Banco Popolare Società Cooperativa Registered and Head offices: Piazza Nogara, 2 - 37121 Verona Share capital as at July 1st, 2007: euro 2,305,728,126 fully paid Tax code, VAT no. and enrollment no. in the Verona Enterprise Registry: 03700430238 Member of the Interbank Fund for Deposit Protection and of the National Guarantee Fund Parent company of the Banking Group Banco Popolare Member of the Banking Groups’ Registry TABLE OF CONTENTS

Introductory note ...... 5

Gruppo Banco Popolare Corporate boards, General Management and Auditing Company ...... 9 Group structure ...... 10 Pro-forma data ...... 13 Integration plan ...... 23 Noteworthy events after the balance sheet date ...... 25 Operational outlook ...... 29

Gruppo Banco Popolare di Verona e Novara Corporate boards, Management and Auditing Company as at June 30th, 2007 ...... 33 Group structure ...... 34 Group financial highlights ...... 36 Group operating performance ...... 38 Financial statements ...... 41 Explanatory notes ...... 53 Accounting standards ...... 57 Operating results and performance ...... 72 Segment reporting ...... 90 Banco Popolare di Verona e Novara stock...... 96 Stock option plans ...... 97 Business combinations ...... 100 Transactions with related parties ...... 102 Noteworthy events after the balance sheet date ...... 106 Operational outlook ...... 106 Independent auditors’ report ...... 109 Attachments ...... 113

Gruppo Banca Popolare Italiana Corporate boards, Top Management and Auditing Company as at June 30th, 2007...... 125 Group structure ...... 126 Group financial highlights ...... 129 Report on Group operations ...... 130 Operating performance ...... 141 Income statement – quarterly evolution ...... 159 Operating performance of the main companies ...... 160 Noteworthy events after June 30th, 2007 ...... 184 Operational outlook ...... 184 Consolidated financial statements ...... 185 Notes to the consolidated accounts ...... 192 Notes to the consolidated balance sheet ...... 209 Notes to the consolidated income statement ...... 217 Segment reporting ...... 223 Transactions with related parties ...... 226 Independent auditors’ report ...... 229 Attachments ...... 233

3 4 INTRODUCTORY NOTE

Merger between Banco Popolare di Verona e Novara and Banca Popolare Italiana

On July 1st, 2007, the Merger between Banco Popolare di Verona e Novara (BPVN) and Banca Popolare Italiana (BPI) became fully effective, leading to the formation of a new company called “Banco Popolare” and to the creation of the largest cooperative Banking Group.

Banco Popolare: x ranks third among Italian distribution networks, with about 2,200 branches and a 10% share of the market in Northern Italy; x its global customer basis counts more than 3 million customers, mainly households and small to medium- sized companies in Northern Italy; x it benefits from 89 billion direct customer funds and 80 billion net loans.

Since the merger’s legal and accounting effectiveness started on July 1st, 2007, the report on operations for the first six months of the year has been prepared separately, one for each of the two Groups being merged. The reports are presented in this document under the sections devoted to Banco Popolare di Verona e Novara and to Banca Popolare Italiana, respectively. This section shall report the pro-forma consolidated data of Gruppo Banco Popolare, the work-in-progress of the integration plan, as well as noteworthy events following the balance sheet date and the operational outlook.

5

GRUPPO BANCO POPOLARE

Desideria Guicciardini - Banco Popolare, water-color 8 CORPORATE BOARDS, GENERAL MANAGEMENT AND AUDITING COMPANY AS AT JUNE 30TH, 2007

Supervisory Board Chairman Carlo Fratta Pasini Deputy Vice-Chairman Dino Piero Giarda Vice Chairman Maurizio Comoli Directors Marco Boroli Giuliano Buffelli Guido Duccio Castellotti Pietro Manzonetto Maurizio Marino Mario Minoja Claudio Rangoni Machiavelli Management Board Chairman Divo Gronchi Chief Executive Officer with Vice-Chairman functions Fabio Innocenzi Directors Franco Baronio (*) Alfredo Cariello (*) Vittorio Coda Luigi Corsi Domenico De Angelis (*) Maurizio Di Maio (*) Enrico Fagioli Marzocchi (*) Maurizio Faroni (*) Massimo Minolfi (*) Roberto Romanin Jacur (*) Directors with executive offices Board of Advisors Standing Marco Cicogna Luciano Codini Giuseppe Bussi Alternate Aldo Bulgarelli Vittorio Cocito Corporate General Manager Massimo Minolfi Retail General Manager Franco Baronio Auditing Company Reconta Ernst & Young S.p.A.

9 Gruppo Banco Popolare

Banca Aletti & C. Banca Popolare di Verona - S. Geminiano Banca Valori e S. Prospero Aletti Gestielle SGR Banca Popolare di Lodi Bipitalia Gestioni SGR Banca Popolare di Novara Aletti Gestielle Alternative SGR Credito Bergamasco Bipitalia Alternative SGR Cassa di Risparmio di Lucca Pisa Livorno Banca Aletti & C. (Suisse) Banca Caripe Bipielle Bank (Suisse) Banca Popolare di Crema Efi banca / Aletti Merchant Banca Popolare di Cremona Aletti Private Equity SGR Banca Popolare di Mantova Efi gestioni SGR Banca Popolare di Verona e Novara (Luxembourg) Italfortune International Advisors Banco Popolare Croatia B.P.I. International (UK) Banco Popolare Hungary Aletti Fiduciaria Banco Popolare Ceská Republika Nazionale Fiduciaria Critefi SIM

Bipielle International Holding Bipitalia Ducato Bipielle Società di Gestione del Credito Easynetwork Società Gestione Servizi Soluzioni Finanziarie Bipielle Information Communication Technology Holding di Partecipazioni Finanziarie Popolare di Verona e Novara Bipielle Real Estate Immobiliare BPV Tecmarket Servizi Banche del Territorio

Investment & Private Banking, Asset Management

Consumer Credit

Others 12 Gruppo Banco Popolare

PRO-FORMA DATA

Gruppo Gruppo Merger BPVN-BPI Financial highlights Eliminations BPVN BPI adjustments pro-forma

Income statement (million euro) Net interest, dividend and similar income 575.7 421.1 - 2.6 999.4 Net commission income 446.2 187.9 - - 634.1 Total income 1,225.6 811.0 - 0.9 2,037.5 Operating costs 660.6 568.4 - - 1,229.0 Profit from operations 564.9 242.5 - - 807.4 Income before tax from continuing operations 504.0 67.8 - 0.9 572.7 Net income for the period 252.5 17.8 - 0.9 271.2

Balance sheet (million euro) Total assets 74,706.0 45,610.8 - 953.0 3,757.3 123,121.1 Loans to customers (gross) 50,261.0 32,166.2 - 47.6 - 82,379.6 Direct customer funds 56,092.1 32,812.6 - 0.3 - 88,904.4 Financial assets and hedging derivatives 11,652.6 3,804.6 - 0.8 - 29.8 15,426.6 Shareholders’ equity 4,559.4 3,555.0 - 2,358.1 10,472.5

Operational structure Number of employees 13,158 8,632 - - 21,790 Bank branches 1,270 969 - - 2,239

Presentation of pro-forma data

In order to give an idea of the financial position and operating performance as at June 30th, 2007 of Gruppo Banco Popolare, this section shall illustrate the pro-forma consolidated data as at June 30th, 2007 that represent the effects from the Merger of Banco Popolare di Verona e Novara S.c.a r.l. (“BPVN”) and Banca Popolare Italiana Soc. Coop. (“BPI”), including the special dividend distribution by Banco Popolare.

Pro-forma consolidated data make reference to the financial statements under the Bank of Italy’s Circular n. 262 of December 22nd, 2005, prepared in compliance with the International Financial Reporting Standards (“IFRS”) adopted by the European Union. In keeping with Consob’s communication n. DEM/1052803 of July 5th, 2001, pro-forma data have been obtained by making the appropriate adjustments to actual data so as to retroactively reflect the effects from the above described transactions. In particular, said effects have been retroactively reflected in the pro-forma consolidated balance sheet as if the transaction had been performed at the balance sheet date (June 30th, 2007) and in the income statement as if the transaction had taken place at the beginning of the period covered by the income statement (January 1st, 2007). Pro-forma adjustments are shown separately in the tables below and are described analytically in this chapter. Aggregates, that were obtained by adding up the consolidated data shown in the individual half-year reports of the two merging entities, have been adjusted to represent the effects from the merger and from the special dividend distribution. These same data have been adjusted also to eliminate the main financial and operating relations past and/or outstanding between the companies of Gruppo BPVN and the companies of Gruppo BPI and to take account of the changes in valuation criteria as a result of the aggregation of the shareholdings held by the two Groups.

13 Gruppo Banco Popolare

From an accounting viewpoint, the Merger entailed the bringing together of two separate corporate entities to form a new single reporting entity, and therefore it represents a “business combination” under the international accounting standards, to be accounted for using the purchase method under IFRS 3. To begin with, this method requires that the virtual acquirer is identified. To this regard, and only for accounting purposes, based on the elements and events indicated by IFRS 3 (a greater number of new common shares to be issued by Banco Popolare are going to be assigned to BPVN shareholders as compared with those to be assigned to BPI shareholders, the fair value spread between the two merging entities is in favor of Gruppo BPVN, the spread between the total assets and revenues of the two merging entities is in favor of Gruppo BPVN), the identified virtual acquirer was BPVN, while the virtual acquiree was BPI. The method of accounting provided for by IFRS 3 prescribes that, at the Merger effective date, the cost of the business combination must be measured and then allocated by recognizing at fair value the assets, liabilities and contingent liabilities of the acquiree identifiable at the Merger effective date. The cost of the business combination under examination was determined by measuring the new shares of Banco Popolare issued and assigned in exchange to BPI shareholders based on the Banco Popolare share price quoted on July 2nd, 2007 (first available share price after the Merger effective date). Upon preparing pro-forma data, this amount has been incremented with the accessory costs that had been already incurred by the acquirer, plus those that can be currently estimated. The final fair values of BPI’s assets, liabilities and contingent liabilities identifiable at the Merger effective date shall be defined within the term fixed for the preparation of the financial statements as at December 31st, 2007 or, should no final measurements be available yet by that date, within twelve months of the Merger effective date. For the preparation of the pro- forma data as at June 30th, 2007, BPI’s assets, liabilities and contingent liabilities were assumed to be equal to Gruppo BPI’s consolidated shareholders’ equity at the same date. The difference between the cost of the business combination as measured above and Gruppo BPI’s consolidated shareholders’ equity as at June 30th, 2007 was recognized in the pro-forma balance sheet under a specific item named “Merger Difference”. Said difference shall not be subject to amortization in the pro-forma income statement.

With regard to the accounting standards adopted by Gruppo BPVN and Gruppo BPI to prepare their consolidated data, please refer to the Half-year Reports on operations in the following chapters II and III.

Hence, pro-forma consolidated data include: • the consolidated data of Gruppo BPVN; • the consolidated data of Gruppo BPI; • the eliminations carried out to take account of the main intra-group relations; • adjustments to represent the effects from the special dividend distribution through the distribution of the share premium reserve by BPI and the effects from the consolidation of Gruppo BPI.

In order to give a correct interpretation of the information provided by these pro-forma consolidated data, it is necessary to take the following aspects into consideration: • pro-forma data do not reflect prospective data as they are prepared to represent only the identifiable and objectively measurable effects generated by the Merger, without taking into account potential effects caused by changes in corporate strategies and operating decisions ensuing from said transactions; • the Merger accounting based on the purchase method shall require the identification of the fair value of BPI’s assets, liabilities and contingent liabilities and the allocation of the cost of the business combination at the Merger effective date. The pro-forma consolidated income statement does not include future income components that may derive from the allocation of the cost of the business combination as described above. Any surplus resulting from the difference between the cost of the business combination and the algebraic sum of the fair value of BPI’s assets, liabilities and contingent liabilities may be allocated to specific intangible assets with definite or indefinite useful lives, and a residual part may be allocated to goodwill. The intangible assets with indefinite useful lives and the goodwill resulting from the allocation

14 Gruppo Banco Popolare

process shall not be amortized, instead they shall be periodically assessed for impairment through the so called “impairment test”. If during the allocation process intangible assets with definite useful lives are identified, the future income statements of Banco Popolare shall include the annual amortization amounts of said intangible assets. The attached pro-forma consolidated income statement does not reflect any such possible amortization; • considering the different aims for which the pro-forma consolidated accounts have been designed as compared to past financial statements and the different methods of calculating the financial and operating effects of the Merger, the pro-forma consolidated accounts must be read and interpreted separately, without seeking accounting links between the two documents.

15 Gruppo Banco Popolare

Pro-forma consolidated balance sheet

Assets Gruppo Gruppo Eliminations Merger BPVN-BPI (in thousand euro) BPVN BPI adjustments pro-forma

10 Cash and cash equivalents 291,669 192,945 - - 484,614 20 Financial assets held for trading 9,452,472 2,725,453 (497) - 12,177,428 30 Financial assets measured at fair value 332,850 - (284) - 332,566 40 Financial assets available for sale 1,023,282 870,620 - (29,784) 1,864,118 50 Financial assets held to maturity 806,435 83,616 - - 890,051 60 Due from other banks 9,038,353 3,490,108 (903,044) - 11,625,417 70 Loans to customers 49,386,548 30,747,618 (47,615) - 80,086,551 80 Hedging derivatives 37,518 124,899 - - 162,417 90 Fair value change of assets in hedged portfolios (5,614) - - - (5,614) 100 Equity investments 665,744 146,895 - 44,510 857,149 120 Property, plant and equipment 540,244 944,104 - - 1,484,348 130 Intangible assets 490,792 2,222,864 - - 2,713,656 140 Tax assets 704,355 1,155,438 - (13) 1,859,780 150 Non-current assets held for sale and 44,924 1,327,677 - - 1,372,601 discontinued operations 160 Other assets 1,896,451 1,578,582 (1,542) - 3,473,491 Merger difference 3,742,570 3,742,570 Total 74,706,023 45,610,819 (952,982) 3,757,283 123,121,143

16 Gruppo Banco Popolare

Liabilities and Shareholders’ equity Gruppo Gruppo Eliminations Merger BPVN-BPI (in thousand euro) BPVN BPI adjustments pro-forma

10 Due to other banks 7,398,291 4,556,313 (950,659) 1,399,370 12,403,315 20 Due to customers 29,031,672 15,546,605 - - 44,578,277 30 Debt securities in issue 21,108,499 17,265,998 (284) - 38,374,213 40 Trading liabilities 2,646,405 511,716 (497) - 3,157,624 50 Financial liabilities measured at fair value 5,951,969 - - - 5,951,969 60 Hedging derivatives 56,471 197,497 - - 253,968 Fair value change of liabilities in hedged 70 portfolios in hedged portfolios (78,858) - - - (78,858) 80 Tax liabilities 366,158 239,413 - (190) 605,381 Liabilities associated with discontinued 90 - 1,507,063 - - 1,507,063 operations 100 Other liabilities 2,949,901 1,622,662 (1,542) - 4,571,021 110 Employee termination benefits 291,116 167,689 - - 458,805 120 Provisions for risks and charges 285,414 339,042 - - 624,456 140 Valuation reserves 320,191 58,983 - (3,109) 376,065 160 Common stock equivalents - 3,048 - - 3,048 180 Share premiums 213,068 2,668,669 - 1,878,819 4,760,556 190 Share capital 1,355,092 2,047,083 - (1,096,447) 2,305,728 200 Treasury shares ( - ) (320,206) (458,907) - 779,113 - 210 Minority interest 139,616 101,830 - - 241,446 Reserves and net income for the period 2,991,224 (763,885) - 799,727 3,027,066 Total 74,706,023 45,610,819 (952,982) 3,757,283 123,121,143

17 Gruppo Banco Popolare

Pro-forma consolidated income statement

Income statement Gruppo Gruppo Eliminations Merger BPVN-BPI (thousand euro) BPVN BPI adjustments pro-forma

10 Interest income and similar revenues 1,597,882 1,098,084 (4,571) - 2,691,395 20 Interest expense and similar charges (908,596) (659,562) 4,571 - (1,563,587) 30 Net interest income 689,286 438,522 - - 1,127,808 40 Commission income 500,241 230,584 (1,542) - 729,283 50 Commission expense (54,045) (42,668) 1,542 - (95,171) 60 Net commission income 446,196 187,916 - - 634,112 70 Dividend and similar income 112,010 17,969 - (1,702) 128,277 80 Net trading income 22,337 35,815 - - 58,152 90 Fair value adjustments in hedge accounting 690 2,644 - - 3,334 100 Profit (Loss) on disposal or repurchase of: 14,917 88,531 - - 103,448 a) loans 2,971 - - - 2,971 b) Financial assets available for sale 11,023 87,415 - - 98,438 c) Financial assets held to maturity - - - - - d) financial liabilities 923 1,116 - - 2,039 110 Profit (Loss) on financial assets and liabilities - designated at fair value 14,000 - - - 14,000 120 Total income 1,299,436 771,397 - (1,702) 2,069,131 130 Net write-downs/write backs on impairment of: (67,043) (175,397) - - (242,440) a) loans (64,212) (172,053) - - (236,265) b) Financial assets available for sale (829) (6,563) - - (7,392) c) Financial assets held to maturity - - - - - d) other financial transactions (2,002) 3,219 - - 1,217 140 Net financial income 1,232,393 596,000 - (1,702) 1,826,691 170 Net financial and insurance income 1,232,393 596,000 - (1,702) 1,826,691 180 G&A expenses: (669,519) (556,197) - - (1,225,716) a) personnel expenses (412,897) (280,178) - - (693,075) b) other administrative expenses (256,622) (276,019) - - (532,641) 190 Net provisions for risks and charges (5,928) (32,915) - - (38,843) Net impairment / write-backs on property, plant and 200 (24,891) (26,571) - - (51,462) equipment 210 Net impairment / write-backs on intangible assets (18,102) (13,426) - - (31,528) 220 Other operating income (expense) 117,849 84,740 - - 202,589 230 Operating costs (600,591) (544,369) - - (1,144,960) 240 Profit (Loss) on equity investments (132,254) 11,035 - 2,635 (118,584) 260 Goodwill impairment - (1,024) - - (1,024) 270 Profit (Loss) on disposal of investments 4,404 6,158 - - 10,562 280 Income before tax from continuing operations 503,952 67,800 - 933 572,685 290 Tax on income from continuing operations (249,962) (24,062) - - (274,024) 300 Income after tax from continuing operations 253,990 43,738 - 933 298,661 310 Income (Loss) after tax from discontinued operations 2,693 (19,441) - - (16,748) 320 Net income for the year 256,683 24,297 - 933 281,913 330 Minority interest (4,176) (6,467) - - (10,643) 340 Net income attributable to the Parent company 252,507 17,830 - 933 271,270

18 Gruppo Banco Popolare

Pro-forma consolidated reclassified balance sheet

Reclassified assets Gruppo Gruppo Eliminations Merger BPVN-BPI (thousand euro) BPVN BPI adjustments pro-forma

Cash and cash equivalents 291,669 192,945 - - 484,614 Financial assets and hedging derivatives 11,652,557 3,804,588 (781) (29,784) 15,426,580 Due from other banks 9,038,353 3,490,108 (903,044) - 11,625,417 Loans to customers 49,386,548 30,747,618 (47,615) - 80,086,551 Equity investments 665,744 146,895 - 44,510 857,149 Property, plant and equipment 540,244 944,104 - - 1,484,348 Intangible assets 490,792 2,222,864 - - 2,713,656 Non-current assets held for sale and discontinued 44,924 1,327,677 - - 1,372,601 operations Other assets 2,595,192 2,734,020 (1,542) (13) 5,327,657 Merger difference (provisional) 3,742,570 3,742,570 Total 74,706,023 45,610,819 (952,982) 3,757,283 123,121,143

Reclassified liabilities Gruppo Gruppo Eliminations Merger BPVN-BPI (thousand euro) BPVN BPI adjustments pro-forma

Due to other banks 7,398,291 4,556,313 (950,659) 1,399,370 12,403,315 Due to customers and debt securities in issue 56,092,140 32,812,603 (284) - 88,904,459 Financial liabilities and Hedging derivatives 2,702,876 709,213 (497) - 3,411,592 Provisions 576,530 506,731 - - 1,083,261 Liabilities associated with discontinued operations - 1,507,063 - - 1,507,063 Other liabilities 3,237,201 1,862,075 (1,542) (190) 5,097,544 Minority interest 139,616 101,830 - - 241,446 Shareholders’ equity 4,559,369 3,554,991 - 2,358,103 10,472,463 - Share capital 1,355,092 2,047,083 - (1,096,447) 2,305,728 - Reserves and net income for the period 3,204,277 1,507,908 - 3,454,550 8,166,735 Total 74,706,023 45,610,819 (952,982) 3,757,283 123,121,143

19 Gruppo Banco Popolare

Pro-forma consolidated reclassified income statement

Reclassified income statement Gruppo Gruppo Eliminations Merger BPVN-BPI (thousand euro) BPVN BPI adjustments pro-forma

Net interest income 712,603 424,777 - - 1,137,380 Profit (Loss) on equity investments carried at equity (136,871) (3,665) - 2,635 (137,901) Net interest, dividend and similar income 575,732 421,112 - 2,635 999,479 Net commission income 446,196 187,916 - - 634,112 Other revenues 65,975 56,971 - - 122,946 Net financial income 137,666 144,959 - (1,702) 280,923 Other operating income 649,837 389,846 - (1,702) 1,037,981 Total income 1,225,569 810,958 - 933 2,037,460 Personnel expenses (412,897) (280,178) - - (693,075) Other administrative expenses (200,597) (248,250) - - (448,847) Net impairment of property, plant and equipment and (47,144) (39,997) - - (87,141) intangible assets Operating costs (660,638) (568,425) - - (1,229,063) Profit from operations 564,931 242,533 - 933 808,397 Net impairment of loans, guarantees and commitments (63,243) (158,308) - - (221,551) Net impairment of other financial transactions (829) (3,344) - - (4,173) Net provisions for risks and charges (5,928) (32,915) - - (38,843) Goodwill impairment - (1,024) - - (1,024) Profit (Loss) on disposal of equity and other investments 9,021 20,858 - - 29,879 Income before tax from continuing operations 503,952 67,800 - 933 572,685 Tax on income from continuing operations (249,962) (24,062) - - (274,024) Income after tax from continuing operations 253,990 43,738 - 933 298,661 Income (Loss) after tax from discontinued operations 2,693 (19,441) - - (16,748) Net income for the period 256,683 24,297 - 933 281,913 Minority interest (4,176) (6,467) - - (10,643) Net income for the period attributable to the Parent 252,507 17,830 - 933 271,270 company

20 Gruppo Banco Popolare

Methodological notes to pro-forma data

Purpose of the presentation of pro-forma data

As explained in the Introductory note, the aim of the pro-forma consolidated balance sheet and income statement is to represent the financial and operating accounting effects of the Merger, based on valuation methods consistent with historical data and compliant with the relevant regulations, as if the Merger had virtually taken place on June 30th, 2007 and, with regard to income statement effects alone, at the beginning of financial year 2007.

Assumptions underlying the calculation of pro-forma data

Described below are the main assumptions used to prepare the pro-forma consolidated data: • the above accounting charts have been obtained by aggregating the data shown in the consolidated half- year reports as at June 30th, 2007 of Gruppo BPVN and Gruppo BPI prepared in compliance with the IAS/IFRS standards adopted by the European Union and in keeping with the financial statement layouts under the Bank of Italy’s Circular n. 262 of December 22nd, 2005. The financial statement layouts shown in the half-year reports are subject to a limited audit by Reconta Ernst & Young S.p.A.; • as of financial year 2005, both Groups have been applying the IAS/IFRS international accounting standards adopted by the European Union. Some differences, however, may exist due to the possibility of choosing among different options made available by the above standards, or due to different methodologies or parameters used to measure assets and liabilities. Said differences have not been taken into consideration when preparing the pro-forma accounts; • the cost of the business combination, as explained in the introductory note, has been determined by taking the opening quotation of Banco Popolare shares on July 2nd, 2007, the first listing day after the merger effective date, and adding to it the costs associated with the transaction (professional fees, costs of expert reports and surveys, etc.), that at present are estimated to amount to about 20 millions.

Elimination of mutual relations

The most significant reciprocal balance sheet and income statement items between Gruppo BPVN and Gruppo BPI have been eliminated, which referred to loan receivable and payable (on June 30th, 2007 they totaled 951 millions, mainly represented by repurchase agreements and deposits) and to the related interest.

Adjustment associated with the representation of the effects from the Merger and from the special dividend distribution

• The effect was recognized, generated by the pro-rata distribution of part of the share premium reserve to BPI shareholders and POC bondholders, totaling 1,399 millions, which correspond to a unit distribution of euro 2.17 per BPI share (including shares from the conversion of convertible bonds) and the assignment of the amount fixed, under art. 7 letter c of POC’s regulation, for each non converted share; • The cost of the business combination (5,902 millions) was compared with Gruppo BPI consolidated shareholders’ equity as at June 30th, 2007, and the resulting difference was 3,743 millions. As explained above, said difference has been preliminarily shown in the pro-forma balance sheet under a specific item named “Merger difference”, pending the precise allocation of the relevant balance sheet items at the Merger effective date;

21 Gruppo Banco Popolare

• The consolidation scope was changed to account for significant shareholdings held by both Groups in the same entities, whenever the cumulative share of ownership should qualify for the consolidation along the equity method (in no case did the cumulative share qualify for the line-by-line consolidation); in particular: - Arca SGR S.p.A.: based on its shareholding (20.71%), Gruppo BPI used to carry the company at equity in its consolidated financial statements; whereas Gruppo BPVN had a 7.57% share and therefore recognized the shareholding at fair value, since it was classified under financial assets available for sale. Upon preparing the pro-forma accounts, the total shareholding was carried at equity, generating a positive impact of 2.9 millions on the shareholders’ equity and of 0.1 millions on the pro-forma net income; - Centrosim S.p.A.: similarly to what described for Arca SGR S.p.A., Gruppo BPI used to carry the company at equity, since it held a 22.35% share, while Gruppo BPVN, with its 2.5% share, recognized the shareholding at fair value since it was classified under financial assets available for sale; again, the total shareholding was carried at equity without significant impacts on the shareholders’ equity and on the pro-forma net income; - Unione Fiduciaria S.p.A.: similarly to what described for Arca SGR S.p.A. and Centrosim S.p.A. (Gruppo BPI used to carry the company at equity, since it held a 24.00% share, while Gruppo BPVN, with a 5.20% share, recognized the shareholding at fair value since it was classified under financial assets available for sale), the total shareholding was carried at equity without significant impacts on the shareholders’ equity and on the pro-forma net income; - Istituto Centrale delle Banche Popolari Italiane: based on its 22,09% shareholding, Gruppo BPVN used to carry the company at equity in its consolidated financial statements; whereas Gruppo BPI, with its 10.64% share, recognized the shareholding at fair value since it was classified under financial assets available for sale. Upon preparing the pro-forma accounts, the total shareholding was carried at equity, generating a positive impact of 14.1 millions on the shareholders’ equity and of 0.9 millions on the pro-forma net income; - Evoluzione 94 S.p.A.: in the consolidated financial statements of both banks the company was carried at cost. The new entity, however, shall inherit the shareholdings of both Gruppo BPI (13.99%) and Gruppo BPVN (6.70%), and as a result upon preparing the pro-forma accounts its total shareholding (20.69%) was carried at equity, without major impacts on the shareholders’ equity and on the pro- forma net income.

22 Gruppo Banco Popolare

INTEGRATION PLAN

In order to meet the goals defined in the Business Plan, following the approval of the Merger Plan, an Integration plan was launched, leveraging the experience accrued during the integration between Banca Popolare di Verona- S. Geminiano e S. Prospero and Banca Popolare di Novara, with the creation of a “double-axis” matrix: • axis of results: the value created by the Integration in terms of cost and revenue synergies is allocated to single projects focusing on a specific business area of the Group; • axis of implementation: “Infra-structural Components” (Organization/ IT/ HR) are in charge of achieving single Project results. The Heads of the above functions must guarantee that the Integration Plan objectives are met by coordinating the same “components” across all projects.

The Master Integration plan is comprised of about 40 projects, subdivided into the following areas: • Retail; • Corporate; • Res (Reti Esterne Specializzate – Specialized External Networks); • Finance; • Banks; • Migration of Bank Systems; • Holding functions.

Each project shall be headed by an officer identified from within the Group Top Management, who shall be in charge of achieving the objectives set in the Integration Plan in line with the Master Integration Plan.

Right from the start, the Integration Plan called for the launch of projects aiming at putting Banco Popolare on stream as of July 1st, 2007, by implementing solutions in line with the model designed in the Business Plan. The following projects were launched already in the first months of 2007: • Kick-off of the Parent Company and of the New S.p.A. Banks BPL and BPV-BSGSP, aiming at managing in a very short period of time the complex bureaucratic courses leading to the formation of the above entities and to the listing of Banco Popolare on the Stock Exchange within the fixed deadlines, and at equipping the Parent company with the target information systems necessary for a correct operation. Since July 1st, when the merger and the formation of the new Gruppo Banco Popolare came into effect, the Parent company and the two new Spa banks have been fully operational, and no particular problem or criticality was encountered right from the start; • Quick wins, aiming at speeding up revenue synergies at Group level, mainly acting on the Finance area, as well as cost synergies, mainly acting on the renegotiation of contracts with IT suppliers; • IT Migration, aiming at carrying out in depth analysis and to plan all the activities for the migration of the former BPI Banks onto the target information system, to define the time schedule and the migration modality; • Bancassurance, aiming at managing the choice of the strategic partner for the “non-life” and “life” businesses, whereby agreements were signed with Aviva and Fondiaria-Sai.

In the first six months of the year, in particular right after the shareholders’ meeting for the approval of the Merger Plan, other priority projects were launched to achieve the objectives defined in the Integration Plan: • Rationalization of Group Asset Management activities, to manage: - the integration of Discretionary Managed Accounts of the former Gruppo BPI into Banca Aletti; - the integration of Bipitalia SGR and Bipitalia SGR Alternative respectively in Aletti Gestielle SGR and Aletti Alternative (expected to take place by yearend).

23 Gruppo Banco Popolare

The Bank of Italy has already approved the above transactions, granting its authorization in the first days of August. In line with the plan, on September 3rd the integration of Discretionary Managed Accounts in Banca Aletti was completed with success, so that now it will be possible to harmonize the investment choices and the product catalog and to rationalize management; • rationalization of the Finance Area at the Parent company’s; • integration of Aletti Merchant in Efibanca and rationalization of Merchant Banking activities (merger planned for the beginning of October); • detailed planning and implementation of IT and organizational activities to migrate BPI Group banks onto the Group systems along the following timetable: - “pilot” bank to test and validate the migration process; on September 7th the migration of Popolare Crema was completed with success; - migration of BPL at the beginning of November 2007; - migration of Cassa di risparmio di Lucca, Pisa e Livorno at the beginning of February 2008; - completion of the migration of the remaining banks within February 2008. • A manifold training and initial support plan was launched, with about 48,000 training days for the human resources of the former BPI Group, mainly focusing on the commercial network; • plan to open 16 additional Banca Aletti branches specifically devoted to private banking, detached from the current private units existing in the banking networks of the former BPI Group, in compliance with the target organizational model covering the management of private customers; • project to centralize the management of NPL recovery from the Banking networks into the “product factory” Bipielle Società di Gestione del Credito S.p.A.; • rationalization of Back Office activities and specialization of geographical centers; • analysis of Human Resource issues aiming at identifying the most adequate mechanisms to manage redundancies, mobility and personnel requalification / training.

All the other projects aiming at putting the Parent company Banco Popolare on stream are being progressively launched, and their implementation is closely correlated to the migration of banks onto the target information system leading to the adoption of a single system throughout the whole group.

The governance of the Master Integration Plan is guaranteed by the Steering Committee, made up of the Group Top Management, which is in charge of governing, planning and controlling the Project: • it sets the strategic direction to meet the Integration Plan objectives; • it solves strategic issues and any criticalities brought forward by the Head of Integration; • it approves project budgets and the relevant changes proposed by the Head of Integration.

A monthly monitoring of all Projects provides an appropriate control over the Master Integration Plan. At present the rolled out projects are in line with the planned implementation activities.

24 Gruppo Banco Popolare

NOTEWORTHY EVENTS AFTER THE BALANCE SHEET DATE

Effectiveness of the Merger between Banco Popolare di Verona e Novara and Banca Popolare Italiana

In the first place, as illustrated above, on July 1st, 2007 the deed of merger between Banca Popolare Italiana and Banco Popolare di Verona e Novara was registered with the Registrars of Companies of Verona and Lodi and as a result as of said date the transaction came into legal, accounting and fiscal effect. The dividend entitlement of Banco Popolare shares assigned in exchange started regularly on July 1st, 2007. On the same date, yet just before the finalization of the merger, the transfer came into effect, whereby BPVN and BPI transferred to “Banca Popolare di Verona San Geminiano e San Prospero” and to “Banca Popolare di Lodi”, respectively, part of their banking units mainly consisting of the branch networks located in their original franchise, and in the case of Banca Popolare di Lodi also the equity investments in the Lombardy cooperative banks and in Cassa di Risparmio di Pescara. The demerger of the above business lines shall strengthen the banks’ presence and ties on their territory of belonging.

Special dividend distribution

With value date on July 5th, 2007, Banco Popolare paid the special dividend amounting to 2.17 euro per share to the shareholders and convertible-bond holders of Banca Popolare Italiana. The total distributed amount was 1,399 millions.

Agreement with Trade Unions signed

On July 7th, an agreement with the Trade Unions was signed to manage the impact on employees of the formation of Gruppo Banco Popolare. The agreement governs many aspects, among which the possibility of voluntarily participate in the so called Solidarity Fund for eligible employees (no more than 60 months before the right for retirement has accrued), the adoption of an early retirement incentive scheme for employees who have already accrued the right for retirement, and the payment of a premium to all the employees of the new Group belonging to professional areas and to management on the special occasion of the merger.

Purchase of Auto Trading Leasing

On July 18th, following the authorizations granted by the competent Authorities, Banco Popolare and Holding di Partecipazioni Finanziarie Popolare di Verona e Novara finalized the purchase of 100% of the share capital of Auto Trading Leasing IFN s.a., with stakes of 99.80% and 0.20%, respectively. The new subsidiary is based in Bucharest (Romania) and the transaction shall entail a total investment of 5.8 million euro.

25 Gruppo Banco Popolare

Commitment to subscribe the planned capital increase of Banca Italease

On July 20th, the Board of Directors of Banca Italease approved a capital increase of 600 millions, scalable up to 700 millions. The goal of the capital increase is to put the associate in a position to face the contingent situation with adequate capital resources and to carry on its business development projects in line with the new business plan that is now being defined. The shareholders who entered into the stability agreement, among which also Banco Popolare, confirmed their firm commitment to the associate, in particular with regard to the necessary financial support. Said shareholders confirmed their commitment to subscribe the share capital increase pro rata in relation to their respective shareholdings. Hence, Banco Popolare’s maximum commitment amounts to about 215 millions,

Sale of 79.7% of Banca Bipielle Net to Sopaf, Aviva Italia Holding and De Agostini Invest

The transaction was finalized on August 1st, 2007, further to the authorizations granted from the Supervisory Authorities on June 25th, 2007. Sopaf S.p.A, De Agostini Invest S.A. and AVIVA Italia Holding S.p.A purchased 79.73% of the share capital of Banca Bipielle Net S.p.A. (a previous investee of the former Banca Popolare Italiana) from Banco Popolare for 104.7 million euro. Banco shall retain a stake of 19.90%. No Put and/or Call options in favor of the contract parties are envisaged. The Company shall be managed by a Board of directors comprising nine members, of which two shall be designated by Banco. Of the two, one shall be an independent director. A business agreement between Banco e Banca Bipielle Net for the provision of services and products shall be implemented. Again on August 1st, 2007, Banco Popolare signed an agreement for the sale to Sopaf and Aviva of 100% of the share capital of Area Life International Assurance Ltd for a base price of 23.5 million euro, while Finoa (a company held by 50% by Banco Popolare) signed an agreement for the sale to Sopaf and Aviva of 100% of the share capital of Aviva Previdenza SpA for 34.3 millions. Also these companies fell within the consolidation scope of the former Gruppo BPI. The contracts should be performed by September 2007 and the payment shall be made in concomitance with the share transfer. The contract effectiveness is conditional to the granting of the required authorizations by the Supervisory Authorities under the current laws.

Asset management arm integration authorized by the Bank of Italy

At the beginning of August, the Bank of Italy authorized the rationalization of the asset management arm of Gruppo Banco Popolare, through the transfer of: • Bipitalia Gestioni SGR’s business unit dealing with discretionary managed accounts invested in securities to Banca Aletti, which shall lead to the creation of a financial organization with total Assets under Management in excess of 30 billion euro; • Bipitalia Gestioni SGR’s business unit dealing with managed accounts invested in mutual funds and supplementary pension products to Aletti Gestielle SGR, which shall give rise to an asset management firm with total assets in excess of 18 billion euro; • Bipitalia Alternative SGR’s business unit dealing with managed accounts invested in speculative funds to Aletti Gestielle Alternative SGR, which shall give rise to an asset management firm with 3 billion euro worth of assets. The transfer of the discretionary managed accounts to Banca Aletti came into effect on September 3rd, 2007. The transfer of the mutual funds and pension funds to Aletti Gestielle SGR shall be operational by yearend.

26 Gruppo Banco Popolare

As a preliminary step to the transfer of the mutual fund arm to Aletti Gestielle, a plan for the rationalization and integration of the range of UCITS set up by the SGR with those currently managed by Aletti Gestielle SGR was submitted to the approval of the Bank of Italy. The plan envisages the merger of various mutual funds of the SGR with those set up by Aletti Gestielle and the harmonization of their regulations with Aletti Gestielle’s management regulations. The significant organizational, product and professional synergies produced by the Group’s new asset management organization, which is on track to become operational along the timeline expected by the integration plan, shall lead to a further service quality enhancement, guaranteeing a management capability in line with the best market standards.

Purchase of 50% of BPV Vita from Società Cattolica di Assicurazione

On August 31st, having received the required authorizations, Banco Popolare purchased 50% of the share capital of BPV Vita by way of its subsidiary Holding di Partecipazioni Finanziarie Popolare di Verona e Novara from Società Cattolica di Assicurazione. The total investment amounted to 64.2 millions.

Sale of 50% of BPV Vita to Gruppo Fondiaria SAI

On September 7th, Banco Popolare and the group Fondiaria-SAI finalized a bancassurance strategic partnership agreement covering the “life and pension” business. Under said agreement, Fondiaria SAI purchased 50% of the share capital of BPV Vita from Banco Popolare and from the subsidiary Credito Bergamasco. BPV Vita is the special purpose vehicle through which the operational implementation of the partnership shall be achieved. The total purchase price paid by Fondiaria SAI was 530 million euro, which shall give rise to the recognition in the third quarter of a capital gain of 433 millions, net of fiscal effects and minority interest. Under the provisions of the shareholders’ agreement , Fondiaria SAI acquires a controlling interest in BPV Vita, and reciprocal put and call options are in place should the partnership be dissolved. In this event, the shareholding in BPV Vita shall be valued along the appraisal value method. On the same date, the parties signed an exclusive distribution agreement for “life-pension” insurance products, which shall have a ten year term and may be renewed every five years, starting from January 1st, 2008 (without prejudice to the existing distribution agreements with Aviva and Aurora).

Merger between the London Stock Exchange and Borsa Italiana

On August 8th, the Special Shareholders’ Meeting of the London Stock Exchange Plc. approved the merger with Borsa Italiana S.p.A., after the prior approval of the merger by the latter’s shareholders. Based on the merger plan, Borsa Italiana shareholders shall be offered 4.9 London Stock Exchange Plc. shares for each outstanding common share of Borsa Italiana S.p.A.. Banco Popolare holds 1,155,252 common shares, accounting for 7.119% of Borsa Italiana’s share capital. Based on the information available to date, the transaction’s finalization shall generate the recognition of a capital gain of about 100 millions, net of fiscal effect.

27 Gruppo Banco Popolare

Approval of the merger of Aletti Merchant in Efibanca by the Special Shareholders’ Meetings

On September 7th, 2007, the Special Shareholders’ Meetings of Efibanca and Aletti Merchant unanimously approved the merger by acquisition of Aletti Merchant into Efibanca. As a result of the merger, the acquiring company Efibanca shall carry out a capital increase of max. euro 16,720,000 – namely from euro 92,976,566.00 to euro 109,696,566.00 – by issuing max. 16,720,000 shares with a nominal value of Euro 1.00 each, to support the exchange ratio of 0.22 ordinary shares of the acquirer with a nominal value of euro 1.00 each for each 1 ordinary share of the acquiree with a nominal value of euro 1.00 each, as well as the transfer of the registered office from Rome to Lodi. The merger is expected to come into legal effect on October 1st next. Under the business plan of the newly formed Gruppo Bancario Banco Popolare, this transaction represents the rationalization and appreciation within one single entity of the group Corporate Finance & Merchant Banking structures and skills.

***

The international macro-economic scenario in the weeks following June 30th, 2007 was characterized by turbulences on the financial markets starting on August 9th with a liquidity squeeze, difficulty to issue debt instruments and falling stock prices. Most likely the origin of this crisis lies in the excessive leverage effects and maturity mismatches of subprime mortgages on the US market, in the presence of less accommodating monetary policies than in the past. The intervention of the Central Banks is aimed at gradually bringing financial markets back to their normal operating conditions. All in all, the summer financial crisis may cause a mild slowdown of the economic growth in the euro area.

The Italian financial sector (and specifically the banking sector) does not report major exposures to the risks caused by the subprime mortgage crisis in relation to its business volume, as shown by the updates specifically gathered by the Supervisory Authorities (Bankitalia, CONSOB, ISVAP).

The Banking Group Banco Popolare, which was formed on July 1st, 2007, is not affected by this phenomenon.

In compliance with the issuers requirements published by Consob with letter dated August 30th, 2007, we provide the following information: • granting of subprime mortgages: Gruppo Banco Popolare has no lending exposures to subprime customers, since it is not a Group policy to grant loans to this class of customers; • investment in financial products with subprime mortgages or associated instruments as underlying: the analysis of investments in financial products reported under the Group’s financial assets identified the presence of an indirect investment whose exposure to subprime mortgages was estimated to be about 1.7 millions; • guarantees issued on subprime mortgages: based on our analyses, no guarantees have been issued in association with said products; • total financial products with subprime mortgages as underlying, managed or held in custody by the Group on behalf of third parties: out of discretionary managed accounts, as at August 31st, 17.8 millions (equal to 0.02% of the Group’s aggregate indirect customer funds) were invested in the SICAV Axa World Fund - US Libor Plus.

28 Gruppo Banco Popolare

OPERATIONAL OUTLOOK

The world economy is now going through a favorable business cycle, that is benefiting also our Country, despite some uncertainty. The tensions caused by last August’s liquidity crisis on financial markets, on the wake of the upheavals experienced on the US subprime mortgage market, may shave the growth outlook of real economy in the coming months and act as a mild brake on the development of financial and banking intermediation activities.

As of July 1st, 2007, in keeping with the Integration plan, the new operational structure of Banco Popolare is up and running, with a Parent Holding Company, called Banco Popolare, in charge of the management and strategic planning for the so called “Banche del Territorio” and “Product Companies” (operating companies) specialized by business areas. In the second half of the year, all the activities related to the implementation of the integration plan shall continue, among which the migration of the BPI group banks onto the Group information systems, expected to start at the beginning of September.

The second-half results shall therefore enjoy the full effects of the capital management actions, of the activities carried out under the integration plan and of the positive operating impact generated by some non-recurring events, such as the life and non-life bancassurance agreements respectively with FonSai and Aviva and the merger between Borsa Italiana and the London Stock Exchange.

29

GRUPPO BANCO POPOLARE DI VERONA E NOVARA

Carlo Scarpa - Head office of Banca Popolare di Verona Banco Popolare di Verona e Novara Limited liability cooperative company

Registered and head offices: Piazza Nogara, 2 – 37121 Verona Share capital as at 30-06-2007: euro 1,355,092,434 fully paid Tax code, VAT no. and enrollment no. in the Verona Company Registrar: 0323127 023 6 Member of the Interbank Fund for Deposit Protection Member of the Banks’ Registry Parent company of the Banking Group Banco Popolare di Verona e Novara Member of the Banking Groups’ Registry

32 CORPORATE BOARDS, MANAGEMENT AND AUDITING COMPANY

Board of Directors Chairman Carlo Fratta Pasini Deputy Vice Chairman Maurizio Comoli Vice Chairman Alberto Bauli Chief Executive Officer Fabio Innocenzi Directors Marco Boroli, Pietro Buzzi, Valentino Campagnolo, Vittorio Corradi, Ugo Della Bella, Giuseppe Fedrigoni, Federico Guasti, Sergio Loro Piana, Maurizio Marino, Giuseppe Nicolò, Gian Luca Rana, Claudio Rangoni Machiavelli, Fabio Ravanelli, Luigi Righetti, Gian Carlo Vezzalini, Franco Zanetta Board of Statutory Auditors Chairman Flavio Dezzani Standing auditors Giuliano Buffelli, Maurizio Calderini, Carlo Gaiani, Giovanni Tantini Alternate auditors Bruno Anti, Emilio Rossi

Board of Advisors

Standing Marco Cicogna, Luciano Codini, Sergio Mancini

Alternate Aldo Bulgarelli, Vittorio Cocito

General Manager Massimo Minolfi

Auditing Company Reconta Ernst & Young S.p.A.

33 Gruppo Banco Popolare di Verona e Novara

Banco Popolare di Verona e Novara Banca Popolare di Novara Credito Bergamasco

BPV Vita (1) BPVN (Luxembourg) Novara Vita (1) Banco Popolare Hungary Linea (1) Banco Popolare Ceskà Republika Banco Popolare Croatia Aletti Merchant Arena Broker

Banca Aletti & C.

Banca Aletti & C. (Suisse) Società Gestione Servizi - BPVN Aletti Gestielle SGR Holding di Partecipazioni Finanziarie Aletti Gestielle Alternative SGR Popolare di Verona e Novara Aletti Fiduciaria BPVN Immobiliare Aletti Private Equity SGR Immobiliare BPV TacMarket Servizi Altre Società

(1) Jointly controlled or associated company, carried at equity Retail

Corporate

Private & Investment Banking & Asset Management

Others Gruppo Banco Popolare di Verona e Novara

GROUP FINANCIAL HIGHLIGHTS

Shown below are the Group’s main financial highlights and ratios.

Financial highlights

(million euro) I H 2007 I H 2006 (*) Change

Income statement Net interest, dividend and similar income 575.7 669.1 -14.0% Net commission income 446.2 438.0 1.9% Total income 1,225.6 1,297.8 -5.6% Operating costs 660.6 664.2 -0.5% Profit from operations 564.9 633.6 -10.8% Income before tax from continuing operations 504.0 625.6 -19.5% Net income for the period 252.5 387.1 -34.8%

(million euro) 30/06/2007 31/12/2006 Change

Balance sheet Total assets 74,706.0 68,694.9 8.8% Gross loans to customers 50,261.0 46,123.9 9.0% Financial assets and hedging derivatives 11,652.6 10,771.0 8.2% Shareholders’ equity 4,559.4 4,872.0 -6.4%

Customer financial assets Direct customer funds 56,092.1 50,574.0 10.9% Indirect customer funds 68,691.2 74,374.5 -7.6% - Assets under management 30,502.1 31,144.1 -2.1% - Mutual funds and Sicav 13,319.7 13,460.6 -1.0% - Managed accounts in securities and funds 10,758.0 11,405.3 -5.7% - Insurance policies 6,424.3 6,278.2 2.3% - Assets under custody 38,189.1 43,230.4 -11.7%

Operational structure Average number of employees (**) 12,964 12,677 2.3% Bank branches 1,270 1,250 1.6%

(*) Adjusted for comparison to take account of changes in consolidation scope. (**) Monthly arithmetic mean.

36 Gruppo Banco Popolare di Verona e Novara

Group economic and financial ratios and other data

30/06/2007 31/12/2006 30/06/2006 (*)

Profitability ratios (%) Annualized ROE 11.7% 26.9% 20.5% Net interest, dividend and similar income / Total income 47.0% 54.0% 51.6% Net commission income / Total income 36.4% 30.7% 33.7% Operating costs / Total income 53.9% 48.4% 51.2%

Operational productivity (€/1000) Customer loans (gross) per employee 3,877.0 3,638.4 Annualized total income per employee 189.1 217.1 207.8 Annualized operating costs per employee 101.9 105.0 106.4

Credit quality ratios (%) Net NPLs / Customer loans (net) 1.11% 1.21% Net watchlist loans / Customer loans (net) 1.04% 1.04% Net NPLs / Shareholders’ equity 12.03% 11.30%

37 Gruppo Banco Popolare di Verona e Novara

GROUP OPERATING PERFORMANCE

The economic backdrop

In general, in first half 2007 global economy was characterized by a good growth rate. With regard to energy, Brent oil prices remained on the high end. In the United States, after reporting a marked slowdown in the first quarter, in the following three months the economic cycle showed a good recovery. According to preliminary estimates, Gross Domestic Product grew by 3.4% annually, driven by the pick-up in exports, the recovery of fixed investments and expenditure by the Federal Government. In the first quarter, however, GDP had grown at a meager annual rate of 0.7%. In June, the unemployment rate had been kept down at contained levels (4.5%) and core inflation (net of energy and food) stood at 2.2%. Against this backdrop, the Federal Reserve kept the monetary policy target rate pinned at 5.25%. In Japan, in the presence of a regular economic growth and a stable inflation rate, the central bank raised the interest rate by a quarter of a point, fixing the overnight call rate target at 0.50%. The Chinese economy kept flying on extremely high growth rates: +11.5% in the first six months of the year. In Great Britain the strong economic growth (GDP: annual +3.0% in the first three months of the year) led the Bank of England, the British central bank, to raise the bank rate twice, up to 5.50% at the end of the first half (in July it raised it again to 5.75%). In the Euro area the business cycle is sustained and unemployment is at its historical lows: in the first quarter GDP increased by 3.1% annually, unemployment in June decreased to 6.9%. As a result, the European Central Bank could go on pursuing its “removal of monetary accommodation” policy, whereby it raised the benchmark rate up to 4% in June. In Italy, GDP grew by +2.3%, driven by an export growth rate of +4.1%. Investments were buoyant only in the building and construction sector (+5.2%). In the meanwhile, in June inflation appeared contained at +1.9%, in line with the euro area average and not such as to further erode the competitiveness of the domestic economy.

The Italian banking industry

In first half 2007, the dynamics of the banking business remained high, although slightly slower than the growth rate reported in the last few months of 2006. According to ABI, direct customer funds gathered by banks recorded a growth slowdown only towards the end of the period, with June standing at an annual +7.7% from +8.3% in December 2006. In particular, this slackening is attributable to deposits (checking accounts, savings deposits and certificates of deposit), whose growth rate went from +6.2% to +4.3%; in contrast, bonds increased their momentum from +11.6% to +12.9%. With regard to balance sheet assets, customer loans have been slipping slightly towards the end of the period, with June at +10.8% from +11.2% at year-end 2006; short term loans enjoyed a stable growth rate from +10.5% to +10.4% last June, while medium to long term transactions showed a more evident slowdown, from +11.6% in December 2006 to +11.0% in June 2007, as a result of the home mortgage pullback. Harmonized interest rates on bank deposits increased by 33 basis points between December 2006 and June 2007, while interest rates on banking loans to households and non-financial businesses reported a parallel increase of 35 basis points as compared with the end of 2006, in the pursuit of the monetary policy signals coming from the European Central Bank.

