Financial Statements

2o11

Financial Statements at December 31, 2011 Iccrea BancaImpresa S.p.A

Iccrea BancaImpresa S.p.A ICCREA BANKING GROUP

INDEX

Shareholders ...... 1

Corporate Officers ...... 7

Calling of Ordinary Shareholders’ Meeting ...... 8

Report on operations ...... 9

Balance Sheet...... 37

Income Statement ...... 39

Statement of changes in shareholders' equity ...... 41

Statement of cash flows (Indirect method) ...... 43

Part A – Accounting Policies ...... 45

Part B – Information on the Balance Sheet ...... 69

Part C – Information on the Income Statement ...... 119

Part D – Comprehensive Income ...... 148

Part E – Risks and Risk Management Policies ...... 150

Part F – Information on Capital ...... 211

Part H – Information on Related Parties ...... 220

Part L – Operating Segments ...... 224

Report of The board of Auditors on the Financial Statements as at December 31, 2011 ...... 230

Independent Auditor’s Report ...... 233 SHAREHOLDERS

SHAREHOLDERS NOT ASSOCIATED WITH MUTUAL FEDERATIONS B.C.C. DEI CASTELLI DI MAZZARINO E BUTERA SCRL MAZZARINO CL B.C.C. DI CONVERSANO SCRL CONVERSANO BA BANCA DI BOLOGNA CREDITO COOPERATIVO SC BOLOGNA BO BANCA POPOLARE DELL'EMILIA ROMAGNA SCRL MODENA MO BANCA POPOLARE DI VICENZA S.C.P.A. VICENZA VI BANCA POPOLARE SANT'ANGELO SCRL LICATA AG BANCA SVILUPPO SPA ROMA RM S.P.A. PALERMO PA ICCREA BANCA S.P.A. ROMA RM ICCREA HOLDING S.P.A. ROMA RM PROMOCOOP TRENTINA SPA TN

CASSA CENTRALE BANCA - CREDITO COOPERATIVO DEL NORD EST C. R. DELLA VALLE DI - B.C.C. - SCRL LEDRO TN C.R. ALTA VALDISOLE E PEJO SCRL MEZZANA TN C.R. CENTROFIEMME - B.C.C. SCRL CAVALESE TN C.R. DELLA VALLE DEI LAGHI-B.C.C. SCRL PADERGNONE TN C.R. DI E CADINE-B.C.C. SCRL ALDENO TN C.R. DI BASSA ANAUNIA - B.C.C. - SCRL TN C.R. DI -B.C.C. SCRL BRENTONICO TN C.R. DI B.C.C. SCRL CALDONAZZO TN C.R. DI -B.C.C. SCRL ISERA TN C.R. DI LIZZANA-B.C.C. SCRL TN C.R. DI -B.C.C. SCRL MEZZOCORONA TN C.R. DI E SAN MICHELE ALL'ADIGE-B.C.C. SCRL MEZZOLOMBARDO TN C.R. DI SAONE-B.C.C. S.C.R.L. TN C.R. DI TASSULLO E -B.C.C. SCRL TASSULLO TN C.R. DI - VAL DI NON - B.C.C. - SC TUENNO TN C.R. DON LORENZO GUETTI DI QUADRA - FIAVE' - LOMASO BCC FIAVE' TN C.R. PINETANA E SEREGNANO-B.C.C. SCRL BASELGA DI PINE' TN C.R.ALTA VALLAGARINA DI , CALLIANO, NOMI, BESENELLO TN CASSA CENTRALE BANCA - CREDITO COOPERATIVO DEL NORD EST SPA TRENTO TN CASSA RURALE ADAMELLO BRENTA BANCA DI CRED. COOP. SOC. COOP. TIONE DI TRENTO TN CASSA RURALE ALTO GARDA B.C.C. SCARL ARCO TN CASSA RURALE BASSA VALLAGARINA - B.C.C. SCRL ALA TN CASSA RURALE CENTRO VALSUGANA B.C.C. STRIGNO TN CASSA RURALE D'ANAUNIA - B.CRED.COOP. - TAIO SCARL TAIO TN CASSA RURALE DELLA BASSA VALSUGANA -B.C.C. SCPARL TN CASSA RURALE DI FIEMME - B.C.C. - TN CASSA RURALE DI SCRL FOLGARIA TN CASSA RURALE DI - VALLE DI CEMBRA B.C.C. SCRL LAVIS TN CASSA RURALE DI - B.C.C. - SC LEVICO TERME TN CASSA RURALE DI MORI-VAL DI GRESTA B.C.C. SCPARL MORI TN CASSA RURALE DI PERGINE-B.C.C. SCARL TN CASSA RURALE DI RABBI E SCRL MALE' TN CASSA RURALE DI RONCEGNO-B.C.C. SCARL RONCEGNO TN CASSA RURALE DI ROVERE' DELLA LUNA-B.C.C. SCARL ROVERE' DELLA LUNA TN CASSA RURALE DI ROVERETO - BANCA DI CREDITO COOPERATIVO - SC ROVERETO TN CASSA RURALE DI TRENTO - BCC - SC TRENTO TN CASSA RURALE GIUDICARIE VALSABBIA PAGANELLA TN CASSA RURALE NOVELLA E ALTA ANAUNIA - B.C.C. SCRL FONDO TN CASSA RURALE OLLE-SAMONE- B.C.C. SC TN CASSA RURALE VAL DI FASSA E AGORDINO TN CASSA RURALE VALLI DI PRIMIERO E VANOI BCC TRANSACQUA TN

CASSA CENTRALE RAIFFEISEN DELL'ALTO ADIGE CASSA CENTRALE RAIFFEISEN DELL'ALTO ADIGE SPA BOLZANO BZ

1 CASSA RAIFFEISEN LANA SC LANA BZ CASSA RAIFFEISEN VAL BADIA SC CORVARA IN BADIA BZ

FEDERAZIONE CALABRESE DELLE C.R.A. B.C.C. DI TARSIA SCRL TARSIA CS BANCA DEI DUE MARI DI CALABRIA - CREDITO COOPERATIVO VILLAPIANA CS BANCA DEL CROTONESE - CREDITO COOPERATIVO SCRL ISOLA DI CAPO RIZZUTO KR BANCA DI COSENZA - CREDITO COOPERATIVO SC COSENZA CS C.R.A. DI SAN CALOGERO SCRL SAN CALOGERO VV CREDITO COOPERATIVO MEDIOCRATI SOC. COOP. A R.L. MONTALTO UFFUGO CS

FEDERAZIONE CAMPANA DELLE BANCHE CRED. COOP. B.C.C. ALTO CASERTANO E BASSO FRUSINATE SCRL MIGNANO MONTE LUNGO CE B.C.C. CAPACCIO PAESTUM - SOC. COOP. CAPACCIO SA B.C.C. DEI COMUNI CILENTANI SCRL MOIO DELLA CIVITELLA SA B.C.C. DI ALTAVILLA SILENTINA E CALABRITTO SCRL ALTAVILLA SILENTINA SA B.C.C. DI MONTECORVINO ROVELLA SCRL MONTECORVINO ROVELLA SA B.C.C. DI SCAFATI E CETARA SCRL SCAFATI SA B.C.C. IRPINA SCRL MONTEMILETTO AV B.C.C. MONTE PRUNO DI ROSCIGNO E DI LAURINO SC ROSCIGNO SA B.C.C."SAN VINCENZO DE' PAOLI" DI CASAGIOVE S.C.P.A. CASAGIOVE CE C.R.A. FISCIANO - CRED.COOP. SCRL FISCIANO SA CASSA RURALE ARTIGIANA - B.C.C. DI BATTIPAGLIA SCRL BATTIPAGLIA SA

FEDERAZIONE DELLE B.C.C. DEL FRIULI-VENEZIA GIULIA B.C.C. DEL CARSO SCRL TRIESTE TS B.C.C. DEL FRIULI CENTRALE SC MARTIGNACCO UD B.C.C. DELLA BASSA FRIULANA SCRL CASTIONS DI STRADA UD B.C.C. DI BASILIANO SC BASILIANO UD B.C.C. DI FIUMICELLO ED AIELLO DEL FRIULI SCRL FIUMICELLO UD B.C.C. DI SAN GIORGIO E MEDUNO SC SAN GIORGIO DELLA PN RICHINVELDA B.C.C. DI STARANZANO E VILLESSE SOC. COOP. STARANZANO GO B.C.C. PORDENONESE SC AZZANO DECIMO PN BANCA DI CARNIA E GEMONESE - CREDITO COOPERATIVO SCRL TOLMEZZO UD BANCA DI UDINE CREDITO COOPERATIVO SC UDINE UD CRED.COOP. - C.R.A. DI LUCINICO FARRA E CAPRIVA SC GORIZIA GO CREDIFRIULI SCRL - CREDITO COOPERATIVO SCRL UDINE UD FEDERAZIONE DELLE B.C.C. DEL FRIULI-VENEZIA GIULIA SCARL UDINE UD B.C.C. DEL CARSO SCRL TRIESTE TS B.C.C. DEL FRIULI CENTRALE SC MARTIGNACCO UD B.C.C. DELLA BASSA FRIULANA SCRL CASTIONS DI STRADA UD B.C.C. DI BASILIANO SC BASILIANO UD B.C.C. DI FIUMICELLO ED AIELLO DEL FRIULI SCRL FIUMICELLO UD B.C.C. DI SAN GIORGIO E MEDUNO SC SAN GIORGIO DELLA PN RICHINVELDA B.C.C. DI STARANZANO E VILLESSE SOC. COOP. STARANZANO GO B.C.C. PORDENONESE SC AZZANO DECIMO PN BANCA DI CARNIA E GEMONESE - CREDITO COOPERATIVO SCRL TOLMEZZO UD BANCA DI UDINE CREDITO COOPERATIVO SC UDINE UD CRED.COOP. - C.R.A. DI LUCINICO FARRA E CAPRIVA SC GORIZIA GO CREDIFRIULI SCRL - CREDITO COOPERATIVO SCRL UDINE UD FEDERAZIONE DELLE B.C.C. DEL FRIULI-VENEZIA GIULIA SCARL UDINE UD

FEDERAZIONE DELLE B.C.C. DEL LAZIO, UMBRIA, SARDEGNA B.C.C. DEL TUSCOLO-ROCCA PRIORA SCRL ROCCA PRIORA RM B.C.C. DEL VELINO SCRL POSTA RI B.C.C. DI BELLEGRA SCRL BELLEGRA RM B.C.C. DI NETTUNO SCRL NETTUNO RM B.C.C. DI PALESTRINA SCRL PALESTRINA RM B.C.C. DI RIANO SCRL RIANO RM

2 B.C.C. DI ROMA S.C. ROMA RM B.C.C. DI SPELLO E BETTONA SC SPELLO PG B.C.C. S. BARNABA DI MARINO SCRL MARINO RM BANCA DI FORMELLO E TREVIGNANO ROMANO DI CRED. COOP. SCRL FORMELLO RM BANCA DI MANTIGNANA E PERUGIA CRED. COOP. UMBRO- SC CORCIANO PG C.R.A. AGRO PONTINO PONTINIA - B.C.C. SC PONTINIA LT CREDIUMBRIA BANCA DI CREDITO COOPERATIVO SC CITTA' DELLA PIEVE PG FEDERAZIONE DELLE B.C.C. DEL LAZIO, UMBRIA, SARDEGNA ROMA RM B.C.C. DEL TUSCOLO-ROCCA PRIORA SCRL ROCCA PRIORA RM B.C.C. DEL VELINO SCRL POSTA RI B.C.C. DI BELLEGRA SCRL BELLEGRA RM B.C.C. DI NETTUNO SCRL NETTUNO RM B.C.C. DI PALESTRINA SCRL PALESTRINA RM B.C.C. DI RIANO SCRL RIANO RM B.C.C. DI ROMA S.C. ROMA RM B.C.C. DI SPELLO E BETTONA SC SPELLO PG B.C.C. S. BARNABA DI MARINO SCRL MARINO RM BANCA DI FORMELLO E TREVIGNANO ROMANO DI CRED. COOP. SCRL FORMELLO RM BANCA DI MANTIGNANA E PERUGIA CRED. COOP. UMBRO- SC CORCIANO PG C.R.A. AGRO PONTINO PONTINIA - B.C.C. SC PONTINIA LT CREDIUMBRIA BANCA DI CREDITO COOPERATIVO SC CITTA' DELLA PIEVE PG FEDERAZIONE DELLE B.C.C. DEL LAZIO, UMBRIA, SARDEGNA ROMA RM

FEDERAZIONE DELLE B.C.C. DEL PIEMONTE,VALLE D'AOSTA E LIGURIA B.C.C. DI CASALGRASSO E SANT'ALBANO STURA SCRL SANT'ALBANO STURA CN B.C.C. DI CHERASCO SCRL CHERASCO CN B.C.C. DI PIANFEI E ROCCA DE' BALDI SC PIANFEI CN BANCA D'ALBA - B.C.C. DI ALBA, LANGHE E ROERO SCRL ALBA CN BANCA DI CARAGLIO, DEL CUNEESE E DELLA RIVIERA DEI FIORI CARAGLIO CN BANCA DI CREDITO COOPERATIVO VALDOSTANA SC GRESSAN AO BCC DEL CANAVESE DI VISCHE E DEL VERBANO CUSIO OSSOLA VISCHE TO BENE BANCA - CREDITO COOPERATIVO DI BENE VAGIENNA SC BENE VAGIENNA CN C.R.A. DI BOVES-B.C.C. SCRL BOVES CN FEDERAZIONE DELLE B.C.C. DEL PIEMONTE,VALLE D'AOSTA E LIG CUNEO CN B.C.C. DI CASALGRASSO E SANT'ALBANO STURA SCRL SANT'ALBANO STURA CN B.C.C. DI CHERASCO SCRL CHERASCO CN B.C.C. DI PIANFEI E ROCCA DE' BALDI SC PIANFEI CN BANCA D'ALBA - B.C.C. DI ALBA, LANGHE E ROERO SCRL ALBA CN BANCA DI CARAGLIO, DEL CUNEESE E DELLA RIVIERA DEI FIORI CARAGLIO CN BANCA DI CREDITO COOPERATIVO VALDOSTANA SC GRESSAN AO BCC DEL CANAVESE DI VISCHE E DEL VERBANO CUSIO OSSOLA VISCHE TO BENE BANCA - CREDITO COOPERATIVO DI BENE VAGIENNA SC BENE VAGIENNA CN C.R.A. DI BOVES-B.C.C. SCRL BOVES CN FEDERAZIONE DELLE B.C.C. DEL PIEMONTE,VALLE D'AOSTA E LIG CUNEO CN

FEDERAZIONE DELLE B.C.C. DELL'ABRUZZO E DEL MOLISE B.C.C. DI CASTIGLIONE MESSER RAIMONDO E PIANELLA SCRL CASTIGLIONE MESSER RAIMONDO TE B.C.C. SANGRO TEATINA DI ATESSA CASTIGLIONE GIULIANO SCRL ATESSA CH FEDERAZIONE DELLE B.C.C. DELL'ABRUZZO E DEL MOLISE PESCARA PE

FEDERAZIONE DELLE B.C.C. DELL'EMILIA ROMAGNA B.C.C. DELL'ALTO RENO SCRL LIZZANO IN BELVEDERE BO B.C.C. DI SALA DI CESENATICO SC CESENATICO FC B.C.C. DI VERGATO SCRL VERGATO BO B.C.C. VALMARECCHIA SCRL RIMINI RN BANCA CENTRO EMILIA CREDITO COOPERATIVO SC CENTO FE BANCA DI CAVOLA E SASSUOLO CRED. COOP. SCRL TOANO RE BANCA DI CREDITO COOPERATIVO DI MONTERENZIO SC MONTERENZIO BO BANCA DI FORLI'- CREDITO COOPERATIVO SCRL FORLI' FC BANCA REGGIANA - CREDITO COOPERATIVO SCRL GUASTALLA RE BANCA ROMAGNA COOPERATIVA-CR. CO. ROMAGNA CENTRO E CESENA FC MACERONE CREDITO COOPERATIVO RAVENNATE E IMOLESE SOC. COOP. FAENZA RA

3 EMILBANCA CREDITO COOPERATIVO SC BOLOGNA BO FEDERAZIONE DELLE B.C.C. DELL'EMILIA ROMAGNA SCRL BOLOGNA BO ROMAGNA EST BANCA DI CREDITO COOPERATIVO - SC SAVIGNANO SUL RUBICONE FC

FEDERAZIONE DELLE B.C.C. DI PUGLIA E BASILICATA B.C.C. DI ALBEROBELLO E SAMMICHELE DI BARI SCRL ALBEROBELLO BA B.C.C. DI LOCOROTONDO - C.R.A. SCRL LOCOROTONDO BA C.R.A. DI CASTELLANA GROTTE-CRED. COOP. SCRL CASTELLANA GROTTE BA CRED.COOP.-C.R.A. DI SAN GIOVANNI ROTONDO SCRL SAN GIOVANNI ROTONDO FG

FEDERAZIONE LOMBARDA DELLE B.C.C. B.C.C. DEL GARDA - COLLI MORENICI DEL GARDA MONTICHIARI BS B.C.C. DELL'AGRO BRESCIANO SC GHEDI BS B.C.C. DELL'ALTA BRIANZA - ALZATE BRIANZA SC ALZATE BRIANZA CO B.C.C. DI BARLASSINA SCRL BARLASSINA MB B.C.C. DI BEDIZZOLE-TURANO-VALVESTINO SCRL BEDIZZOLE BS B.C.C. DI BRESCIA SCRL NAVE BS B.C.C. DI BUSTO GAROLFO E BUGUGGIATE SCRL BUSTO GAROLFO MI B.C.C. DI CARATE BRIANZA SCRL CARATE BRIANZA MB B.C.C. DI CARAVAGGIO SCRL CARAVAGGIO BG B.C.C. DI CARUGATE SC CARUGATE MI B.C.C. DI CASTEL GOFFREDO S.C. CASTEL GOFFREDO MN B.C.C. DI DOVERA E POSTINO SCRL DOVERA CR B.C.C. DI INZAGO SCRL INZAGO MI B.C.C. DI LESMO SC LESMO MB B.C.C. DI MOZZANICA SCRL MOZZANICA BG B.C.C. DI POMPIANO E DELLA FRANCIACORTA SCRL POMPIANO BS B.C.C. DI SORISOLE E LEPRENO SCRL SORISOLE BG B.C.C. DI TRIUGGIO E DELLA VALLE DEL LAMBRO SC TRIUGGIO MB B.C.C. DI VALLE SERIANA SCRL PRADALUNGA BG B.C.C. DI VEROLAVECCHIA SCRL VEROLAVECCHIA BS B.C.C. LAUDENSE - LODI SCRL LODI LO B.C.C. OROBICA DI BARIANO E COLOGNO AL SERIO SCRL COLOGNO AL SERIO BG CREDITO COOPERATIVO SOC.COOP. GUARDAMIGLIO LO BANCA CREMASCA - CREDITO COOPERATIVO SC CREMA CR BANCA CREMONESE - CREDITO COOPERATIVO CASALMORANO CR BANCA DELLA BERGAMASCA-CRED. COOP. SCRL ZANICA BG BANCA DI CREDITO COOPERATIVO DI GHISALBA (BERGAMO) - SC GHISALBA BG BCC DELLA VALTROMPIA BOVEGNO - CASSA DI CREDITO COOPERATIVO BOVEGNO BS C.R.A. DI BINASCO - CRED.COOP. SC BINASCO MI C.R.A. DI BORGO SAN GIACOMO - CRED.COOP. SCRL BORGO SAN GIACOMO BS C.R.A. DI CANTU'- B.C.C. SC CANTU' CO - BCC LENO BS CASSA RURALE B.C.C.DI TREVIGLIO SCRL TREVIGLIO BG CREDICOOP CERNUSCO SUL NAVIGLIO SC CERNUSCO SUL NAVIGLIO MI CREDITO COOPERATIVO DELL'ADDA E DEL CREMASCO-CASSA RURALE SC RIVOLTA D'ADDA CR MANTOVABANCA 1896 CREDITO COOPERATIVO - SC ASOLA MN

FEDERAZIONE MARCHIGIANA B.C.C. B.C.C. DEL METAURO SC ORCIANO DI PESARO PU B.C.C. DI CIVITANOVA MARCHE E MONTECOSARO SCRL CIVITANOVA MARCHE MC B.C.C. DI CORINALDO SCRL CORINALDO AN B.C.C. DI FALCONARA MARITTIMA SCRL FALCONARA MARITTIMA AN B.C.C. DI FANO SC FANO PU B.C.C. DI FILOTTRANO SCRL FILOTTRANO AN B.C.C. DI GRADARA SCARL GRADARA PU B.C.C. DI OSTRA E MORRO D'ALBA SCRL OSTRA AN B.C.C. DI OSTRA VETERE SCRL OSTRA VETERE AN B.C.C. DI PERGOLA SCRL PERGOLA PU B.C.C. DI RECANATI E COLMURANO SCRL RECANATI MC B.C.C. DI RIPATRANSONE SC RIPATRANSONE AP B.C.C. PICENA SCRL CASTIGNANO AP BANCA DEI SIBILLINI CRED. COOP. DI CASAVECCHIA SC PIEVE TORINA MC

4 BANCA DI PESARO CREDITO COOPERATIVO SCRL PESARO PU BANCA PICENA TRUENTINA CRED. COOP. SC ACQUAVIVA PICENA AP BANCA SUASA CREDITO COOPERATIVO SCRL MONDAVIO PU C.R.A. SAN GIUSEPPE CRED.COOP. CAMERANO SCRL CAMERANO AN

FEDERAZIONE SICILIANA DELLE B.C.C. B.C.C. "SEN. PIETRO GRAMMATICO" DI PACECO SCRL PACECO TP B.C.C. DELLA VALLE DEL FITALIA SCRL LONGI ME B.C.C. DI ALTOFONTE E CACCAMO SCRL ALTOFONTE PA B.C.C. DI PACHINO SCRL PACHINO SR B.C.C. DI SAN BIAGIO PLATANI SCRI SAN BIAGIO PLATANI AG B.C.C. DON STELLA DI RESUTTANO SCRL RESUTTANO CL B.C.C. G. TONIOLO DI S. CATALDO SCRL SAN CATALDO CL B.C.C. LA RISCOSSA DI REGALBUTO SCARL REGALBUTO EN B.C.C. S. MICHELE DI CALTANISSETTA E PIETRAPERZIA SCRL CALTANISSETTA CL B.C.C. SAN FRANCESCO DI CANICATTI' SCRL CANICATTI' AG B.C.C. SAN GIUSEPPE DI MUSSOMELI SCRL MUSSOMELI CL BANCA DEL NISSENO - CRED. COOP. DI SOMMATINO E SERRADIFALCO SC CALTANISSETTA CL BANCA DON RIZZO - CRED. COOP. DELLA SICILIA OCCIDENTALE SC ALCAMO TP FEDERAZIONE SICILIANA DELLE B.C.C. SCRL PALERMO PA

FEDERAZIONE TOSCANA B.C.C. "CREDITO VALDINIEVOLE" BANCA DI CREDITO COOPERATIVO DI MONTECATINI-TERME PT MONTECATINI TERME E BIENTINA SOCIETÀ COOPERATIVA B.C.C. DELLA MONTAGNA PISTOIESE - MARESCA SCRL SAN MARCELLO PISTOIESE PT B.C.C. DI IMPRUNETA SCRL IMPRUNETA FI B.C.C. DI MASIANO SCRL PISTOIA PT B.C.C. DI MONTEPULCIANO SCRL MONTEPULCIANO SI B.C.C. DI PITIGLIANO SCRL PITIGLIANO GR B.C.C. DI PONTASSIEVE SCRL PONTASSIEVE FI B.C.C. DI SIGNA SCRL SIGNA FI B.C.C. DI VIGNOLE SCRL QUARRATA PT BANCA AREA PRATESE CREDITO COOPERATIVO -SOC.COOP. CARMIGNANO PO BANCA CRAS - CRED. COOP. CHIANCIANO TERME-SOVICILLE SC SOVICILLE SI BANCA DEL MUGELLO - CREDITO COOPERATIVO SCRL FIRENZUOLA FI BANCA DEL VALDARNO CREDITO COOPERATIVO SCRL SAN GIOVANNI VALDARNO AR BANCA DELLA MAREMMA - CREDITO COOPERATIVO DI GROSSETO GROSSETO GR BANCA DELLA VERSILIA LUNIGIANA E GARFAGNANA - CRED. COOP. SC PIETRASANTA LU BANCA DI ANGHIARI E STIA CRED. COOP. SCRL ANGHIARI AR BANCA DI PESCIA - CREDITO COOPERATIVO SCRL PESCIA PT BANCA DI PISTOIA - CREDITO COOPERATIVO SCRL PISTOIA PT BANCA DI SATURNIA COSTA D'ARGENTO CRED.COOP. MANCIANO GR BANCA VALDICHIANA CREDITO COOPERATIVO TOSCO-UMBRO SC CHIUSI SI CHIANTIBANCA - CREDITO COOPERATIVO - S. C. MONTERIGGIONI SI CREDITO COOPERATIVO FIORENTINO - CAMPI BISENZIO - S.C. CAMPI BISENZIO FI CREDITO COOPERATIVO VALDARNO FIORENTINO BANCA DI CASCIA SC REGGELLO FI FEDERAZIONE TOSCANA B.C.C. BAGNO A RIPOLI FI VIBANCA - B.C.C. DI S. PIETRO IN VINCIO SOC. COOP PISTOIA PT

FEDERAZIONE VENETA DELLE B.C.C. B.C.C. DEL VENEZIANO SC MIRA VE B.C.C. DELLE PREALPI (TARZO - TREVISO) SCRL TARZO TV B.C.C. DI CAMPIGLIA DEI BERICI SCRL CAMPIGLIA DEI BERICI VI B.C.C. DI CARTURA SCRL CARTURA PD B.C.C. DI MARCON-VENEZIA SCRL MARCON VE B.C.C. DI PIOVE DI SACCO SCRL PIOVE DI SACCO PD B.C.C. DI SANT'ELENA SC SANT'ELENA PD B.C.C. VICENTINO - POJANA MAGGIORE SCRL POIANA MAGGIORE VI BANCA ADRIA CREDITO COOPERATIVO DEL DELTA - SOC. COOP. ADRIA RO BANCA ALTO VICENTINO CREDITO COOPERATIVO SCPA - SCHIO SCHIO VI BANCA ATESTINA DI CREDITO COOP. SCRL ESTE PD BANCA DELLA MARCA CREDITO COOPERATIVO - SOCIETÀ COOPERATIVA ORSAGO TV BANCA DI CREDITO COOPERATIVO DEL POLESINE - ROVIGO SC ROVIGO RO

5 BANCA DI MONASTIER E DEL SILE - CREDITO COOPERATIVO SCRL MONASTIER DI TREVISO TV BANCA DI ROMANO E S. CATERINA CREDITO COOPERATIVO - SC ROMANO D'EZZELINO VI BANCA DI VERONA - CREDITO COOPERATIVO CADIDAVID SCRL VERONA VR BANCA PADOVANA CREDITO COOPERATIVO-SOCIETA' COOPERATIVA CAMPODARSEGO PD BANCA S. BIAGIO DEL VENETO ORIENTALE - BCC SC FOSSALTA DI PORTOGRUARO VE BANCA SAN GIORGIO QUINTO VALLE AGNO CREDITO COOPERATIVO SC FARA VICENTINO VI BANCA SANTO STEFANO - CRED. COOP. - MARTELLAGO-VENEZIA - SC MARTELLAGO VE BANCA VERONESE CREDITO COOPERATIVO DI CONCAMARISE SCRL CONCAMARISE VR C.R.A. DI BRENDOLA - CRED.COOP. SCRL BRENDOLA VI CEREA BANCA CEREA VR CRA DI CORTINA D'AMPEZZO E DELLE DOLOMITI-CRED.COOP.-SCRL CORTINA D'AMPEZZO BL CREDITO TREVIGIANO BCC - SC VEDELAGO TV CREDIVENETO - CREDITO COOPERATIVO INTERPROVINCIALE VENETO MONTAGNANA PD FEDERAZIONE VENETA DELLE B.C.C. SCRL PADOVA PD ROVIGOBANCA CREDITO COOPERATIVO - SOC. COOP. ROVIGO RO

6 CORPORATE OFFICERS

BOARD OF DIRECTORS BOARD OF AUDITORS

Serafino Bassanetti* Chairman Ignazio Parrinello Chairman

Florio Faccendi* Vice Chairman

Claudio Bin Fabio Pula Standing auditor

Marcello Cola Fernando Sbarbati Standing auditor

Luigi Querzola*

Carlo Napoleoni* Santo Ferri Alternate auditor

Giovanni Pontiggia* Luciano Eufemi Alternate auditor

Pietro Roman

Alfredo Savini

* Member of Executive Committee

7 Participation is open to shareholders whose shares are

ICCREA BANCAIMPRESA S.p.A. deposited at least five days prior to the meeting at the

Registered office in Rome, Via Lucrezia Romana no. registered office or with Iccrea Banca S.p.A., Rome

41/47 office.

Share capital €374,564,250.50 fully paid-up;

Company Register of Rome and tax ID no. FOR THE BOARD OF DIRECTORS

02820100580, VAT registration number The Chairman Serafino Bassanetti

01122141003; entered in the Register of

pursuant to Article 13 of Legislative Decree

385/1993 at no. 5405, ABI code 3123.7

Company subject to the management and control of

Iccrea Holding S.p.A. of Rome – Iccrea Banking

Group

CALLING OF ORDINARY SHAREHOLDERS’ MEETING

Shareholders are called to the Ordinary Shareholders’

Meeting to be held at the registered office in Rome,

Via Lucrezia Romana no. 41/47, at 12:00 noon at first

calling on April 24, 2012 and, if necessary, at second

calling on April 30, 2012, at the same place and time,

to discuss and resolve the following:

AGENDA

1. Examine and approve the financial statements at

December 31, 2011, having heard the director’s

report on operations, the report of the Board of

Auditors and the report of the independent

auditors; allocation of net profit for the year;

2. Appointment of a directors;

3. Remuneration and incentive policies and practices

pursuant to the instructions of the Bank of ;

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1. Report on Operations

1.1. Iccrea Banking Group

The Iccrea Banking Group was formed to support the operations of mutual banks and meet the needs of their local customers: corporate (small and medium-sized enterprises) and retail (households). The services and products that the Group offers through its two banks (Iccrea Banca and Iccrea BancaImpresa) and the other subsidiaries of the parent company, Iccrea Holding as well as major partnerships with outside providers, ranging from insurance (life and non-life) to finance and investment. Thus, the companies of the Iccrea Banking Group offer an integrated system of solutions for every mutual bank in its local market, enabling them to be local actors in economic and social development.

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The provisional data for the fourth quarter of 2011 (GDP Growth of February 20, 2012) confirm this 2. The macroeconomic trend, with GDP growth of 0.7% in the United States, and a decline of 0.6% in Japan. In the same environment period, in Europe only France posted growth, of 0.2%, while Germany and the United Kingdom both

posted contractions of 0.2% and Italy’s output fell After the timid recovery in 2010, with considerable by 0.7%. differences in the performance of the various countries, 2011 was marked by highly unstable According to the OECD, in 2011 world GDP is economic, financial and political conditions, estimated to have increased by 3.8%, while especially in Europe. forecasts for 2012 show growth slowing to 3.4%.

Overall, the OECD countries grew by 1.8% in 2011, The entire world economy was impacted by the compared with 3.1% in 2010. European difficulties: beginning with the initial problem of the sustainability of Greek debt, which Any recovery will be highly differentiated: in the had already emerged in 2010, events gathered advanced countries Europe is expected to stagnate momentum immediately after the summer with while overall growth should come to 2.0%; in the speculation about the soundness of peripheral emerging economies, growth is forecast to European economies and then a collapse in the moderate in China and India and slow more sharply confidence about the sustainability of Italy’s debt, in Brazil. with the spread on 10-year Treasury bonds compared with the corresponding Bunds rising to well above 500 basis points at the close of the year. In December, the situation worsened even further, prompting many analysts to call into question the stability of the euro area as a whole.

The overall situation remains uncertain, especially in the advanced countries, where private consumption has been affected by the soft labor market, the need to restore the health of the public finances and the difficult financial situation of households.

Selected macroeconomic projections (percentage changes on the previous year) Source: Thomson Reuters Datastream Consensus (1) Industrial production, adjusted for seasonal and calendar OECD effects. GDP Economics

2011 2012 2013 2011 2012 Despite the deceleration in the second half of the year, the growth of non-OECD countries remains World 3.8 3.4 4.3 - - the real engine of growth in the world economy. Advanced countries Euro area 1.6 0.2 1.4 1.6 -0.3 In this highly uncertain environment, inflationary Japan -0.3 2.0 1.6 -0.8 1.9 pressures have eased in both the main advanced United Kingdom 0.9 0.5 1.8 0.9 0.5 countries and the emerging economies, benefitting United States 1.7 2.0 2.5 1.8 2.2 in part from the decline in the prices of raw materials. Emerging economies Brazil 3.4 3.2 3.9 2.9 3.2 The persistent funding difficulties of Europe’s China 9.3 8.5 9.5 9.2 8.4 banking industry could diminish its ability to lend India (1) 7.6 7.5 8.4 7.0 7.3 to the real economy, setting in motion a negative Russia 4.0 4.1 4.1 4.2 3.5 spiral of declining production, weakening financial sector and sovereign debt risks. World trade (2) 6.7 4.8 7.1 - - Source: OECD, Economic Outlook , no. 90, November 2011; The stance of monetary policy in the main Consensus Economics, various publications, January 2012. advanced countries outside the euro area remained (1) Data refer to fiscal year (2) Goods and services. robustly expansive to counter risks of slacker growth and tensions on the financial markets. The initial estimates of the OECD point to further weakening of the main advanced economies, with the sole exception of the United States. The central banks of the main emerging countries also responded to the deterioration in the

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economic outlook and the easing of price strains by sovereign debt of nearly all the euro-area gradually relaxing monetary conditions. countries, including those with AAA status such as Germany, France and the Netherlands, under review. On January 13, Standard & Poor’s 2.1. The Euro Area downgraded the sovereign debt of nine of them, including France, which lost its AAA rating, Spain and Italy. In mid-February 2012, Moody’s also cut Following the weakening of world economic its rating or lowered its outlook for 114 banks and 9 activity and the spread of tensions in the markets insurance companies in Europe. In the same period, for the sovereign debt of the peripheral euro-area ECB analysts lowered their 2012 growth forecast for countries, economic conditions deteriorated in the the euro area from +0.8% to -0.1%. For 2013, the entire euro area in the second half of 2011, EU-17 is expected to grow by 1.1%, compared with although inflationary pressures abated. the 1.6% in the previous forecast. Inflation is also expected to rise from 1.8% to 1.9%. The €-coin indicator calculated by the turned negative in October. However, the As noted, in the latter months of 2011, the strains deterioration came to a halt in December, when on the sovereign debt of the euro area increased, the indicator held at its November level of minus spreading to many countries of the area and taking 0.2%, interrupting the decline that began last June. on systemic proportions. The prices of government securities were impacted by the uncertainty about Nevertheless, Business surveys of firms’ the crisis management mechanisms, while equity expectations for the short term have found and corporate bond markets in the euro area, widespread pessimism buffeted by high volatility, penalized bank shares.

€-coin: December 2011 In December, the ECB undertook extraordinary measures to support liquidity using 3-year loans at a rate of 1% (LTRO). An initial auction of €489 billion was held on December 21 2011, giving banks access to funding at a very low rate at a moment when the interbank market was virtually frozen. In this initial phase, Italian banks raised liquidity of about €110 billion. At the second LTRO auction at the end of February 2012, which saw the participation of about 800 banks, a total of €530

Source: Bank of Italy and Eurostat billion was disbursed, of which €139 billion granted to Italian banks. This brought total medium-term The growth of bank lending has also been weak. liquidity injected by the ECB in the European The rate of growth in lending to the non-financial financial system to €1,000 billion. Despite not private sector was practically unchanged at 1.9%. reaching firms and households in significant The slowdown in the growth of lending to non- volumes, this mass of liquidity had a positive financial companies (to 1.7% from 2.3% in August) impact on the spread between Italian Treasury offset a pickup in lending to households from 1.4% securities and German Bunds. The refinancing to 2.1%. The euro-area banks’ difficulties in operation, together with approval by the German funding have worsened and credit risk on the parliament of the second rescue plan for Greece, interbank market appears to have risen further. caused equity indices to rise and yields on government securities to subside, which in In the face of heightened financial market February 2012 had fallen to 5.04%, representing a tensions, the unfavorable outlook for growth in the spread of 320 basis points over German Bunds. euro area and the weakening of inflationary pressures, the Governing Council of the ECB eased The abundant liquidity injected into the system monetary conditions and adopted important with the last ECB auction brought about a sharp measures to support the liquidity of intermediaries. narrowing of credit spreads on the secondary market in Italian financial and corporate securities, Despite the decisions taken by the European creating an attractive window of opportunity to summit meetings of October 26 and December 9, issue new medium/long-term bonds by the leading euro-area sovereign debt came under mounting Italian banks. pressure at the end of the year, reflecting deteriorating macroeconomic conditions, repeated downgrades of the sovereign debt and bank 2.2. The Italian Economy securities of several European countries by rating agencies. Since the end of September ten countries Economic activity in Italy has been affected by the of the area underwent a debt downgrade by at slowdown in world trade, the worsening of the least one of the main rating agencies. In addition, sovereign debt crisis, which has pushed up the cost in early December the rating agencies put the of raising funds, and the impact on disposable

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income of the budget consolidation measures, Macroeconomic conditions in Italy which have nonetheless warded off more serious (percentage changes on the previous period, unless otherwise indicated) consequences for the real economy. 2010 2011 Q4 (1) Q1 Q2 Q3 In the third quarter of 2011 Italy’s GDP contracted GDP - 1.5 0.1 0.3 0.2 by 0.2% on the previous quarter (Table 2), the first - - downturn since the beginning of 2010. GDP was Total imports 4.1 12.7 -2.6 -1.2 -1.1 held back by the weakness of domestic demand, National demand (2) 0.4 1.7 -0.7 -0.3 -0.9 with a decline in both household consumption (- National consumption - 0.6 0.1 0.1 -0.3 household spending 0.1 1 - 0.1 -0.2 0.2%) and investment (-0.8%). Foreign trade other (3) -0.4 -0.5 0.4 - -0.6 continued to support its growth, contributing about 0.8 percentage points. Exports grew by 1.6% on the Gross fixed investment -0.8 2.4 -0.5 0.1 -0.8 previous period, while imports declined further (by construction -0.6 -4.0 -0.4 -1.1 -1.2 1.1%) in connection with the weakening of other investment goods -0.9 10.2 -0.6 1.3 -0.5 Changes in stocks and domestic demand. The change in stocks subtracted valuables (4) 0.5 0.7 -0.8 -0.4 -0.5 about half a percentage point from GDP growth. Total exports 2.7 12.2 0.4 1.0 1.6 The cyclical situation deteriorated further in the Source: Istat (1) Data not corrected for calendar effects - (2) Includes the change in stocks autumn. Industrial production declined by 1.7% in and valuables - (3) Expenditure of general government and non-profit institutions the fourth quarter, the largest fall since the spring serving households. - (4) Contributions to GDP growth on previous period. of 2009. Surveys on the short-term outlook indicate a deterioration in business opinion. Economic indicators confirm the weakness of domestic demand, a reflection of the decline in households’ 2.4. Interest Rates disposable income. Exports, by contrast, continued to support growth, even though they were Interest rates began to rise slowly from the start of adversely affected by the slowdown in world trade. the year as economic conditions deteriorated, before beginning to decline towards the end of the year as a result of the political and financial stability measures taken in Italy. 2.3. The Outlook for 2012 and 2013 Similarly, 3-month Euribor, the key benchmark for banking, rose in the first part of 2011 before The initial forecasts by the leading institutions are subsiding at the end of the year, reaching an sharply negative for 2012. The forecast of the IMF average of 1.43% in December. for this year shows GDP contracting by about 2%, while that for 2013 points to a modest increase of At its January 12, 2012 meeting, the Governing about 0.3%. Council of the European Central Bank elected to leave the policy rate at 1%. It also decided to keep In this context is difficult to imagine a recovery in the interest rate on the marginal lending facility at investment and concerns are rising about a possible 1.75% and that on overnight deposits at 0.25%. continuation of the adverse trend in impaired loans. The accommodating monetary policy stance and As noted earlier, the best opportunities for growth the continuing conditions of instability in the lie with exports, although the possibility of a financial system do not suggest a swift return to a slowdown in world trade casts some doubt over this rising yield curve, and it is highly likely that rates scenario. will remain low.

In the final months of 2011 consumer confidence deteriorated; consumption was influenced by the weakness of the economic situation of households and the pessimistic outlook for the labor market. Unemployment remains high, especially among 1-month Euribor 3-month Euribor 12-month Euribor young people. 2.50%

2.00%

1.50%

% val % 1.00%

0.50%

0.00%

Source: ABI Economic Analysis Office based on Thomson Reuters Datastream figures.

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growth of 2.6%, compared with 3.1% for the industry average. In the fourth quarter, mutual banks posted significantly greater growth in lending than the system average in all segments measured. 3.Performance of mu- In terms of credit quality, the gradual deterioration tual banks within the seen in 2010 continued into 2011. At December 31, 2011, bad debts had risen by 26.5% for the year, banking system substantially lower than the increase for the banking system as a whole (+37.6%). Substandard loans for mutual banks increased by 16.5% year- At December 31, 2011, there were 412 mutual on-year. (At September, the most recent date for banks (54.4% of all banks operating in Italy), with which comparisons are possible, substandard loans 4,411 branches (13.1% of the banking system). Over had increased by 15.9% for mutual banks versus the last twelve months, the number of branches 8.6% for the system average.) increased by 36 (+0.8%). Mutual banks can be found In December 2011, the ratio of gross bad debts to in 101 provinces and 2,704 municipalities (and are total lending for the mutual banks was 5.2% the sole banking presence in 554 municipalities). (compared with an average of 5.4% for the banking system). The number of shareholders totaled 1,156,711, an The ratio of gross substandard loans to total increase of 10% for the year. The total number of lending came to 4.9% compared with 2.9% (at mutual bank customers at December 31, 2011 September) for the banking system as a whole. surpassed 6.7 million (+17.5%). They are served by 31,804 mutual bank employees (+1.2% compared Regarding business customers specifically, the ratio with -0.4% for the banking system as a whole), in of bad debts to total lending came to 6.3% for addition to over 4,700 employees of local mutual banks, which is nearly two percentage federations, companies of the Iccrea Banking points lower than the ratio for the banking system Group, central credit institutions and consortia. (8.1%).

3.1. Lending 3.2. Funding and Capital Once again in 2011, the mutual banks posted growth in lending and funding. at December 31, Total bank funding by mutual banks amounted to 2011, gross lending to mutual bank customers €152.2 billion at September, an increase of 0.9% on amounted to €139.9 billion, up 3.2% year-on-year, the previous year, compared with an increase of 3% which is significantly better than the performance for the banking system as a whole. Bonds issued by of the banking system as a whole (+1.5%). Mutual mutual banks came to €57.9 billion, a year-on-year banks have a market share of 7.1%. On a quarterly decrease of 1%, whereas the banking system as a basis, mutual bank lending posted growth of 1% at whole posted growth of 13%. During the fourth end-December, compared with a decline of 0.7% quarter, the decline in bond issues by mutual banks for the banking system overall. As of December 31, gradually grew steeper (-2.4% from September to 2011, lending to business customers by mutual December 2011), while the banking system as a banks totaled €93.4 billion, up 2.5% for the year whole posted growth (+6.2%). The market share of (3% for the banking system as a whole). mutual banks came to 6.8%. Taking second-level During the fourth quarter, lending to businesses by banks into account, direct funding for the category the banking system declined measurably (-1.5% approaches a total of €161 billion, with market quarter-on-quarter), whereas lending by mutual share rising to 7.2%. Indirect funding, calculated at banks continued to grow (+0.6%). nominal value, surpassed €28 billion (+25% year-on- year). The ratio of indirect to direct funding came As concerns loan recipients, as a result of their to 18.9%. special mission in serving local communities, the mutual banks lent to producer and consumer The capital of mutual banks (share capital and households at a much higher rate than does the reserves) at December 31, 2011 came to €19.7 banking system (12.8% and 5.1%, respectively, for billion, a 3% increase year-on-year (+8.9% for the producer households, and 30.8% and 25.7% for system average). consumer households). In September 2011, the tier 1 ratio and the capital Lending to consumer households was in line with ratio for mutual banks came to 14.2% and 15.2%, the banking system as a whole (+4.9% compared respectively. with 4.8%), and lending to producer households diminished gradually throughout the year, settling Comparative data for the banking system is only at 2% by year end (+1.9% for the industry average), available through September 2011 and reveal a while lending to non-financial companies posted significant gap in favor of the mutual banks.

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MUTUAL BANKS BANKING SYSTEM negative trend in the Italian leasing market of Capital position Dec-09 Dec-10 Jun-11 Sep-11 Dec-09 Dec-10 Jun-11 recent years has continued. As of the end of 2011, the market had declined by 9.9% compared with CAPITAL RATIO 15.0% 15.2% 15.3% 15.2% 12.0% 12.4% 13.7% 2010, confirming the trend seen in June 2011. TIER 1 RATIO 14.1% 14.1% 14.3% 14.2% 8.9% 9.3% 10.1%

ASSILEA MARKET 2011 2011 2010 % c omp. % change 2011/10 The ratio of risk-weighted assets to non-risk- Product No. Amt. No. Amt. No. Amt. No. Amt. weighted assets came to 50.3% in September 2011, Vehicles 157,334 5,679,334 158,364 5,776,703 55.6% 23.1% -0.7% -1.7% Equipment 112,439 7,092,267 114,684 8,006,289 39.7% 28.8% -2.0% -11.4% unchanged from twelve months earlier, whereas Air, marine and rail 1,224 783,155 1,810 1,077,395 0.4% 3.2% -32.4% -27.3% the ratio between risk-weighted assets and total Real estate 9,974 7,024,415 8,751 8,898,209 3.5% 28.5% 14.0% -21.1% on-balance-sheet exposures came to 61.2% in Renewable energy 2,163 4,027,195 1,899 3,577,317 0.8% 16.4% 13.9% 12.6% Total Leasing 283,134 24,606,366 285,508 27,335,913 100% 100% -0.8% -10.0% September, a slight decline from the same period Other M/L-term lending 76,524 1,630,015 80,360 1,819,394 21.3% 6.2% -4.8% -10.4% of the previous year (61.8%). Leasing + Other lending 359,658 26,236,381 365,868 29,155,307 100% 100% -1.7% -10.0%

The following general developments were seen during 2011: 4. Market developments • slight growth in the renewable energy sector, with €4 billion in new lease investment. Real 4.1. The Credit Market estate and renewable energy products combined decreased by 11.8% in value. In 2011, bank lending (source: ABI) accelerated in Therefore, investment in real estate alone fell the first half of the year before slowing again in by 21%. the second, due mainly to the worsening of • a reduction in leasing of equipment, which has economic conditions. Total lending to Italian most closely tracked the economic downturn (- private-sector residents posted year-on-year 10.6%). growth of 1.8% (+4.2% in 2010). More specifically, • a decline of about 9% in leasing by the leading loans to households and non-financial companies banking groups. came to €1,512 billion, for year-on-year growth of 3.6% (+3.7% at the end of 2010 and +1.3% for the average of the euro area). 5. The development of Looking at a breakdown by maturity, we see that medium/long-term lending posted growth (i.e. Iccrea BancaImpresa beyond 1 year) of 3%, while short-term loans (up to 1 year) posted growth of 5.4%. 5.1. New Lending Regarding non-financial companies alone, the annual growth in lending came to around 3% at the The performance of lending for the Bank in 2011 end of 2011. reflects both the changing economic and financial Bank lending to small businesses in particular landscape and the repositioning of the product posted growth of 0.4% (as of November 2011, the portfolio that has been under way in recent years most recent data available), while lending to with the goal of providing a service that is medium-sized and large enterprises grew by 3%. increasingly oriented on the development of manufacturing, commercial and service firms. The growing need to cover working capital and debt restructuring and consolidation transactions The commercial targets for 2011 were established has driven demand for credit throughout Italy since based on a growth matrix that places emphasis on the beginning of the crisis. the products that make the greatest contribution and that have a profile ensuring an appropriate As of December 2011, gross bad debts totaled over risk/return balance. This strategy has been put into €107 billion, sharply higher than in 2010. As a action through new lending policies and greater percentage of total lending, bad debts came to customer selection capacity, which has been 5.44% at the end of 2011. achieved by refining the evaluation process and the At the end of 2011, bad debts net of writedowns rating system. came to €60.4 billion. The ratio of net bad debts to total lending came to 3.14%, compared with 2.43% In 2011, given the challenging market conditions at December 2010. and despite an innovative distribution network and relationship with companies and the mutual banks, 4.2. The Leasing Market the Bank did not seek to achieve aggressive growth in its business, due in part to the difficulties in transferring to the customer the greater cost of After the signs of recovery registered at the end of funding on the financial markets. 2010, the 2011 Assilea report shows that the

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For 2011, the Bank reported total new credit of volumes was due in part to the strategy of €1,481 million (signed contracts), €1,426.6 million concentrating lending to customers through the of which related to loans and €54.6 million related mutual bank corporate channel, thereby essentially to guarantees. Loans declined by 16.1% from the abandoning third-party channels. In 2011, such previous year in value terms and by 7.8% in terms channels accounted for just 2.6% of the total. of number of transactions. The contraction concerned all product lines. The greatest reduction in percentage terms concerned vehicles and equipment, both at just over 21%. Real estate leasing posted a decline of 17.5% due Total lending both to the impact of economic conditions and the 2011 2010 Comp. % 2011 Annual change Product line goal of reducing the Bank’s exposure to longer- No. Amt. No. Amt. % No. % Val. % No. % Val. Leasing 6,413 948,239 7,107 1,206,656 95.2% 66.5% -9.8% -21.4% term transactions. Leasing in the energy sector Ordinary lending 259 298,195 168 258,998 3.8% 20.9% 54.2% 15.1% posted a drop of 41.7% due to the halt of business Corporate finance 31 146,664 32 235,037 0.5% 10.3% -3.1% -37.6% in the first part of the year as a result of legislative International 34 33,479 0 0 0.5% 2.3% 100.0% 100.0% uncertainty regarding incentives. This was followed Total 6,737 1,426,577 7,307 1,700,691 100.0% 100.0% -7.8% -16.1% by lesser declines for the auto (-14.4%) and marine Thousands of euros (-12.9%) segments.

