Report and consolidated financial statements of

BANCA LOMBARDA E PIEMONTESE
Società per Azioni
Capital stock:
€ 320,828,442 subscribed and paid in
Tax code and registration number
at Brescia Registry of Companies: 00285280178
Registered and head office: Via Cefalonia 62
Brescia Member of the Banking register and Parent Bank
of the Banca Lombarda e Piemontese Group
Member of the Interbank Deposit Guarantee
Fund and of the National Guarantee Fund
Report and consolidated
financial statements of the
Group
Report on operations and
financial statements of Banca
Lombarda e Piemontese S.p.A
as of December 31, 2004
This English version is available for the convenience of the reader.
It is a traslation of the Italian original version “ Bilanci 2004”, that takes precedence and will be
made available to interested readers upon written request to Banca Lombarda e Piemontese –
Relazioni Esterne – Via Cefalonia, 74 – 25175 Brescia (Italy)
1
LETTER TO THE
STOCKHOLDER
Dear Stockholder,
In presenting to you the consolidated and statutory financial statements of
Banca Lombarda e Piemontese S.p.A., I would like to highlight the most
recent developments that have characterized our Group, which today is one
of Italy’s leading banking groups.
In a dynamic market context, Banca Lombarda has developed a widespread
presence in its various business sectors. Today, the Group not only has seven commercial banks, but is also operative in leasing, factoring, consumer
credit and bancassurance, as well as in the intermediation and management
of financial assets and fiduciary activities.
In this growth process - which was made possible by the commitment and
professionalism of our human resources, whose training, motivation and team
spirit has received a great deal of attention and investment - we have been
constantly guided by the wealth of values that we inherited from the banks
that originally created Banca Lombarda. Our vocation is to be a bank that is
“close to the customer”, aiming at stable, long-term growth in the particular
environment in which the Group currently operates. This has enabled us to
achieve a continuous, constant increase in our various activities, despite the
fact that the market context has not always been favorable. I believe it is
worth pointing out that from 1999 (the year of the merger between Banca San
Paolo and Banca Credito Agrario) to the present day, total deposits have risen
by an average rate of 7.3% per year (compared with 6.3% for the system),
while loans to customers have gone up by 10.6% (versus 8% for the system).
Net income has gone from 79 million Euro in 1999 (pro forma) to 151.7 million in 2004, with a market capitalization of over 3 billion Euro. In the same
period, the number of branches has gone from 478 to 783.
At the same time, Banca Lombarda has expanded the markets in which it
operates. The most recent initiatives have seen the Group’s international presence strengthened by opening a new representative office in Shanghai (China), in addition to the banks and product companies already operating in
Luxembourg, France, Switzerland and Spain. The Bank’s innovative ability has
been shown not only in the launch of various new products and services for
customers, but also in the launch of a project involving an Italo-Chinese joint
venture in the field of asset management - the first Italian bank to do so.
Banca Lombarda intends to continue in its policy of reinforcing and enhancing the value of the Group, for the benefit of all its stakeholders, namely the
stockholders, customers, employees and the various social and economic
entities that live and work in the areas where the Group operates. Maximum
commitment on the part of the directors and all of the stockholders will be
devoted to consolidating and increasing the Bank’s presence on the market.
Gino Trombi
Chairman of Banca Lombarda e Piemontese
3
CONTENTS
LETTER TO THE STOCKHOLDER
3
NOTICE OF CALLING TO THE ORDINARY AND EXTRAORDINARY GENERAL MEETING 7
KEY FIGURES
9
BOARD OF DIRECTORS, BOARD OF STATUTORY AUDITORS AND SENIOR MANAGEMENT
11
POWERS OF THE BOARD OF DIRECTORS, THE EXECUTIVE COMMITTEE AND SENIOR MANAGEMENT 12
REPORT ON OPERATIONS AND CONSOLIDATED FINANCIAL STATEMENTS
OF THE BANCA LOMBARDA E PIEMONTESE GROUP
15
THE ECONOMY, THE FINANCIAL MARKETS
AND THE BANKING INDUSTRY
17
ACTIVITIES OF THE BANCA LOMBARDA E PIEMONTESE GROUP
20
BALANCE SHEET AND STATEMENT OF INCOME
47
Balance sheet
50
Statement of income
54
Performance of Group companies
57
RATINGS
70
OTHER INFORMATION
70
SIGNIFICANT SUBSEQUENT EVENTS
AND OUTLOOK FOR THE FUTURE
71
REPORT OF THE INDEPENDENT AUDITORS
73
CONSOLIDATED FINANCIAL STATEMENTS
77
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2004
78
CONSOLIDATED STATEMENT OF INCOME AS OF DECEMBER 31, 2004
81
EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
83
INTRODUCTION
85
PART A: Consolidation methods and accounting policies
86
PART B: Information on the consolidated balance sheet
101
PART C: Information on the consolidated statement of income
138
PART D: Other information
145
ATTACHMENTS TO THE CONSOLIDATED FINANCIAL STATEMENTS
147
REPORT ON OPERATIONS AND FINANCIAL STATEMENTS OF BANCA LOMBARDA E PIEMONTESE 153
REPORT ON OPERATIONS
154
ACTIVITIES OF BANCA LOMBARDA E PIEMONTESE
154
CORPORATE GOVERNANCE - ADOPTION OF THE CODE
OF SELF-REGULATION FOR LISTED COMPANIES
154
BALANCE SHEET AND STATEMENT OF INCOME
157
Balance sheet
160
Statement of income
162
Intercompany and related party transactions
165
Stockholders and share ownership
171
Other information
174
Significant subsequent events
and outlook for the future
176
PROPOSAL FOR APPROVAL OF THE FINANCIAL STATEMENTS
AND ALLOCATION OF NET INCOME
176
REPORT OF THE BOARD OF STATUTORY AUDITORS
177
REPORT OF THE INDEPENDENT AUDITORS
185
FINANCIAL STATEMENTS OF BANCA LOMBARDA E PIEMONTESE
189
BALANCE SHEET AS OF DECEMBER 31, 2004
190
STATEMENT OF INCOME AS OF DECEMBER 31, 2004
192
EXPLANATORY NOTES
193
INTRODUCTION
195
PART A: Accounting policies
196
PART B: Information on the balance sheet
211
PART C: Information on the statement of income
244
PART D: Other information
251
ATTACHMENTS TO THE FINANCIAL STATEMENTS
255
STOCKHOLDERS’ RESOLUTIONS
277
5
783 BRANCHES
Banco di Brescia
(including the Luxembourg branch)
Banca Regionale Europea
(including the Nice branch)
Banca di Valle Camonica
Banco di San Giorgio
Banca Cassa di Risparmio di Tortona
Banca Lombarda Private Investment
Banca Lombarda
The number of branches in each region is indicated in brackets
Situation as of December 31, 2004
376
260
56
33
29
28
1
NOTICE OF CALLING
STOCKHOLDERS’
MEETING
The Stockholders are invited to the Ordinary and Extraordinary General
Meeting to be held on Thursday, April 28, 2005 at 4.30 p.m. at the head
office in Via Cefalonia 74, Brescia in first calling and, if needed, in second
calling at the Conference Center of the President Hotel in Via Cefalonia 74,
Brescia on Friday, April 29, 2005 at 10.00 a.m. to vote on the following
AGENDA
Ordinary part
1) Financial statements as of December 31, 2004; Board of Directors’ report
on operations and the report of the Board of Statutory Auditors; related
resolutions.
2) Allocation of net income for the year.
3) Appointment of the Board of Directors for the three-year period 2005-2007
after deciding how many members there should be;
4) Remuneration of the Board of Directors;
5) Appointment of the Board of Statutory Auditors and its Chairman.
6) Remuneration of the Board of Statutory Auditors.
7) Integration of the Independent Auditors’ engagement letter in light of the
new International Financial Reporting Standards.
8) Third-party liability insurance for the Directors, Statutory Auditors and
Senior Management of the Banca Lombarda e Piemontese Group, and
accident insurance for the Directors and Statutory Auditors of Banca Lombarda e Piemontese S.p.A
Extraordinary part
1) Authorization of the Board of Directors to raise capital stock on one or
more occasions, excluding option rights in accordance with Art. 2441.5 of
the Italian Civil Code, through the issue of up to 650,000 ordinary shares
of Banca Lombarda e Piemontese S.p.A. and its subsidiaries.
Proposal to amend Art. 6 of the Articles of association (change in capital
stock due to the increase described above).
2) Authorization of the Chairman and Vice Chairmen, with separate signing
power, to make any changes required by the authorities as long as they do
not substantially alter the resolutions in question.
3) The entire Board of Statutory Auditors is appointed on the basis of lists
presented by the stockholders, as prescribed by art. 24 of the Articles of
association.
7
Meetings can be attended by stockholders with voting rights, providing the
Company has received a communication from the broker acting as custodian, within two days prior to the date set for the meeting, in compliance
with the law and the articles of association.
The documentation referring to the items on the agenda will be available
to the stockholders, who are entitled to obtain a copy, and to the general
public at the Bank’s head office and at Borsa Italiana S.p.A. by the deadline established by law.
BANCA LOMBARDA E PIEMONTESE SPA
Chairman of the Board of Directors
The notice of calling to the AGM was published in the Gazzetta Ufficiale,
Part II no. 69 of March 24, 2005.
8
KEY FIGURES
(in milions of euro)
BANCA LOMBARDA E PIEMONTESE GROUP
2004
2003
Direct customer deposits
Indirect customer deposits
(at market value) and mathematical reserves
Total customer funds under administration
Loans to customers
Capital and reserves (prior to AGM resolutions
and excluding net income)
Net income for the year
Number of employees at year-end
Number of branches in operation
FINANCIAL INDICATORS
ROE (cash)
Cost/Income ratio
24,965
22,369
43,435
68,400
25,867
40,532
62,901
23,584
1,939
152
7,555
783
1,888
112
7,475
783
10.7%
63.1%
8.9%
62.4%
BANCA LOMBARDA E PIEMONTESE S.p.A.
2004
2003
Equity investments
Total assets
Capital and reserves (prior to AGM resolutions
and excluding net income) (1)
Net income for the year (pro-forma) (1)
Net income for the year
Dividend per share (Euro)
2,562
10,776
2,525
9,291
1,693
148
168
0.35
1,638
116
108
0.30
(1) The pro-forma figures have been adjusted to reflect the process of "defiscalisation" required by law.
9
BOARD OF DIRECTORS
BOARD OF
DIRECTORS,
BOARD OF
STATUTORY
AUDITORS AND
SENIOR
MANAGEMENT
Chairman
Gino Trombi*
Deputy Vice Chairman
Alberto Folonari*
Vice Chairman
Giovanni Bazoli*
Chief Executive Officer
Corrado Faissola*
Director and Secretary
Mario Cera
Directors
Luigi Bellini, Piero Bertolotto*,
Giuseppe Camadini*, Mario Cattaneo*,
Virginio Fidanza, Attilio Franchi,
Ugo Gussalli Beretta, Giuseppe Lucchini,
Felice Martinelli, Giovanni Minelli*,
Luigi Nocivelli, Francesco Passerini Glazel,
Pierfrancesco Rampinelli Rota, Adriano Rodella,
Antonio Spada, Romain Zaleski
* members of the Executive Committee
BOARD OF STATUTORY AUDITORS
Chairman
Sergio Pivato
Auditors
Angelo Coen, Filippo Rovetta
Alternate auditors
Vincenzo Broli, Marco Confalonieri
SENIOR MANAGEMENT
General Manager
Victor Massiah
Vice General Managers
Ettore Medda
Alberto Pella
Elvio Sonnino
(on secondment to Lombarda Sistemi e Servizi
as General Manager)
11
POWERS OF THE
BOARD OF
DIRECTORS,
THE EXECUTIVE
COMMITTEE
AND SENIOR
MANAGEMENT
In accordance with CONSOB’s recommendation no. 97001574 of February
20, 1997, the following disclosure describes the powers of the Board of
Directors and senior management.
This report lists the names of the Board members and the positions within
the Bank held by each director.
Pursuant to art. 18 of the Articles of association, the Board of Directors is
responsible for the ordinary and extraordinary administration of the Bank.
To this end, it has the widest possible powers, except for those that by law
must be exercised by the Stockholders in General Meeting.
In the event of specific, individual matters of ordinary and extraordinary
administration, the Board can delegate signature power to one or more of its
members; and for certain categories of acts and matters of ordinary administration, it can even grant proxies to people who are not employed by the
Bank. To facilitate the Bank’s normal operations, the Board can authorize
employees to sign individually in relation to transactions decided upon by
the Board.
Pursuant to Art. 21 of the Articles of association, the Board of Directors can
appoint an Executive Committee with 5 to 8 members, and delegate powers
to it in accordance with Art. 19 of the Articles of association.
The Executive Committee currently consists of eight members, and was
appointed under the Board resolution dated May 2, 2002.
The Board of Directors has attributed to the Executive Committee all powers
for the ordinary administration of the Bank, except for some that are the
exclusive responsibility of the Board.
In urgent cases, the Executive Committee can take certain decisions that are
normally the responsibility of the Board of Directors . Any such decisions
must be reported to the Board at its next meeting.
Pursuant to Art. 22 of the articles of association, the Chairman, or whoever is
taking his place, legally represents the Bank versus third parties and in court,
at any level of justice, with the right to appoint attorneys and legal counsel.
On a recommendation from the Chief Executive Officer, if appointed, the
Chairman can take decisions in an emergency that would normally be the
responsibility of the Board or of the Executive Committee. Any such decisions must be reported to the Board at its next meeting. The Chairman allocates and distributes the amounts set aside for donations, according to the
indications and manner decided by the Board of Directors.
12
The Board of Directors has delegated powers to the Chief Executive Officer
to supervise the ordinary administration of the Bank, with assistance from
the General Manager, in compliance with guidelines formulated by the Board
of Directors. He also has powers concerning operational matters, lines of
credit, transactions in securities, personnel and organization, and coordination of the activities of the Parent Bank and the companies forming part of
the Group.
With regard to the Parent Bank’s consent for resolutions adopted by Group
companies in accordance with art. 136 of Legislative Decree 385/93, the
Board of Directors has granted the Chairman, the Vice Chairman and the
Chief Executive Officer the authority to give such consent, with separate
signing powers, except with regard to resolutions adopted by Banco di Brescia. Because of the overlapping positions of Chairman, Vice Chairman and
Chief Executive Officer between Banca Lombarda e Piemontese and Banco
di Brescia, the power to give consent for the resolutions taken by Banco di
Brescia has been granted, with separate signing powers, to the directors
Mario Cattaneo, Giovanni Minelli and Francesco Passerini Glazel.
In compliance with Art. 23 of the articles of association, the General Manager
is the chief executive officer, exercising his duties within the scope of the
powers granted by the Board of Directors.
The Board of Directors is periodically informed about the activities performed by persons to whom it has granted powers.
The Vice Chairman, Giovanni Bazoli, has been appointed by the Board of
Directors as the liaison officer for the Banca Intesa stockholder syndicate.
13
Report on operations
and Consolidated
Financial Statements of the
Banca Lombarda e Piemontese Group
as of December 31, 2004
15
F
The international economy
THE ECONOMY, THE
FINANCIAL MARKETS
AND THE BANKING
INDUSTRY
The world economy turned in a significant revival in 2004, with good
progress in output and in trading volumes. Based on initial estimates by the
International Monetary Fund, world GDP in 2004 rose by 5%, driven by
expansion both in developing countries (6.6%) and in the more mature
economies (3.6%).
The Euro Area closed 2004 with GDP growth of around 2%, modest by international standards, but better than in 2003 (0.5%). Domestic demand was
expressed through a more dynamic growth rate for capital investments
(2.2%) and a weaker increase in private consumer spending (1.8%). Foreign
demand in the form of exports managed a distinct recovery, rising by 5.8%
despite the Euro’s rapid revaluation against the main international currencies,
with the exchange rate against the dollar reaching record levels towards the
end of 2004, rising to over 1.34. This resulted in annual appreciation against
the dollar of around 10% and 2.6% against the Japanese yen.
Within the Area Euro, Italy turned in one of the lowest rates of growth with
GDP rising by around 1.2%, though this was better than in 2003 (0.3%)
thanks to services and construction. Industrial output in the strictest sense
(i.e. excluding construction), on the other hand, fell by 0.4% (adjusted for
the number of working days) on the 2003 figure, a drop that can only be
interpreted as a worrying symptom of stagnation, if not of decline. Only certain manufacturing sectors, such as the timber industry, publishing, chemicals
and metal products, managed to benefit from the international recovery.
Consumer goods, on the other hand, have suffered a considerable (1%) drop
in output, partly due to foreign competition, partly to weak internal demand.
Money and financial markets
International bond and equity markets turned in reasonably good performances overall.
Stock markets closed the year with good performances: 7.6% for the United
States, 7.5% for the Euro Area and 8.9% for Japan.
The Italian Stock Exchange reported significant growth with the Mibtel rising
by 18.1%.
17
Thanks to the revaluation of listed stocks and new inflows to the Stock
Exchange, total market capitalization came to 590 million Euro, which is 43%
of GDP, though this is still a long way from the high reached in 2000 (70% of
GDP).
The banking sector
There were no significant changes in the banking trends during 2004 compared with 2003.
In Italy, as elsewhere in the Euro Area, the growth in loans was supported
by healthy demand for medium and long-term loans from households,
whereas short-term loans declined.
At the end of the year, total loans by Italian banks came to 1,160 billion Euro
with an increase of 6.7% on 2003; short-term loans declined by 3.9% on
2003, whereas medium and long-term loans came to slightly less than 14%.
In corporate lending, the sectors that managed to drive growth were construction and agriculture, with a more moderate increase in loans to service
industries. Loans to industry, on the other hand, posted a negative trend.
Considering the aggregates net of loan loss provisions, there are no signs of
any deterioration in asset quality, though such signs are visible if the gross
aggregates are analyzed. Looking at the figures sector by sector, there is a
tendency for non-performing loans to rise in food products, also because this
sector includes the Bank’s exposure to the Parmalat Group, as well as in
mechanical engineering, textiles and footwear.
On the deposit front, Italian banks have again seen significant rates of
growth with an annual rise of 7.2%, helped by bonds (+10.8%) which were
even more vivacious than deposits (5.1%).
The positive trend in the volumes of loans and direct deposits handled was
accompanied during 2004 by a significant reduction in spreads. According to
ABI, which only takes into consideration the rates applied to households and
non-financial companies, excluding all other counterparties, the spread fell
by 20 basis points during the year, coming in at 388 b.p. at the end of 2004
(408 at the end of 2003).
18
This reduction was guided by the mark-up (the differential between the
average rate on loans and the average yield on outstanding BOTs), which
went from 2.83% to 2.64%, falling by 19 b.p. The mark-down (the differential
between the average rate on deposits and the yield on outstanding BOTs)
remained substantially stable, on the other hand, at 1.24%. The main factor
contributing to this decline in the mark-up was the progressive recomposition of loans by maturity, taking account of the fact that medium/long-term
loans have relatively low rates compared with short-term loans.
As regards indirect deposits, asset management reflected the revaluation of
equity prices during the year. The stock of mutual funds reported an increase
of 1.7%, coming in at 523 billion Euro despite negative net funding of 10.5
billion.
The bancassurance sector continued its positive trend; premiums on new life
insurance policies sold through banks and post offices came to 35 billion
Euro, with an increase of 1.8% on 2003. Those sold by the financial consultancy networks, on the other hand, went down, with life insurance premiums coming in at 4 billion Euro, 18% down on 2003.
19
ACTIVITIES OF THE
BANCA LOMBARDA E
PIEMONTESE GROUP
As we saw in the previous chapter, 2004 was a year, as far as the banking
system is concerned, that featured market contexts that only partially managed to resolve the problems and uncertainties that have been with us for
the last three years. The Banca Lombarda Group took a pro-active approach
to coping with changes in the economic and competitive scenario, consolidating a stable growth trend and achieving appreciable results, both in the
economic terms and in terms of commercial development.
The following sections illustrate the Group’s business activities, explaining:
changes in group structure and equity investments;
organizational changes;
developments in product sales and marketing;
risk management;
Auditing activity;
human resources;
transactions with Group companies and related parties;
balance sheet and statement of income;
performance of Group companies.
CHANGES IN GROUP STRUCTURE AND EQUITY INVESTMENTS
The principal changes during 2004 in the structure of the Banca Lombarda
Group and its portfolio of equity investments are described below.
Group companies
Certain changes took place in 2004 in the scope of consolidation as a result
of acquisitions and variances in percentage holdings.
In May, Banca Lombarda International purchased 100% of Caboto International S.A., based in Switzerland, which provides personalized wealth management services, with assets of 200 million Euro under management. The
price paid for the acquisition was 4.1 million Euro, of which 2.5 million as
goodwill. The purpose of the transaction was to extend the range of services
offered to customers in the field of asset management. The company then
changed its name to Gestioni Lombarda (Suisse) S.A..
20
In November, Banca Lombarda Private Investment completed an increase
in capital stock from 30 to 39 million Euro, reserved to Banca Lombarda e
Piemontese in exchange for the latter’s transfer of a business division consisting of the commercial area, the Banca Lombarda Points, the financial consultancy network and the private bankers which previously operated as part of
the Parent Bank.
This transfer forms part of a wider project designed to reorganize the
Group’s entire financial consultancy network by concentrating it in a single
entity: Banca Lombarda Private Investment has been chosen for this purpose.
The following transactions were also carried out for this purpose:
– sale of Banco di San Giorgio’s financial consultancy business in October
for Euro 2.9 million;
– sale of Banco di Brescia’s financial consultancy business in November for
Euro 2.3 million.
The proceeds of these transactions were established by the boards of the
companies concerned with the help of a valuation carried out by KPMG
Business Advisory.
In December, Banca Lombarda Private Investment S.p.A. bought Banco di
Desio e della Brianza’s financial consultancy business. It consisted of more
than 80 consultants with total assets under administration at the transaction
date of more than 250 million Euro. The price paid for the acquisition was
3.1 million Euro, essentially goodwill. This amount is also subject to revision
depending on the trend in the assets transferred.
This investment has enabled further growth in size, in accordance with the
Group’s line of strategy, which attributes to this business area a specific mission to support the growth in volumes, as well to help expand in territorial
markets where the Group’s traditional branches do not have a presence.
In May, Banco di Brescia (100% held by Banca Lombarda) completed a
bonus increase in capital stock, from 453.7 to 593.3 million Euro, by capitalizing the property revaluation reserve recorded in the 2003 financial statements pursuant to Law 350/03 (Finance Law). This operation involved
increasing the par value of the 872,500,000 shares making up the capital
stock from 0.52 to 0.68 Euro. This also permitted a significant strengthening
of the company’s capital for supervisory purposes, and hence that of the
Group as well.
21
During the year, Banca Lombarda e Piemontese bought the residual 2.78% of
CBI Factor S.p.A. from minority interests for 1.5 million Euro. The interest in
CBI Factor now comes to 100%, with an overall carrying value of 64.9 million Euro.
Banca Lombarda e Piemontese also purchased minor interests in Banco di
San Giorgio S.p.A. (0.05% of the capital stock for 34 thousand Euro). After
the end of the year, Banca Lombarda e Piemontese and its subsidiary Banca
Regionale Europea formalized the acquisition of a further 1.11% and 1.84%
respectively of Banco di San Giorgio, with an outlay of 1.1 million and 1.8
million Euro. The acquisition of this stockholding is related to the option and
pre-emption right on the shares given up by certain stockholders. Because of
the above transactions, the total holding in Banco di San Giorgio climbed
from 86.70% to 89.70% (86.74% at the end of 2004), of which 55.91% is held
via Banca Regionale Europea, with a total book value of 110.8 million Euro
(84.0 million Euro recorded by Banca Regionale Europea).
Other companies
During November, Banca Lombarda subscribed for its share (49.9%) of the
capital increase by Lombarda Vita from 55.3 million to 80 million Euro,
involving an investment of 12.3 million Euro. The total investment in the
above insurance company amounts to 40.7 million Euro. This increase is
intended to equip the Lombarda Vita with the capital structure required to
support the current significant expansion of its operations.
In January, Banco di Brescia and Banca Regionale Europea sold their shares
in Banca Popolare di Lodi - 747,650 and 1,216 respectively - which derived
from BPL’s absorption of Efibanca. These sales generated a total of 6.2 million Euro, giving rise to a gain of 3.6 million Euro.
We would remind you that the 2003 dividend of Banca Intesa S.p.A. was
paid partly in cash and partly in shares. As a result, Banca Lombarda e
Piemontese and Banco di Brescia received a stock dividend (2 ordinary
shares for every 41 shares held, regardless of class) of 6,519,423 and 225,828
Banca Intesa ordinary shares worth 17.1 million Euro and 0.6 million Euro,
respectively.
22
As a consequence, the interest in ordinary capital of Banca Intesa held by
the Group has risen from 2.34% to 2.45% (of which 2.37% held by Banca
Lombarda e Piemontese), while its total book value has increased to 348.2
million Euro (of which 343 million relates to the Parent Bank’s holding). In
addition, Banca Lombarda e Piemontese renewed its membership of the
Banca Intesa shareholders’ agreement, due to expire next April, in which the
Parent Bank participates with 2.37% of Banca Intesa’s ordinary capital. Banca
Lombarda e Piemontese represents 5.80% of the syndicate.
In December, Banca Regionale Europea sold its 4.5% stockholding in Compagnie Monégasque de Banque (based in Montecarlo) for 11 million Euro
with a pre-tax gain of 2.3 million Euro.
There were also minor changes in the equity investments in Brescia On Line
S.r.l., Help Rental Service S.r.l. and SITEBA S.p.A., which are discussed
below.
In March, Banca Lombarda e Piemontese participated in the reconstitution
(following its reduction to zero due to losses) of the capital of Brescia On
Line Srl, which operates a portal that provides information and on-line commercial transactions. In subscribing this increase in capital, Banca Lombarda
e Piemontese reduced its equity interest in the company from 20% to 10%.
Subscribing these new quotas involved an outlay of 230 thousand Euro,
together with another 300 thousand Euro in June as a quotaholders’ loan
towards a future increase in capital. Following the losses for the year, the
Bank’s interest in the company was written down by 375 thousand Euro. Its
book value has therefore been reduced to 155 thousand Euro.
In January, SBS Leasing SpA sold part (5% of the capital stock) of its 29%
interest in Help Rental Service S.r.l., a company that specializes in car hire.
This sale amounted to 78,000 Euro, with a gain of 55,000 Euro
During the year, Banca Lombarda e Piemontese increased its holding in
SITEBA S.p.A. from 1.56% to 4.82%; this company designs and builds systems for managing the remote acceptance of payment cards. The investment
amounted to 0.8 million Euro and the total book value of the holding is now
1 million Euro. The strengthening of this investment reflects good prospects
for the future of the company.
In December 2004, the absorption of Idea Multimanager Sicav by Banca
Lombarda Sicav was completed and, since February 2005, the new Sicav of
the Banca Lombarda Group has been included as underlying investments for
the Bank’s funds of funds.
23
Also in December the preliminary agreement between Banca Lombarda e
Piemontese and Guodu Securities Co. was signed. The purpose of this agreement is to establish the first Italo-Chinese company that will operate in the
Chinese asset management market.
Under this agreement, once all the necessary authorizations have been
obtained from the Chinese and Italian Authorities, a company called Guodu
Lombarda Fund Management Company will be incorporated with Banca
Lombarda holding 49% and Guodu Securities Co. 47%. The remaining 4%
will be subscribed by Pingdingshan Mining (Group) Co., Ltd., a leading Chinese group that is active in the energy industry. The parties also agreed to a
minimum period of 5 years during which the shares in the new company
can not be sold.
Guodu Lombarda Fund Management Company will operate in the Chinese
asset management sector, marketing investment funds, using local banks and
securities houses as its main distribution channels.
This agreement forms part of the Banca Lombarda Group’s strategy to enter
the Chinese market which shows high growth potential in asset management. The Chinese authorities are looking favorably on contributions by foreign investors in creating pension funds and the like for the management of
private savings.
24
GROUP STRUCTURE
Banca Lombarda e Piemontese S.p.A.
Asset Management
Capitalgest SGR S.p.A.
Capitalgest Alternative
Investments SGR S.p.A.
100%
Grifogest SGR S.p.A
51%
49%
Solofid S.p.A.
Banks
100%
100%
Banco di
Brescia S.p.A.
100%
100%
Sifru Gestioni Fiduciarie
SIM S.p.A
8.72%
99%
74.24%
Banca di Valle
Camonica S.p.A.
100%
Lombarda Advisory S.A.
Gestioni Lombarda
(Suisse) S.A.