38 Gruppo Banco Popolare di Verona e Novara

Statement of conformity with international accounting standards

This consolidated half-year report, pursuant to art. 81 of Consob’s regulation approved with resolution n. 11971 of May 14th, 1999, was prepared in compliance with the IAS/IFRS standards approved by the European Union and effective at the time of its approval. This report aims at providing a timely indication of the Group’s general performance trend based on more easily and rapidly measurable financial and operating data.

The Report provides a consolidated representation of the financial and operating situation of Banco Popolare di Verona e Novara and of its subsidiaries. The financial statements used to prepare this consolidated half-year report were delivered by the subsidiaries and refer to their position on June 30th, 2007, adjusted when necessary to comply with IAS/IFRS; said accounting situations were prepared using also valuation methods other than the ones generally adopted for annual reports. More precisely, since by way of ordinary accounting methods it was impossible to determine the revenues and charges deriving from services provided and received, but not yet invoiced, relating to specific commission components and G&A expenses, some companies prepared their accounting statements based on forecast data inferred from their budgets.

The consolidated half-year report as at June 30th, 2007 is comprised of: x balance sheet as of June 30th, 2007 compared with the balance sheet as of December 31st, 2006, namely the latest annual report to be published; x income statement of the first half 2006 compared with the income statement for the same period of the year before; x statement of changes in shareholders’ equity for first half 2007 and first half 2006; x statement of changes in cash flows, showing the most significant cash flows in first half 2007, compared with the same period of the year before.

Changes in the application of accounting standards

As a result of the supplementary pension reform, pursuant to Legal Decree n. 252 of December 5th, 2005, depending on the choice made by employees, termination benefits accrued as of January 1st, 2007 shall be destined to supplementary pension schemes or transferred to a fund managed by the Italian Social Security Institute (INPS).

The coming into effect of this reform introduced a change in the method of accounting for the provision for Termination benefits compared with the financial statements as at December 31st, 2006 and the first quarter report on operations. Specifically, employee termination benefits accrued as of January 1st, 2007 are determined without applying any actuarial methodology, as the only charge to be borne by companies is the contribution they have to pay as provided for by the Civil Code (defined contribution plan under IAS 19). The provision for termination benefits accrued as at December 31st, 2006 continues to be accounted for as a defined benefit plan under IAS 19. However, the liability associated with the accrued termination benefits must be measured based on actuarial estimates without applying the pro-rata of the service provided as the benefit to be measured can be considered entirely accrued.

The change in the accounting method described above produced a reduction in the liability valued along the prior measurement procedures. The difference, which amounted to 35.5 million euro, was carried at income for the second quarter under the item “personnel expenses”.

39 Gruppo Banco Popolare di Verona e Novara

Change in classification criteria

In the second quarter of 2006, following the replacement of the software application dedicated to the recognition of foreign currency transactions, it was possible to make the account-taking of exchange derivatives compliant. With respect to the former accounting standards, the spread between the spot exchange rate upon the contract finalization and the exchange rate agreed in the contract has been reclassified from “net interest income” to “net financial income”.

As of the second quarter 2006, the recognition in the reclassified income statement of dividends collected from equity securities classified as financial assets held for trading and financial assets available for sale has changed. Dividends are now shown under “net financial income”. The item “dividends and profit (Loss) from equity investments” now includes only the share of profit generated by the investee companies carried at equity.

As of the second quarter 2007, the figurative cost to fund financial assets purchased by the Group investment bank to produce structured financial products for trading was recognized in the reclassified income statement under the item “Net financial income” instead of “Net interest income”. In order to have a like-to-like comparative basis, the same reclassification was extended to prior quarters. This new recognition criterion should provide a clearer representation of the evolution of results generated by the different operating areas of the Group.

Finally, note that the previous year’s quarterly data have been restated on a comparative basis, to take into account the changes in consolidation scope. In particular, the contributions made in 2006 by the subsidiaries that have been disposed of during that same year have been eliminated (Leasimpresa, Sestri, Sannitica Riscossioni, Compagnie d’Angely and Aletti International).

40 Gruppo Banco Popolare di Verona e Novara

FINANCIAL STATEMENTS

Consolidated balance sheet

Assets (thousand euro) 30/06/2007 31/12/2006 Changes

10 Cash and cash equivalents 291,669 360,546 (68,877) (19.1%) 20 Financial assets held for trading 9,452,472 8,424,623 1,027,849 12.2% 30 Financial assets measured at fair value 332,850 314,430 18,420 5.9% 40 Financial assets available for sale 1,023,282 1,053,752 (30,470) (2.9%) 50 Financial assets held to maturity 806,435 939,319 (132,884) (14.1%) 60 Due from other banks 9,038,353 8,680,735 357,618 4.1% 70 Loans to customers 49,386,548 45,244,563 4,141,985 9.2% 80 Hedging derivatives 37,518 38,847 (1,329) (3.4%) 90 Fair value change of assets in hedged portfolios (5,614) (4,093) 1,521 37.2% 100 Equity investments 665,744 796,935 (131,191) (16.5%) 120 Property, plant and equipment 540,244 538,047 2,197 0.4% 130 Intangible assets 490,792 447,753 43,039 9.6% 140 Tax assets 704,355 661,465 42,890 6.5% 150 Non-current assets held for sale and discontinued operations 44,924 239 44,685 n.s. 160 Other assets 1,896,451 1,197,774 698,677 58.3% Total 74,706,023 68,694,935 6,011,088 8.8%

41 Gruppo Banco Popolare di Verona e Novara

Liabilities and Shareholders’ equity (thousand euro) 30/06/2007 31/12/2006 Changes

10 Due to other banks 7,398,291 8,116,144 (717,853) (8.8%) 20 Due to customers 29,031,672 28,905,375 126,297 0.4% 30 Debt securities in issue 21,108,499 16,334,515 4,773,984 29.2% 40 Trading liabilities 2,646,405 1,844,528 801,877 43.5% 50 Financial liabilities measured at fair value 5,951,969 5,334,143 617,826 11.6% 60 Hedging derivatives 56,471 54,847 1,624 3.0% 70 Fair value change of liabilities in hedged portfolios (78,858) (57,936) 20,922 36.1% 80 Tax liabilities 366,158 416,354 (50,196) (12.1%) 100 Other liabilities 2,949,901 2,111,034 838,867 39.7% 110 Employee termination benefits 291,116 350,079 (58,963) (16.8%) 120 Provisions for risks and charges 285,414 269,073 16,341 6.1% 140 Valuation reserves 320,191 240,820 79,371 33.0% 170 Reserves 2,738,717 2,044,798 693,919 33.9% 180 Share premiums 213,068 202,304 10,764 5.3% 190 Share capital 1,355,092 1,351,182 3,910 0.3% 200 Treasury shares ( - ) (320,206) - (320,206) 210 Minority interest 139,616 144,761 (5,145) (3.6%) 220 Net income for the period 252,507 1,032,914 (780,407) (75.6%) Total 74,706,023 68,694,935 6,011,088 8.8%

42 Gruppo Banco Popolare di Verona e Novara

Consolidated income statement

Income statement (thousand euro) I H 2007 I H 2006 Changes

10 Interest income and similar revenues 1,597,882 1,184,742 413,140 34.9% 20 Interest expense and similar charges (908,596) (537,991) 370,605 68.9% 30 Net interest income 689,286 646,751 42,535 6.6% 40 Commission income 500,241 488,216 12,025 2.5% 50 Commission expense (54,045) (48,373) 5,672 11.7% 60 Net commission income 446,196 439,843 6,353 1.4% 70 Dividend and similar income 112,010 58,298 53,712 92.1% 80 Net trading income 22,337 43,279 (20,942) (48.4%) 90 Fair value adjustments in hedge accounting 690 541 149 27.5% 100 Profit (Loss) on disposal or repurchase of: 14,917 46,644 (31,727) (68.0%) a) loans 2,971 38,147 (35,176) (92.2%) b) Financial assets available for sale 11,023 7,548 3,475 46.0% d) financial liabilities 923 949 (26) (2.7%) 110 Profit (Loss) on financial assets and liabilities designated at fair value 14,000 15,167 (1,167) (7.7%) 120 Total income 1,299,436 1,250,523 48,913 3.9% 130 Net write-downs / write-backs on impairment of: (67,043) (65,154) 1,889 2.9% a) loans (64,212) (64,127) 85 0.1% b) Financial assets available for sale (829) (3) 826 d) other financial transactions (2,002) (1,024) 978 95.5% 140 Net income from banking activities 1,232,393 1,185,369 47,024 4.0% 170 Net income from banking and insurance activities 1,232,393 1,185,369 47,024 4.0% 180 G&A expenses: (669,519) (677,282) (7,763) (1.1%) a) personnel expenses (412,897) (428,904) (16,007) (3.7%) b) other administrative expenses (256,622) (248,378) 8,244 3.3% 190 Net provisions for risks and charges (5,928) (22,322) (16,394) (73.4%) 200 Impairment / write-backs on property, plant and equipment (24,891) (23,431) 1,460 6.2% 210 Impairment / write-backs on intangible assets (18,102) (17,892) 210 1.2% 220 Other operating income (expense) 117,849 125,549 (7,700) (6.1%) 230 Operating costs (600,591) (615,378) (14,787) (2.4%) 240 Profit (Loss) from equity investments (132,254) 35,612 (167,866) 270 Profit (Loss) on disposal of investments 4,404 39,610 (35,206) (88.9%) 280 Income before tax from continuing operations 503,952 645,213 (141,261) (21.9%) 290 Tax on income from continuing operations (249,962) (241,785) 8,177 3.4% 300 Income after tax from continuing operations 253,990 403,428 (149,438) (37.0%) 310 Income (Loss) after tax from discontinued operations 2,693 3,045 (352) (11.6%) 320 Net income for the period 256,683 406,473 (149,790) (36.9%) 330 Minority interest (4,176) (9,068) (4,892) (53.9%) 340 Net income for the period attributable to the Parent Company 252,507 397,405 (144,898) (36.5%)

43 Gruppo BancoPopolarediVeronaeNovara Statement of Changes in consolidated shareholders’ equity

Allocation of net income from Changes over the year previous year Opening balance Changes in shareholders’ equity Closing balance I H 2007 Changes in Net income (loss) (thousand euro) reserves for the period Issue Purchase of Changes in Derivati Reserves Dividends Special of new shares treasury shares Common ves on Stock and other dividend stock treasury options allocations distributions Third Third Third Third Third equivalents shares Third Third Group Group Group Group Group Group Group parties parties parties parties parties parties parties

Share capital: 1,351,182 24,389 - - -66 3,910 - - - - 1,355,092 24,323 a) common shares 1,351,182 24,389 - - -66 3,910 - - - - 1,355,092 24,323 b) other ------

Share premiums 202,304 3,319 - - - 10,764 1,848 - - - 213,068 5,167

Reserves: 2,044,798 84,128692,453 22,523 890 -3,159 ------576 2,738,717 103,492 a) retained earnings 1,766,964 80,941 692,453 22,523 -569 -3,159 ------2,458,848 100,305 b) other 277,834 3,187 1,459 ------576 279,869 3,187

Valuation reserves: 240,820 1,843 79,371 615 320,191 2,458 a) fin. assets AfS 171,119 1,629 75,920 578 247,039 2,207 b)special revaluation laws 66,679 161 -1,459 - 65,220 161 c) other 3,022 53 4,910 37 7,932 90

Common Stock Equivalents - - - - -

Treasury shares - - - - -320,206 - -320,206 -

Net income (loss) for the 1,032,914 31,082 -692,453 -31,082 -340,461 252,507 4,176 252,507 4,176 year

Shareholders’ equity 4,872,018 144,761 - -8,559 -340,461 80,261 -2,610 14,674 1,848 -320,206 - - - - 576 252,507 4,176 4,559,369 139,616 Allocation of net income from Changes over the year previous year Opening balance Changes in shareholders’ equity Closing balance I H 2006 Changes in Net income (loss) (thousand euro) reserves for the peirod Issue of Purchase of Changes in Derivati Reserves Dividends Special new shares Treasury shares common ves on Stock and other dividend stock treasury options allocations distribution Third Third Third Third Third equivalents shares Third Third Group Group Group Group Group Group Group parties parties parties parties parties parties parties

Share capital: 1,342,569 22,869 - - -16 - - - - - 1,342,569 22,853 a) common shares 1,342,569 22,869 - - -16 - - - - - 1,342,569 22,853 b) other ------

Share premiums 184,031 1,308 ------184,031 1,308

Reserves: 1,734,261 76,512307,877 7,943 -1,014 250 - - - - 955 2,042,079 84,705 a) retained earnings 1,461,068 73,325 307,877 7,943 -2,650 250 - - - - 1,766,295 81,518 b) other 273,193 3,187 1,636 - - - - 955 275,784 3,187

Valuation reserves: 163,118 689 40,194 948 203,312 1,637 a) fin. assets AfS 94,459 689 37,691 912 132,150 1,601 b)special revaluation laws 69,409 - 3,545 - 72,954 - c) other -750 - -1,042 36 -1,792 36

Common Stock Equivalents - - - - - Gruppo BancoPopolarediVeronaeNovara

Treasury shares ------

Net income (loss) for the 597,054 15,687 -307,877 -15,687 -289,177 397,405 9,068 397,405 9,068 year

Shareholders’ equity 4,021,033 117,065 - -7,744 -289,177 39,180 1,182 ------955 397,405 9,068 4,169,396 119,571 Gruppo Banco Popolare di Verona e Novara

Consolidated statement of cash flows

(thousand euro) 30/06/2007 30/06/2006

A. OPERATING ACTIVITIES 1. Cash flow from operations 305,604 470,118 2. Cash flow from / used in financial assets (5,882,516) (5,477,600) 3. Cash flow from / used in financial liabilities 6,313,633 5,347,152 Net cash flow from / used in operating activities 736,721 339,670

B. INVESTING ACTIVITIES 1. Generated cash flow 19,206 2,845 2. Used cash flow (259,648) (148,735) Net cash flow from / used in investing activities (240,442) (145,890)

C. FINANCING ACTIVITIES Net cash flow from / used in financing activities (565,156) (249,042)

NET CASH FLOW GENERATED / USED IN THE PERIOD (68,877) (55,262)

RECONCILIATION

Cash and cash equivalents at beginning of period 360,546 337,331 Net cash flow generated / absorbed in the period (68,877) (55,262) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD 291,669 282,069

46 Gruppo Banco Popolare di Verona e Novara

Reclassified financial statements

Reclassified consolidated balance sheet

Reclassified Assets (thousand euro) 30/06/2007 31/12/2006 Changes

Cash and cash equivalents 291,669 360,546 (68,877) (19.1%) Financial assets and hedging derivatives 11,652,557 10,770,971 881,586 8.2% Due from other banks 9,038,353 8,680,735 357,618 4.1% Loans to customers 49,386,548 45,244,563 4,141,985 9.2% Equity investments 665,744 796,935 (131,191) (16.5%) Property, plant and equipment 540,244 538,047 2,197 0.4% Intangible assets 490,792 447,753 43,039 9.6% Non-current assets held for sale and discontinued operations 44,924 239 44,685 n.s. Other Assets 2,595,192 1,855,146 740,046 39.9%

Total 74,706,023 68,694,935 6,011,088 8.8%

Reclassified Liabilities (thousand euro) 30/06/2007 31/12/2006 Changes

Due to other banks 7,398,291 8,116,144 (717,853) (8.8%) Due to customers, debt securities in issue and financial liabilities measured at fair value 56,092,140 50,574,033 5,518,107 10.9% Financial liabilities and hedging derivatives 2,702,876 1,899,375 803,501 42.3% Provisions 576,530 619,152 (42,622) (6.9%) Other Liabilities 3,237,201 2,469,452 767,749 31.1% Minority interest 139,616 144,761 (5,145) (3.6%) Shareholders’ equity 4,559,369 4,872,018 (312,649) (6.4%) - Share capital and reserves 4,306,862 3,839,104 467,758 12.2% - Net income for the period 252,507 1,032,914 (780,407) (75.6%)

Total 74,706,023 68,694,935 6,011,088 8.8%

The reclassified balance sheet is a simple aggregation of the items required to be shown on the balance sheet face, pursuant to the Bank of Italy’s circular N. 262 of December 22nd, 2005.

47 Gruppo Banco Popolare di Verona e Novara

Reclassified consolidated income statement

Reclassified Income statement (thousand euro) I H 2007 I H 2006 I H 2006 (*) Change

Net interest income 712,603 646,751 638,312 11.6% Profit (Loss) from equity investments carried at equity (136,871) 35,616 30,766 Net interest, dividend and similar income 575,732 682,367 669,078 (14.0%) Net commission income 446,196 439,843 437,962 1.9% Other revenues 65,975 77,043 77,810 (15.2%) Net financial income 137,666 125,782 112,992 21.8% Other operating income 649,837 642,668 628,764 3.4% Total income 1,225,569 1,325,035 1,297,842 (5.6%) Personnel expenses (412,897) (428,904) (424,847) (2.8%) Other administrative expenses (200,597) (196,458) (194,842) 3.0% Net impairment of property, plant and equipment and (47,144) (44,737) (44,509) 5.9% intangible assets Operating costs (660,638) (670,099) (664,198) (0.5%) Profit from operations 564,931 654,936 633,644 (10.8%) Net impairment of loans, guarantees and commitments (63,243) (27,004) (25,417) 148.8% Net impairment of other financial assets (829) (3) (3) n.s Net provisions for risks and charges (5,928) (22,322) (22,183) (73.3%) Profit (Loss) on disposal of equity and other investments 9,021 39,606 39,606 (77.2%) Income before tax from continuing operations 503,952 645,213 625,647 (19.5%) Tax on income from continuing operations (249,962) (241,785) (239,041) 4.6% Income after tax from continuing operations 253,990 403,428 386,606 (34.3%) Income (Loss) after tax from discontinued operations 2,693 3,045 9,166 (70.6%) Net income for the period 256,683 406,473 395,772 (35.1%) Minority interest (4,176) (9,068) (8,660) (51.8%) Net income for the period attributable to the Parent 252,507 397,405 387,112 (34.8%) company (*) Adjusted for comparison to take account of changes in consolidation scope and changes in classification criteria.

Attached to this Report is a chart comparing the reclassified income statement published in the 2006 Consolidated half-year report and the data restated to account for the reclassifications and the changes in the consolidation scope.

Shown below are the main reclassifications with respect to the balances illustrated in the income statement face required by the Bank of Italy: x the figurative cost to fund the financial assets purchased by the Group investment bank to produce structured financial products for trading was reclassified from interest expense (item 20) to Net financial income; x dividends from shares classified among assets available for sale and assets held for trading (shown under item 70) have been reclassified under Net financial income;

48 Gruppo Banco Popolare di Verona e Novara

x net trading income and fair value adjustments in hedge accounting (items 80 and 90) as well as profit (loss) on financial assets and liabilities measured at fair value (item 110) have been reclassified under Net financial income; x profit (loss) on disposal of loans (item 100) have been consolidated with net write-downs/write-backs on impairment of loans, guarantees and commitments and credit derivatives; x profit or loss on disposal or repurchase of financial assets available for sale and financial liabilities (to be found under item 100) have been reclassified under Net financial income; x tax and other expense recoveries (under item 230) have been directly deducted from G&A expenses instead of being itemized under other operating income; x the depreciation of expense for improvements to third party assets (accounted for under item 230) was recognized in combination with impairment of property, plant and equipment and intangible assets, instead of being itemized under other operating income and expense; x the share of profit of associates carried at equity (item 240) was recognized in combination with dividends on equity investments.

Attached to this Report, is a chart comparing the income statement items required by the Bank of Italy’s Circular n. 262, of December 22nd, 2005 with the reclassified income statement.

49 Gruppo Banco Popolare di Verona e Novara

The table below summarizes the impact on the consolidated income of the periods under comparison caused by significant non-recurring events or transactions.

I H 2007 I H 2006 (*) Reclassified Income statement Recurr. (thousand euro) % change Non Non Recurring Total Recurring Total Recur. Recur.

Net interest income 712.603 712.603 638.312 638.312 11.6% Profit (Loss) from equity investments measured at 8.489 (145.360) (136.871) 8.267 22.499 30.766 2.7% equity Net interest, dividend and similar income 721.092 (145.360) 575.732 646.579 22.499 669.078 11.5% Net commission income 446.196 446.196 437.962 437.962 1.9% Other revenues 65.975 65.975 77.810 77.810 (15.2%) Net financial income 128.989 8.677 137.666 105.574 7.418 112.992 22.2% Other operating income 641.160 8.677 649.837 621.346 7.418 628.764 3.2% Total income 1.362.252 (136.683) 1.225.569 1.267.925 29.917 1.297.842 7.4% Personnel expenses (448.384) 35.487 (412.897) (424.847) (424.847) 5.5% Other administrative expenses (195.862) (4.735) (200.597) (194.842) (194.842) 0.5% Net impairment of property, plant and (47.144) (47.144) (44.509) (44.509) 5.9% equipment and intangible assets Operating costs (691.390) 30.752 (660.638) (664.198) - (664.198) 4.1% Profit from operations 670.862 (105.931) 564.931 603.727 29.917 633.644 11.1% Net impairment of loans, guarantees and (66.214) 2.971 (63.243) (63.564) 38.147 (25.417) 4.2% commitments Net impairment of other financial assets (829) (829) (3) (3) n.s. Net provisions for risks and charges (5.928) (5.928) (22.183) (22.183) (73.3%) Profit (Loss) on disposal of equity and other - 9.021 9.021 - 39.606 39.606 investments Income before tax from continuing operations 597.891 (93.939) 503.952 517.977 107.670 625.647 15.4% Tax on income from continuing operations (238.393) (11.569) (249.962) (208.835) (30.206) (239.041) 14.2% Income after tax from continuing operations 359.498 (105.508) 253.990 309.142 77.464 386.606 16.3% Income (Loss) after tax on discontinued operations - 2.693 2.693 - 9.166 9.166 Net income for the period 359.498 (102.815) 256.683 309.142 86.630 395.772 16.3% Minority interest (11.906) 7.730 (4.176) (8.660) - (8.660) 37.5% Net income for the period attributable to the 347.592 (95.085) 252.507 300.482 86.630 387.112 15.7% Parent company (*) Adjusted for comparison to take account of changes in consolidation scope and changes in classification criteria.

Note, that in general the following criteria were followed to identify non-recurring components: x the profit from the disposal of all fixed assets are considered non-recurring (equity investments, tangible assets, financial assets available for sale, financial assets held to maturity and since the second quarter 2007 also NPL portfolios); x profit and losses on non-current assets held for sale are considered non-recurring; x income components associated to combination or restructuring transactions (for ex. redundancy fund charges) are considered non-recurring;

50 Gruppo Banco Popolare di Verona e Novara

x material income components that are not destined to repeat frequently (for ex. sanctions, impairment of fixed assets, effects caused by changes in regulations, exceptional results, etc.) are considered non- recurring; x in contrast, material income effects generated by measurement aspects and/or by changes in the parameters used to apply lasting measurement methodologies are considered recurring.

Shown below are the main income components for the first six months of the year which were considered non- recurring.

The first half 2007 “Profit (Loss) from equity investments carried at equity” included the share of loss attributable to the Group (-145.4 millions) reported by Gruppo Banca Italease in the first half. As a result, for the sake of comparability also the share of profit attributable to the Group (22.5 millions) of the first half 2006 was reclassified among non-recurring items.

The other main first half 2007 non-recurring items refer to: x 35.5 million personnel expenses less as a result of the change in the recognition method for termination benefits introduced by the supplementary pension reform; x 4.7 million G&A expenses associated with the integration with Gruppo Banca Popolare Italiana; x income from the disposal of securities classified among Financial assets available for sale (Promatech, 7 millions) and from the acquisition by SSB of the company SIA (1.7 millions); x income from the partial disposal of the equity investment in Pama (4 millions) and from the final liquidation of the equity investment in Cornel (0.8 millions);

The main first half 2006 non-recurring items refer to: x 38.1 million income from the sale without recourse of non-performing loans; x 39.6 million income attributable to the sale of property and equipment (mostly buildings); x 7.4 million income from the disposal of the 5.6% shareholding in S.I. Holding (classified among financial assets available for sale);

Income from non-current assets held for sale, the fiscal effect and the impact on minority interest of the identified non-recurring items classified also belong to the non-recurring items of both periods.

During the administrative periods under comparison no significant atypical and/or unusual transactions occurred.

51 Gruppo Banco Popolare di Verona e Novara

Reclassified consolidated income statement – Quarterly evolution

II Q I Q IV Q III Q II Q I Q Reclassified income statement 2007 2007 2006 (*) 2006 (*) 2006 (*) 2006 (*)

Net interest income 357,989 354,614 348,883 339,964 323,757 314,555 Profit (Loss) from equity investments carried at equity (157,596) 20,725 85,157 16,812 19,061 11,705 Net interest, dividend and similar income 200,393 375,339 434,040 356,776 342,818 326,260 Net commission income 230,351 215,845 197,494 205,102 214,103 223,859 Other revenues 31,606 34,369 64,494 35,571 36,735 41,075 Net financial income 67,411 70,255 58,374 45,816 51,300 61,692 Other operating income 329,368 320,469 320,362 286,489 302,138 326,626 Total income 529,761 695,808 754,402 643,265 644,956 652,886 Personnel expenses (188,246) (224,651) (231,016) (220,256) (207,165) (217,682) Other administrative expenses (101,479) (99,118) (74,045) (89,292) (98,668) (96,174) Net impairment of property, plant and equipment and (23,999) (23,145) (14,833) (25,151) (21,414) (23,095) intangible assets Operating costs (313,724) (346,914) (319,894) (334,699) (327,247) (336,951) Profit from operations 216,037 348,894 434,508 308,566 317,709 315,935 Net impairment of loans, guarantees and commitments (49,010) (14,233) (39,756) (26,996) (5,248) (20,169) Net impairment of other financial assets (827) (2) (1,726) (466) (3) - Net provisions for risks and charges (3,187) (2,741) (27,600) (7,912) (7,426) (14,757) Profit (Loss) on disposal of equity and other investments 6,468 2,553 241,742 3,643 3,790 35,816 Income before tax from continuing operations 169,481 334,471 607,168 276,835 308,822 316,825 Tax on income from continuing operations (124,006) (125,956) (130,202) (108,549) (107,627) (131,414) Income after tax from continuing operations 45,475 208,515 476,966 168,286 201,195 185,411 Income (Loss) after tax from discontinued operations 676 2,017 1,433 3,035 6,6092,557 Net income for the period 46,151 210,532 478,399 171,321 207,804 187,968 Minority interest 1,564 (5,740) (17,606) (4,159) (4,500) (4,160) Net income for the period attributable to the Parent company 47,715 204,792 460,793 167,162 203,304 183,808 (*)Adjusted for comparison to take account of changes in consolidation scope and changes in classification criteria.

52 Gruppo Banco Popolare di Verona e Novara

EXPLANATORY NOTES

Noteworthy events for the period

Illustrated below are the most noteworthy events occurred in the period:

Subscription of the share capital increase of Banca Italease

In January, Banca Italease approved a capital increase through the issue of 7,958,364 shares at a subscription price of 37.6 euro per share. The Group exercised its options on all the shares due. The total investment was 91.6 millions. As a result of this transaction, the Group now holds a total of 28,115,748 shares, accounting for 30.72% of Banca Italease’s share capital.

Redefinition of bancassurance partnerships

Following the interruption of the agreements previously in place with Società Cattolica di Assicurazione, at the beginning of the semester Banco Popolare di Verona e Novara and Banca Popolare Italiana, also in view of the merger, signed new agreements for the year 2007 with Fondiaria SAI for the distribution of life insurance products (Banca Popolare Italiana for automobile comprehensive insurance). An agreement was also signed with the British company Aviva for the distribution of non-life insurance policies, precisely for credit protection and personal protection products. After having examined other potential insurance partners, the two Groups, which to date have joined under the common company name of Banco Popolare, decided to enter longer term partnership agreements with the above mentioned insurance groups.

The agreement signed at the end of May with Groppo Fondiaria SAI envisaged the prior purchase by Gruppo Banca Popolare di Verona e Novara of 50% of the share capital of BPV Vita, which at that time was owned by Società Cattolica di Assicurazione, and the subsequent sale of an equal share to Gruppo Fondiaria SAI. Under the agreement, BPV Vita is the special purpose vehicle through which the operational implementation of the partnership shall be achieved and into which the company Novara Vita shall be merged, held equally by Banco Popolare di Verona e Novara and Fondiaria SAI. The two Groups also agreed to enter into an exclusive ten-year distribution agreement with the new partner for the sale of the insurance products under examination through their branch network. As already mentioned in the section devoted to Banco Popolare referring to noteworthy events after the balance sheet date, the parties finalized the agreement on September 7th, after obtaining the required authorizations from the competent supervisory authorities.

On June 20th, Banco Popolare di Verona e Novara and Banca Popolare Italiana jointly signed a partnership agreement covering the “bancassurance protection” sector. The agreement entered into with Aviva provides for the sale by Banca Popolare Italiana of 50% of the share capital of Novara Assicura, the special purpose vehicle to be first acquired by Banca Popolare Italiana through the purchase of 100% of its share capital from Gruppo Fondiaria SAI. The tw Groups also agreed to sign an exclusive ten-year distribution agreement with the new partner for the sale of the insurance products under examination through their branch network. The transaction is subject to the prior authorization from the competent supervisory authorities.

53 Gruppo Banco Popolare di Verona e Novara

Share Buyback program

On March 10th, 2007, as part of the finalization of the Merger with Banca Popolare Italiana, the Shareholders’ meeting of Banco Popolare di Verona e Novara authorized the purchase of maximum 20,400,000 BPVN common shares. The transaction was part of a manifold capital management actions aiming at optimizing the regulatory share capital structure and funds, in compliance with the restrictions fixed by the Supervisory authorities, while maximizing shareholders’ value growth. The implementation of the buyback program led to the purchase of 13,507,829 BPVN shares on the regulated market, with a total investment of 320 million euro. The buyback program was executed in 61 trading days, and was performed in such a way as not to upset the normal stock performance. All the shares purchased under said program were cancelled without exchange at the time of the merger.

Securitization of performing residential mortgages

Again as part of the capital management plan, in the first six months of the year two securitizations of performing residential mortgages have been performed under law 130/99. The transactions entailed the sale of loans associated with residential land and home mortgages to the special purpose vehicle BP Mortgages S.r.l. for 3,058 millions. The investment grade securities have been sold to institutional investors, while junior securities were fully subscribed by the Group. In compliance with IAS 39 with regard to the specific transactions under examination, the sold loans were not derecognized from the consolidated financial statements.

Issue of hybrid capital instruments for 650 million euro

The above mentioned capital management plan also envisaged the issue by Banco Popolare di Verona e Novara of hybrid capital instruments. On June 21st, 2007 the following issues were performed: x issue of “innovative” instruments for 350 million euro, namely irredeemable bonds characterized by a revision clause of the rate of return after 10 years, when the issuer shall first start the early payment of the debt subject to the prior authorization of the Supervisory Authorities. The bond yield is 6.156% until June 21st, 2017. As of that date, the yield shall be equal to the three month Euribor rate plus 228 b.p.; x issue of “non innovative” instruments for 300 million euro, namely irredeemable bonds without any revision clause of the rate of return or any other clause aiming at incentivizing early redemption. The issuer may exercise the early redemption option after 10 years, subject to the prior authorization of the Supervisory Authorities. The bond yield is 6.756% until June 21st, 2017. As of that date, the yield shall be equal to the three month Euribor rate plus 188 b.p..

Both issues were rated Baa1 by Moody’s Investors Service, BBB+ by Standard & Poor’s and A by Fitch Ratings.

The issues had been granted the prior authorization by the Supervisory Authorities as to their eligibility to be included in the issuers individual and consolidated Tier 1 capital within the limits fixed by the existing laws.

54 Gruppo Banco Popolare di Verona e Novara

Launch of credit derivative trading

Again as part of the above capital management plan, during the semester the Group started the credit derivative trading. In particular, trading on this market is exclusively aimed at purchasing protection as part of a broader risk-weighted asset management policy. The underlying of the purchased hedges are performing loans granted to “large corporate” customers for a total notional value on June 30th, 2007 of about 1.9 billion euro.

55 Gruppo Banco Popolare di Verona e Novara

Accounting criteria, accounting standards and consolidation scope

Accounting criteria

The half-year report is expressed in thousands of Euro.

The half-year report is prepared so as to provide a clear, fair and correct representation of the assets and liabilities, the profits and losses and the financial performance for the period. If, in exceptional cases, the adoption of a provision under the international accounting standards is incompatible with a truthful and correct representation of the assets and liabilities, profits and losses and financial performance, said provision shall not be applied. The explanatory notes shall give an explanation for this possible deviation and the impact on the representation of the assets and liabilities, profits and losses and the financial performance.

The half-year report is drawn up in compliance with the following general principles:

Going concern: the half-year report is drawn up on the assumption that the Group shall continue as a going concern;

Accrual basis of accounting: the half-year report is prepared under the accrual basis of accounting, except for cash flow information;

Consistency of presentation: the presentation and classification of items in the half-year report are retained unchanged from one period to the next, unless a standard or an interpretation require a presentation change, or a different presentation or classification proves to be more appropriate under IAS 8. In this case, the notes to the financial statements shall contain due disclosure of the changes introduced as compared with the previous year;

Materiality and aggregation: the faces of the balance sheet and income statements are shown in summary as provided for under IAS 34.

The balance sheet and the income statement do not include accounts that show no amounts for the period to which the half-year report refers, nor for the previous period.

Offsetting: assets and liabilities, revenues and costs shall not be offset except when offsetting is permitted or required by an international accounting standard or its interpretation, or by the prescriptions contained in the above mentioned Circular issued by the Bank of Italy;

Comparative information: each item in the balance sheet is matched with a comparative item referring to the previous year, while each item in the income statement is supplied with the comparative data referring to the corresponding period of the previous year. In case the accounts are not comparable, the accounts referring to the previous period shall be reclassified. In case of non-comparability, adjustments, or failure to do so, said events shall be disclosed and commented upon in the notes to the accounts.

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ACCOUNTING STANDARDS

Illustrated in this chapter are the main accounting standards that were adopted to prepare the IAS/IFRS half-year report as of June 30th, 2007.

Cash and cash equivalents

This item includes legal currencies, including foreign paper notes and coins and demand deposits with the Central Banks of the Country or Countries where the Group is active with companies or branches. The item is recognized at its face value. For foreign currencies, the face value is translated into Euro at the closing exchange rate in effect at the end of the period.

Financial assets held for trading

This category includes only debt and equity securities and the positive value of derivatives that are held for trading. Derivative contracts include those embedded in structured financial instruments that have been recognized separately from their host contract because: x their economic characteristics and risks are not closely related to those of the host contract; x a separate instrument with the same terms as the embedded derivative would meet the definition of derivative; x the hybrid instruments to which they belong are not measured at fair value with changes in fair value through profit or loss.

Financial assets are initially recognized on the settlement date in case of debt and equity securities, and on the subscription date for derivative contracts. Upon their initial recognition, financial assets held for trading are measured at cost, meaning the instrument’s fair value. Any embedded derivative in complex contracts, which is not closely related to its host contract and qualifies as derivative, is separated from its host contract and measured at fair value, while the host contract is accounted for along its relevant accounting standard.

Subsequently to initial recognition, financial assets held for trading are measured at fair value.

To determine the fair value of financial assets quoted in an active market, quoted market prices are used (bid- ask prices or average prices). In the absence of an active market, estimate methods and valuation models are used, that take into account all the risk factors associated with the instruments and that are based on market inputs, such as: methods based on the fair value of other quoted instruments that are substantially the same, discounted cash flow analysis, option pricing models, recent arm’s length market transactions.

In case no reliable estimate of the fair value is possible in keeping with the above guidelines, equity instruments and related derivatives are measured at cost and written down in the event of impairment loss.

Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all of its associated risks/benefits have been substantially transferred.

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Financial assets measured at fair value

A financial asset is measured at fair value through profit or loss upon initial recognition only when: 1. it is a hybrid contract containing one or more embedded derivatives, and the embedded derivative significantly changes the financial flows that would otherwise be expected from the contract; 2. the measurement at fair value through profit or loss makes it possible to provide a more reliable information as: - it eliminates or considerably reduces a lack in homogeneity in measurement or recognition, that would otherwise be caused by measuring assets or liabilities or recognizing the associated profit and loss along different approaches; - a group of financial assets, or financial liabilities, or both is managed and its performance measured at fair value based on a documented risk management or investment strategy, and group reporting is provided internally to managers in charge of strategic functions based on this approach.

The financial assets under consideration are designated on initial recognition to be measured at fair value. Initial revenues and costs are directly recognized in profit or loss.

Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all of its associated risks/benefits have been substantially transferred.

Financial assets available for sale

This category includes non-derivative financial assets not designated as Loans, Held for trading assets, Held to maturity assets or Assets measured at fair value. In particular, this category includes also shareholdings that are not held for trading and do not qualify as interests in subsidiaries, associates and joint ventures, including private equity investments, as well as the portion of subscribed syndicated loans that had been designated at origin as available for sale. Financial assets are initially recognized on the settlement date in case of debt and equity securities, and on the origination date in case of other financial assets not classified as loans. Upon their initial recognition, assets are measured at cost, meaning their fair value, inclusive of transaction costs or proceeds directly associated with the instrument itself. If recognition follows a reclassification of Assets held to maturity, assets will be recognized at their fair value at the time of reclassification.

Subsequently to initial recognition, assets available for sale go on being measured at fair value through recognition of the corresponding amortized cost value in income, while profits or losses generated by changes in fair value are recognized in a specific Equity reserve until the financial asset is derecognized or an impairment loss is recognized. Upon derecognition, the cumulative gain or loss is recognized in profit or loss.

In case no reliable estimate of the fair value is possible in keeping with the above guidelines, equity instruments and related derivatives are measured at cost and written down in case of impairment loss. The assessment of objective evidence of impairment losses is carried out at each balance sheet or interim reporting date. If the reasons for an impairment loss are no more valid due to an event occurring after the impairment was originally recognized, write-backs are recognized through profit and loss. The write-back in any case cannot exceed the instrument’s amortized cost in the absence of previous adjustments.

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Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all of its associated risks/benefits have been substantially transferred.

Financial assets held to maturity

This category includes debt securities with fixed or determinable payments and fixed maturity date, that the Group has the positive intention and ability to hold to maturity. If a held-to-maturity investment must be sold as a consequence of a reconsideration or of an event beyond the entity’s control, the asset is reclassified as available for sale.

Financial assets are initially recognized on the settlement date. Upon initial recognition, financial assets designated as held to maturity are measured at cost, including any directly associated costs or revenues. If the recognition in this category follows a reclassification from Assets available for sale, the fair value of the asset at the time of reclassification is recognized at the asset’s new cost.

Subsequently to initial recognition, financial assets held to maturity are measured at amortized cost, using the effective interest method. Gains or losses from fair value changes in assets held to maturity are recognized through profit and loss at the time of derecognition. The assessment of objective evidence of impairment losses is carried out at each balance sheet or interim reporting date. In case of objective evidence, the impairment is computed as the difference between the asset’s carrying value and the present value of estimated future cash flows, discounted at the original effective interest rate. The impairment loss is recognized through profit and loss. If the reasons for an impairment loss are no more valid due to an event occurring after the impairment was originally recognized, write-backs are recognized through profit and loss.

Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all of its associated risks/benefits have been substantially transferred.

Loans to banks and customers

Loans include loans to customers and to banks, either originated or acquired, with fixed or determinable payments, that are not quoted in an active market and that were not designated from inception as financial assets Available for sale. Loans include receivables, repurchase agreements, loans originating from financial leases and securities acquired as a result of a private placement or subscription, with fixed or determinable payments, not quoted in an active market. As to loans acquired without recourse, they are classified as loans, provided there are no contract provisions significantly changing the risk exposure of the assignee company.

Loans are initially recognized on the origination date or, in case of debt security, on the settlement date, based on the fair value of the financial instrument, the recognition being equal to the extended amount, or subscription price, including costs/revenues directly associated to the individual loan and that can be determined from the start of the transaction, although settled later on. Costs are excluded, that, although carrying the above characteristics, are refunded by the borrowing counterparty or fall within normal internal administrative costs. For loans that are not negotiated at arm’s length market conditions, the fair value is computed using specific valuation techniques; the difference with the extended amount or the subscription price is charged directly to income. Buyback and repurchase agreements or reverse repurchase agreements are recognized in the balance sheet as loans payable or receivable. In particular, securities sold subject to repurchase agreements (repos) are recorded as loans payable with respect to the amount received spot, while

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securities purchased under agreements to resell (reverse repos) are recorded as loans receivable with respect to the amount paid spot.

After initial recognition, loans are valued at amortized cost, equal to the initial recognition value decreased/increased by capital refunds, write-down/write-backs and the amortization – computed along the effective interest rate method – of the difference between the extended amount and the amount repayable at maturity, typically comparable to the costs/revenues directly associated to the individual loan. The effective interest rate is determined by computing the rate that equals the loan’s present value of future principal and interest cash flows, to the extended amount including costs/rewards associated with the loan. This accounting method, based on a financial logic, spreads the economic effect of costs/revenues throughout the loan’s expected residual life. The amortized cost method is not used for short-term loans, whose limited life span makes the discounting effect immaterial. Said loans are measured at historical cost and their costs/revenues are recognized in the income statement linearly throughout the loan contract life.

The same measurement criterion is used for demand loans. At each balance sheet or interim report date, loans are reviewed to identify loans that due to events occurred after their initial recognition, show objective evidence of an impairment loss. These are loans classified as non-performing, watchlist or restructured under the current rules of the Bank of Italy, in line with IAS regulations.

Said impaired loans undergo an analytical, or individual valuation, whereby the write-down of each loan is equal to the difference between the loan’s book value at the time of measurement (amortized cost) and the present value of expected future cash flows, using the original effective interest rate. Expected cash flows factor in the expected recovery time, the estimated realizable value of collaterals, and possible costs incurred to recover the credit exposure. The cash flows of loans that are expected to be recovered within a short period of time are not discounted. The original effective interest rate of each loan remains unchanged over time, unless a loan restructuring or workout agreement has been negotiated that changes the contractual interest rate, or unless in practice the transaction bears no contractual interest.

The write-down is charged to income. The original loan value is reinstated in following financial years whenever the reasons for their original write-down no longer apply, provided said evaluation is objectively correlated to an event occurred after the write-down. Write-backs are recognized in the income statement and in any case cannot exceed the loan’s amortized cost had no write-downs been carried out in the past.

Individual loans that give no objective evidence of impairment, that is generally speaking performing loans, including loans to counterparties residing in countries at risk, undergo a collective valuation. This valuation is carried out by loan classes carrying similar credit risk characteristics and their percentage loss is estimated by taking into account their historical loss experience, adjusted on the basis of current observable data, so as to estimate the loss latent in every loan group. Collectively determined write-downs are charged to income. At each balance sheet and interim report date, any additional write-down or write-back is recalculated differentially making reference to the entire performing loan book on the same date.

Sold loans are derecognized from the annual or half-year report only if the sale entails the substantial transfer of all risks and rewards associated to the loans. On the contrary, should the risks and rewards associated with the sold loans be retained, the loans will continue to be recognized as part of the assets in the annual or half-year report , although from a legal point of view the loan ownership has been actually transferred. In case the substantial transfer of risks and rewards cannot be verified, loans are derecognized from the annual or half-year report if control of the loans has been relinquished. Otherwise, if be it even a partial control has been retained, the loans will continue to be recognized in the annual or half-year report to the extent of the Group’s residual involvement, based on the exposure to the changes in value of the sold loans and to their changes in cash

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flows. Finally, sold loans are derecognized from the annual or half-year report in case the contractual rights to receive the relevant cash flows are retained, with the concurrent obligation to pay said flows, and nothing more, to third parties.

Hedging derivatives

Assets and liabilities include hedging financial derivatives, which at the balance sheet date reported a positive and negative fair value, respectively.

A hedge aims at neutralizing potential losses associated with a given financial instrument or a group of financial instruments, attributable to a specific risk, by offsetting them with the profit associated with a different financial instrument or group of financial instruments in case that given risk should actually materialize. IAS 39 provides for the following categories of hedges: • a fair value hedge, that is, a hedge of the exposure to changes in fair value of a recognized asset or liability attributable to a particular risk; • cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk associated with a recognized asset or liability; • a hedge of foreign currency transactions or operations.

With regard to the consolidated financial statements or interim reports, only instruments involving an external counterparty to the group may be designated as hedging instruments. Any result associated with intragroup internal transactions is eliminated.

The derivative instrument can be designated as a hedge provided that the hedging relationship between the hedged and the hedging instruments is formally documented, and it is effective at the time of origination and prospectively throughout its entire life. The hedge effectiveness depends on the extent to which the changes in the fair value or in the expected cash flows of the hedged item are actually offset by those of the hedging instrument. As a result, effectiveness is measured by comparing said changes, while considering the aim pursued by the company when the hedge was established. A hedge is effective (within a range of 80 to125%) when changes in the fair value (or in the cash flows) of the hedging instrument neutralize almost completely the changes in the hedged item attributable to the hedged risk. Hedge effectiveness is assessed at each reporting date, using: x prospective tests, that justify the application of hedging accounting in that they demonstrate its expected effectiveness; x retrospective tests, demonstrating the hedge’s actual effectiveness achieved over the period being examined. In other words, they measure to what extent actual results diverge from a perfect hedge.

Should the above tests give evidence of a hedge ineffectiveness, hedge accounting, as described above, is suspended and the hedging derivative is reclassified among trading instruments. The hedged instrument is recognized in the class of belonging at its fair value at the time its effectiveness has ceased to exist.

Hedges are measured at fair value; in particular: • in case of a fair value hedge, the change in fair value of the hedged item is offset against the change in fair value of the hedging instrument. Said offset is recognized by recognizing in profit or loss the value changes referring both to the hedged item (referring to the changes generated by the underlying risk factor), as well as to the hedging instrument. Any resulting difference, which reflects the partial hedge ineffectiveness, represents a net income effect;

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• in case of cash flow hedge, the portion of changes in the fair value of the derivative that are determined to be an effective hedge is recognized directly in equity, while it is carried at income only when, with regard to the hedged item, the change affects the cash flows to be offset; • hedges of foreign currency transactions are accounted for similarly to cash flow hedges.

Value adjustment of financial assets and liabilities under macrohedging (hedged portfolios)

These items indicate the positive or negative balance of the value adjustment of assets under macrohedging and the positive or negative balance of value adjustments of liabilities under macrohedging of interest rate risk, in compliance with IAS 39, paragraph 89A.

Equity investments

This item includes interest held in associate companies, which are carried at equity. Associate companies are enterprises on which the Group has a significant influence and are not subsidiaries. By significant influence we assume all cases in which the Group holds 20% or more of voting the power of the investee, and, irrespective of the shareholding percentage, whenever it can partake in business and financial decisions of the investees.

Financial assets are initially recognized on the settlement date. Upon initial recognition, financial assets classified under this category are recognized at cost.

If there is an indication that an investment in an associate may be impaired, the recoverable value of the associate is estimated, including the present value of future cash flows expected to be generated by the associate, and the proceeds on the ultimate disposal of the investment. Should the resulting recoverable amount be lower than the carrying amount, the difference is recognized in the income statement. Whenever the reasons of the impairment loss are no longer valid due to an event occurring after the recognition of said impairment, write-backs are recognized in the income statement.

Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all of its associated risks/benefits have been substantially transferred.

Property, plant and equipment

Tangible assets (PPE) include land, core property, real estate investments, technical plants, furniture, fittings and equipment of any type. Said tangible assets are held to be used for the production or provision of goods and services, to be rented to third parties, or for administrative use, and they are expected to be used for more than one period. This item includes also assets associated with finance lease contracts, provided that the legal ownership of the assets rests within the leasing company. Said item also includes improvements and incremental expenses incurred on third party assets that do not fall under “other assets”.

Tangible assets are initially recognized at cost, which includes the purchase price and all expenditures directly attributable to the acquisition of the item and to bring the asset to working conditions. Non-recurring maintenance costs entailing probable future economic benefits are included in the asset’s carrying amount, while other repairs and maintenance are charged to income.

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Tangible assets, including “non-core” property, are measured at cost, less any depreciation and impairment. Tangible assets are systematically depreciated throughout their useful life, along the straight-line method, with the exception of: • land, whether purchased separately or as part of the buildings standing on it, in that land has an unlimited life. In case its value is embedded in the value of the buildings built on it, in virtue of the application of the approach by components, land is considered a separate asset from the building; the separation between the land and the building values is based on the survey of independent experts only for "detached" property; • works of art, because the useful life of a masterpiece cannot be estimated and its value normally is destined to increase with time.

At each balance sheet date, if there is an indication that an asset may be impaired, the asset’s carrying amount is compared with its recoverable amount, that is equal to the lower of the asset’s fair value, net of sale costs, and its value in use, meaning the present value of future cash flows originated by the asset. Any write-downs are charged to income. Whenever the reasons of the impairment loss are no longer valid, write-backs are recognized, that must not exceed the asset’s value had no impairment taken place in the past, net of accrued depreciation.

A tangible asset is derecognized from the balance sheet at the time of disposal or when the asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.

Intangible assets

Intangible assets include goodwill, costs to restructure branches and other rented buildings, and software applications to be used for several years. Goodwill is the positive difference between the cost of the acquisition and the fair value of the acquired assets and liabilities. Other intangible assets are recognized as such if identifiable and if originating from legal or contractual rights.

An intangible asset can be recognized as goodwill when the positive difference between the cost of the acquisition (including accessory charges) and the fair value of the acquired assets and liabilities is representative of future economic benefits to be generated by the subsidiary (goodwill). Should this difference be negative (badwill) or in the assumption that goodwill is not justified by the anticipated future economic benefits generated by the subsidiary, the difference is directly recognized in the income statement. Other intangible assets are carried at cost including any accessory charges only if it is probable that the future economic benefits that are attributable to the asset will be realized and if the cost of the asset can be measured reliably. Otherwise, the cost of the intangible asset is recognized in the income statement of the year in which it was incurred.

Goodwill is tested any time there is evidence of an impairment, and in any case at least once a year following the preparation of the three-year plan an impairment test is carried out. To this end, the cash-generating unit to which the goodwill is allocated is identified. The impairment amount is calculated based on the difference between the goodwill’s carrying amount and its recoverable amount, if lower. Said recoverable amount is equal to the higher of the fair value of the cash-generating unit, net of selling costs, and its value in use. The value in use is the current value of future financial flows expected from cash-generating units to which goodwill was allocated. Any resulting write-down is charged to income.

The cost of intangible assets is amortized on a straight-line basis over its useful life. If their useful life is not definable, amortization will not be applied, and periodically the assets will be tested for impairment. At each balance sheet date, if there is evidence of impairment losses, the asset’s recoverable amount is estimated. The

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loss, which is charged to income, is equal to the difference between the asset’s carrying amount and its recoverable amount.

An intangible asset is derecognized from the balance sheet at the time of disposal and whenever no more future economic benefits are expected.

Tax assets and liabilities

Said items include current and deferred tax assets, and current and deferred tax liabilities.

Income tax is recognized in the income statement, with the exception of taxes on items credited or debited directly to equity. Income tax provisions are based on a conservative projection of the current tax burden, together with deferred tax assets and liabilities.

Deferred tax assets and liabilities are based on temporary differences arising between the tax base of assets and liabilities and their carrying amounts, without any time limits. Deferred tax assets are recognized in the annual or half-year report when it is probable that they can be recovered. Deferred tax liabilities are always recognized, with the exception of higher assets under tax suspension represented by equity investments and reserves under tax suspension, as it is reasonable to believe that no operations will be performed deliberately that would trigger taxation. Recognized deferred tax assets and liabilities are systematically measured to account for any regulatory or tax rate changes. The tax provision also accounts for charges associated with possible litigations with fiscal authorities.

Non-current assets and discontinued operations and liabilities associated with discontinued operations.