Commercial performance in the leasing segment, The contraction in new lending concerned both which remains the main financial tool used by SMEs leasing, with €948 million in new contracts in making investments, was certainly affected by (compared with €1,207 million in 2010), and the economic crisis, which has severely impacted corporate finance, totaling €147 million (compared the entire productive system and, therefore, with €235 million in 2010). The volume of leasing investment in durable goods. The Bank has fell by 21.4% and that of corporate finance by 38%. continued monitoring counterparty risk, Conversely, ordinary financing, with €298 million in particularly in the industry segments most affected new lending, posted a 15.1% increase over 2010 in by the crisis, which has resulted in greater value and growth of 54.2% in terms of number of selectivity in terms of both transactions and the transactions. categories of products financed (equipment in particular), and this has resulted in restriction in The Bank’s market share at December 31, 2011, overall market potential. was 4.6%, putting us in 5th place in the Assilea ranking for the leasing industry. 5.3. Ordinary Lending In 2011, a specific International line of business was launched with the goal of providing financing, consulting and other services to assist the business The year closed with 15.1% growth over 2010. This customers of mutual banks in import/export strong performance was due to an expansion in the transactions and in developing their businesses number of mutual banks operating with Iccrea internationally. During the year, this new area of BancaImpresa in the area of mortgage loans business generated €33.5 million in loans and (+26.6% over the previous year), which regarded managed documentary credit totaling €122.5 the financing of investments by industrial firms. million. Conversely, real estate credit lines declined by 10.1% during the year due to greater selectivity 5.2. Leasing and a reduction in lending in construction and real estate generally.

In 2011, leasing accounted for 66.5% of all new lending (71% in 2010). In response to the Ordinary lending 2011 2010 Comp. % 2011 Annual change Product line investment requirements of its business customers, No. Amt. No. Amt. % No. % Val. % No. % Val. the Bank offers leasing for all the usual product M ortgage loans 209 225,591 116 178,255 80.7% 75.7% 80.2% 26.6% areas: real estate, energy, equipment, vehicles and Real estate credit lines 50 72,604 52 80,743 19.3% 24.3% -3.8% -10.1% marine. Total 259 298,195 168 258,998 100.0% 100.0% 54.2% 15.1% Thousands of euros Leasing 2011 2010 Comp. % 2011 Annual change Product line No. Amt. No. Amt. % No. % Val. % No. % Val. Auto 2,499 74,186 2,858 86,654 39.0% 7.8% -12.6% -14.4% Industrial vehicles 605 56,978 778 72,892 9.4% 6.0% -22.2% -21.8% Equipment 2,247 289,263 2,666 368,381 35.0% 30.5% -15.7% -21.5% 5.4. Corporate Finance M arine 30 8,219 40 9,431 0.5% 0.9% -25.0% -12.9% Real estate 982 440,401 706 533,501 15.3% 46.4% 39.1% -17.5% Corporate finance posted the greatest decline in Renewable energy 50 79,192 59 135,797 0.8% 8.4% -15.3% -41.7%

Total Leasing 6,413 948,239 7,107 1,206,656 100.0% 100.0% -9.8% -21.4% 2011 (-38%). The performance of this segment was Thousands of euros heavily impacted by the sudden halt in operations in the energy sector due to the uncertainty As mentioned above, the year closed down 21.4%. surrounding the legislative changes related to the Continuing the trend seen in 2010, the decline in fourth “Energy Account”, which had a noticeable

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impact on the commercial performance of project for direct financing and financing provided by the finance. Similarly, the poor outlook for the mutual banks. economy as a whole had a negative impact on the The derivatives that the Bank provides have been acquisition finance segment. The lack of strong designed to protect businesses from risks related to demand prompted companies to be more cautious changes in interest rates and come with the in terms of business growth and increasing following options: locking in interest costs in production capacity, which led to a decline in advance; setting a specified level of protection acquisitions, particularly for the market segment of against a rise in interest rates while also offering greatest interest to Iccrea BancaImpresa. In the benefit of lower costs if interest rates fall; or addition, the rising instability of the financial and limiting the range of fluctuation in borrowing costs. credit markets effectively put a halt to leveraged Our derivatives business involves executing buy-outs. Conversely, financing for the public transactions with the customer with a matching sector (both leasing and project finance transaction of the opposite sign with Iccrea Banca. operations) posted satisfactory results thanks to This process essentially eliminates the Bank's the strengthening of the organization and the exposure to market risk. success of this business with the enterprises and government entities of interest to the mutual During 2011, 140 derivatives transactions were banks. carried out with a total notional value of €261.3 In all segments of operations, the general economic million, a decline of 6.2% in value on 2010. environment pushed back important transactions to the first part of 2012. 2011 Fair Value 2010 % change Product No. Notional Receivable Payable No. Notional No. Amt. Corporate finance Certezza 120 349,313 21,379 82 236,469 46.3% 47.7% 2011 2010 Comp. % 2011 Annual change Transaction category Versatilità 47 139,752 1,131 30 124,129 56.7% 12.6% No. Amt. No. Amt. % No. % Val. % No. % Val. Stabilità 245 284,625 198 6,341 169 211,786 45.0% 34.4% Acquisition finance 5 38,130 10 94,058 16.1% 26.0% -50.0% -59.5% Total 412 773,689 21,577 7,651 281 572,384 46.6% 35.2% Public leasing 16 71,844 1 5,488 51.6% 49.0% 1500.0% 1209.1% Thousands of euros

Public project finance 0 0 0 0 0.0% 0.0% 0.0% 0.0% Energy project finance 8 28,330 20 129,241 25.8% 19.3% -60.0% -78.1%

Shipping/Real sstate 2 8,360 1 6,250 6.5% 5.7% 100.0% 33.8% Total 31 146,664 32 235,037 100.0% 100.0% -3.1% -37.6% Thousands of euros 5.7. Facilitated Credit

The unit responsible for managing subsidies, which supports leasing and financing transactions for both 5.5. International Iccrea BancaImpresa and the mutual banks, operates on various levels. In particular, the unit: This new area of business was started in 2011 in order to meet the financial and advisory needs of • Provides operating support in leasing and the business customers of the mutual banks in financing, managing subsidized loan relation to international expansion. agreements related to about 15 national During the year, the segment posted €33.5 million subsidy laws and some 80 regional laws, in in business volumes, €27.4 million of which for addition to the farm loans subsidized by the financing (e.g. contract advances, credit regions; enhancement, letter of credit financing and • Governs “concessionaire bank” activities, intercompany financing). In addition to these forms managing and disbursing the subsidies of credit, the segment posted €28 million in envisaged by Italian law 488/92 (the fund for guarantees and €122.5 million in documentary business development), managing the final credit in 2011. reports called for by the “territorial agreements”, disbursing INAIL grants (the A total of 224 mutual banks were operational in security fund), and handling requests for this segment. subsidies under law 46/82 (the fund for International technological innovation); 2011 2010 Comp. % 2011 Annual change No. Amt. No. Amt. % No. % Val. % No. % Val. • Handles servicing for all of the mutual banks Ordinary lending 24 27,410 0 0 16.1% 26.0% 100.0% 100.0% that make use of the guarantees issued by the Bill discounting 9 5,899 0 0 51.6% 49.0% 100.0% 100.0% “SME guarantee fund” of the Italian Ministry Letters of credit 1 170 0 0 2.9% 0.5% 100.0% 100.0% for Economic Development; Total 34 33,479 0 0 100.0% 100.0% 100.0% 100.0% • Thousands of euros Manages the funding made available by Cassa Depositi e Prestiti for mutual banks.

The integrated, organic management of all aspects 5.6. Hedge Derivatives of subsidies seeks to continue increasing the efficacy of the Bank’s contribution to developing The Bank’s offering of derivatives is intended to the system to which we belong. As such, the goal is help customers hedge their interest rate risk, both to create service value for the mutual banks and to

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provide true support to small and medium enterprise.

6. Organizational Deve- 5.8. Outlook for 2012 lopments

The developments in the economy during the fourth quarter of 2011, together with the recessionary effects of the public finance measures In 2011, having completed the strategic (estimated at four-tenths of a point of GDP), point repositioning of the Iccrea Banking Group (which to a recession in Italy in 2012 and essential was a multi-year project aimed at expanding and stagnation for 2013. In this context, and despite improving the Group’s services for mutual banks), seeking to ensure flows of lending to the economy, the entire offering of products and services for the banking industry will have to deal with the corporate customers were brought together in critical issues in funding, while also managing the Iccrea BancaImpresa. pressures of the supervisory authorities regarding This process came to a close with the acquisition of capital ratios. the Special Lending and International business units In terms of leasing, all of this could lead to a from Iccrea Banca in January 2011. The Bank’s shift further contraction in the market, although not to into this new role was then sealed with a change in the same extent as we saw in 2011. Growth in the our name. energy sector is expected to make a positive contribution in the leasing market, but this alone, 6.1. Name Change to Iccrea as in 2011, will not be enough to generate growth BancaImpresa for the market as a whole. Regarding the banking business, ABI forecasts a On October 10, 2011, the name of Banca further slowdown in lending growth in 2012, to Agrileasing was changed to Iccrea BancaImpresa about 2.5% year-on-year (compared with about (IBI). 7.9% last year). New lending should increase in line Indicative of the Bank’s new vocation to everything with the needs of the economy, with preference corporate (“banca impresa” = “corporate bank”), being given to shorter-term financing. this new name has been developed in line with the new visual identity that characterizes the entire In terms of efforts to develop the corporate finance Iccrea Banking Group. The change in name and logo business, the outlook remains fairly good for is also a part of the process of making the logos project finance in the energy sector. For and other branding of all of the companies of the acquisition finance, a modest recovery is expected Iccrea Banking Group consistent, so as to create a due to the need for companies to reposition single visual identity for the entire Group in order themselves, in terms of both organization and to help the various stakeholders to identify the governance, and there should be a greater need for various companies as members of a team serving advisory services provided by qualified financial the mutual banking system. experts. Conversely, operations in the area of local public works are expected to decline. The name Iccrea BancaImpresa represents an

investment in the acronym “ICCREA”, both because Despite the continuing economic crisis, particularly it points to our history and or connection with the in Europe, Italian exporters have held their ground past and because it includes the word “crea” and are in the best position to take advantage of (“create”), which symbolizes our creative spirit the global recovery (with Italian exports growing by and our drive for innovation and for remaining in 11% in 2011). Therefore, business investments are touch with the times. Last but not least, Iccrea is expected to increase in order to support greater also a well-respected name within the banking trade internationally. industry. For the International segment, this will be an opportunity for growth, which will both promote The image that accompanies our new corporate business growth and enable us to further develop identity is that of a dolphin, a strong, agile animal relations with the mutual banks by providing that is also friendly, faithful and intelligent and services that are suited to the needs of businesses. which has traditionally been seen as a guide and Growth in the derivatives segment could be aided travel companion for ships at sea. As such, it by the current trend in medium and long-term appropriately underscores the concept of support interest rates, which is making the conversion of and assistance that Iccrea BancaImpresa seeks to finance costs from variable to fixed extremely provide to the mutual banks and their corporate attractive. customers.

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6.2. 2011 Business Model distribution in order to adapt it to the new range of products and services on offer. Although the The business model adopted for 2011 was organized territory remains covered by the same branches, into the following lines: the changes made in terms of duties, responsibilities and reporting lines were significant. • Movable Property, which manages leasing The new territorial distribution structure reports to in the equipment, vehicles and marine the heads of the various business lines and is segments. This business line focuses on organized differently for each of these. mutual banks and features a high degree of process integration with the individual The territorial coverage for the Lending & Real mutual banks and of product Estate business line is organized into 4 areas and standardization based on the specific features the new position of Enterprise segmentation of the mutual banks Relationship Manager. This new figure liaises with themselves; the mutual banks and supports them in assessing the feasibility and structure of transactions, while • Lending & Real Estate, which manages lending providing specialist product consulting to and real estate leasing (with a focus on the customers. Each manager has a portfolio of customer) and is characterized by supporting customers, pricing and approval powers and cross- mutual banks in the personalized management selling opportunities, and manages relations with of business customers by Bank experts the businesses throughout the duration of their (Enterprise Relationship Managers), supporting investments. Analysts also aid the managers both in their various development activities. This line developing the business and in loan origination and is also responsible for granting farm loans and customer monitoring. financing to cooperatives;

The Movable Property business line serves the • Corporate Finance – managing project financing, corporate acquisitions and M&A territory through 7 Corporate Centers, staffed with advisory services, public leasing, and typical commercial personnel – now called mutual internationalization; bank relationship managers – as well as loan origination and back office functions. The role of these Corporate Centers is to manage commercial • International – providing expert assistance to relations with mutual banks throughout the importer and exporters through special- territory and support them in the various phases of purpose loans, guarantee commitments, loan origination, approval and post-sale assistance consulting (e.g. export finance, international for all leasing transactions in the equipment, expansion, etc.), and the management of vehicles and marine segments. documentary credit;

Completing the distribution network, the cross- • BCC Lease – a company specialized in cutting role of product specialist has been created operating and small-ticket leases; in order to provide high-level skills to support all of

the various business lines. This will allow for • BCC Factoring – a company specialized in greater commercial effectiveness and for cross- factoring. selling opportunities, while providing consulting

services to the customer. We also have financial

advisors throughout the territory providing risk The company’s activities concern the various forms management services, as well as factoring of lending to the mutual banks’ corporate specialists for managing businesses’ working capital customers in Italy, which is essentially the only and corporate finance specialists, who provide a geographic and business segment in which the Bank natural link between specific lines and the mutual operates. banks and with the other lines.

6.3. The Bank Network The Bank’s network organization and the roles and responsibilities assigned are considered the most Despite its effects on the organization of the appropriate for current market needs. Moreover, commercial network, the revision of the business given the changes seen in business investment model left the number of branch offices unchanged strategies, the characteristics of the financial at 15, so as to continue providing effective products available, and the experience we have coverage of the territory for both the mutual banks gained over these last two years, the and their SME customers. The two representative organizational model will be further refined in offices in Pescara and Rende (Cosenza) remain 2012. active, as does the one in Tunis.

With the overhaul of the business model, the Bank also made changes to the organization of

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6.4. Marketing and the Mutual Bank the growth in our “mission” indicator, which Network measures the quality of the relationship between IBI and the mutual banks and which reached 93.92%

in number of contracts and 91.57% in lending. The new distribution model that IBI has adopted provided us with a valid means of governing the Furthermore, in 2011, penetration of the mutual marketplace in 2011. banking system in the volume of the Bank’s leasing

business increased. Of the 356 participating mutual In order to take best advantage of our vast banks in 2011, 327 signed at least one contract, offering, during the year the Bank carried out a while 80% of the Bank’s total lending was carried series of project aimed at strengthening our out through the top 85 mutual banks. partnership with the mutual banks, while emphasizing the implicit potential of the new model and the skills and reliability of our 6.5. 2011 Projects, Initiatives and workforce. Other Activities

Provided below is a summary of the projects that The projects and other initiatives completed in had the greatest impact on our organization. 2011 also reflect the current state of the economy and the consequent strategies adopted by the In April 2011, we released the new pricing system Bank. As such, projects aimed at improving the for the corporate front-end, AOL, used to properly organization and rationalizing processes were the price loans based on their maturity, the risk level ones on which the Bank placed the greatest of the customer, and the form of investment emphasis. During the year, the EVO Program requested. At the same time, the commissions (EVOlution of the Governance Area) was payable to the mutual banks have been calculated completed. This was one of the Bank’s most based on the risk/return ratio of the transaction. important projects of recent years because of its impact on strengthening governance as the During the year, we completed the project company was transformed into a corporate bank. “Autonomia BCC” (Mutual Bank Autonomy), which This program called for a new IT architecture and was launched in 2010 and the goal of which was to focused on revising organizational processes and increase the number of mutual banks operating renewing systems (e.g. management control, “autonomously in stages”. This enabled us to accounting, and supervisory reporting) in order to delegate a greater number of process stages to the adapt them to the Bank’s new role, the goal of mutual banks in the area of equipment and vehicle which was to provide certified accounting and leasing. By the end of 2011, the number of stages, management control data in a timely, uniform in percentage terms, handled by the mutual banks manner throughout the organization’s various units increased to 58%, from 46% in 2010. and to the external authorities. The last stage of the project was completed in 2011 and involved Regarding the training and development of mutual the implementation of the integrated production of bank employees, over 1,200 hours of in-class financial reports and supervisory reports for the training were provided to 2,000 employees of 305 Bank of Italy. mutual banks. Fully 180 training initiatives were aimed at developing mutual bank autonomy, In the area of information technology and the making use of our tools, and increasing risk analysis organization, work continued in order to better skills, while the remainder of the training focused support and further develop the credit risk on products or services provided by the Bank. management processes. With the deterioration in economic conditions, the number of counterparties An experimental service was also launched in order to be monitored and contacted for credit collection to provide mutual banks with consulting in the use increased significantly, as did the consequent need of the guarantee fund of Mediocredito Centrale. for flexible, controlled processes. Further efforts to improve credit management included the Ongoing efforts to strengthen mutual bank revision and rationalization of the processes and relations included numerous joint direct marketing procedures supporting the classification of initiatives, the organization of events to present substandard loans, the integration of new, more new financial instruments provided by the Bank advanced monitoring tools, and greater automation (e.g. international and public leasing) and other of collection management. promotional events, and the ongoing activities of the joint corporate boards aimed at promoting the Efforts also continued in 2011 on the ongoing sharing of information and discussion of the Bank’s refinement of the tools used in evaluating (new and business model and financial products. existing) counterparties. During the year, by way of the Credit Control System project, we reviewed All of the efforts described above helped to create version 2.4.5 of the rating system. The availability an increasingly strong bond between us and the of consolidated rating components enabled us to various mutual banks, as demonstrated in 2011 by establish a new pricing model that takes account of

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the cost of funding and credit risk and to make this effectively as possible to the crisis that has had a model operational and integrate it into the sales particularly strong impact on SMBs, our key process. customer segment.

Numerous other initiatives were also carried out In 2011, the Bank focused the energy of our various during the year. This included: the selection of units more closely on monitoring and collecting initiatives to increase efficiency in the payment on our loan assets in response to the administrative and other back-office functions of systemic increase in non-performing loans. the Financing line; the extension of the information generated by the securitization system to the In addition to the information provided in section special-purpose vehicle; and the optimization of 1, part E, of the explanatory notes, in order to money laundering prevention procedures and increase the efficacy of credit and asset recovery controls for inputting the related single database. and management, the entire Credit Department has been reorganized into five areas of activity: Finally, in order to adequately support the increase in complexity and the integration of the various types of financing provided by the Bank, we have - Monitoring: ongoing examination of the enhanced the IT architecture with new hardware developments in both lending as a whole and and a new version of our database management in the performing positions that are not seen to be at great risk and providing information software. and support (borrower analyses, up-to-date performance data, etc.) to the units dedicated to serving the customers; 7. Credit Risk - Qualitative Analysis: qualitative monitoring of the most important positions by amount and by Management rating and/or classification; - Restructuring: assisting customers in contract Over the last three years, the Bank’s policies for changes, which range from simple changes to taking on risk have been gradually tightened, the amortization schedule up to full refined and implemented. restructuring of a company's debt, including by way of new mechanisms made available by recent changes in Italian bankruptcy law; In 2011 in particular, a number of refinements and other specific interventions were carried out in - Pre-litigation: the set of activities aimed at order to achieve greater fluidity in specific restoring the position as soon as payment operations while maintaining the required delays are encountered. In order to improve methodological rigor. During the year, the Credit the performance of the credit collection and Risk Management units worked together to process, the process itself has been extensively further develop the business credit rating system revised. The key first phone collection contact (AlvinStar Rating). The historical database was with the customer when a payment delay is further enhanced, and the assessment models were encountered has been taken entirely in-house. refined in order to integrate the risk trends of In the spring of 2011, the Corporate Centers recent years. Following the performance were involved in this process, and in November assessment and validation of the model, the in- the project was extended to the Corporate house scale of risk classes was also updated and Managers in order to enable all regional units enhanced. to be aware of anomalies in customer payment right from the start. More rigorous collection procedures have also been implemented in The new model was then integrated into the Bank’s auto and other vehicle leasing, which has systems and processes, thus making it possible both enabled us to halve the time needed to rectify to assign a risk class from the start and to delays in payment. The most significant periodically evaluate the entire customer portfolio positions at risk have been assigned to on an ongoing basis. The assignment of an ongoing specialist, in-house non-performing loan risk class is a key element in the regular periodic managers, while continuing to outsource the monitoring of the portfolio, making it possible to rest of the portfolio made up of a large take action more quickly when the standing of a number of smaller transactions; counterparty deteriorates through the use of more modern analysis and assessment tools and by - Litigation: efforts after a contract is constantly monitoring the adequacy of the system terminated and aimed at the collection of the of rules adopted in order to assess credit ratings. debt through legal action;

The area on which we have focused the most - Asset appraisal and sale: aimed at providing effort, as have most other Italian banks, was credit support to the other operating units in monitoring and collection, so as to react as

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appraising and selling leased assets after difficult 2010. ABI reported that, at the end of default. 2011, gross bad debts exceeded €107.1 billion, around €30 billion more than at December 2010 The guidelines underlying the reorganization (+37.6%), bringing the ratio of gross bad debts to described above called for designing and providing total lending to 5.4%, compared with 4.6% at the valid tools for diagnosing companies experiencing end of 2010. If we focus on bad debts in respect of difficulties in making payment or other crises, so as enterprises as a ratio to related lending, the ratio to determine and analyze the related causes. This for the banking system is 8.1% (source: has enabled us to take all steps necessary to Federcasse). provide rapid assistance to businesses that need it to tackling temporary difficulties (e.g. through The Bank’s net bad debts came to €381.7 million contract changes, debt restructuring, etc.) and to at December 31, 2011, increasing by about €114 speed up credit collection efforts when a company million (+42.4%). The situation was similar for is no longer able to ensure the continuity of its substandard loans and restructured loans, the total operations. value of which came to €597.4 million, an increase of €169 million over 2010 (+39.0%), whereas performing loans increased by 2.6%. This resulted in a worsening of the proportion of impaired 8. Developments in the positions within the portfolio net of provisions, with bad debts increasing to 4.1% versus the 3% of Balance Sheet 2010 and substandard loans increasing to 6.2% from 4.6% the prior year.

At December 31, 2011, the Bank’s loan portfolio 2011 2010 % change Classification Coverage Coverage Coverage Net credit % share Net credit % share Net credit % share had expanded by 5.2% over 2010. The growth in ratio ratio ratio loans to customers can be attributed mainly to the Past due 180 days 1,271 0.0% 2.0% 40,873 0.5% 5.2% -96.9% -97.0% -62.7% Restructured 23,250 0.3% 5.8% 26,050 0.3% 8.6% -10.8% -15.1% -32.2% acquisition of the special lending and international Substandard 574,214 6.2% 13.1% 402,843 4.6% 16.7% 42.5% 35.5% -21.5% Bad debts 381,722 4.1% 37.6% 268,082 3.0% 42.7% 42.4% 35.4% -12.1% portfolios transferred with the business units Total non-performing 980,457 10.6% 24.48% 737,848 8.4% 27.9% 32.9% 26.4% -12.3% acquired from Iccrea Banca in January 2011. Performing 8,287,767 89.4% 0.89% 8,075,472 91.6% 0.95% 2.6% -2.4% -6.3% Total loans 9,268,224 100.0% 8,813,320 100.0% 5.2% Thousands of euros As will be discussed below, net impaired assets posted an increase of 32.9%, although significant The Bank’s total gross bad debts reached €611.3 provisions were recognized. million, equal to 6.6% of total lending and an increase of 31% from 2010. Although the ratio of 2011 2010 Change Type of lending Net credit % share Net credit % share Amt. change % change gross bad debts has increased, it remains better Current accounts 439,266 4.7% 459,411 5.2% - 20,145 -4.4% than the average for the banking system in the M ortgage loans 1,169,286 12.6% 634,195 7.2% 535,091 84.4% Leasing 5,787,324 62.4% 6,007,892 68.2% - 220,568 -3.7% corporate segment (8.1%). Other lending 610,706 9.6% 973,974 11.1% - 82,083 -8.4% Impaired assets 980,457 10.6% 737,848 8.4% 242,609 32.9% Total loans to customers 9,268,224 100.0% 8,813,320 100.0% 454,904 5.2% At December 31, 2011, gross substandard loans and Thousands of euros gross restructured loans came to €685.8 million, accounting for 7.4% of total lending. The coverage ratio for substandard loans fell somewhat from the As regards the composition by product of lending in 16.7% of 2010 to 13.1%, as did the ratio for bad the form of leases, which still represents 77.8% of debts, which went from 42.7% in 2010 to 37.6% by the entire portfolio, the decline in lending is due year end. This was essentially due to the write-off mainly to the decrease in equipment, auto and of non-performing positions that had been almost other vehicle leasing, while real estate leasing rose entirely written down and to the classification despite the slump in this segment, albeit to a during the year of well-secured positions that did limited extent. not require significant provisions.

2011 2010 Change Also of note was the positive trend in portfolio Product Net credit % share Net credit % share Amt. change % change Auto 171,408 1.8% 195,093 2.1% - 23,685 -12.1% adjustments, particularly in the collective Equipment 1,468,520 15.8% 1,694,011 18.3% - 225,492 -13.3% Real estate 5,225,803 56.4% 5,085,159 54.9% 140,644 2.8% provision, which reached €74.1 million at the end Industrial vehicles 247,479 2.7% 283,456 3.1% - 35,978 -12.7% of 2011. At the end of 2011, the portfolio of Residential - 0.0% 1,027 0.0% - 1,027 -100.0% M arine 93,011 1.0% 91,310 1.0% 1,701 1.9% performing loans required a collective provision of Non-leasing lending 2,062,005 22.2% 1,463,264 15.8% 598,741 40.9% €74.1 million, €2.9 million less than in 2010 due to Total loans to customers 9,268,224 100.0% 8,813,320 100.0% 454,904 5.2% Thousands of euros an overall improvement in performing loans thanks to a combination of factors and to an adjustment in risk parameters. Increasingly careful management 8.1. Loan Risk Developments of positions in difficulty was followed by intensive efforts to classify as in default customers who, According to ABI, the banking system as a whole although shown as having performing loans, had closed 2011 with a further deterioration in credit previously been assigned to lower internal risk quality and asset quality following the already grades (in terms of probability of default), which

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improved the average risk profile of the portfolio with maturities limited to the short-term portion of of performing loans (on which the calculation of the yield curve. collective provision is based). The tighter loan selection policies of recent years have also led to a Within such a difficult context, management of the significant improvement in the overall quality of Bank’s funding requirements was handled through new customers. the Group’s centralized finance system. While it continues to take advantage of initiatives promoted Portfolio adjustments by specialized financial institutions, the Bank acted 2011 2010 Amt. change % change in response to funding undertaken by Iccrea Banca Collective provision - performing loans 74,150 77,031 -2,881 -3.7% within the mutual bank system and, to a much Past due 180 days 25 2,044 -2,019 -98.8% lesser extent, on the international markets. The Substandard loans not measured 251 280 -29 -10.4% difficulties in raising funds on the capital markets separately Derivatives with customers 1,000 870 130 14.9% have had a direct impact on the cost of funding, Guarantees 1,135 615 520 84.5% which has risen significantly. Total 76,560 80,840 -4,279 -5.3% Thousands of euros Overall volumes of funding reached €8.9 billion by the end of 2011. As such, 2012 is also expected to be a challenging In light of the situation described above, company year for the Bank. When preparing the business strategies have focused on improving effectiveness plan for 2012-2014, the Bank analyzed the various in terms of the volumes, maturities and costs of possible scenarios and the potential impact on the funds raised. In line with the Group’s model of performance and financial position and identified centralized finance and the instructions of the various action areas for managing developments in parent company, funding efforts focused almost the situation. exclusively on short-term lines of credit and medium and long-term credit granted by Iccrea The Bank has launched, and will continue to Banca. launch, projects aimed at combatting the increase in risk by increasing operational speed and The sole exceptions to this rule were: effectiveness. The goal of these efforts is to emphasize synergies between the commercial and 1) the use, in the amount of €210 million, of the credit collection units, so as to more promptly deal resources provided by Cassa Depositi e Prestiti with companies facing difficulties through a (CDP) in respect of the second tranche of the streamlined model of governance and decision- funding within the scope of the agreement making centers with the appropriate powers. signed between CDP and the ABI on February Thanks in part to the change in organization, the 17, 2010, to promote lending to SMEs through tools for managing the reformulation of contracts banks; and restructuring of debt will now be enhanced by 2) the signing of a financing agreement with CDP, corporate finance solutions (e.g. M&A, equity, within the scope of the same agreement of etc.), and we will also be focusing on the more February 17, 2010, in the amount of €40 effective management of the more numerous million for the purpose of using the portion smaller positions, which will have a tangible overall allocated to the Bank related to the third benefit. tranche of the funding made available by CDP; 3) the carrying out of a seventh securitization transaction in the amount of €607.7 million 8.2. Funding and Financial divided into three tranches, which generated Investments additional funding in the amount of €287.6 million following the subscription of the senior

tranche by a leading institutional investor. After a start to 2011 that appeared to be heading towards a certain degree of normalcy, the crisis in The following are the highlights at December 31, confidence that arose during the summer in respect 2011, compared with the previous year. of the peripheral countries of the euro area, including Italy, caused the confidence of financial 2011 2010 Annual change FUNDING BY CHANNEL institutions to plunge again and triggered a return Stock % share Stock % share % Val. of high levels of instability on the financial and Bonds 5,215 58.9% 5,317 61.6% -1.9% Securitizations 1,127 12.7% 986 11.4% 14.3% credit markets, which, at the end of 2011, Current accounts and short- 1,771 20.0% 723 8.4% 145.0% experienced a generalized lack of confidence and a term bank funding liquidity crunch. As a result, in the second half of Medium-term bank funding 737 8.3% 1,599 18.5% -53.9% Total 8,850 100.0% 8,626 100.0% 2.6% the year, activity on the capital markets slowed Millions of euros abruptly, and investors turned their attention primarily towards the most highly rated private- During the year, four plain-vanilla senior bond sector and sovereign securities. For issuers with issues were undertaken through the Group's ratings comparable to those of the Iccrea Banking centralized finance system for a total of €962 Group, the spreads on funding rose even higher, million, with a view to accessing a volume of

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medium/long-term funding appropriately matching lending compared with 2011, but without the maturity of loans to customers. weakening our broad and consolidated position as a supplier of corporate banking services to SMEs. Again in 2011, the securitization sector was particularly active, above all with regard to Under the Group's centralized finance system, most management of the six securitization transactions of this requirement will be covered by drawing on undertaken in previous years, for which the Bank lines of credit granted by Iccrea Banca. Following a acts as the servicer. significant expansion of Iccrea's role on the market As in previous years, operations proceeded as a borrower, even in view of the mechanisms smoothly, although the challenging economic instituted under the new institutional guarantee circumstances caused a rise in the ratio of non- fund, Iccrea Banca will be able to supply the Bank performing positions in a number of securitization with volumes of funding at average costs consistent portfolios. The notes to the financial statements with the planning of the maturities and interest illustrate the individual securitization operations in rates of loans. greater detail.

As regards the “AGRI2” transaction, it should be 8.2.2. Financial liabilities and derivatives noted that 68% of tranche B has now been amortized. Amortization continued of A2 class The amounts recognized in the financial statements notes in the “AGRI3” transaction. At year-end, the as at December 31, 2011, regarding operational residual total debt on the notes outstanding was hedging and hedging qualifying for hedge €94.5 million, compared with an initial amount of accounting break down as follows: €823.5 million. With regard to “AGRI4”, in • Financial assets held for trading €38.8 million; accordance with the agreed terms of the • Hedging derivatives (positive fair value) €10.3 securitization, four revolving operations were million; conducted, comprising the assignment of around • Financial liabilities held for trading €37.4 €103.2 million (as for the previous year, when the million; amount was €113.5 million). The “AGRI5” notes are • Hedging derivatives (negative fair value) €29.8 still held by the Bank for possible use, in million. agreement with the parent company, in refinancing operations with the Eurosystem. The outstanding For greater detail, please see the notes to the debt of the senior tranche at year end was €428.1 financial statements. At the present time, the Bank million, from an initial amount of €837.1 million. is engaged in the following derivative instrument With regard to “AGRI6”, in accordance with the transactions (for hedging and trading), as agreed terms of the securitization, four revolving summarized below: operations were conducted, comprising assignments of around €115.7 million (compared with €100.4 million last year). The first revolving Hedge type No. Fair value Notional transaction of the new “AGRI7” transaction, operational 8 1.1 696.0 carried out in 2011, is to take place in March 2012. securitizations 14 0.6 890.0 Finally, with regard to securitizations and the ABI bonds 6 8.2 334.5 joint moratorium agreement, the Bank has floating rate 3 0.1 290.0 indicated that it is willing to continue extending payment suspensions to include customers whose fixed rate 20 -10.5 242.0 loans were securitized as part of the “AGRI2”, public leasing 5 -0.9 11.0 “AGRI3”, “AGRI4” and “AGRI5” transactions under Millions of euros the ad hoc credit facilities granted to the two vehicles concerned and who submitted requests by In addition to the above, there are 412 contracts the deadline of July 31, 2011, in accordance with associated with operations in the investment the extension of the agreement between the MEF, services sector intended for the sale of derivative ABI and business associations of February 16, 2011. instruments to customers, offset with matching transactions carried out with Iccrea Banca, with fair values reported under assets and liabilities of 8.2.1. Outlook for 2012 €13.9 million.

The macroeconomic environment, which continues to be characterized by considerable uncertainty 8.2.3. Contractual clauses of financial liabilities (system-wide illiquidity and a shortage of long-term funding, a lack of confidence among banks, The Bank provides the following information in securities placement difficulties for national fulfillment of requirements established under IAS governments, and difficulties in transferring the 1.74 concerning medium and long-term financial high costs of funding onto the customer), has led liabilities and, more generally, under IFRS 7.31 the Bank to expect a certain reduction in overall regarding risks associated with financial

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instruments to which the Bank is exposed at the balance sheet date.

In line with contractual best practice on 8.3. The Real Estate Investment Fund international markets, bonds issued by the Bank under our EMTN program and syndicated loans Since 2008, the Bank has subscribed the closed-end taken on by the Bank – which are regulated under Securis Real Estate mutual fund established by Beni British law – include a series of negative pledge Stabili SGR. The units in the fund were subscribed restrictions on the Bank. by Iccrea BancaImpresa and Banca di Credito Cooperativo dell’Alta Brianza. The purpose of a negative pledge clause is to ensure that holders of the Bank’s bonds and our The asset management company Beni Stabili SGR is lenders are treated equally, thereby ensuring that responsible for leveraging the real estate portfolio, no new bonds are issued or new loans are taken out seeking opportunities for investment and/or that benefit from additional guarantees compared divestment that match the fund's return objectives. with existing transactions of the same type. The company’s search is therefore highly selective, taking account of the returns offered by the As regards the negative pledge on bond issues, the market. Bank may not establish mortgages, liens, security interests in real property or any other form of As of December 31, 2011, the Fund had invested a encumbrance on its assets, nor offer unsecured total of €197,183 thousand in real estate. Changes guarantees or indemnities to guarantee liabilities over the year were ascribable to contributions arising in respect of the issue of bonds or other made in 2011. securities listed or expected to be traded in the future on any exchange or bond market whatsoever. Furthermore, no third party may Amt. establish mortgages, liens, security interests in real Purchase price 206,075 property or any other form of encumbrance on its Impairment - 13,148 assets, nor offer unsecured guarantees or Capitalized expenses 495 indemnities to guarantee the Bank’s liabilities arising in respect of the issue of bonds or other Ancillary purchase costs 3,761 Total 197,183 securities listed or expected to be traded in the future on any exchange or bond market Thousands of euros whatsoever. Based in part on appraisals by independent experts, With regard to the negative pledge in respect of the asset management company recognized a syndicated loans, the Bank may not establish €6,018 thousand decrease in the value of its real mortgages, liens, security interests in real estate and proceeded with a writedown of the property, encumbrances or charges on its assets to shares in order to realign the value of its real guarantee any liability whatsoever arising in estate with market developments. At the end of respect of loans, deposits or the issue of bonds or 2011, the fund’s total net value amounted to other securities, nor pledge any guarantee or €201,317 thousand. obligation to indemnify with regard to such borrowing transactions. Standard exceptions to the Summary 2011 2010 % change clause apply to certain types of debt. Number of units 2,496 1,926 29.60% Unit value 80,656 90,024 -10.41% Three private securitization transactions involving Total value 201,317,376 173,386,224 16.11% In euros performing lease receivables originated by the Bank include a put option for the sale to the Bank The gross operating loss from core operations of the senior tranche securities for a total of amounted to €5,604 thousand, after recognizing €964.6 million, which was granted to the subscriber writedowns on real estate of €6,018 thousand and a of the notes. The main trigger events for exercise €109 thousand profit on sales. As at December 31, of the option are a downgrade of the senior 2011, the fund closed the period with a net loss of tranche to a level below “AA” (related to two €8,271 thousand, compared with a loss of €4,937 transactions totaling €677 million) or to below Aa1 thousand for the previous year. This result reflects (related to one transaction in the amount of €287.6 the effect of writedowns. million); events associated with the negative performance of the assigned portfolio; a As of the date of this report, the unit value downgrade of the Bank below a rating of “BBB”; or amounted to €80,656.22, down €9,368 (or 10.41%) serious contractual breaches by the Bank. compared with 2010 due in part to a proportionate Regarding the €287.6 million transaction, the rating reimbursement executed in 2011. set as the trigger event was reached when the security’s rating was set at “Aa2”. Nonetheless, the investor did not exercise the related option.

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The value of the fund's real estate assets as at December 31, 2011, corresponded to 96.63% of 9. Bank Capitalization total assets. They consist of 258 properties, predominantly industrial properties located in and Rating various provinces across Italy. Based on appraisals performed, the current value of the real estate assets totals €197,183 thousand, including 9.1. Capitalization writedowns taken during the year. To minimize the risks associated with real estate Capital management within banking groups is a management, the asset management firm adopted function that legislation assigns to the group’s a corporate governance structure that is designed parent company. Again in 2011, our parent to make its decision-making process as visible and company, Iccrea Holding, has adopted a strategy of transparent as possible. strict control of capital requirements for the individual Group companies and has provided each The real estate market is exposed to cyclical company with the capital required in compliance changes in rental and sale prices in response to with the regulatory 6% minimum (the reduced macroeconomic developments, affected by the ratio). Where necessary, the parent is prepared to economic conditions in the areas in which the real allocate available capital where it is most estate is located. appropriate to meet growth or other support The macroeconomic factors that have had the requirements. greatest effect on real estate values are: changes in interest rates; the performance of alternative In order to calculate its capital requirement and investments; and economic growth. resulting prudent capital ratios, the Iccrea Banking Group, and therefore the Bank as well, uses the The fund’s investment policy is targeted at Standardized Approach to assess credit and managing these variables in order to maximize counterparty risk, and the Basic Indicator Approach returns on investment through: choice of tenants of to assess operational risks, pursuant to the the highest standing, long-term rental contracts, indications contained in Bank of Italy Circular locations in large urban areas, low vacancy levels, 263/2006 as amended. and yield maximization (the ratio between rents and asset value). On the sales side, constant In recent years, in concert with the parent monitoring of market prices makes it possible to company and in line with the growth in our seize opportunities offered by contingent market business, the Bank has progressively adjusted our developments. capital resources. A description of the main steps taken follows. Choosing lessees with high credit ratings tends to minimize credit risk. They are monitored during On December 22, 2010, the shareholders approved the tenant screening process and during the term a €50,000,000 capital increase by way of the of the rental contract in order to further reduce transfer of the business units from Iccrea Banca the risks inherent in managing rental property. S.p.A. on January 2, 2011. The approved amount was allocated as follows: €39,097,501 to share capital and €10,902,499 to the share premium 8.4. Joint Agreement (Debt reserve.

Moratorium) In its meeting of December 15, 2011, as authorized by the shareholders in an extraordinary meeting In July 2009, as part of its actions to combat the held on July 15, 2010, and in accordance with effects of the financial crisis, the Italian Article 2443 of the Italian Civil Code, the Bank's Government brought together Italy’s leading Board of Directors approved the start of procedures economic players (ABI, the trade associations and to increase capital by a further €100,201,000 by the Ministry for the Economy and Finance) to sign issuing new shares with a par value of €51.65 to be an agreement (the “joint agreement”) establishing paid in at the time of investment. The deadline for rules for the suspension for a certain period of execution of this capital increase has been set at principal repayments. The deadline for submitting May 31, 2012. On December 30, 2011, in execution applications was set at July 31, 2010, under the of the instructions of the parent company’s board agreement. As this date approached, it was agreed of directors issued on December 12, 2011, Iccrea to extend this deadline to January 31, 2011. As Holding paid in €79,737,941 in respect of the future mentioned above, under an agreement signed on capital increase for the holding company’s share on February 16, 2011, the deadline was then extended which it holds option rights. On December 23, further to July 31, 2011. 2011, the parent company also submitted an authorization request to the Bank of Italy for the planned capital increase for Iccrea BancaImpresa.

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On December 31, 2011, following execution of the As at December 31, 2011, the Bank had the resolutions described above, the Bank’s equity following ratings: Standard & Poor’s “BBB+”, Rating totaled €556.1 million, an increase of €132.9 Watch Negative; Fitch Ratings “A-”, Rating Watch million (+31.4%) compared with 2010. Share capital Negative. totals €374.6 million, and reserves, including the €79.7 million capital contribution described above, totals €179.6 million. 10. Performance As of December 31, 2011, total risk-weighted assets came to €9,490.6 million, while the total Income before tax for the Bank came to €14.8 prudential capital requirement for credit, market million, compared with €17.7 million in 2010 (- and operational risks came to €589.2 million. With 16.6%). Net income amounted to €1.9 million, regulatory capital of €736.2 million and the capital essentially in line with the previous year, when it requirements specified above, less 25% given that came to €2.1 (-6%). the Bank is a part of a banking group, the Bank’s total capital ratio comes to 10.0%, which is above Net income for 2011 was impacted by the the 6% minimum established for banks that are a substantial tax burden. Item 260, which reports part of a banking group. Tier 1 capital at the end of income tax for the year, amounted to €12.8 2011 came to 7.4%. million, producing an effective tax rate of 86.7%. The high rate is attributable to the effect on Capital requirements 2011 2010 Change current taxes of the non-deductibility of interest Credit and counterparty risk 759,246 691,429 9.8% expense, the non-deductibility of the writedown of Market risks 0 97 -100.0% Operational risks 26,390 25,527 3.4% BCC Factoring and the fact that personnel costs Total risk requirements 785,636 717,053 9.6% and negative components related to loan Reduction for banks belonging to groups -196,409 -179,263 9.6% writedowns are not recognized for the purposes of Total capital requirements 589,227 537,790 9.6% IRAP.

