2 016 Sustainability Report
Everyone’s responsibility
TOWARDS THE FUTURE, TOGETHER
In 2016, we completed an important project: the creation of the Banco BPM Group from two major, historic cooperative banks. We sought and achieved this together with our Members, our community of employees, the institutions and the Supervisory Authorities.
This is an operation that enables us to project our bank into the future, adopting a sustainable approach that instils a sense of certainty and security in our customers, as well as confidence in our business continuity and creates value for our shareholders, for the local community and for the country.
The sustainability of the Italian credit system today depends to a great extent on our ability to innovate and evolve; it was this underlying awareness that enabled us to achieve the merger between two banks that share the values, the history of cooperative credit and that aspire to continue to do business as before, in their new legal status of S.p.A. and in such a complex and challenging market scenario.
We wanted to be the forerunners, to see a positive change for our country, and to contribute, as far as we are able, to its growth. We are aware of the close ties between the industry we operate in and economic and social wellbeing. Prudence has given us courage and our extensive efforts have not been in vain.
Today, the overall success of the merger is everyone’s responsibility. This is just the beginning of a demanding journey filled with challenges, however, this is precisely why it will lead us to great opportunities and to solid results, meeting the expectations of all stakeholders, whose trust is fundamental to our Bank.
Sustainability was the starting point for this journey and will continue to guide the choices of the Banco BPM Group in the coming years.
Together, we have decided which direction to follow. Together, step-by-step, we will build our future.
Chairman of the Board of Directors Banco BPM Chief Executive Officer Banco BPM Carlo Fratta Pasini Giuseppe Castagna
2 016 Sustainability Report GUIDE TO READING THE REPORT CONTENTS
The 2016 Sustainability Report of the Bipiemme Group 5 Banco BPM Group (2016 Report) represents an integrated reporting tool, How we create sustainable value over time the purpose of which is to illustrate the management of the The new Group - identity, main companies, enterprise, in all of its facets; relations with stakeholders, governance and organisational model, key figures 6 the use of significant amounts of capital for business The new Group - 2016-2019 Business Plan 10 activities and the generation and distribution of value. The new Group - contributing to the community 12
As illustrated in the “Methodology note”, the merger of 13 BPM Group Banca Popolare di Milano S.c.a r.l. and Banco Popolare Identity and value creation Società Cooperativa became effective on 1 January Operating scenario 14 2017, and led to the establishment of Banco BPM S.p.A.. Profile 16 The first section of the sustainability report “Banco BPM Key figures 17 Group - How we create sustainable value over time” Governance and corporate integrity 18 seeks to present the new Banco BPM Group, the second Risk Management 21 section “BPM Group: Identity and value creation” and the Economic value 2016 22 remaining sections regard the Bipiemme Group and its Stakeholders 23 performance as at 31 December 2016. Analysis of materiality 24 Capital 26 The 2016 Report was drawn up in accordance with the Relationship capital 27 Guidelines of the Global Reporting Initiative (version G4). Companies and people 28 The organisation of its content refers to the standards Community 31 of the International Integrated Reporting Council and Suppliers 35 therefore meets the most common requirements at Media/Social Community 36 international level. The topics illustrated in the 2016 Financial capital 37 Report were selected and agreed by the top management Profitability 38 of Banca Popolare di Milano, also considering the Equity strength and financial stability 39 areas retained to be important by analysts specialised Human capital 41 in Sustainability Investing and the aspects of the banking Personnel 42 industry most covered by the media. The Corporate Social Intellectual capital 49 Responsibility Team handled the preparation of the Report Innovation 50 and managed the activities needed to prepare the same, Natural capital 53 in collaboration with other company departments. Environment 54 For any information or further details, readers should send an email to [email protected]. Acknowledgments 56 Methodology note 58 Reconciliations 59 GRI Content Index 64 Independent Auditors’ letter 68 Glossary 71 Banco BPM Group How we create sustainable value over time
Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary How we create sustainable value over time
THE NEW GROUP - IDENTITY
On 15 October 2016, the Shareholders’ Meetings of Banca Popolare di Milano S.c.a.r.l. and Banco Popolare Società Cooperativa approved the planned merger between the two banking companies, which envisages, from 1 January 2017, the establishment of a new banking company called Banco BPM S.p.A., with registered office in Milan and administrative offices in Verona*.
BANCONASCE BPM BANCO IS BORN BPM Horizon Anyone that looks towards the horizon, looks far, looks towards the future.
It is a symbol of union, of sharing: two worlds that unite for a common future, joined by a line that represents a “bridge” between different cultures, between the past and the future, a symbol that BasedDalla storia on the di duehistory of WeVogliamo want innovare to innovate nel in WeVogliamo want essereto rise all’altezza to the conveys collaboration, the will to work twograndi major istituti cooperative popolari linesegno with della tradition, tradizione, occasion,delle vostre meeting aspettative. all towards the growth and development of the people and the companies of our local banksnasce lathe terza third largest toa sostegnosustain the dei young giovani ofSempre your expectations.al vostro servizio, communities. italianBanca italiana.bank is born. ande del the futuro. future for all. Alwayscon responsabilità. at your service. Together,Insieme vogliamo we want creare to WeVogliamo want tutelareto protect le nostre our WithPerché a ognunosense of di voi It is a simple and modern symbol. It createvalore per value i clienti, for our families,famiglie, leour nostre communities comunità responsibility.per noi è importante. Because represents the will to undertake new customers,gli azionisti, ishareholders territori ande continuare continue a to sostenere support each and every one of you challenges and to restore trust between ande il nostro local Paese.economies businesses.le imprese. is important to us. generations, between the schools and the world of industry, between traditional and for our country. professions and new technologies, between all of us and our communities. HeadingVerso il futuro, for the insieme. future, together.
* The information in this section mainly refers to the Articles of Association of Banco BPM, to the 2016-2019 Business Plan of Banco BPM, to the website www.bancobpm.it and to the press release published on 15/02/2017 on the Group’s website regarding the results of the Banco BPM Group as at 31/12/2016.
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THE NEW GROUP - MAIN COMPANIES
BANCO BPM S.P.A.
BANCA POPOLARE ALETTI & C. BANCA SOCIETÀ GESTIONE PROFAMILY S.P.A. RELEASE S.P.A. DI MILANO S.P.A. D’INVESTIMENTO MOBILIARE S.P.A. SERVIZI BP S.C.P.A.
BP PROPERTY ALETTI FIDUCIARIA S.P.A. MANAGEMENT S.C.R.L.
BIPIELLE REAL ESTATE BANCA ALETTI & C (SUISSE) SA S.P.A.
BANCA AKROS S.P.A. COMMERCIAL BANKING INVESTMENT BANKING AND WEALTH MANAGEMENT CONSUMER CREDIT ALETTI GESTIELLE SGR S.P.A. LEASING CREDIT COLLECTION SERVICE COMPANY
* The diagram only shows the banking group companies that are related to business development
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THE NEW GROUP - GOVERNANCE AND ORGANISATIONAL MODEL
Banco BPM S.p.A. adopts a traditional governance model, BOARD OF STATUTORY comprised of: SHAREHOLDERS’ MEETING AUDITORS Banco BPM’s share - Shareholders’ Meeting: appoints the Board of Directors and capital is divided into the Board of Statutory Auditors, establishing their relative 1,515,182,126 shares. remuneration, meets at least once a year, and resolves on Based on figures received the approval of the annual financial statements and on the from Monte Titoli after the BOARD OF DIRECTORS stock swap determined by allocation and distribution of profits. SUPERVISORY BODY Chairman - C. Fratta Pasini the merger, as at 2 January - Board of Directors: responsible for strategic supervision 2017, 38% of shares are held by natural persons and and management, is currently comprised of 19 Directors, of the remaining 62% which at least 9 must meet the independence requirements SECRETARIAT AUDIT by legal entities. pursuant to the Articles of Association. CORPORATE AFFAIRS
- Board of Statutory Auditors: exercises the function of control relating to compliance with the law, and assesses, inter alia, the adequacy of the organisational and administrative- CHIEF EXECUTIVE OFFICER accounting structure of the Company. G. Castagna Voting in the new Group to whom several functions report directly, namely - The principle of per capita voting, according to which each Loans, Compliance, Risks, NPL, Legal, Member has one vote regardless of the number of shares in Communication and Investor Relations its possession, no longer applies.
- Each share corresponds to one voting right; from 26/03/2017, no limits to the quantity of voting rights are envisaged (up until said date, no shareholder could directly or indirectly exercise a voting right for a quantity of shares exceeding 5% of share capital). JOINT GENERAL MANAGER GENERAL MANAGER JOINT GENERAL MANAGER
Right to withdraw S. Poloni M. Faroni D. De Angelis with direct delegated powers with direct delegated powers with direct delegated powers The shareholders and the members of the Banks, who had over all functions/Group over all functions/Group over all functions/Group not contributed to the approval of the planned merger, were companies relating to companies relating to companies and territorial legitimately able to exercise their right to withdraw before the divisions relating to legal deadline. As at 9 November 2016, the deadline for the Human Resources and Administration, Finance, exercise of said right, the same had been validly exercised for Organisation, Real Estate, Asset management, Private Commercial banking around 4.07% of BPM’s share capital and 4.56% of Banco Operations and ICT and Investment banking Popolare’s share capital.
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THE NEW GROUP - KEY FIGURES
BANCO BPM BRANCHES As at 1 January 2017, the new Banco BPM Group had around 25,000 employees, 4 million customers and over 2,300 branches; it represents the third-largest banking group in Italy in terms of net loans to customers and number of branches. 15 14 6 876 270 KEY FIGURES 286 STAKEHOLDERS 229 4 million customers, 25,000 employees, over 390,000 shareholders 119 210 2 BUSINESS 10
No. of BRANCHES 1 EQUITY STRENGTH: PROFITABILITY: 122 6 CET 1 Ratio 11.42% > 8.15%* € 2.3 billion NORTH 1,815 42 * Minimum established by ECB Financial margin CENTRE 344 52 SOUTH AND 188 2 € 11,9 billion € 2.5 billion 1 Shareholders’ equity Commission and ISLANDS other income TOTAL 2,347 1 BRANCHES
MARKET SHARE**: ASSETS AND LIABILITIES: 83 Del 15% in Lombardy € 110.6 billion Loans to Customers Del 14% in Liguria 66% The branch network. The development of a multichannel approach, combined with falling Del 12% in Piedmont Loans to Customers/Total assets profit margins, has led the banks to rationalise their number of branches. In 2016, efforts Del 9% in Veneto continued to rationalise the number of branches, undertaken in previous years by the BPM € 116.8 billion Group and by the Banco Popolare Group, resulting in the overall closure of 122 branches, Direct Funding and a target of a total 335 branches closed by 2019. Despite these closures, the Group has
** Branches as at 31/12/2016 a strong presence throughout the country and a leadership position in some of the country’s wealthiest areas.
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BANCO BPM 2016-2019 BUSINESS PLAN A balance between the interests of our Stakeholders ...
WHAT OUR CUSTOMERS WANT - Solidity to protect their savings WHAT THE COUNTRY AND - Products and services to meet all requirements THE COMMUNITY WANT and life stages - Solid banks able to innovate and compete in the - To work easily from home, mobile phone or in the European arena branch and to receive an honest high quality service - Support for enterprise and individuals
- To perform transactions in a secure environment and - The ability to generate shared value and to promote with latest generation devices growth for the country, also in the social sphere - Costs in line with the service received
STRATEGIC AREAS FOR THE NEW GROUP - Solid equity base and sustainable credit management - Focus on the needs of all market segments and a multichannel business model - Career development and recruitment of young talent - Focus on efficiency and investment in the digital sphere WHAT INVESTORS WANT WHAT OUR EMPLOYEES WANT - Higher profit margins and distribution of dividends - Solid equity base and sustainable profit margins - Solidity to guarantee employment, training and over time career development - Expert mangers able to handle complex scenarios - Meritocracy, involvement and gender equality - The ability to manage risk - Company welfare and work-life balance
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... and the development of all forms of capital
TYPES OF CAPITAL INVOLVED AND OBJECTIVES
FINANCIAL CAPITAL HUMAN CAPITAL RELATIONAL CAPITAL INTELLECTUAL CAPITAL NATURAL CAPITAL
Solid equity base New development programmes Simplified offer of products/ Focus on ICT efficiency Optimisation of facilities with and new professional roles services, differentiated on the a view to improving the work Efficient funding mix basis of differing needs Investment in digital innovation environment and their utilisation Incentive systems with a view and in Big Data Credit quality, risk management to sustainable growth Growth of SMEs on the Branch rationalisation/ and effective management of NPL capital market Increased use of digital processes modernisation Gender equality and to reduce the margin of error and Sustainable credit management generational turnover Welcoming, modern branches improve operational efficiency able to provide valid advice on Cost economies Investment in training complex products and services Talent management
GUIDELINES Increase of profit margins More flexibility and Integrated multichannel distribution and distribution of dividends better welfare model, branch rationalisation and improvement of the customer experience
Net profit of over €1 billion and Around 2,100 voluntary Approximately 4.2 million ICT, greater efficiency Optimisation of energy consumption ROTE of 9% redundancies and 400 young customers served and economies of scale people hired (€-29 million in 4 years) More sustainable work CET1 Ratio Fully-Phased of 12.9% Higher support for consumption environments > 100,000 days of training and investment (loans of Investment in digital innovation Cost/income < 58% per year €110 billion) (> €90 million in 4 years)
Deposits of around €80 billion 0.5% reduction of annual Greater use of multichannel banking personnel costs (> 70% for individual customers Non-Performing Loans/Net Loans and > 80% for corporate
OBJECTIVES TO 2019 of 17.9% customers)
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THE NEW GROUP - CONTRIBUTING TO THE COMMUNITY
The Banco BPM Group supports social and environmental initiatives of its networks, directly through sponsorships and donations and indirectly, through its bank foundations. The articles of association of Banco BPM establish that a percentage of annual net profit, not exceeding 2.5%, may be used for the purposes of assistance, charity and in the public interest in the areas where it has the greatest presence, assigning a specific amount to each network directly or through a Foundation.
