Bpm Group Social Responsibility Report 2008 B PM Group

SocialResponsibility Report2008 2008 BPM GROUP SOCIAL RESPONSIBILITY REPORT 2008 Prepared by the Coordination Committee of the CSR Project and Social Responsibility Report

Layout and art direction Agema Rosso – Milan

Methodology and procedural assistance Avanzi S.r.l. – Milan

Printing Agema Grafiche S.p.A. – Milan

It is forbidden to reproduce either in full or in part the text and images contained in this report

Further information about this document, which may also be downloaded from the website: www.bpm.it, can be obtained by contacting the Investor Relations of Banca Popolare di Milano or by e-mailing: [email protected]

2 CONTENTS

6 Letter from the Chairman and General Manager 10 Methodology

15 BPM GROUP IDENTITY

17 Profile of the BPM Group 20 Key dates 29 Mission, guiding principles and strategies 30 • Our mission 30 • Our guiding principles 31 • The strategy: the main objectives of the strategic plan 2007-2009 32 Progress in the 2007-2009 strategic plan 34 A structure that reacts to the market 34 • Group companies 36 • Equity investments 39 • Distribution network

43 Governance 43 BPM Governance 46 The General Meeting of Members 48 BPM’S Governing bodies: an overview 51 • Directors’ requisites 54 • The board of Directors 56 Amendments to the Articles of Association approved by the General Meeting of 13 December 2008 59 BPM’s supervisory structure: governing bodies and activities 60 • The three levels of control 63 Documents to know BPM 68 Management structure of the Parent Bank

71 BPM GROUP ECONOMIC REPORT

73 Economic Report 73 Economic results of operations 76 Calculation of Value Added 78 Distribution of 2008 total gross value added to the stakeholders

3 81 parent bank SOCIAL POLICIES REPORT

83 Stakeholder

85 The Parent Bank bpm “Customers” 87 Customers 88 Customers’ expectations: listening 88 • Customer satisfaction 91 • Handling of complaints 92 Customers’ expectation: from listening to service 92 • Transparency 93 • Financial inclusion of weak categories 97 • Diffusion of socially responsible investment products 99 • Activities in controversial markets 100 • Offer of lending products which promote environmentally sustainable life styles 101 • Offer of lending products to cope with the crisis 103 • Services and initiatives for the Third Sector 103 • Collaboration with associations and foundations involved in development of social responsibility 105 Customers’ expectations: accessibility and choice of channels 105 • Corporate image 109 • Boosting self service tools 110 • Evolution of on-line channels 111 • On-line documents 112 • Security

115 The Parent Bank BPM “Members and Shareholders” 117 Members and Shareholders 119 Share capital structure 121 Terms of admission to Membership and restrictions on share ownership 124 Value creation and return on capital 126 Communication 128 Participation by the members 131 Members’ associations

143 The Parent Bank BPM “Men and Women” 145 The Bank’s Men and Women 147 Training and development 147 • Training 150 • Development 153 The remuneration system 155 Corporate welfare

4 155 • “The Garden of Bez”, the Bank’s nursery 159 • BPM Pension Fund 159 • Mutual Health Fund 161 • ARES Bipiemme (Social Club) 164 Industrial relations 165 Involvement and communication 168 Equal opportunities 172 Safety and health

175 The Parent Bank bpm “Suppliers” 177 Suppliers 177 Mission and guidelines of the Central Buying Service 179 Relationship with suppliers 181 The SIRF Project

183 The Parent Bank bpm “Community” 185 Community 187 Community, an ongoing relationship 188 Grants and donations 194 BPM for the non-profit sector 198 Other forms of local assistance

205 The Parent Bank bpm “Environment” 207 Environment 208 Initiative completed 208 • Energy consumption 212 • Company cars 213 • Other activities

205 The Parent Bank bpm 2009 “Objectives” 216 Objectives for 2009 218 Corporate responsibility strategy: areas of intervention in 2009

223 BPM GROUP BANKS AND COMPANIES 225 Banca di Legnano 237 Cassa di Risparmio di Alessandria 249 Banca Akros 257 Bipiemme Gestioni SGR

265 Attachments “Figures and Ratios”

289 Glossary

5 LETTER FROM THE CHAIRMAN AND GENERAL MANAGER

Massimo Ponzellini Fiorenzo Dalu Chairman General Manager Banca Popolare di Milano Banca Popolare di Milano

6 2008 will be recorded as the year of the crisis that totally upset financial markets. A phenomenon that surprised most people, both for its speed and for its intensity. As often happens in such cases, many economists try to give it an interpretation that allows them not to fall into the same trap the next time. It’s just a pity that these analyses get made by the experts after the fact, when nobody needs them anymore.

We agree with those who consider it a crisis of ethics even before talking about a crisis of confidence, which undoubtedly had a systemic impact, but which started from a sense of emptiness. The concept of growth was so rooted in the minds of businessmen and financiers that there was no longer any point in asking the question why do we have to grow? and what are we growing for? This mania about size and pursuing the myth of growth at all costs made us lose sight of the fundamentals (in the sense of fundamental values, not balance sheet ratios). With the result that what happened was bound to happen.

Growth is important when we know why we are trying to grow and we are sure that by so doing we are creating more value than what we are destroying: not

7 just economic value, but social value as well. In other words, we undertake not to diminish, and hopefully to increase, the stock of corporate, social and environmental capital available to us. To understand whether we have achieved this objective, which for us is a priority, we have to measure the impact of what we have done. This is the purpose of the Social Responsibility Report.

Social responsibility is not so much a question of “doing more things”, but “how things are done”. So, despite the crisis, we do not intend making an about-turn with respect to the commitments that we took in the past. In our opinion, social responsibility is not a luxury that we can only allow ourselves in times of prosperity; indeed, we believe that it is precisely in times of difficulty that one can see the extent to which creating value for all of the stakeholders really is a shared objective and not just an empty declaration of intent. And it is precisely because trust is a form of capital that one earns over time and which can only be maintained if the commitment is continued that we are well aware that we have to be consistent in wanting to be a responsible bank, even more so than before.

We do not deny that, like all other companies, we have been forced by the current situation to revise our spending policies and strategies, which for a couple of years will probably have to concentrate above all on constructing barriers against the consequences of the crisis: prudence, precise definition of priorities and attention to costs will therefore be the key words for the immediate future. But also courage, creativity, flexibility, i.e. the ability to resist and react to the crisis in a positive way, taking all those steps that help to cope with it, to the benefit of the Bank and of all its stakeholders.

8 In this context, we have continued to invest in relations with our stakeholders, even if less intensely. Precisely because of the characteristics of this crisis, which we will emerge from with a strong sense of shared ethics, we are convinced that if we manage to show that we have never given in to the temptation of lowering our commitment and continue to trust our customers, staff, members and the community in which we work, all of them will in turn trust in us. The link between us will then be even stronger and more convinced and our Bank will be more solid as a result.

Massimo Ponzellini Fiorenzo Dalu Chairman General Manager Banca Popolare di Milano Banca Popolare di Milano

9 METHODOLOGY

The Social Responsibility Report has as its main point of reference the “Guidelines for the Preparation of Social Responsibility Reports” drawn up by the GBS (the Social Responsibility Report Study Group) and the “Manual for the Preparation of Social Responsibility Reports by the Banking Sector” published by ABI.

In the same way as in previous years, and in compliance with the standards mentioned above, the 2008 Social Responsibility Report is also made up of three sections.

10 I d e n t i t y This describes the BPM Group’s profile, its mission, its guiding principles, strategies and governance.

E c o n o m i c R e p o rt This presents the Group’s key financial highlights, the calculation of value added and how this wealth has been distributed among the various stakeholders.

S o c i a l P o l i c i e s R e p o rt This explains the social commitment of the Parent Bank Banca Popolare di Milano (to which the term BPM refers) versus the various categories of stakeholder, showing above all the activities undertaken during the year and the areas of potential improvement in the future.

11 In line with past editions, a section of the document is reserved for a description of the activities carried out by the other banks in the Group and by the main product companies.

The 2008 Social Responsibility Report refers to the BPM Group as identified in the Consolidated Financial Statements. In this connection, we would point out in particular the two important operations that were carried out by Banca Popolare di Milano during 2008: the acquisition del 56.99% of Banca Popolare di Mantova and the purchase of 38 branches from the UniCredit Group.

To the extent that they are available, the figures and quantitative information cover the entire three-year period 2006-2008 and have been taken from various sources: the economic and financial figures from the consolidated financial statements, other information from internal official communications, internal procedures, announcements by competent external bodies and sometimes from estimates.

In line with the previous edition, this entire document attempts to summarise as much as possible by means of charts and tables and by making reference to information that is already available from other sources, without repeating it at length; the booklet format is also an attempt to make the Social Responsibility Report slimmer.

Certain chapters of the Parent Bank’s Social Responsibility Report also contain certain symbols:

! this refers to the closing chapter on “Figures and Ratios” which provides further details;

12 this refers to the document mentioned for further details and explanations.

Moreover, with the intention of transmitting information also from a visual point of view, this document has been enriched with various images that reflect the contents.

Numerous colleagues in the various structures of the Bank and other Group companies have contributed towards its preparation. A reference person was chosen for each category of stakeholder and company, who integrated and coordinated the information gathered by their colleagues, drawing up the drafts of the individual chapters. The Investor Relations Department provided support and coordination for the entire process and wrote the introductory chapters of the document.

The structure of the project is the same as last year’s: The Steering Committee lays down guidelines and approves strategic decisions, while the Coordination Committee has an operational role and a network of internal references provide the information for the Social Responsibility Report. Within the Coordination Committee, a new coordinator for the stakeholder community has been appointed, namely Gianfranco Modica, the head of the Third Sector and PA Department.

A glossary can be found at the end of this document containing definitions of specialist terms.

The structure, preparation methods and contents of the Social Responsibility Report were approved by the Board of Directors at the meeting held on 25 June 2009.

13

BPM GROUP IDENTITY

15 GroUP PROFILE HISTOrY MIssion GUiDING PRiNCIPLES StrategieS governance

16 PROFILE OF THE B P M G R O U P

Banca Popolare di Milano is a multiregional co-operative bank with head office in Milan, Italy.

Its origins go way back to 1865 when, on the initiative of Luigi Luzzatti, three hundred and fifty citizens from all social levels held a general meeting in Milan and founded a credit co-operative able to ensure its members the financial resources that they needed for their businesses.

While it has continued to maintain its traditional link with its original territory, over the last

Luigi Luzzatti (Banca Popolare di Milano Historical Archive)

17 18 140 years BPM has grown to become an important economic force at a national level: having been the “bank of the Milanese”, it is now one of Italy’s leading co-operative banks.

Banca Popolare di Milano was listed on the Milan Stock Exchange in 1994 and now has more than 48,000 members, over half of the number of shareholders.

Today it heads up a multiregional banking group consisting of branch networks and product companies with almost 8,800 employees and more than 800 points of sale that serve a vast clientele of private individuals and firms.

PROFILE Figures at end-2008

Distribution network: Shareholders: 816 points of sale, including 92,821, of whom 787 retail branches 48,219 members (market share: 2.3%) Direct deposits: 35.1 billion euro Headcount: Indirect deposits: 8,902 resources, of whom 35.5 billion euro 8,786 employees Loans and advances to 116 members of staff with other customers: types of contract 32.9 billion euro (temps, short-term contracts) Net profit for the year: Commercial Bank Customers: 75 million euro more than 1.3 million, of whom Equity: almost 90% private individuals 3,177 million euro

Adjoining page: a detail of the facade of BPM’s Head Office in Piazza F. Meda in Milan showing the historical logo.

19 K e y D a t e s

The following pages indicate certain key stages in the history of Banca Popolare di Milano from its origins to the present day.

The development of Banca Popolare di Milano has been dealt with in parallel to the evolution of music, confirming the approach adopted in the previous edition of the Social Responsibility Report to associate BPM’s history with an art form.

In fact, our Bank, which by tradition and vocation pays special attention not only to economic and financial aspects, but also to the social and cultural context, has always stood out for its initiatives in favour of music: it supports the activities of the Teatro alla Scala, the Associazione del Coro Filarmonico, the Orchestra Verdi di Milano and carries out important publishing projects such as the Christmas gift books dedicated to the major composers of classical music.

Many of the artists mentioned in this report have links of birth or popularity with the City of Milan and with the other areas where BPM has its territorial roots.

20 In line with modern management techniques, music also becomes a metaphor for running an harmonious and choral business; for this reason, each chapter on the individual stakeholders is introduced by an image that reflects a certain musical concept.

The importance of sharing common rules and objectives (rhythm), the organisational skill in coordinating and guiding the available resources (harmony), the ability to innovate products and services (melody), under the leadership of a good “conductor” are all basic elements for a successful company that have always stimulated the way that BPM operates.

Photos on the following pages: black and white: BPM’s Head Office in Piazza F. Meda in Milan (photo from the ‘30s - Banca Popolare di Milano Historical Archive); colour: Head office of the BPM Service Centre in Via Massaua (on the corner of Via Bezzi) in Milan.

21 1865-1919 1920-1949 1950-1979 1980-2008

Banca Popolare di Milano was founded during a period of historical events that led to the Unity of Italy. The years of Fascism, the Great Depression of 1929 and the Second World War (1939-1945) This was a very eventful period: the reconstruction, the economic boom, the student revolt of The closing years of the 20th century were marked by important political, economic and social The subsequent years, that were characterised by a long economic crisis (1873-1896), culminated with culminated in the proclamation of the Italian Republic (1946) and the birth of the Constitution ‘68, but also the “Years of Lead”. events: the end of the Cold War with the fall of the Berlin Wall (1989), the birth of the European the outbreak of the First World War (1914-1918). (1948). Union with the Maastricht Treaty (1993) and the signing of the Kyoto Protocol to limit the emission • 1952 saw the first election of representatives of employee of greenhouse gases (1997). In 2008, the election of Barack Obama as the first Afro-American • Banca Popolare di Milano was founded in 1865: its first Chairman members. President in the history of the United States. • The new Head Office was inaugurated in 1931: the was Luigi Luzzatti, a statesman. • With the absorption of Banca Popolare di Roma in 1957, BPM historical premises in Piazza Crispi (now Piazza Meda). • In the early ‘80s, BPM took part, together with a pool • During the period of the crisis of 1873, BPM managed to began to grow outside of Lombardy. of banks, in salvaging Banco Ambrosiano (1982) and • During the post-war years, BPM introduced a treasury consolidate its territorial presence, generating customer loyalty by • The Bank became the principal shareholder of Banca Agricola acquired control of Banca Agricola Milanese (1985). means of cautious lending policies. service for a number of municipalities and entities in Milanese and Banca Briantea in 1960. • BPM’s expansion policy continued over the years with • In 1876 BPM became a member of the National Association of the Province of Milan and Varese and, together with the • Piero Schlesinger became the Chairman of BPM for the first acquisitions and mergers: Banca Popolare di Bologna Co-operative Banks. Cassa di Risparmio, began distributing revenue stamps time in 1971. e Ferrara (1988), Banca Popolare di Apricena (1989), • In 1900 BPM had a stand at the International Exhibition in Paris and stamped paper. BPM’s Head Office in Milan’s Piazza Meda • In the mid-’70s, BPM bought “Torre Galfa”, Milan’s third (Banca Popolare di Milano Historical Banca 2000 SpA - formerly INA Banca SpA (1998), and won a prize in the co-operative banking section. • In 1941 BPM published the first edition of “Il tamburino Archive) highest skyscraper, which became the Bank’s centre of Banca Akros (1998), Banca di Legnano (2001), Cassa • In 1911, BPM hired its first female members of staff and opened its lombardo”, a monthly magazine to promote savings operations. BPM Service Centre di Risparmio di Alessandria (2004) and Banca Popolare first branch in Milan’s Porta Vittoria. among the young. di Mantova (2008). • During the Great War, BPM set aside special funds for the families • When Milan was bombed in 1943, the roof on the central hall of the Bank and a number of Piero Schlesinger (Banca Popolare di Milano • In 2008 BPM launched a public purchase offer, which ended in March 2009, for Anima SGR, a Palazzo dei Giureconsulti of employees as a source of sustenance to cope with a rapidly Historical Archive) (Banca Popolare di Milano city branches were severely damaged. Historical Archive) rising cost of living. fund management company in which a stake had already been bought the previous year. . This era also saw many changes in the world of music. The new styles launched in the UK and USA, • That same year, BPM also bought 38 of the 183 branches being sold by the UniCredit Group, promoted by the major recording companies, spread throughout the world and also influenced Italian taking part in this operation together with a syndicate of 12 other banks. In this same historical context, opera music became extremely popular. Radio spread throughout the world during the 1920s. singer-songwriters. The melodrama became the most widespread and best loved form of In Italy, the first radio broadcast went on the air in 1924. • In Italy 1951 saw the 1st Festival of Italian Songs, the In the musical field, the technological revolution of recent years (CDs, Internet) completely realised the entertainment in Italy. Richard Wagner, Giuseppe Verdi and Giacomo • During the ‘20s Chicago became the capital of jazz and Sanremo Festival: the first person to win it was Nilla Pizzi concept of music sharing; indeed, certain emerging artists now manage to enter the record market Puccini were the maximum exponents of that era. boogie-woogie was born there as well in the ‘30s. with “Grazie dei fiori”. In 1958, it was the turn of Domenico after first getting themselves known on the web, while others have decided to publish their albums • The radio and record sales led to “Latin rhythms” - the tango, Modugno with “Nel blu dipinto di blu” . • In the same year that BPM was founded, Richard Wagner composed only on Internet (the most famous case being that of Radiohead in 2007). “Tristan and Isolda”. beguine, samba and rumba - spreading throughout Europe • 1954 is considered the year that rock’n’roll was born with as well. the first recording by Elvis Presley (That’s All Right/Blue • Two new forms of musical expression emerged between the ‘70s and ‘80s: disco music, as a • The first gramophones were invented in 1887 and the mass • Musicals began on Broadway and with the advent of sound at Moon Of Kentucky). Domenico Modugno countertrend to socially engaged music, and rap, a child of the poor quarters of the Bronx. production of records began a few years later, rapidly invading the the cinema, they were made extremely popular by the dancing • In the ‘60s, English groups began to dominate the world • The ‘80s saw the creation of pop icons like Michael Jackson market. duo, Fred Astaire and Ginger Rogers. charts. Two legends of rock and pop, the Rolling Stones and (Thriller, 1982) and Madonna (Like a Virgin, 1984). • In 1895 Giuseppe Verdi asked BPM to look after the financial side • In the ‘30s Ella Fitzgerald and Benny Goodman introduced swing, the Beatles, started out at that time. • In Italy, various musical styles continued to live together: the of building the Musician’s Rest Home that still bears his name. which achieved mainstream success during the following decade • Protest songs connected with the student movement, sung by the likes of Bob Dylan, Joan Baez, Janis rock of Vasco Rossi, Ligabue and Zucchero, the music of singer- • From 1898 to 1908 Toscanini was the conductor of Milan’s Teatro Giuseppe Verdi Louis Armstrong thanks to Frank Sinatra (“The Voice”) and Nat King Cole. Joplin and Neil Young, also arrived during those years. songwriters from Baglioni to Venditti, from Guccini to De Gregori, alla Scala and would only return there in the 1920s. • 1948 saw the appearance in the United States of vinyl records, • At the same time, Italy saw the debut of Mina, Adriano Celentano, Rita Pavone and Gianni Morandi, the operatic music of Pavarotti and Bocelli and the pop music of • The end of the 19th century saw the debut of Enrico Caruso, tenor definitively replacing those made of shellac. all influenced by rock music; Italy also produced singer-songwriters like Gino Paoli, Luigi Tenco, Pausini, Ramazzotti and Tiziano Ferro. par excellence and the first artist to sell more than one million Fabrizio De Andrè, Lucio Battisti, Giorgio Gaber and Enzo Jannacci. • Classical musical was also getting an infusion of vitality from the records. • reggae was a new style invented during the ‘60s and popularised by Bob Marley, taken over in the contemporary music of Luciano Berio and Luigi Nono and the ‘70s by punk. • At the beginning of the 1900s, a fusion of traditional African and white music led to the birth of new piano compositions of Giovanni Allevi and Ludovico Einaudi. styles in the United States: ragtime, blues and then jazz, in New Orleans.

Madonna M i ss i o n , g u i d i n g p r i n c i p l e s a n d s t r a t e g i e s

In line with our origins as a co-operative bank, our commitment is to enhance the value of household savings and to provide credit to the production system to help it grow, always with an eye on the needs of all our stakeholders and without losing site of the social and environmental aspects.

In order to pursue the ultimate purpose of our business (Mission), we periodically identify certain medium-term priorities (Strategy), taking our inspiration as we achieve them from certain fundamental values of the co-operative world (Guiding Principles).

29 o u r m i ss i o n

“To promote and sustain economic, civil, social and environmental development in the areas where BPM has a presence, performing its role as a banking group versus all sectors of the economy to the best of its ability: • the private sector, made up of households and businesses, with a particular focus on small- and medium-size enterprises; • the public sector, made up of local authorities and institutions representing the local government sector; • the no-profit sector, made up of associations and other organisations.”

o u r g u i d i n g p r i n c i p l e s

• Harmonious balance of interests: in line with what we have said to be our Mission, we work to the advantage of all our stakeholders by creating value that lasts over time. • Efficiency and development: in our activity, we are constantly guided by these two inseparable principles which feed each other in a virtuous circle. • Co-operative spirit: we foster the participation of our Members in the Bank’s affairs and decisions and in the development of the local areas in which it operates. • Accountability and transparency: each element of the company undertakes to carry out its function in a responsible manner, answering for its results to the next level up and to anyone else who is so entitled.

30 t h e s t r at e g y : t h e m a i n o b j e c t i v e s o f t h e s t r at e g i c p l a n 2007-2009

• Commercial development by expanding the network and sales channels, launching new products and paying attention to new market segments. • Reinforcement of productivity and profitability by improving the risk profile, ensuring selective growth in loans and optimising the Bank’s human capital. • Improvements in operating efficiency by completing the internal reorganisation, introducing better operating processes and upgrading IT systems.

31 P r o g r e ss i n t h e 2007-2009 S t r a t e g i c P l a n

2008 was the second year of the BPM Group’s current three-year Strategic Plan. The circumstances in which the Plan is being implemented are very different from what they were when the Plan was drawn up, particularly as a result of the tensions on financial markets; despite these changes, we have still managed to achieve most of the objectives as planned. Below we explain the main initiatives carried out by the Group during the two-year period 2007-2008.

• Territorial expansion in the areas where the Bank has its historical roots and in other areas of commercial interest, both organically (by opening new branches) and by external growth (acquiring other banks). • Launch of new products for retail and corporate customers. In particular, in 2008, Fermotasso and EuroMutuo mortgage loans and MP5 In Viaggio motor insurance for the retail market; the MP5 Benefits policy and BPM brand company credit cards for the corporate market. • Completion of the redesign of the Group’s window displays and continuation of the branch restyling. • Launch of the “Punta su di Te” fidelity plan in Banca Popolare di Milano (from 2007), Banca di Legnano and Cassa di Risparmio di Alessandria (from 2008).

32 • In the asset management field, the completion of distribution agreements, partnerships and special deals. In 2008, completion of the deal with Anima sgr with the launch of a voluntary public purchase offer for all of its shares. • Completion of the measures to optimise the Group’s property assets, renting out those that remained available for lease. • The rationalisation of certain Central Units of Cassa di Risparmio di Alessandria and Banca di Legnano, centralising these activities at the Parent Bank. • Rationalisation of the Parent Company’s back office structures, raising the efficiency of the intermediate functions by revising certain processes (e.g. opening a current account). • Adoption by the commercial banks of the organisational models and operating instruments already used by the Parent Bank in support of the network’s sales and marketing efforts. • Initial installation in 2008 of self-service devices for bank transactions performed directly by customers. • Customers continued to be incentivised to use the online channel as much as possible in order to offer them a more complete service and, at the same time, to increase the efficiency of the commercial network by transferring low value-added transactions onto the e-banking channel. • Improvement in selective growth of loans and in the “share of wallet” of existing customers. • Development of a database for corporate branch managers which centralises information on customers, providing support for the manager’s assessment of them.

For more details on the activities related to the Strategic Plan reference should be made to the Report on Operations contained in the financial statements at 31 December 2008.

33 A s t r u c t u r e t h a t r e a c t s T o t h e m a r k e t

g r o u p c o mpa n i e s

The BPM Group is present in all sectors of banking and financial intermediation and operates almost exclusively 1 in Italy. Coordinated by the Parent Bank Banca Popolare di Milano, the Group consists of an articulated structure that includes the distribution network of the commercial banks (see pages 40-41 for details), the private banking centres and a number of specialist product companies. At the end of 2008 the distribution structure was expanded with the acquisition of Banca Popolare di Mantova and 38 of the branches being sold by Unicredit.

To respond better to the different needs of the various customer segments, the Group is also split into specific business units.

1 Except for BPM Ireland, BPM Fund Management and Tirving, which are based in Dublin, and BPM Capital I and BPM Luxembourg, which are based respectively in the USA and in Luxembourg.

34 GROUP COMPANIES AND BUSINESS UNITS

Commercial Corporate Investment Asset Corporate center Banking Banking Banking Management and other

Banca Popolare Banca Popolare Banca Popolare BIPIEMME GestionI Banca Popolare di Milano di Milano di Milano Sgr di Milano

Banca di Legnano Banca di Legnano Banca Akros BPM Fund Manag. We@service

CASSA DI RISPARMIO CASSA DI RISPARMIO BPM Ireland Tirving Akros AltERNATIVE Ge.se.so. DI Alessandria DI Alessandria InvestMENTS Sgr BPM Capital I BANCA POPOLARE BANCA POPOLARE DI Mantova DI Mantova BPM Luxembourg

bipiemme Private Banking Sim

Business area

Banking and Banking and Portfolio Activities related to Activities in support financial services, financial services management for asset management of the Group’s private banking, and loans financial market operations and insurance investments hedging of risks and loans

Customers served

Individuals, Medium and large Ordinary and Prevalently households, small and companies institutional retail medium businesses (turnover of over 50 customers (turnover of less than million euro) 50 million euro)

Average weighting* as a percentage of operating income

76.7% 10.2% 5.1% 3.1% 4.9%

* Normalised average calculated over the period 2006-2009.

35 e q u i t y i n v e s t m e n t s

Over the years, the BPM Group has stipulated strategic agreements with various third-party companies, in some cases becoming a shareholder.

This system of alliances has developed along two main lines of strategy with a view to improving the range of products and services offered to customers and to provide additional support to local economies. The following list shows the main equity investments in each area. Unless stated otherwise, the investments are held entirely by Banca Popolare di Milano, the Parent Bank.

Panoramic view of the Head Office of Banca Popolare di Milano with the Duomo di Milano (Milan Cathedral) in the background.

36 COMPANIES IN WHICH INVESTMENTS are HELD

Type Company % interest

Bipiemme Vita 45.89% insurance company that was controlled by the Group until June 2007

SelmaBipiemme Leasing 40% market leader in leasing Aedes BPM Real Estate 39% closed-end real estate fund management ESN North America 35.81% broker dealer based in New York (Banca Akros) Anima SGR 29.9% 1 Financial-type equity mutual fund management investments in banks with local roots or in Etica SGR 27.5% other external partners ethical mutual fund management with specialist skills. Pitagora 1936 24% specialist in lending against one-fifth of salary Group 22.5% market research and shareholder services (Banca Akros) for the placement of financial instruments Cassa di Risparmio di Asti 20% historical bank with strong roots in the (Banca di Legnano) Asti area Wise Venture SGR 20% closed-end and private equity fund management

Società Milanese di Sviluppo e 33.33% Formazione Musicale promotion, support and development of Equity investments in the Fondazione Verdi organisations that carry Genextra 4.37% on socially relevant research and development in activities from an biotechnology, biomedicine and functional environmental, cultural, research and territorial Istituto Europeo di Oncologia 3.53% development point of Cancer research and therapy view. Fiera di Milano 2.52% trade fair management in the Milan area and at the new Rho-Pero hub

1 From 2009 Anima SGR is a wholly-owned subsidiary of BPM as a result of the PPO launched in September 2008 and closed on 2 March 2009. A complete list is available on BPM’s website (www.bpm.it in the section entitled “chi siamo/who we are”). 37 38 d i s t r i b u t i o n n e t w o r k

In order to be close to our customers and to service them in the best way possible, the BPM Group makes use of a widespread distribution network located throughout Italy. In addition to the traditional retail branches of the commercial banks, this network also includes a number of points of sales dedicated to specific types of customers (Private Banking Centres, Large Corporate Branches and SME Units) and other more technological forms of access (such as Internet Banking, Telephone Banking, POS and ATMs) that permit even wider geographical coverage.

During the course of 2008, the structure of the Group was increased by 60 units, partly as a result of the new branches opened according to the Strategic Plan and partly as a result of the acquisition of control of Banca Popolare di Mantova (8 branches) and of 38 branches from the Unicredit Group 1.

1 Branches with treasury functions are excluded in both cases.

Photographic elaboration of a BPM branch in Milan. Adjoining page: the cupola of the Central Hall of BPM’s Head Office.

39 Territorial location of Group branches

BPM

373 10

BL

102 15

CRA

2 Other 9 branches in Lombardy: 75 8 Banca Popolare di Mantova 1 Banca Akros

40 Territorial location DISTRIBUTION NETWORK BPM GROUP of Group branches Total branches (including Webank) 787 Companies 14 Private Banking Centres 15 486 Total points of sale 816 100 Financial advisors 62 Call Center 1 ATMs 910 POS 27,889

distribution network The structure that BPM has created specifically as a point of reference for companies is made up of 4 Large Corporate branches and 10 SME units. The Private Banking Centres, which belong to Bipiemme Private Banking SIM (13) and Banca Akros (2), provide customised advisory services on financial matters. The Financial Advisors, who work for BPM (39), Banca Akros (19) and Bipiemme Private Banking SIM (4), form the network of reference for advisory and individual portfolio management services. Thanks to them, the Group manages to reach areas that it has not traditionally served. The Group’s ATMs densely populate the area thanks to the presence of over 900 machines that now include 15 new Self Service machines installed in 2008. The Call Centre provides customers with remote access and includes telephone and Internet banking services. Thanks to almost 28,000 POS terminals, customers of traditional and mass market retailers can make safe payments using their credit and charge cards. 41 42 GOVERNANCE

BPM G o v e r n a n c e

BPM’s model of corporate governance is based on the following cardinal points:

One-man-one-vote: each member has the right to one vote at General Meetings, however many shares they own.

Limit on share ownership: no shareholder can own more than 0.50% of the share capital, except for UCITS (which include mutual funds) to which are applied the limits applicable under their own sector

Definition of corporate governance Corporate governance defines the structure by which a company lays down its objectives and organises the means to achieve them while respecting the interests of the various stakeholders. As stated in the Bank of Italy’s Provision of 4 March 2008 containing instructions on the organisation and corporate governance of banks: “effective organisational and corporate governance structures are for all companies an essential condition for pursuing their objectives. They are particularly important for banks because of the characteristics of the banking business and of the public interest that the measure takes into specific consideration. The organisational and corporate governance structures of banks have to respond not only to the interests of the company, but they also have to ensure conditions of strong, prudent management, which is the essential objective of the regulations and of the controls performed by the Supervisory Authorities”. 43 Adjoining page: the Central Hall of BPM’s Head Office in Piazza F. Meda, Milan. regulations and the limits placed on investments in banks imposed by the Supervisory Authorities.

Approval clause: the right to take part in and to vote at ordinary and extraordinary General Meetings is reserved for member shareholders, i.e. those who specifically ask to be included in the Members Register and have been registered for at least 90 days prior to the General Meeting at first calling. The Board of Directors can reject applications for membership bearing in mind the Bank’s interests, the rules embodied in these articles and the spirit of the co-operative principle. An aspiring member can appeal against their rejection to the Board of Arbitrators within thirty days of receiving the communication.