Tier 1 capital 547,846 417,938 31.1% Tier 2 capital 188,382 203,456 -7.4%

Regulatory capital 736,228 621,394 18.5% RECLASSIFIED INCOME STATEMENT 2011 2010 Total change % change

Surplus/deficit 147,001 83,604 75.8% Interest and similar income 363,037.6 341,660.6 21,377 6.3% Interest and similar expense - 208,767.9 - 146,670.4 - 62,098 42.3% Tier 1 7.4% 6.2% 1.2% NET INTEREST INCOME 154,269.7 194,990.2 - 40,721 -20.9% Fee and c ommission inc ome 5,665.9 3,956.9 1,709 43.2% Total capital ratio 10.0% 9.2% 0.8% Fee and commission expense - 4,636.6 - 4,693.5 57 -1.2% Thousands of euros NET FEE AND COMMISSION INCOME (EXPENSE) 1,029.2 - 736.7 1,766 -239.7% Dividends and similar income 0.7 0.8 0 -5.2% Net gain (loss) on trading activities 4,132.2 6,619.5 - 2,487 -37.6% In the wake of ongoing regulatory changes, the Net gain (loss) on hedging activities - 3,693.4 - 1,522.4 - 2,171 142.6% Iccrea Banking Group has centralized its strategic Net gain (loss) on disposal or repurchase 14.5 580.9 - 566 -97.5% GROSS INCOME 155,752.9 199,932.4 - 44,180 -22.1% risk management activities. In that regard, the Net losses/recoveries on impairment - 69,422.5 - 113,143.2 43,721 -38.6% parent company is steering the process of assessing NET INCOME (LOSS) FROM FINANCIAL OPERATIONS 86,330.4 86,789.2 - 459 -0.5% how much capital is sufficient to permanently Administrative expenses - 70,304.2 - 65,467.6 - 4,837 7.4% cover all risks to which it is exposed. Group banks personnel expenses - 43,031.6 - 39,104.9 - 3,927 10.0% are actively involved in this process. other administrative expenses - 27,272.7 - 26,362.7 - 910 3.5% Net provisions for risks and charges - 1,914.9 - 5,635.2 3,720 -66.0% Net adjustments of property and equipment - 270.4 - 502.9 233 -46.2% Net adjustments of intangible assets - 2,057.2 - 1,592.8 - 464 29.2% 'Other operating expenses/income 8,206.6 8,314.4 - 108 -1.3% 9.1.1. Outlook for 2012 NET OPERATING EXPENSES - 66,340.2 - 64,884.1 - 1,456 2.2% Profit/loss on equity investments - 5,226.1 - 4,200.0 - 1,026 24.4% PROFIT (LOSS) BEFORE TAX ON CONTINUING 14,764.1 17,705.1 - 2,941 -16.6% Capital planning for the coming financial year is OPERATIONS essentially a direct result of the growth in new Income tax for the period - 12,794 - 15,612 2,818 -18.0% PROFIT (LOSS) AFTER TAX ON CONTINUING lending. Given the market conditions described on 1,970 2,093 - 123 -6% OPERATIONS multiple occasions above and the strategic Thousands of euros guidelines of the parent company, the Bank is not expected to significantly increase the overall level of lending for 2012. As a result, and considering the 10.1. Net interest income implemented increase in capital described above and the difference in outstanding subordinated Net interest income amounted to €154.3 million, debt, no further intervention is expected to be down 20.9% compared with €195.0 million in 2010. necessary. The oft-cited critical situation on the financial

market certainly played a role in the decline for

the period. Like the rest of the banking system, the

Bank was affected by the major tensions on the 9.2. The Bank’s Rating market, especially in the second half of 2011, which caused funding costs to rise. The change in

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the composition of the loan portfolio also had an adverse impact, with a larger proportion of 10.3. Net losses/recoveries on ordinary loans and real estate lending and a impairment smaller share of lending through certain more profitable lease products. The negative impact of The net cost of risk management in 2011 amounted developments in benchmark rates (3-month Euribor to €69.4 million (€113.1 million in 2010). first and foremost) on the repricing of assets and liabilities, and hence on the formation of net As regards credit risk, the sum of provisions and interest income, was not negligible. writebacks in 2011 amounted to €57.8 million,

compared with €101.7 million for 2010. The Among the factors that helped offset the adverse reduction in the net charge was attributable to a economic developments was the Iccrea Banking number of factors: in addition to the composition Group’s consolidated funding management by financial product of defaulted positions (which approach, in which finance functions are called for lower new provisions compared with centralized under the guidance of the Parent previous estimates), another factor was the Company. This enables the Bank to take advantage increase in writebacks due to collection and of synergies with Iccrea Banca to tackle critical valuation compared with previous year. issues and contain the cost of funding as much as possible. Total writedowns on financial assets amounted to

€11.1 million, essentially unchanged with 2010

(€11.4 million). The total includes adjustments to 10.2. Gross income units of collective investment undertakings in the amount of €8.0 million (the writedown of the real Gross income totaled €155.7 million, a decline of estate investment fund, in implementation of IAS €44.2 million compared with 2010 (-22.1%). 39, as reported above) and €3.1 million in respect writedowns on participating instruments in Net fees and commissions, which include companies with loans undergoing restructuring. commission paid to mutual banks not connected with individual contracts, were positive, thanks to the increase in ordinary lending and ancillary services. Net income in this segment amounted to 10.4. Net operating expenses €1 million, compared with net expense of €0.7 million in 2010. Net operating expenses, which include components

more closely tied to the business, increased slightly As regards trading and hedging operations, in compared with the previous year (+2.2%), totaling addition to hedging the credit exposures of €66.3 million. customers described in the report, the Bank also undertakes derivatives transactions on its own Personnel expenses amounted to €43.0 million account exclusively for the purpose of preserving (+10%). The increase is mainly associated with the margins on transactions which, by their very costs in respect of the new staff that joined the nature, are held until maturity (both on the asset bank at the start of 2011 following the acquisition and liability sides). Transactions that fail of the business line from Iccrea Banca (45 effectiveness tests (despite operational hedging employees), and charges for early retirement intent) generate capital gains, capital losses and incentives in the amount of about €3.0 million. measurement differences that are recognized Staff turnover had a positive impact on costs through profit or loss. overall, with a net reduction in total expenses as a

result of the decrease for personnel leaving the The net gain on the Bank’s trading activities came Bank and the increase for staff hired to meet an to €4.1 million (€6.6 million in 2010) and includes number of specific staffing needs. negative and positive differences on non-hedge IRS transactions and the related changes in fair value Other administrative expenses, equal to €27.3 and net margins on derivatives operations for million, also rose (+3.5% compared with 2010). The customers. rise is mainly attributable to the administrative

costs associated with the new business line, as well Hedging activities produced a net loss of €3.7 as greater EDP costs for projects to enhance the million, the outcome of the positive and negative efficiency of company processes. The increase was components of all hedging transactions. It contained by specific initiatives to optimize and represents the ineffective portion of transactions in control expenditure, including the reduction in the which the hedging relationship was demonstrated use of outsourcers, costs for which fell by about within the corridor provided for under the €0.8 million. applicable accounting standards. This component had amounted to a negative €1.5 million at In 2011, accruals to provisions for risks and charges December 31, 2010. fell from €5.6 million in 2010 to €1.9 million in

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2011. The decline was connected with the positive Compliance with new rules should therefore be developments in charges and provisions for considered as a stimulus to action. Iccrea contingent liabilities in respect of former lease BancaImpresa, which wants to make the most of customers. the opportunities inherent in the rules, is using the process of adopting its practices to them as a Other operating income and expenses showed net means of developing its capacity to generate income of €8.2 million, virtually unchanged on 2010 economic and social value. (€8.3 million). 11.2. Compliance Depreciation of property and equipment declined by €0.2 million as a result of the management of Within the framework of the new prudential assets returned from leasing, while amortization of supervision rules, the management of compliance intangible assets rose by €0.4 million due to the risk becomes particularly important, especially as start of amortization of investments carried out regards those risk components (operational, legal during the year. and reputational) that cannot be quantified directly, but may nevertheless impact the financial As a result of the decrease in gross income, the equilibrium of the bank. Recent experience has, in Bank’s cost/income ratio, which is calculated on fact, underscored how legal and reputational risks, the basis of total costs in respect of personnel, though hard to identify, are nonetheless very real. overheads and depreciation and amortization, as well as other operating income and expenses, rose The Bank has therefore continued to promote a from 32.5% in 2010 to 42.6% in 2011. corporate culture that enshrines principles of honesty, integrity and respect for internal and external rules, and has set up specific 10.5. Profit (loss) from equity organizational structures including a Compliance Department, to ensure strict compliance with the investments law and its own internal rules. Beginning in 2011, profit (loss) from equity investments was recognized separately under item The Compliance Department, which now forms part 210 of the income statement. Previously, those of the general system of internal controls, helps gains and losses had been classified under item 139 safeguard company capital, enhances the d) (Net losses/recoveries on impairment of other efficiency and effectiveness of company operations financial activities). At December 31, 2011 the and promotes respect for the law. During the year, Banca reports €5.2 million in respect of impairment the Department devoted particular attention to on the investment in BCC Factoring; at the end of testing the methods used to abate risks associated 2010 the impairment loss on that company with: Legislative Decree 231/07 amounted to €4.2 million.

11.3. Anti-Money Laundering

11. The internal control In the area of money laundering, in line with the measure of the Bank of Italy concerning the system organizational requirements for financial and credit intermediaries of March 2011, Iccrea BancaImpresa has established an internal Anti-Money Laundering 11.1. Regulatory developments unit, appointing the head of the anti-money laundering function, whose is also responsible for In recent years, numerous new laws and regulations reporting suspicious transactions. In line with have been enacted that have required banks to external regulations, the same manager has make major changes, given the need for close recently also taken on the role of officer in charge regulation in view of the very nature of banking. of reporting aggregate data. The common intent of the new rules (Basel 2, IAS, The structure of the unit was set out in a specific Compliance, MiFID, the Third Anti-Money project document approved by the Board of Laundering Directive) is to preserve the stability of Directors. In parallel with the establishment of the the financial system by enforcing sound and unit, General Rules governing the duties of top prudent management practices using mechanisms management and control bodies and all company designed to protect the financial system, which is units were issued. one of the main components of the world economy. The aim is also to safeguard the interests of weaker contracting parties, especially consumers, through the adoption of more transparent procedures.

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extension of the ranges of offences covered) and to 12. Control arrange- revise the reporting flows to the 231 Supervisory Body. In particular, the Body, which is chaired by ments an independent expert, is made up of the head of internal controls, the head of compliance and two As part of the progressive strengthening of controls members of the Board of Directors. at various levels, the Bank, in addition to the ordinary structure and functioning of line controls, 12.2. Internal auditing also has an Audit Committee made up of non- executive directors and that was recently re- Internal audit activities have for some time been appointed. During the year it continued to carry outsourced to the Parent Company and are carried out its activities, as follows: out by the Control Department mentioned above. In 2011, the function performed the ordinary scheduled audits and inspections of various • it prepared fact-finding reports, also governance procedures, company processes and making use of the resources of the production units, as well as of support processes functions responsible, for the Board of and units. It also carried out audits and inspections Directors and the evaluated the risks specifically requested by the corporate bodies associated with certain of the Bank’s authorized to do so. activities and new projects; The audits and inspections were followed by the • it scrutinized the periodic reports of the preparation of summary and detailed reports Compliance Department, Risk Management containing critiques and proposed solutions, which and the Control Department, making gave rise to corrective action and follow-ups by the recommendations concerning control company. objectives, including proposals made in planning the activities of the function; At the same time, the function provided full • at its own initiative, it examined the assistance to Bank of Italy inspectors, carrying out general architecture of the control system any specific checks requested by them. of the Bank and its subsidiaries. Control actions coordinated with the Compliance The Audit Committee examined the issues in detail Department were carried out on an ongoing basis and promoted the most important developments in (for example, with regard to derivatives the Bank's system of internal controls in 2011, transactions for customers), as were activities with namely: the new Anti-Money Laundering unit, for which the Control Department provided support in setting up the unit. • the examination of the findings of the work of the Compliance Department and The Control Department also maintained close of the results of auditing and inspection contacts with the Board of Auditors and the Audit activities; Committee, as well providing them with • the development and the functioning of information on matters of joint interest. the unit in charge of line controls; • developments in organizational and operational arrangements for anti-money 12.3. Risk management laundering activities; • developments in the internal EVO project. In 2011, the Group’s Risk Management and ALM Department continued to update the processes and The Committee drafts periodic summary reports for tools used to mitigate credit, market and the Board, which include the minutes of its operational risks in response to regulatory changes meetings so that the considerations and proposals and internal management and monitoring made at its meetings may be known. requirements.

12.1. The compliance model under The ongoing analysis of the credit risk profile of the Bank’s loan portfolio was stepped up. The Bank’s Legislative Decree 231/2001 top management, Board of Directors and control bodies were kept regularly informed about the During 2011, the Bank updated the general part, monitoring carried out and the results of the special part, code of ethics and protocols making analyses performed. The reporting system was up its Legislative Decree 231/2001 compliance refined to improve the representation of the model to ensure it captures the various forms of various drivers that underlie developments in the lending performed by the Bank, developments in credit risk assumed by the Bank and provide the organizational structure and developments in support for decision-making processes. the external regulatory framework (with the

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outcomes with regard to hedges of the fixed- In 2011, Risk Management was involved in and average-rate loan portfolio; implementing the New Credit Control System. It • providing support for new public leasing involves the integration of the expert system for operations in terms of pricing hedges and measuring credit risk (ALVIN), already used in the performing monthly effectiveness tests; loan origination process and in the process of • providing support in preparing and reviewing monitoring the overall portfolio risk, within the forecasts of financial requirements and the loan management and control processes. The funding plan; expert system was also refined and developed to • providing support in defining the take account of the specific needs of the risk characteristics of intercompany funding assumption process and the ongoing credit risk transactions (timing, amount, maturity, management process. indexing type and parameters, and pricing); The constant monitoring of developments in the • definition of intercompany credit exposure risk profile of the portfolio also gave rise to the limits. need at the end of the year to re-estimate the risk parameters, especially PD, in order to reflect The Bank continued to monitor the structural current developments the actual risk level of characteristics of its assets and liabilities with customers more accurately. regard to ALM and liquidity risk. Specifically, in Special attention was focused on the integration of order to fulfill regulatory and operational risk metrics in the pricing system, implementing a requirements, two Group policies were prepared, system for monitoring the risk/return profile of setting out the guidelines and principles for new lending. prudent management, the roles and responsibilities The continuous evolution of methods also went of the corporate bodies and operating structures, forward with activities to refine and enhance the and the control processes both for interest rate risk robustness of the system for simulating risk in the banking book and liquidity risk. developments that is integrated into planning and budgeting processes. The most important project relating to interest rate risk in the banking book was the consolidation The Risk Management unit was actively involved in of the Group’s ALM project to improve the preparing the capital adequacy self-assessment instruments, methods and reports provided, since report, for which it ran the analyses that are part the ALM system serves as the basis for prospective of this process, in compliance with Pillar II analysis conducted for planning purposes. Finally, requirements. for the performance of stress tests, circumstances or factors that could have a serious impact on the In respect of operational risks, the Bank proceeded Bank’s financial equilibrium were identified using a with the continuous monitoring of events with combination of assumptions established by the operational implications as well as the Bank of Italy and internally-developed scenarios simultaneous analysis of their underlying causes based on the Bank’s own risk characteristics. with a view to identifying the actions to take to To address liquidity risk, daily monitoring was enhance the efficiency of its processes and introduced to provide support for risk analysis and mitigate the relevant risks (a process-oriented risk- the short-term and structural liquidity position at based approach). the individual and consolidated levels.

In the area of financial risk, too, support tools for In addition, all the necessary activities for the decision making and the resources for risk preparation of information on all the different management and monitoring were reinforced types of risk for rating agencies for the annual during the year. A key activity for market risks was review of the Bank’s rating were carried out, as ongoing maintenance of the application (RiskSuite) were those regarding supervisory reporting with used in the assessment and reporting processes for regard to regulatory duties for Pillar II and Pillar III monitoring the risk position. This made it possible requirements at the consolidated level. to ensure the accurate monitoring of the Bank's various portfolios on a daily basis. 12.4. Main features of the risk and The main activities included the following: internal control management • daily reporting on all derivatives operations; system with regard to financial • strengthening short-term and structural reporting (Art. 123–bis, paragraph liquidity monitoring systems at both the 2, point B) of the Consolidated individual and consolidated levels, with Law on Financial Intermediation ongoing verification of the adequacy and

matching of cash inflows and outflows, with Control activities and processes involved in the the production of daily monitoring reports; generation of data necessary to draft public • revision of the methodologies used to run financial reports (the annual and interim financial periodic effectiveness and verification tests of

30

reports) form an integral part of the Bank's overall This part of the control system's processes, risk management-oriented control system. activities and key procedures are subject to ongoing monitoring by Internal Auditing. While no internal control system can wholly The annual and interim financial statements eliminate the risk of error or fraud, only assess undergo independent auditing by Reconta Ernst & such risks and mitigate their likelihood and impact, Young S.p.A., which is also charged with these elements are intended to provide reasonable monitoring the accounts in general pursuant to assurance of the reliability, accuracy and Article 14, paragraph 1b) of Legislative Decree 39 timeliness of financial reporting. of January 27, 2010.

The relevant control system is based on two With regard to the "Transparency Directive", the general principles summarized as follows: Bank has selected Luxembourg as its home member state, as the majority of its securities are issued on 1 - Distributed back offices: that market. Accordingly the Bank has not appointed a financial reporting manager pursuant The accounting system is automatically and semi- to Italy's Consolidate Law on Financial automatically fed data by a large number of Intermediation, given that applicable regulations in organizational units at the Bank, where Luxembourg do not require such an officer. transactions are handled through a range of subsystems. As a result, line control processes are built into transaction management IT procedures themselves. Organizational procedures allocate 13. Security Policy Do- responsibility for verification of the accounting records for all transactions to the heads of the cument organizational units that "own" the data generated, in compliance with specified procedures and The Security Policy Document was updated deadlines. pursuant to rule 19 of the Technical Annex –

Attachment B – contained in Legislative Decree 196 Second-level controls are carried out by of June 30, 2003, which governs the protection of organizational units in charge of overseeing the personal data. The document has also been general accounts and drafting the annual and published on the Bank’s intranet for better internal interim financial reports. distribution.

All of these controls have been mapped and are currently being integrated into a control dashboard tool viewable and managed by an ad hoc (projects and controls) organizational unit. Controls are 14. Consolidated tax carried out on a daily, weekly or monthly basis depending upon the type of data handled and mechanism transaction frequencies. Since 2004, the Bank has participated in the Particularly complex and effective control routines consolidated tax mechanism, for which it has have been developed for the lease cycle. drawn up a specific agreement with its Parent Company, Iccrea Holding SpA. With that 2 - Group-level competence centers: participation (subsequently renewed), the Bank transfers both its taxable income and tax credits to Assessments which have the greatest impact on the the Parent Company, which settles the IRES accounts are delegated to specialist offices. corporate tax liability for all participating companies. All financial assets and liabilities Data regarding the fair value of financial items and transferred to the Parent Company are therefore those concerning hedges and their associated recognized in these financial statements under effectiveness tests are supplied by specialist “other assets” and “other liabilities.” Specifically, offices equipped with appropriate calculation the item “other assets” includes advances paid, tools. The Group has centralized these offices taxes withheld at source and tax credits for 2010, Iccrea Banca. This data is additionally examined by as well as the income recognized in respect of the Group Risk Management and the Bank's General partial neutralization of the non-deductible portion Accounting unit before being used. of interest expense originating from intercompany financing, governed by the most recent version of Data on the classification and measurement of non- the agreement, as amended; "other liabilities" performing loans is supplied by duly separated, includes the overall IRES liability. highly specialized offices where operations are undertaken on the basis of detailed procedures approved by the Board of Directors.

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As planned, in 2010, access to the Solidarity Fund 15. Human resources for early retirement incentives was terminated. and organization

15.1. Organization 16. Subsidiaries

As already reported, 2011 saw the acquisition of Within the Bank’s organizational model, the another business line from Iccrea Banca. In subsidiaries functionally represent two of the addition to integrating the new personnel within business lines, while remaining independent and the Bank’s structure, considerable effort was distinct from the parent company, Iccrea devoted to developing the skills needed to operate BancaImpresa. They are a synergistic part of the within the new organizational and business model. Bank’s offering and provide a full response to the As discussed in the dedicated section of the report, needs of the business customers of the mutual monitoring the portfolio and managing non- banking system. performing positions underwent a far-reaching organizational review, which led to the complete overhaul of the entire recovery process, involving 16.1. BCC Factoring the business lines in the pre-litigation stages on the basis of the type of risk and the size of the During 2011 BCC Factoring continued evolving both exposures of the counterparties. its organization and its business. The company focused in particular on increasing the effectiveness and efficiency of the management of 15.2. Human resources the receivables it acquires from both an operational and risk standpoint, consolidating the At times of sweeping change, training is the key information system used to manage the factoring tool both in adapting skills and in helping people to process. Together with the organizational understand how to manage change individually and development, work also continued on as a group. Therefore, following the reorganization implementing an ever more rigorous credit the previous year, during 2011 work continued on selection process, recasting credit approvals in training efforts designed particularly for the order to accompany the growth of assets with an Lending & Real Estate and Movable Property lines, improvement in the overall risk profile. so as to expand and standardize their knowledge base. The company successfully implemented these activities, with a substantial increase in turnover Training efforts continued in order to develop the and investments, while at the same time improving skills needed to meet the corporate banking needs the quality of its portfolio. In 2011 BCC Factoring of the mutual banks and business customers, and, expanded its lending: at the end of the years in addition to the topics dealt with in 2010 (i.e., investments amounted to €487 million, up 78% on risk control and the improvement of credit 2010. This performance, the outcome of the major quality), additional focus was placed on specific development effort undertaken by the company training in the following areas: insurance, lending with the support of the mutual banks (61 new in the energy sector, public and agricultural mutual bank partners were signed on), generated a leasing, biomass and the primary sector in general. turnover of €1,026 million, an increase of 53% on 2010. At the end of 2011 the company had In order to foster the change management process outstanding positions amounted to €549.5 million, for all company employees in the corporate an increase of 67.3% on the previous year. segment (i.e. enterprise relationship managers, heads of the business centers, mutual bank Dec 11 Dec 10 % change relationship managers, support personnel, account Turnover 1,026,177 670,489 53.0% and desk staff, and operating services personnel), Outstanding 549,494 328,518 67.3% specific training courses were implemented in % financed 88.6% 83.2% 6.5% order to ensure that their professional Investment 486,611 273,167 78.1% development is in line with the current needs of Thousands of euros the business and of human resources. Training also continued on facilitating change by way of flexible individual and team coaching mechanisms. 16.1.1. Performance

Mandatory training also continued for all personnel The company closed 2011 with a post-tax loss of involved in issues including security, money €1.6 million. Developments in loan writedowns, laundering legislation, transparency, usury and equal to €4.8 million, was one of the decisive similar matters. factors in the result.

32

with its entry in the register of financial intermediaries pursuant to Article 106 of the 16.1.2. Gross income Banking Act.

The company posted gross income of €8.6 million, During the period, the first full year completed an increase on the €8.3 million achieved in 2010 after that change, the company was especially (+3.5%). The positive performance was essentially focused on consolidating its administrative attributable to the increase in net fee and processes, to improve the formal and substantive commission income, thanks to the increase in compliance with the requirements necessary for volumes handled, offset by a decline in net interest entry in the new register that is expected to be income (-18.9% on 2010), which was affected by rolled out in the early months of 2012 as envisaged the rise in funding rates and the further decline in under the amendments to the Banking Act provided commissions. for by Legislative Decree 141 (reform of the It should be recalled that the increase in lending in regulation of financial intermediaries with the 2011 was achieved despite more rigorous selection elimination of the distinction between Article 106 of customers, which penalized returns. and Article 107 entities and unification of their registers and convergence of supervisory regulations with those for banks). 16.1.3. Cost of risk Pending this change, as the company exceeded the On the risk management front, the company limits permitted under Article 106 (as provided for refined its processes for containing the under the old legislation, which is currently still in deterioration in credit quality and, consequently, force), an application was submitted for entry in reduced the overall cost of risk compared with past the special register pursuant to Article 107 of the years. Net writedowns for the year amounted to Banking Act. €4.8 million, compared with €9.2 million in 2010. In order to bring its capital into line with the new The writedowns were the result of a careful regulations, on July 1, 2011, a capital increase of assessment of the portfolio of non-performing €8 million was approved by the Extraordinary positions in response to the emergence of a number Shareholders’ Meeting of April 27, 2011. of objective risk factors. Writedown policies took due account of the timing and likelihood of As at the end of 2011, the company had entered collection on impaired positions. The coverage into 6,693 transactions valued at €73 million, ratio for bad debts was 87%, while the ratio for all compared with 5,016 transactions and a value of impaired assets was 69% (93% and 68% respectively €55 million the previous year, for an overall in 2010). increase of 33.4% in number and 32.6% in value. This performance was achieved in part by improving the average return on the transactions. As at December 31, 2011, based on an independent expert appraisal, Iccrea BancaImpresa wrote down The portfolio of lease agreements, net of the equity investment in BCC Factoring by €5.2 depreciation for the period, came to about €142.9 million. million, an increase of 17% over the previous year. Total gross customer credit, including receivables In accordance with the indications provided by the already invoiced and the portfolio of direct debit parent company and considering forecasting orders and other bills, came to €157.8 million at scenarios, action will focus on the company’s the end of the year, compared with €135.5 million fundamentals, seeking to expand volumes (through for 2010, an increase of 16.4%. Revenues from greater operations with the mutual banks), lease payments came to €59.7 million, compared improving margins and limiting risks. The with €50.3 million for 2010. development of BCC Factoring will also seek to leverage existing synergies with the commercial Interest income for the company, net of costs for units of the parent company, which in services included in the lease payments, came to implementation of the new organizational model €10.3 million, compared with €8.9 million the are already having a positive impact on cross- previous year. This is an increase of 15.4%, only selling and the level of service provided to the slightly lower than that of assets under mutual banks. management. Total interest expense came to €3.5 million, compared with €3.0 million in 2010.

16.2. BCC Lease As a result, gross income on financial intermediation grew at a faster pace than total

lending, coming to €6.8 million, compared with During 2011 BCC Lease continued the process of €5.9 million the previous year (+14.6%), thereby development and change in its status that, confirming the improvement in margins on new launched a number of years ago, led to an business. especially significant achievement in April 2010

33

The cost of risk for the year rose to €3.8 million, The subsidiary BCC Factoring is a member of compared with €3.4 million for the previous year, Assifact, the Italian trade association of factoring but remained unchanged at 2.6% as a ratio to total companies, while BCC Lease is a member of lending. Assonolo, the Italian association of industrial equipment lessors. Overhead costs for the company totaled €3.3 million, compared with €3.0 million for 2010, a rise of 10.5% and include €1.6 million in personnel expenses, €1.8 million in other administrative 18. Outlook for opera- expenses, and €69 thousand in depreciation and amortization on investments (primarily tions management software).

The cost/income ratio came to 41.4%, compared 18.1. Outlook with 42.3% in 2010, a slight improvement. The difficult outlook for 2012 requires all Income before taxes for the year came to €0.9 companies, and banks in particular, to adopt million, compared with €0.7 million in 2010, an complex and effective approaches to their increase of about 33%. business. The recession expected for 2012 will inevitably weigh on the performance of many The effective tax rate amounted to 64.7%, enterprises and discourage investment even especially high because of the non-deductibility of further, while credit could undergo further many items of the income statement for the restriction owing to the low level of market purposes of Italian regional business tax (IRAP), liquidity. These developments could lead, at least especially the cost of risk (writedowns). Therefore, in the short term, to the continuation of the after income taxes, the year closed with net contraction in the new lending of the Bank. income of €335 thousand, compared with €241 thousand the previous year. In view of forecast conditions, in 2012 the Bank will seek to stabilize the stock of net loans on its books and plans to take firm action on all fronts to preserve future margins, while at the same time 17. Associations working to reduce the level of credit risk. The response to this complex outlook will inevitably be multifaceted. Plans envisage numerous initiatives Iccrea BancaImpresa is a member of the Italian to optimize the portfolio and change our Federation of Mutual Banks (Federazione Italiana commercial stance with regard to the financial delle Banche di Credito Cooperativo: Federcasse) structure of new business. In addition, vigorous and the Italian Banking Association (Associazione action will be taken with non-performing positions Bancaria Italiana: ABI). It is an active member of in order to limit and reduce their impact on the National Association of Leasing Agencies performance and financial position. (Assilea) where it is represented on the board of directors as well on various technical committees, For 2012, the Bank has planned for commercial and some of which it chairs. profit growth to be correlated with the risk that can be taken on, well aware that we have risk As a bank, Iccrea BancaImpresa is also a member of assessment and pricing tools capable of providing the Interbank Deposit Protection Fund. In high-quality service to the network. connection with the new products offered by the Bank, it has become a member of the Italian Despite the constraints on our range of action and Corporate & Investment Banking Association (AICIB) limited tools available, the Bank is determined to and the Italian Association for Consumer Credit and face the situation alongside the mutual banks, Real Estate Lending (Assofin). Since 2008, in order working with them to develop approaches for to start offering investment services, the Bank has managing the short-term challenges in this difficult been a member of the National Guarantee Fund economic climate of supporting the mutual banks (Fondo Nazionale di Garanzia). and the development goals of the Bank itself.

Internationally, the company remains active in Leaseurope, the federation of European national associations of finance lease companies. It is also 19. Other mandatory in- an active member the International Finance & Leasing Association (IFLA), where it is represented formation on the advisory committee. Along with the parent company, it is an active participant in the UNICO Banking Group. Share capital at December 31, 2011, consisted of 7,251,970 shares with a par value of €51.65 each. The company does not hold treasury shares or

34

shares in its Parent Company, either directly or through trustees or other third parties. During the The Shareholders’ Meeting to approve the financial financial year, the company neither bought nor statements has been called for April 24, 2012. sold own shares or shares of its Parent Company, either directly or indirectly through trustees or No significant event has occurred subsequent to other third parties. the balance sheet date that would require a material change in the amounts and results The report on operations gives ample information reported. on any significant events occurring after the close of the year and on the outlook for the company as The financial statements are authorized for well as information on financial risk management publication and no longer modifiable following goals and polices (price risk, credit risk, liquidity approval by the Shareholders’ Meeting. risk and cash flow risk). The report also provides information on key indicators and the main factors and conditions that could affect profitability. In September 2011 the Bank of Italy conducted an * * * * * ordinary inspection of Iccrea BancaImpresa. The inspection began on September 20, 2011 and was completed on December 23, 2011. Pending delivery of the inspection findings, we report that no significant observations emerged during the inspection.

As required by law, we provide below a summary of transactions at December 31, 2011, with other Group companies, divided between the Parent Company, subsidiaries and subsidiaries of the Parent Company. There are no companies subject to significant influence:

INCOME COMPANY ASSETS LIABILITIES STATEMENT Parent company Iccrea Holding S.p.A. 32,394 19,315 - 3,120 Bcc Lease S.p.A. 36,645 869 800 Subsidiaries BCC Factoring S.p.A. 397 385 39 Iccrea Banca 130,010 5,549,058 - 154,182 Immicra 14 - 170 Aureo Gestioni - 138 Companies under BCC Gestione Crediti 238 - 922 common control BCC Multimedia 102 - 431 BCC Private Equity SGR 73 104 Banca Sviluppo Spa 1,039 18 15 BCC Solutions 249 2,259 - 6,091

Thousands of euros

20. Proposed allocation of profit for the year

The financial statements for 2011, which we submit for your approval, show a net profit of €1,969,932.

We recommend allocating net income as follows:

Net income 1,969,932.00 To the legal reserve 196,993.20 To the extraordinary reserve 32,466.00 Distribution of dividends in the amount of €0.24 per share for 7,251,970 shares bearing full 1,740,472.80 dividend rights

35

Shareholders, and development, for our companies and for mutual banking itself. Developments in the year just ended, the general outlines of which were essentially forecast at the Challenging times bring out the different values of start of the period, nevertheless presented a mutual banking. The Bank’s collaboration with the greater level of operational complexity than mutual banking system has been and will be the expected. We are all aware of the events that key for supporting the continued development of involved a variety of European countries in the that system. The Board of Directors would like to second half of the year, as well as the firm thank all of the mutual banks and their associations decisions for change, first in government and then for their support and for the trust they have always at the social and economic level, that our country placed in Iccrea BancaImpresa. had to face at the close of 2011 and the start of 2012. We also thank the Governor and the Directorate of the Bank of Italy, and the inspectors who The instability of the financial markets and the conducted their inspection at the Bank at the end persistence of the crisis of confidence in European of last year for their constructive relationships, as sovereign debt and the banking system seriously well as the entire Banking and Financial Supervision threatened the sustainability of the entire financial Area of the Head Office of the Bank of Italy. system and caused the cost of funding to rise to progressively more disproportionate levels over the We would further like to thank the Board of course of the year. Nevertheless, the drastic Auditors for the work they have done and to measures adopted by the new Italian government express our appreciation to the General Manager, and the generous injections of liquidity undertaken the rest of the management team, and all of the by the European Central Bank enabled a slow Bank’s employees for their dedication and return, from the start of 2012, to more regular commitment throughout the year. financial conditions, although the cost of funding remains very high, even for relatively short-term A final word of thanks also goes to the parent maturities. company, Iccrea Holding, for its guidance and coordination efforts and for its continued In the past few years, the Bank, aware of the encouragement to pursue the major changes we challenges that lie ahead, has undertaken a path of have undertaken. change aimed at the continuous improvement of process of selecting and managing credit risk, at The Board of Directors achieving balanced growth in lending and at enhancing efficiency, while remaining wedded to its mission to provide support to the mutual banks even in the presence of such an enduring economic ROME, February 28, 2012 and financial crisis. We must bear in mind the external context and the actions for renewal already carried out and under way when assessing the results of the Bank.

The Bank is strongly committed to its role as a corporate bank in the mutual banking field. We have a clear strategic vision to guide our development alongside the mutual banks, despite the market difficulties that are currently forcing banks to operate with greater prudence. The new name of Iccrea BancaImpresa, taken on in 2011, already offers a clue as to the service vocation of the Bank in respect of the mutual banking world.

The challenges faced by small and medium-sized companies have already and will continue to impact the Bank and mutual banking. Iccrea BancaImpresa has performed its role in supporting the business community with care, remodulating the commitments of firms with balance, and will continue to do so in 2012. However, it is by joining the resources, skills, objectives and values of the Bank with the banking group and the entire mutual banking system that we can forge a winning future of innovation in our relationship with the market

36 at 31/12/2011 at 31/12/2010 ASSETS partial total partial total

10. Cash and cash equivalents 30,440 27,838 20. Financial assets held for trading 38,840,098 25,659,194 40. Financial assets available for sale 198,021,055 169,413,490 60. Due from banks 267,978,581 213,479,774 70. Loans to customers 9,268,223,672 8,813,320,465 80. Hedging derivatives 10,326,484 15,872,259 100. Equity investments 30,523,888 27,750,000 110. Property and equipment 2,155,995 2,360,703 120. Intangible assets 4,537,487 4,478,297 of which:

- goodwill

130. Tax assets 122,026,889 103,212,010 a) current 38,175,938 29,860,045 b) deferred 83,850,951 73,351,965 150. Other assets 139,648,419 97,685,787 Total assets 10,082,313,008 9,473,259,817

37 LIABILITIES AND SHAREHOLDERS’ at 31/12/2011 at 31/12/2010 EQUITY partial total partial total

10. Due to banks 2,508,421,814 2,322,139,192 20. Due to customers 1,486,414,575 1,107,204,864 30. Securities issued 5,214,749,879 5,317,335,635 40. Financial liabilities held for trading 37,461,398 24,274,143 60. Hedging derivatives 29,805,042 31,981,979 80. Tax liabilities 18,470,012 16,856,031 a) current 17,381,254 16,397,212 b) deferred 1,088,758 458,819 100. Other liabilities 198,355,746 198,400,257 110. Employee termination benefits 5,530,441 5,879,238 120. Provisions for risks and charges: 27,002,429 25,955,841 a) post-employment benefits

b) other provisions 27,002,429 25,955,841 130. Valuation reserves 1,977,292 (1,029,461) 160. Reserves 166,687,699 86,701,976 170. Share premium reserve 10,902,499 180. Share capital 374,564,250 335,466,750 200. Net profit (loss) for the period 1,969,932 2,093,372 Total liabilities and shareholders’

equity 10,082,313,008 9,473,259,817

38 at 31/12/2011 at 31/12/2010 INCOME STATEMENT partial total partial total

10. Interest and similar income 363,037,578 341,660,645 20. Interest and similar expense (208,767,908) (146,670,406) 30. Net interest income 154,269,670 194,990,239 40. Fee and commission income 5,665,856 3,956,862 50. Fee and commission expense (4,636,645) (4,693,549) Net fee and commission income 60. (expense) 1,029,211 (736,687) 70. Dividends and similar income 732 772 80. Net gain (loss) on trading activities 4,132,172 6,619,475 90. Net gain (loss) on hedging activities (3,693,441) (1,522,374) Net gain (loss) on the disposal or 100. repurchase of: 14,520 580,942 a) loans

b) financial assets available for sale

c) financial assets held to maturity

d) financial liabilities 14,520 580,942 120. Gross income 155,752,864 199,932,367 130. Net losses/recoveries on impairment: (69,422,491) (113,143,165) a) loans (57,767,332) (101,678,099) b) financial assets available for sale (11,135,367) (11,418,789) c) financial assets held

to maturity d) other financial activities (519,792) (46,277) Net income (loss) from financial 140. operations 86,330,373 86,789,202 150. Administrative expenses: (70,304,246) (65,467,602) a) personnel expenses (43,031,565) (39,104,861) b) other administrative expenses (27,272,681) (26,362,741) 160. Net provisions for risks and charges (1,914,940) (5,635,189) Net adjustments of property and 170. equipment (270,395) (502,939) 180. Net adjustments of intangible assets (2,057,179) (1,592,822) 190. Other operating expenses/income 8,206,609 8,314,425 200. Operating expenses (66,340,151) (64,884,127) 210. Profit (loss) from equity investments (5,226,112) (4,200,000) Profit (loss) before tax on continuing 250. operations 14,764,110 17,705,075 Income tax expense from continuing 260. operations (12,794,178) (15,611,703) Profit (loss) after tax on continuing 270. operations 1,969,932 2,093,372 290. Net profit (loss) for the period 1,969,932 2,093,372

39 STATEMENT OF COMPREHENSIVE INCOME

31/12/2011 31/12/2010

10. Net profit (loss) for the period 1,969,932 2,093,372 Other comprehensive income net of taxes 20. Financial assets available for sale 4,503,652 30. Property and equipment 40. Intangible assets 50. Hedging of investments in foreign operations 60. Cash flow hedges 3,006,753 1,807,110 70. Foreign exchange differences 80. Non-current assets held for sale 90. Actuarial gains (losses) on defined benefit plans 100. Share of valuation reserves of equity investments accounted for using equity method 110. Total other comprehensive income net of taxes 3,006,753 6,310,762 120. Comprehensive income (Item 10+110) 4,976,685 8,404,134

40 Statement of changes in shareholders' equity

as at as Changes in the period Comprehensiveincome for

Change in opening balance 31/12/2010 Allocation of net profit of

Equity transactions Shareholders' equity at as previous period

as Change in reserves in Change

at Extraordinary dividends Extraordinary Derivatives on treasury treasury on Derivatives 31/12/2011

Purchase of treasury treasury of Purchase 01/01/2011 Issue of new shares Changes in equity

Reserves Stock options Stock other allocations other instruments Dividends and Dividends shares shares

2011

Share capital: 335,466,750 335,466,750 39,097,500 374,564,250 a) ordinary shares 335,466,750 335,466,750 39,097,500 374,564,250 b) other shares Share premium reserve 10,902,500 10,902.499 Reserves: 86,701,976 86,701,976 247,781 79,737,941 0 166,687,699 a) earnings 69,581,076 69,581,076 247,781 69,828,857 b) other 17,120,900 17,120,900 79,737,941 0 96,858,841 Valuation reserves -1,029,461 -1,029,461 3,006,753 3,006,753 1,977,292 Equity instruments Treasury shares Net profit (loss) for the year 2,093,372 2,093,372 -247,781 -1,845,590 1,969,932 1,969,93 2 Total shareholders' equity 423,232,637 423,232,637 0 -1,845,590 82,744,695 50,000,000 4,976,686 556,101,674

(1) Other reserves include the negative FTA reserve of €1.5 million. The change in “Reserves: other” in the period is entirely attributable to the payment by ICCREA Holding of €79.7 million in respect of a future capital increase, as authorized by the Board of the Parent Company on December 23, 2011 (2) For information on changes in the valuation reserves, please see Part F of the notes to the financial statements. (3) On 22 December 2010 the Shareholders’ Meeting approved – with effect from January 1, 2011 – a capital increase for the acquisition of the corporate activities business unit from ICCREA Banca, with the issue of 756,970 new shares with a par value of €51.65 each.

41

Statement of changes in shareholders' equity

Changes in the period Comprehensiveincome for Change in opening balance Allocation of net profit of

Equity transactions Shareholders' equity atas previous period

as as as Change in reserves in Change at at at Extraordinary dividends Extraordinary Derivatives Derivatives 31/12/2010 Purchase of treasury treasury of Purchase 31/12/2009 01/01/2010 Issue of new shares Changes in equity Stock options Stock other allocations other instruments Dividends and Dividends shares shares Reserves on treasury treasury on

2010

Share capital: 285,366,250 285,366,250 50,100,500 335,466,750 a) ordinary shares 285,366,250 285,366,250 50,100,500 335,466,750 b) other shares Share premium reserve Reserves: 86,170,373 86,170,373 531,603 86,701,976 a) earnings 69,049,473 69,049,473 531,603 69,581,076 b) other 17,120,900 17,120,900 17,120,900 Valuation reserves -7,340,223 -7,340,223 6,310,762 6,310,762 -1,029,461 Equity instruments Treasury shares Net profit (loss) for the year 4,785,853 4,785,853 -531,603 -4,254,250 2,093,372 2,093,372 Total shareholders' equity 368,982,253 368,982,253 0 -4,254,250 6,310,762 50,100,500 8,404,134 423,232,637

42

Statement of cash flows (Indirect method)

Amount

31/12/2011 31/12/2010

A. OPERATING ACTIVITIES 1. Operations 95,313,578 139,848,719 - net profit (loss) for the period 1,969,932 2,093,372 - gains (losses) on financial assets held for trading and on financial assets/liabilities at fair value through profit or loss 7,003,195 4,799,314 - gains (losses) on hedging activities 3,693,441 1,522,374 - net losses/recoveries on impairment 57,767,332 101,678,099 - net adjustments of property and equipment and intangible assets 2,327,574 2,095,762 - net provisions for risks and charges and other costs/revenues 4,531,814 7,848,095 - taxes and duties to be settled 12,794,178 15,611,703 - net adjustments of disposal groups held for sale net of tax effects - other adjustments 5,226,112 4,200,000 2. Net cash flows from/used in financial assets -615,950,742 107,144,063 - financial assets held for trading -9,037,732 -116,162,696 - financial assets at fair value through profit or loss - financial assets available for sale -39,742,932 94,883,615 - due from banks: repayable on demand -56,076,868 -65,105,693 - due from banks: other - loans to customers -511,093,210 193,528,837 - other assets 3. Net cash flows from/used in financial liabilities 402,928,737 -285,500,330 - due to banks: repayable on demand 186,282,622 -502,468,373 - due to banks: other - due to customers 375,614,100 -180,557,334 - securities issued -102,585,756 455,163,170 - financial liabilities held for trading 13,177,255 -22,982,470 - financial liabilities at fair value through profit or loss - other liabilities -69,559,484 -34,655,323 Net cash flows from/used in operating activities -117,708,427 -38,507,548 B. INVESTING ACTIVITIES 1. Cash flow from 4,732 2,924,772 - sales of equity investments - dividends on equity investments 732 772 - sales of financial assets held to maturity - sales of property and equipment 4,000 2,924,000 - sales of intangible assets - sales of subsidiaries and business units 2. Cash flow used in -10,186,055 -10,274,257 - purchases of equity investments -8,000,000 -8,000,000 - purchases of financial assets held to maturity - purchases of property and equipment -69,686 -574,734 - purchases of intangible assets -2,116,369 -1,699,523 - purchases of subsidiaries and business units Net cash flow from/used in investing activities -10,181,323 -7,349,485 C. FINANCING ACTIVITIES - issues/purchases of own shares 129,737,942 50,100,500 - issues/purchases of equity instruments - dividend distribution and other -1,845,590 -4,254,250 Net cash flow from/used in financing activities 127,892,352 45,846,250 NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS 2,602 -10,783

43

Reconciliation

Amount

31/12/2011 31/12/2010

Cash and cash equivalents at beginning of period 27,838 38,621 Net increase/decrease in cash and cash equivalents 2,602 -10,783 Cash and cash equivalents: net foreign exchange difference Cash and cash equivalents at end of period 30,440 27,838

44

PART A – ACCOUNTING POLICIES

45

A.1 – GENERAL INFORMATION Amendment to IFRIC 13 – Customer loyalty programs.

Section 1 – Declaration of conformity with the International Accounting Standards The accounting policies described as follows were applied in preparing the financial statements for all In compliance with the provisions of Legislative the periods presented in the financial statements. Decree 38 of February 28, 2005, the financial statements at December 31, 2011 of Iccrea The euro has been used as the presentation currency BancaImpresa S.p.A. have been prepared in in the preparation of the financial statements. The accordance with the International Financial Reporting balance sheet, the income statement, the statement Standards and International Accounting Standards of cash flows and the statement of changes in (IFRSs/IASs) issued by the IASB, and the related IFRIC shareholders’ equity are expressed in euros, while interpretations, endorsed by the European the explanatory notes to the financial statements are Commission in accordance with the procedures expressed in thousands of euros, unless otherwise referred to in Article 6 of Regulation (EC) no. indicated. 1606/2002 of July 19, 2002, as amended.

The financial statements at December 31, 2011 have Section 2 – General preparation principles been prepared on the basis of Circular no. 262 of December 22, 2005 on the format and rules for The financial statements have been prepared in preparation of bank financial statements, 1st update accordance with the principles described in the of November 18, 2009, issued by the Bank of Italy in Framework for the Preparation and Presentation of the exercise of the powers established by Article 9 of Financial Statements. Accordingly, the financial Legislative Decree 38/2005. These instructions statements have been prepared on an accruals and contain binding formats for the financial statements going-concern basis. The general principles of the and the procedures for completing the schedules, as materiality and significance of information and the well as the content of the notes to the financial prevalence of substance over form have also been statements. taken into account. Each material class of similar items is reported separately in the financial The IASs/IFRSs applied in preparing the financial statements. Items of a different nature or function statements were those in force at December 31, 2011 are shown separately, if material. Assets and as endorsed by the European Commission (including liabilities and revenues and costs have not been the interpretations issued by the SIC and the IFRIC). offset except where expressly required or permitted by an accounting standard or interpretation. The following section sets out the new international accounting standards and amendments to existing The financial statements consist of the balance accounting standards, with the related endorsement sheet, the income statement, the statement of regulations of the European Commission, that took comprehensive income, the statement of changes in effect as from the 2011 financial year and which in shareholders’ equity, the statement of cash flows, general improved the Bank’s financial reporting. and the explanatory notes to the financial statements, along with the report on operations. The Amendments to IAS 32 – Financial instruments: balance sheet and income statement contain items, presentation. sub-items and further information (the “of which” for items and sub-items). Amendment to IFRS 1 – limited exemption from comparative IFRS 7 disclosures for first-time adopters Items without values for the reference period and the (no impact). previous period are not included. In the income statement, revenues are shown without indicating Amendment to IFRS 7 – improving disclosures about their sign, while cost figures are shown within financial instruments. parentheses.

IAS 24 – related party disclosures. The notes include the information required under the provisions of Circular 262/2005, 1st update of November 18, 2009, of the Bank of Italy and any Amendment to IFRS 8 – Operating segments. additional information required under international accounting standards. Amendment to IFRIC 14 – Prepayments of a Minimum Funding Requirement. Specific disclosure is provided of any reclassifications made to improve the representation of the accounts. IFRIC 19 – Extinguishing financial liabilities with equity instruments. A number of reclassifications were performed in 2011, the most significant of which are discussed Amendments to IFRS 1 – First-time adoption of IFRS. below:

Improvements to IFRS – IFRS 1, IFRS 3, IFRS 7, IAS 32, writedowns of equity investments were reclassified IAS 39, IAS 1, IAS 21, IAS 28, IAS 31 and IAS 34. from item 130 of the income statement to item 210 in

46 the amount of €5.2 million (€4.2 million at December

31, 2010); Financial position – ICCREA Corporate Assets Liabilities €4.8 million were reclassified (€3.7 million at Loans 498,161 Due to banks 406,759 December 31, 2010) to item 100 “Other liabilities” Sundry receivables 1,692 Due to customers 38,774 for liabilities in respect of grants to be used for loans Other assets 21 Provisions for risks 2,982 Accrued income and to customers. They were previously classified under 1,288 Due to employees 998 item 20 “Due to customers”. prepaid expenses Sundry payables 369 Accrued expenses and 1,280 These financial statements contain forecasts and deferred income estimates (including those underlying impairment Total liabilities 451,162 tests) that reflect management's current assessment Difference 50,000 of future events. These forecasts and estimates Total assets 501,162 Total 501,162 include, but are not limited to, all information other Amounts in thousands of euros than facts, including, without limitation, those concerning the future financial position and all future operating results, strategies, plans, objectives and With the transfer of the business unit, the Bank other developments. The forecasts and estimates assumed all of the obligations previously borne by used here are based on the information available to Iccrea Banca. The value of the business unit, equal to the Bank as of today. €50 million, was settled by way of a capital increase approved by the Shareholders’ Meeting on December The ability of the Bank to achieve the forecast results 22, 2010, with effect from January 1, 2011, reserved depends on numerous factors outside the control of for Iccrea Banca with the issue of 756,970 new management. Actual results may differ significantly ordinary shares with a par value of €51.65 each, at a from those forecast or implied in forward-looking price of €66.05 per share, of which a share premium information. Such forecasts and estimates are of €14.40, paid in full with the transfer in kind. exposed to risks and uncertainties that can have a significant impact on expected results and are based As regards the accounting treatment of the on underlying assumptions. transaction, the operation qualifies as a transfer between entities under common control, as both The estimates and assumptions are reviewed entities involved are controlled by Iccrea Holding. regularly. Any changes made as a result of such Given this status, IFRS 3 is not applicable, as reviews are recognized in the period in which the specifically provided for in that accounting standard. review was conducted where such review involved Accordingly, the accounting treatment adopted only that period. Where the review affects both represents the substance of the transaction, using a current and future periods, any changes are pooling of interests approach. The application of this recognized in the period in which the review was method for Iccrea BancaImpresa involved the transfer conducted and in the related future periods. of the assets and liabilities at the carrying amounts as of the transfer date.

Section 3 – Events subsequent to the balance sheet In December 2011, the Bank, taking advantage of the date possibility permitted under specific legislation, carried out (through Iccrea Banca) a refinancing operation with the European Central Bank in the No significant event occurred subsequent to the amount of €607 million, pledging as collateral balance sheet date that would have materially securities issued and repurchased by it and altered the figures and results reported. guaranteed by the Italian government pursuant to Article 8 of Decree Law 201 of December 6, 2011, In any case, please see the specific section of the ratified with Law 214 of December 22, 2011. report on operations for any further information. As reported in previous financial reports, the Bank These financial statements are authorized for considers the risk of an adverse outcome to the publication and may no longer be amended following disputes that arose in connection with the audit of approval by the Shareholders’ Meeting. the Bank in 2007, with the subsequent issue of a report containing allegations of certain irregularities on March 13, 2007, to be remote. The Bank feels that Section 4 – Other information it acted in compliance with applicable regulations in carrying out the transactions indicated in the report, In January 2011 the Bank finalized the transfer from a position supported by opinions from tax experts Iccrea Banca of its the special lending and facilitated obtained while the feasibility of the transactions was credit business areas (subsidized and guaranteed being assessed. loans) comprising 929 operations and €451 million in exposures and the International business area (loans, This assessment is supported by the granting of the discounting and guarantees) with about €113 million. appeal with regard to the 2003 tax year, argued on January 28, 2011. The ruling in favor of Iccrea The financial position with the transfer is as follows: BancaImpresa was filed with the Provincial Tax Commission of Rome on March 10, 2011.

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Accordingly, as of the date of preparation of these financial statements and in view of the arguments presented above, the Bank, despite having received and appealed a notice of assessment concerning 2003, 2004 and 2005, confirms the assessments made in previous years.

