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Recognition of the super-subordinated debt issued by the AFL as additional Tier 1 capital

AFL, the bank for local governments, is waiving the benefit of the exemption from the application of prudential requirements on an individual basis as of 31 December 2025, thereby recognising its deeply subordinated debt as Additional Tier 1 (AT1) capital.

Eligibility of Additional Tier 1 debt for the Prudential Capital Base of the AFL

Agence France Locale (‘AFL’) has notified the French Prudential Supervision and Resolution Authority (‘ACPR’) that it is waiving the benefit of the exemption from the application of prudential requirements on an individual basis provided for in Regulation (EU) No 575/2013 2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012, as amended (‘CRR’) and therefore no longer benefit from Article 7(1) of the CRR (the ‘Derogation’), with effect from 31 December 2025. To date, AFL has been subject to consolidated prudential supervision at the level of its parent company, Agence France Locale - Société Territoriale (‘AFL-ST’) only. On 4 December 2025, the ACPR notified AFL that it had taken note of this waiver of the Exemption with effect from 31 December 2025.

Consequently, the perpetual fixed rate resettable deeply subordinated notes issued by AFL on 17 December 2024 (the ‘Notes’) will be recognised for regulatory purposes as Additional Tier 1 Capital within the meaning of Article 51 of CRR (Additional Tier 1 Capital or ‘AT1’) of AFL and the AFL Group as of the end date of the Derogation, i.e. 31 December 2025 (the ‘Recognition Date’), as CRR requires the ACPR's recognition of AT1 debt to be subject to direct supervision by the ACPR.

In accordance with the Terms and Conditions of the Securities, the rating assigned to the Securities by S&P Global Ratings Europe Limited (S&P) should be downgraded to [BBB] as of the Recognition Date due to the admission of the Securities as Additional Tier 1 Capital.

As the securities are recognised as AT1 once AFL has been placed under dual supervision by the ACPR, they enable AFL to better meet the financing needs of its member local authorities, whose investment expenditure remains high, driven in particular by transition-related requirements.

With this recognition, the securities will be included in capital ratios as of 31 December 2025, strengthening AFL's capitalisation expressed as a ‘banking’ leverage ratio and providing it with a capital buffer in relation to its internal limits.

AFL's pro forma capital structure as at 30 June 2025 is as follows: