Financial Statements at 31 December 2017
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FINANCIAL STATEMENTS 2017 FINANCIAL STATEMENTS AT 31 DECEMBER 2017 Financial Statements at 31 December 2017 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Table of contents - Report on Operations 13 Reference Context 15 Significant Aspects of Operations 17 Credit Aggregates 21 Deposits 29 Main financial aggregates 31 Equity Investments 35 Main economic aggregates and management indicators 36 Risk governance 39 The equity position 40 Human Resources 41 Organisational and Technological Trends 43 Internal Audit 44 Compliance 45 Environmental Issues 46 Relations with Group companies 47 Significant events during financial year 2017, significant subsequent events 48 and outlook on operations Proposals to the Shareholders’ Meeting 49 - Financial Statements 51 - Notes to the Financial Statements 63 Part A - Accounting Policies 65 Part B - Notes to the Balance Sheet 110 Part C - Notes to the Income Statement 179 Part D - Comprehensive Income 204 Part E - Information on Risks and Related Hedging Policies 205 Part F - Information on Equity 303 Part G - Business Combinations regarding companies or business units 317 Part H - Transactions with related parties 318 Part I - Share-based Payments 324 Part L - Segment Reporting 326 Attachments to the Notes to the Financial Statements 327 - Certification Report 341 - Report of the Board of Statutory Auditors 345 - Shareholders’ Meeting Resolutions 359 5 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Financial Statements at 31 December 2017 Company Profile Name MPS CAPITAL SERVICES BANCA PER LE IMPRESE S.p.A. “Monte dei Paschi di Siena” Banking Group General Information MPS Capital Services Banca per le Imprese SpA (MPSCS) is the Corporate & Investment Bank of the Monte dei Paschi di Siena Banking Group (BMPS Group), specialised in financial support and advice to the Corporate, Public Bodies and Institutional segment. It is registered as a Joint Stock Company in the Florence Companies Register from 4 September 2007, with No. 00816350482, Registered in the Bank of Italy List of Banks with No. 4770, a subscriber to the Interbank Deposit Protection Fund and to the National Guarantee Fund. It is a signatory to the Banking and Financial Sector Code of Conduct. It also participates in the Banking and Financial Arbitrator (ABF) through the Bank of Italy, and the Financial Dispute Arbitrator (ACF) through CONSOB and the Bank Reconciliation Body. It is subject to the direction and coordination of Banca Monte dei Paschi di Siena SpA (BMPS). In particular the Bank is obliged to observe the rules that the Parent Company issues for the execution of the instructions provided by the Bank of Italy in the interest of the group’s stability. The duration of the company is until 31 December 2050. Year of constitution 1954 as Mediocredito Regionale della Toscana Share Capital € 1,669,516,282.10 fully paid-up. Registered Offices Florence - Via Pancaldo, 4 - 50127 General Management Florence - Via Panciatichi, 48 - 50127 Telephone +39 055 2498.1 - Fax +39 055 240826 Website www.mpscapitalservices.it Global Markets Department Siena - Viale G. Mazzini, 23 - 53100 Telephone +39 0577 294111 - Fax +39 0577 209100 Investment Banking Department Rome - Via Salaria, 231 (villino 2) - 00199 Telephone +39 06 42048325 - Fax +39 06 42016914 Sales and Financial Solutions Milan - Via Ippolito Rosellini, 16 - 20124 Department Telephone +39 02 697 05571 - Fax +39 02 882 33205 Corporate Finance Department Florence - Via Panciatichi, 48 - 50127 Telephone +39 055 2498570 - Fax +39 055 2498737 Market Supervisory Structures Milan - Via Ippolito Rosellini, 16 - 20124 Telephone +39 02 888 91941/30 Fax +39 02 882 33206 (electronic channels, e-trade) Telephone +39 02 888 91945/43/31/28/24/21 Fax +39 02 882 33205 (Financial Institutions) Telephone +39 02 888 91934 - Fax +39 02 882 33205 (Corporate) 6 Financial Statements at 31 December 2017 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Siena - Viale G. Mazzini, 23-53100 Telephone +39 0577 537326 - Fax +39 0577 209505 (electronic channels, execution) Telephone +39 0577 537150 - Fax +39 0577 209505 (Corporate) Telephone +39 0577 537151/56/62 Fax +39 0577 209505 (Entities and Institutional Bodies) Rome - Via Salaria, 231 (Villino 2) - 00199 Telephone +39 06 424 50714 - Fax +39 06 420 48337 (Corporate) Padua - Piazzetta Turati, 17 (Torre Ovest) - 35131 Telephone +39 049 804 6192 - (Corporate) Representative Offices Turin - c/o Banca Monte dei Paschi di Siena Local Offices Via Mazzini, 14/16 - 10123 Telephone +39 011 815 5243 - Fax +39 055 240826 Milan - c/o Banca Monte dei Paschi di Siena Largo Cairoli, 1 - 20123 Telephone +39 02 882 33220 - Fax +39 02 882 33233 Padua - c/o Banca Monte dei Paschi di Siena Piazzetta Turati, 17 (West Tower) - 35131 Telephone +39 049 6991659 - Fax +39 049 6992195 Mantua - c/o Banca Monte dei Paschi di Siena Via Vittorio Emanuele II°, 30 - 46100 Telephone +39 049 699 2067 