As at 30 June 2010 - Gruppo Credito Valtellinese

Transcription

Credito Valtellinese Società Cooperativa
Registered Offices in Piazza Quadrivio 8 — Sondrio, Italy
Tax code and Sondrio Company Register No. 00043260140 — Register of Banks No. 489
Parent Company of the Credito Valtellinese Banking Group — Register of Banking Groups No. 5216.7
Internet: http://www.creval.it E-mail: [email protected]
Data as at 30/06/2010: Share Capital EUR 728,667,845.50 – Reserves EUR 1,198,721,665.38
INTERIM REPORT
AS AT 30 June 2010
Interim Report – Credito Valtellinese Group
Credito Valtellinese Banking Group
Company Officers of Credito Valtellinese as at the approval date of the interim report
Board of Directors
Chairman
Substitute Vice Chairman
Vice Chairman
Managing Director
Directors
Members of the Executive Committee
Giovanni De Censi
Angelo Palma
Giuliano Zuccoli
Miro Fiordi
Fabio Bresesti
Gabriele Cogliati
Michele Colombo
Paolo De Santis
Aldo Fumagalli Romario
Gian Maria Gros Pietro
Paolo Stefano Giudici
Franco Moro
Valter Pasqua
Alberto Ribolla
Paolo Scarallo
Board of Statutory Auditors
Chairman
Permanent Auditors
Substitute Auditors
Angelo Garavaglia
Marco Barassi
Alfonso Rapella
Aldo Cottica
Edoardo Della Cagnoletta
Panel of Arbitrators
Permanent Arbitrators
Emilio Berbenni
Francesco Bertini
Emilio Rigamonti
Substitute Arbitrators
Adriano Bassi
Silvano Valenti
General Management
General Manager
Substitute Vice General Manager
Vice General Manager
Vice General Manager
and Executive in charge of drawing up
the corporate accounting documents
Independent auditing firm
Miro Fiordi
Giovanni Paolo Monti
Franco Sala
Enzo Rocca
Reconta Ernst & Young S.p.A.
Contents
INTERIM REPORT ON OPERATIONS .................................................................6
Consolidated highlights and alternative performance indicators .............................7
Organisational model and breakdown of the Credito Valtellinese Banking Group .......9
The reference operating context ...................................................................13
Operating performance and significant events in the half year ........................................15
Transactions between Group Companies and other related parties ...............................34
Business Outlook .....................................................................................................................35
Significant events occurring after the end of the first half of 2010 ...................................35
CONDENSED CONSOLIDATED INTERIM REPORT AS AT 30 JUNE 2010: FINANCIAL
STATEMENTS..............................................................................................36
Consolidated Statement of Financial Position ..................................................37
Consolidated Income Statement ...................................................................38
Consolidated Statement of Comprehensive Income ..........................................39
Statement of changes in consolidated shareholders’ equity.................................40
Consolidated cash flow statement – Direct method ............................................42
NOTES TO THE FINANCIAL STATEMENT ........................................................44
Accounting policies ...................................................................................45
Breakdown of the main statement financial position items ..................................52
Breakdown of the main income statement items...............................................63
Information on risks and hedging policies .......................................................72
Information on consolidated equity ................................................................87
Business combination ................................................................................89
Transactions with related parties ..................................................................91
Segment reporting ....................................................................................92
DISCLOSURE PURSUANT TO ART. 81-TER OF CONSOB REGULATION
NO.11971/1999.............................................................................................98
AUDITOR’S REPORT...................................................................................100
Interim report on operations
Consolidated highlights and alternative performance indicators
STATEMENT OF FINANCIAL POSITION DATA
30/06/2010
31/12/2009
%
change
%
change
30/06/2009
(in thousands of EUR)
Loans to customers
21,239,185
20,373,644
4.25
19,393,165
9.52
Financial assets and liabilities
780,816
680,513
14.74
730,418
6.90
Investments in associates and companies subject to
joint control
216,324
242,859
-10.93
232,458
-6.94
Total assets
25,473,408
24,895,771
2.32
23,400,149
8.86
Direct deposits from customers
21,146,400
20,216,534
4.60
19,300,416
9.56
Indirect deposits from customers
12,687,553
12,636,048
0.41
12,289,588
3.24
of which:
- Managed savings
Total deposits
Shareholders’ equity
6,206,136
5,874,767
5.64
5,504,453
12.75
33,833,953
32,852,582
2.99
31,590,004
7.10
1,886,011
1,927,051
-2.13
1,751,116
7.70
30/06/2010
31/12/2009
Tier 1 Regulatory Capital/Risk-weighted assets
6.32%
6.62%
Regulatory Capital/Risk-weighted assets
9.55%
9.27%
30/06/2010
31/12/2009
Indirect deposits from customers / Total deposits
37.5%
38.5%
Managed savings / Indirect deposits from customers
48.9%
46.5%
Direct deposits from customers / Total liabilities
83.0%
81.2%
Customer loans / Direct deposits from customers
100.4%
100.8%
Customer loans / Total assets
83.4%
81.8%
SOLVENCY RATIOS
FINANCIAL STATEMENT RATIOS
CREDIT RISK
30/06/2010
Net doubtful loans (in thousands of EUR)
31/12/2009
433,042
Other net doubtful loans (in thousands of EUR)
884,268
% change
343,581
26.04
740,729
19.38
Net doubtful loans / Loans to customers
2.0%
1.7%
Other net doubtful loans / Loans to customers
4.2%
3.6%
Hedging of doubtful loans
60.2%
62.6%
Hedging of other doubtful loans
4.4%
5.2%
Cost of credit (*)
0.60%
0.76%
(*) Calculated as the ratio between the net value adjustments due to deterioration of loans and year-end loans (annualised amount).
ORGANISATIONAL DATA
30/06/2010
Number of employees
Number of branches
Banc@perta line users
7
31/12/2009
%
change
4,504
4,415
2.02
536
515
4.08
149,072
137,942
8.07
1st half
of 2010
INCOME STATEMENT DATA
1st half
%
of 2009 change
Interest margin
237,055
255,893
-7.36
Operating income
411,303
395,511
3.99
-276,397
-262,614
5.25
134,906
132,897
1.51
Income (loss) before tax from continuing operations
66,386
74,203
-10.53
Income (loss) after tax from continuing operations
34,698
47,455
-26.88
Net income
29,314
41,493
-29.35
Operating expenses
Net income from banking activities
OTHER ECONOMIC INFORMATION
1st half
of 2010
1st half
of 2009
Cost/Income ratio
67.2%
66.40%
Basic EPS
0.09
0.18
Diluted EPS
0.08
0.18
Fitch Ratings
Issuer Default (long term)
A-; negative
Short term
F2
Individual
C
Support
3
Moody's Ratings
Long Term Rating
A3; stable
Short term Rating
P-2
Bank Financial Strength
C-
31/12/2009
Number of ordinary shares
31/12/2008
208,190,813
186,955,310
Listed price at end of the year
5.600
7.005
Average listed price for the year
6.399
7.098
Average stock-market capitalisation (millions of EUR)
1,283
1,237
Group shareholders’ equity per share (*)
9.256
9.123
(*) The calculation does not consider treasury shares in portfolio
8
Organisational model and breakdown of the Credito Valtellinese Banking Group
The Credito Valtellinese Group adopts a banking operations model that seeks to enhance its relations with
customers and with the territory, by creating a network formed by a series of local banks, specialised and
complementary companies, enhanced by consolidated partnerships with highly qualified banking and
financial organisations.
Creval’s DNA is based on the archetypal matrix of the cooperative bank, therefore the philosophy
underlying corporate activities is centred on territorial origins, seeking to become a clear and constant
reference point for the local community and to act in close synergy with its economic and social fabric.
In order to soundly implement this corporate mission, the Group’s organisational and corporate structure
incorporates companies focused on the banking business, on the provision of specialist financial services
and on support activities, with the aim of pursuing scale and specialist economies and the highest levels of
service.
Group Structure as at the date of this Interim Report
(*) not included in the banking group as it is an insurance company.
The Group currently operates in 537 branches in the reference territory, through other retail banks as
follows:
-
Credito Valtellinese S.c., parent company, cooperative bank listed on the Italian Stock Exchange
Market (MTA), organised and managed by Borsa Italiana S.p.A., whose business is centred on
principles of solidarity and whose primary objective is to guarantee the improvement of economic,
cultural and social well-being in the reference territory. Credito Valtellinese is characterised by its
9
constant focus on the territory and on small-scale businesses. It operates in the provinces of
Sondrio, Lecco, Como, Varese, Bergamo and Trento through a network of 126 branches.
-
Credito Artigiano S.p.A., established in 1946 in Milano. In 1995 it joined the Credito Valtellinese
Group and in July 1999 was listed on the Stock Market. The Bank currently has 142 branches in
Milano, Monza & Brianza, Lodi, Pavia, Cremona, Roma, Firenze, Prato, Pisa, Lucca, Pistoia and
Piacenza.
-
Credito Siciliano S.p.A., established in 2002 from the merger by incorporation of Banca Popolare
Santa Venera S.p.A. and Leasingroup Sicilia S.p.A. into Banca Regionale Sant’Angelo S.p.A. On 1
July 2002, Credito Siciliano also acquired the network of Cassa San Giacomo branches to become
one of the largest banks in Sicilia. Its mission is to actively contribute to the island’s economy and
community through its own commercial network present in all the provinces of Sicilia with 135
branches and in Roma with a branch dedicated to loan against pledge.
-
Banca dell’Artigianato e dell’Industria S.p.A., established in Brescia in 1997 at the initiative of a
committee of promoters comprising local tradesmen, business men and freelance professionals,
with the aim of contributing to economic development in the Brescia area. In 2000 it became a
member of the Credito Valtellinese Group. Without neglecting reinforcement of its traditional
reference territory, the bank is also expanding into the Veneto region, implementing a project that
envisages extension of the Credito Valtellinese Group influence to this region. The Bank currently
operates in the provinces of Brescia, Vicenza, Verona and Padova with 36 branches.
-
Credito Piemontese S.p.A., operative since 25 February 2008 following the acquisition of 23
branches – including 10 in Torino, 9 in the province of Torino and 4 in the Alessandria area – from
the Intesa Sanpaolo Group. The Bank later acquired the Verbania and Novara branches from
Credito Valtellinese and Credito Artigiano, and opened the Borgomanero (NO), Arona (NO) and
Asti branches to increase its total network to 28 branches.
-
Cassa di Risparmio di Fano S.p.A., founded in 1843, joined the Credito Valtellinese banking group
as of 3 December 2008 following the Parent Company’s acquisition of a controlling interest in the
bank’s share capital. Carifano operates 45 branches in the provinces of Pesaro, Ancona, ForlìCesena, Perugia and Rimini.
-
Banca Cattolica S.p.A., established in 1928 and based in Montefiascone (VT), joined the Group in
2009 following the Parent Company’s acquisition of the 80% controlling interest in the bank’s share
capital. Banca Cattolica is present in the provinces of Viterbo and Terni with 9 branches.
-
Banca della Ciociaria S.p.A. - founded in 1913 - is based in Frosinone and it joined the Group on
19 May 2010. It operates in the provinces of Frosinone, Latina and Roma with a network of 15
branches. Banca della Ciociaria is included in the Creval Group, with a 53% investment of the
Parent Company.
A number of other companies providing specialised financial services (“Specialised Finance Sector”) are
also included in the Group consolidation area:
-
Bancaperta S.p.A. is the bank specialised in financial asset management services, private
banking and real estate financial services; it also acts as the financial centre, coordinating the
activities of its subsidiaries and associated companies: Aperta SGR, Global Assicurazioni,
Aperta Fiduciaria, Lussemburgo Gestioni, Aperta Gestioni and Global Broker;
-
Aperta SGR S.p.A., an asset management company, wholly controlled by Bancaperta and
enrolled on the specific register held by the Bank of Italy. In October 2005, the asset
10
management business previously handled directly by Bancaperta was transferred to Aperta
SGR;
-
Lussemburgo Gestioni SA, Luxembourg-based management company, specialising in the
management and administration of UCIs, established with the purpose of widening the range
of financial products offered to the customers and of contributing to the development of new
business areas, by enhancing the experience gained by the Group in the asset management
sector;
Global Assicurazioni S.p.A. is a multifirm insurance agency acting as partner of excellence in
the bancassurance sector and, more in general, in the sales network distribution of standard
insurance policies; 60% of the share capital of the company is owned by Bancaperta and
therefore will be included in the Group consolidation area, even of not included in the baking
group, in that it carries on insurance activities.
-
-
Aperta Fiduciaria S.r.l, a company authorised to perform what is known as “static” fiduciary
services, including the administration of third party assets, the fiduciary registration of the
same, mediation in the exercise of related rights, and the representation of shareholders and
bondholders;
-
Mediocreval S.p.A., a bank specialised in the provision and management of medium to longterm financing. The supervision of the business finance sector and the administrative service
for the leasing segment are centred in the company;
-
Finanziaria San Giacomo S.p.A. is a company included on the Special Register of
Intermediaries operating in the financial sector pursuant to Article 107 of the TUB (Italian
Banking Law). The company purpose is to provide financial activities consisting in the
acquisition, management and disposal of problem loans for financial intermediary activities of
the Group and its associated companies.
-
Creset Servizi Territoriali S.p.A., established in 2006 in line with the strategic plan to
strengthen the Group in the payment systems and public authority services sectors. The
company was formed following the tax collection reform (Article 3, Italian Legislative Decree
no. 203 of 30 September 2005) from a business branch split from Rileno S.p.A., former
concessionary for the provinces of Como and Lecco.
It should also be noted that, on 23 July 2010, Global Broker was established in partnership with the Ri-Fin
Group. 51% of the share capital of the company is owned by Bancaperta and therefore is included in the
Group consolidation area, even of not included in the banking group, in that it carries on insurance
activities. Global Broker operates in the insurance brokerage segment, mainly in the insurance sector
targeting the SME segment.
The scope of the Group also includes a number of entities that provide services complementary to the
banking business, with a view to achieving synergies and economies of scale (“Production sector”):
With the objective of guaranteeing a greater management economic efficiency of the Group and stronger
compliance between the modus operandi and the company organisation, in the first half of 2010 the
transformation of Bankadati and Deltas in “limited consortium companies” was resolved.
-
Deltas Soc. Cons. p .A., consortium company that plays a role of coordination and monitoring
to ensure that the various business areas follow the guidelines established by Credito
Valtellinese as being in the interests of stability and growth. This role, given the title of
“Corporate Centre”, involves the provision of support for administration, planning, human
resource management, marketing, auditing, legal affairs, compliance and risk management;
-
Bankadati Servizi Informatici Soc. Cons. p A. is the Group’s centre for the management and
development of ICT activities, organisation, back office and support processes;
-
Stelline Servizi Immobiliari S.p.A. manages the property and artistic assets of all companies in
the Group. The company also provides other services such as the preparation of real estate
11
valuations to support the disbursement of credit by the territorial banks and develops initiatives
in favour of the local communities.
The Credito Valtellinese network is completed by several associated companies:
-
Banca di Cividale S.p.A., a retail bank that operates in Friuli Venezia Giulia and in the Veneto
provinces of Belluno, Treviso and Venezia through a network of 64 branches. The Parent
company holds 25% of its share capital;
-
Istituto Centrale delle Banche Popolari Italiane S.p.A., of which Credito Valtellinese is one of
the majority shareholders (20.6%), provides support in the development of customer financial
institutions; this is achieved by promoting initiatives and providing services that aim to increase
the efficiency and competitiveness of payment systems and in areas related to the
administration of securities and finance;
-
Global Assistance S.p.A., an insurance company specialised in the non-life sector, in which the
Parent company has a 40% investment.
-
Istifid S.p.A., financial company and auditing firm, 28.66% owned by Credito Valtellinese;
-
Finanziaria Laziale S.p.A., an associated company of Finaziaria San Giacomo (20%).
The following subsidiary or associated companies are also included in the Group scope of consolidation:
-
Omega S.r.l., an associated company of Stelline Servizi Immobiliari S.p.A. (100.00%);
-
Sondrio Città Centro S.r.l., an associated company of Stelline Servizi Immobiliari S.p.A. (30.00%);
-
Progetti Industriali Valtellina S.r.l., an associated company of Stelline Servizi Immobiliari S.p.A.
(20.00%);
-
Sondrio Città Futura S.r.l., an associated company of Stelline Servizi Immobiliari S.p.A. (49.00%).
-
Programma Ciociaria S.r.l., dormant company, associate of Banca della Ciociaria S.p.A. (98.31%).
Lastly, the map of consolidation is completed with Quadrivio Finance S.r.l., a special purpose company
associated with the securitisation implemented in the first half of 2009.
12
The reference operating context
The general economic framework1
The recovery in the world economy continued during the first six months of the current year. Growth rates
were high in emerging economies, strong in the United States and in Japan, still modest in Europe.
International trade gained most of the ground lost compared to 2008. In advanced countries, wide margins
of idle capacity reduced inflationary pressures.
The most updated projections of international bodies and private forecast experts discounted a slowdown
in growth rates in the following months. The development of the world economy still partially depends on
anti-crisis expansive policies, it is curbed by the unfavourable conditions of the employment market and by
recurring financial tensions. Prospects are better in economies where domestic consumer and investment
demand seems stronger.
In the results of the Toronto summit of June, the G20 leaders indicated as a priority the support to the
continuation of the recovery, and underlined the risks deriving from the widening of deficits and public
debts. Advanced countries committed to halve the deficits by 2013 and to stabilise or reduce the debt/GDP
ratio by 2016.
The Eurozone - In the Eurozone, GDP increased only by 0.2 per cent in the first quarter of 2010 compared
to the previous quarter, after the moderate 0.1 at the end of 2009. The economic activity was greatly
supported by re-stocking. Net of this component, the domestic demand recorded a new decline; private
consumption was at a standstill. The sharp rise in imports more than offset the contribution to GDP growth
coming from exports. According to the economic indicators, the activity strengthened considerably in the
second quarter, obtaining support mainly from foreign demand.
In the Eurozone, year-on-year consumer price inflation has been gradually accelerating of approximately
half a percentage point in the first few months of the year, driven by the acceleration in energy prices. In
June, it reached 1.4 per cent. In the absence of pressures on the demand side, the year-on-year growth of
the index net of the most volatile components (food and energy) remained just under 1 per cent from the
beginning of 2010. Always in June, inflation prospects for 2010 of professional operators, slightly revised
upwards from the figures of April, set at 1.4 per cent.
Italy - The Italian GDP increased only 0.4 per cent in the first quarter of 2010. Exports contributed most to
this increase. Domestic demand remained weak: The accumulation of machinery and equipment was
modest, investments in constructions and household consumption were at a standstill. According to the
economic indicators, the growth in the second quarter continued, still driven by exports.
Investments are held back by uncertainties on the future conditions of demand and by the still wide margins
of idle capacity. However, the recovery of industrial activity continues: production increased by 1.7 per cent
in the first quarter and would still grow by 2 per cent in the second quarter; outstanding orders, especially
foreign, grew stronger; price competitiveness improved. Manufacturing productivity increased in the first
quarter compared to a year ago, also due to the reduction of worked hours. In the twelve months ending in
March, company profitability increased, after two years of almost continuous decline. The production levels
in the industry are less than almost 20 percentage points compared to the 2008 peak value.
The recovery of the economic activity was not sufficient for reversing the employment trend, which however
in the first quarter stopped declining; according to provisional figures, it did not improve significantly in the
second quarter. The unemployment rate, net of seasonal factors, stood at 8.7 per cent, lay-off hours slightly
decreased.
Consumer price inflation continued to remain at historically moderate levels.
Italian banking system
Bank lending showed signs of recovery due to an increase in demand. In May, the gradual growth of bank
lending in the non-financial private sector continued (1.3 per cent year-on-year, adjusted for the accounting
effect of securitisations, from 0.1 of February). The increase in the quarter was 3.2 per cent, net of the
seasonal component and per year (from 0.9 in February); business credit sector, which continued to
decrease until February (-1.4 per cent), increased by 2.1 per cent; household credit sector by 5.0.
1
Source: Bank of Italy – Economic Bulletin no. 61 – July 2010
13
In May, the overall credit disbursed by the first five Italian banking groups (net of doubtful loans and
repurchase agreements) still declined by 1.9 per cent compared to the same month in 2009; the credit
granted by other banks grew by 3.1 per cent. The difference can be observed both for household loans and
for business loans and, for the latter, both for bigger and smaller companies.
The growth of business loans mainly showed the increase in demand, related to the recovery of the
business. According to the answers of the Italian banks participating in the Bank Lending Survey of
Eurosistema on bank lending in the Eurozone, in the first quarter of 2010, the lending criteria remained
essentially unchanged. According to the monthly survey of ISAE and the quarterly survey carried out
together with the Bank of Italy and Il Sole 24 Ore, the net percentage of businesses reporting a credit
squeeze further decreased in June.
Over the last months, the interest rates on the new loans recorded very moderate changes. In May, the
cost of short-term loans to businesses, including those on current accounts, stood at 3.7 per cent,
compared to 3.8 in February; the cost of new household loans remained unchanged at 2.2 per cent for
floating-rate transactions and decreased by two tenths, to 4.4 per cent, for fixed-rate transactions.
Credit quality remains at low levels. In the first quarter of this year the ratio between the flow of new
adjusted doubtful loans and total loans, net of seasonal factors, was 2.0 per cent, essentially in line with the
previous quarter and approximately twice the average level of 2008 and 2007. Based on preliminary figures
of the second quarter of this year, the total exposure for debtors recorded as doubtful for the first time did
not record significant changes compared to the same period in 2009. There were some signs of
improvement for businesses in the manufacturing sector whereas there was a further deterioration for
consumer households.
The high level of other types of impaired loans to businesses (substandard, restructured, expired or
overdue exposures), which were equal to 7.9 per cent of loans in May, shows that the flow of new doubtful
loans could remain considerable also in the following months.
The growth of total deposits in Italian banks continued to decrease, almost zeroing in May (0.2 per cent,
compared to 1.0 in February). Bond issues (0.2 per cent) and resident deposits (3.5 per cent) slowed down.
Within the latter, the expansion of current accounts was high (7.7 per cent) in a context characterised by
the extremely low level of interest rates. The decline of yields on bonds continued, in line with the yields of
market interest rates, 2.6 and 1.7 per cent, respectively, due to fixed rate bonds and variable rate bonds.
The decline in banking profitability continued. According to the consolidated reports of the first five banking
groups, in the first quarter of 2010 the drop in profits continued. They fell on average by about one third
compared to a year ago. The return on equity (ROE) was approx. 4 per cent (6 per cent in March 2009). In
the presence of a decrease in trading volumes and the difference between the return on assets and funding
costs, the interest margin dropped by 13 per cent; the decline was totally offset by the increase in other
revenues, especially those deriving from the trading assets and fees and commissions. The income from
banking activities remained stable, reflecting also the sluggishness of operating expenses. Provisions and
adjustments to loans remained high and absorbed more than 50 per cent of the income from banking
activities. In some cases, the drop in profits reflected the increase in taxes, due to the inexistence of the
benefits related to the tax treatment of goodwill. According to the expectations of financial analysts, the
recovery of the banking profitability should be gradual: results in line with 2008 would be achieved again in
2012.
In March 2010, the coefficient related to the core tier 1 ratio of the first five groups could have been
estimated at 7.6 per cent (compared to 7.2 in December 2009); the coefficients related to the tier 1 ratio
and to total capital ratio stood at 8.6 (compared to 8.3) and to 12.2 per cent (compared to 11.8),
respectively.
Financial markets
In the second quarter of the year, the trend of share prices was characterised by high volatility. In April and
May, the persisting worries on the sustainability of national debt of some countries of the Eurozone were
reflected in strong declines of stock market indices; as from the end of May, the stabilisation measures
taken by the government of the Eurozone and the dissemination of some positive macroeconomic figures
contributed to ease off, favouring a recovery of share prices. However, in the last days of June, recovery
was interrupted and further declines occurred. In the second quarter as a whole, the general Borsa Italiana
index dropped by 15 per cent, more than the index of the main listed companies in the Eurozone (minus 11
per cent). The slight worsening of income prospects of the listed companies could have contributed to the
drop in prices. The decline in prices was stronger for insurance and bank shares (-20 and -18 per cent,
respectively), on the wake of the fears that the total debt crisis could affect the financial segment.
14
Operating performance and significant events in the half year
Comments are provided below on the main consolidated economic and financial data for the first half.
To enable a better comprehension of the financial results, the reclassified consolidated statement of
financial position is provided. For general information concerning the macroeconomic scenario of
reference, reference is made to the introductory capital.
RECLASSIFIED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in thousands of EUR)
ASSETS
30/06/2010
31/12/2009
% change
Cash and cash equivalents
171,705
186,153
-7.76
Financial assets held for trading
274,427
316,857
-13.39
Financial assets available for sale
438,567
402,290
9.02
88,487
1
n/a
1,301,455
1,437,907
-9.49
Loans to customers
21,239,185
20,373,644
4.25
Hedging derivatives
658
749
-12.15
216,324
242,859
-10.93
1,242,871
1,207,774
2.91
499,729
727,537
-31.31
25,473,408
24,895,771
2.32
Financial assets held to maturity
Due from banks
Investments in associates and companies subject to joint control
Property, plant and equipment and intangible assets (1)
Other assets (2)
Total assets
(1) Include the items "120. Property, plant and equipment” and “130. Intangible assets”.
(2) Include the items “140. Tax assets” and "160. Other assets".
LIABILITIES AND SHAREHOLDERS’ EQUITY
30/06/2010
Due to banks
31/12/2009
% change
942,567
1,470,661
21,146,400
20,216,534
4.60
21,323
39,384
-45.86
Other liabilities
994,113
700,949
41.82
Provisions for specific purpose (2)
199,368
243,739
-18.20
Direct customer deposits (1)
Financial liabilities held for trading
Minority interests
Shareholders’ equity (3)
Total liabilities and shareholders’ equity
-35.91
283,626
297,453
-4.65
1,886,011
1,927,051
-2.13
25,473,408
24,895,771
2.32
(1) Include the items "20. Due to customers" and "30. Securities issued".
(2) Include the items “80. Tax liabilities”, “110. Employee termination indemnities” and “120. Provisions for risks and
charges”.
(3) Includes items "140. Valuation reserves", "160. Equity instruments", "170. Reserves", "180. Share premium
reserve", "190. Capital", "200. Treasury shares” and "220. Profit (loss) for the period".
15
Deposits
At the end of the first half, total deposits amounted to EUR 33,833.9 million, recording a 3% increase with
respect to EUR 32,852.6 million at the end of December 2009.
Direct deposits2 totalled EUR 21,146.4 million, recording a rise of 4.6% compared to EUR 20,216.5 million
recorded last year. By analysing its components, it can be seen that direct deposits from customers,
corresponding to EUR 14,607.6 million increased by 3.6%, while securities issued, corresponding to EUR
6,538.8 million, rose by 7%.
In terms of breakdown by technical form, it can be noted that current accounts, totalling EUR 13,213.1
million, represent 62.5% of total deposits.
As at 30 June 2010, the Group’s indirect deposits totalled EUR 12,687.6 million, showing substantially no
change compared to EUR 12,636 million of the previous year.
The increase in "managed" deposits was more marked, comprising mutual investment funds, customer
assets and insurance savings (+5.6%), reaching EUR 6,206.1 million and representing 48.9% of the overall
aggregate, whilst the "administered" component, representing customer securities deposited with the
Group banks, recorded a 4.14% decrease compared to 31 December 2009.
Loans
At the end of the first half of 2010, loans to customers amounted to EUR 21,239.2 million, a 4.2% increase
compared to the EUR 20,373.6 million recorded at the end of December 2009. Financing was specifically
focused on small and medium-sized companies, trades and households, which have always been the
fundamental customer base of the Group.
The breakdown by technical type is provided below.
Technical form (in millions of EUR)
30.06.2010
31.12.2009
% Change
Current accounts
7,639.2
7,657.2
Mortgages
9,222.3
8,404.5
9.7
424.1
391.5
8.3
Financial leasing
1,277.0
1,222.2
4.5
Other transactions
2,653.7
2,687.3
-1.2
22.9
10.9
n/a
21,239.2
20,373.6
4.2
Credit cards, personal loans and salary-backed loans
Debt securities
Total
-0.2
Quality of loans
Net doubtful loans to customers amounted to EUR 433 million, compared to EUR 343.6 at the end of the
previous year. The ratio of net doubtful loans and net loans to customers was 2%, up on the 1.7% recorded
last year. Other net doubtful loans, corresponding to EUR 884.3 million, recorded an increase compared to
the EUR 740.7 million recorded at the end of 2009. This aggregate (comprising substandard loans and
overdue/past due), net of the relative value adjustments, accounted for 4.2% of net customer loans.
The ratio between total impaired loans and net loans was 6.2%, recording an increase compared to the end
of the previous year (5.3%).
Increase in risks of the lending portfolio, which still remains quite limited, is due to the worsening of the
economic cycle.
The breakdown of impaired loans is provided below.
2
This figure comprises the items 20 "Due to Customers" and 30 "Securities issued".
16
Gross
exposure
Value
adjustments
as at 30/06/2010
1,087.7
- 654.7
531.8
- 32.0
(in millions of EUR)
Doubtful loans
Substandard loans
Restructured exposures
Past-due exposures
433.0
499.8
919.6
410.5
Value
adjustments
as at 31/12/2009
- 576.0
- 33.1
Net exposure
Gross
exposure
Net
exposure
343.6
377.4
64.7
- 1.8
62.9
42.0
- 1.1
40.9
328.2
- 6.6
321.6
329.1
- 6.7
322.4
The coverage ratios of impaired loans are as follows:
Coverage ratio
Coverage ratio as at
30/06/2010
60.2%
Doubtful loans
Substandard loans
6.0%
Restructured exposures
2.8%
Past-due exposures
2.0%
Impaired loans
34.54%
Other financial assets and liabilities
Other financial assets, represented by investments in securities and derivative contracts with a positive fair
value amounted to EUR 802.1 million as at 30 June 2010, an 11.4% increase compared to the figure
recorded at the end of December 2009 (EUR 719.9 million). Financial liabilities, represented by derivative
contracts with a negative fair value totalled EUR 21.3 million compared to EUR 39.4 million at the end of
2009.
The breakdown is provided below.
30.06.2010
31.12.2009
%
change
274.4
316.9
-13.4%
Bonds and other debt securities
254.6
303.5
-16.1%
Equity securities and UCI quotas
14.1
5.8
n/a
5.7
7.6
-25.0%
438.5
402.3
9.0%
88.5
-
n/a
Financial assets held for trading
Derivative contracts
Financial assets available for sale
Financial assets held to maturity
Hedging derivative contracts
Total other financial assets
Financial liabilities held for trading
Total other financial assets/liabilities
0.7
0.7
-
802.1
719.9
11.4%
21.3
39.4
-45.9%
780.8
680.5
14.7%
Group shareholders’ equity
As at 30 June 2010, Group shareholders’ equity amounted to EUR 1,886 million, a 2.1% decrease
compared to the EUR 1,927 million recorded in December 2009.
The decrease in the aggregate was mainly due to the increase in the investment in the share capital of
Banca dell’Artigianato e dell’Industria (B.A.I.) and to the acquisition of control of Banca della Ciociaria. The
ratio of shareholders’ equity to profit for the year of the Parent Company, as shown in the financial
statements as at 30 June 2010, and the corresponding values of the consolidated situation on the same
date, are illustrated below.
17
Regulatory capital and capital ratios
The consolidated regulatory capital as at 30 June 2010, a detailed breakdown of which is provided in a
specific section of the Notes to the Financial Statements, amounted to EUR 1,859.5 million, compared to
EUR 1,787.9 million as at 31 December 2009. The change is mainly due to the issue of the 2010/2017
Credito Valtellinese subordinated loan, in part offset by the increase in the investment in the share capital
of Banca dell’Artigianato e dell’Industria (B.A.I.) and by the acquisition of control of Banca della Ciociaria.
The regulatory capital and level of the core capital ratio, standing at 6.3%, and the total capital ratio of
9.5%, guarantee that the capital requirements under current law are met and adequately support the
Group's business development.
The following table shows the values for regulatory capital, risk-weighted assets and capital ratios.
Risk-weighted assets and capital ratios
30.06.2010
Risk-weighted assets
31.12.2009
19,478,850
19,285,775
Tier 1 capital
1,230,524
1,277,676
Tier 2 capital
632,974
515,849
1,859,546
1,787,901
Regulatory capital
Capital ratios
30.06.2010
31.12.2009
Core capital ratio
6.3%
6.6%
Total capital ratio
9.5%
9.3%
31.12.2007
With the successful conclusion of the 2010 Warrant exercise, during July, the regulatory capital amounted
to approximately EUR 2 billion. Including the effects of this transaction, the core capital ratio should amount
to 6.8% and the total capital ratio to 10%.
18
At the end of the half year, the Group had one loan legally classified as significant exposure under current
regulations (loans exceeding 10% of regulatory capital), for a total of EUR 254.5 million. The position
mainly refers to an existing commitment towards an associate.
Consolidated economic results
To enable a better comprehension of the economic results, the reclassified consolidated income statement
is provided.
RECLASSIFIED CONSOLIDATED INCOME STATEMENT (in thousands of EUR)
1st half of
2010
1st half of
2009
Interest margin
237,055
255,893
-7.36
Net fee and commission income
ITEMS
%
change
139,060
102,121
36.17
Dividends and similar income
2,108
1,688
24.88
Income from investments in associates and companies subject to joint control carried at
equity (1)
6,806
7,349
-7.39
17,919
18,846
-4.92
8,355
9,614
-13.10
Profit (loss) on trading, hedging activities and disposals/repurchases
Other operating expenses/income (4)
Operating income
411,303
395,511
3.99
(166,088)
(156,399)
6.20
Other administrative expenses (2)
(90,451)
(88,338)
2.39
Net adjustments to/recoveries on property, plant and equipment and intangible assets (3)
(19,858)
(17,877)
11.08
Personnel expenses
Operating costs
(276,397)
(262,614)
5.25
Net operating margin
134,906
132,897
1.51
Net losses/recoveries on impairment of loans and other financial assets
(67,106)
(57,609)
16.49
(1,477)
(1,105)
33.67
63
20
n/a
Net provisions for risks and charges
Profit (losses) on disposal of investments in associates and companies subject to joint
control
66,386
74,203
-10.53
(31,688)
(26,748)
18.47
Income after tax from continuing operations
34,698
47,455
-26.88
Minority interests
(5,384)
(5,962)
-9.69
Profit for the period
29,314
41,493
-29.35
Taxes on income from continuing operations
(1) Income from investments in associates and companies subject to joint control carried at equity include the profit
(loss) on investments carried at equity included in item 240 "Profits (losses) on investments in associates and
companies subject to joint control". The residual amount of that item is included in profits (loss) from disposal of
investments in associates and companies subject to joint control, together with item 270 "Profits (losses) on disposal of
investments";
(2) Other administrative expenses include recoveries of taxes and other recoveries recognised in item 220 “Other
operating expenses/income” (EUR 25,695 thousand in the first half of 2010 and EUR 23,883 thousand in the first half
of 2009);
(3) Net adjustments to/recoveries on property, plant and equipment and intangible assets include items 200 “Net
adjustments to/recoveries on property, plant and equipment”, 210 “Net adjustments to/recoveries on intangible assets”
and the accumulated depreciation of costs incurred for leasehold improvements, included in item 220 “Other operating
expenses/income” (EUR 3,297 thousand in the first half of 2010 and EUR 3,257 thousand in the first half of 2009);
(4) Other income and charges correspond to item 220 "Other operating expenses/income" net of the above
reclassifications.
The Income statement shows a net income for the period of EUR 29.3 million, down 29.4% on the June
2009 figure, due to a positive 4% change in net operating income and an increase in operating expense
which recorded an overall increase of 5.3%.
19
Following the drop in both interest income and income expense, due to falling market rates, the interest
margin was significantly affected, recording EUR 237.1 million compared to EUR 255.9 million in June
2009.
Net commissions amounted to EUR 139.1 million and mark a positive development of 36.2% compared to
the same period last year, and are mainly affected by the increase in commissions linked to traditional
commercial banking activities, such as current account management (+6.8% y-o-y) and collection and
payment services (+9.7% y-o-y). Moreover, a significant rise (+27.7 y-o-y) was recorded in commissions for
management, trading and consulting services.
Similar dividends and income amounted to EUR 2.1 million (+24.9%), whereas profit from investments in
associates and companies subject to joint control carried at equity recorded EUR 6.8 million, a 7.4%
decrease compared to June 2009.
Profit (losses) on trading, hedging activities and disposals/repurchases reaching EUR 17.9 million
compared to EUR 18.8 million in June 2009. In particular, gains from the disposal of financial assets
available for sale decreased from EUR 6.6 million last year to EUR 0.8 million.
Other operating income/expenses decreasing by 13.1% recorded 8.4 million compared to 9.6 of June
2009.
Operating income recorded an increase of 4% year on year and totalled EUR 411 million compared to 396
million of the first half of 2009 – which, however, included non-recurring of approximately EUR 4 million.
Operating costs, the sum of personnel expenses, other administrative expenses and net adjustments
to/recoveries on property, plant and equipment and intangible assets, amounted to EUR 276.4 million, an
increase of 5.3% compared to the corresponding period of 2009 (EUR 262.6 million). More specifically,
personnel expenses rose from EUR 156.4 million to EUR 166.1 million (+6.2%) and other administrative
expenses amounted to EUR 90.5 million, an increase of 2.4%.
These increases are the result of further branch network expansion; on the date of this report the Group
had 536 branches compared to 498 on 30 June 2009, mainly due to acquisition of the controlling interest in
Banca Cattolica di Montefiascone and Banca della Ciociaria.
Net adjustments to/recoveries on property, plant and equipment and intangible assets amounted to EUR
19.9 million, an increase of 11.1% compared to the EUR 17.9 million recorded in the first half of 2009.
The cost/income ratio – the ratio of operating expenses to operating income – stood at 67.2% compared to
66.4% in the first half of last year.
The net operating margin reached EUR 134.9 million, marking an increase of 1.5% against the EUR 132.9
million recorded for the corresponding period of the previous year.
In confirmation of the weak economic cycle, write-downs for impairment of loans increased from EUR 57.6
million in the first half of 2009 to the current EUR 67.1 million.
Income (loss) before tax from continuing operations stood at EUR 66.4 million, down 10.5% year on year
on the previous figure of EUR 74.2 million.
Tax expenses for the period were estimated as EUR 31.7 million compared to EUR 26.7 million in the first
half of 2009, a value that also included non-recurring positive effects of EUR 5.8 million. Lastly, income
pertaining to third parties, amounting to EUR 5.4 million, led to a profit for the period of EUR 29.3 million, a
decrease of 29.4% compared to the EUR 41.5 million recorded in the corresponding period of the previous
year.
20

Customer base and commercial indicators.
As at 30 June 2010, Group customers totalled 900,096, up 2.7% on the 876,290 at the end of 2009.
Group customers as at 30/06/2010
876.290
886.246
900.096
31/12/2009
31/03/2010
30/06/2010
Customers are distributed among eight territorial banks (Credito Valtellinese 24%, Credito Artigiano 26%,
Credito Siciliano 32%, Banca dell’Artigianato e dell’Industria 2%, Credito Piemontese 5%, Carifano 7%
Banca Cattolica (2%) and Banca della Ciociaria (2%), which, within the scope of the Creval Group, are the
organisations in charge of the local reference markets.
Breakdown of Group customers as at 30 June 2010 by bank
CARIFANO
7%
BANCA DELLA
CIOCIARIA
2%
BANCA CATTOLICA
2%
CREDITO
VALTELLINESE
24%
CREDITO
PIEMONTESE
5%
CREDITO SICILIANO
32%
CREDITO ARTIGIANO
26%
BAI
2%
21
Breakdown of Group customers as at 30 June 2010 by area of residence
Foreign
0,3%
South & Islands
31,8%
North
51,4%
Centre
16,6%
Breakdown of Group customers as at 30 June 2010 by segment
Authorities &
Other
2,7%
Companies
9,9%
Private
87,3%
As at 30 June 2010, figures regarding cross-selling at Group level were 2.83
22
Cross-selling for Group banks as at 30/06/10
3,35
CREDITO
VALTELLINESE

3,04
3,15
CREDITO
ARTIGIANO
BAI
2,25
CREDITO SICILIANO
2,59
CREDITO
PIEMONTESE
3,01
CARIFANO
Development of the territorial network.
As at 30 June 2010, the Credito Valtellinese Group’s branch network comprised 536 branches, 126 of
which belonging to the Parent company Credito Valtellinese, 142 to Credito Artigiano, 136 to Credito
Siciliano, 36 to Banca dell’Artigianato e dell’Industria, 28 to Credito Piemontese, 45 to Cassa di Risparmio
di Fano, 9 to Banca Cattolica and 15 to Banca della Ciociaria.
During the half year, the Group further increased its presence throughout the country, in addition to the
acquisition of Banca della Ciociaria – present in the provinces of Frosinone, Roma and Latina – with the
opening of four new branches by Banca dell’Artigianato e dell’Industria in Brescia (Branch no. 3), Vigonza
(PD), Orzinuovi (BS) and Verona (Branch no. 1), of the branch of Melegnano (MI) by Credito Artigiano, as
well as of the opening in Asti by Credito Piemontese.
Commercial network structure
Other sales channels. The Group’s traditional expertise in developing on-line banking services has been
met with the approval of users, who, as at 30 June 2010 numbered 151,921 (+16.4% compared to 30 June
2009). The POS service offered to customers has seen the progressive increase in the number of
installation and transactions: 20,566 terminals were active as at the end of the first half, up 7.9% on the end
23
of 30 June 2009. The number of installed ATMs in the first half of 2010 totalled 658, compared to 594 the
previous year.
DISTRIBUTION CHANNELS
Number of ATMs
Number of Internet users
(active)
Number of POS
30.06.2010
30.06.2009
% change
658
594
10.8%
151,921
130,556
16.4%
20,566
19,067
7.9%
Workforce
As at 30 June 2010, the number of employees of Credito Valtellinese Group companies totalled 4,504
against 4,415 as at 31 December 2009.
In terms of professional categories, the Group’s workforce can be broken down as follows:
–
73 executives;
– 1,511 middle managers;
– 2,920 resources in other professional categories.
Top managers
2%
Middle managers
33%
Other professional categories
65%
24

Commercial operations profile
The Credito Valtellinese Group offers its customers - private and business - a wide range of offers able to
meet any need for financing, investment and transfer expressed by the customers, using to this end
specialised structures within the Group or connected through the company “network” business model.
Another element characterising the offer of the Group is the wide range of on-line based services,
guaranteeing the customer the highest autonomy possible in the management of banking relationships and
a gradual reduction in costs.
The main changes concerning products and services that characterise the offer of the Group are broken
down below.
Lending products
The Group made effective, as from March 2010, a collaboration agreement with Compass S.p.A., leading
company of the Gruppo Mediobanca Group working in the consumer credit sector, specialised in
disbursing loans through the banking channel, in particular.
The agreement, which is the result of an important alternative in this field with a special reference to newly
acquired customers and in the areas of recent branch openings, allows to offer four different products of
personal loans, characterised by fixed rate for all the period of validity of the contract and maturities of the
repayment plan up to 84 months.
Always with reference to loans to private customers, Creval Mutuo Protetto, a long-term mortgage loan with
maturity of up to 10, 15 or 20 years, was made available. This loan, directed to the requirements related to
the purchase, construction or renovation of a building, has a floating rate (indexed to Euribor or ECB) and a
maximum rate that cannot be exceeded during the period of validity. Therefore, it combines the advantage
of having an interest rate that is always in line with the market trend with the certainty that the amount of
the instalment does not exceed a level determined beforehand, therefore by protecting the customer from
any strong increases in the reference rate.
With the entry of the Group's territorial banks into the Agreement signed between ABI and Household
Policy Department, for the disbursement of loans to families with children born or adopted in 2009, 2010 or
2011, “Prestito Nuovi Nati” (New Born Loan), was made available: a fixed-rate instalment credit with soft
economic conditions.
Transfer products
In this context, it should be noted a new current-account agreement called “Conto Più 2%” reserved to
newly acquired private customers. Conto Più is characterised by particularly convenient conditions such as
the creditor rate - equal to 2% on up to EUR 25,000 deposited and remaining unchanged for all of 2010,
zero fee and cost, with free international bancomat and reloadable payment card, Cart@perta Gold.
From the viewpoint of the traditional social commitment and attention to differently abled persons, “Creval
Accanto a te” was carried out: service project whose aim is to support differently abled persons through a
greater attention to the relation together with a range of advantageous banking products designed to meet
the specific requirements. “Creval accanto a Te” offers, in addition to a current account, an instalment
credit, with a repayment plan characterised by particularly favourable economic conditions, for purchasing
means of transport and aid. All this accompanied by a training program of the branch operators whose aim
is to awaken them to the needs of this customer segment.
Supporting the local economy
In a very difficult context, the Credito Valtellinese Group started responsible initiatives putting forward
instruments for guaranteeing traditional support to the SMEs - which constitute the most active and
dynamic entrepreneurial fabric of the territories in which the banks of the Group operate – and to private
customers in state of difficulty.
These measures - for accompanying families and entrepreneurs during the current economic trend - are
not only meant for managing emergency phases, but where implemented for a medium to long term
support and development, in line with the provisions of the articles of association and with the principles on
which the Creval operations are based.
Specifically, during the half year reported, the following agreements were operative
-
Moratorium arrangements for the suspension of mortgage instalments to private customers. In
adopting what was provided by the Protocol signed with the Ministry of Economy and Finance,
within the issue of the so-called “Tremonti Bonds”, the Group undertook to favour families that run
the risk of undergoing the uncertainties of the economic trend and the effects of the financial crisis,
25
including the option of suspending for 12 months the payment of the instalments, without finance
costs, if the subscriber to the loan for the purchase of the main home or a cohabitant member of
the family unit has benefited, until 31 December 2011, from supporting actions to the income due
to suspension from work or has lost his/her job.
-
With reference to the Common announcement signed by Abi, Government and Employers'
associations for the suspension of SMEs debts and that envisaged the suspension for 12 months
of the principal of the medium to long-term loan instalments, the suspension for 12 months for what
concerns leasing, the extension to 270 days of the maturities of the short-term loan and the
preparation of a loan for equity enhancement of the applying SMEs, the Group accepted the
extension of the deadline for filing the suspension as at 31 January 2011 decided on 15 June by
the Ministry of Economy and Finance, ABI and all the main enterprise representations
-
ABI – Cassa Depositi e Prestiti Agreement. On the basis of the agreement signed in August 2009
with Cassa Depositi e Prestiti S.p.A - valid for all the territorial banks and for Mediocreval – with a
view to supporting small and medium-sized enterprises (SMEs), Creval was assigned a second
plafond of EUR 80 million with a view to fostering a greater flow of medium to long-term resources
towards small and medium-sized production units. The first injection of EUR 33 million was
completely used by the Creval Group
-
“Confiducia” agreement with Federfidi Lombardia. The Group (by means of Credito Valtellinese,
Credito Artigiano and Banca dell’Artigianato e dell’Industria) adopted in March 2010, the Warranty
provision, Confiducia, prepared by the Lombardia Region within the anti-crisis package of
measures with a view to facilitating the access to credit of small and medium businesses of all
sectors, by strengthening the guarantees of Lombard credit guarantee consortia.
-
Adopting the Provision for tourist companies. In May, Credito Valtellinese, Credito Artigiano and
Banca dell’Artigianato e dell’Industria, adopted the turnover Fund activated by the Lombardy
Regional Government by means of Finlombarda S.p.A. for the disbursement of soft loans; this
adoption is part of the traditional support of the Creval Group to the tourist sector, important
economic sector for the Lombardia Regional Government and mainly for the Province of Sondrio,
in the provinces of origin of the Parent Company.
Money products
In the first half year, a new reloadable payment card called ContoInTasca was launched, provided with an
IBAN code, which allows to associate the main functions of a payment card to the advantages of a current
account. The product is mainly directed to a young customer, attentive to innovation and sensitive to
operating costs, and due to its characteristics it is a valid alternative to the traditional current account.
26
IN DETAIL – CONTO INTASCA
In June 2010, the Creval Group launched ContoinTasca, the innovative reloadable payment card that can be used for
payments and withdrawals, with a microchip to guarantee a higher degree of security. The card, in addition to the traditional
functions of an international bancomat card allows to:
-
credit the salary, domicile utilities to pay bills or direct debits, issue or receive transfers;
order payments over the Internet thanks to the combination with the Visa network;
manage bank transactions directly online, through the free service of home banking banc@perta;
freely and immediately receive the information on the transactions carried out through SMS;
personalise the maximum capacity of the card in line with its own expense requirements.
Activation and annual fee are free.
Investment and Insurance products
The Creval Group accepted in March the Guidelines issued by the Italian Banking Association (ABI) and
Italian National Association of Insurance Companies (ANIA) concerning insurance policies related to
mortgages and loans to bank customers. The Guidelines aim at introducing, on the one hand, increased
flexibility in the management of policies in compliance with the law provisions on portability and early
redemption of the loans and, on the other hand, a higher level of transparency on the disclosure provided
to the customer.
The acceptance of the Guidelines is in accordance with the trade policies and with the operating policies of
the Group characterised by transparency in the way that services are granted and priced, with a view to
customer satisfaction and long-term trust relations.
In this sense, the policies offered by the Credito Valtellinese Group - through the subsidiary Global
Assicurazioni - combined with loans are fully in compliance with the current regulations in force and with
the principles established by the Guidelines. In particular, the policies placed by the Group related to loans
do not contemplate the single payment of advanced premiums.
The period under review was characterised by the further widening of the multimanager offer of funds and
Sicav carried out by signing a trade agreement with Lemanik Asset Management and with regard to the
placement of two compartments of Sicav Lemanik and of one compartment of Sicav Arcipelagos, as well as
by the introduction of some new products offered by Aperta Sicav, J.P. Morgan Asset Management, Arca
SGR and Aletti Gestielle SGR.
As for the life insurance area, the new life policy “Global Valore Protetto” is available as from February,
addressed to more risk averse investors, interested in the possibility of divesting the capital with less time
and economic constraints compared to other insurance forms by benefiting however in the same time of
the same yield opportunities offered by separate management. Moreover, an additional insurance
coverage exists.
In the sector of non-life products, a test phase was started for the distribution, by some branches of the
Creval Group, of the car policy of Genertel S.p.A.
27
Equity policies – exercise of the 2010 Credito Valtellinese Ordinary Share Warrants
On 30 June 2010, the exercise period of the 2010 Credito Valtellinese Ordinary Share Warrants - which
started last 31 May - came to an end.
At the close of the aforesaid period, 27,454,752 2010 warrants were exercised and 27,454,752 conversion
shares (valid as of 1 January 2010) were subscribed to, equal to 82.4% of the maximum amount, out of
33,310,528 “2010 Credito Valtellinese ordinary warrant shares”.
The 2010 warrants granted the right to subscribe to newly issued ordinary shares of Credito Valtellinese on
the basis of one conversion share for each 2010 warrant exercised at a subscription price of EUR 3.75
(calculated - according to what is provided by Article 2 of the 2010 Warrant Regulations - applying a
discount of 10% with respect to the official average market price of Credito Valtellinese shares – weighted
by the relative quantities traded – calculated with reference to the period 3 May – 21 May 2010).
The total value of the transaction for Credito Valtellinese is EUR 103 million.
As a result of the subscription of 27,454,752 conversion shares issued on 7 July, the share capital of the
bank amounts to EUR 824,759,477.50 and is divided in 235.645.565 ordinary shares with a par value of
Euro 3.5 each.
28

Important events concerning investments
Acquisition of control of Banca della Ciociaria S.p.A.
In May, Banca della Ciociaria S.p.A., which operates in the provinces of Frosinone, Latina and Roma
through a network of 15 branches joined the Creval Group. Credito Valtellinese holds 37.96% of its share
capital.
At the end of the 2009 financial year, the Board of Directors of Credito Valtellinese decided to exercise the
purchase option, required by the shareholders' agreement previously in force, for acquiring the controlling
share of the Lazio bank. Having obtained the necessary authorisation from the competent Supervisory
Authorities and following the transfer of the shares subject-matter of the “call” option to Credito Valtellinese,
as from 19 May 2010, Banca della Ciociaria is included in the Creval Group, with a 53% investment of the
Parent Company.
Within the operation, Finanziaria San Giacomo S.p.A. acquired 20% of the share capital of Finanziaria
Laziale S.p.A., company working in the management of impaired loans and in the granting of personal
loans.
Setting up of Global Broker
In July 2010, Global Broker S.p.A. was established in partnership with the Ri-Fin Group. 51% of the share
capital of the company is owned by Bancaperta and therefore will be included in the Group consolidation
area, even of not included in the baking group, in that it carries on insurance activities. Global Broker
operates in the insurance brokerage segment, mainly in the insurance sector targeting the SME segment.
The Company – which works according to a specific mandate from its customers - provides high value
added consulting services, guaranteeing a precise insurance risk analysis of the customer concern and,
consequently, an excellent and economic coverage of internal risks, through the employment of insurance
contracts with leading insurance companies.
Disposal of 29% of Aperta Gestioni Patrimoniali S.A.
On 23 April 2010, the disposal of 29% of the investment held by Bancaperta S.p.A. – in the share capital of
Aperta Gestioni Patrimoniali S.A., a Swiss asset management company based in Lugano, was completed
for a payment of CHF 1.8 million, with overall gross capital gains at individual level of about CHF 450,000
for Bancaperta. The investment was sold to the Hoderas Holding S.A. company. Due to the said
transaction, currently the investment of the Credito Valtellinese Group, through Bancaperta, in the share
capital of Aperta Gestioni Patrimoniali S.A. is equal to 19%.
Capital increase of Creset S.T.
As is well known, Creset Servizi territoriali S.p.A. carries out a collection activity for municipal authorities up
to 200,000 inhabitants, an activity for which the regulations that came recently into force require a minimum
share capital of at least EUR 5 million. The extraordinary shareholders’ meeting of last 8 June decided the
increase in share capital from EUR 2,600,000 to EUR 5,720,000, through the issue of 2,400 new shares
with a par value of EUR 1,300 each. Shares were fully paid by shareholders Credito Valtellinese for a total
amount of EUR 3,120,000.
Transformation of Deltas and Bankadati in consortium companies
As part of the specific project defined at the Group level, the transformation of the Deltas and Bankadati
Servizi Informatici companies in limited consortium companies was completed during the half year, subject
to the expansion of the shareholding structure of the aforesaid companies to all the companies of the
Credito Valtellinese Group.
To this end, the Board of Directors of the Parent Company resolved the partial disposal of the investment in
Bankadati, equal to 130,000 shares that correspond to 26% of the related share capital, in favour of
companies of the Credito Valtellinese Group for EUR 1,588,600, determined on the basis of the
shareholders' equity of the aforesaid company on 31 December 2009.
Afterwards, an operation that lead, through the acquisition of shares held by the Parent Company, to the
entry in the capital of Bankadati of some companies associated to the Creval Group was completed. Unit
29
price per share of Bankadati, calculated on the basis of the shareholders' equity per share as at 31 March
2010, was fixed in EUR 7.01. In particular, Credito Valtellinese transferred:
- no. 5,000 shares, equal to 1% of the capital, for a countervalue of EUR 35,050.00, in favour of
Istituto Centrale delle Banche Popolari Italiane S.p.A. and Banca di Cividale S.p.A., respectively;
- no. 2,500 shares, equal to 0.5% of the capital for a countervalue of EUR 17,525.00 in favour of
Banca Popolare di Cividale S.c.p.A., Civileasing S.p.A., NordEst Banca Spa and Finanziaria
Laziale SpA, respectively.
Therefore, the Board of Directors of Credito Artigiano resolved the partial disposal of the investment in
Deltas, equal to 6,240 shares that correspond to 26% of the related share capital, in favour of other
companies of the Credito Valtellinese Group for EUR 436,238, determined on the basis of the
shareholders' equity of the aforesaid company on 30 September 2009.
With reference to both operations – transfer of investments in the capital of Bankadati and Deltas - the unit
transfer values were certified by special fairness opinions issued by an independent advisor.
Share capital increase in Banca dell’Artigianato e dell’Industria and purchase of shares from private
individuals
On 26 February 2010, the period of subscription to the second tranche of the share capital increase of
Banca dell’Artigianato e dell’Industria (BAI) totalling EUR 40,431,522 was concluded, approved by the
extraordinary shareholders’ meeting on 30 March 2005.
The subscription to the aforesaid transaction implied, on behalf of the Parent Company, an outlay of EUR
25.9 million for the subscription of 3,705,087 shares at the price of EUR 7 per share, EUR 5.16 of which as
par value and EUR 1.84 as premium. The outlay of Credito Artigiano, for subscribing 1,202,115 shares
totalled EUR 8.4 million.
Later, Credito Valtellinese acquired from some private shareholders 2,632,146 ordinary shares of Banca
dell’Artigianato e dell’Industria for a countervalue of EUR 32.3 million. On conclusion of the operation, the
share capital of BAI is 63.1% owned by Credito Valtellinese and 20.8% owned by Credito Artigiano.
Transfer of the investment in Centrosim
A transfer to Istituto Centrale delle Banche Popolari Italiane (ICBPI) of the investment that the Group held
in Centrosim S.p.A. (6,666 shares held by Credito Valtellinese and 100 shares owned by Banca Cattolica)
was completed during the half year. The final unit price of the shares of Centrosim, equal to EUR 38.89,
implied a total amount of approximately EUR 263 thousand.
30

Other important events
Renewal of the Euro Medium Term Notes program (EMTN)
In London, on 1 June 2010, Credito Valtellinese signed the Euro Medium Term Note renewal, which allows
the Credito Valtellinese Group to issue financial instruments with a view to raising capital through
international institutional investors by up to a maximum EUR 3 billion. The Credito Valtellinese Group
EMTN program was assessed by Moody's and Fitch, leading international rating agencies, which gave
ratings of A3 and A-, respectively, on the senior issues.
Assignment of impaired loans to Finanziaria San Giacomo
The Board of Directors of the Parent Company of 11 May 2010 favourably examined the general terms of
an intragroup transaction for the assignment without recourse of impaired loans of Credito Valtellinese,
Credito Artigiano and Credito Siciliano to Finanziaria San Giacomo S.p.A. The assignment contracts - after
approving the resolutions of the competent board of directors of the companies involved in the transaction were completed on 29 June 2010, according to the book value of the assets to be assigned as at 31
December 2009, considering the financial movements and objective facts occurred from 31 December
2009 to the actual date of assignment, as well as any adjustment made in such time interval according to
the IAS/IFRS standards.
The overall net current value of the transaction – after final price determination – amounted to EUR 43.4
million (EUR 24.2 million for Credito Valtellinese; EUR 9.2 million for Credito Artigiano and EUR 10 million
for Credito Siciliano), for 2,979 positions (Credito Valtellinese 696, Credito Artigiano 802, Credito Siciliano
1,481). The Deloitte & Touche S.p.A. company was appointed with the task to assess the reasonableness
of the assignment prices. Considering the size of the aggregates, the transaction does not affect
significantly the consolidated and separate equity and financial situation and the income statement.
Assignment of the leasing branch to Mediocreval
On 8 June 2010, the Boards of Directors of the parent company Credito Valtellinese S.c., Credito Artigiano
S.p.A. and Credito Siciliano S.p.A., each for what is of direct concern, approved an industrial reorganisation
project that envisages the centralisation of the leasing activities currently carried out by the said banks in
Mediocreval S.p.A. - Creval Group company specialised in disbursing medium to long-term loans and in
the administrative services of the leasing segment (all-in-all, the “Leasing Project”) – with the granting of the
respective company branches due to the disbursement of leasing in Mediocreval.
The business unit area to be granted includes in particular existing leasing contracts, the movable and
immovable property subject-matter of these contracts, the personnel dedicated to this area of activity and
the funding elements of the specific activity.
Therefore, the Boards of Directors of the three granting banks approved their financial positions as at 31
March 2010 of the business units to be granted, which are characterised as follows:
• Credito Valtellinese: total assets EUR 717 million, total liabilities EUR 674 million;
• Credito Artigiano: total assets EUR 390 million, total liabilities EUR 366 million;
• Credito Siciliano: total assets EUR 169 million, total liabilities EUR 159 million.
The granting will be effective as from the end of September 2010.
The transaction pursues the completion of the network business model, model chosen by the Creval Group
for a long time, with the widening of the Group specialisation monitoring.
In fact, in the network business model, the gradual specialisation of the competences of service companies
belonging to the Group allows the territorial banks to offer services with a greater value added: on the one
hand, these may focus on the customer with a greater attention to the increasing expectations of the latter,
whereas, on the other hand, specialised companies will have the possibility of increasing the service quality
by accelerating the response time.
The centralisation of the leasing activities in a single reality will also allow an improved company
organisation, with a simplification of intragroup processes and with a subsequent improvement of the
support rendered to the sales network.
31
Rating
On 6 July, rating agency Fitch confirmed the Rating ('A-) to Credito Valtellinese by modifying at the same
time the Outlook of the Parent Company and of the subsidiaries Credito Artigiano and Bancaperta from
Stable to Negative. The review of the outlook reflects the challenges that the bank has to face in the current
operating context characterised by uncertainty, which could lead to a further deterioration of asset quality
by damaging therefore the capitalisation of the bank.

Performance of Credito Valtellinese stock
In the first half of 2010, the average listed price of Credito Valtellinese stock was EUR 4.67, with a
minimum of EUR 3.74 recorded on 29 June 2010 and a peak price of EUR 5.72 recorded on 5 January
2010. The Credito Valtellinese share performance - calculated on the basis of the average price for the half
year compared to the end of 2009 - recorded an approximate -16%, essentially in line with the Comit
Bancari Index (-12%).
Share performance in the first six months of 2010
4,500,000
6
4,000,000
5.75
5.5
3,500,000
5.25
3,000,000
5
2,500,000
4.75
2,000,000
4.5
1,500,000
4.25
1,000,000
4
500,000
0
4-Jan
3.75
3.5
18-Jan
1-Feb
15-Feb
1-Mar
15-Mar
29-Mar
Volumes
32
14-Apr
28-Apr
Prices
12-May
26-May
9-Jun
23-Jun
Performance of the Credito Valtellinese stock compared with the COMIT Bancari benchmark index over the
first six months of 2010 (base 30 December 2008 = 100)
Assignment to Centrosim SpA of the task for supporting liquidity of Credito Valtellinese ordinary shares
In pursuance of Article 12 of the Articles of Association and in compliance with the prevailing laws and
regulations, the Ordinary shareholders' meeting of Credito Valtellinese of 17 April 2010 approved the
authorisation to the Board of Directors to carry out the purchase of treasury shares, as well as their
reinvestment.
This operation aims at promoting circulation of securities within standard brokerage activities in compliance
with the objectives identified by Permitted Practices no. 1 adopted by Consob no. 16839 on 19 March
2009, as well as the purchase of treasury shares, in compliance with the purposes of Permitted Practices
no. 2 set forth in Consob resolution no. 16839 of 19 March 2009, for a possible utilisation by way of
consideration of extraordinary transactions, also by exchanging investments.
According to the Consob Permitted Practice no. 1, on 13 July 2010 the Credito Valtellinese signed with
Centrosim S.p.A. a contract aimed at assigning the task for supporting liquidity of treasury shares. In
particular, Credito Valtellinese made available to Centrosim as “Intermediary in Charge” a provision consisting of 595,608 Creval shares and an Amount of EUR 3,000,000 - required for carrying out the task
of Liquidity Provider.
In line with what was approved by the meeting, by signing the contract with Centrosim S.p.A., Credito
Valtellinese is among the first Banks to accept what is provided by the aforesaid Consob Permitted
Practices, by guaranteeing to the shareholders and to the market an increasing transparency on their
operations on treasury shares.
33
Transactions between Group Companies and other related parties
Transactions and relations among the other Credito Valtellinese Group companies are established within
the sphere of a consolidated “company network” organisational model, on the basis of which each member
is focused exclusively on the creation of its core business, within a business context that enables the
Group's overall resources to be efficiently and effectively managed.
On the basis of this approach, all transactions with Group companies mainly concern correspondent
transactions for services rendered, deposit and financing services within the sphere of ordinary inter-bank
operations. Other contractual transactions with specialised finance companies and special purpose
companies regard support and consulting services and specialised services in support of banking activities.
The economic effects of inter–bank transactions are regulated at arm's length, while other transactions are
regulated on the basis of the specific contractual terms that - maintaining the principal objective of
optimising the synergies and economies of scale and purpose at the Group level - refer to parameters that
are objective and constant over time, marked by essential transparency and equity. The quantification of
fees for services is defined and formalised according to tested parameters that take into account actual
utilisation by each user company.
Said dealings are managed according to principles of conduct and procedural regulations contained within
specific regulations approved by the Board of Directors, entitled the "Code of self-discipline for related
party, intragroup, unusual and/or atypical transactions". This document provides a clear and approved
reference framework that systematically summarises the various provisions governing management of
these transactions, formally defining criteria for identifying the transaction and the related procedures for
executing the decision-making process.
In accordance with Article 2391-bis of the Italian Civil Code, the document defines and occasionally
integrates the operating approach and company regulations already prevailing with the aim of ensuring
transparency and substantive and procedural correctness in related party transactions.
In accordance with these regulations, transactions of greater importance in economic, equity and financial
terms performed with related parties are reserved to the exclusive authority of the Board of Directors, and
reporting methods are also established for transactions implemented by the Bank’s delegated bodies.
The Board of Directors is exclusively responsible for the definition of intragroup contractual agreements
and approval and possible amendment of the related economic conditions. Furthermore, the overall
approach to intragroup transactions is subject to annual review by the Board of Directors, with the aim of
verifying the consistency of the criteria which oversee related management – contractual aspects, methods
for calculating and reviewing considerations – in relation to the evolution of the operating context.
Transactions with related parties other than companies in the Credito Valtellinese Group, as defined by IAS
24, are part of normal banking activities and are generally regulated at arm's length for specific
transactions, or aligned to the most favourable measure that may have been agreed for employees.
The operations carried out by the Parent Company and the other Group banks and companies, falling
under the field of application of Article 136 of the Consolidated Banking Law (“Obligations of banking
representatives”), are decided in accordance with the provisions of the aforesaid law and governed by
normal market conditions established for the specific operations.
Detailed information on inter-group transactions and transactions with related parties, including information
on the percentage weight of such and of arrangements existing with the same that affect the statement of
financial position or income statement, accompanied by summary tables of said effects, are contained in
the specific part of the Notes to the Financial Statements.
No atypical or unusual transaction has taken place with Group companies or related parties in the half year
period.
34
Business Outlook
Consistent margins of uncertainty remain on the recovery of world economy, whose solidity seems
inconsistent and uncertain. In the Eurozone in particular, recovery, driven by the increase in international
trade, is exposed to several risks first of all the ongoing weakness of internal demand, especially when the
incentive measures introduced by the governments at the beginning of the crisis come to an end. In the
development scenario of the Italian economy, even if in a climate of general uncertainty, some signs of
recovery are reported.
On the basis of the above premises, the Board of Directors expects a business outlook of the second half
year essentially in line with the first one, with statement of financial position aggregates in further
development and a profit trend affected by the prolonged phase of levelling of the market interest rates and
by the fragility of the economic context.
Significant events occurring after the end of the first half of 2010
With the successful conclusion of the 2010 Warrant exercise, during July, the regulatory capital amounted
to approximately EUR 2 billion. Including the effects of this transaction, the core capital ratio amounts to
6.8% and the total capital ratio to 10%.
As a result of the subscription of 27,454,752 conversion shares issued on 7 July, the share capital of the
bank amounts to EUR 824,759,477.50 and is divided in 235,645,565 ordinary shares with a par value of
Euro 3.5 each.
35
Condensed consolidated interim report
as at 30 June 2010: financial statements
36
Consolidated Statement of Financial Position
ASSETS
30/06/2010
31/12/2009
10. Cash and cash equivalents
171,705
186,153
20. Financial assets held for trading
274,427
316,857
40. Financial assets available for sale
438,567
402,290
88,487
1
1,301,455
1,437,907
21,239,185
20,373,644
658
749
100. Investments in associates and companies subject to joint control
216,324
242,859
120. Property, plant and equipment
471,266
462,454
130. Intangible assets
771,605
745,320
50. Financial assets held to maturity
60. Due from banks
70. Loans to customers
80. Hedging derivatives
of which:
- goodwill
709,648
140. Tax assets:
687,508
132,524
192,712
a) current
34,533
100,756
b) pre-paid
97,991
91,956
160. Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
367,205
534,825
25,473,408
24,895,771
30/06/2010
10. Due to banks
31/12/2009
942,567
1,470,661
20. Due to customers
14,607,594
14,105,980
30. Securities issued
6,538,806
6,110,554
40. Financial liabilities held for trading
21,323
39,384
80. Tax liabilities:
74,814
118,791
a) current
51,506
96,917
b) deferred
23,308
21,874
100. Other liabilities
994,113
700,949
110. Employee termination indemnities
62,773
61,343
120. Provisions for risks and charges:
61,781
63,605
a) post employment benefits
32,111
b) other provisions
29,670
32,025
31,580
140. Valuation reserves
43,368
46,583
160. Equity instruments
197,825
197,825
50,666
39,204
180. Share premium reserve
839,191
839,404
190. Share capital
728,668
728,668
-3,021
-760
283,626
297,453
29,314
76,127
25,473,408
24,895,771
170. Reserves
200. Treasury shares (-)
210. Minority interests (+/-)
220. Net income (loss) for the period (+/-)
Total liabilities and shareholders’ equity
37
Consolidated Income Statement
1st half of 2010
ITEMS
10. Interest income and similar income
1st half of 2009
360,485
474,356
(123,430)
(218,463)
30. Interest margin
237,055
255,893
40. Fee and commission income
149,549
112,209
50. Fee and commission expense
(10,489)
(10,088)
60. Net fee and commission income
139,060
102,121
2,108
1,688
20. Interest expense and similar expense
70. Dividends and similar income
80. Profits (losses) on trading activities
16,304
11,510
90. Fair value adjustments in hedge accounting
(11)
87
100. Profit/loss from disposal or repurchase of:
1,626
7,249
a) loans
-
176
b) financial assets available for sale
830
6,575
d) financial liabilities
796
498
120. Net interest and other banking income
396,142
130. Net losses/recoveries on impairment of:
378,548
(67,106)
a) loans
b) financial assets available for sale
d) other financial activities
(57,501)
(3,084)
(5)
(267)
(103)
140. Net income from banking activities
180. Administrative expenses:
a) personnel expenses
(166,088)
b) other administrative expenses
(116,146)
190. Net provisions for risks and charges
200. Net adjustments to/recoveries on property, plant and equipment
210. Net adjustments to/recoveries on intangible assets
220. Other operating income/expenses
230. Operating expenses
240. Profit (losses) on investments in associates and companies subject
to joint control
329,036
320,939
(282,234)
(268,620)
(156,399)
(112,221)
(1,477)
(1,105)
(11,914)
(11,285)
(4,647)
(3,335)
30,753
30,240
(269,519)
(254,105)
6,806
7,349
63
20
66,386
74,203
270. Profit (losses) on disposal of investments
280. Income (loss) before tax from continuing operations
290. Taxes on income from continuing operations
(57,609)
(63,755)
(31,688)
(26,748)
300. Income (loss) after tax from continuing operations
34,698
47,455
320. Net income (loss)
34,698
47,455
330. Minority interests
(5,384)
(5,962)
340. Parent Company’s net income
29,314
41,493
Basic EPS
0.09
0.18
Diluted EPS
0.08
0.18
38
Consolidated Statement of Comprehensive Income
1st half
of 2010
Items
10. Net income (loss)
1st half of
2009
34,698
47,455
(3,972)
(2,974)
Other comprehensive income after tax
20.
Available-for-sale financial assets
100.
Valuation reserves from investments accounted for using the equity method
319
417
110. Total of other comprehensive income after tax
(3,653)
(2,557)
120. Comprehensive income (Item 10+110)
31,045
44,898
130. Consolidated comprehensive income attributable to minorities
140. Consolidated comprehensive income attributable to Parent Company
39
4,946
5,975
26,099
38,923
Statement of changes in consolidated shareholders’ equity
40
41
Consolidated statement of cash flows – Direct method
1st half of 2010
1st half of 2009
A. OPERATING ACTIVITIES
1. Management
129,442
- interest income received (+)
- interest expense paid (-)
- dividends and similar income (+)
- net commissions (+/-)
- personnel expenses (-)
- other costs (-)
- other revenues (+)
- taxes (-)
2. Cash flow generated/utilised by financial assets
- financial assets held for trading
- financial assets available for sale
- loans to customers
- due from banks: repayable on demand
118,202
363,735
487,183
-122,258
-240,850
2,108
1,688
138,396
95,773
-163,345
-152,376
-84,539
-67,035
36,985
36,145
-41,640
-42,326
-301,734
1,846
37,837
397,170
77,377
-303,618
-868,254
-1,088,619
76,631
315,235
- due from banks: other
199,939
796,407
- other assets
174,736
-114,729
3. Cash flow generated/utilised by financial liabilities
303,786
-108,397
- due to banks: repayable on demand
-141,807
-22,695
- due to banks: other
-388,119
-726,361
- due to customers
157,162
412,648
- securities issued
405,737
238,373
1,701
-2,583
- other liabilities
269,112
-7,779
Cash flow generated/utilised by operating activities
131,494
11,651
1.Cash flow generated by
6,240
16,489
- sale of investments in associates and companies subject to joint control
1,493
-
- dividends from investments in associates and companies subject to joint
control
4,747
5,323
- sale of property, plant and equipment
-
10,353
- sale of intangible assets
-
813
- sale of subsidiaries and company branches
-
-
-88,469
-105,923
-1,777
-89,918
- financial liabilities held for trading
B. INVESTMENT ACTIVITIES
2. Cash flow utilised by
- purchase of investments in associates and companies subject to joint control
- purchase of financial assets held to maturity
-65,070
-1
- purchase of property, plant and equipment
-9,270
-13,788
- purchase of intangible assets
-6,257
-2,216
- purchase of subsidiaries and company branches
-6,095
-
-82,229
-89,434
-18,047
107,373
- dividend distribution and other
-45,666
-69,115
Cash flow generated/utilised by funding activities
-63,713
38,258
NET CASH FLOW GENERATED/UTILISED DURING THE PERIOD
-14,448
-39,525
Cash flow generated/utilised by investment activities
C. FUNDING ACTIVITIES
- issue/purchase of treasury shares
42
RECONCILIATION
Financial statement items
1st half of 2010
1st half of 2009
Cash and cash equivalents at the beginning of the period
186,153
198,311
Total net cash flow generated/utilised during the period
-14,448
-39,525
Cash and cash equivalents at the end of the period
171,705
158,786
Key:
(+) generated
(-) utilised
43
Notes to the financial statements
44
Accounting Policies
BASIS OF PREPARATION
The condensed interim report of the Credito Valtellinese Group is prepared in consolidated format as
prescribed by art. 154-ter, Italian Legislative Decree no. 58 of 24 February 1998 (the Consolidated Law on
Finance) and in compliance with IFRS standards issued by IASB (the International Accounting Standards
Board) approved by the European Union, whose application was compulsory at the date of preparation of
the condensed interim report.
In preparing this condensed consolidated interim report, the accounting standards applied in accordance
with IAS 34 - Interim Financial Reporting comply with those adopted in the consolidated annual report as at
31 December 2009, except for those amended by IASB and approved through the issue of new EU
Regulations.
The main changes to the international accounting standards that had to be adopted as from 1 January
2010 resulted from the review of IFRS 3 Business combinations approved with Regulation no. 495/2009.
The basis of accounting for business combinations completed as from 1 January 2010 are provided below.
Business combinations
IFRS 3 (Revised) defines a business combination as a transaction or another event in which a purchaser
acquires control of a business consisting of factors of production and processes applied to such factors
able to create production. Therefore, the acquisition of equity investments in subsidiaries, mergers, the
acquisition of going concerns etc. are all considered business combinations.
IFRS 3 envisages that all business combinations that fall within the relative scope must be recognised
using the acquisition method.
For each business combination, one of the combining entities must be identified as the acquirer that
obtains control of another entity or group of businesses. Control is the power to determine the financial or
management policies of an entity or business in order to obtain a return from the latter’s activities. Control
is obtained when the latter acquires more than half of voting rights.
Even if not in possession of more than half of the voting rights, control can be acquired if power is obtained:
- over more than half of voting rights by virtue of an agreement with other investors;
- to determine the financial policies and the management decisions of the other entity by virtue of a
statute or agreement;
- to appoint or replace the majority of members of the management body of the other entity;
- to have availability of the majority of votes at meetings of the body assigned the management of
the company.
Even though in some cases it is difficult to identify an acquirer, there are usually situations that
demonstrate its existence. In a business combination mainly carried out by transferring cash or other
assets or through assumption of liabilities, generally the acquirer is the entity that transfers cash or other
assets or assumes the liabilities. In a business combination mainly carried out by exchanging interests, in
general the acquirer is the entity that issues the interests. Other relevant facts and circumstances must be
taken into consideration, including:
a) the relevant voting rights in the entity resulting from the combination after the business
combination;
b) the existence of a wide minority interest with voting right in the entity resulting from the combination
if no other shareholder or organised group of shareholders holds an important interest with voting
right;
c) the composition of the management body of the entity resulting from the combination;
d) the composition of the top management of the entity resulting from the combination;
e) the interest exchange conditions.
In general, the acquirer is the combining entity whose size (e.g. designated according to assets, revenues
or profits) is considerably bigger compared to the size of the other combining entity. Moreover, in a
business combination comprising more than two entities, for the purposes of determining the acquirer, we
must consider, among other things, which of the combining entities started the combination as well as the
relative size of the combining entities.
The acquisition date is the date on which the acquirer obtains control of the acquiree and consists of the
date from when the acquiree is consolidated in the financial statements of the acquiring company. In the
event in which a business combination is achieved in a single exchange transaction, the date of the
exchange is the acquisition date.
45
The consideration transferred in a business combination must be valued at fair value calculated as the
amount of the fair values, on the acquisition date, of the assets transferred by the acquirer to the previous
shareholders of the acquiree, of the liabilities borne by the acquirer for these subjects and of the interests
issued by the acquirer. The consideration that the purchaser transfers in exchange for the acquiree
includes any asset or liability resulting from a contingent consideration arrangement.
The costs related to the acquisition are the charges that the acquirer bears for carrying out the business
combination. The acquirer must record the costs related to the acquisition as expenses in the periods in
which these costs are borne and the services are received, except for issue costs of shares or debt
securities that must be recognised according to what is provided by IAS 32 and IAS 39.
Business combinations are recorded according to the “acquisition method”, according to which the
acquired identifiable assets, including any intangible asset not reported previously by the acquired
company, and the assumed identifiable liabilities must be recognised at their respective fair value on the
acquisition date. The fair value of the assets, liabilities and potential liabilities of the acquiree may be
determined provisionally by the end of the year in which the business combination is achieved and must be
finalised within twelve months of the acquisition date.
If the control is carried out through subsequent purchases, the acquirer must recalculate the interest that it
held before in the acquired company at its respective fair value on the acquisition date and record in the
income statement any difference compared to the previous book value.
The acquirer must record the goodwill on the acquisition date measuring it as the surplus of the amount of
the transferred consideration, of the amount of any minority interest in the acquiree and, in a business
combination carried out in several phases, of the fair value on the acquisition date of the interest in the
acquiree previously held by the acquirer, on the net value of the amounts, determined on the acquisition
date, of the acquired identifiable assets and of the identifiable assumed liabilities measured on the basis of
what was stated above. In case a negative difference is reported, it is recorded in the income statement.
For each business combination, any minority shares in the acquired company can be recognised at fair
value, with the resulting increase in the transferred consideration, or in proportion to the minority share in
net identifiable assets of the acquired company.
Following the purchase of control of a company, further equity investments are accounted for by
recognising the difference between the purchase price and the book value of the minority shares
purchased in Group shareholders’ equity. Similarly, the sale of the minority share without loss of control will
not generate profits/losses in the income statement, but variations in Group shareholders' equity.
IFRS 3 does not apply to business combination transactions between parties subject to joint control. These
types of business combination are not usually achieved as part of company reorganisations and are
accounted for by preserving the continuity of the values of the acquiree in the financial statements of the
acquirer.
Other changes to the international accounting standards (IFRS 2 Share-based payments, IAS 39 Financial
instruments: recognition and measurement – Eligible Hedged items, IFRIC 17 Distribution of non-cash
assets to owners and others) have had no significant impact on the condensed consolidated interim report.
The Group accounting policies used for preparing the condensed consolidated interim report, with
reference to the recognition, classification, measurement and derecognition criteria for each asset and
liability item, as with the recognition methods of revenues and costs, remained the same as those used for
the Financial Statements as at 31 December 2009, document that should be referred to.
In drawing up the interim report, estimates and assumptions were used which may affect the values
recorded in the statement of financial position, income statement and the notes to the financial statements.
Reference should be made to the 2009 annual report also in this case. The most important valuation
processes, such as the assessment of any impairment of assets, are completely carried out only upon
preparation of the annual report when all necessary information is available. Important impairment
indicators requiring an immediate assessment are an exception.
This condensed consolidated interim report is subject to limited review by the independent auditing firm
Reconta Ernst & Young S.p.A.
The condensed consolidated interim report comprises the Statement of Financial Position, Income
Statement, Statement of Comprehensive Income, Statement of changes in shareholders’ equity, Cash flow
statement and Notes to the financial statements.
The amounts reported in the Financial Statements and in the Notes to the financial statements are in
thousands of euro, unless indicated otherwise.
Together with the amounts for the reporting period, the Financial statements and the Notes to the financial
statements also show the corresponding comparative amounts as at 31 December 2009 for statement of
financial position data, and for the first half of 2009 for income statement data.
In the Statement of financial position, Income Statement and Statement of Comprehensive Income, any
items equal to zero in the reporting period of reference or in the previous period are not shown. In the
Income Statement and Statement of Comprehensive Income, negative amounts are shown in brackets.
46
The Statement of Changes in Shareholders’ Equity presents the breakdown and changes occurred in the
shareholders’ equity during the year under review and the previous one. The Statement of Cash Flows has
been prepared according to the direct method, in which the main gross cash collection and disbursement
items are displayed. The cash flows for the year are divided into operating, investment and funding
activities.
With regard to the Income Statement for the first half year of 2009 (comparison period), it should be
specified that the interim report included a provisional cost allocation for acquisition of Cassa di Risparmio
di Fano (Carifano) concluded when preparing the consolidated financial statements as at 31 December
2009. In this report, in accordance with IFRS 3, the economic figures for the first half year of 2009 were
reclassified assuming that the cost allocation process for that transaction had been completed on the date
of acquisition (3 December 2008). A lower figure was therefore recorded as interest income amounting to
EUR 1,727 thousand, higher interest expense of EUR 190 thousand, higher amortisation/depreciation of
tangible and intangible assets of EUR 102 thousand, higher administrative expenses of EUR 168 thousand
and lower taxes of EUR 707 thousand. Considering a change in minority interests of EUR 416 thousand, a
reduction is recorded for the first half of 2009 for EUR 1,064 thousand. All related income figures were
adjusted accordingly.
Business performance and outlook (Bank of Italy-Consob-ISVAP document no. 2 of 6 February 2009 and
no. 4 of 3 March 2010)
With reference to the Bank of Italy, Consob and Isvap Document no. 2 of 6 February 2009, as well as to the
following Document no. 4 of 3 March 2010, relevant to the information to be provided in the financial
statements on business outlook, with particular reference to going concern assumptions, financial risk,
impairment testing and uncertainties in the use of estimates, the Credito Valtellinese Directors confirm their
reasonable expectations that the company will remain a going concern in the foreseeable future and,
consequently, the interim report as at 30 June 2010 was prepared on a going concern basis. The Directors
also confirm that the equity and financial structure and business performance have brought to light no
symptoms that could imply the uncertainty of going concern assumptions.
As regards the requirements relating to the disclosure on financial risks, impairment testing and
uncertainties in the use of estimates, please refer to the information provided in this report as well as the
information provided in the Directors' report and in the Notes to the Financial Statements, within the
discussion of the related items.
More specifically, risks related to the economy and financial market trends were described in the chapter
on the macroeconomic scenario. Specific analyses are dedicated to the trend and to the prospects of
economy and finance in our Country. Finally, further information is contained in the chapter on the
management trend and in the following chapters prepared as notes to the economic results and statement
of financial position aggregates.
Information on financial risks and operational risks are described in the chapter of the Notes dedicated to
risk management. Moreover, the notes to the financial statements provide information with reference to the
methods of calculation of the fair value of the financial instruments and to their segmentation among the
different measurement levels of the fair value.
In particular, specific tests were carried out to ascertain any impairment of equity investments, securities
available for sale, intangible values and goodwill, subject to the analysis of the presence of impairment
indicators. The same methods and criteria shown in the 2009 Report, to which reference is made, were
used in order to determine any write-down.
For what concerns securities available for sale, the analyses carried out and the relevant tests determined
the need to carry out value adjustments totalling approx. 3 million especially one security, as indicated
more in detail in the following paragraphs.
For what concerns equity investments, the analyses carried out and the relevant tests did not report any
impairment.
With reference to intangible assets considered to have definite lives and goodwill, please refer to what is
indicated in the section concerning the composition of the main financial items.
Consolidation area and methods
The condensed consolidated interim report includes Credito Valtellinese and the companies directly or
indirectly controlled. Special purpose companies are included as required in compliance with SIC 12. The
accounting situations used for preparing the consolidated financial statements are drawn up on the same
date.
Investments in companies subject to exclusive control are those in respect of which the Bank has the
power of governing the financial and operating policies of the entities with a view of gaining economic
47
benefits from their activities. Investments in companies subject to joint control are those in respect of which
the Bank, together with other parties subject to the terms of an agreement, has the power of governing the
financial and operating policies of the entities with a view to gaining economic benefits from their activities.
Such control exists only when the decisions require unanimous consent of the parties that hold the joint
control.
The financial statements of subsidiaries are consolidated on a line-by-line basis. The book value of the
investments in these companies is offset against the corresponding share in the shareholders’ equity. The
differences arising from this transaction, after recording the subsidiary’s assets and liabilities, are recorded,
if positive under “Intangible assets” – Goodwill; if negative, they are directly recognised in the income
statement. Minority interests are assigned the corresponding shares of equity and net profit.
Assets, liabilities, income and expenses among consolidated companies are eliminated completely.
The financial statements of subsidiaries are prepared by adopting standard accounting methods. In case of
discrepancy between the evaluation criteria adopted by a subsidiary and those used in the consolidated
financial statements, the accounting situations are adjusted for consolidation purposes.
Investments in companies subject to joint control have been measured at equity. The investment is initially
recognised at cost, the value later being increased or decreased due to the effect of investee profits or
losses, recorded according to the equity ratios under "Profit from investments in associates and companies
subject to joint control", of dividends received and other changes in the shareholders’ equity of the
investees. Other changes are booked to reserves. The difference between the value of the investment and
shareholders' equity in the related associated company is included in the book value of the investee.
Dividends booked to the parent company’s financial statements and concerning investments in companies
included in the consolidation area or measured at equity have been cancelled. Taxes associated with
consolidation adjustments have been accounted for, where applicable.
Business combinations completed in the period are accounted for according to IFRS 3 - Business
Combinations, as specified above.
Commitments for the repurchase of own equity instruments, including commitments to purchase equity
instruments of companies consolidated in full, give rise to a financial liability for the current amount
payable. If the option exercise price is the fair value at the time the option is exercised, the balancing entry
of the recognition at fair value of the liability will be in the group shareholders’ equity.
In the first half of 2010, the main change in the scope of consolidation concerns the acquisition of control of
Banca della Ciociaria carried out on 19 May 2010.
A list is provided below of investments in fully consolidated subsidiaries. For each company indicated, the
voting rights at the ordinary shareholders' meeting is equal to that of the holding.
48
1. Investments in companies subject to exclusive and joint control (consolidated on a proportional basis)
Company name
Registered
office
Share
Type of
capital
relationship (1) (amounts in
thousands
of EUR)
Type of investment
Investor
company
% held
A. Companies
A.1 Consolidated on a line-by-line basis
1. Credito Valtellinese Soc. Coop.
Sondrio
1
728,668
2. Credito Artigiano S.p.A.
Milano
1
284,791
A.1.1
69.89
3. Credito Siciliano S.p.A.
Palermo
1
95,826
A.1.1
42.64
A.1.2
35.79
A.1.1
63.44
A.1.2
24.45
A.1.3
12.11
A.1.1
37.45
A.1.2
31.29
A.1.3
31.23
A.1.1
63.16
A.1.2
20.81
A.1.1
50.00
A.1.2
20.00
A.1.3
4.00
A.1.4
2.00
A.1.5
2.00
A.1.6
2.00
A.1.8
1.00
A.1.9
1.00
A.1.10
1.00
A.1.12
1.00
A.1.13
2.00
A.1.14
1.00
A.1.15
4.00
A.1.16
1.00
A.1.18
2.00
A.1.20
2.00
A.1.1
80.00
A.1.2
20.00
A.1.1
50.00
A.1.2
24.00
A.1.3
4.00
A.1.4
2.00
A.1.5
2.00
A.1.6
2.00
A.1.7
1.00
A.1.8
1.00
A.1.10
1.00
4. Bancaperta S.p.A.
5. Mediocreval S.p.A.
Sondrio
1
Sondrio
1
84,240
55,080
6. Banca dell'Artigianato e dell'Industria
S.p.A.
Brescia
1
99,346
7. Bankadati Servizi Informatici S.p.A.
Sondrio
1
2,500
8. Stelline Servizi Immobiliari S.p.A.
Sondrio
1
12,500
9. Deltas S.p.A.
Sondrio
1
120
49
Voting
rights % (2)
A.1.12
1.00
A.1.13
2.00
A.1.14
1.00
A.1.15
4.00
A.1.16
1.00
A.1.18
2.00
A.1.20
2.00
5,720
A.1.1
100.00
10. Creset S.p.A.
Lecco
1
11. Aperta Fiduciaria S.r.l.
Milano
1
50
A.1.4
100.00
12. Aperta SGR S.p.A.
Milano
1
4,966
A.1.4
100.00
13. Credito Piemontese S.p.A.
Torino
1
326,204
A.1.1
99.99
Sondrio
1
15,000
A.1.5
100.00
Fano
1
77,290
A.1.1
94.85
16. Global Assicurazioni S.p.A.
Milano
1
120
A.1.4
60.00
17. Omega Costruzioni S.r.l.
Trento
1
10
A.1.8
100.00
18. Banca Cattolica S.p.A.
Montefiascone
1
1,644
A.1.1
80.35
19. Lussemburgo Gestioni
Lussemburgo
1
303
A.1.1
20.00
A.1.2
10.00
A.1.3
10.00
A.1.4
10.00
A.1.6
10.00
A.1.13
10.00
14. Finanziaria San Giacomo S.p.A.
15. Cassa di Risparmio di Fano S.p.A.
20. Banca della Ciociaria S.p.A.
Frosinone
1
180
A.1.1
53.64
21 . Programma Ciociaria S.r.l.
Frosinone
1
20
A.1.20
98.31
22. Quadrivio Finance S.r.l.
Conegliano
8
10
83.05
Key
(1) Type of relationship: 1 = majority of voting rights in the ordinary shareholders' meeting; 2 = dominant influence in the
ordinary shareholders' meeting; 3 = agreements with other shareholders; 4 = other forms of control; 5 = sole direction
pursuant to art. 26, paragraph 1, of "legislative decree 87/92"; 6 = sole direction pursuant to art. 26, paragraph 2, of "legislative
decree 87/92"; 7 = joint control; 8 = Sic 12.
(2) Voting rights available at ordinary shareholders' meetings, only if different from the % investment, distinguishing between
actual and potential votes: 1 = actual, 2 = potential.
2. Other information
Associated companies are those under significant influence, i.e. the Parent Company has the power of
participating in the determination of financial and operating policies, but has no control or joint control over
those policies. These investments are measured using the equity method.
In applying the equity method to the investment in Istituto Centrale delle Banche Popolari Italiane, its
consolidated results were taken into account.
50
FAIR VALUE INFORMATION
Accounting portfolios: breakdown of fair value by levels
30/06/2010
Financial assets/liabilities designated at fair value
L1
73,986
2. Financial assets designated at fair value
L3
196,858
3,583
86,604
-
-
-
-
62,299 329,711
10,201
62,378
-
749
-
65,882 416,315
237,850
65,731
-
-
357,245
19,023
-
658
431,231
216,539
Total
31/12/2009
L2
L1
-
L2
L3
226,900
3,353
13,222
8,101
-
32,895
6,489
-
2. Financial liabilities designated at fair value
-
-
-
-
-
-
-
-
-
-
-
-
13,222
8,101
-
32,895
6,489
-
Total
Key:
L1= Level 1
L2= Level 2
L3= Level 3
Fair value measurements are classified according to a series of levels reflecting the significance of the
valuation input. The levels have the meaning below:
- prices (without adjustments) recorded on an active market according to IAS 39 (level 1);
- input other than listed prices above, directly observable (prices) or indirectly observable (deriving
from prices) on the market (level 2);
- input not based on observable market data (level 3).
Level 3 financial assets also include equity instruments whose fair value was not determined reliably and
therefore they are carried at cost.
Level 3 financial assets available for sale includes the shareholding in Tercas Spa of EUR 47,455
thousand.
Fair value shifts of the financial assets indicated above among different levels mainly concerned level one
or two for non-significant amounts.
For what concerns the method of determination of the fair value of financial instruments, they were not
changed compared to the 2009 Financial Statements, document which should be referred to.
51
Breakdown of the main statement of financial position items
SECTION 1 – DUE FROM/TO BANKS AND LOANS TO/DUE TO CUSTOMERS
Breakdown by type of item 60 of assets "Due from banks"
Type of transaction/Amounts
30/06/2010
A. Deposits with Central Banks
1. Restricted deposits
2. Compulsory reserve
3. Repurchase agreements
4. Other
B. Due from banks
1. Current accounts and unrestricted deposits
3. Other loans:
31/12/2009
141,171
578,466
-
250,000
141,171
328,466
-
-
-
-
1,160,284
859,441
169,121
133,816
11,759
101,851
220,654
2,844
3.1 Repurchase agreements
-
-
3.2 Finance leases
-
-
3.3 Other
220,654
2,844
758,750
620,930
4.1 Structured securities
-
-
4.2 Other debt securities
758,750
620,930
Total (book value)
1,301,455
1,437,907
Total (fair value)
1,304,479
1,445,389
4. Debt securities
Subitem “3.3. Other loans: other” includes the deferred amount and the receivables related to the
securitisation totalling EUR 215,124 thousand.
Breakdown by type of item 70 of assets “Loans to customers"
30/06/2010
1. Current accounts
Performing
4. Credit cards, personal and salary-backed loans
Deteriorated
Performing
Deteriorated
7,112,713
526,536
7,215,386
441,815
-
-
-
-
8,563,515
658,735
7,870,878
533,664
2. Repurchase agreements
3. Mortgages
31/12/2009
410,788
13,255
379,898
11,629
1,242,682
34,353
1,184,095
38,087
-
-
-
-
2,569,236
84,431
2,628,176
59,115
22,941
-
10,901
-
8.1 structured securities
-
-
-
-
8.2 other debt securities
22,941
-
10,901
-
5. Finance leasing
6. Factoring
7. Other transactions
8. Debt securities
Total (book value)
19,921,875
1,317,310
19,289,334
1,084,310
Total (fair value)
19,981,859
1,340,061
19,579,540
1,115,543
52
Breakdown by type of item 10 of liabilities "Due to banks"
30/06/2010
31/12/2009
1. Due to central banks
150,000
637,902
2. Due to banks
792,567
832,759
94,835
236,627
2.2 Restricted deposits
239,993
299,191
2.3 Loans
457,025
287,776
2.3.1 funding repurchase agreements
279,041
109,165
2.3.2 Other
177,984
178,611
-
-
714
9,165
Total
942,567
1,470,661
Fair value
941,749
1,470,803
2.1 Current accounts and unrestricted deposits
2.4 Payables for commitments to repurchase own equity instruments
2.5 Other payables
Breakdown of item 20 of liabilities "Due to customers"
30/06/2010
1. Current accounts and unrestricted deposits
31/12/2009
13,213,080
12,650,265
320,350
361,477
3. Loans
873,464
936,028
830,464
926,028
43,000
10,000
74,741
44,294
125,959
113,916
Total
14,607,594
14,105,980
Fair value
14,606,617
14,106,057
3.1 funding repurchase agreements
3.2 other
4. Payables for commitments to repurchase own equity instruments
5. Other payables
SECTION 2 – OTHER FINANCIAL INSTRUMENTS
Breakdown by type of item 20 of assets "Financial assets held for trading"
30/06/2010
Item/Amounts
Level 1
31/12/2009
Level 2
Level 3
Level 1
Level 2
Level 3
A. Cash assets
1. Debt securities
2. Equity securities
69,917
184,448
250
84,902
218,572
-
4,034
29
-
1,672
29
-
3. UCI quotas
-
6,712
3,333
-
745
3,353
4. Loans
-
-
-
-
-
-
73,951
191,189
3,583
86,574
219,346
3,353
35
5,669
-
30
7,554
-
-
-
-
-
-
-
35
5,669
-
30
7,554
-
73,986
196,858
3,583
86,604
226,900
3,353
Total A
B. Derivatives
1. Financial derivatives
2. Credit derivatives
Total B
Total (A+B)
53
Breakdown by type of item 40 of assets "Financial assets available for sale"
30/06/2010
Item/Amounts
Level 1
1. Debt securities
2. Equity securities
Level 2
Level 3
Level 1
Level 2
Level 3
346,285
19,023
374
315,907
10,101
374
10,862
-
60,591
13,804
-
61,070
98
-
1,334
-
100
934
3. UCI quotas
4. Loans
Total
31/12/2009
-
-
-
-
-
-
357,245
19,023
62,299
329,711
10,201
62,378
Level 3 also contains equity securities measured at cost.
Breakdown by type of item 50 of assets "Financial assets held for maturity"
30/06/2010
Type of security/Amounts
BV
FV
Level 1
1.
Debt securities
BV
Level 2
FV
Level 3
88,487
23,413
65,074
-
-
-
- other
88,487
23,413
65,074
Loans
-
-
-
- structured
2.
31/12/2009
Level 1
-
Level 2
Level 3
1
1
-
-
-
-
-
-
1
1
-
-
-
-
-
-
Key
FV= fair value
BV = book value
The securities included in the portfolio of financial assets held to maturity include government bonds and
corporate securities belonging to Banca della Ciociaria and Bancaperta, Group bank specialised in
financial asset management services, private banking and real estate financial services.
54
Information on shareholding relationships of investments in companies subject to joint control (valued at
equity) and in companies subject to significant influence
Registered office
Name
Type of
relationship
(1)
Type of investment
Investor company
% held
B. Companies
1. Rajna Immobiliare S.r.l.
Sondrio
1
Credito Valtellinese
50.00
2. Global Assistance S.p.A.
Milano
2
40.00
3. Istituto Centrale delle Banche Popolari
Italiane S.p.A.
Milano
2
20.61
Lugano (Svizzera)
2
Bancaperta
19.00
5. Banca di Cividale S.p.A.
Cividale del Friuli (UD)
2
25.00
6. Sondrio Città Futura S.r.l.
Sondrio
2
Stelline S.I.
49.00
7. Sondrio Città Centro S.r.l.
Sondrio
2
Stelline S.I.
30.00
8. Progetti Industriali Valtellina S.r.l.
Sondrio
2
Stelline S.I.
20.00
9. Soc. Coop. del Polo dell'Innovazione
della Valtellina p.A.
Sondrio
2
10.56
10. Istifid S.p.A.
Milano
2
28.66
Frosinone
2
Finanziaria San
Giacomo S.p.A.
20.00
12. Adamello S.p.A.
Milano
2
Stelline S.I.
10.00
13. Miri & Giò S.p.A.
Sondrio
2
Stelline S.I.
30.00
4. Aperta Gestioni Patrimoniali S.A.
11. Finanziaria Laziale S.p.A.
Key:
(1) Type of relationship: 1 = joint control
2 = significant influence
55
Investments in companies subject to joint control and in companies subject to significant influence:
accounting information
Name
Total Assets
Net profit (loss)
Shareholders’ equity
Consolidated book value
30/06/2010
A. Companies valued at equity
A.1 subject to joint control
1. Rajna Immobiliare S.r.l
988
56
679
355
14,455
946
6,345
2,902
7,019,372
58,147
544,186
114,691
11,226
1,602
7,117
833
3,657,373
3,703
242,299
94,907
A.2 subject to significant influence
1. Global Assistance S.p.A.
2. Istituto Centrale delle Banche Popolari
Italiane S.p.A.
3. Aperta Gestioni Patrimoniali S.A.
4. Banca di Cividale S.p.A.
5. Sondrio Città Futura S.r.l.
7,049
-22
81
49
6. Sondrio Città Centro S.r.l.
20,943
-377
-375
1
6,187
-38
122
20
805
-52
424
50
5,904
167
3,448
1,539
7. Progetti Industriali Valtellina S.r.l.
8. Soc. Coop. del Polo dell'Innovazione
della Valtellina p.A.
9. Istifid S.p.A.
10. Finanziaria Laziale S.p.A.
3,797
-37
324
127
11. Adamello S.p.A.
10,446
-101
10,392
700
12. Miri & Giò S.p.A.
-
-
500
150
The shareholders’ equity and net income (loss) are taken from the 2009 financial statements approved by
the respective Shareholders’ Meetings. The consolidated book value refers to the current period.
The financial statement data referring to Aperta Gestioni S.A. are expressed in Swiss francs. As for Istituto
Centrale delle Banche Popolari Italiane, the data refer to the consolidated financial statements. There are
no approved financial statements yet available for Miri & Giò S.p.A. since it was set up on 17 February
2010.
56
Breakdown by type of item 30 of liabilities "Securities issued"
30/06/2010
Type of security/Amounts
Book
31/12/2009
Fair value
value
Book
Level 1
Level 2
Level 3
1,270,546
4,869,145
-
Fair value
value
Level 1
Level 2
Level 3
A. Securities
1. bonds
6,207,961
1.1 structured
1.2 other
2. other securities
2.2 other
-
5,765,377
-
-
-
-
-
-
-
-
-
6,207,961
1,270,546
4,869,145
-
5,770,986
-
5,765,377
-
330,845
-
285,788
35,018
339,568
-
316,580
23,028
-
-
-
-
-
-
-
-
2.1 structured
Total
5,770,986
330,845
-
285,788
35,018
339,568
-
316,580
23,028
6,538,806
1,270,546
5,154,933
35,018
6,110,554
-
6,081,957
23,028
Breakdown by type of item 40 of liabilities "Financial liabilities held for trading"
30/06/2010
Transaction type/Group elements
31/12/2009
Fair value
NV
L1
Fair value
L2
L3
NV
L1
L2
L3
A. Cash liabilities
1. Due to banks
-
-
-
-
-
-
-
-
2. Due to customers
-
-
-
-
-
-
-
-
3. Debt securities
-
-
-
-
-
-
-
-
Total A
-
-
-
-
-
-
-
-
1. Financial derivatives
X
13,222
8,101
-
X
32,895
6,489
-
2. Credit derivatives
X
-
-
-
X
-
-
-
Total B
X
13,222
8,101
-
X
32,895
6,489
-
-
13,222
8,101
-
-
32,895
6,489
-
B. Derivatives
Total (A+B)
Key:
NV = nominal or notional value
L1: Level 1
L2: Level 2
L3: Level 3
57
SECTION 3 – OTHER ASSET AND LIABILITY ITEMS
Breakdown of item 120 of assets “Property, plant and equipment"
Asset/Amounts
30/06/2010
31/12/2009
Property, plant and equipment
1.1 owned
471,266
462,454
a) land and buildings
424,985
416,937
29,271
28,784
5,206
4,499
11,804
12,234
b) furniture
c) electronic systems
d) other
1.2 acquired through a finance lease
-
-
a) land and buildings
-
-
b) furniture
-
-
c) electronic systems
-
-
d) other
-
-
471,266
462,454
Total
Breakdown of item 130 of assets "Intangible assets"
30/06/2010
Asset/Amounts
Limited
life
31/12/2009
Limited
life
Unlimited life
Unlimited life
A.1 Goodwill
X
709,648
X
687,508
A.1.1 pertaining to the group
X
709,648
X
687,508
A.1.2 pertaining to third parties
X
-
X
-
A.2 Other intangible assets
61,957
-
57,812
-
A.2.1 Assets measured at cost:
61,957
-
57,812
-
797
-
1,000
-
61,160
-
56,812
-
-
-
-
-
a) internally generated intangible assets
-
-
-
-
b) other assets
-
-
-
-
61,957
709,648
57,812
687,508
a) internally generated intangible assets
b) other assets
A.2.2 Assets designated at fair value:
Total
The change indicated under goodwill mainly depends on the acquisition of control of Banca della Ciociara
S.p.a, company consolidated starting from 19 May 2010. The process identifying the fair value of assets,
liabilities and potential liabilities of the acquiree has not been completed yet. Provisionally, the difference
between the transferred consideration, the amount of the minority shares in the acquiree and the fair value,
determined on the date of acquisition, of the interests previously owned (business combination carried out
in several stages as described in the part of the Notes to the financial statements with regard to business
combinations carried out during the period) and the net value of the amounts of identifiable assets acquired
or liabilities assumed was recorded in Goodwill (totalling EUR 23,456 thousand). Minority shares were
determined in proportion to the minority shareholding in identifiable net assets of the acquiree.
For the purpose of the impairment procedure of the new goodwill related to Banca della Ciociaria, subject
to approval by the directors, the Group used the fair value for the recoverability check of the recorded
goodwill as shown above.
Fair value is equal to the amount that can be obtained, net of the disposal costs, from the sale of an asset
in a free transaction between knowledgeable, willing parties. Disposal costs mean the marginal costs
directly attributable to the disposal of an asset, excluding the financing costs and taxation. When
calculating this value, the group considered the transaction prices concerning comparable businesses to
58
the one in question. The basis of this method lies in the information concerning transactions made and
observed in the market deemed similar to the one being analysed. In particular the multiples deemed most
significant were considered recorded in transactions concerning the purchase of banks of small/medium
size taking place in Italy recently. The conditions that qualify the transactions in the case of the sample
used are the deal price that refers to a purchase value exceeding 55 million, the object of the transaction
that refers to a majority package concerning the entire business being purchased, the transaction premium
since the price incorporates the majority premium for the strategic control of the company and the nature of
the price that is reported at the transaction date and expresses an agreed price.
The outcome of the impairment test did not reveal any impairment of the goodwill recorded, also in case of
variation of the value assigned to the basic assumptions following the sensitivity analysis (minimum value
of the multiples identified in the reference sample equal to 2.6 times the book value ex dividend).
With reference to the goodwill recorded, analyses were carried out in order to check the possible presence
of impairment indicators and the subsequent need to calculate again the recoverable value of the different
CGUs (for which no change was made, either of definition or of scope, compared to 31 December 2009).
Specifically:
–
with reference to the estimate of the detailed provisional cash flows for the 2010-2014 period, the
analyses of the macroeconomic context referring to Italy were updated by means of major external
specialised sources. According to this update, there was no need for substantial changes of the
forecasts used for the purposes of the impairment test of the 2009 Financial Statements to report; the
only change of the macroeconomic forecasts to report concerns the interest rate trend, whose growth
recovery is now postponed of approx. 12 months. Moreover, final data as at 30 June was compared
with the forecasts from which it results a substantial solidity of all the significant financial and economic
measures except for the interest margin for what was said previously; therefore, small flow contractions
are considered possible in the short term without significant impacts on the medium to long term;
–
with reference to the growth rates of the financial flows, for the purposes of the estimate of the socalled “terminal value”, the indicators already used for the impairment tests of the prior financial
statements were updated. In particular, the “g” rate was recalculated: it is in line with the same levels of
the one used in the 2009 impairment test;
–
with reference to the discount rates of the financial flows, they were updated on the basis of the new
information available.
According to the aforesaid analyses, no critical factors were to report in such a way as to significantly affect
the recoverable amount of the different CGUs determined for the purposes of the impairment test of the
2009 Financial Statements. Therefore, sensitivity analysis were carried out during that time. These
analyses, to which reference is made, had revealed solidity margins of the book values even in the case of
less prudent taxes compared to those used.
For some CGUs as at 31 December 2009, the impairment test was carried out by comparing the book
values with the fair value. For these CGUs, the estimate of the Fair Value, as at 31 December 2009, was
carried out by applying the method of comparable transactions. In particular, the multiples were considered
recorded in transactions concerning the purchase of banks of small/medium size taking place in Italy
recently. The analysis carried out on 30 June 2010 on the multiples used for the Fair Value estimate at the
end of 2009 showed how no significant changes occurred in these multiples in the first half of the current
financial period. Therefore, the goodwill recorded did not suffer any impairment in the half year.
Therefore, the results of the aforesaid analyses confirm the values recorded in the financial statements.
Moreover, the values expressed by the market, represented by the listing price and therefore by the market
capitalisation, continue to be lower than the net accounting equity. As already observed in the 2009
Financial Statements, such market evaluation has characteristics that make it different from an “essential”
evaluation represented by a value in use. The listed price of the Creval stock, security deriving from its
nature as a cooperative bank, is still affected by the conditions of the financial markets still generally
depressed and highly volatile and in particular, as all the banking sector, it is penalised by the total debt
crisis and by the fears related to solidity and liquidity of the financial system in general, in addition to the
uncertainties on the impacts of the pointed out new capital requirements.
With reference to intangible assets with definite lives, mainly represented by the customer lists, whose
values (all in all equal to EUR 49.8 million as at 30 June 2010) are the subject-matter of progressive
depreciation, analyses on the important variables for the purposes of their enhancement were carried out.
Specifically:
–
the trend of deposits for the different types of products was analysed, reporting an increase compared
to 31 December 2009 for core deposits and funds and a basically stable trend for managed assets;
moreover, it was checked that the decline rates of deposits were in line with the forecasts incorporated
in the estimates of the recoverable value carried out for the impairment purposes of the 2009 financial
statements;
–
the performance trend of the different products was analysed; the analysis reported a confirmation or,
in some cases, a slight improvement from December 2009 with a special attention to commission
59
return. With reference to the mark down of core deposits, which had worsened last year, a gradual
recovery is reported considering however that the contribution of this element is expected in a longterm time horizon;
–
the discount rates of the financial flows were analysed, without reporting significant changes compared
to those used for the impairment test of the 2009 Financial Statements.
Therefore, from the analysis of the aforesaid indicators no critical factors were to report compared to the
situation and to the estimate of the recoverable value calculated for the 2009 Financial Statements and
therefore, no write-down of intangible values was required. Therefore, the recoverable value calculated at
the end of 2009 was greater than the book value and in the meantime the latter decreased all-in-all due to
the amortisation pertaining to the half year.
Breakdown of item 120 of liabilities "Provisions for risks and charges"
Item/Amounts
30/06/2010
31/12/2009
1. Company pension funds
32,111
32,025
2. Other provisions for risks and charges
29,670
31,580
18,506
19,645
2.2 personnel expenses
7,402
9,384
2.3 other
3,762
2,551
61,781
63,605
2.1 legal disputes
Total
60
SECTION 4 – OTHER INFORMATION
Breakdown of guarantees given and commitments
Transaction
30/06/2010
31/12/2009
1) Financial guarantees
a) Banks
22,496
22,496
b) Customers
94,154
100,017
34,747
31,640
1,280,478
1,282,877
i) certain to be called on
52,105
20,311
ii) not certain to be called on
11,342
10,514
132,443
184,164
1,367,596
1,137,785
4) Commitments underlying credit derivatives: sales of protection
-
-
5) Assets lodged to guarantee third-party obligations
-
-
238,633
253,399
3,233,994
3,043,203
2) Commercial guarantees
a) Banks
b) Customers
3) Irrevocable commitments to grant finance
a) Banks
b) Customers
i) certain to be called on
ii) not certain to be called on
6) Other commitments
Total
Assets lodged to guarantee the Bank’s liabilities and commitments
Portfolios
30/06/2010
31/12/2009
11,980
23,698
-
-
73,703
23,836
-
-
5. Due from banks
377,043
133,476
845,175
817,492
-
-
7. Property, plant and equipment
61
Breakdown of management and trading services
Type of service
30/06/2010
31/12/2009
1. Execution of orders on behalf of customers
a) Purchases
1. regulated
-
-
2. unregulated
-
-
1. regulated
-
-
2. unregulated
-
-
a) individual
3,129,846
3,174,819
b) collective
-
-
1. securities issued by companies included in the consolidation area
-
-
2. other securities
-
-
1. securities issued by companies included in the consolidation area
4,284,738
4,152,962
2. other securities
3,511,716
3,745,920
7,764,776
7,603,730
b) Sales
2. Portfolio management
3. Custody and administration of securities
a) third-party securities held on deposit: when acting as custodian bank
(excluding portfolio management)
b) other third-party securities held on deposit (excluding portfolio management): other
c) third-party securities deposited with third parties
d) portfolio securities deposited with third parties
4. Other transactions
62
1,577,468
2,497,048
1,761,253
1,562,347
Breakdown of the main income statement items
Breakdown of item 10 of the income statement "Interest income and similar income"
1st half of
2010
Items
1st half of
2009
%
change
2,264
7,885
-71.29
-
-
-
1,177
1,317
-10.63
818
-
-
11,890
27,480
-56.73
343,931
437,130
-21.32
378
514
-26.46
27
30
-10.00
360,485
474,356
-24.01
5. Due from banks
8. Other assets
Total
Breakdown of item 20 of the income statement "Interest expense and similar expense"
1st half of
2010
Items
1. Due to central banks
1st half of
2009
(247)
2. Due to banks
% change
(387)
-36.18
(3,954)
(12,842)
-69.21
3. Due to customers
(51,887)
(101,830)
-49.05
4. Securities issued
(66,999)
(102,478)
-34.62
(343)
(534)
-35.77
6. Financial liabilities designated at fair value
-
-
-
7. Other liabilities
-
-
-
-
(392)
-100.00
(123,430)
(218,463)
-43.50
Total
Interest income on financial assets in foreign currency
1st half
of 2010
Interest income on foreign currency assets
1,048
1st half of
% change
2009
1,675
-37.43
Interest expense on foreign currency liabilities
1st half
of 2010
Interest expense on foreign currency liabilities
(206)
63
1st half of
% change
2009
(879)
-76.56
Breakdown of item 40 of the income statement "Fee and commission income"
1st half of
2010
Type of service/Sector
a) guarantees given
4,848
b) credit derivatives
c) management, trading and consulting services:
1. trading of financial instruments
2. currency trading
1st half of
% change
2009
4,504
7.64
-
-
-
42,172
33,028
27.69
14
5
n/a
3,119
2,770
12.60
14,957
11,693
27.91
3.1 individual
12,165
11,116
9.44
3.2 collective
2,792
577
n/a
825
704
17.19
-
-
-
6. placement of securities
3,897
2,639
47.67
7. order acceptance and transmission
6,504
6,092
6.76
8. consulting services
1,000
945
5.82
8.1 on investments
2
-
-
998
945
5.61
11,856
8,180
44.94
99
192
-48.44
99
192
-48.44
3. portfolio management
4. custody and administration of securities
5. custodian bank
8.2 on financial structuring
9. distribution of services to third parties
9.1. portfolio management
9.1.1. individual
9.1.2 collective
9.2 insurance products
9.3 other products
d) collection and payment services
e) servicing services for securitisation transactions
f) factoring transaction services
g) tax collection services
h) management of multilateral trading facilities
-
-
-
11,734
7,988
46.90
23
-
-
30,198
27,519
9.74
69
-
-
-
-
-
1,462
1,641
-10.91
-
-
-
i) current account management
30,162
28,233
6.83
j) other services
40,638
17,284
n/a
149,549
112,209
33.28
Total
The increase reported related to the fee and commission income in item “3 portfolio management” is mainly
due to fees and commissions collected by Lussemburgo Gestioni whose activity started in the first months
of 2010. In compliance with the Group development plans in the asset management sector, the company
was established with the purpose of widening the range of financial products offered to the customers and
of contributing to the development of new business areas, by enhancing at the same time the experience
gained by the Group in the asset management sector.
