Eurobank Ergasias Services and Holdings S.A.

Quarterly Report • Nov 22, 2019

I N T E R I M 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 NINE MONTHS ENDED

30 SEPTEMBER 2019

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

Index to the Interim Consolidated Financial Statements Page
Interim Consolidated Balance Sheet1
Interim Consolidated Income Statement 2
Interim Consolidated Statement of Comprehensive Income 3
Interim Consolidated Statement of Changes in Equity4
Interim Consolidated Cash Flow Statement 5

1.	General information 6
2.	Basis of preparation and principal accounting policies 6
3.	Significant accounting estimates and judgments in applying accounting policies 11
4.	Capital Management 12
5.	Operating segment information 13
6.	Earnings per share 16
7.	Net interest income 16
8.	Net banking fee and commission income17
9.	Operating expenses17
10.	Impairment allowance for loans and advances to customers18
11.	Other impairments, restructuring costs and provisions19
12.	Income tax 19
13.	Discontinued operations23
14.	Derivative financial instruments24
15.	Loans and advances to customers24
16.	Investment securities27
17.	Shares in subsidiaries29
18.	Investments in associates and joint ventures32
19.	Property, plant and equipment and Investment property 33
20.	Other assets34
21.	Due to central banks35
22.	Due to credit institutions35
23.	Due to customers35
24.	Debt securities in issue 36
25.	Other liabilities 37
26.	Share capital, share premium and treasury shares 38
27.	Preferred securities 38
28.	Fair value of financial assets and liabilities39
29.	Cash and cash equivalents and other information on interim cash flow statement42
30.	Contingent liabilities and commitments43

31.	Other significant and post balance sheet events44
32.	Related parties48
33.	Board of Directors49

Interim Consolidated Balance Sheet

		30 September	31 December
		2019	2018
	Note	€ million	€ million
ASSETS
Cash and balances with central banks		3,319	1,924
Due from credit institutions		3,738	2,307
Securities held for trading		126	43
Derivative financial instruments	14	2,721	1,871
Loans and advances to customers	15	36,977	36,232
Investment securities	16	7,662	7,772
Investments in associates and joint ventures	18	238	113
Property, plant and equipment	19	780	353
Investment property	19	1,116	316
Intangible assets	31	425	183
Deferred tax assets	12	4,808	4,916
Other assets	20	2,116	1,934
Assets of disposal groups classified as held for sale		-	20
Total assets		64,026	57,984
LIABILITIES
Due to central banks	21	1,250	2,050
Due to credit institutions	22	6,744	6,376
Derivative financial instruments	14	3,310	1,893
Due to customers	23	42,308	39,083
Debt securities in issue	24	2,590	2,707
Other liabilities	25	1,250	844
Total liabilities		57,452	52,953
EQUITY
Share capital	26	852	655
Share premium	26	8,053	8,055
Reserves and retained earnings		(2,352)	(3,721)
Preferred securities	27	21	42
Total equity		6,574	5,031
Total equity and liabilities		64,026	57,984

Interim Consolidated Income Statement

		Nine months ended 30 September		Three months ended 30 September
		2019	2018	2019	2018
	Note	€ million	€ million	€ million	€ million
Net interest income	7	1,031	1,063	346	352
Net banking fee and commission income	8	209	209	75	76
Income from non banking services	31	41	8	19	3
Net trading income/(loss)		(9)	24	(3)	13
Gains less losses from investment securities	16	66	74	22	28
Other income/(expenses)	12,15,31	27	6	(6)	(1)
Operating income		1,365	1,384	453	471
Operating expenses	9	(672)	(653)	(230)	(217)
Profit from operations before impairments,
provisions and restructuring costs		693	731	223	254
Impairment losses relating to loans and
advances to customers	10	(493)	(513)	(145)	(176)
Other impairment losses and provisions	11	(38)	(4)	(21)	0
Restructuring costs	11	(85)	(47)	(4)	(3)
Share of results of associates and joint ventures	18	17	29	14	2
Profit before tax		94	196	67	77
Income tax	12	(9)	(58)	(11)	(21)
Net profit from continuing operations		85	138	56	56
Net profit/(loss) from discontinued operations	13	(3)	(57)	0	(11)
Net profit attributable to shareholders		82	81	56	45
		€	€	€	€
Earnings per share
-Basic and diluted earnings per share	6	0.03	0.04	0.02	0.02
Earnings per share from continuing operations
-Basic and diluted earnings per share	6	0.03	0.06	0.02	0.03

Interim Consolidated Statement of Comprehensive Income

		Nine months ended 30 September			Three months ended 30 September
		2019 2018 2019 € million € million € million				2018
					€ million
Net profit		82		81		56		45
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	3		17		2		6
- transfer to net profit, net of tax	(15)	(12)	(13)	4	(4)	(2)	(6)	0
Debt securities at FVOCI
- changes in fair value, net of tax (note 16)	730		(84)		283		(35)
- transfer to net profit, net of tax	(371)	359	(42)	(126)	(155)	128	(7)	(42)
Foreign currency translation
- foreign operations' translation differences	3		(11)		2		(1)
- transfer to net profit on disposal of
foreign operations (note 13)	0	3	34	23	-	2	-	(1)
Associates and joint ventures
- changes in the share of other comprehensive
income, net of tax (note 16)	50	50	(33)	(33)	13	13	(5)	(5)
Other comprehensive income		400		(132)		141		(48)
Total comprehensive income attributable
to shareholders:
- from continuing operations		485		(40)		197		8
- from discontinued operations		(3)		(11)		0		(11)
		482		(51)		197		(3)

Interim Consolidated Statement of Changes in Equity

Interim Consolidated Cash Flow Statement

		Nine months ended 30 September
		2019	2018
	Note	€ million	€ million
Cash flows from continuing operating activities
Profit before income tax from continuing operations		94	196
Adjustments for : Impairment losses relating to loans and advances to customers	10	493	513
Other impairment losses, provisions and restructuring costs	11	123	51
Depreciation and amortisation	9	90	47
Other (income)/losses οn investment securities	29	(28)	(124)
(Income)/losses on debt securities in issue	29	27	26
Other adjustments	18, 31	(50)	(36)
		749	673
Changes in operating assets and liabilities
Net (increase)/decrease in cash and balances with central banks		(61)	(59)
Net (increase)/decrease in securities held for trading		(82)	(16)
Net (increase)/decrease in due from credit institutions		(1,152)	169
Net (increase)/decrease in loans and advances to customers		(679)	(310)
Net (increase)/decrease in derivative financial instruments		54	5
Net (increase)/decrease in other assets		(205)	(205)
Net increase/(decrease) in due to central banks and credit institutions		(637)	(4,219)
Net increase/(decrease) in due to customers		2,125	3,712
Net increase/(decrease) in other liabilities		(41)	(70)
		(678)	(993)
Income tax paid		(29)	(22)
Net cash from/(used in) continuing operating activities		42	(342)
Cash flows from continuing investing activities
Acquisition of fixed and intangible assets		(85)	(69)
Proceeds from sale of fixed and intangible assets		25	29
(Purchases)/sales and redemptions of investment securities		1,266	(65)
Acquisition of subsidiaries and Grivalia, net of cash acquired	31	450	(7)
Acquisition of holdings in associates and joint ventures		(1)	-
Disposal of subsidiaries, net of cash disposed	17	9	(111)
Dividends from investment securities, associates and joint ventures		4	18
Net cash from/(used in) continuing investing activities		1,668	(205)
Cash flows from continuing financing activities
(Repayments)/proceeds from debt securities in issue	24	(144)	680
Capital return from discontinued operations		-	50
Repayment of lease liabilities	29	(30)	-
Redemption of preferred securities	27	(22)	(1)
Preferred securities' dividend paid	27	(2)	(2)
(Purchase)/sale of treasury shares		(3)	0
Redemption of preference shares, net of expenses	24	-	(4)
Net cash from/(used in) continuing financing activities		(201)	723
Effect of exchange rate changes on cash and cash equivalents		1	(1)
Net increase/(decrease) in cash and cash equivalents from continuing operations		1,510	175
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 period	29	1,949	2,143
Cash and cash equivalents at end of period	29	3,459	2,164

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 interim consolidated financial statements were approved by the Board of Directors on 20 November 2019.

2. Basis of preparation and principal accounting policies

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 'Interim Financial Reporting' as adopted by the European Union (EU). The interim condensed financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2018. Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current period. Except as indicated, financial information presented in Euro has been rounded to the nearest million.

The accounting policies and methods of computation in these interim consolidated financial statements are consistent with those in the consolidated financial statements for the year ended 31 December 2018, except as described below.

Going concern considerations

The interim 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'sreal GDP growth is expected at 1.8% and 2.3% in 2019 and 2020, respectively, according to the November 2019 forecast by the European Commission. The unemployment rate is expected at 17.3% and 15.4% in 2019 and 2020, respectively, while based on ELSTAT data, it stood at 16.7% in August 2019 (August 2018: 18.9%). On the fiscal front, Greece's primary balance is expected to register a surplus of 3.7% and 3.6% of GDP in 2019 and 2020, respectively, according to the 2020 Draft Budget. The first three quarterly reviews of the Enhanced Surveillance (ES) were successfully completed by June 2019, while the conclusion of the fourth review is expected in early December 2019. In that context, the disbursement of the first ES installment of € 970 million took place in early May 2019. The capital controls imposed in July 2015 were fully abolished from 1 September 2019 onwards. On the back of this environment, the Greek government in 2019 managed to normalize market access with the issuance of four bonds of various maturities. The yield of the 10-year benchmark bond was at 1.16% on 31 October 2019, compared to 4.40% on 31 December 2018.

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 attraction of new investments in the country and (iii) 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. Materialization of those risks would have potentially adverse effects on the liquidity, solvency and profitability of the Greek banking sector. 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 18.6% and 16.3% respectively as at 30 September 2019. The net profit attributable to shareholders amounted to € 82 million (€ 149 million net profit from continuing operations before € 64 million restructuring costs, after tax) for the period ended 30 September 2019. Furthermore, the Bank has eliminated the use of ELA as of end January 2019. As at 30 September 2019, the Group deposits have increased by € 3.2 bn (out of which € 1.1 bn is associated with the acquisition of Piraeus Bank Bulgaria) to € 42.3 bn (31 December 2018: € 39.1 bn), improving the Group's (net) loans to deposits (L/D) ratio to 87.3% as at 30 September 2019 (31 December 2018: 92.6%).

The Bank will participate in the ECB SREP stress test of 2020, which is expected to be launched at the beginning of 2020 and to be concluded by the end of July 2020 (note 4).

In September 2019, the Bank completed 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) which represents the second significant milestone of the Bank's frontloaded plan for derisking its balance sheet (note 15). As at 30 September 2019 and taking into account the above transaction, the Group NPEs at amortized cost have been reduced to € 13.8 bn, driving the NPE ratio to 31.1% (31 December 2018: 37%). Going forward, the Bank is continuing actively the negotiations towards completing the next two steps of its plan, specifically, a) the sale of 20% of the mezzanine and part of junior notes (to be determined taking into consideration the developments in relation to the APS, see below) of a securitization of a mixed assets portfolio of NPEs with a gross book value of ca. € 7.5 bn (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) (note 24).

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. In the context of the ongoing consultation on the new law related to the APS and the aforementioned negotiations for the projects Cairo and Europe transactions, Eurobank aims to achieve the targeted Group's NPE ratio of ca. 16% in the first quarter of 2020 instead of the end of 2019 (as submitted to SSM) and a single digit ratio by 2021.

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.

New and amended standards and interpretations adopted by the Group

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, Amendment–Prepayment Features with Negative Compensation

The amendment in IFRS 9 requirements allows 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 amendment would probably result in these financial assets failing the "Solely Payments of Principal and Interest" criterion and thus being measured at FVTPL.

The amendment also confirms the modification accounting of financial liabilities under IFRS 9. Specifically, when a financial liability measured at amortised cost is modified without this resulting 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 amendment had no impact on the interim consolidated financial statements.

IFRIC 23, Uncertainty over Income Tax Treatments

The interpretation clarifies the application of the recognition and measurement requirements in 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 determined 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 and the entity should assume that a tax authority with the right to examine tax treatments will examine them and will have full knowledge of all relevant information.

If an entity concludes it is probable that the taxation authority will accept an uncertain tax treatment, it should determine its accounting for income taxes consistently with that tax treatment. If it concludes that it is not probable that the 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 made for the recognition and measurement of the effect of 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 interim 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 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 statement of financial position, 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 duration, 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.

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 31), 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 period ended 30 September 2019, the depreciation charge for right-of-use assets was € 32 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:

	€ 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.

Update to principal accounting policy – Leases

(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. 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.

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

The amendment clarifies 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 equity accounting.

According to the amendment, 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 amendment had no impact on the interim consolidated financial statements.

IAS 19, Amendment –Plan Amendment, Curtailment or Settlement

The amendment clarifies 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 amendment includes clarifications about the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The amendment applies prospectively to plan amendments, curtailments or settlements that occur on or after the adoption date 1 January 2019.

The adoption of the amendment had no impact on the interim 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. Conversely, if 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' amendment 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 interim consolidated financial statements.

3. Significant accounting estimates and judgments in applying accounting policies

In preparing these interim consolidated financial statements, the significant estimates, judgments and assumptions made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2018, except for the accounting judgments that relate to the changes in accounting policies described in note 2, as a result of IFRS 16 adoption.

Further information about the key assumptions and sources of estimation uncertainty are set out in notes 12, 13, 15, 25, 28, 30 and 31.

4. Capital Management

The Group's capital adequacy position is presented in the following table:

	30 September	31 December
	2019	2018
	€ million	€ million
Total equity	6,574	5,031
Add: Adjustment due to IFRS 9 transitional arrangements	897	1,003
Less: Preferred securities	(21)	(42)
Less: Goodwill	(223)	(1)
Less: Other regulatory adjustments	(463)	(482)
Common Equity Tier 1 Capital	6,764	5,509
Add: Preferred securities subject to phase-out	-	17
Total Tier 1 Capital	6,764	5,526
Tier 2 capital-subordinated debt	950	950
Add: Other regulatory adjustments	6	25
Total Regulatory Capital	7,720	6,501
Risk Weighted Assets	41,596	38,849
Ratios:	%	%
Common Equity Tier 1	16.3	14.2
Tier 1	16.3	14.2
Total Capital Adequacy Ratio	18.6	16.7

Note: The Group's CET1 as at 30 September 2019, based on the full implementation of the Basel III rules in 2024 (fully loaded CET1), would be 14.1% (31 December 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.

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 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).

2020 EU – wide stress test

An EU - wide stress test has been announced by the European Banking Authority (EBA) to be launched at the beginning of 2020 to assess the resilience of EU banks to an adverse economic shock. This is 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 consists of two stress-testing exercises – the EBA EU-wide stress test and the ECB SREP stress test – the results of which will be factored into its overall assessment within the 2020 Supervisory Review and Evaluation Process (SREP).

The scope of the 2020 ECB SREP stress test will 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 will participate in the ECB SREP stress test of 2020. The exercise is expected to be launched at the beginning of 2020 and to be concluded by the end of July 2020.

5. 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 13).
• 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 nine months 2018 results 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.

Operating segments

		For the nine months ended 30 September 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	384	226	9	160	(6)	281	(23)	1,031
Net commission income	45	50	21	16	0	76	1	209
Other net revenue	(6)	13	0	37	32	41	8	125
Total external revenue	423	289	30	213	26	398	(14)	1,365
Inter-segment revenue	13	10	0	(16)	1	(4)	(4)	-
Total revenue	436	299	30	197	27	394	(18)	1,365
Operating expenses	(320)	(91)	(17)	(56)	(18)	(166)	(4)	(672)
Impairment losses relating to loans
and advances to customers	(342)	(81)	(0)	-	-	(70)	-	(493)
Other impairment losses and
provisions (note 11)	(4)	(3)	(0)	1	(0)	(7)	(25)	(38)
Share of results of associates and
joint ventures	(0)	(0)	17	-	0	(0)	0	17
Profit/(loss) before tax from continuing
operations before restructuring costs	(230)	124	30	142	9	151	(47)	179
Restructuring costs (note 11)	(15)	(2)	(0)	(0)	-	(18)	(50)	(85)
Profit/(loss) before tax from
continuing operations	(245)	122	30	142	9	133	(97)	94
Loss before tax from
discontinued operations	-	-	-	-	-	(5)	(0)	(5)
Non controlling interests	-	-	-	-	-	(0)	0	0
Profit/(loss) before tax attributable
to shareholders	(245)	122	30	142	9	128	(97)	89