Near-banking and financial
SBS Leasing S.p.A
57.83% (*)
Banca Regionale
Europea S.p.A.
CBI Factor S.p.A.
Veneta Factoring S.p.A.
Banca Cassa di Risparmio
di Tortona S.p.A.
Banco di S. Giorgio S.p.A.
54.07%
0.51%
Banca Lombarda
International S.A.
91.90%
51%
39%
40%
32.67%
100%
39%
60%
15.20%
98%
Financiera Veneta S.A.
51%
Silf S.p.A.
60%
Mercati Finanziari SIM S.p.A.
100%
Banca Lombarda Preferred
Capital Co. LLC
100%
7.59%
95%
GE.SE.RI. S.p.A.
(in liquidation)
Other
100%
Banca Lombarda
Private Investment S.p.A.
SBIM S.p.A.
100%
Solimm S.p.A.
100%
Lombarda Sistemi e Servizi S.p.A.
(*) With reference to ordinary capital stock.
100%
Andros S.r.l.
Corporation Financiére
Européenne S.A.
25
100%
63.75%
ORGANIZATIONAL CHANGES
During the course of 2004, various new initiatives were undertaken to
improve marketing effectiveness, operating efficiency and the quality of customer service on the part of the Group’s commercial banks. These interventions were directed at innovation and rationalization of branch operating
processes, consisting of:
the introduction of a new distribution model at Banca San Giorgio by
creating commercial areas as a point of reference and coordination for
the retail branches and corporate units;
fine-tuning of the Banca Regionale Europea network, by analyzing
branch performance, identifying the units needing top priority intervention, studying the main problem areas in detail and implementing corrective action to improve their efficiency and effectiveness; the commercial
development of the small business segment by creating the position of
interbranch sales managers at the retail branches of Banco di Brescia,
Banca Regionale Europea and Banco di San Giorgio to specialize in
acquiring new customers specifically in this segment, as well as introducing a support role to help the area manager at Banca Regionale Europea, who would focus on the commercial development and management
of lending to the small business segment; the introduction of a new organizational model at Banco di Brescia for the import/export side of the
business, with a view to optimizing resource allocation, improving their
professional skills and developing the commercial effectiveness in the
areas with the highest market potential;
the rationalization and standardization of the segmentation rules and
allocation of the customer portfolio to the respective account managers at
the Group’s banks to complete the activity begun in 2003 which involved
codifying and defining the rules for a more effective commercial management of their own customers.
Completion of the various steps required by ABI’s PattiChiari (ClearTerms)
project to obtain certification, which saw the involvement of the Group’s
banks in eight initiatives:
•
•
•
•
•
•
•
•
FARO (on-line identification of the nearest ATM).
List of low risk - low yield bonds.
Clear information about subordinated structured bank bonds.
General criteria for assessing the borrowing capacity of SMEs.
Comparison of current account terms.
Basic banking services.
Average response times to loan applications by small businesses.
Guaranteed times for access to amounts paid in by check.
Certification was obtained during the second half of 2004 and the first supervisory audit will take place in March 2005.
26
Various organizational and IT changes were made to bring the Group into
line with the requirements of the new Basel 2 accord. These mainly concern:
the introduction of credit granting and management procedures at
all commercial banks to allow the Group to create an Internal Rating
System to measure lending risk;
the reorganization of lending processes in order to improve their
performance in terms of efficiency and effectiveness.
structuring the Credit and Loans Area of Banca Lombarda to ensure a
standard approach in credit management on the part of all of the commercial banks. The Credit and Loans Area of Banca Lombarda, the Parent
Bank, has been assigned governance of the whole Group’s lending policies and credit control to ensure adequate monitoring of all risks. The
Area has developed new techniques for analyzing and evaluating credit
risk to be used when assessing the credit-worthiness of large customers.
Important interventions took place to bring the Group into line with the new
International Financial Reporting Standards, which involved:
– the operating processes concerning management of anomalous positions
(problem/non-performing loans), a loan assessment methodology and
the development of new software for this purpose;
– the implementation of new applications for the valuation of financial
instruments at fair value and written-down cost;
– the identification of new ways of managing hedge accounting and the
related IT support systems;
– segment reporting, to ensure adequate disclosure in the notes.
These new procedures are currently being released and are due to be rolled
out completely in early 2005.
A special effort has been required for the creation of the New Accounting
Model, which has entailed a structural review of the whole IT side of the
accounting system, in particular:
the review and rationalization of the Chart of Accounts;
the creation of a new “suspense ledger” (the so-called “Partiban” system );
the creation of an accounting data warehouse which functions as a point
of collection and sorting for the various accounting flows to the General
Ledger (the so-called “Cooper” system);
the creation of a system of squaring the books between the general ledger and the various sub-ledgers;
automated management of rebates and allowances to customers and
Group companies;
a complete overhaul of the accounting regulations.
27
This work is still in progress and is due to be completed during 2005.
With reference to the Finance Development Plan, the various stages have
been developed to implement the organizational changes (structures,
processes, resources, systems, logistics, controls, etc.) and the first business
areas envisaged by the plan have been launched.
With regard to the rules governing relations between the Parent Bank and its
subsidiaries, the process of regulating and managing the services rendered
through the new contract system (stipulation, maintenance, reporting, etc.) is
working up to speed. The finance management mandate deriving from the
centralization of the various banks’ own portfolios at the Parent Bank was
also reviewed during 2004.
As regards the interventions relating to companies operating in near-banking,
the reorganization of Silf, a Group company active in consumer credit, has
been commenced. In recent years, Silf has been through a period of significant operational and commercial expansion, so in light of consumer credit’s
high potential it was thought best to review its internal processes to guarantee orderly growth and constant monitoring of all operating risks.
SBS Leasing has also been involved in a process of strategic revision of its
organizational model to ensure more and more effective integration and synergy building with the Group’s distribution network.
It was decided in 2004 to create a centralized structure at the Parent Bank to
deal with Anti Money Laundering and Official Investigations in order to
coordinate all communications with the authorities. This new structure will
be set up in 2005.
Work continued in 2004 on building the Group’s New Management Centre.
The work is on schedule and the building was close to completion by the
end of the year, together with the technology, air conditioning, security and
access control and systems. This project is being financed by reorganizing
the Group’s real estate investments. This envisages selling off non-business
units as well as those that are no longer suitable for the Group’s current
needs and strategies.
DEVELOPMENTS IN PRODUCT SALES AND MARKETING
Group efforts to update products and services in 2004 gave preference to the
creation of proposals that met households’ increasing desire to protect their
savings. On the corporate front, new financing solutions were introduced to
support investments in technology, research and development.
More in general, interventions affected asset management, bancassurance,
payment services, monetics and corporate financing products.
28
In the field of asset management, the ZeroCento line of guaranteed funds
of funds was launched, meeting with a good reception on the part of customers. Work to extend the range of financial products that can be held in
asset management portfolios has continued, with new agreements arranged
with GLG Investment PLC, Carmignac Gestion, Schroders and Vegagest
S.G.R, all Sicavs.
Numerous actions were taken in the field of bancassurance, which again in
2004 fed a rising flow of premiums that featured a significant proportion of
traditional life insurance policies (40% of premium income) and index-linked
policies (43%).In order to offer products that responded better to customers’
need for capital protection, two new lines were launched, called “Risparmio
Più Coupon” and “Tutela il Domani”. The first is a single-premium policy
that introduces more conditions guaranteeing the yield, in addition to those
already offered by the “Risparmio Più” line. “Tutela il Domani” is a policy
with regular premium payments which provides an additional “long-term
care” guarantee. Risk policies have been supplemented by the new “Obiettivo Protezione Plus” policy, an updated version of the temporary policy in the
event of death, with a higher insurable limit.
In addition, the link between the “Prestito Protetto” policy and personal loans
has been extended. Offering combined banking and insurance products
found another application in the new “Creso Business” package, which is
aimed at small business owners, such as freelance professionals, artisans and
shopkeepers. The new line offers two versions (Basic and Gold) and features
the addition of insurance cover studied for a specific target clientele developed together with Europe Assistance.
29
In the field of monetics (electronic money), in 2004 the Group undertook
various commercial development initiatives and the segment has at this stage
distributed 225,000 S MPRE credit cards, which in 2004 corresponded to a
flow of transactions 10% up on 2003. There were also special promotions
that involved the S MPRE Revolving and S MPRE Prepagato cards, with the
added incentive of a competition with prizes.
In the field of virtual banking services, there has been a significant increase
in the number of users, reaching 72,000 at the end of the year. Trading
Online has seen an increase in volumes handled, though with a lower number of transactions.
There has been a constant increase in the number of corporate customers
using on-line banking; indeed, 33,000 customers now use Interbank Corporate Banking services. Distribution of the internet service devoted to treasury
entities (Extensive Enti) has continued and there are now more than 470
installations.
On the corporate loans front, innovative efforts were aimed particularly at
offering new solutions that could improve companies’ debt structure. In particular, the “Sviluppo Capitale” line has an approach that provides an incentive to recapitalize the company, a question that is of critical importance in
the run-up to Basel 2.The new range of loans called “Partner Impresa”, on
the other hand, constitutes a form of incentive for companies’ development
and innovation plans.
At the end of 2004 a new policy called “Capital Top” was developed. It combines insurance and finance and is designed as a way to invest corporate liquidity. The offer is enriched by a corporate advisory service that helps
improve company performances and identifies the critical factors for company ratings.
Lastly, research is being done to develop ways of financing investment in
R&D and new technologies, also in collaboration with universities and
research centers.
The bank branches and the network of financial consultants
In 2004, the plan to develop the financial consultancy network continued,
going through various important stages that involved the incorporation in
Banca Lombarda Private Investment of the consultancy networks of three
banks in the Group, namely Banca Lombarda, Banco di Brescia and Banca
San Giorgio.
30
Efforts to increase in size were also intensified, activating all possible levers
of internal and external growth. In fact, as mentioned previously, towards
the end of the year the Group acquired the consultancy network of Banco di
Desio, made up of around eighty sales agents and assets under management
and administration of more than 250 million Euro.
At 31 December 2004 the overall size of the business came to 2.7 billion
Euro of direct and indirect deposits, 98 million Euro of loans, of which 87
million Euro in the form of residential mortgages, 616 financial consultants
(including 8 aspiring consultants) and 19 “private bankers”.
The pre-existing consultancy structure was involved in incisive reorganization measures designed to raise the level of productivity. In this connection,
the average size of the consultants’ portfolio improved during the year from
2.6 million of funds under administration to 3.4 million Euro. At the end of
2004, the average portfolio of the “private bankers” came close to 20 million
Euro while that of the consultants of the Banco di Desio network came to
3.1 million Euro.
In order to achieve a more functional coverage of the territory, we opened
four new branches, so that at the end of the year Banca Lombarda Private
Investment’s outlets consisted of 28 Banca Lombarda points and 64 advice
centers.
The following table shows the geographic distribution of the Group’s
branches as of December 31, 2004. The strategy of rationalizing the branch
network continued with various openings and closures, though the total
number of branches at the end of the year remained unchanged.
31
Region
Banca CR di
Banco di San
Banca di Valle
Banca Reg.
Banco di
Banca
Banca
Grand
Tortona
Giorgio
Camonica
Europea
Brescia
Lombarda P.I.
Lombarda
total
-
-
-
-
-
1
1
-
1
1
Total ABRUZZO
-
-
-
-
-
2
-
2
CAMPANIA
-
-
-
-
-
1
1
-
1
1
Total CAMPANIA
-
-
-
-
-
2
-
2
EMILIAROMAGNA
PARMA
PIACENZA
BOLOGNA
-
-
-
3
8
-
2
-
1
-
5
8
1
Total EMILIA-ROMAGNA
-
-
-
11
2
1
-
14
FRIULI
V. GIULIA
-
-
-
-
3
9
-
-
3
9
Total FRIULI-VENEZIA GIULIA
-
-
-
-
12
-
-
12
LAZIO
-
-
-
-
2
20
32
-
1
5
1
-
3
25
32
1
-
-
-
-
54
7
-
61
-
15
7
1
9
-
-
1
-
1
-
-
17
7
1
9
-
32
-
-
1
1
-
34
-
-
8
38
1
9
-
2
1
1
5
1
2
2
38
46
4
22
181
4
4
2
6
47
12
1
3
-
1
-
32
222
6
9
3
2
8
88
46
9
16
Total LOMBARDY
-
-
56
102
278
4
1
441
MARCHE
-
-
-
-
-
1
-
1
-
-
-
-
-
1
-
1
29
-
-
-
2
126
4
11
2
1
-
1
-
-
29
2
126
4
13
2
29
-
-
145
1
1
-
176
ABRUZZO
Province
L'AQUILA
PESCARA
NAPLES
SALERNO
PORDENONE
UDINE
LATINA
ROME
VITERBO
FROSINONE
Total LAZIO
LIGURIA
GENOA
IMPERIA
LA SPEZIA
SAVONA
Total LIGURIA
LOMBARDY
BERGAMO
BRESCIA
COMO
CREMONA
LECCO
LODI
MANTUA
MILAN
PAVIA
SONDRIO
VARESE
PESARO E URBINO
Total MARCHE
PIEDMONT
ALESSANDRIA
ASTI
CUNEO
NOVARA
TURIN
VERCELLI
Total PIEDMONT
(folliwing)
32
(straight)
Region
Banca CR di
Banco di San
Banca di Valle
Banca Reg.
Banco di
Banca
Banca
Grand
Tortona
Giorgio
Camonica
Europea
Brescia
Lombarda P.I.
Lombarda
total
-
-
-
-
-
1
1
-
1
1
Total PUGLIA -
-
-
-
-
-
2
-
2
SARDINIA
-
-
-
-
-
1
-
1
Total SARDINIA
-
-
-
-
-
1
-
1
TUSCANY
-
1
-
-
-
-
1
1
1
1
-
1
1
1
1
1
Total TUSCANY
-
1
-
-
-
4
-
5
TRENT. -A.A. TRENTO
-
-
-
2
-
-
2
Total TRENTINO-ALTO ADIGE
-
-
-
-
2
-
-
2
UMBRIA
-
-
-
-
-
1
-
1
Total UMBRIA
-
-
-
-
-
1
-
1
VAL D' AOSTA AOSTA
-
-
-
1
-
-
-
1
Total VAL D' AOSTA
-
-
-
1
-
-
-
1
VENETO
-
-
-
-
4
3
2
12
4
1
-
-
4
3
3
12
4
-
-
-
-
25
1
-
26
29
33
56
259
375
28
1
781
-
-
-
1
1
-
-
-
1
1
29
33
56
260
376
28
1
783
PUGLIA
Province
BARI
FOGGIA
CAGLIARI
MASSA CARRARA
GROSSETO
LUCCA
PRATO
PISA
TERNI
PADUA
TREVISO
VENICE
VERONA
VICENZA
Total VENETO
Total ITALY
LUXEMBOURG LUXEMBOURG
FRANCE
NICE
Grand total
In October, CBRC, the Chinese Central Bank, issued authorization for the Parent Bank to open a representative office in China in the city of Shanghai.
This initiative forms part of the strategy of expanding the Bank’s presence to China, a country that is
showing high growth potential, in this way offering Italian companies that intend to develop their
business in China the chance to have an Italian structure available to them locally. It would also act
as a privileged point of observation of the Chinese market.
33
RISK MANAGEMENT
The overall design of the risk management system is based on the principles
laid down by the Basel Committee for Banking Supervision and is in line
with the instructions issued by the Bank of Italy.
In particular, the functions of identifying, measuring and controlling quantifiable risks on an integrated basis have been centralized in independent
departments within the Parent Bank (Risk Management and Planning and
Management Accounting). These departments are responsible for ensuring
constant control over the Group’s current and prospective exposure to market, lending, liquidity and operating risks.
The functions carried out by the risk management department take two
forms:
• management of current risks, carried out through the existing control
system;
• a design function, whose purpose is to develop a system of risk control in
line with the instructions contained in the “New Basel Capital Accord”
published by the Basel Committee in June 2004.
In order to strengthen the organizational resources dedicated to risk management, the Risk Management sector has been restructured and renamed as the
Risk department. This now contains a specific Risk Management sector,
divided into three separate functions, each of which is dedicated to managing one of the risks listed in the proposed New Basel Capital Accord (credit,
market and operational risk).
Current assets
The control of interest risk is carried out by means of Gap analysis and
Sensitivity models, using the new Static A&LM system, which forms part of a
wider project entitled the “Evolution and integration of the financial risk
management and control system”.
In particular, the new Static A&LM system foresees:
• the “stickiness” of items due on demand;
• the index-linking of floating rate items (mortgage loans in particular);
• an initial approach to the logic of transferring risks and yields according
to the model of Risk Taking Centers, reflecting the current divisionalization of the Commercial Banks.
Sensitivity is measured in terms of duration (sensitivity of loans to parallel
shifts in the yield curve of 100 bp). Gap analysis is carried out both with a
view to the short term (within 12 months) and to the medium/long term
(beyond 12 months). The analysis up to 12 months is carried out by groups
of monthly maturities, while six-monthly groups are used up to 3 years and
annual ones for maturities over 3 years.
34
Static A&LM is also used to analyze liquidity risk, based on the flows of
principal and interest falling due each month over the next twelve months.
As regards the market risk generated by the Finance Department’s trading
activity, the Board of Directors of Banca Lombarda e Piemontese approved a
new set of Finance Regulations giving the Finance Department limits in
terms of Value At Risk (VaR) calculated using variance/covariance methods,
with a time horizon of one day and a confidence level of 99%; these risk limits are also accompanied by Stop Loss criteria.
The limits for VaR cover:
1. Exposure to exchange risk;
2. Exposure to equity risk.
3. Exposure to interest rate risk.
4. Exposure to volatility risk (Vega risk).
In order to limit exposure to corporate securities, criteria have been introduced that will lead to the definition of limits in terms of notional amounts
per sector/rating.
The new finance regulations also contain an approval process for new business on financial markets
As regards exposure to interbank markets and interest risk generated
by the Group’s structural assets (Banking Book), the Finance Regulations
define limits for the Finance Department’s activities on behalf of all Group
banks in order to ensure structured, effective management of the different
levels of risk.
The ratio of the sensitivity of the value of on- and off- balance sheet assets
and liabilities less trading balances to stockholders’ equity will be monitored
in this respect. When calculating this ratio, all balance sheet items are
marked to market, including those that are not negotiable, so that the total
exposure of assets and liabilities to interest rate risk can be evaluated. The
upper limit for this ratio is set at 2% of stockholders’ equity for the Parent
Bank.
The method used for calculating sensitivity, both for the unrestricted securities portfolio and for the entire balance sheet structure, is called parallel shift
analysis. This method calculates the change in value in reaction to parallel
shocks to the entire interest rate structure: the Banca Lombarda e Piemontese
Group has assumed a shock of +/-100 basis points, calculated by means of
A&LM and VaR.
35
The subsidiary banks have also adopted the Finance Regulations and have
granted a mandate to Banca Lombarda e Piemontese to manage their securities portfolio and financial risks. This mandate establishes that the Finance
Area has to operate within the limits laid down in the Regulations.
As for lending risk, the procedure currently in use makes it possible to take
account of the Group’s overall exposure to an individual customer or group
of related customers. Credit limits are reviewed on a daily basis and any
overdrawn accounts not previously authorized are identified and reported to
the appropriate level of authority, in order to check the overall exposure to
each borrower.
Control over the regularity of all positions is carried out by a specific central
function at each of the subsidiary banks, with the power to classify loans in
the way that suits them best if branches appear not to be monitoring the situation adequately.
As regards the monitoring of performing loans, automated risk analysis procedures are used to highlight counterparties showing anomalies, which are
then examined individually.
In order to measure the potential loss of value inherent in the performing
loans portfolio and calculate the amount of the general provisions that need
to be made, current procedures work out the amount of the writedown to be
applied to individual counterparties and to the individual types of loans,
based on the results of this automated risk analysis procedure. For anomalous positions within the performing loans category, higher writedown rates
are applied automatically. In addition, positions considered of greatest risk
are written down on a case-by-case basis. The section on “accounting policies” should also be read in conjunction with this paragraph.
The Parent Bank reviews each bank’s loan performance by geographical
area, sector of the economy and customer segment, highlighting non-performing and anomalous situations, which is information of fundamental
importance to decide on a prudent commercial growth strategy.
As regards the management of credit limits for Italian and foreign institutional counterparties and country risk, IT procedures monitor these risks.
Ratings on institutional counterparties and countries are also obtained from
outside agencies in order to have constant updates on their solvency.
As for legal risk, the Bank maintains constant control over the validity,
effectiveness and enforceability of contracts under current legal norms and
regulations.
36
As regards the validity and effectiveness of contracts, we usually adopt formats developed by our trade associations (A.B.I., I.S.D.A., etc), adapting
them if necessary to our own requirements. As regards the checking of signature powers, we obtain suitable documentation (articles of association,
board resolutions, powers of attorney, etc) on each occasion that they are
required.
Project development
The project development activities performed by the Parent Bank’s Risk and
Planning and Management Accounting departments is particularly important.
They seek to provide the Group with a system for controlling market, lending and operational risks according to the classification recommended by the
Basel Committee, which is geared to risk management and control as well as
the allocation of capital.
The Group is being organized by business areas in order to:
• better monitor the business in terms of corporate governance;
• consider “risk” explicitly as a key factor in capital allocation decisions;
• reason by line of business in terms of their contribution to the creation of
value for stockholders so that the Group’s capital resources can be allocated more effectively.
As for credit risk, the Parent Bank’s Risk Department is currently leading a
project aimed at setting up a system of lending risk management and control,
parts of which will be submitted for Bank of Italy authorization. This program is one step in the process of adopting new standards for quantifying
capital for supervisory purposes, as recommended by the “New Basel Capital
Accord”.
The project will be implemented using a step-by-step approach made up of
various phases, at the end of which it will be possible to obtain a rating and
measure the capital at risk for each and every customer, together with the
related credit exposures by using Credit Value at Risk methods (CreditVaR).
In order to apply the most appropriate rating model, customers were split
into suitable segments. A rating model was then developed for each segment
to integrate the various processes involved in granting loans, as well as the
various profiles for managing lending policy and the loan book, pricing and
the measurement of returns by risk profile.
As for operational risk, work has begun on a group-wide project aimed at
setting up an integrated system for the identification, measurement and control of operating risks, based on international best practices and the qualitative and quantitative standards recommended in the New Basel Accord.
37
During 2004, the Banca Lombarda Group developed the minimum requisites
for applying the Standardised Approach for determining minimum capital
requirements and work began on implementing an Advanced method of
internal measurement in those segments where adequate historical series of
data are available.
As regards the status of the project currently in progress, the operating losses
in 2001 and 2002 have been historically reconstructed and, from early 2003,
the Group’s intranet manages a procedure for the integrated and systematic
reporting of such losses.
In keeping with the recommendations contained in the proposed New Basel
Accord, an organizational model has been defined for managing operating
risks and, within the Parent Bank, an Operational Risks Committee has been
set up to provide guidance and monitor the complex process of Operational
Risk Management. As mentioned, a specific function within the Risk Management sector is dedicated to the design and development of internal
methodologies for identifying, assessing, monitoring and mitigating operational risks and of the related reporting systems.
The Group has also joined the DIPO Observatory on operational risks
launched by the Italian Bankers’ Association for the exchange of data on
losses by the industry as a whole.
In 2004, the Group has continued a structured process of Risk Assessment
for the mapping and assessment of risk scenarios inherent to the various
areas of business. It has the support of an IT procedure to ensure an integrated approach, so as to provide a critical self-diagnosis in terms of potential exposure to the risk of losses and the adequacy of existing controls and
supervision.
THE INTERNAL CONTROL SYSTEM AND THE INTERNAL AUDITING
FUNCTION
Banca Lombarda’s system of internal control involves first and foremost the
Board of Directors and Senior Management, who define the control strategies, policies and objectives with regard to all the risks identified. The Board
also establishes the way that powers are delegated in order to ensure that
the various levels of risk are managed in a careful and effective manner.
In addition to them, the Board of Statutory Auditors, the Internal Control
Committee, Senior Management and the Human Resources Department also
play various roles in the internal control system..
38
Checking that operations are carried on as they should be is specifically delegated to the Internal Auditing department. It has the task of evaluating the
functionality of the overall system of internal controls which are designed to
guarantee the efficiency and effectiveness of corporate processes, the safeguarding of asset values and protection against losses, the reliability and
integrity of accounting and management information.
This activity has been carried on by checking:
– operating processes and structures, both remotely and on site, ensuring
compliance with the law and regulations, as well as the adequacy of and
compliance with internal rules;
– the adequacy of line controls and the reliability of the operating structures
and delegation mechanisms;
– the accuracy of the information made available to the various activities
and the way they are used;
– the loan disbursement and credit management process, also on a remote
basis;
– the adequacy and effectiveness of the ways in which IT systems are developed and run so as to ensure their reliability, security and functionality;
– supervision, also by means of on-site visits, of the intermediation of financial instruments and the adequacy of the related control systems and compliance with the rules of conduct;
– compliance with anti-money laundering regulations, for which structures
are also provided with an advisory service that is also designed to raise
awareness of the problem.
This same activity has been carried out at Group companies that outsource
their internal auditing to the Parent Bank.
In accordance with the instructions received from the Supervisory Authorities, the Parent Bank has taken the necessary steps to exercise strategic,
management and technical operating control and coordination as part of its
institutional role as the Group Parent Company.
The internal auditing activity is carried out on the basis of an annual plan,
which is drawn up and prioritized after a detailed analysis of the risks, in
line with the Bank’s objectives.
Evaluations of the internal control system and the results of audit checks are
periodically brought to the attention of the Directors and Statutory Auditors;
weaknesses arising during on-site checks are communicated to those in
charge of the units concerned to ensure the necessary improvements, subject
to follow-up.
39
HUMAN RESOURCES
At 12.31.2004 the Group employed 7,555 persons, including 378 under fixed-term contracts and 570
under part-time contracts.
The breakdown of staff by company at the end of the period is as follows:
Company
STAFF EMPLOYED
31.12.2003 (1)
Total
of which on longterm contracts
BANCA LOMBARDA
BANCA LOMBARDA PRIVATE INVESTMENT
455
420
STAFF EMPLOYED
31.12.2004
Total of which on longterm contracts
423
396
DIFFERENCE
of which
Total
on long-term
contracts
-32
-24
17
11
104
94
87
83
LOMBARDA SISTEMI E SERVIZI
652
628
635
606
-17
-22
BANCA REGIONALE EUROPEA
1,977
1,954
1,958
1,930
-19
-24
BANCO DI BRESCIA (incl. Luxembourg branch)
2,965
2,810
2,973
2,779
8
-31
BANCO DI BRESCIA
5
5
5
5
-
-
BANCA DI VALLE CAMONICA
(Luxembourg branch subject to Lux. law)
377
353
374
344
-3
-9
BANCA CASSA DI RISPARMIO DI TORTONA
215
213
214
211
-1
-2
BANCO DI SAN GIORGIO
220
207
232
222
12
15
SBS LEASING
155
150
165
161
10
11
C.B.I. FACTOR
129
108
129
114
-
6
S.I.L.F.
99
95
109
99
10
4
CAPITALGEST
63
61
67
66
4
5
1
1
3
2
2
1
VENETA FACTORING
44
38
44
38
-
-
GRIFOGEST
23
21
28
23
5
2
CAPITALGEST ALTERNATIVE INVESTMENTS
BANCA LOMBARDA INTERNATIONAL
46
45
43
39
-3
-6
SOLOFID
14
11
12
12
-2
1
MERCATI FINANZIARI SIM
15
13
15
15
-
2
SIFRU S.I.M.
3
3
4
3
1
-
FINANCIERA VENETA
6
6
6
6
-
-
12
12
12
12
-
-
7.493
7.165
7,555
7,177
62
12
GESTIONI LOMBARDA SUISSE
TOTAL RESOURCES (1)
(1) The 2003 total figure has been recalculated on a pro-forma basis, taking into account the fact that Gestioni Lombarda Suisse joined
the Group in 2004.
With respect to 31.12.2003 the total number of staff has increased by 62 people, mainly thanks to the
new jobs created at Banco di San Giorgio (+12), SBS Leasing (+10), and SILF (+10). There were also
new hires at the Parent Bank, mainly specialists with particular professional skills needed in the
structures involved in developing key projects, especially in the Finance, Auditing and Marketing
Departments. A number of employees were also transferred to Banca Lombarda from certain Group
companies as a result of reorganizations and functional centralizations. The net decrease in staff at
the Parent Bank is due to the sale of the business transferred to Banca Lombarda Private Investment
in October 2004, which involved 79 people. The headcount also went down at Banca Regionale
Europea (-19) and Lombarda Sistemi e Servizi (-17).
40
In these last two cases, the decline in the number of employees reflects a
genuine increase in efficiency thanks to ongoing rationalization at the central
structures and operating units, with particular reference to the gradual optimization of the divisional distribution model.
In the interests of full disclosure, the following is a summary of the average
number of employees in 2004 by company and category.
COMPANY
EXECUTIVES
SUPERVISORS
PROFESSIONAL
GRADES
TOTAL
55
168
216
439
6
22
33
61
54
883
2,032
2,969
BANCA LOMBARDA
BANCA LOMBARDA PRIVATE INVESTMENT
BANCO DI BRESCIA (including Luxembourg branch
personnel on an Italian contract)
BANCO DI BRESCIA (Luxembourg branch
-
2
3
5
BANCA REGIONALE EUROPEA
subject to Lux. law )
30
510
1,428
1,968
BANCA DI VALLE CAMONICA
2
102
272
376
BANCA CASSA DI RISPARMIO DI TORTONA
4
45
166
215
BANCO DI SAN GIORGIO
4
67
155
226
BANCA LOMBARDA INTERNATIONAL
1
11
33
45
11
189
444
644
SBS LEASING
5
25
130
160
C.B.I. FACTOR
7
42
80
129
S.I.L.F.
-
21
83
104
VENETA FACTORING
3
5
36
44
CAPITALGEST SGR
4
26
35
65
CAPITALGEST ALTERNATIVE INVESTMENTS SGR
-
2
-
2
LOMBARDA SISTEMI E SERVIZI
GRIFOGEST SGR
1
6
19
26
MERCATI FINANZIARI SIM
2
5
8
15
SOLOFID
1
2
10
13
SIFRU SIM
-
1
3
4
FINANCIERA VENETA
1
-
5
6
GESTIONI LOMBARDA SUISSE
2
3
7
12
193
2,137
5,198
7,528
2.6%
28.4%
69%
100%
TOTAL RESOURCES
% BY CATEGORY
The Banca Lombarda e Piemontese Group’s human resources management
function was very active in implementing important interventions such as:
•
•
•
•
•
personnel rationalization;
introduction of a new incentive system;
definition of regulatory and trade union procedures;
ongoing staff training;
ongoing staff selection.
41
Rationalization of the workforce
Work continued in 2004 on streamlining organizational structures (particularly head office ones) and optimizing the allocation of human resources within
the Group, mostly through transfers of individual employment contracts, taking account of needs associated with plans to merge the IT/operations of
subsidiaries and the completion of projects to develop the Group’s operations and commercial activities.
In the second half of the year, work continued on implementation of the
agreements signed by Group companies with the respective trade unions in
the first half of the year for admission to the “Solidarity fund for income and
employment support, and retraining of banking personnel” on the part of
workers who satisfy the requirements of Ministerial Decree no. 158/2000 and
subsequent minutes of the meeting held at the Italian Bankers’ Association
on January 24, 2001.
126 employees were admitted to the Solidarity Fund in addition to applications already made in prior years, taking into account the amendments to the
recent reform of the national pension system:
COMPANY
ACCESS TO THE
% OF
SOLIDARITY FOUND
STAFF
BANCA LOMBARDA
7
1.7
BANCO DI BRESCIA
45
1.5
BANCA REGIONALE EUROPEA
51
2.6
BANCA DI VALLE CAMONICA
6
1.6
BANCA CASSA DI RISPARMIO DI TORTONA
3
1.4
BANCO DI SAN GIORGIO
LOMBARDA SISTEMI E SERVIZI
TOTAL
3
1.3
11
1.7
126
1.9
These leavers were mostly replaced with new hires, representing no more
than a third of those admitted to the Fund.
Following the “Optimization of the Retail Model” project launched in recent
years, 2004 saw the introduction of similar plans for the Small Business and
Corporate sectors, the aim being to raise operating flexibility and create new
business opportunities, also by means of greater specialization on the part of
key professionals.
42
With a view to increasing the level of flexibility in personnel management
and the related costs, we continued to give priority to hiring new staff on
fixed-term contracts mainly to cope with turnover at the network banks; we
also encouraged the use of part-time contracts introduced by recent legislation on the labor market (the so-called “Biagi Law”), with particular reference
to “Entry-Level Contracts”. The use of new part-time contracts was also
encouraged and extended.
Lastly, particular attention was paid to Group development projects and to
the plans to expand certain important governance structures of Banca Lombarda. This involved identifying and hiring staff with adequate professional
and management skills, bearing in mind the need to comply with Basel 2
and IFRS.
New Incentive System
In order to improve the commercial effectiveness of the Network and the
operating efficiency of the central structures, 2004 saw the introduction of
the “New Incentive System”. The purpose is to promote “active participation”
of all Group employees, while simultaneously fostering the pursuit of company and individual objectives to the same end, raising the variable, incentive portion of remuneration that depends directly on the amount of value
creation generated.
The new System has the following goals:
• to encourage the involvement of all Network personnel in achieving the
objectives assigned to them, enhancing the value of teamwork;
• to link the payment of bonuses to the achievement of individual results,
team results and company results, based on pre-established objectives;
• to differentiate bonuses depending on the person’s role, level of responsibility and results achieved, based on criteria that are objective, transparent
and easy to understand;
• to stimulate the achievement of objectives through the importance of the
bonuses linked to the results;
• to act on the variable element of pay, adopting a policy of distributing part
of the additional value effectively generated in the form of bonuses.
The new System, which has the support of a specific procedure developed
by Lombarda Sistemi e Servizi to monitor results on an ongoing basis, will
have its initial impact on the bonuses to be paid in 2005. It is based on the
assignment of budget objectives that refer to individual and/or unit portfolios
and specific objectives in terms of quality or quantity, even for members of
Central Management.
43
Contractual and trade union procedures
2004 saw completion of the plan to integrate Banca Lombarda Private Investment by transferring a business consisting of the commercial area of Banca
Lombarda, including the Banca Lombarda Points and the Private Banking
Branches, the customers handled by the financial consultants of Banco di Brescia and Banco di San Giorgio, as well as the support personnel of these areas.
Specific trade union agreements were signed in accordance with the pertinent
legal and contractual procedures, regulating the collective transfer of the
employment relationship of the personnel concerned and harmonizing the economic and regulatory treatment of the various corporate components involved.
Specific trade union agreements were signed in accordance with the pertinent
legal and contractual procedures, regulating the collective transfer of the
employment relationship of the personnel concerned and harmonizing the economic and regulatory treatment of the various corporate components involved.
Training – Selection – Management and Development of Human
Resources
Professional training courses were stepped up, especially classroom training,
with a view to constant improvement in the service provided, in terms of
both technical quality and good customer relations.
The Group focused its training efforts on integrating technical skills and
learning how to use innovative operating tools such as the “AGIRE” portal,
the Asset Allocation portal and the Credit and Loans portal. Considerable
emphasis was also put on commercial planning for the networks. All members of staff at the branches were scheduled to attend classes, involving
them in an integrated training program.
Particular important was given to analyzing topics related to improving customer relations (the new rules on banking transparency, initiatives and certifications as part of the “Patti Chiari” project) and new regulations (Privacy,
Health and Safety in the Workplace (Law 626) and Anti-Money Laundering).
Special attention has also been given to training in highly topical matters
regarding the management of customers with credit facilities (new company
law), risk management (new Basel Accord), the sale of innovative products
(derivatives, flexible funds, bancassurance, electronic money, etc.).
Training in sales and marketing continued in order to refine negotiating skills
and improve selling ability. In 2004, these courses were attended by frontoffice staff of the Networks.
Remote training (or e-learning) was provided for specific professionals to
permit ongoing skills acquisition. Modular integrated training programs have
been put together (combining classroom and e-learning) for individual professionals, involving procedural, technical/professional, regulatory and
behavioral aspects.
A Masters degree has also been launched, together with Milan Polytechnic,
for high-fliers working for the Group.
In 2004, training carried out came to 27,000 man/days, with an increase of
60% on 2003.
44
TOTAL MAN/DAYS TRAINING
2004
2003
In-house courses
22,660
12,098
External courses
1,016
1,338
Self-training and e-learning
3,368
3,380
27,044
16,816
TOTAL
External courses, self-training and e-learning are more or less in line with last
year, whereas there has been a considerable increase in classroom training,
in line with the latest Group strategies.
Personnel selection
The staff selection process, which is carried out on behalf of all Group companies, increasingly through electronic channels, concerned both skilled professionals and new hires.
During the course of 2004, the personnel assessment system was simplified,
streamlining related processes, so as to obtain more systematic and structured information on the staff’s professional skills. Personnel administration
at Grifogest Sgr was transferred to the Parent Bank, continuing the process of
centralizing HR administrative functions for all Group companies.
To permit Group companies’ human resource departments to have a tool to
analyze and control data on employees, an HR datawarehouse was developed with the help of Lombarda Sistemi e Servizi. This is a software application which is automatically updated by the information contained in the procedures of the Personnel Information System.
TRANSACTIONS WITH GROUP COMPANIES AND RELATED PARTIES
As explained previously, the Group’s organizational structure centralizes certain functions and services of the subsidiaries with the Parent Bank, Banca
Lombarda e Piemontese, and Lombarda Sistemi e Servizi.
These service relationships are remunerated at market conditions, including
overheads and depreciation.
45
Transactions with related parties, as defined by CONSOB in recommendations 97001574 dated February 20, 1997, and 98015375 dated February 27,
1998, by Banca Lombarda e Piemontese and other Group companies relate
to normal financial intermediation and services. These transactions are monitored to identify possible conflicts of interest and are conducted on the usual
terms for prime customers.
As regards the activity of management control and coordination on the part
of the Parent Bank, as requested by art. 2497 bis of the Italian Civil Code, we
would point out that this activity concerned all aspects of banking operations.
Indeed, in addition to defining policy guidelines as part of an overall Group
strategy and issuing instructions on how Bank of Italy recommendations in
the interest of Group stability are to be executed, the Parent Bank also managed, under specific outsourcing agreements, the Bank’s own security portfolio and treasury function, the accounting and administrative area, planning
and management accounting, and risk management. As regards the accounting and administrative area in particular, the Parent Bank’s management control and coordination activity could also be seen in the Bank’s option to file
for tax on a consolidated basis, which led to current taxes being calculated
on a Group-wide basis.
The fact that the Parent Bank carried on this activity on an outsourcing basis
made it possible to benefit from better conditions compared with what was
available on the market, given the standardization of the services offered by
the Parent Bank to the various Group entities and, as a result, the economies
of scale that could be realized.
46
B
SCOPE OF CONSOLIDATION
BALANCE SHEET AND
STATEMENT OF
INCOME
The consolidated financial statements include the financial statements of
Banca Lombarda e Piemontese SpA, the Parent Bank, and of its direct and
indirect subsidiaries, which operate in the banking, financial and related sectors. Non-controlling investments, representing at least 20% of capital, in
companies operating in the banking, financial and related sectors are carried
at equity, as are other subsidiaries not operating in those sectors. Holdings of
less than 20% are carried at cost.
Consolidation line-by-line
The following changes regarding equity investments consolidated line-byline have taken place since December 31, 2003:
• purchase of a 1.92% interest in the capital stock of CBI Factor S.p.A.; this
company is now 100% held by the Parent Bank;
• purchase by the Parent Bank of a 0.04% interest in the capital stock of
Banco di San Giorgio S.p.A.: this bank is now 86.74% held by the Group;
• purchase of 100% of the capital stock of Caboto International SA (now
Gestioni Lombarda Suisse S.A.) through Banca Lombarda International
S.A..
Equity method
With reference to the companies carried at equity, we point out that the only
change compared with December 31 2003, refer to the Parent Bank’s interest
in Brescia On Line S.r.l. which having decreased from 20% to 10%, this
investment is therefore now carried at cost rather than at equity.
A reclassified balance sheet and statement of income, highlighting the principal results of operations, are provided below. These are followed by comments on the principal indicators relating to earnings, productivity and efficiency.
47
RECLASSIFIED CONSOLIDATED BALANCE SHEET
(thousands of euro)
ASSETS
12.31.2004
Cash and deposits with central banks and post offices
Loans to customers
- including non-performing loans
12.31.2003
Changes
Amount
%
165,394
150,348
15,046
25,867,003
23,584,079
2,282,924
10.0
9.7
246,207
247,905
-1,698
-0.7
Due from banks
2,475,433
2,383,294
92,139
3.9
Securities
1,247,368
1,663,036
-415,668
-25.0
Equity investments
496,857
477,713
19,144
4.0
Intangible and tangible fixed assets
879,837
873,117
6,720
0.8
673,581
717,681
-44,100
-6.1
1,693,056
1,649,805
43,251
2.6
33,498,529
31,499,073
1,999,456
6.3
12.31.2004
12.31.2003
Due to customers
15,624,869
14,680,967
943,902
6.4
Securities issued
9,339,712
7,688,479
1,651,233
21.5
24,964,581
22,369,446
2,595,135
11.6
2,542,655
2,829,587
-286,932
-10.1
Goodwill arising on application of the equity
method and on consolidation
Other assets
TOTAL ASSETS
LIABILITIES AND
STOCKHOLDERS' EQUITY
Total
Due to banks
Provisions for specific use
Other liabilities
Minority interests
Subordinated liabilities
Changes
Amount
%
527,348
668,004
-140,656
-21.1
1,566,149
1,866,534
-300,385
-16.1
467,747
459,526
8,221
1.8
1,339,040
1,305,821
33,219
2.5
1,939,274
1,888,096
51,178
2.7
151,735
112,059
39,676
35.4
33,498,529
31,499,073
1,999,456
6.3
Stockholders' equity:
- Capital stock, reserves and retained earnings
- Net income for the year
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
48
RECLASSIFIED CONSOLIDATED STATEMENT OF INCOME
(thousands of euro)
12.31.2004
12.31.2003
Changes
Amount
%
10. Interest income
1,290,463
1,335,089
-44,626
-3.3
20. Interest expense
-520,622
-589,440
-68,818
-11.7
28,292
16,593
11,699
70.5
NET INTEREST INCOME
798,133
762,242
35,891
4.7
Net income from services
539,586
510,588
28,998
5.7
40. Commission income
508,280
469,446
38,834
8.3
50. Commission expense
-107,352
-96,473
10,879
11.3
70. Other operating income
170,349
168,849
1,500
0.9
110. Other operating expenses
-31,691
-31,234
457
1.5
40,872
45,885
-5,013
-10.9
1,378,591
1,318,715
59,876
4.5
30. Dividends and other revenues
60. Profits (losses) on financial transactions
NET INTEREST AND OTHER BANKING INCOME
80. Administrative costs
-767,898
-725,152
42,746
5.9
- Payroll costs
-452,223
-429,778
22,445
5.2
- Other administrative costs
-315,675
-295,374
20,301
6.9
OPERATING INCOME
610,693
593,563
17,130
2.9
90. Total adjustments to tangible and intangible assets
-158,983
-156,058
2,925
1.9
-57,664
-58,284
-620
-1.1
-27,062
-18,927
8,135
43.0
-139,756
-173,057
-33,301
-19.2
guarantees and commitments
45,860
43,799
2,061
4.7
150. Adjustments to financial fixed assets
-1,162
-154
1,008
654.5
5,223
4,092
1,131
27.6
334,813
293,258
41,555
14.2
- of which goodwill and positive differences arising on
consolidation or application of the equity method
100. Provisions for liabilities and charges
120. Adjustments to loans and provisions for
guarantees and commitments
130. Writebacks of loans and provisions for
170. Income from equity investments
carried at equity
INCOME FROM OPERATING ACTIVITIES
190. Extraordinary income
30,065
36,791
-6,726
-18.3
200. Extraordinary charges
-14,726
-22,658
-7,932
-35.0
INCOME BEFORE INCOME TAXES
350,152
307,391
42,761
13.9
240. Income taxes for the year
-166,522
-158,865
7,657
4.8
NET INCOME FOR THE YEAR
(before allocations to equity reserves)
183,630
148,526
35,104
23.6
-
-150
150
n.s.
-31,895
-36,317
-4,422
-12.2
151,735
112,059
39,676
35.4
230. Change in reserve for general banking risks
250. Income (loss) attributable to minority interests
NET INCOME FOR THE YEAR
49
BALANCE SHEET
Funding
At the end of 2004, total customer assets under administration came to
68,400 million Euro, an increase of 8.7% compared with the previous year.
The increase is attributable mainly to the growth in direct deposits, up 11.6%
during the year, though indirect deposits also rose by 7.2%.
Assets under management (in millions of euro)
CHANGE IN FUNDS UNDER MANAGEMENT
12.31.2004
12.31.2003
Changes
Amount
%
Amount
%
Amount
%
24,965
36.5%
22,369
35.6%
2,595
11.6%
15,625
22.8%
14,681
23.3%
944
6.4%
1,833
2.7%
1,864
3.0%
-30
-1.6%
SECURITIES ISSUED
9,340
13.7%
7,688
12.2%
1,651
21.5%
of which BONDS
8,878
13.0%
7,156
11.4%
1,722
24.1%
DIRECT CUSTOMER DEPOSITS
DUE TO CUSTOMERS
of which repurchase agreements
INDIRECT DEPOSITS
43,435
63.5%
40,532
64.4%
2,903
7.2%
ASSET ADMINISTRATION
19,410
28.4%
18,144
28.8%
1,266
7.0%
ASSET MANAGEMENT
24,025
35.1%
22,388
35.6%
1,637
7.3%
5,722
8.4%
4,908
7.8%
814
16.6%
62,901 100.0%
5,498
8.7%
of which: technical reserves
TOTAL CUSTOMER FUNDS UNDER ADMINISTRATION
68,400 100.0%
Direct deposits
Direct customer deposits rose by 11.6% compared with December 31, 2003,
to 25 thousand Euro.
The trend in funding, benefiting from customers ongoing preference for liquidity, resulted in an 8.9% increase in current account balances. As regards
the longer term maturity, bonds went up by 24.1% (8% net of the institutional component).
Repurchase agreements, 1,833 million Euro, fell by 1.6%, whereas as a proportion of total deposits, they decreased from 8.3% to 7.3%.
The breakdown of traditional deposits based on the customers’ sector of
appurtenance shows households (consumers and family businesses) with a
percentage of 67%, which confirms the Bank’s high retail base. The remainder consists of the corporate sector (10%) and institutional customers (23%).
50
Indirect deposits
Indirect customer deposits of 43,435 million Euro are 7.2% higher than the
position at the end of December 2003.
This was partly due to the expansion of asset administration, up 7% to
19,410 million Euro, but mostly to the growth in managed assets to more
than 24 million Euro following a rise of 7.3%.
The net inflows to asset management (1,637 million Euro) reflected investment in mutual funds (+3.8%), personalized asset and fund management
(+5.5%), and 1,196 million Euro of new insurance premiums, which pushed
technical reserves up to 5,722 million Euro (+16.6% on the previous year).
During the year there was renewed interest on the part of customers in traditional policies, a segment where the product range has been enriched. These
policies accounted for around half of the life insurance premiums written
during the year; the rest were products with a higher financial content, such
as index and unit linked policies.
Subordinated liabilities
Subordinated liabilities (1,339 million Euro) have increased by 2.5% compared with last year. These are made up of preference shares and upper and
lower tier II liabilities that are included in capital for supervisory purposes. in
particular, this increase was due to the issue of a bond for 250 million Euro
at the end of June 2004; this issue, to replace earlier loans that have matured.
Loans to customers
Lending to customers totals 25,867 million Euro, up 9.7% over the previous
year. Contributions to this performance were made by the Group’s branch
network (+7.8%), but even more by leasing and consumer credit companies,
with an increase of 17.6%.
As regards the loan structure by maturity, there has been a more lively trend
in medium/long term loans than in short term lending, due to the performance of the real estate segment which fed the demand for mortgage loans.
The trend in loans differed quite considerably from sector to sector, with
loans to manufacturing industry down on the previous year, while loans to
the construction and service industries were well up.
51
Doubtful loans
At year-end, net doubtful loans totaled 576 million Euro, with a decrease of
2.9% compared with 2003. In particular, loans are:
– net non-performing loans, at 246 million Euro, are 0.7% lower than in the
previous year; as a proportion of total loans they come to 0.95% versus
1.05% a year ago.
– problem loans, which went from 1.39% in 2003 to 1.24% of total loans,
came to 321 million Euro, falling by 1.8%;
– restructured loans and those in the process of being restructured have
decreased from 19 to 9.4 million Euro.
In addition, the provisions and write-downs covering non-performing loans
rose (from 41% to 42%), as did those covering problem loans (from 13% to
14%).
The Group’s general provisions total 97 million Euro, representing 0.38% of
performing loans.
Securities
As of December 31, 2004, the securities portfolio amounts to 1,247 million
Euro, down 25% over the previous year, following the repayment of securities that have matured which were not replaced. Other more liquid and
remunerative forms of investment have been selected.
The portfolio comprises dealing securities of 975 million Euro, largely floating rate with an average duration of 1.61 years, and investment securities of
272 million Euro, with an average duration of less than six months.
Net interbank balances
The liquidity resulting from the redemption of securities was used partly to
finance higher lending by the Bank and partly to reduce borrowing from
other banks. Net interbank borrowing declined as a result from 446 to 87
million Euro.
Derivatives
As regards derivative products, the Group’s activity was geared to realize a
high degree of correlation between the income-earning profiles of assets and
liabilities, adopting prudent management criteria without any speculative element. Accordingly, derivative transactions have served to hedge interest rate,
maturity date and exchange rate risks related to the profile of assets and liabilities.
52
Stockholders’ equity
The consolidated stockholders’ equity of the Bank as of December 31, 2004,
totals 2,091 million Euro, including 1,939 million Euro of capital stock and
reserves and net income for the year.
Note that during the period there was an increase in capital stock of 4 million Euro and in additional paid-in capital of 31 million Euro against conversion of the warrants and of the stock option and stock granting plans.
The following is the reconciliation of stockholders’ equity and net income for
the year.
(amounts in thousands of Euro)
Stockholders' equity and result for the year pertaining to the Parent Bank
Elimination of adjustments and provisions recorded
solely for tax purposes
- reserves for possible loan losses considered part of equity
- reserves for accelerated depreciation
Consolidation entries:
- effect of line-by-line consolidation
of which "Reserves for general banking and financial risks"
- effect of valuation at equity
Dividends collected during the year
Dividends for the year recorded on an accruals basis
Stockholders' equity and result for the year pertaining to the Group
Minority interests
Stockholders' equity and result for the year
including minority interests
Stockholders'
equity
Net income
for the year
1,842,772
167,646
-
-75,223
-7,370
355,819
58,233
7,126
238,020
5,521
-172,941
-3,918
-172,941
2,091,009
151,735
467,747
31,895
2.558.756
183.630
Based on the equity ratios, consolidated stockholders’ equity at December 31, 2004 includes
revaluation reserves pertaining to minority interests of 59,191 thousand euro.
53
STATEMENT OF INCOME
The Banca Lombarda Group closed 2004 with a significant increase in profitability thanks to good revenue growth and better credit quality.
The results and trends in margins and the main items in the statement of
income are commented on below.
Net interest income
Net interest income came to 798.1 million Euro, a significant increase thanks
to the positive trend in money management (3.2%) and dividends (70.5%).
The first of these elements came to 769.8 million, benefiting from the
increase in volumes handled, which more than offset the substantial (30 bp)
reduction in interest spreads.
Dividends rose considerably to 28.3 million Euro, mainly because of the dividend declared by Banca Intesa, whose economic performance has consolidated steady improvements over the years. Note that the 2003 figures have
not been restated on a pro-forma basis for the tax credit of 3.3 million Euro,
which has been abolished in the meantime. On a comparable basis, the
increase in dividend would have come to 113.5%, while the increase in net
interest income would have been 5.2%.
Net income from services
Net income from services amounts to 539.6 million Euro, with growth of
around 6% on the previous year. This increase was mainly thanks to the rise
in net commissions (7.5%), within which the biggest increase was in commissions on asset management and collection and payment services.
Other operating income amounted to 170.3 million Euro, while other operating expenses (31.7 million Euro) remained substantially unchanged compared with 2003.
Profits on financial transactions
This caption, 40.9 million Euro, shows a decrease of 10.9%, which is partly
due to the decrease in business in derivatives and the decline in the size of
the dealing portfolio.
54
Net interest and other banking income
Net interest and other banking income came in at 1,378.6 million Euro with a
progress on 2003 of 4.5% or 60 million Euro.
Administrative costs
Administrative costs totaled 767.9 million Euro, up 5.9 million compared with
the previous year. The increase in costs is attributable to various factors.
In particular, payroll costs of 452.2 million Euro, showed growth of 5.2%,
only partly due to new hires. Approximately half of this increase (2.3%) was
also brought about by renewal of the National Collective Labor Contract.
Other administrative costs, 315.7 million Euro, showed a rise of 6.9%. The
increase is mainly attributable to the expenses incurred for the “PattiChiari”
initiative, and for important projects such as Basel 2 and IFRS. Other factors
that had an impact on costs were the integration in Banca Lombarda Private
Investment of the businesses transferred by various Group banks, insurance
costs and substitute tax as per Law 601 (recovered in other operating
income).
Operating income
The operating income totals 610.7 million Euro up 2.9% on 2003.
Adjustments to tangible and intangible fixed assets
Adjustments to tangible and intangible fixed assets, amounting to 159 million
Euro, were 1.9% higher than in 2003. This modest rise is due to the increase
in amortization of the solidarity fund.
Provisions for liabilities and charges
Provisions for liabilities and charges, 27.1 million Euro, have gone up by
43%. Provisions have gone up mainly for prudence sake to cover claims for
anatocism (capitalization of interest) and investment services.
55
Net adjustments to loans
Net adjustments to loans resulting from the adjustment of specific positions
to estimated realizable value and coverage of the inherent risk of performing
loans turning bad passed from 129.3 million Euro to 93.9 million Euro with a
reduction of over 27% totaling 35 million Euro, thanks to higher adjustments
in 2003 against the Parmalat exposure (28 million Euro).
The cost of credit quality, calculated as the ratio of net adjustments for the
year to the stock of loans at the end of the year, has improved considerably,
coming in at 0.36% compared with 0.55% in 2003. Note also that the levels of
coverage have improved on non-performing and problem loans, rising to
42% and 14%, respectively, whereas for performing loans it has remained the
same (0.38%).
Income from operating activities
Income from operating activities was 334.8 million Euro, with a significant
rise of 14.2% on 2003.
Net extraordinary income
Net extraordinary items amounted to 15.3 million Euro, up 8.5%. Extraordinary income includes gains on the sale of equity investments of 6.9 million
Euro.
Taxation
Taxation amounts to 166.5 million Euro with a tax rate of 47.6%, a reduction
of 4.1 percentage points on 2003 because of a one-point decrease in IRES,
higher tax-exempt revenues and lower non-deductible extraordinary charges.
Net income for the year
The net income for the year came to 151.7 million Euro with a significant
increase on 2003 of 35%.
56
PERFORMANCE OF GROUP COMPANIES
The performance of the principal Group companies during the year is
described below, with a brief comment on each.
BANKING
Banco di Brescia
Deposits show total volume of 35,607 million Euro, 4.9% higher compared
with December, 31 2003. The increase is mainly due to the positive trend in
direct deposits, which turned in a rise of 5.4%, whereas indirect deposits
grew by a bit less (4.6%).
Once again, investors confirmed their preference for the more liquid kinds of
funding, while as regards indirect deposits the types that saw the biggest
increases are mutual funds (+6.1%) and life insurance policies with technical
reserves that amount to 3,284 million Euro (+12.2%).
Loans to customers climbed by 5.5% on 2003 to 11,972 million Euro. These
amounts reflect the growth in mortgages and personal loans (+18.8%).
Turning to the statement of income, net interest income has remained more
or less the same as in 2003, while net income from services has grown by
4.8% thanks to the positive trend in commissions from the placement of
securities, the distribution of insurance products, collection and payment services and guarantees given.
Administrative costs reported an increase of 3.3%: Payroll costs rose by 2.8%,
while other administrative costs grew by 3.8%.
Operating income, 305 million Euro, remained more or less stable compared
with the previous year, while income from operating activities, 223.7 million
Euro, increased by 6.4%, mainly due to lower net adjustments to loans compared with the previous year. Pro-forma net income for the year was 135.1
million Euro, 15% higher than last year. Net income for the year comes to
178.2 million Euro and includes the effect of extraordinary income deriving
from defiscalisation and intercompany transactions, details of which are given in the section in the notes on accounting policies.
57
(in millions of Euro)
Balance sheet
Loans to customers
Securities
Equity investments
Total assets
Due to customers
Indirect deposits (1)
- Asset administration
- Asset management
of which: technical reserves
Customer assets under administration
Capital and reserves (excluding net income)
12.31.2004
12.31.2003
+/- change Change %
11,972
230
82
15,296
12,809
22,798
10,581
12,217
3,284
35,607
850
11,346
430
85
15,352
12,152
21,803
10,327
11,476
2,927
33,955
844
626
-200
-3
-56
657
996
255
741
357
1,653
6
5.5
-46.5
-3.2
-0.4
5.4
4.6
2.5
6.5
12.2
4.9
0.7
374.1
276.5
650.6
345.5
305.1
223.7
7.7
135.1
178.2
374.8
267.2
642.0
334.5
307.6
210.2
2.8
117.5
118.2
-0.7
9.2
8.6
11.0
-2.5
13.5
4.8
17.6
60.0
-0.2
3.4
1.3
3.3
-0.8
6.4
170.8
15.0
50.8
Statement of income
Net interest income
Net income from services
Net interest and other banking income
Administrative costs
Operating income
Income from operating activities
Net extraordinary income
Net income (2)
Net income for the year
(1) The 2003 total has been restated on a pro-forma basis to take into account the transfer of indirect
deposits by customers served by the bank’s financial consultants to Banca Lombarda Private Investment.
(2) The 2003 and 2004 figures have been restated on a pro-forma basis to take into account the effects of
“defiscalisation”.
Banca Regionale Europea
Direct customer deposits rose 5% to 5,837 million Euro compared with 2003,
driven by current accounts (+6.9%) and bonds (+5.6%).
Indirect deposits now exceed 13 thousand Euro, up 4.3% compared with the
same period of last year.
In particular, assets under administration, 5,210 million Euro, have fallen by
2.8%, while assets under management, thanks to a net inflow of 180 million
Euro, came to 7,846 million Euro, + 9.7% on 2003. Within these two elements, life insurance technical reserves, with an increase of 23.3%, confirmed
their positive growth trend of recent years, reaching a total of 1,740 million
Euro.
At the end of December 2004, loans to customers exceeded 6 billion Euro,
rising by 7.4% compared with 2003, entirely due to medium/long term loans.
The ongoing expansion in long-term loans has raised their proportion to
total loans granted by the Bank, such that by the end of the year they came
to 50%. Constant attention to asset quality led to a further improvement in
the ratio of net non-performing loans/total lending, which fell from 1.24% to
1.18%.
58
As regards the main items in the statement of income, net interest income
was 3.2% lower than at December 31, 2003, mainly due to a deterioration in
the interest spread, only partially offset by higher volumes. However, net
income from services improved by 9.3% with the result that net interest and
other banking income rose by 1.5% on the previous year, to 381.6 million
Euro.
Administrative costs rose by 3.2%. As part of the above, payroll costs went
up by 3%, although this figures includes the impact (+1.9%) of the labor contract renewal. Other administrative costs grew by 3.4%.
Operating income, 149.6 million Euro, decreased by 1.1% compared with the
previous year, whereas income from operating activities was 99.7 million
Euro, down 2.2%. Pro forma net income for the year was 8.1% lower than in
2003 at 63.6 million Euro. Net income for the year amounts to 76.8 million
Euro and includes extraordinary income resulting from defiscalisation.
(in millions of Euro)
Balance sheet
Loans to customers
Securities
Equity investments
Total assets
Due to customers
Indirect deposits
- Asset administration
- Asset management
of which: technical reserves
Customer assets under administration
Capital and reserves (excluding net income)
12.31.2004
12.31.2003
+/- change Change %
6,013
93
237
7,756
5,837
13,056
5,210
7,846
1,740
18,893
961
5,598
116
247
7,264
5,559
12,515
5,363
7,152
1,411
18,074
935
415
-23
-9
491
278
541
-153
694
329
819
26
7.4
-19.9
-3.7
6.8
5.0
4.3
-2.8
9.7
23.3
4.5
2.8
222.2
158.9
381.2
232.0
149.2
99.7
5.7
63.9
77.0
230.0
146.1
376.0
224.7
151.3
101.9
12.3
69.2
69.2
-7.7
12.9
5.2
7.2
-2.1
-2.2
-6.6
-5.3
7.8
-3.4
8.8
1.4
3.2
-1.4
-2.2
-53.9
-7.7
11.2
Statement of income
Net interest income
Net income from services
Net interest and other banking income
Administrative costs
Operating income
Income from operating activities
Net extraordinary income
Net income (1)
Net income for the year
(1) The 2003 and 2004 figures have been restated on a pro-forma basis to take into account the effects
deriving of “defiscalisation”.
59
Banca di Valle Camonica
Closing deposits totaled 2,288 million Euro, up 3.1% on 2003. Direct and
indirect deposits rose by more or less the same amount during the year.
Direct deposits came to 1,244 million Euro (+3%), mainly driven by repurchase agreements (+8.7%).
Indirect deposits amounted to 1,044 million Euro, with an increase of 3.2%
on the figure at December 2003, with the “administered” portion more or
less stationery, whereas the “managed” portion was a bit more dynamic (+
4.9%).
Total loans to customers came to 1,234 million Euro, with growth of 8.8%
compared with the end of 2003, bolstered above all by residential mortgages.
Short-term loans decreased slightly (-1.1%). Net non-performing loans, 11.3
million Euro, declined by 14.6%, showing a further improvement on total
loans (0.91% versus 1.16% in 2003).
As for the results for the year, net interest income was 2.6% lower than at
December 31, 2003. This was due to the contraction in the spread between
interest-bearing funding and interest-earning assets, while net income from
services grew by 5.8%, thanks to the positive trend in net operating income
(+11.5%). Net interest and other banking income of 66.9 million Euro was
essentially unchanged compared with a year earlier.
As regards expenses, administrative costs increased by 3.9%. In particular,
payroll costs remained unchanged compared with 2003, while other administrative costs rose by 7.6% because of an increase in IT costs.
Operating income, 22.6 million Euro, decreased by 7%, while income from
operating activities of 15.8 million Euro, came in at much the same level as
last year. Pro forma net income for the year was 8.8 million Euro, 1.6% higher than last year. Net income for the year is 12.2 million Euro and includes
the extraordinary income generated by defiscalisation.
60
(in millions of Euro)
Balance sheet
Loans to customers
Securities
Equity investments
Total assets
Due to customers
Indirect deposits
- Asset administration
- Asset management
of which: technical reserves
Customer assets under administration
Capital and reserves (excluding net income)
12.31.2004
12.31.2003
+/- change Change %
1,234
3
1,509
1,244
1,044
404
639
181
2,288
92
1,134
60
0.1
1,408
1,208
1,011
402
609
149
2,219
90
100
-58
101
36
33
2
30
32
68
2
8.8
-95.8
7.2
3.0
3.3
0.6
4.9
21.8
3.1
2.8
43.8
23.1
66.9
44.3
22.6
15.8
0.7
8.8
12.2
44.9
22.0
66.9
42.6
24.3
15.9
0.4
8.6
7.7
-1.2
1.1
-0.1
1.7
-1.7
0.0
0.3
0.1
4.5
-2.6
5.0
-0.1
3.9
-7.0
-0.3
93.2
1.6
58.4
Statement of income
Net interest income
Net income from services
Net interest and other banking income
Administrative costs
Operating income
Income from operating activities
Net extraordinary income
Net income (1)
Net income for the year
(1) The 2003 and 2004 figures have been recalculated in a pro-forma version to take into account the
effects of “defiscalisation”.
Banco di San Giorgio
Deposits reached 1,583 million Euro, 14.5% higher than in 2003. The
increase is explained by the positive trend in both direct deposits, +17.1%,
and indirect deposits, +12.1%.
At the end of 2004, loans to customers totaled 956 million Euro, with an
increase of 20.5% on the previous year, sustained above all by “mortgages
and personal loans”. Net non-performing loans, equal to 16.5 million Euro,
grew by 16.3%, but as a proportion of total loans they remained at the same
level as in 2003 (1.73% versus 1.79%).
As regards the statement of income, net interest income increased by 8.3%
thanks to higher volumes. Net income from services exceeded 16.1 million
Euro (+11.6%) and net interest and other banking income came to 46.8 million Euro (+10.6%).
Administrative costs rose by 14.8% to 27.7 million Euro. In particular, payroll
costs grew by 11.3%, because of the increase in personnel; other administrative costs rose by 18%, driven by the costs of services rendered by the Parent
Bank and by Lombarda Sistemi e Servizi.
61
Operating income, 19 million Euro, increased by 5.1% compared with the
previous year; Income from operating activities was 10 million Euro, down
9.2%, while pro-forma net income for the year (7.7 million Euro) is up by
26.8%, thanks to positive net extraordinary items, due to the sale of the business to Banca Lombarda Private Investment. Net income for the year comes
to 12.5 million Euro and, in addition to the intercompany gain mentioned
previously, includes the extraordinary income deriving from defiscalisation.
(in millions of Euro)
Balance sheet
Loans to customers
Securities
Equity investments
Total assets
Due to customers
Indirect deposits (1)
- Asset administration
- Asset management
of which: technical reserves
Customer assets under administration
Capital and reserves (excluding net income)
12.31.2004
12.31.2003
+/- change Change %
956
12
1
1,075
786
797
464
333
105
1,583
74
794
15
1
898
671
711
423
288
79
1,382
72
162
-3
177
115
86
41
45
26
201
2
20.5
-19.6
11.7
19.7
17.1
12.1
9.6
15.7
32.2
14.5
3.2
29.1
17.7
46.8
27.7
19.0
10.0
1.8
7.7
12.5
26.9
15.4
42.3
24.2
18.1
11.0
-0.1
6.1
4.3
2.2
2.3
4.5
3.6
0.9
-1.0
1.9
1.6
8.2
8.3
14.6
10.6
14.8
5.0
-9.2
n.s.
26.5
190.7
Statement of income
Net interest income
Net income from services
Net interest and other banking income
Administrative costs
Operating income
Income from operating activities
Net extraordinary income
Net income (2)
Net income for the year
(1) The 2003 total has been restated on a pro-forma basis to take into account the transfer of indirect
deposits by customers served by the bank’s financial consultants to Banca Lombarda Private Investment.
(2) The 2003 and 2004 figures have been restated on a pro-forma basis to take into account the effects
deriving of “defiscalisation”.
Banca Cassa di Risparmio di Tortona
Direct customer deposits increased by 3.1% to 670 million Euro compared
with the previous year. Current accounts grew by 2.5% and bonds by 13.2%,
whereas deposit accounts and certificates of deposit have again declined,
confirming the trend that has been going on for a number of years.
Indirect deposits of the Bank, at market value, reached 716 million Euro at
year-end, with an increase of 3.1% on December 2003.
62
Asset administration, decreased by 4.7 million Euro, while assets management rose by 9.5%, helped by technical reserves (+33.4%).
Loans to customers amount to 587 million Euro at the end of December
2004, up 5.6% on the end of 2003. Net non-performing loans of 7.8 million
Euro have decreased by 6.7% and their ratio to total loans has improved
from 1.51% to 1.33%.
As regards the statement of income, net interest income declined by 2.5%
due to a deterioration in spreads, only partly offset by higher volumes. On
the other hand, net income from services rose by 13%, mainly due to the
positive trend in net commissions (+14.2%).
Net interest and other banking income of 38.6 million Euro increased by
2.6% compared with 2003.
As regards expenses, administrative costs rose from 22.6 to 24.3 million Euro.
In detail, “payroll” costs came up by 4.6%, while “other administrative costs”
reported a 10.3% increase.
Operating income, 14.3 million Euro, decreased by 4.7% compared with the
previous year. Income from operating activities, 10.3 million Euro, fell by
8.2% and pro-forma net income for the year came in at 6.5 million Euro, a
decrease of 6.6% compared with 2003. Net income for the year is equal to
9.8 million Euro and includes the extraordinary income generated by defiscalisation.
(in millions of Euro)
Balance sheet
Loans to customers
Securities
Equity investments
Total assets
Due to customers
Indirect deposits
- Asset administration
- Asset management
of which: technical reserves
Customer assets under administration
Capital and reserves (excluding net income)
12.31.2004
12.31.2003
+/- change Change %
587
36
7
821
670
716
299
417
122
1,386
81
556
97
7
792
650
695
314
381
92
1,345
79
31
-60
29
20
21
-15
36
31
41
2
5.6
-62.5
-2.8
3.6
3.1
3.1
-4.7
9.5
33.4
3.1
3.0
24.3
14.3
38.6
24.3
14.3
10.3
0.5
6.5
9.8
24.9
12.7
37.6
22.6
15.0
11.3
0.6
7.0
6.0
-0.6
1.6
1.0
1.7
-0.7
-0.9
-0.1
-0.5
3.8
-2.5
12.5
2.6
7.4
-4.7
-8.2
-22.4
-6.6
63.3
Statement of income
Net interest income
Net income from services
Net interest and other banking income
Administrative costs
Operating income
Income from operating activities
Net extraordinary income
Net income (1)
Net income for the year
(1) The 2003 and 2004 figures have been recalculated in a pro-forma version, to take into account the
effects of “defiscalisation”.
63
Banca Lombarda Private Investment
At December, 31 2004 customers’ assets under management amounted to
2,726 million Euro compared with 2,047 million in 2003 (the latter figure has
been restated on a pro-forma basis to take into account the transfer of the
customers served by the financial consultants of Banco di Brescia, Banco di
San Giorgio and Banca Lombarda, which took place towards the end of the
year, as well as the acquisition of Desio Partner). Following these transactions, Banca Lombarda Private Investment has become the Group’s third
largest bank in terms of volumes handled. The year closed with a loss of 6.2
million Euro, compared with a loss of 6.9 million Euro in 2003.
Breakeven should be reached within three years, thanks to the repositioning
of the commission structure, enrichment of the range of products and services on offer and enhancement of the consultants’ portfolio, whose average
volume per head has already improved considerably. This progress has
already been mentioned in the section on the Group’s sales networks.
Banca Lombarda International
At the end of 2004, customer deposits amounted to 2,265 million Euro (462
million of direct deposits and 1,803 million of indirect deposits), growth of
20.9% on the previous year.
Loans to customers, 118 million Euro, showed an increase of 12.3% compared with 2003.
Net interest income amounted to 5.0 million Euro, a decrease of 6.8%,
whereas net income from services rose by 2.3% (from 6.9 to 7.1 million
Euro), including profits on financial transactions. Administrative costs, especially due to the significant reduction in payroll costs and in general expenses, fell by 8.2% (from 6.1 to 5.6 million Euro).
Net income amounted to 4.5 million Euro, 7.2% higher than in 2003.
Gestioni Lombarda Suisse
In May 2004, Banca Lombarda International S.A. acquired a 100% interest in
Caboto International, now called “Gestioni Lombarda Suisse”, a company
with registered offices in Switzerland, which provides personalized asset
management services.
The results at December 31, 2004 show funds under management of 203 million Euro and net income for the period of 495 thousand Euro.
64
NEAR-BANKING COMPANIES
SBS Leasing
Volumes produced in 2004 by SBS Leasing totaled 1,118 million Euro, with a
rise of 15.4% on the previous year.
The highest growth was in the shipping sector, thanks to targeted marketing
policies and ad hoc investments, and in real estate.
Total loans to customers rose by 28.8% to more than 2,340 million Euro. The
quality of credit has improved considerably, with non-performing loans
declining from 1.27% to 0.60% of total loans.
Total revenues amounted to 46.6 million Euro, increasing by 9.2% compared
with 2003. As part of this, net interest income rose by 13.4%.
Administrative costs increased by 11.2%, in line with the increase in average
capital employed and volumes handled during the year.
There was a reduction in net adjustments to loans of 4.3 million Euro (-38.7%
on 2003).
Net income for the year, 16.8 million Euro, saw a rise of 82.7% compared
with the previous year. However, this has been affected by the extraordinary
income generated by “defiscalisation” (3.9 million Euro). Without this, net
income would have been 12.9 million Euro (+39.9% on 2003).
CBI Factor
During 2004, Banca Lombarda bought 100% of this company with a view to
rationalizing its positioning in this area of business and encouraging the
emergence of synergies with the Group’s commercial banks.
The weakness of the economy conditioned the company’s activity and turnover
fell to 2,622 million Euro, from 2,980 million the previous year (-12%). The
total amount of loans has increased, going from 1,481 to 1,504 million Euro
(+1.5% on 2003). At the same time, the quality of assets has improved, with
net non-performing loans declining from 0.73% to 0.64% of total loans. Efficiency has also improved, with a cost/income ratio of 40.7%, 1.3 percentage
points lower than in 2003.
The year closed with net income of 8.1 million Euro, 26.3% higher than a
year earlier.
65
Veneta Factoring
Amounts due to customers stood at 2,610 million Euro, up 4.4% compared
with 2003. The contracts stipulated for loans to be repaid in installments
came to 28.6 million Euro (+11.3%), while new leasing contracts amounted
to 30 million Euro (+13.50%).
Total loans came to 629 million Euro, versus 609 million Euro in the previous
year. Credit quality has remained excellent: the ratio of non-performing loans
to total loans is 0.01%.
Net interest and other banking income remained stable versus the previous
year, whereas administrative costs rose by 1.9%. Net income from operating
activities amounted to 8.4 million Euro, 1.5% higher than the previous year.
Extraordinary income includes 11.6 million Euro generated by “defiscalisation”. Net income for the year came in at 12.5 million Euro; without “defiscalisation”, the result for the year would have been 5.2 million Euro, compared with pro-forma net income in 2003 of 4.9 million Euro (+6%).
SILF
In 2004, loans granted by SILF for purchases of consumer goods or business
assets rose 13.8% compared with the previous year, amounting to 626 million Euro. The percentage increase, in line with growth in the sector, was
achieved thanks to the attention paid to the development and reinforcement
of the sales network and on the identification and implementation of synergies with Group banks and companies, which made it possible to activate
nationwide agreements with important industrial groups.
The company has pursued a policy of portfolio diversification, concentrating
its efforts to expand in the fields of personal loans, credit for specific purposes and the placement of third-party products, mainly insurance-related. Total
customer lending reached 871 million Euro, 35% more than in 2003.
Looking at the statement of income, net interest and other banking income
rose by 37.1%, while administrative costs increased by 16.8%.
The company grew commercially, but without lowering the quality of its
loan portfolio. The proportion of net non-performing loans to total loans
came to 0.48% (0.35% in 2003).
The statement of income closed with net income of 9.3 million Euro, a rise
of 42% compared with 2003.
66
ASSET MANAGEMENT COMPANIES
Capitalgest SGR
2004 was another difficult year for the asset management sector, despite
the recovery in stock markets, mainly because of investors’ particular aversion to risk. As a result, the company suffered a contraction in total assets
managed directly or under mandate, which fell from 18.7 to 17.9 billion
Euro (-4.36%).
(thousands of euro)
Mutual funds
FUND-BASED PORTFOLIO MANAGEMENT
PORTFOLIO MANAGEMENT SCHEMES - Institutional customers
PORTFOLIO MANAGEMENT SCHEMES - Top Private Line
PORTFOLIO MANAGEMENT SCHEMES - Other
Sicav
Pension funds
Total
12.30.2004
12.30.2003
Change
8,580,226
3,254,592
3,454,460
1,424,314
1,151,254
57,273
343
9,708,475
3,438,082
2,986,063
1,202,724
1,378,234
25,733
307
-1,128,249
-183,490
468,397
221,590
-226,980
31,540
36
17,922,462
18,739,618
-817,156
Against an increase in portfolio management business, mutual funds
decreased by 11.6% compared with total assets at the end of 2003. This last
figure also has to be interpreted in the sense of a reallocation of savings by
certain categories of customers in favor of investment products managed by
other companies of the Banca Lombarda Group, Grifogest in particular. The
statement of income reports a net income for the year of 3.2 million Euro.
Capitalgest Alternative Investments
2004 is the first year of operations of Capitalgest Alternative Investments in
the field of hedge funds. The year featured a marked attenuation of the
volatility on equity markets and a compression of yield differentials in the
bond market (government, corporate, emerging market bonds), hitting alltime lows in certain segments. In this difficult context, the Capitalgest Alternative Dynamic Fund realized an annual return of 6.55%, while the Capitalgest Alternative Conservative Fund achieved one of 4.40%.
At December 31, 2004, total assets under management amounted to 157.2
million Euro, putting the company in 18th position in the national ranking of
asset management companies.
Net income came to 341 thousand Euro.
67
Grifogest SGR
In 2004 the placement of the funds managed by the company was extended
to all Group banks, resulting in a considerable increase in the assets managed. In fact, the figure rose continuously throughout the year, going from
1,543 million Euro at the end of 2003 to 3,028 million Euro at December 31,
2004, an increase of 96%. The asset management business was expanded by
acquiring new mandates to manage institutional portfolios and funds, as well
as four sub-funds of Banca Lombarda Sicav.
The number of employees went from 23 at the end of 2003 to the 28 at the
end of 2004. Net income for the year rose from 2.4 million Euro in 2003 to
2.7 million in 2004.
Mercati Finanziari SIM
The company continued its usual brokerage activity on financial markets
during 2004. Turnover generally was affected by stagnation in the primary
bond market, corporate in particular. The bankruptcies of some important
industrial groups gave rise to various problems that had a negative impact on
Italy’s credibility. In this context, the company saw a decline in net interest
and other banking income, which went from 3.3 to 2.7 million Euro (18.7%). The decrease in revenues was partially offset by lower costs, which
fell by 15.1%. The year ended close to break-even (with net income of 1,922
Euro).
Solofid e Sifru Gestioni Fiduciarie SIM
These two fiduciary companies, Solofid S.p.A. and Sifru Gestioni Fiduciarie
SIM, worked together in support of the Group’s commercial banks.
Solofid S.p.A., which is mainly involved in the registration and administration
of equity investments, had total funds under management at the end of the
year of 597 million Euro, with net income for the period of 1.1 million Euro.
Sifru Gestioni Fiduciarie SIM, which is one of the few securities houses in
Italy authorized to provide personalized portfolio management with fiduciary
registration, achieved assets under management of 404 million Euro, generating net income of 1.2 million Euro.
68
OTHER RELATED ACTIVITIES
Lombarda Sistemi e Servizi
In 2004, the value of production, totaling 118.6 million Euro, mostly consists
of revenues for the services provided to Group companies. The increase of
6% compared with 2003 is due to the higher contributions requested for the
IT strategic plan and adjustments to the contractual values.
Cost of production, 109 million Euro (+7.9%), is made up of the following
items: services (19.9 million Euro), use of third-party assets for leases, hires
and rentals(15.7 million Euro), costs of direct employees (36.8 million Euro),
depreciation, amortization and writedowns (35.5 million Euro).
The year produced net income of 5.8 million Euro, versus 3.3 million Euro
the previous year due, above all, to lower extraordinary charges for access to
the solidarity fund and income support for employees and redundancy
incentives.
Società Lombarda Immobiliare
The company did not acquire any properties during 2004 as a result of debt
recovery procedures; two garages and a parking space in the Via Rose complex in Brescia were sold. The company currently owns a number of garages
and parking spaces in the Via Rose complex which it expects to sell off during the year. Stockholders’ equity amounts to 2,718,838 Euro. After making
provisions to the reserve for liabilities and charges of 130,000 Euro, for outstanding disputes, the financial statements close with a loss of 85,336 Euro.
S.B.I.M.
The new head office of the Banca Lombarda Group was completed in
December, together with its various technology and air conditioning systems,
elevators and security and access control systems. The offices are currently
being decorated and furnished. Group companies will start transferring to
their new premises during the first half of 2005.
SBIM invested 30.2 million Euro in the new head office during the year. It
also bought a plot of land next to it for 6.7 million Euro and completed the
tender for the sale of the “ex Borghetto” areas. An initial lot will be sold in
2005.
Three properties previously rented to Banco di Brescia were sold to that
bank, having been classified for a number of years as properties due to be
sold; the capital gain realized was 238 thousand Euro. The result for the period was a loss of 600,489 Euro.
69
RATINGS
In 2004 the rating agencies Moody’s, Fitch and Standard & Poor’s maintained
their ratings on the Bank’s short and medium/long term debt at the same
level as last year. The outlook for the Group remained stable according to
the three rating agencies.
Agency
Short-term debt
Medium/long-term debt
Moody's
P-1
A2
Fitch Ratings
F1
A
Standard & Poor's
A-2
A-
Adoption of International Financial Reporting Standards (IAS-IFRS)
OTHER
INFORMATION
EU Regulation 1606 of July 19, 2002, requires all companies listed on a regulated market in the EU to prepare consolidated financial statements in accordance with International Financial Reporting Standards (IAS-IFRS) from 2005.
Decree 38, issued in February 2004, also gives banks and finance companies
the right to draw up their 2005 statutory financial statements according to
International Financial Reporting Standards (IAS-IFRS). The Parent Bank will
therefore prepare both its consolidated and statutory financial statements for
2005 in accordance with IAS-IFRS.
The Banca Lombarda e Piemontese Group began the transition to IAS-IFRS
in early 2003, with an initial phase involving the identification and assessment of the principal effects of the change on the statutory and consolidated
statements of income. This phase terminated in September 2003 with the
preparation of a master plan for the changes needed to be made to the organization, systems and processes; like the adjustments made to organizational
processes mentioned previously, these changes were made during 2004,
making the transition to IAS-IFRS possible from January 1, 2005.
70
SIGNIFICANT
SUBSEQUENT
EVENTS AND
OUTLOOK FOR
THE FUTURE
On February 12, 2005 agreement was reached between ABI and the Trade
Union Organizations for renewal of the National Collective Labor Contract
for middle managers and professional grades, which expired on December
31, 2003. This agreement establishes an overall increase in pay scales for
2004-2005 of 5.8%, being the sum of an initial amount (1.9%) designed to
recover inflation for the two years 2002-2003, another amount (2.0%) for
inflation in 2004 (based on ISTAT) and a third amount of 1.9% for 2005, subject to adjustment based on actual inflation in that year.
As regards important events affecting Group companies, there was the start
of the process of integration between CBI Factor and Veneta Factoring. This
operation, which involves Veneta Factoring merging with CBI Factor, is
designed to rationalize the Group’s presence in factoring, so as to achieve
economies of scale in terms of both revenues, by optimizing commercial
synergies, and costs.
Early 2005 also saw the start of the procedures for the sale of the real estate
known as the “ex Borghetto” areas. The carrying value is 15.8 million Euro
and it is likely that the sale will generate significant capital gains.
Lastly, as regards the outlook for operations, we are of the opinion that the
Group’s results will inevitably be affected by the macroeconomic scenario,
which still features various elements of uncertainty. However, this should not
jeopardize the Group’s growth trend in balance sheet aggregates and in
gross operating income.
71
Report of the
Indipendent Auditors
73
Consolidated
Financial Statements
of the Banca Lombarda e Piemontese
Group as of December 31, 2004
77
CONSOLIDATED BALANCE SHEET
(thousands of euro)
ASSETS
12.31.2004
10 Cash and deposits with central banks and
post offices
12.31.2003
Changes
Amount
%
165,394
150,348
15,046
10.0
7,083
418,948
-411,865
-98.3
30 Due from banks:
a) repayable on demand
b) other deposits
2,475,433
117,615
2,357,818
2,383,294
162,115
2,221,179
92,139
-44,500
136,639
3.9
-27.4
6.2
40 Loans to customers
of which:
- loans using public funds
25,867,003
23,584,079
2,282,924
9.7
565
1,272
-707
-55.6
50 Bonds and other debt securities:
a) public entities
b) banks
of which:
- own securities
c) financial institutions
of which:
- own securities
d) other issuers
975,645
348,868
415,579
1,050,403
363,550
451,406
-74,758
-14,682
-35,827
-7.1
-4.0
-7.9
44,921
91,891
31,300
88,682
13,621
3,209
43.5
3.6
25,572
119,307
35,040
146,765
-9,468
-27,458
-27.0
-18.7
60 Shares, quotas and other forms of capital
264,640
193,685
70,955
36.6
70 Equity investments:
a) carried at equity
b) other
494,865
50,040
444,825
475,890
36,729
439,161
18,975
13,311
5,664
4.0
36.2
1.3
1,992
1,992
1,823
1,823
169
169
9.3
9.3
90 Goodwill arising on consolidation
673,581
717,681
-44,100
-6.1
110 Intangible fixed assets
of which:
- start-up costs
- goodwill
142,353
146,477
-4,124
-2.8
87
16,827
113
24,342
-26
-7,515
-23.0
-30.9
120 Tangible fixed assets
737,484
726,640
10,844
1.5
1,131,144
1,169,141
-37,997
-3.2
561,912
472,329
89,583
480,664
408,719
71,945
81,248
63,610
17,638
16.9
15.6
24.5
804
959
-155
-16.2
33,498,529
31,499,073
1,999,456
6.3
20 Treasury bills and other bills
eligible for refinancing with central banks
80 Equity investments in Group companies:
a) carried at equity
150 Other assets
160 Accrued income and prepaid expenses:
a) accrued income
b) prepaid expenses
of which:
bond issue discount
TOTAL ASSETS
78
CONSOLIDATED BALANCE SHEET
(thousands of euro)
LIABILITIES AND STOCKHOLDERS' EQUITY
12.31.2004
12.31.2003
Changes
Amount
%
10 Due to banks:
a) repayable on demand
b) time deposits or with notice period
2,542,655
633,740
1,908,915
2,829,587
839,425
1,990,162
-286,932
-205,685
-81,247
-10.1
-24.5
-4.1
20 Due to customers:
a) repayable on demand
b) time deposits or with notice period
15,624,869
12,471,779
3,153,090
14,680,967
11,410,148
3,270,819
943,902
1,061,631
-117,729
6.4
9.3
-3.6
30 Securities issued:
a) bonds
b) certificates of deposit
c) other
9,339,712
8,878,085
291,144
170,483
7,688,479
7,156,424
372,216
159,839
1,651,233
1,721,661
-81,072
10,644
21.5
24.1
-21.8
6.7
40 Public funds administered
557
1,381
-824
-59.7
1,287,672
1,592,226
-304,554
-19.1
60 Accrued expenses and deferred income:
a) accrued expenses
b) deferred income
277,920
250,459
27,461
272,927
248,457
24,470
4,993
2,002
2,991
1.8
0.8
12.2
70 Provision for termination indemnities
181,231
179,478
1,753
1.0
80 Provisions for liabilities and charges:
a) pensions and other commitments
b) taxation
c) other
346,117
24,760
255,957
65,400
488,526
26,051
409,685
52,790
-142,409
-1,291
-153,728
12,610
-29.2
-5.0
-37.5
23.9
64,390
64,222
168
0.3
1,339,040
1,305,821
33,219
2.5
25,622
25,622
-
-
21
21
-
-
140 Minority interests
467,747
459,526
8,221
1.8
150 Capital stock
320,828
316,644
4,184
1.3
160 Additional paid-in capital
654,723
624,034
30,689
4.9
170 Reserves:
A) legal reserve
d) other reserves
746,512
132,641
613,871
591,431
132,641
458,790
155,081
155,081
26.2
33.8
180 Revaluation reserves
127,178
266,122
-138,944
-52.2
200 Net income (loss) for the year
151,735
112,059
39,676
35.4
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 33,498,529
31,499,073
1,999,456
6.3
50 Other liabilities
100 Reserve for general banking risks
110 Subordinated liabilities
120 Negative goodwill arising on consolidation
130 Negative goodwill arising on application of the equity method
79
GUARANTEES AND COMMITMENTS
(thousands of euro)
CAPTIONS
10 Guarantees given:
12.31.2004
12.31.2003
1,574,193
1,478,810
Changes
Amount
%
95,383
6.4
of which:
- acceptances
- other guarantees
20 Commitments
80
718
770
-52
-6.8
1,573,475
1,478,040
95,435
6.5
4,614,854
4,113,216
501,638
12.2
CONSOLIDATED STATEMENT OF INCOME
(thousands of euro)
CAPTIONS
10 Interest income and similar revenues
Variazioni
Assolute
%
31.12.2004
31.12.2003
1,290,463
1,335,089
1,085,181
1,063,380
21,801
2.1
46,269
130,300
-84,031
-64.5
-520,622
-589,440
-68,818
-11.7
-44,626
-3.3
of which:
- loans to customers
- debt securities
20 Interest expense and similar charges
of which:
- on amounts due to customers
-121,768
-141,684
-19,916
-14.1
- on securities issued
-268,540
-255,993
12,547
4.9
28,292
16,593
11,699
70.5
715
515
200
38.8
27,495
16,078
11,417
71.0
30 Dividends and other revenues:
a) shares, quotas and other forms of capital
b) equity investments
82
-
82
-
40 Commission income
c) equity investments in Group companies
508,280
469,446
38,834
8.3
50 Commission expense
-107,352
-96,473
10,879
11.3
60 Profits (losses) on financial transactions
40,872
45,885
-5,013
-10.9
170,349
168,849
1,500
0.9
-767,898
-725,152
42,746
5.9
-452,223
-429,778
22,445
5.2
-312,592
-296,878
15,714
5.3
- social security charges
-92,268
-87,004
5,264
6.1
- termination indemnities
-18,733
-18,569
164
0.9
- pensions and similar commitments
-16,343
-16,014
329
2.1
-315,675
-295,374
20,301
6.9
70 Other operating income
80 Administrative costs:
a) payroll
of which:
- wages and salaries
b) other administrative costs
90 Adjustments to
-158,983
-156,058
2,925
1.9
100 Provisions for liabilities and charges
intangible and tangible fixed assets
-27,062
-18,927
8,135
43.0
110 Other operating expenses
-31,691
-31,234
457
1.5
-139,756
-173,057
-33,301
-19.2
45,860
43,799
2,061
4.7
-1,162
-154
1,008
654.5
120 Adjustments to loans and provisions
for guarantees and commitments
130 Writebacks of loans and provisions
for guarantees and commitments
150 Adjustments to financial fixed assets
170 Profit (loss) from investments carried at equity
180 Income (loss) from operating activities
190 Extraordinary income
5,223
4,092
1,131
27.6
334,813
293,258
41,555
14.2
30,065
36,791
-6,726
-18.3
-35.0
200 Extraordinary charges
-14,726
-22,658
-7,932
210 Extraordinary income, net
15,339
14,133
1,206
8.5
-
-150
150
n.s.
-166,522
-158,865
7,657
4.8
-31,895
-36,317
-4,422
-12.2
151,735
112,059
39,676
35.4
230 Change in reserve for general banking risks
240 Income taxes for the year
250 Income (loss) attributable to minority interests
260 Net income (loss) for the year
81
Explanatory notes to the
consolidated financial statements
of the Banca Lombarda e
Piemontese Group
at December 31, 2004
83
Introduction
EXPLANATORY
NOTES TO THE
CONSOLIDATED
FINANCIAL
STATEMENTS
Part A - Consolidation methods and accounting policies
Section 1
Section 2
Section 3
- Description of accounting policies
- Adjustments and provisions made for tax purposes
- Other information
Part B - Information on the consolidated balance sheet
Section
Section
Section
Section
Section
Section
Section
Section
1
2
3
4
5
6
7
8
-
Section
Section
Section
Section
9
10
11
12
-
Loans
Securities
Equity investments
Tangible and intangible fixed assets
Other assets
Payables
Provisions
Capital stock, equity reserves, reserve for general banking
risks and subordinated liabilities
Other liabilities
Guarantees and commitments
Concentration and distribution of assets and liabilities
Administration and dealing on behalf of third parties
Part C - Information on the consolidated statement of income
Section
Section
Section
Section
Section
Section
Section
1
2
3
4
5
6
7
-
Interest
Commission
Profits (losses) on financial transactions
Administrative costs
Adjustments, writebacks and provisions
Other statement of income captions
Other information on the statement of income
Part D - Other information
Section 1
- Directors and Statutory Auditors
84
INTRODUCTION
The consolidated financial statements comprise the balance sheet, statement
of income and these notes, and the report on operations for the year, pursuant to Decree 87/1992 which regulates the statutory and consolidated
financial statements of banks and similar institutions.
The explanatory notes form an integral part of the financial statements. Their
purpose is to provide all of the information required for a clear and full
explanation of the Group’s assets and liabilities, results and financial position, even if certain types of information are not specifically required by law.
The following attachments are also included:
• Statement of changes in stockholders’ equity.
• Statement of changes in financial position.
The financial statements have been audited by Reconta Ernst & Young S.p.A.
in accordance with article 155 of Decree 58 on February 24, 1998 and in execution of the stockholders’ resolution dated April 27, 2004, which appointed them as auditors for the three-year period 2004-2006.
All information, unless otherwise specified, is presented in thousands of
Euro.
85
ACCOUNTING POLICIES
PART A
CONSOLIDATION
METHODS AND
ACCOUNTING
POLICIES
The accounting policies used for preparing the consolidated financial statements comply with Decree 87 of January 27, 1992 and the instruction of the
Governor of the Bank of Italy issued on July 30, 2002. They take account of
the accounting principles that are generally accepted in Italy.
The financial statements have been prepared in a way that, where possible,
gives preference to substance over form and records transactions at the time
of settlement rather than at the time of negotiation.
The accounting policies adopted, set out below, are unchanged except for
the valuation of securities quoted on official markets, which are valued using
their period-end prices rather than their average prices for December. This
valuation is considered to reflect market trends and the performance of the
related financial derivatives more closely. The change has had no significant
impact on stockholders’ equity or the results for the year.
The accounting policies used by the companies included in the consolidation
are essentially the same as those of the Parent Bank.
Elimination of fiscal interference and other tax-related items
Decree 37 of February 6, 2004, which also amended the Consolidated Banking Law for consistency with the new company law (Decree 6 of January 17,
2003), abrogated art. 15.3 of Decree 87/92 which allowed banks to record
adjustments and provisions solely for tax purposes (so-called “defiscalisation”). Abrogation of this article means that tax-deductible adjustments and
provisions can no longer be recorded in the statement of income if they are
not required for statutory reporting purposes, but solely for fiscal purposes.
This change in the criteria for preparing statutory financial statements has not
affected the consolidated financial statements of the Banca Lombarda Group,
given that the adjustments and provisions recorded by Group companies
solely for tax purposes, and the related tax effect at current tax rates, were
already eliminated on consolidation.
86
In this regard, art. 109.4.b) of the Consolidated Income Tax Law has introduced a specific tax deferral regime to ensure that the deduction of tax
allowances not recorded in the statement of income does not result in the
distribution of untaxed profits. In particular, on the distribution of equity
reserves and net income, including amounts earned subsequent to the tax
years in which deductions are taken, the dividend is treated as part of
income if and to the extent that the residual equity reserves, other than the
legal reserve and undistributed retained earnings, are lower than the additional depreciation, adjustments and provisions deducted for tax purposes
with respect to those charged to the statement of income, net of the related
deferred tax effect.
This reserve includes the 3% allocation to supplementary pension funds from
the annual provision for termination indemnities.
Introduction of the “Group tax filing” and other tax reforms
The tax reform includes:
a) a specific regime (art. 117 et seq. of the new Consolidated Income Tax
Law) to determine a single taxable income for groups of companies. In
substance, the regulation envisages that losses incurred by companies can
be offset against the income earned by other companies belonging to the
same Group;
b) a different tax treatment for dividends received (art. 90 of the new Consolidated Income Tax Law) which, with regard to Group companies, means
that such dividends are totally exempt if both the parent and the subsidiary are taxed together under the “Group tax filing” regulations.
Taking advantage of the “Group tax filing” regulations involved exercising
the options envisaged by art. 118 of Consolidated Income Tax Law.
SCOPE OF CONSOLIDATION
The consolidated financial statements include the financial statements of
Banca Lombarda e Piemontese S.p.A., the Parent Bank, and of its direct and
indirect subsidiaries, which operate in the banking, financial and related sectors. Non-controlling investments, representing at least 20% of capital, in
companies operating in the banking, financial and related sectors are carried
at equity, as are other subsidiaries not operating in those sectors. Holdings of
less than 20% are carried at cost.
87
Consolidation line-by-line
The following changes regarding equity investments consolidated line-byline have taken place since December 31, 2003:
- purchase of the remaining 1.92% interest in the capital stock of CBI Factor
S.p.A.; following this purchase, this company is now 100% held by the
Parent Bank;
- purchase by the Parent Bank of a 0.04% interest in the capital stock of
Banco di San Giorgio S.p.A.: this bank is now 86.74% held by the Group;
- purchase of 100% of the capital stock of Caboto International S.p.A. SA
(now Gestioni Lombarda Suisse S.A.) through Banca Lombarda International S.p.A..
Equity method
With reference to equity investments carried at equity, we would point out
that the only change with respect to December 31, 2003 concerns the Parent
Bank’s interest in Brescia On Line S.r.l., which decreased from 20% to 10%; it
is therefore no longer carried at equity in the consolidated financial statements, but at cost.
CONSOLIDATION METHODS
Consolidation line-by-line
The assets, liabilities and off-balance sheet transactions of companies included within the scope of consolidation are combined on a line-by-line basis.
The book value of investments is eliminated against the related stockholders’
equity at the time of acquisition or initial consolidation.
The differences that emerge as a result of the above elimination are allocated, where possible, to the assets and liabilities of the subsidiaries concerned.
Residual differences:
- if positive, are classified as “goodwill arising on consolidation” and amortized over ten years on a straight-line basis. The portions relating to the
acquisition of Banca Cassa di Risparmio di Tortona S.p.A. and Banca
Regionale Europea S.p.A. are being amortized over twenty years, in view
of the benefits expected from the acquisition and the assumptions made
when the purchase price was determined. goodwill relating to interests
purchased subsequently is amortized over the remaining life of the original goodwill.
- if negative, are classified as “negative goodwill arising on consolidation”,
which forms part of consolidated stockholders’ equity.
88
Equity method
The book value of investments is compared with the Group’s share of the
related stockholders’ equity at the time this method is first applied. The difference in these values:
- if positive:
a) where relating to depreciable assets, is classified among “equity investments” and depreciated using the rates applicable to the fixed assets
concerned.
b) where relating to goodwill, is classified as “goodwill arising on application of the equity method”. This value is generally amortized on a straight-line basis over ten years.
- if negative, is classified as “negative goodwill arising on application of the
equity method”, which forms part of consolidated stockholders’ equity.
Elimination of intercompany transactions
Amounts due to and from consolidated companies, off-balance sheet transactions and revenues and costs arising from such balances are eliminated,
together with profits and losses from dealing transactions between the companies concerned, with the exception of transactions in securities since these
are carried out on arm’s-length terms and for a consideration.
For assets involved in leasing transactions between consolidated companies,
the original costs and accumulated depreciation up to the end of the period
are recalculated and the net book values are recorded in the pertinent asset
captions.
Minority stockholders
The minority interests in equity and results of consolidated companies are
classified separately in the consolidated financial statements.
Dividends
Dividends received from companies included in consolidation are not
recorded in the consolidated statement of income.
Consolidating financial statements
The consolidated financial statements are prepared using the financial statements of the individual Group companies, as prepared by their respective
Boards of Directors for approval at stockholders’ meetings held before that
of Banca Lombarda e Piemontese S.p.A.
S.B.S. Leasing S.p.A. and Veneta Factoring S.p.A. (as far as its leasing business is concerned) have been consolidated on the basis of financial statements prepared using lease accounting methodology.
Accounting reference date
The financial statements used for consolidation purposes were all prepared
as of December 31, 2004, which is the accounting reference date of the Parent Bank.
89
Section 1 – Description of accounting policies
1) Loans, guarantees and commitments
1.1 Loans to customers
Loans, including contractual and default interest, are stated at their estimated
realizable value. This value is determined by writing down principal and
interest to reflect expected losses.
Estimated loan losses take into account the solvency of debtors, considering
any information obtained subsequent to December 31, 2004.
In particular, loans are:
1) assessed in detail to determine the expected loss on each account, considering:
- non-performing loans, including both principal and interest,
- significant problem loans (equal to or over 15,500 Euro),
- other loans that, due to size or the particular characteristics of the borrower, are subject to specific review,
- restructured loans earning less than the refinancing rate;
2) the following are assessed with reference to historical-statistical data, to
take account of the risk of loss inherent in normal banking activities, and
the resulting adjustments are applied to the individual accounts concerned:
- small problem loans (less than 15,500 Euro),
- performing loans.
The assessment of performing loans in relation to historical-statistical data:
- taking into consideration the classification of customers in the “corporate”
and “retail” segments;
- applying writedown percentages, for each customer segment, differentiating between short-term drawdowns and long-term drawdowns, which
are generally secured by real guarantees;
- taking account of the higher creditworthiness of certain customer categories (e.g. customers belonging to banking groups, territorial public bodies,
etc.).
General provisions are also recorded certain non-banking companies, given
the specific nature of their consumer credit activities.
90
The assessment of restructured loans earning less than the refinancing rate,
i.e. 3-month Ribor, takes account of the loss arising from discounting to present, financial flows deriving from the difference between the agreed interest
rate and the refinancing rate.
Adjustments are booked to the statement of income. The original value of
loans is reinstated by crediting the “writeback” account if the reasons for any
writedowns cease to apply.
Default interest is recognized on an accruals basis and the portion considered unrecoverable is written down.
1.2 Explicit and implicit loans relating to lease contracts
For consolidation purposes, leases are recorded under the finance leasing
method.
Implicit and explicit loans are stated at their estimated realizable value.
Writedowns are made taking into account the solvency of the debtor and the
value of the assets being leased.
1.3 Other amounts due
Other amounts due are stated at their estimated realizable value, which generally their nominal value. They include the interest calculated at the end of
the period.
1.4 Guarantees and commitments
Guarantees given are stated at the value of the related commitment. Securities to be received are stated at the forward price contracted with the counterparties. Commitments to grant finance to counterparties and customers are
stated at the amount still to be drawn.
The risk associated with guarantees given and commitments to grant funds is
assessed on the basis applied in relation to cash lending. Doubtful positions
are covered indirectly by the provisions for liabilities and charges, determined both on analytical and historical-statistical bases. Any surplus provisions are released to the statement of income as writebacks.
91
2) Securities and off-balance sheet transactions (not including currency transactions)
Securities held are classified as either investment securities or dealing securities.
2.1 Investment securities
Securities are deemed to be investment securities following specific resolutions of the Board of Directors.
Investment securities are valued at specific cost, as adjusted to reflect the
accrued difference between such cost and their redemption value upon
maturity, or, if transferred from the dealing portfolio, at their value at the
time of transfer determined using the related valuation criterion. Cost
includes accrued issue discounts and rolled-up interest on securities that
earn implicit interest.
Investment securities are written down in the case of permanent losses, taking into account the solvency of the issuers and the ability to repay debt of
their countries of residence. Their original value is reinstated in subsequent
years, to the extent that the reasons for any writedowns cease to apply.
This category also includes junior securities from loan securitizations made
before 2004 and entirely subscribed by the Group companies who put the
deals together. These are considered investment securities since they will
remain in the portfolio until maturity, being an integral part of the securitization deals. Estimated realizable value is determined with reference to expected recoveries from the portfolio underlying the transaction.
2.2 Dealing securities
These securities are held for dealing purposes or to cover treasury requirements.
They are valued:
- at market value, if quoted on official markets;
- at the lower of cost or market value, if not quoted on official markets.
Cost is determined on a LIFO basis with annual layers and includes accrued
issue discounts and rolled-up interest on securities that earn implicit interest.
92
Market value is determined as follows:
- securities quoted on official markets: their value at the end of December;
- securities not quoted on official markets: the value at the end of December for quoted securities with similar characteristics or, otherwise, the prices quoted in unofficial markets or by specialist sources. In the absence of
a reference price, estimated realizable value is obtained by discounting to
present value the flows of interest and expected payments using the
market rates applicable through redemption.
The original value of unquoted securities is reinstated in future accounting
periods if the reasons for any writedowns cease to apply.
If dealing in securities involves short selling, the difference is valued on the
basis described above and recorded among “other liabilities”.
2.3 Off-balance sheet transactions in securities
The valuation of derivative contracts open at year-end depends on whether
they hedge assets and liabilities that generate interest, or are held for dealing
purposes.
Hedging contracts are valued on a basis consistent with that applied in relation to the assets, liabilities and off-balance sheet positions being hedged.
The results of these valuations are reflected in the statement of income as
“Profits (losses) on financial transactions” and matched among “Other
assets/liabilities” in the balance sheet. In the case of contracts hedging dealing securities that involve the payment of a single differential or margin (single-flow contracts), differentials are reflected in full in the statement of
income in the accounting period in which they arise:
– as “Interest income/expense”, when the underlying asset has a life of less
than one year;
– as “Profits (losses) on financial transactions” when the underlying asset
has a life of more than one year.
The differentials on other derivatives hedging assets and liabilities which
generate interest are reflected in the statement of income on an accruals
basis as interest.
Dealing contracts negotiated on official markets are valued at market value
or, otherwise, at the lower of purchase cost or market value. Market value is
determined as follows:
– contracts quoted on organized markets: at their quoted prices;
– other contracts: on the basis of quoted prices or objectively determinable
prices taken from international information networks.
93
Differentials from dealing on own account are recorded as “Profits (losses)
on financial transactions”.
Commission income and expense arising from dealing on behalf of customers is recorded in the appropriate captions when collected.
Commitments to the forward purchase (sale) of securities relative to contracts
open at year end are valued using the criteria adopted for the portfolio to
which they belong.
Writedowns and revaluations are included in the “Profits (losses) on financial
transactions” caption of the statement of income.
3) Equity investments
Equity investments are stated at purchase cost or their previously adjusted
value, except where consolidated or carried at equity as described earlier.
Allocations of bonus shares representing dividend distributions in kind are
valued at current prices and added to the original cost of the investment.
Equity investments are written down by charges to the statement of income
to reflect any permanent reductions in value. The original value is written
back in subsequent years if the reasons for writedowns cease to apply.
4) Foreign currency assets and liabilities (including off-balance sheet
transactions)
Foreign currency revenues and expenses are stated using the exchange rates
applying at the time they are recorded. Assets, liabilities and spot and forward off-balance sheet transactions denominated in foreign currency are
translated into Euro using the period-end exchange rates. The valuation of
assets and liabilities linked to off-balance sheet transactions takes account of
such transactions. The effect of any adjustments is recorded in the “profits
(losses) on financial transactions” caption of the statement of income.
5) Tangible fixed assets
Tangible fixed assets are recorded at purchase cost, including related
charges, or their previously adjusted value. Land and buildings have also
been revalued in accordance with specific laws. They are stated net of accumulated depreciation.
94
Depreciation is provided on a straight-line basis using rates which write
down the related assets over their residual economic useful lives. In cases
where there is a permanent impairment of value, the asset is written down to
reflect the loss, irrespective of how much has already been depreciated. The
original value is written back if the reasons for the writedown cease to
apply.
In addition:
- new assets are depreciated from the year they enter service;
- assets entering service during the year are depreciated at half the standard
rate, in order to reflect their lower degree of usage.
Non-banking property not directly utilized by the Bank is not depreciated
since its value is retained as a result of maintenance expenditure which is
charged directly against income.
6) Intangible fixed assets
These are stated at purchase cost, including related charges, and amortized
systematically over the period they are expected to benefit. They include
start-up and expansion costs, purchased goodwill and other costs benefiting
future periods. Software costs incurred by Lombarda Sistemi e Servizi SpA in
setting up its business include a portion of expenses for the personnel
involved in its development. The contra-item is in “Other operating income”.
Such costs are recorded in the financial statements of each consolidated
company with the agreement of the Statutory Auditors, where this is explicitly required by the regulations.
Intangible fixed assets are amortized over a maximum of five years, with the
exception of the goodwill booked on the acquisition of businesses or other
non-recurring transactions involving equity investments, which is charged
over ten years. Ten years is considered a reasonable reflection of the period
that these assets will benefit.
In cases where there is a permanent impairment of value, the asset is written
down to reflect the loss, irrespective of how much has already been depreciated. The original value is written back if the reasons for the writedown
cease to apply.
95
Intangible fixed assets also include charges relating to the extraordinary payments and related social contributions due to employees who have been
allowed to use the “Solidarity Fund” set up with the Italian social security
authorities (INPS) under Ministerial Decree 158 dated April 28, 2000. These
charges are being amortized on a straight-line basis over five years, as
allowed by article 59.3 of Law 449/97 which sanctions the application of article 1.3(bis) of Decree 364 of August 14, 1992, instead of being expensed in
full to income in the year in which application to the Solidarity Fund is made
(as would be required under generally accepted accounting principles). Had
these charges been expensed in full in the years in which application to the
“Fund” was made, the effect (after tax) as of December 31, 2004 would have
been:
- a charge of about 2.6 million Euro against income for the year;
- a reduction of about 22.6 million Euro in stockholders’ equity.
7) Other aspects
7.1 Accruals and deferrals
Accruals and deferrals are recorded in order to match income and expenses
in the accounting periods to which they relate.
7.2 Provision for termination indemnities
The provision for termination indemnities covers the liability to all employees as of December 31, 2004, accrued in accordance with current legislation.
Under specific agreements, amounts accrued by the employees of certain
Group companies recruited after April 28, 1993, are transferred to internal
supplementary pension funds.
In the case of Banca Regionale Europea SpA, the supplementary pension
fund also includes a portion of the total provision which relates to employees hired before April 28, 1993 who exercised a specific option on the basis
of company agreements.
7.3 Provisions for liabilities and charges
Pension fund
The staff pension fund of Banca Regionale Europea S.p.A. represents the
total current and future commitment to retired personnel, determined in
accordance with the bank’s regulations.
96
Provision for taxation
The provision for taxation includes indirect taxes and current income taxes,
based on the rules governing consolidated tax filings, and deferred taxes,
based on a prudent assessment of the tax liability under current fiscal regulations.
Deferred taxation has been recorded in accordance with Bank of Italy
instructions (Liability Method). These require that income taxes for the period be recorded on an accruals basis so as to fully match the costs and revenues which give rise to the economic result for the period.
Deferred and prepaid taxes are calculated on the timing differences between
the value of assets or liabilities for accounting purposes and their corresponding values for tax purposes, using the rates expected to apply when
the related timing differences reverse. In particular, deferred tax assets are
recognized only when it is reasonably certain that they will be recovered.
Moreover, the deferred tax liabilities relating to reserves in suspense for tax
purposes have been excluded as it is highly unlikely that transactions that
would give rise to taxation will be carried out.
Other provisions
Other provisions cover losses on guarantees given and commitments undertaken, as well as other known or likely losses whose timing and extent cannot be determined at year-end or by the date these financial statements are
prepared. Provisions to cover the above liabilities reflect the best possible
estimates made on the basis of the information available.
7.4 Reserve for general banking risks
This reserve covers general business risks and therefore forms part of the
equity reserves. Any net change during the period is reflected in the statement of income.
7.5 Subordinated liabilities and other securities issued
These are recorded at their issue value until repaid, except in the case of
zero-coupon bonds and structured bonds issued below par and linked to
financial market indices, which are recorded at their issue value as uplifted
by the interest rolled up each year.
7.6 Payables
Payables are stated at face value. They include the interest calculated at the
end of the period.
97
Section 2 – Adjustments and provisions made for tax purposes
The consolidated figures do not include adjustments and provisions recorded
solely for tax purposes.
Sezione 3 - Other information
Unless stated otherwise, all figures in the notes are expressed in thousands
of Euro. The following is an explanation of the criteria used to recognize balance sheet and statement of income items.
Amounts due from and to customers
Current account transactions with customers are recorded at the time they
are carried out. other transactions (note portfolio, international transactions,
securities, etc.) are recorded on settlement.
Amounts due from and to banks
These are recorded on settlement.
Other receivables and payables
Transactions are recorded when carried out.
Securities
Transactions in securities and similar instruments are recorded on settlement.
Interest accrued and not yet collectible is recorded as accrued income,
except for securities with implicit interest, which are stated inclusive of
rolled-up interest.
Repurchase agreements
Repurchase agreements that commit the seller to buy back the securities concerned in the future are deemed to be loans; the amounts received and paid
are therefore booked as loans payable and loans granted.
98
The cost of funding and revenues from lending, represented by the interest
coupons, any accrued issue discount and the differential between the related
spot and forward prices, are recognized as interest on an accruals basis.
Foreign currency assets and liabilities
Assets and liabilities denominated in foreign currencies are recorded on settlement of the related transactions.
***
Information required by CONSOB resolution
1011405 of February 15, 2001
The following information is given in compliance with CONSOB resolution
1011405 of February 15, 2001:
Anatocism (capitalization of interest)
As regards anatocism, which means transferring overdue interest to principal,
we have taken note of the recent sentence (no. 21095/2004) passed by the
Court of Appeals. In our opinion, all Group banks acted in good faith in
accordance with contractual agreements which reproduced normal practice
at the time with the support of current jurisprudence and backed by preexisting legal doctrine.
Bearing in mind that the above decision is applicable exclusively between
the parties to the lawsuit and only concerns the quarterly capitalization of
interest up to the time of application of the CICR Resolution of 9 February
2000, in accordance with guidelines issued by the Parent Bank, Group banks
have taken steps to evaluate, case by case, the lawsuits brought for anatocism, making detailed provisions where necessary. 76 lawsuits have been
brought against Group banks, for which detailed provisions have been made
totaling 1.5 million Euro.
As regards complaints received, Group banks have made prudent provisions
for amounts based on the average value of outstanding lawsuits and the estimated number of complaints that give rise to lawsuits, in light of historical
trends.
Tax benefits included in Decree 153 of May 17, 1999
As already discussed in prior years, the tax benefits included in Decree
153/99 have been suspended. In accordance with Decree 282 of December
24, 2002, converted in Law 27 of February 21, 2003, Banca Lombarda e
Piemontese S.p.A., Banca di Valle Camonica S.p.A. and Banco di San Giorgio
S.p.A. repaid by December 31, 2002, the tax benefits received in 1998, 1999
and 2000 together with the related interest.
99
With reference to the appeal filed with the first-level Court in Luxembourg
on February 21, 2002 by the Italian banks through the Italian Bankers’ Association, the Court itself suspended the proceedings until the European Court
of Justice had passed sentence. A similar appeal filed by the Ministry of Foreign Affairs on behalf of the Italian Government is still pending with this
Court.
On February 3, 2005 there was a public hearing at which the EU Commission reiterated its arguments - against the banks - as before. The lawyer representing the Italian Government reiterated the arguments already sustained
in the defense briefs and repeated that the banks ought to be involved in the
lawsuit, insisting that the Commission ought to cancel its decision dated
December 11, 2001.
The conclusions of the Advocate General of the European Court of Justice
are unlikely to be deposited before this April/May, while at least ten months
will have to go by from the date of the hearing (February 3, 2005) before the
decision is published. The decision is therefore unlikely to take effect before
next December.
Assisted loans for the construction sector (Law 133 of May 13, 1999)
Of all the Group’s banks, only Banco di Brescia has granted an assisted
mortgage loan for construction (one in total). In any case, the effects of article 29 of Law 133 on May 13, 1999 are not applicable since the rate charged
on the loan concerned has never exceeded the specified limit. In particular,
this article permits the bodies granting subsidies and the receivers of these
subsidies to ask the financing bank to renegotiate the loan should the interest rate applied be higher than that determined in compliance with Law
108/96 (the “anti-usury law”).
Unassisted fixed-rate mortgages (Decree 394 of December 29, 2000)
This decree is an interpretation of Law 108/96, which provides for a reduction in interest considered excessive (or “usurious”) on repayments of fixedrate loans maturing after January 2, 2001.
Sentence 29 of the Constitutional Court in February 2002 declared the constitutional illegitimacy of art. 1.2 of Decree 394 dated December 29, 2000,
where it states that the interest referred to in the article must be substituted
only in relation to installments falling due after January 2, 2001. The Court
has therefore ruled that the substitution rate be applied to installments falling
due from the date when Decree 394/2000 came into effect, i.e. December 31,
2000.
The Group’s banks consider that, as a result of the adjustments made to contracts in 2001, there will be no additional future liabilities.
100
PART B
INFORMATION
ON THE
CONSOLIDATED
BALANCE SHEET
Section 1 - Loans (captions 30 and 40)
1.1 Details of caption 30 “Due from banks”
a) due from central banks
12.31.2004
12.31.2003
Changes
194,443
98,556
95,887
-
-
-
-
-
-
1,880,464
1,862,845
17,619
-
-
-
12.31.2004
12.31.2003
Changes
b) notes eligible for refinancing
at central banks
c) due on leasing contracts
d) repurchase agreements
e) securities loaned
This caption includes:
Correspondent current accounts
83,306
128,438
-45,132
Obligatory reserve with the Bank of Italy.
194,443
98,556
95,887
Deposits
100,040
179,769
-79,729
Loans
205,000
80,000
125,000
Repurchase agreements
1,880,464
1,862,845
17,619
Non-performing loans
22
22
-
Other technical forms
12,158
33,664
-21,506
2,475,433
2,383,294
92,139
Total due from banks
1.2 Breakdown of risk on amounts due from banks as of 12.31.2004
A) Doubtful loans
a.1 Non-performing loans
a.2 Problem loans
Gross
exposure
Total
writedowns
Net
exposure
474
-
474
22
-
22
-
-
-
a.3 Loans being restructured
-
-
-
a.4 Restructured loans
-
-
-
452
-
452
B) Performing loans
2,474,959
-
2,474,959
Total
2,475,433
-
2,475,433
a.5 Unsecured loans to countries at risk
101
1.3 Doubtful loans to banks as of 12.31.2004
Description
Nonperforming
loans
Problem
loans
Loans
being
restructured
Restruct.
loans
Unsecured
loans to
countries at risk
22
-
-
-
-
107
433
433
-
-
-
-
-
88
88
-
22
-
-
-
-
452
-
A. Gross exposure as of 1.01.2002
A. 1. of which: default interest
B. Increases
B.1. transfers from performing loans
B.2. default interest
B.3. transfers from other categories
of doubtful loans
B.4. other increases
C. Decreases
C.1. transfers to performing loans
C.2. write-offs
C.3. collections
C.4. recovery through assignment
C.5. transfers to other categories
of doubtful loans
C.6. other decreases
D. Gross exposure as of 12.31.04
D.1. of which: default interest
1.4 Analysis of writedowns to amounts due from banks recorded at 12.31.2004
Nonperforming
loans
Description
A. Total writedowns as of 12.31.04
A. 1. of which: default interest
B. Increases
B.1. writedowns
B.1.1. of which: default interest
B.2. use of provisions for possible loan losses
B.3. transfers from other loan
categories
B.4. other increases
C. Decreases
C.1. writebacks
C.1.1. including: default interest
C.2. writebacks on collection
C.2.1. including: default interest
C.3. write-offs
C.4. transfers to other loan
categories
C.5. other decreases
D. Total writedowns as of 12.31.04
D.1. of which: default interest
102
Problem
loans
Loans
being
restruct.
Restruct.
loans
Unsecured Performing
loans to
loans
countries at risk
-
-
-
-
1
1
1
-
-
-
-
-
-
-
-
1.5 Details of caption 40 "Loans to customers"
12.31.2004
12.31.2003
Changes
a) notes eligible for refinancing
at central banks
40,712
40,712
-
2,377,711
1,831,482
546,229
10,219
194,262
-184,043
-
-
-
12.31.2004
12.31.2003
Changes
4,329,195
4,164,377
164,818
16,626,840
14,936,262
1,690,578
99,646
117,607
-17,961
Due on leasing contracts (*)
2,377,711
1,831,482
546,229
Due on factoring transactions (*)
2,069,768
2,042,736
27,032
Non-performing loans
246,207
247,905
-1,698
Other technical forms
107,417
49,448
57,969
10,219
194,262
-184,043
25,867,003
23,584,079
2,282,924
12.31.2004
12.31.2003
Changes
7,709,154
5,980,105
1,729,049
853,182
1,025,366
-172,184
b) due on leasing contracts
c) repurchase agreements
d) securities loaned
Loans to customers are analyzed by technical form below:
Current accounts
Loans, grants, advances and mortgages
Discounted notes
Contangos and repurchase agreements
Total
(*) Net of non-performing loans
1.6 Secured loans to customers
a) loans secured by mortgages
b) loans secured by pledges on:
1. cash deposits
2. securities
3. other instruments
c) loans guaranteed by:
1. governments
2. other public entities
3. banks
4. other operators
Total
103
82,013
46,493
35,520
747,666
974,004
-226,338
23,503
4,869
18,634
5,050,053
4,250,862
799,191
-
6
-6
9,279
3,226
6,053
32,519
41,743
-9,224
5,008,255
4,205,887
802,368
13,612,389
11,256,333
2,356,056
1.7 Breakdown of risk on loans to customers as of 12.31.04
A) Doubtful loans
Gross
exposure
Total
writedowns
Net
exposure
809,012
-232,700
576,312
a.1 Non-performing loans
424,840
-178,633
246,207
a.2 Problem loans
372,907
-52,276
320,631
-
-
-
11,264
-1,791
9,473
1
-
1
B) Performing loans
25,387,318
-96,627
25,290,691
Total
26,196,330
-329,327
25,867,003
a.3 Loans being restructured
a.4 Restructured loans
a.5 Unsecured loans to countries at risk
In compliance with the requirements of CONSOB resolution 97003369 of September 4, 1997, with
regard to credit factoring or securitization, there have been a small amount of assignments of credit
without recourse (in addition to the securitization operations reported in later section 11.8).
1.8 Doubtful loans to customers as of 12.31.04
Description
A. Gross exposure as of 1.01.2002
A. 1. of which: default interest
B. Increases
B.1. transfers from performing loans
B.2. default interest
Nonperforming
loans
Problem
loans
Loans
being
restructured
424,051
374,836
-
Restruct.
loans
Unsecured
loans to
countries at risk
25,950
1
45,657
3,022
-
6
-
162,879
182,606
-
70
-
69,820
151,257
-
-
-
7,127
1,597
-
-
-
B.3. transfers from other categories
of doubtful loans
B.4. other increases
C. Decreases
C.1. transfers to performing loans
84,975
2,117
-
-
-
957
27,635
-
70
-
162,090
184,535
-
14,756
-
629
31,123
-
2,962
-
-
C.2. write-offs
98,054
304
C.3. collections
56,140
64,558
246
85
C.4. recovery through assignment
-
-
-
789
-
-
-
C.5. transfers to other categories
di crediti dubbi
597
75.490
-
11.005
-
C.6. other decreases
6,424
12,975
-
-
-
424,840
372,907
-
11,264
1
41,622
5,254
-
-
-
D. Gross exposure as of 12.31.04
D.1. of which: default interest
104
1.9 Movements in writedowns for the year are as follows:
Description
Nonperforming
loans
Problem
loans
176,146
38,237
A. Total writedowns as of 12.31.04
A. 1. of which:
default interest
B. Increases
B.1. writedowns
B.1.1. of which: default interest
Loans
being
restruct.
Restruct.
loans
48,171
-
6,914
-
2,122
-
-
-
910
113,367
32,922
-
96
-
34,056
83,580
31,914
-
96
-
30,681
7,302
1,650
-
-
-
560
-
-
-
-
-
-
29,686
974
-
-
-
700
101
34
-
-
-
2,675
110,880
28,817
-
5,219
-
26,722
930
3,197
-
39
-
13,444
27
78
-
-
-
2
B.2. use of provisions for possible loan losses
Unsecured Performing
loans to
loans
countries at risk
89,293
B.3. transfers from other loan
categories
B.4. other increases
C. Decreases
C.1. writebacks
C.1.1. including: default interest
C.2. writebacks on collection
C.2.1. including: default interest
C.3. write-offs
7,742
607
-
-
-
11,215
1,033
208
-
-
-
-
100,934
717
-
-
-
1,814
C.4. transfers to other loan
categories
C.5. other decreases
D. Total writedowns as of 12.31.04
D.1. of which:
default interest
78
24,288
-
5,180
-
1,196
8
-
-
-
249
178,633
52,276
-
1,791
-
96,627
36,690
4,420
-
-
-
560
Section 2 – Securities (captions 20, 50 and 60)
The securities portfolio is made up as follows:
12.31.2004
12.31.2003
Changes
7,083
418,948
-411,865
975,645
1,050,403
-74,758
Treasury bills and other bills eligible
for refinancing with central banks (caption 20)
Bonds and other debt securities (caption 50)
Shares, quotas and other forms of capital (caption 60)
264,640
193,685
70,955
1,247,368
1,663,036
-415,668
- investment securities
272,775
378,547
-105,772
- Dealing securities
974,593
1,284,489
-309,896
Total
of which :
105
The details and movements are provided in accordance with current regulations.
2.1 Investment securities
12.31.2004
1. Debt securities
1.1 Government securities
- quoted
- unquoted
1.2 Other
12.31.2003
Book value
Market value
Book value
Market value
272,775
277,702
378,547
383,916
3,955
4,418
170,934
174,304
3,955
4,418
170,934
174,304
-
-
-
209,612
268,820
273,284
207,613
- quoted
110,020
114,834
65,776
66,305
- unquoted
158,800
158,450
141,837
143,307
2. Equities
-
-
-
-
- quoted
-
-
-
-
- unquoted
-
-
-
-
272,775
277,702
378,547
383,916
Total
Market value represents the average of stockmarket prices during the second
half of 2004 determined with the same principles as for “dealing securities”.
The difference between the book and market values, 4,927 thousand Euro,
should be considered together with the net losses (964,5 thousand Euro) on
derivative hedging contracts shown in section 10.5.
The total also includes an Augusta Vita 10-year endowment policy with
yield linked to the results of Augusta Risparmio Auris for 67,430 thousand
Euro.
Differences between redemption value on maturity and book value as of
12.31.04 are as follows:
Government securities
Positive
differences
Negative
differences
22
-376
Bank bonds
-
-
Property bonds
-
-
Agricultural bonds
Other bonds
Other (Augusta policy)
Total
106
-
-
95
-121
-
-165
117
-662
2.2 Changes during the year in investment securities
A. Opening balance
378,547
B. Increases
105,737
B1) Purchases
45,095
B2) Writebacks
-
B3) Transfers from
47,746
dealing securities (1)
B4) Other (2)
12,896
C. Decreases
211,509
C1) Sales
-
C2) Redemptions
201,778
C3) Adjustments
-
of which: permanent writedowns
-
C4) Transfers to dealing securities
-
C5) Other (2)
9,731
D. Closing balance
272,775
(1) This amount refers entirely to securities of Banca Lombarda International SA.
(2) Other concerns the recording of income from sales, capitalized issue discounts and the difference
between purchase and redemption costs attributed to the statement of income.
The securities have been treated as non-current assets in accordance with CONSOB and Bank of Italy regulations on the basis of specific resolutions by the
Boards of Directors of the individual companies concerned. They identify the
fundamental characteristics of the two categories and decide which one securities should be booked to as soon as they are purchased. They also establish the
absolute and relative size parameters of the investment securities account.
Changes during the year, by type of security, are analyzed as follows:
Purchases
Transfers from
dealing
securities
Other
changes
net
Transfers to Redemptions
dealing
/Sales
securities
Government securities
- quoted
-
-
14
-
166,992
- unquoted
-
-
-
-
-
- quoted
29,578
26,572
468
-
12,375
- unquoted
15,517
21,174
2,683
-
22,411
45,095
47,746
3,165
-
201,778
Other
Total
107
2.3 Dealing securities
12.31.2004
Book value
Market value
12.31.2003
Book value
Market value
1. Debt securities
1.1 Government securities
- quoted
- unquoted
1.2 Other
- quoted
- unquoted
2. Equities
- quoted
- unquoted
706,220
319,335
319,335
386,885
220,186
166,699
268,373
265,398
2,975
709,721
319,335
319,335
390,386
220,580
169,806
268,373
265,398
2,975
1,090,301
504,178
502,758
1,420
586,123
416,332
169,791
194,188
191,957
2,231
1,093,825
504,208
502,788
1,420
589,617
416,613
173,004
187,613
185,381
2,232
Total
974,593
978,094
1,284,489
1,281,438
The difference between the book and market values, 3,501 thousand Euro,
should be considered together with the net capital losses (2,375 thousand
Euro) on derivative hedging contracts shown in section 10.5 on repurchase
agreements.
2.4 Changes during the year in dealing securities
A. Opening balance
B. Increases
B1) Purchases
- Debt securities
- government securities
- other securities
- Equities
B2) Writebacks and revaluations (1)
B3) Transfers from the investment portfolio
B4) Other (2)
C. Decreases
C1) Sales and redemptions
- Debt securities
- government securities
- other securities
- Equities
C2) Adjustments (1)
C3) Transfers to dealing securities (3)
C4) Other (2)
D. Closing balance
1,284,489
25,037,355
24,915,648
22,217,496
18,415,774
3,801,722
2,698,152
14,053
107,654
25,347,251
25,232,433
22,596,720
18,634,348
3,962,372
2,635,713
3,080
47,746
63,992
974,593
(1) Writebacks and revaluations and writedowns have been recorded in the statement of income.
(2) Other changes include income from dealing activities and amounts arising on the recording of capitalized issue discounts and premiums, from the capitalization of zero coupons and from short-selling.
The contra-item for the latter, 30,760 euro, is in other liabilities.
(3) This amount refers entirely to securities of Banca Lombarda International SA.
108
Section 3 – Equity investments (captions 70 and 80)
3.1 Significant investments
A. COMPANIES INCLUDED IN THE SCOPE OF CONSOLIDATION
A.1 LINE-BY-LINE
Type of relationship
(a)
Stockholders’
equity
Net
income
(loss)
(b)
1. BANCA CASSA DI RISPARMIO
DI TORTONA SpA - Tortona (Al)
Capital stock Euro 38,734,500
In shares of Euro 516.46 each
1
87,704
9,788
Banca Lombarda SpA
Banca Regionale
Europea SpA
15.20
60.00
15.20
60.00
2. BANCA DI VALLE CAMONICA SpA - Breno (BS)
Capital stock Euro 2,738,693
In shares of Euro 1 each
1
100,948
12,237
Banca Lombarda SpA
Banco di Brescia SpA
74.24
8.72
74.24
8.72
3. BANCA LOMBARDA INTERNATIONAL S.A.
Luxembourg
Capital stock Euro 19,958,340
In shares of Euro 510 each
1
33,647
4,537
Banca Lombarda SpA
Banco di Brescia SpA
Banco di San Giorgio SpA
91.90
7.59
0.51
91.90
7.59
0.51
1
-152
-153
Banca Lombarda SpA
100.00
100.00
NAME AND LOCATION
4. BANCA LOMBARDA PREFERRED
CAPITAL COMPANY LLC - Delaware (USA)
Capital stock Euro 1,000
In a single quota of 1,000 euro
Type of investment
Investment % Holding
Votes at
held by
ordinary
meetings
% Holding
5.
BANCA LOMBARDA PRIVATE
INVESTMENT SpA - Brescia
Capital stock Euro 39,000,000
In shares of Euro 3 each
1
26,053
-6,185
Banca Lombarda SpA
100.00
100.00
6.
BANCA REGIONALE EUROPEA SpA - Cuneo
Capital stock Euro 442,000,000
In shares of Euro 0.52 each
1
1,025,026
76,791
Banca Lombarda SpA
53.33
57.83
7.
BANCO DI BRESCIA SpA - Brescia
Capital stock Euro 593,300,000
In shares of Euro 0.68 each
1
985,275
178,225
Banca Lombarda SpA
100.00
100.00
8.
BANCO DI SAN GIORGIO SpA - Genoa
Capital stock Euro 55,772,223
In shares of Euro 1.50 each
1
81,804
12,479
Banca Regionale
Europea SpA
Banca Lombarda SpA
54.07
32.68
54.07
32.68
CAPITALGEST SGR SpA - Brescia
Capital stock Euro 12,661,740
In shares of Euro 6 each
1
19,723
3,183
Banca Lombarda SpA
100.00
100.00
10. CAPITALGEST ALTERNATIVE
INVESTMENTS SGR SpA - Brescia
Capital stock Euro 1,500,000
In shares of Euro 1,000 each
1
1,580
341
Banca Lombarda SpA
100.00
100.00
11. C.B.I. FACTOR SpA - Milan
Capital stock Euro 36,115,820
In shares of Euro 0.52 each
1
70,560
8,152
Banca Lombarda SpA
100.00
100.00
12. FINANCIERA VENETA E.F.C. SA - Spain
Capital stock Euro 5,108,500
In shares of Euro 60.10 each
1
6,698
106
Banca Lombarda SpA
Veneta Factoring SpA
51.00
39.00
51.00
39.00
13. GRIFOGEST SGR SpA - Florence
Capital stock Euro 2,582,300
In shares of Euro 516.46 each
1
8,867
2,730
Banca Lombarda SpA
Banca Regionale
Europea SpA
51.00
51.00
49.00
49.00
9.
(Following)
109
(Straight)
NAME AND LOCATION
Type of relationship
(a)
Stockholders’
equity
Net
income
(loss)
(b)
Type of investment
Investment % Holding
Votes at
held by
ordinary
meetings
% Holding
14. LOMBARDA ADVISORY SA - Luxembourg
Capital stock Euro 75,000
In shares of Euro 10.00 each
1
1,087
850
Banca Lombarda
Private Investment S.p.A
99.00
99.00
15. LOMBARDA SISTEMI E SERVIZI SpA - Brescia
Capital stock Euro 10,400,000
In shares of Euro 0.52 each
1
21,744
5,815
Banca Lombarda SpA
100.00
100.00
16. MERCATI FINANZIARI SIM SpA - Milan
Capital stock Euro 10,320,000
In shares of Euro 5.16 each
1
12,079
2
Banca Lombarda SpA
100.00
100.00
17. S.B.I.M. SpA - Brescia
Capital stock Euro 14,768,000
In shares of Euro 0.52 each
1
26,345
-600
Banca Lombarda SpA
100.00
100.00
18. SBS LEASING SpA - Brescia (c)
Capital stock Euro 22,800,000
In shares of Euro 6 each
1
76,581
16,847
Banca Lombarda SpA
98.00
98.00
19. SIFRU GESTIONI FIDUCIARIE SIM SpA - Brescia
Capital stock Euro 1,040,000
In shares of Euro 0.52 each
1
3,264
1,221
Solofid Spa
100.00
100.00
20. SILF SpA - Cuneo
Capital stock Euro 10,300,000
In shares of Euro 1 each
1
35,213
9,253
Banca Lombarda SpA
Banca Regionale
Europea SpA
60.00
60.00
40.00
40.00
21. SOLIMM SpA - Brescia
Capital stock Euro 2,580,000
In shares of Euro 5.16 each
1
2,719
-85
Banca Lombarda SpA
100.00
100.00
22. SOLOFID SpA - Brescia
Capital stock Euro 1,508,000
In shares of Euro 0.52 each
1
3,188
1,131
Banca Lombarda SpA
100.00
100.00
23. VENETA FACTORING SpA - Pordenone
Capital stock Euro 12,080,000
In shares of Euro 1 each
1
36,620
12,529
Banca Lombarda SpA
CBI Factor SpA
51.00
39.00
51.00
39.00
24. GESTIONI LOMBARDA (SUISSE) SA - Switzerland
Capital stock CHF 1,000,000
In shares of CHF 1,000 each
1
2,288
496
Banca Lombarda
International SA
100.00
100.00
B. INVESTMENTS CARRIED AT EQUITY
Group equity investments
NAME AND LOCATION
Type of
relationship
(a)
StockNet
holders’ income
equity (loss)
(b)
Type of investment
Investment % Holding
Votes at Consolid.
held by
ord. meetings
book
% Holding
value
1. ANDROS Srl - Cuneo
Capital stock Euro 260,000
In quotas of Euro 0.52 each
1
1,172
242
BANCA REGIONALE
Europea SpA
100.00
100.00
1,175
2. CORPORATION FINANCIERE EUROPEENNE SA
Luxembourg
Capital stock Euro 1,300,000
In shares of Euro 1 each
1
1,280
106
Banca Lombarda SpA
63.75
63.75
817
3. GE.SE.RI SpA in liquidation - Cuneo
Capital stock Euro 323,520
In quotas of Euro 1 each
1
-96
-42
BANCA REGIONALE
Europea SpA
95.00
95.00
-
Total investments in Group companies
110
1,992
C. OTHER SIGNIFICANT INVESTMENTS
NAME AND LOCATION
Type of
relationship
(a)
StockNet
holders’ income
equity (loss)
(b)
1. CARALT SpA - Alessandria
Capital stock Euro 2,600,00
In shares of Euro 52 each
8
3,920
510
2. FIDUCIARIA BANKNORD SpA - Milan (*)
Capital stock Euro 520,000
In shares of Euro 1 each
8
620
9
3. HELP RENTAL SERVICE Srl - Rome
Capital stock Euro 775,000
8
4. LOMBARDA VITA SpA
Capital stock Euro 80,000,000
In shares of Euro 5 each
8
5. PAVIA SVILUPPO IMPRESE SpA - Pavia
Capital stock Euro 2,500,000
In shares of Euro 1 each
8
2,107
6. PRISMA Srl - Milan
Capital stock Euro 520,000
In quotas of Euro 1 each
8
7. SIDERFACTOR SpA - Milan
Capital stock Euro 1,200,000
In shares of Euro 100 each
8. TEX FACTOR SpA - Milan
Capital stock Euro 1,033,000
In shares of Euro 51.65 each
Type of investment
Investment % Holding
Votes at Consolid.
held by
ord. meetings
book
% Holding
value
Banca Cassa di
Risparmio di Tortona SpA
32.50
32.50
1,274
Banco di Brescia Spa
B.di V.Camonica SpA
30.00
10.00
30.00
10.00
-
853 -1,820
SBS Leasing Spa
24.00
24.00
205
94,312 10,499
Banca Lombarda SpA
49.90
49.90
47,063
-43
BANCA REGIONALE
Europea SpA
32.32
32.32
682
682
30
Banca Lombarda SpA
20.00
20.00
135
7
1,211
11
CBI Factor SpA
27.00
27.00
324
8
1,781
139
CBI Factor SpA
20.00
20.00
357
Total
50,040
(*) Figures taken from the approved financial statements as of December 31, 2003.
(a) Type of relationship:
1 = control as per art.2359.1.1 of the Italian Civil Code (majority of votes at ordinary stockholders’ meetings);
2 = control as defined by article 2359(1.2) of the Italian Civil Code (significant influence at ordinary stockholders’ meetings);
3 = control as defined by article 23(2.1) of the Tax Consolidation Law (agreements with other stockholders)
4 = other forms of control;
5 = single management as defined by article 26(1) of Decree 87/92;
6 = single management as defined by article 26(2) of Decree 87/92;
7 = joint control;
8 = associated company
(b) Amounts included with stockholders’ equity.
(c) Stockholders’ equity and net income calculated using financial lease accounting methodology.
111
3.2 Amounts due to and from Group companies
12.31.2004
a) Assets
12.31.2003
Changes
218
-
218
-
-
-
-
-
218
1. Due from banks
of which: subordinated
2. due from financial institutions
218
-
of which: subordinated
-
-
-
3. due from other customers
-
-
-
of which: subordinated
-
-
-
4. bonds and other debt securities
-
-
-
-
-
-
1,234
2,256
-1,022
-
-
-
of which: subordinated
B) Liabilities
1. Due to banks
2. due to financial institutions
3. due to other customers
-
-
-
1,234
2,256
-1,022
4. securities issued
-
-
-
5. subordinated liabilities
-
-
-
c) Guarantees and commitments
-
-
-
1. guarantees given
-
-
-
2. commitments
-
-
-
12.31.2004 (1)
12.31.2003
Changes
9,950
340,574
-330,624
3.3 Due to and from equity investments
(excluding Group companies)
a) Assets
1. Due from banks
-
-
-
-
-
-
9,950
222,335
-212,385
-
-
-
3. due from other customers
-
118,239
-118,239
of which: subordinated
-
-
-
-
-
-
-
-
-
103,959
681,625
-577,666
100,000
80,110
19,890
3,833
41,161
-37,328
126
9,816
-9,690
4. securities issued
-
550,528
-550,528
5. subordinated liabilities
-
10
-10
6,467
28,384
-21,917
2
10,324
-10,322
6,465
18,060
-11,595
of which: subordinated
2. due from financial institutions
of which: subordinated
4. bonds and other debt securities
of which: subordinated
B) Liabilities
1. Due to banks
2. due to financial institutions
3. due to other customers
c) Guarantees and commitments
1. guarantees given
2. commitments
(1) From 2004, the figures exclude financial dealings with companies in which the investments held are
modest in terms of the investee company’s capital and the investing company’s equity.