In 2008 the Bank participated in the formation of a closed-end real estate investment fund denominated “Securis Real Estate”, to which buildings from terminated lease contracts awaiting sale were transferred. The fund was established by Beni Stabili Spa – SGR and is restricted to qualified investors. The units in the fund were subscribed by the Bank and BCC Alta Brianza Alzate Brianza. As envisaged in the applicable regulations governing the operations of investment funds, the transferred buildings were appraised individually by an independent expert appointed by the asset management company.

The assets of the fund were set at a maximum of €160 million, which can be raised to €400 million. Following the two transfers to the fund in 2011 (on June 27 and December 28, 2011) and the pro-rata partial reimbursement of available liquidity by the fund on December 22, as of the reporting date for these financial statements, the Bank had subscribed a total of 2,436 units of the fund with a nominal value of €205 million and a carrying amount of €196 million. The remaining units, totaling about €4.8 million, were subscribed by BCC Alta Brianza Alzate Brianza.

Finally, other than the securitizations that, as discussed in the specific section of the accounting policies, did not give rise to the derecognition of the financial assets assigned, in application of international accounting standards, the Bank does not have exposures to high-risk instruments (such as collateralized debt obligations, mortgage backed securities, other special purposes vehicles, exposures to subprime mortgages and leveraged positions). The Bank’s derivatives transactions classified as financial assets and liabilities held for trading mainly regard, as discussed in the relevant sections of the notes, hedging activities that have not undergone testing for effectiveness. The same items also comprise activity in the investment services sector involving the sale of derivatives to customers, which are matched against corresponding transactions with ICCREA Banca.

As regards the valuation process used to measure impaired positions through the application of widely accepted estimation approaches (dividend discount model), as well as the specific methods and parameters used, please see the more detailed information in the discussion of Table 10.2.

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A.2 – NOTES TO THE MAIN ITEMS OF THE 1.2 Recognition FINANCIAL STATEMENTS Debt and equity securities are initially recognized at the settlement date, while derivative contracts are This section sets out the accounting policies adopted recognized at the date they are signed. Financial in preparing the financial statements. The assets held for trading are initially recognized at fair presentation of these accounting policies is broken value, which is usually the amount paid or received. down into stages - recognition, classification, Where the price is different from the fair value, the measurement and derecognition - for the various financial asset is recognized at its fair value and the asset and liability items. A description of the impact difference between the two amounts is recognized on profit or loss, if any, is provided for each stage. through profit or loss, subject to compliance with the conditions specified in IAS 39. As required under the amendments of IFRS 7 issued by IASB in March 2009, endorsed by the European Derivative contracts embedded in other financial Commission with Regulation (EC) no. 1165/2009 on instruments or contracts that have financial and risk November 27, 2009 and incorporated by the Bank of characteristics that are not correlated with the host Italy in Circular 262/2005 with the 1st amendment of instrument or which meet the requirements to be November 18, 2009, to ensure proper disclosure classified independently as derivative contracts are Iccrea BancaImpresa reports the quality of the inputs recognized separately among financial assets held for used to determine the fair value of financial trading. After separating the embedded derivative, instruments (the “fair value hierarchy”). Specifically, the host contract is then treated in accordance with the fair value assigned to one of three levels that the accounting rules for its category. reflect the quality of the inputs: 1.3 Measurement Level 1: fair value derived from active markets (unadjusted listed prices); Level 2: fair value derived from valuation techniques Financial assets held for trading are measured at fair whose inputs are directly or indirectly observable value following initial recognition. For financial market parameters ; instruments listed on active markets, the fair value of Level 3: fair value derived from valuation techniques financial assets or liabilities is determined on the whose inputs are not all observable on the market. basis of the official prices observed at the balance sheet date. For financial instruments, including equity securities, that are not listed on active In addition, entities must provide a reconciliation of markets, fair value is determined using valuation the initial and final balances of the fair value techniques and market information, such as the price measurement for Level 3 measurements, as well as of listed instruments with similar features, for material transfers between the different levels of calculation of discounted cash flows, option pricing the hierarchy. Details on the breakdown of financial models and prices registered in recent similar instruments by fair value levels are given in the transactions. specific sections of the notes to the financial statements. For equity securities and related derivative instruments, if the fair value obtained using such As regards paragraph 27 of IFRS 7, Iccrea valuation techniques cannot be reliably determined, BancaImpresa has reported fair values for each class the financial instruments are measured at cost and of financial asset and liability in order to enable adjusted for any impairment losses. comparison with the related carrying amount. The primary methodological assumptions adopted in determining the market value of financial liabilities 1.4 Derecognition are: 1) neutrality with respect to any early repayment clauses; 2) use of credit-risk-adjusted Financial assets held for trading are derecognized valuations using the spread curves provided by when the contractual rights to the cash flows expire, Bloomberg. As regards financial assets, credit risk is or a disposal transfers all the risks and rewards reflected by reducing fair value through specific and connected with ownership to a third party. collective allowance accounts for the assets. Conversely, when a prevalent share of the risks and rewards associated with ownership of the financial asset are retained, the asset continues to be recognized even if legal title has been transferred.

Where it is not possible to ascertain whether Section 1 – Financial assets held for trading substantially all the risks and rewards of ownership have been transferred, financial assets are 1.1 Classification derecognized when no form of control over the instrument has been retained. Conversely, if the Bank This category includes financial assets, regardless of retains even a portion of control, the asset continues their technical form, held for short-term trading to be recognized to the extent of the continuing purposes. It includes derivatives with a positive involvement, measured by exposure to changes in the value, including those resulting from the separation value of the assets transferred and to changes in the of embedded derivatives, that are not deemed to be related cash flows. effective for hedging purposes.

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1.5 Criteria for recognizing gains or losses connected with ownership to a third party. Conversely, when a prevalent share of the risks and The results of the measurement of financial assets rewards associated with ownership of the financial held for trading are recognized through profit or loss. asset are retained, the asset continues to be Dividends from available-for-sale equity instruments recognized even if legal title has been transferred. are recognized in the income statement when the right to receive payment accrues. Where it is not possible to ascertain whether substantially all the risks and rewards of ownership Interest income and dividends are recognized, have been transferred, financial assets are respectively, in the income statement under “interest derecognized when no form of control over the income and similar revenues” and “dividends and instrument has been retained. Conversely, if the Bank similar revenues”. Gains and losses from trading, as retains even a portion of control, the asset continues well as capital gains and losses resulting from to be recognized to the extent of the continuing measurement are recognized in the income statement involvement, measured by exposure to changes in the under “Net gain (loss) on trading activities”. value of the assets transferred and to changes in the related cash flows.

Section 2 – Financial assets available for sale Financial assets sold are derecognized in the event in which the contractual rights to receive the related cash flows are retained with the simultaneous 2.1 Classification assumption of an obligation to pay such flows, and only such flows, to other third parties. This category includes financial assets, other than derivatives, that are not classified in the balance 2.5 Criteria for recognizing gains or losses sheet as “financial assets held for trading”, “financial assets at fair value through profit or loss”, “financial assets held to maturity”, “due from banks” or “loans Gains and losses from changes in the fair value are to customers”; recognized in a special equity reserve until the asset is derecognized. The value corresponding to the amortized cost of available-for-sale financial assets is Specifically, the item includes: shareholdings not held recognized through profit or loss. for trading and not qualifying as a subsidiary, associate or joint venture, units in investment funds that are not listed or are traded infrequently, specific Available-for-sale financial assets are subject to bonds, identified on a case-by-case basis with respect impairment testing to determine whether there is to the purpose for which they are purchased/held. objective evidence of impairment. Where impairment is found, the cumulative loss directly recognized in equity is reversed to the income statement. The 2.2 Recognition amount of this loss is measured as the difference between the purchase cost (net of any amortization Available-for-sale financial assets are initially and repayments of principal) and the fair value, less recognized at the settlement date for debt and any impairment loss previously recognized in the equity securities and the disbursement date in the income statement. case of loans. Where the reasons for the impairment should cease Financial assets are initially recognized at fair value, to obtain subsequent to the recognition of the which is generally the amount paid or received. impairment loss, writebacks are recognized in the Where the price is different from the fair value, the income statement for loans or debt securities and in financial asset is recognized at its fair value and the an equity reserve in the case of equity instruments. difference between the two amounts is recognized The value of the asset after the writeback shall not in through profit or loss. The initial recognition value any event exceed the amortized cost that the includes direct transaction costs or revenues instrument would have had in the absence of the determinable at the recognition date, even if settled prior writedown. at a later time. In addition to the recognition of impairment losses, 2.3 Measurement the cumulative gains or losses in the equity reserve are, as mentioned above, recognized in the income Following initial recognition, financial assets statement at the time of the sale of the asset. available for sale are measured at fair value. Fair value is determined using the criteria adopted for financial assets held for trading. Equity instruments, Section 3 – Financial assets held to maturity for which the fair value cannot be reliably determined, are carried at cost and adjusted for any impairment losses. The Bank does not currently have a portfolio of financial assets held to maturity. 2.4 Derecognition

Available-for-sale financial assets are derecognized Section 4 – Loans and receivables when the contractual rights to the cash flows expire or a disposal transfers all the risks and rewards 4.1 Classification

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“Loans to banks” and “loans to customers” includes sale are recognized as receivables in the amount paid loans, whether disbursed directly or acquired from spot. third parties, with fixed or determinable payments, that are not listed on an active market and that are 4.3 Measurement not classified as: “Financial assets held for trading”; “Financial assets at fair value through profit or loss”; Following initial recognition, loans are measured at “Financial assets available for sale”. This category amortized cost. includes any securities with characteristics similar to loans and receivables. The amortized cost equals the amount at which a financial asset is measured at initial recognition The category also includes trade receivables, decreased by principal repayments, plus or minus the repurchase transactions and receivables recognized cumulative amortization using the effective interest by the lessor in respect of finance leasing method of any difference between the initial amount transactions. and the maturity amount, minus any reduction (directly or through the use of a provision) due to Loans and receivables include assets acquired through impairment or non-recoverability. non-recourse factoring contracts, for which the risks and rewards relating to the asset have been Amortized cost is not used for very-short-term loans, transferred. loans without a specified maturity or revocable loans, for which the impact of this method can be 4.2 Recognition considered not material. These positions are measured at cost. Loans and receivables are initially recognized in the balance sheet at the disbursement date or, in the The loan portfolio undergoes periodic testing for case of debt securities, at the settlement date. The impairment. Impaired positions include bad debts, initial amount recognized is equal to the amount substandard loans, restructured loans or loans past disbursed or subscription price, including costs and due or overlimit for more than 180 days, in revenues directly attributable to the transaction and accordance with the Bank of Italy’s current rules. determinable from the inception of the transaction, Impairment loss is recognized only when, subsequent even if settled at a later time. The initially to initial recognition, events have occurred that give recognized amount does not include costs to be rise to objective evidence of impairment such as to reimbursed by the debtor or that can be cause a change in the reliably estimated cash flows. characterized as normal administrative overhead costs. Loans for which there is objective evidence of possible impairment are measured individually. The Specifically, leasing receivables are recognized in an amount of the loss is the difference between the amount equal to the lower of the fair value of the asset’s carrying amount and the present value of asset and the present value of the minimum expected future cash flows, calculated by applying payments, which are equal to the installments due the original effective interest rate. Measurement under the lease agreement and the purchase option, takes account of the “maximum recoverable” since the latter’s value is significantly lower than the amount, which corresponds to the greatest estimate fair value of the asset upon expiry of the lease, of expected future cash flows in respect of principal meaning that it is reasonably certain that the option and interest payments. Also taken into consideration will be exercised. The receivables are initially is the realizable value of any guarantees excluding recognized at the inception date of the contract, recovery costs, recovery times estimated based on which corresponds to the delivery date of the asset. contractual maturities, if any, and on reasonable estimates in the absence of contractual provisions, All assets related to customer leases that are not and the discount rate, which is the original effective settled and closed are recognized among other loans. interest rate. For impaired positions at the transition Conversely, all assets related to customer leases that date, where determining this figure would be are settled and closed are measured pursuant to IAS 2 excessively burdensome, the Bank has adopted (Inventories) at the lower of cost (impaired implicit reasonable estimates, such as the average rate of credit) and net market value. loans for the year in which the loan was first classified as a bad debt, or the restructuring rate. The initial recognition amount of loans disbursed at non-market conditions is equal to the fair value of In measuring loans individually, cash flows from loans the loans, determined using valuation techniques. for which short-term recovery is expected are not The difference between the fair value and the discounted. The original effective interest rate of amount disbursed or the subscription price is each loan remains unchanged unless the position recognized through profit or loss, subject to undergoes a restructuring that involves a change in compliance with the conditions specified in IAS 39. the contractual interest rate, including when it becomes an interest-free loan. Securities repurchase transactions are recognized as funding or lending transactions. Transactions Loans for which no objective evidence of impairment involving a spot sale and a forward repurchase are has been found, usually performing loans, undergo recognized as payables in the amount received spot, collective impairment testing, with the creation of while those involving a spot purchase and a forward groups of positions with uniform credit risk profiles.

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The writedown is determined based on historic loss distribute the economic impact of costs and revenues rates for each group. In determining the time series, over the expected remaining life of the loan. individually measured positions are removed from the group of loans being measured. Writedowns Under the definition provided in IAS 17, the indexing determined collectively are taken to the income component (contingent rent) is not included in the statement. recognition of minimum lease payments, but is recognized separately over the term of the lease. The Guarantees also undergo impairment testing in a upward or downward adjustments are recognized on manner analogous to collective impairment testing. an accruals basis in the income statement. These are not included in discounting since the minimum 4.4 Derecognition payments do not include contingent rents.

Loans are derecognized when they fall due or are For contracts covering multiple assets, revenues for transferred. Loans transferred are derecognized only the entire lease contract are recognized at the when substantially all the risks and rewards of moment of delivery of the last asset. As a result, pre- ownership of the loans are transferred. If a significant lease interest is recognized. portion of the risks and rewards of ownership of a transferred loan has been retained, the loan The amortized cost method is not used for short-term continues to be recognized even though legal title to loans where the impact of discounting can be the loan has been transferred. Where it is not considered negligible. Short-term loans are valued at possible to determine whether substantially all the cost. The same approach is adopted for loans without risks and rewards have been transferred, the loan is a specified maturity or those subject to revocation. derecognized if no form of control over it is retained. Conversely, where even a portion of control is Impairment losses, as defined in the preceding sub- retained, the loan continues to be recognized to the section on measuring loans, are recognized in the extent of the continuing involvement in the asset, income statement. If the reasons for the impairment measured by the exposure to changes in value of the should cease to obtain subsequent to the recognition transferred loans and changes in their cash flows. of the impairment loss, a writeback is taken to the income statement. The value of the asset after the Transferred loans are derecognized in the event in writeback shall not in any event exceed the which the contractual rights to receive the related amortized cost that the instrument would have had in cash flows are retained with the simultaneous the absence of the prior writedown. assumption of an obligation to pay such flows, and only such flows, to other third parties. Writebacks connected with the passage of time, corresponding to interest accrued during the period IFRS 1 established a specific exemption to the based on the original effective interest rate application of derecognition rules for transfers of previously used to calculate impairment losses, are financial assets, including securitization operations, recognized among writebacks for impairment. occurring prior to 1 January 2004. By virtue of this exemption, for securitizations carried out before that date, the company may elect to continue to apply the Section 5 – Financial assets at fair value through previous accounting rules or to adopt the provisions profit or loss of IAS 39 retrospectively, starting from a date selected by the entity, provided that the information As the Bank has not exercised the fair value option, it required to apply IAS 39 to assets previously does not currently have a portfolio of financial assets derecognized was available at the time of initial designated as at fair value through profit or loss. recognition of the these operations. Therefore, the ICCREA Group has decided to apply the current accounting rules for securitization operations carried out before 1 January 2004. Section 6 - Hedging

4.5 Criteria for recognizing gains or losses 6.1 Classification

Following initial recognition, loans are measured at Derivatives contracts for hedging purposes are used amortized cost, which equals the amount at which to protect against one or more types of risk (interest the assets are measured at initial recognition rate risk, exchange rate risk, price risk, credit risk, decreased by principal repayments, plus or minus the etc.). cumulative amortization using the effective interest method of any difference between the initial amount The items “hedging derivatives” among assets and and the maturity amount (usually attributable to liabilities include the positive and negative values of costs and revenues directly attributable to the derivatives that are part of effective hedging individual position) and plus or minus any relationships. writedowns/writebacks. The effective interest rate is the rate that exactly discounts the estimated future The hedge portfolio contains derivatives contracts cash flows generated by the loan in respect of used to reduce the market risks that affect the principal and interest to the amount disbursed underlying financial assets or liabilities. The Bank’s including costs and revenues attributable to the loan. existing hedging operations are intended to hedge the This accounting treatment makes it possible to

52 fair value (interest rate risk and price risk) of bond consolidated financial statements are prepared by issues (ordinary and structured). the parent company.

6.2 Recognition and derecognition Joint ventures are companies in which control is shared with other parties by contract. Hedging derivatives and the hedged financial assets and liabilities are reported in accordance with hedge Associates are companies in which the Bank holds, accounting rules. either directly or indirectly, at least 20% of the voting rights or, independently of the proportion of voting Where there is formal documentation of the rights, companies over which the Bank exercises a relationship between the hedged item and the significant influence, which is defined as the power hedging instrument, a hedge is considered effective to participate in determining financial and operating if, at inception and throughout its life, the changes in policies, but without exercising either control or joint the fair value of the hedged item or the related control. expected cash flows are almost entirely offset by those of the hedging instrument. Effectiveness is Control, joint control and significant influence cease measured at every balance sheet date through in cases in which the power to determine financial prospective and retrospective tests and the hedge is and operating policies of the company is removed deemed effective when the changes in value are from the governance bodies of the company and within the established interval of 80% to 125%. transferred to a governmental body, a court and in similar cases. The equity investment in these cases is 6.3 Measurement subject to the treatment of IAS 39, as provided for financial instruments. Hedging derivatives and the hedged positions (limited to the change in value caused by hedged risks) are Only factors that exist at the level of the separate measured at fair value. The fair value of derivative financial statements (percentage of ownership, instruments listed on active (efficient) markets are effective and potential voting rights, de facto based on the official closing prices, while the fair situations of significant influence) are used in value of unlisted instruments corresponds to the determining whether a holding is classified as an present value of expected future cash flows, equity investment. Subsidiaries, joint ventures and calculated by taking into account the various risk associates held for sale are reported separately in the profiles inherent in the instruments being measured. financial statements as a disposal group and are measured at the lower of the carrying amount and The fair value of hedged positions is measured using the fair value excluding disposal costs. the above techniques only with respect to changes in value caused by the risks being hedged, sterilizing the 7.2 Recognition risk components that are not directly correlated with the hedge. Equity investments are initially recognized at cost at the settlement date including costs and revenues that 6.4 Criteria for recognizing gains or losses are directly attributable to the transaction.

The differences accrued on derivative instruments 7.3 Measurement hedging interest rate risk are recognized under the income statement items “interest income and similar Investments in subsidiaries, associates and joint revenues” or “interest expense and similar charges” ventures are measured at cost. Where there is (in step with interest accrued on the hedged items). evidence that the value of an equity investment may be impaired, its recoverable value is determined, Gains and losses resulting from the measurement of taking account of both its market value and the hedging derivatives and hedged items are reported in present value of future cash flows. If this value is the income statement under “Net gain/(loss) from lower than the carrying amount, the difference is hedging activities”. recognized in the income statement as an impairment loss.

Section 7 – Equity investments 7.4 Derecognition

7.1 Classification Equity investments are derecognized when the contractual rights to the cash flows from the activities expire or when substantially all the risks The item includes equity investments in subsidiaries, and rewards connected with ownership of the equity associates and joint ventures. investment are transferred. Subsidiaries are companies in which the Bank holds, 7.5 Criteria for recognizing gains or losses either directly or indirectly, more than half of the voting rights unless it can be shown that possessing these rights does not constitute control. Control also Dividends received from equity investments measured exists where the Bank exercises the power to at cost are recognized in the income statement when determine financial and operating policies. The the right to receive the payment accrues.

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Impairment losses on subsidiaries, associates and Depreciation is recognized through profit or loss. If joint ventures valued at cost are recognized in the there is evidence of possible impairment of the asset, income statement. If the reasons for the impairment the asset’s carrying amount is compared against its should cease to obtain subsequent to the recognition recoverable value, which is equal to the greater of of the impairment loss, a writeback is taken to the the value in use of the asset, meaning the present income statement. value of future cash flows originated by the asset and its fair value, net of any disposal costs. Any negative difference between the carrying amount and the Section 8 – Property and equipment recoverable value is recognized in the income statement. If the reasons for the impairment should cease to obtain, a writeback is recognized in the 8.1 Classification income statement. The carrying amount following the writeback shall not exceed the value that the asset Property and equipment includes land, buildings used would have had, net of depreciation, in the absence in operations and held for investment, technical of the prior writedowns. plant, furniture and equipment. This item includes assets are used in providing goods and services, rented to third parties or used for administrative purposes for a period of more than one year. Section 9 - Intangible assets

8.2 Recognition 9.1 Classification

Property and equipment is initially recognized at Intangible assets are recognized as such if they are cost, which includes all costs directly attributable to identifiable and are based on legal or contractual the transaction and placing the asset in service. rights. They include software applications and licenses. Extraordinary maintenance expenses that increase the future economic benefits of such assets are The costs of improving leased property with no allocated as an increase in the value of the assets, independent function and use are conventionally while ordinary maintenance costs are recognized in classified among other assets, as provided for by Bank the income statement. of Italy Circular no. 262. The related amortization, which is carried out over a period that does not exceed the length of the lease, is reported among This item also includes assets held under finance other operating expenses. leases for which substantially all the risks and rewards of ownership have been assumed. These assets are initially recognized at a value equal to the 9.2 Recognition lesser of the fair value and the present value of the minimum payments provided for under finance lease. Intangible assets are recognized at cost, adjusted for This amount is subsequently subject to depreciation. any incidental expenses, only if it is probable that the future economic benefits attributable to the asset 8.3 Measurement will be realized and if the cost of the asset can be reliably determined. Otherwise, the cost of the intangible asset is recognized in the income Property and equipment, including investment statement in the period in which it is incurred. property, is measured at cost less depreciation and impairment. Depreciation is determined systematically over the remaining useful life of the 9.3 Measurement asset. The depreciable value is represented by the cost of the assets since the remaining value at the Intangible assets recognized at cost are amortized on end of the depreciation process is considered a straight-line basis over the estimated remaining negligible. Buildings are depreciated at a rate of 3% useful life of the asset. per year, which is considered to appropriately represent the deterioration of the assets over time 9.4 Derecognition due to use, taking account of any extraordinary maintenance costs, which increase the value of the Intangible assets are derecognized upon disposal or assets. when no future economic benefits are expected to be generated by the use or disposal of the asset. Land, whether purchased individually or incorporated into the value of a building, is not depreciated. 9.5 Criteria for recognizing gains or losses

8.4 Derecognition Amortization is recognized through profit or loss. Where there is evidence of possible impairment of Property and equipment is derecognized when the asset and, for goodwill, at each reporting date, a disposed of or when the asset is permanently comparison is made between the asset’s carrying withdrawn from use and no future benefits are amount and any difference between its carrying expected from its disposal. amount and recoverable value. If the reasons for the impairment of intangible assets other than goodwill 8.5 Criteria for recognizing gains or losses should cease to obtain, a writeback is recognized in the income statement. The value of the asset after

54 the writeback shall not exceed the value that the Current income taxes are calculated based on taxable asset would have had, net of amortization, in the income for the period. Current tax payables and absence of the prior writedowns for impairment. receivables are recognized at the value that payment to or recovery from the tax authorities is expected by applying current tax rates and regulations. Deferred Section 10 – Non-current assets held for sale income tax assets and liabilities are calculated on the basis of timing differences between the value attributed to the assets and liabilities in the financial The Bank does not currently have non-current assets statements and the corresponding values recognized held for sale. for tax purposes.

Section 11 – Current and deferred taxation Section 12 – Provisions for risks and charges 11.1 Classification 12.1 Recognition and classification Deferred tax assets and liabilities are recognized in The provisions for risks and charges are recognized in equity separately without offsetting, under “Tax the income statement and reported under liabilities assets” and “Tax liabilities”, respectively. on the balance sheet and relate to a present legal or constructive obligation resulting from a past event for In accordance with the balance sheet liability which performance of the obligation is likely onerous method, current and deferred taxation items include: and the loss associated with the liability can be reliability estimated. a) current tax assets: amounts paid that exceed the amounts due under applicable corporate The amount recognized is the best estimate of the income tax regulations; amount required to discharge the obligation or to transfer it to third parties as of the close of the b) current tax liabilities: amounts due under period. When the financial impact of the passage of applicable corporate income tax regulations; time is significant and the dates of payment of the obligation can be estimated reliably, the provision is c) deferred tax assets: amounts of income taxes discounted at market rates as of the balance sheet recoverable in future periods in respect of date. deductible timing differences (mainly represented by expenses deductible in the 12.2 Derecognition future under existing corporate income tax regulations); Provisions are only used when the charges for which they were originally established are incurred. When d) deferred tax liabilities: amounts of income the use of resources to fulfill the obligation is no taxes payable in future periods in respect of longer deemed to be probable, the provision is taxable timing differences (mainly reversed through profit or loss. represented by the deferral in taxation of revenues or the advance deduction of 12.3 Criteria for recognizing gains or losses expenses under applicable corporate income tax regulations). The amounts recognized are reviewed at every balance sheet date and are adjusted to reflect the 11.2 Recognition and derecognition best estimate of the expense required to fulfill the obligations existing at the close of the period. The Income taxes are recognized in the income statement impact of the passage of time and that of changes in except for those referring to items directly debited or interest rates are reported in the income statement credited to equity. Deferred tax assets are recognized under net provisions for the period. when their recovery is deemed likely. Deferred tax liabilities are recognized in all cases in which it is likely that the relative payable will accrue. Section 13 – Debt and securities issued When the results of transactions directly affect 13.1 Classification shareholders’ equity, current taxes, deferred tax assets and deferred tax liabilities are also recognized in shareholders’ equity. Debt and securities issued includes financial liabilities not held for trading in the short term, comprising all technical forms of interbank and customer funding 11.3 Measurement and funding through certificates of deposit and outstanding bond issues, excluding any amounts Deferred tax assets and liabilities are periodically repurchased. measured to take account of any regulatory changes or changes in tax rates. Debt also includes payables recognized by the lessee in respect of finance leasing transactions. 11.4 Criteria for recognizing gains or losses

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Financial liabilities towards transferors for non- The item includes the negative value of trading recourse purchases of receivables in factoring derivatives that are not part of hedging relationships transactions are also recognized under debt. as well as the negative value of derivatives embedded in compound contracts. 13.2 Recognition 14.2 Recognition The liabilities are initially recognized at fair value, which is normally equal to the amounts received or Debt and equity securities representing financial the issue price, plus or minus any additional costs or liabilities are initially recognized at the settlement revenues directly attributable to the transaction that date, while derivative contracts are recognized at the are not reimbursed by the creditor. Internal date they are signed. The financial liabilities are administrative costs are excluded. Financial liabilities initially recognized at fair value, which generally issued on non-market terms are recognized at equals the amount received. estimated fair value and the difference with respect to the amount paid or the issue price is taken to the In cases in which the amount paid differs from the income statement. fair value, the financial liability is recognized at fair value, and the difference between the amount paid Structured liabilities (combinations of securities or and the fair value is recognized through profit or loss. loans and derivatives) are separated into their constituent parts - which are recognized individually - Derivative contracts embedded in other financial if the embedded derivatives have different financial instruments or contracts and which have financial and and risk characteristics from those of the underlying risk characteristics that are not correlated with the financial instrument and can be treated as host instrument or which meet the requirements to autonomous derivative contracts. be classified themselves as derivative contracts, are recognized separately among financial liabilities held 13.3 Measurement for trading. This is not done in cases in which the compound instrument containing the derivative is Following initial recognition, financial liabilities are measured at fair value through profit or loss, subject measured at amortized cost using the effective to compliance with the conditions specified in IAS 39. interest rate method, excluding short-term liabilities, which are recognized in the amount received in 14.3 Measurement keeping with the general principles of materiality and significance. Refer to the section on loans and Subsequent to initial recognition, the financial receivables for information on the criteria for liabilities are recognized at fair value. Refer to the determining amortized cost. section on measuring financial assets held for trading for information on determining the fair value. Bonds that are part of hedging operations are subject to the accounting and measurement criteria 14.4 Derecognition applicable to hedges (see Section 6 - Hedging). Financial liabilities held for trading are eliminated 13.4 Derecognition upon being extinguished or upon maturity.

In addition to cases of extinguishment and expiration, 14.5 Criteria for recognizing gains or losses financial liabilities are derecognized when previously issued securities are repurchased. In this case, the Gains and losses from the measurement of financial difference between the carrying amount of the liabilities held for trading are recognized through the liability and the amount paid to repurchase it is income statement. recognized in the income statement. If the repurchased security is subsequently placed again on the market, this is treated as a new issue and is recognized at the new placement price, with no Section 15 – Financial liabilities at fair value impact on the income statement. through profit or loss

13.5 Criteria for recognizing gains or losses As the Bank has not exercised the fair value option, it does not currently have a portfolio of financial liabilities designated as at fair value through profit or Interest expense is reported in the income statement loss. under “interest expense and similar charges”.

Any gains or losses arising from repurchases are recognized in the income statement under Section 16 – Foreign currency transactions “Gains/(losses) from the sale or repurchase of: financial liabilities”. 16.1 Classification

Foreign currency transactions are represented by all Section 14 – Financial liabilities held for trading assets and liabilities denominated in currencies other than the euro. 14.1 Classification

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16.2 Recognition estimated by the company. As a result, the termination benefit provision at December 31, 2006 Transactions in a foreign currency are initially was measured using the new model, which no longer recognized in euros by translating the amount in the takes account of a number of variables such as the foreign currency into the functional currency at the average annual rate of salary increases, pay grades exchange rate prevailing on the date of the based on seniority, and the percentage increase in transaction. salary due to promotion.

16.3 Criteria for recognizing gains or losses The portion of termination benefits accrued from January 1, 2007 allocated to a supplementary pension At the balance sheet date, foreign currency items are scheme or to the treasury fund managed by INPS measured as follows: (Italy’s National Social Security Institute) are treated as a defined-contribution plan since the company’s obligation towards the employee ceases upon transfer - monetary items are translated at the exchange rate of the portions accrued to the fund. prevailing at the balance sheet date; Therefore, starting January 1, 2007, the Bank: - non-monetary items measured at historic cost are translated at the exchange rate prevailing at the transaction date; • continues to recognize the obligation accrued at December 31, 2006 in accordance - non-monetary items measured at fair value are with the rules for defined-benefit plans. It translated using the exchange rate prevailing at the shall measure the obligation for benefits balance sheet date. accrued by employees using actuarial techniques and shall calculate the total amount of actuarial gains and losses and the Exchange rate differences resulting from the portion of these to be recognized using the settlement of monetary items or from the translation previously applied corridor method. of monetary assets/liabilities at exchange rates other than the initial translation rate, or the translation of previous financial statements, are recognized in the • recognizes the obligation for portions income statement in the period in which they accrued starting January 1, 2007, payable to emerge. When gains or losses relating to a non- a supplementary pension scheme or to the monetary item are recognized in equity, the treasury fund managed by INPS, on the basis exchange rate difference for the item is also of the contributions owed in each period, as recognized in equity. Likewise, when a gain or less is a defined-contribution plan. Specifically, this recognized in the income statement, the treatment starts, for contributions allocated corresponding exchange rate difference is also to a supplementary pension scheme, when recognized in the income statement. the election is made or from July 1, 2007 for those employees who do not exercise any option 2007. Section 17 – Other information

Accruals and deferrals Recognition of revenues Accruals and deferrals reporting costs and revenues to the period on assets and liabilities are recognized Revenues are recognized when realized or, in the as adjustments to the assets and liabilities to which case of the sale of goods or products, when it is they refer. probable that future benefits will be received and these future benefits can be reliably determined, and in the case of services, when the services are performed. Specifically: Pensions, termination benefits and seniority bonuses • interest is recognized on an accruals basis Following the reform of supplementary pension using the contractual interest rate or the schemes introduced by Legislative Decree 252 of 5 effective interest rate where the amortized December 2005, changes were made to the way in cost method is applied; which employee termination benefits are recognized. The portion of termination benefits accrued through • default interest, if any, is recognized in the December 31, 2006 is treated as a defined-benefit income statement only upon receipt; plan, since the company is required under law to pay the employee an amount determined pursuant to • dividends are recognized in the income Article 2120 of the Italian Civil Code. The change statement when their distribution is with respect to the situation prior to December 31, authorized; 2006 relates to the actuarial assumptions of the model, which must incorporate the rate of salary • commissions for revenues from services are increases provided for by Article 2120 of the Civil recognized, in accordance with the terms of Code (application of a rate equal to 1.5% plus 75% of the change in the ISTAT inflation index) and not that

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the contract, in the period in which the transactions, bid-ask spreads and volatility are not service is rendered; sufficiently low, the fair value of financial instruments is mainly determined using valuation • revenues from the placement of funding techniques that seek to establish what the instruments, calculated on the basis of the transaction price would have been on the difference between transaction price and measurement date in an arm’s length exchange the fair value of the financial instrument, motivated by normal business considerations. are recognized in the income statement when the transaction is recognized if the fair Valuation techniques consider: value can be determined with reference to parameters or transactions recently • prices in recent market transactions in observed in the same market in which the similar instruments, if available, corrected instrument is traded. If these amounts appropriately to reflect changes in market cannot be easily determined or the conditions and technical differences instrument is not highly liquid, the financial between the instrument being valued and instrument is recognized in an amount equal the similar instrument (the ‘comparable to the transaction price, excluding the approach’); commercial margin. The difference between this amount and the fair value is taken to profit or loss over the duration of the • valuation models commonly used by market transaction through the gradual reduction in participants that have been demonstrated to the valuation model of the corrective factor provide reliable estimates over time of reflecting the reduced liquidity of the prices obtained in current market conditions instrument. Revenues from the sale of non- (“mark-to-model”). financial assets are recognized upon completion of the sale, unless the Bank has The choice between these methods is not optional, as retained most of the risks and rewards they must be applied in accordance with the fair connected with the asset. value hierarchy: in the absence of active markets (effective market quotes – Level 1), we employ valuation techniques using inputs that are directly or indirectly observable on the market other than the prices of financial instruments (comparable approach Determination of fair value – Level 2) or, in the absence of such inputs or in the presence of inputs that are only partially based on Fair value is the amount for which an asset (or parameters observable on the market, fair value is liability) could be exchanged between calculated on the basis of valuation techniques knowledgeable, willing parties in an arm's length commonly used by market participants and, transaction. In the definition of fair value, a key therefore, are more discretionary in nature (mark-to- assumption is that an entity is fully operational (the model approach – Level 3). assumption that an entity is a going concern) and does not have the intention or the need to liquidate, Under the definition given in the IAS/IFRS, the significantly reduce its operations or undertake concept of active market regards the individual transactions on unfavorable terms. In other words, financial instrument and not the market involved. As fair value is not the amount an entity would receive a result: or would pay in a forced transaction, an involuntary liquidation or a distress sale. Nevertheless, the fair value reflects the credit quality of the instrument as • a regulated market does not necessarily ensure it incorporates counterparty risk. the formation of meaningful prices for all quoted instruments;

• multilateral trading facilities (MTF) are considered active markets if they provide a Financial instruments continuous, meaningful volume of trades that can ensure the formation of prices that The fair value of financial instruments is determined effectively represent the fair value of the on the basis of prices on financial markets in the case instrument; of instruments quoted on active markets and through the use of internal valuation techniques for other • electronic over-the-counter (OTC) trading financial instruments. A financial instrument is systems can be considered active markets to the considered to be quoted on an active market if the extent that the quotes they provide effectively quoted prices are readily and regularly available from represent the price at which a normal an exchange, dealer, broker, industry group, pricing transaction would be concluded; service, authorized agency, regulatory authority or multilateral trading facility (MTF) and those prices • quotes from brokers can represent fair value if represent actual and regularly occurring market the reflect the effective price of the instrument transactions on an arm’s length basis. In the absence in a liquid market (i.e. not indicative prices but of a quoted price on an active market or a regularly rather binding offers). functioning market, i.e. when the market does not have a sufficient and continuous number of

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For the purposes of determining fair value, the underlying assets are needed for liquidity or meaningfulness of the price observed on the market counterparty risk. is especially important. To assess this aspect, the criteria considered include: bid-ask spreads, the By exclusion, all other financial instruments that do breadth and depth of transactions, the number of not belong to the above categories are not considered contributors, the availability of information on the to be quoted on an active market. terms and conditions of transactions, and the volatility of prices. In the absence of prices observable on active markets, the fair value of financial instruments is The most appropriate market price for an asset held determined using the “comparable approach” (Level or a liability to be issued is the current price offered 2), which involves the use of valuation techniques by the purchaser (bid), while for an asset to be that use inputs directly observable on the market. In purchased or a liability held it is the current price this case, the valuation is not based on quotations for requested by the seller (ask), on the most the financial instrument being measured but rather advantageous market available, at the close of the on prices or credit spreads drawn from the official reporting period. In the case of financial instruments prices of instruments with substantially similar risk- for which the bid-ask spread is not significant or for return factors, using a pricing model. The use of this financial assets and liabilities whose characteristics approach involves finding transactions on active give rise to offsetting positions in market risk, a mid- markets in financial instruments with comparable risk market price is used (once again as at the last day of factors to the instrument being measured. The the reporting period) rather than the bid or ask price. valuation techniques used in the comparable approach make it possible to replicate the prices of The following are considered to be quoted on an financial instruments quoted on active markets active market (Level 1): (calibration of the model) without using discretionary inputs - i.e. inputs whose value cannot be drawn from • shares quoted on a regulated market or on the quotations of financial instruments on active NASDAQ, which, despite not being markets or that cannot be set at a level that would regulated, has daily trading volumes replicate quotations on an active market – that would comparable to those of the world’s main have a decisive impact on the final valuation. markets. For securities traded on a regulated market, the main price source is Level 2 inputs for use under the comparable approach the reference exchange, which generally are: corresponds to the official price published by the regulated market on which the • quoted prices for similar assets or liabilities in security is traded. active markets;

• bonds actively quoted on regulated markets • quoted prices for identical or similar or MTF. To this end, the calculation of fair instruments in markets that are not active; value uses closing bid-ask prices or, where these are not available, the official closing • observable market inputs (e.g. interest rates prices provided by the markets for each and yield curves observable at commonly quoted security. In the case of “multilisted” intervals, volatilities, credit spreads, etc.); securities, i.e. those quoted on more than one market at the same time, the main In line with the provisions of the IAS/IFRS, the risk market is used; factors to be taken into consideration in using a valuation technique include: the time value of money • government securities of EU Member States (i.e. the risk-free rate), default risk, exchange rates, that are listed or unlisted but with prices commodity prices, share prices, volatility (i.e. the regularly contributed by counterparties scale of future changes in the price of the financial where bid-ask prices provided by the instrument following changes in the price of other counterparties through information financial instruments), early repayment and providers are used; redemption risk, servicing costs for financial assets and liabilities. • investment funds, SICAVs and ETFs if a net asset value (NAV) calculated daily is Valuation techniques to determine fair value should available; make maximum use of observable inputs, should not require significant price adjustments and should not • spot foreign exchange transactions; be based on assumptions specific to the entity performing the valuation. • derivatives for which prices on an active market are available (for example, The valuation techniques used provide for: exchange-traded futures and options); • the use of current market prices of substantially • hedge funds for which the fund manager similar instruments where they are considered provides, with the frequency established in highly comparable (on the basis of the country the subscription contract, the NAV, assuming and sector involved, the rating, the maturity that no valuation adjustments of the and the seniority of the securities) such as to

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avoid significant changes in the prices exposures of the contract using a credit risk themselves; adjustment (CRA).

• the use of prices of instruments with similar • Credit relationships (assets and liabilities). calibration characteristics; More specifically, for medium and long-term assets and liabilities, the valuation discounts • discounted cash flow models; future cash flows. This is based on the discount rate adjustment approach, which • option pricing models. calls for the risk factors associated with the position to be considered in determining the The concept of “similar instruments” calls for an rate used to discount the future cash flows. assessment of various factors, including: the timing of the implicit cash flows of the instrument, the Different valuation techniques can be used if: discount rate used, the amount and structure of cash flows (especially for derivatives), other contractual • they produce reliable estimates of the prices terms (e.g. the presence of a call clause), and the formed in transactions, reflecting market currency in which the cash flows are paid. expectations for those prices;

Financial instruments classified as Level 2 in the fair • the elements underlying the valuation value hierarchy are: techniques reasonably reflect market expectations and the measurement of the risk • Collective investment undertakings and factor incorporated in the yield of the financial hedge funds or closed-end funds with a instrument; published NAV and for which the NAV is reasonably representative of the fair value. • the model undergoes prior validation and periodic reassessment to adjust it to changing • Bonds that do not have an active market but conditions in the market for the instrument which can be priced using the prices of (calibrating the technique on the basis of comparable securities as inputs in a current observable prices). valuation model. The fair value of bonds without official prices set in an active It is also necessary to assess whether it is necessary market is determined on the basis of an to modify the technique to ensure that the estimate appropriate credit spread, identified on the of fair value reflects the current terms of the basis of contributed prices of liquid financial instrument and/or the market. This assessment can instruments with similar characteristics. The be based on the following factors: sources of credit spreads are liquid securities with contributed prices of the • current conditions (financial condition) of the same issuer, credit default swaps on the financial assets/liabilities; same reference entity, liquid securities with contributed prices of issuers with the same • their comparability; rating and in the same sector. Account is also taken of differences in the seniority of • the volume and level of activity on the market the security to be prices with respect to the in which they are traded. debt structure of the issuer. Adjustments that substantially modify the value • OTC derivatives with observable parameters require the Bank to reclassify the instrument to Level and market models. For derivatives, in view 3. of their variety and complexity, a systematic reference framework has been developed To determine the fair value of certain types of that represents the common elements financial instrument, it is necessary to use valuation (calculation algorithms, valuation models, techniques that employ inputs that are not directly market data used, underlying assumptions of observable in the market and therefore require the model) on which the valuation of each estimates and assumptions on the part of the person category of derivative is based. Derivatives measuring the instrument (Level 3). In particular, the on interest rates, exchange rates, equities, financial instrument is valued using a given inflation and commodities not traded on calculation technique based on specific hypotheses regulated markets are over-the-counter regarding: instruments. In other words, they are negotiated bilaterally with market • developments in future cash flows, possibly counterparties and their fair value is affected by future events that can be determined with specific pricing models that assigned a probability on the basis of use inputs (such as yield curves, exchange historical data or behavioral assumptions; rates and volatility) observed on the market. In addition, in order to determine fair value, account is also taken of the credit quality of • the level of certain inputs that are not the counterparty. The fair value reflects quoted on an active market, the estimation counterparty credit risk and the future of which still gives precedence to

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information drawn from prices and spreads instrument uses entity-specific parameters and/or observed on the market. If this is not techniques not supported by market practice, the available, recourse is made to historical financial instrument is classified as Level 3. data on the specific underlying risk factor or specialized research in the field (for If internal assumptions are required, two approaches example, reports produced by rating can be used: agencies or leading market players). • the use of stress tests for the inputs used by the For financial instruments measured using a mark-to- model in order to assess the impact that they model approach, prices on active markets are used may have on the fair value determined using the but different valuation techniques are involved, valuation techniques; including the use of theoretical pricing models that comply with the requirements set down in the IAS • the use of the most prudent assumptions with regard to the valuation of financial instruments. possible in determining the unobservable Pricing may be conducted on the basis of internal parameters used as inputs in the model. models certified by the Group Risk Management and ALM department present: The valuation technique used for a financial instrument is adopted consistently over time and is • directly in the front-office application in modified only in response to material changes in which the instrument is loaded; market conditions or the condition of the issuer of the financial instrument. • in other company valuation systems. The process of measuring financial instruments Financial instruments classified as Level 3 in the fair involves a number of stages, summarized briefly as value hierarchy are: follows.

• Unlisted shares. Unlisted shares carried at cost • for each category, the processes necessary are also included in Level 3 by convention; to estimate the market inputs and the procedures with which that data is to be • Funds with unpublished NAV or for which the acquired and used are specified; published NAV is not adequately representative of the potential realizable value; • certification and processing of market data for valuation: this consists in detailed checks • Bonds not listed on an active market for which of the market inputs used (verification of no comparable instruments exist or which the integrity of the data stored on the require the use of considerable assumptions; proprietary platform compared with the source of the contribution), likelihood • OTC derivatives valued using: testing (consistency of each piece of data with similar or comparable data) and • market models that use a significant verification of the specific application unobservable parameter; procedures.

• • non-market models. certification of pricing models and model risk assessment: in this phase, the consistency of the various valuation Level 3 also includes financial instruments for which techniques with current market practice is the Bank is not able to perform an independent assessed, in order to identify any problems pricing and has to make a specific request for a quote in the pricing models used and to determine from external counterparties. any adjustments to the valuation. The validation process is especially important In order to determine the fair value of all Level 3 when transactions in a new financial instruments, the mark-to-model approach is adopted instrument are introduced, which requires for all unlisted financial instruments whose fair value the development of additional pricing is estimated using valuation techniques that rely on: models, and when it is decided to use a new model to measure payoffs previously • inputs that are not observable in the market; handled with models now considered less appropriate. • assumptions specific to the Bank; • monitoring of the consistency of pricing • prices for recent transactions in similar products models over time: the periodic monitoring of that, nevertheless, require adjustments to the consistency of the pricing model with account for supervening adverse changes in market developments makes possible the market conditions that have a substantial timely identification of divergences and take impact on prices. any necessary corrective action.

If a parameter is not observable (directly or indirectly) in the market and the valuation of the

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For the purpose of reporting for financial instruments Accordingly, the effective interest rate associated at fair value, the above hierarchy adopted in with the transaction differs from the contractual determining fair value is used consistently for the interest rate. Transaction costs do not include allocation of the portfolio to the fair value input costs/revenues regarding more than one transaction levels (see section A.3). and components related to events which may occur during the life of the financial instrument but which are not certain at the time of the initial agreement, such as, for example: commissions for retrocession, Determination of amortized cost for non-use or for early repayment. Furthermore, the calculation of amortized cost does not include costs that would be incurred independently of the The amortized cost of a financial asset or liability is transaction (e.g. administrative costs, office supplies the amount at which it is measured at initial or communication expenses), costs that, while recognition minus principal repayments, plus or minus directly attributable to the transaction, are part of the cumulative amortization using the effective standard practice for the management of the interest method of any difference between that financing (e.g. activities related to the loan granting initial amount and the maturity amount, and minus process), as well as fees and commissions for services any reduction for impairment. collected in respect of structured finance activities The effective interest rate is the rate that exactly which would in any case have been received discounts estimated future cash payments or receipts independently of the subsequent financing of the through the expected life of the financial instrument transaction (e.g. facility and arrangement fees) and, or the next repricing date. In calculating the present finally, intercompany costs and revenues. value, the effective interest rate is applied to the future cash receipts or payments over the entire life of the financial asset or liability or to a shorter period With specific reference to loans and receivables, in the presence of certain conditions (for example, a costs considered directly attributable to the financial change in market rates). instrument include fees paid to distribution networks, fees paid for advisory/assistance services for the origination and/or participation in syndicated loans Subsequent to initial recognition, amortized cost and up-front commissions in respect of loans granted makes it possible to allocate income and expense on at rates exceeding market rates. Revenues considered the instrument over its entire expected life through in the calculation of amortized cost include up-front the amortization process. The determination of commissions in respect of loans granted at rates amortized cost differs depending on whether the below market rates, revenues from participation in financial assets/liabilities being measured are fixed syndicated loans and brokerage fees received. or floating rate instruments and, in the latter case, on whether the variability of the rate is known or not a priori. For fixed-rate instruments or instruments For securities issued, the calculation of amortized whose rate is fixed over specified time periods, cost considers placement commissions on bond issues future cash flows are quantified on the basis of the paid to third parties, amounts paid to exchanges and known interest rate (single or variable) over the life fees paid to audit firms for the activities performed of the instrument. For floating-rate financial for each single issue. The calculation of amortized assets/liabilities for which the variability of the cost does not consider commissions paid to rating interest rate is not known a priori (e.g. because it is agencies, legal and advisory/audit expenses for the linked to an index)), cash flows are calculated on the annual update of prospectuses, the costs for the use basis of the last known rate. At each repricing date, of indices and commissions which originate during the the amortization schedule and the effective interest life of the bond issue. rate are recalculated for the entire useful life of the instrument, i.e. until the maturity date. the Amortized cost is also applied in measuring adjustment is recognized as an expense or income impairment losses on the financial instruments listed through profit or loss. above as well as for the recognition of instruments issued or purchased at an amount other than fair Measurement at amortized cost is used for loans, value. Instead of using the amount received or paid, financial asset held to maturity and available for sale the latter are measured at fair value by discounting and for debt and securities issued. expected future cash flows at a rate equal to the effective interest rate of similar instruments (in terms of credit rating, contractual expiry, currency, Financial assets and liabilities traded on market etc.), with the simultaneous registration in profit or terms and conditions are initially measured at fair loss of financial expense or income; subsequent to value, which is normally equal to the amount initial recognition, these are measured at amortized disbursed or paid including, for instruments measured cost with the registration of higher or lower effective at amortized cost, directly attributable transaction interest with respect to nominal interest. Lastly, costs, fees and commissions. structured assets and liabilities which are not recognized at fair value through profit or loss for Transaction costs include internal or external which the embedded derivative has been separated marginal costs and revenues attributable to the issue, from the financial instrument are measured at the acquisition or the disposal of a financial amortized cost instrument which are not debited to the customer. Such commissions, which must be directly Amortized cost is not applied to hedged financial attributable to the individual financial asset or assets/liabilities for which fair value changes related liability, modify the original effective yield.