					30 September 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	20,094	13,194	239	13,695	1,195	15,111	498	64,026
Segment liabilities	25,639	6,057	2,158	8,239	226	13,551	1,582	57,452

The International segment is further analyzed as follows:

		For the nine months ended 30 September 2019
	Romania	Bulgaria	Serbia		Cyprus Luxembourg	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	9	134	43	76	19	281
Net commission income	(1)	40	11	21	5	76
Other net revenue	4	33	2	1	1	41
Total external revenue	12	207	56	98	25	398
Inter-segment revenue	(0)	(0)	(2)	(0)	(2)	(4)
Total revenue	12	207	54	98	23	394
Operating expenses	(7)	(79)	(37)	(29)	(14)	(166)
Impairment losses relating to loans and advances to customers	(12)	(26)	(24)	(8)	0	(70)
Other impairment losses and provisions	(2)	(5)	(0)	0	0	(7)
Share of results of associates and joint ventures	0	-	(0)	-	-	(0)
Profit/(loss) before tax from continuing operations
before restructuring costs	(9)	97	(7)	61	9	151
Restructuring costs (note 11)	-	(18)	-	-	-	(18)
Profit/(loss) before tax from continuing operations	(9)	79	(7)	61	9	133
Loss before tax from discontinued operations	(5)	-	-	-	-	(5)
Non controlling interests	-	(0)	0	-	-	(0)
Profit/(loss) before tax attributable to shareholders	(14)	79	(7)	61	9	128

	30 September 2019
	Romania	Bulgaria	Serbia		Cyprus Luxembourg	International
	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets(2)	386	5,558	1,499	6,313	1,355	15,111
Segment liabilities(2)	549	4,982	1,095	5,765	1,160	13,551

					For the nine months ended 30 September 2018
				Global &		Other and
			Wealth	Capital		Elimination
	Retail	Corporate	Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	434	236	7	167	252	(33)	1,063
Net commission income	36	57	20	30	64	2	209
Other net revenue	6	7	0	78	10	11	112
Total external revenue	476	300	27	275	326	(20)	1,384
Inter-segment revenue	11	11	4	(19)	(3)	(4)	-
Total revenue	487	311	31	256	323	(24)	1,384
Operating expenses	(336)	(89)	(17)	(55)	(143)	(13)	(653)
Impairment losses relating to loans and
advances to customers	(333)	(132)	(1)	-	(47)	-	(513)
Other impairment losses and provisions	(2)	(1)	0	17	(5)	(13)	(4)
Share of results of associates and joint ventures	(0)	(0)	29	-	(0)	(0)	29
Profit/(loss) before tax from continuing operations
before restructuring costs	(184)	89	42	218	128	(50)	243
Restructuring costs (note 11)	(24)	(3)	(1)	(0)	(1)	(18)	(47)
Profit/(loss) before tax from continuing operations	(208)	86	41	218	127	(68)	196
Profit/(loss) before tax from discontinued operations	-	-	-	-	(98)	38	(60)
Non controlling interests	-	-	-	-	(0)	(0)	(0)
Profit/(loss) before tax attributable to shareholders	(208)	86	41	218	29	(30)	136

		31 December 2018
				Global &		Other and
			Wealth	Capital		Elimination
	Retail	Corporate	Management	Markets	International	center (1)	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets	21,330	13,079	222	10,291	12,395	667	57,984
Segment liabilities	24,582	6,054	1,773	8,021	11,004	1,519	52,953

				For the nine months ended 30 September 2018
	Romania	Bulgaria	Serbia	Cyprus	Luxembourg	Total
	€ million	€ million	€ million	€ million	€ million	€ million
Net interest income	9	116	45	65	17	252
Net commission income	(1)	31	11	17	6	64
Other net revenue	2	2	1	4	1	10
Total external revenue	10	149	57	86	24	326
Inter-segment revenue	(0)	0	(0)	(0)	(3)	(3)
Total revenue	10	149	57	86	21	323
Operating expenses	(6)	(65)	(36)	(23)	(13)	(143)
Impairment losses relating to loans and advances to customers	(7)	(27)	(6)	(8)	1	(47)
Other impairment losses and provisions	(2)	(3)	(0)	0	(0)	(5)
Share of results of associates and joint ventures	(0)	-	(0)	-	-	(0)
Profit/(loss) before tax from continuing operations before
restructuring costs	(5)	54	15	55	9	128
Restructuring costs	-	-	-	(1)	-	(1)
Profit/(loss) before tax from continuing operations	(5)	54	15	54	9	127
Loss before tax from discontinued operations	(98)	-	-	-	-	(98)
Non controlling interests	(0)	(0)	(0)	-	-	(0)
Profit/(loss) before tax attributable to shareholders	(103)	54	15	54	9	29

	31 December 2018
	Romania	Bulgaria	Serbia	Cyprus	Luxembourg	International
	€ million	€ million	€ million	€ million	€ million	€ million
Segment assets(2)	425	4,017	1,442	5,457	1,343	12,395
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 € 1,079 million (note 15).

6. 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. As at 30 September 2019, the Group had issued convertible, subject to certain conditions preferred securities (Series D, note 27), which were not included in the calculation of diluted earnings per share, as their effect would have been anti-dilutive.

		Nine months ended 30 September		Three months ended 30 September
		2019	2018	2019	2018
Net profit for the period attributable to
ordinary shareholders (1)	€ million	80	79	56	44
Net profit for the period from continuing operations
attributable to ordinary shareholders (1)	€ million	84	136	55	56
Weighted average number of ordinary shares in issue for
basic earnings per share (2)	Number of shares	3,182,318,778	2,183,739,215	3,704,540,605	2,184,003,734
Weighted average number of ordinary shares in issue for
diluted earnings per share (2)	Number of shares	3,209,016,478	2,218,912,375	3,731,238,305	2,219,176,894
Earnings per share
- Basic and diluted earnings per share	€	0.03	0.04	0.02	0.02
Earnings per share from continuing operations
- Basic and diluted earnings per share	€	0.03	0.06	0.02	0.03

(1) After deducting dividend attributable to preferred securities holders and after including gains/(losses) on preferred securities (note 27).

(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 31).

Basic and diluted losses per share from discontinued operations for the period ended 30 September 2019 amounted to € 0.001 (30 September 2018: € 0.03 basic and diluted losses per share).

Post balance sheet event

Following the redemption of the preferred securities (Series D) completed on 29 October 2019, the Group has no longer potentially dilutive ordinary shares (note 27).

7. Net interest income

	30 September	30 September
	2019	2018
	€ million	€ million
Interest income
Customers	1,103	1,167
Banks and other assets	23	20
Securities	140	132
Derivatives	322	323
	1,588	1,642
Interest expense
Customers	(140)	(133)
Banks and other liabilities	(45)	(95)
Debt securities in issue	(80)	(62)
Derivatives	(292)	(289)
	(557)	(579)
Total from continuing operations	1,031	1,063

8. 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 5).

		30 September 2019
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Lending related activities	6	29	0	4	9	0	48
Mutual funds and assets under management	9	1	19	1	6	1	37
Network activities and other (1)	30	10	(0)	10	59	(1)	108
Capital markets	-	10	2	1	2	1	16
Total from continuing operations	45	50	21	16	76	1	209

		30 September 2018
				Global &		Other and
			Wealth	Capital		Elimination
	Retail		Corporate Management	Markets	International	center	Total
	€ million	€ million	€ million	€ million	€ million	€ million	€ million
Lending related activities	6	37	0	3	7	(0)	53
Mutual funds and assets under management	8	1	19	2	5	1	36
Network activities and other (1)	22	10	(1)	9	50	(0)	90
Capital markets	-	9	2	16	2	1	30
Total from continuing operations	36	57	20	30	64	2	209

(1) Including income from credit cards related services.

9. Operating expenses

	30 September	30 September
	2019	2018
	€ million	€ million
Staff costs	(358)	(364)
Administrative expenses	(169)	(152)
Contributions to resolution and deposit guarantee funds	(51)	(49)
Depreciation of real estate properties and equipment	(35)	(28)
Depreciation of right of use assets (1)	(32)	-
Amortisation of intangible assets	(23)	(19)
Operating lease rentals (1)	(4)	(41)
Total from continuing operations	(672)	(653)

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2).