Restrictions on the distribution of earnings: any earnings not allocated to the legal reserve (at least 10%), other reserves or for other purposes specified in the articles of association or not distributed to members are allocated to charity or activities of social benefit. In this connection, it is worth mentioning that each year BPM allocates an amount not exceeding 2% of the net profit approved by the previous year’s General Meeting to the charity fund (art. 47 of the articles of association).

Limit on voting proxies: the maximum number of proxies that each member of a co-operative can bring to a General Meeting is ten by law (art. 2539 of the Civil Code), with the right for individual companies to envisage a lower number than this in their articles of association. For BPM, this limit has been set at two proxies per member (art. 13 of the articles of association), excluding Directors, Statutory Auditors and employees who are members. * * * *

44 In recent years, Banca Popolare di Milano has carried out a profound reform of its system of corporate governance in order to optimise the rules and the way that its governing and supervisory bodies function. The particular objectives of the current governance model are:

• the protection of minorities at General Meetings: BPM was one of the first co-operatives to be listed on the Stock Exchange, introducing mechanisms designed to ensure the representation of minorities at General Meetings on its corporate boards, essentially by introducing the so-called “list voting system” and envisaging the presence of “minority” Directors (now established at a regulatory level);

• transparency of the decisions taken by the Board of Directors and independence and professionalism on the part of its members, as required by the principles of best practice in the Code of Conduct of Listed Companies (March 2006 version), which the Bank has been applying for a number of years;

• strategic guidance and coordination of the subsidiaries;

• encouraging participation in the life of the company, which is the substance of the mutualistic profile that underlies the Bank’s co-operative model, fostering enlargement of the shareholder base, particularly with reference to the Bank’s typical target clientele (retail and SMEs).

A form of governance conceived in this way and always in evolution achieves the aim of balancing the various interests of the members/ shareholders, customers and employees, with the necessary attention to other stakeholders as well. The following pages contain charts and diagrams that explain the current system of corporate governance applied in BPM.

45 T h e G e n e r a l M e e t i n g o f M e mb e r s

The General Meeting represents all of the members. It is called by the Board of Directors at least once a year to approve the financial statements. It is normally chaired by the Chairman of the Board of Directors. Meetings can be attended by the members (recorded in the Members’ Register at least 90 days prior to the date of the Meeting at first calling), the Directors, the Acting Statutory Auditors and the members of General Management. Non-members can also attend, if authorised, but without any right to speak or to vote. Meetings can be ordinary or extraordinary, depending on the matters to be decided.

Detail of the stage set up for the Ordinary General Meeting of Members held on 19 April 2008 at the Milan City Trade Fair.

46 Ordinary Extraordinary (art. 26 of the Articles of Association, art. 2364 of the C. C.) (art. 27 of the Articles of Association, art. 2365 of the C. C.)

Functions: Functions: • Approves the financial statements • Decides on amendments to the Articles of • Appoints and revokes Directors, Statutory Association Auditors, Arbitrators and the Independent • Decides any increase in capital involving an Auditors issue of new shares not in the ordinary manner • Establishes the remuneration of Directors and • Decides on the appointment, replacement and Statutory Auditors powers of the liquidators • Approves the Regulations for General • Decides on other matters for which it is solely Meetings responsible • Decides on other matters on the agenda Quorums needed to set up a meeting Quorums needed to set up a meeting (art. 30 (art. 30 Articles of Association): Articles of Association): • 1/10 of the members at first calling • 1/10 of the members at first calling • Any number of members at second calling • At least 1,000 members at second calling Quorums needed to pass resolutions (art. 31 Articles of Association): Quorums needed to pass resolutions (art. 31 Articles • An absolute majority of the members voting of Association): • 2/3 of those voting, but not less than 500 votes for amendments to the Articles of Association • 2/3 of those voting, but not less than 500 votes for mergers and/or absorptions • 1/7 of those entitled to vote for changes in the corporate purpose, in the rules on who has the right to vote and how it can be exercised, to transform the Company or to wind it up in advance, and for amendments to art. 31.4 of the Articles of Association. A secret ballot is held for the appointment of directors and officers the text of the Articles of Association that was changed at the General Meeting of 13 December 2008 is • An absolute majority of those voting for resolutions shown in red. For all other amendments to the Articles of Association, reference should be made to the table on to comply with instructions from the Supervisory pages 56-57. Authority issued for the purpose of stability or to adjust to new regulatory provisions

Arbitration Committee Board of Statutory Auditors Board of Directors Decides disputes referred to it under the Ensures control of the Group Ensures governance of the Group Articles of Association by an absolute majority of votes

47 Bpm’ s G o v e r n i n g b o d i e s :

organo di governo caratteristiche

• 20 Directors including the Chairman and two Board of Directors Deputy Chairmen • All Directors have to be members of the Bank • It is appointed every three years

The Board of Directors has set up the following permanent committees

• 8 members including the Chairman and two Deputy Chairmen Executive Committee • The members do not have to be Executive Directors • It is appointed annually by resolution of the Board of Directors

• 11 members including the Chairman and the Board Financing 2 Deputy Chairmen, 7 Directors chosen by the Committee Board of Directors and the General Manager

• 5 members including 1 Director for each minority Internal group at the General Meeting Control Committee • All non-executive

• 5 members including 1 Director for each minority Remuneration group at the General Meeting Committee • All non-executive

• 6 members including 1 Director for each of the Members’ Relations minority groups at the General Meeting Commission

1 The new Framework Resolution of 3 June 2008 on “Rules for the admission and management of relations with Members” confirmed the Commission’s institution and functions and set the maximum number of its members from the time of its renewal at 5.

2008 Report on Corporate Governance GENERAL

48 Bpm’ s G o v e r n i n g b o d i e s : a n o v e rv i e w

FUNCTIONS

• It is vested with all powers of ordinary and extraordinary administration, except for those reserved by law or the Articles of Association for the General Meeting • It decides on the structure and attributes of General and Head Office Management; it appoints, revokes and establishes the duties, powers and emoluments of the General Manager and of the other Managers • It appoints the Financial Reporting Manager, after hearing the opinion of the Board of Statutory Auditors (this is obligatory) Resolutions are normally passed by an absolute majority of the votes and are valid if at least a majority of the current Directors are present.

to support its activities:

• Its functions are mainly investigatory and/or propositive with decision-making powers only in an emergency • Resolutions are passed on the unanimous vote of those present, otherwise the matter is referred to the Board of Directors for a decision

• It decides mainly on loan facilities in excess of the powers of the Management Financing Committee and on those for which this Committee has abstentions or votes against, even if the majority is in favour.

• It has propositive, consultative and investigatory functions in connection with the system of internal control and risk management

• Makes proposals to the Board of Directors with regard to the remuneration of the Directors that hold particular positions and of the Directors of subsidiaries • It periodically evaluates the criteria adopted for the remuneration of managers with strategic responsibilities in BPM and the subsidiaries • It makes general recommendations on remuneration to the Board of Directors

• It investigates applications for admission to membership, measures to exclude members and with regard to waivers of the preference guarantee restriction on the Bank’s shares

The following diagram shows the corporate governance structure as it was in 2008. The elements shown in red are the bodies involved in the changes made at the General Meeting of 13 December 2008, which were then applied for the first time to appoint the Directors and Officers at the General Meeting of 25 April 2009. MANAGEMENT For further details about these amendments, reference should be made to the table on pages 56-57. 49 50 d i r e c t o r s ’ r e q u i s i t e s

The Articles of Association establish that candidates can only accept a Directorship if they have specific legal requisites concerning their integrity, professionalism and independence.

PROFESSIONALISM AND INTEGRITY In Banca Popolare di Milano, all of the Directors have the requisites of integrity and professionalism, as the Board of Directors verified on a collegiate basis for the Directors in office for the three-years 2006- 2008 at the meeting held on 7 June 2006. As is clear from the wording of the requisites, professionalism relates to the candidate’s professional experience and skills gains over time, whereas integrity relates essentially to the absence of past or present judicial situations (in certain cases also being definitively ascertained) that are incompatible with managing a bank.

INDEPENDENCE AND EXECUTIVE STATUS The requisite of “independence” is generally foreseen at a regulatory level by art. 2387 of the Civil Code and, as it relates to banks, by art. 26 of the Banking Consolidation Act (which makes reference to the implementation rules still to be issued by the Economy and Finance Ministry). So as things stand, independence is assessed on the basis of the Finance Consolidation Act (art. 147-ter, para. 4) and pertinent sections of the Code of Conduct for Listed Companies (art. 3.C.1. of the March 2006 version), which the Bank adopted at the time.

Adjoining page: The Boardroom at BPM’s Head Office.

51 It is worth noting that, in the case of listed companies, art. 147 ter para. 4 of CFA states that “at least one member of the Board of Directors, or if the Board of Directors has more than seven members, at least two of them must satisfy the independence requirements established for statutory auditors in art. 148.3 of this decree”. Accordingly, in 2008 the Board of Directors ascertained that BPM was complying with these rules. This is also the context for the amendment made to the Articles of Association at the General Meeting held on 13 December 2008 – made also to comply with the “Supervisory Instructions on the Organisation and Corporate Governance of Banks” issued by the Bank of Italy on 4 March 2008 - which established that BPM’s Board of Directors had to have at least four independent directors.

Given that executive directors are by definition non-independent, the BPM board meeting of 3 June 2008 defined as executive in accordance with the Code of Conduct, the Chairman of the Board of Directors for his particular role, even without specific operating powers, in guiding the Board’s strategic policy-making and in the management of relations with the members, and literally in accordance with the wording used by the Code, the “executive” director in charge of supervising the system of internal control. All of the other directors have the status of non-executive as they do not have any operating powers. The “independent” nature of directors of co-operative banks is a direct consequence of the one-man-one-vote system that does not allow the formation of pre-established controlling syndicates. The Bank’s Board of Directors has nonetheless reviewed the independence of its members, at the meeting on 3 June 2008, on the basis of the recommendations contained in the Code, which also confirmed the principle of “substance over form”. From this point of view, the Code generally defines as independent those “who do not have, nor had in the recent past, directly or indirectly, any business dealings with

52 the issuer or with subjects linked to the issuer that could currently condition their autonomy of judgement”, making examples of various situations (art. 3.C.1.) which, if recurring, have to be considered in the assessment of the director’s independence profile. The outcome of this verification for the current year was that 7of BPM’s Directors were to be considered independent according to the Code.

53 t h e b o a r d o f d i r e c t o r s

The following table shows the composition of the Board of Directors in office at 31 December 2008, having been appointed in a single round of voting at the General Meeting of the Members held on 6 May 2006 for the three years 2006-2008. While the Social Responsibility Report was being prepared, the Ordinary and Extraordinary General Meeting on 25 April 2009 appointed new directors and officers 1 for the three years 2009-2011, also on the basis of the new rules introduced by the amendments to the articles of association in December 2008 (see the following paragraph). More information will be given on the new governing bodies - their composition, characteristics and who they represent - in the 2009 Social Responsibility Report.

1 BOARD OF DIRECTORS Chairman: Massimo Ponzellini Deputy Chairmen: Mario Artali and Graziano Tarantini Directors: Beniamino Anselmi, Antoniogiorgio Benvenuto, Francesco Bianchi, Giovanni Bianchini, Giuseppe Coppini, Enrico Corali, Franco Debenedetti, Franco Del Favero, Roberto Fusilli, Piero Lonardi, Roberto Mazzotta, Marcello Priori, Leone Spozio, Jean-Jacques Tamburini, Michele Zefferino

BOARD OF STATUTORY AUDITORS Chairman: Salvatore Rino Messina Acting Statutory Auditors: Carlo Bellavite Pellegrini, Enrico Castoldi, Stefano Salvatori, Ezio Maria Simonelli Alternate Statutory Auditors: Emilio Luigi Cherubini, Enrico Radice, Giuseppe Zanzottera, Giorgio Zoia

ARBITRATION COMMITTEE Arbitrators: Italo Ciancia, Anna Maria Sanchirico, Carlo Felice Varini Alternate arbitrators: Guido Mina, Giuseppe Molinari.

54 BOARD OF DIRECTORS AT 31 DECEMBER 2008

Name Office held Status of independence*

Roberto Mazzotta (1) Chairman no

Mario Artali (1) Deputy Chairman yes

Marco Vitale (1) Deputy Chairman no

Enrico Airaghi (1) (3) Director yes

Luca Caniato (3) Director yes

Emilio Castelnuovo (1) (2) Director no

Giuseppe Coppini Director yes

Enrico Corali Director no

Rocco Corigliano Director no

Eugenio Crosta Director no

Roberto Fusilli (4) Director no

Piero Lonardi (1) (4) Director yes

Maria Martellini Director yes

Michele Motterlini (1) Director no

Gianfranco Pittatore (1) Director no

Marcello Priori (2-bis) Director no

Jean-Jacques Tamburini Director yes

Graziano Tarantini Director no

Valerio Tavormina Director no

Michele Zefferino Director no

* Assessment carried out by the Board of Directors during the meeting of 3 June 2008 pursuant to the Code of Conduct for Listed Companies (March 2006 version). (1) Members of the Executive Committee (2) Secretary to the Board of Directors – (2-bis) Director in charge of supervising the internal control system. (3) (4) ”Minority” members (representing the “Insieme per la BPM” and “Non-BPM Staff Members Committee” lists, respectively) N.B. the list representing the majority is called “Friends of BPM”.

55 A m e n d m e n t s t o t h e A rt i c l e s o f A ss o c i at i o n a pp r o v e d b y t h e G e n e r a l M e e t i n g o f 13 d e c e mb e r 2008

The Extraordinary General Meeting on 13 December 2008 approved the following changes to BPM’s Articles of Association. The following table compares the Articles of Association before and after the changes made at the General Meeting.

Article Before the Meeting of 13.12.2008 After the Meeting of 13.12.2008

ART. 31 Amendments to the Articles of Amendments to the Articles of QUORUMS Association have to be approved by Association, including those concerning a vote in favour by at least 2/3 of the mergers and/or absorptions, have to members voting (with a minimum of be approved by a vote in favour of at 500 votes). least 2/3 of the members voting (with a minimum of 500 votes). Resolutions concerning mergers and/ or absorptions have to be approved by a vote in favour of at least 3/4 of the members voting (with a minimum of 500 votes). The resolutions to be taken to comply with the requirements of the Supervisory Authority, issued to maintain stability or to adjust to regulatory provisions, are passed with the quorums envisaged for Ordinary General Meetings.

ARTS. 32, 33 and NEW Number of directors: 20 (min. 16, Number of directors: 18 ART. 50 max. 20) made up as follows: made up as follows: (AFTER THE MEETING) majority list: 16 majority list: half plus one (10) APPOINTMENT AND minority list: max. 4 minority list: 6 COMPOSITION OF THE Another 2 Directors to comply with the BOARD OF DIRECTORS Bank’s commitments to Fondazione Cassa di Risparmio di Alessandria and Crédit Industriel et Commercial who remain in office until expiry or until the assumptions underlying the commitments no longer apply.

Number of independent directors as Number of independent directors as per art. 147-ter, CFA: at least 2 per art. 147-ter, CFA: at least 4

56 Article Before the Meeting of 13.12.2008 After the Meeting of 13.12.2008

ART. 36 Number of directors: from min. 5 to Number of directors: from min. 5 to EXECUTIVE COMMITTEE max. 9 max. 7 (reduction of the number as a consequence of the reduction in the size of the Board of Directors).

Possibility to set up an Executive Reinforcement of the decision-making Committee to which the Board can powers, especially on matters delegate part of its powers on an concerning personnel, organisation annual basis. and the purchase and sale of minor Mainly investigatory and/or equity investments; a detailed propositive functions; decision-making indication of the matters that cannot powers only in an emergency. be delegated (for which the Board of Directors is exclusively responsible).

ART. 36 Generic provision for the Board of In addition to the generic provision OTHER COMMITTEES Directors to set up Commissions/ for the Board to set up Commissions/ AND INTERNAL Committees with investigatory and/ Committees, the new Articles of ORGANISATION OF THE or propositive functions, laying Association expressly provide for BOARD OF DIRECTORS down their composition and duties. the setting up of a Remuneration Committee and an Internal Control Committee.

Appointment of a Board member as Appointment of a Secretary to the Secretary to the Board of Directors. Board of Directors, who does not have to be a Board member.

ART. 41 In the event that more than two lists of APPOINTMENT AND candidates are presented for the position COMPOSITION OF THE of Statutory Auditor, one of which by BOARD OF STATUTORY Undertakings for Collective Investment in AUDITORS Transferable Securities (UCITS), one Acting Auditors and one Alternate Auditor are to be taken from this list, providing it has obtained at least 5% of the overall votes expressed at the General Meeting.

ARTS. 44 AND 45 Generic regulation of the powers A detailed list of the General GENERAL MANAGEMENT and role of the General Manager. Manager’s functions as the “head of the entire structure of the Bank”. The “deputy function” is not expressly foreseen in the Articles of Attribution of the deputy function Association. to another member of General Management.

57 To complete the adjustment of the articles to the Instructions of the Governor of the Bank of Italy of 4 March 2008 relating to “Supervisory Instructions on the Organisation and Corporate Governance of Banks”, on 7 April 2009 the Board of Directors approved the following additional amendments of the Articles of Association: • the methods of revoking members of the governing bodies (arts 26, 32 and 40); • the powers of the Ordinary General Meeting with regard to the approval of any compensation policies for Directors, employees or freelance staff not employed by the Bank, as well as any share- based payment plans (arts. 26 and 36); • clarification of the powers and duties of the Board of Statutory Auditors (art. 40); • the insertion of specific references to internal regulations approved by the Board of Directors: with regard to the composition and powers of the Board Committees, as well as the rules governing the accumulation of appointments by Directors of the Bank (arts. 32 and 36); • greater detail on the reasons for incompatibility of members of the Board of Statutory Auditors as a result of administrative positions held in other companies (art. 41).

58 bpm’ s s u p e rv i s o ry s t r u c t u r e : g o v e r n i n g b o d i e s B o a r d o f S tat u t o ry A u d i t o r s a n d a c t i v i t i e s Monitors observance of the law and the deed of incorporation, compliance with the principles of good administration, the adequacy of the Bank’s organisational I n d e p e n d e n t A u d i t o r s structure and of its internal control and accounting systems

BOARD OF DIRECTORS A rticles of Association, arts. 40-41 and 2008 Report on Corporate Governance I n t e r n a l C o n t r o l The executive director in C o m m i tt e e charge of supervising the S u p e r v i s o ry C o m m i tt e e internal control system (Decree 231/01) It provides support to • Identifies the risks to which the Board of Directors in the company is exposed Prevents infringements of this decree by: defining the aims of the • Carries out the policies of the • assessing the adequacy of the organisational Internal Control System Board of Directors /management/control models and Code of • Proposes to the Board of Ethics adopted by the Bank Directors the appointment, • checking that these models are implemented revocation and remuneration and function as they should of those in charge of internal control (e.g. Compliance Function) 2008 Report on Corporate Governance

2008 Report on Corporate Governance F i n a n c i a l r e p o rt i n g m a n a g e r (art.154-bis CFA) Appointed by the Board of Directors I n t e r n a l a u d i t i n g d e pa rt m e n t after hearing the opinion of the Board of Statutory Auditors (this is obligatory, • Checks that the internal control systems of BPM art. 44.2 of the Articles) and the Group function properly • Performs auditing work • Liaises with the Supervisory Bodies and supports them in their activities

General Management

C o m p l i a n c e F u n ct i o n Ensures that the Bank complies with all regulations A d m i n i s t r at i o n , P l a n n i n g governing investment and other banking services a n d C o n t r o l D i v i s i o n

R i s k M a n a g e m e n t Supervisory bodies Monitors the Bank’s overall risk exposure Functional report and checks compliance with the acceptable Hierarchical report threshold 59 t h e t h r e e l e v e l s o f c o n t r o l

The system of internal control, which has been extended to the entire Group, is a set of rules, procedures and organisational structures that ensure that the business is run in a way that is proper, fair and in line with the set objectives by means of an adequate process of identification, management and monitoring of the principal risks. The system of internal control helps to safeguard the company’s assets, to ensure that it operates efficiently and effectively, that it produces reliable financial data and complies with all laws and regulations.

Committee room with view of the Central Hall of BPM’s Head Office.

60 Control activities are carried out at all hierarchical and functional levels of the organisational structure: all company structures are required to exercise control over the processes and operations under their responsibility.

Control activities can be split into three types (so-called levels of control).

LINE OR 1ST LEVEL CONTROLS These are the normal line controls and other initiatives taken by the members of staff when carrying out their duties. The purpose is to ensure that transactions are carried out properly. They involve all of the Central Units of the Bank and the commercial network.

RISK OR 2ND LEVEL CONTROLS These concern the assessment and management of all types of risks (both internal and external) that the Bank has to face: credit risk, interest rate risk and market risk, operational risk, non-compliance risk, etc. These are monitored by the Risk Management and Compliance Functions, as well as by the Commercial Division’s operating control functions.

3RD LEVEL CONTROLS These concern the general structure and assessment of the entire Internal Control System. Based on the provisions of the supervisory regulations, 3rd level controls are developed by the Internal Auditing Department.

61 62 Documents to know BPM Internal sources of the rules underlying BPM’s system of Corporate Governance

Articles of Association (*) The version updated to 13 December 2008 is made up of 50 articles which regulate how the Bank functions. www.bpm.it/azionariato/bilanci/azi_statuto.shtml

Regulations for General Meetings (*) These lay down the rules for functional and orderly proceedings at Ordinary and Extraordinary General Meetings. The Regulations lay down in detail what members have to do to attend a meeting and the deadlines by which they have to do it, the Chairman’s powers when running such meetings in full respect of each member’s right to take the floor to speak on the topics on the agenda and to make proposals, how ballot papers should be arranged, how voting should take place and how votes should be counted. BPM’s Regulations have been updated over time as a result of changes to the articles of association, the latest of which were approved by the General Meeting in December 2008. www.bpm.it/azionariato/bilanci/azi_statuto.shtml

(*) an asterisk means that the document can be consulted on the Bank’s website.

Adjoining page: View of the main entrance to BPM’s Head Office in Piazza F. Meda, Milan

63 Report on Corporate Governance (*) This is the document that reports on the annual process of self-assessment carried out by the Bank on its own system of Corporate Governance. In compliance with the Instructions of the Bank of Italy of 4 March 2008, BPM is of the opinion that an efficient corporate governance system, based on a balance of powers, requires clear identification and separation of duties, roles and responsibilities among the governing bodies. Talking of which, in 2008, the Bank revised its governance with a view to obtaining a clearer and more balanced division of roles and responsibilities among the various governing bodies, with specific reference to the distinction between the functions of the Board of Directors and the day-to-day activities of the Bank’s top management, as well as a strengthening of the Executive Committee’s decision-making profile. www.bpm.it/governance/scheda_governance.shtml

Framework resolution on the management of relations with members (*) 1 July 2008 saw the introduction of the new Framework Resolution concerning the admission and handling of Members. While reiterating the principles underlying the co-operative model to which the Bank adheres, it introduced significant changes to important aspects such as the admission procedure for registration in the Members’ Register and members’ relations with the Bank and with the other members of the co-operative. The complete text of the resolution, updated for the resolution of 20 January 2009, is available on the following website: www.bpm.it/azionariato/diventasocio/azi_delibera.shtml

Code of Conduct for Listed Companies (*) as adopted by BPM In 2008 BPM has again adopted and implemented all of the recommendations of the Code of Conduct for Listed Companies in

64 the version of March 2006. In this connection, the 2008 Report on Corporate Governance provides an analysis and comparison between the organisational model applied by the Bank and the one foreseen in the Code of Conduct for Listed Companies. www.bpm.it/governance/scheda_codice_autod_it.shtml

Code of Conduct on Internal Dealing (*) (as updated in 2006) It very effectively lays down the disclosure requirements (to BPM, CONSOB and the Stock Exchange) and any limitations (e.g. black out period) on transactions in listed financial instruments issued by BPM and in financial instruments linked to them, carried out by “relevant persons” or by “persons closely linked to relevant persons”, i.e. by those who because of the position that they hold in the Group (Director, Acting Statutory Auditor, Manager with operational decision-making power such as to affect the evolution and future prospects of the Issuer) have regular access to privileged information concerning the Bank and the Group. www.bpm.it/investor/bilanci/pdf/Codice_comp.pdf

Guidelines on Significant Transactions and Related-Party Transactions (as updated in 2007) These identify “significant” transactions on the part of BPM (and the entire BPM Group), in particular those with related parties, laying down a specific and detailed authorisation process for such transactions. They also provide all persons concerned rules of conduct to communicate to the Bank their personal position as a “related party” in the carrying out of transactions with it and how members of the Board should act at board meetings. The procedure is described in detail in the Report on Corporate Governance. The question of related-party transactions will be the subject of

65 a new framework resolution based on the instructions soon to be issued by the Supervisory Authority. In particular, CONSOB issued a consultation document on this topic in April 2008. Once this is definitive, it will introduce additional rules on related-party transactions, making greater disclosure of the reasons for them.

Regulations on Privileged Information (art. 114 CFA) (*) These regulate the Group’s internal procedures to ensure the confidentiality of “price sensitive” information (i.e. any information that could affect the performance of the Bank’s stock) during the period between the start of certain activities and the moment when it has to be communicated to the market, as well as to ensure timely and non-selective diffusion of information. www.bpm.it/governance/scheda_art_114_it.shtml

Register of Insiders and related rules (art. 115-bis CFA) In compliance with the provisions contained in article 115-bis of CFA (and related CONSOB rules), the Bank has created a Register of persons with access to privileged information relating to BPM and any third-party issuers by virtue of their employment or profession or the particular duties that they perform; at the same time, the Bank has adopted a “Regulations of the Banca Popolare di Milano Group concerning the Insider Register as per art. 115-bis CFA”. These regulations, which were updated by board resolution on 27 March 2009, with the definition of roles, responsibilities and conduct, governs the identification of persons with privileged information in BPM and the Group in order to register them.

66 Decree 231/2001 in BPM - Code of Ethics (*) Of the various measures taken by BPM to implement Decree 231/01 on the company’s administrative liability, we would point out that we have adopted the Model of Organisation, Management and Control and the Code of Ethics, the appointment of a Supervisory Committee and the introduction of remote training courses for the staff, who have been sent the texts of the Decree, the Model and the Code of Ethics, both in printed form and electronically. The Code of Ethics is a series of general standards of conduct both internal and external, observance of which fosters the proper functioning, reliability and reputation of the Bank. www.bpm.it/vigilanza/chi_siamo_vigilanza.shtml

Group Regulations These lay down the organisational structure and rules for governing the Group, in line with Bank of Italy guidelines and the demands of strong, prudent management.

67 M a n a g e m e n t s t r u c t u r e o f t h e P a r e n t B a n k

Responsibility for strategy, control and governance of the Bank’s activities, as well as policy coordination for the entire Group lies with the central structures according to their respective areas of competence. The current organisational structure, which took effect from January 2008, consists of four Divisions all reporting directly to the General Manager, namely: the commercial network (known as the Commercial Division), the “operating machine” (the Organisation, IT and Operations Division), human resources (the Resources and Contractual Policies Division) and the governance functions (the Administration, Planning and Control Division). In addition to the four Divisions, the General Manager also has other structures reporting to him: the External Relations Office, the Lending Department, the Finance Department, the Strategic Marketing Department, the Compliance Function and the Internal Auditing Department (the last two report functionally to the Board of Directors). The structure was updated during the course of 2008 with a different mix of management committees and the new Network Controls Office, which is a staff function for the Commercial Division.

68 b a n c a p o p o l a r e d i m i l a n o m a n a g e m e n t s t r u c t u r e

S u p e r v i s o ry C o m m i tt e e B o a r d o f D i r e ct o r s

M a n a g e m e n t c o m m i tt e e s

Operational Management Committee E x e c u t i v e C o m m i tt e e Top Management Committee Commercial Policies and New Products Committee Asset & Liability Management Committee

Liquidity Crisis Committee G e n e r a l M a n a g e r Credit Policies Committee Management Financing Committee Committee for Classification of Non- performing loans E x t e r n a l Personal data Committee R e l at i o n s O ff i c e Technical Project Evaluation Commission

S t r at e g i c I n t e r n a l L e n d i n g F i n a n c e C o m p l i a n c e M a r k e t i n g A u d i t i n g D e pa rt m e n t D e pa rt m e n t F u n ct i o n D e pa rt m e n t D e pa rt m e n t

Resources and Administration, O r g a n i s at i o n , It C o m m e r c i a l C o n t r a ct u a l P l a n n i n g a n d O p e r at i o n s D i v i s i o n P o l i c i e s a n d C o n t r o l D i v i s i o n D i v i s i o n D i v i s i o n

C o r p o r at e C e n t r a l G e n e r a l T a x a n d International F i n a n c e B u y i n g A ffa i r s I n s u r a n c e Office O ff i c e O ff i c e O ff i c e O ff i c e

Operational N e tw o r k Marketing C o n t r o l s Office O ff i c e

Planning G r o u p It a n d Management R e ta i l C o r p o r at e Organisation H u m a n A cc o u n t s L e g a l O p e r at i o n s Accounting and D e pa rt m e n t D e pa rt m e n t Department R e s o u r c e s D e pa rt m e n t D e pa rt m e n t D e pa rt m e n t Risk Management D e pa rt m e n t Department

69

BPM GROUP ECONOMIC REPORT

71 ONOMIC EC RESULT of operations coST AND REVENUES BALANCE SHEET highlights ValUe aDDED

72 ONOMIC EC RESULT ECONOMIC REPORT

The Economic Report is the section of the Social Responsibility Report of operations which acts as the link with the Group Annual Report: it shows the main income statement figures of the BPM Group, highlighting the production and distribution of the wealth created among the coST AND REVENUES stakeholders. E c o n o m i c r e s u lt s BALANCE O f o p e r at i o n s The international crisis that hit the entire economic and financial system has inevitably affected the overall results of the BPM Group as well, which closed the year with a net profit of 75 million euro, considerably SHEET highlights less than in 2007 (-76.8%). Despite this general situation, which saw above all a retrenching of those income statement and balance sheet items most related to the performance of financial markets, the results of the Group’s commercial alUe activity are positive (also thanks to the contribution made by Banca V aDDED Popolare di Mantova and by the branches acquired from Unicredit): deposits are up (+7.8%), we have continued to grant credit (customer loans +10.5%) and as a consequence of this development and a slight improvement in interest spreads, net interest income has risen by +3.9%. The trend in operating costs also improved slightly compared with the previous year (– 0.2%).

73 PRINCIPAL COST AND REVENUE ITEMS (in millions of Euro)

Change 2008 2007 % change (+/-) Net interest income 1,068 1,028 40 3.9

Operating income 1,613 1,812 –199 –11.0

Operating costs –1,081 –1,083 –2 –0.2

Operating profit 532 729 –197 –27.0

Net profit for the year 75 324 –248 –76.8

PRINCIPAL BALANCE SHEET AGGREGATES (in millions of Euro)

Change 2008 2007 % change (+/-) Direct deposits 35,064 32,526 2,538 7.8

Loans to customers 32,899 29,767 3,132 10.5

Assets under management 15,979 20,150 –4,171 –20.7

Assets under administration 19,488 20,744 1,256 –6.1

The ratios shown in the following table reflect the above trend in costs and revenues and balance sheet aggregates. In particular: • Despite the decline in overall costs, the Cost to Income ratio has increased to 67% because of the lower level of operating income; • the return on equity (ROE), adjusted for non-recurring items, comes to 3.4%, with a decrease that proportionately reflects the decline in earnings; • the ratio of net non-performing loans to total loans (0.6%) has deteriorated slightly, but despite this it is still at a good level compared with the average for the banking system;

74 • the Total Capital and Tier 1 Ratios have improved thanks to a combination of the subordinate bond issue and better risk management as reflected in the figures for risk-weighted assets.

CERTAIN RATIOS (%)

2008 2007

Adjusted ROE 1 3.4 13.9

Cost to Income Ratio 67.0 59.8 Net non-performing loans/Loans and advances to customers, net 0.6 0.4 Total Capital Ratio 2 11.9 9.4

Tier 1 3 7.7 7.2

1 Net profit adjusted for non-recurring items (sales/writedowns of equity investments and sale of buildings not used in the business)/closing equity net of goodwill and net profit. 2 Regulatory capital/Total risk-weighted assets. 3 Tier 1 capital/Total risk-weighted assets.

