesale Lending (1)	4,601	870	4,453	9,924	180
Public sector	2	3	-	5	-
Total	20,582	1,234	4,678	26,494	395

(1) Other collaterals include assigned receivables, equipment, inventories, vessels, etc.

Repossessed assets

The Group recognizes collateral assets on the balance sheet by taking possession usually through legal processes or by calling upon other credit enhancements. The main type of collateral that the Group repossesses against repayment or reduction of the outstanding loan is real estate, which is recognized within repossessed assets and carried at the lower of cost or net realizable value (see also notes 2.2.18 and 29). In cases where the Group makes use of repossessed properties as part of its operations, they are classified as own-used or investment properties, as appropriate (notes 2.2.6, 26 and 27).

The following tables present a summary of collaterals that the Group took possession, and were recognized as repossessed assets, as well as the net gains/ (losses) arising from the sale of such assets in the year:

	31 December 2019
	Gross amount € million	Of which: added this year € million	Accumulated impairment € million	Of which: arising this year € million	Net amount € million	Net Sale Price € million	Net gain/(loss) on sale € million
Real estate auction items	719	178	(183)	5	536	39	1
- Residential	255	46	(49)	14	206	15	(0)
- Commercial	464	132	(134)	(9)	330	24	1
Other collateral	1	-	(0)	-	1	1	0
	31 December 2018
		Of which:		Of which:			Net
	Gross	added this	Accumulated	arising this	Net	Net	gain/(loss)
	amount	year	impairment	year	amount	Sale Price	on sale
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Real estate auction items	663	175	(188)	(5)	475	36	(1)
- Residential	279	62	(63)	4	216	21	(1)
- Commercial	384	113	(125)	(9)	259	15	0
Other collateral	1	0	0	0	1	0	0

Properties that have been classified as investment property or held for sale (note 30) in 2019 as a result of repossession or transfer from repossessed properties category, amounted to € 55 million (2018: € 22 million).

(c) Geographical and industry concentrations of loans and advances to customers

As described above in note 5.2.1, the Group holds diversified portfolios across markets and countries and implements limits on concentrations arising from the geographical location or the activity of groups of borrowers that could be similarly affected by changes in economic or other conditions, in order to mitigate credit risk.

The following tables break down the Group's exposure into loans and advances to customers and credit related commitments at their gross carrying amount and nominal amount respectively by stage, product line, industry and geographical region and impairment allowance by product line, industry and geographical region:

	31 December 2019
		Greece			Rest of Europe				Other Countries
	Gross carrying/nominal amount				Gross carrying/nominal amount				Gross carrying/nominal amount
			Lifetime ECL				Lifetime ECL				Lifetime ECL
	12-month	Lifetime ECL	credit	Impairment	12-month	Lifetime ECL	credit	Impairment	12-month	Lifetime ECL	credit	Impairment
	ECL-Stage 1	Stage 2	impaired(1)	allowance	ECL-Stage 1	Stage 2	impaired(1)	allowance	ECL-Stage 1	Stage 2	impaired(1)	allowance
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Retail Lending	9,202	4,176	7,954	(4,272)	2,336	273	351	(174)	7	0	1	(0)
-Mortgage	5,786	3,008	3,676	(1,627)	1,188	121	196	(77)	6	0	1	(0)
-Consumer	839	233	907	(820)	715	91	45	(38)	1	0	0	(0)
-Credit card	644	46	196	(193)	98	19	4	(4)	0	0	0	(0)
-Small business	1,933	889	3,175	(1,632)	335	42	106	(55)	0	-	-	(0)
Wholesale Lending	7,459	1,381	4,085	(2,344)	4,311	379	482	(272)	1,836	39	75	(35)
-Commerce and services (2)	2,942	448	1,943	(1,159)	1,836	57	204	(145)	321	0	33	(18)
-Manufacturing	2,136	267	827	(484)	537	59	17	(8)	12	-	-	(0)
-Shipping	176	5	10	(9)	135	-	62	(57)	1,360	39	24	(7)
-Construction	697	325	884	(529)	424	31	59	(34)	30	-	18	(10)
-Tourism	819	325	405	(146)	197	30	1	(0)	-	-	-	-
-Energy	628	8	11	(13)	168	11	25	(4)	15	-	-	(0)
-Other	61	3	5	(4)	1,014	191	114	(24)	98	-	-	(0)
Public Sector	44	3	1	(2)	2	-	1	(0)	8	-	0	(0)
Total	16,705	5,560	12,040	(6,618)	6,649	652	834	(446)	1,851	39	76	(35)
Credit related Commitments	3,193	168	100	(62)	1,562	98	6	(2)	180	18	0	(0)
-Loan commitments	2,659	69	4	(20)	1,155	60	4	(1)	142	2	-	(0)
-Financial guarantee contracts and
other commitments	534	99	96	(42)	407	38	2	(1)	38	16	0	(0)

						31 December 2018
	Greece				Rest of Europe				Other Countries
	Gross carrying/nominal amount				Gross carrying/nominal amount				Gross carrying/nominal amount
	Lifetime ECL				Lifetime ECL					Lifetime ECL
	12-month	Lifetime ECL	credit	Impairment	12-month	Lifetime ECL	credit	Impairment	12-month	Lifetime ECL	credit	Impairment
	ECL-Stage 1	Stage 2	impaired(1)	allowance	ECL-Stage 1	Stage 2	impaired(1)	allowance	ECL-Stage 1	Stage 2	impaired(1)	allowance
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Retail Lending	8,580	4,833	10,630	(5,433)	1,948	247	425	(207)	7	0	1	(0)
-Mortgage	5,686	3,398	5,812	(2,454)	1,014	115	230	(93)	6	0	1	(0)
-Consumer	899	230	967	(860)	568	78	43	(34)	1	0	0	(0)
-Credit card	664	33	389	(336)	93	18	5	(5)	0	0	0	(0)
-Small business	1,331	1,172	3,462	(1,783)	273	36	147	(75)	-	-	-	-
Wholesale Lending	6,514	1,501	5,018	(2,831)	2,442	296	469	(250)	1,803	83	109	(77)
-Commerce and services	2,435	621	2,308	(1,388)	493	3	144	(80)	51	25	56	(43)
-Manufacturing	1,980	262	1,026	(556)	455	71	31	(17)	6	-	-	(0)
-Shipping	39	0	-	(0)	161	8	78	(59)	1,549	52	35	(24)
-Construction	751	319	1,158	(692)	536	56	83	(54)	78	6	18	(10)
-Tourism	677	286	506	(180)	275	94	13	(5)	0	-	-	(0)
-Energy	594	11	9	(14)	55	0	17	(6)	16	-	-	(0)
-Other	38	2	11	(1)	467	64	103	(29)	103	-	-	(0)
Public Sector	56	0	1	(2)	1	1	0	(0)	8	0	-	(0)
Total	15,150	6,334	15,649	(8,266)	4,391	544	894	(457)	1,818	83	110	(77)
Credit related Commitments	2,971	91	102	(55)	1,370	87	5	(3)	65	16	0	(0)
-Loan commitments	2,400	7	1	(6)	1,054	62	4	(2)	57	0	0	(0)
-Financial guarantee contracts and
other commitments	571	84	101	(49)	316	25	1	(1)	8	16	0	(0)

(1) Includes POCI loans of € 53.5 million held by operations in Rest of Europe and of € 0.5 million in Other countries (2018: € 5 million in Rest of Europe).

(2) The operations in Rest of Europe include € 1,058 million related to the notes of the Pillar securitization.

As at 31 December 2019, the carrying amount of Group's loans measured at FVTPL of € 58 million (2018: € 59 million) were included in Wholesale lending portfolio, of which € 47 million (2018: € 46 million) were held by operations in Greece, while € 11 million (2018: € 13 million) were held by operations in Rest of Europe.

(d) Forbearance practices on lending activities

Modifications of the loans' contractual terms may arise due to various factors, such as changes in market conditions, customer retention and other factors as well as due to the potential deterioration in the borrowers' financial condition. The Group has employed a range of forbearance solutions in order to enhance the management of customer relationships and the effectiveness of collection efforts, as well as to improve the recoverability of cash flows and minimize credit losses for both retail and wholesale portfolios.

Forbearance practices' classification

Forbearance practices as monitored and reported by the Group, based on the European Banking Authority Implementing Technical Standards (EBA ITS) guidelines, occur only in the cases where the contractual payment terms of a loan have been modified, as the borrower is considered unable to comply with the existing loan's terms due to apparent financial difficulties, and the Group grants a concession by providing more favorable terms and conditions that it would not otherwise consider had the borrower not been in financial difficulties.

All other types of modifications granted by the Group, where there is no apparent financial difficulty of the borrower and may be driven by factors of a business nature are not classified as forbearance measures.

Forbearance solutions

Forbearance solutions are granted following an assessment of the borrower's ability and willingness to repay and can be of a short or longer term nature. The objective is to assist financially stressed borrowers by rearranging their repayment cash outflows into a sustainable modification, and at the same time, protect the Group from suffering credit losses. The Group deploys targeted segmentation strategies with the objective to tailor different short or long term and sustainable management solutions to selected groups of borrowers for addressing their specific financial needs.

The nature and type of forbearance options may include but is not necessarily limited to, one or more of the following:

arrears capitalization;
arrears repayment plan;
reduced payment above interest only;
interest-only payments;
reduced payment below interest only;
grace period;
interest rate reduction;
loan term extensions;
split balance;
partial debt forgiveness/write-down;
operational restructuring; and
debt to equity swaps.

Specifically for unsecured consumer loans (including credit cards), forbearance programs (e.g. term extensions), are applied in combination with debt consolidation whereby all existing consumer balances are pooled together. Forbearance solutions are applied in order to ensure a sufficient decrease on installment and a viable solution for the borrower. In selected cases, the debt consolidations may be combined with mortgage prenotations to convert unsecured lending exposures to secured ones.

In the case of mortgage loans, a decrease of installment may be achieved through forbearance measures such as extended payment periods, capitalization of arrears, split balance and reduced payment plans.

Wholesale exposures are subject to forbearance when there are indications of financial difficulties of the borrower, evidenced by a combination of factors including the deterioration of financials, credit rating downgrade, payment delays and other.

The Troubled Assets Group General Division (TAG) is the independent body, which has the overall responsibility for the management of the Group's troubled assets portfolio, in alignment with the Bank of Greece Executive Committee Act 42/30.05.2014 and its amendments. TAG controls and monitors the effectiveness of the forbearance schemes and warrants the continuous improvement and adjustment of policies and procedures.

TAG cooperates with Risk Management to reach a mutual understanding and develop an appropriate methodology for the evaluation of the risks inherent in every type of modification and delinquency bucket, per portfolio. Further information regarding TAG's structure and main responsibilities are provided in notes 5.2.

Debt for equity swaps

For wholesale portfolios, the Group on occasion participates in debt for equity transactions as part of forbearance measures, as described in note 2.2.9. In 2019, equity positions acquired by the Group and held as of 31 December 2019 are: a) 12.46% of the nonvoting preference shares of Helesi S.A. for € 1.8 thousand and b) 6.75% of the non-voting preference shares of Akritas S.A. for € 0.01 million. Similarly in 2018, equity positions acquired by the Group and held as of 31 December 2018 were: a) 10.67% of the non-voting shares of Pillarstone Bidco S.C.A. for € 0.02 million, in the context of the restructuring of Famar S.A. and b) 12.1% of Regency Hellenic Investments S.A. for € 8.5 million, following the debt restructuring of Regency Entertaiment S.A.

i. Classification of Forborne loans

Forborne loans are classified either as non-impaired (stage 2), or impaired (stage 3) by assessing their delinquency and credit quality status.

Credit impaired forborne loans enter initially a probation period of one year where the borrowers' payment performance is closely monitored. If at the end of the abovementioned period, the borrowers have complied with the terms of the program and there are no past due amounts and concerns regarding the loans' full repayment, the loans are then reported as non-impaired forborne loans (stage 2). In addition, non-impaired forborne loans, including those that were previously classified as credit impaired and complied with the terms of the program, are monitored over a period of two years. If, at the end of that period, the borrowers have made regular payments of a significant aggregate amount, there are no past due amounts over 30 days and the loans are neither credit impaired nor any other SICR criteria are met they exit forborne status and are classified as stage 1.

Particularly, the category of credit impaired forborne loans includes those that (a) at the date when forbearance measures were granted, were more than 90 days past due or assessed as unlikely to pay, (b) at the end of the one year probation period met the criteria of entering the non -impaired status and during the two years monitoring period new forbearance measures were extended or became more than 30 days past due, and (c) were initially classified as non- impaired and during the two years monitoring period met the criteria for entering the credit impaired status.

Furthermore, forborne loans that fail to perform under the new modified terms and are subsequently denounced cease to be monitored as part of the Group's forbearance activities and are reported as denounced credit impaired loans (stage 3) consistently with the Group's management and monitoring of all denounced loans.

ii. Impairment assessment

Where forbearance measures are extended, the Group performs an assessment of the borrower's financial condition and its ability to repay, under the Group's impairment policies, as described in notes 2.2.13 and 5.2.1. Accordingly, forborne loans to wholesale customers, retail individually significant exposures and financial institutions are assessed on an individual basis. Forborne retail lending portfolios are generally assessed for impairment separately from other retail loan portfolios on a collective basis as they consist of large homogenous portfolio.

iii. Loan restructurings

In cases where the contractual cash flows of a forborne loan have been substantially modified, the original forborne loan is derecognized and a new loan is recognized. The Group records the modified asset as a 'new' financial asset at fair value and the difference with the carrying amount of the existing one is recorded in the income statement as derecognition gain or loss.

In cases where the modification as a result of forbearance measures is not considered substantial, the Group recalculates the gross carrying amount of the loan and recognizes the difference as a modification gain or loss in the income statement. The Group continues to monitor the modified forborne loan in order to determine if the financial asset exhibits significant increase in credit risk since initial recognition during the forbearance period.

As at 31 December 2019, the carrying amount of Group's forborne loans measured at FVTPL amounted to € 26 million (2018: € 35 million).

The following tables present an analysis of Group's forborne activities for loans measured at amortised cost. In order to align with the quantitative information provided in section (a) based on revised IFRS 7 requirements, the relevant tables below are presented on a gross carrying amount basis, while cumulative impairment allowance is presented separately, in line with the Group's internal credit risk monitoring and reporting.

The following table presents a summary of the types of the Group's forborne activities:

	2019	2018
	€ million	€ million
Forbearance measures:
Split balance	2,342	3,218
Loan term extension	2,696	3,318
Arrears capitalisation	380	564
Reduced payment below interest owed	227	285
Interest rate reduction	726	825
Reduced payment above interest owed	305	568
Arrears repayment plan	239	308
Interest only	53	75
Grace period	90	113
Debt/equity swaps	28	65
Partial debt forgiveness/Write-down	57	54
Operational restructuring	74	95
Other	244	174
Total gross carrying amount	7,461	9,662
Less: cumulative impairment allowance	(1,675)	(2,236)
Total carrying amount	5,786	7,426

The following tables present a summary of the credit quality of forborne loans and advances to customers:

	31 December 2019
	Total loans &
	advances at	Forborne loans	% of Forborne
	amortised cost	& advances	loans &
	€ million	€ million	advances
Gross carrying amounts:
12-month ECL-Stage 1	25,205	-	-
Lifetime ECL-Stage 2	6,251	4,155	66.5
Lifetime ECL credit-impaired	12,950	3,306	25.5
Total Gross Amount	44,406	7,461	16.8
Cumulative ECL Loss allowance:
12-month ECL-Stage 1	(136)	-
Lifetime ECL-Stage 2	(407)	(311)
Lifetime ECL (credit-impaired) of which:	(6,556)	(1,364)
- Individually assessed	(2,129)	(453)
- Collectively assessed	(4,427)	(911)
Total carrying amount	37,307	5,786	15.5
Collateral received	27,256	5,171

The following table presents the movement of forborne loans and advances:

	2019	2018
	€ million	€ million
Gross carrying amount at 1 January	9,662	11,074
Forbearance measures in the year (1)	779	1,253
Forborne loans derecognised/ reclassified as held
for sale during the year (2)	(782)	(42)
Write-offs of forborne loans	(114)	(81)
Repayment of loans	(412)	(484)
Loans & advances that exited forbearance status (3)	(1,843)	(2,201)
Other	171	143
Less: cumulative impairment allowance	(1,675)	(2,236)
Carrying amount at 31 December	5,786	7,426

(1) Forbearnce measures in the year depict loans to which forbearance measures were granted for the first time during the reporting period.

(2) "Forborne loans derecognised/ reclassified as held for sale during the year" presents loans derecognized during the year due to a) sale transactions and b) substantial modifications of the loans' contractual terms and those that have been reclassified as held for sale during the year (note 30).

(3) In 2019, an amount of € 482 million loans and advances that exited forbearance status refers to loans that were denounced (2018: € 946 million).

The following table presents the Group's exposure to forborne loans and advances by product line:

	2019	2018
	€ million	€ million
Retail Lending	5,483	7,276
- Mortgage	3,753	5,071
- Consumer	305	423
- Credit card	66	75
- Small business	1,359	1,707
Wholesale Lending	1,978	2,386
-Large corporate	1,063	1,391
-SMEs	915	995
Total gross carrying amount	7,461	9,662
Less: cumulative impairment allowance	(1,675)	(2,236)
Total carrying amount	5,786	7,426

The following table presents the Group's exposure to forborne loans and advances by geographical region:

	2019	2018
	€ million	€ million
Greece	6,983	9,084
Rest of Europe	468	544
Other countries	10	34
Total gross carrying amount	7,461	9,662
Less: cumulative impairment allowance	(1,675)	(2,236)
Total carrying amount	5,786	7,426

The following table provides information on modifications due to forbearance measures on lending exposures which have not resulted in derecognition. Such financial assets were modified while they had a loss allowance measured at an amount equal to lifetime ECL.

	2019	2018
Modified lending exposures	€ million	€ million
Loans modified during the year with loss allowance measured at an amount equal to lifetime ECL
Gross carrying amount at 31 December (1)	1,637	2,221
Modification loss	65	70
Loans modified since initial recognition at a time when loss allowance was based on lifetime ECL
Gross carrying amount at 31 December for which loss allowance has changed
to 12-month ECL measurement	1,101	1,461

(1) Gross carrying amount at 31 December includes all loans modifications due to forbearance during the year.

In the year ended 31 December 2019, the gross carrying amount of loans previously modified for which the loan allowance has reverted to being measured at an amount equal to lifetime ECL amounted to € 216 million (2018: € 306 million).

5.2.1.3 Debt Securities

The following tables present an analysis of debt securities by external credit rating agency designation at 31 December 2019 and 2018, based on Moody's ratings or their equivalent:

	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Total
	€ million	€ million	€ million
Investment securities at amortised cost
Aaa	100	-	100
Lower than A3	1,442	-	1,442
Gross Carrying Amount	1,542	-	1,542
Impairment Allowance	(3)	-	(3)
Carrying Amount	1,539	-	1,539
Investment securities at FVOCI
Aaa	405	-	405
Aa1 to Aa3	426	-	426
A1 to A3	354	-	354
Lower than A3	5,016	-	5,016
Unrated	77	-	77
Carrying Amount	6,278	-	6,278

	31 December 2018
	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Total
	€ million	€ million	€ million
Investment securities at amortised cost
Aaa	100	-	100
Lower than A3	597	754	1,351
Gross Carrying Amount	697	754	1,451
Impairment Allowance	(3)	(28)	(31)
Carrying Amount	694	726	1,420
Investment securities at FVOCI
Aaa	480	-	480
Aa1 to Aa3	1,119	-	1,119
A1 to A3	437	-	437
Lower than A3	4,108	26	4,134
Unrated	78	-	78
Carrying Amount	6,222	26	6,248

	31 December 2019
		Investment
		securities
	Securities held	measured at
	for trading	FVTPL
	€ million	€ million
Securities at FVTPL
Aa1 to Aa3	-	3
Lower than A3	53	0
Carrying Amount	53	3

	31 December 2018
		Investment
		securities
	Securities held for	measured at
	trading	FVTPL
	€ million	€ million
Securities at FVTPL
Aa1 to Aa3	-	4
Lower than A3	22	0
Unrated	0	-
Carrying Amount	22	4

Securities rated lower than A3 include: € 4,308 million related to Greek sovereign debt (2018: € 3,180 million), € 1,197 million related to Eurozone members sovereign debt (2018: € 1,533 million) and € 448 million related to sovereign debt issued mainly by European Union members and candidate members (2018: € 384 million).

The following tables present the Group's exposure in debt securities, as categorized by stage, counterparty's geographical region and industry sector:

	31 December 2019
	Greece		Other European countries		Other countries
	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2	Stage 1	Stage 2	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Investment securities at amortised cost
Sovereign	1,044	-	488	-	-	-	1,532
Banks	10	-	-	-	-	-	10
Corporate	-	-	-	-	-	-	-
Gross Carrying Amount	1,054	-	488	-	-	-	1,542
Impairment Allowance	(2)	-	(1)	-	-	-	(3)
Net Carrying Amount	1,052	-	487	-	-	-	1,539
Investment securities at FVOCI
Sovereign (1)	3,226	-	1,883	-	173	-	5,282
Banks	89	-	267	-	10	-	366
Corporate	210	-	277	-	143	-	630
Carrying Amount	3,525	-	2,427	-	326	-	6,278

	31 December 2018
	Greece		Other European countries		Other countries
	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2	Stage 1	Stage 2	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Investment securities at amortised cost
Sovereign	216	754	481	-	-	-	1,451
Banks	-	-	-	-	-	-	-
Corporate	-	-	-	-	-	-	-
Gross Carrying Amount	216	754	481	-	-	-	1,451
Impairment Allowance	(2)	(28)	(1)	-	-	-	(31)
Net Carrying Amount	214	726	480	-	-	-	1,420
Investment securities at FVOCI
Sovereign (1)	2,224	5	3,112	-	50	-	5,391
Banks	61	-	273	-	4	-	338
Corporate	215	16	202	5	81	-	519
Carrying Amount	2,500	21	3,587	5	135	-	6,248

(1) As at 31 December 2019, sovereign debt securities of other European countries include EFSF bonds of carrying amount of € 199 million (2018: € 453 million).

	31 December 2019

		European
	Greece	countries	Total
	€ million	€ million	€ million
Investment securities at FVTPL
Sovereign	-	-	-
Banks	-	-	-
Corporate	0	3	3
Carrying Amount	0	3	3
Securities held for trading
Sovereign	40	12	52
Banks	-	-	-
Corporate	-	1	1
Carrying Amount	40	13	53

	Greece	countries	Total
	€ million	€ million	€ million
Investment securities at FVTPL
Sovereign	-	-	-
Banks	-	-	-
Corporate	0	4	4
Carrying Amount	0	4	4
Securities held for trading
Sovereign	11	4	15
Banks	-	6	6
Corporate	1	-	1
Carrying Amount	12	10	22

During the year ended 31 December 2019, the Group recognized € 78 million gains presented in line 'Gains less losses from investment securities', of which € 60 million resulted from debt securities at FVOCI sale transactions and € 18 million mainly from the increase in the fair value of equity instruments. In the comparative period, the Group had recognized € 83 million gains, mainly as a result of debt securities at FVOCI sale transactions.

In the year ended 31 December 2019, the improvement of the credit spreads of the Hellenic Republic debt, resulted in the increase of the fair value of Greek Government Bonds classified at FVOCI. Respectively, the above improvement resulted in the increase of the fair value reserve of the Bank's associate Eurolife Insurance group for the same period. Furthermore, the aforementioned improvement resulted in the transfer of Greek sovereign bonds measured at amortised cost from lifetime ECL - Stage 2 to 12-month ECL – Stage 1 and a decrease of impairment allowance by € 36 million (note 22.2).

5.2.1.4 Offsetting of financial assets and financial liabilities

The disclosures set out in the tables below include financial assets and financial liabilities that:

(a) are offset in the Group's balance sheet according to IAS 32 'Financial Instruments: Presentation' criteria; or

(b) are subject to enforceable master netting arrangements or similar agreements that cover similar financial instruments, irrespective of whether they are offset in balance sheet.

Regarding the former, financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously (the offset criteria), as also set out in Group's accounting policy 2.2.4.

Regarding the latter, the International Swaps and Derivatives Association (ISDA) and similar master netting arrangements do not meet the criteria for offsetting in the balance sheet, as they create a right of set-off that is enforceable only following an event of default, insolvency or bankruptcy of the Group or the counterparties or following other predetermined events. In addition, the Group and its counterparties may not intend to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

Similar agreements to ISDA include derivative clearing agreements, global master repurchase agreements, and global master securities lending agreements. Similar financial instruments include derivatives, repos and reverse repos agreements and securities borrowing and lending agreements. Financial instruments such as loans and deposits are not subject to this disclosure unless they are offset in the balance sheet.

The following tables present financial assets and financial liabilities that meet the criteria for offsetting and thus are reported on a net basis in the balance sheet, as well as amounts that are subject to enforceable master netting arrangements and similar agreements for which the offset criteria mentioned above are not satisfied. The latter amounts, which mainly relate to derivatives, repos and reverse repos, are not set off in the balance sheet. In respect of these transactions, the Group receives and provides collateral in the form of marketable securities and cash that are included in the tables below under columns 'financial instruments' and 'cash collateral' at their fair value.

		31 December 2019
					Related amounts not offset in the BS
		Gross amounts	Net amounts
	Gross	of recognised	of financial
	amounts of	financial	assets	Financial
	recognised	liabilities offset	presented in	instruments	Cash
	financial	in the balance	the balance	(incl. non-cash	collateral	Net
	assets	sheet	sheet	collateral)	received	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Assets
Reverse repos with central banks	50	-	50	(50)	-	-
Reverse repos with banks	1,634	(1,607)	27	(27)	-	-
Derivative financial instruments	2,233	-	2,233	(2,134)	(11)	88
Oher financial assets	45	(45)	-	-	-	-
Total	3,962	(1,652)	2,310	(2,211)	(11)	88

	31 December 2019
		Related amounts not offset in the BS
			Net amounts
	Gross	Gross amounts	of financial
	amounts of	of recognised	liabilities	Financial
	recognised	financial assets	presented in	instruments	Cash
	financial	offset in the	the balance	(incl. non-cash	collateral	Net
	liabilities	balance sheet	sheet	collateral)	pledged	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Liabilities
Derivative financial instruments	2,721	-	2,721	(606)	(2,073)	42
Repurchase agreements with banks	5,874	(1,607)	4,267	(4,267)	-	-
Other financial liabilities	45	(45)	-	-	-	-
Total	8,640	(1,652)	6,988	(4,873)	(2,073)	42

		31 December 2018
				Related amounts not offset in the BS
		Gross amounts
	Gross	of recognised	Net amounts of
	amounts of	financial	financial assets	Financial
	recognised	liabilities offset	presented in	instruments	Cash
	financial	in the balance	the balance	(incl. non-cash	collateral	Net
	assets	sheet	sheet	collateral)	received	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Assets
Reverse repos with central banks	38	-	38	(38)	-	-
Reverse repos with banks	168	(100)	68	(68)	-	-
Derivative financial instruments	1,870	-	1,870	(1,788)	(21)	61
Oher financial assets	48	(48)	-	-	-	-
Total	2,124	(148)	1,976	(1,894)	(21)	61

	31 December 2018
	Related amounts not offset in the BS
			Net amounts of
	Gross	Gross amounts	financial
	amounts of	of recognised	liabilities	Financial
	recognised	financial assets	presented in	instruments	Cash
	financial	offset in the	the balance	(incl. non-cash	collateral	Net
	liabilities	balance sheet	sheet	collateral)	pledged	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Liabilities
Derivative financial instruments	1,893	-	1,893	(598)	(1,282)	13
Repurchase agreements with banks	5,752	(100)	5,652	(5,652)	-	-
Other financial liabilities	48	(48)	-	-	-	-
Total	7,693	(148)	7,545	(6,250)	(1,282)	13

Financial assets and financial liabilities are disclosed in the above tables at their recognized amounts, either at fair value (derivative assets and liabilities) or amortized cost (all other financial instruments), depending on the type of financial instrument.

5.2.2 Market risk

The Group takes on exposure to market risk, which is the risk of potential financial loss due to an adverse change in market variables. Changes in interest rates, foreign exchange rates, credit spreads, equity prices and other relevant factors, such as the implied volatilities of the above, can affect the Group's income or the fair value of its financial instruments. The market risks, the Group is exposed to, are managed and monitored by Group Market and Counterparty Risk Sector (GMCRS).

GMCRS is responsible for the measurement, monitoring and reporting of all market risks, including the interest rate risk in the Banking Book (IRRBB) of the Group. The Sector reports to the GCRO and its main responsibilities include:

Monitoring of all key market & IRRBB risk indicators (VaR, sensitivities, interest rate gaps);
Implementation of Stress Testing methodologies for market risk (historical and hypothetical), and IRRBB;
Monitoring and reporting of market and IRRBB risk limits utilization; and
Development, maintenance and expansion of risk management infrastructure.

The market risks the Group is exposed to, are the following:

(a) Interest rate risk

The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its cash flows and the fair value of its financial positions. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is further split into 'General' and 'Specific'. The former refers to changes in the fair valuation of positions due to the movements of benchmark interest rates, while the latter refers to changes in the fair valuation of positions due to the movements of specific issuer yields and credit spreads.

(b) Currency risk

The Group takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows.

(c) Equity risk

Equity price risk is the risk of the decrease of fair values as a result of changes in the levels of equity indices and the value of individual stocks. The equity risk that the Group undertakes arises mainly from the investment portfolio.

(d) Implied volatilities

The Group carries limited implied volatility (vega) risk, mainly as a result of proprietary swaption positions.

The Board's Risk Committee sets limits on the level of exposure to market risks, which are monitored on a regular basis.

Market risk in Greece and Cyprus is managed and monitored using Value at Risk (VaR) methodology. Market risk in International operations, excluding Cyprus, is managed and monitored using mainly sensitivity analyses. Information from International operations is presented separately as it originates from significantly different economic environments with different risk characteristics.

(i) VaR summary for 2019 and 2018

VaR is a methodology used in measuring financial risk by estimating the potential negative change in the market value of a portfolio at a given confidence level and over a specified time horizon. The VaR that the Group measures is an estimate based upon a 99% confidence level and a holding period of 1 day and the methodology used for the calculation is Monte Carlo simulation (full re-pricing).

The VaR models are designed to measure market risk in a normal market environment. It is assumed that any changes occurring in the risk factors affecting the normal market environment will follow a normal distribution.

Although VaR is an important tool for measuring market risk, the assumptions on which the model is based do give rise to certain limitations. Given this, actual outcomes are monitored regularly, via back testing process, to test the validity of the assumptions and the parameters used in the VaR calculation.

Since VaR constitutes an integral part of the Group's market risk control regime, VaR limits have been established for all (trading and investment portfolios) operations and actual exposure is reviewed daily by management. However, the use of this approach does not prevent losses outside of these limits in the event of extraordinary market movements.

Average VaR by risk type (Trading and Investment portfolios (1))-Greece and Cyprus

	2019	2018
	€ million	€ million
Interest Rate Risk	41	35
Foreign Exchange Risk	0	1
Equities Risk	0	1
Total VaR	41	35

(1) Interest rate volatility applied to all portfolios. Credit spread volatility applied to FVTPL and FVOCI positions.

The aggregate VaR of the interest rate, foreign exchange and equities VaR benefits from diversification effects.

Interest Rate VaR takes into account the changes to the fair valuation of all the Group's items that are attributable to movements in the interest rates. This includes loans and deposits (customers and interbank), Eurosystem funding and debt issued, as well as securities and derivatives held by the Group. Despite the large relative size of the loan and deposit portfolio, Eurosystem funding and debt issued, its timing and amount matching, combined with the current level of interest rates, mean that the incremental contribution of these items to the Interest Rate VaR is not material. The largest portion of the Group's Interest Rate VaR figures is attributable to the risk associated with interest rate sensitive securities and derivatives.

Interest rate exposure for the Group's securities, derivatives portfolio, covered bonds, securitizations and Tier 2 notes can be analyzed into time bands as shown in the following tables:

	31 December 2019
	less than 1			1-5	More than
	month	1-3 months	3-12 months	years	5 years
	€ million	€ million	€ million	€ million	€ million
Securities held for trading	-	1	1	6	36
-Fixed coupon bonds	-	1	1	6	36
-Variable coupon bonds	-	-	-	-	-
Investment securities	94	272	504	1,479	4,012
-Fixed coupon bonds	57	122	501	1,479	4,012
-Variable coupon bonds	37	150	3	-	-
Debt issued (Third parties)	-	(944)	(500)	-	(950)
-Fixed coupon covered bonds	-	-	(500)	-	-
-Fixed coupon subordinated notes (Tier 2)	-	-	-	-	(950)
-Variable coupon securitisations	-	(944)	-	-	-
Derivatives(1)	278	(473)	1,714	(1,147)	(404)

(1) For linear interest rate derivatives, notional amounts are shown in the appropriate time band, aggregated across all currencies. For non-linear interest rate derivatives, delta equivalent notional amounts are shown in the appropriate time band, aggregated across all currencies.

(ii) Sensitivity analysis for 2019 and 2018

Sensitivity analysis used for monitoring market risk stemming from International operations, excluding Cyprus, do not represent worst case scenarios.

	31 December 2019
	Sensitivity of	Sensitivity
	income	o f	Total
	statement	equity	sensitivity
	€ million	€ million	€ million
Interest Rate: +100 bps parallel shift	4	(6)	(2)
Equities / Equity Indices / Mutual Funds: -10% decrease on
prices	(0)	-	(0)
Foreign exchange: -10% depreciation of functional
currency over foreign currencies	2	(63)	(61)

		31 December 2018
	Sensitivity of	Sensitivity
	income	of	Total
	statement	equity	sensitivity
	€ million	€ million	€ million

Interest Rate: +100 bps parallel shift	5	(6)	(1)
Equities / Equity Indices / Mutual Funds: -10% decrease on prices		-
Foreign exchange: -10% depreciation of functional	(0)		(0)

(iii) Foreign exchange risk

The following table presents the Group's exposure to foreign currency exchange risk as at 31 December 2019 and 2018:

	31 December 2019
	USD	CHF	RON	RSD	BGN	OTHER	EUR	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
ASSETS Cash and balances with central
banks	11	3	0	149	530	6	3,980	4,679
Due from credit institutions	186	16	21	0	0	91	2,693	3,007
Securities held for trading	-	-	-	0	5	0	105	110
Derivative financial instruments	23	2	-	0	0	0	2,237	2,262
Loans and advances to customers	2,175	3,426	20	428	2,583	327	28,406	37,365
Investment securities	696	0	0	69	20	6	7,160	7,951
Other assets(1)	23	19	5	85	149	2	9,029	9,312
Assets of disposal groups classified
as held for sale (note 30)	0	-	-	-	-	-	75	75
Total Assets	3,114	3,466	46	731	3,287	432	53,685	64,761
LIABILITIES
Due to central banks and credit institutions	292	0	0	0	17	10	6,603	6,922
Derivative financial instruments	30	0	0	0	0	0	2,696	2,726
Due to customers	4,224	84	0	252	2,977	446	36,858	44,841
Debt securities in issue	0	-	-	-	-	-	2,406	2,406
Other liabilities	28	1	30	7	72	3	1,050	1,191
Liabilities of disposal group
classified as held for sale (note 30)	0	-	-	-	-	-	8	8
Total Liabilities	4,574	85	30	259	3,066	459	49,621	58,094
Net on balance sheet position	(1,460)	3,381	16	472	221	(27)	4,064	6,667

Derivative forward foreign exchange position		(3,374)	0	0	0	33	(120)	(1,978)
Total Foreign Exchange Position	1,483 23	7	16	472	221	6	3,944	4,689

				31 December 2018 restated
	USD	CHF	RON	RSD	BGN	OTHER	EUR	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
ASSETS
Cash and balances with central
banks	12	3	0	99	362	7	1,441	1,924
Due from credit institutions	216	19	25	0	0	97	1,950	2,307
Securities held for trading	0	-	-	1	4	-	38	43
Derivative financial instruments	13	2	-	0	0	0	1,856	1,871
Loans and advances to customers	1,920	3,546	22	393	1,945	275	28,131	36,232
Investment securities	537	-	0	101	4	-	7,130	7,772
Other assets(1) (note 2.3.2)	12	1	1	53	107	3	7,651	7,828
Assets of disposal groups classified
as held for sale	-	-	-	-	-	-	20	20
Total Assets	2,710	3,571	48	647	2,422	382	48,217	57,997
LIABILITIES
Due to central banks and credit institutions	172	1	0	0	15	3	8,235	8,426
Derivative financial instruments	12	0	0	0	0	1	1,880	1,893
Due to customers	3,411	80	0	229	2,218	447	32,698	39,083
Debt securities in issue	0	-	-	-	-	-	2,707	2,707
Other liabilities (note 2.3.2)	27	1	18	8	33	2	756	845
Total Liabilities	3,622	82	18	237	2,266	453	46,276	52,954
Net on balance sheet position	(912)	3,489	30	410	156	(71)	1,941	5,043

Derivative forward foreign
exchange position	939	(3,485)	(25)	27	0	69	1,508	(967)
Total Foreign Exchange Position	27	4	5	437	156	(2)	3,449	4,076

(1) Other assets include Investments in associates and joint ventures, Property, plant and equipment, Investment property, Intangible assets, Deferred tax assets and Other assets.

5.2.3 Liquidity risk

The Group is exposed to daily calls on its available cash resources due to deposits withdrawals, maturity of medium or long term notes, maturity of secured or unsecured funding (interbank repos and money market takings), loan draw-downs and forfeiture of guarantees. Furthermore, margin calls on secured funding transactions (with ECB and the market), on risk mitigation contracts (CSAs, GMRAs) and on centrally cleared transactions (CCPs) result in liquidity exposure. The Group maintains cash resources to meet all of these needs. The Board Risk Committee sets liquidity limits to ensure that sufficient funds are available to meet such contingencies.

Past experience shows that liquidity requirements to support calls under guarantees and standby letters of credit are considerably less than the amount of the commitment. This is also the case with credit commitments where the outstanding contractual amount to extend credit does not necessarily represent future cash requirements, as many of these commitments will expire or terminate without being funded.

The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management of the Group. It is unusual for banks to be completely matched, as transacted business is often of uncertain term and of different types. An unmatched position potentially enhances profitability, but also increases the risk of losses.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest bearing liabilities as they mature, are important factors in assessing the liquidity of the Group.

Liquidity Risk Management Framework

The Group's Liquidity Risk Management Policy defines the following supervisory and control structure:

Board Risk Committee's role is to approve all strategic liquidity risk management decisions and monitor the quantitative and qualitative aspects of liquidity risk;
Group Assets and Liabilities Committee has the mandate to form and implement the liquidity policies and guidelines in conformity with Group's risk appetite, and to review at least monthly the overall liquidity position of the Group;
Group Treasury is responsible for the implementation of the Group's liquidity strategy, the daily management of the Group's liquidity and for the preparation and monitoring of the Group's liquidity budget; and
Group Market and Counterparty Risk Sector is responsible for measuring, monitoring and reporting the liquidity of the Group.

The following list summarizes the main reports which are produced on a periodic basis:

(a) The regulatory liquidity gap report along with the regulatory liquidity ratios;
(b) Stress test scenarios. These scenarios evaluate the impact of a number of stress events on the Group's liquidity position;
(c) Report on market sensitivities affecting liquidity;
(d) Liquidity coverage ratios (LCR) estimation (Basel III new regulatory ratio); and
(e) Reporting on the Bank's Asset Encumbrance.

Maturity analysis of assets and assets held for managing liquidity risk

The following tables present maturity analysis of Group assets as at 31 December 2019 and 2018, based on their carrying values. Loans without contractual maturities are presented in the 'less than 1 month' time bucket. The Group has established credit risk mitigation contracts with its interbank counterparties (ISDA/CSA). Under these contracts the Group has posted or received collateral, which covers the corresponding net liabilities or net assets from derivative transactions. The collateral posted is not presented in the below tables. For derivative assets not covered by ISDA/CSA agreements the positive valuation is presented at fair value in the 'over 1 year' time bucket.

	31 December 2019
	Less than	1 - 3	3 months	Over
	1 month	months	to 1 year	1 year	Total
	€ million	€ million	€ million	€ million	€ million
- Cash and balances with central banks	4,679	-	-	-	4,679
- Due from credit institutions	378	-	-	342	720
- Loans and advances to customers	3,213	792	3,705	29,655	37,365
- Debt Securities	96	87	514	7,176	7,873
- Equity securities	-	-	-	188	188
- Derivative financial instruments	-	-	-	119	119
- Other assets(1)	66	17	9	9,220	9,312
- Assets of disposal groups classified as held
for sale (note 30)	-	2	73	-	75
Total	8,432	898	4,301	46,700	60,331

	31 December 2018 restated
	Less than	1 - 3	3 months	Over
	1 month	months	to 1 year	1 year	Total
	€ million	€ million	€ million	€ million	€ million
- Cash and balances with central banks	1,924	-	-	-	1,924
- Due from credit institutions	390	74	5	274	743
- Loans and advances to customers	3,723	655	2,664	29,190	36,232
- Debt Securities	24	97	619	6,954	7,694
- Equity securities	-	-	-	121	121
- Derivative financial instruments	-	-	-	67	67
- Other assets(1) (note 2.3.2)	55	15	7	7,751	7,828
- Assets of disposal groups classified as held
for sale	20	-	-	-	20
Total	6,136	841	3,295	44,357	54,629

(1) Other assets include Investments in associates and joint ventures, Property, plant and equipment, Investment property, Intangible assets, Deferred tax assets and Other assets.

The Group holds a diversified portfolio of cash and high liquid assets to support payment obligations and contingent deposit withdrawals in a stressed market environment. The Group's assets held for managing liquidity risk comprise:

(a) Cash and balances with central banks;

(b) Eligible bonds and other financial assets for collateral purposes; and
(c) Current accounts with banks and interbank placings maturing within one month.

The unutilized assets, containing highly liquid and central banks eligible assets, provide a contingent liquidity reserve of € 17.4 billion as at 31 December 2019 (2018: € 13.0 billion). In addition, the Group holds other types of highly liquid assets, as defined by the regulator, amounting to € 1.5 billion (cash value) (2018: € 1.3 billion). It should be noted that the major part of ECB's available collateral of € 3.5 billion (cash value) (2018: € 2.6 billion) is held by Group's subsidiaries for which temporary local regulatory restrictions are applied and currently limit the level of its transferability between group entities.

Maturity analysis of liabilities

The amounts disclosed in the tables below are the contractual undiscounted cash flows for the years 2019 and 2018. Liabilities without contractual maturities (sight and saving deposits) are presented in the 'less than 1 month' time bucket. The Group has established credit risk mitigation contracts with its interbank counterparties (ISDA/CSA). Due to these contracts the Group has already posted collateral which covers the valuation of its net liabilities from interbank derivatives. For derivative liabilities not covered by ISDA/CSA agreements the negative valuation is presented at fair value in the 'less than 1 month' time bucket.

It should be noted that this table represents the worst case scenario since it is based on the assumption that all liabilities will be paid earlier than expected (all term deposits are withdrawn at their contractual maturity). The recent experience shows that even in a period of a systemic financial crisis the likelihood of such an event is remote.

	31 December 2019
					Gross nominal
	Less than	1 - 3	3 months	Over	(inflow)/
	1 month	months	to 1 year	1 year	outflow
	€ million	€ million	€ million	€ million	€ million
Non-derivative liabilities:
- Due to central banks and credit
institutions	2,706	1,778	41	2,401	6,926
- Due to customers	32,862	5,594	6,260	161	44,877
- Debt securities in issue	31	83	792	2,066	2,972
- Lease liabilities	3	6	27	259	295
- Other liabilities	365	348	295	-	1,008
- Liabilities of disposal group classified as
held for sale (note 30)	-	-	8	-	8
	35,967	7,809	7,423	4,887	56,086
Derivative financial instruments:	6	-	-	-	6
Off-balance sheet items

Less than Over 1 year 1 year

	€ million	€ million
Credit related commitments	3,696	1,630
Contractual commitments(1)	149	-
Total	3,845	1,630

	31 December 2018 restated
					Gross nominal
	Less than	1 - 3	3 months	Over	(inflow)/
	1 month	months	to 1 year	1 year	outflow
	€ million	€ million	€ million	€ million	€ million
Non-derivative liabilities:
- Due to central banks and credit
institutions	5,858	778	57	1,737	8,430
- Due to customers	29,285	3,797	5,791	247	39,120
- Debt securities in issue	1	85	327	3,059	3,472
- Other liabilities (note 2.3.2)	289	129	404	23	845
	35,433	4,789	6,579	5,066	51,867

Derivative financial instruments:	13	-	-	-	13

Off-balance sheet items

	Less than	Over
	1 year	1 year
	€ million	€ million
Credit related commitments	3,780	927
Contractual commitments(1)	18	-
Operating lease commitments	33	101
Total	3,831	1,028

(1) It refers to contractual commitments for the purchase of own used and investment property and intangible assets (note 42).

5.2.4 Interest Rate Benchmark reform – IBOR reform

Following the financial crisis, global regulators undertook a fundamental review of major interest rate benchmarks and decided to replace existing Interbank Offered Rates (IBORs) with alternative reference rates in currency jurisdictions that will be based on liquid underlying market transactions. As a result of this project (referred to as the 'IBOR reform'), there may be uncertainties relating to the long-term viability of the existing IBORs.

In this context, the Group has established an IBOR Working Group, led by senior representatives from Units across the Bank including Economic Analysis and Research, Global Markets and GMCRS, and the participation of other Business Units and the support of Legal and Group Organization & Business Analysis (Regulatory Unit) Units, in order to manage the transition to the new alternative risk free rates that will replace the current interbank offered rates (IBORs), minimize, as possible, any related risks and fully comply with the regulatory requirements on the EU Benchmarks Regulation (BMR).

The main objectives of the above mentioned IBOR Working Group include:

Monitoring of the regulatory, market and industry developments on the IBOR reform and preparation of the action plans for an orderly transition to the new benchmark rates,
Assessment and evaluation of implications to the business activity including proper integration of the new methodologies to calculate the alternative benchmark rates in the Bank's core systems, amendment of clearing agreements with clearing entities/brokers and contracts with financial institutions-market counterparties based on the new alternative benchmark rates, incorporation of fallback provisions as may be required or recommended by the regulatory authorities of financial markets international associations, in existing and newly originated floating rate financial instruments indexed to benchmark rates that will be replaced as part of the IBOR reform and appropriate modification of customers' contracts,
Development of a communication strategy to all stakeholders regarding changes deriving from the IBOR Reform, and
Regular reporting to the Group Assets Liabilities Committee and as may be required to the BRC in order to review and assess developments, recommend or approve actions and/or strategies relevant to the IBOR reform.

The Group has exposure to a significant number of IBOR-linked financial instruments such as derivatives, debt securities, lending and deposit contracts. Since these benchmark rates will be replaced, as part of the market driven IBOR reform, there may be uncertainty regarding the methods and timing of transition to the new rates, as well as the resulting modifications of the IBOR linked financial instruments in respect of the timing or amount of the new benchmark rate-based cash flows. Accordingly, the above uncertainty may have consequences on the financial instruments' accounting treatment mainly relating to hedge accounting over the transition period, hedge designations when existing uncertainties are no longer present and the accounting treatment to be applied to any changes to the terms of the contracts.

As at 31 December 2019, the Group is exposed to a number of interest rate benchmarks within its hedge accounting relationships that mature beyond the end of 2021, when the IBOR reform is expected to be completed, i.e. the Euribor, the USD Libor, the CHF Libor and the Euro Overnight Index Average (EONIA).

Regarding Euribor rate, as at 31 December 2019 there has been no official statement from the ECB Working Group on Euro Risk Free Rates and the European Money Markets Institute, which is the administrator of Euribor, with respect to Euribor termination date. On the contrary, Euribor from July 2019 is considered BMR compliant as a critical benchmark. Consequently, Euribor may continue to exist as a benchmark rate for the foreseeable future and related fair value hedges are not expected to be directly affected by the IBOR reform.

Furthermore, the hedged items include Euro and CHF floating rate mortgage loans, Euro and US dollar fixed rate debt securities, and Euro deposits to customers. Currently, the market expects that upon the IBOR's transition, the applicable interest rates (i.e. new IBORs plus spread) will be set at such levels so as to minimize, as possible, value transfer for all parties resulting in the respective cash flows being broadly equivalent for all stakeholders, before and after the IBOR change. Considering the market view and the Group's expectation that the hedged items will contractually remain as floating rated and the identified hedged risk components will not change, the existing uncertainties relating to the IBOR replacement during the transition period do not impact the Group's hedge accounting as at 31 December 2019.

The Group will continue to monitor any market developments and regulatory guidance relating to the IBOR Reform and adjust its implementation plans accordingly in order to achieve mitigation of the risks resulting from the transition.

5.3 Fair value of financial assets and liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price). When a quoted price for an identical asset or liability is not observable, fair value is measured using another valuation technique that is appropriate in the circumstances, and maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. Observable inputs are developed using market data, such as publicly available information about actual events or transactions, and reflect assumptions that market participants would use when pricing financial instruments, such as quoted prices in active markets for similar instruments, interest rates and yield curves, implied volatilities and credit spreads.

The Group's financial instruments measured at fair value or at amortized cost for which fair value is disclosed are categorized into the three levels of the fair value hierarchy based on whether the inputs to the fair values are observable or unobservable, as follows:

(a) Level 1-Financial instruments measured based on quoted prices (unadjusted) in active markets for identical financial instruments that the Group can access at the measurement date. A market is considered active when quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and represent actually and regularly occurring transactions. Level 1 financial instruments include actively quoted debt instruments held or issued by the Group, equity and derivative instruments traded on exchanges, as well as mutual funds that have regularly and frequently published quotes.
(b) Level 2-Financial instruments measured using valuation techniques with inputs, other than level 1 quoted prices, that are observable either directly or indirectly, such as: i) quoted prices for similar financial instruments in active markets, ii) quoted prices for identical or similar financial instruments in markets that are not active, iii) inputs other than quoted prices that are directly or indirectly observable, mainly interest rates and yield curves observable at commonly quoted intervals, forward exchange rates, equity prices, credit spreads and implied volatilities obtained from internationally recognized market data providers and iv) other unobservable inputs which are insignificant to the entire fair value measurement. Level 2 financial instruments include over-thecounter (OTC) derivatives, less liquid debt instruments held or issued by the Group and equity instruments.
(c) Level 3-Financial instruments measured using valuation techniques with significant unobservable inputs. When developing unobservable inputs, best information available is used, including own data, while at the same time market participants' assumptions are reflected (e.g. assumptions about risk). Level 3 financial instruments include unquoted equities or equities traded in markets that are not considered active, certain OTC derivatives, loans and advances to customers including securitized loans issued by special purpose entities established by the Group and recognized in financial assets and debt securities issued by the Group.

Financial instruments carried at fair value

The fair value hierarchy categorization of the Group's financial assets and liabilities measured at fair value is presented in the following tables:

	31 December 2019
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million

Securities held for trading	110	0	0	110
Investment securities at FVTPL	48	19	67	134
Derivative financial instruments	0	2,262	0	2,262
Investment securities at FVOCI	6,184	94	-	6,278
Loans and advances to customers mandatorily at FVTPL	-	-	58	58
Financial assets measured at fair value	6,342	2,375	125	8,842

Derivative financial instruments	0	2,726	-	2,726
Trading liabilities	39	-	-	39
Financial liabilities measured at fair value	39	2,726	-	2,765

	31 December 2018
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million

Securities held for trading	43	0	-	43
Investment securities at FVTPL	39	7	58	104
Derivative financial instruments	0	1,870	1	1,871
Investment securities at FVOCI	6,130	118	-	6,248
Loans and advances to customers mandatorily at FVTPL	-	-	59	59
Financial assets measured at fair value	6,212	1,995	118	8,325

Derivative financial instruments	0	1,893	-	1,893
Trading liabilities	4	-	-	4
Financial liabilities measured at fair value	4	1,893	-	1,897

The Group recognizes transfers into and out of the fair value hierarchy levels at the beginning of the quarter in which a financial instrument's transfer was effected. There were no material transfers between levels during the year ended 31 December 2019.

Reconciliation of Level 3 fair value measurements

	2019	2018
	€ million	€ million
Balance at 1 January	118	43
Arising from acquisition (note 23.3)	3	-
Transition to IFRS 9	-	65
Transfers into Level 3	0	0
Transfers out of Level 3	(0)	(1)
Additions, net of disposals and redemptions	(4)	4
Total gain/(loss) for the year included in profit or loss	8	6
Foreign exchange differences and other	(0)	1
Balance at 31 December	125	118

Group's valuation processes and techniques

The Group's processes and procedures governing the fair valuations are established by the Group Market Counterparty Risk Sector in line with the Group's accounting policies. The Group uses widely recognized valuation models for determining the fair value of common financial instruments that are not quoted in an active market, such as interest and cross currency swaps, that use only observable market data and require little management estimation and judgment. Specifically, observable prices or model inputs are usually available in the market for listed debt and equity securities, exchange-traded and simple over-the-counter derivatives. Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determining fair values.

Where valuation techniques are used to determine the fair values of financial instruments that are not quoted in an active market, they are validated against historical data and, where possible, against current or recent observed transactions in different instruments, and periodically reviewed by qualified personnel independent of the personnel that created them. All models are certified before they are used and models are calibrated to ensure that outputs reflect actual data and comparative market prices. Fair values' estimates obtained from models are adjusted for any other factors, such as liquidity risk or model uncertainties, to the extent that market participants would take them into account in pricing the instrument. Fair values also reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and the counterparty, where appropriate.

Valuation controls applied by the Group may include verification of observable pricing, re-performance of model valuations, review and approval process for new models and/or changes to models, calibration and back-testing against observable market transactions, where available, analysis of significant valuation movements, etc. Where third parties' valuations are used for fair value measurement, these are reviewed in order to ensure compliance with the requirements of IFRS 13.

OTC derivative financial instruments are fair valued by discounting expected cash flows using market interest rates at the measurement date. Counterparty credit risk adjustments and own credit risk adjustments are applied to OTC derivatives, where appropriate. Bilateral credit risk adjustments consider the expected cash flows between the Group and its counterparties under the relevant terms of the derivative instruments and the effect of the credit risk on the valuation of these cash flows. As appropriate in circumstances, the Group considers also the effect of any credit risk mitigating arrangements, including collateral agreements and master netting agreements on the calculation of credit risk valuation adjustments (CVAs). CVA calculation uses probabilities of default (PDs) based on observable market data such as credit default swaps (CDS) spreads, where appropriate, or based on internal rating models. The Group applies similar methodology for the calculation of debit-value-adjustments (DVAs), when applicable. Where valuation techniques are based on internal rating models and the relevant CVA is significant to the entire fair value measurement, such derivative instruments are categorized as Level 3 in the fair value hierarchy. A reasonably possible change in the main unobservable input (i.e. the recovery rate), used in their valuation, would not have a significant effect on their fair value measurement.

The Group determines fair values for debt securities held using quoted market prices in active markets for securities with similar credit risk, maturity and yield, quoted market prices in non active markets for identical or similar financial instruments, or using discounted cash flows method.

Unquoted equity instruments at FVTPL under IFRS 9 are estimated mainly (i) using third parties' valuation reports based on investees' net assets, where management does not perform any further significant adjustments, and (ii) net assets' valuations, adjusted where considered necessary.

Loans and advances to customers which contractual cash flows do not represent solely payments of principal and interest (SPPI failures), are measured mandatorily at fair value through profit or loss. Quoted market prices are not available as there are no active markets where these instruments are traded. Their fair values are estimated on an individual loan basis by discounting the future expected cash flows over the time period they are expected to be recovered, using an appropriate discount rate. Expected cash flows, which incorporate credit risk, represent significant unobservable input in the valuation and as such, the entire fair value measurement is categorized as Level 3 in the fair value hierarchy. A reasonably possible increase/decrease in those recovery rates by +5%/-5% would increase/decrease the total fair value measurement by € 2.2 million.

Financial instruments not measured at fair value

The fair value hierarchy categorization of the Group's financial assets and liabilities not measured at fair value on the balance sheet, is presented in the following tables:

		31 December 2019
	Level 1 € million	Level 2 € million	Level 3 € million	Fair value € million	Carrying amount € million
Loans and advances to customers	-	-	37,057	37,057	37,307
Investment securities at amortised cost	522	691	-	1,213	1,539
Financial assets not measured at fair value	522	691	37,057	38,270	38,846
Debt securities in issue	513	881	944	2,338	2,406
Financial liabilities not measured at fair value	513	881	944	2,338	2,406

		31 December 2018
			Carrying
	Level 1	Level 2	Level 3	Fair value	amount
	€ million	€ million	€ million	€ million	€ million
Loans and advances to customers	-	-	35,940	35,940	36,173
Investment securities at amortised cost	491	398	-	889	1,420
Financial assets not measured at fair value	491	398	35,940	36,829	37,593
Debt securities in issue	510	738	1,247	2,495	2,707
Financial liabilities not measured at fair value	510	738	1,247	2,495	2,707

The assumptions and methodologies underlying the calculation of fair values of financial instruments not measured at fair value, are in line with those used to calculate the fair values for financial instruments measured at fair value. Particularly:

(a) Loans and advances to customers including securitized loans issued by special purpose entities established by the Group: for loans and advances to customers, quoted market prices are not available as there are no active markets where these instruments are traded. The fair values are estimated by discounting future expected cash flows over the time period they are expected to be recovered, using appropriate risk-adjusted rates. Loans are grouped into homogenous assets with similar characteristics, as monitored by Management, such as product, borrower type and delinquency status, in order to improve the accuracy of the estimated valuation outputs. In estimating future cash flows, the Group makes assumptions on expected prepayments, product spreads and timing of collateral realization. The discount rates incorporate inputs for expected credit losses and interest rates, as appropriate;
(b) Investment securities measured at amortized cost: the fair values of financial investments are determined using prices quoted in an active market when these are available. In other cases, fair values are determined using quoted market prices for securities with similar credit risk, maturity and yield, quoted market prices in non active markets for identical or similar financial instruments, or by using the discounted cash flows method; and
(c) Debt securities in issue: the fair values of the debt securities in issue are determined using quoted market prices, if available. If quoted prices are not available, fair values are determined based on quotes for similar debt securities or by discounting the expected cash flows at a risk-adjusted rate, where the Group's own credit risk is determined using inputs indirectly observable, i.e. quoted prices of similar securities issued by the Group or other Greek issuers.

For other financial instruments, which are short term or re-price at frequent intervals (cash and balances with central banks, due from credit institutions, due to central banks, due to credit institutions and due to customers), the carrying amounts represent reasonable approximations of fair values.

6. Net interest income

	2019	2018
	€ million	€ million
Interest income
Customers	1,466	1,554
- measured at amortised cost	1,464	1,553
- measured at FVTPL	2	1
Banks and other assets(1)	24	19
Securities (2)	187	179
- measured at amortised cost	27	30
- measured at FVOCI	159	148
- measured at FVTPL	1	1
Derivatives (hedge accounting) (3)	51	59
Derivatives (no hedge accounting) (3)	377	374
	2,105	2,186
Interest expense
Customers (1)	(183)	(178)
Banks (1)	(51)	(114)
Debt securities in issue (1)	(106)	(87)
Derivatives (hedge accounting) (3)	(36)	(38)
Derivatives (no hedge accounting) (3)	(347)	(353)
Lease liabilities - IFRS 16	(5)	-
	(728)	(770)
Total from continuing operations	1,377	1,416

(1) Measured at amortized cost.

(2) The interest income from trading securities included is immaterial for the year ended 31 December 2019 and 2018.

(3) For year 2018, it includes a reclassification between hedge and no hedge accounting of € 47 million in interest income and € 36 million in interest expense.

Interest income from continuing operations recognized by quality of Loans and Advances and Product Line is further analyzed below:

	31 December 2019
	Interest income	Interest
	on non	income on
	impaired loans	impaired loans
	and advances	and advances	Total
	€ million	€ million	€ million
Retail lending	589	230	819
Wholesale lending (1)	528	119	647
Total interest income from customers	1,117	349	1,466

		31 December 2018
	Interest income	Interest
	on non-impaired	income on
	loans and	impaired loans
	advances	and advances	Total
	€ million	€ million	€ million
Retail lending	589	319	908
Wholesale lending (1)	498	148	646
Total interest income from customers	1,087	467	1,554

(1) Including interest income on loans and advances to Public Sector.

7. Net banking fee and commission income

The following tables include net banking fees and commission income from contracts with customers in the scope of IFRS 15, disaggregated by major type of services and operating segments (note 43).

	31 December 2019
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Lending related activities	8	44	0	5	12	0	69
Mutual funds and assets under management	16	1	28	1	8	1	55
Network activities and other (1)	43	13	(0)	13	79	(0)	148
Capital markets	-	12	2	2	4	2	22
Total from continuing operations	67	70	30	21	103	3	294

	31 December 2018
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Lending related activities	8	55	0	5	8	(0)	76
Mutual funds and assets under management	12	1	26	3	7	1	50
Network activities and other (1)	33	14	(1)	12	70	(1)	127
Capital markets	-	11	2	29	2	1	45
Total from continuing operations	53	81	27	49	87	1	298

(1) Including income from credit cards related services.

8. Income from non banking services

Income from non banking services includes rental income of € 58.2 million from real estate properties and other income of € 1.3 million from IT services provided by the Group entities.

9. Net trading income and gains less losses from investment securities

	2019	2018
	€ million	€ million

Debt securities of which:	66	82
- measured at amortised cost	0	0
- measured at FVOCI	64	81
- measured at FVTPL	2	1
Equity securities measured at FVTPL	36	(6)
Gains/(losses) on derivative financial instruments (hedge accounting)	(8)	(1)
Gains/(losses) on derivative financial instruments (no hedge accounting)	(37)	23
Revaluation on foreign exchange positions	1	22
Total from continuing operations	58	120

10. Other income/ (expenses)

		2018
	2019	restated
	€ million	€ million

Gain/(loss) from change in fair value of investment property (note 2.3.2)	61	(13)
Gain arising from the acquisition of Piraeus Bank Bulgaria (note 23.3)	29	-
Derecognition gain/(loss) on loans measured at amortised cost (1)	(39)	6
Fee expense related to the deferred tax credits (note 13)	(7)	(7)
Gain/ (loss) on the disposal of subsidiaries (note 23.1)	3	1
Dividend income	2	2
Gains/(losses) on loans at FVTPL	2	2
Other	4	(6)
Total from continuing operations	55	(15)

(1) For the year 2019, it mainly includes derecognition loss resulting from the Pillar transaction (note 20).

11. Operating expenses

		2018
	2019	restated
	€ million	€ million
Staff costs	(481)	(487)
Administrative expenses	(237)	(208)
Contributions to resolution and deposit guarantee funds	(69)	(67)
Depreciation of real estate properties and equipment (note 2.3.2)	(37)	(32)
Depreciation of right of use assets (1)	(41)	-
Amortisation of intangible assets	(31)	(26)
Operating lease rentals (1)	(5)	(54)
Total from continuing operations	(901)	(874)

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2); VAT and other applicable taxes on operating lease rentals are included.

For the year ended 31 December 2019, the amount of operating expenses (excluding any contribution to a deposit guarantee or resolution fund) for the Group's Greek activities was € 632 million (2018: € 637 million as restated).

Contributions to resolution and deposit guarantee funds

In 2016, the Single Resolution Mechanism (SRM), which is one of the pillars of the Banking Union in the euro area alongside the Single Supervisory Mechanism (SSM), became fully operational. The Single Resolution Fund (SRF) was established by the SRM Regulation (EU) No 806/2014 in order to ensure uniform practice in the financing of resolutions within the SRM and it is owned by the Single Resolution Board (SRB). The SRM provides that the SRF will be built up over a period of eight years with 'ex-ante' contributions from the banking industry, which may include irrevocable payment commitments as a part of the total amount of contributions (note 42).

Staff costs

	2019	2018
	€ million	€ million
Wages, salaries and performance remuneration	(352)	(357)
Social security costs	(67)	(68)
Additional pension and other post employment costs	(17)	(16)
Other	(45)	(46)
Total from continuing operations	(481)	(487)

The average number of employees of the Group's operations during the year was 13,390 (2018: 13,256 for continuing operations). As at 31 December 2019, the number of branches and business/private banking centers of the Group amounted to 674.

12. Other impairments, restructuring costs and provisions

Total from continuing operations	(120)	(71)
Restructuring costs	(88)	(62)
Other restructuring costs	(25)	(5)
Voluntary exit schemes and other related costs (note 35)	(63)	(57)
Other impairment losses and provisions	(32)	(9)
Other impairment losses and provisions (1)	(16)	(6)
Impairment (losses)/ reversal on bonds (note 22)	35	15
Impairment and valuation losses on real estate properties (note 2.3.2)	(51)	(18)
	€ million	€ million
	2019	restated
		2018

(1) Includes impairment losses on equipment and software, other assets and provisions on litigations and other operational risk events.

For the year ended 31 December 2019, the Group recognized € 51 million impairment and valuation losses on real estate properties, of which € 39 million relate to the properties' portfolios classified as held for sale (note 30).

For the year ended 31 December 2019, the Group recognized restructuring costs amounting to € 25 million, of which € 17 million was related with the acquisition of Piraeus Bank Bulgaria A.D. (note 23.3). The remaining restructuring costs mainly relate to the Bank's transformation plan. As at 31 December 2018, the Group recognized restructuring costs amounting to € 5 million mainly related with the optimization of its lending operations.

13. Income tax

		2018
	2019	restated
	€ million	€ million
Current tax	(42)	(46)
Deferred tax (note 2.3.2)	11	(18)
Tax adjustments	-	(14)
Total income tax from continuing operations	(31)	(78)

According to Law 4172/2013 currently in force, the nominal Greek corporate tax rate for credit institutions that fall under the requirements of article 27A of Law 4172/2013 regarding eligible DTAs/deferred tax credits (DTCs) against the Greek State is 29%. As of the year 2019 onwards, according to Law 4646/2019 which was enacted in December 2019 and amended Law 4172/2013, the Greek corporate tax rate for legal entities other than the above credit institutions decreased from 29% to 24% (for the year 2018: 29% corporate tax rate for all legal entities). This resulted to a reduction in the net deferred tax asset by ca. € 0.1 million for the Bank's Greek subsidiaries that has been recorded in the income statement. In addition, according to the aforementioned Law 4646/2019, as of 1 January 2020 the withholding tax rate for dividends distributed, other than intragroup dividends, decreased from 10% to 5%. In particular, the intragroup dividends under certain preconditions are relieved from both income and withholding tax.

The nominal corporate tax rates applicable in the banking subsidiaries incorporated in the international segment of the Group (note 43) are as follows: Bulgaria 10%, Serbia 15%, Cyprus 12.5% and Luxembourg 24.94 % (2018: 26.01 %).

Tax certificate and open tax years

The Bank and its subsidiaries, associates and joint ventures, which operate in Greece (notes 23.1 and 24) have in principle 1 to 6 open tax years. For the open tax years 2014-2015 the Bank and the Group's Greek companies, with annual financial statements audited compulsorily, were required to obtain an 'Annual Tax Certificate' pursuant to the Law 4174/2013, which is issued after a tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. For fiscal years starting from 1

January 2016 onwards, the 'Annual Tax Certificate' is optional, however, the Bank and (as a general rule) the Group's Greek companies will continue to obtain such certificate.

The tax certificates, which have been obtained by the Bank and its subsidiaries, associates and joint ventures, which operate in Greece, are unqualified for the open tax years 2014-2018. For the year ended 31 December 2019, the tax audits from external auditors are in progress.

In accordance with the Greek tax legislation and the respective Ministerial Decisions issued, additional taxes and penalties may be imposed by the Greek tax authorities following a tax audit within the applicable statute of limitations (i.e. in principle five years as from the end of the fiscal year within which the relevant tax return should have been submitted), irrespective of whether an unqualified tax certificate has been obtained from the tax paying company. In light of the above, as a general rule, the right of the Greek State to impose taxes up to tax year 2013 (included) has been time-barred for the Bank and the Group's Greek companies at 31 December 2019.

The open tax years of the foreign banking entities of the Group are as follows: (a) Eurobank Cyprus Ltd, 2018-2019, (b) Eurobank Bulgaria A.D., 2014-2019, (c) Eurobank A.D. Beograd (Serbia), 2014-2019, and (d) Eurobank Private Bank Luxembourg S.A., 2015-2019. The remaining foreign entities of the Group (notes 23.1 and 24), which operate in countries where a statutory tax audit is explicitly stipulated by law, have 1 to 6 open tax years in principle, subject to certain preconditions of the applicable tax legislation of each jurisdiction.

Receivables from withholding taxes

Law 4605/2019 (article 93) voted on 29 March 2019 provided clarifications regarding the treatment of the Bank's withholding tax amounts under Law 2238/1994 (amounting to € 50 million) in a manner that safeguards these tax amounts by providing for their offsetting with the Bank's corporate income tax whenever this becomes due.

Law 4605/2019 further addresses the treatment of tax receivables of Law 4046/2012 (for years 2010, 2011 and 2012), which provides for a five year settlement of tax withheld on interest from GGBs/Tbills/corporate bonds with the Greek State's guarantee against the Banks' corporate income tax. Law 4605/2019 clarified that any remaining amounts (i.e. not offsettable withholding taxes within the set five-year period) will be then offset against all taxes within ten years in equal installments starting from 1 January 2020. As at 31 December 2019, the Bank's receivables subject to the abovementioned law amount to € 13.7 million.

For the year ended 31 December 2018, a provision of € 14 million has been recognized in the income statement against income tax receivables.

In reference to its total uncertain tax positions, the Group assesses all relevant developments (e.g. legislative changes, case law, ad hoc tax/legal opinions, administrative practices) and raises adequate provisions.

Deferred tax

Deferred tax is calculated on all deductible temporary differences under the liability method as well as for unused tax losses at the rate in effect at the time the reversal is expected to take place.

The movement on deferred tax is as follows:

		2018
	2019	restated
	€ million	€ million
Balance at 1 January	4,909	4,855
Restatement due to change in accounting policy (note 2.3.2)	-	(1)
Balance at 1 January, as restated	4,909	4,854
IFRS 9 transition impact (note 2.3.3)	-	5
Income statement credit/(charge) from continuing operations (note 2.3.2)	11	(18)
Investment securities at FVOCI	(167)	64
Cash flow hedges	2	(2)
Discontinued operations (note 30)	1	7
Other	1	(1)
Balance at 31 December	4,757	4,909

		2018
	2019	restated
	€ million	€ million
Impairment/ valuation relating to loans and accounting write-offs	1,592	3,132
PSI+ tax related losses	1,101	1,151
Losses from disposals and crystallized write-offs of loans	1,985	265
Other impairments/ valuations through the income statement	201	248
Unused tax losses	2	63
Costs directly attributable to equity transactions	16	23
Cash flow hedges	17	15
Defined benefit obligations	14	13
Real estate properties and equipment (note 2.3.2)	(47)	(23)
Investment securities at FVOCI	(191)	(24)
Other	67	46
Net deferred tax	4,757	4,909

In the year ended 31 December 2019, the securitization of certain loan portfolios and a related sale transaction have taken place (projects Cairo and Pillar, note 34), as well as the disposal of other loan portfolios has been completed. The crystallization for tax purposes of the related impairment losses resulted in the significant increase of the deferred tax on the above presented category "Losses from disposals and crystallised write-offs of loans" against a decrease in the category "Impairment/valuation relating to loans and accounting write-offs".