62 to the risk hedged are recognized through profit or short term are not discounted, since the time value is loss. However, the financial instrument is again immaterial. measured at amortized cost when the hedge terminates. From that moment, fair value changes Loans for which no objective evidence of impairment recognized previously are amortized, calculating a has emerged from individual measurement undergo new effective interest rate which considers the value collective measurement. Collective measurement is of the loan adjusted by the fair value of the hedged conducted for uniform loan categories in terms of portion until the natural expiry of the hedge. credit risk and the related loss percentages are Furthermore, as already mentioned in the section on estimated on the basis of time series, based on measurement criteria for loans and debts and observable evidence at the measurement date, that securities issued, measurement at amortized cost is permit an estimation of the value of the latent loss not applied to short-term assets/liabilities for which for each loan category. Measurement also considers the time value is deemed to be immaterial and to the risk associated with the counterparty’s country of loans without a specified maturity or which are residence. revocable. The determination of provisions for performing Determination of impairment positions is carried out by identifying the greatest possible synergies (as permitted under the various Financial assets regulations) with the supervisory approach set out under the New Capital Accord (Basel 2). At every reporting date, financial assets not classified as financial assets held for trading or financial assets The provision also takes into account corrective at fair value undergo impairment testing for the factors such as economic conditions and the purpose of assessing if there is objective evidence concentration of credit risks in respect of persons that the carrying amount of such assets is not fully who have a significant exposure to the Bank. recoverable. With regard to assets available for sale, the An impairment loss occurs if there is objective impairment testing process involves the verification evidence of a reduction in future cash flows with of the presence of impairment indicators and the respect to those originally estimated following determination of any writedown. Impairment specific events. The loss must able to be quantified indicators are essentially divided into two categories: reliably and must be associated with events that have indicators associated with internal factors relating to actually and are not merely expected. the company being assessed, and therefore qualitative in nature, and – for equities securities - Impairment is measured on an individual basis for external quantitative indicators deriving from the financial assets which present specific evidence of market values of the company. losses and collectively for financial assets for which individual measurement is not required or for which Within the first category of indicators, the following no writedown was recognized. Collective factors are considered significant: the posting of measurement is based on the identification of losses or in any case a significant divergence with uniform risk classes of financial assets in terms of the respect to budget targets or the objectives set out in characteristics of borrowers/issuers, economic the long-term plans announced to investors, the sector, geographical area, the presence of any announcement/start of composition with creditors or guarantees and other relevant factors. restructuring plans, and the downgrading by more than two grades of the rating issued by a specialist With regard to loans to customers and amounts due agency. As regards the second category, a significant from banks, positions classified as bad debts, or prolonged reduction in fair value below the initial substandard, restructured or past due in accordance recognition value is considered evidence of with the definitions of the Bank of Italy, consistent impairment. More specifically, a reduction in fair with IAS/IFRS, undergo individual testing. value of over 30% is considered significant and a continuous reduction for a period of over 18 months Such impaired positions undergo an individual is considered prolonged. If one of these thresholds is measurement process, or the expected loss for exceeded, impairment loss is recognized on the uniform categories is calculated and allocated security. If these thresholds are not exceeded but specifically to each position. The amount of the other impairment indicators are present, recognition adjustment of each position is the difference of an impairment loss must also be corroborated by between its carrying amount at the time of the result of specific analyses of the security and the measurement (amortized cost) and the present value investment. of expected future cash flows, discounted using the original effective interest rate. The amount of the impairment is calculated with reference to the fair value of the financial asset. Expected cash flows consider expected recovery periods, the estimated realizable value of guarantees For an illustration of the valuation techniques used to and the costs expected to be incurred for the determine fair value, please see the relevant section. recovery of the credit exposure. Cash flows related to loans which are deemed to be recoverable in the

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Equity investments carrying amount corresponds to value in use, since it is determined by a process of depreciation or At each reporting date the equity investments in amortization estimated on the basis of the effective associates undergo impairment testing to determine contribution of the asset to the production process whether there is objective evidence that the carrying and since the determination of fair value is extremely amount of such assets is not fully recoverable. subjective. The two values diverge, giving rise to impairment, in the case of damage, exit from the The identification of any impairment involves the production process or other similar non-recurring verification of the presence of evidence of possible circumstances. impairment and the determination of any writedown. Impairment indicators are essentially divided into two Intangible assets recognized following a business categories: qualitative indicators, such as the posting combination, and in application of IFRS 3, undergo of losses or in any case a significant divergence with impairment testing at each reporting date to assess respect to budget targets or the objectives set out in whether there is objective evidence that the asset the long-term plans announced to investors, the may be impaired. announcement/start of composition with creditors or restructuring plans, and the downgrading by more In the presence of evidence of impairment, intangible than two grades of the rating issued by a specialist assets with a finite life undergo a new valuation agency; and quantitative indicators consisting of a process to assess the recoverability of the carrying reduction in fair value below the carrying amount of amounts. Recoverable value is determined on the over 30%, or a market capitalization lower than the basis of value in use, namely the present value company’s book equity for more than 18 months, for estimated using a rate representing the time value of securities listed quoted on active markets, or a money and the asset’s specific risks of the income carrying amount for the equity investment in the generated by the existing relations as at the valuation separate financial statements greater than the date over a period which expresses their expected carrying amount in the consolidated financial residual life. statements of the company’s net assets and goodwill, or the distribution by the latter of a dividend greater than its comprehensive income. Financial guarantees The presence of evidence of impairment results in the recognition of a writedown to the extent that the As part of its ordinary banking operations, the Bank recoverable value is lower than the carrying amount. grants financial guarantees in the form of letters of credit, acceptances and other guarantees. The value The recoverable value is the greater of fair value less of guarantees at the time of initial recognition is costs to sell and the value in use. equal to the commission received and is reported under “Other liabilities”. Commission income earned For an illustration of the valuation techniques used to on guarantees, net of the portion representing the determine fair value, please see the relevant section recovery of costs incurred in issuing the guarantee, above. are recognized on an accruals basis under “Fee and commission income”, taking account of the duration Value in use is the present value of expected future and residual value of the guarantees. cash flows from the asset. It reflects estimated expected future cash flows from the asset, the Following initial recognition, the liability in respect of estimate of possible changes in the amount and/or each guarantee is measured as the greater of the timing of cash flows, the time value of money, the initial recognition amount less cumulative risk premium on the asset and other factors that amortization recognized in profit or loss and the best could affect the assessment by market participants of estimate of the expense required to settle the expected future cash flows from the asset. financial obligation that arose following the granting of the guarantee. Value in use is determined by discounting future cash flows. Any losses and value adjustments on such guarantees are reported under “value adjustments”. Writedowns Other non-financial assets for impairment of guarantees are also reported under “Other liabilities”. Property, equipment and intangible assets with a finite useful life undergo impairment testing if there Guarantees are off-balance-sheet transactions and is evidence that the carrying amount of the asset may are reported under “Other information” in Part B of no longer be recovered. The recoverable value is the notes to the financial statements. determined with reference to the fair value of the property and equipment or intangible assets less costs to sell or the value in use if it is determinable and is higher than fair value.

For other property, equipment and intangible assets (other than those recognized following business combinations) it is normally assumed that the

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A.3 – FAIR VALUE DISCLOSURES

A.3.1 Transfers between categories

A.3.1.1 Reclassified financial assets: Carrying amount, fair value and impact on comprehensive income

The table has not been completed because there were no such positions as of the balance sheet date.

A.3.1.2 Reclassified financial assets: impact on comprehensive income before transfer

The table has not been completed because there were no such positions as of the balance sheet date.

A.3.1.3 Transfers of financial assets held for trading

The table has not been completed because there were no such positions as of the balance sheet date.

A.3.1.4 Effective interest rate and expected cash flows of reclassified assets

The table has not been completed because there were no such positions as of the balance sheet date.

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A.3.2 Fair value hierarchy

A.3.2.1 Portfolios: breakdown by fair value input level

31/12/2011 31/12/2010

L1 L2 L3 L1 L2 L3

1. Financial assets held for trading 38,840 25,659 2. Financial assets designated as at fair value 3. Financial assets available for sale 196,479 1,542 167,985 1,428 4. Hedging derivatives 10,326 15,872 Total 245,645 1,542 209,517 1,428 1. Financial liabilities held for trading 37,461 24,274 2. Financial liabilities designated as at fair value 3. Hedging derivatives 29,805 31,982 Total 67,266 56,266

Key: L1 = Level 1 L2 = Level 2 L3 = Level 3

For more information on the "fair value hierarchy” set out above, please see Part A.2 on accounting policies in these notes.

“Financial assets available for sale” classified under Level 3 regard equity investments of the Bank in companies other than subsidiaries, joint ventures or associates measured at cost and, as such, are classified under Level 3 by convention.

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A.3.2.2 Change for the period in financial assets designated at fair value (Level 3)

FINANCIAL ASSETS

held available designated as for for hedging at fair value trading sale 1. Opening balance 1,428 2. Increases 122 2.1. Purchases 122 2.2. Profits recognized in: 2.2.1. Income statement - of which: capital gains 2.2.2. Shareholders’ equity 2.3. Transfers from other levels 2.4. Other increases 3. Decreases 8 3.1. Sales 8 3.2. Redemptions 3.3. Losses recognized in: 3.3.1. Income statement - of which: capital losses 3.3.2. Shareholders’ equity 3.4. Transfers to other levels 3.5. Other decreases 4. Closing balance 1,542

A.3.2.3 Change for the period in financial liabilities at fair value (Level 3)

The table has not been completed because there were no such positions as of the balance sheet date.

A.3.3 Disclosures on “day one profit/loss”

Pursuant to paragraph 28 of IFRS 7, there were no differences between the fair value at the time of initial recognition and the amount recalculated at the same date using valuation techniques in accordance with IAS 39, paragraphs AG 74 - AG 79 and IFRS 7, paragraph IG 14.

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PART B - INFORMATION ON THE BALANCE SHEET

Assets

Section 1 - Cash and cash equivalents - item 10

1.1 Cash and cash equivalents: composition

Total Total

31/12/2011 31/12/2010 a) Cash 30 28 b) Demand deposits with central banks Total 30 28

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Section 2 - Financial assets held for trading - item 20

2.1 Financial assets held for trading: composition by type

Total Total 31/12/2011 31/12/2010

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

A. On-balance-sheet assets 1. Debt securities 1.1 structured securities 1.2 other debt securities 2. Equity securities 3. Units in collective investment undertakings 4. Loans 4.1 repurchase agreements 4.2 other Total A B. Derivatives 1. Financial derivatives 38,840 25,659 1.1 trading 28,945 16,830 1.2 associated with fair value option 1.3 other 9,895 8,840 2. Credit derivatives 2.1 trading 2.2 associated with fair value option 2.3 other Total B 38,840 25,659 Total (A+B) 38,840 25,659

The item "other" includes the positive fair value of "operating" hedging derivatives that either did not undergo or did not pass testing for effectiveness (€9.9 million). Assets (and liabilities) held for trading report the market value (about €28.9 million) of derivatives originated by the Bank's business in the investment services sector. These operations involve the sale of derivatives to customers, with matching transactions with Iccrea Banca. The value in respect of customer counterparties amounted to €21.3 million. At December 31, 2010, the item also included €11 thousand in respect of premiums that have been reclassified under “Other assets” to improve the representation provided in the financial statements.

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2.2 Financial assets held for trading: composition by debtor/issuer

Total Total

31/12/2011 31/12/2010

A. ON-BALANCE-SHEET ASSETS 1. Debt securities a) Governments and central banks b) Other government agencies c) Banks d) Other issuers 2. Equity securities a) Banks b) Other issuers - insurance undertakings - financial companies - non-financial companies - other 3. Units in collective investment undertakings 4. Loans a) Governments and central banks b) Other government agencies c) Banks d) Other Total A B. DERIVATIVES a) Banks 17,546 19,680 - fair value 17,546 19,680 b) Customers 21,294 5,980 - fair value 21,294 5,980 Total B 38,840 25,659 Total (A+B) 38,840 25,659

2.3 On-balance-sheet financial assets held for trading: change for the period

The table has not been completed because there were no such positions as of the balance sheet date.

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Section 3 – Financial assets at fair value – item 30

The Bank had no such financial assets as of the balance sheet date.

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Section 4 - Financial assets available for sale - item 40

4.1 Financial assets available for sale: composition by type

Total Total 31/12/2011 31/12/2010

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

1. Debt securities 1.1 Structured securities 1.2 Other debt securities 2. Equity securities 1,542 1,428 2.1 At fair value 2.2 Carried at cost 1,542 1,428 3. Units in collective investment undertakings 196,479 167,985 4. Loans

Total 196,479 1,542 167,985 1,428

Equity securities include the Bank's holdings in companies other than subsidiaries, joint ventures and companies subject to significant influence (associates). More specifically, the item includes the following holdings in Group companies (% stake): BCC Gestione Crediti S.p.A. (15%), BCC Private Equity S.G.R. S.p.A. (1%), Immobiliare Milanese CRA S.r.l. (10%).

“Units in collective investment undertakings” includes the value of the unlisted Securis Real Estate closed- end real estate investment fund restricted to qualified investors and managed by "Beni Stabili Gestioni S.p.A. Società di Gestione del Risparmio", to which the Bank has transferred 291 buildings from terminated finance leases awaiting sale. The Bank has subscribed a total of 2,436 units in the fund with a value of €196.5 million as of the reporting date, paid in part in cash. At December 31, 2011, the fund showed a net loss of €8.3 million. As a result of this performance, the Bank recognized an impairment loss of about €8 million on the units in the fund. For the purposes of identifying evidence of an impairment loss, the Bank considers a significant reduction in fair value compared with the carrying amount as one of more than 30% and a prolonged reduction as one of 18 months.

The item also reports participating financial instruments in a customer company acquired as part of a loan restructuring in the amount of €3.1 million, entirely written down.

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4.2 Financial assets available for sale: composition by debtor/issuer

Total Total

31/12/2011 31/12/2010

1. Debt securities a) Governments and central banks b) Other government agencies c) Banks d) Other issuers 2. Equity securities 1,542 1,428 a) Banks 66 65 b) Other issuers 1,476 1,363 - insurance undertakings - financial companies 405 405 - non-financial companies 1,071 958 - other 0 0 3. Units in collective investment undertakings 196,479 167,985 4. Loans a) Governments and central banks b) Other government agencies c) Banks d) Other Total 198,021 169,413

4.3 Financial assets available for sale: assets hedged specifically

The table has not been completed because there were no such positions as of the balance sheet date.

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4.4 Financial assets available for sale: change for the period

Units in Debt Equity collective Loans Total securities securities investment undertakings A. Opening balance 1,428 167,985 169,413 B. Increases 122 48,197 48,319 B1. Purchases 122 48,197 48,319 B2. Fair value gains B3. Writebacks - recognized through income statement - recognized through equity B4. Transfers from other portfolios B5. Other changes C. Decreases 8 19,703 19,711 C1. Sales 8 8 C2. Redemptions 11,655 11,655 C3. Fair value losses 8,048 8,048 C4. Writedowns for impairment - recognized through income statement - recognized through equity C5. Transfers to other portfolios C6. Other changes D. Closing balance 1,542 196,479 198,021

As regards decreases, in December 2011, the Securis Real Estate fund carried out a pro-rata reimbursement of available liquidity in the about of €12 million (of which €11.7 million to Iccrea BancaImpresa).

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Section 5 – Financial assets held to maturity – item 50

The Bank had no such financial assets as of the balance sheet date.

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Section 6 – Due from banks - item 60

6.1 Due from banks: composition by type

Total 31/12/2011 Total 31/12/2010

A. Claims on central banks 1. Fixed-term deposits 2. Reserve requirement 3. Repurchase agreements 4. Other B. Due from banks 267,979 213,480 1. Current accounts and demand deposits 130,505 102,455 2. Fixed-term deposits 9,356 9,173 3. Other financing: 128,117 101,852 3.1 Repurchase agreements 3.2 Finance leases 23,915 24,601 3.3 Other 104,203 77,251 4. Debt securities 4.1 Structured securities 4.2 Other debt securities Total (carrying amount) 267,979 213,480 Total (fair value) 279,190 219,315

As already the case in previous years, the item “Other financing: other” reflects the reclassification of loans assigned by mutual banks but counter-guaranteed by them in the amount of €99.3 million (€76.7 million at December 31, 2010), essentially leaving the risk with the assignor banks even though the Bank manages relationships involving ordinary customers.

The item “fixed-term deposits” reports the balance of the reserve requirement complied with indirectly in the amount of €0.3 million (€0.1 million at December 31, 2010).

6.2 Due from banks: assets hedged specifically

The table has not been completed because there were no such positions as of the balance sheet date.

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6.3 Finance leases

31/12/2011 Minimum payments Gross investment Principal

Explicit of which of which credit guaranteed Interest unguaranteed

residual residual value value

Demand 172 70 242 Up to 3 months 201 138 339 From 3 months to 1 year 1,038 607 1,645 From 1 to 5 years 6,190 2,641 8,832 More than 5 years 15,668 4,073 19,742 Unspecified maturity 645 Gross total 645 23,270 7,529 30,799 Writedowns Net total 645 23,270 7,529 30,799

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Section 7 - Loans to customers - item 70

7.1 Loans to customers: composition by type

Total Total 31/12/2011 31/12/2010 Performing Impaired Performing Impaired 1. Current accounts 439,266 51,153 459,411 35,953 2. Repurchase agreements 3. Medium/long-term loans 1,169,286 114,788 634,195 52,641 4. Credit cards, personal loans and loans repaid by automatic deductions from wages

5. Finance leases 5,787,324 648,418 6,007,892 613,898 6. Factoring 7. Other 891,891 166,098 973,974 35,357 8. Debt securities 8.1 Structured securities 8.2 Other debt securities Total (carrying amount) 8,287,767 980,457 8,075,472 737,848

Total (fair value) 8,792,249 1,040,138 8,438,684 771,035

Loans to customers increased by 5% compared with 2010. The rise reflects an increase in loans to customer, mainly associated with the acquisition of the international operations by Iccrea BancaImpresa with the transfer of the business line with effect from January 2011, the main aspects of which are discussed in Part A.1 section 4) of these notes.

Net impaired assets rose by 32.8%, the direct consequence of economic conditions and the resulting market developments, as noted in the report on operations. For an analysis of developments in loans and related provisions, please see the section on risk management.

The item “Current accounts” mainly regards lending secured by mortgages for residential and commercial building.

“Other” transactions includes €695 million (€718 million in 2010) for orders in respect of property and equipment leases for which principal repayment is subordinate to the start of the leases. The item also reports the change of €23.3 million in the fair value of fixed-rate loans for which the interest rate risk has been hedged (€18.6 million in 2010).

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7.2 Loans to customers: composition by debtor/issuer

Total Total 31/12/2011 31/12/2010 Performing Impaired Performing Impaired 1. Debt securities a) Governments b) Other government agencies c) Other issuers - non-financial companies - financial companies - insurance undertakings - other 2. Loans to: 8,287,767 980,457 8,075,472 737,848 a) Governments 50 50 b) Other government agencies 20,358 8 5,036 121 c) Other 8,267,359 980,449 8,070,386 737,727 - non-financial companies 7,944,665 953,334 7,604,049 726,208 - financial companies 116,786 117 213,594 1,347 - insurance undertakings 353 27 329 15 - other 205,555 26,971 252,414 10,157 Total 8,287,767 980,457 8,075,472 737,848

7.3 Loans to customers: assets hedged specifically

Total Total

31/12/2011 31/12/2010 1. Loans with specific fair value hedges: 440,418 340,554 a) interest rate risk 440,418 340,554 b) exchange rate risk c) credit risk d) multiple risks 2. Loans with specific cash flow hedges: a) interest rate risk b) exchange rate risk c) other Total 440,418 340,554

The item reports the fair value of fixed-rate loans for which the interest rate risk has been hedged, as reported in the discussion of Table 7.1.

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7.4 Finance leases

31/12/2011 Principal Gross investment

of which Explicit of which guaranteed Interest credit guaranteed residual residual value value

Up to 3 months 238,746 83,578 67,494 306,240 222,662 From 3 months to 1 year 685,803 253,656 184,704 870,507 616,851 From 1 to 5 years 2,355,410 1,011,502 673,320 3,028,730 2,017,228 More than 5 years 2,820,511 1,565,546 667,801 3,488,312 1,922,766 Unspecified maturity 953,450 320,049 320,049 Gross total 953,450 6,420,518 2,914,282 1,593,319 8,013,838 4,779,507 Writedowns 187,204 138,242 325,446 Net total 766,247 6,282,276 2,914,282 1,593,319 7,688,392 4,779,507

Explicit credit includes €695 million in respect of orders on property and equipment leases for which principal payments fall due upon the start of the leases.

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Section 8 - Hedging derivatives - item 80

8.1 Hedging derivatives: composition by type of contract and level of inputs

FV 31/12/2011 FV 31/12/2010 VN VN

31/12/2011 31/12/2010 L1 L2 L3 L1 L2 L3

A. Financial derivatives 10,326 378,147 15,872 778,990 1) Fair value 10,100 87,547 14,482 150,959 2) Cash flows 226 290,600 1,390 628,031 3) Investments in foreign operations B. Credit derivatives 1) Fair value 2) Cash flows Total 10,326 378,147 15,872 778,990 Key NV=notional value L1=Level 1 L2= Level 2 L3= Level 3

The item reports the positive fair value of interest rate swaps used to hedge the interest rate risk on bonds issued in the amount of €10.1 million. Derivatives hedging liabilities include the corresponding value of contracts with a negative fair value at the end of the period. The net impact on performance of the measurement of derivatives and the underlying liabilities is reported at item 90 of the income statement. The change with respect to December 31, 2010 is due to the termination of 3 derivatives amounting to about €1 million and the decrease in fair value.

The item also reports the positive fair value of derivatives hedging floating-rate loans with average indexing in the amount of €0.2 million. As regard cash flow hedge derivatives, in December the hedging relationship of the Agrisec 3 derivative was discontinued as the hedge, whose fair value at December 31, 2010 amounted to €1.2 million, was found to be no longer effective.

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8.2 Hedging derivatives: composition by hedged portfolio and type of hedge

Fair value Cash flows Specific Investments in foreign Interest Exchange Multiple Generic Specific Generic operations Credit risk Price risk rate risk rate risk risks 1. Financial assets available for sale 2. Loans 3. Financial assets held to maturity 4. Portfolio 226 5. Other transactions Total assets 226 1. Financial liabilities 10,100 2. Portfolio Total liabilities 10,100 1. Forecast transactions 2. Portfolio of financial assets and liabilities

As indicated in the note to the previous table, the amount of €0.2 million regards the positive value of derivatives hedging interest-rate risk on floating-rate loans with average indexing.

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Section 9 – Value adjustments of financial assets hedged generically - item 90

The Bank had no such financial assets as of the balance sheet date.

84

Section 10 - Equity investments - item 100

10.1 Equity investments in subsidiaries, joint ventures and companies subject to significant influence: information on investments

Registered % holding % of votes office

A. Wholly-owned subsidiaries 1. BCC FACTORING SPA ROMA 100% 100% 2. BCC LEASE SPA ROMA 100% 100%

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10.2 Equity investments in subsidiaries, joint ventures and companies subject to significant influence: accounting data

Total Total Net profit Shareholders’ Carrying Fair value assets revenues (loss) equity amount

A. Wholly-owned subsidiaries 1. BCC FACTORING SPA 453,169 13,674 -1,593 15,809 15,774 n/a 2. BCC LEASE SPA 156,392 12,743 335 12,772 14,750 n/a Total 30,524

In view of the persistent losses posted by BCC Factoring S.p.A., the investment underwent impairment testing, which found that the estimated value of economic capital came to about €16 million on the basis of the performance and financial forecasts set out in the company's development plans. Accordingly, an additional writedown of €5.2 million was recognized to bring the carrying amount, originally €35 million, into line with the estimate. Total impairment losses on the investment therefore come to €18.9 million. More specifically, the impairment value was determined on the basis of the results reported by the subsidiary as at December 31, 2011 and its forecast performance and financial position figures approved by the Board on February 20, 2012, together with the "2012-2014 plan", adopting estimation criteria recommended in the formal literature and best practice (Dividend Discount Model). The underlying assumptions adopted in developing the plan refer to the following strategic objectives: • Containing risks in respect of the Group liquidity profile and the quality of loans to customers • Maintaining an adequate level of capital • Seeking additional partnership agreements and increasing cross-selling • Updating the service model and organizational arrangements as well as revising production processes to curb costs • Containing overheads through the rationalization of activities performed on an outsourcing basis

The parameters used to determine the discount rate for the future cash flows expected on the basis of the above assumptions consider an estimated cost of capital of 10.9%, considering a risk-free yield equal to the average yield on 10-year Italian Treasury bonds at February 15, 2012 (6.2%) and a risk premium of 5% weighted by a factor for the correlation between the actual yield of a stock and the overall performance of the benchmark market. The Tier 1 capital ratio was also taken to be 8%. The growth rate used to extrapolate the forecast of cash flows beyond the three-year time horizon used by the Bank for the calculation of terminal value was 2%, in line with market practice.

As regards BCC Lease S.p.A., there was no evidence of any impairment loss, bearing in mind the positive performance of the company in recent years, in line with the development plans for the company

The data in the table regard the 2011 financial year.

The Bank, in accordance with the provisions of Legislative Decree 87/92, elected the option envisaged in IAS/IFRS 27.10, point d) to not prepare consolidated financial statements as the ultimate parent company ICCREA Holding produces annual consolidated financial statements for public use that comply with International Financial Reporting Standards.

86

10.3 Equity investments: change for the period

Total Total

31/12/2011 31/12/2010

A. Opening balance 27,750 23,950 B. Increases 8,000 8,000 B.1 Purchases 8,000 8,000 B.2 Writebacks B.3 Revaluations B.4 Other changes C. Decreases 5,226 4,200 C.1 Sales C.2 Writedowns 5,226 4,200 C.4 Other changes D. Closing balance 30,524 27,750 E. Total revaluations F. Total writedowns 18,947 13,721

The increase in 2011 is entirely attributable to a capital contribution to the subsidiary BCC Lease, approved by the Extraordinary Shareholders’ Meeting of April 27, 2011. The decrease in 2011 is entirely attributable to the writedown of BCC Factoring following impairment testing.

10.4 Commitments in respect of subsidiaries

At the balance sheet date, the Bank had €200 million in commitments in respect of BCC Factoring S.p.A. for sureties issued to secure exposures exceeding the limits set under the applicable prudential supervision regulations.

10.5 Commitments in respect of joint ventures

The table has not been completed because there were no such positions as of the balance sheet date.

10.6 Commitments in respect of companies subject to significant influence

The table has not been completed because there were no such positions as of the balance sheet date.

87

Section 11 – Property and equipment - item 110

11.1 Property and equipment: composition of assets carried at cost

Total Total

31/12/2011 31/12/2010

A. Operating assets 2,156 2,361 1.1 owned 2,156 2,361 a) land b) buildings 1,456 1,512 c) movables 191 259 d) electrical plant e) other 509 590 1.2 acquired under financial leases 0 0 a) land b) buildings c) movables d) electrical plant e) other Total A 2,156 2,361 B. Investment property 2.1 owned a) land b) buildings 2.2 acquired under financial leases a) land b) buildings Total B Total (A + B) 2,156 2,361

Asset used in operations ("other") include assets from closed or terminated leases in the amount of €180 thousand (€0.2 million at December 31, 2010). The amount is equal to the residual amount to be depreciated at the termination date for the lease, reduced further to take account of the recoverable value of the assets.

The depreciation rates used (only for assets used by the Bank) were 3% for buildings, 12% for movables, 20% for machinery, 15% for sundry equipment and 25% for communications systems. The rates are considered to represent the useful lives of the assets.

11.2 Property and equipment: composition of assets at fair value or revalued

The table has not been completed because there were no such positions as of the balance sheet date.

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11.3 Operating property and equipment: change for the period

Electrical Land Buildings Movables Other Total plant

A. Opening gross balance 1,843 1,668 13,077 16,588 A.1 Total net writedown 331 1,409 12,487 14,227 A.2 Opening net balance 1,512 259 590 2,361 B. Increases: 3,321 3,321 B.1 Purchases 167 167 B.2 Capitalized improvement costs B.3 Writebacks 0 0 B.4 Fair value gains recognized in recognized in a) equity b) income statement B.5 Positive exchange rate differences B.6 Transfers from investment property B.7 Other changes 3,153 3,153 C. Decreases: 55 69 3,402 3,526 C.1 Sales 2,147 2,147 C.2 Depreciation 55 69 131 255 C.3 Writedowns for impairment recognized in 15 15 a) equity b) income statement 15 15 C.4 Fair value losses recognized in a) equity b) income statement C.5 Negative exchange rate differences C.6 Transfers to: a) investment property

b) discontinuing operations C.7 Other changes 1,108 1,108 D. Closing net balance 1,457 190 509 2,156 D.1 Total net writedowns 386 1,479 12,241 14,106 D.2 Closing gross balance 1,843 1,670 12,750 16,262 E. Measurement at cost 1,843 1,670 12,750 16,262

“Other” includes change in assets from recoveries on closed or terminated leases, net of accumulated depreciation.

11.4 Investment property: change for the period

The table has not been completed because there were no such positions as of the balance sheet date.

11.5 Commitments to acquire property and equipment (IAS 16/74.c)

The table has not been completed because there were no such positions as of the balance sheet date.

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Section 12 – Intangible assets – item 120

12.1 Intangible assets: composition by category

Total Total 31/12/2011 31/12/2010

Finite Indefinite Finite Indefinite life life life life

A.1 Goodwill A.2 Other intangible assets 4,537 4,478 A.2.1 Assets carried at cost: 4,537 4,478 a) internally-generated intangible assets

b) other assets 4,537 4,478 A.2.2 Assets designated at fair value: a) internally-generated intangible assets

b) other assets Total 4,537 4,478

The increases on the previous year are mainly attributable to the costs capitalized by the Bank as part of the “EVO Program” started in 2007, which consists of a series of coordinated projects to improve the quality of data used in systems and to provide Bank units with certified data through a new application infrastructure (Staging Area) that can be adapted to future business developments. The costs capitalized at December 31, 2011 came to €6.1 million (€5.7 million at December 31, 2010). The useful life considered for amortization purposes is 5 years for the “EVO Program” and 3 years for the other intangible assets.

12.2 Intangible assets: change for the period

Other intangible assets: Other intangible assets: Goodwill generated internally other Total Finite Indefinite Finite Indefinite A. Opening balance 9,173 9,173 A.1 Total net writedown 4,695 4,695 A.2 Opening net balance 4,478 4,478 B. Increases 2,116 2,116 B.1 Purchases 2,116 2,116 B.2 Increases in internally generated intangible assets

B.3 Writebacks B.4 Fair value gains recognized in - equity - income statement B.5 Positive exchange rate differences B.6 Other changes C. Decreases 2,057 2,057 C.1 Sales C.2 Writedowns 2,057 2,057 - Amortization 2,057 2,057 - Impairment + equity + income statement C.3 Fair value losses recognized in - equity - income statement C.4 Transfers to non-current assets held for sale C.5 Negative exchange rate differences C.6 Other changes D. Closing net balance 4,537 4,537 D.1 Total net writedowns 6,752 6,752 E. Closing gross balance 11,289 11,289 F. Measurement at cost 11,289 11,289

90

Section 13 - Tax assets and tax liabilities - item 130 of assets and item 80 of liabilities

13.1 Deferred tax assets: composition

The item “tax assets”, equal to €122 million (€103.2 million at December 31, 2010), is composed of “current tax assets” in the amount of €38.2 million (€29.9 million in 2010) and “deferred tax assets" in the amount of €83.8 million (€73.4 million in 2010). The receivables in respect of current tax assets in the amount of €38.2 million include €19 million for VAT credits for which reimbursement has been requested, plus associated interest and €19.2 million for tax receivables (€12.9 million in 2010).

The item “tax liabilities”, equal to €18.5 million (€16.9 million in 2010), is composed of “current tax liabilities” in the amount of €17.4 million (€16.4 million at December 31, 2010) and “deferred tax liabilities” in the amount of €1.1 million (€0.5 million in 2010).

The determination of these assets and liabilities reflects, among other things, the impact of the adoption of the consolidated taxation mechanism introduced with Legislative Decree 344 of December 12, 2003; Accordingly, the tax result for IRES purposes for the year was immediately partially offset with the taxable income of the consolidating company, ICCREA Holding S.p.A.. The corresponding items are classified under item 150 “other assets” and item 100 “other liabilities”.

Current tax assets mainly regard advance payments (€8.4 million) in respect of IRAP (the regional business tax) and the VAT credits and associated interest for which reimbursement has been requested (€19 million); current tax liabilities regard the IRAP liability for the period and the one-off tax pursuant to Article 1, paragraphs 137 and 140 of Law 296/2006 detailed under Table 18.1.

13.1 Deferred tax assets: composition

Total 31/12/2011 Total 31/12/2010

Deferred tax assets (recognized in equity) 22 852 Deferred tax assets (recognized in the income statement) 83,829 72,500 Total 83,851 73,352

The recognition of deferred tax assets for IRES purposes is based on the consolidated taxation mechanism noted earlier, taking account of expected consolidated performance in coming years. The recognition of such assets main regarded the following items: loan writedowns exceeding limits on deductibility pursuant to Article 106 of the Uniform Income Tax Code, provisions, units of CIUs (IRAP only), adjustment for IRAP rates and the realignment (third installment) pursuant to Article 15 of Decree Law 185/2008 (realignment of values reported for tax purposes with those used for statutory reporting purposes), for 2008 the Bank recognized deferred tax assets that are deductible in equal installments of €1.2 million in five years as from 2009.

In application of IAS 39, the decrease in deferred tax assets recognized in shareholders’ equity regards the recognition in equity of the fair value of the derivatives hedging the cash flows from the securitized loans and the fair value of the derivatives hedging the interest rate risk on floating-rate loans with average indexing.

91

13.2 Deferred tax liabilities: composition

Total 31/12/2011 Total 31/12/2010

1. Deferred tax liabilities (recognized in equity) 999 360 2. Deferred tax liabilities (recognized in the income statement) 90 99 Total 1,089 459

The stock of deferred tax liabilities recognized in the income statement regards the misalignment between the statutory reporting value and tax reporting value of employee termination benefits compared with their IAS value, for which it was decided not to exercise the realignment option, while deferred tax liabilities recognized in equity regard the decrease in taxes on the negative value of the derivative hedging the cash flows on the Agrisecurities 3 securitization and the increase in taxes on the positive fair value of derivatives hedging the interest rate risk on floating-rate loans with average indexing.

Deferred tax assets and liabilities were calculated on the basis of the prevailing IRES rate of 27.5% and the IRAP rate of 5.57%. Following the corrective budget measures contained in Decree Law 989 of July 6, 2011, ratified with amendments with Law 111 of July 15, 2011, the ordinary rate for IRAP was raised from 4.82% to 5.57%.

92

13.3 Changes in deferred tax assets (recognized in income statement)

Total Total

31/12/2011 31/12/2010

1. Opening balance 72,500 45,986 2. Increases 16,542 30,491 2.1 Deferred tax assets recognized during the period 16,270 30,491 a) in respect of previous periods 11 b) due to change in accounting policies c) writebacks d) other 16,270 30,480 2.2 New taxes or increases in tax rates 272 2.3 Other increases 3. Decreases 5,214 3,977 3.1 Deferred tax assets derecognized during the period 5,123 3,901 a) reversals 5,123 3,901 b) writedowns for supervening non-recoverability c) due to changes in accounting policies d) other 3.2 Reduction in tax rates 3.3 Other decreases 91 76 4. Closing balance 83,829 72,500

The main changes in deferred tax assets recognized in the income statement primarily regard loan writedowns, provisions for risks and charges, writedowns of assets returned from finance leases and, for IRAP purposes only, the writedown of the units of the “Securis Real Estate” investment fund.

More specifically, as regards the investment in Bianchi Vending Group SpA recognized under item 40 of assets, a petition was submitted to the tax authorities pursuant to Article 113 of the Uniform Income Tax Code requesting non-application of the provisions of Article 87 of the Code (participation exemption) with regard to equity interests acquired as part of loan collection proceedings or from the conversion of loans into newly issued shares of companies in a state of temporary financial distress. On 20 February 2012 the Revenue Agency confirmed the non-application of the participation exemption system. As a result, the Bank was able to consider the writedown of the equity interest as a loan loss adjustment, treating it in the manner established for loan writedowns pursuant to Article 106, paragraph 3, of the Code.

Pursuant to the provisions of Article 15, paragraph 3, of Decree Law 185/2008, the Bank realigned the statutory reporting and tax values of prior transactions that, until December 31, 2007, were characterized, classified, measured and recognized for tax purposes in a different manner than that used to characterize, classify, measure and recognize those components for financial reporting purposes. The deferred tax assets recognized at December 31, 2008 (about €6.2 million) as a result of the exercise of the option in respect of remaining misalignments at that date produced a negative balance deductible in equal installments over five years beginning in 2009. (see table 13.1).

93

13.4 Changes in deferred tax liabilities (recognized in income statement)

Total Total

31/12/2011 31/12/2010

1. Opening balance 99 215 2. Increases 2.1 Deferred tax liabilities recognized during the period a) in respect of previous periods b) due to change in accounting policies c) other 2.2 New taxes or increases in tax rates 2.3 Other increases 3. Decreases 9 116 3.1 Deferred tax liabilities derecognized during the period 9 116 a) reversals 9 116 b) due to change in accounting policies c) other 3.2 Reduction in tax rates 3.3 Other decreases 4. Closing balance 90 99

The change in deferred tax liabilities regarded the release of taxes correlated with the greater IAS accrual to the termination benefit provision.

13.5 Changes in deferred tax assets (recognized in shareholders' equity)

Total Total

31/12/2011 31/12/2010

1. Opening balance 852 4,053 2. Increases 292 2.1 Deferred tax assets recognized during the period 291 a) in respect of previous periods b) due to change in accounting policies c) other 291 2.2 New taxes or increases in tax rates 1 2.3 Other increases 3. Decreases 1,122 3,201 3.1 Deferred tax assets derecognized during the period 1,122 3,201 a) reversals 1,122 3,201 b) writedowns for supervening non-recoverability c) due to changes in accounting policies 3.2 Reduction in tax rates 3.3 Other decreases 4. Closing balance 1. Opening balance 22 852

The decreases in deferred tax assets recognized in equity regarded: a) the value of the valuation reserve for derivatives hedging the cash flows of securitized receivables; b) the reversal of the taxation in respect of derivatives hedging interest rate risk on floating-rate loans with average indexing as a result of their termination; c) the positive fair value of derivatives hedging interest rate risk on floating-rate loans with average indexing that gave rise to the deferred taxation.

The increase of €0.5 thousand reflects the adjustment to the new IRAP rate of the stock at December 31, 2011 of revaluation reserve for cash flow hedge derivatives in respect of securitized loans (Agri 2).

94

13.6 Changes in deferred tax liabilities (recognized in shareholders' equity)

Total Total

31/12/2011 31/12/2010

1. Opening balance 360 547 2. Increases 830 2.1 Deferred tax liabilities recognized during the period 826 a) in respect of previous periods b) due to change in accounting policies c) other 826 2.2 New taxes or increases in tax rates 4 2.3 Other increases 3. Decreases 191 187 3.1 Deferred tax liabilities derecognized during the period 191 187 a) reversals 191 187 b) due to change in accounting policies c) other 3.2 Reduction in tax rates 3.3 Other decreases 4. Closing balance 999 360

Deferred tax liabilities recognized in equity increased owing to the positive fair value of the derivatives hedging the interest rate risk on floating-rate securities with average indexing, while those in respect of the negative fair value of the derivatives hedging the cash flows of securitized receivables (Agrisecurities 3) were reversed, following the interruption of the hedge relationship during 2011.

95

Section 14 – Non-current assets and disposal groups held for sale and associated liabilities – item 140 of assets and item 90 of liabilities

There were no such positions as of the balance sheet date.

96

Section 15 - Other assets - item 150

15.1 Other assets: composition

Total 31/12/2011 Total 31/12/2010

Sundry receivables 107,378 69,940 Receivables from consolidating company 32,270 27,745 Total 139,648 97,685

The item “Sundry receivables” essentially includes: - accrued income and prepaid expenses other than those that can be capitalized in the value of the related financial assets in the amount of €1.2 million (€0.9 million in 2010); - VAT for which reimbursement has not yet been requested, and therefore not recognized under financial assets, on invoices falling due after December 31, 2011 in the amount of €24.8 million (€22.3 million in 2010); - VAT on advances to suppliers in the amount of €0.8million (€1.1 million in 2010); - expenses for leasehold improvements in the amount of €0.1 million, net of depreciation (€0.3 million in 2010); - premiums to be collected for derivatives business with customers in the amount of €20.8 million (€15.2 million in 2010). - receivables in respect of principal and interest reimbursed on a quarterly basis by the vehicle for securitizations in the amount of €42 million.

“Receivables from consolidating company” include receivables arising in respect of participation, as from 2004, in the Group’s consolidated taxation mechanism. They mainly regard the IRES payments on account for 2011 in the amount of €30.2 million (€27.2 million in 2010). They also include €1.4 million for income from the consolidated tax mechanism.

A total of €11 thousand in premiums were reclassified to this item from “Financial assets held for trading”.

97

Liabilities

Section 1 Due to banks - item 10

1.1 Due to banks: composition by type

Total 31/12/2011 Total 31/12/2010

1. Due to central banks 2. Due to banks 2,508,422 2,322,139 2.1 Current accounts and demand deposits 273,546 413,960 2.2 Fixed-term deposits 2.3 Loans 2,234,876 1,908,179 2.3.1 Repurchase agreements 927,433 0 2.3.2 Other 1,307,443 1,908,179 2.4 Liabilities in respect of commitments to repurchase own equity instruments 2.5 Other payables Total 2,508,422 2,322,139 Fair value 2,510,834 2,329,429

The change in "loans" is attributable to short and medium/long-term funding transactions and derives from the funding strategies developed by the centralized Group Finance unit at Iccrea Banca. The cost of funding is settled on market terms and conditions, which reflect the average cost of funding incurred by Iccrea Banca plus a spread to remunerate the service. As discussed in Part A.1, section 4, of the notes, in December 2011, the Bank, taking advantage of the possibility permitted under specific legislation, carried out (through Iccrea Banca) a refinancing operation with the European Central Bank in the amount of €607 million, pledging as collateral securities issued and repurchased by it and guaranteed by the Italian government pursuant to Article 8 of Decree Law 201 of December 6, 2011, ratified with Law 214 of December 22, 2011. The amount is reported in the item for repurchase agreements in the above table. As regards the characteristics of the transaction, it involved a nominal value of €650 million, initiating 20 December 2011 and terminating 20 March 2012, with a gross annual fixed rate of 2.75%.

1.2 Breakdown of item 10 “Due to banks”: subordinated liabilities

There were no such positions as of the balance sheet date.

1.3 Breakdown of item 10 “Due to banks”: structured liabilities

There were no such positions as of the balance sheet date.

1.4 Due to banks: liabilities hedged specifically

There were no such positions as of the balance sheet date.

1.5 Liabilities in respect of finance leases

There were no such positions as of the balance sheet date.

98

Section 2 - Due to customers - item 20

2.1 Due to customers: composition by type

Total 31/12/2011 Total 31/12/2010

1. Current accounts and demand deposits 1 0 2. Fixed-term deposits 3. Loans 120,657 3.1 Repurchase agreements 3.2 Other 120,657 4. Liabilities in respect of commitments to repurchase own equity instruments 5. Other payables 1,486,414 986,549 Total 1,486,415 1,107,205 Fair value 1,414,076 1,053,831

"Other payables" is reported net of the ABSs repurchased during the period in the amount of €302.6 million, which were partially redeemed in the amount of €242 million.

The increase in "Other payables" is also attributable to the increase in amounts due to financial institutions in the amount of €243 million. In the 2010 financial statements, payables for grants to be used in lending to customers in the amount of about €3.7 million were classified under this item. In 2011, they were classified under other liabilities (€4.8 million).

Liabilities in respect of government funds under administration and loans to ordinary customers, which as at 31 December 2010 had been classified under item “3.2 – Loans – Other” have been classified under item “5 – Other payables” to improve their presentation. “Other payables” also include €106 thousand (€96 thousand in 2010) in respect of amounts due to customers reclassified from item 100 – “Other liabilities”.

2.2 Breakdown of item 20 “Due to customers”: subordinated liabilities

There were no such positions as of the balance sheet date.

2.3 Breakdown of item 20 “Due to customers”: structured liabilities

There were no such positions as of the balance sheet date.

99

2.4 Due to customers: liabilities hedged specifically

Total 31/12/2011 Total 31/12/2010

1. Liabilities covered specifically by fair value hedges d) interest rate risk e) exchange rate risk f) multiple risks 2. Liabilities covered specifically by cash flow hedges: 0 354,049 d) interest rate risk 0 354,049 e) exchange rate risk f) other

As at December 31, 2010, specifically hedged liabilities regard the third securitization only. As of the reporting date for the 2011 financial statements, the item is equal to zero owing to the discontinuation of the hedge in the light of the outcome of the effectiveness test on the position (as noted in the comments to table 8.1 under assets).

2.5 Liabilities in respect of finance leases

There were no such positions as of the balance sheet date.

100

Section 3 - Securities issued - item 30

3.1 Securities issued: composition by type

Total Total 31/12/2011 31/12/2010

Fair value Fair value

Carrying Carrying amount amount Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

A. Securities 5,214,750 344,100 5,317,336 567,720 1. Bonds 5,214,750 344,100 5,317,336 567,720 1.1 structured 246,060 246,060 430,294 430,294 1.2 other 4,968,690 98,040 4,887,041 137,426 2. Other 2.1 structured 2.2 other Total 5,214,750 344,100 5,317,336 567,720

Bonds in effective hedging relationships are measured at fair value, while the others are recognized at amortized cost. In the case of structured bonds, the fair value of embedded derivatives is separated, where possible, and reported under financial assets or liabilities held for trading. The Bank has issued 34 bonds, of which 7, amounting to €344 million, are covered by fair value hedges (essentially structured equity linked notes and step-up bonds).

As noted earlier, the cost of funding is settled on market terms and conditions, which reflect the average cost of funding incurred by Iccrea Banca plus a spread to remunerate the service. More specifically, the terms and conditions of the medium/long-term issues subscribed by Iccrea Banca are as follows: • issue of 15/05/2009, nominal value €81 million, fixed rate 3.225%; • issue of 15/05/2009, nominal value €54 million, euribor plus spread of 50 basis points; • issue of 15/05/2009, nominal value €666 million, euribor plus spread of 50 basis points; • issue of 15/05/2009, nominal value €99 million, euribor plus spread of 50 basis points; • issue of 01/07/2009, nominal value €180 million, fixed rate 3.402% • issue of 01/07/2009, nominal value €720 million, euribor plus spread of 50 basis points; • issue of 30/12/2009, nominal value €400 million, euribor plus spread of 50 basis points; • issue of 02/08/2010, nominal value €245 million, euribor plus spread of 95 basis points; • issue of 16/11/2010, nominal value €400 million, euribor plus spread of 178 basis points; • issue of 01/01/2011, nominal value €17 million, fixed rate 3.6% • issue of 01/04/2011, nominal value €324 million, euribor plus spread of 178 basis points; • issue of 06/05/2011, nominal value €321 million, euribor plus spread of 145 basis points; • issue of 20/05/2011, nominal value €300 million, euribor plus spread of 212 basis points.

The figures in the above table for the fair value calculated using Level 2 inputs specifically refer to the hedged bonds and, as such, recognized at fair value.

The overall fair value of the item amounted to €5,299 million (€5,243 million at December 31, 2010).