NETWORKS SUPPORTED BY THE FOUNDATIONS Distribution to networks and Foundations of a percentage not exceeding 2.5% of net annual profit Banca Popolare di Lodi Foundation: 1.5% Lodi, Parma, Cremona*, Piacenza, Genoa, Tuscany and Umbria. 8% Banca Popolare di Novara Foundation: 18.5% Piedmont, Lazio, Centre South. Milan Network Division 13.5% Credito Bergamasco Foundation: Verona Network Division Bergamo, Brescia and Como. Banca Popolare di Lodi Foundation Banco di San Geminiano e San Prospero Religious Banca Popolare di Novara Foundation Foundation: 13.5% Emilia Romagna and Pesaro Urbino. Credito Bergamasco Foundation Banco di San Geminiano e San Prospero Religious Foundation * According to the articles of association, the BPL Foundation devolves 1/8 of this percentage 45.0% to the BP Cremona Foundation and to the Popolare Crema Association for the local area.
2 016 Sustainability Report 12 BPM Group Identity and value creation Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Identity and value creation
OPERATING SCENARIO
The scenario is important to any enterprise. It is particularly so for a bank whose operations are significantly conditioned by changes in the legislative, social and economic framework.
Again in 2016, Gross Domestic Product rose slightly As regards companies, despite flailing confidence, With regard to women, female enterprises represent (+0.9%)1, sustained by the effects of monetary policy investments in machinery9, industrial production10 almost 22% of total enterprises16 and the presence of women measures2, in a continuing difficult economic and social and the number of new companies, especially in sectors such in top positions in public institutions17 and listed companies18 scenario, with practically zero inflation and a high level of as retail, tourism and services to companies all rose. More has increased. unemployment3, particularly among young people. specifically, if we look at the business sphere, a slowdown of Foreign citizens, younger on average than Italians, closures was accompanied by the adoption of more structured represent around 8% of the population and lead 4% of Nevertheless, there was no lack of positive signs, such as legal company forms11, albeit small sized companies, and by domestic enterprises19. the rise of people in employment4, the resumed liveliness a rise in new companies opened by young people12. of credit demand, also assisted by record low interest The Italian system is still highly “bank-centric”: a rates, more loans by the banking sector5; the increase in The lively trend of business men and women “under 35” was significant share of corporate debt is held by banks20, as consumption6 and investments by households and unfortunately offset by both higher unemployment figures is a large part of household savings21. The health and the companies. relating to young people13, and by a still high rate of sustainability of the credit system, which largely depend on inactivity: over 1 young person in 4 aged between 15 and the effective management of non-performing loans, measures As regards households, greater purchasing power7 encourage 29 does not study and does not work14”. to improve efficiency, the consolidation and the review of a rise in consumption and in the request for loans to purchase The level of young people’s education, has however business models, continue to be of fundamental importance to property and other durables. More specifically, the number of improved: over 1 young person in 4 aged between 30 and the country’s competitiveness. mortgage loans granted to households rose by 1.9% 34 has at least a university degree15. against December 2015, and the recovery of the motor vehicle market was confirmed, with a 13% rise in purchases In addition to young people, women and foreigners also by private customers8. play an important part of the Italian economic and social system.
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IMMIGRATION “BREXIT” A scenario characterised by conflict and uncertainty has contributed to making In June 2016, with a majority of 51.9%, British citizens voted to immigration in Italy and Europe a structural phenomenon at this point. In 2016, over exit the European Union. Nevertheless, uncertainties as to the 181,000 migrants arrived in Italy by sea (over half the arrivals by sea in Europe), up process and the timing of the re-negotiation of agreements between compared to 2015 and 2014, almost all of which were hosted by the domestic reception the UK and the EU had a significant impact on the financial markets facilities, by virtue of collaboration between the public and private sector. and threaten the already fragile economic recovery.
ATLANTE FUND NEW BUSINESS INITIATIVES As at September 2016, innovative start-ups registered in Italy totalled 6,363. Within the In order to sustain share capital increases and the purchase of non- business world, the innovative start-ups stood out due to the considerable increase performing loans from Italian banks, a closed-end securities fund in their numbers (+35% against last year) and the number of people employed was established, known as the “Atlante Fund”, whose members (+69%), the average value of production (+16%) and total production value are mostly banks, bank foundations and insurance companies. The (+68%). Around 80% of innovative start-ups are limited liability companies. Based on a initiative, promoted by the Government, was also favourably qualitative analysis, there are on average 4 partners in an innovative start-up, the large received by Banca Popolare di Milano and Banco Popolare, who made majority of which are men (only 18% are women), with a fairly low average age (42) and a a total contribution of euro 150 million. high level of education (at least 7 out of 10 have a degree).
1. Istat - GDP rose by 0.9% in 2016 2. In 2015, the European Central Bank launched what is known as Quantitative Easing, an extraordinary measure planned for the purchase of financial securities with medium/long-term maturities (mostly bonds), extended until the end of 2017, the aim of which was to stimulate the economy 3. Istat - as at December 2016, the rate of unemployment was 11.9%. 4. Istat - as at December 2016, the number of people in employment was 22,826 thousand, up compared to the same figure in 2015 5. ABI - corporate and household loans rose by 0.9% in 2016 14. Istat - in 2015, the percentage of NEET was 25.7%, slightly down compared to 26.2% recorded the previous year 6. Istat - in 2016, consumption rose by 1.2% 15. Istat - in 2015, 25.3% of 30-34 year olds had a university degree, an improvement of 23.9% over the previous year 7. Istat - in the third quarter of 2016, the purchasing power of consumer households rose by 1.8% compared to the same period of 2015 16. Unioncamere - figure improved with respect to 2015 8. UNRAE - % change in sales January/December 2016/2015 for the private segment 17. Istat - the presence of women in the European Parliament, in the National Parliament, and albeit to a lesser extent, in Regional Councils, rose 9. Istat - Investments in machinery and equipment +3.9% in 2016 18. Following the introduction of the “pink quota” (women) in boards of directors of listed companies 10. Istat - industrial production rose by 1.3% on average in 2016 19. Istat and Unioncamere 11. Unioncamere - joint-stock companies rose by 56,479 units in 2016, compared with a fall in partnerships and sole traders 20. Bank of Italy - the bank debt of Italian enterprise in 2015 was over euro 800 billion, and represented two-thirds of financial debt 12. Unioncamere - companies led by young people rose by 10.2% 21. According to estimates of Bank of Italy, the financial assets of Italian households in 2015 was around euro 4,000 billion, of which 13. Istat - the rate of unemployment for young people exceeded 40% at the end of 2016 around one fourth in bank deposits and bank bonds
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PROFILE
The BPM Group operates in the credit and financial sphere and is committed to sustaining the real economy, specifically BANCA POPOLARE DI MILANO S.C.A.R.L. with regard to small and medium enterprises. Although it PARENT COMPANY - REGISTERED OFFICE: MILAN has strong local roots, particularly in Lombardy, it operates throughout Italy by virtue of its Webank online services. The Group seeks to create value by encouraging savings, sustaining credit and operating on the financial markets in a BANCA POPOLARE responsible way. BANCA AKROS S.P.A. PROFAMILY S.P.A. OTHER COMPANIES DI MANTOVA S.P.A.
REGISTERED OFFICE: REGISTERED OFFICE: REGISTERED OFFICE: - GE.SE. SO. S.R.L. The Parent Company Banca Popolare di Milano MANTUA MILAN MILAN (COMPANY CANTEEN S.c.a.r.l. is listed on the FTSE MIB index of Borsa Italiana, SERVICE) REGISTERED with widely-circulated share capital held by around 108,000 OFFICE: MILAN shareholders as at 31 December 2016. - BPM COVERED BOND S.R.L. AND BPM COVERED BOND BPM’s mission is to be a benchmark in the local area for the 2 S.R.L. (SPV) REGISTERED development of households and enterprise, promoting and OFFICE: ROME rewarding long-term relationships with customers: - customer focus and an approach based on a transparent PARTNER COMPANIES relationship and service improvement; - economic performance and a solid equity base; - development of human capital, involvement and motivation to achieve objectives; - conduct focused on social responsibility and sustainable growth. Mutual investment Socially responsible Life and non-life Factoring Leasing funds investment funds insurance policies
SUSTAINABILITY INDICES Again in 2016, the BPM stock was confirmed for several sustainability indices, the selection for which is made also on the basis of social, environmental and good governance criteria.
http://www.gruppobpm.it/it-ist/responsabilita-sociale/ http://www.gruppobpm.it/it-ist/responsabilita-sociale/ indici_di_sostenibilita/Vigeo_Eiris.html indici_di_sostenibilita/Ethibel.html
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KEY FIGURES
Employees Customers Shareholders Group business activities
7,700 1.4 million 108,000 10% 68%
Women Private Members 22% 48% 90% 42% loans to enterprise and private customers Men Corporate Non members financial activities other activities 52% 10% 58% Group liabilities
Around 7,700 employees, 1.4 million customers, 108,000 The main business activity of the Group, which obtains resources 26% 71% shareholders and 652 branches. The figures of a Group which, again mainly through customer funding, focuses on supporting the plans of in 2016, maintained a high level of profitability net of non-recurring households and enterprises through the provision of credit. components and a solid equity base. This activity is also reflected in the Group’s revenues. 3%
Profitability22: Equity strength: Risk: customer funding25 Texas Ratio financial liabilities other sources Net profit Shareholders’ equity 23 86.36% 26 Group revenues € million € billion 73 4.4 Coverage ratio ROE CET 1 ratio non-performing loans 18% 82% 24 1.7% 11.48% >130%
22. Net of non-recurring components, net profit for 2016 was euro 195 million and ROE was 4.5% 23. The Texas Ratio (net non-performing loans/(capital+reserves–intangible asests)) measures the ability to cover loans at risk using tangible capital. 24. The coverage includes guarantees designated at fair value 25. Customer funding includes customer deposits (mainly current accounts and savings accounts) and stock in issue (bonds and other securities) loans and banking services 26. “Loans and banking services” includes revenues relating to Retail Banking and Corporate Banking activities, while “Treasury and investment activities”includes revenues relating to “Treasury & Investment Banking” treasury and investment activities
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GOVERNANCE AND CORPORATE INTEGRITY
Since 2011, Banca Popolare di Milano has adopted the so-called “dualistic” governance model, structured as follows:
SHAREHOLDERS’ MEETING SUPERVISORY BOARD MANAGEMENT BOARD
Is the body that manages the company, including strategic Elects the Supervisory Appoints the members of the Management Board, oversees supervision and the appointment of the Managing Director, Board and is operational management and approves the financial the head of the company’s executive. On an annual basis, the convened at least statements. Board examines and approves the Sustainability Report of the once a year. BPM Group.
BPM Supervisory Board BPM Management Board (as at 31/12/2016) (as at 31/12/2016) As at 31 December 2016, there were over Directors 18 Directors 4 47,000 BPM shareholders Of which executive 0 Of which executive 1 registered in the Members’ Register, 99% of which Of which non-executive 18 Of which non-executive 3 were natural persons. Of which independent TUF 18 Of which independent TUF 3 (Consolidated Finance Law) (Consolidated Finance Law) Of which independent Code 16 Of which independent Code 1 of Self-Regulation of Self-Regulation Of which women 5 Of which women 1 Of which men 13 Of which men 3 Of which aged < 30 0 Of which aged < 30 0 (*) Average percentage attendance of Directors at Of which aged 30-50 0 Of which aged 30-50 0 meetings (number present/number of meetings during the term of office of the person in question). Of which aged > 50 18 Of which aged > 50 4 In compliance with the law in force, the composition of the Boards respects the balance Meetings in 2016 28 Meetings in 2016 30 between genders and the fulfilment by members of the necessary requirements of professionalism Average attendance of meetings (in %)* 95% Average attendance of meetings (in %)* 91% and honourability. For further information on governance, refer to the Committees envisaged by Articles Appointments, Internal Committees Risks Report on corporate governance and ownership structure of Banca Popolare di Milano. of Association Control, Remuneration Commissions Members, Charity and Budget Commissions Members
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Company integrity is also conveyed by the ability to ensure that what a company does In 2016, 4 reports were made to the internal whistleblowing system, of which only one was respects its declared ethical principles. Relations with stakeholders are regulated through the relevant to an inspection, which led to disciplinary meaures. Code of Ethics, which is an integral part of the Organisation, Management and Control Model. Verifying the functioning and the observance of said Model is the task of the Supervisory Compliance with tax legislation is an essential part of our commitment to being Body, which receives reports relating to any information on the commission of offences and/ straightforward and honest. The BPM Group mainly operates in Italy and contributes to or non-compliant behaviour. sustaining public financing in Italy through a tax contribution that totalled euro 140 million One tool that is used to report any behaviour that may potentially harm the organisation, in 2016. for employees and in general for any party that has relations with the Group, is known as Whistleblowing, which allows each employee to report actions or facts that may represent an infringement of the rules governing banking activities, guaranteeing the confidentiality of the parties involved.
CODES OF CONDUCT AND PRINCIPLES* ARMS AND GAMBLING POLICIES
- Organisation, management and control model and Code of Ethics27 The BPM Group has adopted policies to regulate involvement and transactions in controversial sections such as “arms” and “gambling”, - Code of Self-Regulation for Listed Companies28 which, by their nature, are considered high risk from a social and 29 30 - Arms Policy and Gambling Policy environmental perspective. Although transactions in these sectors are - Code of conduct for Internal Dealing31 not excluded entirely, the BPM Group assesses transactions on the basis of considerations relating both to the type of transaction and to the - Regulations for related and connected party transactions32 characteristics of the requesting party. - Internal systems for reporting infringements (WHISTLEBLOWING)33
*Documents available in Italian language.