The net deferred tax is analyzed as follows:

		2018
	2019	restated
	€ million	€ million
Deferred tax assets (note 2.3.2)	4,766	4,914
Deferred tax liabilities (notes 2.3.2 and 35)	(9)	(5)
Net deferred tax	4,757	4,909

Deferred income tax (charge)/credit from continuing operations is attributable to the following items:

		2018
	2019	restated
	€ million	€ million

Impairment/ valuation relating to loans, disposals and write-offs	180	82
Unused tax losses	(61)	41
Tax deductible PSI+ losses	(50)	(50)
Change in fair value and other temporary differences (note 2.3.2)	(58)	(91)
Deferred income tax (charge)/credit from continuing operations	11	(18)

As at 31 December 2019, the Group recognized net deferred tax assets amounting to € 4.8 billion as follows:

(a) € 1,592 million refer to deductible temporary differences arising from impairment/ valuation relating to loans including the accounting debt write-offs according to the Greek tax law 4172/2013, as in force. These temporary differences can be utilized in future periods with no specified time limit and according to current tax legislation of each jurisdiction;
(b) € 1,101 million refer to losses resulted from the Group's participation in PSI+ and the Greek's state debt buyback program which are subject to amortization (i.e. 1/30 of losses per year starting from year 2012 onwards) for tax purposes;
(c) € 1,985 million refer to the unamortized part of the crystallized tax losses arising from write-offs and disposals of loans, which are subject to amortization over a twenty-year period, according to the Greek tax law 4172/2013, as in force;
(d) € 2 million refer to the unused tax losses of the Bank's subsidiaries. In the year ended 31 December 2019, the deferred tax on the cumulative Bank's unused tax losses (amounted to € 62 million as at 31 December 2018) was considered as being non-recoverable

due to the securitization of certain loan portfolios for the execution of the acceleration plan for the NPEs reduction and was reversed accordingly;

(e) € 16 million mainly refer to deductible temporary differences related to the (unamortized for tax purposes) costs directly attributable to Bank's share capital increases, subject to 10 years' amortization according to tax legislation in force at the year they have been incurred; and
(f) € 61 million refer to other taxable and deductible temporary differences (i.e. valuation gains/ losses, provisions for pensions and other post-retirement benefits, etc.) the majority of which can be utilized in future periods with no specified time limit and according to the applicable tax legislation of each jurisdiction.

Assessment of the recoverability of deferred tax assets

The recognition of the above presented deferred tax assets is based on management's assessment, as at 31 December 2019, that the Group's legal entities will have sufficient future taxable profits, against which the deductible temporary differences and the unused tax losses can be utilized. The deferred tax assets are determined on the basis of the tax treatment of each deferred tax asset category, as provided by the applicable tax legislation of each jurisdiction, the eligibility of carried forward losses for offsetting with future taxable profits and the actual tax results for the year ended 31 December 2019. Additionally, the Group's assessment on the recoverability of recognized deferred tax assets is based on (a) the future performance expectations (projections of operating results) and growth opportunities relevant for determining the expected future taxable profits, (b) the expected timing of reversal of the deductible and taxable temporary differences, (c) the probability that the Group entities will have sufficient taxable profits in the future, in the same period as the reversal of the deductible and taxable temporary differences or in the years into which the tax losses can be carried forward, and (d) the historical levels of Group entities' performance in combination with the previous years' tax losses caused by one off or non-recurring events.

For the year ended 31 December 2019, the Group has conducted a deferred tax asset (DTA) recoverability assessment based on a) its three-year Business Plan that was approved by the Board of Directors in March 2019 and provided outlook of its profitability and capital position for the period up to the end of 2021, taking into consideration the progress in the implementation of the steps/transactions indicated in the plan for the accelerated reduction of Non-Performing Exposures - NPEs Acceleration Plan and b) the update of this Plan for the period till the end of 2022 that was submitted to the Board of Directors in December 2019. Both Plans have also been submitted to the Hellenic Financial Stability Fund (HFSF), while the March 2019 Plan has also been submitted to the Single Supervisory Mechanism (SSM).

For the years beyond 2022, the forecast of operating results was based on the management projections considering the growth opportunities of the Greek economy, the banking sector and the Group itself. The level of the abovementioned projections adopted in the Group's Business Plan is mainly based on assumptions and estimates regarding (a) the further reduction of its funding cost driven by the gradual repatriation of customer deposits replacing more expensive funding sources as well as the gradual reduction of nominal rates, (b) the lower loan impairment losses as a result of the gradual improvement of the macroeconomic conditions in Greece, the completion of Cairo transaction and all the strategic initiatives for the Acceleration Plan, in line with the NPEs strategy that the Group has committed to the SSM, (c) the gradual strengthening of the lending activity in Greek operations mainly focused on business loans, (d) the impact from the planned disposal of 80% stake of Financial Planning Services S.A. ('FPS') and the completion of the related Trouble Asset Group carve out, (e) the effectiveness of the continuous cost containment initiatives, and (f) the gradual restoration of traditional commission income, such as asset management and network fees and commissions relating with capital markets and investment banking activities.

The implementation of the Group's Business Plan largely depends on the risks and uncertainties that stem from the macroeconomic environment in Greece as well as in the countries that the Group operates (note 2).

Deferred tax credit against the Greek State and tax regime for loan losses

As at 31 December 2019, pursuant to the Law 4172/2013, as in force, the Bank's eligible DTAs/deferred tax credits (DTCs) against the Greek State amounted to € 3,821 million. The DTCs will be converted into directly enforceable claims (tax credit) against the Greek State provided that the Bank's after tax accounting result for the year is a loss. In particular, DTCs are accounted for on: (a) the losses from the Private Sector Involvement (PSI) and the Greek State Debt Buyback Program and (b) on the sum of (i) the unamortized part of the crystallized loan losses from write-offs and disposals, (ii) the accounting debt write-offs and (iii) the remaining accumulated provisions and other losses in general due to credit risk recorded up to 30 June 2015.

In accordance with the tax regime, in force, the above crystallized tax losses arising from write-offs and disposals on customers' loans are amortised over a twenty-year period, maintaining the DTC status during all this period, while they are disconnected from the accounting write-offs. Accordingly, the recovery of the Bank's deferred tax asset recorded on loans and advances to customers and the regulatory capital structure are safeguarded, contributing substantially to the achievement of the NPEs reduction targets, through the acceleration of write-offs and disposals.

According to tax law 4172/2013 as in force, an annual fee of 1.5% is imposed on the excess amount of deferred tax assets guaranteed by the Greek State, stemming from the difference between the current tax rate for credit institutions (i.e. 29%) and the tax rate applicable on 30 June 2015 (i.e. 26%). For the year ended 31 December 2019, an amount of € 6.6 million has been recognized in "Other income/(expenses)".

Income tax reconciliation and unused tax losses

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the applicable tax rates as follows:

		2018
	2019	restated
	€ million	€ million
Profit before tax from continuing operations (note 2.3.2)	160	236
Tax at the applicable tax rate	(46)	(68)
Tax effect of:
- income not subject to tax and non deductible expenses	(7)	(24)
- effect of different tax rates in different countries	29	26
- change in applicable tax rate	0	-
- tax adjustments	-	(14)
- other (note 2.3.2)	(7)	2
Total income tax from continuing operations	(31)	(78)

In the year ended 2019, the above category "other" mainly includes a) € 260 million deferred tax asset (DTA), which was recognised on the Bank's deductible temporary differences arising from the IFRS 9 transition impact following the reassessment of the recoverability of DTA, based on the aforementioned updated business plan, b) € 211 million relating to deferred tax on the Bank's unused tax losses, which has not been recognised or reversed, c) € 28 million DTA, which was reversed relating to the impairment charge against the Bank's investment cost in certain subsidiaries and d) € 18 million referring to a permanent non tax deductible impairment of € 62 million for Grivalia's goodwill (note 28).

As at 31 December 2019, the Bank has not recognised deferred tax asset (DTA) on unused tax losses amounted to € 233 million (2018: € 80 million). The analysis of unrecognized DTA on unused tax losses of the Bank per year of maturity of related tax losses is presented in the table below:

	Unrecognised
	DTA
	€ million
Year of maturity of unused tax losses
2021	22
2024	58
2025	153
Total	233

14. Earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, excluding the average number of ordinary shares purchased by the Group and held as treasury shares.

The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. Following the redemption of the preferred securities (Series D) completed on 29 October 2019, the Group has no longer potentially dilutive ordinary shares (note 39).

		Year ended 31 December
		2019	2018 restated
Net profit for the year attributable to ordinary
shareholders (note 2.3.2) (1)	€ million	125	91
Net profit for the year from continuing operations attributable to ordinary
shareholders (note 2.3.2) (1)	€ million	127	156
Weighted average number of ordinary shares in issue for basic earnings per
share (2)	Number of shares	3,314,354,719	2,184,028,111
Weighted average number of ordinary shares in issue for diluted earnings
per share (2)	Number of shares	-	2,228,346,292
Earnings per share
- Basic and diluted earnings per share	€	0.04	0.04
Earnings per share from continuing operations
- Basic and diluted earnings per share	€	0.04	0.07

(1) After deducting dividend attributable to preferred securities holders and after including gains/(losses) on preferred securities (note 39). (2) The weighted average number of ordinary shares in issue has been affected by the Bank's share capital increase for the merger with Grivalia Properties REIC (note 23.2).

Basic and diluted losses per share from discontinued operations for the year ended 31 December 2019 amounted to € 0.001 (2018: € 0.03 basic and diluted losses per share).

15. Cash and balances with central banks

	2019	2018
	€ million	€ million
Cash in hand	451	429
Balances with central banks	4,228	1,495
Total	4,679	1,924

The Bank and its banking subsidiaries in Eurozone (Cyprus and Luxemburg), are required to hold a minimum level of deposits (minimum reserve requirement - MRR) with their national central bank on an average basis over maintenance periods (i.e. six week periods); these deposits are calculated as 1% of certain liabilities, mainly customers' deposits, and can be withdrawn at any time provided that the MRR is met over the determined period of time. Similar obligations for the maintenance of minimum reserves with their national central bank are also applied to the banking subsidiaries in Bulgaria and Serbia. As at 31 December 2019, the mandatory reserves (i.e. those that the Group entities maintain in order to meet the MRR) and collateral deposits with central banks amounted to € 573 million (2018: € 495 million).

In September 2019, the European Central Bank (ECB) decided to introduce a two-tier system for eligible credit institutions' reserve remuneration, effective from 30 October 2019, which exempts part of excess liquidity holdings (i.e. reserve holdings in excess of MRR) from negative deposit facility rate. The exempted part is determined as a multiple of an institution's MRR (current multiplier has been set at 6). Following the above development, a significant part of the Bank's excess liquidity was deposited with the BoG as at 31 December 2019.

16. Cash and cash equivalents and other information on cash flow statement

For the purpose of the cash flow statement, cash and cash equivalents comprise the following balances with original maturities of three months or less:

	2019	2018
	€ million	€ million
Cash and balances with central banks (excluding mandatory and
collateral deposits with central banks) (note 15)	4,106	1,429
Due from credit institutions	444	520
Securities held for trading	1	-
Total	4,551	1,949

Other (income)/losses on investment securities presented in continuing operating activities are analyzed as follows:

	2019	2018
	€ million	€ million
Amortisation of premiums/discounts and accrued interest	6	(81)
(Gains)/losses from investment securities	(78)	(83)
Dividends	(1)	(2)
Total	(73)	(166)

As of 1 January 2019, following the adoption of IFRS 16, cash payments for the principal portion of the lease liabilities are classified within financing activities.

Changes in liabilities arising from financing activities

During the year ended 31 December 2019, changes in the Group's liabilities arising from financing activities, other than lease liabilities (note 41), are attributable to: a) debt issuance amounting to € 257 million (net of issuance costs), b) debt repayment amounting to € 560 million and c) accrued interest and amortisation of debt issuance costs amounting to € 2 million.

17. Due from credit institutions

	2019	2018
	€ million	€ million
Pledged deposits with banks	2,565	1,791
Placements and other receivables from banks	198	267
Current accounts and settlement balances with banks	244	249
Total	3,007	2,307

As at 31 December 2019, the Group's pledged deposits with banks mainly include: a) € 2,369 million cash collaterals on risk mitigation contracts for derivative transactions and repurchase agreements (CSAs, GMRAs), b) € 153 million pledged deposits relating to the securitized issues and c) € 43 million cash collateral relating to the sale of the Romanian disposal group (note 30).

The Group's exposure arising from credit institutions, as categorized by counterparty's geographical region, is presented in the following table:

	2019	2018
	€ million	€ million
Greece	32	77
Other European countries	2,855	2,060
Other countries	120	170
Total	3,007	2,307

18. Securities held for trading

	2019	2018
	€ million	€ million
Debt securities (note 5.2.1.3)	53	22
Equity securities	57	21
Total	110	43

19. Derivative financial instruments and hedge accounting

The Group uses derivative financial instruments both for hedging and non-hedging purposes.

The table below presents the fair values of the Group's derivative financial instruments by product type and hedge relationship along with their notional amounts. The notional amounts of derivative instruments provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, are not indicative of the Group's exposure at the reporting date.

	31 December 2019			31 December 2018
	Contract/			Contract/
	notional	Fair values		notional	Fair values
	amount	Assets	Liabilities	amount	Assets	Liabilities
	€ million	€ million	€ million	€ million	€ million	€ million
Derivatives for which hedge
accounting is not applied/ held for
trading
- Interest rate swaps	25,686	2,203	1,719	24,413	1,723	1,263
- Interest rate options	5,617	29	94	7,112	35	76
- Cross currency interest rate swaps	216	16	16	366	20	20
- Currency forwards/currency swaps	3,247	8	29	2,552	15	11
- Currency options	104	1	1	210	1	1
- Commodity derivatives	54	2	2	56	7	7
- Credit default swaps	80	1	1	801	4	7
- Other (see below)	69	0	0	30	0	0
		2,260	1,862		1,805	1,385
Derivatives designated as fair value hedges
- Interest rate swaps	3,280	2	769	3,215	1	349
- Cross currency interest rate swaps	4	0	1	4	0	0
		2	770		1	349
Derivatives designated as cash flow hedges
- Interest rate swaps	127	-	65	154	-	58
- Cross currency interest rate swaps	2,179	0	29	3,078	65	101
		0	94		65	159
Total derivatives assets/liabilities		2,262	2,726		1,871	1,893

Other derivative contracts include warrants, exchange traded equity and interest futures and exchange traded equity options.

Information on the fair value measurement and offsetting of derivatives is provided in notes 5.3 and 5.2.1.4, respectively.

The Group uses certain derivatives and other financial instruments, designated in a qualifying hedge relationship, to reduce its exposure to market risks. The hedging practices applied by the Group, as well as the relevant accounting treatment are disclosed in note 2.2.3. In particular:

(a) Fair value hedges

The Group hedges a proportion of its existing interest rate risk resulting from any potential change in the fair value of fixed rate debt securities held or fixed rate loans, denominated both in local and foreign currencies, using interest rate swaps and cross currency

interest rate swaps. In 2019, the Group recognized a loss of € 418 million (2018: € 60.2 million loss) from changes in the carrying amount of the hedging instruments, used as the basis of recognizing hedge ineffectiveness and € 414 million gain (2018: € 60 million gain) from changes in the carrying amount of the hedged items attributable to the hedged risk. The amount of hedge ineffectiveness recognized for 2019 in income statement was € 4 million loss (2018: € 0.2 million loss).

(b) Cash flow hedges

The Group hedges a proportion of its existing interest rate and foreign currency risk resulting from any cash flow variability on floating rate performing customer loans or fixed rate deposits, denominated both in local and foreign currency, or unrecognized highly probable forecast transactions, using interest rate and cross currency interest rate swaps. For the year ended 31 December 2019, an amount of € 10 million loss was recognised in other comprehensive income in relation to derivatives designated as cash flow hedges. Furthermore, in 2019, the ineffectiveness recognized in the income statement that arose from cash flow hedges was nil (2018: nil).

In addition, the Group uses other derivatives, not designated in a qualifying hedge relationship, to manage its exposure primarily to interest rate and foreign currency risks. Non qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied. The said derivative instruments are monitored and have been classified for accounting purposes along with those held for trading.

The Group's exposure in derivative financial assets, as categorized by counterparty's geographical region and industry sector, is presented in the following table:

	31 December 2019
		Other
		European	Other
	Greece	countries	countries	Total
	€ million	€ million	€ million	€ million
Sovereign	1,545	-	-	1,545
Banks	0	313	289	602
Corporate	113	1	1	115
Total	1,658	314	290	2,262

		31 December 2018
		Other
		European	Other
	Greece	countries	countries	Total
	€ million	€ million	€ million	€ million
Sovereign	1,210	-	-	1,210
Banks	7	291	301	599
Corporate	60	1	1	62
Total	1,277	292	302	1,871

At 31 December 2019 and 2018, the maturity profile of the nominal amount of the financial instruments designated by the Group in hedging relationships is presented in the tables below:

		31 December 2019
		Fair Value Hedges				Cash Flow Hedges
	3 - 12	Over 5			1 - 3	3 - 12	Over 5
	months	1-5 years	years	Total	months	months	1-5 years	years	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Interest rate
swaps	30	546	2,704	3,280	-	-	47	80	127
Cross currency
interest rate
swaps	-	-	4	4	184	456	1,040	499	2,179
Total	30	546	2,708	3,284	184	456	1,087	579	2,306

		31 December 2018
		Fair Value Hedges			Cash Flow Hedges
	3 - 12		Over 5		1 - 3	3 - 12		Over 5
	months	1-5 years	years	Total	months	months	1-5 years	years	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Interest rate swaps Cross currency	42	554	2,619	3,215	-	27	35	92	154
interest rate swaps	-	-	4	4	500	1,343	1,060	175	3,078
Total	42	554	2,623	3,219	500	1,370	1,095	267	3,232

(a) Fair value hedges

The following tables present data relating to the hedged items under fair value hedges for the years ended 31 December 2019 and 2018:

		31 December 2019
		Accumulated
		amount of FV
		hedge	Change in value
		adjustments	as the basis for
		related to the	recognising hedge
	Carrying amount	hedged item	ineffectiveness
	€ million	€ million	€ million
Loans and advances to customers	300	15	2
Debt securities AC	669	290	74
Debt securities FVOCI	3,381	386	338
Total	4,350	691	414

		31 December 2018
		Accumulated
		amount of FV	Change in value as
		hedge adjustments	the basis for
		related to the	recognising hedge
	Carrying amount	hedged item	ineffectiveness
	€ million	€ million	€ million
Loans and advances to customers	312	22	(2)
Debt securities AC	776	220	5
Debt securities FVOCI	2,433	48	57
Total	3,521	290	60

At 31 December 2019, the accumulated amount of fair value hedge adjustments remaining in the balance sheet for any items that have ceased to be adjusted for hedging gains and losses was € 166 million (2018: € 183 million).

(b) Cash flow hedges

The cash flow hedge reserves for continuing hedges as at 31 December 2019 were € 37 million loss (2018: € 26 million loss), of which € 3 million gain (2018: € 5 million gain) relates to loans and advances to customers and € 40 million loss to deposits (2018: € 31 million loss).

As at 31 December 2019, the balances remaining in the cash flow hedge reserve from any cash flow hedging relationships for which hedge accounting is no longer applied was € 22 million loss (2018: € 26 million loss).

The reconciliation of the components of Group's special reserves including cash flow hedges is provided in note 38.

20. Loans and advances to customers

	2019	2018
	€ million	€ million
Loans and advances to customers at amortised cost
- Gross carrying amount	44,406	44,973
- Impairment allowance	(7,099)	(8,800)
Carrying Amount	37,307	36,173
Loans and advances to customers at FVTPL	58	59
Total	37,365	36,232

The table below presents the carrying amount of loans and advances to customers per business unit and per stage as at 31 December 2019:

					31 December
		31 December 2019
	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-impaired(1)	Total amount	Total amount
	€ million	€ million	€ million	€ million	€ million
Loans and advances to
customers at amortised cost
Mortgage lending:
- Gross carrying amount	6,980	3,129	3,873	13,982	16,262
- Impairment allowance	(13)	(174)	(1,517)	(1,704)	(2,547)
Carrying Amount	6,967	2,955	2,356	12,278	13,715
Consumer lending:
- Gross carrying amount	2,297	389	1,152	3,838	3,988
- Impairment allowance	(37)	(44)	(974)	(1,055)	(1,235)
Carrying Amount	2,260	345	178	2,783	2,753
Small Business lending:
- Gross carrying amount	2,268	931	3,281	6,480	6,421
- Impairment allowance	(22)	(99)	(1,566)	(1,687)	(1,858)
Carrying Amount	2,246	832	1,715	4,793	4,563
Wholesale lending (2),(3) :
- Gross carrying amount	13,660	1,802	4,644	20,106	18,302
- Impairment allowance	(64)	(90)	(2,499)	(2,653)	(3,160)
Carrying Amount	13,596	1,712	2,145	17,453	15,142
Total loans and advances to
customers at AC
- Gross carrying amount	25,205	6,251	12,950	44,406	44,973
- Impairment allowance	(136)	(407)	(6,556)	(7,099)	(8,800)
Carrying Amount	25,069	5,844	6,394	37,307	36,173
Loans and advances to
customers at FVTPL
Carrying Amount				58	59
Total				37,365	36,232

(1) As at 31 December 2019, POCI loans of € 54 million gross carrying amount and € 3.5 million impairment allowance are presented in 'Lifetime ECL creditimpaired' stage (2018: € 5 million gross carrying amount and € 0.1 million impairment allowance).

(2) Includes € 1.06 billion related to the senior notes of the Pillar securitization, which have been categorized in Stage 1 (see below). (3) Includes loans to public sector.

Law on the conversion of mortgage loans indexed in Swiss Francs, Serbia

As of 25 April 2019, the parliament of Republic of Serbia adopted a new law on the conversion of mortgage loans indexed in Swiss Francs. Pursuant to the aforementioned law, the Serbian banks were obligated to offer the conversion of the remaining debt indexed in CHF into debt indexed in EUR within 30 days from the law's enforcement. The law envisaged a 38% haircut of the converted debt, of which 15% is reimbursed by the Republic of Serbia, while the banks are also entitled to a tax credit of 2% on the amount of the

remaining debt. This debt reduction is considered tax deductible pursuant to the local corporate income tax law. The debtors had 30 days to inform the banks if they would accept the above offer, which included the application of the interest rate valid on 31 March 2019 for EUR indexed loans.

In 2019, Eurobank's banking subsidiary in Serbia "Eurobank A.D. Beograd" recognized € 18 million impairment losses relating to loans and advances to customers eligible for conversion under the above law. The total tax effect from the aforementioned conversion including the tax credit of 2% amounted to € 4 million income.

Transactions on lending portfolio (1)

In June 2019, the Bank announced that it has entered into a binding agreement with an international investor for the sale of 95% of the mezzanine and junior notes of the securitization of a residential mortgage loan portfolio of ca. € 2 billion gross book value comprising primarily NPEs (project Pillar, note 34). The Bank would retain 100% of the senior notes, as well as 5% of the mezzanine and junior notes issued. As at 30 June 2019, the portfolio comprising loans with gross carrying amount of € 1,987 million, which carried an impairment allowance of € 845 million, was classified as held for sale. The net carrying amount of the loan portfolio amounting to € 1,142 million corresponded to its implied valuation based on the nominal value of the senior notes and the sale price of the mezzanine notes, which was subject to the fulfillment of the underlying terms and conditions of the above agreement.

In September 2019, following the completion of the above sale transaction, the Group ceased to consolidate the SPV ('Pillar Finance Designated Activity Company') and de-recognized the underlying loan portfolio in its entirety, on the basis that the Bank transferred the SPV's control and transferred substantially all risk and rewards of the loan portfolio's ownership. In addition, the Bank recognized the retained notes on its balance sheet whereas the consideration was determined at € 102.5 million, of which € 70 million cash and € 32.5 million deferred amount subject to the fulfillment of the terms of the agreement. The final consideration amounted to € 70 million in cash, while the above deferred amount that was previously recognized, has been reversed in the fourth quarter of 2019, as the underlying terms and conditions were not fulfilled. Accordingly, the transaction resulted in a de-recognition loss of € 42.3 million including related costs, which is presented in "other income/ expenses".

The notes of the Pillar securitization that were retained by the Bank are presented within loans and advances to customers, considering that the underlying loan portfolio was originated by the Bank and reflecting how the notes are managed and monitored internally by the Bank. In particular, as at 31 December 2019: a) senior notes of carrying amount of € 1,058.4 million, including accruals and transaction costs (face value: € 1,044 million), were classified in the wholesale loan portfolio measured at amortized cost, b) mezzanine notes of carrying amount of € 3.7 million (face value: € 15.5 million) were classified under the FVTPL category as they failed the SPPI assessment for contractually linked instruments and c) junior notes of issue price € 1 (initial principal amount of € 645 million with issue price € 1) were classified under the FVTPL category as they also failed the SPPI assessment.

Additionally, in the second quarter of 2019, the Bank had received a binding offer for the disposal of non-performing corporate loans. Accordingly, loans with gross carrying amount of € 37 million, which carried an impairment allowance of € 29 million, were classified as held for sale, as their sale was considered highly probable. The transaction was completed in the third quarter of 2019 with no effect in the Group's income statement.

(1) Refers to loans that were classified as held for sale and derecognized during the year ended 31 December 2019.

21. Impairment allowance for loans and advances to customers

The following tables present the movement of the impairment allowance on loans and advances to customers (expected credit losses – ECL):

	31 December 2019
		Wholesale			Mortgage Consumer					Small business
	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-impaired(1)	Stage 1	Stage 2	credit-impaired(1)	Stage 1	Stage 2	credit-impaired(1)	Stage 1	Stage 2	credit-impaired(1)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Impairment allowance as at 1 January	57	111	2,992	35	284	2,228	39	103	1,093	15	213	1,630	8,800
New loans and advances originated or
purchased	20		- 4	1		- 0	16	-	0	4		- 0	45
Transfers between stages
- to 12-month ECL	14	(13)	(1)	42	(40)	(2)	32	(29)	(3)	85	(84)	(1)	-
- to lifetime ECL	(9)	44	(35)	(2)	123	(121)	(9)	47	(38)	(2)	84	(82)	-
- to lifetime ECL credit-impaired loans	(1)	(6)	7	(2)	(36)	38	(4)	(21)	25	(1)	(24)	25	-
Impact of ECL net remeasurement	(22)	(45)	196	(48)	(143)	385	(29)	(55)	218	(78)	(91)	218	506
Recoveries from written - off loans	-		- 21	-		- 3	-	-	5	-		- 5	34
Loans and advances derecognised/
reclassified as held for sale during the year(2)	(0)	(0)	(117)	(0)	(14)	(832)	(2)	(1)	(1)	(1)	(0)	4	(964)
Amounts written off (3)	-		- (514)	-		- (144)	-	-	(264)	-		- (161)	(1,083)
Unwinding of Discount	-		- (74)	-		- (48)	-	-	(28)	-		- (67)	(217)
Foreign exchange and other movements	5	(1)	20	(13)	0	10	(6)	0	(33)	(0)	1	(5)	(22)
Impairment allowance as at 31 December	64	90	2,499	13	174	1,517	37	44	974	22	99	1,566	7,099

Notes to the Consolidated Financial Statements

	31 December 2018
		Wholesale		Mortgage			Consumer			Small business
	12-month ECL	Lifetime ECL	Lifetime ECL credit	12-month ECL Lifetime ECL		Lifetime ECL credit	12-month ECL	Lifetime ECL	Lifetime ECL credit	12-month ECL	Lifetime ECL credit Lifetime ECL
	Stage 1	Stage 2	impaired(1)	Stage 1	Stage 2	impaired(1)	Stage 1	Stage 2	impaired(1)	Stage 1	Stage 2	impaired(1)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Impairment allowance as at 1 January	71	170	3,540	26	306	2,314	44	127	2,123	19	207	2,160	11,107
Transfer of ECL allowance (4)	(1)	(5)	(44)	-		- -	(7)	(0)	(0)	(5)	(0)	-	(62)
New loans and advances originated or
purchased	7	-	-	1		- -	13		- -	3	-	-	24
Transfers between stages
- to 12-month ECL	5	(4)	(1)	37	(30)	(7)	41	(37)	(4)	23	(21)	(2)	-
- to lifetime ECL not credit-impaired loans	(1)	16	(15)	(2)	174	(172)	(5)	63	(58)	(2)	90	(88)	-
- to lifetime ECL credit-impaired loans	(2)	(25)	27	(1)	(52)	53	(5)	(34)	39	(0)	(34)	34	-
Impact of ECL net remeasurement	(13)	(47)	280	(28)	(113)	191	(38)	(15)	265	(23)	(28)	150	581
Recoveries from written - off loans	-	-	9	-		- 1	-		- 4	-	-	2	16
Loans and advances derecognised/reclassified
as held for sale during the year	(0)	(0)	(177)	(0)		- (0)	(0)	(0)	(951)	(0)	(0)	(0)	(1,128)
Amounts written off (3)	-	-	(566)	-		- (105)	-		- (265)	-	-	(536)	(1,472)
Unwinding of Discount	-	-	(100)	-		- (65)	-		- (44)	-	-	(74)	(283)
Foreign exchange and other movements	(9)	6	39	2	(1)	18	(4)	(1)	(16)	0	(1)	(16)	17
Impairment allowance as at 31 December	57	111	2,992	35	284	2,228	39	103	1,093	15	213	1,630	8,800

(1) The impairment allowance for POCI loans of € 3.5 million is included in 'Lifetime ECL credit-impaired' stage (2018: € 0.1 million).

(2) It represents the impairment allowance of loans derecognized during the year due to a) securitization/ sale transactions (note 20) and b) substantial modifications of the loans' contractual terms and those that have been reclassified as held for sale during the year (note 30).

(3) The contractual amount outstanding on lending exposures that were written off during the year ended 31 December 2019 and that are still subject to enforcement activity is € 927 million (2018: € 1,238 million).

(4) As of 1 January 2018, the impairment allowance for credit related commitments (off balance sheet items) is monitored separately from the impairment allowance on loans and advances to customers and accordingly is presented within other liabilities (note 35).

The impairment losses relating to loans and advances to customers recognized in the Group's income statement for the year ended 31 December 2019 amounted to € 624 million (2018: € 680 million) and are analyzed as follows:

	2019	2018
	€ million	€ million

Impairment loss on loans and advances to customers	(551)	(605)
Modification loss on loans and advances to customers	(65)	(70)
Impairment (loss)/ reversal for credit related commitments	(8)	(5)
Total	(624)	(680)

The critical accounting estimates and judgments that are made by the Group's Management in assessing the impairment losses on loans and advances to customers are evaluated constantly, particularly in circumstances of economic uncertainty, based on the latest available information and expectations of future events that are considered reasonable, as described in note 3.1.

22. Investment securities

	2019	2018
	€ million	€ million
Investment securities at FVOCI	6,278	6,248
Investment securities at amortised cost	1,539	1,420
Investment securities at FVTPL	134	104
Total	7,951	7,772

22.1 Movement of investment securities

	31 December 2019
					Investment
	Investment securities at FVOCI		Investment securities at amortised cost		securities at
					FVTPL
	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2		Total
	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at 1 January	6,222	26	697	754	104	7,803
Arising from acquisition (note 23.3)	28	-	-	-	3	31
Additions, net of disposals and redemptions	(985)	-	12	-	7	(966)
Transfers between stages	26	(26)	754	(754)	-	-
Net gains/(losses) from changes in fair value for the year	989	-	-	-	19	1,008
Amortisation of premiums/discounts and interest	(14)	-	8	-	(0)	(6)
Changes in fair value due to hedging	-	-	70	-	-	70
Exchange adjustments and other movements	12	-	1	-	1	14
Gross carrying amount at 31 December	6,278	-	1,542	-	134	7,954
Impairment allowance	-	-	(3)	-	-	(3)
Net carrying amount at 31 December	6,278	-	1,539	-	134	7,951

	31 December 2018
					Investment
	Investment securities at		Investment securities at		securities at
	FVOCI		amortised cost		FVTPL
	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2		Total
	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at 1 January	5,937	29	710	745	187	7,608
Additions, net of disposals and redemptions	314	(7)	(10)	-	(91)	206
Transfers between stages	(2)	2	-	-	-	-
Net gains/(losses) from changes in fair value for the year	(121)	1	-	-	3	(117)
Amortisation of premiums/discounts and interest	76	0	2	3	0	81
Changes in fair value due to hedging	-	-	(1)	6	-	5
Exchange adjustments and other movements	18	1	(4)	-	5	20
Gross carrying amount at 31 December	6,222	26	697	754	104	7,803
Impairment allowance	-	-	(3)	(28)	-	(31)
Net carrying amount at 31 December	6,222	26	694	726	104	7,772

22.2 Movement of ECL

	31 December 2019			31 December 2018
	Measured at
	amortised	Measured at		Measured at	Measured at
	cost	FVOCI	Total	amortised cost	FVOCI	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Balance at 1 January	31	17	48	57	14	71
New financial assets purchased	0	4	4	0	12	12
- of which 12-month ECL-Stage 1	0	4	4	0	12	12
Remeasurement due to transfers from lifetime
ECL-Stage 2 to 12-month ECL-Stage 1	(28)	(1)	(29)	-	-	-
Remeasurement due to change in ECL risk
parameters	0	(9)	(9)	(26)	0	(26)
- of which 12-month ECL-Stage 1	0	(9)	(9)	(1)	0	(1)
- of which lifetime ECL-Stage 2	-	-	-	(25)	(0)	(25)
Financial assets disposed during the year	(0)	(2)	(2)	-	(6)	(6)
- of which 12-month ECL-Stage 1	(0)	(2)	(2)	-	(6)	(6)
Financial assets redeemed during the year	(0)	(0)	(0)	(0)	(1)	(1)
Foreign exchange and other movements	-	0	0	(0)	(2)	(2)
Balance as at 31 December	3	9	12	31	17	48

During the year ended 31 December 2019, the impairment allowance of the investment securities of the Group decreased by € 36 million, mainly due to the improvement of the credit quality of the Hellenic Republic as depicted in the markets, which resulted in the transfer of Greek government bonds measured at amortised cost from lifetime ECL - Stage 2 to 12-month ECL – Stage1.

22.3 Equity reserve: revaluation of the investment securities at FVOCI

Gains and losses arising from the changes in the fair value of investment securities at FVOCI are recognized in a corresponding revaluation reserve in equity. The movement of the reserve is as follows:

	2019	2018
	€ million	€ million
Balance at 1 January under IAS 39	-	282
Impact of adopting IFRS 9 at 1 January 2018 (note 2.3.3)	-	9
Balance at 1 January under IFRS 9	95	291
Net gains/(losses) from changes in fair value	989	(118)
Tax (expense)/benefit	(284)	30
Revaluation reserve from associated undertakings, net of tax	47	(33)
	752	(121)
Net (gains)/losses transferred to net profit on disposal	(63)	(79)
ECL transferred to net profit	(6)	9
Recyclement of reserve relating to dicontinued operations net of tax (note 30)	-	12
Tax (expense)/benefit on net (gains)/losses transferred to net profit on disposal	17	22
Tax (expense)/benefit on ECL transferred to net profit	2	(3)
	(50)	(39)
Net (gains)/losses transferred to net profit from fair value
hedges	(338)	(51)
Tax (expense)/benefit	98	15
	(240)	(36)
Balance at 31 December	557	95

23. Group composition

23.1 Shares in subsidiaries

The following is a listing of the Bank's subsidiaries at 31 December 2019, included in the consolidated financial statements for the year ended 31 December 2019:

		Percentage	Country of
Name	Note	holding	incorporation	Line of business
Be Business Exchanges S.A. of Business Exchanges Networks and Accounting and Tax Services		98.01	Greece	Business-to-business e-commerce, accounting, tax and sundry services
Eurobank Asset Management Mutual Fund Mngt		100.00	Greece	Mutual fund and asset management
Company S.A. (2)
Eurobank Equities Investment Firm Single Member S.A. (2)		100.00	Greece	Capital markets and advisory services
Eurobank Ergasias Leasing Single Member S.A. (2)		100.00	Greece	Leasing
Eurobank Factors Single Member S.A. (2)		100.00	Greece	Factoring
Eurobank FPS Loans and Credits Claim	d	100.00	Greece	Loans and Credits Claim Management
Management S.A.
Hellenic Post Credit S.A.		50.00	Greece	Credit card management and other services
Herald Greece Single Member Real Estate		100.00	Greece	Real estate
development and services S.A. 1 (2)
Herald Greece Single Member Real Estate		100.00	Greece	Real estate
development and services S.A. 2 (2)
Standard Single Member Real Estate S.A. (2)		100.00	Greece	Real estate
Cloud Hellas Single Member Ktimatiki S.A. (2)	e	100.00	Greece	Real estate
Piraeus Port Plaza 1 Development S.A.	e	100.00	Greece	Real estate
Cairo Estate I Single Member S.A.	g	100.00	Greece	Real estate
Cairo Estate II Single Member S.A.	g	100.00	Greece	Real estate
Cairo Estate III Single Member S.A.	g	100.00	Greece	Real estate
Real Estate Management Single Member S.A.	g	100.00	Greece	Real estate services
Anchor Hellenic Investment Holding Single Member S.A.	h	100.00	Greece	Real estate
Vouliagmeni Residence Single Member S.A.	f	100.00	Greece	Real estate
Athinaiki Estate Investments Single Member S.A.	j	100.00	Greece	Real estate
Eurobank Bulgaria A.D.		99.99	Bulgaria	Banking
IMO 03 E.A.D.		100.00	Bulgaria	Real estate services
IMO Property Investments Sofia E.A.D.		100.00	Bulgaria	Real estate services
ERB Leasing Bulgaria EAD	k	99.99	Bulgaria	Leasing
ERB Hellas (Cayman Islands) Ltd		100.00	Cayman Islands	Special purpose financing vehicle
Berberis Investments Ltd		100.00	Channel Islands	Holding company
ERB Hellas Funding Ltd		100.00	Channel Islands	Special purpose financing vehicle
Eurobank Cyprus Ltd		100.00	Cyprus	Banking
ERB New Europe Funding III Ltd		100.00	Cyprus	Finance company
Foramonio Ltd		100.00	Cyprus	Real estate
NEU 03 Property Holdings Ltd		100.00	Cyprus	Holding company
NEU Property Holdings Ltd		100.00	Cyprus	Holding company
Lenevino Holdings Ltd		100.00	Cyprus	Real estate
Rano Investments Ltd		100.00	Cyprus	Real estate
Neviko Ventures Ltd		100.00	Cyprus	Real estate
Staynia Holdings Ltd	e	100.00	Cyprus	Holding company
Zivar Investments Ltd	i	100.00	Cyprus	Real estate
Amvanero Ltd	i	100.00	Cyprus	Real estate
Ragisena Ltd	i	100.00	Cyprus	Real estate
Revasono Holdings Ltd	i	100.00	Cyprus	Real estate
Volki Investments Ltd	i	100.00	Cyprus	Real estate

		Percentage	Country of
Name	Note	holding	incorporation	Line of business
Eurobank Private Bank Luxembourg S.A.		100.00	Luxembourg	Banking
Eurobank Fund Management Company		100.00	Luxembourg	Fund management
(Luxembourg) S.A.
Eurobank Holding (Luxembourg) S.A.		100.00	Luxembourg	Holding company
ERB Lux Immo S.A.		100.00	Luxembourg	Real estate
Grivalia New Europe S.A. (1)	c, e	100.00	Luxembourg	Real estate
ERB New Europe Funding B.V.		100.00	Netherlands	Finance company
ERB New Europe Funding II B.V.		100.00	Netherlands	Finance company
ERB New Europe Holding B.V.		100.00	Netherlands	Holding company
ERB IT Shared Services S.A.		100.00	Romania	Informatics data processing
Eurobank Finance S.A. (1)		100.00	Romania	Investment banking
IMO Property Investments Bucuresti S.A.		100.00	Romania	Real estate services
IMO-II Property Investments S.A.		100.00	Romania	Real estate services
Eliade Tower S.A.	e	99.99	Romania	Real estate
Retail Development S.A.	e	99.99	Romania	Real estate
Seferco Development S.A.	e	99.99	Romania	Real estate
Eurobank A.D. Beograd		99.99	Serbia	Banking
ERB Leasing A.D. Beograd (1)		99.99	Serbia	Leasing
IMO Property Investments A.D. Beograd		100.00	Serbia	Real estate services
Reco Real Property A.D. Beograd	e	100.00	Serbia	Real estate
ERB Istanbul Holding A.S.		100.00	Turkey	Holding company
ERB Hellas Plc		100.00	United Kingdom	Special purpose financing vehicle
Anaptyxi SME I Plc (1)		-	United Kingdom	Special purpose financing vehicle
Karta II Plc		-	United Kingdom	Special purpose financing vehicle
Themeleion II Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Themeleion III Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Themeleion IV Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Themeleion Mortgage Finance Plc (1)		-	United Kingdom	Special purpose financing vehicle
Tegea Plc (1)		-	United Kingdom	Special purpose financing vehicle
Maximus Hellas Designated Activity Company		-	Ireland	Special purpose financing vehicle
Astarti Designated Activity Company		-	Ireland	Special purpose financing vehicle
Cairo No. 1 Finance Designated Activity Company	g	-	Ireland	Special purpose financing vehicle
Cairo No. 2 Finance Designated Activity Company	g	-	Ireland	Special purpose financing vehicle
Cairo No. 3 Finance Designated Activity Company	g	-	Ireland	Special purpose financing vehicle

(1) Entity under liquidation at 31 December 2019.

(2) In the context of the Greek Law 4548/2018, the legal name of the company has been amended or is in the process of being amended with the inclusion of the term "Single member".

The Group holds half of the voting rights of Hellenic Post Credit S.A. which is fully consolidated. The Bank with the consent of the other shareholder who holds the remaining 50% of the share capital, has appointed the majority of the Board's directors and directs the current operations that significantly affect the returns of the company.

The following entities are not included in the consolidated financial statements mainly due to immateriality:

(i) Holding and other entities of the Group's special purpose financing vehicles: (a) Themeleion III Holdings Ltd, Themeleion IV Holdings Ltd, Themeleion V Mortgage Finance Plc, Themeleion VI Mortgage Finance Plc, Anaptyxi APC Ltd, Byzantium II Finance Plc, Tegea Holdings Ltd and Anaptyxi SME I Holdings Ltd, which are under liquidation and (b) Karta II Holdings Ltd.

(ii) Dormant entity: Enalios Real Estate Development S.A.

(iii) Entities controlled by the Group pursuant to the terms of the relevant share pledge agreements: Finas S.A., Rovinvest S.A., Provet S.A. and Promivet S.A.

(a) NEU BG Central Office Ltd, Cyprus

In the fourth quarter of 2018, the liquidation of the company was decided. In the first quarter of 2019, the distribution of the company's surplus assets to its shareholder NEU Property Holdings Ltd was completed and accordingly the company is not included in the consolidated financial statements as of the period ended 31 March 2019. The relevant procedure for the dissolution of the company was completed in July 2019.

(b) CEH Balkan Holdings Ltd and Chamia Enterprises Company Ltd, Cyprus

In 2018, the liquidation of the companies was decided. In the third quarter of 2019, the distribution of the companies' surplus assets to the Bank (their sole shareholder) was completed and accordingly the companies were not included in the consolidated financial statements as of the period ended 30 September 2019. The dissolution of Chamia Enterprises Company Ltd and of CEH Balkan Holdings Ltd was completed in December 2019 and January 2020, respectively.

(c) Grivalia New Europe S.A., Luxembourg

In the fourth quarter of 2019, the liquidation of the company was decided.

(d) Eurobank FPS Loans and Credits Claim Management S.A., Greece

In the context of the binding agreements that Eurobank has entered into with doValue in December 2019, the Bank will sell 80% of its subsidiary Eurobank FPS Loans and Credits Claim Management S.A. - project "Europe". Therefore, as of 31 December 2019 the company was classified as held for sale. Further information is provided in note 30.

Changes in ownership interest in subsidiaries which did not result in loss of control

(e) Grivalia Properties REIC S.A., subsidiaries

On 5 April 2019, the General Meetings of the Shareholders of Eurobank and Grivalia Properties REIC approved the merger of the two companies. As of that date, the Bank also obtained control of Grivalia's subsidiaries. Further information in relation to the merger of the two companies is provided in note 23.2.

(f) Vouliagmeni Residence Single Member S.A., Greece

In July 2019, the Bank established the wholly owned subsidiary Vouliagmeni Residence Single Member S.A., a real estate company operating in Greece.

In the year ended 31 December 2019, in the context of the management of the Group's non performing exposures (NPEs), the following wholly owned subsidiaries were established:

(g) Special purpose financing vehicles for the securitization of Bank loans and related real estate companies

Cairo No. 1 Finance Designated Activity Company, Cairo No. 2 Finance Designated Activity Company, Cairo No. 3 Finance Designated Activity Company and Pillar Finance Designated Activity Company, Ireland (note 34).
Cairo Estate I Single Member S.A., Cairo Estate II Single Member S.A., Cairo Estate III Single Member S.A., Pillar Estate Single Member S.A. and Real Estate Management Single Member S.A., Greece

Following the completion of the Pillar transaction (note 20), the Bank has no control over the special purpose financing vehicle Pillar Finance Designated Activity Company and the related real estate company Pillar Estate Single Member S.A., and as a result they were not included in the consolidated financial statements as of the period ended 30 September 2019.

(h) Anchor Hellenic Investment Holding Single Member S.A., real estate company, Greece

In the third quarter of 2019, Anchor Hellenic Investment Holding Single Member S.A. acquired the whole of the issued share capital and voting rights of Rhodes Marines S.A. In the same period, the disposal of the holding in Rhodes Marines S.A. along with the Group's lending exposures to the company was completed, with no effect in the Group's income statement.

(i) Zivar Investments Ltd, Amvanero Ltd, Ragisena Ltd, Revasono Holdings Ltd and Volki Investments Ltd, real estate companies, Cyprus

(j) Athinaiki Estate Investments Single Member S.A., real estate company, Greece

(k) ERB Leasing Bulgaria EAD, Bulgaria

In the third quarter of 2019, the Bank disposed its participation in ERB Leasing Bulgaria EAD to Eurobank Bulgaria A.D., where the Group's percentage holding is 99.99% and thus, the Group participation to the company decreased from 100% to 99.99%.

In 2018, the changes in ownership in the Group's subsidiaries without loss of control are as follows:

(i) Modern Hoteling, Greece

In the context of the management of its non performing exposures (NPEs), in January 2018, the Bank established a wholly owned subsidiary, Modern Hoteling, to operate as a real estate company in Greece.

(ii) ERB Lux Immo S.A., Luxembourg

In January 2018, the Bank's subsidiary Eurobank Private Bank Luxembourg S.A. acquired 100% of the shares and voting rights of BHF Lux Immo S.A. for a cash consideration of € 8.7 million. The acquisition was accounted for as a business combination using the purchase method of accounting. At the date of acquisition, the fair value of the total assets amounted to € 19.2 million, while total liabilities amounted to € 11.4 million, mainly consisting of intragroup funding of € 9 million and of € 2.1 million deferred tax liability arising from the fair value measurement of the assets acquired. Accordingly, the resulting goodwill asset amounted to € 0.9 million. Additionally, at the acquisition date, according to the decision of the General Meeting of the Shareholders of the acquired company its name changed to ERB Lux Immo S.A.

(iii) ERB Property Services Sofia E.A.D., Bulgaria

In January 2018, the Bank and its subsidiary Eurobank Property Services S.A. disposed their participations in ERB Property Services Sofia A.D. to Eurobank Bulgaria A.D., where the Group's percentage holding is 99.99% and thus, the Group participation to the company decreased from 100% to 99.99%. In June 2018, following the aforementioned transactions, the company's name changed to ERB Property Services Sofia E.A.D.

(iv) ERB Leasing Bulgaria EAD, Bulgaria

In February 2018, the Bank established the wholly owned subsidiary ERB Leasing Bulgaria EAD, as a result of the transformation of ERB Leasing EAD through a spin-off, whereby part of the assets and liabilities of the latter were passed to the new established company.

(v) Rano Investments Ltd, Cyprus

In the context of the management of its NPEs, in the second quarter of 2018, the Bank's subsidiary Eurobank Cyprus Ltd established a wholly owned subsidiary, Rano Investments Ltd, to operate as a real estate company in Cyprus.

(vi) Maximus Hellas Designated Activity Company, Ireland

In the second quarter of 2018, the Bank established Maximus Hellas Designated Activity Company, a special purpose financing vehicle for the securitization of a portfolio of corporate and SME (small and medium enterprise) loans.

(vii) Neviko Ventures Ltd, Cyprus

In the context of the management of its NPEs, in August 2018, the Bank's subsidiary Eurobank Cyprus Ltd established a wholly owned subsidiary, Neviko Ventures Ltd, to operate as a real estate company in Cyprus.

(viii)Astarti Designated Activity Company, Ireland

In October 2018, the Bank established Astarti Designated Activity Company, a special purpose financing vehicle for the securitization of a portfolio of consumer and SME (small and medium enterprise) loans.

Changes in ownership interest in subsidiaries which resulted in loss of control

(l) Piraeus Bank Bulgaria A.D. and Piraeus Insurance Brokerage EOOD, Bulgaria

In June 2019, the acquisition of Piraeus Bank Bulgaria A.D. ("PBB"), a subsidiary of Piraeus Bank, by Eurobank's subsidiary in Bulgaria, Eurobank Bulgaria A.D. ("Postbank") was completed, after all necessary approvals from the competent authorities were obtained. In particular, Postbank acquired 99.9819% of the shares and voting rights of PBB and, accordingly, indirect participation in PBB's whollyowned subsidiary Piraeus Insurance Brokerage EOOD. In the fourth quarter of 2019, the mergers of i) PBB with Postbank and ii) Piraeus Insurance Brokerage EOOD with ERB Leasing Bulgaria EAD, by absorption of the former by the latter, were completed (note 23.3).

(m) Eurobank Property Services S.A., Greece, Eurobank Property Services S.A., Romania and ERB Property Services d.o.o. Beograd, Serbia

In January 2019, the Bank and Cerved Credit Management Group S.r.l. (Cerved) signed a binding agreement in the context of which Cerved would acquire the entire share capital of Eurobank Property Services S.A. in Greece (EPS) and its subsidiaries Eurobank Property Services S.A. in Romania and ERB Property Services d.o.o. Beograd in Serbia from Eurobank. EPS Greece has also been appointed as real estate servicer for Eurobank for the next five years with respect to all real estate valuation activities and other services. The transaction was completed in April 2019 via the acquisition from Cerved, for a consideration of € 8 million, of the entire share capital of EPS with a resulting gain of € 1.3 million recognized in "other income/expenses". Further consideration of up to € 5 million in the form of earn – out will be due upon reaching certain economic results and conditions in the timeframe until 2023. The transaction was in line with the Bank's strategy to focus on its core operations, adopting an outsourcing business model in relation to real estate services.

(n) Modern Hoteling, Greece

In February 2019, the Bank signed a pre- agreement with third party for the disposal of its participation (100%) in Modern Hoteling. Based on the above agreement, a share capital increase took place in March 2019, which was covered by the purchaser in order for the company's debt to be fully repaid to the Bank. Upon completion of the share capital increase, the Bank's participation in the company decreased to 41% and based on the relevant share purchase agreement signed in the same month, the disposal of the company was completed, with a resulting gain of € 2.1 million recognized in "other income/expenses".

(o) Bulgarian Retail Services A.D., Bulgaria

In November 2019, the shareholders of Bulgarian Retail Services A.D. (including the Bank and ERB New Europe Holding B.V.) disposed their participation in the company to Eurobank Bulgaria A.D., where the Group's percentage holding is 99.99% and thus, the Group participation to Bulgarian Retail Services A.D. decreased from 100% to 99.99%. In the same month, the merger of Bulgarian Retail Services A.D. and ERB Leasing Bulgaria E.A.D. by absorption of the former by the latter, was completed. The transaction was accounted for in the Group's financial statements by using the pooling of interests method (also known as merger accounting) with no effect in the said statements.

(p) ERB Property Services Sofia E.A.D.

In December 2019, Eurobank Bulgaria A.D. disposed its participation interest of 100% in ERB Property Services Sofia E.A.D. to a third party for a cash consideration of € 2.1 million. The resulting gain on the disposal was immaterial.

During 2018, the changes in ownership in the Group's subsidiaries which resulted in loss of control are as follows:

(i) Mesal Holdings Ltd, Cyprus

In the first half of 2018, Eurobank Cyprus Ltd disposed of the 100% of the shares and voting rights of Mesal Holdings Ltd with a resulting gain of € 2.2 million recognized in "other income/expenses".

(ii) Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A., Romania

On 4 April 2018, the Bank announced the completion of the sale of Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A. in Romania (Romanian disposal group) to Banca Transilvania. Hence, as of that date, the subsidiaries of the Romanian disposal group were not consolidated (note 30).

(iii) Densho Investments Ltd, Cyprus

In July 2018, Eurobank Cyprus Ltd disposed of the 100% of the shares and voting rights of Densho Investments Ltd with a resulting gain of € 0.02 million recognized in "other income/expenses".

(iv) ERB Leasing E.A.D, Bulgaria

In November 2018, the Bank completed the sale of the 100% of the shares and voting rights of ERB Leasing E.A.D. with a resulting loss of € 1.6 million recognized in "other income/expenses".

(v) IMO Central Office E.A.D., Bulgaria

In January 2018, the Bank's subsidiary NEU BG Central Office Ltd disposed its participation in IMO Central Office E.A.D. to Eurobank Bulgaria A.D., where the Group's percentage holding is 99.99% and thus, the Group participation to the company decreased from 100% to 99.99%. In December 2018, the merger of IMO Central Office E.A.D. and Eurobank Bulgaria A.D. by absorption of the former by the latter, was completed. The transaction was accounted for in the Group's financial

statements by using the pooling of interests method (also known as merger accounting) with no effect in the said statements.

Post balance sheet event

ERB Leasing Bulgaria EAD, Bulgaria

In February 2020, the legal merger of Eurobank Bulgaria A.D. and ERB Leasing Bulgaria EAD, by absorption of the latter by the former was announced.

Significant restrictions on the Group's ability to access or use the assets and settle the liabilities of the Group

The Group does not have any significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from regulatory, statutory and contractual requirements, as well as from the protective rights of non-controlling interests, set out below:

Banking and other financial institution subsidiaries are subject to regulatory restrictions and central bank requirements in the countries in which the subsidiaries operate. Such supervisory framework requires the subsidiaries to maintain minimum capital buffers and certain capital adequacy and liquidity ratios, including restrictions to limit exposures and/or the transfer of funds to the Bank and other subsidiaries within the Group. Accordingly, even if the subsidiaries' financial assets are not pledged at an individual entity level, their transfer within the Group may be restricted under the existing supervisory framework. In this situation, it is not feasible to identify individual balance sheet items that cannot be transferred other than the major part of ECB's available collateral held by Group's subsidiaries (note 5.2.3).

As at 31 December 2019, the carrying amount of the Group financial institution subsidiaries' assets and liabilities, before intercompany eliminations, amounted to € 17.2 billion and € 15.2 billion, respectively (2018: € 15.4 billion and € 13.5 billion).

Subsidiaries are subject to statutory requirements mainly relating with the level of capital and total equity that they should maintain, restrictions on the distribution of capital and special reserves, as well as dividend payments to their ordinary shareholders. Information relating to the Group's non-distributable reserves is provided in note 38.

The Group uses its financial assets as collateral for repo and derivative transactions, secured borrowing from central and other banks, issuances of covered bonds, as well as securitizations. As a result of financial assets' pledge, their transfer within the Group is not permitted. Information relating to the Group's pledged financial assets is provided in notes 17, 29 and 40.

The Group is required to maintain balances with central banks and also posts cash collaterals for obtaining funding from Eurosystem. Information relating to mandatory and collateral deposits with central banks is provided in note 15.

23.2 Merger of Eurobank with Grivalia

Merger of Eurobank with Grivalia

On 26 November 2018, the Boards of Directors ("BoD") of Eurobank Ergasias S.A. ("Eurobank") and Grivalia Properties REIC ("Grivalia") announced that they unanimously decided to commence the merger of the two companies by absorption of Grivalia by Eurobank (the "Merger"). Grivalia was a real estate investment company under Law 2778/1999, as in force, incorporated in Greece. The business of Grivalia along with its subsidiaries (Grivalia group, note 23.1) and its joint ventures (note 24) was the acquisition, management and leasing out of investment property portfolio located in Greece, in Central Eastern Europe and in Central America.

On 7 February 2019, the European Commission (DG Competition) decided that the Merger is in line with Eurobank's commitments and State Aid rules considering that the strengthening of its capital base through the Merger will enable Eurobank to significantly reduce its non-performing loans in the near future.

On 22 February 2019, the BoD of Eurobank and Grivalia approved the Draft Merger Agreement for the absorption of Grivalia by Eurobank according to the provisions of Greek laws 2166/1993 and 2515/1997, as in force, as well as the applicable Company Law. The proposed share exchange ratio was 15.80000000414930 new Eurobank ordinary registered shares for every 1 Grivalia ordinary registered share, while Eurobank shareholders retain the number of Eurobank ordinary shares they held before the Merger. Accordingly, with respect to the new share capital of Eurobank, 2,185,998,765 shares are allocated to the shareholders of Eurobank and 1,523,163,087 to the shareholders of Grivalia.

The consideration of the transaction amounting to € 1,093.9 million has been calculated as the fair value of the 1,523,163,087 Eurobank new ordinary shares with reference to Eurobank's share market price on the acquisition date (i.e. € 0.7185) less the fair value of the new Eurobank shares issued corresponding to the Grivalia shares held by the Bank's subsidiary ERB Equities.

Upon acquisition, the fair values of the assets acquired and liabilities assumed are presented in the table below:

	Fair value
	€ million
Assets
Due from credit institutions (1)	30
of which intercompany balances with Eurobank Group	2 4
Property, plant and equipment and investment property	1,015
Investment in associates and joint ventures	60
Other assets (2)	16
Total assets	1,121

Liabilities
Due to credit institutions	222
of which intercompany balances with Eurobank Group	147
Other liabilities	27
of which intercompany balances with Eurobank Group	4
Total liabilities	249
Shareholders' equity	872
Total equity and liabilities	1,121

(1) It includes € 3 million cash and cash equivalents (third parties).

(2) It includes mainly trade and other receivables of gross carrying amount of € 17 million of which an amount of € 2 million was expected to be uncollectible at the date of acquisition.

The difference between: (a) the total consideration of € 1,093.9 million and the fair value of the Group's previously held equity interest in Grivalia of € 0.4 million, and (b) the net identifiable assets acquired (fair values of assets and liabilities as stated above) of € 872 million, results in the recognition of a goodwill of € 222 million, which was impaired by € 62 million in the year ended 31 December 2019 (note 28). This is not deductible for income tax purposes and is included in intangible assets. Following the Merger, Eurobank's equity increased by € 1,087 million net of € 7 million related costs. The Merger enhances Eurobank's capital position (note 4) and its earnings capacity, which in turn enables the acceleration of its NPEs reduction plan. In addition, through the Merger, the Group is allowed to deploy Grivalia's best in class real estate management skills to the Bank's real estate assets, in particular to its repossessed assets, which is critical for the management of NPEs.

The results of Grivalia group operations are incorporated in the Group's financial statements prospectively, as of 1 April 2019. If the acquisition had occurred on 1 January 2019, Grivalia group would have contributed net profit of ca. € 9 million to the Group for the period from 1 January 2019 up to 31 March 2019. As of 1 April 2019, the revenues from the investment property portfolio acquired from Grivalia group are presented within the line "Income from non banking services" of the income statement. The Merger was approved on 17 May 2019 by the Ministry of Finance and Development and was registered, on the same day, in the General Commercial Registry. The trading of the 1,523,163,087 new common voting shares of nominal value € 0.23 each was initiated at Athens Exchange on 23 May 2019.

Agreement with the Real estate management company

On 22 February 2019, the Board of Directors of Eurobank also approved the upcoming agreement (SLA), pursuant to article 100 of Greek Law 4548/2018, of the Bank with the company to be incorporated under the name "Grivalia Management Company SA" (the "Company"). The Company was established in March 2019 and is a related party to Eurobank, since a member of the Bank's Board of Directors holdsthe majority (70%) of the shares of the Company and is an executive member of the board of directors of the Company.

The Bank has concluded a 10-year advisory services agreement with Grivalia Management Company S.A. for the combined real estate portfolio of the merged entities, that came into force following the completion of the Merger. The related services assigned to the Company under this agreement mainly refer to advisory services relating to the acquisition, transfer, lease, management development and strategic planning of the management of real estate assets, including the preparation of the annual budget and the supervision of Eurobank's contractors and advisors. Following a specific mandate, the Company will also undertake certain implementation actions. According to the SLA, total fees that will be charged by the Company based on cost and performance criteria, including a minimum service fee of € 9.35 million for the combined own used and investment property portfolio and a fee related to repossessed assets, shall not exceed € 12 million (excluding VAT) per annum.

Further information on the above transactions is provided in the regulatory announcements on the Bank's website dated 26 November 2018 and 8 February, 25 February, 1 March, 5 April and 17 May 2019.

23.3 Acquisition of Piraeus Bank Bulgaria A.D. by Eurobank Bulgaria A.D.

In June 2019, the Transaction was concluded, following the receipt of the relevant regulatory approvals. The final consideration of the Transaction amounted to € 77 million of which € 55 million cash, € 2 million additional amount to be paid to the seller based on the finalized Net Asset Value (NAV) of PBB against a benchmark NAV and € 20 million deferred consideration, payable within a four year period.

In September 2019, the General meeting of the shareholders of Postbank approved the merger of the company with PBB. The merger was completed in November 2019, following the receipt of the relevant regulatory approvals.

Upon acquisition, the fair values of the assets and liabilities are presented in the table below:

	Fair value
	€ million
Assets
Cash and balances with central banks	272
Due from credit institutions	326
Net loans and advances to customers	729
Gross contractual amount: € 858 million
Investment securities	32
Property, plant and equipment	15
Other assets (1)	5
Total Assets (2)	1,379

Liabilities
Due to credit institutions	148
Due to customers	1,103
Other liabilities	19
Total Liabilities	1,270

Shareholders' equity (3)	109
Total equity and liabilites	1,379

(1) Other assets include intangible assets, the investment in Piraeus Insurance Brokerage EOOD and other assets.

(2) Includes cash and cash equivalents of € 501 million.

(3) Includes non controlling interests of € 0.02 million.

The acquisition was accounted for as a business combination using the purchase method of accounting. The resulting gain on the acquisition of the PBB, amounting to € 29 million net of acquisition-related costs of € 2.6 million, is attributed to the particular circumstances of the acquisition, in line with the restructuring plan of the seller and Eurobank's strategy to focus on specific international markets, and has been recognized in 'Other income/(expenses)'. The above gain is considered non-taxable under the local corporate tax framework.

The results of PBB were incorporated in the Group's financial statements prospectively, as of 1 June 2019. If the acquisition had occurred on 1 January 2019, PBB would have contributed net profit of € 1.9 million to the Group for the period from 1 January 2019 up to 31 May 2019.

The acquisition of PBB by Eurobank Bulgaria A.D. along with their subsequent merger, is in line with the Group's strategy to focus on the expansion of its international activities in markets which are deemed core and will strengthen its position in the Bulgarian banking sector, in both the retail and mainly corporate business segments.

24. Investments in associates and joint ventures

As at 31 December 2019, the carrying amount of the Group's investments in associates and joint ventures amounted to € 235 million (2018: € 113 million). The following is the listing of the Group's associates and joint ventures as at 31 December 2019:

		Country of		Group's
Name	Note	incorporation	Line of business	share
Femion Ltd		Cyprus	Special purpose investment vehicle	66.45
Tefin S.A. (1)		Greece	Dealership of vehicles and machinery	50.00
Sinda Enterprises Company Ltd		Cyprus	Special purpose investment vehicle	48.00
Singidunum - Buildings d.o.o. Beograd	a	Serbia	Development of building projects	22.47
Alpha Investment Property Kefalariou S.A.		Greece	Real estate	41.67
Global Finance S.A. (2)		Greece	Investment financing	33.82
Rosequeens Properties Ltd (3)		Cyprus	Special purpose investment vehicle	33.33
Famar S.A. (1)		Luxembourg	Holding company	23.55
Odyssey GP S.a.r.l.		Luxembourg	Special purpose investment vehicle	20.00
Eurolife ERB Insurance Group Holdings S.A. (2)		Greece	Holding company	20.00
Alpha Investment Property Commercial Stores S.A.		Greece	Real estate	30.00
Peirga Kythnou P.C.	b	Greece	Real estate	50.00
Piraeus Port Plaza 2	d	Greece	Real estate	49.00
Piraeus Port Plaza 3	d	Greece	Real estate	49.00
Value Touristiki S.A.	d	Greece	Real estate	49.00
Grivalia Hospitality S.A. (3)	d	Luxembourg	Real estate	25.00
Information Systems Impact S.A.	e	Greece	Information systems services	15.00

(1) Entity under liquidation at 31 December 2019.

(2) Eurolife Insurance group (Eurolife ERB Insurance Group Holdings S.A. and its subsidiaries) and Global Finance group (Global Finance S.A. and its subsidiaries) are considered as Group's associates.

(3) Rosequeens Properties Ltd (including its subsidiary Rosequeens Properties SRL) and Grivalia Hospitality group (Grivalia Hospitality S.A. and its subsidiaries) are considered as Group's joint ventures.

Omega Insurance and Reinsurance Brokers S.A. in which the Group holds 26.05% is not accounted under the equity method in the consolidated financial statements. The Group is not represented in the Board of Directors of the company, therefore does not exercise significant influence over it.

In addition, Femion Ltd. is accounted for as a joint venture of the Group based on the substance and the purpose of the arrangement and the terms of the shareholder's agreement which require the unanimous consent of the shareholders for significant decisions and establish shared control through the equal representation of the shareholders in the management bodies of the company.

For the year ended 31 December 2019, the Group's share of results of Eurolife Insurance group amounting to € 20 million (2018: € 30 million) includes € 13 million, after tax, gains on sale of investment securities (2018: € 22 million).

(a) Singidunum - Buildings d.o.o. Beograd, Serbia

In the year ended 31 December 2019, the Group's participation in Singidunum decreased from 27.06% to 22.47%, following the share capital increases in favor of the other shareholder.

(b) Peirga Kythnou P.C., Greece

In February 2019, in the context of a debt restructuring, Eurobank and Piraeus Bank S.A. established Peirga Kythnou S.A., to operate as a real estate company in Greece. Based on the contractual terms of the shareholders' agreements and the substance of the arrangement, Peirga Kythnou S.A. is accounted as a joint venture of the Group.

(c) Unisoft S.A., Greece

In March 2019, the Bank increased its participation in Unisoft S.A from 18.02% to 29.06%, as a result of the share capital increase performed in the context of the company's debt restructuring scheme. In the second quarter of 2019, the disposal of the holding in the company was completed.

(d) Grivalia Properties REIC S.A., joint ventures

On 5 April 2019, the General Meetings of the Shareholders of Eurobank and Grivalia Properties REIC approved the merger of the two companies. As of that date, the Bank also obtained control of Grivalia group and consequently joint control to its joint ventures. Further information in relation to the merger of the two companies is provided in note 23.2.

(e) Information Systems Impact S.A., Greece

In November 2019, the Bank acquired 15% of the shares and voting rights of Information Systems Impact S.A. Based on the terms of the shareholders' agreement, the company is accounted as an associate of the Group.

Post balance sheet event

Singidunum - Buildings d.o.o. Beograd, Serbia

In March 2020, the Group's participation in Singidunum decreased from 22.47% to 21.65%, following an additional share capital increase in favor of the other shareholder.

Associates material to the Group

With regards to the Group's associates and joint ventures, Eurolife ERB Insurance Group Holdings S.A. and Grivalia Hospitality S.A. are considered individually material for the Group. Financial information regarding both entities is provided in the tables below:

Eurolife ERB Insurance Group Holdings S.A.

	2019	2018
	€ million	€ million

Current assets	3,194	2,701
Non-current assets	127	121
Total assets	3,321	2,822
Current liabilities	393	412
Non-current liabilities	2,209	1,970
Total liabilities	2,602	2,382
Operating income	176	262
Net profit	101	148
Other comprehensive income	234	(166)
Total comprehensive income	335	(18)
Dividends paid to the Group	11	16

In addition, in the fourth quarter of 2018 the Group received an amount of € 25 million following a capital return from Eurolife ERB Insurance Group Holdings S.A.

Grivalia Hospitality S.A.

	2019
	€ million

Current assets (1)	43
Non-current assets	286
Total assets	329

Current liabilities (2)	28
Non-current liabilities (3)	67
Total liabilities	95

	2019 (4)
	€ million
Operating income	2

Net profit	3
Other comprehensive income	-
Total comprehensive income	3

(1) Includes cash and cash equivalents of € 38 million.

(2) Current financial liabilities excluding trade and other payables and provisions amount to € 11 million.

(3) Non-current financial liabilities excluding trade and other payables and provisions amount to € 43 million.

(4) As of acquisition date.

The carrying amount, in aggregate, of the Group's joint ventures as at 31 December 2019 amounted to € 73 million (2018: € 7 million). The Group's share of profit and loss and total comprehensive income of the above entities amounted to € 3 million (2018: immaterial).

The carrying amount, in aggregate, of the Group's associates excluding Eurolife ERB Insurance Group Holdings S.A. which is presented above (i.e. Global Finance S.A., Alpha Investment Property Kefalariou S.A., Singidunum - Buildings d.o.o. Beograd and Odyssey GP S.a.r.l. and Information Systems Impact S.A.) as at 31 December 2019 amounted to € 19 million (2018: € 18 million). The Group's share of profit and loss and total comprehensive income of the above entities was immaterial.

The Group has not recognized losses in relation to its interest in its joint ventures, as its share of losses exceeded its interest in them and no incurred obligations exist or any payments were performed on behalf of them. For the year ended 31 December 2019, the unrecognized share of losses for the Group's joint ventures amounted to € 2 million (2018: € 2 million). The cumulative amount of unrecognized share of losses for the joint ventures amounted to € 18 million.

Following the merger with Grivalia, the Group has assumed contractual commitments to subscribe in future share capital increases in the entities over which it obtained joined control (Piraeus Port Plaza 2, Piraeus Port Plaza 3, Value Touristiki S.A) in accordance with the agreed upon investment budgets on a pro-rata basis to its respective holdings. In addition, the Group has agreed to eventually acquire the other shareholders' interest in these joint ventures upon the satisfaction of certain conditions, relating to the completion of the underlying investments, at a price to be determined by reference to the adjusted net asset value of each entity.

