The consolidated income statement

Transcription

Joint stock co-operative company
Registered office: Bergamo, Piazza Vittorio Veneto 8
Operating offices: Bergamo, Piazza Vittorio Veneto 8; Brescia, Via Cefalonia 74
Member of the Interbank Deposit Protection Fund and the National Guarantee Fund
Tax Code, VAT No. and Bergamo Company Registration No. 03053920165
ABI (Italian Banking Association) 3111.2 Register of Banks No. 5678 Register of banking groups No. 3111.2
Parent of the Unione di Banche Italiane Banking Group
Share capital as at 3rd March 2011: Euro 1.597.865.425,00 fully paid up
www.ubibanca.it
Contents
Our mission ...........................................................................................................................
Letter from the chairmen........................................................................................................
UBI Banca: company officers ..................................................................................................
UBI Banca Group: branch network as at 31st December 2010 ................................................
UBI Banca Group: the main investments as at 31st December 2010 ...................................
UBI Banca Group: principal figures and performance indicators ........................................
The rating ..............................................................................................................................
Notice of call ..........................................................................................................................
5
6
10
11
12
14
15
17
CONSOLIDATED FINANCIAL STATEMENTS OF THE UBI BANCA GROUP
AS AT AND FOR THE YEAR ENDED 31ST DECEMBER 2010
CONSOLIDATED MANAGEMENT REPORT ...................................................................................
20
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21
The macroeconomic scenario .............................................................................................
Significant events that occurred during the year ................................................................
Commercial activity ...........................................................................................................
The distribution network and positioning ..........................................................................
Human resources ..............................................................................................................
The consolidation scope ....................................................................................................
Reclassified consolidated financial statements, reclassified income statement net
of the most significant non-recurring items and reconciliation schedules ...........................
Reclassified consolidated statement of financial position ............................................................
Reclassified consolidated quarterly statements of financial position ............................................
Reclassified consolidated income statement ...............................................................................
Reclassified consolidated quarterly income statements ...............................................................
Reclassified consolidated income statement net of the most significant
non-recurring items ...................................................................................................................
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38
54
62
74
84
84
85
86
87
88
89
90
Reconciliation schedules............................................................................................................
Notes to the reclassified consolidated financial statements .........................................................
The consolidated income statement ............................................................................................
General banking business with customers: funding ...........................................................
Funding policies ........................................................................................................................
Total funding .............................................................................................................................
Direct funding ...........................................................................................................................
Indirect funding and assets under management .........................................................................
102
102
104
105
109
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General banking business with customers: lending ............................................................................
Performance of the loan portfolio ..............................................................................................
Risk ..........................................................................................................................................
111
111
114
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The interbank market and the liquidity situation ...............................................................
Financial assets ................................................................................................................
Equity and capital adequacy .............................................................................................
Research & Development...................................................................................................
The system of internal control ...........................................................................................
Transactions with related parties ......................................................................................
Consolidated companies: the principal figures ...................................................................
The performance of the main consolidated companies .......................................................
Other information .............................................................................................................
Treasury shares.........................................................................................................................
Litigation ...................................................................................................................................
Inspections ................................................................................................................................
Tax aspects ..............................................................................................................................
Investor relations and external communication ..........................................................................
Social and environmental responsibility .....................................................................................
Legislation on the protection of personal data ............................................................................
119
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1
91
123
140
146
147
148
150
154
188
188
188
190
191
193
195
198
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Principal risks and uncertainties to which the UBI Banca Group is exposed ......................
Subsequent events occurring and the business outlook
for consolidated operations................................................................................................
199
205
STATEMENT OF THE CHIEF EXECUTIVE OFFICER AND OF THE SENIOR OFFICER
RESPONSIBLE FOR PREPARING THE CORPORATE ACCOUNTING DOCUMENTS ............................
206
INDEPENDENT AUDITORS’ REPORT ..........................................................................................
209
CONSOLIDATED FINANCIAL STATEMENTS .................................................................
212
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Consolidated statement of financial position ......................................................................
Consolidated income statement .........................................................................................
Consolidated statement of comprehensive income .............................................................
Statement of changes in consolidated equity .....................................................................
Consolidated statement of cash flows ................................................................................
213
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................
220
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221
Part
Part
Part
Part
Part
Part
Part
Part
Part
Part
A – Accounting policies ..............................................................................................
B – Notes to the consolidated statement of financial position ......................................
C – Notes to the consolidated income statement .........................................................
D – Consolidated comprehensive income ....................................................................
E – Information on risks and the relative hedging policies ..........................................
F – Information on consolidated equity .......................................................................
G – Business combinations transactions concerning companies or lines of business ..
H – Transactions with related parties .........................................................................
I – Share based payments ..........................................................................................
L – Segment Reporting ...............................................................................................
214
215
216
218
265
325
346
347
432
439
440
445
446
ATTACHMENT
Disclosures concerning the fees of the independent auditors and services other than auditing in
compliance with Art. 149 duodecies of the Issuers’ Regulations ..............................................
449
SEPARATE FINANCIAL STATEMENTS OF UBI BANCA SCPA
AS AT AND FOR THE YEAR ENDED 31ST DECEMBER 2010
MANAGEMENT REPORT.................................................................................................
453
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▪
▪
▪
▪
454
UBI Banca: principal figures and performance indicators ..................................................
The UBI Banca organisation chart .....................................................................................
The macroeconomic scenario .............................................................................................
Human resources ..............................................................................................................
Reclassified financial statements, reclassified income statement net
of the most significant non-recurring items and reconciliation schedules ...........................
Reclassified statement of financial position. ...............................................................................
Reclassified quarterly statements of financial position ................................................................
Reclassified income statement ...................................................................................................
Quarterly reclassified income statements ...................................................................................
Reclassified income statement net of the most significant
non recurring items ..................................................................................................................
▪
▪
Reconciliation schedules............................................................................................................
Notes to the reclassified financial statements .............................................................................
The income statement .......................................................................................................
General banking business .................................................................................................
Funding ....................................................................................................................................
Lending .....................................................................................................................................
2
455
457
458
460
460
461
462
463
464
465
466
467
475
475
477
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Operations on the interbank market ..........................................................................................
Financial assets ................................................................................................................
Equity and capital adequacy .............................................................................................
Relations with Group member companies ..........................................................................
Research & Development...................................................................................................
The system of internal control ...........................................................................................
Transactions with related parties. .....................................................................................
Share performance and shareholder structure ...................................................................
Share performance ....................................................................................................................
Report on corporate governance and the ownership structure ....................................................
Treasury shares.........................................................................................................................
Report on the admission of new registered shareholders.............................................................
Report on mutual objects...........................................................................................................
Initiatives to reform legislation on ‘popular’ co-operative banks ..................................................
Shareholdings of management and supervisory bodies,
the General Manager and Senior Managers with strategic responsibilities...................................
▪
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De jure and delegated powers of the corporate bodies .................................................................
Other information .............................................................................................................
Litigation ...................................................................................................................................
Legislation on the protection of personal data ............................................................................
Principal risks and uncertainties to which UBI Banca is exposed.......................................
Subsequent events and the business outlook .........................................................................
Proposal for the allocation of profit for the year and dividend distribution ..........................
478
481
487
489
489
489
490
492
492
494
495
495
495
497
497
497
498
498
498
499
499
500
STATEMENT OF THE CHIEF EXECUTIVE OFFICER AND OF THE SENIOR OFFICER RESPONSIBLE FOR
503
PREPARING THE CORPORATE ACCOUNTING DOCUMENTS ...................................................
INDEPENDENT AUDITORS’ REPORT .................................................................................
505
SEPARATE FINANCIAL STATEMENTS ...............................................................................
509
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▪
▪
▪
▪
510
Statement of financial position ..........................................................................................
Income statement..............................................................................................................
Statement of comprehensive income ..................................................................................
Statement of changes in equity ..........................................................................................
Statement of cash flows. ...................................................................................................
511
512
513
515
NOTES TO THE SEPARATE FINANCIAL STATEMENTS ..........................................................
517
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
A – Accounting policies ........................................................................................................
B – Notes to the statement of financial position ..........................................................
C – Notes to the income statement .............................................................................
D – Comprehensive income ........................................................................................
E – Information on risks and the relative hedging policies ...............................................
F – Information on equity ...........................................................................................
G – Business combination transactions concerning companies or lines of business ...
H – Transactions with related parties ................................................................................
I – Share based payments ...................................................................................................
L – Segment Reporting .........................................................................................................
518
ATTACHMENTS TO THE SEPARATE FINANCIAL STATEMENTS ..............................................
740
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741
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Part
Part
Part
Part
Part
Part
Part
Part
Part
Part
List of real estate properties. .............................................................................................
Convertible bonds .............................................................................................................
List of significant equity investments held in unlisted companies as at 31st December 2010
in compliance with Art. 126 of Consob Resolution No. 11971/1999 ...................................
Disclosures concerning the fees of the independent auditors and services other than
auditing in compliance with Art. 149 duodecies of the Issuers’ Regulations .......................
3
553
611
636
638
717
724
725
739
739
746
747
752
REPORT ON CORPORATE GOVERNANCE AND
THE OWNERSHIP STRUCTURE OF UBI BANCA SCPA ................................................................................
753
REPORT OF THE SUPERVISORY BOARD TO THE SHAREHOLDERS’ MEETING
in compliance with Art.153, paragraph 1 of Legislative Decree No. 58 of 24th February 1998
and of Art. 46, paragraph 1, letter h) of the corporate by-laws. ....................................................
807
REPORTS ON THE OTHER ITEMS ON THE AGENDA OF THE SHAREHOLDERS’ MEETING .................
820
GLOSSARY.......................................................................................................................
853
BRANCH NETWORK OF THE UBI BANCA GROUP
………………………………………………………………868
CALENDAR OF CORPORATE EVENTS OF UBI BANCA FOR
CONTACTS
2011 ……………………………………………881
…………………………………………………………………………………..……………………882
Key
The following abbreviations are used in the tables:
- dash (-): when the item does not exist;
- not significant (n.s.): when the figure is insufficient to reach the minimum level in question or is in any case not
significant;
- not available (n.a.): when the information is not available
- a cross “X”: when no amount is to be given for the item (in compliance with Bank of Italy instructions).
All figures are given in thousands of euros, unless indicated otherwise.
4
Our mission
To create value for our customers
and all our stakeholders,
by generating sustainable and lasting profit
through our ability to interpret, serve and encourage
economic development and social well-being
in the local communities
in which we operate.
We work everyday with passion,
experience and the ability to blend tradition
with innovation to provide families and businesses
with excellence in our banking, financial
and insurance products and services,
thereby building long-lasting relationships,
based on trust, with our customers
and with all our stakeholders.
(from the “Charter of Values” of the UBI Banca Group, approved on 29th January 2008)
5
Letter from the chairmen
Dear registered and non registered shareholders,
The year just ended was yet again a difficult one: the macroeconomic context continues to
show signs of recovery, but the situation remains uncertain; financial markets are periodically
shaken by turmoil which never dies down, but on the contrary was stirred up again during the
year by fears of insolvency for some sovereign countries; and the banking system is struggling to
recover from circumstances it has never experienced before. On the one hand the diminished
propensity to save by households is placing limits on the growth of funding from customers and
on the other hand lending business is recording a moderate recovery – after a low in October
2009 – but is faced with a quality of credit that is far from satisfactory, even if it has improved
compared to the recent past.
And the results achieved during the year were in fact modest.
Nevertheless, the UBI Banca Group did not remain dormant, but used all possible internal
organisational and operational means to make significant savings on costs, with a focus on its
core business, a change in the organisational configuration and a more streamlined geographical
market presence for its network banks.
•
The agreement reached on 20th May 2010 concluded trade union negotiations and achieved a
structural reduction in costs at Group level by reducing personnel numbers and the relative
unit cost. It was supported by the adoption of appropriate organisational and operational
measures designed to encourage improvements in efficiency and productivity. The planned
decrease in total personnel numbers was of 895 employees, including 500 through a
redundancy incentive scheme implemented during the year. Over a full year this will result in
a decrease in personnel expense of 70 million euro from 2011.
•
An agreement was concluded on 31st May to transfer a business unit to Royal Bank of
Canada Dexia Investor Services consisting of the depositary banking business of the UBI
Banca Group and also the transfer of correspondent bank contracts. The operation not only
reduced operational risk for the Group to the advantage of its core banking business, but also
generated a net gain of 83,4 million euro.
•
At the same time the Group commenced internal action to simplify operations:
- the “Simplicity objective” project to find solutions to improve services and customer
response times for products and services considered high priority, in order to optimise
support processes and tools for the commercial network;
- a project to revise the lending proces, with the dual aim of reducing customer response
times and lightening administrative loads on account managers, but of course without
relaxing credit risk management. It was implemeted with the intention of improving the
effectiveness and efficiency of the process in the network banks;
- organisational changes at the Parent, designed to streamline some units and at the same
time strengthen the integrity of the supervision of important operational processes, with
the objective of shortening the chain of command and strengthening some operational
areas considered strategically important.
However, the most important action in 2010 was that taken on the branch networks, with the
reorganisation of the areas covered by the network banks, and that taken on the distribution
model.
The project to optimise the branch network designed to focus each network bank on its own local
market by grouping all the branches in a given area under a single brand was completed on 25th
January 2010. At the same time a series of branches were transformed into mini-branches,
which report to a parent branch. The network banks are currently present in 78 provinces and
operate under a single brand in 74 of these.
6
On 21st June action was taken as planned under the trade union agreement of May 2010 to
eliminate overlap and streamline market presence in areas with low growth forecasts, while at
the same time expanding branches with good growth prospects.
An enhancement to the distribution model was developed in the third quarter with the
introduction of a “group branch”, which, although autonomous from both a commercial and a
credit viewpoint, reports to a “head branch”, which provides operational support for it.
In consideration of its role as the principal bank in the Piedmont area, Banca Regionale Europea
transferred its General Management to Turin from January 2011.
Moreover the Group has not abandoned endogenous growth and opened 17 new branches
during the year and transformed six existing “treasury” branches into mini-branches.
From a commercial viewpoint, policies were focused on broadening the product range, the
acquisition of new customers and initiatives to support families and enterprises.
More careful analysis of customer needs and requirements was performed with an increasingly
more advisory approach, designed to generate customised services and solutions. The
commercial strategy also continues to maximise synergies between network banks and product
companies. Particular attention was placed on multi-channel growth (with new and enhanced
consultative and transaction functions and devices for internet and mobile banking functions)
and the contact centre was expanded (with the creation of a new unit in Milan).
A new business unit was created in October 2010 dedicated to public authorities, associations
and non profit organisations (including Church and religious entities), with the formulation of a
specific product range to support a customer differentiated and distinctive service model. The
development of this area occurs in an operating context of confirming and enhancing the role of
the main bank played by the Group in its local markets.
UBI Banca is committed to supporting the economy even in the face of persistent uncertainties
and the difficulties of the economic situation. Its lending policies prioritise an orientation of
participation in numerous initiatives to assist families and businesses, introduced by both the
Italian Banking Association and at local level (e.g. guarantee bodies and Dioceses).
If the large corporate segment is excluded, which does not form part of the Group’s traditional
mission, annual lending increased by +4,8%, more than that for the sector nationally to the
private sector of +4,3%.
Furthermore, lending to the economy has grown progressively over the years, reaching almost
102 billion euro in December 2010, with significant increases compared both to 2008 (+5,7%)
and to 2007 (+9,5%). Within the aggregate, medium-to-long term lending gradually increased to
reach a total of 69,9 billion euro at the end of last December.
This progress was made possible by historically weighted management of pricing consistent
with the cost of risk (and also with the increased cost of funding) and the spreads on the lending
rates applied were again lower on average than those for the sector, thereby ensuring the
competitiveness of the Group and growth in market share.
Funding policies are oriented towards increasingly more diversification of the sources, both in
terms of type and maturity, pursued in parallel with action to increase growth designed to
encourage balanced growth of volumes from non institutional customers.
The Group pays particular attention to strengthening funding from ordinary customers, by
pursuing policies focused on structural balance, able to generate sustainable inflows over time,
consistent with growth in lending. Initiatives developed during the year included the issue of
listed UBI Banca bonds for 1,8 billion euro (fixed rate, mixed rate and with a lower tier two
subordination clause).
Funding from institutional customers – constantly below 20% of total funding – consisted mainly
of covered bonds for the medium-to-long term component with 1,75 billion euro issued during the
year, while use of the EMTN programme was limited, partly in relation to the higher cost, with
issues of 1,7 billion, which basically offset bonds maturing and redeemed during the year. Short
term institutional funding, on the other hand, saw an intensification of issues of French
certificates of deposit and euro commercial paper, instruments able to act as buffers for the
management of liquidity and funding.
7
At the end of December, consolidated direct funding rose to 106,8 billion euro (+9,8%
compared to 2009 and +4% net of total business with the Cassa di Compensazione e Garanzia
(central counterparty clearing), to record growth compared to both 97,6 billion euro in 2008 and
90,3 billion euro at the end of 2007.
Within the aggregate, medium-to-long term funding reached more than 43 billion euro.
Group profits were penalised by a fall in revenues, which could not be offset by the policy to
contain costs – rigorously pursued – as they continued to be affected by both the high cost of
credit, although now falling, and by impairment losses on financial assets (approximately 50
million euro).
The year therefore ended with consolidated profit of 172 million euro (270 million euro in 2009),
the result of operating income of 3,5 billion euro (3,9 billion euro the previous year), held down
above all by the performance of net interest income and the result for financial activities, in
addition to the absence of net income from insurance operations following the partial disposal of
UBI Assicurazioni. Operating expenses amounted to 2,5 billion euro, down by 46 million euro
including: -14 million relating to personnel expense, -7,5 million euro to other administrative
expenses and -24 million euro to depreciation and amortisation.
Net impairment losses on loans fell by 158 million euro and stood at 707 million euro, due to the
quality of the loan portfolios of some network banks, which was brought into line with the Group
average, and to the marked reduction in single impairment losses on deteriorated loans for
those same network banks. However, this performance was offset by the difficulties of some
product companies in relation to specific business sectors, such as consumer finance, which is
nevertheless showing the first signs of improvement after the corrective action taken, and
property leasing, where a project was commenced in the fourth quarter to redefine business as a
whole in co-ordination with the Parent.
The UBI share has not remained immune to the pressures on financial markets, where the
banking sector in particular was hit very hard. After the sharp fall in the spring triggered by the
Greek sovereign debt crisis, equity markets started to recover partially in the third quarter
compared to the lows recorded at the end of June, only to sink again towards the end of the year
as the difficulties of the Irish banking sector emerged. The year again opened in 2011 with
markets performing weakly: signs of a partial recovery in the second half of January gradually
disappeared as tensions intensified in North Africa (in Libya in particular) and as oil prices rose
as a consequence.
The Management Board has decided to submit a proposal to the shareholders meeting
convened for 29th -30th April 2011 to declare a dividend of 0,15 euro on the 639.146.170
ordinary shares with dividend entitlement from 1st January 2010 – to be drawn on the profit of
the Parent of 284 million euro – for a total of 96 million euro (amount virtually the same as the
normalised consolidated profit) after statutory and by-law allocations and an allocation to the
extraordinary reserve. An allocation of 154 million euro is proposed to the latter to fully replenish
it, after drawing from it in 2008, and to further strengthen capital.
When approving the separate and consolidated financial statements, the Supervisory Board
expressed its opinion in favour of the proposal for the allocation and distribution of profit
formulated by the Management Board. Payment of the dividend, if approved, will be made on
23rd May 2011, with value date of 26th May 2011.
The time is arriving in the current context for the application of new prudential supervisory
rules, to strengthen the quality and quantity of banking capital, to contain financial leverage in
the banking system, reduce the possible pro-cyclical effects of prudential rules and to tighten
control over liquidity risks.
UBI Banca has always considered capital solidity to be a distinguishing factor and its
consolidated capital is in fact of high quality with 94% of its tier one capital consisting of core tier
one capital (share capital + reserves) and only 6% of innovative capital instruments. Despite the
economic situation, this characteristic has enabled UBI to support its customers, increase market
share and to pay regular dividends, without the need for government assistance.
Nevertheless, recent changes in legislation and regulations connected with the expected
future capital requirements demanded by Basel III, market trends and the imminent launch of a
8
new business plan, have led the Group to reconsider its capital situation with the following aims:
to position itself at a higher than average level of capitalisation, consistent with the prudent and
realistic approach typical of the Group; to achieve a further improvement in the mix and quality
of the Group’s capital, strengthening its common equity, as required by the new regulations; to
avoid the issue, in the short term, of capital instruments with high costs for which full eligibility
for inclusion in supervisory capital is uncertain; to grasp, all opportunities for endogenous
growth which may arise during the period of the business plan, pursuing, at the same time, a
sustainable dividend policy; and also to support and strengthen the ratings assigned by
international rating agencies with positive impacts on the international perception of UBI Banca
and on the cost of funding.
For these reasons, the Management Board has passed a resolution, with the approval of the
Supervisory Board, to submit a proposal to an extraordinary Shareholders’ Meeting of the Bank,
for examination and approval, for authorisation to increase the share capital by up to one billion
euro with option rights for shareholders and holders of the convertible bond “UBI 2009/2013
Convertibile con facoltà di rimborso in azioni”. It is planned to implement the authorisation
presumably by the end of the summer, if market conditions allow and subject to obtaining the
necessary authorisations, while the new Group business plan will also form an integral part of
the prospectus for the share issue.
The amount of the proposed increase in the share capital is such as to achieve a
remuneration of capital consistent with its cost, over the period covered by the Business Plan.
According to a simulation on figures as at 31st December 2010, following the increase, the core
tier one ratio would stand at 8,01%, the tier one ratio at 8,53% and the total capital ratio at
12,23%. These ratios would also allow the Group to continue to issue covered bonds without
limits.
A capital buffer remains available, consisting of an outstanding bond amounting to 639 million
euro, already convertible since 10th January of this year, maturing in July 2013 and accounting
for approximately 70 basis points of the core tier one ratio on current figures.
Strengthening capital constitutes a primary and indispensible requirement for UBI Banca to
be able to continue to operate as a bank in the most traditional sense, supporting potential
growth in lending at the service of its customers and the local communities in which it has
always operated. UBI Banca is a local community bank, but with global operations, a
continuously evolving range of products and services, the ability to assist its customers in all
important economic and financial affairs, even abroad, through its representative offices and
numerous co-operation agreements.
This long term action will be illustrated in the Business Plan, in the certainty that our work as a
“traditional bank”, will not fail to give satisfactory results in future.
The Chairman of the Management Board
Emilio Zanetti
The Chairman of the Supervisory Board
Corrado Faissola
April 2011
9
UBI Banca: company officers
Honorary Chairman
Giuseppe Vigorelli
Supervisory Board (appointed by a Shareholders’ Meeting on 24th April 2010)
Chairman
Senior Deputy Chairman
Deputy Chairman
Deputy Chairman
Management Board (appointed by the Supervisory Board on 27th April 2010)
Chairman
Deputy Chairman
Chief Executive Officer
Corrado Faissola
Giuseppe Calvi
Alberto Folonari
Mario Mazzoleni
Battista Albertani
Giovanni Bazoli
Luigi Bellini
Mario Cattaneo
Silvia Fidanza
Enio Fontana
Carlo Garavaglia
Alfredo Gusmini
Pietro Gussalli Beretta
Giuseppe Lucchini
Italo Lucchini
Federico Manzoni
Toti S. Musumeci
Sergio Orlandi
Alessandro Pedersoli
Giorgio Perolari
Sergio Pivato
Roberto Sestini
Giuseppe Zannoni
Emilio Zanetti
Flavio Pizzini
Victor Massiah
Giampiero Auletta Armenise
Giuseppe Camadini
Mario Cera
Giorgio Frigeri
Gian Luigi Gola(*)
Guido Lupini
Andrea Moltrasio
Franco Polotti
General Management
General Manager
Deputy General Manager
Graziano Caldiani(**)
Rossella Leidi
Giovanni Lupinacci
Ettore Medda
Pierangelo Rigamonti
Senior Officer Responsible in accordance with
Art. 154 bis of the Consolidated Finance Act
Elisabetta Stegher
Independent auditors
KPMG Spa
(*) Appointed on 30th June 2010 by the Supervisory Board
(**) In office since 1st October 2010.
10
UBI Banca Group: branch network as at 31st
December 2010
11
UBI Banca Group: the main investments as
at 31st December 2010
12
13
UBI Banca Group:
principal figures and performance
indicators1
31.12.2010
STRUCTURAL INDICATORS
Net loans to customers/total assets
Direct funding from customers/total liabilities
Net loans to customers/direct funding from customers
31.12.2009
31.12.2008
78,0%
81,8%
95,4%
80,1%
79,5%
100,8%
79,0%
80,0%
98,7%
8,4%
54,6%
9,3%
53,2%
9,1%
53,1%
19,9
17,8
17,5
PROFIT INDICATORS
ROE (Profit for the year/equity excluding profit for the year)
ROA (Profit for the year/total assets)
1,6%
0,13%
2,4%
0,22%
0,6%
0,06%
The cost/income ratio (operating expenses/operating income)
Personnel expense/operating income
Net impairment losses on loans/net loans to customers (cost of credit)
70,6%
41,5%
0,69%
64,4%
37,5%
0,88%
63,9%
38,8%
0,59%
Net interest income/operating income
Net commission income/operating income
61,3%
33,9%
61,5%
31,1%
68,7%
33,3%
1,0%
3,2%
-5,9%
1,91%
1,36%
0,88%
48,69%
3,91%
51,57%
3,24%
54,58%
2,08%
Equity (including profit for the year) /total liabilities
Assets under management/indirect funding from private customers
Leverage ratio (total assets-goodwill-other intangib le assets)/(equity+minority interests-intangib le
assets)
Net result on financial activities/operating income
RISK INDICATORS
Net non performing loans/net loans to customers
Net impairment losses on non-performing loans/gross non-performing loans (coverage for nonperforming loans)
Net non-performing + net impaired loans/net loans to customers
Net impairment losses on non-performing and impaired loans/gross non-performing
loans+impaired loans (coverage)
Net non-performing loans /equity excluding profit for the year
CAPITAL RATIOS Basel 2 standard
Tier 1 ratio (tier 1 capital/total risk weighted assets)
Core tier I ratio after specific deductions to tier 1 capital
(tier 1 capital net of preference shares/total risk weighted assets)
34,89%
35,93%
38,22%
17,95%
11,96%
7,67%
7,47%
7,96%
7,73%
6,95%
7,43%
7,09%
Total capital ratio [(supervisory capital+tier 3/total risk weighted assets]
Supervisory capital (in thousands of euro)
of which: Tier one capital after the application of prudential filters and specific deductions
11,17%
10.536.200
7.047.888
11,91%
10.202.555
6.816.876
11,08%
9.960.812
6.944.723
Risk weighted assets
INCOME STATEMENT, STATEMENT OF FINANCIAL POSITION FIGURES (in thousands of euro),
STRUCTURAL DATA (numbers)
Profit
94.360.909
85.677.000
89.891.825
172.121
270.099
69.001
105.116
3.496.061
173.380
3.906.247
425.327
4.089.739
Operating expenses
Net loans to customers
of which: net non-performing loans
(2.468.564)
101.814.829
1.939.916
(2.514.347)
98.007.252
1.332.576
(2.611.348)
96.368.452
848.671
net impaired loans
Direct funding from customers
2.032.914
106.760.045
1.845.073
97.214.405
1.160.191
97.591.237
Indirect funding from customers
of which: assets under management
78.078.869
42.629.553
78.791.834
41.924.931
74.288.053
39.430.745
Total funding from customers
Equity (excluding profit for the period)
Total assets
184.838.914
10.806.898
130.558.569
176.006.239
11.141.149
122.313.223
171.879.290
11.071.206
121.955.685
1.892
1.955
1.944
19.699
19.384
786
20.285
20.185
880
20.680
20.606
924
Normalised profit
Operating income
Branches in Italy
Total personnel at the end of year (actual employees in service + workers on agency leasing
contracts)
Average total personnel (actual employees in service + workers on agency leasing contracts) (*)
Financial advisors
1 The indicators have been calculated using the reclassified figures contained in the section “Reclassified consolidated financial statements,
reclassified income statement net of the most significant non-recurring items and reconciliation schedules” in the Consolidated Management
Report.
Information on the share is reported in the relative section of the UBI Banca Management Report.
(*) Part time employees have been calculated within total average personnel numbers according to convention on a 50% basis.
14
The rating
The tables below summarise the ratings assigned to the Group by the international agencies,
Standard & Poor’s, Moody’s and Fitch Ratings.
As part of its general analysis of Italian banks, on 23rd April 2010 Standard & Poor’s affirmed
its short and long term counterparty ratings for UBI Banca and revised its Outlook from Stable
to Negative in relation to a perceived decrease in the Group’s capacity to absorb credit losses
greater than expected should fragile recovery in progress run into difficulties.
On 17th December 2010 Fitch Ratings lowered its long term counterparty rating for UBI
Banca to A from A+, with a Stable Outlook, affirming all its other ratings. The downgrade was
made in consideration of the sluggish activity in the Italian economy and the continued low
interest rates, which, in the opinion of the rating agency, made any swift recovery in UBI
Banca’s operating profitability unlikely.
At the same time Fitch Ratings emphasised the importance of the following: the Group’s strong
franchise in the richest regions of the country; solid management and a credit risk awareness
which has allowed asset quality to deteriorate less than its peers; adequate capitalisation in
relation to a conservative approach to risk; adequate liquidity with diversified sources of
funding.
As a consequence of the manoeuvre the ratings on outstanding issues (senior debt, lower tier
two and hybrid securities) were downgraded by one notch.
STANDARD & POOR’S
Short-term Counterparty Credit Rating (i)
Long-term Counterparty Credit Rating (ii)
Outlook
A-1
A
Negative
RATINGS ON ISSUES
Senior unsecured debt
A
Subordinated debt (Lower Tier II)
A-
Preference shares
BBB
French Certificats de Dépôt Programme
A-1
MOODY'S
Long-term debt and deposit rating (I)
Short-term debt and deposit rating (II)
A1
Prime-1
Bank Financial Strength Rating (BFSR) (III)
C
Baseline Credit Assessment (BCA) (IV)
A3
Outlook (deposit ratings)
Outlook (Bank Financial Strength Rating)
Stable
Negative
RATINGS ON ISSUES
Senior unsecured LT
A1
Lower Tier II subordinated
Preference
shares
(former BPB-CV and Banca Lombarda)
A2
Euro Commercial Paper Programme
Covered Bond
Baa3
Prime-1
Aaa
(i) The ability to repay debt maturing in less than one year.
(A-1: best rating – D: worst rating)
(ii) With reference to debt maturing after one year, it indicates the
ability to pay interest and repay principal, together with any
sensitivity to the adverse effects of changes in circumstances or
economic conditions.
(AAA: best rating – D: worst rating)
(I) The ability to repay long-term debt (maturing after one year) in
local currency. By using the JDA method (Joint Default Analysis),
this rating associates the financial strength rating (BFSR – Bank
Financial Strength Rating) with the probability of intervention if
needed by external support (shareholders, the group to which it
belongs or official institutions). (Aaa: prime quality – Baa3:
medium quality).
(II) The ability to repay debt in local currency maturing in the short
term (due in less than one year).
(Prime -1: highest quality – not prime: speculative grade)
(III) This rating does not relate to the ability to repay debt but
considers the bank’s intrinsic financial strength (by analysing
factors such as its geographical market presence, the
diversification of its activities, the financial basics) in the absence
of external support. (A: best rating – E: worst rating)
(IV) The Baseline Credit Assessment represents the equivalent of the
Bank Financial Strength Rating on the traditional scale of the long
term rating.
15
(1) The capacity to repay debt in the short term (less than 13
months). (F1: best rating – D: worst rating)
FITCH RATINGS
Short-term Issuer Default Rating (1)
F1
Long-term Issuer Default Rating (2)
A
Bank Individual Rating (3)
Support Rating (4)
Support Rating Floor (5)
Outlook for Long-term Issuer Default Rating
B/C
2
BBB
Stable
RATINGS ON ISSUES
Senior unsecured debt
A
Lower Tier II subordinated
A-
Preference shares
Euro Commercial Paper Programme
Covered bond
BBB+
F1
AAA
(2) The ability to meet financial commitments in the long term,
independently of the maturity of individual bonds. This rating is
an indicator of the probability that an issuer will default. (AAA:
best rating – D: worst rating)
(3) An assessment of a bank’s intrinsic strength (profitability,
balance sheet strength, commercial network, ability of
management, operational environment and outlook), on the
assumption that the bank cannot rely on external support
(possible intervention by a lender of last resort, support from
shareholders, etc.). (A: best rating - E: worst rating)
(4) A rating of the possibility of concrete and timely external support
(from the state or large institutional investors) if the bank finds
itself in difficulty. (1: best rating – 5: worst rating)
(5) This rating gives additional information, closely linked to the
Support Rating, in that for each level of the Support Rating it
identifies the minimum level which the Issuer Default Rating could
reach if negative events were to occur.
16
Notice of call1
An Ordinary and Extraordinary General Meeting of the Shareholders of Unione di Banche
Italiane Scpa is convened in first call on Friday 29th April 2011 at 5.00 p.m. at the registered
address of the bank, at No. 8 Piazza Vittorio Veneto, Bergamo, and in second call on Saturday
30th April 2011 at 9.30 a.m. at the New Bergamo Trade Fair, in Via Lunga, Bergamo to
discuss and resolve on the following
Agenda
Ordinary session
1) Proposal for the allocation and distribution of profit, after first presenting the separate and
consolidated financial statements as at and for the year ended 31st December 2010,
pursuant to article 22, paragraph 2, letter d) of the Corporate By-Laws.
2) Report to the shareholders on Group remuneration and incentive policies.
Proposals for:
- remuneration policies for members of the Management Board;
- the incentive scheme based on financial instruments for the top management of the
Group.
3) Authorisation of the Management Board concerning treasury shares.
4) Proposal concerning the appointment for the legal external audit (article 13, paragraph 1 of
Legislative Decree No. 39 of 27th January 2010).
Extraordinary session
1) Proposal to amend the following articles of the Corporate By-Laws: numbers 22, 25, 26 and
No. 28 (Title V - Shareholders’ Meetings), No. 37 (Title VI - Management Board), No. 44, No.
45, No. 46 and No. 49 (Title VIII - Supervisory Board), No. 50 (Title IX – General
Management). Relative and consequent resolutions.
2) Proposal to authorise the Management Board, pursuant to Art. 2443 of the Italian Civil
Code, to increase the share capital by payment, in one or more tranches, within twelve
months of the date of the shareholders’ resolution, by a total maximum amount of one
billion euro, inclusive of any share premiums, by the issue of ordinary shares having the
same characteristics as those already outstanding, to be offered to the holders of option
rights, with the broadest powers to establish, from time to time and in observance of the
above limitations, the procedures, the terms and the conditions of the operation, inclusive
of the issue price and comprising any share premiums and dividend entitlements. Relative
and consequent resolutions.
Consequent amendments to Art. 5 of the Corporate By-Laws.
***
The subscribed and paid up share capital of UBI Banca Scpa amounts to Euro
1.597.865.425,00 consisting of 639.146.170 shares with a nominal value of Euro 2,50 each.
The total number of registered shareholders with the right to vote is 78.705.
Only persons who have been registered shareholders for at least 90 days from the date of entry
in the shareholders’ register may attend the Shareholders’ Meeting and exercise voting rights.
Legitimate authorisation to participate in shareholders’ meetings and to exercise voting rights
is certified by a communication to the Bank, performed by the relative intermediary, in
compliance with its accounting entries, in favour of the party holding the right to vote. In this
regard, registered shareholders for whom the said communication has been made to the Bank
at least two working days prior to that set for the Shareholders’ Meeting in first call may
attend the Shareholders’ Meeting, in accordance with the Law. The legitimate right to attend
and vote nevertheless remains, should the communications be received by the Bank later than
1
This notice of call for a General Meeting of the Shareholders will be published in the Official Journal, No. 37 on 2nd April 2011.
17
the aforementioned time limit, provided they are received before the commencement of the
proceedings of each single session of the shareholders’ meetings.
A registered shareholder is entitled to only one vote no matter how many shares are
possessed.
A registered shareholder is entitled to be represented by issuing a written proxy to another
registered shareholder having the right to attend the Shareholders’ Meeting. Proxies may not
be granted to members of the governing or controlling bodies or to employees of the Bank, to
companies controlled by it, or to the members of the governing or controlling bodies or to
employees of the latter.
No registered shareholder may act as a proxy for more than 3 (three) other registered
shareholders.
Voting by post is not permitted.
Registered shareholders holding shares that have not yet been dematerialised pursuant to the
legislation and regulations in force must deliver them in good time to an approved
intermediary in order to perform the dematerialisation procedure required and to make the
communication mentioned above.
The communication performed by the intermediary shall contain a special section which may
be used to authorise a proxy by signing the said section. In compliance with the procedures
and the time limits set by law, a number of registered shareholders equal to not less than one
fortieth of the total number of registered shareholders entitled on the date of the request, may
make an application in writing for additions to be made to the agenda to be dealt with in the
meeting, as it results from the notice convening the Shareholders' Meeting, with the indication
in the request of the additional items proposed. The signature of each registered shareholder
making the request must be duly authenticated either in accordance with the law or by
employees of the Bank or its subsidiaries specifically authorised for that purpose. The
legitimacy of that right is given by the validity of the documentation testifying to the
possession of the shares on the date of the presentation of the application.
The documentation relating to the items on the agenda will be deposited and made available to
the public at the registered address of the Bank and on the website www.ubibanca.it and it
will be filed with Borsa Italiana SpA within the time limits and according to the procedures of
the Law and regulations.
Registered Shareholders may view and obtain copies of the aforementioned documentation in
accordance with the law by applying in advance to the Management Board Support and
Registered Shareholders Department.
Bergamo, 28th March 2011
The Chairman of the Management Board
Emilio Zanetti
18
The macroeconomic scenario
The severe recession in 2010, which followed the financial crisis triggered by sub-prime
mortgages, has given way to a global economic recovery, but in the presence of a series on
uncertainties which seem prejudicial to a return to normality: the reduction in financial leverage,
the variability of exchange rates and its impact on world imbalances, the high rates of
unemployment and public debt and, since the autumn, a recovery in inflation even in advanced
economies.
The pressures unleashed in the spring by the Greek public debt crisis – the consequences of
which then progressively extended to other countries in the euro area with high levels of debt
(Ireland, Portugal and Spain) – also helped to render more fragile a recovery that was already
affected by weak domestic demand.
The renewed pressures on financial markets towards the end of the year, triggered by the serious
difficulties experienced by the Irish banking sector and by uncertainties over new European anticrisis regulations1, resulted in a progressive rise in yields on long term government securities. At
the same time risk levels for major international banks started to increase again with a rise in
premiums on credit default swaps (CDS) after the decrease that followed the highs recorded in the
spring at the time of the Greek crisis, as they incorporated a heightened perception of risk on
sovereign debt.
On 21st November Ireland made an official request for a loan to the European Union and to the
International Monetary Fund which was accepted on 28th November, when a bailout plan was
prepared for a total of 85 billion euro, composed as follows: 45 billion euro provided by the EUEMU through the EFSF and EFSM programmes and by bilateral loans from the United Kingdom,
Sweden and Denmark; 22,5 billion euro from the IMF and the remaining 17,5 billion euro from
the Irish Government itself (Treasury monetary funds and investments by the national Pension
Reserve Fund).
Important measures were taken during the year designed to prevent the repetition of new financial crises. In
detail:
−
in May, after the adoption of a three-year programme of bilateral loans to Greece of 80 billion euro (in
addition to the 30 billion euro granted by the IMF), the European Union and the countries in the euro area
formulated two agreements for financial stability: on the one hand the European Financial Stabilisation
Mechanism (EFSM) was created to allow the European Commission to acquire up to 60 billion euro,
guaranteed by the EU budget, for loans to EU countries suffering exceptional circumstances beyond their
control; on the other hand a three-year plan was launched jointly with the IMF, designed to guarantee the
funding requirements of countries in the euro area with high levels of debt. Additionally, 440 billion euro
may be made available through the European Financial Stability Facility (EFSF)2, a special purpose entity
created on 7th June to acquire funds on the market by issuing securities guaranteed by countries in the euro
area3;
−
reforms of the regulation and supervision of the financial system have been approved in both the United
States and Europe. In the United States greater powers have been conferred on the Federal Reserve over
major financial groups, with the creation of a financial stability council composed of regulatory authorities,
including the Federal Reserve itself, called upon to oversee systemic risks. In Europe, on the other hand, a
European System of Financial Supervision (ESFS) has been operational since 1st January 2011. This
system consists of a European Systemic Risk Board – ESRB, with general oversight functions and of three
new authorities4 called upon to work with the 27 national authorities of the individual member countries of
the union with country specific oversight functions;
1
2
3
4
The yield differentials on ten year government securities for Greece, Ireland, Spain and Portugal, widened substantially compared those
for Germany, while Italy and Belgium experienced a smaller rise.
The IMF will make 250 billion euro available which, in addition to the 60 billion euro provided by the EFSM and the 440 billion which
should come from the EFSF, will allow the planned total of 750 billion euro to be reached.
The rules that govern the functioning of this special purpose entity state that a ratio of 120% must be maintained between the
guarantees provided and the securities issued to finance applicant countries. Another rule states that the ratio between loans granted
and securities issued shall be approximately two thirds with the remaining part invested in a liquidity reserve. Moreover studies are in
progress to assess the adequacy of the programme to manage a crisis which includes several countries and which could soon lead to an
increase in the amount of the guarantees which set limits on the funding and lending performed.
The first European debt instrument was placed on markets by the EFSF in January 2010. It has a duration of five years, is directly
guaranteed by member countries in the eurozone and is entirely destined to finance Ireland at a rate lower than that country would have
had to pay on its own issues.
One for the banking sector (European Banking Authority – EBA), one for financial markets (European Securities and Markets Authority –
ESMA) and one for insurance companies and pension funds (European Insurance and Occupational Pensions Authority – EIOPA).
21
−
at the end of November the Finance Ministers of the countries in the euro area defined the main
characteristics of a permanent mechanism to safeguard financial stability in the area (the European
Stability Mechanism, ESM). This mechanism, which should replace the European Financial Stability Facility
(EFSF) from June 2013, will provide financial support to countries requesting assistance under rigorous
conditions, similar to those set by the EFSF. It will have initial funding of 500 billion euro subject to
subsequent revision on a two yearly basis;
−
the debate on the proposal to strengthen the stability pact also continued with the introduction of monetary
penalties applicable prior to the start of an excess deficit procedure, which could be started even if the debt
reduction of a country towards the limit of 60% of GDP were not considered satisfactory. A possibility was
also introduced to accompany supervision of public debt and deficits with a procedure designed to promptly
identify macro economic imbalances of potential importance for the financial stability of the area by making
use of quantitative indicators, currently being defined, such as savings rates, private debt, balance of
payments and income from investments and transfers;
−
at the end of December the Basel Committee on Banking Supervision published the final documents on the
new regulations for banks (Basel 3). The new regulations require larger amounts of higher quality capital,
improved risk hedging, the introduction of a ceiling on leverage as an addition to the “risk-based” capital
requirements, measures to encourage the accumulation of capital in positive phases of the credit cycle and
the introduction of two liquidity requirements. The new regulations must be implemented by all member
countries with laws and national regulations which will come into force gradually over six years from 1st
January 2013.
Aggregate debt and its components (% of GDP) in the principal European countries
Private sector(1)
Aggregate debt
Percentages
Italy
Germany
France
Portugal
Ireland
Greece
Spain
United Kingdom
Public sector
2007
2008
2009
2007
2008
2009
2007
2008
2009
218,2
196,7
210,3
291,6
236,8
212,2
250,0
253,1
226,7
197,8
221,5
309,8
319,3
229,4
259,9
274,0
241,3
207,9
240,5
336,3
397,1
250,3
279,2
293,1
114,6
131,8
146,5
228,9
211,8
107,2
213,9
208,6
120,4
131,5
154,0
244,5
275,0
119,1
220,1
221,9
125,3
134,5
162,4
260,2
331,6
123,5
226,0
224,9
103,6
64,9
63,8
62,7
25,0
105,0
36,1
44,5
106,3
66,3
67,5
65,3
44,3
110,3
39,8
52,1
116,0
73,4
78,1
76,1
65,5
126,8
53,2
68,2
Source: Eurostat
(1) Non consolidated data w as used for the private sector (households, non profit organisations, non financial companies). Loans and securities excluding shares
w ere comprised w ithin the notion of private sector debt.
With regard to monetary policy, trends for advanced and developing economies moved in
different directions. In the case of the former, central banks maintained an expansionary attitude
– with official rates at record low levels – designed to support the fragile recovery in progress in a
context of very low inflationary risks for most of the year5. The rapid increase in prices in the last
quarter may lead to a change in that orientation. On the other hand, the monetary authorities of
the main emerging countries have already put restrictive measures in place designed to contain
pressure on prices generated by the large quantities of liquidity injected into markets during the
crisis6.
5
6
At the beginning of November the Federal Reserve launched a new programme for the purchase of long term government securities for a
total of 600 billion dollars, to be completed by the middle of 2011. The programme is in addition to the re-investment, again in
government securities, of the proceeds from redemptions of government agency securities and mortgage backed securities, amounting to
approximately 250-300 billion euro in the same period.
In October the Bank of Japan marginally reduced its reference rate, which now lies between 0% and 0,10%, announcing a quantitative
easing programme which involves the purchase of equity and property funds (for a total of 500 billion yen).
The Governing Council of the ECB decided to continue to conduct principal refinancing operations and those with maturities equal to the
compulsory reserve maintenance period by means of fixed rate tender procedures with full allotment of all bids as long as it is considered
necessary or at least until 12th July 2011. It also decided that three month operations performed until this date will be conducted with
full allotment of all bids and at a rate equal to the average of the principal refinancing rate over the duration of the operation.
Since March 2011, the Indian central bank has increased its reference rate six times during the year and twice in January and March
2011; it now stands at 6,75%.
The People’s Bank of China has intervened repeatedly on compulsory reserve requirements (six times in 2010 and three times in the first
three months of 2011), raising it to a record high of 20%, while there have been three increases in bank lending rates (+25 basis points in
October and December 2010 and in February 2011); it now stands at 6,06%.
The Central Bank of Brazil performed three rises in 2010 and two in January and March 2011 to bring the reference rate up to 11,75%.
The Central Bank of Russia, which had made four cuts to rates in the first half of 2010 in consideration of the fragility of the recovery
after the sharp fall in 2009, raised the reference rate, currently at 8%, by 25 basis points at the end of February.
22
On foreign exchange markets M ajor exchange rates and oil prices (Brent) at the end of period
the euro generally depreciated
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
% change
against
all
the
principal
A
B
C
D
E
A/E
international currencies – with a
Euro/Dollar
1,3630
1,2234
1,3510
1,4316
-6,6%
1,3377
partial recovery in the first few
Euro/Yen
113,75
108,15
126,27
133,08
-18,4%
108,60
months of 2011 – as a
Euro/Yuan
9,1192
8,2972
9,2230
9,7726
-9,8%
8,8148
Euro/Franc CH
1,3387
1,3177
1,4236
1,4823
-15,8%
1,2486
consequence of the repeated
Euro/Sterling
0,8675
0,8183
0,8898
0,8860
-3,3%
0,8572
pressures generated by the
Dollar/Yen
83,45
88,39
93,46
92,90
-12,6%
81,15
sovereign debt crisis. As shown
Dollar/Yuan
6,6905
6,7815
6,8258
6,8259
-3,5%
6,5900
Futures - Brent (in $)
82,31
75,01
82,70
77,93
21,6%
94,75
in graph one, after reaching a
low of less than 1,20 euro
against the dollar at the beginning of June, the single currency recovered partially in the third
quarter only to be affected by new difficulties in the economic situation in November. The trend
for the yen, on the other hand, was more uniform, appreciating progressively between March and
November against the United States currency to reach almost 80 yen per dollar.
Despite intervention by the Chinese central bank, which returned to a controlled floating regime
against a basket of currencies, the hoped for revaluation of the yen against the dollar was
nevertheless fairly modest.
Euro-dollar and dollar-yen exchange rates (2009-2010)
1,54
Oil prices Brent (2009-2010)
Graph No.1
1,58
€/$
$/Yen (right)
102
100
100
95
Graph No. 2
90
1,50
98
1,46
96
1,42
94
1,38
92
70
1,34
90
65
1,30
88
1,26
86
1,22
84
45
1,18
82
40
1,14
80
85
80
75
60
55
J
F
M
A
M
J
2009
J
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
50
35
J
D
F
M
A
M
J
J
2009
2010
A
S
O
N
D
J
F
M
A
M
J
J
A
S
O
N
2010
The macroeconomic background
According to the IMF, while slowing in the second half, world GDP returned to growth of 5% (0,6% in 2009) in the year just ended, although with marked differences between countries and
geographical areas. While the main emerging countries, and Asian countries in particular,
experienced accelerating growth rates as at the same time they increased their importance at
global level, the recovery in advanced countries was more moderate and at times uneven, as in
the case of the euro area.
The scenario was one of high unemployment and a progressive return to inflation attributable to a
generalised increase in raw materials, foodstuffs and energy prices, due mainly to increased
demand against a relatively rigid supply, particularly with regard to foodstuffs.
As shown in graph two, after fluctuating at around 70 to 80 dollars per barrel, the price of Brent
oil ended the year on an upwards trend, which continued into January and February, when
prices exceeded 110 dollars per barrel pushed up by geopolitical tensions in the North African
area.
After slowing during the spring, the United States economy accelerated progressively. In the
fourth quarter, the quarterly increase in GDP was 2,8% annualised (+2,6% in the third quarter),
driven primarily by consumption, and by durable goods in particular, but also by a new positive
contribution from net exports, largely due to a decrease in imports. The contribution from fixed
investments, however, where the residential component continues to be weak, was more modest.
Generally average annual GDP for the United States returned to growth (+2,8%) after a fall in
2009 (-2,6%).
23
D
The principal element of weakness today is the unemployment rate (9,4% in December), slightly
down compared to the highs recorded during the year (9,8% in April and November), but stably
above 9% for twenty months. The improvement in progress was confirmed by figures for January
2011 (9%). The average of 9,6% for 2010 was the highest since 1984.
After peaking at the end of 2009 (2,7%), inflation fell rapidly to a little over 1% between June and
November, ending the year at 1,5%. “Core” inflation (net of foodstuffs and energy products), on
the other hand, has remained stably below 1% (0,8% in December) since April.
The “twin deficits” continued to move in opposite directions but with the roles reversed compared
to the previous year. The federal deficit was reduced to 1.277 billion dollars from 1.471,3 billion
euro in 2009 (-13,2%)7, while the negative balance of trade started to grow again to 497,8 billion
dollars (+32,8%), affected mainly by greater deficits with China and Opec countries.
Actual and forecast data: industrialised countries
Gross domestic product
Percentages
Consumer prices
Unemployment
(average annual rate)
Public Sector Deficit (% of GDP)
Reference interest
rates
2009
2010
2011(1)
2009
2010
2011(1)
2009
2010
2011(1)
2009
2010(1)
2011(1)
Dec-09
Dec-10
United States
Japan
Euro Area
Italy
-2,6
-6,3
-4,1
2,8
3,9
1,7
2,1
1,3
1,5
-0,4
-1,4
0,3
1,6
-0,7
1,6
2,0
0,2
2,2
9,3
5,2
9,4
9,6
5,1
10,0
9,4
5,2
10,0
11,3
8,7
6,3
10,3
10,6
6,2
12,1
9,0
4,8
0-0,25
0,10
1,00
0-0,25
0-0,10
1,00
-5,2
1,2
1,1
0,8
1,6
2,2
7,8
8,5
9,2
5,4
4,6
3,9
-
-
Germany
France
Portugal
Ireland
Greece
Spain
-4,7
-2,6
-2,5
-7,6
-2,0
-3,7
3,6
1,6
1,3
-0,2
-4,2
-0,2
2,2
1,6
-1,0
0,9
-3,0
0,7
0,2
0,1
-0,9
-1,7
1,3
-0,2
1,2
1,7
1,4
-1,6
4,7
2,0
2,1
2,1
1,8
0,8
3,0
3,0
7,5
9,5
9,6
11,9
9,5
18,0
6,9
9,8
10,9
13,5
13,8
20,1
6,6
9,7
11,0
14,0
13,6
20,7
3,0
7,5
9,3
14,4
15,4
11,1
3,6
7,7
-7,0
32,3
9,3
8,9
2,6
6,5
-5,3
10,5
7,6
7,6
-
-
United Kingdom
-4,9
1,3
2,2
2,2
3,3
3,6
7,6
7,8
7,6
11,4
10,1
(1) Forecasts
7,8
0,50
0,50
Source: Prometeia and official statistics
The recovery in Japan slowed during the spring and now seems to have halted. In the last quarter
of the year, GDP fell by 0,3% compared to the previous period after +0,8% in the third quarter
(+1,5% and +0,5% in the first and second quarters respectively.). The trend reflects a strong
slowdown in consumption, the persistent weakness of investments and a progressive weakening
of the balance of trade, penalised, amongst other things, by a stronger yen. The economic
situation also appears to be in line with the Tankan report anticipations which reported a fall in
the confidence of businesses for the first time in six half year periods. On the other hand some
positive signals seem to be coming from industrial output, up in November over the previous
period (+3,3% in December) after five consecutive falls and on the labour market where the
unemployment rate fell in December fell below 5% for the first time after nine months (it peaked
at 5,3% in June).
Japan has not yet come out of the period of deflation in progress since February 2009. The
general consumer price index stood at zero in December, while “core” inflation, net of foodstuffs
continued to remain negative (-0,4%).
China further accelerated its growth rate in 2010, with an average increase in GDP of 10,3%
(+9,2% in 2009), which is pushing it into second position in the world ahead of Japan. This
annual performance was driven by all components, and by domestic demand in particular:
+23,8% for fixed investments, although decelerating compared to 2009; +18,4% for sales of
consumer goods; +15,7% for industrial output, driven by heavy industry.
The positive balance of trade fell to 183,1 billion dollars (-6,4% compared to 2009) due to more
intense growth in imports (+38,7%) compared to exports (+31,3%). Currency reserves reached
almost 2.600 billion dollars (+7,6%), including a significant proportion (approximately 1.160
billion euro) stably invested in United States government securities.
The acceleration in economic growth was accompanied by a rise in inflation to high levels (4,6% in
December, 4,9% in January 2011), which reflected price increases in the foodstuffs and property
sectors.
7
In order to consolidate the recovery, in December the United States Government launched a new fiscal stimulus programme of
approximately 800 billion dollars (5,5% of GDP), to be performed over the two years: 2011-12.
24
Actual and forecast data: the principal emerging countries
Gross dom estic product
2009
2010
China
9,2
10,3
India
5,7
Brazil
Russia
Perc entages
2011(1)
Consumer prices
Unemployment
2009
2010
8,5
-0,7
3,3
9,5
7,3
10,9
-0,6
7,5
4,5
-7,9
3,7
4,5
2011(1)
Reference interest
rates
2011(1)
2009
2010
2,7
4,3
4,1
4,0
5,31
5,81
13,2
6,7
n.a.
n.a.
n.a.
4,75
6,25
4,9
5,0
4,6
8,1
6,7
7,5
8,75
10,75
11,7
6,6
7,4
8,4
7,5
7,3
8,75
7,75
(1) Forecasts
Dec-09
Dec-10
Source: Prometeia, IMF and official statistics
The main emerging countries also recorded a return to high growth rates after a slowdown in 2009.
In the third quarter India’s GDP increased by 10,6% year-on-year, a reflection of a significant acceleration in
domestic demand, both for consumer goods (+9,3%) and for investments (+12,4%), and an improvement of
foreign demand, which, however continues to make a marginal contribution. The favourable context benefited
both the industrial sector (an average increase of +9,5% in industrial output on an annual basis between April
and November) and the service sector. Despite lower levels between August and November, Indian inflation
continues to be the highest in the Asian area.
Russia made up lost ground after the fall in 2009, benefiting from the gradual recovery in the global economy
and the consequent revival of exports (oil in particular) and industrial production. Signs of a slowdown
appeared in the third quarter with an increase in GDP of just 2,7% on an annual basis, the combined effect of
an acceleration in consumer spending and a deceleration in investments, but above all of a significant increase
in imports against more modest performance by exports. Inflation increased to 8,8% in December, reflecting
increases in international prices.
The Brazilian economy was driven by industrial output (+10,5% on average annually), positively affected by
receipts from raw materials prices which remained high and by huge inflows of foreign capital, attracted by
favourable returns in a stable macroeconomic context. However, the capital inflows helped fuel inflation which
reached 5,9% in December, above the target set by the Brazilian authorities.
The year 2010 was generally one of recovery for the euro area, although at different rates in the
various countries of the Monetary Union and with a deceleration in the second half. GDP
increased by just 0,3% over the previous period in the third and fourth quarters (+1% in the
spring), affected mainly by a progressive slowdown in the German economy, which was, however,
again the most lively.
On aggregate average annual GDP increased by 1,7% (-4,1% in 2009) driven by positive
performance by net exports, even if now slowing, as they responded to world economic trends,
while consumption and investments made a small contribution to output.
The industrial production index has recorded year-on-year changes of greater than 5% since
March (+8% in December) but in monthly terms the trend is not yet clear (-0,1% in December).
Unemployment remained at high levels (10% at the end of 2010; 9,9% at the end of 2009) with
Spain continuously above 20% since May.
Inflation has increased progressively: the harmonised consumer price index rose to 2,2% in
December from 0,9% twelve months before (an annual average of 1,6% compared to 0,3% in
2009). Net of foodstuffs and energy products, along with alcohol and tobacco products, the index
recorded significant changes (1,1% in December).
The number of countries which form part of the Monetary Union rose to 17 with the entrance of Estonia on 1st
January 2011. Estonia, which became part of the European Union on 1st May 2004, satisfied all the
requirements (public debt, budget deficit, interest rates and inflation) for admission.
In line with international performance, the weak recovery in Italy also lost vigour in the second
half of the year. The quarterly increase in GDP between September and December was just 0,1%
(+0,3% and +0,5% in the third and second quarters respectively), affected by a lower contribution
from net foreign demand, partly the result of an increase in imports against persistent weakness
for consumption and investments.
Average annual GDP grew by 1,2% after the significant contraction in 2009 (-5,2%), driven by the
rebuilding of inventories and by the recovery of private sector consumption and gross investment
against a still negative, but improving, balance of payments.
Industrial production (seasonally adjusted), which has recorded positive growth since February –
with year-on-year changes of greater than 7% between March and June and a peak of +9,7% in
August –, subsequently lost vigour to record an increase of 5,4% in December (an increase of
+5,3% on average over twelve months after two consecutive years of reductions). In terms of
individual sectors, the most lively were those of “refineries” (+15,6%), “fabrication of machinery
and equipment” (+13,3%) and “metal products” (+12,2%), while negative growth was recorded for
25
“computer fabrication” (-13,1%), “pharmaceuticals” (-7,4%), “mineral extraction” (-3,6%),
“fabrication of electrical equipment” (-2,8%) and “foodstuffs” (-2,5%).
The most recent estimates for December confirmed an unemployment rate of 8,6% (over 2,1
million jobless), still close to the high recorded in October (8,7%), but nevertheless lower than the
European average (10%) as a result of the use of state income benefits: a total of 1,2 billion hours
of state lay-off and redundancy benefits were authorised in 2010, an increase of 31,7% compared
to 914 million hurs in 2009. In the last months of the year the trend, which was already slowing,
seems to have reversed with four consecutive falls year-on-year which also affected extraordinary
and exceptional lay-off benefits in December8.
Prices in Italy were affected by a progressive recovery of inflation, although a little lower than in
the euro area. In December the harmonised consumer price index rose to 2,1% (2,2% for Europe)
from 1,1% at the end of 2009 (0,9%). Average annual inflation was 1,6% (0,8% in 2009), in line
with European levels.
The Italian balance of payments deficit reached 27,3 billion euro, a fourfold increase compared to
2009, due principally to a return to deficit for intermediate products and a deepening of the
energy deficit. The increase in imports (+22,6%) exceeded that for exports (+15,7%) and was
higher in both cases for trade with non EU countries.
Finally, with regard to public finance, the Stability Law for 20119, enacted by Parliament last
December, does not generate any net debt over the next three years. The targets set by the “Public
Finance Decision” at the end of September therefore remain in place, although they have been
updated on the basis of Istat (Italian office for statistics) data for 2010: the ratio of deficit to GDP,
which fell to 4,6% (from 5% of the Public Finance Decision) will fall below 3% in 2012, in line with
commitments undertaken at European level, while the ratio of public debt to GDP, which
decreased further to 119% (from 118,5% of the Public Finance Decision), is not expected to
decrease until 2012.
8
9
According to preliminary Bank of Italy estimates, a measure of the underuse of the labour supply which includes the equivalent of the
hours of state lay-off and redundancy benefits and discouraged workers who are seeking jobs with less intensity would stand at least two
percentage points above the rate of unemployment.
This law, which replaces the Finance Act from this year onwards, following the reform of public accounts and finance (Law No. 19/2009),
requires the acquisition of funds of six billion euro in 2011, 1,6 billion euro in 2012 and 1,2 billion euro in 2013.
26
Financial markets
United States and European yield curves for maturities of greater than one year shifted
substantially downwards compared to December 2009, in line with the continuation of
particularly expansionary monetary policies in the two areas. Nevertheless a rise occurred
compared to the end of June – which in the case of the United States only affected maturities of
longer than two years – in relation to both an improvement in the outlook for economic growth
and expectations of increased inflation. The concerns expressed by the ECB, repeated, moreover
in a meeting of March 2011, over the sharp rise in prices in recent moths and the consequent
expectation of a possible rate rise in the short term, resulted in a rise in European rates
compared to June, even for maturities of less than two years.
After a positive start, in the second quarter of 2010 the trend for the equity markets of the major
industrialised economies reversed sharply due to the fragility of the recovery, but above all to the
turmoil triggered by the sovereign debt crises of some European countries which penalised the
banking sector in particular. The recovery was generalised in the second half, even if in some
cases insufficient to cover the losses that had been incurred.
Over twelve months United States stock exchanges recorded rises of over 10%, managing in some
cases to return to levels prior to the Lehman Brothers collapse, while Japanese markets ended
the year with a moderate fall. Trends in Europe were divergent: the brilliant result for the German
stock exchange, driven by a strong economic recovery, was offset by the difficulties of those
countries most affected by the sovereign debt crises (Portugal, Ireland, Greece and Spain) with
particularly evident repercussions on other markets in the area such as the Italian market.
In line with trends on other world stock exchanges, equity prices on emerging markets recovered
compared to the lows recorded in the second quarter. At the end of the year the MSCI Emerging
Market index recorded an improvement of 16%.
The political events affecting North African countries and the violent earthquake that hit Japan
pulled down international share prices, wiping out the improvements that had been recorded in
the first few weeks of the year.
After a partial recovery compared to the lows recorded in May, the equity markets managed by
Borsa Italiana fell again in the last quarter to end 2010 with losses of over 10% year-on-year.
They were attributable partly to the substantial impact of the banking sector which, despite the
soundness of Italian banks, were particularly affected by the multiple shocks generated by the
progressive spread of the sovereign debt crisis.
Trading in equities reduced in terms of the number of contracts (62,2 million, -3%), while the
volume increased compared to the previous year (748,2 billion euro, +11%). Similarly the
27
numbers of average daily trades in shares also fell (243 thousand contracts) while the value
increased (2,9 billion euro).
The principal share indices in local currency
Dec-10
A
Ftse Mib (Milan)
FTSE Italy All Share (Milan)
Xetra Dax (Frankfurt)
Cac 40 (Paris)
Ftse 100 (London)
S&P 500 (New York)
DJ Industrial (New York)
Nasdaq Composite (New York)
Nikkei 225 (Tokyo)
Topix (Tokyo)
MSCI emerging markets
Sep-10
B
Jun-10
C
20.505
21.098
6.229
3.715
5.549
1.141
10.788
2.369
9.369
830
1.076
20.173
20.936
6.914
3.805
5.900
1.258
11.578
2.653
10.229
899
1.151
Mar-10
D
19.312
19.869
5.966
3.443
4.917
1.031
9.774
2.109
9.192
828
918
22.848
23.368
6.154
3.974
5.680
1.169
10.857
2.398
11.244
985
1.010
Dec-09
E
23.248
23.653
5.957
3.936
5.413
1.115
10.428
2.269
10.546
908
989
% change
A/E
-13,2%
-11,5%
16,1%
-3,3%
9,0%
12,8%
11,0%
16,9%
-3,0%
-1,0%
16,4%
Principal short and long term interest rates in 2010
Graph No. 5
5,25
5,00
4,75
4,50
4,25
4,00
3,75
3,50
3,25
3,00
2,75
2,50
2,25
2,00
1,75
1,50
1,25
1,00
0,75
0,50
0,25
0,00
J
F
M
A
M
J
J
A
US Treasury 10 years
Federal f unds rate
BTP 10 years
Bund 10 years
ECB principal ref inancing rate
USA Libor 3 month
S
O
N
D
Euribor 3 month
Despite the difficult context, in 2010 the markets managed by Borsa Italiana nevertheless
managed to set further new records: new record highs for trading in ETFs (exchange traded
funds) and ETCs (exchange traded commodities), with a value of 78,5 billion euro and 3,4 million
contracts, and for trading on the MOT (electronic bond market) and the ExtraMOT (a total value
of 230 billion euro and 3,9 million contracts); record trades for the equities derivatives on the
IDEM (Italian Derivatives Market), with a daily average of 173 thousand standard contracts;
continued European leadership for contracts on both the electronic stock exchange and the
electronic bond market.
At the end of the year listed companies on the Italian Stock Exchange numbered 332, unchanged
compared to twelve months before as a result of ten new admissions and ten withdrawals. The
total market capitalisation of listed companies fell to 425 billion euro (27,5% of GDP) from 457
billion euro at the end of 2009 (30,1% of GDP).
As a consequence of the increase in the value of equity trades, while capitalisation was lower,
turnover velocity10 increased from 147% to 176% over twelve months.
On 9th February 2011 the London Stock Exchange Group, the company which controls Borsa Italiana, and the
TMX Group, the owner of the Toronto stock exchange, announced a coming merger which should lead to the
creation of a leading organisation in the commodities, derivatives and bond sectors with over 6.700 listed
companies on different segments and capitalisation of around 4,5 billion euro. The new Group will be 55%
owned by the LSE and 45% by the TMX. The operation will enhance Borsa Italiana’s experience in post trading
services and also its position as a global centre for fixed income trading.
10
An indicator which, as the ratio of the value of the shares traded electronically to capitalisation, gives a measure of the turnover of the
shares traded .
28
After a favourable start to the year and a subsequent alternation of positive and negative results,
the mutual investment funds sector again started to show signs of weakness in the last quarter of
2010. Net inflows for the year were nevertheless positive at 5,7 billion euro (-0,7 billion euro in
2009), the aggregate result of opposing performance by Italian registered funds (-10,1 billion euro)
– still penalised by unfavourable tax treatment11 – and by foreign registered funds (+15,8 billion
euro) which now account for almost 58% of assets. In terms of the type of fund, disinvestments
from monetary products (-23,7 billion euro) and from hedge funds (-2 billion euro) were more
than offset by increases in bond funds (+19,9 billion euro), equities funds (+3,7billion euro),
balanced funds (+3,6 billion euro) and flexible funds (+4,2 billion euro)12.
At the end of December assets amounted to 460 billion euro, an increase of 5,7% compared to
435,3 billion euro twelve months before with a change in composition into bond funds (up from
38,1% to 41,1%), equity funds (from 21,2% to 23,4%) and to a lesser extend into flexible funds
(from 13,1% to 14,6%) and balanced funds (from 3,9% to 4,6%), against a substantial movement
out of monetary funds (from 20% to 13,5%) and to a slight extent out of hedge funds (from 3,7%
to 2,8%).
The banking system
The pace of growth in funding from customers in the Italian banking system slowed during the
year, affected by a lower propensity to save by households. This was set against by a moderate
recovery in lending business after a low recorded in October 2010. The quality of credit continued
to deteriorate, although at a slower rate than in the recent past.
On the basis of Bank of Italy data13, direct funding (deposits of residents and bonds) increased
year-on-year in December by +3,1% (+9,2% in December 2009), the aggregate result of a
reduction in the bond component (-1,6% compared to +11,2% at the end of 2009) and a still
positive trend for other types of funding (+6,3% compared to +7,8% in December 2009), driven
principally by repurchase agreements (+82,7%).
As concerns loans to private sector residents, this had increased on an annual basis at the end of
the year by +4,3% (+1,7% in December 2009). Total loans to households and non financial
companies increased by 3,8% (+0,5% at the end of 2009), driven by the households component
(+7,5% compared to +5,9% twelve months before) and by home purchase loans in particular
(+8%), while the various forms of consumer credit tended to slow (+1,8% from +4,9% in
December 2009). The trend for loans to businesses finally reversed (+1,6% compared to -2,3% at
the end of 2009).
In terms of risk, non performing loans to the private sector gross of impairment losses increased
over twelve months by 31,2% (those to households by +31,3% and those to businesses by
+31,5%). The ratio of gross non-performing loans to the private sector to gross loans to the private
sector therefore rose to 4,60% (3,81% in December 2009).
Net non-performing loans, which had grown significantly in terms of the total since March had
increased by 28,9%. Consequently the ratio of net non-performing loans to total loans rose to
2,43% from 2,03% at the end of 2009, while the ratio of net non performing loans to capital and
reserves reached 13,28% (10,47% at the end of 2009).
At the end of the year securities, other than shares and ownership interests, issued by residents
in Italy and present in the portfolios of Italian banks had increased, year-on-year, by 8,5%,
attributable mainly new investments in government securities (+30,5%) concentrated mainly in
the first half of the year – both medium-to-long term (CCTs and BTPs, +36,2%) and short term
(BOTs and CTZs, +20,1%) – against a reduction in “other certificates” (-2,7%). Within the latter,
Decree Law No. 225/2010 known as the “Thousand extensions”, converted into Law No. 10/2011, introduced the expected tax reform
for mutual funds, which will come into force from 1st July 2011. On the basis of the new law, taxation on actual profit taking will also be
applied to Italian investment funds, that is on gains or losses recorded when investments are sold, rather than on the “mark-to-market”
value accruing, thereby bringing the tax treatment into line with that for foreign funds.
12 Assogestioni (national association of asset management companies), “Map of assets under management (collective instruments and
customer portfolio management) 4th quarter 2010”.
13 Bank of Italy, supplement to the statistics bulletin “Moneta e Banche”, March 2011.
11
29
more than 70% continue to consist of bank bonds. The ratio of securities to private sector loans
therefore stood at 33,4% (28,3% at the end of 2009).
After reaching a low in June (1,36%) the average weighted interest rate on bank funding from
customers calculated by the Italian Banking Association14 (which includes the yield on deposits,
bonds and repurchase agreements in euro for households and non financial companies) stood at
1,50% compared to 1,59% twelve months before. Similarly, in line with conditions on the
interbank market, the average weighted interest rate on loans to households and non financial
companies also showed signs of recovery with respect to the record low reached in June, (3,52%),
returning to 3,62% (3,76% in December).
***
In addition to the developments in progress in international regulations already mentioned, a
number of changes were introduced into the legislative framework for Italian banks in 2010:
• on 1st March the European Payment Services Directive (PSD) entered into force, a measure
designed to eliminate regulatory differences between member countries and to increase
competition between operators, by guaranteeing equal conditions, more transparency and
protection for customers. The directive sets the whole subject of payments within a single
regulatory framework with the objective of supporting an integrated European market for
electronic payments and reducing the costs and inefficiency of paper and cash instruments;
• on 11th October trading commenced on the new segment of the Mercato Interbancario
Collateralizzato (MIC – collateralised interbank market)15, named the “New MIC”, with the
transfer to the Cassa di Compensazione e Garanzia (central counterparty clearing) and to
Monte Titoli S.p.A. of the functions performed previously by the Bank of Italy (guaranteeing
transactions, acquisition, valuation, custody and administration of financial assets conferred
by banking operators);
• with Decree Law No. 78/2010, converted into Law 122/2010, the limit on the transfer of cash,
the issue of bank cheques, bankers’ drafts, postal cheques and holding bearer passbooks was
reduced from 12.500 euro to five thousand euro;
• Legislative Decree No. 39/2010, which incorporated Directive No. 43/2006, rewrote the rules
for statutory audits reorganising them in a consistent manner, requiring compliance with
specific requisites concerning independence, ethics, training and quality control. For public
interest entities (including banks, companies that issue listed financial instruments, insurance
companies and stock broking companies) statutory audits may not be performed by the Board
of Statutory Auditors, but must be performed by external statutory auditors or by audit firms
and the appointment must be for a minimum of seven/nine financial years;
• finally with regard to listed banks:
− in March the Consob (Italian securities market authority)16 issued a regulation on
transactions with related parties which regulates procedures to be followed for the approval
of transactions of significant amount where the counterparties have potentially conflicting
interests;
− Legislative Decree No. 27/2010 implemented EC Directive No. 2007/36/EC on
shareholders’ rights with innovative changes to many articles of the Italian Civil Code and
the Consolidated Law on Finance, with consequent amendments also to the Issuers’
Regulations17. The changes introduced, applicable to shareholders’ meetings held after 31st
October 2010, have no effects on co-operative companies, which were expressly excluded
from the scope of the new legislation.
14
15
16
17
Italian Banking Association, Monthly Outlook, Economia e mercati Finanziari-Creditizi, February 2011.
The MIC was an anonymous guaranteed segment of the e-Mid platform, created to encourage the recovery of trading on interbank
circuits following the 2008 financial crisis. When it was created, the guarantees granted by the Bank of Italy were scheduled to lapse on
31st December 2010.
Resolution No. 17221 amended by a later Resolution No. 17389 of 23rd June 2010.
Consob Resolution No. 17592 of 14th December 2010.
30
Significant events that occurred during the
year
The trade union agreement of 20th May 2010
Trade union negotiations were concluded on 20th May 2010, designed to achieve a significant
reduction in costs at consolidated level, by decreasing personnel numbers and the relative unit
costs. These were supported operationally by the adoption across the board (for all companies) of
appropriate organisational and management measures designed to increase efficiency and
productivity.
As concerns personnel expense in particular, a reduction in total Group personnel numbers by
895 was planned to be implemented for 500 employees by means of a redundancy incentive
scheme and by means of normal personnel management mechanisms, including the partial
replacement of personnel normally leaving the Group for the remaining reductions.
The redundancy incentive scheme involved all employees who had attained the right to a pension
by 31st December 2011.
The voluntary applications received (497) allowed the target set to be met virtually completely
without the need to resort to the use of Law No. 223/1991 as permitted under the agreement1.
Group banks and companies contributed jointly to reaching the Group target, accepting
applications received in excess of the quota set at individual company level and using these to
compensate for other companies where targets were not fully met.
The first Group of personnel to leave (321) occurred at the end of June with effect from 1st July;
the remaining group with effect subsequent to 1st July 2010 as shown in the table
Personnel leaving with effect
from 1st July 2010
Personnel leaving with effect
subsequent to 1st July 2010
Total
Banca Popolare di Bergamo
62
25
87
Banco di Brescia
41
33
74
Banca Popolare di Ancona
58
18
76
Banca Popolare Commercio e Industria
26
16
42
Banca Regionale Europea
23
8
31
Banco di San Giorgio
6
2
8
Banca di Valle Camonica
4
2
6
58
54
112
Banks/Companies involved
Banca Carime
Centrobanca
UBI Banca
UBI Sistemi e Servizi
Total
6
3
9
31
12
43
6
6
12
321
179
500
The total cost of the operation – with account taken of the provisions of Decree Law No. 78/2010
converted into Law No. 122/2010 – was 33,2 million euro, already recognised in the income
statement for the period ended 30th June 2010. It was divided between incentives, for those who
had already acquired the right to retire, and use of the “solidarity fund” pursuant to Ministerial
Decree No. 158 of 2000.
When fully phased in, the agreement, together with other personnel management mechanisms,
will create personnel expense synergies of approximately 70 million euro from 2011. Net of the
above expenses, the savings for the second half of 2010 were approximately 13 million euro.
1
The completion of the redundancy plan for 500 personnel was implemented by proceeding, until the target was reached, to terminate the
employment contracts of senior management who had acquired the right to a pension and had not voluntarily applied for retirement
under the scheme, through application of the relative law and clauses in the contract.
31
In order to balance the personnel leaving under the agreement reported here and in order to
guarantee the necessary operational continuity for those business units affected by the
organisational changes, a commitment was made, in conjunction with the memorandum signed
by UBI Banca, to convert the temporary employment contracts of 550 personnel to permanent
contracts for young people already working for the Group. These conversions, concluded in the
fourth quarter, were in addition to 170 already provided for under the previous trade union
agreement of 23rd January 2010 concerning the branch network optimisation.
A basic requirement for the conversion of contracts was the positive assessment of workers, with
priority given to those with the greatest length of service in the Group, compatible with
requirements that emerged on local markets and in individual banks and companies on the basis
of their dimension objectives.
The agreement also covered a series of operational and organisational lines of action as follows:
•
•
•
the streamlining of the branch network of the Group, as reported in detail in a subsequent
sub-section and the consequent change in the composition of customer portfolios;
the development of Contact Centre activities in order to strengthen support for the commercial
activities of the network banks and to improve contacts with customers, with particular
reference to the retail and small business segments. This will also contribute to a more
effective and contained management of geographical mobility as the result of the creation of a
new unit in Milan, in addition to the existing centre in Brescia.
Total employees working in the Contact Centre therefore rose from 65 at the end of 2009 to
153 in December 2010. This unit, originally located in the Commercial Macro Area of the
Parent, was moved to UBI Sistemi e Servizi on 1st January 2011, in order to guarantee better
management of the service by means, amongst other things, of more direct involvement by the
network banks which benefit from it directly;
general increases in efficiency which will include Group companies as follows:
- the Business Process Re-engineering Project for Loans (described on subsequent pages),
with organisational impacts on UBI Banca, the network banks and UBI.S, designed to
improve the lending process within the Group with particular reference to the grant and
monitoring of loans and credit recovery;
- UBI Banca Private Investment, with the closure of twelve branches (including six already
closed in June, when action was taken on the business units of the network banks) and the
creation of a Central Back Office in Milan in July to which administrative activities
previously performed by branches to support Financial Advisors were transferred (order
processing and first level controls for orders placed off-site in relation to assets under
management, insurance and pension products and personal loans);
- SILF, with the reorganisation and focus of activities on two centres: Cuneo and Bergamo. All
the SILF activities complementary to B@nca 24-7, previously performed in Milan, have been
located on the Bergamo centre, created in June, in order to improve costs as a result of
more effective operations;
- Centrobanca, with a revision of the scope of its activities in order to increase the focus of
the company on transactions with a higher specialist content (specialised lending,
acquisition finance, project financing, leveraged finance, shipping, pool financing and
industrial credit operations with non standard and/or complex structures including the
monitoring of covenants).
As a consequence, the authorisation ceilings for the company in the industrial credit sector
were raised from 2010, with the network banks now responsible for all non secured loan
transactions of less than 15 million euro, non operating asset mortgage loans below four
million euro and all transactions pursuant to the Sabatini Law.
32
Action undertaken on the branch network of the Group and on
the distribution model
The distribution network of the UBI Banca Group was subjected in 2010 to a number of actions
taken with the primary purpose of strengthening the relationship of network banks with their
local markets and subsequently to streamline the distribution network of those banks with a view
to achieving an enhanced market presence and a significant reduction in costs. Finally, towards
the end of the year the distribution model was developed to strengthen the commercial
effectiveness of branches and to ensure increasingly more rapid response times.
Details are given as follows:
•
•
•
•
•
2
3
4
5
6
7
on 25th January the project to optimise the branch network was completed. It involved Banca
Popolare di Bergamo, Banco di Brescia, Banca Popolare Commercio e Industria, Banca
Regionale Europea and Banco di San Giorgio2 and its objective was to increase the focus of the
network banks on their respective geographical markets, by grouping together branches in the
same geographical area under a single brand name. As a result, the network banks now
operate with a single brand name in 72 of the 78 provinces in which they are present3.
Technically the project involved the intragroup transfer of 316 branches through contributions
of 14 sets of operating assets. On 21st July, the restoration of the original ownership interests
held by UBI Banca took place (with the repurchase of the minority shareholdings acquired by
each network bank following the contributions performed), together with the reorganisation of
the shareholdings of the foundations, as reported in detail in the section “The consolidation
scope”;
at the same time as the optimisation operation was performed, 37 Group branches, including
existing branches and those resulting from the “switches”, were transformed into minibranches reporting to a parent branch. The operation involved 16 branches belonging to the
BPCI, 14 to the BPB, six to BRE and one to BBS;
on 21st June action was taken on the distribution network as provided for under the Trade
Union Agreement of 20th May 2010, designed to eliminate overlaps and streamline market
presence in areas with limited margins for growth and with insufficient current and/or
potential profitability of the branches concerned. At the same time branches near those
affected by the action were strengthened and those with better growth prospects expanded. A
total of 44 branches4 and 37 mini-branches5 were closed, 101 small branches were
transformed into mini-branches6 and the parent branch of five mini-branches was changed7;
in the third quarter an enhancement to the distribution model was developed, with the
introduction of a new type of “Group Branch”, which, although autonomous from both a
commercial and a credit viewpoint, reports to a “head branch” – generally larger and with
greater authorisation powers over both commercial and credit matters – that is able to provide
operational support to “group branches” partly through the local centralisation of some
processes. The project was implemented at the beginning of 2011 at Banco di Brescia, Banca
Carime, Banca Regionale Europea and Banca di Valle Camonica and was accompanied by a
change in the composition of customer portfolios with the more complex accounts moving to
head branches, which, since they possess all types of specialist personnel, have become
leading local players;
consistent with its role as the leading bank in the Piedmont area, Banca Regionale Europea
has transferred its General Management, central offices and decentralised units at Cuneo to
11, Via Santa Teresa in Turin from January 2011.
The operation did not involve Banca Popolare di Ancona, Banca Carime and Banca di Valle Camonica.
The co-presence provinces are: Milan, Rome, Bergamo, Brescia, Monza Brianza and Como. For the latter two provinces attributed to BPB,
the presence of BPCI and BVC is residual (1 branch in the fist case, 1 parent branch and 1 related mini-branch in the second case).
In detail: 12 branches of the BPB, 10 of the BPCI, seven of BBS, six of UBI BPI, four of BPA plus one for institutional customers, two of
Banca Carime plus one for institutional customers, two of BRE, one of BSG and one of UBI Banca for institutional customers.
In detail: 17 mini-branches of BPCI including one in-house company branch, plus one advisory branch, 12 of BPB, six of the BPA and
two of BBS.
In detail: 65 branches of Banca Carime, 11 of BPA, nine of BRE, six of BSG, five of BPCI, three of BPB, one of BBS and one of the Parent
UBI Banca.
In detail: two mini-branches of BRE, two of BPCI and one of BPA.
33
Although priority was given during the year to the reorganisation of the distribution network, the
Group nevertheless continued with its endogenous growth by opening 17 new branches – half of
which belonging to Banca Popolare di Bergamo – and by transforming six existing “treasury”
branches into mini-branches.
This growth will continue in 2011 with both the opening of new branches (approximately twenty)
and intervention on existing units, with further closures, transformations and/or transfers.
A detailed summary of the operations performed in 2010 on the branch network of the Group is
given in a table contained in the section “The distribution network and positioning”, which may be
consulted.
The international presence: development
Action was also taken on the international front in relation primarily to two foreign subsidiary
banks, designed to improve the Group focus and strengthen its commercial potential. In detail:
•
Banque de Dépôts et de Gestion Sa was reorganised to focus business on the private banking
segment, with the reconfiguration of its geographical presence to concentrate operations on the
most important centres. In this context:
- its presence in the Ticino Canton was streamlined in June with the closure of the Mendrisio
branch and the merger from 31st October of its subsidiary Gestioni Lombarda Suisse Sa
into it;
- the sale to the Swiss Banking Group Valiant of the Neuchâtel and Yverdon branches, which
conduct mainly retail business, was concluded, with effect from 31st December 2010, with a
gain on the sale of approximately 5,6 million euro;
- an increase in the capital of the subsidiary BDG Singapore Private Ltd. of four million Swiss
francs was decided in December (concluded in January 2011). This subsidiary commenced
asset management activities after obtaining a “Capital Markets Services” license in October;
•
with effect from 10th December, the Luxembourg branch of Banco di Brescia was contributed
to UBI Banca International Sa, thereby streamlining the Group presence in Luxembourg with
the merger of two entities which already operated with a high degree of integration. UBI Banca
International Sa took over the transferred branch’s short term institutional funding activities,
performed by the issue of French certificates of deposit and euro commercial paper8;
the range of co-operation agreements with foreign banks was broadened further: currently 37
exist which give cover for more than 50 countries9;
finally the Group sponsored events of great importance in order to increase the visibility of the
brand abroad and to consolidate its closeness to customers that operate on international
markets10.
•
•
8
9
10
The euro commercial paper and French certificates of deposit programmes of the new issuer were formalised on 13th August and 22nd
September 2010 respectively The original programmes of the branch transferred came to an end with the maturity of the last issues (30th
November for the euro commercial papers and 22nd December 2010 for the French certificates of deposit).
A co-operation framework agreement was signed in 2010 with OJSC OTP Bank, a Russian subsidiary of the Hungarian OTP Group. The
agreement completes the two that already exist in the country (with Center-Invest Bank, which operates in southern regions and Bank of
Moscow, well-established in the capital). Amongst other things, OJSC OTP is able to provide operating standards very similar to those of
the UBI Group and has a multi-lingual international desk in Moscow which can also provide assistance in the Italian language.
Lastly an agreement was signed on 2nd December with the Russian state bank Vnesheconombank (VEB), which involves the
establishment of a maximum budget of 50 million euro to finance co-operation projects between Russian and Italian small to mediumsized enterprises.
A further two agreements were added to the 37 mentioned with the European Bank for Reconstruction and Development (EBRD) and
with the International Financial Corporation (IFC) of the World Bank Group for access to their respective “trade facilitation” programmes.
These included a series of initiatives designed to reward the excellence of Italian businesses in the world: the “China Trader
Award” awarded to companies that have distinguished themselves for their innovation and technology; “The Golden Bridge” in Russia
and the “Amerigo Vespucci Prize” awarded to San Paolo of Brazil.
Organisational and financial support was also given to foreign commercial missions, organised by the chambers of commerce of Italian
provinces of major importance to the UBI Group. The objective here is to assist businesses in the process of internationalising their
business on foreign markets.
Finally, the event “U will Be International” was organised in November, during which 500 businesses met representatives of the UBI
Banca foreign network at the Kilometro Rosso Science Park in Bergamo.
34
Action taken to simplify operations
Business Process Re-engineering (BPR) for Loans
Business Process Re-engineering (BPR) for Loans is a project started in the second half of 2009
designed to improve the effectiveness and efficiency of the lending process in the network banks
of the Group. It meets the dual requirement to reduce customer response times and at the same
time to simplify administrative procedures for account managers without, however, relaxing credit
risk controls.
The project was developed along the following lines of action:
•
excellence in customer response times: while maintaining adequate control over credit risks,
the action undertaken included the redistribution of work loads between central and
peripheral units, by increasing the ordinary authorisation powers of peripheral approval bodies
and of local loan approval centres (LACs) for counterparties with low risk profiles (“low” and
“medium”);
•
the appointment of external suppliers to perform property appraisals and the centralisation of
mortgage guarantee processing at UBI.S: this was implemented gradually during the year in all
Group banks by means of the following:
- the introduction of a single procedure for requesting property appraisals by specialist
external companies;
- the centralisation of mortgage guarantee processing at UBI.S, in order to reduce manual
administrative activities by account managers for the processing of mortgage guarantees;
•
the introduction of a Counterparty Problem Indicator: calculated automatically by means of a
mechanism which progressively aggregates weighted problem phenomena on each
counterparty at network bank level, it allows, in combination with internal rating systems,
reports to be generated for timely action to be taken;
•
management of arrears. The project is designed to preserve and protect customer relationships
by means of the prompt resolution of lending irregularities (late repayments/unauthorised
overdrafts) detected on performing private individual and “small economic operator” customers
by providing direct support from a specialist central unit operating since June 2010 at UBI.S
offered to customers by account managers;
•
the new credit recovery model. As part of action to generally improve the efficiency of the
processes and units involved in this activity, the decentralisation in network banks of the
management of customers classified as “recoverable impaired positions” 11, previously managed
as a service by units in the Parent, was completed. A special business unit entitled “Problem
Loan Service” was also created in the Credit Area of the Parent whose tasks include the
supervision of credit recovery processes, support for network banks with debt restructuring,
monitoring of Group problem loans and supervision of processes and tools relating to the
“arrears management” system;
•
Credit quality. This project was commenced in 2008 as an approach to improve credit quality
in the retail customer segment for Banca Popolare Commercio e Industria and Banca Popolare
di Ancona. It was gradually extended in 2009 to all the Group’s network banks with positive
results in terms of improvement for all types of problem loan. It was therefore decided, as part
of the BPR for lending project, to transform what had originally commenced as action to
improve an incidental problem into a consolidated approach and therefore into an ordinary
model for monitoring the quality of credit.
11
“Recoverable impaired positions” are those for which total disengagement is planned (exposures being repaid, exposures for which a
normalisation plan of longer than twelve months must be drawn up for which, although no normalisation plan exists, the exposures are
subject to progressive reduction). These are therefore different from “operationally impaired loans” which are positions for which
situations of temporary difficulty can be overcome in a very short period of time and for which controlled operation is allowed in order
to mitigate risk and return the position to “performing” status, i.e. with a “normalisation plan” of less than 12 months. Counterparties
are included in this class for which a restructuring plan with a duration of longer than six months is being drawn up (referred as a
“stand-still” stage).
35
The “Simplicity objective” project
The “Simplicity objective” project was launched to find solutions to improve service and customer
response times for products and services considered high priority, by improving support
processes and tools for the commercial network. The main areas of intervention were as follows:
‐ the simplification of procedures for the sale of the main current account and investment
products by automating and integrating the compilation and printing of all forms and by
reducing the number of signatures required for stipulating contracts;
‐ response times on mortgage loans to private individuals with the introduction of condition
based products, designed to inform customers of the feasibility of a loan within 48 hours of
receiving income documents on the basis of predetermined assessment parameters;
‐ the revision of the commercial independence of the larger branches with greater volumes of
business in order to increase customer response times to requests to change interest rates and
conditions;
‐ the creation of a specialist “Delivery Management” unit for the entire life cycle of payment
cards issued by the network banks, reducing delivery times, minimising delays and supporting
the distribution network with problem management;
‐ the continuous improvement of response times and standards of service for the helpdesk used
by the distribution network, by means of initiatives designed to develop the analysis of internal
requirements, support action, “technical professional” and “behavioural” training for helpdesk
personnel and improvement of the information website used by the distribution network;
‐ the improvement of the management of internal Group regulations by means of action to
rationalise the existing regulations, to simplify the publishing and the approval of new
regulations and the introduction of an evolved front end for consultation by the distribution
network.
The divestment of non strategic assets
On 31st May 2010 the agreement with RBC Dexia Investor Services12 (RBC Dexia), signed on 28th
September 2009, was concluded – one of the largest suppliers in the world of services to
institutional investors – involving the following:
▪ the transfer to RBC Dexia of a business unit consisting of the depositary banking business of
the UBI Banca Group (more than 19 billion euro of assets administered, relating mainly to
mutual fund management activities performed by the subsidiary UBI Pramerica SGR);
▪ the transfer of correspondent banking operations to RBC Dexia through the sale of contracts
held by BPCI for the supply of paying agent services in Italy to Luxembourg Sicavs and Irish
UCITS;
▪ the supply to UBI Banca of custody and settlement services for foreign securities activities
relating to customer and proprietary business.
As a result of this transaction, by making use of the services of a global specialist able to
guarantee a high standard of service in the depositary banking sector, UBI Banca has further
optimised its operational risk and is continuing to invest in and focus on its core business of
supplying products and services to its customers.
The transaction is worth 93 million euro. A contract was also signed, with a life of ten years, for
the supply, under market conditions, of depositary banking services to UBI Pramerica by RBC
Dexia.
No guarantee was issued in this respect by UBI concerning the minimum level of assets under
management present in the business unit contributed. The agreements signed, nevertheless
contain some adjustment mechanisms to the transfer price, if certain events occur – including
withdrawal from the contract and renegotiation of the consideration – connected with the
12
RBC Dexia Investor Services is a joint venture between the Royal Bank of Canada and Dexia which provides a full range of services for
investors at global level.
36
performance for the two main contracts with UBI Pramerica falling within the scope of the
business operations contributed: (i) the depositary banking contract and (ii) the contract for the
outsourced provision of administrative services.
In terms of profit and loss, the transfer of the interest as part of the contribution of the depositary
banking operations generated a net gain of 83,4 million euro, recognised from 30th June 2010
within item 310 “post-tax profit from discontinued operations”.
The transfer of the contracts, however, gave rise to proceeds of 957 thousand euro for BPCI,
recognised within item 220 “Other operating income (expenses)”.
From an operational viewpoint, the IT migrations for the depositary banking and the
correspondence banking systems were completed in June. The migration of the retail and
institutional customers’ assets was performed and at the beginning of 2011 the migration of the
software managed by Unione Fiduciaria to Dexia for the calculation of NAVs was completed.
The renewal of the partnership in the life banc assurance sector
On 30th September 2010, UBI Banca and Cattolica Assicurazioni concluded an agreement for the
renewal of their partnership in the life insurance sector, which was due to expire at the end of the
year, extending it until 31st December 2020. The agreement, signed on 29th July 2010, involves
the distribution of the insurance products of the Lombarda Vita joint venture on an exclusive
basis through the branch networks of the network banks of the former Banca Lombarda Group
(Banco di Brescia, Banca Regionale Europea, Banca di Valle Camonica and Banco S. Giorgio).
In this context, the partnership was strengthened with the transfer by the UBI Banca Group of a
further 9,9% of the share capital of the joint venture to the Cattolica Assicurazioni Group. On
completion of the transaction, the share capital of Lombarda Vita was held as follows: 60% by
Cattolica Assicurazioni (compared to 50,1% previously) and 40% by UBI Banca Group (compared
to 49,9% previously).
The operation, which received the necessary authorisations from the competent authorities,
involved the payment of total consideration of 118,3 million euro, including 60,9 million euro (net
of taxation) as the consolidated gain, recognised in the results to 30th September 2010.
On 21st December 2010, the UBI Banca Group and the Aviva Group agreed to renew their
strategic partnership in the life insurance sector, which expires at the end of the year, by
extending it for a further five years until 31st December 2015 and maintaining the contractual
conditions unchanged.
The agreements involve the distribution of Aviva Vita insurance products through the branches of
Banca Popolare Commercio e Industria, Banca Popolare di Bergamo and Banca Carime, while
products designed by Aviva Assicurazioni Vita will be sold through the branches of Banca
Popolare di Ancona.
Since the agreements are not subject to authorisation by the competent authorities they therefore
became immediately operational.
37
Commercial activity
Reorganisation action and commercial policies
The UBI Banca Group performed its activities during the year in a context of substantial
reorganisation of the distribution networks of the network banks, designed to reduce costs
significantly by means of an improved local market presence and more effective customer service.
The Commercial Macro Area of the Parent was also affected by reorganisation with the expansion
of some operating functions considered of strategic importance including “payment systems and
electronic payment cards” and “third sector associations and organisations”.
Commercial policies were focused during the year on broadening the product range with an
increasingly advisory oriented approach, on the acquisition of new customers and young
customers in particular and on initiatives to support families and enterprises, both nationally and
locally.
Full use of customer relationship management tools was made for a more careful analysis of
customer needs and requirements to identify sub-segments with specific needs for which “madeto-measure” commercial services could be provided.
The release of the “Financial planning and advice” platform was completed on the entire
commercial network at the beginning of 2010. In addition to compliance with the more stringent
regulatory requirements for investment services (MiFID), this also enabled customised services for
private individual customers to be developed.
The Group “catalogue” was then enriched with new products including the Mutuo Prefix (a floating
rate mortgage with a maximum limit or cap which “protects” borrowers from potential rate
increases), the “CLUBINO” savings book (for customers between the age of 0 to 12) and the Enjoy
card. At the same time specific advertising and/or product initiatives aimed at young people were
implemented.
The commercial strategy also continued to maximise synergies between network banks and
product companies, by promoting, for example, banking products for the “non captive” customers
of these companies. In the consumer credit sector the Group strengthened its position by
acquiring control of Prestitalia, a leading company in the sector in Italy.
Finally, particular attention was paid to multi-channel growth. The Contact Centre was expanded
during the year with the creation of a new unit in Milan and both new consultative and
transaction functions of internet and mobile banking services were put in place.
Commercial policies in 2011 will be oriented towards the achievement of sustainable growth over
time, with attention paid to maintaining a general structural balance based on the capacity of all
markets (including the corporate market) to generate direct funding to support growth in lending
and to maintain high levels of capital strength, through rationalising, amongst other things, the
use of capital and careful control over the quality of credit.
The management of pricing will continue to be weighted, on the basis of the cost of the risk and
the increased cost of funding, with a focus on customer targets and on high value added business
and on the following in particular: small business counterparties, the affluent segment, young
people and foreigners in the Retail Market; high potential counterparties and foreign trade
business for the Corporate Market; remunerated advisory services and, “Pro-Active Wealth
Advisory” services for high-net-worth and institutional customers in the Private Market.
38
The Retail Market
The retail market includes a total of approximately 3,6 million customers, consisting of 3,2
million private individuals (mass market and affluent segments), 355 thousand businesses (small
economic operators1 and small businesses2) and approximately 30 thousand authorities and
associations. These customers are served by 7.000 staff consisting of account and branch
managers.
In consideration of the difficult economic situation, yet again in 2010 the commercial activities of
the Group continued to be oriented on the one hand to providing solutions to help customers deal
with the current difficulties and on the other to constantly improving the quality and quantity of
the products and services provided.
“Anti Crisis” measures to support small-to-medium sized enterprises
and families
During the year the banks in the Group participated in new initiatives organised at national and
local level and took forward measures launched in 2009 to help families and businesses in their
respective local markets, co-operating with public institutions (chambers of commerce, regional
and provincial governments) and guarantee bodies3.
In August 2009 the Group had promptly joined the initiative, “Joint Announcement” to help SMEs
or in other words the “Agreement for the deferral of the debts of small-to-medium size enterprises
to banks” 4 (and subsequent additions) signed by the Ministry of the Economy and Finance, by
the Italian Banking Association and by other associations belonging to the Banks-Businesses
Observatory. In June 2010 it also participated in the extension to the time limit for the
presentation of the relative applications from businesses until 31st January 2011, which put back
the original deadline of 30th June 2010 by seven months.
At the end of December more than 14.800 thousand applications had been received – principally
attributable to medium-to-long term loans – for a total of 4,3 billion euro, of which more than
13.000 had already been processed for a quota of deferred repayment on capital amounting to
520 million euro. Almost all the applications meeting the requirements for eligibility were
accepted.
As concerns the provision of products under the Agreement to strengthen the capital of SMEs, the
Group confirmed its creation of a credit line entitled “200% Immediate Recapitalisation”, (which
provides loans equal to twice the increases in capital actually paid in by the
shareholders/proprietors of a business, up to a maximum of four million euro) and also of two
credit lines backed by guarantees under arrangements with major guarantee bodies, with more
attractive conditions than those of the Agreement:
- “400% Support and Development” – loans up to four times the amount of capital contributions
made by the shareholders/proprietors of a business (up to a maximum of 500 thousand euro)
designed to support growth projects by making fixed investments;
- “200% Capital Reinforcement”, loans of up to twice the amount of capital contributions made
by the shareholders/proprietors of a business (joint stock companies, partnerships or sole
proprietor businesses), for a maximum amount of one million euro, designed to support the
capitalisation of businesses and the restructuring of the sources of funding. These loans may
1
2
3
4
Companies with a turnover below 300 thousands euro.
Companies with a turnover above 300 thousands euro.
These included a variety of subsidised instruments for businesses supported by the UBI Group: measures in the Piedmont Region for
innovation by SMEs to support energy efficiency, to support firms operating in the tourist industry and for farms (tenancies and
mechanisation); measures in the Region of Lombardy to support innovation in businesses, the introduction of new technologies and to
enhance competitiveness as well as measures to meet the functional needs of farms; measures in Calabria to consolidate short term
liabilities, to support investments and to improve and expand hotel facilities. Operations were also commenced to support farms based
on the 2007-2013 Rural Development Programmes which included measures to assist with interest payments.
The agreement, which became operational on 28th September 2009 is for SMEs that are in temporary difficulty but which have good
operating prospects and are going concerns. It enables them to benefit from four measures: i) the deferral for twelve months of capital
repayments on mortgages; ii) the deferral for twelve or six months of the capital repayment portion of property or equipment leasing
instalments respectively; iii) an extension to 270 days for the repayment of bank advances on short term receivables; iv) special finance
designed to strengthen capital.
39
also be granted even in cases where capital payments are deferred or where future profits are
to be allocated to reserves.
Since the weak economic recovery would suggest that the liquidity problems of businesses are
likely to continue, following the expiry of the deferral mentioned above and in order to support
businesses which survived the most acute phase of the crisis, on 16th February 2011 the Italian
Banking Association and the other signatories to the Joint Announcement signed an “Agreement
for loans to small-to-medium sized enterprises” to which the Group promptly adhered for all the
measures involved.
The Agreement extends the time limit until 31st July 2011 for the presentation of applications to
defer loans to banks by SMEs which have not already taken advantage of a similar benefit, under
the same conditions as the Joint Announcement and the subsequent addendum of 23rd December
2009.
The new Agreement also extends the repayment schedules for medium-to-long term loans which
have benefited from the deferral under the Joint Announcement by up to a maximum of two years
(three years for secured loans). As part of that extension, SMEs which apply may use instruments
to manage interest rate risk that are directly linked to the loans in question.
The provision of loans by banks in the UBI Group to strengthen the capital of SMEs again under
the Agreement described above, was confirmed.
On the basis of conventions signed subsequently by the Italian Banking Association and the
Cassa Deposito e Prestiti (CDP – state controlled fund and deposit institution), the Group also
continued to grant loans to SMEs under attractive conditions using CDP funds resulting from
postal savings (with a lower cost) as follows:
1) in the first stage of the operation, (Convention signed on 28th May 2009) – designed to support
investments to be made, and/or in progress, or to increase working capital – which involved the grant of
three billion euro nationally, the banks in the Group accepted approximately 1.200 applications for
assistance for loans, amounting to more than 107 million euro of loans disbursed;
2) as part of the Convention signed on 17th February 2010, designed to regulate the criteria for distributing
and granting the second tranche of five billion euro, the Group signed a new loan contract with the CDP
which involved the allocation of a budget to be used by 28th February 2011, amounting to 286 million
euro.
The duration of the repayment schedule was set at a maximum of seven years, at an interest rate equal
to the Euribor half year plus a spread differing according to the duration of the loan and the grace period
and also dependent on the tier one ratio of the Bank. In consideration of the grace period chosen and the
tier one ratio of greater than 7%, the spread for the Group stood in February 2011 at 85 basis points for
terms of three years, at 95 basis points for terms of five years and at 105 basis points for terms of seven
years.
In February 2011, 1.911 loans had been approved for more than 154 million euro, of which
approximately 117 million euro had already been disbursed, while applications for loans of more than 63
million euro were being assessed;
3) on 17th December 2010 a third Convention was signed, designed to support the recovery in progress,
which involved two further types of loan:
-
a “Ten year budget”, in addition to the three, five and seven year budgets, with funding of one billion
euro, to support lending requirements for long term investments by SMEs:
a “Stable budget” to finance the growth of SMEs, into which the funds not fully used by the previous
budgets will gradually flow, and which will offer all maturities (three, five, seven and ten years).
The Group has been granted funding of 51,6 million euro for the “Ten year budget”, which must be used
by 30th June 2011.
The “Stable budget” on the other hand may be used “on demand” and must be used to fund unsecured
loans (maturities of 13 to 120 months) and secured loans (maturities of 61 to 120 months) for
investments to be made or being made and to increase working capital (with loans for 100% of the
planned expenditure).
In consideration of the tier one ratio of the Group, in January 2011 the spread for maturities of up to ten
years was 106 basis points.
Memorandums of intent were signed in 2010 between banks in the Group and local Provincial
Governments (e.g. the Provinces of Brescia and Bergamo) designed to pay advances on sums
owed to businesses by local authorities, thereby reducing financial pressures on businesses
created by late payments.
40
These agreements involved the payment of advances by the banks participating on those
receivables, subject to notification of the receivables, with repayment in up to 17 months with low
spreads.
On their part the local authorities certify that the companies’ receivables are undisputed claims
payable in cash and indicate the period of time in which they will make the payment to the banks
making advances on the certified sums, together with the relative method of payment.
On 20th January 2010, the Group adhered to one of the Italian Banking Association “Families
Plan” initiatives designed to support the sustainability of the retail lending market. It was an
agreement to defer the repayment of mortgages by families in difficulty as a result of the crisis,
signed by the Italian Banking Association and thirteen consumer associations5 (a similar measure
to the Agreement for the deferral of loans to SMEs described above).
During the year the Agreement led to the deferral of 1.114 mortgages, on a remaining total debt of
more than 93 million euro.
As concerns the framework agreement signed in May 2009 by the Italian Banking Association and
by the Italian Episcopal Conference to grant “Loans of hope” 6 – disbursement of which is from
September 2009 until 2012 and which is centred on B@nca 24-7 –, this resulted in the grant of
16 loans for a total of 96.000 euro. Because the number of families financed was relatively low,
due to the strictness of the constraints imposed by the memorandum of intent, the agreement has
been modified recently and it is forecast that the project will involve larger numbers of families in
2011.
In consideration of the continuing severe hardship suffered by families in Abruzzo hit by the 2009
earthquake, the Group adhered to the new agreement signed between the Italian Banking
Association and the CDP – to supplement that signed in 2009 – raising the ceilings on loans and
adding new forms of finance to those already provided.
In 2010 UBI Banca Private Investment, the Group’s lead bank in the earthquake zone, granted 34
loans for a total of approximately 1,3 million euro.
To confirm the Group’s closeness to its traditional local markets, it intervened, through Banco di
Brescia, to support towns in the Veneto region hit by flooding on 31st October 2010, adhering –
both for families and for SMEs – to the measures of the Ordinance of the President of the Council
of Ministers No. 3906 of 13th November 2010 (deferral of mortgage repayments).
Finally, in the last quarter of the year the “‘Solidarity Fund’ for mortgages for the purchase of a
main dwelling” became operational. It was created by an initiative of the Ministry of the Economy
and Finance (MEF) with Law No. 244 of 24th December 2007, with the objective of assisting
debtors in difficulty with regular mortgage repayments, and it included the following:
- for mortgage contracts for the purchase of a main dwelling for borrowers, the possibility for a
customer, if certain conditions are met, to apply for the deferral of repayments not more than
twice for a maximum period of not longer than 18 months in the life of the mortgage;
- the creation at the MEF of the “Fund” mentioned, usable on request by mortgage borrowers
who intend to make use of the right to defer payments, in order to pay for the costs of the
banking procedures and possible notary fees required to defer the mortgage repayments;
- the deferral of payments, if the mortgage borrower can demonstrate the inability to meet
mortgage repayments and rescheduling expenses, but before enforcement proceedings on the
mortgage security have commenced.
The Group has already received the first applications and an assessment of the success of the
initiative will become possible as the year progresses.
5
6
Briefly the agreement involves the deferral for at least twelve months of repayments on mortgages of up to 150.000 euro taken out for the
purchase, construction or renovation of a main dwelling even with arrears in payments of up to 180 consecutive days for customers:
- with taxable annual income of up to 40.000 euro;
- who have suffered from particularly negative events in the two year period 2009-2010 (death, job loss, becoming non self-sufficient,
becoming eligible for state redundancy benefits).
For families that have lost all income from work, have no unearned income or income other than that generated by the ownership of a
home or ordinary or extraordinary state redundancy benefits. It is designed to implement projects for the return to work or the start of
small businesses.
41
Private individuals
Investment in the development of service models for “Private individual” customers continued
during the year with an advisory approach committed to excellence. In detail, tools were released,
described below, designed to increase efficiency in the management of commercial proposals that
are increasingly customised to meet specific customer requirements.
PLANNING AND FINANCIAL ADVICE PLATFORM
The main objective is to support account managers in the formulation of appropriate investment
proposals that are in line with third level MiFID regulations and optimised to fit the relative
customer profile. The advisory platform was rolled out throughout the Group in 2010 and further
functional enhancements are planned for 2011 with the definition of a more distinctive product
range for affluent segment customers.
MORTGAGE PLATFORM
Released in 2010 and 2011, it provides account managers with a set of tools designed to provide
the following:
- estimates for customised and sustainable products for customers;
- a rapid response capacity by means of condition based products and services;
- simplified and efficient management of the mortgage application processing stages.