27. http://www.gruppobpm.it/it-ist/dms/pdf/BPM_REGDOC_00048_Regolamento-Codice-Etico/BPM_Regolamento%20Codice%20Etico_2015.pdf 28. http://www.gruppobpm.it/it-ist/governance/documenti-societari/codice-autodisciplina-societa-quotate/allegato1/2015.07-Codice-Autodisciplina.pdf?docDisclaimer= 29. http://www.gruppobpm.it/it-ist/responsabilita-sociale/condotta-policy/content/02/linkItems/0/file/Gruppo_BPM-estratto_policy_armamenti.pdf 30. http://www.gruppobpm.it/it-ist/responsabilita-sociale/condotta-policy/content/02/linkItems/00/file/Gruppo_BPM-estratto_policy_gioco_azzardo.pdf 31. http://www.gruppobpm.it/it-ist/governance/documenti-societari/codice-comportamento-internal-dealing/allegato1/Internal_dealing-Politiche_di_Indirizzo_BPM_RPOIND_00054.pdf?docDisclaimer= 32. http://www.gruppobpm.it/it-ist/governance/documenti-societari/content/02/linkItems/0/file/regolamento_operazioni_parti_correlate.pdf 33. http://www.gruppobpm.it/it-ist/responsabilita-sociale/condotta-policy/content/06/linkItems/0/file/POLITICA%20IN%20MATERIA%20DI%20SISTEMA%20INTERNO%20DI%20SEGNALAZIONE%20DELLE%20VIOLAZIONI_%20SITO%20-%2020151126.pdf
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Banks play an important role in preventing corruption, which in Italy is an important phenomenon. Despite the introduction of anti-corruption legislation in 2012, which sought to strengthen prevention policies, this area is still today considered to be of considerable importance. In the BPM Group, all activities and all organisational structures are monitored for risks related to corruption and strict internal procedures and controls are envisaged to prevent the crimes of corruption and extortion.
ANTI-CORRUPTION ANTI-MONEY LAUNDERING
Policies adopted Policies adopted - Organisation, Management and Control Model adopted by all Group - Guidelines regarding Due Diligence; companies in order to prevent the crimes envisaged by Italian Legislative - Regulations for the anti-money laundering process; Decree 231/2001 being committed; - Group Organisation and Governance Model on anti-money laundering. - Code of Ethics adopted by all Group companies. Results Results - Around 37,000 hours of training provided, with the involvement of 6,800 - Around 104,000 hours of training provided, with the involvement of over employees; 7,000 employees; - Automatic checks on customer database both online, with regard to new - Number of dismissals relating to corruption: zero. transactions performed continuously, and in batches overnight, by way of continuous monitoring.
For further information on Anti-corruption and Anti-money laundering Policies: http://www.gruppobpm.it/it-ist/antiriciclaggio.html
2 016 Sustainability Report 20 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Identity and value creation
RISK MANAGEMENT
For a banking group, the ability to correctly manage risk is essential to forging trustworthy relationships with stakeholders and to guaranteeing sustainable profitability over time.
In addition to ordinary activities relating, among other things, to the consolidation of Risk Appetite Framework processes, 2016 was characterised by the following:
• the completion of internal assessments on exposures in order to estimate the capital needed to cover the maximum loss amount that could be recorded in a given period of time with a certain probability (so-called Internal Rating Systems);
• the management of the Stress Test exercise conducted by the European Central Bank, namely analyses that sought to test the resilience of Banks when faced with extremely negative situations;
• Supervisory Dialogue between the Bank and the Regulator (European Central Bank and the Bank of Italy), which regarded the management of numerous requests, both during on-site inspections and during continuous contact over the course of the year.
Risk Appetite Framework (RAF)
The BPM Group uses the Risk Appetite Framework (RAF) to manage risk, which represents a reference framework for the risks that each company department REFERENCE COMPARISON should consider when performing its activities. The RAF contains the objectives WITH THE INDICATORS OBJECTIVES and the risk limits, the relative tolerance thresholds, the reference processes and BANK’S PROFILE Capital adequacy, AND RISK the tools needed to define and implement them. In line liquidity, asset LIMITS The objective of this system is to align the risk profile with the risk appetite quality, other not in line approved by the Management Board, in accordance with the Business Plan, the indicators business model and the performance appraisal system. As this framework is the principal integrated risk management tool, it encourages the spread of a risk culture to the various levels of the organisation and represents a fundamental tool to guaranteeing business sustainability, by promoting a virtuous system that does not allow excessive risk, which is not compatible with the risk appetite approved previously by the Group to be STRATEGIC PLAN TOLERANCE undertaken. BUDGET THRESHOLDS
2 016 Sustainability Report 21 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Identity and value creation
ECONOMIC VALUE 2016
The reclassification of the 2016 Income Statement enables Economic value distributed the economic value generated by the Group and its distribution to the stakeholders to be determined. 0.2% Community and Environment
0% 0.1% ECONOMIC VALUE GENERATED AND DISTRIBUTED34 Shareholders Third parties 11.7% 2016 2 015 Change % Public 65.1% Interest margin 788,040 806,746 -2% Administration Employees and Net fee and commission income 589,001 607,955 -3% External Staff 22.9% Dividends and similar income 15,714 13,065 20% Suppliers Profits (losses) on financial assets and liabilities 155,308 168,659 -8% NET INTEREST AND OTHER BANKING INCOME 1,548,063 1,596,425 -3% Net adjustments on loans -411,676 -342,236 20% NET INCOME FROM BANKING ACTIVITIES 1,136,387 1,254,189 -9% Other operating income/expense 115,789 122,513 -5% Profits (Losses) on disposal of investments in associates and 12,518 -1,416 / companies subject to joint control and other investments ECONOMIC VALUE GENERATED 1,264,694 1,375,286 -8% Economic value distributed to employees and external staff 779,043 614,341 27% Economic value distributed to suppliers 274,403 256,939 7% 34 The economic value distributed to employees and external staff considers the allocations made to the Solidarity Fund regarding the early voluntary redundancies in Economic value distributed to the Public Administration 139,557 208,150 -33% 2016-2019 of several Group employees. As in 2015, the contribution to the Resolution Fund has been included under “Economic value distributed to the public administration” Economic value distributed to shareholders 0 118,578 / insofar as: i) the regulatory nature of the contribution prevails, as established by law, ii) the counterparty to which it is paid is a public entity iii) the category “economic value Economic value distributed to the community 2,199 1,617 36% distributed to the community and the environment” traditionally includes only income components related to charity and sponsorships in the social sphere. In 2016, the and the environment contribution to the Resolution Fund was around euro 43 million, of which almost euro 29 million was an extraordinary contribution. “Economic value distributed to third parties” Economic value distributed to third parties 76 1,002 -92% shows the portion of consolidated profit attributable to shares or quotas owned by TOTAL ECONOMIC VALUE DISTRIBUTED 1,195,278 1,200,627 -0.5% minority shareholders, calculated on the basis of “equity ratios”. TOTAL ECONOMIC VALUE WITHHELD 69,416 174,659 -60%
2 016 Sustainability Report 22 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Identity and value creation
STAKEHOLDERS
There are many stakeholders that show an interest in our banking activities: not only customers (retail customers and companies) and employees, but also a good number of organisations and communities with which valuable and long-term relations are held.
STAKEHOLDERS WITH WHICH DIALOGUE AND ENGAGEMENT CONTRIBUTION TO THE BUSINESS VALUE OF THE RELATIONSHIP THE BANK HOLDS RELATIONS ACTIVITIES
Supervisory Bodies and Public Meetings and inspections Legitimately entitled to operate Maintaining good relations with regulatory authorities Administration Participation in local initiatives enables dialogue on the actions required to establish a good credit system, which is able to support public policies and the economic system
Shareholders, financial General Meeting of Members and Members Club They enable the Bank to raise money on financial A relationship based on transparency contributes to analysts and rating Road shows in main Italian and international markets the good functioning of the financial markets and to marketplaces the correct allocation of savings, which is particularly agencies Section of the website and dedicated email address important in Italy
Customers Branch network with specialist staff They are the main source of value for the Bank Mutual trust and goal sharing lead to long-term Online channel and contact centres relations Online portal “My ideal Bank” Customer satisfaction Dialogue with Consumer Associations
Employees and Corporate intranet, events and team building Essential to achieve corporate goals, they are Employees and collaborators are among the brand’s collaborators Merger: dedicated portal for questions/answers; crucial to the success of the business main ambassadors and are able to enhance the meetings with management in main offices company first-hand Dialogue with Trade Unions Psychological listening service
Trade partners BPM’s representatives on the boards of partner They contribute to the relationship with customers The creation of partnerships with noteworthy companies through the ability to enhance the range of organisations helps to enhance the value of corporate Trade meetings and sharing of information products and services on offer reputation and experience
Community Sponsorship, charity, company voluntary service, The non-profit sector is one of the few sectors The development of the community helps to create social initiatives and free space for conferences featuring growth and is therefore a good business a significant social context and good corporate regarding social and environmental issues opportunity reputation
Media and Media relations, press releases and conferences External communication contributes to the value Transparency and proper communication help to Social Networks Social channels and company website that external stakeholders such as customers, enhance the activity and corporate image shareholders, etc. attribute to the Bank
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ANALYSIS OF MATERIALITY
The analysis of materiality was shared by BPM’s top management, also considering the key concerns according to analysts who specialise in Sustainability Investing and the aspects of the banking sector mainly treated by the media. Material issues have been placed on the graph based on the importance that they have for stakeholders and for the BPM Group.
EQUITY STRENGTH AND PROFITABILITY
SUPPORT FOR ENTERPRISE AND PEOPLE HIGH RISK MANAGEMENT
IT SECURITY AND SUSTAINABLE CREDIT MANAGEMENT PROTECTION OF PRIVACY
DEVELOPMENT, EMPLOYEE INVOLVEMENT CUSTOMER SERVICE INNOVATION AND CORPORATE WELFARE
QUALITY AND TRANSPARENCY PROMOTING DIVERSITY OF THE SERVICE AND EQUAL OPPORTUNITIES REDUCTION OF FIGHT AGAINST Importance for Stakeholders ENVIRONMENTAL IMPACT CORRUPTION
GOVERNANCE AND SUPPORT FOR THE CORPORATE INTEGRITY AVERAGE THIRD SECTOR
ATTENTION/COMPLIANCE DEVELOPMENT STRATEGY
BPM Group’s approach
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MATERIAL ISSUE CAPITAL PERFORMANCE
Equity strength and profitability Financial capital ROE: 1.7% - CET 1: Ratio 11.48% - Rate of coverage of non-performing loans: 41.9%
Relationship capital Loans to customers + 1.7% in 2016 (VS. + 0.7% of system) - renegotiated loans: e2.8 billion Support for entrepreneurship and people Financial capital Support for people and companies without bankability requirements and in difficulty: e243 million
Human capital Investment in training: e2.5 million - Employees trained and assessed: > 7,200 Development, employee involvement and corporate welfare Financial capital Employees involved in various initiatives: 6,000
Intellectual capital Significant cases of data loss: 0 - Recourse to the Privacy Guarantor: IT security and protection of privacy Relationship capital 0 - Investments in IT security: over e2.5 million
Customers that have been with the bank for over 10 years: 54% - Customer satisfaction index: on the rise - Complaints Quality and transparency of the service Relationship capital 2016: -20% (net of disputes regarding salary-backed loans managed by external parties35) - Complaints handled: 99%
Women executives and middle managers: +1% in 2016 (no variation in male employees) Promoting diversity and equal opportunities Human capital Promotions: 740 (9% women;10% men; 10% differently abled people)
Natural capital CO2 emissions avoided: around 16,000 tonnes Reduction of environmental impact Financial capital Consumption: paper -4%; cartridges -10%; toner -14%
Human capital Dismissals due to corruption: 0 - Employees trained on anti-corruption: > 7,000 Fight against corruption Relationship capital Employees trained on anti-money laundering: 6,800 - whistleblowing reports: 4 (1 of which significant)
Disbursements for charity and sponsorships: e2.1 million Support for the Third Sector Relationship capital Associations supported: 226 - Hours of company voluntary service: 1,183
35 For further information see page 30.
2 016 Sustainability Report 25 Capital The resources used in the business and that change through the corporate activities and processes
Relationship Natural capital capital
Financial Intellectual capital capital Human capital
2 016 Sustainability Report 26 Relationship capital 1. 4 mln 226 2,200 94,000 This includes the value of the customers non-profit supplier fans/followers organisations companies on social relationships that the Group has supported networks been able to develop over time with other companies, people and the community as well as its reputation.