Apart from the aforementioned commitments, the Group has no other unrecognized commitments in relation to its participation in joint ventures nor any contingent liabilities regarding its participation in associates or joint ventures, which could result to a future outflow of cash or other resources.

The Group's associate Eurolife ERB Insurance Group Holdings S.A is subject to regulatory and statutory restrictions and is required to maintain sufficient capital to satisfy its insurance obligations. In addition, the shares of the Group's joint ventures Piraeus Port Plaza 2 and Piraeus Port Plaza 3 and dividends and other proceeds deriving from those shares have been pledged under borrowing agreements of these entities.

Except as described above, no significant restrictions exist (e.g. resulting from loan agreements, regulatory requirements or other contractual arrangements) on the ability of associates or joint ventures to transfer funds to the Group either as dividends or to repay loans that have been financed by the Group.

25. Structured Entities

The Group is involved in various types of structured entities, such as securitization vehicles, mutual funds and private equity funds.

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity often has restricted activities, a narrow well-defined objective, insufficient equity to permit it to finance its activities without subordinated financial support and financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks.

An interest in a structured entity refers to contractual and non-contractual involvement that exposes the Group to variability of returns from the performance of the structured entity. Examples of interest in structured entities include the holding of debt and equity instruments, contractual arrangements, liquidity support, credit enhancement, residual value.

Structured entities may be established by the Group or by a third party and are consolidated when the substance of the relationship is such that the structured entities are controlled by the Group, as set out in note 2.2.1(i). As a result of the consolidation assessment performed, the Group has involvement with both consolidated and unconsolidated structured entities, as described below.

Consolidated structured entities

The Group, as part of its funding activity, enters into securitization transactions of various classes of loans (corporate, small and medium enterprise, mortgage, consumer loans, credit card and bond loans), which generally result in the transfer of the above assets to structured entities (securitization vehicles), which, in turn issue debt securities held by investors and the Group's entities. The Group monitors the credit quality of the securitizations' underlying loans, as well as the credit ratings of the debt instruments issued, when applicable, and provides either credit enhancements to the securitization vehicles and/or transfers new loans to the pool of their underlying assets, whenever necessary, in accordance with the terms of the relevant contractual arrangements in force.

Moreover, the Group in the context of its non-performing loans (NPEs) reduction acceleration plan launched in November 2018 entered into the securitization of various classes of NPEs through the issue of senior, mezzanine and junior notes (Cairo, notes 34 and 44).

A listing of the Group's consolidated structured entities is set out in note 23.1.

As at 31 December 2019, the face value of debt securities issued by the securitizations sponsored by the Group amounted to € 5,788 million, of which € 4,844 million including Cairo notes were held by the Bank (2018: € 2,303 million, of which € 1,057 million were held by the Bank) (note 34).

The Group did not provide any non contractual financial or other support to these structured entities, where applicable, and currently has no intention to do so in the foreseeable future.

Unconsolidated structured entities

The Group enters into transactions with unconsolidated structured entities, which are those not controlled by the Group, in the normal course of business, in order to provide fund management services or take advantage of specific investment opportunities.

Moreover, the Group in the context of its NPEs reduction acceleration plan entered into the securitization of mortgage NPEs through the issue of senior, mezzanine and junior notes (Pillar, notes 34 and 44).

Group managed funds

The Group establishes and manages structured entities in order to provide customers, either retail or institutional, with investment opportunities. Accordingly, through its subsidiaries Eurobank Asset Management Mutual Fund Mngt Company S.A. and Eurobank Fund Management Company (Luxembourg) S.A., it is engaged with the management of different types of mutual funds, including fixed income, equities, funds of funds and money market.

Additionally, the Group is entitled to receive management and other fees and may hold investments in such mutual funds for own investment purposes as well as for the benefit of its customers.

The Group is involved in the initial design of the mutual funds and, in its capacity as fund manager, takes investment decisions on the selection of their investments, nevertheless within a predefined, by relevant laws and regulations, decision making framework. Τherefore, the Group has determined that it has no power over these funds.

Furthermore, in its capacity as fund manager, the Group primary acts as an agent in exercising its decision making authority over them. Based on the above, the Group has assessed that it has no control over these mutual funds and as a result does not consolidate them. The Group does not have any contractual obligation to provide financial support to the managed funds and does not guarantee their rate of return.

Non-Group managed funds

The Group purchases and holds units of third party managed funds including mutual funds, private equity and other investment funds.

Securitizations

The Group has interests in unconsolidated securitization vehicles by investing in residential mortgage backed and other asset-backed securities issued by these entities.

The table below sets out the carrying amount of the Group's interests in unconsolidated structured entities, recognized in the consolidated balance sheet as at 31 December 2019, representing its maximum exposure to loss in relation to these interests. Information relating to the total income derived from interests in unconsolidated structured entities, recognized either in profit or loss or other comprehensive income during 2019 is also provided (i.e. fees, interest income, net gains or losses on revaluation and derecognition):

	31 December 2019
	Unconsolidated structured entity type
	Group Non- Group
	Securitizations	managed funds	managed funds	Total
	€ million	€ million	€ million	€ million
Group's interest- assets
Loans and advances to customers (1)	1,062	-	-	1,062
Investment securities	82	46	27	155
Other Assets	-	1	-	1
Total	1,144	47	27	1,218
Total income from Group interests	8	54	2	64

		Unconsolidated structured entity type
		Group managed Non- Group
	Securitizations	funds	managed funds	Total
	€ million	€ million	€ million	€ million
Group's interest- assets
Investment securities	117	19	25	161
Other Assets	-	1	-	1
Total	117	20	25	162
Total income from Group interests	0	43	3	46

(1) Includes the senior and mezzanine notes of the Pillar securitization (note 34).

For the year ended 31 December 2019, total income related to the Group's interests from securitizations includes: (i) € 5.6 million interest income of debt securities retained by the Group measured at amortized cost, (ii) € 2.7 million from gains or losses on revaluation recognized in other comprehensive income and (iii) € 0.1 million from gains or losses on revaluation recognized in profit or loss. Total income from Group interests in relation to Group managed funds, amounting to € 54 million in 2019 as presented in the table above, consists mainly of income relating to management fees and other commissions for the management of funds. In addition, total income in relation to non-Group managed funds, amounting to € 2 million in 2019 as set out above, consists mainly of gains on revaluation of the Group's holding in funds and has been recognized in profit or loss.

As at 31 December 2019, the total assets of funds under the Group's management as well as those of unconsolidated securitization vehicles amounted to € 2,270 million (2018: € 1,882 million) and € 6,039 million (2018: € 6,389 million), respectively.

26. Property, plant and equipment

	31 December 2019
	Land, buildings, leasehold improvements € million	Furniture, equipment, motor vehicles € million	Computer hardware, software € million	Right of use assets (RoU)(1) € million	Total € million
Cost:
Balance at 1 January	463	185	443	-	1,091
Recognition of RoU on initial application of IFRS 16 Arising from	-	-	-	344	344
acquisitions/merger (notes 23.2 and 23.3) (2)	206	2	1	(122)	87
Transfers	11	1	1	-	13
Additions	20	11	18	28	77
Disposals, write-offs and adjustment to RoU (3)	(2)	(3)	(5)	(38)	(48)
Exchange adjustments	0	0	(1)	-	(1)
Held for sale (note 30)	(17)	(1)	(3)	(1)	(22)
Balance at 31 December	681	195	454	211	1,541
Accumulated depreciation:
Balance at 1 January Arising from	(197)	(150)	(391)	-	(738)
acquisitions/merger (notes 23.2 and 23.3) (2)	(0)	(0)	(0)	4	4
Transfers	(0)	(0)	(0)	-	(0)
Disposals, write-offs and adjustment to RoU (3)	1	2	5	0	8
Charge for the year	(15)	(7)	(14)	(41)	(77)
Exchange adjustments	(0)	(0)	1	-	1
Held for sale (note 30)	4	1	2	0	7
Balance at 31 December	(207)	(154)	(397)	(37)	(795)
Net book value at 31 December	474	41	57	174	746

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2.3.1). The respective lease liabilities are presented in "other liabilities" (note 35).

(2) Following the merger with Grivalia (note 23.2), € 132 million right of use assets initially recognised upon transition to IFRS 16 were derecognized in the second quarter of 2019, as the related properties became own used assets of the Group.

(3) It refers to termination, modifications and remeasurements of RoU. It includes the remeasurement from revised estimates of the lease term during the year, considering all facts and circumstances that affect the Group's housing needs, including the merger with Grivalia.

As at 31 December 2019, the RoU assets amounting to € 174 million refer to leased office and branch premises, ATM locations, residential properties of € 168 million and motor vehicles of € 6 million.

	31 December 2018
Land,	Furniture,
buildings,	equipment,	Computer
leasehold	motor	hardware,
improvements	vehicles	software	Total
€ million	€ million	€ million	€ million

527	190	420	1,137
(56)	(9)	13	(52)
25	12	15	52
(30)	(8)	(5)	(43)
(3)	(0)	-	(3)
463	185	443	1,091

(208)	(159)	(380)	(747)
1	9	(3)	7
23	7	5	35
(13)	(7)	(13)	(33)
(197)	(150)	(391)	(738)
266	35	52	353

Leasehold improvements relate to premises occupied by the Group for its own activities.

27. Investment property

In the fourth quarter of 2019, the Group has elected to change its accounting policy regarding the measurement of Investment Property from cost model to fair value model according to IAS 40 "Investment property". In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", the above change in the Group's accounting policy on Investment Property was applied retrospectively, consequently comparatives presented below have been restated. Refer also to note 2.3.2.

The movement of investment property (fair value) is as follows:

		2018
	2019	restated
	€ million	€ million
Balance at beginning of period	331	277
Restatement due to change in accounting policy (note 2.3.2)	-	11
Recognition of right-of-use asset on initial application of IFRS 16 (1)	14	-
Additions	28	0
Arising from acquisition/merger (notes 23.2, 23.3)	814	17
Transfers from/to repossessed assets	16	20
Other transfers	(13)	54
Disposals	(40)	(35)
Net gain/(loss) from fair values adjustments	61	(13)
Held for sale (note 30)	(27)	-
Balance at 31 December	1,184	331

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2.3.1). The respective lease liabilities are presented in "other liabilities" (note 35). As at 31 December 2019, RoU assets that meet the definition of investment property amount to € 15 million.

Changes in fair values of investment property are recognized as gains/(losses) in profit or loss and included in the "Other Income/(expense)". All gains/(losses) are unrealized.

During the year ended 31 December 2019, an amount of € 55 million (2018: € 12 million) was recognized as rental income from investment property in income from non banking services. Contractual obligations in relation to investment property are presented in note 42.

The main classes of investment property have been determined based on the nature, the characteristics and the risks of the Group's properties. The fair value measurements of the Group's investment property, which are categorized within level 3 of the fair value hierarchy, are presented in the below table.

		2018
	2019	restated
	€ million	€ million

Residential	34	28
Commercial (note 2.3.2)	1,093	240
Land Plots	31	31
Industrial (note 2.3.2)	26	32
Total	1,184	331

As at 31 December 2019, an amount of € 952 million (2018: € 84 million) is presented under "Investment Property" operating segment, an amount of € 72 million in "Corporate" (2018: € 43 million) and an amount of € 160 million (2018: € 204 million) in "International" segment (note 43).

The basic methods used for estimating the fair value of the Group's investment property are the income approach (income capitalization/discounted cash flow method), the comparative method and the cost approach, which are also used in combination depending on the class of property being valued.

The discounted cash flow method is used for estimating the fair value of the Group's commercial investment property. Fair value is calculated through the projection of a series of cash flows using explicit assumptions regarding the benefits and liabilities of ownership (income and operating costs, vacancy rates, income growth), including the residual value anticipated at the end of the projection period. To this projected cash flows series, an appropriate, market-derived discount rate is applied to establish its present value.

Under the income capitalization method, also used for the commercial class of investment property, a property's fair value is estimated based on the normalized net operating income generated by the property, which is divided by the capitalization rate (the investor's rate of return).

The comparative method is used for the residential, commercial and land plot classes of investment property. Fair value is estimated based on data for comparable transactions, by analyzing either real transaction prices of similar properties, or by asking prices after performing the necessary adjustments.

The cost approach is used for estimating the fair value of the residential and the industrial classes of the Group's investment property. This approach refers to the calculation of the fair value based on the cost of reproduction/replacement (estimated construction costs), which is then reduced by an appropriate rate to reflect depreciation.

The Group's investment property valuations are performed taking into consideration the highest and best use of each asset that is physically possible, legally permissible and financially feasible.

The main method used to estimate the fair value of the "Investment Property" segment portfolio, which comprises 80% of the total Investment portfolio as at 31 December 2019, is the discounted cash flow method. Significant unobservable inputs used in the fair value measurement of the relevant portfolio are the rental income growth and the discount rate. Increase in rental income growth would result in increase in the carrying amount while an increase in the discount rate would have the opposite result. The discount rate used ranges from 7.5% to 12.5%. As at 31 December 2019, an increase or decrease of 5% in the discount rate used in the DCF analysis, would result in a downward or upward adjustment of the carrying value of the respective investment properties of € 21 million and € 22 million, respectively.

28. Goodwill and other intangible assets

Goodwill

Impairment testing of goodwill

For the purposes of impairment testing, the goodwill recognised upon the acquisition of Grivalia has been allocated to the Investment Property Segment, which is defined as the Cash Generating Unit ("CGU") expected to benefit from that business combination.

The recoverable amount of the Investment Property Segment was determined from value-in-use calculations. For calculating value in use, the Group considered the business plan approved by the Board of Directors in March 2019 for the period up to the end of 2021 and the update of this plan for the period until the end of 2022, as submitted to the Board of Directors in December 2019, taking into account future prospects of the real estate market, as well as operational and market specific assumptions for years 4 to 8. These projections have been extrapolated beyond the 8-year period (the period in perpetuity) using the estimated growth rate stated below.

The key assumptions for the value-in-use calculation are those regarding the discount rate, growth rate and estimated returns based primarily on the rental income from investment properties. Management determined these returns based on past experience, actual performance, and expectations about real estate market growth. The discount rate relevant for the calculation is based on a countryspecific equity capital cost rate using the capital asset pricing model while the tax effects applicable to the Investment Property Segment have been considered in estimating the pre-tax discount rate. The individual components of the calculation (risk-free interest rate, market risk premium, country-specific risk and beta factor) are based on external sources of information. The growth rate is based on respective internal or external market growth forecasts of the sector, and does not exceed the average long-term growth rate for the relevant market.

The key assumptions used for the value-in-use calculations in 2019 for the Investment Property Segment were as follows:

Discount rate (pre-tax)	10.3%
Terminal value growth rate	1.5%
Operating Income	13.6%

Rental Income is the main driver for the revenues and the costs of the Investment Property segment in the value-in-use calculation. The weighted average annual growth rate of gross core income for the initial 3-year period is presented in the above table.

During the year ended 31 December 2019, the Group recognized an impairment loss of € 62 million against the goodwill allocated to the Investment Property Segment, which resulted mainly from the transition of the Group to the fair value model for the measurement of investment property leading to an increase of the carrying amount of the Segment (note 10).

Following the impairment test, the goodwill recognised upon the acquisition of Grivalia was reduced to € 160 million and the carrying amount of the Investment Property Segment was reduced to its recoverable amount, being € 994 million (excluding relevant properties classified as held for sale). The resulting loss has been recognised in the separate line 'Impairment losses on goodwill' in the Consolidated Income Statement.

For ERB Lux Immo S.A., the carrying amount of goodwill (€ 0.9 million) is not considered significant in comparison with the Group's total carrying amount of goodwill and no indications of impairment have been identified.

Other intangible assets

The movement of other intangible assets which refer to purchased and developed software is as follows:

	2019	2018
	€ million	€ million
Cost:
Balance at 1 January	424	373
Transfers	0	(9)
Additions	68	66
Disposals and write-offs	(2)	(7)
Impairment	(2)	-
Exchange adjustments and other	-	1
Held for sale (note 30)	(4)	-
Balance at 31 December	484	424
Accumulated amortisation:
Balance at 1 January	(241)	(221)
Transfers	-	(0)
Amortisation charge for the year	(31)	(26)
Disposals and write-offs	3	6
Exchange adjustments	-	(0)
Held for sale (note 30)	3	-
Balance at 31 December	(266)	(241)
Net book value at 31 December	218	183

29. Other assets

	2019	2018
	€ million	€ million
Receivable from Deposit Guarantee and Investment Fund	707	707
Repossessed properties and relative prepayments	614	555
Pledged amount for a Greek sovereign risk financial guarantee	238	240
Balances under settlement (2)	44	122
Prepaid expenses and accrued income	93	83
Other guarantees	85	76
Income tax receivable (1)	42	53
Other assets	180	98
Total	2,003	1,934

(1) Includes withholding taxes, net of provisions.

(2) Includes settlement balances with customers, balances under settlement relating to the auction process and brokerage activity.

As at 31 December 2019, other assets net of provisions, amounting to € 180 million include, among others, receivables related to (a) prepayments to suppliers, (b) public entities, (c) property management activities and (d) legal cases.

30. Disposal groups classified as held for sale and discontinued operations

(a) Disposal groups classified as held for sale

	2019	2018
	€ million	€ million
Assets of disposal groups
Real estate properties	63	-
Eurobank Financial Planning Services S.A.	10	-
Non-performing loan portfolios	2	20
Total	75	20

Liabilities of disposal group
Eurobank Financial Planning Services S.A.	8	-
Total	8	-

Eurobank FPS Loans and Credits Claim Management S.A., Greece

On 19 December 2019, the Bank announced that it has reached an agreement with doValue S.p.A. ("doValue", the purchaser) to dispose 80% of its subsidiary Eurobank Financial Planning Services ("FPS"), for a cash consideration of € 248 million, subject to certain adjustments. As per the agreement, FPS, which is part of Eurobank's Troubled Asset Group ("TAG") - the unit responsible for the management of the troubled assets portfolio, will take over the Bank's TAG unit in order for the sale to be completed. The transaction also includes the disposal of 80% of the Real Estate Management Single Member S.A., at the option of the purchaser.

In addition, a 10-year servicing agreement will be signed between the Bank and FPS for the servicing of the Bank's early arrears and NPEs. Accordingly, post transaction, FPS will manage a total perimeter of ca. € 26 billion of NPEs, owned by the Bank and third parties, extending its services to all asset classes and becoming the leading independent servicer in Greece.

The agreed consideration for 80% of FPS implies an enterprise value of € 310 million for 100% of the entity. The resulting gain on disposal is estimated at approx. € 215 million before tax (€ 170 million after tax), after taking into account costs directly attributable to the transaction and certain consideration adjustments, in accordance with the terms of the agreement.

The completion of the transaction is expected to occur in the first half of 2020, subject to the fulfillment of the conditions set out in the agreement and the customary regulatory approvals.

As at 31 December 2019, on the basis of the aforementioned binding agreement, the assets and liabilities of FPS, amounting to € 10 million and € 8 million respectively, have been classified as held for sale.

Real estate properties

In November 2019, the Group, in the context of its strategy for the active management of its real estate portfolio (repossessed, investment properties and own used properties) reached pre-sale agreements with prospective investors for the disposal of three pools of real estate assets amounting to a total value of ca. € 0.1 billion. Consequently, the disposal of these properties' portfolios was considered highly probable and they have been classified as held for sale as of the end of November 2019. The fair value less cost to sell of these properties, based on the offer prices included in the pre-sale agreements, was lower than their carrying amount, therefore an impairment loss of € 24 million was recognised upon their remeasurement in accordance with the IFRS 5 requirements. This non-recurring fair value measurement is categorized as Level 3 of the fair value hierarchy due to the significance of the unobservable inputs used. In 2019, the total impairment loss, including selling costs, recognised for these real estate assets amounted to € 39 million and are included in the income statement line "Other impairment losses and provisions", while as at 31 December 2019 their remaining carrying amount (after the completion of certain sales) was € 63 million. The sale of these real estate assets is expected to be concluded within 2020.

Non-performing loan portfolios

In the fourth quarter of 2019, the Bank entered into an agreement for the disposal of non-performing corporate loans and accordingly, loans with gross carrying amount of € 7.6 million, which carried an impairment allowance of € 5.3 million, were classified as held for sale. The transaction is expected to be completed in March 2020 with no effect in the Group's income statement.

(b) Discontinued operations

Romanian disposal group

In April 2018, the sale of the Romanian disposal group (Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A. – presented in the International segment), which was the major part of the Group's operations in Romania was completed. Accordingly, a loss of € 72 million, after tax was recognized in the income statement for the year ended 31 December 2018, which included the recyclement to the income statement of € 46 million cumulative losses previously recognized in other comprehensive income and a provision of € 14.6 million for the completion statements of the Romanian disposal group, which were finalized in the third quarter of 2019. For the year ended 2019 a provision for transaction costs has been reversed amounting to € 1.8 million (€ 1.4 million after tax).

According to the relevant Sale Purchase Agreement (SPA), executed between Eurobank Group and Banca Transilvania (BT) , there are also specific indemnity clauses based on which the Purchaser could claim specific amounts, subject to certain limitations on total claims, including those for: a) open (non-expired) taxable periods of Bancpost S.A. until the completion of the transaction (see below "Tax audit") and b) losses incurred from claims made against the Purchaser or Bancpost S.A. in relation to a certain loan portfolio (see below ANPC case).

Tax audit

According to the tax audit assessment communicated to Bancpost S.A. within July 2018, following the completion of the tax audit for the years 2011-2015, the additional taxes to be paid amounted in total to € 40 million, approximately.

The Group is in close cooperation with BT, which is in the process of challenging the tax audit assessment in the competent courts.

In respect of the above, in the year ended 31 December 2019, the Group has recognized an additional provision of € 5 million (€ 3.6 million after tax), while the accumulated provisions, which have been recognized up to 31 December 2019 amount to € 20 million.

Romanian National Authority for Consumer Protection (ANPC)

In the second half of 2018, the Romanian National Authority for Consumer Protection (ANPC) imposed three fines totaling € 72 thousand on Bancpost S.A. in connection with complaints raised by certain Bancpost S.A. lending clients, related to portfolios of performing loans which were assigned by Bancpost S.A. to ERB New Europe Funding II B.V. (an entity in the Netherlands controlled by Eurobank) starting in 2008. Furthermore, the ANPC concluded that any payments (such as interests, fees, penalties) by the consumers in relation to all the aforementioned loans and for a period of ten years should be reimbursed by Bancpost S.A.

In the year ended 31 December 2019, the first instance court admitted BT's complaints (as legal successor to Bancpost S.A.) against ANPC in all three aforementioned cases, ruling that the relevant penalties and repayment obligations imposed on Bancpost S.A. are cancelled. ANPC appealed against the first instance rulings in all three cases. The second instance court rejected the ANPC appeal in one of the aforementioned cases and two cases are still pending in appeal.

Further information in relation to the sale of Romanian disposal group is provided in note 17 of the consolidated financial statements for the year ended 31 December 2018.

31. Due to central banks

	2019	2018
	€ million	€ million

Secured borrowing from ECB and BoG	1,900	2,050

The Bank has eliminated the use of ELA funding since the end of January 2019.

32. Due to credit institutions

	2019	2018
	€ million	€ million
Secured borrowing from credit institutions	4,267	5,652
Borrowings from international financial and similar institutions	632	591
Current accounts and settlement balances with banks	77	115
Interbank takings	46	18
Total	5,022	6,376

As at 31 December 2019, secured borrowing from credit institutions refers mainly to transactions with foreign institutions, which were conducted with collaterals government and corporate securities, as well as covered bonds issued and held by the Bank (notes 5.2.1.3 and 34). As at 31 December 2019, borrowings from international financial and similar institutions include borrowings from European Investment Bank, European Bank for Reconstruction and Development and other similar institutions.

33. Due to customers

	2019	2018
	€ million	€ million
Savings and current accounts	26,200	21,875
Term deposits	18,430	16,990
Repurchase agreements	200	200
Other term products (note 34)	11	18
Total	44,841	39,083

The other term products relate to senior medium-term notes held by the Bank's customers, amounting to € 11 million (2018: € 18 million).

For the year ended 31 December 2019, due to customers for the Greek and International operations amounted to € 32,444 million and € 12,397 million, respectively (2018: € 28,785 million and € 10,298 million, respectively).

34. Debt securities in issue

	2019	2018
	€ million	€ million

Securitisations	943	1,245
Subordinated notes (Tier 2)	947	947
	500	499
Medium-term notes (EMTN) (note 33)	16	16
	2,406	2,707

Securitisations

In the first quarter of 2019, the Bank, through its special purpose financing vehicle Maximus Hellas DAC, proceeded with the upsize of the asset backed securities issue to a total face value of € 1,338 million, of which € 910 million Class A notes were held by an international institutional investor while € 428 million Class B notes were held by the Bank. As at 31 December 2019, following their partial redemption, the carrying value of Class A notes amounted to € 614 million (2018: € 654 million).

In addition, for the year ended 31 December 2019, following their partial redemption, the carrying value of the asset backed securities issued by the Bank's special purpose financing vehicle Astarti DAC, held by an international institutional investor (Class A notes), amounted to € 329 million (2018: € 591 million).

Pillar securitization

that it has entered into a binding agreement with Celidoria S.A R.L, an entity ultimately owned by funds whose investment manager is the global investment management firm Pimco, for the sale of 95% of the mezzanine and junior notes of the abovementioned securitization. Upon the completion of the transaction, in September 2019, the Bank ceased to have control over the SPV (notes 20 and 23.1).

Cairo securitisation

In June 2019, the Bank, through its special purpose financing vehicles (SPVs) 'Cairo No. 1 Finance Designated Activity Company', 'Cairo No. 2 Finance Designated Activity Company' and 'Cairo No. 3 Finance Designated Activity Company', issued asset backed securities (notes) of total value of ca. € 7.5 billion, collateralized by a mixed assets portfolio of primarily non performing loans, which have been fully retained by the Bank (note 44).

In the context of Law 4649/2019 ('Hercules' – Hellenic Asset Protection Scheme) voted by the Greek parliament on 16 December 2019, the SPVs will opt in for the state guarantee scheme. Accordingly, the Cairo transaction's parameters that include the senior note of face value € 2.4 billion, the mezzanine note of face value € 1.5 billion and the junior note of issue price € 1 (initial principal amount of € 3.6 billion) have taken into account the estimated cost of Hercules and are subject to the targeted rating confirmation.

In December 2019, the Bank announced that it has entered into binding agreements with doValue S.p.A. for: (a) the sale of 80% of its subsidiary Eurobank Financial Planning Services ("FPS") (note 30) and (b) the sale of a portion of mezzanine and junior notes of the aforementioned NPE Securitization. In particular, it has been agreed that 20% of the mezzanine notes and the minimum required percentage (as per 'Hercules' – Hellenic Asset Protection Scheme) of the junior notes will be sold to the above investor for a consideration of € 15 million in cash.

The Group will retain 100% of the senior notes and the 5% of the mezzanine and junior notes. The completion of the transactions with doValue S.p.A is expected to take place within the first half of 2020, subject to obtaining the relevant regulatory approvals in line with the market practice.

Tier 2 Capital instruments

In January 2018, the Bank issued Tier 2 capital instruments of face value of € 950 million, in replacement of the preference shares which had been issued in the context of the first stream of Hellenic Republic's plan to support liquidity in the Greek economy under Law 3723/2008. The aforementioned instruments, which have a maturity of ten years (until 17 January 2028) and pay fixed nominal interest rate of 6.41%, that shall be payable semi-annually, as at 31 December 2019, amounted to € 947 million, including € 3 million unamortized issuance costs and € 0.2 million accrued interest.

Medium-term notes (EMTN)

In January 2019, the Group issued medium term notes of face value of € 2 million and proceeded with the partial redemption of medium term notes of an equal amount.

Covered bonds

During the year ended 31 December 2019, the Bank proceeded with the partial cancellation of covered bonds of face value of € 150 million, previously retained by the Bank.

Financial disclosures required by the Act 2620/28.08.2009 of the Bank of Greece in relation to the covered bonds issued, are available at the Bank's website (Investor Report for Covered Bonds Programs).

Post balance sheet event

In February 2020, the Bank proceeded with the partial cancellation of covered bonds of face value of € 150 million previously retained by the Bank.

35. Other liabilities

		2018
	2019	restated
	€ million	€ million
Lease liabilities (1)	193	-
Balances under settlement (2)	326	297
Deferred income and accrued expenses	109	96
Other provisions	98	98
ECL allowance for credit related commitments (note 5.2.1.2)	64	58
Standard legal staff retirement indemnity obligations (note 36)	52	49
Employee termination benefits (3)	32	8
Sovereign risk financial guarantee	41	43
Acquisition obligation (note 23.3)	22	-
Income taxes payable	7	8
Deferred tax liabilities, (notes 2.3.2 and 12)	9	5
Other liabilities	238	183
Total	1,191	845

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2.3.1).

(2) Includes settlement balances relating to bank cheques and remittances, credit card transactions, other banking and brokerage activities. (3)For the year ended 31 December 2018, obligations for employee termination benefits arising from VES were presented within other provisions.

As at 31 December 2019, other liabilities amounting to € 238 million mainly consist of payables relating with (a) suppliers and creditors, (b) contributions to insurance organizations, (c) duties and other taxes and (d) trading liabilities.

As at 31 December 2019, other provisions amounting to € 98 million (2018: € 98 million) mainly include: (a) € 59 million for outstanding litigations against the Group (note 42), (b) € 30 million for other operational risk events, of which € 22 million is related to Romanian disposal group (note 30) and (c) € 7 million for restructuring costs mainly relating to the acquisition of Piraeus Bank Bulgaria A.D. (note 23.3).

The movement of the Group's other provisions, is presented in the following table:

	31 December 2019
	Litigations and
	claims in dispute	Other	Total
	€ million	€ million	€ million
Balance at 1 January	56	42	98
Amounts charged during the year	6	24	30
Amounts used during the year	(1)	(21)	(22)
Amounts reversed during the year	(2)	(4)	(6)
Foreign exchange and other movements	0	(1)	(1)
Liabilities of disposal group (note 30)	-	(1)	(1)
Balance at 31 December	59	39	98

		31 December 2018
	Litigations and
	claims in dispute	Other	Total
	€ million	€ million	€ million
Balance at 1 January	63	13	76
Amounts charged during the year	3	33	36
Amounts used during the year	(1)	(1)	(2)
Amounts reversed during the year	(9)	(2)	(11)
Foreign exchange and other movements	(0)	(1)	(1)
Balance at 31 December	56	42	98

For the year ended 31 December 2019, an amount of € 44 million has been recognised in the Group's income statement for employee termination benefits in respect of the Voluntary Exit Scheme (VES) launched by the Bank in May 2019. The new VES has been offered to employees over an age limit as well as to employees of specific eligible Bank units independent of age and will be implemented

through either lump-sum payments or long term leaves during which the employees will be receiving a percentage of a monthly salary, or a combination thereof.

In respect of the Voluntary Exit Scheme (VES) that was initiated during the previous years, the Group recognised an additional cost of € 13 million in the year ended 31 December 2019. Further information is provided in note 38 of the consolidated financial statements for the year ended 31 December 2018.

36. Standard legal staff retirement indemnity obligations

The Group provides for staff retirement indemnity obligation for its employees in Greece and abroad, who are entitled to a lump sum payment based on the number of years of service and the level of remuneration at the date of retirement, if they remain in the employment of the Group until normal retirement age, in accordance with the local labor legislation. The above retirement indemnity obligations typically expose the Group to actuarial risks such as interest rate risk and salary risk. Therefore, a decrease in the discount rate used to calculate the present value of the estimated future cash outflows or an increase in future salaries will increase the staff retirement indemnity obligations of the Group.

The movement of the liability for standard legal staff retirement indemnity obligations is as follows:

	2019	2018
	€ million	€ million
Balance at 1 January	49	50
Arising from acquisition (note 23.3)	1	-
Current service cost	3	3
Interest cost	1	1
Past service cost and (gains)/losses on settlements	30	48
Remeasurements:
Actuarial (gains)/losses arising from changes in financial assumptions	4	(2)
Actuarial (gains)/losses arising from changes in demographic assumptions	-	1
Actuarial (gains)/losses arising from experience adjustments	1	1
Benefits paid	(36)	(53)
Exchange adjustments	0	0
Liabilities of disposal group (note 30)	(1)	-
Balance at 31 December	52	49

The benefits paid by the Group during 2019, in the context of the Voluntary Exit Scheme (VES) (note 35), amounted to € 36 million. The provision for staff retirement obligations of the staff that participated in the above scheme, amounted to € 6 million.

The significant actuarial assumptions (expressed as weighted averages) were as follows:

2019	2018
%	%

0.9	1.9
2.0	2.4

As at 31 December 2019, the average duration of the standard legal staff retirement indemnity obligation was 17 years (2018: 18 years).

A quantitative sensitivity analysis based on reasonable changes to significant actuarial assumptions as at 31 December 2019 is as follows:

An increase/(decrease) of the discount rate assumed, by 50 bps/(50 bps), would result in a (decrease)/increase of the standard legal staff retirement obligations by (€ 4.0 million)/ € 4.5 million.

An increase/(decrease) of the future salary growth assumed, by 0.5%/(0.5%) would result in an increase/(decrease) of the standard legal staff retirement obligations by € 4.3 million/(€ 3.9 million).

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

The methods and assumptions used in preparing the above sensitivity analysis were consistent with those used to estimate the retirement benefit obligation and did not change compared to the previous year.

37. Ordinary share capital, share premium and treasury shares

As at 31 December 2019, the par value of the Bank's shares is € 0.23 per share (2018: € 0.30). All shares are fully paid. The movement of ordinary share capital, share premium and treasury shares is as follows:

	Ordinary share capital € million	Treasury shares € million	Net € million	Share premium € million	Treasury shares € million	Net € million
Balance at 1 January 2018	656	(1)	655	8,056	(1)	8,055
Purchase of treasury shares	-	(1)	(1)	-	(2)	(2)
Sale of treasury shares	-	1	1	-	2	2
Balance at 31 December 2018	656	(1)	655	8,056	(1)	8,055

Balance at 1 January	656	(1)	655	8,056	(1)	8,055
Share capital increase, following the merger with Grivalia Properties REIC	197	-	197	-	-	-
Purchase of treasury shares	-	(1)	(1)	-	(3)	(3)
Sale of treasury shares	-	1	1	-	2	2
Balance at 31 December 2019	853	(1)	852	8,056	(2)	8,054

The following is an analysis of the movement in the number of shares issued by the Bank:

Number of shares
Issued ordinary shares	Treasury shares	Net
2,185,998,765	(1,802,710)	2,184,196,055
-	(3,711,579)	(3,711,579)
-	4,320,257	4,320,257
2,185,998,765	(1,194,032)	2,184,804,733
2,185,998,765	(1,194,032)	2,184,804,733
1,523,163,087	-	1,523,163,087
-	(5,612,661)	(5,612,661)
-	3,991,381	3,991,381
3,709,161,852	(2,815,312)	3,706,346,540

On 5 April 2019, the Extraordinary General Meeting of the Bank's Shareholders approved the merger of the Bank with Grivalia Properties REIC (note 23.2) by absorption of the latter by the former and resolved the increase of the share capital of the Bank by:

a) € 165 million, which corresponds to the share capital of Grivalia Properties REIC; and
b) € 32 million, derived from taxed profits for rounding reasons of the nominal value of the Bank's common shares, which was decreased from € 0.30 to € 0.23.

Following the above increases, the Bank's total share capital amounts to € 853 million divided into 3,709,161,852 common voting shares of nominal value of € 0.23 each.

Treasury shares

In the ordinary course of business, the Bank's subsidiaries may acquire and dispose of treasury shares. According to paragraph 1 of Article 16c of Law 3864/2010, during the period of the participation of the HFSF in the share capital of the Bank it is not permitted to the Bank to purchase treasury shares without the approval of the HFSF.

In addition, as at 31 December 2019, the number of Eurobank shares held by the Group's associates in the ordinary course of their insurance and investing activities was 63,158,565 in total (2018: 18,406,000).

38. Reserves and retained earnings

	Statutory	Non-taxed	Fair value	Other	Retained
	reserves	reserves	reserve	reserves	earnings	Total
	€ million	€ million	€ million	€ million	€ million	€ million

Balance at 1 January 2018	399	974	282	6,350	(10,561)	(2,556)
Impact of adopting IFRS 9 at
1 January 2018 (note 2.3.3)	-	-	9	-	(1,094)	(1,085)
Restatement due to change in accounting
policy (note 2.3.2)	-	-	-	-	10	10
Balance at 1 January 2018, as restated	399	974	291	6,350	(11,645)	(3,631)
Net profit (restated, note 2.3.2)	-	-	-	-	93	93
Transfers between reserves (1)	(15)	(31)	-	(2)	48	-
Debt securities at FVOCI	-	-	(163)	-	-	(163)
Cash flow hedges	-	-	-	3	-	3
Foreign currency translation
- foreign operations' translation differences	-	-	-	(10)	-	(10)
- net investment hedges	-	-	-	(0)	-	(0)
Transfer to net profit on disposal of foreign operations
- foreign operations' translation differences	-	-	-	71	-	71
- net investment hedges	-	-	-	(37)	-	(37)
Associates and joint ventures
-changes in the share of other comprehensive income,
net of tax	-	-	(33)	-	-	(33)
Preferred securities' dividend paid and buy back, net
of tax	-	-	-	-	(2)	(2)
Balance at 31 December 2018	384	943	95	6,375	(11,506)	(3,709)
Balance at 1 January 2019	384	943	95	6,375	(11,506)	(3,709)
					127	127
Net profit Transfers between reserves	-	-	-	-
	2	1	-	(0)	(3)	-
Merger with Grivalia Properties REIC (note 23.2)	9	-	-	549	332	890
Debt securities at FVOCI	-	-	415	-	-	415
Cash flow hedges	-	-	-	(5)	-	(5)
Foreign currency translation	-	-	-	2	-	2
Associates and joint ventures
-changes in the share of other comprehensive income,
net of tax	-	-	47	0	-	47
Actuarial gains/(losses) on post employment benefit
obligations, net of tax	-	-	-	(4)	-	(4)
Preferred securities' redemption and dividend paid,
net of tax	-	-	-	-	(4)	(4)
Balance at 31 December 2019	395	944	557	6,917	(11,054)	(2,241)

(1) It includes mainly the amounts related to the Group's operations in Romania, which were disposed in 2018 (note 30).

As at 31 December 2019, other reserves mainly comprise: (a) € 5,579 million, referring to the Bank, pursuant to the corporate law in force (currently article 31 of Law 4548/2018), which can be only either capitalized or offset against losses carried forward (2018: € 5,579 million), (b) € 1,126 million, referring to the Bank, also pursuant to the corporate law in force (currently article 35 of Law

4548/2018), which is not distributable, but it can be either capitalized or offset against losses carried forward to the extent that these losses cannot be covered by designated reserves or other company funds for which loss absorption is provided in the corporate law (2018: € 578 million), (c) € 201 million accumulated loss relating to foreign operations' translation differences, including € 27 million accumulated gain relating to net investment hedging - NIH (2018: € 204 million accumulated loss, including € 27 million gain relating to NIH) and (d) € 42 million accumulated loss relating to cash flow hedging (2018: € 37 million loss).

Statutory reserves, fair value reserve and cash flow hedges are not distributable while non-taxed reserves are taxed when distributed.

Dividends

Based on the 2019 results in combination with the article 159 of Company Law 4548/2018, the distribution of dividends is not permitted. Under article 10 par. 3 of Law 3864/2010 for the "establishment of a Hellenic Financial Stability Fund", for as long the HFSF participates in the share capital of the Bank, the amount of dividends that may be distributed to shareholders of the Bank cannot exceed 35% of the profits as provided in article 161 par. 2 of Company Law 4548/2018.

39. Preferred securities

The movement of preferred securities issued by the Group through its Special Purpose Entity, ERB Hellas Funding Limited, for the years ended 31 December 2019 and 2018 is analyzed as follows:

	Series A	Series B	Series C	Series D	Total
	€ million	€ million	€ million	€ million	€ million
Balance at 1 January 2018	2	4	18	19	43
Buy Back	-	-	(1)	-	(1)
Balance at 31 December 2018	2	4	17	19	42
Balance at 1 January 2019	2	4	17	19	42
Redemption of preferred securities	-	(4)	(17)	(19)	(40)
Balance at 31 December 2019	2	-	-	-	2

All obligations of the issuer, in respect of the aforementioned issues of preferred securities, are guaranteed on a subordinated basis by the Bank. The analytical terms of each issue along with the rates and/or the basis of calculation of preferred dividends are available at the Bank's website. Following the redemption of the Greek State – owned preference shares (note 34) on 17 January 2018, and in accordance with the terms of the preferred securities, ERB Hellas Funding Ltd declared and paid, for the year ended 31 December 2019, the non-cumulative dividends of € 2.5 million (€ 2.1 million after tax) in total on the Series A, B, C and D. As at 31 December 2019, the dividend attributable to preferred securities holders amounted to € 2 million (€ 1.7 million, after tax).

In April 2019, the Board of Directors of ERB Hellas Funding decided to proceed with the redemption of all four series of the preferred securities issued. The relevant regulatory announcement of the company's intention was released on 23 April 2019. Accordingly, on 29 May, 21 June and 13 September 2019, a notice for the redemption of series C, B and D preferred securities was given to the holders. The notes were redeemed on 9 July, 2 August and 29 October 2019, respectively.

Post balance sheet event

On 23 January 2020, a notice for the redemption of series A preferred securities was given to the holders. Pursuant to its terms, the next available call date for the redemption of series A preferred securities is the 18 March 2020.

40. Transfers of financial assets

The Group enters into transactions by which it transfers recognized financial assets directly to third parties or to Special Purpose Entities (SPEs).

(a) The Group sells, in exchange for cash, securities under an agreement to repurchase them (repos) and assumes a liability to repay to the counterparty the cash received. In addition, the Group pledges, in exchange for cash, securities, covered bonds, as well as loans and receivables and assumes a liability to repay to the counterparty the cash received. The Group has determined that it retains substantially all the risks, including associated credit and interest rate risks, and rewards of these financial assets and therefore has not derecognized them. As a result of the above transactions, the Group is unable to use, sell or pledge the transferred assets for the

duration of the transaction. The related liability is recognized in Due to central banks and credit institutions (notes 31 and 32), Due to customers (note 33) and Debt securities in issue (note 34), as appropriate.

The Group enters into securitizations of various classes of loans (corporate, small and medium enterprise, consumer and various classes of non performing loans), under which it assumes an obligation to pass on the cash flows from the loans to the holders of the notes. The Group has determined that it retains substantially all risks, including associated credit and interest rate risks, and rewards of these loans and therefore has not derecognized them. As a result of the above transactions, the Group is unable to use, sell or pledge the transferred assets for the duration of their retention by the SPE. Moreover, the note holders' recourse is limited to the transferred loans. As at 31 December 2019, the securitizations' issues held by third parties amounted to € 943 million (2018: € 1,245 million) (note 34).

The table below sets out the details of Group's financial assets that have been sold or otherwise transferred, but which do not qualify for derecognition:

	Carrying amount
	2019 2018
	€ million	€ million
Securities held for trading	8	6
Loans and advances to customers	15,471	15,829
-securitized loans (1)	9,298	2,268
-pledged loans under covered bond program	4,630	5,014
-pledged loans with central banks	1,318	8,337
-other pledged loans	225	210
Investment securities	3,667	4,160
Total	19,146	19,995

(1) It includes securitized loans of issues held by the Bank, not used for funding, as well as loans under the Cairo securitizations (note 34).

(b) The Group may sell or re-pledge any securities borrowed or obtained through reverse repos and has an obligation to return the securities. The counterparty retains substantially all the risks and rewards of ownership and therefore the securities are not recognized by the Group. As at 31 December 2019, the Group had obtained through reverse repos securities of face value of € 374 million, sold under repurchase agreements with cash value of € 500 million (2018: € 117 million and € 123 million, respectively). Furthermore, as at 31 December 2019, the Group had obtained Greek treasury bills as collaterals for derivatives transactions with the Hellenic Republic of face value of € 1,870 million, sold under repurchase agreements with € 1,538 million cash value (2018: € 1,200 million and € 860 million, respectively).

As at 31 December 2019, the cash value of the assets transferred or borrowed by the Group through securities lending, reverse repo and other agreements (points a and b) amounted to € 9,659 million, while the associated liability from the above transactions amounted to € 9,448 million, of which € 1,607 million repo agreements offset in the balance sheet against reverse repo deals (notes 31, 32, 33, 34 and 5.2.1.4) (2018: cash value € 13,402 million and liability € 9,758 million, of which € 100 million repo agreements offset in the balance sheet). In addition, the Group's financial assets pledged as collaterals for repos, derivatives, securitizations and other transactions other than the financial assets presented in the table above are provided in notes 17 and 29.

41. Leases

Group as a lessee

Policy applicable after 1 January 2019

The Group leases office and branch premises, ATM locations, residential properties for the Group's personnel, and motor vehicles.

The majority of the Group's property leases are under long term agreements (for a term of 12 years or more in the case of leased real estate assets), with options to extend or terminate the lease according to the terms of each contract and the usual terms and conditions of commercial leases applicable in each jurisdiction, while motor vehicles generally have lease terms of up to 4 years. Extension options held by the Group are included in the lease term when it is reasonably certain that they will be exercised based on its assessment. For contracts having an indefinite remaining life as at 1 January 2019, the lease term has been determined at an

average of 7 years for the Bank, after considering all relevant facts and circumstances. Depending on the terms of each lease contract, lease payments are adjusted annually in line with the consumer Price Index, as published by the Greek Statistical Authority, plus an agreed fixed percentage.

Before the adoption of IFRS 16, these leases were classified as operating leases under IAS 17.

Information about the leases for which the Group is a lessee is presented below:

Right-of-Use Assets

As at 31 December 2019, the right-of-use assets included in property plant and equipment amounted to € 174 million (note 26), while those that meet the definition of investment property amounted to € 14 million (note 27).

Lease Liabilities

The lease liability included under other liabilities amounted to € 193 million as at 31 December 2019 (note 35). The maturity analysis of lease liabilities as at 31 December 2019, based on the contractual undiscounted cash flows, is presented in note 5.2.3.

Amounts recognised in profit or loss

Interest on lease liabilities is presented in note 6 and the lease expense relating to short term leases is ca. € 4 million. The operating lease expense under IAS 17 was € 54 million in 2018.

The Group had total cash outflows for leases of € 46 million in 2019.

Policy applicable before 1 January 2019

The Group has entered into commercial leases for premises, equipment and motor vehicles. The majority of the Group's leases are under long-term agreements, according to the usual terms and conditions of commercial leases of each jurisdiction, including renewal options. In particular, as provided by the Greek Commercial Leases Law currently in force, the minimum lease period for commercial real estate leases starting after the end of February 2014 is three years. Accordingly, non-cancellable lease payments are determined based on the said legal provisions and the relevant contractual terms.

The Group's lease agreements, do not include any clauses that impose any restriction on the Group's ability to pay dividends, engage in debt financing transactions or enter into further lease agreements.

Non-cancellable operating lease rentals were payable as follows:

	2018
	€ million
Not later than one year	33
Later than one year and no later than five years	67
Later than five years	34
Total	134

Group as a lessor

Finance lease

Policy applicable after 1 January 2019 (IFRS 16)

The Group leases out certain real estate properties and equipment under finance leases, in its capacity as a lessor.

The maturity analysis of finance lease receivables, based on the undiscounted lease payments to be received after the reporting date, is provided below:

	2019
	€ million

Not later than 1 year	21
1-2 years	15
2-3 years	10
3-4 years	8
4-5 years	6
Later than 5 years	19
Lease payments:	79
Unguaranteed residual values	892
Gross investment in finance leases	971
Less: unearned finance income	(65)
Net investment in finance leases	906
Less: Impairment allowance	(350)
Total	556

Policy applicable before 1 January 2019 (IAS 17)

Loans and advances to customers included finance lease receivables, as detailed below:

	2018
	€ million
Gross investment in finance leases receivable:
Not later than 1 year	499
Later than 1 year and not later than 5 years	232
Later than 5 years	457
	1,188
Unearned future finance income on finance leases	(80)
Net investment in finance leases	1,108
Less: Impairment allowance	(468)
Total	640
The net investment in finance leases is analysed as follows:
Not later than 1 year	483
Later than 1 year and not later than 5 years	194
Later than 5 years	431
	1,108
Less: Impairment allowance	(468)
Total	640

Operating Leases

Policy applicable after 1 January 2019 (IFRS 16)

The Group leases out its investment property under the usual terms and conditions of commercial leases applicable in each jurisdiction. When such leases do not transfer substantially all of the risks and rewards incidental to the ownership of the leased assets, the Group classifies these lease as operating leases. Information relating to operating leases of investment property, including the rental income recognised by the Group during the year, is provided in note 27.

The maturity analysis of operating lease receivables (mainly referring to the investment property portfolio acquired from Grivalia in 2019, note 23.2), based on the undiscounted lease payments to be received after the reporting date, is provided below:

	2019
	€ million
Not later than one year	70
One to two years	66
Two to three years	62
Three to four years	50
Four to five years	44
More than five years	246
Total	538

Policy applicable before 1 January 2019

Non-cancellable operating lease rentals were receivable as follows:

	2018
	€ million
Not later than one year	4
Later than one year and no later than five years	12
Later than five years	3
Total	19

There were no material future minimum sublease payments to be received under non cancellable subleases.

42. Contingent liabilities and other commitments

The Group presents the credit related commitments it has undertaken within the context of its lending related activities into the following three categories: a) financial guarantee contracts, which refer to guarantees and standby letters of credit that carry the same credit risk as loans (credit substitutes), b) commitments to extend credit, which comprise firm commitments that are irrevocable over the life of the facility or revocable only in response to a material adverse effect and c) other credit related commitments, which refer to documentary and commercial letters and other guarantees of medium and low risk according to the Regulation No 575/2013/EU.

Credit related commitments are analyzed as follows:

	2019	2018
	€ million	€ million
Financial guarantee contracts	723	715
Commitments to extend credit	1,115	580
Other credit related commitments	507	406
Total	2,345	1,701

The analyses per stage of all the credit related commitments within the scope of IFRS 9 impairment requirements amounting to € 5.3 billion (2018: € 4.7 billion), including revocable loan commitments of € 3 billion (2018: € 3 billion), and the corresponding allowance for impairment losses of € 64 million (2018: € 58 million) are provided in the note 5.

In addition, the Group has issued a sovereign risk financial guarantee of € 0.24 billion (2018: € 0.24 billion) for which an equivalent amount has been deposited under the relevant pledge agreement (note 29).

Other commitments

(a) The Bank has signed irrevocable payment commitment and collateral arrangement agreements with the Single Resolution Board (SRB) amounting in total to € 13 million as at 31 December 2019 (2018: € 10 million), representing 15% of its resolution contribution payment obligation to the Single Resolution Fund (SRF) for the years 2016-2019.

According to the agreements, which are backed by cash collateral of an equal amount, the Bank undertook to pay to the SRB an amount up to the above irrevocable payment commitment, in case of a call and demand for payment made by it, in relation to a resolution action. The said cash collateral has been recognized as a financial asset in the Group's balance sheet (note 29).

(b) As at 31 December 2019, the contractual commitments for the acquisition of own used property, equipment and intangible assets amounted to € 29 million (2018: € 18 million).

In addition, the Group has assumed a contractual obligation amounting to ca. € 120 million as at 31 December 2019 (2018: nil) relating to future purchase of investment property.

Post balance sheet event

In March 2020, the Group fulfilled the aforementioned obligation and proceeded to the purchase of four real-estate properties leased to Sklavenitis Group. Consideration paid amounted to ca. € 117 million, while the payment of an amount of ca. € 2 million is contingent to specific conditions.

Legal proceedings

As at 31 December 2019, a provision of € 59 million has been recorded for a number of legal proceedings outstanding against the Group (2018: € 56 million). The said amount includes € 34 million for an outstanding litigation related to the acquisition of New TT Hellenic Postbank S.A. in 2013 (2018: € 34 million).

Furthermore, in the normal course of its business, the Group has been involved in a number of legal proceedings, which are either at still a premature or at an advanced trial instance. The final settlement of these cases may require the lapse of a certain time so that the litigants exhaust the legal remedies provided for by the law. Management, having considered the advice of the Legal Services General Division, does not expect that there will be an outflow of resources and therefore does not acknowledge the need for a provision.

Against the Bank various legal remedies and redresses have been filed amongst others in the form of lawsuits, applications for injunction measures, motions to vacate payment orders and appeals in relation to the validity of clauses for the granting of loans in Swiss Francs. As to certain aspects of Swiss Francs loans there was a pending lawsuit before the Supreme Court at plenary session which was initiated from an individual lawsuit. The Decision issued on 18 April 2019 was in favour of the Bank.

A class action has also been filed by a consumer union. To date the vast majority of the judgments issued by the first instance and the appellate Courts have found in favour of the Bank's positions. On the class action, a judgment of the Athens Court of Appeals was issued in February 2018, which was in favour of the Bank and rejected the lawsuit on its merits. The judgment has been challenged by the consumer unions with an appeal which was scheduled to be heard before the Supreme Court on 20 May 2019. This hearing was cancelled due to the elections held on 26 May 2019. The appeal was heard on 13 January 2020 and the decision is pending to be issued.

In any event, the Management of the Bank is closely monitoring the developments to the relevant cases so as to ascertain potential accounting implications in accordance with the Group's accounting policies.

43. Operating segment information

Management has determined the operating segments based on the internal reports reviewed by the Strategic Planning Committee that are used to allocate resources and to assess their performance in order to make strategic decisions. The Strategic Planning Committee considers the business both from a business unit and geographic perspective. Geographically, management considers the performance of its business activities originated from Greece and other countries in Europe (International). Greece is further

segregated into retail, corporate, wealth management, global and capital markets and, as of the second quarter 2019, investment property. International is monitored and reviewed on a country basis. The Group aggregates segments when they exhibit similar economic characteristics and profile and are expected to have similar long-term economic development.

The Group is organized in the following reportable segments:

Retail: incorporating customer current accounts, savings, deposits and investment savings products, credit and debit cards, consumer loans, small business banking and mortgages.
Corporate: incorporating current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products to corporate entities, custody, equity brokerage, cash management and trade services.
Wealth Management: incorporating private banking services to medium and high net worth individuals, mutual fund and investment savings products, institutional asset management and the Group's share of results of Eurolife Insurance group.
Global and Capital Markets: incorporating investment banking services including corporate finance, merger and acquisitions advice, financial instruments trading and institutional finance to corporate and institutional entities, as well as, specialized financial advice and intermediation to private and large retail individuals as well as small and large corporate entities.
International: incorporating operations in Bulgaria, Serbia, Cyprus, Luxembourg and Romania (the operations of the Romanian disposal group are included until 31 March 2018, note 30).
Investment Property: As of the second quarter of 2019, following the merger of the Bank with Grivalia, the investment property activities (Bank, Eurobank Ergasias Leasing S.A. and former Grivalia group) relating to a diversified portfolio of commercial assets, with high yield on prime real estate assets, in the office, retail, logistics, infrastructure and hospitality sectors, are monitored as a separate Group segment. As at 31 December 2018, the investment property portfolios of Eurobank Ergasias Leasing S.A. amounting to € 44 million and of the Bank amounting to € 32 million were included in Corporate and other operations segments respectively, while their results for the year 2018 were immaterial, therefore comparative information has not been adjusted.

Other operations of the Group refer mainly to property management (including repossessed assets) and other investing activities.

The Group's management reporting is based on International Financial Reporting Standards (IFRS) as adopted by the EU. The accounting policies of the Group's operating segments are the same with those described in the principal accounting policies.

Revenues from transactions between business segments are allocated on a mutually agreed basis at rates that approximate market prices.

	31 December 2019
				Global &			Other and
			Wealth	Capital	Investment		Elimination
	Retail		Corporate Management	Markets		Property International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	509	302	12	222	(12)	381	(37)	1,377
Net commission income	67	70	30	21	0	103	3	294
Other net revenue	(2)	27	0	29	113	30	(24)	173
Total external revenue	574	399	42	272	101	514	(58)	1,844
Inter-segment revenue	17	13	1	(22)	1	(5)	(5)	-
Total revenue	591	412	43	250	102	509	(63)	1,844
Operating expenses	(430)	(118)	(23)	(75)	(21)	(224)	(10)	(901)
Impairment losses relating to loans
and advances to customers	(399)	(130)	(0)	-	-	(95)	-	(624)
Impairment losses on goodwill	-	-	-	-	(62)	-	-	(62)
Other impairment losses and
provisions (note 12)	(8)	(2)	(0)	33	(2)	(6)	(47)	(32)
Share of results of associates and
joint ventures	(0)	0	20	-	3	(0)	0	23
Profit/(loss) before tax from continuing
operations before restructuring costs	(246)	162	40	208	20	184	(120)	248
Restructuring costs (note 12)	(19)	(3)	(0)	(0)	-	(17)	(49)	(88)
Profit/(loss) before tax from
continuing operations	(265)	159	40	208	20	167	(169)	160
Loss before tax from
discontinued operations	-	-	-	-	-	(3)	(0)	(3)
Non controlling interests	-	-	-	-	-	(0)	0	0
Profit/(loss) before tax attributable
to shareholders	(265)	159	40	208	20	164	(169)	157

43.1 Operating segments

149 | Page 31 December 2019 Consolidated Financial Statements

		31 December 2019
			Global &				Other and
			Wealth	Capital	Investment		Elimination
	Retail (3)		Corporate Management	Markets		Property International	center (1), (3)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets	20,029	13,515	111	14,464	1,216	15,057	369	64,761
Segment liabilities	25,302	7,368	2,062	8,307	202	13,484	1,369	58,094

The International segment is further analyzed as follows:

		31 December 2019
	Romania	Bulgaria	Serbia		Cyprus Luxembourg	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	12	184	58	103	24	381
Net commission income	(2)	54	14	28	9	103
Other net revenue	0	23	2	2	3	30
Total external revenue	10	261	74	133	36	514
Inter-segment revenue	(1)	1	(1)	(0)	(4)	(5)
Total revenue	9	262	73	133	32	509
Operating expenses	(7)	(109)	(50)	(39)	(19)	(224)
Impairment losses relating to loans and advances to customers	(16)	(42)	(26)	(11)	0	(95)
Other impairment losses and provisions	-	(4)	(1)	(1)	0	(6)
Share of results of associates and joint ventures	(0)	-	(0)	-	-	(0)
Profit/(loss) before tax from continuing operations
before restructuring costs	(14)	107	(4)	82	13	184
Restructuring costs (note 12)	-	(17)	-	-	-	(17)
Profit/(loss) before tax from continuing operations	(14)	90	(4)	82	13	167
Loss before tax from discontinued operations	(3)	-	-	-	-	(3)
Non controlling interests	-	(0)	(0)	-	-	(0)
Profit/(loss) before tax attributable to shareholders	(17)	90	(4)	82	13	164

	31 December 2019
	Romania	Bulgaria Serbia Cyprus Luxembourg				International
	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets(2)	363	5,550	1,510	6,260	1,374	15,057
Segment liabilities(2)	530	4,966	1,101	5,698	1,189	13,484

	31 December 2018 restated
				Global &		Other and
			Wealth	Capital		Elimination
	Retail	Corporate	Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	570	329	10	223	337	(53)	1,416
Net commission income	53	81	27	49	87	1	298
Other net revenue (note 2.3.2)	7	9	0	94	3	5	118
Total external revenue	630	419	37	366	427	(47)	1,832
Inter-segment revenue	15	16	5	(26)	(4)	(6)	-
Total revenue	645	435	42	340	423	(53)	1,832
Operating expenses (note 2.3.2)	(448)	(121)	(23)	(76)	(191)	(15)	(874)
Impairment losses relating to loans and
advances to customers	(409)	(208)	1	(0)	(64)	(0)	(680)
Other impairment losses and
provisions (note 2.3.2)	(3)	(3)	0	15	(5)	(13)	(9)
Share of results of associates and joint ventures	0	(0)	29	-	(0)	(0)	29
Profit/(loss) before tax from continuing operations
before restructuring costs	(215)	103	49	279	163	(81)	298
Restructuring costs (note 12)	(33)	(4)	(1)	(0)	(1)	(23)	(62)
Profit/(loss) before tax from continuing operations	(248)	99	48	279	162	(104)	236
Profit/(loss) before tax from discontinued operations	-	-	-	-	(113)	43	(70)
Non controlling interests	-	-	-	-	(0)	(0)	(0)
Profit/(loss) before tax attributable to shareholders	(248)	99	48	279	49	(61)	166

		31 December 2018 restated
				Global &		Other and
			Wealth	Capital		Elimination
	Retail	Corporate	Management	Markets	International	center (1)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets (note 2.3.2)	21,330	13,086	222	10,291	12,397	671	57,997
Segment liabilities (note 2.3.2)	24,582	6,054	1,773	8,021	11,004	1,520	52,954

	31 December 2018 restated
	Romania	Bulgaria	Serbia	Cyprus	Luxembourg	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	10	154	60	90	23	337
Net commission income	(2)	42	15	24	8	87
Other net revenue (note 2.3.2)	1	(6)	2	4	2	3
Total external revenue	9	190	77	118	33	427
Inter-segment revenue	(0)	(0)	(1)	(0)	(3)	(4)
Total revenue	9	190	76	118	30	423
Operating expenses (note 2.3.2)	(7)	(88)	(48)	(31)	(17)	(191)
Impairment losses relating to loans and advances to customers	(10)	(35)	(8)	(11)	0	(64)
Other impairment losses and provisions (note 2.3.2)	(1)	(0)	(3)	(1)	(0)	(5)
Share of results of associates and joint ventures	(0)	-	(0)	-	-	(0)
Profit/(loss) before tax from continuing operations before
restructuring costs	(9)	67	17	75	13	163
Restructuring costs	-	-	-	(1)	-	(1)
Profit/(loss) before tax from continuing operations	(9)	67	17	74	13	162
Loss before tax from discontinued operations	(113)	-	-	-	-	(113)
Non controlling interests	(0)	(0)	(0)	-	-	(0)
Profit/(loss) before tax attributable to shareholders	(122)	67	17	74	13	49

	31 December 2018 restated

	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets(2) (note 2.3.2)	425	4,015	1,442	5,457	1,343	12,397
Segment liabilities(2)	580	3,550	1,039	4,969	1,155	11,004

(1) Interbank eliminations between International and the other Group's segments are included.

(2) Intercompany balances among the Countries have been excluded from the reported assets and liabilities of International segment.

(3) Following the completion of the Pillar transaction, the loans of the retail segment were decreased by € 1,142 million and those of the other segment were increased by € 1,062 million (note 20).

43.2 Entity wide disclosures

Breakdown of the Group's revenue from continuing operations for each group of similar products and services is as follows:

		2018
	2019	restated
	€ million	€ million

Lending related activities	1,626	1,728
Deposits, network and asset management activities	(61)	(64)
Capital markets	167	172
Non banking and other services (note 2.3.2)	112	(4)
Total	1,844	1,832

Information on the Country by Country Reporting based on Law 4261/2014 is provided in the Appendix.

44. Corporate Transformation-Hive down

Romania Bulgaria Serbia Cyprus Luxembourg International In November 2018, the Bank announced its transformation plan, which includes the Merger with Grivalia (note 23.2) and the non performing loans' (NPEs) reduction Acceleration Plan comprising the following steps: a) the securitisation of ca. € 2 billion of NPEs, through the issue of senior, mezzanine and junior notes and the sale of the 95% of the above mentioned mezzanine and junior notes to a third party investor resulting to the de-recognition of the respective securitized NPEs from the Bank's balance sheet (project Pillar, note 20), b) the securitization of ca. € 7.5 billion of NPEs, through the issue of senior, mezzanine and junior notes (project Cairo, note 34), c) the legal separation of the core and non-core operations of the Bank through the hive-down of the core operations to a new subsidiary (as further described below), d) the entry of a strategic investor into Financial Planning Services S.A. (FPS), the licensed 100% owned loan servicer of the Bank, including the Bank's Troubled Asset Group (note 30), e) the sale of a portion of Cairo mezzanine and junior notes to a third party investor (note 34) and, f) the contemplated de-recognition of the securitized NPEs through the disposal /distribution of the remaining Cairo mezzanine and junior notes, subject inter alia to corporate and regulatory approvals.

Hive down

On 28 June 2019, the BoD of the Bank ("Demerged Entity") decided the initiation of the hive down process of the banking business sector of Eurobank and its transfer to a new company-credit institution that will be established ("the Beneficiary").

On 31 July 2019, the BoD of the Bank approved the Draft Demerger Deed through the aforementioned hive down and establishment of a new company-credit institution, pursuant to Article 16 of Law 2515/1997 and Articles 57 (3) and 59-74 of Law 4601/2019, as currently in force. In particular, the demerger will involve the hive-down of the banking business sector of Eurobank, to which the assets and the liabilities are included, as described on the transformation balance sheet of the hived-down sector as at 30 June 2019 ("Transformation Date"). All actions that have taken place after the Transformation Date and concern the hived down sector shall be treated as occurring on behalf of the Beneficiary. As of 9 August 2019, the Draft Demerger Deed of the Bank is available on its website as well as the website of the General Commercial Registry.

The Demerged Entity will maintain activities and assets that are not related to the main banking activities but are mainly related to the strategic planning of the administration of non-performing loans and the provision of services to the Group companies and third parties. Furthermore, the Demerged Entity will retain the majority stake of Cairo mezzanine and junior notes , the preferred securities (note 39) and participations in certain subsidiaries including Be Business Exchanges S.A. and real estate companies related to projects Pillar and Cairo. In case of any assets or liabilities that will not be possible to be transferred, in the context of the above mentioned Draft Demerger Deed, the Demerged Entity will undertake the obligation to collect or liquidate the assets in accordance with the Beneficiary's instructions whereas the Beneficiary will undertake the obligation to indemnify the Demerged Entity for the settlement of the liabilities including any arising costs or losses.

On 31 January 2020, the Bank's Extraordinary General Meeting (EGM) resolved, among others: a) the approval of the aforementioned demerger of Eurobank through the business banking sector's hive down and the establishment of a new company-credit institution under the corporate name "Eurobank S.A.", b) the approval of the Draft Demerger Deed as well as the Articles of Association of the Beneficiary, as they were approved by the Bank's BoD and c) the adjustment of the Articles of Association of the Demerged Entity which will cease to be a credit institution by amending its object and corporate name, as was also approved by the Bank's BoD.

Upon the completion of the demerger (i.e. the date of registration with the General Commercial Registry of the relevant approval by the competent Authority), the following shall take place: a) The Beneficiary will be incorporated and the Demerged Entity shall become the shareholder of the Beneficiary by acquiring all the shares issued by the Beneficiary and more specifically 3,683,244,830 common registered shares, of a nominal value of € 1.10 each and b) the Beneficiary will substitute the Demerged Entity, by way of universal succession, to all the transferred assets and liabilities, as set out in the transformation balance sheet of the hived down sector and formed up to the completion of the demerger.

The completion of the demerger is expected take place by the end of March 2020, subject to the receipt of the necessary approvals by the competent Authorities.

45. Post balance sheet events

Details of other post balance sheet events are provided in the following notes:

Note 2.1 - Basis of preparation Note 4 – Capital Management Note 5.2 - Financial risk factors Note 23.1 – Shares in subsidiaries Note 24 - Investments in associates and joint ventures Note 34 – Debt securities in issue Note 39 – Preferred securities Note 42 - Contingent liabilities and other commitments Note 44 - Corporate Transformation-Hive down

46. Related parties

In May 2019, following the increase of the share capital of the Bank in the context of the merger with absorption of Grivalia Properties REIC (note 23.2), the percentage of the Bank's ordinary shares with voting rights held by the Hellenic Financial Stability Fund (HFSF) decreased from 2.38% to 1.40%. The HFSF is still considered to have significant influence over the Bank pursuant to the provisions of the Law 3864/2010, as in force, and the Relationship Framework Agreement (RFA) the Bank has entered into with the HFSF. Further information in respect of the HFSF rights based on the aforementioned framework is provided in the section "Report of the Directors and Corporate Governance Statement" of the Annual Financial Report for the year ended 31 December 2019.

A number of banking transactions are entered into with related parties in the normal course of business and are conducted on an arm's length basis. These include loans, deposits and guarantees. In addition, as part of its normal course of business in investment banking activities, the Group at times may hold positions in debt and equity instruments of related parties.

The outstanding balances of the transactions with (a) the key management personnel (KMP) and the entities controlled or jointly controlled by KMP as well as (b) the associates and joint ventures, and the relating income and expenses are as follows:

	31 December 2019		31 December 2018
	KMP(1) and Entities		KMP(1) and Entities
	controlled or jointly	Associates and	controlled or jointly	Associatesand
	controlled by KMP	joint ventures	controlled by KMP	joint ventures
	€ million	€ million	€ million	€ million
Loans and advances to customers	6.20	24.59	7.20	18.74
Other assets	-	9.81	-	6.88
Due to customers	20.34	47.75	14.79	45.13
Other liabilities	0.04	3.76	0.03	2.52
Net interest income	(0.03)	(3.90)	0.02	(5.55)
Net banking fee and commission income	0.02	17.22	0.03	12.23
Net trading income	-	0.25	-	0.23
Gains less losses from investment securities	-	-	-	0.31
Impairment losses relating to loans and
advances including relative fees	-	(4.53)	-	(22.14)
Other operating income/(expenses) (2)	(7.61)	(23.84)	-	(23.96)
Guarantees issued	0.01	2.00	-	-
Guarantees received	0.03	-	0.03	-

(1) Includes the key management personnel of the Group and their close family members.

(2) The amount of € 7.61 million reported for entities controlled by KMP is related to the services agreement with Grivalia Management Company S.A. (note 23.2).

For the year ended 31 December 2019, there were no material transactions with the HFSF. In addition, as at 31 December 2019 the loans, net of provisions, granted to non consolidated entities controlled by the Bank pursuant to the terms of the relevant share pledge agreements amounted to € 3 million (2018: € 3.3 million).

For the year ended 31 December 2019, a reversal of impairment of € 0.1 million (2018: an impairment loss of € 16.5 million) has been recorded against loan balances with Group's associates and joint ventures, while the respective impairment allowance amounts to € 0.5 million (2018: € 0.6 million). In addition, as at 31 December 2019, the fair value adjustment for loans to Group's associates and joint ventures measured at FVTPL amounts to € 17.7 million.

Following the completion of the merger of Eurobank with Grivalia Properties REIC (note 23.2), Fairfax group has increased its percentage holding in the Bank's share capital, which as at 31 December 2019 stands at 31.27%. As at 31 December 2019, the Group's outstanding balances of the transactions with Fairfax group mainly refer to loans granted of € 3.3 million, deposits received of € 3.7 million and guarantees issued of € 0.4 million.

Key management compensation (directors and other key management personnel of the Group)

Key management personnel are entitled to compensation in the form of short-term employee benefits of € 6.90 million (2018: € 6.97 million) and long-term employee benefits of € 1.05 million (2018: € 1.58 million). In addition, as at 31 December 2019, the defined benefit obligation for the KMP amounts to € 1.70 million (2018: € 1.68 million), while the respective cost for the year through the income statement amounts to € 0.29 million and the actuarial loss through the other comprehensive income amounts to € 0.17 million (2018: € 0.09 million through the income statement).