The average number of employees of the Group's operations during the period was 13,354 (Nine months ended 30 September 2018: 13,279 for continuing operations). As at 30 September 2019, the number of branches and business/private banking centers of the Group amounted to 730.

Selected Explanatory Notes to the Interim Consolidated Financial Statements

10. 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):

	30 September 2019
			Lifetime ECL
	12-month ECL	Lifetime ECL	credit-impaired
	Stage 1	Stage 2	Stage 3 (1)	Total
	€ million	€ million	€ million	€ million
Impairment allowance as at 1 January 2019	146	711	7,943	8,800
Transfers between stages	83	66	(149)	-
Impairment loss for the period	(67)	(103)	622	452
Recoveries from written - off loans	-	-	17	17
Loans and advances derecognised during the period (2)	(2)	(14)	(907)	(923)
Amounts written off	-	-	(610)	(610)
Unwinding of Discount	-	-	(167)	(167)
Foreign exchange and other movements	(14)	(13)	23	(4)
Impairment allowance as at 30 September 2019	146	647	6,772	7,565

		30 September 2018
			Lifetime ECL credit
	12-month ECL	Lifetime ECL	impaired
	Stage 1	Stage 2	Stage 3 (1)	Total
	€ million	€ million	€ million	€ million
Impairment allowance as at 1 January 2018	160	810	10,137	11,107
Transfer of ECL allowance (3)	(13)	(5)	(44)	(62)
Transfers between stages	49	81	(130)	-
Impairment loss for the period	(62)	(145)	672	465
Recoveries from written - off loans	-	-	11	11
Loans and advances derecognised during the period	(3)	-	(62)	(65)
Amounts written off	-	-	(878)	(878)
Unwinding of Discount	-	-	(221)	(221)
Amounts classified as held for sale	-	-	(945)	(945)
Foreign exchange and other movements	(1)	0	27	26
Impairment allowance as at 30 September 2018	130	741	8,567	9,438

(1) The impairment allowance for POCI loans is included in 'Lifetime ECL credit-impaired' stage.

(2) It represents the impairment allowance of loans derecognized during the period due to a) securitization/ sale transactions (note 15) and b) substantial modifications of the loans' contractual terms.

(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 25).

The impairment losses relating to loans and advances to customers recognized in the Group's income statement for the period ended 30 September 2019 amounted to € 493 million (30 September 2018: € 513 million) and are analyzed as follows:

	30 September	30 September
	2019	2018
	€ million	€ million
Impairment loss on loans and advances to customers	(452)	(465)
Modification loss on loans and advances to customers	(46)	(51)
Impairment (loss)/ reversal for credit related commitments	5	3
Total	(493)	(513)

11. Other impairments, restructuring costs and provisions

	30 September	30 September
	2019	2018
	€ million	€ million
Impairment and valuation losses on real estate properties	(29)	(17)
Impairment (losses)/ reversal on bonds	3	17
Other impairment losses and provisions (1)	(12)	(4)
Other impairment losses and provisions	(38)	(4)
Voluntary exit schemes and other related costs (note 25)	(60)	(43)
Other restructuring costs	(25)	(4)
Restructuring costs	(85)	(47)
Total from continuing operations	(123)	(51)

(1) Includes impairment losses on other assets and provisions on litigations and other operational risk events.

For the period ended 30 September 2019, the Group recognized restructuring costs amounting to € 25 million, of which € 18 million was related with the acquisition of Piraeus Bank Bulgaria A.D. (note 31). The remaining restructuring costs mainly relate to the Bank's transformation plan. For the period ended 30 September 2018, the Group recognized restructuring costs amounting to € 4 million mainly related with the optimization of its lending operations.

12. Income tax

	30 September	30 September
	2019	2018
	€ million	€ million
Current tax	(29)	(33)
Deferred tax	20	(11)
Tax adjustments	-	(14)
Total income tax from continuing operations	(9)	(58)

For the year 2019, according to Law 4172/2013 currently in force, the nominal Greek corporate tax rate for credit institutions is 29%, while for the other legal entities is 28% (for the year 2018: 29% corporate tax rate for all legal entities). According to article 23 of Law 4579/2018, which was enacted in December 2018 and amended Law 4172/2013, the Greek corporate tax rate for legal entities other than credit institutions will decrease annually by 1% for each of the next four years starting from 2019, resulting to 25% for the year 2022 onwards. In addition, dividends distributed as of 1 January 2019 other than intragroup dividends, which under certain preconditions are relieved from both income and withholding tax, are subject to 10% withholding tax.

Further to the information provided in note 15 of the consolidated financial statements for the year ended 31 December 2018, 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 (i.e. € 4 million for the year 2008 and € 46 million for the year 2012) in a manner that safeguards the said 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. The said Law clarification addresses the treatment of the Bank's receivable of € 13 million arising in 2012 from tax withheld on interest from Greek sovereign bonds, Greek T-bills and corporate bonds with Greek State guarantee.

Tax certificate and open tax years

The Bank and its subsidiaries, associates and joint ventures, which operate in Greece (notes 17 and 18) have in principle 1 to 6 open tax years. For the open tax years 2013-2015 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 Bank has obtained by external auditors unqualified tax certificates for the open tax years 2013-2018. In addition, New TT Hellenic Postbank and New Proton Bank, which were merged with the Bank in 2013, have obtained by external auditors unqualified tax certificates with a matter of emphasis for their unaudited by tax authorities periods/tax years 18/1-30/6/2013 and 9/10/2011- 31/12/2012, respectively, with regards to potential tax obligations resulting from their carve out. For both cases the Bank has formed adequate provisions.

The tax certificates, which have been obtained by the Bank's subsidiaries, associates and joint ventures, which operate in Greece, are unqualified for the open tax years 2013-2018.

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 2012 (included) has been time-barred for the Bank and the Group's Greek companies at 31 December 2018.

The open tax years of the foreign banking entities of the Group are as follows: (a) Eurobank Cyprus Ltd, 2018, (b) Eurobank Bulgaria A.D., 2013-2018, (c) Eurobank A.D. Beograd (Serbia), 2013-2018, and (d) Eurobank Private Bank Luxembourg S.A., 2014-2018. The remaining foreign entities of the Group (notes 17 and 18), 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.

Deferred taxes

Deferred taxes are 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:

	30 September
	2019
	€ million
Balance at 1 January	4,912
Income statement credit/(charge) from continuing operations	20
Investment securities at FVOCI	(144)
Cash flow hedges	5
Discontinued operations (note 13)	1
Balance at 30 September	4,794	Error with BS 0.00100000000020373

Deferred tax assets/ (liabilities) are attributable to the following items:

	30 September	31 December
	2019	2018
	€ million	€ million
Impairment/ valuation relating to loans and accounting write-offs	1,526	3,132
PSI+ tax related losses	1,114	1,151
Losses from disposals and crystallized write-offs of loans	2,000	265
Other impairments/ valuations through the income statement	237	248
Unused tax losses	2	63
Costs directly attributable to equity transactions	18	23
Cash flow hedges	20	15
Defined benefit obligations	13	13
Real estate properties and equipment	(20)	(20)
Investment securities at FVOCI	(168)	(24)
Other	52	46
Net deferred tax	4,794	4,912

In the period ended 30 September 2019, the Bank proceeded with the securitization of certain loan portfolios and a related sale transaction (projects Pillar and Cairo, note 24). Based on the contractual terms of the issued notes, the related impairment losses were considered as crystalized for tax purposes, resulting 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:

	30 September	31 December
	2019	2018
	€ million	€ million
Deferred tax assets	4,808	4,916
Deferred tax liabilities	(14)	(4)
Net deferred tax	4,794	4,912

As at 30 September 2019, the Group recognised a deferred tax liability of € 11 million on the taxable temporary differences associated with its investment in the newly acquired subsidiary "Piraeus Bank Bulgaria A.D." (PBB) (note 31) considering the impending merger of the entity with its banking subsidiary in Bulgaria "Eurobank Bulgaria A.D.". In addition, the Group recognised a deferred tax asset of € 8 million arising from the fair value measurement of the PBB's assets acquired.