101

3.2 Breakdown of item 30 "Securities issued": subordinated securities

Total Total

31/12/2011 31/12/2010

Opening balance 230,415 259,267 Issues in period Other changes 35,155 28,852 Closing balance 195,260 230,415

Other changes in the period are attributable to the net effect of the change in the amortized cost of -€5.7 million and the extinguishment of a subordinated loan for subordinated securities not hedged specifically and the change in the fair value (€1.9 million) of the only hedged security (ISIN XS0295539984).

3.2.1 Breakdown of item 30 "Securities issued": subordinated securities

Carrying Currency Maturity Interest rate amount

1) ISIN XS0203393730 18/10/2004 TV 15,063 EURO 18/10/2014 3m Euribor +0.65% 2) ISIN XS0222800152 27/06/2005 TV 19,953 EURO 27/06/2015 3m Euribor +0.55% 3) ISIN XS0287516214 19/02/2007 TV 50,789 EURO 19/02/2017 3m Euribor +0.50% 4) ISIN XS0287519663 20/02/2007 TV 50,804 EURO 20/02/2017 3m Euribor +0.50% 5) ISIN XS0295539984 11/04/2007 TF 58,651 EURO 11/04/2017 5.22% Total 195,260

3.3 Securities issued: securities hedged specifically

Total 31/12/2011 Total 31/12/2010

1. Securities covered by specific fair value hedges 344,100 567,720 a) interest rate risk 344,100 567,720 b) exchange rate risk c) multiple risks 2. Liabilities covered by specific cash flow hedges a) interest rate risk b) exchange rate risk c) other

102

Section 4 - Financial liabilities held for trading - item 40

4.1 Financial liabilities held for trading: composition by type

Total Total 31/12/2011 31/12/2010

FV FV NV FV* NV FV* L1 L2 L3 L1 L2 L3 A. On-balance-sheet liabilities 1. Due to banks 2. Due to customers 3. Debt securities 3.1 Bonds 3.1.1 Structured 3.1.2 Other bonds 3. Other 3.2.1 Structured 3.2.2 Other Total A B. Derivatives 1. Financial derivatives 37,461 24,274 1.1 Trading 29,227 17,144 1.2 Associated with fair value option 1.3 Other 8,234 7,130 2. Credit derivatives 2.1 Trading 2.2 Associated with fair value option 2.3 Other Total B 37,461 24,274 Total (A+B) 37,461 24,274

Key: FV = Fair value FV*= Fair value calculated excluding changes in the amount attributable to changes in the creditworthiness of the issue since the issue date NV = nominal or notional value

L1=Level 1 L2=Level 2 L3=Level 3

The item "Other" consists of contracts associated with the Agri5 securitization with a negative fair value of €2.3 million, the Agri6 securitization with a negative fair value of €0.9 million, and the Agri7 securitization with a negative fair of €5 million. Liabilities (and assets) held for trading report the market value (about €29.2 million) of derivatives originated by the Bank's business in the investment services sector. These operations involve the sale of derivatives to customers, with matching transactions with ICCREA Banca. The value in respect of customer counterparties is equal to €7.6 million. At December 31, 2010, the item “Other” included derivatives separated from structured securities in the amount of €3.2 million). Their value at December 31, 2011 was zero.

“Other” at December 31, 2010, also included €10 thousand in respect of option premiums, which have been reclassified to “Other liabilities” to improve their presentation in these financial statements.

4.2 Breakdown of item 40 “Financial liabilities held for trading": subordinated liabilities

There were no such positions as of the balance sheet date.

4.3 Breakdown of item 40 “Financial liabilities held for trading": structured liabilities

There were no such positions as of the balance sheet date.

103

4.4 On-balance sheet financial liabilities (excluding technical overdrafts) held for trading: change for the period

The table has not been completed because there were no such positions as of the balance sheet date.

Section 5 Financial liabilities at fair value – item 50

There were no such positions as of the balance sheet date.

104

Section 6 - Hedging derivatives - item 60

6.1 Hedging derivatives: composition by type of hedge and level of inputs

Fair value Fair value 31/12/2011 31/12/2010 NV NV

31/12/2011 31/12/2010

L1 L2 L3 L1 L2 L3

A. Financial derivatives 29,805 499,877 31,982 1,629,160 1) Fair value 29,805 499,877 31,459 741,560 2) Cash flows 523 887,600 3) Investments in foreign operations B. Credit derivatives 1) Fair value 2) Cash flows Total 29,805 499,877 31,982 1,629,160

Key: NV = notional value L1 = Level 1 L2 = Level 2 L3 = Level 3

In 2011, as in previous years, the Bank has classified derivatives associated with the hedging of interest- rate risk on floating-rate loans with average indexing as hedging instruments (in addition to the structures on bond issues and derivatives hedging securitizations and the fixed-rate portfolio). The item reports the negative fair value in the amount of €27.8 million of the derivatives hedging fixed-rate loans and the negative fair value in the amount of €1.9 million of the derivatives hedging bond issues.

In 2010, the cash flow hedges item regarded the negative fair value of the derivatives hedging floating- rate rate loans with average indexing, whose fair value at December 31, 2011, is positive and is therefore reported under the corresponding item of assets (see the comments to Table 8.1 for more information).

6.2 Hedging derivatives: composition by hedged portfolio and type of hedge

Cash flow Fair value

Investments in Specific foreign Generic Specific Generic operations Interest Exchange Credit Multiple Price risk rate risk rate risk risk risks 1. Financial assets available for sale 2. Loans 924 3. Financial assets held to maturity 4. Portfolio 26,955 5. Other transactions Total assets 27,879 1. Financial liabilities 1,926 2. Portfolio Total liabilities 1,926 1. Forecast transactions 2. Portfolio of financial assets and liabilities

As noted for Table 6.1, the amount of €27 million regards the negative value of the derivatives hedging risk on fixed-rate loans.

105

Section 7 Value adjustment of generically hedged liabilities – item 70

There were no such positions as of the balance sheet date.

106

Section 8 - Tax liabilities – item 80

See section 13 under assets.

107

Section 9 - Liabilities associated with assets held for sale – item 90

There were no such positions as of the balance sheet date.

108

Section 10 - Other liabilities - item 100

10.1 Other liabilities: composition

Total 31/12/2011 Total 31/12/2010

Trade payables 70,013 65,321 Invoices to receive for leased assets 1,962 7,841 Invoices to receive from suppliers 20,863 18,828 Other amounts due to customers 28,946 12,407 Customers for advances on sales 626 8,610 Grants to disburse to customers 5,558 5,210 Amounts due to employees for deferred additional monthly salaries 5,771 4,855 Amounts due to social security institutions 1,330 1,281 Amounts due to tax authorities 2,963 3,778 Amounts due to consolidating company 17,595 33,088 Amounts due to insurance undertakings 1,582 1,508 Other payables 41,147 35,673 Total 198,356 198,400

In 2011, €106 thousand (€96 thousand in 2010) were reclassified from “Other amounts due to customers” to item 20 “Due to customers”.

“Amounts due to employees” includes €2.07 million in respect of early retirement incentives for employees, as reported in the comments to Table 9.1 “Personnel expenses: composition”, Section 9 – Item 150.

“Amounts due to consolidating company” are entirely accounted for by the tax payable at December 31, 2011 arising from participation in the consolidated taxation mechanism.

“Other payables” is mainly composed of: - premiums to be paid for derivatives transactions for customers in the amount of €14.8 million (€15.2 million the previous year); - transit items in respect of securitizations in the amount of €20.8 million (€16.2 million the previous year).

The item also includes liabilities in respect of grants for loans to customers in the amount of about €4.8 million (€3.7 million at December 31, 2010) reclassified from amounts due to customers. “Other payables” at December 31, 2011, also includes €10 thousand (same amount a year earlier) in respect of option premiums reclassified from “Financial liabilities held for trading” in order to improve presentation in the financial statements.

109

Section 11 - Employee termination benefits - item 110

11.1 Employee termination benefits: changes for the period

The provision under this item regards the Bank’s liability as determined in compliance with the criteria established by IAS 19 concerning defined-benefit plans.

The following table reports movements in the provision for employee termination benefits with respect to the previous year.

Total Total

31/12/2011 31/12/2010

A. Opening balance: 5,879 5,970 B. Increases 1,183 614 B.1 Provision for the period 294 614 B.2 Other increases 889 C. Decreases 1,532 705 C1. Benefit payments 1,458 684 C.2 Other decreases 75 21 D. Closing balance 5,530 5,879 Total 5,530 5,879

At December 31, 2011 the actuarial gain not recognized in application of the corridor method amounted to €16 thousand, the net result of unrecognized actuarial gains of €143 thousand and losses of €127 thousand.

The provision for the period, equal to €294 thousand, includes the interest cost as determined on the basis of actuarial and financial estimates, as the Bank did not recognize any service cost as a result of the pension system reform, as discussed in detail in the annual report for previous years. “Other increases” reports the transfer of provisions following the acquisition of the business unit in January 2011, equal to €889 thousand.

The provision for employee termination benefits, which under the reform continues to be recognized by the Bank, was calculated using the following actuarial and financial assumptions:

- regulatory parameters: all applicable regulations and interpretations;

- demographic parameters: mortality probabilities were drawn from ISTAT's 2004 mortality tables and the INPS disability tables; the annual rate of exit from the plan as a result of resignation or dismissal was set at 3.75%; the probability of employees requesting an advance on their benefit was set at 2.86% per year, with the average size of the advance equal to 43.00% of the benefit; the retirement age for general staff in service was assumed to be the earliest eligible age under the general compulsory pension system;

- economic and financial parameters: rate of increase in salaries 2.38% (used only for calculating the loyalty bonus); inflation rate 2.00%; average discount rate 4.60%. As regards the discount rate, in view of the high volatility in the financial markets and the discussions held in December with the national actuarial association, it was decided to use the Iboxx Obbligazioni Corporate AA for the euro area at December 31, 2011, as the benchmark index, with an average duration comparable to that of the group being measured.

110

Section 12 - Provisions for risks and charges - item 120

12.1 Provisions for risks and charges: composition

Total Total

31/12/2011 31/12/2010

1. Company pension plans 2. Other provisions for risks and charges 27,002 25,956 2.1 legal disputes 17,739 16,106 2.2 personnel expenses 2.3 other 9,263 9,849 Total 27,002 25,956

Legal disputes include legal expenses in the amount of about €8.6 million (about €7.5 million at December 31, 2010) for credit recovery, the amount of which is estimated at the end of each period. On the basis of past experience, the Bank estimates that most of this cost will be incurred in the subsequent 12 months.

The remainder of the item “Legal disputes” regards pending litigation for which the timing of any adverse rulings is estimated at an average of about 2 years.

The provision under “other” is mainly accounted for by contingent liabilities in respect of former tenants.

The large number and non-material individual amount of legal disputes and contingent liabilities in respect of former tenants means that a detailed analysis of payment forecasts for those disputes would not be significant.

The time value was estimated using listed IRS rates for equivalent maturities.

111

12.2 Provisions for risks and charges: change for the period

Retirement Other provisions provisions Total

A. Opening balance 25,956 25,956 B. Increases 1,996 1,996 B.1 Provisions for the year 1,867 1,867 B.2 Changes due to passage of time 129 129 B.3 Changes due to changes in the discount rate B.4 Other increases C. Decreases 950 950 C.1 Use during the period 900 900 C.2 Changes due changes in the discount rate C.3 Other decreases 50 50 D. Closing balance 27,002 27,002

12.3 Defined-benefit company pension plans

There were no such positions as of the balance sheet date.

12.4 Provisions – other

The information is summarized in the changes reported in Table 12.2 for “Other provisions".

112

Section 13 – Redeemable shares – item 140

There were no such shares as of the balance sheet date.

113

Section 14 - Shareholders' equity - items 130, 150, 160, 170, 180, 190 and 200

14.1 "Share capital” and “Treasury shares": composition

Subscribed and Issued Treasury shares not paid up Ordinary 374,564,250 Savings shares Preference shares Total 374,564,250

As of the reporting date for these financial statements, the number of ordinary shares issued totaled 7,251,970. On December 22, 2010, the shareholders meeting approved – with effect from January 1, 2011 – a capital for the acquisition of the corporate business unit from ICCREA Banca through the issue of 756,970 new shares with a par value of €51.65 each.

114

14.2 Share capital – Number of shares: change for the period

Ordinary Other

A. Shares at start of the year 6,495,000 - fully paid 6,495,000 - partially paid A.1 Treasury shares (-) B.2 Shares in circulation: opening balance B. Increases 756,970 B.1 new issues 756,970 - for consideration: 756,970 - business aggregations 756,970 - conversion of bonds - exercise of warrants - other - bonus issues: - to employees - to directors - other B.2 Sale of own shares B.3 Other C. Decreases C.1 Cancellation C.2 Purchase of own shares C.3 Disposal of companies C.4 Other changes D. Shares in circulation: closing balance 7,251,970 D.1 Treasury shares (+) D.2 Shares at the end of the year - fully paid - partially paid

115

14.4 Earnings reserves: other information

Type Amount Possible uses Available amount

Share capital 374,564 Legal reserve 18,369 B Extraordinary reserve 27,360 A,B,C 27,360 Retained earnings - IAS 24,100 24,100 FTA reserve -1,507 Other reserves 98,366 A,B,C 98,702 Total 166,688 150,161 Amount not available 16,526 Remainder

Key: A: for capital increases B: for loss coverage C: for distribution to shareholders

No reserves have been released in the last three years.

14.5 Equity instruments: composition and change for the period

There were no such positions as of the balance sheet date.

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Other information

1. Guarantees issued and commitments

Amount Amount

31/12/2011 31/12/2010

1) Financial guarantees issued 258,596 63,831 a) Banks b) Customers 258,596 63,831 2) Commercial guarantees issued 55,808 908 a) Banks 38,202 0 b) Customers 17,606 908 3) Irrevocable commitments to disburse funds 737,192 960,749 a) Banks 4,917 397 i) certain use 4,917 123 ii) uncertain use 0 274 b) Customers 732,275 960,352 i) certain use 91,532 551,662 ii) uncertain use 640,743 408,690 4) Commitments underlying credit derivatives: sales of protection 5) Assets pledged as collateral for third-party debts 6) Other commitments Total 1,051,596 1,025,488

Guarantees issued regard guarantees with which the Bank undertook to discharge or guarantee the obligation of customers.

Irrevocable commitments to disburse funds concern leases and loans that had not yet been disbursed as of the balance sheet date.

2. Assets pledged as collateral for own debts and commitments

As discussed in Part A.1, section 4, of the notes and in the comments to the table on amounts due to banks, the Bank carried out (through Iccrea Banca) a refinancing operation with the European Central Bank in the amount of €607 million, pledging as collateral securities issued and repurchased by it and guaranteed by the Italian government pursuant to Article 8 of Decree Law 201 of December 6, 2011, ratified with Law 214 of December 22, 2011.

3. Information on operating leases

There were no such positions as of the balance sheet date.

117

4. Management and intermediation services

1. Order execution on behalf of customers a) Purchases 1. Settled 2. Not yet settled b) Sales 1. Settled 2. Not yet settled 2. Asset management a) Individual b) Collective 3. Securities custody and administration 42,846 a) Third-party securities held as part of depository bank services (excluding asset management) 1. Securities issued by reporting entity 2. Other securities b) Other third-party securities on deposit (excluding asset management): other 42,846 1. Securities issued by reporting entity 2. Other securities 42,846 c) Third-party securities deposited with third parties 42,846 d) Securities owned by bank deposited with third parties 4. Other transactions

118

PART C – INFORMATION ON THE INCOME STATEMENT

119

Section 1 - Interest - items 10 and 20

1.1 Interest and similar income: composition

Loans Other Total Total Debt securities transactions 31/12/2011 31/12/2010

1. Financial assets held for trading 2. Financial assets available for sale 3. Financial assets held to maturity 4. Due from banks 2,379 0 2,379 1,139 5. Loans to customers 359,771 359,771 333,751 6. Financial assets at fair value 7. Hedging derivatives 0 6,160 8. Other assets 888 888 610 Total 362,150 888 363,038 341,661

During the period, interest income in respect of finance leases came to €284 million (€312 million at December 31, 2010). Negative indexing adjustments amounted to €17 million (€35 million the previous year).

1.2 Interest and similar income: differences on hedging transactions

There is nothing to report here because differences on hedging derivatives (fair value hedges) generated interest expense for the period under review.

1.3.1 Interest income on foreign-currency financial assets

Interest income on foreign-currency financial assets amounted to €748 thousand in 2011.

1.3.2 Interest income from finance leases

See information in Table 1.1.

1.4 Interest and similar expense: composition

Total Total Debt Securities Other 31/12/2011 31/12/2010

1. Due to central banks 2. Due to banks 53,374 53,374 32,201 3. Due to customers 24,349 24,349 13,879 4. Securities issued 122,733 122,733 83,870 5. Financial liabilities held for trading 6. Financial liabilities carried at fair value 7. Other liabilities and provisions 8. Hedging derivatives 8,312 8,312 16,721 Total 77,723 122,733 8,312 208,768 146,670

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1.5 Interest and similar expense: differences on hedging transactions

31/12/2011 31/12/2010

A. Positive differences on hedging transactions: 20,382 6,160 B. Negative differences on hedging transactions: 28,694 16,721 C. Balance (A-B) 8,312 10,561

1.6.1 Interest expense on foreign-currency liabilities

Interest expense on foreign-currency financial assets amounted to €291 thousand in 2011.

1.6.2 Interest expense on liabilities in respect of finance leases

There were no such positions as of the balance sheet date.

121

Section 2 – Fees and commissions - items 40 and 50

2.1 Fee and commission income: composition

Total Total

31/12/2011 31/12/2010

a) guarantees issued 1,154 900 b) credit derivatives c) management, intermediation and advisory services: 1,406 1,801 1. trading in financial instruments 2. foreign exchange 3. asset management 3.1. individual 3.2. collective 4. securities custody and administration 5. depository services 6. securities placement 7. order collection and transmission 8. advisory services 1,056 1,102 8.1 concerning investments 8.2 concerning financial structure 1,056 1,102 9. distribution of third-party services 350 700 9.1. asset management 9.1.1. individual 9.1.2. collective 9.2. insurance products 350 700 9.3. other d) collection and payment services e) servicing activities for securitizations f) services for factoring transactions g) tax collection services h) management of multilateral trading systems i) holding and management of current accounts j) other services 3,106 1,256 Total 5,666 3,957

Commissions from the distribution of insurance products to lease customers amounted to €0.4 million (€0.7 million at December 31, 2010). Fees and commissions from “Other services” benefitted from commissions earned by the international segment in the amount of €1.3 million.

2.2 Fee and commission income: distribution channels for products and services

Total Total 31/12/2011 31/12/2010

a) own branches: 1. asset management 2. securities placement 3. third-party services and products b) off-premises distribution: 1. asset management 2. securities placement 3. third-party services and products c) other distribution channels: 350 700 1. asset management 2. securities placement 3. third-party services and products 350 700

122

2.3 Fee and commission expense: composition

Total Total

31/12/2011 31/12/2010

a) guarantees received 1,707 1,276 b) credit derivatives c) management and intermediation services: 1. trading in financial instruments 2. foreign exchange 3. asset management: 3.1 own portfolio 3.2 third-party portfolio 4. securities custody and administration 5. placement of financial instruments 6. off-premises distribution of securities, products and services d) collection and payment services e) other services 2,930 3,417 Total 4,637 4,694

Commissions for “guarantees received” mainly regard commissions paid to mutual banks for loans assigned and counter-guaranteed by the latter, as noted in the comments to table 6.1 of assets in notes to the balance sheet.

“Other services” includes commissions paid to intermediaries for finance lease contracts that cannot be allocated to individual contracts. Commissions that can be allocated directly are reported under net interest income in application of the amortized cost method for determined the effective interest rate.

123

Section 3 - Dividends and similar revenues - item 70

3.1 Dividends and similar income: composition

Total Total 31/12/2011 31/12/2010 Income from Income from units in units in Dividends collective Dividends collective investment investment undertakings undertakings A. Financial assets held for trading B. Financial assets available for sale 1 1 C. Financial assets at fair value D. Equity investments Total 1 1

124

Section 4 - Net gain (loss) on trading activities - item 80

4.1 Net gain (loss) on trading activities: composition

Capital gains Trading Capital losses Trading losses Net gain [(A+B) -

(A) profits (B) (C) (D) (C+D)]

1. Financial assets held for trading 1.1 Debt securities 1.2 Equity securities 1.3 Units in collective investment undertakings 1.4 Loans 1.5 Other 2. Financial liabilities held for trading 2.1 Debt securities 2.2 Payables 2.3 Other 3. Other financial assets and liabilities: foreign exchange differences 42 4. Derivatives 42,430 74,122 8.652 103,809 4,091 4.1 Financial derivatives 42,430 74,122 8.652 103,809 4,091 - on debt securities and interest rates 42,430 74,122 8.652 103,809 4,091 - on equity securities and equity indices - on foreign currencies and gold - other 4.2 Credit derivatives Total 42,430 74,122 8.652 103,809 4,132

125

Section 5 - Net gain (loss) on hedging activities - item 90

5.1 Net gain (loss) on hedging activities: composition

Total Total

31/12/2011 31/12/2010

A. Gain on: A.1 Fair value hedges 4,020 10,563 A.2 Hedged financial assets (fair value) 4,790 428 A.3 Hedged financial liabilities (fair value) 5,068 2,112 A.4 Cash flow hedges 58 165 A.5 Assets and liabilities in foreign currencies Total income on hedging activities (A) 13,935 13,267 B. Loss on: B.1 Fair value hedges 11,316 5,980 B.2 Hedged financial assets (fair value) 0 2,082 B.3 Hedged financial liabilities (fair value) 1,922 4,271 B.4 Cash flow hedges 4,391 2,457 B.5 Assets and liabilities in foreign currencies Total expense on hedging activities (B) 17,629 14,790 C. Net gain (loss) on hedging activities (A-B) -3,693 -1,522

The table above reports the gains and losses on fair value hedges recognized by the Bank. They regard the fair value hedging of fixed-rate funding and fixed-rate loan portfolios, as well as the ineffective portion of cash flow hedges in respect of floating-rate funding and lending.

126

Section 6 - Gain (loss) on disposal or repurchase - item 100

6.1 Gain (loss) on disposal or repurchase: composition

Total Total 31/12/2011 31/12/2010

Net gain Net gain Gains Losses Gains Losses (loss) (loss) Financial assets 1. Due from banks 2. Loans to customers 3. Financial assets available for sale 3.1 Debt securities 3.2 Equity securities 3.3 Units in collective investment undertakings 3.4 Loans 4. Financial assets held to maturity Total assets Financial liabilities 1. Due to banks 2. Due to customers 0 503 503 3. Securities issued 15 15 78 78 Total liabilities 15 15 581 581

No gains classified under “Due to customers” were recognized for the year because no repurchases were made on the secondary market for ABSs.

127

Section 7 – Net adjustments of financial assets and liabilities at fair value – item 110

There were no such positions as of the balance sheet date.

128

Section 8 – Net losses/recoveries on impairment - item 130

8.1 Net losses/recoveries on impairment of loans: composition

Losses Recoveries (1) (2)

Specific Total

Portfolio 31/12/2011 Total

Writeoffs Specific Portfolio 31/12/2010 (1) - (2) Other

A B A B A. Due from banks - Loans - Debt securities B. Loans to customers 42,327 92,346 0 -29,845 -39,152 -7,908 57,767 101,678 - Loans 42,327 92,346 0 -29,845 -39,152 -7,908 57,767 101,678 - Debt securities C. Total 42,327 92,346 0 -29,845 -39,152 -7,908 57,767 101,678

Key: A: Recoveries from interest B: Other recoveries

129

8.2 Net losses/recoveries on impairment of financial assets available for sale: composition

Losses Recoveries (1) (2) Total 31/12/2011 Total

Specific Specific 31/12/2010 (1) - (2)

Writeoffs Other A B

A. Debt securities B. Equity securities 3,087 3,087 C. Units in collective investment undertakings 8,048 8,048 11,419 D. Loans to banks E. Loans to customers F. Total 11,135 11,135 11,419

Key: A: Recoveries from interest B: Other recoveries

The item reports writedowns of units of CIUs as discussed in the comments to Table 4.1 under assets. The adjustment of €3.1 million regards participating financial instruments acquired as part of measures to recover creditor positions.

8.3 Net losses/recoveries on impairment of financial assets held to maturity: composition

The table has not been completed because there were no such positions as of the balance sheet date.

130

8.4 Net losses/recoveries on impairment of other financial instruments: composition

Losses (1) Recoveries (2)

Specific

Portfolio Total Total Specific Portfolio Writeoffs 31/12/2011 31/12/2010

Other

A B A B

A. Guarantees issued 520 520 46 B. Credit derivatives C. Commitments to disburse funds D. Other transactions E. Total 520 520 46

Key: A = From interest B = Other recoveries

At December 31, 2010, the item includes the writedown of €4.2 million recognized in respect of the wholly- owned subsidiary BCC Factoring S.r.l.. In 2011, the amount was reclassified for presentation purposes to Item 210. At December 31, 2011, the item includes adjustments for guarantees, the amount of which rose substantially, partly as a result of the acquisition of the business unit.

131

Section 9 - Administrative expenses - item 150

9.1 Personnel expenses: composition

Total Total

31/12/2011 31/12/2010

1) Employees 41,599 35,556 a) wages and salaries 29,603 25,097 b) social security contributions 6,960 5,982 c) termination benefits d) pensions e) allocation to employee termination benefit provision 294 614 f) allocation to provision for retirement and similar liabilities - defined contribution - defined benefit g) payments to external pension funds: 1,803 1,552 - defined contribution 1,803 1,552 - defined benefit h) costs in respect of agreements to make payments in own equity instruments i) other employee benefits 2,940 2,310 2) Other personnel 383 560 3) Board of Directors and members of Board of Auditors 674 619 4) Retired personnel 5) Recovery of expenses for employees seconded to other companies - 815 - 429 6) Reimbursement of expenses for third-party employees seconded to the Company 1,190 2,799 Total 43,032 39,105

Personnel expenses rose compared with the previous year, with a significant contribution coming from the acquisition of the business unit, which involved the transfer of more than 40 employees to the Bank.

“Wages and salaries” includes €2.07 million in respect of early retirement incentives.

The staff departures came within the framework of the agreement for accessing the Solidarity Fund to support the income, employment and professional retraining of employees of mutual banks, signed on January 21, 2010. In 2011, a total of 12 employees of Iccrea BancaImpresa SpA left under the mechanism.

As from January 1, 2012, access to the Layoff Support Fund (Fondo Esodi) is no longer permitted for employees.

For presentation purposes, a total of €1.1 million (€981 thousand at December 31, 2010) in respect of expenses for meals and accommodation for employees on business trips were reclassified from item 150. a) “Personnel expenses” to the item “Other administrative expenses” 1.b), as discussed in greater detail in the comments to Table 9.5 below.

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9.2 Average number of employees by category

Average Average

31/12/2011 31/12/2010

Employees 450 405 a) senior management 14 13 b) middle management 205 192 c) other employees 231 200 Other personnel Total 450 405

As indicated in the comments to the previous table, the increase in the average number of employees is mainly attributable to personnel transferred with the business unit from Iccrea Banca.

133

9.3 Defined-benefit company pension plans: total costs

There were no such positions as of the balance sheet date.

9.4 Other employee benefits

The balance of €2,940 thousand at December 31, 2011 (€2,310 at December 31, 2010) mainly regards expenses for employee training (€232 thousand), supplementary pension fund contributions (€1,128 thousand) and staff cafeteria services (€621 thousand).

134

9.5 Other administrative expenses: composition

Total Total

31/12/2011 31/12/2010

1) Overheads 26,928 26,093 a) data processing 3,847 3,222 b) travel expenses 2,723 2,271 c) facility rental and management 4,494 4,112 d) telephone, postal charges and couriers 1,391 1,283 e) miscellaneous services 10,266 11,095 f) association dues 1,343 1,285 g) advertising and entertainment expenses 930 931 h) maintenance 1,452 1,468 i) office supplies, printed material, print subscriptions, photocopying, etc. 271 186 l) miscellaneous 211 241 2) Taxes and duties 344 270 Total 27,273 26,363

Item 1.b) reports €1.1 million reclassified from item 150 a) “Personnel expenses” for meals and accommodation for employees on business trips.

The reclassification was carried out on the basis of specific clarifications from the Bank of Italy concerning the recognition of certain types personnel costs in the income statement.

More specifically, lump-sum amounts paid for meals and accommodation and costs that represent itemized and documented reimbursements of expenses incurred by personnel must be recognized under item 150 a) of the bank income statement. Conversely, itemized and documented reimbursement of expenses for meals and accommodation of employees on business trips must be recognized under item 150 b) of the bank income statement.

In the light of these clarifications and with regard to the current procedures adopted by Iccrea BancaImpresa in accounting for expenses for meals and accommodation of employees on business trips, the above amount was reclassified from item 150 a) to item 150 b).

135

Section 10 – Net provisions for risks and charges - item 160

10.1 Net provisions for risks and charges: composition

Total Total

31/12/2011 31/12/2010

Legal disputes 1,343 3,593 Staff expenses Other 572 2,042 Total 1,915 5,635

The legal disputes item includes accruals in the amount of €1.3 million for litigation, assessed on the basis of the likelihood of an adverse ruling.

The accrual for “other” regards contingent liabilities in respect of former tenants of the buildings involved in terminated lease contracts and sold.

136

Section 11 – Net adjustments of property and equipment - item 170

11.1. Net adjustments of property and equipment composition

Writedowns Depreciation for Writebacks Net adjustments

(a) impairment (c) (a+b-c) (b)

A. Property and equipment 255 15 270 A.1 owned 255 15 270 - operating assets 255 15 270 - investment property A.2 acquired under finance leases - operating assets - investment property Total 255 15 270

The writedowns for impairment regard the writedown of the carrying amount of assets returned from lease contracts.

137

Section 12 - Net adjustments of intangible assets - item 180

12.1 Net adjustments of intangible assets: composition

Writedowns for Net adjustments Amortization (a) Writebacks (c) impairment (b) (a+b-c)

A. Intangible assets 2,057 2,057 A.1 owned 2,057 2,057 - generated internally by the Bank - other 2,057 2,057 A.2 acquired under finance leases Total 2,057 2,057

138

Section 13 – Other operating expenses/income - item 190

13.1 Other operating expenses: composition

Total Total Change % 31/12/2011 31/12/2010

Charges connected to leasing service 26,576 26,204 372 1.42% - consulting and other expenses connected to service 13,913 12,756 1,156 9.07% - insurance of leased assets 8,872 8,549 323 3.77% - taxes and duties connected to service 3,218 4,185 - 966 -23.10% - losses on disposal of assets returned from finance leases 72 202 - 131 -64.56% - other 501 511 - 10 -1.96% Other charges 3,310 2,858 453 15.86% Total other operating expenses 29,887 29,062 825 2.84%

139

13.2 Other operating income: composition

Total Total Change % 31/12/2011 31/12/2010

Income connected to leasing service 32,051 33,711 -1,659 -4.92% - recovery of expenses from customers (finance leasing) 9,822 10,417 - 595 -5.71% - recovery of expenses from others 596 652 - 55 -8.46% - other 21,632 22,642 -1,010 -4.46% Other income 6,042 3,666 2,376 64.83% Total other operating income 38,093 37,376 717 1.92%

The decline in income connected to the leasing service is offset by an increase in other income, which helped improve overall operating performance.

140

Section 14 - Profit (loss) from equity investments - item 210

14.1 Profit (loss) from equity investments: composition

Total Total

31/12/2011 31/12/2010

A. Gains 1. Revaluations 2. Gains on disposals 3. Writebacks 4. Other income B. Losses 5,226 4,200 1. Writedowns 2. Impairments 3. Losses on disposals 4. Other expenses Net profit (loss) 5,226 4,200

The item reports the writedowns recognized following the impairment testing of the investment in BCC Factoring. The amount was reclassified in 2011. In 2010 it had amounted to €4.2 million and was classified under item 130 of the income statement.

141

Section 15 – Net adjustment to fair value of property, plant and equipment and intangible assets – item 220

There were no such positions as of the balance sheet date.

142

Section 16 – Value adjustments of goodwill - – item 230

There were no such positions as of the balance sheet date.

143

Section 17 – Gains (losses) on disposal of investments – item 240

There were no such positions as of the balance sheet date.

144

Section 18 – Income tax expense from continuing operations - item 260

18.1 Income tax expense from continuing operations: composition

Total Total

31/12/2011 31/12/2010

1. Current taxes (-) -24,131 -42,259 2. Changes in current taxes from previous periods (+/-) - 1 17 3. Reduction of current taxes for the period (+) 4. Change in deferred tax assets (+/-) 11,329 26,514 5. Change in deferred tax liabilities (+/-) 9 116 6. Income taxes for the period (-) (-1+/-2+3+/-4+/-5) -12,794 -15,612

As noted earlier, the liability in respect of current taxes is recognized under tax liabilities in the amount of €7 million (€8.4 million in 2010) for the liability in respect of IRAP and under other liabilities (payables to parent company) in the amount of €17.6 million for the liability in respect of IRES, gross of payments made on account in the amount of €30.4 million (€33 million in 2010) and net of revenues of €1.3 million from participation in the consolidated taxation mechanism.

The calculation of the current tax liability for IRAP applied the new rate introduced in the corrective budget measures for 2011 in Decree Law 98/2011. It was increased from the 4.82% valid for 2010 to 5.57%.

Current taxes also include the special tax under Article 1, paragraphs 137 and 140, of Law 296/2006 provisioned in the amount of €0.8 million for gains realized on the transfer of buildings to the Securis Real Estate investment fund.

As regards changes in deferred tax assets and liabilities, please seen the extensive discussion in the notes to tables in section 13 of the balance sheet.

145

18.2 Reconciliation of theoretical tax liability and actual tax liability recognized

Taxable Tax rate Tax income IRES 27.50 Net profit (loss) for the period before tax 14,764 4,060 Timing differences taxable in subsequent periods 0 Timing differences deductible in subsequent periods 56,969 15,667 Reversal of taxable timing differences of previous periods -17,872 -4,915 Reversal of deductible timing differences of previous periods Permanent taxable differences 17,052 4,689 Permanent deductible differences -6,932 -1,906 Income taxable at subsidy rates Actual taxable income and tax 63,981 17,595 IRAP 5.75 Gross income 155,753 8,675 Items reducing gross income -26,627 -1,483 Taxable income for IRAP purposes 129,126 7,192 Timing differences taxable in subsequent periods Timing differences deductible in subsequent periods 10 1 Reversal of taxable timing differences of previous periods Reversal of deductible timing differences of previous periods - 291 - 16 Permanent taxable differences 13,858 772 Permanent deductible differences -15,904 - 886 Income taxable at subsidy rates Actual taxable income and tax 126,799 7,063

Timing difference taxable or deductible in subsequent years are the tax base used for determining deferred tax assets and liabilities for the period, applying the tax rates that are expected to be in force when the items reverse. The IRES and IRAP amounts reported in the table differ from the amount reported in respect of current taxes owing to the recognition under the latter of the income (equal to €1.3 million) from participation in the tax consolidation mechanism and the special gains tax provisioned in the amount of €0.8 million on the gain realized following the transfer of property to the real estate investment fund.

146

Section 19 – Profit (loss) after taxes from disposal groups – item 280

There were no such positions as of the balance sheet date.

147

PART D – COMPREHENSIVE INCOME

148

DETAILED BREAKDOWN OF COMPREHENSIVE INCOME

Income taxes Net amount Gross amount

10. Net profit (loss) for the period 14,764 -12,794 1,970 Other comprehensive income 20. Financial assets available for sale a) fair value changes b) reversal to income statement - impairment adjustments - gain/loss on realization c) other changes 30. Property and equipment 40. Intangible assets 50. Hedging of investments in foreign operations: a) fair value changes b) reversal to income statement c) other changes 60. Cash flow hedges: 4,475 -1,469 3,007 a) fair value changes 4,407 - 1,422 2,984 b) reversal to income statement 69 -47 22 c) other changes 70. Foreign exchange differences: a) value changes b) reversal to income statement c) other changes 80. Non-current assets held for sale: a) fair value changes b) reversal to income statement c) other changes 90. Actuarial gains (losses) on defined benefit plans 100. Valuation reserves of equity investments accounted for with equity method (pro rata): a) fair value changes b) reversal to income statement - impairment adjustments - gain/loss on realization c) other changes 110. Total other comprehensive income 4,475 -1,469 3,007 120. Comprehensive income (Item 10+110) 19,239 -14,263 4,977

149

PART E - RISKS AND RISK MANAGEMENT POLICIES

150

INTRODUCTION: RISKS OF THE BANKING GROUP

The ICCREA Banking Group attaches great importance to controlling risks and to control systems, which are essential to ensuring the reliable and sustainable generation of value, preserving a sound financial position over time, and enabling effective management of assets and liabilities.

In recent years, the Group has undertaken a gradual process to upgrade its methods and tools for managing credit, market and operational risks, bringing the system into line with external regulations and operational and internal monitoring needs.

SECTION 1 – CREDIT RISK

QUALITATIVE DISCLOSURES

1. General aspects

Iccrea BancaImpresa’s business has primarily involved lending in the form of leasing transactions for all typical product segments (real estate, equipment, auto, industrial vehicles, marine and, more recently, public sector leasing). The remainder of the Bank’s product range comprises ordinary loans in various forms (mortgage loans, unsecured loans, current account overdrafts, etc.) and corporate finance operations (acquisitions and LBOs, project financing in the renewable energy sector, public-sector project finance, shipping, real estate finance), begun in recent years. The range of products was expanded further with the transfer to Iccrea BancaImpresa of the International, Special Lending and Facilitated Credit business areas of Iccrea Banca. Most of Iccrea BancaImpresa’s lending is directed at business customers and involves medium/long-term financing. Only a marginal part of our business is with banks or public entities. More than 90% of lending is with mutual bank customers. A major element of the risk management approach is represented by the Bank’s focus on lending to the customers of the mutual banks. This leverages the close relationships that these banks have with their customers, thereby ensuring careful customer selection. Although the Bank has undertaken a number of large- value transactions in recent years, it has maintained its policy of limiting exposures to individual counterparties within low ceilings; this generates benefits in terms of the diversification of risks and thus the overall quality of the portfolio. It should be noted that in 2010 the Bank reorganized its business model, with the creation of a variety of business lines. This reorganization had a substantial impact on the credit risk assumption and management process.

2. Credit risk management policies

2.1 Organizational aspects

The adoption of a business model based on business lines involved the revision of organizational arrangements while - maintaining the methodologies and instruments already in use, which have gradually been refined over the years - in order to ensure both maximum operating efficiency and effective management of credit risk. The new organizational structure for credit risk management is based on the following principles: • in general, each business line is responsible for the performance of its own operations in terms of the cost of risk; • in this context, the various business lines must possess the essential internal resources needed to achieve these objectives, obviously including credit activity in general; • accordingly, responsibility for development, assessment, completion, disbursement and management of transactions lies with the business lines into which the activity of the Bank has been divided, each within its area of competence; • in line with this model, the Credit Department (which reports directly to the General Manager) will play a strategic guidance role in establishing the Bank's lending policies; • in addition, partly in response to the current economic climate and the associated rise in non- performing positions, the Credit Department has expanded its control and monitoring of the loan

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portfolio and extended its tracking of problem positions, adopting a range of organizational changes to:  improve portfolio monitoring capacity, identifying positions requiring preventive action more effectively (thanks in part to the new of new tools such as the portfolio risk scorecard);  increase coverage of positions to be monitored by specific substantive examinations;  improve the capacity to managing past-due positions, with the evolution of pre-litigation activities, bearing in mind that in the current economic environment identifying the most appropriate financial solutions for companies in difficulty is an advantage;  enhance the connection between the unit that carries out qualitative analysis of positions (i.e. substantive examinations) with that charged with recovery (pre-litigation stage), in view of the fact that the latter activity is increasingly accompanied by restructuring (in terms of term and repayment schedules) of transactions in order to make them more compatible with the diminished capacity of borrowers to generate cash flow;  focus the operation of the unit responsible for restructurings on this complex and time- consuming activity that requires highly specialized skills;  leverage the skills acquired by the unit involved in legal recovery of loans and assets, an activity that has grown to a significant size. The organization of the Credit Department - rolled out at the end of 2010 and refined in 2011 - has involved: - the assignment of the Monitoring unit to the staff of the head of the Credit Department. The unit is responsible for analyzing the overall portfolio and identifying the riskiest positions (both existing and potential); - the unification of monitoring, qualitative analysis and pre-litigation activities in a single unit (Credit Analysis and Management), divided in turn into two sub-units: a qualitative analysis unit, which conducts substantive examinations of the most critical/largest positions, also processing contractual changes to non- performing positions up to 12/18 months; and a Recovery and Classification unit, which handles pre-litigation activities (both direct action and through outsourcers) and classification of credit positions; - the creation of a specific Restructuring unit, charged with handling complex restructuring activities and contractual changes for non-performing positions over 12/18 months (as well as processing assignments, corporate changes, release of guarantees and sublets); - the creation of a specific Litigation and Asset Valuation and Sale unit to manage non-performing positions from the time of termination of the contract onwards (litigation) as well as handling asset valuations and sales. An important development in 2010 was the completion of the two-year project to draft a comprehensive lending manual governing all policies and methodologies to be used by Iccrea BancaImpresa in assuming risk in all forms of lending. During the year, work continued on the periodic review of lending rules in order to take account of new strategic guidelines concerning risks and products, regulatory developments, etc..

2.2 Measurement, management and control systems

Iccrea BancaImpresa has for many years taken on credit risk with the support of a creditworthiness assessment model based on the Alvin expert system. The model has been continuously developed and improved over the years by enlarging its knowledge base, integrating external databases and improving the level of automation. The model is integrated into the front-end sales process. With verification of the statistical validity of the model, the Bank transitioned from Alvin to “Alvin Rating”, with the definition of an internal rating scale. Since February 2005, Alvin Rating has been used in operations to assess all operations with the Bank's business counterparties. The Alvin model recently underwent a far-reaching review, culminating in a new release in early 2011 that gives the system more accurate predictive capacity. Accordingly, transactions approved over six years underwent reassessment, recalibrating the related PDs. The model, called AlvinStar Rating, currently uses 10 rating grades for counterparties, compared with 7 in the previous version. For finance leasing, the rating model and the front-end sales system permit extensive automation of the preliminary application assessment process (assignment of rating and assessment of transaction) and of the approval of operations (electronic processing of applications and approval), at the same time permitting control to be maintained over the process, data quality and the use of delegated powers (tracking every decision/change).

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This procedural framework will gradually be extended to the other products for which transaction numbers and size make the use of such systems appropriate (in 2010 electronic application processing was extended to ordinary and special credit operations, prompted in part by the decentralization of processing of ordinary lending applications, which had previously been done on a centralized basis). The risk associated with exposures to counterparties is also assessed on an ongoing basis with the assignment of updated ratings reflecting the position's performance. The periodic assignment of ratings is carried out using the same internal rating system (AlvinStar Rating) used for the mass assessment of developments in the business loan portfolio on a monthly basis. To support the summary analyses of the Bank's risk positioning in its global loan portfolio, a company data warehouse is used to maintain key information on business counterparties, as well as all the rating assessments performed. The periodic monitoring of the portfolio focuses on risk components, expected loss, loan quality indices (problem loans) and the risk-return profile of operations. The analysis is conducted from the following perspectives: internal rating grade; geographical area; channel through which position acquired; product being financed; business unit. In the spring of 2011 the Bank completed a project initiated in 2010 with the following main objectives: • introduce a risk-adjusted pricing model that incorporates, in line with the procedures used to determine budget targets, risk parameters in pricing transactions. This will make it possible to develop a pricing policy that is consistent with the Business Plan; • render the current commercial objective control system more sophisticated, evolving towards the adoption of risk-adjusted return metrics in order to govern and pursue profit targets corrected for the risk specified at the budget level. The measures taken involved the introduction of the cost of risk (expected loss) into the final price, the management of guarantees to mitigate expected loss, and the revision of the fee structure adopted by the mutual banks. The new model, which incorporates risk as a component of price and makes both the rate and the commissions paid to our main acquisition channel, the mutual banks, a function of risk, seeks to encourage the mutual banks to send the Bank customers with stronger risk profiles (encouraging the use of guarantees as well) and operation with higher rates, i.e. rates consistent with the risk represented by the customer and the transaction priced appropriately and explicitly by the model.

2.3 Credit risk mitigation techniques

An important risk mitigation tool is the use of guarantees for lending transactions. In addition to personal sureties, bank sureties also play an important role. The mutual banks, for certain individual transactions or under framework agreements, issue bank sureties to support the requests for financing presented to the Bank. This occurs in both the lease segment and, above all, the ordinary lending segment (in view of the fact that one of the Bank's policies is to involve the mutual banks in credit transactions, whether they regard loans or guarantees). In the leasing segment, ownership of the asset involved in the lease is the main security mitigating the risk of losses due to counterparty default. For this reason, valuation of the asset at the time the contract is acquired is one of the most important risk mitigation activities. The Bank has a specific risk policy for such assets, which among other features envisages the following measures: • a specific process for assessing the appropriateness of the value of the assets at the time of purchase. External appraisals are used to support the valuation of property. In this light, after an initial six-month start-up period for the new business model, with a view to generating economies of scope and synergies in technical knowledge concerning assets and the network of relationships (outsourcers, vendors, etc.) and to optimizing and reducing the time for which assets are warehoused and the time required to sell the assets on the best market terms, it was decided to group the asset valuation and sales units into a single unit within the Credit Department. That unit is responsible for assessing the appropriateness of the valuation of assets in the equipment, auto, industrial vehicles and marine segments at the time of purchase and any resale; external appraisers provide assistance in the case of real estate, aircraft and ships; • the use of financing plans with a bargain purchase option; • contract durations that take account of asset obsolescence; • prior screening to identify assets that cannot be financed.

Similar attention is devoted to the assets provided as security (mortgages or liens) for loans, with the valuation of the assets involving a network of experienced appraisers at the time the position is being acquired.

2.4 Impaired financial assets

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During the first half of 2011, a complete revision of the entire collection process in the pre-litigation phase was conducted, with the clustering of the portfolio by type and amount, accompanied by use of external companies (first and foremost BCC Gestione Crediti) for small-value positions, and complete internal handling (enterprise position managers/non-performing position managers) of large real estate/loan positions, in partial conformity with the new organizational model divided by business line. Since April 2011, all collection activities associated with first-time non-payment (phone collection) have been brought in-house and conducted on a coordinated basis by the Corporate Centers and Product Specialists in the various units in order to obtain an immediate picture of the customer situation, which may be facilitated using a variety of approaches. In November 2011 phone collection was expanded enterprise position managers. The review of the collection process was carried out together with the implementation of a more advanced information platform (GeCre 2.5) that can manage roles and collection activities flexibly and, at the same time, rigorously. The platform enables rapid modification of roles and collection actions, permitting the Bank to assign management of problem positions to its agents - internal and external - in an effective and efficient manner. If no agreement can be reached with customers and past due status continues, legal action is then proposed. The position is recommended for classification as a bad debt in the following circumstances: • counterparties in bankruptcy proceedings; • counterparties for which legal action has begun, and in any case with notification of the proceedings; • reports of bad debts from other credit institutions; • contract termination for breach; • counterparties considered irreversibly insolvent on the basis of other checks.

FACTORS ENABLING RECLASSIFICATION OF IMPAIRED EXPOSURES TO PERFORMING STATUS Only full resumption of normal payments in the agreed installments permits restoration of performing status to positions, with the return to full solvency on the part of the debtor: • elimination of the entire exposure or repayment of arrears; • regularization of the risk position.

ASSESSMENT OF THE ADEQUACY OF WRITEDOWNS Loans are recognized at estimated realizable value. This value is obtained by deducting specific and general writedowns of principal and interest, net of any repayments, from the total amount disbursed. On a half-yearly basis, the manager responsible for evaluating problem exposures carries out a detailed analysis of the recoverability of bad debts and substandard loans for the purpose of formulating recommendations for the Board of Directors concerning its decisions regarding doubtful positions. This analysis takes account of the status of legal action and the presence of guarantees and any other risk mitigation factors (in leasing transactions, the realizable value of the asset involved in the lease). The evaluation of restructured positions takes account of the provisions of the agreed workout plan. Positions past due by more than 180 days undergo specific valuation using an approach that takes account of: • the rate at which such positions migrate to more highly impaired classes (bad debts and substandard loans); • the rate at which such positions return to performing status together with the risk associated with the various forms of lending.

Writedowns are taken to the income statement, with the amount determined as the difference between the value at which the exposure is carried in the books and the present value of estimated recoverable cash flows, discounted at the effective interest rate of the impaired financial asset. The original value of the loan is fully or partly restored in subsequent years should the reasons for the writedown cease to obtain.