More detailed information is available in the consolidated financial statements of the BPM Group, in the press release on approval of the 2008 annual report, in the presentation of the 2008 results to the financial community (www.bpm.it in the Investor Relations section) and in the Letter to the Members.

75 C a l c u l at i o n o f V a l u e A d d e d The following two schedules on Value Added (VA) make it possible to: • measure the wealth generated during the year (calculation schedule); • show how it was distributed to the various stakeholders (distribution schedule).

VA, calculated as the difference between the value of the assets and services that the company produces and those that it acquires from the outside, derives from the reclassification of the consolidated financial statements.

In 2008 the Group generated total gross Value Added of 1,044 million euro, which is 25.6% down on the previous year, partly due to lower revenues (– 4.8%), especially those of a financial nature, and higher costs (+12.4%), mainly due to additional loan loss adjustments. In both cases, this reflects a deterioration in the items most affected by the current financial crisis.

76 CALCULATION OF VALUE ADDED (in thousands of Euro)

2008 2007* Interest and similar income 2,313,939 2,211,497 Fee and commission income 590,577 658,376 Dividend and similar income 178,724 188,302 Net trading income –76,833 –58,014 Net hedging gains (losses) 781 –848 Gains/losses on disposal of financial assets/liabilities 11,453 25,477 a) loans and advances –2,459 –1,872 b) financial assets available for sale 4,140 26,402 c) financial assets held to maturity 0 0 d) financial liabilities 9,772 947 Net gain (loss) from financial instruments designated at fair value –145,389 –33,276 Other operating charges/income 110,790 115,591 Share of profit (loss) of equity investments –33,595 –8,524 Total net revenues 2,950,447 3,098,581 Interest expense and similar charges –1,246,232 –1,183,712 Fee and commission expense –73,097 –72,839 Other administrative expenses (net of indirect taxes, donations and gifts) –304,251 –288,883 Net adjustments for the impairment of loans and financial assets –238,755 –122,833 a) loans and advances –204,995 –127,429 b) financial assets available for sale –28,378 –23 c) financial assets held to maturity 0 0 d) other financial transactions –5,382 4,619 Net charges to provisions for risks and charges –34,527 –27,847 Adjustments to goodwill –9,032 0 Total consumption –1,905,894 –1,696,114 Gross core value added 1,044,553 1,402,467 Gains (losses) on disposal of investments –612 178 Total gross value added 1,043,941 1,402,645 Net adjustments to property, plant and equipment –41,281 –41,480 Net adjustments to intangible assets –26,960 –29,752 Total net value added 975,700 1,331,413 Payroll –692,176 –703,315 Other administrative expenses: indirect taxes –66,415 –67,266 Other administrative expenses: donations and gifts –4,040 –5,280 Profit before taxes 213,069 555,552 Income taxes on current operations –130,143 –220,233 Minority interests –7,657 –11,558 Net profit for the year pertaining to the Parent Bank 75,269 323,761

* The 2007 figure for the cost of the Statutory Auditors has been reclassified from “other administrative expenses” to “payroll”.

77 D i s t r i b u t i o n o f 2008 T o ta l G r o ss V a l u e A d d e d t o t h e S ta k e h o l d e r s

VA DISTRIBUTION SCHEDULE (thousands of euro) 4.0%0.7%0.4%

9.8% 66.3% 2008 2007

Total gross value added 1,043,941 1,402,645

Divided amongst: 18.8% Personnel 692,176 703,315 Public bodies and Institutions 196,558 287,499 Enterprise system 102,007 228,979 Members and Shareholders 41,503 166,014 Minority interests - net profit attributable to minority shareholders 7,657 11,558 Community 4,040 5,280 Personnel Members and Shareholders Public bodies and Institutions Minority interests Enterprise system Community

• Generally speaking, in 2008, all categories of stakeholders were allocated a lower amount of Value Added compared with the previous year. • Even though the percentage distributed has changed, the amount ! Figures and Ratios page 266 involved is much the same as for 2007: for most banks, the bulk of VA went to the employees (more than 66% in 2008), followed by public bodies/institutions (18.8%), the enterprise system (9.8%), the members and shareholders (4.0%), minorities (0.7%) and, lastly, the community (0.4%). • With the exception of the employees, where the figures are substantially in line with 2007 (–1.6%), all of the other stakeholders show quite large negative variances as the amounts allocated to them are directly linked to the net result for the year.

78 quota destinata a dipendenti, amministratori e altro personale sotto forma di stipendi, oneri sociali, trattamenti di fine rappprto e altri compensi.

PERSONNEL (in thousands of Euro) 703,315 692,176

PUBLIC BODIES AND INSTITUTIONS 287,499 196,558

2007 2008 2007 2008

Portion allocated to employees, directors and other Portion paid over to the State personnel in the form of salaries, social security charges, and local authorities in the form severance indemnities and other remuneration. of income taxes and indirect taxes.

ENTERPRISE SISTEM MEMBERS AND SHAREHOLDERS

228,979 102,007 166,014

41,503

2007 2008 2007 2008

Portion reinvested in the Group Portion distributed to the members in terms of retained earnings and shareholders depreciation and amortisation. in the form of dividends.

MINORITY INTERESTS COMMUNITY 11,558 5,280 4,040 7,657 2007 2008 2007 2008

Portion of net profit of Group companies Portion allocated to the community attributable to their minority shareholders. in the form of donations and gifts.

79

PARENT BANK SOCIAL POLICIES REPORT

81 CUSTOMERS MEMBER AND SHAREHOLDERS THE BANK’S MEN AND WomEn f o r n i t o r i COMMUnity ENViRONMENT

82 STAKEHOLDER

In this part of the Social Responsibility Report we give space to the relationships that we have with our various categories of stakeholder: we explain the strategies that we have for each of them, the activities that we have carried on during the year and the objectives that we have set to improve our relationship with them.

The Bank's Men and Women Community

bpm Suppliers

Customers bpm

Member and Shareholder

Environment

83 Our status as a co-operative bank, always with an eye on developing close links with the territory not only from a commercial, but also from a social and cultural point of view, enriches and enhances the relationship with each of our stakeholders.

We are firmly convinced that our success depends largely on their cohesion and growth: for this reason, when defining our development strategy, we also put considerable emphasis on improving the relationship with all our stakeholders.

Being well aware that the expectations of individual stakeholders are numerous and often conflicting, our commitment is to involve them in the long-term development of the Bank, a concept that we have often called the “harmonious balance of interests”.

84 THE PARENT BANK BPM “Customers”

This section explains the steps that Banca Popolare di Milano has taken to improve relations with its Customers, highlighting strategies and the projects that have been completed.

85 PROFILE Figures at end 2008 1,068,000 customers, of which Type of customers • 953,000 individuals Companies • 115,000 companies. 11% The territorial distribution of the customers continues to show strong roots in Lombardy (68% of the total, of which 80% in Milan and its Province), even if, compared with 2007, it has grown considerably in Lazio (+31%) thanks to the acquisition of the branches sold by Unicredit Banca. More than 41,000 customers (3.9% of the total) communicate with BPM exclusively through Internet.

Individuals Individuals The Bank has more than 950,000 individual customers 89% (+4% compared with 2007), split equally between men and women. Their average age is around 52.6 years and they have been customers for an average of 12.7 years.

Companies BPM serves around 115,00 firms – 105,300 Small Businesses and 9,700 Medium and Large Companies – a figure that has grown by around 4% compared with 2007. Their presence is particularly high in Lombardy, where 71% of the Bank’s corporate customers are located. In 2008, with the acquisition of the branches from Unicredit, there was a redistribution of corporate loans in favour of Lazio (+59.3%), even if the majority of loans (around 65%) is still to companies located in the Lombardy Region and its production system.

Geographical distribution of loans to companies

2.9% 5.1%

24.1%

18.5%

• 65.2% 21.1% 8.3%

9.9% 0.4% 9.7%

Lombardy Milan Emilia-Romagna Puglia Province of Milan Province of Como Lazio Rest of Italy Province of Varese Other Provinces

! Figures and Ratios pages 267-269

86 CUSTOMERS

The changes that are currently taking place in the economic context, principally as a result of the financial crisis that has affected the whole world, confirm one of our longest-held convictions: the importance of being a bank that pays attention to its territory and its players, whether they are households or businesses.

This means knowing how to maintain relationships with our customers over time, which requires an ability to listen to them and to satisfy their needs; this in turn requires a commitment to cultivate those values and to develop those skills that today allow us to respond to their needs rapidly and effectively, even in critical situations like the present.

So from this point of view, it can be understood how today, even more than yesterday, all of the activities that involve listening to customers directly are extremely important, though they also have to be followed by a concrete proposal of solutions to their needs.

This is an approach to banking that is more “sustainable”, also because it pays particular attention to the inclusion of sectors of the population that were previously denied access to banking and other financial services. This approach also promotes ethical investments and respect for the environment.

87 C u s t o m e r s ’ e x p e c t a t i o n s : l i s t e n i n g

Systematic measurement of customer satisfaction and the handling of complaints are two important “listening” activities which help BPM get to know its customers expectations. In 2008 we again gave a lot of attention to these two activities.

c u s t o m e r s at i s fa c t i o n

2008 was our fourth year of monitoring customer satisfaction. The results of the last four years show a continuing increase in overall satisfaction, which allows us to maintain a good position within the banking system, bearing in mind that customer satisfaction is improving generally in a market that is becoming increasingly competitive.

INDIVIDUAL CUSTOMER RESULTS The figures for individual customers are more of less stable compared with the previous report. The most important topic is current accounts. If in 2007 this was one of the Bank’s most critical areas, one year later satisfaction in this product has improved considerably; it is now our intention to continue this trend by using the most opportune means available.

88 Investments, which are INDIVIDUAL the second topic in 2006 2007 2008 order of importance 53.2 57.9 55.4 when determining overall satisfaction, are showing 34.4 30.4 33.7 results in 2008 that are 12.4 11.7 10.9 worse than the previous vote 8-10 vote 6-7 vote 1-15 year, mainly because of the lower returns caused by the crisis. The relationship between the individual customer and the Bank continues to play a leading role in determining the level of customer satisfaction; BPM’s performance in this area in 2008 was stable or slightly better, confirming the fact that the Bank’s main strength is its staff.

2008 was the second year that customer satisfaction has been monitored for private banking INDIVIDUAL customers. However, for 2008 2008 we have adopted a new research methodology (which 49.5 means that the two years are not comparable). The new approach 39.5 11.0 is similar to the one being used for the other types of customers, vote 8-10 vote 6-7 vote 1-15 while leaving room to address the specific aspects of private banking customers in the various areas of satisfaction being assessed. The survey generally reflected the critical nature of the investment management area, considered by many customers to be the most important of all; at the same time, it is open to improvement compared with their expectations, especially as regards offering solutions with a good balance between costs and results and the availability of innovative products. The next most important aspect was investment news.

89 The other areas that were analyses show satisfactory results, espe- cially as regards customers’ relationship with their financial advisor.

SMALL BUSINESS RESULTS In addition to a slight improvement in overall satisfaction, the 2008 results also show an improvement in the individual areas both compared with 2007 (current accounts and collection/payment services) and compared with the banking system (staff and branches). As for individuals, current accounts were also a key topic for small business customers. SMALL BUSINESS Customer satisfaction in 2006 2007 2008 this area shows a positive trend that reflects that of 55.2 58.3 60.2 the entire banking system, but with a performance 33.1 30.1 29.0 11.7 11.6 10.8 that is even better than the voto 6-7 average. The assessment of branch personnel is the second most important topic and this too shows results that are higher than the system average, above all with reference to their professionalism and competence. Despite the good results achieved in 2008, in line with those of the previous year, we are of the opinion that it is very important to monitor this area carefully so as to avoid any situations of declining satisfaction in a segment that is typically very sensitive about relationships.

90 h a n d l i n g o f c o m p l a i n t s

In 2008, BPM was one of the first banks to adopt the new method of reporting complaints data to ABI, which makes it possible to receive more detailed feedback and more accurate analyses of the problem than in the past. With this new system, participating banks will receive quarterly personalised reports and comparative analyses versus the system, which are very useful for improving internal processes, the range of service offered and the prevention of risks.

This project of ABI’s derives from a desire to monitor and analyse complaints in order to:

• help improve customer satisfaction; • reinforce the sector’s reputation; • improve forecasting models.

As regards BPM’s general trend in complaints, the most significant figures for 2008 are as follows: ! Figures and Ratios page 269 • around 2,200 complaints were received, which is 3.5% fewer than in 2007; • 8.5 complaints were received on average per day; • the distribution of complaints over the three four-month periods was fairly regular, though there was an increase during the last period of the year particularly for disputes of a financial nature; • the average time for handling a complaint was 17.5 days; • the main areas where complaints increased were savings, largely due to the consequences of the crisis in financial markets, and accounts and services, for reports of fraud on credit/charge cards and ATMs.

91 C u s t o m e r s ’ e x p e c t a t i o n s : f r o m l i s t e n i n g t o s e r v i c e

In periods of high competition and widespread economic uncertainty, it becomes even more important for a bank to create long-term, stable relationships with its customers: this is why BPM benefits from listening to customers by gaining suggestions for additional products and services that meet the genuine needs of households and businesses.

t ransparency

The PattiChiari Consortium recently adopted a new model of governance with a “multistakeholder” structure (i.e. including non-banking sector ! Figures and Ratios participants) with a view to further improving the relationship between page 270 banks and their retail customers. In this new role, the Consortium has taken on the task of identifying a series of tools (simplicity, clarity, comparability and mobility), which make up its “Commitments for Quality”.

Banca Popolare di Milano is supporting this project, taking part in the select task force appointed to choose a list of 30 commitments, and we are still part of the team which is looking after its implementation. The first part of these Commitments for Quality will be activated at the commercial network from April 2009, followed by the others, with completion due by the end of 2009.

92 f i n a n c i a l i n c l u s i o n o f w e a k c at e g o r i e s

This expression involves a series of tools, processes, products and services that facilitate access to credit on the part of a variety of people who share a low level of income and/or situations of social unease (e.g. the young, short-term contract workers, immigrants, the otherwise-abled); in other words, all those who are unlikely to find a bank willing to create a mutually satisfactory relationship with them.

The following are some of the initiatives that we worked on in 2008: • Diamo credito ai giovani, (Let’s give credit to the young), which is a way for young people between the ages of 18 and 25 to obtain a loan at zero interest to pay for university or professional training courses and to finance those between the ages of 18 and 35 who want to set up in business. This initiative, which ends in the first quarter of 2009, was promoted in 2008 by BPM together with the Associazione Famiglie Numerose (Association of Numerous Families) and was reserved for certain municipalities in the northern part of the Province of Milan; • Freely, a line of credit dedicated to the world of the otherwise- abled; • Diamogli Credito, (Let’s give them credit), a government initiative with BPM’s participation which allows university and post-graduate students to obtain a loan to pay for the various expenses involved in their training; • Fondi di garanzia per il credito a lavoratori atipici, set up together with the institutions of the Province of Milan to facilitate access to credit on the part of those workers who do not have full social security and who cannot offer normal types of guarantee.

93 parla con te parla con te

Servizi bancari dedicati ai cittadini stranieri.

Servicios bancarios dedicados gXicXZfek\ a ciudadanosgXicXZfek\ extranjeros. Services bancaires dédiés aux citoyens étrangers. Servicii bancare dedicate cetăţenilor străini. Banking services x x for foreign citizens. Tutte le informazioni nella tua p a r l a c o n t e parlalingua: chiama con il Numero Verde te Prendere visione Prendere delle condizioni economiche mediante i fogli informativi disponibili presso ogni agenzia BPM (D. Lgs. 385/93). Il presente messaggio pubblicitario ha dei finalità finanziamenti esclusivamente è promozionali. subordinata L’erogazione alla normale istruttoria da parte dell’agenzia.

94 The relationship between BPM and the immigrant population has ! Figures and Ratios page 268 become even more solid. Confirmation of this comes from the growth in the number of immigrant customers, who in 2008 exceeded 39,000 (8.4% more than in 2007), and from an increase in cross-selling and the average level of income, indicators respectively of higher loyalty and rising financial integration on the part of this segment.

In 2008 we took part in “Welcome Bank - ideas, projects and products for the banking integration of migrants” during which we were presented with the Welcome Award 2008 for the ongoing efforts we have made over the years in favour of this customer segment.

The main initiatives in favour of immigrant customers in 2008 were as follows: • The signing of an agreement with Western Union for the remittance of money to immigrants’ countries of origin. This agreement, which will operate alongside the Money Transfer services already available in BPM, offers a further advantage from the point of view of coverage, as the Western Union service will make it possible to reach even very remote places; • Communication review. Depending on the specific needs of those belonging to this customer segment, personalised promotional messages have been prepared for each type of service offered to them.

95 The use of a testimonial for each of the five continents generates a sense of emotional and aspirational identification, helped by multilingual communication.

Spedisci il denaro a casa tua in modo sicuro, semplice ed economico.

disponibile in agenzia il servizio MONEY TRANSFER 800.100.200

Prendere visione delle condizioni economiche mediante i fogli informativi disponibili presso ogni agenzia BPM (D. Lgs. 385/93). Il presente messaggio pubblicitario ha finalità esclusivamente promozionali. L’erogazione dei finanziamenti è subordinata alla normale istruttoria da parte dell’agenzia.

Extraordinario parla con te and Extraordinario money transfer were both promoted by public transport advertising campaigns in Milan, Turin, Bologna and Rome.

Extraordinario parla con te: (Extraordinary talks with you): this identifies generally BPM’s ongoing commitment to serve foreign citizens living in Italy, emphasising its willingness to create a dialogue with such people, facilitating as much as possible their access to the world of banking. Extraordinario money transfer: this identifies the solutions that BPM offers to immigrants wanting to send money to their country of origin. Extraordinario personal: this identifies the products and services offered to individuals and households (prepaid cards, current accounts, mortgages and loans). Extraordinario business: this identifies the products and services offered to current or aspiring entrepreneurs. Extraordinario information: this identifies the services designed for multiethnic/multilingual relationships and information.

96 d i s t r i b u t i o n o f s o c i a l ly responsible i n v e s t m e n t p r o d u c t s

The Italian asset management sector lost significant market shares again in 2008: net outflows were in excess of 140 billion euro and this, together with the negative performance of the markets, led to a sharp decline in the volume of funds under management.

Italian ethical funds also saw their assets decline for the third year running (-26.7% in 2008) due to a combination of market performance and net outflows of 464 million. These results confirm the difficulties that ethical funds have in making a name for themselves on the domestic market.

Contrary to the general trend of the ethical fund sector and of the overall market, the Valori Responsabili funds managed by Etica SGR ! Figures and Ratios page 270 turned in net inflows of 3.3 million euro, even if this was not sufficient to offset the decline in assets (down to 229.2 million euro) caused by the fall in market prices. For the same reason, the Group’s contribution has gone down by 8%, from 72.6 million in 2007 to 66.6 million euro in 2008.

CONTRIBUTION OF THE BPM GROUP TO TOTAL ASSETS MANAGED BY ETICA SGR (in millions of Euro)

Assets under management 2008 2007 2006

Etica SGR 229.2 236.6 210.4

of which BPM Group 66.6 72.6 70.2

(% Group) 29.1% 30.7% 33.4%

97 The prestigious Lipper Fund Awards 2009 were bestowed on two of Etica SGR’s funds: the Valori Responsabili Monetary Fund and the Mixed Bond Fund (see page 258). The latter also won the “Milano Finanza Tripla A” award for the best performance in 2008.

PERFORMANCE OF THE FUNDS BELONGING TO THE VALORI RESPONSABILI SYSTEM 1

Fund Net return Benchmark Average Ranking of fund return return of the as of 2008 2008 category* 31.12.2008

Monetary Fund +5.21% +5.92% +3.14% Best out of 42 Euro-zone short-term bond funds Mixed +2.98% +2.50% –1.54% Best out of 29 mixed Bond Fund bond funds

Balanced Fund –18.34% –19.21% –19.09% 12th out of 28 balanced funds Equity Fund –30.95% –30.76% –34.49% 4th out of 32 international equity funds *Return for the category in question according to the Fideuram Composite Index.

Subscribing 1,000 euro to one of the Valori Responsabili funds means that 1 euro gets devolved to the Guarantee Fund for Microcredit in Italy. This Fund, which at the end of 2008 amounted to around 450,000 euro, allowed Banca Etica 2 to pay out 73 loans to various individuals and social co-operatives, thanks to special arrangements with a number of local authorities and Caritas branches.

1 Source: Bipiemme Gestioni; the Assogestioni categories were used for these rankings. Fund returns are shown net of tax, management fees and other expenses. The benchmark returns are shown only net of tax. 2 Bank Etica is the leading ethical finance institution in Italy. Etica SGR, of which BPM is one of the funding shareholders, is the asset management company of the Banca Popolare Etica Group.

98 a c t i v i t i e s i n c o n t r o v e r s i a l m a r k e t s

During the course of 2008, we reduced even further the financing of arms exports, imports and transit as regulated by Law 185/90 (the law on the arms trade within the context of Italy’s foreign and defence policy and in compliance with the fundamental principles of the Italian Constitution).

No new authorisations were requested and the volumes of payments and collections for transactions already carried out fell drastically from 4.9 million euro in 2007 to 48,700 euro in 2008.

TECHNICAL OPERATING TREND 2004-2008 (thousands of euro)

Year Transactions Amounts carried out authorised

2004 32 57,946 2005 31 43,638 2006 14 18,216 2007 9 4,858 2008 – 49

As part of an upgrade of our social responsibility policies, we have begun a process of redefining our position as regards activities in controversial markets.

99 o f f e r o f l e n d i n g p r o d u c t s w h i c h p r o m o t e e n v i r o n m e n ta l ly s u s ta i n a b l e l i f e s t y l e s

We are continuing to promote and sustain initiatives aimed at private individuals and businesses to encourage energy savings and cope with climate change. Of these, we would mention in particular: • Credito Fotovoltaico – through the “Conto Energia” decree, it allows customers to benefit from government incentives for the production of electricity by means of photovoltaic systems. In 2008, this type of loan was even more successful than the previous year, both with individuals and with businesses. • BPM Pacchetto Ecologia – conceived for all types of renewable energy sources (wind, biomass, thermal solar, etc.), it also finances improvements in energy efficiency of plants, buildings and power stations, as well as company car pools made up of ecological vehicles.

We believe that this is a field where we can develop further products and services, given that people are becoming more and more aware about questions of environmental sustainability.

100 o f f e r o f l e n d i n g p r o d u c t s t o c o p e w i t h t h e c r i s i s

Ever since the start of the crisis, we have been ready to satisfy the changed needs of households and businesses. In a period when mortgages have been at the heart of the crisis, BPM was the first bank in Italy to launch a house purchase loan index- linked to the European Central Bank rate.

EuroMutuo: il mutuo della nuova era. dire. fare. respirare.

Il mutuo che non c’era. BPM continua a sostenere gli sforzi di chi deve comprare una casa, per questo ha creato EuroMutuo, la risposta più concreta al bisogno di certezze. È un mutuo accessibile a tutte le categorie di lavoratori, a tasso variabile, che viene ancorato al Tasso Ufficiale della Banca Centrale Europea (*).

Prendere visione delle condizioni economiche mediante i Fogli Informativi disponibili presso ogni agenzia BPM (D. Lgs. 385/93). Il presente messaggio ha finalità esclusivamente promozionali. L’erogazione del finanziamento è subordinata alla normale istruttoria da parte dell’agenzia. Esempio EuroMutuo: importo ` 250.000, durata 30 anni, rimborso rate mensili, TAN pari al 3,50%, ISC (Indicatore Sintetico di Costo) pari al 3,592%. Offerta valida fino ad esaurimento plafond. (*) Tasso Ufficiale della Banca Centrale Europea decorrenza 21.01.2009 pari al 2,00% maggiorato di 1,50 punti percentuali.

101 EuroMutuo offers customers a number of important advantages: stability, transparency and competitive pricing. In fact, the ECB rate is less volatile than Euribor 1, it is easier to consult as it is not subject to measurements for the calculation of interim averages and in the last five years it has been more competitive than Euribor.

To support businesses, SMEs in particular, BPM - together with Banca di Legnano - has made available a dedicated ceiling of 50 million euro through a credit product that is innovative and advantageous in terms of amount, commission and duration. This operation, which at a particularly delicate moment sends out a very strong message regarding BPM’s desire to stay close to the territory where it originated, is aimed at industrial and artisan businesses in Lombardy to ensure that they can continue as going concerns. The real strength of this plan is the involvement of all the Trade Associations with which the Bank has strong ties; in addition, the involvement in this project of Lombardy’s main Credit Guarantee Consortiums (Federfidi and Artigiancredit), also as guarantors, allows firms to obtain credit more easily.

1 Euribor is the interest rate at which banks lend money to each other.

102 services and initiatives for the third sector

Our collaboration with organisations of the Third (or Non-Profit) Sector grew even stronger in 2008, helped by the ongoing efforts of Faresolidale (see pages 194-195 of the chapter on “Community” for further details), as witnessed by the constant increase in customers (+2.6% compared with 2007).

THE THIRD SECTOR IN BPM (number of customers)

2008 2007 2006 Social co-operatives 302 308 205 Associations and other Entities 4,155 4,074 3,920 Foundations 204 191 185 Religious entities 553 511 538 Total 5,214 5,084 4,848

c o l l a b o r at i o n w i t h a s s o c i at i o n s a n d f o u n d at i o n s i n v o lv e d i n t h e d e v e l o p m e n t o f s o c i a l responsibili t y

In 2008 we continued our collaboration with various entities on matters such as microcredit, financial inclusion and education. Worth mentioning in particular is our participation in the following associations/foundations by field of activity:

COLLABORATION FIELD OF ACTIVITY Italian Banking Association (ABI) Development of financial inclusion Fondazione Sodalitas Development of social responsibility in the Italian entrepreneurial system Associazione per lo Sviluppo Support for dell’Imprenditorialità Immigrata small businesses run by immigrants a Milano (ASIIM) in Milan and the Province of Milan Forum per la Finanza Promotion of the culture of social responsibility in Sostenibile (FFS) financial investments in Italy

103 104 C u s t o m e r s ’ e x p e c t a t i o n s : accessibility and choice of channels

c o r p o r at e i m a g e

During 2008, the plan to reposition BPM’s corporate image, above all that of its distribution network, involved institutional communication and marketing. The institutional campaign at the end of the year was carried out at a time when the crisis had already started to create worries on the part of small investors and a loss of confidence in the banking system. In this situation, we chose to present ourselves to the public using language that was simple, but at the same time reassuring, reminding them of our fundamental characteristics: the fact that we are not a huge impersonal bank and our long tradition of remaining close to our territory.

105 106 We have also updated our approach to marketing communication in terms of expression and the mix of tools used, according to the following criteria: • consistency and pertinence of the messages being given to the customer segment in question throughout the communication and in all of the media being used; • clarity and transparency of all commercial information, even when the message is quite technical; • simplicity of language.

Of the various promotional and communication initiatives undertaken in 2008, we would point out the following as being particularly significant: • start of the revision of all promotional supports used in the branches, which have been updated both in layout and in creative design; • numerous ongoing activities in support of targeted and commercial offers personalised by customer segment or for particular local situations; • brand and product campaigns in classic national and local media (e.g. Mutuo Fermotasso, EuroMutuo, Rendimento 4.50).

107 108 b o o s t i n g s e l f s e rv i c e t o o l s

In order to complete the range of products and services offered in a multichannel environment to expand the ways that a customer can make contact with the bank, during 2008 we began installing advanced ATM terminal at certain branches.

These tools offer customers a dual advantage: • they can carry out a series of user-friendly teller operations (with easy access 24 hours a day, seven days a week all year round) in total autonomy, simply using their own ATM card; • greater availability on the part of tellers, no longer tied up with routine transactions, who can devote their time and skills to those services where the human component and professional experience are key elements.

Part of the Self Service Area of the BPM branch in Via Massaua, Milan

109 e v o l u t i o n o f o n - l i n e c h a n n e l s

The process begun at the end of 2007 and ended in 2008 relating to the evolution of the services offered on-line allowed us to achieve ! Figures and Ratios pages 270-271 important results in terms of widespread use of the electronic channel by customers.

In 2008, the on-line services www.webank.it and www.inlineanet. it, reserved respectively for private customers and businesses, were gradually combined into a single, new service called BPM Banking. The Webank continues to be operative for “pure” on-line customers, i.e. those with Conto@me and Conto MyBusiness accounts.

Generally speaking, the on-line services showed very positive results during the year, better than in 2007, except for trading and funds, which were affected by the difficulties in financial markets.

THE NUMBER OF ON-LINE CHANNELS 2008

Individuals Companies Total Trend 07-08 No. of on-line customers 259,514 61,112 320,626 19.6%

No. of new customers 56,988 12,589 69,577 28.1%

Total accesses per year 10,098,580 7,530,331 17,628,911 12.3% Active customers at end of year* 198,766 59,817 258,583 20.6% Active customers as percentage of total 77% 97.9% 80.6% 0.7 p.p. Requests for information (current account balance, movements, outcome 11,992,715 8,864,525 20,857,240 15.8% of instructions, etc.) No. of banking instructions** 2,146,752 14,807,447 16,954,199 6.0%

Trading on-line and fund transactions 420,197 n.s. – –10.0%

* Customers who accessed the site at least once during the year. ** Bank transfers, bills, RiBa, MAV, etc. for individuals; on-line instructions, CBI (interbank corporate banking) for businesses. 110 o n - l i n e d o c u m e n t s

There is a growing number of customers (+26.6% compared with 2007) who have access to this service which allows them to receive directly on-line, in a personal archive in the private part of the website, those accounting documents that the bank usually sends by post.

FIGURES FOR THE ON-LINE DOCUMENT SERVICE

2008 2007 2006

Accounts registered for the service 257,000 203,000 143,300

Product statements of account 3,150,000 1,950,000 1,100,000

Accounting documents produced 22,600,000 13,600,000 7,100,000

Amount saved by customers (in euro) 2,800,000 2,000,000 1,430,000

111 s e c u r i t y

Raising the general level of security continued to be one of our main priorities in 2008. Achieving it was pursued in three main ways: • a series of interventions for the “2008 Security Programme” launched at the beginning of May 2008; • introduction of continuous antifraud monitoring; • assessment of internal security.

The “2008 Security Programme” The purpose of this programme is to make customers more aware about how we handle on-line security. On-line fraud is in fact an ever-present risk and to fight it, customers have to act in ways that do not jeopardise security. In this connection, We@Service has for some time been sending customers information on this topic through the on-line services by means of direct mailing and spelling out the main points in commercial materials prepared for the network. Access recognition has also been made more secure as the system now asks the customer for more personal details (date of birth and mobile phone number) as well as those requested previously (ID, first-level password, second-level password and e-mail address). These interventions have been well received by customers, such that by the end of the year 99% of customers who issue instructions through the on-line channel had signed up for the security programme.

112 Antifraud monitoring At the end of May 2008, we started up a programme of antifraud monitoring, which was developed and consolidated during the course of the year. The main purposes of these activities were to: • prevent fraud by identifying suspect transactions and cases of digital identity theft; • handle cases of phishing and trojans designed to steal customers’ digital identity.

Internal security The following activities were carried out during the year by external specialists to assess internal security: • evaluation of the situation compared with the ISO 27001 and ISO 27002 security standards; • evaluation of the security aspects involved in the process of handling customers’ credentials; • assignment to each branch of a fictitious user to demonstrate the service to customers. This process showed that the Bank’s internal security situation is good. The activities relating to on-line security will continue for the whole of 2009, completing the initiatives launched in 2008 and undertaking new projects with a view to monitoring all aspects of security and defining measures to prevent and mitigate the IT risk involved in using the web.

113

THE PARENT BANK BPM “Members and Shareholders”

This section includes an explanation of BPM’s activities with Members and Shareholders, highlighting strategies and the actions that have been taken.