The increase reported in item “9.2 Insurance products” is due to the particularly positive trend of the
placement of bancassurance products of the traditional Life sector compared to corresponding first half of
the year. The overall managed insurance portfolio increased by more than 3% compared to 2009 and stood
at EUR 1,771 million.
Fee and commission income included under "J) other services" mainly refers to commissions on loan
transactions of EUR 36,745 thousand and commissions for rights and pledges of EUR 2,094 thousand. The
increase in commissions on loan transactions refers to the introduction, starting from the second half year
of 2009, of the commission on the arranged overdraft.
64
Breakdown of item 50 "Fee and commission expense"
Services/Sectors
1st half of
2010
1st half of
2009
(34)
(28)
a) guarantees received
b) credit derivatives
c) management and trading services
1. trading of financial instruments
2. currency trading
%
change
21.43
-
-
-
(707)
(615)
14.96
-
(15)
n/a
(3)
(1)
n/a
(1)
n/a
3. portfolio management:
3.1 own account
-
(1)
n/a
3.2 for third parties
-
-
-
4. custody and administration of securities
(541)
(598)
-9.53
5. placement of financial instruments
(163)
-
-
-
-
-
d) collection and payment services
(8,256)
(8,344)
-1.05
e) other services
(1,492)
(1,101)
35.51
(10,489)
(10,088)
3.98
6. off-premises provision of financial instruments, products and services
Total
Breakdown of item 80 “Profits (losses) on trading activities"
Transactions/Income components
1.1 Debt securities
Capital
gains
(A)
Profit on
trading
(B)
Losses on
trading
(D)
Net profit (loss)
[(A+B)-(C+D)]
414
979
(5,571)
(280)
(4,458)
390
768
(4,031)
(233)
(3,106)
-
206
(1,463)
(46)
(1,303)
24
1
(77)
(1)
(53)
1.2 Equity securities
1.3 UCI quotas
Capital
losses
(C)
1.4 Loans
-
-
-
-
-
1.5 Other
-
4
-
-
4
-
-
-
-
-
2.1 Debt securities
-
-
-
-
-
2.2 Payables
-
-
-
-
-
2.3 Other
-
-
-
-
-
X
X
X
X
(453)
18,449
60,218
(12,770)
(47,438)
21,215
11,683
47,601
(12,770)
(47,438)
(924)
6,766
12,617
-
-
19,383
X
X
X
X
2,756
-
-
-
-
-
-
-
-
-
-
18,863
61,197
(18,341)
(47,718)
16,304
3. Financial assets and liabilities:
exchange rate differences
4. Derivatives
4.1 Financial derivatives:
- On debt securities and interest rates
- On equity securities and stock market indices
- On currencies and gold
- Other
4.2 Credit derivatives
Total
The result of financial derivatives on equity securities and share indices refers to the enhancement of the
Warrants issued by Credito Valtellinese falling due in 2010 and 2014.
65
Breakdown of item 90 “Fair value adjustments in hedge accounting"
1st half
of 2010
Income component/Amounts
1st half
of 2009
% change
A. Income from:
A.1 Fair value hedges
188
96
95.83
A.2 Financial liabilities with fair value hedges
330
-
n/a
Total income from hedging activities (A)
518
96
n/a
(529)
(9)
n/a
-
-
-
(529)
(9)
n/a
(11)
87
-112.64
1st half
of 2010
1st half
of 2009
B. Expenses from:
B.1 Fair value hedges
B.2 Financial liabilities with fair value hedges
Total expenses from hedging activities (B)
C. Fair value adjustments in hedge accounting (A-B)
Net losses/recoveries on impairment of loans: breakdown
Value adjustments
Transactions/
/Income components
Recoveries
Portfolio
Specific
Cancellation
A. Due from banks
Portfolio
Specific
Other
A
B
A
B
-
-
-
-
-
-
-
-
(54)
- Loans
-
-
-
-
-
-
-
-
(54)
- Debt securities
-
-
-
-
-
-
-
-
-
(3,313)
(96,844)
(5,802)
21,556
12,731
223
7,694
(63,755) (57,447)
(3,313)
(96,844)
(5,802)
21,556
12,731
223
7,694
(63,755) (57,447)
-
-
-
-
-
-
-
(3,313)
(96,844)
(5,802)
21,556
12,731
223
7,694
B. Loans to customers
- Loans
- Debt securities
C. Total
-
-
(63,755) (57,501)
Key:
A = from interest
B = other recoveries
Net losses/recoveries on impairment of loans: percentage change
A. Due from banks
- Loans
- Debt securities
B. Loans to customers
- Loans
- Debt securities
C. Total
66
1st half of
2010
1st half of
2009
%
change
-
(54)
-100.00
-
(54)
-100.00
-
-
-
(63,755)
(57,447)
10.98
(63,755)
(57,447)
10.98
-
-
-
(63,755)
(57,501)
10.88
Net losses/recoveries on impairment of financial assets available for sale: breakdown
Value adjustments
Recoveries
Specific
Specific
Cancellation
A. Debt securities
Other
-
B. Equity securities
A
1st half 1st half
of 2010 of 2009
%
change
B
-
-
-
-
-
(3,084)
X
X
(3,084)
(5)
n/a
C. UCI quotas
-
-
X
-
-
-
-
D Loans to banks
-
-
-
-
-
-
-
E. Loans to customers
-
-
-
-
-
-
-
F. Total
-
(3,084)
-
-
(3,084)
(5)
n/a
Key:
A = from interest
B = other recoveries
As provided under Group accounting policies, the impairment process of financial assets available for sale
starts if there are indicators that would lead to the presumption that the original book value of the
investment cannot be recovered. These indicators include income of the company in question and its future
income prospects, a significant deviation from the budget objectives or provided by multi-year plans
communicated to the market, downward reviews by outside rating companies and the announcement of
company restructuring plans. Regarding the equity securities included as Financial assets available for
sale, there are certain indicators that represent estimates of significant and long-lasting fair value
decreases to below the book value of the financial assets. The quantitative and duration thresholds beyond
which the decrease in fair value of the equity instruments immediately results in the posting of a write-down
in the income statement refer to market quotations or valuations that are 30% or lower than the initial book
value or the recognition of quotations or valuations that are lower than book value for a period of more than
18 months. Exceeding one of these thresholds leads to the recognition of impairment.
As at 30 June 2010, exceeding one of these thresholds for some equity securities resulted in the
recognition of impairment of EUR 3 million.
67
Breakdown of item 180 “Personnel expenses”
1st half of
2010
Type of expense/Amounts
1) Employees
a) wages and salaries
b) social security charges
c) employee termination indemnities
d) pension expenses
e) provision to employee termination indemnities
1st half of
2009
%
change
(159,939)
(150,688)
6.14
(102,178)
(97,033)
5.30
(31,808)
(30,341)
4.84
(6,636)
(5,877)
12.91
-
-
-
(1,949)
(1,590)
22.58
f) provision to pension fund and similar commitments:
-
- defined contribution
- defined benefit
-
-
-
(1,696)
(691)
n/a
g) payments to external supplementary pension schemes:
-
- defined contribution
(5,159)
(4,965)
3.91
-
-
-
-
-
-
(10,513)
(10,191)
3.16
2) Other personnel
(1,057)
(1,343)
-21.30
3) Directors and statutory auditors
(4,853)
(4,217)
15.08
(239)
(151)
58.28
(166,088)
(156,399)
6.20
- defined benefit
h) costs from equity payments
i) other employee benefits
4) Retired personnel
Total
68
Breakdown of item 180 “Other administrative expenses"
1st half of
2010
Fees for professional and consulting services
1st half of
2009
%
change
(11,407)
(9,365)
21.80
Insurance premiums
(2,207)
(2,460)
-10.28
Advertising
(3,832)
(3,563)
7.55
Postage, telegraph and telephone
(6,512)
(6,391)
1.89
Printed materials and stationery
(1,648)
(1,391)
18.48
Maintenance and repairs
(2,561)
(2,361)
8.47
Data processing services
(9,400)
(9,372)
0.30
Electricity, heating and shared property service charges
(4,849)
(4,554)
6.48
Charges for miscellaneous services provided by third parties
(11,912)
(11,400)
4.49
Cleaning
(2,450)
(2,211)
10.81
Transport and travel
(1,214)
(1,085)
11.89
Security and transport of valuables
(5,061)
(4,730)
7.00
Membership fees
(1,421)
(1,296)
9.65
(897)
(717)
25.10
(3,555)
(3,577)
-0.62
Independent auditors’ fees
Commercial information and searches
Subscriptions to newspapers, magazines and publications
Rent payable
Entertainment expenses
Taxes and dues
(360)
(328)
9.76
(12,267)
(11,686)
4.97
(1,198)
(909)
31.79
(27,648)
(28,795)
-3.98
Contractual charges for treasury management services
(1,201)
(1,016)
18.21
Training costs
(1,584)
(1,448)
9.39
Miscellaneous items
(2,962)
(3,566)
-16.94
(116,146)
(112,221)
3.50
Total
"Miscellaneous items" includes the positive effect related to the VAT regulation that provides the exemption
of services rendered by consortia in favour of its associates.
Average number of employees by category
1st half
of 2010
Employees:
4,276
a) executives
1st half of
2009
4,173
70
68
1,435
1,378
- 3rd and 4th level
683
647
c) other employees
2,771
2,727
b) total middle managers
Other staff
Total
69
31
121
4,307
4,294
Breakdown of item "Other operating expenses"
1st half
of 2010
Depreciation of leasehold improvements
(3,297)
1st half of
% change
2009
(3,257)
1.23
Other charges
(6,061)
(3,623)
67.29
Total
(9,358)
(6,880)
36.02
Other operating expenses mainly include costs for the construction of real estate of EUR 944 thousand and
leasing charges of EUR 4,095 thousand.
Breakdown of item "Other operating income"
1st half
of 2010
Rent receivable
Income from data processing services
Income from other services
Recovery of direct taxes
Recovery of insurance policy payments
1st half
of 2009
% change
558
412
35.44
4,656
4,290
8.53
307
326
-5.83
19,791
18,817
5.18
747
807
-7.43
Recovery of legal and notarial costs
5,157
4,259
21.08
Other income
8,895
8,209
8.36
40,111
37,120
8.06
Total
The other operating income includes income and recoveries for leasing services for EUR 4,980 thousand,
more profits for CILME services for EUR 1,001 thousand and changes in property works in progress for
EUR 981 thousand.
70
Earnings per share
The basic earnings per share and diluted earnings per share are calculated according to the methods
described in IAS 33 – Earnings per share. The basic earnings per share are defined as the profit or loss
attributable to ordinary equity holders divided by the weighted average number of ordinary shares
outstanding during the period.
The following table displays the basic earnings per share with the calculation details.
1st half of
2010
Attributable profit
19,384
Weighted average number of ordinary shares
1st half of
2009
35,848
208,231,065 194,000,027
Basic earnings per share
0.09
0.18
The diluted earnings per share are calculated taking into account also the dilutive effects of the conversion
of the potential ordinary shares, defined as financial instruments that attribute to the holder the right to
obtain ordinary shares. As a result, for the purposes of the calculation, the numerator and denominator of
the ratio are adjusted to take into account the effects of additional shares which would be outstanding in
case of conversion of all the potential ordinary shares with dilutive effects.
The diluted earnings per share take into account also the potential ordinary shares resulting from
converting the convertible bond loan and the related warrants (Warrant 2010 and Warrant 2014) issued on
29 December 2009. The effects of the instruments issued according to art. 12 of Leg. Decree 185/08 were
also considered.
The following table displays the diluted earnings per share with the calculation details.
1st half of
2010
Adjusted attributable profit
36,403
Weighted average number of ordinary shares
1st half of
2009
35,848
449,595,784 194,000,027
Diluted earnings per share
0.08
71
0.18
Information on risks and hedging policies
The identification of risks to which the Group is potentially exposed constitutes the essential prerequisite for
a knowledgeable assumption of said risks and their effective management, making use of the appropriate
mitigation and transfer tools and techniques. In line with its focus on retail banking, the Group is mainly
exposed to credit risk and other types of operating risks.
The set of internal rules, operating procedures and control structures to oversee company risks is
structured according to a model that integrates control methods at various levels, all converging with the
objectives of ensuring efficiency and effectiveness of operating processes, safeguarding integrity of
corporate assets, protecting from losses, ensuring reliability and integrity of information and verifying
proper execution of activities with respect to the internal and external regulations.
With regard to the regulatory provisions regarding the prudential control process, enforced within the group
is a specific corporate regulation – approved by the Board of Directors of the Parent Company and
periodically updated – that governs the capital adequacy company evaluation process (ICAAP). Supervisory
provisions envisage that ICAAP is centred on appropriate corporate risk management systems and
requires adequate corporate governance mechanisms, an organisational structure with a well-defined
hierarchy of responsibility and effective internal control systems. Responsibility for this process will be in
the hands of company bodies who will independently establish the set-up and organisation in accordance
with their respective powers and remits. They will ensure implementation and promote the updating of the
ICAAP in order to ensure continued compliance with the operating characteristics and the strategic context
in which the bank operates. The process is formalised, recorded, subject to internal review and approved
by the company bodies.
Specifically, the process defined at Group level proposes to:
- identify capital requirements in relation to actual risk levels and to the strategic plan defined by the
Group;
- guarantee constant capital adequacy with respect to current and future requirements;
- constantly monitor all the main risks;
- guarantee regular attention to risk measurement and management processes, developing a
growing “risk culture”;
- define the means and tools, methodologies, organisational and control systems of risks and capital
measured against the strategies, characteristics, size and complexity of the Group, with a view to
continuous and gradual improvement.
Once the above described process was completed, in April the Board of Directors of the Parent Company
approved the ICAAP report of 31 December 2009. It comprises the point of convergence and synthesis of
the equity, economic and financial plans, the risk management and capital management on the one hand,
and an essential instrument to support strategic planning and the implementation of the corporate
decisions on the other. Due to the persisting economic and financial crisis, the quantification of the risk that
the Group is exposed to was carried out in a highly prudential manner, both with respect to calculation of
the internal capital for measurable risks, and for identification of a buffer of additional capital for nonmeasurable risks. The ICAAP process led to the expression of an evaluation of the current and future
adequacy of the total capital to meet the relevant risks that the Group is exposed to and support the
corporate growth plans in addition to maintaining adequate standing on the markets.
1. CREDIT RISK
The focus on development in the area in which the Group operates continues to distinguish its lending
practices in support of local production activities. The reference aggregate is represented by households
and small and medium enterprises, the recipients of most of the loans.
The organisational structure of the credit area is distributed over the sales network with hierarchically
ascending powers and competences towards central structures in order to take advantage of the local
knowledge while maintaining more and more specialist competences within the central structures. Every
loan proposal is formulated by bodies within the territorial network, which shall complete the related
decision-making procedure. Applications for larger credit lines, differentiated also on the basis of the risk,
are automatically forwarded to central structures, which decide on the relative cases.
72
In this perspective, all the cases of credit lines which are dealt with by the Board of Directors, in addition to
any particularly important topic relating to lending issues, are systematically and obligatorily monitored by
the Group Loans Department, and submitted to the Group Credit Committee for a non-binding opinion.
With regard to the control function assigned to the parent banks of the banking groups by current legal
regulations, the implementation of the resolutions passed by the Boards of Directors of the banks of the
Group with regard to new credit lines granted or changes to existing credit lines exceeding the limits set for
each Bank, is expected to be subordinated to a congruence opinion by the Executive Committee of Credito
Valtellinese. The decision-making process related to the credit is supported by an internal data processing
procedure (electronic credit line) that manages all the credit process phases, from the contact with
customers and set up to the disbursement and management, up until the credit closure, automatically
identifying the set authorisation levels, on the basis of the limits to the amount defined in the “Structure of
the delegated powers”. Any performance anomaly can be detected with specific procedures.
The factors that enable to evaluate and manage credit risk include all the traditional quantitative (income
component, analysis of financial statements and internal performance data) and qualitative elements, such
as the in-depth knowledge of the customer, the competitive context in which it operates and, above all for
the corporate segment, assessing the effectiveness of the management. The set of assessment tools is
complemented by a number of modern databases available to credit operators such as central credit
registers, sector studies and the scoring of performance analyses.
The Group has developed a model to assign ratings to companies. These ratings represent an evaluation
on an ordinal scale of the ability of a company given a loan to honour its contractual commitments, with a
twelve-month time-frame. The ratings are updated on a monthly basis. The ratings model provides for 9
loan merit classes for performing loans and one class for loans in default. The loans in default comprise
doubtful, substandard or restructured loans, and loans that have expired , according to the definition of
current supervisory reports.
The range of application of the model is that of business customers, defined as the group of counterparties
of any legal form which carry out a production activity and/or sale of goods and services. The model was
developed with a view towards IRB-Foundation, therefore the only risk parameter estimated is the
probability of default (PD).
The assignment of the rating is linked to the credit disbursement process and is activated when a loan has
been requested or is to be reviewed. Ratings are automatically reviewed on a monthly basis. Considering
that the backtesting activities carried out on the model have demonstrated a good match between the
creditworthiness rating classes and historical default data, the model is considered reliable to be used in
managing the various loan processing stages.
73
Chart 1 - Distribution of loans to enterprises by rating class
Compared to the situation as at 31 December 2009, the change in loan distribution indicates that the
portfolio quality has felt the effects of the unfavourable economic situation.
In addition to the internal rating model, performance scoring systems (A.R.I.E.T.E.) have also been in use
for some time in order to allow use of simplified credit line review procedures only for those positions that
have passed the strict selection procedures. Regarding individual companies, as well as private customers,
an acceptance score is assigned.
As regards the concentration risk, in 2009 the Board of Directors of the Parent Company approved an
updated version of the document “The management of concentration risk of the customer loan portfolio”,
adjusting the methods to calculate the internal capital in line with the concentration risks according to the
methodological clarifications provided by the Bank of Italy. Furthermore, the document formalises the
performance of the risk management activities regarding the above mentioned risk, defines the tasks and
responsibilities assigned to the various organisational units in charge, and sets out, among other things,
the strategic directions, management policy, measurement methods, exposure limits, information flows and
any corrective actions that may be necessary.
In accordance with the mission of the retail banking Group which targets a broad, diversified market,
comprising economic entities – families, trades, professionals, and companies – operating in geographically
different sectors and contexts, assumption of the concentration risk deriving from lending activities will be
kept within established limits. Concentration risk management will aim to limit the financial impact of nonperformance by single parties or groups of related customers caused by both specific factors and by
unfavourable economic conditions in specific sectors of the economy or geographical areas. Concentration
risk will be limited by splitting up and diversifying the portfolio. The objectives with respect to concentration
risk exposure are considered by the Group when carrying out strategic and operational planning, and when
making the loans.
Concentration risk measurement is the responsibility of the Risk Management department and it will make
these measurements on a centralised basis on behalf of all Group banks. Risk measurement is carried out
at both an individual and consolidated level in order to more fully identify and allocate the main sources of
exposure to risk at the legal entity level. The approach followed in order to measure the concentration risk
of the customer loan portfolio differs in accordance with whether it is generated by:
-
concentration by single party or group of related customers;
concentration by common factors (geo-sectorial concentration).
The granularity adjustment approach noted in the “New prudential supervisory provisions for banks” is used
to measure the concentration risk per single party or group of related customers. In order to monitor the
74
concentration risk per single party or per group of related customers, the first 20 positions are also
analysed (individual customers or financial groups of performing customers), identified in accordance with
the loan receivable amounts. Information on the positions classified as “high risk” is also important as part
of the risk concentration per single party or group of related customers. In order to monitor the
concentration risk by common factors, calculations of the Herfindahl concentration indices are carried out
on the customer loan portfolios in accordance with the branch of economic activity and province of
residence of the parties. A series of exposure limits applicable at both consolidated and individual level
were defined for the above-mentioned risk profiles. The differentiation of the limit structure takes account of
the current and future operating specifics, size and composition of the loan portfolio and the equity
available in each individual Group Bank. Considering the market in which the Bank operates and type of
customer served, the Board of directors of the Parent Company decided a temporary derogation to the
exposure limit of Credito Piemontese risk concentration, increased for the current financial year from 5% to
10% of the regulatory capital, with the obligation to return within the ordinary limit during 2011.
The loans granted are normally backed by real property security, and to a lesser extent, by personal
guarantees. However, credit derivatives are not used.
For pledges, the procedure envisages the valuation of only predetermined elements which can be easily
liquidated. For mortgages, the assessment of assets involves the intervention of external experts or experts
who may be employed by the Group Company specialised in this field, but have no involvement
whatsoever with the credit rating process. This procedure is not required in special cases of mortgages of a
small amount.
The collection of personal guarantees is often preceded by checks carried out at the competent Land
Registry, with the purpose of ascertaining the guarantor's actual ownership of the property, always duly
taking into account the possibility of a swift and unexpected decrease in value of the asset concerned. In
any event, guarantees are always considered an additional element to the credit line and do not represent
its sole basis.
As part of the ICAAP process, the Group has provided for the evaluation of residual risk, i.e. the risk that
the recognised techniques used to mitigate credit risk are less effective than expected. The use of these
techniques may in fact expose the Group to a series of further risks (for example of an operational or legal
nature) which, if they occur, may lead to a greater lending risk than had been expected due to lower
effectiveness or actual unavailability of the protection. Some typical examples of residual risk include the
inability to promptly enforce the guarantees received (in the event of breach by the party), the legal
invalidity of the documentation, or the incorrect evaluation of the exact value of the guarantee. The residual
guarantee is mainly managed by acting on the procedural and organisational plan. An internal rule book
with guidelines on the correct acquisition, utilisation and management of guarantees has been prepared to
ensure across-the-board standard application. The guarantees are managed on a centralised basis by the
Group Bank Loans Departments, which deal with all aspects regarding the accounting, administration,
control and safe-keeping of guarantees received. Part of the duties of the Inspection Services involve
verification that all obligations regarding guarantee management are met.
The guarantees acquired comply with the suitability criteria established by supervisory regulations on the
mitigation of credit risk for the purpose of determining asset requirements. The Group has a “property value
supervision” system in place that allows it to keep mortgage guarantees under suitable control. Specifically,
the value of mortgaged properties backing loans of more than EUR 3 million are regularly updated by
external experts, while an automatic evaluation mechanism keeps properties with mortgages of less than
EUR 3 million under strict control.
The anomalously performing loans consist of impaired doubtful loans (expired for more than 180 days or
beyond 90 days for the non derogated portfolios), watch-list, restructured loans and doubtful loans.
Instruments that, based on the regulations of the Bank of Italy, have been designated as doubtful,
substandard, restructured have been assessed on an analytical basis. These are identified by the Credit
Performance Management Departments of the Bank on the basis of a set of analyses on internal
performance indicators (particular attention being paid to positions that are overdue by more than 90/180
days), responses received from the risk centres, sector data and the figures of the financial statements of
the borrowers as well as the presence of prejudicial encumbrances. The risk change is resolved by the
Credit Committee, normally upon proposal by the Credit Performance Management Department. On
carrying the resolution, the Committee also determines the impairment of the loans with respect to the
seriousness of the anomaly found and the guarantees obtained to support the case. Regarding these
positions, all decision-making rights granted to individual bodies are suspended, and any subsequent
granting of credit is at the sole discretion of corporate bodies or the Credit Management Department. The
positions are systematically monitored also using a series of controls available on the procedure, by the
75
Credit Performance Management Department, which provide support to the single branches in terms of the
methods for managing relationships and the measures to be taken to attempt to return the positions to
performing status.
In order to support the branches and guarantee the correct application of the Supervisory Regulations, a
procedure is active for “objective substandard loans”, meaning those regarding positions that reach a
specific degree of non-payment. The procedure highlights the anomalies. If the irregularity is not suitably
resolved during the quarter, the notification gradually progresses from the branches to the area manager,
until it reaches the Credit Performance Management Department for the correct assignment of substandard
status. Due to the non discretional nature of the report, a mechanism was recently introduced according to
which those positions that have reached the levels set by the Supervisory Authority are automatically
signalled.
With regard to classification as doubtful, the Supervisory Regulations are strictly observed, with separate
classification of all insolvent parties (even if not legally declared so) or in similar situations, regardless of
any real or personal guarantee obtained in support of the exposure.
Accounting as substandard requires the approval of a credit line, providing for the check by the Credit
Performance Management Service in the Loans Department and the resolution by the Bank’s credit
committee or a higher body.
Regarding the management of doubtful loans, within the Group, Finanziaria San Giacomo has been
assigned to monitor such activity. Almost all impaired loans pertaining to Group Banks have been
transferred to this company, along with the management of non-transferred impaired loans. The
centralising of this specialist activity within a single company favoured the transfer of the best operating
methods among the various operating units throughout the country, and resulted in a significant
improvement in the overall management of problem loans. A Disputes Committee operates within
Finanziaria San Giacomo, with the task of managing its own cases, to the extent of its delegated powers,
and expressing a compulsory, but non-binding, opinion on cases under the responsibility of the Board of
Directors and those assigned under management.
With regard to the amount of provisions allocated on individual doubtful positions, a formal Group policy is
in place, approved by the Board of Directors, for the various types of doubtful loans classified based on the
status of single procedures indicating the criteria to be followed in determining “doubtful” status . Decisions
regarding individual allocations and any changes are made by the Loans Committee on recommendation
from the competent bodies of Finanziaria San Giacomo.
The following tables show cash and “off-balance sheet” exposure to banks and customers and the
distribution of exposures by portfolio and credit quality as at 30 June 2010.
In accordance with the financial statements as at 31 December 2009, the tables related to the cash and offbalance sheet exposure to banks and customers report the data referring to the Banking Group only. The
figures are indicated including the relations with other consolidated companies. The effect of these
exclusions is not in the higher range.
76
Banking Group - Cash and off-balance sheet exposures to banks: gross and net values
30/06/2010
Type of exposure/Amounts
Specific
value
adjustments
Gross exposure
Portfolio
value
adjustments
Net exposure
A. CASH EXPOSURES
a) Doubtful loans
-
-
X
-
b) Substandard loans
-
-
X
-
c) Restructured exposures
-
-
X
-
d) Past due exposures
-
-
X
-
e) Other assets
1,599,005
X
TOTAL A
1,599,005
-
-
-
-
1,599,005
-
1,599,005
B. OFF-BALANCE SHEET EXPOSURES
a) Impaired
b) Other
TOTAL B
TOTAL (A+B)
393,392
X
X
-
393,392
393,392
-
-
393,392
1,992,397
-
-
1,992,397
77
Banking Group - Cash and off-balance sheet exposures to customers: gross and net values
30/06/2010
Gross
exposure
Type of exposure/Amount
Specific
value
adjustments
Portfolio value
adjustments
Net exposure
A. CASH EXPOSURES
a) Doubtful loans
e) Other assets
1,087,752
-654,710
X
433,042
531,796
-31,966
X
499,830
65,079
-1,833
X
63,246
328,190
-6,624
X
321,566
20,448,173
TOTAL A
22,460,990
X
-695,133
-115,629
20,332,544
-115,629
21,650,228
a) Impaired
7,837
b) Other
2,840,138
TOTAL B
TOTAL (A+B)
-916
X
X
6,921
-94
2,840,044
2,847,975
-916
-94
2,846,965
25,308,965
-696,049
-115,723
24,497,193
31/12/2009
Gross
exposure
Type of exposure/Amount
Specific
value
adjustments
Portfolio value
adjustments
Net exposure
A. CASH EXPOSURES
a) Doubtful loans
925,093
-577,650
X
347,442
412,177
-33,380
X
378,797
42,049
-1,121
X
40,928
329,160
-6,719
X
322,441
e) Other assets
19,815,286
TOTAL A
X
21,523,765
-618,871
6,642
-691
-118,705
19,696,581
-118,705
20,786,189
a) Impaired
b) Other
2,710,378
TOTAL B
TOTAL (A+B)
78
X
X
5,951
-150
2,710,228
2,717,020
-691
-150
2,716,179
24,240,785
-619,562
-118,855
23,502,368
Distribution of exposures by portfolio and credit quality (book values)
Portfolio/Quality
Substan
Restructured Past-due
dard
exposures
exposures
loans
Doubtful
loans
Other
assets
Total
-
-
-
-
260,319
260,319
-
-
374
-
365,308
365,682
-
-
-
-
88,487
88,487
4. Due from banks
-
-
-
-
1,301,455
1,301,455
5. loans to customers
433,042
499,830
62,872
321,566
19,921,875
21,239,185
-
-
-
-
-
-
7. Financial assets held for disposal
-
-
-
-
-
-
-
-
-
-
658
658
Total as at 30/06/2010
433,042
499,830
63,246
321,566
21,938,102
23,255,786
347,442
378,797
40,928
322,441
21,457,874
22,547,482
79
Distribution of exposures by portfolio and credit quality (gross and net values)
Portfolio/Quality
4. Due from banks
Impaired assets
Gross
exposure
Performing
Value
Net
adjustments exposure
Gross
exposure
Portfolio
adjustments
X
X
Total (Net
exposure)
Net
exposure
-
-
-
260,319
260,319
374
-
374
365,308
-
365,308
365,682
-
-
-
88,487
-
88,487
88,487
-
-
1,301,455
-
1,301,455
1,301,455
2,012,443
-695,133 1,317,310 20,037,504
-115,629 19,921,875 21,239,185
6. Financial assets designated at
fair value
-
-
-
7. Financial assets held for disposal
-
-
-
-
-
-
2,012,817
-695,133 1,317,684 21,792,754
-115,629 21,938,102 23,255,786
1,708,479
-618,871 1,089,608 21,264,806
-118,739 21,457,874 22,547,482
X
X
-
-
-
-
-
658
658
-
X
X
Major risks (according to supervisory regulations)
30/06/2010
31/12/2009
% change
a) Amount
254,529
259,086
-1.76
b) Number
1
1
-
80
2. MARKET RISK
2.1 - Interest rate risk - Supervisory trading portfolio
“Regulatory trading portfolio” means the portfolio of financial instruments subject to the capital
requirements for the market risks, as stated by the measures regarding supervisory reports.
In line with the Group's retail mission, which mostly entails the assumption of credit risk with regard to
specific customer segments, the trading portfolio is a secondary portfolio and has a low risk profile.
The trading portfolio comprises bonds, shares, harmonised UCI quotas and hedge funds, trading
derivatives.
The bond component of the portfolio consists mainly of floating rate securities and the fixed-rate portion
has a low duration. The bonds held are mainly issued by Italian banks with ratings higher than investment
grade and by the Italian Republic. Direct equity investments, residual in size, mainly involve shares listed
on the Italian Stock Exchange and with a high degree of liquidity. The financial instruments in the portfolio
are almost exclusively in Euro.
Investment and trading is carried out in compliance with the guidelines established by the Group
governance bodies and is implemented as part of an extensive system of assigned management powers
and according to detailed regulations envisaging defined management limits in terms of instruments,
amounts, investment markets, issue and issuer types, sectors and ratings.
Risk is measured using both analytical techniques (establishing the duration of the bond portfolio with
regard to interest rate risk exposure) and statistical techniques (estimate of the overall value at risk, net of
mitigation generated by portfolio diversification). The portfolio approach is based on the daily estimate of
parametric VaR over a 10-day period and a 99% confidence interval. The VaR measures the maximum
loss the trading portfolio may incur based on volatility and historic correlation of the individual risk factors
(interest rates, share prices and exchange rates). This model is not used to determine the minimum capital
requirement with respect to market risk.
The Group uses a single model to monitor the risk to which the trading portfolio is exposed. Therefore, the
tables below illustrate information on VaR, inclusive of all risk factors.
During the half year, the VaR recorded limited values both in absolute terms and with relation to the entity
of the portfolio. The main factors to which it is exposed are interest rate risk and price risk. Credit risk
ascribable to bond investments is limited given the type and the credit status of the issuers.
Table 1 - Supervisory trading portfolio - VaR performance
First half of 2010
Average
Minimum
Maximum
30/06/2010
1,133,974
781,233
1,792,079
1,473,813
81
Chart 2 - Supervisory trading portfolio - VaR performance
GCV GROUP VaR I Half of 2010
1,900,000
1,700,000
1,500,000
1,300,000
1,100,000
900,000
700,000
4-Jan
19-Jan
2-Feb
16-Feb
2-Mar
16-Mar
30-Mar
14-Apr
28-Apr
12-May
26-May
10-Jun
24-Jun
VaR
2.2 – Interest rate risk and price risk – Banking portfolio
The banking portfolio consists of all financial instruments payable and receivable not included in the trading
portfolio. It mainly comprises amounts due from and to banks and customers.
In compliance with the business model adopted, the customer segments served and the types of deposits
and use that the Group generally makes, within the scope of defining the strategic guidelines for the
assumption and exposure to risk, the Parent Company Board of Directors expressed a low inclination to
interest rate risk.
The extent of risk exposure is evaluated both in absolute terms (variation in economic value) and relative
terms (variation of the capital value with respect to the capital required for regulatory purposes). Interest
rate risk management aims to minimise the impact of unfavourable variations in the rates curve on the
value of the Bank, and on the cash flows generated by statement of financial position items. Limiting
exposure to interest rate risk is achieved primarily by index-linking asset and liability items to money market
benchmarks (usually the Euribor rate) and by balancing the duration of the asset or liability at low levels.
The objectives with respect to interest rate risk exposure are considered by the Group when carrying out
strategic and operational planning, both when identifying and developing new products.
The banking portfolio consists also of the shares which are held as part of more in-depth relations with
specific companies or represent the instrument supporting significant initiatives undertaken in the Bank's
reference territory. The price risk management methods for such financial instruments, therefore, tend
more towards the management approach for investments in associates and companies subject to joint
control, rather than the risk measurement techniques and instruments used for the trading portfolio.
At the end of the period, the changed duration calculated for all statement of financial position assets and
liabilities was contained; as a result the change in the value of the Group’s economic capital due to
instantaneous shocks to the rate curve was limited. The exposure measured in consideration of the
persistence of volumes and the stickiness of the rates for on demand items (behavioural profile) is lower
than 1.0% of the regulatory capital.
The exposure to exchange rate risk of the statement of financial position as a whole, which is negligible, is
largely due to transactions carried out with customers, interbank transactions and, to a lesser extent,
positions in financial instruments.
82
2.3 Derivative instruments
The following tables show the positive and negative fair value of the financial derivatives. Purchase and
sale operations unregulated with standardised regulations (purchase or sale of a financial asset according
to a contract whose terms require the delivery of the asset in a space of time generally established by the
regulations or conventions of the interested market).
Financial derivatives: positive gross fair value – breakdown by product
Positive fair value
30/06/2010
Portfolios/Types of derivatives
Over the
counter
A. Supervisory trading portfolios
31/12/2009
Central
counterparties
5,643
35
a) Options
108
b) Interest rate swap
381
c) Cross currency swap
d) Equity swap
e) Forward
Over the
counter
Central
counterparties
7,554
30
-
187
-
-
2,172
-
-
-
-
-
-
-
-
-
5,154
35
5,195
30
f) Futures
-
-
-
-
g) Others
-
-
-
-
658
-
749
-
-
-
-
-
658
-
749
-
-
-
-
-
d) Equity swaps
-
-
-
-
e) Forward
-
-
-
-
f) Futures
-
-
-
-
g) Others
-
-
-
-
B. Banking portfolio - hedging
a) Options
C. Banking portfolio – other derivatives
-
-
-
-
a) Options
-
-
-
-
-
-
-
-
-
-
-
-
d) Equity swaps
-
-
-
-
e) Forward
-
-
-
-
f) Futures
-
-
-
-
g) Others
Total
83
-
-
-
-
6,301
35
8,303
30
Financial derivatives: negative gross fair value – breakdown by product
Negative fair value
30/06/2010
Portfolios/Types of derivatives
Over the
counter
A. Supervisory trading portfolios
a) Options
d) Equity swaps
e) Forward
f) Futures
g) Others
31/12/2009
Central
counterparties
Over the
counter
Central
counterparties
8,087
13,221
6,489
32,895
71
13,220
135
32,877
2,999
-
1,683
-
-
-
-
-
-
-
-
-
5,017
1
4,671
18
-
-
-
-
-
-
-
-
-
-
-
-
a) Options
-
-
-
-
-
-
-
-
-
-
-
-
d) Equity swaps
-
-
-
-
e) Forward
-
-
-
-
f) Futures
-
-
-
-
g) Others
-
-
-
-
-
-
-
-
a) Options
-
-
-
-
-
-
-
-
-
-
-
-
d) Equity swaps
-
-
-
-
e) Forward
-
-
-
-
f) Futures
-
-
-
-
g) Others
-
-
-
-
8,087
13,221
6,489
32,895
B. Banking portfolio - hedging
C. Banking portfolio – other derivatives
Total
84
3. LIQUIDITY RISK
Liquidity risk is the risk that the bank will not be able to meet its obligations when they fall due. The failure
to meet its payment commitments may be due to the following:
-
inability to procure the funds (funding liquidity risk);
the presence of limits in liquidity of the assets (market liquidity risk).
Liquidity risk also includes the risk of meeting payment commitments at costs that are outside market costs,
i.e. incurring high funding costs or (and sometimes concurrently) incurring capital losses in capital in the
event of disinvesting assets.
Even though they are closely connected, liquidity has two different aspects:
-
structural liquidity that forms part of planning and assumes an overall business strategy;
short-term liquidity that deals with the daily management of treasury balances and the optimisation
of short-term cash flows.
Structural liquidity management involves maintaining a suitable ratio between overall liabilities and medium
and long-term assets to avoid straining the financing sources. Short-term liquidity management aims to
ensure that the expected and unexpected payment commitments are met by maintaining the balance
between the incoming and outgoing cash flows.
The assumption of liquidity risk deriving from typical banking activities (funding and lending) and operations
in the property finance sector must be kept within certain limits. Liquidity risk management aims at ensuring
Bank solvency, including in highly critical situations. Limiting liquidity risk exposure is mainly pursued
through a distinct set of organisational management decisions and safeguarding measures, the more
significant being:
-
-
constant attentiveness with respect to the technical situations of the Bank in terms of balanced
structuring of asset and liability expiry dates, with special regard to the short term expiries;
the diversification of funding sources, with respect to the technical form, counterparties and
markets. The Group can count on wide-ranging and highly stable retail funding both in the form of
deposits and in the form of debts represented by securities placed directly through the branch
network. Reliance on market funds (interbank funding and issues targeting institutional investors) is
therefore reduced and in line with a limited exposure to liquidity risk;
the holding of assets that can be readily converted into cash and used as security for financing
transactions, or directly transferable in situations of strain;
the preparation of a contingency funding plan.
The Risk Management department is in charge of measuring liquidity risk on a centralised basis for all
Group Banks. The approach adopted for risk management envisages integration of the cash flow matching
approach (which tends to make expected cash inflows coincide with expected cash outflows for each time
horizon) with the liquid assets approach (which requires the financial statements to include a set number of
financial instruments that can be readily converted into cash). Specifically, exposure to risk is analysed by
construction of a maturity ladder that allows evaluation of the balance of the expected cash flow balance by
comparison of assets and liabilities that mature within the same time slot. The maturity ladder means that
the balances and therefore the deficits between inflows and outflows expected for each time slot can be
highlighted, and the net balance of the financial requirements (or surplus) in the time slot considered can
be calculated by accumulating the deficits. In addition to the maturity ladder, through which the structural
liquidity profile is investigated, the liquidity risk is also evaluated in the short and very short term by
preparing a report.
The Group Contingency Funding Plan approved by the Board of Directors of Credito Valtellinese in 2008
and updated in 2009, plays a very important role in managing liquidity risk in ongoing or once-off crisis
situations. The Group contingency plan consists of the following phases:
-
identification of the signals that can predict potential crises;
definition of the events that will trigger implementation of the contemplated actions;
identification of the bodies, the company departments and the duties assigned to them;
identification of possible funding sources and therefore of the management leverage that can be
implemented in emergency situations;
indication of how the powers necessary to implement the management leverage identified can be
exercised;
definition of the procedures ruling internal and external communications of the crisis situations.
The continuation of conditions of uncertainty on world financial markets contributed towards maintaining
the attention to liquidity risk at a high level, at all Group levels. The simulation of a liquidity crisis situation is
85
inserted in such a context during the first half of 2010, with the aim of testing the efficiency of the
mechanisms provided by the Group's Contingency Funding Plan. The simulation provided useful
information for improving the process.
At the end of the half year, the securities available for refinancing amounted to EUR 1,385 million, EUR 599
million of which allocated to the Mercato Interbancario Collateralizzato – MIC (collateralised interbank
market) and broken down as follows: EUR 200 million used and EUR 399 million available. The remaining
part was not tied up.
During 2009, together with Banca Popolare di Cividale and Banca di Cividale, the Credito Valtellinese
Group completed a multi-originator securitisation on a portfolio of performing residential and commercial
mortgages for a total of EUR 1,366 million - of which EUR 1,124 million originating from Creval Group
banks - through the special purpose company Quadrivio Finance s.r.l. The securitisation, the first
performed by the Group, forms part of the prudential extension of eligible assets for refinancing through the
European Central Bank, and was divided into:
-
one tranche of senior securities (class A) of EUR 1,093 million, listed on the Luxembourg stock
exchange, with a Fitch rating of AAA;
6 tranches of junior securities (classes B1, B2, B3, B4 and B5) for a total of EUR 224 million,
unlisted and unrated.
Both security classes are fully subscribed by the individual originator banks participating in the
securitisation. The class A securities held by Group banks totalling EUR 906 million can be used as
collateral for European Central Bank funding transactions. The junior class securities were also subscribed
by the Group banks for a total of EUR 177 million. Purchase of the senior and junior securities by the
originator Banks involves the retaining of risks/benefits associated with the transferred portfolio.
4. OPERATIONAL RISK
Operational risk management is part of an integrated management strategy that aims to contain overall risk
also by preventing propagation and transformation of the risks. The wide variety of operational risks is not
normally associated with banking or business activities. These risks may originate either internally or
externally and their scope may extend beyond the corporate structure.
Operational risk management is based on the following guidelines:
-
to increase overall operating efficiency;
to avoid the occurrence or reduce the likelihood of events that may potentially generate operating
losses through appropriate regulatory, organisational, procedural and training measures;
to mitigate the expected impact of said events;
through insurance arrangements, to transfer risk that the Bank does not intend to maintain;
to protect the reputation and brand of the Bank and of the Group.
Operational risk measurement/evaluation is the responsibility of the Risk Management department, which
performs this task on a centralised basis on behalf of all Group Companies. The approach followed is
influenced by the advanced method approaches (AMA) provided by supervisory regulations. An advanced
operational risk management system is made up of a structured set of processes, functions and resources
to identify, assess and control operational risk, concentrating particularly on its effective prevention and
reduction.
Risk containment is achieved through the use of regulatory, organisational and procedural measures and
training. Any critical areas, identified through joint analysis of various sources of data, are examined in
further depth by department managers, who together with the Risk Management Department, establish the
appropriate corrective action. Certain types of operational risk are mitigated through the employment of
insurance contracts. In addition, the Group has a business continuity plan in place, which sets out the
principles, establishes the objectives, and describes the procedures to manage all initiatives to reduce any
damage resulting from incidents or catastrophes to a level considered acceptable.
86
Information on consolidated equity
Regulatory capital
Regulatory capital is determined on the basis of new provisions issued by the Bank of Italy following the
implementation of new prudential regulations for banks and banking groups by the New Basel Accord on
Capital (Basel 2), introduced in circular no. 263 of December 2006 and through the 12th update to Circular
155 of February 2008.
30/06/2010
A. Tier 1 capital before the application of prudential filters
31/12/2009
1,349,386
1,366,402
B.1 Positive IAS/IFRS prudential filters (+)
-
-
B.2 Negative IAS/IFRS prudential filters (-)
30,529
866
1,318,857
1,365,536
B. Tier 1 capital prudential filters:
C. Tier 1 capital before
any deductions allowed (A+B)
D. Elements to be deducted from Tier 1 capital
E. Total Tier 1 capital (C-D)
F. Tier 2 capital before the application of prudential filters
88,333
87,860
1,230,524
1,277,676
721,379
604,322
G. Tier 2 capital - prudential filters:
G.1 Positive IAS/IFRS prudential filters (+)
-
-
G.2 Negative IAS/IFRS prudential filters (-)
72
613
721,307
603,709
88,333
87,860
632,974
515,849
3,952
5,624
1,859,546
1,787,901
-
-
1,859,546
1,787,901
H. Tier 2 capital before
any deductions allowed (F+G)
I. Elements to be deducted from Tier 2 capital
L. Total Tier 2 capital (H-I)
M. Items to deduct from total Tier 1 and Tier 2 capital
N. Regulatory capital (E+L-M)
O. Tier 3 capital
P. Regulatory capital including TIER 3 (N+O)
Tier I capital totals EUR 1,230.5 million, a decrease of approximately EUR 47.1 million on the figure of 31
December 2009. This change is mainly attributable to:
- the increase in the investment in the share capital of Banca dell’Artigianato e dell’Industria (B.A.I.);
- the acquisition of control, on 19 May 2010, of Banca della Ciociaria.
Tier 2 capital records an increase of around EUR 117.1 million due mainly to the issue, on 22 March 2010,
of the 2010/2017 Credito Valtellinese subordinated loan.
The regulatory capital as at 30 June 2010 amounts to EUR 1,859.5 million against EUR 1,787.9 million at
the end of 2009 (+4%).
87
Capital adequacy
Capital requirements and prudential coefficients as at 30 June 2010 were determined on the basis of the
provisions issued by the Bank of Italy following the implementation of prudential regulations for banks and
banking groups introduced by the New Basel Accord on Capital (Basel 2) and regulated by circular no. 263
of December 2006 and through the 12th update to Circular 155 of February 2008.