COLLECTIVE PROVISION The value of the portfolio of performing positions is measured on a statistical basis and a collective provision for risk is determined. The risk associated with the portfolio is estimated on the basis of internally estimated risk components, in particular the probability of default associated with the rating grade assigned to the counterparty and the LGD estimated internally on the basis of historical data or standard regulatory values.

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A. CREDIT QUALITY

A.1 IMPAIRED AND PERFORMING POSITIONS: STOCKS, WRITEDOWNS, CHANGES AND DISTRIBUTION BY SECTOR AND GEOGRAPHICAL AREA

A.1.1 Distribution of credit exposures by portfolio and credit quality (carrying amount)

Substandard Restructured Past due Bad debts Other assets Total loans positions positions

1. Financial assets held for trading 350 1,137 37,354 38,840 2. Financial assets available for sale 3. Financial assets held to maturity 4. Due from banks 267,979 267,979 5. Loans to customers 381,722 574,214 23,250 1,270 8,287,768 9,268,224 6. Financial assets at fair value 7. Financial assets held for sale

8. Hedging derivatives 10,326 10,326 Total (31/12/2011) 382,072 575,351 23,250 1,270 8,603,427 9,585,369 Total (31/12/2010) 268,091 403,066 26,050 40,873 8,330,262 9,068,343

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A.1.2 Distribution of credit exposures by portfolio and credit quality (gross and net values)

Impaired assets Performing

Total (net

Gross Specific Net Gross Portfolio Net exposure) exposure adjustments exposure exposure adjustments exposure

1. Financial assets held for trading 1,589 103 1,486 37,354 37,354 38,840 2. Financial assets available for sale 3. Financial assets held to maturity 4. Due from banks 267,979 267,979 267,979 5. Loans to customers 1,298,327 317,871 980,456 8,361,943 74,175 8,287,768 9,268,224 6. Financial assets at fair value 7. Financial assets held for sale 8. Hedging derivatives 10,326 10,326 10,326 Total (31/12/2011) 1,299,916 317,974 981,942 8,677,602 74,175 8,603,427 9,585,369 Total (31/12/2010) 1,024,110 286,029 738,082 8,408,423 78,162 8,330,261 9,068,343

The following table reports the information on performing loans requested by the Bank of Italy in its letter no. 0142023/11 of February 16, 2011.

Exposures renegotiated as part Other exposures Total of collective agreements

Assets not past due 79,630 7,490,260 7,569,890 Assets past due by less than 3 14,472 660,775 675,247 months Asset past due by between 3 and 6 39 42,592 42,631 months Total 94,141 8,193,627 8,287,768

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A.1.3 On-balance-sheet and off-balance-sheet credit exposure to banks: gross and net values

Specific Portfolio Gross exposure Net exposure writedowns writedowns

A. ON-BALANCE-SHEET EXPOSURES a) Bad debts b) Substandard loans c) Restructured positions d) Past due positions e) Other assets 267,979 267,979 Total A 267,979 267,979 B. OFF-BALANCE-SHEET EXPOSURES a) Impaired b) Other 70,991 70,991 TOTAL B 70,991 70,991 TOTAL A+B 338,970 338,970

A.1.4 On-balance-sheet credit exposures to banks: changes in gross impaired positions and those exposed to country risk

There were no such positions as of the balance sheet date.

A.1.5 On-balance-sheet credit exposures to banks: changes in total adjustments of loans

There were no such positions as of the balance sheet date.

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A.1.6 On-balance-sheet and off-balance-sheet credit exposures to customers: gross and net values

Specific Portfolio Gross exposure Net exposure writedowns writedowns

A. ON-BALANCE-SHEET EXPOSURES a) Bad debts 611,276 229,553 381,723 b) Substandard loans 661,070 86,856 574,214 c) Restructured positions 24,686 1,437 23,250 d) Past due positions 1,296 25 1,270 e) Other assets 8,361,943 74,175 8,287,768 Total A 9,660,271 317,871 74,175 9,268,225 B. OFF-BALANCE-SHEET EXPOSURES a) Impaired 2,791 103 2,688 b) Other 1,028,218 1,135 1,027,083 TOTAL B 1,031,009 103 1,135 1,029,771

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A.1.7 On-balance-sheet credit exposures to customers: changes in gross impaired positions

Substandard Restructured Past due Bad debts loans positions positions

A. Opening gross exposure 468,217 483,797 28,497 43,133 - of which: exposures assigned but not derecognized 92,912 73,378 1,550 6,224 B. Increases 267,981 546,208 1,258 13,717 B.1 from performing credit exposures 90,711 457,455 121 B.2 transfers from other categories of impaired positions 151,467 23,403 361 150 B.3 other increases 25,804 65,351 897 13,446 C. Decreases 124,923 368,935 5,069 55,554 C.1 to performing credit exposures 80,536 3,837 12,259 C.2 writeoffs 36,640 672 10 C.3 collections 71,570 92,801 9,496 C.4 assignments C.5 transfers to other categories of impaired positions 6,003 150,170 1,024 18,183 C.6 other decreases 10,711 44,756 208 15,606 D. Closing gross exposure 611,275 661,070 24,686 1,296 - of which: exposures assigned but not derecognized 105,684 89,091 605 111

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A.1.8 On-balance-sheet credit exposures to customers: changes in total adjustments of loans

Substandard Restructured Past due Bad debts loans positions positions

A. Total opening adjustments 200,136 80,954 2,447 2,259 - of which: exposures assigned but not derecognized 41,256 16,260 206 553 B. Increases 100,191 66,847 255 B.1. writedowns 71,475 62,942 255 B.2. transfers from other categories of impaired positions 28,715 3,905 B.3. other increases C. Decreases 70,773 60,945 1,266 2,234 C.1. writebacks from valuations 27,883 20,788 1,031 C.2. writebacks from collections 16,228 10,975 C.3. writeoffs 25,017 665 10 C.4. transfers to other categories of impaired positions 1,645 28,517 234 2,224 C.5. other decreases D. Total closing adjustments 229,553 86,856 1,437 25 - of which: exposures assigned but not derecognized 45,055 14,640 6 2

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A.2 Classification of exposures on the basis of external and internal ratings

A.2.1 Distribution of on-balance-sheet credit exposures and off-balance-sheet exposure by external rating grades

External rating grades Not Total AAA/A BBB+/ BB+/B rated A+/A- B+/B- A- BBB- B- A. On-balance-sheet exposures 213 420 9,535,569 9,536,202 B. Derivatives 49,167 49,167 B.1 Financial derivatives 49,167 49,167 B.2 Credit derivatives C. Guarantees issued 314,404 314,404 D. Commitment to disburse funds 737,192 737,192 Total 0 213 420 10,636,332 10,636,965

A.2.2 Distribution of on-balance-sheet exposures and off-balance-sheet exposure by internal rating grades

There were no such positions as of the balance sheet date.

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A.3 Distribution of secured exposures by type of guarantee

A.3.1 Secured credit exposures to banks

Unsecured guarantees (2) Collateral (1) Credit derivatives Guarantees Value of exposurenet Other derivatives Governments and central banks Other government agencies government Other

Governments and central banks Total Land and buildings Land agencies government Other (1)+(2) Other assets Securities Banks Other CLN

Banks Other

1. Secured on-balance-sheet credit exposures: 39 868 868 1.1. fully secured 39 868 868 - of which: impaired 1.2. partially secured - of which: impaired 2. Secured off-balance-sheet credit exposures: 2,473 52,432 9,586 2.1. fully secured 2,473 52,432 9,586 - of which: impaired 2.2. partially secured - of which: impaired

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A.3.2 Secured credit exposures to customers

Unsecured guarantees (2) Collateral (1) Credit derivatives Guarantees Value of exposurenet Other derivatives Governments and central banks Other government agencies government Other

Governments and central banks Total Land and buildings Land agencies government Other (1)+(2) Other assets Securities Banks Other CLN

Banks Other

1. Secured on-balance-sheet credit exposures: 5,342,185 4,931,319 75,663 343,579 0 0 0 0 0 34,473 20 1,010,411 7,742,907 14,138,372 1.1. fully secured 4,671,890 4,931,319 60,634 338,349 28,345 20 569,915 7,668,342 13,896,924 - of which: impaired 487,245 5,726 8,065 630 77,874 1,239,323 1,331,618 1.2. partially secured 670,295 15,029 5,230 6,128 140,496 74,565 241,448 - of which: impaired 78,741 984 1,626 12,424 11,140 26,174 2. Secured off-balance-sheet credit exposures: 42,395 20,316 77 0 0 0 0 0 0 0 6,480 30,063 56,936 2.1. fully secured 37,735 20,316 77 5,677 28,522 55,592 - of which: impaired 10,451 316 455 12,303 13,074 2.2. partially secured 4,660 803 541 1,344.00 - of which: impaired

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B. Distribution and concentration of credit exposures

B.1 On-balance-sheet and off-balance-sheet credit exposures to customers by sector (carrying amount)

Other government agencies Financial companies Insurance undertakings Non-financial companies Other Governments

Portfolio writedowns Portfolio writedowns Portfolio writedowns Portfolio writedowns Portfolio writedowns Portfolio Portfolio Specific writedowns Specific writedowns Specific writedowns Specific writedowns Specific writedowns Specific writedowns Specific

exposure Net Net exposure Net exposure Net exposure Net exposure Net exposure writedowns

A. On-balance-sheet 50 20,366 171 116,903 413 64 380 65 8,897,608 307,749 72,817 232,918 9,638 1,123 A.1 Bad debts 117 413 27 65 372,651 222,354 8,928 6,721 A.2 Substandard loans 8 556,274 83,968 17,933 2,882 A.3 Restructured positions 22,999 1,405 251 31 A.4 Past due positions 1,019 21 251 4 A.5 Other 50 20,358 171 116,786 64 353 7,944,666 72,817 205,555 1,123 Total A 50 20,366 171 116,903 413 64 380 65 8,897,608 307,749 72,817 232,918 9,638 1,123 B. Off-balance-sheet 53,851 19,218 937,400 103 1,135 19,303 B.1 Bad debts 369 103 B.2 Substandard loans 2,319 B.3 Other impaired assets B.4 Other 53,851 19,218 934,712 1,135 19,303 Total B 53,851 19,218 937,400 103 1,135 19,303 TOTAL (A + B) (31/12/2011) 50 74,217 171 136,121 413 64 380 65 9,835,008 307,852 73,952 252,221 9,638 1,123 TOTAL (A + B) (31/12/2010) 50 10,474 13 94 228,096 246 36 344 73 9,338,259 278,081 76,729 266,552 7,616 1,918

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B.2 On-balance-sheet and off-balance-sheet credit exposures to customers by geographical area (carrying amount)

OTHER REST ITALY EUROPEAN AMERICAS ASIA OF THE COUNTRIES WORLD

Net exposureNet exposureNet Net exposureNet exposureNet exposureNet writedowns writedowns writedowns writedowns writedowns Total Total Total Total Total

A. On-balance-sheet A.1 Bad debts 381,712 228,843 10 711 A.2 Substandard loans 574,214 86,856 A.3 Restructured positions 23,250 1,437 A.4 Past due positions 1,270 26 A.5 Other 8,249,278 73,904 23,857 217 8,609 51 6,024 3 TOTAL 9,229,724 391,065 23,857 217 8,609 51 6,034 714 B. Off-balance-sheet B.1 Bad debts 369 103 B.2 Substandard loans 2,319 B.3 Other impaired assets B.4 Other 1,022,380 1,135 818 1,500 2,385 TOTAL 1,025,069 1,238 818 1,500 2,385 TOTAL (31/12/2011) 10,254,793 392,303 24,675 217 8,609 51 1,500 8,419 714 TOTAL (31/12/2010) 9,826,121 362,294 17,428 195 227 622

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B.3 On-balance-sheet and off-balance-sheet credit exposures to banks by geographical area (carrying amount)

OTHER REST ITALY EUROPEAN AMERICAS ASIA OF THE COUNTRIES WORLD

Net exposureNet exposureNet Net exposureNet exposureNet exposureNet writedowns writedowns writedowns writedowns writedowns Total Total Total Total Total

A. On-balance-sheet A.1 Bad debts A.2 Substandard loans A.3 Restructured positions A.4 Past due positions A.5 Other 259,679 8,204 39 50 7 TOTAL 259,679 8,204 39 50 7 B. Off-balance-sheet B.1 Bad debts B.2 Substandard loans B.3 Other impaired assets B.4 Other 41,587 15,112 978 10,976 2,338 TOTAL 41,587 15,112 978 10,976 2,338 TOTAL (31/12/2011) 301,266 23,316 1,017 11,026 2,345 TOTAL (31/12/2010) 231,580 17,735 113 12

B.4 Large exposures

As regards disclosures in the notes to the financial statements following the changes introduced with the 6th update of Circular 263 of December 27, 2010, the following figures refer to the most recent information available (December 31, 2011). The company has three large exposures, one in respect of the units of the “Securis Real Estate” fund with a carrying amount of €196,478,552 (weighted value of €196,478,552), one in respect of a guarantee granted to Marcegaglia S.p.A. with a carrying amount of €92,200,000 (weighted value of €92,200,000) and the position with Iccrea Holding with a carrying amount of €232,407,258 (weighted value of €0).

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C. SECURITIZATIONS AND ASSET DISPOSALS C.1 SECURITIZATIONS Qualitative disclosures

Agrisecurities 2002 (“Agri#2") On July 19, 2002 the Agri#2 securitization was finalized, with Iccrea BancaImpresa as originator. The transaction involved the assignment of future receivables in an initial portfolio of €759,631,000 of performing lease contracts, with the concomitant payment of the assignment price of €757,460,000 (including €18,131,000 in respect of the junior notes subscribed by Iccrea BancaImpresa).

Features of the operation The transaction involved the participation of UBS Investment Bank as Arranger and Lead Manager and Fortis Bank, Landesbank Baden-Württemberg, The Royal Bank of Scotland, ING and CDC IXIS Capital Markets as Co- Managers.

Securities The term of the ABSs issued as part of the securitization, which are listed on the Luxembourg stock exchange in the amount of €759,631,000, took effect on July 19, 2002. At that date they had the following characteristics:

Series Rating Amount Amount Expected Expected (Fitch – S&P) (€/millions) (% of total) weighted maturity average life - years 1-A AAA/AAA 663.0 87.28% 7.2 12/2011 1-B A-/A- 78.5 10.33% 9.64 6/2012 1-C NR 18.131 2.39% NA NA

Repayment of the securities began at the end of the revolving period, with the first amortization payment in September 2007. In December 2011 the 1-A Series was fully redeemed and amortization of the 1-B Series began. At the end of the period under review, the ABSs issued by Agrisecurities S.r.l. as part of the second securitization, repurchased by the Bank on the secondary market, amounted to €11.4 million.

Assigned portfolio The portfolio of performing leasing receivables was selected on the basis of criteria agreed with the Arranger and the rating agencies, in an amount equal to the value of the securities issued, broken down into four pools. At the initial assignment date, they had the following composition:

Pool Amount (€) % 1) – Industrial vehicles 54,639,538 7.19 2) – Equipment 359,138,312 47.28 3) – Real estate 321,826,075 42.37 4) – Auto 24,027,075 3.16 Total 759,631,000 100.00

Revolving operations were conducted on a quarterly basis (except for the first period), beginning in September 2002 and ending in June 2007 (inclusive), with 20 assignments of subsequent portfolios. The selection criteria for the subsequent portfolios were essentially analogous to those used for the initial portfolio.

Repurchase option In accordance with supervisory instructions, the transaction provides for the exercise of a clean-up call where the value of the portfolio at the time of repurchase does not exceed 10% of the nominal value of the initial portfolio. In concomitance with the exercise of the repurchase option, the vehicle will carry out the early redemption of the securities.

Trigger events The trigger events envisaged in the contract are in line with market practice and consistent with the assignment of a performing portfolio.

Servicing Like the previous securitization (extinguished), servicing activities are performed by Iccrea BancaImpresa, which carries out monitoring, collection and recovery activities using the same procedures adopted for the company portfolio. The contract provides for the termination of servicer activities by Iccrea BancaImpresa and

167 the transfer of the Servicer role to another party to be selected where Iccrea BancaImpresa should no longer be available to continue performing the role.

Credit enhancement Redemption of the notes is secured by the cash flow expected from the assigned portfolio, with no additional guarantees. The transaction makes no provision for credit derivatives to secure the transaction or for the granting of subordinated liquidity facilities. The contract provides for a Debt Service Reserve Account, which is made available by the vehicle on a quarterly basis with payments received, as well as the excess spread covering first losses.

ABI Moratorium Notice Iccrea BancaImpresa expressed its willingness to extend the suspension of debt payments announced in the ABI Moratorium Notice to include customers whose receivables were securitized. To this end, the vehicle was granted an ad hoc facility in the amount of €75 million to offset the suspension of principal payments in respect of contracts on which the suspension was granted. The agreement was subsequently extended to cover the postponement until January 31, 2011 and then July 31, 2011 of the deadline for customers to apply to participate in the moratorium. The amount disbursed by the Bank under the facility amounted to €5.4 million at December 31, 2011.

Agrisecurities 2006 (“Agri#3") On November 8, 2006 the Agri#3 securitization was finalized, with Iccrea BancaImpresa as originator. The transaction involved the assignment of future receivables in an initial portfolio of €1,150,000,000 of performing contracts, with the concomitant payment of the assignment price of €1,148,574,250 (including €23,000,000 in respect of the junior notes subscribed by Iccrea BancaImpresa).

The operation was carried out to replace the Agri#1 transaction (€520 million), for which the clean-up call option was exercised. The new operation also made it possible to broaden and diversify sources of funding, as well as extending and expanding the amount of capital freed up. The junior securities account for 2.0% of the total.

Features of the operation The transaction involved the participation of UBS Investment Bank as Sole Arranger and S.p.A., Royal Bank of Scotland and UBS Investment Bank, as Joint Bookrunners.

Securities The term of the ABSs issued as part of the securitization, which are listed on the Luxembourg stock exchange in the amount of €1,150,000,000, took effect on November 8, 2006. At that date they had the following characteristics:

Series Rating Amount Amount Expected weighted Expected (Fitch – S&P) (€/millions) (%) average life – years maturity 1-A1 AAA/AAA 200.0 17.39 2.07 6/2009 1-A2 AAA/AAA 823.5 71.61 4.98 6/2015 1B A/A- 103.5 9.00 6.80 6/2015 1C NR-JUNIOR 23.0 2.00 NA NA

Redemption of the securities began at the end of the revolving period, with the first amortization payment in June 2008. The 1-A1 Series has been fully amortized. At the end of the period under review, the ABSs issued by Agrisecurities S.r.l. as part of the third securitization, repurchased by the Bank on the secondary market, amounted to €48.8 million.

Assigned portfolio The portfolio of performing leasing receivables was selected on the basis of criteria agreed with the Arranger and the rating agencies, in an amount equal to the value of the securities issued, broken down into four pools. At the initial assignment date, they had the following composition:

Pool Amount (€) % 1) – Industrial vehicles 93,871,969 8.16 2) – Equipment 396,133,990 34.45 3) – Real estate 613,111,098 53.31 4) – Auto 46,882,943 4.08 Total 1,150,000,000 100.00

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Revolving operations were conducted on a quarterly basis (except for the first period, which covered four months), beginning in March 2007 and ending in March 2008, with five assignments of subsequent portfolios. The selection criteria for the subsequent portfolios were essentially analogous to those used for the initial portfolio. In line with other securitizations in recent years, the redemption amount was not assigned.

Repurchase option In accordance with supervisory instructions, the transaction provides for the exercise of a clean-up call where the value of the portfolio at the time of repurchase does not exceed 10% of the smaller between the nominal value of the initial portfolio and the assignment price of the portfolio. In concomitance with the exercise of the repurchase option, the vehicle will carry out the early redemption of the securities.

Trigger events The trigger events envisaged in the contract are in line with market practice and consistent with the assignment of a performing portfolio.

Servicing Like the previous securitizations, servicing activities are performed by Iccrea BancaImpresa, which carries out monitoring, collection and recovery activities using the same procedures adopted for the company portfolio. The contract provides for the termination of servicer activities by Iccrea BancaImpresa and the transfer of the Servicer role to another party to be selected where Iccrea BancaImpresa should no longer be available to continue performing the role.

Credit enhancement Redemption of the notes is secured by the cash flow expected from the assigned portfolio, with no additional guarantees. The transaction makes no provision for credit derivatives to secure the transaction or for the granting of subordinated liquidity facilities. As in the previous operations, the contract provides for a Debt Service Reserve Account, which is made available by the vehicle on a quarterly basis with payments received, as well as the excess spread covering first losses.

ABI Moratorium Notice Iccrea BancaImpresa expressed its willingness to extend the suspension of debt payments announced in the ABI Moratorium Notice to include customers whose receivables were securitized. To this end, the vehicle was granted an ad hoc facility in the amount of €152 million to offset the suspension of principal payments in respect of contracts on which the suspension was granted. The agreement was subsequently extended to cover the postponement until January 31, 2011 and then July 31, 2011 of the deadline for customers to apply to participate in the moratorium. The amount disbursed by the Bank under the facility amounted to €16.3 million at December 31, 2011.

Agricart 4 Finance 2007 ("Agri#4") On November 15, 2007 the Agri#4 securitization was finalized, with Iccrea BancaImpresa as originator. The transaction involved the assignment of future receivables in an initial portfolio of €500,000,416 of performing lease contracts, with the concomitant payment of the assignment price of €498,828,800 (including €150,000,000 in respect of the A2, B and junior notes subscribed by Iccrea BancaImpresa). The operation was carried out to acquire new funding for lease financing with small and medium-sized enterprises, thereby diversifying funding sources with an attractive maturity (an expected average life of about 8.8 years). The transaction did not pursue capital objectives, as under the provisions of the relevant supervisory regulations the presence of a repurchase option for more than 10% of the total value of the assigned portfolio does not permit any reduction in capital requirements for the assignor bank.

Features of the operation The transaction involved BNP Paribas, Finanziaria Internazionale and ICCREA Banca as Arrangers and BNP Paribas as Lead Manager.

Securities The term of the €500 million in ABSs issued as part of the securitization, which are not listed on any regulated market, took effect on November 15, 2007. At that date they had the following characteristics:

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Class Rating Amount Amount Quarterly Expected Expected (Fitch) (€/millions) (%) interest rate weighted maturity average life – years A1 AAA 350.0 70.00 3ME + 0.06% 8.8 9/2016 A2 AAA 58.5 11.70 3ME + 0.35% 8.8 9/2016 B BBB 65.0 13.00 3ME + 0.50% 8.8 9/2016 C NR 26.5 5.30 Residual 8.8 9/2016 remuneration

Assigned portfolio The portfolio of performing leasing receivables was selected on the basis of criteria agreed with the Arranger and the rating agency, in an amount equal to the value of the securities issued, broken down into four pools. At the assignment date, they had the following composition:

Pool Amount (€) % 1) – Industrial vehicles 31,240,593 6.2 2) – Equipment 126,288,768 25.3 3) – Real estate 328,759,532 65.7 4) – Auto 13,711,523 2.8 Total 500,000,416 100.00

Revolving operations are conducted on a quarterly basis, with the exception of the first period, which was four months long. They began in March 2008 and will end in September 2016, with 34 assignments of subsequent portfolios. The selection criteria for the subsequent portfolios were essentially analogous to those used for the initial portfolio. In line with the previous securitization carried out in 2006 (Agri#3) and with the trend in market practice, the value of the bargain purchase option was not assigned.

Repurchase option The assignment contract gives Iccrea BancaImpresa an option for the repurchase of the entire portfolio, which can be exercised on a quarterly basis as from September 2016 as long as the purchase price of the receivables, determined in accordance with the procedures set out in the assignment contract, enables full redemption of the securities and priority payment of all expenses and Iccrea BancaImpresa has obtained the necessary authorizations pursuant to Article 58 of the Banking Act. In concomitance with the exercise of the repurchase option, the vehicle will carry out the early redemption of the securities. Iccrea BancaImpresa sold a put option to the subscriber of the entire Class A1 equal to €350,000,000, exercisable if the rating of the securities falls below “AA", if the rating of the Bank should fall below “BBB” and in the case of adverse events associated with the performance of the assigned portfolio or in the event of significant breaches of contract.

Trigger events The trigger events envisaged in the contract are in line with market practice and consistent with the assignment of a performing portfolio.

Servicing Like the previous securitizations, servicing activities are performed by Iccrea BancaImpresa, which carries out monitoring, collection and recovery activities using the same procedures adopted for the company portfolio. The contract provides for the termination of servicer activities by Iccrea BancaImpresa and the transfer of the Servicer role to another party to be selected where Iccrea BancaImpresa should no longer be available to continue performing the role.

Credit enhancement Redemption of the notes is secured by the cash flow expected from the assigned portfolio. For the A1 notes and a number of expenses with priority reimbursement rights, Iccrea BancaImpresa has provided a subordinated liquidity facility in the event the funds available to the vehicle are not sufficient to pay principal and interest on the securities. As in the previous operations, the contract provides for a Debt Service Reserve Account, which is made available by the vehicle on a quarterly basis with payments received, as well as the excess spread covering first losses.

ABI Moratorium Notice

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Iccrea BancaImpresa expressed its willingness to extend the suspension of debt payments announced in the ABI Moratorium Notice to include customers whose receivables were securitized. To this end, the vehicle was granted an ad hoc facility in the amount of €67.8 million to offset the suspension of principal payments in respect of contracts on which the suspension was granted. The agreement was subsequently extended to cover the postponement until January 31, 2011 and then July 31, 2011 of the deadline for customers to apply to participate in the moratorium. The amount disbursed by the Bank under the facility amounted to €9 million at December 31, 2011.

Agrisecurities 2008 ("Agri#5") On July 30, 2008 the Agri#5 securitization was finalized, with Iccrea BancaImpresa as originator. The transaction involved the assignment of future receivables in an initial portfolio of €1,014,000,129 of performing lease contracts, with the concomitant payment of the assignment price of €1,013,900,000, which was fully offset against the subscription price due from Iccrea BancaImpresa as the subscriber of all the securities issued by the securitization.

The transaction was carried out to enable to participate directly or indirectly in funding operations with the Eurosystem, using eligible collateral for repurchase transactions with the European Central Bank. The transaction made it possible to diversify funding sources while obtaining funds on competitive terms, especially in the light of market conditions. During the year, funding repurchase transactions were carried out with the securities from the Agri#5 securitization used as the underlying asset, for a total of €7,006 million, with an impact of €6.2 million on the income statement.

Features of the operation The transaction involved UBS Ltd as Arranger.

Securities As part of the transaction, ABSs amounting to €1,014 million were issued with effect as from July 30, 2008. The securities are listed on the Irish stock exchange. At that date they had the following characteristics:

Class Rating Amount Amount Quarterly interest Expected weighted Expected (Fitch) (€/millions) (%) rate average life – years maturity

A AAA/AAA 837.1 82.55 3ME + 0.35% 4.89 12/2020 B BBB+/ BBB- 136.35 13.45 3ME + 0.50% 8.84 12/2020 C NR-JUNIOR 40.55 4.00 Residual 8.84 12/2020 remuneration

Redemption of the Class A securities began at the end of the revolving period, with the first amortization payment in March 2010.

Assigned portfolio The portfolio of performing leasing receivables was selected on the basis of criteria agreed with the Arranger and the rating agency, in an amount equal to the value of the securities issued, broken down into four pools. At the assignment date, they had the following composition::

Pool Amount (€) % 1) – Industrial vehicles 60,890,594 6.0 2) – Equipment 333,840,448 32.9 3) – Real estate 577,696,362 57.0 4) – Auto 41,572,725 4.1 Total 1,014,000,129 100.00

Revolving operations are conducted on a quarterly basis, with the exception of the first period, which was five months long. They began on December 2008 and ended in December 2009 (inclusive), with 5 assignments of subsequent portfolios. The selection criteria for the subsequent portfolios were essentially analogous to those used for the initial portfolio. In line with the securitization carried out in 2006 and 2007 (Agri#3 and Agri#4, respectively) and with the trend in market practice, the value of the bargain purchase option was not assigned.

Repurchase option In accordance with supervisory instructions, Iccrea BancaImpresa has been granted a clean-up call option that can be exercised where: i) the value of the portfolio at the time of repurchase does not exceed 10% of the lower between the nominal value of the initial portfolio and the assignment price of the portfolio; ii) the

171 purchase price of the receivables, equal to the sum of the residual debt in respect of performing positions and the fair value of non-performing positions, enables full redemption of the securities and priority payment of all expenses; and (iii) Iccrea BancaImpresa has obtained the necessary authorizations pursuant to Article 58 of the Banking Act. In concomitance with the exercise of the repurchase option, the vehicle will carry out the early redemption of the securities.

Trigger events The trigger events envisaged in the contract are in line with market practice and consistent with the assignment of a performing portfolio.

Servicing Like the previous securitizations, servicing activities are performed by Iccrea BancaImpresa, which will carry out monitoring, collection and recovery activities using the same procedures adopted for the company portfolio. The contract gives the vehicle the power to terminate servicer activities by Iccrea BancaImpresa and to transfer the Servicer role to another party to be selected where Iccrea BancaImpresa should be in significant breach of the provisions of the contract.

Credit enhancement Redemption of the notes is secured by the cash flow expected from the assigned portfolio, with no additional guarantees. The transaction makes no provision for credit derivatives to secure the transaction or for the granting of subordinated liquidity facilities. As in the previous operations, the contract provides for a Debt Service Reserve Account, which is made available by the vehicle on a quarterly basis with payments received, as well as the excess spread covering first losses.

ABI Moratorium Notice Iccrea BancaImpresa expressed its willingness to extend the suspension of debt payments announced in the ABI Moratorium Notice to include customers whose receivables were securitized. To this end, the vehicle was granted an ad hoc facility in the amount of €107 million to offset the suspension of principal payments in respect of contracts on which the suspension was granted The agreement was subsequently extended to cover the postponement until January 31, 2011 and then July 31, 2011 of the deadline for customers to apply to participate in the moratorium. The amount disbursed by the Bank under the facility amounted to €15.0 million at December 31, 2011.

Agricart 4 Finance 2009 ("Agri#6") On December 22, 2009 the Agri#6 securitization was finalized, with Iccrea BancaImpresa as originator. The transaction involved the assignment of future receivables in an initial portfolio of €500,000,730 of performing lease contracts, with the concomitant payment of the assignment price of €499,670,000 (including €173,000,000 in respect of the B (junior) notes subscribed by Iccrea BancaImpresa). The operation, in line with that carried out in 2007 through the same vehicle (Agri#4), was carried out to acquire new funding for lease financing with small and medium-sized enterprises, thereby diversifying funding sources with an attractive maturity (an expected average life of about 5.8 years). The transaction did not pursue capital objectives, as under the provisions of the relevant supervisory regulations the presence of a repurchase option for more than 10% of the total value of the assigned portfolio does not permit any reduction in capital requirements for the assignor bank.

Features of the operation The transaction involved ICCREA Banca and JP Morgan as Arrangers.

Securities As part of the transaction, ABSs amounting to €500 million were issued with effect as from December 22, 2009. The securities are listed on the Luxembourg stock exchange. At that date they had the following characteristics:

Class Rating Amount Amount Quarterly Expected Expected (Fitch) (€/milli (%) interest rate weighted average maturity ons) life – years A AAA 327.0 65.40 3ME + 0.43% 5.8 12/2019 B NR - JUNIOR 173.0 34.60 Residual 10.0 12/2019 remuneration

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On July 29, 2011, the agreements were signed for the contractual amendments necessary for the assignment of a second rating to the Class A securities from S&P in order to make them eligible for refinancing operations with the European Central Bank. Redemption of the Class A securities will begin at the end of the revolving period, with the first amortization payment in March 2013.

Assigned portfolio The portfolio of performing leasing receivables was selected on the basis of criteria agreed with the Arranger and the rating agencies, in an amount essentially equal to the value of the securities issued, broken down into four pools. At the assignment date, they had the following composition:

Pool Amount (€) % 1) – Industrial vehicles 41,863,543 8.37 2) – Equipment 187,185,070 37.44 3) – Real estate 243,716,317 48.74 4) – Auto 27,235,800 5.45 Total 500,000,730 100.00

Revolving operations will be conducted on a quarterly basis, beginning in March 2010 and ending in September 2012, with 12 assignments of subsequent portfolios. The selection criteria for the subsequent portfolios were essentially analogous to those used for the initial portfolio. In line with the latest securitizations carried out by Iccrea BancaImpresa and with the trend in market practice, the value of the bargain purchase option was not assigned.

Repurchase option The assignment contract gives Iccrea BancaImpresa an option for the repurchase of the entire portfolio, which can be exercised on a quarterly basis as from September 2011 as long as the purchase price of the receivables, determined in accordance with the procedures set out in the assignment contract, enables full redemption of the securities and priority payment of all expenses and Iccrea BancaImpresa has obtained the necessary authorizations pursuant to Article 58 of the Banking Act. In concomitance with the exercise of the repurchase option, the vehicle will carry out the early redemption of the securities. Iccrea BancaImpresa sold a put option to the subscriber of the entire Class A equal to €327,000,000, exercisable if the rating of the securities falls below “AA", if the rating of the Bank should fall below “BBB” and in the case of adverse events associated with the performance of the assigned portfolio or in the event of significant breaches of contract.

Trigger events The trigger events envisaged in the contract are in line with market practice and consistent with the assignment of a performing portfolio.

Servicing Like the previous securitizations, servicing activities are performed by Iccrea BancaImpresa, which carries out monitoring, collection and recovery activities using the same procedures adopted for the company portfolio. The contract provides for the termination of servicer activities by Iccrea BancaImpresa and the transfer of the Servicer role to another party to be selected where Iccrea BancaImpresa should no longer be available to continue performing the role.

Credit enhancement Redemption of the notes is secured by the cash flow expected from the assigned portfolio. For the sole benefit of payments to be made with priority with respect to interest on the A notes, Iccrea BancaImpresa has provided a subordinated liquidity facility in the event the funds available to the vehicle are not sufficient to pay those expenditure items. For the sole benefit of the A notes, ICCREA Banca has provided a subordinated liquidity facility of up to €100 million in the event the funds available to the vehicle are not sufficient to pay principal and interest on the A notes themselves. As in the previous operations, the contract provides for a Debt Service Reserve Account, which is made available by the vehicle on a quarterly basis with payments received, as well as the excess spread covering first losses.

Iccrea SME Cart 2011 (Agri#7) On November 14, 2011 the Agri#7 securitization was finalized, with Iccrea BancaImpresa as originator. The transaction involved the assignment of future receivables in an initial portfolio of €599,222,394 of performing

173 lease contracts, with the concomitant payment of the assignment price of €599,052,000 (including €311,622,000 in respect of the Z (junior) notes subscribed by Iccrea BancaImpresa). The operation, in line with those carried out in 2007 and 2009 through the vehicle Agricart 4 Finance (Agri#4 and Agri#6), was carried out to acquire new funding for lease financing with small and medium-sized enterprises, projects in the energy, environmental and corporate social responsibility field or projects undertaken by mid-caps, thereby diversifying funding sources with an attractive maturity (an expected average life of about 3.6 years). The transaction did not pursue capital objectives, as under the provisions of the relevant supervisory regulations the presence of a repurchase option for more than 10% of the total value of the assigned portfolio, as in the case of this transaction, does not permit any reduction in capital requirements for the assignor bank.

Features of the operation The transaction involved ICCREA Banca and UBS Ltd as Arrangers.

Securities As part of the transaction, ABSs amounting to about €607.7 million were issued with effect as from November 14, 2011. Class A notes are listed on the Irish stock exchange. At that date they had the following characteristics:

Class Rating Amount Amount Quarterly Expected Expected (Moody’s/DBRS) (€/millions) (%) interest rate weighted maturity average life – years “Aaa (sf)” / A 287.6 47.3 3ME + 2.00% 3.6 3/2017 “AAA (sf)”

B NR 8.5 1.4 3ME + 2.10% 5.3 3/2017

Residual Z NR - JUNIOR 311.622 51.3 5.3 3/2017 remuneration

Redemption of the Class A securities will begin at the end of the revolving period, with the first amortization payment in March 2014. Redemption of the Class B securities will begin in June 2013 if and to the extent the vehicle has sufficient funds solely in respect of interest to use for such purpose after having paid all costs in the priority order that must be paid before redemption can begin.

Assigned portfolio The portfolio of performing leasing receivables was selected on the basis of criteria agreed with the Arrangers and the rating agencies, in the amount of about €599.2 million, broken down into four pools. At the assignment date, they had the following composition:

Pool Amount (€) % 1) – Industrial vehicles 26,417,190 4.41 2) – Equipment 160,019,212 26.70 3) – Real estate 380,660,754 63.53 4) – Auto 32,125,238 5.36 Total 599,222,394 100.00

Revolving operations will be conducted on a quarterly basis, with the exception of the first period of about 4 months, beginning in March 2012 and ending in December 2013, with 8 assignments of subsequent portfolios. The selection criteria for the subsequent portfolios were essentially analogous to those used for the initial portfolio. In line with the latest securitizations carried out by Iccrea BancaImpresa and with the trend in market practice, the value of the bargain purchase option was not assigned.

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Repurchase option The assignment contract gives Iccrea BancaImpresa an option for the repurchase of the entire portfolio, which can be exercised on a quarterly basis as from March 2014 as long as the purchase price of the receivables, determined in accordance with the procedures set out in the assignment contract, enables full redemption of the securities and priority payment of all expenses and Iccrea BancaImpresa has obtained the necessary authorizations pursuant to Article 58 of the Banking Act. In concomitance with the exercise of the repurchase option, the vehicle will carry out the early redemption of the securities. Iccrea BancaImpresa sold a put option to the subscriber of the entire Class A equal to €287,600,0000, exercisable if the rating of the securities falls below “Aa1, if the rating of the Bank should fall below “BBB/Baa3” and in the case of adverse events associated with the performance of the assigned portfolio or in the event of significant breaches of contract. On February 21, 2012, the rating level of the Class A securities reached the threshold allowing exercise by the subscriber as the securities were downgraded to Aa2.

Trigger events The trigger events envisaged in the contract are in line with market practice and consistent with the assignment of a performing portfolio.

Servicing Like the previous securitizations, servicing activities are performed by Iccrea BancaImpresa, which carries out monitoring, collection and recovery activities using the same procedures adopted for the company portfolio. The contract provides for the termination of servicer activities by Iccrea BancaImpresa and the transfer of the Servicer role to another party to be selected where Iccrea BancaImpresa should no longer be available to continue performing the role.

Credit enhancement Redemption of the notes is secured by the cash flow expected from the assigned portfolio. For the sole benefit of payments to be made with priority with respect to interest on the A notes, Iccrea BancaImpresa has provided a subordinated liquidity facility of up to €500,000 in the event the funds available to the vehicle are not sufficient to pay those expenditure items. For the sole benefit of the A notes, ICCREA Banca has provided a subordinated liquidity facility of up to €100 million in the event the funds available to the vehicle are not sufficient to pay principal and interest on the A notes themselves. As in the previous operations, the contract provides for the excess spread covering first losses and a Debt Service Reserve, which is made available by the vehicle on a quarterly basis in the amount of €5 million with payments received and in the amount of €8.5 million from the proceeds of the subscription of the Class B notes by Iccrea BancaImpresa.

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C. Securitizations and asset disposals C.1 SECURITIZATIONS

C.1.1 Exposures in respect of securitizations by quality of securitized assets

On-balance-sheet exposures Guarantees issued Credit lines

Senior Mezzanine Junior Senior Mezzanine Junior Senior Mezzanine Junior Gross Gross Gross Gross exposure Gross exposure Gross exposure Gross exposure Gross exposure Gross exposure Gross Net Net Net Net Net Net Net Net exposure Net exposure Net exposure Net

exposure exposure exposure exposure exposure exposure exposure exposure exposure

A. With own underlying assets: 80,322 80,322 111,881 111,881 552,253 552,253 a) impaired b) other 80,322 80,322 111,881 111,881 552,253 552,253 B. With third-party underlying assets: a) impaired b) other

The table reports exposures assumed by the Bank in respect of its own securitizations in which the assigned assets were retained on the balance sheet in their entirety as they do not qualify for derecognition pursuant to IAS 39 . The exposure is equal to the retained risk measured as the difference between the assigned assets and the corresponding liabilities as of the balance sheet date.

The exposure in respect of the Agri5 securitization, in which the Bank, as Originator, subscribed all the ABSs issued by the vehicle Agrisecurities S.r.l. at issue, has not been recognized.

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C.1.2 Exposures in respect of main own securitizations by type of securitized assets and type of exposure

On-balance-sheet exposures Guarantees issued Credit lines

Senior Mezzanine Junior Senior Mezzanine Junior Senior Mezzanine Junior Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Writedowns/Writebacks Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount Carrying

A. Fully derecognized A.1 name of securitization 1 – type of assets A.2 name of securitization 2 – type of assets A.3 name of securitization … – type of assets B. Partially derecognized

B.1 name of securitization 1 – type of assets B.2 name of securitization 2 – type of assets B.3 name of securitization … – type of assets C. Not derecognized 80,322 111,881 552,253 C.1 AGRI 2 11,381 18,131 – Lease receivables 11,381 18,131 C.2 AGRI 3 21,822 27,000 23,000 – Lease receivables 21,822 27,000 23,000 C.3 AGRI 4 58,500 65,000 26,500 – Lease receivables 58,500 65,000 26,500 C.4 AGRI 6 173,000 – Lease receivables 173,000 C.5 AGRI 7 8,500 311,622 – Lease receivables 8,500 311,622

The table reports the exposure of the Bank in respect of each of its own securitizations, also indicating the contractual form of the assets assigned. As indicated in the note to table C.1.1. above, the notes issued as part of the AGRI5 securitization were fully subscribed. Accordingly, the exposures assumed by the Bank are not reported in the table.

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C.1.3 Exposures in respect of main third-party securitizations by type of securitized assets and type of exposure

There were no such positions as of the balance sheet date.

C.1.4 Exposures in respect of securitizations by portfolio and type

There were no such positions as of the balance sheet date.

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C.1.5 Total amount of securitized assets underlying junior securities or other forms of credit support

Traditional Synthetic

securitizations securitizations

A. Own underlying assets: 740,497 A.1 Fully derecognized 1. Bad debts 2. Substandard loans 3. Restructured positions 4. Past due positions 5. Other assets A.2 Partially derecognized 1. Bad debts 2. Substandard loans 3. Restructured positions 4. Past due positions 5. Other assets A.3 Not derecognized 740,497 1. Bad debts 13,672 2. Substandard loans 19,038 3. Restructured positions 237 4. Past due positions 42 5. Other assets 707,508 B. Third-party underlying assets: B.1 Bad debts B.2 Substandard loans B.3 Restructured positions B.4 Past due positions B.5 Other assets

The table reports, in proportion to the securities subscribed, the amount of the securitized portfolio at the balance sheet date, broken down by the quality of the securitized assets.

As in the previous tables, this table does not report the exposure in respect of the Agri5 securitization, in which the Bank, as Originator, subscribed all the ABSs issued by Agrisecurities S.r.l. at issue.

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C.1.6 Involvement in special purpose vehicle

The Bank has no involvement in the special purpose vehicles Agrisecurities S.r.l. and Agricart 4 Finance S.r.l.

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C.1.7 Servicer activities - collections on securitized assets and redemption of securities issued by vehicle

Securitized assets Collections % of securities redeemed in the year (end-period figure)

Senior Mezzanine Junior

Impaired Performing Impaired Performing Impaired Performing Impaired Performing Impaired Performing

AGRI 2 - AGRISECURITIES S.r.l. 12,234 24,115 2,966 52,223 100% 53.98% AGRI 3 - AGRISECURITIES S.r.l. 36,442 231,368 12,291 144,594 90.76% AGRI 4 - AGRICART 4 FINANCE S.r.l. 26,395 478,134 9,683 111,424 AGRI 6 - AGRICART 4 FINANCE S.r.l. 8,110 484,407 1,294 136,896 AGRI 7 - ICCREA SME CART SRL 262 571,534 3 32,294 Total 83,443 1,789,558 26,237 477,431

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C.2.1 Financial assets assigned but not derecognized

Financial assets held Financial assets Financial assets available Financial assets held Loans to banks Loans to customers Total for trading at fair value for sale to maturity

A B C A B C A B C A B C A B C A B C 31/12/2011 31/12/2010

A. On-balance-sheet assets 1,873,000 1,873,000 1,476,676 1. Debt securities 2. Equity securities 3. Units in collective investment undertakings 4. Loans 1,873,000 1,873,000 1,476,676 B. Derivatives Total (31/12/2011) 1,873,000 1,873,000 1,476,676 of which: impaired 83,443 83,443 70,645 Total (31/12/2010) 1,476,676 1,476,676 1,476,676 of which: impaired 70,645 70,645 70,645

Key:

A= Assigned financial assets fully recognized (carrying amount)

B=Assigned financial assets partially recognized (carrying amount)

C=Assigned financial assets partially recognized (full value)

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C.2.2 Financial liabilities in respect of financial assets assigned but not derecognized

Financial assets Financial Financial Financial Loans held for assets Loans assets assets held to Total trading available for to banks at fair value to maturity customers sale

1. Due to customers 1,126,498 1,126,498 a) in respect of assets fully recognized 1,126,498 1,126,498 b) in respect of assets partially recognized 2. Due to banks a) in respect of assets fully recognized 319,588 319,588 b) in respect of assets partially recognized Total (31/12/2011) 1,446.086 1,446,086 Total (31/12/2010) 986,141 986,141

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D. MODELS FOR MEASURING CREDIT RISK

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SECTION 2 MARKET RISKS

Iccrea BancaImpresa’s finance operations are directed at supporting its lending activities by raising adequate funds, seeking both to minimize the cost of funding, contain liquidity, interest-rate and exchange-rate risks, maintain an appropriate correlation indexing mechanisms and the maturity of assets and liabilities and comply with the limits established by supervisory or internal Group regulations.

Appropriate financial management is therefore based on the three-year planning of funding needs, in relation to forecast developments in lending and funding costs; the definition of the annual funding requirement, which is used to prepare the company and Group Funding Plan; the periodic review of the funding requirement; the definition and periodic review of limits on exposures to interest and exchange rate risk; the systemic monitoring of the financial position and compliance with risk exposure limits.

Asset & Liability Management techniques are used to support decision-making processes and to monitor and measure the equilibrium of the structure of the Bank's assets and liabilities.

In order to further strengthen operating activities and internal control with regard to managing and monitoring market risks, the Bank has established a committee that, in addition to performing coordination and control duties, also provides support to decision-making bodies in assessing the characteristics and risks associated with individual innovative transactions and new products; It also supplies the data, analysis and assessments needed for rational decision-making by the bodies responsible for financial transactions.

2.1 INTEREST RATE RISK AND PRICE RISK – SUPERVISORY TRADING BOOK

Qualitative disclosures

A. General aspects

The trading book comprises plain vanilla interest rate derivatives, mainly interest rate swaps. These transactions are mainly linked to the transformation of indexing mechanisms on funding operations. The overall market risk that can be assumed under the trading book, measured in accordance with supervisory regulations, is subject to a stringent ceiling calculated as a percentage of Tier 1 capital as reported in the most recently approved annual or interim financial statements. The trading book also includes derivatives on interest rates entered into with customers in respect of lease contracts and mortgage loans. These transactions are matched against corresponding contracts with Iccrea Banca.

Within the framework of the system of internal limits, equity risk is highly contained.

B. Management and measurement of interest rate risk and price risk

Within the organizational structure of Iccrea BancaImpresa, the Finance and Derivatives Department is responsible for minimizing market risk in conformity with the strategic objectives of the Bank and in collaboration with the Group-level coordinating bodies.

The Risk Management and Group ALM function is responsible for monitoring the risk profile of positions in the trading book, using metrics in line with market best practices: sensitivity analysis, estimation of value at risk and stress testing. The monitoring of operational limits provides for the measurement and systematic control of exposures in the various portfolios and verification of the limits on VaR and other in-house operating restrictions .

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QUANTITATIVE DISCLOSURES

1. Supervisory trading book: distribution by residual maturity (repricing date) of on-balance-sheet financial assets and liabilities and financial derivatives

More More than than Up to 3 More than More than On 6 More than Unspecified 3 months 1 year to 5 years to demand months 10 years maturity months to 5 years 10 years to 6 1 year months 1. On-balance-sheet assets 254 360 1.1 Debt securities - with early redemption option - other 1.2 Other assets 254 360 2. On-balance-sheet liabilities 2.1 Repurchase agreements 2.2 Other liabilities 3. Financial derivatives 139,466 602,478 398,828 567,986 12,762,226 13,568,406 3,174,610 3.1 With underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions 3.2 Without underlying security 139,466 602,478 398,828 567,986 12,762,226 13,568,406 3,174,610 - Options 132,682 136,104 188,836 508,736 12,417,694 13,390,596 3,042,104 + long positions 66,341 68,052 94,418 254,368 6,208,847 6,695,298 1,521,052 + short positions 66,341 68,052 94,418 254,368 6,208,847 6,695,298 1,521,052 - Other derivatives 6,784 466,374 209,992 59,250 344,532 177,810 132,506 + long positions 3,392 233,187 104,996 29,625 172,266 88,905 66,253 + short positions 3,392 233,187 104,996 29,625 172,266 88,905 66,253

2. Supervisory trading book: distribution of exposures in equity securities and equity indices by main countries of listing

There were no such positions as of the balance sheet date.