115 PROFILE Figures at end 2008 92,821 shareholders, of whom • 48,219 shareholders with 25.9% of the share capital • 44,602 non-member shareholders with 74.1% of the share capital

More than 63.1% of the shareholders live in Lombardy, prevalently in Milan and the Province of Milan.

Total Shares (415,034,231)

Members 25.9% Non-member shareholders 74.1%

Total Shares (92,821)

Non-member shareholders Members 48.1% 51.9%

! Figures and Ratios pages 272-273

116 MEMBERS AND SHAREHOLDERS

As a listed co-operative bank, we attribute a fundamental role to the relationship that BPM has with its members and shareholders, always in compliance with our mission and guiding principles, while taking into consideration the needs of the other stakeholders.

This means knowing how to combine the typical characteristics of a co-operative, such as attention to interpersonal relations, development of the mutual spirit in favour of the members (“internal mutuality”) and of the local territory (“external mutuality”), with the typical characteristics of a listed company, such as attention to market rules, operational efficiency and profitability.

We undertake to maintain and develop the traditional relationship of trust and transparency versus all of our members and shareholders that we have always had towards them. This we do by effective and constant communication and involvement, as well as by reinforcing the mutualistic profile and exchange that is typical of this relationship, while always respecting the rules laid down for listed companies.

With a view to increasing our identity as a large co-operative bank deeply rooted in its territory and close to the needs of local communities, we intend to enlarge the shareholder base, particularly by developing policies that give our customers incentives to become or remain members of the Bank and to raise their sense of loyalty to it.

117 118 S h a r e c a p i t a l s t r u c t u r e The distinction between members and shareholders comes from the very nature of a co-operative bank. According to the rules of co-operative banks, the status of member is acquired by being entered in the Register of Members and not merely by owning shares (subject to the so-called “approval clause”); those who do not ask to be registered or those that the Board of Directors do not approve for registration, giving the reason why, remain simple shareholders and only enjoy capital rights, not the right to vote.

Structure of the share capital made up of 415,034,231 shares (Breakdown by groupings and related % interest)

Partner Shareholders – 5.38%** with 22,314,695 shares

Other Shareholders – 39.78% Non-institutional with 165,080,030 shares Large Shareholders – 12.02%* with 49,902,002 shares

Institutional Investors – 42.82%* with 177,737,504 shares

NB: Institutional Investors include Qualified Operators and Undertakings for Collective Investment in Transferable Securities (UCITS).

* Institutional Investors and Large Shareholders with 100,000 shares or more. ** Partner Shareholders and Members: 4.85% CM-CIC Group, 0.53% Fondazione Cassa Risp. Alessandria.

The share capital of BPM at 31 December 2008 is distributed amongst 92,821 shareholders, 975 fewer than the previous year (–1.04%), split between 48,219 members and 44,602 shareholders who are not members.

Adjoining page: Entrance to the Ordinary General Meeting of the Members on 18 April 2008 at Fiera Milano City.

119 Analysing the shareholders shows certain characteristics that are typical of co-operative banks: • a prevalence of individual shareholders (97.8%) as opposed to ! Figures and Ratios legal entities (2.2%); pages 272-273 • a high level of fragmentation of the share capital as a consequence of the rule that limits share ownership to not more than 0.50%, excluding Undertakings for Collective Investment in Transferable Securities (UCITS); • a high number of employees and customers. Employees, who together with their minor children represent 3.4% of the share capital, are almost all members. Customers who are also shareholders hold 14.1% of the share capital and more than 70% of them are also members; • as in previous years, there is still a geographical concentration of shareholders in the areas where the Bank has its branches, particularly with regard to members; there tends to be a higher proportion of shareholders who are not members in the other regions and abroad.

The shareholders with more than 100,000 shares, who collectively represent 60.22% of the share capital, include the two strategic partners, Fondazione Cassa di Risparmio di Alessandria and Crédit Mutuel Group (CM-CIC); BPM’s search for strategic alliances follows a dual path consisting of commercial agreements at an international level and partnerships with financial operators willing to invest for the medium/long term.

Lastly, confirming BPM’s status as a listed bank, institutional investors hold 42.82% of the share capital; within this category, foreign investors account for around 30% of the entire share capital, which is lower than in 2007 (around 45%).

120 Terms of admission to membership and restrictions on share ownership In addition to specific clauses in the Articles of Association, the ways in which new members are admitted are laid down in the “Framework Resolution for rules concerning the admission and handling of Members”. It has been in force since 2002 and is currently available in the version updated as of January 2009 (see the chapter on governance on page 64). Among other things, this resolution: • provides for the setting up of a “Members’ Relation Commission” which reviews applications for admission to membership, cases of exclusion from the Register of Members and waivers on the part of the Bank of its preference guarantee on BPM shares; • defines the requisites and procedures for the admission of new members, both individuals and legal entities. Admission to membership is subject to sharing the Bank’s purposes, its objective interests and the spirit of its co-operative status. This requirement is deemed to be satisfied if the application is presented by a shareholder with at least 100 shares and is accompanied by a written undertaking to maintain this minimum investment over time. Of the situations that do not permit admission to membership, the rigid criterion that referred simply to residence in a tax haven (in a country on the “black list”) was eliminated in 2008, at which time a different approach was introduced, based on a detailed assessment of the level of transparency guaranteed by the aspiring member; the purpose is the same as before, namely to allow the Bank to check that the real owner of the shares satisfies the requisites for membership and to favour the entry of persons who have shown confidence in the Bank over time; • establishes the conditions and procedures for cancelling a member; • outlines the criteria for maintaining the Register of Members and Register of Shareholders;

121 • since 2008, following requests from certain members and giving further proof of the extent to which BPM is opening up, it provides for a “Members’ Address File”, which contains not only each member’s name, but also their address, providing they give express consent. This file is available for consultation and the issuance of abstracts to members on request; • defines the procedures for granting any special treatment or benefits to members.

During the course of 2008, reversing the trend of recent years, the Commission reviewed 1,092 applications for admission to membership, 455 more than in 2007 (around 70% more). Only one application was not accepted by the Board of Directors, based

! Figures and Ratios on point 2.e of the Framework Resolution. 21 names were also page 273 readmitted to the Register of Members as their possession of the minimum requirement was ascertained after the resolution to cancel them in December 2007 after they had sold all of their shares.

71 names no longer qualified to be members. The usual annual cancellation from the Register of Members for lack of shares did not take place in 2008 as the Board of Directors passed the resolution in January 2009.

122 In compliance with the limits on share ownership laid down in the current rules for the banking sector (art. 30 of the Banking Act, which we have included in art. 21 of the Articles of Association), according to which no one, except for UCITS, can hold more than 0.50% of the share capital, BPM contested 37 shareholders for exceeding this threshold.

The institutional investors that at the end of 2008 held a “relevant” shareholding in the Bank (i.e. more than 2%) are as follows according to the information received by the Bank and as reported by CONSOB:

RELEVANT SHAREHOLDERS AT 31 DECEMBER 2008

Shareholder Number of % held shares Caisse Fédérale du Credit Mutuel Centre Est Europe – CM (CM-CIC) Group (held by various group companies) 20,101,518 4.843 Credit Suisse Group (held by Credit Suisse, Credit Suisse Securities and Credit Suisse International) 14,161,723 3.412 Barclays Global Investors Uk Holding Ltd. (reported by Barclays Plc for ownership and Barclays Global Investors UK Holdings Ltd for management) 11,518,643 2.775 J. P. Morgan Chase & Co. Group (held by J.P.M. Securities, J.P.M. Whitefriars and Bear Stearns International) 8,486,966 2.044

123 V a l u e c r e a t i o n a n d r e t u r n o n c a p i t a l Since 1994 BPM has been a cooperative bank listed with Borsa Italiana SpA and forming part of the S&P/MIB Index (which has since become the FTSE MIB Index as of the publication date of the Social Responsibility Report) which includes the 40 most representative shares on the Italian Stock Exchange.

During the course of 2008 our stock also suffered from the tensions that hit the main world stock markets, closing with a fall of more than 50% compared with 2007, even if this is better than the sector index, the DJ Stoxx 600 banks (– 64.8%). At the end of 2008, the stock was shown at 4.18 euro, giving the Bank a market capitalisation of 1.7 billion euro.

2008 2007 2006

No. shares in circulation 415,034,231 415,034,231 415,034,231

Closing price of the year (euro) 4.182 9.268 13.138

High of the year (euro) 9.094 13.874 13.400

Low of the year (euro) 3.780 9.049 8.930 Market cap. at year-end (in millions of Euro) 1,737 3,847 5,452

In line with the entire banking sector, the trend of the BPM stock also went down steadily over the year, going from a high of 9.09 euro on 2 January 2008 to a low of 3.78 euro on 10 October 2008; the average trading volume was around 4 million shares per day.

124 PERFORMANCE OF THE BPM STOCK IN 2008

10.0 25,000

9.0 20,000 8.0

7.0 15,000 6.0

Euro 5.0 10,000 4.0

3.0 5,000 2.0 Volumes (thousands of shares) Volumes 1.0 -

28-12-07 12-02-08 27-03-08 08-05-08 19-06-08 31-07-08 12-09-08 24-10-08 05-12-08

Volumes BPM DJ STO XX BANKS

Despite the decline in net profit for the year (see the section on the Economic Report), the Bank has proposed for 2008 the distribution of a dividend of 0.10 euro per share, with a pay-out of more than 50%, just higher than in 2007, considering the capital solidity of the Bank and the quality of its results.

2008 2007 2006 Equity (in thousands of Euro) 3,177,278 3,151,415 2,960,312 Net profit for the year (in thousands of Euro) 75,269 323,761 398,680* Declared dividends (thousands of euro) 41,503 166,014 145,261 Earnings per share (Euro) 0.18 0.78 0.96 Price/Earnings (P/E) 23.1 11.9 13.7 Dividends per share 0.10 0.40 0.35 Yield per share 1.52% 3.56% 3.31% Equity per share (euro) 7.66 7.59 7.13 Price/book value (P/BV) 0.55 1.23 1.84

* Includes non-recurring gains of 75.1 million euro, deriving from the sale of 51% of BPM Vita and a building in the centre of Milan no longer used for business purposes.

125 In October 2008, as approved at the previous April’s General Meeting, the Bank started a programme of treasury share purchases to be allocated to the reserve for the purchase of treasury shares, which will close once it reaches the limit of the reserve (19.5 million), but in any case no later than 25 April 2009, the day of the General Meeting. At the end of 2008 the reserve held 2,387,725 shares worth around 5.9 million euro.

C o m m u n i c a t i o n In relations with the members, the other shareholders and the financial market, we base ourselves on the principles of accuracy, clarity, continuity, accessibility and timeliness and the information, making use of different channels, as follows:

Financial statements These report periodically on the Group’s activities with an emphasis on (annual financial statements, half- its economic results. year report, quarterly reports) Social Responsibility Report This reports once a year on the Group’s activities in the field of Corporate Social Responsibility, with an emphasis on the relationship with stakeholders. Letter to the members and to the This letter is sent out prior to each General meeting to highlight the shareholders principal events of the year and to encourage “informed” participation on the part of the members, as well as to provide instructions for those wishing to attend the General Meeting. Website The website is updated constantly with communications, news and documents, also in English when appropriate. Dedicated structures • External Relations Office - handles relations with the press and maintains contact with institutions, associations and entities to enhance the Bank’s image. • Investor Relations Office - handles relations with the financial community. • Members Sector – handles relations with members, also through a window reserved for members and shareholders (at the Head Office in Piazza Meda 4, Milan), a dedicated Freephone number 800 013 090, as well as all of the activities connected with the procedure for the admission of members by the Members Commission and the initiatives specifically for members, including participation at General Meetings

126 The Investor Relations function makes sure that the financial community has timely information, including information that might affect the Bank’s valuation. It carries on an intense activity, maintaining contact by telephone and by meetings inside and outside the Bank to increase the level of knowledge of BPM in Italy and abroad, as well as to boost the number of current and potential shareholders. During the course of 2008, this function has had contact with a total of 819 Italian and foreign institutional investors and financial analysts, in most cases involving top management as well.

CONTACTS WITH INSTITUTIONAL INVESTORS AND FINANCIAL ANALYSTS

One to one, group Presentations to the meetings, conference calls financial community and rating agencies and conference calls BPM’s Head Banking BPM’s Head Banking TOTAL Office Conference & Office Conference & Road Show Road Show

2008 108 211 240 260 819

2007 147 169 122 389 827

2006 129 131 198 264 722

Interest in the BPM Group is reflected in the growing number of analysts (21 at the end of 2008, 3 more than the previous year), who ! Figures and Ratios page 274 have improved their assessment of the BPM stock.

OPINIONS EXPRESSED BY ANALYSTS

2008 2007

Hold 47.6% 44.4%

Sell 23.8% 27.8%

Add 28.6% 27.8%

127 In 2008 the three rating agencies, Fitch Ratings, Moody’s and Standard & Poor’s, confirmed their view of the Bank’s solidity, ! Figures and Ratios page 273 demonstrating that they still had confidence in our company even in a period of extreme market difficulty.

P a r t i c i p a t i o n b y t h e m e m b e r s One of the prerogatives of co-operative banks is the high level of participation at General Meetings because of the one-man-one-vote system. Because of its status as a co-operative bank and as such with a large shareholder base, in BPM there is the rule of parity among members because of the principle of one-man-one-vote: in fact, each member has the right to express only one vote, quite apart from the number of shares owned. Indeed, general meetings are not only an opportunity to meet and discuss matters. They are above all a moment when each member has the chance to influence the governance of the Company by debating and then voting for the appointment of Directors and Statutory Auditors, to approve the annual report and to take part in other important decisions of an ordinary or extraordinary nature which the law and the articles of association reserve for them. This model of “corporate democracy” is further encouraged by the list voting mechanism (introduced into BPM in 2002, one of the first cooperative banks in Italy to do so). This gives minority groups formal representation, which reinforces even more the Bank’s relationship with its multifaceted shareholder base.

Being present at general meetings is a value not only for the member, but also for the Bank, as it shows that members share and are attached to the principles of the co-operative model. For this reason, we favour

128 maximum informed participation on the part of the members, always having respect for the law and the Articles of Association: • we organise general meetings in comfortable environments that are suitable for hosting a large number of people (they have been held in the pavilions of the Milan Trade Fair since 1996); • we communicate key figures and corporate events clearly and transparently on a timely basis to ensure that all members have sufficient input to take advantage of their right to intervene on the various topics on the agenda; • since 2007 we have been using a special IT procedure for issuing the document needed to attend General Meetings on a decentralised basis (it can be obtained from any BPM branch, wherever members have their securities on deposit.).

Orderly proceedings at General Meetings are governed by special Regulations, while control over the regularity of the Meeting, which is up to the Chairman, is guaranteed by a tried and tested organisational structure and an advanced IT system for running general meetings.

Plenary Meeting of the Members on 19 April 2008 at Fiera Milano City

129 Like every year, the two General Meetings held in 2008 (in April and December) also saw considerable participation on the part of members who attended either on their own account or by proxy: • 2,915 members at the Ordinary Annual General Meeting in April ! Figures and Ratios page 274 when the financial statements were approved; • more than 2,500 members at the Ordinary and Extraordinary General Meeting held on 13 December 2008, during which the amendments to the Articles of Association and the related changes to the Regulations for General Meetings were approved (see the chapter on Corporate Governance for further details).

In line with the principles of mutuality and the values of the co-operative movement, and in compliance with current regulations, on 3 June 2008 the Board of Directors passed a resolution concerning, among other things, “Distinctive Treatment and Benefits for Members”, activating the “Members’ Project 2008-2009”. The purpose of this project is to expand the membership base and increase the loyalty of customer/members, as well as to offer them certain exclusive benefits on banking products (lower charges and commissions on certain products and services and membership of the “Punta su di te” programme) and on non-banking services and special agreements. By automatically becoming a member of the “BPM Members Club”, a member will be able to enjoy an up-to-date information service, through various channels, the most important of which is a dedicated website (www.clubsocibpm.it), as well as special offers affecting various aspects to day-to-day like, such as health, personal care and leisure. Members will be informed about the start-up of this initiative by means of a personal communication that will be sent at the beginning of the second half of 2009.

130 M e m b e r s ’ a s s o c i a t i o n s The amendments to the Articles of Association approved by the Extraordinary General Meeting in December 2002, which concerned the introduction of the list voting system to promote the representation of minority groups on the governing bodies, did manage to foster aggregation among members, who then presented lists of candidates for the election of their representatives to the Board of Directors and the Board of Statutory Auditors in accordance with the regulations on such matters.

The Bank, especially the Chairman who has been delegated this task, has an ongoing dialogue with the Associations, assessing any appeals or proposals and answering any requests for further debate on company matters.

At present, there are four accredited Associations: • “Friends of Banca Popolare di Milano”, set up in 2003 to represent those members who are employees of the Bank. • “Together for Banca Popolare di Milano” or “Assoinsieme”, which is for members who are former employees or customers; • “Non-BPM Staff Members Committee”, which represents above all members who are not employees; • “BPM 360°”, which is for all shareholder members in general.

The following pages of this chapter are reserved for the Associations, where they have written about their characteristics, objectives and the activities that they have performed during 2008 1.

1 These texts have been provided by the Associations. Each Association is therefore responsible for the contents of its own article.

131 t h e “ f r i e n d s o f b a n c a p o p o l a r e d i m i l a n o ” a s s o c i at i o n Profile of the Association The “Friends of Banca Popolare di Milano” Association was set up as an evolution of the previous organisations that represented staff members. The purpose of the Association is to spread the co-operative culture, enhance the link between the Bank and its territory and local economy, stimulate participation at corporate events and investment in BPM shares.

The Association was set up (April 2003) at the same time that the amendment was made to the Articles of Association to introduce the list voting system for the renewal of the Bank’s governing bodies. The activities carried on to date have demonstrated over the years the importance of the role of staff members, who have always contributed to the Bank’s good results and to its growth with their work, their participation in the life of the company and their investment in BPM shares. The representativity of the Association has grown over the years, helped by the fact that it has been joined (as sustaining members) by members’ families, by the employees of other Group companies and by all of the members who share a common interest in maintaining and developing BPM’s co-operative status.

PROFILE Figures at end 2008

Name of the Association: “Friends of Banca Popolare di Milano” (which can be abbreviated to “Friends of BPM”) Year of constitution: 2003 Registered office: Milan, via S. Paolo 16 No. of members at 31 December 2008: 7,373 Chairman: Franco Zaffra

132 Association’s aims The aim of the Association is to protect the interests of all of its associates and sustaining members, based on the maintenance and development of the Bank’s co-operative status and on their participation in its share capital. The Association therefore pays particular attention to developments in the rules and regulations that govern co-operative banks, especially those concerning the one-man-one-vote rule and direct participation on the part of the members, both aspects that are considered fundamental for the life of the Co-operative. One of the Association’s tasks according to the articles of association is to express an opinion to the governing bodies with regard to the more important topics affecting the Bank and the Group, as well as to provide ongoing information to its associates with a view to getting them involved as much as possible in the life of the Co-operative. The Association also helps stimulate the relationship between BPM and local economies, businesses and institutions, considering it fundamental to raise its visibility as a territorial bank that has to respond in a mutualistic way to the needs of all its stakeholders. As regards share ownership on the part of associates, after the positive experience with accumulation plans reserved for employees in the past, new types of incentive schemes in accordance with the articles of association will now be taken into consideration.

Official Bodies of the Association • General Meeting of the Associates • General Meeting of the Delegates • Management Council • Chairman’s Office • Supervisory and Guarantee Committee

Activities and initiatives carried out during 2008 The main event in 2008 took place in November with the election of the Association’s officers. Details can be found on www.amicibpm.it.

133 The run-up to the election involved three lists of candidates, each of which presented its programme at various meetings with the members, which also proved an opportunity to debate the future of the Co- operative, bearing in mind the difficult evolution of the economic and financial scenario. All being convinced of the validity of the participatory model, there was substantial agreement on the part of all three lists with regard to the diffusion of the co-operative system, the enhancement of human resources, the need for the Bank to maintain close links with its territory, SMEs and households. The fact that these objectives are shared means that the mandate given by the associates for the years 2008-2011 should produce positive results. The official bodies of the Association held a debate on the proposed amendments to the articles of association that were presented at the Extraordinary General Meeting on 13 December. The topics of the reforms, which had already been discussed by the Association in the past, did not fail, yet again, to ensure a heated debate, also considering the impact and extent of the changes being proposed (especially the reduction in the number of board members coming from the majority list and the new powers of the Board of Directors and General Management).

Contacts Address: Via S. Paolo 16, 20121 Milan Telephone: 02 7700 4329 Fax: 02 7700 3905 Website: www.amicibpm.it E-mail: [email protected]

134 t o g e t h e r f o r b a n c a p o p o l a r e d i m i l a n o Profile of the Association Following the decision taken on 19 December 2002 by the

Associazione Insieme per la Cooperativa Banca Popolare di Milano Extraordinary General Meeting of the Members of Banca Popolare di Milano to amend the Bank’s articles of association in order to enhance the contribution made to the board of directors by the various components making up the membership, one group of members, representing former employees of the Bank, decided to promote the constitution of an association based on the experience gained by members when they worked for the Bank, together with the experience of customers in their dealings with BPM. One of the Association’s main objectives is therefore to foster synergies between former employees of the Bank and those who are customers, creating the conditions for a development project that is widely shared and likely to generate cohesion among the various types of shareholder.

PROFILE Figures at end 2008

Name of the Association: Together for Banca Popolare di Milano (which can be abbreviated to “Assoinsieme”) Year of constitution: 2002 Registered office: via G. Mazzini 11, Milan No. of members at 31 December 2008: over 3,500 Chairman: Franco Del Favero

135 Association’s aims According to its by-laws, the Association has the following aims: • to protect the interests of its associates, ensuring that they are in harmony with those of the entire membership; • to encourage active participation in the life of the Bank on the part of its associates, so as to protect and revalue its “historical” model, its legal and social particularities and its ongoing attachment to the idea of co-operative credit; • to identify candidates with the right professional skills and experience for election to the governing bodies of the Bank and of the BPM Group; • to maintain institutional relations with the Bank’s Board of Directors and with the other Members’ Associations. These institutional aims have subsequently been supplemented by a mission statement which includes the following key items: – to take steps to ensure that the history and traditions of the Bank are suitably handled and valorised, also considering that BPM will soon reach the prestigious age of 150 years. – to offer analyses and suggestions regarding the future of the Bank, so as to gather and focus in the best way possible strategies that favour BPM’s development.

All of the above in the context of a “modus operandi” that considers it fundamental for the Bank’s progress that there is complete independence on the part of the various components of the company and its members, as foreseen in the articles of association and regulations.

Official Bodies of the Association (art. 13 of the Articles of Association) • General Meeting of the Associates • Management Council • Executive Committee • Board of Auditors • Board of Arbitrators • Electoral Commission

136 Activities and initiatives carried out during 2008 Given that there was no longer the idea of growing externally, which over the last two years would have allowed the Bank to grow through extraordinary acquisitions, the Association made considerable efforts to avoid a split in the governing bodies, which could have led to an early end to the Board’s term of office. In 2008 Assoinsieme also discussed the matters involved in the renewal of the governing bodies which then took place in the spring of 2009. At the end of the year, Assoinsieme took an active part in the debates regarding the amendments to the articles of association that were subsequently approved at the Extraordinary General Meeting held on 13 December 2008. The decisions taken at that Meeting highlighted the considerable efforts that the Bank has been making to foster wider participation in BPM’s growth on the part of members. The Management Council of the Association frequently informed its associates about these matters. This enabled the Association to express an opinion on a timely basis in all circumstances, thereby realising its commitment to clarity and transparency.

Contacts Address: Via G. Mazzini 11, 20123 Milan Telephone: 02 8050 9134 Fax: 02 7700 6149 Website: www.assoinsieme-bpm.it E-mail: [email protected]

137 n o n - b p m s ta f f m e m b e r s c o m m i tt e e Profile of the Association The Non-BPM Staff Members Committee was formed in 1994 on the initiative of a group of the Bank’s members coordinated by Piero Lonardi, a professional accountant from Milan, in order to defend the interests of members of Banca Popolare di Milano and to ensure that they were adequately represented on the Bank’s governing bodies. This association particularly addressed the category of customer- members and investor-members. The Committee has its registered office in Via Pietro Mascagni 15, Milan and operational base in Via Mazzini 11, Milan. The nature, purpose and organisation of the Committee, as stated in its articles of association, can be summarised as follows: • it is an association of a voluntary nature that does not seek profit; • only members and shareholders of Banca Popolare di Milano may join it.

PROFILE Figures at end 2008

Name of the Association: Non-BPM Staff Members Committee (which can be abbreviated to BPM Members Committee) Year of constitution: 1994 Registered office: Via Pietro Mascagni 15, Milan No. of members at 31 December 2008: 4,130 Chairman: Piero Lonardi

138 Association’s aims • to safeguard and promote the image, role and economic and financial interests of Banca Popolare di Milano; • to represent members of Banca Popolare di Milano, and particularly those members who are not employees, safeguarding their interests and representing their opinions with the Bank and all institutions, public and private entities, including through discussion and collaboration with all other BPM Members and its Board of Directors; • to promote initiatives and activities that satisfy the aims described; • to safeguard and defend the bank’s role and co-operative spirit, encouraging the participation of all its members in its corporate life, seeking the utmost transparency in corporate communications and in the conduct of general meetings.

Official Bodies of the Association • General Meeting of the Associates • Executive Committee • Chairman • Deputy Chairman • Secretary

Activities and initiatives carried out during 2008 The Committee nominated the following candidates for the period 2006-2009: • Board of Directors: Roberto Fusilli and Piero Lonardi; • Executive Committee: Piero Lonardi; • Board of Statutory Auditors: Emilio Cherubini (Acting Auditor) Salvatore Rino Messina (Alternate Auditor); • Board of Arbitrators: Sergio Serafini.

139 During 2008, the Committee’s representatives continued to work in favour of an opening up of the Co-operative towards the members, organising initiatives to facilitate inclusion in the Register of Members and participation at General Meetings, pushing for the necessary amendments to the articles of association and encouraging greater efficiency within the Bank. During the General Meeting in May 2008, the Committee asked the Associations to work together for the necessary changes to the articles of association, making precise proposals which, unfortunately, were not accepted. The Bank of Italy subsequently recommended amendments that were in line with the Committee’s proposals.

Contacts Address: via Giuseppe Mazzini 11, 20123 Milan (operational base) Telephone: 02 7700 3997 – 02 782554 Fax: 02 7700 2492 Website: www.comitatosocibpm.it E-mail: [email protected]

140 bpm 360° Profile of the Association BPM 360° was set up on the initiative of Amber Capital, an institutional investor based in New York, a major shareholder of Banca Popolare di Milano for almost ten years and a member of the Bank since 2008. The Association is non-profit and membership on the part of the associates is voluntary. The main purpose of the Association is to encourage active participation in the life of the Bank on the part of BPM’s members and shareholders and to promote actions designed to improve the mechanisms of corporate governance.

The aims of the Association BPM 360° wants to represent an infrastructure that is close to the market, civil society and, in general, all categories of the Bank’s shareholders, helping to improve its governance, profitability and sustainable growth. While having respect for all of the people in BPM and their professional skills, the Association would like to promote an open and transparent debate on the possibility of improving the Bank’s corporate governance and raising the general level of operating efficiency, with a view to creating value for all of the shareholders. The Association also encourages active participation

PROFILE Figures at end 2008

Name of the Association: BPM 360° – Association of BPM Shareholders for BPM and the Market (which can be abbreviated to BPM 360°) Year of constitution: December 2007 Registered office: Largo Toscanini, 1 – 20122 Milan No. of members at 31 December 2008: 913 Chairman: Davide Croff

141 in the life of the Bank on the part of all of BPM’s members and shareholders, thereby ensuring that all categories are represented.

Official Bodies of the Association • General Meeting of the Associates • Executive Committee (made up of 6 members) • Chairman • two Deputy Chairmen • Finance Manager • Secretary • Board of Arbitrators • Advisory Committee

Activities and initiatives carried out during 2008 During 2008, the Association made every effort to heighten the awareness of BPM’s members, contacted numerous private and institutional investors and shareholders of BPM to involve them more in the life of the Bank. It maintained contact with the representatives of the other associations, civil society, the territory and all of the associates, so as to agree on the improvements needed to promote the Bank’s development. Its representatives took part in the General Meetings held on 19 April and 13 December. At the April Meeting, the Association presented its own project, asking for more dialogue between the various components of BPM’s shareholder body. At the December Meeting it publicly expressed its appreciation of the improvements made to the articles of association, hoping that it was a first step towards a greater opening up of BPM towards the outside world and that it would foster greater representation on the governing bodies of all of the components making up the Bank’s shareholders.

Contacts Address: Largo Toscanini 1, 20122 Milan Telephone (freephone number): 800053073 Website: www.bpm360.it E-mail: [email protected]

142 The Parent Bank BPM “The Bank’s Men and Women”

This section describes the activities of Banca Popolare di Milano in relation to the Men and Women who are stakeholders in the Bank, highlighting the strategies adopted and the work performed.

143 PROFILE Figures at end 2008 6,663 employees up 268 (+4.2%) since December 2007. In addition to the Bank’s employees, 51 people work under other forms of contract.

Turnover: 477 arrivals and 209 departures Arrivals comprised: • 49.9%, persons joining from the 38 former Unicredit branches • 19.7%, hired on temporary contracts • 9%, children of former employees • 4.2%, specialists • 17.2%, other types

Average period of service: 17.9 years with the Bank (unchanged compared with 2007) 4.7 years at the same grade (4.3 years in 2007)

The commercial organisation employs 63.3% of the Bank’s staff and absorbed 86.6% of the new recruits (64.8% in 2007 or 73.2% excluding the colleagues from Unicredit).

2008 2007 2006 Average age 43.1 years 42.8 years 42.8 years Average age of new recruits* 29.3 years 30.5 years 29.3 years University graduates 1,422 (21.3%) 1,298 (20.3%) 1,226 (19.4%) 106 (44.4% 107 (33.6% 67 (39.2% Graduate new recruits* of recruitment) of recruitment) of recruitment) Part-time employees 14.6% 14.6% 14.6% Employees promoted 18.8% 13.2% 12.7% Overtime 73,336 hours 73,483 hours 91,916 hours

Overtime set aside in time bank 38,391 hours 35,337 hours 35,044 hours

* Excluding the persons who joined from the former Unicredit branches.

! Figures and Ratios pages 275-277 144 T H E B A N K ’ S M E N A N D W O M E N

For 2008, we decided to entitle this section “The Bank’s Men and Women” since we wanted the language used to reflect clearly the value we attach to each individual taken as a whole, considering their needs and aspirations on both a professional and a private level. This wealth of sentiment and emotion characterizes the human relations within our Bank.

Given the importance attached to the individual and in the awareness that happy, motivated men and women represent a major competitive advantage for the Bank, we have always invested in initiatives that enhance the level of internal wellness.

Work continued in this direction throughout 2008, when a number of delicate moments had to be faced.

The considerable efforts dedicated to training and personnel development were essentially unchanged during the year, along with the attention paid to the health of our colleagues and their recreation time via the Mutual Health Fund and the ARES Social Club.

145 We have carried forward the POESIA project (equal opportunities and in-house support) which revolves around the Bank’s nursery, winner of first prize in the “Family-Work 2008” competition as the best family-support project. Action in support of the differently able has continued, together with aid for those who have been attacked and other activities in favour of equality of opportunity and diversity policies.

There is still room for thought against this positive background. At year end, the Board of Directors approved an efficiency drive that will result in negotiations between the Resources and Contractual Policies Department and the Trade Unions, to establish a banking solidarity fund that employees can join on a voluntary basis. There were also some complexities on the industrial relations front during the year, with a temporary impasse in the project to facilitate the sustainable turnover of personnel. This subject still remains high on the agenda and will be included in a broader, multi-stakeholder process that will involve the Bank in a series of activities focused on environmental sustainability.

146 T r a i n i n g a n d d e v e l o p m e n t

t r a i n i n g

Once again, training programmes have provided fundamental support for the achievement of our business objectives, representing an effective tool for mediation between and the integration of Group companies. This was especially true for those companies that refer directly to BPM on training matters.