Deferred income tax (charge)/credit from continuing operations is attributable to the following items:

	30 September	30 September
	2019	2018
	€ million	€ million
Impairment/ valuation relating to loans, disposals and write-offs	128	39
Unused tax losses	(61)	60
Tax deductible PSI+ losses	(38)	(38)
Change in fair value and other temporary differences	(9)	(72)
Deferred income tax (charge)/credit from continuing operations	20	(11)

As at 30 September 2019, the Group recognized net deferred tax assets amounting to € 4.8 bn as follows:

• (a) € 1,526 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) € 1,114 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) € 2,000 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 period ended 30 September 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 nonrecoverable due to the securitization of certain loan portfolios for the execution of the acceleration plan for the NPEs reduction and was reversed accordingly;
• (e) € 18 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) € 134 million refer to other deductible temporary differences (i.e. valuation losses, provisions for pensions and other postretirement 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 30 September 2019, that the Group's legal entities will have sufficient future taxable profits, against which the unused tax losses and 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 of each jurisdiction, the eligibility of carried forward losses for offsetting with future taxable profits, the actual tax results for the year ended 31 December 2018 and the extrapolated tax results for the year ended 31 December 2019 using the actual tax results for the period ended 30 September 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 (i.e. profits/ losses on sale of investments or other assets, etc.) 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 period ended 30 September 2019, the Group has conducted a deferred tax asset (DTA) recoverability assessment based on 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 Acceleration Plan. The said Business Plan has also been submitted to the Hellenic Financial Stability Fund (HFSF) and to the Single Supervisory Mechanism (SSM).

For the years beyond 2021, 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, (b) the lower loan impairment losses as a result of the gradual improvement of the macroeconomic conditions in Greece and the strategic initiatives for the accelerated reduction of Non-Performing Exposures (NPEs), in line with the NPEs strategy that the Group has committed to the SSM, (c) the merger with Grivalia Properties R.E.I.C, the acquisition of Piraeus Bank Bulgaria A.D. ('PBB') and the disposal of 80% stake of Financial Planning Services S.A. ('FPS'), (d) the effectiveness of the continuous cost containment initiatives, and (e) 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 30 September 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 € 3,854 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 period ended 30 September 2019, an amount of € 5.1 million has been recognized in "Other income/(expenses)".

13. 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. The resulting loss of € 72 million after tax, which has been recognized in the income statement until the year ended 31 December 2018 (of which € 57 million loss has been recognised in the period ended 30 September 2018), includes the recyclement to the income statement of € 46 million cumulative losses previously recognized in other comprehensive income.

According to the relevant Sale Purchase Agreement (SPA), executed between Eurobank Group and Banca Transilvania (BT) (the Purchaser), 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 period ended 30 September 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 30 September 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 (an entity in the Netherlands controlled by Eurobank) in 2008.

In the period ended 30 September 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 imposed on Bancpost S.A. are cancelled. ANPC appealed against the first instance rulings in two of the cases and it is expected to appeal against the first instance ruling also in the third case. The second instance court rejected the ANPC appeal in one of the aforementioned cases.

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.

Post balance sheet event

In October 2019, following the finalization of the completion statements of the Romanian disposal group in accordance with the relevant SPA provisions, the Group paid to BT an amount of € 14.6 million, for which a provision had been recognised in the year ended 2018.

14. Derivative financial instruments

	30 September 2019		31 December 2018
	Fair values		Fair values
	Assets Liabilities		Assets	Liabilities
	€ million	€ million	€ million	€ million
Derivatives for which hedge accounting is not applied/ held for trading	2,677	2,299	1,805	1,385
Derivatives designated as fair value hedges	0	919	1	349
Derivatives designated as cash flow hedges	44	92	65	159
Total derivatives assets/liabilities	2,721	3,310	1,871	1,893

As at 30 September 2019, the derivative assets and liabilities increased by € 850 million and € 1,417 million, respectively, compared to 31 December 2018, mainly as a result of the downward movement of the euro interest rate curve. On the same date, the carrying value of the derivatives with the Hellenic Republic amounted to € 1,768 million (31 December 2018: € 1,189 million).

15. Loans and advances to customers

	30 September	31 December
	2019	2018
	€ million	€ million
Loans and advances to customers at amortised cost
- Gross carrying amount	44,480	44,973
- Impairment allowance	(7,565)	(8,800)
Carrying Amount	36,915	36,173
Loans and advances to customers at FVTPL	62	59
Total	36,977	36,232

The table below presents the carrying amount of loans and advances to customers per business unit and per stage as at 30 September 2019:

		30 September 2019			31 December 2018
	12-month ECL Stage 1 € million	Lifetime ECL Stage 2 € million	Lifetime ECL credit-impaired Stage 3 (1) € million	Total amount € million	Total amount € million
Loans and advances to
customers at amortised cost
Mortgage lending:
- Gross carrying amount	6,825	3,288	4,057	14,170	16,262
- Impairment allowance	(35)	(241)	(1,544)	(1,820)	(2,547)
Carrying Amount	6,790	3,047	2,513	12,350	13,715
Consumer lending:
- Gross carrying amount	2,332	321	1,254	3,907	3,988
- Impairment allowance	(40)	(79)	(957)	(1,076)	(1,235)
Carrying Amount	2,292	242	297	2,831	2,753
Small Business lending:
- Gross carrying amount	1,836	1,223	3,445	6,504	6,421
- Impairment allowance	(21)	(202)	(1,621)	(1,844)	(1,858)
Carrying Amount	1,815	1,021	1,824	4,660	4,563
Wholesale lending (2) :
- Gross carrying amount	12,752	2,070	5,077	19,899	18,302
- Impairment allowance	(50)	(125)	(2,650)	(2,825)	(3,160)
Carrying Amount	12,702	1,945	2,427	17,074	15,142
Total loans and advances to
customers at AC
- Gross carrying amount	23,745	6,902	13,833	44,480	44,973
- Impairment allowance	(146)	(647)	(6,772)	(7,565)	(8,800)
Carrying Amount	23,599	6,255	7,061	36,915	36,173
Loans and advances to
customers at FVTPL
Carrying Amount				62	59
Total				36,977	36,232

(1) The POCI loans are presented in 'Lifetime ECL credit-impaired' stage.

(2) Includes € 1.07 bn related to the senior notes of the Pillar securitization, which have been categorized in Stage 1 (see below).

As at 30 September 2019, the gross carrying amount of loans and advances to customers acquired from Piraeus Bank Bulgaria A.D. (note 31) was € 693 million (wholesale: € 471 million, mortgage: € 120 million, consumer: € 74 million, small business lending: € 28 million).

As at 30 September 2019, the Group's non performing exposures included in loans and advances to customers at amortised cost were reduced to € 13,833 million (31 December 2018: € 16,653 million) driving the Group NPE ratio to 31.1% (31 December 2018: 37%).

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 NPEs management and submitted their new NPE Management Strategy for 2019-21, along with NPE Stock Annual Targets 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 (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. In the context of the ongoing consultation on the new law related to the APS and the negotiations with the prospective investors for the projects Cairo and Europe transactions which are in progress (note 24), Eurobank aims to achieve the targeted

Group's NPE ratio of ca. 16% in the first quarter of 2020 instead of the end of 2019 (as submitted to SSM) and a single digit ratio by 2021.

Furthermore, in March 2019, a new protection scheme on primary residence was voted by the Greek Parliament, which is expected 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.

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.

For the period ended 30 September 2019, Eurobank's banking subsidiary in Serbia "Eurobank A.D. Beograd" recognized € 17.8 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 € 4.4 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 a securitization of a residential mortgage loan portfolio of ca. € 2 bn gross book value (project Pillar comprising primarily NPEs, note 24). The Bank would retain 100% of the senior notes, as well as 5% of the mezzanine and junior notes of the securitization. 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 according to the terms of the above agreement.

In September 2019, the above transaction was completed for a total consideration of € 102.5 million, of which € 70 million cash and € 32.5 million deferred amount subject to the fulfillment of the terms of the agreement. Accordingly, 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. In addition, the Bank recognized the retained notes on its balance sheet. The completion of the transaction resulted in a de-recognition loss of € 7.1 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 30 September 2019: a) senior notes of carrying amount of € 1,073.4 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 € 5.4 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 period ended 30 September 2019.