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COMPANIES AND PEOPLE
The BPM Group works daily with 1.4 million customers, and 34% are under 45 years old. As regards businesses, made up of individuals and companies, with the aim of 91% are SMEs and mainly work in the “industry and craft” BPM GROUP CUSTOMERS 2016 2015 enhancing their savings and business activities. fields (in which Italy is a sector leader in Europe) but also in Total customers around 1.4 mln around 1.4 mln the “services” sector which has recorded a strong increase Lombardy, which is among the most dynamic and productive over the past years in terms of occupation and contribution of which have been 54% 55% with the bank for over regions of Europe, is the area with highest number of to GDP. Thanks to multi-channel banking, customers 10 years customers and branches, as well as the largest business area can choose the most appropriate channel for their needs. in terms of operations. Although branches are a fundamental place for maintaining of which private 90% 90% relationships, over 40% of people and 67% of companies customers Private customers consist of over 1.2 million people, half of use digital channels habitually, also for purchasing financial of which in Lombardy 61% 62% which are women, with an average age of 47 and a high products and services. The introduction of the new APP led of which in Lazio 10% 10% propensity towards using new technologies and online banking. to a strong development of “mobile” services compared to 2015, recording an increase in active customers of over of which in Piedmont 8% 8% 55% of customers have been with the bank for over 24%, in mobile device customers of 38% and in the number of which in Puglia 7% 7% 10 years, whilst 5% are individuals with foreign citizenship, of instructions of 63%36. Operating customers/active Internet banking customers customers ratio Company distribution by economic activity
ENABLED USERS MOBILE WEB 3.3%
25.1% 31.4%
>60% >40% 2014 2014 + 5% + 5% 43.41% 69.58% compared compared to 2015 to 2015 2015 2015 47.33% 71.03% 14.8% 25.4%
Agricolture Services 36 Mobile data related to BPM and Webank. Active customers are customers that have 2016 2016 accessed at least once; mobile device customers are customers that have carried out at least one instruction. 52.40% 72.90% Industry and craft Commerce Other
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The Group’s commercial offer is designed to meet customers’ CONDITIONS INITIATIVES CUSTOMERS INVOLVED AMOUNTS different needs, with particular focus on “educational” aspects: in addition to receiving information in branches, Commercial moratorium in chat or by phone, the website also contains a section In temporary Bankruptcy law moratorium 6,500 companies and e2.8 billion dedicated to the main features of the Group’s products and difficulty Voluntary renegotiation 1,800 retail customers services. Bankruptcy law renegotiation
In 2016, total loans to customers increased by 1.7% Central Guarantee Fund and 37 Lacking bankability 900 companies and compared to 2015, against a 0.7% system growth . Microcredit, Nasko, Cresco e202 million requirements 2,400 retail customers Regarding businesses, the performance of loans was positively e Sostegno Fund affected by the new commercial approach that provides tailor-made solutions based on customer characteristics (size, industry and reference market). In addition, in the event of extraordinary events (earthquakes, ESG Eurizon and Etica SGR investment funds With regard to private customers, the “Chibencomincia” floods, etc.), the Group supports customers in difficulty by marketed by the BPM Group mortgage loan was introduced at the end of the year, a suspending debts, which in 2016 amounted to over euro solution for first-home purchases reserved for young people 41 million. 45,000 under the age of 40, featuring the suspension of loan payments for the first two years. Microcredit and subsidised financing initiatives continued BPM GROUP 2015 thanks to the Central Guarantee Fund as well as non- BPM GROUP Regarding customers in temporary difficulty who do not repayable funding granted by the Lombardy Region through 2016 meet the requirements to access “ordinary credit”, the the Nasko, Cresco e Sostegno Funds. Group provides ad hoc initiatives, products and services. As a result of commercial cooperation with qualified asset Debt renegotiation is aimed at preserving the relationship management companies, the Group’s customers are offered with the Bank for people and companies in difficulty that, by investment opportunities that take into account so-called easing and extending the commitments, prevent a possible ESG (Environmental, Social and Governance) criteria. Number of subscribers default. In 2016, over 8,300 Group customers benefited In 2016, subscribers decreased by 4% compared to 2015, Assets subscribed by BPM € 600 mln from a renegotiation measure (around 80% of which were however, the assets of BPM Group’s customers for ESG funds companies), totalling euro 2.8 billion in renegotiated credit. increased by 5%.
37 ABI outlook - In January 2017 the total loans to residents in Italy increased by 0.7% compared to the previous year.
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The quality of customer relationships is monitored also by indicators such as the values expressed by customer satisfaction and customer complaints. With regard to the performance of the latter, in 2016 there was an increase in disputes regarding credit mainly due to irregularities imputed to the Bank but relating to the early termination of salary-backed loan contracts managed by companies outside the Group. Net of these disputes (around 600), the number of complaints dropped by about 20% compared to 2015.
Customer Satisfaction OBJECTIVE 100 CREATING AND MAINTAINING A RELATIONSHIP OF VALUE WITH CUSTOMERS
BPM 2016 ACTIONS CHECKING BPM 2015 ENGAGEMENT AND CUSTOMER COMPLAINT CREDIT Activity SOCIAL COMMUNITY* SATISFACTION MANAGEMENT Satisfaction of retail customers Credit to companies Facebook Satisfaction surveys Complaints and people: Over 51,000 fans and increasing managed: Satisfaction of companies 100 euro 35 billion, 622 posts published > 99% +1.7% a.a. Satisfaction Twitter of companies Average response BPM GROUP COMPLAINTS 2016 2015 Mortgage loans Over 11,000 followers increasing time: to companies and and 1,348 tweets 20 days Complaints received 2,723 2,623 people: Number of years LinkedIn with the bank: of which current accounts and services 1,242 1,317 Indicators euro 1.9 billion new mortgage loans in Over 31,000 followers - retail customers of which credit 991 686 2016 and 90 posts 14 years of which savings 355 449 - companies Loans to companies: Webank 11 years of which other 135 171 on the rise in almost My ideal bank Complaints handled 99% 99% all sectors 1,996 customer subscribed 3,362 ideas collected Average days needed to process complaints 20.2 17.7 * Fan/follower data include both BPM and Webank.
WIDESPREAD FINANCIAL COMMUNICATION In 2016, Webank launched a project to involve customers in the world of finance using simple ways and languages, and starting from the needs expressed by people across the web. Thanks to an online platform, people can access events and training courses on financial topics organised by the Webank Training School (over 600 events and webinars from 2010), enjoy readings and insights (8 thematic sections inside the Magazine section), and access one of the most comprehensive Italian glossaries (over 500 items regarding various thematic areas) and many videos on youtube (267 videos and tutorials for a total of 48 hours of free video content).
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COMMUNITY
Non-profit organisations generate a significant economic and Breakdown of sponsorships and charity by area social value in our country. The BPM Group contributes to creating this value through donations, sponsorships, voluntary 3% activities and the sharing of skills and company space. 9% In 2016, the Group disbursed euro 2.1 million equally 51% Culture distributed between the sponsorship of social initiatives and Solidarity charity, with a 21% increase in the latter compared to 2015. 10% Healthcare Once again in 2016, the majority of contributions (51% of the total disbursed) was used for cultural initiatives, whilst 3% Research and Education increasing shares of resources were used for solidarity and Sport for research and educational initiatives, rising from 18% to 24% and from 4% to 10%, respectively. Environment/Other
24%
Culture Solidarity Healthcare Research and Education Sport
Area
- Fuoricinema - Casa Chiaravalle - Italian League for - Paolo VI - Progetto Acquario - Strane coppie the Fight against - Italian Paralympic Main - Amici di Edoardo International - La Milanesiana Cancer Swimming Federation initiatives/ - Casa delle Donne Scientific Institute non-profit - Mantua Literature Maltrattate - Association for Festival - Tazzinetta Children in Hospital - Una breccia nel muro benefica oltre l’autismo
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Several cultural initiatives were supported in 2016, With regard to young people in difficulty and social Particular attention was given to protecting women with including the collaboration with Fuoricinema, a charity inclusion, several projects were supported all featuring the support given to the project “Uscire dal deserto” set up by cinema marathon, where the public had the opportunity to common goal of helping to achieve work independence. CADMI (Casa delle Donne Maltrattate - House of Abused meet actors and directors and take part in a charity auction. Among these, of note are: the project “Mani in Pasta” Women) and a project developed by the cooperative I sei A review of international literary meetings - Strane coppie developed in collaboration with the Municipality of Milan Petali to support the employment of women who have been (Strange pairs) - was also supported, where pairs of authors which provides professional training activities to NEET youths; abused. read and performed pairs of world literature classics to the project “Quattro vie” set up by the Associazione Amici readers. Thanks to the contribution of Banca Popolare di di Edoardo, for young people in difficulty to whom business As regards sports activities, in 2016 support continued Milano, the citizens of Milan and tourists were able to coaching and permanent training courses are delivered; and to be given to the “Acquario” project aimed at preparing a appreciate the opening of Palazzo Marino, the Town the initiative of Fondazione CAM “Bed & Breakfast protetto” group of athletes in view of the Rio Paralympics and Hall of Milan, through a cultural itinerary that wound along addressed to youths between the age of 17 and 21, who are of the European championships. At the same time, support was 12 rooms rich in history, frescoes, decorations and canvases. not yet independent and have had experience in communities. also provided to increase the range of sports available Support continued to be given to the La Verdi orchestra as in Milan for differently abled people. Furthermore, FINP well as to the La Milanesiana literature, music, cinema and Banca Popolare di Mantova supported the Diocese of (Italian Paralympic Swimming Federation) received support science review. Mantua for the first reception of refugees in the area of with the aim to assist the young athletes during the most Mantua. Profamily supported the Associazione Tazzinetta important appointment of their sports career. The habitual Mantua was appointed 2016 Italian Capital for Culture Benefica, which is engaged in supporting people in collaborations with Stramilano and the Milan Rugby Sports and as a result many events and initiatives were organised difficulty or who are lonely, such as needy elderly people Association continued. throughout the area. Within this lively cultural context, Banca and those living on the margins of society. Popolare di Mantova supported numerous initiatives, including the exhibitions “Quadri da una esposizione” held at Palazzo Te and the concert “Trame sonore” organised by the Mantua Chamber Orchestra. Support continued to be given “MANI IN PASTA” to the Literature Festival in 2016. professional training for NEET youths
Among the solidarity initiatives, of note is the support given Banca Popolare di Milano worked together with to the project for the recovery of Casa Chiaravalle, the the Municipality of Milan on the “Mani in pasta” largest property confiscated from the Mafia. Its renovation initiative to give youths who do not study and do not will lead to housing and working opportunities for people in work the opportunity to enter into the labour market difficulty. through professional training courses. Specifically, the Bank sustains part of the costs of the initiative In order to provide assistance to the people struck by the and plays an active role by placing the skills of its trainers at the disposal of the BPM Training Centre. In the earthquake in the community of Arquata del Tronto, Banca 2016 edition, 11 youths aged between 17 and 20 attended a course to become pizza makers, 10 of which Popolare di Milano, in partnership with Actionaid, provided then found a job. direct school support to 80 children and their families.
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The Group provided a wide-ranging contribution in the able over the years to network institutional and private Corporate volunteering health sector. In the paediatric ward of the Niguarda resources to the advantage of women, becoming over time Initiatives aimed at involving employees in volunteering Hospital, support was given to the project “Ti presento a national benchmark for the skills and best practices it has activities during working hours continued in 2016. The aim is l’ospedale” set up by the Associazione Spina Bifida e implemented. to promote a culture of voluntary service activities, creating Idrocefalo Niguarda. Again at the Niguarda Hospital, an • The initiative “Maratona del Cuore” organised by cooperation opportunities among employees and non-profit accessible playground was built thanks to the support of Associazione Cuore Amico was hosted in Mantua. The organisations. ASBIN. Several projects regarding medical and psychological event was open to citizens and gave the opportunity to assistance were supported, such as the Aiuto alla Vita centre all to have free medical check-ups for the prevention of of the Buzzi Hospital, for women who are diagnosed with cardiovascular diseases. foetal problems, and Attivecomeprima, for cancer-affected women. The “Nastro Rosa” campaign is also worth mentioning, promoted by LILT for the prevention of female cancer and Una C P a t rn n s nt ith th hi r n F Breccia nel Muro, to support families with autistic children. an tt ni a th r h m a ss a Banca Akros supported VIDAS, the Italian Red Cross and Médecins Sans Frontières.
In order to promote, disseminate and share culture on various topics of significance for the community, m s r h rs n ts t i s a ar as an an ti i 22 conferences were organised by external parties on the Group’s premises in 2016, involving almost 2,300 participants. a ts s mi s Among the most important events hosted: n n- r it ass iati ns ta ar ns an ar ns an an ti i • The conference held on the “International Lennox-Gastaut Syndrome Awareness Day”. The event involved the physicians, community of patients and family members, as t in th well as the institutions involved in the problems related to m a s in s ia ant ns rin C anin n a m an an nat an s r ir t n th str ts this rare syndrome featuring a serious form of epilepsy. t th F an • The conference organised by CADMI, on the occasion of the 30th anniversary of its activities. The association presented the activities it provides for assisting and ss ntia s i s n th a s th s r n rns a s nat t supporting women who are victims of violence. CADMI is sh s s ia an s i arit st r s r ar the most important anti-violence centre in Italy and has been
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Furthermore, in the main offices in Milan, blood collection was organised in collaboration with Avis, in order to support the Milanese hospitals. 160 employees joined the initiative, donating over 100 bags of blood.
Thanks to the corporate volunteering project, Banca Popolare di Milano positioned itself first place in the first edition of the “Volontariato & Impresa” (“Volunteering & Business”) project promoted by the Volunteering Services Centre of Foggia on 17 March 2016.
Memberships The BPM Group companies are members of non-profit organizations, foundations and non-governmental organisations that contribute in different ways to creating shared value. In 2016, a total of euro 127,500 was devoted to organisations such as Aspen Institute Italia, FAI - Fondo Ambiente Italiano, Fondazione Sodalitas, Valore D and Fondazione Artistica Poldi Pezzoli Onlus.
Open Doors for students In its headquarters in Piazza Meda, in Milan, Banca Popolare di Milano welcomes students from all school levels interested in visiting the bank. In 2016, BPM hosted 4 groups of students accompanied by their teachers, for a total of about 200 people. The visitors had the chance to admire the reproduction of Leonardo Da Vinci’s The Last Supper (made in real size before its restoration) and Arnaldo Pomodoro’s “Movement” sculpture at the centre of the room, as well as to view the Bank’s historical archive (unique photos and documents). In addition, the students were able to visit the Bank’s vault (receiving information about its history and its door opening and closing mechanism) and, in certain periods, to visit the exhibitions hosted in the room (such as the one dedicated to the photography competition Obiettivo Terra 2016 Il Mare Polmone Blu del Pianeta).
In connection with particular training courses, groups of students were also hosted who were interested in learning about the activities and professional development opportunities in the banking sector.
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SUPPLIERS
BPM Group’s suppliers of products and services consist Suppliers and turnover by year Breakdown of suppliers by sector of around 2,200 companies, almost all resident in Italy. Half of them are Group customers and 13% have worked 413,084 409,431 with the Group for more than 10 years. In 2016, turnover 19% amounted to approximately euro 410 million and mainly concerned services and ICT.