NEED ANALYSIS PLATFORM
This tool allows account managers to study the “overdraft” financial requirements of customers in
a structured manner, so that they can offer solutions consistent with a customer’s personal
characteristics and projects with a significant impact on household budgets.
The release of a further advisory platform is planned for the current year designed to ensure
excellence in the provision of non life insurance policies.
* * *
Attention was focused in the Group’s commercial activity in 2010 on improving customer trends,
both in terms of attracting new customers to the Group and increasing the loyalty of existing
customers.
The campaigns for the acquisition of new customers have focused on high potential segments and
primarily on the following:
- young people: with the launch of a new savings book, CLUBINO, for minors and the marketing
of a prepaid card ENJOY, targeted at 18-30 year olds and supported by advertising initiatives
including Libertà di Comunicare (Freedom to communicate) and Promozione Natale 2010 (2010
Christmas promotion) in partnership with the telephone operator Vodafone;
- foreigners: with the launch in 2010 and 2011 of the “Money Transfer” service on a limited
number of pilot branches, the result of an agreement signed with Western Union.
The action taken to increase the loyalty and satisfaction of “private individual” customers
included the start of targeted “Loyalty programmes”, which involve various customer segments,
with different scoring methods depending on the products and services used. The first prize
operation launched in 2010 was linked to the prepaid card Enjoy, with the Enjoy People Club for
“young people”. On the other hand a “Loyalty programme” commenced in the first few months of
the year targeted at holders of the Libra credit card. Customer behaviour that was rewarded
included not only use of the card, but also use of a wide range of Group products and services
(e.g. loans, non life insurance policies, etc.).
CURRENT ACCOUNTS
The new Bank of Italy regulations governing transparency came into force on 26th May 2010,
which involve the insertion of “Summary cost indicators” in information sheets. Summary cost
indicators give the annual indicative cost of a current account and the figure is obtained by
summing fixed and variable annual costs for six standard users, to each of which different levels
of use are associated. The account Conto Zero Zero UBI (UBI zero zero account) was therefore
created for better positioning with respect to competitors. The account has no fixed charges, no
expenses for management and use and no constraints to link it with mortgages, personal loans or
42
forms of investment. It was created primarily to acquire new customers and to meet the
expectations of those who want a transparent product that is above all always accessible.
The conditions of the Duetto Basic account were renewed with the monthly charge down from
4,95 euro to 3,00 euro. The Duetto Basic account not only includes all banking services
comprised within the fixed charge (direct debit of utility bills, cheque books, debit cards, Qui UBI
remote banking), but also three insurance services provided by Europ Assistance, with cover for
accidents, withdrawals and health services.
The CLUBINO, the savings book for children from 0 to 12 years of age – for which UBI Banca was
awarded second place in the children’s/youth accounts category in the Milano Finanza
classification of banking products – was a great success. In order to ensure continuity in the
product range it is being followed by a new current account, currently being defined, for young
people between the ages of 14 and 18, with operations limited to paying in cash, receipt of credit
transfers and cash withdrawals from branches or from ATMs using the Libramat card for minors.
LOANS
In 2010 the “Mortgages for private individual customers” sector showed the first signs of recovery
after two sluggish years. The Group nevertheless succeeded in maintaining positive growth in
disbursements, assisted by the good reception given to the new product “Prefix”, a floating rate
mortgage with a cap launched in February. With a maximum contractual limit set on the interest
rate of 5,50%, the Prefix Mortgage allows customers to enjoy the benefits of a variable rate, while
protected from excessive rises in the reference parameter (the Euribor three month rate). It also
includes the application of a competitive spread which differs on the basis of the life of the loan
and the credit rating of the customer.
Small Businesses
Commercial policies led to the progressive establishment of different service models for Small
Economic Operators (SEOs) and small-to-medium sized enterprises (SMEs). They are designed to
respond to the specific requirements of Small Business customers more effectively, which are
particularly uniform both financially and in terms of size.
The “standardised” commercial approach to SEO customers, who are more numerous and have
“basic” requirements, is designed to progressively integrate with direct channels (call centres,
internet banking, evolved ATMs), which are constantly implemented with new services.
The service model for SME customers, who have more sophisticated and varied requirements,
involves a “relationship” approach, with importance given to regular meetings with account
managers (at least quarterly), in order to explore customers’ needs, their potential and future
requirements and to propose more attractive solutions.
The relationship approach with SME customers was further enhanced during the year with
intense and progressive training action to support the network of specialist account managers
and to consolidate planning activity aspects and a “risk-adjusted” approach to pricing.
FINANCIAL CONSULTING
This is based on co-operation by the network banks with SF Consulting, an associate company
controlled by the Finservice Group and specialised in the supply of consulting services in the
subsidised loans sector which include: assessment of the eligibility of companies for subsidies,
the preparation of investment projects, the assessment of investment plans and general
assistance in making and processing applications for subsidised loans.
Recently the activities of SF Consulting have extended to include the energy efficiency of businesses, with good results for
corporate customers, which suggests further possibilities also exist for co-operation involving Retail customers.
Commercial action with the network banks resulted in more than 1.600 new potential
applications with visits to more than four thousand concerns in the small business and corporate
segment.
UBI Banca, SF Consulting and Finservice have also signed a convention for support and advisory
activities in relation to formalities for the issue of guarantees under the “Guarantee Fund for
SMEs” pursuant to Law No. 662 of 23rd December 1996. It became operational in February 2011.
The purpose of the convention is to support account managers with activities required to obtain
guarantees issued by the Fund, ranging from feasibility assessment (inclusive of verification of
43
the subjective and objective requirements of the enterprise) to the acquisition of guarantee
certification. Businesses can benefit from the Guarantee Fund created by Law No. 662 for any
type of operation, provided it is directly linked to the operating activities of the enterprise.
Depending on the nature of the eligible operations, the type of beneficiaries and their location, the
guarantee covers 85%, 80% or 60% of the loan with a maximum amount guaranteed per
enterprise of 1.500.000 di euro.
As part of the convention, SF Consulting has created a special IT platform, implemented by the
Group, which allows account managers to interact with the company while applications to the
Guarantee Fund are being processed.
SECTOR PRODUCTS
The Small Business service model is also based on the development of specific products targeted
on different sectors designed to strengthen UBI Banca’s role as a “partner bank”. The products
were created following a process of analysis and study based on special “focus group” surveys on
businesses in individual sectors, on interviews with account managers and on specific meetings
with the relevant trade associations.
The product range reserved to farms entitled SubitoImpresa Agriculture was launched in 2010,
which follows that for wholesale merchants which came out in 2009. The initiative was designed
to satisfy the principal needs of businesses in the sector: savings on the management of
payments and receipts, increased return on company liquidity, rapid finance for current
operations, cover for company risk, immediate advances against predetermined credit
authorisations to grasp commercial opportunities and deal with adversities, such as climatic
disasters and livestock epidemics as well as to simplify administrative and corporate costs.
A complete range of loans for farms was therefore made available, designed in particular for
initiatives to shorten supply chains, diversify production and facilitate generation turnover.
“NEW ENERGY” LOANS
Proposals to support investments in the production of “clean” energy and for energy savings
launched in 2009 were as follows: “New Photovoltaic Energy”, designed to finance investments in
photovoltaic plant, and “New Energy - Renewable Sources and Energy Savings”, to support
corporate development programmes designed to generate energy either from renewable sources or
with a low environmental impact (i.e. wind power, hydro, biomass generation) and to improve
energy efficiency.
Group co-operation continued in support of these proposals with the Department of Mechanical
and Industrial Engineering in the Faculty of Engineering at the University of Brescia to develop a
software application – recently updated in the light of new incentive regulations and available on
the website www.ubibanca.com – to measure the technical and economical sustainability of these
investments by simulating the expected economic and environmental cost-benefits.
INITIATIVES IN CO-OPERATION WITH THE
EUROPEAN INVESTMENT BANK
On 12th April 2010, the European Investment Bank (EIB) signed a finance contract with the UBI
Banca Group which represents the first tranche of a total EIB loan of 500 million euro to UBI
Banca already approved and destined entirely to Italian small-to-medium sized enterprises
(SMEs). Technically the operation will take the form of the subscription by the EIB of covered
bonds issued by UBI Banca: the first issue of 250 million euro, relating to the financing just
mentioned, took place at the end of April.
The projects that may be financed, through mortgage or unsecured loan contracts (although
finance leases are available), are mainly in the agriculture, industry, services and tourism sectors
with a maximum limit on each project of 12,5 million euro. The funds will be disbursed by seven
banks in the Group (Banca Popolare di Bergamo, Banco di Brescia, Banca Popolare Commercio e
Industria, Banca Regionale Europea, Banca Carime, Banca di Valle Camonica and Banco di San
Giorgio) and by UBI Leasing. The issue of covered bonds lowers the cost of funding and enables
reduced interest rates to be charged to businesses which take advantage of this opportunity: 20
basis points less on average compared to the standard cost of loans for each class of risk.
The product became operational at the end of July 2010 and as at 31st January 2011, 65
applications had been received for loans.
Commercial activities will be intensified in the first half in order to complete the first tranche of
the loans by September and to perform the subsequent issue of 250 million euro and the relative
loans by the end of this year.
44
Again with regard to EIB initiatives, Banca Popolare di Ancona won a contract under a tender
procedure organised by the Marches Region for the management of an EIB credit line worth 100
million euro for investments and expenses incurred in the context of an appropriate SME
development programme. The projects must be located in the Region and the maximum amount
that can be financed is 1,6 million euro.
Authorities, Associations and the third sector
UBI Banca has created a specific business unit, operational since 1st October 2010, dedicated to
the management and development of business in the following segments: public authorities, trade
associations, guarantee consortium bodies and funds and organisations operating in the non
profit sector including Church and religious entities.
The Group intends in this manner to identify structured commercial approaches and the relative
service models which – based on the specifics, complexity and organisation of the customers in
question – require a separate and differentiated approach with the design of products and
services able to meet the needs expressed. Completion of the activity is in progress and it will be
rolled out gradually, partly as a function of the development of market prospects and the
legislative and regulatory contexts of the sectors concerned.
The approach of all the network banks will therefore be standardised, consolidating and
developing activities already performed over the years with the same partners, as an expression of
local economies and institutions and also with the “world” associated with them (enterprises,
employees and families). The development of relations in this area occurs in a context of
confirming and enhancing the role of lead bank played in the Group’s local markets.
ASSOCIATIONS AND GUARANTEE BODIES: CONVENTION LOANS
Particular attention has always been paid, with regard to medium-to-long term lending to SMEs,
to loans granted “under convention”, i.e. loans provided on the basis of agreements with
guarantee bodies and trade associations, which represent an important link in relations with local
economies. At the same time the use of public sector instruments to mitigate credit risk
continued in the current difficult economic situation, including the use of the Guarantee Fund for
SMEs (pursuant to Law No. 662/1996) and the Fund managed by the SGFA (Fund Management
Company for the agricultural and food sectors which manages intervention for the issue of direct
and subsidiary guarantees) for farms.
As a result of new medium-to-long term loans granted in 2010 – 1.485 million euro for more than
16.700 loans (+25% in terms of amount and +4% in terms of number of loans compared to 2009)
– total outstanding medium-to-long term loans rose to 3.475 million euro (+21% compared to the
end of 2009). Short term loans rose from approximately 500 million euro to 600 million euro
(+20%).
The broad range of existing products was added to by numerous initiatives organised in cooperation with local public institutions (chambers of commerce, regions and provinces) and by
those already described in the sub-section “Anti crisis measures to support small-to-medium
sized enterprises and families”7.
In the light of the growing Group business with guarantee bodies through conventions and of the corporate changes in
progress (company reorganisations and mergers between guarantee bodies and the transformation of some guarantee bodies
into intermediaries supervised by the Bank of Italy), a new service model will be adopted in the first half of 2011 designed to
standardise the processes for stipulating conventions, for assessing guarantee bodies and monitoring operations for all the
banks in the Group.
The website “UBI-Confidi Web” was created in September 2010, a platform for online dialogue
between guarantee bodies with convention agreements and the banks in the Group and for the
exchange of information. The website will be enriched with additional functions to manage credit
risk and to develop business by the end of June 2011.
A review of the product range and the rates and charges applied to credit lines granted under
conventions is currently in progress to bring them into line both with the increase in the cost of
funding and credit risk and also with the actual “value” of the guarantees acquired.
7
The “Portfolio PMI Jeremie FESR”, became operational in the first half of the year at BPB, Banco di Brescia and BPCI. It is a synthetic
securitisation performed on the basis of convention agreements with Confapi Lombarda Fidi and Confidi Province Lombarde, destined to
support investments with a high innovative content. The operation, which will be completed on 30th June 2011, involves the potential
creation of two loan portfolios for a total of 87 million euro.
45
THIRD SECTOR
The third sector has become a fundamental player in the Italian economy, having incorporated,
amongst other things, parts of the welfare system previously managed by the public sector. Non
profit organisations (NPOs) are experiencing a growing need for finance – as government funds
allocated to them are contracting and support from private individuals is diminishing due to the
economic crisis – which only the banking sector can provide.
This relationship, which offers banks an important return in terms of reputation and links with
local markets (as a multiplier of relationships and a social aggregator), has become strategic
commercially, partly in consideration of the considerable growth in the sector since the 1990s:
NPOs operating in Italy number around 250 thousand with turnover of more than 45 billion euro
and they involve total connected “private individuals” (employees, volunteers and associate
workers) estimated at four million.
Historically the UBI Banca Group holds a quota of deposits from and loans to the third sector
that is higher than for the sector nationally. This is due to its traditional presence on local
markets in which NPOs are more numerous and to relationships established over the years (NPOs
account for 3.4% of total Group deposits compared to 2% for the sector nationally; while they
account for 0,68% of Group loans compared to 0,52% for the sector8).
In order to strengthen network banks’ links with local communities and to further improve
market positioning, consultation with NPOs was conducted in 2010 to measure their
characteristics and needs. The results were used to define dedicated products and a specific
service model to distribute them.
Agreements are currently being defined with umbrella organisations in order to develop areas of
co-operation for initiatives to assist NPOs on local markets. At the same time training activity will
be commenced for network bank personnel designed to enhance relations with these
organisations.
The commercial model will be rolled out in the second quarter of 2011 in approximately 50
branches of the Provinces of Bergamo and Brescia and it will be extended to the whole country
within a few months.
AUTHORITIES
The “Authorities” segment is composed of public authorities and condominiums.
Public authorities constitute a sector currently undergoing a period of profound change. This is
partly due to the intense computerisation of public administrations designed to generate greater
efficiency in organisational and service delivery terms and also to comply with European
standards.
In this context, the Group is seeking to manage legislative and regulatory change in order to
increase its expertise and specialisations needed to support the development of public
administrations, especially for treasury services for public authorities (at the end of the year it
managed 2.166 treasury services).
PattiChiari Consortium: commitments to quality
Activities to implement and manage quality commitments promoted by the PattiChiari
Consortium continued during the year. They were adhered to by all the Group’s network banks
with the aim of improving retail customer relationships.
On the one hand quality commitments not yet introduced were rolled out according to the agreed
consortium calendar and on the other hand commitments already put in place were consolidated.
Group banks also continued with financial education programmes in schools, already actively
supported for some years.
It was decided in the second half of the year to commence a project to streamline quality
commitments to both make them clearer and easier to communicate to customers and to align
the general self-regulatory framework with changes that have since occurred in compulsory
8
Source: data from Bank of Italy accounts for September 2010.
46
regulations, in order to avoid unnecessary overlap. The dynamic nature of the project led to the
exclusion of some initial commitments from the scope of the PattiChiari initiative and to
incorporate others in uniform areas, while basically maintaining the entire contents of the
existing service9.
As a result of this optimisation process, which moreover is consistent with the general principles
underlying the project (simplicity, clarity, comparability and customer mobility), Group banks will
find it easier to inform customers of the commitments and to make better use of tools designed to
enable customers to make aware and informed decisions.
9
The perimeter of the project currently comprises eleven quality commitments (current accounts compared, basic account, average times
for closing current accounts, transferability of payment services, transferability of mortgage information, transferability of securities
dossiers, transferability of collection orders, FARO – ATM function services, home banking security, payment card security, certification
of mortgage expenses and interest charges) and two optional initiatives (list of services provided on an account, information for access to
credit for small-to-medium sized enterprises).
47
The Private Banking Market
Private Banking service of the UBI Banca Group is a specialist service available throughout the
country, provided through individual network banks by 360 “private bankers” in more than 100
dedicated units.
UBI Private Banking is the third largest private banking operator nationally in Italy with 35 billion
euro of assets under management and approximately 29.000 relationships (around 65.000
customers).
The UBI private banking service model underwent intense development in 2010 with the
expansion of advisory services in the following areas:
• the “Pro-Active Wealth Advisory Service” (a customised financial advisory service which
performs thorough assessments of the characteristics and needs of family groups, analysing
estates and proposing the best investment solutions available on the market) was further
developed with a focus on the following:
- strong synergies with UBI Pramerica SGR;
- systematic comparison with the major investment houses;
- professionalism and team commitment (over 2.000 meetings with customers and over 3.500
customised reports delivered);
- a tested and systematically verified quantitative method: launch/development of
performance attribution (analysis for each customer of the impact of strategies proposed by
the ProAWA service); automation of reports for customers on portfolio, scenario and strategy
analysis and on asset allocation proposals;
- advanced investment and support tools;
• the “Family Business Advisory Service” – designed to meet specific customer requirements for
generation turnover, family and corporate governance and asset control structures – has been
gradually consolidated by means of in-depth training programmes and the organisation of
meetings with customers;
• the launch of a new Planninng and financial consulting tool on the whole distribution network
which, on the basis of customer profile analysis and answers furnished from the MiFID
questionnaire, is used to formulate financial solutions that are highly customised to match the
customer’s requirements.
The following progress was made with the product range in 2010:
• the “UBI Pramerica asset management” range of products was broadened:
- the number of indices underlying the open, customer portfolio management products was
increased to give greater customisation of the product;
- the range of Sicav classes dedicated to the private banking market was enlarged;
• the range of banc assurance products was extended by:
- the creation, within the broad range of products, of a new capitalisation product (insurance
branch V), designed to attract new customers;
- the extension of sales of Aviva products to include Banca Popolare di Ancona (unit linked
policies in insurance branch III).
48
The corporate market
The Corporate Market has approximately 40.000 clients classified in the segment on the basis of
a minimum turnover of five million euro and therefore characterised by complex financial
behaviour patterns.
It has been divided into three sub-segments on the basis of the complexity of the financial
behaviour of the clients: Large Corporate (turnover of greater than 150 million euro), Mid
Corporate (turnover between 25 and 150 million euro) and Lower Corporate (turnover between 5
and 25 million euro). The three sub-segments are managed and supported by a network of
specialist account managers comprising a total of approximately 750 account managers and
assistants working in 65 Corporate Banking Units and 30 “Corners” and supported, for “foreign
commercial” activities, by 300 specialists operating in 35 foreign centres.
In 2010 the corporate market fully implemented the concept of an INTEGRATED PRODUCT RANGE (UBI
Corporate Advisory), by making use of the Group’s product companies and an evolved commercial
approach, which involves the following:
- integration with the product companies through the presence of a liaison officer in
the
network banks (integrated product range contact) for the more complex products (structured
finance, investment banking, leasing, factoring, advisory services for subsidised loans,
insurance brokerage), who reports directly to the Corporate Area of the Parent, with the
objective of systematically managing the commercial approach and defining a customer driven
product range;
- the Mid Corporate Advisory Service, a programme to support Mid Corporate clients, which by
processing a client’s historical data and comparing them with the performance of the sectors to
which it belongs and its main competitors, is able to highlight the client’s overall needs. The
programme has shown that the new commercial approach, which is designed to propose the
Bank as a partner at all stages in the life cycle of a business, is becoming fundamental for the
creation of value for companies themselves;
- the Large Corporate Advisory Service: an approach that is integrated with the demands of the
sub-segment, centred on the preparation of evolved commercial plans, the result of joint
contributions from a virtual team (network banks, product companies, foreign commercial
centres). The project is designed to improve the overall service in order to increase market
share. Approximately 350 detailed commercial plans were prepared on companies in the subsegment in 2010;
- the extension of customer relationship management (CRM) to include foreign commercial
services in order to support the operations of corporate and foreign commercial supply chains.
With regard to the FOREIGN COMMERCE SECTOR, the recent crisis which hit Italy found a sort of
safety valve in the increase in foreign trade: in 2010 Italian exports increased by more than 15%
compared to 2009, with more lively business with non EU countries than with those in the union,
while imports increased by 22%.
The commitment and effort concentrated in this area by the Group allowed the network banks to
increase the quantity and quality of their volumes of business with corporate clients, with positive
returns also in terms of customer satisfaction.
At the same time the focus on business with India, China, Brazil and other emerging countries
(markets with very attractive high growth rates) continued in order to identify – with the
assistance of commercial agreements and partnerships with major international operators –
business areas with high valued added connected with the world of trade finance.
The Group also continues to invest in:
initiatives designed to strengthen its image and those of its local banks: the event “U will Be
International” organised at the Kilometro Rosso venue in Bergamo was a great success. It was
the first opportunity for businesses to meet the entire foreign network of the Group
(companies, branches, representative offices);
-
49
-
-
constant monitoring of the quality of the service provided to clients by the dedicated
distribution network, combined with the search for new technical and organisational solutions
to render processes increasingly more efficient;
an increase in the professionalism of personnel achieved as a result of a significant
commitment to commercial and technical training.
Finally, with regard to the network of personnel specialising in MARKET DEVELOPMENT – Market
Developer Corporate Account Managers, who report directly to the Corporate Departments of the
network banks – 32 market developers operated in 2010, who were assigned set geographical
areas and lists of specific target clients. They contributed significantly to the diffusion of a
corporate advisory approach and to an integrated corporate product range.
Communication and marketing initiatives
In recent months UBI Banca has sought and adopted a style of advertising – which continues to
be clear, transparent and honest in its contents – that is very personal and innovative, highly
attractive and distinctive in the Italian banking world.
The advertising campaigns are characterised by the use of amiable irony in the messages and a
“sunny” graphics format which, together, act to involve the public emotionally, communicating a
positive feeling of trust and friendliness. The communication is modern, simple, close to the
everyday lives of people and more akin to life in successful sectors in industry and commerce.
The objective is not just to effectively present individual products targeted according to the case at
different customer segments, but also to acquaint everyone with the “honest banking” on which
the identity of the group and its “historical” corporate culture is based.
Communication and marketing activity was focused in 2010 on the acquisition of new customers
and of young people between the ages of 0 and 29 in particular.
CLUBINO
“Clubino”, the savings book for children aged between 0 and 12 was launched in January 2010
and met with considerable interest and appreciation by customers. The product educates children
on the subject of saving in an entertaining and involving manner with prizes, a dedicated website,
local events and special initiatives. The latter included the competition “Draw your town” which
was very popular: from more than 12.000 drawings received, a jury of experts selected the 13 best
works in terms of imagination and originality which were published in the 2010 UBI Banca
calendar. The result was an explosion of light and colours which express how children see their
towns. In addition to the publication of the drawings on the calendar, each little artist was
awarded a beautiful prize.
ENJOY
Enjoy is a prepaid, reloadable MasterCard which, because it has an IBAN code, can be used to
perform many of the transactions normally only possible with a current account. It is an
innovative product for young people aged between 18 and 29, an important target for increasing
the customer base.
The launch of the product was announced by an advertising and marketing campaign designed to
arouse as much curiosity as possible. It performed the function of drawing the attention of young
people to UBI Banca, stimulating their desire to appear, thanks to a photographic competition,
and involving them in the definition of an “ideal bank for young people” through messages loaded
onto the bulletin board of a website created for the initiative. These messages not only confirmed
the validity of the “Enjoy” product and appreciation for it, but also furnished interesting ideas for
the development of products designed for young people.
The inspiration for the advertising was taken from the period of the “flower children” and 1970s
styles, which is currently extremely popular in the world of fashion and design. The positive
values of modernity, change and above all the freedom of that historical and social period were
evoked. It is precisely the value of freedom which young people of all generations have always
asked for and demanded. It became the basic idea and rationale of the “banking freedom” which
UBI Banca wants to provide today with its new product Enjoy.
50
In order to acquaint the target with new banking methods, various initiatives were organised to
support the commercialisation of the product in co-marketing with the telephone operator
Vodafone. A loyalty programme was also launched which rewards each use of the card and
passing the word around within the “Enjoy People” community.
These activities occupied the whole of 2010, with advertising in all Group branches and intense
dedicated advertising campaigns mainly on the internet and radio, with occasions of high
visibility in universities and shopping centres in major cities10.
Customer Care
The Consultation Project
Attention to managing the qualitative aspects of customer relationships and service activities had
already led, in 2008, to the launch of the Consultation Project with the objective of measuring the
satisfaction of network bank customers by means of a customer satisfaction index for the Retail,
Corporate and Private Banking markets.
The measurement of the index is performed with the assistance of a major national market
research institute. It is measured continuously in terms of aggregates and also at the level of
network banks, market segments, local retail banking areas, branches, corporate business units
(CBU) and private banking business units (PBU), by means of approximately 150.000 telephone
interviews of a representative sample of customers each year. The customer satisfaction index has
been included among incentive scheme objectives since 2009.
The performance of the indices improved progressively for the three markets (Retail, Private
Banking and Corporate) until October 2010, when it was followed by a fall in the last two months
of the year.
In detail, in December the index for the total Retail Market increased slightly compared to the
index in 2009, again above the
Customer satisfaction indices of the network banks
benchmark comparison, which
also increased by a similar
59
58,4
amount.
58,5
58,22
57,99
58,11
The improvement for the Retail
58
Market was due mainly to the
57,5
57,73
affluent segment, while the
57,74
57,69
57
mass
market
and
small
56,17
business
segments
remained
at
56,5
56,16
56,58
the
same
level
as
the
year
56
56,52
56,09
before. The index nevertheless
55,5
remained above the relative
55
benchmark comparisons for all
Index 2009
October 2010
November 2010
December 2010
three market segments.
Retail Market
Corporate Market
Private Banking Market
The research also identified
discriminating factors for Retail
Market customers such as contact with the branch manager and the offer of new products and
services: more offers and a higher frequency of contact was associated with a higher index of
customer satisfaction.
The most significant improvement was found for the Private Banking Market, which rose even
further than the benchmark comparison rose. An analysis by asset class shows an improvement
across the board for all customers, with higher index values for those in the higher net worth
groups.
In continuity with what was already found in 2009, customers expressed a high degree of
satisfaction with account managers, with regard to both relationship aspects and professional
expertise, but they would appreciate more proposals from them.
10
Pictures are published at the beginning of this report of the main communication and marketing activities targeted at young people.
51
The Corporate Market ended the year with a slightly lower index than in 2009 as a result of the
fall that occurred in the last two months of the year and the index was still below the benchmark
comparison which also fell slightly. An analysis by segment confirmed that the degree of
satisfaction increases with company size both for the Group and for its competitors.
Some in depth surveys were conducted on specific subject areas in parallel to the measurement of
the customer satisfaction index, which allowed the Group to acquire interesting indications with
a view to improving the service.
These surveys involved the following:
‐ retail customers, holders of UBI Pramerica mutual funds and customer portfolio managements, who judged
the range of products offered by the Group to be complete and the service to be high quality, declaring
themselves fairly satisfied with the products chosen;
‐ customers holding UBI Assicurazioni non life insurance policies, who, as in 2009, expressed a degree of
satisfaction that was higher than the average for the Group and a high level of loyalty;
‐ public authority treasuries, customers of UBI Banca, who expressed a high degree of satisfaction. The
customers of these authorities appreciated the centralisation and the automation in a central office,
although they did not yet make full use of the IT tools available (the survey performed formed part of the
monitoring activities required for quality certification);
‐ the quality of “foreign services” provided by Group banks was judged by corporate and SME clients as
generally satisfactory: the index showed higher levels of growth in the value added by the service and in
direct contact with the Foreign Centre;
‐ the customers of the 316 branches involved in the “branch switching” operation, the majority of whom found
no significant differences compared to the past. Some aspects of operational functioning were subject to
complaint, but only in the period immediately following the operation, which then disappeared as operations
normalised;
‐ the customers using the QuiUBI home banking services, for whom widespread use was found together with
a medium, but increasing, index of satisfaction, higher than that of customers not using the services;
‐ the satisfaction of customers with accounts at different banks compared to those with accounts at one bank
(i.e. who have accounts with banks in the UBI Group only): retail customers with accounts in more than one
bank, with indices down compared to previous surveys, accounted for a third of the total Retail Market and
more than half of the small business segment. UBI Banca was nevertheless considered the main bank for
these customers. Customers who declared that they had accounts with one bank only had a higher
satisfaction index than those who also used other banks. The Private Banking Market, which has a higher
percentage of customers with accounts at different banks (more than half of the total), also had higher
indices of satisfaction for those with accounts at Group banks only. The Corporate Market, which consists
almost entirely of clients with accounts at more than one bank, recorded a slight reduction in the average
number of accounts held compared to 2009.
Complaints
Complaints constitute a valuable instrument for customer consultation and each one, or even
just one complaint, may contain valuable information for improving the quality of the services
provided.
This orientation led the UBI Group to broaden the means available to customers for making
complaints to include the internet channel, available on all the websites of the network banks.
52
Distribution of complaints received by the network banks in 2010 by channel of communication
Website 4,1%
Email 17,5%
Fax 6,7%
Hardcopy 71,3%
Telephone 0,4%
In 2010 a total of 4.256 complaints were received by the Group’s network banks, a reduction of
17% compared to the previous year. Complaints to report impolite or unprofessional conduct by
personnel accounted for less than 2% of the total (1,74%). With an average response time of 22
days (32 days in 2009), complaints processed during the year numbered 4.188 including 1.636
accepted (they included 1.318 resolved fully in favour of customers).
The distribution of the complaints shows that more than 50% of the local units of the network
banks (branches, private and corporate banking centres) either received no complaints (29% of
cases) or just one (27%).
Distribution of complaints received in 2010 by local unit of the network banks
1 complaint; 27%
no complaints; 29%
2 complaints; 16%
more than 2 complaints; 28%
Sixty four complaints were presented to the Financial Banking Arbitrator service, formed within
the Bank of Italy for the out-of-court settlement of disputes. In 2010 the Financial Banking
Arbitrator examined a total of 32 cases, of which 13 were resolved in favour of the customers.
Ten new complaints were presented to the Banking Ombudsman, which made eight decisions,
two of which in favour of the applicants.
Activity continued again in 2010 to inform and train the commercial personnel of all the Group’s
network banks, designed to facilitate an increasingly effective ability to consult customers and to
interpret their needs and take action on sources of even latent dissatisfaction manifested by
customers. Classroom training activity, which involved 3.200 employees, consisted of strictly
relevant courses delivered across the board and it was flanked by initiatives directly accessible
from the work station of each employee.
53
The distribution network and market
positioning
The branch network of the Group
As at 31st December 2010 the UBI Banca Group had 1.901 branches, (unchanged at the date of
this report), compared to 1.967 at the end of 2009.
The branch network of the UBI Banca Group in Italy and abroad
31.12.2010
number o f branches
UBI Banca Scpa
Banca Popolare di Bergamo Spa (1)
(3)
(4)
2
2
-
365
375
-10
362
363
-1
Banca Popolare Commercio e Industria Spa (3)
234
214
20
Banca Regionale Europea Spa (3)(4)
229
295
-66
Banca Popolare di Ancona Spa
248
256
-8
Banca Carime Spa
294
295
-1
Banca di Valle Camonica Spa
64
59
5
Banco di San Giorgio Spa
57
53
4
UBI Banca Private Investment Spa
31
36
-5
B@nca 24-7 Spa
1
1
-
IW Bank Spa
2
2
-
Centrobanca Spa
6
7
-1
Banque de Dépôts et de Gestion Sa - Switzerland
3
6
-3
UBI Banca International Sa - Luxembourg
3
3
-
TOTAL (1)(3)
1.901
1.967
-66
Total Branches in Italy (1)(3)
1.892
1.955
-63
Financial advisors
(2)
Change
Banco di Brescia Spa (2)
ATMs
(1)
31.12.2009
786
880
-94
2.470
2.533
-63
The figure as at 31st December 2010 includes a temporary mini-branch for the launch of the prepaid card
Enjoy.
The figure as at 31st December 2009 included a foreign branch which was contributed on 10th December
2010 to UBI Banca International.
The figures do not include the business units dedicated exclusively to pawn business [ten as at 31st December
2009, belonging to Banca Regionale Europea; nine (following the branch switching operation) as at 31st
December 2010, operating under the Banca Popolare Commercio e Industria brand].
The figure as at 31st December 2010 includes three foreign branches, while that as at 31st December 2009
included two foreign branches.
As already reported in the previous section “Significant events that occurred during the year
2010”, the main changes that occurred to the branch network of the Group during the year can
be summarised as follows:
− intragroup transfers which in January involved 316 branches, through the contribution of
operations, performed to increase the focus of the network banks on their respective
geographical markets. At the same time, 37 Group branches, both existing branches and those
resulting from transfers, were transformed into mini-branches;
− direct action to streamline market presence, in implementation of the trade union agreement of
20th May 2010, which resulted in the closure in June of 81 business units and the
transformation of 101 branches into mini-branches;
− the continuation of the programme to open new branches with the start-up of 17 units and the
transformation of six units previously providing treasury services into mini-branches;
54
Action taken in 2010 on the branch network of the Group in Italy and abroad
Opening of:
Net effect of branch
switches
Transformation of
treasury branches
mini-branches into mini-branches
branches
Transformation of
branches into minibranches
Closures/
transfers
UBI Banca Scpa
-
-
-
-
-
1
Banca Popolare di Bergamo Spa
7
5
3
1
26
17
Banco di Brescia Spa
9
-
-
-
10
2
47
-
-
-
27
21
Banca Regionale Europea Spa
-68
4
-
-
2
15
-
1
1
1
11
11
65
Banca Popolare Commercio e Industria Spa
Banca Carime Spa
-
1
-
-
2
-
-
1
4
-
-
5
-
-
-
1
6
-
1
-
-
6
-
Centrobanca Spa
-
-
-
-
1
-
Banque de Dépôts et de Gestion Sa
-
-
-
-
3
-
TOTAL
-
12
5
6
89
138
A summary is given below of the changes (other than branch switches) that occurred in 2010 and
until the date of this report, which affected the Group presence in Italy, while details of the
foreign network are given in a separate sub-section:
•
BANCA POPOLARE DI BERGAMO opened five branches at Muggiò and Bernareggio (Monza
Brianza), Bagnatica (Bergamo), in Rome in Largo di Vigna Stelluti and at Velletri (Rome) and
four mini-branches (including one former treasury branch) at Bergamo at Kilometrorosso and
in Viale Vittorio Emanuele II (a temporary mini-branch closed in March 2011), at Songavazzo
and Scanzorosciate, Tribulina district (Bergamo). On the other hand it closed a total of 26
units1;
•
BANCO DI BRESCIA closed nine branches2 in June 2010 and
Brescia in March 2011;
•
BANCA POPOLARE COMMERCIO E INDUSTRIA closed 27 units3;
•
BANCA REGIONALE EUROPEA
•
BANCA POPOLARE DI ANCONA opened a new branch at Filottrano (Ancona) and two minibranches (including one former treasury branch) at Grazzanise (Caserta) at the air and naval
base and at Gualdo Cattaneo (Perugia), while it closed 11 units4. In January 2011 a new minibranch also started to operate at the air and naval base at Frosinone;
•
BANCA CARIME
1
2
3
4
opened a new mini-branch at
opened two branches at Asti in Corso Savona and at Ivrea (Turin)
changing its presence in the capital of Piedmont by opening a branch in Corso Francia, while it
closed branches in Via Gobetti and Piazza Gran Madre di Dio. Finally, in February and March
2011 a new branch became operational at Ovada (Alessandria) along with two new minibranches at Casale Monferrato and Tortona at the local health board premises, while two minibranches closed, again at Casale Monferrato in Via Hugues and at Rivoli (Turin) in Piazza
Martiri della Libertà;
opened a second branch at Monopoli (Bari), while it closed branches at Ceglie
Messapica (Brindisi) and at Carmiano (Lecce). In March 2011, the mini-branch at Vibo
Valentia in Corso Vittorio Emanuele III was closed;
Varese in Via Luini, Via Veratti, Via Griffi and at 60 Via Sanvito Silvestro; Bergamo in Via Suardi, at 2 Viale Vittorio Emanuele II and at 3
Piazza Pontida; Laveno Mombello (Varese) at 81 and 89 Via Labiena; Venegono Superiore (Varese) in Via Busti; Uboldo (Varese) in Viale
Italia; Busto Arsizio (Varese) in Corso Europe; Cardano al Campo (Varese) in Via Gramsci; Cassano Magnago (Varese) at 6 Via Aldo Moro;
Gavirate (Varese) in Via IV November; Lonate Pozzolo (Varese) in Via Cavour; Sesto Calende (Varese) in Piazza Abba; Tradate (Varese) in
Corso Bernacchi; Induno Olona (Varese) at 28 Via Porro; Lavena Ponte Tresa (Varese); Como in Viale Giulio Cesare; Cermenate (Como) at
29/31 Via Matteotti; Cantù (Como) in Largo Adua; Lecco in Via Resinelli; Seregno (Monza Brianza) in Corso Matteotti; Vimercate (Monza
Brianza) in Via Garibaldi.
Mantua in Via Calvi and Piazza de Gasperi; Cremona in Via Mantova and in Via Giordano; Caldiero (Vicenza) in Via Strà; Milan in Via
Negri; Castiglione delle Stiviere (Mantova) at 36 Via Cavour; Brescia at 3 Piazza della Loggia; Piansano (Viterbo).
Milan in Via Gentilino, at 97 Via Padova, Via Rosellini, Via Sanzio, Via Secchi, at 3 Via Solari, Viale Corsica, Via Pindemonte, Viale
Romagna, Via Tucidide, Corso Cristoforo Colombo, Largo d’Ancona; Parma at 32 Via della Repubblica and Via Tanara; Piacenza in
Piazzale Velleia and Via Sopramuro; Melzo (Milan) in Piazza Repubblica; Sesto San Giovanni (Milan) at 40 Viale Casiraghi; Abbiategrasso
(Milan) in Piazza Golgi; Rozzano (Milan) in Via Torino; Cinisello Balsamo (Milan) in Via Libertà; Trezzano sul Naviglio (Milan) in Via
Leonardo da Vinci; Voghera (Pavia) in Via XX September; Vigevano (Pavia) in Piazza Volta; Casteggio (Pavia) in Via Giulietti; Mortara
(Pavia) in Piazza Silvabella; Carpi (Modena) in Via Peruzzi.
Marcianise (Caserta) on the Sannitica state road; Ancona in Piazza Rosselli; Fabriano (Ancona) in Via Martiri della Libertà; Senigallia
(Ancona) at the “Il Maestrale” shopping centre; Fano (Pesaro Urbino) in Via Pisacane; Porto Recanati (Macerata); Rimini in Via
Gambalunga; Misano Adriatico (Rimini); Pescara at 263 Via Marconi; Rome in Via Ortolani; Guidonia Montecelio (Rome) on the Tiburtina
state road at Setteville.
55
opened five new mini-branches (including four former treasury
branches) at Sonico, Niardo and Darfo Boario Terme, Corna district (Brescia), Villa di Tirano
(Sondrio) and Menaggio (Como);
•
BANCA DI VALLE CAMONICA
•
BANCO DI SAN GIORGIO
•
UBI BANCA PRIVATE INVESTMENT opened a second branch in Florence, while it closed six units
at Bologna, Foggia, Frosinone, Pesaro, Rome in Via Baldovinetti and Varese;
•
CENTROBANCA closed its branch in Bari.
opened a mini-branch at Lerici (La Spezia) and, in March 2011, a minibranch in Genoa in Via alla Porta degli Archi;
A full list of all Group branches in Italy and abroad is given in the final pages of this publication.
After the end of the year the UBI Banca Group rolled out an evolved distribution model (see the
previous section “Significant events that occurred during the year”) with the introduction of new
types of “head branch” and “group branch”. The action involved a total of 552 branches in four
network banks5.
The Italian distribution network of the Group is completed by units dedicated specifically to
private banking customers (private banking units and the associated “corners”) and to corporate
customers (corporate banking units and the associated “corners”).
P rivate banking and corporate units
The summary given in the
table “Private banking and
corporate units” shows that
there
were
94
corporate
banking units and 107 private
banking units operating as at
31st December 2010. As can be
seen from the table, these
units were also subject to
reorganisation
and
rationalisation as part of the
branch optimisation project
performed in January 2010,
with a consequent reduction
compared to the end of 2009
(-18 private banking facilities
and -25 corporate facilities)6.
Private Banking Units
Corporate Banking Units
6
31.12.2009
reclassified
after switch
Change
31.12.2009
107
104
3
122
Private Banking Units (PBU)
Banco di Brescia
Banca Carime
UBI Banca Private Investment
Private corners
Banco di Brescia
Banca Carime
Units (CBU)
New action was taken to Corporate Banking
restructure these facilities in
Banco di Brescia
the first few weeks of 2011,
performed in parallel with the
Banca Carime
changes that affected the
distribution models of some
Corporate corners
network banks. In detail:
- with
regard
to
private
Banco di Brescia
banking facilities, Banco di
Brescia
streamlined
its
Banca Carime
presence in Milan and
Brescia unifying the four
units previously operating in
the two Lombard cities into just two PBUs;
5
31.12.2010
58
14
12
8
6
3
5
1
3
6
49
18
3
5
1
11
11
94
58
14
12
8
6
3
5
1
3
6
46
15
3
5
1
10
11
1
95
66
18
15
9
8
5
6
2
3
28
1
8
4
3
3
7
1
1
3
3
1
-1
60
13
9
13
7
3
5
1
3
6
62
18
7
12
3
10
11
1
-1
-2
1
-
120
71
17
18
11
9
5
6
2
3
49
5
13
11
9
2
7
1
1
-1
66
18
15
9
8
5
6
2
3
29
1
8
6
3
2
7
1
1
Banco di Brescia, Banca Carime, Banca di Valle Camonica and Banca Regionale Europea.
Additional changes occurring in 2010 were as follows:
− in the private banking sector, BPB opened three new corners at Arcore, Cesano Maderno, Binzago district (Monza Brianza) and Erba
(Como); Banco di San Giorgio closed its only corner at Chiavari, while Banca Carime opened a corner at Vibo Valentia, which then
ceased operations in March 2011 when its mini-branch host closed;
− in the corporate banking sector, Banca Carime opened a new corner at Lamezia Terme (Catanzaro), while Banca Popolare Commercio e
Industria closed corners at Sassuolo (Modena) and Reggio Emilia.
56
-
as concerns corporate banking facilities on the other hand, again Banco di Brescia unified two
units operating previously in Milan into one single CBU and it transformed its Cremona CBU
into a corner, while opening two new corners in Milan at Lambrate and Corsico (Milan). Banco
di San Giorgio, on the other hand, closed a corner at Imperia, while Banca Carime transformed
a corner at Lecce into a CBU and opened a new corner at Martina Franca (Taranto).
Following the action described, 104 private banking facilities (56 PBUs and 48 corners) and 95
corporate banking facilities (65 CBUs and 30 corners) were in operation at the date of this Report.
The distribution network of the Group was also supported by a network of 786 financial advisors
reporting to UBI Banca Private Investment, consisting of 419 operating in the central and
northern division and 367 in the central and southern division. The decrease compared to 880
financial advisors at the end of 2009 reflects the streamlining process started in the second half
of 2008 designed to increase the average per capita portfolio of financial advisors7 and to improve
the quality of the network.
On the basis of Assoreti (national association of stock brokerage companies) data published in December, UBI
Banca Private Investment was again in 2010 among the first ten operators nationally in terms of number of
advisors, assets and net inflows. The latter were driven by assets under management, two thirds of which
consisting of mutual funds and Sicavs.
The international presence
At the date of this report the international presence of the UBI Banca Group was structured as
follows:
•
•
•
•
•
•
7
two foreign banks, Banque de Dépôts et de Gestion Sa (with branches in Switzerland at
Lausanne, Geneva and Lugano and a fund management company in Singapore) and UBI
Banca International Sa (with headquarters in Luxembourg, branches in Munich and Madrid
and a trust company in Luxembourg);
three foreign branches of Banca Regionale Europea in France (at Nice, Menton and Antibes);
representative offices in Sao Paolo in Brazil, Mumbai, Shanghai, Hong Kong and Moscow;
equity investments (mainly controlling interests) in four foreign companies: in addition to UBI
Trustee Sa Luxembourg and BDG Singapore Private Ltd. also in Lombarda China Fund
Management Co. and UBI Management Co. Sa;
one Branch of UBI Factor Spa in Krakow in Poland;
37 commercial co-operation agreements with foreign banks (covering more than 50 countries)
two “Trade Facilitation” agreements with the European Bank for Reconstruction and
Development (EBRD) and with the International Financial Corporation (IFC) and a “product
partnership” in the Middle East and in Asia with Standard Chartered Bank to guarantee
effective assistance on all the principal international markets for corporate clients.
The average size of financial advisors’ portfolios increased from approximately five to six million euro over twelve months
57
Remote channels
The Group’s market presence is strengthened by functions for the consultation and management
of bank accounts provided for network bank customers by multi-channel services. An innovative
new platform on which all direct channels available to private individuals and businesses
converge (internet and mobile banking, the contact centre, interbank corporate banking, ATMs
and POS terminals) ensures the constant enhancement and customisation of services based on
customer profiles and the channel used.
Channels available to private individual customers include:
• the QUI UBI internet banking service for information on banking positions (current accounts,
securities deposits, payment cards, mortgages, insurance policies, etc.) and to perform
numerous payment and investment transactions autonomously, with maximum security,
speed and savings for those gaining access from a PC or a smart cell phone. The “business”
version for small business clients provides additional specific functions for single bank
management of a company, which include the payment of single or multiple bills of exchange
and the management of commercial portfolios;
• the QUI UBI Contact Centre service, contactable on a toll free number even outside normal
branch opening times, which in addition to normal telephone services (information, order
collection and payment instructions) comprises both actual and potential customer support
and consultation activity together with advertising and marketing activity;
• a network consisting of approximately 2.500 ATMs, including over 300 equipped for paying in
banknotes and cheques in addition to normal consultation, withdrawal and payment
functions.
Customers of the QUI UBI Internet Banking service grew in 2010 by more than 23%, exceeding
643 thousand at the end of the year (approximately 520 thousand in December 2009). The growth
of the QUI UBI Affari service was particularly encouraging having reached more than 65 thousand
users at the end of the year (+84% compared to twelve months before).
The mobile banking service recorded 15 thousand accesses per month on the website optimised
for cell phone navigation, while in December, the first month of availability, over ten thousand
downloads of applications for iPhones and Androids were recorded.
The speed and increasing security of these channels has increased customer satisfaction as
confirmed by the increase in their use:
- the number of payment and telephone recharge transactions rose to around 4,5 million, an
increase of 45%;
- more than half of the trading in securities on regulated markets is now regularly performed
through direct channels;
- the percentage of payments performed using evolved ATMs, accounting for 15% in 2010, also
increased, although by a limited amount.
These results were also assisted by numerous improvements made during the year, as follows:
•
•
•
•
the internet banking platform for private individual and small business customers was
improved with new consultation functions (consultation of direct debit instructions, amount of
total securities deposits, capital gains) and instruction functions (payment of multiple bills of
exchange, revocation of hardcopy advice of collection orders, email address certification, credit
transfers for building renovation and energy savings, customisation of menu preferences and
fast transactions);
the rollout of the free information service entitled “QUI UBI Light” designed to help customers
uneasy with the internet to use this channel;
the development of a new multichannel “demo” which shows customers the main functions
available on direct channels by means of illustrative videos and interactive simulations;
the launch of a mobile application for navigation using iPhones and Android smartphones in
addition to that on the optimised site already available for approximately two thousand models
of cell phones;
58
•
•
•
the adoption of a single infrastructure for the public websites of the network banks based on
the model adopted for the commercial website ubibanca.com;
the launch of a prize competition “Qui fai. Qui hai. Qui UBI” to incentivise the electronic mail
receipt service entitled Le mie contabili (my accounts)8;
in the first half, the installation was also completed of 30 kiosks, self service machines,
equipped with touch screen technology which provide consultation and instruction functions
by means of Bancomat debit cards that are very simple and intuitive to navigate.
Action to enhance internet banking products is also moving forward in the current year with the
implementation of new functions to further improve customer access to information by means of
self service procedures and broader technological support in the use of banking services9.
Services for businesses allow companies to manage all their banking and interbank transactions,
both single and multi-bank. in an efficient and integrated manner. They also allow companies to
configure the connection for use by single companies or groups of companies, to provide
economic and organisational benefits in the management of cash flows with banks customers and
suppliers.
In the fourth quarter of 2010 the migration onto the new interbank corporate banking platform
was concluded, which allowed the range of services offered to be redefined on the basis of the real
needs of the end users. Some small economic operator (SEO) customers were therefore moved to
the QUI UBI Affari Service, more appropriate to the requirements of these counterparties, while
the commercial range of products and services for the corporate and small business segments
was focused on the QUI UBI Businesses Service, the Group’s multi-bank, interbank corporate
banking product.
Consequently at the end of December the UBI Banca Group had over 146 thousand companies
connected to the interbank corporate banking channel, which confirmed the growth in the
number of payment and receipt instructions communicated on electronic channels.
Cards
At the end of 2010 total credit cards issued by B@nca 24-7 and by Cartasì numbered 1.020.898,
an increase of 6% compared to 963.351 cards in December 2009 and recovering strongly
compared to June (+17%), a result assisted by marketing initiatives10.
The range currently offered by the UBI Group is differentiated by type of user:
− private individual customers can choose between flexible cards (with repayment either of the
balance or in instalments) and revolving cards of different varieties according to the market
(Retail or Private Banking);
− companies, on the other hand, are offered business and corporate cards which vary according
to the credit limit and the services.
In order to satisfy the different needs of customer segments more fully in terms of functions and
additional bundled services, a series of actions were defined to streamline the Libra range of
credit cards issued by B@nca 24-7 and distributed by the network banks of Group. More
specifically action was taken to diversify the type on the basis of the target customers, with
consequent differentiation in terms of maximum credit limits and charges, the latter in proportion
to the services linked to the card.
In detail, in July:
8
9
10
The number of customers who agreed to forgo hardcopy correspondence in 2010 practically doubled to 200 thousand. At the same time
the number of current and deposit accounts linked to this service (305 thousand as at December 2010) increased significantly.
Initiatives carried forward in the first quarter of 2011 include: the launch of the prize competition entitled “Formula UBI”, reserved to
holders of the Libra card, which can be managed on a multi-channel basis (branch, internet, contact centre, SMS); the release of new
instruction functions for QUI UBI and QUI UBI Affari (e.g. donations to non profit organisations and POS terminal statements); the
creation of a mobile application for Blackberry and Nokia.
The “Family Range” offer – which allows four payment cards to be purchased (a Libramat debit card, a Libra Classic credit card, an
additional or family Libra Classic credit card and a SEMPRE prepaid card) offered in a single package at a total cost of 24 euro – was
flanked in July by the prize competition Il cielo in una carta (heaven in a card) targeted at all those who take out a payment card from
among a set range during the period when magnetic band cards are replaced with microchip cards.
59
− marketing of the Libra Gold Superior card was launched, a new “premium” charge card linked
to the international MasterCard association, available for the Retail and Private Banking
segments in both a principal and a family version;
− “Plus” versions of the Libra Classic and Libra Extra cards were introduced;
− the Libra Gold card was repositioned on the basis of the maximum credit limits and the
annual charge. Libra Gold, like the new Libra Gold Superior, has therefore become a
“premium” product which provides additional packages and services of certain interest to
customers.
All the new types of card incorporate highly specialised insurance packages that are distinctive on
the Italian market, provided in co-operation with Chartis Insurance together with the normal
insurance policies provided by UBI Assicurazioni. The “rebate program” was also extended to the
Gold and Gold Superior cards. This mechanism, already provided for Libra Extra and Kalìa cards,
eliminates the annual charge if spending in the year before exceeds a set amount11.
Prepaid cards increased by 30% over twelve months to 175.942 (135.413 at the end of 2009), as a
result of the success of “Enjoy”, the new reloadable evolved card launched in April which
incorporates the services of a current account12.
The Enjoy card, which achieved immediate popularity with 45 thousand cards issued in 2010,
won the “MF Innovation Award” for services and prepaid cards13.
The launch of this new prepaid card was effectively supported by the advertising campaigns
Libertà di comunicare (Freedom to communicate) and Promozione Natale 2010 (2010 Christmas
promotion), both designed to acquire new customers. It was also assisted by the possibility
introduced in December to book the card online and then collect it from branches as part of the
“Remote selling project” for the development of internet sales of banking products14.
Finally, as concerns debit cards (Bancomat-Pagobancomat), at the end of 2010 these came to
number 1.900.000, an annual increase of over 25%.
The trend was assisted by the marketing in the second half of the new Libramat card, a debit card
equipped with a microchip which responds to the new general SEPA recommendations.
The distinctive feature of this new card is the ability to make withdrawals and payments subject
to online control of current account balances, both in Italy and abroad (termed “OLI”, On Line to
Issuer). It is also possible to set further limits (termed “card” limits) without online controls of
current account balances.
In July the Group commenced the progressive replacement of the current multifunction debit and
credit cards equipped with magnetic bands only with new chip cards. This process, which should
be complete by the end of the first half of 2011, involves over a million and a half cards.
The Group also has more than 61.220 POS terminals installed in retail outlets. In 2010, Banca
Popolare Commercio e Industria participated in a pilot initiative to install POS terminals with
contactless technology in the Milan area which allow payments of small amounts to be accepted,
termed micro-payments, swiftly and securely, where the transaction is performed in just a few
seconds, without cardholders losing possession of their payment cards. The contactless
technologies installed are PayWave by Visa and PayPass by MasterCard.
11
12
13
14
“Formula UBI” was launched in February 2011, a prize competition designed to increase customer loyalty by the extraction of prizes for
holders (both new and existing customers) of at least one Libra card linked to the MasterCard association.
These included the following; credit transfers in Italy and in the Sepa Area; payment of wages directly into the card account; direct debit
of utility bills; the definition, from time to time, of the maximum balance that can be spent by telephone or internet banking (box
service); the possibility to make micro-payments using innovative new contactless technology(MasterCard, PayPass).
The “Milano Finanza” newspaper awards, made in co-operation with Accenture, are among the most important made to companies in
the banking, financial and communication industries. The Innovation Award in particular is made to financial products and services
which respond best to market demands.
Additional versions of the Enjoy card were launched in March 2011 with the common feature that they can be customised by customers:
Enjoy standard, with indication of the first and last name of the holder, Enjoy Gallery Card, with customisable graphics; Enjoy Brand
Card, the result of co-branding initiatives with institutions and companies made-to-measure to meet the requirements of the brand
partner.
60
The positioning of the Group
The table summarises the positioning of the
UBI Group in terms of branches as at 30th
September 2010, on the basis of the latest
available Bank of Italy data.
Compared to the position at the end of 2009,
market share has fallen in some of the
Lombard provinces affected by geographical
streamlining initiatives agreed under the
trade union agreement of 20th May 2010.
With account taken of recently formed
provinces15, at the end of September the
Group had a market share equal to or greater
than 10% in 19 Italian provinces, as well as
an important presence in Milan (9%) and in
Rome (4%).
UBI Banca Group: market shares
30.9.2010
Branches
North Italy
6,4%
6,6%
Lombardy
Prov. of Bergamo
Prov. of Brescia
Prov. of Como
Prov. of Lecco
Prov. of Sondrio
Prov. of Mantua
Prov. of Milan
Prov. of Monza Brianza
Prov. of Pavia
Prov. of Varese
12,9%
20,9%
22,8%
6,1%
5,4%
8,1%
5,7%
9,1%
8,5%
15,5%
23,7%
13,4%
20,8%
22,4%
6,7%
5,9%
7,1%
6,5%
9,6%
16,4%
26,5%
Piedmont
Prov. of Alessandria
Prov. of Cuneo
Prov. of Novara
8,4%
11,2%
24,5%
5,1%
8,3%
11,0%
24,6%
5,0%
Liguria
Prov. of Genoa
Prov. of Imperia
Prov. of Savona
Prov. of La Spezia
6,0%
5,0%
5,8%
5,9%
10,3%
6,0%
4,9%
5,7%
5,9%
10,9%
Central Italy
3,6%
3,7%
Marches
Prov. of Ancona
Prov. of Macerata
Prov. of Ascoli Piceno
Prov. of Fermo
Prov. of Pesaro-Urb ino
8,7%
10,5%
9,5%
3,6%
10,6%
8,1%
9,0%
11,1%
9,8%
6,4%
8,2%
Latium
Prov. of Viterb o
Prov. of Rome
4,3%
14,9%
4,0%
4,4%
15,2%
4,1%
South Italy
8,3%
8,3%
6,1%
8,6%
8,1%
5,5%
6,1%
8,6%
8,0%
5,4%
Calabria
Prov. of Catanzaro
Prov. of Cosenza
Prov. of Crotone
Prov. of Reggio Calab ria
Prov. of Vib o Valentia
22,2%
14,2%
25,7%
18,9%
22,2%
28,2%
21,7%
13,9%
25,6%
18,4%
21,4%
26,8%
Basilicata
Prov. of Matera
Prov. of Potenza
14,5%
15,7%
13,9%
14,5%
15,5%
13,9%
Apulia
Prov. of Brindisi
Prov. of Bari
Prov. of Barletta-Andria-Trani
Prov. of Taranto
8,1%
11,6%
10,1%
6,3%
8,3%
8,2%
12,3%
9,2%
8,3%
5,6%
5,7%
Campania
Prov. of Caserta
Prov. of Salerno
Prov. of Naples
Total Italy
15
31.12.2009
The Bank of Italy has provided market share data from June 2010 for the new provinces of Monza Brianza, Fermo and Barletta-AndriaTrani, formed in 2009.
61
Human resources
Changes in the composition of Group Personnel
Employees actually in service
Number
Banca Carime Spa
UBI Banca Scpa
Centrobanca Spa
IW Bank Spa*
B@nca 24-7 Spa
UBI Banca International Sa
Employees on the payroll
31.12.2010
31.12.2009
Changes
31.12.2010
31.12.2009
Changes
A
B
A-B
C
D
C-D
3.761
2.632
2.221
1.756
1.715
1.552
1.367
417
346
325
291
227
167
110
98
3.606
2.624
2.211
1.965
1.692
1.958
1.318
373
349
351
281
204
174
124
96
155
8
10
-209
23
-406
49
44
-3
-26
10
23
-7
-14
2
3.808
2.625
2.363
1.952
1.795
1.585
2.171
418
346
316
312
172
163
107
92
3.664
2.643
2.395
1.946
1.805
2.011
2.204
369
353
337
284
135
171
124
91
144
-18
-32
6
-10
-426
-33
49
-7
-21
28
37
-8
-17
1
TOTAL FOR BANKS
UBI Sistemi e Servizi SCpA
UBI Leasing Spa
UBI Factor Spa
UBI Pramerica SGR Spa**
Prestitalia Spa
UBI Insurance Broker Srl
UBI Fiduciaria Spa
Silf Spa
BPB Immobiliare Srl
IW Lux Sàrl
UBI Gestioni Fiduciarie Sim Spa
Gestioni Lombarda (Suisse) Sa
Centrobanca Sviluppo Impresa SGR Spa
Coralis Rent Srl
UBI Trustee Sa
UBI Management Company Sa
S.B.I.M. Spa
Twice Sim Spa*
Capitalgest Alternative Investments SGR Spa**
UBI Pramerica Alternative Investments SGR Spa**
CB Invest Spa
16.985
1.860
242
153
142
105
40
23
14
9
7
7
6
6
6
4
2
1
-
-341
22
16
8
14
1
2
-2
-12
-1
-6
-1
-2
1
4
-1
-44
-10
-2
-1
18.225
665
250
145
122
102
36
17
25
4
8
4
5
2
4
2
-
-
17.326
1.838
226
145
128
107
38
25
26
10
13
8
8
6
5
3
1
44
10
2
1
-
18.532
657
245
143
117
107
36
18
28
5
10
4
8
2
3
44
1
5
3
-307
8
5
2
5
-5
-1
-3
-1
-2
-3
4
-1
-44
-1
-5
-3
TOTAL
19.612
19.970
-358
19.616
19.968
-352
87
373
-286
87
373
-286
19.699
20.343
-644
17
14
3
19.716
20.357
-641
13
19.716
16
20.357
-3
-641
Workers on personnel leasing contracts
TOTAL PERSONNEL
On secondment outside the Group
- out
- in
TOTAL WORKFORCE
∗
**
-
-
The position of IWBank as at 31st December 2010 also includes the personnel of Twice Sim, merged on 1st November 2010.
The position of UBI Pramerica SGR Spa as at 31st December 2010 also includes the personnel of Capitalgest Alternative Investments SGR Spa and UBI
Pramerica Alternative Investments SGR Spa merged with effect from 1st July 2010.
The table above gives details for each company of the actual distribution of ordinary employees (workers on permanent and temporary
contracts and on apprenticeship contracts) within the Group as at 31st December 2010, adjusted to take account of secondments to and from
other entities within or external to the Group (column A) compared with the position at the end of 2009 (column B) restated on a consistent
basis. Column C, on the other hand, gives details for each company of the number of employees on the payroll as at 31st December 2010
compared with the end of 2009 restated on a consistent basis (column D).
The position as at 31st December 2009 was restated as follows:
y the personnel of UBI Banca was reduced by 50 employees working on depositary banking operations disposed of on 31st May 2010;
y the personnel of Banca Carime was increased by one, reinstated in 2010.
62
At the end of 2010 the total personnel of the UBI Banca Group numbered 19.699 compared to
20.343 in December 20091, a decrease over twelve months of 644. This change reflects, on the
one hand, less recourse to agency leasing contracts by network banks and Group member
companies and, on the other, a reduction in the numbers of employees actually in service, on
temporary and on permanent contracts, due to personnel turnover with recruitment and persons
leaving and to redundancy schemes.
The synergies involved primarily the network banks (-612 consisting of 378 employees and 234
on agency leasing contracts), mainly in relation to two batches leaving under incentive schemes
under the agreement of 20th May 2010 (which involved a total of 500 personnel, including 436 in
the network banks), but also as a result of redundancy initiatives performed in the distribution
network.
Furthermore, the changes in personnel numbers at the level of individual network banks are attributable to the
branch “switches” performed in January as part of the branch network optimisation plan, which led to
specialisation of the banks by geographical area.
The remaining personnel working in other banks and companies in the Group also recorded a
decrease in personnel (a total of -32), which nevertheless included some units with growth in
personnel consistent with the specific organisational and market contexts in which they operate.
The table gives details of changes in the type
of employee contract, with a total decrease
in numbers over twelve months of 352, the
result of 1.056 personnel leaving – 153 due
to use of the “solidarity fund”, 413 for
retirement, (392 on incentive schemes) and
198 for end of contract – and 704 new
appointments, as follows:
- 293 on permanent contracts (including
part of the 550 temporary contract
conversions pursuant to the agreement of
20th May 20102),
- 400 on temporary contracts and
- 11 on apprenticeship contracts.
Employees on the payroll
31.12.2010
Number
Total employees
of which: permanent
Change
19.616
19.968
19.420
19.441
-21
171
498
-327
25
29
-4
on temporary contracts
apprentices (*)
(*)
31.12.2009
-352
Contract regulated by Legislative Decree No. 276/2003 (Biagi Law) for young people
between the ages of 18 and 29, by which they acquire a qualification through training at
work which provides them with specific occupational skills. The duration varies from a
minimum of 18 months to a maximum of 48 months.
In the fourth quarter of 2010, the contracts of 13 employees were converted from
temporary to permanent contracts.
Intragroup mobility involved 641 personnel consisting of 505 on secondment and 136 leaving and
being re-appointed in a new Group member company. This mobility was attributable mainly to
organisational measures taken in connection with processes to reallocate personnel as a
consequence of initiatives to increase efficiency performed in implementation of the trade union
agreement of 20th May 2010 and in connection with merger operations.
The average age of Group employees as at 31st December 2011 was 43 years and five months
compared to 43 years and three months at the end of 2009, while the average length of service
was 16 years and nine months compared to 16 years and seven months a year before.
The percentage of part time
employees was 7,3% (7% at the
end of 2009). Female personnel
accounted for 36,7% of the total,
compared to 35,5% in the year
before.
Composition of personnel in Group Banks by rank
31.12.2010
Number
Senior managers
Middle managers 3rd and 4th level
Middle managers 1st and 2nd level
3rd Professional Area (office staff)
%
31.12.2009
%
411
2,3%
465
2,5%
3.209
17,6%
3.291
17,8%
3.877
21,3%
3.961
21,4%
10.488
57,5%
10.540
56,8%
240
1,3%
275
1,5%
As can be seen from the table 1st and 2nd Professional Area (other personnel)
TOTAL FOR BANKS
18.225
100,0%
18.532
100,0%
there
were
no
significant
changes in the composition of personnel by rank. The reduction shown in both absolute and
1
2
The figure published in the consolidated financial statements as at and for the year ended 31st December 2009 (20.285) also included 50
personnel working in the depository operations business unit disposed of by UBI Banca in May 2010; on the other hand it did not yet
include Prestitalia (107 employees), included in the consolidation with effect from September 2010, and also one employee of Banca
Carime reinstated during the year.
The remaining conversions to permanent contracts do not appear as new appointments because they were performed with changes in the
contract with no intervening interruption.
63
percentage terms in the senior manager category reflects the redundancy incentive scheme
implemented in 2010.
Further details in trends and in the composition of Group personnel are given in the 2010 Social
Report, which may be consulted.
Developments
programme
in
redundancy
plans
and
the
employment
As concerns the redundancy plan implemented by the UBI Banca Group on the basis of the trade
union agreement of 14th August 2007, this resulted in 36 personnel leaving in 2010 which, added
to the 864 that had already left since 31st December 2009, brought the total number of personnel
leaving at the end of 2010 to 900. This incentive scheme will end in 2011 with 60 employees
leaving after a postponement in relation to new measures introduced by Decree Law No. 78/2010
(converted into Law No. 122/2010).
As concerns the 500 redundancies planned under the trade union agreement of 20th May 2010,
321 were implemented effective from 1st July and the remainder took effect subsequent to that
date.
Personnel leaving through use of the ‘credit solidarity fund’ numbered 116, while in all other
cases personnel left due to retirement.
As concerns the employment programme, the 425 conversions from temporary to permanent
contracts planned under the agreement of 14th August 2007 had already been completed in 2009.
However, the following was performed in 2010:
- 170 temporary to permanent contract conversions pursuant to the trade union agreement of
23rd January 2010 concerning “the branch switching operation”;
- 550 contract conversions under the agreement of 20th May 2010, all completed in the last
quarter of the year, the majority of which with the transformation performed with no
interruption in service.
The children of workers who had applied for early redundancy were considered in the selection of candidates
in compliance with the trade union agreement of August 2007 and subsequently affirmed in that of May 2010.
Management policies and instruments
The difficult economic context in recent years, characterised by increasing demands from
customers and strong pressure on profits, required action to be taken in a number of areas. In
this situation the UBI Group considered it even more important to focus on human capital as a
key factor in the success of the Group.
With a view to enhancing and encouraging the growth of its human resources, the UBI Group
uses operational and development tools established and periodically updated over the years,
which provide it with a valuable database on the occupational history of personnel.
The system of roles, skill measurement and performance assessment are used to manage almost
all personnel and the results represent the basis for the definition of career paths, the
identification of training requirements and how economic recognition is assigned.
“Managerial appraisal” methods (assessment through structured interviews) are used to enhance
and develop key personnel with the objective of verifying – and if necessary increasing –
consistency between market challenges and the skills of senior management.
Particular attention is paid to the management of talent in the Group, in order to ensure
continuity in management and appropriate action to guarantee personnel retention. In this
64
respect the measurement of potential was continued, in order to facilitate the ability to fill future
key positions in the Group, by giving priority to internal personnel, and was extended in the
current year to include mass market account managers, professionals in the product companies
and function managers at UBI Banca and UBI Sistemi e Servizi, with a total of 262 personnel
involved.
Finally the release of ERM (Employee Relationship Management) was completed during the year
at UBI Banca, UBI Sistemi e Servizi and in the network banks. It is an innovative tool designed to
integrate and enhance the management and development of human resources. ERM not only acts
as a pool for all information on employees, but also assigns a portfolio of resources to each
manager, providing them with valid support in directing and managing their actions, in order to
ensure a proactive, swift and standard approach in behaviour adopted throughout the Group. All
this allows an increasingly sharper focus on individuals, thereby placing human resources at the
centre of management activity.
Remuneration and incentive policies
The pursuit of the objectives of sustainable growth and the creation of value, defined in the
document “Risk appetite and the creation of value in the UBI Banca Group: details and
governance” also apply in the governance of remuneration and incentive schemes, where the
objective is to encourage, by means of planning over a number of years and through sound and
prudent management, the maintenance of a level of capitalisation that is adequate for the risks
assumed.
In view of this, on 10th March 2010 the Supervisory Board of UBI Banca, having consulted the
Remuneration Committee, approved the “Remuneration and incentive policies” of the UBI Group
(“2010 Policy”), formulated on the basis of EU and national legislation, with the involvement of the
corporate functions responsible for risk management, strategic planning and compliance and also
with the support of a major external consulting firm.
The basic principles on which the incentive and remuneration system for 2010 was based are as
follows:
- identification of conditions for implementation in terms of profit appropriate to the risk;
- the definition of a total amount of performance related remuneration such as not to limit the
ability of the bank to maintain an adequate level of capitalisation for the risks assumed;
- the establishment of symmetry with respect to the results achieved with significant reductions
(even to zero) if performance is below forecasts or negative;
- assessment of the results of the business unit a person belongs to and to that of the bank or
Group as a whole and, where possible, of the results of the individual;
- variable remuneration linked to long term performance measurement indicators which reflect
the profitability of the bank over time, adjusted for current and future risks, for the cost of
equity and the liquidity required to perform the activities undertaken;
- the presence of an adequate system for deferring remuneration for an appropriate period of
time, for a substantial proportion of the remuneration of those roles of particular importance
to Group profits and risk;
- any clauses agreed for the early termination of employment contracts are such as to ensure
that the remuneration paid in these circumstances is linked to the performance achieved and
the risks assumed.
The 2010 Policy consists of five chapters as follows:
1) defines the general principles to be applied to determine remuneration for company officers;
2) deals with the principles for the determination of fixed remuneration and approaches and
methods for determining the variable component and its partial deferment;
3) gives details of roles and responsibilities in the definition, proposal and approval of the
remuneration and incentive system;
4) illustrates operational procedures and timing for the implementation of the system;
65
5) defines control mechanisms for the system in compliance with supervisory authority
recommendations.
The values on which the 2010 Policy is based are those of equity, uniformity, meritocracy and
consistency over time. Pursuit of these values is important to the Group and it also relates to
models for determining variable components of remuneration introduced in Group companies in
2010, attributable to three types of incentive, depending on the recipients and the specific
mechanisms:
- the first is for top and senior management (Management by Objectives – “MBO TSM”);
- the second is for the remaining executive personnel (Management by Objectives – “MBO Other
executive personnel”);
- the third is for middle managers and professional areas (Ordinary Incentive Schemes– “OIS”).
Conditions were established for the implementation of incentive schemes for 2010 based on value
creation and risk parameters such as the achievement of normalised gross income targets and
return on risk adjusted capital (“RORAC”). The schemes are based on the principle of
management by objectives, where specific objectives at company, team and individual level are
set, with the calculation of bonuses linked to the achievement of those objectives. In
consideration of the particular economic situation resulting from the financial crisis, the models
adopted involved the payment of significant and growing variable remuneration only if budget
objectives are exceeded.
With regard to the types of objective, use was made of indicators which, in compliance with the
requirements of “objectivity” and “immediate measurement”, were consistent with long term
strategies and interests (including sustainable growth, ethics, uniformity, personnel development,
skills acquired) and the effectiveness and permanence of the results, also for the purposes of
adequate capitalisation in relation to the risks assumed. The definition of the objectives
underlying the incentive mechanisms and generally those connected with banking or insurance
products and services was performed with regard to the need to pursue and safeguard the
integrity of relations with customers and to comply with regulations and legislation in force. To
give an example, direct links with individual services or products are excluded for personnel
responsible for the sale of financial products and instruments, and reference is made more
generally to areas or sectors of activity and types of service or product.
Other indicators used, either directly or indirectly adjusted for risk, or of a non financial type,
concern the following:
- profit objectives adjusted for actual or expected losses (e.g. operating losses and impairment
losses on loans either singly or collectively calculated);
- non financial objectives, related also to monitoring of ex-ante risk (e.g. performing positions
past due for longer than 60 days, MiFID advice, net customer flows);
- customers satisfaction objectives, using specific surveys and continuous monitoring of
customer satisfaction levels;
- income objectives and volumes for aggregates without reference to single products, although
with a distinction made between direct and indirect funding, with different weightings.
The schemes involve the exclusion of employees subject to disciplinary measures more serious
than a verbal reprimand. Special treatments such as guaranteed bonuses and leaving bonuses
which exceed those provided for by collective labour agreements are also excluded.
The use of economic and financial indicators was expressly excluded for those functions included
in cases mentioned in legislation and regulations, such as for example functions involved in the
preparation of corporate accounting documents, internal controls, compliance and risk
management. In these cases appropriate indicators linked to the operations of the organisational
unit were identified.
The bonus is linked to medium-to-long term objectives for roles that are of particular importance
to Group profitability and risk as follows:
- payment of a part of the bonus accruing on the basis of annual results achieved (by the Group,
company, business unit/function and individual), in relation to the position occupied, in the
year following the period in question, with deferral of the remaining part paid after three years,
depending on the achievement of profit and risk objectives;
66
-
-
for the achievement of three-year objectives, payment of a part of the deferred bonus at the end
of the three-year period, without interest, while a remaining part is linked to the UBI Banca
share price in the observation period 1st January 2011 – 31st December 2014, as specifically
decided by the Shareholders’ Meeting of UBI Banca of 24th April 2010, with subsequent
payment after five years;
any deferred part of bonuses are not paid if the three-year objective is not achieved;
loss of all rights to deferred bonuses if the contract of employment is terminated in the period
considered.
As concerns members of the governing bodies of the Group (with the exception of executive board
members/chief executive officers, who may receive performance related remuneration),
remuneration and incentive policies exclude them from variable remuneration and no guaranteed
bonuses or leaving bonuses are paid to members of these bodies. Furthermore, the fees set for
board members who are employees of the UBI Banca Group and hold positions in a Group bank
or company is incorporated in their salaries and is therefore paid back to the company concerned.
In terms of amount, at consolidated level the
fees of directors and statutory auditors
accounted
for
approximately
1,47%
of
personnel expense as shown in the table aside.
UBI Banca Group:
composition of personnel expense
31.12.2010
Figures in thousands of euro
Directors and statutory auditors' fees
20.880
Other items
Total Personnel expense
1.397.471
(1)
1.418.351
(1) Net o f no n-recurring items
The tables below show the distribution of the cost of gross annual remuneration for employees at
consolidated level and for the Parent.
(1)
(1)
Gross Annual Remuneration : UBI Banca Group
31.12.2010
Senior managers
Middle managers
88.913
608.050
Professional Areas
565.091
TOTAL
Gross Annual Remuneration :
UBI Banca Scpa (employee workforce)
1.262.054
1) Valued at co st, by applying an average co st o f appro ximately 40%. Co st items no t
co nsidered a co mpo nent o f fixed remuneratio n have been excluded (e.g. o vertime,
travelling allo wances, expense refunds, bo nuses and incentives, pro ductivity awards,
etc.).
Senior managers
Middle managers
Professional Areas
TOTAL
31.12.2010
25.588
56.965
27.990
110.543
1) Valued at cost, by applying an average cost of approximately 40%. Cost items not considered a component of
fixed remuneration have been excluded (e.g. overtime, travelling allowances, expense refunds, bonuses and
incentives, productivity awards, etc.).
The composition of gross annual remuneration is also reported below for individual Macro Areas
of the Parent, in terms of senior management, middle management and professional areas.
67
(1)
Gross Annual Remuneration : Unione di Banche Italiane Scpa [w orkforce(2)]
Senior
managers
Middle
managers
Professional
Areas
Total
2010
Legal and corporate affairs and subsidiaries
2.245
3.522
1.852
7.619
Administration and operational control
2.347
5.091
3.887
11.325
Parent and Group audit
1.231
11.109
2.515
14.855
Commercial
6.022
9.717
7.566
23.305
Risk control
2.430
6.593
3.158
12.181
Credit and credit recovery
1.848
4.824
2.537
9.209
Finance
1.994
5.563
943
8.500
Human resources and organisation
3.376
7.946
4.697
16.019
Strategic development and planning
1.060
1.954
465
3.479
22.553
56.319
27.620
106.492
TOTAL
1) Valued at co st, by applying an average co st o f appro ximately 40%. Co st items no t co nsidered a co mpo nent o f fixed remuneratio n have
been excluded (e.g. o vertime, travelling allo wances, expense refunds, bo nuses and incentives, pro ductivity awards, etc.).
(2) Excluding General M anagement and perso nnel repo rting directly to the Superviso ry B o ard and the Chief Executive Officer.
Lastly, gross annual remuneration for the “key personnel” of the Group is given in compliance
with the latest Bank of Italy “Supervisory measures concerning the remuneration and incentive
practices of banks” (document subject to public consultation until 22nd January 2011 and
currently being published3).
(1)
Gross Annual Remuneration : "Key personnel"
(2011 Policy)
28.02.2011
Key personnel
13.958
1) Valued at co st, by applying an average co st o f appro ximately 40%. Co st items no t
co nsidered a co mpo nent o f fixed remuneratio n have been excluded (e.g. o vertime,
travelling allo wances, expense refunds, bo nuses and incentives, pro ductivity awards,
etc.).
Finally, with regard to variable remuneration at Group level for 2010 this amounted, inclusive of
collective company bonuses, paid on the basis of allocations made in the accounts, to 1,54% of
personnel expense net of non-recurring items, due to the failure to meet the conditions required
to trigger bonus schemes.
***
As concerns the most recent developments, at the end of 2010 further changes were introduced to
the relative regulations.
On 14th December 2010, Directive 2010/76/EC of the European Parliament and the Council of
the European Union was issued, which amended Directives No. 2006/48EC and No. 2006/49/EC
with regard to the capital requirements for trading portfolios and for securitisations and the
supervisory authority review of remuneration policies. It expressly includes remuneration policies
and practices in the organisational structures and governance of banks and in the oversight
activities of supervisory authorities and it contains specific criteria with which banks must
comply in order to: guarantee proper processing and implementation of remuneration schemes;
manage potential conflicts of interest effectively; ensure that remuneration schemes take
appropriate account of the current and future risks, the degree of capitalisation and the liquidity
3 “Subjects whose professional role has or may have a significant impact on the banks risk profile” category. The
Supervisory measures provide a non exhaustive list of positions which unless differently indicated belong to this category,
as: Director with executive powers, General Managers and Managers of the main business or geographical areas; staff
directly reporting to the boards in charge for strategic supervision, management and control.
68
levels of each bank; increase the degree of transparency towards markets; strengthen oversight
action by supervisory authorities.
In order to implement Directive 2010/76/EC, on 22nd December 2010 the Bank of Italy opened
the document “Supervisory measures concerning the remuneration and incentive practices of
banks”, which is currently being published, to public consultation, on the basis of articles 53 and
67 of the Consolidated Banking Act and decrees of the Ministry of Economics and Finance, in its
capacity as Chair of the Interministerial Committee for Credit and Savings meetings of 5th August
2004 and 27th December 2006, which addressed the subjects of the organisation and governance
and the capital adequacy and the containment of risk and the public disclosures of banks and
banking groups, respectively.
For the purpose of implementing the latest changes in regulations, on 25th February 2011, the
Supervisory Board of UBI Banca, after consultation with the Remuneration Committee, approved
the document “Remuneration and incentive policies” (“Policy 2011”), on the following matters:
1. general policy on the remuneration of corporate bodies;
2. remuneration and incentive policies for employees or associate workers not linked to the
Group by regular employee contracts;
3. powers and responsibilities (in the definition, proposal and approval of the remuneration and
incentive system);
4. controls (to be performed by the relative corporate functions designed to pursue the adequacy
and regulatory compliance of the remuneration policies and practices adopted and their proper
functioning).
As concerns the remuneration structure for members of governing bodies, the 2011 Policy affirms
the guidelines set out in the 2010 edition, but with some amendments. Principles of the policy
include the following:
- the fees of members of the governing bodies of the UBI Group are structured with a ceiling set
by that of the Chairman of the Management Board which is set at the same level as that of the
Chairman of the Supervisory Board, (the amount of which is related to decisions taken by
shareholders);
- for subsidiaries, fees for attendance by the Chairman and Deputy Chairman at meetings of the
Board of Directors and the Executive Committee may be included in the fixed fee for the
position;
- executive board members and chief exective officers may receive forms of remuneration linked
to results, while all the other members of the governing bodies of the Group receive no variable
remuneration;
- traditional “attendance tokens” are incorporated as part of the fixed remuneration;
- no guaranteed bonuses or leaving bonuses exist for members of governing bodies (apart for
any exceptions expressly allowed for by the “Supervisory Measures).
In consideration of the need for UBI Banca Group policy to comply with these new requirements,
the 2011 Policy provides for the following:
- the identification of “key personal” in accordance with the Bank of Italy “Supervisory
Measures” currently being published;
- the identification of performance indicators measured net of risks over several years;
- for top management, deferment of payment of a portion of between 40% and 60% of bonuses
and the introduction of the use of financial instruments for a portion equal to at least 50% of
variable remuneration, setting an adequate period of personnel retention for this.
The incentive mechanisms put in place to implement the 2011 Policy included details of aspects
relating to conditions to trigger incentives, definition of the underlying objectives, calculation
formulas, procedures for payment of bonuses (including matters concerning deferment and the
use of financial instruments), specifications concerning personnel belonging to control functions
and payment rules.
69
Trade union relations
Activity involving relations with trade union organisations was intense during the year in
question. It was attributable mainly to the streamlining and optimisation of the distribution
networks of some Group banks and to the continuation of integration processes.
The procedures agreed for the optimisation of the branch network of the UBI Group were
concluded on 23rd January 2010. They were performed by means of transfers of business units
between Banca Popolare di Bergamo, Banco di Brescia, Banca Regionale Europea, Banca
Popolare Commercio and Industria e Banco di San Giorgio, by the transformation of branches
into mini-branches and adjustment to the new geographical organisation of banks. A special
Trade Union Memorandum of Intent was signed to regulate all financial and regulatory aspects of
the procedures for the transfer of the employment contracts of the approximately 2.200 personnel
affected by the operation.
With specific reference to Banca Regionale Europea, following, amongst other things, the new
focus of the bank in Piedmont, the agreement signed on 21st October 2010 regulated the transfer
to Turin of the Central Management in Milan and the decentralised offices in Cuneo. The
operation did not involve job losses, but did involve geographical mobility measures and, where
necessary, job retraining measures.
Again with regard to action taken on the local distribution networks of the network banks, the
introduction of an evolved distribution model was agreed with trade union organisations at Banco
di Brescia, Banca Regionale Europea, Banca di Valle Camonica and Banca Carime, (parent
branches – group branches). The main aims included strengthening market presence and
improving the commercial effectiveness and operational efficiency of branches.
An agreement was signed on 20th May at Group level concerning procedures for the management
of redundancies within the UBI Group, designed to improve efficiency and productivity through
rigorous containment of costs, and of labour costs in particular, against a background scenario of
general weakness in the banking sector and a consequent reduction in revenues (see the section
“Significant events that occurred during the year” for further details).
Negotiations were commenced in January 2010 and subsequently concluded on 3rd February
concerning the discontinuance of operations at UBI Sistemi e Servizi relating to Sicav
administration and the consequent reorganisation of the Finance and Foreign Back Office
Department. This action, taken in preparation for the transfer of correspondent banking
operations to RBC Dexia, did not involve job losses, but did involve job conversion processes
within UBI Sistemi e Servizi for the personnel concerned.
The redefinition of the operational perimeter and the organisational structure of Twice Sim Spa
was performed in March, followed by the merger of Twice Sim Spa into IW Bank Spa, with effect
from 1st November. Procedures for the management of geographical and occupational mobility
were agreed upon with trade union organisations with an agreement of 21st October 2010.
An agreement was signed in June concerning the merger of UBI Pramerica Alternative
Investments SGR Spa and Capitalgest Alternative Investments SGR Spa into UBI Pramerica SGR.
The operation in question, designed primarily to streamline the corporate structure of the
companies controlled by UBI Pramerica SGR Spa, did not involve any job losses, nor were there
any significant repercussions in terms of geographical and occupational mobility.
On 26th November 2010 a Memorandum of Intent on “Climate” was signed, the result of wide
ranging consideration of issues relating to the best use of human resources and their centrality
and enhancement as a key factor for the development and success of the Group. This trade union
agreement was designed to seek solutions which will ensure fair and sustainable working
conditions centred on respect for the dignity of workers, by putting in place an adequate system
of guarantees concerning working conditions and the organisation of personnel. On that same
date it was decided to reward all personnel for the great efforts made in the reorganisation
processes which affected the Group with an extraordinary one-off payment in the form of fuel
coupons and/or a contribution to pension funds.
70
Finally, to complete the picture of discussions and negotiations with trade unions, mention must
be made of agreements signed in application of and in compliance with measures established
under the national labour contract in force, on specific company issues at Banca Regionale
Europea, Banco di Brescia, Banco di San Giorgio and UBI Factor.
Training
Training constitutes a key factor for the professional enhancement of personnel. Appropriately
structured and integrated with other systems for the development of human resources, it is an
effective tool for improving specialist skills and for developing corporate identity and culture
through the dissemination of Group values and strategies.
The overall training supply, which may be consulted in a special online catalogue, includes the
following:
y a system of defined training programmes, structured in the form of a sequence of
recommended courses and on-the-job experience stages designed to ensure the development
and refinement of the knowledge and skills considered necessary for each role and required as
part of the skill measurement system;
y specific training, designed to satisfy the requirements of specific segments of Group personnel
and to support the dissemination of strategies and projects relating to organisational
innovation, changes generated by regulatory developments and the more significant product,
instrument and process innovations.
Over 96.000 training days (in the classroom, job experience and remote training) were delivered in
2010, virtually unchanged compared to 2009 and with an average of approximately 5,2 training
days per employee. Seventy five percent of training was for personnel working in retail market
roles, 52% for personnel in professional areas and 46% for middle management personnel.
A total of approximately 443.000 training days were delivered in the period 2007-2010, over 10%
more than that planned under the 2007-2010 Business Plan.
Training activity already commenced in 2009 continued during the year, designed to improve the
professional skills of roles in the distribution network, with attention focused on personnel with
management responsibilities for business activities. The main projects implemented included the
following:
y ValoRe in Rete, an innovative training programme designed to stimulate and enhance existing
Branch Managers;
y the introduction of a compulsory, role qualifying, training programme for potential new Branch
Managers;
y an “Excellence in Corporate Banking” programme, a new highly specialised training initiative
to furnish all Corporate Account Managers in the UBI Group with excellence in their
professional expertise
A third of all activity as devoted to improving the operational, commercial, credit and financial
skills of distribution network personnel. In the finance area in particular the project “Planning
and Financial Consulting”, for all retail, private banking and corporate account managers, was
completed. It was designed to adequately accompany the release of the new service model in
network banks for the provision of investment services to customers and further improve
knowledge of MiFID regulations.
Insurance subjects accounted for 32% of the training delivered during the year. They consisted of
programmes specialised by market and by customer segment (private individuals, corporate)
designed to qualify personnel to sell insurance products and to update them, in compliance with
ISVAP (Insurance Authority) regulation No. 5/2006.
71
Refresher and teaching initiatives continued in the regulatory field (more than 20% of the total) on
regulations and legislation with a substantial impact on banking operations, including those
concerning “transparency” and “health and safety at the workplace”. The implementation of the
training programme designed to ensure that all Group personnel have an adequate knowledge
and understanding of the “Organisation, Management and Control Model pursuant to Legislative
Decree No. 231/2001” was of particular importance.
A significant managerial training programme was implemented in 2010, designed for roles with
greater responsibility in which the various initiatives included participation at intercompany
events to encourage exchange of knowledge with others in different professional fields
The School for Instructors is available to the in-house instructor corps, consisting of more than
300 personnel who delivered almost 12.000 training hours (approximately 60% of total classroom
training).
The
normal
training Training by subject area in 2010
programmes
for
new
Total
Remote
Job
employees and personnel
Classroom
person/days of
%
training
experience
training
involved
in
retraining Subject area
15.245
16.019
31.264
32,4%
programmes
are Insurance
6.295
8
845
7.148
7,4%
accompanied
by
new Commercial
Finance
11.242
1.840
381
13.463
13,9%
training programmes for Credit
5.878
6
2.173
8.057
8,3%
8.959
17
8.976
9,3%
employees appointed on the Managerial-Behavioural
4.405
15.311
19.716
20,4%
basis
of
“professional Regulatory
Other subjects
7.170
827
7.997
8,3%
apprentice” contracts. The
100,0%
TOTAL
59.194
33.184
4.243
96.621
IT-language
project
was
further incentivised to offer all Group personnel the chance to benefit freely from online courses
designed to develop and/or perfect their knowledge of computers and the English language.
The training programme for branch managers
In a particularly difficult and more competitive economic context, awareness of the crucial role
played by Branch Managers in maintaining market share and growth of business on the complex
retail market led the UBI Banca Group to approve an important strategic training project (ValoRe
in Rete) designed to stimulate and enhance the professional skills of Branch Managers.
The ValoRe in Rete project is an innovative and structured training programme, a genuine
“workshop” in which Branch Managers worked and addressed the challenge of “virtuous
behaviour” – whether commercial, credit, organisational or HR management – which they need to
put into practice to “make a difference” in the excellent management of branch teams and in
relationships with customers and the community.
During the four classroom days, over 1.300 Branch Managers of the UBI Group – led by a
selected panel of 45 Branch Managers working in the role of “instructors-facilitators” – worked
intensely on the focus and study of behaviours and key moments which can make a concrete
impact on branch performance and also on an “improvement plan” consisting of concrete action
to achieve it.
The findings of this “workshop” – in which a training programme was implemented which involved
all areas of Branch Managers’ responsibilities, right across the board, – confirmed the validity and
success of this innovative approach, designed also to share best experiences and practices among
Group Branch Managers.
At the same time a new compulsory training programme was introduced for potential new branch
managers to qualify for the role, which involves the participation of candidates in two separate
classroom activities for a total of ten days, structured as follows:
1) improvement and certification of technical and professional knowledge (six classroom days
with individual study and a final qualification examination);
72
2) managerial training to develop management skills (four classroom days).
The five examination sessions organised in 2010 led to the qualification of 110 new potential
Branch Managers.
Internal communication
The internal communication activities performed in 2010 were designed and implemented to
accompany processes of change with initiatives to promote and strengthen corporate identity. The
overall internal communication strategy was therefore designed and developed with the objective
of informing, motivating and involving personnel with continued use of the Group house organ4
and the introduction of innovative multimedia communication including the following:
- a multimedia magazine for the shareholders meeting (developed to provide all Group employees
with prompt information on the main subjects addressed during the 2010 annual
shareholders’ meeting of UBI Banca). It is an easy to consult electronic magazine which
contains different types of media (texts, images, audio and video recordings), within a coordinated graphics environment. Inserted in the homepage of the corporate portal, it has the
appearance of a genuine magazine to be leafed through and it allows readers to choose topics
for further study (short video interviews during and after the meeting, an organisation chart
giving the composition of the new governing bodies, texts on the macroeconomic scenario and
the outlook for the Group, etc.);
- UBI Click, a multimedia tool through which the senior management of the Parent and of
individual companies periodically informs employees of policies and important activities
concerning the general context of the Group and individual banks and companies;
- UBI Pod, an experimental means of communication which has the style of a radio broadcast to
facilitate the direct involvement of employees in person. Two UBIPods were organised in 2010
to support the Training Project ValoRe in Rete for Branch Managers of the Group;
- a new corporate portal, a new version of the Group portal, in which new spaces are provided
for communication to give better support for corporate processes and to organise occasions for
participation and direct involvement by all personnel. The relative project activities were
commenced in 2010, while the operational release will take place in 2011.
The work environment
The section “Principal risks and uncertainties to which the UBI Banca Group is exposed” may be
consulted for information on matters regulated by Legislative Decree No. 81 of 9th April 2008
(health and safety at the workplace), while information on environmental responsibility is given as
part of the information on corporate social and environmental responsibility contained in the
section “other information”.
Welfare
The main initiatives carried forward in the field of welfare are reported as part of the information
given on corporate social responsibility contained in the section “Other information”.
4
yoUBI – A two monthly periodical of company information and culture.
73
Consolidation scope
The companies that formed part of the consolidation as at 31st December 2010 are listed below,
divided into subsidiaries (consolidated line-by-line), companies subject to joint control
(proportionately consolidated) and associates (consolidated using the equity method).
The percentage of control or ownership attributable to the Group (direct or indirect), their
headquarters (registered address or operating headquarters) and the share capital is also
indicated for each of them.
Companies consolidated on a line-by-line basis (control is by the Parent of the Group where no other
indication is given):
1. Unione di Banche Italiane Scpa – UBI Banca (Parent)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: 1.597.864.755 euro
2. Banca Popolare di Bergamo Spa (100% controlled)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: 1.350.514.252 euro
3. Banco di Brescia San Paolo CAB Spa (100% controlled)
registered address: Brescia, Corso Martiri della Libertà, 13 – share capital: 615.632.230,88 euro
4. Banca Popolare Commercio e Industria Spa (75,0769% controlled)
registered address: Milano, Via della Moscova, 33 – share capital: 934.150.467,60 euro
5. Banca Regionale Europea Spa (74,9437% controlled)1
registered address: Cuneo, Via Roma, 13 – share capital: 468.880.348,04 euro
6. Banca Popolare di Ancona Spa (92,8983% controlled)
registered address: Jesi (Ancona), Via Don A. Battistoni, 4 – share capital: 122.343.580 euro
7. Banca Carime Spa (92,8322% controlled)
registered address: Cosenza, Viale Crati snc – share capital: 1.468.208.505,92 euro
8. Banca di Valle Camonica Spa (74,2439% controlled and Banco di Brescia holds 8,7156%)
registered address: Breno (Brescia), Piazza Repubblica, 2 – share capital: 2.738.693 euro
9. Banco di San Giorgio Spa (the Parent holds 36,1939% and 57,3332% controlled by BRE)
registered address: Genova, Via Ceccardi, 1 – share capital: 94.647.277,50 euro
10. Banque de Dépôts et de Gestion Sa (100% controlled)
registered address: Avenue du Théâtre, 14 - Lausanne (Switzerland) – share capital: 10.000.000 Swiss
francs
11. BDG Singapore Pte Ltd (100% controlled by Banque de Dépôts et de Gestion)
registered address: 391B Orchard Road # 15-01 Ngee Ann City Tower B Singapore – share capital:
325.000 Singapore dollars2
12. UBI Banca International Sa (90,6031% controlled
and Banco di Brescia holds 5,8519%, BPB
3,3723% and Banco di San Giorgio 0,1727%)
registered address: 37/A, Avenue J.F. Kennedy, L – Luxembourg – share capital: 59.070.750 euro
13. UBI Trustee Sa (100% controlled by UBI Banca International)
registered address: 37/A, Avenue J.F. Kennedy, L – Luxembourg – share capital: 250.000 euro
14. B@nca 24-7 Spa (100% controlled)
operating headquarters: Bergamo, Via A. Stoppani, 15 – share capital: 316.800.000 euro
1
2
The percentage of control relates to the total share capital held. The Group does in fact possess 80,1054% of the ordinary shares,
26,4147% of the privileged shares and 59,127% of the savings shares.
On 10th December 2010, the parent company, Banque de Dépôts et de Gestion, decided to increase the share capital of the company by
5.275.000 Singapore dollars, which it paid in on 19th January 2011. The new share capital therefore rose to 5.600.000 Singapore dollars.
74
15. Barberini Sa (100% controlled)
registered address: Woluwe-Saint-Pierre, Avenue de Tervueren, 237 – Brussels (Belgium) – share capital:
3.000.000 euro
16. Prestitalia Spa (100% controlled by Barberini)
registered address: Roma, Salita San Nicola da Tolentino, 1/b, Sc. B – share capital: 46.385.482 euro
17. Silf Società Italiana Leasing e Finanziamenti Spa (100% controlled)
registered address: Cuneo, Via Roma, 13 – share capital: 2.000.000 euro
18. IW Bank Spa (55,2740% controlled and Centrobanca holds 23,496%)
registered address: Milano, Via Cavriana, 20 – share capital: 18.404.795 euro
19. InvestNet International Sa (100% controlled by IW Bank)
registered address: 8, Boulevard Royal – Luxembourg – share capital: 12.478.465 euro
20. Investnet Italia Srl, formerly IW Lux Sàrl (100% controlled by IW Bank)
registered address: Milano, via Cavriana 20 – share capital: 5.000.000 euro
21. Invesclub Srl (100% controlled by IW Bank)
registered address: Milano, Via San Vittore al teatro, 1 – share capital: 10.000 euro
22. UBI Banca Private Investment Spa (100% controlled)
registered address: Brescia, Via Cefalonia, 74 – share capital: 67.950.000 euro
23. Centrobanca Spa (92,3818% controlled and BPA holds 5,4712%)
registered address: Milano, Corso Europe, 16 – share capital: 369.600.000 euro
24. Centrobanca Sviluppo Impresa SGR Spa (100% controlled by Centrobanca)
registered address: Milano, Corso Europe, 16 – share capital: 2.000.000 euro
25. FinanzAttiva Servizi Srl (100% controlled)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: 5.660.000 euro
26. UBI Pramerica SGR Spa (65% controlled)
operating headquarters: Milano, Via Monte di Pietà, 5 – share capital: 19.955.465 euro
27. UBI Management Company Sa (100% controlled by UBI Pramerica SGR)
registered address: 37/A, Avenue J.F. Kennedy, L – Luxembourg – share capital: 125.000 euro
28. UBI Insurance Broker Srl (100% controlled)
registered address: Bergamo, Via f.lli Calvi, 15 – share capital: 3.760.000 euro
29. UBI Leasing Spa (79,9962% controlled and BPA holds 18,9965%)
30. Unione di Banche Italiane per il Factoring Spa - UBI Factor Spa (100% controlled)
registered address: Milano, Via f.lli Gabba, 1/a – share capital: 36.115.820 euro
31. BPB Immobiliare Srl (100% controlled)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: 185.680.000 euro
32. Società Bresciana Immobiliare Mobiliare - S.B.I.M. Spa (100% controlled)
registered address: Brescia, Via A. Moro, 13 – share capital: 35.000.000 euro
33. Società Lombarda Immobiliare Srl- SOLIMM (100% controlled)
registered address: Brescia, Via Cefalonia, 74 – share capital: 100.000 euro
34. BPB Funding Llc (100% controlled)
registered address: One Rodney Square, 10th floor, Tenth and King Streets, Wilmington, New Castle
County, Delaware, USA – share capital: 1.000.000 euro
35. BPB Capital Trust (100% controlled by BPB Funding Llc)
County, Delaware, USA – share capital: 1.000 euro
36. Banca Lombarda Preferred Capital Company Llc (100% controlled)
registered address: 1209, Orange Street the Corp. Trust Center, Wilmington, New Castle County,
Delaware, USA – share capital: 1.000 euro
37. Banca Lombarda Preferred Securities Trust (100% controlled)
registered address: 1209, Orange Street the Corp. Trust Center, Wilmington, New Castle County,
Delaware, USA – share capital: 1.000 euro
75
38. BPCI Funding Llc (100% controlled)
County, Delaware, USA – share capital: 1.000.000 euro
39. BPCI Capital Trust (100% controlled by BPCI Funding Llc)
County, Delaware, USA – share capital: 1.000 euro
40. UBI Fiduciaria Spa (100% controlled)
41. UBI Gestioni Fiduciarie Sim Spa (100% controlled by UBI Fiduciaria)
42. Coralis Rent Srl (100% controlled)
registered address: Milano, Via f.lli Gabba, 1 – share capital: 400.000 euro
43. UBI Sistemi e Servizi SCpA4 – Consortium Stock Company (70,9193% controlled and 2,9599%
held by: Banca Popolare di Bergamo, Banco di Brescia, Banca Popolare Commercio e Industria, Banca
Popolare di Ancona, Banca Carime and Banca Regionale Europea; 1,5539% held by UBI Pramerica SGR;
1,4799% held by: Banco di San Giorgio, Banca di Valle Camonica, UBI Banca Lombarda Private
Investment, Centrobanca and B@nca 24-7; 0,74% held by UBI Factor; 0,74% held by: UBI Insurance
Broker and SILF).
44. UBI Finance Srl5 (60% controlled)
registered address: Milano, Foro Bonaparte, 70 – share capital: 10.000 euro
45.
46.
47.
48.
49.
50.
51.
52.
53.
3
4
5
6
7
8
9
10
Albenza 3 Srl6
Orio Finance Nr. 3 Plc6
Sintonia Finance Srl6
24-7 Finance Srl7
Lombarda Lease Finance 3 Srl8
Lombarda Lease Finance 4 Srl8
UBI Finance 2 Srl9
UBI Finance 3 Srl
UBI Lease Finance 5 Srl10
With effect from 1st January 2011, UBI Fiduciaria and UBI Gestioni Fiduciarie Sim transferred their registered addresses in Brescia from
70, via Cefalonia to 74, via Cefalonia in the new UBI Banca management centre.
The Group holds a controlling 98,52% interest in the share capital of UBI.S; the remaining 1,48% is held by UBI Assicurazioni.
A special purpose entity in compliance with Law No. 130/1999, this company, enrolled on the general list of intermediaries pursuant to
Art. 106 of the consolidated banking act, was formed on 18th March 2008 to allow the Parent to implement a programme to issue
covered bonds.
Special purpose entities formed in compliance with Law No. 130/1999 for the securitisations performed in 2001 and 2002 by the former
BPB-CV Scrl (Albenza 3 Srl), by BPU International Finance Plc Ireland, subsequently closed down – (Orio Finance Nr. 3 Plc) and by
Centrobanca (Sintonia Finance Srl). They were included in the consolidated financial statements because they are in reality controlled,
since their assets and liabilities were originated by Group member companies. The consolidation only concerns those assets subject to
securitisation and the relative liabilities issued. As concerns Sintonia Finance, as the securitisation was multioriginator, only those
assets and liabilities relating to the operation originated by Centrobanca were consolidated.
A special purpose entity (formerly Lombarda Lease Finance 1 Srl) used in compliance with Law No. 130/1999 for the B@nca 24-7
securitisations performed in 2008. It was included in the consolidated financial statements because this company is in reality
controlled, since its assets and liabilities were originated by a Group member company. UBI Banca holds a 10% stake in the company.
Special purpose entities formed in compliance with Law No. 130/1999 for the securitisations performed in years running from 2002
until 2005 by SBS Leasing. They were included in the consolidated financial statements because these companies are in reality
controlled, since their assets and liabilities were originated by Group member companies. UBI Banca holds an interest of 10% in each
company.
In the third quarter of 2010, UBI Leasing (formerly SBS Leasing) proceeded to the early close down of the Lombarda Lease Finance 3
securitisation. The originator (UBI Leasing) exercised its option, as provided for under the contracts, to repurchase all the loans (en bloc
and without recourse) (a remaining amount of 47,5 million euro out of 650,5 million euro securitised relating to lease contracts for
machinery and equipment, property and automobiles), which had been sold in 2003 to Lombarda Lease Finance 3, which had in turn
redeemed all the notes issued as part of the securitisation transaction on 30th July 2010. As the transaction was closed, only the items
in the income statement, relating to the assets and liabilities recognised by the Company during the year, remained in the end of year
accounts. The disappearance of the cash flows (although the company remains operational) will result in the elimination of the company
from the consolidation scope from the first quarter of 2011.
A special purpose entity formed in accordance with Law No. 130/1999 for the securitisation performed in 2001 by Banco di Brescia and
completed in the meantime. The company (formerly “Lombarda Mortgage Finance 1 Srl”) was used as an SPE (special purpose entity) for
the securitisation of a portfolio of performing loans performed by Banco di Brescia at the beginning of 2009. It was included in the
consolidated accounts because this company is in reality controlled, since its assets and liabilities were originated by a Group member
company. UBI Banca holds a 10% stake in the company.
A special purpose entity formed in compliance with Law No. 130/1999 and used as an SPE for the securitisation of performing loans by
UBI Leasing in November 2008. It was included in the consolidated financial statements because this company is in reality controlled,
since its assets and liabilities were originated by a Group member company. UBI Banca holds a 10% stake in the company.
76
Companies consolidated using the proportionate method (the investment is by the Parent where no
other indication is given):
1. UBI Trust Company Ltd (99,9980% controlled by UBI Banca International)11
registered address: Esplanade, 44 – St. Helier, Jersey (Great Britain) – share capital: 50.000 pounds
sterling
2. BY YOU Spa12 (formerly Rete Mutui Italia Spa, 40% interest held)
registered address: Milano, Corso Venezia, 37 – share capital: 650.000 euro
3. Polis Fondi SGRpA (9,8% interest held)13
registered address: Milano, Via Solferino, 7 – share capital: 5.200.000 euro
Companies consolidated using the equity method (the investment is by the Parent where no other
indication is given):
1. Aviva Vita Spa (50% controlled)
registered address: Milano, Viale Abruzzi, 94 – share capital: 115.000.000 euro
2. Aviva Assicurazioni Vita Spa (formerly UBI Assicurazioni Vita Spa) (49,9999% held UBI Banca)
registered address: Milano, Viale Abruzzi, 94 – share capital: 49.721.776 euro
3. Lombarda Vita Spa (40% interest held)
registered address: Brescia, Corso Martiri della Libertà, 13 – share capital: 185.300.000 euro
4. UBI Assicurazioni Spa (49,9999% interest held)
registered address: Milano, Piazzale f.lli Zavattari, 12 – share capital: 32.812.000 euro
5. Lombarda China Fund Management Company (49% interest held)
registered address: 47, Sin Mao Tower, 88 Century Boulevard, Pudong Area 200121, Shanghai (China) –
share capital: 120.000.000 yuan/renminbi
6. SF Consulting Srl (35% interest held)
operating headquarters: Mantova, Via P.F. Calvi, 40 – share capital: 93.600 euro
7. Sofipo Fiduciaire Sa (30% interest held by Banque de Dépôts et de Gestion)
registered address: Via Balestra, 22B - Lugano (Switzerland) – share capital: 2.000.000 Swiss francs
8. Arca SGR Spa (23,1240% interest held by the Parent and 3,5840% by BPA)
registered address: Milano, Via M. Bianchi, 6 – share capital: 50.000.000 euro
9. S.P.F. Studio Progetti Finanziari Srl (25% interest held by BPA)
registered address: Roma, Via National, 243 – share capital: 92.960 euro
10. Prisma Srl (20% interest held)
registered address: Milano, Via S. Tecla, 5 – share capital: 120.000 euro
11. Siderfactor Spa (27% interest held by UBI Factor)
registered address: Milano, Via f.lli Gabba, 1/A – share capital: 1.200.000 euro
12. Tex Factor Spa – in liquidation (20% interest held by UBI Factor)
registered address: Milano, Via f.lli Gabba, 1/A – share capital: 1.033.000 euro
13. Capital Money Spa (20,6711% interest held)
registered address: Milano, Via Lausanne, 16 – share capital: 2.042.955 euro
14. Ge.Se.Ri. – Gestione Servizi di Riscossione Spa in liquidation (100% controlled by BRE)
registered address: Cuneo, Via Roma, 13 – share capital: 323.520 euro
15. UFI Servizi Srl (23,1667% interest held by Prestitalia)
registered address: Roma, Via G. Severano, 24 – share capital: 150.000 euro
11
12
13
Following the geographical repositioning of trustee services to Luxembourg, the company was closed down with effect from 30th June
2010. The local monetary authority – Jersey Financial Services Commission Companies Registry – announced that it had removed UBI
Trust Company from the companies register on 10th February 2011.
The company has 100% control of: By You Piemonte Srl, By You Liguria Srl, By You Mutui Srl, (which controls Sintesi Mutuo Srl) and
By You Adriatica Srl,), all proportionately consolidated within the Group.
Polis was included in the consolidation using the proportionate method because joint control emerged. The company manages the fund
Polis, listed on the stock exchange since April 2001.
77
Changes in the consolidation scope
There have been no changes to the scope of consolidation compared to 31st December 2009
except for a few changes in the percentage of interests held and some streamlining action.
Network banks:
• Banca Popolare di Bergamo, Banco di Brescia, Banca Popolare Commercio e Industria, Banca
Regionale Europea, Banco di San Giorgio: the situation described – in terms of share capital
and percentage shareholdings – reflects the implementation, in January 2010, of the “branch
switching” operation already mentioned (see also the previous section “Significant events that
occurred during the year”). The project involved the transfer of a series of branches performed
by the contribution of 14 sets of corporate assets. Each of the five network banks receiving
assets performed specific increases in share capital at the service of the contributions14. Since
these are transactions “under common control”, the increases in the share capital did not give
rise to a share premium because the shares were issued at the nominal value, in relation to
the actual value of the assets transferred.
The minority interests acquired reciprocally by the individual banks as a by-product of the
operation were repurchased by the Parent on 27th July 2010 and the original percentage
ownership interests in the network banks will be restored, except for a change in the
configuration of the holdings of the two foundations (the Cassa di Risparmio di Cuneo
Foundation and the Banca del Monte di Lombardia Foundation), to take account of the new
focus of the network banks on the historical geographical areas of the foundations themselves.
The Banca del Monte di Lombardia Foundation is in fact no longer a shareholder of Banca
Regionale Europea, having become a shareholder of Banca Popolare Commercio e Industria.
The Cassa di Risparmio di Cuneo Foundation has remained a shareholder of Banca Regionale
Europea – focused on the North East area – with its investment increasing from the 20% to
25% with an investment of 125 million euro.
The changes that occurred between 31st December 2009 and 27th July 2010 are summarised
in the table below.
Position as at 31st December 2009
Shareholders
AVIVA Spa
Minority interests
UBI Banca
Fondazione Cassa di Risparmio di Cuneo
Fondazione Banca del Monte di Lombardia
Total number of shares and percentage held
by the Group
Nominal value of shares (in euro)
Share capital (in euro)
Changes due to increases in share capital
and contributions (25th January 2010)
%
687.838 0,08%
509.595.702 59,95%
%
BSG
%
572.721.707 88,11%
1.256.300.000
100,0%
872.500.000
100,0%
4.225.647 7,22%
20.760.378 35,45%
650.000.000 88,11%
1.256.300.000
100,0%
872.500.000
100,0%
58.560.833 92,78%
1,05
1,00
0,68
1,50
682.500.000
1.256.300.000
593.300.000
87.841.249,50
3,97%
2.307.080
0,26%
Nominal value of shares (in euro)
Share capital (in euro)
BBS
0,52
35.837.198
Fondazione Banca del Monte di Lombardia
Total number of shares and percentage held
by the Group
%
442.000.000
UBI Banca
Fondazione Cassa di Risparmio di Cuneo
BPB
33.574.808 57,33%
850.000.000 59,95%
%
1,50%
AVIVA Spa
Minority interests
%
169.858.230 19,98%
169.858.230 19,98%
BRE
13.548.699
Position after re-adjustment (27th July
2010)
BPCI
77.278.293 11,89%
Banco di Brescia
Total number of shares after share capital
increases
of which number of shares issued for
increases in the share capital
14
Investees (number of shares and % held)
BRE
901.692.977
51.692.977
BRE
%
0,16%
BPB
23.568.210
%
1,75%
BBS
%
169.494.668 19,05%
68.715.937 7,72%
6.477.249
0,48%
11.694.531
11.840.156
1,29%
1,31%
64.168.793
4,75%
9.306.829
1,03%
889.667.112
5,73%
%
687.838
BPCI
1.456.507
1.350.514.252
239.667.112 26,93%
BPCI
77.278.293
%
8,69%
94.214.252
BPB
905.341.516
6,98%
%
32.841.516
BBS
%
0,62%
4.144.631
6,57%
63.098.185
3,63%
%
0,08%
675.762.233 74,94%
225.242.906 24,98%
BSG
392.721
4.537.352
BSG
%
4.225.647
667.934.237 75,08%
7,19%
6,70%
1.350.514.252
100,0%
905.341.516
100,0%
22.696.320 35,97%
1.350.514.252
100,0%
905.341.516
100,0%
63.098.185 93,30%
144.454.582 16,24%
36.176.218
901.692.977 74,94%
889.667.112 75,08%
0,52
1,05
1,00
0,68
1,50
468.880.348,04
934.150.467,60
1.350.514.252,00
615.632.230,88
94.647.277,50
57,33%
A shareholders’ meeting of Banco di San Giorgio held on 8th January 2010 passed a resolution to increase the share capital at the
service of the contributions and also to authorise the Board of Directors to issue share capital, in one or more tranches up to a total of
20 million euro, to be completed by 31st December 2013 and to offer option rights on the issues to registered shareholders. The
objective is to bring the total capital ratio back into line with the target (7%) set for commercial banks in the Group.
78
• Banca Popolare di Ancona Spa: UBI Banca made further purchases during the year from
minority shareholders, for a total of 11.181 shares (a small fraction amounting to 0,0457% of
the share capital) which brought its controlling interest up from 92,8526% at the end of 2009
to 92,8983%;
• Banca Carime Spa: in the twelve months in question, the Parent acquired 31.781 shares from
minority shareholders to bring its controlling interest up to 92,8322% (92,8299% as at 31st
December 2009).
• Banco di San Giorgio Spa: subsequent to 27th July, UBI Banca acquired 141.361 shares from
private individuals to bring its investment up from 35,9698% (post readjustment of interests)
to 36,1939% as at 31st December 2009.
Other Banks:
• IW Bank: on 20th October 2010, UBI Banca purchased 156.488 shares, to bring its interest
held in the share capital up to 55,2740% (from 55,0614% at the end of 2009) and the interest
held by the Group up to 78,77% (78,5574% as at 31st December 2009).
Following that purchase, UBI Banca acquired both direct and indirect control through
Centrobanca, with 57.989.829 ordinary shares of IW Bank (accounting for 79,6695% of the
share capital, net of the treasury shares held by IW Bank), while Webstar held 7.609.144
ordinary shares (10,4538% of the share capital, net of the treasury shares held by IW Bank).
Together UBI Banca and Webstar15 held 65.598.973 shares, accounting for 90,1233% of the
share capital, net of the treasury shares held by IW Bank.
Since they then held more than 90% of the share capital with voting rights (a threshold which
determines the obligation to purchase the remaining shares of the issuer), on the following 27th
October 2010, UBI Banca and Webstar jointly announced, in compliance with Art 50 of the
Issuers’ Regulations (residual public tender offer), their intention not to restore the free float
and to comply with the purchase obligation.
With Resolution No. 17669 of 16th February 2011, the Consob (Italian securities market
authority) set the share price at 1,988 euro per share for the purchase, in accordance with Art.
108, paragraph 2 of the Consolidated Finance Act, of the ordinary shares of IW Bank by the
offerors.
On 22nd February 2011, UBI Banca decided to pay an increase on the price set by the Consob,
thereby bringing it up to 2,043 euro16 for each share offered for sale, if it came to hold at least
95% of the share capital (inclusive of the IW Bank shares held by Webstar and also of the
treasury shares held in portfolio by IW Bank). In this event, the maximum amount disbursed
by UBI Banca, if the offer is fully taken up, will be 14.7 million euro and it will be paid from its
own funds. The price set by the Consob on the other hand would remain the consideration
recognised if the acceptance of the offer was insufficient to acquire an interest at least equal to
95% of the share capital.
On 15th March 2011, with Note No. 11019656 the Consob authorised the publication of the
information document in relation to the operation for the obligation to purchase 7.189.039
ordinary shares of IW Bank (9,8767% of the share capital with voting rights and 9,7652% of
the total share capital) in compliance with Art 108, paragraph 2 of the Consolidated Finance
Act.
In this respect, the period for the presentation of applications to sell, agreed with Borsa
Italiana, collected on the Mercato Telematico Azionario (electronic stock exchange) began on
21st March and will end on 8th April, unless extended. Payment of the price will take place on
13th April 2011.
The delisting of the share will take place at the end of the procedures laid down by the primary
and secondary rules concerning compulsory public tenders to purchase.
With regard to IW Bank’s subsidiaries, numerous actions were concluded during the year both
to simplify and streamline the organisational structure, and to develop and enhance the core
business consisting of online trading and banking:
15
16
UBI Banca and Webstar had signed a shareholders’ voting agreement (published on 15th September 2009 in accordance with article 122
of the Consolidated Finance Act, subsequently amended on 29th June 2010) concerning the ordinary shares of IW Bank.
The highest official market price of the IW Bank share in the last 12 months.
79
-
-
-
-
-
-
on 22nd March 2010, the disposals were completed of Twice & Partners Corporate Advisers
Srl and Twice Research Srl (both previously 100% controlled by Twice Sim and consolidated
on a line-by-line basis);
Italforex Srl was excluded from the consolidation from 30th September 2010 (at the end of
2009 it was recognised using the equity method), in consideration of its negligible
importance and consistent with decisions taken by IW Bank;
on 1st November 2010, after obtaining the legal authorisations, Twice Sim was merged
(100%) into its parent, IW Bank, consistent with decisions taken by the respective Boards of
Directors in December 2009 and by a Shareholders’ Meeting of Twice Sim of 26th August
2010, in accordance with the corporate by-laws. Since the entire share capital was held by
the internet bank, the shares of Twice Sim were cancelled when the merger transaction was
stipulated, without proceeding to replacement or new issues. The transaction is effective for
accounting and tax purposes from 1st January 2010. The company was consolidated on a
line-by-line basis as at 31st December 2009;
as a result of the above merger, on 1st November 2010 control of Invesclub Srl, formerly
controlled by Twice Sim, was acquired by IW Bank;
on 23rd July 2010, the Board of Directors of IW Bank decided to merge IW Lux Sàrl, a fully
controlled, Luxembourg registered company, into its Parent, after transferring its
headquarters to Italy. This preparatory measure was officially completed by a Shareholders’
Meeting of IW Lux Sàrl on 25th October 2010, which passed resolutions to relinquish its
authorisation to provide financial services granted by the Ministry of Finance of
Luxembourg on 26th January 2010, to make the related changes to its business purpose, to
transfer the registered address to Milan, to change the name of the company to Investnet
Italia Srl and to approve a new text of the corporate by-laws. On 28th December 2010,
InvestNet Italia was registered with the Milan Company Registrar;
on 13th January 2011, IW Bank acquired an interest in the consortium company UBI
Sistemi e Servizi, purchasing 50.000 shares (0,074% of the share capital) from UBI
Pramerica SGR for 38.500 euro;
on 2nd March 2011, a Shareholders’ Meeting of Invesclub Srl passed a resolution to wind up
the company by placing it into voluntary liquidation in accordance with Art. 2484 of the
Italian Civil Code. This was in consideration of its non strategic importance both for its
parent and for the Group;
• Centrobanca Spa: on 4th November 2010, the Parent purchased 101.732 shares from a
banking counterparty for 177 thousand euro (equivalent to the pro-rata equity value as at 30th
June 2010). The investment held therefore rose from 92,3515% at the end of 2009 to
92,3818% as at 31st December 2010; while Group control increased at the same time over
twelve months from 97,8227% to 97,8530%.
As concerns the streamlining process in progress, action taken with regard to the subsidiaries
of the Group’s “corporate bank” are summarised as follows:
- on 27th December 2010, the merger of CB Invest Spa (formerly Medinvest Spa, acquired on
22nd December 2009 from Twice Sim and then consolidated on a line-by-line basis) into
Centrobanca became effective. As the merged company was wholly owned by Centrobanca,
in compliance with Art. 2505 of the Italian Civil Code, the shares forming the share capital
of CB Invest were cancelled with no share exchange. The transaction is effective for
accounting and tax purposes from 1st January 2010;
- on 29th December 2010, the liquidation of H&C Spa was concluded and it is therefore no
longer included in the consolidation (the company, in which CB Invest held a 49,0833%
interest, was consolidated using the equity method at the end of 2009);
• UBI Banca International Sa: on 10th December 2010, this Luxembourg based bank
strengthened its capital by a total of 2,9 million euro, including 1.531.020 euro used to
increase its share capital (up from 57.539.730 euro to 59.070.750 euro), for the purpose of
acquiring the Luxembourg branch of Banco di Brescia. To achieve this, the contributing party
received 3.002 new shares of UBI Banca International, which brought the interest held by
Banco di Brescia up to 5,8519% (from 3,3468% before). As a result of the dilution effect, the
remaining interests were reduced: for the Parent to 90,6031% (93,0138% as at 31st December
2009), for BPB to 3,3723% (from 3,4621%) and for Banco di San Giorgio to 0,1727% (0,1773%
twelve months before). UBI Banca International is wholly owned by the Group.
80
Asset management:
• on 19th March 2010, UBI Pramerica SGR repurchased 3,75% of the share capital from the
management of UBI Pramerica Alternative Investments SGR Spa to restore its controlling
interest to 100% (96,25% at the end of 2009). The operation was performed in preparation for
the merger of the company into its asset management parent company;
• on 30th March 2010: in order to simplify the ownership structure of the Group, with the
consequent elimination of the duplication of costs and overlap of business units, shareholders’
meetings were held by UBI Pramerica SGR, UBI Pramerica Alternative Investments SGR and
Capitalgest Alternative Investments SGR, which passed resolutions to merge, in simplified
form (pursuant to Art. 2505 of the Italian Civil Code), both the speculative asset management
companies into their parent. The transaction – authorised by the Bank of Italy in February –
took effect from 1st July 2010, while it was effective for accounting and tax purposes from 1st
January 2010. As the shares of the merged companies were cancelled, the share capital of UBI
Pramerica SGR remained unchanged.
UBI Pramerica also acquired the 50.000 shares of UBI.S held by UBI Pramerica Alternative
Investments, which brought its investment in the service company up to 1,5539%.
On 13th January 2011, these shares were sold to IW Bank to allow it to acquire an interest in
the consortium company of 0,074%, while the interest held by UBI Pramerica SGR fell again to
1,4799%;
• on 3rd August 2010, as part of the process to reorganise the sector, the transfer to UBI
Pramerica SGR was completed of the entire interest in UBI Management Company Sa Lux held
by UBI Banca Private Investment (99%) and by UBI Banca International (1%) for consideration
of 560 thousand euro;
• on 7th December 2010, Gestioni Lombarda (Switzerland) Sa was merged into its parent,
Company Banque de Dépôts et de Gestion, with effect from the preceding 31st October, using
the simplified procedure in force according to Swiss regulations, which accelerated the timing
of the transaction;
• on 14th February 2011, the agreement was completed, signed on 28th July 2010 by principal
shareholders of Polis Fondi SGRpA: Sopaf on the one hand (which held 49% of the share
capital) and UBI Banca and another four “popular” banks, Banche Popolari (Banco Popolare,
BPER, Banca Popolare di Sondrio and Banca Popolare di Vicenza) on the other (shareholders
who together also hold 49%). The purpose of the agreement was to acquire the investment held
by Sopaf for consideration of eight million euro. Following the issue of the authorisation by the
Bank of Italy (on 18th January 2011), the planned transactions commenced. In this context
UBI Banca acquired a further 9,8% of the share capital (amounting to 50.960 shares) for
payment of 1,6 million euro. The five “popular” banks – the new majority shareholders with
98% of the share capital – therefore signed a new five year shareholders’ agreement.
Banc assurance:
•
on 30th September 2010, as part of the agreement for the renewal of the partnership in the life
banc assurance sector, UBI Banca and Cattolica Assicurazioni strengthened their co-operation
with the sale by the UBI Banca Group of a further 9,9% of the share capital of the Lombarda
Vita joint venture to the Cattolica Assicurazioni Group (see also the previous section
“Significant events that occurred during the year” for further information). At the end of
December the share capital of Lombarda Vita was therefore held as follows: 60% by Cattolica
Assicurazioni (compared to 50,1% previously) and 40% by UBI Banca Group (49,9%
previously).
•
on 13th December 2010, the entire interest in Secur Broker Srl (10% held by the Parent and
30% by UBI Insurance Broker) was sold to Marine & Aviation Spa (a well-established
insurance brokerage) for 280 thousand euro. Secur Broker, consolidated using the equity
method in December 2009, was therefore excluded from the consolidation.
Consumer credit:
• on 24th March 2010: UBI Banca signed two agreements, one with the shareholders of Barberini
Sa (to purchase the remaining 66,7% of the share capital) and one with the agent shareholders
81
of Prestitalia Spa (to purchase 100% of the share capital in the company held by them).
Commitments were officially agreed with the latter for the exclusive distribution of “salary
backed loan” and “deduction of loan repayments from salary” products.
At the same time as the purchase contracts were signed for the acquisition of 100% of
Barberini and Prestitalia, action was taken, through Barberini, to subscribe an increase in the
share capital of Prestitalia amounting to 37 million euro, in order to implement the necessary
plan to strengthen its capital (pursuant to a provision of the Bank of Italy of 3rd March 2010).
The share capital of Prestitalia therefore rose to 46.385.482 euro (9.385.200 euro in December
200917).
The operation, which was authorised by the Antitrust Authority on 19th May and by the Bank
of Italy on 4th August, was completed on 9th September 201018. In detail:
- with regard to Barberini, UBI Banca acquired a total of 2.000.000 ordinary shares held by
Medinvest International and Pharos Sa (accounting for 66,67% of the share capital subject
to acquisition) for a total price of 7,3 million euro for the ordinary shares (of which 1,6
million euro paid on 24th March 2011 after determined conditions to which it was subject
concerning the agency network of Presitalia were met) and also 92.784 financial
instruments, termed "parts bénéficiaires", for a total price of 341 thousand euro (including
1,6 thousand euro paid on 24th March 2011);
- with regard to Prestitalia, Barberini acquired 3.400 shares (6,4% of the share capital
remaining after the increase in the share capital of 37 million euro fully subscribed by UBI
Banca in March) at a price of 3,6 million euro;
On 10th January 2011, Barberini Sa sold its entire investment held in Prestitalia (53.378
shares accounting for 100% of the share capital) to B@nca 24-7 for a total price of 77 million
euro;
•
on 5th July 2010, By You Mutui Srl acquired 100% of Sintesi Mutuo Srl (a credit brokerage
company), which therefore is included in the consolidation under the proportionate method (as
is the whole of the By You Group). The consideration, set at a maximum amount of 1,8 million
euro, was paid progressively as determined volumes of mortgages granted were achieved; the
last tranche of 0,3 million euro was paid in the fourth quarter of the year.
Other Group Companies:
• on 30th October 2009, UBI Leasing (formerly SBS Leasing) repurchased, without recourse and
en bloc, all the loans, (the remaining amount of approximately 40 million euro of the 610
million euro originally securitised, relating to lease contracts for machinery and equipment,
property and automobiles), which had been sold in 2002 to Lombarda Lease Finance 2, which
in turn redeemed all the notes issued as part of the securitisation transaction. Since the cash
flows relating to the assets and liabilities recognised by the special purpose entity ceased to
exist during the first few months of 2010, it became possible to exclude the underlying
business of LLF2 from the consolidation. The company nevertheless remained operational (UBI
Banca holds a 10% interest).
As part of internal securitisation activity designed to create additional assets eligible for
refinancing, it was decided to use the company Lombarda Lease Finance 2 Srl as a special
purpose entity (already recognised in the Bank of Italy list pursuant to Art. 106 of the
consolidated banking act), with the change of its name to UBI Finance 3 Srl (as approved by a
Shareholders’ Meeting of 17th November 2010). UBI Banca had maintained a 10% interest in
the company, while 90% is held by the Dutch foundation Stichting Brixia. A portfolio of Banca
Popolare di Bergamo loans was sold (secured and unsecured loans to small-and-medium sized
enterprises for a sum of 2,8 billion euro) to the company on 1st December 2010. At the end of
the year the special purpose entity was therefore included in the consolidated financial
statements because this company is in reality controlled, since its assets and liabilities were
originated by a Group member company.
•
17
18
on 16th June 2010 an extraordinary shareholders’ meeting of Tex Factor Spa (20% interest
held by UBI Factor) resolved to wind up the company (with effect from the date of filing the
As already reported, as at 31st December 2009 UBI Banca held 33,3333% of Barberini, which held a controlling interest in Prestitalia of
68,5185%. The indirect interest held by UBI Banca therefore amounted to 22,8395%. The companies were consolidated proportionately.
From 30th September 2010, both Barberini Sa and Prestitalia Spa have been consolidated on a line-by-line basis; similarly as an investee
of Prestitalia, UFI Servizi Srl was also included in the consolidation.
82
decision with the Company Registrar on 1st July 2010) and to put it into voluntary liquidation.
The decision was taken on completion of analysis and assessment activity designed to
ascertain the future prospects for growth, which were not found to be consistent with the
expectations of the shareholders;
•
on 23rd September 2010: following the disposal by Centrobanca of some quotas of Group Srl
(an equity accounted investee), the company is no longer included within the consolidation
(14,2857% the percentage of the share capital held at the end of December compared to 20%
twelve months before);
•
on 30th September 2010: following the increases in the share capital decided by PerMicro Spa,
which increased the number of shareholders and consequently reduced the percentage held by
UBI Banca Group, the company was excluded from the consolidation (an interest of 15,3041%
held at the end of year compared to 20,6148% at the end of 2009);
•
on 30th December 2010: BRE purchased 16.176 shares (held by a co-operative credit bank) for
1.500 euro, equal to the remaining 5% of the share capital of Ge.Se.Ri Spa in liquidation to
achieve full control of the company (95% in December 2009). The company continues to exist
because it holds tax credits not yet received;
•
Capital Money Spa: as a result of the incomplete subscription of operations to increase the
capital performed in 2009 and 2010, the interest held by UBI Banca increased over twelve
months from 20,4604% to 20,6711%.
83
Reclassified consolidated financial
statements, reclassified income statement
net of the most significant non-recurring
items and reconciliation schedules
Reclassified consolidated statement of financial position
31.12.2010
31.12.2009
Changes
% changes
ASSETS
10.
Cash and cash equivalents
20.
Financial assets held for trading
30.
Financial assets at fair value
40.
Available-for-sale financial assets
60.
Loans to banks
70.
80.
609.040
683.845
-74.805
-10,9%
2.732.751
1.575.764
1.156.987
73,4%
147.286
173.727
-26.441
-15,2%
10.252.619
6.386.257
3.866.362
60,5%
3.120.352
3.278.264
-157.912
-4,8%
Loans to customers
101.814.829
98.007.252
3.807.577
3,9%
Hedging derivatives
591.127
633.263
-42.136
-6,7%
90.
Fair value change in hedged financial assets (+/-)
429.073
301.852
127.221
42,1%
100.
Equity investments
368.894
413.943
-45.049
-10,9%
120.
Property, equipment and investment property
2.112.664
2.106.835
5.829
0,3%
130.
Intangible assets
5.475.385
5.523.401
-48.016
-0,9%
of which: goodwill
4.416.660
4.401.911
14.749
0,3%
140.
Tax assets
1.723.231
1.580.187
143.044
9,1%
150.
Non-current assets and disposal groups held for sale
8.429
126.419
-117.990
-93,3%
160.
Other assets
1.172.889
1.522.214
-349.325
-22,9%
Total assets
130.558.569
122.313.223
8.245.346
6,7%
LIABILITIES AND EQUITY
10.
Due to banks
5.383.977
5.324.434
59.543
1,1%
20.
Due to customers
58.666.157
52.864.961
5.801.196
11,0%
30.
Securities issued
48.093.888
44.349.444
3.744.444
8,4%
40.
Financial liabilities held for trading
60.
Hedging derivatives
80.
Tax liabilities
90.
Liabilities associated with activities under disposal
100.
Other liabilities
110.
Post-employment benefits
120.
Provisions for risks and charges:
a) pension and similar obligations
b) other provisions
140.+170.
+180.+190.
Share capital, share premiums, reserves and fair value reserves
954.423
855.387
99.036
11,6%
1.228.056
927.319
300.737
32,4%
993.389
1.210.867
-217.478
-18,0%
-
646.320
-646.320
-100,0%
2.600.165
3.085.006
-484.841
-15,7%
393.163
414.272
-21.109
-5,1%
303.572
285.623
17.949
6,3%
68.082
71.503
-3.421
-4,8%
235.490
214.120
21.370
10,0%
10.806.898
11.141.149
-334.251
-3,0%
210.
Minority interests
962.760
938.342
24.418
2,6%
220.
Profit for the year
172.121
270.099
-97.978
-36,3%
130.558.569
122.313.223
8.245.346
6,7%
Total liabilities and equity
84
Reclassified consolidated quarterly statements of financial position
31.12.2010
30.9.2010
30.6.2010
31.3.2010
31.12.2009
30.9.2009
30.6.2009
31.3.2009
ASSETS
10.
Cash and cash equivalents
20.
30.
40.
50.
Held-to-maturity investments
60.
Loans to banks
70.
80.
609.040
586.075
632.183
637.113
683.845
613.101
600.755
601.322
2.732.751
2.836.561
2.640.330
1.990.806
1.575.764
1.431.752
1.634.912
2.072.595
147.286
153.951
155.143
159.658
173.727
191.583
252.388
398.076
10.252.619
10.954.989
12.501.312
7.123.883
6.386.257
5.257.186
5.483.644
5.316.954
-
-
-
-
-
1.687.077
1.577.276
1.657.865
3.120.352
3.427.795
3.290.637
2.996.834
3.278.264
3.101.108
3.184.949
2.824.055
Loans to customers
101.814.829
101.195.034
100.157.746
97.805.640
98.007.252
96.554.963
96.830.116
96.892.382
Hedging derivatives
591.127
816.673
916.055
743.946
633.263
652.898
641.238
604.739
90.
Fair value change in hedged financial assets (+/-)
429.073
796.414
621.964
450.741
301.852
403.522
313.129
461.224
100.
Equity investments
368.894
375.800
406.789
419.289
413.943
360.098
337.162
297.068
110.
Technical reserves of reinsurers
-
-
-
-
-
35.249
72.166
77.691
120.
2.112.664
2.071.976
2.097.820
2.087.323
2.106.835
2.094.140
2.098.840
2.144.779
130.
Intangible assets
5.475.385
5.478.993
5.475.662
5.497.679
5.523.401
5.588.714
5.603.009
5.613.720
of which: goodwill
4.416.660
4.413.791
4.397.766
4.401.911
4.401.911
4.447.194
4.446.873
4.446.250
140.
Tax assets
1.723.231
1.379.250
1.362.428
1.616.739
1.580.187
1.200.391
1.163.829
1.555.575
150.
Non-current assets and disposal groups held for sale
8.429
48.256
40.285
134.769
126.419
398.011
71.265
20.704
160.
Other assets
1.172.889
1.622.444
1.801.061
2.351.971
1.522.214
1.931.071
1.978.893
1.940.263
Total assets
130.558.569
131.744.211
132.099.415
124.016.391
122.313.223
121.500.864
121.843.571
122.479.012
LIABILITIES AND EQUITY
10.
Due to banks
5.383.977
7.126.257
9.252.062
4.612.141
5.324.434
5.306.536
6.073.741
5.953.954
20.
Due to customers
58.666.157
57.412.547
58.534.315
52.754.329
52.864.961
51.383.644
53.612.989
53.992.027
30.
Securities issued
48.093.888
46.463.566
44.828.119
45.670.177
44.349.444
44.162.873
42.522.368
41.707.004
40.
954.423
978.064
896.016
948.995
855.387
815.697
746.246
856.656
60.
Hedging derivatives
1.228.056
1.827.144
1.560.152
1.130.958
927.319
883.088
724.402
981.373
80.
Tax liabilities
993.389
908.091
814.057
1.277.497
1.210.867
1.132.291
1.014.788
1.633.358
90.
Liabilities associated with activities under disposal
100.
Other liabilities
110.
Post-employment benefits
393.163
402.921
405.118
414.667
414.272
440.728
436.763
430.450
120.
Provisions for risks and charges:
303.572
295.747
271.353
277.233
285.623
282.450
289.167
292.517
b) other provisions
130.
140.+170.
+180.+190.
Technical reserves
Share capital, share premiums, reserves and fair value reserves
-
-
-
803.894
646.320
810.081
156
77
2.600.165
4.288.484
3.697.804
3.859.410
3.085.006
3.743.221
3.916.535
3.939.651
68.082
69.560
70.464
70.982
71.503
69.820
72.758
80.892
235.490
226.187
200.889
206.251
214.120
212.630
216.409
211.625
-
-
-
-
-
195.215
391.352
405.032
10.806.898
10.886.557
10.867.923
11.351.150
11.141.149
11.104.760
10.942.579
11.152.097
1.110.471
210.
Minority interests
962.760
957.099
870.422
877.815
938.342
1.052.983
1.046.548
220.
Profit for the period
172.121
197.734
102.074
38.125
270.099
187.297
125.937
24.345
130.558.569
131.744.211
132.099.415
124.016.391
122.313.223
121.500.864
121.843.571
122.479.012
85
Reclassified consolidated income statement
2010
A
10.-20.
70.
40.-50.
80.+90.+
100.+110.
150.+160.
220.
Net interest income
of which: effects of the purchase price allocation
Net interest income excluding the effects of the PPA
Dividends and similar income
Profits (losses) of equity-accounted investees
Net commission income
of which performance fees
180.b
200.+210.
130.a
190.
240.+260.+270.
310.
330.
340.
4th Quarter
2010
C
4th Quarter
2009
D
Changes
C-D
% changes
C/D
(258.017)
(1.107)
(259.124)
13.490
(17.762)
(29.391)
(7.546)
(10,7%)
(1,8%)
(10,5%)
127,2%
(50,2%)
(2,4%)
(32,9%)
548.555
(14.598)
563.153
3.531
(1.867)
313.767
15.384
557.917
(13.963)
571.880
856
16.383
331.886
22.930
(9.362)
635
(8.727)
2.675
(18.250)
(18.119)
(7.546)
(1,7%)
4,5%
(1,5%)
n.s.
n.s.
(5,5%)
(32,9%)
34.044
92.482
126.783
30.945
87.304
(92.739)
(30.945)
5.178
(73,1%)
(100,0%)
5,9%
20.573
25.893
33.737
(51)
18.538
(13.164)
(51)
7.355
(39,0%)
(100,0%)
39,7%
3.496.061
3.557.202
3.906.247
3.968.495
(410.186)
(411.293)
(10,5%)
(10,4%)
910.452
925.050
959.266
973.229
(48.814)
(48.179)
(5,1%)
(5,0%)
Personnel expense
Other administrative expenses
Net impairment losses on property, equipment and investment property and intangible assets
Net impairment losses on property, equipment and investment property and intangib le assets
excluding the effects of the PPA
(1.451.584)
(769.744)
(247.236)
(74.889)
(1.465.574)
(777.216)
(271.557)
(100.992)
(13.990)
(7.472)
(24.321)
(26.103)
(1,0%)
(1,0%)
(9,0%)
(25,8%)
(344.469)
(201.335)
(63.996)
(18.722)
(346.621)
(219.492)
(97.914)
(51.416)
(2.152)
(18.157)
(33.918)
(32.694)
(0,6%)
(8,3%)
(34,6%)
(63,6%)
(172.347)
(170.565)
1.782
1,0%
(45.274)
(46.498)
(1.224)
(2,6%)
Operating expenses
Operating expenses excluding the effects of the PPA
(2.468.564)
(2.393.675)
(2.514.347)
(2.413.355)
(45.783)
(19.680)
(1,8%)
(0,8%)
(609.800)
(591.078)
(664.027)
(612.611)
(54.227)
(21.533)
(8,2%)
(3,5%)
1.027.497
1.163.527
1.391.900
1.555.140
(364.403)
(391.613)
(26,2%)
(25,2%)
300.652
333.972
295.239
360.618
5.413
(26.646)
1,8%
(7,4%)
(706.932)
(49.721)
(27.209)
90.700
(865.211)
(49.160)
(36.932)
100.302
(158.279)
561
(9.723)
(9.602)
(18,3%)
1,1%
(26,3%)
(9,6%)
(251.217)
(31.529)
(15.204)
12.346
(272.667)
(13.606)
(7.440)
96.684
(21.450)
17.923
7.764
(84.338)
(7,9%)
131,7%
104,4%
(87,2%)
334.335
470.365
540.899
704.139
(206.564)
(233.774)
(38,2%)
(33,2%)
15.048
48.368
98.210
163.589
(83.162)
(115.221)
(84,7%)
(70,4%)
(231.980)
43.770
83.368
(13.602)
10.034
(243.442)
52.532
(15.465)
(11.626)
(5.886)
(4.510)
6.557
5.155
(17.048)
24.280
(11.462)
(8.762)
(15.465)
(11.626)
(5.886)
(4.510)
(6.557)
78.213
(3.446)
(14.246)
(4,7%)
(16,7%)
(100,0%)
(100,0%)
(100,0%)
(100,0%)
(100,0%)
n.s.
(20,2%)
(58,7%)
(34.693)
10.720
(1)
(5.967)
2.503
(22.524)
21.093
(633)
(97)
(186)
(646)
296
7.749
12.461
12.169
(10.373)
(633)
(97)
(186)
(646)
(296)
1
(13.716)
(9.958)
54,0%
(49,2%)
(100,0%)
(100,0%)
(100,0%)
(100,0%)
(100,0%)
n.s.
n.s.
(79,9%)
Profit for the year/period attrib utab le to the shareholders of the Parent excluding the effects of the PPA
254.347
356.527
(102.180)
(28,7%)
(5.516)
114.627
(120.143)
(104,8%)
Profit (loss) for the year/period attributable to the shareholders of the Parent
172.121
270.099
(97.978)
(36,3%)
(25.613)
82.802
(108.415)
n.s.
Total impact of the purchase price allocation on the income statement
(82.226)
(86.428)
(4.202)
(4,9%)
(20.097)
(31.825)
(11.728)
(36,9%)
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities at fair
value
Net income from insurance operations
Other net operating income
Net impairment losses on loans
Net impairment losses on other assets and liabilities
Net provisions for risks and charges
Profit from the disposal of equity investments and net impairment losses on goodwill
Pre-tax profit from continuing operations
Pre-tax profit from continuing operations excluding the effects of the PPA
290.
% changes
A/B
2.400.543
(62.248)
2.462.791
10.609
35.375
1.214.688
22.930
Net operating income
Net operating income excluding the effects of the PPA
130.b+c+d
Changes
A-B
2.142.526
(61.141)
2.203.667
24.099
17.613
1.185.297
15.384
Operating income
Operating income excluding the effects of the PPA
180.a
2009
B
Taxes on income from continuing operations
Integration costs
of which: personnel expense
other administrative expenses
net impairment losses on property, equipment and investment property and intangib le assets
taxes
Post-tax profit (loss) from discontinued operations
Profit (loss) for the year/period attributable to minority interests
86
Reclassified consolidated quarterly income statements
2009
2010
10.-20.
70.
40.-50.
Net interest income
Net interest income excluding the effects of the PPA
80.+90.+
100.+110.
150.+160.
220.
Net income (loss) from trading, hedging and disposal/repurchase activities and from assets/liabilities at
fair value
Operating income
Operating income excluding the effects of the PPA
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
548.555
(14.598)
563.153
3.531
(1.867)
313.767
543.197
(14.060)
557.257
517.441
(15.934)
533.375
2.331
8.414
263.973
15.384
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
16.862
6.043
313.929
533.333
(16.549)
549.882
1.375
5.023
293.628
557.917
(13.963)
571.880
856
16.383
331.886
572.951
(15.198)
588.149
6.253
8.828
297.178
616.804
(18.027)
634.831
1.656
5.956
294.300
652.871
(15.060)
667.931
1.844
4.208
291.324
-
-
-
22.930
-
-
-
20.573
25.893
19.357
25.327
(964)
17.170
(4.922)
24.092
33.737
(51)
18.538
26.363
8.967
24.249
48.429
16.088
23.226
18.254
5.941
21.291
910.452
925.050
862.599
876.659
870.481
886.415
852.529
869.078
959.266
973.229
944.789
959.987
1.006.459
1.024.486
995.733
1.010.793
180.a
Personnel expense
(344.469)
(359.587)
(376.496)
(371.032)
(346.621)
(373.655)
(366.562)
(378.736)
180.b
Net impairment losses on property, equipment and investment property and intangib le assets excluding
the effects of the PPA
(201.335)
(63.996)
(18.722)
(45.274)
(183.844)
(60.425)
(18.723)
(41.702)
(199.730)
(61.729)
(18.722)
(43.007)
(184.835)
(61.086)
(18.722)
(219.492)
(97.914)
(51.416)
(174.589)
(58.143)
(16.526)
(200.525)
(57.546)
(16.525)
(182.610)
(57.954)
(16.525)
(42.364)
(46.498)
(41.617)
(41.021)
(41.429)
Operating expenses
Operating expenses excluding the effects of the PPA
(609.800)
(591.078)
(603.856)
(585.133)
(637.955)
(619.233)
(616.953)
(598.231)
(664.027)
(612.611)
(606.387)
(589.861)
(624.633)
(608.108)
(619.300)
(602.775)
300.652
333.972
258.743
291.526
232.526
267.182
235.576
270.847
295.239
360.618
338.402
370.126
381.826
416.378
376.433
408.018
(251.217)
(134.011)
(189.845)
(131.859)
(272.667)
(197.349)
(235.622)
(159.573)
(31.529)
(15.204)
12.346
(147)
(5.383)
80.498
(18.660)
(4.407)
(2.236)
615
(2.215)
92
(13.606)
(7.440)
96.684
(580)
(2.621)
(213)
39.372
(17.081)
(357)
(74.346)
(9.790)
4.188
15.048
48.368
199.700
232.483
17.378
52.034
102.209
137.480
98.210
163.589
137.639
169.363
168.138
202.690
136.912
168.497
(34.693)
10.720
(103.144)
10.545
(34.285)
11.153
(59.858)
11.352
(22.524)
21.093
(67.883)
10.189
(50.367)
11.106
(102.668)
10.144
(1)
(5.967)
2.503
12
(908)
2.395
83.035
(2.179)
2.622
322
(4.548)
2.514
(633)
(97)
(186)
(646)
296
7.749
12.461
(3.875)
(2.563)
(1.690)
(1.289)
1.667
(33)
(4.488)
4.219
(4.555)
(3.998)
(1.136)
(1.312)
1.891
(5)
(11.619)
4.117
(6.402)
(4.968)
(2.874)
(1.263)
2.703
5.193
(8.690)
3.483
200.+210.
Net operating income excluding the effects of the PPA
130.a
130.b+c+d
190.
240.+260.+270.
Profits (loss) from disposal of equity investments and net impairment losses on goodwill
Pre-tax profit from continuing operations excluding the effects of the PPA
290.
310.
330.
Taxes on income from continuing operations
Integration costs
net impairment losses on property, equipment and investment property and intangib le assets
taxes
Profit (loss) for the period attributable to minority interests
Profit (loss) for the period attrib utab le to the shareholders of the Parent excluding the effects of the PPA
340.
(5.516)
115.503
84.830
59.530
114.627
78.676
120.921
42.303
Profit (loss) for the period attributable to the shareholders of the Parent
(25.613)
95.660
63.949
38.125
82.802
61.360
101.592
24.345
Total impact of the purchase price allocation on the income statement
(20.097)
(19.843)
(20.881)
(21.405)
(31.825)
(17.316)
(19.329)
(17.958)
87
Reclassified consolidated income statement net of the most significant non-recurring items
non-recurring items
Impairment of
equity
Contribution
investments
of depository
Intesa
banking
Sanpaolo,
operations
A2A and the
Tlcom fund
2010
Net
impairment
losses on
goodwill of
Gestioni
Lombarda
(Switzerland)
Leaving
incentives
Partial
Full
Disposal of
disposal of the Disposal of
impairment property in
interest held in
BDG
of IT
via Solferino,
Lombarda Vita branches
systems
Milan
Spa
Tax effect of
branch
switching
operations
2010
net of nonrecurring
items
2009
A
Net interest income (including the effects of PPA)
non-recurring items
Disposal of
Tax realignment
shares,
sale/impairment PEO gain on Impairment pursuant to Art.
of equity
losses on 15, paragraph 3,
own
Decree Law
investments, subordinated DD Growth
185/2008 and
impairment of instruments
Fund
IRAP refund
intangible
assets
Appraisal
expenses for
the "branch
switching"
operation
Integration
costs and
other items
2009
net of nonrecurring
items
Changes
% changes
A-B
A/B
B
2.142.526
2.142.526
2.400.543
2.400.543
24.099
24.099
10.609
10.609
13.490
127,2%
17.613
17.613
35.375
35.375
(17.762)
(50,2%)
1.185.297
1.185.297
1.214.688
1.214.688
(29.391)
(2,4%)
15.384
15.384
22.930
22.930
(7.546)
(32,9%)
35.418
126.783
54.033
(18.615)
(34,5%)
-
30.945
30.945
(30.945)
(100,0%)
Net income from trading, hedging and disposal/repurchase activities and from
assets/liabilities at fair value
Operating income (including the effects of PPA)
Personnel expense
Net impairment losses on property, equipment and investment property and
intangible assets (including the effects of PPA)
34.044
1.374
92.482
3.496.061
(957)
-
(957)
-
(1.451.584)
-
-
-
1.374
-
-
33.233
(769.744)
(1.418.351)
(1.465.574)
(769.744)
(777.216)
(37.441)
(60.543)
25.234
25.234
-
-
1.686
88.990
2.535
2,8%
1.686
3.835.183
(338.705)
(8,8%)
(1.465.574)
(47.223)
(3,2%)
(769.705)
39
0,0%
7.511
(242.781)
(271.557)
34.891
(236.666)
6.115
2,6%
-
-
-
33.233
-
-
-
4.455
-
(2.430.876)
(2.514.347)
34.891
-
-
-
7.511
-
(2.471.945)
(41.069)
(1,7%)
Net operating income (including the effects of PPA)
1.027.497
-
(957)
-
33.233
-
-
1.374
4.455
-
1.065.602
1.391.900
(2.550)
(60.543)
25.234
-
7.511
1.686
1.363.238
(297.636)
(21,8%)
(706.932)
(706.932)
(865.211)
3.479
(861.732)
(154.800)
(18,0%)
(7.706)
904
11,7%
4.996
(31.936)
(4.727)
(14,8%)
(58,7%)
(49.721)
(27.209)
Profit (loss) from the disposal of equity investments and net impairment losses
on goodwill
Pre-tax profit from continuing operations before tax (including the effects of
PPA)
Taxes on income for the year from continuing operations
Integration costs
net impairment losses on property, equipment and investment property and
intangib le assets
taxes
4.455
87.304
3.906.247
(60.543)
(10,7%)
(2.468.564)
Operating expenses (including the effects of PPA)
(247.236)
91.525
3.496.478
(37.441)
(258.017)
41.111
90.700
4.145
(8.610)
(49.160)
(27.209)
(36.932)
41.454
(81.095)
(6.596)
(5.442)
1.712
100.302
(96.157)
4.145
(2.433)
33.233
-
(81.095)
(5.222)
4.455
(5.442)
324.563
540.899
(57.253)
(60.543)
25.234
-
7.511
10.161
466.009
(141.446)
(30,4%)
(9.139)
18.294
20.201
1.566
(1.444)
1.759
(201.089)
(243.442)
(20)
19.586
(8.156)
(31.038)
(2.433)
(2.524)
(268.027)
(66.938)
(25,0%)
-
-
(15.465)
(11.626)
(5.886)
15.465
11.626
5.886
-
-
-
-
-
(4.510)
6.557
4.510
(6.557)
-
-
-
334.335
41.111
(957)
(231.980)
(609)
263
83.368
(83.356)
Profit (loss) for the year attributable to minority interests
(13.602)
173
Profit for the year attributable to the shareholders of the Parent
172.121
40.502
(83.877)
4.145
4.145
(1.711)
(2.951)
22.383
15.343
(279)
(60.894)
(3.656)
2.732
(3.683)
12
5.155
(18.370)
(17.048)
(8.198)
105.116
270.099
(65.471)
(40.957)
17.078
(5.155)
-
12
n.s.
3.284
(633)
(2.007)
(24.602)
(6.232)
(25,3%)
(27.754)
4.445
15.940
173.380
(68.264)
(39,4%)
1,6%
1,0%
2,4%
1,6%
Cost / Income ratio (including the effects of PPA)
70,6%
69,5%
64,4%
64,5%
Cost / Income ratio (excluding the effects of PPA)
67,3%
66,2%
60,8%
60,8%
ROE
88
Reconciliation schedule to 31st December 2010
RECLASSIFIED INCOME STATEMENT
Ite ms
10.-20.
70.
Net interest income
reclassifications
2010
mandatory
consolidated
financial
statements
maximum
depreciation for
profit of equityoverdraft
improvements
accounted
charge
to leased
investees
reclassificatassets
ion
tax
recoveries
2.146.598
(4.072)
80.+90.+ Net income from trading, hedging and disposal/repurchase activities and from
100.+110. assets/liabilities at fair value
17.613
4.072
34.044
Other net operating income/(expense)
239.430
(153.846)
Operating income
3.625.396
(153.846)
Personnel expense
(1.451.584)
200.+210. intangible assets
240.+260.
+270.
(923.590)
6.898
17.613
92.482
6.898
-
3.496.061
(1.451.584)
153.846
(769.744)
(240.338)
(6.898)
(247.236)
Operating expenses
(2.615.512)
153.846
-
(6.898)
-
(2.468.564)
1.009.884
-
17.613
-
-
1.027.497
(706.932)
(706.932)
(49.721)
(49.721)
(27.209)
(27.209)
Profit (loss) from the disposal of equity investments and net impairment
losses on goodwill
108.313
334.335
130.b+c+d Net impairment losses on other assets and liabilities
190.
1.185.297
34.044
-
180.b
17.613
1.181.225
150.+160. Net income from insurance operations
130.a
2.142.526
24.099
-
40.-50.
180.a
reclassified
consolidated
financial
statements
24.099
Profit of equity-accounted investees
220.
2010
290.
310.
Post-tax profit from discontinued operations
330.
340.
(17.613)
-
90.700
-
-
-
334.335
(231.980)
(231.980)
83.368
83.368
(13.602)
(13.602)
172.121
-
-
-
-
172.121
Reconciliation schedule to 31st December 2009
RECLASSIFIED INCOME STATEMENT
Ite ms
10.-20.
70.
Net interest income
Profit of equity-accounted investees
reclassifications
2009
mandatory
consolidated
financial
statements
integration
costs
2.495.628
net income
from
insurance
operations
(10.572)
(84.513)
10.609
35.375
80.+90.+
100.+110.
126.788
(5)
150.+160.
20.049
10.896
220.
235.042
(319)
(155.308)
-
(155.308)
Operating income
180.a
Personnel expense
200.+210. intangible assets
180.b
240.+270.
290.
35.375
1.130.175
84.513
4.018.291
-
(1.477.200)
11.626
(938.410)
5.886
1.214.688
126.783
30.945
7.889
35.375
7.889
87.304
-
3.906.247
(1.465.574)
155.308
(777.216)
(268.178)
4.510
22.022
-
155.308
-
(7.889)
-
(2.514.347)
1.334.503
22.022
-
-
35.375
-
-
1.391.900
(865.211)
(865.211)
(49.160)
(49.160)
130.b+c+d Net impairment losses on other assets and liabilities
190.
2.400.543
(2.683.788)
Operating expenses
130.a
reclassified
consolidated
financial
statements
10.609
-
40.-50.
2009
depreciation maximum
overdraft
for
profit of equitytax
charge
improvements
accounted
recoveries
reclassificato leased
investees
assets
tion
(7.889)
(271.557)
(36.932)
Profits on the disposal of equity investments
135.677
518.877
22.022
(236.885)
(6.557)
(243.442)
-
(15.465)
(15.465)
Integration costs
310.
Post-tax profit from discontinued operations
330.
340.
(36.932)
(35.375)
-
-
-
100.302
-
-
540.899
5.155
5.155
(17.048)
(17.048)
270.099
89
-
-
-
-
-
-
270.099
Notes to the reclassified consolidated financial statements
The mandatory financial statements have been prepared on the basis of Bank of Italy Circular No. 262 of 22nd December 2005
and subsequent updates.
The contribution of depository banking operations was completed on 31st May 2010.
With regard to the statement of financial position, this involved the disposal of all the assets and liabilities associated with
these operations, and of direct funding in particular – the most significant component consisting of the accounts for the
management of the UBI Pramerica investment funds – which had been reclassified from 30th September 2009 within
“liabilities associated with activities under disposal”.
With regard to the income statement, this included not only the gain realised on the contribution in 2010, but also the
expenses and income from the operations transferred in respect of the first five months only.
The majority of the share capital (50% + 1 share) of UBI Assicurazioni was disposed of on 29th December 2009. Because this
partial disposal was concluded at the end of the year, the income statement for 2009 included all the income and expense
items on a “line-by-line” basis, while the statement of financial position items at the end of December no longer included the
assets and liabilities of the insurance company.
As from 1st January 2010 the income and expense items relating to UBI Assicurazioni formed part of the item profit (loss) of
equity-accounted investees (on the basis of the percentage interest held).
A “commitment fee” was introduced from 1st July 2009 which eliminated, amongst other things, the maximum overdraft
charge. This brought about a reclassification – made in the reclassified financial statements only and not the mandatory
financial statements – of the amounts for that fee, classified within interest until 30th June 2009.
In consideration of the commission nature of the commitment fee and the need for a uniform presentation of the data, the
income from the maximum overdraft charge was reclassified out of net interest income and into net commission income for
the periods prior to 1st July 2009.
The following rules have been applied to the reclassified financial statements to allow a vision that is more consistent with a
management accounting style:
-
net income from insurance companies comprises (for all the 2009 interim periods and for the full year 2009) the revenues of UBI
Assicurazioni Spa: net interest, net premiums (item 150), income from trading activities and net income from insurance operations
and other (items 160 and 220 in the mandatory financial statements);
-
the tax recoveries recognised within item 220 of the mandatory financial statements (other net operating income/expenses) were
reclassified as a reduction in indirect taxes included within other administrative expenses;
-
the item profit (loss) of equity-accounted investees includes the profit (loss) of equity-accounted investees included within item 240
in the mandatory financial statements;
-
the item net impairment losses on property, equipment and investment property and intangible assets includes items 200 and 210
in the mandatory financial statements and also the instalments relating to the depreciation of leasehold improvements classified
within item 220;
-
the item profit (loss) from the disposal of equity investments and impairment losses on goodwill includes the item 240, net of profit
(loss) of equity-accounted investees and also items 260 and 270 in the mandatory financial statements;
-
the item other net operating income/expense includes item 220, net of the reclassifications mentioned above.
The reconciliation of the items in the reclassified financial statements with the figures in the mandatory financial statements,
prepared on the basis of Bank of Italy Circular No. 262 of 22nd December 2005, has been facilitated, on the one hand, with the
insertion in the margin against each item of the corresponding number of the item in the mandatory financial statements with
which it is reconciled and, on the other hand, with the preparation of specific reconciliation schedules.
The comments on the performance of the main statement of financial position and income statement items are made on the
basis of the reclassified financial statements and of the reclassified financial statements for the comparative periods, and the
tables providing details included in the subsequent sections of this financial report have also been prepared on that same
basis.
In order to facilitate analysis of the Group’s performance and in compliance with CONSOB Communication No. DEM/6064293
of 28th July 2006, a special schedule has been included in the reclassified financial statements to show the impact on
earnings only of the principal non-recurring events and items – since the relative effects on equity and cash flow, being
closely linked, are not significant – which are summarised as follows:
full year 2010:
-
impairment losses on AFS equity investments in Intesa Sanpaolo and A2A and also in the AFS fund TLcom;
the contribution of depository banking operations;
impairment losses on goodwill of Gestioni Lombarda (Switzerland);
leaving incentives (trade union agreement of 20th May 2010);
tax impact of the branch switching operation;
partial disposal (9,9%) of the investment held in the Lombarda Vita Spa joint venture;
disposal of two branches by BDG;
full impairment loss on some components of IT systems by UBI.S and IW Bank;
disposal by the Parent of a property located in via Solferino, Milan
full year 2009:
-
profits on the disposal of instruments recognised within investments held to maturity. impairment losses on some intangible assets
(brands), impairment losses on equity investments in Intesa Sanpaolo investment and in the Fund Polis recognised within
available-for-sale financial assets and profits on the sale of equity investments (quota of BPA, UBI Assicurazioni, Mercato Impresa
and IW Bank)
- gain realised on the public exchange offer on own subordinated debt instruments;
- impairment loss on DD Growth Fund;
- tax effects of realignment pursuant to Art. 15, paragraph 3 of Decree Law No. 185/2008 and IRAP (local production tax) refund;
- appraisal expenses for the Group "branch switching" operation
extraordinary expenses/impairment/provisions relating to IW Bank, provision for the investment in Coralis Rent, integration costs,
profit on the sale of UBI Assicurazioni agent operations and sale to BPVI of a Palermo branch and a part of a Brescia corporate
business unit by BPCI.
90
The consolidated income statement
The income statement figures commented on are based on the reclassified consolidated financial
statements (the income statement, the quarterly income statements and the income statement net of the
principal non-recurring items) contained in another section of this report and the tables furnishing details
presented below are also based on those statements. The notes that follow those reclassified financial
statements may be consulted as may the reconciliation schedules for a description of the reclassification.
The results for 2010 were again affected by the macroeconomic scenario, in a context of a
recession never completely recovered from, of uncertainty inherited from the turmoil and
imbalances of the last four years and of sudden and unexpected pressures on financial
markets, all factors which perpetuate the disorientation of operators.
The year was characterised for the Group by a fall in ordinary revenues, which could not be
offset by a policy to contain costs – rigorously pursued again in 2010 – as they continued to be
affected by the economic situation, the high costs of credit, although now falling, and
impairment losses on financial assets. The year 2010 therefore ended with a consolidated
profit for the year of 172,1 million euro1, down compared to 270,1 million euro twelve months
before, despite the presence of non-recurring items2, related principally to partial disposals of
equity investments and the disposal of assets not related to the core business of the Group.
The positive trend for operations recorded in 2010 was confirmed in the fourth quarter,
although it ended with a loss of 25,6 million euro, attributable to further impairment losses on
financial assets (over 22 million euro) and additional impairment losses and provisions, mainly
of a prudent nature. This result, which compares with a profit of 82,8 million euro in the
fourth quarter of 2009, did not benefit from any non-recurring gains, as occurred in the
comparative period.
Operating income – which summarises the performance of ordinary activities – totalled
3.496,1 million euro (-10,5% compared to 2009), held down primarily by the trend for net
interest income and by the result for finance activities, as well as by the absence of net income
from insurance operations (following the partial disposal of UBI Assicurazioni on 29th
December 2009 and the consequent consolidation according to the equity method).
On a quarterly basis, operating income amounted to 910,5 million euro (-5,1% compared to
the fourth quarter of 2009), although net interest income (-1,7% compared to the fourth
quarter of 2009) is showing signs of recovery after the uninterrupted fall commenced at the
end of 2008: +1% the increase compared to the third quarter of 2010, +6% compared to the
second quarter of 2010 and +2,9% compared to the first quarter of the year.
In detail, net interest income3, which includes the expense of the purchase price allocation
amounting to 61,1 million euro, fell to 2.142,5 million euro (-258 million euro the year before),
penalised by weak demand for credit and even more by interest rate levels4.
1
2
3
4
The result includes the expense resulting from the purchase price allocation of the merger amounting to 82,2 million euro (86,4
million euro in 2009).
If non-recurring items are not included, then the normalised profit is 105,1 million euro, compared to 173,4 million euro in the
comparative year. These items consisted of net income of 67 million euro in 2010 (net of tax and minority interests), attributable
mainly to the contribution of the depository banking operations and the partial disposal of Lombarda Vita, although offset by
impairment losses on available-for-sale equity investments and payments related to leaving incentives. Positive again in 2009, net
income from non-recurring items amounted to 96,7 million euro in 2009 (again net of tax and minority interests) the result primarily
of the following: profits on the partial disposal of UBI Assicurazioni, a quota of BPA and Mercato Impresa; the gains from the public
exchange offer on own held-to-maturity investments held in portfolio; the tax realignment and the IRAP [local production tax] refund.
This was partly offset in 2009 by impairment losses on the equity investment in Intesa Sanpaolo and in the Polis Fund, by
impairment losses on intangible assets, by the full impairment loss on the DD Growth Fund, by integration costs and by appraisal
expenses for the operation to optimise the branch network.
The introduction of a commitment fee from 1st July 2009 made it appropriate, for the purpose of a consistent comparison, to
reclassify the old maximum overdraft charges (MOC), amounting to 84,5 million euro in 2009, out of net interest income and into net
commissions. Since the commitment fee is of an all encompassing nature, not only was the MOC eliminated, but also a series of
commissions applied to credit lines and to authorised current account overdrafts. This caused a decrease in the relative income from
162,7 million euro in 2009 to 117 million euro in 2010.
The progressive average one month Euribor rate fell from 0,927% in 2009 to 0,573% in 2010 (-35 basis points).
91
Interest and similar income: composition
Debt
instruments
1. Financial assets held for trading
2. Financial assets at fair value
3. Available-for-sale financial assets
30.701
-
-
328.149
2.814
3. Held-to-maturity investments
5. Loans to banks
6. Loans to customers
7. Hedging derivatives
8. Other assets
X
X
Total
Other
transactions
Financing
2009
933
-
31.634
-
18.210
-
-
-
328.149
165.526
29.421
361
29.782
59.659
40.260
3.125.154
1.922
3.129.890
3.831.817
1.785
1.785
2.685
5.001
3.521.240
4.118.157
2010
2009
X
X
361.664
2010
3.154.575
Interest and similar expense: composition
Borrowings
Other
transactions
Securities
1. Due to Central Banks
(14.115)
2. Due to banks
(29.382)
3. Due to customers
4. Securities issued
Total
(14.115)
(3.339)
(29.972)
(45.217)
(645)
-
(196.582)
(1.069.742)
(374.526)
(1.195.592)
X
(1.069.742)
(9.108)
-
-
(9.108)
(810)
-
-
(789)
(789)
(1.406)
X
(1.069.742)
(58.406)
(60.430)
(58.406)
(1.378.714)
(96.724)
(1.717.614)
2.142.526
2.400.543
X
(590)
(195.937)
X
5. Financial liabilities held for trading
6. Financial liabilities at fair value
7. Other liabilities and provisions
X
X
(248.542)
Net interest income
X
The main components were as follows5:
• the net balance on business with customers amounted to 1.969,4 million euro (-267 million
euro), affected above all by the impact of interest rates on the volumes of lending.
Lending business did in fact perform positively over twelve months (an increase in
consolidated lending of +4,8%, net of the large corporate component) affected, however, in
the Group’s network banks, by a further narrowing of the spread (-38 basis points), and by
the poor performance of average volumes of business (-0,1% lending and -3,5% funding).
These changes provide a general summary of the progressive reductions in short term
lending and funding partially offset by growth in medium-to-long term loans (now the most
significant component) and by the stability of longer maturity funding from customers. The
final balance on business with customers also included the income from positive
differentials on hedges on fixed rate bonds issued (approximately 106 million euro
compared to -25 million euro twelve months before);
• financial assets relating to the owned securities portfolio generated net interest income of
186,4 million euro (+15,6 million euro), the net effect of new investments in debt
instruments performed in the first half (+5,4 billion euro over twelve months). In reality, the
action taken to invest in Italian government securities, classified mainly within availablefor-sale financial assets, made a marked improvement in the contribution from the
securities portfolio to net interest income, (an increase of +162,6 million euro in interest
income from AFS financial assets compared to twelve months before), but at the same time
it incorporated the impacts of the differentials paid on derivatives to hedge interest rate risk
(available-for-sale, fixed rate bonds) which more than doubled during the year;
• the net balance on interbank business showed net expense of 14,3 million euro, compared
to -8,3 million euro recorded in 2009. This reflected on the one hand higher average levels
of debt over twelve month and on the other a recovery in interest rates in the last quarter,
especially on short term maturities.
Quarterly net interest income – 548,6 million euro – fell slightly compared to the fourth
quarter of 2009 (-9,4 million euro). On the one hand the item includes positive growth in the
5
The calculation of net balances was performed by allocating interest for hedging derivatives and financial liabilities held for trading
within the different areas of business (financial, with banks, with customers).
92
net balance on income from financial assets (60,2 million euro, compared to 32,9 million euro
in the fourth quarter of 2009), the result of substantial purchases of government securities,
and on the other the increased cost of funding6, partly in relation to the expansion in volumes
of business (+15,2 million euro for interest expense on securities issued, +7,6 million euro for
interest on amounts due to customers and +16,3 million euro for interest on amounts due to
banks). The delay of a few months with which the repricing of financial assets was performed
in relation to rises in interest rates (which nevertheless remain at very low record levels) must
also be underlined.
Dividends, amounting to 24,1 million euro compared to 10,6 million euro previously, relate
mainly to securities held in the AFS portfolio of the Parent, UBI Banca, and included 11,6
million euro of profits distributed on the ordinary shares of Intesa Sanpaolo (not remunerated
in the comparative year).
Profit of equity-accounted investees fell to 17,6 million euro (35,4 million euro in 2009) due
mainly to the lower contributions from Aviva Vita (two million euro, compared 18,5 million
euro before), Lombarda Vita (14,3 million euro compared to 11,2 million euro in 2009), Aviva
Assicurazioni Vita (1,5 million euro, compared to 3,3 million euro) and from Arca SGR (two
million euro compared to 2,8 million euro before) and also to the loss incurred by UBI
Assicurazioni (-2,2 million euro7).
Commission income: composition
a) guarantees granted
c) management, trading and advisory services
1. trading in financial instruments
2. foreign exchange trading
3. portfolio management
3.1. individual
3.2. collective
4. custody and administration of securities
5. depository banking
6. placement of securities
7. receipt and transmission of orders
8. advisory activities
8.1 on investm ents
8.2 on financial structure
9. distribution of third party services
9.1. portfolio management
9.2. insurance products
9.3. other products
d) collection and payment services
f) services for factoring transactions
i) current account administration
j) other services
Total
Commission expense: composition
2010
2009
42.648
683.743
39.462
12.259
273.077
72.968
200.109
15.788
41.069
656.798
37.830
11.510
258.769
73.660
185.109
19.188
7.751
105.533
43.565
6.062
5.958
104
180.246
68
21.022
78.411
48.681
5.965
5.965
175.422
-
127.927
52.251
146.820
26.995
213.902
268.081
105.233
70.189
156.170
26.799
225.262
307.599
1.382.189
1.413.697
a) guarantees received
c) management and trading services:
1. trading in financial instruments
2. foreign exchange trading
3.1. own
3.2. on behalf of third parties
4. custody and administration of securities
5. placement of financial, pinstruments
services
distributed through indirect networks
d) collection and payment services
e) other services
Total
2010
2009
(809)
(90.276)
(16.368)
(281)
(5.772)
(5.083)
(689)
(8.569)
(765)
(82.311)
(17.093)
(84)
(2.877)
(1.653)
(1.224)
(10.687)
(4.942)
(3.774)
(54.344)
(60.899)
(44.908)
(47.796)
(64.034)
(51.899)
(196.892)
(199.009)
1.185.297
1.214.688
Net commission income amounted to 1.185,3 million euro (-2,4% compared to 2009) the
aggregate result of opposing trends that are becoming increasingly more evident.
On the one hand, income from areas typical of normal banking business continued to fall,
even if, after three years, the phenomenon seems to be showing the first signs of slowing. In
detail: -32,5 million euro for “other services” (including, -45,7 million euro in relation to the
new commitment fee as compared to the maximum overdraft charges and the previous
commissions applied to credit authorisations and overdraft accounts taken together); -11,4
million euro for the item “current account administration” (in relation to the lower unit profit
on both conventional products and bundled accounts); -6,2 million euro for “collection and
payment services” (the result, amongst other things, of the economic context)8.
The trend for interest rates reversed from July in the third quarter with modest signs of recovery and then more marked signs
towards the end of the year (the average one month Euribor stood at 0,816% in the fourth quarter of 2010, compared to 0,453% in
the same period of 2009).
7 UBI Assicurazioni was consolidated on a line-by-line basis in 2009 and therefore made no contribution to the item in question. As
already reported, the profits of the company were recognised within the item on the basis of the percentage interest held by the
Group.
8 All the changes were calculated by subtracting commission expense from the respective commission income.
6
93
On the other hand, management, trading and advisory services9, which had recorded
significant recoveries during the year, were held down in the fourth quarter by renewed
pressures on financial markets, settling to 581,5 million euro (+18,4 million euro) and
accounting for 49,1% of total net commission income for the year (46,4% in 2009).
More specifically, the increase was attributable to individual and collective portfolio
managements (+11,4 million euro), to the distribution of insurance products (+22,7 million
euro) and to the placement of securities, mainly third party bonds (+26 million euro). This was
partially offset by the absence of income from depository banking operations (-13,3 million
euro), following the contribution of these operations in May 2010 and also by a fall-off in order
collection (-5,1 million euro).
The increased contribution from “assets under management” was the combined result of an
increase in total average assets managed (assisted also by market trends) and in average
profitability, as a consequence of a return by customers to investments in equities and bonds.
Quarterly commission income reflected the volatility in prices toward the end of the year to
stand at 313,8 million euro (-5,5% compared to fourth quarter of 2009). It recorded a
fluctuating trend compared to previous interim periods: +18,9% compared to the low recorded
in the third quarter of 2010, -0,1% compared to the second quarter and +6,9% compared to
the first three months of the year.
Affected by market trends, performance fees, which related entirely to UBI Pramerica SGR and
were recognised in the last quarter of the year, fell from 22,9 million euro to 15,4 million euro
(accounting for 1,3% of total commission income).
Net income from financial activities fell to 34 million euro from 126,8 million euro the year
before (in normalised terms the result fell from 54 million euro to 35,4 million euro), the result
of performance in the following areas:
• trading activities recorded a loss of 56,9 million euro (compared to a profit of 13,9 million
euro previously), attributable almost entirely (-55,8 million euro) to the unwinding and
ineffectiveness of hedging derivatives, used on a macro-hedge basis, for fixed rate
mortgages subject to either early repayment or renegotiation (unwinding)10.
The extreme reactivity to the “sovereign debt” risk of some European countries, together
with the growing difficulties of first Greece and then Ireland towards the end of the year,
affected the price of financial instruments, reducing their contribution to income from
trading activities: -14,6 million euro for debt instruments and the related derivative
instruments, net of the component just mentioned concerning the unwinding of some
derivatives (-6,1 million in 2009), -2,7 million euro for equity instruments and the related
derivative instruments (+5,2 million euro), +0,4 million euro for investments in hedge funds
(+2,3 million euro) and +14,7 million euro for foreign exchange business (+10,3 million
euro).
In December UBI Banca International disposed of a Lehman Brothers security (2,5 million euro nominal,
recognised in the financial statements as at 31st December 2008 at the expected realisable value, equal to 8,625%
of the nominal value), to realise a gain of over 300 thousand euro, recognised within item 80 “trading”;
• net income from financial assets and liabilities at fair value – relating to investments in
hedge funds performed after 1st July 2007 – amounted to 6,7 million euro, compared to
-25,2 million euro in 2009, which in addition to the gains realised on Capitalgest and from
the redemptions that occurred, nevertheless included the full impairment loss of the SV
Special Situation fund of 8,1 million euro and also the full impairment loss of 25,2 million
euro on the DD Growth fund, which was classifed within non-recurring items;
• net hedging income – which represents the change in the fair value of hedging derivatives
and the relative items hedged – rose to 67,2 million euro (16 million euro in 2009) and
should be interpreted in combination with the information reported on trading activity
concerning the unwinding of hedges. The positive performance also relates to the market
context and more specifically to the reversal in the trend for interest rates which became
more marked in the last quarter of the year and had a positive impact on the value of the
bonds hedged.
9
10
The amount consists of management, trading and advisory services net of the corresponding expense items and is calculated
excluding currency trading.
See in this respect the Notes to the Consolidated Financial Statements, Part A – Accounting Policies – Section 5 – Other aspects.
94
Net trading income (loss)
Gains
Profits from
trading
Losses
Losses from
trading
Net income
(loss) 2010
(A)
(B)
(C)
(D)
[(A+B)-(C+D)]
1.1 Debt instruments
15.561
8.704
85.345
14.297
(61.541)
(20.458)
(243.918)
(22.935)
(204.553)
(20.392)
177.512
17.405
5.752
117
3.314
548
(7.500)
(97)
(5.940)
(181)
(4.374)
387
22.865
2.292
1.2 Equity instruments
1.3 Units in O.I.C.R. (collective investment instruments)
1.4 Financing
2009
-
-
-
-
-
-
988
67.186
(33.486)
(214.862)
(180.174)
134.950
2.1 Debt instruments
2.2 Payables
10.529
10.450
-
1
-
(40)
(40)
-
(11)
(8)
10.479
10.410
(8)
391
480
-
2.3 Other
3. Financial assets and liabilities: exchange rate differences
X
1.5 Other
79
4. Derivative instruments
4.1 Financial derivatives
- on deb t instruments and interest rates
1
X
255.111
255.111
233.543
X
2.142.572
2.141.638
2.127.635
(177.903)
(177.903)
(160.855)
- on equity instruments and share indices
- on currencies and gold
X
- other
16.247
5.803
(10.372)
-
934
-
281.201
2.227.918
(239.484)
5.321
4.2 Credit derivatives
Total
8.200
X
(3)
X
(2.277.469)
(2.275.746)
(2.260.740)
(6.676)
(5.210)
X
X
77
(89)
2.204
3.766
134.979
135.768
(60.417)
(167.805)
(168.637)
(23.985)
1.635
(17.680)
192.668
(128.390)
(9.796)
1.882
1.418
(1.723)
(789)
832
(2.521.398)
(56.891)
13.864
Net hedging income
2010
Net hedging income
2009
67.209
15.960
Profit (loss) from disposal or repurchase
Profits
Net profit (loss)
2010
Losses
Financial assets
1. Loans to banks
1.463
32.127
(5.313)
2009
1.463
(81)
30.511
(882)
(5.313)
31.245
3.1 Deb t instruments
19.670
(581)
19.089
25.031
3.2 Equity instruments
10.418
(298)
10.120
5.463
2.039
(3)
2.036
17
-
-
-
-
-
-
-
37.441
33.590
(6.195)
27.395
67.871
3.3 Units in O.I.C.R (collective investment instruments).
3.4 Financing
Total assets
Financial liabilities
1. Due to banks
2. Due to customers
3. Securities issued
-
-
-
-
6.574
(16.912)
(10.338)
54.239
Total liabilities
6.574
(16.912)
(10.338)
54.239
Total
40.164
(23.107)
17.057
122.110
Net profit (loss) on financial assets and liabilities at fair value
2010
Net profit (loss) on financial assets and liabilities at fair value
2009
6.669
(25.151)
34.044
126.783
• net income from the disposal/repurchase of financial assets/liabilities amounted to 17,1
million euro compared to 122,1 million euro in 200911 and was composed as follows:
♦ 19,1 million euro from available-for-sale debt instruments, including 1,8 million relating
to a corporate bond in the Centrobanca portfolio, 8,7 million relating principally to a BTP
11
The amount included both non-recurring items associated with the gains generated by the public exchange offer on own
subordinated instruments (60,5 million euro) and by the disposal of BTPs in the held-to-maturity portfolio (37,4 million euro), as
well as on ordinary operating items such as the disposal of equity instruments (5,5 million euro, including 2,1 million euro – net of
a consolidation adjustment – for the sale of the equity investment in Cedacri held by BRE, 1,5 million euro in relation to the
disposal of the investment in SIA-SSB, as well as approximately one million euro from accepting the Meliorbanca pubic tender offer)
and the disposal of BTPs as asset swaps (classified as available-for-sale) which had generated gains of approximately 20 million
euro.
95
♦
♦
♦
♦
♦
disposed of by IW Bank and another 8,7 million euro relating to UBI Banca, realised on
the sale of BTPs, CTZs and bank bonds with a short residual life;
10,1 million euro from equity instruments, including 9,1 million euro on the disposal of
the interest held in CartaSì Spa12;
two million euro from units held in monetary and bond funds (resulting from the
contribution of operations by Capitalgest SGR) sold by UBI Pramerica SGR in the second
half of the year;
-10,3 million euro from the repurchase of securities issued as part of ordinary business
with customers;
-5,3 million euro from disposals of impaired loans by Centrobanca;
+1,5 million from the sale by UBI Banca International of a loan to banks, net of the
impairment loss, to a counterparty which acquired the former Soviet Republic bank in
difficulty, the borrower in question;
On a quarterly basis, net income from financial activities amounted to 20,6 million euro (+33,7
million euro in the fourth quarter of 2009, which included profits of 37,4 million euro from the
disposal of the held-to-maturity portfolio), due mainly to profits on the disposal of AFS
securities and units of AFS funds (+19,1 million euro), hedging activity (+10,4 million euro)
and assets at fair value (+0,5 million euro), partially offset, however, by the loss for trading (-6
million euro, attributable above all to the impact of losses incurred as a result of the
broadening of spreads on securities issued by less virtuous countries) and by the disposal of
loans (-3,5 million euro related to Centrobanca).
Following the partial disposal of UBI Assicurazioni (performed on 29th December 2009), net
income from insurance operations was nil (31 million euro in 2009). The profits of the
company are now recognised in proportion to the percentage interest held within the item
“profit of equity-accounted investees”.
Other net operating income/(expense) amounted to 92,5 million euro (+5,2 million euro compared
Other net operating income and expenses
to 2009).
The item includes the following: a
2010
2009
payment of 2,5 million euro to IW Figures in thousands of euro
165.869
195.055
Bank for the final settlement of Other operating income
13.745
26.565
the litigation that had arisen with Recovery of expenses and other income on current accounts
Recovery of insurance premiums
33.125
31.787
former officers of that bank13; 1,7 Recoveries of taxes
153.846
155.308
million euro relating to a recovery Rents and other income for property management
8.959
7.936
14.020
13.946
from a network bank creditor Recovery of expenses on finance lease contracts
income and prior year income
96.020
114.821
action and approximately one Other
Reclassification of "tax recoveries"
(153.846)
(155.308)
million euro resulting from the
(73.387)
(107.751)
Other operating expenses
disposal of BPCI’s correspondent Depreciation of leasehold improvements
(6.898)
(7.889)
banking operations (as part of Costs relating to finance lease contracts
(7.169)
(8.176)
(7.542)
(8.042)
the contribution of depository Expenses for public authority treasury contracts
Ordinary maintenance of investment properties
banking operations).
Other expenses and prior year expenses
(58.676)
(91.533)
The
table
shows
the
6.898
7.889
corresponding decreases that Reclassification of depreciation of leasehold improvements
affected both other operating Other operating income and expenses
92.482
87.304
income (-29,2 million euro) and
other operating expenses (-34,4 million euro), mainly as a result of changes in prior year
income and expense14.
12
13
14
On 17th December 2010 UBI Banca sold its entire interest held in the company Società Istituto Centrale delle Banche Popolari
Italiane Spa consisting of 4.289.751 shares accounting for 7,25% of the share capital for consideration of 23,4 million euro (5,4621
euro per share), in addition to a dividend payment of 1,4 million euro.
Following the unexpected reorganisation of top management at IW Bank, inspections were commenced in 2009 by the Parent which
also concerned the accounting system of that bank. The inspection found a series of problems of an operational and organisational
nature, especially with the system of controls for suspense accounts. Amongst other things, deferred items were found dating back
some time concerning business with customers, of uncertain recovery, for which impairment losses on loans were recognised
amounting to 3,5 million euro, operating costs of 1,7 million euro and provisions for risks and charges of one million euro. The
amounts were classified within non-recurring items.
The performance of prior year items relates, amongst other things, to Coralis Rent which ceased operations in November 2009. Its
revenue and expenses were still included in the separate items of the comparative period figures amounting to 15,9 million euro for
the income and 22,1 million euro for the expenses. Prior year expenses in 2009 also included 3,6 million euro due to litigation with
a large Group of companies by BPA.
96
The change in the item “recovery of expenses and other income on current accounts” is also to
be noted. It fell by 12,8 million euro, partly in relation to the implementation of the European
Directive on the transparency of transactions and banking services.
Total operating expenses incurred by the
Group during the year amounted to
2.468,6 million euro, a decrease of 1,8%
compared to 2009. The item fell in
normalised
terms,
excluding
nonrecurring items, by 1,7%.
In detail:
Personnel expense: composition
2010
2009
1) Employees
a) Wages and salaries
b) Social security charges
c) Post-employment benefits
d) Pension expense
(1.411.084)
(948.075)
(1.416.207)
(974.448)
(250.714)
(62.432)
(264.733)
(60.006)
(105)
(111)
•
e) Provision for post-employment benefits
(10.817)
(17.407)
personnel expense – which includes 33,2
f) Pensions and similar obligations:
(4.144)
(6.660)
million euro of leaving incentives
- defined contribution
(156)
recognised in connection with a trade
- defined service
(4.144)
(6.504)
g) Payments to external supplementary pension
union agreement signed on 20th May
plans:
(50.411)
(50.338)
2010 – fell to 1.451,6 million euro (-14
- defined contribution
(50.363)
(50.188)
million euro, compared to the previous
- defined benefits
(48)
(150)
year; -47,2 million euro excluding the
h) Expenses resulting from share based payment
agreements
(179)
extraordinary payment, classified within
i) Other employee benefits
(84.386)
(42.325)
the item “other employee benefits”).
2) Other personnel in service
(18.130)
(26.559)
The change is the aggregate result, on
- Expenses for agency personnel on staff leasing
contracts
(14.216)
(21.628)
the
one
hand,
of
savings
of
- Other expenses
(3.914)
(4.931)
approximately 32 million euro related to 3) Directors and statutory auditors
(22.118)
(22.701)
changes in average personnel numbers 4) Expenses for retired personnel
(252)
(107)
(1.451.584) (1.465.574)
and of changes in the variable Total
components of remuneration, and on the
other hand, to ordinary increases in salaries, leaving incentives, other specific payments to
employees and expenses for training in external organisations (4,3 million euro).
The details of the composition reported Other administrative expenses: composition
in the table show a significant reduction
concentrated in the item wages and
2010
2009
employee expenses (-40,4 million euro), Figures in thousands of euro
(712.876)
(716.329)
and also a fall in expense for workers on A. Other administrative expenses
Rent payable
(77.847)
(80.090)
personnel leasing contracts (-7,4 million
Professional and advisory services
(102.647)
(108.421)
euro). The latter is due to both less use
Rentals hardware, software and other assets
(38.679)
(36.869)
of this type of personnel and to the
Maintenance of hardware, software and other assets
(40.842)
(43.373)
conversion to permanent contracts
Tenancy of premises
(51.748)
(58.178)
Property maintenance
(27.816)
(24.970)
which occurred in the second half of the
Counting, transport and management of valuables
(16.503)
(17.893)
year.
Membership fees
(10.818)
(11.541)
Personnel expense also benefited in the
Information services and land registry searches
(13.168)
(16.718)
accounts from savings of more than 14,8
Books and periodicals
(1.901)
(1.970)
Postal
(31.906)
(37.759)
million euro following the exclusion from
Insurance premiums
(45.806)
(27.331)
the consolidation of UBI Assicurazioni
Advertising
(24.663)
(28.033)
and Mercato Impresa;
Entertainment expenses
(2.099)
(2.385)
•
other
administrative
expenses,
amounting to 769,7 million euro,
decreased by -7,5 million euro, including
-3,5 million euro for current expenses
and -4 million euro for indirect taxation.
In reality, the higher expenses shown in
the table (a total of +14,9 million euro)
are the result of the effects in the
accounts of the partial disposal of UBI
Assicurazioni (now an equity-accounted
investee), and also the full disposal of
which,
while
Mercato
Impresa15,
15
Telephone and data transmission expenses
(69.934)
(67.817)
Services in outsourcing
Travel expenses
(51.223)
(23.476)
(47.597)
(24.396)
Credit recovery expenses
(46.103)
(42.468)
Forms, stationery and consumables
Transport and removals
(13.304)
(6.987)
(13.545)
(8.414)
Security
(9.651)
(11.368)
Other expenses
(5.755)
(5.193)
(56.868)
(40.467)
(129.567)
(60.887)
(45.157)
(133.620)
B. Indirect taxes
Indirect taxes and duties
Stamp duty
Municipal property tax
Other taxes
Reclassification of "tax recoveries"
Total
(9.029)
(9.818)
(31.651)
153.846
(27.600)
155.308
(769.744)
(777.216)
Both companies were consolidated on a line-by-line basis until 2009 and the relative intragroup cash flows were eliminated as part
of the consolidation process. The disposals (partial for UBI Assicurazioni and total for Mercato Impresa), which occurred in
December 2009 brought out those items in the financial ye2010. However they were not sufficiently large as to warrant pro-forma
restatement of the comparative period.
97
affecting all types of expense, are concentrated mainly in the items insurance premiums and
outsourced services in relation to the management of commercial products for businesses. If
these items are excluded, current expenses continue to show the action taken to contain
them, attributable mainly to tenancy of premises, information services and land registry
searches, advertising and promotion expenses, rent payable, postal expenses (which in 2009
included expenses to communicate changes in terms and conditions and the abolition of the
maximum overdraft charge) and professional and advisory services (due to a non recurring
item of 7,5 million euro in 2009 relating to appraisal expenses and IT intervention for the
“branch switching” operation, of which 7,1 million euro is included in the item). On the other
hand telephone and data transmission expenses moved in the opposite direction (due to the
higher costs incurred for participation in the guarantee system designed to cover the costs of
damages resulting from the fraudulent use of credit cards) as did credit recovery expenses
(in consideration of the current economic context);
•
reduced to 247,2 million euro (-24,3 million euro compared to 2009). The reduction mainly
reflects the change in the purchase price allocation performed here, which reduced by 74,9
million euro after the exceptional amount of 101 million euro in 2009, which incorporated a
non recurring negative component (-34,9 million euro) related to the impairment test on
brands16.
The item also included amortisation of new investments in software, as well as a 4,5 million
euro non-recurring full impairment of some parts of the IT system of the Group’s consortium
service company (3,1 million euro, related mainly to retirements for end of use and service
contract and for replacement of the product) and of IW Bank (1,4 million euro, mainly for the
retirement of the bank’s previous legacy system and to a lesser extent for the Twice Sim and
InvestNet software).
On a quarterly basis, operating expenses totalled 609,8 million euro (-8,2% compared to the
fourth quarter of 2009), which confirmed the downward trend for average quarterly spending
(also for normalised figures): 608 million euro in 2010 compared to 618 million euro the year
before.
In terms of composition, the following trends were observed in the fourth quarter of the year
compared to the same period in 2009:
y
a fall in personnel expense (-2,2 million euro, attributable mainly to workers on personnel
leasing contracts, use of which was reduced partly by making permanent appointments);
y
a significant reduction in other administrative expenses (-18,2 million euro, due to the
presence in 2009 of the 7,5 million euro of non-recurring expenses already mentioned in
relation to appraisal expenses for the branch switching operation, to savings on the item
tenancy of premises, postal expenses – fewer communications of changes to customers –
advertising and telephone and data transmission expenses);
y
a reduction in net impairment losses on property, equipment and investment property and
intangible assets (-33,9 million euro), which, while they included the amortisation of new IT
investments, were affected by the absence of a non recurring item connected with the
impairment test performed in December 2009 on indefinite life intangible assets (34,9
million euro).
As a summary of overall performance, net operating income for the year amounted to
1.027,5 million euro, compared to 1.391,9 million euro in 2009.
As a result of the performance of operating expenses, quarterly net operating income (300,7
million euro) recorded growth compared both to the fourth quarter of 2009 (+1,8%), and to all
the previous periods: +16,2% compared to the third quarter of 2010, +29,3% compared to
second quarter and +27,6% compared to the first three months of the year.
16
The result related to the carrying amounts for indefinite life intangible assets of the network banks of the former Banca Lombarda e
Piemontese Group. The remaining goodwill on the brands has been depreciated from 2010 over 19 years, for a total of
approximately 357 million euro with an annual additional impact on the PPA of 11 million euro.
98
The figures for the year confirm the
positive signals coming from net
Impairment losses/
impairment losses on loans, down to
reversals of impairment losses, net
2010
706,9 million euro, a reduction of
Specific
Portfolio
158,3 million euro compared to
A. Loans to banks
23
23
B. Loans to customers
(630.973)
(75.982)
(706.955)
200917.
C. Total
(630.973)
(75.959)
(706.932)
The improvement affected both
portfolio impairment losses and
Impairment losses/
reversals, which reduced by 29,5
reversals of impairment losses, net
2009
million euro due, amongst other
Specific
Portfolio
things, to bringing the quality of the
A. Loans to banks
(3.468)
(14)
(3.482)
portfolios of some of the network
B. Loans to customers
(756.318)
(105.411)
(861.729)
banks into line with the Group
C. Total
(759.786)
(105.425)
(865.211)
average,
while
coverage
for
performing loans grew over twelve months from 0,52% to 0,54%, and also to specific
impairment losses on deteriorated loans (down by 128,8 million euro). The latter – amounting
to 631 million euro – are the aggregate result of varying trends: on the one hand the network
banks by themselves recorded a significant reduction (-130,5 million euro), offering a signal for
confidence in the short term, and also for a reduced need to recognise impairment losses
following the improvement in the quality of some portfolios just mentioned.
Net impairment losses/reversals of impairment losses
on loans: composition
Net impairment losses/reversals of impairment losses on loans: quarterly performance
Figures in
thousands of
euro
Specific
Portfolio
1st
Quarter
Specific
Portfolio
2nd
Quarter
Specific
Portfolio
3rd
Quarter
Specific
Portfolio
4th
Quarter
2010
(105.366)
(26.493)
(131.859)
(184.080)
(5.765)
(189.845)
(124.200)
(9.811)
(134.011)
(217.327)
(33.890)
(251.217)
2009
(122.845)
(36.728)
(159.573)
(176.919)
(58.703)
(235.622)
(178.354)
(18.995)
(197.349)
(281.668)
9.001
(272.667)
2008
(64.552)
4.895
(59.657)
(85.136)
(8.163)
(93.299)
(77.484)
(25.384)
(102.868)
(219.512)
(90.887)
(310.399)
On the other hand difficulties were encountered for some of the product companies, associated
with specific operating segments: consumer finance, which is nevertheless showing some first
positive signals after the corrective action taken, and property leasing, where a project to
generally improve credit quality was launched in the fourth quarter in co-ordination with the
Parent.
The positive performance by individual impairment losses also contributed to reversals of
losses (excluding present value discounting), which totalled 196,2 million euro, an increase
from 128,2 million euro in 2009.
Total net impairment losses as a percentage of net loans to customers had fallen consistently
at the end of the year to 0,69% from 0,88% in 2009.
On a quarterly basis, net impairment losses fell less markedly, settling at 251,2 million euro
from 272,7 million euro in the fourth quarter of 2009.
In reality, the item included a significant reduction in specific impairment losses (-64,3 million
euro), but greater portfolio impairment losses (after the reversal of impairment losses that
occurred in the last quarter of 2009). In accordance with the provisions of Bank of Italy
Circular No. 263, the periodic update of the historical data series, which form the basis for the
estimate of the risk parameters for the rating models (PD – probability of default) and LGD
(Loss given default), did in fact introduce the period of recession (2008-2010), resulting in an
increase in collective impairment losses in December for the network banks only of greater
than 20 million euro.
The cost of credit in the last quarter of the year fell to 0,99%, annualised, from 1,11% (again
annualised) in the same period of 2009.
Net impairment losses on other assets and liabilities totalled 49,7 million euro (49,2 million
euro in the comparative year).
These included 41,1 million euro of non-recurring items, as follows: 36,8 million euro resulting
from the impairment loss on the AFS investment in Intesa Sanpaolo (an impairment loss had
17
The item includes recognition of a further impairment loss of the Mariella Burani Group amounting to 11,3 million euro, after
impairment losses of 56,5 million euro recognised in 2009.
99
already been recognised in the first half of 17,2 million euro and a further loss was then
recognised – on the basis of the official price of 2,0423 euro quoted on 31st December 2010);
2,6 million relating to the company A2A and 1,7 million euro relating to the permanent
impairment loss on the units of the British TLcom fund classified within available-for-sale
financial assets.
Net impairment losses on other assets and liabilities were recognised in 2009 of 49,2 million
euro as follows: 9,1 million euro on the Polis Fund and 32,4 million euro (all classified within
non-recurring items) on Intesa Sanpaolo (the impairment loss had been recognised in the first
half the year, while in the third and fourth quarter this investment recovered in value by 126,1
million euro gross on the basis of the official price – 3,1654 euro – recorded on 30th December
2009, which increased the equity reserve in relation to available-for-sale financial assets).
As a result, amongst other things, of Net provisions for risks and charges
the reversals recorded by some
2010
2009
network
banks
following
the Figures in thousands of euro
settlement of litigation, net provisions Net provisions for risks and charges for revocations
(1.440)
(1.881)
(79)
for risks and charges fell from 36,9 Additions to and uses of personnel expense provisions
Net provision for bonds in default
46
(739)
million euro18 to 27,2 million euro.
Net provisions for litigation
(16.924)
(17.610)
The following was recognised within Other provisions for risks and charges
(8.812)
(16.702)
the item:
(27.209)
(36.932)
Total
• a provision of eight million euro
made by B@nca 24-7, in relation to the company Ktesios – specialised in the salary backed
loans sector which operates as an agent of B@nca 24-7, providing services, partly through
an associate company, for the recovery of credit.
On 11th February 2011 Ktesios Spa, in consideration of the constant imbalance in its cash
flows, announced that it had made proposals to its governing bodies to take appropriate
corporate ownership initiatives, including a possible proposal to go into voluntary
liquidation. With a provision of 8th March 2011 the Bank of Italy removed Ktesios from the
special list pursuant to Art. 107 of the Consolidated Banking Act. Therefore, from that date
the company is only registered in the general list pursuant to Art. 106 of Legislative Decree
No 385/93 and may not undertake new transactions;
• a provision of two million euro made by Centrobanca against potential revocation action on
the Burani Group;
• a provision of 2,3 million euro made by IW Bank (to increase the provision already made in
2009) for potential future risks and charges connected with differences found when
inspections were performed (intensified and further developed when the IT migration took
place) in suspense accounts, between balances in the accounts and the results of a support
inventory, the nature of which is still being clarified.
Profits from the disposal of equity investments and impairment losses on goodwill of 90,7 million
euro were recognised during the year, classified practically entirely within non-recurring
items19.
The item included the following gains: 81,1 million euro on the sale of a further 9,9% of
Lombarda Vita Spa to our joint venture partner (Società Cattolica di Assicurazione); 6,6 million
euro on the disposal by BDG of its Yverdon and Neuchâtel branches; and 5,4 million euro on
the disposal of a property belonging to the Parent located in via Solferino in the Milan. Losses
on the other hand included the impairment loss on the Gestioni Lombarda Suisse goodwill
(-4,1 million euro) and the impairment loss on Barberini goodwill (-1 million euro not classified
within non-recurring items considering the negligible amount of the loss).
18
19
The figure for 2009 included a provision of 2,8 million euro made for tax litigation arising with the Swiss authorities and a nonrecurring provision of four million euro to cover risks connected with a portfolio belonging the subsidiary Coralis Rent as well as one
million euro relating to IW Bank.
In 2009 the aggregate consisting of the items 240 (profits (losses) of equity investments), 270 (profits (losses) from the disposal of
investments) and 260 (net impairment losses on goodwill), showed income of 100,3 million euro. It was the result of gains on the
following non-recurring items: the sale on the basis of specific agreements of an interest in Banca Popolare di Ancona to Aviva for
32,4 million euro (net of a consolidation adjustment), the disposal of the majority of the share capital of UBI Assicurazioni for 45,8
million euro (net of a reversal of goodwill, accessory costs and the positive effect of a change in the consolidation criterion), the
disposal of the entire interest held in Mercato Impresa for 12,8 million euro (net of a consolidation adjustment) and the partial
disposal of IW Bank shares by Centrobanca for five million euro (net of consolidation adjustments).
The item also included 3,8 million euro for the gain on the disposal of the non operating assets of BPB Immobiliare as part of a
property management project.
100
As a result of the performance described above, pre-tax profit from continuing operations
amounted to 334,3 million euro, compared to 540,9 million previously.
In the fourth quarter of the year pre-tax profit fell to 15 million euro from 98,2 million euro in
the same period in 2009. In normalised terms, excluding non-recurring income and expense
which affected the results for the year, pre-tax profit stood at 31,1 million euro up from 22,5
million euro in the last three months of 2009.
As a result of the trend for taxable income in 2010, taxes on income from continuing operations
fell to 232 million euro from 243,4 million euro in 2009, to give a tax rate of 69,39%, compared
to 45% in the previous year (61,96% and 57,52% respectively, in normalised terms), which,
however, benefited from the positive impact of 12,6 million euro resulting from a substitute tax
(with the relative release of the related deferred taxes) in relation to the realignment of
statutory accounts with tax accounts pursuant to Art. 15, of Decree Law No. 185/2008.
Compared to the theoretical tax rate (32,32%), the taxation levied was conditioned by the
combined effect of greater IRES (corporate income tax) and IRAP (local production tax), due to:
- the non deductibility of impairment losses on equity instruments recognised in the AFS
portfolio, (four percentage points);
- the partial non deductibility of interest expense (4%), introduced by Law No. 133 of 6th
August 2008 (six percentage points);
- the tax effect of the branch switching operation (with a negative impact of five percentage
points);
- the total non deductibility for IRAP purposes of impairment losses on loans and personnel
expenses and the partial non deductibility of other administrative expenses and
depreciation and amortisation (approximately 25 basis points.
These impacts were only partly reduced (three percentage points) by the taxation on profit on
the sale of part of the interest held in Lombarda Vita.
On a quarterly basis, although there were no significant changes in terms of the result, taxes
rose to 34,7 million euro from 22,5 million euro in the fourth quarter of 2009. The tax burden
in 2009 benefited from gains on the sales of a portion of the interest held in BPA, the majority
of the share capital of UBI Assicurazioni and the entire interest held in Mercato Impresa (for a
total of over 90 million euro), all performed by making use of the PEX regime.
Following the conclusion of the activities for the implementation of the 2007-2010 Business
Plan, no integration costs were recognised in the period (15,5 million euro in 2009).
Finally, post-tax profit from discontinued operations of 83,4 million euro (non-recurring) was
recognised in relation to the contribution of depository banking operations performed on 31st
May 2010 by the Parent to RBC Dexia Investor Services.
The profit earned in 2009 – 5,1 million euro almost entirely non-recurring – included 2,6
million euro from the sale of the operations created by agents of UBI Assicurazioni to the
Cattolica Group and 2,5 million euro in respect of the sale by BPCI of its Palermo branch and
a portion of a corporate banking unit in Brescia to Banca Popolare Vicentina, on the basis of
agreements that had been stipulated.
As a result of the performance already reported and as a result of the lower profits earned by
some banks and companies of the Group, profit for the period attributable to minority interests
(inclusive of the effects of consolidation entries) fell from 17 million euro to 13,6 million euro.
101
General banking business with customers:
funding
Funding policies
In 2010 Group funding policies were oriented towards increased diversification of the sources,
both in terms of type and maturity, pursued in parallel with action to increase growth
designed to encourage balanced and sustainable growth of volumes from non institutional
customers.
Institutional funding was affected by the high volatility present on international markets over
the twelve month period. In April markets started to feel the repercussions of the Greek crisis,
which rapidly spread to affect other European countries with high levels of public debt (Spain,
Ireland, Portugal). Italy was not exempt.
The heightened perception of sovereign debt risk rapidly transferred to the banking issues
market, in consideration of the large investments held by banks in government securities and
this led to a progressive increase in the premiums on credit default swaps. Spreads suddenly
widened as a consequence, which made it more costly, if not actually difficult at times, to
place new issues, especially for longer maturities. Modest signs of an improvement appeared
in September, which allowed UBI Banca to resume its funding programme and to intensify it
in the first few months of 2011.
In this context priority was given to covered bonds, because of their lower cost compared to
senior EMTN issues of the same maturity.
More specifically, in the second half of 2010, UBI Banca performed two significant
international placements of COVERED BONDS, pursuant to Art. 7 bis of Law No. 130/1999, with
AAA and Aaa ratings from Fitch and Moody’s respectively:
- on 15th September, a first issue of one billion euro, maturing in September 2017, with a
coupon of 3,375%;
- on 18th October, a second issue of 500 million euro, maturing in October 2015, with a
coupon of 3,125%.
At the end of April a private placement was also performed for 250 million euro with the
European Investment Bank – maturing in April 2022 with a variable coupon equal to the
Euribor six month rate plus 0,53% – as part of an agreement stipulated with the EIB for loans
to Italian SMEs.
After the end of the year, UBI Banca went to the covered bond market with two large
international placements: a first issue in January for one billion euro, with a ten year maturity
(28th January 2021) and a coupon of 5,25%; a second issue in February for 750 million euro,
with a fifteen year maturity (22nd February 2016) and a coupon of 4,5%.
All the operations reported above form part of a programme for a maximum issuance of ten
billion euro running since July 2008 – a “multioriginator” programme which when fully
underway will involve participation by ten banks in the UBI Group. They are in addition to two
previous issues of one billion each performed in the second half of 2009.
Therefore, at the date of publishing this report, UBI Banca had issued a total nominal amount
of 5,5 billion euro of outstanding covered bonds.
The issue is backed by UBI Finance Srl in which a portfolio of residential mortgages was formed, which as
at 31st December 2010 totalled 7,7 billion euro, 24,2% of which originated by Banca Popolare di Bergamo,
23,6% by Banco di Brescia, 17,2% by Banca Popolare Commercio e Industria, 9,9% by Banca Regionale
Europea, 8,7% by Banca Carime, 7,9% by Banca Popolare di Ancona, 4% by Banco di San Giorgio, 2,8% by
Banca di Valle Camonica and the remaining 1,7% by UBI Banca Private Investment.
102
The segregated portfolio has a high degree of fragmentation, because it includes 111 thousand mortgages
with average residual debt of 69,7 thousand euro, distributed with approximately 73% in North Italy and
12% in Central Italy.
For the reasons already given, the EMTN PROGRAMME was limited: after a public placement for a
nominal amount of 700 million euro performed in March – with a three year maturity (March
2013) and a Euribor three month rate plus 0,65% – UBI Banca only returned to the market at
the end of October, with a senior debt issue for a nominal amount of one billion euro, with a
two year maturity (5th November 2012) and a spread of 130 basis points on the Euribor three
month rate. These two issues basically offset securities matured or redeemed during the year
(six issues, including two subordinated, for a total nominal amount of 1,7 billion euro).
Funding on the EMTN market also continued into the first few months of 2011: a private
placement of 80 million euro with a two year maturity of due years performed in January, was
followed in February by a public placement for 700 million euro, with a two year maturity and
a fixed rate of 3,875%.
At the same time the Group intensified its short term institutional funding with its FRENCH
CERTIFICATES OF DEPOSIT AND EURO COMMERCIAL PAPER PROGRAMMES. In both cases these are
instruments listed in Luxembourg issued by UBI Banca International, generally with three
month maturities, able to act as buffers to optimise the management of liquidity and funding.
When the Luxembourg branch of Banco di Brescia (the original issuer) was contributed to UBI
Banca International, the two programmes were renewed by the latter bank with an increase at
the same time in the maximum authorised funding to meet growing volumes of business.
Although it is diversified, funding on institutional markets nevertheless accounts for a small
portion of the total, constantly below 20% of direct funding from customers.
The Group continues to pay particular strategic attention to strengthening its funding from
ordinary customers, by pursuing funding policies focused on the structural balance of the
Group, able to generate sustainable inflows over time, consistent with growth in lending.
Again in 2010, issues of UBI BANCA LISTED BONDS were received positively by network bank
customers and the new placements basically offset the maturing securities issued by those
same network banks.
The following debt was issued over twelve months:
‐ three bonds with a lower tier two subordination clause for a total nominal amount of 853
million euro, all with a seven year maturity (the first two placed in February for a total of
453 million euro and the third in November for 400 million euro);
‐ three fixed rate bonds for a total nominal amount of 810 million euro (two with a two year
maturity: 278,6 million euro placed at the end of August and 450 million euro at the end of
September; the third, with a three year maturity, for 81,3 million euro, issued in
December);
‐ a mixed rate issue (fixed for the first two years and then variable) for 175 million euro, with
a four year maturity, placed in December.
In the first few months of 2011 and until the date of this report, the Group issued a total nominal
amount of 4,3 billion euro against maturities of 3,1 billion euro in the first quarter and 11,4
billion euro for the current year.
More specifically, placements on institutional markets were for a total nominal amount of 2,5
billion euro, which fully offset issues that matured in the first quarter (1,1 billion euro) and
almost equalled the amount maturing in the whole of 2011 (2,7 billion euro).
Network bank issuances, on the other hand, amounted to 1,8 billion euro, compared to
maturities of 1,3 billion euro in the quarter.
103
The comments that follow are based on items in the consolidated statement of financial position contained
in the reclassified consolidated financial statements on which the relative tables furnishing details are also
based.
The sections “Consolidated companies: the principal figures” and “The performance of the main
consolidated companies” may be consulted for information on individual banks and Group member
companies.
Total funding
TOTAL GROUP FUNDING, consisting of total
amounts administered on behalf of
customers, reached 184,8 billion euro, with
growth of 5% over twelve months benefiting
from the positive performance of direct
funding (+9,8%), which fully offset the
slight decrease in indirect funding (-0,9%),
despite the recovery in the assets under
management component (+1,7%).
Direct and indirect funding (end of quarter totals in millions of euro)
200.000
180.000
160.000
140.000
120.000
100.000
4 Q 10
3 Q 10
2 Q 10
1 Q 10
4 Q 09
3 Q 09
2 Q 09
1 Q 09
4 Q 08
3 Q 08
2 Q 08
1 Q 08
80.000
As concerns market segmentation of
1
management
accounting
customers ,
60.000
figures for the average volumes of total
40.000
funding for the network banks and for UBI
20.000
Banca Private Investment show that the
0
contribution to funding made by different
segments was distributed as follows: 67,6%
of total funding came from the retail
Indirect funding
Direct funding
market (67% in December 2009), 26,3%
from the private banking market (26,9%) and 6,1% from the corporate market (6,1%).
In terms of annual changes2, those same management accounting figures show changes of
-0,4% for the retail market, which nevertheless recorded different trends within it (-1,3% for
private individual customers, +5,4% for small business customers and +7,4% for the UBI BPI
network of financial advisors), -2,7% for the corporate market and -3,5% for the private
banking market.
Total funding from customers
31.12.2010
%
31.12.2009
%
Direct funding
Indirect funding
TOTAL FUNDING FROM CUSTOMERS
1
2
Changes
amount
%
106.760.045
57,8%
97.214.405
55,2%
9.545.640
9,8%
78.078.869
42,2%
78.791.834
44,8%
-712.965
-0,9%
42.629.553
23,1%
41.924.931
23,8%
704.622
1,7%
8.832.675
5,0%
184.838.914
100,0%
176.006.239
100,0%
Retail: comprises mass market customers (private individuals with financial wealth – direct and indirect funding – of less than 50
thousand euro), affluent customers (private individuals with financial wealth – direct and indirect funding - of between 50 thousand
and 500 thousand euro) and small businesses (firms with a turnover of up to 5 million euro).
Corporate: comprises corporate customers (companies with a turnover of between five and 150 million euro) and large corporate
customers (groups of companies and companies with turnover of more than 150 million euro).
Private banking: comprises customers consisting of private individuals with financial wealth (direct and indirect funding) of greater
than 500 thousand euro.
The changes relate to average balances in December
104
Direct funding
DIRECT FUNDING, amounted to 106,8 billion euro, an increase of 9,5 billion euro year-on-year,
consisting of 5,8 billion euro of amounts due to customers and 3,7 billion euro of securities
issued.
The growth in AMOUNTS DUE TO CUSTOMERS over the twelve month period was driven by a
significant increase in repurchase agreements (+5,9 billion euro), as a result of greater
business with Cassa di Compensazione e Garanzia Spa (+5,7 billion euro) – used to fund the
position in Italian government securities as part of action taken to support profits decided in
May – and of a recovery by repurchase agreement business with customers (+0,2 billion euro).
Net of business with the Cassa di Compensazione e Garanzia (central counterparty clearing), amounts
due to customers would be virtually unchanged compared to the year before (+0,2%).
Funding from current accounts, on the other hand, recorded a decrease (-0,8 billion euro)
concentrated mainly in the first quarter of 2010, despite the partial recovery that occurred
in the second half of the year when a series of commercial initiatives were undertaken with
regard to funding.
Growth in term deposits (+0,4 billion euro), however, was attributable to UBI International
(+0,5 billion euro), as a result the transfer of business from Banco di Brescia’s Luxembourg
branch, and to UBI Banca (+0,1 billion euro), in relation to the new business with the Cassa
di Compensazione e Garanzia on the “New MIC” segment.
Considered net of total business with the Cassa di Compensazione e Garanzia, direct funding from Group
customers increased year-on-year by 3,7 billion euro (+4%).
31.12.2010
%
31.12.2009
%
Changes
amount
%
Current accounts and deposits (*)
Term deposits
45.209.037
1.341.501
42,3%
1,3%
46.056.955
950.761
47,4%
1,0%
-847.918
390.740
-1,8%
41,1%
Financing
11.152.853
10,4%
5.156.697
5,3%
5.996.156
116,3%
11.011.766
10,3%
5.143.394
5,3%
5.868.372
114,1%
9.190.455
8,6%
3.510.031
3,6%
5.680.424
161,8%
- repurchase agreements
of which: repos with Cassa di Compensazione e Garanzia
- other
Other payables
141.087
0,1%
13.303
0,0%
127.784
n.s.
962.766
1,0%
700.548
0,7%
262.218
37,4%
TOTAL AMOUNTS DUE TO CUSTOMERS (item 20 Liabilities)
58.666.157
55,0%
52.864.961
54,4%
5.801.196
11,0%
Bonds
Other certificates
42.880.256
5.213.632
40,2%
4,8%
39.514.741
4.834.703
40,6%
5,0%
3.365.515
378.929
8,5%
7,8%
TOTAL SECURITIES ISSUED (item 30 Liabilities)
48.093.888
45,0%
44.349.444
45,6%
3.744.444
8,4%
18.797.662
17,6%
16.039.495
16,5%
2.758.167
17,2%
11.158.751
10,5%
11.187.997
11,5%
-29.246
-0,3%
2.886.945
2,7%
1.846.552
1,9%
1.040.393
56,3%
of which:
securities subscribed by institutional customers:
- EMTN (**)
- French certificates of deposit
- Euro commercial paper
- Covered bonds
- Preference shares (***)
bonds subscribed by ordinary customers
- of the Group:
issued by UBI Banca
issued by the network banks
521.256
0,5%
524.578
0,6%
-3.322
-0,6%
3.752.819
3,5%
1.978.464
2,0%
1.774.355
89,7%
-24.013
-4,8%
1.728.353
6,7%
477.891
0,4%
501.904
27.581.980
25,8%
25.853.627
0,5%
26,6%
5.035.176
4,7%
3.413.707
3,5%
1.621.469
47,5%
17.336.752
16,2%
19.550.948
20,1%
-2.214.196
-11,3%
2.321.080
80,3%
9.545.640
9,8%
- of external distribution networks:
issued by Centrobanca
TOTAL DIRECT FUNDING
5.210.052
106.760.045
4,9%
100,0%
2.888.972
97.214.405
3,0%
100,0%
(*) In relation to the contribution of depository banking operations to RBC Dexia, concluded at the end of May 2010, the amounts on the UBI Pramerica fund
management accounts forming part of those operations (0,6 billion euro) were reclassified within liabilities held for disposal from 31st December 2009,
(**) The corresponding nominal amounts were: 11.128 million euro (502 million euro subordinated) as at 31st December 2010 and 11.168 million euro (1.202
million euro subordinated) as at 31st December 2009.
(***) The preference shares were issued for nominal amounts by BPB Capital Trust for 300 million euro, by Banca Lombarda Preferred Securities Trust for
155 million euro and by BPCI Capital Trust for 115 million euro. Following the public exchange offer concluded on 25th June 2009, the residual nominal
amounts consisted of 227,436 million euro for the BPB Capital Trust issue, 124,636 million euro for that of Banca Lombarda Preferred Securities Trust
and 101,388 million euro for the BPCI Capital Trust issue.
105
SECURITIES ISSUED amounted to 48,1 billion euro, with growth of 3,7 billion euro – concentrated
in the second half of the year – driven by bonds (+3,3 billion euro to 42,9 billion euro), in
relation to the placements reported in the preceding sub-section on funding policies, and to a
lesser extent by item “Other payables” (+0,4 billion euro to 5,2 billion euro).
Within the latter item, the increase in French certificates of deposit (up from 1,8 billion euro to
2,9 billion euro) more than compensated for the fall in certificates of deposit in yen
(-0,4 billion euro down to 0,8 billion euro).
Total institutional funding reached 18,8 billion euro, an increase of 2,8 billion euro, with
growth in both the long term maturity component, that of covered bonds (three issues for a
nominal amount of 1.750 million euro), and in short term funding (+1 billion euro for French
certificates of deposit), while the total for EMTN securities remained unchanged.
In December 2010, funding from the EMTN programme remained practically unchanged
compared to twelve months before. The two issues performed during the year for a nominal
amount of 1,7 billion euro offset securities that matured and were redeemed (six issues,
including two subordinated, for a total nominal amount of 1,7 billion euro3).
In detail, institutional funding was composed as follows as at 31st December 2010:
y EMTN securities (Euro Medium Term Notes) amounting to 11,2 billion (502,3 million euro
subordinated), as part of a programme for a maximum issuance of 15 billion euro. All the
securities are admitted for trading on the London stock exchange with the sole exception of
those which had been issued by the former Banca Lombarda e Piemontese listed in
Luxembourg;
y Covered bonds amounting to 3,7 billion euro, consisting of five issues by UBI Banca for a
total nominal amount of 3,75 billion euro as part of a programme for a maximum issuance
of ten billion euro. All the securities are listed in London;
y French certificates of deposit amounting to 2,9 billion euro, issued by the UBI Banca
International as part of a programme for a maximum issuance of five billion euro, listed in
Luxembourg4;
y Euro commercial paper amounting to 0,5 billion euro, issued by UBI Banca International as
part of a programme for a maximum issuance of six billion euro, listed in Luxembourg5;
y Preference shares amounting to 0,5 billion euro consisting of the securities remaining
following the public exchange offer of June 2009. These consist of three issues, two listed in
Luxembourg and one in London. On 22nd December 2010 the UBI Banca Group announced
that it would not be calling outstanding innovative equity instruments and it increased the
spread to levels in line with that of issues with similar characteristics. As from the call
dates in 2011, holders of the three outstanding issues will be granted an increase in the
spread to +594 basis points.
Total funding from bonds issued to ordinary customers rose to 27,6 billion euro (+1,7 billion
euro). Within the item, listed placements by UBI Banca issued to network bank customers
(seven issues for a nominal amount of 1,8 billion euro, including three issues for 0,9 billion
euro with a lower tier two subordination clause) offset only two thirds of the net decrease in
issues by network banks (-2,2 billion euro). At the same time Centrobanca increased its
funding through non captive channels (+2,3 billion euro).
3
4
5
Subordinated securities redeemed included a BLP issue with maturity on 7th December 2015 (ISIN XSO237670319), which, together
with other issues, formed part of the public exchange offer of 25th June 2009, for which an early redemption option was exercised on
7th December 2010.
A new programme for issues by UBI Banca International Luxembourg was rendered official on 22nd September 2010, in relation to
the contribution of Banco di Brescia’s Luxembourg branch to UBI Banca International concluded in December, The previous
programme, in which the issuer was the branch transferred, remained operational until the natural maturity of the relative issues
(22nd December 2010).
A new programme for issues by UBI Banca International Luxembourg was rendered official on 13th August 2010 in relation to the
contribution of Banco di Brescia’s Luxembourg branch to UBI Banca International. The previous programme remained operational
until the natural maturity of the securities which had been issued by the branch transferred (30th November 2010).
106
Maturities for bonds outstanding as at 31st December 2010
No minal amo unts in millio ns o f euro
UBI BANCA*
2nd Quarter
1st half 2011
2011
2012
2013
Subsequent
years
Total
1.139
555
1.056
4.834
2.577
9.795
19.956
of which: EMTN
1.128
555
1.033
4.070
1.692
2.652
11.130
Covered bonds
-
-
-
-
-
3.750
3.750
Network banks
Other banks in the Group
TOTAL
*
1st Quarter
2011
1.339
2.312
3.959
4.902
2.816
1.803
17.131
591
349
111
188
85
3.956
5.280
3.069
3.216
5.126
9.924
5.478
15.554
42.367
The EMTN subordinated bonds were placed on the date of the expiration or the exercise of a call option. Preference shares have not been included.
Listed securities
Bonds listed on the MOT (electronic bond market)
Nominal amount of
issue
ISIN number
Book value as at 31st
December 2010
IT0001197083
Centrobanca zero coupon 1998-2018
L. 800 billion
IT0001257333
Centrobanca 1998/2014 reverse floater
L. 300 billion
€ 154.479.568
€ 120.874.797
IT0001267381
Centrobanca 1998/2018 reverse floater capped
L. 320 billion
€ 120.200.696
IT0001278941
Centrobanca 1998/2013 equity linked coupon
IT0001300992
Centrobanca 1999/2019 step dow n indicizzato al tasso sw ap euro 10 anni
IT0001312708
IT0003834832
IT0003210074
L. 100 billion
€ 42.938.603
€ 170.000.000
€ 117.297.396
Centrobanca 1999/2019 step dow n eurostability bond
€ 60.000.000
€ 53.656.336
Centrobanca 2005/2013 inflazione Italia con leva
€ 16.280.000
€ 9.779.702
Banca Popolare di Bergamo-CV 2001/2012 a tasso variabile subordinato ibrido - upper tier 2
€ 250.000.000
€ 250.161.359
IT0004424435
UBI subordinato low er tier 2 a tasso variabile con ammortamento 28.11.2008-2015
€ 599.399.000
€ 591.835.287
IT0004457187
€ 211.992.000
€ 208.919.029
IT0004457070
UBI subordinato low er tier 2 fix to float con rimborso anticipato 13.03.2009-2019
€ 370.000.000
€ 381.946.207
IT0004497050
UBI subordinato low er tier 2 fix to float con rimborso anticipato 30.06.2009-2019
€ 365.000.000
€ 366.190.696
IT0004497068
€ 156.837.000
€ 154.171.471
IT0004497043
Unione di Banche Italiane Scpa tasso misto 30.06.2009-2014
€ 219.990.000
€ 216.057.808
IT0004496557
€ 200.000.000
€ 199.346.886
IT0004517139
€ 84.991.000
€ 84.972.035
IT0004572860
€ 152.587.000
€ 150.468.611
IT0004572878
UBI subordinato low er tier 2 a tasso fisso con ammortamento 23.02.2010-2017
€ 300.000.000
€ 301.729.015
IT0004624547
Unione di Banche Italiane Scpa tasso fisso 2,30% 31.08.2010-2012 Welcome Edition
€ 278.646.000
€ 278.908.777
IT0004632680
Unione di Banche Italiane Scpa tasso fisso 2,15% 28.09.2010-2012
€ 450.000.000
€ 448.161.421
IT0004626617
IW Bank Obbligazioni agosto 2015 con opzione di tipo call asiatica
€ 1.214.000
€ 1.115.514
IT0004642382
IW Bank Obbligazioni ottobre 2015 con opzione di tipo call asiatica - II tranche
€ 1.045.000
€ 944.346
IT0004645963
UBI subordinato low er tier 2 a tasso fisso con ammortamento 05.11.2010-2017
€ 400.000.000
€ 380.788.851
IT0004651656
Unione di Banche Italiane Scpa tasso fisso 2,30% 02.12.2010-2013 Welcome Edition
IT0004652043
Convertible bonds listed on the MOT (electronic bond market)
€ 80.835.676
€ 173.588.891
Nominal amount of
issue
ISIN number
IT0004506868
€ 81.322.000
€ 174.973.000
UBI 2009/2013 convertibile con facoltà di rimborso in azioni
Covered bonds listed on the London Stock Exchange
€ 639.145.872
Nominal amount of
issue
ISIN number
December 2010
€ 652.263.445
December 2010
IT0004533896
Covered Bonds due 23 september 2016 3,625% guaranteed by UBI Finance Srl
€ 1.000.000.000
€ 1.028.582.677
IT0004558794
Covered Bonds due 16 december 2019 4% guaranteed by UBI Finance Srl
€ 1.000.000.000
€ 1.011.116.295
IT0004599491
Covered Bonds due 30 april 2022 floating rate amortising guaranteed by UBI Finance Srl
€ 250.000.000
€ 250.543.687
IT0004619109
Covered Bonds due 15 september 2017 3,375% guaranteed by UBI Finance Srl
IT0004649700
Covered Bonds due 18 october 2015 3,125% guaranteed by UBI Finance Srl
IT0004682305
Covered Bonds due 28 january 2021 5,25% guaranteed by UBI Finance Srl
€ 1.000.000.000
-
IT0004692346
Covered Bonds due 10 february 2016 4,5% guaranteed by UBI Finance Srl
€ 750.000.000
-
Nominal amount of
issue
December 2010
Innovative equity instruments (preference shares) listed on international markets
ISIN number
€ 1.000.000.000
€ 971.231.814
€ 500.000.000
€ 491.344.223
Luxem bourg
XS0123998394
Non-cumulative Fixed/Floating Rate Guaranteed Trust Preferred Securities
Banca Popolare di Bergamo Capital Trust
€ 300.000.000
€ 244.086.637
XS0131512450
9% Non-cumulative Guaranteed Trust Preferred Securities
Banca Popolare Commercio e Industria Capital Trust
€ 115.000.000
€ 106.899.082
Step-Up Non-voting Non-cumulative Banca Lombarda Preferred Securities Trust
€ 155.000.000
€ 126.904.945
London
XS0108805564
The list does not include the numerous EMTN issues listed in London and in Luxembourg, nor the securities generated by securitisations performed for
internal purposes by B@nca 24-7, UBI Leasing and Banco di Brescia, all listed on the Dublin stock exchange, nor the issues of French certificates of deposit
and of euro commercial paper, listed in Luxembourg.
107
As concerns market segmentation of customers1, management accounting figures for average
volumes of direct funding for the network banks and for UBI Banca Private Investment show
that in December 79,5% of funding from customers came from the retail market (76,8% in
December 2009), 11% from the private banking market (13,8%) and 9,5% from the corporate
market (9,4%).
In terms of annual changes2, those same management accounting figures show changes of
+0,1% for the retail market, which recorded different trends within it (-1% for private
individual customers, compared to +7,6% for the small business segment), -2,7% for the
corporate market and -22,8% for the private banking market.
Geographical distribution of direct
funding from customers by region of
location of the branch
(excluding repurchase agreements and bonds)
Percentage of total
31.12.2010
Lombardy
(*)
31.12.2009
59,11%
60,10%
Latium
Piedmont
Calabria
Apulia
Campania
Marches
Liguria
Emilia Romagna
8,69%
7,61%
4,76%
4,77%
3,87%
4,01%
2,50%
0,98%
7,70%
7,88%
4,61%
4,36%
3,77%
4,41%
2,59%
1,08%
Veneto
Umbria
Abruzzo
Basilicata
Friuli Venezia Giulia
Molise
Tuscany
Valle d'Aosta
1,14%
0,49%
0,41%
1,01%
0,26%
0,20%
0,16%
0,01%
0,99%
0,50%
0,43%
0,92%
0,25%
0,23%
0,14%
0,01%
Trentino Alto Adige
Sardinia
0,02%
0,00%
0,03%
0,00%
100,00%
100,00%
TOTAL
North
71,63%
72,93%
- North West
69,23%
70,58%
- North East
2,40%
2,35%
13,35%
15,02%
12,75%
14,32%
Central
South
Finally, the table, “Geographical distribution of
direct funding from customers by region of location
of the branch” gives the geographical distribution of
traditional funding (consisting of current accounts,
savings deposits and certificates of deposit) in Italy.
The figures confirm the marked geographical
concentration of the Group in the northern regions
of Italy despite a slight decrease (from 72,9% to
71,6%) in relation to the action taken to streamline
and optimise the presence of branches which
involved network banks and was focused primarily
in north west Italy. On the other hand an increase
occurred in the percentage of funding from central
regions (from 12,8% to 13,4%), and in Latium in
particular (from 7,7% to 8,7%) and in the South
(from 14,3% to 15%).
(*) The aggregates relate to banks only.
108
Indirect funding and assets under management
Indirect funding from ordinary customers
31.12.2010
%
31.12.2009
Changes
%
amount
%
Assets under custody
35.449.316
45,4%
36.866.903
46,8%
-1.417.587
-3,8%
Assets under management
Customer portfolio management
42.629.553
9.112.815
54,6%
11,7%
41.924.931
8.654.514
53,2%
11,0%
704.622
458.301
1,7%
5,3%
of which: fund based instruments
Mutual investment funds and SICAV’s
Insurance policies and pension funds
of which: Insurance policies
TOTAL INDIRECT FUNDING FROM ORDINARY CUSTOMERS
2.065.172
2,6%
2.116.155
2,7%
-50.983
-2,4%
21.189.141
12.327.597
27,1%
15,8%
21.160.386
12.110.031
26,8%
15,4%
28.755
217.566
0,1%
1,8%
12.124.734
15,5%
11.916.922
15,1%
207.812
1,7%
78.078.869
100,0%
78.791.834
100,0%
-712.965
-0,9%
Group INDIRECT FUNDING from ordinary customers as at 31st December 2010 amounted to 78,1
billion euro, a decrease of 0,7 billion euro (-0,9%) compared to 78,8 billion euro twelve months
before.
As shown in the graph, no clear trend
emerged for the total aggregate.
The growth which began in the spring of
2009, and which in March 2010 had
brought the total back to the same level as
in the third quarter of 2008, was
interrupted in the months that followed as
the Greek sovereign debt crisis became more
acute.
The partial recovery in the summer was
then followed by another decrease in the
last quarter when new pressures on
financial markets arose, due to the
difficulties of Irish banks which had a
negative effect on prices.
Indirect funding
(end of quarter totals in millions of euro)
90.000
80.000
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
4 Q 10
3 Q 10
2 Q 10
1 Q 10
4 Q 09
3 Q 09
2 Q 09
1 Q 09
4 Q 08
3 Q 08
2 Q 08
1 Q 08
The year-on-year trend was affected mainly
by a fall in assets under custody (-1,4 billion
Assets under custody
Assets under management
euro; -3,8%). On the other hand, assets
under management, which came to account
for 54,6% of the total, recorded a slight increase (+0,7 billion euro; +1,7%), mainly attributable
to customer portfolio managements (+0,5 billion euro; +5,3%) – despite the modest contraction
in fund based instruments (-2,4%) – and to insurance policies and pension funds (+0,2 billion
euro; +1,8%), while mutual investment funds and SICAV’s remained unchanged compared to
the end of 2009.
***
In terms of assets under management net of Group funds (collective instruments and
customer portfolio managements), at the end of the fourth quarter the UBI Banca Group was
positioned in sixth place among operators in the sector6 (fifth among Italian groups) with
assets amounting to 29,4 billion euro – including approximately 4,4 billion euro relating to
institutional customers – and a decrease in market share to 3,19% (3,54% in December 2009).
***
6
Source: Assogestioni, “Map of assets under management (collective instruments and customer portfolio management) 4th quarter of
2010”.
109
As concerns mutual investment funds and Sicav’s, the Assogestioni (national association of
asset management companies)7 figures for asset management companies of the UBI Group
reported the following for 2010:
− negative net inflows of 780,5 million euro, equivalent to -3,7% of assets under management
at the end of 2009 (the figure for the sector nationally, on the other hand, recorded positive
net inflows of 5.696 million euro, equivalent to 1,3% of assets under management twelve
months before);
− net assets under management of approximately 21 billion euro, which in December
confirmed the UBI Group’s position in third place among operators in the sector with a
market share of 4,56%, down compared to 4,87% at the end of 2009. However, the UBI
Banca Group has been in fourth place8 since January 2011;
− a slight reduction in assets under management (-259 million euro; -1,2%) compared to a
positive trend for the sector nationally (+5,7%).
Fund assets
UBI Banca Group
31.12.2010
%
31.12.2009
%
Changes
amount
Figures in millions of euro
Equities
Balanced
Bond
Monetary funds
Flexible
Hedge funds
Total (a)
Sector nationally
%
2.734
13,1%
2.225
10,5%
509
22,9%
1.512
11.784
3.715
840
7,2%
56,2%
17,7%
4,0%
1.497
9.152
6.947
1.001
7,1%
43,1%
32,7%
4,7%
15
2.632
-3.232
-161
1,0%
28,8%
-46,5%
-16,1%
378
1,8%
400
1,9%
-22
-5,5%
20.963
100,0%
21.222
100,0%
-259
-1,2%
31.12.2010
%
31.12.2009
%
Changes
amount
Figures in millions of euro
%
Equities
107.423
23,4%
92.144
21,2%
15.279
16,6%
Balanced
Bond
Monetary funds
21.305
189.212
62.333
4,6%
41,1%
13,5%
17.040
165.823
86.996
3,9%
38,1%
20,0%
4.265
23.389
-24.663
25,0%
14,1%
-28,3%
67.087
12.689
14,6%
2,8%
57.265
16.062
13,1%
3,7%
9.822
-3.373
17,2%
-21,0%
460.049
100,0%
435.330
100,0%
24.719
5,7%
Flexible
Hedge funds
Total (b)
Market share of the UBI Banca Group (a/b)
4,56%
4,87%
The summary figures in the table confirm the prudential approach of UBI Group customers as
follows:
- a change in the composition out of monetary funds into bonds, which is greater for the
Group than for the sector nationally;
- an increase in equity funds, which has become more marked over twelve months compared
to the Assogestioni sample, although the percentage for the UBI Banca Group remains
around ten percentage points below that for the sector nationally (13,1% compared to
23,4%);
- a trend for flexible funds (-16,1%) in the opposite direction to that for the sector (+17,2%);
- a stable and much higher percentage of lower risk funds (monetary funds and bonds),
accounting as a whole for 73,9% of the total compared to 54,6% for the sample mentioned.
Again in 2010 UBI Pramerica SGR Spa received important awards, details of which are given in the report
on the company in the section “The performance of the main consolidated companies”.
7
8
The data are taken from “Trend Mensile sui Fondi Aperti – December 2010” and “New map of assets under management relating to
the 4th quarter of 2010 (Collective instruments: open funds).
“Trend Mensile sui Fondi Aperti – January 2011”. The Group moved down a place as a consequence of the formation of Am Holding,
a new asset management company created from an alliance between Anima Sgr and Prima Sgr, two asset management companies
which, considered singly, have lower assets under management and market share than those of the UBI Banca Group.
110
General banking business with customers:
lending
Performance of the loan portfolio
Composition of loans to customers
31.12.2010
%
Current account overdrafts
Reverse repurchase agreements
Mortgage loans and other
medium-to-long term financing
Credit cards, personal loans and
salary backed loans
Finance leases
Factoring
Other transactions
Debt instruments:
of which
deteriorated
31.12.2009
of which
deteriorated
%
Changes
amount
%
13.723.925
13,5%
1.067.391
14.086.259
14,4%
921.874
-362.334
-2,6%
323.597
0,3%
-
292.127
0,3%
-
31.470
10,8%
53.943.966
53,0%
2.512.658
50.150.434
51,2%
2.104.763
3.793.532
7,6%
6.344.773
9.590.800
6,2%
9,4%
144.009
769.279
6.588.940
9.569.620
6,7%
9,7%
106.801
664.558
-244.167
21.180
-3,7%
0,2%
2.988.697
14.846.953
52.118
2,9%
14,6%
0,1%
16.946
749.846
1.000
2.533.777
14.681.758
104.337
2,6%
15,0%
0,1%
48.846
684.392
1.000
454.920
165.195
-52.219
18,0%
1,1%
-50,0%
- structured instruments
3.409
0,0%
-
31.113
0,0%
-
-27.704
-89,0%
- other debt instruments
48.709
0,1%
1.000
73.224
0,1%
1.000
-24.515
-33,5%
5.261.129
98.007.252
4.532.234
3.807.577
3,9%
TOTAL
101.814.829
100,0%
100,0%
At the end of December LENDING TO CUSTOMERS had exceeded 101,8 billion euro, an increase of
3,8 billion euro compared to 98 billion euro at the end of 2009 (+3,9% compared to an
increase for the sector nationally, relating to the private sector, of +4,3%).
In consideration of the persistent uncertainties and difficulties in the economic situation,
lending policies prioritised an orientation of participation by the Group in the numerous
initiatives to assist families and businesses, introduced by both the Italian Banking
Association and at local level. If the large corporate segment is excluded, which does not form
part of the Group’s traditional mission, annual lending increased by +4.8%.
After a slight fall in the first quarter, the
total lending portfolio embarked on a
growth trend which was at its strongest
between April and June (+2,4% in
quarterly
terms),
but
slowed
progressively in the following months
(+1% and +0,6% quarter-on-quarter for
the third and fourth quarters) as the
recovery in progress in the economy
slowed.
Annual rate of change in lending to the private sector(*)
10%
9%
8%
Sector nationally
7%
UBI Group
6%
5%
4%
3%
Details for the types of lending over twelve months are as follows:
111
4 Q 10
3 Q 10
2 Q 10
1 Q 10
4 Q 09
3 Q 09
1 Q 09
4 Q 08
3 Q 08
2 Q 08
1 Q 08
1%
The long term trend shown in the graph
0%
was supported by both the network
‐1%
banks (+3,7%), which accounted for
‐2%
more than 67% of the consolidated total
‐3%
and by the product companies (+2,7%).
It must also be considered that
approximately 40% of the business of
(*) Exlcuding loans to public administrations the
latter
comes
from
“captive”
customers of the network banks (+4,9% annually).
2 Q 09
2%
• mortgages and other medium-to-long term lending drove growth in the total loans,
representing the main form of lending accounting for 53% of the total and amounting to
almost 54 billion euro (+3,8 billion euro; +7,6%). The result for B@nca 24-7 was particularly
encouraging with total mortgages of over 5,1 billion euro, an annual increase of 558 million
euro (+12%). On the basis of management accounting figures for performing residential
mortgages only, granted by the network banks, Centrobanca and B@nca 24-7, total
residential mortgages at the end of December had increased to 21,8 billion euro from
approximately 20 billion euro at the end of 2009 (+9,4%);
• factoring loans granted by UBI Factor increased to approximately three billion euro (+0,5
billion euro; +18%) with particularly lively performance in the last quarter (+0,4 billion
euro);
• finance leases on the other hand remained stable at 9,6 billion euro (+0,2%);
• reverse repurchase agreements amounted to 323,6 million euro, up from 292,1 million euro
twelve months before (+10,8%), reflecting the ordinary business of the Parent with Cassa di
Compensazione e Garanzia (central counterparty clearing);
• short term forms of lending, more closely related to the demand from businesses for
working capital, still did not show any significant signs of recovery: current account
overdrafts fell to 13,7 billion euro (-0,4 billion euro; -2,6%) while “Other transactions” (loans
for advances, portfolio, import/export transactions, very short term lending, etc.) rose to
14,8 billion euro (+0,2 billion euro; +1,1%);
• on the other hand, the various types of consumer credit fell to 6,3 billion euro (-0,2 billion
euro; -3,7%). The reduction mainly reflected the trend for B@nca 24-7, which reduced its
total outstanding loans over twelve months (-0,2 billion euro to 6,1 billion euro; -3,1%),
partly on the basis of precise company policies pursued in order to improve credit quality.
More specifically, the fall of over 0,3 billion euro in the special purpose loans brokered by
SILF and of approximately 0,4 billion euro for all the other personal loans, originated
mainly by the network banks of Group, was offset by an increase of 0,5 billion euro in
salary backed loans originated by external distribution networks which had exceeded 3,1
billion euro in December.
Lending in relation to salary backed loans are measured on the basis of guarantees provided by the
finance companies with which B@nca 24-7 works.
The loans originated by the finance company Ktesios Spa amounted to 1,1 billion euro as follows:
− 358 million euro secured by a pledge of 4,1 million euro, consisting of a term deposit on a current
account held with B@nca 24-7;
− 747 million euro guaranteed by a “deducted for non payment” clause.
With a provision of 8th March 2011, the Bank of Italy removed Ktesios from the special list pursuant to
Art. 107 of the Consolidated Banking Act. Therefore, from that date the company is only registered in
the general list pursuant to Art. 106 of Legislative Decree No 385/93 and may not undertake new
transactions.
In consideration of the current difficulties experienced by that company, B@nca 24-7 made an estimate
of the risk attaching to the part of the portfolio consisting of loans backed by that counterparty. The
estimates performed led the bank to make a provision of eight million euro classified within “Provisions
for risks and charges”.
At the end of December the ratio of lending to funding stood at 95,4%, a decrease compared to
December 2009 (100,8%), a reflection of the different trends for the two items. If funding is
considered net of repurchase agreements with the Cassa di Compensazione e Garanzia (central
counterparty clearing) the ratios are 104,4% (104,6% in December 2009.)
112
With regard to market
segmentation of customers,
management
accounting
figures
for
average
monthly
lending
by
network banks and by UBI
Banca Private Investment
show that at the end of the
year, 55% was destined to
the retail market, (54,7%
at the end of 2009), 43,9%
to the corporate market
(44,3%) and the remaining
1,1%
to
the
private
banking market (1%).
Distribution of loans by economic sector
(Management accounting figures for network banks Centrobanca)
31.12.2010
Manufacturing and service companies
(non financial companies and producer households)
30.9.2010
30.6.2010
31.3.2010
31.12.2009
62,8%
63,1%
62,9%
62,4%
62,7%
17,7%
17,3%
17,4%
17,4%
16,9%
Commerce, recovery and repair services
9,9%
10,0%
9,8%
9,7%
9,8%
Construction and public works
9,3%
9,6%
9,5%
9,8%
Energy products
3,6%
3,7%
4,2%
3,3%
3,7%
Metal products, excluding machines and means of transport
2,4%
2,5%
2,4%
2,4%
2,2%
Agricultural, forestry and fishery products
2,1%
2,0%
2,0%
2,0%
2,0%
Hotels and restaurants
2,0%
2,0%
2,0%
2,1%
of which: other services destined for sale
9,8%
2,1%
Foodstuffs, beverages and tobacco products
1,6%
1,8%
1,8%
1,8%
2,1%
Textiles, leather and footwear, clothing
1,6%
1,8%
1,7%
1,8%
1,7%
Agricultural and industrial machinery
1,4%
1,5%
1,5%
1,5%
1,5%
29,4%
28,9%
28,7%
28,7%
28,3%
4,6%
0,9%
2,3%
4,6%
0,9%
2,5%
4,7%
1,0%
2,7%
5,1%
0,9%
2,9%
5,1%
1,0%
2,9%
100,0%
100,0%
100,0%
100,0%
100,0%
Consumer households
Financial companies
Public administrations
Other (not-for-profit institutions and the rest of the world)
TOTAL
In terms of annual trends1, those same management
figures show an increase for the corporate market
(+1,7%), driven by the core segment (+3,4%), against a
decrease for the large corporate segment (-1,2%). Lending
to the retail market increased by 3,1%, driven by the
private individual segment (+4,2%) and to a lesser extent,
by the small business segment (+1,8%).
Again on the basis of management figures, the results
given in the table for network banks and Centrobanca
only – an aggregate which represents approximately 70%
of gross loans – showed the following in December 2010:
− 92,2% of outstanding loans is destined to
manufacturing and service companies and consumer
households (91% twelve months before), which
confirms the traditional vocation of the Group to
support communities in its markets;
− as concerns the distribution by sector of lending to
non financial companies and to producer households,
“other services destined for sale” and “commercial
services, recoveries and repairs”, continued to account
for the largest percentage of the total (27,6%). partly
because of their heterogeneity.
Geographical distribution of loans to
customers by region of location of the
(*)
branch
Percentage of total
31.12.2010
31.12.2009
Lombardy
Piedmont
Latium
70,37%
6,39%
4,62%
70,32%
6,37%
4,71%
Marches
Liguria
Campania
Apulia
3,84%
2,82%
2,17%
2,07%
3,93%
2,83%
2,12%
2,08%
Emilia Romagna
Calabria
Veneto
1,97%
1,82%
1,59%
1,93%
1,81%
1,56%
Umbria
Abruzzo
Basilicata
0,64%
0,61%
0,40%
0,24%
0,62%
0,61%
0,41%
0,26%
Molise
Tuscany
Valle d'Aosta
Trentino Alto Adige
0,24%
0,20%
0,01%
0,00%
0,25%
0,18%
0,01%
0,00%
Sardinia
0,00%
0,00%
Total
100,00%
100,00%
North
83,4%
83,3%
- North West
79,6%
79,5%
- North East
3,8%
3,8%
9,3%
7,3%
9,4%
7,3%
Central
South
Details of the geographical distribution of lending are (*) The aggregates relate to banks only.
given in the table “geographical distribution of loans to
customers by region of location of the branch”. The total share of loans to northern regions
amounted to 83,4% of the total, (of which 79,6%. to the North-West) while that to central
regions constituted 9,3%. The remaining 7,3% was to southern regions. No significant changes
appeared compared to the previous year.
Concentration of risk
(largest customers or groups as a percentage of total loans and guarantees)
Customers or Groups
1
2
31.12.2010
30.9.2010
30.6.2010
31.3.2010
31.12.2009
Largest 10
4,1%
4,1%
4,6%
4,0%
4,1%
Largest 20
Largest 30
6,8%
8,5%
6,7%
8,4%
7,2%
8,7%
6,5%
8,1%
6,5%
8,1%
Largest 40
Largest 50
9,6%
10,5%
9,5%
10,4%
9,9%
10,9%
9,2%
10,1%
9,3%
10,3%
From
the
viewpoint
of
concentration,
a
generalised
reduction
was
recorded
while
compared
to
June2,
compared to December 2009 all
the groups, except for the first,
stood at slightly higher levels.
As concerns “large exposures” on
the other hand, the relative
The changes relate to average balances in the month of December.
Since 30th June 2010, the method of calculation also includes exposures held in equity instruments.
113
regulations were amended by the Bank of Italy3. According to the new regulations, “large
exposures” are now measured on the basis of the nominal value, instead of the value weighted
for counterparty risk. Consequently, at the end of 2010, the UBI Banca Group had five
positions which exceeded 10% of the supervisory capital for a total of 22,2 billion euro:
• 10,2 billion euro due to Cassa di Compensazione e Garanzia, in relation to repurchase
agreement transactions by the Parent;
• 8,3 billion euro due to the Ministry of the Treasury, in relation to investments in
government securities by the Parent;
• 1,4 billion euro due to a major banking group, in relation both to investments in bonds and
to normal lending business with a non banking financial company of that group;
• 2,3 billion euro due to two major corporate counterparties, as part of ordinary lending
business with customers.
It must be added, however, that the actual exposure of the UBI Group after weightings are
applied in accordance with the rules currently in force amounts to a total of 1,8 billion euro
and that for each of the five exposures, the percentage of consolidated supervisory capital is
well below the limit of 25% set for banking groups.
At the end of the year guarantees granted by the UBI Group totalled 6,1 billion euro, an
increase of 5,75 billion euro compared to December 2009 (+6,1%).
In detail, commercial guarantees had been granted for 4,5 billion euro (+2,5%) compared to
guarantees of a financial nature of more than 1,6 billion euro (+17,8%).
Risk
Although still increasing strongly year-on-year, in 2010 deteriorated loans as a whole slowed
significantly compared to the previous year, affected in the last quarter by compliance with
new provisions introduced by the Bank of Italy concerning exposures past due and/or in
arrears. More specifically, between October and December 2010, volumes of growth returned
to practically the same rate as in the second quarter after an acceleration over the summer4.
Loans to customers as at 31st December 2010
Deteriorated loans
- Non-performing loans
Gross exposure
Impairment
losses
Carrying amount
Coverage (*)
(7,14%)
(3,62%)
7.465.062
3.780.973
2.203.933
1.841.057
(5,17%)
(1,91%)
5.261.129
1.939.916
29,52%
48,69%
- Impaired loans
(2,22%)
2.320.471
287.557
(2,00%)
2.032.914
12,39%
- Restructured loans
(0,85%)
889.070
60.577
(0,81%)
828.493
6,81%
- Past due loans
(0,45%)
474.548
14.742
(0,45%)
459.806
3,11%
Performing loans
(92,86%)
97.073.520
519.820
(94,83%)
96.553.700
0,54%
104.538.582
2.723.753
101.814.829
2,61%
TOTAL LOANS TO CUSTOMERS
The item as a percentage of the total is given in brackets.
Loans to customers as at 31st December 2009
Gross exposure
Impairment
losses
Carrying amount
Coverage (*)
Deteriorated loans
- Non-performing loans
- Impaired loans
(6,35%)
(2,74%)
(2,20%)
6.373.596
2.751.588
2.208.369
1.841.362
1.419.012
363.296
(4,62%)
(1,36%)
(1,88%)
4.532.234
1.332.576
1.845.073
28,89%
51,57%
16,45%
- Restructured loans
(0,48%)
479.520
40.785
(0,45%)
438.735
8,51%
- Past due loans
(0,93%)
934.119
18.269
(0,93%)
915.850
1,96%
Performing loans
(93,65%)
93.961.673
486.655
(95,38%)
100.335.269
2.328.017
TOTAL LOANS TO CUSTOMERS
93.475.018
0,52%
98.007.252
2,32%
The item as a percentage of the total is given in brackets.
(*) Coverage is calculated as the ratio of impairment losses to gross exposure.
3
4
Circular No. 263 “New regulations for the prudential supervision of banks” of 27th December 2010.
In detail: +0,21 billion euro in the first quarter, +0,24 billion euro in the second, +0,39 billion in third and +0,25 billion in the
fourth.
114
At the end of December, net deteriorated loans totalled 5,26 billion euro, an increase year-onyear of 0,73 billion euro (+16,1%) consisting of: +0,15 billion euro in the first quarter, +0,13
billion euro in the second, +0,35 billion euro in the third and +0,10 billion euro in the fourth.
The changes over twelve months mainly concerned non-performing loans (+0,61 billion euro),
compared to smaller increases in impaired loans (+0,19 billion euro) and restructured loans
(+0,39 billion euro). These were only partly offset by the reduction in exposures past due
and/or in arrears (-0,46 billion euro), within which the positions past due and/or in arrears
for more than 90 days backed by property mortgages fell appreciably (-0,27 billion euro).
Although increasing slightly (from 28,89% to 29,52%), total coverage remained again at low
levels in relation to the smaller estimated losses on newly classified positions due to the effect
of the existence of collateral or because they are operational impairment or restructured loans
for which agreements have been reached to reschedule debt by agreeing to a debt repayment
schedule pursuant to article 67 of the Bankruptcy Law or to a debt restructuring plan
pursuant to article 182-bis of the Bankruptcy Law.
From the viewpoint of the types of loan, as can be seen from the table, “Composition of loans
to customers”, more than 56% of the annual growth in net deteriorated loans regards the item
“Mortgage loans and other medium-to-long term loans” backed by collateral, which results
automatically in a lower level of coverage.
As concerns performing loans, total coverage increased further to 0,54% (0,52% at the end of
2009).
NON-PERFORMING LOANS
5
6
7
3 Q 10
2 Q 10
1 Q 10
4 Q 09
3 Q 09
2 Q 09
1 Q 09
As concerns gross non-performing
Quarterly rate of change in net non‐performing loans
loans, on the other hand, these
22%
increased by 1,03 billion euro to 3,78
20%
billion euro, a greater increase than
18%
16%
that recorded for the sector nationally
14%
(+37,4%
compared
to
+31,2%).
12%
Volumes
of
growth
slowed
10%
8%
progressively
until September, but
6%
then increased again in the last three
Sector nationally
4%
months of the year: +0,28 billion euro
2%
UBI Group
7
in the first quarter , +0,24 billion euro
0%
‐2%
in the second, +0,18 billion euro in
‐4%
the third and +0,33 billion euro in the
‐6%
fourth, including approximately half
relating to UBI Leasing, partly in
relation to the classification of
contracts subject to termination out of the impaired into the non-performing class.
4 Q 10
Net non-performing loans rose over twelve months from 1,3 million euro to 1,9 billion euro, an
increase of 607,3 million euro (+45,6%, compared to +28,9% for the sector nationally5),
including 160,4 million euro relating to the first quarter, 132,4 million euro to the second,
143,4 million euro to the third and 171,1 million euro to the fourth.
The network banks accounted for 56% of the year-on-year increase in non-performing loans
while the remainder is attributable almost entirely to Centrobanca (+33,8 million euro),
B@nca 24-7 (+62,2 million euro) and UBI Leasing in particular (+170,3 million euro, including
as much as 96 million euro in the last quarter of the year6).
However, in the second half of 2010 only, Group net non-performing loans realigned with the figure for the sector nationally
(+19,4% compared to +18%).
Of this 87 million euro relates to reclassifications into the non-performing class, that occurred in the 4th quarter, of contracts
which UBI Leasing had classified as impaired and which were subject to termination.
Including an exposure to the Burani Group of 72,5 million euro gross of impairment losses.
115
More than 65% of the 1,03 billion euro of annual growth consisted of positions backed by
collateral, which came to account for almost 44% of total gross non-performing loans (35% at
the end of 2009).
The rate of new classifications out of the performing class reduced slightly compared to the
previous year, while new classification from other deteriorated classes and from impaired
loans in particular increased by a fifth. Recognition of full impairment losses on loans
considered no longer recoverable increased by more than 15% compared to the previous year.
As a result of the trends just reported, the ratio of non-performing loans to loans rose to
1,91% in net terms (i.e. net of impairment losses) and to 3,62% in gross terms. Despite this
the UBI Group continues to maintain a qualitative advantage compared to the average for
Italian banks, which is 2,43% for net non-performing loans and 4,60% for gross nonperforming loans in the private sector.
Coverage at 48,69%, appears to be falling compared to a year before (51,57%), but remains
fairly stable compared to September (48,63%).
For an accurate assessment of the performance of that level it must, however, be considered
on the one hand that the calculation does not include positions subject to proceedings by
creditors (bankruptcy, arrangement with creditors, extraordinary administration, etc.) with the
non recoverable part and the relative impairment losses recognised eliminated and on the
other hand that the percentage of secured loans with a normally lower level of coverage has
increased.
The coverage for unsecured non-performing loans, considered gross of impairment losses, had
risen at the end of 2010 to 80,14% (78,45% in December 2009).
IMPAIRED LOANS
After a temporary reversal of the trend in the summer, net impaired loans recorded a higher
increase in the last quarter of the year. The total rose from 1,84 billion euro to 2,03 billion
euro, an increase of 187,8 million euro (+10,2%) distributed as follows: +59,3 million euro in
the first quarter, +31,5 million in the second, -25,3 million euro in the third and +122,3
million euro in the fourth.
The total change that occurred over twelve months is attributable entirely to the network
banks and to B@nca 24-7, while Centrobanca and UBI Leasing recorded a decrease in the
item following the reclassification of positions into the non-performing class.
The ratio of net impaired loans to net lending rose as a consequence to 2% (1,88% at the end
of 2009).
Gross impaired loans also rose from 2,21 billion euro to 2,32 billion euro, growth of 112,1
million euro, occurring mainly in the last quarter: changes of +5,2 million euro, +32 million
euro, -30,9 million euro and +105,8 million euro in each of the quarters of the year).
At the end of year the percentage of total gross impaired loans backed by collateral had
exceeded 60% (51% at the end of 2009).
Reclassifications from the performing loan class fell by more than a quarter compared to the
year before. The trend for this class also benefited from the approval of restructuring plans,
which resulted in the reclassifications of many positions into the restructured class.
116
Loans to customers: changes in deteriorated gross exposures in 2010
Nonperforming
loans
Impaired loans
Restructured
exposures
Past due
exposures
Opening gross exposure as at 1st January 2010
2.751.588
2.208.369
479.520
934.119
Increases
transfers from performing exposures
transfers from other classes of deteriorated exposures
1.649.454
422.669
1.114.275
2.484.776
1.258.375
780.327
1.046.418
181.571
372.139
1.811.969
1.617.752
30.112
other increases
Decreases
transfers into performing exposures
full impairment losses
disposals
transfers to other classes of deteriorated exposure
other decreases
Final gross exposure as at 31st December 2010
112.510
446.074
492.708
164.105
-620.069
-1.606
-285.864
-29.486
-3.013
-300.100
-2.372.674
-294.429
-83
-1.379.429
-698.733
-636.868
-28.558
-1.521
-31.859
-574.930
-2.271.540
-1.228.549
0
-882.552
-160.439
3.780.973
2.320.471
889.070
474.548
Loans to customers: changes in deteriorated gross exposures in 2009
Nonperforming
loans
Impaired loans
Restructured
exposures
Past due
exposures
Opening gross exposure as at 1st January 2009
1.868.615
1.382.852
142.114
214.007
Increases
transfers from performing exposures
transfers from other classes of deteriorated exposures
other increases
1.383.829
455.774
921.622
6.433
2.817.924
1.745.232
777.374
295.318
638.098
302.734
110.626
224.738
2.200.633
2.030.659
129.860
40.114
-500.856
-1.020
-245.501
-8
-7.657
-246.670
-1.992.407
-327.980
-1.175
-24
-1.111.672
-551.556
-300.692
-61.085
-26.445
-791
-212.371
-1.480.521
-592.403
-32
-819.362
-68.724
2.751.588
2.208.369
479.520
934.119
Decreases
transfers into performing exposures
full impairment losses
disposals
transfers to other classes of deteriorated exposure
other decreases
Final gross exposure as at 31st December 2009
Coverage decreased to 12,39% from 16,45% at the end of 2009 in relation to the increase in
positions backed by collateral, with account also taken on the one hand of the reclassification
of the Burani Group exposures into the non-performing class in the first quarter8 and on the
other of the reclassification already mentioned into the non-performing class of UBI Leasing
positions subject to contract termination (with coverage of 29%).
Net of secured loans, coverage for impaired loans stood at 22,41% (28,39% twelve months
before).
RESTRUCTURED LOANS
Net restructured loans almost doubled to 828,5 million euro from 438,7 million euro at the end
of 2009. Moreover the increase, amounting to 389,8 million euro, related almost entirely to the
progressive growth that occurred in the first nine months of the year (+360,5 million euro),
while the trend slowed considerably in the last quarter (+29,3 million euro).
The increase in the item – more than 60% of which related to Banco di Brescia (+128,6 million
euro) and to Centrobanca (+120,2 million euro) – was partly the result of already deteriorated
positions for which restructuring plans were agreed, which explains the reduction in coverage
to 6,81% from 8,51% at the end of 2009.
8
Coverage as at 31st December 2009 calculated net of the exposures to the Burani Group, reclassified as non-performing loans in the
first quarter 2010 together with the relative impairment losses, was 14,4%.
117
EXPOSURES PAST DUE AND/OR IN ARREARS
Moving in the opposite direction to other types of deteriorated loan, net exposures past due
and in arrears halved over twelve months to 459,8 million euro compared to 915,8 million euro
at the end of 2009, which also included the implementation of new Bank of Italy provisions
regarding exposures past due and/or in arrears for more than 90 days, backed by property
mortgages, at the level of single transactions.
Net of the increase that occurred in the third quarter, the annual change for this class is one
of a progressive decrease, which was particularly marked between October and December
(-135,7 million euro in the first quarter, -155,5 million euro in the second, +55,8 million euro
in the third and -220,6 million euro in the fourth), in parallel with the reduction in the “90
days past due” component. The latter actually fell from 569,3 million euro at the end of 2009
to 294,8 million euro in December 2010 (-133,6 million euro in the first quarter, -13,4 million
euro in the second, +60,2 million euro in the third and -187,7 million euro in the fourth).
The network banks accounted for 60% of the decrease in exposures past due and/or in
arrears as a direct result of improved credit quality management, introduced in a structured
fashion on the corporate and retail markets of the network banks at the beginning of 2010.
This was also confirmed by the increase in reclassifications into the performing class which
doubled over the year compared to 2009.
Because they are fully secured by collateral, the prevalent percentage of positions past due
and/or in arrears for more than 90 days (64% in December 2010; 62% at the end of 2009)
explains the low coverage for this class, although it did increase from 1,96% to 3,11%.
UBI LEASING
The continuation of the economic crisis in 2010 resulted in a significant worsening of the
credit quality of the UBI Leasing property and machinery and equipment portfolios originated
both through its own agents and through the network banks (captive market), with a
consequent strong impact in terms of impairment losses on loans.
The negative trend worsened further in the fourth quarter, due to the adoption of restrictive
criteria on the reclassification into the non-performing class of positions with terminated
contracts and to the increase of provisions on the performing portfolio.
In view of the scenario described the following actions were commenced in 2010:
• a far reaching internal reorganisation of the company, which included corporate
governance, by strengthening management;
• a project initiative with the involvement of the Parent, focused on improving the quality of
the portfolio and revising credit approval processes to increase quality standards at the
disbursement, monitoring and credit recovery stages.
The restructuring path undertaken will result in a strong focus on captive market growth and
careful selection of business on the agent channel to address the higher risk profile and the
significant losses incurred.
118
The interbank market and the liquidity
situation
The quarterly changes in the net interbank debt
Loans to banks
of which: Loans to central banks
Due to banks
of which: Due to central banks
NET INTERBANK DEBT
Loans to banks
of which: Loans to central banks
Due to banks
of which: Due to central banks
NET INTERBANK DEBT
31.12.2010
30.9.2010
30.6.2010
31.3.2010
31.12.2009
A
B
C
D
E
Changes A/E
amount
%
3.120.352
3.427.795
3.290.637
2.996.834
3.278.264
-157.912
-4,8%
739.508
295.430
375.415
282.815
641.788
97.720
15,2%
5.383.977
7.126.257
9.252.062
4.612.141
5.324.434
59.543
1,1%
2.219.152
2.000.056
2.977.481
479.002
639.753
1.579.399
246,9%
-2.263.625
-3.698.462
-5.961.425
-1.615.307
-2.046.170
217.455
31.12.2009
F
30.9.2009
G
30.6.2009
H
31.3.2009
I
31.12.2008
L
10,6%
Changes F/L
amount
%
3.278.264
3.101.108
3.184.949
2.824.055
3.053.704
224.560
7,4%
641.788
198.428
643.471
119.354
1.045.983
-404.195
-38,6%
5.324.434
5.306.536
6.073.741
5.953.954
3.980.922
1.343.512
33,7%
639.753
501.371
1.500.249
-
450.059
189.694
-2.046.170
-2.205.428
-2.888.792
-3.129.899
-927.218
1.118.952
42,1%
120,7%
The net interbank balance of the UBI Banca Group as at 31st December 2010 consisted of debt
of 2,3 billion euro. It had reduced progressively compared to the previous interim periods (with
the sole exception of March 2010), but was basically unchanged compared to 31st December
2009.
An analysis in terms of residual maturities shows a net short term balance of approximately
+300 million euro, calculated excluding central bank auctions outstanding at the end of year
(in consideration of the full allotment guarantee given). Even if that exposure is classified in
terms of the short term debt component, this continues to be below the early warning
threshold set by Group policy, standing at approximately -1,8 billion euro, as also occurred in
the preceding interim periods.
As shown in the table, which shows quarterly changes for the aggregates in 2010, while loans
to banks remained practically constant, the trend for funding from banks was more variable
and reached a high at the end of June, a time of difficulty on markets for longer term maturity
issues, only to return at the end of the year to the same levels as at the end of 2009, as a
result of a series of actions undertaken by the Group with regard to funding (bond and other)
and also of the resumption of international placements.
Access to the interbank market represents a source of complementary and residual funding for
the Group compared to other sources of funding on institutional markets (see also the
previous section “Funding policies”).
In detail, loans to banks as at 31st December 2010 amounted to 3,1 billion euro (3,3 billion
euro twelve months before), including 740 million euro of loans to the central bank for
compulsory reserve requirements, accounting for 24% of the total.
Loans to banks other than the central bank recorded no significant changes over twelve
months (-256 million euro), with only a small change in composition between the different
types of lending.
The decrease in term deposits (-262 million euro) and other financing (-135 million euro),
mainly in the reverse repurchase agreement component, was accompanied by a slight increase
in current account overdrafts and deposits (+142 million euro). More than 37% of loans
outstanding at the end of the year were concentrated in this item, the most significant,
amounting to 1,2 billion euro.
119
Loans to banks: composition
31.12.2010
%
31.12.2009
Changes
%
amount
Loans to central banks
Term deposits
Compulsory reserve requirements
739.508
-
23,7%
-
641.788
-
19,6%
-
97.720
-
15,2%
-
739.508
23,7%
641.751
19,6%
97.757
15,2%
-
-
37
0,0%
-37
-100,0%
2.380.844
1.161.396
466.445
76,3%
37,3%
14,9%
2.636.476
1.019.692
728.828
80,4%
31,1%
22,2%
-255.632
141.704
-262.383
-9,7%
13,9%
-36,0%
Reverse repurchase agreements
Other
Loans to banks
Current accounts and deposits
Term deposits
Other financing:
%
753.003
24,1%
887.956
27,1%
-134.953
-15,2%
- reverse repurchase agreements
988
0,0%
99.889
3,1%
-98.901
-99,0%
- finance leases
165
0,0%
313
0,0%
-148
-47,3%
751.850
24,1%
787.754
24,0%
-35.904
-4,6%
-
-
-
-
-
-
3.120.352
100,0%
3.278.264
100,0%
-157.912
-4,8%
- other
Debt instruments
TOTAL
At the end of year, interbank funding amounted to 5,4 billion euro, unchanged compared to
twelve months before (+59 million euro), although the change in the composition of the items
can be seen from the table.
Recourse to borrowing from the central bank intensified during the year – up by 640 million
euro to 2,2 billion euro in December 2010 – which offset the reduction in amounts due to
other banks (-1,5 billion euro), down to 3,2 billion euro.
This phenomenon – explained, amongst other things, by tensions on monetary markets –
triggered a process of replacement towards more stable funding (due to the full allotment
clause) which brought amounts due to central banks to account for more than 40% of the
total.
As concerns borrowing from other banks, the appreciable reduction in current accounts and
deposits (-1,9 billion euro) was contrasted by an increase in term deposits (+390 million euro);
while the opposing trends for financing and other payables virtually balanced each other.
Due to banks: composition
31.12.2010
%
31.12.2009
Changes
%
amount
Due to central banks
Due to banks
Current accounts and deposits
Term deposits
Financing:
1.579.399
246,9%
-480.753
-100,0%
88,0%
48,7%
15,2%
-1.519.856
-1.898.190
390.050
-32,4%
-73,3%
48,2%
2.219.152
41,2%
639.753
12,0%
-
-
480.753
9,0%
3.164.825
692.788
1.199.455
58,8%
12,9%
22,3%
4.684.681
2.590.978
809.405
of which: repurchase agreements (*)
%
1.149.003
21,3%
1.191.381
22,4%
-42.378
-3,6%
- repurchase agreements
290.737
5,4%
347.603
6,5%
-56.866
-16,4%
- other
858.266
15,9%
843.778
15,9%
14.488
1,7%
Amounts due for commitments to repurchase own equity
instruments
Other payables
TOTAL
-
-
-
-
-
-
123.579
2,3%
92.917
1,7%
30.662
33,0%
5.383.977
100,0%
5.324.434
100,0%
59.543
1,1%
28th
(*) A new system came into operation on
June 2010 for the pool management of assets posted as collateral for loans in the Eurosystem, with the
introduction of a single pooled deposit account for collateral in which all assets pledged are held. This involved a change to the procedures used to post
collateral assets, with the transformation of repurchase agreements into pledge agreements.
120
Assets eligible for refinancing
31.12.2010
nominal
amount
Figures in billions of euro
amount eligible
(net of haircuts)
31.12.2009
nominal
amount
amount eligible
(net of haircuts)
AFS and HTM securities
1,40
1,34
1,80
1,76
HFT securities
B@nca 24-7 residential mortgage securitisation (*)
0,00
1,71
0,00
1,30
0,03
2,28
0,03
1,68
B@nca 24-7 salary backed loan securitisation (**)
0,38
0,31
0,72
0,58
B@nca 24-7 consumer loan securitisation
UBI Leased assets securitisation
2,13
3,44
1,73
2,87
2,13
3,44
1,80
2,81
Securitisation of Banco di Brescia assets
1,56
1,25
1,56
1,02
Loans eligible resulting from participation in ABACO (***)
0,27
0,27
0,27
0,25
10,89
9,07
12,23
9,93
TOTAL
(*) nominal residual amount after partial redemption (of approximately 25%) recognised in 2010.
(**) nominal residual amount after partial redemption (of approximately 48%) recognised in 2010.
(***) ABACO (bank assets eligible as collateral) is the name given to procedures drawn up by the Bank of Italy for the management of loans eligible for
refinancing. In order to qualify as eligible, an asset must meet specific requirements concerning the following: type of debtor/guarantor (public sector,
non financial company, international and supranational institutions), high credit rating (single “A-” credit quality level, equivalent to a default probability
of 0,10%) and a minimum amount (one million euro for national use until 2011).
Assets eligible for refinancing with the central bank amounted to 9,1 billion euro as at 31st
December 2010 (9,9 billion euro at the end of 2009).
The decrease compared to the previous year is due mainly to repayments on internal
securitisations, and maturities of securities held in portfolio.
In the third quarter, the Group completed activity to restructure the main existing
securitisations and to render them revolving (by using the available liquidity of special purpose
entities) and it is completing the creation of a new securitisation for a nominal amount of two
billion euro and an expected increase, net of haircuts, of 1,5 billion euro.
On 1st January 2011 the central bank revised the classification and levels of haircuts for
eligible instruments: the level was raised for asset backed securities from 12% to 16% with an
impact on the total value of assets eligible for refinancing of approximately 0,3 billion euro.
A second rating requirement became operational from 1st March 2011. In order for
securitisations to be eligible for refinancing with the Bank of Italy and/or the European
Central Bank, ABS instruments must have ratings issued by at least two international
agencies.
The rating process specifically for internal securitisations (which regard four of the five existing
securitisations and amount to 7,5 billion euro net of haircuts) has at present been completed
on assets of 4,1 billion euro, with a consequent reduction in eligible assets (the delay was in
fact the result of factors not under the direct control of the Group).
In order to partially compensate for this decrease, UBI Banca entered into reverse repurchase
agreements with external counterparties to purchase eligible assets amounting to 1,7 billion
euro.
The second rating process is expected to be complete by the end of the first half of 2011.
As a result of the above, at the date of this report eligible assets amounted to 7,2 billion euro.
***
In December 2010, the final version of the Basel Committee Accord was published on the process to revise
international supervisory regulations on liquidity, which basically confirmed the version defined in
December 2009, with the introduction of two indicators associated with a minimum regulatory threshold
(nevertheless officially setting a specific percentage for the renewal of maturing loans, previously left to the
discretion of the bank).
At the same time, on 1st January 2011 amendments to Bank of Italy supervisory regulations entered into
force which make widespread changes to rules governing liquidity risk. These create an organised system
of principles and obligations designed to orient banks towards greater rigour in the management of
liquidity. This system is intended to direct banks and banking groups towards compliance with rules which
121
will be introduced by the new international prudential regulations from 31st December 2015 and which will
form part of the general set of rules governing liquidity1.
Furthermore, in March 2011, the EBA (European Banking Authority) ordered an assessment of liquidity risk
in which the UBI Banca Group participated by preparing a standard matrix, structured by maturity
intervals with the identification of predefined time intervals, to be compiled on a consolidated basis with
data as at 31st December 2010. The assessment, which involves the application of common stress factors
by the EBA in order to estimate the survival period for each bank, is designed to assess the liquidity
position of banks in relative terms (it is not yet possible at present to formulate hypotheses concerning the
possible stress scenarios which will be applied). Finally there is a section relating to funding plans for the
same time intervals, in order to identify possible concentrations in terms of issues planned at system level.
The 2011 policy for the management of the financial risks of the UBI Banca Group significantly revised both
the system for monitoring liquidity risk, and that for structural balance between assets and liabilities, in
order to incorporate the developments and recommendations of the international process in progress to
revise the regulations governing liquidity risk.
From 20th May 2010, that risk is managed by means of the measurement, monitoring and management of
the expected liquidity requirement, using a net liquidity balance model of analysis at consolidated level on
a time horizon of 30 days, integrated with stress tests designed to assess the Group’s ability to withstand
crisis scenarios characterised by an increasing level of severity. The system adopted also involves
monitoring sources of funding both at consolidated and individual company level, in order to verify their
consistency and sustainability over time with respect to the current and expected liquidity requirement of
the Group and also consistency with the level of dependence on institutional markets considered
acceptable.
Management of structural balance is performed by using models which assess the degree of stability of
liabilities and the degree of liquidity of assets (based principally on criteria of residual life and on the
classification of the counterparties which contribute to the definition of the relative weightings), in order to
contain risk associated with the transformation of maturities within a tolerance threshold considered
acceptable by the Group. This model is designed to incorporate the general lines currently being defined in
the process to revise prudential regulations for liquidity risk with specific reference to medium-to-long term
indicators.
1
A summary of the new prudential regulatory framework is
consulted.
given in the section “equity and capital adequacy”, which may be
122
Financial assets
With a view to supporting net interest income in a still fragile and uncertain market context, on 25th May
2010 a decision was taken – and finalised the following June – to invest in government securities. That
investment – for a total nominal amount of six billion euro with partial profit taking in September and
October – influenced trends for financial assets affecting both financial assets held for trading and
available-for-sale financial assets, with new purchases of Italian government securities classified within
debt instruments.
The total financial assets of the Group as at 31st December 2010 had exceeded 13 billion
euro, a significant increase compared to the previous year (+5 billion euro).
Net of financial liabilities held for trading, consisting mainly of financial derivatives, financial
assets amounted to 12,2 billion euro (7,3 billion euro at the end of the 2009).
In terms of composition, as can be seen from the table, the trend for the item is attributable to
increases in financial assets held for trading and above all in instruments classified within
available-for-sale financial assets as a result of the new investments in Italian government
securities (more than doubled over twelve months, to account for 73,5% of the total) as part
the action taken to support net interest income mentioned above. On the other hand financial
assets at fair value continued to decrease having now become a residual item.
Financial assets/liabilities
31.12.2010
of which: financial derivatives contracts
TOTAL FINANCIAL ASSETS (A)
Amount
31.12.2009
%
Amount
Changes
%
amount
%
2.732.751
20,8%
1.575.764
19,4%
1.156.987
73,4%
514.141
3,9%
722.831
8,9%
-208.690
-28,9%
147.286
10.252.619
1,1%
78,1%
173.727
6.386.257
2,1%
78,5%
-26.441
3.866.362
-15,2%
60,5%
-
-
-
-
4.996.908
61,4%
13.132.656
100,0%
8.135.748
100,0%
11.611.039
88,4%
6.251.008
76,8%
5.360.031
85,7%
9.646.573
73,5%
4.325.379
53,2%
5.321.194
123,0%
- equity instruments
667.497
5,1%
846.841
10,4%
-179.344
-21,2%
- Units in O.I.C.R. (collective investment instruments).
274.362
2,1%
310.488
3,8%
-36.126
-11,6%
of which:
- debt instruments
- of which: Italian government securities
FINANCIAL LIABILITIES HELD FOR TRADING (B)
of which: financial derivatives contracts
NET FINANCIAL ASSETS (A-B)
954.423
100,0%
855.387
100,0%
545.161
57,1%
746.752
87,3%
12.178.233
7.280.361
99.036
11,6%
-201.591
-27,0%
4.897.872
67,3%
Management accounting figures1 as at the 31st December 2010 show the following:
- in terms of types of financial instrument, the securities portfolio of the Group was composed
as follows: 80,3% of government securities, 15,9% of corporate securities (of which 79%
relating to major Italian and international banks and financial institutions), 1,3% of hedge
funds and the remainder consisting of funds, equities and other instruments;
- from a financial viewpoint, floating rate securities accounted for 63,4% of the portfolio2 and
fixed rate securities for 26,8%, while structured instruments (for which the optional
component concerned the coupons only and not the capital invested), present mainly in the
available-for-sale portfolio, accounted for 6,7%, while the remainder was composed of
equities, funds and convertible bonds;
1
2
The management accounting figures relate to a smaller portfolio than that stated in the consolidated financial statements, because
they exclude equity investments and some minor portfolios
The fixed rate securities purchased as part of asset swaps are also considered as floating rate. They account for 74% of the floating
rate securities.
123
- as regards the reference currency, 98,8% of the securities were denominated in euro, and
0,6% in dollars with currency hedges, while in terms of geographical distribution, 95,2% of
the investments (excluding hedge funds) were located in the euro area and 2,9% in USA
securities;
- finally, an analysis by rating (for the bond portfolio only) shows that 97,8% of the portfolio
consisted of “investment grade” securities with an average rating of A3.
“Available for sale financial assets”, asset item 40, are measured at fair value with the recognition of
changes in a separate fair value reserve in equity, except for losses due to reductions in value that are
considered significant or prolonged. In this case the reduction in value that occurred in the period is
recognised through profit or loss, the amount being transferred from the negative or positive reserve that
may have been recognised in equity previously. Following the recognition of impairment losses, recoveries
in value continue to be recognised in the separate fair value reserve in equity. Any decreases below the
level of the previous impairment losses are recognised through profit and loss.
Available-for-sale financial assets: composition
31.12.2010
Debt instruments
of which: Italian government
securities
Equity instruments
L1
L2
8.509.464
1.115.988
31.12.2009
L3
Total
L1
L2
1.573.093
10.255
9.635.707
4.041.201
Changes
L3
Total
amount
%
6.586
5.620.880
4.014.827
71,4%
7.776.547
-
-
7.776.547
3.886.375
-
-
3.886.375
3.890.172
100,1%
346.586
73.614
70.357
490.557
489.825
71.083
75.540
636.448
-145.891
-22,9%
18.313
106.596
-
124.909
17.177
110.046
260
127.483
-2.574
-2,0%
-
-
1.446
1.446
-
-
1.446
1.446
-
-
8.874.363
1.296.198
82.058
10.252.619
4.548.203
1.754.222
83.832
6.386.257
3.866.362
60,5%
Units in O.I.C.R.
(co llective investment instruments)
Financing
TOTAL
As at 31st December 2010, available-for-sale financial assets had reached 10,3 billion euro (6,4
billion euro at the end of 2009) and were composed principally as follows:
-
the AFS portfolio of UBI Banca amounting to 8.698 million euro (4.919 million euro in
December 2009);
-
the IW Bank portfolio, designed to stabilise net interest income given the nature of its
normal operations, amounting to 845 million euro (787 million euro);
-
the Centrobanca corporate bond portfolio, which represents activity complementary to and
consistent with the lending approach of that bank, amounting to 557 million euro (535
million euro).
The significant growth that occurred reflects the trend for debt instruments, which rose from
5.621 million euro to 9.636 million euro (+71,4%), as a result of new investments in Italian
government securities contained primarily in the UBI Banca portfolio: a total of +3,9 billion
euro including a nominal amount of 3,3 billion euro relating to the action taken to stabilise net
interest income.
The action, which commenced at the end of May, took concrete form with the purchase of BTPs and CTZs
maturing in September 2011 for a total nominal amount of 5,5 billion euro classified within available-forsale financial assets (a further 0,5 billion euro, again maturing in September 2011, was classified within
financial assets held for trading).
Partial profit taking was performed in September and October (on the basis of the prices and credit spreads
of the Italian government issues), by the sale of securities for a nominal amount of 3,2 billion euro (two
billion euro of BTPs – of which 1,8 billion euro in asset swaps – and 1,2 billion euro of CTZs) and a
subsequent reinvestment of one billion euro in longer term BTPs (2020 and 2021).
124
This action was accompanied by investments in long term BTPs made in the first quarter and
to a lesser extent in the third quarter, with partial disinvestments in the last quarter of the
year.
As concerns Centrobanca, the portfolio – 72,5% consisting of “investment grade” securities –
increased by approximately 22 million euro, approximately half of which attributable to net
investments and the remaining part to recoveries in value and positive exchange rate
differences. The IW Bank portfolio also increased (almost 60 million euro) due to new net
investments in Government securities (CCTs maturing in 2015).
The debt instruments also include ABS financial instruments – all held by UBI Banca – eligible
for refinancing with the ECB with a book value of 89,1 million euro consisting of securities
from INPS (national insurance institute) securitisations (two securitisations existed at the end
of 2009 for a total amount of 128,8 million euro).
In addition to the net fair value impact (+0,4 million euro), the decrease compared to 165,2
million of twelve months before is attributable to the redemption of an INPS securitisation
amounting to 40,1 million euro and to banking securitisations (RMBSs – residential mortgage
backed securities) with a book value of 36,4 million euro in December 2009 (49,7 million euro
nominal).
Total Group investments in ABS securities as at 31st December 2010, net of own
securitisations, amounted to 89,6 million euro (208 million euro the year before) and they were
composed as follows:
y 89,1 million euro, classified in the AFS portfolio of UBI Banca, already mentioned;
y 0,5 million euro classified within the HFT portfolio of UBI International (see in this respect
the sub-section “Financial assets held for trading”);
The total amount at the end of 2009 included a security classified within the Centrobanca
loans and receivables portfolio with a nominal value of five million euro, sold in the second
half of 2010.
Investments in own securitisations, eliminated in the consolidation, fell to 39,3 million from
43,4 million euro in 2009 and related to the following:
RMBS securities classified within financial assets held for trading relating to UBI Banca
(Orio Finance) and amounting to 5,3 million euro (6,6 million euro twelve months before);
ABS securities amounting to 34 million euro (36,8 million euro in December 2009) as
follows:
y 7,2 million euro in the Centrobanca AFS portfolio (Sintonia Finance) (7,5 million euro);
y 5,8 million in the Parent’s AFS portfolio (Lombarda Lease Finance 4) (8,3 million euro);
y 21 million euro classified within loans and receivables held by UBI Leasing (Lombarda
Lease Finance 4) (unchanged compared to twelve months before).
The sub-section "exposures of the UBI Banca Group to some types of products”, later in this section, may be
consulted for further information on exposures to ABS instruments and to special purpose entities (SPE).
Equity instruments fell to 491 million euro from 636 million euro the year before.
Shareholdings that are not classified as companies subject to control, joint control or
significant influence and that are not held for merchant banking and private equity activities,
are recognised here. The decrease in these assets is basically due to the decrease in the fair
value of listed equity investments classified within fair value level one and to the Intesa
Sanpaolo share in particular3. Its market value, affected by the sharp drop in banking share
prices at the end of the year, fell from 459,1 million euro to 296,2 million euro (-35,5%), while
the A2A Spa share also fell from 16,4 million euro to 11,6 million euro over twelve months. On
the other hand, an increase was recorded in the interest held in London Stock Exchange (from
12,6 million euro to 15,5 million euro; +22,5%).
The fair value level one class also includes an investment made in the second quarter of 2010
with a nominal value of 20 million euro (ETF on EuroStoxx 50).
As concerns unlisted equity investments, those with a level two and three fair value decreased
on aggregate by almost three million euro, principally as a result of disposals of holdings in
3
The UBI Banca Group holds a total of 145.022.912 shares, amounting to 1,22% of the share capital with voting rights.
125
Carta SI, the former Si Holding Spa (-14,4 million euro), in Centrosim Spa
(-1,7 million euro at consolidated level) and Equinox Investment Company Scpa (-0,9 million
euro), while increases resulted from an increase in the value of some equity investments and
from new investments. The latter included further purchases by the Parent in Autostrada
Pedemontana Lombarda Spa (+5,3 million euro) and in Autostrade Lombarde Spa (+0,8 million
euro), 4,7 million euro relating to the investment in GGP Greenfield by Centrobanca acquired
through the conversion of amounts due from the company and one million euro net relating to
UBI Banca International.
The investment in OICR units (collective investment instruments) fell to 125 million euro from
127 million euro previously (-2%), the result on the one hand of purchases and a net increase
in the value of the UBI Banca investments (+15,6 million euro) and on the other of sales by
UBI Pramerica (-17,9 million euro). The item includes property funds – held almost entirely by
the Parent – totalling approximately 27 million euro (26,4 million euro in December 2009),
including 18,3 million euro relating to the Polis Fund (17,2 million euro at the end of 2009),
recognised within fair value level one.
As a result of the losses recorded by debt instruments in particular, at the end of year the
balance on the fair value reserve for available-for-sale financial assets recognised in equity was
negative by 311,5 million euro (it was positive by 168,7 million euro in December 2009).
Financial instruments held for trading
Asset item 20, “Financial assets held for trading”, includes financial trading instruments “used to generate
a profit from short-term fluctuations in price or from a dealer’s margin”. They are recognised at fair value
through profit or loss – FVPL.
Financial assets held for trading: composition
31.12.2010
A. On-balance sheet assets
Debt instruments
of which: Italian government
securities
L1
L2
1.964.319
31.12.2009
L3
11.013
Total
-
1.975.332
L1
L2
479.546
Changes
L3
150.582
amount
%
630.128
1.345.204
213,5%
Total
-
1.870.026
-
-
1.870.026
439.004
-
-
439.004
1.431.022
326,0%
72.856
2
104.082
176.940
109.266
80.592
20.535
210.393
-33.453
-15,9%
512
54
1.601
2.167
628
8
8.642
9.278
-7.111
-76,6%
-
64.171
-
64.171
-
3.134
-
3.134
2.037.687
75.240
105.683
2.218.610
589.440
234.316
29.177
852.933
61.037
1.365.677
n.s.
160,1%
B. Derivative instruments
Financial derivatives
Credit derivatives
1.014
-
509.601
-
3.526
-
514.141
-
582
-
721.626
-
623
-
722.831
-
-208.690
-
-28,9%
-
Total B
1.014
509.601
3.526
514.141
582
721.626
623
722.831
-208.690
-28,9%
2.038.701
584.841
109.209
2.732.751
590.022
955.942
29.800
1.575.764
1.156.987
73,4%
Equity instruments
Units in O.I.C.R.
Financing
Total A
TOTAL (A+B)
At the end of December financial assets held for trading amounted to 2.733 million euro, an
increase of more than 70% over twelve months, the result of new net investments in debt
instruments concentrated mainly in the first half of the year.
Debt instruments, amounting to 1.975 million euro (almost all with a level one fair value)
increased by 1.345 million euro (more than tripled compared to December 2009) due to the
net effect of sales, maturities and purchases of Italian government securities (+1.431 million
126
euro, including a nominal amount of 0,5 billion euro connected with an investment decided in
May).
As at 31st December, the Group held Greek government securities in portfolio at the initial
purchase price of 23,6 million euro (a book value of 24,6 million euro inclusive of the coupon
interest accruing); the position was closed in February 2011.
At the date of this report no investments in government debt instruments issued by Portugal,
Ireland, Spain and Belgium were held in portfolio.
Debt instruments also included direct investments in “Asset Backed Securities”4, all held by
the subsidiary UBI Banca International Sa, consisting mainly of mortgage backed securities
(MBS), with the underlying assets principally of European origin amounting to 0,5 million euro
(a total book value of ABSs held in December 2009 of 37,8 million euro).
The decrease that occurred over twelve months (-37,3 million euro) is attributable to the
maturity of a collateralised debt obligation (“CBO Investment Jersey Ltd 1999-2010”)
subscribed by UBI Banca amounting to 35,6 million euro and to the redemption of a security
held in portfolio by UBI Banca International amounting to 1,5 million euro, as well as to the
net fair value impact amounting to -0,2 million euro.
Debt instruments also included a structured product, similar in terms of risk to ABS
securities, amounting to approximately 2,6 million euro and relating to UBI Banca
International Sa (2,4 million euro in December 2009).
Equity instruments decreased during the year, down from 210 million euro to 177 million euro,
principally in relation to disinvestments in European equities (all with a level one fair value) by
the Group’s asset management company under the management mandate granted to it5 (-52
million euro) partially offset by a new equity purchase by the subsidiary Centrobanca, which,
however, was sold in the first few days of 2011.
This category also includes investments in equity instruments held as part of merchant
banking and private equity business (in connection principally with Centrobanca’s activities).
In December 2010, these totalled 104,1 million euro – classified within fair value level three –
an increase compared to twelve months before (100,2 million euro) due to the net effect of new
investments and disposals performed by Centrobanca and to the changes in the fair value of
some equity investments.
Investments in OICR units (collective investment instruments) fell to 2,2 million euro relating
almost entirely to hedge funds purchased prior to 30th June 2007 and still held (1,6 million
euro classified within fair value level three compared to 8,6 million euro before)6.
As concerns the item financing – all relating to Prestitalia Spa – this increased from 3,1 million
euro to 64,2 million euro in relation to the full acquisition of the company, with consequent
line-by-line consolidation applied to it,
Finally, financial assets classified as held for trading also included derivative instruments
amounting to 514,1 million euro (722,8 million euro in December 2009), entirely of a financial
nature, for which the performance and amount must be interpreted in strict relation to the
corresponding item recognised within financial liabilities held for trading.
Financial instruments held for trading as at 31st December 2010 included impaired assets
amounting to 0,9 million euro (1,1 million euro in 2009), attributable to the expected
realisable value of bonds issued by Lehman Brothers and subscribed by UBI International and
by the Parent for a total nominal amount of 10 million euro. The change is due to the sale in
4
5
6
The preceding sub-section on the available-for-sale portfolio should be consulted for a full picture of the Group’s investments in ABS
securities.
As already reported, this accounting class also includes the portfolio entrusted to UBI Pramerica SGR under the management
mandate granted to it. On the basis of that mandate, management is performed following a capital protection strategy, which
guarantees a level of capital protection on maturity of 96,80%.
In December, approximately 39 million euro was invested in European equities (90,8 million euro at the end of 2009). Open positions
also existed in futures on equity indices, options on exchange rates and forward currency contracts, The remaining part of the
mandate was managed using monetary instruments.
The following sub-section, “financial assets at fair value”, may be consulted for a full picture of the Group’s investments in hedge
funds.
127
December of a Lehman security held by UBI International with a nominal amount of 2,5
million euro.
Furthermore, at the date of this report the remaining Lehman securities held in portfolio had
also been disposed of.
As concerns the position of the Group with regard to Lehman Brothers, as already reported in the 2009
Annual Report:
-
UBI Banca and Centrobanca have filed proof of claim applications with the Southern District Court of
New York in connection with derivatives contracts which had been entered into with companies in the
Lehman Brothers Group;
-
Centrobanca has filed proof of claim applications in relation to derivatives contracts which it had
entered into with Lehman Brothers Special Financing Inc. subject to Chapter 11 bankruptcy proceedings
in the USA;
-
UBI Banca has filed proof of claim applications in relation to bonds issued by Lehman Brothers Holdings
Inc. which had been subscribed by UBI Banca, UBI Banca International and the Luxembourg branch of
Banco di Brescia. The relative creditor’s claims must be considered as void in consideration of the
disposal of the securities performed in the meantime.
As concerns the position of Lehman Brothers International (Europe), a company belonging to the Lehman
Brothers Group and subject to an administration order in the United Kingdom, on 17th September 2010 UBI
Banca filed a creditor’s claim for 485.930,71 GBP in relation to derivatives contracts that had been entered
into with Lehman Brothers International (Europe).
In relation to that last position, as already reported, UBI Banca had already filed creditor’s claims against
Lehman Brothers Holdings Inc., as the guarantor of Lehman Brothers International (Europe), in the context
of the Chapter 11 proceedings in the USA mentioned above.
Financial liabilities held for trading: composition
31.12.2010
L1
L2
31.12.2009
L3
L1
Total
L2
Changes
L3
amount
Total
%
A. On-balance sheet liabilities
Due to banks
110.657
-
-
110.657
86.857
-
-
86.857
23.800
Due to customers
Debt instruments
298.605
-
-
-
298.605
-
21.778
-
-
-
21.778
-
276.827
-
n.s.
Total A
409.262
-
-
409.262
108.635
-
-
108.635
300.627
276,7%
1.191
543.970
545.161
3.960
742.792
-
746.752
-201.591
-27,0%
-
-
-
-
-
-
-
1.191
543.970
-
545.161
3.960
742.792
-
746.752
-201.591
-27,0%
410.453
543.970
-
954.423
112.595
742.792
-
855.387
99.036
11,6%
B. Derivative instruments
Financial derivatives
Credit derivatives
Total B
TOTAL (A+B)
27,4%
-
Financial liabilities totalled 954,4 million euro as at 31st December 2010, a moderate increase
compared to 855,4 million twelve months before. As can be seen from the table, financial
derivatives decreased during the year by 27% (-201,6 million euro to 545,2 million euro),
while liabilities increased both in terms of amounts due to banks (+23,8 million euro) and in
particular for amounts due to customers, up from 21,8 million euro to 298,6 million euro. In
both cases the amounts due related to uncovered short positions in Government securities.
As with financial assets held for trading, the changes for derivatives, almost all consisting of
interest rate contracts, relate mainly to smaller volumes of business.
128
The item “financial assets at fair value” (asset item 30) includes financial instruments designated as such
in application of the fair value option (FVO). They consist exclusively of units in hedge funds purchased
subsequent to 1st July 2007.
These financial assets are recognised at fair value through profit or loss.
Financial assets at fair value: composition
31.12.2010
L1
L2
31.12.2009
L3
L1
Total
L2
Changes
L3
amount
Total
%
Debt instruments
-
-
-
-
-
-
-
-
-
Equity instruments
Units in O.I.C.R.
-
-
-
-
-
-
-
-
-
116.208
31.078
147.286
108.819
-
64.908
173.727
-26.441
-
-
-
-
-
-
-
-
31.078
147.286
108.819
-
64.908
173.727
-26.441
(co llective investment
instruments)
Financing
TOTAL
116.208
-
-15,2%
-15,2%
As at 31st December 2010, financial assets at fair value, consisting exclusively of O.I.C.R.
(collective investment instruments) units in hedge funds, amounted to 147,3 million euro
including 116,2 million euro – fair value level one – relating to UBI Pramerica SGR (formerly
Capitalgest).
If investments in hedge funds classified within financial assets held for trading are also
included, then investments in hedge funds as at 31st December 2010 totalled 148,9 million
euro (182,4 million euro at the end of 2009).
Redemptions, net of redemption fees7, were received during the year of approximately 43
million euro (36,1 million euro relating to investments classified within financial assets at fair
value and seven million euro relating to investments classified within financial assets held for
trading).
At the end of December requests to redeem not yet redeemed concerned the remainder of the
hedge fund portfolio with the exception of the UBI Pramerica (formerly Capitalgest) funds.
Management accounting figures show that ten funds, for an amount of approximately 22
million euro, are expected to pay and/or have declared that they were implementing a deferred
redemption plan (known as a "gate") – as allowed for in their respective regulations, while
another 19 funds have created “side pockets” for an amount of 11 million euro.
As concerns the Madoff collapse, court action initiated by UBI Banca against the fund Thema International
Plc and the relative depository bank, HSBC Institutional Trust Services Ltd, is proceeding before the
Commercial Court of Dublin. The “discovery” stage is currently in progress during which the parties
exchange documentation and information relevant to the case.
In the meantime, UBI Banca is monitoring the class actions brought in the USA and the liquidation
proceedings in progress in the British Virgin Islands brought against three funds attributable to Madoff,
Fairfield Sigma Ltd., Kingate Euro Ltd. and Kingate Global Ltd., in order to protect UBI Banca’s creditor
rights also with respect to these actions.
Finally, with regard to the Dynamic Decisions Growth Premium 2X fund, in liquidation, following the signing
of an agreement with the receivers which gives UBI Banca preference in the redemption of sums recovered
in the liquidation, in return for financing paid to the receivers, no significant and/or relevant developments
have occurred.
7
The technical term used to indicate expenses for repayment.
129
Exposures of the UBI Banca Group to some types of products
This section provides an update of the position of the UBI Banca Group with regard to some
types of financial instruments, which since the subprime mortgage crisis in 2007, are now
considered at high risk.
Special purpose entities (SPEs)
The involvement of the UBI Group in special purpose entities (SPEs8) concerns the following
types:
- entities formed to allow the issue of preference shares;
- conventional securitisation transactions9 performed by Group member companies in
accordance with Law No. 130 of 30th April 1999;
- the issue of covered bonds, in accordance with Art. 7 bis of Law No.130/1999.
Special purpose entities existed as at 31st December 2010, within the UBI Banca Group for the
issue of preference shares used as innovative equity instruments on international capital
markets. These issues, which current supervisory regulations allow to be included in the
consolidated tier one capital, take the form of non redeemable instruments and they have
particularly junior levels of subordination. The preference shares included in the tier one
capital amounted to 453,46 million euro and they were issued by a number of the banks
which formed part of the Group prior to the merger. These special purpose entities, which in
accordance with IFRS fall within the consolidation scope are as follows10:
BPB Funding Llc,
BPB Capital Trust (100% controlled by BPB Funding Llc),
Banca Lombarda Preferred Capital Company Llc,
Banca Lombarda Preferred Securities Trust,
BPCI Funding Llc,
BPCI Capital Trust (100% controlled by BPCI Funding Llc).
On the one hand securitisations form part of a strategic policy to expand lending by
simultaneously freeing up part of the supervisory capital relating to the amounts transferred
and on the other they constitute an important medium-to-long term funding instrument. The
underlying assets securitised consist of performing assets of the network banks and other
product companies. The list of SPEs used for the securitisations in which the Group is
involved is as follows:
Orio Finance Nr. 3 Plc,
Albenza 3 Srl,
Lombarda Lease Finance 4 Srl11,
UBI Lease Finance 5 Srl,
Sintonia Finance Srl,
24-7 Finance Srl,
UBI Finance 2 Srl,
UBI Finance 3 Srl.
Finally, the entity UBI Finance Srl was formed to purchase loans from banks as part of
operations to issue covered bonds.
With the exception of UBI Finance Srl, the special purpose entities listed above are included in
the consolidated accounts because these companies are in reality controlled, since their assets
and liabilities were originated by Group member companies. As concerns Sintonia Finance,
8 Special Purpose Entities (SPE) are special companies formed to achieve a determined objective.
9 With normal securitisations the originator sells the portfolio to a special purpose entity which then issues tranches of asset-backed
securities in order to purchase it. With a synthetic securitisation, on the other hand, the originator purchases protection for a pool of
assets and transfers the credit risk attaching to the portfolio – either fully or in part – by using credit derivatives such as CDSs (credit
default swaps) and CLNs (credit-linked notes) or by means of personal guarantees.
10 Control is by the Parent of the Group where no indication is given. See the section “The consolidation scope” in this respect.
11
The securitisation Lombarda Lease Finance 3 Srl was closed down in the third quarter. The entity still remains operational.
130
since the securitisation was multi-originator, only those assets and liabilities relating to the
operation originated by Centrobanca are consolidated.
The securitisations concerning the special purpose entities, 24-7 Finance Srl, UBI Lease
Finance 5 Srl and UBI Finance 2 Srl were performed in order to constitute a portfolio of assets
eligible as collateral for refinancing with the European Central Bank, consistent with Group
policy for the management of liquidity risk.
They were performed on performing residential mortgages, salary backed loans and consumer
loans of B@nca 24-7 (24-7 Finance Srl), on lease contracts of UBI Leasing (UBI Lease Finance
5 Srl) and on performing loans to small-to-medium sized enterprises of Banco di Brescia (UBI
Finance 2 Srl). In the securitisations in question the senior securities issued by the entities –
assigned a rating – are listed and can be used for refinancing operations with the ECB.
Again in this context, in December 2010 a new securitisation transaction was initiated by
transferring loans to small to medium sized enterprises, classified as performing and held by
Banca Popolare di Bergamo Spa, to the special purpose entity UBI Finance 3 Srl.
The operation consists of two stages:
- the transfer of the loans by the originator to the special purpose entity on 6th December
2010 (effective from 1st December), for an amount of approximately 2,8 billion euro. The
purchase of the mortgages by the special purpose entity, financed by deferring payment of
the transfer price, which will be paid when the securities are issued;
- the issue of securities by UBI Finance 3.
The second stage has not yet taken place and it is scheduled for before the end of the first half
of 2011.
The issue of covered bonds is designed to diversify sources of funding for the Group and also
to contain the cost of it. As at 31st December 2010, UBI Banca had performed three
placements of covered bonds for a total nominal amount of 3,75 billion euro (1,75 billion euro
issued in 2010) as part of a programme for a maximum issuance of ten billion euro. The
originator banks issued a subordinated loan to the SPE, UBI Finance, equal to the value of the
loans sold, in order to fund the purchase. At the end of December, these loans amounted to
approximately 7,83 billion euro (3,67 billion euro in December 2009).
In this respect, exposures are present in the Group which relate solely to the special purpose
entities formed for the securitisations mentioned and they all fall within the consolidation
scope.
As at 31st December 2010, ordinary credit lines existed granted by the Parent to the special
purpose entity Orio Finance Nr.3 Plc for a total of five million euro, never drawn on (five
million euro as at 31st December 2009). Ordinary credit lines also existed granted by B@nca
24-7 to the entity 24-7 Finance for a total of 37,3 million euro, entirely drawn on (64,4 million
euro, entirely drawn on, at the end of 2009).
All the securitisations are hedged by swap contracts where the main objective is to stabilise
the flow of interest generated by the securitised portfolio and to protect the special purpose
entity from interest rate risk. These derivatives contracts were taken out between the entities
and the respective hedging counterparties which, in order to be able to “close” the risk with
originator, took out contracts – identical in form but opposite in the effects – with UBI Banca.
The Parent, then in turn, renegotiated further mirror swaps with the respective originators12.
The exposures relating to the derivatives mentioned (of the Parent, Centrobanca and UBI
Leasing towards the special purpose entities created for the securitisation of their assets) had
a total mark-to-market value of 35,1 million euro (65,6 million euro as at 31st December
2009).
No exposures exist to special purpose entities or other conduit operations with underlying
securities or investments linked to United States subprime and Alt-A loans.
The total assets of SPEs relating to securitisations and to covered bonds amounted to
approximately 21,9 billion euro (13,5 billion euro in December 2009).
12
The following constituted exceptions to that practice: the UBI Lease Finance 5 and UBI Finance 2 transactions, where the special
purpose entity entered into swap contracts directly with UBI Banca (which then renegotiated mirror swaps with the originators UBI
Leasing and UBI Banco Brescia) and the Sintonia Finance securitisation which Centrobanca Spa closed directly, without going
through the Parent, hedging the risk by means of a swap contract.
131
Details by asset class are given in the table below:
SPE UNDERLYING ASSETS
Classification of underlying assets of the securitisation
31.12.2010
31.12.2009
Figures in millio ns o f euro
Entity
Total assets
Albenza 3 Srl
Sintonia Finance
24-7 Finance
24-7 Finance
24-7 Finance
Lease Finance 3
Lease Finance 4
UBI Lease Finance 5
Orio Finance 3
UBI Finance
UBI Finance 2
UBI Finance 3
37,4
29,8
5.492,9
61,2
335,4
4.154,5
37,4
7.746,2
1.306,4
2.702,5
Class of underlying asset
Accounting
classification
Mortgages
Mortgages
Mortgages
Salary backed loans
Consumer loans
Leasing
Leasing
Leasing
RMBS Notes (ALBENZA 3 Srl)
Mortgages
Loans to SMEs and small businesses
Mortgages
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
Measurement
Gross of
criteria
impairment
adopted
losses
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
Total impaired assets, mortgages and loans
Total impaired assets, leasing
TOTAL
21.903,7
36,3
25,5
1.903,9
414,1
1.809,6
232,1
2.449,4
37,4
7.700,0
1.241,8
2.707,7
Net of
impairment
losses
36,3
23,4
1.894,5
413,7
1.761,8
226,7
2.445,8
37,4
7.687,2
1.236,9
2.699,5
(*)
(*)
(*)
(*)
(*)
(*)
Gross of
impairment
losses
53,3
33,4
2.166,4
551,7
1.665,2
56,0
332,9
2.917,7
54,3
3.613,7
1.632,7
-
(*)
(*)
(*)
(*)
(*)
(*)
Net of
impairment
losses
(*)
(*)
(*)
(*)
(*)
53,2
31,4
2.154,8
551,5
1.629,7
56,0
332,6
2.906,5
54,3
3.606,5
1.627,9
-
372,2
157,3
242,4
153,9
133,0
248,8
82,7
242,2
19.087,3
18.859,5
13.459,1
13.329,3
(*)
(*)
(*)
(*)
(*)
(*) assets transferred not derecognised on the books of the originators
The distribution by geographical location and credit rating of the underlying assets relating to
the securitisations by the special purpose entities Lombarda Lease Finance 4 and UBI Lease
Finance 5 is given below.
Distribution of the underlying assets of the UBI Leasing securitisations
DISTRIBUTION BY GEOGRAPHICAL AREA
DISTRIBUTION OF ASSETS BY CREDIT RATING
A
0%
1%
1%
4%
BBB
1%
unrated
14%
16%
2%
53%
8%
5%
AAA
85%
10%
AAA
Lombardy
Latium
Liguria
Veneto
Trentino Alto Adige
A
BBB
unrated
Piedmont
Emilia Rom
Other
Exposure in ABS, CDO, CMBS and other structured credit products
As at 31st December 2010, the UBI Banca Group held direct investments in ABS instruments
amounting to 92,2 million euro (210,4 million euro in December 2009), net of repurchases of
tranches of its own securitisations, composed as follows:
- ABS instruments totalling 0,5 million euro (recognised within financial assets held for
trading), belonging to the subsidiary UBI Banca International Sa, with underlying assets
mainly of European origin (2,2 million euro in December 2009);
132
-
-
other structured credit products totalling 2,6 million euro (classified within financial assets
held for trading in the UBI Banca International Sa portfolio) with an investment grade credit
rating (2,4 million euro at the end of 2009);
ABS instruments totalling 89,1 million euro (recognised within available-for-sale financial
assets) relating to senior tranches of INPS (national insurance institute) securitisations
(128,8 million euro at the end of 2009);
Group exposure to ABS instruments reduced following the sale of RMBS instruments for a
nominal amount of 49,7 million euro, the redemption of ABS instruments relating to senior
tranches of INPS securitisations for a nominal amount of 40 million euro and the sale of ABS
instruments – with performing loans originated by banks as the underlying assets – for a
nominal amount of five million euro. All the transactions mentioned took place in the second
half of the year.
The total amount of the direct investments in structured credit products (net of impairment
losses) listed above accounted for 0,07% of consolidated Group assets.
The ABS instruments classified within financial assets held for trading relate to trading
activity that is subject to risk limits which are monitored daily.
ABS securities recognised within available-for-sale financial assets are eligible for refinancing
with the European Central Bank.
No direct investments exist in securities backed by commercial mortgages (CMBS).
The table summarises Group exposures in ABS instruments: none of the positions listed
contained underlying assets linked to subprime or Alt-A loans.
DIRECT EXPOSURE IN ABS
Classifications
31.12.2010
31.12.2009
Figures in millio ns o f euro
Counterparty
relationship
investor
investor
investor
investor
investor
investor
Type of exposure
Accounting
Rating Seniority classification
ABS
ABS
AAA
ABS
RMBS
CDO
Other structured products
Senior
Gross of
impairment
losses
Net of
impairment
losses
0,5
88,7
2,6
0,5
89,1
2,6
91,8
92,2
HFT
AFS
L&R
AFS
HFT
HFT
TOTAL
Hedged by
techniques
to reduce
counterparty/
credit risk
no
no
no
Gross of
impairment
losses
Net of
impairment
losses
2,2
128,2
5,0
34,3
35,5
2,4
2,2
128,8
5,0
36,4
35,6
2,4
207,6
210,4
Own securitisations, eliminated when consolidating the accounts, totalled 11,1 billion euro
(12,1 billion euro at the end of 2009) and related mainly to ABS instruments (including 9,2
billion euro of senior securities) used as collateral for advances from the ECB.
In addition to the direct exposures, hedge funds or funds of hedge funds were identified among
the assets present in Group portfolios with exposures to structured credit products of the CDO
and CMBS type. Investment in these funds as at 31st December 2010 amounted to
approximately 135 million euro (net of impairment losses/reversals) and presented low
percentages of exposure (no hedge funds out of a total of 11 had a percentage of exposure
lower than 2%). Total indirect exposure to CDOs and CMBSs amounted to approximately 0,1
million euro, (0,5 million euro in December 2009).
Net gains/losses attributable to structured credit products classified as held for trading are
recognised within item 80 of the income statement “net trading income (loss)” and amounted
to -3,1 million compared to +1,1 million euro in 2009.
As concerns the fair value impact on structured products classified within available-for-sale
financial assets, the reserve in equity was credited – net of tax – with approximately +0,2
million euro (+0,1 million euro at the end of 2009).
133
Other subprime and Alt-A exposures
Again at the end of 2010, indirect exposures to subprime and Alt-A mortgages existed that
were contained in hedge funds or funds of hedge funds held by the Parent. The percentages of
exposure to subprime and Alt-A mortgages were again low (no fund had a percentage exposure
of greater than 2%), with total exposure to subprime and Alt-A loans of approximately 0,3
million euro (one million euro as at 31st December 2009).
Exposures to monoline insurers
Indirect exposures to monoline insurance companies exist in hedge funds or funds of hedge
funds held by UBI Banca. The percentages of exposure remained very modest with an overall
amount of less than 0,1 million euro, unchanged compared to December 2009.
As on the other hand concerns insurance policies to protect residential mortgage loans – for
the part exceeding 80% of the mortgage – B@nca 24-7 eliminated its exposure to a monoline
insurance company amounting to 71,7 million euro at the end of 2009, having ceased
business relations with the company.
Leveraged Finance
The term leveraged finance is used in the UBI Banca Group to refer to finance provided for a
company or an initiative which has debt that is considered higher than normal on the market
and is therefore considered a higher risk. Usually this finance is used for specific acquisition
purposes (e.g. the acquisition of a company by other companies – either directly or through
vehicles/funds – owned by internal [buy-in] or external [buy-out] management teams). They
are characterised by “non investment grade” credit ratings (less than BBB-) and/or by
remuneration that is higher than normal market levels.
Leveraged finance business is performed by Centrobanca and is regulated by the Group Credit
Risk Policy designed to combine the achievement of budget targets in terms of business
volumes and profits with appropriate management of the attached risks.
Briefly, operations are based on a maximum investment ceiling, reviewed annually and
allocated on the basis of rating classes for operations according to predefined maximum
percentages. The system of limits is calculated to seek appropriate diversification both in
terms of sector and the concentration of risk on single company or Group counterparties.
The table below summarises on- and off-balance sheet exposure for leveraged finance by
Centrobanca. That activity accounts for 12,2% of total lending and guarantees granted by
Centrobanca (17% as at 31st December 2009). The amounts shown relate to 158 positions for
an average unit exposure of 5,6 million euro. There were around five positions of greater than
20 million euro (all relating to on-balance sheet loans) corresponding to approximately 18% of
the total.
Centrobanca leveraged finance business as at 31st December 2010
figure s in m illio ns o f e uro
On-bal ance sheet exposure
gross exposure to customers
Guarantees
gross exposure to customers
us e d
im pa irm e nt
us e d
im pa irm e nt
31 December 2010
853,0
-7,7
51,9
-6,0
31 December 2009
1.194,3
-9,2
90,7
-6,5
The graphs below show the distribution of leveraged exposures by geographical area and by
sector.
134
Distribution of Centrobanca leveraged exposures
(the figures as at 31st December 2009 are given in brackets)
EXPOSURE BY GEOGRAPHICAL AREA
EXPOSURE BY SECTOR
USA and Mexico
4% (10%)
Europe
Commerce and services
39% (29%)
21% (31%)
Manufacturing
61% (71%)
Italy
75% (59%)
Residual exposures also exist within the UBI Banca Group – approximately 265 million euro
(384 million euro as at 31st December 2009) – relating to leveraged finance transactions
performed before this type of business was centralised at Centrobanca. They were performed
by the network banks relating to a total of 34 positions with average unit exposure of 7,8
million euro.
The principal amounts related to Banco di Brescia (126,5 million euro), Banca Popolare di
Bergamo (61,2 million euro), Banca Popolare Commercio e Industria (35,6 million euro) and
Banca Regionale Europea (20,2 million euro).
Financial derivative instruments for trading with customers
In quantitative terms, the analysis performed as at 31st December 2010 for internal monitoring
purposes show that the risks assumed by customers are generally low and they outlined a
conservative profile for UBI Group business in OTC derivatives with customers.
An update of the qualitative analysis performed at the end of the year found the following:
- a slight reduction in the total negative mark-to-market for customers, which stood at
3,35% of the notional amount of the contracts compared to 3,57% as at 31st December
2009;
- the notional amount for existing contracts, totalling 7,037 billion euro, consisted of
interest rate derivatives amounting to 6,490 billion euro and currency derivatives
amounting 0,542 billion euro. The notional amount for contracts on commodities was
marginal, amounting to six million euro;
- transactions in hedging derivatives accounted for approximately 95% of the notional
amount traded for interest rate derivatives and 97% of the notional amount for currency
derivatives;
- the total net mark-to-market (interest rate, currency and commodities derivatives)
amounted to approximately -216 million euro. Those contracts with a negative mark-tomarket for customers were valued at -236 million euro.
The Group has set a “Policy for the sale of OTC derivative instruments to customers” and has
issued “Regulations for the sale of OTC derivative instruments to customers”, which
implement the policy in operational terms and regulate the following:
• customer segmentation and classes of customers associated with specific classes of
products, stating that the purpose of the derivatives transactions must be hedging and that
transactions containing speculative elements must be of a residual nature;
• rules for assessing the appropriateness of transactions, defined on the basis of the products
sold to each class of customer;
135
• principles of integrity and transparency on which the range of OTC derivatives offered to
customers must be based, in compliance with the guidelines laid down by the Italian
Banking Association (and approved by the CONSOB) for illiquid financial products;
• rules and processes for assessing credit exposure, which grant credit lines with maximum
limits for trading in interest rate derivatives and credit lines on each single transaction for
currency derivatives and commodities derivatives, while counterparty risk is assessed on
the basis of Bank of Italy circular No. 263/2006;
• rules and processes for managing restructuring operations, while underlining their
exceptional nature;
• the catalogue of products offered to customers and the relative credit equivalents.
136
OTC INTEREST RATE DERIVATIVES: DETAILS OF INSTRUMENT TYPES AND CLASSES OF CUSTOMER
Data as at 31st December 2010
Policy product
class
Type of instrument
Policy customer class
Number of
transactions
Notional
of which negative
MtM
MtM
1
Purchase of caps
3: Professional and qualified
2: Non private individual retail
1: Private individual retail
78
1.211
1.162
2.451
232.414.394,86
353.369.786,87
133.225.297,52
719.009.479,25
861.540,59
4.204.297,86
2.279.578,73
7.345.417,18
-
88
1.420
6.175
7.683
427.742.575,68
892.377.512,68
663.064.276,37
1.983.184.364,73
-6.215.069,56
-16.646.702,50
-5.534.199,73
-28.395.971,79
-6.439.426,61
-16.841.466,76
-5.566.073,33
-28.846.966,70
254
792
544
1.590
1.463.859.761,21
1.314.505.785,40
75.831.702,38
2.854.197.248,99
-53.170.837,75
-60.793.230,89
-3.525.681,75
-117.489.750,39
-55.913.314,67
-62.250.539,20
-3.558.649,03
-121.722.502,90
27
79
106
94.207.039,83
161.200.907,63
255.407.947,46
-5.179.486,33
-20.438.871,13
-25.618.357,46
-5.559.099,43
-20.481.729,94
-26.040.829,37
Purchase of caps Total
Capped swaps
Capped swaps Total
IRS Interest rate swaps
IRS Interest rate swaps Total
IRS Step up
IRS Step up Total
Total Class 1: hedging derivatives
11.830
5.811.799.040,43
-164.158.662,46
-176.610.298,97
Class 1: % of Group total
97,84%
89,55%
77,07%
78,33%
2
Purchase of caps (including KI/KO)
2
19
21
25.873.627,97
31.243.609,17
57.117.237,14
-274.154,87
-448.353,36
-722.508,23
-274.154,87
-448.353,36
-722.508,23
4
12
16
22.838.583,67
24.227.785,14
47.066.368,81
-320.288,59
-1.658.587,69
-1.978.876,28
-320.288,59
-1.658.587,69
-1.978.876,28
IRS Cap spreads
IRS Cap spreads Total
1
1
311.409,00
311.409,00
-1.994,36
-1.994,36
-1.994,36
-1.994,36
IRS Convertible
11
50
61
161.849.635,48
81.576.305,63
243.425.941,11
-9.445.328,66
-3.549.214,53
-12.994.543,19
-9.445.328,66
-3.549.214,53
-12.994.543,19
347.920.956,06
-15.697.922,06
-15.697.922,06
5,36%
7,37%
6,96%
Purchase of caps (including KI/KO) Total
Purchase of collars (including KI/KO)
Purchase of collars (incl. KI/KO) Total
IRS Convertible Total
Total Class 2: hedging derivatives with possible exposure
to contained financial risks
99
0,82%
3a
IRS Range
18
110
1
129
78.199.356,64
185.067.761,74
500.000,00
263.767.118,38
-7.048.574,24
-18.547.830,54
-53.565,52
-25.649.970,30
-7.048.574,24
-18.547.830,54
-53.565,52
-25.649.970,30
1
1
4.000.000,00
4.000.000,00
-4.102.134,49
-4.102.134,49
-4.102.134,49
-4.102.134,49
130
267.767.118,38
-29.752.104,79
-29.752.104,79
1
3
4
710.740,00
6.628.182,00
7.338.922,00
6.226,02
-118.897,05
-112.671,03
-128.779,71
-128.779,71
6
6
12
15.500.000,00
8.400.000,00
23.900.000,00
-193.867,36
-99.201,43
-293.068,79
-193.867,36
-99.201,43
-293.068,79
2
14
16
7.000.000,00
24.204.867,00
31.204.867,00
-783.782,18
-2.189.259,27
-2.973.041,45
-783.782,18
-2.189.259,27
-2.973.041,45
IRS Range Total
Memory floors 1
Memory floors Total
Total Class 3a: partial hedging derivatives with pre-established maximum loss
3b
Gap floater swaps
Gap floater swaps Total
IRS corridor accruals
IRS corridor accruals Total
IRS Range stability
IRS Range stability Total
Total Class 3b: speculative derivatives with unquantifiable maximum loss
Total Class 3: derivatives not for hedging
Total UBI Group
32
62.443.789,00
-3.378.781,27
-3.394.889,95
162
330.210.907,38
-33.130.886,06
-33.146.994,74
1,34%
5,09%
15,56%
14,70%
12.091
6.489.930.903,87
-212.987.470,58
-225.455.215,77
¹ Prior transaction not attributable to product policy - maturity 28/02/2012, relating to a customer previously classified as non private individual retail on the basis of incorrect indications
137
OTC CURRENCY DERIVATIVES : DETAILS OF INSTRUMENT TYPES AND CLASSES OF CUSTOMER
Policy
product
class
Type of instrument
Number of
transactions
Notional
MtM
of which negative MtM
2
Collars
18
1
19
8.810.884,97
262.206,15
9.073.091,12
37.624,65
-6.437,04
31.187,61
-57.038,55
-6.437,04
-63.475,59
Knock in collars
Knock in collars Total
10
10
4.530.520,16
4.530.520,16
-143.151,32
-143.151,32
-143.151,32
-143.151,32
New collars
10
3
13
2.584.195,82
3.931.514,25
6.515.710,07
-45.225,16
-15.717,64
-60.942,80
-59.166,63
-15.717,64
-74.884,27
251
43
294
200.211.403,59
23.404.162,59
223.615.566,18
-2.991.691,48
46.327,55
-2.945.363,93
-4.646.303,70
-347.612,44
-4.993.916,14
75
26
101
59.562.699,99
11.180.671,72
70.743.371,71
-28.607,53
81.590,59
52.983,06
-882.712,57
-84.115,99
-966.828,56
Collars Total
New collars Total
Forward synthetic
Forward synthetic Total
Knock in forward
Knock in forward Total
Bonus forward
Bonus forward Total
6
6
2.516.510,01
2.516.510,01
-90.076,75
-90.076,75
-90.076,75
-90.076,75
Options purchased by customer
6
7
13
4.223.265,52
1.138.092,23
5.361.357,75
232.753,49
34.500,72
267.254,21
-
155
267
422
112.437.713,10
89.457.734,60
201.895.447,70
499.669,29
-727.648,27
-227.978,98
-1.215.453,65
-2.003.335,71
-3.218.789,36
878
524.251.574,70
-3.116.088,90
-9.551.121,99
96,27%
96,77%
-
96,41%
18
2
20
6.550.526,67
2.967.690,47
9.518.217,14
-125.140,27
117.331,05
-7.809,22
-127.734,09
-127.734,09
14
14
7.961.037,20
7.961.037,20
-227.767,65
-227.767,65
-227.767,65
-227.767,65
34
17.479.254,34
-235.576,87
-355.501,74
3,73%
3,23%
-
3,59%
912 541.730.829,04
-3.351.665,77
-9.906.623,73
Options purchased by customer Total
Plafond
Plafond Total
3
Knock out knock in forward
Knock out knock in forwards Total
Options sold by customer
Options sold by customer Total
Total Class 3: derivatives not for hedging
Total UBI Group
OTC COMMODITIES DERIVATIVES: DETAILS OF INSTRUMENT TYPES AND CLASSES OF CUSTOMER
Policy
product class
Type of instrument
Number of
transaction
s
Notional
MTM
2
Commodity swaps
Commodity swaps Total
15
15
5.800.290,00
5.800.290,00
-13.433,76
-13.433,76
-334.312,76
-334.312,76
15
5.800.290,00
-13.433,76
-334.312,76
15
5.800.290,00
-13.433,76
-334.312,76
13.018
7.037.462.022,91
-216.352.570,11
-235.696.152,26
Total UBI Group
Total UBI Group
138
OTC DERIVATIVES: FIRST FIVE COUNTERPARTIES FOR NETWORK BANKS (figures in euro)
Bank
Centrobanca
Banco di Brescia
Banca Popolare Commercio & Industria
Banca Carime
UBI Private Investment
3:
3:
2:
3:
3:
3:
3:
3:
2:
3:
2:
2:
2:
3:
3:
2:
3:
2:
2:
3:
3:
3:
3:
3:
3:
2:
3:
3:
3:
2:
2:
2:
2:
2:
2:
3:
3:
2:
2:
3:
3:
2:
2:
3:
3:
1:
1:
1:
1:
1:
1:
Classification Policy
Professional and qualified
Non private individual retail
Private individual retail
139
MtM
-11.380.926
-4.102.134
-1.985.193
-1.772.052
-936.137
-7.963.713
-2.537.435
-2.065.976
-2.039.807
-1.819.782
-4.375.640
-1.441.024
-1.435.703
-1.431.887
-1.258.304
-4.174.041
-1.200.517
-1.000.354
-999.363
-706.745
-2.702.881
-837.632
-703.389
-611.141
-479.706
-1.967.672
-1.761.019
-1.749.174
-1.403.230
-1.385.904
-952.566
-925.805
-698.810
-674.699
-587.316
-619.239
-587.006
-496.337
-263.453
-181.713
-369.184
-327.746
-166.053
-165.188
-151.601
-1.016
-465
-418
-272
-196
-196
-11.561.962
-4.102.134
-1.985.193
-2.043.971
-936.137
-7.963.713
-2.537.435
-2.065.976
-2.039.807
-1.819.782
-4.375.640
-1.441.024
-1.435.703
-1.438.113
-1.258.304
-4.174.041
-1.200.517
-1.000.354
-999.363
-706.745
-2.702.881
-837.632
-703.389
-865.896
-479.706
-1.967.672
-1.761.019
-1.749.174
-1.403.230
-1.385.904
-952.566
-925.805
-698.810
-674.699
-587.316
-619.239
-587.006
-496.337
-263.453
-181.713
-444.048
-327.746
-166.053
-165.188
-151.601
-1.016
-465
-418
-272
-196
-196
Equity and capital adequacy
Reconciliation between equity and profit of the Parent with consolidated equity as at 31st
December 2010 and profit for the period then ended
of which:
Profit for the year
Equity
Equity and profit for the year in the financial statements of the Parent
Effect of consolidation of subsidiaries including joint ventures
Effect of measuring other significant equity investments using the equity method
Dividends received during the year
Other consolidation adjustments (including the effects of the PPA)
Equity and profit for the year in the consolidated financial statements
10.328.266
283.720
1.517.263
28.243
-
471.186
17.594
-286.048
-894.753
-314.331
10.979.019
172.121
The consolidated equity of the UBI Banca Group as at 31st December 2010 inclusive of profit
for the year, amounted to 10.979 million euro compared to 11.411,2 million euro at the end of
2009.
As can be seen from the statement of changes in equity, contained among the mandatory
consolidated financial statements, the total decrease of 432,2 million euro that occurred over
twelve months is attributable to:
- the allocation of 200,2 million euro of 2009 consolidated profit to dividends and other
uses1;
- the negative impact on consolidated comprehensive income generated by the reduction in
the fair value reserves amounting to 488,8 million euro. This consisted of -480,2 million
euro relating to available-for-sale financial assets, -12,1 million euro to “Actuarial
gains/losses on defined benefit plans”, +2,2 million euro to “Special revaluation laws” and
+1,3 million to cash flow
hedges;
Fair value reserves attributable to the Group: composition
- an increase in other reserves
31.12.2010
31.12.2009
amounting to 84,7 million euro,
the aggregate result of impacts Available-for-sale financial assets
-311.493
168.729
on equity resulting from the Cash flow hedges
-619
-1.948
“branch switching” operation Foreign currency differences
-243
-243
between banks in the Group Actuarial gains/losses
-14.518
-2.399
and the subsequent restoration Special revaluation laws
73.146
70.904
of
the
original
ownership
TOTAL
-253.727
235.043
interests held by UBI Banca in
the network banks, together with the planned reorganisation of the shareholdings of the
two foundations;
- posting of profit for the year of 172,1 million euro.
Fair value reserves of available-for-sale financial assets attributable to the Group: composition
31.12.2010
Negative
reserve
31.12.2009
Total
Positive
reserve
Negative
reserve
Total
1. Debt instruments
66.715
-431.818
-365.103
72.813
-75.261
-2.448
2. Equity instruments
3. Units in O.I.C.R.
58.225
-3.579
54.646
173.770
-390
173.380
9.124
-
-10.160
-
-1.036
-
5.907
-
-8.110
-
-2.203
-
134.064
-445.557
-311.493
252.490
-83.761
168.729
4. Financing
TOTAL
1
Positive
reserve
The profit was then fully drawn on with an allocation to reserves of 69,9 million euro.
140
Fair value reserves of available-for-sale financial assets attributable to the Group: annual changes
1. Opening balances as at 1st January 2010
2. Positive changes
2.1 Increases in fair value
2.2 Transfer to income statement of negative reserves
Debt
instruments
2.3 Other changes
3. Negative changes
3.1 Decrease in fair value
3.2 Impairment losses
3.3 Transfer to income statement of positive reserves: for disposa
3.4 Other changes
4. Closing balances as at 31st December 2010
OICR units
(co llective
investment
instruments)
Financing
Total
-2.448
173.380
-2.203
-
168.729
50.257
11.433
2.877
6.796
4.990
1.498
5.725
3.970
1.373
-
62.778
20.393
5.748
2.543
- for impairment
- for disposal
Equity
instruments
349
1.245
949
-
2.528
253
424
-
3.205
35.947
308
382
-
36.637
-412.912
-381.996
-13.990
-125.530
-7.750
-116.710
-4.558
-1.468
-945
-
-543.000
-391.214
-131.645
-16.926
-1.070
-2.145
-
-20.141
-365.103
54.646
-1.036
-
-311.493
As can be seen from the table, the decrease of 480,2 million euro already mentioned in the
“fair value reserve for available-for-sale financial assets” primarily reflects the significant
decreases in fair value that occurred in the securities held in portfolio (net of tax and minority
interests). In detail:
y the negative balance on the fair value reserve for debt instruments increased by 362,7
million euro, with reductions in fair value amounting to 382 million euro, including 314,6
million euro relating to the UBI Banca portfolio and to government securities in particular
(over 90%);
y the reserve relating to equity instruments decreased by 118,7 million euro to 54,6 million
euro, due above all to the transfer to the income statement of the positive reserve
recognised in December, following the recoveries in fair value at the end of the year. The fall
in prices that occurred in 2010 made it necessary to recognise impairment losses on some
equity instruments (Intesa Sanpaolo and A2A) with the elimination of the relative reserve (a
total of -116,7 million euro net of tax, relating mainly to Intesa Sanpaolo).
141
Capital adequacy
Capital ratios
(Standard Basel 2 standardised approach)
31.12.2010
Tier 1 capital before filters
31.12.2009
6.766.798
6.563.377
Preference shares and savings/privileged shares attributable to minority interests
489.191
453.460
Tier 1 capital filters
-73.593
-58.244
7.182.396
-134.508
6.958.593
-141.717
Tier 1 capital after filters
Deductions from tier 1 capital
Tier 1 after filters and specific deductions (Tier 1)
Supplementary capital after filters
Deductions from supplementary capital
Supplementary capital after filters and specific deductions (Tier 2)
Deductions from tier 1+supplementary capital
Total supervisory capital
Credit and counterparty risk
7.047.888
6.816.876
3.770.505
-134.508
3.683.037
-141.717
3.635.997
3.541.320
-147.685
-155.641
10.536.200
10.202.555
6.952.925
6.190.116
Market risk
106.636
143.085
Operational risk
489.312
-
520.959
-
7.548.873
6.854.160
Other prudential requirements
Total prudential requirements
Subordinated liabilities Tier 3
Nominal amount
-
-
Amount eligible
-
-
Risk weighted assets
94.360.909
85.677.000
Core tier 1 ratio after specific deductions from tier 1 capital
(tier 1 capital net of preference shares/risk weighted assets)
6,95%
7,43%
Tier 1 capital ratio
(tier 1 capital/risk weighted assets)
7,47%
7,96%
11,17%
11,91%
Total capital ratio
[(Supervisory capital+tier 3 eligible)/risk weighted assets]
As at 31st December 2010, the supervisory capital of the UBI Banca Group exceeded 10,5
billion euro, an increase compared to approximately 10,2 billion euro at the end of 2009.
The change that occurred over the twelve month period is the aggregate result of a
simultaneous increase in the tier one capital2 and the tier two capital3 and a reduction in the
deductions applied to both the tier one and the supplementary capital, the effects of which
more than offset the increase in the negative filters.
Use was made by the UBI Banca Group in the calculation of supervisory capital as at 31st December 2010 –
in compliance with provisions issued by the Bank of Italy in May 2010 – of the possibility of completely
neutralising the impacts on supervisory capital of gains and losses recognised in the fair value reserves
relating to government securities issued by EU member states held in the “available-for-sale financial
assets” portfolio. This approach is in addition to that already contained in regulations, which requires
losses to be deducted entirely from supervisory capital and gains to be only partially included. The option
in question has been applied across the board by all members of the banking group from 30th June 2010.
Compliance with capital adequacy requirements at the end of 2010 resulted in a capital
requirement of over 7,5 billion euro, 0,7 billion euro greater than in the previous year as a
result of increases in the absorption of capital for credit and counterparty risk4, against a
2
3
4
The growth in the tier one capital was mainly attributable to the increase in minority interests, following the operations to optimise
the branch network performed in 2010. As compared to 2009, savings and privileged shares amounting to approximately 36 million
euro are no longer eligible for inclusion in the core capital, although they are included in the tier one capital.
The increase in the tier two capital was generated almost entirely by changes in subordinated liabilities: the issue of subordinated
liabilities sold to retail customers of the Group (853 million euro nominal) more than compensated for issues
matured/redeemed/amortised during the year (a total of 738 million euro with account taken of the reduction by a fifth required by
supervisory regulations in the five years prior to the maturity of the issues).
The factors which contributed to that increase are as follows:
the entrance into force of new risk weighting coefficients for the Cerved (former Lince) rating;
the application of supervisory provisions designed to limit the reduced weighting of mortgage security for property companies;
142
slight reduction in absorption in relation to market risks, mainly due to the disappearance of
currency risk, and to operational risk, as a consequence of the fall in consolidated gross
income.
The result was a general worsening in all the capital ratios as at 31st December 2010,
calculated including the effects of the proposed dividend.
The core tier one ratio fell to 6,95% and the tier one ratio to 7,47%, while the total capital ratio
settled at 11,17%.
These ratios do not include the additional positive impact of more than 70 basis points
(estimated on current data) that could result from the potential conversion of the convertible
debt issued in July 2009. Further benefits may accrue in future from adopting the advanced
approach for the calculation of capital requirements for credit and operational risks.
* * *
As already reported, in April and May 2010, UBI Banca participated in the stress tests conducted at
European level by the CEBS (Committee of European Banking Supervisors) and by national supervisory
authorities.
The stress tests involved 91 banking groups in 20 member states including the five major Italian banks and
also the UBI Banca Group.
Generally speaking, the results – published simultaneously at European level on 23rd July 2010 – were
positive, confirming the solidity of the UBI Banca Group. In the adverse scenario hypothesised (which also
included an increase in sovereign risk for EU member countries) the estimated consolidated tier one ratio
stood at 7,1% in 2011 (6,8% also considering the impact of sovereign risk), compared to 8% at the end of
2009.
Stress tests are also scheduled at European level for 2011 – co-ordinated by the new monetary authority
(European Banking Authority, EBA) with the support of national supervisory authorities – in which the five
major Italian banking groups will again be involved.
There will be greater standardisation and severity than before in the criteria applied, hypothesising a
collapse in property prices and an increased cost of funding.
Changes in supervisory regulations
Basel 3
On 16th December 2010, the Basel Committee on Banking Supervision published new rules on the capital
and liquidity of banks which will enter into force on 1st January 2013.
The new regulations seek to strengthen the quality and quantity of the capital of banks, to contain financial
leverage in the banking system, reduce the possible pro-cyclical effects of prudential rules and to tighten
control over liquidity risks.
As compared to the proposal for consultation issued in December 2009, the absorption of capital against
deferred tax assets and major equity investments in banks and financial and insurance companies was
reduced, with partial recognition of the contribution to capital to cover risk at consolidated level of minority
interests held in banks and other companies belonging to the group subject to supervision, equivalent to
banking supervision.
The new rules on capital
The new rules involve a change in the composition of the capital of banks in favour of common shares and
retained earnings (common equity), the adoption of more stringent criteria for the inclusion of other equity
instruments in capital and greater standardisation at international level of the components deducted.
Requirements relating to particularly high risk exposures were also increased (e.g. securitisations and
derivatives transactions).
When fully introduced, banks must possess capital that must not fall below the following levels:
y primary quality capital (common equity): 4,5% of risk weighted assets;
y tier one capital: 6% of risk weighted assets;
y total capital: 8% of risk weighted assets.
-
the increase in risk assets that occurred with growth in lending.
143
Banks must have primary quality capital that exceeds the minimum amount (a buffer to conserve capital)
by an amount equal to 2,5% of risk weighted assets, otherwise they will risk supervisory measures (e.g.
restrictions on the distribution of profits or the payment of bonuses to employees). In periods of excessive
growth in lending to the economy, a further buffer of up to 2,5% may be required of banks.
The new standards will be introduced gradually:
- from 2013, the new minimum requirements for common equity and tier one capital will be 3,5% and
4,5% of risk weighted assets respectively and they will be progressively increased until they reach
the new requirements in 2015. Similarly the new deductions from capital will be fully applied from
2018;
- the buffer for the conservation of capital will be introduced from 2016 and the transition to the new
regime will be completed in 2019;
- the equity instruments already issued and eligible for inclusion according to the existing rules will
remain fully eligible until 2013. Subsequently the amount recognised for supervisory purposes will
be reduced by 10% each year.
New minimum capital requirements
Common Equity
(after deductions)
Minimum requirement
Conservation buffer
Total
Anti-cyclical buffer
Tier 1
Total Capital
4,5%
2,5%
6,0%
8,0%
7,0%
0%-2,5%
8,5%
10,5%
Compliance timing (the dates relate to 1st January)
2013
2014
2015
2016
2017
2018
2019
3,5%
4,0%
4,5%
4,5%
0,625%
4,5%
1,25%
4,5%
1,875%
4,5%
2,5%
Minimum total capital ratio
4,5%
8,0%
5,5%
8,0%
6,0%
8,0%
5,125%
6,0%
8,0%
5,75%
6,0%
8,0%
6,375%
6,0%
8,0%
7,0%
6,0%
8,0%
M inimum total capital ratio + conservation buffer
8,0%
8,0%
8,0%
8,625%
9,25%
9,875%
10,50%
Minimum common equity
Conservation buffer
Common Equity + Minimum conservation buffers
Minimum tier one ratio
Leverage ratio
A maximum leverage ratio has been introduced, designed to restrict growth in total exposures without an
adequate capital base and to contain the level of debt by banks in periods of expansion in the business
cycle. Banks will be obliged to hold tier one capital that is equal to at least 3% of non risk weighted assets.
This provision will also be introduced gradually. In the first few years the leverage ratio will represent a
pillar two measure. Any adjustments in the definition and the calibration of the instrument will be
considered before it is applied as a first pillar rule in 2018. Banks must make adequate disclosures to
markets concerning the ratio from 2015.
Liquidity risk standards
Two quantitative rules on liquidity have been introduced. The first, the liquidity coverage ratio, states that
banks must maintain high quality liquid assets sufficient to meet requirements under stress conditions for a
period of 30 days. The second, the net stable funding ratio, is designed to prevent structural imbalances in
the composition of assets and liabilities over a period of one year.
As with the measures on capital, the entrance into force of the liquidity risk requirements will also be
gradual. After an initial observation stage, the short term ratio will enter into force in 2015 and the
structural ratio in 2018.
Implementation of EU directives
On 31st December 2010, new supervisory provisions entered into force which implement provisions
approved by EU institutions in 2010 [directives 2009/27/EC, 2009/83/EC and 2009/111/CE which
amended directives 2006/48 and 2006/49 (the “CRDs” capital requirement directives)] in order to
strengthen some aspects of European prudential regulations, the weakness of which was revealed by the
financial crisis.
They consisted of an initial package of amendments (“CRD II”) which involved the following areas:
144
-
the governance and management of liquidity, with the introduction of rules on organisation and
internal controls, giving clear details of the role of corporate bodies and functions and outlining the
basic organisation of the process of risk management with the adoption of a funds transfer pricing
system5 and public disclosure obligations;
-
supervisory capital: the notion of “capital” was redefined, limited to common shares only. The
financial characteristics which innovative and non innovative (hybrid) equity instruments must
possess was specified in terms of permanence, payment flexibility and ability to absorb losses (with
different limits to eligibility for inclusion according to the quality of the capital) with a thirty year
transition regime (grandfathering) for existing instruments which do not comply with the new criteria
for eligibility;
-
risk concentration, with the simplification, on the one hand, of the system of prudential limits and the
relative weighting system, the criteria for which have been brought into line with techniques to
mitigate credit risk and on the other hand with the establishment of oversight organisational units for
the credit rating of customers to which the Bank has significant exposures (“large exposures”), for
monitoring the relative exposures and for the detection of connections between customers.
Implemenation of the second package of amendments (“CRD III”) was commenced in 2011:
5
-
new provisions for securitisations entered into force, designed to increase the degree of
standardisation in regulations by means of uniform criteria for the recognition of securitisation
transactions for supervisory purposes concerning, amongst other things, the grant and management
of credit relating to securitisations. They make changes to the regulatory treatment of credit lines,
introducing higher conversion factors and they are therefore more in line with the risk which that
form of support manifested during the crisis. They also introduce a prohibition on banks investing in
securitisation issues in which the seller or the originator has not retained a portion of the risk;
-
as concerns remuneration policies, a Bank of Italy consultation process has commenced on a new
consolidated law, which will replace the existing legislation. It combines general principles
concerning remuneration policies for all personnel, to be applied to all banks following proportional
criteria, with precise rules applicable above all to key personnel within banking organisations.
The UBI Banca Group has commenced a project for a new funds transfer pricing (FTP) system designed to ensure the following:
accurate measurement of income from different types of products and services;
the identification and pricing of expense and income items associated with risk positions, with account taken of the competitive
context and the regulatory constraints;
a single instrument common to the different macro area organisational units of the Parent.
The FTP applicable to single financial transactions (lending or funding transactions) will be calculated by summing the basic market
rate for risk free transactions firstly to the additional expense that the UBI Group must incur to acquire funds on the market with
the same maturity as the transaction and secondly the additional cost for risk and optional factors incorporated in the transaction.
The scope of application will initially consist of new medium-to-long term disbursements by the distribution network of the network
banks.
145
Research & Development
A summary is given below of the main research projects developed in 2010 by the Innovation
and Architecture Design Department of the Parent. In come cases these consisted of the
continuation of activity already commenced in the previous year and in other cases of new
projects started during the year. These initiatives do not necessarily originate from specific
requirements of the Group but are also based on technological developments which are
studied for possible application to improve the efficiency and effectiveness of corporate
processes including those regarding customer relationships.
As part of the “unified communication” project (integration of telephone and PC-workstations),
already commenced in 2008, in parallel with the completion at the Parent and in the network
banks of the implementation of the VoIP platform1, activities were oriented towards the
implementation of web collaboration2 instruments to share documents and applications.
As concerns video conference systems, a plan to expand use of them within the Group was
completed in 2010 with a total of approximately 300 stations installed, 50 with webcams
integrated in PC-workstations – while improvements in the quality were made at the same time
with the introduction of high definition systems. It has been confirmed that this technology
provides valid support to decision-making and information sharing processes and is also an
important factor in reducing times and costs connected with the movements of personnel.
The initial scope of application of the project “new work stations” is designed to simplify and
increase the efficiency of mortgage processing activities for retail customers. The first stage
has already been completed with the introduction of a paperless document management
platform which became operational in January 2011. A second stage was commenced at the
same time, designed to develop solutions for the integrated management of digital signatures,
legally valid electronic storage and certified email.
The new innovations of mobile web and application stores are clearly underlining the potential
of mobile telephones for provision and use of banking services. An application for the use of
home banking services3 from the most popular mobile terminals was therefore studied and
developed in combination with the Carta Enjoy products. This service, already successfully
operational on iPhone and Android systems, will be extended in 2011 to include BlackBerry
and Nokia devices.
Recent technological developments included a study of the iPad platform to assess its potential
for use in the Group. This led to an initial concrete application as a support to senior
management for the management and sharing of documents in board and committee
meetings. As part of the development of the document functions, it is planned, at a second
stage, to design versions for specific users and perhaps integrate it with corporate document
management systems.
The need to combine Group attention to maximum security in home banking with customer
demands for operational simplicity have led to the first testing of a new tool for the certification
and validation of payment transactions, alongside the current system based on the use of
identification codes.
1
2
3
Technology that can be used to have a telephone conversation over the internet.
Technology used for collaboration over the internet in real time both within the Group and in providing assistance to customers.
Excluding securities trading.
146
The system of internal control
The document “Report on the corporate governance and ownership structure of UBI Banca
Scpa” attached to these reports may be consulted for a description of the architecture, rules
and organisational units of the system of internal controls. It also gives specific information
required under Art. 123 bis of the Consolidated Finance Act (Legislative Decree No. 58/1998)
concerning the risk management and internal control systems that govern the financial
reporting process.
Information on risk management and the relative hedging policies is contained in Part E of the
notes to the consolidated financial statements, where details are also given of the information
requested by Art. 2428 of the Italian Civil Code.
147
Transactions with related parties
With Resolution No. 17221 of 12th March 2010 – amended by the subsequent Resolution No.
17389 of 23rd June 2010 – the Consob (Italian securities market authority) approved a
Regulation concerning related-party transactions. The new regulations concern the procedures
to be followed for the approval of transactions performed by listed companies and the issuers
of shares with a broad shareholder base with parties with a potential conflict of interest,
including major or controlling shareholders, members of the management and supervisory
bodies and senior managers including their close family members.
The key points of the regulations issued are as follows:
- they strengthen the role of independent board members at all stages of the decision-making
process concerning related-party transactions;
- a regime of transparency;
- the introduction of detailed corporate governance regulations containing rules designed to
ensure substantial and procedural integrity in related-party transactions (a special regime
for companies which adopt a two tier system of governance).
The regulations apply within the UBI Banca Group to UBI Banca and IW Bank as listed
companies and to Banco San Giorgio, because that bank has a broad shareholder base.
In relation to the above, the members of the competent bodies of the banks mentioned have
approved regulations which govern related-party transactions, within the set time limits. These
are available on their respective corporate websites and appropriate internal processes have
been defined to ensure compliance with the new provisions.
As specifically concerns UBI Banca, the Supervisory Board has appointed a Related Parties
Committee from among its members to which transactions falling within the scope of the
regulations must be submitted in advance.
In this respect, the UBI Banca regulations have excluded the following transactions from their
scope of application and these are consequently not subject to the disclosure obligations
required under the Consob regulation, but without prejudice to the provisions of Art. 5,
paragraph 8, where applicable, of the said Consob Regulation:
(a) shareholders’ resolutions concerning the fees of the Members of the Supervisory Board
passed in accordance with Art. 2364-bis of the Italian Civil Code, including those
concerning the determination of a total sum for the fees of the Members of the Supervisory
Board assigned particular offices, powers and functions.
(b) remuneration schemes based on financial instruments approved by shareholders in
accordance with Art. 22, letter. b), of the By-Laws and in compliance with Art. 114-bis of
the Consolidated Finance Act and the relative operations to implement them;
(c) resolutions, other than those referred to under the preceding letter a) of this article,
concerning the fees of Members of the Management Board appointed to special positions
and other key management personnel and also the resolutions with which the Supervisory
Board determines the fees of the Members of the Management Board on condition that:
i. UBI Banca has adopted a remuneration policy;
ii. the Remuneration Committee formed by the Supervisory Board in accordance with Art. 49 of
the By-Laws has been involved in the definition of that remuneration policy;
iii. a report setting out the remuneration policy has been submitted for approval or a consultative
vote to a Shareholders' Meeting;
iv. the remuneration awarded is consistent with that policy;
(d) “transactions of negligible amount” are those related-party transactions for which the
amount is less than 250 thousand euro. If a related-party transaction is concluded with a
member of the key management personnel, a close family member of that person or with
companies controlled by or subject to significant influence of those persons, it will be
considered a transaction of negligible amount if the amount of the transaction is not
greater than 100 thousand euro.
148
(e) transactions which fall within the ordinary performance of operating activities and the
related financial activities concluded under equivalent market or standard conditions;
(f) transactions to be performed on the basis of instructions for the purposes of stability
issued by the supervisory authority, or on the basis of instructions issued by the Parent of
the Group to carry out instructions issued by the supervisory authority in the interests of
the stability of the Group;
(g) transactions with or between subsidiaries and also venturers in joint ventures, as well as
transactions with associates, if no significant interests of other related parties exist in the
subsidiaries or associates that are counterparties to the transaction.
Also, in compliance with Consob recommendations, transactions with related-parties of UBI
Banca performed by subsidiaries are subject to the regulations in question if, under the
provisions of the By-Laws or internal regulations adopted by the Bank, the Management
Board, the Supervisory Board in response to a proposal of the Management Board, or even an
officer of the Bank, on the basis of powers conferred on that officer, must preliminarily
examine or approve a transaction to be performed by subsidiaries.
The section “The consolidation scope” gives details of the main transactions which involved
Group member companies in 2010 and which affected the consolidated capital and operating
position and also the consolidation scope existing as at 31st December 2009.
In compliance with IAS 24, part H of the Notes to the Consolidated Financial Statements also
provides information on statement of financial position and income state transactions between
UBI Banca1 and Group member companies, as well as those items as a percentage of the total
for each item in the consolidated financial statements.
Further information is given in the “Report on corporate governance and the ownership
structure of UBI Banca Scpa” attached to these reports.
1
Le società collegate nonché i dirigenti con responsabilità strategiche e i loro familiari stretti unitamente alle entità da loro stessi
controllate/collegate ovvero soggette ad influenza notevole.
149
Consolidated
figures
companies:
the
principal
Profit (loss) for the year
2010
Change
% change
Unione di Banche Italiane Scpa
283.720
406.317
(122.597)
(30,2%)
106.719
179.015
(72.296)
(40,4%)
71.979
128.973
(56.994)
(44,2%)
21.914
1.978
19.936
246.375
54.618
191.757
18.340
12.148
6.192
51,0%
Banca Carime Spa
37.652
1.574
69.988
9.533
(32.336)
(7.959)
(46,2%)
(83,5%)
375
1.934
(1.559)
(80,6%)
57
(3.874)
3.931
16.153
28.042
(11.889)
(42,4%)
109,5%
Banca Regionale Europea Spa (1)
Centrobanca Spa
Centrobanca Sviluppo Impresa SGR Spa
287
137
150
Banque de Dépôts et de Gestion Sa (*)(2)
(7.767)
2.297
(10.064)
B@nca 24-7 Spa
BY YOU Spa
(5.723)
2.187
(49.394)
4.365
(43.671)
(2.178)
n.s.
351,1%
n.s.
n.s.
(88,4%)
(49,9%)
IW Bank Spa (3)
(444)
4.057
(4.501)
UBI Banca International Sa (*)
8.908
13.980
(5.072)
(36,3%)
(7,0%)
UBI Pramerica SGR Spa (4)
UBI Leasing Spa
UBI Factor Spa
BPB Immobiliare Srl
Società Bresciana Immobiliare Mobiliare - S.B.I.M. Spa
UBI Sistemi e Servizi SCpA
UBI Fiduciaria Spa
UBI Assicurazioni Spa (49,99%)
n.s.
38.475
41.361
(2.886)
(20.632)
11.578
(32.210)
18.601
19.551
(950)
(4,9%)
747
2.135
(1.388)
(65,0%)
1.251
-
1.017
-
234
-
23,0%
-
n.s.
209
162
47
29,0%
(2.168)
(497)
1.671
336,2%
Aviva Assicurazioni Vita Spa (49,99%)
1.500
2.600
(1.100)
(42,3%)
Aviva Vita Spa (50%)
2.000
18.350
(16.350)
(89,1%)
14.333
10.841
3.492
32,2%
3.571
3.050
521
17,1%
25
271
4.393
(4.254)
(4.368)
4.525
(99,4%)
n.s.
172.121
270.099
(97.978)
(36,3%)
Lombarda Vita Spa (49,90%)
UBI Trustee Sa
Coralis Rent Srl
CONSOLIDATED
(*)
2009
The profit shown is from the financial statements prepared for the consolidation according to the accounting
policies followed by the Parent.
(1) The figure for 2010 includes a gain of 225,4 million euro (net of taxes) on the sale of the interest held in Banca
Popolare Commercio e Industria to the Banca del Monte di Lombardia Foundation.
(2) The figure for 2009 has been revised for consistency to include the results of Gestioni Lombarda Suisse Sa,
merged on 31st October 2010.
(3) The figure for 2009 does not include the result for Twice Sim, merged on 1st November 2010.
(4) The figure for 2009 has been revised for consistency to include the results of Capitalgest Alternative Investments
SGR Spa and UBI Pramerica Alternative Investments SGR Spa, merged into the company on 1st July 2010.
150
Net loans to customers
31.12.2010
31.12.2009
Change
% change
14.536.121
12.560.060
1.976.061
15,7%
Banca Popolare di Bergamo Spa (*)
Banco di Brescia Spa (*)
20.276.206
15.078.204
19.959.411
14.178.741
316.795
899.463
1,6%
6,3%
Banca Popolare Commercio e Industria Spa (*)
8.885.600
8.377.959
507.641
6,1%
Banca Regionale Europea Spa (*)
6.851.620
7.278.450
-426.830
-5,9%
7.702.345
7.332.080
370.265
5,0%
Banca Carime Spa
4.765.224
1.885.564
4.530.670
1.816.418
234.554
69.146
5,2%
3,8%
Banco di San Giorgio Spa (*)
2.787.617
2.320.407
467.210
20,1%
439.511
404.622
34.889
8,6%
6.972.678
7.047.210
-74.532
-1,1%
207.425
11.219.553
272.862
10.855.336
-65.437
364.217
-24,0%
3,4%
1.095.406
953.676
141.730
14,9%
207.028
149.538
57.490
38,4%
2.744.758
2.323.230
421.528
18,1%
Centrobanca Spa
B@nca 24-7 Spa
IW Bank Spa
UBI Factor Spa
UBI Leasing Spa
9.698.555
9.597.373
101.182
1,1%
CONSOLIDATED
101.814.829
98.007.252
3.807.577
3,9%
Net non-performing
loans / net loans
Percentages
31.12.2010
Net impaired loans /
net loans
31.12.2009
31.12.2010
31.12.2009
Net non-performing
loans + Net impaired
loans / net loans
31.12.2010
31.12.2009
-
-
-
-
-
-
1,74%
1,23%
1,25%
0,93%
1,87%
2,11%
1,69%
1,77%
3,61%
3,34%
2,94%
2,70%
2,96%
2,54%
2,53%
2,38%
5,49%
4,92%
1,88%
1,52%
1,91%
1,62%
3,79%
3,14%
3,73%
2,85%
3,29%
3,66%
7,02%
6,51%
Banca Carime Spa
1,24%
1,60%
0,95%
1,25%
2,27%
2,52%
1,59%
1,55%
3,51%
4,12%
2,54%
2,80%
1,68%
1,49%
4,34%
1,94%
6,02%
3,43%
1,17%
0,78%
1,34%
0,87%
2,51%
1,65%
Centrobanca Spa
1,16%
0,67%
2,07%
3,10%
3,23%
3,77%
B@nca 24-7 Spa
0,09%
1,55%
0,05%
1,03%
0,65%
0,65%
0,42%
0,57%
0,74%
2,20%
0,47%
1,60%
0,07%
0,06%
1,93%
1,22%
2,00%
1,28%
-
-
0,01%
0,08%
0,01%
0,08%
UBI Factor Spa
0,42%
0,58%
0,15%
0,19%
0,57%
0,77%
UBI Leasing Spa
3,19%
1,45%
1,91%
2,25%
5,10%
3,70%
CONSOLIDATO
1,91%
1,36%
2,00%
1,88%
3,91%
3,24%
IW Bank Spa
(*) The change in lending during 2010 was affected by the “branch switches” performed on 25th January 2010 as part
of the project to optimise the branch network.
151
31.12.2010
31.12.2009
Change
% change
31.369.474
21.111.671
10.257.803
48,6%
Banco di Brescia Spa (*) (1)
20.546.068
11.736.765
21.385.193
12.318.369
-839.125
-581.604
-3,9%
-4,7%
7.994.465
7.850.961
143.504
1,8%
5.391.805
7.460.874
-2.069.069
-27,7%
6.485.148
6.747.461
-262.313
-3,9%
Banca Carime Spa
7.562.665
7.892.084
-329.419
-4,2%
1.421.234
1.572.492
1.497.744
1.352.344
-76.510
220.148
-5,1%
16,3%
-12,8%
Centrobanca Spa
Banque de Dépôts et de Gestion Sa (2)
B@nca 24-7 Spa
489.429
561.051
-71.622
5.345.526
3.067.540
2.277.986
74,3%
419.437
508.502
-89.065
-17,5%
23.861
27.334
-3.473
-12,7%
UBI Banca International Sa (3)
1.266.869
985.219
281.650
28,6%
IW Bank Spa
1.513.127
1.469.381
43.746
3,0%
106.760.045
97.214.405
9.545.640
9,8%
CONSOLIDATED
Direct funding from customers includes amounts due to customers and securities issued, with the exclusion of bonds
subscribed directly by companies in the Group
Direct funding for the following banks was therefore adjusted as follows:
BANKS
31.12.2010
31.12 2009
3.421 million euro
165,9 million euro
50 million euro
2.311,1 million euro
382,2 million euro
181 million euro
712 million euro
352 million euro
1.249 million euro
201,6 million euro
201 million euro
502,1 million euro
201,7 million euro
351,5 million euro
332,4 million euro
813,5 million euro
-
75,2 million euro
4.321 million euro
UBI Banca
Banco di Brescia
Centrobanca
UBI Banca Private Investment
B@nca 24-7
(*) The change in direct funding during 2010 was affected by the “branch switches” performed on 25th January 2010
as part of the project to optimise the branch network.
(1) The figure as at 31st December 2009 is net of issues of French certificates of deposit and euro commercial paper
totalling 5.200,5 million euro.
(2) The figure as at 31st December 2009 has been revised for consistency to include the funding of Gestioni Lombarda
Suisse Sa, merged on 31st October 2010.
(3) The figure as at 31st December 2010 is net of issues of French certificates of deposit and euro commercial paper
totalling 7.042,5 million euro.
152
Indirect funding from customers (at market prices)
31.12.2010
31.12.2009
Change
% change
14
24.944.977
14.849.800
11.186.686
12
21.544.048
14.225.218
12.296.433
2
3.400.929
624.582
-1.109.747
16,7%
15,8%
4,4%
-9,0%
Banca Carime Spa
7.267.934
3.828.041
5.753.026
1.065.405
9.362.398
3.670.727
5.705.915
980.718
-2.094.464
157.314
47.111
84.687
-22,4%
4,3%
0,8%
8,6%
Lombarda Vita Spa
Aviva Assicurazioni Vita Spa
1.644.556
5.420.922
991.880
5.149.988
2.305.298
1.438.360
4.879.018
1.204.560
5.061.697
2.565.908
206.196
541.904
-212.680
88.291
-260.610
14,3%
11,1%
-17,7%
1,7%
-10,2%
IW Bank Spa
Aviva Vita Spa
25.047.354
2.971.932
3.037.925
4.374.554
25.252.201
3.086.749
2.403.852
3.932.378
-204.847
-114.817
634.073
442.176
-0,8%
-3,7%
26,4%
11,2%
CONSOLIDATED
78.078.869
78.791.834
-712.965
-0,9%
Assets under management (at market prices)
31.12.2010
31.12.2009
Change
% change
9
12.460.373
7.569.511
7
10.911.606
7.413.029
2
1.548.767
156.482
28,6%
14,2%
2,1%
4.743.435
4.205.324
1.879.189
4.955.300
5.625.295
1.937.869
-211.865
-1.419.971
-58.680
-4,3%
-25,2%
-3,0%
Banca Carime Spa
3.688.062
513.063
637.651
4.073.214
3.947.603
479.669
559.528
3.515.213
-259.541
33.394
78.123
558.001
-6,6%
7,0%
14,0%
15,9%
Lombarda Vita Spa
Aviva Assicurazioni Vita Spa
991.880
5.149.988
2.305.298
1.204.560
5.061.697
2.565.908
-212.680
88.291
-260.610
-17,7%
1,7%
-10,2%
25.047.354
289.940
496.899
25.252.201
98.367
331.451
-204.847
191.573
165.448
-0,8%
194,8%
49,9%
4.374.554
3.932.378
442.176
11,2%
42.629.553
41.924.931
704.622
1,7%
IW Bank Spa
Aviva Vita Spa
CONSOLIDATED
(*) The change in indirect funding during 2010 was affected by the “branch switches” performed on 25th January 2010
as part of the project to optimise the branch network.
(1) The figures as at 31st December 2009 have been revised for consistency to include the funding of Gestioni
Lombarda Suisse Sa, merged on 31st October 2010.
(2) The totals as at 31st December 2009 have been revised for consistency to include the assets under management of
Capitalgest Alternative Investments SGR Spa and UBI Pramerica Alternative Investments SGR Spa, merged into
the company on 1st July 2010.
153
The performance of the main consolidated
companies
BANCA POPOLARE DI BERGAMO SPA
31.12.2010
31.12.2009
Change
% change
Statement of financial position
Loans to customers (*)
Direct funding (*) (**)
Net interbank position
Equity (excluding profit for the year)
Total assets (*)
Indirect funding from customers (including insurance) (*)
20.276.206
20.596.076
2.537.387
51.761
20.795
2.143.727
24.455.885
24.944.977
19.959.411
23.696.263
5.573.557
50.459
21.283
1.721.337
26.506.767
21.544.048
316.795
-3.100.187
-3.036.170
1.302
-488
422.390
-2.050.882
3.400.929
1,6%
-13,1%
-54,5%
2,6%
-2,3%
24,5%
-7,7%
15,8%
12.460.373
10.911.606
1.548.767
14,2%
2010
443.493
254
302.214
9.650
13.311
2009
550.870
308.849
6.534
19.016
(107.377)
254
(6.635)
3.116
(5.705)
(19,5%)
Operating income
Personnel expense
intangible assets
768.922
(277.279)
(204.095)
885.269
(276.415)
(207.168)
(116.347)
864
(3.073)
(13,1%)
0,3%
(1,5%)
(7.178)
(5.329)
1.849
34,7%
Operating expenses
(488.552)
(488.912)
(360)
(0,1%)
280.370
(96.212)
(1.873)
396.357
(109.700)
(1.012)
(115.987)
(13.488)
861
(29,3%)
(12,3%)
85,1%
187
(30)
(543)
(12)
730
18
n.s.
150,0%
182.442
(75.723)
-
285.090
(104.538)
(1.537)
(102.648)
(28.815)
(1.537)
(36,0%)
(27,6%)
(100,0%)
-
(1.663)
(1.663)
(100,0%)
-
(490)
(490)
(100,0%)
-
616
(616)
(100,0%)
106.719
179.015
(72.296)
(40,4%)
365
3.779
375
3.736
-10
43
4,98%
63,54%
1,74%
1,87%
10,40%
55,23%
1,25%
1,69%
of which: assets under management (*)
Income statement
Net interest income
Net income from trading, hedging and disposal/repurchase activities
Net impairment losses on loans (***)
Net impairment losses on other assets/liabilities
Loss on the disposal of equity investments
Taxes on income for the year for continuing operations (****)
Integration costs
intangible assets
taxes
Profit for the year
Other information
Number of branches
Total work force (actual employees+personnel on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost/income ratio (operating expenses/operating income)
Net non-performing loans/net loans to customers
Net impaired loans/net loans to customers
(*)
(2,1%)
47,7%
(30,0%)
The total as at 31st December 2010 includes the effects of the branch switches performed on 25th January as part of the project
to optimise the branch network.
(**)
Inclusive of bonds subscribed by the Parent amounting to 50 million euro as at 31st December 2010 (2.311,1 million euro as at
31st December 2009).
(***) The item for 2010 includes an impairment loss relating to the Mariella Burani Group amounting to 1,4 million euro. That
impairment loss for 2009 amounted to 6,9 million euro.
(****) The item for 2009 included the non recurring positive impacts resulting from the payment of a substitute tax with the release of
deferred tax liabilities – for the purposes of the decree for the realignment of differences in statutory and tax accounting figures,
following the adoption of IFRS – amounting to 0,8 million euro and from an IRAP (local production tax) refund amounting to five
million euro.
154
As part of the “branch switching” operation performed on 25th January 2010, Banca Popolare di Bergamo
disposed of 90 branches and acquired 97, to become the principal bank of the UBI Group in the provinces of
Bergamo, Varese, Como, Lecco and Monza Brianza.
The statement of financial position and income statement figures as at and for the year ended 31st
December 2010 incorporate the effects of that operation and are therefore not consistent with the
comparative figures.
The year 2010 ended with a profit of 106,7 million euro, down compared to 179 million euro in
2009, earned, moreover, in a context of higher interest rates.
Net operating income, down from 396,4 million euro to 280,4 million euro (-29,3%), was
penalised by a fall in operating income (-116,3 million euro to 768,9 million euro), while
expenses remained more or less unchanged at 488,6 million euro.
Income included the following:
- net interest income, which fell to 443,5 million euro (-107,4 million euro), mainly as a
result of the market trend for interest rates already mentioned, while there was a modest
contraction in volumes of business;
- net commission income, which fell marginally to 302,2 million euro (-6,6 million euro), the
aggregate result of a decrease in all current account items (including commitment fees) and
the sale of third party products and services, partially offset by increases in commissions
from indirect funding;
- other net operating income/(expense), which amounted to 13,3 million euro (-5,7 million
euro), the result primarily of lower expense recoveries from ordinary customers;
- net income from trading and hedging activity totalled 9,6 million euro (+3,1 million euro),
benefiting from the positive impacts of hedges on fixed rate mortgages and the change in
the fair value of hedges on bonds.
Expenses included the following:
- personnel expense, amounting to 277,3 million euro (+0,9 million euro), which included a
non recurring item of leaving incentives in relation to the agreement of 20th May 2010 (6,1
million euro). Net of that expense, the item fell by 5,2 million euro (-1,9%) compared to the
previous year;
- the main decreases in other administrative expenses (-3,1 million euro to 204,1 million
euro), which were in rent payable, expenses for outsourced services and for tenancy of
premises and cleaning, while increases were recorded for equipment lease expenses, the
hire of hardware, professional services (in relation to the securitisation transaction) and
maintenance of properties and equipment;
- depreciation and amortisation, which increased by 1,8 million euro to 7,2 million euro,
partly in relation to assets acquired as part of the distribution network optimisation
operation.
As a result of these changes the cost/income ratio worsened, rising from 55,23% to 63,54%.
Net impairment losses on loans fell compared to the previous year to 96,2 million euro (-13,5
million euro). They included 71,7 million euro relating to net specific impairment losses (87,2
million in 2009) while 24,5 million euro related to collective impairment losses on performing
loans (22,5 million euro in 2009), which incorporated the effects of the refinement of the
calculation method and the update of the historical data series used as the basis for the
estimate of risk parameters
Despite the reduction in volumes of business following the completion of the “branch switches”
(-0,2 billion euro), loans to customers increased by 20,3 billion euro (+0,3 billion euro), the
aggregate result of an overall decrease in short term lending – penalised by the continuation of
the effects of the economic crisis – which was more than offset by the increase in medium-tolong term lending, consisting primarily of mortgages.
155
Deteriorated loans net of impairment losses reached 1,06 billion euro (+112,6 million euro). In
detail: non-performing loans increased from 248,5 to 353,3 million euro; impaired loans rose
from 336,7 to 379,6 million euro; restructured loans increased from 243,5 to 301 million euro;
on the other hand, exposures past due and in arrears fell significantly from 120,5 million euro
to 27,9 million euro. Within that item exposures in arrears for between 90 and 180 days
secured by real estate property fell from 98,3 million euro to 23 million euro.
Direct funding from customers, which included a net increase of 0,4 billion euro as a result of
the distribution network optimisation operation, amounted to 20,6 billion euro, down by 3,1
billion euro (-13,1%) compared to the end of 2009, the result primarily of the early redemption
of bonds subscribed by the Parent (-2,3 billion euro).
The item was also affected by a fall in both certificates of deposit (-0,4 billion euro) and bonds
issued by the bank and placed with customers (-0,5 billion euro), which was only partially
offset by growth in current accounts and deposits.
Indirect funding from private customers increased during the year from 21,5 billion euro to
24,9 billion euro (+3,4 billion euro). It benefited to a considerable extent from the “branch
switches” which had a total net impact of 2,7 billion euro: over 1,7 billion euro relating to
assets under custody, which reached almost 12,5 billion euro, and approximately one billion
euro of assets under management, which also came close to 12,5 billion euro.
The net interbank position at the end of 2010 consisted of funds of 2,5 billion euro, a
significant decrease compared to 5,6 billion euro twelve months before in relation to opposing
trends for funding and lending with customers.
Capital ratios as at 31st December 2010 consisted of a tier one ratio (tier one capital/risk
weighted assets) of 16,23% (15,07% at the end of 2009) and a total capital ratio (supervisory
capital/risk-weighted assets) of 18,38% (17,56%).
The proposal for the allocation of profit is to distribute dividends of 27 million euro after legal
and by-law allocations and to allocate 72,3 million euro to the voluntary reserve.
156
BANCO DI BRESCIA SPA
31.12.2010
31.12.2009
Change
% change
Net interbank position (debt)
Total assets (*)
15.078.204
12.118.974
-2.490.173
100.954
20.913
1.388.125
17.621.805
14.178.741
19.171.159
6.071.367
114.259
26.339
1.157.731
22.680.420
899.463
-7.052.185
-8.561.540
-13.305
-5.426
230.394
-5.058.615
14.849.800
14.225.218
624.582
4,4%
7.569.511
7.413.029
156.482
2,1%
Income statement
Net interest income
Net income/(loss) from trading, hedging and disposal/repurchase activities
2010
325.858
1.249
196.007
(1.477)
14.845
2009
353.270
1.699
200.248
10.204
20.740
(27.412)
(450)
(4.241)
(11.681)
(5.895)
(7,8%)
(26,5%)
(2,1%)
n.s.
(28,4%)
Operating income
Personnel expense
intangible assets
536.482
(172.843)
(133.321)
586.161
(164.527)
(134.507)
(49.679)
8.316
(1.186)
(8,5%)
5,1%
(0,9%)
(11.101)
(11.627)
(526)
(4,5%)
Operating expenses
Profit/(loss) on the disposal of equity investments
Integration costs
(317.265)
219.217
(97.859)
(849)
(2.875)
1.296
118.930
(46.951)
-
(310.661)
275.500
(69.220)
(1.348)
(3.258)
(76)
201.598
(71.894)
(731)
6.604
(56.283)
28.639
(499)
(383)
1.372
(82.668)
(24.943)
(731)
-
(597)
(597)
-
(441)
(441)
(100,0%)
-
307
(307)
(100,0%)
intangible assets
taxes
Profit for the year
Other information
Number of branches
Financial ratios
6,3%
-36,8%
n.s.
-11,6%
-20,6%
19,9%
-22,3%
2,1%
(20,4%)
41,4%
(37,0%)
(11,8%)
n.s.
(41,0%)
(34,7%)
(100,0%)
(100,0%)
-
-
-
-
71.979
128.973
(56.994)
(44,2%)
362
2.634
363
2.624
-1
10
5,19%
59,14%
1,23%
2,11%
11,14%
53,00%
0,93%
1,77%
(*)
The total as at 31st December 2010 includes the effects of the branch switches performed on 25th January as part of the project
(**)
Inclusive of bonds subscribed by the Parent amounting to 382,2 million euro as at 31st December 2010 (1.652,3 million euro as
at 31st December 2009). The figure as at 31st December 2009 also included issuances of French certificates of deposit and euro
commercial paper totalling 5.200,5 million euro.
(***) The item for 2010 includes the impairment loss relating to the Mariella Burani Group amounting to 1,4 million euro. In 2009
that impairment loss amounted to 2,4 million euro.
(****) In 2009 the item included the non recurring positive impacts resulting from the payment of a substitute tax with the release of
following the adoption of IFRS – amounting to 2,8 million euro and from an IRAP (local production tax) refund amounting to 3,1
million euro.
As part of the “branch switching” operation performed on 25th January 2010, the bank disposed of a total
of 28 branches and acquired 37 to become the principal bank of the Group in the provinces of Mantua,
Brescia, Cremona and Lodi as well as the entire Triveneto area. The statement of financial position and
income statement figures as at and for the year ended 31st December 2010 incorporate the effects of that
operation and are therefore not consistent with the comparative figures.
157
Banco di Brescia ended 2010 with a profit of 72 million euro, a decrease compared to 129
million euro achieved in the year before.
Net operating income totalled 219,2 million euro compared to 275,5 million euro before,
penalised by a decrease in operating income (-49,7 million euro) against a small increase in
expense items (totalling +6,6 million euro).
Income, amounting to 536,5 million euro, included changes in the various items as follows:
• net interest income fell to 325,9 million euro (-27,4 million euro), mainly as a result of the
trend for interest rates, which was only partly offset by growth in average volumes of
lending business;
• net commission income recorded a smaller decrease to 196 million euro (-4,2 million euro).
The reduction regarded commissions on current accounts and the sale of third party
products (consumer credit provided by B@nca 24-7) in particular and was only partly offset
by growth in commissions on assets under management and under custody, in relation to
the sale of bonds issued by the Parent and by third parties;
• trading and hedging activity resulted in a loss of -1,5 million euro (income of 10,2 million
euro in 2009), affected above all by the negative impact of hedges on fixed rate mortgages;
• other net operating income/(expense) decreased to 14,8 million euro compared to 20,7
million euro the year before, the result primarily of lower expense recoveries from ordinary
customers.
The increase in expenses by 2,1%, amounting to 317,2 million euro, was totally attributable
to the trend for personnel expense, up to 172,8 million euro from 164,5 million euro in 2009.
It was penalised primarily by “non recurring expenses” relating to leaving incentives pursuant
to the trade union agreement of 20th May 2010 (3,9 million euro) and changes in average
personnel numbers (partly in relation to changes in the distribution network), which were only
partly offset by lower provisions for company bonuses and incentive schemes.
On the other hand, other administrative expenses, amounting to 133,3 million euro, remained
more or less unchanged compared to the previous year (-0,9%).
Similarly, net impairment losses on property, plant and equipment and intangible assets,
amounting to 11,1 million euro, were also unchanged compared to the year before (11,6
million euro).
As a result of the performance reported above, the cost/income ratio rose from 53% to 59,1%,
although it remained below the average for the Group.
Net impairment losses on loans rose from 69,2 million euro to 97,9 million euro, as a result of
greater impairment losses recognised as a result of the weak economic context. Specific
impairment losses on deteriorated loans amounted to 77,2 million euro (60,5 million euro in
2009), including 59 million euro relating to non-performing loans, while collective impairment
losses on performing loans amounted to 20,7 million euro (8,8 million the year before). The
latter also incorporated the effects of the refinement of the calculation method and the update
of the historical data series used as the basis for the estimate of risk parameters
Net provisions for risks and charges fell from 3,3 million euro to 2,9 million euro, as a result of
the release of excess provisions and to lower provisions on revocation actions which partly
offset the increased provisions made for litigation concerning the compounding of interest and
financial investments.
As concerns changes in statement of financial position items, in December loans to customers
had exceeded 15 billion euro, an increase over twelve months of 0,9 billion euro, including 0,5
billion euro attributable to the “branch switching” operation in January 2010.
Good performance by loans was attributable both to “Current account overdrafts”, up to 2,6
billion euro (+0,3 billion euro) and to mortgages, up by 0,6 billion euro to 8,9 billion euro, now
accounting for 59,2% of the total lending portfolio.
At the end of the year, the net deteriorated loans of the bank amounted to 746,1 million euro,
an increase of 214,1 million euro compared to twelve months before (+40,2%).
158
Net non-performing loans increased by 52,6 million euro to 184,9 million euro and impaired
loans rose to 318,7 million euro (+67,9 million euro), while restructured exposures almost
tripled rising from 72,9 million euro to 201,5 million euro. Both of the latter classes of loan
were affected by reclassifications into the class of new positions of significant amount.
On the other hand past due exposures fell from 76 million euro to 41 million euro and
included 35 million euro of exposures in arrears for between 90 and 180 days relating to
property mortgages (55,5 million euro at the end of 2009).
Direct funding had fallen at the end of the year by 7,1 billion euro to 12,1 billion euro,
attributable to a significant reduction in securities issued (from 10,3 billion euro to 3,2 billion
euro), due primarily to the contribution to UBI Banca International of the bank’s Luxembourg
branch, which at the end of 2009 had certificates of deposit and commercial paper in issue for
a total 5,2 billion euro and a subordinated deposit with the foreign branch by Banca
Lombarda Preferred Capital Company Llc of 165 million euro. Furthermore, in 2010 bonds
subscribed by the Parent amounting to 1,1 billion euro were subject to early redemption, while
bonds issued to ordinary customers which matured during the year (1,1 billion euro) were only
partly offset by new issues (0,6 billion euro).
Amounts due to customers, which remained more or less unchanged at 8,9 billion euro
(+0,2%), included an increase in repurchase agreements (+0,1 billion euro), which were
practically offset by the decrease in term deposits, while funding of 0,2 billion euro was
acquired from the “branch switches”.
As a result of net increases resulting from the branch network optimisation operation (+0,65
billion euro of assets under custody and +0,2 billion euro of assets under management),
indirect funding from ordinary customers increased by 0,6 billion euro to 14,9 billion euro,
mainly the result of growth in assets under custody (+6,9% to 7,3 billion euro), but also due to
the placement of bonds issued by the Parent (0,4 billion euro nominal) and third party bonds
(0,5 billion euro).
Assets under management (+2,1% to 7,6 billion euro) benefited from growth in customer
portfolio managements (+7,7% to 1,3 billion euro) and insurance products (+5,1% to 3,2 billion
euro), while decreases were recorded for mutual investment funds and Sicav’s (-3% to 3 billion
euro).
As a consequence of the differing trends for funding and lending with customers, at the end of
year the bank had net interbank debt of 2,5 billion euro compared to funds of 6,1 billion euro
the year before, attributable mainly to the reduction in deposits relating to the funding in CDs
and euro commercial paper of the Luxembourg branch transferred, and to the redemption of
the bonds subscribed by the Parent and the maturity of term deposits already mentioned.
weighted assets) of 12,82% (14,04%) and a total capital ratio (supervisory capital and
reserves/risk-weighted assets) of 13,28% (15,23%).
The proposal for the allocation of profit is to distribute dividends of 18,1 million euro after
legal and by-law allocations.
159
BANCA POPOLARE COMMERCIO E INDUSTRIA SPA
31.12.2010
31.12.2009
Change
% change
8.885.600
8.377.959
507.641
6,1%
8.175.503
253.106
32.731
8.562.886
904.700
28.430
-387.383
-651.594
4.301
-4,5%
-72,0%
15,1%
19.314
1.159.451
12.167
830.972
7.147
328.479
58,7%
39,5%
10.129.982
11.186.686
10.335.412
12.296.433
-205.430
-1.109.747
-2,0%
-9,0%
4.743.435
4.955.300
-211.865
-4,3%
2010
197.832
2009
252.863
(55.031)
(21,8%)
2
134.274
(2.145)
15
141.940
(4.607)
(13)
(7.666)
(2.462)
(86,7%)
(5,4%)
(53,4%)
Total assets (*)
Income statement
Net interest income
Other net operating income (***)
7.791
6.050
1.741
28,8%
Operating income
Personnel expense
337.754
(137.261)
396.261
(142.102)
(58.507)
(4.841)
(14,8%)
(3,4%)
intangible assets
(116.059)
(118.523)
(2.464)
(2,1%)
(6.122)
(3.934)
2.188
55,6%
Operating expenses
Net impairment losses on loans (****)
(259.442)
78.312
(30.827)
(13)
(264.559)
131.702
(112.181)
1.051
(5.117)
(53.390)
(81.354)
(1.064)
(1,9%)
(40,5%)
(72,5%)
n.s.
(2.718)
(20)
(5.293)
(49)
(2.575)
(29)
(48,6%)
(59,2%)
44.734
(22.820)
-
15.230
(14.508)
(1.274)
29.504
8.312
(1.274)
193,7%
57,3%
(100,0%)
-
(1.430)
(1.430)
(100,0%)
-
(351)
(351)
(100,0%)
-
507
(507)
(100,0%)
-
2.530
(2.530)
(100,0%)
21.914
1.978
19.936
n.s.
234
1.756
214
1.982
20
-226
Loss on the disposal of equity investments
Taxes on income for the year for continuing operations (*****)
Integration costs
intangible assets
taxes
Pre-tax profit from discontinued operations (******)
Profit for the year
Other information
Number of branches
Financial ratios
1,89%
0,24%
76,81%
2,96%
2,53%
66,76%
2,54%
2,38%
(*)
The total as at 31st December 2010 includes the effects of the branch switches performed on 25th January as part of the
project to optimise the branch network.
(**) Inclusive of bonds subscribed by the Parent amounting to 181 million euro as at 31st December 2010 (712 million euro
as at 31st December 2009).
(***) The item included approximately one million euro in 2010 as the price received for the sale to RBC Dexia of the
correspondence banking operations and 1,7 million euro of amounts recovered following the bankruptcy of a
counterparty.
(****) The item for 2010 included an impairment loss relating to the Mariella Burani Group amounting to 1,6 million euro.
(*****) In 2009 the item included the non recurring positive impacts resulting from the payment of a substitute tax with the
release of deferred tax liabilities – for the purposes of the decree for the realignment of differences in statutory and tax
accounting figures, following the adoption of IFRS – amounting to 0,9 million euro and from an IRAP (local production
tax) refund amounting to 2,5 million euro.
(******)The item as at 31st December 2009 related to the sale of the Palermo branch and a portion of the Brescia corporate
banking unit to Banca Popolare di Vicenza.
160
As at 31st December 2010 UBI Banca held 75,0769% of the share capital of Banca Popolare Commercio, the
Banca del Monte di Lombardia Foundation held 16,2369% and the remaining 8,6862% was held by Aviva
Spa.
The “branch switching” operation performed on 25th January 2010 resulted in a general re-organisation of
the branch network of Banca Popolare Commercio e Industria, consisting of the disposal of 85 branches
and the acquisition of 132 branches. As a consequence, BPCI became the main bank of the Group in the
Lombard provinces of Milan and Pavia and in Emilian provinces of Bologna, Parma, Piacenza, Modena,
Reggio Emilia and Ferrara. It also retained its presence in Rome. The statement of financial position and
income statement figures as at and for the year ended 31st December 2010 incorporate the effects of that
operation and are therefore not fully consistent with the comparative figures of the year before.
The Bank ended the year with a profit of 21,9 million euro compared to two million euro in
2009, as a result of a significant reduction in impairment losses on loans made possible by an
improvement in the quality of the portfolio. Net operating income, on the other hand, fell to
78,3 million euro (-53,4 million euro compared to 2009) as a result of a fall in revenues (14,8% to 337,8 million euro), only partially offset by a modest reduction in expenses (-1,9% to
259,4 million euro).
The decrease in operating income (-58,5 million euro) is attributable mainly to net interest
income, down from 252,9 to 197,8 million euro, penalised by unfavourable trends in interest
rates (the spread narrowed by more than the average for the network banks), while growth was
recorded for average volumes of business, which was greater for funding.
Net commission income also fell to 134,3 million euro from 141,9 million euro in 2009 (-5,4%),
affected mainly by the fall in commissions on current accounts (inclusive of commitment
fees), and it was only partly offset by the increase in commission on electronic payment cards
and indirect funding. The latter were driven by the proceeds from the placement of bonds
issued by the Parent and third parties.
Trading and hedging activity recorded a loss of 2,1 million euro (-4,6 million in 2009),
attributable to losses on the disposal/repurchase of financial liabilities and the negative
impact of hedges on fixed rate mortgages, which was only partially offset by the positive
impact of fair value changes in hedges on bonds.
The item other net operating income/(expense), rose to 7,8 million euro from 6,1 million euro
the year before. It benefited from a non-recurring item of approximately one million euro from
the sale of corresponding banking and depositary banking contracts to RBC Dexia.
As concerns operating expenses, personnel expense fell from 142,1 million euro to 137,3
million euro as a result of lower provisions for company bonuses and lower outgoings due to
reduced personnel numbers
Other administrative expenses, amounting to 116,1 million euro, fell by 2,5 million euro,
attributable in particular to a reduction in intragroup service charges (-2,6 million euro) and a
reduction in expenses for professional and advisory services (-2 million euro approx.).
rose to 6,1 million euro from 3,9 million euro in 2009, in relation to the acquisition of
properties in connection with the “branch switches”.
As a result of the performance reported above, the cost/income ratio worsened, rising from
66,76% to 76,81%.
Although the macroeconomic context is still far from favourable, net impairment losses on
loans fell considerably (from 112,2 million euro to 30,8 million euro), as a result of action
taken to improve the quality of the portfolio in progress since 2008. At the same time,
provisions for risks and charges fell from 5,3 million euro to 2,7 million euro. They consisted
mainly of provisions for litigation relating to revocation actions and for customer claims
relating to investment services.
Integration costs were recognised in 2009 for a total of 1,3 million euro, relating mainly to personnel
expense incurred in relation to the completion of the IT migration together with a profit of 2,5 million euro
161
from non recurring operations held for disposal attributable to a gain on the sale of a Palermo branch to
Banca Nuova and a portion of the Brescia corporate banking unit to Banca Popolare di Vicenza.
As concerns the statement of financial position figures, lending to customers rose from 8,4
million euro to 8,9 billion euro due to an increase in volumes of business with retail
customers, partly as a result of the branch network optimisation operation (+0,3 billion euro).
Medium-to-long term lending increased by 24% and now accounts for more than 60% of the
total lending portfolio.
Net deteriorated loans increased by 60,7 million euro to 549,5 million euro.
In detail, net non-performing loans rose from 212,7 million euro to 263,3 million euro,
impaired loans from 199,8 million euro to 225 million euro and restructured exposures from
34,4 million euro to 42,3 million euro, while past due loans more than halved from 41,9
million euro to 18,9 million euro, as a result of a significant reduction in exposures in arrears
for between 90 and 180 days relating to property mortgages which were reclassified within
impaired loans (18 million euro compared to 38 million euro in 2009).
Direct funding of the bank as at 31st December 2010 amounted to 8,2 billion euro compared to
8,6 billion euro the year before (-4,5%). Although the “branch switches” resulted in an increase
in funding (mainly on demand deposits) of 0,8 billion euro, the fall in the item is attributable
to securities issued and subscribed by the Parent as a result of the early redemption of two
bonds for a total of 530 million euro, including 150 million euro subordinated.
Indirect funding also fell compared to the previous year, down from 12,3 billion euro to 11,2
billion euro, affected by the negative performance of markets.
As a result of the change in the composition of customers’ investment portfolios, assets under
custody decreased considerably (from 7,3 billion euro to 6,4 billion euro), while the fall in
assets under management was more modest (from 4,9 billion euro to 4,7 billion euro). The
latter included a reduction in customer portfolio managements (-0,2 billion euro, to 1,1 billion
euro) and in mutual funds and Sicav’s (-0,3 billion euro, to 2,5 billion euro), while insurance
products increased (approximately +0,3 billion euro, to 1,1 billion euro).
The interbank position at the end of 2010 consisted of funds of 0,3 billion euro, a significant
decrease compared to 0,9 billion euro in 2009, principally as a result of a decrease in current
accounts and deposits held with the Parent.
capital and reserves/risk-weighted assets) of 19,81% (18,59%).
The proposal for the allocation of profit is to distribute total dividends of 19,7 million euro
after legal and by-law allocations.
162
BANCA REGIONALE EUROPEA SPA
31.12.2010
31.12.2009
Change
% change
6.851.620
5.592.784
7.278.450
7.962.965
-426.830
-2.370.181
-5,9%
-29,8%
-195.497
25.269
1.328.154
47.284
-1.523.651
-22.015
n.s.
-46,6%
Total assets (*)
9.610
1.216.497
8.132.305
11.917
925.018
9.706.497
-2.307
291.479
-1.574.192
-19,4%
31,5%
-16,2%
7.267.934
9.362.398
-2.094.464
-22,4%
4.205.324
5.625.295
-1.419.971
-25,2%
2010
147.363
1.318
2009
187.255
10.300
(39.892)
(8.982)
(21,3%)
(87,2%)
99.330
(946)
131.903
12.756
(32.573)
(13.702)
(24,7%)
n.s.
Income statement
Net interest income
Net income/(loss) from trading, hedging and disposal/repurchase activities (***)
8.809
9.943
(1.134)
(11,4%)
Operating income
Personnel expense
intangible assets
255.874
(110.126)
(80.870)
352.157
(128.627)
(96.002)
(96.283)
(18.501)
(15.132)
(27,3%)
(14,4%)
(15,8%)
(6.644)
(9.125)
(2.481)
(27,2%)
Operating expenses
(197.640)
58.234
(27.430)
(169)
(233.754)
118.403
(33.654)
(506)
(36.114)
(60.169)
(6.224)
(337)
(15,4%)
(50,8%)
(18,5%)
(66,6%)
3.253
230.662
264.550
(18.175)
-
(2.196)
(40)
82.007
(26.106)
(1.283)
5.449
230.702
182.543
(7.931)
(1.283)
n.s.
n.s.
222,6%
(30,4%)
(100,0%)
-
(1.481)
(1.481)
(100,0%)
-
(309)
(309)
(100,0%)
-
507
(507)
(100,0%)
246.375
54.618
191.757
229
1.552
295
1.958
-66
-406
20,25%
77,24%
5,90%
66,38%
1,88%
1,91%
1,52%
1,62%
Net provisions for risks and charges (****)
Loss on the disposal of equity investments (*****)
Taxes on income for the year from continuing operations (******)
Integration costs
net impairment losses on property, equipment and investment property and intangible
assets
taxes
Profit for the year
Other information
Number of branches
Financial ratios
(*)
351,1%
The total as at 31st December 2010 includes the effects of the branch switches performed on 25° January as part of the project
(**)
Inclusive of bonds subscribed by the Parent amounting to 201 million euro as at 31st December 2010 (502,1 million euro as at
(***) In 2009 the item included a gain of 8,9 million euro on the disposal of the investment held in Cedacri.
(****) In 2010 the item included the release of a provision made in prior years for litigation with the Ministry of the Economy
amounting to 3,9 million euro.
(*****) In 2010 the item related primarily to a gain on the sale of an interest held in BPCI to the Banca del Monte di Lombardia
Foundation.
(******) The item for 2009 included the non recurring positive impacts resulting from the payment of a substitute tax with the release
of deferred tax liabilities – for the purposes of the decree for the realignment of differences in statutory and tax accounting
figures, following the adoption of IFRS – amounting to 1,6 million euro and from an IRAP (local production tax) refund amounting
to 1,7 million euro.
163
As at 31st December 2010 UBI Banca held 74,9437% of the share capital of Banca Regionale Europea, the
Cassa di Risparmio di Cuneo Foundation held 24,98% and the remaining 0,0763% was held by minority
shareholders.
As part of the “branch switching” operation performed on 25th January 2010, the bank disposed of a total
of 113 branches and acquired 45, to become the principal bank of the Group in the Piedmont area.
Consistent with this operation, General Management, central offices and decentralised units at Cuneo were
transferred to Turin in January 2011. The statement of financial position and income statement figures as
at and for the year ended 31st December 2010 incorporate the effects of that operation and are therefore
not fully consistent with the comparative figures.
The year 2010 ended with a profit of 246,4 million euro, a significant increase compared to
54,6 million euro the year before, as a result of a gain (225,4 million euro net of taxes) realised
following the sale of an interest held in the share capital of Banca Popolare Commercio e
Industria to the Banca del Monte di Lombardia Foundation as part of the ownership structure
reorganisation following the “branch switches” performed in January 2010.
Again in relation to the action taken on the distribution network, net operating income halved
over twelve months, down from 118,4 million euro to 58,2 million euro, as a result of a fall in
operating income (-96,3 million euro, -27,3%), which was only partially offset by a reduction in
expenses (-36,1 million euro, -15,4%).
Within operating income, amounting to 255,9 million euro:
• net interest income amounted to 147,4 million euro (-39,9 million euro) affected by trends
for interest rates, but above all by reduced volumes of business, as a result of the net
reduction in the number of branches following the switching operation;
• dividends and similar income amounted to 1,3 million euro (-9 million euro) and consisted
principally of the dividend received from Banco di San Giorgio amounting to one million
euro (-9,8 million in 2009);
• net commission income fell to 99,3 million euro (-32,6 million euro). The reduction regarded
all the main items, again reflecting the impacts of the change in the geographical area
covered by the distribution network;
• net income from trading and hedging activity was -0,9 million euro compared to 12,8
million euro in 2009, which included non-recurring income of 8,9 million euro from the
disposal of the interest held in Cedacri. The result for 2010 was affected by the negative
impact of the hedges on fixed rate mortgages despite the positive effect of the fair value
change in hedges on bonds;
• the item other net operating income/(expense) decreased by 1,1 million euro to 8,8 million
euro, basically as a result of lower recoveries of charges from ordinary customers.
The fall in operating expenses, amounting to 197,6 million euro, affected all components, as a
result of the change in the operating structure produced by the “switch”:
y personnel expense, fell to 110,1 million euro from 128,6 million euro in 2009 due to a
decrease in average personnel numbers, lower company bonuses and a lower actuarial
valuation (post-employment benefits, loyalty bonus), despite 2,3 million euro of nonrecurring expenses for leaving incentives;
y other administrative expenses fell to 80,9 million euro from 96 million euro before, as a
result of lower intragroup service charges, lower tenancy of premises expenses and lower
postal expenses;
y net impairment losses on property, equipment and investment property and intangible
assets fell from 9,1 million euro to 6,6 million euro, as a result of the disposal of properties
that occurred as part of the operation to optimise the branch network.
Net impairment losses on loans amounted to 27,4 million euro, down from 33,6 million euro
the year before. They included specific impairment losses on non-performing loans of 23,4
million euro (33,3 million euro in 2009) and collective impairment losses on performing loans,
up to four million euro (0,3 million euro in 2009), due to refinements made to the calculation
method.
164
Net releases of provisions for risks and charges amounted to 3,3 million euro. The item
benefited from a release of 3,9 million euro in relation to a settlement agreement concerning
litigation with the Ministry of the Economy and Finance, concluded in April.
As concerns statement of financial position items, in December loans to customers amounted
to 6,9 billion euro (-0,4 billion euro year-on-year), reflecting a reduction in volumes of
business as a consequence of the branch switches (-0,9 billion euro). In terms of types of
lending, mortgages fell to 3,9 billion euro (-0,4 billion euro) and current accounts to 1,3
billion euro (-0,4 billion euro), while there was an increase in “Other transactions” (+0,4
billion euro to 1,7 billion euro) which includes various types of short term lending (advances
on bills and import-export documents , etc..).
At the end of the year net deteriorated loans of the bank totalled 306,2 million euro, up from
285,2 million euro in December 2009. In detail, net non-performing loans, amounting to 128,5
million euro, increased by 18,1 million euro, impaired loans rose from 117,8 million euro to
131 million euro, while restructured loans doubled from 10,8 million euro to 20,3 million euro
as a result of reclassifications into this class of significant amount following the changes in the
composition of the branch network.
On the other hand past due exposures fell from 46,2 million euro to 26,4 million euro and
included 22,6 million euro of exposures in arrears for between 90 and 180 days, secured by
real estate property reclassified within deteriorated loans in accordance with supervisory
regulations (35,8 million euro at the end of 2009).
Direct funding amounted to 5,6 billion euro, compared to eight billion euro the year before,
reflecting a decrease in volumes of 1,5 billion euro, resulting from the “branch switches”. The
decrease in the total for the item was also the result of a fall in total bonds issued (-0,8 billion
euro), both for bonds issued to customers (-0,5 billion euro) and those subscribed by the
Parent (-0,3 billion euro for the early redemption of an issue of 0,5 billion euro against a new
issuance of 0,2 billion euro).
As concerns indirect funding from ordinary customers – amounting to 7,3 billion euro (-2,1
billion) – assets under custody totalled 3,1 billion euro (-0,7 billion euro year-on-year) with
lower net inflows of 1,5 billion euro as a result of the “branch switches”. Assets under
management fell to 4,2 billion euro (-1,4 billion euro), affected by lower net inflows of 1,2
billion euro as a result of the branch switching operation.
As a result of the differing trends for funding and lending with customers, the net interbank
debt of the bank at the end of year, relating primarily to the Parent, amounted to 0,2 billion
euro (compared to funds of 1,3 billion euro in December 2009).
weighted assets) of 25,38% (15,52%) and a total capital ratio (supervisory capital and
The proposal for the allocation of profit is to distribute total dividends of 19,9 million euro.
165
BANCA POPOLARE DI ANCONA SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
Direct funding (*)
7.702.345
7.332.080
370.265
5,0%
6.837.163
7.996.422
-1.159.259
-14,5%
-209.751
1.314.307
-1.524.058
25.159
22.140
20.259
22.545
4.900
-405
n.s.
24,2%
-1,8%
875.143
867.338
7.805
0,9%
Total assets
9.100.755
9.377.093
-276.338
-2,9%
Indirect funding from customers (including insurance)
3.828.041
3.670.727
157.314
4,3%
1.879.189
1.937.869
-58.680
-3,0%
2010
204.263
2009
234.174
(29.911)
(12,8%)
3.757
16.437
(12.680)
(77,1%)
105.328
2.970
112.008
(715)
(6.680)
3.685
(6,0%)
n.s.
Income statement
Net interest income
Other net operating income/(expense) (**)
Operating income
Personnel expense
intangible assets
Operating expenses
2.732
(196)
2.928
n.s.
319.050
(125.953)
361.708
(128.114)
(42.658)
(2.161)
(11,8%)
(1,7%)
(90.704)
(96.523)
(5.819)
(6,0%)
(11.980)
(12.262)
(282)
(2,3%)
(228.637)
90.413
(51.481)
(236.899)
124.809
(115.745)
(8.262)
(34.396)
(64.264)
(3,5%)
(27,6%)
(55,5%)
955
(324)
1.279
n.s.
Profit on the disposal of equity investments (****)
(1.057)
25
(3.320)
17.077
(2.263)
(17.052)
(68,2%)
(99,9%)
38.855
(20.515)
22.497
(9.269)
16.358
11.246
Integration costs
-
(1.080)
(1.080)
(100,0%)
intangible assets
-
(1.200)
(1.200)
(100,0%)
Taxes on income for the year for continuing operations (*****)
taxes
Profit for the year
Other information
Number of branches
72,7%
121,3%
-
(311)
(311)
(100,0%)
-
431
(431)
(100,0%)
18.340
12.148
6.192
248
256
-8
1.749
1.787
-38
Financial ratios
2,10%
1,40%
71,66%
65,49%
3,73%
2,85%
3,29%
3,66%
51,0%
(*)
Inclusive of bonds subscribed by the Parent amounting to 352 million euro as at 31st December 2010 (1.249 million euro as at
(**)
In 2009 the item included a provision of 3,6 million euro following the conclusion of a settlement agreement with a large group of
companies.
(***) The item for 2010 includes an impairment loss relating to the Mariella Burani Group amounting to 0,9 million euro. In 2009 that
impairment loss amounted to 0,1 million euro.
(****) In 2009 the item included profit from the disposal of UBI Assicurazioni shares amounting to 17 million euro.
(*****) In 2009 the item included a non recurring positive impact resulting from an IRAP [local production tax] refund amounting to 1,6
million euro.
As at 31st December 2010, UBI Banca held 92,8983% of the share capital of the Banca Popolare di Ancona,
Aviva Spa held 6,4853% and the remaining 0,6164% was held by minority shareholders.
The Bank ended the year with a profit of 18,3 million euro, an increase compared to 12,1
million euro in 2009, due to a significant reduction in impairment losses on loans as a result
of an improvement in the quality of lending.
166
Net operating income nevertheless fell by 27,6%, as a result of a decrease in operating income
(-11,8%), only partly offset by a fall in expenses (-3,5%).
The
main
items
of
operating
income,
which
totalled
319,1
million
euro
(-42,7 million euro), performed as follows:
- net interest income fell to 204,3 million euro (-29,9 million euro), incorporating the effects
of a reduction in the interest rate spread and unfavourable performance for average
volumes of business;
- dividends and similar income fell to 3,8 million euro compared to 16,4 million euro the year
before, which, however, included a dividend of 6,3 million euro paid by UBI Assicurazioni
Spa (the investment was disposed of in December 2009);
- net commission income amounted to 105,3 million euro (-6,7 million euro), affected above
all by commissions on current accounts, only partly offset by positive growth in assets
under management and under custody, the latter driven by sales of bonds issued by the
Parent and by third parties;
- trading, hedging and disposal/repurchase activities generated income of approximately
three million euro (-0,7 million in 2009), mainly as a result of profit from fair value changes
in mortgage and bond hedges, which more than compensated for losses on the repurchase
of financial liabilities and the negative impact of unwinding derivatives to hedge against the
early repayment of mortgages;
- other net operating income/expense, rose to 2,7 million euro compared a net expense in
2009 (-0,2 million euro), which included a cost – amounting to 3,6 million euro – in
relation to a settlement agreement with a major group of companies.
Operating expenses fell to 228,6 million euro (-8,3 million euro), as a result of contributions
from all expense items:
- personnel expense of 125,9 million euro fell by 2,2 million euro due mainly to lower
provisions for company bonuses and also to a reduction in average personnel numbers. The
item includes 4,5 million euro of leaving incentives following the trade union agreement of
20th May 2010. Net of that non recurring item the expense decreased by 5,2%;
- other administrative expenses fell to 90,7 million euro (-5,8 million euro), due to lower
expenses for professional and advisory services, the tenancy of premises, outsourced
services and services provided by other Group member companies;
- net impairment losses on property, equipment and investment property and intangible
assets also fell to 12 million euro from 12,3 million euro the year before.
As a result of an improvement in the quality of loans, net impairment losses on loans fell from
115,7 million euro to 51,5 million euro. The cost of credit therefore decreased as a result from
1,58% to 0,67%, returning into line with the average for the Group.
Net provisions for risks and charges fell from 3,3 million euro to 1,1 million euro, benefiting
from the release of excess and/or unnecessary provisions for losses on claims (+1,3 million
euro) and revocation actions (+0,7 million euro).
As concerns the statement of financial position, at the end of the year loans to customers had
reached 7,7 billion euro, up from 7,3 billion euro the year before, driven by growth in
mortgages (+0,5 billion euro to approximately five billion euro), while current account deposits
decreased (-0,1 billion euro to 1,5 billion euro).
Net deteriorated loans of the bank totalled 572,3 million euro compared to 508,2 million euro
twelve months before (+12,6%). Within the aggregate, net non-performing loans increased
(from 209,2 million euro to 287,4 million euro) as did restructured exposures (from 0,9 million
euro to 15,7 million euro). On the other hand decreases were recorded for impaired loans (from
268,7 million euro to 253,4 million euro) and past due exposures (from 29,4 million euro to
15,7 million euro), within which exposures in arrears for between 90 and 180 days secured by
real estate property fell from 24,4 million euro to 11,5 million euro.
Direct funding amounted to 6,8 billion euro, down from eight billion euro in December 2009 (14,5%), penalised above all by a fall in securities issued, down by over one billion euro to 2,3
167
billion euro, mainly due to the redemption of bonds subscribed by the Parent (-0,9 billion
euro).
However, the fall in amounts due to customers was more modest (-0,1 billion euro to
approximately 4,5 billion euro), reflecting a fall in current account deposits (-0,3 billion euro
to 4,2 billion euro), only partly offset by funding from repurchase agreements.
Indirect funding grew by 0,2 billion euro to 3,8 billion euro as a result of an increase in assets
under custody (+0,2 billion euro, to almost two billion euro), which benefited from an issuance
of bonds (some subordinated), issued by third parties and by the Parent for a total of 0,3
billion euro. On the other hand, there was a slight fall in assets under management (-0,1
billion euro to 1,9 billion euro), due primarily to a decrease in mutual funds and Sicav’s (-0,1
billion euro to 0,8 billion euro), despite fair performance for customer portfolio management.
At the end of the year net interbank debt stood at 0,2 billion euro (funds of 1,3 billion euro in
December 2009). With regard to assets this was due to a decrease in liquidity on the interbank
current account held with the Parent, as a consequence of redemptions of bonds and the
maturities of two deposits (one a term deposit of 0,3 billion euro and one a subordinated
deposit of 0,2 billion euro), while with regard to liabilities it was due to an increase in debt as a
consequence of the redemptions already mentioned.
weighted assets) of 15,13% (16,16% in 2009) and a total capital ratio (supervisory capital and
The proposal for the allocation of profit is to distribute dividends of 16,5 million euro after an
allocation to the extraordinary reserve of 1,2 and an allocation of 0,6 million euro to a fund
available to the Board of Directors.
168
BANCA CARIME SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
4.765.224
4.530.670
234.554
5,2%
Direct funding
7.562.665
3.670.923
2.698
27.793
7.892.084
4.318.255
2.214
28.110
-329.419
-647.332
484
-317
-4,2%
-15,0%
21,9%
-1,1%
Total assets
1.551.681
9.784.297
5.753.026
1.548.575
10.094.090
5.705.915
3.106
-309.793
47.111
0,2%
-3,1%
0,8%
3.688.062
3.947.603
-259.541
-6,6%
2010
237.036
107
109.737
2009
275.724
115
118.201
(38.688)
(8)
(8.464)
(14,0%)
(7,0%)
(7,2%)
2.018
4.618
(609)
5.835
2.627
(1.217)
n.s.
(20,9%)
353.516
(153.219)
399.266
(154.655)
(45.750)
(1.436)
(11,5%)
(0,9%)
(94.309)
(95.118)
(809)
(0,9%)
Income statement
Net interest income
Operating income
Personnel expense
intangible assets
(14.582)
(13.703)
879
6,4%
(262.110)
(263.476)
(1.366)
(0,5%)
91.406
(22.875)
(434)
862
135.790
(20.128)
123
(6.076)
(44.384)
2.747
(557)
6.938
(32,7%)
13,6%
n.s.
n.s.
Profit (loss) on the disposal of equity investments
Taxes on income for the year for continuing operations (*)
Integration costs
(2)
68.957
(31.305)
-
21
109.730
(36.951)
(2.791)
(23)
(40.773)
(5.646)
(2.791)
n.s.
(37,2%)
(15,3%)
(100,0%)
-
(3.541)
(3.541)
(100,0%)
Operating expenses
intangible assets
taxes
Profit for the year
Other information
Number of branches
Financial ratios
-
(330)
(330)
(100,0%)
-
1.080
(1.080)
(100,0%)
37.652
69.988
(32.336)
(46,2%)
294
2.224
295
2.254
-1
-30
2,43%
74,14%
1,24%
4,52%
65,99%
0,95%
2,27%
1,59%
(*) In 2009 the item included the non recurring positive impacts resulting from the payment of a substitute tax with the release of
following the adoption of IFRS – amounting to 6,1 million euro and from an IRAP (local production tax) refund amounting to 1,2
million euro.
As at 31st December 2010, UBI Banca held 92,8322% of the share capital of the Banca Carime, Aviva Spa
held 7,1476% and the remaining 0,0202% was held by minority shareholders.
The year 2010 ended with a profit for Banca Carime of 37,7 million euro compared to 70
million euro in 2009, the result of a difficult market context – characterised by continued falls
in volumes of business – against a structurally weak socio-economic background.
169
Net operating income fell by 44,4 million euro to 91,4 million euro, as a result of a fall in
operating income (-45,8 million euro to 353,5 million euro) and a modest decrease in operating
expenses (-1,4 million euro to 262,1 million euro).
Within operating income, net interest income fell to 237 million euro (-38,7 million euro)
mainly due to the downwards pressure on interest rates, despite growth in average volumes of
lending (+5,1%).
Net commission income totalled 109,7 million, a decrease of 7,2% (-8,5 million euro), as a
result of different trends that affected individual items. Falls in commissions on current
account management and on consumer credit were only partially offset by commission income
on assets under custody – which benefited from the sale of bonds issued by the Parent and
third parties – and on insurance products.
Net income on trading, hedging and disposal/repurchase activities which showed a loss of 0,6
million euro in 2009, recorded income of two million euro, due to hedging activity (2,4 million
euro) – from hedge accounting on mortgages, financing and fixed rate bonds – and, although to
a lesser extent, to trading activity (1,2 million euro) driven by profits on trading in government
securities and in currencies, while losses were recorded of 1,5 million euro from the
disposal/repurchase of financial liabilities attributable to interest rate trends.
Other net operating income/(expense) fell from 5,8 million euro to 4,6 million euro due
primarily to lower expense recoveries from ordinary customers.
With regard to expenses, personnel expense amounted to 153,2 million euro, a decrease of 1,4
million euro (-0,9%), attributable to lower provisions for company bonuses and also to a
decrease in average personnel numbers. The item included the following:
a prudential provision for risks and charges of 3,4 million euro as the best present
estimate of the increased liabilities arising from a refinement of the formula employed to
calculate the pension fund with particular reference to periodic payments made to
participants in the fund;
leaving incentives of 5,9 million euro, pursuant to the trade union agreement of 20th May
2010. Net of that non recurring item the expense decreased by 4,8%.
Similarly other administrative expenses also decreased slightly to 94,3 million euro (-0,9%), as
a result of reduced “Tenancy of premises” expenses (electricity).
amounted to 14,6 million euro compared to 13,7 million euro in 2009.
As a result of the performance reported above, the cost/income ratio worsened, rising from
65,99% to 74,14%.
Net impairment losses on loans rose to 22,9 million euro (+2,7 million euro). While specific net
impairment losses remained almost unchanged (-0,8 million euro), collective impairment
losses recorded a decrease (+3,5 million euro), following a refinement of the calculation method
and the update of the historical data series used as the basis for the estimate of risk
parameters of the rating models (PD) and LGD.
Net provisions for risks and charges – which included provisions for revocation actions
and for customer claims relating to compounding of interest and financial investments –
showed releases of 0,9 million euro following the conclusion of litigation without
disbursements or with settlements for sums lower than the provision set aside (provisions of
6,1 million euro were recognised in 2009).
As concerns the statement of financial position, in December loans to customers reached 4,8
billion euro (+0,2 billion euro), driven by medium-to-long term loans (+0,3 billion euro), which
now account for approximately 70% of the total.
The trend for net deteriorated loans rose to 184,6 million euro (+27,4 million euro), a reflection
of the fragile economic context and the consequent poorer quality of credit. Net nonperforming loans amounted to 58,9 million euro, an increase of 36,8% year-on-year, while net
impaired loans, amounting to 108 million euro, increased by 50,2%. On the other hand past
due exposures fell from 42,2 million euro to 15,5 million euro. These included, 12,1 million of
170
exposures in arrears for between 90 and 180 days relating to property mortgages, classified in
that class in accordance with Bank of Italy provisions.
At the end of the year direct funding totalled 7,6 billion euro, a decrease of 0,3 billion euro (4,2%) compared to 2009, attributable to securities issued, and to bonds in particular (-0,5
billion euro, to 2,2 billion euro), which were replaced by forms of indirect funding to which
customers oriented their asset allocation decisions.
Amounts due to customers on the other hand recorded an increase (+0,2 billion euro to 5,2
billion euro), driven by the item current accounts and deposits.
Indirect funding, amounting to approximately 5,8 billion euro, remained more or less
unchanged over twelve months (+0,8%). Within the item, assets under custody increased by
17,4% to over two billion euro – due to the sale of bonds issued by the Parent and third parties
– which offset the fall in assets under management (-6,6% to 3,7 billion euro), penalised by
difficulties in the insurance area (-0,7% to 1,3 billion euro) and above all with mutual funds
and Sicav’s (-10,2% to 2,2 billion euro), while customer portfolio management performed well
(+5,1% to 0,2 billion euro).
As a result of the differing trends for funding and lending with customers, while still positive,
the net interbank position fell from 4,3 billion euro to 3,7 billion euro.
The proposal for the allocation of profit is to distribute total dividends of 33,9 million euro
after legal and by-law allocations.
171
CENTROBANCA SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
Direct funding (*)
Net interbank debt
6.972.678
7.047.210
-74.532
-1,1%
5.547.161
-1.514.777
4.172.765
-2.977.202
1.374.396
-1.462.425
32,9%
-49,1%
447.633
399.861
47.772
11,9%
566.135
537.143
28.992
5,4%
577.124
574.553
2.571
0,4%
10.512.435
8.806.074
1.706.361
19,4%
2010
100.212
1.532
2009
126.192
3.686
(25.980)
(2.154)
(20,6%)
(58,4%)
Total assets
Income statement
Net interest income
42.102
40.890
1.212
3,0%
14.010
24.264
(10.254)
(42,3%)
5.351
3.543
1.808
51,0%
Operating income
Personnel expense
163.207
(32.957)
198.575
(33.449)
(35.368)
(492)
(17,8%)
(1,5%)
intangible assets
(21.049)
(23.234)
(2.185)
(9,4%)
(1.003)
(993)
10
1,0%
Operating expenses
(55.009)
(57.676)
(2.667)
(4,6%)
Net impairment losses on loans (**)
108.198
(65.430)
140.899
(112.386)
(32.701)
(46.956)
(23,2%)
(41,8%)
(3.564)
(2.477)
1.087
43,9%
Net provisions per risks and charges
Profit/loss on the disposal of equity investments (***)
(7.669)
(15)
679
17.798
(8.348)
(17.813)
n.s.
n.s.
31.520
(15.367)
44.513
(16.471)
(12.993)
(1.104)
(29,2%)
(6,7%)
16.153
28.042
(11.889)
(42,4%)
Profit for the year
Other information
Number of branches
6
7
-1
325
351
-26
2,80%
33,71%
4,88%
29,04%
1,16%
0,67%
2,07%
3,10%
Financial ratios
(*)
Inclusive of bonds subscribed by the Parent (and by Banco di San Giorgio) amounting to 201,6 million euro as at 31st December
2010 (1.105,2 million euro as at 31st December 2009).
(**)
The item for 2010 includes the impairment loss relating to the Mariella Burani Group amounting to six million euro. In 2009 that
impairment loss amounted to 47 million euro.
(***) In 2009 the item related to the sale of IW Bank shares to Webstar Sa.
(****) In 2009 the item included a positive non-recurring impact resulting from an IRAP [local production tax] refund of 0,9 million
euro.
As at 31st December 2010, UBI Banca held 92,3818% of the share capital of Centrobanca, while 5,4712%
was held by Banca Popolare di Ancona Spa, 1,6% by Banca Popolare di Sondrio Scpa, 0,1420% by Banca
di Piacenza Scpa, 0,1008% by Veneto Banca Holding Scpa and the remaining portion totalling 0,3042%
was held by 24 different banks, mainly “popular” banks.
Centrobanca is the bank in the Group which specialises in corporate and investment banking
to support corporate clients with innovation, expansion and financial restructuring.
The year 2010 ended with a profit of 16,2 million euro, a decrease compared to 28 million euro
the year before, which, however, had benefited from non-recurring income totalling 18,4
million euro net of taxes. In normalised terms, net of those items, 2010 profit recorded a
significant recovery from 9,6 million euro to 16,6 million euro (+72%).
172
The continuing difficult economic situation and the extraordinary low levels of interest rates
affected the results of the bank, which recorded a fall in income which more than offset the
reduction in expenses and the lower cost of credit.
Net operating income fell to 108,2 million euro (-32,7 million euro; -23,2%).
Within operating income, amounting to 163,2 million euro (-35,4 million euro; -17,8%):
- net interest income amounted to 100,2 million euro, a decrease of over a fifth compared to
2009, due to the combined effect of continuing low interest rates at record low levels and a
reduction in average volumes of business;
- dividends (-2,2 million euro to 1,5 million euro) were affected by the generally lower
dividends received from IW Bank and from investees as part of private equity business;
- net commission income increased to 42,1 million euro (+1,2 million euro), driven by
commissions on lending activity;
- net income from trading hedging and disposal/repurchase activity decreased by 10,3
million euro to 14 million euro, the aggregate result of opposing trends for trading (-7,7
million euro, including -6,4 million euro from securities in the owned portfolio) and hedging
(+3,4 million euro, largely in relation to the unwinding of hedges on owned securities
subject to repurchase), against increased losses from disposal/repurchase activity
amounting to six million euro (including -5,3 million euro resulting from the disposal of
non-performing loans);
- other net operating income/(expense) totalled 5,4 million euro (+1,8 million euro) and
included, the recovery of legal costs incurred by the bank (2,1 million euro) and receipts in
relation to the price adjustment for the disposal of the interest held in Radici Film that
occurred in 2009 (2,3 million euro), for which a provision of the same amount had been
made.
Within operating expenses (-2,7 million euro to 55 million euro; -4,6%) the most significant
reduction regarded other administrative expenses (-2,2 million euro to 21 million euro), as a
result of a decrease of 1,3 million euro in business support expenses, mainly those of a legal
and advisory nature, resulting from action taken to optimise the professionals engaged,
despite the presence of particularly critical positions involved in litigation.
The decrease in personnel expense on the other hand (-0,5 million euro to 33 million euro)
reflects the following: a reduction in variable components of remuneration (bonuses and
incentive schemes); nine employees leaving under incentive schemes; less use of temporary
and external personnel; and effective management of personnel turnover (replacement of
personnel leaving with less costly appointments).
As a result of the performance reported above, the cost/income ratio increased to 33,71%,
from 29,04% in 2009.
Net impairment losses on loans, amounting to 65,4 million euro, fell significantly compared to
112,4 million a year before. The overall improvement is the aggregate result of a significant
decrease in net specific impairment losses (down to 68,2 million euro from 104,8 million euro
in 2009) and the presence of net reversals of impairment losses for collective impairment of
loans (2,8 million euro compared to impairment losses of 6,7 million euro in 2009).
Approximately 40% of the specific impairment losses were attributable to five positions
including that relating to the Mariella Burani Group amounting to six million euro (47 million
euro in 2009).
Net provisions for risks and charges rose to 7,7 million euro (+8,3 million euro), including two
million euro in relation to revocation risks on the Mariella Burani position.
As concerns the statement of financial position, loans to customers amounted to 6,97 billion
euro, slightly down compared to 7,05 billion euro in 2009 (-1,1%). In terms of type of business,
there was a slight decrease in corporate lending (-1,5%) and in corporate finance
(-1,1%), while Acquisition & Project Finance remained stable (+0,6%).
173
The year 2010 recorded a slight recovery in lending, with an increase in loans approved (+2,1%
to 3,35 billion euro). The main recipients of new loans (+0,5% to 2,16 billion euro) were non
financial companies.
Total net deteriorated loans increased only slightly during the year to 437,8 million euro (+5,9
million euro; +1,4%), accompanied, however, by a change in the composition of the different
classes.
While
reductions
were
recorded
for
net
impaired
loans
(-74,1 million euro) and net past due exposures (-73,9 million euro), both net non-performing
loans (+33,8 million euro) and restructured loans in particular recorded increases (+120,2
million euro). As a result of these trends, the ratio of net impaired loans to net lending fell
from 3,1% to 2,1%, while the ratio of non-performing loans to net lending rose from 0,7% to
1,2% and the ratio of net restructured loans to net loans rose to 2,4% from 0,7% at the end of
2009.
Over twelve months net interbank debt halved (down from -3 billion euro to -1,5 billion euro),
mainly as a result of an increase in receivables from banks (+1,7 billion euro) following the
subscription of UBI bonds, as part of funding activity performed for the Parent.
Direct funding from customers rose to 5,5 billion euro from 4,2 billion euro the year before,
supported by the placement of bonds (mainly on external distribution networks) for
approximately 2,8 billion euro, including approximately 1,7 billion euro transferred to the
Parent, against maturities and redemptions of own securities amounting to 970 million euro.
Financial assets held for trading increased by 12% to 448 million euro in relation to both the
value of investments made as part of merchant banking and investment banking business and
to the purchase of the Vallourec share, which was nevertheless disposed of in the first few
days of 2011.
The portfolio of available-for-sale financial assets, consisting almost entirely of investments in
corporate bonds made as part of Centrobanca’s general lending business, increased to
approximately 566 million euro from 537 million euro the year before. Investment policies in
2010 were designed to refocus on captive Group customers with investments in Italian
corporate issuers and the major European players operating in Italy.
The proposal for the appropriation of profits is to first allocate 0,8 million to the legal reserve
and then to distribute dividends of 15,5 million euro, by drawing 0,1 million euro from
retained profits.
174
B@NCA 24-7 SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
11.219.553
10.855.336
364.217
3,4%
Direct funding (*)
4.344.858
4.376.481
-31.623
-0,7%
Net interbank debt
-7.757.694
-7.858.789
-101.095
-1,3%
348.179
397.552
-49.373
-12,4%
12.957.569
13.136.902
-179.333
-1,4%
2010
200.453
2009
174.415
26.038
14,9%
-
2
(2)
(100,0%)
Total assets
Income statement
Net interest income
17.634
25.792
(8.158)
(31,6%)
Net loss from trading, hedging and disposal/repurchase activity
(24.036)
29.817
(31.758)
24.710
(7.722)
5.107
(24,3%)
20,7%
Operating income
Personnel expense
223.868
(13.046)
193.161
(12.775)
30.707
271
15,9%
2,1%
(45.921)
(49.069)
(3.148)
(6,4%)
(180)
(229)
(49)
(21,4%)
(59.147)
(62.073)
(2.926)
(4,7%)
164.721
(149.833)
131.088
(184.877)
33.633
(35.044)
25,7%
(19,0%)
Operating expenses
Net provisions per risks and charges (**)
Taxes on income for the year for continuing operations (***)
(8.912)
(1.374)
7.538
548,6%
5.976
(11.699)
(55.163)
6.522
61.139
(18.221)
n.s.
n.s.
Integration costs
-
(753)
(753)
(100,0%)
of which: other administrative expenses
-
(1.112)
(1.112)
(100,0%)
-
359
(359)
(100,0%)
(5.723)
(49.394)
(43.671)
(88,4%)
taxes
Profit for the year
Other information
Number of branches
Financial ratios
1
1
-
227
218
9
26,42%
32,14%
1,55%
1,03%
0,65%
0,57%
(*)
Inclusive of bonds subscribed by the Parent amounting to 4.321 million euro as at 31st December 2010 (4.349,1 million euro as at
(**) In 2010 the item included a provision of eight million euro in relation to estimated risks on the part of the lending portfolio
guaranteed by Ktesios Spa.
(***) In 2009 the item included a positive non-recurring impact resulting from an IRAP [local production tax] refund of 0,2 million euro.
The bank ended the year with a loss of 5,7 million euro compared to -49,4 million euro in
2009. Despite incurring a loss again, the improvement that occurred in both net operating
income and in trends for impairment losses on loans, nevertheless resulted in a return to
profit before taxes.
Net operating income amounted to 164,7 million euro (+33,6 million euro; +25,7%), due
primarily to good performance by revenues, up to 223,9 million euro (+30,7 million euro;
+15,9%), but also to a reduction at the same time in expenses, down to 59,1 million euro (-2,9
million euro; -4,7%).
Operating income included the following:
- net interest income, which was yet again the main driver, rising to 200,5 million euro (+26
million euro) as a result of positive performance by average volumes of business and by the
spreads. While interest income was more or less unchanged, the increase was attributable
mainly to interest expense, within which the positive impact on securities issued was partly
offset by negative differentials on hedges on loans to customers;
175
-
-
-
net commissions, which fell to 17,6 million euro (-8,2 million euro), within which
commissions on insurance policies decreased in particular, affected by the lower volumes of
loans granted;
net income from trading, hedging and disposal/repurchase activities, which again showed
an overall loss (-24 million euro), the result of an improvement in hedging activity and
poorer performance by trading activity, affected solely by the failure to meet the “effective
hedge” criterion (i.e. the unwinding of derivative positions);
other net operating income/(expense) increased to 29,8 million euro (+5,1 million euro),
benefiting from lower prior year expenses.
Operating expenses included the following:
- other administrative expenses, which fell to 45,9 million euro (-3,1 million euro), mainly in
relation to lower expenses for “Professional and advisory services” and for the “Use of
networks and ICT services”, despite increases in expenses for credit recovery expenses and
for IT system management services outsourced to other Group member companies;
- personnel expense on the other hand increased to 13 million euro (+0,3 million euro) partly
in relation to increased personnel numbers.
As a result of the performance reported above, the cost/income ratio improved over twelve
months from 32,14% to 26,42%.
While net impairment losses on loans (-35 million euro to 149,8 million euro) still remained at
high levels, they benefited from action taken to contain risks, which took the form of reducing
loans to “non captive” customers originated through the network of the SILF Group and also to
“captive” customers originated through Group branches.
On the other hand an increase was recorded for net provisions for risks and charges (+7,5
million euro to 8,9 million euro), which took account of possible operational risks connected
with salary backed lending business.
Pre-tax profit, amounting to six million euro, recorded a considerable improvement compared
to the loss of 55,2 million euro incurred in 2009. The final loss for the year, amounting to 5,7
million euro, was affected by a particularly severe tax impact (11,7 million euro), due mainly to
the limits on the deductibility of impairment losses on loans.
As concerns the statement of financial position, the lending portfolio recorded a moderate
increased in 2010, while volumes of business decreased.
Total outstanding loans increased by 3,4% to 11,2 billion euro (+0,4 billion euro) over twelve
months with a change in composition in favour of mortgages (up from 42,3% to 45,9% of the
total) and salary backed loans (up from 23,6% to 27,7%), while the percentages of both non
captive loans originated by SILF (down from 14,8% to 9,7%) and captive loans originated by
Group branches (down from 18,4% to 15,9%) fell. On the other hand, the remaining types of
lending were practically unchanged (down from 0,9% to 0,8%).
The total amount of new loans granted, on the other hand, fell by 39,3%, falling from 4,4
billion euro in 2009 to 2,7 billion euro. In detail, these consisted of the following: over one
billion euro of salary backed loans originated by external networks (Prestitalia1 and others, 24,8%); approximately one billion euro of mortgages (-33,5%), mainly through the network of
BY YOU Spa2; 0,7 billion euro of personal and special purpose loans distributed through the
network banks (-36,5%) and the SILF distribution network (-80,3%).
As concerns mortgages, an important project was prepared to be implemented in 2011. It
involves the transfer to the network banks of disbursement activities and overall customer
relationship management, designed on the one hand to ensure greater stability over time for
lending business, reducing expenses connected with early repayments and on the other to
1
2
On 10th January 2011, B@nca 24-7 acquired the entire investment in the share capital of Prestitalia Spa from Barberini Sa, a
company 100% controlled by UBI Banca.
Contacts continued in 2010 between the Parent and the BY You distribution network designed to identify more appropriate methods
to renew the commercial agreement with B@nca 24-7, which expires on 5th October 2011. On 15th February 2011, an “amendment
agreement” to that commercial agreement was signed, designed to limit the exclusive rights of the bank for a limited period of time,
thereby allowing BY YOU, in come cases, to propose property mortgages to other intermediaries.
176
generate improved and sustainable economic returns by exploiting cross selling possibilities
with other Group products.
At the end of the year total active cards issued by B@nca 24-7 to Group customers numbered
close to 505 thousand, an increase year-on-year of 6,1% compared to 476 thousand at the
end of 2009. A particularly significant increase in new issues of cards was recorded, mainly
the result of the process of replacing multifunction cards which commenced in July.
Over the twelve months in question, net deteriorated loans increased from 198 million euro to
269,3 million euro (+36%): net non-performing loans increased from 111,5 million euro to
173,7 million euro (+55,7%), net impaired loans rose from 61,6 million euro to 73,1 million
euro (+18,6%), while exposures past due and in arrears fell from 24,9 to 22,6 million euro (9,3%). At the same time as the action already mentioned concerning new loans was taken to
reduce risk in the loan portfolio, in 2010 the bank took further initiatives to improve the
management of credit quality. It brought its organisational structure into line with that of the
Group with the creation of a specific unit entitled “Credit support and monitoring” and it
intensified controls on documentation of customer personal details and income, introducing
more stringent credit rules on mortgage lending3.
Lending business is financed mainly through intragroup interbank funding (current accounts
overdrafts with UBI Banca and Banca Popolare di Bergamo; term deposits and repurchase
agreements with the Parent, where the collateral consists of senior securities resulting from
securitisations), but also through the issue of bonds subscribed by the Parent4.
The net interbank position as at 31st December 2010 was therefore again one of debt of -7,8
billion euro, with no significant change compared to the previous year (-7,9 billion euro).
The Board of Directors has proposed carrying forward the loss for 2010 amounting to 5,7
million euro.
3
4
In accordance with new Group policies, mortgages with a loan to value of greater than 80% were progressively reduced from the
beginning of 2011 (a maximum of 5% of loans for mortgages with an LTV of greater than 80% and a maximum of 0,5% for
mortgages with an LTV of greater than 95%).
At the end of August the Banca issued a bond with a seven year maturity, subscribed entirely by the Parent, amounting to 420
million euro. This issue partly offset the early redemption of another issue for a nominal amount of 450 million euro, maturing in
2015.
177
IW BANK SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
Direct funding
207.028
149.538
57.490
38,4%
1.513.127
401.300
1.469.381
516.338
43.746
-115.038
3,0%
-22,3%
21.113
39.648
-18.535
-46,7%
845.043
36.065
787.147
61.858
57.896
-25.793
7,4%
-41,7%
Total assets
2.874.217
2.569.415
304.802
11,9%
3.037.925
2.403.852
634.073
26,4%
496.899
331.451
165.448
49,9%
2010
24.047
2009
32.127
(8.080)
(25,2%)
33.062
31.738
1.324
4,2%
7.787
4.175
6.589
(420)
1.198
4.595
18,2%
n.s.
Operating income
Personnel expense
intangible assets (**)
69.071
(20.577)
(31.977)
70.034
(19.517)
(26.453)
(963)
1.060
5.524
(1,4%)
5,4%
20,9%
(8.470)
(6.510)
1.960
30,1%
Operating expenses
(61.024)
8.047
(969)
(52.480)
17.554
(5.530)
8.544
(9.507)
(4.561)
16,3%
(54,2%)
(82,5%)
Income statement
Net interest income
Other net operating income/(expense) (*)
(613)
-
613
Net provisions for risks and charges (***)
(2.933)
(2.247)
686
30,5%
Loss on the disposal of equity investments (****)
(1.982)
1.550
(1.994)
9.777
(5.720)
1.982
(8.227)
(3.726)
(84,1%)
(65,1%)
(444)
4.057
(4.501)
n.s.
2
292
2
282
10
Other information
Number of branches
Financial ratios
-1,23%
6,56%
88,35%
-
74,94%
-
0,01%
0,08%
-
The figures as at and for the year ended 31st December 2009 have not been restated on a pro-forma basis to take account of Twice Sim, merged
on 1st November 2010, but relate to IW Bank only.
(*)
In 2010 the item included prior year income of 2,5 million euro following the conclusion of a settlement agreement with former
Directors.
(**)
In 2010 the item included full impairment losses on intangible assets amounting to 1,4 million euro.
(***) In 2010 the item included a provision of 2,3 million euro in addition to that made in 2009 (one million euro), in relation to
differences found when inspections were performed on suspense accounts when the migration to the new IT platform was
performed.
(****) In 2010 the item included an impairment loss on interests held in InvestNet International and Investnet Italia amounting to two
million euro.
For more than ten years IW Bank has specialised in the provision of banking and financial
services to retail and institutional customers almost exclusively through the internet. Its range
of services includes trading in financial instruments, the distribution of OICRs (collective
investment instruments), current accounts, the issue of credit and debit cards, electronic
money, insurance, personal loans and mortgages.
As at 31st December 2010, UBI Banca held 55,274% of the share capital of IW Bank and
Centrobanca held 23,496%, while 10,336% was held by Webstar Sa and 9,765% by other
shareholders and the remaining 1,129% consisted of treasury shares. On that same date the
shares of the bank were listed on the Mercato Telematico Azionario (electronic stock exchange)
operated by Borsa Italiana. Following the joint acquisition by the parent company, UBI Banca,
178
and a major shareholder Webstar Sa of over 90% of the share capital (net of treasury shares)
on 27th October 2010, they announced their intention not to restore the free float of the IW
Bank share. UBI Banca therefore committed itself to complying with the obligation to purchase
the remaining ordinary shares in preparation for the delisting of the share, as already reported
in the preceding section “The consolidation scope”, which may be consulted.
During the year just ended the bank strengthened its business model, took action to
rationalise its equity investments with the mergers of its subsidiary Twice Sim (concluded on
1st November) and Investnet Italia, formerly IW Lux Sàrl5 (decided on 23rd July) and improved
its operating processes. Despite the extent of the action taken, the bank recorded considerable
commercial growth in 2010 which resulted in increases in the main operational performance
indicators and growing attention to customer requirements.
In February 2011 the bank successfully migrated from its legacy IT platform onto a new
platform supplied by the company Cedacri, developed with one of the major technological
centres in Italy specialised in processing banking and payment transactions with the objective,
amongst other things, of improving the operational efficiency of customer services.
In 2010 IW Bank further increased the number of active accounts held, up to 105,8 thousand
from 99 thousand at the end of 2009 (recalculated to include Twice Sim). Again on a like-tolike basis, the average daily number of orders received from customers and implemented fell,
however, to 35,5 thousand (36,4 thousand in 2009).
It is underlined that the figures in reclassified statement of financial position and income
statement presented here have not been restated on a consistent basis to include the figures
for the merged company Twice Sim, but relate to IW Bank only.
From an operational viewpoint, the year ended with a loss of 0,4 million euro compared to a
profit of 4,1 million euro the year before. The result for the year, however, includes nonrecurring expense items totalling 3,9 million euro (net of tax), mainly related to management
decisions concerning the corporate reorganisation of the Group and the replacement of the
bank’s IT system. Net of those extraordinary items profit for the year amounted to +3,5 million
euro.
Net operating income more than halved to eight million euro from 17,5 million euro in 2009
(-9,5 million euro), affected by growth in expense items (+8,5 million euro to 61 million euro),
while operating income, which suffered from a fall in net interest income, decreased by
approximately one million euro to 69,1 million euro.
Operating income included the following:
- net interest income amounting to 24 million euro (-8,1 million euro; -25,2%), the result of a
decrease in interest rates and a change in the composition of the AFS portfolio following the
sale of part of the fixed rate investments;
- net commission income, which increased to 33,1 million euro (+1,3 million euro; +4,2%),
the aggregate result of a fall in commissions on business with customers in the order
routing area, which was offset by an increase in commissions on assets under management
and in the banking area;
- net income from trading hedging and disposal/repurchase activity, which rose to 7,8
million euro (+1,2 million euro; +18,2%) benefiting from 8,7 million euro of profits on the
sale of BTPs in the AFS portfolio;
- other net operating income/(expense), which increased by approximately 4,6 million euro to
4,2 million euro, benefited from a non recurring item of income amounting to 2,5 million
euro following the conclusion of a settlement agreement with former Directors6.
Within operating expenses:
- personnel expense increased to 20,5 million euro (+1,1 million euro), the result, amongst
other things, of an increase in personnel numbers due to the merger of Twice Sim;
5
6
The section “The consolidation scope” may be consulted for further details of the process to streamline the IW Bank Group.
2,1 million euro net of legal costs and the cancellation of a loan to the directors in question. See in this respect the specific subsection in the section “Other information” of this report.
179
-
-
other administrative expenses increased to approximately 32 million euro (+5,5 million
euro) as a result of increases in IT expenses incurred for the IT migration and for disaster
recovery and business continuity and in expenses for advisory services for legal affairs and
CRM;
net impairment losses on property, equipment and investment property and intangible
assets rose to 8,5 million euro (+2 million euro), mainly as a result of full impairment losses
on intangible assets, largely due to the retirement of the previous legacy IT system and, to a
lesser extent, to the retirement of software by the subsidiary InvestNet.
Net impairment losses on loans of one million euro were recognised, a significant reduction
compared to the end of 2009 (-4,6 million euro), while net provisions increased to 2,9 million
euro (+0,7 million euro).
Losses were also recognised on the disposal of equity investments, amounting to two million
euro, due to the impairment losses on the equity investments in InvestNet International and
Investnet Italia.
As concerns the statement of financial position, direct funding exceeded 1,5 billion euro, an
increase of 3% compared to 2009.
During the summer IW Bank placed two tranches of a structured bond with the yield linked to
the performance of the DJ Eurostoxx 5 share index, with capital guaranteed and redemption
after five years. The bonds, which were issued for a nominal amount of 4.361.000 euro
(including 2.259.000 placed with ordinary customers), are listed and traded on the
DomesticMOT market operated by Borsa Italiana.
Indirect funding from customers increased to three billion euro (+26,4%), partly as a result of
good performance by assets under management, which rose from 331 million euro to 497
million euro (+49,9%).
Lending to customers increased over twelve months from 149,5 million euro to 207 million
euro (+38,4%) and consisted of mortgages of approximately 117,6 million euro, personal loans
of 8,8 million euro, the use of credit cards amounting to 14,5 million euro, credit lines for
leveraged trading with financial leverage and to cover temporary overdrafts amounting to 38,7
million euro, while the remaining 27,4 million euro related to “Other transactions” (postal
deposits, security deposits, commercial credit and margins with clearing houses)
The net interbank position, consisting mainly of positions with the Parent, decreased to 401,3
million euro (516,3 million euro in December 2009).
The portfolio of available-for-sale financial assets, amounting to 845 million euro (+57,9
million euro), consisted mainly of Italian government securities, including 794 million euro of
floating rate certificates (CCT).