This item includes non-current assets and liabilities and discontinued operations. In specific, said assets and liabilities are measured at the lower of fair value less costs to sell and their carrying amount. Any gain or charges are presented in the income statement under a separate item, net of fiscal effects.

Other assets

This item includes assets that do not belong to the other balance sheet assets items. This item for example may include: a) gold, silver and precious metals; b) the positive value of management contracts (so called “servicing assets”) under IAS 39; c) accrued income other than those that are to be capitalized onto the associated financial assets; d) any inventories under IAS 2; e) improvements and incremental expenses incurred on third party assets other than those associated with the item “tangible assets”. Also balances (“debit balance”) of temporary or suspense items that have not been allocated to the relevant accounts can be presented under this item, but only if the amount is immaterial.

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Due to banks and customers and debt securities in issue

The items “Due to banks”, “Due to customers” and “Debt securities in issue” include various forms of interbank and customer loans and proceeds raised through certificates of deposit and bonds outstanding, net of any repurchased amount. Also loans registered by lessees as part of financial leases are included.

These financial liabilities are first recognized when the raised amounts are received or the debt securities issued. The initial recognition is based on the fair value of liabilities, generally the consideration received or the issue price, plus any additional costs/revenues directly attributable to the single funding or issue operation and not refunded by the lending counterparty. Internal administrative costs are excluded.

After initial recognition, financial liabilities are measured at amortized cost along the effective interest rate method. Short term liabilities are an exception, if the time factor is immaterial: they are stated at their received value and any incurred costs are charged to income on a straight-line basis over the liability contract life. Note, that Funding instruments under an effective hedge are measured along the standards governing hedges.

For structured instruments, provided that the requirements under IAS 39 are satisfied, the embedded derivative is separated from the host contract and measured at fair value as a trading liability. In this case the host contract is recognized at the amortized cost.

Financial liabilities are derecognized from the annual or half-year report when expired or exhausted. Removal takes place also in case of repurchases of securities issued. The difference between the carrying amount of liabilities and the consideration paid is registered in the income statement. The subsequent sale of own shares following their repurchase is considered as a new issue, recognized at the new selling price, with no effect on the income statement.

Trading liabilities

This item includes the negative amount trading derivative contracts measured at fair value and financial liabilities held for trading. It also includes embedded derivatives, which were separated from their host financial instruments under IAS 39.

Gains and losses from changes in the fair value and/or from the sale of trading instruments are stated in the income statement.

Trading liabilities are derecognized from the annual or half-year report when expired or exhausted.

Financial liabilities measured at fair value

A financial asset is measured at fair value through profit or loss upon initial recognition only when: 1. it is a hybrid contract containing one or more embedded derivatives, and the embedded derivative significantly changes the financial flows that would otherwise be expected from the contract; 2. or when the measurement at fair value through profit or loss makes it possible to provide a more reliable information as: - it eliminates or considerably reduces a lack in homogeneity in measurement or recognition, that would otherwise be caused by measuring assets or liabilities or recognizing the associated profit and loss along different approaches;

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- a group of financial assets, or financial liabilities, or both is managed and its performance measured at fair value based on a documented risk management or investment strategy, and group reporting is provided internally to managers in charge of strategic functions based on this approach.

The financial liabilities under examination are measured at fair value right from the initial recognition. Initial revenues and charges are immediately charged or credited to income. Financial liabilities are derecognized from the annual or half-year report when expired or exhausted.

Other liabilities

This item includes liabilities that cannot be associated with other balance sheet liability items. For example, this item may include: a) payment agreements that under IFRS 2 must be classified as debts; b) the negative value of management contracts (so called “servicing liabilities”) under IAS 39; c) the initial recognition of guarantees issued and the equated credit derivatives under IAS 39, as well as the following impairment write-downs; d) payables associated with the payment of received goods or services; e) accrued liabilities others than those to be capitalized onto the relevant financial liabilities.

Provisions for risks and charges

Other provisions for risks and charges include the provisions related to present obligations originated from past events where it is more likely than not that an outflow of resources will be required to settle the obligation, provided the amount can be reliably estimated. The sub-item “retirement provisions and similar obligations" show only defined-benefit and defined- contribution supplementary pension funds backed by a legal or secured guarantee issued by Banco on the capital repayment and/or on the return in favor of beneficiaries, classified as “internal provisions” under the current pension regulations. The item also includes “external provisions”, backed by a guarantee on capital repayment and/or the return in favor of beneficiaries. The sub-item “other provisions” show the provisions for risks and charges that were set aside in compliance with international accounting standards, except for impairments caused by the deterioration of guarantees issued and for equated credit derivatives under IAS 39, that are shown under the item "other liabilities". The Group recognizes provisions for risks and charges only when: • there is a present obligation (legal or constructive) as a result of past events; • it is likely that an outflow of resources will be required to produce economic benefits to settle the obligation; • the obligation amount can be reliably estimated.

Whenever the time factor is significant, provisions are discounted using current market rates. The effect of discounting to net present value is recognized in the income statement.

Valuation reserves

Said item includes valuation reserves for financial assets available for sale, for foreign investment hedging, cash flow hedging, and for translation exchange differences, as well as for “individual assets” under disposal and discontinued operations. It also includes the revaluation reserves recognized in compliance with special revaluation regulations, also if fiscal exempt.

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Refundable shares

This item includes shares entailing the obligation for the issuer to refund/repurchase the shares at a preset price in favor of the shareholder.

Common stock equivalents

This item includes shareholders’ equity components other than capital and reserves.

Reserves

This item includes retained earnings.

Share capital and treasury stocks

Share capital includes common and preferred stock issued by the bank net of any capital already subscribed but not yet paid in at the balance sheet date or at the date of the interim report. This item includes any treasury stock held by the bank. The latter are shown with a minus sign in the item bearing their name under balance sheet liabilities. The original cost of repurchased treasury shares and the gain or loss originated by their subsequent sale are recognized as changes to shareholders’ equity.

Minority interest

This item shows the portion of consolidated shareholders’ equity attributable to shares owned by minority shareholders based on “equity ratios”. The amount is net of any treasury shares repurchased by consolidated companies.

Foreign currency transactions

Upon initial recognition, foreign currency transactions are recognized in the money of account, and the exchange rate applied to the amount expressed in foreign currency is the one in effect at the date of the transaction.

At each balance sheet date, items expressed in foreign currencies are measured as follows: • cash items are translated at the exchange rate in effect at the closing date; • non-cash items measured at their historical cost are translated at the exchange rate in effect at the date of transaction; • non-cash items measured at fair value are translated based on the exchange rates in effect at the closing date.

Exchange rate differences originated by the settlement of cash items, or by the translation of cash items at rates other than the initial ones, or by the conversion of the previous financial statements, are recognized in the income statement at the time of their accrual.

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When a gain or loss from a non-cash item is carried at equity, the relevant exchange rate difference is also carried at equity. Conversely, when a gain or loss is carried at income, also the associated exchange rate difference is carried at income.

Other information

Securitizations

In 2001 the Group finalized a single securitization through which it sold a pool of performing loans to the special purpose vehicle BPV Mortgages S.r.l. The securitized loans were not recognized in the consolidated financial statements, as the Group made use of the exemption under IFRS 1 from reinstating financial assets/liabilities sold or written off before January 1st, 2004.

Employee Benefit Plans

In keeping with the supplementary pension reform, under Legal Decree n. 252 of December 5th, 2005, termination benefits accrued as of January 1st, 2007, depending on the choice made by the single employees, have been destined to supplementary pension schemes or transferred to a fund managed by the Italian Social Security Institute (INPS). The coming into effect of said reform changed the accounting of the termination benefit provision as compared with the financial statements as at December 31st, 2006 and with the first quarter report on operations. Specifically, employee termination benefits accrued as of January 1st, 2007 are measured without applying any actuarial methodology, since the charge to be incurred by companies is limited to the contributions borne by them under the Civil Code (defined contribution plan under IAS 19). The termination benefit provision accrued as at December 31st, 2006 goes on being accounted for as a defined benefit plan under the classification spelled out by IAS 19. The liability associated with the accrued termination benefits however must be measured at actuarial value without applying the pro-rata of the rendered service since the benefit to be measured may be considered fully accrued.

Pension plans and liabilities associated with the so called “personnel seniority premiums” are classified either as defined benefit plans or defined contribution plans. Under defined contribution plans, the charge associated with the contributions to be paid under the plan is recognized in the income statement, under defined benefit plans, the burden of insufficient contributions or an insufficient return from the assets contributions have been invested in falls onto the company. The liability calculation is based on the actuarial methodology defined in IAS 19.

Share based payments

Under IFRS 2, stock options granted to employees are measured at their fair value at grant date. The cost of the granted options, represented by the periodically measured fair value, is recognized in profit or loss throughout its vesting period, and offset in a specific equity reserve, in case of equity-settled transactions, or in a liability item in case of cash-settled transactions.

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Dividends and revenue recognition

Revenues are recognized when received or in any case when it is likely that future benefits will be received and that said benefits can be reliably measured. In particular: • default interests, if provided for by the contract, are recognized in the income statement only when actually collected; • dividends are recognized in the income statement when their distribution is ratified; • revenues from the brokerage of trading financial instruments, represented by the difference between the transaction price and the instrument fair value, are recognized in the income statement when the transaction is recognized if the fair value can be measured based on recent parameters or transactions performed on the same market on which the instrument is traded. Proceeds from financial instruments that cannot be measured along the above procedure are taken to the income statement throughout the transaction’s life.

Consolidation scope and method

The consolidated half-year report includes the financial and operating results of the Parent company and its direct and indirect subsidiaries.

The concept of control goes beyond the percentage interest in the share capital of an investee, and is rather defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.

Full consolidation is the line-by-line combination of assets, liabilities, profit and loss of subsidiaries. Upon the identification and recognition of minority interests in net assets and net income under a specific item, the carrying amount of the investment is eliminated as an offset to the residual portion of the subsidiary’s equity. Any difference resulting from the above operation, if positive – after being accounted for under the subsidiary’s assets or liabilities – shall be initially recognized as goodwill under the item “Intangible assets” upon the first consolidation, and then under “Other reserves”. Negative differences are charged to income.

Assets, liabilities, revenues and expenses among consolidated companies are eliminated in full.

The results of operations of a subsidiary acquired during the period are included into the consolidated half-year report as from the date of acquisition. The results of operations of a subsidiary which has been disposed of are included in the report until the date of disposal. The difference between the proceeds from the disposal and its carrying amount as of the date of disposal, including any exchange rate difference recognized period by period in equity upon consolidation, is recognized in the income statement. If necessary, the financial statements of consolidated companies, when prepared in compliance with different accounting standards, shall be uniformed to the Group’s accounting procedures.

Investees on which the Group exercises a significant influence (called “associates”), that is, enterprises in which the Group has the power to participate in the financial and operating policy decisions, but is not in control over those policies, and which are neither a subsidiary nor a joint venture, are carried at equity. If an associate applies other accounting standards than those used by the Group, adjustments are made to the associate’s financial statements used by the Group to apply the equity accounting method. Under the equity method, the investment is initially recognized at cost and the carrying amount is then adjusted based on the proportionate interest in the investee. The difference between the carrying amount of the investment and the investee’s equity is treated similarly to the line-by-line consolidation differences described

69 Gruppo Banco Popolare di Verona e Novara

above. In computing the share of net assets, potential voting rights are not considered. The pro-rata share of net income from the associate is recognized under a specific item of the consolidated income statement.

Equity investments in jointly controlled companies are recognized under the proportionate consolidation method. Joint control is the contractually agreed sharing of control over an economic activity, and exists only when a unanimous consensus by all venturers (i.e., the parties to a joint venture, having joint control over it) is required to make strategic financial and operational decisions.

The financial, balance sheet, and P&L statements of the consolidated companies whose money of account is not the Euro, are translated based on the following rules: x balance sheet assets and liabilities are translated at the exchange rate in effect at the end of the period; x P&L revenues and costs are translated at the period’s average exchange rates; x all exchange rate differences originated by the conversion are recognized in a specific and separate reserve under shareholder’s equity. Said reserves are eliminated by charging or crediting them to income when the equity interest is disposed of.

70 Gruppo Banco Popolare di Verona e Novara

Shown below are the equity investments in subsidiaries, associates and joint ventures (proportionate consolidation method)

Type of Shareholding Voting (in thousand euro) Head office relation (a) right% Company % share

A. Companies A.1 Line-by-line consolidation Banco Popolare di Verona e Novara S.c.a r.l. Verona Parent company Aletti & C. Banca di Investimento Mobiliare S.p.A. Milan (1) BPVN 74.349% 74.349% Credito Bergamasco 25.651% 25.651% Aletti Fiduciaria S.p.A. Milan (1) Aletti & C. Banca 100.000% 100.000% Aletti Gestielle SGR S.p.A. Milan (1) BPVN 32.612% 32.612% Credito Bergamasco 19.591% 19.591% Holding di Partecip. 47.797% 47.797% Aletti Gestielle Alternative SGR S.p.A. Milan (1) Holding di Partecip. 70.800% 70.800% Credito Bergamasco 29.200% 29.200% Aletti Merchant S.p.A. Verona (1) BPVN 60.000% 60.000% Credito Bergamasco 40.000% 40.000% Aletti Private Equity SGR S.p.A. Verona (1) Aletti Merchant 99.860% 99.860% Holding di Partecip. 0.140% 0.140% Arena Broker S.r.l. Verona (1) Holding di Partecip. 57.300% 57.300% Banca Aletti & C. (Suisse) S.A. CH - Lugano (1) BPVN Luxemborg 100.000% 100.000% Banca Popolare di Novara S.p.A. Novara (1) BPVN 100.000% 100.000% Banca Popolare di Verona - SGSP S.p.A. Verona (1) BPVN 100.000% 100.000% Banco Popolare Ceská Republika, a.s. CZ - Prague (1) BPVN 100.000% 100.000% Banco Popolare Croatia d.d. HR - Zagreb (1) BPVN 85.252% 98.236% Banco Popolare Hungary Zrt. H - Budapest (1) BPVN 100.000% 100.000% Bio Energy International S.A. L - Luxembourg (1) Aletti Merchant 99.998% 99.998% BPVN Immobiliare S.r.l. Verona (1) BPVN 100.000% 100.000% BPVN (Luxembourg) S.A. L - Luxembourg (1) BPVN 99.969% 99.969% Holding di Partecip. 0.031% 0.031% Compagnia Finanziaria Ligure Piemontese S.p.A. Milan (1) BPVN 100.000% 100.000% (under liq.) Credito Bergamasco S.p.A. Bergamo (1) BPVN 87.719% 87.769% FIN.E.R.T. S.p.A (under liquidation) Marano (NA) (1) SE.RI. 100.000% 100.000% Holding di Partecipazioni Finanziarie Popolare di Verona e Novara S.p.A. Verona (1) BPVN 100.000% 100.000% ICB Service Kft. H - Budapest (1) BP Hungary 100.000% 100.000% Immobiliare BPV S.r.l. Verona (1) BPVN 100.000% 100.000% Milan Leasing S.p.A. (under liquidation) Milan (1) Aletti Merchant 99.999% 99.999% Novara Invest SIM S.p.A. (under liquidation) Milan (1) BPVN 99.000% 99.000% Aletti Gestielle SGR 1.000% 1.000% Parchi del Garda S.p.A. Milan (1) Aletti Merchant 73.636% 73.636% Seefinanz S.A. (under liquidation) CH - Lugano (1) BPVN 100.000% 100.000% Servizi Riscossione Imposte SE.R.I. S.p.A. (under Naples (1) BPVN 80.000% 80.000% liq.) Società Gestione Servizi - BPVN S.p.A. Verona (1) BPVN 75.490% 75.490% Credito Bergamasco 24.510% 24.510% Tecmarket Servizi S.p.A. Verona (1) BPVN 47.500% 47.500% SGS 52.500% 52.500% Verona e Novara France S.A. F - Paris (1) BPVN Luxemborg 99.888% 99.888% (a) Type of relation: (1) Control under art. 2359 civil code, paragraph 1, n. 1, (majority of voting rights in general shareholders’ meeting)

71 Gruppo Banco Popolare di Verona e Novara

OPERATING RESULTS AND PERFORMANCE

Credit intermediation

Direct customer funds

As at June 30th, 2007, direct customer funds reached 56,092 millions from 50,574 millions on December 31st, 2006, showing a 10.9% increase. The annual growth rate was 25.6%.

Direct customer founds

60,000

50,000 56,092.1 50,574.0

€ 40,000

30,000 in mln of 20,000

10,000

0 31/12/2006 30/06/2007

(in thousand euro) 30/06/2007 31/12/2006 Changes

Due to customers 29,031,672 28,905,375 126,297 0.4% - checking accounts and demand deposits 21,275,562 22,080,458 -804,896 -3.6% - time deposits 2,444,415 2,065,334 379,081 18.4% - repurchase agreements and other payables 5,311,695 4,759,583 552,112 11.6% Debt securities in issue 21,108,499 16,334,515 4,773,984 29.2% Financial liabilities measured at fair value 5,951,969 5,334,143 617,826 11.6% Total Direct customer funds 56,092,140 50,574,033 5,518,107 10.9%

The growth in direct customer funds in first half 2007 was mainly driven by debt securities in issue (+29.2%), which include notes for 3,041 millions issued by BP Mortgages in the first half of the year for the two securitizations of performing loans executed by the Group. Net of this component, direct customer funds increased by 2,478 millions (+4.9%). The decrease in checking accounts is partly due to the new bond issues and partly to the increase in customer repurchase agreements.

72 Gruppo Banco Popolare di Verona e Novara

Indirect customer funds

The market value of indirect customer funds at the end of June amounted to 68,691 millions, down by 7.6% as compared with 74,374 millions on December 31st, 2006. The decrease in funds was mainly due to the reorganization of bancassurance partnerships.

Indirect customers funds

80,000

60,000 74,374.5 € 68,691.2

40,000 in mln of 20,000

0 31/12/2006 30/06/2007

(in thousand euro) 30/06/2007 31/12/2006 Changes

Assets under management 30,502,061 31,144,121 -642,060 - 2.1% - Mutual funds and SICAV 13,319,712 13,460,644 -140,932 -1.0% - Managed accounts invested in securities and funds 10,758,033 11,405,265 -647,232 -5.7% - Insurance policies 6,424,316 6,278,212 146,104 2.3% Assets under custody 38,189,140 43,230,363 -5,041,223 - 11.7% Total Indirect customer funds 68,691,201 74,374,484 -5,683,283 -7.6%

Excluding institutional customer funds under management and custody (mutual funds, banking foundations, merchant banks, leasing and factoring companies, investment companies - SIM, SICAV, fund managers, insurance companies, pension and other superannuation funds, central supervisory authorities and banking associations), assets and management and custody totaled 59,318 millions, up by 4.2 % from 56,917 millions on December 31st, 2006 (+9.0% from 54,445 millions on June 30th, 2006).

Total customer funds (direct customer funds + indirect customer funds) amounted to 124,783 millions, reporting a decrease of 0.1% from 124,949 millions on December 31st, 2006 (+5.5% increase with respect to the June 30th, 2006 adjusted data of 118,307 millions).

73 Gruppo Banco Popolare di Verona e Novara

Loans to customers

On June 30th, 2007, gross customer loans reached 50,261 millions, up by 9.0% from 46,124 millions on December 31st, 2006. On a like-to-like consolidation basis, hence stripping the aggregate as at June 30th, 2006 of the loans attributable to Leasimpresa and to other subsidiaries sold in 2006, the annual growth rate was 16.5%.

Loans to customers

50,000 50,261.0 40,000 46,123.9 € 30,000

20,000 in mln of

10,000

0 31/12/2006 30/06/2007

Net of total write-downs, loan totaled 49.387 millions, up by 9.2% from 45,245 millions on December 31st, 2006 (+16.8% annual growth rate when compared to the adjusted data to account for the exit of Leasimpresa from the consolidation scope).

(in thousand euro) 30/06/2007 31/12/2006 Changes

Mortgages 17,636,240 18,092,144 -455,904 -2.5% Checking accounts 10,801,433 10,318,965 482,468 4.7% Finance lease 38 48 -10 -20.8% Repurchase agreements 1,319,257 514,744 804,513 156.3% Assets sold and not derecognized 2,969,810 - 2,969,810 Credit lines and other loans 16,659,770 16,318,662 341,108 2.1% Total loans to customers 49,386,548 45,244,563 4,141,985 9.2%

Worth mentioning within this compartment are repurchase agreements. Including also assets sold and not derecognized (namely, performing home and land mortgages sold as a result of securitizations), mortgages increased by 13.9%.

74 Gruppo Banco Popolare di Verona e Novara

30/06/2007 Individual Collective Gross exposure Net exposure (in thousand euro) write-downs write-downs

Impaired loans 1,809,520 -583,256 -1,549 1,224,715 Non-performing loans 1,038,821 -490,356 - 548,465 Watchlist loans 589,921 -76,447 -855 512,619 Restructured loans 99,087 -16,445 - 82,642 Past dues 81,691 -8 -694 80,989

Performing loans 48,451,455 - -289,622 48,161,833 Country risk 95 - -18 77 Other performing loans 48,451,360 - -289,604 48,161,756

Total 50,260,975 -583,256 -291,171 49,386,548

31/12/2006 Individual Collective Gross exposure Net exposure (in thousand euro) write-downs write-downs

Impaired loans 1,754,394 -607,930 -1,553 1,144,911 Non-performing loans 1,064,495 -514,842 -2 549,651 Watchlist loans 553,048 -83,387 -881 468,780 Restructured loans 59,437 -9,701 -24 49,712 Past dues 77,414 -646 76,768

Performing loans 44,369,511 - -269,859 44,099,652 Country risk 5,359 - -273 5,086 Other performing loans 44,364,152 - -269,586 44,094,566

Total 46,123,905 -607,930 -271,412 45,244,563

On June 30th, 2007, total impaired loans (non-performing, watchlist, restructured loans and past-dues/overdrafts for more than 180 days), net of write-downs, stood at 1,225 millions, up by 7.0% from 1,145 millions on December 31st, 2006. Among impaired loans, Net NPLs reported an 0.2% reduction as compared with yearend.

75 Gruppo Banco Popolare di Verona e Novara

Impaired loans

2,000

1,809.5 1,500 1,754.4 €

1,000 in mln of 500

0 31/12/2006 30/06/2007

The impaired loans to total customer loans ratio, gross of write-downs, at the end of first half 2007 was running at 3.6% from 3.8% on December 31st, 2006. This downtrend is further confirmed by the same ratio net of write- downs, which went from 2.53% on December 31st, 2006 to 2.48% at the end of June 2007.

The NPL to loans ratio, gross of write-downs, totaled 2.07% from 2.31% on December 31st, 2006. Net of write- downs, the ratio stood at 1.11% from 1.21% on December 31st, 2006.

56.092,1

Gross NPL / Gross Loans 2.31%

2.07%

31/12/2006 30/06/2007

Write-downs of impaired loans on June 30th, 2007 accounted for 32.32% of their total gross value, as compared with 34.74% on December 31st, 2006. In particular, write-downs of non-performing loans at the end of June accounted for 47.20% of their gross value, with respect to 48.37% on December 31st, 2006. Write- downs of performing loans accounted for 0.60% of their total gross value, from 0.61% on December 31st, 2006.

76 Gruppo Banco Popolare di Verona e Novara

Financial assets

On June 30th, 2007, the Group’s financial assets totaled 11,615 millions, up by 8.2% from 10,732 millions on December 31st, 2006.

(in thousand euro) 30/06/2007 31/12/2006 Changes

Financial assets held for trading 9,452,472 8,424,623 1,027,849 12.2% Financial assets measured at fair value 332,850 314,430 18,420 5.9% Financial assets available for sale 1,023,282 1,053,752 -30,470 -2.9% Financial assets held to maturity 806,435 939,319 -132,884 -14.1%

Total 11,615,039 10,732,124 882,915 8.2%

Financial assets held for trading on June 30th, 2007 accounted for 81.4% of the Group’s total financial assets, reporting an increase of 12.2%. Shown below is the breakdown of Financial assets held for trading by type of financial instrument.

(in thousand euro) 30/06/2007 31/12/2006 Changes

Debt securities 2,512,992 2,816,831 -303,839 -10.8% Equity securities 1,084,092 599,449 484,643 80.8% UCITS units 767,018 951,844 -184,826 -19.4% Assets sold and not derecognized 3,053,327 2,488,331 564,996 22.7% Financial and credit derivatives 2,035,043 1,568,168 466,875 29.8%

Total 9,452,472 8,424,623 1,027,849 12.2%

Assets sold and not derecognized are represented by securities sold as part of repurchase agreements. With regard to financial and credit derivatives, note that loans to customers totaled 458 million euro. Net of institutional counterparties (financial and insurance companies, etc.), amounting to 254 millions, loans to corporate customers on June 30th, 2007 stood at 204 millions, net of write-downs of 17.4 millions.

77 Gruppo Banco Popolare di Verona e Novara

Financial assets measured at fair value illustrated below are mainly represented by investments in UCITS units.

(in thousand euro) 30/06/2007 31/12/2006 Changes

Debt securities 1,390 3,789 -2,399 -63.3% Equity securities 14,562 9,901 4,661 47.1% UCITS units 316,898 300,740 16,158 5.4%

Total 332,850 314,430 18,420 5.9%

Shown below is the breakdown of financial assets available for sale.

(in thousand euro) 30/06/2007 31/12/2006 Changes

Debt securities 377,087 496,147 -119,060 -24.0% Equity securities 579,153 492,777 86,376 17.5% UCITS units 27,178 22,688 4,490 19.8% Assets sold and not derecognized 39,864 42,140 -2,276 -5.4%

Total 1,023,282 1,053,752 -30,470 -2.9%

Financial assets held to maturity are represented exclusively by debt securities, of which part was used for repurchase agreements.

(in thousand euro) 30/06/2007 31/12/2006 Changes

Debt securities 499,810 79,502 420,308 528.7% Assets sold and not derecognized 306,625 859,817 -553,192 -64.3%

Total 806,435 939,319 -132,884 -14.1%

78 Gruppo Banco Popolare di Verona e Novara

Equity investments

As at June 30th, 2007, equity investments in companies under a significant influence and in jointly controlled companies amounted to 666 millions from 797 millions on December 31st, 2006. Shown below are equity investments in jointly controlled companies (carried at equity) and in companies under significant influence.

Type of Shareholding relation Voting (thousand euro) Head office relation rights % (a) Company % Share

A. Companies under joint control

AF Mezzanine SGR S.p.A. Milan (7) Aletti Merchant 50.000% 50.000% Linea S.p.A. Milan (7) BPVN 47.963% 47.963% Novara Vita S.p.A. Novara (7) BPVN 50.000% 50.000% Polo Finanziario S.p.A. Verona (7) BPVN 33.333% 33.333%

B. Companies under significant influence

Abitando S.p.A. Milan (8) Aletti Merchant 20.000% 20.000% Banca per il Leasing - Italease S.p.A. Milan (8) BPVN 13.139% 13.139% Holding 14.657% 14.657% Credito Bergamasco 2.923% 2.923% Bertani Holding S.p.A. Verona (8) Aletti Merchant 22.330% 22.330% BPV Vita S.p.A. Verona (8) BPVN 35.000% 35.000% Credito Bergamasco 15.000% 15.000% Cornel S.a.r.l. L - Luxembourg (8) Aletti Merchant 39.900% 39.900% Delta S.p.A. Bologna (8) BPVN 20.000% 20.000% Estates Capital Venture S.A. L - Luxembourg (8) Aletti Merchant 45.000% 45.000% G.I. Holding S.p.A. Milan (8) Aletti Merchant 29.346% 30.412% GEMA Magazzini Generali BPV-BSGSP S.p.A. Castelnovo Sotto (RE) (8) BPVN 33.333% 33.333% Gruppo Operaz. Underwriting Banche Popolari Milan (8) Banca Aletti 22.500% 22.500% S.r.l. HI-MTF S.p.A. Milan (8) Banca Aletti 25.000% 25.000% Istituto Centrale delle Banche Pop. Italiane S.p.A. Rome (8) BPVN 15.000% 15.000% Holding 7.089% 7.089% Novara Promuove S.r.l. Novara (8) BPN 49.000% 49.000% Phoenix S.p.A. Verona (8) Aletti Merchant 40.000% 40.000% Soc. Coop. fra le Banche Pop. "L.Luzzatti" S.c.r.l. Rome (8) BPVN 25.100% 25.100% Triera S.p.A. Rovigo (8) Bio Energy 49.000% 49.000% Veronagest S.A. L - Luxembourg (8) Aletti Merchant 37.150% 37.150% (a) Type of relation: (7) Joint control (8) Associate

In addition to the transactions already illustrated in the section devoted to noteworthy events for the period (subscription of Banca Italease’s capital increase), it should be noted that in the semester Aletti Merchant increased its shareholding in Bertani Holding S.p.A. to 22.33%. On December 31st, 2006 it held a 18.999% interest and shares were classified among financial assets available for sale (item 40 of assets). The total investment for the 22.33% share was 5 millions. When HI-MTF S.p.A. was incorporated, the Group subscribed a 25% interest in the company’s share capital against a total investment of 1 million euro. The associate’s purpose is to produce and maintain one information systems supporting the provision of banking and investment services and collective asset management, as well as the associated services for users.

79 Gruppo Banco Popolare di Verona e Novara

In June, as part of the merchant banking activities, part of the share held Pama S.p.A. was sold, generating a gross capital gain of 4 millions. As a result of said disposal, the share held by the Group decreased to 12% and therefore shares have been classified under item 40 of assets “Financial assets available for sale”.

Shareholders’ equity

The consolidated shareholders’ equity as at June 30th, 2007, inclusive of valuation reserves and the net income for the period, totaled 4,559 millions, reporting a decrease of 313 millions (-6.4%) from 4,872 millions on December 31st, 2006. The decrease in shareholders’ equity is due to the dividend distribution, partly offset by the net income for the period.

Consolidated shareholders’ equity

6,000

5,000

€ 4,000 4,872.0 4,559.4

3,000 in mln of 2,000

1,000

0 31/12/2006 30/06/2007

80 Gruppo Banco Popolare di Verona e Novara

Comparison between the Parent company’s shareholders’ equity and the net income for the period and the consolidated shareholders’ equity and net income for the period

Net income (thousand euro) Shareholders’ equity for the period

Balances as at 30-06-2007 as in Parent company’s accounts 3,740,216 354,877

Write-off of dividends collected in the period from fully consolidated companies and companies carried at equity (254,536)

Derecognition of intercompany capital gains from discontinuing and contributing operations (164,914) 2,311

Difference between the shareholders’ equity of the consolidated associates and their carrying amount, net of minority interest 1,015,204

Net income for the period of consolidated associates, net of minority interest 277,665

Difference between the pro-rata value of the shareholders’ equity and the carrying amount of equity investments carried at equity (31,137)

Group’s share of profit for the period of associates carried at equity (127,810)

Balances as at 30-06-2007 as in consolidated accounts 4,559,369 252,507

Risk monitoring and control

Among the most relevant events occurred in the first months of 2007, worth mentioning is the end of the fine- tuning project for the Value Based Management model (risk-adjusted profitability and value creation measures), dealing with the exhaustive and precise measurement of capital absorbed from the various types of risks to which the Group is exposed. A special focus was devoted to verifying the consistency of adopted methods and models in the light of Basel II.

Moreover, the current budget and planning tools and processes are now being assessed, to identify and launch tools capable of estimating future capital absorption in view of the prospective internal capital adequacy assessment (ICAAP – Basel II Second Pillar).

Financial risks

As part of the project for the validation of the internal model (VaR Historical Simulation approach) to calculate market risk-related capital requirements, it is worth highlighting the first cash product-related risk assessment results (bonds, stocks, money market instruments, funds) based on the new methodology. In the meanwhile, equity option-related pricing and VaR calculation are being assessed.

81 Gruppo Banco Popolare di Verona e Novara

In order to make the market risk assessment process more efficient and effective from both a regulatory and operational viewpoint, in-depth analyses have been performed to seek possible room for improvements of the methodologies and of the performance and economy of the calculation systems. Following the merger of the ex-Bpvn and ex-BPI Groups, the market risk limits (trading book and banking book) and the associated Risk Limit Regulation were extended to the new companies, so as to adopt the same logics across the group.

FY 2007 – First 6 months FY 2006 – First 6 months VaR of Trading activities broken down by type of risk 30 June Average Max Min 30 June Average (mln €) (mln €) (mln €) (mln €) (mln €) (mln €)

Interest rate risk 21.8 9.3 21.8 2.9 8.6 10.2 Exchange rate risk 6.2 3.5 6.2 1.5 1.3 1.5 Equity risk 16.0 17.2 23.0 10.9 15.0 10.7 Diversification Effect -14.2 -8.6 n.s. n.s. -6.7 -8.6

Correlated total 29.9 21.3 29.9 14.4 18.2 13.7

FY 2007 – First 6 months FY 2006 – First 6 months Risk ratios 30 June Average 2007 Max Min 30 June Average 2006

Risk ratios per shift of +100 bp Net interest, dividend and similar income at risk / Net interest, 3.3% 5.0% 6.0% 3.3% 4.9% 5.6% dividend and similar income Economic Value at risk / Capital 1.9% 1.9% 2.3% 1.6% 1.5% 2.0% economic Value Risk ratios per shift of -100 bp Net interest, dividend and similar income at risk / Net interest, -1.7% -3.5% -1.7% -4.5% -3.5% -4.5% dividend and similar income Economic Value at risk / Capital -1.6% -1.7% -1.3% -2.1% -1.2% -1.7% Economic Value

82 Gruppo Banco Popolare di Verona e Novara

Credit risks

As part of the Basel 2 project, aiming at validating IRB methodologies to calculate new capital absorptions, Corporate counterparty rating models are being re-estimated and validated. The activities to adjust the systems responsible for the calculation of risk-weighted assets under Basel 2 are progressing. The activities for the conduction of stress-tests for the assessment of the banking group’s capital adequacy in view of credit risks and for the fine-tuning of the internal portfolio model to estimate Economic capital have begun. The first hedging transactions aiming at optimizing the risk profile of the Group’s portfolio have been completed.

Operational risks

In Q2 2007, actions were taken to ensure the adoption of the “Standard” method by Gruppo Banco Popolare di Verona e Novara with the coming into effect of the New Capital Accord. The data collection process has been further enhanced, by uncoupling the Enterprise Centers from the branches with regard to the reporting of operating losses and commercial refunds. In order to supplement data and make them available to the management control structures, a monthly data flow has been put in place to supply commercial refund and operating loss information, with the possibility of tracing them back to the single customer. The insurance recovery management process centralized in the company Arena Broker has been activated. In view of the integration with BPI, operational risk management methodologies to be adopted in the Banco Popolare group have been coordinated, together with the plan to extend them to the ex BPI banks. Training activities have begun for BPI’s Accounting, HR and Legal Affairs Departments, so that they may be fully operational and autonomous by July 2007, in line with the methodology applied in the BPVN group. On June 30th, 2007, the advanced internal model for operational risk management was being further enhanced. A data quality action was performed on all Loss Collection data, aiming at improving the capital requirement calculation based on AMA methodologies.

Consolidated income statement

The growth in intermediated volumes coupled with the interest rate rise drove net interest income up to 712.6 millions, with an 11.6% increase over the same data last year, on a like-to-like basis in terms of consolidation scope. The Q2 contribution to this aggregate was 358.0 millions, up by 1% with respect to 354.6 million euro in Q1 2007.

83 Gruppo Banco Popolare di Verona e Novara

Net interest income

800

600 712.6 € 646.8 638.3 400 in mln of 200

0 I H 2006I H 2006 proforma I H 2007

Net interest, dividend and similar income for the period was significantly penalized by the recognition of the share in the loss reported by Gruppo Banca Italease amounting to 478.8 millions. The contribution to net income of the share of results reported by jointly controlled companies and by companies under a significant influence recorded a loss of 136.9 millions, while in H1 2006 it had posted a profit of 30.8 millions. Net of this non-recurring component (amounting to 145.4 millions), the other associates carried at equity made a positive contribution of 8.5 millions to the first half result, basically in line with the 8.3 millions on a like-to-like basis (excluding for comparative reasons the contribution made by Gruppo Banca Italease) in first half 2006. The Q2 contribution to the recurring result was 4.2 millions, as compared with 4.3 millions in Q1 2007. As a result, the recurring net interest, dividend and similar income in Q2 amounted to 362.2 millions, up by 0.9% with respect to Q1 2007 (358.9 millions).

Net commission income totaled 446.2 millions, up by 1.9% from 438.0 millions in first half 2006. The breakdown shows that asset management services increased by 10.7%, offsetting the decrease recorded by securities placement , custodian bank and currency trading activities. Also commissions from payment and collection services and the other components making up this aggregate reported a positive performance. Q2 2007 commissions totaled 230.4 millions, reporting a marked increase over 215.8 millions in Q1, mainly driven by commissions from the activity of insurance arrangers.

Net commissions

500

400 439.8 438.0 446.2 € 300

200 in mln of

100

0 I H 2006I H 2006 proforma I H 2007

84 Gruppo Banco Popolare di Verona e Novara

(in thousand euro) I H 2007 I H 2006 I H 2006 (*) Change

Management, brokerage and advisory services 307,144 306,952 306,952 0.1% Expense recovery on checking accounts and other loans to retail customers 54,650 51,106 51,106 6.9% Payment and collection services 47,479 43,425 42,883 10.7% Guarantees given 14,925 14,316 14,370 3.9% Other services 21,998 24,044 22,651 -2.9%

Net commission income 446,196 439,843 437,962 1.9% (*) Adjusted for comparison to take account of changes in the consolidation scope and in classification criteria.

Shown below is the breakdown of commissions from management, brokerage and advisory services.

(in thousand euro) I H 2007 I H 2006 I H 2006 (*) Change

Asset management 144,639 157,419 157,419 -8.1% Distribution of third party services 90,268 54,717 54,717 65.0% Securities placement 30,797 48,435 48,435 -36.4% Custodian bank 11,693 14,397 14,397 -18.8% Order collection 15,389 13,793 13,793 11.6% Trading of financial instruments 12,326 10,035 10,035 22.8% Currency trading 1,782 6,819 6,819 -73.9% Securities custody and administration 267 1,142 1,142 -76.6% Advisory services 1,831 2,204 2,204 -16.9% Off-branch sale of securities, products and services -1,848 -2,009 -2,009 -8.0%

Total 307,144 306,952 306,952 0.1% (*) Adjusted for comparison to take account of changes in the consolidation scope and in classification criteria.

Other revenues stood at 66.0 millions from 77.8 millions in first half 2006. the dip is mainly due to the reduction in expense recoveries from checking accounts and the recognition of charges associated with the settlement of some legal disputes. The Q2 contribution came in at 31.6 millions, down from 34.4 millions in Q1 for the same reasons.

Net financial income, an aggregate comprising the net profit or loss from assets and liabilities held for trading for hedging, and measured at fair value, profit or loss from the sale and repurchase of financial assets and liabilities and dividends collected from shares classified as financial assets held for trading and available for sale, added up to 137.7 millions, reporting a 21.8% increase over 113.0 millions in first half 2006. Both periods benefited from the positive non-recurring contribution from the sale of shares included under financial assets available for sale. In first half 2007, a 7.0 million euro profit from the sale of Promatech shares and a capital gain of 1.7 millions from the merger of SIA (Società Interbancaria per l’Automazione) into SSB (Società per i Servizi Bancari) were recognized. In the same period last year, a 7.4 million profit from the sale of S.I. Holding shares had been recognized. Net of non-recurring items, net financial income came in at 129.0 millions, up by 22.2% with respect to the same comparative data in 1H 2006 (105.6 millions).

85 Gruppo Banco Popolare di Verona e Novara

The Q2 contribution was 67.4 millions over 70.3 millions in Q1. It should be pointed out, that the Q2 2007 result was penalized by the counterparty risk assessments associated with exposures outstanding at the end of the semester with regard to derivative contracts with customers. Impairments charged to income in the second quarter totaled 13.1 millions. Net of non-recurring items, the Q2 contribution came in at 65.7 millions, up by 3.9% from 63.2 millions in Q1.

(in thousand euro) I H 2007 I H 2006 I H 2006 (*) Change

Net trading income -980 43,279 30,489 Fair value adjustments in hedge accounting 690 541 541 27.5% Profit/Loss from purchase / disposal: 11,946 8,497 8,497 40.6% - financial assets available for sale (AFS) 11,023 7,548 7,548 46.0% - financial liabilities 923 949 949 -2.7% Profit/Loss of financial assets and liabilities designated at 14,000 15,167 15,167 -7.7% fair value Dividend and similar income from financial assets 112,010 58,298 58,298 92.1%

Net financial income 137,666 125,782 112,992 21.8% (*) Adjusted for comparison to take account of changes in the consolidation scope and in classification criteria.

As a result, other operating income (total income other than net interest, dividend and similar income) added up to 649.8 millions, up by 3.4% from the comparative data for 1H 2006 of 628.8 millions.

Total income

1,400

1,200 1,325.0 1,297.8 1,225.6 € 1,000

800 in mln of

600

400 I H 2006I H 2006 proforma I H 2007

86 Gruppo Banco Popolare di Verona e Novara

Total income (net interest, dividend and similar income + other operating income) came in at 1,225.6 millions, reporting a 5.6% decrease on a like-to-like basis from 1,297.8 millions for the first half last year. Net of non- recurring items, however, it totaled 1,362.3 millions, up by 7.4% form 1,267.9 millions in 1H 2006.

Personnel expenses stood at 412.9 millions, down by 2.8% on a like to like basis from 424.8 millions in H1 2006. Note, that the second quarter benefited from the positive impact generated by the changes in the way termination benefits are recognized in compliance with the supplementary pension reform. The impact of this change amounted to 35.5 millions. Net of this non-recurring item, personnel expenses in 1H 2007 amounted to 448.4 millions, up by 5.5% over 424.8 millions in the same period last year. The growth was mainly driven by the increase in the Group’s average headcount.

The Q2 contribution was 188.2 millions, from 224.7 millions in Q1. Net of non-recurring items, the contribution made by the second quarter totaled 223.7 millions, down by 0.4%.

Other administrative expenses amounted to 200.6 millions, up by 3.0% over 194.8 millions reported on a like- to-like basis the year before. 1H expenses include a 4.7 million non-recurring component associated with the ongoing integration process. Net of non-recurring items, other administrative expenses totaled 195.9 millions, up by 0.5%. Net impairments of property, plant and equipment and intangible assets totaled 47.1 millions, up from 44.5 millions charged to income in the first six months of 2006.

Operating costs totaled 660.6 millions, reporting a slight decrease (-0.5%) from 664.2 millions on a comparative basis in the same period last year. Net of the non-recurring items described above, total operating costs would amount to 691.4 millions, up by 4.1% from 664.2 millions in 1H 2006.

The Q2 contribution was 313.7 millions, as compared with 346.9 millions in Q1. Net of non-recurring components, the second quarter made a contribution of 344.5 millions, down by 0.7% over the comparative non-recurring data at the end of March.

On June 30th, 2007 the cost income ratio was running at 53.9%. Net of non-recurring items, the cost income ratio stood at 50.8%.

As a result, profit from operations added up to 564.9 millions, down by 10,8% on a like-to-like basis from 633.6 millions on June 30th, 2006. Net of non-recurring items, profit from operations came in at 670.9 millions, up by 11.1% over 603.7 millions in the first half last year.

Net write-downs for loan impairment totaled 63.2 millions from 25.4 millions last year. The aggregate includes profit from loan disposal. In particular, in Q2 2006 the sale without-recourse of a portfolio of non-performing loans with a total gross book value of about 174 millions had been finalized. Loan sales finalized in 1H 2007 generated net write-backs of 3.0 millions, while those finalized in the same period last year generated net write-backs of 38.1 millions. Net of the economic impact from loan disposal, net write-downs for loan impairment on June 30th, 2007 totaled 66.2 millions, up by 4.2% over 63.6 millions in 1H 2006. Stripping out the impact of disposals and the time value effect from the measurement of impaired loans, the net cost of lending was 35 b.p. as compared with36 b.p. in the same period last year.

Provisions for risks and charges stood at 5.9 millions from 22.2 millions in 1H 2006.

87 Gruppo Banco Popolare di Verona e Novara

In the first six months of the year, equity and other investments were disposed of, generating a positive impact at income statement level of 9 millions. In Q1 2006, the sale of some tangible assets (property) had generated the recognition of capital gains of 39.6 millions.

Income before tax from continuing operations amounted to 504.0 millions, down from 625.6 millions on June 30th, 2006. Net of non-recurring items, it came in at 597.9 millions, up by 15.4% from 518.0 millions in the same period last year.

Net income from discontinued operations totaled 2.7 millions, with respect to 9.2 millions the year before, and it is mostly represented by the contribution from the 50% interest in BPV Vita.

Net of an income tax for the period of 250.0 millions and a minority interest of 4.2 millions, net income for the period totaled 252.5 millions, down from 387.1 millions in the same period last year. Net of non-recurring items, the net income for the period however added up to 347.6 millions, reporting a 15.7% growth over 300.5 millions in 1H 2006.

Net income for the period

400

397.4 300 387.1 €

200 252.5 in mln of 100

0 I H 2006I H 2006 proforma I H 2007

88 Gruppo Banco Popolare di Verona e Novara

Main financial highlights of the companies of the Group

Shown below is a summary of the main equity investments in Group companies, showing the main financial and operating highlights for 1H 2007.

Direct Indirect Total Shareholder Income (in million euro) customer customer Net loans assets s’ equity (*) (Loss) funds funds

Banking companies Banco Popolare di Verona e Novara 46,681.7 3,740.2 32,469.8 26,053.1 25,043.7 354.9 Banca Popolare di Novara 21,640.0 1,025.8 12,054.7 23,539.9 11,643.2 84.8 Credito Bergamasco 16,659.2 1,067.3 9,438.4 12,375.9 10,702.1 26.8 Banca Aletti & C. 16,936.3 335.0 2,177.7 14,522.2 1,602.0 67.9 BPVN (Luxembourg) 1,267.9 52.1 900.9 2,045.0 225.7 2.0 Banca Aletti & C. (Suisse) 41.8 10.5 28.8 432.4 3.2 0.9 Banco Popolare Croatia 190.4 25.4 133.4 - 115.9 0.2 Banco Popolare Hungary 67.1 11.3 51.9 - 26.0 (0.6) Banco Popolare Ceská Republika 34.6 19.9 14.2 - 10.5 (0.0) Financial companies Aletti Merchant 144.0 132.9 - - 16.1 6.6 Holding di Partecipazioni Finanziarie Popolare di Verona e Novara 367.2 361.7 - - - (56.8) Aletti Gestielle SGR 107.7 31.8 - 13,324.1 - 0.3 Aletti Gestielle Alternative SGR 31.8 9.2 - 2.223.5 - 3.2 Aletti Private Equity SGR 6.2 4.3 - 92.9 - (0.2) Other companies Società Gestione Servizi - BPVN 262.6 108.2 - - - 4.0 BPVN Immobiliare 40.8 38.2 - - - 0.3 COFILP (under liquidation) 22.7 20.7 - - - Seefinanz (under liquidation) 21.7 21.7 - - - 0.1 Tecmarket Servizi 6.7 3.4 - - - 1.7 Immobiliare BPV 3.8 3.6 - - - (0.0) (*) Inclusive of net income for the period

89 Gruppo Banco Popolare di Verona e Novara

SEGMENT REPORTING

A. Primary format

Gruppo Banco Popolare di Verona e Novara decided to adopt the “business segment” as its primary reporting format.

Business segment definition criteria

The segment reporting of financial and profitability information under IAS 14 for Gruppo BPVN for the primary format is comprised of three Business Segments and a residual segment (Other): x Commercial Banking – Retail: it includes the business activities of the three commercial banks serving the Retail customer segments (private and small-sized enterprises), the business activities of the Group companies engaging in bancassurance and the foreign companies mainly serving Retail customers; x Commercial Banking – Corporate: it includes the business activities of the three commercial banks serving the Corporate customer segments (mid and large corporations), the business activities of the Group companies engaging in leasing, factoring, merchant banking and insurance brokerage and the foreign companies mainly serving Corporate customers; x Investment Banking, Private Banking e Asset Management – Finance and Private Banking: it includes the portfolio management for Private customers, asset management, Treasury, proprietary portfolio management and access to financial markets; x Other: it includes: - other companies whose business activities do not belong to the Group’s Core Business (Real estate, etc.); - Corporate Center, that includes all the items associated with the management of the company and all those items that are not directly linked to the business activities of the three business areas described above, as well as special non-performing items that are not directly attributable to retail or corporate; - any balance sheet or income statement inter-segment elimination, in compliance with relevant regulations, that has not been allocated to the relevant segments of belonging.

The three commercial banks have been allocated to the business segments based on the outcome of the business reporting system, while the other companies of the group were assigned to the business segments based on the main business activity they engage in.

Criteria used to distribute the income statement by Business Segment

The income statement by business segment was prepared along the following criteria: x the net interest income allocated to the business segments was determined by comparing the real revenues/costs of each item with the corresponding figurative values that were calculated based on Internal Rates of Transfer distinguished by maturity, type of product and currency; x other operating income was calculated by aggregating the total real commission amount by single transaction based on the segment of belonging (retail, corporate, private etc.) of the customer performing the transaction; x the combination of interest income and other operating income with total dividends allocated to the corporate center gives rise to total income as illustrated in the chart below;

90 Gruppo Banco Popolare di Verona e Novara

x operating costs are allocated along a full costing model, that assigns all the costs (personnel expenses, administrative expenses, amortization associated with deferred costs) of the commercial banks to the business areas; x loan impairment losses and provisions for risks and charges are allocated to their relevant business segments, while the other value adjustments and profits or losses from disposal of investments are allocated to the “Other” segment; x the income or loss before tax from continuing operations is thus calculated for each business segment, as illustrated in the segment reporting chart.

Criteria used to distribute the balance sheet by Business Segment

The balance sheet by business segment was prepared along the following criteria: x customer assets/liabilities are allocated to the business segments based on the results of the customer monitoring business systems; x balance sheet items related to due to and from banks are allocated to the “private and finance” segment; x the securities portfolio (both banking book and trading book) is allocated to the “private and finance” segment; x the other items, either because they refer to decisions made by the Corporate Center (Equity investments, provisions etc.). or because they are residual items (Other assets/liabilities), in keeping with the income statement model adopted, are allocated to the “other” segment.

91 Gruppo Banco Popolare di Verona e Novara

A.1 Distribution by business segment: Income statement

Invest. Bank, I H 2007 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

1 Net interest, dividend and similar income 497,271 64,453 -42,569 56,577 575,732 2 Other operating income 378,600 72,388 182,988 15,861 649,837 3 TOTAL INCOME (1+2) 875,871 136,841 140,419 72,438 1,225,569 4 Operating costs -478,116 -135,037 -59,190 11,705 -660,638 5 PROFIT FROM OPERATIONS (3+4) 397,755 1,804 81,229 84,143 564,931 6 Write-downs and provisions -46,763 -38,771 36 24,519 -60,979 INCOME BEFORE TAX FROM CONTINUING 7 350,992 -36,967 81,265 108,662 503,952 OPERATIONS

Invest. Bank, I H 2006 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

1 Net interest, dividend and similar income 427,358 231,809 -9,858 33,058 682,367 2 Other operating income 378,392 79,922 154,920 29,434 642,668 3 TOTAL INCOME (1+2) 805,750 311,731 145,062 62,492 1,325,035 4 Operating costs -488,329 -139,543 -53,473 11,246 -670,099 5 PROFIT FROM OPERATIONS (3+4) 317,421 172,188 91,589 73,738 654,936 6 Write-downs and provisions -14,995 -41,606 -72 46,950 -9,723 INCOME BEFORE TAX FROM CONTINUING 7 302,426 130,582 91,517 120,688 645,213 OPERATIONS

Invest. Bank, I H 2007 on a like-to-like basis (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

1 Net interest, dividend and similar income 422,142 216,156 -718 31,498 669,078 2 Other operating income 378,164 74,733 145,713 30,154 628,764 3 TOTAL INCOME (1+2) 800,306 290,889 144,995 61,652 1,297,842 4 Operating costs -488,329 -133,659 -53,473 11,263 -664,198 5 PROFIT FROM OPERATIONS (3+4) 311,977 157,230 91,522 72,915 633,644 6 Write-downs and provisions -16,687 -38,181 -78 46,949 -7,997 INCOME BEFORE TAX FROM CONTINUING 7 295,290 119,049 91,444 119,864 625,647 OPERATIONS

In order to provide a consistent representation of the operating results generated by Gruppo BPVN in each single business segment, FY 2006 comparative data have been restated on a like-to-like basis with the current year.

