2 2
TRENTINO 2 5 1 FRIULI VENEZIA VAL 36 46 17 GIULIA D’AOSTA 36 4 36 23 12 2316 1114 LOMBARDIALOMBARDY VENETO
3031 4 2119 7
PIEDMONTPIEMONTE 19 1413 8
EMILIA ROMAGNA 201 42 2 14 1
LIGURIA 3 1731 3119 1220 15 7 32 67 64 BRANCHES AND AGENTS TOSCANATUSCANY MARCHES 1 1 4
UMBRIA 87 6 392 BANCA CARIGE ABRUZZI
46 2 CASSA di RISPARMIO di SAVONA 3233 2128 1610 MOLISE 9 2225 1610 LATIUM 33 CASSA di RISPARMIO di CARRARA 114 18 PUGLIAAPULIA CAMPANIA 21 12 19 7 2623 23 BANCA del MONTE di LUCCA BASILICATA SARDINIA
4 BANCA CESARE PONTI 16 9
CALABRIA (*) 275 ASSURBANCA
CARIGE ASSICURAZIONI & 138 CARIGE VITA NUOVA 38 4540 139 (*) Insurance offices qualified for the sale of banking products. In the cities where insurance offices are also SICILY present, the symbol comprises Assurbanca and insurances. ANNUAL REPORT 2004
This document has been translated from that issued in Italy from the Italian into the English language solely for the convenience of international readers.
BANCA CARIGE GROUP
1 DIRECTORS, STATUTORY AUDITORS, MANAGEMENT AND AUDIT FIRM
BOARD OF BOARD OF GENERAL MANAGEMENT STAFF DIRECTORS STATUTORY MANAGEMENT STRUCTURES AUDITORS Commercial Planning & CHAIRMAN CHAIRMAN GENERAL Luigi Gardelli Research and MANAGER Management Giovanni Berneschi * Antonio Semeria District of Liguria Control Alfredo Sanguinetto Armando Remuzzi Ennio La Monica DEPUTY CHAIRMAN AUDITORS DEPUTY GENERAL District of North Italy Public Alessandro Scajola* Massimo Scotton MANAGER Riccio Da Passano Relations Andrea Traverso (Resources) E. P. Molinari DIRECTORS District of Centre-South Italy DEPUTY AUDITORS Carlo Arzani Roberta Mazzanti Internal Auditing Adalberto Alberici Armando Botto Piergiorgio Alberti * ** Adriano Lunardi DEPUTY GENERAL General & Legal Andrea Baldini MANAGER Support Risk Management Giorgio Binda (Administration) Giacomo Ottonello and Control Jean-Jacques Bonnaud Sara Calzavara Luca Bonsignore Giovanni Poggio Information- Mario Capelli Communication Remo Angelo Checconi * DEPUTY GENERAL Technology (I.C.T.) AUDIT Maurizio Fazzari MANAGER Giorgio Seronello FIRM Pietro Isnardi (Commercial) Ferdinando Menconi * Group Accounting Deloitte & Paolo Cesare Odone * Achille Tori Mario Venturino Touche SpA Vincenzo Roppo * Enrico Maria Scerni Accounting & Revenue Francesco Taranto Mario De Negri Oliviero Tarolli Human Resources Sergio Donegà
Loans Department Mario Cavanna
Wealth Management * Member of Executive Committe Giacomo Burro ** Senior Director Payment Systems Piero Giadresco
Credit collection and litigation Giuseppe Punta
The Board of Directors was appointed by the Ordinary Shareholders Meeting of 31st March 2003 for the business years 2003, 2004 and 2005. The Executive Committee was appointed by the Board of Directors on 18th October 2004, as from 1st November 2004 until the adoption of the balance sheet 2005; the previous Executive Committee, appointed on 14th April 2003, was composed by the Chairman Giovanni Berneschi, the Deputy Chairman Alessandro Scajola and the Directors Adalberto Alberici, Andrea Baldini, Mario Capelli, Paolo Cesare Odone and Enrico Maria Scerni. The Bank's structural and organizational order was approved by the Board of Directors on 2th August 2004, as from 1st October 2004. The Board of Statutory Auditors was appointed by the Ordinary Shareholders Meeting of 29th April 2002 for the business years 2002, 2003 and 2004 and was composed by Fulvio Rosina as Chairman, Antonio Semeria and Andrea Traverso. On 21th June 2004 Fulvio Rosina resigned from Chairman and member of Statutory Auditors and so, according to the law and the corporate charter, he was substituted by the deputy auditor Massimo Scotton, while Antonio Semeria was appointed President of the Board. The external auditors were appointed by the Ordinary Shareholders Meeting of 31st March 2003 for the business years 2003, 2004 and 2005.
2 POWERS OF THE ADMINISTRATIVE BODIES AND THEIR DELEGATED AUTHORITY
As required by directive no. 97001574 of CONSOB dated 20th February 1997 shown below are the powers and delegated authority belonging to the Directors and Management.
Chairman of the Board of Directors
According to article 24 of the By-laws the Chairman of the Board of Directors is the legal representative of the Bank vis-à-vis third parties and in court proceedings. He presides at shareholders’ meetings, convenes and presides at meetings of the Board of Directors of which he is an ex officio member. In a case of compelling urgency not admitting of delay, the Chairman himself may, on a proposal of the General Manager, take decisions falling within the competence of the Board of Directors or the Executive Committee where it is impossible for their members to meet. Decisions so made are to be brought to the notice of the relevant body at its next meeting. The Chairman has not specific proxy powers. He has proposal and decisional powers in the following areas: a) intra-Group relations; b) human resources, in the best interests of the Banca Carige Group. He may also appoint another person to take part on his behalf in subsidiaries’ shareholders meetings.
Executive Committee
Article 25 of the By-laws provides for the appointment of the Executive Committee by the members of the Board of Directors, which is to fix the number of members, their term of office and their functions. The Executive Committee is made up of the Chairman and Vice Chairman, who are ex officio members, and between three and five other members. The five members of the Executive Committee now in office were appointed by the Board of Directors on 14th April 2003 and will hold office until 31st October 2004. The Board of Directors in conformity with article 21 of the By-laws has delegated to the Executive Committee within defined limits its powers in regard to: a) the grant, renewal, increase, reduction, confirmation, cancellation and suspension of advances and facilities and general credit operations of every description in all branches, as well as the Group and the treasury and tax-collection payment functions, independently from the amounts and the categories of risk, remaining the exclusive competence of the Board to establish the credit politics addresses that the Bank must follow; b) general decision making powers in matters relating to expenditure (or loss, or, however, lacked proceeds for the Bank), or in matter of returns, without amount limit, but respecting the general budget deliberated by the Board, in all the matters having nature of running management and, therefore, not strategic, remaining the exclusive competence of the Board on the points specified by article 20 of the By-laws; c) power to determine a range of matters including the management of human resources (excluded the competence of the Board by article 20 of the By-laws, and initiatives in accordance with articles 2118 and 2119 Civil Code), management of the treasury and of the Bank’s investment portfolio, the use of derivatives and foreign exchange operations, the management of equity investments including decisions relating to the exercise (or not) of pre-emption or option rights on shares or shareholdings in subsidiaries; as well as in matters of day- to-day management not involving strategic issues, without a precise quantification, including the faculty to accept inheritance, legacies and donations; decisions relating to the entering into litigation affecting the Bank, without limits as to the costs estimated or undetermined, decisions regarding the opening, closing, transfer or reorganisation of the Bank’s branches consistent with the Bank’s branch policy document deliberated by the Board of Directors, remaining the exclusive competence of the Board on the points specified by article 20 of the By-laws.
3 Managing Director - General Manager
In accordance with article 27 of the By-laws, a Managing Director or General Manager is appointed by the Board of Directors. The former, if appointed, will also perform the duties of General Manager. Either will exercise those powers belonging to him within the scope of the By-laws and the powers granted to him by the Board of Directors. The General Manager is the head of the Bank’s staff and is responsible for the management and coordination of human resources. The General Manager in office was appointed on 14th April 2003 and has the following decision-making powers delegated to him: a) with respect to the grant, renewal, increase, reduction, confirmation, cancellation and suspension of advances and facilities and general credit operations of every description in all branches as well as treasury and tax- collection, and payment functions; he can also give guidelines on the above to the banking subsidiaries of the Banca Carige Group as foreseen by current legislation; b) generally with respect to matters relating to expenditure (or loss, or, however, lacked proceeds for the Bank), or in matter of returns; c) in regard to the management of the Bank’s financial policy; d) with the Chairman’s consent, he has the right to represent the Bank at general meetings of subsidiary and associated companies and to decide the Bank’s policy as he may think fit; e) matters of day-to-day management not involving strategic issues; f) faculty to represent the Company in judgement, remaining the competence of the Board of Directors' Chairman and, in case of absence, of the Vice Chairman; g) faculty to delegate and to sign for all the matters of day-to-day management.
4 BANCA CARIGE SPA BALANCE SHEET AT 31st DECEMBER 2004
CONTENTS
BANCA CARIGE Banca Carige ownership structure 9 OWNERSHIP STRUCTURE
FINANCIAL HIGHLIGHTS Financial highlights 11
NOTICE OF MEETING Notice of meeting 12
BOARD OF DIRECTORS’ The year in Italy and abroad 14 REPORT Strategy 16 Borrowing and lending activities 20 Services, marketing and customer protection 41 Public relations and the promotion of cultural, scientific and social activities 44 Distribution channels and resource management 44 The adoption of the International Accounting Standards (IAS) 47 Investments 49 Corporate Governance 50 Relations with Subsidiaries and related parties 51 Share ownership structure and relations with the Cassa di Risparmio di Genova e Imperia Foundation 53 Carige shares 53 Income statement and net income 55 Shareholders’ equity 60 Risk management 64 Significant events in the first quarter 2005 68 Prospects and conclusions 69
FINANCIAL STATEMENTS Financial statements 2004 71 Assets 72 Liabilities and Stockholders’ Equity 73 Income statement 74 Financial statements comparison with 2003 75 Explanatory notes 79 Introduction 79 Part A – Accounting principles 81 Part B – Balance sheet 86 Part C – Income statement 148 Part D – Other information 160
PROPOSED RESOLUTION Adoption of annual report and allocation of net profit 168
REPORT OF THE BOARD Report of the Board of Statutory Auditors 170 OF STATUTORY AUDITORS
REPORT OF THE Report of the Independent Auditors 177 INDEPENDENT AUDITORS
5 ATTACHMENTS Statement of changes in stockholders’ equity 180 Statement of cash flow 182 Properties (excluding leased fixed assets) 183 Leased fixed assets revalued in accordance with Law 413/91 191 Convertible bonds 192 List of non significant investments 194 Information on subsidiaries and other significant company interests 196 Information on open pension fund “Fondo Pensione Aperto Carige” 200 List of exchange rates used in converting foreign currencies 201
REMARKS In the charts of the Annual Report the following conventional signs are used
- when data are nought … when data are not significant
6 BANCA CARIGE GROUP BALANCE SHEET AT 31st DECEMBER 2004
CONTENTS
CONSOLIDATED Consolidated financial highlights 203 FINANCIAL HIGHLIGHTS
BASIS OF Basis of consolidation 204 CONSOLIDATION
CONSOLIDATED Introduction 206 BOARD OF DIRECTORS’ The year in Italy and abroad 206 REPORT Key events for the Banca Carige Group in 2004 207 Intermediation activities 210 Group personnel and operating structure 225 Adoption of the International Accounting Standards (IAS) 227 Income statement 229 Shareholders’ equity 231 The Group Companies and equity investments 235 Significant events after 31th December 2004 244 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance sheet 245 Assets 246 Liabilities and Stockholders’ Equity 247 Consolidated Income statement 248 Consolidated Explanatory notes 249 Introduction 249 Part A – Accounting principles 253 Part B – Consolidated Balance sheet 257 Part C – Consolidated Income statement 321 Part D – Other information 334
REPORT OF THE BOARD Report of the Board of Statutory Auditors 335 OF STATUTORY AUDITORS
REPORT OF THE INDEPENDENT AUDITORS Report of the Independent Auditors 337
ATTACHMENTS Statement of changes in consolidated stockholders’ equity 340
7 BALANCE SHEET 2004
BANCA CARIGE Cassa di Risparmio di Genova e Imperia BANCA CARIGE SpA - Cassa di Risparmio di Genova e Imperia Head Office in Genoa, Via Cassa di Risparmio, 15
8 Fondazione CR CNCE WestLB El Monte Others Genova e Imperia (2) (3)
43.37% (1) 11.02% (1) 7.47% (1) 2.31% (1) 35.83% (1) Banca Carige SpA - Cassa di RisparmioRisparmio di Genova e Imperia
47.50% Frankfurter Bankgesellschaft AG
51.09% (4) Banca Cesare Ponti S.p.A. Voting rights on 58.75 per cent of capital
90.00% 100.00% Cassa di Risparmio di Carrara S.p.A Galeazzo Srl
54.00% 0.01% Banca del Monte di Lucca S.p.A 99.99% Columbus Carige Immobiliare SpA 95.90% Cassa di Risparmio di Savona S.p.A 90.00% Immobiliare Ettore Vernazza SpA 20.00% 10 per cent as own shares 76.93% Centro Fiduciario C.F. S.p.A 100.00% 60.00% Immobiliare Carisa Srl Argo Finance One S.r.l.
60.00% Priamar Finance S.r.l.
98.24% 37.50% Carige Assicurazioni S.p.A 1.25 per cent as own shares 100.00% 22.50% Assi90 S.r.l. Carige Group Carige Carige Group Carige Carige Vita Nuova S.p.A 0.50% 99.50% Controls the insurance agencies : Carige Asset Management SGR S.p.A - AG S.r.l. (100%) - Savona 2000 S.r.l. (80%) Banca Banca Banca Banca
Banking activities Trustee activities Insurance activities Instrumental activities Financial activities Insurance agents
(1) Holding calculated on the basis exclusively of ordinary shares. (2) Direct holding of 4.989% and indirect holding of 2.480% via subsidiary WestLB (Italy) Finanziaria SpA. (3) Holding via Al’Andalus Foreign Investments s.l. (4) Following share capital increase deliberated by Board of Directors on 29th December 2004.
9 FINANCIAL HIGHLIGHTS
10 FINANCIAL HIGHLIGHTS
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
BALANCE SHEET (1) Total assets 15.928,9 15.658,3 14.653,1 14.393,8 8,7 1,8
Funding 12.887,5 12.587,8 11.667,5 11.433,8 10,5 2,0 – Customer Deposits (a) 11.258,8 10.734,5 10.025,4 9.236,2 12,3 8,5 – Amounts owed to customers 6.709,6 6.250,5 5.957,9 5.912,3 12,6 0,8 – Debts evidenced by certificates 4.549,2 4.484,0 4.067,5 3.323,9 11,8 22,4 – Deposits from Banks 1.126,3 1.350,9 1.139,6 1.797,3 - 1,2 - 36,6 – Funds managed on behalf of third parties 0,3 0,3 0,4 0,3 - 25,0 33,3 – Subordinated loans 502,1 502,1 502,1 400,0 - 25,5
Other Financial Intermediation Activities (OFIA) (b) 13.640,6 13.383,2 12.767,1 12.386,8 6,8 3,1 – Assets Under Management 6.977,6 6.740,3 6.585,5 6.075,4 6,0 8,4 – Assets in Custody 6.663,0 6.642,9 6.181,6 6.311,4 7,8 - 2,1 Total Financial Intermediation Activities (TFIA) (a+b) 24.899,4 24.117,7 22.792,5 21.623,0 9,2 5,4
Lending (2) (3) 13.462,5 13.121,6 12.316,5 12.080,9 9,3 2,0 – Loans to Customers (2) (3) 9.468,1 9.074,8 9.247,1 8.634,9 2,4 7,1 – Loans to Banks (2) 1.590,7 1.826,2 942,7 1.363,6 68,7 - 30,9 – Securities 2.403,7 2.220,6 2.126,7 2.082,4 13,0 2,1 – Investment securities 155,5 155,6 173,7 232,7 - 10,5 - 25,4 – Trading securities 2.248,2 2.065,0 1.953,0 1.849,7 15,1 5,6
Shareholders’ Equity (4) 1.622,2 1.620,0 1.606,0 1.369,7 1,0 17,3 INCOME STATEMENT (1) Operating Income 261,8 212,9 224,5 237,7 16,6 - 5,5 Income from Ordinary Activities 123,7 102,5 145,0 171,8 - 14,7 - 15,6 Income before Taxation 138,7 105,6 168,0 183,7 - 17,4 - 8,5 Net Income 107,5 81,1 106,2 104,8 1,3 1,3 RESOURCES (5) Number of branches 393 393 393 391 - 0,5 Number of employees 3.719 3.720 3.759 3.512 - 1,1 7,0 FINANCIAL RATIOS Non interest income / Gross operating income 58,36% 58,13% 54,55% 53,38% Operating costs / Gross operating income (Cost Income Ratio) (8) 61,59% 58,21% 68,58% 63,47% Income before Taxation / Shareholders’ Equity (4) 8,55% 6,52% 10,46% 13,41%
ROE 6,63% 5,00% 6,61% 7,65%
ROAE (6) 6,66% 5,03% 7,64% 7,76% SOLVENCY RATIOS Risk-Weighted Assets (RWA) (1) 10.956,4 10.965,1 10.573,1 9.709,8 3,6 8,9 Tier 1 % of RWA 10,73% 10,15% 10,85% 9,27% Total Capital % of RWA 13.19% (7) 12,70% 13,89% 11,58% (1) Millions of Euros. (2) Gross of allowance for credit risks. (3) Including leased fixed assets. (4) Including reserves for general banking risks. (5) Statistics at the end of period. (6) Net income on average shareholders’ equity (Return On Average Equity). (7) 13.67% including the Tier III subordinate loan, authorized by the Bank of Italy on 18 th F ebruary 2004 (8) The gross operating income and the operating costs are net of redress provisions on lease assets
11 NOTICE OF ANNUAL GENERAL MEETING
The shareholders of Banca Carige SpA are called to an ordinary general meeting to be held at the Bank’s headquarters in Genoa (Via David Chiossone, 3) on 28th April 2005 at 10.30 am and, if necessary, by adjournment at the same place on 29th April 2005 at 10.30 am to discuss and to resolve the following:
AGENDA
1. Financial statements as at 31st December 2004, together with the reports of the Board of Directors and Statutory Auditors
2. Consolidated financial statements of the Banca Carige Group as at 31st December 2004
3. To elect the Board of Statutory Auditors
4. To appoint the Chairman of the Board of Statutory Auditors
5. To fix the remuneration of the Statutory Auditors
6. Deliberation regarding the acquisition of own shares pursuant to article 2357 of the Italian Civil Code.
Shareholders will be entitled to attend and vote. Exercise of these rights will be recognised only on presentation at the Meeting of the appropriate documentation foreseen by relevant legislation and the articles of association of the Bank. Such evidence may be obtained by depositing share certificates with an authorised Agent against written receipt, which must be communicated to the Bank at least two days before the date of the Meeting.
The above documentation will also be available at www.gruppocarige.it.
In conformity with and in the manner established by article 26 of the Bank’s Articles, the lists of candidates for the position of statutory auditor (Point 3) are to be deposited, with the appropriate documentation, by shareholders who have the right of proposal, at the Bank’s Registered Office at least ten days before the day fixed for the first call of the Meeting. Lists of candidates must be presented on bank working days from 8.30 am to 1.30 pm and from 2.30 pm to 4.30 pm.
Genoa, 25th March 2005
The Chairman of the Board of Directors (Giovanni Berneschi)
Notice of meeting published in the “Sole 24 Ore” of 26th March 2005.
12 BOARD OF DIRECTORS’ REPORT
13 THE YEAR IN ITALY AND ABROAD
The world’s economy recorded strong economic In Germany, gross domestic product rose at an growth during 2004: GDP rose at around 5 per annual rate of 1.2 per cent; domestic demand cent in comparison to the previous year’s figure of continued to be weak, rising by only half a 3.9 per cent. percentage point over 2003. Exports returned to a This growth was powered, in particular, by strong positive figure, albeit minimum, at 0.7 per cent. domestic demand present in the economies of Asia Inflation was at 1.8 per cent and unemployment and Latin America. The US economy was in touched 10 per cent (2003: 9.7 per cent), a progressive expansion. Japan’s economy saw reflection of underlying structural problems in the contained growth. In Europe, prospects for a German labour market. sustained upturn became more remote as the year The French economy grew at 2.2 per cent went on despite generally expansionist policies at thanks to sizeable expansion in domestic monetary and fiscal levels. Satisfactory consumption (+3.3. per cent). Net exports, performances by financial markets, which helped however, continued to fall (-1.2 per cent). claw back some of the losses recorded between Unemployment continues to be a problem: the 2000 and 2002, also had little effect on Europe’s national unemployment rate actually rose from 9.4 ‘real’ economy. per cent in 2003 to 9.6 per cent. The dollar continued to lose ground against the Better results came from Spain: the country’s GDP euro throughout the year with a subsequent rose at an annual rate of 2.6 per cent, slightly redistribution of purchasing power at the world higher than in 2003 (2.5 per cent). Domestic level. demand was strong at 3.6 per cent, whilst net In the United States, the economy grew by 4.4 exports continued to record a negative result (1 per per cent in comparison to 3 per cent for 2003. This cent). Investment levels rose, particularly in gross expansion was due to a marked upturn in fixed investments such as machinery, equipment consumer demand and investment levels (both in and buildings. Private consumption was flat at housing and machinery) during the second half of +0.5 per cent. Spain’s inflation level is one of the the year. On the foreign trade front, imports and highest in the EU at 3.2 per cent. There was an exports were both vibrant: imports were boosted by improvement in the country’s unemployment rate domestic demand, whilst exports were helped by from 11.3 per cent in 2003 to 10.9 per cent. strong demand from Asia and a weak dollar. The United Kingdom economy overall had a Inflation for the year was 2.7 per cent; good year. GDP rose at 3.1 per cent, thanks to unemployment dropped significantly from 6 per increased consumption on the part of both the cent in 2003 to 5.5 per cent. public sector and families. There was, however, a The European Monetary Union (EMU) slowing in fixed investments especially in the derived some benefit from the overall world context, property sector. Net exports recorded a negative but growth continued to be weaker in comparison variation of 0.6 per cent. The annual inflation rate to other economies and the situation worsened was 1.3 per cent and unemployment fell from 5 per during 2004 with a marked drop in the area’s GDP cent in 2003 to 4.6 per cent. from 2.5 to around 2 per cent. Principal results for In spite of generally positive results in 2004, the eurozone include modest rises in private Japan continues to suffer the effects of the consumption of 1 per cent, gross fixed investments difficulties the country’s economy suffered during of 2.2. per cent and a worsening of the trade the 1990s (deflation and zero growth). The rise in deficit. Inflation was at around 2.1 per cent, similar Japan’s GDP of 2.9 per cent was the result above to the previous year’s figure. There was also little all of increases in investments and exports. Demand change in average unemployment for the twelve on the home front also showed an upturn from euro-member countries: 8.9 per cent. 2003’s +0.7 per cent to +2.1 per cent. Inflation Within the European Union, there were some was marginally negative (-0.1. per cent) though less differences in terms of the various demand so than in recent years. Unemployment fell from components. 5.3 to 4.7 per cent.
14 Asian economies were particularly vibrant powered in tax revenues. On the basis of initial estimates principally by China and India. GDP for the two Italy’s deficit/GDP ratio for 2004 will remain countries rose at an annual rate of 8.4 per cent, around the eurozone’s required 3 per cent level; similar to the levels recorded in 2003. Economic the country’s debt/GDP improved slightly from expansion continued to be aided by considerable 106.1 per cent in 2003 to 105.8 per cent for domestic demand. Other Asian Pacific 2004. economies recorded an increase in GDP of 5.8 In Liguria, Banca Carige’s operating stronghold, per cent (2003: +3.9 per cent), substantially due to there were some causes for optimism. The region’s rises in net exports. Latin America recorded a GDP grew at just over 1 per cent, higher than the significant turnaround in 2004 after the serious previous year. The rise is a result of positive trends problems that affected Argentina, Venezuela and to in gross fixed investments. a lesser extent Brazil. GDP for the area rose by 5.6 The number of new businesses increased although per cent. Economic results for other emerging at a lower rate then the national average. In markets (central Europe, Russia and non- December 2004, there were 137,826 enterprises in Mediterranean Africa) overall improved in activity, 83.3 per cent of the total enrolled with the comparison to the previous year. region’s chambers of commerce (total number of In Italy after a weak first six months there was an enterprises enrolled: 165,374). The number of improvement in the second half of the year which Liguria’s enterprises classified as going concerns helped to produce an annual rise in GDP of accounts for 2.7 per cent of the national total. In around 1.1 per cent, better than the figure Liguria, these enterprises rose in number by 1 per recorded for 2003 (+0.3 per cent). The result can cent (national increase: +1.3 per cent). In be put down to a slight improvement in net export particular, according to figures provided by figures, but continuing stagnation in domestic chambers of commerce, the difference between the demand. Investment trends remained negative with number of new enterprises created during the year actual falls in investments for machinery and in Liguria (12,627) was greater than the number of equipment. The building sector, however, recorded those that ceased doing business (10, 346): 2,346. a positive result of +1 per cent. There were rises in both orders (+6.9 per cent) and Inflationary pressure that accompanied the turnover (+2.6 per cent) for the region’s industry. introduction of the euro abated during 2004, Private consumption levels, however, held back despite sharp rises in the price of petrol. The retail both the industry and commerce sectors. More price index for 2004 marked an average increase vibrant is the transport and logistics sector. Liguria’s in prices of 2 per cent in comparison to the ports, though to differing extents, generally brought previous year’s figure of 2.5 per cent with the in satisfactory results. The port of Genoa recorded highest price rises being found in energy prices. a rise in goods and container traffic of, respectively, On the basis of Italy’s National Statistics Institute 4.6 and 2.5 per cent. The easternmost of the (ISTAT) figures for the year, employment rose by region’s ports, La Spezia, achieved a 3.4 per cent 0.4 per cent (2003: + 0.9 per cent). In detail, increase in container traffic, but saw a 6.9 per cent there was a minimal rise in the numbers of fall in its goods traffic. To the west of Genoa, the employees, whilst the increase in the number of port of Savona recorded strong increases in its self-employed was more dynamic at + 1.3 per cruise business (+49.5 per cent) and more cent. By sector, there were above average increases contained growth in non-cruise traffic (+2.6 per in farming (+2.1 per cent) and industry (+0.5 per cent). cent), the latter exclusively due to increased The property market in the region’s four provinces employment in the building industry. There was was lively, although less so than in recent years. limited expansion in terms of jobs in the service Foreign trade saw falls in both imports (-3 per cent) sector (+0.2 per cent). The national unemployment and exports (-2.6 per cent). The former totalled rate dropped from 8 per cent in 2003 to 7.4 per 5,329 million euros at the end of September and cent. The north/south divide, however, continues to felt the effects of significant falls in demand in the be a critical problem. provinces of Genoa and La Spezia; the latter was Turning to the question of the state’s finances, PSBR affected by poor sales in vehicles and chemical at the end of the year was around 45 billion euros, products. in line with budget forecasts. Capital account The worsening of the balance of trade was revenues made up for continuing moderate growth accompanied by continuing problems for Ligurian
15 tourism. The number of visitors to the region continued to fall (-4.6 per cent). The only bright STRATEGY spot was Genoa, which benefited from its role as European Culture Capital for 2004. There was generally good news from the labour The strategic plan approved by the Board of market, which saw a 0.7 per cent increase in the Directors of Banca Carige for 2005-07 develops number of those in work and a fall in the region’s the Carige Group’s established mission as a unemployment rate from 7.3 to 4.3 per cent. conglomerate equipped to offer banking, finance The consumer price rise index for the city of Genoa and insurance products throughout Italy, whilst at recorded an annual rise of 1.7 per cent in the same time maintaining strong ties with local comparison to the previous year’s 2.4 per cent. operating areas. The Group also seeks to achieve Turning to monetary policy, the European competitive advantages in terms of service quality Central Bank left rates unchanged during the year. via the Group’s multi-channel distribution system, In particular, the discount rate for the eurozone human resources and branch facilities. In more stayed at 2 per cent. Consequently, there were no detail, the Carige Group intends to be: significant changes in money market rates and rises • a conglomerate, in terms of the range of in Italian government stock were also limited as borrowing and lending services and shown by Italian treasury bills, rises of which did not products offered. It will continue to be an go beyond ten basis points. aggregation point for other small/medium- On currency markets, the euro continued to rise sized banks with particular locational, against the US dollar although at a slower pace structural and organisational features; than in 2003. The average rate for the year was • national, with its operating heartland in 1.244 (2003: 1.132), with an upturn towards the Liguria, but increasingly present throughout end of the year (November: 1.300; December: the country. The Group will seek to exploit 1.341). the value present in each local context via a The Italian banking system’s total deposits consolidated multi-local approach; amounted to around 980 billion euros, up more • focused on service quality and the than 7 per cent over 2003. There was a 10.9 per development of integrated multi- cent increase in bonds and 5.7 per cent rise in channel distribution, which in practical customer deposits. System-wide, wealth terms means: an operational relation with management did not maintain the critical mass our customers that is based on trust and levels achieved during 2003: around 12 bn euros flexibility; particular attention to the retail down. In terms of asset values, there was little market, particularly the family and small change over year end 2003. Mutual funds volumes and medium-sized enterprises (SMEs), rose by 2.3 per cent thanks to positive results artisans, and local public bodies; the use of recorded by international products. Asset state-of the-art technologies; management increased by 8.7 per cent, with solid • committed to a constant evolution growth in the funds component. of resources and organisational Lending continued to expand, particularly in favour structures, which achieves: heightened of families and non financial enterprises. There was specialisation across networks and also an increase in medium/long-term credits. The productive functions; unitary management annual overall increase was around 5.6 per cent of core Group competencies and the for a total of 1,068 bn euros. There was an annual development of human resources rise of 6.3 per cent in the system’s bad loans, less (continuing increases in efficiency and than the rate recorded the previous year. professional skills). Bank rates (borrowing and lending) remained In line with this mission, the Banca Carige Group’s substantially stable throughout the year. The overarching strategic aim is to create long-term average lending rate was 5.6 per cent, whilst the value for its shareholders and other stakeholders. In borrowing rate was 0.9 per cent. The average order to achieve this, four enabling strategies have spread of 4.7 per cent was unchanged over 2003. been identified: increased operating capacity; increased productivity and profitability; risk containment; maximisation of the value of the
16 Group assets. These will be obtained through the being provided by branches on-the-spot. The implementation of the following measures: search for new customers is also the responsibility a) increases in amounts intermediated per of local market makers who focus, in particular, on employee, with particular attention to cross the private, affluent and small business segments, selling and business retention in Liguria, where we all of which currently account for a limited share of are market leader, and added focus on the the Group’s customer portfolio in operating areas Group’s operating areas outside Liguria through of recent penetration. The results of the branches increased market share at local level. Particular under scrutiny are monitored on a weekly basis with attention will be given to developing relations with changes being made if and where necessary. existing customers as well as expanding our In addition, in order to heighten integration portfolio of new customers; between the Group’s banking and insurance b) increased profitability of business areas networks – one of the pillars on which Group (lending, wealth management, payment systems, expansion is based – cooperation between the insurance) via the optimisation of productive supply Group’s insurance agents and bank branches chains and the consolidation of relations with defined in the “Insieme di piu`” project continued. Carige’s foreign partners particularly in the fields of The project seeks to valuate appropriately the asset management, payment systems, structured relations and professional skills both have in terms funding, and project financing; of their relations with customers and the added c) increased income generated by our value for the Group that derives from integration. subsidiaries thanks to the full operational The project presently involves 117 insurance offices integration of the banks acquired, appropriate and 107 bank branches. valuation of single brands and synergies with our The strategic plan 2005-07 identifies the insurance subsidiaries; importance of territorial expansion especially in the d) review of management processes with the surrounding regions around Liguria. Consequently, aim of reducing administrative costs and containing over the next five years a total of around 50 to 70 the share of total costs represented by personnel branches are expected to be opened, distributed in charges. This review also seeks to improve the Piedmont, Lombardy, Emilia Romagna and quality of services offered to customers both Tuscany. internally and externally; The second project aimed at maintaining the e) containment of costs related to credit, Group’s role as market leader in Liguria is market, liquidity and operative risks, via based on developing, firstly, cross selling an integrated risk management across the Group’s opportunities in order to exploit business banks and insurance companies as well as a opportunities presented by existing customers and, commitment to appropriate capital adequacy levels secondly, payment systems, consumer credit and in terms of total capital and Tier 1 ratios, and to Internet banking. liquidity, particularly at medium/long-term. In the area of payment systems, particular attention Progress across all five measures (a-e) was made was given to the marketing of Carige’s during 2004. With regards to a) “increases in rechargeable payment card “CarigeEasyPay”; the amounts intermediated per employee”, net payment service promoted by the Italian two specific projects were activated during the year: Banking Association (ABI) “Bankpass-Web” was the first aims at bringing efficiency levels in new also launched. operating areas up to Group standards, whilst the The year also saw specific marketing campaigns in second focuses on the consolidation of our the area of personal loans. presence in Liguria. Starting with the Group’s Carige’s treasury and payment services provided for branch network outside Liguria, particular local public bodies (local government, hospitals, attention was placed on a group of 90 branches etc.) were upgraded through the offer of a new with cost/income ratios significantly different from online service that allows users to access data the Group average. Improvements in business relative to treasury services managed by the Group performance are defined in terms of reaching the in real time. The service extends the capabilities of objectives fixed in the Group’s strategy plan. The Carige’s on line services for business (“Servizi on development of business opportunities present in line Business”) to the public administration. our portfolio of existing customers is coordinated Turning to point b) increased profitability of centrally with the necessary commercial back up business areas, 2004 was the first year of
17 business for the Group’s asset management firm The Board of Directors of Banca Carige in its Carige Asset Management SGR, which received meeting of 2nd August deliberated a new Bank of Italy authorisation to carry out business on organisational structure that consists of the 10th January. The company can offer both collective following four macro areas: governance and and individual asset management solutions. The management control carried out by a staff structure company’s activities, in line with the Group’s referring to the General Manager; distribution, strategic objectives, are the following: under the Deputy General Manager responsible for • private banking (securities and mutual the Network; administration and support under the funds management) on behalf of Deputy General Manager responsible for customers of the Group’s banks; Administration; Production, under the Deputy • pension funds, including the management General Manager responsible for Products. This of the Carige Open Pension Fund; organisational model enables Banca Carige to • management of a part of the Group focus attention crucially on sales and service subsidiaries’ securities portfolios via quality, which will be supported by an increased reserved funds (“Forziere Obbligazionario” market presence resulting from market and “Forziere Dinamico”); segmentation (network and customer), further • mutual fund management. The company’s specialisation on the part of production, and product range includes six, new, strengthened operational capacities. specifically designed funds (“Carige A specific cost management unit was set up in Azionario Italia”, “Obbligazionario 2004 to guarantee structural support for the Internazionale”, “Bilanciato Euro”, monitoring of operating costs and the “Azionario Europa”,” Mosaico implementation of cost efficiencies. Monitoring Obbligazionario Misto”, “Mosaico consists in tracking the evolution of costs, putting Bilanciato Obbligazionario”), three existing into place internal and external benchmark funds previously managed by Nextra I.M analyses, and identifying the re-engineering SGR (“Carige Monetario Euro”, process. Operating costs have been reclassified on “Obbligazionario Euro”, “Azionario the basis of total ownership costs into twenty Internazionale”), and three fund lines categories, the first five of which account for more previously managed by Sanpaolo Imi SGR than 60 per cent of overall costs. Initial results have (“Carige Liquidita` Euro”, “Corporate already achieved annual cost savings of around 7 Euro”, “Azioni America”). million euros. c) increased income generated by our So as to improve the management of relations with subsidiaries: during the year the integration of suppliers, an ad hoc purchasing office was set up Cassa di Risparmio di Carrara into the Carige with the responsibility of identifying an appropriate Group was completed. At present the Group is policy for the purchase of goods and services that is centralising management, administrative and in line with both budgetary decisions and the accounting functions according to the structural competences assigned to the four organisational characteristics typified by a network bank. External areas described above. growth via acquisition continued in 2004 with the With regards to the final point - e) containment purchase of a controlling stake (51.09 per cent) in of costs related to credit, market, liquidity the Milanese private bank Banca Ponti. The bank and operative risks – risk containment was has four branches, three in Milan and one in effected by a review of credit management Como. The purchase was completed in December processes, the application of Basel 2 principles, after Bank of Italy approval. The Group’s total and particular attention to operating risk. The investment amounted to 38.2 million euros. application of Basel 2 principles according to the Increased size will allow the Group to exploit method prescribed by the IRB Foundation, the one economies of scale and scope (improved chosen by Banca Carige, is fixed for the end of cost/income ratio and diversification-generated 2006. However, this process was quickened by economies offered by the universal banking model). implementation in the near future of EU directives Improved efficiency sought by point d) - a review adopting IAS/IFRS. In fact, the principles, which will of management processes - continued to be be applied to the financial statements of Banca the focus of considerable attention during 2004. Carige and the Banca Carige Group from 2005 onwards, to a great extent coincide with the
18 evaluation of credit risk methodology foreseen by & Poor’s and Moody’s, which all confirmed their Basel 2. previous ratings for the Bank. Carige’s strategy was positively evaluated by the main international rating agencies Fitch, Standard
BANCA CARIGE RATING
short-term long-term BFSR (1) (2) Individual (2) Support (3) Fitch F1 A - C 3 Moody's P-1 A2 C+ - - Standard & Poor's A2 A- - - -
(1) Bank Financial Strength Ratings. (2) Rating of financial solidity on a scale from A to E. (3) Rating of likelihood of state intervention in case of crisis on a scale from 1 to 5.
19 5
BORROWING AND LENDING ACTIVITIES
At 31st December 2004, Total Financial 45.2 per cent of TFIA (2003: 10,025.4 million). Intermediation Activities (TFIA) made up Indirect deposits or ‘other financial by direct and indirect deposits recorded an intermediation activities’ increased by 6.8 per increase of 9.2 per cent to 24,899.4 million in cent from 12,767.1 million at 31/12/03 to comparison to the end of 2003. In particular, 13,640.6 million. This aggregate now accounts direct deposits or ‘customer deposits’ rose 12.3 for 54.8 per cent of TFIA. per cent to 11,258.8 million, accounting for
TOTAL FINANCIAL INTERMEDIATION ACTIVITIES (millions of Euros) Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Total (A+B) 24,899.4 24,117.7 22,792.5 21,623.0 9.2 5.4
Direct deposits (A) 11,258.8 10,734.5 10,025.4 9,236.2 12.3 8.5 % Total 45.2% 44.5% 44.0% 42.7% Indirect deposits (B) 13,640.6 13,383.2 12,767.1 12,386.8 6.8 3.1 % Total 54.8% 55.5% 56.0% 57.3% - Assets under management 6,977.6 6,740.3 6,585.5 6,075.4 6.0 8.4 % Total 28.0% 27.9% 28.9% 28.1% % OFIA 51.2% 50.4% 51.6% 49.0% - Assets in custody 6,663.0 6,642.9 6,181.6 6,311.4 7.8 - 2.1 % Total 26.8% 27.5% 27.1% 29.2% % OFIA 48.8% 49.6% 48.4% 51.0%
TOTAL FINANCIAL INTERMEDIATION ACTIVITIES (millions of Euros)
24.899 22.792 21.623 25,000
20,000
15,000 Assets under management Assets in custody 10,000 Direct deposits
5,000
0 2002 2003 2004
20 Total funds at 31/12/04, which include another 12.1 per cent during 2004 to 287.4 customer deposits (11,258.8 million), interbank million. Growth in bonds was entirely due to the deposits (1,126,3 million), funds managed on distribution at our branches of 25 new issues, 17 behalf of third parties (0.3 million) and of which at fixed rate, 6 at floating rate (one in subordinated loans (502.1 million), amounted US dollars), and one at a periodic cap floating to 12,887.5 million, up 10.5 per cent in rate. Amounts subscribed totalled 900 million. comparison to the end of 2003 (11,667,5 Of these issues, 17 have maturities beyond five million). years. In particular, customer deposits recorded a The Euro Medium Term Note programme 12.3 per cent increase over December 2003. (EMTN) recorded little change in comparison to This increase stems from rises in amounts owed 2003 (577.2 million). With regards to this to customers (6,709.6 million; +12.6 per cent) programme, aimed at giving the Bank and debts evidenced by certificates (4,549.2 medium/long-term deposit instruments equipped million; +11.8 per cent), the latter as a result of to match increases in lending, other products increased demand for bonds. include 130 million in interbank borrowing and Polarisation continued during the year between, 400 million in the form of a subordinated loan. on one hand, liquid products (current accounts, On the basis of maturities, the year confirmed a repurchase agreements) and, on the other, trend for growth in the medium/long-term bonds. In greater detail, current accounts rose segment. This aggregate, almost entirely in the by 13.3 per cent to 6,042.5 million, whilst form of bonds, rose by 14.1 per cent to 4,197.6 savings deposits fell to 461.2 million (-2.3 per million in comparison to an 11.2 per cent rise in cent). Sales and repurchase agreements, after a short-term deposits (7,061.2 million) sharp fall during 2003, recorded an upturn of At 31/12/04, derivatives provided 1,663.2 30.5 per cent to 195.1 million. Certificates of million in cover on bonds issued by the Bank. deposit continued their downward trend, losing
21 FUNDING (millions of Euros) Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Total (a+b+c) 12,887.5 12,587.8 11,667.5 11,433.8 10.5 2.0
Direct deposits (a) 11,258.8 10,734.5 10,025.4 9,236.2 12.3 8.5 Amounts owed to customers 6,709.6 6,250.5 5,957.9 5,912.3 12.6 0.8 current accounts 6,042.5 5,596.9 5,331.4 5,047.4 13.3 5.6 repurchase agreements 195.1 179.6 149.5 393.7 30.5 - 62.0 saving deposits 461.2 464.4 472 467.8 - 2.3 0.9 loans from international organizations 1.5 1.5 - 0.8 … - 100.0 other borrowings 9.3 8.1 5.0 2.6 86.0 92.3 Debts evidenced by certificates 4,549.2 4,484.0 4,067.5 3,323.9 11.8 22.4 bond certificates 4,178.7 4,113.3 3,653.9 2,853.9 14.4 28.0 certificates of deposits 287.4 295.1 326.8 397.3 - 12.1 - 17.7 outstanding cheques 83.1 75.6 86.8 72.7 - 4.3 19.4 short term deposits 7,061.2 6,602.5 6,347.7 6,335.3 11.2 0.2 % Total 62.7 61.5 63.3 68.6 long term deposits 4,197.6 4,132.0 3,677.7 2,900.9 14.1 26.8 % Total 37.3 38.5 36.7 31.4
Amounts owed to credit institutions (b) 1,126.3 1,350.9 1,139.6 1,797.3 - 1.2 - 36.6 Deposits 439.6 569.7 617.3 1,307.8 - 28.8 - 52.8 Financing 367.4 367.3 373.4 273.2 - 1.6 36.7 Current accounts 14.3 159.5 88.8 53.9 - 83.9 64.7 Repurchase agreements 305.0 254.4 60.1 162.4 407.5 - 63.0 Due to central banks - - - - … …
Funds managed on behalf of third parties (c) 0.3 0.3 0.4 0.3 - 25.0 33.3
Subordinated loans (d) 502.1 502.1 502.1 400.0 - 25.5
DEPOSITS (millions of Euros)
11.259 12,000 10.025 9.236 10,000 8,000 Repurchase agreement 6,000 Certificates of deposits Bond certificates 4,000 Other borrowings 2,000 0 2002 2003 2004
By sector, the share represented by households total deposits (1,295.6 million); this figure decreased from 69.6 per cent of the total at added to amounts owed to households makes 31/12/03 to (4,144.7 million) to 64.5 per cent up 83.8 per cent of the total aggregate. (4,326.5 million), despite a 4.4 per cent Deposits by financial institutions rose strongly, increase in volumes. Deposits by non finance partly influenced by liquidity present in accounts and family firms account for 19.3 per cent of held by Carige Asset Management SGR.
22 DIRECT DEPOSITS (1) - DISTRIBUTION BY SECTOR (millions of Euros)
31/12/04 31/12/03 31/12/02 %%%
Amounts owed to customers 6,709.6 5,957.9 5,912.3 Public Administration 293.9 4.4% 192.4 3.2% 153.8 2.6% Financial institutions 540.6 8.1% 221.1 3.7% 502.0 8.5% Non-financial institutions and personal businesses 1,295.6 19.3% 1,122.2 18.8% 1,112.2 18.8% Private social bodies 191.5 2.9% 190.8 3.2% 155.3 2.6% Families 4,326.5 64.5% 4,144.7 69.6% 3,902.4 66.0% Total residents 6,648.1 99.1% 5,871.2 98.5% 5,825.7 98.5% Rest of the world 61.5 0.9% 86.7 1.5% 86.6 1.5% Total 6,709.6 100.0% 5,957.9 100.0% 5,912.3 100.0%
Debts evidenced by certificates 4,549.2 4,067.5 3,323.9
TOTAL DIRECT DEPOSITS 11,258.8 10,025.4 9,236.2
Expansion of the Group’s activities has seen the Funds managed on behalf of third increasing redistribution of deposits to regions parties remained at marginal levels, dropping outside Liguria. The share of total deposits held from 0.4 to 0.3 million. in Liguria has, in fact, progressively dropped There was little change in subordinated from 77.7 per cent in 2002, 75.1 per cent in loans; these are of two types: the first is in the 2003, to 73.7 per cent in 2004. The central form of a subordinated loan of 400 million Italian region of Latium increased its aggregate issued in September 2001 within the Euro share to 7 per cent. Medium Term Note Programme; the second is a Amounts owed to banks amounted to hybrid subordinated loan issue convertible into 1,126.3 million, down 1.2 per cent in ordinary shares issued as part of the Bank’s comparison to 31st December 2003. The fall financial strengthening policy, which in relates, in particular, to interbank deposits December 2003 raised 102.1 million. (439.6 million; -28.8 per cent), whilst there was Full details are given in sections 6, 8 and 11, strong growth in sale and repurchase part B of the explanatory notes. agreements (305 million).
23 DIRECT DEPOSITS (1) - GEOGRAPHICAL DISTRIBUTION (millions of Euros)
31/12/04 31/12/03 31/12/02 %%%
Liguria 8,291.9 73.7% 7,513.5 75.1% 7,165.3 77.7% Latium 792.2 7.0% 635.0 6.3% 490.4 5.3% Sicily 529.4 4.7% 485.0 4.8% 436.8 4.7% Lombardy 482.9 4.3% 391.4 3.9% 345.7 3.7% Piedmont 363.0 3.2% 322.6 3.2% 251.8 2.7% Emilia Romagna 229.3 2.0% 185.2 1.8% 176.8 1.9% Apulia 172.9 1.5% 152.3 1.5% 118.3 1.3% Veneto 124.2 1.1% 117.1 1.2% 87.2 0.9% Sardinia 127.2 1.2% 95.1 1.0% 52.7 0.6% Marches 65.6 0.6% 52.7 0.5% 47.9 0.5% Tuscany 21.9 0.2% 21.9 0.2% 18.3 0.2% Umbria 26.7 0.2% 19.9 0.2% 18.4 0.2% Total Italy 11,227.2 99.7% 9,991.7 99.7% 9,209.6 99.7% Abroad 31.6 0.3% 33.7 0.3% 26.6 0.3% Total direct deposits 11,258.8 100.0% 10,025.4 100.0% 9,236.2 100.0%
(1) Balance Sheet (Liabilities) captions 20 and 30.
INDIRECT DEPOSITS (millions of Euros) Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Total (A+B) 13,640.6 13,383.2 12,767.1 12,386.8 6.8 3.1
Assets under management (A) 6,977.6 6,740.3 6,585.5 6,075.4 6.0 8.4 Mutual funds and unit trusts 3,983.9 3,808.7 3,780.5 3,361.3 5.4 12.5 Private banking 2,172.5 2,145.0 2,102.5 2,112.0 3.3 - 0.4 including: Security management (1) 1,285.2 1,240.1 1,126.7 972.4 14.1 15.9 Mutual funds management 887.3 904.9 975.8 1,139.6 - 9.1 - 14.4 Bancassurance products 821.2 786.6 702.5 602.1 16.9 16.7
Assets in custody (B) 6,663.0 6,642.9 6,181.6 6,311.4 7.8 - 2.1 Government securities 3,294.1 3,367.0 3,114.3 3,645.0 5.8 - 14.6 Others 3,368.9 3,275.9 3,067.3 2,666.4 9.8 15.0 (1) The figure includes the entire securities portfolio of the insurance subsidiaries.
Indirect deposits recorded a 6.8 per cent management returned to positive growth, increase in comparison to the end of 2003 to amounting to 2,172.5 million (+3.3 per cent), reach 13,640.6 million. Within this aggregate, thanks to rises in securities management there were rises for both assets under (1,285.2 million; +14.1 per cent) which offset a management and assets in custody. 9.1 per cent fall in fund management amounts Wealth management at 31/12/04 rose 6 per (887.3 million). cent to 6,977.6 million, particularly as a result Assets in custody totalled 6,663 million, up 7.8 of rises in mutual funds (3,983.9 million; +5.4 per cent following a 5.8 per cent increase in per cent) and bancassurance products (821.2 demand for government securities and million; +16.9 per cent). In particular, asset
24 continued demand for bonds and shares Financial institutions make up 12.4 per cent of (3,368.9 million; + 9.8 per cent). the total (1,686.6 million; + 13.5 per cent). Indirect deposits are concentrated amongst Non financial institutions and family businesses households (10,750.8 million, 78.8 per cent of increased their share by 4.8 per cent, as did the the total), an increase of 3 per cent over 2003. public administration (+1.7 per cent).
INDIRECT DEPOSITS - DISTRIBUTION BY SECTOR (millions of Euros)
31/12/04 31/12/03 31/12/02 %%%
Public Administration 236.8 1.7% 173.7 1.4% 145.8 1.2% Financial institutions 1,686.6 12.4% 1,485.7 11.6% 1,427.7 11.5% Non-financial and personal businesses 653.8 4.8% 542.9 4.3% 504.1 4.1% Private social bodies 92.4 0.7% 95.6 0.7% 109.7 0.9% Families 10,750.8 78.8% 10,433.4 81.7% 10,178.2 82.2% Total residents 13,420.4 98.4% 12,731.3 99.7% 12,365.6 99.9% Rest of the world 220.2 1.6% 35.8 0.3% 21.2 0.1% Total 13,640.6 100.0% 12,767.1 100.0% 12,386.8 100.0%
Liguria continues to represent the lion’s shares at 3.2 per cent, Lombardy’s share was slightly as far as indirect deposits are concerned: 80.9 down (3.1 per cent from 3.2 per cent) as was per cent. There was little change in the share of Sicily’s (down from 2.9 per cent to 2.7 per cent). the other regions in which Carige operates; the There was a slight increase for Emilia Romagna one exception was Latium, which increased its (from 1.4 to 1.5 per cent). Marches, Veneto, share of indirect deposits from 4.3 per cent in Apulia, Umbria, Sardinia and Tuscany all 2003 to 5.5 per cent. Piedmont was unchanged confirmed shares below 1 per cent.
INDIRECT DEPOSITS - GEOGRAPHICAL DISTRIBUTION (millions of Euros)
31/12/0431/12/03 31/12/02 %%%
Liguria 11,040.1 80.9% 10,451.9 81.9% 9,883.8 79.8% Latium 756.7 5.5% 554.7 4.3% 589.9 4.8% Piedmont 439.0 3.2% 407.7 3.2% 382.8 3.1% Lombardy 421.5 3.1% 407.3 3.2% 580.3 4.7% Sicily 374.1 2.7% 370.2 2.9% 365.6 3.0% Emilia Romagna 198.7 1.5% 180.9 1.4% 166.3 1.3% Veneto 110.4 0.8% 107.1 0.8% 115.0 0.9% Marches 103.8 0.8% 106.7 0.8% 121.4 1.0% Apulia 102.0 0.7% 94.7 0.7% 97.6 0.8% Sardinia 40.6 0.3% 30.4 0.2% 21.3 0.2% Umbria 29.5 0.2% 32.4 0.3% 40.0 0.3% Tuscany 17.0 0.1% 15.9 0.1% 15.2 0.1% Total Italy 13,633.4 99.9% 12,759.9 99.9% 12,379.2 99.9% Abroad 7.2 0.1% 7.2 0.1% 7.6 0.1% Total indirect deposits 13,640.6 100.0% 12,767.1 100.0% 12,386.8 100.0%
25 Total lending at 31st December 2004 The Commercial Credit Division, offering reached 13,309.7 million, an increase of 9.4 short-term lending solutions also in currency, per cent. recorded a 0.3 per cent rise to 3,613.9 million. Lending to customers amounted to 9,468.1 This result stems from an increase in current million, an increase of 2.4 per cent. account lending (1,424.4 million; +8.1 per Excluding amounts calculated for expected cent) and the discounting of bills (305.9 million; losses, the total drops to 9,320 million (+2.4 + 12.6 per cent). At 31st December 2004, the per cent). Division accounted for 38.2 per cent of total The aggregate was affected by the securitisation credits granted. of performing mortgage loans (864.5 million) The Real Estate, Public Works and carried out by Banca Carige on 30th June 2004. Mortgages Division, operating in the field of The transaction is part of the Bank’s intention to mortgages and funding for public bodies, maintain equilibrium in its liquidity in the face of recorded a 2.4 per cent fall to 3,248 million, strong demand for medium/long-term loans. following the securitisation of mortgages for a The sale of the mortgages brought in 61.1 value of 864.5 million carried out in June. million, recorded in the P&L at caption 70 “ Without taking into account this transaction, other operating income”. growth for the Division would have been around With the issue and placement of securities 22.9 per cent. There was continuing strong relating to the transaction, the short-term loan demand for mortgages throughout the year and granted to the SPV Argo Mortgage 2 Srl particular attention was placed in the marketing amounted to 82.9 million, of which 61.1 million of mortgage packages with interest caps (so- in excess spread and 21.7 million in a called ‘mortgage with a ceiling’). The Division subordinated loan granted to the SPV by Banca accounts for 34.3 per cent of total lending. Carige. The Industrial and Agricultural Credit The transfer of the credits and related risks to Division handles medium to long-term third parties means that neither is accounted for financing to firms. Its year-end result was down the statements, individual or consolidated. 1.8 per cent to 1,060.7 million as a result of With regards to maturities, the securitisation falling investments made by enterprises. This of the mortgages described above meant an figure represents 11.2 per cent of Carige’s interruption to the lengthening of maturities lending portfolio. previously in place. At the end of 2004, the The Parabanking Division, offering leasing, medium/long-term component accounted for factoring and consumer credit solutions, ended 60.5 per cent of total lending, down 0.8 per the year with a 14.2 per cent increase over cent over 2003 to 5,725.7 million. The short- 2003 (9.4 per cent of total lending). This term component rose 4.9 per cent to 35.1 per positive result was due to a 17.7 per cent rise in cent of the aggregate total (3,328.7 million). leasing (793.4 million). There were, however, On the basis of an analysis by lending product, falls in factoring (90.1 million; -9.1 per cent) significant growth was recorded by the Bank’s and consumer credit (4.2 million; -1.2 per cent). Parabanking Division, whilst the Real Estate, Other lending forms rose significantly Public Works and Mortgages, and the Industrial (+55.8 per cent) to 244 million as a result of and Agricultural Credit Divisions ended the year the loan granted to the special purpose vehicle slightly down on previous year’s levels. Argo Mortgage 2 (82.9 per cent).
26 LENDING (millions of Euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Total (a+b+c) 13,309.7 12,961.2 12,168.7 11,953.4 9.4 1.8
Loans to customers (a) 9,320.0 8,918.9 9,103.2 8,515.3 2.4 6.9 -Gross value (1) 9,468.1 9,074.8 9,247.1 8,634.9 2.4 7.1 . Commercial Credit 3,613.9 3,591.1 3,603.8 3,780.4 0.3 -4.7 . Real estate and Public Works mortgages 3,248.0 2,956.7 3,326.3 2,759.8 - 2.4 20.5 . Industrial and Agricultural credits 1,060.7 1,107.9 1,080.2 1,057.7 - 1.8 2.1 . Parabanking (2) 887.8 819.3 777.7 715.2 14.2 8.7 . Others 244.0 243.0 156.6 86.1 55.8 81.9
-short term loans 3,328.7 3,273.5 3,173.4 3,149.4 4.9 0.8 % Gross value 35.1 36.1 34.3 36.5 -long term loans 5,725.7 5,444.3 5,771.2 5,249.8 - 0.8 9.9 % Gross value 60.5 60.0 62.4 60.8
. Bad loans 413.7 356.8 302.5 235.7 36.8 28.3 % Gross value 4.4 3.9 3.3 2.7
-Specific allowances for loan losses (-) 148.1 155.9 143.9 119.6 2.9 20.3
Loans to banks (b) 1,586.0 1,821.7 938.8 1,355.7 68.9 -30.8 -Gross value 1,590.7 1,826.2 942.7 1,363.6 68.7 -30.9 . Compulsory reserves 145.3 98.4 102.4 143.8 41.9 -28.8 . Deposits 1,046.9 817.4 730.0 1,024.3 43.4 -28.7 . Overdraft facilities 140.3 138.4 71.5 82.6 96.2 -13.4 . Repurchase agreements 220.0 730.8 - 19.5 … -100.0 . Other loans 19.9 23.1 21.3 71.7 - 6.6 -70.3
. Bad loans 18.3 18.1 17.5 21.7 4.6 -19.4 % Gross value 1.2 1.0 1.9 1.6
-Specific allowances for loan losses (-) 4.7 4.5 3.9 7.9 20.5 -50.6
Securities (c) 2,403.7 2,220.6 2,126.7 2,082.4 13.0 2.1 -Government securities 1,096.5 1,262.9 1,061.3 1,230.2 3.3 -13.7 -Other securities 783.8 770.6 887.5 679.3 - 11.7 30.6 -Shares and equity securities 523.4 187.1 177.9 172.9 194.2 2.9
(1) Including bad loans. (2) Amount includes lease assets stated at Balance Sheet caption 100.
27 LOANS TO CUSTOMERS (millions of Euros)
9,247 9,468 10.000 8,635 9.000 8.000 7.000 Parabanking 6.000 Industrial and Agricultural credit 5.000 Real estate and Public Works mortages 4.000 Other loans 3.000 2.000 1.000 0 2002 2003 2004
The primary recipients of lending continue to be 1,223 million). Trade services, including repairs family businesses and non-finance firms, which and salvage services, is the second largest at increased their share from 59.7 per cent in 1,052 million, maintaining its overall share at 2003 to 61.6 per cent (5,838.3 million). 11.1 per cent (2003: 11.3 per cent). The Lending to households accounts for 21.3 per building industry and public works received 866 cent (2004: 2,023.8 million; 2003: 2,088,8 million (91 per cent of the aggregate), whilst air million). The share represented by the public and sea transport-related services totalled 336.3 administration dropped 10 per cent to 10.2 per million (3.6% of the total). The last figure, in cent. Lending to financial institutions reached particular, reflects the commitment of the Bank 329.8 million, 3.5 per cent of the total lending to the region’s essential port-related economy. aggregate (2003: 2.8 per cent). In face of strong competition in this area, Carige An analysis of individual business segments will be closely monitoring possible future growth shows that retail services accounted for 14.5 per areas in revenue sources. cent of total lending at 1,375.8 million (2003:
28 LOANS TO CUSTOMERS (1) - DISTRIBUTION BY SECTOR (millions of Euros)
31/12/04 31/12/03 31/12/02 %%%
Public Administration 963.3 10.2% 1,070.0 11.6% 1,032.2 12.0% Financial institutions 329.8 3.5% 256.7 2.8% 485.1 5.6% Non-financial and personal businesses 5,828.3 61.6% 5,529.2 59.7% 5,335.2 61.8% Agriculture, farming and fishing 76.5 0.8% 77.7 0.8% 87.6 1.0% Energy products 207.7 2.2% 201.6 2.2% 224.3 2.6% Mineral and ferrous metals and non ferrous 114.4 1.2% 99.0 1.1% 120.9 1.4% Mineral and non metallic products 87.6 0.9% 88.8 1.0% 87.0 1.0% Chemical products 61.9 0.7% 56.7 0.6% 58.0 0.7% Metal products 204.5 2.2% 184.0 2.0% 149.4 1.7% Agricultural and industrial machinery 137.7 1.5% 133.0 1.4% 149.2 1.7% Office equipment 23.9 0.3% 27.6 0.3% 29.1 0.3% Electrical supplies 71.4 0.8% 89.3 1.0% 104.0 1.2% Means of transport 59.0 0.6% 66.6 0.7% 85.7 1.0% Food, drink, tobacco 188.9 2.0% 198.5 2.1% 167.7 1.9% Textiles, leather goods, clothing 93.5 1.0% 88.2 1.0% 77.0 0.9% Paper, printing and publishing 75.8 0.8% 69.1 0.7% 69.0 0.8% Rubber and plastic goods 51.5 0.5% 51.5 0.6% 60.4 0.7% Other industrial products 94.3 1.0% 97.0 1.0% 95.2 1.1% Building and public works 866.0 9.1% 762.1 8.2% 895.5 10.4% Wholesale & retail trade, salvage and repairs 1,052.0 11.1% 1,044.7 11.3% 998.4 11.6% Hotel and catering services 278.6 2.9% 255.7 2.8% 255.3 3.0% Transport services 132.1 1.4% 129.1 1.4% 120.9 1.4% Air and sea transport-related services 336.3 3.6% 315.0 3.4% 378.9 4.4% Transport-related services 236.6 2.5% 258.3 2.8% 240.0 2.8% Communications-related services 2.3 0.0% 12.7 0.1% 60.0 0.7% Sales-related services 1,375.8 14.5% 1,223.0 13.2% 821.7 9.5% Private social bodies 47.8 0.5% 30.2 0.3% 28.5 0.3% Families 2,023.8 21.3% 2,088.8 22.7% 1,492.1 17.3% Total residents 9,193.0 97.1% 8,974.9 97.1% 8,373.1 97.0% Rest of the world 275.1 2.9% 272.2 2.9% 261.8 3.0% Total 9,468.1 100.0% 9,247.1 100.0% 8,634.9 100.0%
(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and financial lease.
Liguria absorbs 61.1 per cent of total credits, a Latium increased significantly its share to 6.1 per figure that is continuing to fall: 2002: 63.7 per cent. cent; 2003: 62.8 per cent. Outside Liguria,
29 LOANS TO CUSTOMERS (1) - GEOGRAPHIC DISTRIBUTION (millions of Euros)
31/12/0431/12/03 31/12/02 %%%
Liguria 5,783.6 61.1% 5,788.2 62.8% 5,505.5 63.7% Lombardy 1,239.4 13.1% 1,242.0 13.4% 1,049.6 12.1% Emilia Romagna 585.6 6.2% 556.4 6.0% 542.7 6.3% Latium 577.4 6.1% 379.2 4.1% 315.7 3.7% Piedmont 527.1 5.6% 484.0 5.2% 454.7 5.3% Sicily 152.6 1.6% 166.1 1.8% 155.0 1.8% Veneto 137.0 1.4% 146.6 1.6% 165.3 1.9% Marches 125.4 1.3% 122.1 1.3% 134.8 1.6% Sardinia 93.5 1.0% 74.7 0.8% 41.7 0.5% Umbria 84.7 0.9% 82.4 0.9% 94.9 1.1% Apulia 84.0 0.9% 78.5 0.8% 61.5 0.7% Tuscany 33.6 0.4% 40.0 0.4% 40.3 0.5% Total Italy 9,423.9 99.5% 9,160.2 99.1% 8,561.7 99.2% Abroad 44.2 0.5% 86.9 0.9% 73.2 0.8% Total loans to customers 9,468.1 100.0% 9,247.1 100.0% 8,634.9 100.0%
(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and leasing.
At 31/12/04, the Bank was exposed to two The Bank’s securities portfolio at 31sh major credit risk positions, totalling 301.6 December 2004 totalled 2,403.7 million, an million. The proportion of loans concentrated increase of 13 per cent in comparison to the amongst the first 50 lending exposures was 21.9 end of 2003. per cent considered singly, down on 2003, and During the year, the management of part of 25.2 per cent when group connections are taken Banca Carige’s securities portfolio was into account. transferred to Carige Asset Management SGR At the end of the year lending to customers via the underwriting of two funds, Carige amounting to 398 million was covered by swap Forziere Obbligazionario and Carige Forziere and option contracts. Dinamico. Lending to banks after value adjustments The bond component, which makes up 78.2 per amounted to 1,590.7 million, up 68.7 per cent cent of the portfolio, amounted to 1,880.3 in comparison to the figure recorded at the end million, an increase of 3.5 per cent over 2003. of 2003. The increase was recorded over all The share component (capital securities, equity components. Deposits represents the largest investments, funds) rose sharply to 523.4 million component at 1,046.9 million (+43.4 per cent). following the subscription to the reserved funds Within the lending to banks item bad loans for managed by Carige Asset Management SGR 18.3 million are included, with related and the related sale of some securities in writedowns of 4.2 million. Other credits at risk portfolio. amount to 1.2 million after impairment charges The investment portfolio is regulated by of 0.5 million. Consob’s communication of 15/2/95 and the The difference between interbank lending and Bank of Italy’s letter of 1/3/95 in addition to the deposits at 31/12/04 showed a balance in Board of Directors’ deliberation of 27/3/95, favour of the latter of 464.4 million. At the end later modified on 6/12/99. The portfolio’s total of 2003 amounts owed to banks exceeded dropped to 155.5 million (-10.5 per cent) amounts receivable by 196.9 million. This following the maturity of Italian state credit notes change is to a great extent due to the increased (CCTs) at 1/9/2004 for a total of 18 million. liquidity generated by the securitisation of The trading portfolio totalled 2,248.2 million, of mortgages performed in 2004. which 707.9 million is covered by derivatives. Further details are given in part B (sections 1 At 31st December 2004 trading securities were and 11) of the explanatory notes. valued at market price rather than at the lowest price between cost and market, as applied at
30 31/12/03. The new valuation criteria was also The notional value of outstanding derivatives applied to off balance sheet transactions. The contracts amounted to 7,110.7 million, up change, which was made on the basis of 14.7 per cent in comparison to December operational requirements, had an overall 2003. Derivatives usage is principally in the positive effect on gross income of 10.2 million form of swaps (75.5 per cent); index and rate (a positive effect of 6.4 million on net income), options account for 11.8 per cent, securities of which 4.3 million on derivative contracts and options 5 per cent, currency options 4.6 per related listed securities and 5.9 million on the cent, credit derivatives 2.6 per cent and futures remaining listed securities. 0.5 per cent. With regards to options on Losses recorded on the securities portfolio securities, a total of 102.1 million refers to the totalled 8.5 million, of which 6.8 million are hybrid convertible subordinated bond issue part related to debt securities and 1.7 million to of the securitisation transaction carried out at the capital securities and funds. This figure is higher end of 2003. than that recorded at the end of 2003 (6.7 Of the total of outstanding contracts, 13.5 per million). These figures are recorded at income cent is in the form of capital exchange contracts, statement caption 60 “gains and losses on the rest to contracts with no capital exchange financial transactions”. Related writebacks amounting to 6,149.5 million. amounting to 22.3 million (2003: 0.8 million) Hedging contracts totalled 3,596.1 million, an are stated at the same caption. increase of 14.8 per cent over 2003. These The securities portfolio also presents potential contracts represent 50.6 per cent of the total capital gains on unlisted securities of 29.1 (2003: 50.5 per cent). Balanced contracts million, of which 26.8 million refers to hedging amounted to 2,676.6 million, up 23.1 per cent derivatives contracts; potential losses of 1.5 in comparison to 2003. Open contracts, with million are related to the investment securities risk exposure for the Bank in terms of exchange portfolio. and interest rate totalled 838 million, 6.2 per Further details are given at section 2, part B of cent down on 2003. the explanatory notes.
DERIVATIVES CONTRACTS (millions of Euros)
Change % Principal (1) 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
- Forwards (2) - 4.0 - - … - - Swaps (3) 5,366.1 5,170.6 4,543.9 3,665.7 18.1 24.0 - Futures 33.0 51.5 21.4 - 54.2 … - Securities options 356.1 209.6 219.5 113.0 62.2 94.2 - Interest-rate and index options (4) 842.4 844.9 1,091.5 737.6 - 22.8 48.0 - Exchange rate options 327.5 334.3 109.6 58.9 198.8 86.1 - Credit default products 185.6 198.7 215.0 288.5 - 13.7 - 25.5 Total 7,110.7 6,813.6 6,200.9 4,863.7 14.7 27.5 - with exchange of principal 961.2 929.9 717.0 617.7 34.1 16.1 - without exchange of principal 6,149.5 5,883.7 5,483.9 4,246.0 12.1 29.2
- hedging 3,596.1 3,564.7 3,132.5 2,307.7 14.8 35.7 - trading 3,514.6 3,248.9 3,068.4 2,556.0 14.5 20.0 * balanced contracts (5) 2,676.6 2,622.5 2,174.9 1,458.1 23.1 49.2 * open-ended contracts (6) 838.0 624.4 893.5 1,097.9 - 6.2 - 18.6 (1) Principal relative to basis swaps is stated once. (2) Includes forward rate agreements. (3) Includes basis swaps, interest rate swaps, overnight indexed swaps and cross currency swaps. (4) Includes interest rate caps. (5) Contracts matched by contracts of same characteristics so giving the Bank full cover against interest and exchange-rate risk. (6) Contracts entailing exposure to interest and exchange-rate risk.