47. External Auditors

The Bank has adopted a Policy on External Auditors' Independence which provides amongst others, for the definition of the permitted and non-permitted services the Group auditors may provide further to the statutory audit. For any such services to be assigned to the Group's auditors there are specific controlling mechanisms in order for the Bank's Audit Committee to ensure there is proper balance between audit and non-audit work.

The total fees of the Group's principal independent auditor "KPMG Certified Auditors", along with the KPMG network, for audit and other services provided are analyzed as follows:

2019	2018
€ million	€ million

Statutory audit (1) (2.3)	(2.4)
Tax certificate (0.4)	(0.3)
Other audit related assignments (0.6)	(0.2)
Non audit assignments (0.2)	(0.1)
Total (3.5)	(3.0)

(1) Includes fees for statutory audit of the annual standalone and consolidated financial statements.

It is noted that the non-audit assignments fees of "KPMG Certified Auditors A.E." Greece, statutory auditor of the Bank, amounted to € 0.2 million.

48. Board of Directors

Further to that:

The BoD by its decisions dated 29 March and 1 April 2019, appointed Mr. George Zanias as new non-executive Director and Chairman of the BoD in replacement of the resigned Chairman Mr. N. Karamouzis. The appointment of Mr. George Zanias was announced to the Extraordinary General Meeting of the Shareholders of the Bank (EGM) held on 5 April 2019 and his term of office will expire concurrently with the term of office of the other members of the BoD.
Following the resignation of Ms. Lucrezia Reichlin, effective as of 1 April 2019, the BoD of the Bank decided on 1 April 2019 not to replace her and the continuation of the management and representation of the Bank by the BoD without her replacement.
The EGM of the Shareholders of the Bank held on 5 April 2019 approved the appointment of Mr. Nikolaos Bertsos as new independent non-executive member of the Bank's BoD, whose term of office will expire concurrently with the term of office of the other members of the BoD. Same day (5 April 2019), the BoD decided its constitution as a body.
The BoD by its decision dated 31 July 2019, appointed Mr. Konstantinos Angelopoulos as the new representative of the HFSF to Eurobank's BoD in replacement of the resigned Ms. Aikaterini Beritsi, according to the provisions of Law 3864/2010 and the Relationship Framework Agreement signed between Eurobank and HFSF.
The BoD by its decision dated 16 December 2019, appointed Mr. Dimitrios Miskou as the new representative of the HFSF to Eurobank's BoD in replacement of the departing Mr. Konstantinos Angelopoulos, according to the provisions of Law 3864/2010 and the Relationship Framework Agreement signed between Eurobank and HFSF.

Following the above, the BoD is as follows:

G. Zanias	Chairman, Non-Executive
G. Chryssikos	Vice Chairman, Non-Executive
F. Karavias	Chief Executive Officer
S. Ioannou	Deputy Chief Executive Officer
T. Kalantonis	Deputy Chief Executive Officer
K. Vassiliou	Deputy Chief Executive Officer
B. P. Martin	Non-Executive
N. Bertsos	Non-Executive Independent
R. Boucher	Non-Executive Independent
R. Kakar	Non-Executive Independent
J. Mirza	Non-Executive Independent
G. Myhal	Non-Executive Independent
D. Miskou	Non-Executive (HFSF representative under Law 3864/2010)

Athens, 12 March 2020

CHAIRMAN OF THE BOARD OF DIRECTORS

Georgios P. Zanias Fokion C. Karavias Harris V. Kokologiannis I.D. No ΑI - 414343 I.D. No ΑΙ - 677962 I.D. No AN - 582334 CHIEF EXECUTIVE OFFICER GENERAL MANAGER OF GROUP FINANCE GROUP CHIEF FINANCIAL OFFICER

APPENDIX – Disclosures under Law 4261/2014

Country by Country Reporting

Pursuant to article 81 of Law 4261/2014, which incorporated article 89 of Directive 2013/36/EC into the Greek legislation, the Group provides the following information for each country in which it has an establishment:

(i) Names, nature of activities and geographical location.
(ii) The operating income (turnover), the profit/(loss) before tax, the tax on profit/ (loss) and the current tax on a consolidated basis for each country; intercompany transactions among countries are eliminated through the line 'Intra-Group amounts'. The amounts disclosed are prepared on the same basis as the Group's financial statements for the year ended 31 December 2019.
(iii) The number of employees on a full time equivalent basis.
(iv) The public subsidies received.

For the listing of the Bank's subsidiaries at 31 December 2019, the country of their incorporation and the line of their business refer to note 23.1.

The information per country is set out below:

		Year ended 31 December 2019
	Operating	Profit/(loss)	Tax on		Number of
	income	before tax	profit/(loss)	Current tax	employees at
	€ million	€ million	€ million	€ million	31 December
Greece	1,355.5	(33.8)	(2.7)	(12.1)	8,553
Bulgaria	260.1	92.4	(8.3)	(9.4)	3,113
Romania	(1.7)	(7.5)	(0.6)	(0.3)	19
Cyprus	109.0	60.8	(14.5)	(14.5)	414
Serbia	73.4	0.2	1.9	0.9	1,247
Luxembourg (1)	44.0	22.0	(4.9)	(4.6)	103
Turkey	0.2	0.1	(0.7)	(0.7)	-
Netherlands	2.2	0.2	(0.8)	(0.8)	-
Other countries (2)	2.2	2.1	-	-	7
Intra-Group amounts	(1.1)	-	-	-
Total from continuing operations	1,843.8	136.5	(30.6)	(41.5)	13,456
Romanian disposal group (3)	-	(3.3)	1.1	-
Total from discontinued operations		(3.3)	1.1	-
Total	1,843.8	133.2	(29.5)	(41.5)	13,456

(1) The operations of Eurobank Private Bank Luxembourg S.A.'s branch in London are included within Luxembourg.

(2) Amounts reported under 'Other countries' refer to (a) the Group's SPVs issuing EMTNs and preferred securities i.e. ERB Hellas Plc in the United Kingdom, ERB Hellas (Cayman Islands) Ltd in Cayman Islands and ERB Hellas funding Ltd in Channel Islands and (b) a holding company, Berberis investments Ltd in Channel Islands.

(3) For further details regarding the Romanian disposal group refer to note 30 'Disposal groups classified as held for sale and discontinued operations'.

For the year ended 31 December 2019, none of the Bank's subsidiaries has received any public subsidy.

Article 82 of Law 4261/2014

For 2019, the Group's return on assets (RoA) was 0.21%. RoA is calculated by dividing the net profit for the year ended 31 December 2019 by the Group's average total assets for the year.

V. Ιndependent Auditor's Report (on the Financial Statements of the Bank)

KPMG Certified Auditors S.A. 3 Stratigou Tombra Street Aghia Paraskevi 153 42 Athens, Greece Telephone: +30 210 60 62 100 Fax: +30 210 60 62 111

Independent Auditor's Report

To the Shareholders of Eurobank Ergasias S.A.

Report on the Audit of the financial statements

Opinion

We have audited the accompanying financial statements of Eurobank Ergasias S.A. (the "Bank") which comprise the Balance Sheet as at 31 December 2019, the statements of Income and Comprehensive Income, Changes in Equity and Cash Flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Eurobank Ergasias S.A. as at 31 December 2019 and its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISA), which have been incorporated in Greek legislation. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the financial statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants, as it has been incorporated into Greek legislation, and the ethical requirements that are relevant to the audit of the financial statements in Greece and we have fulfilled our ethical responsibilities in accordance with the requirements of the applicable legislation and the aforementioned Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters, that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters and the relevant significant assessed risks of material misstatement were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Allowance for credit losses

Refer to Note 2.2.13 and 3.1 to the financial statements. Total impairment charge for loans and advances to customers for the year amounted to EUR 529 million (2018: 606 million). Total estimated credit losses as of 31 December 2019 amounted to EUR 6 466 million (2018: 7 967 million).

The key audit matter	How this matter was addressed in our audit manner
The estimation of expected credit losses (ECL) on loans and advances to customers involves significant judgment and estimates.	Our audit procedures included, among others:
The carrying value of financial instruments within the scope of IFRS 9 ECL may be materially misstated if judgments or estimates made by the Bank are inappropriate.
The most significant areas where we identified greater levels of management judgment in the Bank's estimation of ECLs and therefore required greater levels of audit focus are:
Significant Increase in Credit Risk (SICR) –the identification of qualitative indicators for identifying a significant increase in credit risk is highly judgmental and can materially impact the ECL recognized for facilities with a tenor greater than 12 months as these determine whether a	Control design, observation and operation:
	We tested the design, implementation and operating effectiveness of key controls relating to the assessment and calculation of material SICR indicators and criteria.

	12 month or lifetime provision is	Assessing application of methodology:
	recorded.	We obtained a selection of loans to test the appropriateness of classification made by management.
		We involved our financial risk management specialists to assist us in assessing the appropriateness of material models used by the Bank. For these models:
		a) we assessed the model methodology, the key assumptions and the mathematical accuracy of the model.
		b) reperformed certain aspects of the model validation and independently evaluated model monitoring results arising in the year. We have also challenged the completeness and accuracy of material post model adjustments calculated to address areas of identified model underperformance.

B.	Complex ECL models –inherently	Control design, observation and
	judgmental modelling techniques are used to estimate ECLs which involves determining Probabilities of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD).	operation: We tested the design, implementation and operating effectiveness of key controls relating to management's approval of IFRS 9 impairment calculations.
C.	Individually assessed stage 3 exposures carrying value –the carrying value of loans and	Assessing individual exposures: We selected a sample (based on quantitative thresholds) of large clients identified by the Bank as stage 3.
	advances to customers, may be materially misstated if individual impairments are not appropriately identified and estimated. The identification of impaired assets	We obtained the Bank's assessment of the recoverability of these exposures and challenged whether individual impairment provisions, or lack of, were appropriate.
	and the estimation of impairment are highly judgmental. We have identified, estimation of future cash flows, valuation of collateral and probability weighting of scenarios to be the assumptions with high	Our procedures focused on the underlying recovery scenarios and assumptions, and the weighting applied to each scenario. On a case-by-case basis we: 

	scenarios and corroboration to evidence.
	 Tested collateral valuations through inspecting valuation reports by using our own real estate experts.
	 Confirmed that underlying data driving assumptions was accurate by agreeing to source documents such as loan agreements.
Disclosures: The disclosures regarding the Bank's application of IFRS 9 are key to explaining the key judgements and material inputs to the IFRS 9 ECL results.	We assessed whether the disclosures appropriately disclose and address the uncertainty which exists when determining the expected credit losses.
Recoverability of deferred tax assets
Refer to Note 2.2.16 (ii) and 3.4 to the financial statements. Total deferred tax recognized as of 31 December 2019 amounted to EUR 4 754 million (2018: EUR 4 901 million).
The key audit matter	How the matter was addressed in our audit
Recognition and measurement of deferred tax assets requires judgement and besides objective factors also numerous estimates regarding future taxable profit and the recoverability of temporary differences.	Our audit procedures included, among others: Based on our understanding of the applicable tax laws and regulations to the Bank we performed substantive audit procedures with the assistance of KPMG
Management's assessment regarding whether there will be sufficient tax profits requires significant judgments and estimates such as:	tax specialists. We performed substantive audit procedures that include but is not limited to:
— Assumptions based on the business plan of the Bank regarding future performance that will generate tax profits in the future.	— Assessment of the appropriateness of parameters applied to the business plans, — We tested the adjustments performed by management to calculate taxable
— Estimates that cover the time

In addition, we assessed the historical accuracy of management's assumptions by comparing them to actual results reported.

Use of IT systems relevant to the financial information

The key audit matter

How the matter was addressed in our
audit

The Bank's financial reporting
processes are highly reliant on
information produced by the Bank's
Information Technology (IT) systems,
and / or automated processes and
controls (i.e. calculations,
reconciliations) implemented in these
systems.
The nature, complexity and the
increased use of these information
systems combined with the large
volume of transactions being
processed daily, increase the risk over
the effective inter-connectivity of the IT
systems and data and the risk around
the degree of reliability of the financial
reporting information. The banking
environment is also subject to a
number of internal and external threats
relating to cyber security particularly
due to the significant increase in the
volume of transactions through
internet.
The above is a key audit matter as the
Bank's financial reporting systems rely
heavily on complex information
systems that process huge amount of
transactions and are functioning based
on the operating effectiveness of
internal controls in place to assure the
completeness and accuracy of
financial information and security
information of the Bank that produce
the financial information.

Our audit procedures included, among
others:
We assessed the information security
resilience of the Bank by evaluating the
design of key IT processes and controls
over financial reporting.
More specifically, involving our own
specialists, we assessed the
administration of access, changes and
daily IT operations for key layers of
underlying infrastructure (i.e. application,
operating system and database) for the
systems in scope of the audit, and tested
the operating effectiveness of the
processes and controls.
In addition, to place reliance on the system
generated information (i.e. data and
reports) and any automated controls (i.e.
calculations, reconciliations) implemented
in these systems, we have relied on
business process controls, and performed
additional substantive procedures as part
of our audit.

Derecognition of loans following transfer through securitization Refer to Note 20 to the financial statements. The key audit matter How the matter was addressed in our audit Due to the complexity of the transaction and the significance of the relating accounting effect we have considered derecognition of financial assets through securitisation as a key audit matter. Our audit procedures included, among others in order to evaluate Bank's position on derecognition of transferred loans: a) We examined relevant asset transfer agreements and other related legal documents including the operational agreement of the related securitization vehicles to ascertain whether the criteria for derecognition according to IFRS are met. b) We analysed the contractual terms, substantial assumptions and conditions to assess if the Bank retained control over the transferred loans. c) We reviewed and assessed the accounting policy and the accounting assessment of the Bank for the specific transaction. We examined the adequacy of the disclosures about this transaction in the financial statements.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Board of Directors' Report and the Declarations of the Members of the Board of Directors but does not include the financial statements and our Auditor's Report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the financial statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Audit Committee (article 44 of L. 4449/2017) of the Bank is responsible for overseeing the Bank's financial reporting process.

Auditor's Responsibilities for the Audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs which have been incorporated in Greek legislation will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, which have been incorporated in Greek legislation, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
Conclude on the appropriateness of Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. Additional Report to the Audit Committee

Our audit opinion on the financial statements is consistent with the Additional Report to the Audit Committee of the Bank dated 11 March 2020, pursuant to the requirements of article 11 of the Regulation 537/2014 of the European Union (EU).

2. Provision of non Audit Services

We have not provided to the Bank any prohibited non – audit services referred to in article 5 of regulation (EU) 537/2014.

The permissible non-audit services that we have provided to the Bank during the year ended 31 December 2019 are disclosed in Note 46 of the accompanying financial statements.

3. Appointment of Auditors

Athens, 13 March 2020

KPMG Certified Auditors S.A. AM SOEL 114

Harry Sirounis, Certified Auditor AM SOEL 19071

VΙ. Financial Statements οf the Bank for the year ended 31 December 2019

F I N A N C I A L S T A T E M E N T S

FOR THE YEAR ENDED

31 DECEMBER 2019

8 Othonos Street, Athens 105 57, Greece www.eurobank.gr, Tel.: (+30) 210 333 7000 General Commercial Registry No: 000223001000

Index to the Financial Statements Page
Balance Sheet 1
Income Statement 2
Statement of Comprehensive Income 3
Statement of Changes in Equity4
Cash Flow Statement5

1.	General information 6
2.	Basis of preparation and principal accounting policies 6
2.1	Basis of preparation6
2.2	Principal accounting policies12
2.3	Impact of significant changes in applying accounting policies34
3.	Critical accounting estimates and judgments in applying accounting policies37
4.	Capital Management 43
5.	Financial risk management and fair value 45
	5.2.1 Credit Risk 48
	5.2.2 Market risk78
	5.2.3 Liquidity risk80
	5.2.4 Interest Rate Benchmark reform - IBOR reform83
5.3	Fair value of financial assets and liabilities84
6.	Net interest income 88
7.	Net banking fee and commission income89
8.	Income from non banking services89
9.	Dividend income89
10.	Net trading income and gains less losses from investment securities 89
11.	Other income/ (expenses) 90
12.	Operating expenses90
13.	Other impairments, restructuring costs and provisions91
14.	Income tax 91
15.	Cash and balances with central banks95
16.	Cash and cash equivalents and other information on cash flow statement95
17.	Due from credit institutions96
18.	Securities held for trading96
19.	Derivative financial instruments and hedge accounting96
20.	Loans and advances to customers99
21.	Impairment allowance for loans and advances to customers102
22.	Investment securities104
23.	Shares in subsidiaries107

24.	Merger of Eurobank with Grivalia110
25.	Investment in associates and joint ventures 112
26.	Property, plant and equipment 113
27.	Investment property114
28.	Goodwill and other intangible assets 115
29.	Other assets116
30.	Assets of disposal groups classified as held for sale 116
31.	Due to central banks117
32.	Due to credit institutions117
33.	Due to customers117
34.	Debt securities in issue 117
35.	Other liabilities 119
36.	Standard legal staff retirement indemnity obligations120
37.	Share capital and share premium121
38.	Reserves and retained earnings121
39.	Hybrid capital122
40.	Transfers of financial assets122
41.	Leases 123
42.	Contingent liabilities and other commitments126
43.	Corporate Transformation-Hive down127
44.	Post balance sheet events 128
45.	Related parties128
46.	External Auditors130
47.	Board of Directors130

Balance Sheet

		31 December
		2019	2018
			Restated (1)
	Note	€ million	€ million
ASSETS
Cash and balances with central banks	15	2,626	397
Due from credit institutions	17	3,459	3,190
Securities held for trading	18	50	18
Derivative financial instruments	19	2,278	1,875
Loans and advances to customers	20	29,698	29,354
Investment securities	22	6,580	6,597
Shares in subsidiaries	23	1,855	1,753
Investments in associates and joint ventures	25	100	37
Property, plant and equipment	26	564	244
Investment property	27	721	39
Goodwill and other intangible assets	28	313	126
Deferred tax assets	14	4,754	4,901
Other assets	29	1,799	1,729
Assets of disposal groups classified as held for sale	30	49	20
Total assets		54,846	50,280
LIABILITIES
Due to central banks	31	1,900	2,050
Due to credit institutions	32	8,201	9,247
Derivative financial instruments	19	2,724	1,896
Due to customers	33	32,693	29,135
Debt securities in issue	34	2,390	2,697
Other liabilities	35	1,081	872
Total liabilities		48,989	45,897
EQUITY
Share capital	37	853	656
Share premium	37	8,056	8,056
Reserves and retained earnings	38	(3,054)	(4,371)
Hybrid capital	39	2	42
Total equity		5,857	4,383
Total equity and liabilities		54,846	50,280

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

Income Statement

		Year ended 31 December
		2019	2018
			Restated (1)
	Note	€ million	€ million

Interest income		1,701	1,807
Interest expense		(709)	(752)
Net interest income	6	992	1,055
Banking fee and commission income		243	271
Banking fee and commission expense		(96)	(86)
Net banking fee and commission income	7	147	185
Income from non banking services	8	42	6
Dividend income	9	142	123
Net trading income/(loss)	10	(24)	20
Gains less losses from investment securities	10	74	79
Other income/(expenses)	11	1	(7)
Operating income		1,374	1,461
Operating expenses	12	(654)	(665)
Profit from operations before impairments,
provisions and restructuring costs		720	796
Impairment losses relating to loans and
advances to customers	21	(529)	(606)
Impairment losses on goodwill	28	(62)	-
Other impairment losses and provisions	13	(41)	(76)
Restructuring costs	13	(69)	(58)
Profit before tax		19	56
Income tax	14	12	(23)
Net profit		31	33

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

Statement of Comprehensive Income

	Year ended 31 December
	2019		2018
			Restated (1)
	€ million		€ million
Net profit		31		33
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Cash flow hedges - changes in fair value, net of tax - transfer to net profit, net of tax	12 (17)	(5)	26 (21)	5
Debt securities at FVOCI - changes in fair value, net of tax (note 5.2.1.3 and 22) - transfer to net profit, net of tax (note 22)	696 (287)	409 404	(81) (85)	(166) (161)
Items that will not be reclassified to profit or loss: -Actuarial gains/ (losses) on post employment benefit obligations,net of tax		(4)		0
Other comprehensive income		400		(161)
Total comprehensive income		431		(128)

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

Statement of Changes in Equity

			Reserves and
	Ordinary	Share	Retained	Preference
	share capital	premium	earnings	shares	Hybrid capital	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Balance at 1 January 2018	656	8,056	(3,263)	950	43	6,442
Impact of adopting IFRS 9 at 1 January 2018 (note 2.3.3)	-	-	(982)	-	-	(982)
Restatement due to charge in accounting policy (note 2.3.2)	-	-	5	-	-	5
Balance at 1 January 2018, as restated	656	8,056	(4,240)	950	43	5,465
Net profit (restated note 2.3.2)	-	-	33	-	-	33
Other comprehensive income	-	-	(161)	-	-	(161)
Total comprehensive income for the year ended 31 December 2018	-	-	(128)	-	-	(128)
Redemption of preference shares	-	-	-	(950)	-	(950)
Hybrid capital's dividend paid and buy
back, net of tax	-	-	(2)	-	(1)	(3)
Merger with a Bank's subsidiary	-	-	(1)	-	-	(1)
	-	-	(3)	(950)	(1)	(954)
Balance at 31 December 2018	656	8,056	(4,371)	-	42	4,383
Balance at 1 January 2019	656	8,056	(4,371)	-	42	4,383
Net profit	-	-	31	-	-	31
Other comprehensive income	-	-	400	-	-	400
Total comprehensive income for the
year ended 31 December 2019	-	-	431	-	-	431
Merger with Grivalia Properties REIC (note 24)	197	-	890	-	-	1,087
Hybrid capital's redemption and dividend
paid, net of tax	-	-	(4)	-	(40)	(44)
	197	-	886	-	(40)	1,043
Balance at 31 December 2019	853	8,056	(3,054)	-	2	5,857
	Note 37	Note 37	Note 38	Note 34	Note 39

Cash Flow Statement

		Year ended 31 December
		2019	2018
			Restated (1)
	Note	€ million	€ million
Cash flows from operating activities

Profit before income tax (note 2.3.2)		19	56
Adjustments for :
Impairment losses relating to loans and advances to customers	21	529	606
Impairment losses on goodwill	28	62	-
Other impairment losses, provisions and restructuring costs (note 2.3.2)	13	110	134
Depreciation and amortisation (note 2.3.2)	12	78	42
Other (income)/losses οn investment securities	16	(67)	(159)
(Gain)/ loss on sale of subsidiaries, associates and joint ventures		(2)	33
Dividends from subsidiaries, associates and joint ventures	9	(141)	(122)
Valuation of investment property	27	(45)	3
Other adjustments		4	(26)
		547	567
Changes in operating assets and liabilities
Net (increase)/decrease in cash and balances with central banks		45	(31)
Net (increase)/decrease in securities held for trading		(31)	(5)
Net (increase)/decrease in due from credit institutions		(255)	(81)
Net (increase)/decrease in loans and advances to customers		(1,032)	31
Net (increase)/decrease in derivative financial instruments		137	(74)
Net (increase)/decrease in other assets		(131)	(124)
Net increase/(decrease) in due to central banks and credit institutions		(1,243)	(5,866)
Net increase/(decrease) in due to customers		3,558	4,126
Net increase/(decrease) in other liabilities		(81)	(44)
		967	(2,068)
Net cash from/(used in) operating activities		1,514	(1,501)
Cash flows from investing activities
Acquisition of fixed and intagible assets		(103)	(80)
Proceeds from sale of fixed and intangible assets		1	3
(Purchases)/sales and redemptions of investment securities		1,105	(21)
Acquisition of subsidiaries, associates, joint ventures and participation in
capital increases	23,25	(64)	(3)
Proceeds from disposal/liquidation/capital decrease of holdings in
subsidiaries, associates and joint ventures	23,11	68	188
Merger with Grivalia		1	-
Dividends from investment securities, subsidiaries, associates and
joint ventures		142	161
Net cash from/(used in) investing activities		1,150	248
Cash flows from financing activities
(Repayments)/proceeds from debt securities in issue	34	(309)	1,245
Repayment of lease liabilities	16	(27)	-
Redemption/ buy back of hybrid capital	39	(42)	(1)
Hybrid capital's dividend paid	39	(3)	(3)
Redemption on preference shares, net of expenses	34	-	(4)
Net cash from/(used in) financing activities		(381)	1,237
Net increase/(decrease) in cash and cash equivalents		2,283	(16)

Cash and cash equivalents at beginning of year	16	490	506
Cash and cash equivalents at end of year	16	2,773	490

(1) The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2).

1. General information

Eurobank Ergasias S.A. (the Bank) is active in retail, corporate and private banking, asset management, treasury, capital markets and other services. The Bank is incorporated in Greece and its shares are listed on the Athens Stock Exchange. The Bank operates mainly in Greece and through its subsidiaries in Central and Southeastern Europe.

These financial statements were approved by the Board of Directors on 12 March 2020. The Independent Auditor's Report of the Financial Statements is included in the section III of the Annual Financial Report.

2. Basis of preparation and principal accounting policies

The principal accounting policies applied in the preparation of the financial statements are set out below:

2.1 Basis of preparation

The financial statements of the Bank have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the IASB, as endorsed by the European Union (EU), and in particular with those standards and interpretations, issued and effective or issued and early adopted as at the time of preparing these financial statements.

The financial statements are prepared under the historical cost basis except for the financial assets measured at fair value through other comprehensive income, financial assets and financial liabilities (including derivative instruments) at fair-value-through-profitor-loss and investment property measured at fair value.

The accounting policies for the preparation of the financial statements have been consistently applied to the years 2019 and 2018, after taking into account the amendments in IFRSs as described in section 2.1.1 "New and amended standards and interpretations" and the amendments described in section 2.2 "Principal accounting policies" following changes in the Bank's accounting policies. The comparative information has been restated due to change in accounting policy for investment property (note 2.3.2). In addition, where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.

The preparation of financial statements in accordance with IFRS requires the use of estimates and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates.

The Bank's presentation currency is the Euro (€). Except as indicated, financial information presented in Euro has been rounded to the nearest million.

Going concern considerations

The annual financial statements have been prepared on a going concern basis, as the Board of the Directors considered as appropriate, taking into consideration the following:

The merger with Grivalia completed in May 2019 has further enhanced Eurobank's capital with the total CAD and the CET1 ratios amounting to 19.2% and 16.7% (Bank: 19.4% and 16.5%) respectively as at 31 December 2019 . The Group's net profit attributable to shareholders amounted to € 127 million (€ 257 million net profit from continuing operations before € 66 million restructuring costs after tax and € 62 million goodwill impairment) for the year ended 31 December 2019, while the Bank's after tax result amounted to a profit of 31 million. Furthermore, the Bank has eliminated the use of ELA as of end January 2019. As at 31 December 2019, the Group deposits have increased by € 5.7 billion (out of which € 1.1 billion is associated with the acquisition of Piraeus Bank Bulgaria) to € 44.8 billion (2018: € 39.1 billion), improving the Group's (net) loans to deposits (L/D) ratio to 83.2% as at 31 December 2019 (2018: 92.6%). In the context of the internal liquidity stress test framework, which is part of the 2019 ILAAP (Internal Liquidity Adequacy Assessment Process), the results of the short and medium term liquidity stress tests indicate that the Bank has adequate liquidity buffer to withstand to all of the stress test scenario effects.

Going concern assessment

The Board of Directors, taking into account the above factors relating to the adequacy of the Bank's capital and liquidity position as well as the progress that has been made in executing its NPE reduction acceleration plan, has been satisfied that the financial statements of the Bank can be prepared on a going concern basis.

2.1.1 New and amended standards and interpretations

New and amended standards adopted by the Bank as of 1 January 2019

IFRS 9, Amendments–Prepayment Features with Negative Compensation

The amendmentsin IFRS 9 requirements allow the measurement of a financial asset at amortised cost, or at fair value through other comprehensive income (FVOCI), depending on the business model, even in the case of prepayment options which could result in the party that triggers the early termination, receiving compensation from the other party (negative compensation). Therefore, these financial assets can now be measured at amortised cost or at FVOCI, regardless of the event or circumstance that caused the early termination of the contract and irrespective of which party pays or receives reasonable compensation for the early termination. Applying IFRS 9 before the amendments would probably result in these financial assets failing the "Solely Payments of Principal and Interest" criterion and thus being measured at FVTPL.

The adoption of the amendments had no impact on the Bank's financial statements.

IFRIC 23, Uncertainty over Income Tax Treatments

According to the interpretation, each uncertain tax treatment is considered separately or together as a group, depending on which approach better predicts the resolution of the uncertainty. The entity also assumes that the taxation authority that will examine these uncertain tax amounts, has a right to examine and has full knowledge of all related information when making those examinations.

The adoption of the interpretation had no impact on the Bank's financial statements.

IFRS 16, Leases

Notes to the Financial Statements

The right to obtain substantially all of the economic benefits from the use of an identified asset; and
The right to direct the use of that asset.

Consequently, the typical straight line operating lease expense of operating leases under IAS 17 is replaced by the depreciation charge of the 'right-of-use-asset' and the interest expense on the 'lease liability'. The recognition of assets and liabilities by lessees, as described above, is not required for certain short term leases and leases of low value assets. The accounting treatment for lessors is not substantially affected by the requirements of IFRS 16.

Adoption of IFRS 16

The Bank implemented the requirements of IFRS 16 on 1 January 2019. The Bank has chosen the modified retrospective application of IFRS 16 and therefore the comparative information was not restated.

Upon transition, the Bank adopted the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease. Accordingly, existing contracts previously classified as service contracts such as ATMs, APSs and printing services were not classified as leases under IFRS 16, while the definition set out in IFRS 16 is applied to all lease contracts entered into or modified on or after 1 January 2019.

In accordance with IFRS 16, at the commencement date of the lease, the Bank as a lessee recognises right-of-use assets and lease liabilities in the balance sheet, initially measured at the present value of the future lease payments.

The Bank applied this initial measurement principle to all leases, except for those with a lease term of 12 months or less, and leases of low value (i.e. less than € 5,000) - making use of the relevant short-term leases and leases of low-value assets exemptions. The Bank also adopted the practical expedient not to separate non-lease components from lease components.

In applying the modified retrospective transition approach, the Bank used the following main estimates and judgments:

In determining the lease term for the leases in which the Bank is the lessee, including those leases having an indefinite life, all relevant facts and circumstances, such as future housing needs and expected use, were considered and judgment was exercised. Furthermore, options to extend or terminate the lease that are reasonably certain to exercise were considered. These estimates will be revisited on a regular basis over the lease term.
The present value of the lease liabilities was measured by using the incremental borrowing rate on the transition date, since the interest rate implicit in the leases was not readily determinable. The incremental borrowing rate was derived from the estimated covered bonds yield curve, which is constructed based on observable Greek Government Bond yields. The weighted average discount rate used to determine the lease liabilities was 2.6% and will be recalculated on a regular basis, using updated input.
Applicable taxes, Value Added Tax and stamp duties were excluded from the scope of IFRS 16 calculations.

The quantitative impact of applying IFRS 16 as at 1 January 2019 is disclosed in note 2.3.1.

IAS 28, Amendments – Long -Term Interests in Associates and Joint Ventures

The amendments clarify that IFRS 9 'Financial Instruments' including its impairment requirements, applies to long -term interests in associates or joint ventures that form part of the entity's net investment in the associate or joint venture but are not accounted for using the equity method of accounting.

According to the amendments, an entity should not take into account any adjustments to the carrying amount of long term interests (net investment in the associate or joint venture), resulting from the application of IAS 28 'Investments in Associates and Joint Ventures' when applying IFRS 9.

The adoption of the amendments had no impact on the Bank's financial statements.

IAS 19, Amendments –Plan Amendment, Curtailment or Settlement

The adoption of the amendments had no impact on the Bank's financial statements.

Annual Improvements to IFRSs 2015-2017 Cycle

The improvements introduce key changes to several standards as set out below:

The adoption of the amendments had no impact on the Bank's financial statements.

New standards, amendments to standards and interpretations not yet adopted by the Bank

A number of new standards, amendments to existing standards and interpretations are effective after 2019, as they have not yet been endorsed by the European Union, or have not been early applied by the Bank. Those that may be relevant to the Bank are set out below:

Interest Rate Benchmark Reform: Amendments to IFRS 9, IAS 39 and IFRS 7 (effective 1 January 2020)

hedges, the compliance with the identifiable nature of the risk component and the application of prospective and retrospective effectiveness tests.

The IASB addresses the IBOR reform and its potential effects on financial reporting in two phases. These amendments conclude phase one that focuses on hedge accounting issues affecting financial reporting in the period before the interest rate benchmark reform, while the second phase focuses on potential issues that might affect financial reporting once the existing rates are replaced with an RFR.

As described in note 2.2.3, the Bank elected, as a policy choice permitted under IFRS 9, to continue to apply hedge accounting in accordance with IAS 39. Therefore, the amendments to IAS 39 and IFRS 7 will be applicable for the Bank.

The Bank has set up an IBOR transition program to implement the transition to alternative interest rates that focuses on key areas of impact on customers' contracts, systems and processes, financial reporting, valuation, capital and liquidity planning and communication (refer to note 5.2.4).

The Bank is currently assessing the amendments in order to define the extent to which the reliefs provided will be applied in its hedging relationships.

Amendments to the Conceptual Framework for Financial Reporting, including amendments to references to the Conceptual Framework in IFRS Standards (effective 1 January 2020)

The adoption of the amended Framework is not expected to impact the Bank's financial statements.

Amendments to IFRS 3 Business Combinations (effective 1 January 2020, not yet endorsed by EU)

The adoption of the amendments is not expected to impact the Bank's financial statements.

Amendments to IAS 1 and IAS 8: Definition of Material (effective 1 January 2020)

The adoption of the amendments is not expected to impact the Bank's financial statements.

IAS 1, Amendments, Classification of Liabilities as Current or Non-Current (effective 1 January 2022, not yet endorsed by EU)

right to defer settlement of a liability. The Board also clarified that when classifying liabilities as current or non-current, a entity can ignore only those conversion options that are recognised as equity.

The adoption of the amendments is not expected to impact the Bank's financial statements.

IFRS 17, Insurance Contracts (effective 1 January 2021, not yet endorsed by EU)

Revenue is allocated to periods in proportion to the value of expected coverage and other services that the insurer provides during the period, claims are presented when incurred and any investment components i.e amounts repaid to policyholders even if the insured event does not occur, are not included in revenue and claims. Insurance services results are presented separately from the insurance finance income or expense.

IFRS 17 is not relevant to the Bank's activities, other than through its associate Eurolife ERB Insurance Group Holdings S.A.

2.2 Principal accounting policies

2.2.1 Investments in subsidiaries, associates and joint ventures

Investments in subsidiaries, associates and joint ventures, including investments acquired through common control transactions, are accounted at cost less any impairment losses. Cost is the fair value of the consideration given being the amount of cash or shares issued, or if that cannot be determined reliably, the consideration received together with any directly attributable costs.

As an exception to the above measurement basis, when the Bank transfers an existing Group entity or business sector to a new subsidiary formed for this purpose in a share for share exchange that does not have commercial substance, the Bank's investment in that newly formed subsidiary is recognized at the carrying amount of the transferred entity.

Legal mergers that involve the combination of the Bank with one or more of its subsidiaries are accounted for by using the pooling of interest method (also known as merger accounting) pursuant to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" with reference to the most recent pronouncements of other standard-setting bodies that use a similar conceptual framework and comply with the IFRS general principles, as well as accepted industry practices. Under the pooling of interest method, the Bank incorporates the acquired assets and liabilities of the merged subsidiary at their carrying amounts in the financial statements as of the date of the legal merger without any fair value adjustments. Any difference between the carrying amount of the investment in the merged subsidiary before the legal merger, and the carrying amount of net assets acquired is recognized in the Bank's equity.

Legal mergers that involve the absorption of an entity by the Bank, other than an entity under common control, are accounted for by using the purchase method of accounting pursuant to IFRS 3 for business combinations. The consideration transferred for the acquisition is measured at the fair value of the assets given, equity instruments issued or exchanged and liabilities undertaken at the date of acquisition, including the fair value of assets or liabilities resulting from a contingent consideration arrangement. Acquisition related costs are expensed as incurred. Under the purchase method of accounting, the identifiable assets acquired and liabilities and contingent liabilities assumed are measured initially at their fair values at the acquisition date. Any previously held interest in the acquiree is remeasured to fair value at the acquisition date with any gain or loss recognized in the income statement.

The excess of the consideration transferred and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets of the entity acquired, is recorded as goodwill. If this is less than the fair value of the net

assets of the acquiree, the difference is recognized directly in the income statement. If the initial accounting for the acquisition is incomplete by the end of the reporting period in which it occurs, the Bank reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period to reflect the new information obtained about the facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date. The measurement period adjustments, as mentioned above, affect accordingly the amount of goodwill that was initially recognized, while the measurement period cannot exceed one year from the acquisition date.

For acquisitions of entities not meeting the definition of a business, the Bank allocates the consideration to the individual identifiable assets and liabilities based on their relative fair values at the date of acquisition. Such transactions or events do not give rise to goodwill.

Where necessary, accounting policies of merged subsidiaries or other entities have been changed to ensure consistency with the policies of the Bank.

A listing of the Bank's subsidiaries, associates and joint ventures is set out in notes 23 and 25, respectively.

2.2.2 Foreign currencies

2.2.3 Derivative financial instruments and hedging

Embedded derivatives

The use of derivative financial instruments is inherent in the Bank's activities and aims principally at managing risk effectively.

Accordingly, the Bank, as part of its risk management strategy, may enter into transactions with external counterparties to hedge partially or fully interest rate, foreign currency, equity and other exposures that are generated from its activities.

The objectives of hedging with derivative financial instruments include:

Reduction of interest rate exposure that is in excess of the Bank's interest rate limits
Efficient management of interest rate risk and fair value exposure
Management of future variable cash flows
Reduction of foreign currency risk or inflation risk

Hedge accounting

The Bank has elected, as a policy choice permitted under IFRS 9, to continue to apply hedge accounting in accordance with IAS 39, until the project of accounting of macro hedging activities is completed by the IASB.

For hedge accounting purposes, the Bank forms a hedging relationship between a hedging instrument and a related item or group of items to be hedged. A hedging instrument is a designated derivative or a designated non-derivative financial asset or financial liability whose fair value or cash flows are expected to offset changes in the fair value or cash flows of a designated hedged item.

Specifically, the Bank designates certain derivatives as: (a) hedges of the exposure to changes in fair value of recognized assets or liabilities or unrecognized firm commitments (fair value hedge), (b) hedges of the exposure to variability in cash flows of recognized assets or liabilities or highly probable forecasted transactions (cash flow hedge).

In order to apply hedge accounting, specified criteria should be met. Accordingly, at the inception of the hedge accounting relationship, the Bank documents the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions, together with the method that will be used to assess the effectiveness of the hedging relationship. The Bank also documents its assessment, both at inception of the hedge and on an ongoing basis, of whether the derivatives that are used in the hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items and whether the actual results of each hedge are within a range of 80-125%. If a relationship does not meet the abovementioned hedge effectiveness criteria, the Bank discontinues hedge accounting prospectively. Similarly, if the hedging derivative expires or is sold, terminated or exercised, or the hedge designation is revoked, then hedge accounting is discontinued prospectively. In addition, the Bank uses other derivatives, not designated in a qualifying hedge relationship, to manage its exposure primarily to interest rate and foreign currency risks. Non qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied. The said derivative instruments are classified along with those held for trading purposes.

The method of recognizing the resulting fair value gain or loss depends on whether the derivatives are designated and qualify as hedging instruments, and if so, the nature of the item being hedged.

Furthermore, the Bank may designate groups of items as hedged items, by aggregating recognized assets or liabilities or unrecognized but highly probable transactions of similar risk characteristics that share the exposure for which they are hedged. Although the overall risk exposures may be different for the individual items in the group, the specific risk being hedged will be inherent in each of the items in the group.

(i) Fair value hedge

The Bank applies fair value hedging to hedge exposures primarily to changes in the fair value attributable to interest rate risk and currency risk.

The interest rate and currency risk with respect to the applicable benchmark rate may be hedged using interest rate swaps and cross currency swaps.

The Bank uses the dollar-offset method in order to assess the effectiveness of fair value hedges. This is a quantitative method that involves the comparison of the change in the fair value of the hedging instrument with the change in the fair value of the hedged item attributable to the hedged risk. Even if a hedge is not expected to be highly effective in a particular period, hedge accounting is not precluded if effectiveness is expected to remain sufficiently high over the life of the hedge.

The Bank discontinues hedge accounting in case the hedging instrument expires or is sold, terminated or exercised, the hedge no longer meets the qualifying criteria for hedge accounting, or designation is revoked. In such cases, any adjustment to the carrying amount of the hedged item, for which the effective interest method is applied, is amortized to profit or loss over the period to maturity. Hedge ineffectiveness may arise in case of potential differences in the critical terms between the hedged item and the hedging instrument such as maturity, interest rate reset frequency and discount curves.

(ii) Cash flow hedge

The Bank applies cash flow hedging to hedge exposures to variability in cash flows primarily attributable to the interest rate risk and currency risk associated with a recognized asset or liability or a highly probable forecast transaction.

If the hedged item is documented as a forecast transaction, the Bank assesses and verifies that there is a high probability of the transaction occurring.

In order to assess the effectiveness of cash flow hedges of interest rate risk, the Bank uses regression analysis which demonstrates that there is high historical and expected future correlation between the interest rate risk designated as being hedged and the interest rate risk of the hedging instrument. For assessing the effectiveness of cash flow hedges of currency risk, the Bank uses the dollar-offset method.

Amounts accumulated in equity are recycled to the income statement in the periods in which the hedged item will affect profit or loss (for example, when the forecast sale that is hedged takes place).

When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

(iii) Derivatives not designated as hedging instruments for hedge accounting purposes

Changes in the fair value of derivative financial instruments that are not designated as hedging instruments or do not qualify for hedge accounting are recognized in the income statement.

The fair values of derivative instruments held for trading and hedging purposes are disclosed in note 19.

2.2.4 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Bank currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

2.2.5 Income statement

(i) Interest income and expense

payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the EIR for financial instruments other than purchased or originated credit-impaired, the Bank estimates cash flows considering all contractual terms of the financial instrument but does not consider expected credit losses. For purchased or originated credit impaired (POCI) financial assets, the Bank calculates the credit-adjusted EIR, which is the interest rate that upon the original recognition of the POCI financial asset discounts the estimated future cash flows (including expected credit losses) to the fair value of the POCI asset.

The amortized cost of a financial asset or liability is the amount at which it is measured upon initial recognition minus principal repayments, plus or minus cumulative amortization using the EIR (as described above) and for financial assets it is adjusted for the expected credit loss allowance.The gross carrying amount of a financial asset is its amortized cost before adjusting for ECL allowance.

The Bank calculates interest income and expense by applying the EIR to the gross carrying amount of non-impaired financial assets (exposures in Stage 1 and 2) and to the amortized cost of financial liabilities respectively.

For financial assets that have become credit-impaired subsequent to initial recognition (exposures in Stage 3), the Bank calculates interest income by applying the effective interest rate to the amortized cost of the financial asset (i.e. gross carrying amount adjusted for the expected credit loss allowance). If the asset is no longer credit-impaired, then the EIR is applied again to the gross carrying amount.

For financial assets that were credit-impaired on initial recognition (POCI) interest income is calculated by applying the creditadjusted EIR (calculated as described above) to the POCI asset's amortized cost. For such assets even if the credit risk improves, interest income does not revert to gross basis calculation. For inflation-linked instruments the Bank recognizes interest income and expense by adjusting the effective interest rate on each reporting period due to changes in expected future cash flows, incorporating changes in inflation expectations over the term of the instruments. The adjusted effective interest rate is applied in order to calculate the new gross carrying amount on each reporting period.

Interest income and expense is presented separately in the income statement for all interest bearing financial instruments within net interest income.

(ii) Fees and commissions

Fee and commission received or paid that are integral to the effective interest rate on a financial asset or financial liability are included in the effective interest rate.

In the case of a contract with a customer that results in the recognition of a financial instrument in the Bank's financial statements which may be partially in the scope of IFRS 9 and partially in the scope of IFRS 15, the Bank first applies IFRS 9 to separate and measure the part of the contract that is in the scope of IFRS 9 and subsequently applies IFRS 15 to the residual part.

2.2.6 Property, plant and equipment and Investment property

(i) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. Subsequent expenditure is recognized in the asset's carrying amount only when it is probable that future economic benefits will flow to the Bank and the cost of the asset can be measured reliably. All other repair and maintenance costs are recognized in the income statement as incurred.

Depreciation is calculated using the straight-line method to write down the cost of property, plant and equipment, to their residual values over their estimated useful life as follows:

Land: no depreciation;
Freehold buildings: 40-50 years;
Leasehold improvements: over the lease term or the useful life of the asset if shorter;
Computer hardware and software: 4-10 years;
Other furniture and equipment: 4-20 years; and
Motor vehicles: 5-7 years.

(ii) Investment property

In the fourth quarter of 2019, the Bank voluntarily changed its accounting policy regarding the measurement of Investment Property from cost model to fair value model according to IAS 40 "Investment property". In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", the above change in the Bank's accounting policy on Investment Property was applied retrospectively as of 1 January 2018 (note2.3.2).

Property held for rental yields and/or capital appreciation that is not occupied by the Bank is classified as investment property.

Subsequent expenditure is charged to the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized to the income statement during the financial period in which they are incurred.

If a repossessed asset becomes investment property, any difference between the fair value of the property at the date of transfer and its previous carrying amount is recognized in profit or loss.

2.2.7 Intangible assets

(i) Goodwill

Goodwill arising on legal mergers that involve the absorption of an entity by the Bank, other than an entity under common control, represents the excess of the aggregate of the fair value of the consideration transferred and the acquisition date fair value of any previously held equity interest in the acquiree over the fair value of the Bank's share of net identifiable assets and contingent liabilities acquired. Goodwill arising is included in 'intangible assets' and is measured at cost less accumulated impairment losses.

(ii) Computer software

expected to generate economic benefits and can be measured reliably. Internally generated computer software assets are amortized using the straight-line method over 4 years, except for core systems whose useful life may extend up to 15 years.

(iii) Other intangible assets

Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

2.2.8 Impairment of non-financial assets

(i) Goodwill

Goodwill arising on legal mergers that involve the absorption of an entity by the Bank, other than an entity under common control, is not amortized but tested for impairment annually or more frequently if there are any indications that impairment may have occurred. The Bank's impairment test is performed each year end. The Bank considers external information such as prevailing economic conditions, persistent slowdown in financial markets, volatility in markets and changes in levels of market and exchange risk, an unexpected decline in an asset's market value or market capitalization being below the book value of equity, together with a deterioration in internal performance indicators, in assessing whether there is any indication of impairment.

For the purpose of impairment testing, goodwill is allocated to each Cash Generating Unit (CGU) or groups of CGUs that are expected to benefit from the synergies of the merger. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Bank at which goodwill is monitored for internal management purposes. The Bank monitors goodwill either at the separate CGU or group of CGUs consistent with the internal monitoring of operating segments.

The Bank impairment model compares the carrying value of a CGU or group of CGUs with its recoverable amount. The carrying value of a CGU is based on the assets and liabilities of each CGU. The recoverable amount is determined on the basis of the valuein-use which is the present value of the future cash flows expected to be derived from the CGU or group of CGUs. The estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU and the countries where the CGUs operate.

An impairment loss arises if the carrying amount of an asset or CGU exceeds its recoverable amount, and is recognized in the income statement. Impairment losses are not subsequently reversed. Gains and losses on the disposal of an operation within that CGU include the carrying amount of goodwill relating to the operation disposed of.

(ii) Other non-financial assets

Impairment losses arising from the Bank's associates and joint ventures are determined in accordance with this accounting policy.

2.2.9 Financial assets

Financial assets - Classification and measurement

The Bank classifies financial assets based on the business model for managing those assets and their contractual cash flow characteristics. Accordingly, financial assets are classified into one of the following measurement categories: amortized cost, fair value through other comprehensive income or fair value through profit or loss.

Purchases and sales of financial assets are recognized on trade date, which is the date the Bank commits to purchase or sell the assets. Loans originated by the Bank are recognized when cash is advanced to the borrowers.

Financial Assets measured at Amortized Cost ('AC')

The Bank classifies and measures a financial asset at AC only if both of the following conditions are met and is not designated as at FVTPL:

(a) The financial asset is held within a business model whose objective is to collect contractual cash flows (hold-to-collect business model) and

(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

Interest income, realized gains and losses on derecognition, and changes in expected credit losses from assets classified at AC, are included in the income statement.

Financial Assets measured at Fair Value through Other Comprehensive Income ('FVOCI')

The Bank classifies and measures a financial asset at FVOCI only if both of the following conditions are met and is not designated as at FVTPL:

(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

Financial assets that meet these criteria are debt instruments and are measured initially at fair value, plus direct and incremental transaction costs.

Equity Instruments designated at FVOCI

The Bank may make an irrevocable election to designate an equity instrument at FVOCI. This designation, if elected, is made at initial recognition and on an instrument by instrument basis. Gains and losses on these instruments, including when derecognized, are recorded in OCI and are not subsequently reclassified to the income statement. Dividends received are recorded in the income statement.

Financial Assets measured at Fair Value through Profit and Loss ("FVTPL")

The Bank classifies and measures all other financial assets that are not classified at AC or FVOCI, at FVTPL. Accordingly, this measurement category includes debt instruments such as loans and debt securities that are held within the hold–to-collect (HTC) or hold-to-collect-and-sell models (HTCS), but fail the SPPI assessment, equities that are not designated at FVOCI and financial assets held for trading. Derivative financial instruments are measured at FVTPL, unless they are designated and effective hedging instruments, in which case hedge accounting requirements under IAS 39 continue to apply.

Furthermore, a financial asset that meets the above conditions to be classified at AC or FVOCI, may be irrevocably designated by the Bank at FVTPL at initial recognition, if doing so eliminates, or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets measured at FVTPL are initially recorded at fair value and any unrealized gains or losses arising due to changes in fair value are included in the income statement.

Business model and contractual characteristics assessment

The business model assessment determines how the Bank manages a group of assets to generate cash flows. That is, whether the Bank's objective is solely to collect contractual cash flows from the asset, to realize cash flows from the sale of assets, or both to collect contractual cash flows and cash flows from the sale of assets. In addition, the business model is determined after aggregating the financial assets into groups (business lines) which are managed similarly rather than at an individual instrument's level.

The business model is determined by the Bank's key management personnel consistently with the operating model, considering how financial assets are managed in order to generate cash flows, the objectives and how performance of each portfolio is monitored and reported and any available information on past sales and on future sales' strategy, where applicable.

Accordingly, in making the above assessment, the Bank will consider a number of factors including the risks associated with the performance of the business model and how those risks are evaluated and managed, the related personnel compensation, and the frequency, volume and reasons of past sales, as well as expectations about future sales activity.

Types of business models

The Bank's business models fall into three categories, which are indicative of the key strategies used to generate returns.

The hold-to-collect (HTC) business model has the objective to hold the financial assets in order to collect contractual cash flows. Sales within this model are monitored and may be performed for reasons which are not inconsistent with this business model. More specifically, sales of financial assets due to credit deterioration, as well as, sales close to the maturity are considered consistent with the objective of hold-to-collect contractual cash flows regardless of value and frequency. Sales for other reasons may be consistent with the HTC model such as liquidity needs in any stress case scenario or sales made to manage high concentration level of credit risk. Such sales are monitored and assessed depending on frequency and value to conclude whether they are consistent with the HTC model. Debt instruments classified within this business model include bonds, due from banks and loans and advances to customers including securitized notes issued by special purpose vehicles established by the Bank and recognized in its balance sheet, which are measured at amortized cost, subject to meeting the SPPI assessment criteria.

The Bank's business models are reassessed at least annually or earlier, if there is a sales' assessment trigger or if there are any changes in the Bank's strategy and main activities, as evidenced by the Bank's business plan, budget and NPE strategy.

Cash flow characteristics assessment

In assessing whether the contractual cash flows are SPPI, the Bank will consider whether the contractual terms of the instrument are consistent with a basic lending arrangement i.e. interest includes only consideration for the time value of money, credit risk, other basic lending risks and a profit margin. On the initial recognition of a financial asset, an assessment is performed of whether the financial asset contains a contractual term that could change the amount or timing of contractual cash flows in a way that it would not be consistent with the above condition. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset is considered to have failed the SPPI assessment and will be measured at FVTPL.

For the purpose of the SPPI assessment, the Bank considers the existence of various features, including among others, contractually linked terms, prepayment terms, deferred interest-free payments, extension and equity conversion options and terms that introduce leverage including index linked payments. Moreover, for the securitized notes issued by special purpose vehicles and held by the Bank, the cash flow characteristics of the underlying pool of financial assets as well as the credit risk inherent in each securitization's tranche compared to the credit risk of all of the underlying pool of financial assets, are considered.

In case of special lending arrangements such as non-recourse loans, in its assessment of the SPPI criterion, the Bank considers various factors such as the nature of the borrower and its business, the pricing of the loans, whether it participates in the economic performance of the underlying asset and the extent to which the collateral represents all or a substantial portion of the borrower's assets. Moreover, for special purpose entities, the Bank takes into consideration the borrower's adequacy of loss absorbing capital

by assessing jointly the criteria of equity sufficiency, Loan to Value ratio (LTV), the Average Debt Service Coverage ratio (ADSCR) as well as the existence of corporate and personal guarantees.

In particular, the Bank assesses the contractual cash flows of the "real instrument", whose interest rate is reset with a frequency that does not match the tenor of the interest rate, and those of the "benchmark instrument", which are identical in all respects except that the tenor of the interest rate matches exactly the interest period. If the undiscounted cash flows of the former are significantly different from the benchmark cash flows due to the modified time value of money element, the financial asset does not meet the SPPI criterion. In its assessment, the Bank considers both the effect of the modified time value of money element in each reporting period and cumulatively over the life of the instrument. This is done, as far as the lifetime of the instrument is concerned, by comparing the cumulative projected undiscounted cash flows of the real and the benchmark instrument, and for each quarterly reporting period, by comparing the projected undiscounted cash flows of the two instruments for that quarterly reporting period, based on predefined thresholds.

In addition, for the purposes of the SPPI assessment, if a contractual feature could have an effect that is de-minimis on the contractual cash flows of the financial asset, it does not affect its classification. Moreover, a contractual feature is considered as not genuine by the Bank, if it affects the instrument's contractual cash flows only on the occurrence of an event that is extremely rare, highly abnormal and very unlikely to occur. In such a case, it does not affect the instrument's classification.

The Bank performs the SPPI assessment for its lending exposures on a product basis for the retail and part of the wholesale portfolio where contracts are of standardized form, whereas for the remaining wholesale portfolio, securitized notes issued by special purpose vehicles established by the Bank and debt securities the assessment is performed on an individual basis.

Derecognition of financial assets

The Bank derecognizes a financial asset when its contractual cash flows expire, or the rights to receive those cash flows are transferred in an outright sale in which substantially all risks and rewards of ownership have been transferred. In addition, a financial asset is derecognized even if rights to receive cash flows are retained but at the same time the Bank assumes an obligation to pay the received cash flows without a material delay (pass through agreement) or when substantially all the risks and rewards are neither transferred nor retained but the Bank has transferred control of the asset. Control is transferred if, and only if, the transferee has the practical ability to sell the asset in its entirety to unrelated third party. The main transactions that are subject to the above de-recognition rules are securitization transactions, repurchase agreements and stock lending transactions. In the case of securitization transactions, in order to assess the application of the above mentioned de-recognition principles, the Bank considers the structure of each securitization transaction including its exposure to the more subordinated tranches of the notes issued and/or credit enhancements provided to the special purposes vehicles, as well as the securitization's contractual terms that may indicate that the Bank retains control of the underlying assets. In the case of repurchase transactions and stock lending, the assets transferred are not derecognised since the terms of the transaction entail the retention of all their risks and rewards.

Modification of financial assets that may result in derecognition

In addition, derecognition of financial asset arises when its contractual cash flows are modified and the modification is considered substantial enough so that the original asset is derecognized and a new one is recognised. The Bank records the modified asset as a 'new' financial asset at fair value and the difference with the carrying amount of the existing one is recorded in the income statement as derecognition gain or loss.

The Bank may modify the contractual terms of a lending exposure either as a concession granted to a client facing or that is about to face financial difficulties or due to other commercial reasons such as changes in market conditions, competition or customer retention.

Modifications that may result in derecognition include:

change in borrower,
change in the currency that the lending exposure is denominated,
debt consolidation features where two or more consumer unsecured lending contracts are consolidated into a single new secured lending agreement,
the removal or addition of conversion features and/or profit sharing mechanisms and similar terms which are relevant to the SPPI assessment;

In addition, the Bank may occasionally enter, in the context of loans' modifications, into debt-for-equity transactions. These are transactions where the terms of a lending exposure are renegotiated and as a result, the borrower issues equity instruments (voting or no voting) in order to extinguish part or all of its financial liability to the Bank. Such transactions may include also exercise of conversion rights embedded into convertible or exchangeable bonds and enforcement of shares held as collateral.

2.2.10 Reclassifications of financial assets

The Bank reclassifies a financial asset only when it changes its business model for managing financial assets. Generally, a change in the business model is expected to be rare and occurs when the Bank either begins or ceases to perform an activity that is significant to its operations; for example, when a business line is acquired, disposed of or terminated. In the rare event when there is a change to the existing business models, the updated assessment is approved by the Bank's competent Committees and the amendment is reflected appropriately in the Bank's budget and business plan.

Changes in intention related to particular financial assets (even in circumstances of significant changes in market conditions), the temporary disappearance of a particular market for financial assets or a transfer of financial assets between parts of the Bank with different business models, are not considered by the Bank changes in business model.

The reclassification is applied prospectively from the reclassification date, therefore previously recognized gains, losses (including impairment losses) or interest are not restated.

2.2.11 Financial liabilities

Financial liabilities - Classification and measurement

The Bank classifies its financial liabilities in the following categories: financial liabilities measured at amortized cost and financial liabilities measured at fair-value-through-profit-or-loss.

Financial liabilities held for trading are those liabilities that the Bank incurs principally for the purpose of repurchasing in the near term for short term profit.

The Bank may, at initial recognition, irrevocably designate financial liabilities at fair-value-through-profit-or-loss when one of the following criteria is met:

the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases; or
a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis; or
the financial liability contains one or more embedded derivatives as components of a hybrid contract which significantly modify the cash flows that otherwise would be required by the contract.

Financial liabilities designated at FVTPL are initially recognized at fair value. Changes in fair value are recognized in the income statement, except for changes in fair value attributable to changes in the Bank's own credit risk, which are recognised in OCI and are not subsequently reclassified to the income statement upon derecognition of the liabilities. However, if such treatment creates or enlarges an accounting mismatch in the income statement, all gains or losses of this financial liability, including the effects of changes in the credit risk, are recognized in the income statement.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability of the Bank is replaced by another from the same counterparty on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as an extinguishment of the original liability and the recognition of a new liability and any difference arising is recognized in the income statement.

The Bank considers the terms to be substantially different, if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability.

If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognized as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortized over the remaining term of the modified liability.

Similarly, when the Bank repurchases any debt instruments issued by the Bank, it accounts for such transactions as an extinguishment of debt.

2.2.12 Fair value measurement of financial instruments

Fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions in the principal or, in its absence, the most advantageous market to which the Bank has access at that date. The fair value of a liability reflects its nonperformance risk.

When available, the Bank measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Bank uses other valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Bank has elected to use mid-market pricing as a practical expedient for fair value measurements within a bid-ask spread.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price, i.e. the fair value of the consideration given or received unless the Bank determines that the fair value at initial recognition differs from the transaction price. In this case, if the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. Level 1 input) or based on a valuation technique that uses only data from observable markets, a day one gain or loss is recognized in the income statement. On the other hand, if the fair value is evidenced by a valuation technique that uses unobservable inputs, the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price (day one gain or loss). Subsequently the deferred gain or loss is amortized on an appropriate basis over the life of the instrument or released earlier if a quoted price in an active market or observable market data become available or the financial instrument is closed out.

For assets and liabilities that are measured at fair value on a recurring basis, the Bank recognizes transfers into and out of the fair value hierarchy levels at the beginning of the quarter in which a financial instrument's transfer was effected.

2.2.13 Impairment of financial assets

The Bank recognizes allowance for expected credit losses (ECL) that reflect changes in credit quality since initial recognition to financial assets that are measured at AC and FVOCI, including loans, securitized notes issued by special purpose vehicles established by the Bank, lease receivables, debt securities, financial guarantee contracts, and loan commitments. No ECL are recognized on equity investments. ECL are a probability-weighted average estimate of credit losses that reflects the time value of money. Upon initial recognition of the financial instruments in scope of the impairment policy, the Bank records a loss allowance equal to 12 month ECL, being the ECL that result from default events that are possible within the next twelve months. Subsequently, for those financial instruments that have experienced a significant increase in credit risk (SICR) since initial recognition, a loss allowance equal

to lifetime ECL is recognized, arising from default events that are possible over the expected life of the instrument. If upon initial recognition, the financial asset meets the definition of purchased or originated credit impaired (POCI), the loss allowance is based on the change in the ECL over the life of the asset.

Loss allowances for trade receivables are always measured at an amount equal to lifetime ECL. For all other financial assets subject to impairment, the general three-stage approach applies.

Accordingly, ECL are recognized using a three-stage approach based on the extent of credit deterioration since origination:

Stage 1 When there is no significant increase in credit risk since initial recognition of a financial instrument, an amount equal to 12-months ECL is recorded. The 12 – month ECL represent a portion of lifetime losses, that result from default events that are possible within the next 12 months after the reporting date and is equal to the expected cash shortfalls over the life of the instrument or group of instruments, due to loss events probable within the next 12 months. Not credit-impaired financial assets that are either newly originated or purchased, as well as, assets recognized following a substantial modification accounted for as a derecognition, are classified initially in Stage 1.
Stage 2 When a financial instrument experiences a SICR subsequent to origination but is not considered to be in default, it is included in Stage 2. Lifetime ECL represent the expected credit losses that result from all possible default events over the expected life of the financial instrument.
Stage 3 Financial instruments that are considered to be in default are included in this stage. Similar to Stage 2, the allowance for credit losses captures the lifetime expected credit losses.
POCI Purchased or originated credit impaired (POCI) assets are financial assets that are credit impaired on initial recognition. They are not subject to stage allocation and are always measured on the basis of lifetime expected credit losses. Accordingly, ECL are only recognized to the extent that there is a subsequent change in the assets' lifetime expected credit losses. Any subsequent favorable change to their expected cash flows is recognized as impairment gain in the income statement even if the resulting expected cash flows exceed the estimated cash flows at initial recognition. Apart from purchased assets, POCI assets may also include financial instruments that are considered new assets, following a substantial modification accounted for as a derecognition (see section 2.2.9).

Definition of default

To determine the risk of default, the Bank applies a default definition for accounting purposes, which is consistent with the European Banking Authority (EBA) definition for non-performing exposure (refer to note 5.2.1.2). The accounting definition of default is consistent with the one used for internal credit risk management purposes.

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that exposure have occurred:

The borrower faces a significant difficulty in meeting his financial obligations.
There has been a breach of contract, such as a default or past due event.
The Bank, for economic or contractual reasons relating to the borrower's financial difficulty, has granted to the borrower a concession(s) that the Bank would not otherwise consider.
There is a probability that the borrower will enter bankruptcy or other financial re-organization.
For POCI financial assets, a purchase or origination at a deep discount that reflects incurred credit losses is considered a detrimental event. The Bank assesses the deep discount criterion following a principle -based approach with the aim to incorporate all reasonable and supportable information which reflects market conditions that exist at the time of the assessment.

For debt securities, the Bank determines the risk of default using an internal credit rating scale. The Bank considers debt securities as credit impaired if the internal rating of the issuer/counterparty corresponds to a rating equivalent to "C" (Moody's rating scale) or the external rating of the issuer/counterparty at the reporting date is equivalent to "C" (Moody's rating scale) and the internal rating is not available.

Significant increase in credit risk (SICR) and staging allocation

At each reporting date, the Bank performs an assessment as to whether the risk of a default occurring over the remaining expected lifetime of the exposure has increased significantly from the expected risk of a default estimated at origination for that point in time.

The assessment for SICR is performed using both qualitative and quantitative criteria based on reasonable and supportable information that is available without undue cost or effort including forward looking information and macroeconomic scenarios as well as historical experience. Furthermore, regardless of the outcome of the SICR assessment based on the above indicators, the credit risk of a financial asset is deemed to have increased significantly when contractual payments are more than 30 days past due.

As a primary criterion for SICR assessment, the Bank compares the residual lifetime probability of default (PD) at each reporting date to the residual lifetime PD for the same point in time which was expected at the origination.

The Bank may also consider as a SICR indicator when the residual lifetime PD at each reporting date exceeds certain predetermined values. The criterion may be applied in order to capture cases where the relative PD comparison does not result to the identification of SICR although the absolute value of PD is at levels which are considered high based on the Bank's risk appetite framework.

Internal credit risk rating (on a borrower basis) is also used as a basis for the identification of SICR with regards to lending exposures of the Wholesale portfolio. Specifically, the Bank takes into consideration the changes of internal ratings by a certain number of notches. In addition, a watchlist status is also considered by the Bank as a trigger for SICR identification. Internal credit risk ratings models include borrower specific information as well as, forward-looking information including macroeconomic variables.

Assessment of SICR for debt securities is performed on an individual basis based on the number of notches downgrade in the internal credit rating scale since the origination date.

Forbearance measures as monitored by the Bank are considered as a SICR indicator and thus the exposures are allocated into Stage 2 upon forbearance, unless they are considered credit-impaired in which case they are classified as stage 3. Furthermore, regardless of the outcome of the SICR assessment based on the above indicators, the credit risk of a financial asset is deemed to have increased significantly when contractual payments are more than 30 days past due.

Transfers from Stage 2 to Stage 1

A financial asset, which is classified to Stage 2 due to Significant Increase in Credit Risk (SICR), is reclassified to Stage 1, as long as it does not meet anymore any of the Stage 2 Criteria.

Where forbearance measures have been applied, the Bank uses a probation period of two years, in order to fulfill the requirements for a transfer back to Stage 1. If at the end of that period the borrowers have made regular payments of a significant aggregate amount, there are no past due amounts over 30 days and the loans are neither credit impaired, nor any other SICR criteria are met, they exit forborne status and are classified as stage 1.

Transfers from Stage 3 to Stage 2

A financial asset is transferred from Stage 3 to Stage 2, when the criteria based on which the financial asset was characterized as credit impaired, are no longer valid.

Criteria for grouping of exposures based on shared credit risk characteristics

The assessment of loss allowance is performed either on an individual basis or on a collective basis for groups of similar items with homogeneous credit risk characteristics. The Bank applies the same principles for assessing SICR since initial recognition when estimating ECL on a collective or on an individual basis.

The Bank segments its lending exposures on the basis of shared credit risk characteristics for the purposes of both assessing significant increase in credit risk and measuring loan loss allowance on a collective basis. The different segments aim to capture differences in PDs and in the rates of recovery in the event of default.

The Bank identifies individually significant exposures and performs the ECL measurement based on borrower specific information for both retail and wholesale portfolios. This measurement is performed at a borrower level, hence the criteria are defined at this level, while both qualitative and quantitative factors are taken into consideration including forward looking information.

For the remaining retail and wholesale exposures, ECL are measured on a collective basis. This incorporates borrower specific information, collective historical experience of losses and forward-looking information. For debt securities and securitized notes issued by special purpose entities established by the Bank, the measurement of impairment losses is performed on an individual basis.

Measurement of Expected Credit Losses

The measurement of ECL is an unbiased probability-weighted average estimate of credit losses that reflects the time value of money, determined by evaluating a range of possible outcomes. A credit loss is the difference between the cash flows that are due to the Bank in accordance with the contractual terms of the instrument and the cash flows that the Bank expects to receive (i.e. cash shortfalls) discounted at the original effective interest rate (EIR) of the same instrument, or the credit-adjusted EIR in case of purchased or originated credit impaired assets (POCI). In measuring ECL, information about past events, current conditions and reasonable and supportable forecasts of future conditions are considered. For undrawn commitments, ECL are calculated as the present value of the difference between the contractual cash flows due if the commitment was drawn and the cash flows expected to be received, while for financial guarantees ECL are measured as the expected payments to reimburse the holder less any amounts that the Bank expects to receive.

The Bank estimates expected cash shortfalls, which reflect the cash flows expected from all possible sources, including collateral and other credit enhancements that are part of the contractual terms and are not recognized separately. In case of a collateralized financial instrument, the estimated expected cash flows related to the collateral reflect the amount and timing of cash flows that are expected from liquidation less the discounted costs of obtaining and selling the collateral, irrespective of whether liquidation is probable.

ECL are calculated over the maximum contractual period over which the Bank is exposed to credit risk, which is determined based on the substantive terms of the instrument, or in case of revolving credit facilities, by taking into consideration factors such as the Bank's expected credit risk management actions to mitigate credit risk and past practice.

Receivables from customers arising from the Bank's activities other than lending, are presented under Other Assets and are typically short term. Therefore, considering that usually there is no significant financing component, the loss allowance for such financial assets is measured at an amount equal to the lifetime expected credit losses under the simplified approach.

ECL Key Inputs

The ECL calculations are based on the term structures of the probability of default (PD), the loss given default (LGD), the exposure at default (EAD) and other input parameters such as the credit conversion factor (CCF) and the prepayment rate. Generally, the Bank derives these parameters from internally developed statistical models and observed point-in-time and historical data, leveraging the existing infrastructure development for the regulatory framework and risk management practices.

The Bank uses Point in Time (PiT) PDs in order to remove any bias towards historical data thus aiming to reflect management's view of the future as at the reporting date, incorporating relevant forward looking information including macroeconomic scenarios.

Two types of PD are used for calculating ECL:

12-month PD, which is the estimated probability of default occurring within the next 12 months (or over the remaining life of the financial asset if this is less than 12 months). It is used to calculate 12-month ECL for Stage 1 exposures.
Lifetime PD, which is the estimated probability of a default occurring over the remaining life of the financial asset. It is used to calculate lifetime ECL for Stage 2, Stage 3 and POCI exposures.

For debt securities, PDs are obtained by an international rating agency using risk methodologies that maximize the use of objective non-judgmental variables and market data. The Bank assigns internal credit ratings to each issuer/counterparty based on these PDs. In case of counterparties for which no information is available, the Bank assigns PDs which are derived from internal models.

LGD represents the Bank's expectation of the extent of loss on a defaulted exposure and it is the difference between the contractual cash flows due and those that the Bank expects to receive including any amounts from collateral liquidation. LGD varies by type of counterparty, type and seniority of claim, availability of collateral or other credit support, and is usually expressed as a percentage of EAD. The Bank distinguishes its loan portfolios into two broad categories i.e. secured and unsecured. The Bank estimates the LGD component using cure rates that reflect cash recoveries, estimated proceeds from collateral liquidation, estimates for timing realization, realization costs, etc. Where the LGD's component values are dependent on macro – economic data, such types of dependencies are reflected by incorporating forward looking information, such as forecasted price indices into the respective models. The estimation of the aforementioned component values within LGD reflects available historical data which cover a reasonable period, i.e. a full economic cycle.

