Grenke : Disclosure Report 31.12.2020

2020

FOR THE GRENKE­ GROUP PURSUANT TO ARTICLES 431 THROUGH 455 OF REGULATION (EU) NO. 575/2013

DISCLOSURE REPORT

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GRENKE GROUP  // DISCLOSURE REPORT 2020

TABLE OF CONTENTS

4 // 1. Scope of application

1. // 2. Regulatory scope of consolidation

1. // 3. Own funds

1. // 4. Countercyclical capital buffer

16 // 5. Information on risk management 16 // 5.1 Risk management

16 // 5.2 Risk-bearing capacity

17 // 5.2.1 Stress tests

18 // 5.3 Governing bodies

1. // 5.3.1 Supervisory board

1. // 5.3.2 Board of directors
2. // 5.3.3 Number of management and supervisory functions held by members of the management body
3. // 5.3.4 Strategy for the selection of members of the management­body
4. // 5.3.5 Diversity strategy for the selection of members of the management body

1. // 5.3.6 Risk committee and number of supervisory board meetings

1. // 5.3.7 Information flow to the management body

21 // 5.4 Statements by the management body

1. // 5.4.1 Statement on the adequacy of risk management procedures

1. // 5.4.2 Concise risk declaration

22 // 6. Risk management of individual risk types

22 // 6.1 Credit risk

1. // 6.1.1 Information on the structure of the loan portfolio

1. // 6.1.2 Leasing segment

1. // 6.1.3 Banking segment

1. // 6.1.4 Factoring segment

1. // 6.1.5 Deferral agreements

1. // 6.1.6 Non-performing and past due receivables
2. // 6.1.7 Counterparty default risk
3. // 6.1.8 Utilisation of ECAI

1. // 6.1.9 Investments

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GRENKE GROUP  // DISCLOSURE REPORT 2020

35 // 6.2 Market risk

1. // 6.2.1 Interest rate risk

1. // 6.2.2 Currency risks

36 // 6.3 Liquidity risk

36 // 6.3.1 Short-term liquidity management

1. // 6.3.2 Medium and long-term liquidity management
2. // 6.3.3 Liquidity coverage ratio

38 // 6.4 Operational risk

38 // 6.4.1 Risk management

39 // 6.5 Other risks

1. // 7. Encumbered and unencumbered assets
2. // 8. Remuneration policy

40 // 8.1 GRENKE's remuneration strategy

1. // 8.3 Composition and structure of the grenke remuneration system

1. // 8.4 Remuneration of the consolidated group's board of directors
2. // 8.5 Remuneration systems of institutions subject­ to financial supervision
3. // 8.6 Remuneration of employees by business area of the grenke group

1. // 8.7 Remuneration of the supervisory board

48 // 8.7.1 External consultants

49 // 9. Leverage

52 // List of tables

53 // Glossar

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GRENKE GROUP  // DISCLOSURE REPORT 2020

1. Scope of application

The publication of this disclosure report as of the reporting date of December 31, 2020 is made in accordance with the regulatory requirements of the Basel III framework of Regulation (EU) No. 575/2013 (CRR) Articles 431 to 455, which came into force on January 1, 2014.

In 2009, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) granted ­GRENKE AG permission to derive the regulatory scope of consolidation from the scope of consolidation used in the consolidated financial statements under commercial law. The group of companies taken into account thus includes all companies with a direct majority shareholding in Germany and abroad as well as potentially controlled parts of companies without a direct shareholding. In the course of coordinating with BaFin at the time regarding the scope of consolidation, it was agreed that changes to the scope of consolidation, such as those made in the reporting year through the integration of the franchise companies, would be reported to BaFin without delay.

­GRENKE AG is the parent company of a group of institutions as defined by Sections 10a and 25a of the German Banking Act (Kreditwesengesetz - KWG), which means that the ­GRENKE AG Group is also a financial holding company in accordance with Section 1 (35) KWG in conjunction with Article 4 (1) No. 20 of the Capital Requirements Regulation

(CRR). The GRENKE­ Group also has a credit institution as a subsidiary, GRENKE­ BANK AG. Both the GRENKE­ Group and ­GRENKE BANK AG are subject to the regulatory provisions of CRR and the Capital Requirements Directive (CRD IV) as well as KWG.

In addition to the GRENKE­ Group and GRENKE­ BANK AG, the financial services institutions GRENKEFACTORING­

Table 1: Subsidiaries and structured entities

GmbH and ­GRENKE Investitionen Verwaltungs KGaA are also subject to the requirements of KWG and supervision of BaFin and the Deutsche Bundesbank at the level of individual institutions. For these financial services institutions, ­GRENKE AG has made use of the waiver regulation in accordance with Section 2 a (1) or (2) KWG in conjunction with Section 2 a (5) KWG.