31 DERIVATIVES CONTRACTS AT 31/12/2004 ( millions of Euro )
Hedging Trading Total "balanced "open-ended Total Principal (1) contracts" (5) contracts" (6)
- Forwards (2) ------Swaps (3) 3,102.3 1,861.0 402.8 2,263.8 5,366.1 - Futures - - 33.0 33.0 33.0 - Securities options 96.0 30.1 230.0 260.1 356.1 - Interest-rate and index options (4) 387.8 438.0 16.6 454.6 842.4 - Exchange-rate options - 327.5 - 327.5 327.5 - Credit default products 10.0 20.0 155.6 175.6 185.6 Total 3,596.1 2,676.6 838.0 3,514.6 7,110.7 - with exchange of principal 263.2 286.6 411.4 698.0 961.2 - without exchange of principal 3,332.9 2,390.0 426.6 2,816.6 6,149.5
(1) Principal relative to basis swaps is stated once. (2) Includes forward rate agreements. (3) Includes basis swaps, interest rate swaps, overnight indexed swaps and cross currency swaps. (4) Includes interest rate caps. (5) Contracts matched by contracts of same characteristics so giving the Bank full cover against interest and exchange-rate risk. (6) Contracts entailing exposure to interest and exchange-rate risk.
Derivatives-related losses and gains of, portfolio and 59.8 million from other hedging respectively, 63.8 million and 52.3 million were contracts. recorded. Non-recorded gains amounted to Counterparties for the derivatives contracts are 58.1 million, of which 0.3 million relates to exclusively prime banks or finance companies. hedging contracts on the trading securities Specific provisions for counterparty risk were portfolio, and 57.8 million on derivatives therefore not made. Similarly to the previous covering bonds issued by the Bank; non- year, no derivatives-generated losses on credits recorded capital losses totalled 82.8 million, of were recorded. which 23 million stemming from hedging Further details are given in the explanatory notes derivatives relating to the trading securities section 10, part B and section 3, part C.
32 1. Trading contracts 47.1 48.5 1.1 Non-quoted trading contracts 47.0 48.4 - Forward - - - Swaps 32.5 33.8 - Options 13.1 13.9 - Credit default products 1.4 0.7 1.2 Quoted trading contracts 0.1 0.1 - Futures 0.1 0.1 - Options - - 2. Hedging contracts 16.7 3.8 2.1 Non-quoted hedging contracts 16.7 3.8 - Swaps 16.7 3.6 - Options - 0.2 2.2 Quoted hedging contracts - - Total 63.8 52.3
Total risk aggregates (cash credits and The collapse of the Genoa-based cruise guarantees) amounted to 613.9 million after operator, Festival Crociere, had a significant writedowns of 152.7 million (2003: 56.9 impact on risk aggregates for 2004 in million), an increase of 10 per cent. Expected comparison to the previous year, with effects not losses, which rose from 153.4 to 158.6 million, only on bad loan volumes but also on the represent 25.8 per cent of the total risk sectorial and geographical distribution of aggregate. Carige’s non performing loans.
33 CREDITS AT RISK AND TOTAL ALLOWANCES ( thousands of Euros )
31/12/04 30/9/04 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets
Bad loans 432,028 9,318 - 441,346 374,923 8,045 - 382,968 Watchlists 135,874 11,796 - 147,670 194,618 17,432 - 212,050 Country risk 5,642 1,781 - 7,423 5,922 2,546 - 8,468 Rescheduled loans 8,449 - - 8,449 11,262 - - 11,262 Bad leased assets - - 9,061 9,061 - - 7,900 7,900 Total credits at risk 581,993 22,895 9,061 613,949 586,725 28,023 7,900 622,648
Specific allowances 152,839 2,729 2,944 158,512 160,471 2,686 2,952 166,109
Total allowances 152,839 2,729 2,944 158,512 165,471 2,686 2,952 171,109 - Specific allowances for loan losses 152,839 - - 152,839 160,471 - - 160,471 - Specific allowances for guarantees and commitments - 2,729 - 2,729 - 2,686 - 2,686 - Specific allowances for leased assets - - 2,944 2,944 - - 2,952 2,952 - General allowances for loan losses - - - - 5,000 - - 5,000
31/12/03 31/12/02 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets
Bad loans 319,942 8,849 - 328,791 257,449 12,153 - 269,602 Watchlists 185,617 9,607 - 195,224 162,974 9,581 - 172,555 Country risk 12,340 5 - 12,345 19,390 687 - 20,077 Rescheduled loans 14,123 - - 14,123 9,315 - - 9,315 Bad leased assets - - 7,732 7,732 - - 4,698 4,698 Total credits at risk 532,023 18,461 7,732 558,216 449,128 22,421 4,698 476,247
Specific allowances 147,752 2,787 2,898 153,437 127,555 2,516 459 130,530
Total allowances 165,752 2,787 2,898 171,437 140,555 2,516 459 143,530 - Specific allowances for loan losses 147,752 - - 147,752 127,555 - - 127,555 - Specific allowances for guarantees and commitments - 2,787 - 2,787 - 2,516 - 2,516 - Specific allowances for leased assets - - 2,898 2,898 - - 459 459 - General allowances for loan losses 18,000 - - 18,000 13,000 - - 13,000
Total cash credits at risk amounted to 582 refers to three positions, all of which were million, an increase of 9.4 per cent over the categorised as performing at the end of 2003. previous December’s figure of 532 million. The Guarantees and commitments totalled overall rise is due to increases in bad loans (+112.1 22.9 million (+24 per cent) million; +35 per cent), of which 89.9 million Bad lease contracts rose from 7.7 million in 2003 to 9.1 million.
34 CASH CREDITS AT RISK (thousands of Euros)
31/12/04 30/9/04 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a)
Bad loans - customers 413,731 135,469 278,262 32.7 356,837 134,117 222,720 37.6 - banks 18,297 4,226 14,071 23.1 18,086 4,014 14,072 22.2 Watchlists - customers 135,171 12,007 123,164 8.9 193,830 19,467 174,363 10.0 - banks 703 513 190 73.0 788 513 275 65.1 Country risk - customers 5,122 - 5,122 - 5,719 - 5,719 - - banks 520 - 520 - 203 - 203 - Rescheduled loans - customers 8,449 624 7,825 7.4 11,262 2,360 8,902 21.0 Total cash credits at risk 581,993 152,839 429,154 26.3 586,725 160,471 426,254 27.4 - customers 562,473 148,100 414,373 26.3 567,648 155,944 411,704 27.5 - banks 19,520 4,739 14,781 24.3 19,077 4,527 14,550 23.7 Performing loans 10,476,914 - 10,476,914 - 10,314,279 - 10,314,279 - - customers 8,905,660 - 8,905,660 - 8,507,085 - 8,507,085 - - banks 1,571,254 - 1,571,254 - 1,807,194 - 1,807,194 - Total loans 11,058,907 152,839 10,906,068 1.4 10,901,004 160,471 10,740,533 1.5 - customers 9,468,133 148,100 9,320,033 1.6 9,074,733 155,944 8,918,789 1.7 - banks 1,590,774 4,739 1,586,035 0.3 1,826,271 4,527 1,821,744 0.2
31/12/03 31/12/02 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a)
Bad loans - customers 302,487 125,123 177,364 41.4 235,729 101,650 134,079 43.1 - banks 17,455 3,383 14,072 19.4 21,720 7,648 14,072 35.2 Watchlists - customers 184,825 16,501 168,324 8.9 162,529 15,825 146,704 9.7 - banks 792 513 279 64.8 445 267 178 60.0 Country risk - customers 11,306 - 11,306 - 18,423 - 18,423 - - banks 1,034 - 1,034 - 967 - 967 - Rescheduled loans - customers 14,123 2,232 11,891 15.8 9,315 2,165 7,150 23.2 Total cash credits at risk 532,023 147,752 384,271 27.8 449,128 127,555 321,573 28.4 - customers 512,741 143,856 368,885 28.1 425,996 119,640 306,356 28.1 - banks 19,281 3,896 15,385 20.2 23,132 7,915 15,217 34.2 Performing loans 9,657,808 - 9,657,808 - 9,549,353 - 9,549,353 - - customers 8,734,357 - 8,734,357 - 8,208,903 - 8,208,903 - - banks 923,451 - 923,451 - 1,340,450 - 1,340,450 - Total loans 10,189,830 147,752 10,042,078 1.4 9,998,481 127,555 9,870,926 1.3 - customers 9,247,098 143,856 9,103,242 1.6 8,634,899 119,640 8,515,259 1.4 - banks 942,732 3,896 938,836 0.4 1,363,582 7,915 1,355,667 0.6
Expected losses derive from an analytical 9.3 million to guarantees. The substantial rise in valuation of bad loans, restructured credits, the aggregate was due to increases in non- credits implicit in lease contracts, and significant performing cash credits. Turning to writedowns watchlist positions. Remaining watchlists are and provisions, cash credits were written down evaluated according to the presumptive by 32.3 per cent, whilst guarantees were assessment applied to expected losses. covered by redress provisions accounting for The single risk-type categories are analysed in 29.3 per cent of the total. The bad detail below: loans/lending ratio rose from 2003’s figure of - bad loans rose 34.2 per cent to 441.3 3.3 per cent to 4.4 per cent. After writedowns, million, of which 413.7 million refers to retail the figure rises from 1.9 per cent in 2003 to 3 customers, 18.3 million to lending to banks, and per cent;
35 - watchlists dropped 24.4 per cent in - country risk positions totalled 7.4 million, comparison to the previous year to 147.7 of which 5.6 million refers to cash credits and million; this fall was due to a fall in cash 1.8 million to guarantees. In comparison to credits in this category (135.9 million; -26.8 2003, the aggregate fell by 39.9 per cent with per cent). Expected losses for the aggregate no expected losses foreseen; amounted to 12.5 million and refer entirely - rescheduled loans dropped 40.2 per cent to cash credits, which were written down by to 8.4 million (2003: 14.1 million). Writedowns 9.2 per cent. The watchlist aggregate overall amounted to 0.6 million, 7.4 per cent of the was written down by 8.5 per cent; aggregate total.
CREDIT COMMITMENTS (thousands of Euros)
31/12/04 30/9/04 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b)(b/a) (a) (b)(b/a)
Bad loans 9,318 2,729 29.3 8,045 2,686 33.4 Watchlists 11,796 - - 17,432 - - Country risk 1,781 - - 2,546 - - Total guarantees and commitments at risk 22,895 2,729 11.9 28,023 2,686 9.6 Performing guarantees and commitments 1,025,759 - - 1,042,286 - - Total guarantees and commitments 1,048,654 2,729 0.3 1,070,309 2,686 0.3
31/12/03 31/12/02 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b)(b/a) (a) (b)(b/a)
Bad loans 8,849 2,787 31.5 12,153 2,516 20.7 Watchlists 9,607 - - 9,581 - - Country risk 5- - 687 - - Total guarantees and commitments at risk 18,461 2,787 15.1 22,421 2,516 11.2 Performing guarantees and commitments 1,184,192 - - 1,214,473 - … Total guarantees and commitments 1,202,653 2,787 0.2 1,236,894 2,516 0.2
36 ALLOWANCES AND WRITE OFFS AGAINST LENDING RISKS (thousands of Euros) 31/12/04 31/12/03 31/12/02 PATRIMONIAL AND ECONOMIC ASSETS Total credits at risk Closing balances 613,949 558,216 476,247 Year's net change 55,734 81,969 53,702 Write offs 166,347 (3) 69,308 (3) 61,338 (3) Year's gross change 222,081 151,277 115,040 Reserves for loan losses - Caption 90 Opening balances 18,000 13,000 5,165 - provisions (+) - 18,000 13,000 - utilizations (-) 18,000 13,000 5,165 - other changes (-) - - - Closing balances - 18,000 13,000 Allowances and write offs Allowances (a) 158,512 153,437 130,530 Write offs 166,347 (3) 69,308 (3) 61,338 (3) Total allowances and write offs (b) 324,859 222,745 191,868 Allowances and write offs of the year 171,422 92,215 72,522 ((b) - (a) of the previous year) COVERING OF ALLOWANCES AND WRITE OFFS OF THE YEAR Income statement 137,792 65,039 55,253 Caption 100 - Provisions for risk and charges (leasing) (+) 45 2,440 29 Caption 120 - Provisions (+) (1) 141,751 (3) 66,699 (3) 59,578 (3) Caption 130 - Recoveries (-) (2) 4,004 4,100 4,354 Withdrawals from income statement 15,630 14,176 12,104 Irrecoverable interest on overdue loans (+) 15,630 14,176 12,104 Income statement of the previous years 18,000 13,000 5,165 Utilization of general allowances for loan losses - caption 90 (+) 18,000 13,000 5,165 Other changes (-) - - - (4) Total 171,422 92,215 72,522 (1) Caption 120 for 31/12/04, 31/12/03 and 31/12/02 includes exchange-translation differences, respectively, of 29,000, 82,000 and 91,000 Euros stemming from write-downs relative to Nice branch. (2) Caption 130 for 31/12/04, 31/12/03 and 31/12/02 excludes, respectively, 1,445,000, 5,095,000 and 5,510,000 Euros related to the ex- Tax Collection Service and to written off credit collection. (3) Inclusive of 13,656,000 Euros related to the securitisation of bad loans.
Lending risk at 31st December 2004 totalled - 4 million refers to writebacks on credits 171.4 million (2003: 92.2 million ), of which previously written down or written off, 15.6 million in the form of written off interest recorded at income statement caption arrears. The remaining amount can be broken 130; down as follows: - 18 million refers to utilisation of the - 141.8 million refers to writedowns credit risk fund, recorded at income recorded at income statement caption statement 90. 120;
37 BAD LOANS (1) - DISTRIBUTION BY SECTOR (thousands of Euros)
31/12/04 31/12/03 31/12/02 %%%
Public Administration - 0.0% 23 0.0% 21 0.0% Financial institutions 10,097 2.4% 13,720 4.5% 11,497 4.9% Non-financial and personal businesses 335,313 81.0% 224,088 74.1% 172,687 73.3% Agriculture, farming and fishing 2,367 0.6% 2,735 0.9% 3,053 1.3% Energy products - 0.0% - 0.0% 173 0.1% Mineral and ferrous metals and non ferrous 1,605 0.4% 1,550 0.5% 243 0.1% Mineral and non metallic products 6,752 1.6% 4,605 1.5% 3,831 1.6% Chemical products 10,070 2.4% 817 0.3% 964 0.4% Metal products 10,312 2.5% 8,416 2.8% 6,233 2.6% Agricultural and industrial machinery 5,584 1.3% 4,779 1.6% 6,620 2.8% Office equipment 748 0.2% 709 0.2% 1,346 0.6% Electrical supplies 1,658 0.4% 1,780 0.6% 2,660 1.1% Means of transport 2,847 0.7% 1,931 0.6% 1,036 0.4% Food, drink, tobacco 15,137 3.7% 30,204 10.0% 6,273 2.7% Textiles, leather goods, clothing 5,852 1.4% 5,150 1.7% 3,868 1.6% Paper, printing and publishing 2,084 0.5% 1,760 0.6% 1,011 0.4% Rubber and plastic goods 1,811 0.4% 1,676 0.6% 1,519 0.6% Other industrial products 4,194 1.0% 3,094 1.0% 2,949 1.3% Building and public works 65,112 15.7% 68,468 22.6% 64,474 27.5% Wholesale & retail trade, salvage and repairs 55,094 13.3% 47,398 15.7% 39,420 16.7% Hotel and catering services 9,743 2.4% 8,529 2.8% 7,017 3.0% Transport services 5,380 1.3% 4,239 1.4% 4,779 2.0% Air and sea transport-related services 83,765 20.2% 131 0.0% 79 0.0% Transport-related services 3,753 0.9% 1,983 0.7% 1,629 0.7% Communications-related services 229 0.1% 67 0.0% 219 0.1% Sales-related services 41,215 10.0% 24,067 8.0% 13,291 5.6% Private social bodies 1,064 0.3% 1,809 0.6% 1,178 0.5% Families 60,755 14.7% 50,223 16.6% 38,758 16.4% Total residents 407,229 98.4% 289,863 95.8% 224,141 95.1% Rest of the world 6,501 1.6% 12,624 4.2% 11,588 4.9% Total 413,730 100.0% 302,487 100.0% 235,729 100.0%
(1) Inclusive of expected losses.
Bad loans are concentrated amongst non- industry and public works (15.7 per cent; 65.1 finance, and family businesses: 81 per cent of million) and services to commerce (13.3 per the total at 335.3 million; households come next cent; 55.1 million). In comparison to the end of accounting for 14.7 per cent of the total bad 2003, there was a drop in the share of bad loan portfolio of the Bank at 60.8 million. The loans represented by the food and drink industry sea and air transport industry has the highest risk (from 10 per cent in 2003 to 3.7 per cent), after rating, representing 20.2 per cent of the total the writing off of amounts following the Parmalat (83.8 million), followed by the construction collapse.
38 BAD LOANS/LENDING RATIO (1) - DISTRIBUTION BY SECTOR
31/12/04 31/12/03 31/12/02
Public Administration - - - Financial institutions 3.1% 5.3% 2.4% Non-financial and personal businesses 5.8% 4.1% 3.2% - including (2): Wholesale & retail trade, salvage and repairs 5.2% 4.5% 3.9% Sales-related services 3.0%2.0% 1.6% Building and public works 7.5% 9.0% 7.2% Air and sea transport-related services 24.9% 0.0% 0.0% Hotel and catering services 3.5% 3.3% 2.7% Private social bodies 2.2% 6.0% 4.1% Families 3.0% 2.4% 2.6% Total residents 4.4% 3.2% 2.7% Rest of the world 2.4% 4.6% 4.4% Total 4.4% 3.3% 2.7%
(1) Inclusive of expected losses. (2) Principal branches of the economy in terms of overall credit exposure.
The risk index of Banca Carige’s lending inexistent. The sea and air transport industry has portfolio measured in terms of the bad the highest risk rating within the non-finance and loans/total lending ratio recorded an increase family business sector at 24.9 per cent, followed from 2.7 per cent in 2002 and 3.3 per cent in by the construction industry and public works 2003 to 4.4 per cent at 31/12/04. In particular, (7.5 per cent) and services to trade, salvage and the non-finance and family business sector was repairs (5.2 per cent), hotels, bars, restaurants most at risk at 5.8 per cent. The risk ratios for (3.5 per cent) and other sales-related services (3 financial institutions and households are, per cent). respectively, 3.1 and 3 per cent. Risk intrinsic in lending to the public administration is practically
BAD LOANS (1) - GEOGRAPHIC DISTRIBUTION (thousands of Euros)
31/12/0431/12/03 31/12/02 %%%
Liguria 284,881 68.9% 176,249 58.3% 151,710 64.5% Piedmont 38,768 9.4% 27,914 9.2% 25,642 10.9% Lombardy 30,287 7.3% 25,057 8.3% 15,621 6.6% Emilia Romagna 27,627 6.7% 43,089 14.2% 19,911 8.4% Sicily 8,796 2.1% 6,704 2.2% 5,675 2.4% Veneto 5,744 1.4% 3,886 1.3% 852 0.4% Latium 5,739 1.4% 2,099 0.7% 809 0.3% Apulia 3,534 0.9% 2,362 0.8% 986 0.4% Tuscany 2,780 0.7% 2,912 1.0% 2,917 1.2% Umbria 2,097 0.5% 133 0.0% - - Marches 1,001 0.2% 286 0.1% - - Sardinia 256 0.1% 90 0.0% 60 - Total Italy 411,510 99.5% 290,781 96.1% 224,183 95.1% Abroad 2,221 0.5% 11,706 3.9% 11,546 4.9% Total 413,731 100.0% 302,487 100.0% 235,729 100.0%
(1) Inclusive of expected losses.
39 Liguria’s share of bad loans rose from 58.3 to share of bad loans remained stable at 9.4 per 68.9 per cent, whilst there were falls for Emilia cent, whilst bad loan levels in the Carige Romagna (from 14.2 to 6.7 per cent) and Group’s other operating areas were marginal. Lombardy (from 8.3 to 7.3 per cent). Piedmont’s
BAD LOANS / LENDING RATIO (1) - GEOGRAPHIC DISTRIBUTION
31/12/04 31/12/03 31/12/02
Tuscany 8.3% 7.3% 7.2% Piedmont 7.4% 5.8% 5.6% Sicily 5.8% 4.0% 3.7% Liguria 4.9% 3.0% 2.8% Emilia Romagna 4.7% 7.7% 3.7% Apulia 4.2% 3.0% 1.6% Veneto 4.2% 2.7% 0.5% Umbria 2.5% 0.2% - Lombardy 2.4% 2.0% 1.5% Latium 1.0% 0.6% 0.3% Marches 0.8% 0.2% - Sardinia 0.3% 0.1% 0.1% Total Italy 4.4% 3.2% 2.6% Abroad 5.0% 13.5% 15.8% Total 4.4% 3.3% 2.7%
(1) Inclusive of expected losses.
The bad loans/lending ratio for Emilia Romagna by Piedmont (7.4 per cent) and Sicily (5.8 per dropped from 7.7 to 4.7 per cent. Tuscany has cent). the highest level of risk at 8.3 per cent, followed
40 SERVICES, MARKETING AND CUSTOMER PROTECTION
During 2004, Banca Carige continued to focus management products regards principally: attention on core customer intermediation activities rationalisation of securities management lines, and the development of its services portfolio which will now reflect customer preferences for utilising customer fidelity as the principal lever. In bond solutions; review of fund management with fact, the Group has now reached one million the elimination of the distinction between the fund banking customers with a further 700,000 lines “Classic” and “ Multibrand”; creation of new customers of our insurance subsidiaries. product lines named “Total Return”, which will seek Banca Carige alone has more than 600,000 an acceptable balance between return and risk. customer contracts; 515,000 (86 per cent of Bancassurance premiums rose 13.2 per cent in the total) refer to deposits (current accounts; comparison to the previous year to 155.2 million. savings and deposits accounts; cash bonds; The principal source of premiums continues to be certificates of deposit), whilst the remaining 86,000 life assurance (149.9 million; 96.6 per cent of the are in the form of lending agreements (14 per cent total), within which both Carige Unit and Risparmio of the total). Assicurato recorded increases; with regards to the The development of the Group’s wealth first, premiums collected rose from 8.5 to 40.2 management services was centred around the million, whilst premiums collected by the second specialised subsidiary Carige Asset Management moved forward from 27 to 41.3 million. During the SGR, now in its first full year of business. The range year Carige Unit Dinamicamente Protetta was of Carige AM-brand funds on offer consists of launched. This new unit linked insurance product partly the management of dedicated funds for has two main features: on one hand, it is an Carige Group customers (previously managed by investment instrument with upside potential, whilst, Eptafund SGR and Nextra I.M. SGR) and partly new on the other, it is a life product that protects capital fund lines. invested. The following products recorded falls Carige AM currently manages funds on behalf of during the year: Carige Index (41.6 million; - 39.5 Carige Group customers as well as managing per cent) and Gestilink (23.4 million; -10.1 per reserved funds on behalf of the Carige Group’s cent). banks. The company also operates in the field of Turning to accident insurance, despite an increase insurance funds. At the end of the year, amounts of 34 per cent over 2003, total premiums amount managed by the company reached more than 6 to 5.3 million, still marginal at 3.4 per cent of the billion, of which 4.5 billion refers to asset total. The most significant growth was achieved by management, 1.3 billion to private banking and the mortgage/insurance product Mutuo 100%’, 0.3 billion to insurance funds. which more than doubled premiums collected over During the year a review of the asset management 2003 to 1.7 million. The policy represents a lines offered by Carige AM was started. The guarantee against which the mortgage is granted objective is to reorganise and renew product offer and offers total debt/guarantee cover. in addition to introducing a new service (“Carige Gestioni”), which will respond more effectively to current market scenarios and provide customers with a broader range of choice in terms of their investment requirements. The overhaul of wealth
41 BANCASSURANCE (thousands of Euros)
Change % 31/12/2004 31/12/2003 31/12/2002 2004 2003
Total life assurance volumes 788,519 681,178 590,942 15.8 15.3
Total premiums collected 155,203 137,122 139,562 13.2 -1.7
Life 149,916 133,176 136,522 12.6 -2.5 - Carige Unit 40,233 8,513 36,610 372.6 -76.7 - Gestilink 23,392 26,015 28,789 -10.1 -9.6 - Gestilink Plus 170 250 2,473 -32.0 -89.9 - Risparmio assicurato 41,314 26,960 31,902 53.2 -15.5 - Carige Index 41,582 68,756 34,375 -39.5 100.0 - Vita assicurata 1,153 1,351 1,540 -14.7 -12.3 - Previdenza attiva 520 611 701 -14.9 -12.8 - Mutuo assicurato 1,552 720 132 115.6 445.5
Accident 5,287 3,946 3,040 34.0 29.8 - Correntista sicuro 1,206 1,080 1,082 11.7 -0.2 - Auto assicurata 623 1,218 1,125 -48.9 8.3 - Auto risparmio 557 - -… … - Casa assicurata 412 386 407 6.7 -5.2 - C/C assicurato 134 167 179 -19.8 -6.7 - Famiglia assicurata 650 510 247 27.5 106.5 - Mutuo 100% 1,705 585 - 191.5 …
In the field of supplementary pensions, the There was a 2.7 per cent increase in the number of Bank’s ‘Carige Open Pension Fund’, constituted in Carige Bancomat cards, now totalling 278,113 in accordance with Legislative decree 124/93 and number. The number of withdrawals carried out by later modifications and additions, had a total of these cards at Carige cash points or those of other 17,146 fund subscribers in comparison to 15,533 banks rose from 11.2 to 11.6 million (+3.6 per at the end of 2003. The fund’s assets amounted to cent) for a related amount of 1,638 million. The 64.5 million (45.5 million at the end of 2003). The average number of withdrawals per card was 42. fund is divided into three investment lines. The number of payment transactions carried out on With regards to payment systems, particular Carige POS terminals reached 8,972,000 for a attention was placed on marketing the pre-paid corresponding amount of 1,660 million. Credit charge card CarigeEasyPay also for Internet cards belonging to the CartaSì network rose at payments made by non customers of the Bank as 31/12/04 by 8.7 per cent in number to 105,031. part of research being carried out by Banca Carige The number of transactions performed at POS into the possibilities of using the web for the sale of terminals installed in shops and other outlets banking products. During the year, the increased significantly, rising from 11,211 to BankPassWeb service, promoted by the Italian 12,567 (+12.1 per cent). Banking Association (ABI), was developed further. Treasury and payment services managed by The service, offered at Group level, is via two the Bank on behalf of public bodies and companies products: Bankpass Web Esercente and Bank Pass numbered 593 at 31st December 2004. Total funds Titolare. The first is targeted at shopkeepers as handled reached 15.1 billion with an average support for Internet sales and payment, whilst the exposure of 52.1 million and an average amount second enables credit card holders to make of funds deposited of 188.5 million. purchases on the Internet without transmitting their credit card details.
42 There was a rise in the volume of financing product was launched, Carige Affari, which offers granted against pledged goods: up 10.6 falling bank charges in relation to the number of per cent to 11.7 million. transactions performed and a specific package of Carige’s foreign business (correspondent account services. banking, etc.) recorded 562,260 transactions, up In addition to marketing measures aimed at 3.4 per cent in comparison to the previous year. promoting the sale of products, specific attention Amounts handled reached 21.8 billion, a fall of was placed on high net worth clients. Carige’s 36.3 per cent over 2003. During the year, the corporate service was strengthened with the process of decentralisation towards single territorial creation of three teams within the Bank’s Large areas, and some branches in the field of Corporate office, which from May 2004 took over guarantees and commitments, was completed. responsibility for all Carige’s corporate clients. The Corporate Finance activities can be year also saw the promotion and sale of interest summarised in 13 transactions for a total risk hedging instruments as well as the focus on the underlying amount of 582 million as well as a acquisition of new medium-sized businesses. series of learning initiatives in the area of legislative In May 2004, a project to maximise the change, seminars and collaboration. During the performance of the Group’s retail network was year there was also activity in the areas of private launched. The project focuses on increasing the equity, project financing (as foreseen by the so- performance of each sales point (branch, insurance called Merloni ter law), structured finance office) both by exploiting potential revenue sources operations and restructuring transactions. in existing customers and by acquiring, through the Banca Carige’s marketing activities activities of market makers outside the branch, new concentrated on providing support for the Group's customers. three-point strategy regarding its customer In line with the Group’s policy of new branches portfolio: identification of potential customers; over the next few years, analysis regarding the acquisition of new customers; consolidation of optimal location of new branches continued. relations with existing customers. As part of the Italian Banking Association (ABI) Marketing of the Group’s investment product lines project for transparency and disclosure within the concentrated on: bonds issued by the Group’s industry (Patti Chiari), Carige identified a series of banks, which recorded significant increases in sales basic banking services (Servizio bancario di base) during the year; pensions solutions, which satisfy contained in a current account, including contained customer requirements in terms of levels of both prices for potential customers with at present no safety and return; wealth management, with the bank account. Other initiatives include a shopping placement of two new index linked products (Carige list of Carige accounts that allows the potential Index Protezione & Valore and Carige Index customer to find a clear and immediate Evoluzione Valore) and the sale of the Carige Unit comparison of costs and services present in each Dinamicamente Protetta line; investment transfers to account. those products of most value to our customers. Qualified staff are an essential part of the The offer of the Group’s lending products was marketing of our products and services. qualitatively improved by the addition of new Consequently, training continued throughout the structured solutions, in line with market needs and year with emphasis on customer relations and in response to an increasingly internationalised and specific product knowledge, the latter helped by competitive system. The mortgage products intranet availability of updated product descriptions. portfolio includes not only those traditionally on Customer protection is handled by a specific offer (fixed rate, rising rate, floating rate), but also a complaints office of the Bank, which operates in fixed and floating solution (50 per cent at fixed, 50 close collaboration with our legal and internal per cent at floating), a mortgage with an interest auditing offices in order to update computer ceiling (Mutuo con il tetto) and a mortgage for the records required by Consob. The complaints office full value of the house (Mutuo Centopercento). also manages relations with the banking industry Small and medium-sized enterprises were also Ombudsman and the Bank of Italy; these relations targeted for the offer of a wide range of products, consist principally in responding to observations such as mortgages and various forms of leasing made by either body following a complaint made solutions (property leases, product and motor car by a customer dissatisfied by a previous reply on leasing). During 2004, a new current account our part.
43 This office was given the responsibility to manage Other conferences included the annual meeting relations with the Group’s banking customers with held at Carige’s head offices in Genoa to debate regards to the requirements contained in article 13 the Governor of the Bank of Italy’s yearly report on of Law 675/96 (“Privacy Law”) and carry out the the state of the Italian economy. necessary formalities relating to customer rights Banca Carige also organised financial round tables foreseen by the above-mentioned article. During in various cities newly part of the Group’s the year, the policy document on data security was distribution (Rome, Palermo, Perugia, Catania and updated as required by Legislative decree Bari). The meetings, which attracted considerable 196/2003. interest, focused mainly on the implications The segmentation of customers on the basis of stemming from the implementation of new capital credit risk and the creation of a credit risk data adequacy requirements foreseen by Basel 2. (Centrale dei Rischi) resulted in increased requests Turning to the world of the arts, the prestigious on the part of customers during the year for book prize for women writers Rapallo-Carige was clarifications concerning the use of personal data. given extensive media attention both locally and nationally. Carige continued its involvement in specialised publishing, in particular, with its well-established reviews in the fields of law and economics PUBLIC RELATIONS AND THE Economia e Diritto del Terziario and Prospettive PROMOTION OF CULTURAL, SCIENTIFIC dell’Economia, both published in collaboration with AND SOCIAL ACTIVITIES the University of Genoa. Books published during the year included the Activities in the field of promoting the Banca Carige critically acclaimed Genova e l’Europa Group and its services and products were Continentale and the catalogue of the exhibition rationalised during 2004. Four macro areas have held at the beginning of the year of Carige’s coin been identified: media relations; sponsorship of collection. cultural and sporting events; organisation of conferences and cultural events; heightened valuation of the Bank’s artistic assets. During the year, Carige continued to utilise high DISTRIBUTION CHANNELS AND profile events for advertising, including the Genoa RESOURCE MANAGEMENT International Boat Show and the Milan Trade Fair as well as sponsoring a number of sporting events. Banca Carige Group is also official sponsor of the The distribution of Banca Carige’s products and Italian Serie A football team, Livorno Calcio AS. services is based on an integrated three-legged Conferences promoted by the Bank included those multi-channel distribution system: traditional; organised by various professions and trade remote; mobile. associations. The traditional distribution channel is made In order to raise awareness of the Group’s asset up by our branch network and a network of private management company Carige AM SGR, a golf and corporate banking advisers. tournament marking the opening of the company’s offices in its prestigious Villa Raggio headquarters The number of Banca Carige’s branches at the end in Genoa was organised with great success. of 2004 remained unchanged following two branch Carige was also present both as organiser and openings and two closures: in total 393 branches, sponsor at a number of high profile events as part 201 (51.1 per cent) in Liguria, 38 in Sicily, 36 in of “Genoa: European Culture Capital 2004”. Lombardy, 33 in Latium, 31 in Piedmont, 19 in One of the most important events of the year was Emilia Romagna, 12 in Veneto, 9 in Apulia, 7 in the Forex Congress, the annual meeting of Italy’s Sardinia, 3 in Tuscany, 2 in Marches, and 1 in top names from the world of finance. Under the Umbria. The network includes one branch in Nice, auspices of Banca Carige, the meeting was also France and three representative offices abroad. The attended by the Governor of the Bank of Italy, Mr Bank also has a desk at the offices of the Regione Antonio Fazio. Liguria in Brussels.
44 DISTRIBUTION NETWORK 31/12/04 30/9/04 31/12/03 31/12/02 A) TRADITIONAL number Q% number Q% number Q% number Q% NORTH-WEST ITALY 268 68.2 268 68.2 268 68.2 266 68.0 Liguria 201 51.1 201 51.1 202 51.4 201 51.4 - Genoa 136 34.6 136 34.6 137 34.9 136 34.8 - Imperia 27 6.9 27 6.9 27 6.9 27 6.9 - La Spezia 19 4.8 19 4.8 19 4.8 19 4.9 - Savona 19 4.8 19 4.8 19 4.8 19 4.9 Lombardy 36 9.2 36 9.2 36 9.2 35 9.0 Piedmont 31 7.9 31 7.9 30 7.6 30 7.7 NORTH-EAST ITALY 31 7.9 31 7.9 31 7.9 31 7.9 Emilia Romagna 19 4.8 19 4.8 19 4.8 19 4.9 Veneto 12 3.1 12 3.1 12 3.1 12 3.1 CENTRAL ITALY 39 9.9 39 9.9 39 9.9 39 10.0 Latium 33 8.4 33 8.4 32 8.1 32 8.2 Marches 3 0.8 3 0.8 3 0.8 3 0.8 Tuscany 2 0.5 2 0.5 3 0.8 3 0.8 Umbria 10.3 10.3 1 0.3 1 0.3 SOUTH ITALY AND ISLANDS 54 13.7 54 13.7 54 13.7 54 13.8 Sicily 38 9.7 38 9.7 38 9.7 38 9.7 Apulia 9 2.3 9 2.3 9 2.3 9 2.3 Sardinia 71.8 71.8 7 1.8 7 1.8 BRANCHES ABROAD: Nice (France) 1 0.3 1 0.3 1 0.3 1 0.3 TOTAL 393 100.0 393 100.0 393 100.0 391 100.0
31/12/04 30/9/04 31/12/03 31/12/02 Private banking consultants 94 94 93 66 Corporate consultants 81 81 75 44
B) REMOTE 31/12/04 30/9/04 31/12/03 31/12/02 ATM - Bancomat 465 465 461 455 Bancacontinua (self service) 13 13 13 13 POS 12,567 12,305 11,211 9,440 Service on line (1) 66,602 64,605 57,982 43,119 (1) Internet banking and Call Center contracts.
C) MOBILE 31/12/04 30/9/04 31/12/03 31/12/02 Insurance agents (2) 277 296 290 220 Estate agents 1,549 1,519 1,425 1,269 (2) Agents of the Group’s insurance subsidiaries distributing Banca Carige products.
The rapid and continuing evolution of financial Service for high net worth clients and a Financial markets, structurally low interest rates, and the Consultancy Service for Businesses. availability of a large range of financial instruments The private banking consultancy service combine to make the job of wealth management seeks to offer its clients differentiated service, whilst and lending to businesses all the more complex. at the same time guaranteeing operational For this reason, Carige has developed a review of efficiency and commercial effectiveness. At its distribution structure that is organised in various 31/12/04, there were 94 advisors, in 37 phases. The review is based on the creation of operational districts. Each district has a district commercial and organisational modules manager to which the advisors refer. The service differentiated according to customer segment was extended to Bergamo (Lombardy) during the (private and corporate). Part of the project is the year. creation of a Personalised Financial Consultancy The Corporate Consultancy Service is offered to medium and large businesses and at 31st
45 December 2004, there were 81 consultants carried out during the year rose by 8.4 per cent to operating over 37 districts situated in Liguria, more than 160,000, of which money-movement Tuscany, Lombardy, Piedmont, Emilia Romagna transactions accounted for 16,000 (around 165 and Marches. million). With regards to remote channels, the number of Carige’s mobile channels are made up fully-automated branches of the “Bancacontinua” principally by the Group’s insurance agents. Thanks network remained at 13, whilst the number of ATM- to rulings made by both the Bank of Italy and the Bancomat cash points rose by 4 in comparison to Italian insurance industry regulator ISVAP, Banca the end of 2003. There was considerable Carige stipulated with the Group’s two insurance expansion in the number of POS terminals installed companies – Carige Assicurazioni and Carige Vita in retail outlets: up from 11,211 in December Nuova – agreements for the distribution of Carige 2003 to 12,567. banking products at the offices of the insurance The need to provide our customers with access to companies. A total of 277 insurance offices banking services outside the normal business hours have signed these agreements, which aim not only of branches has led to the development of to find new customers, but also to revitalise alternative channels of distribution. Carige’s on contacts with existing customers in terms of fidelity line services (specific offers for the family, private and net worth to the Bank. Support to the offices is banking clients, corporate, self-employed provided by a group of 35 financial professions such as lawyers, architects and consultants (promotori) who promote a package accountants), which include the Internet and call of products and related services. centre, allows the customer to access information Estate agents working in agreement with the and carry out transactions (including securities Bank are also part of the mobile distribution trading) via computer and/or phone according to network. The objective here is to extend our the service subscribed to. mortgage business. At 31st December 2004, there There was considerable growth in net banking also were more than 1,500 estate agent offices during 2004 in terms of the number of subscribers collaborating with Banca Carige. Out of around and transactions (money-movement transactions, 3,100 contracts proposed by estate agents to their involving the movement of money with a customers, around 1,000 mortgage contracts were subsequent effect on the balance of the account, signed, figures similar to 2003. Average mortgage and information-related transactions, such as values rose both at the proposal stage (128,000 in balance enquires, which have no effect on the comparison to 115,000 in 2003) and at balance of the account). At the end of 2004, there completion (120,000 in comparison to 108,000 were 49,993 contracts in comparison to the in 2003). previous year’s total of 41,658. The number of The number of Banca Carige employees active customers, namely those subscribers who dropped slightly in comparison to the previous year effected at least one transaction during the year, from 3,759 at 31st December 2003 to 3,719. totalled 45,060. After absorbing the transfer to the Bank of 371 The number of transactions amounted to around employees from Capitalia, this figure confirms a 5.5 million, an increase of 3.2 per cent in long-term trend. In detail, the total is made up by comparison to 2003. This rise was particularly high 56 senior executives, 705 managers, and 2,958 in traditional transaction forms (just over 4 million clerical and ancillary members of staff. There are transactions; +8.8 per cent), which at December 2,079 male and 1,640 female employees. The 2004 accounted for 74 per cent of all Internet average age of employees is around 43 with 18 transactions. Trading dropped by 9.9 per cent to years service. About 28% of staff (1,054 around 1.5 million transactions, a figure that employees) are employed in Carige’s Genoa head represents only 26 per cent of the total. Money- offices; the remaining amount are involved in movement transactions rose by 7.2 per cent to market activities. With regards to types of more than 600,000, representing 1.1 billion, employment contract utilised, 95 per cent of staff slightly down on 2003 (-0.9 per cent). are full-time, permanently employed; the rest are There was little significant change in the volume of part-time temporary employees. Traineeship and the Carige’s call centre: the number of contracts job learning contracts make up an insignificant 0.2 amounted to 16,000, of which 2,800 active (17 per cent. per cent of the total). The number of transactions
46 PERSONNEL
31/12/04 30/09/04 31/12/03 31/12/02 (1) N. % N. % N. % N. %
Grade Executives 56 1.5 45 1.2 46 1.2 41 1.2 Managers 705 19.0 719 19.3 746 19.8 607 17.3 Other employees 2,958 79.5 2,956 79.5 2,967 78.9 2,864 81.5 TOTAL 3,719 100.0 3,720 100.0 3,759 100.0 3,512 100.0 Activities Head-offices 1,052 28.3 1,070 28.8 1,054 28.0 1,065 30.3 Branches 2,667 71.7 2,650 71.2 2,705 72.0 2,447 69.7 (1) Exclusive of 371 members of staff of the 42 branches acquired by Banca Carige from Capitalia Group employed by the Bank with effect 1/1/03.
Regulation no. 1725/2003 and adopts THE ADOPTION OF INTERNATIONAL IFRS 1; ACCOUNTING STANDARDS (IAS/IFRS) - Regulation no. 2086/2004 of 19/11/2004 (OJEC L363/1 of 9/12/2004) modifies Regulation no. 1725/2003 and adopts IAS The European Commission’s Regulation no. 1725, 39; made it compulsory for all EU publicly traded - Regulation no. 2236/2004 of 29/12/2004 companies to adopt from 1st January 2005 in the (OJEC L392/1 of 31/12/2004) modifies preparation of their consolidated statements new Regulation no. 1725 regarding IFRS 3, 4 international accounting standards (IAS and IFRS) and 5, and IAS 36 and 38; as defined in Regulation no. 1606/2002 of the - Regulation no. 2237/2004 of 29/12/2004 European Parliament and Council. (OJEC L393/1 of 31/12/2004) modifies The current situation as to the adoption and Regulation no. 1725/2003 regarding IAS implementation of the new standards can be 32 and IFRIC 1; summarised by the following Regulations as - Regulation no. 2238/2004 of 29/12/2004 published in the Official Journal of the European (OJEC L394/1 of 31/12/2004) modifies Communities (OJEC): Regulation no. 1725/2003 regarding IAS - Regulation no. 1725/2003 of 29/9/2003 1, 2, 8, 10, 16, 17, 21, 24, 27, 28, 31, (OJEC L261/1 of 13/10/2003) adopts 33, 40. existing IAS from the date on which At national level, pursuant to article 25 of Law Regulation no. 1606/2002 entered into 306/2003 the Government has delegated authority force (14/9/2002). IAS 32 and 39 were to adopt the accounting principles into national excluded; legislation via legislative decrees. The scope of - Regulation no. 707/2004 of 6/4/2004 application of the principles was extended to (OJEC L113/3 of 17/4/2004) modifies include the financial statements of both listed and non-listed companies in addition to banks and
47 financial intermediaries subject to Bank of Italy - wider levels of disclosure. oversight. On 27th February 2005, the Council of Application of the new principles will result in Ministers passed a legislative decree (the IAS differences in the valuation of balance sheet items. Decree) containing the criteria for the On first time adoption, these effects, pursuant to implementation of IAS and IFRS. IFRS 1, will be on net assets. Consequently, there Article 2 of the above-mentioned Decree states, in are likely to be differences in the value of the net addition to the preparation of compulsory IAS- assets of the banks belonging to the Carige Group compatible consolidated statements for publicly from those recorded at 31/12/04 and those at traded companies, banks and insurance companies 1/1/05. (publicly traded and non-publicly traded), that the The introduction of the new principles will have an new legislative framework (in force from 1st January impact far beyond accounting and the preparation 2005) may, if desired, be also applied to non- of financial statements; the effects will be felt on consolidated statements prepared by publicly information systems (different organisation of data traded companies, banks, financial institutions and and information), organisation (changes in related subsidiaries for the year 2005, in advance accounting processes with effects on organisational of compulsory application from 2006. structures), corporate culture (the need to create On 21st February 2005, the Bank of Italy supplied new professional profiles and specific training banks with draft outlines for the preparation of programmes). The coherent application of the financial statements and explanatory notes in the principles requires an integrated approach that light of IAS and IFRS application. takes into account the logic underpinning the On 17th February, CONSOB, the Italian securities principles and their impact. market watchdog, distributed a consultation During the first half of 2003, Banca Carige as the document that covers the following areas: periodic leader of a universal financial services group reporting; preparation of invitations for investment (banking, insurance, financial services) began to and price listing, the definition of correlated parties. identify, on one hand, the professional duties Subject to approval on the part of regulators, the required and, on the other, to define guidelines, Banca Carige Group intends to apply the following programmes, models, methods and processes that three measures: will enable the effective introduction of the new 1. utilisation as foreseen by the IAS Decree of administrative/accounting system foreseen by the the opportunity to adopt IAS/IFRS also for European Commission’s Regulation. the statements of the Group’s banks for the This project is part of a wide-ranging reengineering financial year 2005; process carried out throughout the Group, 2. first time application of IAS/IFRS to the half including the insurance subsidiaries. It is designed year statements of the Group’s banks at and led by an ad hoc steering committee, made up 30th June 2005; by senior managers from the accounting, business 3. utilisation of the opportunities foreseen by and risk management, ITC, organisation, research Consob (‘Documento di Consultazione’) and planning offices. The Committee is supported regarding the application of existing by a Coordinating Group formed by staff members regulations for the preparation of quarterly with specific competences in the areas of statements at 31st March 2005. accounting, management control, risk The adoption of the new accounting principles will management, IT systems, and organisation. The have wide-ranging effects, the most significant of Coordinating Group’s responsibilities include legal which can be summarised as follows: and regulatory aspects of the process, the definition - the use of the principle of fair value rather of measures to be taken, and the monitoring of than historic cost for the valuation of work in progress. financial instruments and securities During an initial fact-finding phase the investments; Coordinating Group, in collaboration with external - the systematic use of financial valuations of consultants, identified the primary information and certain assets (loans) and liabilities (staff valuation effects of adoption and consequently its funds); ensuing effects on organisation, IT&C, and - regular application of impairment testing to accounting; training and learning followed with at monitor the value of significant assets first in-house courses, followed by external training (loans, equity investments, goodwill); programmes and participation in workshops
48 organised by ABI, the Italian Banking Association. million; this was, however, more than made up by This activity is flanked by internal work groups sales and value adjustments of 5.9 million. which, particularly during 2004, carried out an The results described above had an effect on the organisational/information analysis of the Bank’s internal composition of the aggregate. Financial information systems in order to verify the presence lease assets increased their share of the total of data required and, where absent, the manner of aggregate from 72 to 74 per cent, whilst premises retrieval. Software suppliers to the Bank were were down from 25.9 to 24.4 per cent, and brought actively into this process. furniture and fittings dropped from 2.1 to 1.6 per During 2004, the following measures were carried cent of the total. out: the completion of detailed analytical models Remaining amounts include advances for and operational plans above all for the valuation of investments of 62.3 million, almost exclusively loans and securities; the signing of contracts for the referring to lease assets. Tangible fixed assets purchase of software; the launch of two significant include revaluations carried out in accordance with consultancy agreements aimed at, among other the provisions contained in Laws 576/75, 72/83, things, customer segmentation foreseen by IFRS 14 413/91 and 218/90 and amounted to 186.2 and conformity of Carige’s ALM in the light of new million (2003: 186.6 million). hedge accounting rules and integration of CRM Depreciation charges on remaining amounts and ALM systems for the fair value calculation of totalled 454 million, of which 268.2 million refers banking book items. to financial lease assets. Banca Carige has sought to build an appropriate Criterion relating to the valuation of the useful life management information platform that is equipped of property for amortisation of the same was to handle the increased information flows that changed during the year: from 1st January 2004, derive from, on one hand, our position as a property is amortised at an annual rate of 1.5 per growing financial conglomerate and, on the other, cent rather than at the previous rate of 3 per cent. the increased informational requirements that the Previously frozen capital gains (suspended from regulatory framework has identified. liability to tax pursuant to Law 218/90) amounting In conclusion, on the basis of an analysis of first- to 157.4 million were released. The subsequent tax time application of fair value to equity investments payable (imposta sostitutiva) totalled 14.2 million, outside the Group and to technical fixed assets, it is recorded at extraordinary reserves. reasonable to expect that the ensuing benefits will Further information can be found at section 4.1, outweigh potential negative effects of the same part B of the explanatory notes. criteria on application to loans, with a resulting Intangible assets amounted to 460.8 million, overall positive impact on the Bank’s financial down 2.7 per cent in comparison to December position. 2003. The fall is due entirely to depreciation charges for the period of 24.9 million, which neutralised rises related to software purchases (11 million) and other increases (1.2 million). INVESTMENTS The largest amount (431.9 million) refers to goodwill on branch acquisitions still to be amortised (54.8 million refers to the 21 branches At 31st December 2004, Banca Carige’s total purchased from Banco di Sicilia, 256.5 million tangible fixed assets amounted to 1,055.3 refers to the 61 branches purchased from the Intesa million, an increase of 14.6 per cent over the Group, and 120.6 million refers to 42 branches previous year. This rise was due to an increase in from Capitalia). lease assets, which rose from 662.6 to 780.3 Amortisation charges relating to the three million (+117.7 million; +17.8 per cent). acquisitions, calculated from 2002 on a rising- There were increases in other tangible assets: charge basis in correlation with the increased future property rose significantly to 257.7 million (+7.9 profitability of the branches, are as follows: 1.2 per cent), following purchases totalling 24.2 million relating to the ex-Banco di Sicilia branches; million, sales for 0.4 million and value adjustments 5.5 million relating to the ex-Intesa branches; 3.8 of 5 million. Furniture and fittings amounted to million relating to the ex-Capitalia branches. 17.3 million, down 9.3 per cent as a result of Details regarding the method of amortisation purchases made during the year totalling 4.1
49 utilised are given in Part A, section 1 of the - Centro Fiduciario SpA, is a trust company; explanatory notes. - Galeazzo Srl, Columbus Carige Other intangible assets include software products Immobiliare SpA and Ettore Vernazza SpA (21.6 million; +5.8 per cent), start-up costs (2.4 offer property-related services; million; -27 per cent), and other intangibles (5 - Argo Finance One Srl and Priamar Finance million; -33.3 per cent), of which the most Srl are the special purpose vehicles significant items are maintenance charges on third- established for the securitisation of bad party premises ( 3 million). loans. Total depreciation charges on recorded intangible Banca Carige has an indirect holding in the assets amount to 81 million, of which 24.9 million following companies, the book value of which was recorded during 2004. is not included at ‘equity investments within the Further information can be found at section 4.2, Group’: part B of the explanatory notes. - Immobiliare Carisa Srl is owned directly by The value of the Bank’s equity investments the Group subsidiary Cassa di Risparmio di (excluding investment securities) rose 39.9 per cent Savona. The company offers property- from 648 million at the end of 2003 to 906.4 related services; million. - Assi90 Srl, offering insurance-related Within this amount, 886.9 million refers to services, is owned directly by the Group significant holdings, up 38.3 per cent following two subsidiaries Carige Assicurazioni and acquisitions completed during the year: the first Carige Vita Nuova; refers to the purchase of a 90 per cent holding in - AG Srl and Savona 2000 Srl offer Cassa di Risparmio di Carrara (book value: 173.6 insurance-related services and are owned million), whilst the second refers to the purchase of directly by Assi90 Srl. 51.09 per cent of Banca Cesare Ponti (book value: The book value of equity investments outside 34.1 million). The remaining increases are a result the Group dropped by 5.7 per cent to 29.2 of subscribing to equity raising operations on the million in comparison to 2003. part of the subsidiaries Carige Assicurazioni SpA (37.1 million), Columbus Carige Immobiliare SpA (11 million) and Carige Vita Nuova SpA (2.5 million). CORPORATE GOVERNANCE Other equity investments amounted to 19.5 million, down 8.3 per cent in comparison to 31/12/03, following the sale of non-strategic holdings. In February 2001, the Board of Directors of Banca Capital gains subject to suspended liability to tax as Carige deliberated its adherence to the Code of foreseen by Law 218/90, which totalled 4.4 million Best Practice in the area of Self-Regulation for at 31/12/03 (3.2 million referring to significant Listed Companies (“the Code”). holdings), were fully released during the year. Banca Carige’s governance system is fully in line No writedowns or writebacks were carried out with the requirements stated by the Code. It should during the year. be pointed out that the present structure of Banca The book value of equity investments within Carige, its functional organisation and company the Group increased by 42.2 per cent over procedures were already established and therefore December 2003 to 877.2 million. pre-empted the Code’s requirements. The following companies belong to the Banca Full details regarding the governance aspects of Carige Group: Banca Carige and its subsidiaries are contained in - Banca del Monte di Lucca SpA, Cassa di the annual corporate governance report deposited Risparmio di Savona SpA, Cassa di at Borsa Italiana SpA and available for Risparmio di Carrara SpA and Banca shareholders’ consultation along with other Cesare Ponti SpA are banks; documentation required by the Shareholders’ - Carige Assicurazioni SpA and Carige Vita Meeting. The same documentation can also be Nuova SpA are insurance providers; found at www.gruppocarige.it. - Carige Asset Management SGR SpA is a manager trust company specialising in asset management.;
50 In particular, at 31st December 2004 total lending RELATIONS WITH SUBSIDIARIES AND granted to subsidiaries amounted to 181.2 million, RELATED PARTIES whilst deposits amounted to 490.2 million. Guarantees and commitments totalled 5 million. The following table “Relations with Subsidiaries” Relations between Banca Carige and its illustrates in detail relations with subsidiaries and subsidiaries and other related parties are other companies in which Banca Carige has a conducted as part of the Bank’s normal activities significant holding. Details of ownership structure and are regulated according to market conditions and variations carried out during the year are in accordance with Consob, the Italian Securities provided in the explanatory notes at section 3, part Market Regulator, recommendation no. 97001574 B. of 20/2/97.
EQUITY INVESTMENTS (thousands of Euros)
31/12/04 Assets (1) Liabilities (1) Guarantees & Revenue Expenses Dividends Commitments SUBSIDIARIES 181,209 490,238 5,017 30,209 15,169 39,342 Galeazzo Srl - 2,872 - 8 85 - Columbus Carige Immobiliare SpA 11,119 - - 875 1,954 - Immobiliare Ettore Vernazza SpA 733 2 - 94 - 957 Argo Finance One Srl 21 21 - 10 - - Priamar Finance Srl 24 10 - 10 - - Centro Fiduciario SpA 2 1,146 - 439 306 88 Cassa di Risparmio di Carrara SpA 31,269 260,591 - 241 3,492 17,480 Cassa di Risparmio di Savona SpA 20,988 117,302 - 12,666 4,922 12,287 Banca del Monte di Lucca SpA 64,842 33,842 1,555 1,564 1,837 2,066 Carige Asset Management SGR SpA 3,880 4,047 - 6,865 1,127 - Carige Vita Nuova SpA 491 12,674 - 3,205 140 3,649 Carige Assicurazioni SpA 47,304 55,342 3,462 3,017 1,287 2,815 Assi 90 Srl 453 1,918 - 1,211 13 - AG Srl 83 395 - 3 6 - Savona 2000 Srl - 76 - 1 - -
SIGNIFICANT HOLDINGS 144,539 1,001 - 2,336 55 152 Frankfurter Bankgesellschaft AG 144,539 92 - 2,329 8 152 Assimiliano Srl - 796 - 2 10 - Recina Servizi Srl - - - 1 37 - Consorzio per il Giurista d'Impresa Scrl - 25 - - - - Assistars Srl - 11 - - - - B.D.A. SpA - - - 3 - - U.C. Sport e Sicurezza Srl - 15 - - - - Atoma Srl - 62 - 1 - -
TOTAL 325,748 491,239 5,017 32,545 15,224 39,494 (1) Unlike table 3.2 in the explanatory notes, this table includes items “other assets”, “accrued income and prepaid expenses”, “other liabilities”, “accrued expenses and defferred income”.
51 With regards to the subject of related parties, case such transactions are performed by delegated Banca Carige SpA has at all times conducted its bodies. In this way, procedures will be respected at business in accordance with Consob all times. In order to carry out the provisions communication no. 2064231 of 30/9/2002 contained in the Regulation, the Bank has prepared (“related parties”), the provisions of the same a list of all its related parties, which will be authority’s Regulation 11971/99 (article 71) and distributed to our subsidiaries. None of the article 11 of the Code of Self Regulation prepared transactions performed with related parties have by publicly traded companies. The Board of required market disclosure of the type stated in Directors of Banca Carige in their meeting of 2nd Consob Regulation no. 11971. The requirements August 2004 approved a specific regulation of article 136, Legislative decree no. 385 of regarding the definition of and relations with 1/9/93 regarding banks, for which Banca Carige related parties in line with Consob criteria. has its own specific internal regulation, clearly The same document defined guidelines for business remain unchanged as does legislation concerning relations with such parties, particularly with regards administrators’ interests. Further details are given in to economically and financially significant the Carige Group’s Corporate Governance Report. transactions, for which the Board will have exclusive The following table provides details of total credits authority. The document identifies quantitative and and guarantees at 31/12/04 granted to the Bank’s qualitative criteria for information regarding such administrators and statutory auditors. transactions to be transmitted to the Board in the
CREDITS AND GUARANTEES GRANTED (thousands of Euros)
31/12/04 31/12/03 (a) D irectors - Cash credits 18,789 23,638 - Guarantees granted 9,588 3,975 (b) Statutory auditors - Cash credits 256 355 - Guarantees granted - - Total 28,633 27,968
The table below provides information requested by company or its subsidiaries on the part of its Consob in its deliberation no. 11971 of 14/5/99 directors, statutory auditors, senior executives or, and later modifications, in addition to the either directly or on their behalf, by their spouses or regulation enacting Legislative decree 58/98 children under the age of 18. regarding the disclosure of shareholdings in a
52 SHAREHOLDINGS OF BOARD MEMBERS, STATUTORY AUDITORS AND GENERAL MANAGER (1) Number of Number of Number of shares in Number of shares in Name and Surname Company represented shares possession shares sold possession bought 31/12/03 31/12/04 Dott. Giovanni BERNESCHI Banca Carige S.p.A. 116,170 - - 116,170 Dott. Alessandro SCAJOLA Banca Carige S.p.A. 2,200 - - 2,200 Prof. Adalberto ALBERICI Banca Carige S.p.A. 5,454 7,546 - 13,000 Sig.ra Annamaria GALLI in ALBERICI Banca Carige S.p.A. 10 - - 10 Prof. Avv. Piergiorgio ALBERTI Banca Carige S.p.A. 5,454 - - 5,454 P.I. Mario CAPELLI Banca Carige S.p.A. 4,500 55,500 50,000 10,000 Rag. Remo Angelo CHECCONI Banca Carige S.p.A. 3,100 - - 3,100 Comm. Pietro ISNARDI Banca Carige S.p.A. 11,360 - - 11,360 Dott. Fulvio ROSINA Banca Carige S.p.A. - - - - Sig.ra Maria Franca GUALCO in ROSINA (2) Banca Carige S.p.A. 354,594 - - 354,594 Rag. Alfredo SANGUINETTO Banca Carige S.p.A. 70,636 - - 70,636 Sig.ra Silvana FERRERO in SANGUINETTO Banca Carige S.p.A. 40,858 - - 40,858 (1) Share ownership is direct unless otherwise stated (2) Indirect ownership
accounting and tax-consultancy service contracts SHARE OWNERSHIP STRUCTURE AND amounted to 1.4 million. RELATIONS WITH THE CASSA DI RISPARMIO DI GENOVA E IMPERIA FOUNDATION CARIGE SHARES At 31st December 2004, Banca Carige’s share capital amounted to 1,113,326,839, in the form of 959,897,518 ordinary shares and 153,429,321 There was a general upturn on financial markets convertible savings shares. during 2004, which was particularly vibrant in the The holding on the part of the Bank’s principal second half of the year. Greater stability on the shareholder - the Cassa di Risparmio di Genova e world political scene and economic recovery, in Imperia Foundation – remained unchanged at particular from the United States, continued the 43.37 per cent. Carige’s other significant positive trend started in 2003 after several years of shareholders are: CDC-CNCEP: 11.02 per cent; sharp falls. WestLB AG: 7.47 per cent; El Monte de Piedad y In Italy, the Mibtel general share index rose over Caja de Ahorros de Huelva y Sevilla: 2.31%. twelve months by 17.7 per cent, achieving positive Diffused ownership accounts for the remaining results both in the first (+5.7 per cent) and second 35.83 per cent. half (+11.4 per cent) of the year, particularly in the With regards to business relations existing between last quarter. the Foundation and Banca Carige, the Bank has Banking share prices also rose, although at a lower liabilities of 53.7 million (of which 52 million in the rate: the MIB banking index increased by 9.8 per form of convertible subordinated bonds issued cent over twelve months with most of the rise being during the share capital increase performed by concentrated in the last half of the year (+ 8.7 per Banca Carige during 2003), which generated cent). interest charges of 0.9 million. Assets amount to Banca Carige’s share price continued to rise: 0.7 million. Revenues for the Bank on banking during its tenth year of listing, the share at commissions and service contract fees relating to 31/12/04 was quoted at 2.955, an increase of 5.8 transferred personnel, and administrative, per cent in comparison to the same period of the
53 previous year. Growth was particularly strong Carige ordinary shares were the object of 42,883 during the first six months of the year (+9.2 per trades (2003: 39,275) relating to a total of cent), whilst during the second half of the year, it 125,531,376 shares (2003: 89,742,508 shares) slipped 3.1 per cent. The average share price for for a total counter value of 382.7 million (2003: the year was 3.022 in comparison to 2003’s figure 223.7 million). With regards to savings shares, of 2.491. there was a total of 1,108 trades (2003: 1,440) Carige’s savings share price, listed from 4th relating to 836,696 shares (2003: 2,768,282 December 2002, recorded a 3 per cent increase, shares) for a value of 2.7 million (2003: 8 million). rising from 3.258 at the end of 2003 to 3.357 at The share capital increase performed at the end of 31/12/04. This rise was concentrated in the second the year did not have an effect on the prices of half of the year (+3.1 per cent), maintaining Carige shares, so confirming the solidity of the overall stability during the first half. The average investment and the trust investors have in our Bank. price for the year was 3.062. Dividends for the ordinary and savings shares were, respectively, 0.0723 and 0.0923.
CARIGE SHARE PERFORMANCE
Change %
31/12/04 30/9/04 31/12/03 31/12/02 year 2nd half 1st half
CARIGE 2.955 2.929 2.792 2.056 5.84 -3.08 9.20 CARIGE saving shares 3.357 3.02 3.258 2.210 3.04 3.13 -0.09 Milan general share index 23,515 21,045 19,980 17,443 17.69 11.37 5.68 Milan banking index 2,472 2,223 2,251 1,727 9.82 8.71 1.02
54 INCOME STATEMENT AND NET INCOME
Net profit rose 1.3% over 2003 to 107.5 detail, the recovery of current account charges million. The result was conditioned by an totalled 50.1 million, up 2.5 per cent, and net economic situation in which a consolidated commissions on payment and collection upturn has yet to appear. The effects for the amounted to 28.7 million, an increase of 2.7 Bank can be summarised as follows: per cent. Wealth management commissions - with regards to lending, despite growth dropped 1.8 per cent to 50.5 million. in the medium/long-term component Net gains from financial transactions amounted favoured by continuing low rates and to 18.6 million. At 31st December 2004, trading strong for demand for mortgages, there securities of the Carige Group’s banks are was limited significant expansion in valued at market price (average of prices short-term credits as a result of weak recorded during the last month of the year). demand on the part of businesses; They were previously valued at the lowest of - with regards to deposits, although there either cost or market. This change in valuation was good growth in bonds and criteria, made for operational reasons, satisfactory levels in current accounts, produced a positive effect on gross profit of expansion in wealth management 10.2 million (6.4 million on net profit), of which products particularly in the second half 4.3 million refers to derivatives and hedged of the year was disappointing; listed securities, and 5.9 million to remaining - market rates continued to fall during the listed securities. Details are given in part A, first six months of the year with only a section 1 of the explanatory notes. slight upturn in the third and fourth The contribution of dividends to total revenues quarters. Consequently, interest margins amounted to 44.1 million, down 31.1 per cent narrowed both at short and over 2003. Comparison with 2003 is affected medium/long-term maturities with by a change in the accounting treatment applied negative effects on net interest income. to dividends received from subsidiaries during Net interest income amounted to 322.1 that year, subject to a tax credit of 51.51 per million, a fall of 0.8 per cent over 2003. cent. Under new IRES rules, tax credits on these Increases in amounts handled could not offset dividends are eliminated. After excluding certain the reduced interest spreads mentioned above. extraordinary items in addition to sterilising the In detail, interest income rose 5.4 per cent to effects of accounting changes, ordinary 575.8 million. Within this aggregate, lending dividends for 2004 rose 19.9 per cent in interest income fell by 2.7 per cent from 439.7 comparison to 2003, principally due to to 427.7 million, whilst interest on securities rose dividends paid out by the newly-acquired Cassa 43.7 per cent from 82.8 to 118.9 million. di Risparmio di Carrara. Interest charges increased 14.4 per cent to Other operating income reached 231 million, 253.8 million; amounts payable on customer up 43.7 per cent over 2003’s result of 160.8 deposits dropped 12.1 per cent from 49.7 to million. This strong growth is attributable to 43.6 million, whilst interest payable on bonds revenues generated from the securitisation and subordinated liabilities increased 10.1 per operation carried out during 2004. Lease cent from 124 to 136.5 million. revenues, after several years of two-figure Non-interest income rose 15.8 per cent to growth, rose 1.2 per cent. 451.5 million. This increase was due to growth Rises in other operating income were tracked by throughout the aggregate with the exception of increases in other operating expenses, which dividends. Particularly significant was the rose 20.3 per cent to 9.3 million following contribution of securitisation revenues of 61.1 losses on alienated lease assets. million recorded at “other operating income”. Gross operating income totalled 773.5 Net commission income totalled 167.1 million, million (+8.3 per cent). a rise of 2.2 per cent in comparison to 2003. In
55 INCOME STATEMENT (thousands of Euros) Change % 2004 30/9/04 2003 2002 04/03 03/02
10 Interest income and similar revenues 575,848 421,831 546,478 567,000 5.4 -3.6 20 Interest expenses and similar charges - 253,773 - 179,524 - 221,820 - 263,694 14.4 -15.9 NET INTEREST INCOME 322,075 242,307 324,658 303,306 - 0.8 7.0 40 Commission income 184,555 134,880 179,169 160,710 3.0 11.5 50 Commission expenses - 17,494 - 12,059 - 15,627 - 12,825 11.9 21.8 60 Gains (losses) from financial transactions 18,629 312 9,229 - 5,989 101.9 … 30 Dividends and other revenues 44,078 33,891 63,958 87,245 -31.1 -26.7 70 Other operating income 231,011 185,347 160,752 123,889 43.7 29.8 110 Other operating expenses - 9,322 - 5,926 - 7,747 - 5,800 20.3 33.6 NON INTEREST INCOME 451,457 336,445 389,734 347,230 15.8 12.2 GROSS OPERATING INCOME 773,532 578,752 714,392 650,536 8.3 9.8 80 Administrative costs - 384,141 - 270,108 - 366,712 - 321,821 4.8 13.9 – Personnel - 236,688 - 165,851 - 234,968 - 199,388 0.7 17.8 – Other administrative costs - 147,453 - 104,257 - 131,744 - 122,433 11.9 7.6 90 Depreciation and amortization of intangible and tangible fixed assets - 127,629 - 95,732 - 123,207 - 91,052 3.6 35.3 OPERATING COSTS -511,770 -365,840 -489,919 -412,873 4.5 18.7 OPERATING INCOME 261,762 212,912 224,473 237,663 16.6 - 5.5 100 Provisions for risks and charges -1,716 -1,933 -3,966 -3,176 -56.7 24.9 120 Provisions for loan losses and for guarantees and commitments -141,780 -112,346 -66,782 -59,670 112.3 11.9 130 Recoveries of loans and reversals of provisions for guarantees and commitments 5,449 3,876 9,195 9,863 -40.7 -6.8 140 Additional provisions for loan losses - - -18,000 -13,000 -100.0 38.5 150 Write-downs to financial fixed assets - - - -11 … … 160 Recoveries of financial fixed assets - - 107 88 -100.0 21.6 PROVISIONS AND WRITE-DOWNS -138,047 -110,403 -79,446 -65,906 73.8 20.5 170 INCOME FROM ORDINARY ACTIVITIES 123,715 102,509 145,027 171,757 - 14.7 - 15.6 180 Extraordinary income 20,586 7,139 30,029 14,559 -31.4 106.3 190 Extraordinary expenses - 5,559 - 4,083 - 7,022 - 2,598 -20.8 170.3 200 EXTRAORDINARY INCOME, NET 15,027 3,056 23,007 11,961 - 34.7 92.4 INCOME BEFORE TAXATION 138,742 105,565 168,034 183,718 - 17.4 - 8.5 210 Variation of Reserves for general banking risks 0 - 5,165 - … … 220 Income taxes - 31,201 - 24,500 - 67,000 - 78,900 -53.4 -15.1 230 NET INCOME 107,541 81,065 106,199 104,818 1.3 1.3
56 INCOME STATEMENT (thousands of Euros)
2004 2003 4th quarter 3rd quarter 2nd quarter 1st quarter 4th quarter 3rd quarter 2nd quarter 1st quarter
10 Interest income and similar revenues 154,017 152,972 138,004 130,855 134,375 133,190 137,043 141,870 20 Interest expense and similar charges -74,249 -75,605 -53,911 -50,008 -50,532 -51,664 -55,538 -64,086 NET INTEREST INCOME 79,768 77,367 84,093 80,847 83,843 81,526 81,505 77,784 40 Commission income 49,675 44,763 44,422 45,695 50,059 43,188 44,169 41,753 50 Commission expenses -5,435 -4,112 -4,663 -3,284 -4,060 -4,095 -4,176 -3,296 60 Gains (losses) from financial transactions 18,317 -3,272 -129 3,713 5,919 6,020 -1,168 -1,542 30 Dividends and other revenues 10,187 11,503 17,542 4,846 -347 7,128 37,717 19,460 70 Other operating income 45,664 45,919 100,687 38,741 44,673 39,347 38,968 37,764 110 Other operating expenses -3,396 -2,702 -2,541 -683 -3,148 -2,726 -1,231 -642 NON INTEREST INCOME 115,012 92,099 155,318 89,028 93,096 88,862 114,279 93,497 GROSS OPERATING INCOME 194,780 169,466 239,411 169,875 176,939 170,388 195,784 171,281 80 Administrative costs -114,033 -92,021 -93,575 -84,512 -92,689 -92,971 -92,728 -88,324 – Personnel -70,837 -55,379 -55,952 -54,520 -60,968 -57,453 -58,557 -57,990 – Other administrative costs -43,196 -36,642 -37,623 -29,992 -31,721 -35,518 -34,171 -30,334 90 Depreciation and amortization of intangible and tangible fixed assets -31,897 -31,686 -31,519 -32,527 -31,823 -30,702 -31,210 -29,472 OPERATING COSTS -145,930 -123,707 -125,094 -117,039 -124,512 -123,673 -123,938 -117,796 OPERATING INCOME 48,850 45,759 114,317 52,836 52,427 46,715 71,846 53,485 100 Provisions for risks and charges 217 -924 -178 -831 -723 -580 -2,330 -333 120 Provisions for loan losses and for guarantees and commitments -29,434 -14,526 -86,822 -10,998 -18,385 -20,613 -11,792 -15,992 130 Recoveries of loans and reversals of provisions for guarantees and commitments 1,573 848 1,931 1,097 4,561 873 1,262 2,499 140 Additional provisions for loan losses - - - - -18,000 - - - 150 Write-downs to financial fixed assets ------160 Recoveries of financial fixed assets - - - - 107 - - - PROVISIONS AND WRITE-DOWNS -27,644 -14,602 -85,069 -10,732 -32,440 -20,320 -12,860 -13,826 170 INCOME FROM ORDINARY ACTIVITIES 21,206 31,157 29,248 42,104 19,987 26,395 58,986 39,659 180 Extraordinary income 13,447 -35 6,818 356 11,839 3,720 11,097 3,373 190 Extraordinary expenses -1,476 -549 -1,748 -1,786 -1,662 -1,452 -1,973 -1,935 200 EXTRAORDINARY INCOME, NET 11,971 -584 5,070 -1,430 10,177 2,268 9,124 1,438 INCOME BEFORE TAXATION 33,177 30,573 34,318 40,674 30,164 28,663 68,110 41,097 210 Variation of Reserves for general banking risks - - - - 5,165 - - - 220 Income taxes -6,701 -9,650 510 -15,360 -8,500 -12,250 -30,350 -15,900 230 NET INCOME 26,476 20,923 34,828 25,314 26,829 16,413 37,760 25,197
Operating costs amounted to 511.8 million, an expansion in leasing activity, which required increase of 4.5 per cent over the previous year. increased writedowns totalling 1.8 million in The most significant increase was recorded by comparison to 2003, and amortisation of administrative costs (+11.9 per cent), whilst goodwill on branch purchases totalling 10.5 personnel charges rose by only 0.7 per cent and million (2003: 8.7 million). Amortisation of writedowns on fixed assets by 3.6 per cent. goodwill relating to these branches is calculated There was a fall in the Bank’s cost/income ratio on a rising-charge basis until the integration of from 68.6 to 66.2 per cent. However, the the branches is completed, after which, a fixed valuation of lease credits as other credits would amortisation charge will be applied. Further lower the ratio further to 61. 6 per cent (2003: details are given in section 1, part A of the 64 per cent). explanatory notes. Personnel expenses totalled 236.7 million (+0.7 Operating income consequently rose to per cent). The rise is due to increased 261.8 million, up 16.6 per cent over 2003. contributions to the supplementary staff pension Provisions include those made with regards to fund (2004: 19.1 million; 2003:13.8 million). the securitisation of non performing loans Personnel expenses are principally made up by carried out at the end of 2000 and amount to salaries, which reached 152.2 million in 138 million, an increase of 73.8 per cent in comparison to 153.7 million in 2003 (-1 per comparison to those made in 2003. Within this cent). aggregate, provisions for risks and charges Other administrative costs amounted to 147.5 totalled 1.7 million (-56.7 per cent) and million, rising by 11.9 per cent over the previous writedowns on credits amounted to 136.3 year. Within this aggregate, general expenses million (+136.7 per cent). rose 7.6 per cent to 113.3 million and indirect The collapse of the Genoa cruise operator taxes increased by 29.3 per cent to 34.2 million. Festival Crociere had significant effects on the Writedowns on financial fixed assets rose by 3.6 quality of the Bank’s loan portfolio during the per cent to 127.6 million, essentially a result of year. Carige’s total exposure with regards to the
57 company amounted to 106.4 million, of which Pre-tax profit was 138.7 million, down 17.4 80 million was written off. The remaining 26.4 per cent over 2003. million was written down by 9.3 per cent with a Income tax for the period was down 53.4 per further negative effect on the P&L of 2.5 million. cent from 67 to 31.2 million, following the During the year 18 million from credit risk abolition of tax credits on dividends and reserves was utilised (liabilities caption 90). changes to criteria utilised for the calculation of Income from ordinary activities dropped indirect tax. The average tax rate applied to pre- 14.7 per cent from 145 million to 123.7 tax profit dropped from 39.9 per cent in 2003 million. to 22.5 per cent. Extraordinary net income totalled 15 Net income amounted to 107.5 million, an million, down from 2003’s figure of 23 million. increase of 1.3% in comparison to 2003. Return Extraordinary income, which last year was on Equity remained unchanged at 6.6 per cent. boosted by the sales of non-strategic investments The fall in Return on Average Equity from 7.6 to for 20.6 million, fell to 20.6 million at 6.7 per cent is related to a 16.2 per cent rise in 31/12/04 (-31.4 per cent). This year’s figure average equity following an equity raising includes 10.1 million received on the sale of our operation performed by Carige at the end of holding in Cassa di Risparmio di Firenze. 2003.