92 Gruppo Banco Popolare di Verona e Novara

In detail, comparative income data as at June 2006 are affected by: 1. the reclassification of customers carried out by the commercial banks at the end of the previous financial year. At the end of every year, commercial banks reclassify their customers taking into account the evolution of quantitative parameters (turnover), as well as commercial parameters (industry, type of banking operations, … etc) that are normally used to allocate each single customer to the corresponding segment of belonging. In order to ensure comparisons on a like-to-like basis during the year, business reports restate the comparative data referring to the first half of the previous year based on the segment of belonging of the current year; 2. the progressive enhancement of cost-allocation models and of the criteria to allocate net loan impairments.

A.2 Distribution by business segment: Balance sheet

Invest. Bank, 30/06/2007 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

Loans to customers 20,718,676 26,540,915 1,794,789 332,168 49,386,548 Total assets 21,311,375 29,366,147 20,415,020 3,613,481 74,706,023

Invest. Bank, 30/06/2007 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

Due to customers, Debt securities in issue and financial liabilities designated at fair 25,193,606 15,189,931 15,390,708 317,895 56,092,140 value Total liabilities 25,452,671 15,813,226 27,178,894 6,261,232 74,706,023

Invest. Bank, 31/12/2006 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

Loans to customers 18,922,093 25,309,852 833,807 178,811 45,244,563 Total assets 19,320,152 27,244,242 19,089,150 3,041,391 68,694,935

Invest. Bank, 31/12/2006 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

Due to customers, Debt securities in issue and financial liabilities designated at fair 24,386,395 16,109,473 9,890,789 187,376 50,574,033 value Total liabilities 24,741,843 16,678,833 20,736,006 6,538,253 68,694,935

93 Gruppo Banco Popolare di Verona e Novara

Equity investments in associates and joint ventures

Invest. Bank, 30/06/2007 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

Jointly controlled 130,912 712 0 15,017 146,641 Under significant influence 38,863 413,521 1,018 65,701 519,103

Invest. Bank, 31/12/2006 (thousand euro) Retail Corporate Priv. Bank., Other Total Asset Man.

Jointly controlled 123,328 636 0 15,013 138,977 Under significant influence 94,684 499,347 18 63,909 657,958

B. Secondary format

The secondary segment reporting format is the “geographical segment”.

Geographical Segment definition

The segment reporting of financial and profitability information under IAS 14 for Gruppo BPVN for the secondary format is comprised of two geographical segments and a residual area: x Italia: it refers to the business activities of the operational offices of the three commercial banks and the companies of the group whose registered offices are in Italy; x Abroad: it includes the business activities of the companies of the group whose registered offices are in foreign countries, as well as the business activities of foreign operational offices of Italian companies; x Other: it includes intra-segment relations, which, in compliance with regulations, have been segregated in a separate column for the reconciliation with the group’s consolidated results.

Criteria to distribute the income statement and balance sheet by Geographical Sectors

Both the balance sheet and the income statement have been prepared by referring to the accounting values of operating income and total assets and liabilities of the companies allocated in the segments mentioned above. Any intra-segment relation has been segregated, as required by the regulations, in a separate column for the reconciliation with the group’s consolidated results.

94 Gruppo Banco Popolare di Verona e Novara

B.1 Distribution by geographical segment: Income statement

I H 2007 (thousand euro) Italy Abroad Other Total

1,208,372 17,478 -281 1,225,569 Total income 1,208,372 17,478 -281 1,225,569

I H 2006 (thousand euro) Italy Abroad Other Total

1,316,231 9,314 -510 1,325,035 Total income 1,316,231 9,314 -510 1,325,035

I H 2006 like-to-like (thousand euro) Italy Abroad Other Total

1,289,041 9,311 -510 1,297,842 Total income 1,289,041 9,311 -510 1,297,842

B.2 Distribution by geographical segment: Balance sheet

30/06/2007 (thousand euro) Italy Abroad Other Total

73,325,389 8,948,007 -7,567,373 74,706,023 Total assets 73,325,389 8,948,007 -7,567,373 74,706,023

31/12/2006 (thousand euro) Italy Abroad Other Total

67,425,690 8,921,923 -7,652,678 68,694,935 Total assets 67,425,690 8,921,923 -7,652,678 68,694,935

95 Gruppo Banco Popolare di Verona e Novara

BANCO POPOLARE DI VERONA E NOVARA STOCK

Issue and trading of own equity securities

During the first six months of the year no new shares were issued. Summarized below are the buy/sell trades of Banco Popolare di Verona e Novara shares executed in the period:

Parent company common shares Number Nominal value (in €) Trading amount

Balance as at 31 December 2006 - - - Buy 13,668,046 49,204,966 323,929,830 Sell -13,668,046 -49,204,966 -323,935,104 Profit (loss) from trading 5,274 Profit (loss) from valuation - Balance as at 30 June 2007 - - -

In compliance with Consob’s recommendation published with note n. 92005334 of July 23rd, 1992, own shares were purchased and sold in counter-trend to the market, with the aim of supporting the stock’s “liquidity”.

Issue and trading of own convertible bonds

As at June 30th, 2007 no convertible bonds were outstanding.

Dividend distribution

On May 5th, the General Shareholders’ Meeting was convened, and the financial statements as at December 31st, 2006 of Banco Popolare dei Verona e Novara and the Group consolidated financial statements were approved. The approved unit dividend was euro 0.83 (+19%). Coupon n. 5 was paid on May 21st, 2007 and total dividends paid out against the entitled 375,328,315 shares amounted to euro 311,522,501.

Earnings per share

Due to the coming into effect of the merger, earnings per share disclosures are not meaningful.

96 Gruppo Banco Popolare di Verona e Novara

STOCK OPTION PLANS

During the Special shareholders’ meetings of Banca Popolare di Verona – Banco S.Geminiano e S.Prospero and Banca Popolare di Novara, upon approving the merger, shareholders had given mandate to Banco’s Board of Directors to implement a stock option plan addressing the managers of Banco and its subsidiaries, and had approved its guidelines and characteristics. Then shareholders had granted the Board of Directors the faculty to carry out a share capital increase, to be dedicated exclusively to the plan, for a maximum nominal amount of 26,431,362 euro, through the issue of maximum 7,342,045 common shares. In compliance with the above mentioned mandates, on July 2nd, 2002 the Regulations of the stock option plan of Banco Popolare di Verona e Novara were approved. The plan aims at fostering a teamwork approach across its management, with a strong focus on the Group’s strategic objectives, as well as at increasing the Group’s ability to retain its most valuable human resources and to cater for the best talents present on the market. The plan provides for the grant of registered, personal and non transferable rights to subscribe newly issued Banco common shares to those managers who, according to the Board of Directors’ undisputable opinion, may have a relevant impact upon the success and the results achieved by Banco and by the Group at large. The plan envisages three yearly grant cycles. Granted options can be exercised later after three years from the grant and within the following three years thereon, provided that on the exercise date there is still an outstanding employment relationship with any one company of the Group. The option exercise price shall not be lower than the greater between the share normal and nominal values. The normal value is the mean of the prices registered by the Milan Stock Exchange in the time window between the option grant date and the same date of the solar month before the grant.

On the same date, the validity was confirmed – and hence the suspension clause discontinued – of the effects of a total of 2,668,000 options already granted on January 26th, 2002 to managers of Gruppo Banca Popolare di Verona - Banco S.Geminiano e S.Prospero, based upon the resolutions passed by its Board of Directors. As a result, said options shall still bear their effects on Banco Popolare di Verona e Novara upon a one to one exchange ratio between shares of Banca Popolare di Verona - Banco S.Geminiano e S.Prospero and those of Banco Popolare di Verona e Novara. The exercise price of said options is that fixed at the time of their original grant, equal to 11.247 euro per share. On the same date, the completion of the first grant cycle was approved, with the grant of further 1,122,000 options, with an exercise price of 13.4 euro per share.

The second grant was carried out in financial year 2003, with the grant of 1,241,000 new options at the average exercise price of 10.554 euro, while 823,500 options expired because the managers to whom they had been granted have left the company. In financial year 2004, 2,572,000 additional new shares have been granted at the exercise price of 13.726 euro, while again as a result of the resignation of granted managers, 21,000 options have expired. In May 2005 a total number of 1,020,500 options were exercised; during the year, 70,000 options have expired, while no new grants were carried out. During 2006 the vesting period for the second tranche of the plan ended and as a result between June 1st and 30th, 2006 (calendar month following the month in which the General Meeting was held) beneficiaries could exercise the above options and the residual options from the first tranche that had not been exercised yet. On said occasion, a total of 2,392,500 options were exercised. As to exercised options, on July 3rd, 2006, n. 3,392,500 new shares were issued. In 2006, n. 28,000 options expired and no new grants were carried out. In first half 2007, no new grants were assigned , and no options expired. In 2007 the vesting period of the third tranche of the plan ended, and as a result beneficiaries exercised the above options and the residual options

97 Gruppo Banco Popolare di Verona e Novara

from the first and second tranches that had not been exercised yet. On said occasion, a total of 1,086,250 options were exercised, and with regard to exercised options, on June 19th, 2007, n. 1,086,250 new shares were issued. In first half 2007 no options have been extinguished and no new grants were carried out. Based on what illustrated above, shown below is the disclosure required by Consob under resolution n. 11508 of February15th, 2000.

30 June 2007 31 December 2006

Average Average Number of Market Number of Market exercise exercise shares prices shares prices price price

(1) Options outstanding at start of 3,247,500 13,132 21,720 5,668,000 12.225 17.090 period (2) New options assigned in the period ------(3) Options exercised in the period 1,086,250 13,509 22,030 2,392,500 11.238 20.430 (4) Options expired in the period ------(5) Options extinguished in the period - - - 28,000 (*) - - (6) Options outstanding at end of period 2,161,250 12,944 21,340 3,247,500 13.132 21.720 of which: exercisable 2,161,250 (**) 12,944 21,340 3,247,500 13.132 21.720 The market price is the average of the different dates, weighted for the amounts of shares for (2), (3), (4) and (5), spot for (1) and (6). In case of assignment of free shares, options shall have an exercise price equal to zero. (*) Extinguished options as the managers to which they had been assigned are not working with the Group anymore (**) of which: n. 55,000 exercisable in 2008, n. 647,500 exercisable in 2008 and 2009 and n. 1,458,750 exercisable in 2008, 2009 and 2010

Options assigned as at 30 June 2007 Of which: Exercise prices Residual contract life exercisable (vested) (in euro) between1 over 3 Average residual up to 1 year Total Total and 3 years years contract life

Below or equal to 10 ------Above 10 and below or equal to 702,500 (*) - - 702,500 702,500 (***) 12 Above 12 and below or equal to 1,458,750 (**) - - 1,458,750 1,458,750 (****) 15 Above 15 ------

Total 2,161,250 - 2,161,250 2,161,250 - (*) of which 625,000 options assigned in 2002 and 77,500 options assigned in 2003 (**) third tranche options assigned in 2004 (***) 55,000 options exercisable in 2008 and 647,500 exercisable in 2008 and 2009 (****) exercisable in 2008, 2009 and 2010

98 Gruppo Banco Popolare di Verona e Novara

In keeping with the circular letter n. 262 published by the Bank of Italy on December 22nd, 2005 shown below is the required statement of changes:

30 June 2007 31 December 2006

Number of Average Average Number of Average Average options prices maturity options prices maturity

A. Opening balance 3,247,500 13.132 5 mon. 5,668,000 12.225 9.34 mon.

B. Increments - XXX - XXX B.1 new issues ------B.2 other changes - - XXX - - XXX

C. Decrements 1,086,250 XXX 2,420,500 XXX C.1 cancelled - - XXX 28,000 - XXX C.2 exercised 1,086,250 13.509 XXX 2,392,500 11.351 XXX C.3 expired - - XXX - - XXX C.4 other changes - - XXX - - XXX

D. Closing balance 2,161,250 12.944 10 mon. 3,247,500 13.132 5 mon.

E. Options exercisable at the end of the year 2,161,250 12.944 10 mon. 3,247,500 13.132 5 mon.

99 Gruppo Banco Popolare di Verona e Novara

BUSINESS COMBINATIONS

Transactions executed during the year

Total Income Income (Loss) Transaction Transactio acquired Total income (Loss) for recognized since (million euro) date n cost (2) interest (%) (4) the year acquisition (1) (3) (5) (6)

Banco Popolare Hungary Zrt 14-05-2007 18.6 100% 2.1 (0.7) (0.6)

Banco Popolare Ceská Republika, a.s. 14-05-2007 28.1 100% 6.2 (0.6) (0.2) 1 Date of acquisition of the controlling interest 2 Cost inclusive of accessory charges 3 Percentage interest with voting rights, without voting rights and over total equity 4 [Item 120] of Income Statement referring to the entire 1H 2007 5 Income (Loss) reported by the investee company for the entire 1H 2007 6 Income reported after the acquisition date and included in consolidated results

Banco Popolare Banco Popolare (million euro) Total Hungary Zrt Ceská Republika, a.s.

Fair value of acquired net assets (3.2) 20.2 17.0 Goodwill 21.8 7.9 29.7 Transaction cost 18.6 28.1 46.7

Breakdown of the transaction cost

Banco Popolare Banco Popolare (million euro) Total Hungary Zrt Ceská Republika, a.s.

Shareholding cost 18.4 28.0 46.4 Costs directly attributable to the transaction 0.2 0.1 0.3 Transaction cost 18.6 28.1 46.7

Pursuant to IFRS 3, the initial measurement of the above business combinations was provisional, resultantly also the measurement of goodwill was provisional.

Purchase of Banco Popolare Hungary Zrt

On October 18th, 2006, the Parent company signed a preliminary agreement for the purchase of 100% of the share capital of IC Bank Zrt in Budapest (now Banco Popolare Hungary), a bank focusing on small-medium enterprises and retail customers, with a Head office and 6 branches. The investee company also fully owns the company ICB Service, which manages the branches and the property of the Hungarian bank. On May 14th, 2007, the purchase of said stake was finalized, with a total investment of 18.6 million euro.

100 Gruppo Banco Popolare di Verona e Novara

Purchase of Banco Popolare Ceská Republika, a.s.

On October 18th, 2006, the Parent company also signed a preliminary agreement for a call option on 100% of the share capital of IC Banka a.s. in Prague, (now Banco Popolare Ceská Republika), a bank focusing on small- medium sized enterprises and retail customers, with 2 branches. The bank has no equity investments. On May 14th, 2007, the purchase was finalized and the first installment of 24.2 million euro of the fixed price (28.1 millions). The second installment, amounting to 3.8 million euro, shall be paid within 12 months of the closing date.

Transactions executed after the balance sheet date

Total acquired Total Transaction date Transaction cost Income (Loss) (million euro) shareholding Income (1) (2) for the year (5) (%) (3) (4)

Banca Popolare Italiana 01-07-2007 6,050.0 100% 771.4 17.8

AT Leasing (Romania) 18-07-2007 4.7 100% 1.0 (0.0) 1 Date of acquisition of the controlling interest 2 Cost inclusive of already accounted for accessory charges 3 Percentage of interest with voting rights, without voting rights and over total share capital 4 [Item 120] of Income Statement referred to the acquisition date 5 income (Loss) reported by the investee company at the time of acquisition

As widely illustrated at the beginning of this document, on July 1st, 2007 the merger between Banco Popolare di Verona e Novara and Banca Popolare Italiana was finalized. For the details of the transaction, please refer to the section devoted to Gruppo Banco Popolare and to proforma data.

On November 29th, 2006, a preliminary agreement was signed for the purchase of 100% of the share capital of Auto Trading Leasing IFN s.a. based in Bucharest, (Romania). On July 18th, 2007 the first tranche of 4.6 million euro was paid, out of a total investment of 5.8 million euro. The second installment, amounting to 1.2 million euro, is due within 12 months of the closing date.

101 Gruppo Banco Popolare di Verona e Novara

TRANSACTIONS WITH RELATED PARTIES

Financial and commercial relations between subsidiaries and associate and jointly controlled undertakings.

Financial and commercial relations entertained between the subsidiaries and the associate and jointly controlled undertakings fall under the normal course of business and are carried out at arm’s length.

The tables below summarize the outstanding relations as at June 30th, 2007 and the P&L components of first half 2007 with associate and jointly controlled undertakings, as well as Management with strategic responsibilities and governing boards and other related parties.

(c) (a) (b) (d) Management with % of Companies under Jointly Other (thousand euro) strategic TOTAL consolidated significant controlled related responsibilities and results influence companies parties governing boards

Financial assets held for trading 74,452 10 - - 74,462 0.79% Financial assets available for sale 7,421 - - - 7,421 0.73% Financial assets held to maturity 10 - - - 10 0.00% Due from other banks 1,231,339 - - - 1,231,339 13.62% Loans to customers 543,416 682,335 1,022 337,466 1,564,239 3.17% Other assets 4,374 33,753 - - 38,127 2.01% Total Assets 1,861,012 716,098 1,022 337,466 2,915,598 3.90%

Due to other banks 167,007 - - - 167,007 2.26% Due to customers 108,275 44,167 - - 152,442 0.53% Trading liabilities 24,097 4,668 - - 28,765 1.09% Other liabilities 470 11 - - 481 0.02% Total Liabilities 299,849 48,846 - - 348,695 0.47%

Total guarantees given and 13,435 390 - 72,238 86,063 1.29% commitments

102 Gruppo Banco Popolare di Verona e Novara

(c) (a) (b) (d) Management with % of Companies under Jointly Other (thousand euro) strategic TOTAL consolidated significant controlled related responsibilities and results influence companies parties governing boards

Interest income and similar revenues 30,505 12,910 - - 43,415 2.72% Interest expense and similar charges (5,844) (492) - - (6,336) 0.70% Commission income 5,689 65,673 - - 71,362 14.27% Commission expense (516) (15) - - (531) 0.98% G&A expenses (432) (117) - - (549) 0.08% Other operating income (expense) 24 - - - 24 0.02% (a) Associates as defined under IAS 28 (b) Jointly controlled companies (c) Directors and Managers with strategic responsibilities (d) Close relatives of Directors and Managers with strategic responsibilities, as well as companies controlled or associated with either the same managers or their close relatives.

Pursuant to the instructions issued by the Bank of Italy on December 22nd, 2005 for the preparation of the financial accounts and consolidated accounts of banks in compliance with the international accounting standards IAS/IFRS, the table below provides the required information on Banco’s key officers.

103 Gruppo Banco Popolare di Verona e Novara

The table below illustrates the loans and guarantees given to related parties under IAS 24, with the exception of subsidiaries and companies under a significant influence.

Guarantees & Cash Total (thousand euro) commitments

Credit line Utilization Credit line Utilization Credit line Utilization a) Directors 1,276 - - - 1,276 - of which: from Banco Popolare di Verona e Novara 725 from Credito Bergamasco from Banca Popolare di Novara 551 b) Managers with strategic responsibilities 2,281 1,022 - - 2,281 1,022 of which: from Banco Popolare di Verona e Novara 1,906 646 from Credito Bergamasco 76 77 from Banca Popolare di Novara 299 299 c) Close relative of individuals under items a) and b) 354 281 - - 354 281 of which: from Banco Popolare di Verona e Novara 354 281 from Credito Bergamasco from Banca Popolare di Novara d) Company controlled, associated or under significant 1,347,796 337,185 168,603 72,238 1,516,399 409,423 influence of individuals under items a) and b) of which: from Banco Popolare di Verona e Novara 331,666 73,046 49,019 42,266 from Credito Bergamasco 55,727 2,015 from Banca Popolare di Novara 960,403 262,124 119,584 29,972

Credit lines have been approved in compliance with art. 136 of Legal Decree 385/93.

104 Gruppo Banco Popolare di Verona e Novara

Other transactions with related parties

The table below shows the other transactions – provision of goods and services and real estate transactions – executed between Banco Popolare di Verona e Novara and related parties as defined by IAS 24, excluding subsidiaries and associates (companies on which the Parent company has a significant influence).

Purchase and sale of (thousand euro) Lease goods and services a) Directors - 13 of which: from Banco Popolare di Verona e Novara - 13 from Credito Bergamasco - - from Banca Popolare di Novara - - b) Managers with strategic responsibilities - 16 of which: from Banco Popolare di Verona e Novara - 16 from Credito Bergamasco - - from Banca Popolare di Novara - - c) Close relative of individuals under items a) and b) - - of which: from Banco Popolare di Verona e Novara - - from Credito Bergamasco - - from Banca Popolare di Novara - - d) Company controlled, associated or under significant influence of 1,798 368 individuals under items a) and b) of which: from Banco Popolare di Verona e Novara 1,746 368 from Credito Bergamasco 51 from Banca Popolare di Novara 1

105 Gruppo Banco Popolare di Verona e Novara

NOTEWORTHY EVENTS AFTER THE BALANCE SHEET DATE

With regard to noteworthy events after the balance sheet date, please refer to the same topic in the section devoted to Gruppo Banco Popolare and pro-forma data.

OPERATIONAL OUTLOOK

Please refer to the same topic in the section devoted to Gruppo Banco Popolare and pro-forma data.

106 Gruppo Banco Popolare di Verona e Novara

107

AUDITOR’S REPORT

Carlo Scarpa - Head office of Banca Popolare di Verona ERNST & YOUNG ERNST & YOUNG

ATTACHMENTS

Carlo Scarpa - Head office of Banca Popolare di Verona Gruppo Banco Popolare di Verona e Novara

Financial statements of Banco Popolare di Verona e Novara

Balance sheet

Assets (in thousand euro) 30/06/2007 31/12/2006 Changes

10 Cash and cash equivalents 129,818 166,115 -36,297 - 21.9% 20 Financial assets held for trading 2,454,258 2,364,966 89,292 3.8% 30 Financial assets measured at fair value 1,124,130 1,114,249 9,882 0.9% 40 Financial assets available for sale 409,734 456,246 -46,512 - 10.2% 50 Financial assets held to maturity 459,156 521,282 -62,127 - 11.9% 60 Due from other banks 12,706,899 8,636,773 4,070,126 47.1% 70 Loans to customers 25,043,660 23,861,039 1,182,621 5.0% 80 Hedging derivatives 7,207 10,046 -2,839 - 28.3% 100 Equity investments 2,814,342 2,611,037 203,304 7.8% 110 Property, plant and equipment 383,102 381,400 1,702 0.4% 120 Intangible assets 123,200 123,431 -231 - 0.2% 130 Tax assets 221,327 231,126 -9,800 - 4.2% Non-current assets held for sale and discontinued 140 31,588 - 31,588 - operations 150 Other assets 773,239 839,849 -66,610 - 7.9% Total assets 46,681,657 41,317,559 5,364,098 13.0%

Liabilities and Shareholders’ equity (in thousand euro) 30/06/2007 31/12/2006 Changes

10 Due to other banks 8,510,064 6,907,618 1,602,446 23.2% 20 Due to customers 13,364,989 11,512,653 1,852,336 16.1% 30 Debt securities in issue 16,583,300 15,029,266 1,554,033 10.3% 40 Trading liabilities 388,935 285,771 103,164 36.1% 50 Financial liabilities measured at fair value 2,521,505 1,939,726 581,779 30.0% 60 Hedging derivatives 16,701 16,838 -137 - 0.8% 70 Fair value change of liabilities in hedging portfolios -33,588 -24,608 8,979 - 36.5% 80 Tax liabilities 122,833 265,637 -142,804 - 53.8% 100 Other liabilities 1,136,322 1,084,066 52,256 4.8% 110 Employee termination benefits 112,752 134,268 -21,517 - 16.0% 120 Provisions for risks and charges 217,629 198,512 19,117 9.6% 130 Valuation reserves 241,994 191,323 50,672 26.5% 160 Reserves 1,895,391 1,635,172 260,218 15.9% 170 Share premiums 213,068 202,304 10,764 5.3% 180 Share capital 1,355,092 1,351,182 3,911 0.3% 190 Treasury shares -320,206 - -320,206 - 100.0% 200 Net income for the period 354,877 587,830 -232,953 - 39.6% Total liabilities 46,681,657 41,317,559 5,364,098 13.0%

114 Gruppo Banco Popolare di Verona e Novara

Income statement

Income statement (in thousand euro) I H 2007 I H 2006 Changes

10 Interest income and similar revenues 916,408 659,108 257,300 39.0% 20 Interest expense and similar charges -603,774 -363,075 -240,699 66.3% 30 Net interest income 312,634 296,033 16,601 5.6% 40 Commission income 207,429 210,869 -3,440 -1.6% 50 Commission expense -22,202 -21,436 766 3.6% 60 Net commission income 185,227 189,433 -4,206 -2.2% 70 Dividend and similar income 233,936 196,576 37,360 19.0% 80 Net trading income 7,269 5,606 1,663 29.7% 90 Fair value adjustments in hedge accounting 292 208 84 40.4% 100 Profit (Loss) on disposal or repurchase of: 3,688 44,609 -40,921 -91.7% a) loans 2,970 38,052 -35,082 -92.2% b) Financial assets available for sale 300 5,899 -5,599 -94.9% d) financial liabilities 418 658 -240 -36.5% Profit (loss) on financial assets and liabilities measured at fair 110 3,229 3,537 -308 8.7% value 120 Total income 746,275 736,002 10,273 1.4% 130 Net write-downs on impairment of: -22,034 -38,003 15,969 42.0% a) loans -20,428 -37,222 16,794 45.1% d) other financial transactions -1,606 -781 -825 -105.6% 140 Net income from banking activities 724,241 697,999 26,242 3.8% 150 G&A expenses -339,329 -343,046 -3,717 1.1% a) personnel expenses -172,877 -181,569 -8,692 -4.8% b) other administrative expenses -166,452 -161,477 4,975 3.1% 160 Net provisions for risks and charges -4,530 -15,945 -11,415 -71.6% 170 Net impairment of Property, plant and equipment -12,006 -11,882 124 1.0% 180 Net impairment of Intangible assets -236 -314 -78 -24.8% 190 Other operating income/expense 84,212 89,287 -5,075 -5.7% 200 Operating costs -271,889 -281,900 10,011 -3.6% 240 Profit (Loss) on disposal of investments 2,289 39,538 -37,249 -94.2% 250 Income before tax from continuing operations 454,641 455,637 -996 -0.2% 260 Tax on income from continuing operations -99,764 -104,136 -4,372 4.2% 270 Income after tax from continuing operations 354,877 351,501 3,376 1.0% 290 Net income for the period 354,877 351,501 3,376 1.0%

115 Gruppo BancoPopolarediVeronaeNovara 118

Statement of Changes in Shareholders’ equity of Banco Popolare di Verona e Novara

Net income allocation for Changes in shareholders’ equity over the period Opening the period Net income Closing balance Change (in thousand euro) balance as at Purchase of Special Derivatives (loss) for the as at in Reserves Issue of new Changes in Stock 31-12-2006 Dividends treasury dividend on Treasury period 30-06-2007 shares CSE options Reserves and other shares distribution shares allocations

Share capital: 1,351,182 - - - 3,910 ------1,355,092 a) common shares 1,351,182 3,910 1,355,092 b) other - -

Treasury shares - -320,206 -320,206

Share premiums 202,304 10,764 213,068

Reserves: 1,635,173 247,369 - 12,273 - - -- - 576 - 1,895,391 a) retained earnings 1,511,345 247,369 10,815 - 576 1,770,105 b) FTA reserves -96,222 -96,222 c) other reserves 220,050 - 1,458 - - 221,508

Valuation reserves: 191,323 - - 50,672 ------241,995 a) Financial assets available for sale 126,001 51,681 177,682 b) Property, plant and equipment - - c) cash flow hedges 957 449 1,406 d) special revaluation laws 64,365 -1,458 62,907 e)other - -

Common Stock Equivalents - -

Net income (loss) for the period 587,830 -247,369 -340,462 354,877 354,876

Total 3,967,812 - -340,462 62,945 14,674 -320,206 - - - 576 354,877 3,740,216 Gruppo Banco Popolare di Verona e Novara

Parent company’s statement of cash flows

(In thousand euro) 30/06/2007 30/06/2006

OPERATING ACTIVITIES 1. Cash flow from operations 124,995 140,805 2. Cash flow from / used in financial assets -5,093,877 -4,301,209 3. Cash flow from / used in financial liabilities 5,510,536 4,275,494

NET CASH FLOW FROM / USED IN OPERATING ACTIVITIES 541,654 115,090

INVESTING ACTIVITIES 1. Generated cash flow 322,514 230,539 2. Used cash flow -290,821 -84,773

NET CASH FLOW FROM / USED IN INVESTING ACTIVITIES 31,693 145,766

FUNDING ACTIVITIES -609,644 -285,125

NET CASH FLOW FROM / USED IN FINANCING ACTIVITIES -609,644 -285,125

NET CASH FLOW GENERATED / USED IN THE YEAR -36,297 -24,269

RECONCILIATION

Cash and cash equivalents at beginning of year 166,115 150,641 Net cash flow generated / used in the year -36,297 -24,269 CASH AND CASH EQUIVALENTS AT END OF YEAR 129,818 126,372

117 Gruppo Banco Popolare di Verona e Novara

Comparison between the Income statement and the Reclassified income statement

Reclassified income statement (thousand euro) I H 2007 Restatements Reclassified

10 Interest income and similar revenues 1,597,882 1,597,882 20 Interest expense and similar charges (908,596) 23,317 (885,279) 240 Profit (Loss) from equity investments (132,254) (4,617) (136,871) Net interest, dividend and similar income 557,032 18,700 575,732 40 Commission income 500,241 500,241 50 Commission expense (54,045) (54,045) 220 Other operating income (expense) 117,849 (51,874) 65,975 Net financial income: 20 Interest expense and similar charges (23,317) (23,317) 70 Dividend and similar income 112,010 112,010 80 Net trading income 22,337 22,337 90 Fair value adjustments in hedge accounting 690 690 100 Profit (Loss) on disposal or repurchase 14,917 (2,971) 11,946 110 Profit (Loss) on fin. assets and liabilities measured at fair value 14,000 14,000 Other operating income 727,999 (78,162) 649,837 Total income 1,285,031 (59,462) 1,225,569 180 Personnel expenses (412,897) (412,897) 180 Other administrative expenses (256,622) 56,025 (200,597) 200 Impairment / write-backs on property, plant and equipment (24,891) (24,891) 210 Impairment / write-backs on intangible assets (18,102) (4,151) (22,253) Operating costs (712,512) 51,874 (660,638) Profit from operations 572,519 (7,588) 564,931 100 Profit (Loss) on disposal or repurchase 2,971 2,971 130 Net write-downs / write-backs for impairment (67,043) (67,043) 190 Net provisions for risks and charges (5,928) (5,928) 240 Profit (Loss) from equity investments 4,617 4,617 270 Profit (Loss) on disposal of investments 4,404 4,404 Income before tax from continuing operations 503,952 - 503,952 290 Tax on income from continuing operations (249,962) (249,962) Income after tax from continuing operations 253,990 - 253,990 310 Income (Loss) after tax on discontinued operations 2,693 2,693 Net income for the period 256,683 - 256,683 330 Minority interest (4,176) (4,176) Net income for the period attributable to the Parent company 252,507 - 252,507

118 Gruppo Banco Popolare di Verona e Novara

Comparison between the reclassified consolidated income statement as at June 30th, 2006 and restated data

Reclassified Income statement IFRS 5 Other Homogeneo I H 2006 Disposals (*) (thousand euro) (**) restatements us I H 2006

Net interest income 646,751 (18,579) 10,140 638,312 Profit (Loss) from equity investments carried at equity 35,616 (4,850) 30,766 Net interest, dividend and similar income 682,367 (18,579) (4,850) 10,140 669,078 Net commission income 439,843 (1,881) 437,962 Other revenues 77,043 767 77,810 Net financial income 125,782 (2,650) (10,140) 112,992 Other operating income 642,668 (3,764) - (10,140) 628,764 Total income 1,325,035 (22,343) (4,850) - 1,297,842 Personnel expenses (428,904) 4,057 (424,847) Other administrative expenses (196,458) 1,616 (194,842) Net impairment of property, plant and equipment and (44,737) 228 (44,509) intangible assets Operating costs (670,099) 5,901 - - (664,198) Profit from operations 654,936 (16,442) (4,850) - 633,644 Net impairment of loans, guarantees and commitments (27,004) 1,587 (25,417) Net impairment of other financial assets (3) (3) Net provisions for risks and charges (22,322) 139 (22,183) Profit (loss) on PPE and intangible assets designated at fair value - - Goodwill impairment - - Profit (Loss) on disposal of equity and other investments 39,606 39,606 Income before tax from continuing operations 645,213 (14,716) (4,850) - 625,647 Tax on income from continuing operations (241,785) 7,477 (4,733) (239,041) Income after tax from continuing operations 403,428 (7,239) (9,583) - 386,606 Income (loss) after tax from discontinued operations 3,045 (3,462) 9,583 9,166 Net income for the period 406,473 (10,701) - - 395,772 Minority interest (9,068) 408 (8,660) Net income for the period attributable to the Parent 397,405 (10,293) - - 387,112 company (*) Adjusted for comparative consolidation scope (sold companies) (**) Reclassifications under IFRS 5 with regard to sold operating assets

119 Gruppo Banco Popolare di Verona e Novara

Statement of share ownership under art. 126 of Consob’s Regulation n. 11971 of 14/05/1999 (*)

(Share ownership above 10% of the share capital represented by shares or quotas with voting rights in unlisted companies, directly or indirectly held under any entitlement)

Percentage Type of Investee Investor Direct Indirect ownership

Aosta Factor S.p.A. 13.79% BPVN Ownership ILP I S.c.a.r.l 21.56% Aletti Merchant Ownership ILP II S.c.a.r.l 20.82% Aletti Merchant Ownership ILP III S.c.a.r.l 25.86% Aletti Merchant Ownership Lumson S.p.A. 16.67% Aletti Merchant Ownership Natura Appennino S.r.l. (under liquidation) 15.00% BPVN Ownership Pama S.p.A. 12.00% Aletti Merchant Ownership Pantex International S.p.A. 13.23% Aletti Merchant Ownership Ponte S.p.A. 10.87% Aletti Merchant Ownership Riello Sistemi S.p.A. 18.17% Aletti Merchant Ownership Sivori % Partners Sim S.p.A. 10.00% Banca Aletti Ownership Tecnosistemi S.p.A. 14.50% Aletti Merchant Ownership United Business Holding S.p.A. 15.00% BPVN Ownership Ai Mori S.n.c. 100.00% BPVN Pledge Albergo Basilea S.r.l. 100.00% BPVN Pledge Aquila d'oro S.r.l. 100.00% BPVN Pledge Autoluna S.r.l. 50.00% BPVN Pledge Automotor Immobiliare S.p.A. 100.00% BPVN Pledge Bertani Holding S.p.A. 27.42% BPVN Pledge Branste S.r.l. 51.00% BPVN Pledge Carlo Raimondi fu Rodolfo S.p.A. 13.05% BPVN Pledge Castel-Service S.r.l. 100.00% BPVN Pledge Centrale S.r.l. 100.00% BPVN Pledge Cizeta Costruzioni S.r.l. 100.00% BPVN Pledge Consultinvest Costruzioni S.r.l. 16.01% BPVN Pledge Delfino S.p.A. 51.00% BPVN Pledge F.F.M. S.r.l. 40.00% BPVN Pledge Gruppo Stabila S.p.A. 14.28% BPVN Pledge Iniziativa Immobiliare S.Antonio S.r.l. 99.94% BPVN Pledge Laverda S.p.A. 34.00% BPVN Pledge Marmi Vicenzi S.p.A. 100.00% BPVN Pledge Misterday S.r.l. 80.00% BPVN Pledge

120 Gruppo Banco Popolare di Verona e Novara

Percentage Type of Investee Investor Direct Indirect ownership

Modena Share capital S.p.A. 16.67% BPVN Pledge Omobono S.r.l. 100.00% BPVN Pledge Plastic Company S.p.A. 22.22% BPVN Pledge Pneus 2000 S.p.A. 20.00% BPVN Pledge Sasip Immobiliare S.r.l. 100.00% BPVN Pledge Sirmione Gestioni S.r.l. 100.00% BPVN Pledge Vallorita S.p.A. 25.75% BPVN Pledge Villa Quaranta Park S.p.A. 100.00% BPVN Pledge Waterland S.r.l. 100.00% BPVN Pledge Wemar 2002 S.r.l. 100.00% BPVN Pledge Zaga S.r.l. 100.00% BPVN Pledge (*) The list does not include companies recognized under item 100 (Equity investments) already illustrated in this document

121

GRUPPO BANCA POPOLARE ITALIANA

Renzo Piano - Head office of Banca Popolare di Lodi Banca Popolare Italiana Società cooperativa

Iscritta all’Albo delle Società Cooperative Sede sociale e Direzione Generale: Via Polenghi Lombardo, 13 - 26900 Lodi Capitale sociale al 30 giugno 2007: euro 2.047.082.517 i.v. Codice fiscale, Partita IVA e N. iscrizione al Registro delle imprese di Lodi: 00691360150 Aderente al Fondo Interbancario di Tutela dei Depositi Iscritta all’Albo delle Banche Capogruppo del Gruppo Creditizio Banca Popolare Italiana Iscritta all’Albo dei Gruppi Bancari CORPORATE BOARDS, TOP MANAGEMENT AND AUDITING COMPANY AS AT JUNE 30TH, 2007

Board of Directors Chairman Dino Piero Mario Giarda Chief Executive Officer Divo Gronchi Deputy Vice Chairman Enrico Perotti Vice Chairman Vittorio Coda Directors Guido Castellotti Pierantonio Ciampicali Costantino Coccoli Maria Luisa Di Battista Bruno Giovanni Giuffrè Andrea Guidi Augusto Machirelli Pietro Manzonetto Roberto Nicola Albino Martone Mario Minoja Giorgio Olmo Robert Schmid Board of Statutory Auditors Chairman Gianandrea Goisis Standing auditors Luigi Corsi Gabriele Camillo Erba Giordano Massa Gianpaolo Fornasari Alternate auditors Massimo Mustarelli Paolo Perolini Board of Advisors Standing Carlo Bianchi Giovanni Lupi Gaetano Cornalba Giuseppe Germani Giovanni Molinari Alternate Attilio Garbelli Giuseppe Bussi Top Management General Manager Franco Baronio Co-General Manager Massimo Minolfi Auditing Company Reconta Ernst & Young S.p.A.

125 Gruppo Banca Popolare Italiana

Bipitalia Gestioni SGR Banca Popolare di Lodi Bipitalia Alternative SGR Cassa di Risparmio di Lucca Pisa Livorno Banca Valori Banca Caripe Nazionale Fiduciaria Banca Popolare di Crema Critefi SIM Banca Popolare di Cremona Bipielle Bank (Suisse) Banca Popolare di Mantova Italfortune International Advisors B.P.I. International (UK)

Bipielle Real Estate Bipielle Società di Gestione del Credito Bipielle Information Communication Technology Bipielle International Holding Efibanca Efigestioni SGR Banche del Territorio

Investment & Private Banking

Merchant Banking & Private Equity

Corporate Center

Consumer Credit

Bipitalia Ducato Easynetwork Soluzioni Finanziarie Gruppo Banca Popolare Italiana

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GROUP FINANCIAL HIGHLIGHTS

Shown below are the main financial highlights and ratios of the Group.

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 45,610,819 46,787,071 45,874,824 -2.51% Total loans and receivables 34,237,726 33,569,379 31,299,843 1.99% of which loans to customers 30,747,618 28,735,907 27,570,830 7.00% Financial assets 3,679,689 4,785,796 5,737,493 -23.11% Equity investments 146,895 151,168 394,485 -2.83% Total payables 37,368,916 38,135,411 37,005,008 -2.01% of which Due to customers and debt securities in issue 32,812,603 32,138,095 33,803,987 2.10% Indirect customer funds 32,937,898 33,260,783 31,390,318 -0.97% of which assets under management 18,257,822 18,575,664 17,840,103 -1.71% Net interbank position -1,066,205 -1,163,844 527,992 8.39% Group and minority shareholders’ equity (inclusive of profit or 3,656,821 4,103,419 3,275,477 -10.88% loss) of which Group shareholders’ equity (inclusive of profit or loss) 3,554,991 3,955,825 2,809,569 -10.13% Income statement Net interest income 438,522 400,985 9.36% Total income 771,397 756,382 1.99% Net write downs for impairment of loans and financial assets -175,397 -59,034 -197.11% G&A expenses -556,197 -470,774 -18.15% Income (loss)) before tax from continuing operations 67,800 261,646 -74.09% Net income (loss) (gross of minority interest) 24,297 136,398 -82.19% Group net income (loss) 17,830 91,969 -80.61% Operational structure Number of employees 8,632 8,579 8,347 Number of bank branches 969 973 978 Financial ratios ROE (*) 1.00% n.s. 6.55% ROA (*) 0.08% n.s. 0.40% Net interest income/Total income 56.85% 55.98% 53.01% G&A expenses/Total income 72.10% 66.59% 62.24% Total financial assets/Total assets 8.07% 10.23% 12.51% Non-performing loans/Customer loans 1.03% 1.02% 1.01% Net write-downs for loan impairment/Customer loans (**) 0.56% 1.16% 0.18% (*) The six-month figure has been annualized. (**) Percentages as at 30/06/2007 and 30/06/2006 have been reckoned based on the loan write-downs accounted for until said dates. The percentage as at 31/12/2006 was also affected by the NPL sale.

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REPORT ON GROUP OPERATIONS

Economic backdrop in First Half 2007

In general, in first half 2007 global economy was characterized by a good growth rate. With regard to energy, Brent oil prices remained on the high end. In the United States, after reporting a marked slowdown in the first quarter, in the following three months the economic cycle showed a good recovery. According to preliminary estimates, Gross Domestic Product grew by 3.4% annually, driven by the pick-up in exports, the recovery of fixed investments and expenditure by the Federal Government. In the first quarter, however, GDP had grown at a meager annual rate of 0.7%. In June, the unemployment rate had been kept down at contained levels (4.5%) and core inflation (net of energy and food) stood at 2.2%. Against this backdrop, the Federal Reserve kept the monetary policy target rate pinned at 5.25%. In Japan, in the presence of a regular economic growth and a stable inflation rate, the central bank raised the interest rate by a quarter of a point, fixing the overnight call rate target at 0.50%. The Chinese economy kept flying on extremely high growth rates: +11.5% in the first six months of the year. In Great Britain the strong economic growth (GDP: annual +3.0% in the first three months of the year) led the Bank of England, the British central bank, to raise the bank rate twice, up to 5.50% at the end of the first half (in July it raised it again to 5.75%). In the Euro area the business cycle is sustained and unemployment is at its historical lows: in the first quarter GDP increased by 3.1% annually, unemployment in June decreased to 6.9%. As a result, the European Central Bank could go on pursuing its “removal of monetary accommodation” policy, whereby it raised the benchmark rate up to 4% in June. In Italy, GDP grew by +2.3%, driven by an export growth rate of +4.1%. Investments were buoyant only in the building and construction sector (+5.2%). In the meanwhile, in June inflation appeared contained at +1.9%, in line with the euro area average and not such as to further erode the competitiveness of the domestic economy.

In first half 2007, the dynamics of the banking business remained high, although slightly slower than the growth rate reported in the last few months of 2006. According to ABI, direct customer funds gathered by banks recorded a growth slowdown only towards the end of the period, with June standing at an annual +7.7% from +8.3% in December 2006. In particular, this slackening is attributable to deposits (checking accounts, savings deposits and certificates of deposit), whose growth rate went from +6.2% to +4.3%; in contrast, bonds increased their momentum from +11.6% to +12.9%. With regard to balance sheet assets, customer loans have been slipping slightly towards the end of the period, with June at +10.8% from +11.2% at year-end 2006; short term loans enjoyed a stable growth rate from +10.5% to +10.4% last June, while medium to long term transactions showed a more evident slowdown, from +11.6% in December 2006 to +11.0% in June 2007, as a result of the home mortgage pullback.

Harmonized interest rates on bank deposits increased by 33 basis points between December 2006 and June 2007, while interest rates on banking loans to households and non-financial businesses reported a parallel increase of 35 basis points as compared with the end of 2006, in the pursuit of the monetary policy signals coming from the European Central Bank.

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First-half noteworthy events for Gruppo BPI

The first half was primarily characterized by numerous initiatives aiming at creating Banco Popolare, whose formation became effective on July 1st, 2007, as a result of the merger between Banca Popolare Italiana and Banco Popolare di Verona e Novara. This is an integration plan of major prominence, which shall position Banco among the top credit and financial intermediation players within the domestic and international lending sector. While being proud of their individual identity and history, Gruppo BPI and Gruppo BPVN shall combine and therefore contribute to the creation of a large new entity, the third banking group in Italy, number one among cooperative banks, a symbol of the cooperative experience, which for almost 150 years has been growing with perseverance, achieving positive results, without impairing its strong ties with its territory and its original identity. Clearly, during the first six months of the year, also a number of events occurred, that are more directly associated with the activities of Gruppo BPI.

Shown below is a brief description of the main events occurred in the period under examination, beginning with the formation of Banco Popolare.

The creation of Banco Popolare

Merger plan authorized by the Bank of Italy

On January 26th, 2007, the Bank of Italy authorized the merger between Banca Popolare Italiana and Banco Popolare Verona-Novara, leading to the formation of Banco Popolare.

Annual and Special shareholders’ meeting on March 10th: approval of the merger plan with Banco Popolare di Verona e Novara with the formation of Banco Popolare

The Annual and Special Shareholders’ Meeting of Banca Popolare Italiana, which convened on March 10th, 2007, approved the Merger Plan between Banca Popolare Italiana and Banco Popolare di Verona e Novara with the formation of a new company, a listed cooperative bank, called “Banco Popolare - Società Cooperativa”. The resolution was passed with 4441 yes votes, 522 no votes, 59 abstainees, hence with a majority greater than the one required by the Articles of Association (2/3 of non abstained voters). More precisely, Shareholders approved: x the assignment to Banco Popolare di Verona e Novara shareholders of 1 share of the newly formed Banco Popolare, with a nominal value of euro 3.60, for every 1 old share, and to Banca Popolare Italiana shareholders of 0.43 shares of new Banco Popolare, with a nominal value of euro 3.60 each, for every 1 old share, with a nominal value of euro 3.00; x the articles of association, characterized by the adoption of the dual corporate governance system, referred to under art. 2409 octies and following articles of the civil code; x the suggested candidates for the board offices of the new Banco Popolare, which for the Supervisory Board are: Carlo Fratta Pasini, Chairman, Dino Piero Giarda, Deputy Vice Chairman, Maurizio Comoli, Vice Chairman, and the Directors: Marco Boroli, Giuliano Buffelli, Guido Castellotti, Pietro Manzonetto, Maurizio Marino, Mario Minoja and Claudio Rangoni Machiavelli; x the suggested candidates as Chairman and Chief Executive Officer of the Management Board, namely Mr. Divo Gronchi and Mr. Fabio Innocenzi, respectively; the other members of the Management Board shall be identified when the merger goes into effect; they shall include the incumbent general managers of Banca Popolare Italiana and Banco Popolare di Verona e Novara, Mr. Franco Baronio and Mr. Massimo Minolfi;

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x the hiring of the auditing firm Reconta Ernst & Young S.p.A. as auditors of the newly formed Banco Popolare, under art. 159 of Legal Decree n. 58/1998, from 2007 to 2015; x the application for admission to listing on Borsa Italiana of the shares of Banco Popolare and the convertible bonds and “Warrant common shares” already issued by Banca Popolare Italiana and whose obligations, as of the merger, shall be taken over by the newly formed Banco Popolare. x Shareholders also approved other items on the agenda, all associated with the Merger Plan. More precisely: x during the special session, they approved to cancel the resolution under item 5 of the agenda of the special shareholders’ meeting held on 3/3/2003 (amended by the resolution passed on the special meeting on 2/6/2005) covering the issue of subordinated convertible bonds for a maximum nominal value of 1.5 billion euro and the concurrent capital increase to cover the conversion; x during the annual meeting, they approved to make an extraordinary allocation of part of the share premium reserve for a maximum amount of Euro 1,521 million, equivalent to Euro 2.17 per each BPI share, excluding any treasury shares held by BPI in its proprietary portfolio, and the subsequent allocation, within the limits of the above mentioned total amount, of an amount to be defined under art. 7 of the convertible bond program regulations to the Convertible Bond holders of “Prestito Obbligazionario Convertibile 4.75% 2000-2010 ISIN IT0001444360” (“POC”). The extraordinary allocation resolution is: - subject to BPI Management Board’s verification and certification that as at June 30th, 2007 no negative events have occurred that may have affected the outstanding reserves to be distributed to such an extent as to prevent the allocation of the approved amount to BPI shareholders and POC holders; - outstanding and conditional to the finalization of the merger; x during the annual part of the meeting, as part of the merger finalization and in compliance with regulatory and legal restrictions and provisions, they approved to purchase maximum 37,000,000 BPI common shares, accounting for about 5.4% of the share capital. The authorization to purchase shall be effective only until the day the merger shall go into effect. Any shares bought under this resolution shall be cancelled without share exchange, as part of the merger. This deal shall be explained in greater details in following sections of this Half-Year Report; x during the special session, they approved a management and personnel incentive plan. In specific, Banco Popolare’s Management Board is to be given authorization, pursuant to art. 2357, paragraph 1 of the Civil Code, to buy maximum 660,000 common shares of Banco Popolare, accounting for 0.10% of its share capital. The Management Board shall then use the purchased treasury shares for bonus allocations as part of incentive schemes for executives, mangers and employees of Banco Popolare and its subsidiaries (mainly non-beneficiaries of the existing stock option plan). The loyalty-building and incentive plan is aimed at favoring management integration along a teamwork approach, at correlating the total economic return achievable by top management with the stock price appreciation on the market, hence with the value of Banco Popolare and the new group over the long term, and finally at increasing the retention rate of key human resources, by reducing the propensity of talents to quit the new group. The minimum price at which the purchase may take place was fixed at the nominal value of Banco Popolare’s common shares, namely Euro 3.60 per share; the maximum price shall be equal to a value not exceeding the closing average reference price recorded by the stock in the three Stock Exchange sessions before each single purchase transaction, incremented by a maximum percentage of 15%.

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Actions taken by the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) and ISVAP (Insurance Supervisory Authority)

With reference to the merger plan between Banca Popolare Italiana and Banco Popolare di Verona e Novara approved by their shareholders’ meeting on March 10th, 2007, on March 30th, 2007 the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) communicated its decision not to conduct any inquiry on the deal. Also ISVAP, on the same date, communicated that no reason exists to conduct an inquiry on the taking over by the newly formed company resulting from the merger of the stakes currently held by Banca Popolare Italiana in the following companies: Area Life International Assurance Ltd., Bipielle Previdenza Assicurativa s.r.l., Aviva Previdenza S.p.A. and Eurovita Assicurazioni S.p.A. (the last two held through Finoa s.r.l.). As a result, the taking over of said shareholdings by the newly formed Banco Popolare is not subject to ISVAP’s authorization.

Merchant and corporate banking integration plan

On April 27th, 2007, the Board of Directors of Efibanca S.p.A., the merchant bank controlled by Banca Popolare Italiana, approved the plan to merge Aletti Merchant S.p.A., the merchant bank controlled by Banco Popolare di Verona e Novara (Acquiree), into Efibanca (Acquirer). The Board of Directors of Aletti Merchant, on the same date, made the same decision. This transaction lies within the larger integration process taking place between the Banking Groups BPVN and BPI and it endorses the strategic and organizational guidelines underlying the Business Plan of Gruppo Banco Popolare. The goal of the merger is to value and promote the competences and structures devoted to Corporate and Merchant Banking by combining them into a single entity within Gruppo Banco Popolare. The merger plan aims at consolidating the skills in specific business areas within Efibanca and thus form an entity capable of providing its corporate customers with a range of high value added financial products and services. As a result, through the contribution of Aletti Merchant’s skills and professional competencies, and its well- established relations with the other domestic banking institutions and with the corporate customers of Gruppo Banco Popolare, Efibanca shall be in a position to increase its productivity in specific business areas. The acquisition shall be performed through the merger of Aletti Merchant S.p.A. into Efibanca S.p.A. and the issue by the Acquirer of new shares to be allocated to the Acquiree’s shareholders in exchange for their former shares. The Special shareholders’ meetings of Efibanca and Aletti Merchant approved the merger plan on September 7th, 2007.

Asset management integration plan

As part of the business plan associated with the merger plan, a special focus was devoted to the rationalization of the asset management arm, whose discrete business lines would have entailed cost duplications, product overlapping, different management styles, and a poor business and marketing effectiveness. At corporate level it was decided to achieve the integration by transferring the relevant business lines of Bipitalia Gestioni and Bipitalia Alternative to Banca Aletti and Aletti Gestielle, since from an operational and legal point of view this approach is simpler and less expensive than a merger. As a result, at the end of the process, Bipitalia Gestioni shall have to relinquish its authorization to engage in investment services, and turn into a simple financial holding company. According to estimates, following the transfers to Banca Aletti and Aletti Gestielle SGR, based on the current valuations of the target companies, Bipitalia Gestioni shall hold 16.9% and 33.7% of their share capital, respectively. More precisely, in the meeting held on April 3rd, 2007, the Board of Directors of Bipitalia Gestioni approved the transfer of the discretionary asset management business line to Banca Aletti, and the transfer of the mutual and pension fund management business line to Aletti Gestielle. The business lines under transfer comprise the

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total assets, liabilities and contracts associated with the performance of discretionary asset management activities, and the total assets, liabilities and contracts associated with the performance of promotional and management activities for mutual and pension funds. From a legal point of view, the transfer of the business line comprising individually managed assets, collectively managed assets and mutual funds, is considered a capital increase with no preemptive right under art. 2441, paragraph four of the civil code. On June 13th, 2007, the Board of Directors of Banca Aletti approved the transfer by Bipitalia Gestioni of the business line comprising individually managed assets and the associated capital increase. On June 22nd, 2007 the special shareholders’ meeting of Banca Aletti decided to increase its share capital by euro 20,064,047 with a share premium of euro 169,934,953, leading to the issue of 3,888,575 new shares, with a nominal value of euro 5.16 each, to be assigned to Bipitalia Gestioni through the transfer of the full ownership of the business line by Bipitalia Gestioni, based on the estimated valuation. The transferor Bipitalia Gestioni, during the same meeting, declared the subscription of the whole share capital increase and the transfer of the full ownership of the business line comprising individually managed assets to the transferee company (Banca Aletti) as a paying up of said new share issue. The parties agreed to bring the transfer into effect on August 1st, 2007 or at a subsequent date as soon as the pending inquiries and procedures with the Bank of Italy are completed. Similarly, on June 13th, 2007, the Board of Directors of Aletti Gestielle approved the transfer by Bipitalia Gestioni of the business line comprising individually managed assets and pension funds, and the associated share capital increase. On June 22nd, 2007, Aletti Gestielle special shareholders’ meeting decided to increase the share capital by euro 11,099,530 with a share premium of euro 48,900,470, with no preemptive right under art. 2441, leading to the issue of 2,219,906 new shares, with a nominal value of euro 5 each, to be assigned to Bipitalia Gestioni through the transfer of the full ownership of the business line by Bipitalia Gestioni, based on the estimated valuation. The transferor Bipitalia Gestioni, during the same meeting, declared the subscription of the whole share capital increase and the transfer of the full and the transfer of the full ownership of the business line “Collective asset management and supplementary pension schemes” to the transferee company (Aletti Gestielle) as a paying up of said new share issue. The parties agreed to bring the transfer into effect on December 29th, 2007, by which date all the pending inquiries and procedures with the Bank of Italy and Covip are expected to be over. Based on the estimated valuation prepared by the experts for the transfer of the discretionary asset management business unit from Bipitalia Gestioni to Banca Aletti, which referred to March 31st, 2007, total assets under transfer amounted to Euro 62,731,568, while total liabilities amounted to Euro 14,968,741; as a result, net assets shall come in at Euro 47,762,827, and Bipitalia Gestioni shall acquire a shareholding in Banca Aletti amounting to Euro 190,000,000. The difference between the shareholding and the net assets shall generate a tax-free capital surplus recognized in a transfer reserve under fiscal neutrality for Bipitalia Gestioni of Euro 142,237,173. Based on the estimated valuation prepared by the experts for the transfer of the business line dealing with collective asset management and supplementary pension schemes from Bipitalia Gestioni to Aletti Gestielle, total assets under transfer amounted to Euro 29,528,036, while total liabilities amounted to Euro 9,955,456. As a result, net assets shall come in at Euro 19,572,580, and Bipitalia Gestioni shall acquire a shareholding in Aletti Gestielle amounting to Euro 60,000,000. The difference between the shareholding and the net assets shall generate a tax-free capital surplus recognized in a transfer reserve under fiscal neutrality for Bipitalia Gestioni of Euro 40,427,420. As of June 30th, 2007, the discretionary asset management business line reported total assets of Euro 62,074,663 and total liabilities of Euro 14,416,584. The collective asset management and supplementary pension schemes business line, again as of June 30th, 2007, reported total assets of Euro 29,154,139 and total liabilities of Euro 10,661,910. The Bank of Italy granted the necessary authorizations for the rationalization of the asset management reorganization in August.

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Insurance Partnership with Fondiaria-SAI

On May 31st, 2007, Banco Popolare di Verona e Novara and Banca Popolare Italiana signed an agreement with Fondiaria-Sai (“FonSAI”) to develop an exclusive strategic bancassurance partnership for the Life and Pension business of Gruppo Banco Popolare. Based on the agreement, after receiving the necessary authorization from the relevant regulatory authorities, Gruppo BPVN shall sell a total 50% interest in BPV Vita S.p.A.’s share capital to FonSAI for 530 millions. Banco Popolare and FonSAI shall also enter into a shareholders’ agreement regulating the partnership’s business aspects and the corporate governance rules for BPV Vita. Among other things, the agreement shall envisage provisions giving Gruppo Fondiaria-SAI the possibility of fully consolidating BPV Vita, as well as put&call options in the event that the partnership is terminated, in which case Fondiaria-SAI’s interest is to be valued along the appraisal value method. The distribution agreement between BP VITA, which shall acquire Novara Vita, and the networks of Banco Popolare shall have a 10 year term and may be renewed every 5 years, and its exclusive rights shall start as at January 1st, 2008, without prejudice to the residual distribution agreements with Aviva (non-exclusive agreement expiring at the end of 2009) and Aurora (exclusive agreement expiring in May 2009) in effect with BPI branches and “former Reti Bancarie” branches, respectively. Once fully operational, BPV Vita shall count on a total network of about 2,200 branches, with an annual written premium target of about Euro 6 billion. In order to maximize the business efficiency and effectiveness and thus the partners’ value creation, BPV Vita shall adopt an organizational solution based on an in-house operational structure at the Verona head offices, while several functions shall be outsourced to partners. In particular, the company shall turn to Banca Aletti for Asset Management services and to FonSAI for insurance services. For FonSAI this agreement represents a further opportunity to develop its life business – in 2006 the group wrote premiums for about 2,670 million (IAS/IFRS values), of which 667 millions through the bancassurance channel – both because it is consistent with the goals of its business plan, and because of its strong historical ties with BPVN, with which over time it developed a well-established and marked common vision on how to manage this business, also based on a mutual strategic view where the customer is at the core of business development policies. For Banco Popolare this agreement represents the first step along the long term reorganization plan of the bancassurance business, and an important part of the capital strengthening initiatives envisaged in the capital management plan. From a business point of view, the agreement is a seamless evolution of the partnership between BPVN and FonSAI and it represents a major opportunity to strengthen Banco Popolare’s competitive position in the Italian Life bancassurance sector. Gruppo Banco Popolare and Gruppo Fondiaria SAI finalized the above agreement on September 7th, 2007.

Insurance Partnership with Aviva

On June 20th, 2007, Banco Popolare di Verona e Novara, Banca Popolare Italiana and Aviva signed an agreement for the development of an exclusive strategic bancassurance partnership for the Non-life insurance business of Banco Popolare. Based on the agreement, after obtaining the necessary authorization from the relevant regulatory authorities, BPI shall sell a 50% interest in Novara Assicura’s share capital to Aviva for Euro 250 millions. Banco Popolare and Aviva shall also enter into a shareholders’ agreement regulating the partnership’s business aspects and the corporate governance rules for Novara Assicura. Among other things, the agreement shall include provisions giving Aviva the possibility of fully consolidating the company, as well as put&call options in the event that the partnership is terminated, in which case Aviva’s interest is to be valued along the appraisal value method. The distribution agreement shall have a ten-year term, and may be renewed every 5 years, and its exclusive rights shall start as at January 1st, 2008. Following this agreement, Aviva shall have the exclusive access to the

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distribution network, comprising about 2,200 branches mainly located in Northern Italy (Lombardy, Veneto, Piedmont and Tuscany), where Banco Popolare has a market share of about 10%. The agreement covers also the Ducato network, one of the leading consumer credit companies in Italy, fully owned by Banco Popolare. In order to maximize the business efficiency and effectiveness, and thus the partners’ value creation, the company shall turn to Banca Aletti for financial services. For Banco Popolare, this agreement represents the completion of the long-term reorganization plan for the bancassurance business, as well as an important part of the capital strengthening initiatives envisaged in the capital management plan. From a business point of view, the agreement is a seamless evolution of the partnership between BPI and Aviva and it represents a major opportunity to strengthen Banco Popolare’s competitive position in the Italian Non-Life bancassurance sector.

Appointment of the members of the Management Board of Banco Popolare, beginning of the procedures to form Banca Popolare di Lodi S.p.A. and appointment of the relevant corporate boards

On June 6th, 2007, following the resolutions passed by the shareholders’ meeting of Banca Popolare Italiana and Banco Popolare di Verona e Novara on March 10th, regarding the merger which gave rise to the formation of Banco Popolare Società Cooperativa, the Board of Directors of Banca Popolare Italiana, together with the Board of Directors of Banco Popolare di Verona e Novara, appointed the following candidates as members of the first Management Board of Banco Popolare: Divo Gronchi – Chairman, Fabio Innocenzi - Vice Chairman and CEO, Franco Baronio – Executive director, Alfredo Cariello – Executive director, Vittorio Coda – Independent, non- executive director, Luigi Corsi - Independent, non-executive director, Domenico De Angelis – Executive director, Maurizio Di Maio – Executive director, Enrico Fagioli Marzocchi – Executive director, Maurizio Faroni – Executive director, Massimo Minolfi – Executive director, Roberto Romanin Jacur - Independent, non- executive director. After deciding to convene the shareholders’ meeting to turn BPI Servizi Amministrativi s.r.l., a special purpose vehicle, into a public company called Banca Popolare di Lodi S.p.A., as foreseen in the above mentioned merger plan, the Board of Directors of Banca Popolare Italiana appointed the members of the Board of Directors of Banca Popolare di Lodi S.p.A. for financial years 2007/2008/2009: Enrico Perotti – Chairman, Massimo Minolfi – CEO, Franco Baronio – Executive director, Maurizio Di Maio – Executive director, Fabio Innocenzi – Executive director, Angelo Benelli, Augusto Cantoni, Costantino Coccoli, Franco Curioni, Carlo Franciosi, Andrea Guidi, Augusto Machirelli, Roberto Nicola Martone, Giorgio Olmo, Roberto Schmid, Ambrogio Sfondrini, Directors. The makeup of the Board of Statutory Auditors shall be as follows: Flavio Dezzani – Chairman, Maurizio Calderini – Standing auditor, Gianpaolo Fornasari – Standing auditor, Giordano Massa – Standing auditor, Mario Maestroni – Standing auditor, Vanni Mauro Madonini – Alternate auditor, Gabriele Camillo Erba – Alternate auditor.

Sealing of the Deed of transfer of the banking business lines to Banca Popolare di Verona - San Geminiano e S. Prospero and to Banca Popolare di Lodi S.p.A. and of the Merger Deed between Banco Popolare di Verona e Novara and Banca Popolare Italiana

The deed of transfer of the banking business lines from BPVN to Banca Popolare di Verona – S. Geminiano e S. Prospero S.p.A and from BPI to Banca Popolare di Lodi S.p.A was entered into on June 26th, 2007. Assets under transfer were mainly represented by networks of branches located primarily in the banks’ franchise areas, and by head office functions, mainly focused on lending, retail, and corporate banking activities. Banca Popolare di Lodi received also some controlling stakes in banks (Banca Popolare di Crema, Banca Popolare di Cremona, Banca Popolare di Mantova and Banca Caripe) that had been previously controlled by Banca Popolare Italiana. The business line transfer went into effect immediately before the coming into effect of the merger (July 1st, 2007).

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On June 27th, 2007, a merger deed was entered into for the formal incorporation of Banco Popolare Società Cooperativa. Based on the share exchange ratios and considering also the cancellation without exchange of 13,507,829 treasury shared held by BPVN, of the cancellation without exchange of 36,841,445 treasury share held by BPI, and of the cancellation without exchange of 94 BPI shares held by BPVN, the share capital of Banco Popolare, as of the date of coming into effect of the merger, amounted to nominal Euro 2,305,728,126, and was made up of 640,480,035 shares with a nominal value of Euro 3.60 each.

Verification of the stock of reserves to be distributed

On June 30th, 2007, based on the verifications conducted by the Chief Executive Officer vested with the necessary powers as a result of the resolution passed by the Board of Directors on June 27th, 2007, no negative events had occurred that may have affected the reserves to be used for the special dividend distribution of Euro 2.17, in keeping with the decision approved by BPI shareholders’ meeting held on March 10th, 2007. The value date of the payment was July 5th, 2007.

Conclusion of the Buy-back program

On March 28th, 2007, the Board of Directors of Banca Popolare Italiana, as a result of the resolution passed by the general shareholders’ meeting on March 10th, decided to run a share repurchase program on the Regulated Market, pursuant to art. 2357, paragraph 1, of the Civil Code, effective as of March 29th, 2007 and ending no later than June 30th, 2007. The aim of the program is to implement capital management actions in the time frame between the board meeting date when the 2006 financial statements are approved (March 28th, 2007) and the date of coming into effect of the merger with Banco Popolare di Verona e Novara (July 1st, 2007). The maximum theoretical total number of treasury shares that can be purchased is 37,000,000 common shares, accounting for 5.4% of BPI’s share capital. A similar program was launched by Banco Popolare di Verona e Novara. In compliance with art. 3 of EC Regulation 2273/2003, this transaction falls within BPI’s capital management actions associated with the merger with BPVN. In particular, the buy-back shall decrease the number of outstanding shares of the companies taking part in the merger, thus optimizing the capital structure of the newly formed Banco Popolare, without prejudice to capital adequacy rules and to the protection of the interest of the creditors of the companies involved in the deal. The finalization of the merger deal between BPI and BPVN and the definition of the final number of shares to be issued, which took place on June 27th, 2007, put an end to the share repurchase program. As a whole, the execution of the program led to the purchase on the regulated market of: x 13,507,829 BPVN shares, with a total investment of 320.1 millions x 32,209,000 BPI shares, with a total investment of 380.1 millions leading to a total investment of 700.2 millions. On March 28th, 2007, Banca Popolare Italiana held 4,632,445 treasury shares; as a result, at the end of the buyback program, the total number of treasury shares held in its portfolio by Banca Popolare Italiana was 36,841,445, equivalent to 5.399% of its share capital. On the same date, Banco Popolare di Verona e Novara held no treasury share. The share repurchase program lasted 61 trading days, and the transactions were conducted in such a way as not to upset the normal stock performance. The buyback ended on June 27th, 2007, in order to allow for the time necessary to form the new Banco Popolare, incorporated on July 1st, 2007. All BPVN and BPI shares purchased as part of the buyback program were cancelled without exchange, since at the coming into effect of the merger they were held by the two banks participating in the merger itself. Described below are the other noteworthy events for the first half of the year involving Gruppo BPI.

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General Shareholders’ Meeting reinstated the Chief Executive Officer

On December 7th, 2006, the Court of Brescia passed a first instance decision on the bankruptcy of Italcase-il Bagaglino-Bertelli and among others, it found the Chief Executive Officer of Banca Popolare Italiana, Divo Gronchi, guilty of complicity in bankruptcy filing (art. 217 r.d. n. 267 of 1942, bankruptcy law). As a result, during the Board meeting of Banca Popolare Italiana of December 13th, Mr. Gronchi was suspended from the office of director under Art. 6 MD 161/1998. On January 20th, 2007, the General Shareholders’ Meeting was asked to express their opinion thereon, and the large majority (with 1885 yes votes out of 2847 votes represented in the meeting) decided not to revoke Mr. Gronchi from the office of director under art. 6 paragraph 2 of MD 161/1998. Hence, Mr. Gronchi was fully reinstated to his office of Chief Executive Officer.

Sale of Equity investments

On February 27th, 2007, the subsidiary Efibanca finalized the sale of its entire equity investment (20%) held in the share capital of the associate IGLI S.p.A., equivalent to 38.3 millions, generating a capital gain of 14.3 millions. On March 13th, 2007, Efibanca sold its entire stake in Generale de Santé, equal to 4,292,680 shares (accounting for 8% of the capital share), for a unit price of 32.5 euro per share, generating a total capital gain of 77.1 millions.

Requirements of independence for the members of the BoD

On April 12th, 2007, the Board of Directors of Banca Popolare Italiana, in compliance with the 2002 version of the Corporate Governance for Listed Companies, certified the satisfaction of the requirement of independence for the following non-executive directors: Pier Antonio Ciampicali, Costantino Coccoli, Bruno Giuffré, Pietro Manzonetto, Mario Minoja, Giorgio Olmo, Roberto Schmid. The following directors do not meet the independence criteria: Dino Piero Giarda, Divo Gronchi, Duccio Castellotti, Vittorio Coda, Maria Luisa Di Battista, Andrea Guidi, Augusto Machirelli, Roberto Nicola Martone, Enrico Perotti. The assessment of the requirements of independence of non-executive directors takes into account the composition of the executive and strategic-operational bodies put forward by the Board of Directors: the “Executive Committee”, made up of the following directors: Dino Piero Giarda (Chairman), Enrico Perotti, Vittorio Coda, Divo Gronchi, Maria Luisa Di Battista ed Andrea Guidi; the "Strategic Planning Committee", made up of the following directors: Dino Piero Giarda, Divo Gronchi, Enrico Perotti, Vittorio Coda, Andrea Guidi; the "Loan Executive Committee", made up of the directors Divo Gronchi (Chairman), Duccio Castellotti, Maria Luisa Di Battista, Augusto Machirelli and by the general manager Franco Baronio.

Agreement between BPI and Pandette Finanziaria

On April 19th, 2007, Banca Popolare Italiana Soc. Coop. and Pandette Finanziaria S.r.l. subscribed an option contract by which: a) BPI acquires a put option on 18,300,000 common shares of RCS MediaGroup S.p.A., at a unit strike price of Euro 4.51, totaling Euro 82,533,000.00; b) Pandette acquires a call option on the same share package at a unit strike price of Euro 4.45, totaling Euro 81,435,000.00. Both options may be exercised only for the entire share package (equivalent to about 2.402% of the entire share capital and to about 2.498% of the share capital represented by common shares of RCS MediaGroup S.p.A.) in the time frame between February 24th and 27th, 2009.

138 Gruppo Banca Popolare Italiana

The agreement followed a similar one entered into by the same counterparties on November 29th, 2006 on 25,300,000 RCS common shares.

Rating of Ducato

On May 4th, 2007, the international rating firm Fitch Ratings assigned the following ratings to Bipitalia Ducato, a leading consumer credit company controlled by Banca Popolare Italiana: ‘BBB’, Short term ‘F3’ and Support ‘2’. The firm also placed it on a Rating Watch Positive.

Corporate liability action against some members of the former corporate boards of Banca Popolare Italiana

On June 9th, 2007, the General Shareholders’ Meeting of Banca Popolare Italiana approved by large majority to bring a corporate liability action against Messrs. Gianpiero Fiorani, Giovanni Benevento, Francesco Ferrari, Osvaldo Savoldi, Desiderio Zoncada, Roberto Araldi, Aldino Quartieri. The Board of Directors of Banca Popolare Italiana had proposed said liability action on May 3rd, 2007.

Agreement with the bankruptcy administrator of Magiste International SA and with the legal representatives of Magiste Real Estate S.p.A. and Garlsson Real Estate SA

On June 26th, 2007, Banca Popolare Italiana Soc. Coop. reached an agreement with the Bankruptcy Administrator Magiste International S.A. and with the legal representatives of Magiste Real Estate S.p.A. – under composition proceedings – and of Garlsson Real Estate S.A. In virtue of this agreement, Banca Popolare Italiana signed a proposal which was submitted to the above mentioned Magiste International, Magiste Real Estate and Garlsson Real Estate, and was accepted by their representatives, duly authorized by the relevant bodies of the above bankruptcy and of the above mentioned composition proceedings. Under said proposal: x Magiste International, Magiste Real Estate and Garlsson Real Estate shall discharge any claim or any indemnity, bankruptcy or other type of action, either before a criminal or civil court, against all the companies of Gruppo Banca Popolare Italiana and its executives, managers, officers and employees; as well as any other right claimed under any other entitlement, individually and under art. 1381 of the civil code, by all the companies of Gruppo Ricucci/Magiste against Gruppo Banca Popolare Italiana; x BPI shall receive the sum of 26 millions as partial settlement of its actual larger claim; x BPI shall agree to the same discharges illustrated above against Magiste International, Magiste Real Estate and Garlsson Real Estate, and it shall also discharge about 176 million outstanding loans extended to these companies. Note, that the provisions set aside to date by BPI are adequate.

Granting of the request to apply a monetary penalty put forward by Banca Popolare Italiana

On June 28th, 2007, Banca Popolare Italiana defined its position within the criminal trial n. 26261/07 R.G.N.R. (part of the criminal trial 19195/05 R.G.N.R.), where it was one of the entities under investigation, under Legal Decree 231/2001, before the Milan Court. The Preliminary inquiry judge accepted to apply the monetary penalty suggested by the Bank in agreement with the public prosecutors, under art. 63 L.D. 231/2001. Banca Popolare Italiana was thus inflicted a fine of Euro 1,026,667. The changes introduced to the Bank’s organization and governance, and the adoption and implementation of an organizational and business model in line with Legal Decree 231/2001 proved determining elements in the making of this decision. Under the law, the Judge ordered the forfeiture of the sums representing the profit from the charged offences, that Banca Popolare Italiana had already made available under and pursuant to art. 17 letter c L. Decree 231/2001, amounting to Euro 94,237,412.83. The forfeiture of said sum does not give rise to any income charge, since in the financial year in which the capital gain had been recognized, an equal sum had been set aside in a provision for risks and charges.

139 Gruppo Banca Popolare Italiana

Equity investments by Ducato

On March 2nd, as part of the plan to develop Ducato S.p.A., namely the Group’s consumer credit company, an 80% interest in the share capital of Easynetwork S.p.A. was purchased, the latter being a credit intermediation company specializing in salary-secured loans. Easynetwork was registered by the Bank of Italy in the general register of financial intermediaries under art. 106 of the Banking single act. The purchase price was 900 thousand euro, of which 420 thousand representing a share premium; Easynetwork’s registered office was moved from Rome to Lucca. On the same date the purchase of a 10% stake in the share capital of Gestamm S.r.l. was finalized, the latter being a company providing administrative services based in Rome, for 40 thousand euro (of which 35 thousand as share premium). Again, on March 2nd, 2007, Ducato formed the company Soluzioni Finanziarie S.p.A, with registered office in Lucca, with a share capital of 1 million euro fully held by Ducato. On May 17th 2007, the company, that for the time being is not operational yet, was registered by the Bank of Italy in the general register of financial intermediaries under art. 106 of the Banking single act, and according to group plans, it is destined to become the group company specializing in so called near-prime loans. On the same day Ducato took part in the formation of the company C.F. Assicurazioni S.p.A., with registered office in Rome, a share capital of 3.75 millions and a start-up provision of 1.25 millions. Ducato’s interest in the share capital of the company, which at present is not operational yet, amounts to 40%.

140 Gruppo Banca Popolare Italiana

OPERATING PERFORMANCE

Reclassified Balance Sheet

Balance Balance Absolute % change 30/06/2007 31/12/2006 change

ASSETS Cash and cash equivalents 192,945 248,988 -56,043 -22.51% Financial assets and hedging derivatives 3,804,588 4,888,723 -1,084,135 -22.18% Due from other banks 3,490,108 4,833,472 -1,343,364 -27.79% Loans to customers 30,747,618 28,735,907 2,011,711 7.00% Equity investments 146,895 151,168 -4,273 -2.83% Property and equipment 944,104 947,078 -2,974 -0.31% Intangible assets 2,222,864 2,221,173 1,691 0.08% Non-current assets held for sale and discontinued 1,155,438 1,222,348 -66,910 -5.47% operations Other assets 2,906,259 3,538,214 -631,955 -17.86% TOTAL ASSETS 45,610,819 46,787,071 -1,176,252 -2.51%

LIABILITIES Due to other banks 4,556,313 5,997,316 -1,441,003 -24.03% Due to customers, debt securities in issue and financial 32,812,603 32,138,095 674,508 2.10% liabilities measured at fair value Financial liabilities and hedging derivatives 709,213 703,433 5,780 0.82% Other liabilities 3,369,138 3,270,550 98,588 3.01% Provisions for liabilities 506,731 574,258 -67,527 -11.76% Shareholders’ equity - Share capital and reserves 3,537,161 3,995,686 -458,525 -11.48% - Net income for the period 17,830 -39,861 57,691 -144.73% Minority interest 101,830 147,594 -45,764 -31.01%

TOTAL LIABILITIES 45,610,819 46,787,071 -1,176,252 -2.51%

The reclassified balance sheet represents a simple aggregation of the items contained on the balance-sheet face, in compliance with the Bank of Italy’s circular letter n.262 of December 22nd, 2005. Illustrated below are some significant items, analyzed in grater detail and compared with December 31st, 2006.

141 Gruppo Banca Popolare Italiana

Consolidated managed assets

Due to customers 30/06/2007 % comp 31/12/2006 % change

Checking accounts and deposits 12,487,093 80.32% 12,725,353 -1.87% Time deposits and restricted checking accounts 235,245 1.51% 101,865 130.94% Third party assets under administration 4,052 0.03% 4,955 -18.22% Loans payable: 145,155 0.93% 155,765 -6.81% Financial leases 7,120 0.05% 7,046 1.05% Other 138,035 0.88% 148,719 -7.18% Liabilities for assets sold and not derecognized: 2,654,968 17.08% 2,596,120 2.27% Repurchase agreements 2,652,965 17.07% 2,594,101 2.27% Other 2,003 0.01% 2,019 -0.79% Other payables 20,092 0.13% 26,793 -25.01% Total 15,546,605 100.00% 15,610,851 -0.41% Securities in issue 17,265,998 16,527,244 4.47% Total due to customers and debt securities in issue 32,812,603 32,138,095 2.10% Managed assets 8,637,710 47.31% 8,708,398 -0.81% Mutual Funds and SICAV 7,561,256 41.41% 7,954,693 -4.95% Insurance products 2,058,856 11.28% 1,912,573 7.65% Total assets under management 18,257,822 100.00% 18,575,664 -1.71% Third party securities under custody and administration of 14,680,076 14,685,119 -0.03% retail customers Total indirect customer funds 32,937,898 33,260,783 -0.97% Due to other banks 4,556,313 5,997,316 -24.03% Third party securities under custody and administration of 19,877,057 20,306,109 -2.11% banks and institutional investors Total administered assets of banks and institutional investors 24,433,370 26,303,425 -7.11%

Total assets under management and administration 90,183,871 91,702,303 -1.66%

Total assets under management and administration as at June 30th, 2007 stood at 90,183.9 millions, down by about 1.7% from 91,702.3 millions on December 2006. As a whole, direct customer funds (the sum of due to customers and debt securities in issue) increased by 2.1% as compared with 2006 del 2,1%, reaching 32,812.6 millions: a positive dynamic was reported by Debt securities in issue, which went up to 17,266 millions (+4.5%) as a result of the positive balance between bond issues and maturities during the semester, while Due to customers stood at 15,546.6 millions (-0.4%), reporting a decrease in ordinary checking accounts (-1.9%) which was only partly offset by the performance of repurchase agreements and time deposits.

Indirect customer funds decreased by a percentage point to 32,937.9 millions, due to the reduction in total assets under management (-1.7% over December 2006), while third party securities under custody and administration remained practically stable at 14,680.1 millions (-0.03%). In detail, assets under management as at June 30th, 2007 amounted to 18,257.8 millions: the negative dynamic was partly due to managed assets (-0,8%), but to a greater extent to the strong contraction of mutual funds (- 5%). In particular, the drop reported by managed assets and mutual funds was due to the poor performance reported by the asset management arm, in line with the sector’s domestic trend, especially Italian mutual funds.

142 Gruppo Banca Popolare Italiana

Gruppo BPI’s managed assets during the first-half of the year went from 8,708.4 millions to 8,637.7 millions, while mutual funds (net of those included in managed assets) slipped to 7,561.3 millions. On the contrary, insurance products reported a positive performance, rising from 1,912.6 millions at year-end 2006 to 2,058.9 millions (+7.7%), as a result of the sale of supplementary pension products and of the greater market demand for products characterized by a rather low risk-return profile at times of heightened uncertainty on financial markets. Total assets under administration of banks and institutional investors dropped to 24,433.4 millions (-7.1%).

Shown in the tables below is the classification of deposits (direct customer funds net of repurchase agreements and bonds) of the banking companies of the Group broken down by institutional sector and by Italian region of belonging of the customer’s branch.

Deposits by institutional sector % breakdown June 2007 % breakdown December 2006

Public Administrations 4.97% 3.59% Households 59.56% 63.11% Financial companies 10.75% 8.93% Non-financial companies 20.03% 19.24% Non-profit organizations 1.97% 2.08% Rest of the World and other 2.72% 3.05%

Total 100.00% 100.00%

With regard to customer deposits, the main institutional sector is represented by “households”, which reported a pullback with respect to total deposits of Gruppo Banca Popolare Italiana (from 63.1% to 59.6%). Companies other than sole proprietorships (called non-financial companies) remained stable at around 20%, while financial companies rose to 10.7% from 8.9%. Public Administrations have been growing and accounted for 5% of total deposits.

143 Gruppo Banca Popolare Italiana

Deposits by region % breakdown June 2007 % breakdown December 2006

Lombardy 34.39% 33.46% Tuscany 25.59% 25.88% Liguria 9.56% 9.97% Sicily 8.53% 8.75% Abruzzo 6.24% 6.82% Lazio 5.72% 4.80% Emilia Romagna 4.70% 4.52% Molise 2.28% 2.22% Piedmont 1.02% 1.26% Campania 0.70% 0.62% Umbria 0.44% 0.50% Veneto 0.41% 0.69% Basilicata 0.14% 0.15% Calabria 0.11% 0.11% Marche 0.10% 0.19% Sardinia 0.06% 0.05% Friuli Venezia Giulia 0.01% 0.01%

Total 100.00% 100.00%

The breakdown of the deposits of Gruppo Banca Popolare Italiana into the main Italian regions ranks Lombardy (it went from 33.5% to 34,4%) and Tuscany (stable at 25.6%) as leading regions, while Liguria, Sicily and Abruzzo reported a slight decrease.

Consolidated loans

Customer loans 30/06/2007 % comp 31/12/2006 %change

Checking accounts 7,986,110 25.97% 7,641,432 4.51% Mortgages 11,728,202 38.15% 10,607,254 10.57% Credit cards, personal loans and salary-secured loans 3,200,447 10.41% 2,564,572 24.79% Other transactions 3,567,752 11.60% 3,655,868 -2.41% Impaired assets 981,869 3.19% 1,048,220 -6.33% Assets sold and not derecognized 3,283,238 10.68% 3,218,561 2.01%

Total 30,747,618 100.00% 28,735,907 7.00%

As at June 30th, 2007, total loans to customers reached 30,747.6 millions, equivalent to a 7% increase from 28,735.9 millions on December 31st, 2006. This figure is telltale of the trust and business relationship reestablished between the Group and its economic communities. As to the different loan typologies, checking accounts grew by about 4.5% up to 7,986.1 millions (accounting for about 26% of total loans), while mortgages, accounting for 38% of total loans, in the first six months of the year increased by 10.6%, from 10,607.3 millions to 11,728.2 millions, outperforming the sector’s national

144 Gruppo Banca Popolare Italiana

average. Credit cards and personal loans reported a particularly brilliant performance in the first half 2007, thanks to Bipitalia Ducato activities: the consumer credit stock went from 2,564.6 millions up to 3,200.4 millions, up by about 25%. Impaired assets went down to 981.9 millions (-6.3% with respect to December 2006 and accounting for 3.2% of total loans), evidence of the ability to keep credit quality under control despite the growth in customer loans. Similarly to what illustrated for deposits, shown in the tables below is the classification of customer cash loans extended by the banking companies of the Group broken down by institutional sector, customer’s economic activity and branch’s Italian region.

Loans by institutional sector % breakdown June 2007 % breakdown December 2006

Public Administrations 1.29% 1.94% Households 17.94% 18.06% Financial companies 19.02% 13.66% Non-financial companies 55.96% 59.73% Non-profit organizations 0.39% 0.43% Rest of the World and other 5.40% 6.18%

Total 100.00% 100.00%

The breakdown by customer institutional classes shows a progress of financial companies, from 13.7% to 19%, offset by the decrease of non-financial companies (other than sole proprietorships), accounting for 56% of total loans.

145 Gruppo Banca Popolare Italiana

Loans by region % breakdown June 2007 % breakdown December 2006

Lombardy 34.86% 34.28% Tuscany 26.64% 25.23% Lazio 18.95% 20.29% Liguria 4.81% 4.73% Abruzzo 5.11% 4.81% Emilia Romagna 3.59% 3.84% Sicily 2.50% 2.92% Veneto 1.57% 1.88% Piedmont 0.75% 0.78% Marche 0.23% 0.34% Umbria 0.42% 0.36% Molise 0.26% 0.24% Campania 0.13% 0.14% Sardinia 0.07% 0.04% Calabria 0.05% 0.04% Basilicata 0.04% 0.04% Friuli Venezia Giulia 0.02% 0.02% Trentino Alto Adige 0.00% 0.02%

Total 100.00% 100.00%

The loan breakdown by Italian regions shows an upturn in Lombardy and Tuscany (34.9% and 26.6%, respectively), while Lazio slipped from 20.3% to about 19%.

146 Gruppo Banca Popolare Italiana

Loans by economic activity % breakdown June 2007 % breakdown December 2006

Communication services- Other sellable services 32.42% 32.52% Building and public works 12.94% 12.11% Trade services, recoveries and repairs 12.65% 12.29% Transportation services and similar 4.90% 4.90% Agriculture, Forestry and Fishing 4.77% 5.09% Hotels and public commercial concerns 4.39% 4.44% Food 3.78% 3.82% Textile 2.96% 3.07% Metals 2.76% 2.59% Energy 2.76% 2.52% Agricultural and manufacturing machinery 2.34% 2.39% Ferrous and non-ferrous metals and minerals 2.06% 2.43% Non-ore minerals and products 2.02% 2.14% Rubber and plastics 1.65% 1.77% Electric materials and supplies 1.61% 1.56% Paper and products 1.54% 1.69% Other manufacturing products 1.40% 1.47% Chemicals 1.37% 1.43% Transportation means 1.33% 1.44% Office machines, data processing 0.35% 0.33%

Total 100.00% 100.00%

The loan breakdown by economic activity does not highlight any noteworthy changes with respect to the end of 2006, with “other sellable services” (32.4%) ranking first and “building and public works” and “trade services” accounting for 13% of loans, both slightly progressing since December 2006.

147 Gruppo Banca Popolare Italiana

Shareholders’ equity

As at June 30th, 2007, the Group shareholders’ equity including the net income for the period stood at 3,554 millions from 3,955.8 millions on December 31st, 2006. BPI’s share capital as at June 30th, 2007 amounted to Euro 2,047,082,517, and was represented by 682,360,839 shares with a unit value of Euro 3. The shareholders’ equity as at June 30th, 2007 included the special distribution from the share premium reserve decided by the Shareholders’ meeting on March 10th, 2007, which was to come into effect at a later time after this balance sheet’s date, as prescribed by the shareholders resolution. The coupon was paid in July and amounted to euro 1,400,776,881 for Banca Popolare Italiana shareholders and to euro 39,907,395 for convertible bondholders participating in the bond program “Banca Popolare di Lodi Prestito Obbligazionario Convertibile 4,75% 2000/2010 – ISIN IT 0001444360”. Shown below is the reconciliation table between Banca Popolare Italiana’s and the consolidated shareholders’ equity and the net income for the period.

Net income for the period Shareholders’ equity

Balance as at 30/06/2007 Parent company 94,883 4,100,299 Impact of fully consolidated equity investments 174,218 -577,852 Impact of equity investments carried at equity -3,666 41,976 Intragroup dividend write-off -237,150 Consolidation adjustments -10,455 -10,456

Balance as at 30/06/2007 shown in Consolidated Fin.Statem. 17,830 3,553,967

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Bpi stock performance

In the first half of 2007, the Banca Popolare Italiana stock moved within a price range of max. 9.97 euro (14/05/2007*) and min. 8.84 euro (27/06/2007), with a daily average trade volume of about 6 million shares. In the first six months of the year, the stock reported a positive performance, +5.73%, outperforming the S&P MIB 40 index, which closed at +1.26%, and in countertrend with respect to the Milan Stock Exchange Bank index, namely MIB Bancario, which recorded a –2.73%. The average price of the BPI stock in this six-month period was 9.46 euro. The uptrend of the first two months of the year halted in concomitance with the Special Shareholders’ meeting held at the beginning of March, when shareholders were convened to approve the merger with Banco Popolare di Verona e Novara. Subsequently, the stock price recovered its initial uptrend and went on rising up to the maximum levels in May of about 9.97 euro per share reported on May 14th, 2007. The stock, which by then was anchored to the exchange ratio with BPVN as part of the merger between the two banking institutes, was affected by the dip of the BPVN stock caused by the events associated with their interest in Banca Italease. BPI stock prices kept within a range of minimum 8.85 euro and maximum 9.37 euro, and closed the first half at 9.25 euro. As at June 30th, 2007, total BPI outstanding shares amounted to 682,360,539, equivalent to a market capitalization of about 8 billion euro.

Bpi stock performance in first-half 2007

10,2

10

9,8

9,6

9,4

9,2

9

8,8

8,6

8,4

8,2 3-gen 17-gen 31-gen 14-feb 28-feb 14-mar 28-mar 11-apr 25-apr 9-mag 23-mag 6-giu 20-giu

Source: Bloomberg on 30/06/2007. * Prices discount the special dividend of Euro 2.17 distributed to shareholders on July 2nd, 2007 as a result of the merger with Banco Popolare di Verona Novara.

149 Gruppo Banca Popolare Italiana

The table below lists the main shareholders of the Parent company Banca Popolare Italiana as determined by Consob right before the merger with Banco Popolare di Verona Novara. Along the Capital Management plan, which is an integral part of the merger plan between the two banking groups, as at June 30th, 2007, Banca Popolare Italiana held treasury shares equivalent to a share of 5.079%.

Shareholders with a share greater than 2% % share

Stichting Pensioenfonds ABP 2.215 Magnetar Financial UK 2.201 Franklin Mutual Advisors LLC 2.079 Julius Baer Investment Manag. 2.075 Credit Suisse Group 2.031 Cheyne Capital Management Limited 2.027

Total of greater than 2% share 12.628 Source: Consob on 30/06/2007

Ratings by rating firms

After the merger with BPVN was approved, in the first quarter the ratings of the BPI Group received a favorable valuation by Standard & Poor’s, which upgraded BPI’s long term rating from ‘BBB’ to ‘A’. In the second quarter 2007, both Moody’s and Fitch upgraded their ratings by three notches, from ‘Baa2’ to ‘A2’ and from ‘BBB’ to ‘A’, respectively. The outlook is “stable”.

RATING CREDIT WATCH

MOODY'S Issuer Rating A2 Long Term Bank Deposits A2 Senior Unsecured Debt A2 Stable Subordinated Debt T2 A3 Bank Financial Strength C- Short Term Debt P-1

FITCHRATINGS Issuer Rating A Short Term Debt F1 Stable Individual B/C Preferred stock BB+

STANDARD & POOR'S RATING OUTLOOK Issuer Rating A Stable Short Term Debt A-1

150 Gruppo Banca Popolare Italiana

Human resources

At Group level, the total headcount as at June 30th, 2007 was 8,695, with 52 more employees with respect to December 2006 (8,643). Taking into account the impact from the disposals in progress, as at June 30th, 2007 the headcount was 8,632, as compared with 8,579 at year-end 2006. Distribution network

Bank branches 30/06/2007 31/12/2006 Changes

Banca Popolare Italiana 536 539 -3 Banca Popolare di Mantova 8 8 Cassa di Risparmio di Lucca Pisa Livorno 245 244 1 Banca Popolare di Crema 44 44 Banca Popolare di Cremona 72 73 -1 Banca Valori 11 Banca Caripe 55 56 -1 Efibanca 66 Bipielle Bank (Suisse) 1 1 London Branch 11

Total 969 973 -4

As at June 30th, 2007, total bank branches were 969, 4 less as compared with 973 on December 2006. BPI closed the treasury and cash branches in Bibiano, at the Chamber of Commerce of Trapani and in Rome at the IACP. In addition, in first half 2007 bank branch n. 1 was closed in Bagheria, and bank branch n. 14 was opened in Milan. Banca Popolare di Cremona closed the bank branch in Melzo, while Banca Caripe closed the treasury branch at Collecorvino. Finally, Cassa di Risparmio di Lucca Pisa Livorno opened a treasury branch at Pontedera.

151 Gruppo Banca Popolare Italiana

Income statement

The following chart and comments illustrate the Income Statement results as at June 30th, 2007, prepared in compliance with IAS/IFRS, and compared with the same period last year.

Absolute 30/06/2007 30/06/2006 % change Change

Net interest income 424,777 390,776 34,001 8.70% Profit (loss) from equity investments carried at equity -3,665 -1,018 -2,647 -260.02% Net interest, dividend and similar income 421,112 389,758 31,354 8.04% Net commission income 187,916 200,694 -12,778 -6.37% Other revenues 56,971 51,957 5,014 9.65% Net financial income 144,959 85,620 59,339 69.31% Other operating income 389,846 338,271 51,575 15.25% Total income 810,958 728,029 82,929 11.39% Personnel expenses -280,178 -254,368 -25,810 -10.15% Other G&A expenses -248,250 -191,215 -57,035 -29.83% Net impairment of tangible and intangible assets -39,997 -33,069 -6,928 -20.95% Operating costs -568,425 -478,652 -89,773 -18.76% Profit from operations 242,533 249,377 -6,844 -2.74% Net impairment of loans, guarantees and commitments -158,308 28,596 -186,904 -653.60% Net impairment of other financial transactions -3,344 -8,338 4,994 59.89% Net provisions for risks and charges -32,915 -33,514 599 1.79% Goodwill impairment -1,024 -63 -961 n.s. Profit (loss) on disposal of equity and other investments 20,858 25,588 -4,730 -18.49% Income before tax from continuing operations 67,800 261,646 -193,846 -74.09% Tax on income from continuing operations -24,062 -93,730 69,668 74.33% Income after tax from continuing operations 43,738 167,916 -124,178 -73.95% Income (loss) after tax from discontinued operations -19,441 -31,518 12,077 38.32%

Net income (loss) for the period 24,297 136,398 -112,101 -82.19% Minority interest -6,467 -44,429 37,962 85.44%

Net income attributable to the Parent Company 17,830 91,969 -74,139 -80.61%

Illustrated below are the reclassifications of balances populating the items of the income statement face prescribed by the Bank of Italy: x dividend income on shares classified among assets available for sale and assets held for trading (shown under item 70) has been restated under net financial income x net trading income and fair value adjustments in hedge accounting (items 80 and 90) and profit or loss on financial assets and liabilities designated at fair value (item 110) have been classified under net financial income x profit or loss on disposal of loans (item 100) has been consolidated with net write-downs/write-backs on impairment of loans, guarantees, commitments and credit derivatives

152 Gruppo Banca Popolare Italiana

x profit or loss on disposal or repurchase of financial assets available for sale and financial liabilities (shown under item 100) have been stated under net financial income x tax and other expense recoveries (included in item 230) have been directly deducted from G&A expenses instead of being added to other revenues x the share of profit of associates carried at equity (item 240) has been stated with dividends on equity investments.

On June 30th, 2007, net interest income stood at 424.8 millions, up by 8.7% from 390.8 millions on June 30th, 2006. The growth in net interest income was influenced by the more sustained increase in interest income during the period under examination, which grew by 168.2 millions compared with the same period of 2006, rather than by interest expense which increased by 130.7 millions. The June 2006 figure had enjoyed a non- recurring contribution of 26.9 millions from overdue coupons of the security “Tiepolo Finance 2 – mezzanine tranche”, that had not been paid yet but had been accounted for based on the performance of the underlying transactions. Net of said non-recurring component, net interest income reported an increase of 60.9 millions, equal to 16.7%. The sustained net interest income growth was driven by the retail compartment, reporting a highly positive dynamic of residential mortgages (+10.6% as compared with December 31st, 2006 and +23.2% with respect to the first quarter 2006) and of personal loans (+24.8% as compared with year-end and +53.7% with respect to first-half 2006), combined with a favorable interest rate scenario. Note, that net interest income does not factor in the positive effect of 13.7 millions as at June 30th, 2007 (10.2 millions on June 30th, 2006) associated with interest income accrued on loans extended to the Barilla group for the acquisition of the Kamps and Harry’s bakery group, as said interest is subject to an impairment loss recognized in loan write-downs.

Losses from equity investments carried at equity totaled 3.7 millions, and include profits of 1.6 millions from the valuation of Arca SGR along the equity method, 1.1 millions from Efibanca Palladio Finanziaria, 0.5 millions from Centrosim, as well as the 7.2 million loss from the equity investment in the Comital Saiag group.

Net commission income amounted to 187.9 millions from 200.7 millions in the same period of 2006. Commission income decreased by about 10 millions (-4.2%), mainly because of a fall in commissions on management, brokerage and advisory services and on customer checking accounts, which in 2006 have been deeply revised also due to the new regulatory framework. Commission expense increased by 2.7 millions (+6.8%), mainly as a result of the commissions on intermediation services of the subsidiary Bipitalia Ducato.

Other revenues totaled 57 millions, up by about 5 millions (+9.7%) compared with June 2006, mainly as a result of the 18.4 million decrease in other expenses. The latter include the 18.3 million cost for the early termination of an agreement between BPI and Aviva due to the new bancassurance agreements entered into by Gruppo Banco Popolare, a 10,3 million charge for the purchase of collective insurance policies on consumer lending transactions of the subsidiary Bipitalia Ducato, a 2.7 million charge for interest repayment and 4.5 million worth of non-operating losses. Note, that the previous year’s figure had been negatively affected by a 12 million loss incurred by the associate Bipitalia Gestioni on the disposal of an investment in structured notes and by non-recurring charges of about 9 millions for the execution of non-core real estate actions by the subsidiary Basileus. Other revenues include third party charges amounting to 26.5 millions referring to the recovery of insurance premiums paid by the subsidiary Bipitalia Ducato when extending consumer loans, expense recovery from customers of 39.9 millions, 6.1 million revenues from notes associated with securitizations, and non- operating profit of 6.7 millions.

On June 30th, 2007, net financial income came in at 145 millions, as compared with 85.6 millions on June 2006. This figure includes the 87.4 million profit on disposal of financial assets (33 millions in first-half 2006),

153 Gruppo Banca Popolare Italiana

mainly associated with the capital gain generated by the subsidiary Efibanca through the disposal of its stake in Generale de Santé (77.1 millions) and the 9.6 million profit on disposal of the Parent company’s stake in Unipol Assicurazioni, and other minor interest mainly linked to the merchant banking activity performed by Efibanca. It also includes a profit of 1.1 millions on the disposal of financial liabilities, as well as net trading and hedging income, amounting to 39.4 millions, as compared with 35.4 millions in June 2006. To this regard, while trading income posted a marked improvement (+14.6 millions with respect to the first half 2006, equal to 69%), hedging income stood at 2.6 millions, plummeting from 14.2 millions in the first six months of 2006. It should be noted, however, that the positive figure reported in first half 2006 was also due to some write-downs carried out in the annual report as at December 31st, 2005, that as a result of the good market performance at the beginning of 2006 were reverted to back to income. Finally, net financial income also includes dividends collected on financial assets held for trading and available for sale, amounting to about 18 millions (20,4 millions in first half 2006). The fall is mainly due to the smaller dividend paid out by Unipol Assicurazioni shares.

As a result of the dynamics illustrated above, total income came in at 811 millions, up by 11.4% with respect to June 2006.

In the first six months of the year, personnel and G&A expenses were characterized by a substantial change in budget-based estimates, aimed at guaranteeing a better expense distribution across the four quarters of the year. Personnel expenses totaled 280.2 millions, up by 10.2% with respect to the same period last year, and up by 3.4% compared with the average of the 2006 quarters, mainly driven by the launch of the incentive scheme, the adjustments introduced by the national collective bargaining agreement, the beefing up of the network sales force and the payment of a figurative amount equal to 3% of the Parent company’s net income to Group employees. In particular, with regard to the incentive scheme, in addition to the charge pertaining to the pervious financial year, in first-half 2007 also 50% of the 2007 premium (to be paid in June 2008) was set aside, based on the assumption that the budget targets are met. In the following quarters, the shares of subsequent provisions shall be defined based on the operating performance and on year-end result estimates. Note, that personnel expenses were positively affected by the adjustment of the discount rate used to calculate the termination benefit charges, in compliance with international accounting standards. Other G&A expenses grew by 29.8% as compared with June 30th, 2006. Said increase was mainly driven by the costs incurred for the merger with BPVN, amounting to about 33 millions. Net of said non-recurring item, other G&A expenses increased by 12.5%, but were still fairly stable compared to the previous quarter and to the average of last year’s quarters.

Net impairment of tangible and intangible assets amounted to 40 millions, up by about 7 millions (+21%) with respect to first-half 2006, of which 6.2 millions were generated by the depreciation of some fixed assets held by the Parent company and by the subsidiary Bipielle ICT.

With 568.4 millions, operating costs increased by 89.8 millions as compared with June 2006.

As a result, profit from operations came in at 242.5 millions, with respect to 249.4 millions on June 30th, 2006.

Net impairment of loans, guarantees and commitments amounted to 158.3 millions, as compared with 28.6 million net write-backs in June 2006, and break down as follows: 127.1 million impaired loans (of which 96.5 million non-performing loans, 48.4 million watchlist loans, while past due and restructured loans posted a net write-back of 16.8 millions and 1 million, respectively), and 31.,2 million performing loans (which include 4 million write-downs charged to income for Kamps, 15 million write-downs on the exposure to Gruppo Coppola after its transfer to watchlist loans in July 2007). As mentioned before, loan impairments does not include the impairment referring to the interest accrued on the loan extended as part of the financing of the acquisition of

154 Gruppo Banca Popolare Italiana

Kamps and Harry’s by the Barilla Group, amounting to 13.7 millions, and reclassified as a deduction to net interest income. The 21.3 million increase in loan impairment losses was mainly due to the higher appropriations recognized by the Parent company to account for the impairment of the loan book, considered an extraordinary event. Consider that the first-half 2006 figure benefited from the global effect of the disposal of non-performing loans for 113 millions. The annual percentage of total write-downs on loans went from 0.36% in June 2006 to the current 1.12% (for the entire year 2006 the percentage was 1.16%).

Net impairment of other financial transactions, amounting to 3.3 millions (8.3 millions as at June 30th, 2006) include the impairment of the stakes held in Finbakery Netherlands B.V. (4.5 millions) and in Fidia S.p.A. (1 million), as well as the 1.8 million write-backs, net of impairments, recognized on securities originated from securitizations.

As at June 2007, net provisions for risks and charges stood at 32.9 millions, as compared with 33.5 millions in first-half 2006. The 2006 figure included 8.8 million non-recurring charges referring to costs incurred for non- core real estate initiatives by the subsidiary Basileus. In first-half 2007 said charges amounted to 2 millions; the Parent company also made additional appropriations for about 5 millions to account for charges for the destructuring of some financial deals.

Goodwill impairment, adding up to 1 million, referred to the goodwill impairment recognized upon first consolidating the shareholding in Gruppo Acque Minerali Riunite.

Profit on disposal of equity and other investments totaled 20.9 millions (25.6 millions on June 30th, 2006) and included the 14.3 million profit on the disposal of the stake held by the subsidiary Efibanca in IGLI, and the capital gains generated on the sale of property of about 6 millions. As a result, income before tax from continuing operations came in at 67.8 millions, as compared with 261.6 millions in the first six months of 2006.

Loss after tax from discontinued operations amounted to –19.4 millions, and it included the revenues and charges, net of intragroup relations, of the associates under disposal Bipielle Net, Bipielle Previdenza, Area Life International Assurance and some subsidiaries held by Efibanca as part of its merchant banking activity (Glass Italy BV and Gruppo Acque Minerali Riunite). This item is so peculiar and unrelated to the normal scope of activity of the Group, that any comparison with the figure posted in the same period of 2006 is irrelevant.

Minority interest included the share of profit attributable to minorities, based on the relevant equity ratios. On June 30th, 2007, this item amounted to 6.5 millions, as a result of the equity ratio changes caused by the merger of the sub-holdings Bipielle Investimenti and Reti Bancarie into the Parent company on September 30th, 2006. Net of a tax income of 24.1 millions, where most capital gains from the disposal of equity investments were tax- exempt, as explained above, net income for the period came in at 17.8 millions, as compared with 92 millions in the same period of 2006.

155 Gruppo Banca Popolare Italiana

Shown below is a chart summarizing non-recurring transactions that had a material impact on the consolidated income of the periods under comparison.

30/06/2007 30/06/2006 Recurr. Total Reclassified income statement Change Change Non Non % % Recurring Total Recurring Total Recur. Recur.

Net interest income 424,777 424,777 363,876 26,900 390,776 16.7% 8.7% Profit (loss) from equity investments -3,665 -3,665 -1,018 -1,018 260.0% 260.0% carried at equity Net interest, dividend and similar 421,112 421,112 362,858 26,900 389,758 16.1% 8.0% income Net commission income 187,916 187,916 200,694 200,694 -6.4% -6.4% Other revenues 76,933 -19,962 56,971 72,595 -20,638 51,957 6.0% 9.7% Net financial income 57,543 87,416 144,959 57,725 27,895 85,620 -0.3% 69.3% Other operating income 322,392 67,454 389,846 331,014 7,257 338,271 -2.6% 15.2% Total income 743,504 67,454 810,958 693,872 34,157 728,029 7.2% 11.4% Personnel expenses -258,780 -21,398 -280,178 -254,368 -254,368 1.7% 10.1% Other G&A expenses -215,150 -33,100 -248,250 -191,215 -191,215 12.5% 29.8% Net impairment of tangible and -33,766 -6,231 -39,997 -33,069 -33,069 2.1% 21.0% intangible assets Operating costs -507,696 -60,729 -568,425 -478,652 -478,652 6.1% 18.8% Profit from operations 235,808 6,725 242,533 215,220 34,157 249,377 9.6% -2.7% Net impairment of loans, guarantees -118,000 -40,308 -158,308 -84,487 113,083 28,596 39.7% and commitments Net impairment of other financial 1,309 -4,653 -3,344 -2,893 -5,445 -8,338 -59.9% transactions Net provisions for risks and charges -30,885 -2,030 -32,915 -24,739 -8,775 -33,514 24.8% -1.8% Goodwill impairment -1,024 -1,024 -63 -63 Profit (loss) on disposal of equity and 20,858 20,858 25,587 25,587 -18.5% other investments Income before tax from continuing 88,232 -20,432 67,800 103,101 158,544 261,645 -14.4% -74.1% operations Tax on income from continuing -52,059 27,997 -24,062 -57,757 -35,973 -93,730 -9.9% -74.3% operations Income after tax from continuing 36,173 7,565 43,738 45,344 122,571 167,915 -20.2% -74.0% operations Income (loss) after tax from non-current -19,441 -19,441 -31,518 -31,518 assets held for sale

Net income for the period 36,173 -11,876 24,297 45,344 91,053 136,397 -20.2% -82.2% Minority interest -6,467 -6,467 -44,429 -44,429 -85.4% -85.4%

Net income attributable to the Parent 29,706 -11,876 17,830 915 91,053 91,968 3146.6% -80.6% Company

156 Gruppo Banca Popolare Italiana

In general, the following criteria have been observed to identify non-recurring items. The following items are considered non-recurring: x profit or loss from disposal of all fixed assets (equity investments, tangible assets, financial assets available for sale, financial assets held to maturity and non-performing loan portfolios) x profit or loss from discontinued operations x income components associated with aggregations, restructurings etc. (for example, merger charges) x material income components that are most unlikely to occur frequently (for example impairment of fixed assets, impacts associated with regulatory changes, exceptional results, etc).

In contrast, economic impacts, when material, generated by valuation aspects and/or by changes in parameters used in valuation methodologies applied on an ongoing basis are considered recurring. The fiscal impact of non-recurring items has been recognized under the same non-recurring items of both periods. Illustrated below are the main income statement items for the first half of the year that have been considered non-recurring.

Other revenues for the first-half 2007 included non-recurring components associated to the 18.3 million cost incurred for the early termination of an agreement between BPI and Aviva, due to the new bancassurance agreements made by Gruppo Banco Popolare, as well as 1.7 million charges associated with the non-core real estate management by the subsidiary Basileus. The previous year’s figure had been negatively affected by the loss of about 12 millions incurred by the associate Bipitalia Gestioni for the disposal of an investment in structured notes and by non-recurring charges of about 9 millions for the execution of non-core real estate actions by the subsidiary Basileus.

Net financial income included the profit from the disposal by the subsidiary Efibanca of the stake held in Generale de Santé (77.1 millions), the 9.6 million profit from disposal of the stake held by the Parent company in Unipol Assicurazioni, and other minor profit mainly generated by the merchant banking activity performed by Efibanca. In first-half 2006 this item included the 27.9 million profit from the disposal of the stake held in Banca Italease.

Personnel expenses included non-recurring items mainly associated with the appropriation for incentive scheme, the adjustments for the renewal of the national collective bargaining agreement and the payment of a figurative amount equal to 3% of the Parent company’s net income to Group employees. In particular, with regard to the incentive scheme, in addition to the charge pertaining to the pervious financial year, in first-half 2007 also 50% of the 2007 premium (to be paid in June 2008) was set aside, based on the assumption that the budget targets are met.

Other G&A expenses included charges incurred for the merger with BPVN, amounting to about 33 millions.

Depreciation and amortization of tangible and intangible assets referred to the depreciation of some fixed assets held by the Parent company (1.6 millions), and by the subsidiary Bipielle ICT (4.6 millions).

Net impairment of loans, guarantees and commitments included the following non-recurring items: 4 million write-downs charged to income for Kamps, 15 million write-downs on the exposure to Gruppo Coppola after its transfer to watchlist loans in July 2007, and additional 21.3 million worth of additional appropriations recognized by the Parent company to account for the impairment of the loan book, considered an extraordinary event. Consider that the first-half 2006 figure benefited from the global effect of the disposal of non-performing loans for 113 millions

157 Gruppo Banca Popolare Italiana

Net impairment of other financial transactions included the impairment of the stakes held in Finbakery Netherlands B.V. (4.5 millions) and in Fidia S.p.A. (1 million), plus other minor writhe-downs, as well as the 1.8 million write-backs, net of impairments, recognized on securities originated from securitizations. In first-half 2006, non-recurring items were associated with write-downs carried out on securities originated from securitizations.

Net provisions for risks and charges in first-half 2007 were burdened by non-recurring charges associated with costs incurred for non-core real estate initiatives by the subsidiary Basileus amounting to 2 millions, which in the first half of last year amounted to 8.8 millions.

Goodwill impairment, which added up to 1 million, referred to the goodwill impairment recognized upon first consolidating the shareholding in Gruppo Acque Minerali Riunite. The impairment posted in first-half 2006 referred to Gruppo Partecipazioni Italiane.

Income from disposal of equity and other investments, by nature a non-recurring item, added up to 20.9 millions and it included the 14,3 million profit from the disposal of the stake held by the subsidiary Efibanca in IGLI, as well as capital gains generated from the sale of property for about 6 millions. The figure referring to June 30th, 2006, amounting to 25.6 millions, was mainly associated with the capital gain generated by the sale of the associates Bipielle Leasing for 22.4 millions and Buon Viaggio for 1.3 millions, and the capital gains from sale of property for 1.7 millions.

Loss after tax from discontinued operations, by nature a non-recurring item, amounted to –19.4 millions, and it included the revenues and charges, net of intragroup relations, of the associates under disposal Bipielle Net, Bipielle Previdenza, Area Life International Assurance and some subsidiaries held by Efibanca as part of its merchant banking activity (Glass Italy BV and Gruppo Acque Minerali Riunite). The first-half 2006 figure referred to the same companies. Net of the fiscal impact amounting to about 28 millions, which benefited from the tax exemption of most capital gains from the disposal of equity investments, the net impact of non-recurring items described above amounted to a loss of 11.9 millions, as compared with a profit of 91.1 millions in the first six months of the previous year.

158 Gruppo Banca Popolare Italiana

INCOME STATEMENT QUARTERLY EVOLUTION

Shown below is the quarterly evolution of the reclassified income statement. Note, that 12.1 millions were deducted from the first quarter 2007 net income due to a correction, which was accounted for in the second quarter but had accrued in the first quarter, of a mistake in the accounting of interest expense accrued on bonds issued by the Parent company. The impact on the quarterly income was calculated net of the associated fiscal charge.

Quarter Quarter Quarter Quarter Quarter 30/06/2007 31/03/2007 31/12/2006 30/09/2006 30/06/2006

Net interest income 213,478 211,299 217,944 209,020 214,019 Profit (loss) from equity investments carried at equity 1,270 -4,935 -5,503 4,109 -2,273 Net interest, dividend and similar income 214,748 206,364 212,441 213,129 211,746 Net commission income 94,102 93,814 106,210 93,788 92,782 Other revenues 22,373 34,598 36,816 32,615 11,059 Net financial income 38,689 106,270 49,699 55,852 15,807 Other operating income 155,164 234,682 192,725 182,255 119,648 Total income 369,912 441,046 405,166 395,384 331,394 Personnel expenses -140,912 -139,266 -147,482 -127,115 -134,056 Other G&A expenses -142,450 -105,800 -124,317 -102,906 -107,805 Net impairment of tangible and intangible assets -23,427 -16,570 -24,665 -19,684 -17,501 Operating costs -306,789 -261,636 -296,464 -249,705 -259,362 Profit from operations 63,123 179,410 108,702 145,679 72,032 Net impairment of loans, guarantees and commitments -106,408 -51,900 -234,252 -36,251 60,949 Net impairment of other financial transactions -1,571 -1,773 -95,145 4,057 -8,541 Net provisions for risks and charges -26,555 -6,360 -21,874 2,012 -32,489 Goodwill impairment -1,024 -38,696 -8,203 -63 Profit (loss) on disposal of equity and other investments 6,388 14,470 44,728 10,161 25,452 Income before tax from continuing operations -65,023 132,823 -236,537 117,455 117,340 Tax on income from continuing operations 13,996 -38,058 38,250 -41,578 -34,611 Income after tax from continuing operations -51,027 94,765 -198,287 75,877 82,729 Income (loss) after tax from discontinued operations -5,888 -13,553 -14,339 3,772 -26,472 Net income (loss) for the period -56,915 81,212 -212,626 79,649 56,257 Minority interest -6,259 -208 22,124 -20,977 -15,988 Net income attributable to the Parent Company -63,174 81,004 -190,502 58,672 40,269

159 Gruppo Banca Popolare Italiana

OPERATING PERFORMANCE OF THE MAIN COMPANIES

In order to provide a more detailed analysis, shown below is a summary of the quarterly performance of the main companies of the Group.

Banca Popolare Italiana

pro- forma Balance sheet 30/06/2007 31/12/2006 % change 30/06/2006

Total assets 31,789,368 33,039,227 31,625,340 -3.78% Total loans 20,045,219 20,313,920 17,872,252 -1.32% of which loans to customers 12,122,231 11,878,206 11,546,516 2.05% Financial assets 4,305,824 5,022,264 5,326,300 -14.27% Equity investments 5,146,296 5,063,554 5,128,089 1.63% Total payables 25,953,486 26,640,530 24,824,116 -2.58% of which due to customers and debt securities in issue 20,851,396 20,003,309 21,123,040 4.24% Indirect customer funds 12,893,881 12,573,799 11,555,566 2.55% of which Managed assets 5,128,296 4,879,442 4,765,717 5.10% Net interbank position 2,820,897 1,798,493 2,624,660 56.85% Shareholders’ equity (including income/loss) 4,100,193 4,371,221 3,873,493 -6.20% Income statement Net interest income 119,111 131,809 -9.63% Total income 481,884 409,640 17.64% Net loans and financial assets impairment loss -105,772 -30,703 244.50% G&A expenses -336,062 -273,221 23.00% Income before tax from continuing operations 29,027 158,804 -81.72% Net income (loss) 94,882 144,541 -34.36% Operational structure Number of employees 4,280 4,272 4,219 Number of bank branches 540 540 558 Financial ratios ROE (*) 4.63% n.a. 7.46% ROA (*) 0.60% n.a. 0.91% Net interest income/Total income 24.72% 38.04% 32.18% G&A expenses/Total income 69.74% 86.66% 66.70% Total financial assets /Total assets 13.54% 15.20% 16.84% NPLs/Customer loans 1.43% 1.46% 1.56% Net loan impairment loss/Customer loans (**) 0.88% 1.84% 0.10% Pro-forma data as at 30/06/2006 include the impact from the merger into Banca Popolare Italiana of the subsidiaries Reti Bancarie and Bipielle Investimenti. (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then. The percentage as at 31/12/2006 was affected by the impact of the NPL disposal.

160 Gruppo Banca Popolare Italiana

Total loans to customers as at June 30th, 2007 amounted to 12,122 million euro, up by 2.05% as compared with December 2006. More precisely, checking accounts decreased by 0.87%, posting a balance of 5,553 millions, while mortgages, amounting to 3,439 million euro, grew by 11.48%. Total administered assets remained fairly stable in first-half 2007 at 64,108 millions (-1.4%). Customer administered assets increased by 3.6% to 33,745 millions. The dynamic of this item is generated both by the increase in Direct customer funds (the sum of Due to customers and Debt securities in issue) which went up to 20,851.4 millions (+4.2%), and by the performance of Indirect customer funds, coming in at 38,154.5 millions, (+4.1%).

Due to customers, amounting to 9,572.2 millions (+1.5%), were affected by the increase in Liabilities on assets sold and not derecognized (1,875.8 millions). As a result of the new issues carried out in the first half, also debt securities in issue were on the rise (11,279 millions, +6.7%). Indirect customer funds closed the first half at 12,893.9 millions, up by 2.6%. Managed assets rose to 5.128,3 millions (+ 5.1%), driven both by the positive performance of mutual fund inflows (2,439.1 millions, +2.6%), and by the growth enjoyed by insurance products (1,091 millions, +9%) and asset management (1,598 millions, +6.4%). The Net interbank position stood at 2,820.9 million euro, up by 56.85%; said increase was mainly due to the decrease in due to other banks (-23.13%), partly offset by the decrease in due from other banks (-6.08%).

Illustrated below are the main income statement items. Net interest income as at June 30th, 2007 amounted to 119.1 millions, down by 9.63% from 131.8 on June 30th, 2006. Note, that the figure as at June 30th, 2006 benefited from an extraordinary positive impact of 26.9 million euro, generated by overdue coupons of the security Tiepolo Finance 2, (mezzanine tranche), which had not been settled yet and were accounted for based on the performance of the underlying transactions. Net of said extraordinary component, net interest income grew by 14.2 millions, or 13.5%.

Dividends added up to 244.4 million euro, of which 232 millions generated by Group equity investments, in particular from Cassa di Risparmio di Lucca Pisa e Livorno S.p.A. for 60.3 millions, Bipielle Sgc for 50.8 millions, Efibanca for 40.1 millions and Bipielle Ducato for 36.6 millions.

Net commission income totaled 82 millions, from 83 millions in 2006. Commission income reported a slight drop of 1.9 millions (-1.9%), mainly due to the decrease in commissions applied to customer checking accounts and from payment and collection services. Net trading income as at June 30th, 2007 amounted to 18.6 million euro, as compared with the trading loss of 0.9 millions reported in June 2006. This result was mostly driven by the good performance of the portfolio’s equity securities and UCITS units. Profit on disposal of financial assets and liabilities, amounting to 13.2 million euro, is mainly comprised of the profit on the sale of Financial assets available for sale of about 12 million euro, among which it is worth mentioning the sale of the stakes held in Ferfina (2.4 millions) and Unipol (9.6 millions). This item also includes the profit on the repurchase of own financial liabilities of 1.2 millions.

Other revenues and charges resulted in a net revenue of 27.9 millions, down by 16.6 millions (-37.2%) with respect to 2006. This decrease is attributable to the 19.2 million euro costs for the early termination of an agreement between BPI and Aviva, as a result of the new bancassurance agreement entered into by Gruppo Banco Popolare. Loan impairments added up to 106.5 millions, from 26.2 millions in 2006. They break down as follows: 69.5 millions on impaired loans for (of which 44.5 millions on non-performing loans, 39.8 millions on watchlist loans, 1 million on restructured loans, while past dues posted a net write-back of 16 millions) and 37 millions on performing loans (which include write-downs of 17.7 millions, inclusive of principal and interest, on the

161 Gruppo Banca Popolare Italiana

Kamps exposure and write-downs of 15 millions on the exposure to Gruppo Coppola following the transfer of said loans to watchlist in July 2007 last). The figure for the first six months of 2006 benefited from a profit on disposal of non-performing loans of 11.6 millions.

Personnel and G&A expenses as a whole reported an increase of 62.8 million euro from 2006 (+23%). Personnel expenses, amounting to 142 million euro, increased by 8.36%, mainly due to the appropriation of the incentive scheme, the adjustments introduced by the national collective bargaining agreement, and the payment of 3% of the Bank’s figurative net income to employees, as provided for by the Group employment contract. In particular, with regard to the incentive scheme, in addition to the charge pertaining to the pervious financial year, in first-half 2007 also 50% of the 2007 premium (to be paid in June 2008) was set aside, based on the assumption that the budget targets are met. In the following quarters, the shares of subsequent provisions shall be defined based on the operating performance and on year-end result estimates. Note, that personnel expenses were positively affected by the adjustment of the discount rate used to calculate the termination benefit charges, in compliance with international accounting standards.

Other G&A expenses increased by 36.5%, going from 142,2 millions to 194.1 million euro. This increase was mainly driven by the costs incurred for the merger with BPVN, amounting to about 33 million euro. Net of this non-recurring item, G&A expenses increased by 13.3%, but were still fairly stable compared to the previous quarter and to the average of last year’s quarters. Net impairment of tangible and intangible assets increased by 3.4 millions due to the higher impairments on intangible assets made necessary by the integration process with BPVN.

As at June 30th, 2007, Net provisions for risks and charges totaled 27.7 million euro, fairly higher than the 2006 figure. In particular, in the first six months of the year the following provisions were set aside: 5 million euro associated with the destructuring of financial transactions, 1.1 millions to cover possible penalties ensuing from the enforcement of L.D. 231/2001, 5 millions associated with tax disputes and the remaining for legal actions brought against us. As a result, Net income for the period came in at 94.9 million euro, as compared with 144.5 millions in first- half 2006.

162 Gruppo Banca Popolare Italiana

Banca Popolare di Crema

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 1,778,456 1,680,261 1,512,417 5.84% Total loans 1,506,864 1,414,197 1,300,323 6.55% of which loans to customers 1,141,718 1,064,628 972,329 7.24% Financial assets 75,268 65,404 21,606 15.08% Equity investments 4,779 4,779 4,779 0.00% Total payables 1,433,794 1,337,063 1,174,395 7.23% of which due to customers and debt securities in issue 826,054 790,547 1,003,078 4.49% Indirect customer funds 1,374,517 1,335,488 1,170,377 2.92% of which Managed assets 715,374 691,251 544,552 3.49% Net interbank position -242,594 -196,948 156,677 23.18% Shareholders’ equity (including income/loss) 273,300 278,086 269,642 -1.72% Income statement Net interest income 21,357 19,231 11.05% Total income 30,452 27,968 8.88% Net loans and financial assets impairment loss -1,794 -2,536 -29.26% G&A expenses -17,901 -16,302 9.81% Income before tax from continuing operations 13,573 11,835 14.68% Net income (loss) 8,550 7,284 17.38% Operational structure Number of employees 257 264 262 1,54% Number of bank branches 44 44 44 -100,00% Financial ratios ROE (*) 6.26% 5.30% 5.40% ROA (*) 0.96% 0.88% 0.96% Net interest income/Total income 70.13% 70.56% 68.76% G&A expenses/Total income 58.78% 59.32% 58.29% Total financial assets /Total assets 4.23% 3.89% 1.43% NPLs/Customer loans 0.33% 0.35% 0.33% Net write-downs for impaired loans/Customer loans (**) 0.16% 0.39% 0.19% (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then. The percentage as at 31/12/2006 was affected by the impact of the NPL disposal..

163 Gruppo Banca Popolare Italiana

Total loans to customers stood at 1,141.7 millions, up by 7.2% with respect to year-end 2006, mainly driven by the marked growth in mortgages, that went from 379 millions on 31/12/2006 up to 439 millions (+15.6%). Direct customer funds (due to customers and debt securities in issue) amounted to 826 millions, up by 4.5%. In particular, due to customers went from 585.3 millions to 612.5 millions, up by 4.6%, while Debt securities in issue reached 213.5 millions, up by 4% over December 2006. Total indirect customer funds added up to 1,374.5 millions, up by 2.9%, where Managed assets enjoyed a significant progress, growing by 3.5% up to 715.4 millions. Net income for the first half totaled 8.55 millions, up by 17.4% with respect to the first six months of the year before. Total income increased by 8.8% over the June 2006 figure, reaching 30.5 millions, Net interest income grew by 11%, reporting a marked progress compared with the previous period (+2.1 millions), and Net commission income increased by 3.4% (+0.26 millions). Net loan impairments came in at 1.8 millions, down compared to the June 2006 figure as a result of the decrease in past due loans. G&A expenses increased to 17.9 millions (+9.8%), offset by an 0.3 million increase in other revenues. As a result, Income before tax from continuing operations totaled 13.6 millions (+14.7%).

164 Gruppo Banca Popolare Italiana

Banca Popolare di Cremona

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 2,077,124 1,964,646 1,650,114 5.73% Total loans 1,944,570 1,836,326 1,584,849 5.89% of which loans to customers 1,732,506 1,609,791 1,454,768 7.62% Financial assets 53,702 47,201 15,564 13.77% Equity investments 5,070 5,070 5,070 0.00% Total payables 1,729,771 1,633,122 1,335,189 5.92% of which due to customers and debt securities in issue 1,383,406 1,309,099 1,319,304 5.68% Indirect customer funds 1,728,216 1,760,670 1,664,837 -1.84% of which Managed assets 1,023,440 1,051,030 982,521 -2.63% Net interbank position -134,301 -97,487 114,195 37.76% Shareholders’ equity (including income/loss) 217,077 225,112 214,703 -3.57% Income statement Net interest income 26,843 24,080 11.47% Total income 39,703 37,545 5.75% Net loans and financial assets impairment loss -3,365 -3,270 2.89% G&A expenses -29,065 -26,266 10.65% Income before tax from continuing operations 10,007 8,439 18.56% Net income (loss) 5,595 4,342 28.86% Operational structure Number of employees 453 449 434 Number of bank branches 73 73 74 Financial ratios ROE (*) 5.15% 6.55% 4.04% ROA (*) 0.54% 0.75% 0.53% Net interest income/Total income 67.61% 64.15% 64.14% G&A expenses/Total income 73.21% 66.34% 69.96% Total financial assets/Total assets 2.59% 2.40% 0.94% NPLs/Customer loans 0.41% 0.41% 0.30% Net loan impairment loss/Customer loans (**) 0.19% 0.34% 0.21% (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then. The percentage as at 31/12/2006 was affected by the impact of the NPL disposal..

165 Gruppo Banca Popolare Italiana

The analysis of the income statement shows an increase in loans to customers, which reached 1,732.5 millions, up by 7.6% with respect to the year before. Among the various loan forms, bank overdrafts came in at 719.2 millions, accounting for about 41.5% of Total loans, up by 14% as compared with December 2006. Also mortgages reported a positive dynamic, running at 628.5 millions, up by 8.8% with respect to year-end 2006. Total payables, which stood at 1,729.8 millions, increased by 5.9%, with Indirect customer funds slipping slightly (-1.8%), while Direct customer funds posted a significant increase (+5.7%). Worth mentioning is the 22.1% increase in repurchase agreements from 134.1 millions to 163.8 millions, mainly driven by the liquidity overflow from monetary funds. First half 2007 ended with a positive profitability result for the company, reaching a net income for the period of 5.6 millions, up by 28.9% with respect to the first six months of 2006. Net interest income went from 24.1 millions to 26.8 millions, up by 11.5%, Net commission income totaled 12.2 millions (+8.8%), reporting a clear pickup as compared to the same period last year, similarly to Total income, which stood at 39.7 millions, up by 5.7% with respect to the June 2006 figure. Loan impairments amounted to 3.4 millions, slightly higher compared to the June 2006 figure, which stood at 3.3 millions. G&A expenses, totaling 29.1 millions, increased by 10.7% with respect to the year before. Income before tax from continuing operations came in at 10 millions, up by 18.6% from 8.4 millions on 30.6.2006. Net of an Income tax of 4.4 millions (+7.7%), net income added up to 5.6 millions, up by 28.9% over June 2006. Return on Equity (R.O.E.) grew from 4.04% in June 2006 to 5.15% at the end of the period.

166 Gruppo Banca Popolare Italiana

Cassa di Risparmio di Lucca Pisa Livorno

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 10,175,273 9,502,777 8,954,959 7.08% Total loans 8,912,864 8,265,039 7,906,093 7.84% of which loans to customers 8,042,662 7,286,789 7,076,425 10.37% Financial assets 274,258 240,426 93,537 14.07% Equity investments 4,642 4,642 35,275 0.00% Total payables 8,497,754 7,814,615 7,228,268 8.74% of which due to customers and debt securities in issue 6,320,524 6,138,339 6,583,454 2.97% Indirect customer funds 5,742,475 5,592,227 5,363,202 2.69% of which Managed assets 3,392,430 3,407,492 3,202,070 -0.44% Net interbank position -1,307,028 -698,027 184,854 87.25% Shareholders’ equity (including income/loss) 1,243,080 1,281,457 1,248,390 -2.99% Income statement Net interest income 138,059 122,431 12.76% Total income 182,419 203,859 -10.52% Net loans and financial assets impairment loss -17,018 -23,541 -27.71% G&A expenses -114,502 -101,481 12.83% Income before tax from continuing operations 68,226 85,426 -20.13% Net income (loss) 39,189 61,089 -35.85% Operational structure Number of employees 1,771 1,771 1,655 1,54% Number of bank branches 235 235 223 -100,00% Financial ratios ROE (*) 6.31% 7.27% 9.79% ROA (**) 0.77% 0.98% 1.36% Net interest income/Total income 75.68% 67.52% 60.06% G&A expenses/Total income 62.77% 54.65% 49.78% Total financial assets/Total assets 2.70% 2.53% 1.04% NPLs/Customer loans 0.62% 0.46% 0.46% Net loan impairment loss/Customer loans (**) 0.21% 0.98% 0.24% (*) The quarterly figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then. The percentage as at 31/12/2006 was affected by the impact of the NPL disposal..

167 Gruppo Banca Popolare Italiana

Customer loans totaled 8,042.6 millions, up by 10.4% with respect to last December, mainly buoyed by mortgages, which increased by 39.7% to 3,865.7 millions. Direct customer funds (due to customers and debt securities in issue) stood at 6,320.5 millions, up by 3% as compared to year-end 2006, while total Indirect customer funds reached 5,742.4 millions, up by 2.7%. Managed assets were on a downtrend with respect to December 2006 (-0.4%), reaching 3,392.4 millions, while when compared to the March 2007 quarterly report, where the decrease had been of 2,3%, they have been recovering. Total administered assets reached 12,318.2 million euro, up by 2.8% with respect to year-end. Net interest income, which went up to 138,058.6 millions from 122,431.3 in June 2006, grew by 12.8%. Net commission income increased by 2.4%, while although Total income decreased by 10.5% as a result of the capital gain on the sale of the stakes in Banca Italease and CartaSì (29 million euro) recognized in the 2006 half-year report, it is actually recovering when compared to the first quarter, where it was decreasing by 20% . Net loan impairments added up to 18.1 million euro, down by 20.4% with respect to first half 2006. G&A expenses as a whole went from 101.4 millions up to 114.5 millions, with a 12.8% increase, also due to the larger company size: Personnel expenses increased by 21.2%, from 45.7 to 55.4 millions, due to the acquisition of 11 former BPVN branches. Other G&A expenses, which were estimated based on the cost budget approved by the Parent company, grew by 6%. As a result, Net income for the period, amounting to 39.1 millions, posted a decrease of over 35% as compared with 61 millions in first half 2006. When however we compare the figure net of non-recurring transactions performed in first half 2006, the bank’s profitability proves to be fairly stable.

168 Gruppo Banca Popolare Italiana

Banca Caripe

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 1,678,272 1,496,268 1,272,827 12.16% Total loans 1,578,222 1,411,529 1,183,406 11.81% of which loans to customers 1,440,427 1,277,667 1,099,957 12.74% Financial assets 3,456 3,569 2,055 -3.16% Total payables 1,500,972 1,327,783 1,094,092 13.04% of which due to customers and debt securities in issue 1,231,881 1,237,351 1,061,496 -0.44% Indirect customer funds 583,283 567,479 602,020 2.78% of which Managed assets 240,283 194,843 193,044 23.32% Net interbank position -131,296 43,430 50,853 n.a. Shareholders’ equity (including income/loss) 112,245 109,515 109,319 2.49% Income statement Net interest income 27,002 21,207 27.33% Total income 33,156 29,495 12.41% Net loans and financial assets impairment loss -2,977 -1,578 88.63% G&A expenses -24,773 -20,543 20.59% Income before tax from continuing operations 8,593 11,351 -24.30% Income (loss) for the year 4,585 6,642 -30.96% Operational structure Number of employees 398 399 378 -0.25% Number of bank branches 50 51 47 Financial ratios ROE (*) 8.17% 6.24% 12.15% ROA (*) 0.55% 0.46% 1.04% Net interest income/Total income 81.44% 76.00% 71.90% G&A expenses/Total income 74.71% 73.95% 69.65% Total financial assets/Total assets 0.21% 0.24% 0.16% NPLs/Customer loans 0.23% 0.20% 0.27% Net loan impairment loss/Customer loans (**) 0.21% 0.67% 0.13% (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then. The percentage as at 31/12/2006 was affected by the impact of the NPL disposal..

169 Gruppo Banca Popolare Italiana

The analysis of the income statement shows an increase in customer loans to 1,440.4 millions, up by 12.7% with respect to the year before. Among the various loan forms, bank overdrafts reached 476.6 millions, accounting for about 33.1% of Total loans, up by 24.3% when compared with December 2006. Also mortgages showed a positive dynamic, running at 717.8 millions, up by 19.6% with respect to year-end 2006. Total payables reached 1,501 millions, up by 13%: the slight slip by direct customer funds (-0.4%) was offset by a fair increase in indirect customer funds (+2.8%). The first half 2007 ended with a net income for the period of 4.6 millions, down by 31% with respect to the first six months of 2006. Net interest income went from 21.2 millions to 27 millions, up by 27.3%, Net commission income amounted to 6 millions (+6%), on the upturn with respect to the same period last year, when it reached 5.7 millions, similarly to Total income, which reached 33.2 millions, up by 12.4% from June 2006. Loan impairments stood at 3 millions, up from 1.6 millions in June 2006. G&A expenses added up to 24.8 millions, and increased by 20.6% with respect to the year before. Income before tax from continuing operations amounted to 8.6 millions, down by 24.3% from 11.4 millions on 30.6.2006. Net of an income tax of 4 millions (-14.9%), net income reached 4.6 millions, down by 31% over June 2006.

170 Gruppo Banca Popolare Italiana

Banca Valori

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 169,521 199,719 170,072 -15.12% Total loans 124,884 154,211 123,984 -19.02% of which loans to customers 98,219 92,871 106,442 5.76% Financial assets 25,980 25,939 25,961 0.16% Equity investments 17,175 17,185 17,187 Total payables 108,289 135,250 107,804 -19.93% of which due to customers and debt securities in issue 108,190 110,062 74,830 -1.70% Indirect customer funds 765,107 741,006 706,457 3.25% of which Managed assets 16,264 23,016 22,165 -29.34% Net interbank position 26,566 36,152 -15,432 -26.52% Shareholders’ equity (including income/loss) 58,075 58,070 57,517 0.01% Income statement Net interest income 2,043 2,002 2.10% Total income 2,867 2,901 -1.14% Net loans and financial assets impairment loss 5 -128 -103.91% G&A expenses -1,383 -1,244 11.17% Income before tax from continuing operations 1,503 1,324 13.61% Net income (loss) 1,091 970 12.47% Operational structure Number of employees 4 5 5 Number of bank branches 1 1 1 Financial ratios ROE (*) 3.76% 2.62% 3.43% ROA (*) 1.29% 0.76% 1.14% Net interest income/Total income 71.26% 76.69% 69.00% G&A expenses/Total income 48.24% 46.53% 42.90% Total financial assets/Total assets 15.33% 12.99% 15.27% NPLs/Customer loans n.s. n.s. n.s. Net loan impairment loss/Customer loans (**) n.s. 0.19% 0.10% (*) The quarterly figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then.

171 Gruppo Banca Popolare Italiana

Direct customer funds were running at 108.2 millions, down by 1.7% with respect to December 31st, 2006; this dynamic was mainly driven by a decrease in reverse repurchase agreements, which decreased to 22,9 million euro (-26.7%), offset by an increase in checking accounts, which increased to 85.3 millions (+8.2%). Indirect customer funds, the company’s core business, increased by 3.2%, reaching euro 765.1 million, despite the decrease in Managed assets, which stood at 16.3 million euro from 23 at year-end 2006. Net interest income slightly increased (+ 2.1%); while Net commission income went from euro 330 thousand on June 30th, 2006 to euro 267 thousand as at June 30th, 2007 mainly as a result of a decrease in commissions on mutual fund sales. As a whole, Total income slipped slightly (-1.1%) with respect to June 30th, 2006. G&A expenses stood at euro 1.4 million, up by 11.2% with respect to first half 2006. Net income for the period increased by 12.5%, from about euro 0.9 million on June 30th, 2006 to euro 1.1 million as at June 30th, 2007.

172 Gruppo Banca Popolare Italiana

Banca Popolare di Mantova

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 237,760 250,063 230,343 -4.92% Total loans 231,453 244,148 221,062 -5.20% of which loans to customers 209,680 202,619 182,765 3.48% Financial assets 126 162 137 -22.22% Equity investments Total payables 199,745 214,613 196,239 -6.93% of which due to customers and debt securities in issue 117,889 154,760 158,539 -23.82% Indirect customer funds 159,327 152,173 143,166 4.70% of which Managed assets 17,704 16,381 13,732 8.08% Net interbank position -60,083 -8,324 597 n.s. Shareholders’ equity (including income/loss) 22,329 22,176 21,930 0.69% Income statement Net interest income 2,667 2,280 16.97% Total income 3,501 2,982 17.40% Net loans and financial assets impairment loss -337 -719 -53.13% G&A expenses -2,995 -2,580 16.09% Income before tax from continuing operations 358 -200 n.s Net income (loss) for the year 153 -230 n.s Operational structure Number of employees 35 34 32 Number of bank branches 8 8 8 Financial ratios ROE (*) 1.37% 0.08% n.s. ROA (*) 0.13% 0.01% n.s. Net interest income/Total income 76.19% 74.98% 76.46% G&A expenses/Total income 85.56% 83.67% 86.52% Total financial assets/Total assets 0.05% 0.06% 0.06% Impaired assets/Customer loans 0.07% 0.07% 0.00% Net loan impairment loss/Customer loans (**) 0.16% 0.51% 0.39% (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then. The percentage as at 31/12/2006 was affected by the impact of the NPL disposal.

173 Gruppo Banca Popolare Italiana

The analysis of the income statement shows that first half 2007 was characterized by a slight expansion of loans to customers, reaching 209.7 millions from 202.6 millions on December 2006, up by 3.5%. Among the various loan forms, it is worth mentioning the increase in mortgages (+11.5%), accounting for 41.3% of total loans, and an increase in the item “Credit cards, personal loans and salary-guaranteed loans” (14 thousand, +27.3%). Financial assets totaled 0.12 millions, down by 22.2% with respect to December 2006. Total payables decreased by 6.93% as compared with the year before, in particular due to customers and debt securities in issue, that fell by 23.82% down to 118 millions. Indirect customer funds reported a slight increase of 4.7% over December 2006, in particular Managed assets, which increased by 8.08% over December 2006, reaching 18 millions. Operationally, total income increased by 17% over June 2006, running at 2.67 millions. Net interest income, amounting to 3.50 millions against 2.98 millions in first half 2006, increased by 17.40% with respect to the first six months of 2006. Net loan impairments reported an improvement of 53.26%; in particular net write-downs on watchlist loans decreased by 28.5%, performing and past due loans reported a write-back of 27 thousand euro as compared with a write-down of 172 thousand euro reported in the same period last year. G&A expenses, standing at about 3 millions, increased by 16.09% over June 2006, with a progression of about 13.1% of Personnel expenses and of 18.03% of other G&A expenses. Income before tax of continuing operations reached 0.4 millions.

174 Gruppo Banca Popolare Italiana

Efibanca

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 5,196,948 5,255,965 5,218,431 -1.12% Total loans 4,488,302 4,242,530 4,213,030 5.79% of which loans to customers 4,222,758 4,080,910 4,016,223 3.48% Financial assets 204,709 272,185 349,488 -24.79% Equity investments 88,668 94,648 201,209 -6.32% Total payables 4,043,781 4,022,895 4,082,728 0.52% of which due to customers and debt securities in issue 2,928,514 2,806,075 2,544,050 4.36% Indirect customer funds 1,314,017 1,356,251 1,417,575 -3.11% of which Managed assets 5,707 5,002 4,450 14.09% Net interbank position -849,723 -1,055,200 -1,341,871 19.47% Shareholders’ equity (including income/loss) 873,621 902,254 799,732 -3.16% Income statement Net interest income 31,727 32,559 -2.56% Total income 126,478 61,553 105.48% Net loans and financial assets impairment loss -17,381 -1,689 -929.07% G&A expenses -18,647 -19,440 4.08% Income before tax from continuing operations 104,720 48,985 113.78% Net income (loss) 85,950 34,100 152.05% Operational structure Number of employees 236 237 231 Number of bank branches 6 6 7 Financial ratios ROE (*) 19.67% 9.08% 8.53% ROA (*) 3.31% 1.56% 1.31% Net interest income/Total income 25.08% 49.84% 52.90% G&A expenses/Total income 14.74% 30.83% 31.58% Total financial assets/Total assets 3.94% 5.18% 6.70% NPLs/Customer loans 0.97% 0.95% 0.90% Net loan impairment loss/Customer loans (**) 0.13% 0.24% 0.04% (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then.

175 Gruppo Banca Popolare Italiana

As at June 2007, loans to customers amounted to 4,223 millions, up by 142 millions with respect to the end of 2006 (+3.5%). To this regard, in the first six months of 2007, 413 million worth of contracts expired, and 306 millions worth of loans were terminated early. Loans extended in first half 2007 amounted to 900 millions as compared with 638 in the same period last year (+41%). Total funding at the end of June 2007 amounted to 4,044 millions, 21 million more than on 31/12/2006 (+0.5%). In first half 2007, 4 bond programs were not issued and the balance went from 2,667 millions in December 2006 to the current 2,799 millions, up by 5%. Interbank loan payables, followed centrally by the Parent company’s Finance Area, at the end of June totaled 1,115 millions, down from 1,217 millions in December 2006. The Merchant Bank portfolio (securities, equity investments and convertible bonds or cum warrant) totaled 290.9 millions, down by 26.5% over December 2006. In first half 2007, the entire equity investments in Generale De Sante’ (8%) and in IGLI SpA (20%) were sold, generating a profit of 77.1 and 14.3 millions, respectively. The portfolio right-sizing is in line with the profit- taking program for some important investments started in 2006, as part of a portfolio investment recomposition process. Efibanca is launching the first Italian closed-end mutual fund specializing in shipping and logistics, which should be authorized by the end of September. Efigestioni Sgr, this is the name of the fund manager, shall target shipping and ferry companies, as well as yacht manufacturers in Italy and abroad. In the first six months of 2007, the M&A Advisory activity generated a total commission income of 1 million euro. In the same period, the assistance phase for a complex shareholding reorganization program with Gruppo Phard, which included also the leverage structuring to support the transaction, came to an end. With regard to the income statement, Net interest income amounted to 31.7 millions, down by 3% over first half 2006, despite a slight increase in customer loan volumes, which however took place mainly towards the end of the semester, and could only marginally affect the half-year income statement. Total income stood at 126.5 million euro, up by 106% with respect to first half 2006, driven by the capital gain on the sale of Generale De Sante’, leading to a profit of 77.1 millions. Net non-interest income, however, net of profit from equity investments, dwindles down to 16.8 millions, from 28.7 millions in June 2006, both because of a slight decrease in proceeds from the M&A Advisory and Lending activities (less loans on the Sabatini product) and as a result of a non-recurring commission income collected last year. 17.4 million worth of net write-downs were deducted from total income, of which 5.6 millions on loans, 4.5 millions on financial assets available for sale (Finbakery Netherlands) and 7.3 millions on other financial assets (Acque Minerali Riunite and AB Capital). G&A expenses added up to 18.7 millions, down by 4.1% from 19.4 millions in the same period last year. Finally, profit/loss on equity investments totaled 14.3 millions, and were associated with the sale of IGLI. Net of tax provisions of 18.8 millions, net income came in at 85.9 millions, up by 152% from 34.1 millions in June 2006.

176 Gruppo Banca Popolare Italiana

Bipielle Bank (Suisse)

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 426,920 328,146 604,560 30.10% Total loans 358,563 281,462 517,722 27.39% of which loans to customers 188,844 118,916 254,402 58.80% Financial assets 62,523 41,825 15,696 49.49% Equity investments 0.00% Total payables 333,987 252,442 473,565 32.30% of which due to customers and debt securities in issue 101,401 62,706 106,089 61.71% Indirect customer funds 253,270 249,409 284,112 1.55% of which Managed assets 253,270 249,409 284,112 1.55% Net interbank position -62,867 -27,190 -104,156 -131.21% Shareholders’ equity (including income/loss) 36,867 36,790 34,670 0.21% Income statement Net interest income 1,545 2,071 -25.40% Total income 5,715 7,033 -18.74% Net loans and financial assets impairment loss -104 0.00% G&A expenses -4,486 -5,180 13.40% Income before tax from continuing operations 1,617 962 68.09% Net income (loss) 1,169 718 62.81% Operational structure Number of employees 45 45 48 Number of bank branches 1 1 1 Financial ratios ROE (*) 6.34% 10.20% 4.14% ROA (*) 0.55% 1.14% 0.24% Net interest income/Total income 27.03% 26.93% 29.45% G&A expenses/Total income 78.50% 65.44% 73.65% Total financial assets/Total assets 14.65% 12.75% 2.60% NPLs/Customer loans 1.76% n.s. n.s. Net loan impairment loss/Customer loans (**) 0.06% n.s. n.s. (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then.

177 Gruppo Banca Popolare Italiana

Although affected by some critical factors which restricted its operations, the Bank ended the first six months of the year with a net income of 1.2 millions, + 63% with respect to the same period of 2006. This result was driven by a non-recurring income associated with the recovery of administration fees from Cayman Island funds that had been frozen by local authorities. Net of said non-recurring revenue, the half-year result exceeded both the budget and first-half 2006, buoyed by high-income streams generated by the precious metal business in Vietnam. Should we strip out the effects generated by the company Net impairment policy, gross income (1.62 millions) is in line with the budget, but is definitely lower than last year’s result. Total assets came in at 427 millions (328 millions as at 31.12.2006). Loans to customers increased by 70 millions from 31.12.2006, up to 189 millions. This increase was partly driven by new loans extended during the second quarter 2007, and partly by temporary transactions performed on precious metals (gold). The increase in loans to other banks is more limited (+ 4% over 31.12.2006). Net interest income stood at 1.54 millions (2.07 millions as at 30.06.2006), affected by the decrease in loans to private customers as compared with first half 2006; also Total income decreased (-19% over 30.06.2006), as a result of the decrease in Indirect customer funds. The positive effects from the actions taken to curb G&A expenses continued also in the second quarter 2007, leading to a 13.4% decrement with respect to the same period last year. As at 30.06.2007, ROE stood at 6.34%, also as a result of the capital increase, leading at the end of financial year 2006 to an equity of 36.8 millions. The capital increase policy pursued the objectives of promoting the bank’s image, satisfying market needs and supporting business development.

178 Gruppo Banca Popolare Italiana

Bipitalia Ducato

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 4,861,977 4,126,653 3,484,496 17.82% Total loans 4,424,696 3,754,603 3,141,363 17.85% of which loans to customers 4,413,269 3,749,033 3,123,646 17.72% Financial assets 20,284 20,839 10,126 -2.66% Equity investments 3,900 0.00% Total payables 4,380,545 3,665,755 3,044,910 19.50% of which due to customers and debt securities in issue 976,638 981,704 867,731 -0.52% Indirect customer funds 1,455 793 770 83.48% of which Managed assets 1,455 793 770 83.48% Net interbank position -3,392,480 -2,678,481 -2,159,462 -26.66% Shareholders’ equity (including income/loss) 341,801 346,536 323,985 -1.37% Income statement Net interest income 70,956 51,367 38.14% Total income 83,714 58,503 43.09% Net loans and financial assets impairment loss -32,096 -20,849 -53.95% G&A expenses -36,407 -32,269 -12.82% Income before tax from continuing operations 39,750 33,827 17.51% Net income (loss) 22,626 19,109 18.40% Operational structure Number of employees 679 623 590 Financial ratios ROE (*) 13.24% 12.02% 11.80% ROA (*) 0.93% 1.01% 1.10% Net interest income/Total income 84.76% 86.99% 87.80% G&A expenses/Total income 43.49% 49.07% 55.16% Total financial assets/Total assets 0.42% 0.50% 0.29% NPLs/Customer loans 0.75% 0.80% 0.66% Net loan impairment loss/Customer loans (**) 0.73% 1.16% 0.67% (*) The six-month figure was annualized. (**) Percentages as at 30/06/2007 and as at 30/06/2006 were calculated based on the loan impairment accounted for up to then.

179 Gruppo Banca Popolare Italiana

Total loans to customers added up to 4,413 millions, up by 17.72% with respect to 31/12/2006, driven by the significant increase in consumer lending, reaching 3,173 millions, up by 56.36% as compared to first half 2006. This result was achieved also as a result of loan placement through the Group bank branches. The most significant increases were reported by open-end consumer loans (+54.08%). An outstanding result was posted also by salary-guaranteed loans, which went from 7.5 millions in first half 2006 up to 30.3 millions (+301.77%). Credit card loans increased by 7.83% as compared with 30/06/2006, while closed-end loans increased by 15.32% for auto loans and by 8.19% for non-auto loans. As to the income statement, both net interest income, up by 38.14%, from 51.4 millions to 70,9 millions in first half 2007, and total income, leaping from 58.5 millions up to 83.7 millions (+43.09%), enjoyed a strong increase. Loan impairments reported a substantial increase, from 20.8 to 32.1 millions (+53.95%), due to the greater loan volume and to the fact that the lending scope was broadened to cover also more insolvent customers. The increase in G&A expenses (+12.82%) was driven both by the rise in Personnel expenses due to the headcount increase, which went from 623 employees at the end of 2006 to 679, and by the rise in other G&A expenses associated with the increase in company business activities. Net income went up by 18.40%, coming in at 22.6 millions with respect to 19.1 millions in first half 2006.

180 Gruppo Banca Popolare Italiana

Bipitalia Gestioni SGR

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 106,127 118,995 110,003 -10.81% Total loans 29,623 39,724 31,764 -25.43% of which loans to customers 18,333 35,755 20,676 -48.73% Financial assets 29,133 28,589 28,210 1.90% Equity investments 1,600 1,600 1,600 0.00% Total payables 21,252 27,549 22,950 -22.86% of which due to customers and debt securities in issue 2,834 5,430 1,967 -47.81% Indirect customer funds 12,272,577 12,798,586 12,596,849 -4.11% of which Managed assets 12,272,577 12,798,586 12,596,849 -4.11% Net interbank position 10,815 2,755 11,056 292.56% Shareholders’ equity (including income/loss) 68,981 77,883 62,248 -11.43% Income statement Net interest income 560 381 46.98% Total income 17,410 18,676 -6.78% G&A expenses -5,968 -5,313 -12.33% Income before tax from continuing operations 11,392 1,748 551.72% Net income (loss) 7,298 685 965.40% Operational structure Number of employees 44 51 49 Financial ratios ROE (*) 21.16% 20.95% 2.20% ROA (*) 13.75% 13.71% 1.25% Net interest income/Total income 3.22% 2.31% 2.04% G&A expenses/Total income 34.28% 22.09% 28.45% Total financial assets/Total assets 27.45% 24.03% 25.64% (*) The six-month figure was annualized.

181 Gruppo Banca Popolare Italiana

Indirect customer funds, made up of Managed assets, added up to 12,272.6 millions, down from 12,798.5 millions on December 31st, 2006. In the first six months of the year, the negative trend reported by mutual funds was further amplified by the outflow from assets under management. In particular, collectively managed assets (mutual funds) went from 5,746 millions on December 31st, 2006 to 5,095 millions on June 30th, 2007, reporting a decrease by 651 millions (11.33%), and a net outflow of 750 millions. Assets under management went from 8,549 millions on December 31st, 2006 to 8,320 millions on June 30th, 2007, with a total decrease of 229 millions, equal to 2.68%. The net outflow amounted to 313 millions. With regard to the income statement, total income stood at 17.4 millions, slipping slightly compared with June 30th, 2006; in particular, commission income totaled 60 millions as at June 30th, 2007, against 65 millions on June 30th, 2006, down by 7.7%; commission expense went from 47.9 millions as at June 3oth, 2006 to 44.4 millions on June 30th, 2007, down by 7.31%. G&A expenses amounted to 5.9 millions (5.3 millions on June 30th, 2006), reporting an increase with respect to the same period last year in particular as a result of advisory fees incurred for the project to transfer business lines in Banca Aletti and Aletti Gestielle Sgr.

182 Gruppo Banca Popolare Italiana

Bipielle Real Estate

Balance sheet 30/06/2007 31/12/2006 30/06/2006 % change

Total assets 812,770 869,184 875,299 -6.49 Total non-current assets 752,821 770,986 767,398 -2.36 Total real estate investments 597,084 612,959 628,284 -2.59 Equity investments 35,984 40,704 19,303 -11.60 Financial assets 107,672 100,666 110,629 6.96 Total current assets 59,949 98,198 107,901 -38.95 of which cash and cash equivalents 5 2,417 177 -99.79 Total non current liabilities 46,908 46,995 50,167 -0.19 of which Due to banks and other lenders 34,592 34,628 35,787 -0.10 Total current liabilities 377,042 435,536 438,848 -13.43 of which due to banks and other lenders 324,972 391,600 342,795 -17.01 Shareholders’ equity (including income/loss) 388,820 386,653 386,284 0.56 Income statement Total value of production 45,118 37,258 21.10 Total cost of production -30,541 -40,631 -24.83 Operating income 14,576 -3,373 -532.14 Financial income -7,785 -7,749 0.46 Income (loss) before tax of continuing operations 6,792 -11,122 -161.07 Net income (loss) 2,168 -14,595 -114.85 Operational structure Number of employees 82 86 89

As at June 30th, 2007, real estate investments decreased as compared with December 31st, 2006, both with respect to sales and to the depreciation for the period. In particular, sales refer to the disposal of the former head office of Cassa di Risparmi di Livorno for about 12 millions, leading to a capital gain of 3.2 millions. Financial assets increased by 7 millions as a result to the extension of a non-interest bearing loan to the associate Lido dei Coralli; this item also includes the real estate development project called “Santa Giulia”, whose book value as at June 30th, 2007 was 100 millions. The project’s total value is 203 million euro and it should be completed by the end of 2008, with the relevant notarial documents to be registered in 2009. Current assets decreased by 38 millions, mainly as a result of real estate disposals, in line with the three-year business plan; as a whole, property for about 32 millions was registered (included in inventory), and a capital gain of about 2.7 millions was generated; in particular, among sales it is worth mentioning the registration of the so called “second portfolio”, made up of a set of property having sundry destinations for a total price of about 26.6 millions. With regard to the income statement, the value of production increased by 7.8 million euro with respect to the same period last year, driven by the capital gains generated by the sale of the so called “second portfolio”, the former head office of Cassa di Risparmio di Livorno. The cost of production decreased by 10 millions; in particular, write-downs of financial assets decreased by 12.5 millions, mainly as a result of the impairment of the equity investment held in the company Basileus

183 Gruppo Banca Popolare Italiana

carried out on June 30th, 2006; in contrast, costs for services, leases and rentals increased by about 3 millions mainly as a result of increasing maintenance and advisory costs. Operating income came in at 14.6 millions, as compared with the operating loss of 3.4 millions posted on June 30th, 2006. Net of taxes, amounting to 4.6 millions, the company reported a net income of 2.2 millions.

NOTEWORTHY EVENTS AFTER JUNE 30TH, 2007

See the corresponding section in Chapter 1 of this report.

OPERATIONAL OUTLOOK

See the corresponding section in Chapter 1 of this report.

184 Gruppo Banca Popolare Italiana

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet

Assets 30/06/2007 31/12/2006

10. Cash and cash equivalents 192,945 248,988 20. Financial assets held for trading 2,725,453 3,601,485 40. Financial assets available for sale 870,620 1,100,617 50. Financial assets held to maturity 83,616 83,694 60. Due from other banks 3,490,108 4,833,472 70. Loans to customers 30,747,618 28,735,907 80. Hedging derivatives 124,899 102,927 100. Equity investments 146,895 151,168 120. Property, plant and equipment 944,104 947,078 130. Intangible assets 2,222,864 2,221,173 of which: goodwill 2,175,432 2,169,865 140. Tax assets 1,155,438 1,222,348 a) current 120,727 179,627 b) deferred 1,034,711 1,042,721 150. Non-current assets held for sale and discontinued operations 1,327,677 1,391,248 160. Other assets 1,578,582 2,146,966 Total assets 45,610,819 46,787,071

185 Gruppo Banca Popolare Italiana

Liabilities and Shareholders’ equity 30/06/2007 31/12/2006

10. Due to other banks 4,556,313 5,997,316 20. Due to customers 15,546,605 15,610,851 30. Debt securities in issue 17,265,998 16,527,244 40. Trading liabilities 511,716 498,859 60. Hedging derivatives 197,497 204,574 80. Tax liabilities 239,413 277,646 a) current 104,891 142,081 b) deferred 134,522 135,565 90. Liabilities associated with discontinued operations 1,507,063 1,269,425 100. Other liabilities 1,622,662 1,723,479 110. Employee termination benefits 167,689 173,128 120. Provisions for risks and charges 339,042 401,130 a) retirement and similar obligations 155,241 139,642 b) other provisions 183,801 261,488 140. Valuation reserves 58,983 91,549 160. Common stock equivalents 3,048 3,048 170. Reserves -781,715 -749,540 180. Share premiums 2,668,669 2,682,267 190. Share capital 2,047,083 2,047,082 200. Treasury shares (-) -458,907 -78,720 210. Minority interest (+/-) 101,830 147,594 220. Net income (loss) for the year 17,830 -39,861 Total liabilities and Shareholders’ equity 45,610,819 46,787,071

186 Gruppo Banca Popolare Italiana

Consolidated income statement

Income statement 30/06/2007 30/06/2006

10. Interest income and similar revenues 1,098,084 929,869 20. Interest expense and similar charges -659,562 -528,884 30. Net interest income 438,522 400,985 40. Commission income 230,584 240,664 50. Commission expense -42,668 -39,970 60. Net commission income 187,916 200,694 70. Dividend and similar income 17,969 20,390 80. Net trading income 35,815 21,195

90. Fair value adjustments in hedge accounting 2,644 14,187

100. Profit (loss) on disposal or repurchase of: 88,531 102,039 a) loans 69,083 b) financial assets available for sale 87,415 31,003 d) financial liabilities 1,116 1,953 110. Profit (loss) on financial assets and liabilities designated at fair value -3,108 120. Total income 771,397 756,382 130. Net write-downs/write-backs on impairment of: -175,397 -59,034 a) loans -172,053 -50,696 b) Financial assets available for sale -6,563 -5,316 d) other financial transactions 3,219 -3,022 140. Net financial income 596,000 697,348 170. Net financial and insurance income 596,000 697,348 180. G&A expenses: -556,197 -470,774 a) Personnel expenses -280,178 -254,368 b) other G&A expenses -276,019 -216,406 190. Net provisions for risks and charges -32,915 -33,514 200. Depreciation of property, plant and equipment -26,571 -22,856 210. Amortization of intangible assets -13,426 -10,213 220. Other operating income (expense) 84,740 77,148 230. Operating costs -544,369 -460,209 240. Profit (loss) on equity investments 11,035 22,684 260. Goodwill impairment -1,024 -63 270. Profit (loss) on disposal of investments 6,158 1,886 280. Income (loss) before tax from continuing operations 67,800 261,646 290. Tax on income from continuing operations -24,062 -93,730 300. Income (loss) after tax from continuing operations 43,738 167,916 310. Income (loss) after tax from discontinued operations -19,441 -31,518 320. Net income (loss) for the year 24,297 136,398 330. Minority interest -6,467 -44,429 340. Net income (loss) for the year attributable to the Parent company 17,830 91,969

187 Gruppo BancaPopolareItaliana Statement of changes in consolidated shareholders’ equity

Net income Shareholders’ equity changes in the period Shareholders’ Changes Shareholders’ allocation Shareholders’ Net income th equity in equity Changes equity As at June 30 , 2007 Changes in as at restated on opening restated on In reserves Issue of Purchase Special Treasury restated on Common Stock 30 06 2007 31 12 2006 balance 01 01 2007 new of treasury dividend share 30 06 2007 Stock Options Dividends shares shares distribution derivatives Reserves and other equivalents all.

Share capital a) common shares 2,047,082 2,047,082 1 2,047,083 b) other

Share premiums 2,682,267 2,682,267-13,600 2 2,668,669

Reserves a) retained earnings -820,353 -820,353 -26,261 -5,914 -852,528 b) other 70,813 70,813 70,813

Common stock equivalents 3,048 3,048 3,048

Valuation reserves: a) Financial assets available for sale 73,284 73,284 -32,566 40,718 b) cash flow hedges c) other 18,265 18,265 18,265

Treasury shares -78,720 -78,720 -380,187 -458,907

Net income for the period -39,861 -39,861 39,861 17,830 17,830

Total 3,955,825 3,955,825 -38,480 3 -380,187 17,830 3,554,991

Minority interest 147,594 147,594 -52,231 6,467 101,830

Total 4,103,419 4,103,419 -90,711 3 -380,187 24,297 3,656,821

(*) Share premiums as at June 30th, 2007 include the amount of the extraordinary distribution of the share premium reserve decided by the Shareholders’ meeting on March 10th, 2007, which shall go into effect after this report’s date, as envisaged by the resolution passed by the shareholders. The coupon was paid in July and amounted to euro 1,400,776,881 for shareholders of Banca Popolare Italiana and to euro 39,907,395 for convertible bond holders participating in the program “Banca Popolare di Lodi Prestito Obbligazionario Convertibile 4,75% 2000/2010 – ISIN IT 0001444360”. Net income Changes in Shareholders’ equity in the period Shareholders’ Changes Shareholders’ allocations Shareholders’ equity in equity Changes Net income equity As at June 30th, 2006 restated on opening restated on in reserves Issue of Purchase Special Changes Treasury 30 06 2006 restated on Stock 31 12 2005 balance 01 01 2006 new of treasury dividend in common share 30 06 2006 Options Dividends shares shares distribution stock equiv. derivatives Reserves and other all.

Share capital a) common shares 1,456,498 1,456,498 -300 1,456,198 b) other

Share premiums 2,487,324 2,487,324 -512,493 -114 -740 1,973,977

Reserves a) retained earnings -577,291 -577,291 -134,432 -8,107 -719,830 b) other 201,466 201,466 -96,968 -24,566 79,932

Common stock equivalents 3,048 3,048 3,048

Valuation reserves: a) Financial assets 0 available for sale 32,440 32,440 -46,294 -13,854 b) financial flow hedges 0 c) other 18,265 18,265 18,265

Treasury shares -91,546 -91,546 11,712 -302 -80,136

Net income for the period -743,893 -743,893 743,893 91,969 91,969

Gruppo BancaPopolareItaliana Total 2,786,311 2,786,311 -78,967 11,598 -302-1,040 91,969 2,809,569

Minority interest 461,664 461,664 -44,014 3,829 44,429 465,908

Total 3,247,975 3,247,975-44,014 -75,138 11,598 -302-1,040 136,398 3,275,477 Gruppo Banca Popolare Italiana

Consolidated statement of cash flows Direct method

30 06 2007 30 06 2006

A. OPERATING ACTIVITIES 1. Cash flow from operations 261,005 217,645 Interest income collected 1,098,084 929,869 Interest expense paid 659,562 528,884 Dividend and similar income 17,969 20,390 Net commission income 187,916 200,694 Personnel expenses 280,178 254,368 Other costs 155,496 123,414 Other revenues 95,775 98,606 Taxes and other duties 24,062 93,730 Costs/revenues from discontinued operations and net of the fiscal effect -19,441 -31,518 2. Cash flow from / used in financial assets 928,584 1,168,556 Financial assets held for trading Financial assets measured at fair value 876,032 390,353 Financial assets available for sale 194,087 -218,309 Loans to customers -2,183,764 347,236 Due from other banks 1,343,364 728,184 Other assets 698,865 -78,908 3. Cash flow from / used in financial liabilities -800,647 -1,024,643 Due to other banks -1,441,003 -1,590,598 Due to customers -64,246 643,519 Debt securities in issue 731,677 -1,445,093 Trading liabilities 12,857 -51,054 Financial liabilities measured at fair value -316,281 Other liabilities -39,932 1,734,864 Net cash flow from / used in operating activities 388,942 361,558 B. INVESTING ACTIVITIES 1. Cash flow from: 4,273 189,983 Sale of equity investments 4,273 93,159 Sale/redemption of financial assets held to maturity 96,824 2. Cash flow used in: -55,474 -93,314 Purchase of financial assets held to maturity 21,894 Purchase of property, plant and equipment 17,439 78,256 Purchase of intangible assets 16,141 15,058 Net cash flow from / used in investing activities -51,201 96,669 C. FINANCING ACTIVITIES Issue/purchase of treasury shares -393,784 10,256 Dividend distribution and other -512,493 Net cash flow from / used in financing activities -393,784 -502,237 NET CASH FLOW GENERATED / USED IN THE PERIOD -56,043 -44,010

190 Gruppo Banca Popolare Italiana

Reconciliation

30 06 2007 30 06 2006

Cash and cash equivalents at beginning of period 248,988 237,423 Net cash flow generated / used in the period -56,043 -44,010 Cash and cash equivalents: impact from exchange rate changes

Cash and cash equivalents at end of period 192,945 193,413

191 Gruppo Banca Popolare Italiana

NOTES TO THE CONSOLIDATED ACCOUNTS

Statement of conformity with international accounting standards

The consolidated half-year report of Gruppo Banca Popolare Italiana was prepared in keeping with the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS), issued by the International Accounting Standards Board (IASB), and the associated interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the European Commission under the European Regulation n. 1606 of July 19th, 2002, obliging all European Union companies listed on regulated markets to prepare their consolidated financial statements in compliance with IAS/IFRS standards as of 2005. The Consolidated half-year report as at June 30th, 2007 was prepared based on the international accounting standards pursuant to Consob’s resolution n. 14990 of April 14th, 2005, stating that the report contents must be compliant with the Issuers Regulation or with IAS 34 governing interim financial statements. IAS/IFRS standards effective on June 30th, 2007 were applied to prepare the Half-year report (including SIC and IFRIC interpretations), as approved by the European Commission. With respect to the standards applied on December 31st, 2006, a number of changes to IAS 23 (borrowing costs) were approved. This Half-year report has also been prepared in compliance with the enacting measures for art. 9 of L. Decree n.38/2005, precisely: x Consob communication n. 6064293 of 28/7/06 – “Company reporting under art. 114, paragraph 5, L. Decree 58/98; x Circular of the Bank of Italy n. 262 of 22/12/05 – “Banks’ financial statements: layouts and preparation”.

General accounting standards

The half-year report was prepared on the assumption of the going concern, under the accrual basis of accounting, in keeping with the principle of materiality and aggregation, with substance prevailing over form and in such a way as to favor comparability and consistency with future presentations. Each material class of similar items is explained separately in the report. Dissimilar items are presented separately unless they are immaterial. Assets and liabilities, revenues and charges are not offset except when offsetting is expressly required or permitted by a standard or its interpretation. In compliance with art. 5 of Legal Decree n. 38 of February 28th, 2005 and with IAS 1/46, the half-year report was prepared with the euro as money of account. The amounts shown in the Financial statements and in the Report on operations are expressed in thousand of euro, unless otherwise specified. The faces of the financial statements and the charts illustrated in the report on operations show the amounts referring to the period under consideration together with the corresponding comparison data, referring to December 31st, 2006 for the balance sheet, and to June 30th, 2006 for the income statement. In some cases said figures have been duly reclassified in order to apply more correctly the international accounting standards for some companies falling within the consolidation scope. The report on operations provides the half-year income statement for the current interim period under consideration compared with the income statement of the corresponding interim period of the year before, in keeping with IAS 34/20.

192 Gruppo Banca Popolare Italiana

Consolidation scope and methods

Shown below are the equity investments in fully owned companies (line by line consolidation):

Type of Voting Put % Company name Head office relation Investing company % Share right % share (1)

Banca Popolare di Lodi Capital New York 1 Banca Popolare Italiana 100.00 100.00 Company LLC Banca Popolare di Lodi Capital New York 1 Banca Popolare Italiana 100.00 100.00 Company LLC II Banca Popolare di Lodi Capital New York 1 Banca Popolare Italiana 100.00 100.00 Company LLC III Banca Popolare di Lodi S.p.A. Lodi 1 Banca Popolare Italiana 100.00 100.00 Bipielle I.C.T. S.p.A. Lodi 1 Banca Popolare Italiana 100.00 100.00 Bipitalia Broker S.p.A. Milan 1 Banca Popolare Italiana 100.00 100.00 Banca Popolare di Crema S.p.A. Crema (CR) 1 Banca Popolare Italiana 94.47 94.47 Banca Popolare di Cremona S.p.A. Cremona 1 Banca Popolare Italiana 99.57 99.57 Banca Popolare di Mantova S.p.A. Mantova 1 Banca Popolare Italiana 55.04 55.04 Banca Valori S.p.A. Brescia 1 Banca Popolare Italiana 85.33 85.33 Bipielle Società di Gestione del Lodi 1 Banca Popolare Italiana 100.00 100.00 Credito S.p.A. Bipielle International Holding S.A. Lugano 1 Banca Popolare Italiana 100.00 100.00 Cassa di Risparmio di Lucca Pisa Lucca 1 Banca Popolare Italiana 72.26 72.26 6.66 Livorno S.p.A. Banca Caripe S.p.A. Pescara 1 Banca Popolare Italiana 95.00 95.00 Bipielle International Bipielle Bank (Suisse) S.A. Lugano 1 91.00 91.00 Holding Bipielle International B.P.I. International (UK) Ltd London 1 72.00 72.00 Holding 1 Banca Popolare Italiana 10.00 10.00 Banca Bipielle Network S.p.A. Lodi 1 Banca Popolare Italiana 99.63 99.63 Bipitalia Alternative SGR S.p.A. Lodi 1 Banca Popolare Italiana 20.00 20.00 1 Bipitalia Gestioni SGR 80.00 80.00 Bipitalia Ducato S.p.A. Lucca 1 Banca Popolare Italiana 100.00 100.00 Bipitalia Gestioni SGR S.p.A. Lodi 1 Banca Popolare Italiana 97.75 97.75 Bipielle Real Estate S.p.A. Lodi 1 Banca Popolare Italiana 100.00 100.00 Bipielle Fondi Immobiliari SGR S.p.A. Lodi 1 Banca Popolare Italiana 100.00 100.00 Efibanca S.p.A. Rome 1 Banca Popolare Italiana 100.00 100.00 Italfortune International Advisors S.A. Luxembourg 1 Banca Popolare Italiana 100.00 100.00 Conegliano Tiepolo Finance S.r.l. 1 Banca Popolare Italiana 60.00 60.00 Veneto (TV) Bipielle Società di Tiepolo Finance II S.r.l. Lodi 1 60.00 60.00 Gestione del Credito Nazionale Fiduciaria S.p.A. Brescia 1 Banca Valori 100.00 100.00 Critefi SIM S.p.A. Brescia 1 Nazionale Fiduciaria 100.00 100.00 AB Capital S.p.A. Pescara 1 Efibanca 51.00 51.00 Gruppo Acque Minerali Riunite Rome 1 Efibanca 100.00 100.00

193 Gruppo Banca Popolare Italiana

Type of Voting Put % Company name Head office relation Investing company % Share right % share (1)

Glass Italy B.V. Amsterdam 1 Efibanca 5.00 5.00

Gruppo Partecipazioni Italiane Milan 1 Glass Italy 91.78 91.86 1 Banca Popolare Italiana 7.31 7.32 Bipielle International Area Life International Assurance Ltd Dublin 1 100.00 100.00 Holding Bipielle Previdenza Assicurativa S.r.l. Lodi 1 Banca Bipielle Network 100.00 100.00 Basileus S.p.A. Lodi 1 Bipielle Real Estate 100.00 100.00 S. Teresa di Lido dei Coralli S.r.l. 1 Bipielle Real Estate 100.00 100.00 Gallura (SS) Nadir Immobiliare S.r.l. Lodi 1 Bipielle Real Estate 100.00 100.00 Sirio Immobiliare S.r.l. Lodi 1 Bipielle Real Estate 100.00 100.00 Efigestioni SGR S.p.A. Milan 1 Efibanca 100.00 100.00 Easynetwork S.p.A. Rome 1 Bipitalia Ducato 80.00 80.00 Soluzioni Finanziarie S.p.A. Lucca 1 Bipitalia Ducato 100.00 100.00 (1) Type of relation: 1 = majority of voting rights in general annual meeting 2 = dominant influence in general annual meeting 3 = shareholders’ agreements 4 = other forms of control 5 = independent management under art. 26, paragraph 1, of “legal decree 87/92” 6 = independent management under art. 26, paragraph 2, of “legal decree 87/92” 7 = joint control Consolidation scope

The consolidated half-year report includes the half-year accounting situation of Banca Popolare Italiana and its direct and indirect subsidiaries. The consolidation scope is defined in keeping with IAS 27. The consolidation scope comprises also all companies considered associated based on IAS 28 and 31. Equity investments available for sale have been accounted for in compliance with IFRS 5, governing the accounting of non-current assets held for sale, both upon preparing the Half-year report as at June 30th, 2007 and comparative data referring to previous periods. In order to identify changes in consolidation scope caused by the application of the above mentioned standards, a materiality criterion has been applied, based on the contemporary presence of exclusion thresholds equal to the lower between 1% of the Parent company’s book value and 10 million euro as individual threshold and 5 times said limits as overall thresholds. Companies under liquidation or non-operational companies have been excluded. Shares received in pledge have not been considered for the purpose of consolidation, as they are not held with the aim of exercising a control or an influence on the company’s business policies. Compared with the situation as at December 31st, 2006, the following changes in the consolidation scope have occurred: x the company Soluzioni Finanziarie S.p.A., formed on March 2nd, 2007 by the subsidiary Bipitalia Ducato, is consolidated on a line by line basis; x on the same date, Bipitalia Ducato acquired 80% of Easynetwork S.p.A., which is therefore fully consolidated;

194 Gruppo Banca Popolare Italiana

x the company Efigestioni SGR S.p.A., formed on March 26th, 2007 by the subsidiary Efibanca, is fully consolidated; x the company CF Assicurazioni S.p.A., formed on March 2nd, 2007, is consolidated along the equity method as Bipitalia Ducato holds a 40% share; x the shareholding in Cartesio Alternative Investments S.p.A., which was previously carried at equity, was deconsolidated and shown under item 150 of consolidated assets “Non-current assets held for sale and discontinued operations”, following the finalization of the sale of the entire stake to third parties on April 6th, 2007. The fully consolidated investees Banca Bipielle Network S.p.A., Bipielle Previdenza Assicurativa S.r.l. and Area Life International Assurance Ltd. synthetically contribute to the consolidated financial statements through items 150 of assets (Non-current assets held for sale and discontinued operations), 90 of liabilities (Liabilities associated with discontinued operations) and 310 of the income statement (Profit/loss after tax from discontinued operations) as they are available for sale, and their disposal shall be finalized in September 2007.

Consolidation date

The reference date of the half-year report coincides with the closing date of the half-year report of the Parent company Banca Popolare Italiana. Companies ending the period at a different date with respect to the Parent company prepare a balance sheet and income statement as at the reference date.

Half-year accounts used for consolidation

The consolidated half-year report is prepared base on the half-year accounts of the consolidated accounts prepared and approved by the competent corporate bodies before the approval of the half-year report by the Board of Directors of the Parent company. The latest accounts approved by the same companies and prepared in compliance with national accounting standards have been used for the consolidation of equity investments that do not fall within the scope of international accounting standards (in particular we refer to industrial equity investments held by the subsidiary Efibanca as part of its merchant banking activity). The half-year accounts prepared based on national accounting standards have been used to consolidate the shareholding in Eurovita S.p.A.. Based on simulations, the consolidated accounts of the BPI Group would not have been significantly affected had these half-year accounts been prepared based on IAS/IFRS standards.

Consolidation methods

Line by line consolidation

The half-year accounts of the Parent company and of its subsidiaries have been consolidated line by line, adding together the corresponding items under assets, liabilities, shareholders’ equity, revenues and charges. The carrying value of equity investments held in each subsidiary and the corresponding portion of shareholders’ equity of each subsidiary are eliminated, so that the consolidated half-year report shows group accounts as if it were a single company. The positive differences resulting from said eliminations, calculated based on equity ratios, have been recognized as goodwill under intangible assets, after being accounted for under the subsidiary’s assets or liabilities. Negative differences are charged to income. Goodwill is not amortized. If necessary, it is impaired. The share of profit for the period of the subsidiaries and the share capital and reserve portions not attributable to the group are identified and attributed to third parties based on equity ratios. Said profit and shareholders’ equity share is shown separately from the share attributable to the parent company’s shareholders. The intragroup balances and transactions and the associated revenues and charges are eliminated in full.

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Consolidation along the equity method

Under the equity method, the shareholding is initially recognized at cost and the carrying value is incremented or decremented of the associate’s share profit or loss generated after the date of acquisition and attributable to the investor. Said share is recognized under a specific item of the consolidated income statement. Any differences between the shareholding value and the associate’s shareholders’ equity are included in the associates’ carrying value.

Accounting standards

The Accounting standards adopted to prepare the Half-year report, with regard to classification, recognition, measurement and derecognition of the various items making up assets and liabilities, as well as the methods used to recognize revenues and costs, are unchanged with respect to the ones adopted for the 2006 Annual report, and are illustrated in detail below.

1 – Financial assets held for trading

Initial recognition criteria Financial assets are initially recognized on the settlement date in case of debt and equity securities, and on the subscription date for derivative contracts. Upon their initial recognition, financial assets held for trading are measured at cost, meaning the instrument’s fair value, excluding transaction costs or proceeds directly associated with the instrument itself. Any embedded derivative in complex contracts, which is not closely related to its host contract and qualifies as derivative, is separated from its host contract and measured at fair value, while the host contract is accounted for along its relevant accounting standard.

Classification criteria This category includes only debt and equity securities and the positive value of derivatives that are held for trading. Derivative contracts include those embedded in structured financial instruments that have been recognized separately from their host contract because: x their economic risks and characteristics are not closely related to those of the host contract; x a separate instrument with the same terms as the embedded derivative would meet the definition of derivative; x the hybrid instruments to which they belong are not measured at fair value with changes in fair value recognized in the income statement.

Measurement criteria Subsequently to initial recognition, financial assets held for trading are measured at fair value. To determine the fair value of financial assets quoted in an active market, quoted market prices are used (bid-ask prices or average prices). In the absence of an active market, estimate methods and valuation models are used, that take into account all the risk factors associated with the instruments and that are based on market inputs, such as: methods based on the fair value of other quoted instruments that are substantially the same, discounted cash flow analysis, option pricing models, recent arm’s length market transactions. In case no reliable estimate of the fair value is possible in keeping with the above guidelines, equity instruments and related derivatives are measured at cost.

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Derecognition criteria Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all risks and rewards of ownership of the assets have been substantially transferred.

2 – Financial assets available for sale

Initial recognition criteria Financial assets are initially recognized on the settlement date in case of debt and equity securities. Upon their initial recognition, assets are measured at fair value, inclusive of transaction costs or proceeds directly associated with the instrument itself. If recognition follows a reclassification of Assets held to maturity, assets will be recognized at their fair value at the time of reclassification.

Classification criteria This category includes non-derivative financial assets not designated as Loans, Held for trading assets or Held to maturity assets. In particular, in addition to bonds that are not held for trading and are not classified as Assets held to maturity or under loans, this category includes also shareholdings that are not held for trading and do not qualify as interests in subsidiaries, associates and joint ventures.

Measurement criteria Subsequently to initial recognition, Financial assets available for sale are measured at fair value through recognition of the corresponding amortized cost value in income, while profits or losses generated by changes in fair value are recognized in a specific equity reserve until the financial asset is derecognized or an impairment loss is recognized. Upon derecognition or impairment, the cumulative gain or loss is recognized in profit or loss. The fair value is measured based on the same criteria illustrated for Financial assets held for trading. In case no reliable estimate of the fair value is possible equity instruments are measured at cost. The assessment of objective evidence of impairment losses is carried out at each balance sheet or interim reporting date. In case of objective evidence, the loss amount to be charged to income is measured as the cumulative change previously recognized in the specific Shareholders’ equity reserve. If the reasons for an impairment loss are no more valid due to an event occurring after the impairment was originally recognized, write-backs are recognized through profit and loss, in case of loans or debt securities, and through Shareholders’ equity in case of equity securities. The write-back in any case cannot exceed the instrument’s amortized cost in the absence of previous adjustments.

Derecognition criteria Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all risks and rewards of ownership of the assets have been substantially transferred.

3 – Financial assets held to maturity

Initial recognition criteria Financial assets are initially recognized on the settlement date. Upon initial recognition, financial assets designated as held to maturity are measured at cost, including any directly associated costs or revenues. If the recognition in this category follows a reclassification from Assets available for sale, the fair value of the asset at the time of reclassification is recognized at the asset’s new amortized cost.

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Classification criteria This category includes debt securities with fixed or determinable payments and fixed maturity date, that the entity has the positive intention and ability to hold to maturity. If a held-to-maturity investment must be sold as a consequence of a reconsideration or of an event beyond the entity’s control, the asset is reclassified as available for sale.

Measurement criteria Subsequently to initial recognition, financial assets held to maturity are measured at amortized cost, using the effective interest method. Gains or losses on assets held to maturity are recognized through profit and loss at the time of derecognition or fair value impairment, and also based on the amortization of the difference between the value upon recognition and the redemption value upon maturity. The assessment of objective evidence of impairment losses is carried out at each balance sheet or interim reporting date. In case of objective evidence, the impairment is computed as the difference between the asset’s carrying value and the present value of estimated future cash flows, discounted at the original effective interest rate. The impairment loss is recognized through profit and loss. If the reasons for an impairment loss are no more valid due to an event occurring after the impairment was originally recognized, write-backs are recognized through profit and loss.

Derecognition criteria Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all risks and rewards of ownership of the assets have been substantially transferred.

4 – Loans

Initial recognition criteria Loans are initially recognized on the origination date or, in case of debt security, on the settlement date, based on the fair value of the financial instrument, the recognition being equal to the extended amount, or subscription price, including costs/revenues directly associated to the individual loan and that can be determined from the start of the transaction, although settled later on. Costs are excluded, that, although carrying the above characteristics, are refunded by the borrowing counterparty or fall under normal internal administrative costs. For loans that are not negotiated at arm’s length market conditions, the fair value is computed using specific valuation techniques; the difference with the extended amount or the subscription price is charged directly to income. Buyback and repurchase agreements or reverse repurchase agreements are recognized in the balance sheet as loans payable or receivable. In particular, securities sold subject to repurchase agreements (repos) are recorded as loans payable with respect to the amount received spot, while securities purchased under agreements to resell (reverse repos) are recorded as loans receivable with respect to the amount paid spot.

Classification criteria Loans include loans to customers and to banks, with fixed or determinable payments that are not quoted in an active market and that were not designated from inception as financial assets Available for sale. Loans include receivables, repurchase agreements.

Measurement criteria After initial recognition, loans are valued at amortized cost, equal to the initial recognition value decreased/increased by capital refunds, write-down/write-backs and the amortization – computed along the effective interest rate method – of the difference between the extended amount and the amount repayable at maturity, typically comparable to the costs/revenues directly associated to the individual loan. The effective interest rate is determined by computing the rate that equals the loan’s present value of future principal and

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interest cash flows, to the extended amount including costs/rewards associated with the loan. This accounting method, based on a financial logic, spreads the economic effect of costs/revenues throughout the loan’s expected residual life. At each balance sheet or interim report date, loans are reviewed to identify loans that due to events occurred after their initial recognition, show objective evidence of an impairment loss. These are loans classified as non- performing, watchlist or restructured under the current rules of the Bank of Italy, in line with IAS regulations. Said impaired loans undergo an analytical, or individual valuation, whereby the write-down of each loan is equal to the difference between the loan’s book value at the time of measurement (amortized cost) and the present value of expected future cash flows, using the original effective interest rate. Expected cash flows factor in the expected recovery time, the estimated realizable value of collaterals, and possible costs incurred to recover the credit exposure. The cash flows of loans that are expected to be recovered within a short period of time are not discounted. The original effective interest rate of each loan remains unchanged over time, unless a loan restructuring or workout agreement has been negotiated that changes the contractual interest rate, or unless in practice the transaction bears no contractual interest. The write-down is charged to income. The original loan value is reinstated in following financial years whenever the reasons for their original write-down no longer apply, provided said evaluation is objectively correlated to an event occurred after the write-down. Write-backs are recognized in the income statement and in any case cannot exceed the loan’s amortized cost had no write-downs been carried out in the past. Individual loans that give no objective evidence of impairment, that is generally speaking performing loans, including loans to counterparties residing in countries at risk, undergo a collective valuation. This valuation is carried out by loan classes carrying similar credit risk characteristics and their percentage loss is estimated by taking into account their historical loss experience, adjusted on the basis of current observable data, so as to estimate the loss latent in every loan group. Collectively determined write-downs are charged to income. At each balance sheet and interim report date, any additional write-down or write-back is recalculated differentially making reference to the entire performing loan book on the same date.

Derecognition criteria Sold loans are derecognized only if the sale entails the substantial transfer of all risks and rewards associated to the loans. On the contrary, should the risks and rewards associated with the sold loans be retained, the loans will continue to be recognized, although from a legal point of view the loan ownership has been actually transferred. In case the substantial transfer of risks and rewards cannot be verified, loans are derecognized if control of the loans has been relinquished. Otherwise, if be it even a partial control has been retained, the loans will continue to be recognized to the extent of the Group’s residual involvement, based on the exposure to the changes in value of the sold loans and to their changes in cash flows. Finally, sold loans are derecognized in case the contractual rights to receive the relevant cash flows are retained, with the concurrent obligation to pay said flows, and nothing more, to third parties.

5 - Financial assets measured at fair value

Initial recognition criteria Upon initial recognition financial instruments designated at fair value are measured at cost, meaning the instrument’s fair value, without considering the transaction costs or proceeds that are directly associated with the instrument and that are directly recognized in profit or loss. This designation may be used when it provides more significant information in that it: x it eliminates or considerably reduces the lack of consistency in measurement or recognition (at times called “accounting asymmetry”), which would otherwise stem from the measurement of assets or liabilities or from the recognition of the associated profit or loss along different approaches.

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x the management or performance of a group of financial assets and/or financial liabilities is measured at fair value based on a documented risk management methodology or investment strategy, lending a greater significance to the reported information. x the instrument under examination contains an embedded derivative that meets given conditions. In this case, however, the fair value option may not be applied if: x the derivative does not significantly change the host instrument’s cash flows, or it is clear that, without the need for in-depth analysis, the derivative must not be uncoupled. The Fair Value Option (FVO) is applied to all financial assets and liabilities that generate a distorted accounting representation and to all instruments that are managed and measured under a fair value view.

Classification criteria This class includes all financial assets and liabilities of different types (debt securities, equity securities, loans etc.) that have been designated at fair value through profit or loss, based on the option granted to companies (so called “fair value option”) by IAS39.

Measurement criteria Subsequently to initial recognition, financial assets and financial liabilities measured at fair continue to be measured at fair value. Market quotes are used to determine the fair value of financial instruments quoted in an active market. In the absence of an active market, generally accepted estimate and valuation methods are used, based on market inputs, such as: methods based on the fair value of other quoted instruments that are substantially the same, discounted cash flow analysis, option pricing models, recent arm’s length market transactions. Profits and losses generated by a change in the fair value of financial assets and liabilities are shown under the item “Profit or loss of financial assets and liabilities measured at fair value through profit or loss”.

Derecognition criteria Financial assets are derecognized when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset is disposed of, and all risks and rewards of ownership of the assets have been substantially transferred. Financial liabilities are derecognized upon their extinction, or when the obligation specified in the contract has been performed, cancelled or has expired.

6 – Hedging derivatives

Initial recognition criteria Hedging derivatives, as all other derivatives, are initially recognized and subsequently measured at fair value. The derivative can be designated as hedge provided that there the hedging relationship between the hedged and the hedging instrument is formally documented, and that it is effective at the time of origination and prospectively throughout its entire life. The hedge effectiveness depends on the extent to which the changes in fair value or in the expected cash flows of the hedged item are actually offset by those of the hedging instrument. As a result, effectiveness is measured by comparing said changes, while considering the aim pursued by the company when the hedge was established. A hedge is effective (within a range of 80-125%) when changes in fair value (or in cash flows) of the hedging instrument neutralize almost completely the changes in the hedged item, attributable to the hedged risk. Hedge effectiveness is assessed at each reporting date, using: x prospective tests, that justify the application of hedging accounting in that they demonstrate its expected effectiveness; x retrospective tests, demonstrating the hedge’s actual effectiveness achieved over the period under examination. In other words, they measure to what extent actual results diverge from a perfect hedge.

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Only instruments involving an external counterparty to the Group may be designated as hedging instruments.

Classification criteria A hedge aims at neutralizing potential losses associated with a given financial instrument or a group of financial instruments (hedged item), attributable to a specific risk (for example an interest rate rise) by offsetting them with the profit associated with a different financial instrument or group of financial instruments (hedging instrument) in case that given risk should actually materialize. The following categories of hedges are used: x a fair value hedge, that is, a hedge of the exposure to changes in fair value of a recognized asset or liability attributable to a particular risk; x a cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk associated with a recognized asset or liability. The items “Hedging derivatives” in the balance sheet assets and liabilities show the positive and negative value of derivatives that belong to effective hedging relationships; should the tests give evidence of a hedge ineffectiveness, the hedging derivative is reclassified among trading instruments (HfT).

Measurement criteria Hedging derivatives are measured at fair value, in particular: x In case of a fair value hedge, the change in fair value of the hedged item is offset against the change in fair value of the hedging instrument. Said offset is recognized by recognizing in profit or loss the value changes referring both to the hedged item (referring to the changes generated by the underlying risk factor), as well as to the hedging instrument. Any resulting difference, which reflects the partial hedge ineffectiveness, represents a net income effect; x In case of cash flow hedge, the portion of changes in the fair value of the derivative that are determined to be an effective hedge is recognized directly in equity, while it is recognized in the income statement only when the hedged cash transaction affects profit or loss, namely the cash flows to be offset have changed.

Derecognition criteria Hedging financial assets and liabilities are derecognized when the when the contractual rights to receive the cash flows generated by the assets have expired, or when the financial asset or liability is disposed of, and all associated risks and rewards of ownership have been substantially transferred.

7 – Equity investments

Initial recognition criteria Financial assets are initially recognized on the settlement date. Upon initial recognition, financial assets classified under this category are recognized at cost.

Classification and measurement criteria This item includes interest held in associate companies, which are carried at equity. Associate companies are enterprises in which the Group holds a share of 20% or more of the voting power and companies that, as a result of special legal bindings, such as shareholders’ agreements, must be considered as being subject to a significant influence.

Derecognition criteria Equity investments are derecognized when the when the contractual rights to receive the cash flows generated by the assets have expired, or when the equity investment is disposed of, and all associated risks and rewards of ownership have been substantially transferred.

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8 - Property, plant and equipment

Initial recognition criteria Tangible assets are initially recognized at cost, which includes the purchase price and all expenditures directly attributable to the acquisition of the item and to bring the asset to working conditions. Non-recurring maintenance costs entailing probable future economic benefits are included in the asset’s carrying amount, while other repairs and maintenance are charged to income.

Classification criteria Property, plant and equipment include land, “core” property, real estate investments, technical plants, furniture and equipment of any kind. Said tangible assets are held to be used for the production or provision of goods and services, to be rented out to third parties or for administrative use, and they are estimated to be used during more than one period. This item includes also assets associated with finance lease contracts, provided that the legal ownership of the assets rests within the leasing company.

Measurement criteria Tangible assets, including “non-core” property, are measured at cost, less any depreciation and impairment. Tangible assets are systematically depreciated throughout their useful life, along the straight-line method, with the exception of land, whether purchased separately or as part of the buildings standing on it, in that land has an unlimited life. In case its value is embedded in the value of the buildings built on it, in virtue of the application of the approach by components, land is considered a separate asset from the building; the separation between the land and the building values is based on the survey of independent experts. At each balance sheet or interim reporting date, if there is an indication that an asset may be impaired, the asset’s carrying amount is compared with its recoverable amount, that is equal to the lower of the asset’s fair value, net of sale costs, and its value in use, meaning the present value of future cash flows originated by the asset. Any write-downs are charged to income. Whenever the reasons of the impairment loss are no longer valid, write- backs are recognized, that must not exceed the asset’s value had no impairment taken place in the past, net of accrued depreciation. Restructuring costs of rented property are not capitalized in that throughout the life of the lease contract the tenant retains the control over the assets and may derive future economic benefits from them. Restructuring expenses for rented property are depreciated for a period of time no greater than the life of the lease contract.

Derecognition criteria A tangible asset is derecognized from the balance sheet at the time of disposal or when the asset is permanently withdrawn from use and no future economic benefits are expected from its disposal.

9 - Intangible assets

Classification criteria IAS 38 defines intangible assets as an identifiable non-monetary asset without physical substance. The asset, to qualify as intangible asset, must meet the following requirements: x it must be an identifiable resource x must be a resource controlled by the enterprise x must be a resource from which future economic benefits are expected. In the absence of one of the above characteristics, the expenditure to acquire or generate the item internally must be recognized as an expense when it is incurred. Intangible assets include goodwill and software applications to be used for several years. Goodwill included in intangible assets represents the positive difference between the cost of the acquisition and the fair value of the acquired assets and liabilities.

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Other intangible assets are recognized as such if identifiable and if originating from legal or contractual rights.

Initial recognition and measurement criteria An intangible asset can be recognized as goodwill when the positive difference between the cost of the acquisition (including accessory charges) and the fair value of the acquired assets and liabilities is representative of future economic benefits to be generated by the subsidiary (goodwill). Should this difference be negative (badwill) or in the assumption that goodwill is not justified by the anticipated future economic benefits generated by the subsidiary, the difference is directly recognized in the income statement. Goodwill is tested annually for impairment (or any time there is evidence of an impairment). To this end, the cash-generating unit to which the goodwill is allocated is identified. The impairment amount is calculated based on the difference between the goodwill’s carrying amount and its recoverable amount, if lower. Said recoverable amount is equal to the lower of the fair value of the cash- generating unit, net of selling costs, and its value in use. Any resulting write-down is charged to income. Other intangible assets are carried at cost including any accessory charges only if it is probable that the future economic benefits that are attributable to the asset will be realized and if the cost of the asset can be measured reliably. The cost of intangible assets is amortized on a straight-line basis over its useful life. If their useful life is not definable, amortization will not be applied, and periodically the assets will be tested for impairment. Restructuring expenses of rented buildings are amortized over a period not exceeding the rental contract life. At each balance sheet date, if there is evidence of impairment losses, the asset’s recoverable amount is estimated. The loss, which is charged to income, is equal to the difference between the asset’s carrying amount and its recoverable amount.

Derecognition criteria An intangible asset is derecognized from the balance sheet at the time of disposal and whenever no more future economic benefits are expected.

10 – Non-current assets and liabilities held for sale

Classification, recognition and measurement criteria This item includes non-current assets held for sale and discontinued operations, under IFRS 5. Said assets are measured at the lower of fair value less costs to sell and their carrying amount, and any asset and liability or profit and loss is stated separately in the financial statements as provided for under IFRS 5. Any gain or charges (net of fiscal effects) are stated in the income statement under a separate item.

11 – Current and deferred income tax

Classification, recognition and measurement criteria Current and deferred tax is recognized in compliance with the current tax regulations. Income tax is carried at income with the exception of taxes on items credited or debited directly to equity. Income tax provisions are calculated based on a projection of the current tax burden, together with deferred tax assets and liabilities. In particular, deferred tax assets and liabilities are determined based on temporary differences arising between the tax base of assets and liabilities and their carrying amounts in statutory accounts. Deferred tax assets are recognized when it is probable that they can be recovered, and the likelihood is assessed based on the ability of the concerned company and its Parent company, as a result of the exercise of the “tax consolidation” option, to generate positive taxable income. Deferred tax liabilities are always recognized, with the exception of higher assets under tax suspension represented by reserves under tax suspension, as it is reasonable to believe that no operations will be performed deliberately that would trigger taxation. Deferred tax assets and liabilities are

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accounted for in the balance sheet without offsets and with balances still open, by showing the former under the item "Tax assets" and the latter under the item "Tax liabilities”. Said items are systematically measured to account for any regulatory or tax rate changes, or any specific circumstance that may have occurred in the individual companies of the Group. Tax provisions are also adjusted to account for charges associated with already notified tax assessments or litigations with fiscal authorities.

12 – Provisions for risks and charges and termination benefits

1) Employee termination benefits

Classification, recognition and measurement criteria Employee termination benefits are recognized based on their actuarial value certified by external qualified actuaries.

The measurement is carried out by applying IAS 19, as termination benefits are comparable to “post- employment benefits” classified as “defined benefit”, whose already accrued amount must be projected to estimate the amount to be paid upon the termination of the employment relation and must then be discounted to net present value, along the so called “Projected Unit Credit Method”, to take account of the time that shall elapse before the actual payment is made.

In case of a defined benefit plan, under IAS 19, the enterprise is obliged to provide the agreed benefits to active and past employees. In practice, the actuarial and investment risks associated with the plan are underwritten by the enterprise, which might be obliged to increase the periodic contribution flows in case of adverse actuarial and investment risks affecting the employees’ benefit expectations.

The determination of the net present value is based on the projected future obligations based on statistical historical analyses and demographic curves and cash flows are discounted based on a market interest rate.

A new regulatory obligation has been introduced with the approval of the 2007 Budget Law, according to which the employees of companies with more than 50 employees must decide where to allocate the accrued portion of their termination benefits. If the employee does not expressly opt for a given solution by July 1st, 2007, the employer must allocate the unopted termination benefits following a specific priority list.

This entails a major change in the entity upon which the actuarial and investment risks fall for termination benefit portions after January 1st, 2007. For said quotas, risks have been transferred from the employer to the employee, while the employer shall still bear the risks associated with the benefits accrued up to 31.12.2006. As a result : x Termination benefits accrued as of January 1st, 2007 have been considered a Defined Contribution Plan (par. 7 IAS 19) both in case the employee opted for supplementary pension schemes, or for the INPS Treasury Fund. In this case, termination benefits shall be accounted for similarly to other types of contributions. x Termination benefits accrued as of December 31st, 2006: remain a Defined Benefit Plan (par. 7 IAS 19), giving rise to the need of actuarial estimates, which however, when compared with the calculation made up to now (as reported in the financial statements as at December 31st, 2006), shall not include the part associated with future salary increases. The difference resulting from the new calculation is treated as a “curtailment” (par. 109 IAS 19) and therefore carried at income in first half 2007 (including any actuarial gains or losses that had not been accounted for before under the corridor method).

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2) Provisions for risks and charges

Classification criteria Provisions for risks and charges include the provisions related to present obligations originated from past events where it is more likely than not that an outflow of resources will be required to settle the obligation, provided the amount can be reliably estimated. This item includes provisions for other long-term benefits and post-employment benefits covered by IAS 19 and provisions for risks and charges covered by IAS 37.

Initial recognition criteria A provision is recognized when: x An entity has a present obligation (legal or constructive) as a result of a past event; x It is probable that an outflow of economic benefits will be required to settle the obligation; x A reliable estimate can be made of the amount of the obligation. Should these conditions fail to be met, no provision is recognized.

Measurement criteria The amount recognized as a provision is the “best estimate” of the expenditure required to settle the obligation, namely the amount that an enterprise would rationally pay to settle the obligation at the balance sheet date or to transfer it to a third party at that time, as stated by IAS 37. Where the effect of the time value of money is material, the amount of a provision should be the present value of the expenditure expected to be required to settle the obligation. The obligations being provided for may have different maturities, therefore whenever deferment is long, the estimated amount is discounted to net present value based on a benchmark interest rate aligned with the interest rates prevailing at the time of the estimate. Recognized provisions are reviewed at each balance sheet date and adjusted to the current best estimate.

Derecognition criteria If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed; moreover, a provision is used only for expenditures for which the provision was originally recognized.

13 – Borrowings and Debt securities in issue

Initial recognition criteria These financial liabilities are first recognized when the raised amounts are received or the debt securities issued. The initial recognition is based on the fair value of liabilities, generally the consideration received or the issue price, plus any additional costs/revenues directly attributable to the single funding or issue operation and not refunded by the lending counterparty. Internal administrative costs are excluded.

Classification criteria Due to other banks, Due to customers and Debt securities in issue, which include Subordinated liabilities, include various forms of interbank and customer loans and proceeds raised through certificates of deposit and bonds outstanding, net of any repurchased amount. Also loans registered by lessees as part of financial leases are included.

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Measurement criteria After initial recognition, financial liabilities are measured at amortized cost along the effective interest rate method. Short-term liabilities are an exception, if the time factor is immaterial, and they are stated at their received value.

Derecognition criteria Financial liabilities are derecognized when expired or exhausted. Removal takes place also in case of repurchases of securities issued. The difference between the carrying amount of liabilities and the consideration paid is registered in the income statement.

14 – Trading liabilities

Initial recognition criteria This item includes the negative amount of trading derivative contracts, as well as of embedded derivatives. It also includes financial liabilities from technical overdrafts generated by securities trading.

Measurement criteria Gains and losses from changes in the fair value and/or from the sale of trading instruments are stated in the income statement.

15 - Financial liabilities measured at fair value

Classification criteria This item includes financial liabilities that the management decides to measure at fair value upon initial recognition, when this designation eliminates or considerably reduces the lack of consistency in measurement or recognition (at times called “accounting asymmetry”) which would otherwise stem from the measurement of assets or liabilities or from the recognition of the associated profit or loss along different approaches. It also includes financial liabilities which, together with financial assets, belong to a group whose management and performance is measures at fair value based on a documented risk management methodology or investment strategy.

Measurement criteria Profits and losses generated by a change in the fair value and or by the sale of these financial liabilities are carried at income.

16 – Foreign currency transactions

Initial recognition criteria Foreign currency transactions are initially recognized in the money of account, and their translation is based on the exchange rate prevailing at the date of transaction.

Measurement criteria At each balance sheet or interim reporting date, assets and liabilities in foreign currency are measured as follows: x Monetary assets and liabilities are translated at the exchange rate prevailing at the balance sheet date; x Non-monetary assets and liabilities measured at historical cost are translated at the exchange rate prevailing at the date of transaction; x Non-monetary assets and liabilities measured at fair value are translated at the prevailing at the balance sheet date.

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Translation differences resulting from the settlement of monetary assets or liabilities or from the translation of monetary assets and liabilities at different exchange rates from the initial translation rate, or from translation from the previous financial statements, are recognized in the income statement at the time of inception.

17 – Other information

1) Insurance assets and liabilities Insurance products are classified under Insurance contracts based on the materiality of the insurance risk embedded in said contracts; for said contracts IFRS 4 prescribes: x the recognition of gross premiums as revenues in the income statement; they include all amounts accrued during the financial year as a result of insurance contracts net of cancellations; similarly, premiums ceded to reinsurers are recognized as costs for the year; x the provision to mathematical reserves corresponding to the amount of obligations towards policyholders, analytically calculated for each contract along the prospective method based on demographic/financial assumptions currently used by the market.

2) Other liabilities – Impairment of other financial assets Liabilities classified under this item include write-downs of the estimates of possible expenditures associated with the credit risk linked to guarantees and commitments based on an analytical calculation. Said impairments are determined by applying the same criteria illustrated above for loans.

3) Treasury shares Treasury shares are deducted from the Shareholders’ equity. Similarly, their original cost and the profit or loss on their sale are recognized as changes in shareholders’ equity.

4) Revenue recognition Revenues are recognized when received or in any case when it is likely that future benefits will be received and that said benefits can be reliably measured. In particular, default interest, if provided for by the contract, is recognized in the income statement only when actually collected, and dividends are recognized in the income statement when their distribution is ratified.

5) Segment reporting Segment reporting refers to the modality used to represent the company’s economic and financial information by segments. A business segment is a distinguishable component of an enterprise that is engaged in providing a group of related products/services and that is subject to risks and returns that are different from those of other business segments. A geographical segment is a distinguishable component of an enterprise that is engaged in providing related products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments. Gruppo Banca Popolare Italiana decided to adopt the “business segment” as its primary reporting format. The identification of the business segments is consistent with the current accounting system based on an operating analysis of legal entities.

6) Methods to measure Fair Value for disclosure purposes The fair value of floating rate instruments has been approximated by assumption to the corresponding book value and therefore in case of loans it does not reflect the changes in loan quality because the credit risk impact is recognized separately by deducting the amount of loan loss provisions both from the fair value and from the book value.

207 Gruppo Banca Popolare Italiana

The fair value of short-term loans and payables is equal to the corresponding carrying value due to the short- term nature of said instruments. For fixed rate instruments, expected future cash flows are discounted to their net present value by using current interest rates. The credit risk impact is recognized separately by deducting the amount of loan loss provisions both from the fair value and from the book value.

7) Share based payments Employee share based payments are recognized in profit or loss, and offset by a corresponding increase in shareholders’ equity, based on the fair value of the financial instruments granted upon the assignment date, spreading the cost throughout the vesting period. In case of options, their fair value is calculated based on a model which takes into account both the exercise price and the time to expiration of the option, as well as the stock current price and their expected volatility, expected dividends and the risk-free interest rate, together with the plan’s specific characteristics. The valuation model measures the option and the likelihood of the terms upon which options are assigned separately. The combination of the two values produces the fair value of the assigned instrument. Any reduction in the number of assigned financial instruments is accounted for as a derecognition of part of them. In the BPI group, only the subsidiary Efibanca S.p.A. has in place share based payments.

Other aspects

Also in financial year 2007, similarly to the past, Gruppo Banca Popolare Italiana shall make use of the option under art. 82, paragraph 2, of Consob Resolution n. 11971 of May 14th, 1999 and following amendments, and instead of disclosing the second quarter report, it shall provide shareholders and the market with the Half-year report as at June 30th, 2007 within seventy-five days of the end of the quarter.

208 Gruppo Banca Popolare Italiana

NOTES TO THE CONSOLIDATED BALANCE SHEET

Shown below are some tables detailing the main account items, compared with the previous year’s data for the Balance sheet and first half 2006 data for the Income Statement.

Assets

Net financial assets held for trading

Financial assets/liabilities held for trading: breakdown by instrument

30/06/2007 31/12/2006

A. Cash assets Debt securities 1,519,958 1,486,093 Equity securities and UCITS units 391,426 497,672 Assets sold and not derecognized 310,065 1,112,260

Total A 2,221,449 3,096,025

B. Derivatives (net value) Financial derivatives -6,750 11,454 Credit derivatives -962 -4,853

Total B -7,712 6,601 Total A+B 2,213,737 3,102,626

Assets sold and not derecognized include securities underlying reverse repurchase agreements without repurchase option for the seller.

209 Gruppo Banca Popolare Italiana

Financial assets available for sale

Financial assets available for sale: breakdown by instrument

30/06/2007 31/12/2006

Quoted Unquoted Quoted Unquoted

Debt securities 45,078 19,341 63,368 Other debt securities 45,078 19,341 63,368 Equity securities 209,346 616,196 463,737 554,171 Measured at Fair Value 209,346 356,694 463,737 321,525 Measured at cost 259,502 232,646

Total 209,346 661,274 483,078 617,539

This item includes shareholdings totaling 822.8 millions which are not held for trading and do not qualify as controlling, associate or joint controlled interest. In particular, it includes shareholdings below 20%, controlling equity investments held in companies that as at June 30th, 2007 were not operational yet and in companies under liquidation. In the first six months of the year equity securities decreased by about 254 millions, as a result of the sale of some shareholdings mainly executed by the Parent company and by Efibanca, referring to Unipol Assicurazioni (138 millions), Generale de Santé (62.4 millions) and IGLI (24 millions) shares.

Financial assets held to maturity

Financial assets held to maturity: breakdown by instrument

30/06/2007 31/12/2006

Debt securities other 83,616 83,694

Total 83,616 83,694

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Due from other banks

Due from other banks: breakdown by instrument

30/06/2007 31/12/2006

Due from central banks 348,169 276,311 Compulsory reserve 346,785 275,554 Other 1,384 757 Due from other banks 3,141,939 4,557,161 Checking accounts and demand deposits 773,789 1,205,977 Time deposits 558,808 649,405 Other loans 1,809,342 2,701,779

Total 3,490,108 4,833,472

In addition to reverse repos, the above repos include also the purchase of securities through repo contracts entered into to cover system and customer repos.

Loans to customers

Loans to customers: breakdown by instrument

30/06/2007 31/12/2006

Checking accounts 7,986,110 7,641,432 Mortgages 11,728,202 10,607,254 Credit cards, personal loans and salary-guaranteed loans 3,200,447 2,564,572 Other transactions 3,567,752 3,655,868 Impaired assets 981,869 1,048,220 Assets sold and not derecognized 3,283,238 3,218,561

Total 30,747,618 28,735,907

Assets sold and not derecognized are basically made up of consumer loans, as well as residential and commercial mortgages, that were securitized between 2004 and 2007. The tables below show cash loans to customers as at June 30th, 2007, compared with December 31st, 2006.

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Cash and off-balance sheet exposures to customers: gross and net amounts

Individual Collective Gross exposure Net exposure impairments impairments

CASH EXPOSURE Non-performing loans 1,100,660 704,255 80,087 316,318 Watchlist loans 680,759 206,249 20,893 453,617 Restructured loans 48,475 5,860 42,615 Past dues 240,328 33,403 206,925 Country risk 29,468 X 29,468 Other assets 30,066,464 X 367,789 29,698,675

TOTAL 32,166,154 916,364 502,172 30,747,618

Non-performing loan coverage is 71.3% with respect to 70.9% on December 31st, 2006.

Individual Collective Gross exposure Net exposure impairments impairments

CASH EXPOSURE Non-performing loans 1,011,294 643,372 73,580 294,342 Watchlist loans 610,186 185,587 16,478 408,121 Restructured loans 109,869 6,891 102,978 Past dues 350,374 51,851 298,523 Country risk 42,313 X 42,313 Other assets 27,917,122 X 327,492 27,589,630

TOTAL 30,041,158 835,850 469,401 28,735,907

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Equity investments

Equity investments in jointly controlled companies (carried at equity) and in companies under a significant influence: shareholding information

Type of % Voting Consolidated Name Head office Shareholder relation share right % book value

significant Arca SGR S.p.A. Milan Banca Popolare Italiana 10.28 10.28 20,591 influence Banca Popolare di Crema 5.12 5.12 Banca Popolare di Cremona 5.31 5.31 significant Centrosim S.p.A. Milan Banca Popolare Italiana 5.00 5.00 6,649 influence Banca Popolare di Crema 4.85 4.85 Banca Popolare di Cremona 2.50 2.50 Cassa di Risparmio di Lucca 10.00 10.00 Pisa e Livorno significant Unione Fiduciaria S.p.A. Milan Banca Popolare Italiana 4.00 4.00 6,370 influence Banca Popolare di Crema 20.00 20.00 significant Cassa di Risparmio di Lucca Assipromos S.r.l. Livorno 34.00 34.00 influence Pisa e Livorno significant Cassa di Risparmio di Lucca Castimm S.r.l. Livorno 100.00 100.00 1,183 influence Pisa e Livorno significant Gruppo Finoa. Milan Banca Popolare Italiana 50.00 50.00 89,695 influence significant Royle West Ltd Dublin Banca Popolare Italiana 99.00 99.00 influence Bipielle Previdenza 1.00 1.00 Assicurativa significant Ali S.p.A. Roma Efibanca 28.35 28.35 4,800 influence significant Gruppo Comital Volpiano (TO) Efibanca 29.86 30.98 9,315 influence Efibanca Palladio Finanziaria significant Milan Efibanca 50.00 50.00 5,197 SGR S.p.A. influence significant Tortella S.p.A. Ortona (CH) AB Capital 21.51 21.51 1,095 influence significant CF Assicurazioni S.p.A. Rome Bipitalia Ducato 40.00 40.00 2,000 influence

Total 146,895

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Non-current assets held for sale and discontinued operations and associated liabilities

30/06/2007 31/12/2006

Discontinued operations 1,327,677 1,391,248 Financial assets held for trading 66,420 62,514 Financial assets available for sale 735 39,585 Due from other banks 3,213 1,740 Loans to customers 7,010 12,376 Property, plant and equipment 317,413 41,349 Intangible assets 38,277 28,604 Other assets 894,609 1,205,080

Total assets 1,327,677 1,391,248

Liabilities associated with discontinued operations 1,507,063 1,269,425 Due to other banks 240,173 34,367 Due to customers 233,521 209,379 Debt securities in issue 1,007 987 Provisions 64,486 40,873 Other liabilities 967,876 983,819

Total liabilities 1,507,063 1,269,425

Non-current assets and liabilities held for sale include equity investments, property, plant and equipment, intangible and financial assets, as well as liabilities, net of associated intragroup relations, relating to the subsidiaries under disposal Area Life International Assurance, Banca Bipielle Network, Bipielle Previdenza and to equity investments held by Efibanca as part of its merchant banking activities.

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Liabilities

Due to other banks

Due to other banks: breakdown by instrument

30/06/2007 31/12/2006

Due to central banks 394,356 Due to other banks 4,556,313 5,602,960 Checking accounts and demand deposits 427,077 1,414,747 Time deposits (including restricted checking accounts) 1,977,023 1,320,680 Loans 1,087,877 347,454 Liabilities associated with assets sold and not derecognized 1,046,288 2,505,777 Other liabilities 18,048 14,302

Total 4,556,313 5,997,316

Due to customers

Due to customers: breakdown by instrument

30/06/2007 31/12/2006

1. Checking accounts and demand deposits 12,487,093 12,725,353 2. Time deposits and restricted checking accounts 235,245 101,865 3. Third party assets under administration 4,052 4,955 4. Loans 145,155 155,765 6. Liabilities associated with assets sold and not derecognized 2,654,968 2,596,120 7. Other liabilities 20,092 26,793

Total 15,546,605 15,610,851

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Debt securities in issue

Debt securities in issue: breakdown by instrument

30/06/2007 31/12/2006

Quoted Securities 1,472,497 1,583,160 Bonds 1,472,497 1,583,160 structured 1,434,391 1,509,369 other 38,106 73,791

Unquoted Securities 15,793,501 14,944,084 Bonds 13,777,222 12,943,146 structured 1,898,043 1,953,109 other 11,879,179 10,990,037 Other securities 2,016,279 2,000,938 structured 35,854 35,854 other 1,980,425 1,965,084

Total 17,265,998 16,527,244

Debt securities in issue classified under quoted securities are traded on the MTO (Mercato Telematico Organizzato – Regulated Electronic Market).

216 Gruppo Banca Popolare Italiana

NOTES TO THE CONSOLIDATED INCOME STATEMENT

Interest income and expense

Interest income and similar revenues: breakdown

Impaired Performing financial assets 30/06/2007 30/06/2006 financial Other assets Total Total assets Debt securities Loans

Financial assets held for trading 18,135 18,736 36,871 73,947 Financial assets measured at fair 344 value Financial assets available for sale 7,040 7,040 38,758 Financial assets held to maturity 1,825 1,825 1,087 Due from other banks 72,744 7,754 80,498 59,260 Loans to customers 856,711 4,263 14,139 875,113 684,531 Hedging derivatives 13,272 Financial assets sold and not 34,860 57,475 92,335 55,317 derecognized Other assets 4,402 4,402 3,353

Total 61,860 986,930 4,263 45,031 1,098,084 929,869

Interest income on assets sold and not derecognized refers to residential and commercial mortgages securitized as of financial year 2004. Note, that in 2007 interest accrued on securities underlying repurchase agreements, totaling 34.8 millions, has been reclassified under interest on financial assets sold and not derecognized.

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Interest expense and similar charges: breakdown

Other Payables Securities 30/06/2007 30/06/2006 liabilities

Due to other banks 100,793 100,793 83,784 Due to customers 140,377 48,880 189,257 63,483 Debt securities in issue 333,197 333,197 368,789 Trading liabilities 3,156 2,440 5,596 3,933 Financial liabilities associated with assets sold 6,410 6,410 and not derecognized Other liabilities and provisions 3,793 3,793 971 Hedging derivatives 20,516 20,516 7,924

Total 241,170 336,353 82,039 659,562 528,884

Commission income and expense

Commission income: breakdown

30/06/2007 30/06/2006 a) guarantees given 8,879 8,818 c) management, brokerage and advisory services: 126,593 124,085 1. trading of financial instruments 4,401 5,596 2. currency trading 2,965 3,015 3. managed accounts 65,368 70,090 4. securities administration and custody 2,634 4,679 5. custodian bank 4,316 4,735 6. securities placement 9,646 14,626 7. order collection 8,809 10,272 8. advisory services 1,921 1,545 9. distribution of third party services 26,533 9,527 d) payment and collection services 30,169 34,205 e) securitization servicing 2,393 1,866 h) other services 62,550 71,690

Total 230,584 240,664

“Other services” include commissions on cash reserve checking of 24.3 millions, on loans of 14.2 millions and on checking accounts and deposits of 3.1 millions.

218 Gruppo Banca Popolare Italiana

Commission expense: breakdown

30/06/2007 30/06/2006 a) guarantees given 198 310 b) credit derivatives 721 742 c) management, brokerage and advisory services: 16,834 18,353 1. trading of financial instruments 3,693 2,432 2. currency trading 8 60 3. managed accounts 1 4. securities administration and custody 1,708 2,205 5. placement of financial instruments 11,401 13,507 6. off-branch sale of financial instruments, products and services 24 148 d) payment and collection services 7,227 7,441 e) other services 17,688 13,124

Total 42,668 39,970

“Other services” include commissions on intermediations of 3.9 millions and on loans of 2.1 millions.

Net trading income

Net trading income: breakdown

Net income Capital gains Trading income Capital losses Trading losses 30/06/2007 or loss (A) (B) (C) (D) (A+B)-(C+D)

Trading financial assets 28,553 23,429 -11,567 -13,875 26,540 Debt securities 12,369 9,131 -8,319 -9,852 3,329 Equity securities 5,485 10,075 -606 -4,023 10,931 UCITS units 10,151 4,203 -2,642 11,712 Other 548 20 568 Trading liabilities 5 5 Other 5 5 Other financial assets and liabilities: XXXX 2,516 exchange rate differences Derivatives 198,413 424,375 -184,243 -427,371 6,754 Financial derivatives: 186,196 424,141 -183,543 -427,332 -4,958 - on debt securities and interest rates 136,789 280,275 -133,152 -255,202 28,710 - on equity securities and indices 49,407 143,866 -50,391 -172,110 -29,228 - on currencies and gold XXXX -4,420 - Other -20 -20 Credit derivatives 12,217 234 -700 -39 11,712 TOTAL 226,966 447,804 -195,810 -441,241 35,815

219 Gruppo Banca Popolare Italiana

Net income Capital gains Trading income Capital losses Trading losses 30/06/2006 or loss (A) (B) (C) (D) (A+B)-(C+D)

Trading financial assets 14,245 47,959 -13,916 -40,245 8,043 Debt securities 2,055 15,320 -3,358 -30,045 -16,028 Equity securities 4,638 23,833 -6,808 -9,885 11,778 UCITS units 7,524 8,806 -3,750 -215 12,365 Other 28 -100 -72 Trading liabilities 1,262 185 4,646 6,093 Debt securities 1,262 185 4,646 6,093 Other financial assets and liabilities: XXXX 7,209 exchange rate differences Derivatives 114,612 504,434 -22,262 -580,085 -150 Financial derivatives: 104,811 492,967 -17,587 -567,831 -4,489 - on debt securities and interest rates 102,396 307,759 -8,323 -371,036 30,796 - on equity securities and indices 2,415 181,520 -9,264 -196,736 -22,065 - on currencies and gold XXXX -16,849 - Other 3,688 -59 3,629 Credit derivatives 9,801 11,467 -4,675 -12,254 4,339

TOTAL 130,119 552,578 -36,178 -615,684 21,195

G&A expenses

Personnel expenses: breakdown

30/06/2007 30/06/2006

Employees under payroll 275,018 247,981 Salaries and wages 200,459 175,549 Social security and pension expenses 58,226 46,902 Provisions for employee termination benefits 3,463 13,575 Provisions for company retirement funds 1,612 2,756 Payments to external supplementary pension funds 2,666 2,630 Costs associated with share-based payments 1,236 Other employee benefits 8,592 5,333 Other staff 1,221 3,329 Executives 3,939 3,058

Total 280,178 254,368

220 Gruppo Banca Popolare Italiana

Other G&A expenses

30/06/2007 30/06/2006

Indirect taxes and duties 37,134 31,730 Rent and lease expenses 47,164 56,689 Maintenance and management expenses 20,856 17,247 Cleaning of premises 3,230 3,117 Energy, water and heating 8,188 6,522 Print-outs and office supplies 1,208 2,188 Postage and telephone expenses 20,440 15,901 Security 2,311 1,957 Transportation 5,546 5,388 Insurance premiums 5,205 4,694 Advertising, promotion and publishing initiatives 14,154 8,095 Entertainment expenses 211 923 Association fees 2,641 1,516 Contributions to organizations and associations 2,132 2,463 Subscriptions to newspapers, magazines and other publications 721 782 Fees to external professionals 74,956 35,528 Information service and outsourcing expenses 8,498 4,899 Statutory auditor fees 760 504 Other expenses 20,664 16,263

Total 276,019 216,406

Other operating income and expense

Other operating income and expense: breakdown

30/06/2007 30/06/2006

Rent and lease income 5,118 4,053 Charges attributable to third parties 54,260 42,080 Other income 70,389 93,856 Other expense -45,027 -62,841

Total 84,740 77,148

This item shows a positive balance of 84.7 millions, up by 7.6 millions (+9.8%) with respect to June 2006, mainly driven by the reduction in other operating charges (amounting to 17.8 millions). The latter include the 18.3 million cost for the early termination of a contract between BPI and Aviva as a result of the new bancassurance agreements entered into by Gruppo Banco Popolare, charges for the purchase of collective insurance policies on consumer credit transactions by the subsidiary Bipitalia Ducato of 10.3 millions, charges for interest repayment of 2.7 millions and contingent liabilities of 4.5 millions. Note, that the previous year

221 Gruppo Banca Popolare Italiana

figure had been negatively affected by the loss of about 12 millions incurred by the associate Bipitalia Gestioni for the disposal of an investment in structured notes and by non-recurring charges of about 9 millions for the completion of non-core property initiatives by the subsidiary Basileus. Other charges attributable to third parties include the recovery of insurance premiums paid by the subsidiary Bipitalia Ducato as part of its consumer credit activity of 26.5 millions; other income includes a customer expense recovery of 39.9 millions, revenues from securities associated with securitizations of 6.1 millions and contingent assets of 6.7 millions.

Income (loss) after tax from discontinued operations

Breakdown of item “Income (loss) after tax from discontinued operations”

30/06/2007 30/06/2006

Asset/Liability groups Revenues 601,239 26,308 Charges -610,099 -46,691 Profit (loss) on disposal 43 -8,840 Taxes and duties -10,624 -2,295

Profit/(loss) -19,441 -31,518

This item shows a negative balance of 19.4 millions, which includes revenues and charges, net of the associated intragroup relations, of associates under disposal Bipielle Net, Bipielle Previdenza, Area Life International Assurance and some subsidiaries held by Efibanca as part of its merchant banking activity (Glass Italy BV and Gruppo Acque Minerali Riunite).

Earnings per share

30/06/2007 30/06/2006

Consolidated net income for the period (in thousand euro) 17,830 91,969 Weighted average of common outstanding shares 677,728,394 479,849,756 Net earning per share (in euro) 0.0263 0.1917 Weighted average of common outstanding shares + warrant 790,148,863 592,270,525 Diluted net earning per share (in euro) 0.0226 0.1553

222 Gruppo Banca Popolare Italiana

SEGMENT REPORTING

This chapter illustrates the consolidated results subdivided by business segment, in compliance with IAS 14. In particular, Gruppo BPI opted for the following representation format: x Primary reporting: breakdown of consolidated results by business segment x Secondary reporting: breakdown of results by geographical segment. Primary segment reporting

Definition of segment results

Business segments have been formed based on the classification of the various group companies depending on the prevailing activity performed by each of them. As a result, the results of each segment stem from the aggregation of the statutory financial statements of the legal entities of belonging.

Makeup of business segments

The identified segments are shown below: x Banca Rete (banking network) x Asset Management x Investment Bank x Operating companies x Real Estate x Other business activities.

Shown below is a detailed list of the group legal entities that contribute to the generation of the operating results of each segment:

Investment Operating Other business Banca rete Asset Management Real Estate Bank companies activities

Banca Popolare Italiana Bipitalia Gestioni SGR Efibanca Bipitalia Ducato Bipielle Real Bipielle ICT S.p.A. Soc.Coop. S.p.A. S.p.A. S.p.A. Estate S.p.A. Bipitalia Broker S.r.l. Cassa di Risparmio di Lucca Pisa Bipitalia Alternative AB Capital Critefi Sim S.p.A. Basileus Bipielle International Livorno S.p.A. SGR S.p.A. S.p.A. Bipielle S.p.A. Holding SA Banca Pop. di Crema S.p.A. Bipielle Fondi Consumer ABS Nadir S.r.l. Banca Pop. di Lodi Banca Pop. di Cremona S.p.A. Immobiliari SGR S.p.A. 2004 Sirio S.r.l. Capital Company Banca Caripe S.p.A, Nazionale Fiduciaria Bipielle Lido dei L.L.C. Banca Popolare di Mantova S.p.A. Consumer ABS Coralli S.r.l. Banca Pop. di Lodi S.p.A. Italfortune International 2005 Capital Company II Banca Valori S.p.A. Advisors S.A. L.L.C. Bipielle Società di Gestione del BPI International UK Ltd Banca Popolare di Lodi Credito S.p.A. Capital Company III Bipielle Bank (Suisse) S.A. L.L.C. Tiepolo Finance S.r.l. Soluzioni Finanziarie Tiepolo Finance II S.r.l. S.p.A. Bipitalia Residential RMBS 2004 Easynetwork S.p.A. Bipitalia Residential RMBS 2005 Efigestioni SGR S.p.A. Bipitalia Residential CMBS 2005 BPI Servizi S.r.l. Bipielle Mortgages S.r.l.

223 Gruppo Banca Popolare Italiana

Segment results as at 30/06/07: Income statement

Shown below is a summary of the operating results for first half 2007 and first half 2006.

Income statement as at Asset Invest. Operating Intercompany Banca Rete Real Estate Other Consol. 30/06/2007 Mng Bank companies trans.

Net interest income 340,261 800 31,727 73,383 -10,853 -1,411 4,615 438,522 Net commission income 160,875 18,651 10,209 896 -97 1,322 -3,940 187,916 Net trading income 21,746 557 1,309 11,482 721 35,815 Other costs/revenues 265,542 960 83,233 -1,581 989 -239,999 109,144 Total income 788,424 20,968 126,478 84,180 -9,961 632 -239,324 771,397 Write-downs -132,519 -17,381 -32,096 -682 7,281-175,397 Net financial income 655,905 20,968 109,097 52,084 -10,643 632 -232,043 596,000 Net financial and insurance 655,905 20,968 109,097 52,084 -10,643 632 -232,043 596,000 income Operating costs and other -521,660 -7,281 -4,377 -12,198 12,611 19,004 -14,299 -528,200 costs/revenues Income (loss) before tax from 134,245 13,687 104,720 39,886 1,968 19,636 -246,342 67,800 continuing operations

Income statement as at Asset Invest. Operating Intercompany Banca Rete Real Estate Other Consol. 30 June 2006 Mng Bank companies trans.

Net interest income 323,075 577 32,562 52,792 -12,535 192 4,322 400,985 Net commission income 154,207 20,081 15,830 1,887 -32 873 7,848 200,694 Net trading income 3,431 326 5,153 4,804 2,501 4,980 21,195 Other costs/revenues 208,904 980 8,047 95,430 -179,853 133,508 Total income 689,617 21,964 61,592 59,483 -12,567 98,996 -162,703 756,382 Write-downs -33,474 -1,689 -20,849 -3,022 -59,034 Net financial income 656,143 21,964 59,903 38,634 -15,589 98,996 -162,703 697,348 Net financial and insurance 656,143 21,964 59,903 38,634 -15,589 98,996 -162,703 697,348 income Operating costs and other -436,252 -18,267 -11,043 -4,540 -2,241 10,302 26,339 -435,702 costs/revenues Income (loss) before tax from 219,891 3,697 48,860 34,094 -17,830 109,298 -136,364 261,646 continuing operations

224 Gruppo Banca Popolare Italiana

Segment results as at 30/06/2007: Balance sheet

Shown below is a summary of assets and liabilities as at June 30th, 2007 and December 31st, 2006.

Intercompany Balance sheet as at Banca Asset Invest. Operating Real Other trans. and Consol. 30/06/2007 Rete Mng Bank companies Estate other

Due from other banks 10,928,879 32,482 265,567 244,874 304 39,173 -8,021,171 3,490,108 Customer loans 24,982,928 22,344 4,222,758 5,381,403 621 -3,862,436 30,747,618 Equity investments 5,177,978 2,633 89,668 6,987 34,053 209,283 -5,373,707 146,895 Other assets 8,495,247 77,834 620,730 1,250,457 946,752 1,432,603 -1,597,425 11,226,198

Total assets 49,585,032 135,293 5,198,723 6,883,721 981,109 1,681,680 -18,854,739 45,610,819 Due to other banks 8,817,679 19,322 1,115,509 3,404,019 464,340 31,940 -9,296,496 4,556,313 Due to customers 16,590,974 4,717 11,465 1,121,968 543 -2,183,062 15,546,605 Debt securities in issue 15,439,436 2,917,049 996,650 623,709 -2,710,846 17,265,998 Shareholders’ equity 6,006,983 80,520 774,996 376,409 409,766 292,879 -4,404,392 3,537,161 Other liabilities 2,729,960 30,734 379,704 984,675 107,003 732,609 -259,943 4,704,742

Total liabilities 49,585,032 135,293 5,198,723 6,883,721 981,109 1,681,680 -18,854,739 45,610,819

Intercompany Balance sheet as at Banca Asset Invest. Operating Real Other trans. and Consol. 31 December 2006 Rete Mng Bank companies Estate other

Due from other banks 11,613,345 23,971 161,643 223,266 2,866 12,819 -7,204,438 4,833,472 Customer loans 23,538,000 39,221 4,080,910 4,713,303 -3,635,527 28,735,907 Equity investments 5,095,237 2,633 95,648 4,084 37,784 248,642 -5,332,860 151,168 Other assets 9,486,621 80,517 919,539 1,199,929 993,938 1,440,929 -1,054,949 13,066,524

Total assets 49,733,203 146,342 5,257,740 6,140,582 1,034,588 1,702,390 -17,227,774 46,787,071 Due to other banks 9,550,669 22,888 1,217,062 2,694,214 512,021 87,674 -8,087,212 5,997,316 Due to customers 16,414,668 7,303 23,902 1,119,795 428 -1,955,245 15,610,851 Debt securities in issue 14,448,818 2,782,173 996,650 621,998 -2,322,395 16,527,244 Shareholders’ equity (1) 6,445,283 79,708 813,691 374,798 409,766 284,224 -4,411,784 3,995,686 Other liabilities 2,873,765 36,443 420,912 955,125 112,801 708,066 -451,138 4,655,974

Total liabilities 49,733,203 146,342 5,257,740 6,140,582 1,034,588 1,702,390 -17,227,774 46,787,071 (1) Not inclusive of minority interest and net income for the period.

225 Gruppo Banca Popolare Italiana

Secondary segment reporting

Gruppo BPI adopted the breakdown of results by Geographical Area as secondary segment reporting. Gruppo BPI is present on almost the entire domestic market, with a special market penetration in the center-north areas. As a result, the identified segments are: Italy, Abroad. Legal entities Banca Pop. di Lodi Capital Company L.L.C, Banca Pop. di Lodi Capital Company II L.L.C, Banca Pop. di Lodi Capital Company III L.L.C, Italfortune International Advisors S.A., Bipielle Bank (Suisse) S.A., Bipielle International Holding S.A., BPI International (UK) Ltd contribute to the operating income of the “Abroad” segment. The remaining Legal entities belong to the “Italy” segment.

Italy Abroad Group Total

Net interest income 444,038 -2,846 441,192 Total income 771,548 3,020 774,568 Net financial income 596,254 2,916 599,170 Net financial and insurance income 596,254 2,916 599,170 Operating costs and other -511,900 -3,999 -515,899 Income (loss) before tax from continuing operations 84,354 -1,083 83,271

TRANSACTIONS WITH RELATED PARTIES

In order to guarantee a full regulatory compliance, the companies of Gruppo BPI adopted procedural and substantial rules with regard to so called “transactions with related parties”, providing for the participation in a Group arrangement aiming at keeping the above transactions constantly under control. To this end, a set of board regulations was adopted and a Group database is to be implemented, fed with statements made by single corporate officers. The Board of Directors of the Group companies are periodically informed of the finalization of transactions with related parties, through reports highlighting the aggregates (in case transactions are ordinary and material), or individual amounts in case of uncommon or atypical transactions. It is important to underline that the Group decided conservatively to include both the parties that act as the “related party” of the company itself, and entities that are a “related party” at Group level among the “related parties” of each Group company; the data illustrated in the tables below are based on this approach. With regard to relations with related parties under IAS 24, art. 2359 “Subsidiary and associate companies” of the civil code and Consob regulation n. 11971/99 (and its amendment through Consob communication n. 14.990 of April 14th, 2005), we point out that the transactions performed over the period with said parties fall within the normal course of business of the company for which the transactions have been executed and that they have been performed regularly over time and at arm’s length conditions.

226 Gruppo Banca Popolare Italiana

Related party transactions

The table below summarizes the balance sheet and income statement relations outstanding as at June 30th, 2007.

Description Amount

Credit line 1,702,658 Credit line utilization 1,452,136 Transactions on increasing credit line proposals 178,176 Transactions on decreasing credit line proposals 801,286 Collaterals received 16,593 Guarantees received 1,730,301 Collaterals given 11,721 Guarantees given 1,252,127 Commitments - extended 72,363 Commitments - utilized 60,048 Direct customer funds 641,629 Indirect customer funds 820,483 Interest income 19,187 Interest expense 2,889 Commission income 622 Commission expense 1 G&A expenses (expense recovery) 387 Other liabilities 427 Other assets 31,331

With respect to the corresponding account items, the above loans account for 4.72% of loans to customers, direct customer funds for 1.96%, interest income for 1.75%, interest expense for 0.44%, commission income for 0.27% and G&A expenses for 0.14%.

227

AUDITOR’S REPORT

Renzo Piano - Head office of Banca Popolare di Lodi ERNST & YOUNG ERNST & YOUNG

ATTACHMENTS

Renzo Piano - Head office of Banca Popolare di Lodi Gruppo Banca Popolare Italiana

Parent Company’s Statutory Financial Statements

Banca popolare italiana soc. Coop. – balance sheet

Assets 30/06/2007 31/12/2006

10. Cash and cash equivalents 99,315,446 171,629,854 20. Financial assets held for trading 3,623,241,606 4,206,890,999 40. Financial assets available for sale 599,704,824 732,393,022 50. Financial assets held to maturity 82,878,007 82,980,125 60. Due from other banks 7,922,987,723 8,435,713,658 70. Loans to customers 12,122,231,495 11,878,206,076 80. Hedging derivatives 57,143,114 45,853,096 100. Equity investments 5,015,463,263 4,932,721,435 110. Property, plant and equipment 83,669,975 86,990,162 120. Intangible assets 413,618,396 416,684,960 of which: - goodwill 411,943,886 414,746,760 130. Tax assets 682,755,317 687,045,188 a) current 102,595,361 105,030,564 b) deferred 580,159,956 582,014,624 140. Non-current assets held for sale and discontinued operations 130,832,892 130,832,892 150. Other assets 955,525,990 1,231,285,842

Total assets 31,789,368,048 33,039,227,309

234 Gruppo Banca Popolare Italiana

Liabilities and Shareholders’ equity 30/06/2007 31/12/2006

10. Due to other banks 5,102,090,735 6,637,220,740 20. Due to customers 9,572,177,622 9,429,391,742 30. Debt securities in issue 11,279,218,096 10,573,917,304 40. Trading liabilities 410,130,589 436,241,008 60. Hedging derivatives 88,639,977 102,372,088 80. Tax liabilities 61,169,644 62,307,942 a) current 8,235,885 10,040,811 b) deferred 52,933,759 52,267,131 100. Other liabilities 863,580,271 1,047,023,659 110. Employee termination benefits 87,533,383 89,578,366 120. Provisions for risks and charges 224,634,849 289,953,455 a) retirement and similar obligations 106,396,482 91,701,725 b) other provisions 118,238,367 198,251,730 130. Valuation reserves 10,028,092 -4,245,563 150. Common stock equivalents 3,047,950 3,048,000 160. Reserves -264,609,730 -176,746,232 170. Share premiums 2,668,668,623 2,682,266,751 180. Share capital 2,047,082,517 2,047,081,617 190. Treasury shares (-) -458,906,711 -78,720,010 200. Net income (loss) for the year (+/-) 94,882,141 -101,463,558

Total liabilities and Shareholders’ equity 31,789,368,048 33,039,227,309

235 Gruppo Banca Popolare Italiana

Banca popolare italiana soc. Coop. – income statement

30/06/2006 30/06/2007 30/06/2006 pro-forma (*)

10. Interest income and similar revenues 583,937,132 489,655,833 492,567,273 20. Interest expense and similar charges -464,825,811 -358,160,424 -360,758,165 30. Net interest income 119,111,321 131,495,409 131,809,108 40. Commission income 95,668,796 97,573,209 97,574,340 50. Commission expense -13,601,336 -14,248,883 -14,591,809 60. Net commission income 82,067,460 83,324,326 82,982,531 70. Dividend and similar income 244,439,829 92,212,242 171,790,070 80. Net trading income 18,644,915 -893,794 -959,571 90. Fair value adjustments in hedge accounting 4,429,396 9,979,335 9,979,335 100. Profit/(loss) on sale or repurchase of: 13,191,250 14,031,652 14,038,486 a) loans 11,558,605 11,558,605 b) Financial assets available for sale 11,978,527 571,462 578,296 d) financial liabilities 1,212,723 1,901,585 1,901,585 120. Total income 481,884,171 330,149,170 409,639,960 130. Net write-downs/write-backs on impairment of: -105,772,435 -30,702,889 -30,702,889 a) loans -106,546,868 -26,208,980 -26,208,980 b) Financial assets available for sale 1,714 -4,493,909 -4,493,909 d) other financial transactions 772,719 140. Net financial income 376,111,736 299,446,281 378,937,071 150. G&A expenses: -336,062,462 -267,722,067 -273,221,237 a) Personnel expenses -142,003,141 -129,808,264 -131,043,041 b) other G&A expenses -194,059,321 -137,913,803 -142,178,196 160. Net provisions for risks and charges -27,749,300 -14,307,216 -15,278,135 170. Impairment/write-backs on property, plant and equipment -9,046,858 -7,450,230 -7,793,407 180. Impairment/write-backs on intangible assets -2,174,510 -49,614 -49,614 190. Other operating income/(expense) 27,938,584 45,047,493 44,515,073 200. Operating costs -347,094,546 -244,481,634 -251,827,320 210. Profit/(loss) on equity investments -64,666 10,962,070 230. Goodwill impairment -15,493,707 -15,493,707 240. Profit/(loss) on disposal of investments 9,748 3,114 36,226,114 250. Income (loss) before tax from continuing operations 29,026,938 39,409,388 158,804,227 260. Tax on income from continuing operations 65,509,283 14,027,217 1,286,532 270. Income (loss) after tax from continuing operations 94,536,221 53,436,605 160,090,759 280. Income/(loss) after tax from discontinued operations 345,920 26,622,696 2,316,827 285. Minority interest -17,866,339 290. Net income/(loss) for the period 94,882,141 80,059,301 144,541,247 (*) Pro-forma data include the impact of the merger of the subsidiaries Reti Bancarie and Bipielle Investimenti into Banca Popolare Italiana

236 Banca popolare italiana soc. Coop. – statement of changes in shareholders’ equity

Changes over the year Allocation of net income from previous year Net income Opening Changes Opening Shareholders’ as at June 30th, 2007 Changes in Shareholders’ equity (loss) for the balance as in opening balance as equity as in euro period at 31-12-2006 balance at 1-1-2007 at 30/06/2007 Changes in 30/06/2007 reserves Changes in Dividends Issue of Special Derivatives Purchase of Common Other Stock Reserves and other new dividend on treasury treasury shares stock changes options allocations shares distributions shares equivalents

Share capital: 2,047,081,617 2,047,081,617 900 2,047,082,517 a) common shares 2,047,081,617 2,047,081,617 900 2,047,082,517 b) other shares Share premiums 2,682,266,751 2,682,266,751 -13,600,059 1,931 2,668,668,623 , Reserves: -176,746,232 -176,746,232 -87,863,499 -264,609,731 a) retained earnings -228,754,805 -228,754,805 -87,863,499 -316,618,304 b) other 52,008,573 52,008,573 52,008,573

Valuation reserves: -4,245,563 -4,245,563 14,273,655 10,028,092 a) available for sale -22,510,940 -22,510,940 14,273,655 -8,237,285 b) cash flow hedging c) revaluation reserves 18,265,377 18,265,377 18,265,377

Common stock equivalents 3,048,000 3,048,000 -50 3,047,950

Treasury shares -78,720,010 -78,720,010 230,968 -380,417,669 -458,906,711

Net income (loss) for the year -101,463,558 -101,463,558 101,463,558 94,882,141 94,882,141 Gruppo BancaPopolareItaliana

Shareholders’ equity 4,371,221,005 4,371,221,005 14,273,655 233,749 -380,417,669 94,882,141 4,100,192,881 Gruppo BancaPopolareItaliana

Changes over the year Allocation of net income from previous year Net income Opening Changes Opening Shareholders’ as at June 30th, 2006 Changes in Shareholders’ equity (loss) for the balance as in opening balance as equity as in euro period at 31-12-2005 balance at 1-1-2006 at 30/06/2006 Changes in 30/06/2006 reserves Changes in Derivativ Dividends Purchase of Special Issue of new Common es on Other Stock Reserves and other treasury dividend shares stock treasury changes options allocations shares distributions equivalents shares

Share capital: 1,456,497,609 1,456,497,609 -300,000 1,456,197,609 a) common shares 1,456,497,609 1,456,497,609 -300,000 1,456,197,609 b) other shares Share premiums 2,487,323,971 2,487,323,971 -512,493,078 -114,481 -739,800 1,973,976,612 , Reserves: 76,078,510 76,078,510 -98,610,795 -22,532,285 a) retained earnings -72,897,713 -72,897,713 -1,643,145 -74,540,858 b) other 148,976,223 148,976,223 -96,967,650 52,008,573

Valuation reserves: -5,597,553 -5,597,553 -39,998,532 -45,596,085 a) available for sale -23,862,930 -23,862,930 -39,998,532 -63,861,462 b) cash flow hedging c) revaluation reserves 18,265,377 18,265,377 18,265,377

Common stock equivalents 3,048,000 3,048,000 3,048,000

Treasury shares -89,821,674 -89,821,674 11,672,869 -301,651 -78,450,456

Net income (loss) for the year -611,103,873 -611,103,873 611,103,873 80,059,301 80,059,301

Shareholders’ equity 3,316,424,990 3,316,424,990 -39,998,532 11,558,388 -1,341,451 80,059,301 3,366,702,696 Gruppo Banca Popolare Italiana

Banca popolare italiana soc. Coop. – statement of cash flows

DIRECT METHOD 30/06/2007 30/06/2006

A. OPERATING ACTIVITIES 1. Cash flow from operations 239,623,321 120,878,749 - Interest income collected -+ 583,937,132 512,712,833 - Interest expense paid -- -464,825,811 -290,914,424 - Dividend and similar income 244,439,829 92,212,242 - Net commission income -+/- 82,067,460 61,551,326 - Personnel expenses -141,995,316 -109,997,023 - Other costs -- -157,793,760 -142,873,945 - Other revenues -+ 27,938,584 -28,435,173 - Taxes and duties -- 65,509,283 217 - costs/revenues after tax from discontinued operations -+/- 345,920 26,622,696 2. Cash flow from / used in financial assets 1,159,315,394 1,461,123,664 - Financial assets held for trading 583,649,393 -359,077,245 - Financial assets measured at fair value 284,066,800 - Financial assets available for sale 133,462,631 -172,667,225 - Loans to customers -350,572,287 1,329,496,487 - Due from other banks: on demand 549,186,234 19,722,000 - Due from other banks: other loans -36,460,299 586,450,630 - Other assets 280,049,722 -226,867,783 3. Cash flow from / used in financial liabilities -991,420,672 -1,622,658,446 - Due to other banks: on demand -210,956,700 -1,072,175,000 - Due to other banks: other payables -1,324,173,305 -867,348,397 - Due to customers 142,785,880 502,612,221 - Debt securities in issue 691,568,681 -673,791,179 - Trading liabilities -26,110,419 -35,851,598 - Other liabilities -264,534,809 523,895,507 A Net cash flow from / used in operating activities 407,518,043 -40,656,033 B. INVESTING ACTIVITIES 1. Cash flow from: 9,748 639,222 - Sale/redemption of financial assets held to maturity 636,108 - Sale of business lines 9,748 3,114 2. Cash flow used in: -99,656,398 -2,523,070 - Purchase of equity investments -82,741,827 -634,805 - Purchase of financial assets held to maturity -11,187,900 - Purchase of property, plant and equipment -5,726,671 -1,838,651 - Purchase of intangible assets -49,614 B Net cash flow from / used in investing activities -99,646,650 -1,883,848 C. FINANCING ACTIVITIES - Issue/purchase of treasury shares -380,185,751 11,071,218 - Issue/purchase of common stock equivalents -50 C Net cash flow from / used in financing activities -380,185,801 11,071,218 D = A+/-B+/- C NET CASH FLOW GENERATED / USED IN THE PERIOD -72,314,408 -31,468,663

239 Gruppo Banca Popolare Italiana

RECONCILIATION

E Cash and cash equivalents at the beginning of period 171,629,854 166,617,721 D Total cash flow generated / used in the period -72,314,408 -31,468,663 F Cash and cash equivalents: impact from exchange rate changes G= E+/-D+/-F Cash and cash equivalents at the end of period 99,315,446 135,149,058

240 Gruppo Banca Popolare Italiana

Significant shareholdings under art.126 of consob regulation n. 11971 of 14/05/1999 (*)

(Shareholdings exceeding 10% of share capital represented by shares or quotas with voting rights in unlisted companies, held either directly or indirectly for any reason) (*) = the list does not include companies stated under item 100 of assets (Equity investments) already shown in this Half-year Report.

Percentage share Type of Investee company Investor ownership Direct Indirect

Alfa Iota 2002 S.r.l. 35.000 Efibanca S.p.A. Ownership Andromeda Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Antares Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Antilia Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Archimede 1 S.p.A. 15.000 Banca Popolare Italiana Soc.Coop. Ownership Azimuth Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership B.S.R. Gestioni Turistiche Immobiliari S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Banca della Nuova Terra S.p.A. 15.000 Banca Popolare Italiana Soc.Coop. Ownership Biasi S.p.A. 10.597 Efibanca S.p.A. Ownership Black & Blue GMBH 24.820 Efibanca S.p.A. Ownership Braidense Seconda S.r.l. 100.000 Efibanca S.p.A. Ownership Bussentina S.c.a.r.l. 20.000 Bipielle Real Estate S.p.A. Ownership Carfid S.r.l. 100.000 Banca Popolare Italiana Soc.Coop. Ownership Co.Im.A. S.r.l. 33.330 Banca Popolare Italiana Soc.Coop. Ownership Cossi Costruzioni S.p.A. 15.000 Efibanca S.p.A. Ownership De Fonseca S.p.A. 15.000 Efibanca S.p.A. Ownership Deltadator S.p.A. 16.896 Efibanca S.p.A. Ownership Earchimede S.p.A. 10.730 Banca Popolare Italiana Soc.Coop. Ownership Cassa di Risparmio di Lucca Pisa Ente per lo Sviluppo Zona Industriale 19.730 Ownership Livorno S.p.A. Eurocasse Sim S.p.A. under liquidation 20.795 Banca Popolare Italiana Soc.Coop. Ownership Cassa di Risparmio di Lucca Pisa " 0.186 Ownership Livorno S.p.A. Evoluzione 94 S.p.A. 11.137 Banca Popolare Italiana Soc.Coop. Ownership " 0.750 Banca Popolare di Crema S.p.A. Ownership " 2.100 Efibanca S.p.A. Ownership Farma.Cer. S.p.A. 10.000 Banca Popolare Italiana Soc.Coop. Ownership Faster Holding S.p.A. 15.000 Efibanca S.p.A. Ownership Fidia Farmaceutici S.p.A. 10.000 Efibanca S.p.A. Ownership Finanziaria ICCRI BBL under liquidation 50.000 Banca Popolare Italiana Soc.Coop. Ownership Fira Servizi S.r.l. 15.000 Banca Caripe S.p.A. Ownership Flashmallit S.p.A. under liquidation 15.596 Efibanca S.p.A. Ownership Framo S.c.a.r.l. under liquidation 75.000 Bipielle Real Estate S.p.A. Ownership Gestamm S.r.l. 10.000 Bipitalia Ducato S.p.A. Ownership Gruppo Stabila S.p.A. 12.130 Efibanca S.p.A. Ownership

241 Gruppo Banca Popolare Italiana

Percentage share Type of Investee company Investor ownership Direct Indirect

H.D.C. S.p.A. 15.135 Efibanca S.p.A. Ownership Istituto Centrale delle Banche Popolari 9.619 Banca Popolare Italiana Soc.Coop. Ownership Italiane S.p.A. " 1.023 Banca Popolare di Crema S.p.A. Ownership Istituto Pisano Leasing S.p.A. under Cassa di Risparmio di Lucca Pisa 99.990 Ownership liquidation Livorno S.p.A. Kinlab S.p.A. 20.230 AB Capital S.p.A. Ownership Lisbona Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Cassa di Risparmio di Lucca Pisa LU.CEN.SE. S.p.A. 12.500 Ownership Livorno S.p.A. Nuovo Mondo S.c.a.r.l. under liquidation 10.000 Bipielle Real Estate S.p.A. Ownership Pegaso Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Perseo Immobiliare S.r.l. 100.000 Bipielle Real Estate S.p.A. Ownership Plastisud S.r.l. 20.540 AB Capital S.p.A. Ownership Cassa di Risparmio di Lucca Pisa Porto Industriale di Livorno S.p.A. 12.146 Ownership Livorno S.p.A. Portone S.c.a.r.l. under liquidation 30.000 Bipielle Real Estate S.p.A. Ownership Premuda Chartering 14.000 Efibanca S.p.A. Ownership Qualiter S.c.a r.l. 30.000 AB Capital S.p.A. Ownership Quantoro S.r.l. 23.330 AB Capital S.p.A. Ownership Reindustria S.c.r.l. 5.000 Banca Popolare di Crema S.p.A. Ownership " 5.000 Banca Popolare di Cremona S.p.A. Ownership SAGA - Società Abruzzese Gestione 10.728 Banca Caripe S.p.A. Ownership Aeroporto S.p.A. Servizi Assicurativi S.r.l. under liquidation 100.000 Bipielle Previdenza Assicurativa S.r.l. Ownership Spal Automotive S.r.l. 12.000 Efibanca S.p.A. Ownership Tirrena Professional Factor S.p.A. under Cassa di Risparmio di Lucca Pisa 69.500 Ownership liquidation Livorno S.p.A. Tre Pi S.p.A. under arrangement with 20.000 Efibanca S.p.A. Ownership creditors Zucchetti.Com S.r.l. 15.000 Banca Popolare Italiana Soc.Coop. Ownership Cassa di Risparmio di Lucca Pisa Acquarius S.r.l. 100.000 Pledge Livorno S.p.A. Aro Tubi Trafilerie S.p.A. 30.330 Banca Popolare Italiana Soc.Coop. Pledge Azeinda Agricola di Gradella S.p.A. 33.333 Banca Popolare Italiana Soc.Coop. Pledge Berinal SA 100.000 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Borello S.p.A. 100.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Cartiera Fenili S.r.l. 84.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Deca S.r.l. 60.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Edilversil S.r.l. 100.000 Pledge Livorno S.p.A. Edon S.p.A. 59.809 Banca Popolare Italiana Soc.Coop. Pledge Europa 2000 S.p.A. 60.000 Banca Popolare Italiana Soc.Coop. Pledge

242 Gruppo Banca Popolare Italiana

Percentage share Type of Investee company Investor ownership Direct Indirect

Cassa di Risparmio di Lucca Pisa F.M.H. S.p.A. 25.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Farmigea S.p.A. 100.000 Pledge Livorno S.p.A. Fenice S.r.l. 100.000 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Fosber S.p.A. 30.000 Pledge Livorno S.p.A. Gesim S.p.A. 40.000 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Grifil S.r.l. 100.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa GSV Marmi S.r.l. 50.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa I.T.N. S.p.A. 80.000 Pledge Livorno S.p.A. Immobiliare Verdi S.r.l. 100.000 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Intergomma S.p.A. 50.010 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Latin Spark Italia S.r.l. 51.000 Pledge Livorno S.p.A. Magiste Real Estate S.p.A. 40.000 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Maitò S.r.l. 89.500 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa ME.RO. S.r.l. 70.500 Pledge Livorno S.p.A. Milaninvest Real Estate S.p.A. 30.000 Banca Popolare di Cremona S.p.A. Pledge Cassa di Risparmio di Lucca Pisa Moby S.p.A. 11.407 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Monticello Marmi S.r.l. 51.000 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Odissea S.r.l. 100.000 Pledge Livorno S.p.A. Panischi S.r.l. 100.000 Banca Popolare Italiana Soc.Coop. Pledge Parconavi S.p.A. 59.996 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa SO.FI.PO. S.p.A. 10.744 Pledge Livorno S.p.A. Cassa di Risparmio di Lucca Pisa Sollinox S.r.l. 100.000 Pledge Livorno S.p.A. Stella Bianca S.p.A. 52.500 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Telma S.r.l. 52.000 Pledge Livorno S.p.A. Tofani Antonino e Tiraboschi Mattia & C. Cassa di Risparmio di Lucca Pisa 100.000 Pledge S.r.l. Livorno S.p.A. Tundra S.r.l. 100.000 Banca Popolare Italiana Soc.Coop. Pledge Cassa di Risparmio di Lucca Pisa Unide S.p.A. 74.186 Pledge Livorno S.p.A. Villa Sarda S.r.l. 100.000 Banca Popolare Italiana Soc.Coop. Pledge

243 ADDRESS Banco Popolare Soc. Coop. Piazza Nogara, 2 - 37121 Verona - Italia INVESTOR RELATIONS tel. +39-045.867.5537 [email protected] www.bancopopolare.it (sezione IR) IMAGES pag. 6 - 7 Desideria Guicciardini - Il Banco Popolare, water colour pag. 30 - 31 Carlo Scarpa – Head Office Banca Popolare di Verona pag. 122 - 123 Renzo Piano – Head Office Banca Popolare di Lodi PUBLISHING COORDINATION Group Advertising and Identity PHOTOLITH AND PRINT Grafiche Serenissima

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