Suppliers are a key part of the value chain and relationships 18% 63% are based on transparency and fairness. These principles are contained in the Code of Ethics that all suppliers must accept, in particular with reference to regulations on environmental safety, anti-money laundering and health and safety in the 2,091 2,199 workplace. 9% of the supplying companies are provided with at least one social and/or environmental certification 2015 2016 (e.g. ISO 14001). er ices Property echnologies uppliers urno er In line with the geographical presence of Group companies, 72% of suppliers are resident in the North of Italy, which account for 77% of the turnover. Investments in technology Geographical breakdown Breakdown of turnover by sector play a significant role: they grew by 33% in three years, accounting for about 20% in terms of number of suppliers and Suppliers Turnover 40% in terms of total turnover. (number) (in thousands of euro) North-West Italy 1,425 282,271
North-East Italy 167 32,464 40% Central Italy 326 45,702 44%
Southern Italy 90 4,592
Italian islands 13 2,600 16% Abroad 178 41,802 Total 2,199 409,431 er ices Property echnologies
2 016 Sustainability Report 35 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Relationship capital
MEDIA/SOCIAL COMMUNITY
Communication contributes to the creation of transparent and Over 1,300 posts were published over the year, involving news, information and events of interest among prospective valuable relationships with the community. For this reason, several followers, particularly on issues such as sports, culture, candidates and, in general, among the community of registered the Group promotes clear and timely communication with solidarity and the environment. employees. In 2016, there were over 1,800 new fans on the stakeholders by maintaining an ongoing dialogue with the Facebook page and around 8,000 new followers acquired media (national, local, specialist and foreign) and promoting In the field of solidarity, particular emphasis was placed on on LinkedIn. the sharing and exchange of information through social and the corporate volunteering project in order to give visibility web channels. to many organisations and their activities and to promote the Finally, Twitter - which involved 653 new followers - was importance of community-based engagement. used to share news about start-ups and SMEs, topics that are Amongst the over 120 press releases issued, much importance particularly relevant to both the Group and followers. was given to the planned merger between Banca Popolare di LinkedIn proved to be a key social channel for matching Milano and Banco Popolare, through all of its steps, in order labour demand and supply, and was also useful for sharing to illustrate the different phases of the plan and facilitate its correct understanding. Discussion and dialogue were fostered by specific press conferences, especially during the significant SOCIAL* 2016 FAN/FOLLOWER 2016 POST/TWEET phases, such as the Company Meeting of October 15th.
Social networks play an important role not only as a means 4 ,11 0 210 of communication but above all of engagement, seeking to create a community within which it is possible to share information and/or opinions not only on commercial issues, but also of a cultural and generally shared-interest nature. 26,025 53 In 2016, Banca Popolare di Milano’s communication through social media was based on storytelling, especially through Facebook and Instagram, which lend themselves best for describing and telling the story of the initiatives supported and carried out. 1,793 1,028
* Data referred to the social profiles of Banca Popolare di Milano.
2 016 Sustainability Report 36 Financial Capital 1. 7 % 11.48% € 51 billion 54.7% Includes the value of relations ROE CET 1 Total assets Coverage of bad loans with companies, people and communities. It includes the financial resources collected (deposits of savers, indebtedness, equity) and generated by the Group’s operating activities and investments. These resources are used to provide loans to customers and in medium-long term operations of the Bank. Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Financial Capital
P o ita ilit 289 net o PERFORMANCE OF BPM STOCK non recurring In 2016, the entire European banking industry was characterized by high volatility 79.1 components and suffered signficantly due to persistently weak economic growth, low interest 195 rates and high levels of non-performing exposures, reflecting the legacy of the crisis 61.2 59.4 that has swept across Europe and particularly Italy in recent years. These factors had 0.066 a negative impact especially on Italian bank securities. 0.044 6.7 4.5 The European stock index, (Euro Stoxx Banks) recorded a loss of 8%, against the loss 73 of the Italian stock index (FTSE Italia All Share Banks) which fell by 38.2%. BPM stock 0.017 1.7 fell by 61.1%.
et pro it €mln Pro it per share € R Cost/Income One-to-one encounters, meetings and conference calls were held with 863 analysts, rating agencies and shareholders in 2016 (compared to 663 in 2015). If the Banca Popolare di Milano closed 2016 with a net profit of euro 73 million, despite the inclusion attendees of market presentations are also included (conference calls), the number of of non-recurring charges, mostly related to the advance payment of a large part of the costs of parties involved rises to 2,268 (compared to 1,023 in 2015). the merger with Banco Popolare envisaged in the 2016-2019 Business Plan, as well as systemic charges and the value adjustment of the contribution to the Atlante Fund.
ANALYSTS WHO COVER BPM STOCK
AUTONOMOUS BERENBERG EQUITA GOLDMAN HSBC SACHS
BANCA IMI CITI EXANE KBW INTERMONTE
BANK OF AMERICA DEUTSCHE BANK FIDENTIIS KEPLER MEDIOBANCA MERRILL LYNCH CHEUVREUX
BARCLAYS MORGAN STANLEY
2 016 Sustainability Report 38 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Financial Capital
E it t en t +1.8
51.1 50.2 +1.7 -0.1p.p. 34.8 34.2 68.0 68.1 LOANS Loans to customers represents a large share of assets and makes credit management and policies fundamental to equity strength. The Bank constantly monitors the loans portfolio with a view to improving the Risk/Return profile by: • maintaining the risk profile within the established risk appetite; • developing sustainable relations with customers, which take into account both the Bank’s equity balance and the financial needs of the customer; • diversifying the loans portfolio by containing concentration levels. otal assets oans to customers oans to customers/ €mld €mld total assets
Financial ta ilit 54.7 54.5
41.9 39.6
A SOLID BANK
11.53 11.48 10.5 10.6 As at 2016, BPM has a solid equity base, with a CET1 of 11.48%, substantially higher than the minimum capital 4.6 4.4 ratio indicated by the ECB for 2016 (SREP 9%), even though it does not yet benefit from the effects resulting Common uity ier et non per orming loans/ et ad loans/ Co erage o non per orming Co erage o ad from the adoption of internal AIRB models. Capital Ratio otal net loans otal net loans loans loans
BPM Rating as at 31st December 2016
Rating agency Latest updates Long-term debt Short-term debt Outlook
Fitch Ratings 23rd December 2016 BB- B Stable Moody’s 20th October 2016 Ba1 N-P Stable
2 016 Sustainability Report 39
Human Capital 7,673 99% 44,500 6,000 This is made up of the expertise, employees on permanent training people skills and experience of the contracts days involved in company events people that work for the and initiatives organisation. Development, training, engagement and welfare are the management levers used by the Group together with respect for people and the promotion of diversity. Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
PERSONNEL
The personnel are essential within any organisation and PROMOTIONS AVERAGE AGE 2016 2015 particularly in the banking sector where the ability to create long-term relationships is very important. For this reason GROUP EMPLOYEES (number) 7,673 7,736 the BPM Group invests in its collaborators, establishing a long- By contract type (as a %) term relationship with them and providing the necessary tools Permanent contract 99.2 99.1 to enhance their sense of belonging to the company, enrich and develop their expertise and aptitudes, and guarantee a good Fixed-term contract 0.1 0.1 people quality of life inside and outside the company. Apprenticeship 0.7 0.8 740 45 in 2016 Women By gender (as a %) 9% of women employee Women 48 48 10% of men employee 47 Men 52 52 10% of differently-abled Men people employee
Recruitment and Development UNIVERSITY GRADUATE HOURS OF TRAINING
Engagement MANAGEMENT OF HUMAN 1 in 3 333,000 hours CAPITAL Training 34% of women employee 47.9% to women 29% of men employee 52.1% to men
Promotion of people and diversity
Supplementary Welfare system
The identification of expertise is the point of departure for organisational development and the planning of personal growth programmes. In addition to those identified in 2015 relative to the network departments, in 2016 the activities of the central services were mapped involving around 150 managers in detailed interviews in order to enrich the company’s information assets.
2 016 Sustainability Report 42 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
The acquisition of the necessary expertise to meet the company’s goals takes place both through the hiring of new human resources and staff training.
Recruitment and Development
The 3-year plan to hire over 400 staff, all relatively young and resident in the areas in which the company has greatest presence (mainly in Lombardy), concluded in 2016. More specifically, at Group level 13 people were hired in 2016 and 76 left the company, the majority of whom resigning of their own accord.
The majority of the newly-hired young adults come from the university world and often do a placement in the company before being employed. In fact, the Group companies offer internships to students and graduates so they can positively “contaminate” the company with their youthful forward-looking expertise. For the youths involved in this experience, an internship is a chance to put the knowledge they have learned during their studies into practice, to refine their organisational skills and, above all, to make informed professional decisions moving forwards. In 2016 fifteen youths undertook internships in some of the departments most involved in the change, such as Finance, Credit, Corporate, Communications, Accounting and Reports, and Risk Management. In addition to the internships, the students finishing their university studies can also receive support when writing their university theses on arguments developed in the Group departments and companies. During the year, 5 students completed their degree theses and 3 others are in the process of finishing theirs.
2016 2015 2016 2015
HIRES (number) 13 218 TERMINATIONS (number) 76 219 By gender % By gender % Men 77 55 Men 63 63 Women 23 45 Women 37 37 By age % By age % Under 30 46 52 Under 30 11 6 30 to 50 46 42 30 to 50 54 21 over 50 8 6 over 50 35 73
2 016 Sustainability Report 43 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
Training T ainin t pe Aging of the population and marginalisation of the young 73% Economic-financial 27% crisis and non-performing High level of CONTEXTUAL loans (NPL) competition and FACTORS shadow banking
Digitalisation and changes in customer behaviour Mandatory training y law iscretionary training Growing regulation Need for openness and ability to innovate T ainin content The 2016 training plan took account of a context 2. The promotion of diversity and the culture of global inclusion 5% characterised by complexity and change. In 2016 over 7,300 and talent management as the guiding principles for a number 5% colleagues were involved in around 44,500 training days at of important initiatives, aimed at recognising the decisive 2% Group level with an economic investment of around euro 2.5 value of human talent: million. Almost all employees attended at least one - the value of an inclusive approach, a reflection that made it 61% training course with a per capita average of around 46 possible to focus on people and their talent rather than on hours (approx. 6 working days). The majority of the training was their diversity; 27% provided on a voluntary basis and around 2/3 was focused on - junior talent management, a process for involving young developing professional and commercial roles. employees in the identification and development of the The training courses focused on different development issues and necessary skills to meet the challenges of the near future in touched on different areas and sectors, contributing to increasing complex contexts, helping them to develop an awareness the number of levers for the development of expertise. of their talent and providing them with simple and innovative More specifically, the 2016 training activities placed the tools to improve their performances in the working and non- emphasis on: working environment; echnical pro essional Mandatory Relational 1. The possession of the necessary expertise for professional - senior talent management, an initiative aimed at recognising kills de elopment development right throughout the life cycle. and enhancing the talent and skills possessed by people Managerial Commercial
2 016 Sustainability Report 44 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
that have worked for the company for some time via Supplementary welfare courses designed to transfer the legacy of expertise they have accumulated; Welfare - trial parental assistance course, before and after maternity bonus Study and parental leave, with the aim of guaranteeing the Cassa Mutua grants continuity of the relationship with the company before, Assistenza LOOKING AFTER PEOPLE during and after returning from leave in order to maintain health insurance Company Healthcare and healthy lifestyles the expertise acquired and take advantage of the new skills canteens were once again the subject of acquired in the “role” of parent. Pension initiatives aimed at employees and, 3. The spread of a professional consultancy culture in order to Fund in some cases, customers in 2016. guide colleagues towards a qualified and customer-oriented SUPPLEMENTARY In particular, the collaboration with consultancy approach. WELFARE LILT (Italian League for the Fight 4. Closer focus on monitoring and containing credit risk and its against Tumours) was consolidated Gym through conferences on the issue associated economic and financial impact. of prevention at the head offices 5. A cultural approach that embraces continuous change, aimed Insurance policies in Milan and free early diagnosis particularly at the company management and designed to and subsidised Crèche skin check-ups for employees at the enable them to anticipate, understand, confront and manage bank services company and senology clinics via change. the LILT Mobile Centre as part of an 6. The development of a digital approach, which involved some Work Life initiative aimed at the Communications, Marketing and Organisation employees first Occupational Balance entire community. safety Employees’ Club and foremost before being aimed at all employees, with the (CRAL) aim of developing the necessary digital skills to confront the changes. The focus on the needs of people is also manifest in a series of services designed to improve the professional, physical and personal wellbeing of people inside and outside the company. These services form part of a supplementary welfare system designed for all employees: the benefits are available to all workers and, in some cases, adjusted according to the number of hours worked (e.g. the Welfare bonus). In terms of the work-life balance, employees can take advantage of flexible working hours, in both the morning and evening and, on request, part-time contracts. In 2016, there were 1,139 people with part-time contracts (93% women). Furthermore, there are also family services (products and services at subsidised prices, crèche, summer camps and study grants for children etc.), health services (Cassa Mutua Assistenza health insurance, also for family members) and pension services (Pension Fund, to which the Bank makes a monthly contribution).
The Group protects and promotes the health and safety of its stakeholders in the workplace. For the benefit of its employees and the community, as well as continuing the investigations into the radon and asbestos risk, in 2016 the Group installed 5 external automatic defibrillators in the Meda and Bezzi sites in Milan and provided a training programme for employees in charge of first aid activities. The defibrillators form part of the Lombardy regional network which any party providing emergency help (also outside the Bank) can access to identify and use the correct apparatus where necessary.
2 016 Sustainability Report 45 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
For employees with work-related difficulties, the Bank also provides a psychological support service which assisted 45 people in 2016. During the year support was also provided to 28 differently-abled people, who were followed via an OCCUPATIONAL SAFETY 2016 2015 individual programme, and 15 managers relating to requests for consultancy over staff management. Injury rate 38 7.24 6.85 Severity index 39 0.2 0.2 As for injuries, there were 68 while commuting and 23 during working hours (6 of which with an absence of over 30 days) in 2016. In terms of the latter, there were no episodes of significant gravity leading to requests for the recognition of occupational illness.
Engagement Engagement figures The promotion of a strong business culture and the engagement of employees are key activities for meeting INTRANET the company’s goals, particularly during times of change. In 2016 the issue of change, particularly regarding the transformation into a joint-stock company and the merger plan 2,435,142 8 24 with Banco Popolare, was extremely relevant. During the year all the information and latest news on the merger plan, live audio feeds, video interviews and presentations were made Total views Video Interviews Videos available to employees via the company intranet, fostering of main content published published dialogue and debate through initiatives like “Learn More to Decide”, in which colleagues were able to interact with the top management. INITIATIVES AND EVENTS The Group contributes to strengthening team spirit and the sense of belonging to the company also through corporate people people people volunteering initiatives, which involve employees in social 50 2,250 3,500 projects in collaboration with non-profit institutions and organisations. In 2016, 165 colleagues participated in 28 days of voluntary work organised with 19 non-profit Breakfast with the Company 5-stage organisations for a total of 1,183 hours. Managing Director events roadshow
38 number of injuries/total workable hours* 1,000,000. 39 *days of work lost per injury/total workable hours* 1,000.