NET INCOME (millions of Euros)
120.000 104.8 106.2 107.5 9.00% 100.000 8.00% 80.000 7.65% 7.00% 60.000 6.61% 6.63% 40.000 6.00%
20.000 5.00%
0.000 4.00% 2002 2003 2004
NET INCOME ROAE
The proposed distribution of net profit for the year (107.5 million) is as follows:
58 DISTRIBUTION OF NET INCOME
31/12/04 Net Income 107,540,673.77 Reserve for dividends on own shares 266,821.77 Total 107,807,495.54 Legal reserve 10,754,067.38 Taxed extraordinary reserve 13,491,311.28 Ordinary share dividend (0.0723 euro per share) 69,400,590.55 Saving share dividend (0.0923 euro per share) 14,161,526.33
The proposed dividend to be distributed to the If approved, total dividends to be distributed Bank’s shareholders is 0.0723 for each of the remain unchanged over 2003 with a dividend 959,897,518 ordinary shares and 0.0923 for pay out of 77.7 per cent (2003: 78.6 per cent). each of the 153,429,321 savings shares. It is proposed that dividends on own shares in Savings shares pay a dividend increased by an portfolio at the moment of distribution be amount equivalent to 2% of the nominal value destined to a specific reserve. of ordinary shares.
59 On the basis of the proposed distribution of SHAREHOLDERS’EQUITY earnings for the year to be presented to the AGM for approval, shareholders’ equity amounts to:
SHAREHOLDERS' EQUITY (thousands of Euros)
31/12/04 31/12/03 31/12/02
Capital Stock 1,113,327 1,113,327 1,020,550 Additional paid-in capital 262,839 255,023 136,095 Reserves 262,029 252,361 229,584 - legal 88,725 77,971 67,351 - taxed extraordinary 55,403 56,489 44,397 - decree 153/99 11,718 11,718 11,718 - decree 124/93 122 122 57 - merger 12,341 12,341 12,341 - incorporation 16,589 16,589 16,589 - own shares 1,301 - 11,619 - purchase of treasury stock 75,699 77,000 65,381 - art. 55, decree 917/86 131 131 131 Revaluation reserves 7,956 7,956 7,956 Total 1,646,151 1,628,667 1,394,185 Reserve for general banking risks - - 5,165 Total 1,646,151 1,628,667 1,399,350
SHAREHOLDERS' EQUITY (millions of Euros)
1,600 1,400 1,200 1,000 1,629 1,646 800 1,399 600 400 200 0 2002 2003 2004
Positive variations in shareholders’ equity derive taxation, following payment of the fifth and final from the distribution of net income for 2003, quota relative to tranching losses on securitised provisions of 7.8 million to the issue premium bad loans, and the release of 14.6 million reserve, non-inclusive of the effects of deferred destined to the extraordinary reserve of capital
60 gains previously subject to suspended liability to Turning to share market indicators, the tax as foreseen by Law 218/90. earnings per share ratio was 0.097 in Carige’s total share capital at 31/12/04 was comparison to 0.095 at 31/12/03. The share’s made up by 959,897,518 ordinary shares and P/E ratio for 2004 rose from 26.11 to 31.29; 153,429,321 savings shares with a nominal there was also an increase also in the value of 1 euro each. Total share capital was price/book value ratio from 1.73 to 2.07. 1,113,326,839.
SHAREMARKET INDICATORS
31/12/04 30/9/04 31/12/03 31/12/02
Return on Equity (ROE) % 6.63 6.67 6.61 7.65
Return on Average Equity (ROAE %) 6.66 6.70 7.64 7.76
Earnings per share (EpS) (1) 0.097 0.097 0.095 0.103 Price/Earnings ratio (P/E) (2) (6) 31.29 31.20 26.11 18.96
Price/Book value (P/BV) (3) (6) 2.07 2.08 1.73 1.45 Dividend yield (%) (4) (6) 2.39 2.39 2.90 3.71 Net profit (in thousands of euros) 107,541 81,065 106,199 104,823 Annual percentage variation 1.3 2.1 1.3 1.2
Equity (thousands of euros) (5) 1,622,173 1,619,954 1,606,029 1,369,723
Number of shares/1000 1,113,327 1,113,327 1,113,327 1,020,550 Average share price for the period (6) 3.022 3.029 2.491 1.947 (1) Earning for share. (2) Price/Earning. (3) Price/Book value. (4) Dividend for share / Average share price in the period. (5) Capital and reserves (including general banking risks fund) prior to profit allocation. (6) Ordinary shares only. (7) Annualised values
61 Core capital at 31st December 2004 in comparison to the end of 2003 (1,469.1 amounted to 1,445 million, down 1.6 per cent million). Full details are given in the table below:
BREAKDOWN OF TOTAL CAPITAL (thousands of euros)
31/12/04 30/9/04 31/12/03 31/12/02
Tier 1 Capital: positive elements eligible for inclusion (a) 1,638,196 1,630,359 1,620,710 1,391,392 Share capital 1,113,327 1,113,327 1,113,327 1,020,550 Reserves 262,030 256,412 252,360 229,582 Additional paid-in capital 262,839 260,620 255,023 136,095 General banking risks fund - - - 5,165
Tier 1 Capital: negative elements (b) 462,113 517,897 473,530 491,752 Goodwill 431,849 437,121 442,392 450,799 Other negative elements 30,264 80,776 31,138 40,953
Total Tier 1 capital (c = a-b) 1,176,083 1,112,462 1,147,180 899,640
Supplementary capital (d) 499,752 496,372 512,498 405,708
Reductions (e) 230,800 (1) 216,080 (1) 190,582 (1) 181,120 (1)
Total core capital (c+d-e) 1,445,035 (1) 1,392,754 (1) 1,469,096 (1) 1,124,228 (1) (1) As requested by regulators, this item includes writedown in equity investment in subsidiary Carige Assicurazioni SpA (171,200 thousand euros) and the same subsidiary’s subordinated bond issue subscribed by Banca Carige (44,304 thousand euros). Excluding this deduction, total core capital would amount to 1,663,039 thousand euros.
Tier 1 capital includes positive elements totalling issued during the share capital increase 1,638.2 million; negative elements to be concluded in December 2003. Negative deducted amount to 462.1 million. elements are represented by holdings in Carige Supplementary capital is made up almost Assicurazioni, Frankfurter Bankgesellschaft, exclusively by a lower tier 2 subordinated loan FILSE and Ligurcapital, in addition to the issue (September 2001) of 399 million and a subordinated loan issued by Carige convertible subordinated loan of 101.5 million Assicurazioni.
62 CORE CAPITAL AND SOLVENCY RATIOS (thousands of Euros)
31/12/04 30/09/04 31/12/03 31/12/02
Core capital Tier 1 capital 1,176,083 1,112,462 1,147,180 899,640 Tier 2 capital 499,752 496,372 512,498 405,708 Deductions (1) -230,800 -216,080 -190,582 -181,120 Total capital (1) 1,445,035 1,392,754 1,469,096 1,124,228
Weighted assets Credit risk (1) 9,526,943 9,117,747 9,101,528 8,545,463 Market risk 759,600 1,162,690 988,300 681,020 Other prudential requirements 669,257 684,624 483,286 483,291 Total weighted assets (1) 10,955,800 10,965,061 10,573,114 9,709,774
Solvency ratios % Tier 1/weighted assets for credit risk 12.34% 12.20% 12.60% 10.53% Total capital/weighted assets for credit risk (1) 15.17% 15.28% 16.14% 13.16%
Tier 1 capital / Total weighted assets (2) 10.73% 10.15% 10.85% 9.27% Total capital / Total weighted assets (1) (2) 13.19% 12.70% 13.89% 11.58%
(1) Amounts include writedown to holding in subsidiary Carige Assicurazioni as requested by regulators. Excluding this deduction, total capital would rise to 1,663,039 thousand euros with related rises in the total capital/weighted assets for credit risk from 15.17 per cent to 17.42 per cent, and total capital/total weighted assets ratios from 13.19 per cent to 15.15 per cent. (2) Total weighted assets include credit and market risks.
With regards to capital absorption and core capital, leave a total of 678.1 million in capital adequacy levels, weighted assets for excess to capital requirements. credit risk totalled 9,526.9 million, substantially Solvency, calculated on the basis of the total greater than the figure required: 666.9 million capital/weighted assets for credit risk ratio was (2003: 637.1 million). Capital adequacy at 31/12/04 15.17 per cent; the total capital requirements for market risks totalled 53.2 ratio, which includes also weighted assets for million, whilst other amounts required in relation market risks, was 13.19 per cent. The above to the Bank’s securitisation operations totalled coefficients relating to tier 1 capital were, 46.8 million. Overall, capital requirements respectively, 12.34 per cent and 10.73 per cent. totalled 766.9 million which, deducted from
63 CORE CAPITAL AND SOLVENCY RATIO
1,600 1,469.1 25.00% 1,445.0 1,400 1,147.2 1,176.1 1,200 1,124.2 20.00% 1,000 899.6 13.89% 800 13.19% 15.00% 600 11.58% 400 10.00% 9.27% 10.85% 10.73% 200 0 5.00% 31/12/2002 31/12/2003 31/12/2004
Core capital Tier 1 Total capital ratio Tier 1 ratio
Total capital levels and related solvency ratios been financed by two share capital increases have been influenced over the last few years by and one subordinated bond loan issue. Both expansion in the Carige Group’s retail network. channels seek expansion that goes hand-in- Expansion by the purchase of branches from hand with financial solidity, a characteristic of other banks or via new branch openings has Banca Carige’s operational strategy.
of shareholders, whilst at the same time respecting short term, and medium/long-term RISK MANAGEMENT strategic objectives; • development of risk evaluation methodologies that are consistent with current relevant legislation, Basel 2 capital adequacy recommendations, and best practices at national Risk management processes are governed level; by an organisational structure that includes • identification of the functions involved at control bodies at all three levels foreseen by the the three levels of control in order to guarantee Internal Control System (ICS). a separation between operational and risk First level controls are carried out within each evaluation activities. single productive and distributive unit (branches, The risk management unit, with delegated operating area management, headquarter responsibilities for risk management control offices belonging directly to risk management throughout the Group companies, guarantees in and control departments). The activities of those quantitative terms the identification, collection, responsible for oversight at the first level are evaluation and control of risk. At the same time, regulated by internal regulations which are the the unit matches on a constant basis its findings subject of regular review so as to meet changes to a raft of indicators ranging from those used in external regulation. by the Bank, regulators and other relevant Risk management (second level controls) is external benchmarks. This unit is linked to the based on the: Research, Planning and Management Control • assignment of banking risk management office in order to guarantee a unitary view of responsibilities (market, rate, credit, liquidity, governance-related activities as well as a operational risks) to the Asset and Liability constant oversight of the various components Committee (ALCO), with the aim of keeping the that make up the planning process. Bank and the Group in line with the risk appetite
64 Third level controls are carried out by the 10.2. The Committee reports to the Board on Internal Control Office’s internal auditing unit, matters concerning the overall effectiveness of which evaluates the feasibility of the ICS as a internal control systems. whole. This unit refers to general management Management processes relating to the Finance and is responsible for identifying process and Area utilise the data warehouse generated by operational anomalies. It has specific first and Carige’s in-house trading floor activities (bonds, third level duties in addition to the possibility of shares, currency, derivatives, money deposits). utilising second level instruments and With regards to the Credit Area, a procedures. datawarehouse is being created that will provide The Board of Directors, the Executive the necessary data for rating calculations. Committee and General Management Market risk is measured by VAR (Value at are responsible for the definition of strategy and Risk), which is calculated on a daily basis and control policy, with specific reference to risk. provides operational limits for those responsible Within the Board of Directors, the Internal for portfolio management. Control Committee operates in accordance with those powers foreseen by the Code for Self- Regulation of Listed Companies stated at point
Andamento VaR 2004
5,500 5,000 4,500 4,000 3,500 3,000 2,500 migliaia di euro 2,000 1,500
04 04 04 7/ 03/ 05/04 09/04 12/ 5/01/04 5/ 6/ 7/0 1/ 8/10/04 0/ 0 0 0 0 0 2 3
During 2004, overall average VAR referring to minimum (1.9 million) was recorded on 19th July the entirety of Banca Carige’s securities and 2004. derivatives portfolio was calculated at 3.1 A detailed analysis of the different types of risk million. making up VAR is given in the table below. Maximum VAR for the period (5.3 million) was Amounts are expressed in millions of euros: recorded on 18th March 2004, whilst the
31/12/2004 Average for 2004 Minimum for 2004 Maximum for 2004 Share risk 4.2 2.5 1.2 4.7 Exchange-rate risk 0.6 1.2 0.4 1.8 Interest-rate risk 1.1 1.5 0.7 3.3 Diversification effect -1.7 -2.1 -1.0 -4.3 VAR Total 4.2 3.1 1.9 5.3
65 Interest-rate risk is analysed utilising: basis of risk exposure to a particular position at a particular date (a so-called static simulation). • gap analysis evaluates earnings The analysis is carried out using three exposure by subtracting interest rate sensitive complementary methodologies which provide, liabilities in a time band from the corresponding as one moves from the first to the third, more interest rate sensitive assets so producing a sophisticated levels of management information. repricing gap for that time band. This gap can Incremental gap evaluates the impact on net be multiplied by an assumed change in interest interest income stemming from a change in rates to yield an approximation of the change in interest rates (up or down) with a parallel net interest income that would result from an movement in the Bank’s interest rates at the interest rate movement; moment of repricing. The second, incremental • duration analysis is based on an beta gap, analyses the response on the part of economic value approach and measures the the Bank’s administered interest rates on sight sensitivity of the market value of assets to positions to external variations in market rates. external variations in interest rates. The assets The coefficients generated are regularly updated duration indicator – the difference between on the basis of historical trends in administered interest-rate sensitive assets and liabilities – and external rates. Shifted beta gap analysis provides an approximation of a percentage loss takes into consideration the fact that in the capital account resulting from an interest- administered rates are sticky and do not respond rate movement; immediately to variations in market rates. • sensitivity analysis analyses the market Data at 31st December 2004 reveal, on the value of the Bank’s assets in response to basis of a twelve-month time band, shifted gap changes in interest rates. The analysis aims at analysis, a loss in net interest income of 30.4 evaluating the market value of assets in a million generated by a 1 per cent fall in interest scenario of interest-rate variations; rates, and a gain of 23.5 million with a 1 per • maximum probable loss analysis seeks to cent rise in rates. Average data for the year quantify the maximum probable value loss of the recorded a loss of 28.1 million accompanying a Bank’s assets in a defined period of time. In 1 per cent drop in rates and a gain of 28.1 practice this analysis represents the extension of million stemming from a 1 per cent rise. VAR techniques to the Bank as a whole. Average values recorded for 2004 are Gap analysis in particular measures on a summarised in the table below: monthly basis changes in interest rates on the
Shock: -1% Shock: +1% Balance- sheet Off-balance Total Balance- sheet Off-balance Total sheet sheet Sight Term Sight Term a - Incremental gap 40.5 -32.7 0.2 8.0 -46.5 31.5 0.2 -14.7 b - β Incremental gap 2.7 -32.7 0.2 -29.7 -5.2 31.5 0.2 26.5 c - Shifted β gap 4.3 -32.7 0.2 -28.1 -3.7 31.5 0.2 28.1
β : indicator of elasticity with regards to estimated variations in interest rates on sight positions
The overall average impact of a one percent fall focused analysis of the medium/long-term in interest rates (28.1 million) represents 8.72 component. With regards to this medium/long- per cent of net interest income for the year. term component, the gap between Liquidity risk is evaluated by analysing overall medium/long-term lending and borrowing is the total of interest-rate sensitive assets and analysed in terms of total stock and the flows of liabilities (excluding sight positions) and by a maturing positions. In this way, the Bank is in a
66 position to make informed funding policy The next phases of the project to be carried out decisions with regards to ordinary bond issues or in 2005 include the consolidation of the internal more sophisticated fund raising transactions on EAD model, the establishment of fully running international markets. monthly data extraction procedures for During 2004, the assignment of a credit risk calculation engines, and the implementation of rating to the Bank’s customer portfolio the portfolio model for the calculation of assets continued. The project was coordinated by the at risk in the event of an unexpected loan loss. Credit Division and the Research, Planning and At an organisational level, the Administrative Management Control office. The model for bodies of the Bank establish guidelines relating assigning credit risk to small and medium sized to credit and on the basis of these the Credit enterprises was defined and trials were carried Division is responsible for deciding and out throughout the year. The resulting coordinating operational policy. The various probability of default figures for this business aspects relating to lending (granting, segment are integrated into the Group’s management, control) are regulated by a information systems in order to generate a recently updated, specific consolidated monthly PD rating. Output is checked on a document, the aim of which is to increase the monthly basis in order for it to be used as efficiency and effectiveness of the process, whilst support in the granting and pricing of credit. In at the same time seeking conformity with parallel, the evaluation and application of credit national and international regulations. risk models to other customer segments During 2004, credit policy continued to be continued during the year. Banca Carige’s large consistent with Carige’s retail vocation. corporate clients are assigned a rating that Particular attention was placed on families, results from internal data and an evaluation craftsmen, shopkeepers, and small and provided by the depositary of financial medium-sized businesses. Ties with our documentation “Centrale dei Bilanci” within the corporate clients were strengthened thanks to confines of the Credit Risk Information System the network of corporate advisors assigned to project (CRIS). With regards to the assignment of medium-sized businesses with a turnover credit risk ratings to our retail customers, ranging from 1.5 to 25 million. Another analysis (uni- and multi-varied) by product type significant example of innovation in Carige’s was completed during the year. During early lending policy and proof of the strategic 2005, customer-based analysis will be importance this activity has and will have for the completed which will be followed by the Bank is corporate finance; in this area Banca assignment of probability of default ratings for Carige intends to be a reference point for this segment. The CRIS project includes the businesses in the supply of innovative services. realisation of a credit data warehouse that The established policy of diversification was provides data for rating engines. In addition to favoured during the year by continued evaluating the probability of default, a model expansion of the Group’s traditional distribution was elaborated for the calculation of loss given network. Whilst maintaining its traditional default (LGD) based on segmentation in terms of support for the Ligurian economy, Carige type of customer, product and guarantee extended its lending activities into new areas granted. Here too LGD estimates were tested for with the aim of exploiting the business their utilisation in product and credit pricing opportunities on offer. processes. A project for the calculation of The process of granting overdraft facilities is adjusted risk pricing was also started in 2004. organised on the basis of an information The initial phase will focus on the Bank’s small platform (‘Pratica Elettronica’) made up by and medium-sized business customers. Output integrated sub-systems powered by various generated by credit risk models (PD and LGD) operational units and supported by various will be used in pricing calculations that also take information providers. Organisationally, lending into account customer credit risk levels. During is under the control of the Credit Division. A the first half of 2005, a pilot phase will be series of delegated responsibilities drawn up by launched that aims to optimally implement the Board of Directors foresee limits to powers scoring procedures throughout the Group’s granting overdraft facilities or their extension in branch network. relation to staff member seniority and level of risk. The granting of loans is divided into three
67 categories according to the type of security approach. In addition, processes for the provided and the overall level of risk. The system collection of such data are a pre-requisite of the of control has been put in place in order to Italian Operational Losses database (DIPO) set guarantee the necessary separation between up by ABI - the Italian Banking Association. operational management and risk control. Banca Carige is participating in this scheme and Within the Credit Division, a special credit believes that such processes are not only useful recovery unit is responsible for the profitable from a regulatory perspective but also as a management of bad loan positions as well as means of evaluating more effectively the the collection of amounts relating to those bad profit/risk ratios for each line of activity foreseen loans securitised at the end of 2000. The inflows by the Basel Committee. relating to this transaction outperformed those The systematic collection of specific operational foreseen in the collection schedule and as such loss data, which began in June 2002 with in March 2002 Fitch upgraded class A securities reference to certain business lines, was extended from AA to AAA, whilst upgrading twice class B to other business lines and to the whole Group securities, the first time in December 2002 from from 1st January 2003. AA- to AA and then again in August 2004 from In conclusion, with regards to Bank of Italy AA to AAA. With regards to country-risk regulations in the area of business continuity, positions, changes were made to classification the Bank has carried out an initial fact finding criteria during the year. All positions are now analysis of its risk areas and identified the evaluated analytically: a risk exposure is potential business impact in case of procedural recorded within the appropriate risk category failures. A report of the findings along with (bad loans, watchlists, restructured positions), operational solutions to be implemented will be determining the related, analytically calculated transmitted to regulators by the end of the first redress provision. half of 2005. Policies aimed at managing and limiting credit risk range from traditional approaches, such as the demand for particular commitments, to innovative forms such as securitisation and the use of derivatives (credit default swaps). The SIGNIFICANT EVENTS IN THE FIRST Internal Credit Rating project described above QUARTER 2005 will have a significant effect also on the organisation and management of credit in line with Basle Committee recommendations. In the westernmost Ligurian province of Imperia The present phase of expansion in the Banca a new branch was opened on 31st January Carige Group requires accurate organisational 2005, replacing one previously closed in the and technological assessment that provides same area last September. effective strategic and management tools. With Banca Carige’s Board of Directors in their this in mind, a special work group has been set meeting of 21st February 2005 approved the up to redesign the lending process and seek new Group Regulatory Document which defines heightened efficiencies by exploiting flows in the powers of the parent company in terms of information, activities, instruments, roles. The management and coordination with regards to work group’s duties include defining the its subsidiaries. functional needs of the Bank’s IC&T capabilities. The same meeting also approved a new branch The subject of operational risks is under network plan as part of the Carige Group’s discussion both within the international banking strategic objectives of territorial growth. industry itself and amongst international On 24th February 2005 a tier 3 subordinated regulators. The objective of these discussions is loan issue of 80 million was completed to design a framework of credit risk mitigation (maturity: 24/8/05). The Bank of Italy authorised techniques and corresponding capital adequacy the inclusion of the issue within Carige’s capital ratios. New guidelines by the Basel Committee requirements for market risk (Bank of Italy (Basel 2) to be introduced from 2006 have communication no. 172218 of 18th February meant banks having to put into place systematic 2005) as part of the calculation of total capital data collection processes regarding operational ratio, which as a result of the issue, rose from losses also when adopting the standard 13.01 per cent at 31/12/05 to 13.49 per cent.
68 After receiving authorisation for the publication - achievement by subsidiaries of of the issue prospectus from Consob, on 2nd appropriate returns on equity and, March 2005, trading of Carige’s 10-year above all, on the sizeable investments subordinated bond issue began (“Banca Carige made by Banca Carige; 1.50 per cent 2003-2013 hybrid subordinated - reduction of our cost income ratio to issue with premium at maturity convertible into best performer levels. ordinary shares”). A wide-ranging review of the organisational On 2nd March 2005 the Bank of Italy structure necessary to achieve these strategic communicated the formal inclusion of Banca objectives was carried out. As a result, at Group Cesare Ponti in the area of consolidation of the level focus is placed on the organisation of Banca Carige Group with effect 29th December governance and control, production, 2004. distribution, and operations. Strategy for production, distribution and operations can be summarised as follows: - production focus on wealth management, payment systems and PROSPECTS AND CONCLUSIONS accident insurance; - distribution focus on the importance of sales points, specialisation of sales Since the early 1990s our strategic priority has persons, integration of specialised sales been to maintain Carige’s autonomy and persons, pro-active sales approach, influence on the Italian banking and finance organisational flexibility, with scene. differentiation where required between With this objective in mind, strategy for the the distribution networks inside and immediate future will focus on achieving suitable outside Liguria; returns on the significant investments made in - operational focus on human resources, recent years allied to heightened operational IT, and organisation. efficiency. The principal objectives are: - convergence in terms of performance on the part of the branches acquired to parent company standards; -
69 To the Shareholders of Banca Carige, service and courtesy and to maintain the strong ties that exist between them and the Bank. Your Bank during 2004 achieved continued Our thanks must go also to the General growth in spite of the uncertain economic and Manager and all our staff for their contribution financial climate. The positive results described during the year as well as to employees' trade in this Report along with those of recent years union representatives. will provide support for our future development The assistance provided to us by the Board of as a national universal financial services Statutory Auditors in their carrying out of their provider. oversight duties was of immense help. Many The Board of Directors would like to thank all thanks clearly go to each member. those who have contributed to the development Finally, we would like to express our of Banca Carige and the Carige Group. appreciation of the work of the Italian banking In particular, thanks are owed to our industry's three regulators, the Bank of Italy, shareholders who continue to provide their Consob, and Borsa Italiana SpA. Here, too, they invaluable support. provided crucial support and advise; relations We are proud to serve our customers. Our with each was at all times characterised by commitment is to strive to provide them with efficiency and cordiality.
Genoa, 25nd March 2005 The Board of Directors
70 FINANCIAL STATEMENTS 2004
71 BALANCE SHEET
ASSETS (Euros) 31/12/04 31/12/03 10 CASH AND DEPOSITS WITH CENTRAL BANKS AND POST OFFICES 152,292,740 168,108,987 20 TREASURY BILLS AND SIMILAR BILLS ELIGIBLE FOR REFINANCING WITH CENTRAL BANKS 480,086,603 691,015,303 30 DUE FROM BANKS: 1,586,034,632 938,835,859 (a) repayable on demand 318,834,246 378,479,247 (b) other deposits 1,267,200,386 560,356,612 40 LOANS TO CUSTOMERS 8,539,718,857 8,440,644,395 of which: – loans using funds managed on behalf of third parties 213,272 255,085 50 BONDS AND OTHER DEBT SECURITIES: 1,400,271,180 1,257,740,066 (a) issued by public bodies 931,803,541 637,804,472 (b) issued by banks 118,399,173 347,559,993 including: – own securities 84,031,198 58,847,894 (c) issued by financial institutions 290,304,656 187,991,247 including: – own securities - - (d) issued by others 59,763,810 84,384,354 60 SHARES, QUOTAS AND OTHER EQUITY 523,371,425 177,932,293 70 EQUITY INVESTMENTS 29,252,882 31,013,184 80 INVESTMENTS IN GROUP COMPANIES 877,164,695 617,016,378 90 INTANGIBLE FIXED ASSETS 460,812,393 473,529,817 including: – start-up costs 2,374,473 3,249,903 – goodwill 431,849,390 442,391,686 100 TANGIBLE FIXED ASSETS 1,055,305,707 920,539,261 including: – financial lease 780,313,919 662,598,015 120 OWN SHARES (nominal value: 228) 1,300,874 426 130 OTHER ASSETS 729,503,015 837,370,047 140 ACCRUED INCOME AND PREPAID EXPENSES: 93,824,026 99,308,198 (a) accrued income 87,476,870 91,407,515 (b) prepaid expenses 6,347,156 7,900,683 including: – discount on bonds issued 2,744,616 3,595,731 TOTAL ASSETS 15,928,939,029 14,653,054,214
72 LIABILITIES AND STOCKHOLDERS’ EQUITY (Euros) 31/12/04 31/12/03 10 - AMOUNTS OWED TO CREDIT INSTITUTIONS: 1,126,347,006 1,139,631,489 (a) repayable on demand 14,272,577 89,045,616 (b) with agreed maturity dates or periods of notice 1,112,074,429 1,050,585,873 20 AMOUNTS OWED TO CUSTOMERS: 6,709,592,796 5,957,888,132 (a) repayable on demand 6,498,314,003 5,798,105,078 (b) with agreed maturity dates or periods of notice 211,278,793 159,783,054 30 DEBTS EVIDENCED BY CERTIFICATES: 4,549,241,262 4,067,493,688 (a) bonds 4,178,791,214 3,653,862,730 (b) certificates of deposits 287,367,883 326,768,574 (c) other 83,082,165 86,862,384 40 FUNDS MANAGED ON BEHALF OF THIRD PARTIES 342,232 368,148 50 OTHER LIABILITIES 651,179,112 579,839,081 60 ACCRUED EXPENSES AND DEFERRED INCOME: 164,696,052 163,572,023 (a) accrued expenses 84,854,353 95,528,365 (b) deferred income 79,841,699 68,043,658 70 RESERVE FOR TERMINATION INDEMNITIES 79,243,864 78,302,511 80 RESERVES FOR RISKS AND CHARGES 416,528,335 433,675,763 (a) reserves for pensions and similar commitments 296,310,000 289,632,000 (b) reserves for taxation 85,794,623 111,262,752 (c) other reserves 34,423,712 32,781,011 90 RESERVES FOR LOAN LOSSES - 18,000,000 100 RESERVES FOR GENERAL BANKING RISKS - - 110 SUBORDINATED LOANS 502,054,948 502,054,948 120 CAPITAL STOCK 1,113,326,839 1,113,326,839 130 ADDITIONAL PAID-IN CAPITAL 262,838,899 255,023,120 140 RESERVES 238,050,952 229,722,987 (a) legal reserve 77,971,037 67,351,094 (b) reserve for purchase of treasury stock 1,300,874 426 (c) statutory reserves - - (d) other reserves 158,779,041 162,371,467 150 REVALUATION RESERVES 7,956,058 7,956,058 170 NET INCOME 107,540,674 106,199,427
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 15,928,939,029 14,653,054,214
GUARANTEES AND COMMITMENTS 10 GUARANTEES GIVEN 1,100,698,829 1,271,681,334 including: – acceptances 5,505,418 2,610,263 – other guarantees 1,095,193,411 1,269,071,071 20 COMMITMENTS 1,247,874,091 910,193,337 including: – repurchase agreements - -
73 INCOME STATEMENT
(Euros) 31/12/04 31/12/03 10 - INTEREST INCOME AND SIMILAR REVENUES 575,848,494 546,477,707 including: – loans and advances to customers 427,750,108 439,720,446 – fixed-income securities 118,931,081 82,753,323 20 - INTEREST EXPENSES AND SIMILAR CHARGES - 253,772,652 - 221,820,499 including: – amounts owed to customers - 43,631,384 - 49,653,703 – securities issued - 136,501,084 - 123,950,862 30 - DIVIDENDS AND OTHER REVENUES: 44,078,232 63,957,867 (a) from shares, quotas and other equity securities 1,274,226 13,085,276 (b) from equity investments 3,461,969 8,700,435 (c) from equity investments in group companies 39,342,037 42,172,156 40 - COMMISSION INCOME 184,554,592 179,169,160 50 - COMMISSION EXPENSES - 17,493,671 - 15,626,680 60 - GAINS (LOSSES) FROM FINANCIAL TRANSACTIONS, NET 18,629,234 9,229,491 70 - OTHER OPERATING INCOME 231,011,182 160,752,411 80 - ADMINISTRATIVE COSTS: - 384,140,271 - 366,712,276 (a) personnel - 236,687,743 - 234,968,218 including: – wages and salaries - 152,197,925 - 153,683,393 – social security costs - 42,361,083 - 42,895,611 – termination indemnities - 8,600,382 - 9,257,745 – pensions and similar commitments - 23,189,152 - 17,763,598 (b) other administrative costs - 147,452,528 - 131,744,058 90 - DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS - 127,629,049 - 123,207,101 100 - PROVISIONS FOR RISKS AND CHARGES - 1,716,462 - 3,966,097 110 - OTHER OPERATING EXPENSES - 9,322,304 - 7,747,138 120 - PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS - 141,780,148 - 66,781,495 130 - RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS 5,449,175 9,194,962 140 - ADDITIONAL PROVISIONS FOR LOAN LOSSES - - 18,000,000 150 - WRITE-DOWNS TO FINANCIAL FIXED ASSETS - - 160 - RECOVERIES OF FINANCIAL FIXED ASSETS - 107,094 170 - INCOME FROM ORDINARY ACTIVITIES 123,716,352 145,027,406 180 - EXTRAORDINARY INCOME 20,584,784 30,028,911 190 - EXTRAORDINARY EXPENSES - 5,559,231 - 7,021,459 200 - EXTRAORDINARY INCOME, NET 15,025,553 23,007,452 210 - VARIATION OF RESERVES FOR GENERAL BANKING RISKS - 5,164,569 220 - INCOME TAXES - 31,201,231 - 67,000,000 230 - NET INCOME 107,540,674 106,199,427
74 FINANCIAL STATEMENTS: COMPARISON WITH 2003
75 BALANCE SHEET
ASSETS Change % (Thousands of Euros) 31/12/04 31/12/03 2004 2003 10 CASH AND DEPOSITS WITH CENTRAL BANKS AND POST OFFICES 152,293 168,109 - 9.4 - 3.1 20 TREASURY BILLS AND SIMILAR BILLS ELIGIBLE FOR REFINANCING WITH CENTRAL BANKS 480,087 691,015 - 30.5 … 30 DUE FROM BANKS: 1,586,035 938,836 68.9 - 30.7 (a) repayable on demand 318,834 378,479 - 15.8 - 30.4 (b) other deposits 1,267,201 560,357 … - 31.0 40 LOANS TO CUSTOMERS 8,539,719 8,440,644 1.2 6.7 including: – loans using funds managed on behalf of third parties 213 255 - 16.5 35.6 50 BONDS AND OTHER DEBT SECURITIES: 1,400,271 1,257,740 11.3 - 21.3 (a) issued by public bodies 931,803 637,805 46.1 - 31.3 (b) issued by banks 118,399 347,560 - 65.9 - 10.1 including: – own securities 84,031 58,848 42.8 36.6 (c) issued by financial institutions 290,305 187,991 54.4 - 0.7 including: – own securities - - - - (d) issued by others 59,764 84,384 - 29.2 - 9.9 60 SHARES, QUOTAS AND OTHER EQUITY SECURITIES 523,371 177,932 … 2.9 70 EQUITY INVESTMENTS 29,253 31,013 - 5.7 - 40.3 80 INVESTMENTS IN GROUP COMPANIES 877,165 617,016 42.2 5.2 90 INTANGIBLE FIXED ASSETS 460,812 473,530 - 2.7 - 1.4 including: – start-up costs 2,374 3,250 - 27.0 … – goodwill 431,849 442,392 - 2.4 - 1.9 100 TANGIBLE FIXED ASSETS 1,055,306 920,539 14.6 6.4 including: – financial lease 780,314 662,598 17.8 9.4 120 OWN SHARES (nominal value: 2,313) 1,301 - … - 100.0 130 OTHER ASSETS 729,503 837,371 - 12.9 5.3 140 ACCRUED INCOME AND PREPAID EXPENSES: 93,824 99,309 - 5.5 22.2 (a) accrued income 87,477 91,408 - 4.3 27.3 (b) prepaid expenses 6,347 7,901 - 19.7 - 16.7 including: – discount on bonds issued 2,745 3,596 - 23.7 - 18.7 TOTAL ASSETS 15,928,940 14,653,054 8.7 1.8
76 LIABILITIES AND STOCKHOLDERS’ EQUITY Change % (Thousands of Euros) 31/12/04 31/12/03 2004 2003 10 - AMOUNTS OWED TO CREDIT INSTITUTIONS: 1,126,347 1,139,632 - 1.2 - 36.6 (a) repayable on demand 14,273 89,046 - 84.0 27.2 (b) with agreed maturity dates or periods of notice 1,112,074 1,050,586 5.9 - 39.2 20 AMOUNTS OWED TO CUSTOMERS: 6,709,593 5,957,888 12.6 0.8 (a) repayable on demand 6,498,314 5,798,105 12.1 5.3 (b) with agreed maturity dates or periods of notice 211,279 159,783 32.2 - 60.8 30 DEBTS EVIDENCED BY CERTIFICATES: 4,549,241 4,067,494 11.8 22.4 (a) bonds 4,178,791 3,653,863 14.4 28.0 (b) certificates of deposits 287,368 326,769 - 12.1 - 17.8 (c) other 83,082 86,862 - 4.4 19.5 40 FUNDS MANAGED ON BEHALF OF THIRD PARTIES 342 368 - 7.1 18.7 50 OTHER LIABILITIES 651,179 579,839 12.3 - 28.7 60 ACCRUED EXPENSES AND DEFERRED INCOME: 164,696 163,572 0.7 13.2 (a) accrued expenses 84,854 95,528 - 11.2 18.3 (b) deferred income 79,842 68,044 17.3 6.8 70 RESERVE FOR TERMINATION INDEMNITIES 79,244 78,303 1.2 - 7.8 80 RESERVES FOR RISKS AND CHARGES 416,529 433,676 - 4.0 1.0 (a) reserves for pensions and similar commitments 296,310 289,632 2.3 0.6 (b) reserves for taxation 85,795 111,263 - 22.9 1.7 (c) other reserves 34,424 32,781 5.0 2.0 90 RESERVES FOR LOAN LOSSES - 18,000 - 100.0 38.5 100 RESERVES FOR GENERAL BANKING RISKS - - - … 110 SUBORDINATED LOANS 502,055 502,055 - 25.5 120 CAPITAL STOCK 1,113,327 1,113,327 - 9.1 130 ADDITIONAL PAID-IN CAPITAL 262,839 255,023 3.1 87.4 140 RESERVES 238,051 229,722 3.6 14.9 (a) legal reserve 77,971 67,351 15.8 18.4 (b) reserve for purchase of treasury stock 1,301 - … - 100.0 (c) statutory reserves - - - - (d) other reserves 158,779 162,371 - 2.2 23.5 150 REVALUATION RESERVES 7,956 7,956 - - 170 NET INCOME 107,541 106,199 1.3 1.3
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 15,928,940 14,653,054 8.7 1.8
GUARANTEES AND COMMITMENTS 10 GUARANTEES GIVEN 1,100,698 1,271,681 - 13.4 - 3.8 including: – acceptances 5,505 2,610 … - 38.0 – other guarantees 1,095,193 1,269,071 - 13.7 - 3.6 20 COMMITMENTS 1,247,874 910,193 37.1 18.1 including: – repurchase agreements - - - -
77 INCOME STATEMENT
Change % (thousands of Euros) 2004 2003 2004 2003 10 - INTEREST INCOME AND SIMILAR REVENUES 575,848 546,478 5.4 - 3.6 including: – loans and advances to customers 427,750 439,720 - 2.7 1.9 – fixed-income securities 118,931 82,753 43.7 - 24.9 20 - INTEREST EXPENSES AND SIMILAR CHARGES - 253,773 - 221,820 14.4 - 15.9 including: – amounts owed to customers - 43,631 - 49,654 - 12.1 - 20.8 – securities issued - 136,501 - 123,951 10.1 - 9.6 30 - DIVIDENDS AND OTHER REVENUES: 44,078 63,957 - 31.1 - 26.7 (a) from shares, quotas and other equity securities 1,274 13,085 - 90.3 … (b) from equity investments 3,462 8,700 - 60.2 - 78.5 (c) from equity investments in group companies 39,342 42,172 - 6.7 - 4.1 40 - COMMISSION INCOME 184,555 179,169 3.0 11.5 50 - COMMISSION EXPENSES - 17,494 - 15,627 11.9 21.8 60 - GAINS (LOSSES) FROM FINANCIAL TRANSACTIONS, NET 18,629 9,229 … … 70 - OTHER OPERATING INCOME 231,011 160,752 43.7 29.8 80 - ADMINISTRATIVE COSTS: - 384,141 - 366,712 4.8 13.9 (a) personnel - 236,688 - 234,968 0.7 17.8 including: – wages and salaries - 152,198 - 153,683 - 1.0 11.2 – social security costs - 42,361 - 42,896 - 1.2 12.1 – termination indemnities - 8,600 - 9,258 - 7.1 7.6 – pensions and similar commitments - 23,189 - 17,764 30.5 … (b) other administrative costs - 147,453 - 131,744 11.9 7.6 90 - DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS - 127,629 - 123,207 3.6 35.3 100 - PROVISIONS FOR RISKS AND CHARGES - 1,716 - 3,966 - 56.7 24.9 110 - OTHER OPERATING EXPENSES - 9,322 - 7,747 20.3 33.6 120 - PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS - 141,780 - 66,781 … 11.9 130 - RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS 5,449 9,195 - 40.7 - 6.8 140 - ADDITIONAL PROVISIONS FOR LOAN LOSSES - - 18,000 … 38.5 150 - WRITE-DOWNS TO FINANCIAL FIXED ASSETS - - - … 160 - RECOVERIES OF FINANCIAL FIXED ASSETS - 107 - 100.0 21.6 170 - INCOME FROM ORDINARY ACTIVITIES 123,715 145,027 - 14.7 - 15.6 180 - EXTRAORDINARY INCOME 20,586 30,028 - 31.4 … 190 - EXTRAORDINARY EXPENSES - 5,559 - 7,021 - 20.8 … 200 - EXTRAORDINARY INCOME, NET 15,027 23,007 - 34.7 92.4 210 - VARIATION OF RESERVES FOR GENERAL BANKING RISKS - 5,165 - 100.0 … 220 - INCOME TAXES - 31,201 - 67,000 - 53.4 - 15.1 230 - NET INCOME 107,541 106,199 1.3 1.3
78 EXPLANATORY NOTES
INTRODUCTION Tax relief foreseen by articles 22 and 23 of Legislative decree 153/99. These financial statements have been prepared in compliance with Legislative The European Commission in its decision of decree 87/92 and the Bank of Italy provision 11th December 2001 judged the tax relief dated 30/7/92 and subsequent foreseen by Legislative decree 153/99 as modifications. state aid incompatible with the principles of The Balance Sheet and Income Statement the common market. show amounts in Euro. Comparison is made to the business year ending 31/12/03. The Italian Government lodged an appeal Captions which show no amounts in the against the decision with the Court of balance sheets of the periods under European Justice. The Italian Banking examination have not been entered. Association (ABI) also presented on 25th In the explanatory notes, amounts are February 2002 an appeal against the expressed in millions of Euros, unless decision in front of the Tribunal of otherwise stated. Captions which show no Luxembourg. Banca Carige actively supports amounts for the periods under examination ABI’s decision and will give the necessary have been omitted. Further information not help required in preparing an effective line of foreseen by the above-mentioned regulations defence. and provisions has been supplied where On 15th June 2002 Law decree 63/2002 judged appropriate. was converted into Law 212/2002 Section 11.8 - “Securitisation” contains implementing the European Commission’s information on the securitisation of decision and suspending the tax relief performing credits carried out in June 2004; contained in articles 22 and 23 of Legislative in the same section, details are also given of decree 153/99 from 2001 until the question the performing and non performing is resolved. From 2001 onwards awaiting securitisations carried out during the previous judgement on ABI’s appeal, the Bank years by Banca Carige and Cassa di suspended special reserve provisions. On Risparmio di Savona, in which Banca Carige 24th December 2002 Law decree 282/02 is servicer. was enacted which, in carrying out the provisions of the EU Commission, obliged The report is completed by the following those banks which had benefited from attached statements: Legislative decree 153/99 to return the sums - statement of changes in stockholders’ owed plus interest charges within 31/12/02. equity; The Bank repaid 1,557 thousand. Given the - statement of cash flow; nature of the case (litigation with the - properties; European Community) this amount was - leased fixed assets re-valued in recorded at item "tax credits". accordance with Law 413/91; The total credit is matched by adequate - convertible bonds; provisions to tax reserves in the event of a - list of non-significant investments; negative decision on the part of the Court. - information on subsidiaries and other significant company interests; Special rate mortgages (Law 133/99 - key data relating to Carige Open and article 145 of Law accompanying Pension Fund; 2001 Budget). - list of exchange rates used in converting Article 29 of Law 133/99 foresees the re- currency into euro. negotiation of mortgage interest rates at a reference rate equal to the system-wide average (as defined by article 145 of the Law 79 accompanying the 2001 budget), with the capitalisation of bank interest income until subsequent charges, all or in part, to be June 2000. covered by the State or public bodies. The number of actions started for the return The renegotiation rate to be applied was of interest charges paid has progressively established by article 2 of the Economy and decreased over time. Given that it is Finance Ministry's Decree dated 31/3/03. reasonable to expect that the actions will be On renegotiation at the rate defined in the time-barred after ten years, the exceptionable above Decree, charges calculated by the period of time as at 2003 is reduced from Bank for 2003 and previous years will be 1994 to 30th June 2000. met by the specific reserve constituted in For the limited number of actions started, the 2000. Bank strongly contests the grounds for returning amounts previously paid also in the Capitalisation of interest due light of differing positions regarding the (Constitutional Court Sentence 425 of matter on the part of judges. If anything, the 9/10/00). majority of first instance and appeal court The Constitutional Court’s ruling number judges have so far upheld the validity of 425 of 9/10/00 declared illegitimate the using different time periods for the contents of article 25, Legislative decree calculation of customers’ interest income and 344/99. The article excluded from liability to charges. legal action those clauses between banks and customers relating to capitalisation of Consolidated Financial Statements for interest due signed after the coming into the Banca Carige Group have been effect of the Inter-ministerial Committee for prepared. Credit and Saving’s deliberation of 22/4/00, enacting Legislative decree 344/99. These financial statements were The Constitutional Court confined its audited by Deloitte & Touche SpA. The judgement exclusively to a criticism of the selection of the Bank’s auditors for the period government in its enactment of the above- 2003-2005 was approved by the mentioned law. In the light of the fact that the Shareholders’ Meeting of 31/3/03 pursuant judges of the Constitutional Court did not to Legislative decree 58/98. The duties of the enter into the merits of the question above, auditors for the period are the auditing of the Banca Carige has declined the few requests Bank’s financial statements, the consolidated it has received from customers for the return financial statements, and a limited review of of interest paid as a result of the quarterly the half yearly report at 30 June.
80 PART A ACCOUNTING PRINCIPLES
SECTION 1 The Bank in line with provisions of the Law accompanying the 2004 Budget (article 2, VALUATION CRITERIA ADOPTED paragraph 26 of Law 350/2003) released The valuation criteria adopted are in capital gains previously subject to suspended compliance with Legislative decree 87/92 liability to tax (Law 218/90, “Amato Law”) and the Bank of Italy’s provisions of 30/7/92 through payment of a one-off tax charge and subsequent modifications and are the (imposta sostitutiva) of 9 per cent. The freed- same as those adopted for the year ending up capital allows for realignment in tax and 31/12/03, with the exception of changes book values of those assets (property, made to the valuation of listed trading securities, equity investments) valuated at the securities, which are valued at market rather moment of transfer to the newly-formed than either at cost or market, whichever is Banca Carige SpA following the provisions of lower. The same criteria has been applied to the Amato Law. The tax paid totalled 14.6 off balance sheet transactions. The change, million and is recorded at reserves made for operational reasons, generated a (“Extraordinary taxed reserve”). positive effect on gross income of 10.2 million (6.4 million on net income), of which With regards to the amortisation of real 4.3 million refers to derivatives contracts and estate property, the criterion used to hedged listed securities, and 5.9 million to calculate the useful life of the property the remaining listed securities. portfolio was changed from the previous 3 The economic effects have been recorded at per cent (corresponding to the maximum item 60 of the Profit & Loss Account “Gains ordinary tax rate applied up to 31/12/03) to from financial transactions” in the light of the an annual flat rate of 1.5 per cent. practical difficulty of separating the Total revaluations for 2004, including assets (predominant) current from retrospective released via the payment of tax pursuant to component. Law 218/90, were 0.1 million higher than Effects on the balance sheet have regarded those generated under the previous criterion. the items “securities”, “other assets” and This result led to a corresponding negative “other liabilities”. effect on the item “Tangible assets” and on gross income (0.07 million on the net result). The time horizon adopted in the calculation of deferred assets and liabilities was LOANS, GUARANTEES AND extended in line with IAS 12 beyond the COMMITMENTS previous five-year period to an indefinite Loans are stated at their estimated realizable period of time and was applied for the first value and are determined according to time in the preparation of the interim th debtors’ solvency and the debt-paying statement at 30 June 2004. The extension difficulty of the debtors’ home country. appears justified on the basis of past The valuation of loans is made under the performance and realistic expectations application of either an analytic or lump-sum regarding future earnings as a result of which method. there presently appear no grounds to The interest on overdue loans is adjusted by question the certainty and reasonableness of the portion of loans considered to be recovery of the tax in question. irrecoverable. As a result of this change to the time horizon Reserves for loan losses, recorded under applied, increased deferred tax assets in the “Liabilities”, have been created only to offset form of tax advanced recorded at “other contingent credit risks. assets” amounted to 20.9 million, with a Guarantees and commitments with intrinsic corresponding positive effect on net profit. credit risk, including derivatives on banking
81 book credits (the Bank takes on credit risk in whichever is lower; in the case of own its role as protection seller), are valued securities that are not publicly-traded, at according to the same criteria as those purchase price written down as at point applied to credits. Expected losses on these b). transactions are covered by a specific fund The purchase price, determined according to for risks and charges recorded at liabilities. the principle of daily weighted average, includes adjustments for the relevant quota of issue premium or discount accumulated SECURITIES PORTFOLIO AND OFF- during the period the securities are held. BALANCE SHEET TRANSACTIONS Securities held at 1/12/91 and still in EXCLUDING THOSE IN CURRENCY portfolio at 31/12/2004 are valued at cost defined as the value of transfer to Banca Investment securities Carige at 1/12/91 and adjusted for issue Investment securities are valued at cost, premium or discount pursuant to Legislative adjusted on an accruals basis for the decree 719/94 and subsequent changes. difference between cost and their redemption The original value of the securities is re- at maturity and includes unamortized issue instated when the reasons for writing down premiums or discounts. cease to apply. In the event of long term deterioration of the Any securities to be transferred from the issuer’s solvency, the securities are written investment to trading portfolio will be down. In the case of those securities deriving recorded at the book value on the date of from structured securitised debt transactions, transfer calculated on the basis of the criteria writing down is carried out on the basis of applied to investment securities foreseen in expected proceeds stemming from the the Bank of Italy’s communication of underlying. 12/6/01, CONSOB’s communication n. The original value of investment securities is 95001286 of 15/2/95, the latter modified reinstated when the reasons for writing down by CONSOB’s letter dated 15/6/01. cease to apply. Securities transferred still present in portfolio at year end are valuated according to the Trading securities. criteria applied to the portfolio to which they a) trading securities quoted on organised are destined. markets are valued at the average market price for the last month; in Off balance sheet operations, determining the market value of mutual excluding those in currency fund quotas, reference is also made to Unsettled securities transactions are prices supplied by asset manager trusts in evaluated according to the criteria of the their communications to markets. portfolio to which they are destined. b) securities not quoted on organised Unsettled trading securities transactions are markets are valued at cost adjusted for evaluated accordingly: market trends and issuer solvency. In the a) with regards to commitments to purchase case of those securities deriving from and commitments to sell which have the structured securitised debt transactions, same underlying securities with the same value adjustments are carried out on the nominal value, any positive difference basis of expected proceeds stemming between the settlement price of the from the underlying. commitment to purchase and the c) in the case of publicly-traded own shares settlement price of the commitment to sell or bonds or those issued by companies is recorded in the income statement; of the Group, at either cost or market,
82 b) the residual commitments to purchase to reflect any permanent loss in value. The are evaluated at either settlement price original value is reinstated when the reasons or market price whichever is lower; for writing down ceased to apply. c) the residual commitments to sell are The dividends of the subsidiaries are evaluated at either settlement price or recorded in the same accounting period in book value, whichever is lower. which the related profit accrued. As at 31/12/03, pursuant to Legislative decree Derivative contracts on securities, interest 344/03 these dividends, previously recorded rate etc., are evaluated accordingly: inclusive of related tax credit, are recorded net at distribution value. a) Trading contracts are valued as follows: The dividends on other equity investments are contracts listed on organised markets are recorded in the accounting period in which valued at market price; unlisted contracts they were deliberated, usually coinciding with are valued at either cost or market, the period of collection. whichever is the lower. Listed contracts include: FOREIGN CURRENCY ASSETS AND LIABILITIES INCLUDING OFF- - contracts listed on organised markets, the BALANCE SHEET TRANSACTIONS market price of which is the official price Assets, excluding equity investments, and quoted on the last trading day of the year; liabilities expressed in foreign currencies are valued applying the spot rate at - non-listed contracts subject to the 31/12/2003. application of official pricing Equity investments expressed in foreign mechanisms, the market price of which is currencies are valued according to the rate in the replacement price calculated on the force at the time of purchase. basis of the same official pricing Forward transactions expressed in foreign mechanisms on the last trading day of currencies are valued: the year. – at the spot rate as of the last business day of the period in the case of unsettled b) valuation of hedging contracts is spot contracts; consistent with the underlying hedged assets – at the forward exchange rate as of the and liabilities; last business day of the period for maturities corresponding to those of the c) contracts relating to the purchase of an contracts being valued, in the case of investment in a subsidiary are valuated at forward transactions. cost, written down in the case of a persistent Derivatives contracts on currency are worsening of the counterpart’s solvency. valuated according to the criteria applied to derivatives recorded at “Off-balance sheet EQUITY INVESTMENTS transactions (excluding those in currency)”. The Bank’s stock rights in relation to its In the case of on-balance sheet assets and subsidiaries are included under holdings. liabilities linked to off-balance sheet assets These rights, in the form of securities or not, and liabilities, off-balance sheet items are are held for investment. accounted for in a manner similar to the Holdings, both substantial and those in accounting of on-balance sheet items. Group subsidiaries, are valued at purchase cost or subscription. With regard to TANGIBLE FIXED ASSETS investments resulting from the transfer of Tangible assets are recorded at purchase assets on 1/12/91, the cost was estimated by price plus related charges, and include a group of experts. The cost is written down 83 leased assets and those assets that are to be will be carried out over twenty years; from 1st leased. January 2001, 1st October 2001 and 1st The value of those assets transferred from January 2003. Cassa di Risparmio di Genova e Imperia to The period of amortisation chosen Banca Carige on 1/12/91 was estimated by corresponds to the average period of a group of experts. goodwill intrinsic in the branch network The value of tangible fixed assets includes acquired. revaluation in accordance with Laws 575/75, Amortisation rates on goodwill deriving from 72/83, 413/91 (only for some assets the purchase of branches stem from the transferred by merged companies) and with application of an analytical model which reference to revaluations, Law 218/90. takes into account the expected returns on Advances to supplies for the purpose of the branches acquired and the period of time tangible fixed assets are included under required for their integration into the Banca tangible fixed assets. Carige Group. Depreciation is determined by using the The method utilises a rising-charge rate until straight-line method over the useful life of the integration of the branches acquired is each category. Objects of art, being assets completed (2006 for the ex-Banco di Sicilia which conserve if not increase their value, branches; 2007 for the ex-Gruppo Banca are not amortized. Intesa branches and 2008 for the ex-Gruppo Capitalia branches). Post-integration Included in this category are leased assets, in amortisation will be on a fixed-charge basis. line with the equity method, and are A weighted average rate of 2.27% was amortized as follows: applied for 2004. – assets leased from 1988 to 1994 are depreciated on a fixed percentage basis PAYABLES in compliance with Presidential decree Payables are recorded at face value with the 917/86; exception of zero coupon and one coupon – assets leased from 1995 onwards are debt securities, which are recorded at a depreciated as established in the relevant value corresponding to net proceeds plus financial amortization plan; accrued interest. – assets to be leased and assets stolen or destroyed are not amortized. TERMINATION INDEMNITY Tangible fixed assets, including assets leased Termination indemnity is in accordance with or to be leased, are depreciated on a current legislation. straight-line basis. RESERVES FOR RISKS AND CHARGES INTANGIBLE FIXED ASSETS – RESERVES FOR TAXATION Intangible fixed assets are, in those cases Tax reserves stem from provisions for direct foreseen by relevant legislation, recorded taxation, deferred tax liabilities, indirect with the consent of the Board of Statutory taxation and other unforeseen events such as Auditors and are amortized on a straight-line risk to liabilities after litigation. basis. Start-up and improvement costs in addition to research and development costs OTHER TAX ASPECTS – DEFERRED are amortised over a period not exceeding TAX: POSITIVE AND NEGATIVE five years. EFFECTS Amortisation of goodwill stemming from the The calculation of deferred tax is made on purchase of branches from Banco di Sicilia, the basis of the equity method with reference Gruppo Banca Intesa and Gruppo Capitalia to the timing differences existing between the
84 value attributed to an asset or liability under Not carried out (1). accounting criteria and the value attributed to the same for the calculation of tax. Assets for tax advances the current financial 2.2 Tax provisions year are recorded from the current financial year according to the criteria illustrated at the No tax provisions were made during the year beginning of this section. (1). The recording of liabilities for taxes payable in the future is subject to the condition that there is a possibility of the liability to tax (1) abrogation of article 15, paragraph 3 of occurring. Legislative decree 87/92 pursuant to The treatment of deferred tax in these article 7, Legislative decree 37/2004. financial statements is in accordance with the Bank of Italy's instructions dated 3/8/99.
SUPPLEMENTARY PENSION FUND Provisions have been made to guarantee sufficient funds as stipulated by the Supplementary Pension Agreement.
ACCRUALS AND DEFERRALS Accruals and deferrals are calculated in accordance with the matching principle.
SECTION 2
TAX-RELATED ADJUSTMENTS AND PROVISIONS
2.1 Tax Adjustments
85 PART B BALANCE SHEET
SECTION 1
LOANS
The Bank’s loans portfolio, summarized in this section, amounts to 10,278,047 thousand euros and is analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Cash and deposits with central banks and post offices (caption 10) 152,293 1.5 168,109 1.8 – Due from banks (caption 30) 1,586,035 15.4 938,836 9.8 – Loans to customers (caption 40) 8,539,719 83.1 8,440,644 88.4 Total 10,278,047 100.0 9,547,589 100.0
Change 31/12/04 31/12/03 absolute % CAPTION 10 “CASH AND DEPOSITS WITH CENTRAL BANKS AND POST OFFICES” 152,293 168,109 -15.816 -9.4
Caption 10 detailed by technical form:
31/12/04 31/12/03 absolute %
Cash 151,898 166,896 -14,998 -9.0 Promissory notes of Bank of Italy and postal orders and cheques 6 113 -107 -94.7 Deposits with - central banks - - - - - post offices 389 1,100 -711 -64.6 Total 152,293 168,109 -15,816 -9.4
- Euros 145,270 162,498 -17,228 -10.6 - foreign currency 7,023 5,611 1,412 25.2
86 Change 31/12/04 31/12/03 absolute % 1.1 CAPTION 30 "DUE FROM BANKS" 1,586,035 938,836 647,199 68.9 (a) deposits with central banks 145,322 102,385 42,937 41.9 (b) bills elegible for refinancing by central banks - - - - (c) repurchase agreements 220,030 - 220,030 … (d) loan of securities - - - -
Caption 30 detailed by technical form and currency is the following:
Change 31/12/04 31/12/03 absolute % Nominal value Deposits with central banks 145,322 102,385 42,937 41.9 – Compulsory reserves 145,322 102,385 42,937 41.9 Deposits with banks 1,445,452 840,347 605,105 72.0 – Deposits 1,046,887 729,981 316,906 43.4 – Repurchase agreements 220,030 - 220,030 … – Discounted notes 1,845 1,029 816 79.3 – Overdraft facilities 140,283 71,534 68,749 96.1 – Loans (Financial backing) 11,284 11,098 186 1.7 – Long term loans 918 1,364 -446 -32.7 – Bad loans 18,298 17,455 843 4.8 – Other 5,907 7,886 -1,979 -25.1 1,590,774 942,732 648,042 68.7 (–) Total specific allowances 4,739 3,896 843 21.6 – bad loans 4,226 3,383 843 24.9 – other loans 513 513 - 0.0 Total 1,586,035 938,836 647,199 68.9 of which: – resident Euros 927,610 557,033 370,577 66.5 – resident foreign currency 68,512 21,461 47,051 … – non-resident Euros 516,144 303,578 212,566 70.0 – non-resident foreign currency 73,769 56,764 17,005 30.0
At 31/12/04, all non-guaranteed credits to residents outside the OECD were valuated analytically; credit risk positions are classified as either bad loans or watchlists.
1.2 CASH CREDITS BANKS 31/12/04 31/12/03 Specific Specific CATEGORIES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at risks 19,521 4,739 14,782 19,281 3,896 15,385 A.1 Bad loans 18,298 4,226 14,072 17,455 3,383 14,072 A.2 Watchlists 703 513 190 792 513 279 A.3 Credits undergoing restructuring ------A.4 Restructured loans ------A.5 Non-guaranteed credits towards countries at risk 520 - 520 1,034 - 1,034 B. Performing credits 1,571,253 - 1,571,253 923,451 - 923,451
At 31/12/04, items A.1 “Bad loans” and A.2 “Watchlists” refer entirely to country-risk positions.
87 1.3 DOUBTFUL LOANS BANKS Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/03 17,455 792 - - 1,034 A.1 of which: interest on overdue loans 1,100 - - - - B. Increases 843 - - - 144 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 842 - - - - B.3 transfer from other doubtful loan categories - - - - - B.4 other increases 1 - - - 144 C. Decreases - 89 - - 658 C.1 re-performing credits - - - - - C.2 write offs - - - - - C.3 payments received - - - - 658 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - - C.6 other decreases - 89 - - - D. Total closing exposure at 31/12/2004 18,298 703 - - 520 D.1 of which: interest on overdue loans 1,942 - - - -
Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/02 21,720 445 - - 967 A.1 of which: interest on overdue loans 364 - - - - B. Increases 1,101 502 - - 701 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 1,100 - - - - B.3 transfer from other doubtful loan categories - 484 - - - B.4 other increases 1 18 - - 701 C. Decreases 5,366 155 - - 634 C.1 re-performing credits - - - - - C.2 write offs 5,366 - - - - C.3 payments received - - - - 1 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - 484 C.6 other decreases - 155 - - 149 D. Total closing exposure at 31/12/2003 17,455 792 - - 1,034 D.1 of which: interest on overdue loans 1,100 - - - -
88 1.4 TOTAL VALUE ADJUSTMENTS BANKS Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/03 3,383 513 - - - - A.1 of which: interest on overdue loans 1,100 - - - - - B. Increases 843 - - - - - B.1 adjustments 843 - - - - B.1.1 of which: interest on overdue loans 843 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases ------C.1 recoveries stemming from evaluation ------C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs ------C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 31/12/04 4,226 513 - - - - D.1 of which: interest on overdue loans 1,942 - - - - -
Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/02 7,648 267 - - - - A.1 of which: interest on overdue loans 365 - - - - - B. Increases 1,101 296 - - - - B.1 adjustments 1,101 296 - - - B.1.1 of which: interest on overdue loans 1,100 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases 5,366 50 - - - - C.1 recoveries stemming from evaluation - 50 - - - - C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs 5,366 - - - - - C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 31/12/03 3,383 513 - - - - D.1 of which: interest on overdue loans 1,100 - - - - -
89 Change 31/12/04 31/12/03 absolute % 1.5 CAPTION 40 "LOANS TO CUSTOMERS" 8,539,719 8,440,644 99,075 1.2 (a) bills elegible for refinancing by central banks - - - - (b) repurchase agreements - - - - (c) loan of securities - - - -
Caption 40 detailed by technical form is the following:
Change 31/12/04 31/12/03 absolute % Nominal value Discounted notes 26,594 31,429 -4,835 -15.4 Advances with recourse 279,287 240,146 39,141 16.3 Overdrafts 1,424,387 1,318,099 106,288 8.1 Other non-overdrafts loans 1,848,814 1,988,411 -139,597 -7.0 Loans backed by pledge assets 11,693 10,575 1,118 10.6 Loans 4,308,770 4,406,498 -97,728 -2.2 Salary backed loans 23,093 15,173 7,920 52.2 Consumer credit loans 4,189 4,242 -53 -1.2 Factoring 90,147 99,141 -8,994 -9.1 Loans for leased assets 13,127 11,685 1,442 12.3 Bad loans 413,731 302,487 111,244 36.8 Securitization loans 103,690 8,728 94,962 … Postal bonds 112,000 112,000 - - Other 28,298 35,886 -7,588 -21.1 8,687,820 8,584,500 103,320 1.2 (–) Total specific allowances 148,101 143,856 4,245 3.0 - Bad loans 135,470 125,123 10,347 8.3 - Other 12,631 18,733 -6,102 -32.6 Total 8,539,719 8,440,644 99,075 1.2 of which: – resident Euros 8,096,111 7,962,194 133,917 1.7 – resident foreign currency 172,393 217,698 -45,305 -20.8 – non-resident Euros 253,411 154,745 98,666 63.8 – non-resident foreign currency 17,804 106,007 -88,203 -83.2
The nominal value of credits was adjusted to take into account expected losses as follows:
31/12/04 31/12/03 - analytic allowances 141,471 136,997 - lump-sum allowances 6,630 6,859 - country risks - - - other 6,630 6,859 Total 148,101 143,856
All bad loan positions are evaluated analytically as are significant watchlist and country-risk positions specified at 1.1. Other watchlists are evaluated on a lump-sum basis.
90 Rescheduled loans were evaluated analytically calculating future flows on the basis of the difference between renegotiated interest rates and the annual average yield for interbank company loans for 2004.