In this regard, the results achieved cover three main areas: • the spread of culture and new behaviour that transcend each individual company, facilitating the acceptance of a systemic and synergistic vision of the entire Group; • the gradual spread and adoption of unified operating procedures and processes; • the design, development and management of distance-learning courses covering, in particular, the so-called “obligatory training”.

147 148 Personnel at Group companies and other collaborators not on the payroll received 10,758 man-days of training during 2008. This was on top of the 32,771 man-days of training that involved more than 5,700 employees of the Parent Bank.

TRAINING STATISTICS FOR THE PARENT BANK 1

2008 2007 2006

Man-days delivered 32,771 29,580 18,321

Attendance 49,085 49,854 19,566

Employees involved 5,709 5,760 6,315

As in the past, the training programmes covered different areas, applying the most appropriate methodologies and channels (classroom training - mainly provided at the Training Centre in Milan - distance learning, integrated training paths, coaching, “tutoring”), depending on their effectiveness and the objectives to be achieved.

COURSE CONTENT 1 2008

Training Area Attendance Attendance % Duration in Duration in of total man-days hours days* 8 Distance learning 28,390 57.8% 11,241 89,928 Professional training 16,369 33.3% 12,916 103,328 Initiatives/Other 373 0.8% 528 4,224 Procedural training 1,668 3.4% 4,385 35,080 Communications 1,077 2.2% 2,033 16,264 Management courses 819 1.7% 1,078 8,624 Languages 242 0.5% 288 2,304 Seminars/conferences 147 0.3% 302 2,416 Total 49,085 100.0% 32,771 262,168

Given the high quality of the training services provided, the “UNI EN ISO 9001-2000“ quality approval obtained in October 2007 was retained in 2008.

1 The figures shown differ slightly from those presented in the Report on Operations attached to the Annual Report, since they include subsequent updates.

Opposite page: view of the BPM Training Centre’s offices situated within the Service Centre in via Massaua, Milan.

149 d e v e l o p m e n t

When the going gets tough, it is especially important to remember that employees are not just a cost to be recorded in the income statement, but represent a true and proper intangible asset for the entire Group and all its stakeholders. In order to best safeguard and grow this asset, implementation of the Bank’s personnel enhancement policies is of paramount importance. Efforts made in this direction during 2008 included the following activities: • periodic monitoring of skills on a dynamic basis (skill development model), focused on evaluating the utilisation of persons in roles of increasing responsibility in order to cover key roles over time

Reception area at the BPM Training Centre.

150 (succession planning charts). The ability of this model to support effectively the personnel planning processes places it at the heart of the development system, since it is able to link the present (current position held) with the future (management of positions over time) in a manner consistent with the Bank’s business activities; • design of a system for the appraisal of performance (Performance Management) which can measure and assess the quality of individual and group contributions to the organisation. This system will be implemented on an experimental basis during 2009; • continuation of work on a training programme for the development of interpersonal skills for the IT and Operations Department, which will be launched during 2009 (see the next page for more details).

Training rooms at the BPM Training Centre.

151 d e v e l o p m e n t pat h s f o r t h e i t a n d o p e r at i o n s d e pa rt m e n t

The growth paths created for personnel in the IT and Operations Department are an example of the application of the personnel development model. This initiative, positioned with the IT programme “Transformation - Development of Existing Employees”, represents a new experience in which, starting from a precise analysis of “existing assets” (diagnosis), the interpersonal skills needed for the job are developed. Following the design phase carried out in 2007 and the diagnosis made in 2008, training paths will commence in 2009 for about 160 persons (about 50% of the IT population) divided into 9 groups. This process of planned learning will last about 8 months. This timing reflects the modular nature of the training path, which is a concrete application of the concept of skills development. The overall objective is to enhance the interpersonal skills of employees in terms of their customer orientation and negotiating skills by a mix of classroom and daily activities, working on both an individual and a group basis: self-training, classroom training, experience in the field with a tutor, coaching sessions and final assessment of the experience.

This sense of learning while gaining experience is common to all training paths. Using the metaphor of walking and footsteps in the sand summarised by the slogan “Paths are made by walking”, the point is that every “step” marks a new experience and an opportunity to learn: reading a book, watching a film, time in the classroom, discussions with the tutor and opportunities to try things out in the field. The image of tennis shoes printed on the training materials conveys the idea of movement. This is the first time that BPM has used tutorship as a tool for learning, with the tutor responsible for developing the skills of the members of his tutor group. Sector Leaders from the IT and Operations Department have been selected as tutors, given them the opportunity - via relations with their tutor groups - to strengthen such skills as taking responsibility, support, appraisal and guidance towards change, which are common to both the role of tutor and the role of manager.

BPM’s decision to launch this long-term project which, starting from IT, will be progressively extended to all Departments, reflects the importance attached to the quality of service. This is because the right negotiating and listening skills are key to the provision of quality service. Increasing the value of personnel and the managerial effectiveness of their bosses paves the way for further improvements in efficiency, as our people become more aware of their skills and develop an enhanced sense of responsibility.

152 T h e r e m u n e r at i o n s y s t e m A survey 1 carried out in 2008 of the remuneration model adopted by the Italian banking industry showed that: • the fixed element of the gross remuneration of BPM’s executives is much higher (77%) than that of the system as a a whole (68%); this situation is inverted when considering the variable element (13%) and benefits (10%) which, system wide, contribute respectively 18% and 14% of the total; • at lower grades, these three components of remuneration tend towards the system averages.

% OF TOTAL REMUNERATION BPM/SYSTEM

100% 10% 14% 17% 14% 19% 15% 19% 16% 20% 15% 22% 18% 90% 13% 80% 4% 10% 9% 7% 7% 4% 4% 7% 18% 5% 5% 70%

60%

50%

40% 77% 68% 80% 76% 77% 76% 76% 77% 75% 78% 74% 75%

30%

20%

10%

0% ExecutivesExecutives Q04 Q04 Q03 Q03 Q02 Q02 Q01 Q01 3A A Company Market Company Market Company Market Company Market Company Market Company Market

GROSS ANNUAL REMUNERATION SHORT-TERM INCENTIVES TOTAL VALUE OF BENEFITS

1 Survey carried out by Associazione Bancaria Italiana (ABI) and the Hay Group.

153 The research data shown in the chart on the preceding page show, in general, that the Bank has never exaggerated the importance of the variable element linked to results.

This modus operandi has avoided the placement of undue pressure on customers to buy higher risk products that offer the Bank greater returns, an outcome that has proved especially valid and praiseworthy in view of the circumstances associated with the current crisis. In addition, since the reduction in purchasing power cannot be offset by the normal adjustments to fixed and variable remuneration, the standard practice is to motivate employees by diverting part of their direct salary to indirect remuneration via the provision of non-monetary, company benefits. The Bank has been moving in this direction for some time, although further emphasis will be placed on it in the future, with further work-life balance and long-care initiatives to supplement the more traditional form (pension, health care).

154 C o r p o r a t e w e l f a r e The ongoing process of rationalisation and synergistic integration of the services provided to our colleagues continued during 2008.

“the garden of bez”, the bank’s nursery

The excellent reputation enjoyed by The Garden of Bez with employees and locals alike, together with the echo from winning first prize as the best project in support of parents in the Family-Work competition sponsored by the Lombardy Region and ALTIS (the Business School of Università Cattolica), resulted in all the nursery places for 2009 being rapidly taken up in the prior year. Accordingly, having regard also for the beneficial effect on “The Garden of Bez” website. the working environment and the organisation of work, a project is being developed for the expansion of the facility and for a network of agreements with private nurseries.

155 156 benefit for the organisation of work

An analysis was performed in early 2009 to measure the benefits of the Bank’s nursery for the organisation of work. Initial results have identified the following statistics: • in the 2006-2007 school year, two of the 18 mothers who worked part time with a child at the nursery returned to full-time work, or extended their working hours by one hour; they were joined by a third mother in the following year; • during these first two years of nursery activities, applications have doubled for children under the age of one. Internal statistics shown that, in BPM, about 80% of mothers stay at home until their child reaches the age of 1. This doubling of applications therefore shows that a significant number of mothers are returning to work early, rather than remain on leave of absence.

For the second consecutive year, a customer satisfaction survey was carried out in 2008 among the parents with children at the nursery. A total of 40 replies were received, representing 80% of the recipients of the questionnaire. The replies were predominantly positive in all areas, confirming once again the strong appreciation felt for the facility as a whole. In particular, the overall rating for: • the teacher was very good in 80.7% of cases, good in 13.2% and adequate in 6.1%. There were no adverse ratings; • the coordinator was good in 98.7% of cases and adverse for the remaining 1.3%; • the menu was very good in 76.6% of cases, and good/adequate for the remaining 23.4%. There were no adverse ratings.

Opposite page: Entrance to “The Garden of Bez” nursery at the BPM Service Centre in via Massaua, Milan.

157 In reply to the question (with three reply options) about the services that parents would like to see activated in future, the majority voted for an infant school, followed by a programme of meetings with experts and, lastly, a library for parents.

Different environments within “The Garden of Bez”.

158 BPM p e n s i o n f u n d

This pension fund is available to all employees within the Group. Opened in 1989, there were 6,701 members at the end of 2008. The fund’s resources are allocated to three categories of investment that differ based on the level of risk. Membership is voluntary and on an individual basis. Bilateral monthly contributions are made by members of the fund and the Bank. Following the latest pension reforms, this fund also receives the employee severance indemnities (TFR) set aside by the Bank.

Members 2008 2007

Members of the fund 6,701 6,507

Contributors of TFR 4,550 4,262

of which 100% 4,321 4,031

of which 50% 229 231

m u t u a l h e a lt h f u n d

This is a voluntary, non-profit association comprising BPM’s employees and pensioners. Its purpose is to provide members and their families with health and economic support that supplements that available from the National Health Service. At 31 December 2008, the net assets of the fund totalled 21.2 million euro and there were 10,025 members, as well as 7,662 beneficiary family members.

159 2008 2007 2006 Total beneficiaries 17,687 17,595 17,504 of which members 10,025 9,782 9,598 of which family beneficiaries 7,662 7,813 7,906 Net assets (in millions of Euro) 21.2 18.1 16.4

For organisational purposes, the fund operates three separate support funds – Health, Social and Survivor – that are governed by their own specific regulations.

Support Fund Purpose Beneficiaries 2008 Health • economic support supplementing that envisaged no. reimbursements: by the Public System 35,660 • health services available from approved doctors no. beneficiaries: and facilities 14,018 • provision of health-related education (e.g. total expenditure: awareness of ways to make improvements to 12.8 million euro lifestyle and eating habits) Social • economic support for expenses that are not no. beneficiaries: strictly health related 219 • support for differently able persons with 100% total expenditure: disabilities 0.9 million euro • contribution towards funeral expenses Survivors • economic assistance on the death of a member no. beneficiaries: or spouse. This fund provides support, in 54 particular, for the orphans of employees who died in service, so that they can complete their education.

During 2008, the governing bodies of the fund resolved to increase the stipends paid out by the Survivors Fund and fully updated the health services that are provided, with effect from January 2009.

160 a r e s b i p i e m m e ( s o c i a l c l u b )

ARES BPM is a non-profit co-operative comprising employees and pensioners of the BPM Group that organises recreational activities for its members and their families. Banca Popolare di Milano supports the activities of ARES by making personnel available, providing economic support and allowing the use of dedicated premises.

Members of ARES 2008 2007 2006

No. members: 9,613 9,396 9,116

of which employees 6,322 6,263 n.d.

of which pensioners 2,811 2,692 n.d.

of which other 1 480 441 n.d.

No. family associates 25,337 24,831 24,128

Total users 34,950 34,227 33,244

There were 34,950 users, comprising members and their families, at the end of 2008, reflecting a steady rise over the years.

ARES organises activities for members of all ages, ranging from cultural, tourism and sporting initiatives for recreational purposes, to charitable work (Solidarity at Christmas and Charity in the New Year), and from the sale of products and tickets for concerts and events, to special agreements with tour operators, publishers, public transport companies, car park operators and an insurance broker.

1 This category includes other members, such as the employees of Group companies.

161 For its more junior members, ARES organises a “school party” every year for children up to the age of 12, a “savings day”, special events at Christmas and Easter, and summer holiday camps.

Various activities of ARES Results in 2008 Tourism (no. departures) 4,700 Sale products (Euro) 356,000 Subscriptions to magazines 6,718 Concerts and events (tickets sold) 16,548 Insurance policies 8,889 Summer camps (no. stays) 644

All activities are supported by the central organisation in Milan, as well as by the Rome, Bologna and Foggia branches to ensure the wider distribution of services, and by the voluntary contribution of 14 thematic sections.

Members Thematic sections 2008

Silver: organises activities for the more senior members, generally pensioners 915 Athletics and Bowling: participation at local, national and international events 97 Bridge and Chess: promotion of courses and tournaments at various levels 40 Football: participation in two banking championships and organisation of 62 in-house tournaments Culture: proposal and organisation of cultural events (visits to exhibitions and museums, trips) with experienced guides 736 Double flash – motorcycling: brings together biking enthusiasts and contributes 335 to the annual “Charity in the New Year” event Stamp collecting: supports collectors with magazines and meetings to facilitate exchanges 200 Volleyball: participation in banking championships and national tournaments, and 52 management of a gym Fishing: manages an equipped lake with playground and picnic area 126 Skiing: organises ski trips that are always well received 226

162 With regard to the collection of funds for “Solidarity at Christmas”, ARES has been mentioned in the “Golden book of social responsibility 2008” (promoted by Fondazione Sodalitas, Milan), which brings together 200 examples of corporate social responsibility organised by various firms. During 2008, ARES BPM carried out a customer satisfaction survey of its members via an online questionnaire for employees and a paper version for pensioners. A total of 3,630 replies were received (see the sample profile below): 3,058 from employees (49.5%) and 572 from pensioners (20.4%). This is an extremely positive result, confirming the interest and involvement of ARES members in their co-operative.

Profile of sample* Employees Pensioners

Gender 54% men, 45% women 83.2% men, 15.6% women Average age 43 years 66 years Marital status 75.3% with partner/married 83% with partner/married Family size 3 persons 2 persons (average) Geographical 47% Milan, 19.9% province of 40.9% Milan, 25.2% province distribution Milan, 13.6% other provinces in of Milan, 16.3% other Lombardy, 19.5% other provinces in Lombardy, 17.6% other * Percentages exclude those not providing detailed information.

The research identified a number of suggestions for improving the service offered by ARES: larger number of initiatives for members that work or live in outlying areas, more timely and informal communications, further diversification of activities, upgrade the functions of the ARES website (www.aresbipiemme.coop), etc. Considering the results of the above survey, the ARES Board and organisation will work during 2009 to make the necessary organisational and operational improvements, commencing with the upgrade of the website.

163 I n d u s t r i a l r e l a t i o n s An important agreement was reached in 2008 regarding employees who work shifts or who are on call. As a consequence, the indemnities for shift work and persons on call have been revised and updated, and the organisation of such work has been rationalised to safeguard

! Figures and Ratios better the health of employees by establishing an appropriate number page 276 of night shifts.

This outcome was achieved after a major and, at times, tiring negotiation effort with the social partners.

The rate of union membership among employees exceeds 90%, in line with the situation in 2007.

164 I n v o l v e m e n t a n d c o m m u n i c a t i o n The involvement of workers relies on systems of internal communication that are capable of delivering all types of information: amounts, figures, decisions, suggestions, regulatory and behavioural requirements and changes. The breadth of such communications ensures the consistency of corporate culture and strategy, optimises the flow of operational information in both hierarchical and inter-functional directions, motivates and involves personnel, spreads a sense of responsibility, accelerates the decision-making process and improves the management of time.

The Bank’s established system of communication includes an Intranet to make a wide range of job-related materials available to employees. Press cuttings for the sector are available for consultation every day, enabling personnel to keep up to date with matters relevant to the Bank and the entire financial sector.

A number of specific involvement and communication initiatives were carried out during 2008, including: • organisation of conventions for new colleagues from the

165 acquired banks in order to facilitate the integration process. With the same objective, they were also sent a letter of welcome from the Chairman and the General Manager, together with a presentation brochure about the Group; • organisation of “say.do.continue” conventions in Rome and Milan at year end, for colleagues in the commercial network, to communicate the results for the year and the new business objectives;

“Say.do.continue” convention in Rome and at the Ciak Webank theatre in Milan.

166 • preparation and delivery to all employees within the Group of an explanatory brochure covering the Basel II accord, in order to update them on changes to the banking regulations; • organisation of the “Ideas in play” competition for BPM employees, in order to stimulate a spirit of initiative in the proposal of innovative projects.

the “ideas in play” competition Banca Popolare di Milano launched the “Ideas in play” competition in October 2008. The objective was to “activate” the creativity of employees by gathering projects, virtuous practices and alternative ideas that may help the Bank to make continual improvements in the areas of environmental protection and corporate social responsibility. The initiative represented an invitation to participate and share, consistent with the co-operative nature of the Bank. Participation was such that the deadline had to be extended in order to deal with all the various requests. More than 6% of employees took part, either individually or in groups, submitting 432 ideas-projects over a four-week period. Of these, 39 were selected for the final and 9 were awarded prizes. Analysis of the projects presented identified that: • most involved the specific work of the participants: our colleagues treated their professional experience as a value to share and enhance; • the “collective” element was common to all group entries: branch managers participated together with their subordinates; • the analytical effort made was considerable: even those with operational roles proposed analyses of great worth; • 70% of proposals came from branches in all the geographical areas where the Bank has a presence; • all age groups were active participants; • 25% of the projects sought to improve customer relations.

167 E q u a l o p p o r t u n i t i e s Efforts in the area of equal opportunities continued throughout 2008 via the POESIA project (equal opportunities and in-house support), winner of the Family-Work award: activities focused on drawing benefit from differences in gender, age, ability (see the next paragraph) and culture.

t h e fa m i ly - w o r k awa r d As part of the competition organised by the Lombardy Region and ALTIS, the Business School at Milan’s Università Cattolica, BPM’s POESIA project won the prize in the “Best programme of support for parents” category, for the following reason:

“For the value, the major investment made in the quality of personnel and the organisational/ architectural/educational approach taken to the corporate nursery, and for the great care and attention paid at the planning and design stage. In addition, further merit was found in the fact that the facilities are available to the local community, and that employees were involved at every stage: from the planning of the initiative, to creation, follow-up and future development.”

168 The presence of women remain both significant (44.9% of the entire ! Figures and Ratios pages 275-277 population) and on the increase, considering the high percentage of recruitment among women. There was a difference between genders when it came to promotions during 2008; in particular, there has been a slight increase in the percentage of women with managerial responsibilities. Women continue to predominant among the part-time population (94.6%). Again with regard to gender differences, we have continued to participate in the “Genderativity” project promoted by Sodalitas and AIED. This project seeks to identify practical action that facilitates the change of attitudes within the working environment. Work in 2008 focused on the generation of new awareness and the development of guidelines for considering birth as a source of energy for the individual, the couple, the group and the professional environment.

We also conducted a “Female Leadership” survey among women managers of central functional units, with a view to analysing their personal and working characteristics, needs, aspirations and how they perform their leadership role within BPM. A number of requirements were identified: • tools that help to reconcile their role with their family commitments, such as the expansion of services that support family-related activities (access to dry cleaners, plumbers, baby sitters, and approved nurseries); • management training to overcome gender stereotypes (need to make senior management more aware about this topic, via suitable forms of communication).

169 average results of the “female leadership” survey

A score of between 0 and 3 has been allocated tor each parameter in the following tables, where 0=not at all, 1=little, 2=enough, 3=a lot.

Characteristics of a female manager at BPM 3.0 2.5 2.0 1.5 1.0 0.5 0

Intuition CreativityInnovation Ambition Mind flexibility IntransigenceDetermination Dedication to work Aggressiveness/Competitiveness

Career obstacles encountered

3.0 2.5 2.0 1.5 1.0 0.5 0 Inconsistent Compulsory Man-based Stereotypes Lack of training territorial work and collaboration mobility organization prejudices among women

Important requirements for career progression at BPM

3.0 2.5 2.0 1.5 1.0 0.5 0 Length of Full-time Overtime Social Professionalism service work skills and results

170 In terms of cultural differences, BPM is co-leader of the Sodalitas working party on the multi-cultural nature of customers. The objectives here are to gather and share corporate experiences in this area, and to promote a culture of inclusion via the spread of best practices. For this purpose, a training course was designed in 2008, together with ABI, for the counter staff at branches with a high proportion of foreign customers. The course contents are designed to help understand different cultures, thus helping to overcome the prejudices and stereotypes that impede commercial relationships.

Acceptance of the “Family-Work Award” 2008.

171 S a f e t y a n d h e a l t h Work continued in two main directions in 2008 to deal with criminal attacks on BPM: • installation of anti-raid devices at the branches most exposed to risk. The number of branches with a biometric recognition system (for fingerprints) increased by 30% during 2008, from 103 in 2007 to 135 last December. This exceeded plan, which envisages the coverage of about 10 additional branches every year; • specific agreement with local law enforcement agencies. During the first half of 2008, the Bank signed collaboration agreements with the Forlì/Cesena, Ferrara, Prato and Lodi police for the identification of more effective anti-raid measures in those areas. We have also launched a project to provide psychological support following bank raids. Guidelines for standardised action have been developed via a series of interviews at the Milan branches that have suffered from recent raids. Following the more violent raids, psychological support is available upon request by the persons affected. Psychological support also continues to be available in such areas as handicap, work-related stress and the induction of new recruits into the network.

2008 2007 2006

Number of raids 71 96 71

172 Areas covered by psychological support Persons assisted in 2008 Induction of new recruits 90 Handicap 81 Prevention of stress 16 Post-raid support 1

BPM’s activities in the Handicap area were presented at a European level, as an example of best practice for banks, as part of the closing conference for the NORMA project 1 which was held in Milan on 30 January 2009 2. We have also started work together with Istituto Don Gnocchi on the ergonomic study of workstations for persons with major physical handicaps. Action in this area has covered the workstations of four colleagues with different types of disability, involving the purchase of special equipment to facilitate their work and movement within the office. Special chairs have also been purchased, offering a higher standard of safety. The action taken has been much appreciated by the persons concerned.

1 See the “Diversity Management” chapter of the Social Responsibility Report 2007 (pages 122-124). 2 The conference reports are available from the website htpp://normadialogue.com.

173

THE PARENT BANK BPM “Suppliers”

This section describes the activities of Banca Popolare di Milano in relation to the Suppliers that are stakeholders in the Bank, highlighting the strategies adopted and the work performed.

175 PROFILE Figures at end 2008 Purchases: 313 million euro, of which 39.7% for services

Number of suppliers: 1,406 (2,978 in 2007), of which: • 255 new suppliers (18.1%) • 760 BPM customers (54.1%) • 963 resident in North-West Italy (of which 892 in Lombardy, 92.6%)

Analysis by type of supply (% of invoicing)

Property: 18.1% of invoicing 27.3% of suppliers Technologies: 42.3% of invoicing 15.5% of suppliers

Services: 39.6% of invoicing 57.2% of suppliers

Analysis by geographical area (% of invoicing) North-East Italy 6.6% Central North-West Italy Italy 10.2% 78.8% Southern Italy 1.9% Italian Islands 0.5% Abroad 2.0%

! Figures and Ratios pages 278-279

176 SUPPLIERS

M i s s i o n a n d G u i d e l i n e s o f t h e C e n t r a l B u y i n g S e r v i c e

TRANSPARENCY AND EQUITY IN THE SELECTION PROCESS The purchasing policies of BPM’s Central Buying Service are designed to procure products, materials and services on the most advantageous terms for the Bank and the Group, considering the price-quality trade-off. This objective must however be balanced with the need to establish ways of working with suppliers that are respectful of both human rights and the environment.

SUPPLY CONTRACTS The contracts signed by the Central Buying Service include a termination clause if the supplier adopts discriminatory policies or violates the rights of workers or fails to comply with environmental regulations. All supplies must be appropriately formalised and documented.

177 RELATIONS WITH SUPPLIERS No potential suppliers may be prevented from competing for the supply of their products/services. In this regard, on-line tendering is widely used to ensure transparency, equity and speed in completing the negotiations.

PROPRIETY AND PUNCTUAL PAYMENTS Suppliers are paid within the contractual terms, based on clear and detailed agreements, with the result that disputes are minimal.

An operational area within the Central Buying Service at BPM’s Service Centre.

178 R e l a t i o n s h i p w i t h s u p p l i e r s Our objective is to obtain the best market and quality terms for the purchase of goods and services, in compliance with the procedures set out in the Supplies Regulation and the Bank’s Regulation, and optimising the timescales for the purchasing process as a whole.

The Central Buying Service carries out sector surveys, scouting and market checks, managing the pre-contract, negotiation and contracting phases through to the signature of contracts and framework agreements with suppliers. The conditions obtained are made available to all Group companies.

The Central Buying Service also manages the tendering process for the supply of goods and services, making use of on-line auctions - if the circumstances apply - which ensure transparency, equity and speed in completing the negotiations. They also enable all potential suppliers meeting the necessary requirements to participate.

The information about all BPM suppliers is gathered in a register that is updated using procedures which were further refined during 2008. The Bank is committed to investigating its suppliers and requesting them to provide a declaration confirming that their working methods are compatible with respect for human rights and the environment. Consistent with this intention, all supplies must be adequately documented and formalised in clear and detailed contracts containing suitable rules for compliance with the regulations on health and safety

179 in the workplace (pursuant to Decree 81/2008). These contracts also contain a termination clause if the supplier adopts discriminatory policies or violates the rights of workers or fails to comply with environmental regulations. Conversely, the Bank agrees to pay suppliers in accordance with the contract terms, thus guaranteeing a minimal level of disputes.

The suppliers’ register was reviewed during 2008, retaining only those companies that actually provide the Bank with commercially- significant supplies on an ongoing basis; we have also conducted a search for new suppliers. Following this work, the number of “active” suppliers has declined from the 2,978 recorded in 2007 to 1,406 at the end of 2008, of which il 18.1% were identified over the past year. This last statistic is evidence of BPM’s interest in investing in new solutions and initiating a process of renewal.

Further reductions are envisaged during 2009.

180 T h e S irf P r o j e c t During 2008, we also consolidated and improved our scoring with respect to the general principles established for the SIRF project and the related guidelines have been included as part of corporate policy.

In particular, we have refined the system of scouting for suppliers, having particular regard for sustainability issues.

Additionally, a pilot system has been implemented that, among its objectives, envisages simplified access for suppliers wishing to work with BPM and comprehensive management of the underlying contracts. The entire lifecycle of each contract is tracked, taking account of subsequent renewals and modifications, through to its filing in both electronic and hard-copy form.

These project objectives form the basis for a long-term plan designed to make constant improvements in this area.

181

THE PARENT BANK BPM “Community”

This section describes the activities of Banca Popolare di Milano in relation to the Community as a stakeholder in the Bank, highlighting the strategies adopted and the work performed.

183 PROFILE Figures at end 2008 Donations: about 500 initiatives financed for a total of 4.9 million euro, of which: • 4 million euro allocated to the Milan area • 2.3 million euro allocated to cultural initiatives

Conferences hosted: around 60

Type of initiatives financed Other 11.6%

Culture 47.5% Healthcare 15.7%

Education 1.9%

Solidarity 19.6% Research 3.7% Territorial nature of initiatives

Province of Milan 4.5% Lombardy 4.5% Other regions 8.3%

Milan 82.7%

! Figures and Ratios page 280

184 COMMUNITY

Given our nature as a co-operative bank, from the start we have sought to build ties with our members and the territories served. On the one hand, as a bank of people rather than just capital, we operate from a standpoint that places the entire human being at its focus: ability, commitment and work, but also needs and aspirations. On the other, as a grassroots bank, we have always been close to the social fabric, supporting its economic, cultural and social activities, and collaborating actively with bodies, foundations and associations. Over the years, alongside the traditional forms of financial assistance, we have added other forms of support that emphasise our role as a service organisation and mediator between the various actors on stage (for profit, non profit, citizens, institutions etc.), thus facilitating collaboration, with a logic that combines “making profit” with “being useful”.

185 186 C o m m u n i t y , a n o n g o i n g r e l a t i o n s h i p

Right from the start of our banking activities, we have maintained a presence, with our values, strength and contribution, in the principal cultural, scientific and humanitarian institutions rooted in the territories that we serve. Given our co-operative status, our articles of association allow us to allocate part (up to 2%) of the prior year’s net profit approved at the Shareholders’ Meeting to the reserve for charitable donations and the public interest. There are three major categories for the allocation of these funds: ongoing institutional presence, annual commitments and longer-term commitments, depending on whether the support for a specific project covers just one year or a longer period of time.

During 2008, 4.9 million euro was allocated to the community, about half of which for cultural activities. Although most of the action takes place in the original home territory, the Milan area (82.7%), the trend over the past three years has seen a redistribution in favour of other areas (in particular, the allocation to regions other than Lombardy has more than doubled).

The following pages provide further details about the actions taken with regard to specific projects in 2008, while merely listing those organisations that have received institutional support over the years.

Opposite page: Church of S. Maurizio at Monastero Maggiore

187 G r a n t s a n d d o n a t i o n s CULTURE Art and culture are treasures to be preserved and shared, accordingly we have decided to support them in their various forms:

Music and theatre: – Fondazione Teatro alla Scala; – Milan’s “Giuseppe Verdi” Symphony Orchestra; – Milan’s Piccolo Theatre; – “La Milanesiana”, 2008 edition; – Musical Evenings; – Cycles of Music and Poetry at San Maurizio; – Arturo Benedetti Michelangeli International Piano Festival held in Bergamo and Brescia; – Bach Weeks organised by Società del Quartetto; – “Two Organs in Concert” with La Cappella Musicale;

Villa Arconati.

188 – Festival at Villa Arconati (together with the Insieme Groane cultural centre).

Defence of our artistic heritage: – Monastery of Santa Maria di Chiaravalle: restoration of a XIIth century mill; – Restoration of the Sanctuary and Casa Alpina Motta at Campodolcino; – Church of San Maurizio at Monastero Maggiore.

Culture, training and conferences: – Istituto Luigi Sturzo: three-year project to reorganise the historical archives; – Fondazione Ugo La Malfa: cycle of conferences entitled “The Foreign Ministers reveal: Italy and the world over the past thirty years” held in the Aula Magna of Milan’s Bocconi University; – “100 years of Olivetti”, a conference promoted by Fondazione Adriano Olivetti and Fondazione ISTUD; – Fondazione Aldo Aniasi; – Fondazione Museo Teatrale alla Scala; – Istituto per la Storia dell’Età Contemporanea (ISEC); – Fondazione per la Sussidiarietà; – Fondazione San Giacomo; – Associazione Amici di Brera e dei Musei Milanesi; – Fondazione Artistica Poldi Pezzoli; – Fondazione Cineteca Italiana.

Art and exhibitions: – “Le Corbusier. Paintings and drawings”, exploration for the first time of paintings by one of the XXth century’s greatest architects; – “1900s. One hundred years of creativity in Piedmont”, comprising five areas featuring different themes and installations.

189 SOLIDARITY Fighting isolation in its various forms is the civilised approach and a way to build a better society, accordingly we have decided to diversify our contributions via support for various bodies: – Fondazione Fratelli di San Francesco d’Assisi: opening of a call centre for the aged and differently able; – Associazione per L’Abbazia di Mirasole: support for the CREADA project (centre for adult-adolescent relations) from an educational standpoint; – Fondazione San Carlo: grant to the fund in order to assist with housing problems in the areas of intermediation and assistance; – Opera San Francesco per i Poveri; – Comunità di San Patrignano; – Comunità Nuova; – Fondazione Exodus.

Details of initiatives carried out by Opera San Francesco.

190 HEALTHCARE Health is an assets to be preserved with care, accordingly we offer our support to various bodies whose daily work is dedicated to this end: – Fondazione Don Carlo Gnocchi: equipment of a ward for patients in a vegetative state; – Villaggio della Madre e del Fanciullo: purchase of an ultrasound machine; – Pio Albergo Trivulzio: contribution towards the cost of diagnostic equipment; – Fondazione G. e d. De Marchi: installation of a low-bacterial room at the Blood disease and Cancer centre of Fondazione Don Carlo Gnocchi. Clinica Pediatrica; – Istituto Martinitt; – Istituto Stelline; – Fondazione Emergency.

SCIENTIFIC RESEARCH Research is the true weapon of progress, accordingly we provide our support to various organisations whose main objective is the advancement of research, especially in the medical field: – Istituto di Ricerche Farmacologiche Mario Negri: purchase of scientific equipment for the new headquarters; – Istituto Nazionale per lo Studio e la Cura di Tumori; – Associazione Italiana Ricerca sul Cancro (AIRC); – Fondazione Centro di Cardiologia e Cardiochirurgia.

191 EDUCATION Education of the younger generations is a fundamental investment for the future, accordingly we finance a range of initiatives that promote this goal: – Facoltà di Economia dell’Università degli Studi di Bergamo: research into the fund-raising activities carried out by various providers of finance in favour of research projects in the health sector; – Istituto di Patologia Generale dell’Università degli Studi di Milano: study of the changes in the immune system of children and adults affected by Down’s Syndrome; – Università Commerciale Luigi Bocconi: Centro di Ricerca Eleusi; – Fondazione Rui: grant for the training of students at Torrescalla hall of residence.

192 Sport Sport is one of the healthiest ways to compete and stay together, accordingly for more than twenty years we have been an institutional sponsor of the Stramilano marathon that is run every spring. During this event we provide hospitality to a voluntary association: in 2008 our guests were the Milan branch of Unione Italiana Lotta alla Distrofia Muscolare (UILDM), which fights muscular dystrophy.

193 bpm f o r t h e n o n - p r o f i t s e c t o r

FARESOLIDALE (SOLIDARITY) Our sensitivity towards the Third Sector also includes Faresolidale, namely multi-functional support for non-profit organisations that assures them of effective assistance that is significantly different to the traditional forms of economic support made available by banks: dedicated products, innovative systems for gathering donations, and a website designed to inform, give visibility and facilitate contacts Faresolidale website between the protagonists of solidarity. Via Faresolidale, we continue and develop in a consistent manner our traditional relationship with the local communities served, completing the support we have always given to culture, solidarity and the arts. Faresolidale enables us to create a point of contact and exchange between for profit and non- profit associations and companies, volunteers and donors: a place where shared solutions can be devised, a place to obtain the latest information and a place for the synergistic achievement of common objectives.

This project began life as BPM Solidarietà, in order to promote concrete collaboration with non-profit organisations by making a

194 dedicated display area available to them within our branches. In 2001, we launched www.bpmsolidarieta.it, the first portal for non- profit organisations that became www.faresolidale.it in 2007. This website hosts non-profit organisations, guaranteeing them ample space for the presentation of their activities and projects, as well as direct access to the various donation systems available and to innovative and structured proposals for collaboration between non- profit organisations and firms. The significant and steady increase in visitors to the website (+200% in 2008) confirms the public’s increased awareness about solidarity and its confidence in this tool. In addition to the website, Faresolidale also provides a series of services that are potentially useful for the Third Sector and responsive to the changing needs of all the players involved (non-profit organisations, donors, other bodies and firms): consultancy, specific banking products and services, collaboration that promotes eco- sustainable behaviour.

In 2008, Faresolidale was the main sponsor of the first Fund Raising Festival, an event that involved those who work in and for the non- profit sector. The dual objective was to promote the sharing of “good practices” and the exchange of experiences, as well as to create a “network” among the various realities that, at different levels, work in the Third Sector.

MEMBERSHIP OF NETWORKS In 2008, we joined the network of strategic partners of AGIRE (Italian emergency response agency). This non-profit association brings together several of the most important and authoritative non- governmental organisations present in Italy, with a view to responding in a timely, effective and transparent manner to the world’s

195 humanitarian emergencies. The Italian network of partners contributes to informing and raising public awareness, and multiples the channels available for the collection of funds when emergencies arise.

We also joined Leader2Leader in 2008. This network of Italian and European executives is committed to the development of quality collaboration within civil society: for the exchange of strategic information, the release of synergies between high-level partners, cultural exchanges between leaders with different backgrounds, and the refinement of social and territorial understanding.

MAKING ROOM FOR SOLIDARITY At the end of 2008, we launched “Let’s make room for solidarity”, an initiative promoted by Faresolidale together with ARES Bipiemme and Ge.Se.So. 1 that consists in offering visibility to non-profit customers by inviting them to the Bank’s canteens so they can promote their activities and make themselves known to the Bank’s employees.

In addition, for many years at Christmas time our branches have promoted the sale to customers of UNICEF materials. Once again, the results this year were very good: we collected about 49,000 euro, almost 10% more than in the prior year, which goes to UNICEF in support of its projects for children.

1 ARES Bipiemme is a Recreation and Social Club that organises activities for employees (further information on pages 161-163), Ge.Se.So. is the Group company that operates the staff canteens.

196 COUNTING ON YOU Support has continued for ActionAid International, an Intorno a te organisation that fights poverty PUNTARE and social exclusion. Our SUGLI ALTRI È ANCORA “Counting on you” loyalty PIU’ PREMIANTE

Progetto Brasile programme offers the possibility per migliorare l’istruzione of transforming into economic aid the points accumulated from the use of various banking Website www.puntasudite.it services. About 150 donations were made in 2008.

SOLIDARITY AT CHRISTMAS Every year, ARES Bipiemme supports the collection of funds in aid of “Solidarity at Christmas”. The amount collected from members (active BPM employees, pensioners and employees of Group companies), plus the contribution from BPM, is donated to social solidarity work and international cooperation.

In 2008, just as in the prior year, the amount collected 150 thousand euro which was allocated in part to needy families identified by our colleagues (via Associazione Banco Alimentare) and, in part, to other associations.

197 O t h e r f o r m s o f l o c a l a s s i s t a n c e

Right from the start, we have provided concrete support on the ground, working with local groups and seeking to identify their needs and motivations in order to make progress. In this way, in addition to guaranteeing community support via donations and sponsorship, we also promote other initiatives. In addition to the initiatives mentioned below, we also collaborate with Associazione Famiglie Numerose which helps families with at least three children via access to the “We give Credit to Youngsters” loans scheme (see the chapter on Customers, page 93).

SOCIAL HOUSING In 2007, we took part in an important social housing project by investing 10 million euro in “Fondo Abitare Sociale 1”, an ethical property fund for which we are the Custodian Bank. This fund was created on the initiative of Fondazione Housing Sociale, in order to increase the private loans available for the construction of low-rental housing. The objective is to tackle the increasing housing problem by developing new homes on land or property obtained on assisted terms and managed by operators in the Third Sector.

198 This initiative is the first of its kind in Italy and among the most significant in Europe, standing out both for the amount invested (commitment for 85 million euro, of which more than 21 million euro has been collected to date) and for the ethical intentions underlying the approach, which are already obvious from the stated objectives. Following the publication of conditions by the Municipality of Milan, tenders were requested in November 2008 for the allocation of construction work on about 750 homes in three different areas of Milan (via Figino, via Cenni, via Ferrari).

“THE GARDEN OF BEZ” “The Garden of Bez”, the Bank’s nursery, was established both to meet internal demand from our employees and to provide a service to families resident in the same area as our Service Centre. The reputation established from the first year of activity, 2006, was further enhanced by the recent prize awarded by the Lombardy Region and ALTIS (see page 168). This has contributed to a rapid increase in applications, so much so that the places available in 2008 were taken up rapidly. A feasibility study has already begun for the expansion of the current premises, so that we can continue to contribute to the area’s need for nursery facilities.

199 200 THE PARK IN VIA MASSAUA The park surrounding the Bezzi Service Centre, opened in 2006 following an agreement with the Municipality of Milan, comprises about 10,000 sq.m. of green space that is open to the public. Management of the area is entrusted to BPM, which looks after the fencing, security and maintenance of the space. Children’s playgrounds, a fenced area for pets, a track laid with red asphalt and a track of beaten earth make the park a daily destination for mothers, children, sports enthusiasts and passers-by, with numerous visitors especially when the weather is good.

OTHER BPM INITIATIVES: CONFERENCES AND “INVITO A PALAZZO” Once again, our facilities (the traditional Columned Room at our headquarters and the modern rooms at the Service Centre in via Massaua) hosted around 60 conferences during 2008 on current topics in the economic, financial and social areas.

We also participated in the “Invito A Palazzo” initiative promoted by ABI, the Italian Bankers’ Association, which has reached its VIIth edition. Now almost a tradition, Italian banks open their doors to the public on the first Saturday in October, in order to show off their historic premises and artistic collections: for one day, the locations and environments of the banking profession become museums open to the citizens and tourists alike. The artistic treasures displayed to the public confirm the constant presence of banks in the civil and cultural history of our nation.

Opposite page: view of the park attached to BPM’s Service Centre.

201 202 HISTORICAL ARCHIVES Our Archives make available to scholars, journalists, members, customers and other interested parties the entire wealth of resources (assorted papers and photographic collections) accumulated and retained by the BPM Group over its history. Within the Archives, work also continues on the cataloguing and study of the documents and volumes that have been gathered together during the 140 years since the foundation of the Bank.

INTERNSHIPS With a view to bridging the gap between schools and the world of work, we work on a continuous basis with Milan’s principal universities (Università Commerciale L. Bocconi, Università Cattolica del Sacro Cuore, Università degli Studi di Milano, Politecnico di Milano), providing work experience and orientation that help students to chose their professions based on direct knowledge of the world of work. The interns received during 2008 mainly came from faculties and degree courses (three-year and advanced degrees) that specialise in economic and financial matters. Alongside the traditional commitment made to the universities, we also participate in special projects with upper schools that, on an experimental basis, involve the induction of a number of students with a view to facilitating their first steps in the world of working ina technical and specialist environment. The philosophy underlying these internships is founded on the concept of “exchange”: the Bank benefits from the availability of resources for a given project or activity, while the interns are able to test their skills within a major bank that is well known in the community.

Opposite page: details of a room with the Historical Archives at BPM’s headquarters.

203

THE PARENT BANK BPM “Environment”

This section describes the activities of Banca Popolare di Milano in relation to the Environment, highlighting the strategies adopted and the work performed.

205 PROFILE Measurement of environmental impact 2006 2007 2008

Heat (Kcal/sq.m.) Water (c.m./year) 380,150

276,525 276,081 50,200 30,550 31,200

The mapping of paper use was extended in 2008 to Paper (Kg) include internal consumption, tables and compulsory 1,296,183 documents to be sent to customers. The 2008 figure is therefore not comparable with that of previous years.

Waste recovery/disposal (Kg) Company mobility (Km/year)

1,482,475 2,747,203 2,717,914

1,344,986 2,548,495 1,275,412

! Figures and Ratios page 281

206 ENVIRONMENT

We are aware that our activities affect the environment and, therefore, that our strategic decisions must take environmental sustainability into account.

As a financial institution, our commitment to the environment involves giving attention to the direct effects deriving from our daily activities (energy consumption, use of raw materials, selection of products etc.), as well the indirect effects generated by those parties who we are able to influence (placement of financial products that facilitate eco-friendly behaviour, selection of suppliers based on certain requirements, provision of guidelines to Group companies etc.).

Photoelectric installation at BPM’s Service Centre

207 I n i t i a t i v e c o m p l e t e d We carried forward during 2008 the energy saving projects launched in 2007, with the achievement of several important objectives. The initiatives taken mainly relate to energy use and the fleet of company cars.

e n e r g y c o n s u m p t i o n THE “SAY.DO.SOLAR” PROJECT Consistent with the plans made last year, we have completed the photoelectric installations in Foggia and Milan. The provides energy for the signage at the Foggia offices, while the energy generated by the second provides lighting 1 for the playground adjoining the Service Centre in via Bezzi, which was installed by BPM and made available for use by local citizens.

1 Which explains the “say.do.illuminate” message that appears on the luminous display being installed in the playground.

208 The following statistics relate to the energy generated and CO2 saved every year by these two installations:

BEZZI 2 INSTALLATION FOGGIA INSTALLATION

Energy generated Energy generated

6,190 kWh/year 7,298 kWh/year

CO2 avoided CO2 avoided

3.44 tonnes/year 4.05 tonnes/year

The “say.do.solar” project also includes the commercial offer of financial products dedicated to the addition of photoelectric installations (see the chapter on Customers, page 100). During 2008, the Photoelectric Loans granted by BPM, BL and CRA resulted in installations with a total capacity of about 2,285 kW 1.

1 Sufficient to meet the annual energy needs of about 1,300 average families.

209 PURCHASE OF GREEN ENERGY We have continued to work with the Idroenergia consortium for the purchase of energy produced 100% from renewable sources; use of this type of energy enabled us to reduce our 2008 CO2 emissions into the atmosphere by about 26,352 tonnes. With a view to extending this project to other Group companies, Bipiemme Gestioni SGR and Bipiemme Private Banking SIM started to use “green energy” during 2008.

ENERGY SAVING PROJECT The focus on energy saving has caused us to consider the technological efficiency of our installations. In particular, we have worked on two fronts: • expansion and completion of the guidelines for renovations and for the fitting out of new branches; • work at existing branches to identify the highest levels of consumption and the related causes, with a view to a return to normal levels. In this regard, a Consumption Database has been implemented so that the historical consumption of branches can be recorded. This will facilitate planning work, routine maintenance and the modernisation of installations. The most common action taken relates to the use and overhaul of technological installations, in order to lower consumption via, for example, the use of rephasing plant and time switches.

210 “I USE LESS LIGHT” On 13 February, we took part in the “I use less light” initiative, an international day dedicated to energy saving promoted by the Caterpillar programme (Radio 2). The Bank’s contribution was to switch off all lights not essential for operational and safety purposes.

ENERGY CONSUMPTION

2008 2007 2006 Trend 07-08 Electricity KWh/m2 127.5 128 128 – 0.4%

Heat energy Kcal/m2 31,200 30,550 50,200 +2.1% (slight increase due to the more severe winter with respect to the prior year)

211 c o m pa n y c a r s

As envisaged in the Social Responsibility Report 2007, the environmental impact of the Bank’s vehicles was reduced during the last quarter of 2008 by lowering the total number of vehicles. In addition, a four-year leasing contract has been signed in order to replace 156 petrol-engined cars with Euro 4 vehicles, and 44 diesel- engined cars with Euro 4 vehicles fitted with active particle filters.

With a view to saving, we have also established a fleet of pool cars available to the functions located within the Bezzi facilities. The car fleet currently comprises: • 70 petrol-engined cars; • 114 diesel-engined cars/vans; • 3 motorcycles.

The car fleet drove a total of 2.5 million kilometres during 2008, down 7.2% with respect to the prior year.

ANNUAL KILOMETRES DRIVEN

2008 2007 2006 Trend 07-08 Km petrol 1,782,640 1,856,187 1,877,356 – 4.0% Km diesel 765,855 891,016 840,558 – 14.0% Total 2,548,495 2,747,203 2,717,914 – 7.2%

212 o t h e r a c t i v i t i e s

Various bodies within the Bank gave specific attention to the environment during 2008 including, in particular, Faresolidale and Cassa Mutua Assistenza (CMA), the mutual health fund.

In its activities, Faresolidale opts for “responsible consumption” by giving preference to eco-sustainable products and ethically- responsible suppliers, as well as by neutralising the emission of greenhouse gases via a forestation project at Milan’s Parco Nord. These activities will be extended in 2009, via the provision of an on-line service for customer associations that need information and practical support in the areas of energy saving and efficiency.

For the past several years, CMA has used a section of the Intranet to reduce the volume of printed materials. In particular, during 2008 CMA extended this section with additional new documentation, and informed its members about the importance of on-line consultation in order to avoid unnecessary printing. The text of this message also stated that “the consequent saving in the use of paper represents a significant and responsible decision to consume wisely”.

213

THE PARENT BANK BPM “2009 Objectives”

This section describes the improvement objectives for 2009 set by Banca Popolare di Milano.

215 2009 OBJECTIVES

The definition of objectives for improvement was affected by the severe economic crisis that arose during the second half of 2008, which carried on in the following months up to the time of going to press. Although social responsibility remains strategic, as already stated in the introduction, it has also been necessary to take account of the changed conditions which, along with the rest of the banking system, have caused BPM to pay even greater attention to the management of costs.

This said, BPM has established an approach for 2009 that takes three directions: • in terms of policies, we intend to rationalise the complex system of internal regulations that, directly or indirectly, govern the values that inspire the activities of the Bank. The numerous CSR activities require consistent and clear (as far as possible) codification as a basis for the concrete lines of action taken. Accordingly, the objective is to develop a summary document - already well advanced - that presents our commitments to stakeholders and represents out social responsibility contract with them;

216 • in terms of systems, we will define an “integrated” approach to the environment that, for consistency and credibility, covers both internal and external systems: on the one hand, we will develop a full range of sustainable banking and non-banking products for our customers and, on the other, we will adopt internal measures to reduce the consumption of paper, energy etc. (with a consequent reduction in CO2 emissions), in order to manage appropriately the direct impact of our activities. This is a complex, cross-functional project that spans the various areas of the Bank and the various stakeholders, and its completion will necessarily be gradual; • lastly, in terms of other more established initiatives and consistent with the macro objectives set in the Social Responsibility Report 2007, we will launch or, in some cases, continue specific projects relevant to individual categories of stakeholder.

217 Corporate responsibility strategy: areas of intervention in 2009

CSR strategy

Involvement and participation

Customer satisfaction

Work environment and training

Customers Members Equal Personnel opportunities For all stakeholders

218 Corporate responsibility strategy: areas of intervention in 2009

Inclusion Co-operative in the business spirit

Policies Increase in number for controversial sectors of shareholders

Financial services Member-customer for the disadvantaged loyalty

Financial Charter of values sustainability and commitments

219 c u s t o m e r s • In 2009, we will continue to conduct customer satisfaction surveys. In one of the worst ever years for the entire banking system, listening to our customers will help us to understand better their expectations of us and the steps to be taken to retain their confidence. • Consistent with our principles of social responsibility, we are committed to revising our position with regard to transactions in controversial markets. This will involve identifying certain economic activities considered to be especially problematic, for which we will apply special appraisal and decision-making procedures. • We are committed to paying great attention to the accessibility of financial services by persons who are not fully included in society. In this context, we will continue to monitor the market represented by immigrants, and we will take experimental action to develop forms of microfinance via collaboration with parties that have specific experience in this area. • We will strengthen our presence in the segment of socially responsible investment, promoting awareness among the public and taking special steps to listen and communicate. • With regard to environmental sustainability, we intend to develop the market of “Green products” by expanding our range of products and raising public awareness about this topic.

220 m e m b e r s • Consistent with our mutual and co-operative spirit, we will launch and implement a long-term project of offers to members, with a view to expanding the number of shareholders. This project envisages the offer of banking products and services on advantageous terms, as well as non-banking products and services targeting, in particular, health, personal wellness and recreational activities. Shareholder customers will also have the opportunity to accumulate a larger number of “Counting on you” points from their banking transactions. p e r s o n n e l • In order to make social responsibility a pillar of our corporate culture, we will facilitate the communication of the related topics via specific training for all our employees, the nature of which will depend on their level and role within the organisation. Corporate policy is implemented by the persons who work in the organisation, so their involvement and participation is fundamental. • Pursuant to the new Decree 81/2008, we will carry out an assessment of the risk of work-related stress. • In view of the numerous and growing number of applications for places in the corporate nursery, both by employees and by local residents, we will study the feasibility of expanding the facility, taking account of the benefits for the working environment and the organisation of work, and - in the meantime - we will also create a network of approved private nurseries.

In summary, we will continue work to rationalise our approach to corporate social responsibility, without however ceasing our commitment to traditional areas, where we will introduce further elements of stability and systematic support.

221

BPM Group Banks and Companies

223 224 i d e n t i t y

Banca di Legnano was founded in December 1887 to respond to the financial needs of manufacturing industry in the area north of Milan which, at that time, was taking on an increasingly important economic role. Since that time, Banca di Legnano (BL) has always been the primary bank in the northern sector of provincial Milan.

Following the Second World War, Banca di Legnano took an active part in the reconstruction effort and, during the economic boom, contributed towards the development of modern Italian industry. Around that time,

Figures at end 2008 PROFILE

Distribution network: Direct deposits: 3.2 billion euro 117 branches, of which Indirect deposits: 3.6 billion euro 102 in Lombardy Loans to customers: 3.3 billion euro Net profit for the year: 67 million euro Headcount: 846 employees, of which 31.3% women and 68.7% men

Customers: over 160,000, of which 87% individuals

225 Banca Commerciale Italiana became the majority shareholder of BL.

BL joined the BPM Group in 2001. BL’s commercial policy is designed to consolidate and expand the market shares already acquired in the traditional provincial territories (Milan and Varese), and to expand into the adjoining areas. These objectives are pursued via continual improvements in efficiency and the progressive expansion of the commercial network which, in recent years, has established a presence in the provinces of Como, Novara and Verbano Cusio Ossola. In this context, BL has reinforced its vocation as the bank of reference, ensuring that funds are redeployed in the areas from which they were sourced. This provides support for those firms - especially SMEs - that, in turn, create employment and wellbeing. The consistent achievement of this objective over the years was further consolidated during 2008, as shown by the following numbers and statistics.

226 s o c i a l p o l i c i e s r e p o rt

C u s t o m e r s BL had 160,448 customers at the end of 2008, 94% of whom were resident in Lombardy (including 70% in the city and province of Milan). This illustrates the bank’s grassroots presence in Lombardy, especially in the areas north of Milan and around Varese. For the future, a significant increase in customers resident in the provinces of Piedmont is expected, given the expansion there in accordance with the Group’s strategy for BL. In particular, the main mission is to establish a greater presence in North-East Piedmont. In this regard, 4 branches were opened in Piedmont during the year, thus establishing an initial presence in the province of Verbano Cusio Ossola. There are now more than 139,000 individual customers. There are slightly more women (52%) than men, and the average length of time as a customer exceeds 10 years, confirming the ongoing satisfaction of customers with the service received.

BL’s customer profile also includes more than 21,000 firms: 19,500 small firms and 1,500 medium-sized and large firms. The predominance of small firms and the priority given to BL’s presence in Lombardy, both in terms of number of clients (over 93%) and the related volume of business (98%), confirms the position of BL as a retail bank rooted in its home territory.

Customer Satisfaction The systematic verification of customer satisfaction is intended to measure the quality “perceived” by the customers that use BL’s products and services. 2008 marked the third edition of this monitoring

227 programme. There has been an upward trend in the overall level of satisfaction during this period, and the bank’s positioning with respect to competitors has remained good.

The overall satisfaction instinctively perceived by individual customers has improved, while the considered perception has essentially remained stable. Customers do however expect a more proactive approach from the staff of Banca di Legnano, with the presentation of more attractive and/or more remunerative products; value is attached to the quality of the relationships built up over time.

The survey conducted among firms indicates that the bank’s situation is broadly stable, with an advantage in the eyes of customers with respect to the rest of the banking system.

The commercial range: “green” products In general, the commercial range is benefiting from the synergistic action being taken together with the Parent Bank to create common products capable of meeting the needs of all target customers. With specific regard to initiatives in support of energy saving (see page 100 for more information), targeted commercial action over the past year or more by the entire network has encountered considerable interest from both individuals and business customers in the retail segment.

(amounts in Euro)

Initiative Individuals Companies No. loans Amount No. loans Amount 2008 2008 2008 2008 Photoelectric Loans 27 752,000 14 2,506,000 BDL Ecology Package 12 212,000 2 275,000

228 As shown in the above table, the commercial results achieved in 2008 were good; even better results are expected in 2009 since, at the time of preparing the Social Responsibility Report 2008, applications worth over 15 million euro are under review.

Evolution of on-line channels The work commenced at the end of 2007 to enhance the services offered on-line was completed during 2008 by the creation of BL Banking, a new service that brings together the individual customers who accessed www.webank.it and the business customers that used www.inlineanet.it. At the end of 2008, 28,928 individual customers used the electronic channels (+20.0% vs 2007), 80% of whom (23,128) have already carried out Internet transactions. A total of 267,489 banking transactions (transfers, utility payments, settlement of bank receipts, MAV credit collection, purchase/sale of securities etc.) were carried out during the year, up by 26% compared with 2007, while there were 1,969,175 requests for information(+12% compared with 2007). The on-line activity of business customers also increased significantly during 2008. There were 10,936 business customers registered for the on-line service at year end, representing 51% of the total. Of these, the 10,895 active customers (99.6% of those registered) made 1,231,534 visits to the BL Banking website (+18% compared with 2007) and made 1,254,685 requests for information (+21% vs 2007). In terms of transactions, a total of 1,629,356 individual or batch instructions were given (+9.8% compared with 2007).

PattiChiari (Transparent terms) Management of the 8 PattiChiari initiatives has continued. BL has participated in this ABI initiative since its inception. This participation enabled BL to obtain quality certification back in

229 2004 and maintain it during the period 2005-2008. Over this time, the maintenance audits performed by CISQ.CERT, the certification firm, confirm that the guidelines underlying the project have been properly applied. Commencing from 2009, with a view to improving customer relations even further, the PattiChiari Consortium has decided to transform “PattiChiari” into a new vehicle enabling the banking system to prepare, manage and inform customers about products that are simple, clear, comparable and transferable, and about financial education programmes for the community. In this context, the Consortium has worked together with the Consumers’ Associations to devise a series of “30 commitments to quality”, which BL has adopted in order to guarantee an improvement in the products and services offered to consumers.

P e r s o n n e l The number of employees rose by 39 in 2008, to 846 persons. The incidence of females is rising steadily (31.3% in 2008, compared ! Figures and Ratios pages 282-283 with 28.6% in 2007), as is the percentage of graduates (24.7% in 2008, 22.1% in 2007). The average age of employees is 42 years and 2 months.

STATISTICS

2008 2007 2006 Total employees 846 807 808 of which men 68.7% 71.4% 73.6% of which women 31.3% 28.6% 26.4% Average age 42.2 41.4 41.6

230 ALLOCATION BY STRUCTURE

2008 2007 2006 Branch network 699 82.6% 654 81.0% 645 79.8% Headquarters 147 17.4% 153 19.0% 163 20.2% Total 846 100.0% 807 100.0% 808 100.0%

QUALIFICATIONS

2008 2007 2006 University degree (long or short course) 209 24.7% 178 22.1% 166 20.5% High school diploma 550 65.0% 537 66.5% 548 67.8% Middle school certificate or lower high school diploma 87 10.3% 92 11.4% 94 11.6% Total 846 100.0% 807 100.0% 808 100.0%

PERSONNEL FLOWS IN AND OUT

2008 2007 2006 Arrivals 68 53 48 Departures 29 54 32 Arrivals less departures 39 –1 16

There was greater involvement from employees during 2008, with the renewed objective of promoting behaviour that unites the central offices with the commercial network with a view to growing the business. This process of integration was carried forward principally via managerial training for the central office managers that is consistent with the training provided to managers within the commercial network.

231 Equal opportunities For the benefit of female employees, BL has continued its cancer prevention activities and the activation of part-time contracts for colleagues returning from maternity leave. The recruitment campaign for the 6 branches opened during 2008 was designed to find school leavers and recent graduates resident in the provinces of Verbania and Novara, thus confirming BL’s role as a local bank. The new recruits significantly increased the presence of females within the bank.

Training The trend established in recent years was confirmed in 2008, consolidating the significant number of man-days dedicated to training sessions: a total of 4,929 days were delivered, equal to 5.8 per person, or 6.7 considering just the commercial network. 62.7% of the days related to professional training, 22.5% to operational training and 14.8% to managerial training. BL also supported and encouraged self training on obligatory topics, so that personnel are able to work under safe conditions.

COURSE CONTENT (man-days)

2008 2007 2006

Procedures 1,108 676 3,027

Professional skills 3,090 3,906 836

Seminars & other initiatives 731 816 272

Total 4,929 5,398 4,135

232 Social activities and the staff climate Recreational activities in the strictest sense are “subcontracted” to the CRAL (Circolo Ricreativo Aziendale Lavoratori, the staff social club), which every year receives financial support from the bank; contributions are also made to the mutual health fund. Once again, long-service awards for colleagues who have worked for BL for 25-35 years were presented at the annual meeting with the Chairman and Senior Management; this meeting was also attended by those who retired during the year and for whom the 2008 incentive plan gave them the opportunity to present a son or daughter as a candidate recruit. The annual meeting with the bank’s pensioners was also held during the year. Lastly, during 2008 we developed a detailed questionnaire to analyze the state of the working environment, for release in early 2009. This survey will involve all BL employees.

Communications Communications are decided periodically by the Strategic Direction Management Committee; bank employees are informed at plenary sessions held at Area or Head Office level, where management explains the instructions received. In addition to the normal tools used for communications (e-mail, letter etc.), the face-to-face approach remains fundamental and indeed the preferred method.

C o m m u n i t y Publishing activities continued during 2008, with the presentation of a book entitled ”Alta pianura milanese. Legnano, Busto Arsizio, Gallarate tra ‘800 e ‘900”. This history of BL’s home territory, where the first steps were taken and where the bank’s unique and inimitable character was formed, discusses the challenges faced by senior

233 management over the years. In-depth knowledge of this territory and the way it has evolved provides the key to understanding its essence and the objectives of yesteryear, but also of today.

The Legnano headquarters hosted even more exhibitions over the past year, some of which were particularly significant: • Dreams and innovation: from Lam to Sassu: The great 20th century ceramic masters at Ceramiche San Giorgio at Albissola. This exhibition, which ran from early March to early May, focused on the life of Giovanni, the master potter, and the many artists who collaborated with his factory: from Fontana to Lam, from Jorn to Sassu, from Treccani to Fabbri, all names written into the history of art for the contemporary artistic revolution they brought to traditional ceramics. • The designs of Giancarlo Pozzi, an exhibition in honour of Giancarlo Pozzi, an artist who was born in Castellanza in 1938.

SOCIAL ACTION (euro)

2008 2007 2006 School, culture and healthcare 83,250 260,111 189,553 Solidarity 15,800 24,400 15,543 Associations 262,764 150,484 75,880 Other 26,331 125,681 102,985 Total 388,145 560,676 383,961

234 We are among the founding members of Fondazione Comunitaria del Ticino Olona. Formed in February 2006 with a view to improving the quality of life of the community, by stimulating civil, cultural, social, environmental and economic growth, the Foundation has already called for 6 projects worth Euro 1,363,750, of which two in 2008, with the payment of grants totalling Euro 550,000.

235 236 i d e n t i t y

Cassa di Risparmio di Alessandria was founded in 1838 with the following mission: “to help promote the development of the territory in which it operates by paying constant attention to the needs of local households and businesses, with particular regard to SMEs. The Bank’s link with the local territory is also developed via the numerous treasury services provided to the Public Administration”. Following the 1990 reform, banking activities were separated from non- profit support for the territory. This created the conditions for the birth

Figures at end 2008 PROFILE

Distribution network: Direct deposits: 2.0 billion euro 89 branches, of which Indirect deposits: 2.0 billion euro 75 in Piedmont Loans to customers: 1.9 billion euro Net profit for the year: 6.3 million euro Headcount: 591 employees, of which 54.3% women and 45.7% men

Customers: over 98,000, of which 85% individuals

237 of Cassa di Risparmio di Alessandria SpA on the one hand and the Foundation on the other.

CRA joined the BPM Group in September 2004.

The bank’s grassroots presence is a key strength. Close contact with the communities served is assured by the even coverage achieved by the 89 branches situated in the home provinces and, following recent expansion, the adjoining areas

238 s o c i a l p o l i c i e s r e p o rt

C u s t o m e r s There were more than 98,000 customers at the end of 2008, the vast majority of which (over 90%) reside in Piedmont. This confirms the strong territorial presence in the region, although there has been an increase in recent years in the percentage of customers resident in Liguria (more than 5% in 2008), reflecting the opening of new branches in that region.

Individual customers hold more than 83,000 accounts. Their average age is about 55 years and, on average, their accounts have been open for about 14.6 years. This exceeds the norm for the banking system, confirming the loyalty shown by CRA’s customers.