2 016 Sustainability Report 46 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
Industrial relations As regards company training, an agreement was reached with the Trade Union Organisations was the merger with Relations with Trade Union Organisations are founded on on the FBA Joint Interprofessional Fund for the supplementing, the Banco Popolare Group. To this end, given the 2,100 dialogue and discussion. The early part of 2016 was requalification and acquisition of the necessary skills to redundancies between the two business entities, an agreement characterised by intense discussions that led to the signing support the professional development of people in the was reached over the voluntary access to the sector of the second level BPM Group contract. As part of the company, with a particular emphasis on promoting diversity, Solidarity Fund of 585 people in the BPM Group. regulatory framework defined by the second level contract, talent and good parenting. Contract negotiations also began Finally, as regards labour disputes between the company and subsequent specific agreements were sought to promote on the performance appraisal system and the incentive system employees or former employees, there were 18 ongoing welfare with particular reference to the supplementary with the aim of rewarding the expertise, responsibility and disputes at the end of 2016 as compared with 14 at the pension fund. merits of workers, a goal also pursued in 2015. end of 2015. In the second part of the year the main subject of discussion
Promotion of people and diversity
With the aim of promoting people and their contributions, (Women in the Company) project and the fund dedicated to 25% more on average, mainly because of the lower number all employees are regularly appraised in terms of female enterprise, for example. of women in higher management roles. the activities they have carried out and the goals they have achieved with the exception of those that do not possess As regards remuneration, the National Collective Labour i t i tion o male an emale the minimum requirements to access the appraisal system, Agreement and the second-level contract applied in the emplo ee ole such as at least six months with the company. The personnel company do not make any distinction between men and incentive system involves the assignment of an evaluation and women. The figures show that there are no significant 87.8 potentially a promotion and/or a variable bonus payment. differences in the “Middle Managers and Professional Areas” In 2016, 740 people were rewarded with an economic categories, which represent 98% of the people that work for 64.9 and/or positional promotion. the Group; conversely, in the “Executives” category men earn 57.1 42.9 Women represent around half of the people that work 35.1 for the Group and, relatively speaking, are more educated. RATIO OF MALE TO FEMALE 2016 2015 However, as in other companies, there are proportionately REMUNERATION (EXCLUDING PART-TIME 12.2 fewer women at the top of the company: at management level WORKERS) Men (Executives and Middle Managers) only 1 in 3 employees Executives 1.25 1.28 are women. It is also for this reason that in recent years the omen Middle Managers 1.06 1.06 company has promoted a number of initiatives to promote xecuti es Middle Managers All other talent, both internally and externally, such as the DNA All other employees 0.98 0.99 employees
2 016 Sustainability Report 47 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Human Capital
As regards the company’s younger employees, under- Participating companies can access a platform with the CVs of whom with a medium-high level qualification (school 30’s represent 4% of the Group’s personnel and in almost all of the candidates and meet with them for an interview. BPM leaver’s diploma or degree). 10% of the differently-abled cases have a high level of education (undergraduate degree, has hosted the event since 2012, also being presented with people were promoted in 2016. In addition, 28 persons Master’s or PhD). In recent years the Group has invested in the Diversity&Inclusion Award for the internships it has offered were followed with a personalised project by the company youth through both an employment programme with permanent (10 in 2016), 4 of which have led to employment contracts. psychologists. contracts and ad hoc training programmes such as the junior In terms of discrimination, in 2016 one request for intervention talent management scheme that aims to recognise and 471 differently-abled persons work for the Group, 82% was made to the anti-discrimination freephone number. promote young talent.
As regards diversity, for several years BPM has been GENDER SEGMENTATION Men Women SEGMENTATION BY AGE < 30 30-50 > 50 partner of “Diversitalavoro”, an initiative promoted by UNAR, BY ROLE (in %) AND ROLE (in %) years years years the Sodalitas Foundation, the Adecco Foundation for Equal Opportunities and People. Recognised as an international Executives 3.2 0.5 Executives 0 0.9 4.3 best practice in the area of Diversity & Inclusion, it aims Middle Managers 45.9 26.8 Middle Managers 0 28.5 57.5 to facilitate the employment of people with disabilities, All other employees 50.9 72.7 All other employees 100 70.6 38.2 people of foreign origin and transgender people. Total 100 100 Total 100 100 100
2 016 Sustainability Report 48 Intellectual Capital 3,000 ideas 800 -60% € 2.5 million This includes material and proposed via the innovative reduction in costs Investments “My Ideal Bank” proposals and energy in IT security intangible resources that are social community implemented consumption with able to introduce innovations to the “Smart Project” processes, organisation, products and services, and therefore to generate greater benefits for internal and external customers.
2 016 Sustainability Report 49 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Intellectual Capital
INNOVATION
Today, companies are expected to contribute to economic and social development also through innovation, one of the goals identified by the UN for the creation of an inclusive and sustainable society.
In recent years the BPM Group has developed its innovation processes not only with the aim of increasing its productivity and profits but also to create shared value, envisaging new jobs and business opportunities and promoting new engagement tools.
CONTEXT DRIVERS OBJECTIVE
Technological innovation and new ways Investments in ICT and IT security, of working new workspaces
DEVELOP A VALUE New purchasing/investment behaviour Digitalisation to improve processes/services RELATIONSHIP
Focus on relations and stakeholder Rates at historical lows engagement
In particular, in recent years various actions have been studied and carried out in the Real Estate and ICT areas in order to improve the services and the time dedicated to customers, quality and workspaces, risk management and IT security.
The core of these activities was the development of an integrated multichannel approach through the combination of physical and virtual contact channels and the use of new digital tools like the NSR platform for the sale of products in branches and online, the graphometric signature for signing contracts in branches, and digital signatures for contracts signed directly online.
2 016 Sustainability Report 50 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Intellectual Capital
Investments in ICT have made it possible to adopt solutions for reducing the amount of time spent on administrative work and during physical transfers, to use a single platform for the online management of customers and to make more effective use of the data collected. Through the “Lync Skype” system it is also possible to work together with people in different locations. Tools have also been introduced to analyse the semantics of financial transactions carried out via bank transfer to translate them into information that can help provide people and companies with the best possible solutions, with respect for their privacy. In a context in which cyber attacks are on the rise, the BPM Group has continued to invest in IT security in order to protect the personal data of customers, employees and company information in general, a measure it regards as fundamental.
In 2016 it invested over euro 2.5 million in new technology and organisational solutions to protect company information. The most relevant initiatives regarded: • improving technology and organisational security controls with the creation of special controls for mitigating fraud and cyber attacks and with the participation of the banking sector at CertFin40; • the introduction of “strong authentication” tools for customers that use mobile devices; • training and informational activities on the risk and security culture in order to raise both personal awareness and awareness in the workplace.
As regards privacy, the collection and processing of data in the Group takes place with respect for legislative provisions and with the complete protection of information on people’s private lives. All requests to access one’s data are managed promptly and interested parties can find all the information they need on the processing of personal data on the BPM Group website. In 2016 no serious violations creating significant damage took place and no requests, complaints or appeals were made to the Data Protection Authority regarding the loss of personal data.
In regard to Real Estate, in recent years the Group has invested in the effective organisation of work and workspaces in order to improve the working environment and reduce costs, energy consumption and environmental impact. The spaces at the Bezzi Services Centre in Milan were completely redesigned to meet various different requirements (shared spaces to facilitate networking, reserved areas for work that requires concentration and meetings, relaxation areas for breaks and socialising). So far these measures have resulted in energy savings of around 60% in terms of costs and consumption.
THE NEW CUSTOMER CENTRE INNOVATION THROUGH ENGAGEMENT Launched in 2015, the Customer Centre project was developed in 2016 with the integration of all online Active since 2010, “My Ideal Bank”, the Webank online customer contact channels (including email and chats). In terms of performance, the telephone channel has proved community for creating innovation through engagement, allows more efficient (63% of calls answered within 20 seconds) and there has been a greater level of commercial customers to put forward ideas (almost 3,400), vote on them effectiveness (commercial proposals have more than doubled). The Customer Centre is manned by over 150 and see them implemented (over 800). persons who have undergone specific training and are authorised to sell some products and services online.
40 CertFin is the new body that specialises in the cybersecurity of the banking and financial sector with the aim of preventing and combating IT threats connected with the development of new technologies and the digital economy. The body was born from the agreement between Bank of Italy, the Italian Banking Association and the ABI Lab Consortium and involves the creation of a Cert (Computer emergency response team), a highly specialised body dedicated to the Italian financial sector which will be tasked with preventing and combating IT threats connected with the development of new technologies and the digital economy.
2 016 Sustainability Report 51 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Intellectual Capital
Main innovations 2015-2016 according to economic and social impact
DIGITAL MANAGEMENT OF NPL Digitalised platform that makes it HIGH possible to classify loans* according to relevant variables and manage them more efficiently REAL ESTATE RESTYLING LYNC-SKYPE SYSTEM Redevelopment and refurbishment System that makes it possible to make of real estate completed with a focus calls and videocalls and exchange instant on the optimal management of spaces messages online reducing the transfers and energy efficiency of colleagues ONLINE SECURITY Strong authentication system to work from home or when on the move in complete security, also extended to private customers ARCHIBUS PLATFORM STREAMLINING OF Computer system for surveying and ADMINISTRATIVE WORK managing real estate that makes it possible Digitalisation of documentation and to centralise documents and processes credit process to increase efficiency Economic Impact and make efficiency forecasts and reduce margin of error
ROOM BOOKING SYSTEM IMPROVEMENT OF THE MOBILE SERVICE Internal system for searching and booking GRAPHOMETRIC SIGNATURE Better customer experience and functionalities rooms that is able to identify the most Ongoing adoption of of the Webank APP extended to the BPM suitable spaces according to time available graphometric signature Banking APP with the possibility of cardless and number of participants withdrawals and fast personalised functions MEDIUM
MEDIUM HIGH Social Impact
ICT and SECURITY REAL ESTATE
* The effective management of non-performing loans is a key issue for the new Banco BPM Group.
2 016 Sustainability Report 52 Natural Capital 16,000 -4% -10% -14% The natural resources used in tonnes of paper ink toner company activities that can be CO2 consumption cartridge consumption not emitted into consumption affected by the Group’s actions. the atmosphere Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Natural Capital
ENVIRONMENT
For several years the BPM Group has launched initiatives to reduce its environmental footprint through both the continuous search for efficient solutions in the workplace and loans to customers for redevelopment work and energy efficiency.
Energy ENERGY AND EMISSIONS 2016 2015 Variation
Electricity consumption remains largely consistent with the previous year thanks to the constant attention paid to energy Electricity from renewable 174,262 172,655 +0.9% efficiency, which makes it possible to contain the gradual increase in consumption stemming from the growing digitalisation of sources (GJ) banking operations and processes. The decision made years ago to use electricity deriving exclusively from renewable sources Emissions from electricity not 15,684 16,340 -4% makes this consumption sustainable. emitted (tonnes of CO2) Thermal energy from 99,564 97,179 +2.5% Thermal energy, gas and diesel for heating increased by 2% compared to 2015 as a result of the trends in the external non-renewable sources (GJ) temperature. Direct emissions from SCOPE 1 5,730 5,595 +2.4%
thermal energy (tonnes of CO2) Material consumed PAPER CONSUMPTION 2016 2015 Variation The progressive use of digital channels has made it possible to limit the consumption of paper, ink cartridges and toner. (tonnes) Despite the increase in mandatory documentation sent to customers because of the merger, overall paper consumption, Total paper consumption 881 920 -4.2% 881 tonnes, fell by over 4% compared with 2015 thanks also to the use of digital signatures and the automatic front and Paper A4 format 414 447 -7.4% back printing function (-7% the A4 format paper normally used for printing). Statements 185 182 +1.6% The use of toner and ink cartridges fell by 14% and 10% respectively compared with 2015. Paper communications 137 128 +7.0% to customers Other consumption 145 163 -11%
MATERIAL CONSUMPTION 2016 2015 Variation FOR PRINTING (tonnes)
Original toner 17.5 20.3 -13.8% of which regenerated toner 1.8 3.9 -53.8% Original ink cartridges 755 841 -10.2% of which regenerated 31 47 -34.0% ink cartridges
2 016 Sustainability Report 54 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary Natural Capital
Commercial policy “Green” products 2016 2015 Variation euro/000 As well as carrying out energy retrofit measures at its sites which take account of work quality and environmental sustainability, Photovoltaic 3,996 21,857 -81.7% the BPM Group promotes products dedicated to the energy efficiency of real estate, the installation of photovoltaic panels and other ecological and sustainable solutions. Ecology Package 3,789 6,254 -39.4% Condominium Products 21,234 29,266 -27.4% In 2016 around euro 30 million was spent, well down compared with 2015 mainly due to the absence of tax incentives. Total 29,019 57,377 -49.4%
Sustainable mobility
The agreements with public and private transport companies and car sharing companies were renewed to incentivise the sustainable use of transport by employees of the Group, whose fleet also includes hybrid and electric cars.
2016 also saw the renewal of its partnership with the Municipality of Milan for the “Smart Working” initiative which enabled 150 employees to work from sites close to their homes, with associated personal and environmental benefits.
CLIMATE CHANGE
Following the approval of the Chamber of Deputies and the Senate, in October 2016 the Paris Agreement on climate change was ratified, coming into force at international level in November. As part of the agreement, signatory countries pledge to keep global warming within 2°C of the pre-industrial level (and possibly within 1.5°C).
Richer countries have pledged to finance poorer countries to meet this goal. More specifically, Italy has committed to contributing euro 50 million a year to the Green Climate Fund.