Bologna Viale della Repubblica, 23 - 40127 Telephone +39 071 291 2735 - Fax +39 055 240826 Perugia - c/o Banca Monte dei Paschi di Siena Via XX Settembre, 77 - 06124 Telephone +39 0577 209246 - Fax +39 055 240826 Ancona - c/o Banca Monte dei Paschi di Siena Via 1° Maggio, 70/d - 60131 Telephone +39 071 2912735 - Fax +39 055 240826 Rome Via Salaria (Villino 2) 231 - 00199 Telephone +39 06 673 45313 - Fax +39 06 673 45330 Naples - c/o Banca Monte dei Paschi di Siena Via Cervantes de Savaedra, 55/14 - 80133 Telephone +39 081 778 5243 - Fax +39 055 240826 7 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Financial Statements at 31 December 2017 Bari - c/o Banca Monte dei Paschi di Siena Piazza Aldo Moro, 21 - 70122 Telephone +39 080 522 6244 - Fax +39 055 240826 Florence Via Panciatichi 48 - 50127 Florence Telephone +39 055 2498.570/395 - Fax +39 055 249 8737 Siena Viale G. Mazzini, 23 - 53100 Telephone +39 0577 209246 - Fax +39 055 240826 Catania - c/o Banca Monte dei Paschi di Siena Piazza della Repubblica, 32/38 - 95131 Telephone +39 081 778 5243 - Fax +39 055 240826 Administrative offices Rome - Via Pedicino, 5 Telephone +39 06 42048320 - Fax +39 06 42016914 Padua - c/o Banca Monte dei Paschi di Siena Piazzetta Turati, 17 (West Tower) - 35131 8 Financial Statements at 31 December 2017 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Corporate Officers and Auditing Company BOARD OF DIRECTORS Chairperson Mario COMANA Deputy Chairperson Angelo BARBARULO Managing Director Giampiero BERGAMI Director Paola DEMARTINI Director Lucia SAVARESE Director Riccardo TISCINI Director Vittorio CALVANICO Director Ilaria Maria DALLA RIVA Director Renzo Filippo Riccardo QUAGLIANA BOARD OF STATUTORY AUDITORS Chairperson Graziano GALLO Regular Auditor Werther MONTANARI Regular Auditor Lara ZAMPIERO Alternate Auditor Marco TANINI Alternate Auditor Vittorio MARRONI MANAGEMENT General Manager Giorgio PERNICI AUDITING COMPANY ERNST & YOUNG S.P.A. Via Po, 32 00198 ROME VAT No. 00891231003 9 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Financial Statements at 31 December 2017 Ratings The following ratings have been assigned to the Bank by Moody’s Investors Service Ltd: LONG-TERM DEPOSITS RATING: B1 SHORT-TERM DEPOSITS RATING: Not Prime FINANCIAL STRENGTH RATING: caa1 with stable outlook. The international ratings agency Moody’s confirmed its measurement for the Italian sovereign entity for 2017, with a rating of Baa2. It also positively assessed the government’s actions with regards to the MPS Group, which, thanks to recapitalisation, achieved a significant improvement in its equity benchmarks. In this context, the rating assigned to the MPS Group’s financial solidity, and hence that of the Bank, rose to class caa1, which, benefiting from 3 notches associated with government support, saw the rating for long-term deposits rise by one notch, from B2 to B1. Nonetheless, Moody’s decided not to fully include the benefits deriving from the achievement of the Restructuring Plan in course within the MPS Group in its evaluation, given that it is expected that the return to adequate profits will be gradual and difficult. For this reason, the LONG TERM DEBT rating for the parent company MPS was kept at B3 with negative outlook. 10 Financial Statements at 31 December 2017 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Shareholding Structure anca Monte dei Paschi di Siena controls the company with an equity investment equal to 99.990% as of 31 BDecember 2017, as shown in the table below: Shareholder Number of shares Amount in units Percentage of one Euro Banca Monte dei Paschi di Siena SpA 802,495 1,669,342,681.78 99.990% I.N.A.I.L. 23 71,300.13 0.004% Other shareholders 33 102,300.19 0.006% Total 802,551 1,669,516,282.10 100.000% On 18 August 2017, the Extraordinary Shareholders’ Meeting resolved "to increase the share capital by payment for a maximum total amount of € 898,857,120.00, divided into ordinary nominative shares, without nominal value, at the price of € 1,680.00 per share (of which € 1,570.39 is capital and € 109.61 is the share premium), to be completed by 16 November 2017, divisible, through the issuing of up to 535,034 ordinary shares with regular dividends, to be offered as options to shareholders, on the basis of 2 shares for each 1 share held, pursuant to article 2441 of the Italian Civil Code". The capital increase was completed within the terms established with full subscription and payment of the entire amount offered by the parent company Banca Monte dei Paschi di Siena S.p.A., which exercised its right of first refusal relative to unoptioned shares, and was registered with the Florence Companies Register on 15 November 2017. 11 REPORT ON OPERATIONS Financial Statements at 31 December 2017 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Reference Context 017 saw highly significant political events and important geopolitical phenomena, including tensions between 2the USA and North Korea and the attempted secession by Catalonia.