Furthermore, the seniority of the debt security, any potential collaterals by the obligor or any other type of coverage is taken into account for the calculation.

Forward-looking information

The Bank uses, at a minimum, three macroeconomic scenarios (i.e. base, adverse and optimistic) to achieve the objective of measuring ECL in a way that reflects an unbiased and probability weighted outcome. The base scenario represents the most likely scenario and is aligned with the information used by the Bank for strategic planning and budgeting purposes.

The scenarios are reflected in the risk parameters, and, namely 12-month PD, Lifetime PD and LGD, hence 3 sets of each of these parameters are used, in line with the scenarios developed.

The Bank then proceeds to the calculation of weights for each scenario, which represent the probability of occurrence for each of these scenarios. These weights are applied on the 3 sets of calculations of the parameters in order to produce a single scenario

weighted risk parameter value which is subsequently used in both SICR assessment and ECL measurement. ECL calculation incorporates forward-looking macroeconomic variables, including GDP growth rates, house price indices, unemployment rates, interest rates, etc. In order to capture material non – linearities in the ECL model, in the case of individually significant exposures, the Bank considers the relevance of forward looking information to each specific group of borrowers primarily on the basis of the business sector they belong and other drivers of credit risk (if any).As such, different scenario weights are determined per groups of borrowers with the objective of achieving an unbiased ECL amount which incorporates all relevant and supportable information.

Modified Financial Assets

In cases where the contractual cash flows of a financial asset have been modified and the modification is considered substantial enough (for the triggers of derecognition, refer to Derecognition of Financial assets in section 2.2.9 above), the modification date is considered to be the date of initial recognition for impairment calculation purposes, including for the purposes of determining whether a significant increase in credit risk has occurred. Such a modified asset is typically classified as Stage 1 for ECL measurement purposes. However, in some circumstances following a modification that results in derecognition of the original financial asset, there may be evidence that the new financial asset is credit-impaired at initial recognition, and thus, the financial asset is recognized as an originated credit-impaired financial asset (POCI).

In cases where the contractual cash flows of a financial asset have been modified and the modification is not considered substantial enough, the Bank recalculates the gross carrying amount of the financial asset and recognizes the difference as a modification gain or loss in the income statement and determines if the financial asset's credit risk has increased significantly since initial recognition by comparing the risk of a default occurring at initial recognition based on the original unmodified contractual terms and the risk of a default occurring at the reporting date, based on the modified contractual terms.

Presentation of impairment allowance

For financial assets measured at amortized cost, impairment allowance is recognized as a loss allowance reducing the gross carrying amount of the financial assets in the balance sheet. For debt instruments measured at FVOCI, impairment allowance is recognized in other comprehensive income and does not reduce the carrying amount of the debt instruments in the balance sheet. For offbalance sheet financial items arising from lending activities, impairment allowance is presented in Other Liabilities. The respective ECL for the above financial items is recognised within impairment losses.

Write-off of financial assets

Where the Bank has no reasonable expectations of recovering a financial asset either in its entirety or a portion of it, the gross carrying amount of that instrument is reduced directly, partially or in full, against the impairment allowance. The amount writtenoff is considered as derecognized. Subsequent recoveries of amounts previously written off decrease the amount of the impairment losses in the income statement.

Financial assets that are written off could still be subject to enforcement activities in order to comply with the Bank's procedures for recovery of amounts due.

2.2.14 Sale and repurchase agreements and securities lending

(i) Sale and repurchase agreements

Securities sold subject to repurchase agreements (repos) continue to be recorded in the Bank's Balance Sheet as the Bank retains substantially all risks and rewards of ownership, while the counterparty liability is included in amounts due to other banks or due to customers, as appropriate. Securities purchased under agreements to resell (reverse repos) are recorded as loans and advances to other banks or customers, as appropriate. The difference between the sale and repurchase price in case of repos and the purchase and resale price in case of reverse repos is recognized as interest and accrued over the period of the repo or reverse repo agreements using the effective interest method.

(ii) Securities lending

2.2.15 Leases

Policy applicable after 1 January 2019

(i) Accounting for leases as lessee

When the Bank becomes the lessee in a lease arrangement, it recognizes a lease liability and a corresponding right-of-use (RoU) asset at the commencement of the lease term when the Bank acquires control of the physical use of the asset.

When a lease contains extension or termination options that the Bank considers reasonably certain to be exercised, the expected future lease payments or costs of early termination are included within the lease payments used to calculate the lease liability.

(ii) Accounting for leases as lessor

At inception date of the lease, the Bank, acting as a lessor, classifies each of its leases as either an operating lease or a finance lease based on certain criteria.

Finance leases

At commencement date, the Bank derecognizes the carrying amount of the underlying assets held under finance lease, recognizes a receivable at an amount equal to the net investment in the lease and recognizes, in profit or loss, any profit or loss from the derecognition of the asset and the recognition of the net investment. The net investment in the lease is calculated as the present value of the future lease payments in the same way as for the lessee.

After commencement date, the Bank recognizes finance income over the lease term, based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease. The Bank also recognizes income from variable payments that are not included in the net investment in the lease. After lease commencement, the net investment in a lease is not remeasured unless the lease is modified or the lease term is revised.

Operating leases

The Bank continues to recognize the underlying asset and does not recognize a net investment in the lease on the balance sheet or initial profit (if any) on the income statement.

The Bank recognizes lease payments from the lessees as income on a straight-line basis. Also it recognizes costs, including depreciation, incurred in earning the lease income as an expense. The Bank adds initial direct costs incurred in obtaining an operating lease to the carrying amount of the underlying asset and recognizes those costs as an expense over the lease term on the same basis as the lease income.

Subleases

The Bank, acting as a lessee, may enter into arrangements to sublease a leased asset to a third party while the original lease contract is in effect. The Bank acts as both the lessee and lessor of the same underlying asset. The sublease is a separate lease agreement, in which the intermediate lessor classifies the sublease as a finance lease or an operating lease as follows:

if the head lease is a short-term lease, the sublease is classified as an operating lease; or
otherwise, the sublease is classified by reference to the right-of-use asset arising from the head lease, rather than by reference to the underlying asset.

Policy applicable before 1 January 2019

(i) Accounting for leases as lessee

Finance leases:

Leases of property, plant and equipment where the Bank has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are recognized, at the inception of the lease term, at the lower of the fair value of the leased asset or the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charge so as to achieve a constant rate of interest on the liability outstanding. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term.

Operating leases:

(ii) Accounting for leases as lessor

Finance leases:

When assets are leased out under finance leases, the present value of the lease payments is recognized under loans and receivables. The difference between the gross receivable (gross investment) and the present value of minimum lease payments (net investment) is recognized as unearned future finance income and is deducted from loans and advances. Lease income is recognized over the term of the lease using the net investment method, which reflects a constant periodic rate of return. Finance lease receivables are assessed for impairment losses in accordance with Bank's impairment policy for financial assets as described in note 2.2.13.

Operating leases:

2.2.16 Income tax

Income tax consists of current and deferred tax.

(i) Current income tax

Income tax payable on profits, based on the applicable tax law, is recognized as an expense in the period in which profits arise.

(ii) Deferred income tax

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The principal temporary differences arise from impairment/valuation relating to loans, Private Sector Initiative (PSI+) tax related losses, losses from disposals and crystallized writeoffs of loans, depreciation of property, plant and equipment, fair value adjustment of investment property, pension and other retirement benefit obligations, and revaluation of certain financial assets and liabilities, including derivative financial instruments.

Deferred tax assets are recognized where it is probable that future taxable profit will be available against which the temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available. The Bank recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

The deferred tax asset on income tax losses carried forward is recognized as an asset when it is probable that future taxable profits will be available against which these losses can be utilized.

(iii) Uncertain tax positions

The Bank determines and assesses all material tax positions taken, including all, if any, significant uncertain positions, in all tax years that are still subject to assessment (or when the litigation is in progress) by relevant tax authorities. In evaluating tax positions , the Bank examines all supporting evidence (Ministry of Finance circulars, individual rulings, case law, past administrative practices, ad hoc tax/legal opinions etc.) to the extent they are applicable to the facts and circumstances of the particular Bank's case/ transaction.

In addition, judgments concerning the recognition of a provision against the possibility of losing some of the tax positions are highly dependent on advice received from internal/ external legal counselors. For uncertain tax positions with a high level of uncertainty, the Bank recognizes, on a transaction by transaction basis, or together as a group, depending on which approach better predicts the resolution of the uncertainty using an expected value (probability-weighted average) approach: (a) a provision against tax receivable which has been booked for the amount of income tax already paid but further pursued in courts or (b) a liability for the amount which is expected to be paid to the tax authorities. The Bank presents in its balance sheet all uncertain tax balances as current or deferred tax assets or liabilities.

The Bank as a general rule has opted to obtain an 'Annual Tax Certificate', which is issued after a tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. Further information in respect of the Annual Tax Certificate and the related tax legislation, is provided in note 14.

2.2.17 Employee benefits

(i) Short term benefits

(ii) Pension obligations

The Bank provides a number of defined contribution pension plans where annual contributions are invested and allocated to specific asset categories. Eligible employees are entitled to the overall performance of the investment. The Bank's contributions are recognized as employee benefit expense in the year in which they are paid.

(iii) Standard legal staff retirement indemnity obligations (SLSRI) and termination benefits

The Bank operates unfunded defined benefit plans in Greece under the regulatory framework. In accordance with the local labor legislation, the Bank provides for staff retirement indemnity obligation for employees which are entitled to a lump sum payment based on the number of years of service and the level of remuneration at the date of retirement, if they remain in the employment of the Bank until normal retirement age. Provision has been made for the actuarial value of the lump sum payable on retirement (SLSRI) using the projected unit credit method. Under this method the cost of providing retirement indemnities is charged to the income statement so as to spread the cost over the period of service of the employees, in accordance with the actuarial valuations which are performed every year.

The SLSRI obligation is calculated as the present value of the estimated future cash outflows using interest rates of high quality corporate bonds. The currency and term to maturity of the bonds used are consistent with the currency and estimated term of the retirement benefit obligations. Actuarial gains and losses that arise in calculating the Bank's SLSRI obligations are recognized directly in other comprehensive income in the period in which they occur and are not reclassified to the income statement in subsequent periods.

Interest on the staff retirement indemnity obligations and service cost, consisting of current service cost, past service cost and gains or losses on settlement are recognized in the income statement. In calculating the SLSRI obligation, the Bank also considers potential separations before normal retirement based on the terms of previous voluntary exit schemes.

Termination benefits are payable when employment is terminated by the Bank before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits (including those in the context of the Voluntary Exit Schemes implemented by the Bank). The Bank recognizes termination benefits at the earlier of the following dates: (a) when the Bank can

no longer withdraw the offer of those benefits; and (b) when the Bank recognizes costs for a restructuring that involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Termination benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

(iv) Performance-based cash payments

The Bank's Management awards high performing employees with bonuses in cash, from time to time, on a discretionary basis. Cash payments requiring only Management approval are recognized as employee benefit expenses on an accrual basis. Cash payments requiring General Meeting approval as distribution of profits to staff are recognized as employee benefit expense in the accounting period that they are approved by the Bank's shareholders.

(v) Performance-based share-based payments

The Bank's Management awards employees with bonuses in the form of shares and share options on a discretionary basis. Nonperformance related shares vest in the period granted. Share based payments that are contingent upon the achievement of a performance and service condition, vest only if both conditions are satisfied.

The fair value of the shares granted is recognized as an employee benefit expense with a corresponding increase in share capital (par value) and share premium.

2.2.18 Repossessed properties

In cases where the Bank makes use of repossessed properties as part of its operations, they may be reclassified to own occupied or investment properties, as appropriate.

Any gains or losses on liquidation are included in the income statement.

2.2.19 Related party transactions

Related parties of the Bank include:

(a) an entity that has control over the Bank and entities controlled, jointly controlled or significantly influenced by this entity, as well as members of its key management personnel and their close family members;

(b) an entity that has significant influence over the Bank and entities controlled by this entity,

(c) members of key management personnel of the Bank, their close family members and entities controlled or jointly controlled by the abovementioned persons;

(d) associates and joint ventures of the Bank; and

(e) subsidiaries.

2.2.20 Provisions

Provisions are recognized when the Bank has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and reliable estimates of the amount of the obligation can be made.

2.2.21 Share capital

Dividend distribution on shares is recognized as a deduction in the Bank's equity when approved by the General Meeting of shareholders. Interim dividends are recognized as a deduction in the Bank's equity when approved by the Board of Directors.

Where the Bank purchases own shares (treasury shares), the consideration paid including any directly attributable incremental costs (net of income taxes), is deducted from shareholders' equity until the shares are cancelled, reissued or disposed of. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders' equity.

2.2.22 Hybrid capital

Hybrid capital issued by the Bank, through its special purpose entity, is classified as equity when there is no contractual obligation to deliver to the holder cash or another financial asset.

Incremental costs directly attributable to the issue of new hybrid capital are shown in equity as a deduction from the proceeds, net of tax.

Dividend distribution on hybrid capital is recognized as a deduction in the Bank's equity on the date it is due.

Where hybrid capital, issued by the Bank, is repurchased, the consideration paid including any directly attributable incremental costs (net of income taxes), is deducted from shareholders' equity. Where such securities are subsequently called or sold, any consideration received is included in shareholders' equity.

2.2.23 Financial guarantees and commitments to extend credit

Financial guarantees

Commitments to extend credit

Commitments represent off-balance sheet items where the Bank commits, over the duration of the agreement, to provide a loan with pre-specified terms to the customer. Such contractual commitments represent commitments to extend credit and standby letters and they are part of the normal lending activities of the Bank, for which an impairment allowance is recognised under IFRS 9.

Impairment allowance for off-balance sheet exposures (financial guarantees and commitments) is included within Other Liabilities.

2.2.24 Non-current assets classified as held for sale and discontinued operations

Non-current assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. For a non-current asset to be classified as held for sale, it is available for immediate sale in its present condition, subject to terms that are usual and customary for sales of such assets, and the sale is considered to be highly probable. In such cases, management is committed to the sale and actively markets the property for sale at a price that is reasonable in relation to the current fair value. The sale is also expected to qualify for recognition as a completed sale within one year from the date of classification. Before their classification as held for sale, assets are remeasured in accordance with the respective accounting standard.

The Bank presents discontinued operations in a separate line in the income statement if a component of the Bank's operations has been disposed of or is classified as held for sale and:

(a) Represents a separate major line of business or geographical area of operations or

(b) Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.

Profit or loss from discontinued operations includes the profit or loss before tax from discontinued operations, the gain or loss on disposal before tax or measurement to fair value less costs to sell and discontinued operations tax expense. Upon classification of a component of the Bank's operations as a discontinued operation, the Bank restates prior periods in the income statement.

2.2.25 Cash and cash equivalents

Cash and cash equivalents include cash in hand, unrestricted deposits with central banks, due from credit institutions and other short-term highly liquid investments with original maturities of three months or less.

2.2.26 Fiduciary activities

The Bank provides custody, trustee, corporate administration, investment management and advisory services to third parties. This involves the Bank making allocation, purchase and sale decisions in relation to a wide range of financial instruments. The Bank receives fee income for providing these services. Those assets that are held in a fiduciary capacity are not assets of the Bank and are not recognized in the financial statements. In addition, the Bank does not guarantee these investments and as a result it is not exposed to any credit risk in relation to them.

2.3 Impact of significant changes in applying accounting policies

2.3.1 IFRS 16 'Leases' – Impact of adoption

The Bank implemented the requirements of IFRS 16 on 1 January 2019, as further analyzed in note 2.1.1. The impact of the transitioning to the new standard is discussed below.

On 1 January 2019, the Bank recognised right-of-use assets of € 280 million and lease liabilities of an equivalent amount arising from leases of properties and vehicles, with no impact on shareholders' equity. The capital impact arising primarily from the increase in risk-weighted assets was a reduction of approximately 11 bps on the Bank's common equity Tier I ratio by applying regulatory transitional arrangements (approximately -9 bps on the Bank's CET1 ratio, on a fully loaded basis).

It is noted that € 114 million of the above mentioned right-of-use assets and of the corresponding lease liabilities were related to properties on lease from Grivalia. Following the merger of Eurobank with Grivalia (note 24), these assets and liabilities have been derecognized in the second quarter of 2019, as the related properties have become own used assets of the combined group.

With regard to subsequent measurement, the Bank, acting as a lessee, applies the cost model for the measurement of right-of-use asset. Accordingly, the right-of-use asset is measured at cost less any accumulated depreciation and accumulated impairment losses as determined in accordance with IAS 36, and is adjusted for the remeasurement of the lease liability.

On the other hand, interest expense is recognized on the lease liabilities, while their carrying amount is reduced to reflect the lease payments made. In case of any reassessments or lease modifications specified, the carrying amount of the lease liabilities is remeasured to reflect revised lease payments. For the year ended 31 December 2019, the depreciation charge for right-of-use assets was € 29 million and the interest expense recognised on lease liabilities was € 3 million.

	€ million
Non-cancellable operating lease rentals payable under IAS 17	107
Plus: Future contractual lease payments (in excess of non-cancellable term)	118
Total future contractual operating lease payments	225
Plus: Re-estimation of lease term (1)	105
Adjusted total operating lease commitments as at 31 December 2018	330
Less: Recognition exemption for short term leases and leases of low value	(3)
Less: Exclusion of Stamp Duty, VAT and other applicable taxes from the lease payments	(10)
Undiscounted lease liabilities as at 31 December 2018	317
Less: Discounting effect of the lease liabilities using the incremental borrowing
rate as at 1 January 2019	(37)
Total lease liabilities recognised as at 1 January 2019 under IFRS 16	280

(1) The re-estimation of total future contractual lease payments includes primarily:

a) contracts that expire in 2019 but the Bank expects to renew and has reset their term,

b) contracts with indefinite duration for which the Bank has determined the term that it expects to occupy the leased asset, and
c) re-assessment of extension and termination options.

There was no impact from the adoption of IFRS 16 for the leases in which the Bank is a lessor.

2.3.2 IAS 40 'Investment property' – Impact of change in accounting policy to Fair value model

The Bank deems the fair value model to be currently more appropriate for measuring Bank's investment property portfolio, which was significantly expanded following Grivalia's merger, also considering the positive real-estate market prospects. As such the adoption of fair value model provides more relevant and reliable information since it better reflects the current value of Bank's investment property.

In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", the above change in the Bank's accounting policy on Investment Property was applied retrospectively. The tables below show the adjustments recognized for each individual line item as at 1 January 2018, 31 December 2018 and 31 December 2019. Line items that were not affected by the changes have not been included.

	31 December 2019		31 December 2018			1 January 2018
Balance Sheet	IP under cost model	FV model adjustment	As presented		As published Restatement	Restated	As published Restatement		Restated
ASSETS	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million

Investment property	664	57	721	32	7	39	22	7	29
Deferred tax assets	4,771	(17)	4,754	4,903	(2)	4,901	4,846	(2)	4,844
Total assets	54,806	40	54,846	50,275	5	50,280	51,448	5	51,453
EQUITY
Reserves and retained earnings	(3,094)	40	(3,054)	(4,376)	5	(4,371)	(3,263)	5	(3,258)
Total equity	5,817	40	5,857	4,378	5	4,383	6,442	5	6,447
Total equity and liabilities	54,806	40	54,846	50,275	5	50,280	51,448	5	51,453

	31 December 2019			31 December 2018
Income Statement	IP under cost model	FV model adjustment	As presented	As published	Restatement	Restated
	€ million	€ million	€ million	€ million	€ million	€ million
Other income/(expenses)	(44)	45	1	(4)	(3)	(7)
Operating income	1,329	45	1,374	1,464	(3)	1,461
Operating expenses	(659)	5	(654)	(665)	0	(665)
Profit from operations before impairments, provisions and restructuring costs	670	50	720	799	(3)	796
Other impairment losses and provisions	(41)	-	(41)	(79)	3	(76)
Profit before tax	(31)	50	19	56	0	56
Income tax	27	(15)	12	(23)	(0)	(23)
Net profit	(4)	35	31	33	0	33

2.3.3 IFRS 9 'Financial Instruments' – Impact of adoption

The Bank adopted IFRS 9 in the first quarter of 2018, whereas the Standard's requirements were applied retrospectively by adjusting the Bank's balance sheet on the date of transition on 1 January 2018. The effect on the carrying amounts of financial assets and liabilities at the date of transition to IFRS 9 was recognized as an adjustment to opening reserves and retained earnings as further discussed below.

The impact of transitioning to IFRS 9 amounted to € 982 million, which is recognised as an opening balance adjustment at 1 January 2018 of the Bank's total shareholders' equity. The above impact, as depicted in the table below, is mainly attributed to the impact on the Greek lending portfolio, which amounts to € 918 million.

	IFRS 9 impact
Impact attributed to :	€ million
Impairment
- Loans and advances to customers	(918)
- Other financial assets	(62)
Total impairment	(980)
Classification & Measurement	(2)
Hedging	-
Total IFRS 9 impact	(982)

The Bank, based on the Management's relevant assessment at 1 January 2018, did not recognize a deferred tax asset (DTA) of € 285 million approximately arising from the IFRS 9 transition impact. Up to 31 December 2019, following the reassessment of the recoverability of deferred tax assets, the Bank has recognized the above deferred tax asset, of which € 260 million in 2019, affecting the income statement accordingly (note 14).

The table below presents the impact of transition to IFRS 9 to Fair value reserve and Retained earnings:

	IFRS 9 impact
	€ million

Special reserves
Closing balance under IAS 39	7,755
of which AFS reserve	206
Remeasurement under IFRS 9 measurement categories	5
Remeasurement under IFRS 9 ECL impairment for FVOCI portfolio	12
Deferred tax	(4)
Opening balance under IFRS 9	7,768
Retained earnings
Closing balance under IAS 39	(11,018)
Remeasurement under IFRS 9 measurement categories	(7)
Remeasurement under IFRS 9 ECL impairment including FVOCI portfolio	(992)
Deferred tax	4
Opening balance under IFRS 9	(12,013)

(ii) Regulatory capital

The Bank's capital impact from the initial application of IFRS 9 as shown in the table below:

	As at
Capital impact from the initial			1 January 2018
application of IFRS 9	31 December 2017	1 January 2018	IFRS 9 transitional
	IAS 39	IFRS 9 full impact	arrangements
	€ million	€ million	€ million
Common equity Tier 1 Capital	6,173	5,189	6,049
Risk weighted assets	32,689	32,293	32,445
	%	%	%
Common equity Tier 1 (CET 1) Ratio	18.9	16.1	18.6

The Bank's capital impact on the fully loaded CET1 ratio as at 1 January 2018, based on the full implementation of the Basel III rules in 2024 is shown in the table below:

	As at
Fully loaded CET 1 ratio	31 December 2017 IAS 39	1 January 2018 IFRS 9 full impact	IFRS 9 impact
	€ million	€ million	€ million
Common equity Tier 1 Capital	4,934	3,950	(984)
Risk weighted assets	32,441	32,045	(396)
	%	%	%
Common equity Tier 1 (CET 1) Ratio	15.2	12.3	(2.9)

The Bank has elected to apply the phase-in approach as per EU legislation (Regulation EU 2017/2395) for mitigating the impact of IFRS 9 transition on the regulatory capital. The transition period is for five years, with the proportion of the impact to be included being 5% in 2018 and 15%, 30%, 50% and 75% in the subsequent four years (note 4). The full impact is expected as of 1 January 2023.

3. Critical accounting estimates and judgments in applying accounting policies

In the process of applying the Bank's accounting policies, the Bank's Management makes various judgments, estimates and assumptions that may affect the reported amounts of assets and liabilities, revenues and expenses recognized in the financial statements within the next financial year and the accompanying disclosures. Estimates and judgments are continually evaluated and are based on current conditions, historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are recognized prospectively. The most significant areas in which the Bank makes judgments, estimates and assumptions in applying its accounting policies are set out below:

3.1 Impairment losses on loans and advances to customers

ECL measurement

Notes to the Financial Statements

The Bank's ECL calculations are outputs of complex models with a number of underlying assumptions regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered accounting judgments and estimates include:

Determination of a significant increase of credit risk

IFRS 9 does not include a definition of what constitutes a significant increase in credit risk (SICR). An assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering primarily the change in the risk of default occurring over the remaining life of the financial instrument. The Bank assesses whether a SICR has occurred since initial recognition based on qualitative and quantitative reasonable and supportable forward-looking information that includes significant management judgment. More stringent criteria could significantly increase the number of instruments migrating to stage 2.

As at 31 December 2019 and 31 December 2018, the range of lifetime PD thresholds based on the above segmentation, that triggers allocation to stage 2 for Greece's retail exposures are set out below:

Retail exposures	Range of SICR thresholds
Mortgage	30%-50%
Home Equity	10%-80%
SBB	10%-65%
Consumer	60%-100%

For wholesale portfolios, the origination PD curves and the residual lifetime PD curves at each reporting date are mapped to credit rating bands. Accordingly, SICR thresholds are based on the comparison of the origination and reporting date credit ratings, whereby rating downgrades represent changes in residual lifetime PD. Similar to retail exposures, the Bank segments the wholesale portfolios based on asset class, loan type and credit rating at origination.

Wholesale internal rating bands	SICR threshold range
1-2	Two to Three notches
3-4	Two notches or more
5-8	One notch or more

Determination of scenarios, scenario weights and macroeconomic factors

To achieve the objective of measuring ECL, the Bank evaluates a range of possible outcomes in line with the requirements of IFRS 9 through the application of a minimum three macroeconomic scenarios i.e. baseline, adverse and optimistic, in a way that reflects an unbiased and probability weighted outcome. Each of the scenarios is based on management's assumptions around future economic conditions in the form of macroeconomic, market and other factors. As at 31 December 2019 and 31 December 2018, the probability weights for the above mentioned scenarios applied by the Bank in the ECL measurement calculations are 50% for the baseline scenario and 25% for the adverse and optimistic scenarios.

The Bank ensures that impairment estimates and macroeconomic forecasts applicable for business and regulatory purposes are fully consistent. Accordingly, the baseline scenario applied in the ECL calculation coincides with the one used for ICAAP, business planning and internal stress testing purposes. In addition, all experience gained from the stress tests imposed by the regulator, have been taken into account in the process of developing the macroeconomic scenarios, as well as, impairments for stress testing purposes have been forecasted in line with IFRS 9 ECL methodology.

In terms of macroeconomic assumptions, the Bank assesses a number of indicators in projecting the risk parameters, namely Residential and Commercial Property Price Indices, unemployment, Gross Domestic Product (GDP), Greek Government Bond (GGB) spread over Euribor and inflation as well as Interest and FX rates. Regarding the key macroeconomic indicators used in the ECL measurement of Greek lending portfolios for the year ended 31 December 2019 and 31 December 2018, the arithmetic averages

of the scenarios' probability-weighted annual forecasts for the next four year period following the reporting date, are set in the following table:

	As at 31 December 2019	As at 31 December 2018
Key macroeconomic indicator	Average (2020-2023) annual forecast	Average (2019-2022) annual forecast
Gross Domestic Product growth Unemployment rate Residential property prices' index Commercial property prices' index	2.47% 14.70% 3.96% 4.17%	1.74% 17.72% 1.70% 2.20%

Changes in the scenarios and weights, the corresponding set of macroeconomic variables and the assumptions made around those variables for the forecast horizon would have a significant effect on the ECL amount. The Bank independently validates all models and underlying methodologies used in the ECL measurement through competent resources, who are independent of the model development process.

Development of ECL models, including the various formulas, choice of inputs and interdependencies

For the purposes of ECL measurement the Bank performs the necessary model parameterization based on observed point-in-time data on a granularity of monthly intervals. The ECL calculations are based on input parameters, i.e. EAD, PDs, LGDs, CCFs, etc. incorporating management's view of the future. The Bank also determines the links between macroeconomic scenarios and, economic inputs, such as unemployment levels and collateral values, and the effect on PDs, EADs and LGDs.

Segmentation of financial assets when their ECL is assessed on a collective basis

The Bank segments its exposures on the basis of shared credit risk characteristics upon initial recognition for the purposes of both assessing significant increase in credit risk and measuring loan loss allowance on a collective basis. The different segments aim to capture differences in PDs and in the rates of recovery in the event of default. On subsequent periods, the Bank re-evaluates the grouping of its exposures at least on an annual basis, in order to ensure that the groups remain homogeneous in terms of their response to the identified shared credit risk characteristics. Re-segmentation reflects management's perception in respect to the change of credit risk associated with the particular exposures compared to initial recognition.

Modeling and Management overlays / adjustments

A number of sophisticated models have been developed or modified to calculate ECL, while temporary management adjustments may be required to capture new developments and information available, which are not yet reflected in the ECL calculation through the risk models. Internal counterparty rating changes, new or revised models and data may significantly affect ECL. The models are governed by the Bank's validation framework, which aim to ensure independent verification, and are approved by the Board Risk Committee (BRC).

Sensitivity analysis on lending portfolios

The tables below depicts, the estimated effect in the Bank's ECL measurement (including off-balance sheet items) upon potential reasonable combined changes of forecasts in key macroeconomic indicators over the next 5 years (2020-2024 and 2019-2023, respectively):

		As at 31 December 2019				As at 31 December 2019
Sensitivity scenario		Impact
Combined change %			in € million % of allowance
Key macroconomic indicators	Positive change	Adverse change		Lending Portfolio	Positive change	Adverse change	Positive change	Adverse change
GDP growth	+30%	-30%	change of annual forecasts	Wholesale lending	-27	26	-1.14	+1.11
Unemployment Rate	-6.5%	+6.5%	change of annual forecasts	Retail lending	-57	65	-1.38	+1.58
Property indices (RRE/CRE)	+3%	-3%	change of index adjusted real estate collateral market values	Total Bank	-84	91	-1.29	+1.41

		As at 31 December 2018					As at 31 December 2018
		Sensitivity scenario				Impact
Combined change %			in € million % of allowance
Key macroconomic indicators	Positive change	Adverse change		Lending Portfolio	Positive change	Adverse change	Positive change	Adverse change
GDP growth	+30%	-30%	change of annual forecasts	Wholesale lending	-40	50	-1.27	+1.59
Unemployment Rate	-6.5%	+6.5%	change of annual forecasts	Retail lending	-105	123	-1.93	+2.26
Property indices (RRE/CRE)	+2%	-2%	change of index adjusted real estate collateral market values	Total Bank	-145	173	-1.69	+2.01

The Bank updates and reviews the reasonability and performs back-testing of the main assumptions used in its methodology assessment for SICR and ECL measurement, at least on an annual basis or earlier, based on facts and circumstances. In this context, experienced and dedicated staff within the Bank's Risk Management function monitors the risk parameters applied for the estimation of ECL. Furthermore, as part of the well-defined governance framework, any revisions to the methodology used are approved by the Bank competent committees and ultimately the Board Risk Committee (BRC).

3.2 Fair value of financial instruments

Valuation models are used mainly to value over-the-counter derivatives and securities measured at fair value.

are certified before they are used, and are calibrated to ensure that outputs reflect actual data and comparative market prices. The main assumptions and estimates, considered by management when applying a valuation model include:

the likelihood and expected timing of future cash flows;
the selection of the appropriate discount rate, which is based on an assessment of what a market participant would regard as an appropriate spread of the rate over the risk-free rate; and
judgment to determine what model to use in order to calculate fair value.

Information in respect of the fair valuation of the Bank's financial assets and liabilities is provided in note 5.3.

3.3 Classification of financial instruments

The Bank applies significant judgment in assessing the classification of its financial instruments and especially, in the below areas:

Business model assessment

Judgment is exercised in order to determine the appropriate level at which to assess the business model. In assessing the business model of financial instruments, these are aggregated into groups (business lines) based on their characteristics, and the way they are managed in order to achieve the Bank's business objectives. In general the assessment is performed at the business unit level for lending exposures including securitized notes issued by special purpose entities established by the Bank and debt securities. However, further disaggregation may be performed by business strategy/ region, etc.

In assessing the business model for financial instruments, the Bank performs a past sales evaluation of the financial instruments and assesses their expected evolution in the future. Judgment is exercised in determining the effect of sales to a "hold to collect" business model depending on their objective and their acceptable level and frequency.

Contractual cash flow characteristics test (SPPI test)

The Bank performs the SPPI assessment of lending exposures including securitized notes issued by special purpose entities established by the Bank and debt securities, by considering all the features which might potentially lead to SPPI failure. Judgment is applied by the responsible Business Units when considering whether certain contractual features significantly affect future cash flows. Accordingly, for non-recourse financial assets, the Bank assesses jointly criteria such as the adequacy of equity, LTV (Loanto-Value) and DSCR (Debt-Service-Coverage-Ratio) ratios as well as the existence of corporate and personal guarantees. Furthermore, in order to assess whether any variability in the cash flows is introduced by the modified time value of money element, the Bank performs a quantitative assessment (as described in note 2). Moreover, the Bank evaluates certain cases on whether the existence of performance-related terms exposes the Bank to asset risk rather to the borrower's credit risk.

The Bank has established a robust framework to perform the necessary assessments in accordance with Bank's policies in order to ensure appropriate classification of financial instruments, including reviews by experienced staff for lending exposures and debt securities.

3.4 Income tax

The Bank is subject to income tax and estimates are required in determining the liability for income tax. The Bank recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due or for anticipated tax disputes. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax in the period in which such determination is made. Further information in relation to the above is provided in note 14.

In addition, the Bank recognizes deferred tax assets to the extent that it is probable that sufficient taxable profit will be available against which unused tax losses and deductible temporary differences can be utilized. Recognition therefore involves judgment regarding the Bank's future financial performance in which the deferred tax asset has been recognized. Particularly, in order to determine the amount of deferred tax assets that can be recognized, significant management judgments are required regarding the

likely timing and level of future taxable profits. In making this evaluation, the Bank has considered all available evidence, including management's projections of future taxable income and the tax legislation.

The most significant judgment exercised by Management relates to the recognition of deferred tax assets in respect of losses realized in Greece. In the event that, the Bank assesses that it would not be able to recover any portion of the recognized deferred tax assets in the future, the unrecoverable portion would impact the deferred tax balances in the period in which such judgment is made.

As at 31 December 2019, the Bank revisited its estimates regarding the level of future taxable profits against which the unused tax losses and the deductible temporary differences can be utilized and evaluated accordingly the recoverability of the recognized deferred tax assets based on a) its three- year Business Plan, which was approved by the Board of Directors in March 2019 and has been submitted to the Hellenic Financial Stability Fund (HFSF) and to the Single Supervisory Mechanism (SSM), providing outlook of its profitability and capital position for the period up to the end of 2021 and b) the update of this Plan for the period till the end of 2022 that was submitted to the Board of Directors and the Hellenic Financial Stability Fund (HFSF) in December 2019. The implementation of the abovementioned Business Plan and its update largely depend on the risks and uncertainties that stem from the macroeconomic environment in Greece.

Further information in respect of the recognized deferred tax assets and the Bank's assessment for their recoverability is provided in note 14.

3.5 Retirement benefit obligations

The Bank determines the appropriate discount rate used to calculate the present value of the estimated retirement obligations, at the end of each year based on interest rates of high quality corporate bonds. The currency and term to maturity of the bonds used are consistent with the currency and estimated term to maturity of the retirement benefit obligations. The salary rate increase assumption is based on future inflation estimates reflecting also the Bank's reward structure and expected market conditions.

Other assumptions for pension obligations, such as the inflation rate, are based in part on current market conditions.

For information in respect of the sensitivity analysis of the Bank's retirement benefit obligations to reasonably possible, at the time of preparation of these financial statements, changes in the abovementioned key actuarial assumptions, refer to note 36.

3.6 Investment properties

Investment property is carried at fair value, as determined by external, independent, certified valuators on an annual basis.

Further information in respect of the fair valuation of the Bank's investment properties is included in note 27.

3.7 Provisions and contingent liabilities

The Bank recognizes provisions when it has a present legal or constructive obligation, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of its amount.

Considering the subjectivity and uncertainty inherent in the determination of the probability and amount of the abovementioned outflows, the Bank takes into account a number of factors such as legal advice, the stage of the matter and historical evidence from

Notes to the Financial Statements

similar cases. In the case of an offer made within the context of the Bank's voluntary exit scheme, the number of employees expected to accept the abovementioned offer along with their age cluster is a significant factor affecting the measurement of the outflow for the termination benefits.

Further information in relation to the Bank's provisions and contingent liabilities is provided in note 35 and note 42.

3.8 Leases

The Bank, as a lessee, determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Bank applies judgement in evaluating whether it is reasonably certain or not to exercise an option to renew or terminate the lease, by considering all relevant factors and economic aspects that create an economic incentive. The Bank reassesses the lease term if there is a significant event or change in circumstances that is within its control that affects its ability to exercise or not to exercise the option to renew or to terminate, such as significant leasehold improvements or significant customization of the leased asset.

In measuring lease liabilities, the Bank uses the lessees' incremental borrowing rate ('IBR') when it cannot readily determine the interest rate implicit in the lease. The IBR is the rate of interest that the Bank would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.

Therefore, estimation is required when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Bank estimates the IBR using observable inputs (such as government bond yields) as a starting point when available, and performs certain additional entity-specific adjustments, such as credit spread adjustments or adjustments to reflect the lease terms and conditions. For the Bank, the IBR is derived from the estimated covered bonds yield curve, which is constructed based on observable Greek Government Bond yields.

3.9 Other significant accounting estimates and judgments

Information in respect of other estimates and judgments that are made by the Bank is provided in notes 23, 28 and 30.

4. Capital Management

The Bank's capital adequacy position is presented in the following table:

	2019	2018 (1)
	€ million	€ million

Total equity	5,857	4,378
Add: Adjustment due to IFRS 9 transitional arrangements	714	798
Less: Preferred securities	(2)	(42)
Less: Goodwill	(160)	-
Less: Other regulatory adjustments	(498)	(566)
Common Equity Tier 1 Capital	5,911	4,568
Add: Preferred securities subject to phase-out	-	17
Total Tier 1 Capital	5,911	4,585
Tier 2 capital-subordinated debt	950	950
Add: Other regulatory adjustments	89	-
Total Regulatory Capital	6,950	5,535
Risk Weighted Assets	35,806	34,436
Ratios:	%	%
Common Equity Tier 1	16.5	13.3
Tier 1	16.5	13.3
Total Capital Adequacy Ratio	19.4	16.1

(1) The capital adequacy ratios for the year ended 31 December 2018 have not been adjusted following the change in accounting policy (note 2.3.2).

Note: The Bank's CET1 as at 31 December 2019, based on the full implementation of the Basel III rules in 2024 (fully loaded CET1 ), would be 14.5% (2018: 10.7%).

The Bank has sought to maintain an actively managed capital base to cover risks inherent in the business. The adequacy of the Bank's capital is monitored using, among other measures, the rules and ratios established by the Basel Committee on Banking Supervision (BIS rules/ratios) as adopted by the European Central Bank and the Bank of Greece in supervising the Bank. The capital adequacy framework, as in force, was incorporated in the European Union (EU) legislation through the Directive 2013/36/EU (known as CRD IV), along with the Regulation No 575/2013/EU (known as CRR). Directive 2013/36/EU was transposed into Greek legislation by Law 4261/2014. Supplementary to that, in the context of Internal Capital Adequacy Assessment Process (ICAAP), the Bank considers a broader range of risk types and the Bank's risk management capabilities. ICAAP aims ultimately to ensure that the Bank has sufficient capital to cover all material risks that it is exposed to, over a three-year horizon.

Based on Council Regulation No 1024/2013, the European Central Bank (ECB) conducts annually a Supervisory Review and Evaluation Process (SREP) in order to define the prudential requirements of the institutions under its supervision. The key purpose of the SREP is to ensure that institutions have adequate arrangements, strategies, processes and mechanisms as well as capital and liquidity to ensure a sound management and coverage of their risks, to which they are or might be exposed, including those revealed by stress testing and risks the institution may pose to the financial system. According to the 2018 SREP decision, starting from 1 March 2019, the Bank is required to meet on an individual basis a Common Equity Tier 1 ratio of at least 10.25% and a Total Capital Adequacy Ratio of at least 13.75% (Overall Capital Requirements including the Capital Conservation Buffer and the Other Systemically Important Institutions Buffer ), plus the applicable Countercyclical Capital Buffer (0.05% for the last quarter of 2019 mainly stemming from the exposures in Bulgaria and Ireland) analyzed as follows:

	31 December 2019
	CET1 Capital	Total Capital
	Requirements	Requirements

Minimum regulatory requirement	4.5%	8.0%
Pillar 2 Requirement (P2R)	3.0%	3.0%
Total SREP Capital Requirement (TSCR)	7.5%	11.0%
Combined Buffer Requirement (CBR)
Capital conservation buffer (CCoB)	2.5%	2.5%
Countercyclical capital buffer (CCyB)	0.05%	0.05%
Other systemic institutions buffer (O-SII)	0.25%	0.25%
Overall Capital Requirement (OCR)	10.30%	13.80%

Pillar 2 additional own fund requirement of 3% for 2019, must be held in the form of CET1 capital and amounts to € 1,074 million for the Bank on an individual basis.

According to the 2019 SREP decision, for 2020, the Bank is required to meet on an individual basis a Common Equity Tier 1 ratio of at least 10.5% and a Total Capital Adequacy Ratio of at least 14% (Overall Capital Requirements including Capital Conservation Buffer of 2.5% and Other Systemically Important Institution Buffer of 0.5%) plus any applicable Countercyclical Capital Buffer.

2020 EU – wide stress test postponed to 2021

5. Financial risk management and fair value

5.1 Use of financial instruments

By their nature the Bank's activities are principally related to the use of financial instruments including derivatives. The Bank accepts deposits from customers, at both fixed and floating rates, and for various periods and seeks to earn above average interest margins by investing these funds in high quality assets. The Bank seeks to increase these margins by consolidating short-term funds and lending for longer periods at higher rates, while maintaining sufficient liquidity to meet all claims that might fall due.

The Bank also seeks to raise its interest margins by obtaining above average margins, net of provisions, through lending to commercial and retail borrowers within a range of credit standing. Such exposures include both on-balance sheet loans and advances and off-balance sheet guarantees and other commitments such as letters of credit.

The Bank also trades in financial instruments where it takes positions in traded and over the counter financial instruments, including derivatives, to take advantage of short-term market movements in the equity and bond markets and in currency and interest rates.

5.2 Financial risk factors

Due to its activities, the Bank is exposed to a number of financial risks, such as credit risk, market risk (including currency and interest rate risk), liquidity and operational risks. The Bank's overall risk management strategy seeks to minimize any potential adverse effects on its financial performance, financial position and cash flows.

Risk Management objectives and policies

The Group acknowledges that taking risks is an integral part of its operations in order to achieve its business objectives. Therefore, the Group's management sets adequate mechanisms to identify, those risks at an early stage and assesses their potential impact on the achievement of these objectives.

Risk appetite that is clearly communicated throughout the Group, determines risk culture and forms the basis on which risk policies and risk limits are established at Group and regional level.

Board Risk Committee (BRC)

The Board Risk Committee (BRC) is a committee of the BoD and its task is to assist the BoD to ensure that the Group has a welldefined risk and capital strategy in line with its business plan and an adequate and robust risk appetite.

The BRC consists of five (5) non-executive directors, meets at least on a monthly basis and reports to the BoD on a quarterly basis and on ad hoc instances if it is needed.

Management Risk Committee

The Management Risk Committee (MRC) is a management committee established by the CEO and operates as an advisory committee to the BRC.

Group Risk Management General Division

Non-Performing Exposures (NPEs) management

Troubled Assets Committee (TAC)

Troubled Assets Group General Division (TAG)

The TAG, which has been established as an independent body, is headed by the Deputy Chief Executive Officer, and Executive member of the BoD and is responsible for the management of the Group's troubled assets portfolio, for the whole process, from the pre-delinquency status in case of high risk exposures up to legal workout. It ensures close monitoring, tight control and course adjustment taking into account the continuous developments in the macro environment, the regulatory and legal requirements, the international best practices and new or evolved internal requirements.

The key governing principles of the TAG are to:

Preserve the clear demarcation line between business units and troubled assets management;
Ensure direct top management involvement in troubled assets management and close monitoring of the respective portfolio;
Deploy a sound credit workout strategy through innovative propositions that will lead to viable solutions, ensuring a consistent approach for managing troubled assets across portfolios;
Engineer improvements in monitoring and offering targeted solutions by segmenting delinquent borrowers and tailoring the remedial and workout approach to specific segment;
Prevent non performing loans formation through early intervention and clear definition of primary financial objectives of troubled assets;
Monitor the loan delinquency statistics, as well as define targeted risk mitigating actions to ensure portfolio risk reduction;
Target maximization of borrowers who return to current status through modifications or collections;
Monitor losses related to troubled assets; and
Define criteria to assess the sustainability of proposed forbearance or resolution and closure measures and design decision trees.

Following the Corporate Transformation Hive-down, the Pillar and Cairo securitizations and the FPS agreement (notes 30, 34 and 43), the Bank will assign the management of its remaining NPE portfolio to FPS, through a 10-year agreement.

Eurobank will retain the business ownership and responsibility for the performance of the NPEs and will manage the relationship with FPS through a structured governance and a solid control framework.

Operational targets for Non-Performing Exposures (NPEs)

As at 31 December 2019, the Group's NPEs' stock amounted to € 13 billion (Bank: € 12 billion), reduced by € 3.7 billion (Bank: € 3.2 billion) compared to 31 December 2018.

Notes to the Financial Statements

Legal Framework

5.2.1 Credit Risk

Credit risk is the risk that a counterparty will be unable to fulfill its payment obligations in full when due.

Settlement risk is the risk arising when payments are settled, for example for trades in financial instruments, including derivatives and currency transactions. The risk arises when the Bank remits payments before it can ascertain that the counterparties' payments have been received.

Credit risk arises principally from the wholesale and retail lending activities of the Bank, including from credit enhancements provided, such as financial guarantees and letters of credit. The Bank is also exposed to credit risk arising from other activities such as investments in debt securities, trading, capital markets and settlement activities. Taking into account that credit risk is the primary risk the Bank is exposed to, it is very closely managed and monitored by centralized dedicated risk units, reporting to the GCRO.

(a) Credit approval process

Credit Committees

Credit Committees (Central and Local) authorized to approve new financing, renewals or amendments in the existing credit limits, in accordance with their approval authority level, depending on total limit amount and customer risk category (i.e. high, medium or low), as well as the value and type of security;
Special Handling Credit Committees authorized to approve credit requests and take actions for distressed clients;
International Credit Committees (Regional and Country) established for credit underwriting to wholesale borrowers for the Group's international Bank subsidiaries, authorized to approve new limits, renewals or amendments to existing limits, in accordance with their approval authority level, depending on total customer exposure and customer risk category (i.e. high, medium or low), as well as the value and type of security; and
International Special Handling Committees established for handling distressed wholesale borrowers of the Group's international bank subsidiaries.

The Credit Committees meet on a weekly basis or more frequently, if needed.

Group Credit General Division (GCGD)

The main responsibilities of the GCGD of the Risk Management General Division are:

Review and evaluation of credit requests of:
- (a) Domestic large and medium scale corporate entities of every risk category;
- (b) Specialized units, such as Shipping, Structured Finance; and
- (c) Retail sector's customers (small business and individual banking) above a predetermined threshold.
Issuance of an independent risk opinion for each credit request, which includes:
- (a) Assessment of the customer credit profile based on the qualitative and quantitative risk factors identified (market, operations, structural and financial);
- (b) A focused sector analysis; and
- (c) Recommendations to structure a bankable, well-secured and well-controlled transaction.
Review and confirmation of the ratings of each separate borrower, to reflect the risks acknowledged;
Participation with voting rights in all credit committees, as per the credit approval procedures (except for Special Handling Committee I- no voting rights);
Active participation in all external/regulatory audits of the Bank;
Preparation of specialized reports to Management on a regular basis, with regards to Top 25 biggest Borrower groups and statistics on the new approved financings;
Safeguard compliance of the Lending Units with specific policies (such as SPPI/ derecognition process, assessment of individual customers for impairment review purposes, environmental and social policy); and
Provision of specialized knowledge, expertise and support to other divisions of the Bank, in relation to operational and credit procedures, security policies, new lending products and restructuring schemes.

In this context, ICS is responsible for the implementation, among others, of the below activities:

Participation with voting right in all International Committees (Regional and Special Handling);
Participation in the sessions of Special Handling Monitoring Committees which monitor and decide on the strategy of problematic corporate relationships with loan outstanding exceeding a certain threshold, that is jointly set by ICS and Country TAG;
Advice on best practices to the Credit Risk Units of international subsidiaries and implementation of Group Risk's credit related special projects such as acquisition and /or sale of wholesale portfolio ; and
In cooperation with Group Credit Control Sector (GCCS), it conducts field reviews regarding the quality of the loan portfolios and specific loan segments.

Furthermore, information on credit risk monitoring of troubled assets is also provided in the section of Non-Performing Exposures (NPEs) management.

Retail Banking approval process

type and quality of securities and other factors as well. The ongoing monitoring of the portfolio quality and of any other deviations that may arise, leads to an immediate adjustment of the credit policy and procedures, when deemed necessary.

(b) Credit risk monitoring

Group Credit Control Sector

The main responsibilities of the GCCS are to:

supervise, support and maintain the credit rating and impairment systems used to assess the wholesale lending customers;
develop, supervise and support the Transactional Rating (TR) application used to measure the overall risk of wholesale credit relationships, taking into account both the creditworthiness of the borrower and required collaterals;
monitor and review the performance of all of the Group's loan portfolios;
supervise and control the foreign subsidiaries' credit risk management units;
monitor on a regular basis and report on a quarterly basis to the Board of Directors and the BRC of risk exposures, along with accompanying analyses;
monitor and evaluate the efficiency of adopted strategies and proposed solutions in terms of dealing with Non Performing Exposures (NPEs) and the achievement of targets for NPEs reduction, as communicated and agreed with the Supervisory Authorities;
conduct field reviews and prepare written reports to the Management on the quality of all of the Group's loan portfolios and adherence with EBA prevailing regulations;
ensure that EBA classifications are made in accordance with the relevant provisions and guidelines;
participate in the approval of new credit policies and new loan products;
participate in the Troubled Asset Committee;
attend meetings of Credit Committees and Special Handling Committees, without voting right;
formulate the Group's credit impairment policy and regularly review the adequacy of provisions of all of the Group's loan portfolios;
formulate, in collaboration with the responsible lending Units the credit policy manuals for performing borrowers; and
provide guidance and monitor the process of designing and reviewing credit policies before approved by Management.

Group Credit Risk Capital Adequacy Control Sector

Specifically, the main responsibilities of the Group Credit Risk Capital Adequacy Control Sector are to:

control, measure and monitor the capital requirements arising from the Bank's loan portfolio along with the relevant reporting to Management and regulators (ECB/SSM);
measure and monitor the risk parameters (PD, LGD, EAD) for the purposes of capital adequacy calculations, as well as, the estimation of risk related parameters (such as forecast 12-m PD, forecast lifetime PD) for impairment calculation purposes
reviewing the grouping of lending exposures and ensuring their homogeneity under IFRS , re-assessing and re-developing the significant increase in credit risk (SICR) threshold;
prepare monthly capital adequacy calculations (Pillar 1) and relevant management, as well as, regulatory reports (COREPs, SREP) on a quarterly basis;
perform stress tests, both internal and external (EBA/SSM), and maintain the credit risk stress testing infrastructure;

coordinate the stress testing exercises for the loan portfolios at Group Level;
monitoring of the regulatory framework in relation to the IRB framework performing impact assessment by initiating and managing relevant projects;
manage the models development, implementation, monitoring of the IRB models of Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) for evaluating credit risk;
prepare the credit risk analyses for Internal Capital Adequacy Assessment (ICAAP)/ Pillar 2 purposes;
implement the IRB roll-out plan of the Group;
prepare the Basel Pillar 3 disclosures for credit risk;
monitor the regulatory framework in relation to the above, to perform impact assessment, to initiate and manage relevant projects;
regularly report to the GCRO, to the Management Risk Committee and to the Board Risk Committee on: risk models performance, risk parameters (PD, LGD, EAD), updates on regulatory changes and impact assessment and asset quality reviews;
guide, monitor and supervise the Credit Risk divisions of the subsidiaries on modelling, credit stress testing and other credit risk related regulatory issues.
monitor and guide Group's international subsidiaries on credit risk related ICAAP, stress testing and other regulatory credit risk related issues, based on Group standards. Review of local credit risk stress test exercises;
participate in the preparation of the business plan, the NPE targets plan and the recovery plan of the Group in relation to asset quality and capital requirements for the loan book (projected impairments and RWAs), as well as participate in the relevant committees;
support the business units in the use of credit risk models in business decisions, for funding purposes, in the capital impact assessment of strategic initiatives and the development and usage of risk related metrics such as risk adjusted pricing, Risk Adjusted Return on Capital (RAROC) etc.; and
assist Troubled Asset Group in the risk assessment and risk impact of various programs and products.

Group Model Validation and Governance Sector

The Group Model Validation and Governance Sector was established in September 2018, with key mandates:

the establishment of a comprehensive model governance and validation framework, and
the independent validation of the technical and operational completeness of all models used by the Group and their parameters, as well as their compliance with the provisions of the regulatory framework.

In more detail, the tasks of the Sector are outlined as follows:

Prepare and update the Group's Models Framework (to include model definition, roles involved per model, model classification principles and methodology, model validation principles, materiality classifications and thresholds, models' registry governance, etc.);
Establish and update the Group's Models Registry;
Review models' classification, in accordance with the methodology provided in the Group Models Framework;
Prepare and update the Group Models Validation Framework, while providing support to Group's subsidiaries in its implementation;
Monitor changes in ECB guidelines on models' validation;
Propose and escalate for approval the quantitative thresholds, in order to assess the results of the validation tests;
Conduct model validation tests in alignment with the Group Model Validation Framework and regulatory requirements;
Prepare detailed reports of the model valuation results according to the specific requirements of the model validated, if any, which are communicated to BRC on an annual basis along with any related proposed remediation plan;
Disseminate models' validation test results within the Group's BRC or MRC following reporting to Group CRO, as appropriate;
Prepare action plan for remediation actions, if any, as a result of the model validation tests implemented, and escalate the plan for its approval by the appropriate Management Authority;
Participate in the approval process of new models for assessing ratings' system accuracy and suitability; and
Monitor industry practices on the development and use of models as well as related ECB guidelines and restrictions.

Group Market and Counterparty Risk Sector

Furthermore, GMCRS prepares specialized reports for the Management along with regular reporting that includes the exposure to the Hellenic Republic, which is also provided to regulators (ECB/SSM).

(c) Credit related commitments

The primary purpose of credit related commitments is to ensure that funds are available to a customer as agreed. Financial guarantee contracts carry the same credit risk as loans since they represent irrevocable assurances that the Bank will make payments in the event that a customer cannot meet its obligations to third parties. Documentary and commercial letters of credit, which are written undertakings by the Bank on behalf of a customer authorizing a third party to draw drafts on the Bank up to a stipulated amount under specific terms and conditions, are secured by the underlying shipment of goods to which they relate and therefore carry less risk than a loan. Commitments to extend credit represent contractual commitments to provide credit under pre-specified terms and conditions (note 42) in the form of loans, guarantees or letters of credit for which the Bank usually receives a commitment fee. Such commitments are irrevocable over the life of the facility or revocable only in response to a material adverse effect

(d) Concentration risk

The Bank structures the levels of credit risk it undertakes by placing exposure limits by borrower, or groups of borrowers, and by industry segments. The exposure to each borrower is further restricted by sub-limits covering on and off-balance sheet exposures, and daily delivery risk limits in relation to trading items such as forward foreign exchange contracts.

(e) Rating systems

Rating of wholesale lending exposures

The Bank has decided upon the differentiation of rating models for wholesale lending activities, in order to reflect appropriately the risks arising from customers with different characteristics. Accordingly, the Bank employs the following rating models for the wholesale portfolio:

Moody's Risk Analyst model ("MRA" or "Fundamental Analysis"-"FA") is used to assess the risk of borrowers for Corporate Lending.
Internal Credit Rating model ("ICR") is used for those customers that cannot be rated by MRA.
Transactional Rating model ("TR") has been developed in order to assess the risk of transactions taking into consideration their specific factors. Specifically, aiming to facilitate its understanding of the Expected Loss (EL) when approving a credit limit, the Bank has developed a relevant application, whereby a borrower's credit rating along with proposed credit limit and provided collaterals/guarantees are considered for the calculation of the TR.
Slotting rating models are employed in view of assessing the risk of specialized exposures, which are part of the Specialized Lending corporate portfolio.
Finally, an assessment of the borrowers' viability and the identification of impairment triggers is performed using the Viability and the Impairment scorecards.

In addition, the Bank performs an overall assessment of wholesale customers, based both on their rating (MRA or ICR) and the collaterals and guarantees referred to the respective approved credit relationship, using a 14-grade rating scale. Credit exposures are subject to detailed reviews by the appropriate Credit Committee based on the respective transactional rating (TR). Low risk wholesale customers are reviewed at least once a year, whereas higher risk customers are reviewed either on a semi-annual or a quarterly basis.

In addition, the Bank has developed an Impairment Rating Scorecard in accordance to which borrowers should be assessed and classified as impaired or not. The Impairment Rating Scorecard is embedded in the RA platform, in order to depict and archive in the most effective way, the information which is taken into consideration during credit limit reviews, especially in respect to the assessment of impairment triggers.

The rating systems described above are an integral part of the wholesale banking decision-making and risk management processes:

the credit approval or rejection, both at the origination and review process;
the allocation of competence levels for credit approval;
risk-adjusted pricing;
the calculation of Economic Value Added (EVA) and internal capital allocation; and
the impairment calculation (staging criteria and subsequent ECL estimation of forecasted risk parameters).

Rating of retail lending exposures

The Bank assigns credit scores to its retail customers using a number of statistically-based models both at the origination and on ongoing basis through behavioral scorecards. These models have been developed to predict, on the basis of available information, the probability of default, the loss given default and the exposure at default. They cover the entire spectrum of retail products (credit cards, consumer lending, unsecured revolving credits, car loans, personal loans, mortgages and small business loans).

The Group's Internal Audit Division also independently reviews the validation process in wholesale and retail rating systems annually.

(f) Credit risk mitigation

A key component of the Bank's business strategy is to reduce risk by utilizing various risk mitigating techniques. The most important risk mitigating means are collaterals' pledges, guarantees and master netting arrangements.

Types of collateral commonly accepted by the Bank

The Bank has internal policies in place which set out the following types of collateral that are usually accepted in a credit relationship:

residential real estate, commercial real estate (offices, shopping malls, etc.), industrial buildings and land;
receivables (trade debtors) and post dated cheques;
securities, including listed shares and bonds;
deposits;
guarantees and letters of support;
insurance policies; and
equipment, mainly, vehicles and vessels.

A specific coverage ratio is pre-requisite, upon the credit relationship's approval and on ongoing basis, for each collateral type, as specified in the Bank's credit policy.

For exposures, other than loans to customers (i.e. reverse repos, derivatives), the Bank accepts as collateral only cash or liquid bonds.

Valuation principles of collaterals

In defining the maximum collateral ratio for loans, the Bank considers all relevant information available, including the collaterals' specific characteristics, if market participants would take those into account when pricing the relevant assets. The valuation and hence eligibility is based on the following factors:

the collateral's fair value, i.e. the exit price that would be received to sell the asset in an orderly transaction under current market conditions;
the fair value reflects market participants' ability to generate economic benefits by using the asset in its highest and best use or by selling it;
a reduction in the collateral's value is considered if the type, location or condition (such as deterioration and obsolescence) of the asset indicate so; and
no collateral value is assigned if a pledge is not legally enforceable.

The Bank performs collaterals' valuation in accordance with its processes and policies. With the exception of special cases (e.g. syndicated loans), the real estate collaterals of all units are valued by Cerved Property Services S.A. ("CPS") who is the successor of the Bank's former subsidiary, Eurobank Property Services S.A. CPS is regulated by the Royal Institute of Chartered Surveyors and employs internal or external qualified appraisers based on predefined criteria (qualifications and expertise). All appraisals take into account factors such as the region, age and marketability of the property, and are further reviewed and countersigned by experienced staff. The valuation methodology employed is based on International Valuation Standards (IVS), while quality controls are in place, such as reviewing mechanisms, independent sample reviews by independent well established valuation companies.

Collateral policy and documentation

Regarding collaterals, Bank's policy emphasizes the need that collaterals and relevant processes are timely and prudently executed, in order to ensure that collaterals and relevant documentation are legally enforceable at any time. The Bank holds the right to liquidate collateral in the event of the obligor's financial distress and can claim and control cash proceeds from the liquidation process.

Guarantees

The guarantees used as credit risk mitigation by the Bank are largely issued by the government. The National Fund for Entrepreneurship and Development (ETEAN SA) and similar funds, banks and insurance companies are also significant guarantors of credit risk.

Management of repossessed properties

The objective of the repossessed assets' management is to minimize the time cycle of the asset's disposal and to maximize the recovery of the capital engaged.

To this end, the management of repossessed assets aims at improving rental and other income from the exploitation of such assets, and at the same time reducing the respective holding and maintenance costs. Additionally, the Bank is actively engaged in identifying suitable potential buyers for its portfolio of repossessed assets (including specialized funds involved in acquiring specific portfolios of properties repossessed), both in Greece and abroad, in order to reduce its stock of properties with a time horizon of 3-5 years.

Repossessed assets are closely monitored based on technical and legal due diligence reports, so that their market value is accurately reported and updated in accordance with market trends.

Counterparty risk

The Bank mitigates counterparty risk arising from treasury activities by entering into master netting arrangements and similar agreements, as well as collateral agreements with counterparties with which it undertakes a significant volume of transactions. Master netting arrangements do not generally result in the offset of balance sheet assets and liabilities, as the transactions are usually settled on a gross basis. However, the respective credit risk is reduced through a master netting agreement to the extent that if an event of default occurs, all amounts with the counterparty are terminated and settled on a net basis.

In the case of derivatives, the Bank makes use of International Swaps and Derivatives Association (ISDA) contracts, which limit the exposure via the application of netting, and Credit Support Annex (CSAs), which further reduce the total exposure with the counterparty. Under these agreements, the total exposure with the counterparty is calculated on a daily basis taking into account any netting arrangements and collaterals.

5.2.1.1 Maximum exposure to credit risk before collateral held

	2019 € million		2018 € million

Credit risk exposures relating to on-balance
sheet assets are as follows:
Due from credit institutions	2,787		2,005
Less: Impairment allowance	(1)	2,786	(2)	2,003
Debt securities held for trading		50		18
Derivative financial instruments		2,278		1,875
Loans and advances to customers at amortised cost:
- Wholesale lending (1)	14,978		13,668
- Mortgage lending	12,656		14,895
- Consumer lending	2,586		2,862
- Small business lending	5,894		5,850
Less: Impairment allowance	(6,466)	29,648	(7,967)	29,308
Loans and advances to customers measured at FVTPL		50		46
Investment securities:
- Debt securities measured at amortised cost	1,044		971
Less: Impairment allowance	(2)	1,042	(30)	941
Debt securities measured at FVOCI		5,443		5,578
Investment securities at FVTPL		95		78
Other financial assets (2)	63		35
Less: Impairment allowance	(20)	43	(13)	22
Credit risk exposures relating to off-balance
sheet items (note 42):
- Loan commitments		2,850		2,438
- Financial guarantee contracts and other commitments		2,000		2,532
Total		46,285		44,839

(1) Includes loans to public sector.

(2) Refers to financial assets subject to IFRS 9 impairment requirements, which are recognised within other assets.

The above table represents the Bank's maximum credit risk exposure as at 31 December 2019 and 31 December 2018 respectively, without taking account of any collateral held or other credit enhancements that do not qualify for offset in the Bank's financial statements.

For on-balance sheet assets, the exposures set out above are based on the carrying amounts as reported in the balance sheet. For off-balance sheet items, the maximum exposure is the nominal amount that the Bank may be required to pay if the financial guarantee contracts and other commitments are called upon and the loan commitments are drawn down. Off-balance sheet loan commitments presented above, include revocable commitments to extend credit of € 2.1 billion (2018: € 2.2 billion) that are subject to ECL measurement.

5.2.1.2 Loans and advances to customers

The section below provides an overview of the Bank's exposure to credit risk arising from its customer lending portfolios, in line with the guidelines set by the Hellenic Capital Markets Commission and the Bank of Greece (BoG) released on 30 September 2013, as updated by the Bank in order to comply with the revised IFRS 7 'Financial Instruments: Disclosures', following the adoption of IFRS 9 from 1 January 2018. In addition, the types of the Bank's forbearance programs are in line with the BoG's Executive Committee Act 42/30.05.2014 and its amendments.

(a) Credit quality of loans and advances to customers

Loans and advances to customers carried at amortised cost are classified depending on how ECL is measured.

Notes to the Financial Statements

The Bank's accounting policy regarding impairment of financial assets is set out in note 2.2.13.

Regulatory definitions

'Default exposures', in line with the regulatory definition of default as adopted by the Bank, include material exposures that are past due more than 90 days, exposures that are assessed by the Bank as unlikely to pay as well as those that are assessed for impairment individually and carry an individual impairment allowance. As at 31 December 2019, the Bank's default exposures amounted to € 11,392 million (2018: € 14,290 million).

'Non-performing exposures' as currently monitored and reported by the Bank, in line with the guidelines set by the European Banking Authority (EBA Implementing Technical Standards), include material exposures that are in arrears for more than 90 days or assessed as unlikely to pay, impaired exposures under individual or collective impairment assessment, exposures categorized as defaulted for regulatory purposes, as well as forborne non performing exposures. As at 31 December 2019, the Bank's nonperforming exposures included in loans and advances to customers at amortised cost amounted to € 11,970 million (2018: € 15,208 million). Correspondingly, 'Performing exposures' include exposures without arrears, those that are less than 90 days past due or are not assessed as unlikely to pay, non-impaired and non-defaulted exposures. As at 31 December 2019, the Bank's performing exposures included in loans and advances to customers at amortised cost amounted to € 24,144 million (2018: € 22,067 million).

Quantitative information

The following tables present the total gross carrying and nominal amount, representing the maximum exposure to credit risk before the impairment allowance, of loans and advances including securitized notes issued by special purpose vehicles established by the Bank and credit related commitments respectively, that are classified as non-impaired (stage 1 and stage 2) and those classified as credit-impaired (stage 3). They also present the impairment allowance recognized in respect of all loans and advances and credit related commitments, analyzed into individually or collectively assessed, based on how the respective impairment allowance has been calculated, the carrying amount of loans and advances, as well as the value of collateral held to mitigate credit risk.

In addition, the value of collateral presented in the tables below is capped to the respective gross loan amount.

						31 December 2019
							Impairment allowance
			Lifetime ECL					Lifetime ECL
			credit-impaired					credit-impaired
	12-month ECL Stage 1 € million	Lifetime ECL - Stage 2 € million	Individually assessed € million	Collectively assessed € million	Total gross carrying amount/nominal exposure € million	12-month ECL Stage 1 € million	Lifetime ECL - Stage 2 € million	Individually assessed € million	Collectively € million	assessed Carrying amount € million	Value of collateral € million
Retail Lending	9,102	4,194	442	7,398	21,136	(56)	(305)	(244)	(3,524)	17,007	13,651
- Mortgage	5,878	3,042	199	3,537	12,656	(11)	(173)	(100)	(1,356)	11,016
Value of collateral	5,221	2,457	112	2,281							10,071
- Consumer	798	234	0	910	1,942	(13)	(32)	(0)	(776)	1,121
Value of collateral	0	1	-	120							121
- Credit card	553	30	0	61	644	(15)	(4)	(0)	(55)	570
Value of collateral	-	-	-	-							-
- Small business	1,873	888	243	2,890	5,894	(17)	(96)	(144)	(1,337)	4,300
Value of collateral	1,152	605	121	1,581							3,459
Wholesale Lending	9,528	1,273	2,991	1,139	14,931	(48)	(74)	(1,628)	(586)	12,595	6,742
- Large corporate	7,152	656	1,583	67	9,458	(35)	(36)	(792)	(31)	8,564
Value of collateral	2,218	490	802	29							3,539
- SMEs	1,318	617	1,408	1,072	4,415	(13)	(38)	(836)	(555)	2,973
Value of collateral	649	420	660	416							2,145
-Securitized notes (1)	1,058	-	-	-	1,058	(0)	-	-	-	1,058
Value of collateral	1,058	-	-	-							1,058
Public Sector	44	3	-	-	47	(1)	(0)	-	-	46	2
- Greece	44	3	-	-	47	(1)	(0)	-	-	46
Value of collateral	1	1	-	-							2
Loans and advances to customers at FVTPL										50	50
Total	18,674	5,470	3,433	8,537	36,114	(105)	(379)	(1,872)	(4,110)	29,698	20,445
Total value of collateral	10,299	3,974	1,695	4,427

Credit related commitments	4,100	239	481	30	4,850	(28)	(4)	(250)	(7)
Loan commitments Financial guarantee contracts	2,777	69	4	-	2,850	(20)	(0)	(0)	-
and other commitments	1,323	170	477	30	2,000	(8)	(4)	(250)	(7)
Value of collateral	274	33	16	5

Notes to the Financial Statements

						31 December 2018
							Impairment allowance
			Lifetime ECL					Lifetime ECL
			credit-impaired					credit-impaired
					Total gross carrying
	12-month ECL	Lifetime ECL	Individually	Collectively	amount/nominal	12-month ECL	Lifetime ECL	Individually	Collectively		Value of
	Stage 1	Stage 2	assessed	assessed	exposure	Stage 1	Stage 2	assessed		assessed Carrying amount	collateral
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Retail Lending	8,409	4,813	469	9,916	23,607	(74)	(581)	(257)	(4,327)	18,368	14,847
- Mortgage	5,686	3,397	223	5,589	14,895	(30)	(279)	(129)	(2,016)	12,441
Value of collateral	4,966	2,647	126	3,710							11,449
- Consumer	873	230	-	966	2,069	(28)	(85)	-	(747)	1,209
Value of collateral	0	1	-	128							129
- Credit card	568	15	-	210	793	(5)	(6)	-	(172)	610
Value of collateral	-	-	-	-
- Small business	1,282	1,171	246	3,151	5,850	(11)	(211)	(128)	(1,392)	4,108	-
Value of collateral	748	770	123	1,628							3,269
Wholesale Lending	7,373	1,416	3,653	1,170	13,612	(49)	(97)	(2,065)	(516)	10,885	5,586
- Large corporate	6,274	902	2,166	64	9,406	(38)	(57)	(1,207)	(28)	8,076
Value of collateral	2,005	688	912	25							3,630
- SMEs	1,099	514	1,487	1,106	4,206	(11)	(40)	(858)	(488)	2,809
Value of collateral	520	338	685	413							1,956
Public Sector	56	-	-	0	56	(1)	-	-	(0)	55	5
- Greece	56	-	-	0	56	(1)	-	-	(0)	55
Value of collateral	5	-	-	-							5
Loans and advances to customers
at FVTPL										46	42
Total	15,838	6,229	4,122	11,086	37,275	(124)	(678)	(2,322)	(4,843)	29,354	20,480
Total value of collateral	8,244	4,444	1,846	5,904

Credit related commitments	3,894	178	589	309	4,970	(12)	(4)	(271)	(18)
Loan commitments Financial guarantee contracts	2,428	10	-	0	2,438	(7)	(0)	-	-
and other commitments	1,466	168	589	309	2,532	(5)	(4)	(271)	(18)
Value of collateral	433	33	48	2

(1) It refers to the notes of Pillar securitization (note 20).