In the light of the Bank’s prudential valuation of its complete loan portfolio, provisions calculated by a lump-sum method concerning other “in bonis” loans were deemed unnecessary.
Change 31/12/04 31/12/03 absolute % 1.6 SECURED LOANS TO CUSTOMERS 5,182,776 4,968,467 214,309 4.3 (a) by mortgages 3,457,613 3,394,999 62,614 1.8 (b) by pledges on: 269,827 134,508 135,319 … 1. Cash deposits 3,789 2,091 1,698 81.2 2. Securities 240,930 121,266 119,664 98.7 3. Other valuables 25,108 11,151 13,957 … (c) by guarantees from: 1,455,336 1,438,960 16,376 1.1 1. Governments 0 50 -50 … 2. Other public entities 25,144 7,874 17,270 … 3. Banks 10,527 11,980 -1,453 -12.1 4. Other operators 1,419,665 1,419,056 609 0.0
This detail does not include loans to Government and public bodies.
1.7 CASH CREDITS CUSTOMERS 31/12/04 31/12/03 Specific Specific CATEGORIES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at risks 570,943 148,101 422,842 519,940 143,856 376,084 A.1 Bad loans 422,201 135,470 286,731 309,686 125,123 184,563 A.2 Watchlists 135,171 12,007 123,164 184,825 16,501 168,324 A.3 Credits undergoing restructuring 4,385 362 4,023 2,406 - 2,406 A.4 Restructured loans 4,064 262 3,802 11,717 2,232 9,485 A.5 Non-guaranteed credits towards countries at risk 5,122 - 5,122 11,306 - 11,306 B. Performing credits 8,835,603 - 8,835,603 8,677,611 - 8,677,611
The credits presented in the table refer to balance sheet asset caption 40 "Loans and advances to customers" and to credits related to finance lease transactions which totalled 718,726 thousand euros at 31/12/04. In particular, 8,470 thousand euros is in the form of bad loans and is covered for 2,944 thousand euros by liabilities caption 80c "Reserves for loan losses - other reserves". Finance lease transactions are included at assets caption 100 " Tangible assets" for a total of 780,314 thousand euros. Item A.1 “Bad loans” includes gross exposures and writedowns on country-risk positions, respectively, of 106,000 and 36,000; item A.2 “Watchlists” does not include gross exposures and writedowns on country-risk positions.
91 1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/03 309,686 184,825 2,406 11,717 11,306 A.1 of which: interest on overdue loans 42,219 4,755 - - - B. Increases 292,158 68,684 2,373 1,171 3 B.1 ex-performing loans 218,509 61,934 2,373 1,086 - B.2 interest on overdue loans 14,787 2,266 - - - B.3 transfer from other doubtful loan categories 48,858 - - - - B.4 other increases 10,004 4,484 - 85 3 C. Decreases 179,643 118,338 394 8,824 6,187 C.1 re-performing credits 807 37,513 - 6,395 - C.2 write offs 143,796 5,885 - 2,429 - C.3 payments received 35,011 8,856 - - 5,321 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 48,858 - - C.6 other decreases 29 17,226 394 - 866 D. Total closing exposure at 31/12/04 422,201 135,171 4,385 4,064 5,122 D.1 of which: interest on overdue loans 43,871 4,701 - - -
Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/02 240,115 162,529 9,315 18,423 A.1 of which: interest on overdue loans 41,259 5,123 - - - B. Increases 158,233 107,688 2,406 2,775 1,240 B.1 ex-performing loans 86,287 99,626 2,406 2,775 - B.2 interest on overdue loans 13,077 1,742 - - - B.3 transfer from other doubtful loan categories 45,449 - - - - B.4 other increases 13,420 6,320 - 1,240 C. Decreases 88,662 85,392 - 373 8,357 C.1 re-performing credits - 29,830 - 275 - C.2 write offs 49,462 159 - - - C.3 payments received 38,708 3,507 - 98 4,785 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 45,449 - - C.6 other decreases 492 6,447 - - 3,572 D. Total closing exposure at 31/12/03 309,686 184,825 2,406 11,717 11,306 D.1 of which: interest on overdue loans 42,219 4,755 - - -
92 1.9 TOTAL VALUE ADJUSTMENTS CUSTOMERS Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/03 125,123 16,501 - 2,232 - - A.1 of which: interest on overdue loans 42,219 759 - - - - B. Increases 171,230 10,216 362 516 - 581 B.1 adjustments 144,892 10,216 362 516 - 581 B.1.1 of which: interest on overdue loans 14,787 - - - - - B.2 amounts from credit risk fund 18,000 - - - - - B.3 transfer from other loan categories 8,338 - - - - - B.4 other increases ------C. Decreases 160,883 14,710 - 2,486 - 581 C.1 recoveries stemming from evaluation 337 378 - 58 - - C.1.1 of which: interest on overdue loans 91 - - - - - C.2 recoveries stemming from payments received 3,064 109 - - - - C.2.1 of which: interest on overdue loans 861 53 - - - - C.3 write offs 143,797 5,885 - 2,428 - 581 C.4 transfer to other loan categories - 8,338 - - - - C.5 other decreases 13,685 - - - - - D. Total closing adjustments at 31/12/04 135,470 12,007 362 262 - - D.1 of which: interest on overdue loans 43,871 - - - - -
At 31/12/2004 items B1 ‘Positive variations – writedowns’ and C5 ‘Negative variations – other variations’ include 12,456 thousand euros corresponding to the amortisation charge for the year relating to losses stemming from the securitisation of bad loans carried out at the end of 2000.
Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/02 101,650 15,825 - 2,165 - - A.1 of which: interest on overdue loans 41,259 1,282 - - - - B. Increases 88,451 9,035 - 381 - - B.1 adjustments 68,009 9,035 - 381 - - B.1.1 of which: interest on overdue loans 13,077 - - - - - B.2 amounts from credit risk fund 13,000 - - - - - B.3 transfer from other loan categories 7,442 - - - - - B.4 other increases ------C. Decreases 64,978 8,359 - 314 - - C.1 recoveries stemming from evaluation 799 109 - 290 - - C.1.1 of which: interest on overdue loans - 39 - - - - C.2 recoveries stemming from payments received 2,180 649 - 24 - - C.2.1 of which: interest on overdue loans 790 483 - - - - C.3 write offs 49,462 159 - - - - C.4 transfer to other loan categories - 7,442 - - - - C.5 other decreases 12,537 - - - - - D. Total closing adjustments at 31/12/03 125,123 16,501 - 2,232 - - D.1 of which: interest on overdue loans 42,219 759 - - - -
93 SECTION 2
SECURITIES
The securities held by the Bank amount to 2,403,729 thousand euros and are analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Treasury bills and other bills eligible for refinancing with central banks (caption 20) 480,087 20.0 691,015 32.5 – Bonds and other debt securities (caption 50) 1,400,271 58.2 1,257,740 59.1 – Shares, quotas and other equity securities (caption 60) 523,371 21.8 177,932 8.4 Total 2,403,729 100.0 2,126,687 100.0
of which: – Investment securities 155,545 6.5 173,737 8.2 – Trading securities 2,248,184 93.5 1,952,950 91.8
Change 31/12/04 31/12/03 absolute % 2.1 INVESTMENT SECURITIES 155,545 173,737 -18,192 -10.5
31/12/04 31/12/03 Book Market Book Market value value value value 1. Certificates of indebtedness 155,545 154,015 173,737 173,439 1.1 Government securities 51,666 52,025 69,745 70,097 – listed 51,666 52,025 69,745 70,097 – unlisted - - - - 1.2 Other securities 103,879 101,990 103,992 103,342 – listed 32,234 32,397 32,243 31,961 – unlisted 71,645 69,593 71,749 71,381 2. Shares and equity securities - - - - – listed - - - - – unlisted - - - - Total 155,545 154,015 173,737 173,439
Book value of investment securities comprises the difference, on the basis of “pro rata temporis” criteria, between cost and redemption value, including issue premium or discount. Market value is the average price recorded during the last six months of the year. The difference between market and book value (1,530 thousand euros) represents the potential losses for the portfolio.
The positive and negative differences between book value and re-payment value at maturity total 286 thousand euros and 334 thousand euros, respectively. These differences were calculated separately for each category.
94 Book Redemption Positive Negative value value differences differences 1. Listed certificates of indebtedness 83,901 83,903 286 288 Public bodies 51,666 51,500 214 48 Banks 25,056 25,015 72 31 Other 7,179 7,388 - 209 2. Unlisted certificates of indebtedness 71,644 71,690 - 46 Public bodies - - - - Banks 5,954 6,000 - 46 Other 65,690 65,690 - - Total 155,545 155,593 286 334
2.2 CHANGES IN INVESTM ENT SECURITIES
31/12/04 31/12/03 A . O pening balances 173,737 232,733 B. Increases 41 2,593 B1. Purchases - - B2. W ritebacks - - B3. Transfers from trading portfolio - - B 4 . O ther cha ng es 4 1 2 ,5 9 3 C. Decreases 18,233 61,589 C1. Sales - 61,391 C2. Redemptions 18,123 25 C 3 . A d ju stm e n ts in clu d in g - - - p erm a nent w rited o w ns - - C4. Transfers to trading portfolio - - C5. Other changes 110 173 D. Closing balances 155,545 173,737
Transfers to and/or from the investment securities portfolio were carried out in accordance with the Bank of Italy’s communication of 12/6/01, CONSOB’s communication no.95001286 of 15/2/95, subsequently modified by CONSOB’s letter of 15/6/01, and the policy document approved by the Board of Directors of Banca Carige on 27/3/95, subsequently modified on 6/12/99.
Captions “Other changes” are analysed below:
31/12/04 31/12/03 1. Increases 41 2,593 Exchange-rate gains - - Gains on securities 1 2,494 Intrinsic interest (1) 40 99 2. Decreases 110 173 Exchange-rate losses - - Losses on securities - - Intrinsic interest (2) 110 173
(1) Includes the share for the period of interest referring to discount bonds and of issuing and negotiation spreads. (2) Includes the share for the period of negotiation spreads.
95 Change 31/12/04 31/12/03 absolute % 2.3 TRADING SECURITIES 2,248,184 1,952,950 295,234 15.1
31/12/04 31/12/03 Book Market Book Market value value value value 1. Certificates of indebtedness 1,724,813 1,752,654 1,775,018 1,820,566 1.1 Government securities 1,044,882 1,044,890 991,571 1,000,804 – listed 1,042,859 1,042,859 989,422 998,638 – unlisted 2,023 2,031 2,149 2,166 1.2 Other securities 679,931 707,764 783,447 819,762 – listed 52,738 52,738 618,099 652,051 – unlisted 627,193 655,026 165,348 167,711 2. Shares and equity securities 523,371 524,631 177,932 185,705 – listed 112,497 112,497 175,612 183,132 – unlisted 410,874 412,134 2,320 2,573 Total 2,248,184 2,277,285 1,952,950 2,006,271
The difference between market value and book value represents potential non-recorded capital gains for the period and amounts to 29,101 thousand euros, of which 26,784 thousand euros related to hedging forward transactions (section 10.5). Criteria adopted for the valuation of the trading securities portfolio (securities and off balance sheet transactions) at 31/12/04 differ from those adopted in the previous period. The effects generated by this change are described in ‘Part A- Evaluation Criteria’ of the explanatory notes.
2.4 CHANGES IN TRADING SECURITIES
31/12/04 31/12/03 A . O pening balances 1,952,950 1,849,625 B. Increases 7,319,171 7,841,239 B1. Purchases 7,273,467 7,798,048 - Certificates of indebtedness 5,868,244 6,714,448 . G o vernm ent secu rities 3 ,9 6 2 ,5 7 0 4 ,8 8 0 ,1 8 6 . o ther secu rities 1 ,9 0 5 ,6 7 4 1 ,8 3 4 ,2 6 2 - Sha res a nd o ther eq u ity secu rities 1 ,4 0 5 ,2 2 3 1 ,0 8 3 ,6 0 0 B 2 . W riteb a cks 2 2 ,3 0 3 7 5 1 B3. Transfers from investm ent portfolio - - B4. Other changes 23,401 42,440 C. Decreases 7,023,937 7,737,914 C1. Sales 7,011,030 7,709,939 - Certificates of indebtedness 5,937,720 6,639,619 . G o vernm ent secu rities 3 ,9 2 8 ,8 4 1 5 ,0 5 6 ,3 1 2 . o ther secu rities 2 ,0 0 8 ,8 7 9 1 ,5 8 3 ,3 0 7 - Sha res a nd o ther eq u ity secu rities 1 ,0 7 3 ,3 1 0 1 ,0 7 0 ,3 2 0 C2. Adjustments 8,458 6,660 C 3. Transfers to investm ent portfolio - - C4. Other changes 4,449 21,315 D. Closing balances 2,248,184 1,952,950
96 Details of recognized losses are as follows:
31/12/04 31/12/03 1 . C e rtifica te s o f in d e b te d n e ss 6 ,8 2 3 3 ,9 0 5 1.1 Government securities 370 580 1.2 Other securities 6,453 3,325 2. Shares and equity securities 1,635 2,755 Total 8,458 6,660
Captions “Other changes” are analysed below:
31/12/04 31/12/03 1. Increases 23,401 42,440 Exchange-rate gains - - Gains on securities 19,933 24,765 Intrinsic interest (1) 3,468 17,675 2. Decreases 4,449 21,315 Exchange-rate losses 1,413 7,917 Losses on securities 3,036 13,398
(1) Includes the share for the period of interest referring to discount bonds and of issuing spreads.
97 SECTION 3
EQUITY INVESTMENTS
Equity investments amount to 906,418 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Equity investments (caption 70) 29,253 3.2 31,013 4.8 – Investments in Group companies (caption 80) 877,165 96.8 617,016 95.2 Total 906,418 100.0 648,029 100.0 including: . significant investments 886,903 97.8 626,748 96.7 . other investments 19,515 2.2 21,281 3.3
Change 31/12/04 31/12/03 absolute % 3.1 SIGNIFICANT INVESTMENTS 886,903 626,748 260,155 41.5
Name Location of Stockholders' Net income % Book registered office equity (loss) ownership value A.Subsidiary companies (1) (caption 80) 1. Galeazzo Srl (2) Genoa 3,904 56 100.00 3,836 2. Carige Vita Nuova SpA Genoa 49,964 4,013 100.00 131,347 3. Columbus Carige Immobiliare SpA Genoa 36,428 332 99.99 36,818 4. Carige Assicurazioni SpA (3) Milano 175,811 3,055 98.24 171,226 5. Carige Asset Management SGR SpA (4) Genoa 5,706 323 99.50 5,424 6. Cassa di Risparmio di Savona SpA Savona 153,058 13,503 95.90 226,587 7. Cassa di Risparmio di Carrara SpA Carrara 84,021 15,125 90.00 173,606 8. Immobiliare Ettore Vernazza SpA (5) Genoa 5,184 1,007 90.00 31,164 9. Centro Fiduciario SpA (6) Genoa 994 142 76.93 407 10. Argo Finance One Srl Genoa 10 - 60.00 6 11. Priamar Finance Srl Genoa 10 - 60.00 6 12. Banca del Monte di Lucca SpA Lucca 26,977 4,270 54.00 62,610 13. Banca Cesare Ponti SpA (7) Milano 19,827 -615 51.86 34,128 Total 877,165 B. Companies subject to significant influence (included in caption 70) 1. Frankfurter Bankgesellschaft AG (8) Frankfurt 22,653 348 47.50 9,712 2. Consorzio per il Giurista di Impresa Scrl (8) Genoa 15 -31 22.73 26 Total 9,738 (1) Captions are taken from the Board of Directors’ Report at 31/12/2004. (2) The company holds 0.01% of capital stock of Columbus Carige Immobiliare SpA. (3) The company holds 1.273% of its own shares. (4) Carige Vita Nuova also holds 0.5% of capital stock. (5) The company holds 10% of its own shares. (6) Cassa di Risparmio di Savona SpA also holds 20% of capital stock (7) Shareholding takes into account that part of the share capital increase subscribed at 31/12/04. (8) Figures taken from the last approved statements at 31st December 2003.
98 The valuation of those companies subject to significant influence by the equity method determines a value of 532,142 thousand euros, 354,760 thousand euros lower than book value.
Name Book Share of Difference value stockholders'equity (a) (b) (b-a) Carige Assicurazioni SpA 171,226 172,715 1,489 Carige Vita Nuova SpA 131,347 49,964 -81,383 Cassa di Risparmio di Carrara SpA 173,606 75,619 -97,987 Cassa di Risparmio di Savona SpA 226,587 146,784 -79,803 Banca del Monte di Lucca SpA 62,610 14,568 -48,042 Banca Cesare Ponti SpA 34,127 10,282 -23,845 Immobiliare Ettore Vernazza SpA 31,164 4,666 -26,498 Columbus Carige Immobiliare spA 36,818 36,423 -395 Carige Asset Management SGR SpA 5,424 5,677 253 Galeazzo Srl 3,836 3,904 68 Centro Fiduciario SpA 407 765 358 Argo Finance One Srl 6 6 - Priamar Finance Srl 6 6 - Frankfurter Bankgesellschaft AG 9,712 10,760 1,048 Consorzio per il Giurista di Impresa Scrl. 26 3 -23 886,902 532,142 -354,760
With regards to the Bank’s strategic holdings in Cassa di Risparmio di Savona, in Banca del Monte di Lucca, Cassa di Risparmio di Carrara, in Banca Cesare Ponti and in the insurance company Carige Vita Nuova, negative differences between the Bank’s equity investment in each company and book value is due to the higher price paid for each so as to account for the economic value and goodwill of each company. The difference between book value and net equity relating to Immobiliare Ettore Vernazza is due to higher property values than those recorded in the subsidiary’s balance sheet. Evaluation of the Bank’s total holdings applying the equity method rather than cost, would generate losses of 359,902 thousand euros and gains of 580,670 thousand euros, including valuation of Carige’s holding in the Bank of Italy, of 539,216 thousand euros.
99 Change 31/12/04 31/12/03 absolute % 3.2 AMOUNTS DUE TO AND FROM GROUP COMPANIES (a) Assets 165,453 94,272 71,181 75.5 1. Amounts due from banks including: 105,664 38,093 67,571 … – subordinated - - - - 2. Amounts due from financial institutions - 64 -64 … including: – subordinated - - - - 3. Amounts due from other customers 12,172 11,766 406 3.5 including: – subordinated - - - - 4. Bonds and other fixed-income securities 47,617 44,349 3,268 7.4 including: – subordinated 46,804 44,304 2,500 5.6 (b) Liabilities 523,134 247,476 275,658 … 1. Amounts due to banks 353,763 136,213 217,550 … 2. Amounts due to financial institutions 48,371 4,734 43,637 … 3. Amounts due to other customers 62,028 54,952 7,076 12.9 4. Securities issued 51,472 51,577 -105 -0.2 5. Subordinated liabilities 7,500 - 7,500 … (c) Guarantees and commitments 5,017 4,980 37 0.7 1. Guarantees 5,011 4,980 31 0.6 2. Commitments 6 - 6 …
Change 31/12/04 31/12/03 absolute % 3.3 AMOUNTS DUE TO AND FROM OTHER COMPANIES (a) Assets 374,039 347,404 26,635 7.7 1. Amounts due from banks including: 289,107 279,316 9,791 3.5 – subordinated - - - - 2. Amounts due from financial institutions 49,466 35,073 14,393 41.0 including: – subordinated - - - - 3. Amounts due from other customers 35,348 24,483 10,865 44.4 including: – subordinated - - - - 4. Bonds and other fixed-income securities 118 8,532 -8,414 -98.6 including: – subordinated - 3,269 -3,269 … (b) Liabilities 157,525 49,745 107,780 … 1. Amounts due to banks 90,094 18,354 71,740 … 2. Amounts due to financial institutions 42,489 16,987 25,502 … 3. Amounts due to other customers 15,094 6,434 8,660 … 4. Securities issued 9,848 7,970 1,878 23.6 5. Subordinated liabilities - - - - (c) Guarantees and commitments 6,555 82,204 -75,649 -92.0 1. Guarantees 6,555 75,537 -68,982 -91.3 2. Commitments - 6,667 -6,667 …
Amounts due from banks include 144,568 thousand euros with the Bank of Italy. Amounts due to banks include 90,002 thousand euros with the Bank of Italy.
100 Change 31/12/04 31/12/03 absolute % 3.4 CAPTION 70 "EQUITY INVESTMENTS" 29,253 31,013 -1,760 -5.7 (a) in banks 10,202 15,073 -4,871 -32.3 1. listed - 4,871 -4,871 … 2. unlisted 10,202 10,202 - - (b) in financial institutions 8,477 5,891 2,586 43.9 1. listed - - - - 2. unlisted 8,477 5,891 2,586 43.9 (c) others 10,574 10,049 525 5.2 1. listed 723 723 - - 2. unlisted 9,851 9,326 525 5.6
The item includes significant holdings in companies outside the Banca Carige Group as listed at 3.1/B, in addition to other equity investments.
The caption includes tax-deferred gains pursuant to Law 218/90.
Change 31/12/04 31/12/03 absolute % 3.5 CAPTION 80 "INVESTMENTS IN GROUP COMPANIES" 877,165 617,016 260,149 42.2 (a) in banks 496,931 287,687 209,244 72.7 1. listed - - - - 2. unlisted 496,931 287,687 209,244 72.7 (b) in financial institutions 5,843 413 5,430 … 1. listed - - - - 2. unlisted 5,843 413 5,430 … (c) others 374,391 328,916 45,475 13.8 1. listed - - - - 2. unlisted 374,391 328,916 45,475 13.8
The caption includes tax-deferred gains pursuant to Law 218/90.
101 3 .6 C H A N G ES IN P A R TIC IP A TIN G IN TER ESTS
3.6.1 INVESTM EN TS IN GRO UP CO M PAN IES 31/12/04 31/12/03 A . O pening balances 617,016 586,522 B. Increases 436,155 30,494 B1. Purchases 83,862 30,387 B2. Recoveries - 107 B3 . Revaluations - - B4. Other changes 352,293 - C. Decreases 176,006 - C1. Sales - - C2. Write-downs - - inclu d ing : - permanent write-downs - - C3. Other changes 176,006 - D. Closing balances 877,165 617,016 E . T o ta l re va lu a tio n s - - F . T o ta l w rite -d o w n s - -
Details of purchases and all variations are given below:
PURCHASES
PRIAMAR FINANCE SRL Purchase of 55% of capital stock. (Variation in our share holding from 5% to 60%) 5
CARIGE VITA NUOVA SPA Purchase of 6,400,000 ordinary shares, nominal unit value 0.52 euro. (Variation in our share holding from 92.809% to 100.000%) 2,517
CARIGE ASSICURAZIONI SPA Subscription of 18,948 new ordinary shares, nominal unit value 982 euros and additional paid-in of 193 euros. (Considering the increase of capital stock from 119,236,040 to 137,872,800, our share holding varies from 90.695% to 91.932%) 22,264
CARIGE ASSICURAZIONI SPA Purchase of 8,672 new ordinary shares, nominal unit value 982 euros. (Variation in our share holding from 91.932% to 98.108%) 2,648
CARIGE ASSICURAZIONI SPA Subscription of 10,400 new ordinary shares, nominal unit value 982 euros and additional paid-in of 193 euros. (Considering the increase of capital stock from 137,872,800 to 148,085,600, our share holding varies from 98.108% to 98.239%) 12,220
COLUMBUS CARIGE IMMOBILIARE SPA Subscription of 21,300 new ordinary shares, nominal unit value 516.45 euros within the increase of capital stock from 25,822,500 to 36,822,885 euros. (Variation in our share holding from 99.980% to 99.986%) 11,000
102 BANCA CESARE PONTI SPA Purchase of 986,160 new ordinary shares, nominal unit value 5 euros. (Our share holding 41.090%) 24,654
BANCA CESARE PONTI SPA Subscription of 82,180 new ordinary shares, nominal unit value 5 euros and additional paid-in of 20 euros, within the increase of capital stock from 12,000,000 to 13,000,000 euros. (No variation in our share holding after the subscription) 2,054
BANCA CESARE PONTI SPA Purchase of 260,000 new ordinary shares, nominal unit value 5 euros. (Variation in our share holding from 41.090% to 51.090% after the subscription; the share holding is 51.857%) 6,500
OTHER CHANGES
CARICARRARA HOLDING SPA Receipt of 45,462,325 new ordinary shares, nominal unit value 1 euro, following the non proportional partial division of Carinord 2 SpA. (Our share holding 100%) 174,415
CARICARRARA HOLDING SPA Charged to the investment cost aid expenses and technical-legal consulence 1,591
CASSA DI RISPARMIO DI SAVONA SPA Charged to the investment cost legal expenses referring to the purchasing of the share holding 1,510
PRIAMAR FINANCE SRL Reclassification of the existing share holding from “Other participating interests” to “Investments in Group Companies” 1
CARIGE ASSET MANAGEMENT SGR SPA Payment of 250,000 euros as capital financings to the shareholders 250
CASSA DI RISPARMIO DI CARRARA SPA Value of the investment within the merger through incorporation of Caricarrara Holding SpA in Banca Carige SpA 173,606
BANCA CESARE PONTI SPA Charged to the investment cost aid expenses and technical-legal consulence 920
Total other changes 352,293
OTHER CHANGES
CARICARRARA HOLDING SPA Surveying of the merger through incorporation in Banca Carige SpA 176,006
Total other changes 176,006
103 3.6.2 OTHER PARTICIPATING INTERESTS 31/12/04 31/12/03 A . O pening balances 31,013 51,989 B. Increases 197,955 13,897 B 1 . Pu rcha ses 1 8 6 ,8 7 7 3 1 0 B2. Recoveries - - B3. Revaluations - - B4. Other changes 11,078 13,587 C. Decreases 199,715 34,873 C1. Sales 25,294 34,852 C2. Write-downs - - inclu d ing : - permanent write-downs - - C3. Other changes 174,421 21 D. Closing balances 29,253 31,013 E . T o ta l re va lu a tio n s - - F. Total write-downs 4,798 4,798
Detail of variations are given below:
PURCHASES
CARINORD 2 SPA Purchase of 92,619,780 new ordinary shares, nominal unit value 0,52 euros, total price 183,764,644 (Purchased post-sale percentage: 41.048%) 183,765
CENTRO SIM SPA Subscription of 33,330 new ordinary shares, nominal unit value 60 euros. (Our share holding 9.999%)) 2,000
INFRASTRUTTURE LAVORI ITALIA SPA Payment of residual 7/10 related to the subscription of 750,000 shares, nominal unit value 1 euro, made during past years. (Our share holding: 15.000%) 525
FILSE SPA Payment of residual 7/10 related to the subscription of 1,609,652 new shares, nominal unit value 0.52 euro, made past year. (Our share holding 10.102%) 586
CONSORZIO IDROENERGIA SCRL Purchase of n.1 share, nominal value 516 euro, and payment of 258.23 euros, as grant, to the cooperative fund (Our share holding 0.067%) 1
Total purchases 186,877
104 OTHER CHANGES
CARINORD 2 SPA Charged to the investment cost aid expenses and consulence 952
CASSA DI RISPARMIO DI FIRENZE SPA Profit made following sale of 8,766,953 shares 10,120
CONSORZIO PER IL GIURISTA DI IMPRESA SCRL Sum acknowledged as share charged to us for the covering of the loss related to the year 2002. 6
Total other changes 11,078
SALES
CARINORD 2 SPA Sale of 5,192,231 shares, nominal unit value 0.52 euro, for a total price of 10,301,778 euros. (Sale happened contextually to the purchase, written above) 10,302
CASSA DI RISPARMIO DI FIRENZE SPA Sale of 8,766,953 shares for a nominal unit value of 0.57 euro. (Dismissal of entire holding) 14,991
BUSINESS DATENBANKEN INTERNATIONAL GMBH Amount received following distribution of assets sold in liquidation 1
Total sales 25,294
OTHER CHANGES
PRIAMAR FINANCE SRL Reclassification of the existing share holding from “Other participating interests” to “Investments in Group Companies” 1
CARINORD 2 SPA Following the partial division the Society, 87,427,549 shares of Carinord 2 SpA, owned by Banca Carige SpA, were converted in 45,462,325 shares of Caricarrara Holding SpA 174,415
BUSINESS DATENBANKEN INTERNATIONAL GMBH Loss following distribution of assets sold in liquidation 5
Total other changes 174,421
105 SECTION 4
TANGIBLE AND INTANGIBLE FIXED ASSETS
Tangible and intangible fixed assets (caption 100 and 90) amount to 1,516,118 thousand euros and are analysed as follows:
Gross Total Net Share value depreciations value % - Tangible fixed assets (caption 100) 1,509,312 454,006 1,055,306 69.6 - Intangible fixed assets (caption 90) 541,795 80,983 460,812 30.4 Total 2,051,107 534,989 1,516,118 100.0
4.1 CHANGES IN TANGIBLE FIXED ASSETS 31/12/04 Properties Furniture Leased Total and fittings assets A. Opening balances 238,879 19,062 662,598 920,539 B. Increases 24,206 4,106 230,923 259,235 B1. Purchases 24,206 4,106 230,923 259,235 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - - - C. Decreases 5,382 5,879 113,207 124,468 C1. Sales 428 157 20,010 20,595 C2. Depreciation and amortization 4,954 5,722 92,039 102,715 (a) amortization 4,954 5,722 92,039 102,715 (b) permanent write-downs - - - - C3. Other changes - - 1,158 1,158 D. Closing balances 257,703 17,289 780,314 1,055,306 E. Total revaluations - - - - F. Total depreciation and amortization 100,390 85,408 268,208 454,006 (a) amortization 100,390 85,408 268,208 454,006 (b) permanent write-downs - - - -
Opening balances include advances for investments in course relating to furniture and equipment and leased assets of 312 thousand euros and 47,732 thousand euros respectively. Closing balances include 9,061 thousand euros relating to bad leased assets. Closing balances include advances for investments in course relating to properties, furniture and equipment and leased assets for 923 thousand euros and 61,390 thousand euros, respectively.
106 31/12/03 Properties Furniture Leased Total and fittings assets A. Opening balances 239,845 20,197 605,418 865,460 B. Increases 4,580 4,778 168,335 177,693 B1. Purchases 4,580 4,778 168,220 177,578 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 115 115 C. Decreases 5,546 5,913 111,155 122,614 C1. Sales 967 297 17,200 18,464 C2. Depreciation and amortization 4,579 5,616 90,279 100,474 (a) amortization 4,579 5,616 90,279 100,474 (b) permanent write-downs - - - - C3. Other changes - - 3,676 3,676 D. Closing balances 238,879 19,062 662,598 920,539 E. Total revaluations - - - - F. Total depreciation and amortization 95,486 87,306 226,571 409,363 (a) amortization 95,486 87,306 226,571 409,363 (b) permanent write-downs - - - -
Tangible fixed assets are detailed as follows:
31/12/04 31/12/03 Gross Total Book Gross Total Book value depreciations value value depreciations value Properties 358,093 100,390 257,703 334,365 95,486 238,879 Furniture and fittings 18,937 15,142 3,795 18,806 14,875 3,931 Machinery and equipment 81,869 70,266 11,603 86,286 72,431 13,855 Objects of art 968 - 968 964 - 964 Advances for future investments 923 - 923 312 - 312 – Properties ------– Furniture and fittings 923 - 923 312 - 312 Total 460,790 185,798 274,992 440,733 182,792 257,941 Leased assets 1,048,522 268,208 780,314 889,169 226,571 662,598 Total 1,509,312 454,006 1,055,306 1,329,902 409,363 920,539
Properties owned by the Bank were revalued in previous years, in accordance with specific laws, and are analysed below:
31/12/04 31/12/03 Monetary revaluations laws 576/75, 72/83 and 413/91 29,069 29,116 Revaluations law 218/90 157,111 157,444 Total 186,180 186,560
107 Pursuant to article 10 Law 72/83, details of properties owned by the Bank and revalued are given below:
Revaluations L. 576/75 L. 72/83 L. 413/91 Total Building in Genoa Via Cassa di Risparmio 15 1,872 12,911 - 14,783 Building in Genoa Via Pelio 6 - 926 - 926 Buildings in Genoa Via D’Annunzio, 25-29c-39-41-63-73-81 - 4,132 - 4,132 Via D’Annunzio, 83-89-93-103 - 1,728 1,804 3,532 Via D’Annunzio, 23 - - 3,876 3,876 Via D’Annunzio, 79 - 1,132 602 1,734 Via D’Annunzio, garage E1 - - 20 20 Via D’Annunzio, car parking areas n. 1B2 and n. 2B2 - 51 - 51 Via D’Annunzio, car parkings 7E1, 8E1, 9E1, - 10E1 and cellar - - 15 15 Leased assets - - 47 47 Total 1,872 20,880 6,364 29,116
Property owned and used by the Bank for its business and activities is classified below:
Gross Total Net Share value depreciations value % Property utilised in business activities: – productive 310,558 83,908 226,650 88.0 – staff accommodation 2,541 8 2,533 1.0 – other property . supplementary pension fund 35,646 14,379 21,267 8.3 . reserve for termination indemnity 8,660 2,095 6,565 2.5 . others 688 - 688 0.3 Total real estate 358,093 100,390 257,703 100.0
108 4.2 CHANGES IN INTANGIBLE FIXED ASSETS 31/12/04 Software Start-up Goodwill Other intangible Total charges (1) fixed assets A. Opening balances 20,439 3,250 442,392 7,449 473,530 B. Increases 10,986 34 - 1,187 12,207 B1. Purchases 10,986 34 - 1,187 12,207 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 9,801 910 10,543 3,671 24,925 C1. Sales - - - - - C2. Depreciation and amortization 9,801 910 10,543 3,660 24,914 (a) amortization 9,801 910 10,543 3,660 24,914 (b) permanent write-downs - - - - - C3. Other changes - - - 11 11 D. Closing balances 21,624 2,374 431,849 4,965 460,812 E. Total revaluations - - - - - F. Total depreciation and amortization 29,244 2,178 31,813 17,748 80,983 (a) amortization 29,244 2,178 31,813 17,748 80,983 (b) permanent write-downs - - - - - (1) Value adjustments on goodwill relate to the purchase of branches during 2000, 2001 and 2002. The item total of 10,543 thousand euros (Banco di Sicilia branches: 1,203 thousand; Intesa branches: 5,532 thousand; Capitalia branches: 3,808 thousand) derives from an analytical calculation of amortisation charges as explained in detail in part A, section 1.
The following costs were included under intangible fixed assets during the period (thousand euros):
Software products 10,986 Start-up charges 34 Other intangible fixed assets 1,187 – maintenance of premises not owned by the Bank 782 – funding for Treasury Service purchases with value attributable to more than one year 250 – research and development costs 155
109 Closing balances of intangible fixed assets at 31/12/04 amount to 460,812 thousand euros and are as follow:
Software products 21,624 Start-up charges 2,374 Goodwill 431,849 - Banco di Sicilia (initial value 60,167 thousand euros) 54,752 - Gruppo Intesa (initial value 276,591 thousand euros) 256,538 - Gruppo Capitalia (initial value 126,905 thousand euros) 120,559 Other intangible fixed assets 4,965 – maintenance of premises not owned by the Bank 3,001 – funding for Treasury Service purchases with value attributable to more than one year 586 – INVIM (tax on increased value of immovable property) 15 – research and development costs 330 – licences and trademarks 65 – securitisation transaction 428 _ purchase of finance lease contracts 540
31/12/03 Software Start-up Goodwill Other intangible Total charges fixed assets A. Opening balances 18,725 1,047 450,799 9,562 480,133 B. Increases 10,676 3,608 264 1,896 16,444 B1. Purchases 10,676 3,608 264 1,896 16,444 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C. Decreases 8,962 1,405 8,671 4,009 23,047 C1. Sales - - - - - C2. Depreciation and amortization 8,703 1,405 8,671 3,954 22,733 (a) amortization 8,703 1,405 8,671 3,954 22,733 (b) permanent write-downs - - - - - C3. Other changes 259 - - 55 314 D. Closing balances 20,439 3,250 442,392 7,449 473,530 E. Total revaluations - - - - - F. Total depreciation and amortization 24,824 3,772 21,271 16,463 66,330 (a) amortization 24,824 3,772 21,271 16,463 66,330 (b) permanent write-downs - - - - -
110 SECTION 5
OTHER ASSETS
Other assets amount to 823,327 thousand euros and are analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Other assets (caption 130) 729,503 88.6 837,371 89.4 – Accrued income and prepaid expenses (caption 140) 93,824 11.4 99,309 10.6 Total 823,327 100.0 936,680 100.0
Change 31/12/04 31/12/03 absolute % 5.1 CAPTION 130 "OTHER ASSETS" 729,503 837,371 -107,868 -12.9 – post-collection notes and other values 127,587 128,105 -518 -0.4 – miscellaneous accounts receivable from branches 101,474 244,107 -142,633 -58.4 – amounts to be collected from customers 66,361 50,661 15,700 31.0 – amounts in transit between branches 58,473 1,879 56,594 … – off balance sheet revaluations 49,151 149 49,002 … – current account cheques drawn on other banks 39,512 46,766 -7,254 -15.5 – premiums related to option transactions 38,950 38,555 395 1.0 – current account cheques drawn on the Bank 6,435 7,106 -671 -9.4 – Bank guarantee deposits 1,359 310 1,049 … – accounts relating to tax collection services 180 180 - - – fiscal items: 175,767 175,351 416 0.2 tax advances 72,309 106,471 -34,162 -32.1 taxes paid in advance 70,275 47,590 22,685 47.7 accounts receivable from the tax authorities 29,487 16,648 12,839 77.1 tax advance on provisions to reserve for termination indemnity (Law 140/97) 3,316 4,239 -923 -21.8 with-holding taxes 380 403 -23 -5.7 – others 64,254 144,202 -79,948 -55.4
111 Change 31/12/04 31/12/03 absolute % 5.2 CAPTION 140 “ACCRUED INCOME AND PREPAID EXPENSES” 93,824 99,309 -5,485 -5.5 Accrued income: 87,477 91,408 -3,931 -4.3 – interest income on loans and advances to credit institutions 11,249 4,787 6,462 … – interest income on loans to customers 11,347 12,189 -842 -6.9 – interest income on securities in portfolio 33,451 27,416 6,035 22.0 – differentials stemming from derivatives contracts 31,154 47,016 -15,862 -33.7 – others 276 - 276 … Prepaid expenses: 6,347 7,901 -1,554 -19.7 – premiums related to currency forward transactions 583 307 276 89.9 – differentials stemming from derivatives contracts - 10 -10 … – discounts on issuing of securities 2,744 3,596 -852 -23.7 – administrative charges 953 1,314 -361 -27.5 – other transactions 2,067 2,674 -607 -22.7
Accrued income and prepaid expenses are not applied directly to the balance sheet accounts, in accordance with article 12, item 2 of Law 87/92.
Change 31/12/04 31/12/03 absolute % 5.4 DISTRIBUTION OF SUBORDINATED ASSETS 235,581 178,675 56,906 31.8 a) Loans and advances to credit institutions - - - - b) Loans and advances to customers 101,848 6,796 95,052 … c) Bonds and other fixed-income securities 133,733 171,879 -38,146 -22.2
Item c) ‘bond and other debt securities’ includes 65,690 thousand euros relating to the subscription of Junior class notes issued in relation to the securitisation of bad loans carried out by Banca Carige at the end of 2000 and during the 2001. These securities were inserted by the Bank into its investment securities portfolio.
112 SECTION 6
PAYABLES
Payables amount to 12,385,523 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Amounts owed to credit institutions (caption 10) 1,126,347 9.1 1,139,632 10.2 – Amounts owed to customers (caption 20) 6,709,593 54.2 5,957,888 53.4 – Debts evidenced by certificates (caption 30) 4,549,241 36.7 4,067,494 36.4 – Funds managed on behalf of third parties (caption 40) 342 0.0 368 0.0 Total 12,385,523 100.0 11,165,382 100.0
Change 31/12/04 31/12/03 absolute % 6.1 CAPTION 10 “AMOUNTS OWED TO CREDIT INSTITUTIONS” 1,126,347 1,139,632 -13,285 -1.2 (a) repurchase agreements 304,994 60,094 244,900 … (b) loans of securities - - - -
Caption 10 “amounts owed to credit institutions” detail by technical form and currency is the following:
Change 31/12/04 31/12/03 absolute %
Deposits 439,593 617,311 -177,718 -28.8 Current accounts 14,268 88,758 -74,490 -83.9 Financing 135,533 130,798 4,735 3.6 Long term loans 231,959 242,671 -10,712 -4.4 Repurchase agreements with banks 304,994 60,094 244,900 … Other - - - - Total 1,126,347 1,139,632 -13,285 -1.2 of which: – resident Euros 511,980 364,925 147,055 40.3 – resident foreign currency 127,838 106,840 20,998 19.7 – non-resident Euros 393,301 523,554 -130,253 -24.9 – non-resident foreign currency 93,228 144,313 -51,085 -35.4
113 Change 31/12/04 31/12/03 absolute % 6.2 CAPTION 20 “AMOUNTS OWED TO CUSTOMERS” 6,709,593 5,957,888 751,705 12.6 (a) repurchase agreements 195,095 149,468 45,627 30.5 (b) loans of securities - - - -
Caption 20 “Amounts owed to customers” is the following:
Change 31/12/04 31/12/03 absolute % Euro Euro Savings deposits 461,178 472,031 -10,853 -2.3 Current accounts 6,042,502 5,331,369 711,133 13.3 Funding from international organisations - - - - Mortgages 1,527 - 1,527 … Repurchase agreements 195,095 149,468 45,627 30.5 Other 9,291 5,020 4,271 85.1 Total 6,709,593 5,957,888 751,705 12.6 of which: – resident Euros 6,579,869 5,778,289 801,580 13.9 – resident foreign currency 87,263 80,322 6,941 8.6 – non-resident Euros 34,013 89,284 -55,271 -61.9 – non-resident foreign currency 8,448 9,993 -1,545 -15.5
Caption 30 “Debts evidenced by certificates” is the following:
Change 31/12/04 31/12/03 absolute % Euro Euro Certificates of deposits 287,368 326,769 -39,401 -12.1 Bonds certificates 4,178,791 3,653,863 524,928 14.4 Own cheques in circulation 83,082 86,862 -3,780 -4.4 Total 4,549,241 4,067,494 481,747 11.8 of which: – resident Euros 4,329,451 3,867,440 462,011 11.9 – resident foreign currency 219,725 199,986 19,739 9.9 – non-resident Euros 65 68 -3 -4.4 – non-resident foreign currency - - - -
Caption 40, “Funds managed on behalf of third parties” (342 thousand euros) includes interest-bearing funds supplied by the State and other public bodies for the financing of specific projects foreseen by law;the lending transactions carried out on behalf of public bodies, exclusively at fixed remuneration, are stated at section 12.
114 SECTION 7
RESERVES
Reserves, summarised in this section, amount to 495,773 thousand euros and are represented in the balance sheet as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Reserves for loan losses (caption 90) - - 18,000 3.4 – Reserves for risks and charges (caption 80) 416,529 84.0 433,676 81.8 – Reserve for termination indemnities (caption 70) 79,244 16.0 78,303 14.8 Total 495,773 100.0 529,979 100.0
Change 31/12/04 31/12/03 absolute % 7.1 COMPOSITION OF CAPTION 90 "RESERVES FOR LOAN LOSSES" - 18,000 -18,000 - 100.0
7.2 CHANGES IN THE "RESERVES FOR LOAN LOSSES" (CAPTION 90) 31/12/2004 31/12/2003 A. Opening balances 18,000 13,000 B. Increases - 18,000 B1. Provisions - 18,000 B2. Other changes - - C. Decreases 18,000 13,000 C1. Utilizations 18,000 13,000 C2. Other changes - - D. Closing balances - 18,000
115 Change 31/12/04 31/12/03 absolute % 7.3 COMPOSITION OF CAPTION 80 (C) "OTHER RESERVES" 34,424 32,781 1,643 5.0 Reserves for personnel charges 22,085 19,794 2,291 11.6 Reserves for future charges 52 52 - - Reserves for guarantees and commitments 2,729 2,787 -58 -2.1 Reserves for in-house insurance scheme - 1,570 -1,570 … Reserves for leasing transactions 2,944 2,899 45 1.6 Reserves for legal proceedings 4,862 5,563 -701 -12.6 Reserves for re-negotiated mortgages Law 133/99 - - - - Reserves for risks and charges - convertible bonds 1,752 116 1,636 …
A breakdown of the reserves which make up the caption reveals the following changes:
Reserves for personnel charges include provisions made for charges relative to staff employed subject to uncertainty regarding time or amount. Provisions for the year are stated in the Income Statement at caption 80a “Administrative costs - personnel”.
31/12/04 31/12/03 A. Opening balance 19,794 19,790 B. Increases 20,069 17,447 C. Decreases due to utilisation 17,778 17,443 D. Closing balance 22,085 19,794
Reserves for future charges. These reserves are almost exclusively destined to meet Deposit Protection Fund charges (FITD).
31/12/04 31/12/03 A. Opening balance 52 52 B. Increases due to provisions - - C. Decreases due to utilisation - - D. Closing balance 52 52
Reserves for guarantees and commitments. The reserve for guarantees and commitments was created in accordance with the provisions of Legislative Decree 87/92 and is equal to expected losses on credit commitments.
31/12/04 31/12/03 A. Opening balance 2,787 2,516 B. Increases due to provisions - 271 C. Decreases due to utilisation 58 - D. Closing balance 2,729 2,787
Reserves for in-house insurance scheme. The in-house self insurance fund was recorded at the P&L following changes to risk management policy.
116 31/12/04 31/12/03 A. Opening balance 1,570 1,563 B. Increases due to provisions - 500 C. Decreases due to utilisation 1,570 493 D. Closing balance - 1,570
Reserves for finance lease transactions. Provisions to this reserve are connected to the valuation of latent credit risks present in bad leased assets.
31/12/04 31/12/03 A. Opening balance 5,563 4,909 B. Increases due to provisions - 684 C. Decreases due to utilisation 701 30 D. Closing balance 4,862 5,563
Reserves for legal proceedings. Reserves for legal proceedings limit exposure to potential loss resulting from unsettled litigation.
31/12/03 31/12/02 A. Opening balance 4,909 3,904 B. Increases due to provisions 684 1,762 C. Decreases due to utilisation 30 757 D. Closing balance 5,563 4,909
The reserve for risk and charges – convertible bonds was created in 2003 in relation to Banca Carige’s hybrid subordinated loan issue with a premium at reimbursement convertible into ordinary shares (“Banca Carige 1.50% 2003- 2013”).
31/12/04 31/12/03 A. Opening balance 116 - B. Increases due to provisions 1,636 116 C. Decreases due to utilisation - - D. Closing balance 1,752 116
CHANGES IN THE “RESERVES FOR TAXATION” (CAPTION 80 B) Risks for 2004 Income Indirect legal taxes taxes proceedings Total Opening balances 87,365 21,359 2,539 111,263 Increases 65,523 * 22,098 - 87,621 Decreases 91,529 ** 21,361 199 113,089 Closing balances 61,359 22,096 2,340 85,795 ** of which 7,288,000 euro in the form of payment of first tax instalment ("imposta sostitutiva") as outlined above and 32,000 euro in the form of fund surplus, recorded at the P&L (see section 6, explanatory notes).
117 Amounts paid as advances for income tax are recorded at caption 130 ‘other assets’ and amount respectively to: 24,020 thousand euros in corporation tax (IRES); 13,079 thousand euros in regional levied tax on businesses (IRAP); 32,468 thousand euros in stamp duty; 5,640 thousand euros in tax charged on medium/long-term financing (‘imposta sostitutiva’).
Risks for 2003 Income Indirect legal taxes taxes proceedings Total Opening balances 87,581 19,223 2,630 109,434 Increases 68,271 21,359 200 89,830 Decreases 68,487 * 19,223 291 88,001 Closing balances 87,365 21,359 2,539 111,263 * of which 3,028,000 surplus to reserve requirements and subsequently destined to the income statement (see section 6, Income Statement).
During 2004, Banca Carige, in addition to the following companies of the Group - Cassa di Risparmio di Savona SpA, Banca del Monte di Lucca SpA, Carige Asset Management SGR SpA, Carige Assicurazioni SpA, Carige Vita Nuova SpA, Galeazzo S.r.l., Columbus Carige Immobiliare SpA and Immobiliare Ettore Vernazza SpA, adhered to the national consolidated corporation tax (IRES) regime foreseen by article 117 et seq. of Decree of the President of the Republic 917/96 subsequently modified by Legislative decree 344/2003. According to the terms of the regime (‘consolidato fiscale’), the parent company or consolidator (Banca Carige SpA) shall prepare a consolidated tax return (calculating the tax base of the companies taking part in the regime adjusted by amounts written down in accordance with article 122 of the Consolidated Tax Law) in addition to settling tax owed (advances and settlements). On effecting payment, the consolidator will be repaid the amounts owed by each consolidated company. Therefore, that part of the tax reserve destined to corporation tax represents the tax liabilities of the Bank which, after taking into account advances paid and added to outstanding tax owed by the consolidated companies, shall be paid to the tax authorities in the timescale and manner foreseen by the law. During the initial phase of application, tax advances are to be paid by the consolidated companies rather than the consolidator.
Tax reserves include the costs deriving from the cancellation of tax breaks contained in Legislative decree 153/99 (see introduction to explanatory notes) and recorded as a tax credit for litigation in course awaiting the decision of the appeal against the EU Commission’s decision lodged at the Court of Luxembourg.
Deferred tax: positive and negative effects
The calculation of tax advanced and liabilities to deferred taxation was made according to tax rates which will be in force when timing differences reverse, pursuant to tax regulations at 31/12/2004.
The rates applied are the follow: 33% IRES and 4,25% IRAP.
IRAP rate adopted is that applied in Liguria, where the Bank carries out most of its business.
The time horizon was, as indicated in the accounting principles, extended to an unlimited period of time as there appears no reason to doubt the certainty of reasonableness of recovery of the tax in question.
118 7.4 CHANGES IN "ASSETS IN THE FORM O F ADVAN CED PAYM EN T O F TAXATIO N " a) recorded in the incom e statem ent w ith counter entry 1. Opening balances 12,008 2. Increases 29,369 2.1 Advanced taxation arising during the year 29,369 2.2 Other increases - 3. Decreases 11,891 3.1 Advanced taxation written off during the year 11,891 3.2 O ther decreases - 4. Closing balances 29,486
At 31/12/2003, assets representing advance payment of taxation totalled 12,008 thousand euros were recorded; to this figure 29,369 thousand euros was added in the form of advanced tax relative to 2004. In more detail, this consists of: – costs related to hospitality and entertaining related to 2004, deductible for a third of the total over five years in five equal instalments; – provisions for personnel charges deductible in the next business year; – losses on shares and derivatives hedging shares deductible on realization pursuant to Legislative decree 917/86 modified by Legislative decree 344/03; – losses on credits to be written off in future accounting periods; – fund balances and related provisions for which the extension of the time horizon has meant the calculation of related advanced tax; the most significant funds and related provisions include: fund for long service allowances and provisions there to; fund for long service allowance and provisions there to; fund for risks relating to claims and litigation and provisions there to; fund for guarantees and commitments and provisions there to; fund for risks relating to convertible bonds and provisions there to; fund for leasing risks and provisions there to.
Overall, the extension of the time horizon has generated increased tax advances of 20,898,000 euros.
Negative variations amount to 11,891,000 euros.
In accordance with Bank of Italy indications contained in its decision of 3/8/99, assets in the form of taxes advanced relating to timing differences emerging in 2004, which will be cancelled out in the coming years, were recorded at caption 220 ‘Income taxes for the year’; taxes paid in advance recorded in previous years and written down in 2004 were responsible for an increase in the above-mentioned caption 220.
7.4 CHANGES IN "ASSETS IN THE FORM O F ADVAN CED PAYM EN T O F TAXATIO N " b) recorded in the net value with counter entry 1. Opening balances 4,640 2. Increases - 2.1 Advanced taxation arising during the year - 2.2 Other increases - 3. Decreases 4,640 3.1 Advanced taxation written off during the year 4,640 3.2 O ther decreases - 4. Closing balances -
119 Reduced deferred tax liabilities relative to net assets stem from the utilisation of 49,822 thousand euros of provisions to the share premium reserve to cover 4/5ths of the negative variation deriving from the securitisation of bad loans carried out in 2000. As a result, 19,960 thousand euros in tax advanced relating to net assets (IRPEG: 17,687 thousand euros; IRAP: 2,273 thousand euros) was recorded in 2000 as counterpart to the share premium reserve. In 2004, such as in previous years, in accordance with article 6 of Law 130/99, 1/5th of the negative difference referred to (12,456 thousand euros) was recorded in the Profit & Loss account; at the same time 7,816 thousand euros were destined to reconstitute in part the share premium reserve, and 4,640 thousand euros of assets in the form of tax advanced were cancelled.
7.5 CHANGES IN "LIABILITIES FO R TAXES PAYABLE" a) recorded in the incom e statem ent w ith counter entry 1. Opening balances 5,391 2. Increases 18,789 2.1 D eferred taxation originating in the year 18,789 2.2 Other increases - 3. Decreases 2,267 3.1 Deferred taxation written off in the year 2,267 3.2 O ther decreases - 4. Closing balances 21,913
With regards to timing differences liable to tax, deferred tax liabilities amounting to 18,789 thousand euros were recorded relating to:
– capital gains realised during 2004 on property, the sale of which is subject to tax payable in instalments pursuant to article 86, Consolidated Tax law (602,000 euros). – writebacks and value adjustments on equity securities and adjustments on mutual funds (8,804,000 euros); - amortisation of property (5,218,000 euros) and of goodwill (35,824,000 euros) not recorded at the profit & loss account but tax deductible as foreseen by article 109, paragraph 4 of the Consolidated Tax Law; the corresponding asset commitment at 31/12/04 amounted to 25,754,000 euros.
Deferred tax liabilities which became relevant for tax purposes in 2004 amounted to 2,267 thousand euros.
The counterpart for these increases and decreases in the deferred tax reserve is caption 220 “Income tax”, in line with tax regulations.
No provisions were made with regard to deferred tax liabilities on reserves benefiting from tax relief totalling 40,678 thousand euros as distribution is not foreseen and there is little likelihood of the conditions requiring payment arising. This amount includes reserves created under article 22, Legislative decree 153/99 from profits recorded for the years 2000 (5,362,000). Related tax liabilities are suspended pending the decision on litigation in course before the Tribunal of Luxembourg (see Introduction to the Explanatory Notes).
120 CHANGES IN THE “SUPPLEMENTARY PENSION FUND” (CAPTION 80 A) 31/12/04 31/12/03 A. Opening balance 289,632 287,888 B. Increases or decreases 6,678 1,744 D. Closing balance 296,310 289,632
CHANGES IN CAPTION 70 “RESERVE FOR TERMINATION INDEMNITIES” 31/12/04 31/12/03 A. Opening balance 78,303 84,941 B. Increases 10,868 11,431 B.1 Provisions and other changes 10,868 11,431 C. Decreases 9,927 18,069 C.1 Termination employment 3,642 5,832 C.2 Advances (law 297/82) 3,789 9,790 C.3 Others 2,496 2,447 D. Closing balance 79,244 78,303
121 SECTION 8
SUBSCRIBED CAPITAL, EQUITY RESERVES, RESERVES FOR GENERAL BANKING RISKS AND SUBORDINATED LIABILITIES
This section presents liabilities captions 100, 110, 120, 130, 140, 150 and 170 and assets caption 120.
31/12/04 31/12/03 thousands of € % thousands of € % – Capital stock (caption 120) 1,113,327 64.4 1,113,327 65.0 – Additional paid-in capital (caption 130) 262,839 15.2 255,023 14.9 – Reserves (caption 140) 238,051 13.8 229,722 13.4 – Revaluation reserves (caption 150) 7,956 0.5 7,956 0.5 – Reserves for general banking risks (caption 100) - - - - – Net income (caption 170) 107,541 6.2 106,199 6.2 Shareholders’ equity 1,729,714 100.0 1,712,227 100.0 – Subordinated loans (caption 110) 502,055 502,055 – Own shares (caption 120 - assets) 1,301 -
Change 31/12/04 31/12/03 absolute % CAPTION 120 "CAPITAL STOCK" 1,113,327 1,113,327 - - - ordinary shares 959,898 959,898 - - - saving shares 153,429 153,429 - -
Share capital amounts to 1,113,326,839 euros in the form of 1,113,326,839 shares of a unitary nominal value of 1 euro.
Change 31/12/04 31/12/03 absolute % CAPTION 130 "ADDITIONAL PAID-IN CAPITAL" 262,839 255,023 7,816 3.1
Changes recorded during the year result from an increase of 7,816 thousand euros in the form of provisions made to the reserve within the confines of the securitisation of non performing loans carried out in 2000 pursuant to Law 130/99, article 6, paragraph c.3. In particular, this change corresponds to the difference between the provision quota for the period, the reduced value of the loans sold (12,456 thousand euros) and related tax advances (4640 thousand euros).
122 Change 31/12/04 31/12/03 absolute % CAPTION 140 "RESERVES" 238,051 229,722 8,329 3.6 a) legal reserve 77,971 67,351 10,620 15.8 b) reserve for purchase of treasury stock 1,301 - 1,301 … c) other reserves 158,779 162,371 -3,592 -2.2 - taxed extraordinary reserve 41,913 44,396 -2,483 -5.6 - reserve for purchase of treasury stock disposable amount 75,699 77,000 -1,301 -1.7 - reserve for incorporation 16,589 16,589 - - - reserve (legislative decree 17/5/99 n. 153) 11,718 11,718 - - - reserve (legislative decree 21/4/93 n. 124) 121 56 65 … - merger reserve 12,341 12,341 - - - reserve for dividends on own shares 267 140 127 90.7 - reserve (art. 55 Decree 917/86) 131 131 - -
Legal reserve increased from 67,351 thousand euros to 77,971 thousand euros by the distribution of the 2003 net profit, as decided by stockholders’ resolutions of 28/4/2004.
The Extraordinary Taxed Reserve rose by 12,093,000 euros following the allocation of profit for 2003 as deliberated by the Shareholders’ Meeting of 28th April 2004; there was reduction of 14,576,000 euros in the fund balance following the payment of a one-off tax charge (imposta sostituva) for the release of capital gains previously subject to suspended liability to tax (Law 218/90).
The Reserve for Purchase of Own Shares, created pursuant to article 2357 et seq. Italian Civil Code, amounted to 77,000 million. At 31/12/04, utilisation of the fund totalled 1,301,000, leaving a residual utilizable amount of 75,699,000 euros.
Merger reserve was formed in 1994 in accordance with art. 7 c. 3 of Law 218/90 and with art. 1 of Law 489/93 and recorded no change.
The reserve foreseen by Legislative decree 153/99, constituted during the year 2000 in order to benefit from the tax benefits contained in the same decree relating to merger operations, recorded no change.
The Reserve created in 2003 under the provisions of Legislative Decree 124/93 receives annual severance pay provisions destined for supplementary pension schemes. This reserve rose by 65,000 euros following the allocation of profit for 2003 as deliberated by the Annual Shareholders’ Meeting of 28th April 2004.
Reserve for incorporation and the reserve foreseen by art. 55, Presidential Decree 917/86 recorded no changes during the year.
The dividends on own shares reserve (267 thousand euros) is related to the dividend on own shares held in portfolio at 3/5/2004 and was constituted as deliberated by the Annual Shareholders’ Meeting of 28/4/2004.
123 Change 31/12/04 31/12/03 absolute % CAPTION 150 "REVALUATION RESERVES" 7,956 7,956 - - Revaluation reserves (law 72/83) 1,930 1,930 - - Revaluation reserves (law 413/91) 6,026 6,026 - -
Revaluation reserves, which show the same amount as at 31/12/03, benefited from the tax-break opportunities offered by article 123, item 4, Presidential Decree 917/86, as present in the balance sheets of the incorporated companies. During 1995 Carige released the revaluation reserves connected to Law 413/91, by the payment of taxes in accordance with article 22 of Law 85/95.
Change 31/12/04 31/12/03 absolute % CAPTION 100 "RESERVES FOR GENERAL BANKING RISKS" - - - -
The reserves for general banking risks were fully used during the previous year.
Change 31/12/04 31/12/03 absolute % CAPTION 110 "SUBORDINATED LOANS" 502,055 502,055 - -
The issue recorded no changes during the year and is as follows:
Code Amount Currency Interest rate Maturity
XSO135565637 400,000 euro Euribor 3 months + 28/11/2011 annual spread of 0.80
ITO003563035 102,055 euro 1.5% + 16% at 5/12/2013 maturity
With regards to the first loan issue, reimbursement will be effected at maturity in one payment. The Bank can, however, anticipate repayment after the fifth year with Bank of Italy authorisation. In the eventuality of liquidation, the bonds will be repaid only after all other claims have been met.
The repayment ranking of the bond issue ‘Banca Carige 1.50% 2003-2013’, performed in the year 2003, in case of the Bank’s going into liquidation or receivership is as follows: the bonds will be repaid only after all other creditors subordinated or otherwise have been repaid with the exception of those creditors with an equal or more accentuated degree of subordination. Further characteristics of the issue are as follows: - from 1st January 2006 until 31st October 2013 the bonds can be converted into shares of the Bank on a one-to-one basis; - for those bonds for which no conversion right has been exercised as at 31st October 2013, the principal shall be repaid in one payment on 5th December 2013 with a 16% premium on the nominal value.
124 Changes in assets caption 120 “Own shares” are described below:
31/12/03 31/12/03 Nominal Amount Nominal Amount Quantity Quantity value /1000 value /1000 A. Opening balances - - - 6,024,532 6,024,532 11,619 B. Increases 20,537,262 20,537,262 62,350 8,870,380 8,870,380 24,723 - Purchases 20,537,262 20,537,262 62,350 8,870,380 8,870,380 22,446 - Writebacks ------Other changes - - - - - 2,277 C. Decreases 20,101,163 20,101,163 61,049 14,894,912 14,894,912 36,342 - Sales 20,101,163 20,101,163 60,246 14,894,912 14,894,912 36,342 - Adjustments - - 23 - - - - Other changes - - 780 - - - D. Closing balances 436,099 (1) 436,099 1,301 - (1) - - (1) Figure does not include 227.92 shares corresponding to 44/50 of 259 non converted shares.
Relative to article 16, Legislative decree 87/92, available reserves recorded at 31/12/2004 offer sufficient cover for those costs not amortised as by article 10 (comma 2a) and d))of the same decree.
The table below provides the details of the Bank's total capital and prudential management requirements.
Total capital and prudential requirements
CATEGORIES/VALUES 31/12/04 31/12/03 A. Total capital A.1 Tier 1 1,176,082 1,147,180 A.2 Tier 2 499,752 512,498 A.3 Deductions 230,800 190,582 A.4 Total capital 1,445,034 1,469,096 B. Prudential requirements B.1 Credit risks 666,886 637,107 B.2 Trading risks 53,172 69,181 including: – trading securities risks 53,172 69,181 – exchange rate risks - - B.3 Subordinated loans of 3rd level - - B.4 Other prudential requirements 46,848 33,830 B.5 Total prudential requirements 766,906 740,118 C. Capital adequacy ratios C.1 Risk-Weighted Assets (*) 10,955,800 10,573,114 C.2 Tier 1% of RWA 10.73% 10.85% C.3 Total capital % of RWA 13.19% 13.89% (*) Total prudential requirements multiplied by the reciprocal minimum obligatory credit risk coefficient.
125 SECTION 9
OTHER LIABILITIES
Other liabilities amount to 815,875 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Other liabilities (caption 50) 651,179 79.8 579,839 78.0 – Accrued expenses and deferred income (caption 60) 164,696 20.2 163,572 22.0 Total 815,875 100.0 743,411 100.0
Change 31/12/04 31/12/03 absolute % 9.1 CAPTION 50 "OTHER LIABILITIES" 651,179 579,839 71,340 12.3 – miscellaneous accounts payable to branches 176,366 205,916 -29,550 -14.4 – excess of adjustment on discounted notes 149,140 151,597 -2,457 -1.6 – amounts related to writedowns on off-balance sheet transactions 65,621 5,013 60,608 … - amounts in transit with branches 61,543 6,698 54,845 … – amounts due to customers 51,218 56,465 -5,247 -9.3 – beneficiaries of outstanding invoices 32,736 30,920 1,816 5.9 – amounts due to tax authorities on behalf of third parties 16,242 12,961 3,281 25.3 - premiums related to options transactions 12,873 5,607 7,266 … – staff charges 12,138 12,819 -681 -5.3 – guarantee deposits from third parties 1,068 764 304 39.8 – accrued costs to be recognized 766 913 -147 -16.1 – amounts relating to tax collection service 360 499 -139 -27.9 – other 71,108 89,667 -18,559 -20.7
126 Change 31/12/04 31/12/03 absolute % 9.2 CAPTION 60 "ACCRUED EXPENSES AND DEFERRED INCOME" 164,696 163,572 1,124 0.7 Accrued expenses: 84,854 95,528 -10,674 -11.2 – interest expenses due to banks 3,188 3,132 56 1.8 – interest expenses due to customers 296 310 -14 -4.5 – interest payable on debt securities 53,358 44,522 8,836 19.8 – differentials stemming from derivatives 27,918 47,450 -19,532 -41.2 contracts – others 94 114 -20 -17.5 Deferred income: 79,842 68,044 11,798 17.3 – premiums related to currency forward 1,159 636 523 82.2 transactions – differentials stemming from derivatives 2,895 3,777 -882 -23.4 contracts – discounted notes 1,168 1,702 -534 -31.4 – leasing rents 71,516 59,838 11,678 19.5 – others 3,104 2,091 1,013 48.4
Accrued expenses and deferred income are not applied directly to the balance sheet accounts in accordance with article 12, Legislative Decree 87/92.
127 SECTION 10
GUARANTEES AND COMMITMENTS
Guarantees and commitments amount to 2,348,572 thousand euros and are analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Guarantees given (caption 10) 1,100,698 46.9 1,271,681 58.3 – Commitments (caption 20) 1,247,874 53.1 910,193 41.7 Total 2,348,572 100.0 2,181,874 100.0
Change 31/12/04 31/12/03 absolute % 10.1 CAPTION 10 "GUARANTEES GIVEN" 1,100,698 1,271,681 -170,983 -13.4 (a) commercial guarantees 1,015,082 1,170,959 -155,877 -13.3 (b) financial guarantees 33,572 31,694 1,878 5.9 (c) assets held in guarantee 52,044 69,028 -16,984 -24.6 Total 1,100,698 1,271,681 -170,983 -13.4 Caption 10 is analysed below: – sureties 972,450 1,140,003 -167,553 -14.7 – documentary and non documentary credits 70,699 60,040 10,659 17.8 – acceptances on behalf of third parties 5,505 2,610 2,895 … – other sureties on behalf of third parties 1,022 1 1,021 … – bond sureties on behalf of third parties 51,022 69,027 -18,005 -26.1
Credit commitments related to non-performing loans amount to 22,895 thousand euros. Reserve for guarantees and commitments, which amount to 2,729 thousand euros, cover all related risks.
128 Change 31/12/04 31/12/03 absolute % 10.2 CAPTION 20 "COMMITMENTS" 1,247,874 910,193 337,681 37.1 (a) Commitments to extend credit (certain to be called on) 673,380 458,915 214,465 46.7 (b) Commitments to extend credit (not certain to be called on) 574,494 451,278 123,216 27.3 Commitments are analysed as follows: – stipulated mortgages to be granted 371,614 355,254 16,360 4.6 – derivative contracts on credits 150,245 194,087 -43,842 -22.6 – purchases of securities to be settled 143,535 112,074 31,461 28.1 – unused irrevocable lines of credit 97,065 104,828 -7,763 -7.4 – amounts to be granted to customers 237,484 14,010 223,474 … – stipulated leasing transactions to be granted 36,627 15,800 20,827 … – commitments with Deposit Protection Fund Liabilities (FITD) 16,684 15,650 1,034 6.6 – subsidiaries' shares and quotas to be received 4,881 97,874 -92,993 -95.0 – option on securities 86,181 - 86,181 … – deposits to be made with banks 103,558 616 102,942 … Total 1,247,874 910,193 337,681 37.1
Change 31/12/04 31/12/03 absolute % 10.3 ASSETS HELD TO GUARANTEE THE BANK’S LIABILITIES 527,823 228,857 298,966 … Securities held to guarantee: – bank drafts issued by Carige 29,250 23,129 6,121 26.5 – repurchase agreements 498,573 205,728 292,845 … Total 527,823 228,857 298,966 …
Change 31/12/04 31/12/03 absolute % 10.4 UNUSED LINES OF CREDIT BY THE BANK 183,722 129,712 54,010 41.6 (a) central banks 145,322 102,385 42,937 41.9 (b) other banks 38,400 27,327 11,073 40.5
129 10.5 FORWARD TRANSACTIONS 31/12/04 31/12/03 Hedging Trading Other Hedging Trading Other 1. Purchase/sale of: 200,000 615,789 - - 328,602 - 1.1 Securities 200,000 240,263 - - 145,439 - – purchases - 148,416 - - 112,074 - – sales 200,000 91,847 - - 33,365 - 1.2 Currency - 375,526 - - 183,163 - – currency against currency - 541 - - - - – purchases against euro - 194,810 - - 45,456 - – sales against euro - 180,175 - - 137,707 - 2. Deposits and loans - - 407,253 - - 66,546 – to be made - - 341,042 - - 16,210 – to be received - - 66,211 - - 50,336 3. Derivatives contracts 4,028,126 3,828,224 207,942 3,541,457 3,436,316 178,885 3.1 With exchange of principal 253,230 353,594 131,942 274,227 125,636 102,171 (a) securities 96,000 26,145 131,942 116,997 15,980 102,171 – purchases - 300 29,887 - 300 - – sales 96,000 25,845 102,055 116,997 15,680 102,171 (b) currency 157,230 327,449 - 157,230 109,656 - – currency against currency - 21,043 - - - - – purchases against euro 157,230 153,203 - 157,230 54,828 - – sales against euro - 153,203 - - 54,828 - (c) other instruments ------– purchases ------– sales ------3.2 Without exchange of principal 3,774,896 3,474,630 76,000 3,267,230 3,310,680 76,714 (a) currency ------– currency against currency ------– purchases against euro ------– sales against euro ------(b) other instruments 3,774,896 3,474,630 76,000 3,267,230 3,310,680 76,714 – purchases 1,553,950 1,778,364 - 1,278,824 1,672,981 - – sales 2,220,946 1,696,266 76,000 1,988,406 1,637,699 76,714 Total 4,228,126 4,444,013 615,195 3,541,457 3,764,918 245,431
Deposits and financing to be made or received include exclusively short-term repurchase agreements; sale and repurchase agreements with currency as the underlying totalled 8.4 million euros. With reference to derivatives contracts, the notional value of options incorporated in structured bonds issued by the Bank, the value of which is derived from the liabilities of other parties, amounts to 178.1 million euros and is recorded at column ‘other transactions’. In particular, in capital-exchange contracts, the values recorded are those of the options implicitly sold to the subscribers of convertible bonds (into ordinary shares) issued during 2003 (see section 8). The notional value of options incorporated in assets or liabilities which allow either the Bank or the counterparty to transform, after a certain period of time, the interest rate stipulated in the contract from fixed to floating, or vice versa, was recorded at section 11.6 ‘Maturities of assets and liabilities’.