There are about 15,000 business customers, of which around 95% are small enterprises. In territorial terms, 89.9% of these firms are active in Piedmont, 7.8% in Liguria and 2.3% in Lombardy. Significantly, 10.4% of business customers work in the agricultural sector. Cassa di Risparmio di Alessandria has been present in this sector for many years, maintaining constant relations with trade associations and the public administration, in order to promote the expansion and reorganisation of the sector. Market leadership is confirmed by the volume of loans granted, which increased by 20% during 2008, and especially by the results obtained on the distribution of the assisted agricultural loan made available by the Province of Alessandria (CRA paid out about 44% of the total).

239 Products and services Working together with the Parent Bank, the commercial range of products and services was extended even further during the year via the following initiatives: • launch of the “Counting on you” points accumulation programme that was initially promoted solely by BPM, but which has now become a Group-level product; • a 4.50% fixed-rate loan was introduced from February, in order to attract mortgage customers in the younger age bracket; • launch of the Weekend Pass campaign at Christmas enabled CRA to reward its most “loyal” customers (those whose current accounts have been active for 10, 15, 20 years) with a discount voucher stays at selected Italian hotels; • promotion from year end of EuroMutuo, the first floating-rate mortgage linked to the ECB rate rather than Euribor. The Group has presented this product in response to market requirements for more transparent rates and lower volatility given the current economic situation; • commercial campaigns focused on personal loans, with an initial analysis of the target customers identified at branch level, followed by mailings sent out for each individual product.

During the first half of the year, CRA also welcomed new customers with special “Benvenuto Imprese” and “Benvenuto Famiglie” current accounts.

The commercial range will be further expanded during 2009 with the addition of new products, some of which are already promoted by the Parent Bank: • Cartimpronta, the credit card issued directly by BPM which is linked to the Mastercard and Visa circuits;

240 • “Primo Assoluto”, the low-cost current account for new customers that use the Internet channel; • new loans for businesses and individuals on terms that are renegotiable every 2 years by businesses; • MP5 and MP5 Benefits insurance products.

In terms of the environment, CRA promotes and supports initiatives in favour of energy saving and the production of energy from renewable sources. This responds to an increase in customer awareness about environmental sustainability issues. The related regulations and advances in technology influence banks when seeking the most appropriate solutions: assisted loans are available in same cases (e.g. artigiancassa) while, in others, initiatives are supported via more complex property transactions, or via ad hoc loans.

Complaints CRA is committed to developing a culture that pays attention to the needs of customers at all stages of their relationship with the bank, but especially at times of dissatisfaction in order to reduce the level of conflict. During 2008, 129 complaints and 47 requests for information and documentation were received, together with 3 claims regarding the compounding of interest expense. The bank is also party to 13 legal cases regarding securities trading, all of which stemmed from earlier complaints.

PattiChiari (Transparent terms) The PattiChiari initiative has continued in a positive vein right from its inception. CRA obtained certification for 6 transparency initiatives back in 2004 and these have been maintained over the years. Periodic audits have confirmed application of the recommended best practices, confirming the attention given to transparency towards the market.

241 A survey of customer awareness about PattiChiari carried out in 2008 revealed unchanged results: the most well known aspects relate to finance and services.

P e r s o n n e l In line with the Parent Bank, CRA’s personnel management policy is focused on the proper and transparent application of internal ! Figures and Ratios communications processes. pages 284-285 In this regard, internal policies: • consider each employee as a company asset; • enhance the skills, professionalism and personal aptitudes of each member of staff to ensure the growth of the individual and of the Bank as a result; • maintain contact and critical comparison with the same sectors at the Parent Bank, taking advantage of high level professional skills that already exist. Members of staff on secondment from the Parent Bank have made a decisive contribution in this direction.

The number of employees exceeded 590 during 2008, up by 10 compared with 2007. As shown by the greater incidence of branch personnel (74.8% in 2008 compared with 71.9% in 2007) with respect to those at headquarters, this increase was due both to the expansion of the network in Liguria (Alassio) and Piedmont (Savigliano and Moncalieri) and to an increase in central efficiency.

With regard to equal opportunities, the percentage of women managers increased again in 2008 following both internal promotions (i.e. drawn from the category of female clerical staff) and the recruitment of experienced persons.

242 There are now more women than men in the “Long or short-course degree” category, confirming the trend seen in recent years.

STATISTICS

2008 2007 2006 Total employees 591 581 576 of which men 45.7% 46.1% 46.9% of which women 54.3% 53.9% 53.1% Average age 42.6 43.2 42.5

ALLOCATION BY STRUCTURE

2008 2007 2006 Branch network 442 74.8% 418 71.9% 409 71.0% Headquarters 128 21.7% 144 24.8% 143 24.8% Outside the structure 21 3.6% 19 3.3% 24 4.2% Total 591 100.0% 581 100.0% 576 100.0%

QUALIFICATIONS

2008 2007 2006 University degree (long or short course) 149 25.2% 130 22.4% 125 21.7% High school diploma 419 70.9% 422 72.6% 422 73.3% Middle school certificate or lower high school diploma 16 2.7% 18 3.1% 18 3.1% Other 7 1.2% 11 1.9% 11 1.9% Total 591 100.0% 581 100.0% 576 100.0%

243 PERSONNEL FLOWS IN AND OUT

2008 2007 2006 Arrivals 53 26 33 Departures 43 21 37 Arrivals less departures 10 5 –4

Training For the first time, CRA has prepared a Development and Training Plan that brings together in one tool all the activities associated with the professional growth of personnel.

The guidelines for the 2008 plan are summarised below: • completion of the skills analysis (Abilities and Knowledge) for the entire branch network with the objective, for 2009, of performing this analysis in relation to HQ personnel. This represents the first step in the methodology followed for the preparation of development and training plans that address the professional skills necessary to meet both market and individual requirements; • creation of a “Training Culture” designed to increase awareness about the importance of training as an integral part of professional activity. Via the implementation of a challenging training plan, CRA intends to double the number of man-days of training delivered with respect to 2006 (given that 2007 was an exceptional year dedicated to multi-channel procedural training).

The plan analyses training into three macroareas – compulsory, necessary, optional – which reflect the priorities for action. Considerable attention was given to the compulsory area during 2008, covering all the training required by law for the different professional categories within the bank: anti-money laundering, physical security and raid prevention, ISVAP.

244 A dedicated training room has been set up in Acqui Terme to facilitate ongoing development in this area. Overall, 2,477 days of training were delivered in 2008, representing an average of 4.2 days per person.

COURSE CONTENT (man-days)

2008 2007 2006 Procedures 317 3,509 282 Management skills 107 4 46 Sales and marketing 88 10 470 Professional skills 831 787 662 New recruits 0 52 50 Distance learning 834 684 388 Languages 3 – – Seminars & other initiatives 297 10 10 Total 2,477 5,056 1,908

TRAINING BY CATEGORY

2008 2007 2006 Managers 21 7 7 No. of days 23 9 9 Officials 2,060 933 120 No. of days 987 1,217 617 Clerical 3,006 1,901 315 No. of days 1,467 3,830 1,282 Total 5,087 2,841 442 No. of days 2,477 5,056 1,908

Building on achievements in 2008, the objective for 2009 is to intensify the professional training of staff. In addition to completion of the compulsory training programme (an average of 4.6 man-days planned), professional enhancement efforts will focus on the analysis and management of loans, finance in general and commercial skills.

245 Overall, a per capita average of 6 days of training will be delivered in the coming year, placing CRA at the forefront within the Group and in comparison with direct competitors.

C o m m u n i t y a n d T e r r i t o ry Working together with Fondazione Cassa di Risparmio di Alessandria and Società Bancaria, CRA has published “From the Restoration to 1848”, which is the first volume of the trilogy entitled “Alessandria from the Risorgimento to the Unification of Italy”. This new line of research focuses on CRA’s home territory, with a view to understanding and placing today’s social and economic challenges in the context of a past that has marked the destinies of many generations.

CRA took part in the Bank and Territory Competition, dedicated to grassroots activities that was organised by AIFIn (Associazione Italiana Financial Innovation). The bank won first prize in the prestigious “Initiatives in support of local entrepreneurs” category, with an incentive plan for innovative entrepreneurial activity.

Initiatives in support of local entrepreneurs 1. Cassa di Risparmio di Alessandria - Excellent Ideas 2. Cassa di Risparmio di La Spezia - DiscoverBusiness 3. Cassa di Risparmio di Fabriano e Cupramontana - Let’s help Fabriano: assisted loans

246 SOCIAL ACTION (euro)

2008 2007 2006 School, culture and healthcare 253,065 236,282 282,870 Other 94,920 90,340 60,850 Total 347,985 326,622 343,720

E x t e r n a l r e l at i o n s Analytical work began in the second half of 2008 for the creation of a new institutional website that will give staff, existing customers and potential customers access to a modern tool that complies with current regulations. The new site, set to be launched during 2009, will take a different approach with new navigation and, especially, updated graphics.

The weekly television slot “Today for Tomorrow” continues to present topics of economic interest to residents in Piedmont and Liguria. Conferences have also been organised for specific sectors within the world of entrepreneurs, in collaboration with the local trade associations and professional bodies.

Lastly, the Protocol of Understanding with the Police Headquarters in each Piedmont province has been renewed, with a view to preventing crimes against banks. The objective is to enhance relations between banks and the law enforcement agencies concerning the risk of bank raids, which is one of the risks listed in and governed by Decree 626/94.

247 248 i d e n t i t y

Banca Akros is the Group’s investment bank and private banking specialist.

Services are principally provided to institutional clients and high net worth private clients.

Activities commenced in 1997 under the control of Akros Finanziaria, the holding company for a group of 200 entrepreneurs organised as a public company; the company was acquired by Banca Popolare di Milano in the following year.

Figures at end 2008 PROFILE

Distribution network: Total assets managed: 1 branch in Milan 2.1 billion euro and 2 area offices (Rome and Turin) Direct deposits: 0.6 billion euro Indirect deposits: 2.1 billion euro Headcount: Loans to customers: 0.3 billion euro 262 employees Net profit for the year: 23 million euro

Customers: around 1,400

249 Relations and collaboration with Banca Popolare di Milano are developing constantly, base on two precepts: the separation of roles and the complementary nature of the two banks. Distinguishing the roles and maintaining the complementary approach means highlighting the specific focus of Banca Akros on the investment banking sectors, principally targeted on institutional investors and entrepreneurs, and on private banks for high net worth individuals.

The strategy of Banca Akros is based on client service, innovation and specialisation in financial markets, and on well-established domestic operations that have been rapidly extended to all cover main international markets.

250 s o c i a l p o l i c i e s r e p o rt

C u s t o m e r s In order to offer the best service, it is first necessary to understand the needs of clients, the effectiveness of the available tools and the prospects for each potential solution. Client requirements also include confidentiality, a hard concept to communicate that is achieved as part of the bank’s overall relationship with each client. Private clients are served via the personalised management of their assets, wealth management consultancy, and the acceptance of orders to trade in domestic and international markets. About 1,400 clients are served from the head office in Milan and the branches in Rome and Turin; most of these are resident in Lombardy and Northern Italy. The statistics for the end of 2008 reflect total net assets of more than 2.1 billion euro, while the net assets invested by each clients is about 1.5 million euro.

The best possible service is provided to clients, paying attention to both stated and perceived requirements, and organising a series of coordinated actions on their behalf. These include: • high ratio of private bankers to clients – so that each is dedicated the time needed to analyse their risk-return profile and devise the related investment strategies; • very stable team – so that clients experience continuity over time and respond with a high degree of loyalty, even when market conditions become difficult; • high level of transparency – so that clients can evaluate their investments in a proper manner;

251 • rapid execution of orders at the best possible prices at international level – so that orders are managed in an optimal manner. This commitment to safeguard the interests of clients was made prior to the adoption into Italian law of the EU’s “MiFID” Directive, via the SABE (automated best execution system). As the first in Italy to use SABE, the bank introduced “dynamic” best execution for bonds, a service that is offered to private clients and the retail customers of other financial intermediaries that place orders via Akros. During 2008, SABE was able to execute a high percentage of the orders received, even under difficult market conditions characterised by the low liquidity of the instruments traded. This safeguarded in a truly effective manner the trading requirements of the bank’s own customers and those of third parties; • organisation of meetings between clients and private bankers – with a view to consolidating the personal relationship of trust. There was considerable interest in the numerous concerts of modern and contemporary music organised in favour of FAI (Fondo per L’Ambiente Italiano), as well as the various sporting events that were held (sailing, horse-riding and golf). During 2008, the bank also promoted “roundtables” on current topics of economic and financial interest at its offices in Rome and Turin.

252 P e r s o n n e l The number of employees rose by 20 during the year, following a

! Figures and Ratios period of stability over the past three years. pages 286-287 The number of graduates continues to rise (46.6% at the end of 2008, 44% at the end of 2007), confirming the high professional level required by the nature of the services provided. Most of employees have long-term contracts and their average age is fairly low.

STATISTICS

2008 2007 2006 Total employees 262 243 244 of which men 64.1% 65.0% 63.1% of which women 35.9% 35.0% 36.9% Average age 40.0 39.5 39.0

QUALIFICATIONS

2008 2007 2006 University degree (long or short 122 46.6% 107 44.0% 103 42.2% course) High school diploma 124 47.3% 121 49.8% 124 50.8% Middle school certificate or lower high school diploma 16 6.1% 15 6.2% 17 7.0% Total 262 100.0% 243 100.0% 244 100.0%

PERSONNEL FLOWS IN AND OUT

2008 2007 2006 Arrivals 1 29 24 21 Departures 2 10 25 18 Arrivals less departures 19 –1 3

1 Hired on long-term contracts. 1 Mainly voluntary resignations.

253 As with all companies that offer advanced professional services, the value added by the bank depends in large measure on the quality of its human capital which, accordingly, must be cultivated and developed with care. Various actions are taken in this regard: • utilisation of every available organisational driver, including: J continuous training, comprising both the traditional approaches and professional learning by doing, together with meetings to examine new topics relevant to the financial markets; J incentivisation of responsible decision-making and the rewarding of merit, in order to guarantee awareness and participation; J continuous verification of compliance with the values declared, such as non-discrimination, discipline and mutual respect, not least to promote a team spirit; J broad and comprehensive training paths that take advantage of the complementary nature of private and investment banking; J provision of English tuition to employees; J training meetings with employees, some of which are compulsory, focused on the recognition and prevention of improper behaviour that might represent or facilitate corporate crime, the financing of terrorism or money laundering. • investment in young people: new graduates and school leavers are recruited and, after a brief internship for training, their employment can be confirmed; • investment in technology to improve efficiency, guarantee high quality work and client service, and minimise operational risks. IT expenses represents about one third of total administrative expenses (excluding payroll).

254 The major professional commitment required from all employees has resulted, in a difficult year like 2008, in strong and diversified results, as well as an awareness among employees that their job is less exposed (with respect to other international financial intermediaries) to the risks generated by the 2008 financial crisis.

C o m m u n i t y A n d T e r r i t o ry The bank feels close ties with the local territory, pursuing as ever a philosophy of support for initiatives that promote Italy’s artistic and cultural heritage, as well as social initiatives with an emphasis on the provision of support for younger people. In recent years, Akros has promoted and supported the activities of young artists, organising personal exhibitions at its Milan headquarters that are open to the public. Part of the proceeds from the exhibitions financed study visits to South Africa. The bank also promotes and sponsors exhibitions of modern and contemporary art. This includes support for the concerts of modern and contemporary music, and the conferences on modern art, organised by FAI – Fondo per L’Ambiente Italiano – to finance its activities. FAI recognises the bank as a “Corporate Golden Donor” as a consequence of these efforts. Following on from the 60th anniversary of the Italian Constitution in 2007, during 2008 the bank financed a series of courses on constitutional law as part of the “Young people of healthy and robust Constitution” initiative. The objective was to help youngsters at five Milan schools understand the historical origins and values laid down in the Italian Constitution. Following these courses, 20 study grants were awarded to the students who performed best, as determined by a technical commission, in a written test on the Constitution. This project obtained patronage from the Offices of the Prime Minister and the President of the Republic, the Lombardy Region, the Province of

255 Milan and the Municipality of Milan. The bank dedicates great attention to young people and children, including: • direct participation in training initiatives for youth workers and for the fight against drug dependency; • grants to charities, including those that help seriously ill children in hospital, others that facilitate the transportation of differently- able children, and yet others that support children faced with other forms of social disadvantage; • the remote adoption of children in various parts of the world.

E x t e r n a l R e l at i o n s Akros has promoted a unique European venture as founders of an independent financial research company (ESN - European Securities Network), involving a large number of banks situated in numerous European countries. Even in highly complex financial market conditions, such as those experienced in 2008, Akros has remained one of the few banks capable of offering clients complete pan-European research, covering not only major listed companies but also the medium and small caps. This helps for improve the financial knowledge of the bank’s customers and contacts.

256 i d e n t i t y

Bipiemme Gestioni SGR is the BPM Group’s asset management company.

The company has 25 years’ experience in the field of mutual funds, having started business in 1984. The corporate mission is “to offer professional, innovative and transparent asset management with tailor-made solutions and instruments for all investment requirements: mutual funds, funds of funds, pension funds and managed portfolios, as well as to optimise the diversification of customer portfolios, depending on their time horizons and propensity for risk”.

Figures at end 2008 PROFILE

Distribution network: Total assets managed: 50 placers, of which 14.8 billion euro, of which 5 from the BPM Group 61% funds and 39% individual portfolio management Headcount: 117 employees Share of mutual funds market: 2.28% Customers: over 250,000 customers, Net profit for the year: of which 146 institutional 8.5 million euro

257 The products and services offered by Bipiemme Gestioni SGR cover all the needs that a customer might have, ranging from global funds to funds that specialise in particular geographical areas. Over time, the product range has been expanded via the inclusion of important innovations: from quantitative management to flexible funds, from specialist funds to ethical and multimanager funds. Bipiemme Gestioni SGR also offers various different lines of asset management in securities and in funds, as well as the chance to supplement public pension cover with an open-ended pension fund.

With net assets at the end of 2008 totalling 14.8 billion euro, the company is positioned as one of Italy’s leading fund managers. The quality of the services offered by Bipiemme Gestioni SGR has won it a variety of awards over the years. Recognition of performance in 2008 • 3rd place in 2008 High Yield Awards from “Il Sole 24 Ore”, which were presented to big Italian managers for their mutual fund performance over the past three years. • 3rd place at the Milano Finanza Global Awards 2009 with the “Best Average Rating” prize for performance over the past three years by major operators. • 1st place at the Lipper Fund Awards 2009 for the Valori Responsabili Obbligazionario Misto fund, a mixed bond fund that won the prize in the “Best Mixed Asset EUR Conservative – Eurozone over 3 years” category. • 1st prize at the Lipper Fund Awards 2009 for the Valori Responsabili Monetario fund, a money fund that won the prize in the “Short Term over 3 years Best Bond Eurozone” category.

258 s o c i a l p o l i c i e s r e p o rt

C u s t o m e r s The company has more than 250,000 private and institutional customers, of which about 16,000 are under individual management 1. A constant and continuous flow of information is provided to customers. This assures maximum transparency in the analysis of the services offered and maximum effort in support for the products and services offered, with continuous advice and a shared approach to satisfying the needs of customers.

Products and services Net assets managed total almost 15 billion euro, involving a wide range of products and services that include 27 mutual funds, funds of funds, asset management funds and an open-ended pension fund. The rationalisation of asset management activities continued during 2008, together with the restyling of a liquidity management service via the launch of New Energy in April. In addition, Bipiemme Più was launched in May. This multi-section fund of funds mainly invests in the units of funds managed by Bipiemme Gestioni.

1 With respect to the prior year, the number of customer accounts under individual management includes, for completeness, customers holding liquidity and the management of units in funds.

259 The following chart and table analyse assets under management by type of product and customer.

Net assets at the end of december 2008: 14,759 million euro

2.32%

29.94%

1.11% 61.03% 5.30% Cash accounts GPM 0.30% GPF Management under mandate Pension fund FCI

ANALYSIS OF CUSTOMERS AS OF 31 DECEMBER 2008 (millions of euro)

Amount % Institutional clients 3,685.6 25% Other 11,073.5 75% Total 14,759.1 100%

Breakdown of institutional clients Amount Number Classic institutions* 498.7 31 Private banks 137.8 14 Open-ended pension funds 44.0 5 Pre-existing pension funds 314.3 10 Bank foundations 2.6 2 Other institutions 3,186.9 115 Banks and other financial services 575.4 14 Insurance companies 2,235.9 21 Non-profit 192.2 20 Corporate 116.6 39 Other** 66.8 21 Total 3,685.6 146

* Prometeia classification. **“Other” includes, for example, non-banking foundations and trade associations.

260 Distribution network The company’s mutual funds are distributed by the BPM Group, via bank branches, a website and a network of private bankers (so-called captive channels), as well as by operators outside the Group, comprising other banks, insurance companies, stockbrokers, networks of financial consultants (so-called non-captive channels).

At 31 December 2008, the company had a network of 50 placers (including 5 within the BPM Group) active under placement agreements.

PLACERS AS OF 31 DECEMBER 2008

Number Banks 38 Insurance companies 3 Foundations 1 SGR 3 Online 3 Networks of financial consultants 1 Other 1 Total 50

Changes in the net assets of investment funds over the past year reflect the growing weight of the captive as opposed to the non-captive channels, as shown in the following table:

INCIDENCE OF ASSETS FROM CAPTIVE / NON CAPTIVE SOURCES

Year Captive Non Captive 2008 90.9% 9.1% 2007 90.6% 9.4% 2006 93.8% 6.2%

261 P e r s o n n e l Employment by Bipiemme Gestioni SGR was unchanged in 2008 with respect to the end of 2007. With a view to attracting the best professional skills and offering the highest quality services, the company maintains a working environment founded on close cooperation and rewards employees in line with market best practices.

STATISTICS

2008 2007 2006 Total employees 117 117 110 of which men 62.4% 62.4% 60.9% of which women 37.6% 37.6% 39.1% Average age 40.9 39.8 39.0

QUALIFICATIONS

2008 2007 2006 University degree (long or short course) 55 47.0% 54 46.2% 49 44.5% High school diploma 54 46.2% 54 46.2% 52 47.3% Middle school certificate or lower high school diploma 8 6.8% 9 7.6% 9 8.2% Total 117 100.0% 117 100.0% 110 100.0%

262 C o m m u n i t y a n d t e r r i t o ry Bipiemme Gestioni SGR organises together with the Diocesan Museum of Milan - Fondazione Sant’Ambrogio – the cultural initiative entitled “Un Capolavoro per Milano”. This is an initiative which every year brings to Milan a work of art that is normally kept elsewhere, or in a place where it is hard for the general public to gain access. Following masterpieces by Mantegna and Antonello da Messina, 2008 was the turn of The Return of Judith by Sandro Botticelli, a work that hangs in Florence’s Uffizi Gallery.

“UN CAPOLAVORO PER MILANO”

Year Work of art Visitors 2002 Ecce Homo by Antonello da Messina 15,000 2003 Annunciazione by Domenico Beccafumi 20,000 2004 Cattura di Cristo by Caravaggio 50,000 2006 La Sacra Famiglia by Andrea Mantegna 50,000 2007 L’Annunciata by Antonello da Messina 50,000 2008 La Giuditta by Sandro Botticelli 50,000

Since 2000, BPM Gestioni has worked together with the Parent Bank to organise the Economy and Savings Forum, an annual, high level meeting devoted to economic scenarios and the financial markets. Particular attention is given to changes in investors’ attitudes and needs, and the way in which sector operators are organised to meet them. The event is reserved for customers and personalities of the world of economics and finance.

263 E x t e r n a l r e l at i o n s Bipiemme Gestioni SGR pays a great deal of attention to external relations with the media and with customers. For several years now, the Communications and External Relations Department has handled all contact with the media in order to make the spreading of news to the general public as effective as possible. The following tools are used: • press releases that are sent to financial/national newspapers and periodicals and to press agencies; • meetings with financial journalists to explain directly the company’s activities and the various initiatives that it is promoting; • a website that provides all the information that a customer might need about the products and services provided by the company, as well as the latest economic news.

I n s t i t u t i o n s Bipiemme Gestioni SGR has ongoing relations with the Supervisory Authorities, trade associations and external consultants to assure the proper management of the company, as well as relations with the Bank of Italy, Consob, Covip, and various trade associations and external consultants which handle matters relating to financial products.

Within ABI and Assogestioni, the company takes part in the task forces relating to specific areas of interest.

264 ATTACHMENTS “Figures and Ratios”

This section presents tables detailing the figures and ratios mentioned in the various chapters of the Social Responsibility Report.

265 E c o n o m i c R e p o r t

INCOME TAXES FOR THE YEAR (thousands of euro)

2008 2007 Central government: IRES 83,581 198,474 Local authorities: IRAP 51,182 25,226 Taxation of foreign branches -4,620 -3,467 Total income taxes (A) 130,143 220,233

INDIRECT TAXES AND DUTIES (thousands of euro)

2008 2007 CENTRAL GOVERNMENT: 63,159 62,104 Stamp duty 46,836 46,579 Stamp duty on stock exchange contracts 0 665 Flat-rate tax 12,459 12,359 Other taxes and duties 3,864 2,501 LOCAL AUTHORITIES: 3,256 5,162 ICI 2,855 2,857 Other local taxes and duties 401 2,305 Total indirect taxes (B) 66,415 67,266

TOTAL 2008 TAXATION (A+B) 196,558 287,499

266 C u s t o m e r s

TOTAL NUMBER OF CUSTOMERS

2008 1,068,119

2007 1,026,702

2006 1,027,623

INDIVIDUAL CUSTOMERS NUMBER OF INDIVIDUAL CUSTOMERS

2008 952,701

2007 916,086

2006 920,085

BREAKDOWN BY GENDER

Men 49.6%

Women 50.4%

BREAKDOWN BY AGE

Age bracket 2008 2007 2006

Over 65 years 25.7% 25.4% 24.7%

From 46 to 65 years 35.0% 34.7% 34.5%

From 26 to 45 years 34.5% 34.9% 35.7%

From 19 to 25 years 3.5% 3.7% 3.8%

< 18 1.4% 1.3% 1.3%

Total 100.0% 100.0% 100.0%

267 % BREAKDOWN BY LENGTH OF RELATIONSHIP

Length of relationship bands 2008 2007 2006

<1 Year 4.5% 3.8% 3.4%

1-5 years 15.0% 15.6% 17.0%

6-10 years 16.9% 18.0% 19.3%

over 10 years 63.6% 62.6% 60.3%

Total 100.0% 100.0% 100.0%

FOREIGN CUSTOMERS

Country or origin 2008 2007 2006

Eastern Europe 12,185 9,437 8,181

Rest of Europe 2,468 2,835 2,303

Africa 8,575 8,121 7,912

Asia 8,577 8,691 8,194

South America 6,171 5,921 5,725

Rest of the world 1,029 986 923

Total 39,005 35,991 33,238

CORPORATE CUSTOMERS NUMBER OF CORPORATE CUSTOMERS

Type 2008 2007 2006

Small businesses 105,307 101,580 98,465

Medium-sized enterprises 9,345 8,684 8,637

Large enterprises 337 352 436

Total 114,989 110,616 107,538

268 SMALL BUSINESSES: DISTRIBUTION BY SECTOR

Economic sector 2008 2007 2006

Agriculture 2,786 2,692 2,557

Industry 17,659 17,303 17,065

Skilled trades 22,506 22,435 21,543

Services 26,252 24,594 23,621

Commerce 14,392 14,053 13,862

Other 21,712 20,503 19,817

Total 105,307 101,580 98,465

% BREAKDOWN BY LENGTH OF RELATIONSHIP

Length of relationship bands 2008 2007 2006

<1 Year 9.6% 9.8% 9.2%

1-5 years 34.9% 33.9% 35.2%

6-10 years 20.8% 21.1% 22.2% beyond 10 years 34.7% 35.2% 33.3%

Total 100.0% 100.0% 100.0%

COMPLAINTS RECEIVED

Type 2008 2007 2006

Current accounts and services 1,262 1,253 1,205

Credit 432 522 355

Saving 469 348 631

Other 53 173 134

Total 2,216 2,296 2,325

269 AWARENESS ABOUT PATTICHIARI

2008 2007 2006

I am aware of the initiative 44.0% 42.6% 44.2%

I have only heard of it 42.0% 38.6% 38.2%

I am well aware of the initiative 2.0% 4.0% 6.1%

I am not aware of the initiative 56.0% 57.4% 55.8%

NET ASSETS OF VALORI RESPONSABILI SYSTEM (thousands of euro)

Fund Net assets at Net deposits Market Total change Net assets at 31.12.07 effect 31.12.08

V.R. Monetary 94,301 39.9% 28,622 5,892 34,514 128,815 56.2% V.R. Mixed Bonds 45,212 19.1% -10,360 1,040 -9,320 35,892 15.7%

V.R. Balanced 85,046 35.9% -16,632 -13,565 -30,197 54,850 23.9%

V.R. Equities 12,050 5.1% 1,655 -4,085 -2,430 9,620 4.2%

Total 236,609 100.0% 3,286 -10,719 -7,433 229,176 100.0%

INTERNET BANKING: INDIVIDUALS USAGE OF THE WEBANK AND BPMBANKING.IT SERVICES

Description 2008 2007 Trend 08-07

Total annual visits 10,098,580 9,086,464 11.1% Requests for information (a/c balance, movements, outcome of instructions etc.) 11,992,715 10,803,471 11.0% Banking instructions (transfers, payment of utilities, bank receipts, credit collection etc.) 2,146,752 1,748,554 22.8% Trading on line (stockmarket transactions) 399,105 440,675 -9.4%

Transactions in funds (purchases, sales and switches) 21,092 26,006 -18.9%

270 WEBANK.IT – CUSTOMER ACTIVITY

2008 2007 Trend 08-07 Electronic customers 41,687 31,384 32.8% Customers acquired 14,116 12,179 15.9% Active customers at end of period* 36,414 26,343 38.2% % active customers against registered customers 87.4% 83.9% 3.50 p.p. Customers giving instructions at end of period** 27,215 19,008 43.2%

BPMBANKING.IT – CUSTOMER ACTIVITY

2008 2007 Trend 08-07 Electronic customers 217,827 180,226 20.9% Customers acquired 42,872 27,026 58.6% Active customers at end of period* 162,352 132,294 22.7% % active customers against registered customers 74.5% 73.4% 1.10 p.p. Customers giving instructions at period end** 111,562 90,679 23.0%

INTERNET BANKING: CORPORATE USAGE OF BPMBANKING.IT SERVICE

Description 2008 2007 Trend 08-07 Total annual visits 7,530,331 6,612,418 13.9% Requests for information (a/c balance, movements, instructions etc.) 8,864,525 7,211,541 22.9% On-line instructions 1,855,845 1,179,471 57.3% CBI instructions 12,951,602 13,073,443 – 0.9%

BPMBANKING.IT – CUSTOMER ACTIVITY

2008 2007 Trend 08-07 Electronic customers 61,112 56,546 8.1% Customers acquired 12,589 15,096 –16.6% Active customers at end of period* 59,817 55,747 7.3% % active customers against registered customers 97.9% 98.6% – 0.70 p.p.

* Customers visiting the website at least once during the year. ** Customers giving at least one instruction during the year.

271 M e m b e r s a n d S hareholders

COMPOSITION OF SHARE CAPITAL AT 31 DECEMBER 2008

Total shareholders of which members of which non-member shareholders Type of Number of Shares Number Shares Number of Shares shareholders shareholders owned of members owned shareholders owned BPM employees1 8,529 13,609,034 7,922 13,550,169 607 58,865 Group employees1 499 402,077 423 346,225 76 55,852 Customers2 38,527 58,687,961 28,009 45,526,676 10,518 13,161,285 Institutional Investors3 221 177,737,504 4 2,583,430 217 175,154,074 Large Members/ Shareholders4 72 49,902,002 23 7,307,165 49 42,594,837 Strategic Partners5 15 22,314,695 11 15,810,060 4 6,504,635 Other 44,958 92,380,958 11,827 22,572,595 33,131 69,808,363 Total 92,821 415,034,231 48,219 107,696,320 44,602 307,337,911

1 IncIncluding children that are minors. 2 Individuals and legal persons not included elsewhere. 3 Qualified operators (insurance companies, banks, trust companies etc.) and UCITS (funds, pension funds and Sicavs). 4 Holders of at least 100,000 shares, not including institutional investors. 5 Comprises 4 Partner Shareholders belonging to the CM-CIC Group that as of 31 December 2008 have not applied for membership.