The Bank assesses the credit quality of its loans and advances to customers and credit related commitments that are subject to ECL using internal credit rating systems for the wholesale portfolio, which are based on a variety of quantitative and qualitative factors, while the credit quality of the retail portfolio is based on the allocation of risk classes into homogenous pools.

		31 December 2019			31 December 2018
Internal credit rating	12-month ECL Stage 1	Lifetime ECL Stage 2	Lifetime ECL credit-Impaired	Total gross carrying amount	12-month ECL Stage 1	Lifetime ECL Stage 2	Lifetime ECL credit-Impaired	Total gross carrying amount
Retail Lending	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
- Mortgage
PD<2.5%	5,326	613	-	5,939	2,610	1	-	2,611
2.5%<=PD<4%	328	392	-	720	2,117	593	-	2,710
4%<=PD<10%	190	753	-	943	823	611	-	1,434
10%<=PD<16%	22	238	-	260	31	376	-	407
16%<=PD<99.99%	12	1,046	-	1,058	105	1,816	-	1,921
100%	-	-	3,736	3,736	-	-	5,812	5,812
- Consumer
PD<2.5%	465	8	-	473	495	-	-	495
2.5%<=PD<4%	101	20	-	121	126	-	-	126
4%<=PD<10%	232	90	-	322	83	5	-	88
10%<=PD<16%	0	58	-	58	169	1	-	170
16%<=PD<99.99%	0	58	-	58	0	224	-	224
100%	-	-	910	910	-	-	966	966
- Credit card
PD<2.5%	16	0	-	16	421	-	-	421
2.5%<=PD<4%	152	0	-	152	124	-	-	124
4%<=PD<10%	385	22	-	407	-	1	-	1
10%<=PD<16%	-	-	-	-	21	-	-	21
16%<=PD<99.99%	-	8	-	8	2	14	-	16
100%	-	-	61	61	-	-	210	210
- Small business
PD<2.5%	161	3	-	164	218	2	-	220
2.5%<=PD<4%	942	20	-	962	937	-	-	937
4%<=PD<10%	627	185	-	812	37	7	-	44
10%<=PD<16%	143	191	-	334	45	9	-	54
16%<=PD<99.99%	0	489	-	489	45	1,153	-	1,198
100%	-	-	3,133	3133	-	-	3,397	3,397
Wholesale Lending
- Large corporate
Strong	4,793	11	-	4,804	3,821	14	-	3,835
Satisfactory	2,117	446	-	2,563	2,448	509	-	2,957
Watch list	242	199	-	441	5	379	-	384
Impaired (Defaulted)	-	-	1,650	1,650	-	-	2,230	2,230
- SMEs
Strong	691	47	-	738	571	25	-	596
Satisfactory	556	173	-	729	516	150	-	666
Watch list	71	397	-	468	12	339	-	351
Impaired (Defaulted)	-	-	2,480	2,480	-	-	2,593	2,593
-Securitized notes
Strong	1,058	-	-	1,058	-	-	-	-
Public Sector
All countries
Strong	1	-	-	1	6	-	-	6
Satisfactory	43	-	-	43	50	-	-	50
Watch list	-	3	-	3	-	-	-	-
Impaired (Defaulted)	-	-	-	-	-	-	0	0
Total	18,674	5,470	11,970	36,114	15,838	6,229	15,208	37,275

		31 December 2019			31 December 2018
Internal credit rating	12-month ECL Stage 1 € million	Lifetime ECL - Stage 2 € million	Lifetime ECL credit-impaired € million	Total nominal amount € million	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-impaired € million	Total nominal amount € million
Credit Related Commitments
Retail Lending
Loan commitments
PD<2.5%	70	-	-	70	1,339	0	-	1,339
2.5%<=PD<4%	519	0	-	519	922	-	-	922
4%<=PD<10%	1,334	62	-	1,396	3	1	-	4
10%<=PD<16%	165	1	-	166	21	1	-	22
16%<=PD<99.99%	-	6	-	6	1	8	-	9
100%	-	-	-	-	-	-	0	0
Financial guarantee contracts
and other commitments
PD<2.5%	1	-	-	1	21	-	-	21
2.5%<=PD<4%	88	-	-	88	93	-	-	93
4%<=PD<10%	39	-	-	39	-	-	-	-
10%<=PD<16%	-	-	-	-	-	-	-	-
16%<=PD<99.99%	-	-	-	-	-	-	-	-
100%	-	-	-	-	-	-	-	-
Wholesale Lending
Loan commitments
Strong	366	-	-	366	90	-	-	90
Satisfactory	321	-	-	321	44	-	-	44
Watch list	2	-	-	2	8	-	-	8
Impaired (Defaulted)	-	-	4	4	-	-	-	-
Financial guarantee contracts
and other commitments
Strong	786	34	-	820	1,019	52	-	1,071
Satisfactory	385	51	-	436	327	62	-	389
Watch list	24	85	-	109	6	54	-	60
Impaired (Defaulted)	-	-	507	507	-	-	898	898
Total	4,100	239	511	4,850	3,894	178	898	4,970

Wholesale Lending
Credit Quality
classification categories	Internal Credit Rating
Strong	1-4
Satisfactory	5-6
Watch list	7-9
Impaired (Defaulted)	10

Notes to the Financial Statements

		31 December 2019
		Wholesale			Mortgage			Consumer			Small business
	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-Impaired € million	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-Impaired € million	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-Impaired € million	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-Impaired € million	Total € million
Gross carrying amount at 1
January	7,429	1,416	4,823	5,686	3,397	5,812	1,441	245	1,176	1,282	1,171	3,397	37,275
Arising from acquisitions (1) New loans and advances	67	-	-	184	-	-	8	-	-	21	-	-	280
originated or purchased Securitized notes	2,255	-	-	139	-	-	191	-	-	206	-	-	2,791
	1,058	-	-	-	-	-	-	-	-	-	-	-	1,058
Transfers between stages
-to 12-month ECL	175	(173)	(2)	631	(623)	(8)	83	(80)	(3)	495	(492)	(3)	-
-to lifetime ECL -to lifetime ECL credit	(387)	560	(173)	(216)	746	(530)	(128)	182	(54)	(48)	370	(322)	-
impaired loans Loans and advances derecognised/ reclassified as held for sale during the	(96)	(70)	166	(107)	(354)	461	(34)	(52)	86	(41)	(135)	176	-
year	-	-	(77)	(0)	(90)	(1,896)	(6)	(1)	(0)	(5)	(1)	(0)	(2,076)
Amounts written-off (2)	-	-	(364)	-	-	(119)	-	-	(210)	-	-	(125)	(818)
Repayments Foreign exchange differences and other	(960)	(452)	(259)	(606)	(140)	(74)	(245)	(37)	(51)	(184)	(52)	(46)	(3,106)
movements	31	(5)	16	167	106	90	41	7	27	147	27	56	710
Gross Carrying amount at
31 December	9,572	1,276	4,130	5,878	3,042	3,736	1,351	264	971	1,873	888	3,133	36,114
Impairment allowance	(49)	(74)	(2,214)	(11)	(173)	(1,456)	(28)	(36)	(831)	(17)	(96)	(1,481)	(6,466)
Carrying amount at 31
December	9,523	1,202	1,916	5,867	2,869	2,280	1,323	228	140	1,856	792	1,652	29,648

Notes to the Financial Statements

		31 December 2018
	Wholesale				Mortgage			Consumer		Small business
	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-Impaired	Stage 1	Stage 2	credit-Impaired	Stage 1	Stage 2	credit-Impaired	Stage 1	Stage 2	credit-Impaired	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at 1
January	6,419	2,106	5,441	5,743	3,405	6,151	1,476	297	2,439	1,248	1,064	4,008	39,797
New loans and advances
originated or purchased	2,127	-	-	115	-	-	179	-	-	177	-	-	2,598
Transfers between stages
-to 12-month ECL	859	(839)	(20)	501	(487)	(14)	90	(87)	(3)	108	(102)	(6)	-
-to lifetime ECL	(217)	285	(68)	(164)	925	(761)	(50)	132	(82)	(58)	398	(340)	-
-to lifetime ECL credit
impaired loans	(16)	(192)	208	(69)	(408)	477	(44)	(71)	115	(26)	(171)	197	-
Loans and advances
derecognised/ reclassified as
held for sale during the
year	-	-	(144)	-	-	(0)	(11)	(2)	(994)	(6)	(1)	(0)	(1,158)
Amounts written-off (2)	-	-	(329)	-	-	(53)	-	-	(256)	-	-	(423)	(1,061)
Repayments	(1,253)	(86)	(489)	(590)	(170)	(111)	(249)	(44)	(78)	(154)	(75)	(83)	(3,382)
Foreign exchange
differences and other
movements	(490)	142	224	150	132	123	50	20	35	(7)	58	44	481
Gross Carrying amount at
31 December	7,429	1,416	4,823	5,686	3,397	5,812	1,441	245	1,176	1,282	1,171	3,397	37,275
Impairment allowance	(50)	(97)	(2,581)	(30)	(279)	(2,145)	(33)	(91)	(919)	(11)	(211)	(1,520)	(7,967)
Carrying amount at 31
December	7,379	1,319	2,242	5,656	3,118	3,667	1,408	154	257	1,271	960	1,877	29,308

(1) Refers to the loans at amortized cost, acquired from the Bank's subsidiary ERB New Europe Funding II B.V.

(2) The contractual amount outstanding on lending exposures that were written off during the year ended 31 December 2019 and that are still subject to enforcement activity is € 786 million (2018: € 1,010 million).

Note 1: Wholesale product line category includes also Public sector loans portfolio.

Note 2: "Loans and advances derecognised/reclassified as held for sale during the year" presents loans derecognized during the year due to a) securitization/ sale transactions (note 20) and b) substantial modifications of the loans' contractual terms and those that have been reclassified as held for sale during the year (note 30).

Credit impaired loans and advances to customers

The following tables present the ageing analysis of credit impaired (Stage 3) loans and advances by product line at their gross carrying amounts, as well as the respective impairment allowance and the value of collaterals held to mitigate credit risk.

For denounced loans, the Bank ceases to monitor the delinquency status and therefore the respective balances have been included in the 'over 360 days' time band, with the exception of consumer exposures which continue to be monitored up to 360 days past due.

	31 December 2019
		Retail lending		Wholesale lending		Public sector
	Mortgage € million	Consumer € million	Credit card € million	Small business € million	Large corporate € million	SMEs € million	Greece € million	Lifetime ECL credit impaired € million
up to 90 days	812	104	1	349	614	358	-	2,238
90 to 179 days	116	28	5	61	99	47	-	356
180 to 360 days	107	33	5	66	23	32	-	266
more than 360 days	2,701	745	50	2,657	914	2,043	-	9,110
Total gross carrying
amount	3,736	910	61	3,133	1,650	2,480	-	11,970
Impairment allowance	(1,456)	(776)	(55)	(1,481)	(823)	(1,391)	-	(5,982)
Carrying amount	2,280	134	6	1,652	827	1,089	-	5,988
Value of Collateral	2,393	120	-	1,702	831	1,076	-	6,122

	31 December 2018
		Retail lending			Wholesale lending		Public sector	Lifetime
					Large			ECL credit
	Mortgage	Consumer	Credit card	Small business	corporate	SMEs	Greece	impaired
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million

up to 90 days	1,229	121	1	560	906	392	-	3,209
90 to 179 days	227	45	5	78	38	48	-	441
180 to 360 days	159	60	6	67	24	25	-	341
more than 360 days	4,197	740	198	2,692	1,262	2,128	0	11,217
Total gross carrying
amount	5,812	966	210	3,397	2,230	2,593	0	15,208

Impairment allowance	(2,145)	(747)	(172)	(1,520)	(1,235)	(1,346)	(0)	(7,165)
Carrying amount	3,667	219	38	1,877	995	1,247	0	8,043
Value of Collateral	3,836	128	-	1,751	937	1,098	-	7,750

(b) Collaterals and repossessed assets

Collaterals

The Loan-to-Value (LTV) ratio of the mortgage lending reflects the gross loan exposure at the balance sheet date over the market value of the property held as collateral.

The LTV ratio of the mortgage portfolio is presented below:

	2019	2018
	€ million	€ million
Mortgages
Less than 50%	3,091	3,136
50%-70%	1,944	1,774
71%-80%	1,255	1,186
81%-90%	961	1,075
91%-100%	2,034	2,560
101%-120%	956	1,460
121%-150%	841	1,288
Greater than 150%	1,574	2,416
Total exposure	12,656	14,895
Average LTV	80.13%	90.31%

The breakdown of collateral and guarantees for loans and advances to customers at amortised cost is presented below:

	31 December 2019
		Value of collateral received
	Real Estate	Financial Other Total
	€ million	€ million	€ million	€ million	€ million
Retail Lending	13,237	263
Wholesale Lending (1)	2,732	100	3,910	6,742	124
Public sector	1	1	0	2	-
Total	15,970	433	3,992	20,395	387

		31 December 2018
		Value of collateral received
	Real Estate	Financial Other Total
	€ million	€ million	€ million	€ million	€ million
Retail Lending	14,491	288	68	14,847	196
Wholesale Lending (1)	2,651	75	2,860	5,586	150
Public sector	1	4	-	5	-
Total	17,143	367	2,928	20,438	346

(1) Other collaterals include assigned receivables, equipment, inventories, vessels, etc.

Repossessed assets

The Bank recognizes collateral assets on the balance sheet by taking possession usually through legal processes or by calling upon other credit enhancements. The main type of collateral that the Bank repossesses against repayment or reduction of the outstanding loan is real estate, which is recognized within repossessed assets and carried at the lower of cost or net realizable value (see also notes 2.2.18 and 29). In cases where the Bank makes use of repossessed properties as part of its operations, they are classified as own-used or investment properties, as appropriate (notes 2.2.6, 26 and 27).

The following tables present a summary of collaterals that the Bank took possession, and were recognized as repossessed assets, as well as the net gains/ (losses) arising from the sale of such assets in the year:

	31 December 2019
		Of which:		Of which:	Net
		added this	Accumulated	arising this	Net	Net	gain/(loss) on
	Gross amount	year	impairment	year	amount	Sale Price	sale
	€ million	€ million	€ million	€ million	€ million	€ million	€ million

Real estate auction items	504	128	(93)	4	411	19	(1)
- Residential	247	46	(46)	15	201	14	(1)
- Commercial	257	82	(47)	(11)	210	5	(0)

	31 December 2018
		Of which: Of which:
	Gross	added this	Accumulated	arising this	Net	Net	gain/(loss)
	amount	year	impairment	year	amount	Sale Price	on sale
	€ million	€ million	€ million	€ million	€ million	€ million	€ million

Real estate auction items	455	135	(97)	0	358	25	(1)
- Residential	268	62	(61)	4	207	18	(1)
- Commercial	187	73	(36)	(4)	151	7	0

Properties that have been classified as held for sale (note 30) in 2019 following their transfer from repossessed properties category, amounted to € 28 million (2018: nil).

(c) Geographical and industry concentrations of loans and advances to customers

As described above in note 5.2.1, the Bank holds diversified portfolios across markets and countries and implements limits on concentrations arising from the geographical location or the activity of groups of borrowers that could be similarly affected by changes in economic or other conditions, in order to mitigate credit risk.

The following tables break down the Bank's exposure into loans and advances to customers and credit related commitments at their gross carrying amount and nominal amount respectively by stage, product line, industry and geographical region and impairment allowance by product line, industry and geographical region:

	31 December 2019
	Greece				Rest of Europe			Other Countries
	Gross carrying/nominal amount				Gross carrying/nominal amount			Gross carrying/nominal amount
	12-month ECL-Stage 1	Lifetime ECL Stage 2	Lifetime ECL credit Impaired	Impairment allowance	12-month ECL-Stage 1	Lifetime ECL Stage 2	Lifetime ECL credit Impaired	Impairment allowance	12-month ECL-Stage 1	Lifetime ECL Stage 2	Lifetime ECL credit Impaired	Impairment allowance
	€ million	€ million	€ million	€ million	€ million € million		€ million	€ million	€ million	€ million	€ million	€ million
Retail Lending	9,014	4,157	7,758	(4,115)	88	37	82	(14)	-	-	-	-
-Mortgage	5,794	3,007	3,675	(1,627)	84	35	61	(13)	-	-	-	-
-Consumer	795	233	907	(820)	3	1	3	(1)	-	-	-	-
-Credit card	553	30	61	(74)	-	-	-	-	-	-	-	-
-Small business	1,872	887	3,115	(1,594)	1	1	18	(0)	-	-	-	-
Wholesale Lending	7,204	1,220	3,779	(2,118)	1,198	14	277	(183)	1,126	39	74	(35)
services (1) -Commerce and	3,747	366	1,797	(1,032)	1,067	10	140	(113)	12	-	32	(18)
-Manufacturing	1,666	235	740	(436)	-	-	1	(0)	-	-	-	-
-Shipping	8	5	8	(7)	120	-	62	(57)	1,114	39	24	(7)
-Construction	608	336	849	(509)	11	4	20	(13)	-	-	18	(10)
-Tourism	637	271	375	(122)	-	-	-	-	-	-	-	-
-Energy	538	7	10	(12)	-	-	-	-	-	-	-	-
-Other	0	-	0	(0)	0	0	54	(0)	-	-	-	-
Public Sector	44	3	-	(1)	-	-	-	-	-	-	-	-
Total	16,262	5,380	11,537	(6,234)	1,286	51	359	(197)	1,126	39	74	(35)
Credit related Commitments	3,704	186	108	(66)	220	37	403	(223)	176	16	0	(0)
-Loan commitments -Financial guarantee contracts	2,669	69	4	(20)	-	-	-	-	108	-	-	(0)
and other commitments	1,035	117	104	(46)	220	37	403	(223)	68	16	0	(0)

Notes to the Financial Statements

						31 December	2018
	Greece				Rest of Europe				Other Countries
	Gross carrying/nominal amount				Gross carrying/nominal amount			Gross carrying/nominal amount
	Lifetime ECL			Lifetime ECL				Lifetime ECL
	12-month	Lifetime ECL	credit	Impairment	12-month	Lifetime ECL	credit	Impairment	12-month	Lifetime ECL	credit	Impairment
	ECL-Stage 1	Stage 2	Impaired	allowance	ECL-Stage 1	Stage 2	Impaired	allowance	ECL-Stage 1	Stage 2	Impaired	allowance
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Retail Lending	8,409	4,813	10,385	(5,239)	-	-	-	-	-	-	-	-
-Mortgage	5,686	3,397	5,812	(2,454)	-	-	-	-	-	-	-	-
-Consumer	873	230	966	(860)	-	-	-	-	-	-	-	-
-Credit card	568	15	210	(183)	-	-	-	-	-	-	-	-
-Small business	1,282	1,171	3,397	(1,742)	-	-	-	-	-	-	-	-
Wholesale Lending	6,356	1,325	4,514	(2,497)	103	15	202	(154)	914	76	107	(76)
-Commerce and services	3,177	539	2,160	(1,263)	26	8	111	(78)	5	24	54	(42)
-Manufacturing	1,534	232	902	(488)	-	1	1	(0)	-	-	-	-
-Shipping	22	0	-	(0)	77	-	61	(56)	909	52	35	(24)
-Construction	556	307	994	(596)	0	6	20	(13)	-	-	18	(10)
-Tourism	564	236	447	(136)	-	-	-	-	-	-	-	-
-Energy	503	11	9	(13)	-	-	4	(4)	-	-	-	-
-Other	-	-	2	(1)	-	-	5	(3)	-	-	-	-
Public Sector	56	-	0	(1)	-	-	-	-
Total	14,821	6,138	14,899	(7,737)	103	15	202	(154)	914	76	107	(76)
Credit related Commitments	3,568	101	113	(61)	270	60	785	(244)	56	17	0	(0)
-Loan commitments	2,400	10	0	(7)	-	-	-	-	28	-	-	(0)
-Financial guarantee contracts
and other commitments	1,168	91	113	(54)	270	60	785	(244)	28	17	0	(0)

(1) The operations in Rest of Europe include € 1,058 million related to the notes of the Pillar securitization.

As at 31 December 2019, the carrying amount of Bank's loans measured at FVTPL of € 50 million (2018: € 46 million) was included in Wholesale lending portfolio,of which € 47 million (2018: € 46 million) were held by operations in Greece, while € 3 million (2018: nil) were held by operations in Rest of Europe.

(d) Forbearance practices on lending activities

Modifications of the loans' contractual terms may arise due to various factors, such as changes in market conditions, customer retention and other factors as well as due to the potential deterioration in the borrowers' financial condition. The Bank has employed a range of forbearance solutions in order to enhance the management of customer relationships and the effectiveness of collection efforts, as well as to improve the recoverability of cash flows and minimize credit losses for both retail and wholesale portfolios.

Forbearance practices' classification

Forbearance practices as monitored and reported by the Bank, based on the European Banking Authority Implementing Technical Standards (EBA ITS) guidelines, occur only in the cases where the contractual payment terms of a loan have been modified, as the borrower is considered unable to comply with the existing loan's terms due to apparent financial difficulties, and the Bank grants a concession by providing more favorable terms and conditions that it would not otherwise consider had the borrower not been in financial difficulties.

All other types of modifications granted by the Bank, where there is no apparent financial difficulty of the borrower and may be driven by factors of a business nature are not classified as forbearance measures.

Forbearance solutions

Forbearance solutions are granted following an assessment of the borrower's ability and willingness to repay and can be of a short or longer term nature. The objective is to assist financially stressed borrowers by rearranging their repayment cash outflows into a sustainable modification, and at the same time, protect the Bank from suffering credit losses. The Bank deploys targeted segmentation strategies with the objective to tailor different short or long term and sustainable management solutions to selected groups of borrowers for addressing their specific financial needs.

The nature and type of forbearance options may include but is not necessarily limited to, one or more of the following:

arrears capitalization;
arrears repayment plan;
reduced payment above interest only;
interest-only payments;
reduced payment below interest only;
grace period;
interest rate reduction;
loan term extensions;
split balance;
partial debt forgiveness/write-down;
operational restructuring; and
debt to equity swaps.

Debt for equity swaps

For wholesale portfolios, the Bank on occasion participates in debt for equity transactions as part of forbearance measures, as described in note 2.2.9. In 2019, equity positions acquired by the Bank and held as of 31 December 2019 are: a) 12.46% of the nonvoting preference shares of Helesi S.A. for € 1.8 thousand and b) 6.75% of the non-voting preference shares of Akritas S.A. for € 0.01 million. Similarly in 2018, equity positions acquired by the Bank and held as of 31 December 2018 were: a) 10.67% of the nonvoting shares of Pillarstone Bidco S.C.A. for € 0.02 million, in the context of the restructuring of Famar S.A. and b) 12.1% of Regency Hellenic Investments S.A. for € 8.5 million, following the debt restructuring of Regency Entertaiment S.A.

i. Classification of Forborne loans

Forborne loans are classified either as non-impaired (stage 2), or impaired (stage 3) by assessing their delinquency and credit quality status.

Furthermore, forborne loans that fail to perform under the new modified terms and are subsequently denounced cease to be monitored as part of the Bank's forbearance activities and are reported as denounced credit impaired loans (stage 3) consistently with the Bank's management and monitoring of all denounced loans

ii. Impairment assessment

Where forbearance measures are extended, the Bank performs an assessment of the borrower's financial condition and its ability to repay, under the Bank's impairment policies, as described in notes 2.2.13 and 5.2.1. Accordingly, forborne loans to wholesale customers, retail individually significant exposures and financial institutions are assessed on an individual basis. Forborne retail lending portfolios are generally assessed for impairment separately from other retail loan portfolios on a collective basis as they consist of large homogenous portfolio.

iii. Loan restructurings

In cases where the contractual cash flows of a forborne loan have been substantially modified, the original forborne loan is derecognized and a new loan is recognized. The Bank records the modified asset as a 'new' financial asset at fair value and the difference with the carrying amount of the existing one is recorded in the income statement as derecognition gain or loss.

In cases where the modification as a result of forbearance measures is not considered substantial, the Bank recalculates the gross carrying amount of the loan and recognizes the difference as a modification gain or loss in the income statement. The Bank continues to monitor the modified forborne loan in order to determine if the financial asset exhibits significant increase in credit risk since initial recognition during the forbearance period.

As at 31 December 2019, the carrying amount of Bank's forborne loans measured at FVTPL amounted to € 26 million (2018: € 31 million).

The following tables present an analysis of Bank's forborne activities for loans measured at amortised cost. In order to align with the quantitative information provided in section (a) based on revised IFRS 7 requirements, the relevant tables below are presented on a gross carrying amount basis, while cumulative impairment allowance is presented separately, in line with the Bank's internal credit risk monitoring and reporting.

The following table presents a summary of the types of the Bank's forborne activities:

	2019	2018
	€ million	€ million
Forbearance measures:
Split balance	2,338	3,213
Loan term extension	2,462	2,988
Arrears capitalisation	378	556
Reduced payment below interest owed	215	254
Interest rate reduction	586	656
Reduced payment above interest owed	230	506
Arrears repayment plan	53	118
Interest only	20	37
Grace period	85	99
Debt/equity swaps	28	65
Partial debt forgiveness/Write-down	30	24
Operational restructuring	74	49
Other	238	174
Total gross carrying amount	6,737	8,739
Less: cumulative impairment allowance	(1,483)	(1,997)
Total carrying amount	5,254	6,742

The following tables present a summary of the credit quality of forborne loans and advances to customers:

	31 December 2019
	Total loans &
	advances at	Forborne
	amortised	loans &	% of Forborne
	cost	advances	loans &
	€ million	€ million	advances
Gross carrying amounts:
12-month ECL-Stage 1	18,674	-	0%
Lifetime ECL-Stage 2	5,470	3,831	70%
Lifetime ECL credit-impaired	11,970	2,906	24%
Total Gross Amount	36,114	6,737	19%
Cumulative ECL Loss allowance:
12-month ECL-Stage 1	(105)	-
Lifetime ECL -Stage 2	(379)	(299)
Lifetime ECL (credit-impaired) of which:	(5,982)	(1,184)
- Individually assessed	(1,872)	(337)
- Collectively assessed	(4,110)	(847)
Total carrying amount	29,648	5,254	18%
Collateral received	20,395	4,752

		31 December 2018
	Total loans & advances at amortised cost € million	Forborne loans & advances € million	% of Forborne loans & advances
Gross carrying amounts:
12-month ECL-Stage 1	15,838	-	0%
Lifetime ECL-Stage 2	6,229	4,489	72%
Lifetime ECL credit-impaired	15,208	4,250	28%
Total Gross Amount	37,275	8,739	23%
Cumulative ECL Loss allowance:
12-month ECL-Stage 1	(124)	-
Lifetime ECL - Stage 2	(678)	(527)
Lifetime ECL (credit-impaired) of which:	(7,165)	(1,470)
- Individually assessed	(2,322)	(447)
- Collectively assessed	(4,843)	(1,023)
Total carrying amount	29,308	6,742	23%
Collateral received	20,438	5,883

The following table presents the movement of forborne loans and advances:

	2019	2018
	€ million	€ million
Gross carrying amount at 1 January	8,739	10,005
Forbearance measures in the year (1)	726	1,010
Forborne loans derecognised/ reclassified as held
for sale during the year (2)	(782)	(41)
Write-offs of forborne loans	(95)	(20)
Repayment of loans	(351)	(406)
Loans & advances that exited forbearance status (3)	(1,732)	(1,999)
Other	232	190
Less: cumulative impairment allowance	(1,483)	(1,997)
Carrying amount at 31 December	5,254	6,742

(1) Forbearnce measures in the year depict loans to which forbearance measures were granted for the first time during the reporting period. (2) "Forborne loans derecognised/ reclassified as held for sale during the year" presents loans derecognized during the year due to a) sale transactions and b) substantial modifications of the loans' contractual terms and those that have been reclassified as held for sale during the year (note 30). (3) In 2019, an amount of € 466 million loans and advances that exited forbearance status refers to loans that were denounced (2018: € 825 million).

The following table presents the Bank's exposure to forborne loans and advances by product line:

	2019	2018
	€ million	€ million
Retail Lending	5,295	7,020
- Mortgage	3,689	4,960
- Consumer	276	390
- Credit card	0	0
- Small business	1,330	1,670
Wholesale Lending	1,442	1,719
-Large corporate	802	1,066
-SMEs	640	653
Total gross carrying amount	6,737	8,739
Less: cumulative impairment allowance	(1,483)	(1,997)
Total carrying amount	5,254	6,742

The following table presents the Bank's exposure to forborne loans and advances by geographical region:

	2019	2018
	€ million	€ million
Greece	6,616	8,666
Rest of Europe	111	40
Other countries	10	33
Total gross carrying amount	6,737	8,739
Less: cumulative impairment allowance	(1,483)	(1,997)
Total carrying amount	5,254	6,742

	2019	2018
Modified lending exposures	€ million	€ million
Loans modified during the year with loss allowance measured at an amount equal to lifetime ECL
Gross carrying amount at 31 December (1)	1,593	1,969
Modification loss	63	68
Loans modified since initial recognition at a time when loss allowance was based on lifetime ECL
Gross carrying amount at 31 December for which loss allowance has changed to 12-month
ECL measurement	1,080	560

(1) Gross carrying amount at 31 December includes all loans modifications due to forbearance during the year.

5.2.1.3 Debt Securities

The following tables present an analysis of debt securities by external credit rating agency designation at 31 December 2019 and 2018, based on Moody's ratings or their equivalent:

	31 December 2019

	12-month ECL	Lifetime ECL	Total
	Stage 1	Stage 2
	€ million	€ million	€ million
Investment securities at amortised cost
Gross Carrying Amount - Lower than A3	1,044	-	1,044
Impairment Allowance	(2)	-	(2)
Carrying Amount	1,042	-	1,042
Investment securities at FVOCI
Aaa	158	-	158
Aa1 to Aa3	336	-	336
A1 to A3	304	-	304
Lower than A3	4,576	-	4,576
Unrated	69	-	69
Carrying amount	5,443	-	5,443

Notes to the Financial Statements

Lifetime ECL	12-month ECL
Stage 2	Stage 1
€ million	€ million
		Investment securities at amortised cost
754	217	Gross Carrying Amount - Lower than A3
(28)	(2)	Impairment Allowance
726	215	Carrying Amount
		Investment securities at FVOCI
-	219	Aaa
-	1,093	Aa1 to Aa3
-	435	A1 to A3
21	3,739	Lower than A3
-	71	Unrated
21	5,557	Carrying amount

31 December 2019
	Investment
	securities
Securities held	measured at
for trading	FVTPL
€ million	€ million

Aa1 to Aa3 - 3 Lower than A3 50 0 Carrying Amount 50 3 Securities at FVTPL

		31 December 2018
		Investment
		securities
	Securities held	measured at
	for trading	FVTPL
	€ million	€ million
Securities at FVTPL
A1 to A3	-	4
Unrated	18	0
Carrying Amount	0	-
	18	4

Securities rated lower than A3 include: € 4,308 million related to Greek sovereign debt (2018: € 3,180 million), € 759 million related to Eurozone members sovereign debt (2018: € 1,115 million) and € 121 million related to sovereign debt issued mainly by European Union members and candidate members and other European countries (2018: € 83 million).

The following tables present the Bank's exposure in debt securities, as categorized by stage, counterparty's geographical region and industry sector:

	31 December 2019
	Greece		Other European countries		Other countries
	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2	Stage 1	Stage 2	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Investment securities at amortised cost
Sovereign	1,044	-	-	-	-	-	1,044
Banks	-	-	-	-	-	-	-
Corporate	-	-	-	-	-	-	-
Gross Carrying Amount	1,044	-	-	-	-	-	1,044
Impairment Allowance	(2)	-	-	-	-	-	(2)
Net Carrying Amount	1,042	-	-	-	-	-	1,042
Investment securities at FVOCI
Sovereign (1)	3,226	-	1,346	-	115	-	4,687
Banks	88	-	130	-	10	-	228
Corporate	151	-	234	-	143	-	528
Carrying Amount	3,465	-	1,710	-	268	-	5,443


				31 December 2018
	Greece			Other European countries Other countries
	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2	Stage 1	Stage 2	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Investment securities at amortised cost
Sovereign	216	754	-	-	-	-	970
Banks	-	-	-	-	-	-	-
Corporate	1	-	-	-	-	-	1
Gross Carrying Amount	217	754	-	-	-	-	971
Impairment Allowance	(2)	(28)	-	-	-	-	(30)
Net Carrying Amount	215	726	-	-	-	-	941
Investment securities at FVOCI
Sovereign (1)	2,229	-	2,740	-	50	-	5,019
Banks	61	-	92	-	4	-	157
Corporate	144	16	156	5	81	-	402

(1)As at 31 December 2019, sovereign debt securities of other European countries include EFSF bonds of carrying amount of € 199 million (2018: € 453 million).

Carrying Amount 2,434 16 2,988 5 135 - 5,578

		31 December 2019
		Other
		European
	Greece	countries	Total
	€ million	€ million	€ million
Investment securities at FVTPL
Sovereign	-	-	-
Banks	-	-	-
Corporate	0	3	3
Carrying amount	0	3	3
Securities held for trading
Sovereign	40	8	48
Banks	-	-	-
Corporate	1	1	2
Carrying amount	41	9	50

	31 December 2018
	Other
		European
	Greece	countries	Total
	€ million	€ million	€ million
Investment securities at FVTPL
Sovereign	-	-	-
Banks	-	-	-
Corporate	0	4	4
Carrying amount	0	4	4
Securities held for trading
Sovereign	11	-	11
Banks	-	6	6
Corporate	1	-	1
Carrying amount	12	6	18

During the year ended 31 December 2019, the Bank recognized € 74 million gains presented in line 'Gains less losses from investment securities', of which € 58 million resulted from debt securities at FVOCI sale transactions and € 16 million mainly from the increase in the fair value of equity instruments. In the comparative period, the Bank had recognized € 79 million gains, mainly as a result of debt securities at FVOCI sale transactions.

In the year ended 31 December 2019, the improvement of the credit spreads of the Hellenic Republic debt, resulted in the increase of the fair value of Greek Government Bonds classified at FVOCI.

5.2.1.4 Offsetting of financial assets and financial liabilities

The disclosures set out in the tables below include financial assets and financial liabilities that:

(a) are offset in the Bank's balance sheet according to IAS 32 'Financial Instruments: Presentation' criteria; or

(b) are subject to enforceable master netting arrangements or similar agreements that cover similar financial instruments, irrespective of whether they are offset in balance sheet.

Regarding the latter, the International Swaps and Derivatives Association (ISDA) and similar master netting arrangements do not meet the criteria for offsetting in the balance sheet, as they create a right of set-off that is enforceable only following an event of default, insolvency or bankruptcy of the Bank or the counterparties or following other predetermined events. In addition, the Bank and its counterparties may not intend to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

The following tables present financial assets and financial liabilities that meet the criteria for offsetting and thus are reported on a net basis in the balance sheet, as well as amounts that are subject to enforceable master netting arrangements and similar agreements for which the offset criteria mentioned above are not satisfied. The latter amounts, which mainly relate to derivatives, repos and reverse repos, are not set off in the balance sheet. In respect of these transactions, the Bank receives and provides collateral in the form of marketable securities and cash that are included in the tables below under columns 'financial instruments' and 'cash collateral' at their fair value.

	31 December 2019
				Related amounts not offset in the BS
	amounts of recognised financial assets	Gross amounts of recognised financial liabilities offset in the balance sheet	Net amounts of financial assets presented in the balance sheet	Financial instruments (incl. non-cash collateral)	Cash collateral received	Net amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Assets
Reverse repos with banks	1,634	(1,607)	27	(27)	-	-
Derivative financial instruments	2,251	-	2,251	(2,135)	(24)	92
Total	3,885	(1,607)	2,278	(2,162)	(24)	92

Financial Assets	amounts of recognised financial	financial	assets	Financial

		liabilities offset	presented in	instruments	Cash
		in the balance	the balance	(incl. non-cash	collateral	Net
	assets	sheet	sheet	collateral)	received	amount
	€ million	€ million	€ million	€ million	€ million	€ million

Reverse repos with banks	1,634	(1,607)	27	(27)	-	-
Derivative financial instruments	2,251	-	2,251	(2,135)	(24)	92
Total	3,885	(1,607)	2,278	(2,162)	(24)	92

	31 December 2019
	Related amounts not offset in the BS

			Net amounts
	Gross	Gross amounts	of financial
	amounts of	of recognised	liabilities	Financial
	recognised	financial assets	presented in	instruments	Cash
	financial	offset in the	the balance	(incl. non-cash	collateral	Net
	liabilities	balance sheet	sheet	collateral)	pledged	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Liabilities
Derivative financial instruments	2,723	-	2,723	(608)	(2,073)	42
Repurchase agreements with banks	8,395	(1,607)	6,788	(6,788)	-	-
Total	11,118	(1,607)	9,511	(7,396)	(2,073)	42

			31 December 2018
					Related amounts not offset in the BS

	Gross	Gross amounts of recognised	Net amounts of
	amounts of	financial	financial assets	Financial
	recognised	liabilities offset	presented in	instruments	Cash
	financial	in the balance	the balance	(incl. non-cash	collateral	Net
	assets	sheet	sheet	collateral)	received	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Assets
Reverse repos with banks	120	(100)	20	(20)	-	-
Derivative financial instruments	1,874	-	1,874	(1,790)	(23)	61
Total	1,994	(100)	1,894	(1,810)	(23)	61

	31 December 2018

					Related amounts not offset in the BS
			Net amounts of
	Gross	Gross amounts	financial
	amounts of	of recognised	liabilities	Financial
	recognised	financial assets	presented in	instruments	Cash
	financial	offset in the	the balance	(incl. non-cash	collateral	Net
	liabilities	balance sheet	sheet	collateral)	pledged	amount
	€ million	€ million	€ million	€ million	€ million	€ million

Financial Liabilities Derivative financial instruments Repurchase agreements with banks	1,897 8,010	- (100)	1,897 7,910	(601) (7,910)	(1,285) -	11 -

	31 December 2018
				Related amounts not offset in the BS
	Gross amounts of recognised financial	Gross amounts of recognised financial liabilities offset in the balance	Net amounts of financial assets presented in the balance	Financial instruments (incl. non-cash	Cash collateral	Net
	assets	sheet	sheet	collateral)	received	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Assets
Reverse repos with banks	120	(100)	20	(20)	-	-
Derivative financial instruments	1,874	-	1,874	(1,790)	(23)	61
Total	1,994	(100)	1,894	(1,810)	(23)	61

	31 December 2018
				Related amounts not offset in the BS
			Net amounts of
	Gross	Gross amounts	financial
	amounts of	of recognised	liabilities	Financial
	recognised	financial assets	presented in	instruments	Cash
	financial	offset in the	the balance	(incl. non-cash	collateral	Net
	liabilities	balance sheet	sheet	collateral)	pledged	amount
	€ million	€ million	€ million	€ million	€ million	€ million
Financial Liabilities
Derivative financial instruments	1,897	-	1,897	(601)	(1,285)	11
Repurchase agreements with banks	8,010	(100)	7,910	(7,910)	-	-
Total	9,907	(100)	9,807	(8,511)	(1,285)	11

5.2.2 Market risk

The Bank takes on exposure to market risk, which is the risk of potential financial loss due to an adverse change in market variables. Changes in interest rates, foreign exchange rates, credit spreads, equity prices and other relevant factors, such as the implied volatilities of the above, can affect the Bank's income or the fair value of its financial instruments. The market risks the Bank is exposed to, are managed and monitored by Group Market and Counterparty Risk Sector (GMCRS).

Monitoring of all key market & IRRBB risk indicators (VaR, sensitivities, interest rate gaps);
Implementation of Stress Testing methodologies for market risk (historical and hypothetical), and IRRBB;
Monitoring and reporting of market and IRRBB risk limits utilization; and
Development, maintenance and expansion of risk management infrastructure

The market risks the Bank is exposed to, are the following:

(a) Interest rate risk

The Bank takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its cash flows and the fair value of its financial positions. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is further split into 'General' and 'Specific'. The former refers to changes in the fair valuation of positions due to the movements of benchmark interest rates, while the latter refers to changes in the fair valuation of positions due to the movements of specific issuer yields and credit spreads.

(b) Currency risk

The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows.

(c) Equity risk

Equity price risk is the risk of the decrease of fair values as a result of changes in the levels of equity indices and the value of individual stocks. The equity risk that the Bank undertakes arises mainly from the investment portfolio.

(d) Implied volatilities

The Bank carries limited implied volatility (vega) risk, mainly as a result of proprietary swaption positions.

The Board's Risk Committee sets limits on the level of exposure to market risks, which are monitored on a regular basis.

Market risk is managed and monitored using Value at Risk (VaR) methodology.

(i) VaR summary for 2019 and 2018

VaR is a methodology used in measuring financial risk by estimating the potential negative change in the market value of a portfolio at a given confidence level and over a specified time horizon. The VaR that the Bank measures is an estimate based upon a 99% confidence level and a holding period of 1 day and the methodology used for the calculation is Monte Carlo simulation (full repricing).

Since VaR constitutes an integral part of the Bank's market risk control regime, VaR limits have been established for all (trading and investment portfolios) operations and actual exposure is reviewed daily by management. However, the use of this approach does not prevent losses outside of these limits in the event of extraordinary market movements.

Average VaR by risk type (Trading and Investment portfolios (1))-Greece

	2019	2018
	€ million	€ million
Interest Rate Risk	42	35
Foreign Exchange Risk	0	0
Equities Risk	0	1
Total VaR	42	35

(1) Interest rate volatility applied to all portfolios. Credit spread volatility applied to FVTPL and FVOCI positions.

The aggregate VaR of the interest rate, foreign exchange and equities VaR benefits from diversification effects.

Interest Rate VaR takes into account the changes to the fair valuation of all the Bank's items that are attributable to movements in the interest rates. This includes loans and deposits (customers and interbank), Eurosystem funding and debt issued, as well as securities and derivatives held by the Bank. Despite the large relative size of the loan and deposit portfolio, Eurosystem funding and debt issued, its timing and amount matching, combined with the current level of interest rates, mean that the incremental contribution of these items to the Interest Rate VaR is not material. The largest portion of the Bank's Interest Rate VaR figures is attributable to the risk associated with interest rate sensitive securities and derivatives.

Interest rate exposure for the Bank's securities, derivatives portfolio, covered bonds, securitizations and Tier 2 notes can be analyzed into time bands as shown in the following tables:

	31 December 2019
	Less than 1				More than 5
	month	1-3 months	3-12 months	1-5 years	years
	€ million	€ million	€ million	€ million	€ million
Securities held for trading	-	1	1	6	32
-Fixed coupon bonds	-	1	1	6	32
Investment securities	50	87	257	868	3,832
-Fixed coupon bonds	25	56	254	868	3,832
-Variable coupon bonds	25	31	3	-	-
Debt issued (Third parties)	-	(944)	(500)	-	(950)
-Fixed coupon covered bonds	-	-	(500)	-	-
-Fixed coupon subordinated notes (Tier 2)	-	-	-	-	(950)
-Variable coupon securitisations	-	(944)	-	-	-
Derivatives(1)	278	(528)	1,714	(1,098)	(398)

		31 December 2018
	Less than 1				More than 5
	month	1-3 months	3-12 months	1-5 years	years
	€ million	€ million	€ million	€ million	€ million
Securities held for trading	-	2	1	2	13
-Fixed coupon bonds	-	-	1	2	13
-Variable coupon bonds	-	2	-	-	-
Investment securities	36	58	516	2,304	3,229
-Fixed coupon bonds	-	-	516	2,304	3,229
-Variable coupon bonds	36	58	-	-	-
Debt issued (Third parties)	-	(1,246)	-	(500)	(950)
-Fixed coupon covered bonds	-	-	-	(500)	-
-Fixed coupon subordinated notes (Tier 2)	-	-	-	-	(950)
-Variable coupon securitisations	-	(1,246)	-	-	-
Derivatives(1)	348	1,782	1,389	(1,441)	(2,122)

(ii) Foreign exchange risk

The following table presents the Bank's exposure to foreign currency exchange risk as at 31 December 2019 and 2018:

				31 December 2019
	USD	CHF	RON	RSD	BGN	OTHER	EUR	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
ASSETS
Cash and balances with central banks	7	1	-	-	-	4	2,614	2,626
Due from credit institutions	129	9	18	0	1	34	3,268	3,459
Securities held for trading	0	-	-	-	-	0	50	50
Derivative financial instruments	23	2	-	-	0	0	2,253	2,278
Loans and advances to customers	1,516	3,378	20	-	0	14	24,770	29,698
Investment securities	331	0	-	-	-	6	6,243	6,580
Other assets (1)	15	18	45	233	189	0	9,606	10,106
Assets of disposal groups classified as held
for sale	-	-	-	-	-	-	49	49
Total Assets	2,021	3,408	83	233	190	58	48,853	54,846
LIABILITIES
Due to central banks and credit institutions	600	20	0	0	0	24	9,457	10,101
Derivative financial instruments	30	0	0	-	0	0	2,694	2,724
Due to customers	1,883	19	0	0	0	133	30,658	32,693
Debt securities in issue	0	-	-	-	-	-	2,390	2,390
Other Liabilities	7	0	26	-	0	0	1,048	1,081
Total Liabilities	2,520	39	26	0	0	157	46,247	48,989
Net on balance sheet position	(499)	3,369	57	233	190	(99)	2,606	5,857
Derivative forward foreign
exchange position	512	(3,370)	(12)	-	(506)	101	3,225	(50)
Total Foreign Exchange Position	13	(1)	45	233	(316)	2	5,831	5,807

	31 December 2018 restated
	USD	CHF	RON	RSD	BGN	OTHER	EUR	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
ASSETS
Cash and balances with central banks	10	1	-	-	-	4	382	397
Due from credit institutions	88	210	25	0	0	32	2,835	3,190
Securities held for trading	0	-	0	-	-	0	18	18
Derivative financial instruments	13	2	-	-	0	0	1,860	1,875
Loans and advances to customers	1,292	3,235	0	-	0	24	24,803	29,354
Investment securities	245	-	-	-	-	-	6,352	6,597
Other assets (1) (note 2.3.2)	3	1	-	221	189	0	8,415	8,829
Assets classified as held for sale	-	-	0	-	-	-	20	20
Total Assets	1,651	3,449	25	221	189	60	44,685	50,280
LIABILITIES
Due to central banks and credit institutions	722	3	5	0	0	17	10,550	11,297
Derivative financial instruments	14	0	0	-	0	0	1,882	1,896
Due to customers	1,525	18	0	0	0	117	27,475	29,135
Debt securities in issue	0	-	-	-	-	-	2,697	2,697
Other Liabilities	8	1	16	-	-	0	847	872
Total Liabilities	2,269	22	21	0	0	134	43,451	45,897
Net on balance sheet position	(618)	3,427	4	221	189	(74)	1,234	4,383
Derivative forward foreign
exchange position	608	(3,399)	(25)	-	(430)	65	3,322	141
Total Foreign Exchange Position	(10)	28	(21)	221	(241)	(9)	4,556	4,524

(1) Other assets include Shares in subsidiaries, property, plant and equipment, Investment property, Intangible assets, Deferred tax assets and Other assets.

5.2.3 Liquidity risk

The Bank is exposed to daily calls on its available cash resources due to deposits withdrawals, maturity of medium or long term notes, maturity of secured or unsecured funding (interbank repos and money market takings), loan draw-downs and forfeiture of

guarantees. Furthermore, margin calls on secured funding transactions (with ECB and the market), on risk mitigation contracts (CSAs, GMRAs) and on centrally cleared transactions (CCPs) result in liquidity exposure. The Bank maintains cash resources to meet all of these needs. The Board Risk Committee sets liquidity limits to ensure that sufficient funds are available to meet such contingencies.

The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management of the Bank. It is unusual for banks to be completely matched, as transacted business is often of uncertain term and of different types. An unmatched position potentially enhances profitability, but also increases the risk of losses.

The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest bearing liabilities as they mature, are important factors in assessing the liquidity of the Bank.

Liquidity Risk Management Framework

The Bank's Liquidity Risk Management Policy defines the following supervisory and control structure:

Board Risk Committee's role is to approve all strategic liquidity risk management decisions and monitor the quantitative and qualitative aspects of liquidity risk;
Group Assets and Liabilities Committee has the mandate to form and implement the liquidity policies and guidelines in conformity with Bank's risk appetite, and to review at least monthly the overall liquidity position of the Bank;
Group Treasury is responsible for the implementation of the Bank's liquidity strategy, the daily management of the Bank's liquidity and for the preparation and monitoring of the Bank's liquidity budget; and
Group Market and Counterparty Risk Sector is responsible for measuring, monitoring and reporting the liquidity of the Bank.

The following list summarizes the main reports which are produced on a periodic basis:

(a) The regulatory liquidity gap report along with the regulatory liquidity ratios;
(b) Stress test scenarios. These scenarios evaluate the impact of a number of stress events on the Bank's liquidity position;
(c) Report on market sensitivities affecting liquidity;
(d) Liquidity coverage ratios (LCR) estimation (Basel III new regulatory ratio); and
(e) Reporting on the Bank's Asset Encumbrance.

Maturity analysis of assets and assets held for managing liquidity risk

The following tables present maturity analysis of Bank assets as at 31 December 2019 and 2018, based on their carrying values. Loans without contractual maturities are presented in the 'less than 1 month' time bucket. The Bank has established credit risk mitigation contracts with its interbank counterparties (ISDA/CSA). Under these contracts the Bank has posted or received collateral, which covers the corresponding net liabilities or net assets from derivative transactions. The collateral posted is not presented in the below tables. For derivative assets not covered by ISDA/CSA agreements the positive valuation is presented at fair value in the 'over 1 year' time bucket.

	31 December 2019
	Less than	1 - 3	3 months	Over
	1 month	months	to 1 year	1 year	Total
	€ million	€ million	€ million	€ million	€ million
- Cash and balances with central banks	2,626	-	-	-	2,626
- Due from credit institutions	382	96	280	414	1,172
- Loans and advances to customers	1,925	317	2,806	24,650	29,698
- Debt Securities	43	41	262	6,192	6,538
- Equity Securities	-	-	-	92	92
- Derivative financial instruments	-	-	-	118	118
- Other assets(1)	83	11	10	10,002	10,106
- Assets of disposal groups classified as held for sale (note 30)	-	2	47	-	49
Total	5,059	467	3,405	41,468	50,399

		31 December 2018 restated
	Less than	1 - 3	3 months	Over
	1 month	months	to 1 year	1 year	Total
	€ million	€ million	€ million	€ million	€ million
- Cash and balances with central banks	397	-	-	-	397
- Due from credit institutions	663	142	361	462	1,628
- Loans and advances to customers	2,276	325	2,058	24,695	29,354
- Debt Securities	-	6	528	6,007	6,541
- Equity Securities	-	-	-	74	74
- Derivative financial instruments	-	-	-	66	66
- Other assets(1) (note 2.3.2)	72	10	9	8,738	8,829
- Assets of disposal groups classified as held for sale (note 30)	20	-	-	-	20
Total	3,428	483	2,956	40,042	46,909

(1) Other assets include Shares in subsidiaries, Property, plant and equipment, Investment property, Intangible assets, Deferred tax assets and Other assets.

The Bank holds a diversified portfolio of cash and high liquid assets to support payment obligations and contingent deposit withdrawals in a stressed market environment. The Bank's assets held for managing liquidity risk comprise:

(a) Cash and balances with central banks;

(b) Eligible bonds and other financial assets for collateral purposes; and

Maturity analysis of liabilities

The amounts disclosed in the tables below are the contractual undiscounted cash flows for the years 2019 and 2018. Liabilities without contractual maturities (sight and saving deposits) are presented in the 'less than 1 month' time bucket. The Bank has established credit risk mitigation contracts with its interbank counterparties (ISDA/CSA). Due to these contracts the Bank has already posted collateral which covers the valuation of its net liabilities from interbank derivatives. For derivative liabilities not covered by ISDA/CSA agreements the negative valuation is presented at fair value in the 'less than 1 month' time bucket.

	31 December 2019
					Gross nominal
	Less than	1 - 3	3 months	Over 1	(inflow)/
	1 month	months	to 1 year	year	outflow
	€ million	€ million	€ million	€ million	€ million
Non-derivative liabilities:
- Due to central banks and credit institutions	5,406	2,358	10	2,338	10,112
- Due to customers	24,194	3,920	4,600	-	32,714
- Debt securities in issue	31	84	792	2,050	2,957
- Lease liabilities	2	4	18	111	135
- Other liabilities	193	247	520	-	960
	29,826	6,613	5,940	4,499	46,878
Derivative financial instruments:	5	-	-	-	5

Off-balance sheet items

	Less than	Over
	1 year	1 year
	€ million	€ million
Credit related commitments	3,627	1,224
Contractual commitments (1)	136	-
Total	3,763	1,224

	31 December 2018
					Gross nominal
	Less than		3 months to	Over 1	(inflow)/
		1 month 1 - 3 months	1 year	year	outflow
	€ million	€ million	€ million	€ million	€ million
Non-derivative liabilities:
- Due to central banks and credit institutions	8,828	790	-	1,688	11,306
	22,155	2,802	4,195	4	29,156
	1	91	327	3,043	3,462
	103	169	600	-	872
	31,087	3,852	5,122	4,735	44,796
Derivative financial instruments:	13	-	-	-	13

Off-balance sheet items

	Less than	Over
	1 year	1 year
	€ million	€ million
Credit related commitments	3,906	1,064
Contractual commitments (1)	13	-
Operating lease commitments	26	81
Total	3,945	1,145

(1) It refers to contractual commitments for the purchase of own used and investment property and intangible assets (note 42).

5.2.4 Interest Rate Benchmark reform - IBOR reform

In this context, the Bank has established an IBOR Working Group, led by senior representatives from Units across the Bank including Economic Analysis and Research, Global Markets and GMCRS, and the participation of other Business Units and the support of Legal and Group Organization & Business Analysis (Regulatory Unit) Units, in order to manage the transition to the new alternative risk free rates that will replace the current interbank offered rates (IBORs), minimize, as possible , any related risks and fully comply with the regulatory requirements on the EU Benchmarks Regulation (BMR).

The main objectives of the above mentioned IBOR Working Group include:

Monitoring of the regulatory, market and industry developments on the IBOR reform and preparation of the action plans for an orderly transition to the new benchmark rates,
Assessment and evaluation of implications to the business activity including proper integration of the new methodologies to calculate the alternative benchmark rates in the Bank's core systems, amendment of clearing agreements with clearing entities/brokers and contracts with financial institutions-market counterparties based on the new alternative benchmark rates, incorporation of fallback provisions as may be required or recommended by the regulatory authorities of financial markets international associations, in existing and newly originated floating rate financial instruments indexed to benchmark rates that will be replaced as part of the IBOR reform and appropriate modification of customers' contracts,
Development of a communication strategy to all stakeholders regarding changes deriving from the IBOR Reform, and
Regular reporting to the Group Assets Liabilities Committee and as may be required to the BRC in order to review and assess developments, recommend or approve actions and/or strategies relevant to the IBOR reform.

The Bank has exposure to a significant number of IBOR-linked financial instruments such as derivatives, debt securities, lending and deposit contracts. Since these benchmark rates will be replaced, as part of the market driven IBOR reform, there may be uncertainty regarding the methods and timing of transition to the new rates, as well as the resulting modifications of the IBOR linked financial instruments in respect of the timing or amount of the new benchmark rate-based cash flows. Accordingly, the above uncertainty may have consequences on the financial instruments' accounting treatment mainly relating to hedge accounting over the transition

Notes to the Financial Statements

period, hedge designations when existing uncertainties are no longer present and the accounting treatment to be applied to any changes to the terms of the contracts.

As at 31 December 2019, the Bank is exposed to a number of interest rate benchmarks within its hedge accounting relationships that mature beyond the end of 2021, when the IBOR reform is expected to be completed, i.e. the Euribor, the USD Libor, the CHF Libor and the Euro Overnight Index Average (EONIA).

Furthermore, the hedged items include Euro and CHF floating rate mortgage loans, Euro and US dollar fixed rate debt securities, and Euro deposits to customers. Currently, the market expects that upon the IBOR's transition, the applicable interest rates (i.e. new IBORs plus spread) will be set atsuch levels so as to minimize, as possible, value transfer for all parties resulting in the respective cash flows being broadly equivalent for all stakeholders, before and after the IBOR change. Considering the market view and the Bank's expectation that the hedged items will contractually remain as floating rated and the identified hedged risk components will not change, the existing uncertainties relating to the IBOR replacement during the transition period do not impact the Group's hedge accounting as at 31 December 2019.

The Bank will continue to monitor any market developments and regulatory guidance relating to the IBOR Reform and adjust its implementation plans accordingly in order to achieve mitigation of the risks resulting from the transition.

5.3 Fair value of financial assets and liabilities

The Bank's financial instruments measured at fair value or at amortized cost for which fair value is disclosed are categorized into the three levels of the fair value hierarchy based on whether the inputs to the fair values are observable or unobservable, as follows:

(a) Level 1-Financial instruments measured based on quoted prices (unadjusted) in active markets for identical financial instruments that the Bank can access at the measurement date. A market is considered active when quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and represent actually and regularly occurring transactions. Level 1 financial instruments include actively quoted debt instruments held or issued by the Bank, equity and derivative instruments traded on exchanges, as well as mutual funds that have regularly and frequently published quotes.
(b) Level 2-Financial instruments measured using valuation techniques with inputs, other than level 1 quoted prices, that are observable either directly or indirectly, such as: i) quoted prices for similar financial instruments in active markets, ii) quoted prices for identical or similar financial instruments in markets that are not active, iii) inputs other than quoted prices that are directly or indirectly observable, mainly interest rates and yield curves observable at commonly quoted intervals, forward exchange rates, equity prices, credit spreads and implied volatilities obtained from internationally recognized market data providers and iv) other unobservable inputs which are insignificant to the entire fair value measurement. Level 2 financial instruments include over-the-counter (OTC) derivatives, less liquid debt instruments held or issued by the Bank and equity instruments.
(c) Level 3-Financial instruments measured using valuation techniques with significant unobservable inputs. When developing unobservable inputs, best information available is used, including own data, while at the same time market participants' assumptions are reflected (e.g. assumptions about risk). Level 3 financial instruments include unquoted equities or equities traded in markets that are not considered active, certain OTC derivatives, loans and advances to customersincluding securitized

loans issued by special purpose entities established by the Bank and recognized in financial assets and debt securities issued by the Bank.

Financial instruments carried at fair value

The fair value hierarchy categorization of the Bank's financial assets and liabilities measured at fair value is presented in the following tables:

	31 December 2019
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million
Securities held for trading	50	-	-	50
Investment securities at FVTPL	21	17	57	95
Derivative financial instruments	0	2,278	0	2,278
Investment securities at FVOCI	5,393	50	-	5,443
Loans and advances to customers mandatorily at FVTPL	-	-	50	50
Financial assets measured at fair value	5,464	2,345	107	7,916
Derivative financial instruments	0	2,724	-	2,724
Trading liabilities	39	-	-	39
Financial liabilities measured at fair value	39	2,724	-	2,763

	31 December 2018
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million
Securities held for trading	18	0	-	18
Investment securities at FVTPL	20	6	52	78
Derivative financial instruments	0	1,874	1	1,875
Investment securities at FVOCI	5,493	85	0	5,578
Loans and advances to customers mandatorily at FVTPL	-	-	46	46
Financial assets measured at fair value	5,531	1,965	99	7,595
Derivative financial instruments	0	1,896	-	1,896
Trading liabilities	4	-	-	4
Financial liabilities measured at fair value	4	1,896	-	1,900

The Bank recognizes transfers into and out of the fair value hierarchy levels at the beginning of the quarter in which a financial instrument's transfer was effected. There were no material transfers between levels during the year ended 31 December 2019.

Reconciliation of Level 3 fair value measurements

	2019	2018
	€ million	€ million
Balance at 1 January	99	39
Transition to IFRS 9	-	52
Transfers into Level 3	0	0
Transfers out of Level 3	(0)	(1)
Additions, net of disposals and redemptions	2	4
Total gain/(loss) for the year included in profit or loss	7	4
Foreign exchange differences and other	(1)	1
Balance at 31 December	107	99

Bank's valuation processes and techniques

The Bank's processes and procedures governing the fair valuations are established by the Group Market Counterparty Risk Sector in line with the Bank's accounting policies. The Bank uses widely recognized valuation models for determining the fair value of common financial instruments that are not quoted in an active market, such as interest and cross currency swaps, that use only observable market data and require little management estimation and judgment. Specifically, observable prices or model inputs are usually available in the market for listed debt and equity securities, exchange-traded and simple over-the-counter derivatives.

Availability of observable market prices and model inputs reduces the need for management judgment and estimation and also reduces the uncertainty associated with determining fair values.

Valuation controls applied by the Bank may include verification of observable pricing, re-performance of model valuations, review and approval process for new models and/or changes to models, calibration and back-testing against observable market transactions, where available, analysis of significant valuation movements, etc. Where third parties' valuations are used for fair value measurement, these are reviewed in order to ensure compliance with the requirements of IFRS 13.

OTC derivative financial instruments are fair valued by discounting expected cash flows using market interest rates at the measurement date. Counterparty credit risk adjustments and own credit risk adjustments are applied to OTC derivatives, where appropriate. Bilateral credit risk adjustments consider the expected cash flows between the Bank and its counterparties under the relevant terms of the derivative instruments and the effect of the credit risk on the valuation of these cash flows. As appropriate in circumstances, the Bank considers also the effect of any credit risk mitigating arrangements, including collateral agreements and master netting agreements on the calculation of credit risk valuation adjustments (CVAs). CVA calculation uses probabilities of default (PDs) based on observable market data such as credit default swaps (CDS) spreads, where appropriate, or based on internal rating models. The Bank applies similar methodology for the calculation of debit-value-adjustments (DVAs), when applicable. Where valuation techniques are based on internal rating models and the relevant CVA is significant to the entire fair value measurement, such derivative instruments are categorized as Level 3 in the fair value hierarchy. A reasonably possible change in the main unobservable input (i.e. the recovery rate), used in their valuation, would not have a significant effect on their fair value measurement.

The Bank determines fair values for debt securities held using quoted market prices in active markets for securities with similar credit risk, maturity and yield, quoted market prices in non active markets for identical or similar financial instruments, or using discounted cash flows method.

Loans and advances to customers which contractual cash flows do not represent solely payments of principal and interest (SPPI failures), are measured mandatorily at fair value through profit or loss. Quoted market prices are not available as there are no active markets where these instruments are traded. Their fair values are estimated on an individual loan basis by discounting the future expected cash flows over the time period they are expected to be recovered, using an appropriate discount rate. Expected cash flows which incorporate credit risk, represent significant unobservable input in the valuation and as such, the entire fair value measurement is categorized as Level 3 in the fair value hierarchy. A reasonably possible increase/decrease in those recovery rates by +5%/-5% would increase/decrease the total fair value measurement by € 2 million.

Financial instruments not measured at fair value

The fair value hierarchy categorization of the Bank's financial assets and liabilities not measured at fair value on the balance sheet, is presented in the following tables:

	31 December 2019
				Fair	Carrying
	Level 1	Level 2	Level 3	value	amount
	€ million	€ million	€ million	€ million	€ million
Loans and advances to customers	-	-	29,734	29,734	29,648
Investment securities at amortized cost	-	681	-	681	1,042
Financial assets not measured at fair value	-	681	29,734	30,415	30,690
Debt securities in issue held by third party investors	513	865	944	2,322	2,390
Financial liabilities not measured at fair value	513	865	944	2,322	2,390

	31 December 2018
					Carrying
	Level 1	Level 2		Level 3 Fair value	amount
	€ million	€ million	€ million	€ million	€ million
Loans and advances to customers	-	-	29,270	29,270	29,308
Investment securities at amortized cost	-	392	-	392	941
Financial assets not measured at fair value	-	392	29,270	29,662	30,249
Debt securities in issue held by third party investors	510	722	1,247	2,479	2,691
Financial liabilities not measured at fair value	510	722	1,247	2,479	2,691

(a) Loans and advances to customers including securitized loans issued by special purpose entities established by the Bank: for loans and advances to customers, quoted market prices are not available as there are no active markets where these instruments are traded. The fair values are estimated by discounting future expected cash flows over the time period they are expected to be recovered, using appropriate risk-adjusted rates. Loans are grouped into homogenous assets with similar characteristics, as monitored by Management, such as product, borrower type and delinquency status, in order to improve the accuracy of the estimated valuation outputs. In estimating future cash flows, the Bank makes assumptions on expected prepayments, product spreads and timing of collateral realization. The discount rates incorporate inputs for expected credit losses and interest rates, as appropriate;
(b) Investment securities measured at amortized cost: the fair values of financial investments are determined using prices quoted in an active market when these are available. In other cases, fair values are determined using quoted market prices for securities with similar credit risk, maturity and yield, quoted market prices in non active markets for identical or similar financial instruments, or by using the discounted cash flows method; and
(c) Debt securities in issue: the fair values of the debt securities in issue are determined using quoted market prices, if available. If quoted prices are not available, fair values are determined based on quotes for similar debt securities or by discounting the expected cash flows at a risk-adjusted rate, where the Bank's own credit risk is determined using inputs indirectly observable, i.e. quoted prices of similar securities issued by the Bank or other Greek issuers.

6. Net interest income

	2019	2018
	€ million	€ million
Interest income
Customers	1,084	1,197
- measured at amortized cost	1,082	1,196
- measured at FVTPL	2	1
Banks and other assets (1)	32	30
Securities (2)	157	151
- measured at amortized cost	15	17
- measured at FVOCI	141	133
- measured at FVTPL	1	1
Derivatives (hedge accounting) (3)	51	59
Derivatives (no hedge accounting) (3)	377	370
	1,701	1,807
Interest expense
Customers (1)	(130)	(129)
Banks (1)	(75)	(140)
Debt securities in issue (1)	(105)	(85)
Derivatives (hedge accounting) (3)	(36)	(38)
Derivatives (no hedge accounting) (3)	(360)	(360)
Lease liabilities - IFRS 16	(3)	-
	(709)	(752)
Total	992	1,055

(1) Measured at amortized cost.

(2) The interest income from trading securities included is immaterial for the year ended 31 December 2019 and 2018.

(3) For year 2018, it includes a reclassification between hedge and no hedge accounting of € 44 million in interest income and € 35 million in interest expense.

Interest income recognized by quality of Loans and Advances and Product Line is further analyzed below:

	31 December 2019
	Interest income on	Interest income on
	non-impaired loans	impaired loans and
	and advances	advances	Total
	€ million	€ million	€ million
Retail lending	433	198	631
Wholesale lending(1)	358	95	453
Total interest income from customers	791	293	1,084

	31 December 2018
	Interest income on	Interest income on
	non-impaired loans	impaired loans and
	and advances	advances	Total
	€ million	€ million	€ million
Retail lending	441	278	719
Wholesale lending(1)	351	127	478
Total interest income from customers	792	405	1,197

(1) Including interest income on loans and advances to Public Sector.

7. Net banking fee and commission income

The following tables include net banking fees and commission income from contracts with customers in the scope of IFRS 15, disaggregated by major type of services and operating segments.

	31 December 2019
				Global &	Other and
			Wealth	Capital		Elimination Investment
			Retail Corporate Management	Markets	center	Property	Total
	€ million	€ million		€ million € million	€ million		€ million € million

Lending related activities	7	36	0	6	2	0	51
Mutual funds and assets under management	17	2	18	1	0	0	38
Network activities and other (1)	25	14	0	14	0	0	53
Capital markets	0	4	(3)	2	2	0	5
Total	49	56	15	23	4	0	147

	31 December 2018
				Global &	Other and
			Wealth	Capital		Elimination Investment
		Retail Corporate	Management	Markets	center	Property	Total
	€ million	€ million		€ million € million	€ million		€ million € million

Lending related activities (1)	6	46	0	5	5	0	62
Mutual funds and assets under management	12	1	16	3	0	0	32
Network activities and other (1)	32	13	0	12	0	0	57
Capital markets	0	4	(1)	29	2	0	34
Total	50	64	15	49	7	0	185

(1) Including income from credit cards related services and as of 2019 fees from institutional clients previously included in lending related activities. Comparative information has been adjusted accordingly.

8. Income from non banking services

Income from non banking services includes rental income of € 39 million from real estate properties and other income of € 3 million from IT services provided by the Bank.

9. Dividend income

During the year, the Bank recognized dividend income mainly resulting from shares in subsidiaries amounting to € 142 million (2018: € 123 million).

The analysis of the aforementioned dividends per entity is as follows:

	2019	2018
	€ million	€ million
Eurobank Private Bank Luxembourg S.A.	15	30
ERB Istanbul Holding A.S.	-	30
Eurobank Bulgaria A.D.	-	17
Eurolife ERB Insurance Group Holdings S.A.	11	16
Eurobank Factors S.A.	15	15
ERB New Europe Holding B.V.	100	13
Οther	1	2
Total	142	123

10. Net trading income and gains less losses from investment securities

	2019	2018
	€ million	€ million

Debt securities of which:	63	78
- measured at FVOCI	61	77
- measured at FVTPL	2	1
Equity securities measured at FVTPL	16	2
Gains/(losses) on derivative financial instruments (hedge accounting)	(8)	(1)
Gains/(losses) on derivative financial instruments (no hedge accounting)	(21)	11
Revaluation on foreign exchange positions	-	9
Total	50	99

11. Other income/ (expenses)

		2018
	2019	restated
	€ million	€ million

Gain/(loss) from change in fair value of investment property (note 2.3.2)	45	(3)
Derecognition gain/ (loss) on loans measured at amortised cost (1)	(40)	4
Fee expense related to the deferred tax credits (note 14)	(7)	(7)
Gain/ (loss) on the disposal of subsidiaries (note 23)(2)	2	(23)
Capital return received from Eurolife ERB Insurance Group Holdings S.A. (3)	-	25
Gains/(losses) on loans at FVTPL	2	1
Other	(1)	(4)
Total	1	(7)

(1) For the year 2019, it mainly includes derecognition loss resulting from the Pillar transaction (note 20).

(2) For the year 2018, it includes a refund of € 5 million based on the agreement for the sale of 80% of the Group's insurance operations in August 2016 (3) It corresponded to the accumulated profits of Eurolife group

12. Operating expenses

		2018
	2019	restated
	€ million	€ million
Staff costs	(360)	(382)
Administrative expenses	(163)	(148)
Contributions to resolution and deposit guarantee funds	(52)	(53)
Depreciation of real estate properties and equipment	(28)	(24)
Depreciation of right of use assets (1)	(29)	-
Amortisation of intangible assets	(21)	(18)
Operating lease rentals (1)	(1)	(40)
Total	(654)	(665)

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2); VAT and other applicable taxes on operating lease rentals are included.