130 10.6 DERIVATIVES CONTRACTS ON LENDING 31/12/04 31/12/03 Trading Banking Trading Banking book book book book 1. Hedging purchases 35,341 - 20,918 - 1.1 With exchange of principal 35,341 - 20,918 - - credit default product 35,341 - 20,918 - 2. Hedging sales 118,245 32,000 162,087 32,000 2.1 With exchange of principal 12,000 32,000 2,000 32,000 - credit default product 12,000 32,000 2,000 32,000 2.2 Without exchange of principal 106,245 - 160,087 - - total rate of return swap 106,245 - 160,087 - Total 153,586 32,000 183,005 32,000
Total principal of derivatives contracts amounts to 8,249.9 million euros (inclusive of basis swaps contracts for 1,139.2 million of euros, the notional value of which is recorded at section 10.5).
PRINCIPAL (1) Interest Exchange Share Other Total rate rate rates 1. Trading contracts 2,448,057 327,449 537,598 201,432 3,514,536 1.1 Non-quoted trading contracts 2,448,057 327,449 530,129 175,587 3,481,222 Forwards - - - - - Swaps (2) 2,263,847 - - - 2,263,847 Options bought 83,806 163,294 168,672 - 415,772 Options sold 100,404 164,155 361,457 - 626,016 Derivatives on credits - - - 175,587 175,587 1.2 Quoted trading contracts - - 7,469 25,845 33,314 Futures bought - - 1,972 - 1,972 Futures sold - - 5,197 25,845 31,042 Options bought - - 300 - 300 Options sold - - - - - 2. Non-quoted hedging contracts 3,256,896 157,230 172,000 10,000 3,596,126 Swaps (2) 2,945,142 157,230 - - 3,102,372 Options bought 311,754 - 124,000 - 435,754 Options sold - - 48,000 - 48,000 Derivatives on credits - - - 10,000 10,000 Total 5,704,953 484,679 709,598 211,432 7,110,662 (1) Principal in basis swaps is stated once (2) Caption includes basis swaps, cross currency swaps, interest rate swaps and overnight indexed swaps.
131 PRINCIPAL IN HEDGING CONTRACTS (1) Swaps Options Options Derivatives Total bought sold on credits 1. Assets 1,730,192 144,754 48,000 10,000 1,932,946 Loans to customers 391,281 96,754 - - 488,035 Trading securities 601,911 48,000 48,000 10,000 707,911 Deposits with banks 737,000 - - - 737,000 2. Liabilities 1,372,180 291,000 - - 1,663,180 Bonds 1,372,180 291,000 - - 1,663,180 Total 3,102,372 435,754 48,000 10,000 3,596,126 (1) Principal in basis swaps is stated once.
PRINCIPAL IN CONTRACTS CLASSIFIED BY REMAINING CONTRACT LIFE (1) Up to 12 From 1 to 5 More than Total months years 5 years 1. Trading contracts 1,426,141 1,046,304 1,042,091 3,514,536 1.1 Non-quoted trading contracts 1,393,127 1,046,004 1,042,091 3,481,222 Swaps 841,381 633,427 789,039 2,263,847 Options bought 216,320 135,702 63,750 415,772 Options sold 217,181 219,533 189,302 626,016 Derivatives on credits 118,245 57,342 - 175,587 1.2 Quoted trading contracts 33,014 300 - 33,314 Futures bought 1,972 - - 1,972 Futures sold 31,042 - - 31,042 Options bought - 300 - 300 Options sold - - - - 2. Non-quoted hedging contracts 1,272,823 1,292,521 1,030,782 3,596,126 Swaps 1,176,823 1,076,521 849,028 3,102,372 Options bought 48,000 206,000 181,754 435,754 Options sold 48,000 - - 48,000 Derivatives on credits - 10,000 - 10,000 Total 2,698,964 2,338,825 2,072,873 7,110,662 (1) Principal in basis swaps is stated once.
Derivatives business is carried out exclusively with primary banking and financial institutions. During the period no losses on loans-related derivatives contracts were recorded and no provisions for counterparty risk have been made. At 31/12/04, there were no unsettled contracts. Non quoted derivatives contracts accounted for 99% of all derivatives contracts at 31/12/04.
132 NON-QUOTED INTEREST-RATE DERIVATIVES CONTRACTS (1) Banks Financial Other Total bodies 1. Principal 6,224,776 430,304 422,268 7,077,348 2. Trading contracts (2) Positive market value 42,955 432 2,015 45,402 Negative market value 47,449 3,405 5,608 56,462 Potential credit equivalent 44,965 3,796 22,188 70,949 3. Hedging contracts Positive market value 57,294 4,025 - 61,319 Negative market value 72,938 18,754 - 91,692 Potential credit equivalent 34,134 3,176 - 37,310 (1) Principal in basis swaps is stated once. (2) The trading derivatives item includes negative market values of 11,210 thousand euros relating to options on the Bank’s structured bond issues; these options are matched by a positive market value for the same amount stated at the item ‘hedging contracts’.
Derivatives-related capital losses of 82.8 million euros and capital gains of 58.1 million euros were not recorded in the income statement. In particular, capital losses and gains stemming from hedging contracts related to the investment and trading securities portfolios of 23 million euros and 0.3 million euros respectively, were not recorded (see Section 2.3); capital losses stemming from hedging contracts related to bonds issued of 23.2 million euros and capital gains of 57.8 million euros, and capital losses stemming from credit derivatives of 25.4 million euros were also not recorded.
DEFERRED GAINS AND LOSSES Losses Gains 1. Trading contracts 11,210 - 1.1 Non-quoted trading contracts 11,210 - Swaps - - Options (1) 11,210 - Derivatives on credits - - 1.2 Quoted trading contracts - - Futures - - Options - - 2. Non-quoted hedging contracts 71,634 58,157 Swaps 69,582 38,567 Options 1,720 19,590 Derivatives on credits 332 - Total 82,844 58,157 (1) ) The trading derivatives item includes deferred losses of 11,210 thousand euros relating to options on the Bank’s structured bond issues; these options are matched by a positive market value for the same amount stated at the item ‘hedging contracts’.
133 SECTION 11
CONCENTRATION AND DISTRIBUTION OF ASSETS AND LIABILITIES
Breakdowns of loans related to lists 11.2, 11.3, 11.5, 11.6 and 11.7 of this section include leased assets, which amount to 780,314 thuosand of euros and are exclusively connected to transactions with customers. On this basis, loans to customers amount to 9,320,033 thousand euros and not to 8,539,719 thousand euros (as caption 40 of assets).
11.1 SIGNIFICANT EXPOSURES 31/12/04 31/12/03 (a) amount 301,555 150,000 (b) number 21
Significant exposures are those identified on the basis of “major lines of credit” as defined by the Bank of Italy.
11.2 DISTRIBUTION OF LOANS AND ADVANCES TO CUSTOMERS, BY CATEGORY 31/12/04 31/12/03 (a) Governments 445,468 481,278 (b) Other public entities 517,797 588,805 (c) Non-financial businesses 5,341,872 5,111,659 (d) Financial institutions 480,194 356,147 (e) Personal businesses 459,790 469,917 (f) Other operators 2,074,912 2,095,436 Total 9,320,033 9,103,242
11.3 DISTRIBUTION OF LOANS TO RESIDENT NON-FINANCIAL BUSINESSES AND PERSONAL BUSINESSES 31/12/04 31/12/03 (a) 1st branch of economic activity Other market services 1,360,955 1,207,153 Wholesale and retail trade, salvage and repairs (b) 2nd branch of economic activity Wholesale and retail trade, salvage and repairs 1,024,782 1,021,269 Building and construction (c) 3rd branch of economic activity Building and construction 847,518 741,473 Other market services (d) 4th branch of economic activity Air and sea transport 327,169 314,946 (e) 5th branch of economic activity Transport services 272,886 257,341 Hotel and catering services (f) Other branches 1,883,596 1,886,604 Total 5,716,906 5,428,786
134 11.4 DISTRIBUTION OF GUARANTEES GIVEN, BY CATEGORY OF COUNTERPART 31/12/04 31/12/03 (a) Governments - - (b) Other public entities 5,035 9,772 (c) Banks 94,918 137,584 (d) Non-financial businesses 900,131 984,583 (e) Financial institutions 59,483 93,910 (f) Personal businesses 12,617 13,012 (g) Other operators 28,515 32,820 Total 1,100,699 1,271,681
11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND LIABILITIES
31/12/04 Caption/countries Italy Other EU Other Total countries countries 1. Assets 11,794,808 1,453,358 61,631 13,309,797 1.1 Due from banks 996,122 565,440 24,473 1,586,035 1.2 Loans to customers 9,048,818 262,396 8,819 9,320,033 1.3 Securities 1,749,868 625,522 28,339 2,403,729 2. Liabilities 11,958,523 720,907 208,148 12,887,578 2.1 Due to banks 639,818 480,389 6,140 1,126,347 2.2 Deposits from customers 6,667,132 30,518 11,943 6,709,593 2.3 Securities issued 4,549,176 0 65 4,549,241 2.4 Others 102,397 210,000 190,000 502,397 3. Guarantees and Commitments 2,051,274 273,163 24,136 2,348,573
31/12/03 Caption/countries Italy Other EU Other Total countries countries 1. Assets 11,516,829 564,537 87,399 12,168,765 1.1 Due from banks 578,500 332,234 28,102 938,836 1.2 Loans to customers 8,842,545 214,663 46,034 9,103,242 1.3 Securities 2,095,784 17,640 13,263 2,126,687 2. Liabilities 10,600,224 822,126 245,087 11,667,437 2.1 Due to banks 571,765 525,106 42,761 1,139,632 2.2 Deposits from customers 5,858,610 87,020 12,258 5,957,888 2.3 Securities issued 4,067,426 - 68 4,067,494 2.4 Others 102,423 210,000 190,000 502,423 3. Guarantees and Commitments 2,099,321 26,596 55,957 2,181,874
Geographic distribution is analysed with reference to the counterparts’ residence.
135 11.6 MATURITIES OF ASSETS AND LIABILITIES
31/12/04 Repayable Up to Between 3 Between 1 and 5 Beyond 5 Unspecified Captions/Residual life on demand 3 months and 12 years years duration Total months fixed rate indexed rate fixed rate indexed rate 1. Assets 2,715,420 3,692,892 4,159,824 1,662,701 2,503,702 1,504,812 3,203,617 556,508 19,999,476 1.1 Treasury bonds eligible for refinancing 7 10,522 52,478 250,650 130,769 15,311 20,350 - 480,087 1.2 Due from banks 321,219 736,398 358,383 351 10,000 897 - 158,787 1,586,035 1.3 Loans to customers 2,317,110 237,614 1,124,558 362,975 1,632,080 536,400 2,711,575 397,721 9,320,033 1.4 Bonds and other fixed income securities 1,373 96,564 21,104 29,241 730,596 76,051 445,342 - 1,400,271 1.5 Off-balance sheet transactions 75,711 2,611,794 2,603,301 1,019,484 257 876,153 26,350 - 7,213,050 2. Liabilities 7,461,381 3,985,197 2,379,744 1,123,700 2,219,268 1,543,752 1,387,244 - 20,100,286 2.1 Due to banks 261,840 512,918 14,719 61,806 68,169 77,266 129,629 - 1,126,347 2.2 Deposits from customers 6,508,493 190,184 9,416 - 38 - 1,462 - 6,709,593 2.3 Securities issued 100,578 585,774 337,782 365,617 1,789,141 605,287 765,062 - 4,549,241 – bonds 5,361 448,732 220,264 355,081 1,779,004 605,287 765,062 - 4,178,791 – certificates of deposits 12,135 137,042 117,518 10,536 10,137 - - - 287,368 – other securities 83,082 ------83,082 2.4 Subordinated liabilities - - - - - 102,055 400,000 - 502,055 2.5 Off-balance sheet - transactions 590,470 2,696,321 2,017,827 696,277 361,920 759,144 91,091 7,213,050
31/12/03 Repayable Up to Between 3 Between 1 and 5 Beyond 5 Unspecified Captions/Residual life on demand 3 months and 12 years years duration Total months fixed rate indexed rate fixed rate indexed rate 1. Assets 2,948,445 3,127,916 2,890,836 1,939,863 2,015,457 1,376,800 3,176,276 479,211 17,954,804 1.1 Treasury bonds eligible for refinancing 26 54,030 78,767 262,398 170,759 767 124,268 - 691,015 1.2 Due from banks 379,355 394,875 36,899 762 - 983 10,000 115,962 938,836 1.3 Loans to customers 1,902,642 742,134 1,131,305 425,865 1,476,882 559,006 2,502,159 363,249 9,103,242 1.4 Bonds and other fixed income securities 10,112 57,244 154,749 79,407 346,486 72,351 537,391 - 1,257,740 1.5 Off-balance sheet transactions 656,310 1,879,633 1,489,116 1,171,431 21,330 743,693 2,458 - 5,963,971 2. Liabilities 6,457,941 3,258,885 1,695,055 1,521,041 1,866,259 1,288,849 1,543,010 - 17,631,040 2.1 Due to banks 114,193 553,992 122,923 40,683 61,955 104,488 141,398 - 1,139,632 2.2 Deposits from customers 5,803,838 144,320 9,728 2 - - - - 5,957,888 2.3 Securities issued 172,169 309,602 264,660 433,832 1,801,553 86,922 998,756 - 4,067,494 – bonds 71,831 154,895 130,167 420,975 1,790,317 86,922 998,756 - 3,653,863 – certificates of deposits 13,476 154,707 134,493 12,857 11,236 - - - 326,769 – other securities 86,862 ------86,862 2.4 Subordinated liabilities - - - - - 102,055 400,000 - 502,055 2.5 Off-balance sheet - transactions 367,741 2,250,971 1,297,744 1,046,524 2,751 995,384 2,856 5,963,971
Caption repayable on demand includes assets and liabilities with residual life of not more than 24 hours. Unspecified duration includes compulsory reserve, overdue loans and bad loans. Sub-captions 1.5 and 2.5 include the notional value (482.5 million euros) of options incorporated in structured mortgaged loans and bond issues which allow either the Bank or the counterparty, after a certain period of time, to transform the interest rate stipulated in the contract from fixed to floating, or vice versa.
136 Change 31/12/04 31/12/03 absolute % 11.7 ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY a) Assets 348,599 443,243 -94,644 -21.4 1. Due from banks 142,280 78,225 64,055 81.9 2. Loans to customers 190,197 323,706 -133,509 -41.2 3. Securities 8,717 35,319 -26,602 -75.3 4. Participating interests 382 382 - - 5. Other 7,023 5,611 1,412 25.2 (b) Liabilities 536,503 457,096 79,407 17.4 1. Due to banks 221,066 251,153 -30,087 -12.0 2. Deposits from customers 95,712 5,957 89,755 … 3. Securities issued 219,725 199,986 19,739 9.9 4. Other - - - -
137 11. 8 SECURITISATION
The Bank carried out three structured securitised credits, the first in December 2000 relating to bad loans, the others in December 2001 and in the first half of 2004, relating to performing loans. Cassa di Risparmio di Savona carried out a securitisation relating to bad loans in December 2002. Details of these transactions are given below. a) Securitisation of bad loans: year 2000
At the end of 2000 the Bank securitised without recourse a part of its bad loans portfolio. These loans were backed either fully or in part by voluntary or legally-enforced guarantees (gross value of pro soluto credits: ITL 566.4 bn, 292.5 million euros; book value: ITL 440.6 bn, 227.6 million euros; sale price: ITL 320 bn, 165.3 million euros).
As special purpose vehicle for the transaction, Argo Finance, a subsidiary of the Carige Group, issued the following three types of bonds: - Class A ‘Senior’ bonds amounting to 40 million €, floating rate destined to institutional investors; rating: Moody’s: Aaa; Fitch IBCA: AA; - Class B ‘Mezzanine’ bonds amounting to 70 million euros, floating rate, destined to institutional investors and subordinate to class A; rating: Moody’s: Aa1, Fitch IBCA: AA; class A and B securities are quoted on the Luxembourg bond market; - Class C ‘Junior’ bonds amounting to 56.5 million €, fixed rate 4% plus variable remuneration subject to payment of coupon on classes A and B and portfolio cash flows; fully subscribed by Banca Carige, this issue is fully subordinated in principal and coupon payments to classes A and B.
Arranger of the securitisation was Credit Suisse First Boston.
At 31st December 2004, of the three classes issued, Banca Carige held in its securities portfolio exclusively and fully the class C ‘Junior’ bonds for a value of 56.5 million euros. These securities were placed in the Bank’s investment portfolio. No writedowns have been effected on the book value of these securities in the light of the positive performance of receipts. The securitised bad loans represent the underlying for all three classes of securities issued.
Risks for the Bank resulting from this transaction are represented by: the class C bonds both for principal and interest; guarantees granted to holders of class B securities for both principal and interest; the credit line of 15 million euros backing the class B bond issues granted by Banca Carige to Argo Finance; a limited recourse mortgage bond loan of 51 million euros; an interest rate cap. The positive performance in repayment flows has meant that no writedowns were carried out. The credit line, which at 31/12/04 was unused, was recorded at balance sheet caption 20 ‘Guarantees’, whilst the limited recourse mortgage, also unused, was recorded, as required by the Bank of Italy, at caption 10 ‘Guarantees given’. The positive performance in repayment flows has meant that no value adjustments were required.
Banca Carige is the servicer for the transaction. Revenues on the credit portfolio at 30/12/04 amounted to 122.8 million euros, of which 33.3 million euros collected during 2003. These amounts are in line with the repayment schedule defined at the start of the transaction. Banca Carige bills Argo Finance One on a monthly and half-yearly basis for the service activity it performs. The half-yearly accounts are inspected by the auditors KPMG SpA.
The service activity carried out by Banca Carige generated 1,3 million euros in commission revenues and 1,6 million euros in reimbursed legal costs; 2,3 million euros in interest were received on the class C Junior bonds. On the basis of interest-rate trends and conditions contained in the contract, no additional revenues were payable on the limited recourse mortgage.
138 As a result of the positive performance recorded by the repayment schedule, Fitch on 6/3/02 upgraded the class A securities transaction from “AA” to “AAA”; on 13th December 2002 the same institute upgraded the transaction relating to the class B securities from “AA-“ to “AA”. On 10th August 2004 Fitch upgraded the class B securities transaction from “AA” to “AAA”.
The positive trend allowed for the full repayment of the class A securities (40 million) in addition to the repayment of part (53.4 million) of the capital relating to the class B securities. After the end of the year, in the month of January 2004, 10.3 million of class B securities was also repaid.
The limited recourse mortgage in Italian government stock in support of class B subscribers, previously reduced to 69 million in December 2003, was redefined at a nominal value of 51 million at the beginning of 2004. b).Securitisation of performing loans: year 2001
At the end of 2001, Banca Carige securitised its performing mortgages in order to improve liquidity in the light of considerable expansion in long-term lending to the family (mortgages, in particular).
A total of 13,858 mortgages was sold with a residual debt at 31/12/01, the date of ceding, on the part of customers amounting to 511.5 million euros.
The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99).
In particular, the bundle of credits sold were mortgages granted to private customers for the purchase or renovation of property.
The bundle of credits ceded, whose characteristics were published in the Gazzetta Ufficiale of 25/2/2002, were as follows: 1) index-linked, first recorded mortgages/landed property loans distributed to private individuals prior to 31/7/2001; 2) mortgages with: a fixed repayment schedule with instalment due 31/12/2001; repayments in order with schedule via current account direct debit. 3) mortgages/landed property loans not classified either as bad loans or watchlists between 31/12/93 (exclusive) and 31/12/01 (inclusive).
The bundle of credits described above was sold on 31/12/01 for 535.5 million euros to the special purpose vehicle Argo Mortgage Srl, in which Banca Carige has a 5% indirect holding via its subsidiary Columbus Carige Immobiliare (the regularity of the operation was evidenced by the signing of servicing, and guarantee and indemnity contracts in the time prescribed).
The price of the credits ceded was calculated as the sum of the following two components: - an initial price of 511.5 million euros equivalent to the nominal value of the credits ceded; - a deferred price of 24.0 million euros calculated on the basis of profit extraction which, in particular, took into account the excess spread after the transaction costs relating to each payment date, intrinsic risk levels of the credits, possibility of anticipated re-payment of loan. This spread was actualised using market rates at 31/12/01 on the basis of the duration of the transaction.
The determination of deferred price was carried out with a financial model verified by an auditor. It is paid pro quota at each payment date in reference to the procedures foreseen in the contract and the payment priorities defined in the transaction. During 2002, 2003 and 2004 deferred-price account payments totalled 7.1 million. The remaining credit of 16.9 million euros at 31/12/2004 with Argo Mortgage Srl related to deferred-price is recorded at the caption 40 “Loans to customers”.
139 The securities issued by Argo Mortgage are as follows:
Class Amount in Rating by Expected Contractual Effective Euribor 3 Credit millions of Moody’s/Fitch duration Maturity expected months enhancement euro (***) (*) duration (*) margin in basis points (**) A 478.0 Aaa/AAA March 2009 October 2036 4.3 years 26 8.2% B 22.0 Aa2/AA March 2009 October 2036 6.8 years 45 4.0% C 11.5 Baa2/BBB March 2009 October 2036 6.8 years 145 1.8% D 9.2 Not rated October 2036 (*) assuming Argo Mortgage exercises its call option in January 2009; (**) step up of applicable spread if call option is not exercised; (***) the rating was assigned by Moody’s and Fitch/IBCA on the basis of due diligence. The rating will be reviewed annually on the basis of collection flows and deviance from business plans.
The class A, B and C securities are quoted on the Luxemburg bond market and have been fully subscribed exclusively by European institutional investors, Italian included.
Class B and C securities were subscribed by Banca Carige. The class D issue was subscribed fully by Banca Carige and placed in the Bank's investment portfolio.
At 31st December 2004, the transaction-related securities held in Banca Carige’s investment securities portfolio were exclusively class D securities and amounted to 9.2 million.
Payment priority will be as follows: - the payment of senior expenses and swap interest rate, followed by: - the payment of coupon on class A securities at maturity dates prior to maturity at October 2003, followed by: - the payment of coupon on class B securities on the basis of cumulative default ratio, followed by: - the payment of coupon on class C securities with residual available amounts at each payment date to be paid into a capital accumulation account.
From the October 2003 date of payment onwards, the order of priority is as follows: - the repayment of class A securities redemption instalment, followed, on the basis of the cumulative default ratio, by: - the payment of coupon on class B securities and class B securities redemption instalment, followed by: - the payment of coupon on class C securities and redemption instalment relating to the same securities. The repayment of principal and interest of class D securities is subordinate to the first three classes.
The role of servicer of the transaction was carried out by Argo Mortgage to Banca Carige.
Banca Carige bills Argo Mortgage on a three-monthly basis for the service activity it performs. The yearly accounts are inspected by the auditors KPMG SpA.
All proceeds relating to the securitised credits will be paid by mortgage borrowers at the counters of Banca Carige, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the corporate service contract in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.
During 2004, total revenues collected amounted to 74.6 million euros, of which 43.5 million euros in capital instalments, 15.9 million euros in interest instalments, 15.2 million in advanced repayments, interest and penalty charges. In 2004 commissions on revenues for 0.3 million euros accrued.
140 The transaction is proceeding according to schedule, consequently no value adjustments relating to the Bank’s relations with Argo Mortgage were required.
The transaction is monitored by the Bank of New York in its payment report and by Banca Carige in its quarterly and investor reports, and certified by the independent auditor (KPMG SPA).
Banca Carige SpA provided the special purpose vehicle with the cash collateral foreseen by the transaction (quota of the tranche of class D securities totalling 7.8 million) which during the year, as a result of the regular repayment flows scheduled by the contract, reached the figure of 10.9 million, of which 0.5 million of accrued interest.
The London offices of the Bank of New York will represent the bond holders as well as being agent for calculation and security trustee. The same bank’s Luxemburg offices will act as agent for Luxemburg. The Milan offices of BNP Paribas Security Services will be payment agent for the transaction. The arrangers of the transaction were CSFB and CDC IXIS.
The counterparty of the swap contracts utilised by Argo Mortgage for cover against interest rate fluctuations latent in the securitised credits is CDC IXIS.
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Banca Carige is also servicer in the securitisation operation (securitisation of non performing loans) carried out by the subsidiary Cassa di Risparmio di Savona pursuant to Law 130/99, with the special purpose vehicle Priamar Finance Srl. c) Securitisation of non-performing loans carried out by Cassa di Risparmio di Savona at the end of 2002.
At the end of 2002, Cassa di Risparmio di Savona securitised a part of its bad loans portfolio. The advantages of this transaction can be summarised as follows: - previously illiquid asset positions with low returns can now benefit from higher-yielding market interest rates; - securitisation achieves qualitative improvements in the bank’s risk portfolio; - higher credit rating of the bank has cost benefits for the Banca Carige Group in its funding requirements on international markets.
The special purpose vehicle Priamar Finance Srl ownership structure is as follows: Stichting Faro of Amsterdam 95%; Banca Carige 5%. The bad loans securitised were classified as such at 31/12/01 and were still effective at 11/12/02.
On 14th January 2004 Banca Carige acquired a majority holding in Priamar Finance Srl, which subsequently was incorporated into the Banca Carige Group with effect from the business year 2004. Priamar Finance’s share capital ownership structure is as follows: - 60% Banca Carige SpA - 40% Stichting Faro (Amsterdam).
The portfolio subject to sale was identified on the basis of objective criteria foreseen by relevant legislation (Law 130/99 and article 58, Law decree 385/93).
The credits sold (contract date: 23/12/02 with effect from 11.59 pm of 31/12/02) consisted of 1,085 debt positions (equivalent to 2,238 sub-items).
The gross value of credits sold excluding previous reductions was calculated at 68.8 million. The corresponding net value was 33.7 million after previous writedowns. The sale price, fixed at 28 million, determined a loss on securitisation of 5.7 million, registered in the profit and loss account of 2002.
All the loans securitised were denominated in euro and were granted to customers resident in Italy.
141 All proceeds relating to the securitised credits will be collected at the counters of Banca Carige, the latter, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the administrative service contract signed between Banca Carige and Priamar Finance in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.
The role of servicer of the transaction was assigned to Banca Carige by Priamar Finance.
Banca Carige bills Priamar Finance on a monthly and half-yearly basis for the service activity it performs. The yearly accounts are inspected by the auditors KPMG SpA.
Priamar Finance is both assignee of the credits and issuer of the securities.
The London offices of the Bank of New York will represent the bond holders in addition to performing the duties of calculation agent, security trustee, and payment agent. The same bank’s Luxemburg offices will act as agent for Luxembourg.
Arranger and lead manager of the operation is WestLB AG.
The asset backed securities issued by Priamar Finance on 21st February 2003 are as follows:
Class Amount in millions of euro Expected duration Interest rate A 18.0 4.6 years Euribor 6 months + 0.15% B 10.2 4% plus any residual portfolio cash flows
The maturity indicated in the table is that forecasted by the business plan. The expiry date of the operation has been fixed at 31/12/2016.
The class A securities are quoted on the Luxembourg bond market; class B securities are unquoted.
Class B securities were subscribed by Cassa di Risparmio di Savona and were placed in that bank’s investment securities portfolio.
The securities are not rated.
Payment priority will be as follows: - the payment of coupon on class A securities, followed by the principal; on completion of this - the payment of coupon on class B securities, followed by the principal. As stated above, the payment of coupon and principal relating to class B securities is fully subordinated to the class A issue.
Credit enhancement of the issue is represented, in addition to the class categorization and payment priority described above, by a line of credit, a limited recourse bond loan, and an interest cap covering interest rate risk exposure.
Banca Carige has opened a revolving credit line in favour of Priamar Finance of 2.5 million for the duration of the bond issue, renewable on a yearly basis. This line of credit will be used in the case of any temporary interruptions in repayment flows. Reimbursement of the credit to Banca Carige will be effected according to the conditions stipulated in the contract between Banca Carige and Priamar Finance. Repayment of the line of credit utilised is subordinated to the interest and capital repayments relating to the class A securities.
As stated above, Priamar Finance is covered by an interest rate cap the premium of which was paid by Banca Carige up front at the issuing of the securities.
142 Cassa di Risparmio di Savona has made available a limited recourse mortgage in the form of Italian government stock of nominal 22 million.
Risks for Cassa di Risparmio di Savona resulting from this transaction are represented by: the class B bonds both for principal and interest and a limited recourse mortgage bond loan. Risks for Banca Carige, the servicer, are: the credit line, an interest rate cap and subordinate credits related to the role of servicer.
The transaction proceeds according to schedule. Consequently, no value adjustments were required (the proceeds at 31/12/2004 were 8.8 million euros, of which 3.1 million euros in the year 2004). For the same reason neither the credit line, nor mortgage bond loan was used.
Given market trends, the interest rate cap was not utilised.
In 2004 the following amounts accrued: 0.1 million euros in servicing commission; 0.6 million euros in recovered expenses (0.1 million euros anticipated). d) Securitisation of performing credits: 2004
In June 2004, the Bank securitised part of its performing mortgage portfolio in the light of increasing demand for long- term lending on the part of households and the need to satisfy the requirements of prudential liquidity management.
A total of 13,272 mortgages were sold to special purpose vehicle (SPV) Argo Mortgage 2 Srl for a book value of 864.5 million at 30th June 2004.
The mortgages were selected on the basis of criteria required by Law 130/99 (“Securitisation Law”).
The mortgages in question were granted to households for the purchase or renovation of residential property.
A description of the underlying credits was published in the Official Gazette of the Italian Republic of 2/7/04. The credits were mortgage loans: 1. granted to households prior to 31st December 2003 at varying interest-rate solutions that include floating, fixed, floating with cap, mixed (fixed for the first two years and subsequently floating); 2. with instalments due at 30th June 2004 and with repayment schedules effected by direct debit; 3. not classified as non performing (watchlists or bad loans) from 31st December 1994 (inclusive) to 30th June 2004 (inclusive).
The above-described credits were sold to Argo Mortgage 2 Srl (Banca Carige has a 5 per cent indirect holding in the company via its subsidiary Columbus Carige Immobiliare SpA) on 30th June 2004 for an overall price of 925.6 million. The sale was completed with the signing of the servicing contract.
The price is the sum of the following two components; - an initial price of 864.5 million corresponding to the book value of the credits sold; - a deferred price of 61.1 million generated by the application of a profit extraction mechanism which took into account, in particular, excess spread at every payment date, the degree of risk latent in the credits sold, and the possibility of early extinction of the mortgage loan, calculated utilising market rates as at 30/6/04 on the basis of the length of the transaction.
The adequacy of the financial model utilised for the calculation of the deferred price was confirmed by a leading firm of auditors.
Payment of the first price component (864.5 million) was made according to the terms of the transaction on 23rd July 2004 along with the issue of the securities. Payment of the deferred price (61.1 million) will be made in instalments at each payment date on the basis of the forecasts and payment priorities defined in the contract.
143 The remaining credit in favour of Argo Mortgage 2 Srl relating to the deferred price (61.1 million) is recorded at balance sheet caption 40 “Amounts owed to customers”; transaction revenues (61.1 million) are recorded in the Profit & Loss Account at caption 70 “Other operating revenues”.
The transaction was completed in the time prescribed with the signing of the servicing contract, which also includes the guarantee and compensation agreement.
Banca Carige was appointed by Argo Mortgage 2 Srl as servicer for the transaction.
Banca Carige will report on its activities as servicer to the SPV on a quarterly basis; these reports will, in turn, be subject to annual review by auditors (KPMG SpA).
Receipts for the securitised credits will be paid by mortgage borrowers over the counters of Banca Carige in its role as account bank and cash manager; both roles are compatible with the corporate service contract signed by Carige and Argo Mortgage 2.
Reporting will be carried out by Deutsche Bank AG in London branch (Payment Report) and by Banca Carige (Quarterly Report and Investor Report). The transaction will be certified annually by KPMG SpA.
The Deutsche Trustee Company is security trustee, whilst Deutsche Bank AG (London) is paying agent. The Luxemburg branch of Deutsche Bank AG is the Luxemburg agent.
CDC IXIS Capital Markets is counterpart in swap contracts offering Argo Mortgage 2 Srl cover against interest rate risk latent in the underlying securitised.
The issuance of asset backed securities by Argo Mortgage 2 Srl and related payments took place on 23rd July 2004 as scheduled. The securities are as follows:
Class Amount in Rating supplied by Moody’s/Fitch Maturity Margin on Euribor 3 months millions of euros (***) (**) A 808.30 Aaa/AAA October 2043 Bps 18 B 26.80 Aa2/AA- October 2043 Bps 32 C 29.35 Baa2/BBB October 2043 Bps 83
Rating followed due diligence carried out on the part of each agency. Ratings are subject to annual review on the basis of receipts and variations to the business plan.
The bonds are traded on the Luxemburg bond market.
Payment claims rank in the following order: - senior expenses, the interest rate swap and interest due on class A securities prior to maturity at January 2006, followed by - according to cumulative default ratio trends interest due on class B securities, followed by - interest due on class C securities with payment of residual amounts to the capital accumulation account at every payment date.
From payment date January 2006, the priority ranking is as follows: - payment of class A securities redemption instalments, followed by - on the basis of the cumulative default ratio, payment of class B securities interest and redemption instalments, followed by - payment of class C securities interest and redemption instalments.
144 Banca Carige provided Argo Mortgage 2 Srl the necessary cash collateral for: - the purchase of an IRS from CDC IXIS ; - start-up costs. Collateral was in the form of subordinated loan of 22.7 million. Repayment of the loan will occur at each payment date according to the availability of funds and the order of payment priority, prior to the payment of the deferred price. At 31st December 2004, the outstanding amounted to 21.7 million.
During the second half of 2004 receipts totalled 55.5 million, of which 24.5 million in capital, 16.9 million in interest and 13.2 million in early repayment, interest and penalty charges. In 2004, 0.2 million euros in servicing commission accrued. e) Securities deriving from securitisation transactions carried out by other parties: Asset backed securities in portfolio at 31/12/04.
Within the trading securities portfolio at 31/12/04 are no securities deriving from securitisation transactions carried out by other parties.
The economic effects resulting from the investments carried out during the period are stated at P&L captions 10 “Interest income” (1,258,000 euros) and 60 “Profit (Loss) from financial transactions” (559,000 in losses on securities, exchange rates and writedowns). Details are provided in the table below:
EFFECTS ON INCOME STATEMENTS 2004 STEMMING FROM ASSET BACKED SECURITIES IN PORTFOLIO AT 31/12/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY OTHER PARTIES
Senior securities Mezzanine securities Junior securities Net Interests Net Svalut Interests Net Svalut Underlying Svalut Interests incomes incomes ations incomes/ ations ations / Losses / Losses Losses a) Mortgages 379 49 - 27 24 - - - - b) Corporate loans 79 63 - 100 184 - - - - c) Consumer credits 112 134 ------d) Securities ------e) Various other credits 109 2 ------f) Various other non- 307 69 - 145 34 - - - - performing credits Total 986 317 - 272 242 - - - -
145 SECTION 12
ADMINISTRATION AND DEALING ON BEHALF OF THIRD PARTIES
Change 31/12/04 31/12/03 absolute % 12.1 DEALING OF SECURITIES a) Purchases 852,612 804,129 48,483 6.0 1. Settled 848,611 802,770 45,841 5.7 2. Unsettled 4,001 1,359 2,642 … (b) Sales 810,280 815,080 -4,800 -0.6 1. Settled 807,457 810,608 -3,151 -0.4 2. Unsettled 2,823 4,472 -1,649 -36.9
Change 31/12/04 31/12/03 absolute % 12.2 PRIVATE BANKING 1,174,939 1,154,661 20,278 1.8 1. Securities issued by the Bank - 38 -38 -100.0 2. Other securities 1,174,939 1,154,623 20,316 1.8
The figures shown correspond to total market values of property included within administration and trading on behalf of third parties.
At 31st December 2004 all management lines were performed by third parties pursuant to article 24, paragraph 1, lett. f of Legislative decree 58/98. The caption includes 64,175,000 euros in Carige Open Pension Fund investments (fund created in 1999 pursuant to article 9, Legislative decree 124/93) and 67,148,000 euros referring to asset management lines offering a guarantee of initial invested capital via the sale of an accessory put option.
Change 31/12/04 31/12/03 absolute % 12.3 CUSTODY AND ADMINISTRATION OF SECURITIES (a) third-party securities held in deposit 18,769,862 15,969,476 2,800,386 17.5 (private banking not included) 1. Securities issued by the Bank 4,538,701 4,060,006 478,695 11.8 2. Other securities 14,231,161 11,909,470 2,321,691 19.5 (b) third-party securities deposited with third-parties 16,198,528 14,562,095 1,636,433 11.2 (c) portfolio securities deposited with third parties 1,559,644 1,533,005 26,639 1.7
Depositary bank-related securities in custody amounted to 3,902,450 thousand euros.
146 12.4 COLLECTION OF THIRD PARTY RECEIVABLES: DEBIT AND CREDIT ADJUSTMENTS 31/12/2004 31/12/2003 (a) debit adjustments 1,019,407 788,633 1. current accounts 115,380 12,698 2. bills portfolio 608,425 555,057 3. cash 28,764 29,748 4. other 266,838 191,130 (b) credit adjustments 1,168,547 940,230 1. current accounts 58,775 8,250 2. bills and other items for collection 1,109,693 931,898 3. other 79 82
Change 31/12/04 31/12/03 absolute % 12.5 OTHER TRANSACTIONS 566,327 881,913 -315,586 -35.8 – Other banks’ share of pool operations 381,238 694,000 -312,762 -45.1 – Total bills related to factoring transactions (“pro solvendo”) 173,319 173,267 52 - - Loans on behalf of public bodies 11,770 14,646 -2,876 -19.6
147 PART C INCOME STATEMENT
SECTION 1
INTEREST
Change 2004 2003 absolute % 1.1 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES” 575,848 546,478 29,370 5.4 (a) on deposits with banks 28,303 22,753 5,550 24.4 including: – deposits with central banks 2,592 2,802 -210 -7.5 (b) on loans and advances to customers 427,750 439,720 -11,970 -2.7 including: – loans using funds managed on behalf of third parties 5 6 -1 -16.7 (c) on certificates of indebtedness 118,931 82,753 36,178 43.7 (d) other interest income 864 1,252 -388 -31.0 (e) positive differentials on hedging transactions - - - -
Change 2004 2003 absolute % 1.2 CAPTION 20 “INTEREST EXPENSE AND SIMILAR CHARGES” 253,773 221,820 31,953 14.4 (a) on deposits from banks 25,347 34,519 -9,172 -26.6 (b) on deposits from customers 43,630 49,653 -6,023 -12.1 (c) on securities issued 122,964 110,528 12,436 11.3 including: – certificates of deposits 5,216 7,826 -2,610 -33.4 (d) on funds managed on behalf of third parties 1 1 - - (e) on subordinated liabilities 13,537 13,423 114 0.8 (f) negative differentials on hedging transactions 48,294 13,696 34,598 …
Change 2004 2003 absolute % 1.3 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES” a) on foreign currency assets 9,154 9,925 -771 -7.8
Change 2004 2003 absolute % 1.4 CAPTION 20 “INTEREST EXPENSE AND SIMILAR CHARGES” a) on foreign currency liabilities 8,979 21,480 -12,501 -58.2
148 SECTION 2
COMMISSION
Change 2004 2003 absolute % 2.1 CAPTION 40 “COMMISSION INCOME” 184,555 179,169 5,386 3.0 (a) guarantees given 7,393 7,170 223 3.1 (b) credit risk derivatives 464 461 3 0.7 (c) management, dealing and consultancy services: 68,417 67,260 1,157 1.7 1. securities dealing 1,494 1,648 -154 -9.3 2. foreign currency dealing 2,866 2,848 18 0.6 3. private banking 7,560 7,684 -124 -1.6 3.1 individual 6,867 7,210 -343 -4.8 3.2 collective 693 474 219 46.2 4. custody and administration of securities 2,369 2,043 326 16.0 5. depositary bank 2,670 2,454 216 8.8 6. placement of securities 38,650 38,324 326 0.9 6.1 placement of quotas in mutual funds 38,226 38,161 65 0.2 6.2 placement of other securities 424 163 261 … 7. acceptance of orders 4,656 4,097 559 13.6 8. consultancy - - - - 9. distribution of third party products 8,152 8,162 -10 -0.1 9.2 insurance products 3,656 4,177 -521 -12.5 9.3 other products 4,496 3,985 511 12.8 (d) collection and payment services 38,222 36,673 1,549 4.2 (e) servicing relating to securitisation 2,022 1,683 339 20.1 (f) tax and rates collection - - - - (g) other services 68,037 65,922 2,115 3.2
The caption “other services” in more detail is as follows:
Change 2004 2003 absolute % – Deposits and current accounts 39,044 38,246 798 2.1 – Overdraft facilities 14,343 13,549 794 5.9 – Financing 9,642 9,268 374 4.0 – Safe deposit rentals 1,083 1,162 -79 -6.8 – Others 3,925 3,697 228 6.2 Total 68,037 65,922 2,115 3.2
149 Change 2004 2003 absolute % 2.2 CAPTION 40 “COMMISSION INCOME”: “DISTRIBUTION CHANNELS OF PRODUCTS AND SERVICES (a) distribution at Carige branches 54,206 54,033 173 0.3 1. asset management 7,482 7,615 -133 -1.7 2. securities placement 38,587 38,269 318 0.8 3. services relating to third party products 8,137 8,149 -12 -0.1 (b) distribution at outlets other than at head office 156 137 19 13.9 1. asset management 78 69 9 13.0 2. securities placement 63 55 8 14.5 3. services relating to third party products 15 13 2 15.4
Change 2004 2003 absolute % 2.3 CAPTION 50 “COMMISSION EXPENSES” 17,494 15,627 1,867 11.9 (a) guarantees received 998 1,184 -186 -15.7 (b) credit risk derivatives - - - - (c) management and dealing services: 4,434 3,238 1,196 36.9 1. securities dealing 1,030 1,378 -348 -25.3 2. foreign currency dealing - - - - 3. private banking 1,700 529 1,171 … 3.1 Bank's portfolio 274 266 8 3.0 3.2 third party's portfolio 1,426 263 1,163 … 4. custody and administration of securities 1,546 1,155 391 33.9 5. placement of securities 38 70 -32 -45.7 6. securities, products and services not delivered at the Bank’s head office 120 106 14 13.2 (d) collection and payment services 9,021 8,698 323 3.7 (c) other services 3,041 2,507 534 21.3
The caption "other services" in more detail is as follows:
Change 2004 2003 absolute % – Relations with banks 206 339 -133 -39.2 – Financing 205 143 62 43.4 – Intermediation 1,761 1,511 250 16.5 – Others 869 514 355 69.1 Total 3,041 2,507 534 21.3
150 SECTION 3
GAINS FROM FINANCIAL TRANSACTIONS, NET
Change 2004 2003 absolute % 3.1 CAPTION 60 “GAINS FROM FINANCIAL TRANSACTIONS, NET” 18,629 9,229 9,400 …
2004 Transactions securities currency other A.1 Revaluations 28,522 37,163 A.2 Write-downs 13,996 49,096 B. Other gains and losses 11,735 4,369 -68 Total 26,261 4,369 -12,001 1. Government securities 17,307 2. Certificates of indebtedness -362 3. Shares and other equity securities 13,249 4. Derivatives on securities as underlying -3,933
2003 Transactions securities currency other A.1 Revaluations 751 2,521 A.2 Write-downs 6,882 592 B. Other gains and losses 8,009 3,124 2,298 Total 1,878 3,124 4,227 1. Government securities 3,403 2. Certificates of indebtedness 3,787 3. Shares and other equity securities -1,735 4. Derivatives on securities as underlying -3577
In the financial statements at 31th december 2004, valuation criteria related to trading portfolio (off-balance securities and operations) were modified; the effects of the changement are indicated in the Part “A – Accounting principles” of the explanatory notes.
The positive variation in comparison to 2003 refers to the items “securities transactions” for 24,383 thousand (increased revaluations of 27,771 thousand and increased profits of 3,726 thousand, against increased writedowns of 7,114 thousand) and “currency transactions” for 1,245 thousand; the item “other operations” evidences, instead, a negative variation of 16,228 thousand (increased writedowns of 48,504 thousand and reduced profits of 2,366 thousand, against increased revaluations of 34,642 thousand).
151 Write- Other gains Revaluations Total downs and losses 1. Securities transactions 28,522 13,996 11,735 26,261 Government securities 13,450 370 4,210 17,290 Certificates of indebtedness 33 6,453 6,003 -417 Shares and other equity securities 8,820 1,658 6,087 13,249 Securities purchases and sales to be settled 79 7 - 72 Derivatives on securities as underlying 6,140 5,508 -4,565 -3,933 2. Currency transactions 6,675 7,036 4,730 4,369 Exchange-rate gains - - 2,634 2,634 Currency derivatives 6,675 7,036 800 439 Forward currency transactions - - 1,296 1,296 3. Other transactions 37,163 49,096 -68 -12,001 Interest rates derivatives 36,525 47,727 167 -11,035 Derivatives hedging credit risk 638 1,369 -235 -966 Total 72,360 70,128 16,397 18,629
The caption “securities” includes losses and writedowns referring to own shares of, respectively, 780,000 and 23,000 euros.
Further details of gains and losses stemming from derivatives contracts recorded or not in the income statement are given in the Board of Directors' Report and at section 10.5 of the explanatory notes.
152 SECTION 4
ADMINISTRATIVE COSTS
Change 2004 2003 absolute % 4.1 AVERAGE NUMBER OF EMPLOYEES, BY GRADE 3,734 3,631 103 2.8 (a) executives 51 43 8 18.6 (b) middle management (3rd & 4th levels) 297 297 - - (c) other employees 3,386 3,291 95 2.9
Change 2004 2003 absolute % NUMBER OF OPERATING BRANCHES 393 393 - -
Change 2004 2003 absolute % CAPTION 80 A "PERSONNEL" 236,688 234,968 1,720 0.7 – wages and salaries 152,198 153,683 -1,485 -1.0 – social security costs 42,361 42,896 -535 -1.2 – termination indemnities 8,600 9,258 -658 -7.1 – pensions and similar commitments 23,189 17,764 5,425 30.5 – others 10,340 11,367 -1,027 -9.0
153 Change 2004 2003 absolute % CAPTION 80 B "OTHER ADMINISTRATIVE COSTS" 147,453 131,744 15,709 11.9 Postage and telephone 13,021 12,869 152 1.2 Maintenance of tangible and intangible fixed-assets 11,369 11,783 -414 -3.5 Professional fees 17,345 8,937 8,408 94.1 Advertising, promotion and publishing 7,833 6,675 1,158 17.3 Rental expenses 10,764 10,701 63 0.6 Donations 3,526 3,767 -241 -6.4 Other banking services 5,279 4,546 733 16.1 Office cleaning 3,623 3,544 79 2.2 Lighting and heating 4,253 4,114 139 3.4 EDP processing with third parties 5,858 5,310 548 10.3 Travelling and transport 3,544 3,650 -106 -2.9 Printing and stationery 2,179 2,566 -387 -15.1 Software maintenance 3,878 5,259 -1,381 -26.3 Hardware leasing charges 3,964 3,205 759 23.7 Banking premises security services 2,945 3,177 -232 -7.3 Insurance premiums 2,424 2,165 259 12.0 Association fees 783 598 185 30.9 Indirect taxes 34,182 26,437 7,745 29.3 – stamp duty and stock exchange contracts 20,175 20,050 125 0.6 – ”imposta sostitutiva” Presidential Decree 601/73 4,528 3,240 1,288 39.8 – ICI (Municipal real estate tax) 1,316 1,307 9 0.7 – local council taxes 1,695 1,457 238 16.3 – taxes paid abroad 6,307 248 6,059 … – INVIM (tax on increased value on properties) 11 32 -21 -65.6 – penalties for late tax rolls 88 39 49 … – other indirect taxes 62 64 -2 -3.1 Others 10,683 12,441 -1,758 -14.1
Item “other” includes the cost of assets of a unit value not exceeding 516 euros (Lit. 1,000,000) purchased during the year for a total price of 1,047 thousand euros (2003: 1,786 thousand euros).
154 SECTION 5
DEPRECIATION AND AMORTIZATION, PROVISIONS AND RECOVERIES
Change 2004 2003 absolute % CAPTION 90 "DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS” 127,629 123,207 4,422 3.6
Depreciation and amortization comprise the following:
Change 2004 2003 absolute % Tangible fixed assets – Properties 4,954 4,579 375 8.2 – Furniture and fittings 861 831 30 3.6 – Machinery and equipment 4,861 4,785 76 1.6 – Leased assets 92,039 90,279 1,760 1.9 Total (a) 102,715 100,474 2,241 2.2 Intangible fixed assets (1) – Software 9,801 8,703 1,098 12.6 – Installation costs 910 1,405 -495 -35.2 – Goodwill (2) 10,543 8,671 1,872 21.6 – Others 3,660 3,954 -294 -7.4 Total (b) 24,914 22,733 2,181 9.6 Total (a+b) 127,629 123,207 4,422 3.6 (1) Amounts relating to the ten-year tax on Increased Value of Immovable Property (INVIM), for 11 thousand euros, which are included under intangible fixed assets (Section 4, table 4.2, paragraph C3 of the explanatory notes), are recorded at Caption 80b “Other administrative expenses”.
Change 2004 2003 absolute % CAPTION 100 "PROVISIONS FOR RISKS AND CHARGES” 1,716 3,966 -2,250 -56.7 Provisions: – for convertible bonds fund 1,636 116 1,520 … – for in-house insurance scheme - 500 -500 … – other 80 3,350 -3,270 -97.6
Change 2004 2003 absolute % 5.1 CAPTION 120 "PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS" 141,780 66,781 74,999 … (a) provisions for loan losses 141,780 66,510 75,270 … including: – lump-sum allowances for country risks - - - … – other lump-sum allowances 6,630 6,858 -228 -3.3 (b) provisions for guarantees and commitments - 271 -271 -100.0 including: – lump-sum allowances for country risks - - - - – other lump-sum allowances - - - -
155 Item (a) “Allowances for loan losses” includes 12,456 thousand euros which corresponds to a fifth of the losses stemming from the operation of securitisation carried out at December 2000.
Other provisions for 15,630 thousand euros, which are connected to interest on overdue loans realised during the period but retained to be not recoverable, are not recorded in the Income Statement.
Change 2004 2003 absolute % CAPTION 130 "RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS" 5,449 9,195 -3,746 -40.7 – bad loans -principal 2,450 2,189 261 11.9 – watchlists - principal 491 599 -108 -18.0 – interest – others 53 522 -469 -89.8 – interest arrears on loans 952 790 162 20.5 – credits written-off 1,445 5,087 -3,642 -71.6 – interest credits related to tax collection services - 8 -8 … – provision for guarantees and commitments 58 - 58 …
These recoveries are related to previously written down credits for which the reason for writing down ceases, fully or in part, to apply.
Change 2004 2003 absolute % CAPTION 140 “ADDITIONAL PROVISIONS FOR LOAN LOSSES” - 18,000 -18,000 …
The fund was used to meet credit losses recorded during the year.
Change 2004 2003 absolute % CAPTION 160 “RECOVERIES OF FINANCIAL FIXED ASSETS” - 107 -107 …
156 SECTION 6
OTHER INCOME STATEMENT CAPTIONS
Change 2004 2003 absolute % 6.1 CAPTION 70 “OTHER OPERATING INCOME” 161,408 160,752 656 0.4 Revenues from loan selling 61,125 - 61,125 … Leasing rents 122,359 120,950 1,409 1.2 Amounts recovered from third parties 34,396 31,516 2,880 9.1 including: stamp duty recovered 18,584 18,657 -73 -0.4 Rental income 2,717 2,486 231 9.3 Repayments from leased assets 988 895 93 10.4 Gains from transfer and revaluation of leased assets 305 245 60 24.5 Premiums received on options - 79 -79 … Taxes payed abroad and tax sparing 8,478 - 8,478 … Others 643 4,581 -3,938 -86.0
Change 2004 2003 absolute % 6.2 CAPTION 110 “OTHER OPERATING EXPENSES” 9,322 7,747 1,575 20.3 Recognised losses on leased assets sold 7,401 6,648 753 11.3 Leasing charges 870 848 22 2.6 Premiums paid on hedging options 1,051 251 800 … Others - - - …
Change 2004 2003 absolute % 6.3 CAPTION 180 “EXTRAORDINARY INCOME” 20,586 30,028 -9,442 -31.4 Surplus in reserves for taxation 32 3,028 -2,996 -98.9 Gains from releases: furniture and premises 790 682 108 15.8 Gains from releases: holdings 10,120 13,587 -3,467 -25.5 Gains from sale of activities - 2,494 -2,494 … Taxes payed abroad and tax sparing 2,941 1,566 1,375 87.8 In-house insurance fund repayment 1,213 - 1,213 … Other 5,490 8,671 -3,181 -36.7
Change 2004 2003 absolute % 6.4 CAPTION 190 “EXTRAORDINARY EXPENSES” 5,559 7,021 -1,462 -20.8 Retirement incentives 2,925 3,828 -903 -23.6 Losses from releases: holdings 6 - 6 … Losses from releases: furniture 179 360 -181 -50.3 Other 2,449 2,833 -384 -13.6
157 Change 2004 2003 absolute % CAPTION 220 “INCOME TAXES” 31,201 67,000 -35,799 -53.4 Income taxes of the period 32,158 81,956 -49,798 -60.8 Variation of taxes paid in advance -17,478 -1,187 -16,291 … Variations of deferred taxes 16,521 -13,769 30,290 …
As illustrated in the accounting principles stated at section 1, part A of the explanatory notes, in order to establish the tax rate for the period, the time horizon adopted for the calculation of deferred tax assets was extended indefinitely as there appear no grounds to question the certainty and reasonableness of recovery of the tax in question. The calculation of deferred tax charges beyond 2009 has meant a reduction in the tax charge for the year of 20,898,000 euros, of which 12,427,000 relates to timing differences arising in previous accounting periods.
158 SECTION 7
OTHER INFORMATION REGARDING THE INCOME STATEMENT
7.1 GEOGRAPHIC DISTRIBUTION OF REVENUES
Banca Carige prevalently works in Italy; the only branch outside Italy was opened in Nice (France) in 1994.
2004 Other Italy Total Captions countries 10 Interest income and similar revenue 573,213 2,635 575,848 30 Dividends and other revenues 44,078 - 44,078 40 Commission income 183,918 637 184,555 60 Gains from financial transactions, net 18,616 13 18,629 70 Other operating income 230,966 45 231,011 Total 1,050,791 3,330 1,054,121
2003 Other Italy Total Captions countries 10 Interest income and similar revenue 543,391 3,087 546,478 30 Dividends and other revenues 63,957 - 63,957 40 Commission income 178,675 494 179,169 60 Gains from financial transactions, net 9,193 36 9,229 70 Other operating income 160,712 40 160,752 Total 955,928 3,657 959,585
159 PART D OTHER INFORMATION
SECTION 1
DIRECTORS AND STATUTORY AUDITORS
31/12/04 31/12/03 1.1 EMOLUMENTS (a) Directors 2,038 2,108 (b) Statutory auditors 192 190
The amounts given refer to emoluments paid to directors and statutory auditors in the carrying out of those duties related specifically to Banca Carige, as required by article 78 of CONSOB Regulation n. 11971.
31/12/04 31/12/03 1.2 CREDITS AND GUARANTEES GIVEN (a) D irectors - clean credits 18,789 23,638 - guarantees given 9,589 3,975 (b) Statutory auditors - clean credits 256 355 - guarantees given - -
At 31/12/2004 credits were used by directors and statutory auditors, personally or by companies in which the same declared to have pre-eminent interests, in compliance with art. 136 D.Lgs. 385/93, for these amounts.
The following table provides information relating to remuneration and benefits paid to Directors, Statutory Auditors and General Managers as required by article 78 of CONSOB Regulation (Deliberation n. 11971 of 14/5/99) enacting Legislative Decree 58/98. The Bank did not allocate any option shares to its Directors or General Manager during the year.
160 GROSS SALARIES PAID TO DIRECTORS, STATUTORY AUDITORS AND GENERAL MANAGERS (article 78, CONSOB n. 11971)
NAME POSITION SALARY (before tax and social securities payments)
Emoluments for positions held Term of Expiry of Benefits Name / Surname Position held in the company Bonuses Others office appointment in kind preparing the accounts Chairman Giovanni BERNESCHI 1/1 – 31/12 * 1,000,000.00 167,601.16 (1) Managing Director Alessandro SCAJOLA Deputy Chairman 1/1 – 31/12 * 250,000.00 41,358.30 (2) Director 1/1 – 31/12 Adalberto ALBERICI Executive * 60,366.67 17,444.73 (3) 1/1 – 31/10 Commitee Member Director 1/1 – 31/12 Piergiorgio ALBERTI Executive * 43,833.33 6,200.00 (4) 1/11 - 31/12 Commitee Member Director 1/1 – 31/12 Andrea BALDINI Executive * 58,366.67 12,913.14 (5) 1/1 – 31/10 Commitee Member Giorgio BINDA Director 1/1 – 31/12 * 45,100.00 17,315.75 (6) Jean Jacques BONNAUD Director 1/1 – 31/12 * 47,200.00 Luca BONSIGNORE Director 31/3 – 31/12 * 44,500.00 Director 1/1 – 31/12 Mario CAPELLI Executive * 54,966.67 1/1 – 31/10 Commitee Member Director 1/1 – 31/12 Remo Angelo CHECCONI Executive * 45,033.33 1/11 - 31/12 Commitee Member Maurizio FAZZARI Director 31/3 – 31/12 * 47,800.00 Pietro ISNARDI Director 1/1 – 31/12 * 45,300.00 Director 1/1 – 31/12 Ferdinando MENCONI Executive * 47,133.33 575,830.68 (7) 1/11 - 31/12 Commitee Member Director and Paolo Cesare ODONE Executive 1/1 – 31/12 * 56,200.00 Commitee Member Director 1/1 – 31/12 Vincenzo ROPPO Executive * 47,533.33 23,400.00 (8) 1/11 – 31/12 Commitee Member Director 1/1 – 31/12 Enrico Maria SCERNI Executive * 53,366.67 1/1 – 31/10 Commitee Member Francesco TARANTO Director 1/1 – 31/12 * 45,500.00 Oliviero TAROLLI Director 1/1 – 31/12 * 45,500.00 18,652.39 (9) Chairman of Board Fulvio ROSINA of Statutory 1/1 – 21/6 ** 36,565.50 83,416.53 (10) Auditors Auditor Chairman of Board 1/1 – 20/6 Antonio SEMERIA *** 69,723.89 88,111.44 (11) of Statutory 21/6 – 31/12 Auditors Andrea TRAVERSO Auditor 1/1 – 31/12 *** 56,320.00 76,924.04 (12) Massimo SCOTTON Auditor 21/6 – 31/12 *** 29,724.45 311.64 (13) Alfredo SANGUINETTO General Manager 1/1 – 31/12 * 456,585.34 36,303.01 (14)
* Annual Shareholders’ Meeting called to approve annual statements as at 31/12/05 ** Resigned on 21st May 2004 *** Annual Shareholders’ Meeting called to approve annual statements as at 31/12/04
161 (1) of which: • 43,893.00 euros paid to Banca Carige as remuneration for the position of Chairman of Carige Assicurazioni from 1st January to 18th April and Deputy Chairman from 19th April to 31th December; • 1,857.50 euros received from Carige Assicurazioni as non-monetary benefits; • 52,123.98 euros paid to Banca Carige as remuneration for the position of Board Member of Carige Vita Nuova from 11th January to 18th April and for the position of Chairman from 19th April to 31th December. • 1,857.50 euros received from Carige Vita Nuova as non-monetary benefits; • 23,850.00 euros paid to Banca Carige as remuneration for the positions of Board Member and Executive Committee Member of Cassa di Risparmio di Savona from 1st January to 31st December; • 315.75 euros paid to Banca Carige as remuneration for the position of Deputy Chairman of Banca Cesare Ponti SpA held from 29th December to 31st December; • 17,600.00 euros paid to Banca Carige as remuneration for the position of Deputy Chairman of Carige Asset Management SGR held from 1st January to 31st December; • 25,473.33 euros paid to Banca Carige as remuneration for the position of Deputy Chairman of Cassa di Risparmio di Carrara held from 19th February to 31st December; • 630.00 euros paid to Banca Carige as remuneration for the position of Deputy Chairman of Centro Fiduciario from 1st January to 31st December. (2) • 23,958.30 euros paid to Banca Carige as remuneration for the position of Deputy Chairman of Carige Vita Nuova from 19th April to 31th December. • 17,400.00 euros paid to Banca Carige as remuneration for the position of Chairman of Carige Asset Management SGR from 1st January to 31th December. (3) of which: • 16,098.42 euros as remuneration for the position of Board Member of Carige Assicurazioni from 1st January to 31st December; • 1,030.56 euros received from Carige Assicurazioni as non-monetary benefits. • 315.75 euros as remuneration for the position of Board Member of Banca Cesare Ponti from 29th December to 31th December; (4) 6,200.00 euros as remuneration for the position of member of the Editorial Committee of a review published by Banca Carige. (5) of which: • 1,227.55 euros as remuneration for the position of Board Member of Banca del Monte di Lucca from 23th November to 31th December; • 11,685.59 euros as remuneration for the position of Board Member of Cassa di Risparmio di Carrara from 19th February to 31th December; (6) of which: • 17,000.00 euros as remuneration for the position of Board Member of Carige Asset Management SGR from 1st January to 31th December. • 315.75 euros as remuneration for the position of Banca Cesare Ponti from 29th December to 31th December. (7) of which: • 316,296.14 euros as remuneration for the position of CEO of Carige Assicurazioni from 1st January to 18th April and Chairman from 19th April to 31th December; • 1,980.73 euros received from Carige Assicurazioni as non-monetary benefits; • 255,573.08 euros as remuneration for the position of CEO of Carige Vita Nuova from 1st January to 31st December; • 1,980.73 euros received from Carige Vita Nuova as non-monetary benefits. (8) of which: • 17,200.00 euros as remuneration for the position of Board Member of Carige Asset Management SGR from 1st January to 31th December; • 6,200.00 euros as remuneration for the position of member of the Editorial Committee of a review published by Banca Carige. (9) of which: • 6,924.87 euros as remuneration for the position of Deputy Chairman of Carige Assicurazioni from 1st January to 19th April; • 515.28 euros received from Carige Assicurazioni as non-monetary benefits; • 10,696.96 euros as remuneration for the position of Deputy Chairman of Carige Vita Nuova from 1st January to 19th April; • 515.28 euros received from Carige Vita Nuova as non-monetary benefits. 162 (10) of which: • 17,882.90 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Banca del Monte di Lucca from 1st January to 31th December; • 45,511.43 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Cassa di Risparmio di Savona from 1st January to 31th December; • 4,646.22 euros as remuneration for the position of Auditor of Ligure Leasing from 1st January to 25th October; • 7,500.00 euros as remuneration for the position of Statutory Auditor of Carige Asset Management SGR from 1st January to 31th December; • 2,324.06 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Galeazzo held from 1st January to 31th December; • 5,551.92 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Columbus Carige Immobiliare held from 1st January to 31th December; (11) of which: • 29,457.53 euros as remuneration for the position of Chairman of the Board of Statutory Auditor of Carige Assicurazioni from 19th April to 31th December; • 26,301.36 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Carige Vita Nuova from 19th April to 31th December; • 7,100.00 euros as remuneration for the position of Statutory Auditor of Carige Asset Management SGR from 1st January to 31th December; • 24,684.45 euros as remuneration for the position of Statutory Auditors of Cassa di Risparmio di Savona from 16th April to 31th December; • 568.10 euros as remuneration for the position of Statutory Auditors of Immobiliare Ettore Vernazza from 20th April to 31th December. (12) of which: • 9,150.00 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Carige Asset Management SGR from 1st January to 31th December. • 20,240.00 euros as remuneration for the position of Chairman of the Board of Statutory Auditors of Cassa di Risparmio di Carrara from 19th February to 31th December. • 8,657.12 euros as remuneration for the position of Statutory Auditor of Banca del Monte di Lucca from 22th April to 31th December. • 19,638.36 euros as remuneration for the position of Statutory Auditor of Carige Assicurazioni from 19th April to 31th December. • 17,534.25 euros as remuneration for the position of Statutory Auditor of Carige Vita Nuova from 19th April to 31th December. • 568.10 euros as remuneration for the position of Statutory Auditor of Immobiliare Ettore Vernazza from 20th April to 31th December. • 1,136.21 euros as remuneration for the position of Statutory Auditor of Columbus Carige Immobiliare from 20th April to 31th December. • 311.64 euros as remuneration for the position of Chairman of the Board of Statutory Auditor of Banca Cesare Ponti from 29th December to 31th December. (13) 311.64 euros as remuneration for the position of Chairman of the Board of Statutory Auditor of Banca Cesare Ponti from 29th December to 31th December. (14) of which: • 315.75 euros as remuneration for the position of Board Member of Banca Cesare Ponti from 29th December to 31th December; • 17,600.00 euros for the position of Board Member of Carige Asset Management SGR from 1th January to 31th December; • 17,757.26 euros as remuneration for the position of Board Member of Cassa di Risparmio di Carrara from 19th February to 31th December; • 630.00 euros as remuneration for the position of Board Member of Centro Fiduciario from 1st January to 31th December.
163 SITUATION OF PENSION FUND
CHANGES IN SUPPLEMENTARY PENSION FUND
Pursuant to art. 9 of the fund regulation, approved on 23rd January 1992, the following are beneficiaries of the Supplementary Pension Fund: - all staff employed by Cassa di Risparmio di Genova ed Imperia in service at 30th November 1991 and transferred to Banca Carige SpA on 1st December 1991, excluding temporarily employed staff. Staff taken on from 1st December 1991 onwards are beneficiaries of a timed fixed-payment cover not related to the Fund; - the staff of Istituto di Credito Fondiario della Liguria SpA who were on duty on 31st December 1991; - the staff of Mediocredito Ligure SpA who were on duty on 31st December 1991.
31/12/04 31/12/03 Opening balances 289,632 287,888 Closing balances 296,310 289,632 Net changes of the year 6,678 1,744
Incomes related to assets captions 19,120 13,794 Employees' contributions 472 418 Pension paid 12,901 12,443 V oluntary state pension fund payment 13 25
The Supplementary Pension Fund is an in-house reserve without corporate identity recorded in the Directory of Pension Funds, 3rd special section, no. 9,004 since 14/10/99(1).
The closing balance of the fund – 296,310 thousand euros – corresponds to actuarial calculations on the basis of cover capital criteria for amounts sufficient to guarantee requiriments as foreseen by the Pension Fund regulations for those eligible.
The actuary’s evaluation is made annually and for future requirements an interest rate of 3.75% was applied.
(1) The Fund is not structured on the basis of individual accounts. Its position in the accounts guarantees the obligation on the part of the Bank to maintain the Fund’s resources at a level that enables it to satisfy the aims prescribed in its regulations. Consequently, provisions to the Fund are considered as a guarantee for future commitments. The Fund is based on the principle of mutual solidarity. For instance, in the case of disability, retirement payments will be made on the basis of a period of service longer than that effectively worked. The Fund has the following characteristics: - the retributive potential of provisions made to the Fund is ignored; - provisions made by the Bank are not subject to distrainment on the part of creditors of fund members in service or in retirement; - in the case of termination of employment prior to qualifying for retirement pay from the Fund, ex-employees are entitled exclusively to reimbursement of amounts paid into the Fund plus accrued interest. Such characteristics have been confirmed also by jurisdiction.
164 The Fund, in line with the provisions of the Pension Fund regulations, was created by regular provisions and presents the following composition:
31/12/04 31/12/03 - Bonds 208,431 207,952 - Shares and quotes - - - Holdings 35,000 35,000 - Tangible fixed assets (1) 21,267 21,780 - Cash 31,612 24,900 Total 296,310 289,632
(1) Balance sheet value
165 SECTION 2
PARENT COMPANY OR EU LENDING INSTITUTION AS HOLDING
2.1 NAME BANCA CARIGE SpA - Cassa di Risparmio di Genova e Imperia
2.2 LOCATION AND REGISTERED OFFICES Genova, Via Cassa di Risparmio n. 15.
Registered at the Genoa List of Companies no. 03285880104. Chamber of Commerce (C.C.I.A.) of Genoa registration no. 331717.
Banca Carige is recorded in the register of banks (no. 6175/4) and it belongs, as parent company, to Banca Carige Group, recorded in the special register pursuant to Decree no. 356/90.
Genoa, 25th March 2005 The Board of Directors
166 PROPOSED RESOLUTION
167 ADOPTION OF ANNUAL REPORT AND ALLOCATION OF NET PROFIT
To the Shareholders of Banca Carige,
We submit for your approval the Annual Report for 2004 made up by balance sheet, profit and loss account, explanatory notes and attachments supplemented by the reports of the Board of Directors, Statutory Auditors and External Auditors.