The proposal to cover the loss of 0,4 million euro is to draw the entire amount from the
retained profit reserve.
180
UBI PRAMERICA SGR SPA
31.12.2010
31.12.2009
Change
% change
OWN "RETAIL CUSTOMERS"
Of which: customer portfolio management
Fund based instruments
FUNDS
of which: Pramerica funds included in fund based instruments
Other duplications
7.724.350
7.264.874
459.476
5.659.178
5.148.719
510.459
6,3%
9,9%
2.065.172
2.116.155
-50.983
-2,4%
18.958.811
20.076.424
-1.117.613
-5,6%
1.882.328
2.097.040
-214.712
-10,2%
125.379
75.624
49.755
65,8%
SICAV’s and other (net of duplications)
371.900
83.567
288.333
345,0%
TOTAL ASSETS UNDER MANAGEMENT
25.047.354
25.252.201
-204.847
-0,8%
924
1.706
(782)
(45,8%)
70.142
14.982
2.048
(43)
539
65.594
22.930
466
667
(539)
4.548
(7.948)
1.582
(710)
(100,0%)
6,9%
(34,7%)
339,5%
n.s.
Operating income
Personnel expense
intangible assets
88.053
(15.490)
(15.114)
91.902
(14.544)
(15.724)
(3.849)
946
(610)
(4,2%)
6,5%
(3,9%)
(120)
(105)
15
14,3%
Operating expenses
(30.724)
57.329
(30.373)
61.529
351
(4.200)
1,2%
(6,8%)
Taxation for the year
292
57.621
(19.146)
(375)
61.154
(19.793)
667
(3.533)
(647)
n.s.
(5,8%)
(3,3%)
38.475
41.361
(2.886)
(7,0%)
142
140
2
Income statement
Net interest income
Performance fees
Net income from trading, hedging and disposal/repurchase activity
Profit for the year
Other information
The figures as at and for the year ended 31st December 2009 have been restated for consistency to include the results of Capitalgest
Alternative Investments SGR Spa and UBI Pramerica Alternative Investments SGR Spa, merged into the company on 1st July 2010.
As at 31st December 2010, UBI Banca held 65% of the share capital of UBI Pramerica SGR and the
remaining 35% was held by Prudential International Investments Corporation.
Following the streamlining of the product range performed in 2009, in 2010 UBI Pramerica
SGR also completed the reorganisation of the Group’s asset management activities, designed
to simplify the management and structure of operations and generally contain costs. In this
respect:
- the merger of Capitalgest Alternative Investments SGR Spa and UBI Pramerica Alternative
Investments SGR Spa into UBI Pramerica SGR Spa became effective from 1st July 2010, as
authorised by the Bank of Italy with a provision of 19th February 20107. The operation –
preceded in March by the repurchase of 3,75% of the share capital from the management of
UBI Pramerica Alternative Investments SGR Spa – produced goodwill arising from the
merger, recognised in the appropriate reserve in equity, of approximately 0,4 million euro,
without any change to the share capital, having cancelled the shares of the merged
companies;
- on the following 3rd August, the transfer (for consideration of 560 thousand euro) to UBI
Pramerica SGR was performed of the entire interest in UBI Management Company Sa held
by UBI Banca Private Investment (99%) and by UBI Banca International (1%).
Following the conclusion of the agreement for the disposal of depository banking operations,
from 31st May 2010 the assets previously administered by the Parent UBI Banca relating to
7
However, the transaction is effective for accounting and tax purposes from 1st January 2010.
181
the management of mutual funds by UBI Pramerica SGR were transferred to RBC Dexia
Investor Services.
The inspections commenced in 2009 by the Bank of Italy were officially concluded in
September with no penalties imposed on the management and supervisory bodies of the
company.
UBI Pramerica SGR Spa received important recognition in 2010:
−
the 2010 Lipper Fund Awards Prize as the “Best Italian asset management company in the large bond class”
as a result of the performance of its bond team over the last three years. UBI Pramerica received two more
prizes awarded to the UBI Pramerica Euro B.T. fund as the best “Bond Eurozone – short term” fund over ten
years and to the UBI Pramerica Portafoglio Moderato fund as the best “Mixed Asset EUR Conservative –
Global” fund over five years;
−
the Triple A Mutual Investment Fund Prize awarded to the UBI Pramerica Portafoglio Moderato fund at the
Milano Finanza 2010 Global Awards ceremony;
−
the 2009 “High Return Prize”, organised by “Il Sole 24 Ore”, awarded in March to the UBI Pramerica Euro
Corporate fund as a result of its performance over three years and third place in the classification as “The best
Italian mutual fund manager in the BIG category” in which companies with assets under management of more
than 4.000 million euro are grouped;
−
the Morningstar Fund Awards Italy 2010 prize as the “Best euro area corporate bond fund”.
Further recognition was also received in the first few months of 2011:
−
the “Capitalgest Alternative Conservative” funds received the 2011 “Premio Mondo Hedge Awards” as the
“best low and medium volatility funds in 2010”;
−
with regard to the 2010 “High Return Prize”, the “UBI Pramerica Obbligazioni Dollari” fund was nominated as
the “Best American bond fund” as a result of its performance over three years, while UBI Pramerica SGR
improved is performance over the previous year by finishing in third place in the classification for “The best
Italian mutual fund manager in the BIG category”
−
the company received the Milano Finanza “Tripla A Fondi Comuni di Investimento” prize for the results
achieved by the “UBI Pramerica Portafoglio Moderato” and “UBI Pramerica Euro Cash” funds over a period
of 36 months
−
UBI Pramerica received four prizes at the 2011 Lipper Fund Awards 2011 granted to: the “UBI Pramerica
Euro B.T.” fund as the best “bond-eurozone-short term” fund over three, five and ten 10 years; the “UBI
Pramerica Euro Corporate” fund as the best “bond euro-corporates” fund over five years; the “UBI Pramerica
Euro Medio/Lungo Termine” fund as the best “bond eurozone long term” fund over five years; and “UBI
Pramerica Portfolio Moderato”, as the best “mixed asset EUR cons-global” fund over five years.
In terms of volumes, total assets under management by UBI Pramerica relating to ordinary
customers amounted to 25 billion euro as at 31st December 2010, a slight decrease compared
to 25,3 billion euro at the end of 2009. If the customer portfolios managed on behalf of
institutional customers are also considered, total assets under management by UBI Pramerica
at the end of 2010 amounted to 29,4 billion euro (net of duplications) compared to 30,4 billion
euro (again net of duplications) twelve months before.
From an operating viewpoint, net operating income, down by 4,2 million euro to 57,3 million
euro, was affected mainly by a contraction in revenues, while expenses remained more or less
unchanged.
Within operating income, the reduction in performance fees (-7,9 million euro; -34,7%) was
only partly offset by the increase in other items of net commission income (a total of +4,5
million euro; +6,9%). Similarly net interest income, penalised by the fall in lending rates,
decreased (-0,8 million euro; -45,8%), while net income from disposal and repurchase activity
(+1,6 million euro) benefited from the sale in the second half of the year of part of the shares in
UBI Pramerica fund classified within the AFS portfolio.
With regard to costs, the increase in personnel expense (+0,9 million euro; +6,5%) was offset to
a large extent by the reduction in other administrative expenses (-0,6 million euro; -3,9%).
As a result of the performance reported above, the year 2010 ended with a profit of 38,5
million euro, a decrease compared to 41,4 million euro earned in the previous year. The
proposal for the allocation of profits is to distribute dividends of 38,4 million euro.
A change in senior management occurred after the end of the year. Paolo Cavrioli, the General Manager –
who was appointed to new important positions in the UBI Banca Group – resigned with effect from 1st
March 2011 and was replaced by Andrea Pennacchia, previously the chief of the Organisation Area at the
Parent.
182
UBI LEASING SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
Due to customers (*)
9.698.555
682.963
9.597.373
776.360
101.182
-93.397
1,1%
-12,0%
-10.501.685
1.598
26
-9.561.805
1.141
26
939.880
457
-
9,8%
40,1%
-
Total assets
289.749
11.601.054
289.104
10.765.141
645
835.913
0,2%
7,8%
2010
114.422
2009
98.776
15.646
15,8%
(2.283)
(14.615)
(4.000)
(3.024)
(1.717)
11.591
(42,9%)
383,3%
Net debt with banks
Income statement
Net interest income
Net loss from trading, hedging and disposal/repurchase activities
44.037
31.962
12.075
37,8%
Operating income
Personnel expense
intangible assets
141.561
(15.820)
(28.979)
123.714
(15.238)
(26.676)
17.847
582
2.303
14,4%
3,8%
8,6%
(603)
(640)
(37)
(5,8%)
Operating expenses
(45.402)
(42.554)
2.848
6,7%
96.159
(114.612)
81.160
(59.320)
14.999
55.292
18,5%
93,2%
(2.646)
20
(62)
15
2.584
5
n.s.
33,3%
(21.079)
447
21.793
(10.137)
(42.872)
10.584
n.s.
n.s.
-
(78)
(78)
(100,0%)
(115)
(115)
(100,0%)
37
(37)
(100,0%)
(20.632)
11.578
(32.210)
242
232
10
-7,12%
32,07%
4,00%
34,40%
3,19%
1,91%
1,45%
2,25%
Profit (loss) on the disposal of equity investments
Pre-tax profit (loss) from continuing operations
Taxes on income for the year for continuing operations (**)
Integration costs
of which: other administrative expenses
taxes
Other information
Financial ratios
R.O.E. [Profit for the year/equity (excluding profit for the year)]
n.s.
(*) The item includes variable rate subordinated bonds subscribed by the Parent amounting to 121,1 million euro (84 million euro at
the end of 2009).
(**) In 2009 the item included non recurring income resulting from an IRAP (local production tax) refund amounting to 0,6 million
euro.
As at 31st December 2010, UBI Banca held 79,9962% of the share capital of UBI Leasing, 18,9965% was
held by Banca Popolare di Ancona Spa and the remaining 1,0073% was held by Banca Cooperativa
Valsabbina Scpa.
After two years of an appreciable contraction in volumes of business, in 2010 some sectors of
the leasing market showed slight signs of recovery, while others confirmed the continuation of
the economic crisis with the absence of investment by firms.
On the basis of Assilea (national association of leasing companies) data, 2010 ended at
national level with total contracts signed worth 27,3 billion euro, an increase of approximately
5% compared to the year before. In terms of business sector there was slight growth in
machinery and equipment (+3,7%; +317 million euro) and automobiles (+1,7%; +97 million
euro), while the property sector produced the best result (+9,4%; +1 billion). The aeronautical
and rail sector, on the other hand, was the only one to perform badly (-16,1%; -207 million
euro).
183
The trend for business was in the opposite direction to that for the sector nationally in the
year just ended with a fall in average business for UBI Leasing. This, however, did not affect its
third place in the Assilea classification (national association of leasing companies) among
leasing firms on the Italian market for volume of contracts signed, even if its market share
decreased to 6,81% (7,95% in 2009).
The company signed 10.216 contracts for a total amount of approximately 1,9 billion euro, a
decrease of 10,4% in volumes and of 4,1% in the number of transactions concluded. As can be
seen from the table, the machinery and equipment and aeronautical sectors recorded the
greatest decreases, although the property sector also contributed to the general reduction,
which was only partly offset by the good result for the automobile sector, which performed
markedly better than the sector nationally, while the trend for the captive business of many
automobile manufacturers was in the opposite direction
Performance by business sector
2010
number
2009
amount
number
amount
% change
% change
number
amount
Auto
5.745
223.580
5.147
193.676
11,6%
of which: - motor vehicles
3.240
103.752
3.122
101.096
3,8%
2,6%
1.560
36.237
1.299
32.059
20,1%
13,0%
- commercial vehicles
- industrial vehicles
Machinery and equipment
Aeronautical
Property
TOTAL
15,4%
945
83.591
726
60.521
30,2%
38,1%
3.402
242
827
390.210
93.689
1.151.425
4.298
303
905
466.805
154.645
1.260.102
-20,8%
-20,1%
-8,6%
-16,4%
-39,4%
-8,6%
10.216
1.858.904
10.653
2.075.228
-4,1%
-10,4%
As concerns the statement of financial position, lending to customers reached 9,7 billion euro,
a slight increase compared to twelve months before (+1,1%). Approximately 28% of this had
been securitised at the end of December.
In order to support businesses on its local markets, a distinguishing characteristic of the company and the
Group historically, UBI Leasing participated in initiatives to assist small-to-medium sized enterprises
adhered to at Group level:
-
the “General agreement” with the European Investment Bank for the grant of subsidised finance;
-
a further extension until 31st July 2011 of the “Common agreement for the deferral of SME debts”8;
Modest performance by lending continued to be accompanied by a progressive deterioration in
the quality of credit, attributable to the protracted economic crisis, which affected the property
and machinery and equipment sectors above all, both on the agent and the banking (captive
market) distribution channels. Gross deteriorated loans rose from 761,7 million euro to 962,2
million euro, with an increase of 200,5 million euro (+26,3%). The reduction in quality mainly
affected both non-performing loans (+267,5 million euro), which now account for half of total
deteriorated loans, and also restructured loans (+52,2 million euro), while decreases were
recorded for impaired loans (-39,8 million euro) and past due exposures (-79,4 million euro),
partly the result of transfers to the non-performing loan class. However, this growth was
accompanied by only a partial increase in the degree of coverage (from 13,5% to 20,1%), which
remains less than the average for the Group, in relation to both the secured nature of the
loans (ownership of the asset leased) and the prevalence of property transactions (more than
70% of outstanding deteriorated loans at the end of 2010). On the other hand the coverage for
performing loans rose from 0,28% to 0,40%, as a result of an increase in impairment losses
recognised in the fourth quarter.
Having reached an extremely critical position, it was necessary to launch a project in that
same period entitled the “Credit quality project” implemented in co-ordination with the Parent,
8
UBI Leasing also adhered to a proposal of the Italian Banking Association to support people hit by the earthquake in Abruzzo by
adapting the agreement mentioned to defer the debts of SMEs to meet specific local needs. The agreement was signed in 2009 by
the Ministry of the Economy, by the Italian Banking Association and by other associations of the Banche-Imprese Observatory. That
measure became operational on 14th August 2010.
184
designed to rapidly and effectively improve credit quality. The project team conducted andepth analysis and review of lending processes, and defined a series of actions that will be
implemented in 2011. This initiative is focusing on analyses of the existing portfolio, the
adequacy of specific impairment losses recognised and on the verification of tools, processes
and organisational units involved in credit management. It will be completed by the end of
June 2011.
Again in order to ensure more precise risk management and credit recovery, the Credit Area
was reorganised in 2010 with the creation of two departments, one for the disbursement of
loans and one for the recovery of credit. The latter was then provided with three services: one
for high risk and past due positions; one for restructured and impaired loans; and finally one
for the management of non-performing loans.
As concerns the financial management of the company:
- a programme to strengthen capital was formulated in the first half of the year, which took
the form of the issuance of a ten-year subordinated bond for a nominal amount of 50
million euro and the early redemption of a ten-year subordinated bond with a nominal
value of ten million euro issued on 22nd December 2004;
- in accordance with Group policies for the management of the structural balance of the
company, further lines of medium-to-long term finance were granted in the second half of
the year amounting to 1.621 million euro.
From an operating viewpoint, the result for the year was affected by high costs due to the
deterioration in credit quality, which more than offset the result for net operating income,
which did in fact increase by 15 million euro compared to the previous year (+18,5% to 96,2
million euro).
Operating income (+17,8 million euro to 141,6 million euro) was driven by net interest income
(+15,6 million euro to 114,4 million euro), while both the trend for other net operating
income/(expense) (+12,1 million euro to 44 million euro) and for net trading and hedging
income (-11,6 million euro to -14,6 million euro) was attributable mainly to the Lombarda
Lease Finance 3 securitisation, which was closed down during the year.
The increase in expenses (+2,8 million euro to 45,4 million euro) was to a large extent due to
other administrative expenses (+2,3 million euro to 29 million euro) and in particular to legal
advisory and credit recovery expenses and to insurance for leased assets.
Net impairment losses on loans doubled from 59,3 million euro in 2009 to 114,6 million euro
in 2010. As a consequence the year ended with a loss of 20,6 million euro compared to a profit
of 11,6 million euro in 2009.
The proposal to cover the loss is to draw on the extraordinary reserve for 18,6 million euro and
on the share premium reserve for the remaining two million euro.
A change in senior management occurred during the year. Gianpiero Bertoli was appointed
Managing Director of the Board of Directors with effect from 1st November to replace Maurizio
Lazzaroni who went into retirement in 2010.
A project to review the entire organisational structure of the company was also launched in
December with the objectives of simplifying and streamlining it. It will be completed by the end of
the first half of 2011.
185
UBI FACTOR SPA
31.12.2010
31.12.2009
Change
% change
Loans to customers
2.744.758
2.323.230
421.528
18,1%
9.539
15.946
-6.407
-40,2%
-2.609.221
107.499
-2.192.398
92.892
416.823
14.607
19,0%
15,7%
2.775.049
2.366.367
408.682
17,3%
Income statement
Net interest income
34.821
-
38.680
23
(3.859)
(23)
(10,0%)
(100,0%)
16.251
2.159
16.260
4.069
(9)
(1.910)
(0,1%)
(46,9%)
Operating income
Personnel expense
intangible assets
53.231
(11.180)
(9.859)
59.032
(10.644)
(10.136)
(5.801)
536
(277)
(9,8%)
5,0%
(2,7%)
(649)
(349)
300
86,0%
Operating expenses
(21.688)
(21.129)
559
2,6%
31.543
(3.147)
37.903
(8.030)
(6.360)
(4.883)
(16,8%)
(60,8%)
(1)
(89)
(80)
(89)
(79)
(100,0%)
(98,8%)
Taxation for the year (*)
28.395
(9.794)
29.704
(10.153)
(1.309)
(359)
(4,4%)
(3,5%)
Profit for the year
18.601
19.551
(950)
(4,9%)
153
147
6
17,30%
40,74%
21,05%
35,79%
0,42%
0,58%
0,15%
0,19%
Due to customers
Net debt with banks
Total assets
Other information
Financial ratios
R.O.E. [Profit for the year/equity (excluding profit for the year)]
(*) In 2009 the item included non recurring income resulting from an IRAP (local production tax) refund amounting to 0,2 million
euro.
UBI Factor, the Group member company which specialises in factoring business, performs
“captive factoring” activity, mainly with major international industrial groups and with public
administrations. In 2010 the company rose from fifth to fourth place nationally in terms of
outstanding amounts (receivables which have been purchased, but not yet received), with a
market share of 6,5%, and in the same position in terms of advances with and without
recourse, with a market share of 7,1%.
Pursuit of policies continued during the year designed on the one hand to gradually reduce
business with public administrations as a percentage of revenues and to abandon high risk
sectors and on the other hand to focus on major large corporate counterparties, with an
increase in business through the network banks in the light of the commercial co-operation
agreement signed in 20089. In order to achieve this a “Large corporate commercial plans”
project was launched to promote growth in business with counterparties of high standing, able
to provide large volumes of business with very low risk.
Constant growth in foreign business continued based on factoring for export and import
transactions with customers of high standing, good profitability and low credit risk, operating
on both established and developing markets.
9
A revision of the contents is currently being evaluated, after two years since it entered into force. The purpose is to render the
commissions paid to the network banks more consistent with UBI Factors commercial strategies and with the contribution made by
the banks themselves on the basis of indications furnished by the company.
186
The foreign investments in both the Polish branch in Krakow and the commercial partnership
with Strateji Faktoring Hizmetleri A.S., a major Turkish factoring company have been
successful in this respect. With regard to the latter, following an appropriate assessment UBI
Factor decided to acquire the company, to allow its large corporate customers to develop their
presence in that particular geographical area, distinguished by increasingly larger domestic
volumes of business. The relative letter of intent was therefore signed in 2010 which, if there
are no changes in regulatory and market conditions, will lead to the gradual purchase of the
entire Turkish company over the next three years.
The year 2010 ended with a profit of 18,6 million euro compared to 19,6 million euro the year
before.
Net operating income generated 31,5 million euro (-6,4 million euro; -16,8%), the aggregate
result of a fall of approximately 10% in operating income (-5,8 million euro to 53,2 million
euro) and a modest increase in operating expenses (+0,6 million euro to 21,7 million euro).
Net operating income included net interest income, down by 10% to 34,8 million euro, but
perfectly in line with trends on the domestic factoring market and other net operating
income/(expense), also down by 1,9 million euro to 2,2 million euro due to the failure of a
significant item of income in 2009 to recur. Net commission income, on the other hand,
remained stable at 16,3 million euro.
Expenses items included an increase to 11,2 million euro for personnel expense (+0,5 million
euro; +5%) due mainly to non-recurring factors (payment of leaving incentives in 2010
amounting to 0,2 million euro; lower costs of 0,3 million in 2009 due to the release of
provisions for redundancies in excess of the expected payments), while the reduction by 0,3
million euro in other administrative expenses was offset by greater amortisation of intangible
assets.
As a consequence, the cost/income ratio worsened by five percentage points, rising from
35,8% to 40,7%.
Net impairment losses on loans more than halved from over eight million euro in 2009, due to
an improvement in the quality of the portfolio, which demonstrated the effectiveness of the
commercial policies in terms of prudent risk management.
As concerns volumes of business, the total turnover for factoring business generated during
the year amounted to 7,6 billion euro (+38,1%), including 7,1 billion euro of factoring business
(+39,2%), which benefited from commercial action targeted at customers of banks in the
Group, which in terms of volumes reached almost 40% of the total result for UBI Factor.
As a consequence, loans to customers amounted to 2,7 billion euro (including 3% relating to
the Polish branch), an increase of 18,1% compared to 2,3 billion euro twelve months before.
Despite the difficult economic situation for domestic and international business, deteriorated
loans fell from 48,8 million euro to 17,3 million euro (-65%). More specifically “non-performing
loans” fell from 13,6 million euro to 11,5 million euro. Impaired positions – consisting mainly
of receivables purchased relating to public administrations and classified as deteriorated loans
because of the remaining duration of the loan and not on the basis of the collectability –
reduced slightly to 4,2 million euro (-0,1 million euro compared to 2009) and exposures past
due and in arrears fell almost to zero from 31 million euro to 1,6 million euro.
The proposal for the allocation of profits is to distribute dividends of 4,9 million after allocating
13,7 million to reserves.
187
Other information
Treasury shares
The companies included in the consolidation did not hold any of their own shares nor those of
the Parent during the course of 2010 with the sole exception of IW Bank which, as at 31st
December 2010 held 831.168 of its treasury shares (corresponding to 1,13% of the share
capital) for a nominal amount of 207.792 euro and recognised at the purchase price of
approximately 2,6 million euro. During the year IW Bank repurchased 4.000 treasury shares
(corresponding to 0,005% of the share capital) with a nominal value of 1.000 euro at a price of
approximately six thousand euro.
Litigation
THE MARIELLA BURANI GROUP
Following on from what has already been communicated in previous periodic financial reports
concerning the Mariella Burani Group, we report that with regard to the creditor court action
taken against Mariella Burani Family Holding Spa (MBFH), Burani Designer Holding N.V.
(BDH), Burani Private Holding Spa (BPH) and the Mariella Burani Fashion Group Spa (MBFG),
Centrobanca’s creditor claims were accepted with a final ruling for all the proceedings with
regard to the receivables resulting from a loan granted in August 2008 to MBFH concerning
the public tender offer on MBFG shares and also with regard to receivables resulting from
other loans granted between March 2004 and June 2007 to MBFG.
As already reported, impairment losses were recognised on the total exposure to the Burani Group
amounting to 56,5 million euro in 2009, with a further 11,3 million euro recognised in 2010. The latter are
also in addition to a provision of two million euro, made against risks of revocation action against Mariella
Burani Family Holding, performed by Centrobanca again in 2010.
In January 2011, Centrobanca received a letter from the official receiver of BDH in which
Centrobanca was held responsible for the bankruptcy of BDH as a consequence of the roles it
played in the public tender offer and of the fall in the price of MBFG shares owned by BDH.
The relative claim for damages amounted to approximately 134 million euro (the same as the
average amount indicated by the court appointed expert for the number of MBFG shares
owned by BDH before the public tender offer).
The letter was examined by external legal advisors and the Board of Directors of Centrobanca
assessed the position carefully, making a formal reply to the official receiver, firmly rejecting
all the allegations made and underlining that the affair had been construed erroneously and in
a contradictory manner.
APPEAL BY BANCA REGIONALE EUROPEA AGAINST A FINE IMPOSED BY THE MINISTRY OF THE ECONOMY
AND FINANCE
In 2001 the Ministry of the Economy and Finance imposed a fine on Banca Regionale Europea
(totalling 10,3 million euro) for alleged infringement of Law No. 197/1991 (the “anti-money
laundering law”).
A settlement agreement was signed in April 2010, which involved the payment of sum of one
million euro to the Ministry of the Economy and Finance, while the latter waived its right to
impose penalties awarded, with the abandonment of all the legal proceedings pending.
For accounting purposes use was made of the provision that had been made of 5,140 million
euro, with the recovery of the part in excess, net of the legal costs, in the form of a release of
provisions for risks and charges (3,9 million euro).
188
CONCLUSION OF THE APPEAL AGAINST THE FINE IMPOSED BY THE ANTITRUST AUTHORITY
On 23rd October 2010 the ruling was published with which the Council of State finally
quashed the appeal lodged by the Antitrust Authority against the ruling of the TAR
(Administrative Tribunal) of Latium No. 3685 of 6th April 2009. This ruling, which upheld the
appeals of all 23 of the banks that were fined – including Banca Popolare di Bergamo, Banca
Popolare Commercio e Industria, Banco di Brescia and Banca Regionale Europea – quashed
the administrative fines which the Antitrust Authority had imposed with a provision of 8th
August 2008, for unfair market practices in relation to the transfer of mortgages.
As already reported, each of the Group banks was fined 450 thousand euro, a sum which was
then returned by the Ministry of the Economy and Finance following the ruling of the court of
first instance. In December that same ministry then made an interest payment at the legal
rate on the sums reimbursed; a total of 74.515 euro recognised in the consolidated income
statement 2010, within item 10, interest income.
The ruling by the Council of State – which almost entirely upheld the grounds given by the
TAR of Latium in the decision of first instance – concluded the affair, testifying to the proper
conduct of the banks in the Group.
NOTIFICATIONS
On 10th March 2010, the Markets-Insider Trading Office Division of the Consob (Italian
securities market authority), notified UBI Banca Scpa, as the company into which Banca
Lombarda e Piemontese Spa (BLP) was merged, of an alleged violation by the Bank pursuant to
article 187-septies of Legislative Decree No. 58/1998 (Consolidated Finance Act) concerning an
affair dating back to the beginning of 2006 relating to possible irregularities pursuant to
article 187 ter of the Consolidated Finance Act (market manipulation) discovered in relation to
trading in listed shares performed by an untrustworthy employee (subsequently dismissed) on
an account of Banca Lombarda and on personal accounts of the employee himself, both by
means of trading performed directly on the Borsa Italiana Spa electronic market and through
orders placed though intermediaries.
After filing it’s defence, UBI Banca received a letter dated 7th March 2011 from the Consob
informing it that “the Commission, having assessed the results of the investigation, had found
no grounds for the adoption of penalties and it has therefore closed the relative proceedings”.
In 2010, the Guardia di Finanza (Finance Police), served eleven “Written notification of
findings” on nine branch managers of Banca Popolare di Ancona in relation to reporting
omissions under “anti-money laundering” laws. In nine cases those notifications were also
served on Banca Popolare di Ancona, as jointly liable.
The bank filed its defence with the Ministry of the Economy and Finance within the set time
limits and appropriate provisions were recognised.
IW BANK
Following inspections which took place between July 2009 and February 2010, facts and
situations of bad management and organisational negligence on the part of former directors
emerged. Consequently, on the basis of a proposal by UBI Banca, the controlling shareholder,
an ordinary shareholders’ meeting of IW Bank held on 6th April 2010 authorised the Board of
Directors of that bank to initiate a corporate liability action, pursuant to Art, 2393, paragraph
2 of the Italian Civil Code, against the former Managing Director, Pasquale Casale, who had
been served with an official written warning in relation to liability for mismanagement,
authorising the board to decide the timing and manner of conducting the action, subject to
advice concerning the conditions and contents of the legal action from the legal advisors of the
bank.
During the shareholders’ meeting held on 24th September 2010, a motion was approved to
abandon the liability action against the former director Pasquale Casale. This was decided
following and in the context of a more general settlement agreement stipulated in July 2010
between UBI Banca and IW Bank on the one hand and Pasquale Casale and other third
parties (Benedetto Marti – former Executive Deputy Chairman of IW Bank – and the company
Casale, Marti & Associati Spa) on the other. This finally concluded the complex litigation
between the parties. The basic terms of the agreement involved the following:
- the payment to IW Bank of a lump sum of 2,5 million euro, which was paid to IW Bank
when the settlement agreement was reached and recognised in the third quarter of 2010
189
(2,1 million euro net of legal expenses and of the cancellation of amounts payable to those
same former company officers). That amount, as provided for in the settlement agreement,
also constitutes, up to an amount of 1.250.000 euro, a guarantee of prompt compliance
with the reciprocal obligations contained within the said agreement;
- a non competition commitment on the part of Casale, Marti & Associati Spa and Mr. Casale
and Mr. Marti until 31st March 2011 and a commitment not to appoint or solicit the
appointment of employees, associate workers, financial advisors or customers of IW Bank
and UBI Banca;
- a commitment on the part of Pasquale Casale and Benedetto Marti to sell to UBI all the IW
Bank shares in their possession (through the company Giudoca and Ottotto) and a
consequent commitment on their part not to purchase shares of IW Bank, neither directly
nor through third parties, for a period of 12 months following the above sale;
- the abandonment by Pasquale Casale of all claims against IW Bank arising from his former
employment relationship as General Manager.
In conjunction with and at the same time as the settlement agreement was concluded, an
agreement was signed between IW Bank and the IT supplier Enterprise Spa designed to settle
all pending items relating to business relations between the bank and Enterprise. The
settlement agreement concluded also requires Enterprise to provide a guarantee to the bank
that it will continue to supply contracted services with the professional diligence required,
until completion of all the activities resulting from the migration of the IT system of the bank
onto the system supplied by the company Cedacri, which occurred in February 2011.
With a letter of 12th April 2010, the Markets Division of the Consob commenced administrative
penalty proceedings, as the outcome of supervisory inspections conducted into IW Bank,
which included the inspection performed between 13th March and 3rd December 2008.
More specifically, the bank was charged with violation – relating to the period prior to the
conclusion of the inspections – of Art. 187 nonies of the Consolidated Finance Act and the
relative regulations to implement it issued by the Consob, which oblige those authorised to
“report transactions which on the basis of reasonable grounds may be considered to constitute a
violation of regulations [concerning market abuse] to the Consob without delay”.
In this respect the Bank filed its defence with the Consob on 7th July 2010 in the name of and
on behalf of all those who had received the letters of notification sent by the Consob on 12th
April 2010, giving the grounds for the defence of the Bank itself.
On 23rd November IW Bank received a communication informing it of the start of the
“investigative part of the decision” by the Consob, with the “Investigative Report” attached,
containing an assessment of the defence filed with the Consob. On the following 23rd
December 2010 a note containing additions to its defence was filed with the Consob, prepared
on behalf of IW Bank and those who had received notifications.
Inspections
In February 2010 the Bank of Italy commenced inspections – pursuant to articles 54 and 68 of
Legislative Decree No. 385/1993 (Consolidated Banking Act) – designed to assess the Group
with regard to the management, governance and control of credit risk in the corporate
customer segment, including the state of progress of the project to introduce an internal rating
system to measure risk, based on internal ratings. The inspections, which involved not only
UBI Banca but also other banks in the Group, were concluded at the end of July.
With a communication of 23rd September 2010, the supervisory authority announced further
inspections - pursuant to article 68 of Legislative Decree No. 385/1993 – designed to assess
the Group for liquidity and interest rate risk and related processes of governance,
management and control. These inspections were concluded in December.
In both cases the considerations expressed by the supervisory authority contained
observations, recommendations and suggestions which will be given the maximum
consideration, in view amongst other things, of the preparation of the new Business Plan.
Finally on 28th January 2011, the Bank of Italy announced the commencement of new
inspections of the UBI Banca Group – again pursuant to Art. 68 of Legislative Decree No.
385/1993 – into the management and measurement of risks assumed by the product
190
companies which use large distribution networks (UBI Banca Lombarda Private Investment
and B@nca 24-7) or operate online (IW Bank).
On 25th October 2010, the on site inspection of Banca Popolare di Bergamo by the Consob,
commenced in December 2009, was completed. It was designed to ascertain proper application
of provisions concerning the MiFID and illiquid securities. The documentation acquired will be
sent by the inspection team to the Intermediaries Supervision Office of the Consob for the
assessment and the preparation of the final report, which had not yet been received at the
date of this report.
SANCTIONS
On 13th December 2010, the Bank of Italy imposed administrative fines totalling 532 thousand
euro on the members of the Board of Directors and Board of Statutory Auditors and on the
General Manager of Prestitalia Spa1.
The fines relate to irregularities found during inspections conducted between 16th September
and 4th December 2009 – when UBI Banca held only an indirect interest of 22,8395% –
following which the supervisory authority issued a temporary order, dated 3rd March 2010, to
suspend activities until the company was recapitalised.
The increase in the capital occurred in that same month of March, when agreements were
signed to acquire control of Prestitalia (see the section “The consolidation scope” for further
information).
Tax aspects
Summary of changes introduced during the year
New legislation on tax that affected the activities of the Group in 2010 was of a limited nature.
It must nevertheless be considered that the banking industry has repeatedly solicited
measures on the following issues:
- abuse of tax law with specific regard to restructuring/reorganisation operations or
transnational financial operations;
- criteria for the deductibility of impairment losses on loans for IRES (corporate income tax)
and IRAP (local production tax) purposes;
- the tax regime for financial instruments;
- the VAT treatment of intragroup transactions;
- and more generally the large tax burden for banks and financial intermediaries also
compared to tax regimes in other EU countries.
A further critical aspect for the sector is the application of IFRS standards, which has not been
effectively accompanied by an appropriate tax framework.
Furthermore, the Italian tax regime generates substantial recognition of deferred tax assets,
which in the near future (Basel 3) will be considered as a negative component for the purposes
of supervisory capital.
Decree Law No. 225/2010 (known as the “thousand extensions”) – converted with Law No. 10
of 26th February 2011 – allows the main items of deferred tax assets (impaired
loans/intangible assets) to be transformed into tax credits if a loss for the year is recognised in
a bank’s separate financial statements. This provision is designed to ensure that the deferred
tax assets just mentioned do not qualify as negative components of supervisory capital.
1
In accordance with Art. 145, paragraph 10 of the Consolidated Banking Act, the company Prestitalia Spa is civilly liable to make the
payment, with the obligation to recover the amounts from those responsible.
191
EXTENSION OF DOMESTIC TAX LEGISLATION TO INCLUDE CONTROLLED FOREIGN COMPANIES
As already reported, article 13 of Decree Law No. 78/2009, converted into Law No. 102/2009,
introduced – with effect from 2010 – new and more stringent tax rules concerning business
with companies located in countries that are considered tax havens, where these are in turn
subsidiaries of Italian companies (CFC - Controlled Foreign Companies – legislation designed
to prevent the attribution to foreign companies of earnings which would otherwise relate to the
Italian parent company).
With Circular No. 51/E of 6th October 2010, the tax authorities furnished practical
instructions on the matter. It specified that the regulations apply to both controlling interests
in companies resident in countries on the “black list” and in companies resident in countries
where the level of taxation is 50% lower than the corresponding national IRES (corporate
income tax) and significant commercial and capital business relations exist with the Italian
Group to which it belongs.
An Italian company will not be obliged to tax the earnings of a foreign subsidiary “for
transparency”, only if it files an application, to the tax authorities by 1st June 2011 and
receives approval in time for the subsequent filing of tax returns for the financial year 2010.
While further clarifications may be issued by the tax authorities, the UBI Group considers that
once the necessary applications have been made, the conditions for taxation “for
transparency” are not met because its subsidiaries do not exceed the thresholds set by the
legislation. In this respect it is not expected that the taxation estimates for 2010 will be worse
than in prior years, since the only subsidiaries subject to the CFC regime are BDG Singapore
Pte Ltd and UBI Trust Company Jersey.
NEW VAT OBLIGATIONS
Decree Law No. 40/2010, converted into Law No. 73/2010, introduced further reporting
obligations for VAT taxpayers. More specifically – from 1st July 2010 – transactions performed
and received with businesses with headquarters, residence or domicile in determined
countries with low taxation must be declared (ministerial decrees of 4th May 1999 and 21st
November 2001). The reporting obligation concerns transactions performed since 1st July
2010. The return must be filed either monthly or quarterly according to the amount of the
transactions performed in the preceding four quarters (greater or less than 50 thousand euro).
The tax authority circular No. 53/E of 21st October 2010 established that for companies
operating in the financial sector and especially for those which adopt the regime pursuant to
Art. 36 bis of Presidential Decree No. 633/1972, the return must only concern income
transactions subject to VAT and therefore all expense transactions are excluded as are income
transactions that are exempt, not subject to Vat and excluded from VAT.
Furthermore, Decree Law No. 78/2010 (converted into Law No. 122/2010) introduced the
obligation to report transactions for amounts of not less than 3.000 euro subject to VAT to the
tax authorities via internet from 2010. The provision concerns all VAT taxpayers with regard to
sales of goods and assets and to services provided and received. The declarations must be
made by 30th April of the year following that to which they relate, while for 2010 only they
must be made by 31st October 2011.
Some exclusions are provided for the banking sector relating to information already present in
the general databank of the tax authorities (e.g. customer accounts).
BUSINESS WITH NON RESIDENTS
– TRANSFER PRICES
Decree Law No. 78/2010, converted into Law No. 122/2010 introduced special procedures to
prevent resident companies which hold business relations with foreign subsidiaries from being
subject to tax penalties in relation to violations concerning the determination of “transfer
prices” for tax purposes pursuant to Art. 110, paragraph 7 of the Consolidated Income Tax
Act.
Following the Provision of the Director of the Tax Authorities issued on 29th September 2010 to
implement the above legislation, the tax authorities furnished practical details with Circular
No. 58/E of 15th December 2010.
Briefly details were provided of the contents of the documentation considered indispensable in
order to be able to benefit from the exemption in the event of assessment for taxes. This
documentation consists of the “master file” (containing information on the Group) and the
“national documentation” (concerning the individual company). While the filing of that
documentation is optional and while transactions with foreign counterparties of the Group are
192
at present limited to financial business relations, the competent offices of the Parent have
been asked to identify the most appropriate methods for measuring and comparing intragroup
prices in line with the OECD Guidelines of 28th July 2010 and the results of this activity will in
any case be used to demonstrate the correct determination of intragroup prices.
Generally speaking, firms which operate with foreign parent companies and subsidiaries are
hopeful that the financial authorities will simplify the obligations at least in relation to the
magnitude of transnational business.
TAX LITIGATION
Three tax inspections by the tax authorities and Guardia di Finanza (finance police) were
initiated and/or concluded at Group member companies in 2010. A new inspection was
commenced at Banca Popolare di Ancona in March 2011 and concerns 2008.
Further details of tax inspections concerning the Group in recent years and of action taken by
the tax authorities are given in the Notes to the Consolidated Financial Statements, Part B,
Section 12.5 Liabilities, Contingent liabilities, which may be consulted.
Investor relations and external communication
RELATIONS WITH ANALYSTS
CORPORATE WEBSITE
AND
INSTITUTIONAL
INVESTORS
AND
COMMUNICATION
THROUGH
THE
The work of the Investor Relations Function, which reports directly to the CEO, continued to
focus on both equity and debt security markets, under the difficult conditions which again
continued to characterise markets in 2010. The objective was to ensure maximum
transparency in disclosures to markets, a constant and traditional trait of the Group, and to
dialogue with operators in the sector.
The following deserve mention in this respect:
• conference calls2 organised when annual and interim results were approved;
• the participation of UBI Banca as a speaker at seven international conferences in Milan,
London and San Francisco to promote knowledge of the Group among institutional “equity”
and “debt” investors and representatives of the international financial community;
• periodic meetings with Italian and international investors and with the analysts who cover
the UBI share (the share is currently followed by 26 brokerage houses, including 18
international, while the remainder are Italian).
Altogether senior management and/or the investor relations officer met more than 150
institutional investors during the year, sometimes on more than one occasion;
• the very many occasions on which analysts and investors were provided with information in
response to telephone or email queries, especially in view of the intense reporting activity
required by the situation on markets.
Work continued during the year on updating and improving the corporate website
www.ubibanca.it, in both the Italian and English version, also in the light of the everincreasing importance of online communications, both in terms of use and regulations.
The efforts and investments made to improve online financial communication resulted in UBI
Banca achieving 14th position in the Italian league table compiled annually by the specialist
web ranking company Hallvarsson & Halvarsson, and it again held second position in the
Italian banking sector.
2
With a view to encouraging the fullest participation of those potentially concerned, all the invitations (prepared in the English
language) are not only sent to a mailing list of analysts and investors, but are also communicated to Consob and Borsa Italia Spa
through NIS (the Borsa Italia network information service) and published on the corporate website at the same time. A copy of the
presentation is made available on the Bank’s website, in good time beforehand.
193
PRESS RELATIONS
Communication activity was performed as always in 2010 with a maximum of transparency
and co-operation with each publication and with each journalist in order to ensure an
accurate perception of the distinguishing features and values of the Group.
The network banks were in involved in the issue of press releases at local level in order to
attain widespread distribution of information to the public.
This was also underlined in the particular focus of the Group’s press releases on agreements
with associations of different types in the single local areas in which it is present, designed to
enhance the value of being “close to local communities” and to give further visibility to the
Parent. As a result the network banks increased their visibility in local publications providing
further visibility to the Parent.
In 2010 UBI Banca obtained visibility in the Italian press in 9.501 articles, 24,4% of which
described it in detail, with a readership (an estimate of the number of people who read these
articles) of more than one billion readers (+21,8% compared to 2009).
The percentage of positive articles out of total high standing articles was 29,2%, while negative
articles accounted for 14,2%.
In this context UBI Banca demonstrated that it was able to maintain a significant presence in
the national and local media, underlining its corporate and capital soundness, especially when
faced with the challenges of stress tests, the implications of Basel 3 and the new Payment
Services Directive regulations. It has consolidated its closeness to local communities which
goes hand in hand with its highly recognised concrete approach to business.
EVENTS AND SPONSORSHIPS
In order to enhance its brand and support commercial advertising the Group has always
promoted a series of events on its local markets.
More specifically, UBI Banca organised a road show in important towns and cities to present
the XV Rapporto Einaudi (Einaudi report) on the global economy and Italy, the result of a
study performed by the Einaudi Centre and supported by UBI Banca.
The “U will be International” event, already mentioned, lasted two days during which firms
were offered the opportunity to meet international specialists of the Group, to see the services
it provides on foreign markets and to take part in specialist workshops.
A seminar was held in 16 Italian towns and cities on the Scudo Ter (third version of the “tax
shield” for the repatriation of capital), on an analysis of the economic scenario, on
interpretation of it and on practical solutions.
Sponsorships performed in 2010 can be divided into two categories: social, recreational and
sports activities and cultural activities.
With regard to the former, partnerships continued with the Goggi Ski Club in Bergamo and the
Bergamo international tennis tournament.
A sponsorship of the cycling team TX Active Bianchi was launched. The team is led by Felice
Gimondi and dedicated to the mountain bike and cross country fields. The sponsorship
supports a sport close to nature out in the fresh air.
Co-operation continued in the cultural field with the “Popotus a scuola” project, organised by
the daily newspaper Avvenire. UBI Banca has supported this initiative for some years. The
objective is to help children to read and understand newspapers by using a specific tool to
attract them.
The Parent sponsored the publication of the seventh edition of the Federculture Annual
Report entitled “Culture is needed today. Creativity and knowledge for social well-being and the
future of the country”. The Annual Federculture Report provides the most complete photograph
of the world of culture in Italy today and it is the most important source of analyses and upto-date information on cultural heritage and activity.
Finally, co-operation with Mediaset was commenced to support a master in marketing,
communication and sales management provided by Publitalia ’80.
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Social and environmental responsibility
By progressively integrating social responsibility objectives, UBI Banca pursues the
convergence of corporate strategies, policies and objectives with its values and principles and
with the expectations of its stakeholders. The objective is to create sustainable value through
the control of reputational risk, to establish a strong and distinctive corporate identity and to
develop a climate of trust with its personnel, its shareholder base and markets
All the organisational units in the Group are involved in defining and achieving social
responsibility objectives, with support from the Corporate Social Responsibility Function,
which formulates proposals for policies and guidelines, contributes to the management and
control system, supports the involvement of stakeholders and manages reporting activities.
A summary of the main traits of social responsibility at UBI Banca is given below, while the
Social Report may be consulted for further information and in-depth analysis.
CORPORATE GOVERNANCE (Code of Ethics)
On conclusion of joint activity involving management, consisting of a series of interviews and a
working group composed of different functions formed by UBI Banca, the network banks and
the principal product companies, on 13th and 14th December 2010 the Supervisory Board and
the Management Board of UBI Banca approved the Code of Ethics, which is as an integral part
of the “Organisational, Management and Control Model pursuant to Legislative Decree
231/01”. All the banks and Group member companies adopted the text approved by UBI
Banca – with amendments to it, where necessary, required by the specific regulations
governing their business sectors and/or the foreign country in which they are incorporated –
through the official approval of it by their respective management bodies.
The document incorporates the Group Charter of Values and makes reference to the universal
principles of the Global Compact. It defines the manner in which UBI Banca and the
companies in the Group intend to pursue their mission and act in dealings with their various
stakeholders, by basing their management and operating activities on observance of moral and
legal obligations contained in the code. The document identifies significant stakeholders in the
Bank’s activities, defines general ethical principles and standards of conduct in dealings with
stakeholders and it gives details for the implementation and monitoring of the Code itself,
including the procedures for reporting suspected violations, how to treat them and the
imposition of penalties where applicable.
The Code applies to all organisational units and geographical areas in which UBI Banca
operates and it is communicated to stakeholders through a variety of channels. It will be the
subject of a training and internal communication programme in 2011 designed for all Group
personnel and will be updated shortly with the issue of a Code of Conduct for personnel,
currently being prepared in accordance with the guidelines contained in the current Art. 8.3 Attachment C, which will form an integral part of it.
THE MARKET
Business management is oriented towards innovation in products and services, marketing
approaches and distribution processes consistent with the ethical, social and environmental
expectations of stakeholders and in implementation of the mutual and community vocation of
the Group.
Intense activity was performed during the year to plan and develop initiatives for the weaker
groups in society and for nonprofit organisations. More specifically, in addition to the action
taken to assist families and businesses reported in the section on commercial activity, the
most important initiatives were as follows:
• the launch of a project to define a service model for third sector organisations and Church
and religious entities with a special range of products and services. Project work included a
series of meetings with representatives of both Church and other organisations in order to
discover their specific needs;
• the continuation of the partnership with PerMicro (a leading player in the Italian sector) to
develop micro-credit for social inclusion and to support employment. PerMicro doubled its
volumes of businesses in 2010 with the grant of 530 micro-loans to families and 105
micro-loans to start micro-businesses, for a total of 2,9 million euro;
• the development of a range of products and services for immigrants, as part of the
programme to acquire new customers on the retail market.
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SOCIAL ASSISTANCE
Depending on the companies to which they belong, Group employees can benefit from the
following: supplementary forms of pension and health care, insurance policies covering death
or permanent disablement, gifts on important occasions such as marriages, births and
adoptions, high school and university graduation, scholarship grants for children, paid leave
to care for disabled family members, the emergency hospitalisation of family members, the
birth or adoption of children and when they start nursery schooling. We also make extra
payments to single income families or those with disabled members.
Services: in addition to company crèches, these include eight company cultural and
recreational clubs, holiday accommodation facilities at tourist locations (available to
personnel and their families under special terms) and shuttle bus services provided for travel
to and from work. Favourable terms and conditions are granted on charges and commissions
for banking services along with loans at special rates for the purchase of homes and
automatic credit on easy terms in line with the best market conditions.
Solidarity: the Group has supported the Clematis Onlus since 2002. It is an association
formed by employees and former employees of the former Banca Popolare di BergamoCredito Varesino. The association was formed to give support to the families of employees,
whether in service or retired, who have non self sufficient, disabled children.
SOCIAL INTERVENTION
The management of social intervention is designed to strengthen and support those large
numbers of nonprofit organisations which work in the following fields: social, recreational and
sport; welfare and solidarity; education and training; culture: university and research;
restoration of artistic heritage and the protection of the environment.
In 2010 the Group, with contributions from the Parent, the network banks, the main product
companies and its foundations, disbursed a total of approximately 16,2 million euro (-18,6%
compared to 2009) in the form of donations and sponsorships. Each entity in the Group
operates independently in response to the demands it encounters and considers consistent
with its own values and social responsibility objectives.
Important initiatives include the longstanding partnership with CESVI (one of the main Italian
NGOs operating in the field of humanitarian emergencies throughout the world) as part of
which UBI Banca supported the initiative “CESVI sUBIto for Pakistan” in 2010 for people in
Pakistan hit by severe floods in the summer of 2010. UBI Banca made its 1.900 branches
available to receive donations from customers ,which amounted to 30 thousand euro. This was
then doubled with a contribution of an equal amount made by the Group for a total donation
of 60 thousand euro.
ENVIRONMENTAL RESPONSIBILITY
In addition to its pursuit of full and substantial compliance with regulations in force, it is
Group policy to contribute to sustainable economic development, thereby also concretely
implementing the principles of the Global Compact.
The environmental policy approved in December 2008 commits the Group to reducing its
environmental impact through the intelligent and responsible management of both direct
impacts (i.e. impacts generated by its own operating activities through the consumption of
resources, the production of waste and harmful emissions) and also indirect impacts (i.e.
impacts generated by the conduct of third parties with whom the Bank does business, such as
its customers and suppliers).
With regard to direct impacts the most important objective achieved in 2010 was the exclusive
use of electricity certified as from renewable sources (RECS certificates) and this made it
possible to reduce total CO2 emissions by 46,6%, compared to 2009. Energy consumption
amounted to 26.129 TOE3 and waste production remained virtually stable (+2,5% for a total of
2.153 tonnes).
As concerns indirect impacts, the Group has been active for some time in its commercial
activities with “green” products, and that is credit lines provided for investments in energy
savings and in the diversification of energy sources, with particular attention given to
3
A tonne of oil equivalent is a unit or measurement which represents the quantity of energy released by burning a tonne of crude oil
and is equal approximately to 42 GJ (billion joules). The value is set by convention, because different types of oil have different
values for the heat of combustion and there are many conventions currently in use.
196
renewable sources or those with a low environmental impact. The New Energy product line is
for businesses. It comes in two versions, Renewables and Photovoltaic, with approximately 700
loans granted in 2010 for a total amount of 300 million euro, while the line Sun Strength is for
private individual customers with over 500 loans granted in 2010 for approximately 12 million
euro.
ECONOMIC REPORT
In 2009 the UBI Banca Group generated economic value of 3.048 billion euro (-0,5% compared
to 2008), 6,4% of which is retained by the Group with the remainder distributed to
stakeholders as follows: 47,6% to
employees, 23,2% to suppliers, 18,8% to public
administrations, 3,2% to registered and unregistered shareholders, 0,4% to third parties and
0,4% to the community and the environment (see the 2010 Social Report for further details).
REPORTING AND CONTROL
The Corporate Social Responsibility Report, together with the social responsibility section of
the Group corporate website, is the main instrument for integrated reporting on the economic
aspects (the economic value generated and distributed), social aspects (commitments,
objectives and results achieved in terms of satisfying the legitimate expectations of
stakeholders) and environmental aspects (commitments, objectives and results for controlling
direct and indirect impacts) of operations.
The Group Social Report is prepared annually in compliance with the 2006 Sustainability
Reporting Guidelines (G3) and the Financial Services Sector Supplement of the Global
Reporting Initiative4 (the 2010 edition again achieved an intermediate B+ level of application)
and it is subjected to an independent audit. It is printed in 3,000 copies, published and
distributed to shareholders on the occasion of the Annual General Meeting together with the
Annual Report entitled “Reports and Accounts”. The 2010 edition has been audited by the
independent auditors, KPMG Spa.
As occurred last year, for a greater and broader readership of the report, two summary
versions will be produced again in 2010. One version for the public with approximately
100.000 copies printed and distributed as a supplement to the weekly Vita Non Profit
magazine and in the branches of the Group and another distributed exclusively in electronic
format on the corporate intranet of the Group. Both the full and the summary versions are
available to the public (the former also in the English language) in the social responsibility
section of the corporate website.
Six meetings were held in the second half of 2010 with representatives of trade associations
and nonprofit organisations, conducted by an independent company using the focus group
method, in order to verify the level of awareness and agreement with the social responsibility
policies of the Group and the quality of the reporting provided in the communities concerned
and to survey expectations and acquire recommendations for improvement. The work
performed in 2010 concluded a three year cycle of meetings, which involved all the main
provinces in which the Group network banks are present.
4
An independent nonprofit foundation located in Amsterdam which was formed from a project started in 1997 by CERES of Boston (a
coalition of investors, environmental organisations and public interest groups which came together to promote corporate social
responsibility by addressing businesses directly on social and environmental issues). Its mission is to produce global standards for
sustainability reporting, thanks to the contribution of hundreds of experts in a large number of countries throughout the world
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Legislation on the protection of personal data
In compliance with Art. 34 of Legislative Decree No. 196 of 30th June 2003 – legislation on the
protection of personal data – the companies of the Group subject to that legislation performed
the periodic update of security programme documents on time and in compliance with the
recommendations contained in the Attachment B, Technical Regulations, of that decree (rule
19).
In order to ensure the accurate and proper preparation of that document – standardising
operational practices where possible and at the same time defining the scope of responsibility
of each actor concerned – the Parent prepared specific corporate guidelines to regulate the
process at UBI Banca, UBI Sistemi e Servizi and in the network banks. These guidelines were
also used as a standard reference for other banks and companies in the Group required to
comply with the legislation.
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Principal risks and uncertainties to which
the UBI Banca Group is exposed
Risks
The UBI Banca Group attributes primary importance to the measurement, management and
monitoring of risk, as activities necessary to the sustainable creation of value over time and to
the consolidation of its reputation on its markets.
In compliance with the regulations in force for the prudential supervision of banks (Bank of
Italy Circular No. 263/2006), the Group has put a process in place to calculate its capital
adequacy requirement – for the present and the future – to meet all significant risks to which
the Group is or might be exposed (ICAAP - Internal Capital Adequacy Assessment Process).
In this respect very careful identification is performed on a continuous basis of the risks
subject to measurement. Risk identification activity is designed to verify the magnitude of
Group risks already subject to measurement and to detect signals of other types of risk which
may manifest. Identification involves precise conceptual definition of the risks to which the
Group is exposed, an analysis of the factors which combine to generate them and a description
of the relative manner in which they manifest. This activity was achieved by means of a
centralised process of analysis supplemented by self assessment conducted on all the entities
of the Group.
Once the activity to identify significant risks is completed, the ICAAP process involves the
measurement of the risks identified and the calculation of the capital required to meet it
(capital adequacy), both at present and in the future. Use is also made of specific and global
stress tests (by assessing impacts on a single risk and on all risks respectively) to perform a
better assessment of exposure to risk and of systems for mitigating and monitoring them and
calculating capital requirements.
The UBI Banca Group has a system of risk governance and management in place which takes
account of organisation, regulations and methods in order to ensure consistency in its
operations and its relative propensity to risk.
In consideration of its mission, the operations of the Group and also the market context in
which it operates, the risks to be subjected to measurement in the ICAAP assessment process
were identified and divided into first pillar and second pillar risks, as required by the relative
regulations.
First pillar risks – already managed under the requirements of supervisory regulations – are as
follows:
• credit risk (including counterparty risk): the risk of incurring losses resulting from the
default of a counterparty with whom a position of credit exposure exists;
• financial risks: risk of changes in market value or in financial instruments held due to
unexpected changes in market conditions and the credit rating of the issuer;
• operational risk: the risk of incurring losses resulting from the inadequacy or malfunction
of procedures, human resources and internal events or from exogenous events. These
include losses resulting from fraud, human error, business disruption, system failure, non
performance of contracts and natural disasters and it comprises legal risk.
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In addition to first pillar risks, second pillar risks were identified, consisting of the following:
• risks defined as measurable, for which established quantitative methods have been
identified, which lead to the determination of internal capital or for which useful
quantitative thresholds or limits can be defined which, combined with qualitative
measurements, allow allocation and monitoring processes to be defined;
y risks defined as non measurable, for which policies and measures for control, reduction or
mitigation are considered more appropriate because no established approaches exist for the
measurement of internal capital that are useful for allocation purposes.
The second pillar risks subject to analysis are as follows:
Measurable risks:
- concentration risk: risk resulting from exposures in the banking portfolio to counterparties,
or groups of counterparties in the same economic sector or counterparties which carry on
the same business or belong to the same geographical area. Concentration risk can be
divided into two types: single name concentration risk and sector concentration risk;
- interest rate risk: current or future risk of a change in net interest income and in the
economic value of the Bank following unexpected changes in interest rates which have an
impact on the banking portfolio;
- business risk: the risk of adverse and unexpected changes in profits and margins with
respect to forecasts, connected with volatility in volumes of business due to competitive
pressures and market conditions;
- equity risk: the risk of losses incurred in the equity investments portfolio.
- property risk: risk of changes in the value of property assets.
By convention measurable risks also include those risks for which, although no well
established approaches exist for the estimate of internal capital, operational limits of a
quantitative nature, for which there is a consensus in the literature, can be set to measure,
monitor and mitigate them. These risks are:
- liquidity risk: the risk of the failure to meet payment obligations which can be caused either
by an inability to raise funds or by raising them at higher than market costs (funding
liquidity risk), or by the presence of restrictions on the ability to sell assets (market liquidity
risk) with losses incurred on capital account;
- structural liquidity risk: the risk resulting from inadequate matching of maturities for
assets and liabilities.
Non measurable risks:
- risks resulting from securitisations: the risk that the underlying economic substance of a
securitisation is not fully reflected in decisions made to measure and manage risk;
- compliance risk: the risk of incurring legal or administrative penalties, substantial financial
losses or damage to reputation resulting from violations of laws and mandatory external
regulations or internal regulations (by-laws, codes of conduct and voluntary codes);
- reputational risk: the risk of incurring losses resulting from a negative perception of the
image of the Bank by customers, counterparties, shareholders of the Bank, investors, the
supervisory authority or other stakeholders;
- residual risk: the risk of incurring losses resulting from the unforeseen ineffectiveness of
established methods of mitigating risk used by the Bank (e.g. mortgage collateral);
- strategic risk: the current or future risk of a fall in profits or in capital resulting from
changes in the operating context, inadequate decision-making, failure to react to changes in
a competitive environment.
* * *
Credit risk constitutes the most important characteristic risk of the UBI Banca Group:
historically this risk accounts for approximately 90% of the supervisory risk capital.
The economic recovery in the year just ended was basically weak, after the substantial
decreases in growth in 2008 and 2009. While timid signs of recovery have been seen, the
protracted difficulties of the economy in general and the related consumer crisis have
200
continued to have a negative impact on the ability of businesses and individuals to meet their
commitments and this has held credit risk at high levels along with increases in problem loans
and the relative provisions.
It is considered that again in 2011 there will only be a slow recovery in the causes of risk in
the financial system and in particular in levels of activity in relation to company earnings and
household income.
As concerns structural liquidity risk, the relationship between sources of funding and those of
lending could be subject to difficulties because on the one hand it will be difficult to reduce
volumes of lending and on the other hand, the need to replace maturing securities and the
progressive impoverishment of households will stifle funding markets. However, given the
maturities of its own bonds, the UBI Banca Group has prepared a structured programme of
new issues which has been fully implemented to-date.
As concerns liquidity risk, problems of trust persist on international and interbank markets,
due above all to fears over the solvency of some sovereign states, in a context of a slowdown in
traditional funding due to the lower available income of households. The country risk effect is
penalising Italian banks with their funding on wholesale markets heavily compared to banks
in other European countries.
Risks other than those just reported, which are of marginal importance within the UBI Banca
Group, are not expected to change during the course of the year.
Detailed information on financial risk management objectives and policies and also on the
exposure of the Group to price risk, credit risk, liquidity risk and the risk of changes in cash
flows – pursuant to article 2428 of the Italian Civil Code – is given in Part E of the notes to the
consolidated financial statements, which may be consulted.
Uncertainties
An uncertainty is defined as a possible event for which the potential impact, attributable to one
of the risk categories just mentioned, cannot be determined and therefore quantified at present.
The scenario unfolding for the Group is one of volumes of business recovering moderately, low
profit margins and high credit risk. While the economic recovery has started, it is progressing
quite differently in different countries: vigorously in emerging economies and slowly in
advanced economies. Other potential vulnerabilities remain: the rapid growth of debt in some
countries in the euro area could trigger doubts over the sustainability of public finances;
markets are still highly volatile and difficulties could arise over the refinancing of huge
quantities of banking debt in competition with sovereign states and businesses.
The elements of uncertainty identified could manifest with impacts attributable basically to
credit risk, interest rate risk and liquidity risk.
In detail, the main uncertainties identified for 2011 are linked to the following aspects:
-
development of the macroeconomic situation: statistics published since the start of 2011
have confirmed the continuation of world growth which would suggest that the recovery will
be consolidated in the current year. Nevertheless temporary slowdowns in growth rates are
not to be excluded.
More specifically emerging countries – the growth drivers throughout 2010 – should
continue to make a positive contribution to the performance of the macroeconomic
scenario, despite the monetary tightening decided by central banks, including those of India
and China, to dampen inflation.
In this international context, Italian GDP grew in real terms in 2010 by 1,2%, driven to a
considerable extent by the boost in exports, although net of exports the balance of foreign
trade decreased. A significant contribution to growth in the economy also came from
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domestic demand net of inventories. Encouraging signs also arrived from industry, with an
average annual increase in output of 5.3% and in manufacturing orders of 13.9%.
With regard to inflation, consumer prices have been affected in recent months, in the euro
area above all, by the sharp increase in raw materials, and in oil prices in particular, in
light of the stronger global economic situation and the geopolitical instability in North Africa
and the Middle East. Trends for commodities prices are also being affected “upstream” with
pressures on production prices.
In any event inflation in Italy in 2010 increased to 1,6%, fuelled mainly by prices for goods
rather than services:
performance of financial markets and the yield curve: the process of the strategy to exit from
the expansionary monetary policies pursued by the ECB to address the market and credit
crises of previous years continued. In this respect the principal longer term (six and twelve
month) refinancing auctions were not renewed, but were replaced by shorter three month
operations. Last year saw growth in pressures connected with the sovereign debt of
peripheral countries in the euro area (Greece, Spain, Portugal and Ireland in particular).
The increases in interbank rates that occurred at the end of 2010 followed the process of
normalisation determined by the gradual removal of extraordinary measures put in place by
the European Central Bank during the last recession, while swap rates fell sharply.
Finally, the risk of high volatility in the yields and therefore in the prices of the portfolio of
owned bonds remains, the result of uncertainties over the solvency of some sovereign states
and the normalisation of monetary policies.
The periodic testing of the recoverability of goodwill is to be set against the background
described. It is based on parameters and information that is significantly affected by the
macroeconomic context and related to difficulties on financial markets. Consequently it is
susceptible to rapid changes;
-
-
changes in the regulatory context: the legislative environment is subject at present to various
changes. These are the result of both enactments at EU and national level, with the relative
regulatory provisions to implement them, regarding the provision of banking services (e.g.
relating to payment services and consumer credit) and also decisions in the courts (e.g.
relating to the form of contracts, interest and other items of remuneration for banking
services). This scenario which has introduced discontinuities in operations, could directly
affect the profits of banks, requiring particular effort both in terms of interpretation and
implementation.
* * *
The risks and uncertainties described above were subject to a process of assessment designed,
amongst other things, to examine the impacts of changes in market parameters and conditions
on corporate performance. The Group does in fact possess instruments to measure the possible
impacts of risks and uncertainties on its operations (sensitivity analysis and stress tests in
particular), which allow it to rapidly and continuously adapt its strategies – in terms of its
distribution, organisation and cost management systems – to changes in the operating context.
Risks and uncertainties are also under constant observation through the implementation of the
policies and regulations to govern risk adopted by the Group: policies are updated in relation to
changes in strategy, context and market expectations. Periodic monitoring of policies is designed
to verify their state of implementation and their adequacy. The findings of the analyses
performed show that the Group is able to meet the risks and uncertainties to which it is exposed,
which therefore confirms the assumption that it is a going concern.
Risks relating to health and safety at the workplace
(Legislative Decree No. 81 of 9th April 2008)
To complete compulsory activity required for compliance with general obligations concerning
health and safety at the workplace, the new risk assessment documents prepared by the
Prevention and Protection Service were approved by the Official Employers of Group
companies in December. These documents were prepared in accordance with articles 28 and
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29 of Legislative Decree No. 81/2008, on the basis of methodological recommendations made
by the Permanent Consultative Commission for Health and Safety at the Workplace (Art. 6 of
Legislative Decree No. 81/2008) for the assessment of work-related stress risks, published by
the Ministry of Labour in a circular letter of 18th November 2010.
The obligation to also assess work-related stress risk, as part of workplace risks, had in fact
been postponed repeatedly because that risk is different from “traditional” accident risks,
where “automatic” techniques of measurement have existed for some time (e.g. noise levels,
number of hours spent using a video terminal). It had therefore been underlined by all trade
unions and associations that there was a need for practical guidelines to follow. The
Commission also stated that the date of 31st December 2010, contained in the article 28
mentioned above, is to be considered the date on which assessment activity commences and
not the date on which it is to be completed by firms subject to the obligation.
With regard to the methodology, the assessment process will be completed in 2011 in close co-operation
with the official Occupational Doctors and with the involvement of a significant sample of employees. It
consists of two stages, one which is necessary and preliminary (the “objective” stage) and a second
potential stage (the “subjective” stage) to be implemented only if the preliminary stage reveals elements of
stress risk.
The preliminary stage consists of measuring numerically appreciable objective factors, relating to: (i)
events in employment relationships (absences, accidents, employment figures, training hours, workrelated litigation, etc.); (ii) the contents of the relationships (work loads and rhythms, hours and shifts,
etc.); (iii) the context (decision-making autonomy, career development, role in the organisations, etc.).
These are then to be used as possible indicators of stress. This is performed to analyse and identify the
organisational antecedents of work-related stress, by acquiring comparative quantitative data, using a
benchmarking process, which also uses data for the sector.
If the findings of the first analysis reveal the presence of stress indicators high enough to
require corrective action, then appropriate preventative action must be planned in addition to
measures already present and in use, independently of the formal obligation to measure stress
recently introduced5.
With regard to the more traditional aspects of regulations governing health and safety at the
workplace, the positive trend for work-related accidents and illnesses in the banking sector
continued. It was again placed in the lowest class both in terms of absolute severity and the
frequency and seriousness of accidents. “Accidents while travelling” which occur while
travelling to and from work were again the most prevalent of total accidents. In this respect
the data for the UBI Banca Group is not only perfectly in line with those for the sector, but
Group also pursues special policies designed to reduce road accident risks at the source, by
encouraging, where possible, the use of public transport even for work activities, or by making
collective transport facilities available, where restructuring processes result in significant
travelling requirements for personnel
As concerns the remaining potential sources of accident risk normally present at the
workplace, such as those connected with ordinary and extraordinary maintenance work
performed at the operating premises of the group (termed “interference risks”) the virtuous
process started in 2009 for the safety management of contracted work continued. This
included greater involvement of the personnel of the Group’s consortium service company
which manages relations with Group suppliers directly, while the practice of ensuring the
participation of members of the Parent’s Prevention and Protection services in meetings for cooperation and co-ordination with contractors, as well as to provide support and advice, was
consolidated.
Much time was also dedicated to safety management for contracted work in the training day
organised for all personnel assigned to emergency management in the local operating units of
the network banks.
Similarly, co-operation between the Prevention and Protection Service of the Parent and the
operating units of the consortium service company responsible for property management also
included accident prevention within its scope along with security issues. It was designed for
5
Examples include the following: the continuous refinement of communication tools in companies; a significant investment in both
commercial and behavioural training; numerous welfare initiatives with supplementary insurance, pensions and health care to
which the company makes a significant financial contribution; the provision, either directly or indirectly, of children’s nurseries;
collective transport facilities, where restructuring processes may result in significant travelling requirements for personnel.
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joint analysis of health and safety issues for personnel, right from the design stages of
buildings, and also to find the most appropriate operational and management solutions.
The risk of robbery in the banking sector and in business units in the distribution network in
particular, where cash is present, remains an important issue, although the number of events
in absolute terms has fallen constantly and substantially. The project for the widespread
distribution of automatic systems for cash management has produced an appreciable
reduction in the quantity of immediately available cash, which is the main objective of bank
robbers.
Nevertheless, there has been a certain increase, compared to the past, of robberies no longer
carried out by single individuals or pairs of robbers, but by organised gangs, who aim to steal
large sums. These have not hesitated to remain in bank premises for long periods, keeping
personnel hostage under threat until timer operated safes open. The phenomenon is not just
significant in terms of the financial damage, but also in terms of prevention risks, because the
long duration of the robberies raises the level of stress to which employees are exposed as a
result of the threats received.
In this respect, the useful psychological assistance provided for years for branch network
personnel was increased and the classroom training programme furnished by specialist
psychologists was continued. In addition, further online training has now been provided to
supplement classroom training, which simulates the real dynamics of the different types of
robbery and as a result of its very interactive nature, provides personnel with a useful means
of learning the correct behaviour to employ on those occasions.
An analysis of the risks and uncertainties to which the UBI Banca Group is exposed in the
application of health and safety legislation must necessarily consider the relationship of that
legislation (which as is known requires those occupying the positions of Official Employer,
senior manager and company officers to act as guarantors and therefore to be personally
liable) to Legislative Decree No. 231/2001, which regulates the administrative liability of legal
entities.
The key connection between Legislative Decree No. 231/2001 and Legislative Decree No.
81/2008 is article 30 of Legislative Decree No. 81, which gives the adoption and
implementation of a management and organisation system for health and safety based on a
specific series of parameters as effective justification for the administrative liability of legal
entities. If that system is defined in compliance with UNI-INAIL guidelines (SGLS 2001) or with
the 2007 OHSAS 18001 British Standard, conformity is presumed under the legislation.
Although the adoption of a system based on the standards just mentioned is not compulsory,
nor can it in any case guarantee absolute “immunity” from penalties in the event of an
accident, it is considered that the progressive adoption of a system based in the UNI-INAIL
guidelines by all the companies in the Group should constitute a concrete objective to be
achieved. Consequently, an external advisory firm has already been commissioned to
implement the relative project.
The unification of the system of accident prevention appointments (appointment of a member of
senior management of each company as an “Official Employer” and the grant of functional
powers by the Official Employer” to senior managers operating in the areas more directly
involved in the operational management of workplace health and safety issues for workers) can
be considered the first and most important step to take in the introduction of the principles
indicated in the legislation in question.
Furthermore, as part of governance activities conducted by the Parent, the protocols for the
assessment of risks, internal procedures, training programmes and procedures for the
management of relations with occupational doctors who work for the UBI Banca Group have
now been standardised, again with a view to consistency and compliance with the
requirements of paragraph 1 of Art. 30 of Legislative Decree No. 81/2008.
204
Subsequent events and the business outlook
for consolidated operations
Part A, Section 4 of the Notes to the Financial Statements may be consulted for significant
events occurring after the end of the year.
***
With regard to the business outlook, we report the forecasts given below on the basis of
information currently available.
The substantial increase in the cost of funding should not compromise the effect on interest
income of repricing action already put in place from the second half of 2010. The general level
of operating income is expected to improve as a result, amongst other things, of repricing
action taken on commission items, partly inherited from the last quarter of 2010 and partly
introduced in the first quarter of the current year.
Operating expenses as a whole are expected to fall slightly compared to 2010. It should
nevertheless be considered that the achievement of this forecast is dependent on the outcome
of national labour contract negotiations. Constant measures are being taken to contain
administrative expenses.
An improvement is also forecast for the quality of credit which should enable an annual level
for the cost of credit to be achieved that is lower than that recorded in 2010, but which will
still be conditioned by the unfavourable economic situation.
Consequently, an improvement in profits on ordinary activities is expected for 2011.
THE MANAGEMENT BOARD
205
STATEMENT OF THE CHIEF
EXECUTIVE OFFICER AND OF THE
SENIOR OFFICER RESPONSIBLE
FOR PREPARING THE COMPANY
ACCOUNTING DOCUMENTS
206
207
Certification of the consolidated financial statements pursuant to Art. 81-ter of the
Consob Regulation 14th May 1999, No.11971 and subsequent modifications and
integrations
1. The undersigned Victor Massiah, Chief Executive Officer, and Elisabetta Stegher, Senior Officer Responsible for
preparing the company accounting documents of UBI Banca Scpa, having taken account of the provisions of
paragraphs 3 and 4 of article 154 bis of Legislative Decree No. 58 of 24th February 1998, hereby certify:

the adequacy in relation to the characteristics of the company and
the effective application
of the administrative and accounting procedures for the preparation of the consolidated financial statements during
the course of 2010.
2. The model employed
The assessment of the adequacy of the administrative and accounting procedures for the preparation of the
consolidated financial statements as at and for the year ended 31st December 2010 was based on an internal model
defined by UBI Banca Scpa and developed in accordance with the framework drawn up by the Committee of
Sponsoring Organisations of the Treadway Commission (COSO) and with the framework Control Objectives for IT
and related technology (COBIT) which represent the generally accepted international standards for internal control
systems.
3.Furthermore, it is certified that:
3.1 the consolidated financial statements:
a) were prepared in compliance with the applicable international financial reporting standards recognised
by the European Community in accordance with the Regulation No. 1606/2002 (EC) issued by the
European Parliament on 19th July 2002;
b) correspond to the records contained in the accounting books;
c) give a true and fair view of the capital, operating and financial position of the issuer and of the group
of companies included in the consolidation.
3.2 the management report comprises a reliable analysis of the performance, operating results and position of the
issuer and of the companies included in the consolidation, together with a description, insofar as they are
known, of the main risks and uncertainties to which they are exposed.
Victor Massiah
Elisabetta Stegher
Chief Executive Officer
Senior Officer Responsible for preparing
the company accounting documents
(signed on the original)
(signed on the original)
208
Independent auditors’ report
209
210
211
Consolidated
financial statements
Consolidated Statement of Financial Position
ble 1: 100O|1 - NO1i “Criteri di redazione” .
sa
ASSET ITEMS (figures in thousand euro)
31/12/2010
10. Cash and cash equivalents
60. Loans to banks
90. Fair value change in hedged financial assets
100. Equity investments
120. Property, equipment and investment property
130. Intangible assets
of which:
goodwill
140. Tax assets:
a) current
b) deferred
150. Non current assets and disposal groups held for sale
160. Other assets
Total assets
LIABILITIES AND EQUITY (figures in thousand euro)
609.040
2.732.751
147.286
10.252.619
3.120.352
101.814.829
591.127
429.073
368.894
2.112.664
5.475.385
683.845
1.575.764
173.727
6.386.257
3.278.264
98.007.252
633.263
301.852
413.943
2.106.835
5.523.401
4.416.660
1.723.231
650.177
1.073.054
8.429
1.172.889
4.401.911
1.580.187
744.435
835.752
126.419
1.522.214
130.558.569
122.313.223
31/12/2010
10.
20.
30.
40.
60.
80.
Due to banks
Due to customers
Securities issued
Hedging derivatives
Tax liabilities:
a) current
b) deferred
90. Liabilities associated with activities under disposal
100. Other liabilities
110. Post employment benefits
120. Provisions for risks and charges:
b) other provisions
140. Fair value reserves
170. Reserves
180. Share premiums
190. Share capital
210. Minority interests
220. Profit for the year
ldi di confronto al 31 dicembre 2006 si riferiscono al solo ex Gruppo BPU Banca.ai
213
31/12/2009
31/12/2009
5.383.977
58.666.157
48.093.888
954.423
1.228.056
993.389
441.433
551.956
2.600.165
393.163
303.572
68.082
235.490
(253.727)
2.362.382
7.100.378
1.597.865
962.760
172.121
5.324.434
52.864.961
44.349.444
855.387
927.319
1.210.867
558.997
651.870
646.320
3.085.006
414.272
285.623
71.503
214.120
235.043
2.207.863
7.100.378
1.597.865
938.342
270.099
130.558.569
122.313.223
“Criteri di redazione” .
Consolidated Income Statement
figures in thousands of euro
2010
10. Interest and similar income
2009
3.525.312
4.213.948
20. Interest expense and similar
(1.378.714)
(1.718.320)
30. Net interest income
40. Commission income
2.146.598
1.378.117
2.495.628
1.329.184
50. Commission expense
60. Net commission income
70. Dividends and similar income
80. Net trading income (loss)
90. Net hedging income
100. Income from disposal or repurchase of:
(196.892)
(199.009)
1.181.225
24.099
1.130.175
10.609
(56.891)
13.864
67.209
15.960
17.057
122.115
a) loans
(3.850)
(81)
b) available-for-sale financial assets
31.245
30.516
-
37.441
c) held-to-maturity investments
d) financial liabilities
110. Net income/expense on financial assets and liabilities at fair value
120. Gross income
130. Net impairment losses on:
a) loans
b) available-for-sale financial assets
d) other financial transactions
140. Net financial income
150. Net insurance premiums
160. Other income/expense of insurance operations
170. Net income from banking and insurance operations
180. Administrative expenses
a) personnel expense
b) other administrative expenses
190. Net provisions for risks and charges
(10.338)
54.239
6.669
(25.151)
3.385.966
(756.653)
3.763.200
(914.371)
(706.932)
(865.211)
(42.364)
(43.883)
(7.357)
(5.277)
2.629.313
-
2.848.829
169.176
-
(149.127)
2.629.313
(2.375.174)
2.868.878
(2.415.610)
(1.451.584)
(1.477.200)
(923.590)
(938.410)
(27.209)
(36.932)
200. Net impairment losses on property, equipment and investment property
(109.838)
(117.408)
210. Net impairment losses on intangible assets
(130.500)
(150.770)
220. Other net operating income
230. Operating expenses
240. Profits of equity investments
250. Net income on property, equipment and investment property and intangible assets at
fair value
239.430
235.042
(2.403.291)
99.027
(2.485.678)
35.578
-
-
260. Net impairment losses on goodwill
(5.172)
-
270. Profits on disposal of investments
14.458
100.099
280. Pre-tax profit from continuing operations
290. Taxes on income for the year from continuing operations
334.335
(231.980)
518.877
(236.885)
300. Post-tax profit from continuing operations
310. Post-tax profit from discontinued operations
102.355
83.368
281.992
5.155
320. Profit for the year
330. Loss for the year attributable to minority interests
185.723
(13.602)
287.147
(17.048)
340. Profit for the year attributable to the shareholders of the Parent
172.121
270.099
In considerazione dell’allineamento delle prassi contabili resesi necessarie a seguito della fusione tra gli ex Gruppi BPU e
Bana Lombarda, nonché della variazione del principio contabile relativo ai piani a benefici definiti per i dipendenti, i
214
rispetto a quelli già pubosito si rimanda a quanto I
Iesposto nella sezione relativa ai “Criteri di redazione” .
icembre 2006 si riferiscono al solo ex Gruppo BPU Banca.
Consolidated statement of comprehensive income
2010
Fig ure s in tho us a nds o f e uro
10.
PROFIT FOR THE YEAR
2009
185.723
287.147
(456.017)
254.041
Other comprehensive income net of taxes
20.
30.
P roperty, equipment and investment property
-
40.
Intangible assets
-
50.
Foreign investment hedges
60.
Cash flow hedges
70.
Foreign currency differences
80.
Non current assets held for sale.
90.
Actuarial gains (losses) on defined benefit plans
1.356
10.682
(12.537)
3.471
100.
Share of fair value reserves of equity investments valued at equity
(30.398)
38.186
110.
Total other comprehensive income (expense) net of taxes
(497.596)
306.380
120.
COM PREHENSIVE INCOM E (EXPENSE) (item 10 + 110)
(311.873)
593.527
130.
CONSOLIDAT ED COMP REHENSIVE INCOME AT T RIBUT ABLE T O MINORIT Y INT EREST S
7.017
18.109
140.
CONSOLIDATED COM PREHENSIVE INCOM E (EXPENSE) ATTRIBUTABLE TO THE
SHAREHOLDERS OF THE PARENT
(318.890)
575.418
215
Statement of changes in consolidated equity
as at 31/12/2010
of the Parent as at 31/12/2010
Consolidated comprehensive income
Stock options
Derivatives on treasury shares
Change in equity instruments
dividends
Repurchase of treasury shares
New share issues
Changes in reserves
Reserves
Balances as at 01/01/2010
Restatement of opening balances
Equity transactions
year profit
Equity attributable to the shareholders
Changes during the year
Allocation of prior
Extraordinary distribution of
(figures in thousands of euro)
Equity attributable to minority interests
to 31/12/2010
Dividends and other uses
•
Share capital:
1.597.865
-
1.597.865
-
-
-
-
-
-
-
-
-
-
1.597.865
514.687
a) ordinary shares
1.597.865
-
1.597.865
-
-
-
-
-
-
-
-
-
-
1.597.865
478.597
-
-
-
-
-
-
-
-
b) other shares
-
-
-
-
Share premiums
7.100.378
-
7.100.378
-
Reserves
-
-
-
-
-
36.090
-
-
-
-
7.100.378
78.777
2.207.863
-
2.207.863
69.878
-
84.641
-
-
-
-
-
-
2.362.382
327.818
Fair value reserves
235.043
-
235.043
-
-
2.241
-
-
-
-
-
-
(491.011)
(253.727)
27.876
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
T reasury shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
270.099
-
270.099
(69.878)
(200.221)
-
-
-
-
-
-
172.121
172.121
13.602
-
11.411.248
- (200.221)
86.882
-
-
-
-
-
-
938.342
34.449
-
-
-
-
-
P rofit for the year
Equity attributabl e to the
sharehol ders of the Parent
11.411.248
Equity attributabl e to minority
i nterests
938.342
(17.048)
-
216
-
(318.890) 10.979.019
7.017
X
X
962.760
• to 31/12/2009
Equity attributable to the minority
intere sts as at 31/12/2009
Consolidated c omprehensive inc ome
Stock options
Derivativ es on treas ury share s
Change in e quity instruments
Extraordinary distribution of
dividends
New share issues
Re purchase of treasury shares
Equity trans actions
Changes in reserves
Divide nds and other uses
Reserves
Equity attributable to the Parent as at
31/12/2009
Change s during the ye ar
Allocation of prior year
profit
Balance s as at 31/12/2008
Restateme nt of opening balances
(figures in thousands of euro)
Share capital:
1.597.865
-
1.597.865
-
-
-
-
-
-
-
-
-
-
1.597.865
435.44 0
a) ordinary share s
b) other s hares
1.597.865
-
-
1.597.865
-
-
-
-
-
-
-
-
-
-
-
1.597.865
-
399.35 0
36.09 0
Share pre miums
Res erv es
Fair value reserves
7.100.378
2.443.259
(70.29 6)
-
7.100.378
2.443.259
(70.296)
9.788
-
(234.165)
-
(11.019)
20
-
-
-
-
-
-
305.319
7.100.378
2.207.863
235.043
85.83 9
347.88 3
52.13 2
Equity instruments
Treasury share s
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
69.001
-
69.001
-
(69.001)
-
-
-
-
-
-
270.099
270.099
17.04 8
11.140.207
-
11.140.207
9.788
(303.166)
(10.999)
-
-
-
-
-
575.418
11.411.248
1.123.637
-
1.123.637
-
-
(203.404)
-
-
-
-
-
18.109
Profit for the ye ar
Equity attributable to the
sharehold ers of the Parent
Equity attributable to minority
interes ts
217
-
X
X
938.342
Consolidated Statement of Cash Flows (Indirect method)
2010
2009
A. OPERATING ACTIVITIES
1. Ordinary activities
- profit for the year (+/ -)
- gains/ losses on financial assets held for trading and on financial assets/ liabilities at f air value ( -/+ )
84.058
918.163
17 2.121
270 .099
5 0.222
11 .287
- gains/ losses on hedging activities (-/+)
(67.209)
(15.960)
- net impai rment losses on loans (+/-)
75 6.653
914 .371
- net impai rment losses on plant, equipment and investment pr operty and intangible assets (+/-)
24 0.338
268 .178
3 2.381
36 .932
- net p remiums not recei ved (-)
-
-
- other insurance i ncome/expense not received (+/-)
-
-
(360.522)
(370.840)
- net p rovisions f or risks and charges and other expense/income (+/-)
- outstanding taxes and duties (+)
- net impai rment losses on disp osal groups held for sale after tax (+/-)
-
- other adjustments (+/-)
2. Cash flows genera ted/a bsorbed by financial asset s
- f inanci al assets held for trading
- f inanci al assets at f air value
- available-for-sale financial assets
- loans to banks: repayable on demand
- loans to banks: other loans
- loans to customers
- other assets
3. Cash flows genera ted/a bsorbed by financial liabilities
- amounts due to bank s r epa yable on d emand
(5.155)
(739.926)
(190.749)
(8.758.001)
( 2.190.821)
(1.213.878)
764 .754
3 3.110
261 .279
(3.908.724)
(1. 409.265)
-
-
15 7.912
(224.560)
(4.514.509)
(2. 504.011)
68 8.088
920 .982
8.769.541
585.854
-
-
5 9.543
1. 343 .512
- due to customers
5.80 1.196
(1. 285.720)
- securities issued
3.74 4.444
908 .888
9 9.036
56 .133
- amounts due to bank s: other payables
- f inanci al liabilities held f or trading
- f inanci al liabilities at fair value
- other lia bilities
Cash flows generated/absor bed by oper ating activit ies
-
-
(934.678)
(436.959)
95.598
( 686.804)
218.289
1.219.026
B. INVESTING ACTIVITIES
1. Cash flows genera ted by
- disp osals of equity i nvestments
8 1.095
-
- dividends received on equity investments
2 4.099
10 .609
-
1. 083 .337
1 4.458
19 .826
- disp osals of held-to-maturity investments
- disp osals of property, equipment and investment pr operty
- disp osals of i ntangible assets
- disp osals of l ines of businesses
2. Cash flows ab sor bed by
- purchases of equity investments
- purchases of held-to-maturity i nvestments
- purchases of property, equipment and investment pr op erty
- purchases of intangible assets
- purchases of lines of business
Cash flows generated/absor bed by investing activities
C. FUNDING ACTIVITIES
811
-
9 7.826
105 .254
(188.471)
( 338.868)
(13.988)
(55.032)
-
(115.373)
(105.507)
(88.390)
(68.976)
(80.073)
-
-
29.818
880.158
-
-
- issues/ repur chases of treasury shares
-
-
- issues/ purchases of equity instruments
-
-
- distribution of dividend s and other uses
(200.221)
(303.166)
(200.221)
( 303.166)
(74.805)
( 109.812)
Cash flows generated/absor bed by funding activities
CASH FLOWS GENERATED/ABSORBED DURING THE YEAR
218
Reconciliation
2010
2009
Cash and cash equivalents at beginning of year
683.845
793.65 7
Cash and cash equivalent inflow on 01/04/2007 following the me rge r
Total net cas h flows generated /absorbed during the year
Cash and cash equivalents: e ffect of c hanges in e xchange rates
(74.805)
-
(109 .812)
-
Cash and cash equivalents at end of year
609.040
683.845
219
PART A – Accounting policies
A.1 – General Part
A.2 – The main items in the financial
statements
PART B – Notes to the consolidated statement
of financial position
Assets
Liabilities
Other information
PART C – Notes to the consolidated income statement
PART D – Consolidated comprehensive income
PART E – Information on risks and the relative
hedging policies
PART F – Information on consolidated equity
PART G – Business combination transactions
concerning companies or lines of business
Notes to the
Consolidated
Financial
Statements
PART H – Transactions with related parties
PART I – Share based payments
PART L – Segment Reporting
The figures contained in the tables in the notes to the financial statements are stated in thousands
of euro, unless specified otherwise
220
Part A – Accounting policies
A.1 – GENERAL PART
Section 1 Statement of compliance with IFRS
This consolidated financial report has been prepared in compliance with the international
financial reporting standards issued by the International Accounting Standards Board (IASB) and
endorsed at the date of publication and also in compliance with the related interpretations of the
International Financial Reporting Interpretation Committee (IFRIC)1.
The report is composed of the statement of financial position, income statement, statement of
comprehensive income, statement of cash flows, statement of changes in equity, the notes to the
financial statements and the consolidated management report, subjected to audit by the
independent auditors and it relates to the companies (subsidiaries, associates and companies
subject to joint control) included in the consolidation.
The consolidated financial statements as at and for the year ended 31st December 2010 have been
clearly stated and give a true and fair view of the capital and financial position, the result for the
year, the changes in equity and the cash flows.
SECTION 2 Basis of preparation
These consolidated financial statements have been prepared according to the general accounting
principles contained in IAS 1 “Presentation of financial statements” and they therefore report
information on a going concern basis, recognising income and expenses on an accruals basis,
without offsetting assets against liabilities and income against expenses.
The information contained in this annual report is expressed, unless otherwise indicated, in euro
as the accounting currency and the financial information, the statement of financial position and
income statement, the notes and comments and the explanatory tables are presented in
thousands of euro. The relative rounding of the figures has been performed on the basis of Bank
of Italy instructions. Items for which there are no values for the current and the previous period
have been omitted.
The mandatory financial statements used in this annual report comply with those defined in Bank
of Italy Circular No. 262/2005, as amended by the first update of 18th November 20092, and in
addition to the accounts as at 31st December 2010, they also provide the same comparative
information as at 31st December 2009.
On 16th February 2011 the Bank of Italy issued “addendum” letter No. 0142023/11 concerning
“financial statements and supervisory reporting” with which it provided banks and financial
intermediaries with replies to requests for clarification that it had received concerning the correct
treatment for the recognition of certain transactions.
From an initial examination of that document, it was found that the recommendations contained
in it are mainly already followed by UBI Group practice.
1
2
See the “List of IFRS standards approved by the European Commission”. The standards listed there and the relative
interpretations are applied on the basis of events occurring that are disciplined by them and the year from which they
must be applied.
And also by subsequent communications from the supervisory authority.
221
However, investigations concerning certain expense items are in progress with the supervisory
authority through the Italian Banking Association and therefore no changes have been made to
the accounting classifications already in use in this year’s financial statements.
Accounting policies
The accounting policies contained in Part A.2 concerning the classification, measurement and
derecognition phases are essentially the same as those adopted for the preparation of the 2009
annual financial statements.
The accounting policies employed tend to apply the cost criterion with the exception of the
following financial assets and liabilities, which are measured using the fair value criterion:
financial instruments held for trading (including derivative products), financial instruments
designated at fair value (in application of the fair value option) and available-for-sale financial
instruments.
To complete the information, non current assets available for sale (and the liabilities associated
with them) have been recognised at the lower of the carrying amount and the fair value (net of
sales costs).
SECTION 3 Consolidation scope and methods
The consolidated financial statements include the financial and operating results of UBI Banca
Scpa and the companies either directly or indirectly controlled by it, including within the scope of
the consolidation also those companies which operate in sectors different from that to which the
Parent belongs and the special purpose entities, when the conditions of effective control exist,
even in the absence of an equity stake, but in relation to what is termed “business”.
The following principal changes occurred in the consolidation scope as compared with the
situation as at 31st December 2009.
Changes in the consolidation scope
‐
‐
‐
‐
‐
‐
the disposal, on 22nd March 2010, of Twice & Partners Corporate Advisers Srl and Twice
Research Srl, both 100% controlled by Twice Sim Spa;
the purchase, on 5th July 2010, of 100% of Sintesi Mutuo Srl by By You Mutui Srl;
the purchase of 100% of Barberini Sa on 9th September 2010 by UBI Banca and, through
it, of Prestitalia Spa which, while previously consolidated according to the proportionate
method, are now consolidated according to the line-by-line consolidation method;
the partial disposal, on 23rd September 2010, of quotas of the company Group Srl which
therefore is no longer included in the consolidation;
a change in the percentage of ownership of Permicro Spa following increases in the share
capital, which increased the number of shareholders and decreased the percentage held by
the UBI Banca Group. The company was therefore excluded from the consolidation;
the disposal of 100% of the quotas held in Secur Broker Srl belonging to the UBI Group on
13th December 2010.
Non recurring operations which occurred within the Group
‐
‐
the merger, on 1st July 2010, of Capitalgest Alternative Investments SGR Spa and UBI
Pramerica Alternative Investments SGR Spa into UBI Pramerica SGR Spa;
with the repurchase of the reciprocally held minority interests which individual banks
came to possess after the “branch switching” operation performed in January, on 27th July
222
‐
‐
‐
2010 the original ownership interests held by UBI Banca in the network banks were
restored, together with the planned reorganisation of the shareholdings of the two
foundations, as reported in full in the management report;
the merger, on 1st November 2010, of Twice SIM Spa into IW Bank Spa;
the merger, on 10th December 2010, of Gestioni Lombarda Suisse Sa into Banque de
Depots et de Gestion Sa;
the merger, on 27th December 2010, of CB Invest Spa into Centrobanca Spa.
See the section “The consolidation scope” in the management report for further information on the
changes just reported and for information on operations which resulted in changes in the
percentages of ownership.
As concerns changes in the percentage of ownership, these did not determine changes in the
methods of consolidating the undertakings involved in those operations, except for those just
mentioned.
With regard to the consolidation methods used, companies subject to control are consolidated
using the line-by-line method, those subject to joint control are proportionately consolidated,
while those interests over which the Group exercises significant influence are valued using the
equity method.
The line-by-line consolidation method
Subsidiaries subject to control are consolidated using the full line-by-line method. The concept of
control goes beyond a majority percentage interest in the share capital of the company invested in
and is defined as the power to determine the financial and operating policies of the entity in
question for the purpose of obtaining the benefits from its activities.
The line-by-line consolidation method involves summing the items of the income statements and
statements of financial position of subsidiaries on a line-by-line basis The following adjustments
are made for this purpose:
(a) the carrying amounts of the subsidiaries held by the Parent and the corresponding part of the
equity are eliminated;
(b) the proportion of equity and of profit or loss for the year attributable to other shareholders is
stated under a separate item
If the results of the above value adjustments are positive, these are stated (after first allocating
them if possible to the assets or liabilities of the subsidiary) as goodwill under item 130
“intangible assets” on the date of the first consolidation. If the resulting differences are negative
they are normally charged to the income statement.
Intragroup balances and transactions, including revenues, costs and dividends are completely
eliminated.
The operating results of a subsidiary that is acquired during the period are included in the
consolidated statement of financial position starting from the date on which it is acquired.
Similarly, the operating results of a subsidiary that is disposed of are included in the consolidated
statement of financial position until the date on which control over the company is released.
The accounts used in the preparation of consolidated financial statements are stated as of the
same date.
The consolidated financial statements have been prepared using uniform accounting policies for
like transactions and events.
If a subsidiary uses different accounting policies from those employed in the consolidated
financial statements for like transactions and other events in similar circumstances, value
adjustments are made to its accounts for the purposes of the consolidation.
223
The proportionate method
An equity investment is considered as subject to joint control even in the absence of equal voting
rights, if control over the operating activities and strategic policies of the company invested in is
shared with others on the basis of contractual agreements.
Application of the proportionate method involves the inclusion in the investor’s statement of
financial position of its share of the assets controlled jointly and of its share of the liabilities for
which it is jointly responsible.
The income statement of the investor includes the relative share of the income and expenses of
the jointly controlled entity.
Intragroup balances and transactions, including revenues, costs and dividends are eliminated on
the basis of the share of joint control.
The investor ceases the use of the proportionate consolidation method for the purposes of
consolidation from the date on which it ceases to have joint control over the investment
The equity method
Equity investments over which the Group exercises significant influence, which is the power to
participate in the financial and operating policy decisions but not to control or have joint control
over them are measured using the equity method.
Under this method an equity investment is initially recorded at cost and the carrying amount is
increased or decreased to reflect the investor's share of the profit or loss of the associate after the
acquisition date. The proportion of the profit or loss for the year made by the investee attributable
to the investor is stated in the income statement of the latter. Dividends received from an investee
reduce the carrying value of the investment; adjustments to the carrying amount may also be
required arising from a change in the portion of the investee's equity attributable to the investor
that have not been recognised in the income statement. These changes include changes arising
from the revaluation of property, equipment and investment property from exchange rate
differences on items in foreign currencies. The portion of those changes attributable to the
investor are recorded directly in its equity.
Where potential voting rights exist, the investor's share of profit or loss of the investee and of
changes in the investee's equity is determined on the basis of present ownership interests and
does not reflect the possible exercise or conversion of potential voting rights.
Where the investee incurs continued losses, if these exceed the carrying value of the investee, the
carrying value is written off and further losses are only recognised if the investor has contracted
legal or implicit obligations or has made payments on behalf of the investee. If the investee
subsequently realises a profit, the investor resumes recognition of its share of the profits only
after reaching the share of the profit which was previously not recognised.
For the purposes of consolidating investments in associates the figures from the financial
statements prepared and approved by the boards of directors of the individual companies are
used. Where accounts prepared according to international standards are not available those
prepared according to national accounting standards are used after first verifying that there are
no significant differences.
The consolidating entity ceases use of the equity method from the date on which it ceases to
exercise significant influence over the associate and the investment is classified under either
“Financial assets held for trading” or “available-for-sale financial assets”, according to the case,
starting from that date on condition that the associate does not become a subsidiary or subject to
joint control.
224
1.
Equity investments in companies subject to exclusive control and to joint control (proportionately consolidated)
He adquart ers
A.1 Line-by-line consolidat ed c ompanies
1. Unione di Banche Italiane Scpa - UBI B anca
2. 24 -7 Finance Srl
3. Albenza 3 Srl
4. Barb erini Sa
5. BDG Singap ore P te L td
6. B@nca 24-7 Spa
7. Banca Carime Spa
8. Banca di Valle Camoni ca Spa
Bergamo
Brescia
Mil an
Brussels (Belgium)
Singapore
Bergamo
Cosenza
Breno (BS)
9. Banca Lomb arda Prefer red Capital C ompany LLC
10 . Banca Lombarda Preferred Securities Trust
11 . Banca Popolar e C ommercio e Industria Capital Trust
12 . Banca Popolar e C ommercio e Industria Funding LL C
13 . Banca Popolar e C ommercio e Industria Spa
14 . Banca Popolar e di Ancona Spa
15 . Banca Popolar e di Bergamo Spa
16 . Banca Regionale Europ ea Spa
17 . Banco di B rescia Spa
18 . Banco di San Giorgio Spa
Delaware (USA)
Delaware (USA)
Delaware (USA)
Delaware (USA)
Mil an
Jesi ( AN)
Bergamo
Cuneo
Brescia
Genoa
19 . Banque de Depots et de Gestion Sa
20 . BPB Cap ital Trust
21 . BPB Funding LLC
22 . BPB Immobiliare Srl
23 . Centroba nca Spa
Lausanne (Switzerl and)
Delaware (USA)
Delaware (USA)
Bergamo
Mil an
24 . Centroba nca Svilupp o Impresa SGR Spa
25 . Corali s Rent Srl
26 . FinanzAttiva Ser vizi Srl
27 . Invesclub Srl
28 . Investnet International Sa
29 . IW Bank Spa
30 . Investnet Italia Srl
31 . Lombard a Lease Fina nce 3 Srl
32 . Lombard a Lease Fina nce 4 Srl
33 . Orio Fi nance Nr. 3 Plc
34 . P restitalia Sp a
35 . Silf - Soci età Italiana Leasing e Finanziamenti Spa
36 . Sintonia Finance Srl
Share capit al
Type of
o wnership
N ame
Details of invest ment
% of vot es
Investing company
% held
PARENT
euro 10.000
euro 10.000
euro 3.092.784
Singapore dollars 325.000
euro 316.800.000
euro 1.46 8.208. 505, 92
euro 2.738.693
4
4
1
1
1
1
1
euro 1.000
euro 1.000
euro 1.000
euro 1.000.000
euro 93 4.150. 467, 60
euro 122.343.580
euro 1 .350.514.252
euro 46 8.880. 348, 04
euro 61 5.632. 230, 88
euro 9 4.647. 277, 50
1
1
1
1
1
1
1
1
1
1
Swiss francs 10.000.000
euro 1.000
euro 1.000.000
euro 185.680.000
euro 369.600.000
1
1
1
1
1
Mil an
Mil an
Bergamo
Mil an
Luxembourg
Mil an
euro 2.000.000
euro 400.000
euro 5.660.000
euro 10.000
euro 12.478.465
euro 18.404.795
1
1
1
1
1
1
Mil an
Brescia
Brescia
Dublin (Ireland)
Rome
Cuneo
Mil an
euro 5.000.000
euro 10.000
euro 10.000
euro 10.000
euro 46.385.482
euro 2.000.000
euro 10.000
1
4
4
4
1
1
4
225
UB I Banca Scpa
X
UB I Banca Scpa
Banque d e Depots et de Gestion Sa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
BPC I Funding Llc - USA
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
BPB Funding Llc - USA
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
Banca Popolare d i Ancona Spa
Centrobanca Spa
UB I Banca Scpa
UB I Banca Scpa
IW B ank Sp a
IW B ank Sp a
UB I Banca Scpa
Centrobanca Spa
IW B ank Sp a
UB I Banca Scpa
UB I Banca Scpa
X
Barb erini Sa
UB I Banca Scpa
X
10,000%
X
100,000%
100,000%
100,000%
92,832%
74,244%
8,716%
100,000%
100,000%
100,000%
100,000%
75,077%
92,898%
100,000%
74,944%
100,000%
36,194%
57,333%
100,000%
100,000%
100,000%
100,000%
92,382%
5,471%
100,000%
100,000%
100,000%
100,000%
100,000%
55,274%
23,496%
100,000%
10,000%
10,000%
X
100,000%
100,000%
X
10 ,00 0%
X
100 ,00 0%
100 ,00 0%
100 ,00 0%
92 ,83 2%
82 ,96 0%
100 ,00 0%
100 ,00 0%
100 ,00 0%
100 ,00 0%
75 ,07 7%
92 ,89 8%
100 ,00 0%
74 ,94 4%
100 ,00 0%
93 ,52 7%
100 ,00 0%
100 ,00 0%
100 ,00 0%
100 ,00 0%
97 ,85 3%
100 ,00 0%
100 ,00 0%
100 ,00 0%
100 ,00 0%
100 ,00 0%
78 ,77 0%
100 ,00 0%
10 ,00 0%
10 ,00 0%
X
100 ,00 0%
100 ,00 0%
X
37. Società Bresciana Immobiliare - Mobi liare SBIM Spa
38. Società Lombarda Immobil iare Spa - SOLIMM
39. UBI B anca Inter national Sa
Brescia
Brescia
Luxembourg
40. UBI B anca Private Investment Spa
41. UBI Factor Spa
42. UBI Fiduciaria Spa
43. UBI Finance Srl
44. UBI Finance 2 Srl
45. UBI Gestioni Fiduciarie Sim Spa
46. UBI Insurance Broker Srl
47. UBI L ease Finance 5 Srl
48. UBI L easing Spa
Brescia
Mil an
Brescia
Mil an
Brescia
Brescia
Bergamo
Brescia
Brescia
49. UBI Mana gement Compa ny Sa
50. UBI Pramerica SGR Spa
51. UBI Sistemi e Servizi Scpa
Luxembourg
Mil an
Brescia
euro 35.000.000
euro 100.000
euro 59.070.750
1
1
1
euro 67.950.000
euro 36.115.820
euro 1.898.000
euro 10.000
euro 10.000
euro 1.040.000
euro 3.760.000
euro 10.000
euro 196.557.810
1
1
1
1
4
1
1
4
1
euro 125.000
euro 19.955.465
euro 35.136.400
1
1
1
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
Banca Popolare di Berga mo Spa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Fiduciar ia Spa
UB I Banca Scpa
UB I Banca Scpa
UB I Banca Scpa
UB I Pramerica SGR Spa
UB I Banca Scpa
UB I Banca Scpa
Banca Carime Spa
Banca Popolare di Berga mo Spa
Banca 24-7 Spa
Banca di Valle C amonica Spa
52. UBI Trustee Sa
Luxembourg
euro 250.000
226
1
Centrobanca Spa
UB I Assicur azioni Spa
UB I Banca Private Investment Spa
UB I Pramerica SGR Spa
UB I Factor Spa
Silf Spa
UB I Insur ance Broker Srl
UB I Banca International Sa
100,000%
100,000%
90,603%
5,852%
0,173%
3,372%
100,000%
100,000%
100,000%
60,000%
10,000%
100,000%
100,000%
10,000%
79,996%
18,997%
100,000%
65,000%
70,919%
2,960%
2,960%
2,960%
2,960%
2,960%
2,960%
1,480%
100,000%
100,000%
100,000%
100,000%
100,000%
100,000%
60,000%
10,000%
100,000%
100,000%
10,000%
98,993%
100,000%
65,000%
100,000%
1,480%
1,480%
1,480%
1,480%
1,480%
1,554%
0,740%
0,074%
0,074%
100,000%
100,000%
A.2 Propor tiona tely consolidat ed companies
1. By You Spa
2. By You Piemonte Srl
3. By You Mutui Srl
4. By You L iguria Srl
5. By You Adria tica Srl
6. Polis Fondi SGR Spa
7. Si ntesi Mutuo Srl
8. UBI Tr ust Company L td
Mil an
Ciriè (TO)
Mil an
Genoa
Bologna
Mil an
Naples
Jersey (Grea t B rita in)
euro 650.000
euro 60.000
euro 60.000
euro 60.000
euro 60.000
euro 5.200.000
euro 87.165
UK sterling 50.000
Key
(1) Type of ownership:
1 = majority of voting rights in ordinary general meetings
2 = dominating influence over ordinary general meetings
3 = agreements with other shareholders
4 = other forms of control
5 = “unitary management” control under Art. 26, paragraph 1, of “Legislative Decree No. 87/92”
6 = “unitary management” control under Art. 26, paragraph 2, of “Legislative Decree No. 87/92
7 = joint control
(2) Votes available at ordinary shareholders’ meetings, distinguishing between actual and potential
227
7
7
7
7
7
7
7
7
UB I Banca Scpa
By You Spa
By You Spa
By You Spa
By You Spa
UB I Banca Scpa
By You Mutui Srl
UB I Banca International Sa
40,000%
100,000%
100,000%
100,000%
100,000%
9,800%
100,000%
99,998%
40,000%
100,000%
100,000%
100,000%
100,000%
9,800%
100,000%
99,998%
2.
Other information
Companies in which no equity investment is held and for which shares have been received as
pledges are excluded from the scope of the consolidation, in consideration of the purpose of
possession, which is to secure the loan granted and not to exercise control and determine
financial and operating policies in order to obtain the economic benefits deriving from them.
The statement of financial position, income statement and statement of cash flows of consolidated
companies which operate with a reference currency other than the euro are translated at the
exchange rate ruling at the end of the year. All the exchange rate differences resulting from the
conversion are recognised in a specific reserve in equity. If an investment is disposed of, this
reserve is eliminated with a simultaneous debit or credit in the income statement at the time of
disposal.
International financial reporting standards require the recognition in the financial statements of
corporate events in a manner which reflects the underlying economic substance of them.
No equity investments held directly or indirectly by the Parent with an interest of less than 20%
existed at the reporting date over which it is considered it exerted significant influence.
Furthermore, with the exception of equity investments held for merchant banking activities
classified under item 20 “Financial assets held for trading”, no equity investments held directly or
indirectly by the Parent with an interest of more than 20% existed as at the statement of financial
position date over which it is considered it did not exert significant influence.
No significant restrictions existed as at the statement of financial position date on the capacity of
associate companies to transfer funds to the investing company in payment of dividends or
repayment of loans or advances.
The reporting dates of the companies valued according to the equity method and consolidated
proportionately were the same as that of the Parent.
SECTION 4 Subsequent events
With regard to the provisions of IAS 10, subsequent to 31st December 2010, the reporting date,
and until 28th March 2011, the date on which the Annual Report was approved by the
Management Board for submission to the Supervisory Board, no events occurred to make
adjustments to the figures presented in the report necessary.