112
3.4 Equity investments (caption 70)
a) Investments in banks
1. quoted
2. unquoted
b) Investments in financial institutions
1. quoted
2. unquoted
c) Other
1. quoted
2. unquoted
Total
12.31.2004
12.31.2003
Changes
349,439
343,336
6,103
346,630
328,985
17,645
2,809
14,351
-11,542
62,904
65,901
-2,997
-
-
-
62,904
65,901
-2,997
82,522
66,653
15,869
-
-
-
82,522
66,653
15,869
494,865
475,890
18,975
3.5 Equity investments in Group companies (caption 80)
12.31.2004
a) Investments in banks
12.31.2003
Changes
-
-
-
1. quoted
-
-
-
2. unquoted
-
-
-
-
-
-
b) Investments in financial institutions
1. quoted
-
-
-
2. unquoted
-
-
-
1,992
1,823
169
-
-
1,992
1,823
169
1,992
1,823
169
c) Other
1. quoted
2. unquoted
Total
113
3.6 Changes during the year in equity investments
3.6.1 Equity investments in Group companies
A. Opening balance
B. Increases
1,823
169
B1. Purchases
-
B2. Writebacks
-
B3. Revaluations
B4. Other changes
B5. Valuation as per article 19 Decree 87/92
C. Decreases
169
-
C1. Sales
-
C2. Adjustments
-
C3. Other changes
-
D. Closing balance
1,992
E. Total revaluations
-
F. Total adjustments
413
3.6.2 Other equity investments
A. Opening balance
B. Increases
475,890
44,676
B1.Purchases
14,778
B2.Writebacks
-
B3. Revaluations
-
B4 Other changes
B5. Valuation as per article 19 Decree 87/92
C. Decreases
29,898
25,701
C1. Sales
19,487
C2. Adjustments
1,510
C3. Other changes
4,704
D. Closing balance
494,865
E. Total revaluations
15,664
F. Total adjustments
14,156
114
Changes in these investments are detailed below:
B) Associated companies
Opening
B.1
B.2
B.3
B.4
balance
Purchases
Writebacks
Revalua-
Other
tions
changes
CARALT SpA
Fiduciaria Banknord SpA (*)
Help Rental Service Srl
Lombarda Vita SpA
C.2
C.3
Sales Adjustments
C.1
Other
Closing
%
balance
changes
1,628
-
-
-
166
-
-
521
1,273
-
-
-
-
-
-
-
-
-
32.50
40.00
173
527
-
-
-
-
495
-
205
24.00
49.90
33,417
12,325
-
-
5,239
-
-
3,918
47,063
Pavia Sviluppo Imprese PASVIM SpA
691
-
-
-
-
-
-
9
682
32.32
Prisma Srl
129
-
-
-
7
-
-
-
136
20.00
Siderfactor SpA
324
-
-
-
-
-
-
-
324
27.00
Tex Factor SpA
367
-
-
-
28
-
-
38
357
20.00
36,729
12,852
-
-
5,440
-
495
4,486
50,040
--
C.1
C.2
C.3
Closing
Sales Adjustments
Other
Total (B)
C) Other equity investments
Opening
B.1
B.2
B.3
B.4
balance
Purchases
Writebacks
Revalua-
Other
tions
changes
Agemont SpA
29
%
balance
changes
-
-
-
5
-
6
-
28
0.17
12,950
-
-
-
-
-
-
-
12,950
0.96
18
42
-
-
-
-
-
-
60
0.06
459
-
-
-
-
-
-
-
459
10.00
83
6
-
-
-
-
-
-
89
4.17
Earchimede SpA
3,064
-
-
-
-
-
-
-
3,064
1.40
Banca d'Italia
1,824
-
-
-
-
-
-
-
1,824
0.25
-
530
-
-
-
-
375
-
155
10.00
328,985
-
-
-
17,645
-
-
-
346,630
2.45
ASM Brescia SpA
Autostrade Lombarde SpA
Autosystem Società di Servizi SpA
AQM
Brescia On Line Srl
Banca Intesa SpA
Banco Emiliano Romagnolo SpA
1,369
-
-
-
-
-
430
-
939
5.00
Cedacri SpA
1,980
-
-
-
-
-
-
-
1,980
12.20
Centrale Bilanci Srl
1,404
-
-
-
-
-
-
-
1,404
3.00
207
-
-
-
112
319
-
-
-
-
Centro Factoring SpA
Centro Fiduciario SpA
5
-
-
-
-
-
-
-
5
2.00
Centro Leasing SpA
450
-
-
-
319
769
-
-
-
-
Cidneo Finance PLC
5,934
-
-
-
-
-
-
-
5,934
-
Compagnie Monegasque de Banque
8,670
-
-
-
2,330
11,000
-
-
-
-
Cooperativa Farmaceutica Srl (*)
-
-
-
-
-
-
-
-
-
0.02
Deutsche Morgan Grenfell Capital Italy Scpa 1,372
-
-
-
-
221
-
-
1,151
2.59
Ec Bic Piedmont in liquidation SpA (*)
-
-
-
-
-
-
-
-
-
4.93
2,578
-
-
-
3,595
6,173
-
-
-
-
Banca Popolare di Lodi Scrl
e-Mid SpA
221
-
-
-
-
-
-
-
221
3.68
Eontech Ventures SA & Alpha sca
180
95
-
-
-
-
-
-
275
4.48
-
-
-
-
-
-
-
-
-
6.25
1,473
90
-
-
-
-
-
194
1,369
1.17
-
-
-
-
-
-
-
-
-
0.45
294
-
-
-
-
-
-
-
294
3.69
Ente Turismo Alba Bra Langhe Roero srl (*)
Equinox Investment Company Scpa
Eurocasse SIM SpA in liquidation (*)
Eurofidi Consorzio Garanzia Fidi
European Investment Fund
1,000
-
-
-
-
-
-
-
1,000
0.25
Euros SpA
133
215
-
-
-
-
202
-
146
1.43
Filse SpA
283
80
-
-
-
-
-
-
363
1.66
(Following)
115
(seguito)
C) Other equity investments
Opening
B.1
B.2
B.3
B.4
balance
Purchases
Writebacks
Revalua-
Other
tions
changes
Finlombarda SpA
514
-
-
-
400
Finpiemonte SpA
612
-
-
-
27
-
-
-
GAL Vallecamonica srl in liquidation
GEC spa
Hopa SpA
Immobiliare Fiera di Brescia
Informatica Servizi Organizzazione srl
Interbrennero SpA
C.2
C.3
Sales Adjustments
C.1
Other
Closing
%
balance
changes
914
-
-
-
-
-
-
16
-
-
-
612
1.83
-
11
-
11.11
98
-
-
-
-
-
-
-
98
7.20
48,529
-
-
-
-
-
-
-
48,529
2.00
1,696
-
-
-
-
-
-
-
1,696
7.38
26
-
-
-
-
-
-
-
26
10.00
43
-
-
-
-
-
-
-
43
0.42
Isfor 2000 SpA
372
-
-
-
-
-
-
-
372
9.82
Latur SpA
200
-
-
-
-
-
-
-
200
10.00
LigurCapital SpA
163
-
-
-
-
-
-
-
163
2.86
1,463
-
-
-
-
-
-
-
1,463
2.31
Lombarda Mortgage Finance 1 Srl
1
-
-
-
-
-
-
-
1
10.00
Lombarda Lease Finance 1 Srl
1
-
-
-
-
-
-
-
1
10.00
Lombarda Lease Finance 2 Srl
1
-
-
-
-
-
-
-
1
10.00
Lombarda Lease Finance 3 Srl
1
-
-
-
-
-
-
-
1
10.00
46
-
-
-
-
-
-
-
46
0.09
619
-
-
-
-
-
-
-
619
9.87
LineaPiù SpA
Mediocredito Friuli SpA
Multiutility SpA
Parco Scientifico Tecnologico e delle
Telecomunicazioni in Valle Scrivia SpA
Risparmio e Previdenza SpA
S.W.I.F.T. Sc.
SI Holding SpA
Soc. Gestione per il Realizzo SpA
SO.P.R.IN SpA Ass. in participation
813
-
-
-
-
-
-
-
813
16.95
1,883
-
-
-
-
-
-
-
1,883
5.00
23
76
-
-
52
75
-
-
76
0.04
450
-
-
-
-
-
-
-
450
1.68
72
-
-
-
-
-
-
-
72
0.93
1,446
-
-
-
-
-
-
-
1,446
-
SSB SpA
65
-
-
-
-
-
-
-
65
1.07
Fidimpresa Liguria
26
-
-
-
-
-
-
-
26
0.79
Vemer Siber Group SpA
4,776
-
-
-
-
-
-
-
4,776
7.34
Other minor investments
230
792
-
-
-
-
2
13
1,007
-
Total (C)
439,161
1,926
-
-
24,458
19,487
1,015
218
444,825
-
Total (B + C)
475,890
14,778
-
-
29,898
19,487
1,510
4,704
494,865
-
(*) Equity investments not reaching the minimum amount for reporting purposes (thousand euro). These were written down in previous
years either because of the losses incurred or because they were placed in liquidation.
In relation to Banca Intesa, the increase reflects recognition of the own shares distributed by that bank on the allocation of net income
for 2003.
116
Selection 4 - Tangible and intangible fixed assets (captions 110 and 120)
4.1 Changes during the year in tangible fixed assets
Property
Furniture
and installations
Total
673,773
52,867
726,640
29,150
48,834
77,984
28,634
38,676
67,310
B2. Writebacks
-
-
-
B3. Revaluations
-
-
-
A. Opening balance
B. Increases
B1. Purchases
B4. Other changes
C. Decreases
516
10,158
10,674
36,591
30,549
67,140
C1. Sales
10,671
3,508
14,179
C2. Adjustments
23,994
22,886
46,880
23,994
22,799
46,793
-
87
87
1,926
4,155
6,081
666,332
71,152
737,484
a) depreciation
b) permanent writedowns
C3. Other changes
D. Closing balance
E. Total revaluations
620,336
-
620,336
F. Total adjustments
217,080
164,893
381,973
217,080
164,806
381,886
-
87
87
a) depreciation
b) permanent writedowns
4.2 Changes during the year in intangible fixed assets (caption 120)
Solidarity
fund
Ex DM. 158/2000
Software
Leasehold
Improvements
Goodwill
Other
Total
A. Opening balance
33,520
67,303
9,341
B. Increases
19,024
34,391
8,967
3,143
794
66,329
B1.Purchases
24,342 11,971 146,477
19,024
34,381
3,358
3,143
789
60,705
B2.Writebacks
-
-
-
-
-
-
B3. Revaluations
-
-
-
-
-
-
B4 Other changes
-
10
5,609
-
5
5,624
13,228
32,961
9,847
10,659
3,748
70,453
-
1
2,372
-
-
2,373
13,228
32,692
4,863
10,659
3,646
65,098
13,228
32,692
4,863
10,659
3,646
65,098
C. Decreases
C1. Sales
C2. Adjustments
a) amortization
b) permanent writedowns
C3. Other changes
D. Closing balance
-
-
-
-
-
-
-
268
2,612
-
102
2,982
39,316
68,733
8,461
16,826
E. Total revaluations
-
-
-
-
F. Total adjustments
22,013
5,821
22,555
22,013
5,821
22,555
-
-
-
a) amortization
b) permanent writedowns
117
9,017 142,353
-
-
109,168 11,862 171,419
109,168 11,862
-
-
171,419
-
Section 5 - Other assets (captions 150 and 160)
5.1 Other assets (caption 150)
12.31.2004
12.31.2003
Changes
Amounts due from tax authorities (1)
407,596
571,847
-164,251
Other items
208,281
127,157
81,124
Items in transit
85,847
71,873
13,974
Amounts to be collected
69,967
92,653
-22,686
Value-date differences on exchange
and dealing transactions
Third-party checks
11,370
11,713
-343
60,326
70,819
-10,493
Discounted value of "corporate derivatives"
124,466
110,776
13,690
Items being processed
163,291
112,303
50,988
1,131,144
1,169,141
-37,997
Total
(1) including deferred tax assets as detailed in the related table in section 7 “Provisions”.
The above assets have not been written down as they are fully collectible.
5.2 Accrued income and prepaid expenses (caption 160)
12.31.2004
12.31.2003
Changes
8,219
12,619
-4,400
22,908
10,625
12,283
Accrued income:
- interest on securities
- interest on bank deposits and loans
- interest on loans to customers
- differentials on derivative contracts
- other
Total accrued income
33,400
31,624
1,776
401,661
338,722
62,939
6,141
15,129
-8,988
472,329
408,719
63,610
1,511
1,242
269
Prepaid expenses:
- insurance premiums
- rentals and condominium expenses
- substitute tax on release of goodwill
- bond issue discount
- other
Total prepaid expenses
Total accrued income and prepaid expenses
118
98
57
41
1,883
4,352
-2,469
804
959
-155
85,287
65,335
19,952
89,583
71,945
17,638
561,912
480,664
81,248
5.4 Distribution of subordinated assets
a) due from banks
b) loans to customers
c) bonds and other debt securities
of which: own securities
12.31.2004
12.31.2003
Changes
-
-
-
14,163
16,182
-2,019
164,990
168,946
-3,956
7
-
7
12.31.2004
12.31.2003
Changes
131,617
427,912
-296,295
-
-
-
12.31.2003
Changes
565,858
606,886
-41,028
1,629,770
1,558,680
71,090
Section 6 - Payables (captions 10, 20, 30 and 40)
6.1 Due to banks (caption 10)
a) repurchase agreements
b) securities loaned
Due to banks is analyzed by technical form as follows:
12.31.2004
correspondent current accounts
deposits
mortgage loans
173,649
196,959
-23,310
repurchase agreements
131,617
427,912
-296,295
41,761
39,150
2,611
2,542,655
2,829,587
-286,932
12.31.2004
12.31.2003
Changes
1,833,458
-
1,863,846
-
-30,388
-
other technical forms
Total due to banks
6.2 Due to customers (caption 20)
a) repurchase agreements
b) securities loaned
Due to customers (caption 20) and securities issued (caption 30) are analyzed by technical form as follows:
Due to customers (caption 20)
current accounts
deposit accounts
repurchase agreements
assignors in factoring
other technical forms
Total
119
12.31.2004
12.31.2003
Changes
11,585,517
1,638,344
1,833,458
567,507
43
10,641,414
1,566,680
1,863,846
608,650
377
944,103
71,664
-30,388
-41,143
-334
15,624,869
14,680,967
943,902
Securities issued (caption 30)
Bonds
12.31.2004
12.31.2003
Changes
8,878,085
7,157,478
1,720,607
Certificates of deposit
291,144
372,210
-81,066
Bankers' drafts
159,483
111,590
47,893
11,000
47,201
-36,201
9,339,712
7,688,479
1,651,233
24,964,581
22,369,446
2,595,135
12.31.2004
12.31.2003
Changes
557
1,381
-824
Commercial paper
Total
Total due to customers
and securities issued
6.3 Public funds administered (caption 40)
Funds used to finance revolving agricultural loans
Sezione 7 – Provisions (captions 70, 80 and 90)
7.3 Provisions for liabilities and charges: other (caption 80c)
This caption, together with movements during the year, is analyzed as follows:
12.31.2003
Provision for guarantees given (*)
Increases
Provision
changes
Decreases
Uses
changes 12.31.2004
7,666
561
-
-326
-
7,901
Provision for legal disputes and other charges 17,152
16,040
-
-5,088
-
28,104
Provision for actions for revocation 15,569
5,091
-
-4,906
-
15,754
Provision for charitable donations
4,685
3,800
400
-4,083
-
4,802
Provision for agents' indemnities
2,809
1,071
193
-13
-
4,060
Other provisions
4,909
1,060
-
-1,190
-
4,779
52,790
27,623
593 -15,606
-
65,400
Total
(*) The increases to provisions of 561 thousand Euro have been calculated in the consolidated statement of
incom under the caption 120 “Adjustments to loans and provisions for guarantees and commitments”.
The provision for guarantees given includes an estimate to cover doubtful
guarantees.
The provision for legal disputes and other charges also includes estimated losses on lawsuits with customers, as well as prudent provisions against
customers’ claims regarding anatocism and investment services.
120
Provision for termination indemnities (caption 70)
Balance as of 12.31.2003
Use
Provision for the year
Balance as of 12.31.2004
179,478
-15,146
16,899
181,231
Staff pension funds (caption 80 a )
The pension fund represents the amount of the commitments taken on by
“BRE Banca” towards retired personnel or those still working. The amount is
determined using an actuarial valuation of the pensions payable to those so
entitled. The amount totals 24,760 thousand Euro and refers to:
- 8,961 thousand Euro for the fund of the former Banca del Monte di Lombardia (B.R.E. Banca);
- 15,799 thousand Euro for the fund of the former Cassa di Risparmio di
Cuneo (B.R.E. Banca).
Provisions for taxation (caption 80 b)
Balance as of 12.31.2003
409,685
- Payments made during the year:
direct taxes
indirect taxes
other changes
+ Provisions for :
indirect taxes (included in caption 80 b of the statement of income)
direct taxes (included in caption 240 of the statement of income) - current taxes:
other changes
+ Change in deferred taxes
-330,441
-327,173
-782
-2,486
148,098
245
144,992
2,861
28,615
Balance as of 12.31.2004
255,957
“Deferred tax assets” refer to provisions for liabilities and charges and
expenses which are not deductible in the year in which they are recorded
for accounting purposes. They are shown under asset caption 130.
“Deferred tax liabilities” relate to gains arising on the disposal of equity
investments and buildings. They are classified as part of the provision for
taxation.
Foreseeable rates of tax applicable to consolidated companies have been
used to calculate these taxes.
121
7.4 Deferred tax assets
(1) Opening balance
(2) Increases
58,273
27,982
2.1 Deferred tax assets arising in the year
2.2 Other increases
(3) Decreases
27,361
621
20,192
3.1 Deferred tax assets reversing in the year
3.2 Other decreases
(4) Closing balance
19,571
621
66,063
7.5 Deferred tax liabilities
(1) Opening balance
(2) Increases
60,537
33,127
2.1 Deferred tax liabilities arising during the year
2.2 Other increases
(3) Decreases
33,127
4,512
3.1 Deferred tax liabilities reversing during the year
3.2 Other decreases
(4) Closing balance
4,512
89,152
The above closing balances are retained in the financial statements since the
related events are likely to crystallize in the future.
122
Section 8 –
Capital stock, additional paid-in capital, equity reserves, reserve for general banking risks, goodwill and
negative goodwill on consolidation, subordinated liabilities and minority interests. (liability captions: 100,
110, 120, 130, 140, 150, 160, 170, 180, 200 - asset captions
90 and 100)
12.31.2004
12.31.2003
Changes
Reserve for general banking risks (caption 100)
64,390
Capital stock (caption 150)
320,828
Additional paid-in capital (caption 160)
654,723
Reserves (caption 170)
746,512
A) Legal reserve
132,641
B) Other reserves
613,871
Revaluation reserves (caption 180):
127,178
Negative goodwill arising on consolidation
(caption 120)
25,622
Negative goodwill arising on application
of the equity method (caption 130)
21
Retained earnings (Accumulated losses) (caption 190)
Net income for the year (caption 200)
151,735
Total stockholders' equity
2,091,009
64,222
316,644
624,034
591,431
132,641
458,790
266,122
168
4,184
30,689
155,081
155,081
-138,944
25,622
-
21
112,059
2,000,155
39,676
90,854
Subordinated liabilities (caption 110)
Minority interests (caption 140)
1,305,821
459,526
33,219
8,221
1,339,040
467,747
These captions are analyzed below:
Reserve for general banking risks: (caption 100)
The difference is due to changes in the equity interest in CB Factor.
Capital stock: (caption 150)
This is made up of 320,828,000 ordinary shares of par value of Euro 1 issued
by the Parent Bank (*)
Additional paid-in capital (caption 160)
This pertains to the Parent Bank (*)
Legal reserve (caption 170 a)
This pertains to the Parent Bank (*)
Other reserves (caption 170 b):
Details of changes are shown in the attachments.
Revaluation reserves (caption 180)
The decrease is mainly attributable to the transfer to capital stock approved
by Banco di Brescia at the extraordinary meeting held on April 14, 2004.
(*) Details and movements in these captions are shown in the Explanatory
notes of the Parent Bank (section 8).
123
Subordinated liabilities
Subordinated liabilities are analyzed in the following table:
Name
Interest rate
Book value
at 12.31.2004
Fixed rate swapped
with 6-mths Euribor + 2.42%
155,000
PREFERENCE SHARES (TIER I):
1 Banca Lombarda Preferred
Capital Company LLC 2000/2010
HYBRID CAPITALIZATION INSTRUMENTS (UPPER TIER II):
2
Banca Lombarda bond loan 1999-2009
3 month-euribor +1.05%
99,840
3
Banca Lombarda bond loan 2000-2010
6 month-euribor +1.065%
348,642
SUBORDINATE LOANS THAT CAN BE INCLUDED IN CAPITAL FOR SUPERVISORY PURPOSES (LOWER TIER II):
4 Former Banca San Paolo 1998-2006 bond loan
3 month-Euribor +0.45%
61,975
5 Banca Lombarda
e Piemontese 2001-2011 bond loan
3 month-euribor +0.80%
149,636
6 Banca Lombarda
e Piemontese 2002-2012 bond loan
3-mths euribor +1% for the first 5
years, +1.60% thereafter
249,657
7 Banca Lombarda
e Piemontese 2004-2014 bond loan
3-mths euribor + 0.45% for the first 5
years, + 1.05 thereafter
249,290
8 Banco di Brescia 2002-2009 bond loan
3-mths euribor + 0.40% for the first 5
years, +0.50% thereafter (1)
25,000
Total
1,339,040
(1) Except for the call option, which allows early repayment.
These loans comply with Bank of Italy requirements for inclusion in the calculation of capital for supervisory purposes, namely:
- advance repayment clause, with authorization of the supervisory authority;
- subordination clause which comes into play if the issuing bank is put into
liquidation.
The subordinated loans included in the “Upper Tier II” category are subject
to additional more restrictive clauses linked to any losses, suspension of
interest payments and repayment only after all other creditors not similarly
subordinated have been paid.
124
Negative goodwill arising on consolidation (caption 120)
This relates to:
12.31.2004
Banco di San Giorgio Spa
C.B.I. Factor Spa
SBS Leasing Spa
Banca di Valle Camonica Spa
Capitalgest SGR SpA
Solofid (formerly Sifru Fiduciaria SpA)
Lombarda Sistemi e Servizi Spa
12.31.2003
Changes
226
226
-
1,646
1,646
-
10
10
-
22,546
22,546
-
1,884
1,884
-
15
15
-
7
7
-
Offset against positive goodwill:
- Sifru SIM SpA
- S.B.I.M. SpA (formerly Magazzini Gen.Borghetto SpA)
Total
-11
-11
-
-701
-701
-
25,622
25,622
-
Negative goodwill arising on application of the equity method (caption 130)
This relates to:
12.31.2004
12.31.2003
Changes
Prisma Srl
8
8
-
Andros Srl
115
115
-
-102
-102
-
21
21
-
12.31.2004
12.31.2003
Changes
11,985
14,141
68
411,190
14,920
634
1,167
11
1,532
8,432
3,662
5
11,423
12,891
63
403,477
15,530
1,832
626
1,073
16
1,426
7,405
39
3,725
-
562
1,250
5
7,713
-610
-1,832
8
94
-5
106
1,027
-39
-63
5
467,747
459,526
8,221
Offset against positive goodwill:
- BRE SpA
Total
Minority interests (caption 140)
These relate to:
Banca Cassa Risparmio Tortona SpA
Banco di San Giorgio Spa
Banca Lombarda International SA
Banca Regionale Europea SpA
Banca di Valle Camonica Spa
C.B.I. Factor Spa
Financiera Veneta SA
Grifogest SGR SpA
Lombarda Advisory SA
SBS Leasing Spa
SILF SpA
Solimm SpA
Veneta Factoring Spa
Gestioni Lombarda (Suisse) SA
Total
125
Goodwill arising on consolidation (caption 90)
This relates to:
12.31.2003 Increases
Banco di San Giorgio Spa
Banca Cassa di Risparmio di Tortona SpA
Banca di Valle Camonica Spa
Banca Regionale Europea SpA
Capitalgest SGR SpA (and ex Unigest SpA)
C.B.I. Factor Spa
Grifogest SGR SpA
Mercati Finanziari SIM Spa
Banca Lombarda Private Investment SpA
Finanziera Veneta SA
Gestioni Lombarda (Suisse) SA
Total
Decreases
12.31.2004
1,033
105,721
675
594,795
501
4,374
1,743
149
8,428
262
-
565
2,340
-206
-7,048
-112
-37,175
-100
-926
-218
-21
-936
-29
-234
827
98,673
563
557,620
401
4,013
1,525
128
7,492
233
2,106
717,681
2,905
-47,005
673,581
CAPITAL ADEQUACY REQUIREMENTS AT DECEMBER 31, 2004
Categories
Amount
A. CONSOLIDATED CAPITAL FOR SUPERVISORY PURPOSES
A.1 Tier 1 capital
A.2 Tier 2 capital
A.3 Items to be deducted
A.4 Capital for supervisory purposes
B. CAPITAL ADEQUACY REQUIREMENTS
B.1 Lending risks
B.2 Market risks
of which:
- dealing portfolio risks
- exchange risks
B.2.1 Tier 3 subordinated loans
B.3 Other requirements
B.4 Total requirements
C. RISK-WEIGHTED ASSETS AND CAPITAL ADEQUACY RATIOS (*)
C.1 Risk-weighted assets
C.2 Tier 1 capital / Risk-weighted assets
C.3 Capital for supervisory purposes / Risk-weighted assets
1,634,401
1,310,652
-133,253
2,811,800
2,112,214
57,846
55,920
1,926
49,058
2,219,118
27,738,969
5.89%
10.14%
(*) Total prudent requirements multiplied by the reciprocal of the minimum compulsory coefficient for
lending risks (as per Bank of Italy notice dated November 4, 1999).
Capital adequacy ratio for lending risks
126
10.65%
Section 9 – Other liabilities (caption 50 and 60)
9.1 Other liabilities (caption 50)
12.31.2004
12.31.2003
Changes
Withholding taxes payable
21,069
20,653
416
Due to employees
82,790
62,370
20,420
1,095
1,808
-713
-
37
-37
-289,632
Value-date differences on exchange transactions
Down-payments on property sales
Securities - short-selling (1)
30,760
320,392
167,910
190,621
-22,711
Balances to be allocated
26,205
129,205
-103,000
Miscellaneous payables
256,255
267,946
-11,691
Due to suppliers
148,992
154,786
-5,794
Value-date differences on dealing transactions
303,601
243,891
59,710
19,675
24,061
-4,386
Amounts awaiting customer instructions
Items in transit with branches
Other
Discounted value of "corporate derivatives"
Consolidation adjustments
Total
63,143
35,128
28,015
120,255
109,523
10,732
45,922
31,805
14,117
1,287,672
1,592,226
-304,554
(1) This involves short-selling of securities as part of normal operations by the Finance Area. They are
valued using the same accounting principles as for securities dealing securities. The effects of the
valuation have been recorded in statement of income caption 60 “profits/losses from financial transactions”.
9.2 Accrued expenses and deferred income (caption 60)
12.31.2004
12.31.2003
Changes
132,820
113,275
19,545
- interest on derivative contracts
83,370
101,138
-17,768
- interest on repurchase agreements for customers
10,522
5,276
5,246
Accrued expenses:
- interest on securities issued
- interest on repurchase agreements for banks
207
5,240
-5,033
- interest on amounts due to banks
7,520
9,620
-2,100
- interest on amounts due to customers
6,478
6,965
-487
- other
9,542
6,943
2,599
250,459
248,457
2,002
6,767
7,838
-1,071
Total accrued expenses
Deferred income:
- interest on discounted notes and loans
- forward transactions denominated in foreign currency
- other
Total prepaid expenses
Total accrued expenses and deferred income
127
-
1,818
-1,818
20,694
14,814
5,880
27,461
24,470
2,991
277,920
272,927
4,993
Section 10 – Guarantees and commitments
(captions 10 and 20)
10.1 Guarantees given (caption 10)
12.31.2004
12.31.2003
Changes
- commercial guarantees
946,941
904,451
42,490
- financial guarantees
622,736
569,445
53,291
4,516
4,914
-398
1,574,193
1,478,810
95,383
12.31.2004
12.31.2003
Changes
254,876
689,524
-434,648
4,359,978
3,423,692
936,286
4,614,854
4,113,216
501,638
- assets lodged in guarantee
Total
10.2 Commitments (caption 20)
- commitments to grant finance (certain to be called on)
- commitments to grant finance (not certain to be called on) (1)
Total
(1) This caption includes commitments for 1,072 thousand euro relating to put options for the sale of residual equity investments granted to sellers on the acquisition of controlling interests in Group companies.
10.3 Assets lodged to guarantee the Group’s liabilities
12.31.2004
12.31.2003
Changes
100,000
-
100,000
-
-
-
98,923
252,194
-153,271
172,344
194,510
-22,166
371,267
446,704
-75,437
12.31.2004
12.31.2003
Changes
194,443
92,431
102,012
-
-
-
a) Nominal value of Group's securities lodged
to guarantee
- as guarantee of other advances from
the Bank of Italy
- other advances
- repurchase agreements
b) Loans to customers assigned with recourse
(using EIB funds)
Total
10.4 Margins available on lines of credit
a) central banks
b) other banks
This represents the unrestricted portion of obligatory deposits placed with
the Bank of Italy.