We propose 1) the approval of the financial statements for 2004 (balance sheet, profit and loss account, explanatory notes, Board of Directors' report) and the net profit of 107,540,673.77 euros;
2) the distribution of 107,807,495.54, being the sum of net profit stated at point 1) and the total of the dividends on own shares reserve (266,821.77 euros), as follows:
- Legal reserve euro 10,754,067.38 - Extraordinary taxed reserve euro 13,491,311.28 - Total dividends payable to the holders of 959,897,518 ordinary shares (dividend per share of € 0.0723) euro 69,400,590.55 - Total dividends payable to the holders of 153,429,321 saving shares (dividend per share of € 0.0923) euro 14,161,526.33
Dividends shall be payable from 5th May 2004 (ex-dividend date: 2nd May 2004) with payment taking place via the centralised management system of financial instruments as per Borsa Italiana SpA's recommendation for listed companies;
3) the destining of dividends on the Bank's own shares in portfolio to the specific reserve.
If approved, Banca Carige’s net equity after allocation of profit would amount to 1,646,151 thousand.
Genoa, 25th March 2005 The Board of Directors
168 STATUTORY AUDITORS’REPORT
169 STATUTORY AUDITORS’ REPORT TO THE SHAREHOLDERS’ MEETING IN ACCORDANCE WITH ARTICLE 153 OF Legislative Decree 58/98 and article 242
To the shareholders of Banca Carige SpA,
During the business year ending 31/12/04 we carried out those supervisory duties foreseen by law in accordance with the Code of Best Practice recommended by the Italian Council of Chartered Accountants.
* * *
In particular we took part in the meetings of both the parent company’s Board of Directors and Executive Committee and received on a quarterly basis (in accordance with article 150 of Legislative Decree 55/98 and article 20 of the Bank’s Articles of Association) information concerning the activities of the Bank in addition to significant economic and financial transactions carried out by the Bank and/or its subsidiaries. During the year the Shareholders’ Meeting met twice, Board of Directors met sixteen times, the Executive Committee forty-seven times and this Board of Statutory Auditors met forty-five times. The Internal Control Committee met eight times.
* * *
The following significant economic and financial transactions, outlined in chronological order, took place during the year:
a) on 14th January Banca Carige purchased a further 55 per cent of the share capital of Priamar Finance S.r.l. (Carige’s total holding: 60 per cent) from Stitching Faro for a total investment of 5,500 euros. The Bank of Italy authorised the consolidation of the company into the Banca Carige Group with effect 14th January (Bank of Italy letter of 25/6/04 no. 614827); b) on 16th January 2004, in accordance with the purchase agreement signed on 16th July 2003 and subsequent to regulatory authorisation, Banca Carige acquired a 41.05 per cent of the share capital of the holding Carinord 2 SpA, via which the Bank achieved control of Cassa di Risparmio di Carrara. On 21st April, subject to Bank of Italy authorisation, the break up of Carinord 2 was finalised along with the formation of Carricarrara Holding SpA, a fully-owned subsidiary of Banca Carige. On 25th June 2004, the Bank of Italy communicated the formal incorporation of Cassa di Risparmio di Carrara into the Banca Carige Group with effect 21st April 2004 (Bank of Italy letter no. 614827 of 25th June 2004). On 2nd August, the Board of Directors of Banca Carige and the shareholders’ meeting of Caricarrara Holding approved the merger of the latter into Banca Carige. The merger deed granting Banca Carige a controlling interest of 90 per cent in Cassa di Risparmio di Carrara was signed on 1st September 2004 and recorded at the Registry of Companies in Genoa on 7th September; c) on 29th January 2004, the subsidiary Carige Asset Management AM SGR received Bank of Italy authorisation to do business with effect 10th January 2004; d) on 31st March 2004 the equity strengthening of the subsidiary Carige Assicurazioni SpA, deliberated by the Shareholders’ Meeting of the company on 28th November 2003, was completed. Banca Carige, subject to Bank of Italy authorisation, subscribed the 18,948 shares for an investment of 22,263,900 euros. As a result of the operation, Carige Assicurazioni’s share
170 capital rose to 137,872,800 euros, made up by 140,400 shares with a nominal value of 982 euros each. The parent company’s holding in the subsidiary is 91.932 per cent; e) on 14th June in accordance with an agreement signed between Banca Carige and La Basilese insurance group in 1997, the latter sold, subject to Bank of Italy authorisation, its residual shareholdings in the Carige Group’s insurance companies to the parent company. In detail, Banca Carige acquired from La Basilese 8,672 shares in Carige Assicurazioni and 6,400,000 shares in Carige Vita Nuova. As a result of these purchases, Banca Carige’s holdings in the two companies rises to 98.11 per cent in the first and 100 per cent in the second; f) on 18th June an Extraordinary Shareholders’ Meeting of Banca Carige was held to transact modifications to the Bank’s Articles of Association in compliance with recent changes in Italian company law. During the same month, extraordinary meetings of the banking and insurance subsidiaries were held for the same purpose, whilst the other companies of the Group held their extraordinary meetings in September; g) on 18th June Banca Carige took advantage of the opportunities contained in the Law accompanying the 2004 Budget (‘Legge Finanziaria’) foreseen by article 2, paragraph 26 of Law 350/2003 to release previously tax-frozen capital gains (Law 218/90) on the payment of tax at a rate of 9 per cent; h) in June, Banca Carige securitised a part of its performing credits portfolio pursuant to Law 120/99. Details of the transaction are given subsequently in this Report; i) in August, the international rating agency Fitch raised its rating from AA to AAA of the class B securities issued as part of the securitisation of non performing loans carried out by Banca Carige in December 2000; j) on 2nd August the Board of Directors of Banca Carige approved a review of the Bank’s organisational structure to take effect 1st October. The new structural model identifies four macro areas of activity: governance and internal auditing, distribution, administration, support and production; k) on 28th September Banca Carige subscribed the entirety of a share capital increase carried out by the subsidiary Columbus Carige Immobiliare SpA. The issue deliberated by the subsidiary’s extraordinary meeting raised capital from 25,822,500 to 36,822,885 euros (Banca Carige’s shareholding increased from 99.980 per cent to 99.986 per cent); l) on 18th October the Board of Directors of Banca Carige deliberated to exercise its right to adhere to the national consolidated corporation tax (IRES) regime foreseen by article 117 et seq. of Decree of the President of the Republic 917/86 subsequently modified by Legislative decree 344/2003. As foreseen by the legislation Banca Carige is consolidator, whilst the following companies are those consolidated (registered offices are given in brackets): - Cassa di Risparmio di Savona SpA (Savona) - Banca del Monte di Lucca SpA (Lucca) - Carige Asset Management SGR SpA (Genoa) - Carige Assicurazioni SpA (Milan) - Carige Vita Nuova SpA (Genoa) - Galeazzo S.r.l. (Genoa) - Columbus Carige Immobiliare SpA (Genoa) - Immobiliare Ettore Vernazza SpA (Genova); m) On 21th December the Court of Appeal of Genoa (sentence no. 1072) with regards to the acquisition of a controlling interest in C.R. Savona by Banca Carige in 1998, declared the contract stipulated between the C.R. Savona Foundation and Banca Toscana SpA null and void, upholding at the same time the validity of the pre-emption clause in favour of Banca Carige. The same decision recognised Banca Carige’s claim for damages resulting from the breach of the same clause; n) on 29th December the purchase of 51.09 per cent of the share capital of Banca Cesare Ponti SpA of Milan was completed for an initial investment of 38.2 million. The ordinary and extraordinary meeting of Banca Cesare Ponti approved, amongst other business, the raising of the bank’s share capital from 12 to 13 million;
171 o) on 30th December Banca Carige fully subscribed a share capital increase carried out by Carige Assicurazioni SpA of 12,220,000 (from 137,872,800 to 148,085,600) along with the entirety of a subordinated bond issue for 2,500,000. Banca Carige’s direct holding in the company rose to 98.239 per cent.
* * *
We found no evidence of transactions, either infra-Group or with related parties, which could be classified as unusual, atypical, imprudent or any way contrary to the Law, the Articles of the Bank or the deliberations of the Shareholders’ Meeting.
* * *
The Board of Directors’ Report states adequately that dealings with its subsidiaries and associated undertakings are those connected to the normal activity of the Bank and are regulated by market conditions. With regards to these dealings, we can confirm that this is the case and that they are carried out in the interest of your company and regulated economically by market conditions.
* * *
Within the scope of this Board’s competence, we monitored the adequacy of the Bank’s organisational structure, and the respect of the codes of best practice concerning its administration by means of relevant documentation provided by the Bank’s senior offices in addition to meetings with the external auditors. In the light of the information in our possession we can confirm the adequacy of the Bank’s operating structure (also in the light of changes made to the same as deliberated by the Board of Directors’ meeting of 2nd August 2004 as described above at point j) and the respect of best practice standards.
* * *
During the year, we evaluated and monitored the adequacy of the Bank’s internal auditing system. Internal auditing is carried out by a dedicated body as foreseen by Bank of Italy indications, which has access to all areas of the Bank’s activities as well those of the other banks of the Group. This body is outside the line of command foreseen by the Bank’s organisational structure and offers General Management (with regards to which it functions as a staff position) details of its activities on a systematic basis. It also reports on a monthly basis to the Board of Directors and to this Board of Statutory Auditors as well as to every meeting of the Internal Control Committee. The internal auditing plan for 2004 was established in agreement with this Board on 24th February 2004. The work foreseen in the plan, quantitatively no lower than the sector average, was substantially carried out during the course of the year. This Board performed constant oversight of any operational anomalies that were communicated to it by the unit in order to guarantee effective and appropriate follow up. This Board believes, therefore, that the internal auditing system is suitably equipped to guarantee the effective and efficient management of the Bank’s activities.
* * *
We also evaluated and monitored the adequacy of the Bank’s administration and accounting systems. With regards to the latter, information was collected from senior officers in the form of company documents and audit analyses in order to verify that such a system was suitably equipped to give a true and fair picture of the Bank’s affairs. In particular, throughout the year we controlled the Bank’s internal monitoring of all its risk profiles and can confirm the Bank’s position throughout the year within the limits of all indicators fixed by the Bank of Italy and the Interbank Deposit Protection Fund – FITD, with the exception of the credit losses/gross operating result indicator, which at year end 2004 was slightly higher than the normal threshold (raised 172 by regulators from 1/1/04) following a major loss exposure in the cruise sector. This Board can state that already in the first quarter of 2005 the indicator in question has returned below the regulatory threshold. On the basis of the activities carried out by this Board, we believe that the administrative and accounting systems of the Bank provide a true and fair picture of its activities.
* * *
During the year the Board received two reports pursuant to article 2408 Italian Civil Code from one shareholder in possession of 100 shares. A further communication was received from the same shareholder in January 2004. We examined the matter, though not required by law to do so (article 128 of the Consolidated Finance Law), and concluded that the charges made were unfounded.
* * *
We can confirm that as at 31st December 2004 the parent company, Banca Carige SpA, communicated adequate and complete instructions to its subsidiaries pursuant to article 114, section 2, Legislative decree 58/98. It is our opinion that Banca Carige SpA, the parent company of the Banca Carige Group, communicated adequate and complete instructions to its subsidiaries as foreseen by the Consolidated Banking Law and the regulatory indications issued by the Bank of Italy. Similar instructions were also supplied to the insurance companies of the Group in addition to other companies where required.
* * *
In accordance with the above-mentioned Legislative decree 58/98, the audit firm Deloitte & Touche SpA during the year examined the accounts of the Bank on a regular basis and reviewed the contents of the directors’ report at 31st December 2004 for consistency with the financial statements and conformity with current accounting criteria. In its report of 5th April 2005, the company declared that “the financial statements taken as a whole are clearly stated and give a true and fair view of the financial position and results of Banca Carige SpA – Cassa di Risparmio di Genova e Imperia”.
* * *
During the course of the year Banca Carige SpA assigned Deloitte & Touche SpA and related parties the following duties for a total of 117,042.24 (VAT excluded). This Board believes that these further duties were fully justified in the light of the Bank’s needs as was the remuneration agreed.
Company Service performed Remuneration in euros (VAT excluded) Deloitte & Touche SpA Offering circular EMTN Carige euro 60,600.00 and due diligence on behalf of Banca Carige at Banca Cesare Ponti SpA Studio Tributario e Societario Qualified intermediary services euro 4,643.00 Deloitte & Touche ERS France Consultancy regarding legislative euro 40,799.24 scenario in France Deloitte & Touche SpA Assessment of IAS compliance euro 11,000.00 Consulting
173 In accordance with article 150, paragraph 2, Legislative decree 58/98, regular meetings were held between this Board and the auditors Deloitte & Touche SpA for the reciprocal exchange of information. During these meetings no facts worthy of censure or further investigation came to our notice.
* * *
As a result of this Board’s direct examination of the statements and in cooperation with the auditors, we also can confirm that the financial statements have been prepared in accordance with the requirements governing financial statements. In particular: • the structure of the financial statements is in accordance with those required by Legislative decree 87/92 and the Bank of Italy’s ruling of 30th July 1992 and subsequent updates; • accounting principles adopted are pursuant to relevant legislation and are those utilised in the previous year’s statements; • valuation criteria adopted were unchanged in comparison to 2003 with the exception of the criterion applied to listed trading securities, which are now valued at market rather than the lowest of cost or market price; the same criterion is applied to off-balance sheet transactions; • criteria adopted to estimate future values are unchanged in comparison to 2003 with the exception of the time horizon applied in the calculation of deferred tax assets and liabilities and the amortisation rate on property, the latter changed from 3 per cent applied at 31/12/03 to 1.5 per cent. • the financial statements so prepared are consistent with the facts and information at our disposal following meetings with the governing bodies of the Bank and the external auditors. The principal results can be summarised as follows:
Balance sheet Assets 15,928,939,029 Liabilities and shareholders’ equity 15,821,398,355 Net profit for the year 107,540,674
Guarantees 1,100,698,829 Commitments 1,247,874,091
Profit & Loss Account Revenues 1,059,570,909 Costs (935,854,557) Profit from Ordinary activities 123,716,352 Profit from non routine activities 15,025,554 Income tax (31,201,231) Net profit for the year 107,540,674 * negative amounts are given in brackets
• the Board of Directors’ Report illustrates in a consistent manner balance sheet and income statement data and results as well as outlining the prospects for the Bank; • in the explanatory notes the directors of the Bank provide clear details regarding the securitisation of credits without recourse (Law 130/99) and the performance recorded during 2004. With reference to the securitisation of 13,272 performing mortgage loans carried out by Banca Carige in June 2004, at 30/6/04 864.50 million was raised. Details of the portfolio securitised were published in the Official Gazette of the Italian Republic of 2nd July 2004. In particular, the credits sold refer to performing real estate mortgage loans granted to private customers prior to 31st December 2003; the mortgages were classified as fully
174 performing (i.e. neither watchlist nor non performing status) up to the sale date of 30th June 2004. The credits were sold to the special purpose vehicle Argo Mortgage 2 S.r.l., in which Banca Carige has an indirect holding of 5 per cent via its subsidiary Columbus Carige Immobiliare SpA, on 30th June 2004 for 925.6 million (of which, a nominal value of the credits sold of 864.5 million and a deferred price generated by profit extraction on excess spread net of payment date costs, intrinsic credit risks and the possibility of early repayment of 61.1 million). The mathematical accuracy of the financial model utilised to calculate deferred price was approved by a primary firm of auditors. As part of the transaction, Argo Mortgage 2 S.r.l. issued on 23rd July 2004 asset backed securities totalling 864.5 million (class A: 808.3 million; class B: 26.8 million; class C: 29.4 million). The securities are listed on the Luxemburg bond market. Banca Carige is servicer for the transaction. During the first six months of 2004, revenues totalled 55.5 million.
* * *
Accordingly, we release our Report on the financial statements of Banca Carige as at and for the year ended 31/12/2004 and approve the distribution of net profit proposed therein. We also inform you that this Board’s term of office expires with the approval of the 2004 annual report. We would like to take this opportunity to express our gratitude for the trust and collaboration granted and ask the Meeting to deliberate the renewal of the Bank’s Board of Statutory Auditors.
Genoa, 8th April 2005
The Board of Statutory Auditors
175 REPORT OF THE INDEPENDENT AUDITORS
176
ATTACHMENTS
179 STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(thousands of euros)
Capital Additional paid-in Legal Reserve (art. Taxed Revaluation Reserve for stock capital reserve 55 decree extraordinary reserve incorporation 917/86) reserve
Shareholders' equity at 31/12/2003 1,113,327 255,023 67,351 131 44,396 7,956 12,341 Allocation of 2003 net income - reserves 10,620 12,093 - dividends paid Allocation to reserve for dividends on own shares Reserves for general banking Additional paid-in capital 7,816 Taxed extraordinary reserve - 14,576 Reserve for the purchase of treasury stock disposable
Riserve for the purchase of stock Net income 2004 Shareholders' equity at 31/12/2004 1,113,327 262,839 77,971 131 41,913 7,956 12,341
180 Reserve Reserve for the Reserve for the Merger reserve Reserve Reserves for Reserves for Net income Total D.Lgs purchase of purchase of D.Lgs general dividends 21/4/93 n. treasury stock stock 17/5/99 n. banking risks own share 124 disposable 153
56 77,000 - 16,589 11,718 - 140 106,199 1,712,227
65 - 140 - 22,638 - - 83,561 - 83,561
267 267 - - 7,816 - 14,576
- 1,301 - 1,301
1,301 1,301 107,541 107,541
121 75,699 1,301 16,589 11,718 - 267 107,541 1,729,714
181 STATEMENT OF CASH FLOW
2003 2004
FUNDS GENERATED BY OPERATIONS (A) 476,306 542,539
Distributable net income for the year 106,199 107,541
Adjustment to: 215,176 309,743 - tangible fixed assets 100,474 102,715 - intangible fixed assets 22,733 24,914 - financial fixed assets - - - trading securities 6,882 13,996 - loan and advances to credit institutions 297 - - loan and advances to customers 84,790 168,118
Provisions for: 154,931 125,255 - reserves for loan losses and leasing transactions 20,440 45 - term ination indem nities 11,431 10,868 - pensions and similar com m itm ents 14,212 19,592 - taxation 89,830 73,045 - other assets 19,018 21,705
USE OF FUNDS GENERATED BY OPERATIONS (B) 310,420 434,988
Use for: - taxation 88,002 113,089 - term ination indem nities 18,069 9,927 - pensions and similar com m itm ents 12,468 12,914 - loan losses 77,755 177,655 - reserves for loan losses 13,000 18,000 - revaluations on holdings 107 - - reserves for general banking risks 5,165 - - other assets 20,801 20,107 - dividends paid 75,053 83,296
CASH FLOW (A-B) 165,886 107,551
INCREASE IN FUNDS TAKEN AND DECREASE IN FUNDS APPLIED (C) 1,561,056 1,442,901
Increase in: 1,122,154 1,313,732 - amount owed to credit institutions - - - amount owed to customers 45,640 751,705 - debts evidenced by certificates 743,568 481,747 - funds managed on behalf of third parties 58 - - other liabilities - 71,340 - accrued expenses and deferred income 19,128 1,124 - subordinated loans 102,055 - - capital stock 92,777 - - additional paid-in capital 118,928 7,816
Decrease in: 438,902 129,169 - cash in hand, balances with central banks and post offices 5,333 15,816 - securities - - - loans and advances to credit institutions 421,950 - - own shares 11,619 - - other assets - 107,868 - accrued income and prepaid expenses - 5,485
INCREASE IN FUNDS APPLIED AND DECREASES IN FUNDS TAKEN (D) 1,726,942 1,550,452
- Increase in: 835,451 1,537,167 - cash in hand, balances with central banks and post offices - - - securities 51,211 291,038 - loans and advances to credit institutions - 647,200 - loans and advances to customers 543,254 89,538 - financial fixed assets 9,411 258,389 - tangible fixed assets 155,553 237,482 - intangible fixed assets 16,130 12,196 - own shares - 1,324 - other assets 41,883 - - accrued income and prepaid expenses 18,009 -
Decrease in: 891,491 13,285 - amount owed to credit institutions 657,716 13,285 - other liabilities 233,775 -
TOTAL OF FUNDS GENERATED AND TAKEN (A+C) 2,037,362 1,985,440
TOTAL OF FUNDS APPLIED (B+D) 2,037,362 1,985,440
Thousands of euros.
182 PROPERTIES (excluding leased fixed assets)
Location Area m2 Cost price Revaluation Revaluated Depreciation Balance (1) cost fund at sheet value 31/12/04 at 31/12/04
Productive Head office Via Cassa di Risparmio 15 Genova 21278 7,772,713.43 44,104,275.84 51,876,989.27 15,061,719.85 36,815,269.42 Upgrading " " " " 260,483.01 - 260,483.01 3,907.25 256,575.76 Web Point Via Cassa di Risparmio 12 Genova 28 136,824.47 - 136,824.47 11,795.71 125,028.76 Banca continua Via XXV Aprile 10/12 r. Genova 204 48,524.31 678,761.22 727,285.53 24,496.09 702,789.44 Other head office Vico Monte di Pietà 4 Genova 1942 25,822.84 2,991,641.15 3,017,463.99 71,084.80 2,946,379.19 buildings Piazza dei Garibaldi 29 r. Genova 34 3,098.74 59,451.94 62,550.68 4,037.00 58,513.68 Via D. Chiossone 7 - fondi Genova 427 2,582.28 226,860.15 229,442.43 6,023.92 223,418.51 Via D. Chiossone 12 Genova 3655 168,623.18 4,444,695.86 4,613,319.04 237,822.96 4,375,496.08 Vico Monte di Pietà 6/8 r. Genova 126 68,688.77 97,304.35 165,993.12 71,178.67 94,814.45 Vico Monte di Pietà 10 r. Genova 50 - 59,909.00 59,909.00 898.64 59,010.36 Via D. Chiossone 7/6 Genova 93 - 38,734.27 38,734.27 581.01 38,153.26 Piazza dei Garibaldi 33 r. Genova 45 7,230.40 58,734.06 65,964.46 8,219.87 57,744.59 Piazza dei Garibaldi 31 r. Genova 37 39,814.18 48,661.08 88,475.26 41,141.08 47,334.18 Via G. D'Annunzio Torri E e F Genova 7396 15,743,165.94 10,502,339.28 26,245,505.22 15,061,630.26 11,183,874.96 Via G. D'Annunzio Torri E e F 2° p. Genova " 1,104,680.65 580,313.04 1,684,993.69 587,574.23 1,097,419.46 Warehouse Via Emilia 48 C E r. Genova 3653 556,274.87 977,992.85 1,534,267.72 579,288.89 954,978.83 Warehouse Via Emilia 48 D r. Genova " 242,337.57 426,056.29 668,393.86 249,940.11 418,453.75 Electric room Via G. D'Annunzio "A" (q.9,40) Genova 27 18,325.44 24,161.19 42,486.63 18,779.48 23,707.15 Warehouse Via G. D'Annunzio "B" (q.10,75) Genova 50 27,302.49 41,475.51 68,778.00 28,061.13 40,716.87 Warehouse Via G. D'Annunzio "B" (q.10,75) Genova 176 48,051.15 64,734.05 112,785.20 49,262.41 63,522.79 Warehouse Via G. D'Annunzio "C" (q.14,95) Genova 275 161,375.74 213,609.69 374,985.43 165,386.76 209,598.67 Car parking Corso Sardegna Genova 18 7,488.63 34,935.08 42,423.71 8,124.99 34,298.72 Warehouse Via Arrivabene 39 r. Genova 1536 64,857.69 811,203.50 876,061.19 76,052.62 800,008.57 Car parking areas Via G. D'Annunzio - 66 posti auto Genova 1080 772,671.29 749,381.35 1,522,052.64 783,598.25 738,454.39 Archivie Via Pelio 6 Genova 4760 878,428.99 2,559,088.93 3,437,517.92 1,574,255.11 1,863,262.81 Archivie Via Pelio 6 Genova " 107,681.26 109,759.98 217,441.24 51,718.19 165,723.05 Archivie Via Pelio 6 Genova " 158,232.25 148,972.77 307,205.02 59,642.60 247,562.42 Upgrading " " " 9,592.32 - 9,592.32 143.88 9,448.44 Archivie Via Monticelli 13/2 Genova 50 10,344.12 51,630.71 61,974.83 11,273.74 50,701.09 Employess club Via XX Settembre 41 6° piano Genova 830 293,458.08 764,308.90 1,057,766.98 71,015.83 986,751.15 Genoa branch no.87 Via Pisa 58 Genova " 108,704.25 255,436.79 364,141.04 32,161.22 331,979.82 Upgrading " " 104,489.38 - 104,489.38 1,567.34 102,922.04 Genoa branch no.41 Via G. D'Annunzio 25-29c-39-41-63-73-81 Genova 1700 1,173,775.44 3,775,717.00 4,949,492.44 2,547,969.75 2,401,522.69 E.A.D. Via Isonzo 21 Genova 8520 1,783,519.06 12,757,061.39 14,540,580.45 1,931,188.74 12,609,391.71 Upgrading " " " 62,063.45 - 62,063.45 930.95 61,132.50 Genoa branch no.39 Piazza delle Americhe 1 Genova 2680 6,094,413.47 1,728,123.68 7,822,537.15 2,815,693.08 5,006,844.07 Upgrading " " " 43,560.00 - 43,560.00 653.40 42,906.60 Main office Milan Piazza Pattari 5-7 Milano 1970 2,157,550.34 5,324,742.43 7,482,292.77 2,269,784.73 5,212,508.04 Main office Milan Piazza Pattari 5-7 2° p. Milano " 823,025.71 2,031,192.44 2,854,218.15 832,917.95 2,021,300.20 Main office Milan Piazza Pattari 5-7 3° p. Milano " 1,434,749.97 488,485.59 1,923,235.56 522,619.76 1,400,615.80 Upgrading " " 25,500.42 - 25,500.42 382.51 25,117.91 Main office Turin Corso Matteotti 13 Torino 1146 722,628.97 1,457,699.60 2,180,328.57 363,083.59 1,817,244.98 Main office Turin Via Parini 13 piano terra e 1° piano interrato Torino 300 280,350.00 69,179.40 349,529.40 73,544.40 275,985.00 Genoa branch no.1 Via Cesarea 60 r. Genova 536 71,843.29 1,347,820.29 1,419,663.58 93,138.24 1,326,525.34 Genoa branch no.2 Via B. Buozzi 57- 58 rr. Genova 187 60,941.91 329,130.24 390,072.15 66,792.99 323,279.16 Genoa branch no.2 Piazza Dinegro 2-3-4 rr. Genova 70 116,202.80 - 116,202.80 36,603.87 79,598.93 Genoa branch no.3 Via G. Torti 80 r. Genova 498 2,166.54 10,942.07 13,108.61 2,363.17 10,745.44 Genoa branch no.3 Via G. Torti 24 Genova " 187,525.50 947,095.54 1,134,621.04 204,544.82 930,076.22 Genoa branch no.4 Via Lagustena 40/48 Genova 465 852,153.88 572,725.47 1,424,879.35 565,452.17 859,427.18 Genoa branch no.5 Via Monticelli 70 r. Genova 1035 47,596.25 76,397.84 123,994.09 49,456.16 74,537.93 Genoa branch no.5 Via Monticelli Genova " 645,571.12 1,036,220.95 1,681,792.07 664,342.29 1,017,449.78 Genoa branch no.6 Piazza Dante 30 r. Genova 330 54,024.28 838,298.55 892,322.83 67,409.12 824,913.71 Genoa branch no.6 Via Fieschi 47 r. Genova " 32,868.97 510,030.08 542,899.05 41,012.46 501,886.59 Genoa branch no.7 Via della Liberta' 68-70-72-74-74A-78 rr. Genova 340 16,844.80 174,800.79 191,645.59 19,719.48 171,926.11 Genoa branch no.7 Via L. Pareto 6/8 Genova " 30,987.41 321,560.64 352,548.05 36,275.63 316,272.42 Genoa branch no.8 Piazza S. Sabina 6 Genova 872 376,497.08 1,234,495.96 1,610,993.04 400,661.98 1,210,331.06 Genoa branch no.9 Corso Sardegna 94 r. Genova 340 2,737.22 13,894.40 16,631.62 2,986.69 13,644.93 Genoa branch no.9 Corso Sardegna 90 r. Genova " 645.57 3,276.98 3,922.55 704.41 3,218.14 Genoa branch no.9 Corso Sardegna 96 r. p.t. Genova " 28,405.13 144,187.16 172,592.29 30,994.01 141,598.28 Genoa branch no.9 Corso Sardegna 44/1 Genova " 120,921.00 613,806.58 734,727.58 131,941.91 602,785.67 Genoa branch no.9 Corso Sardegna 98 r. Genova " 219,492.45 - 219,492.45 29,878.46 189,613.99 Genoa branch no.10 Via S. Vincenzo 26 Genova 760 333,878.87 884,182.95 1,218,061.82 352,149.80 865,912.02 Genoa branch no.10 Via Galata 51 A r. Genova " 25,822.84 68,384.44 94,207.28 27,235.95 66,971.33 Genoa branch no.11 Via Piacenza 94 E Genova 391 384,132.89 464,849.72 848,982.61 396,867.63 452,114.98 Genoa branch no.11 Via Piacenza 179 G Genova " 8,556.54 10,354.50 18,911.04 5,160.90 13,750.14
183 Location Area m2 Cost price Revaluation Revaluated Depreciation Balance (1) cost fund at sheet value 31/12/04 at 31/12/04 Genoa branch no.13 Via XII Ottobre 7 r. Genova 536 130,014.82 1,629,850.82 1,759,865.64 71,627.88 1,688,237.76 Upgrading " " " " 241,587.49 - 241,587.49 3,623.81 237,963.68 Genoa branch no.14 Piazza Manin 2/1 Genova 321 5,866.57 296,689.91 302,556.48 10,404.92 292,151.56 Genoa branch no.14 Piazza Manin 2/1 Genova " 3,520.12 178,022.93 181,543.05 6,243.27 175,299.78 Genoa branch no.15 Via Napoli 40 r. Genova 180 14,338.39 236,488.17 250,826.56 18,100.79 232,725.77 Genoa branch no.16 Viale des Geneys 2/1 - 2/A/B/C/D/E Genova 423 387,342.67 469,265.65 856,608.32 396,318.37 460,289.95 Genoa branch no.17 Via Posalunga 11 r. Genova 585 3,859.64 35,292.99 39,152.63 2,092.55 37,060.08 Genoa branch no.17 Via Timavo 96 - 104 r. Genova " 18,092.0 3 165,435.47 183,527.50 9,808.80 173,718.70 Genoa branch no.17 Via Posalunga 5 r. Genova " 7,165.32 101,054.69 108,220.01 8,788.62 99,431.39 Genoa branch no.17 Via Timavo 86-94 Genova " 21,538.14 303,758.79 325,296.93 25,771.44 299,525.49 Genoa branch no.17 Via Posalunga 7-9 r. Genova " 9,019.08 127,198.75 136,217.83 10,476.10 125,741.73 Genoa branch no.18 Via Corsica 13-19 r. Genova 802 65,168.73 668,212.88 733,381.61 76,169.45 657,212.16 Genoa branch no.19 Via Quinto 38 r. Genova 123 43,898.84 270,823.54 314,722.38 48,619.68 266,102.70 Genoa branch no.20 Via Avio 2 r. Genova 765 211,756.62 1,136,575.64 1,348,332.26 218,217.43 1,130,114.83 Genoa branch no.20 Via Pesce - Via Mamiani 3 Genova 319 154,141.73 325,884.43 480,026.16 110,475.03 369,551.13 Genoa branch no.21 Via Sestri 114 r. Genova 787 225,776.28 1,621.16 227,397.44 30,606.45 196,790.99 Genoa branch no.21 Via Sestri 24/1 r. Genova " 18.90 290.47 309.37 12.30 297.07 Genoa branch no.21 Via Donizetti 46/46A/46B/48 Genova " 77,468.5 3 1,190,462.05 1,267,930.58 96,487.49 1,171,443.09 Genoa branch no.21 Via Donizetti 8 A/3 - 8 A/4 Genova " 10,277.49 157,934.63 168,212.12 12,800.67 155,411.45 Genoa branch no.21 Via Donizetti 8 A/1 - 8 A/2 Genova " 10,277.49 157,934.63 168,212.12 12,800.67 155,411.45 Genoa branch no.21 Via Donizetti 8 A - 46 - 48 Genova " 25,822.84 396,820.68 422,643.52 32,162.49 390,481.03 Genoa branch no.21 Via Donizetti 50 r. Genova " 6,507.36 99,998.81 106,506.17 4,769.93 101,736.24 Genoa branch no.21 Via Donizetti 52 r. Genova " 6,507.36 71,530.57 78,037.93 3,773.52 74,264.41 Genoa branch no.21 Piazza Rosolino Pilo 1 Genova 15 57,275.30 4,183.07 61,458.37 18,766.06 42,692.31 Genoa branch no.22 Piazza Sebastiano Gaggero 9 r. Genova 730 265,321.90 925,257.98 1,190,579.88 240,579.80 950,000.08 Genoa branch no.22 Via Don G. Verità 28 r. Genova " 1,084.56 4,416.00 5,500.56 1,167.07 4,333.49 Genoa branch no.22 Via Don G. Verità 6/2 Genova " 261.20 1,063.52 1,324.72 153.09 1,171.63 Genoa branch no.23 Via Pastorino 26 - Via Custo 22 r. Genova 831 617,474.01 909,206.15 1,526,680.16 640,374.21 886,305.95 Genoa branch no.23 Via G.B. Custo 18 - 20 r. Genova 142 87,797.67 129,278.61 217,076.28 90,175.84 126,900.44 Genoa branch no.24 Via F. del Canto 4 A Genova 424 5,342.75 408,245.81 413,588.56 11,546.58 402,041.98 Genoa branch no.25 Via G. Jori 22 A - B Genova 337 11,580.63 297,377.50 308,958.13 15,462.26 293,495.87 Genoa branch no.25 Via G. Jori 22/1 Genova " 4,131.66 106,096.22 110,227.88 5,785.08 104,442.80 Genoa branch no.26 Via Martiri della Libertà 3 A Genova 490 37,410.53 193,343.55 230,754.08 40,871.84 189,882.24 Genoa branch no.26 Via Garelli 11 r. Genova " 61,968.89 320,265.04 382,233.93 65,223.65 317,010.28 Genoa branch no.26 Via Garelli 5 - 7 - 9 r. Genova " 274,256.92 - 274,256.92 111,074.06 163,182.86 Genoa branch no.26 Via Martiri della Libertà 7-9 Genova " 251,101.34 7,127.11 258,228.45 79,203.83 179,024.62 Genoa branch no.27 Via Oberdan 120 A Genova 243 3,098.74 544,921.42 548,020.16 11,319.04 536,701.12 Genoa branch no.28 Via Molassana 70 r. - Via S. D'Acquisto Genova 512 6,197.48 408,119.74 414,317.22 12,412.24 401,904.98 Genoa branch no.29 Via C. Rolando 56 E r. Genova 346 36,537.57 143,645.99 180,183.56 39,240.32 140,943.24 Genoa branch no.29 Via C. Abba 43 - 45 r. Genova " 61,974.8 3 243,651.55 305,626.38 66,559.23 239,067.15 Genoa branch no.30 Via S. G. D'Acri 6 r. Genova 304 890.89 22,887.36 23,778.25 1,247.56 22,530.69 Genoa branch no.30 Via S. G. D'Acri 4 r. Genova " 2,919.53 75,004.20 77,923.73 4,000.81 73,922.92 Genoa branch no.30 Via S. G. D'Acri 12 r. Genova " 9,253.87 237,736.64 246,990.51 12,357.24 234,633.27 Genoa branch no.30 Via S. G. D'Acri 4-1 Genova 382,406.74 - 382,406.74 75,903.11 306,503.63 Genoa branch no.31 Via Pra 140 A/R Genova 287 7,230.40 118,036.61 125,267.01 9,109.41 116,157.60 Genoa branch no.31 Via Venezian 1 Genova " 11,341.39 185,148.85 196,490.24 14,288.74 182,201.50 Upgrading " " 157,158.00 - 157,158.00 2,357.37 154,800.63 Genoa branch no.32 Piazza Banchi 2 r Genova 210 7,746.85 147,216.76 154,963.61 10,071.30 144,892.31 Genoa branch no.32 Via S. Luca 2 Genova 10 5,164.57 98,144.50 103,309.07 3,718.76 99,590.31 Genoa branch no.34 Via Struppa 146 C e via Buscaglia 18 r Genova 331 220,306.60 285,234.29 505,540.89 227,889.90 277,650.99 Genoa branch no.47 Via di Francia 3 r. Genova 770 2,324,056.05 - 2,324,056.05 1,078,542.76 1,245,513.29 Genoa branch no.55 Via del Capriolo 1 - 3 rr. Genova 106 213,038.47 - 213,038.47 86,280.58 126,757.89 Genoa branch no.60 Piazza Leopardi 2 Genova 426 963,192.12 - 963,192.12 390,092.80 573,099.32 Branch Recco Via IV Novembre 2r - P.za N.da Recco27/2 Recco 512 2,065.83 55,114.34 57,180.17 2,923.53 54,256.64 Branch Recco P.za N. da Recco 24 Recco " 77,468.5 3 826,715.15 904,183.68 50,592.72 853,590.96 Branch S.Margherita L. Via XXV Aprile 6/1 S.Margherita L. 137 1,446.08 10,089.04 11,535.12 1,619.11 9,916.01 Branch S.Margherita L. Largo Giusti 17 S.Margherita L. 311 178,114.96 792,710.67 970,825.63 156,834.98 813,990.65 Branch Chiavari Piazza Roma 34 r. - Piazza Roma 10/1 Chiavari 1540 12,214.21 75,851.11 88,065.32 13,535.19 74,530.13 Branch Chiavari Corso Dante p.t. Chiavari " 463,651.72 976,189.33 1,439,841.05 275,385.45 1,164,455.60 Branch Chiavari Corso Dante 16/4 Chiavari " 171,904.13 846,710.05 1,018,614.18 74,850.24 943,763.94 Branch Sestri L. Corso Colombo 19 r. Sestri Levante 311 56,985.50 671,323.26 728,308.76 67,910.13 660,398.63 Branch Rapallo Via Giustiniani 9 Rapallo 496 18,979.79 258,780.44 277,760.23 23,146.19 254,614.04 Branch Rapallo Galleria Raggio 2D e 3D Rapallo " 4,080.01 55,628.99 59,709.00 4,975.65 54,733.35 Branch Rapallo Via Matteotti 7/3 Rapallo " 6,135.77 83,658.26 89,794.03 7,482.68 82,311.35 Branch Rapallo Via Giustiniani 7 Rapallo " 54,227.97 739,372.67 793,600.64 66,131.98 727,468.66 Branch Rapallo Galleria Raggio 4/D Rapallo " 15,449.55 210,647.27 226,096.82 18,841.00 207,255.82
184 Location Area m2 Cost price Revaluation Revaluated Depreciation (1) cost fund at 31/12/04
Rapallo branch no.1 Via del Pozzo 24 Rapallo 151 193,154.88 240,619.85 433,774.73 199,661.50 Branch Lavagna Piazza della Libertà 40/2 Lavagna 106 204,516.93 76,833.29 281,350.22 90,117.37 Branch La Spezia Corso Nazionale 252 La Spezia 2141 4,399,246.47 2,190,810.17 6,590,056.64 2,480,768.38 La Spezia Branch Ag.2 Corso Cavour 154 La Spezia 153 499,894.13 - 499,894.13 187,374.92 La Spezia Branch Ag.2 Via Monale 76 La Spezia 140 107,939.49 - 107,939.49 34,000.93 Branch Rezzoaglio Via Roma 12 Rezzoaglio 399 233,866.14 416,009.34 649,875.48 243,614.27 Branch Montoggio Via Roma 89 Montoggio 234 2,065.83 170,126.06 172,191.89 4,648.71 Branch Torriglia Via Matteotti 48 r. Torriglia 120 1,084.56 18,261.95 19,346.51 1,374.76 Branch Torriglia Loc.piano fondi con acc.Via Molinetto 7 Torriglia " 6,960.94 117,209.20 124,170.14 8,823.49 Branch Campoligure P.za Martiri della Benedicta 2 Campoligure 254 1,910.89 6,545.20 8,456.09 2,037.73 Branch Campoligure Via Trento 2 Campoligure " 62,511.94 214,116.41 276,628.35 66,661.37 Branch Campoligure Via Trento 6 Campoligure 57 38,062.87 38,907.67 76,970.54 37,694.93 Branch Arenzano Via Pallavicini 25 Arenzano 419 2,114.34 47,631.15 49,745.49 2,860.52 Branch Arenzano Via Pallavicini 29 Arenzano " 27,555.41 620,758.11 648,313.52 35,489.00 Branch Ronco Scrivia Corso Italia 29 Ronco Scrivia 562 294,380.43 308,208.57 602,589.00 303,419.57 Branch Cogoleto Piazza Giusti 1 Cogoleto 564 356,013.90 440,736.83 796,750.73 361,763.37 Branch Cogoleto Piazza Giusti 1 Cogoleto " 41,833.01 46,733.92 88,566.93 37,656.08 Branch Isola Cantone Via Roma 118 r. Isola Cantone 261 1,239.50 11,340.98 12,580.48 1,428.21 Branch Isola Cantone Via Roma 182 1^ p. Isola Cantone " 20,658.28 189,016.40 209,674.68 23,803.40 Branch Camogli Piazza Schiaffino 9 Camogli 225 31,585.92 340,596.66 372,182.58 11,115.04 Branch Rossiglione Via Roma 10 Rossiglione 203 774.69 170,316.48 171,091.17 3,341.06 Branch Masone Via Veneto 6 Masone 188 4,352.18 41,523.26 45,875.44 5,040.31 Branch Masone Via Roma 27 Masone " 19,936.27 190,207.79 210,144.06 23,088.43 Branch Casella Viale Mandelli Casella 189 169,493.74 234,771.90 404,265.64 29,281.52 Branch Savignone Via Giovanni XXIII 1 Savignone 130 83,149.56 60,262.77 143,412.33 42,062.98 Branch Sori Via Garibaldi 6 B - C Sori 249 15,638.06 219,607.85 235,245.91 19,166.75 Branch Sori Via Garibaldi 6 D Sori " 18,685.95 47,189.63 65,875.58 4,808.23 Branch Moconesi Viale De Gasperi 19 Moconesi 175 16,720.29 191,214.47 207,934.76 18,752.50 Branch Moconesi Viale De Gasperi 19 Moconesi " 517.25 5,915.30 6,432.55 562.02 Branch Pedemonte Via Medicina p.t. 104 Serra Ricco' 293 24,789.93 238,002.64 262,792.57 28,731.82 Branch Pedemonte Via Medicina p.fondi 104 Serra Ricco' 6,713.94 64,459.05 71,172.99 7,781.53 Branch S.Olcese Via Poire'43 S.Olcese di M. 309 18,912.16 187,014.16 205,926.32 20,771.74 Branch S.Olcese Via Poire'69 S.Olcese di M. " 10,788.87 106,686.44 117,475.31 11,472.12 Branch Casarza L. Via IV Novembre 28 B Casarza L. 308 36,132.71 270,069.62 306,202.33 40,725.74 Branch S.Colombano C. Via D.Cuneo 163/C - D - E S.Colombano C. 221 44,080.22 163,098.13 207,178.35 47,187.90 Branch S.Colombano C. Via D.Cuneo 163/C - D - E S.Colombano C. " 22,462.70 34,081.36 56,544.06 10,456.81 Branch Campomorone Via De Gasperi 60 - 62 - 64 - 70 Campomorone 408 284,128.76 388,415.87 672,544.63 294,216.93 Branch Alassio Via Mazzini 2 Alassio 683 160,342.57 1,284,853.94 1,445,196.51 171,598.25 Branch Alassio Via Mazzini 2 Alassio " 133.32 1,068.34 1,201.66 138.01 Branch Alassio Via Dante 114/1 Alassio " 1,084.56 8,690.77 9,775.33 1,231.19 Branch Leca d'Albenga Piazza del Popolo 13 Leca d'Albenga 206 212,780.24 - 212,780.24 86,176.00 Branch Toirano Via Braida 21 - 23 - 27 Toirano 135 29,954.50 102,694.70 132,649.20 31,944.24 Branch Toirano Via Braida 21 - 23 - 27 Toirano " 7,883.71 27,028.18 34,911.89 8,407.39 Branch Finale Ligure Via Garibaldi 1 - Via Roma 12/1 Finale L. 315 516.46 579,388.72 579,905.18 9,215.04 Branch Varazze Piazza Dante 6 Varazze 280 3,098.74 476,749.11 479,847.85 10,296.46 Branch Cairo M. Via F.lli Francia 3 Cairo M. 225 131,696.51 54,741.83 186,438.34 59,830.20 Branch Loano Corso Roma 198 Loano 130 2,014.18 170,133.68 172,147.86 4,596.40 Branch Loano main office Via Stella (Pal. Sirena) Loano 404 179,935.19 536,026.84 715,962.03 90,342.62 Branch Pietra L. P.zza Martiri Libertà 10 ) Pietra L. 610 - - - - Branch Pietra L. Via Vinzone 1/1^-2^p. ) Pietra L. 3,873.43 913,000.93 916,874.36 17,626.55 Branch Pietra L. Via Vinzone 1/3^p. Pietra L. " 460.94 108,647.11 109,108.05 1,899.36 Branch Pietra L. Lev. Corso Italia 15 Pietra L. 99 10,595.63 167,755.38 178,351.01 13,270.90 Main office Imperia Via Berio 14 r. Imperia 1634 14,615.73 126,338.83 140,954.56 16,730.05 Main office Imperia Via Berio 4/1 e 4/2 Imperia " 8,947.62 77,343.47 86,291.09 10,241.99 Main office Imperia Via Berio 4 Imperia " 13,849.24 119,713.27 133,562.51 15,437.21 Main office Imperia Via Berio 10/5 Imperia " 3,492.53 30,189.53 33,682.06 3,892.99 Main office Imperia Via Berio 10/8 Imperia " 100,606.32 869,644.17 970,250.49 115,160.08 Main office Imperia Via Berio 6 Imperia " 35,635.53 308,034.60 343,670.13 40,790.58 Main office Imperia Via Berio 10/6 Imperia " 189,540.26 777,698.07 967,238.33 113,909.42 Upgrading " " " " 461,000.31 - 461,000.31 6,915.00 Branch Sanremo Corso Mombello 25,25 A,27,29 Sanremo 1605 1,140,794.80 2,440,000.62 3,580,795.42 1,179,105.80 Branch Bordighera Corso V.Emanuele 153/155 r. Bordighera 810 356,163.84 902,925.21 1,259,089.05 173,926.34 Branch Pieve di Teco Via Eula 33 Pieve di Teco 246 38,661.66 200,813.93 239,475.59 12,590.55 Branch Arma di Taggia Via Blengino 19 Arma di Taggia 236 63,559.42 654,551.45 718,110.87 70,199.71 Branch P.Maurizio P.zza F.lli Serra 10 Imperia 340 10,458.25 340,999.82 351,458.07 15,730.12 Branch P.Maurizio P.zza F.lli Serra 9 Imperia " 10,313.11 336,267.25 346,580.36 15,511.82 Branch S.Bartolomeo M. Nuova P.zza Comunale 49/51 r. S.Bartolomeo M. 240 26,028.19 231,679.53 257,707.72 29,112.97
185 Location Area m2 Cost price Revaluation Revaluated Depreciation Balance (1) cost fund at sheet value 31/12/04 at 31/12/04 Branch S.Bartolomeo M. Piazza Magnolia 32 S.Bartolomeo M. " 14,384.93 27,802.86 42,187.79 2,235.70 39,952.09 Branch S.Stefano Mare Piazza A. Saffi 4 S.Stefano M. 282 29,954.50 105,338.19 135,292.69 31,983.89 103,308.80 Branch S.Stefano Mare Piazza A. Saffi 5 S.Stefano M. " 37,287.18 131,124.35 168,411.53 39,813.35 128,598.18 Branch S.Stefano Mare Piazza A. Saffi 6 S.Stefano M. " 39,448.76 138,725.76 178,174.52 42,121.38 136,053.14 Branch Ventimiglia Condominio Le Palme Ventimiglia 876 169,494.44 564,606.06 734,100.50 141,784.71 592,315.79 Branch Ventimiglia Condominio Le Palme Ventimiglia " 14,329.56 61,265.88 75,595.44 14,030.54 61,564.90 Branch Ventimiglia Via Roma (fondi) Ventimiglia " 15,599.45 121,899.48 137,498.93 16,101.99 121,396.94 Branch Ventimiglia Via Matteotti 1 Ventimiglia 145 315,209.81 - 315,209.81 56,737.76 258,472.05 Branch Diano Marina Piazza Maglione 1 Diano Marina 208 92,962.24 294,457.90 387,420.14 98,773.54 288,646.60 Branch Vallecrosia Via Giovanni XXIII 27 - 29 - 31 Vallecrosia 327 276,681.43 260,103.05 536,784.48 272,860.40 263,924.08 Branch Ovada Via Torino 10 Ovada 501 679,140.82 527,673.38 1,206,814.20 461,617.62 745,196.58 Branch Alessandria Centro Agorà - Corso Borsalino 46 Alessandria 1026 1,593,387.66 - 1,593,387.66 726,936.03 866,451.63 Branch Bologna Via Riva del Reno 67 Bologna 883 1,741,364.99 - 1,741,364.99 804,977.54 936,387.45 Rappres. Londra Hornton Street 12 Londra 150 391,565.17 401,009.10 792,574.27 398,960.96 393,613.31 Of fi ce Pri vat e ( Roma 7) Via Piemonte 39/8 Roma 251 477,297.50 470,957.24 948,254.74 478,554.36 469,700.38 Branch Reggio Emilia P.zza del Tricolore 2c e 2d Reggio Emilia 215 428,814.16 - 428,814.16 161,877.33 266,936.83 Upgrading 22,800.00 - 22,800.00 342.00 22,458.00 Branch Reggio Emilia Piazza del Tricolore 4 r. Reggio Emilia " 224,285.73 - 224,285.73 46,535.54 177,750.19 Genoa branch no.63 Via Donghi n. 20/22/24/26/28 r. Genova 98 173,142.18 - 173,142.18 65,361.18 107,781.00 Branch Carrara Viale XX Settembre 209/211 Carrara 406 911,546.43 - 911,546.43 398,801.56 512,744.87 Branch Brugnato Via Briniati 3 Brugnato 194 227,241.04 - 227,241.04 99,417.96 127,823.08 Branch Acqui Terme Via Mazzini 43/45 Acqui Terme 193 204,516.93 - 204,516.93 89,476.16 115,040.77 Branch Acqui Terme Via Mazzini 47 Acqui Terme 60 207,174.20 - 207,174.20 62,175.38 144,998.82 Branch Lavagna P. la Scafa 16 Lavagna 197 339,172.24 38,136.21 377,308.45 142,357.77 234,950.68 Genoa branch no.65 Via Marchini 39 r Genova 55 76,383.98 - 76,383.98 26,352.47 50,031.51 Branch no.3 - Sanremo Corso Cavallotti 232 Sanremo 115 328,724.82 - 328,724.82 113,410.05 215,314.77 Branch Sarzana Via Brigate Partigiane Muccini 65 Sarzana 340 1,159,313.18 - 1,159,313.18 427,116.81 732,196.37 Genoa branch no.66 Via Merano 99 Genova 214 165,059.62 - 165,059.62 56,945.57 108,114.05 Branch no. 3 - Ventimiglia Corso Genova 82 Ventimiglia 152 318,189.10 - 318,189.10 109,775.24 208,413.86 Branch no. 1 - Chiavari Via S. Rufino 18 Chiavari 131 232,405.60 - 232,405.60 80,179.93 152,225.67 Genoa branch no.69 Via Paleocapa 135/137 Genova 94 83,149.56 - 83,149.56 28,686.60 54,462.96 Branch no. 3 - La Spezia Via Genova 103 La Spezia 173 388,666.10 - 388,666.10 122,429.81 266,236.29 Branch Ameglia Via XXV Aprile 51 Ameglia 103 216,640.76 - 216,640.76 68,241.83 148,398.93 Genoa branch no.71 Via dei Mille 57/59 Genova 203 551,136.98 - 551,136.98 173,608.15 377,528.83 Branch Lerici Via Gerini 10 Lerici 214 578,431.73 - 578,431.73 182,205.99 396,225.74 Branch Sassuolo Via Circonvallazione Sud/Est 221-223-225 Sassuolo 739 645,571.12 - 645,571.12 203,354.90 442,216.22 Branch no.1 Parma Via Emilia 65 Parma 275 451,769.63 - 451,769.63 140,400.62 311,369.01 Branch no.1 Parma Via Emilia 65 Parma " 15,493.71 - 15,493.71 4,183.30 11,310.41 Branch Savona Piazza Dallara 42 Savona 149 188,506.77 - 188,506.77 54,390.65 134,116.12 Genoa branch no.75 Via Gramsci 135/137/139 Genova 220 40,313.25 256,317.66 296,630.91 13,491.28 283,139.63 Branch no.1 Milano Via Morosini 7 Milano 320 795,343.62 - 795,343.62 214,742.78 580,600.84 Branch Valenza Via Canonico Zuffi 3 Valenza 309 823,748.75 - 823,748.75 222,412.16 601,336.59 Genoa branch no.76 Via Bobbio 62/64/66 r. Genova 120 204,217.29 - 204,217.29 54,465.94 149,751.35 Branch Monterosso Via Vittorio Emanuele 69 Monterosso 105 312,456.42 - 312,456.42 84,363.23 228,093.19 Branch no.5 - Milano Via Bertini 1 Milano 245 494,869.00 - 494,869.00 118,768.57 376,100.43 Branch no.5 - Milano Via Bertini 1 Milano " 114,653.43 - 114,653.43 24,077.21 90,576.22 Branch no.2 - Ventimiglia Corso Nizza Ventimiglia 150 143,316.79 - 143,316.79 34,396.02 108,920.77 Genoa branch no.81 Via Torti 236/238 rr. Genova 150 189,178.16 - 189,178.16 45,402.75 143,775.41 Genoa branch no.81 Via Barrili 26 r. Genova " 181,427.28 - 181,427.28 39,242.08 142,185.20 Genoa branch no.78 Via Murcarolo 4 r. Genova 205 601,326.48 - 601,326.48 144,318.35 457,008.13 Branch no. Tortona Piazza Roma 34 Tortona 402 537,755.45 - 537,755.45 129,061.30 408,694.15 Branch Rho Via Lainate 60 Rho 275 516,198.67 - 516,198.67 108,401.72 407,796.95 Branch Riva Ligure Corso Villaregia 54 Riva Ligure 132 316,429.24 - 316,429.24 66,450.15 249,979.09 Genoa branch no.83 Via Lido di Pegli 2/3 rr. Genova 200 214,123.03 - 214,123.03 44,617.23 169,505.80 Genoa branch no.83 Via Lido di Pegli 2/3 rr. Genova " 376,298.02 - 376,298.02 78,606.06 297,691.96 Branch no.1 - Bologna Via Emilia Levante 61/63 Bologna 185 599,374.00 - 599,374.00 104,904.40 494,469.60 Branch no.2 - Torino Via Borgaro 119 Torino 0 p.t.+165 716,003.91 - 716,003.91 107,400.59 608,603.32 Branch no.3 - Torino Via Viberti 1 Torino +30 s.+13 355,825.96 - 355,825.96 52,753.15 303,072.81 Genoa branch no.85 Via Teglia 23/25/27 rr Genova 170 346,213.17 - 346,213.17 41,545.59 304,667.58 Branch no.7 - Milano Via Rembrandt Milano 82 p.t.+1 973,239.40 - 973,239.40 116,788.72 856,450.68 Branch no.1 - Palermo Via F. Crispi 146 Palermo 303 701,369.98 - 701,369.98 58,998.28 642,371.70 Branch no.7 - Palermo Via Castelforte 5 Palermo 267 302,127.29 - 302,127.29 27,191.46 274,935.83 Palermo main office Piazza Monte di Pietà 16 - 18 Palermo 2600 2,530,638.81 - 2,530,638.81 75,919.16 2,454,719.65 Branch Lercara Friddi Via V.Emanuele 30 Lercara Friddi 151+280 180,243.46 - 180,243.46 16,221.91 164,021.55 Branch Termini Imerese C.so Umberto e Margherita 85-87-89-91 Termini Imerese 295+ 561,572.95 - 561,572.95 50,035.25 511,537.70 Branch Leonforte C.so Umberto I 168 Leonforte 305 334,938.35 - 334,938.35 28,381.80 306,556.55
186 Location Area m2 Cost price Revaluation Revaluated Depreciation Balance (1) cost fund at sheet value 31/12/04 at 31/12/04
Branch Nicosia Via F.lli Testa 38-40-42 Nicosia 260 269,074.04 - 269,074.04 24,216.66 244,857.38 Warehouse / car parking Via G. D'Annunzio - Lotto "D" Genova 1755 1,757,195.91 811,074.46 2,568,270.37 821,344.15 1,746,926.22 War ehouse Via G. D'Annunzio - Lotto "E" Genova 1210 1,637,487.54 773,038.41 2,410,525.95 773,027.29 1,637,498.66 Bancomat Via G. D'Annunzio - Lotto "F" Genova 80 213,584.88 99,484.23 313,069.11 100,809.24 212,259.87 Canteen Via G. D'Annunzio - Lotto "G" Genova 607 1,067,926.48 502,583.82 1,570,510.30 504,124.56 1,066,385.74 Car parking 1-2 B2 Via D'Annunzio 31 Genova 27 14,460.79 50,288.54 64,749.33 51,948.45 12,800.88 Via D'Annunzio 31 Genova " 212.94 740.50 953.44 758.55 194.89 office buildings Via D'Annunzio 23 Genova 2810 4,021,722.18 2,079,683.71 6,101,405.89 5,183,667.40 917,738.49 Via D'Annunzio 23 Genova " 3,698,004.03 1,784,792.76 5,482,796.79 4,738,751.56 744,045.23 Via D'Annunzio 23 Genova " 18,477.59 8,007.36 26,484.95 22,681.39 3,803.56 Via D'Annunzio 23 Genova " 457.06 154.80 611.86 517.41 94.45 Garage Via D'Annunzio 23 Genova 52 64,697.07 19,549.75 84,246.82 76,233.53 8,013.29 N. 4 car parking Via D'Annunzio 23 (+ cantina) Genova 67 81,588.32 14,737.22 96,325.54 94,865.68 1,459.86 Garage Via D'Annunzio 23 Genova 27 2,141.71 706.22 2,847.93 2,417.26 430.67 Via D'Annunzio 23 Genova " 9,202.84 3,552.42 12,755.26 10,857.10 1,898.16 N. 2 car parking Via D'Annunzio Genova 25 14,047.63 24,616.07 38,663.70 31,919.02 6,744.68 N. 4 car parking Via D'Annunzio Genova 50 60,873.72 11,995.85 72,869.57 72,869.57 - Branch Corte Brugnatella Via Genova loc. Marsaglia Corte Brugnatella 75 76,693.85 - 76,693.85 6,902.46 69,791.39 Branch Villaguardia Via Varesina 42 Villa Guardia 307 388,092.26 - 388,092.26 34,928.30 353,163.96 Branch Taranto Via Berardi 48/B Taranto 1155 1,046,361.05 - 1,046,361.05 94,172.50 952,188.55 Branch Fidenza Via Tagliasacchi 7-P.za Pezzana Fidenza 421 1,027,427.26 - 1,027,427.26 92,468.46 934,958.80 Branch Alcamo Corso VI Aprile 83-85 - V. F. Gioia Alcamo 230 88,867.27 - 88,867.27 7,998.06 80,869.21 Upgrading " " " " 170,666.18 - 170,666.18 2,559.99 168,106.19 Branch Marsala Via XI Maggio 133-135-137 Marsala 285 161,453.03 - 161,453.03 14,530.78 146,922.25 Branch Vescovato Piazza Roma 28 Vescovato 441 351,831.52 - 351,831.52 31,664.84 320,166.68 Branch Treviglio P.za L.Manara ang. Via S. Martino Treviglio 715 619,748.28 - 619,748.28 55,777.34 563,970.94 Main office Perugia Via Sicilia 35 Perugia 1223 2,059,250.69 - 2,059,250.69 61,777.52 1,997,473.17 Branch Treviso Viale N.Bixio 31 Treviso 130 188,107.31 - 188,107.31 5,643.22 182,464.09 Branch Frosinone Via A.Paleario 3 Frosinone 603 647,605.37 - 647,605.37 19,428.16 628,177.21 Branch Rieti Via Cintia 65 Rieti 503 1,462,334.70 - 1,462,334.70 43,870.04 1,418,464.66 Branch Sora Via Vittorio Veneto 8 A Sora 750 1,357,882.10 - 1,357,882.10 40,736.46 1,317,145.64 Branch Catania Piazza del Duomo 5 Catania 366 783,393.59 - 783,393.59 23,501.80 759,891.79 Branch no.8 - Roma Piazza Risorgimento 56 Roma 47 1,566,787.18 - 1,566,787.18 47,003.62 1,519,783.56 Branch no.10 - Roma Piazza Vega 34/40 - Ostia Lido Roma 216 684,163.73 - 684,163.73 20,524.92 663,638.81 Branch no.11 - Roma Via Emanuele Filiberto 180 E Roma 355 1,775,692.14 - 1,775,692.14 53,270.76 1,722,421.38 Branch no.14 - Roma Via Tiburtina 493 ang. Via Morello Roma 1253 3,330,669.19 - 3,330,669.19 99,920.08 3,230,749.11 Main office Ancona Corso Garibaldi 13/15 Ancona 1651 3,370,956.00 - 3,370,956.00 101,128.68 3,269,827.32 Branch Sesta Godano Via Sogari 25 Sesta Godano 130 196,185.00 - 196,185.00 5,885.56 190,299.44 Branch Viterbo Via della Ferrovia 2-4-6 Viterbo 250 339,443.00 - 339,443.00 10,183.30 329,259.70 Upgrading " " " 184,527.60 - 184,527.60 2,767.91 181,759.69
Total 128,823,681.97 157,337,333.22 286,161,015.19 83,880,316.41 202,280,698.78
Staff accomodation
Flat Via XX Settembre 20/131 Genova 36 52,929.60 36,323.64 89,253.24 1,455.56 87,797.68 Flat Via XX Settembre 20/132 Genova 36 54,486.72 34,809.34 89,296.06 1,498.39 87,797.67 Flat Via XX Settembre 20/133 Genova 34 59,399.77 30,031.39 89,431.16 1,633.49 87,797.67 Flat Via XX Settembre 20/134 Genova 34 59,399.77 30,031.39 89,431.16 1,633.49 87,797.67 Flat Via XX Settembre 20/136 Genova 35 62,999.99 26,530.18 89,530.17 1,732.50 87,797.67 Flat Via Ceresio 3 int.4/1 Milano 70 62,749.51 25,048.16 87,797.67 - 87,797.67 Flat Via Ceresio 3 int.5/1 Milano 81 71,529.28 31,762.10 103,291.38 - 103,291.38 Flat Via Ceresio 3 int.6/1 Milano 71 62,749.51 25,048.16 87,797.67 - 87,797.67 Flat Via Ceresio 3 int.9/1 Milano 46 45,293.27 32,175.26 77,468.53 - 77,468.53 Flat Via Ceresio 3 int.9/2 Milano 46 45,293.27 32,175.26 77,468.53 - 77,468.53 Flat Via Ceresio 3 int.8/3 Milano 48 45,293.27 32,175.26 77,468.53 - 77,468.53
187 Location Area m2 Cost price Revaluation Revaluated Depreciation Balance (1) cost fund at sheet value 31/12/04 at 31/12/04
Flat Via Ceresio 3 int.8/5 Milano 48 45,293.27 32,175.26 77,468.53 - 77,468.53 Flat Via Ceresio 3 int.9/5 Milano 46 45,293.27 32,175.26 77,468.53 - 77,468.53 Flat Corso Mombello 25 p.attico/1 S.Remo 45 33,569.70 54,227.97 87,797.67 - 87,797.67 Flat Corso Mombello 25 p.attico/2 S.Remo 45 33,569.70 54,227.97 87,797.67 - 87,797.67 Flat Corso Mombello 25 p.attico/3 S.Remo 50 36,151.98 51,645.69 87,797.67 - 87,797.67 Flat Via Roma 12 a/1 Rezzoaglio 48 36,151.98 5,164.57 41,316.55 - 41,316.55 Flat Via Roma 12 a/2 Rezzoaglio 73 56,810.26 5,164.57 61,974.83 - 61,974.83 Flat Via Perletti 9 - 2^ p. Piacenza 117 105,098.98 18,850.68 123,949.66 - 123,949.66 Flat Via Mezzacosta 1 Bologna 243 602,395.33 - 602,395.33 - 602,395.33 Flat Corso Matteotti 13 Torino 180 56,810.26 98,126.81 154,937.07 - 154,937.07 Flat Via XX Settembre 20 139/154 Genova 75 179,727.00 - 179,727.00 - 179,727.00
Total 1,852,995.69 687,868.92 2,540,864.61 7,953.43 2,532,911.18
Other properties a) Supplementary pension found
Shop Via Luccoli 19-21 r. Genova 340 69,721.68 246,253.11 315,974.79 36,114.38 279,860.41 Shop Via XXV Aprile 14-16 r. Genova 150 82,063.83 441,573.65 523,637.48 44,783.27 478,854.21 Flat Via Cassa di Risparmio 4/1 Genova 60 - 56,810.26 56,810.26 852.15 55,958.11 Flat Via Cassa di Risparmio 4/3 Genova 110 23,120.53 118,345.88 141,466.41 12,526.25 128,940.16 Flat Via Cassa di Risparmio 4/6 Genova 110 - 123,949.66 123,949.66 1,859.24 122,090.42 Flat Via Cassa di Risparmio 4/13 Genova 50 - 56,810.26 56,810.26 852.15 55,958.11 Flat Via Cassa di Risparmio 4/14 Genova 105 25,822.84 157,196.57 183,019.41 14,365.58 168,653.83 Shop Via F. Turati 2 - 4 - 6 rr. Genova 85 17,993.77 164,340.60 182,334.37 6,153.83 176,180.54 Shop Via F. Turati 8/10 rr. Genova 40 9,476.46 53,327.56 62,804.02 2,742.59 60,061.43 Shop Via S. Martino 65 B - C (piani terra e fondi) Genova 1180 75,975.37 705,357.83 781,333.20 37,551.62 743,781.58 Shop Via S. Martino 152 - 154 - 156 rr. Genova 220 2,040.0 0 256,188.44 258,228.44 3,873.43 254,355.01 Offices Via XX Settembre 41 - 5° piano Genova 700 82,180.13 771,115.27 853,295.40 40,740.67 812,554.73 Offices Via XX Settembre 41 - 5° piano Genova 380 30,816.42 279,057.72 309,874.14 15,125.69 294,748.45 Offices Via XX Settembre 41 - 6° piano Genova 270 30,256.12 248,630.61 278,886.73 14,470.38 264,416.35 Offices Via XX Settembre 41 - 7° piano Genova 600 71,901.95 754,429.09 826,331.04 36,841.63 789,489.41 Shop Vico Casana 74-76 rr. Genova 260 24,930.62 312,947.79 337,878.41 13,544.59 324,333.82 Shop Vico Casana 38 r. Genova 35 - 92,962.24 92,962.24 1,394.43 91,567.81 Shop Vico Casana 40 r. Genova 26 - 61,974.83 61,974.83 929.62 61,045.21 Shop Vico Casana 42 r. Genova 26 - 61,974.83 61,974.83 929.62 61,045.21 Shop Vico Casana 44/46 r. Genova 95 - 123,949.66 123,949.66 1,859.24 122,090.42 Shop Vico Casana 48 r. Genova " - 61,974.83 61,974.83 929.62 61,045.21 Shop Vico Casana 50 r. Genova " - 61,974.83 61,974.83 929.62 61,045.21 Warehouse Via G. D'Annunzio p. A/3 (lotto B q. 10,75) Genova 100 48,051.15 42,271.07 90,322.22 31,627.05 58,695.17 Offices Piazza Dante 8/2 Genova 170 12,994.22 194,725.53 207,719.75 5,974.52 201,745.23 Shop Via Fiasella 36 - 38 - 40 rr. Genova 190 11,555.72 402,418.70 413,974.42 7,018.52 406,955.90 Shop Via Cesarea 66 r. Genova 75 12,373.99 143,645.81 156,019.80 6,176.24 149,843.56 Shop Via Cesarea 68 r. Genova 687 11,624.05 299,267.19 310,891.24 8,266.82 302,624.42 Car parkings Via G. D'Annunzio - 14 posti auto Genova 170 168,336.94 113,576.60 281,913.54 140,581.62 141,331.92 Shop V.le Des Geneys 14 r. Genova 175 5,887.61 237,734.67 243,622.28 9,541.94 234,080.34 Shop Via de Nicolay 44 r. Genova 160 42.31 206,540.45 206,582.76 3,098.74 203,484.02 Shop Via Monticelli 35 Genova 720 56,795.28 283,485.26 340,280.54 61,899.49 278,381.05 Flat/Offices Via Monticelli 11/1 Genova 150 25,822.84 150,740.86 176,563.70 28,471.30 148,092.40 Shop Via Colombo 49 r. Genova 180 4,596.4 7 408,615.02 413,211.49 6,244.13 406,967.36 Shop Via G.B. Custo 11 r. Genova 220 1,378.94 205,217.61 206,596.55 3,112.74 203,483.81 Offices Via di Francia 5 A r. Genova 635 284,051.29 - 284,051.29 132,793.98 151,257.31 Flat Piazzetta dei Garibaldi 27 r. Genova 35 45,448.21 5,897.93 51,346.14 18,495.00 32,851.14 Shop Via Lungomare S.Maria 9/11/13 Cogoleto 100 2,347.3 0 101,149.50 103,496.80 1,928.02 101,568.78 Shop Via Dante 225 B Alassio 65 976.1 0 76,511.95 77,488.05 1,172.08 76,315.97 Shop Via Dante 229 Alassio 65 845.96 81,804.19 82,650.15 1,248.21 81,401.94 Shop Via della Concezione 60 Finale Ligure 130 187,495.55 205,260.96 392,756.51 193,386.90 199,369.61 Shop Via S. Maurizio 25 Imperia 35 427.76 46,053.36 46,481.12 697.22 45,783.90 Shop Via S. Maurizio 27 Imperia 40 822.79 61,152.04 61,974.83 929.62 61,045.21 Shop Via S. Maurizio 27 A Imperia 40 608.69 56,201.57 56,810.26 852.15 55,958.11 Flat C.so Mombello 25 piano 3 int. 3 Sanremo 104 92,962.24 30,987.41 123,949.65 - 123,949.65 Flat C.so Mombello 25 piano 3 int. 4 Sanremo 149 113,620.52 41,316.55 154,937.07 - 154,937.07 Shop Corso Mombello 46/48/50 rr. Sanremo 180 71.4 5 309,802.69 309,874.14 4,648.11 305,226.03 Shop Via Boselli 21 r. Arma di Taggia 125 614.58 154,322.49 154,937.07 2,324.06 152,613.01 Shop Via Vittorio Emanuele 176 Bordighera 150 7,486.56 173,928.43 181,414.99 3,919.07 177,495.92 Offices Via D'Annunzio 79 Genova 615 325,540.94 1,733,909.98 2,059,450.92 1,404,545.90 654,905.02 Offices Via Sestri 128/130/132 rr. Genova 2,076 2,119,074.07 210,708.19 2,329,782.26 861,385.64 1,468,396.62
188 Location Area m2 Cost price Revaluation Revaluated Depreciation Balance (1) cost fund at sheet value 31/12/04 at 31/12/04
Offices Via Sestri 128/130/132 rr. Genova " 1,066,483.50 76,952.08 1,143,435.58 - 1,143,435.58 Offices Via D'Annunzio 83-89-93-103 Genova 680 1,731,286.32 860,338.63 2,591,624.95 2,270,324.09 321,300.86 Offices Via Ceccardi 4/16 Genova 500 1,354,328.38 - 1,354,328.38 507,873.14 846,455.24 Offices Via D'Annunzio 83-89-93-103 Genova 941 31,864.42 14,414.86 46,279.28 40,297.11 5,982.17 Offices Via D'Annunzio 83-89-93-103 Genova " 707,966.33 2,620,859.70 3,328,826.03 2,287,378.66 1,041,447.37 Offices Piazza Faralli 36/38 rr. Genova 854 1,712,726.36 1,375,927.44 3,088,653.80 1,759,056.17 1,329,597.63 Cellar Via Corsica 3 Genova 9 154.94 1,588.66 1,743.60 181.09 1,562.51 Offices Via D'Annunzio Lotto D Genova 300 173,563.29 80,112.15 253,675.44 81,126.52 172,548.92 Offices Via D'Annunzio 41 Genova 3600 1,897,720.78 6,104,452.63 8,002,173.41 4,119,472.05 3,882,701.36 Offices Via D'Annunzio 27 (81) Genova 6 11,155.47 - 11,155.47 1,338.65 9,816.82 Ex brunch Via Mazzini 30 A Fidenza 300 547,502.24 - 547,502.24 82,125.34 465,376.90
Total (a) 13,322,905.28 22,323,037.68 35,645,942.96 14,378,881.49 21,267,061.47
b) Reserve for termination indemnities
Flat Via XXV Aprile 4/7 Genova 145 21,162.4 5 145,955.47 167,117.92 12,029.87 155,088.05 Flat Via XXV Aprile 4/8 Genova 70 15,620.6 7 52,885.54 68,506.21 8,056.89 60,449.32 Flat Via XXV Aprile 4/9 Genova 120 22,790.3 3 97,988.91 120,779.24 12,067.34 108,711.90 Flat Via XXV Aprile 4/12 Genova 120 23,670.51 107,514.88 131,185.39 12,619.52 118,565.87 Flat Via XXV Aprile 6/6 amm.to Genova 40 256.16 25,566.69 25,822.85 - 25,822.85 Warehouse Vico Monte di Pietà 3/5/7 rr. Genova 180 12,137.76 118,038.52 130,176.28 7,414.62 122,761.66 Shop Sottopassaggio Via XXV Aprile 2 Genova 40 - 20,658.28 20,658.28 309.87 20,348.41 Shop Via Antica Accademia 1 r. Genova 35 - 36,151.98 36,151.98 542.28 35,609.70 Shop Via Antica Accademia 3 r. Genova 35 - 41,316.55 41,316.55 619.75 40,696.80 Shop Via Antica Accademia 5 r. Genova 40 - 51,645.69 51,645.69 774.69 50,871.00 Shop Piazza S. Matteo 6 A - 6 B (piani terreno e ammGenova 220 21,076.4 7 290,641.87 311,718.34 13,738.66 297,979.68 Offices Piazza S. Matteo 15/3 - 4 Genova 400 20,389.08 291,269.10 311,658.18 13,442.17 298,216.01 Shop Vico S. Matteo 13 r. - Piazzetta Tavarone 15 r. Genova 35 6,827.83 71,238.14 78,065.97 4,106.96 73,959.01 Shop Vico dell'Isola 4 r. Genova 35 6,900.44 40,184.47 47,084.91 3,673.47 43,411.44 Shop Vico dell'Isola 6 r. Genova 35 5,690.26 10,301.35 15,991.61 2,686.69 13,304.92 Flat Via Luccoli 17/3 Genova 70 4,308.37 47,714.30 52,022.67 2,719.10 49,303.57 Flat Via Luccoli 17/6 Genova 85 28,456.78 25,678.88 54,135.66 13,617.57 40,518.09 Flat Via Luccoli 17/9 Genova 90 5,764.53 25,222.89 30,987.42 3,058.85 27,928.57 Flat Via Luccoli 17/9 A Genova 90 6,914.96 24,072.46 30,987.42 3,576.55 27,410.87 Flat Via Luccoli 17/10 A-B-C Genova 120 13,999.56 39,980.55 53,980.11 7,109.51 46,870.60 Flat Via Luccoli 17/11 A Genova 36 3,716.59 17,266.89 20,983.48 1,987.22 18,996.26 Flat Via Luccoli 17/12 Genova 120 8,265.59 54,432.48 62,698.07 4,659.99 58,038.08 Flat Via Luccoli 17/13 Genova 45 2,478.61 18,396.50 20,875.11 1,428.51 19,446.60 Flat Via Luccoli 17/14 A Genova 50 28,426.8 2 5,047.94 33,474.76 13,294.18 20,180.58 Shop Via Cassa di Risparmio 14 Genova 20 5,284.60 36,494.35 41,778.95 3,004.75 38,774.20 Flat Via Davide Chiossone 7/2 Genova 100 12,394.9 7 40,335.28 52,730.25 6,368.69 46,361.56 Flat + Shop Via Davide Chiossone 8/1 e 26 r. Genova 115 7,659.03 111,796.23 119,455.26 5,238.39 114,216.87 Flat Via Davide Chiossone 8/2 Genova 60 1,895.40 18,928.66 20,824.06 1,165.22 19,658.84 Offices Via G. D'Annunzio Lotto "I" (quota 24,50) Genova 210 427,170.8 0 38,865.87 466,036.67 199,217.40 266,819.27 Flat Sal. Montagnola della Marina 3 - 1° piano sot. Genova 1220 88,526.4 0 17,346.47 105,872.87 41,424.97 64,447.90 Flat Sal. Montagnola della Marina 3 - 2° piano sot. Genova " 88,526.40 17,346.47 105,872.87 41,424.97 64,447.90 Flat Sal. Montagnola della Marina 3 - piano terrenoGenova " 115,968.91 23,292.60 139,261.51 54,274.94 84,986.57 Flat Sal. Montagnola della Marina 3 - 1° piano Genova " 115,968.91 23,292.60 139,261.51 54,274.94 84,986.57 Flat Sal. Montagnola della Marina 3 - 2° piano Genova " 126,511.54 24,001.59 150,513.13 59,187.90 91,325.23 Flat Sal. Montagnola della Marina 3 - 3° piano Genova " 115,968.91 23,292.60 139,261.51 54,274.94 84,986.57 Flat Sal. Montagnola della Marina 3 - 4° piano Genova " 126,511.54 24,001.59 150,513.13 59,187.90 91,325.23 Flat Sal. Montagnola della Marina 3 - 5° piano Genova " 115,968.91 23,292.60 139,261.51 54,274.94 84,986.57 Flat Sal. Montagnola della Marina 3 - 6° piano Genova " 126,511.54 24,001.59 150,513.13 59,187.90 91,325.23 Flat Via G. Jori 22/2 Genova 80 676.04 50,969.65 51,645.69 - 51,645.69 Flat Via S. D'Acquisto 1/1 Genova 100 1,113.93 60,860.89 61,974.82 - 61,974.82 Shop Via XXV Aprile 2 B S. Margherita L. 120 952.60 231,453.00 232,405.60 3,486.08 228,919.52 Shop Via Roma 1 Busalla 230 3,042.45 121,173.42 124,215.87 2,441.31 121,774.56 Garage Via Molinetto 7 (parte - mq. 15) Torriglia 15 386.33 15,141.18 15,527.51 406.76 15,120.75 Flat Via Sauli Pallavicini 27/4 Arenzano 118 537.76 164,728.45 165,266.21 - 165,266.21 Cellar Via Sauli Pallavicini 25 Arenzano 5 54.78 1,233.97 1,288.75 74.11 1,214.64 Shop Piazza Camillo Golgi 19 D Arenzano 95 131,696.51 53,027.21 184,723.72 65,985.19 118,738.53 Flat Piazza Schiaffino 11 Camogli 65 76.82 61,898.00 61,974.82 - 61,974.82 Warehouse Piazza Schiaffino 6 - 2° piano interrato Camogli 150 153.65 51,492.04 51,645.69 774.69 50,871.00 Flat Via Mandelli 29/1 Casella 106 4,119.33 39,779.51 43,898.84 - 43,898.84 Flat Via Mandelli 29/2 Casella 121 4,739.49 46,906.20 51,645.69 - 51,645.69 Shop Via Medicina 102 Serra Riccò 72 2,389.53 64,958.95 67,348.48 1,535.93 65,812.55
189 Location Area m2 Cost price Revaluation Revaluated Depreciation Balance cost fund at sheet value (1) 31/12/04 at 31/12/04
Shop Piazza La Scafa - Residence al Porto Lavagna 620 903,476.79 133,262.92 1,036,739.71 476,324.51 560,415.20 Flat Piazza Unità Nazionale 19/9 sc. A Imperia 175 10,329.14 103,291.38 113,620.52 - 113,620.52 Cellar Via Berio 10 Imperia 6 1,032.91 2,228.51 3,261.42 1,081.83 2,179.59 Shop Via Eula 31 A/29 Pieve di Teco 170 7,481.99 65,476.65 72,958.64 4,461.27 68,497.37 Flat Via Blengino 12/1 Arma di Taggia 132 3,843.13 68,460.84 72,303.97 - 72,303.97 Flat Piazzetta Pattari 5/7 4° piano Milano 350 823,025.71 488,485.59 1,311,511.30 390,034.24 921,477.06 Flat Piazzetta Pattari 5/7 5° piano Milano 220 537,941.51 283,813.72 821,755.23 254,400.02 567,355.21 Shop Corso Italia 55 F. Ronco Scrivia 169 10,252.70 168,918.50 179,171.20 12,940.27 166,230.93 Offices leased to Levante Centro Agorà - Corso Borsalino 46 Alessandria 55 95,942.86 - 95,942.86 44,853.29 51,089.57 S.G.R. S.p.a. Via Pisa 58 Genova 1185 561,638.60 1,319,756.75 1,881,395.35 - 1,881,395.35 Upgrading " " 247,533.70 - 247,533.70 - 247,533.70
Total (b) 5,086,159.89 5,702,776.16 10,788,936.05 2,094,841.61 8,694,094.44 c) Other premises
Flat Via Blengino 12/2 Arma di Taggia 70 5,124.1 7 62,015.23 67,139.40 - 67,139.40 Flat Corso Gastaldi 9/12 Genova 91 36,151.98 67,139.40 103,291.38 - 103,291.38 Via Bissolati 57-59 Roma 22,200,000.00 - 22,200,000.00 27,750.00 22,172,250.00 Flat Via Lorano 5A/B Castellarano 725 185,924.48 - 185,924.48 - 185,924.48 Flat Via Oratorio 7/6 Rossiglione 79 60,500.00 - 60,500.00 - 60,500.00 Flat Via Ciappin 109 p.t. Ventimiglia 415 131,987.68 - 131,987.68 - 131,987.68 Flat Via Ciappin 109 1° piano Ventimiglia 54,347.87 - 54,347.87 - 54,347.87 Building Località Prau primo Perinaldo 152,431.70 - 152,431.70 - 152,431.70
Total (c) 22,826,467.88 129,154.63 22,955,622.51 27,750.00 22,927,872.51
Total (a+b+c) 41,235,533.05 28,154,968.47 69,390,501.52 16,501,473.10 52,889,028.42
TOTAL PROPERTIES 171,912,210.71 186,180,170.61 358,092,381.32 100,389,742.94 257,702,638.38
(1) Revaluation Laws 576/75 - 72/83 - 218/90 - 413/91
190 LEASED FIXED ASSETS REVALUED IN ACCORDANCE WITH LAW 413/91
(Euro) REVALUATION LAW 413/91
Via Puggia 43,45,47 r. Genoa 22,341.92 Loc. Anderlino fraz. Avenza Carrara 24,346.75 Total 46,688.67
191 CONVERTIBLE BONDS
(Euro) Balance at 31/12/2003
Code Description Nominal Cost Book Value Price Value
356303 CARIGE 1,5 CV 107,927.50 106.230 114,651.26 305691 OLIVETTI 1,5 04 4,499,996.80 105.19 4,733,350.97
Total 4,607,924.30 - 4,848,002.23
192 Variations Balance at 31/12/2004
Nominal Countervalue Gains/losses Revaluations/ Nominal Cost Book Value writebacks Value Price Value
403,500.00 412,900.38 72,655.45 - 7,714.75 511,427.50 115.85 592,492.34 - 4,499,996.80 - 4,728,265.92 - 5,085.05 - - - -
-4,096,496.80 -4,315,365.54 67,570.40 -7,714.75 511,427.50 592,492.34
193 LIST OF NON SIGNIFICANT INVESTMENTS
Denomination Head Office Currency Capital Stock Number of our Number of our % our Nominal value of Book value quotas or shares quotas or shares shareholding our quotas or at 31/12/04 in which Capital shares stock is divided (Euro)
AUTOSTRADA DEI FIORI SpA Savona Euro 40,000,000.00 40,000,000 6,648,000 16.620 6,648,000.00 6,184,470.87 W.T.C. GENOVA SpA Genoa Euro 3,660,874.21 101,213 15,453 15.268 558,935.01 497,398.20 SOC. ZONA FRANCA GENOVA Srl Genoa Euro 71,872.00 71,872 10,958 15.247 10,958.00 12,251.98 SVILUPPO GENOVA SpA Genoa Euro 5,164,500.00 10,000 1,500 15.000 774,675.00 774,685.35 SVILUPPO DELLE VALLI DEL PONENTE SRL Taggia (IM) Euro 19,500.00 19,500 2,925 15.000 2,925.00 2,948.24 ILI - Infrastrutture lavori Italia Spa Genova Euro 5,000,000.00 5,000,000 750,000 15.000 750,000.00 750,000.00 AREA 24 Spa Sanremo Euro 500,000.00 5,000 700 14.000 70,000.00 70,000.00 LIGURCAPITAL SpA Genoa Euro 5,681,060.00 11,000 1,182 10.745 610,455.72 611,670.24 F.I.L.S.E. SpA Genoa Euro 22,612,332.60 43,485,255 4,392,736 10.102 2,284,222.72 2,445,614.53 C.I.V. SpA Milan Euro 10,000,000.00 10,000,000 500,000 5.000 500,000.00 440,871.10 CENTRO SIM SpA Milan 20,000,040.00 333,334 33,330 9.999 1,999,800.00 1,999,800.00 GAL AREE RURALI DELLA PROVINCIA DELLA SPEZIA Scrl (1) Beverino (SP) Euro 142,917.18 14,290,718 1,243,403 8.701 12,434.03 10,329.14 FINLIGURE SpA - fallita Genoa Lit. 8,553,342,765 2,728,339 153,600 5.630 481,536,000 0.01 Agenzia Regionale per il Recupero Edilizio SpA Genoa Euro 520,000.00 1,000,000 51,276 5.128 26,663.52 26,481.84 IAM PIAGGIO SpA - in liquidazione Genoa Lit. 200,533,520 911,516 43,034 4.721 9,467,480 0.01 LUCCA POLO FIERE & TECNOLOGIA SpA Lucca Euro 1,460,000.00 1,460,000 66,138 4.530 66,138.00 314,780.48 COOP. ART. PROV. GE Scrl (1) Genoa Euro 643,836.00 6,233 250 4.011 25,823.68 25,822.84 SVILUPPO ITALIA LIGURIA Scpa Genoa Euro 5,442,455.48 10,538 320 3.037 165,267.20 164,773.66 BANCA D'ITALIA Rome Euro 156,000.00 300,000 11,869 3.956 6,171.88 490,386.15 APPENNINO GENOVESE SRL Borzonasca (GE) Euro 90,000.00 90,000 3,120 3.467 3,120.00 3,098.74 SOC. REG. PER L'INTERNAZIONALIZZAZIONE Genoa Euro 500,000.00 5,000 150 3.000 15,000.00 15,000.00 IMPIANTI Srl in liquidazione Vimodrone (MI) Euro 92,952.00 180,000 5,191 2.884 2,681 0.01
(1) Investment Company with Variable Capital (ICVC) with share quota of varying nominal values. A hypothetical unitary value of 0.01 euros was used in the calculation of the share capital quota and the number of quotas in our possession.