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AWARDS RECEIVED IN 2016
LEGALCOMMUNITY AWARDS - Banking Deal of the year Finanziamento Autogrill FINANCE SECTOR Banca Popolare di Milano was one of the BANCA banks acknowledged at the Legalcommunity POPOLARE 25 FEBRUARY 2016 Awards for the loan operation involving GIOVEDÌ 25 FEBBRAIO 2016 DI MILANO Autogrill, one of the most important of the year. Now in their 14th year, the Legalcommunity ABILAB INNOVATING THROUGH THE Awards aim to highlight the excellence of the CHANNELS “THE SMART BANK” legal market in the finance sector. At the Italian Banking Association “Innovating through the channels” forum held in Milan on 22 March 2016, Banca Popolare di Milano received a special mention in the “Smart bank” category - “Innovating through the channels” 22 MARCH 2016 award for “THE NEW FRONTIER OF MOBILE BANKING” project due to its MILANO FINANZA GLOBAL AWARDS “ability to embrace the evolution of the Banca Popolare di Milano was the winner of technological frontier of Mobile Banking 2016 two important prizes at the 2016 MF Global services, making new functionalities Premio Guido Carli Awards: available to its customers (…)”. Conferito a - the Guido Carli/Lombard Award, Banco PoPolare presented to Managing Director of BPM Pier Francesco saviotti Per Giuseppe Castagna and Managing Director Banchiere dell'anno 18 MAY 2016 of Banco Popolare Pier Francesco Saviotti, named ‘Bankers of the year’ for having UOL Y SC A DI D B PA IE LO launched the first major merger following the IF A T L R T 2016 E O POSITIVE BUSINESS AWARD in collaborazione con C reform of the cooperative banks. Premio Guido Carli Milan was the venue for the prize-giving ceremony of Conferito a - the MF Innovation Award in the category Conferito a the Positive Business Awards, launched by Scuola Bancayous PoHPopolare Financial Digital Services, thanks to the new BadiNC Milanoo popoLare di Palo Alto for companies, organisations, entrepreneurs Webank App. GiusePPe castaGna P CategoriaPer 6 O and managers whose success is built on the happiness serviziBanchiere DiGitaLi Ndell'annooN fiNaNziari 1 S 0 of people. As well as capturing the Overall POSITIVE IT 2 I Y BUSINESS AWARDS Prize for 2016, Banca VE N COMPA Popolare di Milano received 5 acknowledgments 26 MAY 2016 (POSITIVE BUSINESS HISTORY, POSITIVE BUSINESS in collaborazione con SUSTAINABILITY, POSITIVE BUSINESS IMAGE, Conferito a POSITIVE BUSINESS VISION, POSITIVE BUSINESS WeBaNk moBiLe BaNkiNG app PEOPLE) for “having always contributed to the BaNCa popoLare Di miLaNo
Categoria development of its areas through numerous initiatives, not servizi DiGitaLi fiNaNziari just economic but also social, cultural and sporting (…)”.
2 016 Sustainability Report 56 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary
DIVERSITY & INCLUSION AWARD Banca Popolare di Milano received the Diversity & Inclusion Award as a business which, in 2015, made diversity an opportunity, employing candidates that it met via Diversitalavoro, the equal opportunities 9 JUNE 2016 career forum which since 2007, on the initiative ARETÈ “FINANCIAL of UNAR (National Anti-Racial Discrimination COMMUNICATIONS CATEGORY” Office), the Sodalitas Foundation, People and The 13th edition of the “Aretè Award for responsible the Adecco Foundation for Equal Opportunities, communications - also responsible extra media has facilitated contact between companies and communications”, dedicated to organisations that have differently-abled people, people belonging distinguished themselves for the effectiveness of their to protected categories, foreign and responsible communications, was held during the CSR 4 OCTOBER 2016 transgender people. Salon at Bocconi University. On this occasion, Banca Popolare di Milano won the prize in the “Financial Communications” category for developing a communications plan aimed at disseminating a video which, AIFIN BANCA E TERRITORIO in just a few minutes, explains its business approach using “CSR COMMUNICATION INITIATIVES” a simple and innovative language completely different Banca Popolare di Milano received a special from financial language. mention for its “Sustainability Report 2015 - A change of tack in Corporate Communications” 6 OCTOBER 2016 project in the “CSR and Social Report COMMUNICATIONS TEAM OF THE YEAR Communication Initiatives” category of the “Banca IN THE BANKING SECTOR e Territorio” awards promoted by the Italian Palazzo Mezzanotte in Milan was the setting for the Financial Innovation Association (AIFIN). sixth edition of the Le Fonti Awards, endorsed by the European Commission and with the media partnership of Corriere Economia. The main theme of the event was innovation and digital leadership. Banca Popolare di Milano was the winner of the Communications 15 NOVEMBER 2016 Team of the Year Award in the Banking sector “for having implemented an innovative and multichannel FINANCECOMMUNITY AWARDS - communications strategy in a merger context in which it DEAL OF THE YEAR was necessary to interact with the media and the customer The second edition of the base every day. For the attention focused on financial Financecommunity Awards, an event education without forgetting the promotion of art, sport developed with the aim of acknowledging and the community”. leading players in the finance sector, was 24 NOVEMBER 2016 held at the National Science and Technology Museum of Milan. During the ceremony, Banca Popolare di Milano received the Deal of the Year prize for the merger between Banca Popolare di Milano and Banco Popolare.
2 016 Sustainability Report 57 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary
METHODOLOGY NOTE
The Bipiemme Group (hereinafter also “Group” or “BPM Global Reporting Initiative (GRI) in 2013 and contains some The Italian Banking Association Guidelines were used when Group”) 2016 Sustainability Report (hereinafter also indicators of the “G4 Sector Disclosures” relative to “Financial drafting the statement on the calculation of the economic “Report” or “2016 Report”) is a key instrument for reporting Services”; in terms of content, it is organised according to the value generated and distributed. and informing its stakeholders of the results achieved in the principles of the International Integrated Reporting Council. management of its activities in the context of sustainability and The scope of reporting of social and environmental data creating long-term value, and its relative goals for the future. The process of defining the content of the Report was includes companies that are relevant in terms of sustainability based on the principles of the “G4 Sustainability Reporting and corresponds with that defined in the Bipiemme Group As illustrated in more detail in the Bipiemme Group’s Report Guidelines” (materiality, stakeholder inclusiveness, Report and Consolidated Financial Statements as at 31 and Consolidated Financial Statements as at 31 December sustainability context, completeness, comparability, accuracy, December 2016. All exceptions to this scope of reporting 2016, the merger between Banca Popolare di Milano S.c.a timeliness, clarity, reliability and balance). are suitably indicated in the document. r.l. and Banco Popolare Società Cooperativa that led to the founding of Banco BPM S.p.A. came into force on The process of collecting and reprocessing the themes, data During the year in question no significant changes took place 1 January 2017. and information outlined in the Report was concluded by such as to influence the comparability of the data presented in the Corporate Social Responsibility team together with the the previous Report. The data contained in this Report refer to The first section of the 2016 Sustainability Report, “Banco reference persons of the Group departments and companies measurable quantities. The use of estimates, where necessary, BPM Group - How we create sustainable value over time”, responsible for the various areas and involved in the process was suitably indicated in the document. is designed to present the new Banco BPM Group while the of drafting the document. second section, “BPM Group: Identity and value creation”, The 2016 Sustainability Report was subject to the limited and the remaining paragraphs are on the Bipiemme Group For the 2016 Report, the identification of relevant issues for assurance engagement of the independent auditors (KPMG and its performances as at 31 December 2016. The Report, the Group and its stakeholders took place involving external S.p.A.) whose report, which describes the activities it carried drafted and published on an annual basis (the previous stakeholders and the Group’s corporate structures (for more out and its conclusions, is found on pages 68, 69 and 70. Report was published in July 2016 on www.gruppobpm. information see pages 24-25). it.), refers to the period between 1 January 2016 and 31 December 2016 and, where possible, the trends of the last To help readers identify the information and data foreseen For information on the Report please two years are illustrated so that performances in the social by the “G4 Sustainability Reporting Guidelines” and reported write to [email protected]. and environmental sphere can be compared over time. Some in the Sustainability Report, the “GRI Content Index” has been significant results, events and activities relating to the start of provided on pages 64, 65, 66 and 67. 2017 may also be reported. The economic and financial data provided in the Report The Report was drafted in accordance with the core option derive from the Bipiemme Group Report and Consolidated of the “G4 Sustainability Reporting Guidelines” issued by the Financial Statements as at 31 December 2016.
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RECONCILIATIONS
MATERIAL DEFINITION AND WHERE IT IS GRI G4 REFERENCE GRI G4 INTERNAL EXTERNAL ISSUE RELEVANCE FOR BPM DISCUSSED ASPECT INDICATORS IMPACTS IMPACTS
Risk In this context it regards the ability of Identity - / G4-14 BPM Group1 All stakeholders management a company to use risk management Risk management to guarantee the sustainability of the business over time. Correct risk management is fundamental for every company, particularly for banking businesses whose activities are based on trust.
Governance Regards the series of rules that Identity - Governance / G4-34 BPM Group All stakeholders and corporate regulate the management of the Bank and corporate integrity integrity so it can meet the company objectives. Effective organisation and company governance structures are an essential condition for the pursuit of the company objectives and for maintaining the right balance between stakeholders.
IT security Refers to the reliability of IT systems Intellectual Capital - Customer Privacy G4-PR8 BPM Group Customers and protection and the operations carried out using Innovation of privacy digital media in the context of business continuity and protecting people’s personal data during their relations with the Bank. In the banking business it is common to come into contact with the personal data of the people that interact with the Bank. These data must be managed with respect for the law and people’s privacy.
1 Includes employees as internal stakeholders in the Group.
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MATERIAL DEFINITION AND WHERE IT IS GRI G4 REFERENCE GRI G4 INTERNAL EXTERNAL ISSUE RELEVANCE FOR BPM DISCUSSED ASPECT INDICATORS IMPACTS IMPACTS
Development, Regards the growth, involvement and Human Capital - Employment G4-LA1 BPM Group Customers employee development of employees through Personnel G4-LA2 involvement training activities, professional Equal remuneration for G4-LA6 and company opportunities, measures and initiatives women and men welfare designed to increase the organisational, G4-LA9 BPM Group individual and private wellbeing of Occupational Health workers. and Safety
The sustainable management of human Training and Education resources mainly takes the form of focusing on the needs of people throughout their career with the company. Reconciling the company’s goals and values with the professional aspirations and expectations of workers is a success factor and a way of limiting risk, particularly for a service company where human capital is a key asset.
Promoting Refers to the creation of a working Human Capital - Diversity and Equal G4-LA12 BPM Group diversity environment that is able to develop Personnel Opportunities G4-LA13 and equal and cater for people with different G4-HR3 opportunities characteristics and talents and to Non-discrimination offer them equal growth opportunities within the organisation. Promoting people and inclusion contribute to creating a relationship based on trust between colleagues and trust between employees and the organisation. Equal opportunities policies contribute to spreading a culture based on merit and results.
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MATERIAL DEFINITION AND WHERE IT IS GRI G4 REFERENCE GRI G4 INTERNAL EXTERNAL ISSUE RELEVANCE FOR BPM DISCUSSED ASPECT INDICATORS IMPACTS IMPACTS
Support for Refers to commercial policies, actions Relationship Capital - Product Portfolio G4-FS6 BPM Group Customers enterprise and initiatives designed to promote Companies and people G4-FS7 and people savings and support the real economy. G4-FS8 Supporting the real economy is one of the most delicate issues of recent years, which have been characterised by an economic and liquidity crisis that has called the economic and social development model into question.
Sustainable Refers to the granting of credit to people Relationship Capital - / 2 BPM Group Customers credit and companies in a sustainable way, i.e. Companies and people management in which there are mutual advantages. The granting of credit to deserving Financial capital parties whose assets and finances are solid and who have the ability to produce revenues in the future, taking account of the consistency between the credit line supplied and the actual needs of the customer, is a key requisite for supporting the real economy in a sustainable way on one hand and, on the other, guaranteeing the Bank profitability and capital adequacy.
Quality and A service that meets the needs of the Relationship Capital - Product and service labelling G4-PR5 BPM Group Customers transparency customer in a transparent way, i.e. by Companies and people of the service providing them information that makes them aware of their choices. Quality and transparency are fundamental requisites of a mutually satisfying and long-term relationship between the parties.
2 With regard to this issue (not directly connected with an aspect foreseen by the GRI G4 guidelines), BPM reports its management approach and the relative indicators in the document.
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MATERIAL DEFINITION AND WHERE IT IS GRI G4 REFERENCE GRI G4 INTERNAL EXTERNAL ISSUE RELEVANCE FOR BPM DISCUSSED ASPECT INDICATORS IMPACTS IMPACTS
Customer In this area innovation is regarded as Intellectual Capital - / 3 BPM Group Customers service a lever of sustainability because of its Innovation innovation ability to adapt to new requirements and social and cultural changes, and to exploit new technologies to make services more efficient and effective. It is a value proposition issue for the banking company that is also measured by its ability to continuously add value to traditional services.
Equity strength Refers to the Group’s equity strength Identity - Group Profile, Economic Performance G4-EC1 BPM Group Shareholders and profitability and profitability indicators. A suitable Brand and key figures and other level of capitalisation and profitability investors is essential for successfully carrying out Financial capital banking activities and remunerating the main stakeholders in the mid- to long-term.
Reduction The reduction in the consumption of Natural capital - Energy G4-EN2 BPM Group Community of environmental resources used in company activities. Environment G4-EN3 impact The activities carried out by the Bank Emissions G4-EN19 Environment can have a direct and indirect impact on natural resources and climate change can constitute a risk element both for the Bank and for the sustainability of the system as a whole.
3 With regard to this issue (not directly connected with an aspect foreseen by the GRI G4 guidelines), BPM reports its management approach and the relative indicators in the document..
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MATERIAL DEFINITION AND WHERE IT IS GRI G4 REFERENCE GRI G4 INTERNAL EXTERNAL ISSUE RELEVANCE FOR BPM DISCUSSED ASPECT INDICATORS IMPACTS IMPACTS
Support for the Regards the support for non-profit Relationship capital - Indirect economic impacts G4-EC7 BPM Group Community Third Sector organisations through sponsorships with Community social ends, charitable donations and Economic performance the concession of company assets (e.g. spaces at sites). Non-profit organisations are a key component of society that carry out activities of immense social relevance. At the same time they represent a sector that is undergoing rapid growth in Italy and an opportunity for the Bank.