For information purposes, the following events are mentioned:
• on 19th January 2011, the appointment of Maximum Capuano to the top management of
Centrobanca was announced, effective from 1st February. Capuano will occupy the position of
Managing Director as soon as the amendment to the corporate by-laws required for his
appointment can be made;
• on 25th January Centrobanca, received a claim for damages from the official receiver of Burani
Designer Holding NV. The allegations made were all rejected, underlining that the affair had
been construed erroneously and in a contradictory manner (the section “Other information” in
the management report, may be consulted for further information);
• on 11th February 2011, Ktesios Spa – a company that specialises in the salary backed loans
sector and which operates as an agent of B@nca 24-7, providing services, partly through an
associate company, for the recovery of credit (on the basis of “deducted for non payment”
clauses) – in consideration of the constant imbalance in its cash flows, announced that it had
made proposals to its governing bodies to take appropriate corporate ownership initiatives,
including a possible proposal to go into voluntary liquidation. With a provision of 8th March
2011, the Bank of Italy removed the company from the list of specially authorised
intermediaries pursuant to Art. 107 of the Consolidated Banking Act, while it only maintained
its registration on the general list of intermediaries pursuant to Art. 106 of the consolidated
banking act. It was therefore allowed to continue with the disbursement of loans stipulated
prior to the provision;
228
• a series of study and assessment activities were commenced in the first quarter of 2011 of a
strategic nature to identify the best options for the development and enhancement, including
the use of external resources, of the activities performed at present by the Group’s asset
management company in the funds of hedge funds sphere. The finalisation of these activities is
not expected to be complete before the third quarter of the current year, in consideration,
amongst other things, of the complex authorisation procedures involved. It is underlined that
these assessments have no impact on the consolidated financial statements as at and for the
year ended 31st December 2010;
• on 28th March 2011, the Management Board of UBI Banca passed a resolution, with the
approval of the Supervisory Board, to submit a proposal to an extraordinary Shareholders’
Meeting of the Bank, for examination and approval, requesting authorisation to increase the
share capital by up to one billion euro with option rights for shareholders and holders of the
convertible bonds “UBI 2009/2013 Convertibile con facoltà di rimborso in azioni”. That
authorisation will probably be used by the end of the summer, if market conditions allow and
subject to obtaining the necessary official authorisations. The new Business Plan will form an
integral part of the relative prospectus.
The Group has always considered capital solidity to be one of its distinguishing features and its
consolidated capital is of high quality with 94% of its tier one capital consisting of core tier one
capital (share capital + reserves) and only 6% of innovative equity instruments. As a result of
that strength, despite the rapid deterioration in the economic environment, the Group has
continued to be able to support its customers, increase its market share and pay regular
dividends, while it has had no need of government assistance.
Recent developments connected with the expected future levels of the new Basel 3 capital
adequacy requirements, market trends and changes in the economic environment, together
with the imminent launch of a new Business Plan, have nevertheless led the Group to
reconsider its capital position with the following aims:
- to position itself at a higher than average level, by taking action in advance with respect to
its competitors, consistent with the prudence and realism that distinguishes the Group;
- to improve the mix and quality of its capital, strengthening its “common equity”, as required
by the new regulations;
- to avoid the issue, in the short term, of new high cost capital instruments, for which the
future eligibility to meet capital requirements also remains uncertain, in the absence of
certain rules governing the required structure and tax treatment;
- to grasp opportunities for endogenous growth during the period of the Business Plan,
pursuing a sustainable dividend policy at the same time. The amount of the proposed
increase in the share capital is such as to achieve a remuneration of capital consistent with
its cost;
- to support and strengthen the ratings assigned by international rating agencies with
positive impacts on the international perception of UBI Banca and on the cost of funding.
Once the increase in the share capital is completed and with account taken for changes in
liquidity, consideration may be given to the possibility, subject to authorisation from the
competent authorities, of calling in the outstanding innovative equity instruments for a
nominal amount of 453,5 million euro, which presumably will cease to be included in the tier
one capital from the end of 2012. In this respect, the following is underlined:
1. any redemption of currently outstanding innovative equity instruments would give annual
savings on net interest income of approximately 36 million euro;
2. the hypothesis of issuing new instruments eligible for inclusion in supervisory capital for an
amount of one billion euro would have involved a charge (in addition to the regulatory and
tax uncertainties already mentioned) of over 100 million euro per year (at a hypothesised
interest rate of higher than 10%) on net interest income, in other words an impact on
earnings per share and therefore on a possible dividend ranging from approximately 8 to 12
euro cents (depending on the admissibility or not of the tax deductibility of that cost, not yet
regulated).
229
Following the increase in share capital, a simulation on figures as at 31st December 2010
showed a core tier one ratio of 8,01%, a tier one ratio at 8,53% and a total capital ratio of
12,23%. These capital ratios would allow the Group to continue to issue covered bonds without
limits.
A capital buffer already mentioned remains available, consisting of an outstanding convertible
bond amounting to 639 million euro, already convertible since 10th January of this year,
maturing in July 2013 and accounting for approximately 70 basis points of the core tier one
ratio on current figures.
Further benefits may accrue in future from adopting the advanced approach for the calculation
of capital requirements for credit and operational risks.
Finally, with regard to holders of the convertible bond, article 9, “Bondholders rights in the
event of operations concerning the share capital of the issuer”, of the regulations for that bond
issue grants them the opportunity to participate in the proposed share issue with one option
right assigned for each bond held.
As the sole global coordinator, sole bookrunner and underwriter, Mediobanca – Banca di
Credito Finanziario S.p.A. has agreed to underwrite – under the usual terms and conditions for
this type of operation – the subscription of the portion of the share issue that is not taken up
on conclusion of the offer on the stock exchange.
Section 5 Other aspects
Optimisation of branch networks
A full report on the branch network optimisation operation has been given in the “Management
report” section of this publication in the section “Significant events that occurred during the
year”. It involved the transfer, in January, of 14 sets of business units, consisting mainly of
branches and the subsequent reorganisation of the equity investments, which took place in July.
Consequently, the effects of the entire operation have been recognised in the financial statements
presented here.
More specifically, the operation in question, performed between entities under common control,
has been recognised in the separate financial statements of the entities of the UBI Group member
companies in application of “Orientamenti preliminari Assirevi in tema IFRS” (OPI – preliminary
orientations on IFRS of the Italian National Association of Auditors), since operations of this type
do not fall within the scope of IFRS 3 “Business combinations”.
In compliance with those OPI, since the operation was conducted for re-organisational purposes,
it was therefore recognised on the basis of the carrying amounts, i.e. with no recognition through
profit and loss.
The sales of shares by the network banks involved was performed at fair value and the profits on
the sales were recognised in the separate financial statements of those banks in a separate
reserve in equity, except for the recognition through profit and loss of the profits on sales to
counterparties outside the Group.
The effects in the consolidated financial statements were limited to the recognition in equity of the
net impacts of transactions with third parties, while the relative taxes, amounting to 18,3 million
euro, were recognised entirely through profit and loss gross of minority interests.
Hedge Accounting
Until 31st December 2009 the Group used a strategy to hedge interest rate risk for fixed rate
medium-to-long term assets in compliance with the version of IAS 39 endorsed by the EU (termed
a “carve out”), which allows a predetermined amount of contractually agreed cash flows (amount
of cash) to be hedged, for which an entity intends to take out interest rate hedges.
230
Following the entrance into force of new legislation (the “Bersani Decree”), when interest rates
suddenly fell, the historical data and the forecast expected cash flows from repayments changed
substantially and it became necessary to refine the Group’s hedging methods, based nevertheless
on interest rate hedges, using the same hedging instruments.
To achieve this, the amount of cash hedged that had reduced following early repayments,
renegotiations and defaults was reconstituted with effect from 1st January 2010. From an
operational viewpoint the fixed rate assets previously not hedged were reclassified into portfolios
subject to hedging. Also the refinement of the method used to hedge interest rate risk on fixed
rate medium-to-long term assets involved a change to a percentage hedging approach. This
percentage represents the expected cash flows because it is established on the basis of an
estimate of early repayments which will occur in future and may be revised up to a maximum of
100% of the remaining portfolio as a function of changes in the estimates of early repayments,
performed necessarily over the duration of the hedging transactions, in order to measure the
expected risk on the portfolio of outstanding mortgages.
On aggregate, the above involved the recognition of income in the income statement on 1st
January 2010 of 22 million euro net of tax, which partly offset the negative impact of repayments,
renegotiations and defaults in 2010, amounting to approximately 80 million euro net of tax.
Collective impairment losses on performing loans
The credit management and monitoring process updating was completed during the year and it
included the measurement of collective impairment losses on the performing loans of the network
banks.
The activity consisted basically of the scheduled changes to the algorithm used to calculate
collective impairment losses, in order to fully adopt the data obtained from the Basel 2 model in
single entities.
The data in the financial statements as at and for the year ended 31st December 2010 were
therefore the first in which the provision for the collective impairment losses of the Group’s
network banks were calculated by the simple multiplication of the carrying amount, of the
operational LGD (estimated according to the model) and of the PD (resulting from the application
of rating models). This was performed in compliance with the decision taken by the Parent
concerning the impairment of performing loans, which abandoned the reproportioning approach
introduced at the end of 2008, now that the process designed to gradually eliminate the
mechanism of redistributing the provision had been completed.
At the same time a periodic revision of risk estimates was performed by updating risk parameters.
This activity resulted in an increase in collective impairment losses in the Group’s network banks,
amounting to 22,4 million euro, due to the inclusion of the historical data series for the more
recent years, which are critical in terms of risk.
The introduction of the new generation of rating and LGD models within the Basel 2 validation
plan on the companies regulatory segment is now being programmed in 2011.
Accounting treatment for the “overdrawn penalty”
As already reported in the interim financial report as at and for the period ended 30th September
2010, last August, the UBI Group preliminarily revised its regulations for overdrawn penalty
charges, before broader action is taken to revise terms and conditions for customers. This penalty
is applied when accounts become overdrawn without authorisation, when overdraft limits are
exceeded and when accounts continue to be overdrawn and it is basically set at a fixed amount
231
when unauthorised overdrafts exceed a certain amount and when an account has a negative
balance for several working days.
The reason for this new regulation lies with the increased credit risk from overdrawn positions for
which the bank must obtain adequate remuneration also for exceeding authorised credit limits
and for unauthorised overdrafts. These are situations which imply the increased credit risk just
mentioned and for which the Bank incurs an extraordinary cost for rapid processing, operational
and monitoring activities to manage that risk.
In consideration of the above, the proceeds from overdrawn penalty charges under the new
commission regime are recognised in both the mandatory financial statements pursuant to the
Bank of Italy circular No. 262/2005 and in the reclassified financial statements within the item
“Interest and similar income”. This decision is based on the fundamental assumption that that
remuneration is undoubtedly connected with the use of liquidity over time and does not therefore
constitute remuneration for a service. This treatment complies with the sector recommendation
which emerged from a broader discussion of the nature of “commitment fees”.
Use of estimates and assumptions in the preparation of the consolidated financial
statements
Statement of financial position items are measured according to the policies set out in subsequent
Part A.2 “The main statement of financial position items” of these accounting policies.
Where it is impossible to measure items in the financial statements with precision, the application
of those policies involves the use of estimates and assumptions which may even have a significant
effect on the amounts recognised in the statement of financial position and in the income
statement.
The use of reasonable estimates forms an essential part of the preparation of financial statements
and we have listed here those items in the financial statements in which the use of estimates and
assumptions is most significant:
measurement of loans;
measurement of financial assets not listed in active markets;
measurement of intangible assets and equity investments;
quantification of provisions for risks and charges
quantification of deferred taxes;
definition of the depreciation and amortisation charges for property, equipment and
investment property and finite life intangible assets.
Furthermore, in this respect an adjustment may be made to an estimate following a change in the
circumstances on which it was based or if new information is acquired or yet again on the basis of
greater experience. A change in an estimate is applied prospectively and it therefore generates an
impact on the income statement in the year in which it is made and, if it is the case, also in future
years.
No significant changes were made this financial year to the criteria previously employed for
estimates in the financial statements as at 31st December 2009.
*******
Amendments to IAS 39
While the process of the full revision of IAS 39, is still in progress and should be concluded by the
end of the first half of 2011, at present no documents issued by the IASB have been endorsed by
the European Commission.
232
A brief summary of the state of revision of the above standard is given below.
Phase 1 Classification and Measurement
On 12th November the International Accounting Standards Board (IASB) approved the final
version of IFRS 9 “Financial Instruments”, the new accounting standard destined to replace the
part concerning the classification and measurement of financial assets contained in IAS 39
“Financial instruments: recognition and measurement”, thereby completing the first phase of the
project to fully revise that accounting standard.
In consideration of the criticisms received during the consultation period, the standard has not
been endorsed by the European Commission and is therefore not currently applicable to the
financial statements of European countries. Consequently the endorsement phase for the
revision of IAS 39 has been postponed.
On 28th October 2010, the IASB published new provisions concerning the classification and
measurement of financial liabilities. More specifically, these new provisions, which basically
confirm the framework already provided by IAS 39, normally require, in the case of the application
of the fair value option, the recognition of changes in value attributable to credit ratings in the
statement of comprehensive income and no longer in the income statement.
Phase 2 Impairment
On 5th November 2009, the IASB published an exposure draft document, for the normal
consultation, entitled “Financial Instruments; Amortised Cost and Impairment”.
The draft version of that document, which proposes a revision of the procedures for the
calculation of impairment losses of all financial assets measured at amortised cost, according to
the “expected loss” model (which involves the recognition of expected losses over the whole
contractual life of an asset), was subject to numerous criticisms by international commentators.
These concerned in particular the complexity of its application and its concrete inapplicability to
what are termed “open” portfolios. Consequently on 31st January 2011 the IASB published a
consultation document jointly with the FASB entitled “Supplement ‘Financial Instruments:
Impairment’”, as a supplement to the “Financial Instruments: Amortised Cost and Impairment”
exposure draft published in 2009, designed to resolve the main issues and practical problems
brought up by commentators for the implementation of the proposed method of calculating
expected losses.
Phase 3 Hedge Accounting
On 9th November 2009, the IASB published an exposure draft document, for the normal
consultation which ended on 9th March 2011, entitled “Hedge Accounting”.
This document, which does not address the still controversial issue of macrohedging, subject to
further study, is intended by the IASB to achieve the following:
to align the accounting treatment with a risk management approach;
to introduce a standard that is more focused on the objective to be achieved when a hedge
contract is taken out and on the procedures with which it is to be achieved.
233
Briefly, the new proposals contained in the exposure draft concern the following:
a change in the recognition of fair value hedges;
the introduction of the possibility of changing the weighting of the hedging ratio of the
hedging relationship by “rebalancing” it, if it is still in line with the initial purpose;
the introduction of the possibility of performing hedges using a “layer approach”;
the possibility of hedging net positions;
the elimination of the compulsory 80%-125% limits for quantitative tests performed on
the effectiveness of a hedge;
the elimination of the possibility of hedging financial instruments, the measurement of
which does not affect profit and loss;
recognition of the time value premium of options.
To complete the project in question the IASB added a further phase for “Asset and Liability
Offsetting”. On 28th January 2011, the IASB released an exposure draft, entitled “Offsetting
Financial Assets and Financial Liabilities”. Its purpose is to address the issue of offsetting
positions on derivative contracts and other financial instruments in the financial statements,
which might involve significant differences in the reporting of financial institutions.
List of the main IFRS standards endorsed by the European Commission
IAS/IFRS
ACCOUNTING STANDARD
IAS 1
Presentation of financial statements
IAS 2
IAS 7
Inventories
Statement of cash flows
IAS 8
Accounting policies, changes in accounting estimates and errors
IAS 10
Events after the reporting date
IAS 11
Construction contracts
IAS 12
Income taxes
IAS 16
Property, plant and equipment
IAS 17
Leases
IAS 18
IAS 19
Revenues
Employee benefits
IAS 20
IAS 21
Accounting for government grants and disclosure of government
assistance
The effects of changes in foreign exchange rates
IAS
IAS
IAS
IAS
IAS
Borrowing costs
Related party disclosures
Retirement benefit plans
Consolidated and separate financial statements
Investments in associates
23
24
26
27
28
234
ENDORSEMENT
Reg. 1274/2008,
53/2009, 70/2009,
494/2009, 243/2010,
149/2011
Reg. 1126/2008
Reg. 1126/2008,
1274/2008, 70/2009,
494/2009, 243/2010
Reg. 1126/2008,
1274/2008, 70/2009
Reg. 1126/2008,
1274/2008, 70/2009,
1142/2009
Reg. 1126/2008,
1274/2008
Reg. 1126/2008,
1274/2008, 495/2009
Reg. 1126/2008,
1274/2008, 70/2009,
495/2009
Reg. 1126/2008,
243/2010
Reg. 1126/2008, 69/2009
Reg. 1126/2008,
1274/2008, 70/2009
Reg. 1126/2008,
1274/2008, 70/2009
Reg. 1126/2008,
1274/2008, 69/2009,
494/2009, 149/2011
Reg. 1260/2008, 70/2009
Reg. 632/2010
Reg. 1126/2008
Reg. 494/2009
Reg. 1126/2008,
IAS 29
Financial reporting in hyperinflationary economies
IAS 31
Interests in joint ventures
IAS 32
Financial instruments: presentation
IAS 33
Earnings per share
IAS 34
Interim financial reporting
IAS 36
Impairment of assets
IAS 37
Provisions, contingent liabilities and contingent assets
IAS 38
Intangible assets
IAS 39
Financial instruments: recognition and measurement
IAS 40
Investment property
IAS 41
Agriculture
IFRS 1
First-time adoption of international financial reporting standards
IFRS 2
Share-based payment
IFRS 3
IFRS 4
Business combinations
Insurance contracts
IFRS 5
Non-current assets held for sale and discontinued operations
IFRS 6
IFRS 7
Exploration for and evaluation of mineral resources
Financial instruments: disclosures
IFRS 8
Operating segments
SIC/IFRIC
INTERPRETATION DOCUMENTS
235
1274/2008, 70/2009,
494/2009, 495/2009,
149/2011
Reg. 1126/2008,
1274/2008, 70/2009
Reg. 1126/2008,
70/2009, 494/2009,
149/2011
Reg. 1126/2008,
1274/2008, 53/2009,
70/2009, 495/2009,
1293/2009, 149/2011
Reg. 1126/2008,
1274/2008, 495/2009
Reg. 1126/2008,
1274/2008, 70/2009,
495/2009, 149/2011
Reg. 1126/2008,
1274/2008, 69/2009,
70/2009, 495/2009,
243/2010
Reg. 1126/2008,
1274/2008, 495/2009
Reg. 1126/2008,
1274/2008, 70/2009,
495/2009, 243/2010
Reg. 1126/2008,
1274/2008, 53/2009,
70/2009, 494/2009,
495/2009, 824/2009,
839/2009, 1171/2009,
243/2010, 149/2011
Reg. 1126/2008, Reg.
1274/2008, Reg. 70/2009
Reg. 1126/2008,
1274/2008, 70/2009
Reg. 1126/2009,
1164/2009, 550/2010,
574/2010, 662/2010,
149/2011
Reg. 1126/2008,
1261/2008, 495/2009,
243/2010 , 244/2010
Reg. 495/2009, 149/2011
Reg. 1126/2008,
1274/2008, 1165/2009
Reg. 1126/2008,
1274/2008, 70/2009,
494/2009, 1142/2009,
243/2010
Reg. 1126/2008
Reg. 1126/2008,
1274/2008, 53/2009,
70/2009, 495/2009,
824/2009, 1165/2009,
574/2010, 149/2011
Reg. 1126/2008,
1274/2008, 243/2010,
632/2010
ENDORSEMENT
IFRIC 1
IFRIC 2
IFRIC 4
IFRIC 5
IFRIC 6
IFRIC 7
IFRIC 9
IFRIC 10
IFRIC 12
IFRIC 13
IFRIC 14
IFRIC 15
IFRIC 16
Changes in existing decommissioning, restoration and similar
liabilities
Members' shares in co-operative entities and similar
instruments
Determining whether an arrangement contains a lease
Reg. 1126/2008,
1274/2008
Reg. 1126/2008,
53/2009
Reg. 1126/2008,
70/2009
Reg. 1126/2008
Rights to interests arising from decommissioning, restoration
and environmental rehabilitation funds
Liabilities arising from participating in a specific market - waste Reg. 1126/2008
electrical and electronic equipment
Applying the restatement approach under IAS 29 “Financial
Reg. 1126/2008,
reporting in hyperinflationary economies”
1274/2008
Reg. 1126/2008,
Reassessment of embedded derivatives
495/2009, 1171/2009,
243/2010
Reg. 1126/2008,
Interim financial reporting and impairment
1274/2008
Reg. 254/2009
Service concession arrangements
Customer loyalty programmes
Prepayments of a minimum funding requirement
Agreements for the Construction of Real Estate
Reg. 1262/2008,
149/2011
Reg. 1263/2008, Reg.
1274/2008, 633/2010
Reg. 636/2009
IFRIC 17
Distributions of non-cash assets to owners
Reg. 460/2009, Reg.
243/2010
Reg. 1142/2009
IFRIC 18
Transfers of assets from customers
Reg. 1164/2009
IFRIC 19
Extinguishing financial liabilities with equity instruments
Reg. 662/2010
SIC 7
Introduction of the euro
SIC 10
Government assistance – no specific relation to operating
activities
Hedges of a net investment in a foreign operation
SIC 12
Consolidation – special purpose entities
SIC 13
Jointly controlled entities – non-monetary contributions by
venturers
SIC 15
Operating leases – Incentives
SIC 21
SIC 25
SIC 27
Income taxes – Recovery of revalued non-depreciable assets
Income taxes – Changes in the tax status of an enterprise or its
shareholders
Evaluating the substance of transactions in the legal form of a
lease
SIC 29
Service concession arrangements: disclosures
SIC 31
Revenue – Barter transactions involving advertising services
SIC 32
Intangible assets – Website costs
Reg. 1126/2008,
1274/2008, 494/2009
Reg. 1126/2008,
1274/2008
Reg. 1126/2008
Reg. 1126/2008,
1274/2008
Reg. 1126/2008,
1274/2008
Reg. 1126/2008
Reg. 1126/2008,
1274/2008
Reg. 1126/2008
Reg. 1126/2008,
1274/2008, 70/2009
Reg. 1126/2008
Reg. 1126/2008,
1274/2008
For full information and to supplement the information given in the interim reports for the
period in question, on 19th February 2011 Regulation No. 149/2011 was published in the
Official Journal of the EU. It introduces various marginal amendments to international reporting
standards as part of the annual improvement process designed to simplify and clarify them.
These amendments, which become compulsory for the financial year 2011 at the latest, concern
various financial reporting standards as can be seen from the details given in the list above.
236
A.2 – THE MAIN ITEMS IN THE FINANCIAL STATEMENTS
1. Financial assets and liabilities held for trading and financial
assets and liabilities at fair value
This category includes:
1.1. Definition of financial assets and liabilities held for trading
A financial asset or liability is classified as held for trading (Fair value through profit or loss –
FVPL) and is recognised under either item 20 “Financial assets held for trading” or item 40
“Financial liabilities held for trading”, if it is:
acquired or incurred for sale or repurchase in the short term;
part of a portfolio of identified financial instruments which are managed together and for which
there is evidence of a recent and effective strategy of short term profit taking;
a derivative (except for derivatives designated and effective as a hedging instrument – see the
relative section below).
1.1.1. Derivative financial instruments
A “derivative” is defined as a financial instrument or other contract with the following
characteristics:
its value changes in response to the change in an interest rate, in the price of a financial
instrument, in a commodity price, in a foreign currency exchange rate, in a price, interest rate
or credit rating index, or credit worthiness index or other specific variable;
it requires no initial investment, or a net initial investment that is smaller than would be
required for other types of contract from which a similar response to changes in market factors
would be expected;
it is settled at a future date.
The UBI Group holds derivative financial instruments for both trading and for hedging purposes
(see the relative section below for information on the latter). All derivatives held for trading are
stated initially at fair value which generally is the same as cost. Subsequently derivative contracts
are stated at fair value, which is the value that the Group would pay or receive if it terminated the
contract at the date of valuation. Each change measured in the fair value is recognised in the
income statement within the item 80 “Net trading income (loss)”.
The fair value of derivatives is measured by applying the methodology described in the section
below “Measurement Criteria”.
1.1.2. Embedded derivative financial instruments
An "embedded derivative financial instrument" is defined as a component of a hybrid (combined)
instrument which also includes a “host” non derivative contract such that some of the cash flows
of the combined instrument behave in a way similarly to the derivative as a stand-alone
instrument. The embedded derivative is separated from the host contract and treated in the
accounts as a stand-alone derivative if and only if:
the economic risks and characteristics of the embedded derivative are not closely related to the
economic risks and characteristics of the host contract;
a separate instrument with the same conditions as the embedded derivative would satisfy the
definition of a derivative;
the hybrid (combined) instrument is not recognised within financial assets or liabilities held for
trading.
The fair value of separated derivatives is measured by applying the methodology described in the
section below “Measurement criteria”.
237
1.2. Definition of financial assets and liabilities at fair value
Financial assets and liabilities may be designated on initial recognition under “financial assets
and liabilities at fair value” and recorded under items 30 “Financial assets held at fair value” and
50 “Financial liabilities at fair value”.
A financial asset/liability is designated at fair value through profit or loss on initial recognition
only when:
a) it is a hybrid contract containing one or more embedded derivatives and the embedded
derivative significantly alters the cash flows that would otherwise be generated by the contract;
b) the designation at fair value through profit or loss allows better information to be provided
because:
it eliminates or considerably reduces an asymmetry in the valuation or in the recognition,
which would otherwise result from the valuation of assets or liabilities or from recognition
of the relative profits and losses on a different basis;

a group of financial assets, financial liabilities or of both is managed and its performance
is valued on the basis of its fair value according to a documented risk management
procedure or investment strategy and the information on the group is provided internally
on that basis to senior managers with strategic responsibilities.
1.3. Recognition criteria
The financial instruments “Financial assets and liabilities held for trading and financial assets at
fair value” are recognised at the time of settlement if they are debt securities or equity
instruments, or at the trade date if they are derivative contracts and they are valued at cost,
intended as meaning the fair value of the instrument without considering any transaction costs or
income directly attributable to the instruments themselves.
1.4. Measurement criteria
Subsequent to initial recognition, the financial instruments in question are measured at fair value
with changes recognised in the income statement under item 80 “Net trading income (loss)”, for
assets/liabilities held for trading and under item 110 “net income/expense on financial assets
and liabilities at fair value” for financial assets/liabilities at fair value. The measurement of the
fair value of the assets and liabilities held in a trading portfolio is based on prices quoted on active
markets or on internal valuation models which are generally used in financial practice and are
described below.
1.4.1. Methods of measuring fair value
1.4.1.1.
Securities listed and unlisted
For securities listed on active markets, the measurement of fair value is based on prices quoted
on the relative market (that on which the greatest volume of trading occurs) as obtained from
international providers and registered on the last day of the financial year or reporting period. A
market is defined as an active market if the prices quoted reflect normal market transactions, are
readily and regularly available and represent actual and regularly occurring market transactions.
Hedge funds are valued on the basis of the official end of period NAV. In its absence, the last
available NAV is used prudentially adjusted if external observations show evidence of lower
values.
For unlisted securities fair value is measured by using valuation techniques that measure the
price that an instrument would have had at the valuation date in a free transaction motivated by
normal market considerations. Measurement of the fair value is performed by applying methods
commonly used on international markets and also internal valuation models. More specifically, for
unlisted bonds, models which discount expected future cash flow to present value (using interest
rates that take proper consideration of the sector that the issuer operates in and the rating class
where available) and price option models are used. For equity instruments, prices based on
238
comparable transactions, the market multiples of directly comparable companies and mixed
capital and income measurement models are used.
1.4.1.2.
Derivatives: listed and unlisted
For listed derivatives the measurement of fair value is based on prices taken from active markets.
For unlisted derivatives the fair value is measured by using models which discount future cash
flows to present value and which are also weighted for the credit risk associated with the financial
instrument. For derivatives traded with institutional counterparties, this risk is considered
virtually nil because of compensation agreements (CSA) designed to minimise credit risk.
1.4.1.3.
Private Equity and Merchant Banking Interests
For equity instruments not classified as held for control, but held for merchant banking and
private equity activities, the measurement of fair value is performed by using methods commonly
accepted in market practice. For equity instruments held in listed companies, the last available
and significant price quoted in the period is used; for unlisted companies resort is made to prices
inferred from recent transactions concerning assets similar to those that are being valued, market
multiples of directly comparable companies or capital, income and mixed valuation models.
1.5. Derecognition criteria
“Financial assets and liabilities held for trading and financial assets at fair value” are
derecognised in the accounts when the rights to the cash flows from the financial assets or
liabilities expire or when the financial assets or liabilities are transferred with the substantial
transfer of all the risks and rewards deriving from ownership of them. The result of the transfer of
financial assets or liabilities held for trading is recognised in the income statement under item 80
“net profit (loss) on trading”, while the result of the transfer of financial assets or liabilities at fair
value is recognised under item 110 “Net income/expense on financial assets and liabilities at fair
value”.
2.
2.1 Definition
Available-for-sale financial assets (AFS) are defined as non-derivative financial assets designated
on initial recognition as such or that are not classified as:
(1) loans and receivables (see section below);
(2) financial investments held until maturity (see section below);
(3) financial assets held for trading and measured at fair value recognised in the income
statement (see section below).
These financial assets are recognised under item 40 “Available-for-sale financial assets”.
2.2 Recognition criteria
Available-for-sale financial assets are recognised initially when, and only when, the company
becomes a party in the contract clauses of the instrument and that is on the date of settlement, at
fair value which generally coincides with the cost of them. This value includes costs or income
directly connected with the instruments themselves.
The recognition of available-for-sale financial assets may result also from the reclassification out
of “held-to-maturity investments” or, but only and only in rare circumstances and in any case
only if the asset is no longer held for sale or repurchase in the short term, out of “financial assets
held for trading”; in this case the recognition value is the same as the fair value at the moment of
reclassification.
239
2.3 Measurement criteria
Subsequent to initial recognition, available-for-sale financial assets continue to be recognised at
fair value with interest (resulting from application of the amortised cost) recognised in the income
statement and changes in fair value recognised in equity under item 140 “Fair value reserves”,
except for losses due to impairment, until the financial asset is derecognised, at which time the
profit or loss previously recognised in equity must be recognised in the income statement. Equity
instruments for which the fair value cannot be reliably measured according to the methods
described are recognised at cost.
At the end of each financial year or interim reporting period, objective evidence of impairment is
assessed, which in the case of equity instruments is held to be significant or prolonged.
As concerns the significance of the impairment, significant indications of impairment exist where
the market value of an equity instrument is less than 35% of its historical cost of acquisition. In
this case impairment is recognised through profit or loss without further analysis. If the
impairment is less then it is recognised only if the valuation of the instrument performed on the
basis of its fundamentals does not confirm the soundness of the company and that is its earning
prospects.
As concerns the permanence of the impairment, it is defined as prolonged when the fair value
remains below its historical cost of purchase for a period of longer than 18 months. In this case
the impairment is recognised through profit or loss without further analysis. If the fair value
continues to remain below its historical purchase cost for periods shorter than 18 months, then
the impairment to be recognised through profit or loss is determined by considering, amongst
other things, whether the impairment is attributable to general negative performance by stock
markets rather than to the specific performance of the individual counterparty.
If there is permanent impairment, the cumulative change, including that previously recognised in
equity under the aforementioned item, is recognised directly in the income statement within item
130 “Net impairment losses on b) available-for-sale financial assets”.
Permanent impairment loss is recognised when the acquisition cost (net of any repayments of
principal and amortisation) of an available-for-sale financial asset exceeds its recoverable amount.
Any recoveries of value, which are only possible when the causes of the original permanent
impairment no longer exist are treated as follows:
if they relate to investments in equity instruments, then with a balancing entry directly in the
equity reserve;
if they relate to investments in debt instruments, they are recognised in the income statement
under item 130 “Net impairment losses on b) available-for-sale financial assets”.
The amount of the reversal of the impairment loss may not in any case exceed the amortised cost
which, in the absence of previous value adjustments, the instrument would have had at that time.
Because the UBI Group applies IAS 34 “Interim financial reporting” to its half year interim reports
with consequent identification of a half year “interim period”, any impairment incurring is
recognised historically at the end of the half year.
2.3.1 Methods of measuring fair value
See the sub section on “Financial assets and liabilities held for trading and financial assets at fair
value.
2.4 Derecognition criteria
Available for sale financial assets are derecognised in the accounts when the contractual rights to
the cash flows from the financial assets expire or when the financial assets are sold with the
substantial transfer of all the risks and benefits deriving from ownership of them. The result of
the disposal of available-for-sale financial assets is recognised in the income statement under
240
item 100 “Income (loss) from the disposal or repurchase of b) available for sale financial assets”.
Upon derecognition any corresponding amount of what was previously recognised in shareholders’
equity under 140 “Fair value reserves” is written off against the income statement.
3.
3.1 Definition
Held-to-maturity investments (HTM) are defined as non derivative financial assets with fixed or
determinable payments and fixed maturity that an entity intends and is able to hold to maturity.
Exception is made for those:
(a) held for trading and those designated upon initial recognition at fair value through profit or
loss (see previous section);
(b) designated as available for sale (see previous section);
(c) which satisfy the definition of loans (see section below).
When annual and interim reports are prepared the intention and ability to hold financial assets
until maturity is assessed.
The assets in question are recognised under item 50 “Held-to-maturity investments”.
Held-to-maturity investments are recognised initially when, and only when, the company becomes
a party in the contract clauses of the instrument and that is on the date of settlement, measured
at cost inclusive of any costs and income directly attributable to it. If the recognition of assets in
this category is the result of the reclassification out of “available-for-sale financial assets” or, but
only in rare circumstances, if the asset is no longer held for sale or repurchase in the short term,
out of the “financial assets held for trading”, the fair value of the assets as measured at the time
of the reclassification is taken as the new measure of the amortised cost of the assets.
Held-to-maturity investments are valued at amortised cost using the criteria of the effective
interest rate (see the section below “loans and receivables” for a definition). The result of the
application of this method is recognised in the income statement under the item 10 “Interest and
similar income”.
When annual financial statements or interim reports are prepared objective evidence of the
existence of an impairment of the value of the assets is assessed. If there is permanent
impairment, the difference between the recognised value and the present value of expected future
cash flows discounted at the original effective interest rate is included in the income statement
under the item 130 “Net impairment losses on c) held-to-maturity investments”. Any recoveries of
value recorded, should the cause that gave rise to the previous recognition of impairment loss no
longer exist, are recognised under the same item in the income statement.
The fair value of held-to-maturity investments is given for the sole purpose of information. A
description of the measurement is given in the section “Financial assets and liabilities held for
trading and financial assets and liabilities at fair value”. For effective hedging of currency risk or
of loans, the fair value is calculated in relation to the risk that is hedged for valuation purposes.
Held-to-maturity investments are derecognised when the rights to the cash flows from the
financial assets expire or when the financial assets are sold with the substantial transfer of all the
241
risks and rewards deriving from ownership of them The result of the disposal of held-to-maturity
financial assets is recognised in the income statement under the item 100 “Income (loss) from the
disposal or repurchase of c) held-to-maturity investments”.
4.
Loans and receivables
4.1 Definition
Loans and receivables (L&R) are defined as non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The following are exceptions:
(a) those which it is intended to sell immediately or in the short term, that are classified as held
for trading and those that may have been designated on initial recognition as at fair value
through profit or loss;
(b) those designated upon initial recognition as available for sale;
(c) those for which the holder may not recover substantially all of its initial investment, other
than because of credit deterioration; in this case they are classified as available-for-sale.
loans and receivables are recognised under the items 60 “Loans to banks” and 70 “Loans to
customers”.
Loans are initially recognised in the accounts when the company becomes part of a loan contract,
which is to say when the creditor acquires the right to the payment of the sums agreed in the
contract. That moment corresponds to the date on which the loan is granted.
Recognition in this category may result also from the reclassification out of “available-for-sale
financial assets” or, but only in rare circumstances, if the asset is no longer held for sale or
repurchase in the short term, out of “financial assets held for trading”.
The amount initially recognised is that of the fair value of the financial instrument which is the
same as the amount granted inclusive of costs or income directly attributable to it and
determinable from the outset, independently of when they are paid. The amount of the initial
recognition does not include all those expenses that are reimbursed by the debtor counterparty or
that are attributable to internal expenses of an administrative character.
If the recognition is the result of reclassification, the fair value of the asset recognised at the time
of the reclassification is taken as the new measure of the amortised cost of the assets.
For loans not granted under market conditions, the initial fair value is calculated by using special
measurement techniques described below; in these circumstances the difference between the fair
value that is calculated and the amount granted is included directly in the income statement
within the item interest.
Contango and repo agreements with the obligation or right to repurchase or resell at term are
recognised in the accounts as funding or lending transactions. For transactions with a spot sale
and forward repurchase, the spot cash received is recognised in the accounts as borrowings while
the spot purchase transactions with forward resale are recognised as lending for the spot amount
paid.
Loans are measured at amortised cost using the criteria of effective interest.
The amortised cost of a financial asset or financial liability is the amount at which the financial
asset or financial liability was measured upon initial recognition net of principal repayments, plus
or minus the cumulative amortisation using the effective interest criterion on any difference
between that initial amount and the maturity amount, and minus any reduction (arising from an
impairment or uncollectability).
The effective interest criterion is a method of calculating amortised cost of an asset or liability (or
group of assets and liabilities) and of distributing the interest income or expense over its relative
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life. The effective interest rate is the rate that exactly discounts the estimated flow of future cash
payments or receipts until the expected maturity of the financial instrument. To determine the
effective interest rate, the cash flows must be estimated taking into consideration all the
contractual conditions of the financial instrument (e.g. payment in advance, a purchase option or
similar), but future impairments of the loan are not considered. The computation includes all fees
and basis points paid or received between parties to the contract which are integral parts of the
effective interest, the transaction costs and all other premiums or discounts.
At each reporting date or when interim reports are prepared, any objective evidence that a
financial asset or group of financial assets has suffered impairment loss is assessed. This
circumstance occurs when it is probable that a company may not be able to collect amounts due
on the basis of the original contracted conditions or, for example, in the presence of:
(a) significant financial difficulties of the issuer or debtor;
(b) an infringement of the contract such as default or failure to pay interest or repay principal;
(c) the lender, because of the economic or legal factors relating to the financial difficulties of the
debtor, granting a concession to the latter which the lender would not otherwise have
considered;
(d) the probability of the beneficiary declaring procedures for loan restructuring;
(e) the disappearance of an active market for that financial asset due to financial difficulties;
(f) available data which indicate a substantial decrease in expected future cash flows for a
similar group of financial assets since the time of the initial recognition of those assets,
although the decrease cannot yet be identified with the single financial assets of the group.
The measurement of non-performing loans (loans which, according to Bank of Italy definitions,
are non performing, impaired, restructured and past due, including exposures in arrears for
between 90 and 180 days secured by property mortgages) is performed on a case-by-case basis.
The remaining loans are measured using, collective, statistical methods which group uniform
classes of risk together.
The method for determining the impairment losses recognised on non-performing loans is based
on discounting expected future cash flows for principal and interest, taking account of any
guarantees attached to positions and of any advances received. The basic elements for
determining the present value of cash flows are the identification of the estimated receipts, the
relative maturity dates and the discount rate to apply. The amount of the loss is equal to the
difference between the recognised value of the asset and the present value of expected future cash
flows, discounted at the original effective interest rate.
The measurement of performing loans relates to asset portfolios for which no objective evidence of
impairment exist and which are therefore valued collectively. Percentage rates of loss calculated
from historical data series are applied to the estimated cash flows from the assets, grouped into
uniform classes with similar characteristics in terms of credit risk for the network banks of the
Group, according to Basel 2 regulations.
If a loan is subject to individual measurement and shows no objective impairment loss, it is
placed in a class of financial assets with similar credit risk characteristics and subjected to
collective measurement.
Permanent impairment that is found is immediately recognised in the income statement within
the item 130 “Net impairment losses on a) loans” as are recoveries of part or all of the amounts on
which impairment loss was previously recognised. Reversals of impairment losses are recognised
where there is an improvement in credit quality sufficient to provide reasonable certainty of
prompt collection of the principal and the interest according to the original conditions of the
original loan contract, or in the presence of a progressive reversal of the present value calculated
at the time of recognising the impairment loss. Where loans are measured on a collective basis,
any upward value adjustments or reversals of impairment losses are recalculated as differences in
relation to each performing loan at the measurement date.
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The fair value of loans is measured by considering future cash flows discounted at the
replacement rate or the market rate existing at the measurement date and relating to a position
with the same characteristics as the loan measured. The fair value is measured for all loans for
information purposes only. For loans subject to effective hedging, the fair value is calculated in
relation to the risk that is hedged for measurement purposes.
Loans are derecognised the statement of financial position when the rights to the cash flows from
the financial assets expire or when the financial assets are sold with the substantial transfer of all
the risks and rewards deriving from ownership of them. Otherwise loans continue to be
recognised on statement of financial position for an amount equal to the remaining involvement,
even if legal title has been transferred to a third party.
The assets in question are derecognised in the statement of financial position even when the Bank
maintains the contractual right to receive cash flows from them, but when at the same time it has
a contractual obligation to pay those cash flows to a third party.
The profit or loss on the disposal of loans is recognised in the income statement under the item
100 “Income (loss) from the disposal or repurchase of a) loans”.
5.
Hedging derivatives
5.1 Definition
Hedging transactions are designed to neutralise potential losses on a specific item (or group of
items) attributable to a determined risk, by means of the gains realised on another instrument or
group of instruments if that particular risk should actually result in losses.
The UBI Group uses the following type of hedging transactions, appropriately represented in the
accounts and described below:
a fair value hedge: the objective is to offset adverse changes in the fair value of the asset or
liability hedged;
a cash flow hedge: the objective is to hedge against the exposure to variability in expected cash
flows with respect to the initial expectations.
Derivative contracts stipulated with external counterparties are designated as hedging
instruments.
As with all derivatives, derivative financial instruments used for hedging are initially recognised
and subsequently measured at fair value and are classified in the statement of financial position
within the asset item 80 “Hedging derivatives” and within liabilities item 60 “Hedging derivatives”.
A relationship qualifies as a hedge and is appropriately represented in the accounts if, and only if,
all the following conditions are satisfied:
at the start of the hedging transaction the relationship is formally designated and documented,
including the company’s risk management objective and strategy for undertaking the hedge.
This documentation includes identification of the hedging instrument, the item or transaction
hedged, the nature of the risk being hedged, and how the entity will assess the hedging
instrument's effectiveness in offsetting the exposures to changes in the fair value of the item
hedged or in the cash flows attributable to the risk hedged;
the hedging is expected to be highly effective;
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the planned transaction hedged, for hedging cash flows, is highly probable and presents an
exposure to changes in cash flows that could have effects on the income statement;
the effectiveness of the hedging can be reliably measured;
the hedging is measured on an ongoing basis and is considered highly effective for all the
financial years in which it was designated.
5.2.1 Methods for testing effectiveness
A hedge relationship is judged effective, and as such is appropriately represented in the accounts,
if at its inception and during its life the changes in the fair value or cash flows of the hedged item
attributable to the hedged risk are almost always completely offset by the changes in the fair
value or cash flows of the hedging instrument. This conclusion is reached when the actual result
falls within a range of between 80% and 125%.
The effectiveness of hedging is tested at inception by means of a prospective test and when annual
reports are prepared by means of a retrospective test; the outcome of the test justifies the
application of hedging accounting because it demonstrates its expected effectiveness.
Retrospective tests are conducted monthly on a cumulative basis where the objective is to
measure the degree of effectiveness of the hedging in the reporting period and therefore to verify
whether the hedging has actually been effective in the period.
Derivative financial instruments that are considered hedges from a profit and loss viewpoint but
which do not satisfy the requirements to be considered effective instruments for hedging are
recognised under item 20 “Financial assets held for trading” or under item 40 “Financial liabilities
held for trading” and the profits and losses under the corresponding item 80 “Net trading income
(loss)”.
See the section “financial assets and liabilities held for trading” and “financial assets and
liabilities at fair value” for a description of the methods used to calculate the fair value of
derivatives
5.3.1 Fair value hedging
Fair value hedging is treated as follows:
the profit of loss resulting from measuring a hedging instrument at fair value is included in the
income statement under item 90 “Net hedging income (loss)”;
the profit or loss on the item hedged attributable to the hedged risk adjusts the value in the
accounts of the hedged item and is recognised immediately, regardless of the type of asset or
liability hedged, in the income statement within the aforementioned item.
Hedge accounting is discontinued prospectively in the following cases:
1. the hedging instrument expires or is sold, terminated, or exercised;
2. the hedge no longer meets the hedge accounting criteria described above;
3. the entity revokes the designation.
In case 2, if the assets or liabilities hedged are valued at amortised cost, the higher or lower value
resulting from valuing them at fair value as a result of the hedge becoming ineffective is
recognised in the income statement, according to the effective interest rate method prevailing at
the time of revocation of hedge.
The methods used for measurement of the fair value of the risk hedged in the assets or liabilities
hedged are described in the notes that comment on available-for-sale financial assets, loans and
held-to-maturity investments.
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5.3.2 Cash flow hedging
When a derivative is designated as a hedge of exposure to changes in expected cash flows from an
asset or liability in the statement of financial position or a future transaction considered highly
probable, the accounting treatment of the hedge is as follows:
the profits or losses (from the measurement of the hedging derivative) attributable to the
effective portion of the hedge are recognised in a special reserve in equity named 140 “Fair
value reserves”;
the profits or losses (from the measurement of the hedging derivative) attributable to the
ineffective portion of the hedge are recognised directly in the income statement under item 90
“Net hedging income (loss)”;
the asset or liability hedged is measured according to the class of asset or liability to which it
belongs.
If a future transaction occurs which involves recognising non financial assets and liabilities, the
corresponding profits or losses initially recognised under item 140 “Fair value reserves” are then
transferred from that reserve and included as an initial cost of the asset or liability that is
recognised. If the future hedged transaction subsequently involves recognition of a financial asset
or liability, the associated profits or losses that were originally recognised within item 140 “Fair
value reserves” are reclassified to the income statement in the same reporting period or periods
during which the assets acquired or liabilities incurred have an effect on the income statement. If
a portion of the profits or losses recognised in the fair value reserve are not considered
recoverable, it is reclassified to the income statement under item 80 “Net trading income (losses)”.
In all cases other than those already described, the profits or losses initially recognised under the
item 140 “Fair value reserves” are transferred to the income statement to reflect the time and
manner in which the future transaction is recognised in the income statement.
An entity must
circumstances:
discontinue
hedge
accounting
prospectively
in
each
of
the
following
(a) the hedging instrument expires or is sold, terminated, or exercised (for this purpose the
replacement or exchange of one hedging instrument with another hedging instrument is not a
conclusion or termination if that replacement or exchange forms part of an entity’s
documented hedging strategy). In this case the total profit (or loss) on the hedging instrument
continues to be recognised directly in equity until the reporting period in which the hedge
became effective and it continues to be recognised separately until the programmed hedging
transaction occurs;
(b) the hedge no longer satisfies the criteria for hedge accounting. In this case the total profit or
loss on the hedging instrument continues to be recognised directly in equity starting from the
reporting period in which the hedge became effective and it continues to be recognised
separately in equity until the programmed hedging transaction occurs;
(c) it is no longer considered that the future transaction should occur, in which case any related
total profit or loss on the hedging instrument recognised directly in equity starting from the
reporting period in which the hedge became effective must be recognised through profit or
loss;
(d) the entity revokes the designation. For hedges of a programmed transaction, total profits or
losses on the hedging instrument recognised directly in equity starting from the reporting
period in which the hedge became effective continues to be recognised separately in equity
until the programmed transaction occurs or it is expected that it will no longer occur.
If it is expected that the transaction will no longer occur the total profit (or loss) that had been
recognised directly in equity is transferred to the income statement.
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5.3.3 Hedging portfolios of assets and liabilities
Hedging of portfolios of assets and liabilities (“macrohedging”) and appropriate accounting
treatment is possible after first:
-
identifying the portfolio to be hedged and dividing it by maturity dates;
designating the risk to be hedged;
identifying the interest rate risk to be hedged;
designating the hedging instruments;
determining the effectiveness.
The portfolio for which the interest rate risk is hedged may contain both assets and liabilities.
This portfolio is divided on the basis of expected maturity or repricing dates of interest rates after
first analysing the structure of the cash flows.
Changes in the fair value of the hedged instrument are recognised in the income statement under
item 90 “Net hedging income (loss)” and in the statement of financial position within item 90 “Fair
value change in hedged financial assets” or within item 70 “Fair value change in hedged financial
liabilities”
Changes occurring in the fair value of the hedging instrument are recognised in the income
statement under item 90 “Profits (losses) on hedging” and on the assets side of the statement of
financial position within item 80 “Hedging derivatives” or on the liabilities side within item 60
“Hedging derivatives”.
6.
Equity investments
6.1 Definition
6.1.1 Associates
An “associate” is defined as a company in which at least 20% of the voting rights are held or over
which the investing company exercises significant influence and which is neither a subsidiary nor
a company subject to joint control by the investing company. Significant influence is the power to
participate in the financial and operating policy decisions of the company invested in but not to
control or have joint control of it. Investments in associates are valued using the equity method.
6.1.2 Companies subject to joint control
A “company subject to joint control” is defined as a company governed by a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to joint
control.
Investments in companies subject to joint control are recognised by adopting either the equity
method or the proportionate method
Equity investments are recognised in the financial statements by applying the methods described
in the preceding sections.
Any objective evidence that an equity investment has been subject to impairment is assessed as
at each annual or interim reporting date. The recoverable amount is then calculated, considering
the present value of the future cash flows which may be generated by the investment, including
the final disposal value. If the recoverable amount calculated in this way is less than carrying
value the difference is recognised in the income statement under 240 “Profits (losses) of equity
investments” (valued at equity). Any future recoveries of value are also included in the item where
the reasons for the original write down no longer apply.
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Equity investments are derecognised in the statement of financial position when the contractual
rights to the cash flows from the financial assets expire or when the financial assets are sold with
the substantial transfer of all the risks and rewards deriving from ownership of them. The result
of the disposal on investments valued using the equity method recognised in the income
statement under item 240 “Profits (losses) of equity investments” (valued at equity); the result of
the disposal of equity investments other than those valued using the equity method is recognised
in the income statement under item 270 “Profits (losses) on the disposal of investments”.
7.
7.1 Definition of assets for functional use
“Assets for functional use” are defined as tangible assets possessed to be used for the purpose of
carrying on a company’s business and where the use is planned to last longer than one year.
Assets for functional use also include properties rented to employees, ex employees and their
heirs, as well as works of art.
7.2 Definition of investment property
“Investment property” is defined as properties held in order to earn rentals or for capital
appreciation. As a consequence, investment property is to be distinguished from assets held for
the use of the owner because they generate cash flows that are very different from the other assets
held by the banking group.
Finance lease contracts are also included within tangible assets (for functional use and held for
investment) even if the legal title to the assets remains with the leasing company.
Property, equipment and investment property assets, functional and other, are initially recognised
at cost (item 120 Property, equipment and investment property), inclusive of all costs directly
connected with bringing it to working condition for the use of the assets and purchase taxes and
duties that are not recoverable. This amount is subsequently increased to include expenses
incurred from which it is expected future benefits will be obtained. The costs of ordinary
maintenance are recognised in the income statement at the time at which they are incurred, while
extraordinary maintenance expenses (improvements) from which future benefits are expected are
capitalised by increasing the value of the relative asset.
Improvements and expenses incurred to increase the value of leased assets from which future
benefits are expected are recognised:
–
–
under the most appropriate category of item 120 “Property, equipment and
investment property” if they are independent and can be separately identified,
whether they are third parties assets held on the basis of a ordinary leasing
contract or whether they are held under a financial leasing contract;
within 120 “Property, equipment and investment property”, if they are not
independent and cannot be separately identified, as an increase to the type of
assets concerned if held by means of a financial leasing contract or within item 160
“Other assets” if they are held under an ordinary leasing contract.
The cost of property, equipment and investment property is recognised as an asset if, and only if:
it is probable that the future economic benefits associated with the asset will flow to the
enterprise;
the cost of the asset can be reliably determined.
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Subsequent to initial recognition, items of property, equipment and investment property for use in
operations are recognised at cost, as defined above, net of accumulated depreciation and any
permanent cumulative impairment. The depreciable amount, equal to cost less the residual value
(i.e. the amount that would be normally obtained from disposal, less disposal costs, if the asset
was normally in the conditions, including age, expected at the end of its useful life), should be
allocated on a systematic basis over the asset's useful life by adopting the straight line method of
depreciation. The useful life of an asset, which is reviewed periodically to detect any significant
change in estimates compared to previous figures, is defined as:
the period of time over which it is expected that the asset can be used by a company or,
the quantity of products or similar units that an entity expects to obtain from the use of the
asset.
Since property, equipment and investment property may consist of items with different useful
lives, land, whether by itself or as part of the value of a building is not depreciated since it
constitutes a fixed asset with an indefinite life. The value attributable to the land is deducted from
the total value of a property for all buildings in proportion to the percentage of ownership.
Buildings, on the other hand, are depreciated according to the criteria described above.
Works of art are not depreciated because they generally increase in value over time.
Depreciation of an asset starts when it is available for use and ceases when the asset is written off
the accounts, which is the most recent of when it is classified as for sale and the date of
elimination from the accounts. As a consequence depreciation does not stop when an asset is left
idle or is no longer in use, unless the asset has already been fully depreciated.
Improvements and expenses which increase the value are depreciated as follows:
– if they are independent and can be separately identified, according to the presumed useful
life as described above;
– if they are not independent and cannot be separately identified, then if they are held under
an ordinary leasing contract, over the shorter of the period in which the improvements and
expenses can be used and that of the remaining life of the contract taking account of any
individual renewals, or if the assets are held under a finance lease contract, over the
expected useful life of the assets concerned.
The depreciation of improvements and expenses to increase the value of leased assets recognised
under item 160 “Other assets” is recognised within item 220 “Other net operating income
(expense)”.
At the end of each annual or interim reporting period the existence of indications that
demonstrate the impairment of the value of an asset are assessed. The loss is determined by
comparing the carrying amount of the tangible asset with the lower recoverable amount. The
latter is the greater of the fair value, net of any sales costs, and the relative use value intended as
the present value of future cash flows generated by the asset. The loss is immediately recognised
in the income statement under item 200 “Net impairment losses on property, equipment and
investment property tangible assets”; the item also includes any future recovery in value if the
causes of the original recognition of impairment no longer exist.
7.4.1 Definition and measurement of fair value
7.4.1.1 Properties
The fair value is measured on the basis of the market value intended as meaning the best price at
which the sale of a property might reasonably be expected to have been completed unconditionally
for cash consideration on the date of valuation, assuming:
− that the seller and the purchaser are independent counterparties;
− the intention of the seller to sell the assets is real;
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− that there is a reasonable period (having regard to the nature of the property and the state
of the market) for the proper marketing of the property and for the agreement of price and
terms necessary to complete the sale;
− that the market trend, level of values and other circumstances were, at the date of signing
the preliminary contract of purchase and sale, identical to those existing at the date of
valuation;
− that no account is taken of bids by purchasers for whom the property has characteristics
which make it “outside the market range”.
The procedures adopted for determining the market value are based on the following methods:
the direct comparative or market method, based on a comparison between the asset in
question and other similar asset subject to sale or currently on sale on the same market or
competing markets;
the income method based on the present value of potential market incomes for a similar
property, obtained by capitalising the income at a market rate.
The above methods are performed individually and the values obtained are appropriately
averaged.
7.4.1.2 Determination of the value of land
The method used for identifying the percentage of the market value attributable to land is based
on an analysis of the location of the property, taking account of the type of construction, the state
of conservation and the cost of rebuilding the entire building.
7.5 Property, equipment and investment property acquired through finance
leases
A finance lease is a contract that substantially transfers all the risks and rewards incident to
ownership of an asset. Legal title may or may not be transferred at the end of the lease term.
The beginning of the lease term is the date on which the lessee is authorised to exercise his right
to use the asset leased and therefore corresponds to the date on which the lease is initially
recognised. When the contract commences, the lessee recognises the financial lease transactions
as assets and liabilities in its statement of financial position at the fair value of the asset leased
or, if lower, at the present value of the minimum payments due. To determine the present value of
the minimum payments due, the discount rate used is the contractual interest rate implicit in the
lease, if practicable, or else the lessee’s incremental borrowing rate is used. Any initial direct costs
incurred by the lessee are added to the amount recognised for the asset.
The minimum payments due are apportioned between the finance charges and the reduction of
the residual liability. The former are allocated over the lease term so as to produce a constant rate
of interest on the residual liability.
The finance lease contract involves recognition of the depreciation charge for the asset leased and
of the finance charges for each financial year. The depreciation policy used for assets acquired
under finance leases is consistent with that adopted for owned assets. See the relative paragraph
for a more detailed description.
Property, equipment and investment property are derecognised in the statement of financial
position when they are disposed of or when they are permanently retired from use and no future
economic benefits are expected from their disposal Any gains or losses resulting from the
retirement or disposal of the property, equipment and investment property, calculated as the
difference between the net consideration on the sale and the carrying amount of the asset are
recognised in the income statement under item 270 “Profit (loss) on the disposal of investments”.
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8.
Intangible assets
8.1 Definition
An intangible asset is defined as an identifiable non monetary asset without physical substance
that is used in carrying on a company’s business.
The asset is identifiable when:
it is separable, which is to say capable of being separated and sold, transferred, licensed,
rented, or exchanged;
it arises from contractual or other legal rights, regardless of whether those rights are
transferable or separable from other rights and obligations.
An asset possesses the characteristic of being controlled by the enterprise as a result of past
events and the assumption that its use will cause economic benefits to flow to the enterprise. An
entity has control over an asset if it has the power to obtain future economic benefits arising from
the resource in question and may also limit access by others to those benefits.
Future economic benefits arising from an intangible asset might include receipts from the sale of
products or services, savings on costs or other benefits resulting from the use of the asset by an
enterprise.
An intangible asset is recognised if, and only if:
(a) it is probable that the expected future economic benefits attributable to the asset will flow to
the entity;
(b) the cost of the asset can be reliably measured.
The probability of future economic benefits occurring is assessed on the basis of reasonable and
supportable assumptions that represent the best estimate of the economic conditions that will
exist over the useful life of the asset.
The degree of probability attaching to the flow of economic benefits attributable to the use of the
asset is assessed on the basis of the sources of information available at the time of initial
recognition, giving greater weight to external sources of information.
In addition to goodwill and software used over several years, brands, core deposits, assets under
management and assets under management recognised following the merger of the former BPU
Banca and the former Banca Lombarda e Piemontese are also considered as intangible assets.
8.1.1 Intangible assets with a finite useful life
A finite useful life is defined for an asset where it is possible to estimate a limit to the period over
which the related economic benefits are expected to be produced.
Intangible assets considered as having a finite useful life include software, core deposits and
assets under management.
8.1.2 Intangible assets with an indefinite useful life
An indefinite useful life is defined for an asset where it is not possible to estimate a predictable
limit to the period over which the asset is expected to generate economic benefits for the Bank.
The attribution of an indefinite useful life to an asset does not arise from having already
programmed future expenses which restore the standard level of performance of the asset over
time and prolong its useful life.
Intangible assets considered as having an indefinite useful life include goodwill.
Assets recognised within statement of financial position item 130 “Intangible assets” are stated at
cost and any expenses subsequent to the initial recognition are only capitalised if they are able to
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generate future economic benefits and only if those expenses can be reliably determined and
attributed to the Assets.
The cost of an intangible asset includes:
the purchase price including any non recoverable taxes and duties on purchases after
commercial discounts and bonuses have been deducted;
any direct costs incurred in bringing the asset into use.
Subsequent to initial recognition intangible assets with a finite useful life are recognised at cost
net of total amortisation and any impairment losses that may have occurred. Amortisation is
calculated on a systematic basis over the estimated useful life of the asset (see definition included
in the section “Property, equipment and investment property ”) using the straight line method for
all intangible assets with the exception of intangible assets relating to customer accounts
recognised following the purchase price allocation resulting from the merger of the former BPU
Banca and the former Banca Lombarda e Piemontese In this case the amortisation is calculated
using percentage rates of amortisation which represent the probability of the customer accounts
ending over time.
Amortisation begins when the asset is available for use and ceases on the date on which the asset
is eliminated from the accounts.
Intangible assets with an indefinite useful life (see, goodwill, as defined in the section below if
positive) are recognised at cost net of any impairment loss resulting from periodic reviews when
tests are performed to verify the appropriateness of the carrying amount of the assets (see section
below). As a consequence amortisation of these assets is not calculated.
No intangible assets arising from research (or from the research phase of an internal project) are
recognised. Research expenses (or the research phase of an internal project) are recognised as
expenses at the time at which they are incurred.
An intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if the following can be demonstrated:
(a) the technical feasibility of completing the intangible asset so that it becomes available for sale
or use;
(b) the intention of the company to complete the intangible asset to use it or sell it;
(c) the capacity of the company to use or sell the intangible asset.
At the end of each annual or interim reporting period the existence of potential impairment of the
value of intangible assets is assessed. The impairment is given by the difference between the
carrying amount of the assets and the recoverable amount and is recognised, as are any
recoveries of value, within item 210 “Net impairment losses on intangible assets”, with the
exception of impairment losses on goodwill which are recognised within item 260 “Net impairment
losses on goodwill”.
8.4 Goodwill
Goodwill is defined as the difference between the purchase cost and the fair value of assets and
liabilities acquired as part of a business combination which consists of the union of separate
enterprises or businesses in a single entity required to prepare financial statements. The result of
almost all business combinations consists in the fact that a sole entity, an acquirer, obtains
control over one or more separate businesses of the acquiree. When an entity acquires a group of
activities or net assets that do not constitute a business it allocates the cost of the group to
individual assets and liabilities identified on the basis of their relative fair value at the date of
acquisition.
A business combination may give rise to a holding relationship between a parent company and a
subsidiary in which the acquirer is the parent company and the acquiree is the subsidiary.
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All business combinations are accounted for using the purchase method of accounting.
The purchase method involves the following steps:
(a) identification of the acquirer (the acquirer is the combining enterprise that obtains control of
the other combining enterprises or businesses);
(b) determination of the acquisition date;
(c) determination of the cost of the business combination, intended as the consideration
transferred by the purchaser to the shareholders of the acquiree;
(d) the allocation, as at the acquisition date, of the cost of the business combination by means of
the recognition, classification and measurement of the identifiable assets acquired and the
identifiable liabilities assumed;
(e) recognition of any existing goodwill.
Business combination transactions performed with subsidiary undertakings or with companies
belonging to the same group are recognised on the basis of the significant economic substance of
the transactions.
In application of that principle, the goodwill arising from those transactions in the separate
financial statements is recognised:
(a) within asset item 120 of the statement of financial position if significant economic substance
is found;
(b) as a deduction from equity if it is not found.
These transactions are eliminated from the consolidated financial statements and are therefore
recognised solely as the relative costs incurred in relation to parties external to the Group.
8.4.1. Allocation of the cost of a business combination to assets and liabilities and
contingent liabilities
The acquirer:
(a) recognises the goodwill acquired in a business combination as assets;
(b) measures that goodwill at its cost to the extent that it is the excess of the cost of the business
combination over the acquirer's share of interest in the net fair values of the acquiree's
identifiable assets, liabilities and contingent liabilities.
Goodwill acquired in a business combination represents a payment made by the acquirer in the
expectation of receiving economic future benefits from the asset which cannot be identified
individually and recognised separately.
After initial recognition, the acquirer values the goodwill acquired in a business combination at
the relative cost net of cumulative impairment.
The goodwill acquired in a business combination must not be amortised. The acquirer tests the
asset for impairment annually or more frequently if specific events or changed circumstances
indicate that it may have suffered a reduction in value, according to the relative accounting
standard.
The standard states that an asset (including goodwill) has suffered an impairment loss when the
amount recognised in the accounts exceeds the recoverable amount understood as the greater of
the fair value, net of any sales expenses and its value in use, defined by section 6 of IAS 36.
In order to test for impairment, goodwill must be allocated to cash generating units or to groups of
cash generating units, in observance of the maximum aggregation limit which cannot exceed the
operating segment identified in accordance with IFRS 8.
8.4.2. Negative goodwill
If the acquirer’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination the acquirer:
253
(a) reviews the identification and measurement of the identifiable assets, liabilities and
contingent liabilities of the acquiree and the determination of the cost of the business
combination;
(b) immediately recognises any excess existing after the new measurement in the income
statement.
Intangible assets are derecognised in the statement of financial position following disposal or
when no economic future benefit is expected from its use or disposal.
9.
Liabilities, securities issued (and subordinated liabilities)
The various forms of interbank and customer funding are recognised within the statement of
financial position items 10 “Due to banks”, 20 “Due to customers” and 30 “Securities issued”.
These items also include liabilities recognised by a lessee in financial leasing operations.
The liabilities in question are recognised in the statement of financial position at the time when
the funding is received or when the debt securities are issued. The amount recognised is the fair
value, inclusive of any additional expenses/income that are directly attributable to the
transaction and determinable from the outset regardless of when they are paid. The amount of the
initial recognition does not include all those costs that are reimbursed by the creditor
counterparty or that are attributable to internal costs of an administrative character.
After initial recognition, financial liabilities are measured at amortised cost using the effective
interest method, as defined in previous paragraphs.
Financial liabilities are derecognised in the statement of financial position when they expire or are
extinguished.
The repurchase of own securities issued results in derecognition of the securities with the
consequent redefinition of the liability for debt instruments issued. Any difference between the
repurchase value of the own securities and the corresponding carrying amount of the liabilities is
recognised in the income statement under the item 100 “Income (loss) from the disposal or
repurchase of d) financial liabilities”. Any subsequent re-issue of the securities previously subject
to derecognition in the accounts constitutes a new issue for accounting purposes with the
consequent recognition at the new issue price without any effect in the income statement.
10. Tax assets and liabilities
Tax assets and liabilities are stated in the statement of financial position within the items 140
“Tax assets” and 80 “Tax liabilities”.
10.1. Current tax assets and liabilities
Current tax for the current and prior periods is recognised as a liability to the extent that it has
not yet been settled; any excess compared to the amount due is recognised as an asset.
Current tax liabilities (assets) for the current and prior years, are measured at the amount
expected to be paid to/recovered from taxation authorities, using the tax rates and tax laws in
force.
254
Current tax assets and liabilities are derecognised in the accounts in the year in which the assets
are realised or the liabilities are extinguished.
10.2. Deferred tax assets and liabilities
Deferred tax liabilities are recognised for all taxable temporary differences unless the deferred tax
liability arises from:
goodwill for which amortisation is not deductible for tax purposes or
the initial recognition of an asset or a liability in a transaction which:
− is not a business combination and
− at the time of the transaction, affects neither the accounting nor the taxable profit.
Deferred tax assets are not calculated for higher values of assets for which the tax regime has
been suspended relating to equity investments and to reserves for which the tax regime has been
suspended because it is considered there are no reasonable grounds to assume they will be taxed
in future.
Deferred tax liabilities are recognised within the statement of financial position item 80 “Tax
liabilities b) deferred”.
A deferred tax asset is recognised for all deductible temporary differences if it is probable that a
taxable income will be used against which it will be possible to use the deductible temporary
difference, unless the deferred tax asset arises from:
negative goodwill which is treated as deferred income;
the initial recognition of an asset or liability in a transaction which:
− is not a business combination and
− affects neither the accounting profit nor the taxable profit at the time of the transaction.
Deferred tax assets are recognised within statement of financial position item 140 “Tax assets b)
deferred”.
Deferred tax assets and deferred tax liabilities are subject to constant monitoring and are
measured using the tax rates that it is expected will apply in the period in which the tax asset will
be realised or the tax liability will be extinguished on the basis of the tax regulations established
by laws currently in force.
Deferred tax assets and deferred tax liabilities are derecognised in the accounts in the year in
which:
the temporary difference which gave rise to them becomes payable with regard to deferred tax
liabilities or deductible with regard to deferred tax assets;
the temporary difference which gave rise to them is no longer valid for tax purposes.
Deferred tax assets and deferred liabilities must not normally be discounted to present values nor
offset one against the other,
11. Non current assets and disposal groups held for sale –
Liabilities associated with disposal groups held for sale
Non current assets and liabilities and groups of non current assets and liabilities for which it is
expected that the carrying amounts will recovered by selling them rather than by continued use
are classified respectively within items 150 “Non current assets and disposal groups held for sale”
and 90 “Liabilities associated with disposal groups held for sale”.
In order to be classified within these items the assets or liabilities (or disposal groups) must be
immediately available for sale and there must be active, concrete programmes to sell the assets or
liabilities in the short term.
255
These assets or liabilities are measured at the lower of the carrying amount and their fair value
net of disposal costs. Profits and losses attributable to groups of assets or liabilities held for sale
are recognised in the income statement under item 310 “Pre-tax profit from discontinued
operations. Profits and losses attributable to individual assets held for disposal are recognised in
the income statement under the most appropriate item.
12. Provisions for risks and charges
12.1. Definition
A provision is defined as a liability of uncertain timing or amount.
A contingent liability, however, is defined as:
a possible obligation, the result of past events, the existence of which will only be confirmed by
the occurrence or (non occurrence) of future events that are not totally under the control of the
enterprise;
a present obligation that is the result of past events, but which is not recognised in the
accounts because:
− it is improbable that financial resources will be needed to settle the obligation;
− the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognised in the accounts, but are only reported, unless they are
considered a remote possibility.
12.2. Recognition criteria and measurement
A provision is recognised if and only if:
there is a present obligation (legal or implicit) that is the result of a past event;
it is probable that the use of resources suitable for producing economic benefits will be
required to fulfil the obligation;
a reliable estimate can be made of the amount arising from fulfilment of the obligation.
The amount recognised as a provision represents the best estimate of the expenditure required to
settle the present obligation at the reporting date and reflects the risks and uncertainties that
inevitably characterise a number of facts and circumstances. The amount of a provision is
measured by the present value of the expenditure that it is assumed will be necessary to settle the
obligation where the effect of the present value is a substantial aspect. Future events that might
affect the amount required to settle the obligation are only taken into consideration if there is
sufficient objective evidence that they will occur.
Provisions made for risks and charges include those for the risk attaching to any existing tax
litigation.
12.3. Derecognition criteria
The provision is reversed when it becomes improbable that the use of resources suitable for
producing economic benefits will be required to settle the obligation.
256
13. Foreign currency transactions
13.1. Definition
A foreign currency is a currency other than the functional currency of the entity, which is the
currency of the primary economic environment in which an entity operates.
13.2. Recognition criteria
A foreign currency transaction is recorded at the time of initial recognition in the functional
currency applying the spot exchange rate between the functional currency and the foreign
currency ruling on the date of the transaction.
13.3. Measurement criteria
At each reporting date:
(a) foreign currency3 monetary amounts are translated using the closing rate;
(b) non-monetary items4 carried at historical cost in foreign currency are translated using the
exchange rate at the date of the transaction;
(c) non-monetary items carried at fair value in a foreign currency are translated using the
exchange rates that existed on the dates when the fair values were determined.
Exchange rate differences arising from the settlement of monetary items, or from the translation
of monetary items at rates different from those at which they were translated when initially
recognised during the year or in previous financial statements, are recognised in the income
statement for the period except for exchange rate differences arising on monetary items that form
part of a net investment in a foreign operation.
Exchange rate differences arising from a monetary item that forms part of a net investment in a
foreign operation of an entity that prepares financial statements are recognised in the income
statement of the separate company financial statements of the entity that prepares the financial
statements or the separate company financial statements of the foreign operation. These exchange
rate differences in the financial statements that include the foreign operation (e.g. in the
consolidated accounts when the foreign operation is a subsidiary) are initially recognised as a
separate component in equity and are recognised in the income statement at the time of the
disposal of the net investment.
When a profit or loss on a non monetary item is recognised directly in equity, each change in that
profit or loss is also recognised directly in equity. However, when a profit or loss on a non
monetary item is recognised in the income statement each change in that profit or loss is
recognised in the income statement.
The financial statements of foreign subsidiaries and associates which employ an accounting
currency that is different from that of the Parent are translated using the exchange rates ruling at
the reporting date
14. Other information
14.1 Treasury shares
Treasury shares if present in the UBI Group portfolio are deducted from equity No profit or loss
arising from the purchase, sale, issue or cancellation of treasury shares is recognised in the
3
“Monetary” items are defined as relating to determined sums in foreign currency, which is to say to assets and liabilities
which must be received or paid for a determined amount in foreign currency. The defining characteristic of a monetary
item is the right to receive or an obligation to pay a set or calculable number of foreign currency units.
4 See the note on “monetary” items for the contrary.
257
income statement. The differences between the purchase and sale price arising from these
transactions are recorded in equity reserves.
14.2 Provisions for guarantees granted and commitments
Provisions made on a cases by case and collective basis to estimate possible payments to be made
connected with the assumption of credit risks attaching to guarantees granted and commitments
assumed are calculated by applying the same criteria as that reported for loans.
These provisions are recognised within the item 100 “Other liabilities” against item in the income
statement 130d “Net impairment losses on: other financial transactions”.
14.3 Employee benefits
14.3.1 Definition
Employee benefits are defined as all forms of consideration given by an enterprise in exchange for
services rendered by employees. Employee benefits can be classified as follows:
short-term employee benefits (not including benefits due to employees for severance payments
and benefits paid in the form of equity instruments) due entirely within twelve months after the
service is rendered by employees;
post-employment benefits due after the contract of employment has terminated;
post-employment benefit plans subsequent to the termination of the employment contract and
that is agreements whereby the enterprise provides benefits subsequent to the termination of
the employment contract;
long term benefits, other than the previous, due entirely within the twelve months subsequent
to the end of the financial year in which employee rendered the relative service.
14.3.2 Post-employment benefits and defined benefit plans
14.3.2.1 Recognition criteria
Following the reform of supplementary pensions pursuant to Legislative Decree No. 252/2005,
portions of post-employment benefit funds maturing from 1st January 2007 constitute a “defined
benefit plan”.
The liability relating to those portions is measured on the basis of the contributions due without
the application of any actuarial methods.
However, post-employment benefits maturing up until 31st December 2006 continue to constitute
a “post employment benefit” belonging to the “defined benefit plan” series and as such require the
amount of the obligation to be determined on an actuarial basis and to be discounted to present
values because the debt may be extinguished a long time after the employees have rendered the
relative service.
The amount is accounted for as a liability amounting to:
(a)
(b)
(c)
(d)
the present value of the defined benefit obligation as at the reporting date;
plus any actuarial gains (less any actuarial losses) recognised in a separate reserve in equity;
less any pension costs relating to past service rendered not yet recognised;
less the fair value at the reporting date of any assets at the service of the plan.
14.3.2.2 Measurement criteria
As concerns the accounting treatment for actuarial gains/losses, the UBI Group has opted for
direct recognition of these items within fair value reserves in equity.
“Actuarial gains/losses” comprise adjustments arising from the reformulation of previous
actuarial assumptions as a result of actual experience or from changes in the actuarial
assumptions themselves.
258
The Projected Unit Credit Method is used to calculate the present value. This considers each
single period of service as giving rise to an additional unit of post employment benefit and
measures each unit separately to arrive at the final obligation. This additional unit is obtained by
dividing the total expected service by the number of years that have passed from the time service
commenced until the expected payment date. Application of the method involves making
projections of future payments based on historical analysis of statistics and of the demographic
curve and discounting these flows on the basis of market interest rates. The rate used for
discounting to present value is calculated as the average of the swap, bid and ask rates at the
measurement date appropriately interpolated for intermediate maturity dates.
14.3.3 Stock Options
Stock option plans are defined as operations where an employee or a third party renders service
for a consideration paid in the equity instruments (including options on shares) of the enterprise
which benefits from the service.
The cost of these transactions is measured at the fair value of equity instruments granted and is
recognised in the income statement under item 180 “Administrative expenses a) personnel
expense” on a straight line basis over the original life of the plan. The fair value determined relates
to the equity instruments granted at the time of grant and takes account of market prices, if
available, and the terms and conditions upon which the instruments were granted.
14.4 Segment reporting
Segment reporting is defined as the manner in which financial information on an enterprise is
reported by operating segment.
An operating segment is intended as a component of an entity:
that engages in business activities that generate revenues and expenses;
whose operating results are reviewed regularly by the entity’s chief operating decision
maker, to make decisions about the resources to be allocated to the segment and assess
its performance;
for which discrete financial information is available.
Segment reporting is based on elements that senior management uses to make operating
decisions (a “management approach”) and consequently the identification of operating segments is
performed on the basis of the current system of reporting to management which is based
primarily on management analysis of legally recognised entities.
Segment reporting is completed by information on the geographical areas in which revenues are
produced and assets are held.
14.5 Revenues
14.5.1 Definition
Revenues are the gross inflow of economic benefits resulting from business arising from the
ordinary operating activities of an enterprise when these inflows create an increase in equity other
than an increase resulting from payments made by shareholders.
14.5.2 Recognition criteria
Revenues are measured at the fair value of the consideration received or due and are recognised
in the accounts when they can be reliably estimated.
The result of the rendering of services can be reliably estimated when the following conditions are
met:

the amount of revenue can be measured reliably;
it is probable that the economic benefits arising from the transaction will flow to the company;
the stage of completion of the operation as at the reporting date can be measured reliably;
the costs incurred, or to be incurred, to complete the transaction can be measured reliably.
259
Revenue recognised in return for services rendered is recognised by reference to the stage of
completion of the transaction.
Revenue is only recognised when it is probable that the economic benefits arising from the
transaction will be enjoyed by the company. Nevertheless when the recoverability of an amount
already included within revenues is uncertain, the amount not recoverable, or the amount for
which recovery is no longer probable is recognised as a cost instead of adjusting the revenue
originally recognised.
Revenue arising from the use by third parties of the company’s assets which generate interest or
dividends are recognised when:
it is probable that the economic benefits arising from the transaction will be received by the
enterprise;
the amount of the revenue can be reliably measured.
Interest is recognised on an accruals basis that takes into account the effective yield of the asset.
In detail:
interest income includes the amortisation of any discounts, premiums or other differences
between the initial carrying amount of a security and its value at maturity;
arrears of interest that are considered recoverable are recognised within the item 10 “Interest
and similar income”, but only the part considered recoverable.
Dividends are recognised when shareholders acquire the right to receive payment.
Expenses or revenues resulting from the sale or purchase of financial instruments, determined by
the difference between the amount paid or received for the transaction and the fair value of the
instrument are recognised in the income statement on initial recognition of the financial
instrument when the fair value is determined:
by making reference to current and observable market transactions in the same
instrument;
by using valuation techniques which use, as variables, only data from observable
markets.
14.6 Expenses
Expenses are recognised in the accounts at the time at which they are incurred while following
the criteria of matching expenses to revenues that result directly and jointly from the same
transactions or events. Expenses that cannot be associated with revenues are recognised
immediately in the income statement.
Expenses directly attributable to financial instruments measured at amortised cost and
determinable from the outset, regardless of the time at which they are settled, flow to the income
statement by applying the effective interest rate, a definition of which is given in the section
“Loans”.
Impairment losses are recognised through profit and loss in the year in which they are noted.
A.3 – INFORMATION ON FAIR VALUE
A.3.1 Transfers between portfolios
No reclassifications have been performed in the UBI Banca Group either in the current year, or in
the previous year in financial asset portfolios from asset classes recognised at fair value into
classes recognised at amortised cost with regard to the possibilities introduced by EC Regulation
No. 1004/2008 of the European Commission.
260
A.3.2 Fair value hierarchy
The fair value used for measuring financial instruments is determined on the basis of criteria,
listed below, which involve the use of what are termed observable or unobservable inputs.
Observable inputs are parameters developed on the basis of available market data and they reflect
the assumptions that market participants should use when they price financial instruments. On
the other hand, unobservable inputs are parameters for which market data are not available and
which are therefore developed on the basis of the best available information on the assumptions
that market participants should use when they price financial instruments.
Fair value determined on the basis of level 1 inputs:
the measurement is based on observable inputs, i.e. prices listed on active markets for identical
financial instruments to which the entity can gain access on the valuation date of the instrument.
A market is defined as active when the prices quoted reflect normal market transactions, are
regularly and readily available and if those prices represent actual and regular market trading.
Fair value determined on the basis of level 2 inputs:
the measurement is performed using methods that are used if the instrument is not listed on an
active market and is therefore based on inputs that are different from those of level one. The
measurement of the financial instrument is based on prices inferred from market quotations for
similar assets or by using measurement techniques for which all the significant factors – credit
spreads and liquidity spreads – are inferred from observable market variables. Although this is
the application of a measurement technique, there is basically no element of discretion in the
resulting price, because the most important parameters used are drawn from markets and the
calculation methods used replicate quotations existing on active markets.
fair value determined on the basis of level 3 inputs:
the measurement is performed using methods which consist of measuring unlisted instruments
by employing significant inputs not inferable from markets and which therefore involve the use of
estimates and assumptions made by management.
The choice of the method of measuring fair value is not optional, because the methods must be
applied in hierarchical order.
Level 1
Equity instruments quoted on regulated markets, bonds quoted on the EuroMot circuit and those
for which prices that represent actual and regular market transactions continuously available
from the main contribution platforms occurring on the basis of a normal reference period with
price fluctuations over the last five days which occur at intervals considered normal are
considered as quoted on an active market.
Those derivatives for which a quotation on an active reference market (e.g. IDEM) are also
considered as quoted, to the extent that the markets are considered highly liquid.
The fair value of these instruments is calculated on the basis of the relative closing prices on the
last day of the month on the markets on which they are quoted.
The hedge funds issued by Capitalgest for which the NAV made available periodically by the fund
managers and for which it is considered that no adjustment need be made to take account of
liquidity risk and/or counterparty risk are also considered as quoted.
Level 2
Where no prices are available on active markets, the fair value of instruments is measured by
using measurement models which make use of market inputs. The resulting measurement is
therefore based on factors inferred from official quotations, essentially similar in terms of risk
factors, by applying a determined method of calculation.
With regard to derivatives, almost all the trading instruments consist of over the counter
derivatives and they are therefore measured using internal models that use market inputs. The
options implicit in structured bonds and in the respective hedging derivatives are measured using
261
appropriate pricing models which make use of directly observable market inputs (e.g. interest rate
curves, volatility matrices and correlations, exchange rates). The calculation methodologies used
replicate the prices of financial instruments listed on active markets without making discretionary
assumptions which might influence the final price.
As concerns equity instruments recognised within the available-for-sale portfolio, these are
classified as within level two if they are measured on the basis of measurement methods which
consider transactions occurring in the instrument in a reasonable period of time with respect to
the date of measurement and in some cases, by means of stock market multiples for comparable
companies.
Finally the “plain vanilla” bonds in issue and the “plain vanilla” component of structured bonds
are valued by discounting future cash flows to present values. The curve used for subordinated
issues is obtained by applying the UBI subordinated spread observed for transactions with a
duration equal to the residual life of the bond to the risk free curve. The curve used for senior
issues destined for institutional customers is the UBI EMTN curve. Finally the curve used to
determine the fair value of issues subscribed by ordinary customers is obtained by applying the
spreads observed in the last quarter for issues with a maturity equal to the residual life of
individual bonds to the risk free curve.
Level 3
Level three is defined as the fair value determined using measurement models which use inputs
that are not directly observable on markets and which involve the use of estimates and
assumptions by management.
Hedge funds not managed by Capitalgest to which adjustments have been made to take account
of liquidity and/or counterparty risk are included in level three, and they do not therefore assume
that the NAV reported by the managers is totally reliable.
Complex OTC derivatives are measured using internal models that use implicit assumptions; the
credit risk component is also considered explicitly for these.
The remaining part of the equity instruments classified as available-for-sale are measured using
methods based on an analysis of the fundamentals of the company in question and, as an
alternative of last resort, at cost.
It is necessary to use valuation models to measure the level three fair value of options with
underlying equity instruments that involve the use of market inputs that are not directly
observable and which involve the use of estimates and assumptions in the measurement. More
specifically the measurement instruments are designed using appropriate calculation methods
based on specific assumptions that regard:
o the performance of future cash flows, affected by future events to which
probabilities are assigned based on historical experience or on behavioural
assumptions;
o determined input parameters not observable on active markets which are estimated
from financial instruments observable on the market but not identical to the
instruments measured.
Finally, with regard to bonds issued, these are recognised within level 3 and measured at cost if
this correlates directly with the financing operation.
Information on the valuation models used for securities and derivatives
The target instrument used for pricing securities and derivatives in the UBI Group is the software
application Mxg2000 by Murex. This software takes account of all market factors in measuring
the value of financial instruments.
The majority of the market data is acquired through the information provider Reuters, partly in
real time (i.e. prices, yield curves and exchange rates) and partly at preset times (ATM volatility for
swaptions and ATM volatility and smile curves for caps and floors). The application is also fed “on
demand” with a series of market parameters supplied by the provider Bloomberg: correlations,
dividend yields, index and forex volatility.
Fair value is calculated daily as follows:
262
•
•
the market parameters acquired in real time by Mxg2000 (prices, yield curves and
exchange rates) are crystallised at 4.45 p.m. and used as reference data for calculating the
mark-to-market. The last update of the day for the volatilities of swaptions and caps/floors
(and the other market data acquired on demand if necessary) is performed at 4.45 p.m.;
at the end of the day closure (which occurs at 9.00 p.m.), a series of software procedures
are performed which extract various information from Mxg2000 including the reference
mark-to-market for the day.
The pricing of unlisted financial assets is currently calculated using the software application Risk
Watch by Algorithmics, before the full migration of Group portfolios onto the Mxg2000 Front
Office target system takes place. For these instruments the future cash flows are discounted to
present values using interest rates which take into account the specific nature of the issuer
(credit spread).
OTC derivatives on interest rates and exchange rates and derivatives used to hedge bonds (with
interest rates and currencies as the underlying) are valued using the target software (Mxg2000).
Values are measured for all contracts which can be priced using closed formula models. In detail,
the main pricing models used in Mxg2000 for OTC derivatives are: Black Yield, Black Fwd, Black
Swap Yield, Cox Fwd, Trinomial, Lnormal and CMS Convexity Analytical.
Derivative instruments that are not managed in Murex, relating to embedded options in
structured bonds issued and in the respective derivative hedges are valued using internal models
(stochastic models with MonteCarlo simulations).
Pricing for unlisted “plain vanilla” liabilities securities and the “plain vanilla” component of
structured securities is currently calculated on the Front Office Mxg2000 target system.
The pricing models employed for securities and derivatives are used continuously over time and
are only modified when substantial market changes occur.
A.3.2.1 Accounting portfolios: distribution by fair value level
Financial assets/liabilities measured at fair value
Total
31.12.2010
Level 1
31.12.2009
Level 2
Level 3
Level 1
Level 2
Level 3
2.038.701
584.841
109.209
590.022
955.942
116.208
-
31.078
108.819
-
29.800
64.908
8.874.363
1.296.198
82.058
4.548.203
1.754.222
83.832
-
591.127
-
-
633.263
-
11.029.272
2.472.166
222.345
5.247.044
3.343.427
178.540
-
410.453
543.970
-
112.595
742.792
2. Financial liabilities at fair value
-
-
-
-
-
-
-
1.228.056
-
-
927.319
-
410.453
1.772.026
-
112.595
1.670.111
-
Total
263
A.3.2.2 Annual changes in financial assets recognised at fair value (level 3)
FINANCI AL ASSETS
meas ured at fair
value
held for trading
1. Opening balances
2. Increases
available-fo r-sale
hedges
29.800
90.867
64.908
8.341
83.832
29.604
-
2.1. Purchase s
2.2. Profits rec ognise d in:
2.2.1. Income stateme nt
4.076
3.563
13.840
-
2.601
1.815
973
-
- of which gains
2.2.2. Equity
2.3. Transfers from other leve ls
2.246
484
-
3.1.Sales
3.2. Redemptions
3.3. Loss es re cognise d in:
3.4. Transfers to othe r lev els
3.5. Other dec rease s
4. Closing balances
-
3.815
(11.458)
2.963
(42.171)
7.251
(31.378)
-
(8.6 22)
(39.636)
(29.032)
-
(3 15)
-
-
-
(2.0 84)
(2.0 84)
(2.535)
(2.028)
(264)
(243)
(1.806)
-
31.078
(260)
(16)
82.058
-
X
2.4. Other incre as es
3. Decreases
3.3.1. Income stateme nt
- of which losse s
3.3.2. Equity
80.375
960
2.014
5.526
X
X
X
(4 37)
109.209
The amount in line 2.3 “Transfers from other levels” under the column for financial assets held for
trading relates exclusively to Centrobanca Spa. The transfer relating to equity instruments (equity
investments for merchant banking) is the result of a more precise classification than that
performed in 2009, in compliance with the methods described in sub-section A.3.2.
The item for that same line under the column available-for-sale financial assets relates essentially
to the instrument SF Equitalia 11 TVP.
A.3.2.2 Annual changes in financial liabilities recognised at fair value (level 3)
No financial liabilities recognised at fair value level 3 exist in the UBI Group.
264
Part B – Notes to the consolidated statement
of financial position
ASSETS
SECTION 1 Cash and cash equivalents – Item 10
1.1 Cash and cash equivalents: composition
31/12/2010
a) Cash in hand
b) Deposits with central banks
Total
31/12/2009
609.040
609.040
683.845
683.845
SECTION 2 Financial assets held for trading – Item 20
2.1 Financial assets held for trading: composition by type
Item s /Am ou n ts
3 1 /12 /2 01 0
L 1
3 1/1 2/ 20 09
3 1/ 12 /20 1 0
L 2
L3
31 /1 2/2 0 09
L 1
L 2
L 3
A. O n- balan ce sh eet ass ets
1. De bt in stru m en ts
1 .964 .31 9
1 1.0 13
-
1 .97 5.33 2
4 79. 546
150 .58 2
-
1 .1 St ru ct ur ed ins t rum e nt s
8
2.7 92
-
2.80 0
107
7 .91 6
-
8. 023
1 .2 Ot he r d ebt in s tru m en ts
1 .964 .31 1
8.2 21
-
1 .97 2.53 2
4 79. 439
142 .66 6
-
6 22. 105
2. Equ ity in st ru m en ts
3. Un it s in O .I .C.R.
(c ollec t ive in v es tm e nt in st ru me nt s )
4. Fin an cin g
72 .85 6
2
104. 082
17 6.94 0
1 09. 266
80 .59 2
2 0.5 35
51 2
54
1. 601
2.16 7
628
8
8.6 42
-
6 4.1 71
4 .1 Rev er se re pu rch as e agr ee me nt s
-
4 .2 Ot he r
-
T otal A
2 .0 37 .6 87
-
6 4.1 71
-
75 .2 4 0
6 4.17 1
10 5. 68 3
6 4.17 1
2 .2 18 .6 10
2 10. 393
9. 278
-
3 .13 4
-
-
-
-
-
3 .13 4
-
58 9. 44 0
23 4 .3 16
6 30. 128
29 .1 77
3. 134
3. 134
85 2. 93 3
B. Der iva tive in s tru m ent s
1. Fin an cial de rivat iv es
1 .1 for tradin g
1 .01 4
50 9.6 01
1 .01 4
50 4.6 59
1 .2 con ne ct e d wi th fair v alue opt ions
-
1 .3 ot h er
-
4.9 42
3. 526
51 4.14 1
3. 526
50 9.19 9
-
582
582
-
4.94 2
721 .62 6
6 23
707 .65 0
6 23
7 22. 831
7 08. 855
-
-
-
-
13 .97 6
-
13. 976
2. Cre dit de riv at ive s
-
-
-
-
-
-
-
-
2 .1 for tradin g
-
-
-
-
-
-
-
-
2 .2 con ne ct e d wi th fair v alue opt ions
-
-
-
-
-
-
-
-
2 .3 ot h er
-
-
-
-
-
-
-
-
T otal B
T otal (A +B )
1 .0 14
5 09 .6 0 1
3. 52 6
5 14 .1 41
58 2
72 1 .6 26
6 23
72 2. 83 1
2 .0 38 .7 01
5 84 .8 4 1
10 9. 20 9
2 .7 32 .7 51
59 0. 02 2
95 5 .9 42
29 .8 00
1. 57 5. 76 4
Equity instruments also include equity investments held for merchant banking activity, performed
mainly by Centrobanca Spa.
Item 1.2 “Other debt instruments – Level 2” includes impaired assets consisting of bonds issued
by Lehman Brothers for a nominal amount of 10 million euro recognised at 8,625% of the
nominal amount.
During the year part of those instruments with a nominal amount of 2,5 million euro were
disposed of, with the realisation of a profit of approximately 309 thousand euro.
Item 3 “OICR units (collective investment instruments)” relates exclusively to remaining
investments in hedge funds.
Item 4 “ Financing – Level 2” relates to salary backed loans of the the subsidiary Prestitalia Spa to
be sold to third parties.
265
2.2 Financial assets held for trading: composition by debtors/issuers
31/12/2010
31/12/2009
A. ASSETS
1. Debt instrument s
a) Gover nments and Central Banks
b ) Other public authorities
c) Banks
d ) Other issuers
2. Equity instrument s
a) Banks
b ) Other issuers:
- insurance companies
- financial comp anies
- non financial comp anies
- other
3. Units in O.I.C.R. (collective investment instr uments)
1.975.332
630.128
1.906.508
450 .38 4
7
14 2
35.394
82 .87 4
33.423
96 .72 8
176.940
210.393
5.400
8 .01 4
171.540
202 .37 9
3.605
7 .49 3
47.368
64 .87 9
116.713
126 .30 9
3.854
3 .69 8
2.167
9.278
64.171
3.134
-
-
b ) Other public authorities
-
-
c) Banks
-
-
d ) Other
64.171
3 .13 4
2.218.610
852.933
159.984
348 .20 0
4. Financing
Tot al A
B. DERIVATI VE INSTRUMENTS
a) Banks
- fair va lue
b ) Customers
- fair va lue
Total B
Total (A+B)
354.157
374 .63 1
514.141
722.831
2.732.751
1.575.764
2.3 Financial assets held for trading: annual changes
Changes/Underlying assets
Units in O.I.C.R.
Financing
630.128
210.393
9.278
3.134
852.933
12.593.333
181.832
4.741
64.171
12.844.077
12.137.235
171.944
4.128
-
12.313.307
18.763
5.622
117
-
24.502
437.335
4.266
496
64.171
506.268
C. Decreases
(11.248.129)
(215.285)
(11.852)
(3.134)
(11.478.400)
C.1 Sales
(10.990.281)
(201.431)
(3.918)
-
(11.195.630)
(108.759)
-
(7.656)
-
(116.415)
(20.178)
( 7.473)
(275)
-
(27.926)
-
-
-
-
-
(128.911)
( 6.381)
(3)
(3.134)
(138.429)
1.975.332
176.940
2.167
64.171
2.218.610
A. Opening balances
B. Increases
B.1 Purchases
B.2 Positive changes in fair value
B.3 Other changes
C.2 Redempti ons
C.3 Negative changes in fair value
C.4 Transfers to other portfolios
C.5 Other changes
D. Final balances
Debt instruments
Equity instruments
Total
Within debt instrument item B.3 “Other changes” (increased), the amount of 409,3 million euro
relates to uncovered short positions existing at the end of the year. Similarly, item C.5, “Other
changes” (decreased) includes an amount of 111 million euro relating to the total uncovered short
positions existing at the end of the year before.
266
Section 3 Financial assets at fair value –Item 30
3.1 Financial assets at fair value: composition by type
Items/Amounts
L1
1. Debt instruments
1.1 Structured instruments
1.2 Other debt instruments
(collective investment instruments)
4. Financing
4.1 Structured
4.2 Other
Total
31/12/2010
L2
L3
Total
31/12/2009
L1
L2
L3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
116.208
-
31.078
147.286
108.819
-
64.908
173.727
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
116.208
-
31.078
147.286
108.819
-
64.908
173.727
Cost
116.208
-
31.078
147.286
108.819
-
64.908
173.727
: 103000O|1 – NOTA
Item 3, “OICR units (collective investment instruments)”, relates exclusively to units in hedge
funds subscribed by UBI Banca Scpa. The decrease in the total is attributable to a decision by
management to reduce investments in this area.
Investments in hedge funds were classified within “Level 1” for which the NAV is communicated
regularly and for which the assets of the fund are totally liquid.
However, hedge funds were classified within “Level 3” for which the NAV was replaced by prudent
measurement methods devised internally because there are no prospects of redemption in the
short term (suspended redemptions, exit gates or side pockets) and where recovery of the
investment is therefore probable in instalments over time.
Information on the impacts on profit and loss are given in “Part C – Notes to the income
statement” at the foot of table 7.1. “Net value change in financial assets/liabilities at fair value”,
which may be consulted.
3.2 Financial assets at fair value: composition by debtors/issuers
Items/Amounts
31/12/2010
31/12/2009
-
-
a) Governments and Central Banks
-
-
b) Other public author ities
-
-
c) Banks
-
-
d) Other issuers
-
-
-
-
a) Banks
-
-
b) Other issuers:
-
-
-
-
- financial companies
-
-
- non financial companies
-
-
- other
-
-
147.286
173.727
-
-
-
-
b) Other public authorities
-
-
c) Banks
-
-
d) Other
-
-
147.286
173.727
4. Financing
Tot al
267
3.3 Financial assets at fair value: annual changes
Debt instruments
Equity instruments
Units in O.I.C.R.
Financing
Total
A. Opening balances
-
-
173.727
-
173.727
B. Inc reases
-
-
12.167
-
12.167
B.1 Purchases
-
-
-
-
-
-
-
7.873
-
7.873
B.3 Other changes
C. Decreases
-
-
4.294
-
4.294
-
-
(38.608)
-
(38.608)
C.1 Sales
-
-
-
-
-
C.2 Redempti ons
-
-
( 36.073)
-
(36.073)
-
-
(2.028)
-
(2.028)
C.4 Other changes
-
-
(507)
-
(507)
-
-
147.286
-
147.286
D. Final balances
SECTION 4 Available-for-sale financial assets – Item 40
4.1
Available-for-sale financial assets: composition by type
31/12/2010
Items/Amounts
1. Debt instruments
31/12/2009
Total
L1
L2
L3
Total
L1
L2
L3
8.509.464
1.115.988
10.255
9.635.707
4.041.201
1.573.093
6.586
177.191
-
-
177.191
128.752
41.798
-
170.550
8.332.273
1.115.988
10.255
9.458.516
3.912.449
1.531.295
6.586
5.450.330
346.586
73.614
70.357
490.557
489.825
71.083
75.540
636.448
2.1 At fair value
346.586
73.588
46.008
466.182
489.825
71.057
31.823
592.705
2.2 At cost
-
26
24.349
24.375
-
26
43.717
43.743
18.313
106.596
-
124.909
17.177
110.046
260
127.483
(collective investment instruments)
4. Financing
Total
5.620.880
-
-
1.446
1.446
-
-
1.446
1.446
8.874.363
1.296.198
82.058
10.252.619
4.548.203
1.754.222
83.832
6.386.257
Equity instruments are recognised within “Level 3” if, for example, in the absence of a price
quoted on an active market, their fair value is estimated by assuming the value at cost or the
quota of the equity corresponding to the interest held.
In consideration of the particular nature of the shareholding, the equity investment held by Banca
Carime Spa in the Bank of Italy of approximately 422 thousand euro is recognised at cost.
Amounts recognised at cost also include all the equity investments held by the Group for the
purposes of a more solid presence on its local markets and for the development of commercial
agreements.
The units held in “OICR units” (collective investment instruments) relate mainly to investments in
private equity funds. The units held in “Level 1” OICR units” relate mainly to the book value of
Polis funds.
268
4.2 Available-for-sale financial assets: composition by debtors/issuers
Items/Amounts
c) Banks
d) Other issuers
31/12/2010
31/12/2009
9.635.707
5.620.880
7. 779.641
3. 675.786
-
-
890.267
1. 070.838
965.799
874.256
490.557
636.448
a) Banks
332.655
494.958
b) Other issuers:
157.902
141.490
4.499
4.518
- financial companies
54.758
47.092
- non financial companies
95.883
87.171
- other
4. Financing
2.762
2.709
124.909
127.483
1.446
1.446
-
-
-
-
c) Banks
-
-
d) Other
1.446
1.446
10.252.619
6.386.257
Tot al
Equity instruments include shares acquired by the network banks following partial conversions of
restructured loans.
|1 - NOTA
4.3 Available-for-sale financial assets: hedged assets
Items/Components
31/12/2010
31/12/2009
1. Financial assets subject to fair value specific hedge
a) interest rate risk
5. 694.419
3. 768.135
b) price risk
-
-
c) currency risk
-
-
d) credit risk
-
-
-
-
-
-
b) currency risk
-
-
c) other
-
-
5.694.419
3.768.135
e) multiple r isks
2. Financial assets subject to cash flow specific hedge
Tot al
Investments in available-for-sale financial assets (government securities – and other debt
instruments) subject to specific fair value hedges on interest rate risk were increased during the
year.
As summarised in section 5.1 of the part on the income statement, item 90 “Net hedging income”,
the valuation of hedging contracts and the underlying assets led to the recognition of a net loss of
2,2 million euro.
269
4.4 Available-for-sale financial assets: annual changes
Debt inst rume nts
Equity instruments
Unit s in O.I.C .R.
Financing
Tot al
A. Opening b alances
5.620.880
636.448
127.483
1.446
B. Inc reases
8.799.516
145.982
20.497
-
8.965. 995
8. 611.208
128.429
16.605
-
8.756. 242
B. 2 Positive changes in f air value
39.176
5.329
3.521
-
48. 026
B. 3 Reversal of impairment losses
-
-
-
-
-
-
-
-
-
-
B. 1 Purchases
- recognised in the income statement
- recognised in equity
B. 4 Transfers from other portfolios
B. 5 Other changes
6.386.257
-
-
-
-
-
2
409
-
-
411
149.130
11.815
371
-
161. 316
C. Decreases
( 4.784.689)
( 291.873)
(23.071)
-
(5.099.633)
C. 1 Sales
(4. 080.323)
(119.465)
(18. 336)
-
(4.218. 124)
C. 2 Redempti ons
(335.290)
-
(2. 900)
-
(338. 190)
C. 3 N egative changes in fair value
(336.746)
(8.068)
(1. 583)
-
(346. 397)
(474)
(164.286)
(249)
-
(165. 009)
(474)
(40.240)
(249)
-
(40. 963)
-
(124.046)
-
-
(124. 046)
C. 4 Impairment losses
- recognised in the income statement
- recognised in equity
C. 5 Transfers to other portfolios
C. 6 Other changes
D. Final balances
-
-
-
-
-
(31.856)
(54)
(3)
-
(31. 913)
9.635.707
490.557
124.909
1.446
10.252.619
Purchases of debt instruments consisted mainly of investments in government securities
(approximately eight billion euro), while the remaining part consisted of purchases of bonds
issued by major banks.
Again with regard to debt instruments, the decrease in fair value was attributable to the serious
economic situation on markets (especially in the last quarter of the year). The mark-to-market
recognition of instruments was performed in a separate fair value reserve in equity.
Investments in equity instruments included the following purchases: ETF TRACK EURXX50 for 20
million euro, Autostrade Padane Spa for 0,8 million euro, Autostrada Pedemontana Spa for 6,7
million euro, RBC DEXIA INV SE BK for 92 million euro and other equity investments acquired as
part of loan restructuring including GGP Greenfield Azioni A3 for 4,2 million euro and Greenvision
Ambiente Spa for 2,8 million euro.
The purchase of RBC DEXIA INV SE BK was performed as part of the operation to contribute the
depository bank operations. UBI Banca later disposed of those instruments during the year.
In addition to RBC DEXIA just mentioned, the main sales of equity instruments concerned
Cartasi Spa amounting to 23,4 million euro.
The decreases in fair value recognised through profit and loss consisted of 2,7 million euro
relating to A2A Spa and 36,8 million euro relating to Banca Intesa Sanpaolo Spa.
The effects in the income statement and the movements in the reserve are given below for the
latter investment.
historica l values
No. shares unit price
145.022.912
5,686
cost
824.600
values
31/12/2009
movements in reserves and in t he
income st atement to 31/12/2009
unit price fair value
recognition in the
income statement
reversal of share
(already
to reserve (gross of performed to 30th
tax)
June 2009)
3,1654
459. 056
126.069
32.369
270
values
31/12/2010
unit price fair value
2, 0423
296.180
mov ements in r eser ves and in the
income stat ement to 31/12/2010
fair value change
of share in reserve
(gross of t ax)
recognition in the
income statement
(126.069)
(36. 807)
SECTION 5 Held-to-maturity investments – Item 50
5.1 Held-to-maturity investments: composition by type
At the end of the 2009, the Parent disposed of its entire portfolio of held-to-maturity investments
and therefore no items of this type exist for the UBI Group.
5.2
Held-to-maturity investments: debtors/issuers
No items of this type exist in the UBI Group.
5.3 Held-to-maturity investments: hedged
No items of this type exist in the UBI Group.
5.4 Held-to-maturity investments: annual changes
No movements in the item occurred in 2010.
Table 2: 105030O|1 - NOTA
Section 6 Loans to banks – Item 60
6.1 Loans to banks: composition by type
Type of transactio n/ Amounts
A. Lo ans to C ent ral Banks
1 . T erm deposits
2 . Compulsory reserve requi rement
31/12/2010
31/12/2009
739.508
641.788
-
-
739 .50 8
641 .751
3 . Reverse rep ur chase agreements
-
-
4 . Other
-
37
2.380.844
2.636.476
1. 161 .396
1. 019 .692
2 . T erm deposits
466 .44 5
728 .828
3 . Other loans
753 .00 3
887 .956
3.1 Reverse repurchase agreements
98 8
99 .889
3.2 Finance leases
16 5
313
751 .85 0
787 .754
B. Lo ans to b anks
1 . Current accounts and dep osits
3.3 other
4 . Deb t instr uments
-
-
-
-
4.2 Other deb t instr uments
Tot al (carry ing a mo unt)
3.120.352
3.278.264
Tot al (fa ir value)
3.120.509
3.278.360
Deteriorated loans to banks as at 31/12/2010 amounted to 67 thousand euro.
The item “Other loans other” consists mainly of mortgages, cheques drawn on third parties and
pooled financing.
6.2 Loans to banks: assets subject to specific hedging
There were no loans to banks subject to specific hedging.
271
6.3 Finance leases
minimum payments
Duration
det eriorated
exposur es
gross investment
quo ta o f principal
of which guaranteed
remaining value
quota of inte rest
of which non guar ant eed
remaining value
on demand
-
-
-
-
-
-
up to 3 months
-
16
-
1
17
-
between 3 months and 1 year
-
51
-
3
54
-
from 1 year to 5 years
-
98
-
2
10 0
-
mor e than 5 years
-
-
-
-
-
-
indeterminate maturity
-
-
-
-
-
-
to tal gross value
-
165
-
6
171
-
SECTION 7 Loans to customers – Item 70
7.1 Loans to customers: composition by type
Type of transaction/ Amounts
1. Current account over drafts
2. Reverse r epurcha se agreements
3. Mortgages
31/ 12/2010
Perfor ming
31/12/2009
Deterior ated
Performing
Det eriorate d
12.656. 534
1.067.391
13.164.385
323. 597
-
292.127
921.874
-
51.431. 308
2.512.658
48.045.671
2. 104.763
4. Credit cards, personal loans and salary backed loans
6.200. 764
144.009
6.482.139
106.801
5. Finance leases
8.821. 521
769.279
8.905.062
664.558
6. Factoring
7. Other transactions
8. Debt instruments
2.971. 751
16.946
2.484.931
48.846
14.097. 107
749.846
13.978.709
684.392
2.825
51. 118
1.000
101.512
8.1 Structur ed instruments
3. 409
-
31.113
-
47. 709
1.000
89.056
2.825
Tot al (carrying a mount)
96.553.700
5.261.129
93.473.193
4.534.059
Tot al (fa ir value)
98.756.310
5.260.108
95.797.250
4.564.415
On the basis of Bank of Italy instructions, from 31st December 2009 impaired assets include loans
that have been past due and/or in arrears for more than 90 days backed by property mortgages
amounting to 294,8 million euro.
Reverse repurchase agreement transactions amounting to 0,3 million euro were performed with
Cassa di Compensazione e Garanzia (central counterparty clearing).
Other transactions included a security deposit with the Cassa di Compensazione e Garanzia
amounting to 690 million euro.