16. Investment securities

	30 September	31 December
	2019	2018
	€ million	€ million
Investment securities at FVOCI	6,025	6,248
Investment securities at amortised cost	1,533	1,420
Investment securities at FVTPL	104	104
Total	7,662	7,772

The tables below disclose the carrying amount and the exposure to credit risk of investment securities:

		30 September 2019
	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Total
	€ million	€ million	€ million
Investment securities at amortised cost
- Gross carrying amount	735	831	1,566
- Impairment allowance	(2)	(31)	(33)
Carrying Amount	733	800	1,533
Investment securities at FVOCI
Carrying Amount	6,025	-	6,025
Total	6,758	800	7,558
Investment securities at FVTPL
Carrying amount			104
Total Investment securities			7,662
		31 December 2018
	12-month ECL	Lifetime ECL
	Stage 1	Stage 2	Total
	€ million	€ million	€ million
Investment securities at amortised cost
- Gross carrying amount	697	754	1,451
- Impairment allowance	(3)	(28)	(31)
Carrying Amount	694	726	1,420
Investment securities at FVOCI
Carrying Amount	6,222	26	6,248
Total	6,916	752	7,668
Investment securities at FVTPL

Carrying amount 104 Total Investment securities 7,772

The investment securities per category are analyzed as follows:

	30 September 2019
	Investment	Investment	Investment
	securities at	securities at	securities at
	FVOCI	amortised cost	FVTPL	Total
	€ million	€ million	€ million	€ million
Debt securities
- Greek government bonds	3,220	1,037	-	4,257
- Other government bonds	1,918	496	-	2,414
- Other issuers	887	-	3	890
	6,025	1,533	3	7,561
Equity securities	-	-	101	101
Total	6,025	1,533	104	7,662

	31 December 2018
	Investment	Investment	Investment
	securities at	securities at	securities at
	FVOCI	amortised cost	FVTPL	Total
	€ million	€ million
Debt securities
- Greek government bonds(1)	2,229	940	-	3,169
- Other government bonds	3,162	480	-	3,642
- Other issuers	857	-	4	861
	6,248	1,420	4	7,672
Equity securities	-	-	100	100
Total	6,248	1,420	104	7,772

(1) As at 31 December 2018, it includes Greek government treasury bills of € 0.1 million.

During the period ended 30 September 2019, the Group recognized € 66 million gains presented in line 'Gains less losses from investment securities', of which € 57 million resulted from debt securities at FVOCI sale transactions and € 9 million mainly from the increase in the fair value of equity instruments. In the comparative period, the Group had recognized € 74 million gains, mainly as a result of debt securities at FVOCI sale transactions.

In the period ended 30 September 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.

17. Shares in subsidiaries

The following is a listing of the Bank's subsidiaries at 30 September 2019, included in the interim consolidated financial statements for the period ended 30 September 2019:

		Percentage	Country of
Name	Note	holding	incorporation	Line of business
Be Business Exchanges S.A. of Business Exchanges		98.01	Greece	Business-to-business e-commerce,
Networks and Accounting and Tax Services				accounting, tax and sundry services
Eurobank Asset Management Mutual Fund Mngt Company S.A.		100.00	Greece	Mutual fund and asset management
Eurobank Equities S.A.		100.00	Greece	Capital markets and advisory services
Eurobank Ergasias Leasing S.A.		100.00	Greece	Leasing
Eurobank Factors Single Member S.A. (2)		100.00	Greece	Factoring
Eurobank FPS Loans and Credits Claim		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 company 1 (2)
Herald Greece Real Estate development and		100.00	Greece	Real estate
services company 2
Standard Ktimatiki S.A.		100.00	Greece	Real estate
Cloud Hellas Ktimatiki S.A.	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
Bulgarian Retail Services A.D.		100.00	Bulgaria	Rendering of financial services and credit
				card management
ERB Property Services Sofia E.A.D.		99.99	Bulgaria	Real estate services
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
Piraeus Bank Bulgaria A.D.	d	99.98	Bulgaria	Banking
Piraeus Insurance Brokerage EOOD	d	99.98	Bulgaria	Insurance brokerage
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	Real estate
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.	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 30 September 2019.

(2) In the context of the Greek Law 4548/2018, the legal name of the company has been amended with the inclusion of the term "Single member".

The following entities are not included in the interim 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) 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.

(c) 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".

(d) Acquisition of Piraeus Bank Bulgaria A.D. and Piraeus Insurance Brokerage EOOD, Bulgaria

On 7 November 2018, the Bank announced that it had concluded an agreement with Piraeus Bank S.A. for 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") (the "Transaction"). In June 2019, the Transaction was completed, after all necessary approvals from the competent authorities were obtained and the Bank's subsidiary Postbank acquired 99.9819% of the shares and voting rights of PBB and consequently indirect holding participation of 99.9819% in its 100% subsidiary Piraeus Insurance Brokerage EOOD. In November 2019, the merger of PBB with Postbank was completed (note 31).

(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 subsidiaries. Further information in relation to the merger of the two companies is provided in note 31.

(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 period ended 30 September 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 24).

• 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 15), 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 interim consolidated financial statements for 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%.

(l) 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, while their dissolution will be completed in the following months. Accordingly, the companies were not included in the consolidated financial statements for the period ended 30 September 2019.

Post balance sheet event

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%.

18. Investments in associates and joint ventures

As at 30 September 2019, the carrying amount of the Group's investments in associates and joint ventures amounted to € 238 million (31 December 2018: € 113 million). The following is the listing of the Group's associates and joint ventures as at 30 September 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	24.39
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

(1) Entity under liquidation at 30 September 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.

For the period ended 30 September 2019, the Group's share of results of Eurolife Insurance group amounting to € 17 million (30 September 2018: € 30 million) includes € 13 million, after tax, gains on sale of investment securities (30 September 2018: € 22 million).

(a) Singidunum - Buildings d.o.o. Beograd, Serbia

During the period ended 30 September 2019, the Group's participation in Singidunum decreased to 24.39%, 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 31.

Post balance sheet events

Singidunum - Buildings d.o.o. Beograd, Serbia

In October 2019, the Group's participation in Singidunum decreased from 24.39% to 24.09%, following an additional share capital increase in favor of the other shareholder.

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 will be accounted as an associate of the Group.

19. Property, plant and equipment and Investment property

The carrying amounts of property, plant and equipment and investment property are analyzed as follows:

	30 September	31 December
	2019	2018
	€ million	€ million
Land, buildings, leasehold improvements (2)	469	266
Furniture, equipment, motor vehicles	38	35
Computer hardware, software	55	52
Right of use of assets (1)	218	-
Total property, plant and equipment	780	353
Investment property (2) (note 20)	1,116	316
Total	1,896	669

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2). The respective lease liabilities are presented in "other liabilities" (note 25). (2) The increase is mainly related to the merger with Grivalia Properties REIC (note 31).

The movement of investment property is as follows:

2019 € million Cost: Balance at 1 January 343 Arising from acquisition/merger (note 31) 815 Transfers from/to repossessed assets 13 Other transfers 3 Additions 9 Disposals and write-offs (28) (5) Impairments Balance at 30 September 1,150 Accumulated depreciation: Balance at 1 January (27) Arising from acquisition/merger (note 31) (1) Transfers (1) Disposals and write-offs 3 Charge for the year (8) Balance at 30 September (34) Net book value at 30 September 1,116	30 September

20. Other assets

	30 September	31 December
	2019	2018
	€ million	€ million
Receivable from Deposit Guarantee and Investment Fund	708	707
Repossessed properties and relative prepayments	621	555
Pledged amount for a Greek sovereign risk financial guarantee	239	240
Balances under settlement (2)	55	122
Prepaid expenses and accrued income	113	83
Other guarantees	82	76
Income tax receivable (1)	66	53
Other assets	232	98
Total	2,116	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 30 September 2019, other assets net of provisions, amounting to € 232 million include, among others, receivables related to (a) prepayments to suppliers, (b) public entities (including the receivable from Republic of Serbia, note 15), (c) property management activities, (d) legal cases and (e) securitizations' transactions (note 15).

Post balance sheet event

In November 2019, the Group, in the context of its strategy for the active management of its real estate portfolio (repossessed and investment properties) has reached or is close to initial agreements with prospective investors for the disposal of three pools of real estate assets amounting to a total value of ca. € 0.1 bn.

21. Due to central banks

	30 September	31 December
	2019	2018
	€ million	€ million
Secured borrowing from ECB and BoG	1,250	2,050

As at 30 September 2019, the dependency on Eurosystem financing facilities decreased to € 1.3 bn, mainly due to deposits inflows (31 December 2018: € 2.1 bn, of which € 0.5 bn funding from ELA). The Bank has eliminated the use of ELA since the end of January 2019.