194 Denomination Head Office Currency Capital Stock Number of our Number of our % our Nominal value of Book value quotas or shares quotas or shares shareholding our quotas or at 31/12/04 in which Capital shares stock is divided (Euro)
CENTRO FACTORING SpA Florence Euro 25,200,000.00 6,300,000 175,000 2.778 700,000.00 641,258.90 SI HOLDING SpA Milan Euro 27,000,000.00 45,000,000 945,496 2.101 567,297.60 483,386.88 CENTRO LEASING SpA Firenze Euro 100,093,642.00 31,279,263 502,359 1.606 1,607,548.81 1,379,357.46 FIDIMPRESA LIGURIA Scrlpa Genoa Euro 3,283,302.84 636,299 10,008 1.573 51,641.28 25,822.84 Società per i Servizi Bancari SpA Milan Euro 10,763,984.27 82,799,879 835,379 1.009 108,599.27 61,164.48 CENTRALE DEI BILANCI Srl Turin Euro 30,000,000.00 30,000,000 250,000 0.833 250,000.00 378,486.19 SITEBA - Sistema Telematici Bancari SpA Rome Euro 2,600,000.00 5,000,000 33,091 0.662 17,207.32 17,090.08 EUROSIM Società di Intermediazione Mobiliare SpA - in liquidazione Rome Euro 2,220,000.00 1,000,000 3,210 0.321 7,126 0.01 Istituto per l'Enciclopedia della Banca e della Borsa SpA Rome Euro 502,116.30 323,946 756 0.233 1,171.80 1,634.62 T.M.E. Tecnomeccanica Ecologia SpA La Spezia Euro 25,810,538.00 499,720 708 0.142 36,568.20 72,594.36 BORSA ITALIANA Spa Milan Euro 8,438,179.36 16,227,268 14,448 0.089 7,512.96 850,461.29 S.I.A. - Cedborsa SpA Milan Euro 18,123,684.00 34,853,238 18,167 0.052 9,446.84 10,300.44 EUROTUNNEL (2) Paris/Folkestone Euro 344,702,526.06 2,084,247,832 734,290 0.035 121,440.27 723,305.67 S.W.I.F.T. Bruxelles Euro 10,794,000.00 86,352 16 0.019 2,000.00 9,827.27 MASTERCARD INCORPORATED New York USD 1,000,000.00 100,000,000 1,242 0.001 12.42 13,322.34 ELSAG BANKLAB SpA Genoa Euro 2,208,000.00 13,800,000 62 0.000 9.92 5,183.11 CONSORZIO IDROENERGIA Scrl Chatillon Euro 774,000.00 1,500 1 0.067 516.00 774.23 ASSOCAAF SpA Milan Euro 156,000.00 300,000 1 0.000 0.52 0.52 VISA EUROPE LIMITED London Euro - - 1 0.000 10.00 10.00
(2) The stock capital is made up of 2,084,247,832 units made up of one ordinary share of Eurotunnel Plc (0.01 GBP) and one ordinary share of Eurotunnel SA (0.15 euros). The stock capital value is in euros, using the exchange rates at 31/12/2001 for the part in GBP.
195 INFORMATION ON SUBSIDIARIES AND OTHER SIGNIFICANT COMPANY INTERESTS
Columbus Immobiliare Galeazzo Srl Carige Ettore Centro Carige Carige Immobiliare SpA Vernazza SpA Fiduciario SpA Assicurazioni Vita Nuova SpA (thousands of Euros) SpA BALANCE SHEET (1) (1) (1) (1) (1) (1) ASSETS Loans to bank 2,872 - 2 731 47,936 9,659 Other loans (2) - - - 140 215,926 708,848 Securities - - 2,324 (4) 968 463,066 (7) 527,658 Equity investments 5 1 - - 2,208 1,322 Tangible and intangible fixed assets 1,025 44,414 5,454 30 200,110 86,650 Other assets 169 3,694 675 111 222,935 9,276 Total assets 4,071 48,109 8,455 1,980 1,152,181 1,343,413 LIABILITIES AND STOCKHOLDERS' EQUITY Amounts owed to banks - 11,118 733 416 2 - Other payables (3) - - 957 161 737,123 1,292,712 Other liabilities 167 563 1,581 409 239,245 (5) 737 Stockholders' equity 3,904 36,428 5,184 994 175,811 49,964 Total liabilities and stockholders' equity 4,071 48,109 8,455 1,980 1,152,181 1,343,413 INCOME STATEMENT Profit (loss) on ordinary activities 95 408 1,706 257 9,763 6,124 Extraordinary profit (loss) - 7 251 - 1 1 - 1,261 316 Changes of reserves for general bank ------Taxation 32 327 698 116 5,447 2,427 Profit (loss) for the financial year 56 332 1,007 142 3,055 4,013
Net equity includes credit risk and general banking risk funds, and does not include dividends deliberated (recorded at item ‘other debts’).
(1) Financial statements as of 31/12/04 prepared by directors. (2) With reference to insurance companies, item includes reserves of reinsurers and retrocessionaries. (3) With reference to insurance companies, item includes actuarial, premium and damage reserves. (4) Own shares: Immobliare Ettore Vernazza 2,324 thousand euros. (5) Includes subordinated liabilities of 48,500 thousand euros. (6) Includes shareholders’ provisions for losses recorded during the year. (7) Of which own shares 3,400 thousand euros. (8) Financial statements as of 31/12/03 prepared by directors.
196 Banca del Monte Bankenunion Cassa di Cassa di Banca Carige Asset Argo Finance Priamar Consorzio per di Lucca SpA Frankfurt Am Main Risparmio di Risparmio di C.Ponti Management One srl Finance srl Giurista di Impresa Aktiengesellschaft Savona Carrara s.g.r.p.a. (1) (8) (1) (1) (1) (1) (1) (1) (8)
27,203 175,413 97,330 273,062 42,508 4,095 11 10 33 429,964 234,244 730,685 749,420 164,250 - - - - 91,919 128,208 408,594 152,779 41,668 4,459 - - - 480 69 5,982 2,157 1,942 - - - - 10,640 318 16,370 12,682 8,963 236 1 2 - 26,942 99 83,934 61,350 8,565 2,463 22 24 12 (6) 587,148 538,351 1,342,895 1,251,450 267,896 11,253 34 36 45
63,627 496,151 13,709 233,282 2,693 4,867 - - - 462,279 19,064 1,086,511 841,223 240,011 274 - - - 34,265 483 89,617 92,924 5,365 406 24 26 30 26,977 22,653 153,058 84,021 19,827 5,706 10 10 15 (6) 587,148 538,351 1,342,895 1,251,450 267,896 11,253 34 36 45
6,515 330 17,607 12,940 - 1,851 534 - - - 31 405 - 1,796 - 144 70 ------8,391 - 350 - - - - 2,650 1 5,900 6,062 - 816 211 - - - 4,270 329 13,503 15,125 - 615 323 - - - 31
197 Autostrada Assi 90 AG Assimilano Savona 2000 dei Fiori srl srl srl srl (thousands of Euros) BALANCE SHEET (1) (1) (1) (4) (1) ASSETS Loans to bank 347 1,595 395 1,318 185 Other loans (2) 10,687 323 207 485 43 Securities - - - 41 - Equity investments 7,024 1,582 8 2 - Tangible and intangible fixed assets 622,613 127 357 414 72 Other assets 158,071 2,641 280 2,556 20 Total assets 798,742 6,268 1,247 4,816 320 LIABILITIES AND STOCKHOLDERS' EQUITY Amounts owed to banks 114,411 - 83 - - Other payables (3) 342,887 5,333 692 2,142 3 Other liabilities 98,435 472 424 2,611 246 Stockholders' equity 243,009 463 48 63 71 Total liabilities and stockholders' equity 798,742 6,268 1,247 4,816 320 INCOME STATEMENT Profit (loss) on ordinary activities 49,976 2,051 90 3 10 Extraordinary profit (loss) 920 - 3 - 18 - 17 1 Changes of reserves for general bank - - - - - Taxation 19,931 755 45 30 9 Profit (loss) for the financial year 30,965 1,293 27 - 44 2
The shareholders'equity includes reserves for loan losses and for general banking risks, and it is net of deliberated dividends (included into caption "Other liabilities").
(1) Financial statements as of 31/12/04 prepared by directors. (2) With reference to insurance companies, item includes reserves of reinsurers and retrocessionaries. (3) With reference to insurance companies, item includes actuarial, premium and damage reserves. (4) Financial statements as of 31/12/03 prepared by directors.
198 BDA Recina Servizi Assistars Fideass srl U.C. Sport e Atoma Immobiliare SpA srl srl (ex Didiass srl) Sicurezza srl srl Carisa srl
(4) (4) (4) (4) (4) (4) (1)
263 3,518 142 - 188 - - 483 51 103 - 1,410 - 63 ------115 - - - - - 287 746 7 20 3 13 4,381 321 3,309 260 237 29 136 15 1,354 7,739 512 257 1,630 149 4,459
- 47 - - - - 2,626 1,064 2,331 365 5 1,295 - - 232 4,482 96 206 322 105 43 58879514613441,790 1,354 7,739 512 257 1,630 149 4,459
- 279 1,657 - 14 23 18 66 3 - 78 - 55 33 4 2 - - 15 ------11 705 18 6 18 32 4 - 368 897 1 21 2 34 - 16
199 INFORMATION ON OPEN PENSION FUND
“FONDO PENSIONE APERTO CARIGE”
"Asset defence" investment "Contribution paid development" "Long term asset revaluation" investment investment
BALANCE SHEET - ACCUMULATION OF CAPITAL 31/12/2004 31/12/2003 31/12/2004 31/12/2003 31/12/2004 31/12/2003 10 - Investments 15,976,933 9,103,731 21,460,338 13,362,809 26,800,074 18,328,547 10 a) - Investments - banking deposits 81,986 478,834 1,856,743 599,538 1,862,945 700,915 10 h) - Investments - mutual funds and unit trusts 15,882,822 8,617,156 19,584,159 12,748,626 24,906,739 17,604,002 10 l) - Investments - accrued income and prepaid expenses ------10 n) - Financial trust management: other assets 12,125 7,741 19,436 14,645 30,390 23,630 30 - TAX CREDIT 1,118 - 68,619 48,807 251,722 219,363 10 - Pension and health trust management: liabilities - -3,989 - - - - 10 a) - Pension and health trust management: amounts owed - -3,989 - - - - 30 - Financial management liabilities -10,385 -5,723 -20,839 -12,764 -34,923 -23,809 30 c) - Accruals and payables liabilities ------30 d) - Financial trust management: other liabilities -10,385 -5,723 -20,839 -12,764 -34,923 -23,809 40 - Tax liabilities - -189 - - - - 100 - Net asset for benefit 15,967,666 9,093,830 21,508,118 13,398,852 27,016,873 18,524,101 Credit account (1) 1,202,483 1,261,000 1,281,549 1,517,472 1,233,215 1,555,053 INCOME STATEMENT - ACCUMULATION OF CAPITAL 10 - Settlement of social security contributions 6,581,426 4,825,601 7,390,676 6,593,389 7,408,026 6,983,755 10 a) - Social security contributions 6,255,729 4,860,316 7,479,758 6,828,033 7,622,414 7,186,678 10 b) - Advances -126,000 -24,670 -24,000 -69,000 - - 10 c) - Transfer and redemptions 457,888 5,660 -54,129 -155,976 -198,395 -185,463 10 e) - Distributions of capital - -10,719 - - - - 10 f) - Other contributions -6,191 -4,986 -10,953 -9,668 -15,993 -17,460 20 -Settlement of financial management 391,543 168,571 909,386 250,308 1,415,911 531,257 20 a) - Dividends and interests 10,551 13,904 16,778 20,530 20,870 21,976 20 b) - Profits (losses) from financial transactions, net 380,992 154,667 892,608 229,778 1,395,041 509,281 30 - Operating expenses -100,251 -53,693 -210,607 -120,918 -363,713 -235,461 30 a) - Management trust -100,181 -53,530 -209,299 -120,785 -363,854 -235,330 30 b) - Other expenses -70 -163 -1,308 -133 141 -131 50 - “Imposta sostitutiva” (Law 85/95) 1,118 - 797 19,811 12,677 32,548 24,213
Changes on net asset for benefits (10)+(20)+(30)+(50) 6,873,836 4,939,682 8,109,266 6,735,456 8,492,772 7,303,764
200 LIST OF EXCHANGE RATES USED IN CONVERTING FOREIGN CURRENCIES
CURRENCY 2004 2003 US dollar USD 1.36210 1.26300 British pound GBP 0.70505 0.70480 Danish krone DKK 7.43880 7.44500 Canadian dollar CAD 1.64160 1.62340 Japanese yen YPY 139.65000 135.05000 Swiss franc CHF 1.54290 1.55790 Norwegian krone NOK 8.23650 8.41410 Swedish krona SEK 9.02060 9.08000 Australian dollar AUD 1.74590 1.68020 South African rand ZAR 7.68970 8.32760 Hong Kong dollar HKD 10.58800 9.80490 Indian rupee INR 59.36000 56.90000 Tunisian dinar TND 1.63250 1.52330 Malaysian ringgit MYR 5.18820 4.75250 Moroccan dirham MAD 11.20970 11.06500 Singapore dollar SGD 2.22620 2.14500 United Arab Emirates dirham AED 4.99930 4.59340 Czech koruna CZK 30.46400 32.41000 Argentine peso ARS 4.05592 3.67300 Mexican peso MXN 15.22975 14.00500 Brazilian cruz BRL 3.62340 3.62000 Indonesian rupee IDR 112669.77500 10604.35000 Philippines peso PHP 76.55300 69.45000 Thaylandian bath THB 53.06445 49.59000 Hungaryan forint HUF 245.97000 262.50000 Polish zloty PLN 4.08450 4.70190 Venezuelan bolivar VEB 2615.45000 1998.54000 Israeli shekel ILS 5.88400 5.45500 Peruvian sol PEN 4.48210 4.33800 South Korean won KRW 1410.05000 1506.32000 New Zeland dollar NZD 1.88710 1.92440 Algerian dinar DZD 98.10265 89.90000 Sri Lanka rupee LKR 142.48850 120.48000 Qatar riyal QAR 4.96560 4.55200 Libyian dinar LYD 1.76852 1.67946 Honduras lempira HNL 25.43950 22.46600 Saudi Arabian riyal SAR 5.09469 4.67975 Chinese renbimby RBY 11.26410 10.34660 Uruguayan peso UYP 36.97560 35.67600 C.F.A. franc XAF 655.95700 655.95700 Mauritanian ouguiya MRO 345.91900 321.14700 Yemeni riyal YER 247.49700 222.44100 Jordanian dinar JOD 0.96452 0.88471 Bahrain dinar BHD 0.51490 0.47100 Iranian riyal IRR 11960.60000 10374.10000 Egyptian pound EGP 8.30165 7.70500 Kuwait dinar KWD 0.40038 0.36777 Iraqi dinar IQD 1987.54000 0.38862 Pakistan rupee PKR 81.03750 71.82310 C.F.A. franc (BCEAO) XOF 655.95700 655.95700 Maltese lira MTL 0.43460 0.43120 Namibian dollar NAD 7.70640 8.23330 Turkish lira TRL 1829000.00000 1752635.00000
201 CONSOLIDATED ACCOUNTS 2004
BANCA CARIGE GROUP
202 CONSOLIDATED FINANCIAL HIGHLIGHTS
Change % 31/12/04 30/9/04 31/12/03 31/12/02 04/03 04/03 03/02 pro forma pro forma BALANCE SHEET (1) Total assets 18,475.2 17,919.0 15,918.3 16,173.8 15,388.9 16.1 14.2 3.4
Funding 15,249.2 14,677.9 12,897.4 13,977.4 12,424.9 18.2 9.1 3.8 – Customer Deposits 13,749.3 13,054.8 11,373.9 12,433.9 10,558.2 20.9 10.6 7.7 – Amounts owed to customers 8,416.8 7,815.4 6,861.1 7,646.8 6,900.8 22.7 10.1 - 0.6 – Debts evidenced by certificates 5,332.5 5,239.4 4,512.8 4,787.1 3,657.4 18.2 11.4 23.4 – Deposits from Banks 979.3 1,105.0 1,006.0 1,022.6 1,466.4 - 2.7 - 4.2 - 31.4 – Funds managed on behalf of third parties 1.0 1.0 0.4 1.3 0.3 150.0 - 23.133.3 – Subordinated loans 519.6 517.1 517.1 519.6 400.0 0.5 - 29.3
Other Financial Intermediation Activities (OFIA) 16,616.0 15,615.7 14,316.9 15,594.1 13,929.9 16.1 6.6 2.8 – Assets Under Management 8,406.9 7,911.2 7,436.7 7,959.9 6,842.9 13.0 5.6 8.7 – Assets in Custody 8,209.1 7,704.5 6,880.2 7,634.2 7,087.0 19.3 7.5 - 2.9
Total Financial Intermediation Activities (TFIA) 30,365.3 28,670.5 25,690.8 28,028.0 24,488.1 18.2 8.3 4.9
Lending (2) (3) 16,204.0 15,571.0 13,737.6 14,985.1 13,210.9 18.0 8.1 4.0 – Loans to Customers (2) (3) 11,579.7 10,949.9 10,251.3 11,193.5 9,495.1 13.0 3.5 8.0 – Loans to Banks (2) 1,571.5 1,793.6 922.3 1,022.2 1,328.1 70.4 53.7 - 30.6 – Securities 3,052.8 2,827.5 2,564.0 2,769.4 2,387.7 19.1 10.2 7.4 – Investiment Securities 190.7 190.8 214.7 214.7 242.0 - 11.2 - 11.2 - 11.3 – Trading Securities 2,862.1 2,636.7 2,349.3 2,554.7 2,145.7 21.8 12.0 9.5
Shareholders’ Equity (4) 1,499.7 1,497.3 1,504.3 1,504.3 1,305.8 - 0.3 - 0.3 15.2 GROUP INSURANCE COMPANIES (1) Total premiums 715.2 506.2 670.7 670.7 676.2 6.6 6.6 - 0.8 Damages paid-out 410.3 286.5 403.5 403.5 430.3 1.7 1.7 - 6.2 INCOME STATEMENT (1) Operating Income 279.7 210.4 206.7 219.4 186.4 35.3 27.5 10.9 Income from Ordinary Activities 134.2 93.0 121.5 131.6 112.0 10.5 2.0 8.5 Income before Taxation 151.4 98.5 156.4 167.1 128.5 - 3.2 - 9.4 21.7 Net Income 100.9 61.7 84.7 84.7 66.2 19.1 19.1 28.1 RESOURCES (5) Number of branches 495 491 456 493 452 8.6 0.4 0.9 Number of employees 4,787 4,673 4,354 4,842 4,111 9.9 - 1.1 5.9 Insurance companies: - number of branches 405 407 416 416 443 - 2.6 - 2.6 - 6.1 - number of employees 378 384 377 377 402 0.3 0.3 - 6.2 FINANCIAL RATIOS Non interest income / Gross operating income 54.70% 53.36% 50.69% 49.67% 48.08% Operating costs / Gross operating income (6) 65.12% 63.94% 69.11% 69.43% 69.05% Income before Taxation / Shareholders’ Equity (4) 10.09% 6.58% 10.40% 11.11% 9.84%
ROE 6.73% 4.12% 5.63% 5.63% 5.07%
ROAE (7) 6.72% 4.11% 6.41% 6.41% 5.13% SOLVENCY RATIOS (8) Risk-Weighted Assets (RWA) 12,439.7 12,325.9 11,254.3 10,164.1 10.5 10.7 Tier 1% of RWA 7.38% 7.02% 8.61% 7.13% Total Capital % of RWA 9.64% (9) 9.43% 11.67% 9.01% (1) Millions of Euros. (2) Gross of allowance for credit risks. (3) Including leased fixed assets. (4) Including reserves for general banking risks. (5) Statistics at the end of period. (6) The gross operating income and the operating costs are net of redress provisions on lease assets (7) Net income on average shareholders’ equity (Return On Average Equity). (8) Ratios communicated to the Bank of Italy, excluding ratios at 30/9/2003. (9) 10.23% including the Tier III subordinate loan, authorized from the Bank of Italy on 18th february 2004
203 BASIS OF CONSOLIDATION
Fondazione Cassa di Risparmio di CNCE (1) WestLB (1) (2) El Monte (1) (3) Others (1) Genova e Imperia (1)
43.37% 11.02% 7.47% 2.31% 35.83%
BANCA CARIGE SpA
SUBSIDIARIES ASSOCIATED COMPANIES
BANKING ACTIVITIES . BANKING ACTIVITIES Banca del Monte di Lucca SpA (54.00%) Frankfurter Bankgesellschaft AG (47,50%)
Cassa di Risparmio di Savona SpA (95.90%)
Cassa di Risparmio di Carrara SpA (90.00%)
Banca Cesare Ponti SpA (51.09%)
FINANCIAL ACTIVITIES . INSURANCE ACTIVITIES Argo Finance One Srl (60.00%) Carige Assicurazioni SpA (7) (98.24%)
Priamar Finance Srl (60.00%) Carige Vita Nuova SpA (100.00%) 37.50%
Carige Asset Management SGR SpA (99.50%) 0.50% 22.50% INSTRUMENTAL ACTIVITIES . Assi90 Srl (6)
Galeazzo Srl (5) (100.00%) AG Srl (8) (100.00%) Columbus Carige Immobiliare SpA (99.98%) Savona 2000 Srl (8) (80.00%) Immobiliare Ettore Vernazza SpA (6) (90.00%)
Immobiliare Carisa Srl 100.00% TRUSTEE ACTIVITIES OTHER ACTIVITIES
Centro Fiduciario SpA (76.93%) 20.00% 4.00% Autostrada dei Fiori SpA (16,62%) Banca Carige's share holding is shown in brackets.
(1) Quota calculated on the basis of odinary shares only. (2) Direct holding of 4.989% and indirect holding of 2.480% via subsidiary WestLB (Italy) Finanziaria SpA. (3) Holding via Al’Andalus Foreign Investments s.l. (4) Percentage calculated on deliberated capital; Carige holds rights to vote on 58.75% of the capital. (5) The company has a 0.01% holding in Columbus Carige Immobiliare SpA. (6) The company holds 10.00% of its own shares. (7) The company holds 1.25% of its own shares. (8) Insurance instrumental companies (insurance agencies).
204 CONSOLIDATED BOARD OF DIRECTORS’ REPORT
205 losses recorded between 2000 and 2002, also had little effect on Europe’s ‘real’ economy. INTRODUCTION The dollar continued to lose ground against the euro throughout the year with a subsequent redistribution of purchasing power at world To the Shareholders of the Banca Carige Group level. companies, In the United States, the economy grew by 4.4 per cent in comparison to 3 per cent for These consolidated financial statements have 2003. This expansion was due to a marked been prepared in accordance with Legislative upturn in consumer demand and investment decree 87/92 in addition to the specific levels (both in housing and machinery) during requirements stated in the Bank of Italy’s ruling the second half of the year. On the foreign trade of 30/7/92 and subsequent modifications with front, imports and exports were both vibrant: regards to the accounting procedures to be imports were boosted by domestic demand, followed in the preparation of consolidated whilst exports were helped by strong demand banking statements. from Asia and a weak dollar. Inflation for the The Bank has taken advantage of paragraph 2, year was 2.7 per cent; unemployment dropped article 82 of Consob’s ruling 11991 of 14/5/99 significantly from 6 per cent in 2003 to 5.5 per and the exemption contained therein with cent. regards to the publication of fourth quarter The European Monetary Union (EMU) statements on the condition that these derived some benefit from the overall world consolidated annual statements are made public context, but growth continued to be weaker in no later than 90 days after the close of the comparison to other economies and the accounting period. situation worsened during 2004 with a marked This report includes the consolidated statements drop in the area’s GDP from 2.5 to around 2 at 31/12/04, 30/9/04, 31/12/03 and per cent. Principal results for the eurozone 31/12/02 of the Banca Carige Group. As a include modest rises in private consumption of 1 result of the incorporation into the Group of per cent, gross fixed investments of 2.2 per cent Banca Cesare Ponti and Cassa di Risparmio di and a worsening of the trade deficit. Inflation Carrara, the following pro forma statements at was at around 2.1 per cent, similar to the 31st December 2004 have been prepared: pro previous year’s figure. There was also little forma balance sheet statements for both change in average unemployment for the twelve subsidiaries; pro forma profit and loss account euro-member countries: 8.9 per cent. for Cassa di Risparmio di Carrara. In Italy after a weak first six months there was an improvement in the second half of the year which helped to produce an annual rise in GDP of around 1.1 per cent, better than the figure THE YEAR IN ITALY AND ABROAD recorded for 2003 (+0.3 per cent). The result can be put down to a slight improvement in net export figures, but continuing stagnation in The world’s economy recorded strong economic domestic demand. Investment trends remained growth during 2004: GDP rose at around 5 per negative with actual falls in investments for cent in comparison to the previous year’s figure machinery and equipment. The building sector, of 3.9 per cent. however, recorded a positive result of +1 per This growth was powered, in particular, by cent. strong domestic demand present in the Inflationary pressure that accompanied the economies of Asia and Latin America. The US introduction of the euro abated during 2004, economy was in progressive expansion. Japan’s despite sharp rises in petrol prices. The retail economy saw contained growth. In Europe, price index for 2004 marked an average prospects for a sustained upturn became more increase in prices of 2 per cent in comparison to remote as the year went on despite generally the previous year’s figure of 2.5 per cent, with expansionist policies at monetary and fiscal the highest rises being found in energy prices. levels. Satisfactory performances by financial markets, which helped claw back some of the
206 On the basis of figures from Italy’s National Turning to monetary policy, the European Statistics Institute (ISTAT) for the year, Central Bank left rates unchanged during the employment rose by 0.4 per cent (2003: + 0.9 year. In particular, the discount rate for the per cent). The national unemployment rate eurozone stayed at 2 per cent. Consequently, dropped from 8 per cent in 2003 to 7.4 per there were no significant changes in money cent. The north/south divide, however, continues market rates and rises in Italian government to be a critical problem. stock were also limited as shown by Italian Turning to the question of the state’s finances, treasury bills (BOT), rises of which did not go PSBR at the end of the year was around 45 beyond ten basis points. billion, in line with budget forecasts. Capital On currency markets, the euro continued to rise account revenues made up for continuing against the US dollar although at a slower pace moderate growth in tax revenues. On the basis than in 2003. The average rate for the year was of initial estimates Italy’s deficit/GDP ratio for 1.244 (2003: 1.132), with an upturn towards 2004 will remain around the eurozone’s the end of the year (November : 1.300; required 3 per cent level; the country’s December: 1.341). debt/GDP improved slightly from 106.1 per cent in 2003 to 105.8 per cent for 2004. In Liguria, Banca Carige’s operating stronghold, there were some causes for KEY EVENTS FOR THE BANCA optimism. The region’s GDP grew at just over 1 CARIGE GROUP IN 2004 per cent, higher than the previous year. The rise is a result of positive trends in gross fixed investments. The strategic plan approved by the Board of The number of new businesses increased Directors of Banca Carige for 2005-07 although at a lower rate than the national develops the Carige Group’s established average. mission as a conglomerate equipped to offer There were rises in both orders (+6.9 per cent) banking, finance and insurance products and turnover (+2.6 per cent) for the region’s throughout Italy, whilst at the same time industry. Private consumption levels, however, maintaining strong ties with local operating held back both the industry and commerce areas. The Group also seeks to achieve sectors. More vibrant is the transport and competitive advantages in terms of service logistics sector. quality via the Group’s multi-channel distribution Liguria’s ports, though to differing extents, system, human resources and branch facilities. generally brought in satisfactory results. In more detail, the Carige Group intends to be: The property market in the region’s four • a conglomerate, in terms of the range provinces was lively, although less so than in of borrowing and lending services and recent years. products offered. It will continue to be Foreign trade saw falls in both imports (-3 per an aggregation point for other cent) and exports (-2.6 per cent). small/medium-sized banks with The worsening of the balance of trade was particular locational, structural and accompanied by continuing problems for organisational features; Ligurian tourism. The number of visitors to the • national, with its operating heartland region continued to fall (-4.6 per cent). The only in Liguria, but increasingly present bright spot was Genoa, which benefited from its throughout the country. The Group will role as European Culture Capital for 2004. seek to exploit the value present in each There was generally good news from the labour local context via a consolidated multi- market, which saw a 0.7 per cent increase in the local approach; number of those in work and a fall in the • focused on service quality and region’s unemployment rate from 7.3 to 4.3 per the development of integrated cent. multi-channel distribution, which The consumer price rise index for the city of in practical terms means: an operational Genoa recorded an annual rise of 1.7 per cent relation with our customers that is based in comparison to the previous year’s 2.4 per on trust and flexibility; particular cent.
207 attention to the retail market, with the application of Basel 2 principles and widest use of technologies; focus on critical operating risk areas. • committed to a constant With regards to principal events for the Banca evolution of resources and Carige Group during 2004, the parent organisational structures, which company Bance Carige completed the achieves: heightened specialisation acquisition of a further 55 per cent from across networks and productive Stitching Faro in Priamar Finace Srl, so bringing functions; unitary management of core its holding up to 60 per cent. Following this Group competencies and the transaction, Priamar was incorporated into the development of human resources Group. (continuing increases in efficiency and On 16th January 2004, in accordance with the professional skills). purchase agreement signed on 16th July 2003 In line with this mission, the Banca Carige and subsequent to regulatory authorisation, Group’s overarching strategic aim is to create Banca Carige acquired a 41.05 per cent of the long-term value for its shareholders and other share capital of the holding Carinord 2 SpA, via stakeholders. In order to achieve this, four which the Bank achieved control (90 per cent of enabling strategies have been identified: share capital) of Cassa di Risparmio di Carrara. increased operating capacity; increased On 21st April the break up of Carinord 2 was productivity and profitability; risk containment; finalised: Carige’s holding in Cassa di maximisation of the value of the Group assets. Risaparmio di Carrara was transferred to the These will be obtained through the newly-formed Carricarrara Holding SpA, a fully- implementation of the following measures: owned subsidiary of Banca Carige. • increases in amounts Consequently, Carinord 2 shares previously intermediated per employee with owned by Carige were annulled. On 2nd August, particular attention to performance the Board of Directors of Banca Carige and the grades for branches outside Liguria and shareholders’ meeting of Caricarrara Holding consolidation of our position in our approved the merger of the latter into Banca traditional operating stronghold; Carige. The merger deed granting Banca • increased profitability of single Carige a controlling stake in Cassa di Risparmio business areas, a significant di Carrara was signed on 1 September 2004 contribution to which was made by the and recorded at the Registry of Companies in Group’s manager trust Carige Asset Genoa on 7th September. Management SGR, in its first full year of On 18th October the Board of Directors of business; Banca Carige appointed the following elective • increased income generated by members to the Executive Committee: Prof. our subsidiaries thanks to the full Alberti, Mr Checconi, Mr Menconi, Mr Odone operational integration of the banks and Prof. Roppo. Permanent members of the acquired. During the year the integration Committee are Mr Berneschi and Mr Scajola, of Cassa di Risparmio di Carrara was respectively, Chairman and Deputy Chairman of completed via the centralising of the Banca Carige. subsidiary’s management, administration On 3rd November, following approval given by and accounting along with the purchase the Carige Board on 18th October, contracts of Banca Cesare Ponti; were exchanged for the purchase of Banca • improved operational efficiency Cesare Ponti. On 29th December, after Bank of via the overhaul of organisational Italy authorisation, Carige purchased 51.09 per structure and the identifying of four cent of the Milan bank’s share capital for a total macro areas of activity (governance and investment of 38.2 million. The shareholders’ control, distribution, administration and meeting of Banca Cesare Ponti called to support, production); deliberate the acquisition approved an increase • containment of the risk of in share capital from 12 to 13 million in economic impact via a review of addition to the drawing up of new articles of credit management processes, association and the renewal of the company’s boards of directors and statutory auditors.
208 Admission to trading of Carige’s 10-year Mr Marchini, Mr Menchini, Mr Vatteroni, Prof subordinated bond issue (“Banca Carige 1.50 Benelli, Mr Laviosa, Mr Sanguinetto. Mr per cent 2003-2013 hybrid subordinated issue Traverso was appointed Chairman of the Board with premium at maturity convertible into of Statutory Auditors, flanked as board members ordinary shares”) was followed on 16th by Mr Isoppi and Mr Vannucci and, in their November by the request for Consob absence, Mr Lattanzi and Mr Semeria. authorisation for the publication of the issue The Extraordinary Shareholders Meeting of prospectus. Banca Cesare Ponti appointed a new Board In the light of the request made by Carige Asset of Directors following the acquisition of the bank Management SGR in order to guarantee capital by Banca Carige. Mr Ponti is Chairman, Mr adequacy requirements, Banca Carige on 29th Berneschi is Deputy Chairman and Mr Ragaini is December, pursuant to the deliberation of its Managing Director; the following were Board of Directors of 13th December 2004, appointed as board members: Prof Alberici, Mr transferred to the subsidiary a capital account Binda, Mr Rinaldini, Mr Sanguinetto. The loan of 250,000 euros. Chairman of the bank’s Board of Statutory Internal growth (branch openings) continued Auditors is Mr Scotton; Mr Bonaduce and Mr during the year with two new branches in Farinella are board members, who, in their Piedmont (Gavi) and Latium (Viterbo). absence, will be substituted by Mr Farinella and Turning to the Group’s subsidiaries, on 16th Mr Traverso. April 2004, the General Meeting of Cassa di On 31st March the share capital increase of Risparmio di Savona SpA renewed its Carige Assicurazioni was completed. Banca Board of Statutory Auditors: Mr Rosina Carige subscribed the residual 18,948 shares (Chairman), Mr Semeria and Mr Pario (Board issued as part of the transaction for an Members) and, in the event of the their absence, investment of 22,263,900 euros. The insurance Mr Traverso and Mr Stognone. company’s new share capital is composed by The Bank of Italy authorised on 28th June the 140,400 shares with a nominal value of 982 merger of Ligure Leasing into Cassa di euros each. Following this equity raising Risparmio di Savona. The meetings of both operation, Banca Carige’s holding in the companies gave their approval on 25th October subsidiary rose to 91.932 per cent. On 14th and the merger deed was registered with the June, it increased its holding further by Registry of Companies in Savona on 2nd purchasing from La Basilese its residual November. investment in the company. On 22th April 2004 the shareholders of Banca The Extraordinary Shareholders’ Meeting of del Monte di Lucca SpA during their general Carige Assicurazioni held on 27th September meeting appointed a new Board of Directors: Mr deliberated a paid up share capital increase Dallari (Chairman), Mr Tori (Deputy Chairman), from 137,872,800 to 148,085,600 euros, Prof Benelli, Mr Buglioni, Mr Merella, Mr through the issue of 10,400 new ordinary shares Remuzzi (Board Members). The bank’s Board of with a nominal value of 982 euros and a share Statutory Auditors is chaired by Mr Rosina with premium of 193 euros to be offered in option to Mr Traverso as statutory board member and Mr shareholders. The meeting also approved the Lunardi as acting board member. issue of subordinated bonds totalling 2.5 On 23th November the Board of Directors co- million. On 30th December, following Bank of opted Mr Andrea Baldini as Board member, Italy authorisation, Banca Carige subscribed the replacing the outgoing Mr Remuzzi. entirety of both the share capital increase (total In June the bank opened two new branches in its investment: 12,220,000 euros) and the operating area of Tuscany. subordinated bond issue. Banca Carige now Following its acquisition by Banca Carige and owns 98.239 per cent of the insurance incorporation into the Carige Group, the company’s equity. meeting of Cassa di Risparmio di Carrara On 19th April Carige Assicurazioni’s general appointed a new Board of Directors; Mr meeting renewed its Board of Directors and Gaspari is Chairman, Mr Berneschi is Deputy Board of Statutory Auditors. Mr Menconi was Chairman and the bank’s new managing appointed Chairman of Carige Assicurazioni director is Mr Coppa. The following were with Mr Berneschi as his deputy. Other board elected to the Board: Mr Baldini, Mr Andreani, members are Mr Alberici, Mr Bozzano, Mr
209 Fresco, Mr Paganelli and Mr Poggio. The board Argo Mortgage 2 Srl, special purpose of statutory auditors is chaired by Mr Semeria; vehicle in the mortgage securitisation the other members are Mr Traverso and Mr transaction, was established on 20th April. The Strada. company’s share capital is 10,000 euros. The general meeting of the other insurance Carige’s 5 per cent holding is via the subsidiary company of the Group, Carige Vita Nuova, Columbus Carige Immobiliare; the remaining also renewed its Boards of Directors and 95 per cent is held by the Dutch-registered Statutory Auditors. On 19th April the following Stitching Faro. On 20th October the company’s appointments were made: Mr Berneschi ordinary meeting appointed its Board of (Chairman), Mr Scajola (Deputy Chairman), Mr Directors: Mr Picollo (Chairman), Ms Russo and Menconi (Managing Director), Mr Dadduzio, Mr Mr Tori (board members). The company’s Board Ferrero, Mr Mager, Mr Magnano (board of Statutory Auditors is chaired by Mr members); Mr Semeria (Chairman of the Board Costigliolo, with Mr Vignali and Ms Girabaldi as of Statutory Auditors), Mr Catalfamo and Mr board members. Traverso (Statutory Board members). The total number of banking staff of the On 14th June, in conformity with an agreement Banca Carige Group at 31/12/04 amounted to between the parties signed in 1997, Carige 4,787 employees, 29.2 per cent at head office acquired from La Basilese the remainder of the and 70.8 per cent located in the Group’s Swiss insurer’s holding in Carige Vita Nuova distribution network. At the same date, there SpA; as a result of the acquisition Carige has full were 378 insurance employees. ownership of the company. Details regarding the performance of Carige On 29th January, the Group’s manager trust shares are given in the Banca Carige Report company, Carige Asset Management SGR (‘Carige Shares’). received Bank of Italy authorisation to carry out business. The company’s extraordinary meeting held on 30th September approved attributing the Board of Directors the necessary powers to raise share INTERMEDIATION ACTIVITIES capital by up to 4,800,000 euros via cash payments on one or more occasions over a maximum of five years. Ordinary shares offered The Banca Carige Group’s total assets at 31st in option to shareholders will have a nominal December 2004 amounted to 18,475.2 million, value of 1 euro each. an increase of 16.1 per cent in comparison to On 28th September, Banca Carige entirely the previous year. subscribed the share capital increase carried out Total Financial Intermediation Activities by Columbus Carige Immobiliare totalling (TFIA) reached 30,365.3 million, up 18.2 per 11,000,385 euros. Banca Carige’s share in the cent over 2003. Of this total, 45.3 per cent is in company consequently rose to 99.986 per cent; the form of direct deposits (customer deposits), the remaining amount of capital is held by the whilst the remaining 54.7 per cent is represented Group subsidiary, Immobiliare Galeazzo. The by indirect deposits (other financial same meeting of 30th September approved intermediation activities). assigning Galeazzo’s sole administrator the right On the basis of the pro forma statements to raise share capital by a further 9,037,875 formed by adding figures for Cassa di Riparmio euros up to a maximum of 45,860,760 euros di Carrara and Banca Cesare Ponti at over a maximum of five years from the date of 31/12/03 to the Carige Group consolidated the meeting. New shares to be offered in option statements, the annual increase in total financial to shareholders shall not exceed 17,500 in intermediation activities drops to +8.3 per cent. number.
210 TOTAL FINANCIAL INTERMEDIATION ACTIVITIES (millions of Euros)
Consolidated Change % 31/12/04 30/9/04 31/12/03 31/12/02 04/03 04/03 03/02 pro forma pro forma Total (a+b) 30,365.3 28,670.5 25,690.8 28,028.1 24,488.1 18.2 8.3 4.9
Direct deposits (a) 13,749.3 13,054.8 11,373.9 12,433.9 10,558.2 20.9 10.6 7.7 % Total 45.3% 45.5% 44.3% 44.4% 43.1% Indirect deposits (OFIA) (b) 16,616.0 15,615.7 14,316.9 15,594.2 13,929.9 16.1 6.6 2.8 % Total 54.7% 54.5% 55.7% 55.6% 56.9% - Assets under management 8,406.9 7,911.2 7,436.7 7,959.9 6,842.9 13.0 5.6 8.7 % Total 27.7% 27.6% 28.9% 28.4% 27.9% % OFIA 50.6% 50.7% 51.9% 51.0% 49.1% - Assets in custody 8,209.1 7,704.5 6,880.2 7,634.2 7,087.0 19.3 7.5 -2.9 % Total 27.0% 26.9% 26.8% 27.2% 28.9% % OFIA 49.4% 49.3% 48.1% 49.0% 50.9%
Total deposits amounted to 15,249.2 million. On the basis of pro forma figures, this million, an increase of 18.2 per cent in increase falls to +9.1 per cent. comparison to 2003’s result of 12,897.4
FUNDING (millions of euros)
Consolidated Change % 31/12/04 30/9/04 31/12/03 31/12/02 04/03 04/03 03/02 pro forma pro forma Total (a+b+c+d) 15,249.2 14,677.9 12,897.4 13,977.4 12,424.9 18.2 9.1 3.8
Direct deposits (a) 13,749.3 13,054.8 11,374.0 12,433.9 10,558.2 20.9 10.6 7.7 -Amounts owed to customers 8,416.8 7,815.4 6,861.2 7,646.8 6,900.8 22.7 10.1 -0.6 current accounts 7,422.3 6,848.0 6,066.6 6,670.1 5,720.1 22.3 11.3 6.1 repurchase agreements 367.9 346.1 254.1 344.2 644.9 44.8 6.9 -60.6 saving deposits 615.1 611.0 534.6 626.6 531.1 15.1 -1.8 0.7 loans 1.7 1.7 - - 0.8 … … -100.0 other borrowings 9.8 8.6 5.9 5.9 3.9 66.1 66.1 51.3 -Debts evidenced by certificates 5,332.5 5,239.4 4,512.8 4,787.1 3,657.4 18.2 11.4 23.4 bond certificates 4,927.4 4,836.8 4,073.5 4,338.9 3,146.6 21.0 13.6 29.5 certificates of deposits 321.5 326.5 351.4 360.3 429.5 -8.5 -10.8 -18.2 outstanding cheques 83.6 76.1 88.0 88.0 81.3 -5.0 -5.0 8.2
-short term deposits 8,798.7 8,194.8 7,271.2 8,065.5 7,357.0 21.0 9.1 -1.2 % Total 64.0 62.8 63.9 64.9 69.7 -long term deposits 4,950.6 4,860.0 4,102.7 4,368.4 3,201.2 20.7 13.3 28.2 % Total 36.0 37.2 36.1 35.1 30.3 Amounts owed to credit institutions (b) 979.3 1,105.0 1,005.9 1,022.6 1,466.4 -2.6 -4.2 -31.4 Deposits 376.8 569.0 612.0 628.4 1,148.4 -38.4 -40.0 -46.7 Financing 372.9 367.5 374.0 374.0 274.1 -0.3 -0.3 36.4 Current accounts 12.9 12.0 19.9 20.2 43.7 -35.2 -36.1 -54.5 Repurchase agreements 216.7 156.5 - - - … … … Others - - - - 0.2 … … - 100.0
Funds managed on behalf of third parties (c) 1.0 1.0 0.4 1.3 0.3 150.0 - 23.1 33.3
Subordinated loans (d) 519.6 517.1 517.1 519.6 400.0 0.5 - 29.3
211 Direct deposits rose 20.9 per cent in By sector, direct deposits are distributed comparison to the total recorded at the end of amongst households (64.8 per cent of the total; 2003 to 13,749.3 million. There was a 5,452.4 million; 68,6 per cent and 4,706.4 generalised increase over most items with the million in 2003), and non financial firms and exception of certificates of deposit and own family businesses (19.4 per cent of the total; cheques in circulation. 1,636.3 million at 31/12/04; 18.7 per cent Short-term deposits rose 21 per cent to 8,798.7 and 1,282.6 million at 31/12/03). The share million, but in comparison to pro forma figures represented by financial enterprises rose the increase drops to +9.1 per cent. In greater significantly by 7.1 per cent to 596.9 million. detail, current accounts, the principal Amounts owed to banks fell 2.7 per cent component, rose by 22.3 per cent to 7,422.3 from 1,006 million to 979.3 million. million. Sales and repurchase agreements, after Funds managed on behalf of third a marked fall in 2003, recorded an upturn of parties remained marginal at 1 million. +44.8 per cent to 367.9 million. Medium/long- Subordinated loans amounted to 519.6 term borrowing rose 20.7 per cent to 4,950.6 million and are made up principally by a million. Within this aggregate, bonds rose 21 subordinated loan issued by the Group leader per cent to 4,927.4 million. Differences between for 502.1 million in addition to another 15 pro forma and non-pro forma results are less million in the form of a subordinated loan issued evident in this aggregate: medium/long-term by Banca del Monte di Lucca and 2.5 million by deposits rose 20.7 per cent over 2003, a pro- Banca Cesare Ponti. forma increase of 13.3 per cent.
DIRECT DEPOSITS (1) - DISTRIBUTION BY SECTOR (millions of euros)
31/12/04 31/12/03 31/12/02 %% %
Amounts owed to customers 8,416.8 6,861.1 6,900.8 Public Administration 374.2 4.4% 248.5 3.6% 193.0 2.8% Financial institutions 596.9 7.1% 281.0 4.1% 674.3 9.8% Non-financial institutions and personal businesses 1,636.3 19.4% 1,282.6 18.7% 1,219.1 17.7% Private social bodies 277.1 3.3% 252.2 3.7% 217.2 3.1% Families 5,452.4 64.8% 4,706.4 68.6% 4,505.9 65.3% Total residents 8,336.9 99.1% 6,770.7 98.7% 6,809.5 98.7% Rest of the world 79.9 0.9% 90.4 1.3% 91.3 1.3% Total 8,416.8 100.0% 6,861.1 100.0% 6,900.8 100.0%
Debts evidenced by certificates 5,332.5 4,512.8 3,657.4
TOTAL DIRECT DEPOSITS 13,749.3 11,373.9 10,558.2 (1) Captions 20 and 30 of Liabilities and Stockholders' equity.
With regards to the geographical distribution of regions is increasing: in particular, Latium in the the Group’s direct deposits, Liguria continues to centre of the country accounts for 5.8 per cent be the primary source of deposits (71.9 per of total Group deposits followed by Lombardy cent) and also absorbs the entirety of the Bank’s (5.2 per cent) and Tuscany (4.8 per cent) EMTN programme. However, the share of other
212 DIRECT DEPOSITS (1) - GEOGRAPHICAL DISTRIBUTION (millions of euros)
31/12/04 31/12/03 31/12/02 %%%
Liguria 9,898.7 71.9% 9,552.6 76.9% 8,207.7 77.7% Latium 792.2 5.8% 635.0 5.1% 490.4 4.6% Lombardy 718.5 5.2% 391.4 3.1% 345.7 3.3% Tuscany 655.8 4.8% 380.7 3.1% 291.7 2.8% Sicily 529.4 3.9% 485.0 3.9% 436.8 4.1% Piedmont 377.2 2.7% 333.2 2.7% 258.0 2.4% Emilia Romagna 229.3 1.7% 185.2 1.5% 176.8 1.7% Apulia 172.9 1.3% 152.3 1.2% 118.3 1.1% Sardinia 127.2 0.9% 95.1 0.8% 52.7 0.5% Veneto 124.2 0.9% 117.1 0.9% 87.2 0.8% Marches 65.6 0.5% 52.7 0.4% 47.9 0.5% Umbria 26.7 0.2% 19.9 0.2% 18.4 0.2% Total Italy 13,717.7 99.8% 12,400.2 99.8% 10,531.6 99.7% Abroad 31.6 0.2% 33.7 0.2% 26.6 0.3% Total 13,749.3 100.0% 12,433.9 100.0% 10,558.2 100.0%
(1) Balance Sheet (Liabilities) captions 20 and 30.
Indirect deposits (other financial over the counters of the Group’s banks recorded intermediation activities) rose 16.1 per cent to a 23.9 per cent rise to 926.2 million. In 16,616 million (pro forma increase: + 6.6 per particular, the Group’s life products increased cent). by 16.3 per cent to 844.6 million. Within the aggregate, wealth management There was an 10.5 per cent increase in life increased 13 per cent to 8,406.9 million, whilst premiums collected and 36.1 per cent rise in assets in custody totalled 8,209.1 million accident premiums. (+19.3 per cent). Assets in custody includes Italian government On the basis of pro forma figures, the increases securities, and other debt and capital securities. fall, respectively, to + 5.6 per cent and +7.5 The former recorded a rise of 13.8 per cent to per cent. 4,010.6 million, whilst other capital and debt Within asset management, mutual funds securities increased their share by 25.1 per cent rose by 12 per cent to 4.892.2 million and to 4,198.5 million. private banking increased by 11.6 per cent to 2,588.5 million. Bancassurance products sold
213 INDIRECT DEPOSITS (millions of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 04/03 04/03 03/02 pro forma pro forma Total (a+b) 16,616.0 15,615.7 14,316.9 15,594.2 13,929.9 16.1 6.6 2.8
Assets under management (a) 8,406.9 7,911.2 7,436.7 7,959.9 6,842.9 13.0 5.6 8.7 - Mutual funds and unit trusts 4,892.2 4,600.9 4,369.9 4,633.6 3,872.1 12.0 5.6 12.9 - Private banking 2,588.5 2,423.4 2,319.5 2,537.9 2,336.2 11.6 2.0 -0.7 including: Security management (1) 1,617.5 1,438.4 1,328.2 1,473.9 1,183.9 21.8 9.7 12.2 Mutual funds management 971.0 985.0 991.3 1,064.0 1,152.3 -2.0 -8.7 -14.0 - Bancassurance products 926.2 886.9 747.3 788.4 634.6 23.9 17.5 17.8
Assets in custody (b) 8,209.1 7,704.5 6,880.2 7,634.2 7,087.0 19.3 7.5 -2.9 - Government securities 4,010.6 4,079.4 3,524.3 3,789.2 4,137.4 13.8 5.8 -14.8 - Others 4,198.5 3,625.1 3,355.9 3,845.0 2,949.6 25.1 9.2 13.8 (1) The figure includes the entire securities portfolio of the insurance subsidiaries.
BANCASSURANCE (thousands of euros)
Var. % 31/12/04 31/12/03 31/12/02 2004 2003
Life branch 844,611 726,019 623,417 16.3 16.5
Total prizes 168,024 151,139 157,407 11.2 -4.0
Life 162,605 147,157 154,351 10.5 -4.7 - Carige Unit 44,550 10,307 44,080 332.2 -76.6 - Gestilink 25,887 28,609 31,704 -9.5 -9.8 - Gestilink Plus 174 259 2,522 -32.8 -89.7 - Risparmio assicurato 42,537 27,853 32,454 52.7 -14.2 - Carige Index 45,802 77,154 40,996 -40.6 88.2 - Vita assicurata 1,153 1,351 1,540 -14.7 -12.3 - Previdenza attiva 700 801 923 -12.6 -13.2 - Mutuo assicurato 1,802 823 132 119.0 523.5
A ccident 5,419 3,982 3,056 36.1 30.3 - Correntista sicuro 1,229 1,080 1,082 13.8 -0.2 - Auto assicurata 623 1,218 1,125 -48.9 8.3 - Auto risparmio 562 - - … … - Casa assicurata 412 386 407 6.7 -5.2 - C/c assicurato 134 167 179 -19.8 -6.7 - Famiglia Assicurata 687 546 263 25.8 107.6 - Mutuo 100% 1,772 585 - 202.9 …
214 INDIRECT DEPOSITS - DISTRIBUTION BY SECTOR (millions of euros)
31/12/04 31/12/03 31/12/02 %% %
Public Administration 250.7 1.5% 175.7 1.2% 151.3 1.1% Financial institutions 1,913.5 11.5% 1,562.3 10.9% 1,449.4 10.4% Non-financial institutions and personal businesses 800.3 4.8% 626.2 4.4% 581.0 4.2% Private social bodies 128.2 0.8% 110.1 0.8% 115.3 0.8% Families 13,257.8 79.8% 11,804.6 82.4% 11,610.2 83.3% Total residents 16,350.5 98.4% 14,278.9 99.7% 13,907.2 99.8% Rest of the world 265.5 1.6% 38.0 0.3% 22.7 0.2% Total 16,616.0 100.0% 14,316.9 100.0% 13,929.9 100.0%
Households account for 79.8 per cent of the purchases of Banca Cesare Ponti of Milan and aggregate total at 13,257.8 million, a share Cassa di Risaprmio di Carrara, Lombardy and that has, however, been falling since 2001. Tuscany’s share rose, the former from 2.8 to 6.6 Indirect deposits are concentrated in Liguria per cent and the latter from 2 to 5.6 per cent. (74.8 per cent) although, following the
INDIRECT DEPOSITS - GEOGRAPHICAL DISTRIBUTION (millions of euros)
31/12/04 31/12/03 31/12/02 %%%
Liguria 12,412.5 74.7% 11,731.3 82.0% 11,143.7 80.0% Lombardy 1,099.2 6.6% 407.3 2.8% 580.3 4.2% Tuscany 927.0 5.6% 286.3 2.0% 285.5 2.0% Latium 756.7 4.6% 554.7 3.9% 589.9 4.2% Piedmont 454.3 2.7% 407.7 2.8% 395.7 2.8% Sicily 374.1 2.3% 370.2 2.6% 365.6 2.6% Emilia Romagna 198.7 1.2% 180.9 1.3% 166.3 1.2% Veneto 110.4 0.7% 106.7 0.7% 115.0 0.8% Marches 103.8 0.6% 107.1 0.7% 121.4 0.9% Apulia 102.0 0.6% 94.7 0.7% 97.6 0.7% Sardinia 40.6 0.2% 30.4 0.2% 21.3 0.2% Umbria 29.5 0.2% 32.4 0.2% 40.0 0.3% Total Italy 16,608.8 100.0% 14,309.7 99.9% 13,922.3 99.9% Abroad 7.2 0.0% 7.2 0.1% 7.6 0.1% Total indirect deposits 16,616.0 100.0% 14,316.9 100.0% 13,929.9 100.0%
The Group’s total lending reached 16,006.2 million; +8.7 per cent). Parabanking credits million at the end of 2004, up 17.9 per cent in rose by 12.8 per cent to 887.9 million, comparison to the end of 2003. principally due to increased leasing activity Lending to customers amounted to (+16.1 per cent). There were rises also in the 11,579.7, an increase of 13 per cent; after portfolio (397.1 million; +25.6 per cent) and writedowns the aggregate totalled 11,380.2 other lending forms (371.9 million; +35.8 per million (+12.8 per cent). cent). In terms of product, there were significant Bad loans amounted to 494.5 million; the bad increases in current account advances (4,056.2 loans/lending ratio for the year was 4.3 per million; +12.5 per cent) and mortgages (5,356 cent.