Fight against Refers to the combating of corruption Identity - Governance Anti-corruption G4-SO4 BPM Group All stakeholders corruption in all its forms and associated illegal and corporate integrity activities. As well as being one of the main predicate offences to money laundering, corruption is a major obstacle to the sustainable development of businesses and countries as it slows down economic growth, blocks deserving entities, distorts competition between companies and can generate legal and reputational risks for companies.
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GRI CONTENT INDEX
KPMG S.p.A. performed a limited assurance engagement on the BPM Group 2016 Sustainability Report expressing its opinions on the Sustainability Report as a whole. As regards the scope of its activities, please refer to the Report of the Independent Auditors on the Sustainability Report on pages 68, 69 and 70.
GRI CONTENT INDEX
Standard Description Page number Omissions External Assurance Disclosure of indicator (or direct reference) page 68 GENERAL STANDARD DISCLOSURES STRATEGY AND ANALYSIS G4-1 Statement from the Chairman and Managing Director “Towards the future, together” ✔ ORGANISATIONAL PROFILE G4-3 Name of the organisation 16, 58 ✔ G4-4 Primary brands, products and/or services 16 ✔ G4-5 HQ location 16; STAT: 6 ✔ G4-6 Countries of operation 17 ✔ G4-7 Nature of ownership and legal form 16-18; STAT: 6-9 ✔ G4-8 Markets served 17 ✔ G4-9 Scale of reporting organisation 17 ✔ 42-48; Number of employees by type of employment contract: permanent 7,615 (Men: 3,956, Women: 3,659), fixed-term 9 (Men: 4, Women: 5) and apprenticeship 49 (Men: G4-10 Number of employees by type of employment contract, region and gender 17, Women: 32); Number of employees on permanent employment contracts by role: ✔ Executives 145 (Men: 127, Women: 18), Middle Managers 2,814 (Men: 1,825, Women: 989) and Other personnel 4,538 (Men: 1,950, Women: 2,588) All employees of the Group Banks are covered by the Credit Sector National Collective G4-11 Percentage of employees covered by collective labour agreements ✔ Labour Agreement signed with the Trade Union Organisations Description of the supply chain (activities, products, number of suppliers, suppliers G4-12 35 ✔ divided by geographic area, value of orders) Significant changes during the reporting period regarding the Group’s size, G4-13 58 ✔ structure, ownership or supply chain G4-14 How the precautionary approach or principle is addressed by the organisation 19-21 ✔ G4-15 Adoption of externally developed economic, social and environmental charters and principles 20 ✔ G4-16 Membership of associations and national or international advocacy organisations 29, 48, 51 ✔ IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES List of entities included in the consolidated financial statements and entities not included G4-17 16, 58; BC16: 37-38 ✔ in the consolidated financial statements in the consolidated Sustainability Report G4-18 Process for defining report content “Reading guide”, 24, 58 ✔
LEGEND: CE: Code of Ethics of BPM Group; BC 16: 2016 Report and Financial Statements of BPM Group and Banca Popolare di Milano; STAT: Articles of Association updated with the changes introduced by the Shareholders’ Meeting of 6 August 2015.
2 016 Sustainability Report 64 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary
Standard Description Page number Omissions External Assurance Disclosure of indicator (or direct reference) page 68 G4-19 Identified material aspects 24-25, 59-63 ✔ G4-20 For each material aspect report the aspect boundary within the organisation 59-63 ✔ G4-21 For each material aspect report the aspect boundary outside the organisation 59-63 ✔ Report the effect of any restatements of information provided in previous reports G4-22 58 ✔ and the reasons for such restatements G4-23 Significant changes from previous report 58 ✔ STAKEHOLDER ENGAGEMENT G4-24 List of stakeholders engaged 23 ✔ G4-25 Basis for identification and selection of stakeholders with whom to engage 23 ✔ G4-26 Approach to stakeholder engagement 23-25, 30, 36, 46 ✔ Key topics and concerns that have been raised through stakeholder engagement G4-27 23-25, 30, 36, 46 ✔ and how the organisation has responded REPORT PROFILE G4-28 Reporting period 58 ✔ G4-29 Date of most recent report (if any) 58 ✔ G4-30 Reporting cycle 58 ✔ G4-31 Contact point for questions regarding the report or its contents “Reading guide”, 58 ✔ G4-32 GRI content index and “in accordance” option chosen 58 ✔ G4-33 External assurance 68-70 ✔ GOVERNANCE Governance structure of the organisation, including committees under the highest G4-34 governance body. Identify any committees responsible for decision-making on economic, 18 ✔ environmental and social impacts ETHICS AND INTEGRITY Describe the organisation’s values, principles, standards and norms of behaviour G4-56 19 ✔ such as codes of conduct and codes of ethics SPECIFIC STANDARD DISCLOSURES CATEGORY: ECONOMIC PERFORMANCE ASPECT: ECONOMIC PERFORMANCE G4-DMA Report how the organisation manages the material Aspect or its impacts 22, 62 ✔ G4-EC1 Report the direct economic value generated and distributed 22 ✔ ASPECT: INDIRECT ECONOMIC IMPACT G4-DMA Report how the organisation manages the material Aspect or its impacts 31-34, 63 ✔
2 016 Sustainability Report 65 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary
Standard Description Page number Omissions External Assurance Disclosure of indicator (or direct reference) page 68 G4-EC7 Development and impact of infrastructure investments and services supported 31-34 ✔ ASPECT: PROCUREMENT PRACTICES G4-DMA Report how the organisation manages the material Aspect or its impacts 35 ✔ G4-EC9 Proportion of spending on local suppliers at significant locations of operation 35 ✔ CATEGORY: ENVIRONMENTAL PERFORMANCE ASPECT: MATERIALS G4-DMA Report how the organisation manages the material Aspect or its impacts 54, 62 ✔ G4-EN1 Materials used by weight or volume 54 ✔ G4-EN2 Percentage of materials used that are recycled input materials 54 ✔ ASPECT: ENERGY G4-DMA Report how the organisation manages the material Aspect or its impacts 54, 62 ✔ G4-EN3 Energy consumption within the organisation 54 ✔ ASPECT: EMISSIONS G4-DMA Report how the organisation manages the material Aspect or its impacts 54, 62 ✔ G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 54 ✔ The emissions deriving from indirect energy consumption (Scope 2) come to zero as the G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) ✔ energy acquired from third parties derives from renewable sources G4-EN19 Reduction of greenhouse gas (GHG) emissions 54 ✔ CATEGORY: SOCIAL PERFORMANCE SUB-CATEGORY: LABOUR PRACTICES AND DECENT WORK ASPECT: EMPLOYMENT G4-DMA Report how the organisation manages the material Aspect or its impacts 43, 60 ✔ 43; Total hires by gender: 10 men, 3 women; by age group: <30 (6), 30
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Standard Description Page number Omissions External Assurance Disclosure of indicator (or direct reference) page 68 ASPECT: DIVERSITY AND EQUAL OPPORTUNITY G4-DMA Report how the organisation manages the material Aspect or its impacts 48, 60 ✔ Composition of governance bodies and breakdown of employees per employee G4-LA12 category according to gender, age group, protected category membership, 18, 48 ✔ and other indicators of diversity ASPECT: EQUAL REMUNERATION FOR WOMEN AND MEN G4-DMA G4-DMA Report how the organisation manages the material Aspect or its impacts 47, 60 ✔ Ratio of basic salary and remuneration of women to men by employee category, G4-LA13 47 ✔ by significant location of operation SUB-CATEGORY: HUMAN RIGHTS ASPECT: NON-DISCRIMINATION G4-DMA Report how the organisation manages the material Aspect or its impacts 48, 60 ✔ G4-HR3 Total number of incidents of discrimination and corrective actions taken 48 ✔ SUB-CATEGORY: SOCIETY ASPECT: ANTI-CORRUPTION G4-DMA Report how the organisation manages the material Aspect or its impacts 63 ✔ G4-SO4 Communication and training on anti-corruption policies and procedures 20 ✔ SUB-CATEGORY: PRODUCT RESPONSIBILITY ASPECT: PRODUCT AND SERVICE LABELLING G4-DMA Report how the organisation manages the material Aspect or its impacts 30, 61 ✔ G4-PR5 Results of surveys measuring customer satisfaction 30 ✔ ASPECT: CUSTOMER PRIVACY G4-DMA Report how the organisation manages the material Aspect or its impacts 51, 59 ✔ Total number of substantiated complaints regarding breaches of customer G4-PR8 51 ✔ privacy and losses of customer data “G4 SECTOR DISCLOSURES” INDICATORS ON “FINANCIAL SERVICES” ASPECT: PRODUCT PORTFOLIO G4-DMA Report how the organisation manages the material Aspect or its impacts 61 ✔ G4-FS6 Customer portfolio 28 ✔ G4-FS7 Products and services designed to deliver a specific social benefit 29 ✔ G4-FS8 Products and services designed to deliver a specific environmental benefit 55 ✔
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2 016 Sustainability Report 70 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary
GLOSSARY 2016
AIRB (Advanced Internal Rating Based) risk assessment Customer oriented: focused on satisfying the needs Global Reporting Initiative (GRI): international models that banks use internally on their debtors. of the customer. guidelines for the drafting of a Sustainability Report, which provides economic, environmental and social information on Asset management: management of the company’s Customer satisfaction: the main goal of a marketing- the company that produces it using performance indicators. material and intangible resources. oriented company, which channels its efforts towards Currently, the GRI G4 guidelines are used. developing a quality relationship with its customer base. Batch: digital processing and codification of data. Governance: series of instruments and rules that regulate Environmental, Social and Governance (ESG) criteria: company life regarding in particular the transparency of Best practice: series of activities that facilitate the criteria relating to social, environmental and governance documents and company records and the comprehensiveness achievement of the best possible results. issues. of the information provided to the market.
Big Data: large data sets that require specific technologies Equity: a company’s own funds, as opposed to those of third ICT: information and communication technology. and analytical methods for the extraction of value. parties (payables). International Integrated Reporting Council (IIRC): Brand: a name, sign, symbol or design that identifies a European Central Bank: the ECB, with head office in international organisation whose mission is the development of business and distinguishes the products and services it markets, Frankfurt, Germany, implements monetary policies for countries an integrated reporting standard. setting them apart from the competition. forming part of the single European currency and has the task of guaranteeing the stability of prices in the “Eurozone”. The Intranet: internal communication tool based on the use of Cardless cash withdrawal: service that enables customers institute also carries out banking supervision processes for information networks. to withdraw cash at cashpoints using a mobile device, major bank groups in the Eurozone. without any need for a cash card. Microcredit: small loans granted to parties that typically do Follower: person that follows a blog or personal social not fulfil the necessary requisites to access ordinary loans.
CO2: carbon dioxide. network page. Mission: the underlying macro objectives that embody the raison d’être of every company. Coaching: training strategy aimed at fostering a FTSE Italia All Share Banks: index that brings together the transformation that can improve and enhance individual bank securities listed on Borsa Italiana. Mobile Device: electronic devices that can be used on the managerial potential. move (e.g. mobile phones, smartphones, tablets). Funding mix: diversified fund. Common Equity Tier 1 (CET 1): the ratio between tier Multichannel: possibility of using various channels to interact 1 equity (mainly represented by paid-up ordinary capital) Gigajoule (GJ): equivalent of a billion joules, unit of with customers, e.g. branches, call centres, home banking etc. and risk weighted assets. measurement of energy, work and heat. NEET (Not in Education, Employment or Training): Corporate: customer segment comprising of large Global Inclusion: policy for the inclusion and promotion of population between 15 and 29 years of age that are neither businesses. the professional and personal diversities of human resources. employed, receiving training or in education.
2 016 Sustainability Report 71 Banco BPM Group / BPM Group / Acknowledgments / Methodology note, Reconciliations and GRI Content Index / Independent Auditors’ letter / Glossary
Networking: sharing of work projects. Risk Management: the management of risk. Sustainability Investing: sustainable and responsible investments (SRI) over time. Non-performing loans (NPL): bank loans exposed to ROE (Return On Equity): indicator measuring the potential impairment and therefore associated with a high profitability of a bank that is calculated by dividing net profit Talent management: development and integration of level of risk. by net equity. employee skills.
One to one: direct commercial or financial relationship Shadow banking: banking system that includes markets, Team building: in human resources, a series of activities between two parties. institutions and intermediaries that provide banking services (recreational, experiential or wellness-related) geared towards without being subject to regulation. the training of a group of people and the development of Policy: series of core principles and guidelines formulated team spirit. and implemented by an organisation to shape its actions. Social networks: virtual meeting places that use web technology (e.g. Facebook, Twitter, LinkedIn, Pinterest, Texas Ratio: risk indicator that measures the ratio between Private banking: advanced consultancy model dedicated Instagram…). a company’s gross non-performing loans and its tangible to the personalised management of substantial assets. equity (equity net of intangible equity) plus provisions. SREP (Supervisory Review and Evaluation Process): Radon: radioactive gas. ECB review and evaluation process of relevant risks that Wearable devices: digital technology devices that can be banks are exposed to during their activities and the measures worn (e.g. smartwatches). Renewable sources: natural resources that are regenerated taken to monitor them. at least as quickly as they are consumed. Welfare: series of initiatives that an organisation can Stakeholders: parties that have a particular interest in the introduce to improve the quality of life of its employees inside Restyling: revisiting the style of the branches without existence of a business. and outside the company. completely altering their original look and feel. Storytelling: stories/activities/experiences described with Whistleblowing: the possibility of reporting actions or facts Retail: the supply of a service or the sale of a product the aim of promoting the company. that may constitute a violation of banking industry regulations to a large base of consumers/users. and that can damage customers, colleagues, shareholders, the Sustainability: ability to involve the main stakeholders and public and the company reputation. Return on Tangible Equity (Rote): indicator measuring the include their social initiatives in company policies in order to profitability of a bank that is calculated by dividing net profit preserve the business in the mid- to long-term. Work life balance: flexibility and the promotion of the by tangible equity (i.e. equity net of intangible assets). correct balance between the work and private life of employees.
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