2. Regulatory scope of consolidation

The following table provides an overview of the fully consolidated companies in the GRENKE­ AG Group's scope of consolidation under commercial and regulatory law as of the end of financial years 2020 and 2019. In the reporting year, a reassessment of the criteria for defining the scope of consolidation under commercial law as defined by IFRS 10 was made for franchise companies that were not previously consolidated. Due to this reassessment, the franchise companies are now considered controlled companies and are therefore fully consolidated. As a result, the 13 currently existing franchise companies have now been retroactively included in GRENKE­ AG's scope of consolidation under commercial law and therefore within the scope of consolidation under regulatory law from the commencement of business operations. In addition, a memorandum of understanding

was concluded between GRENKE­ AG and the financial investors of the franchise companies in December 2020, under which the parties agreed that the shares of all franchise companies shall be acquired by December 31, 2021. The distinction made in previous years between the GRENKE­ Consolidated Group, i.e. ­GRENKE AG including its subsidiaries and the structured entities, and the GRENKE­ Group, defined as the Consolidated Group including the franchise partners, was rendered obsolete by the full consolidation of the franchise companies.

			Equity	Equity
			interest	interest
			Dec. 31, 2020	Dec. 31, 2019
Name		Registered office	in %	in %
DOMESTIC
GRENKE­	Service AG	Baden-Baden	100	100
GRENKE­	Investitionen Verwaltungs Kommanditgesellschaft auf Aktien	Baden-Baden	100	100
GRENKE­	BANK AG	Baden-Baden	100	100
GRENKEFACTORING GmbH	Baden-Baden	100	100
GRENKE­	Business Solutions GmbH Co. KG	Baden-Baden	100	100
GRENKE­	MANAGEMENT SERVICES GmbH	Baden-Baden	100	100
GRENKE­	digital GmbH	Karlsruhe	100	100

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GRENKE GROUP  // DISCLOSURE REPORT 2020

				Equity		Equity
				interest		interest
				Dec. 31, 2020		Dec. 31, 2019
Name			Registered office	in %		in %
INTERNATIONAL
GRENKELEASING s.r.o.	Prague / Czechia	100	100
GRENKE­	ALQUILER S.L.	Barcelona / Spain	100	100
Grenkefinance N.V.		Vianen / Netherlands	100	100
GRENKE­	RENT S.L.	Madrid / Spain	100	100
GRENKELEASING AG	Zurich / Switzerland	100	100
GRENKELEASING GmbH	Vienna / Austria	100	100
GRENKELEASING ApS	Herlev / Denmark	100	100
GRENKE LIMITED		Dublin / Ireland	100	100
GRENKE­	Finance Plc.	Dublin / Ireland	100	100
GRENKE­	LOCATION SAS	Schiltigheim / France	100	100
GRENKE­	Locazione S.r.l.	Milan / Italy	100	100
GRENKELEASING AB	Stockholm / Sweden	100	100
GRENKE­	LEASE SRL / BV	Brussels / Belgium	100	100
Grenke Leasing Ltd.	Guildford / Great Britain	100	100
GRENKELEASING Sp.z.o.o.	Poznan / Poland	100	100
GRENKELEASING­	Magyarország Kft.	Budapest / Hungary	100	100
Grenke Renting S.R.L.	Bucharest / Romania	100	100
GRENKE­	RENTING S.A.	Lisbon / Portugal	100	100
GRENKELEASING s.r.o.	Bratislava / Slovakia	100	100
GRENKELEASING Oy	Vantaa / Finland	100	100
GRENKELOCATION SARL	Munsbach / Luxembourg	100	100
GRENKEFACTORING AG	Basel / Switzerland	100	100
GRENKELEASING d.o.o.	Ljubljana / Slovenia	100	100
GRENKE­	Kiralama Ltd Sti.	Istanbul / Turkey	100	100
GRENKE­	RENTING LTD.	Sliema / Malta	100	100
GC Locação de Equipamentos LTDA.	São Paulo / Brazil	100	100
GRENKE­	LOCAÇÃO DE EQUIPAMENTOS LTDA.	São Paulo / Brazil	100	100
GC Leasing Middle East FZCO	Dubai / UAE	100	100
GRENKE­	Hrvatska d.o.o.	Zagreb / Croatia	100	100
FCT "GK"-COMPARTMENT "G2"	Pantin / France	100		100
FCT "GK"-COMPARTMENT "G3"	Pantin / France	0		0
FCT "GK"-COMPARTMENT "G4"	Pantin / France	100		100
Opusalpha Purchaser II Limited	Dublin / Ireland	0		0
Kebnekaise Funding Limited	St. Helier / Jersey	0		0
CORAL PURCHASING (IRELAND) DAC	Dublin / Ireland	0		0
GF Faktor Zrt.		Budapest / Hungary	0		0
GC Factoring Ltd.		London / Great Britain	0		0
GC Crédit-Bail Québec Inc.	Montréal / Canada	0		0
GC Leasing Ontario Inc.	Toronto / Canada	0		0
GL Leasing British Columbia Inc.	Vancouver / Canada	0		0
GC Rent Chile SpA		Santiago de Chile / Chile	0		0
GC Lease Singapore Pte Ltd	Singapore / Singapore	0		0
GC Factoring Ireland Limited	Dublin / Ireland	0		0
GC LEASING MELBOURNE PTY LTD	Melbourne / Australia	0		0
GC LEASING SYDNEY PTY LTD	Sydney / Australia	0		0
GC Faktoring Polska Sp.z.o.o.	Poznan / Poland	0		0
SIA GC Leasing Baltic	Riga / Latvia	0		0
GC Leasing AZ L.L.C.	Phoenix / USA	0		0

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