Contributions to resolution and deposit guarantee funds

Staff costs

	2019	2018
	€ million	€ million
Wages, salaries and performance remuneration	(250)	(269)
Social security costs	(63)	(64)
Additional pension and other post employment costs	(11)	(12)
Other	(36)	(37)
Total	(360)	(382)

The average number of employees of the Bank during the year was 7,929 (2018: 8,216). As at 31 December 2019, the number of branches and business/private banking centers of the Bank amounted to 373.

13. Other impairments, restructuring costs and provisions

	2019	2018 restated
	€ million	€ million
Impairments and provisions related to shares in subsidiaries
(notes 23, 35)	(27)	(76)
Impairment and valuation losses on real estate
properties (note 2.3.2)	(39)	(12)
Other impairment losses and provisions (1)	(10)	(3)
Impairment losses/ reversal on bonds
(note 22)	35	15
Other impairment losses and provisions	(41)	(76)
Voluntary exit schemes and other related costs (note 35)	(59)	(52)
Other restructuring costs	(10)	(6)
Restructuring costs	(69)	(58)
Total	(110)	(134)

(1) Includes impairment losses on equipment and software, other assets and provisions on litigations and other operational risk events.

For the year ended 31 December 2019, the Bank recognized € 39 million impairment and valuation losses on real estate properties, of which € 31 million relate to the properties' portfolios classified as held for sale (note 30).

For the year ended 31 December 2019, the Bank recognized restructuring costs amounting to € 10 million mainly related with its transformation plan. As at 31 December 2018, the Bank recognized restructuring costs amounting to € 6 million mainly related with the optimization of its lending operations.

14. Income tax

	2019	2018
		restated
	€ million	€ million
Current tax	(4)	(3)
Deferred tax	16	(6)
Tax adjustments	-	(14)
Total tax (charge)/income	12	(23)

According to Law 4172/2013 currently in force, the nominal Greek corporate tax rate for credit institutions that fall under the requirements of article 27A of Law 4172/2013 regarding eligible DTAs/deferred tax credits (DTCs) against the Greek State is 29%. As of the year 2019 onwards, according to Law 4646/2019 which was enacted in December 2019 and amended Law 4172/2013, the Greek corporate tax rate for legal entities other than the above credit institutions decreased from 29% to 24% (for the year 2018: 29% corporate tax rate for all legal entities). In addition, according to the aforementioned Law 4646/2019, as of 1 January 2020 the withholding tax rate for dividends distributed, other than intragroup dividends, decreased from 10% to 5%. In particular, the intragroup dividends under certain preconditions are relieved from both income and withholding tax.

Tax certificate and open tax years

The Bank has in principle 6 open tax years (i.e. five years as from the end of the fiscal year within which the relevant tax return should have been submitted). For the open tax years 2014-2015 the Bank was required to obtain an 'Annual Tax Certificate' pursuant to the Law 4174/2013, which is issued after a tax audit is performed by the same statutory auditor or audit firm that audits the annual financial statements. For fiscal years starting from 1 January 2016 onwards, the 'Annual Tax Certificate' is optional, however, the Bank will continue to obtain such certificate.

The tax certificates, which have been obtained by the Bank, are unqualified for the open tax years 2014-2018. For the year ended 31 December 2019, the tax audit from external auditor is in progress.

of whether an unqualified tax certificate has been obtained from the tax paying company. In light of the above, as a general rule, the right of the Greek State to impose taxes up to tax year 2013 (included) has been time-barred for the Bank at 31 December 2019.

Receivables from withholding taxes

Law 4605/2019 (article 93) voted on 29 March 2019 provided clarifications regarding the treatment of the Bank's withholding tax amounts under Law 2238/1994 (amounting to €50 million) in a manner that safeguards these tax amounts by providing for their offsetting with the Bank's corporate income tax whenever this becomes due.

Law 4605/2019 further addresses the treatment of tax receivables of Law 4046/2012 (for years 2010, 2011 and 2012), which provides for a five year settlement of tax withheld on interest from GGBs/Tbills/corporate bonds with the Greek State's guarantee against the Banks' corporate income tax. Law 4605/2019 clarified that any remaining amounts (i.e. not offsettable withholding taxes within the set five year period) will be then offset against all taxes within ten years in equal installments starting from 1 January 2020. As at 31 December 2019, the Bank's receivables subject to the abovementioned law amount to € 13.7 million.

For the year ended 31 December 2018, a provision of € 14 million has been recognized in the income statement against income tax receivables.

In reference to its total uncertain tax positions, the Bank assesses all relevant developments (e.g. legislative changes, case law, ad hoc tax/legal opinions, administrative practices) and raises adequate provisions.

Deferred tax

The movement on deferred tax is as follows:

	2019	2018
		restated
€ million		€ million
Balance at 1 January	4,901	4,846
Restatement due to change in accounting policy (note 2.3.2)	-	(2)
Balance at 1 January , as restated	4,901	4,844
Income statement credit/(charge)	16	(6)
Investment securities at FVOCI	(167)	64
Cash flow hedges	2	(2)
Other	2	1
Balance at 31 December	4,754	4,901

Deferred tax assets/ (liabilities) are attributable to the following items:

	2019	2018
		restated
	€ million	€ million
Impairment/valuation relating to loans and accounting write-offs	1,583	3,124
PSI+ tax related losses	1,101	1,151
Losses from disposals and crystallized write-offs of loans	1,985	265
Other impairments/ valuations through the income statement	202	248
Unused tax losses	-	62
Costs directly attributable to equity transactions	16	23
Cash flow hedges	17	15
Defined benefit obligations	13	12
Real estate properties and equipment (note 2.3.2)	(35)	(17)
Investment securities at FVOCI	(191)	(24)
Other	63	42
Net deferred tax	4,754	4,901

Notes to the Financial Statements

"Losses from disposals and crystallised write-offs of loans" against a decrease in the category "Impairment/valuation relating to loans and accounting write-offs".

In the year ended 31 December 2019, the deferred tax on the cumulative Bank's unused tax losses was considered as being nonrecoverable due to the securitization of certain loan portfolios for the execution of the acceleration plan for the NPEs reduction and was reversed accordingly.

Deferred income tax (charge)/credit is attributable to the following items:

	2019	2018
		restated
	€ million	€ million
Impairment/ valuation relating to loans, disposals and write-offs	180	85
Unused tax losses	(62)	41
Tax deductible PSI+ losses	(50)	(50)
Change in fair value and other temporary differences	(52)	(82)
Deferred income tax (charge)/credit	16	(6)

As at 31 December 2019, the Bank recognized net deferred tax assets amounting to € 4.8 billion as follows:

(a) € 1,583 million refer to deductible temporary differences arising from impairment/ valuation relating to loans including the accounting debt write-offs according to the Greek tax law 4172/2013, as in force. These temporary differences can be utilized in future periods with no specified time limit and according to current tax legislation;
(b) € 1,101 million refer to losses resulted from the Bank's participation in PSI+ and the Greek's state debt buyback program which are subject to amortization (i.e. 1/30 of losses per year starting from year 2012 onwards) for tax purposes;
(c) € 1,985 million refer to the unamortized part of the crystallized tax losses arising from write-offs and disposals of loans, which are subject to amortization over a twenty-year period, according to the Greek tax law 4172/2013, as in force;
(d) € 16 million mainly refer to deductible temporary differences related to the (unamortized for tax purposes) costs directly attributable to Bank's share capital increases, subject to 10 years' amortization according to tax legislation in force at the year they have been incurred; and
(e) € 69 million refer to other taxable and deductible temporary differences (i.e. valuation gains/losses, provisions for pensions and other post-retirement benefits, etc.) the majority of which can be utilized in future periods with no specified time limit and according to the applicable tax legislation.

Assessment of the recoverability of deferred tax assets

The recognition of the above presented deferred tax assets is based on management's assessment, as at 31 December 2019, that the Bank will have sufficient future taxable profits, against which the deductible temporary differences can be utilized. The deferred tax assets are determined on the basis of the tax treatment of each deferred tax asset category, as provided by the applicable tax legislation, the eligibility of carried forward losses for offsetting with future taxable profits and the actual tax results for the year ended 31 December 2019. Additionally, the Bank's assessment on the recoverability of recognized deferred tax assets is based on (a) the future performance expectations (projections of operating results) and growth opportunities relevant for determining the expected future taxable profits, (b) the expected timing of reversal of the deductible and taxable temporary differences, (c) the probability that the Bank will have sufficient taxable profits in the future, in the same period as the reversal of the deductible and taxable temporary differences or in the years into which the tax losses can be carried forward, and (d) the historical levels of Bank's performance in combination with the previous years' tax losses caused by one off or non-recurring events.

For the year ended 31 December 2019, the Bank has conducted a deferred tax asset (DTA) recoverability assessment based on a) its three-year Business Plan that was approved by the Board of Directors in March 2019 and provided outlook of its profitability and capital position for the period up to the end of 2021, taking into consideration the progress in the implementation of the steps/transactions indicated in the plan for the accelerated reduction of Non-Performing Exposures - NPEs Acceleration Plan and b) the update of this Plan for the period till the end of 2022 that was submitted to the Board of Directors in December 2019. Both Plans have also been submitted to the Hellenic Financial Stability Fund (HFSF), while the March 2019 Plan has also been submitted to the Single Supervisory Mechanism (SSM).

For the years beyond 2022, the forecast of operating results was based on the management projections considering the growth opportunities of the Greek economy, the banking sector and the Bank itself. The level of the abovementioned projections adopted in the Bank's Business Plan is mainly based on assumptions and estimates regarding (a) the further reduction of its funding cost driven by the gradual repatriation of customer deposits replacing more expensive funding sources as well as the gradual reduction of nominal rates, (b) the lower loan impairment losses as a result of the gradual improvement of the macroeconomic conditions in Greece, the completion of Cairo transaction and all the strategic initiatives for the Acceleration Plan, in line with the NPEs strategy that the Bank has committed to the SSM, (c) the gradual strengthening of the lending activity in Greek operations mainly focused on business loans, (d) the impact from the planned disposal of 80% stake of Financial Planning Services S.A. ('FPS') and the completion of the related Trouble Asset Group carve out, (e) the effectiveness of the continuous cost containment initiatives, and (f) the gradual restoration of traditional commission income, such as asset management and network fees and commissions relating with capital markets and investment banking activities.

The implementation of the Bank's Business Plan largely depends on the risks and uncertainties that stem from the macroeconomic environment in Greece (note 2).

Deferred tax credit against the Greek State and tax regime for loan losses

Income tax reconciliation and unused tax losses

The tax on the Bank's profit before tax differs from the theoretical amount that would arise using the applicable tax rates as follows:

	2019 € million	2018 restated € million
Profit/(loss) before tax	19	56
Tax at the applicable tax rate	(5)	(16)
Tax effect of: - income not subject to tax and non deductible expenses - tax adjustments	32 -	24 (14)
- other	(15)	(17)
Total tax (charge)/income	12	(23)

In the year ended 2019, the above category "other" mainly includes a) € 260 million deferred tax asset (DTA), which was recognised on the Bank's deductible temporary differences arising from the IFRS 9 transition impact following the reassessment of the recoverability of DTA, based on the aforementioned updated business plan, b) € 211 million relating to deferred tax on the Bank's unused tax losses, which has not been recognised or reversed, c) € 37 million DTA, which has not been recognised or reversed relating to the impairment charge against the Bank's investment cost in certain subsidiaries and d) € 18 million referring to a permanent non tax deductible impairment of € 62 million for Grivalia's goodwill (note 28).

	Unrecognised
	DTA
	€ million
Year of maturity of unused tax losses
2021	22
2024	58
2025	153
Total	233

15. Cash and balances with central banks

	2019	2018
	€ million	€ million
Cash in hand	332	329
Balances with central banks	2,294	68
Total	2,626	397

The Bank is required to hold a minimum level of deposits (minimum reserve requirement - MRR) with the Bank of Greece (BoG) on an average basis over maintenance periods (i.e. six week periods); these deposits are calculated as 1% of certain Bank's liabilities, mainly customers' deposits, and can be withdrawn at any time, provided that the MRR is met over the determined period of time. As at 31 December 2019, the whole amount of the deposit with the BoG is considered cash equivalent, as its average balance over the maintenance period exceeds the MRR (2018: € 45 million deposits with BoG were considered as mandatory for meeting the MRR and thus were excluded from the cash and cash equivalents).

16. Cash and cash equivalents and other information on cash flow statement

For the purpose of the cash flow statement, cash and cash equivalents comprise the following balances with original maturities of three months or less:

	2019	2018
	€ million	€ million
Cash and balances with central banks (excluding
mandatory and collateral deposits with central banks) (note 15)	2,626	352
Due from credit institutions	146	138
Securities held for trading	1	-
Total	2,773	490

Other (income)/losses on investment securities presented in operating activities are analyzed as follows:

	2019	2018
	€ million	€ million
Amortisation of premiums/discounts and accrued interest	8	(79)
(Gains)/losses from investment securities	(74)	(79)
Dividends	(1)	(1)
Total	(67)	(159)

Notes to the Financial Statements

As of 1 January 2019, following the adoption of IFRS 16, cash payments for the principal portion of the lease liabilities are classified within financing activities.

Changes in liabilities arising from financing activities

During the year ended 31 December 2019, changes in the Bank's liabilities arising from financing activities, other than lease liabilities (note 41), are attributable to: a) debt issuance amounting to € 255 million (net of issuance costs), b) debt repayment amounting to € 564 million and c) accrued interest and amortisation of debt issuance costs amounting to € 2 million.

17. Due from credit institutions

	2019	2018
	€ million	€ million
Pledged deposits with banks	3,237	2,986
Placements and other receivables from banks	104	85
Current accounts and settlement balances with banks	118	119
Total	3,459	3,190

	2019	2018
	€ million	€ million
Included in due from credit institutions were unsubordinated amounts due from:
-subsidiary undertakings	752	1,263

As at 31 December 2019, the pledged deposits with banks mainly include: a) € 673 million cash collaterals for guarantees relating to the lending activities of banking subsidiaries, b) € 2,368 million cash collaterals on risk mitigation contracts for derivative transactions and repurchase agreements (CSAs, GMRAs), c) € 153 million pledged deposits relating to the securitized issues and d) € 43 million cash collateral relating to the sale of the Romanian disposal group (note 23).

The Bank's exposure arising from credit institutions, as categorized by counterparty's geographical region, is presented in the following table:

	2019	2018
	€ million	€ million
Greece	11	18
Other European countries	3,415	3,156
Other countries	33	16
Total	3,459	3,190
18. Securities held for trading
	2019	2018
	€ million	€ million
Debt securities (note 5.2.1.3)	50	18
Total	50	18

19. Derivative financial instruments and hedge accounting

The Bank uses derivative financial instruments both for hedging and non-hedging purposes.

The table below presents the fair values of the Bank's derivative financial instruments by product type and hedge relationship along with their notional amounts. The notional amounts of derivative instruments provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, are not indicative of the Bank's exposure at the reporting date.

		31 December 2019		31 December 2018
	Contract/			Contract/
	notional	Fair values		notional	Fair values
	amount	Assets	Liabilities	amount	Assets	Liabilities
	€ million	€ million	€ million	€ million	€ million	€ million
Derivatives for which hedge accounting is not applied/ held for trading
- Interest rate swaps	25,966	2,210	1,727	24,648	1,726	1,265
- Interest rate options	5,617	29	94	7,113	35	76
- Cross currency interest rate swaps	207	16	16	286	20	19
- Currency forwards/currency swaps	4,588	17	28	3,106	16	15
- Currency options	105	1	1	214	1	1
- Commodity derivatives	54	2	2	56	7	7
- Credit default swaps	80	1	1	801	4	7
- Other (see below)	9	0	0	10	0	-
		2,276	1,869		1,809	1,390
Derivatives designated as fair value hedges
- Interest rate swaps	3,149	2	760	3,110	1	347
- Cross currency interest rate swaps	4	0	1	4	0	0
		2	761		1	347
Derivatives designated as cash flow hedges
- Interest rate swaps	127	-	65	154	-	58
- Cross currency interest rate swaps	2,179	0	29	3,078	65	101
		0	94		65	159
Total derivatives assets/liabilities		2,278	2,724		1,875	1,896

Other derivative contracts include exchange traded interest futures and warrants.

Information on the fair value measurement and offsetting of derivatives is provided in notes 5.3 and 5.2.1.4, respectively.

The Bank uses certain derivatives and other financial instruments, designated in a qualifying hedge relationship, to reduce its exposure to market risks. The hedging practices applied by the Bank, as well as the relevant accounting treatment are disclosed in note 2.2.3. In particular:

(a) Fair value hedges

The Bank hedges a proportion of its existing interest rate risk resulting from any potential change in the fair value of fixed rate debt securities held or fixed rate loans, denominated both in local and foreign currencies, using interest rate swaps and cross currency interest rate swaps. In 2019, the Bank recognized a loss of € 412 million (2018: € 59.3 million loss) from changes in the carrying amount of the hedging instruments, used as the basis of recognizing hedge ineffectiveness and € 408 million gain (2018: € 59.1 million gain) from changes in the carrying amount of the hedged items attributable to the hedged risk. The amount of hedge ineffectiveness recognized for 2019 in income statement was € 4 million loss (2018: € 0.2 million loss).

(b) Cash flow hedges

The Bank hedges a proportion of its existing interest rate and foreign currency risk resulting from any cash flow variability on floating rate performing customer loans or fixed rate deposits, denominated both in local and foreign currency, or unrecognized highly probable forecast transactions, using interest rate and cross currency interest rate swaps. For the year ended 31 December 2019, an amount of € 10 million loss was recognised in other comprehensive income in relation to derivatives designated as cash flow hedges. Furthermore, in 2019, the ineffectiveness recognized in the income statement that arose from cash flow hedges was nil (2018: nil).

In addition, the Bank uses other derivatives, not designated in a qualifying hedge relationship, to manage its exposure primarily to interest rate and foreign currency risks. Non qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied. The said derivative instruments are monitored and have been classified for accounting purposes along with those held for trading.

The Bank's exposure in derivative financial assets, as categorized by counterparty's geographical region and industry sector, is presented in the following table:

	31 December 2019
	Other
		European	Other
	Greece	countries	countries	Total
	€ million	€ million	€ million	€ million
Sovereign	1,545	-	-	1,545
Banks	0	330	289	619
Corporate	113	0	1	114
Total	1,658	330	290	2,278

	31 December 2018
		Other
		European	Other
	Greece	countries	countries	Total
	€ million	€ million	€ million	€ million
Sovereign	1,210	-	-	1,210
Banks	7	295	302	604
Corporate	60	-	1	61
Total	1,277	295	303	1,875

At 31 December 2019 and 2018, the maturity profile of the nominal amount of the financial instruments designated by the Bank in hedging relationships is presented in the tables below:

	31 December 2019
	Fair Value Hedges				Cash Flow Hedges
	3 - 12		Over 5		1 - 3	3 - 12		Over 5
	months	1-5 years	years	Total	months	months	1-5 years	years	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Interest rate swaps	30	491	2,628	3,149	-	-	47	80	127
Cross currency interest
rate swaps	-	-	4	4	184	456	1,040	499	2,179
Total	30	491	2,632	3,153	184	456	1,087	579	2,306

	31 December 2018
		Fair Value Hedges				Cash Flow Hedges
	3 - 12	1 - 3	3 - 12
	months	1-5 years	years	Total	months	months	1-5 years	years	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Interest rate swaps	42	525	2,543	3,110	-	27	35	92	154
Cross currency interest
rate swaps	-	-	4	4	500	1,343	1,060	175	3,078
Total	42	525	2,547	3,114	500	1,370	1,095	267	3,232

(a) Fair value hedges

The following tables present data relating to the hedged items under fair value hedges for the years ended 31 December 2019 and 2018:

	31 December 2019
		Accumulated amount of FV Change in value hedge adjustments as the basis for related to the recognising hedge Carrying
	amount	hedged item	ineffectiveness
	€ million	€ million	€ million
Loans and advances to customers	300	15	2
Debt securities AC	602	284	68
Debt securities FVOCI	3,302	385	338
Total	4,204	684	408
		31 December 2018
		Accumulated	Change in value as
		amount of FV hedge	the basis for
	Carrying	adjustments on the	recognising hedge
	amount	hedged item	ineffectiveness

	€ million	€ million	€ million

Loans and advances to customers 312 22 (2) 726 219 5 2,372 47 56 Total 3,410 288 59 Debt securities AC Debt securities FVOCI

(b) Cash flow hedges

The cash flow hedge reserves for continuing hedges as at 31 December 2019 were € 37 million loss (2018: € 26 million loss ), of which € 3 million gain (2018: € 5 million gain) relates to loans and advances to customers and € 40 million loss to deposits (2018: € 31 million loss).

The reconciliation of the components of Bank's special reserves including cash flow hedges is provided in note 38.

20. Loans and advances to customers

	2019	2018
	€ million	€ million

Loans and advances to customers at amortised cost
- Gross carrying amount	36,114	37,275
- Impairment allowance	(6,466)	(7,967)
Carrying Amount	29,648	29,308
Loans and advances to customers at FVTPL	50	46
Total	29,698	29,354

The table below presents the carrying amount of loans and advances to customers per business unit and per stage as at 31 December 2019:

					31 December
			31 December 2019		2018
	12-month ECL	Lifetime ECL	Lifetime ECL credit
	Stage 1	Stage 2	impaired	Total amount	Total amount
	€ million	€ million	€ million	€ million	€ million
Loans and advances to
customers at amortised cost
Mortgage lending:
- Gross carrying amount	5,878	3,042	3,736	12,656	14,895
- Impairment allowance	(11)	(173)	(1,456)	(1,640)	(2,454)
Carrying Amount	5,867	2,869	2,280	11,016	12,441
Consumer lending:
- Gross carrying amount	1,351	264	971	2,586	2,862
- Impairment allowance	(28)	(36)	(831)	(895)	(1,043)
Carrying Amount	1,323	228	140	1,691	1,819
Small Business lending:
- Gross carrying amount	1,873	888	3,133	5,894	5,850
- Impairment allowance	(17)	(96)	(1,481)	(1,594)	(1,742)
Carrying Amount	1,856	792	1,652	4,300	4,108
Wholesale lending (1),(2) :
- Gross carrying amount	9,572	1,276	4,130	14,978	13,668
- Impairment allowance	(49)	(74)	(2,214)	(2,337)	(2,728)
Carrying Amount	9,523	1,202	1,916	12,641	10,940
Total loans and advances to
customers at AC
- Gross carrying amount	18,674	5,470	11,970	36,114	37,275
- Impairment allowance	(105)	(379)	(5,982)	(6,466)	(7,967)
Carrying Amount	18,569	5,091	5,988	29,648	29,308
Loans and advances to
customers at FVTPL
Carrying Amount				50	46
Total				29,698	29,354

(1) Includes € 1.06 billion related to the senior notes of the Pillar securitization, which have been categorized in Stage 1 (see below). (2) Includes loans to public sector.

Transactions on lending portfolio (1)

In September 2019, following the completion of the above sale transaction, the Bank ceased to have control over the SPV ('Pillar Finance Designated Activity Company') and de-recognized the underlying loan portfolio in its entirety, on the basis that the Bank transferred the SPV's control and transferred substantially all risk and rewards of the loan portfolio's ownership. In addition, the Bank recognized the retained notes on its balance sheet whereas the consideration was determined at € 102.5 million, of which € 70 million cash and € 32.5 million deferred amount subject to the fulfillment of the terms of the agreement. The final consideration amounted to € 70 million in cash, while the above deferred amount that was previously recognized, has been reversed in the fourth quarter of 2019, as the underlying terms and conditions were not fulfilled. Accordingly, the transaction resulted in a de-recognition loss of € 42.3 million including related costs, which is presented in "other income/ expenses".

(1) Refers to loans that were classified as held for sale and derecognized during the year ended 31 December 2019.

Notes to the Financial Statements

21. Impairment allowance for loans and advances to customers

The following tables present the movement of the impairment allowance on loans and advances to customers (expected credit losses – ECL):

	31 December 2019
	Wholesale			Mortgage			Consumer			Small business
	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Impairment allowance as at 1 January	50	97	2,581	30	279	2,145	33	91	919	11	211	1,520	7,967
New loans and advances originated or purchased	14	-	-	0	-	-	6	-	-	1	-	-	21
Transfers between stages
- to 12-month ECL	13	(12)	(1)	41	(40)	(1)	29	(27)	(2)	84	(83)	(1)	-
- to lifetime ECL	(6)	41	(35)	(2)	119	(117)	(6)	38	(32)	(1)	82	(81)	-
- to lifetime ECL credit-impaired loans	(1)	(6)	7	(2)	(35)	37	(1)	(19)	20	(0)	(24)	24	-
Impact of ECL net remeasurement	(21)	(47)	185	(58)	(143)	360	(31)	(47)	177	(76)	(91)	208	416
Recoveries from written - off loans derecognised/ Loans and advances reclassified as	-	-	0	-	-	0	-	-	1	-	-	0	1
year(1) held for sale during the	-	-	(112)	-	(14)	(830)	(2)	(0)	(0)	(1)	(0)	(0)	(959)
(2) Amounts written off	-	-	(364)	-	-	(119)	-	-	(210)	-	-	(125)	(818)
Unwinding of Discount	-	-	(66)	-	-	(44)	-	-	(24)	-	-	(61)	(195)
Foreign exchange and other movements	(0)	1	19	2	7	25	(0)	0	(18)	(1)	1	(3)	33
Impairment allowance as at 31 December	49	74	2,214	11	173	1,456	28	36	831	17	96	1,481	6,466

Notes to the Financial Statements

	31 December 2018
		Wholesale		Mortgage			Consumer		Small business

	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL	12-month ECL	Lifetime ECL	Lifetime ECL
	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Stage 1	Stage 2	credit-impaired	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million	€ million


Impairment allowance as at 1 January	56	147	2,903	23	299	2,196	38	115	1,959	15	203	1,950	9,904
Transfer of ECL allowance (3)	(2)	(6)	(101)	-	-	-	(7)	(0)	(0)	(5)	(0)	-	(121)
New loans and advances originated or purchased	8	-	-	0	-	-	7	-	-	1	-	-	16
Transfers between stages
- to 12-month ECL	5	(4)	(1)	29	(27)	(2)	37	(33)	(4)	21	(19)	(2)	-
- to lifetime ECL not credit-impaired loans	(0)	13	(13)	(1)	167	(166)	(3)	56	(53)	(2)	88	(86)	-
- to lifetime ECL credit-impaired loans	(0)	(15)	15	(1)	(50)	51	(4)	(31)	35	(0)	(33)	33	-
Impact of ECL net remeasurement	(3)	(44)	266	(22)	(109)	173	(35)	(13)	246	(20)	(27)	121	533
Recoveries from written - off loans	-	-	-	-	-	-	-	-	2	-	-	-	2
Loans and advances derecognised/reclassified as
held for sale during the year	-	-	(123)	-	-	(0)	(0)	(0)	(937)	(0)	(0)	(0)	(1,060)
Amounts written off (2)	-	-	(329)	-	-	(53)	-	-	(256)	-	-	(423)	(1,061)
Unwinding of Discount	-	-	(82)	-	-	(60)	-	-	(41)	-	-	(68)	(251)
Foreign exchange and other movements	(14)	6	46	2	(1)	6	(0)	(3)	(32)	1	(1)	(5)	5
Impairment allowance as at 31 December	50	97	2,581	30	279	2,145	33	91	919	11	211	1,520	7,967

(1) It represents the impairment allowance of loans derecognized during the year due to a) securitization/ sale transactions (note 20) and b) substantial modifications of the loans' contractual terms and those that have been reclassified as held for sale during the year (note 30).

(3) As of 1 January 2018, the impairment allowance for credit related commitments (off balance sheet items) is monitored separately from the impairment allowance on loans and advances to customers and accordingly is presented within other liabilities (note 35).

Notes to the Financial Statements

The impairment losses relating to loans and advances to customers recognized in the Bank's income statement for the year ended 31 December 2019 amounted to € 529 million (2018: € 606 million) and are analyzed as follows:

	31 December	31 December
	2019	2018
	€ million	€ million

Impairment loss on loans and advances to customers	(437)	(549)
Modification loss on loans and advances to customers	(63)	(68)
Impairment (loss)/ reversal for credit related commitments	(29)	11
Total	(529)	(606)

The critical accounting estimates and judgments that are made by the Bank's Management in assessing the impairment losses on loans and advances to customers are evaluated constantly, particularly in circumstances of economic uncertainty, based on the latest available information and expectations of future events that are considered reasonable, as described in note 3.1.

22. Investment securities

	2019	2018
	€ million	€ million
Investment securities at FVOCI	5,443	5,578
Investment securities at amortized cost	1,042	941
Investment securities at FVTPL	95	78
Total	6,580	6,597

22.1 Movement of investment securities

	31 December 2019
					Investment
	Investment securities at FVOCI		Investment securities at		securities at
			amortised cost		FVTPL
	12-month ECL	Lifetime ECL -	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2		Total
	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at 1 January	5,557	21	217	754	78	6,627
Additions, net of disposals and
redemptions	(1,104)	-	(0)	-	(0)	(1,104)
Transfers between stages	21	(21)	754	(754)	-	-
Net gains/(losses) from changes in fair value for
the year	980	-	-	-	17	997
Amortisation of premiums/discounts and
interest	(16)	-	8	-	(0)	(8)
Changes in fair value due to hedging	-	-	65	-	-	65
Exchange adjustments and other
movements	5	-	-	-	0	5
Gross carrying amount at 31 December	5,443	-	1,044	-	95	6,582
Impairment allowance	-	-	(2)	-	-	(2)
Net carrying amount at 31 December	5,443	-	1,042	-	95	6,580

	31 December 2018
					Investment
			Investment securities at		securities at
	amortised cost Investment securities at FVOCI				FVTPL
	12-month ECL	Lifetime ECL	12-month ECL Lifetime ECL
	Stage 1	Stage 2	Stage 1	Stage 2		Total
	€ million	€ million	€ million	€ million	€ million	€ million
Gross carrying amount at 1 January	5,388	20	302	746	162	6,618
Additions, net of disposals and
redemptions	199	(2)	(84)	-	(91)	22
Transfers between stages	(2)	2	-	-	-	-
Net gains/(losses) from changes in fair value for	(112)	1	-	-	2	(109)
Amortisation of premiums/discounts and	77	0	(1)	3	0	79
Changes in fair value due to hedging
Changes in fair value due to hedging	-	-	(2)	6	-	4
Exchange adjustments and other
Exchange adjustments and other	7	-	2	(1)	5	13
Gross carrying amount at 31 December	5,557	21	217	754	78	6,627
Impairment allowance	-	-	(2)	(28)	-	(30)
Net carrying amount at 31 December	5,557	21	215	726	78	6,597

22.2 Movement of ECL

	31 December 2019			31 December 2018
	Measured at
	amortised	Measured		Measured at	Measured at
	cost	at FVOCI	Total	amortised cost	FVOCI	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Balance at 1 January	30	16	46	55	12	67
New financial assets purchased	0	4	4	0	11	11
- of which 12-month ECL - Stage 1	0	4	4	-	11	11
Remeasurement due to transfers from lifetime ECL-Stage 2
to 12-month ECL- Stage 1	(28)	(1)	(29)	-	-	-
Remeasurement due to change in ECL risk parameters	0	(9)	(9)	(25)	(0)	(25)
- of which 12-month ECL - Stage 1	0	(9)	(9)	(0)	(0)	(0)
- of which lifetime ECL - Stage 2	-	-	-	(25)	(0)	(25)
Financial assets disposed during the year	(0)	(2)	(2)	-	(6)	(6)
- of which 12-month ECL - Stage 1	(0)	(2)	(2)	-	(6)	(6)
Financial assets redeemed during the year	(0)	(0)	(0)	(0)	(1)	(1)
Foreign exchange and other movements	-	0	0	-	-	-
Balance as at 31 December	2	8	10	30	16	46

During the year ended 31 December 2019, the impairment allowance of the investment securities of the Bank decreased by € 36 million, mainly due to the improvement of the credit quality of the Hellenic Republic as depicted in the markets, which resulted in the transfer of Greek government bonds measured at amortised cost from lifetime ECL - Stage 2 to 12-month ECL – Stage1.

22.3 Equity reserve: revaluation of the investment securities at FVOCI

	2019	2018
	€ million	€ million
Balance at 1 January under IAS 39	53	206
Impact of adopting IFRS 9 at 1 January 2018 (note 2.3.3)	-	13
Balance at 1 January under IFRS 9	53	219
Net gains/(losses) from changes in fair value	980	(111)
Tax (expense)/benefit	(284)	30
	696	(81)
Net (gains)/losses transferred to net profit on disposal	(60)	(78)
ECL transferred to net profit	(6)	11
Tax (expense)/benefit on net (gains)/losses transferred to net profit on disposal	17	22
Tax (expense)/benefit on ECL transferred to net profit	2	(3)
	(47)	(48)
Net (gains)/losses transferred to net profit from fair value
hedges	(338)	(52)
Tax (expense)/benefit	98	15
	(240)	(37)
Balance at 31 December	462	53

23. Shares in subsidiaries

The following is a listing of the Bank's subsidiaries at 31 December 2019:

		Percentage	Country of
Name	Note	holding	incorporation	Line of business
Be Business Exchanges S.A. of Business Exchanges Networks and				Business-to-business e-commerce, accounting, tax
Accounting and Tax Services		98.01	Greece	and sundry services
Eurobank Asset Management Mutual Fund Mngt Company S.A. (3)		100.00	Greece	Mutual fund and asset management
Eurobank Equities Investment Firm Single Member S.A. (3)		100.00	Greece	Capital markets and advisory services
Eurobank Ergasias Leasing Single Member S.A. (3)		100.00	Greece	Leasing
Eurobank Factors Single Member S.A. (3)		100.00	Greece	Factoring
Eurobank FPS Loans and Credits Claim Management S.A.	n	100.00	Greece	Loans and Credits Claim Management
Hellenic Post Credit S.A.		50.00	Greece	Credit card management and other services
Herald Greece Single Member Real Estate development and services S.A. 1 (3)		100.00	Greece	Real estate
Herald Greece Single Member Real Estate development and services
S.A. 2 (3)	o	100.00	Greece	Real estate
Standard Single Member Real Estate S.A. (3)		100.00	Greece	Real estate
Cloud Hellas Single Member Ktimatiki S.A. (3)	d	100.00	Greece	Real estate
Piraeus Port Plaza 1 Development S.A.	d	51.96	Greece	Real estate
Cairo Estate I Single Member S.A.	g	100.00	Greece	Real estate
Cairo Estate II Single Member S.A.	g	100.00	Greece	Real estate
Cairo Estate III Single Member S.A.	g	100.00	Greece	Real estate
Real Estate Management Single Member S.A.	g	100.00	Greece	Real estate services
Anchor Hellenic Investment Holding Single Member S.A.	h	100.00	Greece	Real estate
Vouliagmeni Residence Single Member S.A.	f	100.00	Greece	Real estate
Athinaiki Estate Investments Single Member S.A.	i	100.00	Greece	Real estate
Eurobank Bulgaria A.D.		56.14	Bulgaria	Banking
ERB Hellas (Cayman Islands) Ltd		100.00	Cayman Islands	Special purpose financing vehicle
Berberis Investments Ltd		100.00	Channel Islands	Holding company
ERB Hellas Funding Ltd		100.00	Channel Islands	Special purpose financing vehicle
NEU Property Holdings Ltd		100.00	Cyprus	Holding company
Staynia Holdings Ltd	d	100.00	Cyprus	Holding company
Eurobank Private Bank Luxembourg S.A.		100.00	Luxembourg	Banking
Eurobank Fund Management Company (Luxembourg) S.A.		99.99	Luxembourg	Fund management
Eurobank Holding (Luxembourg) S.A.		100.00 100.00	Luxembourg	Holding company Real estate
Grivalia New Europe S.A. (2)	m		Luxembourg
ERB New Europe Funding B.V.		100.00	Netherlands	Finance company
ERB New Europe Holding B.V.		100.00 1.10	Netherlands Romania	Holding company
ERB IT Shared Services S.A. (1)				Informatics data processing
Eurobank Finance S.A. (1) (2)		19.65	Romania	Investment banking
Eliade Tower S.A.	d	99.99	Romania	Real estate
Retail Development S.A.	d	99.99	Romania	Real estate
Seferco Development S.A.	d	99.99	Romania Serbia	Real estate
Eurobank A.D. Beograd		55.80 17.51	Serbia	Banking Leasing
ERB Leasing A.D. Beograd (1) (2)
Reco Real Property A.D. Beograd	d	100.00 100.00	Serbia	Real estate
ERB Istanbul Holding A.S. ERB Hellas Plc		99.99	Turkey United Kingdom	Holding company Special purpose financing vehicle
Anaptyxi SME I Plc (2)			United Kingdom	Special purpose financing vehicle
Karta II Plc		-
		-	United Kingdom United Kingdom	Special purpose financing vehicle Special purpose financing vehicle
Themeleion II Mortgage Finance Plc (2)		-
Themeleion III Mortgage Finance Plc (2)		-	United Kingdom	Special purpose financing vehicle
Themeleion IV Mortgage Finance Plc (2)		-	United Kingdom	Special purpose financing vehicle
Themeleion Mortgage Finance Plc (2)		-	United Kingdom	Special purpose financing vehicle
Tegea Plc (2)		-	United Kingdom	Special purpose financing vehicle
Maximus Hellas Designated Activity Company		-	Ireland	Special purpose financing vehicle
Astarti Designated Activity Company		-	Ireland	Special purpose financing vehicle
Cairo No. 1 Finance Designated Activity Company	g	-	Ireland	Special purpose financing vehicle
Cairo No. 2 Finance Designated Activity Company	g	-	Ireland	Special purpose financing vehicle
Cairo No. 3 Finance Designated Activity Company	g	-	Ireland	Special purpose financing vehicle

(1) Not direct control by the Bank.

(2) Entity under liquidation at 31 December 2019.

(3) In the context of the Greek Law 4548/2018, the legal name of the company has been amended or is in the process of being amended with the inclusion of the term "Single member".

In addition, the following entities are controlled by the Bank:

(i) Holding and other entities of the Bank's special purpose financing vehicles: (a) Themeleion III Holdings Ltd, Themeleion IV Holdings Ltd, Themeleion V Mortgage Finance Plc, Themeleion VI Mortgage Finance Plc, Anaptyxi APC Ltd, Byzantium II Finance Plc, Tegea Holdings Ltd and Anaptyxi SME I Holdings Ltd, which are under liquidation and (b) Karta II Holdings Ltd.

(ii) Dormant entity: Enalios Real Estate Development S.A.

(iii) Entities controlled by the Bank pursuant to the terms of the relevant share pledge agreements: Finas S.A., Rovinvest S.A., Provet S.A. and Promivet S.A.

(a) Bancpost S.A. and ERB Leasing IFN S.A., Romania

In April 2018, the sale of the Romanian disposal group (Bancpost S.A., ERB Retail Services IFN S.A. and ERB Leasing IFN S.A.) was completed. Accordingly, a loss of € 28 million was recognized in "other income/(expenses" for the year ended 31 December 2018, which included a provision of € 14.1 million for the completion statements of the Romanian disposal group, which were finalized in the third quarter of 2019. For the year ended 2019 a provision for transaction costs has been reversed amounting to € 1.3 million (€ 0.9 million after tax).

Tax audit

The Group is in close cooperation with BT, which is in the process of challenging the tax audit assessment in the competent courts.

In respect of the above, in the year ended 31 December 2019, the Bank has recognized an additional provision of € 5 million (€ 3.6 million after tax), while the accumulated provisions, which have been recognized up to 31 December 2019 amount to € 20 million.

Romanian National Authority for Consumer Protection (ANPC)

Further information in relation to the sale of Bancpost S.A. and ERB Leasing IFN S.A. is provided in note 25 of the financial statements for the year ended 31 December 2018.

(b) Eurobank Property Services S.A., Greece

In January 2019, the Bank and Cerved Credit Management Group S.r.l. (Cerved) signed a binding agreement in the context of which Cerved would acquire the entire share capital of Eurobank Property Services S.A. in Greece (EPS) and its subsidiaries Eurobank Property Services S.A. in Romania and ERB Property Services d.o.o. Beograd in Serbia from Eurobank. EPS Greece has also been appointed as real estate servicer for Eurobank for the next five years with respect to all real estate valuation activities and other services. The transaction was completed in April 2019 via the acquisition from Cerved, for a consideration of € 8 million, of the entire share capital of EPS with a resulting gain of € 6.4 million recognized in "other income/expenses". Further consideration of up to € 5 million in the form of earn – out will be due upon reaching certain economic results and conditions in the timeframe until

The transaction was in line with the Bank's strategy to focus on its core operations, adopting an outsourcing business model in relation to real estate services.

(c) Modern Hoteling, Greece

(d) Grivalia Properties REIC S.A., subsidiaries

On 5 April 2019, the General Meetings of the Shareholders of Eurobank and Grivalia Properties REIC approved the merger of the two companies. As of that date, the Bank also obtained control of Grivalia subsidiaries. Further information in relation to the merger of the two companies is provided in note 24.

(e) Eurobank Bulgaria A.D., Bulgaria

In June 2019, the acquisition of Piraeus Bank Bulgaria A.D. ("PBB"), a subsidiary of Piraeus Bank, by Eurobank's subsidiary in Bulgaria, Eurobank Bulgaria A.D. ("Postbank") was completed, after all necessary approvals from the competent authorities were obtained. In particular, Postbank acquired 99.9819% of the shares and voting rights of PBB and, accordingly, indirect participation in PBB's wholly-owned subsidiary Piraeus Insurance Brokerage EOOD. In the fourth quarter of 2019, the mergers of i) PBB with Postbank and ii) Piraeus Insurance Brokerage EOOD with ERB Leasing Bulgaria EAD, by absorption of the former by the latter, were completed. Further information about the Transaction is provided in note 23.3 of the consolidated financial statements for the year ended 31 December 2019.

(f) Vouliagmeni Residence Single Member S.A., Greece

In July 2019, the Bank established the wholly owned subsidiary Vouliagmeni Residence Single Member S.A., a real estate company operating in Greece.

In the year ended 31 December 2019, in the context of the management of the Bank's non performing exposures (NPEs), the following wholly owned subsidiaries were established:

(g) Special purpose financing vehicles for the securitization of Bank loans and related real estate companies

Cairo No. 1 Finance Designated Activity Company, Cairo No. 2 Finance Designated Activity Company, Cairo No. 3 Finance Designated Activity Company and Pillar Finance Designated Activity Company, Ireland (note 34).
Cairo Estate I Single Member S.A., Cairo Estate II Single Member S.A., Cairo Estate III Single Member S.A., Pillar Estate Single Member S.A. and Real Estate Management Single Member S.A., Greece

(h) Anchor Hellenic Investment Holding Single Member S.A., real estate company, Greece

In the third quarter of 2019, Anchor Hellenic Investment Holding Single Member S.A. acquired the whole of the issued share capital and voting rights of Rhodes Marines S.A. In the same period, the disposal of the holding in Rhodes Marines S.A. along with the Bank's lending exposures to the company was completed, with no effect in the Bank's income statement.

(i) Athinaiki Estate Investments Single Member S.A., real estate company, Greece

(j) CEH Balkan Holdings Ltd and Chamia Enterprises Company Ltd, Cyprus

In 2018, the liquidation of the companies was decided. In the third quarter of 2019, the distribution of the companies' surplus assets to the Bank was completed. The dissolution of Chamia Enterprises Company Ltd and of CEH Balkan Holdings Ltd was completed in December 2019 and January 2020, respectively.

(k) ERB Leasing Bulgaria EAD, Bulgaria

In the third quarter of 2019, the Bank disposed its participation in ERB Leasing Bulgaria EAD to Eurobank Bulgaria A.D., resulting to the recognition of gain of € 1 million.

(l) Bulgarian Retail Services A.D., Bulgaria

In September 2019, the share capital of Bulgarian Retail Services A.D., increased by € 38 million with the issuance of new shares fully subscribed by the Bank. Accordingly, the Bank's direct participation to the company amounted to 99.07%.In November 2019, the Bank disposed its participation in Bulgarian Retail Services A.D.to Eurobank Bulgaria A.D., resulting to the recognition of loss of € 3.3 million.

(m) Grivalia New Europe S.A., Luxembourg

In the fourth quarter of 2019, the liquidation of the company was decided.

(n) Eurobank FPS Loans and Credits Claim Management S.A., Greece

In December 2019, following the decrease of the share capital of the company by € 7 million, the Bank recognized a receivable of an equivalent amount. In the context of the binding agreements that Eurobank has entered into with doValue in December 2019, the Bank will sell 80% of its subsidiary Eurobank FPS Loans and Credits Claim Management S.A. - project "Europe". Therefore, as of 31 December 2019 the company was classified as held for sale. Further information is provided in note 30.

(o) Herald Greece Single Member Real Estate development and services S.A. 2, Greece

In December 2019, the share capital of the company increased by € 2.5 million.

24. Merger of Eurobank with Grivalia

On 26 November 2018, the Boards of Directors ("BoD") of Eurobank Ergasias S.A. ("Eurobank") and Grivalia Properties REIC ("Grivalia") announced that they unanimously decided to commence the merger of the two companies by absorption of Grivalia by Eurobank (the "Merger"). Grivalia was a real estate investment company under Law 2778/1999, as in force, incorporated in Greece. The business of Grivalia along with its subsidiaries (Grivalia group, note 23) and its joint ventures (note 25) was the acquisition, management and leasing out of investment property portfolio located in Greece, in Central Eastern Europe and in Central America.

The consideration of the transaction amounting to € 1,094.4 million has been calculated as the fair value of the 1,523,163,087 Eurobank new ordinary shares with reference to Eurobank's share market price on the acquisition date (i.e. € 0.7185).

Upon acquisition, the fair values of the assets acquired and liabilities assumed are presented in the table below:

	Fair value
	€ million
Assets
Due from credit institutions (1)	20
Shares in subsidiary undertakings	141
Property, plant and equipment and investment property	843
Other assets (2)	84
Total assets	1,088

Liabilities
Due to credit institutions	191
Other liabilities	25
Total liabilities	216

Shareholders' equity	872
Total equity and liabilities	1,088

(1) It includes € 1 million cash and cash equivalents.

(2) It mainly includes investments in associates and joint ventures amounting to € 60 million as well as trade and other receivables of gross carrying amount of € 26 million for which a provision of € 1,7 million has been recognized.

The difference between: (a) the total consideration of € 1,094.4 million, and (b) the net identifiable assets acquired (fair values of assets and liabilities as stated above) of € 872 million, results in the recognition of a goodwill of € 222 million, which was impaired by € 62 million in the year ended 31 December 2019 (note 28). This is not deductible for income tax purposes and is included in intangible assets. Following the Merger, Eurobank's equity increased by € 1,087 million net of € 7 million related costs. The Merger enhances Eurobank's capital position (note 4) and its earnings capacity, which in turn enables the acceleration of its NPEs reduction plan. In addition, through the Merger, the Bank is allowed to deploy Grivalia's best in class real estate management skills to the Bank's real estate assets, in particular to its repossessed assets, which is critical for the management of NPEs.

The results of Grivalia operations are incorporated in the Bank's financial statements prospectively, as of 1 April 2019. If the acquisition had occurred on 1 January 2019, the Grivalia would have contributed net profit of ca. € 7 million to the Bank for the period from 1 January 2019 up to 31 March 2019. As of 1 April 2019, the revenues from the investment property portfolio acquired from Grivalia are presented within the line "Income from non banking services" of the income statement. The Merger was approved on 17 May 2019 by the Ministry of Finance and Development and was registered, on the same day, in the General Commercial Registry. The trading of the 1,523,163,087 new common voting shares of nominal value € 0.23 each was initiated at Athens Exchange on 23 May 2019.

Agreement with the Real estate management company

On 22 February 2019, the Board of Directors of Eurobank also approved the upcoming agreement (SLA), pursuant to article 100 of Greek Law 4548/2018, of the Bank with the company to be incorporated under the name "Grivalia Management Company SA" (the "Company"). The Company was established in March 2019 and is a related party to Eurobank, since a member of the Bank's Board of Directors holds the majority (70%) of the shares of the Company and is an executive member of the board of directors of the Company.

criteria, including a minimum service fee of € 9.35 million for the combined own used and investment property portfolio and a fee related to repossessed assets, shall not exceed € 12 million (excluding VAT) per annum.

Further information on the above transactions is provided in the regulatory announcements on the Bank's website dated 26 November 2018 and 8 February, 25 February, 1 March, 5 April and 17 May 2019.

25. Investment in associates and joint ventures

As at 31 December 2019, the carrying amount of the Bank's investments in associates and joint ventures amounted to € 100 million (2018: € 37 million).

The following is the listing of the Bank's associates and joint ventures as at 31 December 2019:

		Country of		Percentage
Name	Note	incorporation	Line of business	Holding
Femion Ltd		Cyprus	Special purpose investment vehicle	66.45
Tefin S.A. (1)		Greece	Dealership of vehicles and machinery	50.00
Sinda Enterprises Company Ltd		Cyprus	Special purpose investment vehicle	48.00
Alpha Investment Property Kefalariou S.A.		Greece	Real estate	41.67
Global Finance S.A. (2)		Greece	Investment financing	9.91
Famar S.A. (1)		Luxembourg	Holding company	23.55
Odyssey GP S.a.r.l.		Luxembourg	Special purpose investment vehicle	20.00
Eurolife ERB Insurance Group Holdings S.A. (2)		Greece	Holding company	20.00
Alpha Investment Property Commercial Stores S.A.		Greece	Real estate	30.00
Peirga Kythnou P.C.	a	Greece	Real estate	50.00
Piraeus Port Plaza 2	c	Greece	Real estate	49.00
Piraeus Port Plaza 3	c	Greece	Real estate	49.00
Value Touristiki S.A.	c	Greece	Real estate	49.00
Grivalia Hospitality S.A.(3)	c	Luxembourg	Real estate	25.00
Information Systems Impact S.A	d	Greece	Information systems services	15.00

(1) Entity under liquidation at 31 December 2019.

(3) Grivalia Hospitality group (Grivalia Hospitality S.A. and its subsidiaries) is considered as Bank's joint venture.

(a) Peirga Kythnou P.C., Greece

(b) Unisoft S.A., Greece

(c) Grivalia Properties REIC S.A., joint ventures

On 5 April 2019, the General Meetings of the Shareholders of Eurobank and Grivalia Properties REIC approved the merger of the two companies. As of that date, the Bank also obtained control of Grivalia group and consequently joint control to its joint ventures. Further information in relation to the merger of the two companies is provided in note 24.

(d) Information Systems Impact S.A., Greece

26. Property, plant and equipment

		31 December 2019
	Land, buildings,	Furniture,	Computer
	leasehold	equipment,	hardware,	Right of use
	improvements	motor vehicles	software	assets (RoU)(1)	Total
	€ million	€ million	€ million	€ million	€ million
Cost:
Balance at 1 January	341	130	373	-	844
Recognition of RoU on initial application of IFRS 16	-	-	-	280	280
Arising from merger (note 24) (2)	198	-	-	(111)	87
Transfers	4	(0)	1	-	5
Additions	13	7	15	20	55
Disposals, write-offs & adjustment to RoU (3)	(1)	(1)	(5)	(43)	(50)
Held for sale (note 30)	(14)	-	-	-	(14)
Balance at 31 December	541	136	384	146	1,207
Accumulated depreciation:
Balance at 1 January	(159)	(113)	(328)	-	(600)
Arising from merger (note 24)	-	-	-	3	3
Transfers	(0)	-	-	-	(0)
Disposals, write-offs and adjustment to RoU (3)	1	2	5	-	8
Charge for the year	(11)	(4)	(12)	(29)	(56)
Held for sale (note 30)	2	-	-	-	2
Balance at 31 December	(167)	(115)	(335)	(26)	(643)
Net book value at 31 December	374	21	49	120	564

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2.3.1). The respective lease liabilities are presented in "other liabilities" (note 35).

(2) Following the merger with Grivalia (note 24), € 114 million right of use assets initially recognised upon transition to IFRS 16 were derecognized in the second quarter of 2019, as the related properties became own used assets of the Bank.

(3) It refers to termination, modifications and remeasurements of RoU. It includes the remeasurement from revised estimates of the lease term during the year, considering all facts and circumstances that affect the Bank's housing needs, including the merger with Grivalia.

As at 31 December 2019, the RoU assets amounting to € 120 million refer to leased office and branch premises, ATM locations, residential properties of € 117 million and motor vehicles of € 3 million.

	31 December 2018
	Land, buildings, Furniture, Computer
	leasehold	equipment,	hardware,
	improvements	motor vehicles	software	Total
	€ million	€ million	€ million	€ million
Cost:
Balance at 1 January	356	121	330	807
Arising from merger	11	4	18	33
Transfers	(20)	-	17	(3)
Additions	10	7	12	29
Disposals and write-offs	(16)	(2)	(4)	(22)
Balance at 31 December	341	130	373	844
Accumulated depreciation:
Balance at 1 January	(165)	(107)	(298)	(570)
Arising from merger	(4)	(4)	(18)	(26)
Transfers	4	-	(7)	(3)
Disposals and write-offs	15	2	5	22
Charge for the year	(9)	(4)	(10)	(23)
Balance at 31 December	(159)	(113)	(328)	(600)
Net book value at 31 December	182	17	45	244

Leasehold improvements relate to premises occupied by the Bank for its own activities.

27. Investment property

In the fourth quarter of 2019, the Bank has elected to change its accounting policy regarding the measurement of Investment Property from cost model to fair value model according to IAS 40 "Investment property". In accordance with IAS 8 "Accounting policies, changes in accounting estimates and errors", the above change in the Bank's accounting policy on Investment Property was applied retrospectively, consequently comparatives presented below have been restated. Refer also to note 2.3.2.

The movement of investment property (fair value) is as follows:

		2018
	2019	restated
	€ million	€ million

Balance at beginning of period	39	22
Restatement due to change in accounting policy (note 2.3.2)	-	7
Merger with Grivalia (note 24)	645	-
Other transfers	(4)	16
Additions	17	0
Disposals	(1)	(3)
Net gain / (loss) from fair values adjustments	45	(3)
Assets classified as held for sale	(20)	-
Balance at 31 December	721	39

Changes in fair values of investment property are recognized as gains/(losses) in profit or loss and included in the "Other Income/(expense)". All gains/(losses) are unrealized.

During the year ended 31 December 2019, an amount of € 37 million (2018: € 3.7 million) was recognized as rental income from investment property in income from non-banking services. Contractual obligations in relation to investment property are presented in note 42.

The main classes of investment property have been determined based on the nature, the characteristics and the risks of the Bank's properties. The fair value measurements of the Bank's investment property, which are categorized within level 3 of the fair value hierarchy, are presented in the below table.

	2019	2018
	€ million	€ million

Commercial	715	36
Land Plots	6	3
Total	721	39

The basic methods used for estimating the fair value of the Bank's investment property are the income approach (income capitalization/discounted cash flow method) and the comparative method, which are also used in combination depending on the class of property being valued.

The discounted cash flow method is used for estimating the fair value of the Bank's commercial investment property. Fair value is calculated through the projection of a series of cash flows using explicit assumptions regarding the benefits and liabilities of ownership (income and operating costs, vacancy rates, income growth), including the residual value anticipated at the end of the projection period. To this projected cash flows series, an appropriate, market-derived discount rate is applied to establish its present value.

The comparative method is used for the commercial and land plot classes of investment property. Fair value is estimated based on data for comparable transactions, by analyzing either real transaction prices of similar properties, or by asking prices after performing the necessary adjustments.

The Bank's investment property valuations are performed taking into consideration the highest and best use of each asset that is physically possible, legally permissible and financially feasible.

The main method used to estimate the fair value of the "Investment Property" portfolio as at 31 December 2019, is the discounted cash flow method. Significant unobservable inputs used in the fair value measurement of the relevant portfolio are the rental income growth and the discount rate. Increase in rental income growth would result in increase in the carrying amount while an increase in the discount rate would have the opposite result. The discount rate used ranges from 7.5% to 12.5%. As at 31 December 2019, an increase or decrease of 5% in the discount rate used in the DCF analysis, would result in a downward or upward adjustment of the carrying value of the respective investment properties of 17 million and 17 million, respectively.

28. Goodwill and other intangible assets

Goodwill

Impairment testing of goodwill

For the purposes of impairment testing, the goodwill recognised upon the acquisition of Grivalia has been allocated to the Investment Property Segment at Group level, which is defined as the Cash Generating Unit ("CGU") expected to benefit from that business combination.

The recoverable amount of the Investment Property Segment was determined from value-in-use calculation. The key assumptions for the value-in-use calculation are those regarding the discount rate, growth rate and estimated returns based primarily on the rental income from investment properties, and are presented below:

Discount rate (pre-tax)	10.3%
Terminal value growth rate	1.5%
Operating Income	13.6%

During the year ended 31 December 2019, the Bank recognized an impairment loss of € 62 million against the goodwill asset from the acquisition of Grivalia, which was reduced to € 160 million.

The goodwill impairment loss has been recognised in the separate line "Impairment losses on goodwill" in the Income Statement.

Other intangible assets

The movement of other intangible assets which refer to purchased and developed software is as follows:

	2019	2018
	€ million	€ million
Cost:
Balance at 1 January	303	252
Arising from merger	0	23
Additions	51	50
Transfers	(1)	(17)
Disposals and write-offs	-	(5)
Impairment	(2)	-
Balance at 31 December	351	303

Accumulated amortisation:
Balance at 1 January	(177)	(147)
Arising from merger	-	(22)
Transfers	-	7
Amortization charge for the year	(21)	(18)
Disposals and write-offs	-	3
Balance at 31 December	(198)	(177)

Net book value at 31 December	153	126

29. Other assets

	2019	2018 (3)
	€ million	€ million
Receivable from Deposit Guarantee and Investment Fund	707	707
Repossessed properties and relative prepayments	487	437
Pledged amount for a Greek sovereign risk financial guarantee	238	240
Balances under settlement (2)	28	108
Prepaid expenses and accrued income	76	70
Income tax receivable (1)	35	46
Other guarantees	56	44
Other assets	172	77
Total	1,799	1,729

(1) Includes withholding taxes, net of provisions.

(2) Includes settlement balances with customers and balances under settlement relating to the auction process.

(3) In 2019, 'Investment in associates and joint ventures' are presented separately in note 25, while in 2018 were included in other assets.

As at 31 December 2019, other assets net of provisions, amounting to € 172 million include, among others, receivables related to (a) prepayments to suppliers, (b) public entities, (c) property management activities and (d) legal cases.

30. Assets of disposal groups classified as held for sale

Eurobank FPS Loans and Credits Claim Management S.A., Greece

The agreed consideration for 80% of FPS implies an enterprise value of € 310 million for 100% of the entity. The resulting gain on disposal is estimated at approx. € 155 million before tax (€ 110 million after tax), after taking into account costs directly attributable to the transaction and certain consideration adjustments, in accordance with the terms of the agreement.

The completion of the transaction is expected to occur in the first half of 2020, subject to the fulfillment of the conditions set out in the agreement and the customary regulatory approvals.

As at 31 December 2019, on the basis of the binding agreement signed between the Bank and doValue on 19 December 2019, the Bank's investment in FPS has been classified as held for sale.

Real estate properties

In November 2019, the Bank, in the context of its strategy for the active management of its real estate portfolio (repossessed, investment properties and own used properties) reached pre-sale agreements with prospective investors for the disposal of three pools of real estate assets amounting to a total value of ca. € 0.1 billion (including real estate property of its subsidiary ERB Leasing S.A.) Consequently, the disposal of these properties' portfolios was considered highly probable and they have been classified as held for sale as of the end of November 2019. The fair value less cost to sell of these properties, based on the offer prices included in the pre-sale agreements, was lower than their carrying amount, therefore an impairment loss of € 17 million was recognised upon their remeasurement in accordance with the IFRS 5 requirements. This non-recurring fair value measurement is categorized as Level 3 of the fair value hierarchy due to the significance of the unobservable inputs used. In 2019, the total impairment loss, including selling costs, recognised for these real estate assets amounted to € 31 million and are included in the income statement line "Other impairment losses and provisions", while as at 31 December 2019 their remaining carrying amount (after the completion of certain sales) was € 46 million. The sale of these real estate assets is expected to be concluded within 2020.

Non-performing loan portfolios

31. Due to central banks

2019	2018
€ million	€ million
Secured borrowing from ECB and BoG 1,900	2,050

The Bank has eliminated the use of ELA funding since the end of January 2019.

32. Due to credit institutions

	2019	2018
	€ million	€ million
Secured borrowing from credit institutions	6,788	7,909
Borrowings from international financial and similar institutions	438	429
Interbank takings	889	789
Current accounts and settlement balances with banks	86	120
Total	8,201	9,247

As at 31 December 2019, secured borrowing from credit institutions refers mainly to transactions with foreign institutions, which were conducted with collaterals government and corporate securities, EFSF bonds and covered bonds issued and held by the Bank (notes 5.2.1.3 and 34). As at 31 December 2019, borrowings from international financial and similar institutions include borrowings from European Investment Bank and other similar institutions.

33. Due to customers

	2019	2018
	€ million	€ million
Savings and current accounts	18,921	16,187
Term deposits	13,602	12,778
Repurchase agreements	170	170
Total	32,693	29,135

Under the Law 4151/2013, the dormant deposits accounts balances are statute barred for the benefit of the Greek State after the 20-year lapse of the last transaction. Accordingly, in 2019 the amount that the Bank transferred to the Greek State was approximately € 1 million (2018: almost nil).

34. Debt securities in issue

	2019	2018
	€ million	€ million
Securitizations	943	1,245
Subordinated notes (Tier 2)	947	947
Covered bonds	500	499
Medium-term notes (EMTN)	-	6
Total	2,390	2,697

Securitisations

Notes to the Financial Statements

international institutional investor while € 428 million Class B notes were held by the Bank. As at 31 December 2019, following their partial redemption, the carrying value of Class A notes amounted to € 614 million (2018: € 654 million).

Pillar securitization

In June 2019, the Bank through its special purpose financing vehicle (SPV) 'Pillar Finance Designated Activity Company', issued asset backed securities (notes) of total value of ca. € 2 billion collateralized by a portfolio of primarily non performing residential mortgage loans (project Pillar), which were fully retained by the Bank. The securitization consisted of € 1,044 million senior notes issued at par, € 310 million mezzanine notes issued at par and € 645 million junior notes of issue price € 1. In the same month, the Bank announced that it has entered into a binding agreement with Celidoria S.A R.L, an entity ultimately owned by funds whose investment manager is the global investment management firm Pimco, for the sale of 95% of the mezzanine and junior notes of the abovementioned securitization. Upon the completion of the transaction, in September 2019, the Bank ceased to have control over the SPV (notes 20 and 23).

Cairo securitization

The Bank will retain 100% of the senior notes and the 5% of the mezzanine and junior notes. The completion of the transactions with doValue S.p.A is expected to take place within the first half of 2020, subject to obtaining the relevant regulatory approvals in line with the market practice.

Tier 2 Capital instruments

In January 2018, the Bank issued Tier 2 capital instruments of face value of € 950 million, in replacement of the preference shares which had been issued in the context of the first stream of Hellenic Republic's plan to support liquidity in the Greek economy under Law 3723/2008. The aforementioned instruments, which have a maturity of ten years (until 17 January 2028) and pay fixed nominal interest rate of 6.41%, thatshall be payable semi-annually, as at 31 December 2019, amounted to € 947 million, including € 3 million unamortized issuance costs and € 0.2 million accrued interest.

Medium-term notes (EMTN)

In the first quarter of 2019, medium term notes of face value of € 7 million, issued by the Bank and held by a Bank's subsidiary, ERB Hellas (Cayman Islands) Ltd, matured.

Covered bonds

During the year ended 31 December 2019, the Bank proceeded with the partial cancellation of covered bonds of face value of € 150 million, previously retained by the Bank.

Post balance sheet event

In February 2020, the Bank proceeded with the partial cancellation of covered bonds of face value of € 150 million previously retained by the Bank.

35. Other liabilities

	2019	2018
	€ million	€ million
Lease liabilities (1)	121	-
Balances under settlement (2)	154	151
Deferred income and accrued expenses	66	62
ECL allowance for credit related commitments (note 5.2.1.2)	289	305
Standard legal staff retirement indemnity obligations (note 36)	46	43
Employee termination benefits (3)	31	8
Sovereign risk financial guarantee	41	43
Other provisions	144	122
Other liabilities	189	138
Total	1,081	872

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2.3.1).

(2) Includes settlement balances relating to bank cheques and remittances, credit card transactions and other banking activities.

(3) For the year ended 31 December 2018, obligations for employee termination benefits arising from VES were presented within other provisions.

As at 31 December 2019, other liabilities amounting to € 189 million mainly consist of payables relating with (a) suppliers and creditors, (b) contributions to insurance organizations, (c) duties and other taxes and (d) trading liabilities.

As at 31 December 2019, other provisions amounting to € 144 million (2018: € 122 million) mainly include: (a) € 50 million for outstanding litigations against the Bank (note 42), (b) € 28 million for other operational risk events, of which € 22 million is related to Romanian disposal group (note 23) and (c) € 64 million for the participation in share capital increases of Bank's subsidiaries with negative net assets value, which are necessary for the continuity of their operations of which 30 million has been recognized in the income statement during the year.

The movement of the Bank's other provisions, is presented in the following table:

		31 December 2019
	Litigations and claims in dispute € million	Other € million	Total € million
Balance at 1 January Amounts charged during the year Amounts used during the year Amounts reversed during the year	50 2 (1) (2)	72 37 (14) (2)	122 39 (15) (4)
Other movements	1	1	2
Balance at 31 December	50	94	144
	Litigations and claims in dispute € million	31 December 2018 Other € million	Total € million
Balance at 1 January	58	8	66
Amounts charged during the year	2	66	68
Amounts used during the year	(0)	(0)	(0)
Amounts reversed during the year	(8)	(2)	(10)
Other movements	(2)	(0)	(2)
Balance at 31 December	50	72	122

For the year ended 31 December 2019, an amount of € 40 million has been recognised in the Bank's income statement for employee termination benefits in respect of the Voluntary Exit Scheme (VES) launched by the Bank in May 2019. The new VES has been offered

to employees over an age limit as well as to employees of specific eligible Bank units independent of age and will be implemented through either lump-sum payments or long term leaves during which the employees will be receiving a percentage of a monthly salary, or a combination thereof.

In respect of the Voluntary Exit Scheme (VES) that was initiated during the previous years, the Bank recognised an additional cost of € 13 million in the year ended 31 December 2019. Further information is provided in note 34 of the financial statements for the year ended 31 December 2018.

36. Standard legal staff retirement indemnity obligations

The Bank provides for staff retirement indemnity obligation for its employees in Greece and abroad, who are entitled to a lump sum payment based on the number of years of service and the level of remuneration at the date of retirement, if they remain in the employment of the Bank until normal retirement age, in accordance with the local labor legislation. The above retirement indemnity obligations typically expose the Bank to actuarial risks such as interest rate risk and salary risk. Therefore, a decrease in the discount rate used to calculate the present value of the estimated future cash outflows or an increase in future salaries will increase the staff retirement indemnity obligations of the Bank.

The movement of the liability for standard legal staff retirement indemnity obligations is as follows:

	2019	2018
	€ million	€ million
Balance at 1 January	43	44
Arising from merger	-	1
Current service cost	3	3
Interest cost	1	1
Past service cost and (gains)/losses on settlements	28	43
Remeasurements:
Actuarial (gains)/losses arising from changes in financial assumptions	4	(2)
Actuarial (gains)/losses arising from changes in demographic assumptions	-	1
Actuarial (gains)/losses arising from experience adjustments	1	1
Benefits paid	(34)	(49)
Balance at 31 December	46	43

The benefits paid by the Bank during 2019, in the context of the Voluntary Exit Scheme (VES) (note 35), amounted to € 34 million. The provision for staff retirement obligations of the staff that participated in the above scheme, amounted to € 6 million.

The significant actuarial assumptions (expressed as weighted averages) were as follows:

	2019	2018
	%	%
Discount rate	0.9	1.9
Future salary increases	1.9	2.3

As at 31 December 2019, the average duration of the standard legal staff retirement indemnity obligation was 17 years (2018: 18 years).

A quantitative sensitivity analysis based on reasonable changes to significant actuarial assumptions as at 31 December 2019 is as follows:

An increase/(decrease) of the discount rate assumed, by 50 bps/(50 bps), would result in a (decrease)/ increase of the standard legal staff retirement obligations by (€ 3.4 million)/ € 3.7 million.

An increase/(decrease) of the future salary growth assumed, by 0.5%/(0.5 %), would result in an increase /(decrease) of the standard legal staff retirement obligations by € 3.7 million/ (€ 3.3 million).

37. Share capital and share premium

As at 31 December 2019, the par value of the Bank's shares is € 0.23 per share (2018: € 0.30). All shares are fully paid. The movement of ordinary share capital, share premium and the number of ordinary shares issued by the Bank, are as follows:

	Share	Share
	capital	premium	Number of
	€ million	€ million	issued shares

Balance at 1 January	656	8,056	2,185,998,765
Share capital increase, following the merger with Grivalia Properties REIC	197	-	1,523,163,087
Balance at 31 December 2019	853	8,056	3,709,161,852

On 5 April 2019, the Extraordinary General Meeting of the Bank's Shareholders approved the merger of the Bank with Grivalia Properties REIC (note 24) by absorption of the latter by the former and resolved the increase of the share capital of the Bank by:

a) € 165 million, which corresponds to the share capital of Grivalia Properties REIC; and
b) € 32 million, derived from taxed profits for rounding reasons of the nominal value of the Bank's common shares, which was decreased from € 0.30 to € 0.23.

Following the above increases, the Bank's total share capital amounts to € 853 million divided into 3,709,161,852 common voting shares of nominal value of € 0.23 each.

Treasury shares

According to paragraph 1 of Article 16c of Law 3864/2010, during the period of the participation of the HFSF in the share capital of the Bank it is not permitted to the Bank to purchase treasury shares without the approval of the HFSF.