22. Due to credit institutions

	30 September	31 December
	2019	2018
	€ million	€ million
Secured borrowing from credit institutions	5,916	5,652
Borrowings from international financial and similar institutions	639	591
Current accounts and settlement balances with banks	134	115
Interbank takings	55	18
Total	6,744	6,376

As at 30 September 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 16 and 24). As at 30 September 2019, borrowings from international financial and similar institutions include borrowings from European Investment Bank, European Bank for Reconstruction and Development and other similar institutions.

23. Due to customers

	30 September	31 December
	2019	2018
	€ million	€ million
Savings and current accounts	24,608	21,875
Term deposits	17,487	16,990
Repurchase agreements	201	200
Other term products (note 24)	12	18
Total	42,308	39,083

As at 30 September 2019, due to customers include customer deposits from the acquisition of Piraeus Bank Bulgaria A.D. (note 31) amounting to € 1,120 million (savings and current accounts: € 655 million, term deposits: € 465 million).

The other term products relate to senior medium-term notes held by the Bank's customers, amounting to € 12 million (31 December 2018: € 18 million).

For the period ended 30 September 2019, due to customers for the Greek and International operations amounted to € 29,924 million and € 12,384 million, respectively (31 December 2018: € 28,785 million and € 10,298 million, respectively).

24. Debt securities in issue

	30 September	31 December
	2019	2018
	€ million	€ million
Securitisations	1,100	1,245
Subordinated notes (Tier 2)	962	947
Covered bonds	510	499
Medium-term notes (EMTN) (note 23)	18	16
Total	2,590	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 30 September 2019, following their partial redemption, the carrying value of Class A notes amounted to € 708 million (31 December 2018: € 654 million).

In addition, for the period ended 30 September 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 € 392 million (31 December 2018: € 591 million).

In June 2019, the Bank through its special purpose financing vehicle 'Pillar Finance Designated Activity Company', issued asset backed securities of total value of ca. € 2 bn (of which € 1,044 million senior notes issued at par, € 310 million mezzanine issued at par, € 645 million junior notes of issue price € 1), collateralized by a portfolio of primarily non performing residential mortgage loans (project Pillar), which were fully retained by the Bank. In the same month, the Bank announced that it has signed 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 special purpose financing vehicle 'Pillar Finance Designated Activity Company' (note 15).

Furthermore, in June 2019, the Bank through its special purpose financing vehicles '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 of total value of ca. € 7.5 bn, collateralized by a mixed assets portfolio of non performing loans, which have been fully retained by the Bank. In the same month, the Bank and Bravo Strategies III LLC, an affiliate of Celidoria, agreed to enter into exclusive negotiations for the sale of 20% of the mezzanine and junior notes of the abovementioned securitization (project Cairo) and the sale of a majority stake in the Bank's subsidiary Financial Planning Services S.A. (project Europe). Following the expiration of the agreed exclusivity period at the end of September 2019 and taking into consideration the developments in relation to the Asset Protection Scheme (note 15), Eurobank is continuing actively the negotiations with prospective investors towards the completion of the transactions.

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 30 September 2019, amounted to € 962 million, including € 3 million unamortized issuance costs and € 15 million accrued interest.

Medium-term notes (EMTN)

In January 2019, the Group issued medium term notes of face value of € 2 million.

Covered bonds

During the period ended 30 September 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).

25. Other liabilities

	30 September	31 December
	2019	2018
	€ million	€ million
Lease liabilities (1)	221	-
Balances under settlement (2)	331	297
Deferred income and accrued expenses	164	96
Other provisions	121	98
ECL allowance for credit related commitments	53	58
Standard legal staff retirement indemnity obligations	50	49
Employee termination benefits (3)	39	8
Sovereign risk financial guarantee	41	43
Acquisition obligation (note 31)	26	-
Income taxes payable	10	8
Deferred tax liabilities (note 12)	14	4
Other liabilities	180	183
Total	1,250	844

(1) Following the adoption of IFRS 16 as of 1 January 2019 (note 2).

(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 30 September 2019, other liabilities amounting to € 180 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 30 September 2019, other provisions amounting to € 121 million (31 December 2018: € 98 million) mainly include: (a) € 57 million for outstanding litigations against the Group (note 30), (b) € 45 million for other operational risk events, of which € 37 million is related to Romanian disposal group (note 13) and (c) € 16 million for restructuring costs mainly relating to the acquisition of Piraeus Bank Bulgaria A.D. (note 31).

For the period ended 30 September 2019, an amount of € 42 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 period ended 30 September 2019. Further information is provided in note 38 of the consolidated financial statements for the year ended 31 December 2018.

26. Share capital, share premium and treasury shares

As at 30 September 2019, the par value of the Bank's shares is € 0.23 per share (31 December 2018: € 0.30). All shares are fully paid. The movement of share capital, share premium and treasury shares is as follows:

	Share	Treasury		Share	Treasury
	capital	shares	Net	premium	shares	Net
	€ million	€ million	€ million	€ million	€ million	€ million
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	-	1	1
Balance at 30 September	853	(1)	852	8,056	(3)	8,053

The following is an analysis of the movement in the number of shares issued by the Bank:

	Number of shares
	Issued	Treasury
	shares	shares	Net
Balance at 1 January	2,185,998,765	(1,194,032)	2,184,804,733
Share capital increase, following the
merger with Grivalia Properties REIC	1,523,163,087	-	1,523,163,087
Purchase of treasury shares	-	(4,918,193)	(4,918,193)
Sale of treasury shares	-	2,175,357	2,175,357
Balance at 30 September	3,709,161,852	(3,936,868)	3,705,224,984

On 5 April 2019, the Extraordinary General Meeting of the Bank's Shareholders approved the merger of the Bank with Grivalia Properties REIC (note 31) 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 30 September 2019, the number of Eurobank shares held by the Group's associates in the ordinary course of their insurance and investing activities was 63,392,250 in total (31 December 2018: 18,406,000).

27. Preferred securities

The movement of preferred securities issued by the Group through its Special Purpose Entity, ERB Hellas Funding Limited, for the period ended 30 September 2019 is analyzed as follows:

	Series A	Series B	Series C	Series D	Total
	€ million	€ million	€ million	€ million	€ million
Balance at 1 January	2	4	17	19	42
Redemption of preferred securities	-	(4)	(17)	-	(21)
Balance at 30 September	2	-	-	19	21

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 24) on 17 January 2018, and in accordance with the terms of the preferred securities, ERB Hellas Funding Ltd declared and paid, for the period ended 30 September 2019, the non-cumulative dividends of € 2.1 million (€ 1.8 million after tax) in total on the Series A, B, C and D. As at 30 September 2019, the dividend attributable to preferred securities holders amounted to € 1.8 million (€ 1.6 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. Series C and B notes were redeemed on 9 July and 2 August 2019, respectively. As at 30 September 2019, pursuant to the terms of each issue, the next available call dates for the redemption of series D and A preferred securities were 29 October 2019 and 18 March 2020, respectively.

Post balance sheet event

On 29 October 2019, series D preferred securities were redeemed.

28. 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 and asset backed securities issued by the Group.

Financial instruments measured 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:

		30 September 2019
	Level 1	Level 2	Level 3	Total
	€ million	€ million	€ million	€ million
Securities held for trading	126	-	-	126
Investment securities at FVTPL	20	18	66	104
Derivative financial instruments	0	2,721	0	2,721
Investment securities at FVOCI	5,929	96	-	6,025
Loans and advances to customers mandatorily at FVTPL	-	-	62	62
Financial assets measured at fair value	6,075	2,835	128	9,038
Derivative financial instruments	0	3,310	-	3,310
Trading liabilities	21	-	-	21
Financial liabilities measured at fair value	21	3,310	-	3,331
		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

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 period ended 30 September 2019.

Financial liabilities measured at fair value 4 1,893 - 1,897

Reconciliation of Level 3 fair value measurements

	30 September
	2019
	€ million
Balance at 1 January	118
Additions, net of disposals and redemptions	12
Total gain/(loss) for the period included in profit or loss	(2)
Foreign exchange differences and other	(0)
Balance at 30 September	128

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 € 2.4 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:

	30 September 2019
	Carrying
	amount	Fair value
	€ million	€ million
Loans and advances to customers	36,915	36,722
Investment securities at amortised cost	1,533	1,213
Financial assets not measured at fair value	38,448	37,935
Debt securities in issue	2,590	2,412
Financial liabilities not measured at fair value	2,590	2,412

	31 December 2018
	Carrying
	amount	Fair value
	€ million	€ million
Loans and advances to customers	36,173	35,940
Investment securities at amortised cost	1,420	889
Financial assets not measured at fair value	37,593	36,829
Debt securities in issue	2,707	2,495
Financial liabilities not measured at fair value	2,707	2,495

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: 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.