COMPOSITION OF FOREIGN SHAREHOLDERS 2008 2007

Type of shareholders Number of Shares Number of Shares shareholders owned shareholders owned Funds 63 32,072,348 104 52,517,320 Pension funds 30 9,619,888 26 10,821,133 Other qualified operators 76 84,026,485 95 124,574,660 Total 169 125,718,721 225 187,913,113

272 GEOGRAPHICAL DISTRIBUTION OF MEMBERS AND SHAREHOLDERS AT 31 DECEMBER 2008

Total shareholders of which members of which non-member shareholders Region Number of Shares Number Shares Number of Shares shareholders owned of members owned non-member owned shareholders Milan and Province of Milan 41,797 124,243,527 29,558 53,394,557 12,239 70,848,970 Lombardy 16,742 40,486,134 9,455 17,416,584 7,287 23,069,550 Lazio 4,841 15,615,636 2,083 2,197,309 2,758 13,418,327 Puglia 2,222 2,346,717 1,171 1,113,440 1,051 1,233,277 Emilia Romagna 9,054 18,557,941 3,019 9,707,509 6,035 8,850,432 Piedmont 4,808 12,622,949 1,311 5,053,580 3,497 7,569,369 Other regions and abroad 13,357 201,161,327 1,622 18,813,341 11,735 182,347,986 Total 92,821 415,034,231 48,219 107,696,320 44,602 307,337,911

NUMBER OF MEMBERSHIP ADMISSIONS AND CANCELLATIONS/FORFEITURES

2008 2007 2006 Members admitted/readmitted 1,112 635 735 Applications rejected 1 2 0 Memberships cancelled* 22 19 14 Memberships forfeited** 149 3,671 4,880

* For “Breach of contractual obligations to the Bank”. ** For “the complete loss of share ownership” or death. The resolution adopted in January 2009 identified 1,631 memberships forfeited due to loss of share ownership in 2008.

BPM RATINGS

Rating agency Long-term debt Short-term debt Outlook Date of last review Moody’s A1 P–1 Stable 14–Nov–08 Fitch Ratings A F1 Stable 13–Jun–08 Standard & Poor’s A– A–2 Stable 28–Nov–08

273 TOTAL COVERAGE BY ANALYSTS COVERAGE BY ANALYSTS AT DECEMBER 2008

List of analysts Year No. analysts Banca IMI Dresdner Kleinworth Intermonte 2008 21 Banca Leonardo Equita SIM JP Morgan 2007 18 Cassa Lombarda Exane Bnp KBW 2006 15 Centrosim FPK Mediobanca

Cheuvreux Goldman Sachs Merrill Lynch

Citi HSBC Nomura

Deutsche Bank HVB UBS

ATTENDANCE AT SHAREHOLDERS’ MEETINGS

Type of 13-Dec-08 19-Apr-08 15-Feb-07 21-Apr-07 6-May-06 shareholders In Proxy In Proxy In Proxy In Proxy In Proxy person person person person person BPM employees 810 70 997 41 1,940 90 1,012 44 1,287 156 Group employees 31 2 52 3 27 2 45 4 57 5 Under-age children of BPM employees 0 235 0 337 0 635 0 354 0 493 Under-age children of BPM Group employees 0 1 0 2 0 2 0 4 0 5 Total employees 841 308 1,049 383 1,967 729 1,057 406 1,344 659 Total other 670 693 762 721 399 390 755 811 1,430 1,924 members Grand total 1,511 1,001 1,811 1,104 2,366 1,119 1,812 1,217 2,774 2,583 Total voters 2,512 2,915 3,485 3,029 5,357

274 T h e B a n k ’ s M e n a n d W o m e n

NUMBER OF EMPLOYEES

2008 2007 2006

Men 3,671 3,608 3,655

Women 2,992 2,787 2,660

Total 6,663 6,395 6,315

AVERAGE AGE

2008 2007 2006

Men 44.9 44.6 44.8

Women 40.9 40.3 40

Average age 43.1 42.8 42.8

NEW HIRES BY GENDER

2008 2007 2006

Men 233 164 104

Women 244 154 67

Total 477 318 171

Ratio of Women/Men 1.05 0.94 0.64

RESIGNATIONS BY GENDER

2008 2007 2006 Men 170 211 218 Women 39 27 39 Total 209 238 257

275 DISTRIBUTION OF PART-TIMERS

2008 2007 2006

Men 53 54 59

Women 920 882 865

Total 973 936 924

UNION ACTIVITY

2008 2007 2006 Strike hours 6,887 82 28 Meeting hours 2,324 3,796 568 Total 9,211 3,878 596

DISCIPLINARY MEASURES

2008 2007 2006 Verbal warnings 5 9 9 Written warnings 10 6 9 Suspensions 19 19 13 Dismissals/Resignations 4 11 17 Total 38 34 48 Breaches of Circ. no. 19 dated 29/12/2000 on trading in securities by employees 68 98 81

276 ALLOCATION BY QUALIFICATION, LEVEL AND STRUCTURE

2008 2007 2006 Qualifications Men Women Total Men Women Total Men Women Total University degree 671 751 1,422 637 661 1,298 625 601 1,226 High school diploma 2,444 1,909 4,353 2,421 1,807 4,228 2,462 1,748 4,210 Lower high school diploma 556 332 888 550 319 869 568 311 879 Total 3,671 2,992 6,663 3,608 2,787 6,395 3,655 2,660 6,315 University degree 18.3% 25.1% 21.3% 17.7% 23.7% 20.3% 17.1% 22.6% 19.4% High school diploma 66.6% 63.8% 65.3% 67.1% 64.8% 66.1% 67.4% 65.7% 66.7% Lower high school diploma 15.1% 11.1% 13.3% 15.2% 11.4% 13.6% 15.5% 11.7% 13.9% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

2008 2007 2006 Level Men Women Total Men Women Total Men Women Total Managers 85 6 91 95 4 99 94 3 97 Officials 1,681 722 2,403 1,670 674 2,344 1,709 626 2,335 Clerical 1,842 2,241 4083 1,769 2,082 3,851 1,777 2,012 3,789 Other 63 23 86 74 27 101 75 19 94 Total 3,671 2,992 6,663 3,608 2,787 6,395 3,655 2,660 6,315 Managers 2.3% 0.2% 1.4% 2.6% 0.1% 1.5% 2.6% 0.1% 1.5% Officials 45.8% 24.1% 36.1% 46.3% 24.2% 36.7% 46.8% 23.5% 37.0% Clerical 50.2% 74.9% 61.3% 49.0% 74.7% 60.2% 48.6% 75.6% 60.0% Other 1.7% 0.8% 1.3% 2.1% 1.0% 1.6% 2.1% 0.7% 1.5% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

2008 2007 2006 Structure Men Women Total Men Women Total Men Women Total Branch network 2,196 2,020 4,216 2,123 1,841 3,964 2,169 1,804 3,973 Area network 288 94 382 315 102 417 338 92 430 Headquarters 1,178 744 1,922 1,122 643 1,765 1,110 590 1,700 Outside the structure* 9 134 143 48 201 249 38 174 212 Total 3,671 2,992 6,663 3,608 2,787 6,395 3,655 2,660 6,315 Branch network 59.8% 67.5% 63.3% 58.8% 66.1% 62.0% 59.3% 67.8% 62.95% Area network 7.8% 3.1% 5.7% 8.7% 3.7% 6.5% 9.2% 3.5% 6.8% Headquarters 32.1% 24.9% 28.8% 31.1% 23.1% 27.6% 30.4% 22.2% 26.9% Outside the structure* 0.2% 4.5% 2.1% 1.3% 7.2% 3.9% 1.0% 6.5% 3.4% Totale 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

* Includes persons on maternity leave and leave of absence.

277 S u p p l i e r s

BREAKDOWN BY TYPE OF SUPPLY (thousands of euro)

Type of supply 2008 2007 2006 Number of Amount Number of Amount Number of Amount suppliers invoiced suppliers invoiced suppliers invoiced

Services 804 124,180 2,570 156,178 2,630 161,184

Property 384 56,577 265 36,434 246 39,281

Technologies 218 132,389 143 94,637 155 90,362

Total 1,406 313,146 2,978 287,249 3,031 290,827

Services 57.2% 39.6% 86.3% 54.4% 86.8% 55.4%

Property 27.3% 18.1% 8.9% 12.7% 8.1% 13.5%

Technologies 15.5% 42.3% 4.8% 32.9% 5.1% 31.1%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

BREAKDOWN BY AMOUNT INVOICED (thousands of euro)

Bands Services Property Technologies Total (in Euro) Number of Amount Number of Amount Number of Amount Number of Amount suppliers invoiced suppliers invoiced suppliers invoiced suppliers invoiced Up to 100,000 638 16,617 296 9,707 124 4,645 1,058 30,968 From 100,001 to 500,000 118 24,899 72 15,631 59 14,116 249 54,646 From 500,001 to 1,000,000 21 14,267 8 5,876 11 7,855 40 27,997 Over 1,000,000 27 68,398 8 25,364 24 105,773 59 199,535 Total 804 124,180 384 56,577 218 132,389 1,406 313,146 Up to 100,000 79.4% 13.4% 77.1% 17.2% 56.9% 3.5% 75.2% 9.9% From 100,001 to 500,000 14.7% 20.1% 18.8% 27.6% 27.1% 10.7% 17.7% 17.5% From 500,001 to 1,000,000 2.6% 11.5% 2.1% 10.4% 5.0% 5.9% 2.8% 8.9% Over 1,000,000 3.4% 55.1% 2.1% 44.8% 11.0% 79.9% 4.2% 63.7% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

278 BREAKDOWN BY GEOGRAPHICAL AREA (thousands of euro)

Region / 2008 2007 2006 Geographical area Number of Amount Number of Amount Number of Amount suppliers invoiced suppliers invoiced suppliers invoiced North-West Italy 963 246,753 1,794 224,621 1,909 229,301 North-East Italy 111 20,859 306 24,984 319 18,154 Central Italy 199 31,849 496 24,667 452 30,987 Southern Italy 91 5,904 305 5,472 262 5,496 Italian islands 2 1,568 20 2,411 22 481 Abroad 40 6,213 57 5,095 67 6,408 Total 1,406 313,146 2,978 287,249 3,031 290,827 North-West Italy 68.5% 78.8% 60.2% 78.2% 63.0% 78.8% North-East Italy 7.9% 6.6% 10.3% 8.7% 10.5% 6.2% Central Italy 14.2% 10.2% 16.7% 8.6% 14.9% 10.7% Southern Italy 6.5% 1.9% 10.2% 1.9% 8.6% 1.9% Italian islands 0.1% 0.5% 0.7% 0.8% 0.7% 0.2% Abroad 2.8% 2.0% 1.9% 1.8% 2.2% 2.2% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

279 C o m m u n i t y

DISTRIBUTION BY TYPE OF ACTIVITY (thousands of euro)

2008 2007 2006 Amount % Amount % Amount % Culture 2,315 47.5% 2,305 50.0% 2,732 51.8% Solidarity 954 19.6% 837 18.2% 1,272 24.1% Healthcare 768 15.7% 715 15.5% 305 5.8% Research 180 3.7% 123 2.7% 147 2.8% Education 93 1.9% 126 2.7% 82 1.5% Other 568 11.6% 504 10.9% 736 14.0% Total 4,879 100.0% 4,609 100.0% 5,273 100.0%

TERRITORIAL NATURE OF ACTION (thousands of euro)

2008 2007 2006 Amount % Amount % Amount % Milan 4,033 82.7% 4,006 86.9% 4,668 88.5% Province of Milan 218 4.5% 167 3.6% 175 3.3% Lombardy 221 4.5% 250 5.4% 214 4.1% Other 407 8.3% 185 4.0% 216 4.1% Total 4,879 100.0% 4,609 100.0% 5,273 100.0%

280 E n v i r o n m e n t

PHOTOCOPIES

Annual number of copies 2008 2007 2006

Black/White 8,371,991 8,019,880 5,098,745

Colour 531,707 554,065 535,940

Total 8,903,698 8,573,945 5,634,685

The Bank’s photocopying centre, which makes copies for all functions, has 3 black&white copiers and 2 colour copiers. Due to an improvement in photocopier technology, the weight of the paper used for black&white copies has decreased from 80 g/m2 to 75 g/m2, while the weight of the paper used for colour copies has decreased from 100 g/m2 to 75 g/m2.

RECYCLING AND DISPOSAL OF DIFFERENTIATE WASTE (kilograms)

Type of waste 2008 2007 2006

Urban and similar waste 1 134,336 131,291 170,680

Spent oil (in litres) 4,260 4,450 840

Non-hazardous waste 2 1,193,379 1,338,575 1,094,418

Hazardous/Special waste 3 13,011 8,159 9,474

Total 1,344,986 1,482,475 1,275,412

1 Packaging that uses mixed materials. 2 Paper, cardboard, plastic and toner. 3 Sanitary waste, batteries and neon.

The report excludes ordinary waste that is collected and disposed of directly by municipal companies.

The supply contract envisages that the service provider will ensure that the recycling and/or disposal process takes place in accordance with current regulations (giving preference to recycling where possible), at authorised installations (including landfills), pursuant to Decree 22/97, Decree 389/97 and subsequent amendments and additions.

281 G r o u p C o m p a n i e s

PERSONNEL MIX BY GRADE

2008 2007 2006 Men Women Men Women Men Women Managers 12 2 12 2 12 2 Officials 275 51 277 41 279 39 Clerical 294 212 287 188 304 172 Total 581 265 576 231 595 213 Managers 2.1% 0.8% 2.1% 0.9% 2.0% 0.9% Officials 47.3% 19.2% 48.1% 17.7% 46.9% 18.3% Clerical 50.6% 80.0% 49.8% 81.4% 51.1% 80.8% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

PERSONNEL MIX

2008 2007 2006 No. of permanent employees 747 88.3% 724 89.7% 728 90.1% No. of fixed-term employees 0 0 0 0 0 0 No. of part-time employees 52 6.2% 53 6.6% 54 6.7% No. of members of staff on new hire contracts 47 5.6% 30 3.7% 26 3.2% Total 846 100.0% 807 100.0% 808 100.0% No. of temps 0 12 1

282 average age of personnel

2008 2007 2006 Men Women Men Women Men Women Managers 56.1 55.6 54.8 53.5 53.9 52.5 Officials 47.0 43.2 45.6 42.5 45.9 42.3 Clerical 40.2 36.4 39.3 36.1 39.2 36.2 Average 43.1 37.1 42.9 37.8 42.9 37.8

DISTRIBUTION OF PERSONNEL BY STRUCTURE

2008 2007 2006 Men Women Men Women Men Women Branch network 472 227 469 185 475 170 Headquarters 109 38 107 46 120 43 Total 581 265 576 231 595 213 Branch network 81.2% 85.7% 81.4% 80.1% 79.8% 79.8% Headquarters 18.8% 14.3% 18.6% 19.9% 20.2% 20.2% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

DISTRIBUTION OF PERSONNEL BY QUALIFICATION

2008 2007 2006 Men Women Men Women Men Women University degree (long or short course) 126 83 116 62 114 52 High school diploma 384 166 386 151 405 143 Middle school certificate or lower high school diploma 71 16 74 18 76 18 Total 581 265 576 231 595 213 University degree (long or short course) 21.7% 31.3% 20.1% 26.8% 19.2% 24.4% High school diploma 66.1% 62.6% 67.0% 65.4% 68.1% 67.1% Middle school certificate or lower high school diploma 12.2% 6.0% 12.8% 7.8% 12.8% 8.5% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

283 PERSONNEL MIX BY GRADE

2008 2007 2006 Men Women Men Women Men Women

Managers 14 0 13 0 10 0

Officials 116 76 114 62 108 52

Clerical 140 245 141 251 152 254

Total 270 321 268 313 270 306 Managers 5.2% 0.0% 4.9% 0.0% 3.7% 0.0% Officials 43.0% 23.7% 42.5% 19.8% 40.0% 17.0% Clerical 51.9% 76.3% 52.6% 80.2% 56.3% 83.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

PERSONNEL MIX

2008 2007 2006 No. of permanent employees 517 87.5% 535 92.1% 519 90.1% No. of fixed-term employees 33 5.6% 3 0.5% 11 1.9% No. of part-time employees 41 6.9% 43 7.4% 46 8.0% Total 591 100.0% 581 100.0% 576 100.0% No. of temps 1 0.2% 27 4.6% 16 2.8%

AVERAGE AGE OF PERSONNEL

2008 2007 2006 Men Women Men Women Men Women Managers 57.9 – 57.1 – 57.4 – Officials 47.9 47.9 48.7 48.6 48.8 48.4 Clerical 39.3 39.4 40.0 40.2 39.7 39.8 Average 43.9 41.4 44.7 41.8 44.0 41.2

284 DISTRIBUTION OF PERSONNEL BY STRUCTURE

2008 2007 2006

Men Women Men Women Men Women

Branch network 204 238 189 229 191 218

Headquarters 64 64 77 67 76 67

Other 2 19 2 17 3 21

Total 270 321 268 313 270 306

Branch network 75.6% 74.1% 70.5% 73.2% 70.7% 71.2%

Headquarters 23.7% 19.9% 28.7% 21.4% 28.1% 21.9%

Other 0.7% 5.9% 0.7% 5.4% 1.1% 6.9%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

DISTRIBUTION OF PERSONNEL BY QUALIFICATION

2008 2007 2006 Men Women Men Women Men Women University degree 72 77 65 65 66 59 (long or short course) High school diploma 188 231 189 233 190 232 Middle school certificate or lower high school diploma 10 6 11 7 11 7 Other 0 7 3 8 3 8 Total 270 321 268 313 270 306 University degree 26.7% 24.0% 24.3% 20.8% 24.4% 19.3% (long or short course) High school diploma 69.6% 72.0% 70.5% 74.4% 70.4% 75.8% Middle school certificate or lower high school diploma 3.7% 1.9% 4.1% 2.2% 4.1% 2.3% Other 0.0% 2.2% 1.1% 2.6% 1.1% 2.6% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

285 PERSONNEL MIX BY GRADE

2008 2007 2006 Men Women Men Women Men Women Managers 27 1 24 1 24 1 Officials 88 37 82 34 77 35 Clerical 53 56 52 50 53 54 Total 168 94 158 85 154 90 Managers 16.1% 1.1% 15.2% 1.2% 15.6% 1.1% Officials 52.4% 39.4% 51.9% 40.0% 50.0% 38.9% Clerical 31.5% 59.6% 32.9% 58.8% 34.4% 60.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

PERSONNEL MIX

2008 2007 2006

No. of permanent employees 237 90.5% 225 92.6% 225 92.2%

No. of fixed-term employees 1 0.4% 0 0.0% 0 0.0%

No. of part-time employees 24 9.2% 18 7.4% 19 7.8% No. of members of staff on new hire contracts 0 0.0% 0 0.0% 0 0.0% Total 262 100.0% 243 100.0% 244 100.0%

286 AVERAGE AGE OF EMPLOYEES

2008 2007 2006

Men Women Men Women Men Women

Managers 48.4 53.0 48.2 52.0 47.7 51.0

Officials 40.8 41.7 40.5 41.2 40.0 40.1

Clerical 36.1 36.9 35.5 36.2 36.0 35.8

Average 40.5 39.0 40.1 38.4 39.8 37.6

DISTRIBUTION OF PERSONNEL BY QUALIFICATION

2008 2007 2006

Men Women Men Women Men Women

University degree (long or short course) 84 38 75 32 69 34

High school diploma 76 48 74 47 76 48 Middle school certificate or lower high school diploma 8 8 9 6 9 8 Total 168 94 158 85 154 90

University degree (long or short course) 50.0% 40.4% 47.5% 37.6% 44.8% 37.8%

High school diploma 45.2% 51.1% 46.8% 55.3% 49.4% 53.3% Middle school certificate or lower high school diploma 4.8% 8.5% 5.7% 7.1% 5.8% 8.9% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

287 g l o s s a ry

Asset: tangible and intangible items of value owned by a business.

Back office: administrative activities not involving direct contact with customers.

Banking: activities carried out in a banking environment.

Basel 2: name of the new international accord on the capital requirements of banks, whereby banks in signatory countries must maintain sufficient capital to cover their exposure to risks (credit, market and operational risk). With regard to credit risk, banks must calculate the capital required in relation to the risk assets placed with customers with reference to their creditworthiness, as summarised by an external rating (assigned by specialist agencies) or calculated internally using methodologies communicated in advance to the Regulators.

Black-list: list of all countries offering preferential tax arrangements.

Black out period: period of time during which relevant persons are forbidden to purchase, sell, subscribe for or exchange financial instruments.

Benchmark: reference parameter for a measurement.

Best practice: the optimal approach.

Broker: party that trades in securities and financial instruments (or, more broadly, in other assets) on behalf of clients.

Business (segment): productive activity of a firm (sector).

289 Call center: telephone support for customers.

Coaching: process of helping an individual to develop and optimise his skills and personal characteristics in order to maximise performance.

Convention: meeting of individuals to discuss matters of common interest. In the business world, conventions are used to communicate to an internal public, dealers and commercial partners.

Corporate: type of customer represented by medium-sized and large companies.

Corporate image: collection of values and messages perceived and processed by the public, in response to the external-public relations behaviour of the business.

Cost to income ratio: productivity ratio obtained by dividing operating costs by net interest and other banking income.

CRAL: Centro Ricreativo Aziendale Lavoratori - social club for employees.

Customer Relationship Management (CRM): organisational model that focuses functional and operational activities on the relationship of the business with its customers.

Cross selling: parameter indicating the number of products used by a customer.

CSR: Corporate Social Responsibility.

Customer satisfaction: measure of approval. Indicates the extent to which the business satisfies the customer’s expectations.

290 Database: a computer file that is organised to allow applications software to managed the data stored (input, query, delete, update).

Dealer: operator in the financial markets.

Direct Mailing: the sending of mail to customers or potential customers to promote products, provide technical information, newsletters etc.

Diversity: corporate policies designed to develop and manage human resources via awareness of and drawing benefit from human diversity (gender, age, nationality, etc.).

Fair value: understood to be represented by market value. The consideration for which an asset or liability can be exchanged by knowledgeable and independent parties operating under free market conditions.

Follow-up: action subsequent to an event.

Fringe benefit: non-cash remuneration that supplements fixed salary as an incentive for the employee to be more productive. Examples include health insurance, pension payments, subsidised meals, company cars etc.

Fund raising: collection of funds to finance the activities of the Third Sector via donations, amounts given by private citizens and firms.

Compliance function: organisation tasked to prevent the risk that business activities fail to comply with legislation or other regulations, or with self-imposed instructions (e.g. articles of association, codes of conduct, codes of self-regulation).

291 GBS (Working Party For The Social Responsibility Report): Italian association for scientific research into the Social Responsibility Report, officially founded in 1998 in response to the growing call for information from academics and companies with regard to the social responsibility of firms.

Governance (or corporate governance): organisational arrangements that establish the firm’s objectives and provide the means for achieving them.

Holding (or holding company): private company that holds investments in other companies. A holding company that owns enough shares or quotas in a company to control its administration is known as a parent company.

Social Housing: a series of actions, initiatives and tools, provided directly or by facilitating the work of third parties, that help the disadvantaged live in a dignified manner, in order to improve and consolidate their position in society.

IAS: the international accounting standards issued by the IASB (International Accounting Standard Board) and adopted in the European Union from 2005 for listed companies. In particular, IAS 24 covers disclosures in the financial statements about related-party transactions.

Internal Audit: independent checking and consultancy activities designed to improve organisational efficiency and effectiveness, via the assessment and development controls, risk management process and corporate governance.

Internal dealing: transactions (purchases, sales, subscriptions or exchanges) in the securities of a listed company by its directors, statutory auditors and senior managers (so-called relevant persons), as well as by shareholders with interests in excess of 10% of capital.

292 Intranet: local network that uses the same technology as the Internet.

Investment Banking: specialist financial segment dedicated, in particular, to the provision of consultancy for the issue of securities and, more in general, for the sourcing of funds in the capital markets.

Investor Relations: relations maintained by listed companies with institutional investors and rating agencies.

IRES: corporate income tax.

IRAP: regional tax on productive activities.

ISO 27001-27002: international standards governing information security.

ISVAP: the insurance-industry watchdog (legally, financially, organisationally and operationally independent) that guarantees the stability of the insurance market and the transparency of the products offered in the interests of both insured persons and the community. Sanctions are applied in the event of improper behaviour.

Leasing: contracts whereby one party (lessor) grants the other (lessee) the use of an asset for a given period of time. This asset is purchased or constructed by the lessor in accordance with the requirements of the lessee, which holds an option to purchase the asset at the end of the contract on predetermined terms.

Learning by doing: a form of on-the-job training.

Management: persons who direct a business or decide on its strategic direction.

Mission: summary of macro objectives that explain the reason why a business exists. Consistent with the declared values, the mission statement usually links the activity of the business with its contribution

293 to the community in terms of greater wellbeing, the quality of life and social integration.

Non Profit: activities not conducted with a view to making a profit.

Public Offer: offer of cash for the purchase of financial products. This may be voluntary (on the initiative of the offeror) or compulsory (imposed on the offeror as a consequence of current regulations); such offers may be “friendly” (the Board of Directors of the target company is in favour of the transaction) or “hostile” (the Board of Directors of the target company is opposed to the transaction).

OECD: Organisation for Economic Cooperation and Development. This organisation was established in Europe immediately after the Second World War to initiate and coordinate cooperation between countries in the economic field.

On line: everything related to telematic systems.

Related parties: in general (except where covered by specific sector regulations), related parties are defined in IAS 24 (which is also referred to in the regulations issued by CONSOB). “Related parties” include: 1) parties that directly or indirectly control (including joint control) a company, or which are controlled by the company or subject to joint control; 2) parties whose equity interest in a company means that they can exercise significant influence over it; 3) companies that are associates of the company; 4) joint ventures in which the company has invested; 5) directors, statutory auditors and executives of the company with strategic responsibilities; 6) “close family members” of the parties listed in the previous point; 7) companies in which one of the parties referred to in points 5) and 6), directly or indirectly owns (jointly or otherwise) holds significant voting rights (e.g. subsidiaries or associates of that party); 8) pension funds for the employees of the company or of a related company.

294 Partnership: close collaboration between two or more organisations that share certain objectives and make available their operational resources in order to achieve them. Partnership facilitates dialogue and the exchange of ideas, which are key to the proper assessment and management of risk.

Pay-out (of dividends): ratio of the total dividends paid to the net profit of the company.

Performance: equivalent to yield in financial terminology.

POS machine: literally “point of sale” machine, this automated equipment is used to pay for goods purchased or services received.

Phishing: illegal IT activity that takes advantage of social engineering techniques to obtain personal or confidential information via electronic communications, with a view to identity theft. These techniques include false e-mails, SMS messages and even telephone contacts.

Policy: a series of fundamental principles and guidelines devised and implemented by the leadership of an organisation, with a view to directing its activities and pursuing long-term objectives.

Price sensitive: information which, if made public, could affect the economic and financial position of a business or significantly influence the price of listed financial instruments.

Private customers: used to refer to high net worth individuals.

295 Private Banking: banking activity dedicated to the private segment, offering personalised services that mainly comprise the administration of assets and the offer of high value-added and “custom” products and services.

Public company: listed company whose shares are held by many investors and without one controlling shareholder.

Ratings: an assessment made by a specialist private agency of the creditworthiness of a party that issues bonds in the international financial markets i.e. a reflection of the probability that the party will be able to service the debt on a timely basis.

Real estate: structured financial transactions in the property sector.

Retail: a term borrowed from high-street commerce to indicate the provision of a service or the sale of a product to the general public.

Social responsibility: the strategies of a business that, together, increase its economic value while respecting the environment and considering the legitimate interests and needs of its stakeholders.

Restyling: superficial changes to update the internal or external image of a business.

Risk Management: business function that seeks to optimise a company’s exposure to risk..

ROE: return on equity, being the ratio of net profit to shareholders’ equity at the end of the period.

SGR (Società di Gestione del Risparmio): an asset management company that is authorised to promote, establish, organise and manage mutual funds (collective management of savings), while keeping its own assets separate from those of the fund. An SGR may also manage funds established by other SGRs.

296 SIM (Società di Intermediazione Mobiliare): a company that solely provides stockbroking services.

Skills development: development of the ability of individuals to solve problems.

Small business: a market segment comprising small and medium-sized enterprises.

Small Cap: listed companies with a low level of capitalisation, often grouped separately on the stock exchange.

Relevant persons: persons with regular access to privileged information relevant to transactions in financial instruments.

Stakeholder: strictly, all those individuals and identifiable groups on which the business depends for its survival: shareholders, employees, customers, suppliers and key government agencies. More broadly, a stakeholder is any identifiable individual who can influence or be influenced by the activities of the organisation in terms of its products, policies or processes: local groups, governmental bodies, trade associations, competitors, trade unions and the press. (R.E. Freeman, Strategic Management: a Stakeholders Approach, Pitman Boston, 1984).

Staff: functional specialists that support the hierarchical “line” structure of the business; the former are independent of the latter and assist them with their activities.

Sustainable development: ability to guarantee development that is compatible with the values of individuals and the environment. This definition is broader than that set out in the Brundtland Report: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

297 Target: objective to be reached.

Testimonial: association of the image and words of a person considered representative with a cause or product, in order to reinforce its credibility.

Third Sector: all the parties occupying an intermediate position between the public sector (First Sector) and the private sector (Second Sector) that are able to provide goods and services on a non-profit basis. In Italy, the Third Sector principally comprises voluntary organisations, social cooperatives, associations and foundations working for the benefit of society.

Top management: the most senior executives of a company.

Total Capital Ratio: cthe minimum required solvency ratio, being the ratio of regulatory capital, including third-level subordinated loans, to the weighted on- and off-balance sheet assets of a bank.

Trading: the purchase and sale of instruments traded in the financial markets. Trading via the Internet is known as trading on line.

Trojan (trojan horse): type of computer virus.

Turnover: used with regard to employees, this means the percentage of new hires (inward turnover) and terminations (outward turnover) during the year.

Tutor: commonly understood to be a person who looks after another. In training circles, a tutor is responsible for a group of persons and/ or a training programme.

298 Value Added: measures the increase in value created by the production and distribution of goods and services, achieved by combining capital and labour (the factors of production).

Uni En Iso 9001: standard that certifies the quality system of an organisation after verifying the conformity of the entire production process, from the design and development stage, to procurement and production, testing and installation, and subsequent support.

Wealth Management: personalised management of major financial wealth.

Welfare: the provision of social support. The British government coined the expression “The Welfare State” after the Second World War to describe its policy of social protection.

Work And Life Balance: balance between the energy dedicated to work and that dedicated to the private life of the individual.

299 A commitment to the planet. Black on white. Banca Popolare di Milano demonstrates its commitment and support for ecology by using Shiro Alga Paper for this report. This natural product is unique in terms of innovation and environmental protection. It is made from excess algae removed from the Venice lagoon together with 50% FSC- certified cellulose from sustainable forests, where the processing of wood fully respects the ecosystem. This process helps to keep the lagoon’s water clean, while also replaced a substantial quantity of cellulose with a natural alternative.

Banca Popolare di Milano has decided to offset the carbon emissions deriving from the publication of this report by contributing to the forestation of the BPM Wood within Milan’s Parco Nord.

This report has been produced using FSC recycled ecological paper and eco-compatible vegetable inks from Agema Corporation S.p.A. – Milan, a company certified for eco-sustainable development. Bpm Group Social Responsibility Report 2008 B PM Group

SocialResponsibility Report2008 2008