38. Reserves and retained earnings

	Statutory	Non-taxed	Fair value	Other	Retained
	reserves	reserves	reserve	reserves	earnings	Total
	€ million	€ million	€ million	€ million	€ million	€ million

Balance at 1 January 2018	204	887	206	6,458	(11,018)	(3,263)
Impact of adopting IFRS 9 at 1 January 2018 (note 2.3.3)	-	-	13	-	(995)	(982)
Restatement due to charge in accounting policy (note
2.3.2)	-	-	-	-	5	5
Balance at 1 January 2018, as restated	204	887	219	6,458	(12,008)	(4,240)
Net profit (restated note 2.3.2)	-	-	-	-	33	33
Merger with a Bank's subsidiary	1	0	-	0	(2)	(1)
Debt securities at FVOCI	-	-	(166)	-	-	(166)
Cash flow hedges	-	-	-	5	-	5
Hybrid capital's dividend paid and buy back,
net of tax	-	-	-	-	(2)	(2)
Balance at 31 December 2018	205	887	53	6,463	(11,979)	(4,371)
Balance at 1 January 2019	205	887	53	6,463	(11,979)	(4,371)
Net profit	-	-	-	-	31	31
Merger with Grivalia Properties REIC (note 24)	9	-	-	549	332	890
Debt securities at FVOCI	-	-	409	-	-	409
Cash flow hedges	-	-	-	(5)	-	(5)
Actuarial gains/(losses) on post employment benefit
obligations, net of tax	-	-	-	(4)	-	(4)
Hybrid capital's dividend paid and buy back,
net of tax	-	-	-	-	(4)	(4)
Balance at 31 December 2019	214	887	462	7,003	(11,620)	(3,054)

As at 31 December 2019, other reserves mainly comprise: (a) € 5,579 million, pursuant to the corporate law in force (currently article 31 of Law 4548/2018), which can be only either capitalized or offset against losses carried forward (2018: € 5,579 million), (b) € 1,126 million, also pursuant to the corporate law in force (currently article 35 of Law 4548/2018), which is not distributable, but it can be either capitalized or offset against losses carried forward to the extent that these losses cannot be covered by designated reserves or other company funds for which loss absorption is provided in the corporate law (2018: € 578 million) and (c) € 42 million accumulated loss relating to cash flow hedging (2018: € 37 million loss).

Statutory reserves, fair value reserve and cash flow hedges are not distributable, while non-taxed reserves are taxed when distributed.

Dividends

Based on the 2019 results in combination with the article 159 of Company Law 4548/2018, the distribution of dividends is not permitted Under article 10 par. 3 of Law 3864/2010 for the "establishment of a Hellenic Financial Stability Fund", for as long the HFSF participates in the share capital of the Bank, the amount of dividends that may be distributed to shareholders of the Bank cannot exceed 35% of the profits as provided in article 161 par. 2 of Company Law 4548/2018.

39. Hybrid capital

The movement of hybrid capital issued by the Bank, in the form of preferred securities, through its Special Purpose Entity, ERB Hellas Funding Limited, for the years ended 31 December 2019 and 2018 is analyzed as follows:

	Series A	Series B	Series C	Series D	Total
	€ million	€ million	€ million	€ million	€ million
Balance at 1 January 2018	2	4	18	19	43
Buy Back	-	-	(1)	-	(1)
Balance at 31 December 2018	2	4	17	19	42
Balance at 1 January 2019	2	4	17	19	42
Redemption of Hybrid capital	-	(4)	(17)	(19)	(40)
Balance at 31 December 2019	2	-	-	-	2

Post balance sheet event

40. Transfers of financial assets

The Bank enters into transactions by which it transfers recognized financial assets directly to third parties or to Special Purpose Entities (SPEs).

(a) The Bank sells, in exchange for cash, securities under an agreement to repurchase them (repos) and assumes a liability to repay to the counterparty the cash received. In addition, the Bank pledges, in exchange for cash, securities, covered bonds as well as loans and receivables and assumes a liability to repay to the counterparty the cash received. The Bank has determined that it retains substantially all the risks, including associated credit and interest rate risks, and rewards of these financial assets and therefore has not derecognized them. As a result of the above transactions, the Bank is unable to use, sell or pledge the transferred assets for the

The Bank enters into securitizations of various classes of loans (corporate, small and medium enterprise, consumer and various classes of non performing loans), under which it assumes an obligation to pass on the cash flows from the loans to the holders of the notes. The Bank has determined that it retains substantially all risks, including associated credit and interest rate risks, and rewards of these loans and therefore has not derecognized them. As a result of the above transactions, the Bank is unable to use, sell or pledge the transferred assets for the duration of their retention by the SPE. Moreover, the note holders' recourse is limited to the transferred loans. As at 31 December 2019, the securitizations' issues held by third parties amounted to € 943 million (2018: € 1,245 million) (note 34).

The table below sets out the details of Bank's financial assets that have been sold or otherwise transferred, but which do not qualify for derecognition:

	Carrying amount
	2019	2018
	€ million	€ million
Securities held for trading	8	6
Loans and advances to customers	15,431	15,789
-securitized loans (1)	9,298	2,268
-pledged loans under covered bond program	4,630	5,014
-pledged loans with central banks	1,318	8,337
-other pledged loans	185	170
Investment securities	5,044	6,374
Total	20,483	22,169

(1) It includes securitized loans of issues held by the Bank, not used for funding, as well as loans under the Cairo securitizations (note 34).

(b) The Bank may sell or re-pledge any securities borrowed or obtained through reverse repos and has an obligation to return the securities. The counterparty retains substantially all the risks and rewards of ownership and therefore the securities are not recognized by the Bank. As at 31 December 2019, the Bank had obtained through reverse repos securities of face value of € 1,452 million, sold under repurchase agreements with cash value of € 1,620 million (2018: € 117 million and € 123 million, respectively). Furthermore, as at 31 December 2019, the Bank had obtained Greek treasury bills as collaterals for derivatives transactions with the Hellenic Republic of face value of € 1,870 million, sold under repurchase agreements with € 1,538 million cash value (2018: € 1,200 million and € 860 million, respectively).

As at 31 December 2019, the cash value of the assets transferred or borrowed by the Bank through securities lending, reverse repo and other agreements (points a and b) amounted to € 12,133 million, while the associated liability from the above transactions amounted to € 11,923 million, of which € 1,607 million repo agreements offset in the balance sheet against reverse repo deals (notes 31, 32, 33, 34 and 5.2.1.4) (2018: cash value € 15,618 million and liability € 11,974 million, of which € 100 million repo agreements offset in the balance sheet). In addition, the Bank's financial assets pledged as collaterals for repos, derivatives, securitizations and other transactions other than the financial assets presented in the table above are provided in notes 17 and 29.

41. Leases

Bank as a lessee

Policy applicable after 1 January 2019

The Bank leases office and branch premises, ATM locations, residential properties for the Bank's personnel, and motor vehicles.

The majority of the Bank's property leases are under long term agreements (for a term of 12 years or more in the case of leased real estate assets), with options to extend or terminate the lease according to the terms of each contract and the usual terms and conditions of commercial leases, while motor vehicles generally have lease terms of up to 4 years. Extension options held by the Bank are included in the lease term when it is reasonably certain that they will be exercised based on its assessment. For contracts having an indefinite remaining life as at 1 January 2019, the lease term has been determined at an average of 7 years for the Bank, after considering all relevant facts and circumstances. Depending on the terms of each lease contract, lease payments are adjusted annually in line with the consumer Price Index, as published by the Greek Statistical Authority, plus an agreed fixed percentage.

Before the adoption of IFRS 16, these leases were classified as operating leases under IAS 17.

Information about the leases for which the Bank is a lessee is presented below:

Right-of-Use Assets

As at 31 December 2019, the right-of-use assets included in property plant and equipment amounted to € 120 million (note 26).

Lease Liabilities

The lease liability included under other liabilities amounted to € 121 million as at 31 December 2019 (note 35). The maturity analysis of lease liabilities as at 31 December 2019, based on the contractual undiscounted cash flows, is presented in note 5.2.3.

Amounts recognised in profit or loss

Interest on lease liabilities is presented in note 6 and the lease expense relating to short term leases is ca. € 1 million. The operating lease expense under IAS 17 was € 40 million in 2018.

The Bank had total cash outflows for leases of € 32 million in 2019.

Policy applicable before 1 January 2019

The Bank has entered into commercial leases for premises, equipment and motor vehicles. The majority of the Bank's leases are under long-term agreements, according to the usual terms and conditions of commercial leases, including renewal options. In particular, as provided by the Greek Commercial Leases Law currently in force, the minimum lease period for commercial real estate leases starting after the end of February 2014 is three years. Accordingly, non-cancellable lease payments are determined based on the said legal provisions and the relevant contractual terms.

The Bank's lease agreements, do not include any clauses that impose any restriction on the Bank's ability to pay dividends, engage in debt financing transactions or enter into further lease agreements.

Non-cancellable operating lease rentals were payable as follows:

	2018
	€ million
Not later than one year	26
Later than one year and no later than five years	56
Later than five years	25
Total	107

Bank as a lessor

Finance lease

Policy applicable after 1 January 2019 (IFRS 16)

The Bank leases out certain real estate properties and equipment under finance leases, in its capacity as a lessor.

The maturity analysis of finance lease receivables, based on the undiscounted lease payments to be received after the reporting date, is provided below:

	2019
	€ million

Not later than 1 year	1
1-2 years	1
2-3 years	0
3-4 years	0
4-5 years	0
Later than 5 years	1
Lease payments	3
Unguaranteed residual values	43
Gross investment in finance leases	46
Less: unearned finance income	(3)
Net investment in finance leases	43
Less: Impairment allowance	(28)
Total	15

Policy applicable before 1 January 2019 (IAS 17)

Loans and advances to customers included finance lease receivables, as detailed below:

	2018
	€ million

Gross investment in finance leases receivable:
Not later than 1 year	26
Later than 1 year and not later than 5 years	3
Later than 5 years	16
	45
Unearned future finance income on finance leases	(2)
Net investment in finance leases	43
Less: Impairment allowance	(26)
Total	17

The net investment in finance leases is analysed as follows:
Not later than 1 year	26
Later than 1 year and not later than 5 years	2
Later than 5 years	15
	43
Less: Impairment allowance	(26)
Total	17

Operating Leases

Policy applicable after 1 January 2019 (IFRS 16)

The Bank leases out its investment property under the usual terms and conditions of commercial leases. When such leases do not transfer substantially all of the risks and rewards incidental to the ownership of the leased assets, the Bank classifies these lease as operating leases. Information relating to operating leases of investment property, including the rental income recognised by the Bank during the year, is provided in note 8.

The maturity analysis of operating lease receivables (mainly referring to the investment property portfolio acquired from Grivalia in 2019, note 24), based on the undiscounted lease payments to be received after the reporting date, is provided below:

€ million


Not later than one year	51
One to two years	47
Two to three years	45
Three to four years	41
Four to five years	39
More than five years	236
Total	459

Policy applicable before 1 January 2019

Non-cancellable operating lease rentals were receivable as follows:

	2018
	€ million
Not later than one year	2
Later than one year and no later than five years	3
Later than five years	1
Total	6

There were no material future minimum sublease payments to be received under non cancellable subleases.

42. Contingent liabilities and other commitments

The Bank presents the credit related commitments it has undertaken within the context of its lending related activities into the following three categories: a) financial guarantee contracts, which refer to guarantees and standby letters of credit that carry the same credit risk as loans (credit substitutes), b) commitments to extend credit, which comprise firm commitments that are irrevocable over the life of the facility or revocable only in response to a material adverse effect and c) other credit related commitments, which refer to documentary and commercial letters and other guarantees of medium and low risk according to the Regulation No 575/2013/EU.

Credit related commitments are analyzed as follows:

€ million	€ million

Financial guarantee contracts 1,019	971
Financial guarantees contracts given to Bank SPVs' issuing EMTNs 38	87
Other credit related commitments 303	254
Commitments to extend credit 731	172
Total 2,091	1,484

As of 31 December 2019, the credit related commitments within the scope of IFRS 9 impairment requirements amounted to € 4.8 billion (2018: 4.9 billion), including revocable loan commitments of € 2.1 billion (2018: 2.2 billion) and guarantees of € 0.6 billion (2018: 1.2 billion) relating to the lending activities of banking subsidiaries for which the equivalent pledged amount is presented within "Due from credit institutions". The analyses per stage, according to IFRS 9, of the above credit related commitments and the corresponding allowance for impairment losses of € 289 million (2018: € 305 million) are provided in the note 5.

In addition, the Bank has issued a sovereign risk financial guarantee of € 0.24 billion (2018: € 0.24 billion) for which an equivalent amount has been deposited under the relevant pledge agreement (note 29).

Other commitments

(b) As at 31 December 2019, the contractual commitments for the acquisition of own used property, equipment and intangible assets amounted to € 16 million (2018: € 13 million).

In addition, the Bank has assumed a contractual obligation amounting to ca. € 120 million as at 31 December 2019 (2018: nil) relating to future purchase of investment property.

Post balance sheet event

In March 2020, the Bank fulfilled the aforementioned obligation and proceeded to the purchase of four real-estate properties leased to Sklavenitis Group. Consideration paid amounted to ca. € 117 million, while the payment of an amount of ca. € 2 million is contingent to specific conditions.

Legal proceedings

As at 31 December 2019, a provision of € 50 million has been recorded for a number of legal proceedings outstanding against the Bank (2018: € 50 million). The said amount includes € 34 million for an outstanding litigation related to the acquisition of New TT Hellenic Postbank S.A. in 2013 (2018: € 34 million).

Furthermore, in the normal course of its business, the Bank has been involved in a number of legal proceedings, which are either at still a premature or at an advanced trial instance. The final settlement of these cases may require the lapse of a certain time so that the litigants exhaust the legal remedies provided for by the law. Management, having considered the advice of the Legal Services

General Division, does not expect that there will be an outflow of resources and therefore does not acknowledge the need for a provision.

43. Corporate Transformation-Hive down

In November 2018, the Bank announced its transformation plan, which includes the Merger with Grivalia (note 24) and the non performing loans' (NPEs) reduction Acceleration Plan comprising the following steps: a) the securitisation of ca. € 2 billion of NPEs, through the issue of senior, mezzanine and junior notes and the sale of the 95% of the above mentioned mezzanine and junior notes to a third party investor resulting to the de-recognition of the respective securitized NPEs from the Bank's balance sheet (project Pillar, note 20), b) the securitization of ca. € 7.5 billion of NPEs, through the issue of senior, mezzanine and junior notes (project Cairo, note 34), c) the legal separation of the core and non-core operations of the Bank through the hive-down of the core operations to a new subsidiary (as further described below), d) the entry of a strategic investor into Financial Planning Services S.A. (FPS), the licensed 100% owned loan servicer of the Bank, including the Bank's Troubled Asset Group (note 30), e) the sale of a portion of Cairo mezzanine and junior notes to a third party investor (note 34) and, f) the contemplated de-recognition of the securitized NPEs through the disposal /distribution of the remaining Cairo mezzanine and junior notes,subject inter alia to corporate and regulatory approvals .

Hive down

The Demerged Entity will maintain activities and assets that are not related to the main banking activities but are mainly related to the strategic planning of the administration of non-performing loans and the provision of services to the Group companies and third parties. Furthermore, the Demerged Entity will retain the majority stake of Cairo mezzanine and junior notes, the preferred securities (note 39) and participations in certain subsidiaries including Be Business Exchanges S.A. and real estate companies related to projects Pillar and Cairo. In case of any assets or liabilities that will not be possible to be transferred, in the context of the above mentioned Draft Demerger Deed, the Demerged Entity will undertake the obligation to collect or liquidate the assets in accordance with the Beneficiary's instructions whereas the Beneficiary will undertake the obligation to indemnify the Demerged Entity for the settlement of the liabilities including any arising costs or losses.

On 31 January 2020, the Bank's Extraordinary General Meeting (EGM) resolved, among others, a) the approval of the aforementioned demerger of Eurobank through the business banking sector's hive down and the establishment of a new companycredit institution under the corporate name "Eurobank S.A.", b) the approval of the Draft Demerger Deed as well as the Articles of

Association of the Beneficiary, as they were approved by the Bank's BoD and, c) the adjustment of the Articles of Association of the Demerged Entity which will cease to be a credit institution by amending its object and corporate name, as was also approved by the Bank's BoD.

The completion of the demerger is expected take place by the end of March 2020, subject to the receipt of the necessary approvals by the competent Authorities.

44. Post balance sheet events

Details of other post balance sheet events are provided in the following notes:

Note 2.1 - Basis of preparation Note 4 - Capital Management Note 5.2 - Financial risk factors Note 23 -Shares in subsidiaries Note 34 - Debt securities in issue Note 39 - Hybrid capital Note 42 - Contingent liabilities and other commitments Note 43 - Corporate Transformation-Hive down

45. Related parties

In May 2019, following the increase of the share capital of the Bank in the context of the merger with absorption of Grivalia Properties REIC (note 24), the percentage of the Bank's ordinary shares with voting rights held by the Hellenic Financial Stability Fund (HFSF) decreased from 2.38% to 1.40%. The HFSF is still considered to have significant influence over the Bank pursuant to the provisions of the Law 3864/2010, as in force, and the Relationship Framework Agreement (RFA) the Bank has entered into with the HFSF. Further information in respect of the HFSF rights based on the aforementioned framework is provided in the section "Report of the Directors and Corporate Governance Statement" of the Annual Financial Report for the year ended 31 December 2019.

A number of banking transactions are entered into with related parties in the normal course of business and are conducted on an arm's length basis. These include loans, deposits and guarantees. In addition, as part of its normal course of business in investment banking activities, the Bank at times may hold positions in debt and equity instruments of related parties.

The outstanding balances of the transactions with: (a) the subsidiaries, (b) the key management personnel (KMP) and the entities controlled or jointly controlled by KMP and (c) the associates and joint ventures, as well as the relating income and expenses are as follows:

	31 December 2019		31 December 2018
		KMP (1) and			KMP (1) and
		Entities			Entities
		controlled or			controlled or
		jointly	Associates		jointly
		controlled by	and joint		controlled by	Associates and
	Subsidiaries (2)	KMP	ventures	Subsidiaries	KMP	joint ventures
	€ million	€ million	€ million	€ million	€ million	€ million
Due from credit institutions (3)	752.25	-	-	1,263.38	-	-
Securities held for trading	0.62	-	-	-	-	-
Derivative financial instruments assets	19.24	-	-	4.56	-
Investment securities	-	-	-	0.46	-	-
Loans and advances to customers (3)	1,435.85	6.16	11.60	1,370.91	7.19	0.83
Other assets	10.89	-	9.80	5.18	-	6.86
Due to credit institutions	3,432.26	-	-	3,082.19	-	-
Derivative financial instruments liabilities	2.03	-	-	5.03	-	-
Due to customers	294.24	13.86	46.83	405.53	3.35	44.40
Debt securities in issue	-	-	-	6.72	-	-
Other liabilities (3)	294.99	-	3.21	299.47	-	1.88
Net interest income	(4.47)	0.01	(4.25)	(4.26)	0.04	(6.77)
Net banking fee and commission income	(0.59)	-	18.09	7.28	-	12.78
Dividend income	130.00	-	11.00	105.60	-	16.08
Net trading income	(0.47)	-	0.25	0.26	-	0.23
Gains less losses from investment securities	-	-	-	-	-	0.31
Other operating income/(expense)	8.96	(7.61)	(22.81)	2.40	-	(22.70)
Other Impairment losses and
provisions (note 13)	(30.00)	-	-	(34.00)	-	-
Impairment losses relating to loans and
advances and collectors' fees	(44.66)	-	(4.79)	(39.40)	-	(10.58)
Guarantees issued (4)	598.45	0.01	2.00	515.83	-	-
Guarantees received	-	0.03	-	-	0.03	-

(1) Includes the key management personnel of the Bank and their close family members.

(2) Equity contributions and other transactions with subsidiaries are presented in notes 11 and 23.

(3) Furthermore as of 31 December 2019, € 0.7 billion guarantees have been issued relating mainly to the lending activities of banking subsidiaries for which the equivalent pledged amount is included above in "Due from credit institutions" (2018: € 1.2 billion).

(4) The amount of € 7.61 million reported for entities controlled by KMP is related to the services agreement with Grivalia Management Company S.A (note 24).

For the year ended 31 December 2019, there were no material transactions with the HFSF. In addition, as at 31 December 2019, the loans, net of provisions, granted to entities controlled by the Bank pursuant to the terms of the relevant share pledge agreements (note 23) amounted to € 3 million (2018: € 3.3 million).

In 2019, the Bank proceeded with the purchase of loans at amortized cost of gross carrying amount of € 280 million and loans at FVTPL of € 4 million from its subsidiary ERB New Europe Funding II B.V.

Following the assessment of the recoverable amount of the Bank's funding to its subsidiaries, associates and joint ventures, an impairment loss of € 26 million has been recognized in respect of the Bank's loans, receivables and the credit related commitments to its subsidiaries, associates and joint ventures, mainly to reflect the carrying values of their loan's portfolios. As at 31 December 2019, the respective impairment allowance amounted to € 280 million (2018: € 300 million).

Following the completion of the merger of Eurobank with Grivalia Properties REIC (note 24), Fairfax group has increased its percentage holding in the Bank's share capital, which as at 31 December 2019 stands at 31.27%. As at 31 December 2019, the Bank's outstanding balances of the transactions with Fairfax group mainly refer to loans granted of € 0.02 million, deposits received of € 3.7 million and guarantees issued of € 0.4 million.

Key management compensation (directors and other key management personnel of the Bank)

Key management personnel are entitled to compensation in the form of short-term employee benefits of € 6.42 million (2018: € 6.49 million) and long-term employee benefits of € 1.01 million (2018: € 1.54 million). In addition, as at 31 December 2019, the defined benefit obligation for the KMP amounts to € 1.70 million (2018: € 1.68 million), while the respective cost for the year through the income statement amounts to € 0.29 million and the actuarial loss through the other comprehensive income amounts to € 0.17 million (2018: € 0.09 million through the income statement).

46. External Auditors

The Bank has adopted a Policy on External Auditors' Independence which provides amongst others, for the definition of the permitted and non-permitted services the Bank auditors may provide further to the statutory audit. For any such services to be assigned to the Bank's auditors there are specific controlling mechanisms in order for the Bank's Audit Committee to ensure there is proper balance between audit and non-audit work.

The total fees of the Bank's independent auditor "KPMG Certified Auditors" for audit and other services provided are analyzed as follows:

	2019	2018
	€ million	€ million
Statutory audit (1)	(1.1)	(1.2)
Tax certificate	(0.2)	(0.2)
Other audit related assignments	(0.3)	(0.1)
Non audit assignments	(0.1)	(0.1)
Total	(1.7)	(1.6)

(1) Includes fees for statutory audit of the Bank's annual financial statements.

It is noted that the non-audit assignments fees of "KPMG Certified Auditors A.E." Greece, statutory auditor of the Bank, amounted to € 0.1 million.

47. Board of Directors

Further to that:

The BoD by its decisions dated 29 March and 1 April 2019, appointed Mr. George Zanias as new non-executive Director and Chairman of the BoD in replacement of the resigned Chairman Mr. N. Karamouzis. The appointment of Mr. George Zanias was announced to the Extraordinary General Meeting of the Shareholders of the Bank (EGM) held on 5 April 2019 and his term of office will expire concurrently with the term of office of the other members of the BoD.
Following the resignation of Ms. Lucrezia Reichlin, effective as of 1 April 2019, the BoD of the Bank decided on 1 April 2019 not to replace her and the continuation of the management and representation of the Bank by the BoD without her replacement.
The EGM of the Shareholders of the Bank held on 5 April 2019 approved the appointment of Mr. Nikolaos Bertsos as new independent non-executive member of the Bank's BoD, whose term of office will expire concurrently with the term of office of the other members of the BoD. Same day (5 April 2019), the BoD decided its constitution as a body.
The BoD by its decision dated 31 July 2019, appointed Mr. Konstantinos Angelopoulos as the new representative of the HFSF to Eurobank's BoD in replacement of the resigned Ms. Aikaterini Beritsi, according to the provisions of Law 3864/2010 and the Relationship Framework Agreement signed between Eurobank and HFSF.
The BoD by its decision dated 16 December 2019, appointed Mr. Dimitrios Miskou as the new representative of the HFSF to Eurobank's BoD in replacement of the departing Mr. Konstantinos Angelopoulos, according to the provisions of Law 3864/2010 and the Relationship Framework Agreement signed between Eurobank and HFSF.

Following the above, the BoD is as follows:

G. Zanias	Chairman, Non-Executive
G. Chryssikos	Vice Chairman, Non-Executive
F. Karavias	Chief Executive Officer
S. Ioannou	Deputy Chief Executive Officer
T. Kalantonis	Deputy Chief Executive Officer
K. Vassiliou	Deputy Chief Executive Officer
B. P. Martin	Non-Executive
N. Bertsos	Non-Executive Independent
R. Boucher	Non-Executive Independent
R. Kakar	Non-Executive Independent
J. Mirza	Non-Executive Independent
G. Myhal	Non-Executive Independent
D. Miskou	Non-Executive (HFSF representative under Law 3864/2010)

Athens, 12 March 2020

Georgios P. Zanias Fokion C. Karavias Harris V. Kokologiannis I.D. No AI -414343 I.D. No ΑΙ - 677962 I.D. No AN - 582334 CHAIRMAN CHIEF EXECUTIVE OFFICER GENERAL MANAGER OF GROUP FINANCE OF THE BOARD OF DIRECTORS GROUP CHIEF FINANCIAL OFFICER

VΙΙ. Website Address for Information on Subsidiaries of the Bank

The website address, where the annual financial statements for the year ended 31.12.2019 are uploaded, as well as the independent Auditors' reports and the Board of Directors' Reports of the entities, which are consolidated and not listed and which represent accumulatively more than 5% of the consolidated turnover or of the assets of the consolidated balance sheet or of the consolidated results after subtracting the proportion of minority shares, is: www.eurobank.gr

VΙΙΙ. Information of Eurobank Ergasias S.Α. group for the period 1.1-31.12.2019 pursuant to article 6 of l. 4374/2016

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 1 OF ARTICLE 6 OF L.4374/2016 REGARDING LEGAL ENTITIES

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
"SPOT" APOSTOLOS ELLINAS GENERAL PARTNERSHIP	1.500,00
1908 PUBLISHING PRIVATE COMPANY	24.000,00
1984 PRODUCTIONS S.A.	16.200,00
24 MEDIA S.A. A.S.M. PUBLICATIONS PRIVATE COMPANY	23.500,00 11.000,00
ABP PUBLISHING PRIVATE COMPANY	9.600,00
ADESMEFTI ENIMEROSI PRIVATE COMPANY	3.000,00
ADWEB LTD	1.040,00
AIRLINK S.A.	16.313,00
AKOI RADIO MANAGEMENT S.A.	13.991,97
AKRITES TELEVISION S.A.	196,00
ALLIANCE FOR GREECE	5.500,00
ALPHA 989 S.A.	14.841,80
ALPHA SATELLITE TV S.A. ALTER EGO MEDIA S.A.	465.259,64 453.126,40
ANTARIS PRIVATE COMPANY	2.000,00
ANTENNA TV S.A.	445.796,79
APE-MPE S.A.	23.200,00
ART SAVY SINGLE ENTITY PRIVATE COMPANY	5.000,00
ASLANIDIS GEORG. ANASTASSIOS	5.000,00
ATHENS VOICE S.A.	21.480,00
ATTICA PUBLICATIONS S.A.	6.500,00
BANKINGNEWS S.A.	64.000,00
BEHLIVANOS I. CHRISTOS BOGDANOS KONSTANTINOS & CO LIMITED PARTNERSHIP	5.600,00 1.692,30
BOULEVARD FRΕΕ PRESS PRIVATE COMPANY	3.060,00
BOUSIAS COMMUNICATIONS LLC	10.302,40
BRAINWAY S.A.	3.020,00
BROADCASTING PROMOTION S.A. SPORT TV	18.208,90
BUSINESS ORGANIZATION INTERNATIONAL SERVICES S.A. ALFA TELEVISION	1.024,75
CAPITAL.GR S.A.	139.676,67
CHRISI EFKERIA EDITIONS S.A.	6.334,00
CINE NEWS S.A.	14.445,00
COSMOS LLC COSMOS PELOPONNESE MME S.A.	3.000,00 489,75
CREATIVE INTERNET SERVICES SINGLE ENTITY LTD CO.	10.800,00
CRETALIVE SINGLE ENTITY LTD CO.	19.000,00
D. KONSTANTOPOULOS & CO LIMITED PARNTERSHIP	4.000,00
DAM PRODUCTIONS S.A.	16.466,00
DESMI S.A.	42.099,90
DG NEWSAGENCY S.A.	30.333,33
DIADIKI ENIMEROSI LIMITED PARTNERSHIP DIFONO RADIO OPERATIONS S.A.	6.000,00 3.427,20
DIMERA PUBLISHING S.A.	32.040,00
DIO DEKA PUBLISHING S.A.	27.000,00
DIONATOS I. AND CO LIMITED PARTNERSHIP (DELTA PRESS)	21.500,00
DIONISIOS MPOURAS & CO LIMITED PARTNERSHIP	10.000,00
DITIONE LIMITED INTERNET ENTERPRISES	8.000,00
DOCUMENTO MEDIA SINGLE ENTITY PRIVATE COMPANY	76.900,00
DOUSIS ANASTASIOS & CO LIMITED PARTNERSHIP	20.000,00
DPG DIGITAL MEDIA S.A.	30.333,33
ELEYTHERIA TOY TYPOU PUBLISHING S.A. ΕLΝΑΒΙ LLC	81.790,00 800,00
ENIKOS S.A.	47.540,00
ENTYPOEKDOTIKI INDUSTRIAL AND COMMERCIAL S.A.	10.000,00
EPIKOINONIA ACHAIAS SINGLE ENTITY PRIVATE COMPANY	3.000,00
ERINYA NEWS SINGLE ENTITY PRIVATE COMPANY	8.500,00
ESTIA INVESTMENTS MME S.A.	104.000,00
ESTIA NEWSPAPER S.A.	35.173,42
ETHOS MEDIA S.A.	8.950,00
EUROPE ONE RADIOTELEVISION S.A. EXCESS SINGLE ENTITY LLC	804,00 300,00
EXPLORER S.A.	38.350,00
FAROSNET S.A.	15.700,00
FELNIKOS ELECTRONIC MEDIA SINGLE ENTITY LLC	8.500,00
FILELEYTHEROS PUBLISHING S.A.	84.000,00
FINANCIAL MARKETS VOICE S.A.	10.000,00
FMW FINANCIAL MEDIA WAY	1.000,00
FORTHNET MEDIA S.A.	92.278,25
FOTAGOGOS LLC	1.600,00
FOX NETWORKS GROUP S.A. FREED S.A. DIGITAL INTERNET APPLICATIONS	21.339,00 26.125,00

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 1 OF ARTICLE 6 OF L.4374/2016 REGARDING LEGAL ENTITIES

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
FRONTSTAGE ENTERTAINING S.A.	29.522,71
G. SIMANTONIS & CO GENERAL PARTNERSHIP	645,16
GENERAL RADIOTELEVISION ENTERPRISES S.A.	14.874,92
GRΕΕN BOX PUBLISHING S.A.	20.100,00
HAZLIS AND RIVAS COMMUNICATIONS LTD	5.000,00
HELLENIC TELECOMMUNICATIONS ORGANIZATION S.A. I AVGI - PUBLISHING AND JOURNALISTIC ORGANIZATION S.A.	44.866,03 44.000,00
I EFIMERIDA TON SINTAKTON S.A.	77.496,00
ICAP S.A.	7.450,00
ICHOS & RYTHMOS S.A.	17.898,60
IDENTITY S.A.	6.000,00
IKAROS RADIOTELEVISION COMPANY S.A.	55.102,30
INFINITAS INTERNET MULTIMEDIA PRIVATE COMPANY	1.779,00
INTERBUS S.A.	111.420,00
INTERNATIONAL RADIO NETWORKS S.A.	7.088,20
ΙΟΝΙΑΝ RADIOTELEVISION ENTERPRISES S.A.	3.000,00
J.O. INFOCENT COMMUNICATIONS SINGLE ENTITY LTD CO.	6.000,00
J.P. COMMUNICATIONS LIMITED PARTNERSHIP K.M.CHATZIILIADES & CO LIMITED PARTNERSHIP	1.500,00 5.835,14
KARAGIANNOPOULOS KONSTANTINOS	990,00
KARANTZOUNIS G. DIMITRIOS	1.500,00
KASTORINI - TOMELITOU I.	2.059,00
KATHIMERINES PUBLICATIONS S.A.	402.194,51
KATSONIS PANAGIOTIS	1.500,00
KAVALA RADIOTELEVISION S.A. - "ENA CHANNEL"	181,60
KERKYRA PUBLICATIONS S.A.	800,00
KILKIS RADIOTELEVISION S.A. - "KILKIS EURO CHANNEL"	3.536,40
KISS MEDIA S.A.	21.472,86
KONTRA MEDIA MME S.A. KYRIAKOPOULOS IOANNIS & CO LIMITED PARTNERSHIP	29.513,41 6.000,00
LEFT MEDIA S.A.	1.584,00
LIQUID MEDIA S.A.	30.450,00
LOVE RADIO BROADCASTING S.A.	12.096,77
LYCABETTUS PUBLICATIONS SINGLE ENTITY PRIVATE COMPANY	6.000,00
M PRESS PUBLISHING S.A.	121,00
MADEINGREECE LIMITED PARTNERSHIP	4.500,00
MAKEDONIA ENIMEROSI S.A.	1.000,00
MANESIOTIS NIKOLAOS-PSOMIADIS KONSTANTINOS G.P.	14.400,00
MARATHON PRESS PRIVATE COMPANY	6.500,00
MARIA VASILAKI PUBLISHING ENTERPRISES SINGLE ENTITY LTD CO. MARINA G. TOULA & CO GENERAL PARTNERSHIP	3.500,00 1.200,00
MARKETING AND MEDIA SERVICES SINGLE ENTITY PRIVATE COMPANY	10.000,00
MEDIA DIVERSITY PRIVATE COMPANY	300,00
MEDIA2DAY PUBLISHING S.A.	136.500,00
METRODEAL SINGLE ENTITY PRIVATE COMPANY	5.385,60
METRON ARISTON COMMUNICATION SERVICES SINGLE ENTITY LTD CO.	1.000,00
MICHELAKIS IOANNIS & CO LIMITED PARTNERSHIP	6.000,00
MINDTHEGAP MEDIA COMMUNICATIONS SINGLE ENTITY PRIVATE COMPANY	8.000,00
MODERN ERA PUBLISHING S.A.	4.400,00
MONOCLE MEDIA LAB MONONEWS PRIVATE COMPANY	41.000,00
MUNICIPAL TELEVISION CORPORATION OF ASPROPYRGOS	4.786,20
MUNICIPALITY OF THESSALONIKI INFORMATION, SPECTACLE AND COMMUNICATION COMPANY - "T.V. 100" MYTILINI RADIOTELEVISION ENTERPRISES S.A.	2.988,00 196,00
Ν.Κ. MEDIA GROUP LLC	39.912,99
NEA TELEORASI S.A.	338.648,15
NEO CHRIMA PUBLISHING S.A.	60.000,00
NEOTYPOGRAFIKI LLC	52,42
NEW MEDIA NETWORK SYNAPSIS S.A.	84.700,00
NEW RADIO OF JOURNALISTS LTD	49.000,00
NEWPOST PRIVATE COMPANY	44.000,00
NEWS DOT COM RADIOTELEVISION S.A.	534.428,73
NEWSIT LLC	76.285,00
NEWSMEDIA PRIVATE COMPANY	4.900,00
NOESIS PRIVATE COMPANY	15.040,00
NOTICE CONTENT AND SERVICES SINGLE ENTITY PRIVATE COMPANY NSK PUBLISHING LLC	2.650,00 7.600,00
OKTAS MEDIA PRIVATE COMPANY	1.500,00
OLIVE MEDIA S.A.	31.600,00
ONLINE TECHPRESS PUBLISHING LLC	3.600,00
ORTHODOXI KIVOTOS PUBLICATIONS S.A.	2.000,00
P. ATHANASSIADIS & CO S.A.	3.791,04
P.D. PUBLICATIONS LTD	12.195,16

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 1 OF ARTICLE 6 OF L.4374/2016 REGARDING LEGAL ENTITIES

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
PALO DIGITAL TECHNOLOGIES LTD	25.165,03
PAPALIOS KONSTANTINOS & CO LIMITED PARTNERSHIP	8.051,00
PAPASTAMOULOS D. GEORGIOS	2.000,00
PARA ENA NETWORK SERVICES LLC	59.500,00
PARAPOLITIKA PUBLISHING S.A.	28.920,00
PAYLOPOULOS S. NETWORK & SOCIALNETWORK INFORMATION SINGLE ENTITY LLC	7.000,00
PELOPONNESE PATRON EDITIONS S.A.	18.500,00
PERFECT MEDIA ADVERTISING SINGLE ENTITY PRIVATE COMPANY	70.000,00
POLITIS GENERAL PARTNERSHIP	854,70
POLITI-SIAFAKA MARIELIZE-VASILIKI	3.000,00
PREMIUM S.A.	44.000,00
PRIME APPLICATIONS S.A.	34.200,00
PROTAGON S.A.	27.000,00
PROTO THEMA PUBLISHING S.A.	344.568,60
PUBLISHING S.A. AGRICULTURAL NEWS	1.040,00
R MEDIA PUBLISHING LIMITED PARTNERSHIP	1.000,00
RADIO COMMUNICATION S.A.	18.451,32
RADIO PLAN BEE PRIVATE COMPANY	3.618,00
RADIO PRODUCTIONS S.A.	15.359,40
RADIO THESSALONIKI S.A.	8.318,99
RADIOTELEVISION ENTERPRISES ΑΝΤΕΝΝΑ FM S.A.	7.396,20
RADIOTELEVISION ENTERPRISES REAL FM S.A.	135.520,00
RADIOTELEVISION ENTERPRISES S.A. SYROS T.V.1	261,00
RADIOTELEVISION S.A.	92.790,91
RADIOTELEVISION TOURIST ENTERPRISES-IRIDA S.A.	252,00
RAGKAVIS CHR. KONSTANTINOS	806,45
REAL MEDIA S.A.	39.980,00
REPORT PRIVATE COMPANY	8.000,00
REVMATA PUBLICATIONS S.A.	8.000,00
SABD PUBLISHING S.A.	91.600,00
SARISA LLC	10.800,00
SARONIC GLAM PRIVATE COMPANY SELANA S.A.	3.000,00 8.000,00
SFERA RADIO S.A.	21.470,40
SIRGANI PARASKEVI	1.600,00
SMART PRESS PUBLISHING ADVERTISING S.A.	2.300,00
SPORTDOG PRIVATE COMPANY	11.210,00
SPORTNEWS INTERNET SERVICES S.A.	12.240,00
STAMOULIS PUBLICATIONS S.A.	3.250,00
STAR S.A. RADIOTELEVISION ORGANIZATION OF CENTRAL GREECE	17.998,20
TELIA COMMUNICATIONS S.A.	2.400,00
TΗΕ TOC DIGITAL MEDIA INFORMATION SERVICES S.A.	30.150,00
THEOHARIS SPYR. GEORGIOS	6.750,00
THESSALIKI RADIOTELEVISION S.A.	8.512,31
TO KOUTI THS PANDORAS MEDIA LIMITED PARTNERSHIP	24.000,00
TO MANIFESTO PRIVATE COMPANY	6.000,00
TRAPEZIKO VIMA CIVIL NON PROFIT COMPANY	2.700,00
TV CRETA S.A.	9.999,81
TYPOS MEDIA LTD	3.000,00
UNION OF HELLENIC CHAMBERS OF COMMERCE-INSTITUTE OF RESEARCH & STUDIES	2.900,00
VASSILATOS CHRISTOFOROS	17.415,00
VERGINA HYBRID TV - TELEVISION SERVICES S.A.	5.000,00
VORIA GR S.A.	6.900,00
VOULGARIDOU CHRISA	1.000,00
WALL STREET FINANCE PRIVATE COMPANY	8.400,00
WAVE MEDIA OPERATIONS PRIVATE COMPANY	750,00
WORLD TWENTY FOUR SEVEN LIMITED PARTNERSHIP	17.500,00
ZOYGLA G.R. S.A.	66.000,00
TOTAL	6.756.085,02

NOTES:

Not including charges in favor of Greek government (V.A.T, Special TV tax.) and in favor of third parties

(advertisement tax), total amount € 1.469.082,57.

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 2 OF ARTICLE 6 OF L.4374 / 2016

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
1st PRIMARY SCHOOL OF KONITSA*	4.303,55
ACTION AID HELLAS	5.590,00
AMERICAN COLLEGE OF GREECE	6.204,00
ANATOLIA COLLEGE BOARD OF TRUSTEES	55.000,00
ANDRION CLUB	500,00
APOSTOLIDOU EVANTHIA	3.000,00
ARGO PUBLISHING AND ADVERTISING SINGLE ENTITY LLC	2.040,00
ARISTOTELEIAN UNIVERSITY OF THESSALONIKI RESEARCH COMMITTEE	806,45
ARK OF THE WORLD	2.800,00
ARTA MEDICAL ASSOCIATION	200,00 4.768,71
ASSOCIATION OF BUSINESS AND RENTAL OF VALAORITOU AND VOUKOURESTIOU* ASSOCIATION OF PARENTS & GUARDIANS 4th PRIMARY SCHOOL OF VOULA	2.000,00
ASSOCIATION OF PARENTS & GUARDIANS OF MUSIC SCHOOL OF KAVALA	500,00
ASSOCIATION OF PATIENTS WITH NEOPLASIA "IMASTE MAZI"	4.000,00
ASSOCIATION OF SARAKATSANIANS PREFECTURE OF LARISSA "KATSANTONIS"*	1.500,00
ASSOCIATION OF SOCIAL LIABILITY FOR CHILDREN AND YOUTH	14.040,00
ATHENA RESEARCH CENTER FOR INNOVATION IN COMMUNICATION & KNOWLEDGE TECHNOLOGIES	1.000,00
ATHENS ALZHEIMER ASSOCIATION	500,00
ATHENS COORDINATION CENTER FOR MIGRANT AND REFUGEE ISSUES	1.000,00
ATHENS UNIVERSITY OF ECONOMICS AND BUSINESS SPECIAL RESEARCH FUND	6.500,00
ATHLETIC CLUB OF RETHYMNO	1.000,00
AUEB PROPERTY MANAGEMENT & DEVELOPMENT S.A.	17.016,13
AUEB PROPERTY MANAGEMENT & DEVELOPMENT S.A.*	2.016,13
BLUE RIBBON CIVIL NON PROFIT COMPANY	30.000,00
BOTONAKIS SOFOKLIS	403,00
BRITISH EMBASSY	1.000,00
BUSINESS AND INDUSTRY ASSOCIATION OF THESSALY	500,00
CAPITAL LINK FORUM, INC	10.010,80
CATERING BUSINESS OWNERS ASSOCIATION OF TINOS	500,00
CENTER OF SPECIAL PEOPLE "I CHARA" CENTRE FOR RESEARCH AND TECHNOLOGY HELLAS	12.000,00 3.225,81
CHAMBER OF LESVOS	2.000,00
CHANIA DEVELOPMENT CORPORATION CIVIL NON PROFIT COMPANY	3.225,80
CHATZINIKOLAOU NIK. & CO LIMITED PARTNERSHIP	15.000,00
CITIZENS' MOVEMENT FOR AN OPEN SOCIETY	1.000,00
COEURS POUR TOUS HELLAS	12.000,00
CULTURAL & FOLKLORE ASSOCIATION OF VILLIA	1.000,00
DEAF-HEARING IMPAIRED ATHLETIC CLUB OF SOUTHWEST GREECE	2.000,00
DELPHI ECONOMIC FORUM	15.000,00
DESMOS NON PROFIT ORGANIZATION	1.300,00
DODECANESE SOCIETY FOR DEVELOPMENT & PROGRESS	806,45
ECONOMIC CHAMBER OF GREECE	5.000,00
EKALI TOURIST AND HOTEL ENTERPRISES	3.000,00
ELECTRICAL ENGINEERING STUDENTS EUROPEAN ASSOCIATION-LOCAL COMMITTEE OF ATHENS	4.500,00
ELEPAP-REHABILITATION FOR THE DISABLE	2.500,00
ELPIDA ASSOCIATION	230,00 5.000,00
ENA INSTITUTE FOR ALTERNATIVE POLICIES ERGO CIVIL NON PROFIT COMPANY	1.500,00
ETHOS MEDIA S.A.	2.000,00
EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT	7.500,00
EXCESS SINGLE ENTITY LTD	300,00
FOUNDATION FOR PEOPLE WITH SPECIAL NEEDS-"ASPRES PETALOUDES"	1.000,00
FRIENDS OF Α.Ε.Κ. UNION	276,00
FRIENDS OF THE CHILD	100,00
FULBRIGHT FOUNDATION - GREECE	5.000,00
GENERAL HOSPITAL OF IOANNINA " G.CHATZIKOSTA*	1.500,00
GENERAL HOSPITAL OF RODOS*	4.741,94
GENERAL HOSPITAL OF VOLOS*	1.640,00
GENERAL STATE HOSPITAL OF ARGOS	1.000,00
GEO ROUTES CULTURAL INSTITUTE	8.000,00
GEORGE & AIKATERINI HATZIKONSTA FOUNDATION FOR YOUTH TRAINING PRIVATE LEGAL ENTITY	14.760,00
GREEK CENTER FOR VALUE INVESTMENTS CIVIL NON PROFIT COMPANY	59.890,00
GREEK CENTER FOR VALUE INVESTMENTS CIVIL NON PROFIT COMPANY* GREEK CHILDREN'S VILLAGE - FILIRO	5.465,00 250,00
GREEK EXPORTERS' ASSOCIATION OF NORTHERN GREECE	6.000,00
GREEK SOCIETY FOR THE PROMOTION OF SAFETY OF SPORTS AND RECREATIONAL MEANS THE SEA AND WATER-"SAFE
WATER SPORTS"	3.500,00
GREEK TECHNOLOGY ENTERPRISE FORUM	5.000,00
GREEK-SWISS CHAMBER	1.000,00
GREEN BOX PUBLICATIONS S.A.	10.000,00
HAZLIS AND RIVAS COMMUNICATIONS LTD	10.000,00
HELLA-DIKA MAS CIVIL NON PROFIT COMPANY	5.000,00

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 2 OF ARTICLE 6 OF L.4374 / 2016

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
HELLENIC ADVERTISERS' ASSOCIATION	5.000,00
HELLENIC ASSOCIATION OF MOBILE APPLICATION COMPANIES	8.225,81
HELLENIC ASSOCIATION OF MOBILE APPLICATION COMPANIES*	4.800,00
HELLENIC ASSOCIATION ORTHOPAEDIC SURGERY & TRAUMATOLOGY	1.000,00
HELLENIC BASKETBALL FEDERATION	920.000,02
HELLENIC EQUESTRIAN FEDERATION	10.000,00 21.250,00
HELLENIC EXCHANGES S.A.-ATHENS STOCK EXCHANGE HELLENIC INSTITUTE OF CUSTOMER SERVICE	5.000,00
HELLENIC MANAGEMENT ASSOCIATION	8.000,00
HELLENIC OPEN UNIVERSITY	66.000,00
HELLENIC RADIATION DOSIMETRY PRIVATE COMPANY	20.000,00
HELLENIC ROOTS ASSOCIATION	2.000,00
HELLENIC-AMERICAN CHAMBER	9.000,00
HELLENIC-AMERICAN EDUCATIONAL FOUNDATION	22.150,00
HELLENIC-ITALIAN CHAMBER	5.000,00
HELLENIC-SPANISH CHAMBER OF COMMERCE*	1.895,16
HERACLES KALLISTHENIS FOUNDATION	700,00
HOLY METROPOLIS OF PERISTERI* HOLY METROPOLIS OF TRIKALA	940,00 1.500,00
HOLY TEMPLE OF ANALIPSIS TOU KIRIOY OF RAFINA*	700,00
HOLY TEMPLE OF KOIMISEOS THEOTOKOU OF ARIA NAFPLIOU*	806,44
HOLY TEMPLE OF THREE HIERARCHS OF PIGADIA DRAMA*	806,54
I FLOGA'- PARENTS ASSOCIATION OF CHILDREN WITH NEOPLASTIC DISEASES	780,00
INFORMA UK LIMITED	20.000,00
INSESSION EVENTS	2.000,00
INTERNATIONAL FOUNDATION FOR GREECE	3.720,00
INTERSPORT ATHLETICS S.A.	2.000,00
JUNIOR ACHIEVEMENT GREECE	500,00
KARRER LOUKIA KONSTANTINOS TSAOUSIS SINGLE ENTITY PRIVATE COMPANY	5.000,00 3.000,00
LARISSA BAR ASSOCIATION	1.600,00
LAWYERS AND INTERNS GUILD	2.000,00
LEFKADA CHAMBER OF COMMERCE AND INDUSTRY	2.000,00
LYCEUM CLUB OF GREEK WOMEN - VOLOS' BRANCH	1.000,00
MAKE A WISH FOUNDATION HELLAS	2.800,00
MANDOULIDES SCHOOLS	8.064,52
MANTIS BUSINESS INNOVATION PRIVATE COMPANY	7.000,00
MARKETING GREECE S.A.	50.000,00
MATHEMATICIANS' CLUB OF LARISSA	500,00
MDA HELLAS MEDICINE SANS FRONTIERES	500,00 1.100,00
MESOTOPOS LESVOS ATHLETIC CLUB	1.500,00
METKE S.A.	300,00
MICROSOFT HELLAS S.A.	25.000,00
MIKRASIATES CLUB OF IONIA THESSALONIKI	500,00
MINDSPACE CIVIL NON PROFIT COMPANY	5.000,00
MINISTRY OF CITIZEN PROTECTION*	5.341,85
MINISTRY OF CULTURE EMPLOYEES ASSOCIATION*	234,50
MK SAILING LIMITED	55.000,00
MUNICIPALITY OF AGIA VARVARA*	204,96
MUNICIPALITY OF AGIOS EFSTRATIOS	5.000,00 5.000,00
MUNICIPALITY OF ASPROPYRGOS MUNICIPALITY OF CHALANDRI*	938,00
MUNICIPALITY OF CORFU*	4.032,26
MUNICIPALITY OF DELTA	9.500,00
MUNICIPALITY OF DELTA*	4.592,83
MUNICIPALITY OF EGALEO	4.000,00
MUNICIPALITY OF EVOSMOS-KORDELIO SOCIAL PROTECTION AND SOLIDARITY CENTER	500,00
MUNICIPALITY OF FARSALA*	5.643,35
MUNICIPALITY OF GLYFADA*	8.000,00
MUNICIPALITY OF KARDITSA	400,00
MUNICIPALITY OF KIFISSIA	10.000,00
MUNICIPALITY OF KIFISSIA*	2.400,00
MUNICIPALITY OF MARKOPOULO MUNICIPALITY OF MEGALOPOLI*	1.000,00 2.016,13
MUNICIPALITY OF MYCONOS*	4.032,25
MUNICIPALITY OF ΝΕΑ ΙΟΝΙΑ*	7.721,00
MUNICIPALITY OF PALLINI	7.200,00
MUNICIPALITY OF PAPAGOS-CHOLARGOS*	4.000,00
MUNICIPALITY OF PENTELI*	3.283,00
MUNICIPALITY OF PIRGOS	5.000,00
MUNICIPALITY OF POLYGYROS	2.000,00

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 2 OF ARTICLE 6 OF L.4374 / 2016

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
MUNICIPALITY OF RAFINA-PIKERMI*	32.080,00
MUNICIPALITY OF SPARTA*	1.514,11
MUNICIPALITY OF TEMPI	1.000,00
MUNICIPALITY OF TRIPOLI	2.500,00
MUNICIPALITY OF VOLOS	32.000,00
MUSEUM FOR THE MACEDONIAN STRUGGLE FOUNDATION NATIONAL AND KAPODISTRIAN UNIVERSITY OF ATHENS	2.000,00 30.000,00
NATIONAL OPERA	49.500,00
NATURAL HISTORY MUSEUM OF METEORA & MUSHROOM MUSEUM PRIVATE COMPANY	3.000,00
NAUTICAL CLUB OF KALAMAKI	1.000,00
NAUTICAL CLUB OF VOULIAGMENI	500,00
NEOS VOUTZAS ATHLETIC CLUB - "PROODOS"	3.000,00
NEOS VOUTZAS ATHLETIC CLUB - "PROODOS"*	9.646,00
NOMIKI BIBLIOTHIKI S.A.	2.000,00
OFFSEC SERVICES LIMITED	1.032,87
OLOI MAZI BOROUME*	1.407,00
PALLADIAN COMMUNICATIONS SPECIALISTS	14.000,00
PANHELLENIC EXPORTERS ASSOCIATION	9.500,00 400,00
PANHELLENIC FEDERATION OF GOLDSMITHS, JEWELLERS AND WATCH DEALERS PANHELLENIC SOCIETY FOR CANCER PREVENTION-"STOCHOS -PROLIPSI"	7.000,00
PAPALIOS KONSTANTINOS & CO LIMITED PARTNERSHIP	3.000,00
PAPAPETROU PATROKLOS & CO LIMITED PARTNERSHIP	4.000,00
PENTELI SWIMMING CLUB	500,00
PERSONAL AVIATION SERVICE COMPLEX (SEPA)	3.100,00
PETROS AND MARIA KYDONIEOS FOUNDATION	4.250,00
PHARMACISTS COOPERATIVE COMPANY OF SERRES	3.000,00
PIRAEUS MEDICAL ASSOCIATION	600,00
PNOE-FRIENDS OF CHILDREN IN INTENSIVE CARE	12.558,00
PREFECTURAL UNIT OF ARGOLIDA*	2.000,00
PREFECTURAL UNIT OF CENTRAL MACEDONIA	10.000,00
PUBLIC AFFAIRS & NETWORKS SINGLE ENTITY PRIVATE COMPANY QUESTEX LLC	7.000,00 15.000,00
REGION OF IONIAN ISLANDS-PREFECTURAL UNIT OF CORFU	3.000,00
RELOAD GREECE FOUNDATION	12.000,00
RHODES BICYCLE CLUB- "RODILIOS"	1.500,00
ROTARY DISCTRICT 2470	2.000,00
RUNNERS' CLUB OF PIERIA -"ZEUS"	300,00
SAINT FILOTHEI OF ATHENS - GIRL'S HOME	250,00
SANΙ S.A.	20.000,00
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ELLINIKO - ARGIROUPOLI*	817,82
SCH. COM. PRIM. EDUC. MUNICIPALITY OF NIKAIA* SCOUTS OF GREECE	806,45 200,00
SMALL VINTNERS ASSOCIATION OF GREECE	3.000,00
SOCIAL COOPERATIVE COMPANY ART	1.500,00
SOCIAL INITIATIVE CLUB OF VEROIA - "PROTOVOULIA GIA TO PAIDI"	1.000,00
SOCIETY FOR JUDICIAL STUDIES	4.000,00
SOCIETY FOR MACEDONIAN STUDIES	17.000,00
SOLID WASTE MANAGEMENT ASSOCIATION OF MAGNESSIA PREFECTURE	1.500,00
SOS CHILDREN'S VILLAGES GREECE	3.200,00
SPECIAL ACCOUNT FOR RESEARCH FUNDING (E.L.K.E.) OF NATIONAL TECHNICAL UNIVERSITY OF ATHENS (N.T.U.A.)	1.500,00
SPECIAL VOCATIONAL TRAINING CENTER - "ESTIA" ST. ANTONY'S COLLEGE	1.000,00 29.157,92
SWIMMING ACADEMY PRIVATE COMPANY	10.000,00
THE ALUMNI OF AMERICAN COLLEGE ANATOLIA	17.605,00
THE ATHENS CHAMBER OF TRADESMEN*	20.180,43
THE CUBE WORKSPACE SINGLE ENTITY PRIVATE COMPANY	1.000,00
THE GREEK TOURISM CONFEDERATION -"SETE"	130.000,00
THE SMILE OF THE CHILD	1.360,00
THESSALONIKI CHAMBER OF COMMERCE	13.000,00
THESSALONIKI CONSULATE*	1.000,00
THIRA ATHLETIC CLUB	2.000,00
THORACIC DISEASES GENERAL HOSPITAL OF ATHENS "SOTIRIA"	1.000,00
TOGETHER FOR CHILDREN TOURISM ASSOCIATION OF MYTHIMNA	150,00 850,00
TRAFIGURA MAR.VENTURES LTD - HELLENIC BRANCH	2.000,00
TSOMOKOS PUBLIC RELATIONS S.A.	2.000,00
UNION OF GREEK PROCEDURAL LAWYERS	3.000,00
UNION OF HELLENIC POLICE OFFICERS OF ILEIA PREFECTURE	2.200,00
UNIVERSITY OF CRETE SPECIAL RESEARCH FUND	1.200,00
UNIVERSITY OF NICOSIA	12.500,00
UNIVERSITY OF PATRAS SPECIAL RESEARCH FUND	11.000,00
UNIVERSITY OF PIREAUS RESEARCH CENTRE	5.500,00

PAYMENTS ON CONSOLIDATED BASIS PURSUANT TO PARAGRAPH 2 OF ARTICLE 6 OF L.4374 / 2016

	AMOUNTS
LEGAL ENTITY / NAME OF INDIVIDUAL	(pre taxes and charges)
URBAN LAND INSTITUTE	3.000,00
VELOS SAILING RECREATIONAL BOAT COMPANY	15.000,00
VERTICAL SOLUTIONS S.A.	10.000,00
VIOTIA CHAMBER	2.000,00
WOMENS' CLUB OF STEFANIA	500,00
WORKING PARTY OF GENERAL HOSPITAL OF XANTHI	750,00
WORLD HUMAN FORUM	3.000,00
TOTAL	2.484.203,99

NOTES:

Not including charges for Greek Government and in favor of third parties (V.A.T., etc), total amount €393.166,79
Where (*) relates to grants / donations in kind.

INFORMATION UNDER PARAGRAPH 2 OF ARTICLE 6 OF L.4374/2016 REGARDING INDIVIDUALS
	AMOUNTS WITHOUT TAX
888 VALEDICTORIANS OF THE PROGRAM "THE GREAT MOMENT FOR EDUCATION"	710.400,00
10 INDIVIDUALS	35.427,52
TOTAL	745.827,52

FIXED ASSETS DONATIONS
NAME	ITEM
ARISTOTELEIAN UNIVERSITY OF THESSALONIKI - DEAN'S OFFICE	ELECTRONIC EQUIPMENT
ASSOCIATION FOR REGIONAL DEVELOPMENT AND MENTAL HEALTH	ELECTRONIC EQUIPMENT
ASSOCIATION OF PARENTS & GUARDIANS 2nd PRIMARY SCHOOL OF KOUFALIA	ELECTRONIC EQUIPMENT
ASSOCIATION OF PARENTS & GUARDIANS 3rd HIGH SCHOOL OF ARGIROUPOLI	ELECTRONIC EQUIPMENT OFFICE FURNITURE & OTHER
ASSOCIATION OF PARENTS & GUARDIANS 7th NURSERY AND PRIMARY SCHOOL OF PALLINI	EQUIPMENT
	OFFICE FURNITURE &
ASSOCIATION OF PARENTS & GUARDIANS 7th PRIMARY SCHOOL OF KIFISIA	ELECTRONIC EQUIPMENT
ASSOCIATION OF PARENTS & GUARDIANS 8th PRIMARY SCHOOL OF SIKEES OF THESSALONIKI	ELECTRONIC EQUIPMENT
ASSOCIATION OF PARENTS & GUARDIANS NURSERY SCHOOL OF ST. LOUKAS OF ALIVERI	ELECTRONIC EQUIPMENT
ASSOCIATION OF PELOPONNESE PEOPLE OF KAMATERO "O GEROS OF MORIA"	ELECTRONIC EQUIPMENT
ATRAPOS SPORTS CLUB	OFFICE FURNITURE
	OFFICE FURNITURE &
CHAMBER OF CHIOS	TELECOMMS EQUIPMENT
D.I.E.K. TRIKALA, D.I.E.K. KIFISSIA, SECOND CHANCE SCHOOL OF NEA PROPONTIDA GENERAL HOSPITAL OF IKARIA "AGIOS PANTELEIMON"	ELECTRONIC EQUIPMENT ELECTRONIC EQUIPMENT
GENERAL HOSPITAL OF KARDITSA	ELECTRONIC EQUIPMENT
GENERAL HOSPITAL PREFECTURE OF ARGOLIDA	ELECTRONIC EQUIPMENT
HEALTH CENTRE OF ARIDAIA	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
HEALTH CENTRE OF NEA MOUDANIA CHALKIDIKI	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
HELLENIC CENTRE FOR MARINE RESEARCH	ELECTRONIC EQUIPMENT
HOLY TEMPLE OF AGIA PARASKEVI IN STENOMA	ELECTRONIC EQUIPMENT
HOLY TEMPLE OF AGIOS ATHANASSIOS IN RIZOMILOS	ELECTRONIC EQUIPMENT
ILISIAKOS SPORTS CLUB K.E.A./A.M.E.A. - CENTRE OF VOCATIONAL TRAINING FOR PEOPLE WITH DISABILITIES	ELECTRONIC EQUIPMENT ELECTRONIC EQUIPMENT
LOCAL COMMUNITY OF MATARAGKA	ELECTRONIC EQUIPMENT
LOCAL ORGANIZATION OF LANDSCAPE UPGRADE IN VOIRANI	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
MANAGEMENT BODY OF PROTECTED AREAS OF CYCLADES	ELECTRONIC EQUIPMENT
MINISTRY OF CITIZEN PROTECTION (DEPARTMENT OF IMMIGRATION MANAGEMENT, HELLENIC POLICE, P.D. OF KROPIA,
P.D. OF MESSOLOGHI, FIRE SERVICE OF THESSALONIKI, POLICE HQ /STATE POLICE OF KARDITSA, STATE POLICE OF	OFFICE FURNITURE &
ACHARNAI, TRAFFIC POLICE DIVISION OF ATTICA, FIRE DEPARTMENT OF KARDITSA ) MINISTRY OF NATIONAL DEFENCE (KEEM, KETX, GES/G2, SPECIAL PARATROOPERS' DEPARTMENT, 211 MKTE, DIKE IV MP ELECTRONIC EQUIPMENT
"PELOPONISSOS", 50 BATTALION SUPPORT, AMMUNITION BATTALION, 111 CW, 296 MKTE PETRES OF LARISSA, ARMY
CENTER OF SUPPLY AND TRANSPORT, SALAMIS NAVAL BASE FUEL DEPARTMENT, CENTRE OF MILITARY POLICE TRAINING,
24 SQUADRON OF BATTLE TANKS, SETTIL, ASDEN, 124TH NATIONAL GUARD BATALLION, 126TH NATIONAL GUARD
BATALLION, 2/39 REGIMENT OF EVZONES, 221ST NATIONAL GUARD BATALLION, 264TH MOTORISED NATIONAL GUARD
BATALLION, 265TH MOTORISED NATIONAL GUARD BATALLION, 296TH MOTORISED NATIONAL GUARD BATALLION,
698TH MUNITIONS BASE, 8TH SQUADRON CONTROL AND WARNING STATION, 98TH NATIONAL GUARD ANTI-ARMOUR
COMPANY, 98TH NATIONAL GUARD BATALLION, 98TH NATIONAL GUARD SUPPORT BATALLION, 2ND MECHANISED
INFANTRY DIVISION "ELASSON", 11TH INFANTRY REGIMENT IV (MP)/ MUSIC BAND COMPANY, D' COMMANDO
SQUADRON, COMMAND CENTER / IV INFANTRY DIVISION "PELOPONISSOS", HELLENIC NAVY GENERAL
INSPECTORATE/TECHNICAL INSPECTORATE, ENGINEER CORE HQ, 98 HIGHER COMMAND OF NATIONAL GUARD
BATALLIONS - HQ COMPANY, 11TH INFANTRY REGIMENT "ARGYROKASTRO" STG928, ARMOURED CORE TRAINING	OFFICE FURNITURE,
CENTRE, TECHNICAL TRAINING CENTER-LOGISTICS SUPPORT COMMAND, 784th TRANSPORT BATALLION, 791st SUPPLY BATTALION)	ELECTRONIC & TELECOMMS EQUIPMENT
	OFFICE FURNITURE &
MUNICIPALITY OF ACHARNES	ELECTRONIC EQUIPMENT
MUNICIPALITY OF ATHENS	OFFICE FURNITURE
MUNICIPALITY OF KAISARIANI	ELECTRONIC EQUIPMENT
MUNICIPALITY OF LAGADA	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
MUNICIPALITY OF LIVADIA	ELECTRONIC EQUIPMENT
MUNICIPALITY OF PIANA-KOLINDROS	OFFICE FURNITURE
NATIONAL AND KAPODISTRIAN UNIVERSITY OF ATHENS NATIONAL FLIGHT COORDINATION AUTHORITY	ELECTRONIC EQUIPMENT OFFICE FURNITURE
	OFFICE FURNITURE &
NAUTICAL CLUB OF SYROS	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
PANHELLENIC UNION OF HELLENIC POST BANK PENSIONERS	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
POLICEMEN UNION OF ARGOLIDA	ELECTRONIC EQUIPMENT
POLICEMEN UNION OF LASITHI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ALMOPIA	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
SCH. COM. PRIM. EDUC. MUNICIPALITY OF AMAROUSSION SCH. COM. PRIM. EDUC. MUNICIPALITY OF ARGOS-MYKINES	ELECTRONIC EQUIPMENT ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ARISTOTELIS CHALKIDIKI	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ATHENS	ELECTRONIC EQUIPMENT

FIXED ASSETS DONATIONS
NAME	ITEM
SCH. COM. PRIM. EDUC. MUNICIPALITY OF CHALKIDA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF CHANIA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF CHAIDARI	OFFICE FURNITURE
SCH. COM. PRIM. EDUC. MUNICIPALITY OF DIONISOS	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF EDESSA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF EGALEO	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF GEORGIOS KARAISKAKIS	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF GLIFADA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF HERACLION OF CRETE	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ILION	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ILIOUPOLI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF KALLITHEA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF KIMI - ALIVERI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF KORDELIO - EVOSMOS	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF KORINTHIA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF LAGKADA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF LAMIA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF LIMNOS	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF LIVADIA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF NAFPAKTIA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF NIKAIA	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
SCH. COM. PRIM. EDUC. MUNICIPALITY OF PALAIO FALIRO	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF PERISTERI	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
SCH. COM. PRIM. EDUC. MUNICIPALITY OF PETROUPOLI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF PIRAEUS	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF PREVEZA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF SACRED TOWN OF MESSOLOGHI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF SIKYONA	OFFICE FURNITURE
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ST. ANARGIRI - KAMATERO	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
SCH. COM. PRIM. EDUC. MUNICIPALITY OF ST. VARVARA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF THERMI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF THESSALONIKI	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF TRIKALA	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF VIRONAS	ELECTRONIC EQUIPMENT
SCH. COM. PRIM. EDUC. MUNICIPALITY OF VOLOS	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF ACHARNES	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF AGIA PARASKEVI	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF AMAROUSSION	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF AMPHILOCHIA	ELECTRONIC EQUIPMENT ELECTRONIC & TELECOMMS
SCH. COM. SEC. EDUC. MUNICIPALITY OF ANAFI	EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF ARGOS - MYKINES	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF ARIDAIA	ELECTRONIC EQUIPMENT
	OFFICE FURNITURE &
SCH. COM. SEC. EDUC. MUNICIPALITY OF ATHENS	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF CHALANDRI	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF ERMIONIDA	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF GLIFADA	OFFICE FURNITURE
SCH. COM. SEC. EDUC. MUNICIPALITY OF ILIOUPOLI	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF KORIDALLOS	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF N.IONIA	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF NAFPAKTIA	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF NIKAIA - RENTI	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF PAIANIA	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF PATREON	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF ST. ANARGIRI - KAMATERO	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF THESSALONIKI	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF TRIKALA	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF VOLOS	ELECTRONIC EQUIPMENT
SCH. COM. SEC. EDUC. MUNICIPALITY OF XILOKASTRO	ELECTRONIC EQUIPMENT
TECHNOLOGY CLUB OF THRACE	ELECTRONIC EQUIPMENT
UNION OF EMPLOYEES MUNICIPALITY OF PIRAEUS	ELECTRONIC EQUIPMENT
UNION OF PEOPLE OF AGIOS DIMITRIOS OF MONEMVASIA	ELECTRONIC EQUIPMENT
WOMENS' ASSOCIATION OF EVRITANIA	ELECTRONIC EQUIPMENT

The table above relates to Bank's fixed assets donations with residual value € 264,58

AI Terminal

Eurobank Ergasias Services and Holdings S.A.

2644_10-k_2020-03-17_a574e658-4bb7-4384-b66e-1f99c990a02b.pdf

ANNUAL FINANCIAL REPORT

FOR THE YEAR ENDED

Table of Contents

Statements of Members of the Board of Directors (according to the article 4 par. 2 of the Law 3556/2007)

Profit or Loss

Financial Results Review and Outlook2

Capital adequacy

2020 European Union (EU) – wide stress test postponed to 2021

Corporate Transformation Plan

Merger Agreement of the Bank with Grivalia

Agreement with the Real estate management company

Acceleration Plan for NPEs reduction and Hive down

International Activities

Risk management

Credit Risk

Market Risk

Liquidity Risk

Operational Risk

Non Performing Exposures (NPEs) management

Troubled Assets Group (TAG) General Division

Operational targets for Non-Performing Exposures (NPEs)

Legal framework

Transactions on Non-performing loans

Non-performing loans classified as held for sale

Macroeconomic Outlook and Risks

Share Capital

Dividends

Major Shareholders

Board of Directors

Authority to issue new shares

Sundry information required under Law 3556/2007 (article 4, par.7)

Information required under Law 4548/2018 (article 97, par.1 (b))

The Auditors

Non financial information

Materiality Analysis

Employee Engagement

Corporate Social Responsibility

Protection of environment

Actions against corruption and bribery incidents

Related party transactions

Corporate Governance Statement

APPENDIX

Definition of capital ratios in accordance with the regulatory framework, which are included in the Report of Directors for 2019:

Source of financial Information

CORPORATE GOVERNANCE STATEMENT 2019

1. Corporate Governance Code and Practices

2. Board of Directors1

2.1 General

2.2 Composition of the Board

2.3 Provisions of Law 3864/2010, as in force, regarding the composition of the Board

2.4 HFSF's rights according to Law 3864/2010 and the RFA

2.5 Division of responsibilities

2.6 Operation of the Board

2.7 Directorships of Board members

2.8 Conflict of interest

2.9 Remuneration

2.10 Main issues the Board dealt with during 2019

a) Governance:

b) Corporate and other actions:

d) Business monitoring:

2.11 Evaluation of the Board's structure, size, composition and performance

2.12 Directors' Induction and Continuous Professional Development Process

3. Board Committees

3.1 Audit Committee4

3.2 Board Risk Committee5

3.3 Remuneration Committee6

3.4 Nomination Committee8

Board of Directors Diversity Policy

Assessment of the knowledge, skills and experience (KSE) of the Board collectively as well as the KSE and contribution of individual Board members

Board Nomination Policy

3.5 Strategic Planning Committee10

4. Management Committees

Executive Board11

Management Risk Committee12

Group Asset and Liability Committee (G-ALCO) 13

Central Credit Committees

Central Credit Committee I

Financial Results Review and Outlook²

2. Board of Directors¹

3.1 Audit Committee⁴

3.2 Board Risk Committee⁵

3.3 Remuneration Committee⁶

3.4 Nomination Committee⁸

3.5 Strategic Planning Committee¹⁰

Executive Board¹¹

Management Risk Committee¹²

Troubled Assets Committee¹⁴