Following the measure of the Supervisory Authority issued last 18 May, the Group opted the full
neutralisation of capital losses and capital gains accrued during the current year on the securities issued by
Central governments of Countries belonging to the EU included in the “financial assets available for sale
AFS” portfolio.
30/06/2010
Categories/Amounts
31/12/2009
30/06/2010
31/12/2009
Weighted amounts/
requirements
Non-weighted amounts
A. RISK ASSETS
A.1 Credit risk and counterparty risk
28,783,506
27,040,413
17,761,342
17,593,638
1. Standardised method
28,783,506
27,040,413
17,761,342
17,593,638
2. Internal rating method
-
-
-
-
2.1 Base
-
-
-
-
2.2 Advanced
-
-
-
-
-
-
-
-
1,420,908
1,407,491
3. Securitisations
B. CAPITAL REQUIREMENTS FOR SUPERVISORY
PURPOSES
B.1 Credit risk and counterparty risk
B.2 Market risk
X
X
16,680
15,656
1. Standard method
X
X
16,680
15,656
2. Internal models
X
X
-
-
3. Concentration risk
X
X
-
-
B.3 Operational risk
X
X
120,720
119,715
1. Base method
X
X
120,720
119,715
2. Standardised method
X
X
-
-
3. Advanced method
X
X
-
-
B.4 Other prudential requirements
X
X
-
-
B.5 Other calculation elements
X
X
-
-
B.6 Total prudential requirements
X
X
1,558,308
1,542,862
C.1 Weighted risk assets
X
X
19,478,850
19,285,775
C.2 Tier 1 capital/risk-weighted assets
(Tier 1 capital ratio)
X
X
6.32%
6.62%
C.3 Capital for supervisory purposes including TIER 3 /
Risk-weighted assets
(Total capital ratio)
X
X
9.55%
9.27%
C. RISK ASSETS AND CAPITAL RATIOS
88
Business combinations
Acquisition of control of Banca della Ciociaria S.p.A.
On 19 May 2010, after exercising the existing call option by Credito Valtellinese, there was the completion
of the purchase of 902,573 shares of Banca della Ciociaria S.p.A., corresponding to approx. 15% of the
share capital, for a payment of approx. EUR 16,986 thousand.
Due to the said transaction, the investment of Credito Valtellinese in Banca della Ciociaria increased from
37.96% to 53%, a share that allows its insertion in the Creval group at the end of a wide strategic
collaboration project between the two banks and the groups to which they refer, started in 2005 and mainly
aimed at strengthening the territorial monitoring of the Lazio bank by developing business and operational
synergies.
Banca della Ciociaria is based in Frosinone and currently has a branch network of fifteen branches in the
provinces of Frosinone, Latina and Roma. It has 90 collaborators.
The reference principle for the accounting procedure of the acquisition of control of Banca della Ciociaria in
the consolidated financial statements of Credito Valtellinese is IFRS 3 – Business combinations ratified with
Regulation no. 495/2009. This principle defines a business combination as an operation or another event in
which an acquirer acquires the control of one or more businesses.
The accounting procedure must occur by applying the acquisition method and by applying the specific
provisions established for step business combinations. In particular, according to paragraph 42, the
purchase must recalculate the investment previously held in the acquiree at its respective fair value on the
acquisition date and report any resulting profit or loss in the income statement. Therefore, the fair value of
the previously owned 2,277,427 shares was recalculated for a book value in the consolidated financial
statements that was equal to EUR 26,564 on 19 May 2010. The determined fair value (equal to EUR
28,946 thousand) implied the recognition of a positive difference posted to the item “240. Profit (losses) on
investments in associates and companies subject to joint control” amounting to EUR 2,382 thousand.
As at the date of acquisition, the company had customer loans of EUR 62,126 thousand, bank loans of
EUR 138,947 thousand, customer deposits of EUR 322,120 thousand and bank deposits of EUR 4,814
thousand.
The fair value of the assets, liabilities and potential liabilities of the acquiree may be determined
provisionally by the end of the year in which the business combination is achieved and must be finalised
within twelve months of the acquisition date. Given the complexity linked with the process defining the fair
value of the assets and liabilities acquired, as at 30 June 2010 the measurement process has not been
completed. Provisionally, the difference between the transferred consideration, the amount of the minority
shares in the acquiree and the fair value of the investments previously owned and the net value of the
amounts of the identifiable assets acquired or liabilities assumed was recognised in the item Goodwill
(amounting to EUR 23,456 thousand). Minority shares were determined in proportion to the minority
shareholding in identifiable net assets of the acquiree.
In accordance with the provisions of paragraph B64 of IFRS 3, it is specified that, from the consolidation
date, the consolidated interim report includes a loss, referring to Banca della Ciociaria, which amounts to
EUR 79 thousand, net of the minority portion. Before the acquisition of control, the company was measured
at equity. This implied the entry of negative values amounting to EUR 825 thousand. If the exclusive
acquisition of control had been carried out at the beginning of the financial year, Parent Company’s net
income would have been less amounting to EUR 327 thousand.
The signed agreements contemplate the assignment to the minority shareholders of a put option to Credito
Valtellinese on approx. 2 million shares. In accounts, commitments for the repurchase of own equity
instruments, including commitments to purchase equity instruments of companies consolidated in full, give
rise to a financial liability for the current amount payable. Therefore, the amount payable concerning the
commitment underlying the granted option amounting to EUR 30.4 million was entered as a balancing entry
to the shareholders’ equity and minority interests.
89
Acquisition of control of Banca Cattolica S.p.A.
A Framework Agreement was signed on 14 July 2009 between Credito Valtellinese and Banca Cooperativa
Cattolica (subsequently transformed into Banca Cattolica S.p.A) – with offices in Montefiascone (Viterbo) –
with the goal of including the latter in the Credito Valtellinese banking group.
The Agreement signed envisaged the launch of an equity swap by Credito Valtellinese - through a swap of
Creval shares for 30% of the total bid price - targeting Banca Cooperativa Cattolica shareholders and
subject to reaching a subscription rate of at least 50.01% on a maximum 80% of the share capital of the
Bank, corresponding to a maximum amount set of EUR 46 million.
The equity swap was completed through the acquisition of the maximum number of shares set for the
payment, occurred on 23 November 2009, with the simultaneous exchange of shares, for an amount
consisting of:
- EUR 33,557 thousand in cash; and
- 2,031,604 Creval ordinary shares from stockpiling purposely created by the Bidder according to the
Permitted Practice no. 2 introduced by Consob with Resolution no. 16839 of 19 March 2009.
The investment was recognised at EUR 45,696 thousand, calculated as the sum of the consideration in
cash and the fair value of the Credito Valtellinese shares on the exchange date (market price of the share).
The above described transaction was accounted for in accordance with the provisions of IFRS 3 – Business
combinations in force for the transactions carried out in 2009.
The date of acquisition of control is 23 November 2009, while the cost of the acquisition, including the
transaction costs, for an amount of EUR 460 thousand, amounts to EUR 46,156 thousand. The price
differential to allocate in accordance with IFRS 3 equals EUR 23,018 thousand, calculated in consideration
of the portion of shareholders’ equity acquired.
IFRS 3 permits final allocation of the cost of the business combination within twelve months of the
acquisition date. Due to the complexity of allocating the acquisition cost of the operation carried out at the
end of November 2009, the Group avails itself of this option.
As at the date of acquisition, the company had customer loans of EUR 221,282 thousand, bank loans of
EUR 37,965 thousand, customer deposits of EUR 252,412 thousand, bank deposits of EUR 3,036
thousand and indirect deposits of EUR 58,172 thousand.
In the consolidated interim report, the temporary allocation of costs of the business combination was
performed by including certain estimates resulting in the recognition of new intangible assets not
recognised to the company financial statements associated with customer relations management, for a
total of EUR 2,419 thousand. Based on the provisions of IAS 12 - Income taxes, deferred tax assets and
liabilities were recognised for a total of EUR 782 thousand.
Considering the share attributable to third-party shareholders, the total recognised to Goodwill was
therefore temporarily calculated as EUR 21,703 thousand.
The intangible assets temporarily identified as acquired are deemed to have definite lives since only the
positions as at the date of acquisition are considered and not their capacity to generate new business. The
intangible assets are therefore amortised at a constant rate over the period that most of the expected
economic benefits will accrue estimated as 14 years. The consolidated interim income statement therefore
includes higher amortisation intangible assets amounting to EUR 86 thousand.
90
Transactions with related parties
1. Information on remuneration of managers with key responsibilities
The table below summarises the compensation paid to directors and executives with strategic
responsibility:
1st half of
2010
FEES
a) short-term benefits in favour of employees (*)
3,460
b) post-employment benefits
127
c) other long-term benefits
-
d) employee termination indemnities
-
e) share-based payments
-
Total
3,587
(*) The amount indicated includes payments to directors of EUR 1,705 thousand.
2. Information on transactions with related parties
For the purpose of providing this information, transactions with related parties identified as such within
each company included in the consolidation area have been aggregated.
In accordance with IAS 24, related parties are:
-
subsidiaries, companies in which the Parent company directly or indirectly exercises control, as defined
by IAS 27;
associated companies, companies in which the Parent company directly or indirectly exercises
significant influence, as defined by IAS 28;
companies subject to joint control, companies in which the Parent company directly or indirectly
exercises joint control, as defined by IAS 31;
directors with strategic responsibilities and supervisory authorities, namely Directors, Statutory
Auditors, the General Manager and the Vice General Managers of the entity and of its parent company;
other related parties, which include:
a) immediate family members – partners, children, the partner’s children and dependents of the
individual or partner - of Directors, Auditors, the General Manager and the Vice General Managers
of the entity and its parent company;
b) subsidiaries, subject to joint control or subject to significant influence by Directors, Auditors, the
General Manager and the Vice General Managers of the entity and its parent company, as well as
their immediate family members, as defined above;
c) pension funds established by companies of the Group.
Transactions and relations with the other Credito Valtellinese Group companies are established within the
sphere of a consolidated “company network” organisational model, on the basis of which each member is
focused exclusively on the creation of its core business, within a business context which enables the
Groups overall resources to be efficiently and effectively managed.
All transactions with Group companies mainly concern correspondent transactions for services rendered,
deposit and financing services within the sphere of ordinary inter-bank operations. Other contractual
transactions with specialised finance companies and special purpose companies regard support and
consulting services and specialised services in support of banking activities.
The economic effects of inter–bank transactions are regulated at arm's length, while other transactions are
regulated on the basis of the specific contractual terms which - maintaining the principal objective of
optimising the synergies and economies of scale and purpose at the Group level - refer to parameters that
are objective and constant over time, marked by essential transparency and equity. The quantification of
fees for services is defined and formalised according to tested parameters that take into account actual
utilisation by each user company.
91
Transactions with related parties other than companies in the Credito Valtellinese Group are part of normal
banking activities and are generally regulated at arm's length for specific transactions, or aligned to the
most favourable measure that may have been agreed for employees.
Bank transactions with groups headed by Directors of the company or by the parent company Credito
Valtellinese and other companies of the Credito Valtellinese Group are resolved in compliance with the
provisions of art. 136 of the Consolidated Banking Law and settled at arm's length as established for each
transaction.
The impact of transactions with related parties as defined above on the equity and financial situation and
on the income statement for the period, together with the percentage weight of these transactions on the
corresponding statement of financial position items, is illustrated in the tables below. The impact of
transactions completed with Group companies has not been included as their line-by-line consolidation
requires the netting of intragroup balances and transactions.
92
Segment Reporting
In compliance with IFRS 8, segment reporting is prepared on the basis of elements used by management
to make operational and strategic decisions.
The following operating segments were identified for the Credito Valtellinese Group:
-
The Market segment: generates its revenues from the production and sale of lending products and
services, investment and transfer services for the Group's customers (traditionally households,
trades, professionals and SMEs);
-
The Specialised Finance segment: generates its revenues from asset management, the
distribution of bancassurance products, the administration of third party assets, disbursement and
management of medium and long-term financing, the management and disposal of problem loans
and services for public entities;
-
The Production segment: supports the overall strategic plan of the Group, monitors ICT
management and development and manages the Group's real estate assets.
The summary statements are provided below.
Operating Segments
Amounts in thousands of EUR
Market
31/12/2009
30/06/2010
STATEMENT OF FINANCIAL
POSITION DATA
Loans to customers
Due from banks
Treasury securities and investments
in associates and companies subject
to joint control
Due to banks
Direct deposits
- Due to customers
- Securities issued
Indirect deposits
ORGANISATIONAL DATA
Personnel
20,345,653
396,885
187,041
19,617,844
168,115
51,794
3.7
136.1
261.1
889,120
904,569
537,931
752,650
1,269,792
584,895
18.1
- 28.8
- 8.0
269,089
20,731,134
307,000
19,797,124
673,478
415,265
1,157,432
419,410
11,809,676
11,733,958
-12.3
4.7
3.7
7.2
0.6
877,877
902,090
- 41.8
- 1.0
- 4.0
2.3
- 2.7
3,676
3,581
2.7
238
1.3
14,397,014
6,334,120
Due from banks
Treasury securities and investments
in associates and companies subject
Due to banks
Direct deposits
- Due to customers
- Securities issued
Indirect deposits
ORGANISATIONAL DATA
Personnel
13,886,673
5,910,451
Production
31/12/2009
30/06/2010
STATEMENT OF FINANCIAL
POSITION DATA
Loans to customers
Specialised Finance
30/06/2010
31/12/2009
% change
% change
% change
241
3,151
-
40.0
-
-
6,230
-
- 100.0
-
584
593
-
1.5
219,307
200,103
Other Assets
31/12/2009
30/06/2010
4,412
-
93
210,580
204,685
% change
317,732
- 9.6
-
-
-
3
3
-
287,127
Operating Segments
Market
1st half
2009
1st half
2010
Interest margin
Income from investments in associates and companies subject to
joint control measured at equity
Profit (losses) on trading, hedging activities and
disposals/repurchases
Other operating income/expenses
Specialised Finance
1st half 1st half
%
2010
2009 change
%
change
228,263
121,799
-
252,478
91,139
-
-9.6
33.6
-
10,040
17,262
-
6,267
10,982
-
60.2
57.2
-
20,488
3,400
502.5
-2,569
11,349
-122.6
2,219
4,095
-45.8
155
201
-22.6
Operating income
372,769
351,112
6.2
24,888
28,799
-13.6
Personnel expenses
-142,858
-134,063
6.6
-8,692
-8,517
2.1
-57,129
-15,784
-58,165
-15,104
-1.8
4.5
-4,961
-193
-5,669
-260
-12.5
-25.7
-215,772
156,997
-207,332
143,781
4.1
9.2
-13,846
11,042
-14,446
14,353
-4.2
-23.1
-65,993
-59,607
10.7
1,863
2,003
-7.0
-1,477
60
-918
16
60.9
261.0
7
-187
2
-100.0
357.5
89,586
83,271
7.6
12,912
16,171
-20.2
Other administrative expenses
Net adjustments to/recoveries on property, plant and equipment and
intangible assets
Operating expenses
Net losses/recoveries on impairment of loans and other financial
assets
Goodwill adjustments
Profit (losses) on disposal of investments in associates and companies
subject to joint control
Production
1st half
2009
1st half
2010
Interest margin
Income from investments in associates and companies subject to
joint control measured at equity
Profit (losses) on trading, hedging activities and
disposals/repurchases
Operating income
Personnel expenses
intangible assets
Operating expenses
Net losses/recoveries on impairment of loans and other financial
assets
Goodwill adjustments
94
Other Assets
1st half 1st half
%
2010
2009 change
%
change
-213
-
-421
-
-49.5
-
-1,034
2,108
6,806
-2,431
1,688
7,349
- 57.5
24.9
- 7.4
-
-
-
-
4,097
-100.0
5,980
5,318
12.4
-
-
-
5,766
4,897
17.8
7,879
10,703
- 26.4
-14,426
-28,224
-13,714
-24,376
5.2
15.8
-112
-137
-105
-128
7.1
7.1
-3,880
-2,514
54.4
-
-
-
-46,531
-40,765
-40,604
-35,707
14.6
14.2
-249
7,630
-233
10,470
7.1
-27.1
-
-
-
-2,975
-5
n/a
-4
2
- 261.1
-
-
-
-40,769
-35,705
14.2
4,656
10,465
- 55.5
During the first half of 2010 the finance segment achieved net interest with the market segment of EUR -11
million (EUR -23 million in the first half of 2009), and EUR -250 thousand the productivity segment (EUR 421 thousand in the first half of 2009). All other costs and revenues were incurred and achieved,
respectively, with parties outside the Group.
Market
The market segment is the core business of the Group, as it includes all the (lending, investment and
transfer) products and services offered to Group customers, traditionally represented by households, smallscale industry, professionals and small and medium-sized enterprises.
During the first half of 2010, the market segment generated net interest and other banking income of EUR
372.8 million. The segment accounts for 90.6% of the net interest and other banking income of the Group.
Operating expenses amounted to EUR 215.8 million and reflect the strengthening of the branch network.
Income before tax from continuing operations amounted to EUR 89.6 million.
Market
1st half 2010
Interest margin
Profit (losses) on trading, hedging activities and disposals/repurchases
Operating income
Personnel expenses
intangible assets
Operating expenses
1st half 2009
% change
228,263
121,799
20,488
2,219
372,769
-142,858
-57,129
252,478
91,139
3,400
4,095
351,112
-134,063
-58,165
-9.6
33.6
502.5
- 45.8
6.2
6.6
-1.8
-15,784
-15,104
4.5
-215,772
156,997
-65,993
-1,477
-207,332
143,781
-59,607
-918
4.1
9.2
10.7
60.9
60
16
261.0
89,586
83,271
7.6
The direct deposits of the market segment amounted to EUR 20,731.1 million. Indirect deposits reached
EUR 11,809.7 million. Loans to customers also increased (+3.7%), to reach EUR 20,345.7 million. At the
end of the half year, the market segment had 536 branches, compared to 515 at the end of 2009. There
were 3,676 human resources employed in the segment, equal to 81.6% of the total employees of the
Group.
Market
30/06/2010
Loans to customers
Due from banks
Treasury securities and investments in associates and companies
Due to banks
Direct deposits
- Due to customers
- Securities issued
Indirect deposits
ORGANISATIONAL DATA
Personnel
95
31/12/2009
% change
20,345,653
396,885
19,617,844
168,115
3.7
136.1
187,041
51,794
261.1
269,089
20,731,134
307,000
19,797,124
11,809,676
11,733,958
-12.3
4.7
3.7
7.2
0.6
3,676
3,581
2.7
14,397,014
6,334,120
13,886,673
5,910,451
Specialised Finance
The specialised finance segment generates its revenues from asset management, the distribution of
bancassurance products, the administration of third party assets, disbursement and management of
medium and long-term financing, the management and disposal of problem loans and services for public
entities;
During the first half of the year, the finance segment generated operating income of EUR 24.9 million,
accounting for 6.1% of Group operating income, and recorded income before tax from continuing
operations of EUR 12.9 million.
Specialised Finance
1st half 2010
1st half 2009
% change
Interest margin
Profit (losses) on trading, hedging activities and disposals/repurchases
Operating income
Personnel expenses
intangible assets
Operating expenses
10,040
17,262
-2,569
155
24,888
-8,692
-4,961
6,267
10,982
11,349
201
28,799
-8,517
-5,669
60.2
57.2
-122.6
-22.6
-13.6
2.1
- 12.5
-193
-260
- 25.7
-13,846
11,042
1,863
-
-14,446
14,353
2,003
-187
- 4.2
- 23.1
- 7.0
- 100.0
7
2
357.5
12,912
16,171
- 20.2
The direct deposits of the finance segment amounted to EUR 415.3 million. Indirect deposits reached EUR
877.9 million, showing a slight decrease compared to 31 December 2009. Loans to customers increased
(+18.1%), to reach EUR 889.1 million. As at 30 June, the resources for this segment totalled 241, i.e. 5.4%
of the Group's total workforce.
30/06/2010
Loans to customers
Due from banks
Treasury securities and investments in associates and companies
Due to banks
Direct deposits
- Due to customers
- Securities issued
Indirect deposits
ORGANISATIONAL DATA
Personnel
% change
889,120
904,569
752,650
1,269,792
18.1
- 28.8
537,931
584,895
-8.0
673,478
415,265
1,157,432
419,410
877,877
902,090
- 41.8
-1.0
-4.0
2.3
-2.7
238
1.3
210,580
204,685
241
96
Specialised Finance
31/12/2009
219,307
200,103
Production
The productivity segment comprises the central functions performed for the benefit of the whole Group and,
to a lesser extent, of third parties. The segment includes only operations of the Group’s special purpose
companies (Deltas, Bankadati and Stelline).
Operating expenses for the productivity segment amounted to EUR -46.5 million. The result of the segment
was EUR - 40.8 million.
The human resources employed in the productivity segment were 584, equal to 13.0% of the Group’s
workforce.
1st half 2010
Interest margin
Operating income
Personnel expenses
intangible assets
Operating expenses
97
Production
1st half 2009
% change
-213
5,980
5,766
-14,426
-28,224
-421
5,318
4,897
-13,714
-24,376
- 49.5
12.4
17.8
5.2
15.8
-3,880
-2,514
54.4
-46,531
-40,765
-
-40,604
-35,707
-
14.6
14.2
-
-4
2
- 261.1
-40,769
-35,705
14.2
Disclosure pursuant to art. 81-ter of Consob Regulation no.
11971/1999
98
Condensed consolidated interim report disclosure pursuant to Art. 81 –ter of Consob Regulation no. 11971
of 14 May 1999, as amended
1.
The undersigned, Miro Fiordi, as Managing Director, and Enzo Rocca, as the Manager in
charge of preparing corporate accounting documents of Credito Valtellinese S.c., also
considering the provisions of article 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of
24 February 1998, hereby certify:
• the adequacy, in relation to the business characteristics and
• the effective application
of administrative and accounting procedures for the formation of the condensed interim
financial statements, in the period 1 January – 30 June 2010.
2.
The assessment of the adequacy and effective application of the administrative and
accounting procedures for the formation of the condensed interim report as at 30 June 2010 is
based on a model conceived by Credito Valtellinese S.c., in line with the “Internal Control Integrated Framework (CoSO)” and with the ”Control Objectives for Information and Related
Technologies (Cobit)”, which represent reference standards for the internal control system and
for financial reporting in particular, generally accepted at international level.
3.
We also certify that:
3.1 the condensed interim financial statements:
a. were prepared in compliance with applicable international accounting standards
recognised in the European Community pursuant to (EC) Regulation no. 1606/2002 of
the European Parliament and Council, dated 19 July 2002;
b. correspond to accounting records;
c. provide a truthful and accurate view of the equity, economic and financial position of the
issuer and the group of companies included in the scope of consolidation.
3.2 The interim report on operations contains a reliable analysis of significant events that
occurred in the first six months of the year and their impact on the condensed interim financial
statements, together with a description of the main risks and uncertainties for the remaining six
months of the year. The interim report on operations also contains a reliable analysis of
information on transactions with related parties.
Sondrio, 26 August 2010
The Managing Director
The Manager in charge of preparing
the corporate accounting documents
Miro Fiordi
Enzo Rocca
99
Auditors’ Report
100
101