3. Supervisory trading book: internal models and other sensitivity analysis methodologies

With regard to interest rate risk, the table has not been completed because there were no such positions as of the balance sheet. Operations in derivatives in respect of lease transactions or loans with customers were perfectly offset, while the remaining derivatives were traded for hedging purposes.

With regard to price risk, the table has not been completed because there were no such positions as of the balance sheet date.

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2.2 INTEREST RATE RISK AND PRICE RISK – BANKING BOOK QUALITATIVE DISCLOSURES

A. General aspects, management and measurement of interest rate risk and price risk

The Bank’s operations are mainly at medium and long term, organized on the basis of annual and three-year programs. Funding in the market is carried out with a view to minimizing the cost of funds in a manner compatible with prudent risk management while correlating the maturity structure of assets and liabilities.

In this regard, in monitoring market developments, structured funding solutions are accompanied by strict hedging of the composite risk factors (mainly equity risk) in order to identify exposures exclusively associated with interest rate risk.

In the reporting generated through the company ALM system, the Risk Management & Group ALM function includes position information and risk data for the banking book. Attention is paid to basis risk in respect of differences in the timing of the repricing of indexed assets and liabilities and/or differences in the parameters used for indexing assets and liabilities. The exposure to basis risk is measured by analyzing the repricing gap and monitored using a specific limit.

In its monitoring activity, the Risk Management & Group ALM function uses sensitivity analyses of net interest income and economic value in response to different scenarios of changes in the yield curve. In particular, as regards the sensitivity analyses associated with changes in market rates, limits were set on the prospective change in net interest at 12 months and on the market value of the Bank's equity. Both limits are calculated on the basis of a parallel shift of +/- 100 basis points in the yield curve. In addition, stress tests are conducted to identify events or factors that could have a severe impact on the Bank's financial equilibrium. In order to capture the specific features of its portfolio, the Bank identified highly adverse stress situations: more specifically, the Bank used a combination of the stress tests specified by the Bank of Italy with those developed internally in relation to its own risk characteristics.

The risk in respect of fixed-rate positions is hedged using bond funding or derivatives on interest rates.

The overall exposure to interest rate risk is concentrated in euro-denominated transactions, and therefore the correlation effects between developments in the yield curves of other currency areas are marginal.

B. Fair value hedging

Positions exposed to interest rate risk are hedged in accordance with the IAS rules for fair value hedges.

At December 31, 2011, the effectiveness tests for the loan portfolio were carried out using the Volatility Risk Reduction Method (VRR) for the macro-hedge of assets totaling €230 million. On the liability side, the effectiveness tests were performed using the dollar-offset method for individual Iccrea BancaImpresa bond issues in euros for a total of €285.7 million.

In 2011, the Bank entered into 5 swap transactions to hedge specific credit operations (public-sector leases) which is tested for effectiveness using the dollar-offset method, in the total amount of €11.9 million.

C. Cash flow hedging

Since 2009 a portfolio of derivatives was established to hedge floating-rate loans using the Volatility Risk Reduction Method. At December 31, 2011, the hedged portfolio of loans amounted to €291 million.

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QUANTITATIVE DISCLOSURES

1. Banking book: distribution of financial assets and liabilities by residual maturity (repricing date) - currency: euro

More than More than More than More than Up to More than Unspecified On demand 3 months to 6 months to 1 year to 5 years to 3 months 10 years maturity 6 months 1 year 5 years 10 years

1. On-balance- sheet assets 887,617 6,542,278 1,386,652 78,248 365,622 56,374 169,058 1.1 Debt securities - with early redemption option - other 1.2 Loans to banks 139,504 97,464 20,662 1,181 5,572 870 2,685 1.3 Loans to customers 748,113 6,444,815 1,365,990 77,067 360,050 55,503 166,373 - current accounts 490,419 - other loans 257,695 6,444,815 1,365,990 77,067 360,050 55,503 166,373 - with early redemption option 34,012 998,144 305,667 26,804 73,138 10,717 4,326 - other 223,683 5,446,671 1,060,323 50,263 286,912 44,786 162,047 2. On-balance- sheet liabilities 303,902 7,311,965 908,932 254,333 322,221 55,139 3,965 2.1 Due to customers 22,672 941,238 394,750 112,237 8,437 3,366 3,965 - current accounts 1 - other payables 22,671 941,238 394,750 112,237 8,437 3,366 3,965 - with early redemption option - other 22,671 941,238 394,750 112,237 8,437 3,366 3,965 2.2 Due to banks 273,546 1,640,861 421,049 104,127 35,130 - current accounts 18,207 - other payables 255,339 1,640,861 421,049 104,127 35,130 2.3 Debt securities 7,684 4,729,865 93,134 37,970 278,654 51,773 - with early redemption option 101,592 - other 7,684 4,628,273 93,134 37,970 278,654 51,773 2.4 Other liabilities - with early redemption option

- other 3. Financial derivatives 1,719,991 8,656,8518,6 398,982 405,311 708,497 114,446 193,967 3.1 With underlying security - Options + long positions + short positions - Other derivatives + long positions + short position 3.2 Without underlying security 1,719,991 8,656,851 398,982 405,311 708,497 114,446 193,967 - Options 4,374 + long positions 2,187 + short positions 2,187 - Other derivatives 1,719,991 8,652,477 398,982 405,311 708,497 114,446 193,967 + long positions 1,478,727 4,256,324 15,735 66,277 70,671 66,236 142,864 + short positions 241,264 4,396,152 383,246 339,034 637,825 48,210 51,103

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1. Banking book: distribution of financial assets and liabilities by residual maturity (repricing date) - currency: US dollar

More than More than More than More than Up to 3 months 6 months More than Unspecified On demand 1 year to 5 years to 3 months to to 10 years maturity 5 years 10 years 6 months 1 year

1. On-balance-sheet assets 13,215 5,109 39 1.1 Debt securities - with early redemption option

- other 1.2 Loans to banks 2 39 1.3 Loans to customers 13,213 5,109 - current accounts - other loans 13,213 5,109 - with early redemption option

- other 13,213 5,109 2. On-balance-sheet liabilities 20,600 2.1 Due to customers - current accounts - other payables - with early redemption option

- other 2.2 Due to banks 20,600 - current accounts - other payables 20,600 2.3 Debt securities - with early redemption option

- other 2.4 Other liabilities - with early redemption option

- other 3. Financial derivatives 3.1 With underlying security - Options + long positions + short positions - Other derivatives + long positions + short position 3.2 Without underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions

189

1. Banking book: distribution of financial assets and liabilities by residual maturity (repricing date) - currency: yen

More than More than More than More than Up to 3 months 6 months More than Unspecified On demand 1 year to 5 years to 3 months to to 10 years maturity 5 years 10 years 6 months 1 year

1. On-balance-sheet assets 97 4,053 1.1 Debt securities - with early redemption option

- other 1.2 Loans to banks 1.3 Loans to customers 97 4,053 - current accounts - other loans 97 4,053 - with early redemption option

- other 97 4,053 2. On-balance-sheet liabilities 5,498 2.1 Due to customers - current accounts - other payables - with early redemption option

- other 2.2 Due to banks 5,498 - current accounts - other payables 5,498 2.3 Debt securities - with early redemption option

- other 2.4 Other liabilities - with early redemption option

- other 3. Financial derivatives 3.1 With underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions 3.2 Without underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions

190

1. Banking book: distribution of financial assets and liabilities by residual maturity (repricing date) - currency: Swiss franc

More than More than More than More than Up to 3 months 6 months More than Unspecified On demand 1 year to 5 years to 3 months to to 10 years maturity 5 years 10 years 6 months 1 year

1. On-balance-sheet assets 32 4,462 1.1 Debt securities - with early redemption option

- other 1.2 Loans to banks 1.3 Loans to customers 32 4,462 - current accounts - other loans 32 4,462 - with early redemption option

- other 32 4,462 2. On-balance-sheet liabilities 7,612 2.1 Due to customers - current accounts - other payables - with early redemption option

- other 2.2 Due to banks 7,612 - current accounts - other payables 7,612 2.3 Debt securities - with early redemption option

- other 2.4 Other liabilities - with early redemption option

- other 3. Financial derivatives 3.1 With underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions 3.2 Without underlying security - Options + long positions + short positions - Other derivatives + long positions + short positions

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2. Banking book: internal models and other sensitivity analysis methodologies

With regard to interest rate risk on the banking book, the following table reports the results of the sensitivity analysis of the impact on prospective net interest income at 1 year of a +/- 100 b.p. shift in the yield curve for the currencies in the position.

Impact on Impact on shareholders’ Impact on net profit net interest income equity + 100 bp - 100 bp + 100 bp - 100 bp + 100 bp - 100 bp Iccrea BancaImpresa - 21.31 + 35.71 - 14.27 + 23.90 - 1.61 + 2.70

Figures in millions of euros at December 31, 2011

The figures at December 31, 2010 are shown below:

Impact on Impact on shareholders’ Impact on net profit net interest income equity + 100 bp - 100 bp + 100 bp - 100 bp + 100 bp - 100 bp Iccrea BancaImpresa - 24.08 + 36.18 - 16.26 + 24.43 - 2.79 + 4.20

• the sensitivity of net interest income, reported gross of implicit components (rounding and floors) is in line with the values reported the previous year as a result of the continuing low level of interest rates and closer alignment of indexing procedures for lending and funding; • the decrease in the sensitivity of net profit compared with the previous year is consistent with market developments and the application of a higher IRAP rate; • the reduction in the impact on equity is in line with the comments in the first point, albeit more than proportionately owing to the reduction from 17.2% to 11.3% in the ratio between retained earnings and undistributed earnings in the time series used (3 previous years).

With regard to price risk, the table has not been completed because there were no such positions as of the balance sheet date.

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2.3 EXCHANGE RATE RISK

Qualitative disclosures

A. General aspects, management and measurement of exchange rate risk

The Bank’s operations are conducted largely in euros. Transactions denominated in other currencies are of marginal significance.

B. Exchange rate risk hedging

The Bank ensures that positions in currencies other than the euro are constantly offset.

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QUANTITATIVE DISCLOSURES

1. Distribution by currency of assets, liabilities and derivatives

Currency

Pound Canadian US dollar Yen Swiss franc Other sterling dollar A. Financial assets 18,363 4,150 4,494 A.1 Debt securities A.2 Equity securities A.3 Loans to banks 41 A.4 Loans to customers 18,322 4,150 4,494 A.5 Other financial assets B. Other assets C. Financial liabilities 7,187 5,498 7,612 C.1 Due to banks 7,187 5,498 7,612 C.2 Due to customers C.3 Debt securities C.4 Other financial liabilities D. Other liabilities E. Financial derivatives - Options + long positions + short positions - Other derivatives + long positions + short positions Total assets 18,363 4,150 4,494 Total liabilities 7,187 5,498 7,612 Difference (+/-) 11,176 (1,348) (3,118)

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2.4 Derivatives

A. Financial derivatives

A.1 Supervisory trading book: end-period and average notional amounts

Total 31/12/2011 Total 31/12/2010

Over the Central Over the Central counter counterparties counter counterparties

1. Debt securities and interest rates 1,636,592 1,224,248 a) Options 937,967 751,310 b) Swaps 698,625 472,939 c) Forwards d) Futures e) Other 2. Equity securities and equity indices a) Options b) Swaps c) Forwards d) Futures e) Other 3. Foreign currencies and gold a) Options b) Swaps c) Forwards d) Futures

e) Other 4. Commodities 5. Other underlyings Total 1,636,592 1,224,248 Average values 1,430,421 955,706

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A.2 Banking book: end-period and average notional amounts

A.2.1 Hedging

Total 31/12/2011 Total 31/12/2010

Over the Central Over the Central counter counterparties counter counterparties

1. Debt securities and interest rates 878,024 2,408,150 a) Options b) Swaps 878,024 2,408,150 c) Forwards d) Futures e) Other 2. Equity securities and equity indices a) Options b) Swaps c) Forwards d) Futures e) Other 3. Foreign currencies and gold a) Options b) Swaps c) Forwards d) Futures e) Other 4. Commodities 5. Other underlyings Total 878,024 2,408,150 Average values 1,643,087 2,736,406

196

A.2.2 Other derivatives

Total 31/12/2011 Total 31/12/2010

Over the Central Over the Central counter counterparties counter counterparties

1. Debt securities and interest rates 4,284,855 3,281,125 a) Options 2,187 b) Swaps 4,282,668 3,281,125 c) Forwards d) Futures e) Other 2. Equity securities and equity indices 873,120 a) Options 873,120 b) Swaps c) Forwards d) Futures e) Other 3. Foreign currencies and gold a) Options b) Swaps c) Forwards d) Futures e) Other 4. Commodities 5. Other underlyings Total 4,284,855 4,154,245 Average values 4,219,822 4,616,777

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A.3 Financial derivatives: gross positive fair value - breakdown by product

Positive fair value

Total 31/12/2011 Total 31/12/2010

Over the Central Over the Central counter counterparties counter counterparties

A. Supervisory trading book 28,331 16,505 a) Options 7,848 10,850 b) Interest rate swaps 20,483 5,655 c) Cross currency swaps d) Equity swaps e) Forwards f) Futures g) Other B. Banking book – hedging 10,326 15,872 a) Options b) Interest rate swaps 10,326 15,872 c) Cross currency swaps d) Equity swaps e) Forwards f) Futures g) Other C. Banking book – Other derivatives 9,895 8,840 a) Options 1,902 3,246 b) Interest rate swaps 7,993 5,594 c) Cross currency swaps d) Equity swaps e) Forwards f) Futures g) Other Total 48,552 41,218

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A.4 Financial derivatives: gross negative fair value – breakdown by product

Negative fair value

Total 31/12/2011 Total 31/12/2010

Over the Central Over the Central counter counterparties counter counterparties

A. Supervisory trading book 29,227 17,144 a) Options 7,848 10,850 b) Interest rate swaps 21,379 6,293 c) Cross currency swaps d) Equity swaps e) Forwards f) Futures g) Other B. Banking book – hedging 29,805 31,982 a) Options b) Interest rate swaps 29,805 31,982 c) Cross currency swaps d) Equity swaps e) Forwards f) Futures g) Other C. Banking book – Other derivatives 8,234 7,140 a) Options 1,902 3,245 b) Interest rate swaps 6,332 3,895 c) Cross currency swaps d) Equity swaps e) Forwards f) Futures g) Other Total 67,266 56,266

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A.5 Over-the-counter financial derivatives – supervisory trading book: notional values, gross positive and negative fair values by counterparty - contracts not covered by netting arrangements

Othergovernment agencies Non Insurance undertakings Insurance Financial companies Governments and Governments - financial companies financial central Banks Other

banks

1) Debt securities and interest rates 850,764 6,216 842,794 860 - notional value 818,296 5,740 811,712 845 - positive fair value 7,651 411 20,270 - negative fair value 21,577 7,636 15 - future exposure 3,240 65 3,176 2) Equity securities and equity indices - notional value - positive fair value - negative fair value - future exposure 3) Foreign currencies and gold - notional value - positive fair value - negative fair value - future exposure 4) Other assets - notional value - positive fair value - negative fair value - future exposure

A.6 Over-the-counter financial derivatives – supervisory trading book: notional values, gross positive and negative fair values by counterparty - contracts covered by netting arrangements

There were no such positions as of the balance sheet date.

200

A.7 Over-the-counter financial derivatives – banking book: notional values, gross positive and negative fair values by counterparty - contracts not covered by netting arrangements

Othergovernment agencies Non Insurance undertakings Insurance Financial companies Governments and Governments - financial companies financial central banks central Banks Other

1) Debt securities and interest rates 5,221,139 543 - notional value 5,162,878 543 - positive fair value 20,222 - negative fair value 38,039 - future exposure 2) Equity securities and equity indices - notional value - positive fair value - negative fair value - future exposure 3) Foreign currencies and gold - notional value - positive fair value - negative fair value - future exposure 4) Other assets - notional value - positive fair value - negative fair value - future exposure

A.8 Over-the-counter financial derivatives – banking book: notional values, gross positive and negative fair values by counterparty - contracts covered by netting arrangements

There were no such positions as of the balance sheet date.

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A.9 Residual life of over-the-counter financial derivatives: notional values

More than Up to More than 5 1 year and Total 1 year years up to 5 years

A. Supervisory trading book 79,612 617,145 939,836 1,636,593 A.1 Financial derivatives on debt securities and interest rates 79,612 617,145 939,836 1,636,593 A.2 Financial derivatives on equity securities and equity indices A.3 Financial derivatives on exchange rates and gold A.4 Financial derivatives on other assets B. Banking book 4,195,336 694,435 273,106 5,162,877 B.1 Financial derivatives on debt securities and interest rates 4,195,336 694,435 273,106 5,162,877 B.2 Financial derivatives on equity securities and equity indices B.3 Financial derivatives on exchange rates and gold B.4 Financial derivatives on other assets Total (T) 4,274,948 1,311,580 1,212,942 6,799,470 Total (T-1) 5,684,002 1,052,064 1,050,577 7,786,644

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B. CREDIT DERIVATIVES

There were no credit derivatives outstanding at the reporting date.

C. FINANCIAL AND CREDIT DERIVATIVES

C.1 Over-the-counter financial and credit derivatives: net fair value and future exposure by counterparty

There were no such positions as of the balance sheet date.

203

SECTION 3 – LIQUIDITY RISK QUALITATIVE DISCLOSURES

A. General aspects, management and measurement of liquidity risk

Liquidity risk is defined as the risk that the Bank will not be able to fulfill its obligations at maturity (see Circular no. 263, Title III, Chapter 1, Annex D). The Iccrea Group does not hold internal capital against liquidity risk, but has developed and implemented a series of policies and tools that allow it to control such risk appropriately. In 2010, in fact, a liquidity policy model was developed that, in accordance with regulatory requirements and operational needs, sets out the principles for prudent management of liquidity risk within the Iccrea Group, the roles and responsibilities of the corporate bodies and operating units, the control processes and a plan for managing any crisis situations that may arise (the Contingency Funding Plan). In defining these guidelines, reference was made to the instructions of the supervisory authorities as well as the most recent international best practices, which include the following principles: - the presence of a liquidity management policy approved by top management and clearly communicated within the institution; - the existence of an operational structure that works within the assigned limits and an independent control structure; - the adoption of a prudential approach in projecting incoming and outgoing cash flows for all items on and off the balance sheet, especially with regards to those without contractual maturity dates (or with maturity dates that are not meaningful); - the assessment of the impact of various scenarios, including stress scenarios, on incoming and outgoing cash flows. In the light of the 4th update of Circular no. 263/2006 of December 13, 2010, work is in progress on revising the Group liquidity policy in order to incorporate the new guidance into the liquidity risk governance, management and control system. The guidelines can be grouped into these main areas: - Short term liquidity: Short term liquidity management is aimed at ensuring sufficient and balanced incoming and outgoing cash flows with a specified or estimated maturity of up to 12 months. In order to monitor and manage the short-term liquidity position, indicators at the individual and consolidated levels have been defined to define equilibrium profiles over a short-term time horizon. To manage the short- term financial position, a Group-level minimum maintenance level of €1 billion in assets that can be used in refinancing operations with the ECB has been established. The manner in which Iccrea Banca uses refinanceable assets held by Iccrea BancaImpresa is specified by the Group’s Finance Committee;

- Structural liquidity: Structural liquidity management is aimed at ensuring the balance and stability of the liquidity profile over a time horizon of more than 12 months and integration with short-term liquidity management. Indicators have been established at the consolidated level to monitor the structural liquidity position. These are calculated on a monthly basis and seek to assess the availability of stable funding sources over a time horizon of more than 1 year for on- and off-balance-sheet assets and liabilities and ensure balance in expected cash flows, with the identification of assets and liabilities within each individual time band;

- Contingency Funding Plan (CFP): The CFP is a process used to manage the Group’s liquidity profile under conditions of market strains or crisis. The guidelines set out the objectives, the processes and intervention strategies that would be implemented in the case such conditions occur, the organizational structure which supports the CFP and the risk indicators that serve as the basis for identifying difficult or emergency situations. They also specify the thresholds that determine when these crisis management procedures are activated;

- Daily reporting to the Bank of Italy- Short-term liquidity: since October 2008, the Group Risk Management and ALM unit has generated short-term liquidity reports at the consolidated level for the Bank of Italy. Since October 2010 the Bank of Italy, in view of the systemic importance of the Iccrea Banking Group in the cooperative credit system, has required the preparation of daily consolidated short-term liquidity reports. The short-term liquidity position is monitored by estimating expected cash flows at the Group level over the reference time horizon (from 0 to 3 months). The positions reported also undergo stress testing;

- Measurement and control of liquidity risk: this function is performed by identifying cash imbalances by maturity band, both in static terms (with a view to identifying actual liquidity strains seen from the characteristics of the account items, through the construction, for each specified time band, of the corresponding gap indicator) and in dynamic terms (using estimation and simulation techniques, aiming to develop the most likely scenarios following changes in the financial variables that can impact the time profile of liquidity).

Measurement and monitoring of the limits and indicators at the individual and overall Group level for short- term and structural liquidity are performed by the Group Risk Management and ALM unit. In particular:

204

- developments in market rates, Group and system liquidity and the operating limits at the individual and consolidated levels and the indicators provided for in the CFP are analyzed on a daily basis. These analyses are transmitted to management at the Parent Company, Iccrea Banca and Iccrea BancaImpresa; - the 1-month liquidity coverage ratio (in both ordinary and stress conditions) is assessed on a weekly basis; - the maturity ladder with a time horizon of 12 months and a time horizon of indefinite maturity (the net stable funding ratio) is assessed on a monthly basis.

In implementation of the new Group Finance model, funding on financial markets is primarily carried out by Iccrea Banca, which handles operational management and de facto immunization of liquidity risk.

The Group Risk Management and ALM unit participates in the Group Finance Committee and reports to it on developments in the liquidity position and compliance with the limits in place.

The Iccrea Group does not hold internal capital against liquidity risk, but has developed and implemented a series of policies and tools that allow it to control such risk appropriately.

The main sources of liquidity risk are: - short-term liquidity imbalances, connected with the relationship between incoming and outgoing cash flows. This is monitored to ensure the ability to discharge forecast cash payment commitments; - structural liquidity imbalances, connected with the relationship between overall liabilities and medium/long-term assets. This is monitored to avoid straining current and prospective funding sources, and to enable achievement of appropriate balance between asset and liability items.

205

Section 3 – Liquidity risk

QUANTITATIVE DISCLOSURES

1. Distribution of financial assets and liabilities by residual maturity - currency: euro

More than More than More than More than More than More than More than Unspecified 1 day 7 days 15 days 1 month 3 months 6 months 1 year More than On demand maturity to to to to to to to 5 years

7 days 15 days 1 month 3 months 6 months 1 year 5 years

On-balance-sheet assets 1,493,485 148 938 109,872 136,953 226,321 424,326 2,493,396 3,667,542 882 A.1 Government securities A.2 Other debt securities A.3 Units in collective investment undertakings 196,479 A.4 Loans 1,297,006 148 938 109,872 136,953 226,321 424,326 2,463,884 2,952,598 882 - banks 228,408 1,127 329 540 1,220 10,201 25,617 499 - customers 1,068,598 148 938 108,745 136,624 225,781 423,106 2,453,684 2,926,981 383 On-balance-sheet liabilities 282,612 28,369 23 1,325,982 460,538 1,412,393 4,326,569 196,797 B.1 Deposits 273,547 - banks 273,546 - customers 1 B.2 Debt securities 7,519 28,364 5,948 251,767 754,496 3,997,002 153,984 B.3 Other liabilities 1,546 5 23 1,320,034 208,770 657,897 329,567 42,814 Off-balance-sheet transactions 468,896 96,449 12,498 29,850 69,969 49,138 348,768 24,094 C.1 Financial derivatives with exchange of principal - long positions - short positions C.2 Financial derivatives without exchange of principal 59,242 - long positions 29,173 - short positions 30,069 C.3 Deposits and loans to receive - long positions - short positions C.4 Irrevocable commitments to disburse funds 391,126 268 2,898 27,991 331,490 24,094 - long positions 268 2,898 27,991 331,490 11,545 - short positions 391,126 12,549 C.5 Financial guarantees issued 18,528 96,181 9,600 29,850 69,969 21,147 17,278

206

1. Distribution of financial assets and liabilities by residual maturity - currency: US dollar

More than More than More than More than More than More than More than Unspecified 1 day 7 days 15 days 1 month 3 months 6 months 1 year More than On demand maturity to to to to to to to 5 years

7 days 15 days 1 month 3 months 6 months 1 year 5 years

On-balance-sheet assets 149 104 294 529 5,131 11,888 A.1 Government securities A.2 Other debt securities A.3 Units in collective investment undertakings A.4 Loans 149 104 294 529 5,131 11,888 - banks 2 38 - customers 147 104 256 529 5,131 11,888 On-balance-sheet liabilities 20,600 B.1 Deposits - banks - customers B.2 Debt securities B.3 Other liabilities 20,600 Off-balance-sheet transactions C.1 Financial derivatives with exchange of principal - long positions - short positions C.2 Financial derivatives without exchange of principal - long positions - short positions C.3 Deposits and loans to receive - long positions - short positions C.4 Irrevocable commitments to disburse funds - long positions - short positions C.5 Financial guarantees issued

207

1. Distribution of financial assets and liabilities by residual maturity - currency: yen

More than More than More than More than More than More than More than Unspecified 1 day 7 days 15 days 1 month 3 months 6 months 1 year More than On demand maturity to to to to to to to 5 years

7 days 15 days 1 month 3 months 6 months 1 year 5 years

On-balance-sheet assets 93 66 105 188 1,062 2,577 A.1 Government securities A.2 Other debt securities A.3 Units in collective investment undertakings A.4 Loans 93 66 105 188 1,062 2,577 - banks - customers 93 66 105 188 1,062 2,577 On-balance-sheet liabilities 5,498 B.1 Deposits - banks - customers B.2 Debt securities B.3 Other liabilities 5,498 Off-balance-sheet transactions C.1 Financial derivatives with exchange of principal - long positions - short positions C.2 Financial derivatives without exchange of principal - long positions - short positions C.3 Deposits and loans to receive - long positions - short positions C.4 Irrevocable commitments to disburse funds - long positions - short positions C.5 Financial guarantees issued

208

1. Distribution of financial assets and liabilities by residual maturity - currency: Swiss franc

More than More than More than More than More than More than More than Unspecified 1 day 7 days 15 days 1 month 3 months 6 months 1 year More than On demand maturity to to to to to to to 5 years

7 days 15 days 1 month 3 months 6 months 1 year 5 years

On-balance-sheet assets 31 63 137 179 1,122 2,924 A.1 Government securities A.2 Other debt securities A.3 Units in collective investment undertakings A.4 Loans 31 63 137 179 1,122 2,924 - banks - customers 31 63 137 179 1,122 2,924 On-balance-sheet liabilities 7,612 B.1 Deposits - banks - customers B.2 Debt securities B.3 Other liabilities 7,612 Off-balance-sheet transactions C.1 Financial derivatives with exchange of principal - long positions - short positions C.2 Financial derivatives without exchange of principal - long positions - short positions C.3 Deposits and loans to receive - long positions - short positions C.4 Irrevocable commitments to disburse funds - long positions - short positions C.5 Financial guarantees issued

209

SECTION 4- OPERATIONAL RISKS

QUALITATIVE DISCLOSURES

A. General aspects, management and measurement of operational risks

Within the framework of the initiatives defined at the Group level in the Risk Management area, the Bank has implemented an integrated operational risk identification and analysis system which makes it possible to assess exposure to operational risk for each business area. The approach adopted also makes it possible to pursue the following specific objectives: − providing risk owners with greater awareness of the risks associated with their operations; − assessing the Bank’s positioning with respect to operational risk factors in corporate processes; − providing top management with an overall view of the Bank’s operational issues by period and area of observation; − providing information to improve the internal control system; − optimizing operational risk mitigation actions through a process that identifies risks, assesses their potential financial impact and identifies the internal problems underlying those risks, thereby enabling cost/benefit analysis of the initiatives to be taken in response.

The operational risk analysis system created through these initiatives is composed of:

− an overall framework for managing operational risks, setting out classification models, analytical methodologies, management processes and support tools; − a forward looking self-assessment process for determining exposures to operational risks. The results of the assessment are processed using a statistical model that makes it possible to translate the estimates for operational risk exposures into amounts of economic capital; − a loss data collection process; − an actuarial quantitative model to analyze time series of operational losses over a five-year time horizon.

210

PART F – INFORMATION ON CAPITAL

211

SECTION 1- COMPANY CAPITAL

A. QUALITATIVE DISCLOSURES

The Bank verifies the adequacy of its regulatory capital by way of constant monitoring of developments in risk- weighted assets and the underlying risks both retrospectively and prospectively (planning).

In assessing its overall capital adequacy, the Bank also takes account of specific measurements of credit risk, interest rate risk and operational risk, bearing in mind the capital targets set in the Group’s business plan.

212

B. Quantitative disclosures

B.1 Company capital: composition

Total Total

(31/12/2011) (31/12/2010)

1. Share capital 374,564 335,467 2. Share premium reserve 10,902 0 3. Reserves 166,688 86,702 - earnings 69,829 69,581 a) legal 18,369 18,160 b) established in bylaws 27,360 27,321 c) treasury shares d) other 24,100 24,100 - other 96,859 17,121 4. Equity instruments 5. (Treasury shares) 6. Valuation reserves: 1,977 -1,029 - Financial assets available for sale - Property and equipment - Intangible assets - Hedging of investments in foreign operations - Cash flow hedges 1,977 -1,029 - Foreign exchange differences - Non-current assets held for sale - Actuarial gains (losses) on defined benefit plans - Share of valuation reserves of equity investments accounted for using equity method - Special revaluation laws 7. Net profit (loss) for the period 1,970 2,093 Total 556,102 423,233

213

B.2 Valuation reserves for financial assets available for sale: composition

There were no such positions as of the balance sheet date.

214

B.3 Valuation reserves for financial assets available for sale: change for the period

There were no such positions as of the balance sheet date.

215

SECTION 2- REGULATORY CAPITAL AND CAPITAL RATIOS

2.1 Regulatory capital

A. Qualitative disclosures

Regulatory capital and capital ratios are calculated on the basis of the balance sheet data and performance figures determined using the IAS/IFRS and taking account of the Supervisory Instructions issued by the Bank of Italy with the most recent update of Circular no. 155/91 “Instructions for reporting on regulatory capital and capital ratios”. Regulatory capital is calculated as the sum of the positive and negative elements, on the basis of their quality as capital. Positive elements must be fully available to the Bank in order for them to be used in calculating capital requirements.

Regulatory capital totals €736,228,014. It is composed of Tier 1 capital, Tier 2 capital and Tier 3 capital (for the financial statements at December 31, 2011, there are no Tier 3 capital elements) , net of deductions. More specifically:

• Tier 1 capital comes to €547,846,420, and includes paid-up share capital of €374,564,250, the share premium of €10,902,500, earnings and capital reserves of €166,687,698, net profit for the period of 229,459 (adjusted for the planned distribution of dividends in the amount of €1,740,473), net of intangible assets equal to €4,537,487;

• Tier 2 capital includes subordinated liabilities in the amount of €136,609,007 and hybrid capital instruments equal to €51,772,587;

The latest provisions of the Bank of Italy circular seek to harmonize the criteria for determining regulatory capital and capital ratios with international accounting standards. In particular, they provide for the application of the “prudential filters” indicated by the Basel Committee in governing the criteria to be following by national supervisory authorities in harmonizing regulatory provisions with the new reporting standards. Prudential filters, which seek to preserve the quality of regulatory capital and reduce the potential volatility that the application of the new standards might generate, essentially take the form of a number of corrections to accounting data before their use for supervisory purposes.

216

B. Quantitative disclosures

Total Total

31/12/2011 31/12/2010

A. Tier 1 capital before prudential filters 547,846 417,938 B. Tier 1 capital prudential filters: B.1 Positive IAS/IFRS prudential filters (+) B.2 Negative IAS/IFRS prudential filters (-) C. Tier 1 capital gross of deductible elements (A + B) 547,846 417,938 D. Elements to deduct from Tier 1 capital E. Total Tier 1 capital (C – D) 547,846 417,938 F. Tier 2 capital before prudential filters 188,382 203,456 G. Tier 2 prudential filters: G.1 Positive IAS/IFRS prudential filters (+) G.2 Negative IAS/IFRS prudential filters (-) H. Tier 2 capital gross of deductible elements (F + G) 188,382 203,456 I. Elements to deduct from Tier 2 capital L. Total Tier 2 capital (H – I) 188,382 203,456 M. Elements to deduct from total Tier 1 and Tier 2 capital N. Regulatory capital (E + L – M) 736,228 621,394 O. Tier 3 capital P. Regulatory capital including Tier 3 (N + O) 736,228 621,394

217

2.2 Capital adequacy

A. Qualitative disclosures

Capital ratios at December 31, 2011 were determined, as they were in 2010, in accordance with the provisions of the Basel 2 Capital Accord, adopting the Standardized Approach for the calculation of capital requirements for credit and counterparty risk and the Basic Indicator Approach for operational risk.

As reported in the table indicating the composition of regulatory capital and capital adequacy ratios, at December 31, 2011 the Bank had a ratio of Tier 1 capital to risk-weighted assets of 7.44% while the ratio of regulatory capital to risk-weighted assets came to 10.00%, greater than the minimum requirement of 6% established under the new rules governing banks that belong to a banking group.

218

B. Quantitative disclosures

Unweighted amounts Weighted amounts/requirements

31/12/2011 31/12/2010 31/12/2011 31/12/2010

A. EXPOSURES 11,756,297 10,444,659 9,490,576 8,642,864 A.1 Credit and counterparty risk 11,756,297 10,444,659 9,490,576 8,642,864 1. Standardized approach 11,756,297 10,336,701 9,490,576 8,330,272 2. IRB approach 2.1 Foundation 2.2 Advanced 3. Securitizations 107,958 312,592 B. CAPITAL REQUIREMENTS B.1 Credit and counterparty risk 759,246 691,429 B.2 Market risks 0 97 1. Standardized method 0 97 2. Internal models 3. Concentration risk B.3 Operational risk 26,390 25,527 1. Basic indicator approach 26,390 25,527 2. Standardized approach 3. Advanced measurement approaches B.4 Other prudential requirements B.5 Other elements -196,409 -179,263 B.6 Total prudential requirements 589,227 537,790 C. EXPOSURES AND CAPITAL ADEQUACY RATIOS

C.1 Risk-weighted assets 7,365,336 6,722,376 C.2 Tier 1 capital/risk weighted assets (Tier 1 capital ratio) 7.44% 6.22% C.3 Regulatory capital including Tier 3 /Risk- weighted assets (Total capital ratio) 10.00% 9.24%

219

PART H – INFORMATION ON RELATED PARTIES

220

1. Information on the remuneration of key management personnel

Total 31/12/2011

Short-term benefits 1,485 Post-employment benefits 118 Other long-term benefits 3 Employee termination benefits Share-based payments A) Total 1,606 Compensation of members of Board of Directors 443 Compensation of members of Board of Auditors 231 B) Total 674 A)+B) Total 2,280 Loans and guarantees granted 3,632 - Members of Board of Directors 3,628 - Members of Board of Auditors 4

221

2. Information on transactions with related parties

Receivables Revenues Guarant Costs Losses Payables ees Gross Net

a) Parent company 120 3,240 32,394 32,394 19,315 b) Entities under common control or with significant influence c) Subsidiaries 2,364 1,525 37,042 37,042 1,254 d) Associates 1,453 163,268 131,371 131,371 5,551,689 e) Joint ventures f) Key management personnel Total 3,937 168,033 200,807 200,807 5,572,258

Subsidiaries, parent companies and associates

Intercompany transactions regard ordinary internal operations. They are generally settled at market conditions.

The table summarizes transactions, with the associated revenues and costs at December 31, 2011, with the subsidiaries BCC Lease S.p.A. and BCC Factoring S.p.A., with the parent company ICCREA Holding S.p.A., and with subsidiaries of the parent company ( (ICCREA Banca S.p.A. BCC Private Equity SGR S.p.A. BCC Gestione Crediti S.p.A. S.r.l. Immicra S.r.l. BCC Multimedia, BCC Solutions, Aureo Gestioni e Banca Sviluppo).

The exposure to managers with strategic responsibilities regards mortgage loans.

Pursuant to the disclosures required under Article 2424, paragraph 16-bis, of the Civil Code, the following table reports the fees of the audit firm:

1 Audit services 38 2 Tax advisory 43 3 Certification services 60 4 Audit related services 22 TOTAL 163

222

DISCLOSURE PURSUANT TO ARTICLE 2497 OF THE ITALIAN CIVIL CODE

As required under Article 2497 of the Italian Civil Code, the following table provides a summary of the key information reported in the most recently approved financial statements of the parent company ICCREA Holding S.p.A., with registered office in Rome, Via Lucrezia Romana 41/47.

Summary of key information in the financial statements at December 31, 2010 of the company that exercises management and coordination functions – ICCREA Holding S.p.A. (Amounts in euros)

ASSETS Cash and cash equivalents 1,359 Financial assets available for sale 88,721,638 Due from banks 71,530,735 Loans to customers 1,325,912 Equity investments 699,647,034 Property and equipment 311,874 Intangible assets 648,222 Tax assets 9,653,695 a) current 7,266,649 b) deferred 2,387,046 Non-current assets and disposal groups held for sale 0 Other assets 57,196,389 Total ASSETS 929,036,858

LIABILITIES AND SHAREHOLDERS’ EQUITY Due to banks 59,536,879 Tax liabilities 74,967 a) current 0 b) deferred 74,967 Other liabilities 56,503,854 Employee termination benefits 346,148 Provisions for risks and charges 7,968,727 b) other provisions 7,968,727 Valuation reserves 3,631,725 Reserves 67,994,768 Share capital 712,420,071 Treasury shares (-) (333,467) Net profit (loss) for the period (+/-) 20,893,186 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 929,036,858

INCOME STATEMENT Net interest income 529,837 Net fee and commission income (expense) 1,618,070 Gross income 38,828,274 Net income (loss) from financial operations 35,866,817 Operating expenses (19,742,193) Profit (loss) before tax on continuing operations 16,575,400 Profit (loss) after tax on continuing operations 20,893,186 Net profit (loss) for the period 20,893,186

223

Part L – OPERATING SEGMENTS

The Bank operates exclusively in the medium/long-term credit sector, offering a broad range of credit products primarily to the small and medium-sized companies that are mutual bank customers.

Accordingly, pursuant to IFRS 8, the Bank has only one operating segment represented by the performance and financial data reported in the financial statements.

In addition, the Bank operates exclusively in Italian territory and, for disclosure purposes, has only one geographical segment.

224

ANNEXES

FINANCIAL STATEMENTS OF SUBSIDIARIES

-BCC Factoring S.P.A. -BCC Lease S.P.A.

225

Financial statements at December 31, 2011 of BCC Factoring S.p.A. (in euros)

Assets 2011

10. Cash and cash equivalents 231

40. Financial assets available for sale 9,553

60. Receivables 444,987,853

100. Property and equipment 25,921

110. Intangible assets 201,166

120 Tax assets 7,474,597

a) current 179,877

b) deferred 7,294,720

140. Other assets 469,600

Total assets 453,168,921

Liabilities and shareholders’ equity 2011 432,603,212 10. Payables 102,727 70. Tax liabilities 87,744 a) current 14,983 b) deferred 4,079,465 90. Other liabilities 108,132 100. Employee termination benefits 466,489 110. Provisions for risks and charges 466,489 b) other provisions 18,000,000 120. Share capital (598,042) 160. Reserves (1,593,062) 180. Net profit (loss) for the period Total liabilities and shareholders’ equity 453,168,921

226

Income statement 2011

8,479,072 10. Interest and similar income (4,322,384) 20. Interest and similar expense 4,156,688 Net interest income 5,083,965 30. Fee and commission income (679,173) 40. Fee and commission expense Net fee and commission income (expense) 4,404,792 119 50. Dividends and similar revenues 60. Net gain (loss) on trading activities 7,181

Gross income 8,568,780 100. Net losses/recoveries on impairment: (4,848,450) a) financial assets (4,848,450) 110. Administrative expenses: (5,109,792) a) personnel expenses (2,808,562)

b) other administrative expenses (2,301,230) 120. Net adjustments of property and equipment (8,139) 130. Net adjustments of intangible assets (213,116) 150. Net provisions for risks and charges (198,444) 80,173 160. Other operating expenses/income Operating result (1,728,988)

Profit (loss) before tax on continuing operations (1,728,988) 210. Income tax expense from continuing operations 135,926

Profit (loss) after tax on continuing operations (1,593,062)

Net profit (loss) for the period (1,593,062)

227

Financial statements at December 31, 2011 of BCC Lease S.p.A. (in euros)

Assets 2011

10. Cash and cash equivalents 1,927

60. Receivables 146,825,827 100. Property and equipment 3,031 110. Intangible assets 174,890 120. Tax assets 8,183,258 a) current 5,015,225 b) deferred 3,168,033 140. Other assets 1,203,342

Total assets 156,392,275

Liabilities and shareholders’ equity 2011

10. Payables 139,514,768

70. Tax liabilities 734,849 a) current 309,433 b) deferred 425,416 90. Other liabilities 3,240,087

100. Employee termination benefits 130,577

120. Share capital 9,000,000 160. Reserves 3,436,497 180. Net profit (loss) for the period (+/-) 335,497

Total liabilities and shareholders’ equity 156,392,275

228

Income statement 2011

10. Interest and similar income 10,286,598

20. Interest and similar expense (3,527,206) Net interest income 6,759,391

30. Fee and commission income 25,874

40. Fee and commission expense (195,693) Net fee and commission income (expense) (169,819)

Gross income 6,589,573 100. Net losses/recoveries on impairment: (3,829,850) a) loans (3,829,850)

d) other financial activities

110. Administrative expenses: (3,313,646) a) personnel expenses (1,556,896) b) other administrative expenses (1,756,750) 120. Net adjustments of property and equipment (4,296) 130. Net adjustments of intangible assets (64,654) 160. Other operating expenses/income 1,573,306

Operating result 950,433 Profit (loss) before tax on continuing operations 950,433 190. Income tax expense from continuing operations (614,936)

200. Profit (loss) after tax on continuing operations 335,497

Net profit (loss) for the period 335,497

229 process, carrying out specific meetings and ICCREA BANCAIMPRESA SPA examinations addressing the various issues, receiving and analyzing the reports concerning the actions REPORT OF THE BOARD OF taken. We also prompted top management – where AUDITORS ON THE FINANCIAL necessary – to take the initiatives necessary to resolve STATEMENTS AS AT DECEMBER any issues that we found. We also held specific 31, 2011 meetings with the Compliance Department and the (ART. 2429, SECOND PARAGRAPH, OF THE ITALIAN Risk Management Department in order to assess the CIVIL CODE) adequacy of the arrangements established for the performance of their duties and the outcomes of their To the shareholders’ meeting of Iccrea BancaImpresa work. S.p.A. We took part in all the meetings of the Audit Committee and, bearing in mind the differences in our Shareholders, respective institutional duties, we agreed the overall

framework for identifying and handling risks for the The draft annual report and financial statements, company, with particular emphasis on credit and which the Board of Directors submits for your operational risks, without neglecting basic issues approval, review the various aspects of the activities connected with management control. carried out by the company in 2011. We conducted a sample examination of approvals In performing our work and in fulfilling our of lease transactions, corporate finance operations mandate, we monitored compliance with the law, the and ordinary lending in order to verify compliance bylaws and regulatory provisions, as well as with the rules governing the individual processes. observance of the rules of sound and prudent administration. The Board of Auditors had periodic exchanges of We participated in the Shareholders’ Meetings and information with the audit firm Reconta Ernst & all the meetings of the Board of Directors and the Young, examining the audit plan and receiving Executive Committee, which were conducted briefings on the firm’s position on the state of the appropriately, noting that the resolutions passed and company's internal and administrative controls, subsequent actions complied with the law and did not complying with the specific requirements of conflict with the company bylaws, nor did they give Legislative Decree 39/2010. rise to conflicts of interest with the company, appear manifestly imprudent or risky, conflict with the In the closing months of 2011 the Bank underwent resolutions of the Shareholders' Meeting or jeopardize a general inspection by the Bank of Italy. The scope of the financial integrity of the company. the inspection covered all of the Bank’s operational We monitored the adequacy, functionality and sectors, leading to the formulation of assessments efficiency of the organizational, administrative and concerning strategic policy, organization and internal accounting structures of the company and the internal controls, and credit, financial, operational and control system, receiving support from the Control reputational risks. Department of Iccrea Holding. On the one hand, the supervisory authorities The Board of Auditors received no complaints underscored weaknesses in certain strategic aspects of pursuant to Article 2408 of the Italian Civil Code. the Bank (profitability, funding, structure of loan

portfolio), for which the solutions identified and During the year we had a number of meetings with undergoing implementation will also be carried out the heads of the control units. The Board of Auditors within the broader process of strategic planning and followed with particular attention the activities of the allocation of the resources of the Iccrea Banking control units provided for in the annual planning

230 Group. On the other hand, the supervisory authorities Shareholders' Meetings, as well as from the also acknowledged the substantial progress achieved performance of our duties and the exercise of our in recent years with regard to the internal control and supervisory and control powers pursuant to Articles risk governance systems. Upon completion, the 2403 and 2403-bis of the Civil Code. inspectors found no grounds for initiating a penalty proceeding, confirming the overall adequacy of the As regards the intercompany transactions discussed organizational arrangements and processes of the in the report on operations and in the notes to the Bank. financial statements, we can report that such transactions are carried out as part of normal The financial statements submitted for your operations and were undertaken on market terms and approval have been prepared in accordance with the conditions and on the basis of an assessment of the International Financial Reporting Standards and reciprocal economic advantage of the transactions and International Accounting Standards (IFRSs/IASs) issued always in the interest of the company and the banking by the IASB, and the related IFRIC interpretations, group to which it belongs. endorsed by the European Commission, and on the To the extent of our knowledge, the directors, in basis of the provisions of Circular no. 262 of December preparing the financial statements, did not have 22, 2005 on the format and rules for preparation of recourse to the departures from statutory bank financial statements, 1st update of November 18, requirements pursuant to Article 2423 paragraph 4 of 2009, issued by the Bank of Italy. the Civil Code. The IASs/IFRSs applied in preparing the financial The Board of Auditors met with the Administration statements were those in force at December 31, 2011 Department and the audit firm Reconta Ernst & Young as endorsed by the European Commission and are to discuss the general approach adopted in the essentially in line with those adopted the previous financial statements and their compliance with year. applicable law and regulations, having regard to The financial statements consist of the balance structural and valuation issues. A positive assessment sheet, the income statement, the statement of emerged at that meeting, supported by the report comprehensive income, the statement of changes in issued on April 3, 2012, by the audit firm pursuant to shareholders' equity, the statement of cash flows, and Articles 14 and 16 of Legislative Decree 39/2010. the explanatory notes to the financial statements, Reconta Ernst & Young also provided us with the along with the report on operations. In order to certification envisaged under Article 17 of Legislative provide more information on the situation of the Decree concerning independence and the report company and in compliance with Article 2428 of the provided for under Article 19 of that decree regarding Italian Civil Code, the Bank has also prepared the the control system supporting the financial reporting directors' report on operations, which among other process, which found no material issues. aspects discusses the strategic and operational While we are not responsible for issuing an opinion development of the Bank, lending policies, on the form and content of the financial statements, developments in capital and capitalization, the rating, we feel that the draft financial statements at performance, the internal control system and risk December 31, 2011 of Iccrea BancaImpresa SpA have management activities. been prepared clearly and provide a true The draft financial statements provide a representation of the performance and financial comprehensive presentation of the corporate events position of the Bank. and information that we learned of as a result of our In view of the foregoing, we recommend that the participation in the meetings of the Board of Shareholders’ Meeting approve the financial Directors, the Executive Committee, the Audit statements for the year ended December 31, 2011 and Committee and the Ordinary and Extraordinary the related report on operations in the form and with

231 the content prepared by the Board of Directors, also concurring with the legitimacy of the proposed allocation of net profit for the year.

Rome, April 5, 2012

The Board of Auditors

Ignazio Parrinello Fabio Pula Fernando Sbarbati

232 233 234 235