128
10.5 Forward transactions
Type of transaction
Hedging
Dealing
Other transactions
1. Purchase/sale
1,163,555
164,983
-
1.1 Securities
-
164,983
-
- purchases
118,144
- sales
1.2 Currency
- currency against currency
46,839
1,163,555
- purchases against euro
551,109
- sales against euro
600,652
2. Deposits and loans
-
-
-
173,533
11,794
-
- to be made
15,912
- to be received
3. Derivative contracts
3.1 With exchange of capital
157,621
10,632,795
20,117,714
1,652,155
-
1,831,107
1,476,477
-
1,831,107
1,476,477
-
923,249
1,352,561
- sales
-
907,858
123,916
b) currency
-
-
-
-
-
-
a) securities
- purchases
- currency against currency
- purchases against euro
- sales against euro
c) other instruments
- purchases
-
- sales
-
3.2 Without exchange of capital
a) currency
10,632,795
18,286,607
175,678
527,050
-
-
175,678
- currency against currency
- purchases against euro
263,777
- sales against euro
263,273
b) other instruments
10,105,745
18,286,607
- purchases
7,380,185
10,099,005
- sales
2,725,560
8,187,602
175,678
11,796,350
20,282,697
1,825,688
Total
129
Details of the principal derivative contracts contained in the previous table
are as follows:
3.1 With exchange of capital
a) securities
- purchases
. options
. futures
- sales
. options
. futures
c) other instruments
- purchases for futures
- sales for futures
3.2 Without exchange of capital
b) other instruments
- purchases
. basis swaps
. cap/floor
. futures
. options
. implicit options
. swap
- sales
. basis swaps
. cap/floor
. forward rate agreement
. futures
. options
. implicit options
. swap
Hedging
Dealing
Other transactions
-
1,476,477
1,476,477
1,352,561
1,352,561
-
1,831,107
1,831,107
923,249
846,694
76,555
907,858
870,325
37,533
-
10,105,745
10,105,745
7,380,185
2,072,776
44,816
5,262,593
2,725,560
2,072,776
652,784
18,286,607
18,286,607
10,099,005
5,018,891
282,648
2,757,280
7,251
2,032,935
8,187,602
5,018,891
294,507
67,500
160,459
100,507
2,545,738
175,678
175,678
175,678
400
175,278
-
-
123,916
123,916
-
Forward transactions include both assets to be received, already accounted
for in “commitments”, as well as all other off-balance sheet transactions traded on own account, which have been recorded as follows:
a) purchases/sales of securities and currency as well as derivative contracts
that entail or may entail an exchange of capital: at the settlement price;
b) deposits and loans: at the amount to be received or paid;
c) derivative contracts without exchange of capital: at the reference nominal
value.
Hedging transactions not involving an exchange of capital principally relate
to interest rate swaps that hedge against interest rate fluctuations. These offbalance sheet transactions are valued at period-end prices, using the same
principles adopted for the assets being hedged. This valuation has generated
an unrealized loss of 2,551 thousand Euro which, pursuant to current regulations, has not been recorded in the statement of income. This amount is correlated with the gains shown on unquoted investment and dealing securities,
as discussed in sections 2.1 and 2.3.
All these transactions have been arranged with leading international banks
and financial institutions.
130
Section 11 –
Concentration and distribution of assets and liabilities
11.1 Significant exposures
12.31.2004
12.31.2003
a) amount
328,079
290,872
b) number
1
1
As required by Bank of Italy regulations, the weighted positions (from cash
lending, guarantees and commitments) in relation to clients or groups of
“related” customers, are reported under this heading.
11.2 Distribution of loans to customers by category of borrower
12.31.2004
a) governments
12.31.2003
Changes
55,358
58,003
-2,645
b) other public entities
1,330,162
1,126,447
203,715
c) non-financial entities
14,587,359
13,533,449
1,053,910
d) financial institutions
2,185,700
2,501,794
-316,094
e) family businesses
1,133,733
1,105,152
28,581
f) other operators
6,574,691
5,259,234
1,315,457
25,867,003
23,584,079
2,282,924
Total
11.3 Distribution of loans to resident non-financial and family businesses
12.31.2004
12.31.2003
Changes
b) other services for sale
3,807,353
3,210,936
596,417
a) commerce, salvage and repairs
2,821,518
2,652,087
169,431
c) construction and public works
1,788,565
1,432,215
356,350
d) metal products other than machines and means of transport 985,186
989,963
-4,777
e) ferrous & non ferrous minerals and metals
690,145
616,010
74,135
5,479,716
5,567,790
-88,074
15,572,483
14,469,001
1,103,482
f) other sectors
Total
131
11.4 Distribution of guarantees given by principal category of borrower
12.31.2004
a) governments
12.31.2003
Changes
-728
69
797
b) other public entities
13,449
13,426
23
c) banks
55,015
24,036
30,979
1,225,693
1,162,324
63,369
100,811
72,062
28,749
d) non-financial entities
e) financial institutions
f) family businesses
g) other operators
Total
35,481
39,683
-4,202
143,675
166,482
-22,807
1,574,193
1,478,810
95,383
11.5 Geographical distribution of assets and liabilities as of 12.31.2004
1 Assets
1.1 Due from banks
1.2 Loans to customers
Italy
Other EU
countries
Other
countries
Total
28,496,463
791,248
302,093
29,589,804
2,171,950
291,416
12,067
2,475,433
25,445,100
374,309
47,594
25,867,003
879,413
125,523
242,432
1,247,368
26,863,719
1,504,637
478,477
28,846,833
1,488,917
838,822
214,916
2,542,655
2.2 Due to customers
14,860,751
659,646
104,472
15,624,869
2.3 Securities issued
9,329,479
6,144
4,089
9,339,712
2.4 Other
1,184,572
25
155,000
1,339,597
5,983,274
179,538
26,235
6,189,047
1.3 Securities
2. Liabilities
2.1 Due to banks
3. Guarantees and commitments
132
11.6 Distribution of assets and liabilities by maturity as of 12.31.2004
Repayable
Captions/Residual duration
on
demand
1. Assets
7,831,356
up to 3 Between 3
months
and 12
months
13,580,117
7,356,218
Fixed duration
Beyond 1 year
Fixed Floating
rate
rate
7,883,536
Beyond 5 years Unspecified
Fixed
Floating duration
rate
rate
5,766,510
1,679,009
5,673,727
TOTAL
1,350,393 51,120,866
1.1 Securities eligible for
refinancing by the Treasury
1.2 Due from banks
1.3 Loans to customers
1
153
1,270
641
807
3,525
686
-
7,083
274,091
1,722,038
236,483
40,000
8,022
-
38
194,761
2,475,433
7,024,037
3,732,760
2,413,251
1,175,172
4,780,423
459,218
5,166,208
1,115,934
25,867,003
1.4 bonds and other
debt securities
1.5 Off-balance sheet transactions
2. Liabilities
2.1 Due to banks
2.2 Due to customers
2.3 Securities issued
- bonds
- certificates of deposit
- other securities
2.4 Subordinated liabilities
2.5 Off-balance sheet transactions
-
12,019
198,696
178,701
352,207
40,169
154,560
39,293
975,645
533,227
8,113,147
4,506,518
6,489,022
625,051
1,176,097
352,235
405
21,795,702
13,550,785
15,646,972
6,964,946
5,187,601
5,566,928
1,506,251
1,829,700
633,460
1,732,338
46,721
355
88,273
3,724
37,592
192
2,542,655
388,795 50,641,978
12,472,763
2,584,950
193,310
424
214
10
-
373,198
15,624,869
171,027
1,194,475
1,294,359
3,156,442
2,353,820
262,163
892,426
15,000
9,339,712
-
1,034,425
1,175,194
3,147,386
2,351,491
262,163
892,426
15,000
8,878,085
11,544
149,050
119,165
9,056
2,329
-
-
-
291,144
159,483
11,000
-
-
-
-
-
-
170,483
-
-
30,987
-
155,827
503,642
648,584
-
1,339,040
273,535
10,135,209
5,399,569
2,030,380
2,968,794
736,712
251,098
405
21,795,702
11.7 Assets and liabilities in foreign currencies
12.31.2004
12.31.2003
Changes
1,038,553
778,040
260,513
1. Due from banks
522,135
325,999
196,136
2. loans to customers
338,002
346,370
-8,368
3. securities
174,338
100,374
73,964
-
-
-
4,078
5,297
-1,219
1,004,149
737,331
266,818
1. due to banks
633,612
349,641
283,971
2. due to customers
349,059
369,810
-20,751
3. securities issued
21,478
17,880
3,598
-
-
-
a) assets
4. equity investments
5. other
B) Liabilities
4. other
133
11.8 Securitization transactions
No securitizations were arranged in 2004.
Securities in portfolio (from securitization transactions)
Investment securities
- Senior
- Mezzanine
- Junior (1)
Dealing securities
- Senior
- Mezzanine (2)
- Junior (2)
Total
- Senior
- Mezzanine
- Junior
Book value
Market value
33,922
33,922
7,008
6,289
719
33,922
33,922
7,008
6,289
719
40,930
40,930
6,289
34,641
6,289
34,641
(1) Securities from securitization deals:
- 8,350 Lombarda Mortgage Finance 1 Srl - Banco di Brescia 2001.
- 6,124 Lombarda Lease Finance 1 Srl - SBS Leasing 2001.
- 6,898 Lombarda Lease Finance 2 Srl - SBS Leasing 2002.
- 12,550 Lombarda Lease Finance 3 Srl - SBS Leasing 2003.
(2) Securities from Cidneo Finance Plc - Banca Lombarda 2001 securitization deal
Breakdown of securitized securities by quality of underlying assets
Securities in portfolio - Book value
Senior
Mezzanine
Junior
Total
Mortgage loans to retail customers
-
-
8,350
8,350
Loans deriving from lease contracts
-
-
25,572
25,572
Securities
-
6,289
719
7,008
Total
-
6,289
34,641
40,930
134
Breakdown of securitized securities by quality of underlying assets
Securities in portfolio - Book value
a) Own underlying assets
Senior
Mezzanine
Junior
Total
-
6,289
34,641
40,930
Non-performing loans
-
-
262
262
Problem loans
-
-
619
619
Other assets
-
6,289
34,379
40,668
-
-
-
-
Non-performing loans
-
-
-
-
Problem loans
-
-
-
-
Other assets
-
-
-
-
-
6,289
34,641
40,930
a) Third-party underlying assets
Total
Securitized assets underlying junior securities
- Non-performing loans
- Problem loans
- Other assets (of which 23,552 for the "Cidneo" operation)
Total
8,610
21,906
1,200,895
1,231,411
Writedowns of securities in portfolio (from securitization transactions)
- Senior
-
- Mezzanine
-
- Junior
-
Total
-
Writebacks to securities in portfolio (from securitization transactions)
- Senior
-
- Mezzanine (1)
- Junior (1)
114
32
Total
146
(1) Adjustments for Cidneo Finance Plc 2001 securitization deal.
135
Servicer and arranger activities
Vehicle company
Securitized
assets
Loans collected Adjustments
(principal)
Residual
assets
Lombarda Mortgage Finance 1 Srl
499,895
177,504
-
322,391
Lombarda Lease Finance 1 Srl
495,401
362,302
1,382
131,717
Lombarda Lease Finance 2 Srl
610,008
288,263
1,619
320,126
Lombarda Lease Finance 3 Srl
650,529
216,044
860
433,625
2,255,833
1,044,113
3,861
1,207,859
Section 12 – Administration and dealing on behalf of third parties
12.1 Dealing in securities
12.31.2004
12.31.2003
Changes
9,296,456
8,927,851
368,605
28,031
36,943
-8,912
9,324,487
8,964,794
359,693
6,243,807
5,776,877
466,930
29,780
23,567
6,213
Total
6,273,587
5,800,444
473,143
Total
15,598,074
14,765,238
832,836
12.31.2004
12.31.2003
Changes
9,723,291
9,408,863
314,428
a) purchases
1. settled
2. not settled
Total
b) sales
1. settled
2. not settled
12.2 Portfolio management
Assets under management
The amounts are stated net of current account balances under management.
12.3 Custody and administration of securities
12.31.2004
12.31.2003
Changes
A) Third-party securities on deposit
35,688,462
35,196,080
492,382
B) Third-party securities deposited with third parties 31,214,683
(excluding those in portfolio management)
30,250,013
964,670
1,475,694
-459,999
C) Own securities deposited with third parties
136
1,015,695
12.4 Collection of receivables on behalf of third parties: debit and credit adjustments
a) Debit adjustments
12.31.2004
12.31.2003
Changes
212,847
5,188,565
4,975,718
1. current accounts
31,699
37,769
-6,070
2. central portfolio
5,125,017
4,909,932
215,085
3. cash
4. other
b) Credit adjustments
1. current accounts
2. presenters of notes and documents
3. other
137
-
-
-
31,849
28,017
3,832
5,396,176
5,206,986
189,190
31,849
28,017
3,832
5,332,628
5,141,200
191,428
31,699
37,769
-6,070
Section 1 – Interest (captions 10 and 20)
PART C
INFORMATION
ON THE
CONSOLIDATED
STATEMENT OF
INCOME
1.1 Interest income and similar revenues (caption 10)
a) on amounts due from banks
12.31.2004
12.31.2003
Changes
57,139
72,453
-15,314
of which:
deposits with central banks
b) on loans to customers
4,938
5,402
-464
1,085,181
1,063,380
21,801
of which:
on loans using public funds
c) on debt securities
d) other interest income
-
-
-
46,269
130,300
-84,031
2,821
5,388
-2,567
99,053
63,568
35,485
1,290,463
1,335,089
-44,626
e) positive differentials on
hedging transactions
Total
1.2 Interest expense and similar charges (caption 20)
a) on amounts due to banks
12.31.2004
12.31.2003
Changes
46,143
61,096
-14,953
b) on amounts due to customers
121,768
141,684
-19,916
c) on securities issued
268,540
255,993
12,547
4,555
7,721
-3,166
of which:
on certificates of deposit
d) on public funds administered
e) on subordinated liabilities
-
-
-
73,831
81,090
-7,259
10,340
49,577
-39,237
520,622
589,440
-68,818
f) negative differentials on
hedging transactions
Total
Interest income and similar revenues (caption 10)
a) on foreign currency assets
12.31.2004
12.31.2003
Changes
11,169
6,924
4,245
1.4 Interest expense and similar charges (caption 20)
a) on foreign currency liabilities
138
12.31.2004
12.31.2003
Changes
20,413
17,472
2,941
Section 2 – Commission (captions 40 and 50)
2.1 Commission income (caption 40)
12.31.2004
12.31.2003
Changes
1,322
19,144
-1,562
-166
14,929
-1,036
15,965
-60
831
-1,494
1,100
5,566
-1,073
-1,073
1,303
5,336
3,164
68
15,136
38,834
a) Guarantees given
b) Derivatives on loans
c) Management, dealing and consultancy services:
1. dealing in securities
2. dealing in currency
3. portfolio management
3.1 individual
3.2 collective
4. custody and administration of securities
5. custodian bank
6. placement of securities
7. acceptance of instructions
8. consultancy
9. distribution of third-party services:
9.1 portfolio management:
a) individual
b) collective
9.2 insurance products
9.3 other products
d) Collection and payment services
e) Servicing for securitization operations
f) Tax collection services
g) Other services (*)
11,354
296,776
9,915
5,657
159,201
35,523
123,678
6,258
12,850
14,190
12,610
76,095
53,052
23,043
62,837
1,944
135,369
10,032
277,632
11,477
5,823
144,272
36,559
107,713
6,318
12,019
15,684
11,510
70,529
1,073
1,073
51,749
17,707
59,673
1,876
120,233
Total
508,280
469,446
(*) This caption includes, in particular, commissions relating to transactions on customers’ current
accounts.
2.2 Detail of caption 40 - Commission income:
Distribution channels of products and services
12.31.2004
12.31.2003
Changes
236,477
215,360
21,117
159,090
144,148
14,942
8,509
11,256
-2,747
68,878
59,956
8,922
13,009
15,125
-2,116
111
124
-13
2. placement of securities
5,681
4,428
1,253
3. third-party services and products
7,217
10,573
-3,356
249,486
230,485
19,001
a) at own branches:
1. portfolio management
2. placement of securities
3. third-party services and products
b) door-to-door:
1. portfolio management
Total
139
2.3 Commission expense (caption 50)
a) Guarantees received
b) Derivatives on loans
c) Management and dealing services:
1. dealing in securities
12.31.2004
12.31.2003
Changes
932
300
632
-
-
-
30,905
37,893
-6,988
4,339
2,970
1,369
2. dealing in currency
-
-
-
3. portfolio management:
-
187
-187
3.1 own portfolio
-
-
-
3.2 third-party portfolio
-
187
-187
4. custody and administration of securities
3,506
2,786
720
5. placement of securities
1,102
730
372
31,220
-9,262
d) Collection and payment services
6. door-to-door distribution of securities, products and services 21,958
24,251
22,364
1,887
e) Other services
51,264
35,916
15,348
107,352
96,473
10,879
Total
Section 3
– Profits (losses) on financial transactions (caption 60)
3.1 Profit (losses) on financial transactions (caption 60) as of
12.31.2004
Security
transactions
Currency
transactions
A.1 Revaluations
16,715
-
59,459
76,174
A.2 Writedowns
-5,901
-
-59,433
-65,334
8,775
6,827
14,430
30,032
19,589
6,827
14,456
40,872
B. Other gains/losses
Total
1. Government securities
2. Other debt securities
3. Equities
3,092
3,294
11,764
4. Security derivatives
Total
1,439
19,589
140
Other
transactions
Total
Section 4
– Administrative costs (caption 80)
4.1 Average number of employees by category
12.31.2004
12.31.2003
Changes
a) managers
b) 3rd and 4th grade middle managers
c) other employees
193
1,059
6,276
183
1,030
6,259
10
29
17
Total
7,528
7,472
56
12.31.2004
12.31.2003
Changes
312,592
92,268
35,076
12,287
296,878
87,004
34,583
11,313
15,714
5,264
493
974
452,223
429,778
22,445
12.31.2003
Changes
Payroll is made up as follows:
wages and salaries
social security charges
termination indemnities and pensions
other charges
Total
Other administrative costs
Other administrative costs are made up as follows:
12.31.2004
Telephone, postage, data transmission and alarms
Repair and maintenance of premises
Rental of machines and software
Rental of premises
Security services
Transport
Professional and consultancy fees
Office supplies
Power, heat and water
Advertising
Legal fees for debt collection
External data processing
Insurance premiums
Credit information
Directors and Statutory Auditors fees
Membership fees
Expenses for treasury contracts with public entities
Other charges
Total administrative costs
Indirect taxes and duties:
- Vat
- Stamp duty, substitute and other taxes
36,274
31,672
18,942
26,165
8,512
10,205
18,770
5,922
9,034
16,734
7,247
26,084
12,059
5,943
9,984
2,349
8,373
9,336
263,605
34,098
31,036
18,353
24,095
8,893
8,940
13,904
4,637
8,919
17,086
6,232
24,098
9,944
4,794
9,385
2,390
9,024
9,154
244,982
2,176
636
589
2,070
-381
1,265
4,866
1,285
115
-352
1,015
1,986
2,115
1,149
599
-41
-651
182
18,623
721
51,349
605
49,787
116
1,562
Total other administrative costs
315,675
295,374
20,301
141
Section 5 –
Adjustments, writebacks and provisions (captions 90,
100, 120, 130, 140 and 150)
Adjustments to intangible and tangible fixed assets (caption 90)
12.31.2004
-
Solidarity Fund (Ministerial Decree 158/2000)
depreciation of tangible fixed assets
amortization of intangible fixed assets
goodwill arising on consolidation
goodwill arising on application of the equity method
Total
12.31.2003
Changes
13,228
46,880
51,870
47,005
-
9,424
46,079
52,903
46,718
934
3,804
801
-1,033
287
-934
158,983
156,058
2,925
Provisions for liabilities and charges (caption 100)
This caption shows provisions of Euro 27,062 thousand, which have been
credited to liability caption 80c “Provisions for liabilities and charges”, as
mentioned in the earlier note on provisions.
5.1 Adjustments to loans and provisions for guarantees and commitments (caption 120)
12.31.2004
12.31.2003
Changes
a) adjustments to loans
of which:
- general adjustments for country risks
- other general adjustments
b) accantonamento per garanzie ed impegni
of which:
- general adjustments for country risks
- other general adjustments
139,195
172,969
-33,774
561
88
473
146
50
96
Total
139,756
173,057
-33,301
Writebacks of loans and provisions for guarantees and commitments (caption 130)
Writebacks are made up of:
Recovery of loans written off in prior periods
Writebacks of writedowns made in prior periods
Other writebacks
Writebacks on guarantees and commitments
Total
142
12.31.2004
12.31.2003
Changes
23,399
21,013
1,148
300
20,118
20,518
2,698
465
3,281
495
-1,550
-165
45,860
43,799
2,061
Section 6 – Other statement of income captions (captions 70, 110, 190 and 220)
6.1 Other operating income (caption 70)
12.31.2004
12.31.2003
Changes
2,229
3,025
-796
Stamp duties and substitute tax recovered
41,793
41,019
774
Expense recoveries and other income on
deposits and current accounts
38.281
29.745
8.536
3,449
3,774
-325
915
974
-59
5,185
5,695
-510
Securitization income
25,978
35,028
-9,050
Other income and recharges (2)
52,519
49,589
2,930
170,349
168,849
1,500
Property rentals
Income from back-dated bank transfers
Capitalized payroll costs (1)
Fees on taxes paid
Total
(1) As specified in Part A, Section 1, paragraph 6), these are payroll costs of Lombarda Sistemi e Servizi
staff used in software development.
(2) Including cost recoveries from customers on leasing, factoring and consumer credit transactions which
at December 31, 2004 amount to 31.7 million euro.
6.2 Other operating expenses (caption 110)
Finance leasing charges
12.31.2004
12.31.2003
Changes
1,087
1,098
-11
1,679
2,035
-356
Prior-year commission
and interest
Expenses from back-dated bank transfers
Other (1)
Total
4,969
5,317
-348
23,956
22,784
1,172
31,691
31,234
457
(1) Including expenses incurred on behalf of customers, subsequently recovered, on leasing, factoring and
consumer credit transactions which at December 31, 2004 amount to 20.5 million euro.
6.3 Extraordinary income (caption 190)
12.31.2004
12.31.2003
Changes
5,639
10,315
-4,676
16,416
17,510
-1,094
- property and other fixed assets
1,149
8,616
-7,467
- equity investments
6,861
244
6,617
Out-of-period income:
- overprovision of taxed costs for previous years
- other (1)
Gains on the disposal of:
- investment securities
Consolidation adjustments
Total
5
-5
-
101
-101
30,065
36,791
-6,726
(1) This caption is made up principally of recoveries on loans to customers written down in previous years, outof-period income on provisions made in previous years and liabilities that have fallen into prescription.
143
6.4 Extraordinary charges (caption 200)
12.31.2004
12.31.2003
Changes
Out-of-period expense:
- extraordinary personnel charges
- other (1)
3,257
2,147
1,110
11,043
19,606
-8,563
163
21
142
-
16
-16
81
868
-787
182
-
182
14,726
22,658
-7,932
Losses on the disposal of:
- tangible and intangible assets
- equity investments
Other
Consolidation adjustments
Total
(1) This caption mainly consists of out-of-period expenses for disputes and non-existent assets.
Income taxes for the year (caption 240)
Income taxes for the year
(1) Current taxes
12.31.2004
145,697
(2) Change in deferred tax assets
-7,790
(3) Change in deferred tax liabilities
28,615
(4) Income taxes for the year
Section 7
166,522
– Other information on the statement of income
7.1 Geographical distribution of profits
The geographical distribution of revenues is such that no detailed breakdown is required.
144
Section 1
PART D
OTHER
INFORMATION
– Directors and Statutory Auditors
1.1 Remuneration
12.31.2004
a) Directors
3,563
b) Statutory auditors
249
These figures include amounts paid for duties carried out at the Parent Bank
and its subsidiaries.
1.2 Loans granted and guarantees given
12.31.2004
a) Directors
405,873 (of which indirectly 403,366)
b) Statutory auditors
1,146 (of which indirectly 27)
(*) Loans and guarantees granted indirectly and in favor of companies in which the Directors and Statutory Auditors have an interest according to the Banking Law.
145
Attachments to the consolidated
financial statements of the
Banca Lombarda e Piemontese Group
- Statement of changes in consolidated financial position
as of December 31, 2004
- Statement of changes in consolidated stockholders' equity
as of December 31, 2004
147
Statement of changes in consolidated financial position
(thousands of euro)
SOURCES OF FUNDS
FUNDS GENERATED BY OPERATIONS
Net income for the year
Change in reserve for general banking risks (net of use for risk reserves)
Adjustments to intangible and tangible fixed assets
Adjustments to loans
Writebacks on loans
Provision for termination indemnities
Provision for taxation
Provisions for liabilities and charges
Adjustments to financial fixed assets
Increase in liabilities
Increase in capital stock and additional paid-in capital
Due to customers and securities issued
Due to banks
Subordinated liabilities
Revaluation reserves
Specific tax on revaluation
Other changes in reserves
Changes in minority interests
Decrease in assets
Due from banks
Other assets
Portfolio securities
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Application of funds generated from operations
Dividends distributed
Charitable donations
Use of provision for termination indemnities
Use of provision for taxation
Use of other provisions for liabilities and charges
Increase in assets
Cash
Loans to customers
Due from banks
Equity investments
Tangible and intangible assets and goodwill arising on consolidation
and application of the equity method
Other assets
Decrease in liabilities
Due to banks
Other liabilities
Subordinated liabilities
Decrease in pension funds
Revaluation reserves
TOTAL
149
12.31.2004
12.31.2003
151,735
168
158,983
139,756
-45,860
16,899
166,522
27,062
1,162
616,427
112,059
1,472
156,058
173,057
-43,799
17,714
165,630
20,116
154
602,461
34,873
2,595,135
33,219
139,532
8,221
3,245
935,492
302,077
241,718
71,611
-2,108
-7,957
415,668
3,226,648
83,547
27,246
644,164
2,299,035
3,843,075
2,901,496
12.31.2004
12.31.2003
95,219
15,146
161,385
15,743
287,493
104,191
350
17,647
172,813
19,938
314,939
15,046
2,376,820
92,139
20,306
14,615
2,005,998
40,363
121,603
202,116
454,416
-
286,932
300,385
1,291
138,944
3,555,582
28,498
41,317
1,350
2,586,557
3,843,075
2,901,496
Statement of changes in consolidated stockholders' equity as of 12.31.2004
(thousands of euro)
Total balances as of 12.31.2002
Capital
stock
Legal
reserve
Additional
paid-in
capital
315,729
132,641
621,702
Increases in capital stock for:
- for cash
268
-
2,332
- stock granting plan
647
-
-
- dividends to stockholders
-
-
-
- other reserves
-
-
-
Revaluation Law 350/2003
-
-
-
Reserve art. 13 D.Lgs. 124/93
-
-
-
Charitable donations made by Group companies
-
-
-
Other adjustments on consolidation
-
-
-
Net income for the year
-
-
-
316,644
132,641
624,034
4,184
-
30,689
-
-
-
- dividends to stockholders
-
-
-
- other reserves
-
-
-
-
-
-
-
-
-
320,828
132,641
654,723
Allocation of Parent Bank's net income
Total balances as of 12.31.2003
Increases in capital stock by:
- Parent Bank - for cash
- other companies - using the revaluation reserves
Allocation of Parent Bank's net income
Other adjustments on consolidation
Net income for the year
Total balances as of 12.31.2004
(1) Based on equity ratios, consolidated stockholders' equity at December 31, 2004 includes reserves pertaining to minority
interests of 59 million euro.
150
Other
reserves
Reserve
for general
banking risks
Revaluation
reserve
(1)
Net income
for the year
Negative goodwill
arising on application
of the equity method
and on consolidation
Totale
stockholders'
equity
435,468
62,750
24,404
130,078
25,643
1,748,415
-
-
-
-
-
2,600
-
-
-
-
-
647
-
-
-
-104,191
-
-104,191
25,537
-
-
-25,537
-
-
-
-
241,718
-
-
241,718
27
-
-
-
-
27
-
-
-
-350
-
-350
-2,242
1,472
-
-
-
-770
-
-
-
112,059
-
112,059
458,790
64,222
266,122
112,059
25,643
2,000,155
-
-
-
-
-
34,873
138,944
-
-138,944
-
-
-
-
-
-
-95,218
-
-95,218
16,841
-
-
-16,841
-
-
-704
168
-
-
-
-536
-
-
-
151,735
-
151,735
613,871
64,390
127,178
151,735
25,643
2,091,009
151