29. Cash and cash equivalents and other information on interim 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:

	30 September	31 December
	2019	2018
	€ million	€ million
Cash and balances with central banks (excluding mandatory and
collateral deposits with central banks) (1)	2,667	1,429
Due from credit institutions	791	520
Securities held for trading	1	-
Total	3,459	1,949

(1) € 0.5 bn increase is related to the international activities.

Other (income)/losses on investment securities presented in continuing operating activities are analyzed as follows:

	30 September	30 September
	2019	2018
	€ million	€ million
Amortisation of premiums/discounts and accrued interest	39	(48)
(Gains)/losses from investment securities	(66)	(74)
Dividends	(1)	(2)
Total	(28)	(124)

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.

In the period ended 30 September 2019, changes in debt securities in issue arising from accrued interest and amortisation of debt issuance costs amount to € 27 million (30 September 2018: € 26 million).

30. Contingent liabilities and 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:

	30 September	31 December
	2019	2018
	€ million	€ million
Financial guarantee contracts	703	715
Commitments to extend credit	772	580
Other credit related commitments	463	406
Total	1,938	1,701

The credit related commitments within the scope of IFRS 9 impairment requirements amount to € 4.9 bn, including revocable loan commitments of € 3 bn, while the corresponding allowance for impairment losses amounts to € 53 million (31 December 2018: € 58 million).

In addition, the Group has issued a sovereign risk financial guarantee of € 0.24 bn (31 December 2018: € 0.24 bn) for which an equivalent amount has been deposited under the relevant pledge agreement (note 20).

Legal proceedings

As at 30 September 2019, a provision of € 57 million has been recorded for a number of legal proceedings outstanding against the Group (31 December 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 (31 December 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. 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. The hearing was cancelled due to the elections held on 26 May 2019, while a new date has been set on 13 January 2020. As to certain aspects of Swiss Francs loans there was also 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.

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.

31. Other significant and post balance sheet events

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 17) and its joint ventures (note 18) 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.

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 € 197 million (note 26).

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 € 1,093.9 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.

The fair value measurement of the assets acquired and liabilities assumed has been provisionally determined and is close to finalization. Upon acquisition, their provisional fair values are presented in the table below:

	Fair value
	(Provisional
	values)
	€ 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 (provisional fair values of assets and liabilities as stated above) of € 872 million, results in the recognition of a temporary goodwill of € 222 million, which is expected to be finalized by the year end. 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.

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 33.03% shareholding as at 30 September 2019 (note 32).

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.

Acquisition of Piraeus Bank Bulgaria A.D. by Eurobank Bulgaria A.D.

On 7 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. The estimated consideration of the Transaction amounted to € 81 million consisting of the upfront cash consideration of € 55 million, a deferred consideration of € 20 million, to be paid to the seller within a four year period and an additional estimated amount of € 6 million, based on the unaudited benchmark Net Asset Value of PBB as per the provisions of the relevant shares Sale and Purchase Agreement (SPA), to be finally determined upon conclusion of the relevant audits, as described therein.

The fair value measurement of the assets acquired and liabilities assumed will be completed within 12 months from the acquisition date (measurement period) as provided in IFRS 3. Upon acquisition, their provisional fair values are presented in the table below:

values) € million Assets Cash and balances with central banks 272 Due from credit institutions 326 Net loans and advances to customers 738 Gross contractual amount: € 858 million Investment securities 32 Property, plant and equipment 12 Other assets (1) 5 Total Assets (2) 1,385 Liabilities Due to credit institutions 148 Due to customers 1,103 Other liabilities 18 Total Liabilities 1,269 Shareholders' equity (3) 116 Total equity and liabilites 1,385	Fair value
	(Provisional

(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 € 31.5 million net of acquisition-related costs of € 3.6 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)'. In addition, a deferred income tax charge of € 3.6 million arose as a result of the acquisition (note 12).

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 € 1.8 million to the Group for the period from 1 January 2019 up to 31 May 2019.

The General meeting of the shareholders of Postbank approved the merger of the company with PBB in September 2019. In line with the Group's strategy to focus on the expansion of its international activities in markets which are deemed core, this transaction along with the merger will strengthen Postbank's position in the Bulgarian banking sector, in both the retail and mainly corporate business segments.

Post balance sheet event

In October 2019, the Bulgarian National Bank approved the merger of Postbank with PBB, which was completed in November 2019.

Corporate Transformation-Hive down

In the context of the NPE reduction acceleration plan, as announced in November 2018, the BoD of the Bank ("Demerged Entity") on 28 June 2019 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 will take place after the Transformation Date and will concern the hived down sector shall be treated as occurring on behalf of the Beneficiary.

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, at the transformation date, the Demerged Entity retains: a) 95% of the mezzanine and junior notes of projects Pillar and Cairo (note 15 and 24), b) the preferred securities (note 27) and c) participations in certain subsidiaries including Be Business Exchanges S.A. and real estate companies related to projects Pillar and Cairo.

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 substitutes 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, which is expected to take place in the first quarter of 2020, is subject to the required by the Law approval of the General Meeting of the shareholders of the Bank as well as the receipt of all necessary approvals by the competent Authorities.

Details of other post balance sheet events are provided in the following notes:

• Note 2 Basis of preparation and principal accounting policies
• Note 6 Earnings per share
• Note 13 Discontinued operations
• Note 15 Loans and advances to customers
• Note 17 Shares in subsidiaries
• Note 18 Investments in associates and joint ventures
• Note 20 Other assets
• Note 27 Preferred securities
• Note 32 Related parties

32. 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 31), 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 2018.

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:

	30 September 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	6.21	25.00	7.20	18.74
Other assets	-	5.88	-	6.88
Due to customers	17.89	56.69	14.79	45.13
Other liabilities	0.04	3.79	0.03	2.52
Guarantees issued	0.01	2.00	-	-
Guarantees received	0.03	-	0.03	-
	Nine months ended 30 September 2019		Nine months ended 30 September 2018
Net interest income	(0.02)	(3.24)	0.02	(4.28)
Net banking fee and commission income	0.01	9.27	0.02	8.11
Net trading income	-	0.24	-	0.17
Gains less losses from investment securities	-	-	-	0.41
Impairment losses relating to loans and
advances including relative fees	-	(4.01)	-	(19.84)
Other operating income/(expenses) (2)	(4.69)	(18.93)	-	(18.38)

(1) Includes the key management personnel of the Group and their close family members.

(2) The amount of € 4.69 million reported for entities controlled by KMP is related to the services agreement with Grivalia Management Company S.A. (note 31).

For the period ended 30 September 2019, there were no material transactions with the HFSF. In addition, as at 30 September 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 € 3.2 million (31 December 2018: € 3.3 million).

For the period ended 30 September 2019, a reversal of impairment of € 0.4 million (30 September 2018: an impairment loss of € 15.7 million) has been recorded against loan balances with Group's associates and joint ventures, while the respective impairment allowance amounts to € 0.3 million (31 December 2018: € 0.6 million). In addition, as at 30 September 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 31), Fairfax group held 33.03% in Eurobank's share capital as at 30 September 2019 and is expected to have the ability to exercise significant influence over the Bank, subject to the required regulatory approvals in relation to the increase of its shareholding as a result of the merger.

Post balance sheet event

In early November 2019, the percentage of Eurobank's share capital held by Fairfax group decreased to 31.27%.

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 € 4.92 million (30 September 2018: € 4.92 million) and long-term employee benefits of € 0.76 million (30 September 2018: € 0.7 million). In addition, the Group has formed a defined benefit obligation for the KMP amounting to € 1.6 million as at 30 September 2019 (31 December 2018: € 1.68 million), while the respective cost for the period amounts to € 0.14 million (30 September 2018: € 0.07 million).

33. 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.

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.

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
K. Angelopoulos	Non-Executive (HFSF representative under Law 3864/2010)

Athens, 20 November 2019

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