Table 3: 107000O|1 - NOTA2_ASS
272
7.2 Loans to customers: composition by debtors/issuers
3 1/ 12 / 2 0 10
3 1/ 12 / 2 0 0 9
T yp e o f t ra n s a c t io n / A m o u n t s
P e rf o rm in g
1. D e b t in s t ru m e n t s
D e t e rio ra t e d
5 1.118
a ) Go ve rnm e nts
P e rf o rm in g
1.0 0 0
D e t e rio ra t e d
10 3 .3 3 7
1.0 0 0
-
-
-
8.026
-
8.456
43.092
1.000
94.881
5.524
-
5.523
-
37.568
1.000
79.346
1.000
- ins ura nc e c o m pa nie s
-
-
10.012
-
- o the r
-
-
-
-
b) Othe r public a utho ritie s
c ) Othe r is s ue rs
- no n fina nc ia l c o m pa nie s
- fina nc ia l c o m pa nie s
2 . F in a n c in g t o
a ) Go ve rnm e nts
b) Othe r public a utho ritie s
c ) Othe r
- no n fina nc ia l c o m pa nie s
- fina nc ia l c o m pa nie s
- ins ura nc e c o m pa nie s
- o the r
To ta l
9 6 .5 0 2 .5 8 2
5 .2 6 0 .12 9
9 3 .3 7 1.6 8 1
-
1.000
4 .5 3 1.2 3 4
91.716
1
122.763
-
1.001.685
2.323
993.651
2.067
95.409.181
5.257.805
92.255.267
4.529.167
55.995.639
3.958.314
55.961.312
3.404.354
4.981.460
68.283
4.570.089
166.657
124.449
112
53.942
104
34.307.633
1.231.096
31.669.924
958.052
9 6 .5 5 3 .7 0 0
273
5 .2 6 1.12 9
9 3 .4 7 5 .0 18
4 .5 3 2 .2 3 4
7.3 Loans to customers: assets subject to specific hedge
Type of transac tion/ Amounts
31/12/2010
31/12/2009
1. Loans subject to fair va lue specif ic hedge:
370.600
755.617
c) currency risk
-
-
d) credit risk
-
-
e ) multiple risks
-
-
-
-
b) currency risk
-
-
c) other
-
-
370.600
755.617
2. Loans subject to cash flow specific hedge:
Tot al
7.4 Finance leases
minimum payments
Dura tio n
det eriorated
exposur es
gross investment
quota of pr incipal
of which quo ta of intere st
guar ant eed
remaining value
of which non
guaranteed
r emaining value
on demand
67. 600
284.701
-
-
284.701
up to 3 months
24. 276
287.370
15.187
8 3.960
371.330
b etween 3 months and 1 year
-
29. 929
863.933
50.345
229.919
1. 093.852
f rom 1 year to 5 yea rs
108. 843
2.959.7 63
294.194
839.851
3. 799.614
more than 5 years
200. 951
3.460.4 59
814.000
842.466
4. 302.925
indeterminate maturity
337. 680
965.294
-
-
965.294
-
769.279
8.821.520
1.173.726
1.996.196
10.817.716
-
total
The lending portfolio for the finance leases of UBI Leasing Spa, the product company of the Group
in the leasing sector, consists of 83.699 contracts, composed as follows:
− 72% property leases;
− 18% plant and equipment;
− 6% auto;
− 4% aeronautical sector.
The ten most significant exposures had a total remaining value amounting to 270.121 thousand
euro.
Potential lease instalments (equal to the index value of the instalments) were recognised
amounting to 130.578 thousand euro.
274
Section 8 Hedging derivatives – Item 80
8.1 Hedging derivatives: composition by type of contract and underlying assets
Type of derivative/Underlying
assets
31/12/2010
L1
L2
L3
A) Financial derivatives
-
591.127
1) Fair value
-
560.918
2) Cash flow
-
30.209
3) Foreign investments
-
B) Credit derivatives
31/12/2009
Total
-
nominal amount
L1
L2
L3
591.127
19.718.767
-
633.263
560.918
19.117.091
-
625.529
-
30.209
601.676
-
7.734
-
-
-
-
-
-
-
-
-
-
1) Fair value
-
-
-
-
2) Cash flow
-
-
-
-
Total
-
591.127
-
591.127
Total
nominal amount
633.263
27.452.549
625.529
27.081.756
-
7.734
370.793
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19.718.767
-
633.263
-
633.263
27.452.549
-
8.2 Hedging Derivatives: composition by portfolios hedged and type of hedge
Fair Value
Cash flow
Specific
Tr ansactions /Type o f
hedging
Inte rest rat e
risk
1. Availa ble-f or -sale financial
assets
2. Loans
3. Held-to-matur ity
investments
X
4. Portfolio
X
Credit risk
943
-
-
897
-
-
X
X
X
X
X
-
X
-
X
X
-
X
-
X
X
-
X
-
X
X
12 .44 5
-
-
-
-
-
-
-
-
546.6 33
-
X
X
-
2. Portfolio
X
Tot al lia bilities
546.633
1. Expected transactions
2. Portfolio of fina ncial assets
and liabilities
X
X
X
X
X
X
X
X
X
X
-
X
-
Macro-he dge
For eign
investments
-
X
Specific
Multiple
risks
Price r isk
1.840
Tot al assets
1. Financial liabilities
Currency
risk
Macr o-hedge
X
275
30. 209
-
-
X
X
-
-
X
30.209
X
-
X
-
X
X
-
X
X
-
12.445
X
-
X
X
X
X
-
-
SECTION 9 Fair value change in hedged financial assets – Item 90
9.1 Fair value change in hedged assets: composition by portfolios hedged
Fair value change in hedge d assets/Group components
31/12/2010
31/12/2009
1. Positive adjustments
1. 1 of specific portfolios:
a) loans
475.219
337.916
475.219
337.916
-
-
-
-
(46.146)
(36.064)
(46.146)
(36.064)
-
-
b) available-for-sale assets
1. 2 general
2. Negative adjust ment s
2. 1 of specific portfolios
a) loans
b) available-for-sale assets
2. 2 general
Tot al
-
-
429.073
301.852
09000O|1 - NOTA
9.2 Assets of the banking group subject to interest rate risk macro hedge: composition
Hedg ed a ssets
31/12/ 2010
1. Loans
31/12/ 2009
12.523.038
8.561.145
2. Availa ble-for -sale assets
-
-
3. Portfolio
-
-
12.523.038
8.561.145
Tot al
276
SECTION 10 Equity investments – Item 100
10.1 Equity investments in companies subject to joint control (valued using the equity
method) and in companies subject to significant influence: information on
investments
Name
Headquarters
Type of ow nership
Detail s of investment
Investing company
% hel d
% of votes
B. Companies
UBI Banca Scpa
23,124%
1. Arca SGR Spa
Milan
Significant influence
2. Aviva Assicurazioni Vita Spa
Milan
significant influence
UBI Banca Scpa
49,999%
49,999%
3. Aviva Vita Spa
Milan
UBI Banca Scpa
50,000%
50,000%
4. Capital Money Spa
Milan
UBI Banca Scpa
20,671%
20,671%
5. Ge.Se.Ri. Spa in liquidazione
Cuneo
100,000%
100,000%
Banca P opolare di Ancona Spa
3,584%
25,000%
6. Lombarda China Fund Management Co.
Shenzen (China) significant influence
UBI Banca Scpa
49,000%
49,000%
7. Lombarda Vita Spa
Brescia
UBI Banca Scpa
40,000%
40,000%
8. P risma Srl
Milan
UBI Banca Scpa
20,000%
20,000%
9. SF Consulting Srl
Mantua
UBI Banca Scpa
35,000%
35,000%
10. Sider Factor Spa
Milan
UBI Factor Spa
27,000%
27,000%
11. Sofipo Fiduciarie Sa
Lugano
Banque de Depots et de Gestion Sa
30,000%
30,000%
12. SP F Studio P rogetti Finanziari Srl
Roma
Banca P opolare di Ancona Spa
25,000%
25,000%
20,000%
13. T ex Factor Spa in liquidazione
Milan
UBI Factor Spa
20,000%
14. UBI Assicurazioni Spa
Milan
UBI Banca Scpa
49,999%
49,999%
15. UFI Servizi Srl
Rome
P restitalia Spa
23,167%
23,167%
The financial statements as at and for the year ended 31st December 2010 included exclusively
equity-accounted investees.
The larger equity investments were subjected to impairment testing, in some cases using the
average of the multiples of a sample of comparable companies, while in other cases reference was
made to market transactions occurring during the last financial year.
Greater information is given on the market values relating to the more significant equity
investments recognised in the consolidated financial statements of UBI Banca. Additionally, the
market value for the insurance companies Aviva Assicurazioni Vita Spa, Aviva Vita Spa and
Lombarda Vita Spa was calculated on the basis of a sample of companies quoted on active
European stock markets considering the multiple price/book value (P/BV) adjusted for minority
interests and for intangible assets. The source for the amounts used was Bloomberg. The equity
value was compared with the carrying amount of the equity investments in the consolidated
financial statements.
‐
‐
‐
Aviva Vita Assicurazioni Spa – the equity attributable to the Parent, amounting to 53,6
million euro, inclusive of profit to 31st December 2010 and also of a positive consolidation
difference amounting to 2,6 million euro compared to an equity value (pro rata) of 67,2 million
euro;
Aviva Vita Spa: the equity attributable to the Parent, amounting to 76,4 million euro,
inclusive of profit to 31st December 2010 compared to an equity value (pro rata) of 104,7
million euro;
Lombarda Vita Spa – the equity attributable to the Parent, amounting to 159,2 million euro,
inclusive of profit to 31st December 2010 and a positive consolidation difference amounting to
36,6 million euro compared to an equity value (pro rata) of 163,3 million euro.
As concerns UBI Assicurazioni Spa, the equity attributable to the Parent amounted to 38,7
million euro, inclusive of the result at the end of the year and of a positive consolidation difference
amounting to 5,6 million euro. An analysis of changes during the year in the market multiples of
comparable listed insurance companies and of the multiples of comparable transactions
performed in the sector showed that the book value of the investment was appropriate.
277
For further details “Part A. Accounting policies – Section 3 – Consolidation scope and methods” of
this report may be consulted.
10.2 Equity investments in companies subject to joint control and in companies subject to
significant influence: accounting information
Name
Total assets
Total revenues
Profit (Los s)
Co nsolidated
carrying amount
Equity
A. Equity accounted investees
1. Arc a SGR Spa
7.647
113.772
30.386
2. Aviv a Assicurazioni Vita Spa
2.491.807
289.623
5.000
101.896
52.558
3. Aviv a Vita Spa
4.384.400
119.400
2.000
152.798
77.449
10.574
10.032
3.615
1.565
4. Capital Mone y Spa
5. Ge.Se.Ri. Spa in liquidazione
6. Lombard a China Fund Management Co.
7. Lombard a Vita Spa
8. Prisma Srl
169.767
1 72.590
35
-
16.119
8.755
5.657.451
1.496.909
828
1.012
9. SF Consulting Srl
6.119
5.045
10. Sider F actor Spa
(35)
(299)
30.785
(329)
-
13.747
6.736
324.711
159.250
(117)
127
25
46
556
195
93.050
2.346
669
3.357
907
11. Sofipo Fiduciarie Sa
3.117
763
3.938
2.443
733
12. SPF Studio Progetti e Servizi Finanziari Srl
1.155
839
6
143
38
13. Te x Factor Spa in liquidazione
1.635
598
(222)
1.635
327
(4.337)
14. UBI As sicurazioni Spa
66.189
38.687
464
347
60
224
38
15.706
43.375
5.466
6.558
732
2.959
3. By You Mutui Srl
6.927
15.329
4. By You Liguria Srl
1.222
4.639
15. UFI Se rvizi Srl
B. Proportionately cons olidated companies
1. By You Spa
2. By You Piemonte Srl
598.768
189.640
(442)
1.565
(249)
1.866
(68)
xxx
xxx
443
1.384
6. Polis F ond i SGR Spa
12.344
5.855
934
9.710
xxx
212
52
29
116
xxx
23
xxx
8. UBI Trust Company Ltd.
TOTAL
32
13
13.472.907
2.371.505
(75)
52.357
126
xxx
xxx
5. By You Ad riatic a Srl
7. Sinte si Mutuo Srl
(12)
(44)
803.171
xxx
368.894
For companies subject to significant influence valued using the equity method, the fair value is
not used because they are investments in companies that are not listed on active markets.
278
10.3 Annual changes in equity investments
31/12/2010
A Opening balances
B Increas es
B.1 Purchases
B.2 Re versals of impairme nt los ses
B.3 Re valuations
B.4 Othe r change s
31/12/2009
413.943
34.868
246.099
169.777
13.988
55 .032
-
-
20.880
114 .745
(79.917)
(1.933)
(36.812)
-
-
(43.105)
368.894
(1.933)
413.943
E Total revaluations
-
-
F Total impairment losses
-
-
C De creases
C.1 Sales
C.2 Impairment loss es
C.3 Othe r change s
D Final balances
The amount recognised on line B.1 “Purchases” is the result of the increases in the share capital
subscribed and paid up by the Parent for Lombarda Vita Spa.
The amount recognised on line B.4 “Other changes” consists of the following:
‐ an amount of 536 thousand euro for positive exchange rate differences;
‐ an amount of 90 thousand euro for increases in reserves;
‐ profits for the year totalling 20.254 thousand euro. More specifically:
o Aviva Vita Spa
2.000 thousand euro
o Lombarda Vita Spa
14.146 thousand euro
o Aviva Vita Assicurazioni Spa
1.500 thousand euro
o Arca SGR Spa
2.224 thousand euro
The amount recognised on line C.1 “Sales” relates to the sale to third parties of a 9,9% interest in
the share capital of Lombarda Vita Spa for 36.716 thousand euro and the disposal of 100% of
Secur Broker Srl for 96 thousand euro.
The amount recognised on line C.3 “Other changes” is composed as follows:
‐ dividends of 23.199 thousand euro;
‐ losses for the year for a total 2.460 thousand euro including 2.168 thousand euro relating
to UBI Assicurazioni Spa and 147 thousand euro to Lombarda China Fund Management
Co.;
‐ other decreases of 17.466 thousand euro relating almost totally to changes in the fair
value reserves of UBI Assicurazioni Spa amounting to 3.037 thousand euro and to
Lombarda Vita Spa amounting to 14.307 thousand euro.
10.4 Commitments relating to equity investments in subsidiaries
Commitments relating to the possible exercise of options
Banca Popolare Commercio e Industria/Banca Carime/Banca Popolare di Ancona – banc
assurance agreement with the Aviva Group: this agreement between UBI Banca and Aviva
involves three call options granted to UBI on equity investments in banks (BPCI, Carime and
Popolare di Ancona) for which the trigger events are connected with the performance of the jointventure or the termination of the distribution agreement or the exclusive distribution condition. If
UBI fails to exercise the call options, Aviva will have the right from 30th September 2016 (from 1st
279
January 2020 in the case of the investment in Popolare di Ancona), to exercise a put option on the
same investments at a price equal to the fair value at the time of exercise.
10.5 Commitments relating to equity investments in companies subject to joint control
Commitments connected with the possible payment of further tranches of the price
Nothing to report.
10.6 Commitments relating to equity investments in companies subject to significant
influence
Commitments relating to the possible exercise of options
Lombarda Vita Spa: as part of the renewal of life banc assurance agreements with the Cattolica
Assicurazioni Group concluded on 30th September 2010, the options on the respective
investments in the Lombarda Vita joint venture were reformulated with purchase options only,
exercisable on the basis of the occurrence of predetermined conditions.
Lombarda China Fund Management Company: the partnership agreement signed between UBI
Banca and Goudu Securities Banca Ltd. in the asset management sector, focused on the Chinese
market, involves a series of intersecting put/call options which can be exercised if determined
trigger events occur concerning the respective investments held in Lombarda China Fund
Management.
Aviva Vita Spa: on 23rd February 2011 UBI Banca subscribed and paid up its part – amounting
to five million euro – of a share capital increase performed by Aviva Vita Spa for a total 10 million
euro. This payment is the first tranche of an operation to recapitalise the associate company for a
total of 20 million euro. The remaining ten million euro may be called by the company by 31st
December 2012.
280
SECTION 11 Technical reserves of reinsurers – Item 110
No items of this type exist.
SECTION 12 Property, equipment and investment property – Item 120
12.1 Property, equipment and investment property: composition of assets valued at cost
31/12/2010
Assets /amounts
31/12/2009
A. As sets us ed in operations
1.1 owned
a) land
b) buildings
c) furnishings
d) electronic e quipment
e) other
1.2 acquired through finance leases
a) land
b) buildings
c) furnishings
d) electronic e quipment
e) other
Total A
B. As sets held for investment
2.1 owned
a) land
b) buildings
2.2 acquired through finance leases
a) land
b) buildings
Total B
Total (A+B)
1.891.547
884.296
1.932.480
904.231
814.977
822.851
50.393
62.646
79.235
44.075
22.123
51.985
70.430
82.983
48.409
23.011
21.518
203
23.820
164
113
154
118
1.935.622
1.260
1.980.889
177.042
103.864
125.946
65.703
73.178
-
60.243
-
177.042
125.946
2.112.664
2.106.835
12.2 Property, equipment and investment property: composition of the assets at fair value
or revalued
No property, equipment and investment property at fair value are held.
281
12.3 Property, equipment and investment property used in operations: annual changes
Land
A. Gross opening balances
A.1 Total net reductions in value
Buildings
Electronic
equipment
Furnishings
Othe r
Total
1.031.684
(10 4.442)
1.536.298
(689.627)
219.471
(167.32 2)
424.558
(353.974)
394.786
(310.543)
3.606.797
(1.625.908)
927.242
846.671
52.149
70.584
84.243
1.980.889
26.071
11.4 97
-
58.008
24.748
2.124
10.482
10.326
-
31.407
30.680
-
27.915
27.854
-
153.883
105.105
2.124
B.3 Rev ers al of impairment losse s
-
-
-
-
-
-
B.4 Positive changes in fair value recognised in:
a) equity
-
-
-
-
-
-
A.2 Net opening balances
B. Increases
B.1 Purc hases
B.2 Capitalised improvement e xpenses
b) income s tate ment
B.5 Positive exchange rate differenc es
B.6 Transfe rs from properties he ld for inve stment
B.7 Other c hanges
- business combinations
- other c hange s
C. Decreas es
C.1 Sales
-
-
-
-
-
-
2.6 09
4.214
70
502
7
7.402
5 53
699
-
-
-
1.252
11.4 12
26.223
86
225
54
38.000
11.4 12
26.223
86
225
54
38.000
(46.894)
(8.082)
(68.184)
(7.090)
(12.035)
(3 2)
(39.232)
(7.017)
(32.805)
(145)
(199.150)
(22.366)
C.2 Depreciation
-
(43.285)
(10.06 3)
(29.554)
(23.566)
(106.468)
C.3 Impairment losse s recognised in:
a) equity
-
-
(1 2)
-
-
-
(12)
-
-
-
(1 2)
-
-
(12)
-
-
-
-
-
-
-
-
-
-
-
-
C.5 Ne gative exchange rate differenc es
C.6 Transfe rs to:
(3 8.806)
(16.869)
-
-
-
(55.675)
a) tangible assets he ld for investment
b) assets held for sale
C.7 Other c hanges
(3 8.806)
(16.869)
-
-
-
(55.675)
(6)
(940)
(1.92 8)
(2.661)
(9.094)
(14.629)
C.4 Ne gative changes in fair value
a) equity
- business combinations
- other c hange s
D. Final net balances
D.1 Total ne t reduc tions in value
D.2 Final gross balances
(6)
(940)
(1.92 8)
(2.661)
(9.094)
(14.629)
906.419
(11 9.861)
836.495
(567.431)
50.596
(150.29 5)
62.759
(353.349)
79.353
(303.018)
1.935.622
(1.493.954)
1.026.280
1.403.926
200.891
416.108
382.371
3.429.576
The sum of the amounts for “Increases - Other changes” on line B.7 under the column “Land” and
the column “Buildings” totals 37.635 thousand euro. That amount includes approximately 30
million euro of land and buildings reclassified out of the item “assets held for disposal” and profits
on disposal of approximately seven million euro.
The reclassification out of the item “assets held for disposal” related mainly to properties owned
by BPB Immobiliare already transferred in 2009. The table giving changes in property, equipment
and investment property for 2009 may be consulted in this respect.
12.4 Annual changes in tangible assets held for investment
T ot al
L a nd
A . O pe ning bala nc e s
B . I nc re a se s
B.1 Pur cha se s
B.2 C a pita lis ed imp ro vem ent ex pense s
B.3 Pos itiv e cha nge s i n f a ir va lu e
B.4 R ever sa ls of imp ai rm ent lo sses
B.5 Pos itiv e exc ha nge ra te dif fe re nces
B.6 Tra nsf er s f ro m pr ope rtie s u sed in o per ati on s
B.7 Oth er cha ng es
C. Dec re ase s
C.1 Sa le s
C.2 De pre cia tio n
C.3 N eg ati ve cha nge s i n fa ir va lu e
C.4 Impa ir me nt l os ses
65 .7 03
Bu il ding s
60 .2 43
39 .7 87
3
19 .2 08
399
-
-
38.806
978
16.869
1.940
( 1.626 )
(1.068)
( 6.273 )
(2. 218)
(2)
(3. 356)
-
-
C.5 N eg ati ve exc ha nge r ate di ff ere nces
C.6 Tra nsf er s to othe r as set por tfo li os
a) pr op erti es fo r us e i n oper a tio ns
-
-
( 553)
( 553)
( 699)
( 699)
b) no n c ur ren t a sse ts h eld fo r dis posa l
C.7 Oth er cha ng es
(3)
-
103 .8 64
147.827
73 .1 78
146.233
D. Fin al b ala nc e s
E. F ai r va lu e
282
Given that land and buildings are recognised at cost for accounting purposes, in order to
determine the fair value (market value) of the properties, the Parent had external appraisers value
the entire stock of properties.
The estimate was based on generally accepted valuation principles, by applying the following
valuation criteria:
• the direct comparative or market method, based on a comparison between the asset in
question and other similar assets subject to sale or currently on sale on the same market or
competing markets;
• the income method, based on the present value of potential market incomes for a property,
obtained by capitalising the income at a market rate.
The valuation methods just described have been performed individually and the values obtained
appropriately averaged
As already reported above, external appraisers were appointed to test the value of all property,
equipment and investment property assets for impairment at the end of the financial year.
The appraisals performed basically confirmed the appropriateness of the carrying amounts.
283
12.5 Commitments for the purchase of property, equipment and investment property
31/12/2010
Asse ts/amounts
31/12/2009
A. As sets used in operations
1.1 owned
9.558
- land
- buildings
- furnishings
7.061
-
-
1.959
2.008
222
1.769
- elec tronic equipme nt
3.710
1.728
- other
3.667
1.556
-
-
- land
-
-
- buildings
-
-
- furnishings
-
-
- elec tronic equipme nt
-
-
- other
-
-
9.558
7.061
633
-
-
-
1.2 F inance lease
Total A
B. As sets held for inves tment
2.1 owned
- land
- buildings
633
2.2 F inance lease
-
-
- land
-
-
- buildings
-
-
633
10.191
7.061
Total B
Total (A+B)
SECTION 13 Intangible assets – Item 130
13.1 Intangible assets: composition by type of asset
b) Othe r ass ets
A.2.2 Asse ts at fair value:
X
4.416.660
Indefinite life
X
4.401.911
1.058.688
1.058.688
37
37
1.121.453
1.121.453
37
37
409
1.058.279
37
612
1.120.841
37
-
-
-
-
-
-
-
-
1.058.688
4.416.697
1.121.453
4.401.948
a) Inte rnally gene rated intangible ass ets
b) Othe r ass ets
Total
Finite life
Finite life
A.1 Goodwill
A.2 Other intangible ass ets
A.2.1 Asse ts v alued at cost:
a) Inte rnally gene rated intangible ass ets
31/12/2009
Inde finite life
31/12/2010
Ass ets/amounts
284
Details of the item “Goodwill” are given below.
Figures in thousands of e uro
31.12.2010
UBI Banca Sc pa
Banco di Bresc ia Spa
31.12.2009
changes
521.245
521.245
-
1.267.763
1.377.754
( 109.991)
Banca Carime Spa
812.454
812.454
-
Banca Re gionale Europe a Spa
309.121
430.683
( 121.562)
Banca Popolare di Ancona Sp a
249.049
249.049
-
232.543
82.423
150.120
17.365
UBI Pramerica SGR Spa
205.489
188.124
UBI Leasing Spa
160.337
160.337
-
155.265
151.738
3.527
103.621
103.621
-
100.044
22.028
78.016
B@nca 24-7 Spa
71.132
71.132
-
UBI Factor Spa
61.491
61.491
-
IW Bank Spa
65.846
54.631
11.215
Prestitalia Spa
24.895
8.298
16.597
UBI Banca Private Inves tment Sp a
20.189
20.189
-
Ce ntrobanca Spa
17.785
16.672
1.113
UBI Banca Inte rnational Sa
15.080
15.080
-
9.155
9.155
-
UBI Manage ment Company Sa
Twice Sim Spa
-
8.688
( 8.688)
By You Spa
3.459
3.459
-
Inv estNet International Sa
2.719
2.719
-
UBI Sis temi e Serv izi SCpA
2.122
2.122
-
2.094
2.094
-
UBI Fiduciaria Spa
2.052
2.052
-
-
993
( 993)
UBI Ge stioni Fiduciarie Sim Spa
778
778
-
Sinte si Mutui Srl
685
-
685
Solimm Spa
CB Inves t Spa
172
172
-
Capitalgest Alternative Inves tme nts SGR Spa
-
17.365
( 17.365)
Gestioni Lombarda (Suis se) Sa
-
4.145
( 4.145)
Barbe rini Sa
Other goodwill
TOTAL
-
1.026
( 1.026)
75
194
( 119)
4.416.660
4.401.911
14.749
The goodwill recognised in the consolidated financial statements of UBI Banca Group (“goodwill
arising on consolidation” resulting from the elimination of the equity investments in subsidiaries)
is the result of all the goodwill items relating to some of the companies controlled by UBI Banca.
The goodwill recognised in the financial statements of UBI Banca amounting to 521,2 million euro
(unchanged compared to 31st December 2009) was the result of the merger between the former
Banche Popolari Unite Group and the former Banca Lombarda e Piemontese Group, which
occurred on 31st April 2009) That transaction was recognised in accordance with IFRS 3, in
application of the purchase method, according to which the acquirer (BPU) allocated the cost of
the transaction at the fair value of the assets and liabilities of the acquired company (BLP),
recognising what remained after the allocation within the item “goodwill”.
Following the introduction of EU Regulation No. 494/2009, which became compulsory from the
financial year 2010, IAS 27 requires any changes in percentage ownership which do not result in
285
the loss or acquisition of control to be considered as transactions between shareholders and as a
consequence the relative effects must be recognised as either an increase or a decrease in equity.
In this respect, only changes in the consolidation scope which have resulted in the acquisition or
loss of control determine the appearance or disappearance of goodwill. Further changes may be
attributable to impairment losses recognised following impairment tests, which in compliance
with IAS 36 are performed at the end of each year or more frequently if doubts arise from an
analysis of internal or external conditions over the recoverability of the value of the assets.
As concerns the changes shown above in the table “Details of the item goodwill”, those for Banco
di Brescia Spa, Banca Regionale Europea Spa, Banco di San Giorgio Spa, Banca Popolare
Commercio e Industria Spa and Banca Popolare di Bergamo Spa relate to the operation to
optimise branch networks already mentioned. These differences offset each other totally and
regard the goodwill of the individual branches subject to intragroup transfer. The difference
amounting to 110 thousand euro relates to Banca Regionale Europea and is due to goodwill
recognised in relation to the opening of a branch at Antibes in France.
The increase in the goodwill of UBI Pramerica SGR Spa is equal to the decrease for CapitalGest
Alternative Investments Spa merged into UBI Pramerica in order to simplify the structure of the
Group with the consequent elimination of expenses and overlap of operating units.
The comment at the foot of Table 13.2 “Intangible assets: annual changes” may be consulted for
other changes in the item “goodwill”.
“Other finite life intangible assets” amounting to 1.058.688 thousand euro were comprised mainly
of the following:
• “brands” totalling 337.861 thousand euro arising from the purchase price allocation
performed on 1st April 2007 following the merger of the BPU Banca and Banca Lombarda
banking groups. That amount relates to the value of the brands of the banks in the former
Banca Lombarda Group as follows:
TOTAL
•
•
•
•
207.939
97.735
20.800
11.387
337.861
As already reported, the impairment tests applied from the financial year 2010 to those
brands resulted in a change in their useful life from indefinite life to finite life (18 years
remaining);
“core deposits”, intangible assets associated with customer relationships totalling
324.992 thousand euro. These assets arose from the purchase price allocation already
mentioned and from that relating to Banco di S. Giorgio Spa following its acquisition, at
the beginning of 2009, of operations consisting of 13 branches from Banca Intesa San
Paolo Spa. In view of their close dependence on customer relationships, they are by
definition finite life assets and are subject to systematic amortisation according to a
schedule that takes account of the probability of current accounts being closed;
“asset management business” consisting both of the actual management and the relative
distribution activities totalled 165.008 thousand euro. These assets are amortised over the
useful remaining life of the customer relationships;
“asset under administration” business totalling 54.097 thousand euro;
the remaining balance consists almost exclusively of software, allocated mainly to UBISS
scpa, the UBI Group service company. Software is amortised over three years.
Finite life intangible assets include a remaining amount of 21.018 thousand euro, which relates to
the identification within the amount of the interest acquired in the By You Spa of the intangible
assets consisting of the value of the benefits accruing from customer relationships. The amount at
historical cost is 29,9 million euro, while the useful life was considered to be ten years on the
basis of the average life of the mortgages.
286
13.2 Annual changes in intangible assets
Other intangible assets: internally
generated
Goodwill
Finite life
Other intangib le as sets: othe r
Indefinite life
Finite life
Balances as at
31/12/2010
Inde finite life
A Opening gross balances
A.1 Total ne t reduc tions in value
4.590.703
( 188.792)
4.406
( 3.794 )
-
1.276.957
( 156.116)
37
-
5.872.103
( 348.702)
A.2 Net opening balances
B. Increases
B.1 Purchases
B.2 Inc reases in intangible internal ass ets
B.3 Reversal of impairment losses
- in equity
- in the inc ome s tate me nt
B.5 Positive exchange rate differenc es
B.6 Other changes
4.401.911
20.039
685
X
X
X
X
19.354
612
-
-
1.120.841
71.086
68.976
2.110
37
-
5.523.401
91.125
69.661
21.464
( 5.290)
( 5.171)
-
( 133.648)
( 811)
( 130.297)
( 125.795)
( 4.502)
( 4.502)
-
-
X
( 203)
( 203 )
( 203 )
-
( 139.141)
( 811)
( 135.671)
( 125.998)
( 9.673)
( 9.673)
-
X
-
-
-
-
-
-
-
-
( 2.406)
-
( 2.406)
( 119)
-
-
( 134)
-
( 253)
D. Final net balances
D.1 Total impairment losses
4.416.660
( 188.792)
409
( 3.949 )
-
1.058.279
( 273.437)
37
-
5.475.385
( 466.178)
E. Final gross balances
F. Value at cost
4.605.452
-
4.358
-
-
1.331.716
-
37
-
5.941.563
-
C. Decreas es
C.1 Sales
C.2 Impairment losses
- Amortisation
- Impairment losse s
+ equity
+ income statement
- in equity
- in the inc ome s tate me nt
C.4 Transfers to non curre nt ass ets held for sale.
C.5 Negative exchange rate differenc es
C.6 Other changes
X
( 5.171)
X
( 5.171)
-
The column “Goodwill” consists of the following:
‐
Line B.1, Purchases:
Sintesi mortgages Srl – acquisition of 100% by By You mortgages Srl for 685 thousand
euro.
‐
Line B.6 Other changes:
Prestitalia Spa – increase in goodwill arising on consolidation as a result of the
acquisition of 100% of Barberini Sa by UBI Banca which resulted in 100% control of
Prestitalia Spa amounting to 16.597 thousand euro;
IW Bank Spa – increase in goodwill, as a result of the merger of the company Twice Sim
Spa into IW Bank Spa, amounting to 2.527 thousand euro;
Centrobanca Spa – increase in goodwill, as a result of the merger of the company CB
Invest Spa into Centrobanca Spa, amounting to 120 thousand euro;
Banca Regionale Europea Spa – recognition of goodwill, following the opening of a
branch at Antibes (France), amounting to 110 thousand euro.
‐
Line C.2 Impairment losses:
Barberini Sa – the effect of the valuation of shares acquired by UBI Banca with a
consequent impairment loss on the investment amounting to -1.026 thousand euro;
Gestione Lombarda Suisse sa – adjustment following recognition of an impairment loss
on the interest held in BDG Banque Sa amounting to -4.145 thousand euro.
287
‐
Line C.6, Other changes:
Permicro Spa – the result of exclusion from the consolidation (reduction in percentage
held) amounting to -76 thousand euro;
UBI Trust Company Ltd – result of company put into liquidation amounting to -43
thousand euro.
13.3 Other information
Software
The useful life of software considered for the purposes of amortisation is three years.
Contracted commitments to purchase intangible assets amounted to 17.667 thousand euro for
the acquisition of software.
Goodwill
The goodwill recognised in the consolidated financial statements of UBI Banca (“consolidation”
resulting from the elimination of the equity investment in subsidiaries) is the result of all the
goodwill items and all the goodwill arising from the consolidation of some of the companies
controlled by UBI Banca. In detail, following the merger of Banca Lombarda e Piemontese into
BPU Banca, which took effect on 1st April 2007, goodwill was recognised in the consolidated
financial statements of the BPU Banca Group (which changed its name from 1st April 2007 to UBI
Banca) amounting to 3.181 million euro as the goodwill that arose from a comparison of (i) the
purchase price paid by UBI Banca for the control of the company Banca Lombarda e Piemontese
amounting to 6.546 million and (ii) the current value of the assets acquired (i.e. the fair value of
the assets, liabilities and contingent liabilities acquired in proportion to the interest held by the
acquirer), inclusive of the intangible assets identifiable that were not previously recognised in the
accounts of the entity acquired (e.g. the brands of the banks of the former Banca Lombarda e
Piemontese Group).
In order to test goodwill for impairment, the criterion followed in allocating it considers the
minimum level at which it is monitored for the purposes of internal management control, which
coincides with the legal entities of the Group. As concerns the goodwill that arose from the merger
between the BPU and Banca Lombarda e Piemontese groups, the allocation for the purposes of
impairment testing followed the same logic as that employed for the purchase price allocation. In
detail, the goodwill attributable to synergies from which the companies in the former acquiring
group (BPU Group) benefit was allocated to the individual units of the acquiring group, while the
goodwill arising from the difference between the fair value of the former equity investments of the
Banca Lombarda e Piemontese and their equity adjusted for the fair value of loans, properties and
bonds was allocated to individual units. The goodwill of the units of the former BPU Group not
affected by synergies created by that merger was tested for impairment along the same lines as in
previous years.
For cash generating units (CGU) that are not wholly owned, for impairment purposes goodwill was
restated on a notional basis including the goodwill attributable to minority interests (not
recognised in the consolidated financial statements) by means of “grossing up” (goodwill
attributable to the Parent/percentage ownership attributable to the Parent) in accordance with
example seven in IAS 36. The value measurement used to calculate the recoverable amount of the
business units to which goodwill was allocated was that of their value in use or the fair value if
the value in use was lower than the carrying amount. The value in use was estimated on the basis
of the financial criterion and the book value of the CGUs was determined on the basis of the
criterion used to estimate the recoverable value.
The recoverable amount was the same as the value in use for all the CGUs except for the CGU,
Banco di Brescia, although the value in use was almost the same as the book value (-0,5%).
288
The impairment test, for which the procedure was approved prior to the examination of the draft
financial statements by the Management Board, was performed with methodological support from
an external appraiser of high standing and with account taken of the following factors:
(i) reasonable and demonstrable assumptions which represent the best estimate that can be made
by management of the range of possible economic conditions that may manifest over the useful
life of the asset in question;
(ii) the 2011 budget approved by the competent corporate bodies of UBI Banca and of its
subsidiaries and the forecasts made by management for the period 2012-2015 on the basis of
guidelines approved by the Management Board of the Parent and by the Boards of Directors of the
subsidiaries.
These forecasts for the network banks (to which more than 80% of the total goodwill is allocated)
are based on:
a) an estimate for short term interest rates (one-month Euribor rate) of 3,35% for 2015, up
by approximately 225 b.p. compared to the average annual short term interest rates used
for the purposes of the 2011 budget (1,10%) and sufficient to ensure a progressive
normalisation of the markup and markdown; an estimate for end of 2015 interest rates in
line with the implied yield to maturity for interest rates;
b) an annual average growth rate for business (lending to customers, direct and indirect
funding) in the explicit forecast period of approximately 4,3%;
c) a progressive reduction in the cost of risk (net impairment losses on loans/loans to
customers) forecast for 2015, down by 13 basis points compared to 2010 levels and by six
basis points compared to the 2011 budget and consistent with long term historical data
and risk management forecasts;
d) stable operating costs over the explicit forecast period.
(iii) a rate of growth in profits for the network banks – beyond the explicit forecast period – that is
stable and does not exceed the long term growth rates for the banking sector nationally (0,82%); a
rate of growth for the other CGUs operating in the non-banking financial sector of between 0,34%
and 2,00%, not sufficient to exceed future inflation. These growth rates, together with opportunity
costs for capital reported in the following point (iv), ensure rates of return on equity (cost of equity
– rate of long term growth in profit) in line with the rates of return expressed by analysts who
cover the UBI share;
(iv) a discount rate used for calculating the present value of cash flows corresponding to the
return on equity required by investors/shareholders for investments with similar risk/return
characteristics. The cost of equity was estimated on the basis of the following:
a) a CAPM estimation criterion was applied (Capital Asset Pricing Model – the criterion used
by the Group for the purposes of estimating value in use, considering the reference made
to it in appendix A of IAS 36);
b) the beta coefficient for the banking segment was calculated on the basis of the
performance of the UBI share, while the beta coefficient for business segments was
obtained on the basis of the beta coefficients of comparable listed companies;
c) a cost of equity was considered for the main business segments of the Group, as reported
by analysts who follow the UBI Banca share and published after the announcement of the
2010 third quarter results;
d) a different cost of equity was used for each year due to the use of different yields to
maturity for risk free securities, in accordance with appendix A of IAS 36 A21. The yields
to maturity for risk free securities for each year are consistent with the interest rate
forecasts made by the corporate bodies.
The cost of equity was estimated on this basis for each business unit/segment The cost of equity
reported below is the long term cost (i.e. the opportunity cost of equity used to estimate the
terminal value).
289
Cost of equity after tax
Network Banks
Assets Under Management Other Companies
8,82%
9,77%
8,10% - 9,25%
The analyses performed are based on an analysis of the difference between actual and budgeted
figures, where the aim is to use budgeted figures and Business Plan projections for value
measurement purposes. In this respect the total negative difference in terms of profit between
budgeted and actual figures for the network banks was entirely attributable to the difference
between the forecast for the Euribor rate made on the date when the 2010 budget was prepared
(and based and aligned on the forward yield curve as at 31.12.2009) and the Euribor rate actually
observed during 2010. This difference in the rate was of a systematic nature and therefore to be
incorporated in the rate for discounting to present values for income. This is the main reason for
the increase in the opportunity cost of capital that occurred between 31.12.2009 and 31.12.2010
(1%), attributable entirely to the higher premium requested by investors to cover the risk
connected with the interest rate scenario.
The recoverable amounts of the single CGUs defined above are greater than their respective
carrying amounts and no impairment losses have therefore occurred. For the Banco di Brescia
CGU, the value in use is slightly less than the carrying amount. Since the fair value less the cost
to sell is greater than the value in use, this measurement of value was used for the impairment
test. For this CGU, the fair value less the cost to sell was calculated on the basis of funding
multiples (direct and indirect) implicit in comparable transactions. The main problem with the use
of multiples of comparable transactions is that the transactions relate mainly to a pre-crisis
context. Consequently, it was considered best to reconstruct prices implicit in transactions as
homogeneous as possible on the basis of a “momentum” variable able to capture the conditions of
the banking market (profit, growth and risk expectations perceived by market operators) in the
period immediately before the deal. The variable chosen was the average daily Euribor three
month rate observed in the month prior to the deal, once it was verified that higher Euribor rates
(as in the pre-crisis period) corresponded to higher multiples. This variable represents a proxy for
markdown expectations (and therefore for the profits of the branches acquired) of banking
operators participating in the market. In order to obtain the best comparability it was decided to
employ maximum granularity for the deal, which in the case of the banking sector is given by the
disposal of branches. The branches were ranked on the basis of the geographical location after
verifying the statistical significance of the relationship between the premium paid and the
location. For the purposes of measuring the value of Banco di Brescia using this method, the
network bank was conceived of as an aggregate of branches co-ordinated by a corporate unit. On
the basis of these considerations the fair value of Banco di Brescia can be reconstructed on the
basis of two positive amounts and one negative amount.
Positive amounts:
- goodwill for funding based on the location of the branches and adjusted downwards on the basis
of the current market momentum (as incorporated by the present level of the Euribor rate).
- the equity (net of intangible assets) of the bank.
Negative amount: current amount of corporate costs (structural) before tax, projected in
perpetuity on the basis of the same capitalisation rate used for estimating the value in use of the
network banks.
The fair value of Banco di Brescia calculated in this manner gives an implicit multiple aligned
with that paid in transactions involving banks performed in 2010. This value is 22% higher than
its book value and is an indicator of the prudence that characterised the estimates of the value in
use (which gave a recoverable amount almost the same as the book value).
290
Finally a sensitivity analysis was performed to identify the variation in key variables that would
render the recoverable amount of the different CGUs equal to their carrying amounts in the
consolidated financial statements. The table below gives the maximum tolerable increase in the
cost of equity and the cost of risk for each CGU for the recoverable value to equal the book value.
Rise in the cost of
equity required to
make the value in
use equal to the
carrying amount
Rise in the cost of risk*
required to make the value
in use equal to the carrying
amount
11,95%
1,01%
n.a.
n.a.
2,41%
0,35%
0,56%
0,09%
1,30%
0,17%
Banca Carime Spa
0,31%
0,08%
0,90%
0,18%
0,62%
0,10%
Centrobanca Spa
0,08%
0,01%
Banca 24-7 Spa
1,08%
0,07%
UBI Leasing Spa
0,31%
0,03%
UBI Factor Spa
2,04%
0,23%
2,84%
0,47%
UBI Private Investment Sa
5,50%
1,18%
IW Bank Spa
8,85%
2,59%
Asset Management
1,68%
n.s.
* cost of risk = net impairment losses on loans/loans to customers
The analysis shows that in the case of the network bank CGUs the lowest margin of tolerance
regarded the Banca Carime CGU, for which an increase of 0,31% in the cost of equity or a rise in
the cost of risk of 0,08% would bring the recoverable amount into line with the book value. As
concerns the GCUs operating in non banking financial sectors, the table shows that for the CGU
UBI Leasing, a rise in the cost of equity of 0,31% or in the cost of risk of 0,03% would make the
recoverable amount equal to the carrying amount.
Finally, because the UBI Group presents costs that were not allocated to single CGUs, a second
level impairment test was performed on the Group as a whole in accordance with paragraphs 101
and 103 of IAS 36. The second level impairment test, which compared the total recoverable
amount for UBI Banca with the consolidated equity of the Group did not result in impairment
losses.
291
SECTION 14 Tax assets and tax liabilities – Asset item 140 and Liability
item 80
14.1 Deferred tax assets: composition
31/12/2010
Balanc ing entry in the income statement
Balanc ing entry in equity
31/12/2009
885.951
187.103
802.142
33.610
1.073.054
835.752
443 .311
8 .841
1 .972
84 .468
8 .045
36 .127
16 .353
35 2.665
2.710
3.317
1.665
8 4.708
6.375
2 6.260
2 8.060
134
56 .251
271
5 2.087
- sales price ad justments, long term costs and non recurri ng transactions
- intangible assets and goodwill
2 .305
227 .549
5.359
23 6.822
-
167 .299
962
194
46
629
295
18 .273
2 6.180
962
597
413
491
286
6.524
Total
for the following re as ons :
- impairment loss on loans to banks and customers and guarantees not deducted
- losses
- post em ploym ent benefits
- maintenance expenses
- application of IFRS (amortised cost in particular)
- advance d epreciation and am ortisation
- property, equipment and investment proper ty
- personnel expense
- entertainment expenses
- provisions for risks and charges not deducted
fair val ue change in securities and equity investments
impairment losses on proper ties
purchase pr ice allocation of bond s
revaluation of hedged subordinated liabil ities
non recurrin g expenses not ded ucted
cash flow hedges
other
14.2 Deferred tax liabilities: composition
31/12/2010
31/12/2009
Balanc ing entry in the income statement
188.200
219.269
Balanc ing entry in equity
Total
363.756
551.956
432.601
651.870
O|1 - NOTA
14.3 Changes in deferred tax assets (balancing entry in the income statement)
31/12/2010
31/12/2009
1. Opening balance
802.142
659.316
2. Increases
196.861
294.076
2.1 Deferred tax ass ets arising during the year
a) relating to prev ious years
182.823
5.633
233.841
5.211
b) due to changes in accounting polic ies
c) rev ers als of impairment loss es
d) othe r
2.2 Ne w taxes or increases in tax rates
2.3 Other increases
3. Decreases
3.1 Deferred tax ass ets derecognised during the year
a) reversals of temporary d ifferences
b) imp airment losses on non-re coverable items
c) due to changes in accounting polic ies
d) othe r
3.2 Red uctions in tax rate s
3.3 Other d ecreas es
Final amount
292
-
-
177.190
-
53
228.577
-
14.038
60.235
(113.052)
(110.369)
(151.250)
(98.569)
(110.009)
(360)
-
(98.569)
-
-
-
-
-
(2.683)
(52.681)
885.951
802.142
Deferred tax assets are recognised on the basis of the probability of there being sufficient future
taxable income and also taking into account the consolidated tax regime adopted in accordance
with articles 117 et seq of Presidential Decree No. 917/86
No deferred tax assets were recognised for impairment losses on equity investments which
satisfied the requirements for participation exemption.
The rates generally used for calculating deferred tax assets for IRES (corporation tax) and IRAP
(local production tax) purposes are 27,50% and 4,82%.
The difference between the “Increases” and the “Decreases” of “deferred tax assets” recognised in
the income statement does not correspond to the item “Change in deferred tax assets”, reported in
table 20.1 of the income statement section “Taxes on income for the year from continuing
operations“ amounting to approximately 8.553 thousand euro. An amount of approximately 4.302
thousand euro relates to the different classification of deferred tax assets due to the operation to
optimise the branch network, classified mainly within item 2.3 “Other increases”. The new
difference of approximately 12.855 thousand euro is attributable almost totally to deferred IRES
relating to the tax loss transferred to the tax consolidation in which the Parent participates as the
consolidating company as a result of options exercised jointly with other companies in the Group.
14.4 Changes in deferred tax liabilities (balancing entry in the income statement)
31/12/2010
1. Opening balance
2. Increases
2.1 Deferred tax liabilities aris ing during the year
c) other
31/12/2009
219.269
238.908
38.480
32.329
123.031
54.040
869
1.228
-
-
31.460
52.812
445
-
5.706
68.991
3. Decreases
(69.549)
(142.670)
3.1 Deferred tax liabilities derecognised during the year
(66.0 34)
(94.587)
(65.8 17)
(92.879)
2.3 Other increases
a) reversals of temporary d ifferenc es
c) other
4. Final balance
-
-
(2 17)
(1.708)
-
-
(3.5 15)
(48.083)
188.200
219.269
14040O|1 NOTA
Deferred tax liabilities were recognised on the basis of temporary differences between the financial
accounting value of an asset or liability and its value for tax purposes. The recognition was made
on the basis of the tax legislation in force.
No deferred taxes were recognised on untaxed reserves, because no events occurred to remove the
tax exemption regime.
The difference between the “Increases” and the “Decreases” of the “deferred tax liabilities”
recognised in the income statement does not correspond to the item “Change in deferred tax
liabilities”, reported in table 20.1 of the income statement section “Taxes on income for the year
from continuing operations“ amounting to approximately 5.380 thousand euro. An amount of
approximately 5.082 thousand euro regards the different classification of deferred tax liabilities
due to the operation to optimise the branch network, classified mainly within item 2.3 “Other
increases”.
293
14.5 Changes in deferred tax assets (balancing entry in equity)
31/12/2010
31/12/2009
1. Opening balance
2. Increases
2.1 Deferred tax ass ets arising during the year
33.610
161.061
149.610
9.515
-
106.239
12.627
12.425
769
-
c) other
2.3 Other increases
140.095
11.451
11.656
14
188
(7.568)
(7.434)
(7.434)
(85.256)
(54.585)
(54.585)
-
-
(134)
(30.671)
187.103
33.610
3. Decreases
3.1 Deferred tax ass ets derecognised during the year
b) imp airment losses on non-re cov erable items
c) due to changes in accounting principle s
4. Final balance
14.6 Changes in deferred tax liabilities (with balancing entry in equity)
31/12/2010
1. Opening balance
31/12/2009
432.601
530.273
10.913
30.339
7.823
30.299
5.185
-
119
-
c) other
2.638
2
30.180
-
2.3 Other increases
3.088
40
3. Decreases
(79.758)
(128.011)
3.1 Deferred tax liabilities derecognised during the year
(79.734)
(58.625)
(74.420)
(58.365)
2. Increases
2.1 Deferred tax liabilities aris ing during the year
c) other
4. Final balance
-
-
(5.314)
(260)
-
-
(24)
(69.386)
363.756
432.601
The tables above contain the aggregate figures giving all the information on the line-by-line
consolidated individual companies. Tables 14.3 “Changes in deferred tax assets (balancing entry
in the income statement)” and 14.4 “Changes in deferred tax liabilities (balancing entry in the
income statement)” recorded movements due to the consolidation entries which determined
changes in the consolidated profit.
Finally taxes of 6.490 thousand euro in respect of dividends that will be paid by subsidiaries in
2011 have been recognised within deferred tax liabilities with the balancing entry in the income
statement (9.931 thousand euro as at 31st December 2009).
294
SECTION 15 Non current assets and liabilities and groups of assets and the
associated liabilities held for disposal – Asset item 150 and Liability item 90
15.1 Non current assets and disposal groups held for sale: composition by type of asset
31/12/2010
31/12/2009
A. Individual as sets
A.1 Financial assets
-
-
A.2 Equity investments
-
-
A.3 Property, equipment and inves tme nt prope rty
6.023
44.052
A.4 Intangible assets
2.406
-
A.5 Other non curre nt asse ts
-
-
8.429
44.052
B.1 F inancial asse ts held for trading
-
-
B.2 F inancial asse ts at fair value
-
-
B.3 Available-for-sale financial ass ets
-
-
B.4 Held-to- maturity investments
-
-
B.5 Loans to b anks
-
-
B.6 Loans to c ustome rs
-
71.158
B.7 Equity inve stme nts
-
-
B.8 Prope rty, equipment and inv estment property
-
-
B.9 Intangible asse ts
-
1.733
B.10 Other ass ets
-
9.476
Total B
C. Liabilities associated with no n current assets held for
dis posal.
-
82.367
C.1 Borrowings
-
-
C.2 Securities
-
-
C.3 Other liabilities
-
Total C
-
Total A
B. Groups of ass ets (disco ntinued operating units)
-
D. Liabilities associated with dispo sal groups held fo r dispos al
D.1 Due to banks
-
-
D.2 Due to cus tomers
-
645.567
D.3 Sec uritie s issued
-
-
D.4 Financial liabilities he ld for trading
-
-
D.5 Financial liabilities at fair value
-
-
D.6 Provisions
-
-
D.7 Other liabilities
Total D
-
753
-
646.320
Nothing to report.
15.3
Information on equity investments in companies subject to significant influence not
valued using the equity method
Nothing to report.
295
SECTION 16 Other assets - Item 160
16.1 Other assets: composition
31/12/2010
De scription/Amounts
Consolidation adjustments
31/12/2009
-
7 .865
Tax credits relating to prior ye ars and related intere st
3.794
3 .198
VAT tax cre dits and payments on acc ount
4.491
28 .692
Credits for withholding taxe s paid on be half of third parties
6.931
6 .767
111.813
137 .944
Payments on acc ount for stamp duty on banking doc uments and deeds
Tax credits for pe rsonal inc ome tax and pos t-employment bene fits on acc ount
Withholding tax on merge r los ses
Tax credits on withholding tax
Items in transit
450
656
-
1 .805
2.508
4 .597
264.565
544 .020
Debtor items in transit not yet posted to destination accounts
124.695
152 .859
Bills , securitie s, coupons and fees to be debited to cus tomers and correspondents
155.603
141 .275
Cheques drawn on the bank
Improvements to third party le ase d asse ts
Accrue d income not attribute d to s pecific items
Prepaid expens es not attributed to spe cific items
Sundry debtor items
Total
296
23
353
42.883
43 .872
10.529
21 .095
102.404
96 .833
342.200
330 .383
1.172.889
1.522.214
LIABILITIES
SECTION 1 Due to banks – Item 10
1.1 Amounts due to banks: composition by type
Des cription/Values
31/12/2010
1. Due to central banks
2. Due to banks
31/12/2009
2.219.152
3.164.825
639.753
4.684.681
2.1 1. Curre nt accounts and deposits
2.2 Term d epos its
692.788
1.199.455
2.590.978
809.405
2.3 Financ ing
1.149.003
1.191.381
290.737
858.266
347.603
843.778
123.579
5.383.977
5.375.821
92.917
5.324.434
5.310.965
2.3.1 Re purchase agre eme nts
2.3.2 Othe r
2.4 Amounts due for commitments to repurc has e own equity instrume nts
2.5 Othe r payables
Total
Fair value
ab
Item 1, “Due to central banks”, contains a short term deposit of 2,1 billion euro received from the
Bank of Italy.
ella 1:
1.2 Details of the item 10 “Due to banks”: subordinated liabilities
No subordinated liabilities due to banks have been recognised.
1.3 Details of the item 10 “Due to banks”: structured debts
No structured debts due to banks have been recognised.
1.4 Amounts due to banks subject to specific hedge
Des cription/Values
31/12/2010
31/12/2009
1. Liabilities s ubject to fair value specific hedge:
b) curre ncy risk
170.058
170.058
-
893.520
893.520
-
c) multiple risks
2. Liabilities s ubject to specific cash flow hed ge:
-
-
-
-
170.058
893.520
b) curre ncy risk
c) other
Total
1.5 Amounts due for finance leases
No amounts due to banks for finance leases have been recognised.
297
SECTION 2 Due to customers – Item 20
2.1 Amounts due to customers: composition by type
Des cription/Values
31/12/2010
1. Current accounts and deposits
31/12/2009
45.209.037
2. Te rm de posits
3. F inancing
3.1 rep urchase agree me nts
3.2 other
950.761
11.152.853
11.011.766
141.087
5.156.697
5.143.394
13.303
962.766
700.548
58.666.157
58.666.278
52.864.961
52.893.491
4. Amounts due for commitments to repurchase own equity instruments
5. Other payables
Total
Fair value
46.056.955
1.341.501
Financial liabilities for repurchase agreements include a transaction with the Cassa di
Compensazione e Garanzia (central counterparty clearing) amounting to 9,2 billion euro.
Tabel
2.2 Details of item 20 “Due to customers”: subordinated liabilities
No subordinated liabilities due to customers have been recognised.
2.3 Details of item 20 “Due to customers”: structured debts
No structured debts due to customers have been recognised.
2.4 Amounts due to customers subject to specific hedge
No amounts due to customers subject to specific hedge have been recognised.
Tabella 2: 202030O|1 - NOTA
2.5 Amounts due for finance leases
Amounts due to customers for finance leases totalled 1.334 thousand euro. Details of these are as
follows:
C ounter part y
Total amount
Amount for final
purchase
Contr act e xpires
S.Paolo Leasint Spa
1.965
01/09/2011
196
ABF Leasing Spa
1.859
25/07/2011
310
ABF Leasing Spa
837
13/02/2012
217
The total amount relates to three property contracts signed by UBI Banca Scpa (two contracts)
and by UBI Leasing Spa.
The residual life of those debts is as follows:
Residual life
up to 3 months
U BI contrac ts
U BI Leasing contract s
Total
60
-
60
between 3 months and 1 year
358
359
717
from 1 year to 5 years
217
-
217
-
-
-
635
359
994
mor e than 5 years
total
298
SECTION 3 Securities issued – Item 30
3.1 Securities issued: composition by type
Type securitie s /
Amounts
31/12/2010
Carrying
Amount
31/12/2009
Fair Va lue
Level 1
Le vel 2
Level 3
C arrying
Amount
Fair Value
Level 1
Leve l 2
Lev el 3
A. Secur ities
1 . bonds
40.880.256
16.007.7 31
2 1.430.817
5.070. 534
39. 514.741
13. 333.949
23.650.248
7.750.255
1.473.6 36
5.164.983
959. 907
6. 998.963
1. 698.438
4.961.009
408.4 82
33.130.001
14.534.0 95
1 6.265.834
4.110. 627
32. 515.778
11. 635.511
18.689.239
2.186.5 03
5.213.632
-
5.766.494
200. 352
4. 834.703
-
4.636.184
183.0 49
-
-
-
-
1.1 structured
1.2 other
2 . other securities
2.1 structured
2.2 other
Tot al
5.213.632
46.093.888
16.007.731
2.594.9 85
5.766.494
200. 352
4. 834.703
-
4.636.184
183.0 49
27.197.311
5.270.886
44.349.444
13.333.949
28.286.432
2.778.034
Structured bonds listed on an active market (Level 1) include a convertible bond issued on 10th
July 2009 by the Parent for a remaining amount of 652,3 million euro, inclusive of amounts
maturing. The fair value of the unbundled option was recognised as a loss of 601 thousand euro
within item 80 of the income statement “Net trading income (loss)”.
At the end of the year covered bonds issued amounted to 3,7 billion euro.
Bond issues consisting of issues on the EMTN market totalled 11,2 billion euro.
3.2 Details of item 30 “Securities issued”: subordinated securities
Des cription/Value
31/12/2010
Subordinated s ecurities is sue d
4.177.319
Details of item A.1 “Subordinated securities” are also given.
299
31/12/2009
4.061.145
300
As reported in a press release of 22nd December 2010, the UBI Banca Group will not proceed
to redeem innovative equity instruments still in issue consisting of the three issues listed in
the table “Subordinated securities”, because the regulatory framework governing the
composition and quality of supervisory capital will only become fully clear when Basel three
recommendations are implemented in national regulations. On the basis of currently available
indications, the outstanding equity instruments will remain eligible for inclusion in tier one
capital until the end of 2012. Subsequently, when the capital assumptions on which those
issuances were made are no longer valid, the Group will consider whether to proceed to
redeem them.
3.3. Securities issued subject to specific hedge
31/12/2010
1. Securities subject to specific fair value hedge:
25.945.089
25.943.029
31/12/2009
23.208.842
23.2 08.842
b) curre ncy risk
-
c) multiple risks
2. Securities subject to specific cas h flow hedge:
b) curre ncy risk
2.060
766.343
1.181.614
-
76 6.343
1.1 81.614
c) other
-
A
Greater use of bond issues and the performance of interest rates led to a corresponding
increase in positions subject to fair value hedging on interest rates. As reported in section 5.1
of the part on the income statement, the net fair value change on hedge contracts and the
underlying securities issued, generated a gain of 18,4 million euro recognised within item 90
in the income statement “Net hedging income (loss)”.
301
SECTION 4 Financial liabilities held for trading – Item 40
4.1 Financial liabilities held for trading: composition by type
31/ 12/2010
Ty pe t ransact ions / Items of gro up
31/12/2009
FV
NA
L1
L2
L3
FV*
NA
FV
L1
L2
FV*
L3
A. On-st atement o f fina ncial positio n
liabilit ies
1 . Due to banks
111 .500
110 .65 7
-
-
110 .65 7
8 0.80 0
8 6.8 57
-
-
8 6.8 57
2 . Due to customers
299 .500
298 .60 5
-
-
298 .60 5
2 0.34 2
2 1.7 78
-
-
2 1.7 78
3 . Deb t instr uments
-
-
-
-
-
-
-
-
-
-
3.1 Bond s
-
-
-
-
3.1 .1 Structured
-
-
-
-
X
3.1 .2 Other b onds
-
-
-
-
X
-
-
-
-
-
-
-
-
3.2 Other securities
3.2 .1 Structured
3.2 .2 Other
Tot al A
-
-
-
-
411.000
409.262
-
-
-
X
X
409.262
-
-
-
-
-
-
-
-
X
-
-
-
-
X
-
-
-
-
-
-
-
-
-
-
-
-
101.142
108.635
-
-
-
X
X
108.635
B. Der iva tive instrument s
1 . Financi al derivatives
1 .19 1
54 3.9 70
-
3.9 60
7 42. 792
-
1.1 For trad ing
X
1 .19 1
52 9.0 34
-
X
X
3.9 60
7 12. 874
-
1.2 Connected with fair value options
X
-
-
-
X
X
-
-
-
X
1.3 Other
X
-
1 4.9 36
-
X
X
-
29. 918
-
X
-
-
-
-
-
-
2.1 For trad ing
X
-
-
-
X
X
-
-
-
2.2 Connected with fair value options
X
-
-
-
X
X
-
-
-
X
2.3 Other
X
-
-
-
X
X
-
-
-
X
2 . Credit d erivatives
X
X
Tot al B
X
1.191
543.970
-
X
X
3.960
742. 792
-
X
Tot al (A+B)
X
410.453
543.970
-
X
X
112.595
742. 792
-
X
204000O|1 - NOTA
On-statement of financial position liabilities include uncovered short positions in debt securities.
Key
FV = fair value
FV* = Fair value calculated excluding changes in value resulting from a change in the credit rating of the issuer since the date of issue
NA = nominal or notional amount
L = listed
UL = unlisted
302
bella 3:
4.2 Details of item 40 “Financial liabilities held for trading”: subordinated liabilities
No subordinated financial liabilities held for trading have been recognised.
4.3 Details of item 40 “Financial liabilities held for trading”: structured debt
No structured debt financial liabilities held for trading have been recognised.
4.4 Financial liabilities held for trading (excluding “uncovered short positions”): annual
changes
No financial liabilities held for trading have been recognised.
SECTION 5 Financial liabilities held at fair value – Item 50
The UBI Group has not applied the option under IFRS to designate financial liabilities at fair value
(fair value option).
SECTION 6 Hedging derivatives – Item 60
6.1 Hedging derivatives: composition by type of hedge and hierarchical level
Ty pe of der iva tive /
U nderlying a ssets
A. Financial deriv ativ es
Fair Value 31/12/2010
L1
L2
Fair Value 31/12/2009
Nominal
amount
L3
L1
L2
Nominal
amount
L3
-
1.228.056
-
24.047.341
-
927.319
-
16.457.827
1) Fai r value
-
1.226.673
-
23.949.961
-
874.833
-
15.646. 867
2) Cash flow
-
1.383
-
97.380
-
52.486
-
810. 960
3) Foreign investments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1) Fai r value
-
-
-
-
-
-
-
2) Cash flow
-
-
-
-
-
-
-
-
1.228.056
-
24.047.341
-
927.319
-
B. Credit deriv ativ es
Total
303
16.457.827
6.2 Hedging derivatives: composition by portfolios hedged and type of hedge
Fair Value
Cash flow
Specific
Tran sacti ons /Type of hedge
Interest
rate risk
Currency
ris k
Credit ri sk
1. A vailable-fo r-sale financial assets
579.271
-
-
2. Loans
102.018
-
-
3. Held-t o-mat urit y inv estments
X
4. Po rtfo lio
X
5. Ot her transact io ns
Total assets
1. Financial liabilities
X
Macrohedge
Mul tiple
risks
X
X
-
X
-
X
X
X
-
X
X
-
X
-
X
X
X
498.931
-
-
-
-
-
-
-
-
-
X
Foreign
in vestments
Macrohedge
Specific
-
681.289
-
X
X
-
498. 931
-
-
-
-
-
-
-
-
-
-
46.454
-
-
-
-
-
1.383
-
X
X
X
X
X
2. Po rtfo lio of financial assets and liabilit ies
X
X
X
X
X
1.383
X
-
X
X
X
-
-
1. E xpected trans actio ns
X
X
-
46.454
2. Po rtfo lio
Total liabilities
X
Price risk
X
X
X
X
X
-
-
SECTION 7 Fair value change in macro-hedged financial liabilities – Item 70
SECTION 8 Tax liabilities – Item 80
Details of tax liabilities are reported in assets section 14.
SECTION 9 Liabilities associated with assets held for disposal – Item 90
See assets section 15 for details
304
SECTION 10 Other liabilities – Item 100
10.1 Other liabilities: composition
Des cription/Values
31/12/2010
31/12/2009
Balance of illiquid portfolio items
857.981
Credit ite ms in transit in departments or branc hes pending posting to acc ounts
134.104
570.197
228.085
Sums available to cus tomers and banks for transactions in the c ourse of payme nt
158.461
578.087
Items payable to tax authorities on be half of third parties
38.999
68.149
Items in transit
95.497
229.419
121
123.897
202
107.737
16.647
2.143
11.220
2.229
Sums due to customers but not av ailable due to various restrictions
Tax withheld on inc ome paid to third parties
Indire ct taxes payable
Social s ecurity contributions for third p arties in the c ourse of payme nt
Dividends and sums due to shareholde rs
Amounts due to staff pe nsion funds, inclus ive of acc essory costs
Accrued expenses not attribute d to spe cific ite ms
Deferred income not attrib uted to spe cific ite ms
363
2.449
7.937
15.203
43.271
43.894
167.377
89.436
Payable s for educational, cultural, charitable and s ocial purposes
13.356
15.527
Debt for post-employme nt benefit/welfare sche me s
Doubtful ov erall outc omes on guarantees grante d and commitme nts
19.322
48.221
29.655
44.766
Due to pe rsonne l
179.761
257.506
Res idual creditor ite ms
692.707
791.245
2.600.165
3.085.006
Total
210000O|1 - NOTA
SECTION 11 Post-employment benefits – Item 110
11.1 Annual changes in post-employment benefits
31/12/2010
A. Opening balances
B. Increases
B.1 Allocation for the year
B.2 Othe r change s
C. Decreas es
C.1 Payme nts made
C.2 Othe r change s
D. Final balances
305
31/12/2009
414.272
30.226
433.094
21.021
7.039
23.187
6.221
14.800
(51.335)
(39.843)
(46.564)
(4.771)
(29.722)
(10.121)
393.163
414.272
The demographic and actuarial hypotheses adopted to measure the post-employment benefit provision and leaving
entitlements
Mortality rate
The “RGS48” tables (prepared by the State General Accounting Office) were used
appropriately modified on the basis of historical data for the Group.
Post-employment benefit
The probability of advance payments, calculated on the basis of historical data for the
advances
Group, is 2% while the average amount requested is between 45% and 100% of the
available provision.
Inflation rates
Long term forecasts of the scenario for inflation led to the use of a rate of 2%.
Present value discount
A discount rate of 4,071%, was used, calculated as the weighted average of the EUR
rate
Composite A curve as at 31.12.2010, using, as weights, the ratios between the amount paid
and advanced for each maturity date and the total amount to be paid and advanced until
the extinction of the population considered. This was performed because IAS 19 states that
reference should be made to the market yields of “high quality corporate bonds”, or to
yields on securities with a low credit risk. By making reference to the definition of
“investment grade” securities, where a security qualifies for that classification if its rating is
equal to or higher than BBB for S&P or Baa2 for Moodys, it was decided to consider only
securities issued by corporate issuers with a class “A” rating with the assumption that this
class identifies an average level for “investment grade” securities and thereby excludes
higher risk securities. Since IAS 19 makes no explicit reference to a specific market sector
for the bonds, it was decided to opt for a “composite” market curve which therefore
summarises the prevailing market conditions on the valuation date for securities issued by
companies belonging to different sectors, including utilities, telephone, financial, banking
and industrial sectors. The euro area was used for the geographical area.
The demographic and actuarial hypotheses adopted to value the post-employment benefit provision and leaving
entitlements as at 31/12/2009
Mortality rate
The “RGS48” tables (prepared by the State General Accounting Office) were used
appropriately modified on the basis of historical data for the Group.
Post-employment benefit
The probability of advance payments, calculated on the basis of historical data for the
advances
Group, is 2% while the average amount requested is between 45% and 100% of the
available provision.
Inflation rates
Long term forecasts of the scenario for inflation led to the use of a rate of 2%.
Present value discount
A discount rate of 4,871% was used, calculated as the weighted average of the EUR
rate
Composite A curve as at 30.12.2009, using, as weights, the ratios between the amount paid
and advanced for each maturity date and the total amount to be paid and advanced until
the extinction of the population considered. This was performed because IAS 19 states that
reference should be made to the market yields of “high quality corporate bonds”, or to
yields on securities with a low credit risk. By making reference to the definition of
“investment grade” securities, where a security qualifies for that classification if its rating is
equal to or higher than BBB for S&P or Baa2 for Moodys, it was decided to consider only
securities issued by corporate issuers with a class “A” rating with the assumption that this
class identifies an average level for “investment grade” securities and thereby excludes
higher risk securities. Since IAS 19 makes no explicit reference to a specific market sector
for the bonds, it was decided to opt for a “composite” market curve which therefore
summarises the prevailing market conditions on the valuation date for securities issued by
companies belonging to different sectors, including utilities, telephone, financial, banking
and industrial sectors. The euro area was used for the geographical area.
306
SECTION 12 Provisions for risks and charges – Item 120
12.1 Provisions for risks and charges: composition
Items/Components
31/12/2010
1. Comp any pe nsion funds
2. Other provisions for risks and charges
2.1 litigation
2.2 personnel expense
2.3 other
Total
31/12/2009
68.082
235.490
71.503
214.120
113.868
41.423
80.199
107.993
18.768
87.359
303.572
285.623
Provisions for personnel consist of an actuarial valuation of length of service bonuses provided for
under supplementary labour agreements, company bonus provisions, for which negotiations are
in progress with trade union organisations and a prudent provision made by Banca Carime,
amounting to 3.408 thousand euro, the result of an improved estimate to-date of the greater
liabilities arising from a refinement of the formula employed to calculate the pension fund, with
particular reference to periodic payments made to participants in the fund. That amount is
recognised within personnel expense.
Provisions for risks and charges – Other provisions – include a provision made by Banca 24-7 Spa
totalling 8,9 million euro. This provision includes an amount of eight million euro to cover
possible operational risks relating to salary backed loan business for loans originated by the
company Ktesios Spa and transferred to Banca 24-7 Spa.
Ktesios Spa specialises in granting secured loans to workers with permanent employment
contracts, repaid directly from wage packets with a payment authorisation, At the beginning of
February 2011 it informed B@nca 24-7, that it was experiencing constant cash flow difficulties
and had made proposals to its governing bodies to take appropriate corporate ownership
initiatives, including a possible proposal to go into voluntary liquidation. Subsequently with a
provision of 8th March 2011, the Bank of Italy removed the company from the special list
pursuant to Art. 107 of the Consolidated Banking Act. Therefore, from that date the company is
only registered in the general list pursuant to Art. 106 of that decree and may not undertake new
transactions.
12.2 Provisions for risks and charges: annual changes
Total
Items/Components
Pension funds
A. Opening bal ances
B. Increases
B.1 Allocation for the year
B.2 Changes due to time value of money
B.3 Changes due to changes in discount rate
B.4 Other changes
C. Decreases
C.1 Use for the year
C.2 Changes due to changes in discount rate
C.3 Other changes
D. Final bal ances
307
Other provisions
71.503
214.120
4.571
3.051
83.839
77.286
1.093
4.117
-
400
427
2.036
(7.992)
(7.959)
(62.469)
(35.908)
-
(161)
(33)
(26.400)
68.082
235.490
12.3 Defined benefit company pension funds
The balance in the financial statements for defined benefit company pension funds was composed
of Banca Carime Spa funds amounting to 43.647 thousand euro, Banca Regionale Europea Spa
funds amounting to 23.526 thousand euro and Centrobanca Spa funds amounting to 909
thousand euro.
12.3.1 Description of the funds
BANCA CARIME SPA
Three defined benefit company pension funds existed as at 31.12.2010.
1. The fund to supplement I.N.P.S. (national insurance institute) benefits for compulsory
invalidity, old age and survivors insurance for retired personnel of the former Cassa di Risparmio
di Calabria e Lucania (Reg. No. 9059 in the Pension Fund Register);
invalidity, old age and survivors insurance for retired staff of the former Cassa di Risparmio di
Puglia (Reg. No. 9124 in the Pension Fund Register);
invalidity, old age and survivors insurance for retired staff of the former Cassa di Risparmio
Salernitana (Reg. No. 9053 in the Pension Fund Register).
The funds pay the following welfare benefits as a direct pension for:
• old age, when the participants have reached 60 years of age if men and 55 years of age if
women, provided that they have participated in the fund for at least 15 years;
• length of service, at any age when the participants have participated in the fund for 35 years if
men and 30 years if women;
• invalidity at any age when permanently and completely unable to work through disability and
participating in the fund (in addition, for the fund of the former Cassa di Risparmio di Puglia, the
invalidity must be caused by work and for the fund of the former Cassa di Risparmio Salernitana,
participation for at least 5 years is required).
Furthermore, survivors of participants receive an ‘indirect pension’ if a participant dies while in
service and a surviving dependent’s pension if a participant dies, provided a direct pension has
been paid.
Description of the main actuarial hypotheses
The defined benefit plan funds were subjected to actuarial valuation which in the technical audit
as at 31.12.2010 resulted in an amount for the mathematical reserve which on average, in the
actuarial sense, will allow the pensions granted to pensioners and their surviving dependents to
be paid.
The valuations were performed in compliance with accounting standard IAS 19, with the
legislation governing the relative pensions schemes and with company regulations. More
specifically, the criterion used to calculate the liability is consistent with the projected unit credit
method required under IAS 19.
The following demographic hypotheses were assumed:
• for the probability of death of pensioners, those for the Italian population censused by ISTAT in
2002, separately by gender;
308
• for the probability of death of permanently and completely disabled pensioners, those adopted in
the INPS (national insurance institute) model for projections to 2010, separately by gender;
• for the probability of leaving a family, those published separately by gender in pension fund
reports;
• for the probability of widowers and widows remarrying, those taken from ISTAT 1960/62
marriage tables;
• for the probability of death of widowers and widows, those for the Italian population censused by
ISTAT in 2002, while for orphaned minors, the probability of death assumed is nil.
The economic and financial hypotheses used in the actuarial valuation were as follows:
Former
Caripuglia
pension fund
Former Carical
pension fund
Former Carisal
pension fund
a) Discount rates
4,50%
4,50%
4,50%
b) Expected rates of increase in remuneration
0,00%
0,00%
0,00%
c) Inflation rate
2,00%
2,00%
2,00%
Actuarial valuations
The table below gives the results from the actuarial valuations performed as at 31st December
2010 in relation to the different groups.
Changes in liabilities in 2010 for IAS 19 purposes
Former
Caripuglia
pension fund
Former Carical
pension fund
A. Opening balances
Former Carisal
pension fund
Total
35.834
9.758
612
46.204
B. Increases
2.430
480
45
2.955
B.1 Interest expense balancing entry in the income statement
"personnel expense"
2.430
480
45
2.955
-
-
-
-
B.2 Actuarial gains balancing entry in "fair value reserves"
B.3 Provisions
B.4 Other changes
C. Decreases
C.1 Pension benefits paid
-
-
-
-
(4.370)
(4.370)
(1.064)
(1.064)
(78)
(78)
(5.512)
(5.512)
C.2 Actuarial losses balancing entry in "fair value reserves"
-
-
-
-
C.3 Other changes
-
-
-
-
D. Final balances
33.894
9.174
579
43.647
The average present value of pensions currently being paid (immediate costs) was identified as
constituting the economic commitments of the fund as at 31st December 2010,
A sufficiently prudent system of financial capitalisation was adopted that is able to guarantee the
full cover of the benefits to be paid to the group of pensioners existing as at 31st December 2010
with the accumulated reserves at any moment.
309
CENTROBANCA SPA
This is a supplementary pension fund in which there are now 10 remaining pensioners from
Centrobanca participating.
The number of participants reduced by one compared to the previous year. In 2009, on the other
hand, they had reduced by six who had accepted a proposal of a lump-sum capital payment
amounting to 671 thousand euro.
The contribution for the 2010, as specified by the “Fund Regulations” was calculated on the basis
of the weighted average rate used in the valuation performed (3,7%).
Against that contribution the Bank benefited from the returns on using the assets of the fund.
The sums in the fund are not invested in specific assets.
Except for the amount for asset item 120a), no “other” liabilities and/or assets were recognised in
the financial statements of the bank
The main actuarial hypotheses on which the valuation of the fund as at 31.12.2010 was based
are as follows:
- demographic hypotheses from ISTAT (Italian National Office for Statistics) 2007 mortality tables;
- the present value discount rate determined on the basis of zero coupon interest rates calculated
on same maturity swap rates for the date 31st December 2010 (source Bloomberg).
The present value of the fund, calculated on the basis of those hypotheses, resulted in an
“actuarial loss” of 33 thousand euro (point C.3).
PENSION FUND CENTROBANCA
A. Opening balances
1.001
B. Increases
38
B.1 In tere st expe nse balancing entry in the income statement "personnel expen se"
38
B.2 Actuarial gain s balancing e ntry in "fair value res erves"
B.3 Provisions
B.4 Othe r change s
C. Decreas es
(130)
C.1 Pension be nefits paid
(97)
C.2 Actuarial losse s balancing entry in "fair value res erves"
C.3 Othe r change s
(33)
D. Final balances
909
BANCA REGIONALE EUROPEA SPA
As at 31.12.2010 there was a fund to supplement compulsory invalidity, old age and survivors
insurance for the staff of Banca Regionale Europea originally from the former Cassa del Monte di
Lombardia and from the former Cassa di Risparmio di Cuneo.
The fund pays the following welfare benefits as a direct pension for:
• old age, when the participants have reached the age limits set in the contracts in force at the
time, provided that they have participated in the fund for at least 15 years;
• length of service, when the participants have reached the minimum age limits set in the
contracts in force at the time;
• invalidity when, having obtained acknowledgement of the condition of invalidity and whatever
the age, a length of service of at least five years has been served, or whatever the length of service,
if the invalidity is permanent and caused by work.
Furthermore, survivors of participants receive an ‘indirect pension’ if a participant dies while in
service after one year of participation in the fund or after any period if death was caused by work
and a surviving dependent’s pension if a participant dies, provided a direct pension has been
paid.
310
Description of the main actuarial hypotheses
The defined benefit plan fund was subjected to actuarial valuation which in the technical audit as
at 31.12.2010 resulted in an amount for the mathematical reserve which on average, in the
actuarial sense, will allow the pensions granted to pensioners and their surviving dependents to
be paid.
The valuations were performed in compliance with accounting standard IAS 19, with the
legislation governing the relative pensions schemes and with company regulations. More
specifically, the criterion used to calculate the liability is consistent with the projected unit credit
method required under IAS 19.
The following demographic hypotheses were assumed:
• for the probability of death of pensioners, direct and/or indirect, those for the Italian population
taken from “RGS48” tables prepared by the State General Accounting Office, separately by gender;
• for the probability of death of permanently and completely disabled pensioners, those adopted in
the INPS (national insurance institute) model for projections to 2010, separately by gender;
• for the probability of leaving a family, those published separately by gender in pension fund
reports;
• for the probability of widowers and widows remarrying, those taken from ISTAT 1960/62
marriage tables;
The economic and financial hypotheses used in the actuarial valuation were as follows:
• discount rate 4,50%
• expected rate of increase in remuneration 3,50%
• annual inflation rate of 2,00%.
Actuarial valuations
The table below gives the results from the actuarial valuations performed as at 31st December
2010 in relation to the different groups.
Former B.M.L.
p ension fund
A. Opening balances
B. Increases
B.1 Intere st expe nse balancing entry in the income statement "personnel expense"
B.2 Actuarial gains balancing e ntry in "fair value res erv es"
B.3 Provis ions
B.4 Othe r change s
C. Decreases
C.1 Pension benefits paid
C.2 Actuarial losse s balanc ing e ntry in "fair value res erv es"
C.3 Othe r change s
D. Final balances
Former C.R.C.
pension fund
Total
9.896
14.402
24.298
552
1.026
1.578
445
35
59
648
378
-
1.093
413
59
13
-
13
(716)
(716)
(1.634)
(1.634)
(2.350)
(2.350)
-
-
-
9.732
13.794
23.526
The average present value of pensions currently being paid (immediate costs) was identified as
constituting the economic commitments of the fund as at 31st December 2010,
A sufficiently prudent system of financial capitalisation was adopted that is able to guarantee the
full cover of the benefits to be paid to the group of pensioners existing as at 31st December 2010
with the accumulated reserves at any moment.
|1 - NOTA
311
12.4 Provisions for liabilities and charges – other provisions
31/12/2010
1. Prov ision for revocation risks
2. Prov ision for bonds and de fault
31/12/2009
29.161
10.155
36.938
12.385
3. Other provisions for risks and charges
40.883
38.036
Total
80.199
87.359
12.5 Contingent liabilities
31/12/2010
for pe rsonnel litigation
31/12/2009
246
1.061
for revocation ris ks
2.857
7
for bonds in de fault
-
60
1.394
1.781
for c ompounding of interest
for c laim risks
for tax litigation
for othe r litigation
Total
660
500
183.600
135.400
73.390
42.152
262.147
180.961
The liabilities governed by IAS 37, characterised by the absence of certainty over the timing or the
amount of future expense required to settle presumed liabilities, can be classified as being of two
types:

probable liabilities;
contingent liabilities (possible or remote).
The correct identification of the nature of liabilities is of fundamental importance because it
determines whether or not the risk deriving from an obligation must be recognised in the financial
statements.
The recognition of a provision for risks and charges in the financial statements represents a
probable liability of uncertain timing or amount5 and the amount recognised in the accounts
represents the best estimate of the expenditure required to settle the obligation existing as at the
reporting date and reflects the risks and uncertainties that inevitably characterise a number of
different facts and circumstances.
The amount of a provision is measured by the present value of the expenditure that it is assumed
will be necessary to settle the obligation where the effect of the present value is significant.
Future events that might affect the amount required to settle the obligation are only taken into
consideration if there is sufficient objective evidence that they will occur.
The measurement of provisions is periodically reviewed to verify that they are reasonable.
The general and theoretical legal parameters which the govern the process of determining the
present value of provisions, which is performed for each single case of litigation and for the
relative residual life, are given below:
• type/nature of the litigation, to be assessed in the light of the legal claims formulated by the
counterparty. Various “macro-families” are identifiable in this respect such as corporate litigation,
5 Details of the criteria for recognising provisions are given in Part A.2 of the notes to the financial statements “The main
items in the financial statements”, section 12 “Provisions for risks and charges”, which may be consulted.
312
labour law cases, financial intermediation litigation, litigation generically definable as
compensation for damages (resulting from non performance of contract obligations, illegal actions,
violation of regulations) etc.;
• degree of “innovation” in the litigation, to be assessed by considering whether the issues
turn on matters already known and “weighed” by the Bank or on completely new matters which
therefore require study (e.g. resulting from a change in the legislation or in legal orientations);
• degree of “strategic importance” of the litigation to the bank: for commercial reasons the
Bank might for example decide to end a case very rapidly even if it had grounds of defence that
would allow it to resist in court for a long time;
• average length of litigation, to be weighted taking account of geographical factors, which is to
say the location of the jurisdiction in which the case is tried and the state of progress of the trial.
In this respect a decision must be taken on the source of the statistics from which data is
obtained and assistance can be obtained from the lawyers who represent the Bank in litigation
and who have direct knowledge of the jurisdictions concerned for each case;
• the “nature” of the counterparty (e.g. a private individual or a legal entity, a professional
operator or not, a consumer or not, etc.).
A contingent liability is defined as:
a possible obligation, the result of past events, the existence of which will only be confirmed
by the occurrence or (non occurrence) of future events that are not totally under the control of
the enterprise;
a present obligation that is the result of past events, but which is not recognised in the
accounts because:
−
−
it is improbable that financial resources will be needed to settle the obligation;
the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognised in the financial statements but are only reported, unless
they are considered a remote possibility. In the latter case, in compliance with IAS 37, no
information is given on them in the notes to the financial statements.
Amounts for contingent liabilities are also subject to periodical verification because it is possible
that events may occur which make them remote or probable with the possible need, in the latter
case, to make a provision for them in the financial statements.
The Group was subjected to a significant number of tax inspections during the year followed by
tax assessment reports, from which notices of tax assessment can arise generally towards the end
of the legal time limits. Where tax consolidation for IRES (corporation tax) purposes exist, with
joint liability, these inspections are duplicated for the Parent as the consolidating company. A
summary is given below of the companies affected by these events for each year.
313
NOTICES OF TAX ASSESSMENT
BPB Immobiliare (2003) increased taxation of 16,5 million euro, fines of 17,6 million euro
This was a contribution of company property operations considered by the tax authorities as the
disposal of assets.
A ruling was given fully in favour of the company by the Tax Commission of the Province of
Bergamo against which the tax authorities appealed to the Regional Tax Commission of
Lombardy. The relative hearing is set for June 2011.
Banca Carime (2003) increased taxation of 14,4 million euro, fines of 22,6 million euro
disposal of assets.
Cosenza against which the tax authorities appealed to the Regional Tax Commission of Calabria.
The date for the relative hearing has not yet been set.
UBI Banca (2003) increased taxation of 5,3 million euro, fines of 6,4 million euro
disposal of assets.
Bergamo against which the tax authorities appealed to the Regional Tax Commission of
Lombardy, to be discussed in a hearing in April 2011.
UBI Banca (2004 and 2005) increased taxation of 8,83 million euro, fines of 10,86 million euro
This was based on the alleged failure to apply a withholding tax on interest paid to a foreign
subsidiary on deposits made by the subsidiary, which were classified by the tax inspectors as
financing. These were complex transactions designed to strengthen capital performed in 2001
with the authorisation of the Bank of Italy. On the basis of expert opinion it is considered that the
tax regime applied by the bank – which was then Banca Popolare di Bergamo and Banca Popolare
Commercio e Industria – complied with the requirements of contracts and the law. Since the
question involves more than one year, notices of tax assessment for 2004 and 2005 have been
received so far. An appeal has been presented for the latter year, while for 2004 the Tax
Commission of the Province of Milan ruled in a hearing held on 2nd December 2010 that collection
of the amount demanded should be suspended, with a hearing scheduled for 3rd March 2011.
Banco di Brescia (2004 and 2005) increased taxation of euro 3,16 million euro, fines of 3,92
million euro
This was based on the alleged failure to apply a withholding tax on interest paid to a foreign
subsidiary on deposits made by the subsidiary, which were classified by the tax inspectors as
financing. These were complex transactions designed to strengthen capital performed in 2000
with the authorisation of the Bank of Italy. On the basis of expert opinion it is considered that the
tax regime applied by the bank complied with the requirements of contracts and the law. The
relative tax demands were appealed against before the Tax Commission of the Province of Milan.
While the verdict is pending for 2004 a collection order for 953 thousand euro was issued which
the Bank paid.
UBI Leasing (2004) increased taxation of euro 2,15 million euro, fines of 2,3 million euro
This is a case of alleged improper application of a subsidised VAT rate on marine lease
transactions or undue deduction of VAT on invoices for non existent transactions and improper
quantification of the recognition of impairment losses on loans for IRES (corporate income tax)
purposes. At present the tax authorities have issued an interim collection order limited to the
IRES (corporate income tax) demands for a total of 22 thousand euro.
Banco di Brescia (2004) increased taxation of 1,5 million euro, fines of 1,5 million euro
An alleged error in the technical recognition of expenses and improper valuation of securities
owned. The tax authorities have issued the relative collection order. As part of a second level
314
assessment, the tax authorities issued a collection order on the bank for 901 thousand which it
paid.
UBI Banca Private Investment (2004) increased taxation of 0,3 million euro, fines of 0,3 million
euro
An alleged error in the technical recognition of expenses, including supplementary personnel
redundancy indemnities. The hearing for plea bargaining before the court of first instance was
held on 1st July 2010 with an unsuccessful outcome for the bank. The bank reserves the right to
appeal. As part of a second level assessment, the tax authorities issued a collection order for 169
thousand which the bank paid.
Grifogest (2004) increased taxation of 0,15 million euro, fines of 0,15 million euro
This was a case of alleged infringement of the rules for the period in which income and expenses
are recognised. The Tax Commission of the Province of Florence ruled fully in favour of the
company’s appeal. The tax authorities have lodged an appeal with the relative Regional Tax
Commission.
UBI Leasing (2008) increased taxation of 0,30 million euro, fines of 0,30 million euro
Alleged mistaken use of the tax base for land registry and mortgage duties following the
termination of two finance lease contracts.
Finally, following the tax consolidation opted for in 2004 and the assessment notices for IRES
(corporate income tax) received by the subsidiaries/consolidated companies Banco di Brescia,
UBI Private Investment, UBI Leasing and Grifogest, the tax authorities issued an interim
collection order through Equitalia, for a total of 1,1 million during the last quarter of 2010.
Without prejudice to the grounds given in both the first and second level appeals, the
Parent/consolidating company settled the collection order and charged the amounts on to the
individual companies subject to tax assessment pursuant to articles 117 et seq. of the
Consolidated Income Tax Act.
TAX ASSESSMENT REPORTS
Centrobanca (2006) increased taxation of three million euro
The tax authorities do not approve the criteria employed for the recognition of the disposal of
loans to customers or the recognition of impairment losses on those same loans notwithstanding
the tax derivation principle introduced for IAS entities in 2005. The conduct of the company is
also supported by the reputable opinions of external advisors. Observations were presented
against the claims in the tax assessment report as permitted by the taxpayers’ statute (Law No.
212/2000). In consideration of the amount of the claims, the inspectors referred the case to the
Public Prosecutor’s Office of Milan, where the hearing is still in progress. A positive result is
expected because the issue is centred almost entirely on the complex aspect of the taxation of
entities subject to IFRS.
UBI Sistemi e Servizi (2005) increased taxation of 0,02 million euro
These are alleged infringements concerning the application of accrual and matching principles to
some expenses. Observations were presented against the claims in the tax assessment report as
permitted by the taxpayers’ statute (Law No. 212/2000). A payment was made in December 2010
to settle the matter.
UBI Banca (2006) increased taxation of 4,4 million euro
These are the same types of infringement as those reported for the notices of tax assessment
relating to 2004 and 2005.
315
Banco di Brescia (2006) increased taxation of 1,5 million euro
These are the same types of infringement as those reported for the notices of tax assessment
relating to 2004 and 2005.
Banco di Brescia (2006) increased taxation of two million euro
This is a case of presumed irregularities in the quantification of the recognition of impairment
losses on loans for the year. Observations were presented against the claims in the tax
assessment report as permitted by the taxpayers’ statute (Law No. 212/2000) and an appeal was
subsequently lodged.
UBI Leasing (2005-2007) increased taxation of 3,7 million euro
These are the same types of infringement as those reported for the notice of assessment relating
to 2004.
Banca Popolare Commercio e Industria (2006) increased taxation of 0,3 million euro
losses on loans for the year. An application for full settlement by consent of the tax assessment
report was made and also by the consolidating company UBI Banca. The relative payment
amounts to 350 thousand euro and will be paid within the set time limits.
Banca Popolare di Bergamo (2006) increased taxation of 0,06 million euro
losses on loans for the year. This bank, together with the consolidating company UBI Banca, has
agreed to accept the findings of the tax assessment report (Art. 5 bis of Legislative Decree No.
218/1997). On 21st October 2010 the payment was made to settle the claim.
Silf (2007) increased taxation of 0,4 million euro
This is a case of presumed irregularities in the deductibility of some expenses during the year (in
particular, those related to commission expenses paid to financial advisors) and of loan losses as
well as the quantification of the recognition of impairment losses on loans for the year.
Observations were presented against the claims in the tax assessment report as permitted by the
taxpayers’ statute (Law No. 212/2000).
UBI Banca (2003) increased taxation of 18 million euro
This is a case of presumed undue corporate income tax deductions of expense items in relation to
contributions of operations performed in 2003 which gave rise to the formation of the former
Banche Popolari Unite Group. The Parent not only pleaded the lack of grounds, but also raised
the objection during the inspection that the assessment was null and void because it related to a
year (2003) for which the time limit for assessment had expired on 31st December 2008, while the
inspection was performed in 2010.
316
OTHER TAX LITIGATION
Further tax litigation exists, relating mainly to years prior to 31/12/2007, which regard the
following issues:
UBI Banca (years between 1976 and 1984) increased taxation of 18,6 million euro
These consist of cases pending before the Central Tax Commission, for most of which favourable
decisions have been given in 2010 and in the absence of an appeal to the Supreme Court of
Cassation these will become final judgements by the end of the year. They are based on the
deductibility criteria for IRPEG (former corporate income tax) and ILOR (former local income tax)
purposes of various expense items, because they relate specifically to assets from which income
and proceeds subject to taxation is derived. They are also based on the non taxability for IRPEG
and ILOR purposes of interest due to the tax authorities on tax credits, in the light of legislation
in force at the time (pre Consolidated Income Tax Act, pursuant to Presidential Decree No.
917/1986).
UBI Banca (1980-1984), increased taxation of 2,2 million euro
These consist of cases pending before the Central Tax Commission, for which favourable decisions
have been given in 2010 and in the absence of an appeal to the Supreme Court of Cassation,
these will become final judgements by the end of the year. They concern the non applicability of
the withholding tax pursuant to Art. 26, paragraph 3 of Presidential Decree No. 600/1973 on
interest paid by foreign banks to Italian banks relating to deposits and current accounts held by
the latter on their own account with the former.
Banca Regionale Europea (2003), fines of 1,2 million euro
This is an appeal to the Supreme Court of Cassation by the tax authorities against a ruling in the
court of second instance in favour of the bank concerning the criteria employed by the bank to
rectify its tax returns which it is claimed resulted in a non payment of IRPEG (former corporate
income tax), for which a fine of 1,2 million euro was imposed.
Banca Carime (2003, 2004), increased taxation of 0,6 million euro
These are two cases for which favourable decisions were given in the court of first instance, which
are currently subject to appeal by the tax authorities before the competent Regional Tax
Commission. They concern the alleged failure to document withholding taxes on interest paid on
treasury postal bonds issued prior to 1997.
Finally, requests for the refund of taxes are in progress in courts at various levels and also out-ofcourt for a total of 15,6 million euro.
* * *
Except for some of the cases just reported, for which probable risks exist (demands for increased
taxation, interest and fines amounting to 13,6 million euro) and which as a consequence justified
recognition of provisions amounting to 11,6 million euro, on the basis of careful consideration by
the organisational units concerned, backed by external expert opinion, the remaining disputes
were felt to constitute only possible risks not requiring the recognition of specific provisions.
317
SECTION 13 Technical reserves – Item 130
No amounts were recognised within item 130 “Technical reserves” either as at 31/12/2010 or as
at 31/12/2009.
SECTION 14 Redeemable shares – Item 150
14.1 Redeemable shares: composition
No shares have been issued with redemption clauses.
SECTION 15 Equity attributable to the Shareholders of the Parent – Items
140, 160, 170, 180, 190, 200 and 220
15.1 “Share capital” and “Treasury shares”: composition
31/12/2010
Numbe r of ordinary shares
31/12/2009
639.145.902
639.145.902
nominal unit value in e uro
2,50
2,50
Numbe r of treasury share s
nominal unit value in e uro
0,00
0,00
- NOTA
318
15.2 Share capital – Number of shares of the Parent: annual changes
Ord inary
A. Shares existing at the beginning of the year
- fully paid up
Other
639.145.902
639.145.902
-
- not fully paid up
-
-
A.1 Treasury share s (-)
-
-
639.145.902
-
-
-
-
-
- by p ayment:
-
-
- busines s combination transactions
- conversion of bonds
-
-
- exe rcise of warrants
-
-
- othe r
-
-
- free of c harge :
-
-
- in favour of employee s
- in favour of directors
-
-
- othe r
B.2 Outs tand ing s hares: initial number
B. Increases
B.1 New iss ues
-
-
B.2 Sale of treasury shares
-
-
B.3 Othe r change s
-
-
-
-
C.1 Cancellation
-
-
C.2 Purchase of treasury shares
C.3 Company disposal ope rations
-
-
C. Decreas es
C. 4 Other changes
D. Outstanding shares : closing balances
D.1 Treasury shares (+)
D.2 Shares outstanding at the end of the year
- fully paid up
- not fully paid up
319
-
-
639.145.902
-
-
639.145.902
-
-
-
-
15.3 Share capital: other information
UBI Banca ordinary share 2009/2011 warrants
On 9th May 2009 an ordinary shareholders’ meeting of UBI Banca approved an increase in the
share capital in tranches for a maximum nominal amount of 79.893.237,50 euro by the issue of
up to 31.957.295 ordinary shares with a nominal value of 2,50 euro each and regular dividend
entitlement corresponding to that of the UBI Banca shares outstanding at the time of the issue, in
order to service the issue of 639.145.900 warrants “Warrant azioni ordinarie UBI Banca
2009/2011”.
The warrants were allotted free of charge to the shareholders of the Bank on 18th May 2009 on a
basis of one warrant for each UBI share held.
The warrants grant shareholders or their assignees the right to subscribe one share for every 20
warrants held at a price of 12,30 euro. The holders of the warrants can exercise their rights to
subscribe for a period of 30 calendar days from 1st June 2011 until 30th June 2011.
Convertible bond issue “UBI 2009/2013 convertibile con facoltà di rimborso in azioni”
On 18th June 2009, the Management Board of UBI Banca, following the decisions taken on 27th
May 2009 and in implementation of the authorisation granted by a shareholders’ meeting of 9th
May 2009, approved the final conditions for the convertible bond “UBI 2009/2013 convertibile con
facoltà di rimborso in azioni”, offered as a rights issue to the shareholders of UBI Banca.
The issuance of the convertible bonds was performed for a total nominal amount of 639.145.872
euro, through the issue of 50.129.088 convertible bonds for a nominal amount of 12,75 euro
each, offered as a rights issue to the shareholders of UBI Banca at a ratio of four convertible
bonds for every 51 ordinary shares of UBI Banca possessed. The issue price of each convertible
bond was 12,75 euro.
The convertible bonds confer the right on the holders to the payment of a fixed coupon equal to
5,75% gross per annum of the nominal amount of the convertible bonds to be paid annually and
which will have a term running from 10th July 2009 until 10th July 2013.
The Management Board also decided to increase the share capital at the service of the convertible
bonds by a maximum amount of 639.145.872 euro through the issue of a maximum of
255.658.348 ordinary shares of UBI Banca, with a nominal value of 2,50 euro each, normal
dividend entitlement and having the same characteristics of the ordinary shares of UBI Banca
outstanding on the date of issue.
As concerns the conversion and redemption rights attaching to the convertible bonds, when 18
months have elapsed since the issue date of the convertible bonds:
• bondholders shall have the right to convert the convertible bonds into UBI Banca shares at a
ratio of one ordinary share for every one convertible bond held. If the conversion right is exercised,
UBI Banca shall have the right to pay a sum of money in place of the shares, not less than the
nominal amount of the bonds, calculated on the basis of the stock market share price of the UBI
Banca shares;
• UBI Banca shall have the right to call the convertible bonds by payment in cash and/or in UBI
Banca shares, with the addition of a premium equal to 10% of the nominal amount of the
convertible bonds.
The convertible bonds shall be redeemed at par on the maturity date. UBI Banca shall have the
right to perform the redemption by payment in cash and/or ordinary shares of UBI Banca, in an
amount not less than the nominal value of the convertible bonds.
320
15.4 Reserves of profits: other information
The reserves of profits in the consolidated financial statements increased by 69.878 thousand
euro. That increase was almost entirely the result of the allocation of the profit for the year ended
31.12.2009 amounting to 270.099 thousand euro, the distribution of a dividend for 2009 and the
allocations of profits made by the governing bodies of the Bank and its subsidiaries.
SECTION 16 Minority interests – Item 210
16.1 Minority interests: composition
31/12/2010
Share capital
31/12/2009
514.687
Share pre miums
Res erv es
435.440
78.777
85.839
327.818
347.883
27.876
52.132
13.602
17.048
962.760
938.342
Treasury share s
-
Fair value reserves
Equity instruments
-
Profit for the ye ar attributable to minority intere sts
Total
Minority interests net of fair value reserves and profits (losses) for the year increased by
approximately 52.120 thousand euro. The changes that occurred were due mainly to the impacts,
already mentioned, of the operation to optimise the branch network concluded at the end of July
by the sale to UBI Banca Scpa, Banca Regionale Europea Spa and the Monte di Lombardia
foundation of the shares held by individual banks following the increases in the share capital.
The effects of that operation and those due to non recurring transactions that occurred during the
reporting period (the merger of UBI Pramerica Alternative Investments SGR and Capitalgest
Alternative Investments into UBI Pramerica SGR, the merger of Twice SIM into IW Bank and the
merger of CB Invest into Centrobanca) on minority interests were as follows:
share capital: increase of approximately 79,2 million euro of which:
Twice Sim Spa
UBI Pramerica Alternative Investments SGR
Capitalgest Alternative Investments SGR
+151.677 thousand euro
- 59.526 thousand euro
1.872 thousand euro
525 thousand euro.
Minority interests included 9.844 thousand euro consisting of savings shares and 26.246
thousand euro consisting of the privileged shares of Banca Regionale Europea Spa.
Share premiums decreased by approximately 7,1 million euro of which:
Twice Sim Spa
-
6.168 thousand euro
425 thousand euro.
Reserves decreased by approximately 20 million euro. That decrease was determined
primarily by an increase of 17 million euro (2009 profit) and by a decrease of
approximately 43,5 million euro due to the distribution of dividends and other outgoings.
321
The remaining differences related to changes in percentage holdings due to the purchase or sale
of shares from or to minority shareholders during the year.
The effect of the transfer to the income statement of asset items when the purchase price
allocation was performed had a negative impact on profit attributable to minority interests
amounting to approximately 10.034 thousand euro (15.519 thousand euro as at 31st December
2009).
OTHER INFORMATION
1.
Guarantees granted and commitments
Transactions
31/12/2010
31/12/2009
1) Guarante es grante d of a financial nature
a) Banks
1.832.763
226.696
1.586.143
222.671
b) Custome rs
2) Guarante es grante d of a commercial nature
a) Banks
1.606.067
4.686.558
191.074
1.363.472
4.450.885
65.832
b) Custome rs
3) Irrevocable commitments to pay funds
a) Banks
4.495.484
6.691.440
111.933
4.385.053
7.387.905
143.090
i) of certain use
ii) of uncertain us e
b) Custome rs
107.773
4.160
6.579.507
141.809
1.281
7.244.815
i) of certain use
ii) of uncertain us e
579.994
5.999.513
651.512
6.593.303
3.632.315
2.836.715
16.843.076
16.261.648
4) Commitments underlying credit derivatives: prote ction sales
5) Assets pledge d to guarante e obligations to third p arties
6) Other c ommitments
Total
bella 4: 301000O|1 – NOTA
2.
Assets pledged to secure own liabilities and commitments
Portfolios
31/12/2010
1. F inancial asse ts held for trading
31/12/2009
1.827.624
374.822
7.892.169
4.247.467
2. F inancial asse ts at fair value
-
3. Available-for-sale financial ass ets
4. Held-to- maturity investments
5. Loans to b anks
-
6. Loans to c ustome rs
48.152
73.068
9.767.945
4.695.357
7. Prope rty, equipment and inv estment property
-
Total
322
The financial assets contained in the table relate to securities and loans implemented by the
banks in the Group as reported in detail below:
Guarantees o f liabilities or commitments
Portfolios
Repurchas e agree ments
Other transactions
1.771.526
50.098
1.821.624
Bank of Italy advances
Repurchas e agree ments
Issue of banke rs' drafts
Inte rbank marke t collat.
Other transactions
724.159
6.544.626
13.046
575.524
34.814
7.892.169
Loans to customers
Mortgages
48.152
48.152
3.
Information on operational leases
4.
Composition of investments for unit-linked and index-linked policies
323
5.
Management and intermediation on behalf of third parties
Type of services
Amounts
1. Execution of orders on behalf of customers
7.369.901
a) Purchas es
3.2 45.068
1. Se ttled
3.1 99.800
2. Not se ttled
45.268
b) Sales
4.1 24.833
1. Se ttled
4.1 21.265
2. Not se ttled
3.568
2. Portfolio managements
36.384.763
a) Individual
17.4 23.131
b) Collective
18.9 61.632
3. Cus tody and administration of securities
a) Se curities of third parties held on deposit: connected with de pos itory bank activity (not inc luding
portfolio management)
214.085.887
6 38.717
1. Se curities issued by companie s include d in the c ons olidation
2. Other se curitie s
6 38.717
b) Othe r third party s ecurities held on deposit (not including portfolio manageme nts): othe r
129.2 75.473
1. Se curities issued by companie s include d in the c ons olidation
2. Other se curitie s
129.2 75.473
c) Securitie s be longing to third parties , deposite d with third parties
81.2 56.843
d) Own se curities deposited with third parties
2.9 14.854
44.402.864
324
PART C – Notes to the consolidated income
statement
SECTION 1 Interest – Items 10 and 20
1.1 Interest income and similar: composition
Items/Type
Debt
instruments
1. F inancial asse ts held for trading
2. F inancial asse ts at fair value
Other
transactions
Financing
2010
2009
30.701
328.149
-
933
-
31.634
328.149
18.210
176.804
2.349
29.42 1
3.129.22 6
361
2 .387
29.782
3.133.962
59.659
40.260
3.916.330
X
8. Other assets
Total
X
361.199
X
3.158.647
5. Loans to b anks
X
-
-
-
1 .785
5.466
1.785
3.525.312
2.685
4.213.948
ble 4: 501000O|1 - NOTA3_ALTRE
Interest on impaired assets relates almost entirely to loans to customers and totalled 181.814
thousand euro.
1.2 Interest income and similar: hedging differentials
The interest balance for hedging differentials to 31st December 2010, showed a loss.
Details are given in Table 1.5 later in this section.
1.3 Interest and similar income: other information
Items/Amounts
2010
Inte rest income on financ ial assets held in foreign currency
Inte rest income on financ e lease transactions
2009
3 2.970
25 3.920
ble 5: 501030O|1 - NOTA
325
50.635
300.088
1.4 Interest expense and similar: composition
I tems/Type
1. Due to Central Banks
2. Due to banks
Borrowings
(14.115 )
(29.382 )
3. Due to custome rs
(195.937 )
4. Securities is sue d
5. F inancial liabilities held for trading
X
(9.108 )
6. F inancial liabilities at fair value
Other
transactions
Securities
-
X
Total
X
(248.542)
2009
X
(590)
X
(645)
(1 96.582)
(374.578)
-
(1.0 69.742)
(9.108)
(1.195.592)
(810)
(1.069.742)
-
-
7. Other liabilities and funds
2010
X
X
(1.069.742)
(14.115)
(29.972)
(3.339)
(45.871)
-
-
-
(789)
(789)
(1.406)
(58.406)
(60.430)
(58.406)
(1.378.714)
(96.724)
(1.718.320)
e 6: 502000O|1 - NOTA3_ALTRE
1.5 Interest expense and similar: hedging differentials
able 7: 502010O|1 - NOTA
Items
2010
A. Pos itiv e d ifferentials on hed ging transactions
B. Ne gative differe ntials on hedging trans actions
2009
91 8.121
(976.528)
641.146
(737.870)
(58.407)
(96.724)
C. Balance (A-B)
1.6 Interest expense and similar: other information
Items/Amounts
2010
Interes t expense on liabilities held in foreign currency
Interes t expense on finance lease transactions
2009
(33.072)
(631)
Table 8: 502020O|1 - NOTA
326
(34.551)
(146)
SECTION 2 Commissions – Items 40 and 50
2.1 Commission income: composition
Type of services/Segments
2010
a) guarantees granted
2009
42.648
b) credit de riv atives
c) management, trading and adv isory se rvices:
1. trading in financial in strume nts
2. fore ign exchange trading
3.1. individual
3.2. c ollec tive
4. cus tody and administration of securities
5. depository banking
6. placement of securities
7. rec eipt and transmission of orders
8. adv isory activitie s
8.1 on inve stme nts
8.2 on financ ial structure
9. distribution of third party servic es
9.1. p ortfolio management
9.1.1. indiv idual
9.1.2. c ollective
9.2. insurance products
9.3. othe r products
d) collection and payment se rvices
e ) service r ac tivities for se curitisation transac tions
41.069
-
-
683.743
656.798
39.462
12.259
37.830
11.510
273.077
258.769
72.968
73.660
200.109
185.109
15.788
19.188
7.751
21.022
105.533
78.411
43.565
48.681
6.062
5.965
5.958
104
5.965
-
180.246
175.422
68
-
68
-
-
127.927
105.233
52.251
70.189
146.820
156.170
-
-
26.995
26.799
g) tax collection and payme nt s erv ices
-
-
h) management of multilateral trading syste ms
-
-
213.902
225.262
264.009
1.378.117
223.086
1.329.184
f) servic es for factoring transactions
i) curre nt account administration
j) othe r servic es
Total
The sub item j) “Other services” for 2009 includes
- customer finance
184.720
- foreign transactions
10.889
- issue of bankers' drafts
13
“Other commission income” consisting of:
thousand euro
thousand euro
thousand euro.
With regard to “day one profit/loss” transactions, Centrobanca Spa performed limited
transactions during the financial year, with the recognition of commissions amounting to 678
thousand euro (these commissions totalled 4,2 million euro in 2009).
327
2.2 Commission expense: composition
Services/Segments
2010
a) guarantees received
b) credit de riv atives
2009
(80 9)
-
(765)
-
(90.27 6)
(16.36 8)
(28 1)
(82.311)
(17.093)
(84)
3.1. own
(5.77 2)
(5.08 3)
(2.877)
(1.653)
3.2. on behalf of third partie s
4. cus tody and administration of securities
(68 9)
(8.56 9)
(1.224)
(10.687)
c) manag