215 Lending is concentrated amongst non financial finance and family businesses as far as lending and family businesses: 61.2 per cent of the is concerned is other retail services, which aggregate for a total of 7,080.6 million; this absorbs 14.1 per cent of the Group’s total loans sector is followed by households (22.9 per cent; (1,637.7 million). 2,652.7 million). The primary branch of non
LENDING (millions of euros)
Consolidated Change % 31/12/04 30/9/04 31/12/03 31/12/02 04/03 04/03 03/02 pro forma pro forma Total (a+b+c) 15,999.7 15,376.7 13,573.9 14,791.9 13,068.7 17.9 8.2 3.9
Loans to customers (a) 11,380.2 10,760.1 10,091.5 11,004.2 9,360.8 12.8 3.4 7.8 -Gross value (1) 11,579.7 10,949.9 10,251.3 11,193.5 9,495.1 13.0 3.4 8.0 . Current accounts 4,056.2 3,719.4 3,605.8 3,899.0 3,803.0 12.5 4.0 -5.2 . Discounted notes 397.1 409.1 316.1 454.8 341.0 25.6 -12.7 -7.3 . Mortgages 5,356.0 5,021.9 4,925.4 5,316.7 4,238.0 8.7 0.7 16.2 . Parabanking 887.9 820.6 787.1 787.1 726.4 12.8 12.8 8.4 - leasing 793.5 726.5 683.7 683.7 625.9 16.1 16.1 9.2 - factoring 90.1 89.9 99.2 99.2 96.2 -9.1 -9.1 3.1 - consumer credit loans 4.2 4.2 4.2 4.2 4.3 -0.3 -0.3 -2.3 . Loans backed by pledged assets 16.2 15.6 15.0 15.0 14.4 7.7 7.7 4.2 . Others 371.9 541.4 273.9 348.0 111.4 35.8 6.9 145.9
-short term loans 4,004.3 3,882.8 3,484.9 3,904.5 3,503.5 14.9 2.6 -0.5 -long term loans 7,080.8 6,645.1 6,438.5 6,916.1 5,730.7 10.0 2.4 12.4
. Bad loans 494.5 421.9 328.0 372.9 260.9 50.8 32.6 25.7
-Specific allowances for 199.5 189.8 159.8 189.3 134.3 24.9 5.4 19.0 loan losses Loans to banks (b) 1,566.8 1,789.1 918.4 1,018.3 1,320.2 70.6 53.9 -30.4 -Gross value 1,571.5 1,793.6 922.3 1,022.2 1,328.1 70.4 53.7 -30.6 . Compulsory reserves 179.5 125.8 114.3 124.5 163.1 57.0 44.2 -29.9 . Deposits 1,058.3 797.0 725.5 742.9 963.7 45.9 42.5 -24.7 . Current accounts 69.0 127.0 41.2 113.5 85.5 67.6 -39.2 -51.8 . Repurchase agreements 224.3 701.0 - - 19.4 … … -100.0 . Other loans 22.1 24.7 23.8 23.8 74.7 -7.2 -7.2 -68.1
. Bad loans 18.3 18.1 17.5 17.5 21.7 4.6 4.6 -19.4
-Specific allowances for loan losses ( 4.7 4.5 3.9 3.9 7.9 21.5 21.5 -50.6
Securities (c) 3,052.8 2,827.5 2,564.0 2,769.4 2,387.7 19.1 10.2 7.4 -Government securities 1,320.3 1,551.8 1,242.9 1,361.2 1,443.9 6.2 -3.0 -13.9 -Other securities 873.7 1,088.6 1,143.2 1,228.4 743.3 -23.6 -28.9 53.8 -Shares and equity securities 858.7 187.1 177.9 179.8 200.5 382.7 377.6 -11.3 (1) Including bad loans.
216 LOANS TO CUSTOMERS (1) - DISTRIBUTION BY SECTOR (millions of euros)
31/12/04 31/12/03 31/12/02 %% %
Public Administration 1,121.3 9.7% 1,177.1 11.5% 1,046.1 11.0% Financial institutions 378.7 3.3% 275.6 2.7% 560.0 5.9% Non-financial and personal businesses 7,080.6 61.1% 6,109.7 59.5% 5,850.5 61.7% Agriculture, farming and fishing 90.2 0.8% 87.1 0.9% 95.9 1.0% Energy products 220.5 1.9% 211.8 2.1% 229.3 2.4% Mineral and ferrous metals and non ferrous 117.9 1.0% 100.7 1.0% 122.1 1.3% Mineral and non metallic products 163.5 1.4% 96.3 0.9% 98.1 1.0% Chemical products 88.7 0.8% 75.5 0.7% 75.4 0.8% Metal products 245.0 2.1% 197.9 1.9% 163.1 1.7% Agricultural and industrial machinery 163.3 1.4% 140.9 1.4% 156.7 1.7% Office equipment 27.5 0.2% 29.7 0.3% 31.7 0.3% Electrical supplies 82.8 0.7% 93.6 0.9% 108.0 1.1% Means of transport 75.9 0.7% 70.0 0.7% 91.1 1.0% Food, drink, tobacco 215.6 1.9% 216.1 2.1% 185.3 2.0% Textiles, leather goods, clothing 111.3 1.0% 97.1 1.0% 83.8 0.9% Paper, printing and publishing 95.8 0.8% 84.8 0.8% 89.5 0.9% Rubber and plastic goods 66.2 0.6% 63.4 0.6% 70.2 0.7% Other industrial products 115.3 1.0% 109.7 1.1% 106.1 1.1% Building and public works 1,081.4 9.3% 862.0 8.4% 974.6 10.3% Wholesale & retail trade, salvage and repairs 1,327.8 11.5% 1,183.3 11.5% 1,121.6 11.8% Hotel and catering services 380.7 3.3% 319.8 3.1% 311.0 3.3% Transport services 160.6 1.4% 146.7 1.4% 138.9 1.5% Air and sea transport-related services 354.1 3.1% 329.7 3.2% 390.0 4.1% Transport-related services 254.6 2.2% 265.6 2.6% 251.7 2.7% Communications-related services 4.2 0.0% 13.6 0.1% 61.8 0.7% Sales-related services 1,637.7 14.1% 1,314.4 12.8% 894.6 9.4% Private social bodies 59.3 0.5% 36.7 0.4% 34.3 0.4% Families 2,652.7 22.9% 2,376.3 23.2% 1,739.5 18.2% Total residents 11,292.6 97.5% 9,975.4 97.3% 9,230.4 97.2% Rest of the world 287.1 2.5% 275.9 2.7% 264.7 2.8% Total 11,579.7 100.0% 10,251.3 100.0% 9,495.1 100.0%
(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and leasing.
Liguria continues to account for the majority of Group’s operations outside Liguria. In the Group’s lending activities, receiving 56.4 particular, Lombardy’s share rose by to 12.2 per per cent of credits granted. However, the cent and Tuscany’s to 10.4 per cent (2003: 3.4 region’s share is progressively falling (2003: per cent). 66.9 per cent) following extension of the
217 LOANS TO CUSTOMERS (1) - GEOGRAPHIC DISTRIBUTION (millions of euros)
31/12/04 31/12/03 31/12/02 %%%
Liguria 6,530.2 56.4% 6,434.1 62,9% 6,083.5 64.2% Lombardy 1,415.2 12.2% 1,242.0 12.1% 1,049.6 11.1% Tuscany 1,206.1 10.4% 387.2 3.8% 319.0 3.4% Emilia Romagna 585.6 5.1% 556.4 5.4% 542.7 5.7% Latium 577.4 5.0% 379.2 3.7% 315.7 3.3% Piedmont 543.8 4.7% 495.1 4.8% 458.2 4.8% Sicily 152.6 1.3% 166.1 1.6% 155.0 1.6% Veneto 137.0 1.2% 146.6 1.4% 165.3 1.7% Marches 125.4 1.1% 122.1 1.2% 134.8 1.4% Sardinia 93.5 0.8% 74.7 0.7% 41.7 0.4% Umbria 84.7 0.7% 82.4 0.8% 94.9 1.0% Apulia 84.0 0.7% 78.5 0.8% 61.5 0.6% Total Italy 11,535.5 99.6% 10,164.4 99.2% 9,421.9 99.2% Abroad 44.2 0.4% 86.9 0.8% 73.2 0.8% Total loans to customer 11,579.7 100.0% 10,251.3 100.0% 9,495.1 100.0%
(1) Balance Sheet (Assets) caption 40 inclusive of expected losses and leasing.
Lending to banks totalled 1,571.5 million at BTPs (maturity: 1/2/04) in the portfolio of Cassa 31th December 2004, an increase of 70.4 per di Risaprmio di Savona. cent. The Group’s net interbank balance Potential capital gains present in the securities (lending to banks minus amounts owed to portfolio amount to 39.4 million, of which 26.8 banks) was positive at 592.2 million in million relate to derivatives. Potential losses comparison to 2003’s figure of 83.7 million. amount to 1.1 million, exclusively present in the The value of the Group’s securities portfolio investment securities portfolio. The notional rose by 19.1 per cent to 3,052.8 million. The value of outstanding derivative contracts totalled investment securities portfolio totalled 196.3 6,836.5 million, the majority of which do not million, down 9 per cent. This drop is due to the foresee principal exchange. The Group’s fact that two bond investments reached maturity prudent use of these instruments is reflected by during the year: the first, amounting to 18 the fact that 87.3 per cent of the total is in the million in Italian state CCTs (maturity: 1/9/04) form of hedging or balanced contracts. in the investment portfolio of Banca Carige, whilst the second of 5.8 million in Italian state
218 DERIVATIVES CONTRACTS AT 31/12/2004 - CONSOLIDATED (millions of euros)
Principal (1) Hedging Trading Total balanced open-ended Total contracts (5) contracts (6)
- Forwards (2) 233.0 - - - 233.0 - Swaps (3) 3,228.2 1,269.0 432.8 1,701.8 4,930.0 - Futures - - 33.0 33.0 33.0 - Securities options 101.4 35.5 230.0 265.5 366.9 - Interest rate options (4) 395.3 348.6 16.6 365.2 760.5 - Exchange-rate options - 327.5 - 327.5 327.5 - Credit default product 10.0 20.0 155.6 175.6 185.6 Total 3,967.9 2,000.6 868.0 2,868.6 6,836.5 - with exchange of principal 263.2 286.6 411.4 698.0 961.2 - without exchange of principal 3,704.7 1,714.0 456.6 2,170.6 5,875.3
(1) Principal relative to basis swaps is stated once. (2) Includes forward rate agreements. (3) Includes basis swaps, interest rate swaps, overnight indexed swaps and currency swaps. (4) Includes interest rate caps. (5) Contracts matched by contracts of same characteristics so giving the Group full cover against interest and exchange-rate risk. (6) Contracts entailing exposure to interest and exchange-rate risk.
Total risk aggregates relating to cash was also an increase in guarantees and credits and guarantees and commitments commitments at risk of 19.7 per cent to 27.7 reached 737.8 million at the end of the year, million. an increase of 19.8 per cent over 2003. Expected credit losses for the Group are This aggregate was negatively impacted by the calculated on the basis of an analytical collapse of the Genoa cruise company Festival valuation of bad loans, rescheduled loans, Crociere with effects not only on the size of the underlying credit positions in leasing contracts, aggregate, but also on its geographical and and significant watchlist positions. Remaining sectoral distribution. watchlists are assigned provisions on the basis of The percentage of total credits represented by a presumptive analysis as applied for expected total cash credits at risk rose from 5.2 to 5.3 per losses. cent. Taking into account lending to customers, Expected losses for the Group amounted to the ratio of risk aggregates/total lending rose 211.1 million at 31st December 2004, an from 5.5 per cent in 2003 to 5.9 per cent. Total increase of 24.1 per cent over the previous cash credits at risk amounted to 701.3 million, year’s figure of 170.1 million. an increase of 19.9 per cent over 2003. There
219 CREDITS AT RISK AND TOTAL ALLOWANCES (thousands of euros)
31/12/2004 30/09/2004 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets
Bad loans 512,814 13,801 - 526,615 439,995 12,150 - 452,145 Watchlists 173,495 12,143 - 185,638 220,966 17,706 - 238,672 Country risk 6,332 1,781 - 8,113 6,046 2,546 - 8,592 Rescheduled loans 8,675 - - 8,675 11,519 - - 11,519 Bad leased assets - - 9,061 9,061 - - 8,761 8,761 Total credits at risks 701,316 27,725 9,061 738,102 678,526 32,402 8,761 719,689
Specific allowances 204,256 3,935 2,944 211,135 199,434 3,919 3,421 206,774
Total allowances 206,178 3,935 2,944 213,057 206,665 3,919 3,421 214,005 - Specific allowances for loan losses 204,256 - - 204,256 199,434 - - 199,434 - Specific allowances for guarantees and commitments - 3,935 - 3,935 - 3,919 - 3,919 - Specific allowances for leased assets - - 2,944 2,944 - - 3,421 3,421 - General allowances for loan losses 1,922 - - 1,922 7,231 - - 7,231
31/12/2003 31/12/2002 Cash Guarantees and Leased Total Cash Guarantees and Leased Total credits commitments assets credits commitments assets
Bad loans 345,436 13,088 - 358,524 282,626 18,113 - 300,739 Watchlists 212,714 10,069 - 222,783 188,687 10,207 - 198,894 Country risk 12,466 5 - 12,471 19,488 687 - 20,175 Rescheduled loans 14,123 - - 14,123 9,315 - - 9,315 Bad leased assets - - 8,138 8,138 - - 6,018 6,018 Total credits at risks 584,739 23,162 8,138 616,039 500,116 29,007 6,018 535,141
Specific allowances 163,698 4,124 2,276 170,098 142,180 4,551 1,240 147,971
Total allowances 183,695 4,124 2,276 190,095 156,824 4,551 1,240 162,615 - Specific allowances for loan losses 163,698 - - 163,698 142,180 - - 142,180 - Specific allowances for guarantees and commitments - 4,124 - 4,124 - 4,551 - 4,551 - Specific allowances for leased assets - - 2,276 2,276 - - 1,240 1,240 - General allowances for loan losses 19,997 - - 19,997 14,644 - - 14,644
Bad loans closed the year at 526.6 million Country risks amounted to 8.1 million, down (+46.9 per cent), of which 512.8 million were 34.9 per cent. Rescheduled loans also fell in the form of cash credits and 13.8 million in 38,6% to 8.7 million, with specific allowances guarantees and commitments. for 0.6 million. The bad loans/lending ratio rose from 3.2 per Aggregates at risk related to leasing cent in 2003 to 4.3 per cent. After redress increased 11.3 per cent to 9.1 million, of which provisions, the ratio drops to 2.8 per cent allowances for expected losses totalled 2.9 (2003: 1.9 per cent). million. Watchlist positions were down 16.7 per cent over the figure recorded at the end of 2003.
220 CASH CREDITS AT RISK (thousands of euros)
31/12/04 30/9/04 Gross Specific Net book % Gross Specific Net book % value allowances value value allowances value (a) (b) (b/a) (a) (b) (b/a) Bad loans - customers 494,517 178,273 316,244 36.0 421,909 166,670 255,239 39.5 - banks 18,297 4,226 14,071 23.1 18,086 4,014 14,072 22.2 Watchlists - customers 172,792 16,205 156,587 9.4 220,178 21,505 198,673 9.8 - banks 703 513 190 73.0 788 513 275 65.1 Country risk - customers 5,812 - 5,812 - 5,843 - 5,843 - - banks 520 - 520 - 203 - 203 - Rescheduled loans - customers 8,675 625 8,050 7.2 11,519 2,362 9,157 20.5 Total cash credits at risk 701,316 199,842 501,474 28.5 678,526 195,064 483,462 28.7 - customers 681,796 195,103 486,693 28.6 659,449 190,537 468,912 28.9 - banks 19,520 4,739 14,781 24.3 19,077 4,527 14,550 23.7 Performing loans 12,449,858 4,414 12,445,444 0.0 12,070,288 4,370 12,065,918 0.0 - customers 10,897,886 4,414 10,893,472 0.0 10,295,757 4,370 10,291,387 0.0 - banks 1,551,972 - 1,551,972 - 1,774,531 - 1,774,531 - Total loans 13,151,174 204,256 12,946,918 1.6 12,748,814 199,434 12,549,380 1.6 - customers 11,579,682 199,517 11,380,165 1.7 10,955,206 194,907 10,760,299 1.8 - banks 1,571,492 4,739 1,566,753 0.3 1,793,608 4,527 1,789,081 0.3
31/12/03 31/12/02 Gross Specific Net book % Valore Rett.di valore Valore % value allowances value lordo complessive di bilancio (a) (b) (b/a) (a) (b) (b/a)
Bad loans - customers 327,981 137,327 190,654 41.9 260,906 114,369 146,537 43.8 - banks 17,455 3,383 14,072 19.4 21,720 7,648 14,072 35.2 Watchlists - customers 211,922 20,203 191,719 9.5 188,242 17,702 170,540 9.4 - banks 792 513 279 64.8 445 267 178 60.0 Country risk - customers 11,432 - 11,432 - 18,521 - 18,521 - - banks 1,034 - 1,034 - 967 - 967 - Rescheduled loans - customers 14,123 2,232 11,891 15.8 9,315 2,165 7,150 23.2 Total cash credits at risk 584,739 163,658 421,081 28.0 500,116 142,151 357,965 28.4 - customers 565,458 159,762 405,696 28.3 476,984 134,236 342,748 28.1 - banks 19,281 3,896 15,385 20.2 23,132 7,915 15,217 34.2 Performing loans 10,588,936 40 10,588,896 0.0 10,323,142 29 10,323,113 0.0 - customers 9,685,890 40 9,685,850 0.0 9,018,130 29 9,018,101 0.0 - banks 903,046 - 903,046 - 1,305,012 - 1,305,012 - Total loans 11,173,675 163,698 11,009,977 1.5 10,823,258 142,180 10,681,078 1.3 - customers 10,251,348 159,802 10,091,546 1.6 9,495,114 134,265 9,360,849 1.4 - banks 922,327 3,896 918,431 0.4 1,328,144 7,915 1,320,229 0.6
221 CREDIT COMMITMENTS (thousands of euros)
31/12/04 30/9/04 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b) (b/a) (a) (b) (b/a)
Bad loans 13,801 3,935 28.5 12,150 3,886 32.0 Watchlists 12,143 - - 17,706 - - Country risk 1,781 - - 2,546 - - Total guarantees and commitments at risk 27,725 3,935 14.2 32,402 3,886 12.0 Performing guarantees and commitments 1,158,853 - - 1,161,291 148 - Total guarantees and commitments 1,186,578 3,935 0.3 1,193,693 4,034 0.3
31/12/03 31/12/02 Nominal Specific % Nominal Specific % value allowances value allowances (a) (b) (b/a) (a) (b) (b/a)
Bad loans 13,088 4,124 31.5 18,113 4,551 25.1 Watchlists 10,069 - - 10,207 - - Country risk 5 - - 687 - - Total guarantees and commitments at risk 23,162 4,124 17.8 29,007 4,551 15.7 Performing guarantees and commitments 1,244,339 - - 1,278,376 - - Total guarantees and commitments 1,267,501 4,124 0.3 1,307,383 4,551 0.3
Bad loans are concentrated amongst non The bad loans/total lending ratio reveals that financial and family businesses, which amount the sector most at risk for the Group is the non- to 395.4 million (80 per cent of the total), financial and family business sector at 5.6 per followed by households (81.2 million; 16.4 per cent. Within this sector, the highest cent of the total). The most significant branches concentration of credit risk measured in terms of of the non-financial and family business sector the same ratio is found in air and sea transport are sea and air transport (84 million; 17 per services (23.7 per cent), communications cent of the total), building and public works services (20.1 per cent) and chemical products (75.3 million; 15.2 per cent of the total) and (15.8 per cent). services to trade, salvage and repairs (66.2 million; 13.4 per cent of the total).
222 BAD LOANS (1) - DISTRIBUTION BY SECTOR (thousands of euros)
31/12/04 31/12/03 31/12/02 %% %
Public Administration - - 23 0.0% 21 0.0% Financial institutions 10,097 2.0% 13,720 4.2% 11,497 4.4% Non-financial and personal businesses 395,402 80.0% 242,980 74.1% 190,762 73.1% Agriculture, farming and fishing 3,193 0.6% 2,829 0.9% 3,303 1.3% Energy products - 0.0% 237 0.1% 177 0.1% Mineral and ferrous metals and non ferrous 1,939 0.4% 1,592 0.5% 283 0.1% Mineral and non metallic products 10,631 2.1% 4,767 1.5% 4,055 1.6% Chemical products 14,009 2.8% 837 0.3% 983 0.4% Metal products 12,500 2.5% 8,965 2.7% 6,700 2.6% Agricultural and industrial machinery 8,196 1.7% 4,817 1.5% 6,723 2.6% Office equipment 1,249 0.3% 883 0.3% 1,358 0.5% Electrical supplies 2,096 0.4% 2,153 0.7% 3,060 1.2% Means of transport 3,120 0.6% 2,303 0.7% 2,510 1.0% Food, drink, tobacco 18,358 3.7% 32,703 10.0% 8,901 3.4% Textiles, leather goods, clothing 7,864 1.6% 6,790 2.1% 5,072 1.9% Paper, printing and publishing 3,081 0.6% 2,094 0.6% 1,397 0.5% Rubber and plastic goods 2,559 0.5% 2,364 0.7% 2,434 0.9% Other industrial products 5,632 1.1% 3,314 1.0% 3,175 1.2% Building and public works 75,311 15.2% 71,101 21.7% 66,849 25.6% Wholesale & retail trade, salvage and repairs 66,189 13.4% 50,713 15.5% 42,188 16.2% Hotel and catering services 12,619 2.6% 9,803 3.0% 7,989 3.1% Transport services 8,018 1.6% 5,780 1.8% 6,293 2.4% Air and sea transport-related services 83,966 17.0% 131 0.0% 79 0.0% Transport-related services 3,954 0.8% 2,039 0.6% 1,684 0.6% Communications-related services 845 0.2% 67 0.0% 219 0.1% Sales-related services 50,073 10.1% 26,698 8.1% 15,330 5.9% Private social bodies 1,157 0.2% 1,884 0.6% 1,244 0.5% Families 81,219 16.4% 56,644 17.3% 45,794 17.6% Total residents 487,875 98.7% 315,251 96.1% 249,318 95.6% Rest of the world 6,642 1.3% 12,730 3.9% 11,588 4.4% Total 494,517 100.0% 327,981 100.0% 260,906 100.0%
(1) Inclusive of expected losses.
BAD LOANS/LENDING RATIO (1) - DISTRIBUTION BY SECTOR
31/12/2004 31/12/2003 31/12/2002
Public Administration 0.0% 0.0% 0.0% Financial institutions 2.7% 5.0% 2.1% Non-financial and personal businesses 5.6% 4.0% 3.3% - including (2): Sales-related services 3.1% 2.0% 1.7% Wholesale & retail trade, salvage and repairs 5.0% 4.3% 3.8% Building and public works 7.0% 8.2% 6.9% Hotel and catering services 3.3% 3.1% 0.0% Air and sea transport-related services 23.7% 0.0% 2.6% Private social bodies 2.0% 5.1% 3.6% Families 3.1% 2.4% 2.6% Total residents 4.3% 3.2% 2.7% Rest of the world 2.3% 4.6% 4.4% Total 4.3% 3.2% 2.7%
(1) Inclusive of expected losses. (2) Principal branches of the economy in terms of overall credit exposure.
The Group’s traditional operating area, Liguria, accounts for 9.5 per cent, followed by Lombardy absorbs 62 per cent of bad loans, five percent at 9.1 per cent, Piedmont at 7.8 per cent and higher than in 2003. Outside Liguria, Tuscany Emilia Romagna at 5.6 per cent.
223 BAD LOANS (1) - GEOGRAPHIC DISTRIBUTION (thousands of euros)
31/12/04 31/12/03 31/12/02 %%%
Liguria 306,669 62.0% 187,486 57,3% 162,848 62.5% Tuscany 47,096 9.5% 17,169 5.2% 16,956 6.5% Lombardy 44,946 9.1% 25,057 7.6% 15,621 6.0% Piedmont 38,791 7.8% 27,914 8.5% 25,642 9.8% Emilia Romagna 27,627 5.6% 43,089 13,2% 19,911 7.6% Sicily 8,796 1.8% 6,704 2.0% 5,675 2.2% Veneto 5,744 1.2% 3,886 1.2% 852 0.3% Latium 5,739 1.2% 2,099 0.6% 809 0.3% Apulia 3,534 0.7% 2,362 0.7% 986 0.4% Umbria 2,097 0.4% 133 0.0% - - Marches 1,001 0.2% 286 0.1% - - Sardinia 256 0.1% 90 0.0% 60 0.0% Total Italy 492,296 99.6% 316,275 96.4% 249,360 95.6% Abroad 2,221 0.4% 11,706 3.6% 11,546 4.4% Total 494,517 100.0% 327,981 100.0% 260,906 100.0%
(1) Inclusive of expected losses.
Risk levels in terms of the bad loans/lending Group’s operating areas with the exception of ratio are under 5 per cent throughout the Piedmont (7.1 per cent) and Sicily (5.8 per cent).
BAD LOANS / LENDING RATIO (1) - GEOGRAPHIC DISTRIBUTION
31/12/04 31/12/03 31/12/02
Piedmont 7.1% 5.6% 5.6% Sicily 5.8% 4.0% 3.7% Emilia Romagna 4.7% 7.7% 3.7% Liguria 4.7% 2.9% 2.7% Apulia 4.2% 3.0% 1.6% Veneto 4.2% 2.7% 0.5% Tuscany 3.9% 4.4% 5.3% Lombardy 3.2% 2.0% 1.5% Umbria 2.5% 0.2% - Latium 1.0% 0.6% 0.3% Marches 0.8% 0.2% - Sardinia 0.3% 0.1% 0.1% Total Italy 4.3% 3.1% 2.6% Abroad 5.0% 13.5% 15.8% Total 4.3% 3.2% 2.7%
(1) Inclusive of expected losses.
224 consultancy service described above, the Group GROUP PERSONNEL AND OPERATING also offers differentiated financial consultancy for STRUCTURE business. Divided into medium and corporate segments, the service aims to achieve operating efficiency and commercial efficacy, along with The distribution of the services and products of an accurate monitoring of credit quality. The the Banca Carige Group is organised in terms of service, available in Liguria, Tuscany, Lombardy, an integrated multi-channel system utilising three Piedmont, Emilia Romagna, Veneto and principal distribution channels: traditional Marches, is provided by 81 advisers distributed (network of branches and financial consultants), over 37 districts. The Group also has a network remote (ATM, POS, on line services) and mobile of 405 insurance offices located throughout the (insurance agents, financial consultants, estate country. agents). Turning to remote distribution, the number With the incorporation into the Carige Group of of fully automated “Bancacontinua” branches Cassa di Risparmio di Carrara and Banca remained unchanged at 14, whilst 53 new Cesare Ponti during the year, the number of ATM/service tills installed during the year branches making up the Group’s brought the total up to 598. The Group’s Point traditional (physical) distribution of Sale (POS) terminals supplied to retail outlets network amounted to 494 located in twelve amounted to 15,429, a marked increase over regions of the country. Outside Italy, the Group the previous year’s total of 13,075. has a branch also in Nice, France as well as 6 The need to provide our customers with access representative offices and a desk at the offices of to banking services outside the normal business the Regione Liguria in Brussels. hours of branches has led to the development of There was an increase of 39 branches to the alternative channels of distribution. The Carige network during 2004: 33 stemming from the Group’s on line services include Internet and call acquisition of C.R. Carrara and 4 from Banca centre solutions and the number of subscribers Cesare Ponti in addition to 2 new branches totalled more than 75,000 at the end of the opened by Banca del Monte di Lucca. Banca year. Carige opened two branches – one in Piedmont Mobile distribution channels take (Gavi) and one in Latium (Viterbo) – as advantage of regulatory opportunities offered by replacements for two previous branch closures. the Bank of Italy and ISVAP (Italian insurance The total number of branches in Liguria industry watchdog): financial advisors of our amounted to 245 at 31/12/04, the region’s banks distribute bank products and insurance share falling from 53.5 to 49.5 per cent of the agents of the Group’s insurance subsidiaries network total. distribute Banca Carige and Banca del Monte di The rapid and continuing evolution of financial Lucca standardised banking products (current markets allied to structural low interest rates and accounts, bonds and certificates of deposits, the availability of a large range of financial mortgages, loans). The number of insurance instruments makes the job of wealth agents collaborating in this way totalled 290 at management and lending to business all the 31/12/04, 12.8 per cent of which are qualified more complex. The Group’s personalised financial advisors (‘promotori’). financial consultancy service for high net-worth In order to consolidate and extend the Group’s customers (private banking) offers a mortgage business, Banca Carige signed differentiated service that guarantees operating agreements with estate agent associations in efficiency and business effectiveness. The service those parts of the country where an effective is now available by means of a network of 103 mortgage supply shortage exists. There was financial advisers distributed in 38 districts constant growth in the network of estate agents (Banca Carige: 37; Cassa di Risparmio di working in collaboration with Banca Carige. The Savona: 1). number at the end of 2004 rose from 1,425 to As part of the overhaul of distribution structure 1,554. finalised in 1999 and in parallel to the private
225 BRANCH NETWORK
A) BRANCHES 31/12/04 30/9/04 31/12/03 31/12/02 number Q% number Q% number Q% number Q% NORTH-WEST ITALY 320 64.6 316 64.4 314 68.9 310 68.6 Liguria 245 49.5 245 49.9 244 53.5 243 53.8 - Genoa 136 27.5 136 27.7 137 30.0 136 30.1 - Savona 60 12.1 60 12.2 60 13.2 60 13.3 - Imperia 28 5.7 28 5.7 28 6.1 28 6.2 - La Spezia 21 4.2 21 4.3 19 4.2 19 4.2 Lombardy 40 8.1 36 7.3 36 7.9 35 7.7 Piedmont 35 7.1 35 7.1 34 7.5 32 7.1 NORTH-EAST ITALY 31 6.3 31 6.3 31 6.8 31 6.9 Emilia Romagna 19 3.8 19 3.9 19 4.2 19 4.2 Veneto 12 2.4 12 2.4 12 2.6 12 2.7 CENTRAL ITALY 89 18.0 89 18.1 56 12.3 56 12.4 Tuscany 53 10.7 53 10.8 20 4.4 20 4.4 Latium 33 6.7 33 6.7 32 7.0 32 7.1 Marches 2 0.4 2 0.4 3 0.7 3 0.7 Umbria 1 0.2 1 0.2 1 0.2 1 0.2 SOUTH ITALY AND ISLANDS 54 10.9 54 11.0 54 11.8 54 11.9 Sicily 38 7.7 38 7.7 38 8.3 38 8.4 Apulia 9 1.8 9 1.8 9 2.0 9 2.0 Sardinia 7 1.4 7 1.4 7 1.5 7 1.5 BRANCHES ABROAD: Nice (France) 1 0.2 1 0.2 1 0.2 1 0.2 TOTAL 495 100.0 491 100.0 456 100.0 452 100.0
31/12/04 30/9/04 31/12/03 31/12/02 Private banking consultants 103 103 102 75 Corporate consultants 81 81 75 44
B) REMOTE 31/12/04 30/9/0431/12/03 31/12/02 ATM - Bancomat 598 595 545 534 Bancacontinua (self service) 14 14 14 14 POS 15,429 15,024 13,075 11,241 On-line services (1) 75,439 72,758 63,405 46,495 (1) Internet banking and Call Center contracts.
C) MOBILE 31/12/04 30/9/04 31/12/03 31/12/02 Insurance agents (2) 290 309 303 220 Estate agents 1,554 1,524 1,425 1,269 (3) Agents of the Group’s insurance subsidiaries distributing Banca Carige products.
At 31st December 2004, total staff levels of the market operations accounts for 70.8 per cent of Banca Carige Group reached 4,787 (5,165 the total; 29.2 per cent is engaged in head when including employees of the Group’s office administrative duties. insurance subsidiaries). Banking staff assigned to
PERSONNEL
31/12/04 30/9/04 31/12/03 31/12/02 (1)
Grade Managers 67 1.4 55 1.2 55 1.3 51 1.2 Officials 973 20.3 928 19.9 875 20.1 722 17.6 Other employees 3,747 78.3 3,690 79.0 3,424 78.6 3,338 81.2 TOTAL 4,787 100.0 4,673 100.0 4,354 100.0 4,111 100.0 Activities Head-offices 1,400 29.2 1,353 29.0 1,249 28.7 1,263 30.7 Branches 3,387 70.8 3,320 71.0 3,105 71.3 2,848 69.3
(1) Excluding the 371 employees of the 42 ex-Capitalia branches transferred to Banca Carige on 1/1/03
226 to banks and financial intermediaries subject to THE ADOPTION OF Bank of Italy oversight. On 27th February 2005, INTERNATIONAL ACCOUNTING Council of Ministers passed a legislative decree STANDARDS (IAS/IFRS) (the IAS Decree) containing the criteria for the implementation of IAS and IFRS. Article 2 of the above-mentioned Decree states, in addition to the preparation of compulsory The European Commission’s Regulation no. IAS-compatible consolidated statements for 1725, made it compulsory for all EU publicly publicly traded companies, banks and insurance traded companies to adopt from 1st January companies (publicly traded and non-publicly 2005 in the preparation of their consolidated traded), that the new legislative framework (in statements new international accounting force from 1st January 2005) may, if desired, be standards (IAS and IFRS) as defined in also applied to non-consolidated statements Regulation no. 1606/2002 of the European prepared by publicly traded companies, banks, Parliament and Council. financial institutions and related subsidiaries for The current situation as to the adoption and the year 2005, in advance of compulsory implementation of the new standards can be application from 2006 onwards. summarised by the following Regulations as On 21st February 2005, the Bank of Italy published in the Official Journal of the European supplied banks with a draft outlines for the Communities (OJEC): preparation of financial statements and - Regulation no. 1725/2003 of explanatory notes in the light of IAS and IFRS 29/9/2003 (OJEC L261/1 of application. 13/10/2003) adopts existing IAS from On 17th February, CONSOB, the Italian the date on which Regulation no. securities market watchdog, distributed a 1606/2002 entered into force consultation document that covers the following (14/9/2002). IAS 32 and 39 were areas: periodic reporting; preparation of excluded; invitations for investment and price listing, the - Regulation no. 707/2004 of 6/4/2004 definition of correlated parties. (OJEC L113/3 of 17/4/2004) modifies Subject to approval on the part of regulators, the Regulation no. 1725/2003 and adopts Banca Carige Group intends to apply the IFRS 1; following three measures: - Regulation no. 2086/2004 of 1. utilisation as foreseen by the IAS Decree 19/11/2004 (OJEC L363/1 of of the opportunity to adopt IAS/IFRS also 9/12/2004) modifies Regulation no. for the statements of the Group’s banks 1725/2003 and adopts IAS 39; for the financial year 2005; - Regulation no. 2236/2004 of 2. first time application of IAS/IFRS to the 29/12/2004 (OJEC L392/1 of half year statements of the Group’s 31/12/2004) modifies Regulation no. banks at 30th June 2005; 1725 regarding IFRS 3, 4 and 5, and 3. utilisation of the opportunities foreseen IAS 36 and 38; by Consob (‘Documento di - Regulation no. 2237/2004 of Consultazione’) regarding the 29/12/2004 (OJEC L393/1 of application of existing regulations for the 31/12/2004) modifies Regulation no. preparation of quarterly statements at 1725/2003 regarding IAS 32 and IFRIC 31st March 2005. 1; The adoption of the new accounting principles - Regulation no. 2238/2004 of will have wide-ranging effects, the most 29/12/2004 (OJEC L394/1 of significant of which can be summarised as 31/12/2004) modifies Regulation no. follows: 1725/2003 regarding IAS 1, 2, 8, 10, - the use of the principle of fair value 16, 17, 21, 24, 27, 28, 31, 33, 40. rather than historic cost for the valuation At national level, pursuant to article 25 of Law of financial instruments and securities 306/2003 the Government has delegated investments; authority to adopt the accounting principles into - the systematic use of financial valuations national legislation via legislative decrees. The of certain assets (loans) and liabilities scope of application of the principles was (staff funds); extended to include the financial statements of both listed and non-listed companies in addition
227 - regular application of impairment testing definition of measures to be taken, and the to monitor the value of significant assets monitoring of work in progress. (loans, equity investments, goodwill); During an initial fact-finding phase the - wider levels of disclosure. Coordinating Group, in collaboration with Application of the new principles will result in external consultants, identified the primary differences in the valuation of balance sheet information and valuation effects of adoption items. On first time adoption, these effects, and consequently its ensuing effects on pursuant to IFRS 1, will be on net assets. organisation, IT&C, and accounting; training Consequently, there are likely to be differences and learning followed with at first in-house in the value of the net assets of the banks courses, followed by external learning belonging to the Carige Group from those programmes and participation in workshops recorded at 31/12/04 and those at 1/1/05. organised by ABI, the Italian Banking The introduction of the new principles will have Association. an impact far beyond accounting and the This activity is flanked by internal work groups preparation of financial statements; the effects which, particularly during 2004, carried out an will be felt on information systems (different organisational/information analysis of the Bank’s organisation of data and information), information systems in order to verify the organisation (changes in accounting processes presence of data required and, where absent, with effects on organisational structures), the manner of retrieval. Software suppliers to the corporate culture (the need to create new Bank were brought actively into this process. professional profiles and specific training During 2004, the following measures were programmes). The coherent application of the carried out: the completion of detailed analytical principles requires an integrated approach that models and operational plans above all for the takes into account the logic underpinning the valuation of loans and securities; the signing of principles and their impact. contracts for the purchase of software; the Banca Carige as the leader of a universal launch of two significant consultancy agreements financial services group (banking, insurance, aimed at, among other things, customer financial services) during the first half of 2003 segmentation foreseen by IFRS 14 and began to identify, on one hand, the professional conformity of Carige’s ALM in the light of new duties required and, on the other, to define hedge accounting rules and integration of CRM guidelines, programmes, models, methods and and ALM systems for the fair value calculation of processes that will enable the effective banking book items. introduction of the new administrative / Banca Carige has sought to build an accounting system foreseen by the European appropriate management information platform Commission’s Regulation. that is equipped to handle the increased This project is part of a wide-ranging information flows that derive from, on one hand, reengineering process carried out throughout our position as a growing financial the Group, including the insurance subsidiaries. conglomerate and, on the other, the increased It is designed and led by an ad hoc steering informational requirements that the regulatory committee, made up by senior managers from framework has identified. the accounting, business and risk management, In conclusion, on the basis of an analysis of first- ITC, organisation, research and planning time application of fair value to equity offices. The Committee is supported by a investments outside the Group and to technical Coordinating Group formed by staff members fixed assets, it is reasonable to expect that the with specific competences in the areas of ensuing benefits will outweigh potential negative accounting, management control, risk effects of the same criteria on application to management, IT systems, and organisation. The loans, with a resulting overall positive impact on Coordinating Group’s responsibilities include the Group’s financial position. legal and regulatory aspects of the process, the
228 INCOME STATEMENT to 23.5 million, above all as a result of Net profit for the Group at 31/12/04 rose to harmonising valuation criteria applied to 100.9 million, from the previous year’s result of securities in portfolio; criteria utilised by Banca 84.7 million. This positive result was supported Carige was adopted by the Group’s two by encouraging growth both in operating insurance subsidiaries with a subsequent (+17.5 per cent) and ordinary income (+10.5 economic benefit of 10 million. Other operating per cent). Marked falls in extraordinary income income amounted to 242.9 million (+45 per (nearly halved from 35 to 17.2 million), which cent), whilst other operating charges increased negatively impacted the pre-tax result (down by 15.9 per cent to 10.7 million. The only item from 156.4 to 151.4 million) were offset by in this aggregate not to record an increase lower tax charges following changes to deferred during the year was dividends, which dropped tax valuation criteria. from 18.5 to 4.3 million. However, comparison In order to take into account the consolidation between 2003 and 2004 is affected by the of Cassa di Risaprmio di Carrara into the Group existence of a tax credit on dividends collected during 2004, a pro forma P&L has been during 2003 of 51.51 per cent, abolished in prepared inclusive of C.R. Carrara’s results. Net 2004. profit for the subsidiary was recorded at item Gross operating income therefore rose 250 ‘minority interests’. 17.5 per cent over December 2003 to 894.2 Net interest income rose to 405.1million million (pro forma 2003: +10.5 per cent). (+8 per cent comparison to 31st December Operating costs increased 10.9 per cent 2003), despite a further fall in interest rates with from 554.2 to 614.4 million (pro forma increase the narrower margins that this entails. The rise in of 4.1 per cent). In particular, administrative net interest income stemmed from increases in costs rose 12.9 per cent to 470.6 million: volumes handled, in part stemming from the personnel charges were 8.7 per cent higher at purchase of C.R. Carrara. In detail, interest 291.9 million (pro forma 2003: + 0.8 per income rose 13.2 per cent to 694.6 million and cent), whilst there were more substantial rises in interest charges increased by 21.5 per cent to other administrative costs of 20.4 per cent to 289.5 million. Interest income on loans to 178.7 million (pro forma 2003: + 10.2 per customers amounted to 521.5 million, whilst cent). Writedowns on financial fixed assets rose interest income on securities in portfolio totalled 4.8 per cent (pro forma 2003: +4 per cent) to 143.4 million. In comparison with pro forma 143.8 million. results for 2003, net interest income dropped Operating income for the year moved 0.6 per cent. forward significantly from 206.7 to 279.8 Non-interest, service-generated income million, an increase of 35.4 per cent (pro forma rose 26.8 per cent from 385.7 million to 489.1 2003: + 27.5 per cent). million at 31/12/04 (pro forma 2003: +21.6 Provisions and writedowns increased by per cent). 70.8 per cent to 145.6 million (pro forma 2003: The result reflects a generalised increase in all +65.8 per cent). In particular, provisions for non-interest income items except dividends. risks and charges totalled 1.8 million, in Rises in net commission income and other comparison to 4.2 million at 31/12/03 (-57.5 operating income benefited from expansion in per cent). Risk credit, measured in terms of the the Group’s operational capacity as well as from difference between writedowns and provisions to revenues stemming from the securitisation of risk funds, and writebacks rose 77.4 per cent mortgages carried out by Banca Carige. Other from 81 to 143.8 million. contributions to the aggregate came from Income from ordinary activities recorded increased profits recorded by holdings carried at an increase of 10.5 per cent over 31th equity, in addition to net earnings on financial December 2003, reaching 134.2 million (pro transactions. In more detail, commission income forma 2003: +2 per cent). rose from 204.4 to 225.8 million (+10.4 per cent). Commission expenses increased by 19.7 Extraordinary income, net amounted to per cent in comparison to 31/12/03 from 16.4 17.2 million (December 2003: 35 million). to 19.6 million. Net gains on financial Extraordinary revenues (25.9 million) fell 39.9 transactions doubled from 10.7 to 22.9 million. per cent in comparison to 2003, a year that Similar increases were recorded by profits of the benefited from the sales, on the one hand, of Group companies carried at equity: up from 10 non-strategic equity investments (16 million)
229 and, on the other, of Carige shares on the part After taking into account income tax for the year of the banking subsidiary Cassa di Risparmio di (47.3 million; -36.7 per cent) and profits on Savona (11.3 million). Of 2004’s total, 10.1 minority interests (3.2 million; +56.8 per cent), million was raised from the sale of Banca net profit at 31st December 2004 rose 19.1 Carige’s holding in Cassa di Risparmio di per cent from 84.7 to 100.9 million. Firenze.
RECLASSIFIED INCOME STATEMENT (thousands of Euros) Change % 2004 30/09/04 2003 2002 04/03 04/03 03/02 pro forma pro forma
10 Interest income and similar revenues 694,586 506,039 613,535 656,608 635,012 13.2 5.8 -3.4 20 Interest expense and similar charges -289,512 -201,190 -238,334 -249,244 -280,157 21.5 16.2 -14.9 NET INTEREST INCOME 405,074 304,849 375,201 407,364 354,855 8.0 -0.6 5.7 40 Commission income 225,757 166,984 204,447 215,638 184,235 10.4 4.7 11.0 50 Commission expenses -19,580 -13,713 -16,351 -17,375 -13,705 19.7 12.7 19.3 60 Gains (losses) from financial transactions 22,920 1,886 10,674 10,918 -5,844 … … … 30 Dividends and other revenues 4,306 3,533 18,536 18,637 8,754 -76.8 -76.9 111.7 170 Profit (losses) on investments carried at equity 23,507 5,915 10,030 10,030 8,512 … … 17.8 70 Other operating income 242,852 191,397 167,518 173,470 157,806 45.0 40.0 6.2 110 Other operating expenses -10,662 -7,252 -9,199 -9,223 -11,101 15.9 15.6 -17.1 NON INTEREST INCOME 489,100 348,750 385,655 402,095 328,657 26.8 21.6 17.3 GROSS OPERATING INCOME 894,174 653,599 760,856 809,459 683,512 17.5 10.5 11.3 80 Administrative costs -470,598 -333,982 -416,916 -451,740 -374,031 12.9 4.2 11.5 – Personnel -291,869 -206,848 -268,412 -289,549 -232,748 8.7 0.8 15.3 – Other administrative costs -178,729 -127,134 -148,504 -162,191 -141,283 20.4 10.2 5.1 90 Depreciation and amortization of intangible and tangible fixed assets -143,829 -109,214 -137,238 -138,329 -123,129 4.8 4.0 11.5 OPERATING COSTS -614,427 -443,196 -554,154 -590,069 -497,160 10.9 4.1 11.5 OPERATING INCOME 279,747 210,403 206,702 219,390 186,352 35.3 27.5 10.9 100 Provisions for risks and charges -1,789 -3,141 -4,209 -4,829 -3,273 -57.5 -63.0 28.6 120 Provisions for loan losses and for guarantees and commitments -151,329 -119,890 -72,588 -75,371 -67,090 … … 8.2 130 Recoveries of loans and reversals of provisions for guarantees and commitments 9,010 5,666 11,295 12,739 13,264 -20.2 -29.3 -14.8 140 Additional provisions for loan losses -1,470 -78 -19,744 -20,332 -17,334 -92.6 -92.8 13.9 150 Write-downs to financial fixed assets - - - - -33 … … -100.0 160 Recoveries of financial fixed assets 2 2 - 7 99 … -71.4 -100.0 PROVISIONS AND WRITE-DOWNS -145,576 -117,441 -85,246 -87,786 -74,367 70.8 65.8 14.6 180 INCOME FROM ORDINARY ACTIVITIES 134,171 92,962 121,456 131,604 111,985 10.5 2.0 8.5 190 Extraordinary income 25,908 10,650 43,121 44,124 23,339 -39.9 -41.3 84.8 200 Extraordinary expenses -8,690 -5,074 -8,149 -8,661 -6,868 6.6 0.3 18.7 210 EXTRAORDINARY INCOME, NET 17,218 5,576 34,972 35,463 16,471 -50.8 -51.4 … INCOME BEFORE TAXATION 151,389 98,538 156,428 167,067 128,456 -3.2 -9.4 21.8 230 Variation of reserves for general banking risks - - 5,065 5,065 - -100.0 -100.0 … 240 Income taxes -47,269 -34,791 -74,721 -79,735 -60,914 -36.7 -40.7 22.7 250 Minority interests -3,184 -2,086 -2,030 -7,655 -1,371 56.8 -58.4 48.1 260 NET INCOME 100,936 61,661 84,742 84,742 66,171 19.1 19.1 28.1
230 INCOME STATEMENT - QUARTERLY CHANGES (thousands of Euros)
2004 2003 4th quarter 3rd quarter 2nd quarter 1st quarter 4th quarter 3rd quarter 2nd quarter 1st quarter
10 Interest income and similar revenues 188,547 181,054 166,216 158,769 151,754 149,797 154,164 157,820 20 Interest expense and similar charges -88,322 -82,809 -60,993 -57,388 -55,141 -55,832 -59,838 -67,523 NET INTEREST INCOME 100,225 98,245 105,223 101,381 96,613 93,965 94,326 90,297 40 Commission income 58,773 56,533 55,183 55,268 57,039 49,284 50,221 47,903 50 Commission expenses -5,867 -5,226 -4,928 -3,559 -4,152 -4,286 -4,415 -3,498 60 Gains (losses) from financial transactions 21,034 -2,431 -184 4,501 6,442 5,098 -192 -674 30 Dividends and other revenues 773 38 3,235 260 1,542 -632 15,000 2,626 170 Profit (losses) on investments carried at equity 17,592 2,655 1,991 1,269 6,251 1,627 2,105 47 70 Other operating income 51,455 47,729 101,617 42,051 46,419 41,118 40,523 39,458 110 Other operating expenses -3,410 -3,050 -3,162 -1,040 -3,606 -3,158 -1,504 -931 NON INTEREST INCOME 140,350 96,248 153,752 98,750 109,935 89,051 101,738 84,931 GROSS OPERATING INCOME 240,575 194,493 258,975 200,131 206,548 183,016 196,064 175,228 80 Administrative costs -136,616 -112,854 -115,187 -105,941 -104,635 -105,520 -105,343 -101,418 – Personnel -85,021 -68,865 -70,026 -67,957 -69275.0 -65685.0 -66,842 -66,610 – Other administrative costs -51,595 -43,989 -45,161 -37,984 -35360.0 -39835.0 -38,501 -34,808 90 Depreciation and amortization of intangible and tangible fixed assets -34,615 -36,212 -35,777 -37,225 -35462.0 -34122.0 -34,628 -33,026 OPERATING COSTS -171,231 -149,066 -150,964 -143,166 -140,097 -139,642 -139,971 -134,444 OPERATING INCOME 69,344 45,427 108,011 56,965 66,451 43,374 56,093 40,784 100 Provisions for risks and charges 1,352 -901 -1,377 -863 -706 -139 -2,789 -575 120 Provisions for loan losses and for guarantees and commitments -31,439 -16,279 -89,960 -13,651 -21,128 -21,873 -12,764 -16,823 130 Recoveries of loans and reversals of provisions for guarantees and commitments 3,344 1,134 2,508 2,024 4,995 1,585 2,053 2,662 140 Additional provisions for loan losses -1,392 -43 -13 -22 -19,429 -253 28 -90 150 Write-downs to financial fixed assets ------160 Recoveries of financial fixed assets - - 2 - - - - - PROVISIONS AND WRITE-DOWNS -28,135 -16,089 -88,840 -12,512 -36,268 -20,680 -13,472 -14,826 180 INCOME FROM ORDINARY ACTIVITIES 41,209 29,338 19,171 44,453 30,183 22,694 42,621 25,958 190 Extraordinary income 15,258 827 9,132 691 15,470 3,864 8,887 14,900 200 Extraordinary expenses -3,616 -736 -2,256 -2,082 -2,063 -1,632 -2,281 -2,173 210 EXTRAORDINARY INCOME, NET 11,642 91 6,876 -1,391 13,407 2,232 6,606 12,727 INCOME BEFORE TAXATION 52,851 29,429 26,047 43,062 43,590 24,926 49,227 38,685 230 Variation of reserves for general banking risks - - - - -5,065 - - - 240 Income taxes -12,478 -14,860 -807 -19,124 -21,075 -10,596 -26,530 -16,520 250 Minority interests -1,098 -724 -791 -571 -526 -367 -485 -652 260 NET INCOME 39,275 13,845 24,449 23,367 27,054 13,963 22,212 21,513
Capital resources (Tier 1 and Tier 2) for the Banca Carige Group at 31/12/04 totalled SHAREHOLDERS' EQUITY 1,199 million, 8.7 per cent lower than the previous end-of-year figure.
BREAKDOWN OF TOTAL CAPITAL (thousands of euros)
31/12/04 30/9/04 31/12/03 31/12/02
Tier 1 Capital: positive elements eligible for inclusion (a) 1,586,264 1,559,698 1,549,697 1,341,443 Share capital 1,113,327 1,113,327 1,113,327 1,020,550 Reserves 209,998 185,651 181,247 179,633 Additional paid-in capital 262,839 260,620 255,023 136,095 General banking risks fund 100 100 100 5,165
Tier 1 Capital: negative elements (b) 668,054 694,943 580,240 616,704 Goodwill 634,269 614,682 546,098 558,894 Other negative elements 33,785 80,261 34,142 57,810
Total Tier 1 Capital (c = a-b) 918,210 864,755 969,457 724,739
Supplementary capital (d) 518,099 512,866 526,081 371,048
Reductions (e) (1) 237,332 215,265 182,644 180,385
Total core capital (c+d-e) (1) 1,198,977 1,162,356 1,312,894 915,402
(1) As requested by regulators, the item includes writedowns on equity investments in Carige Assicurazioni SpA (176,066,000 euros) and in Frankfurter Bankgesellschaft AG (10,760,000 euros); it is also inclusive of Carige Assicurazioni’s subordinated loan issue subscribed by Banca Carige (46,804,000 euros). Excluding this deduction, total core capital resources at 31st December 2004 would amount to 1,433,075,000 euros.
231 Tier 1 capital amounted to 918.2 million, 5.3 issue performed in September 2001 (399 per cent lower than the figure recorded at million) and a convertible subordinated loan 31/12/03. Positive elements total 1,586.3 (101.5 million) issued during the share capital million (+2.4 per cent). Negative elements to be increase concluded in December 2003. deducted amounted to 668.1 million, (+15.1 Negative elements are represented by holdings per cent). Tier 2 capital fell 1.5 per cent to in Frankfurter Bankgesellschaft and Carige 518.1 million and is almost exclusively in the Assicurazioni in addition to a subordinated loan form of subordinated loan capital raised by issue carried out by Carige Assicurazioni. Banca Carige via two issues: a lower Tier 2
TOTAL CORE CAPITAL AND SOLVENCY RATIOS (thousands of euros)
31/12/04 30/09/04 31/12/03 31/12/02
Core capital Tier 1 capital 918,210 864,755 969,457 724,739 Tier 2 capital 518,099 512,866 526,081 371,048 Deductions (1) 237,332 215,265 182,644 180,385 Total capital (1) 1,198,977 1,162,356 1,312,894 915,402
Weighted assets Credit risks (1) 10,835,575 10,341,988 9,665,037 8,961,900 Market risks 924,675 1,289,125 1,095,775 718,900 Other prudential requirements 679,425 694,803 493,463 483,288 Total weighted assets (1) 12,439,675 12,325,916 11,254,275 10,164,088
Solvency ratios % Tier 1/ Weighted assets for credit risk 8.47% 8.36% 10.03% 8.09% Total capital / Weighted assets for credit risk (1) 11.07% 11.24% 13.58% 10.21%
Tier 1 / Total weighted assets (2) 7.38% 7.02% 8.61% 7.13% Total capital / Total weighted assets (1) (2) 9.64% 9.43% 11.67% 9.01%
(1) As requested by regulators, the item includes writedowns on equity investments in Carige Assicurazioni SpA and in Frankfurter Bankgesellschaft AG; it also includes Carige Assicurazioni’s subordinated loan issue subscribed by Banca Carige. Excluding this deduction, total capital resources at 31st December 2004 would amount to 1,433,075,000 euros with related rises in the total capital/weighted assets for credit risk from 11.07 to 13.23 per cent and total capital/total weighted assets ratios from 9.64 to 11.52 per cent. (2) Total weighted assets include credit and market risks.
At 31st December 2004, weighted assets for million which, deducted from total capital, leave credit risk amounted to 10,835.6 million, higher 203.8 million in excess to capital requirements. than the capital adequacy requirement of 866.8 Solvency, calculated on the basis of the total million (31/12/03: 773.2 million). Capital capital/weighted assets for credit risk ratio was adequacy requirements for market risks totalled at 31/12/04 11.07 per cent; the total capital 74 million, whilst other amounts required in ratio, which includes also weighted assets for relation to the various securitisation operations market risks, was 9.64 per cent. The above carried out in recent years totalled 54.4 million. coefficients relating to tier 1 capital were, Overall, capital requirements totalled 995.2 respectively, 8.47 and 7.38 per cent.
232 CORE CAPITAL AND SOLVENCY RATIOS 1,400 1,312.9 15.00% 1,199.0 1,200 969.5 1,000 915.4 918.2
11.67% 800 724.7 10.00% 600 9.64% 9.01% 400 8.61%
200 7.13% 7.38%
0 5.00% 31/12/2002 31/12/2003 31/12/2004
Core capital Tier 1 Total capital ratio Tier 1 ratio
Total capital levels and related solvency ratios hand with financial solidity, a characteristic of have been influenced over the last few years by Banca Carige’s operational strategy. expansion in the Carige Group’s retail network. Details of risk management for the Group can Expansion by the purchase of branches from be found in the Board of Directors’ Report for other banks or via new branch openings has Banca Carige (‘Risk Management’). been financed by two share capital increases Consolidated net equity and net income derive and one subordinated bond loan issue. Both from those of the parent company, Banca channels seek expansion that goes hand-in- Carige in the following way:
Net equity Profit for the year Totals recorded in Banca Carige Financial Statements at 31/12/2004 1,729,713 107,541 Positive variations on book value 77,385 31,558 Writedowns on allocated capital gains -419 -419 Writedowns on positive differences deriving from consolidation and application of the equity method -11,639 -11,639 Effects deriving from items recorded in previous accounting periods -109,278 - Profit (loss) on investments carried at equity 23,507 23,507 Writedowns on dividends distributed by associated undertakings -1,142 -1,142 Writedowns on dividends distributed by subsidiaries -39,262 -39,365 Others -23,154 -9,105 Consolidated Totals at 31/12/2004 1,645,711 100,936
Changes in consolidated net equity from 31/12/03 to 31/12/04 are a result of the following variations:
Balance at 31/12/2003 1,643,944 Tax paid from extraordinary taxed reserve for the release of assets subject to suspended liability to tax pursuant to Law 218/90 -14,576 Reintegration of share premium used in securitisation 7,816 Dividends distributed during the year to shareholders outside the Group -83,295 Variations in credit risk reserves -18,076 Variations in merger reserve following the incorporation of C.R. Carrara 599 New negative variations in net equity 8,224 Others 139 Consolidated net profit 100,936 Balance at 31/12/2004 1,645,711
233 Dealings in own shares on the part of the parent purchased own shares with a counter value of company, Banca Carige, were related to the 0.1 million. purchase of 20,537,262 shares with a nominal At year end 2004, no Group company was in value of 20.5 million and a corresponding possession of Banca Carige shares. counter value of 62.3 million. A total of At 31st December 2004, Carige Assicurazioni 20,101,163 shares were sold, nominal value held 1,919 of its own shares for a counter value 20.1 million, counter value 60.2 million. Trading of 3.4 million and Immobiliare Vernazza held in own shares as described above represented 10,000 own shares for a counter value of 2.3 3.7 per cent of Banca Carige’s share capital. million. During the year, Carige Assicurazioni also
234 THE GROUP COMPANIES AND EQUITY INVESTMENTS
BANCA CARIGE GROUP SUBSIDIARIES: PRINCIPAL DETAILS
Name Registered Holding Equity ratio Net assets Profit/loss office Direct Total (thousands (thousands of euros) of euros) A. Fully consolidated companies
Banks 1. Banca CARIGE SpA Genoa - - - 1,622,173 107,540 2. Cassa di Risparmio di Savona SpA Savona 95.90 95.90 95.90 153,058 13,503 3. Banca del Monte di Lucca SpA Lucca 54.00 54.00 54.00 26,977 4,270 4. Cassa di Risparmio di Carrara SpA Carrara (MS) 90.00 90.00 90.00 84,021 15,125 5. Banca Cesare Ponti SpA Milan 51.09 (2) 51.09 51.09 19,827 -615
Financial firms 6. Carige AM SGR SpA Genoa 99.50 100.00 100.00 5,706 323 7. Argo Finance One Srl Genoa 60.00 60.00 60.00 10 - 8. Priamar Finance Srl Genoa 60.00 60.00 60.00 10 -
Property-related services providers 9. Galeazzo Srl Genoa 100.00 100.00 100.00 3,904 56 10. Columbus Carige Imm. SpA Genoa 99.99 100.00 100.00 36,428 332 11. Imm. Ettore Vernazza SpA Genoa 90.00 100.00 100.00 5,184 1,007 12. Immobiliare CARISA Srl Savona - 100.00 95.90 1,790 -16
Trust company 13. Centro Fiduciario SpA Genoa 76.93 96.93 96.11 994 142
B. Companies consolidated by the equity method
Insurance companies 1. Carige Assicurazioni SpA Milan 98.11 99.46 99.46 175,811 3,055 2. Carige Vita Nuova SpA Genoa 100.00 100.00 100.00 49,964 4,013
Other activities 3. Assi 90 Srl (1) Genoa - 60.00 59.80 463 1293 4. AG Srl (1) Genoa - 100.00 59.80 48 27 5. Savona 2000 Srl (1) Savona - 80.00 47.84 71 2
(1) Companies providing insurance-related services (2) Percentage calculated on deliberated capital; Carige holds voting rights on 58.75% of the capital.
Banking subsidiaries
Cassa di Risparmio di Savona ('Carisa') segment. Indirect deposits ('other financial recorded a rise in the volume of amounts intermediation activities') rose 6.8 per cent in handled. Financial intermediation activities comparison to the end of 2003 to 1,450 million. (direct and indirect deposits; lending to Within indirect deposits, there was growth in customers) rose 6.1 per cent to 3,251.8 wealth management, which reached 781.9 million. In particular, direct and indirect million (+3.9 per cent), aided by mutual funds; deposits increased 4.3 per cent to 2,509.9 assets under administration rose by 10.3 per cent million, whilst lending rose 12.8 per cent to to 668.1 million. 741.9 million. Lending rose 12.8 per cent to 741.9 million. There was a marginal increase in the volume of There was particular expansion in the Carisa’s direct deposits of 1.2 per cent to medium/long-term component (+16.8 per cent; 1,059.9 million; a drop in short-term deposits 533.4 million), whilst short-term credits fell 3.8 was offset by a rise in the medium//long-term per cent to 188.3 million.
235 The bad loans/gross lending ratio was 2.7 per by growth in commission income and gains from cent in comparison to the previous year’s figure financial transactions. The gross operating result of 0.8%, which benefited from the securitisation for the year was 62.4 million, 1.2 per cent higher of the bank's bad loan portfolio for around 70 than the previous year. million. Operating costs were substantially unchanged (- There was a slight increase in Carisa's securities 0.2 per cent; 41,4 million) thanks to falls in portfolio during 2004, rising 1.2 per cent to general costs and writedowns to financial fixed 408.6 million. assets. There were falls also in provisions and Net profit for the year was lower 30.7 per cent writedowns (-19.3 per cent; 3.4 million). to 13.5 million. It should be pointed out, Ordinary income for the period was 17.6 million however, that 2003's result benefited from an (2003: 16 million; +10.3 per cent). extraordinary contribution in the form of a pre- Extraordinary income amounted to 1.8 million in tax gain of 11.3 million from the sale of Banca comparison to 2003’s result of 14.8 million, the Carige shares in portfolio. latter figure principally the result of gains realised In 2004, there was a fall in net interest income on the sale of the parent company's shares in (-1.1 per cent) to 36.2 million. Service- portfolio. After tax for the period of 5.9 million, generated income recorded a 4.6 per cent net profit for 2004 was 13.5 million. increase to end the year at 26.2 million, helped
CASSA DI RISPARMIO DI SAVONA (millions of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
BALANCE SHEET Total assets 1,342.9 1,482.9 1,331.0 1,350.4 0.9 -1.4 Direct deposits (a) 1,059.9 1,127.0 1,047.7 1,053.7 1.2 -0.6 Indirect deposits (b) 1,450.0 1,412.5 1,358.2 1,272.8 6.8 6.7 - Assets under management 781.9 760.4 752.4 683.0 3.9 10.2 - Assets in custody 668.1 652.1 605.8 589.8 10.3 2.7 Total Financial Intermediation Activities (TFIA) (a+b) 2,509.9 2,539.5 2,405.9 2,326.5 4.3 3.4 Loans to customers (1) 741.9 721.8 657.6 623.3 12.8 5.5 Securities 408.6 391.6 403.8 238.6 1.2 69.3 Capital and reserves (2) 148.1 147.4 146.2 154.9 1.3 -5.6
PROFIT & LOSS ACCOUNT Operating Income 21.0 14.2 20.2 23.4 4.1 -13.6 Ordinary Income, net 17.6 10.5 16.0 19.0 10.3 -16.1 Income before Taxation 19.4 11.4 30.8 22.3 -37.0 37.9 Net profit 13.5 8.0 19.5 24.7 -30.7 -21.1
RESOURCES Branch network 46 46 46 44 0.0 4.5 Personnel 437 423 432 430 1.2 0.5 (1) Gross of expected loss (2) Includes the general banking risk fund and excludes newly recorded profits and losses.
Banca del Monte di Lucca recorded financial intermediation activities (direct and significant growth in amounts handled: total indirect deposits, loans to customers) rose 18.3
236 per cent to reach 1,154.7 million. This result 147.5 million. The bank's bad loans/lending follows expansion carried out in recent years that ratio dropped from 4.1 to 3.5 per cent. also included the opening of 10 new branches. Growth in the securities portfolio continued, Total deposits rose by 14.3 per cent to 719.4 rising 11.7 per cent over 2003 to 91.9 million. million, whilst lending increased by 25.4 per Net profit for the year increased 62.2 per cent to cent to 435.3 million. 4 million. In particular, there were rises in both Direct deposits ('customer deposits') increased by net interest income (+10 per cent to 15.9 22.4 per cent to 439.1 million, in particular million) and non interest income (+16.9 per thanks to strong growth in both the short and cent to 8.6 million). Gross operating income medium/long-term segments. Indirect deposits therefore was also up, by 12.3 per cent to 24.6 also rose, albeit at a slower rate (+3.6 per cent; million. Operational costs increased by 2.5 per 280.3 million), mainly due to an 8.5 per cent cent to 15.5 million as did writedowns on credits rise in asset management solutions (110 (+33.9 per cent to 2.3 million). Profit from million). Assets in custody recorded a slight ordinary activities reached 6.7 million, an increase of 0.7 per cent to 170.3 million. increase of 34.3 per cent. Taking into account The Lucca bank's total lending increased by extraordinary net income of 0.4 million and an 25.4 per cent to 435.3 million, with particularly income tax charge for the year of 3.1 million, strong growth in the medium/long-term net profit at 31/12/04 amounted to 4 million. component (+33.6 per cent; 272.7 million). Short-term credits rose by 14.5 per cent to
BANCA DEL MONTE DI LUCCA (millions of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
BALANCE SHEET Total assets 586.7 565.0 464.1 389.2 26.4 19.2 Direct deposits (a) 439.1 419.1 358.7 273.3 22.4 31.2 Indirect deposits (b) 280.3 271.1 270.5 270.2 3.6 0.1 - Assets under management 110.0 100.5 101.4 84.4 8.5 20.1 - Assets in custody 170.3 170.6 169.1 185.8 0.7 -9.0 Total Financial Intermediation Activities (TFIA) (a+b) 719.4 690.1 629.2 543.5 14.3 15.8 Loans to customers (1) 435.3 394.8 347.2 278.7 25.4 24.6 Securities 91.9 101.5 82.3 72.1 11.7 14.1 Capital and reserves (2) 24.3 24.3 24.0 23.7 1.0 1.5
PROFIT & LOSS ACCOUNT Operating Income 9.1 6.0 6.7 4.7 34.2 43.5 Ordinary Income, net 6.7 4.4 5.0 3.3 34.3 49.9 Income before Taxation 7.1 4.6 5.3 3.4 34.7 54.2 Net profit 4.0 2.7 2.5 1.6 62.2 58.8
RESOURCES Branch network 19 19 17 17 11.8 0.0 Personnel 146 145 142 142 2.8 0.0 (1) Gross of expected loss (2) Includes the general banking risk fund and excludes newly recorded profits and losses.
Cassa di Risparmio di Carrara (C.R. to 2003 (+0.6 per cent), with total amounts Carrara) recorded little change in its total handled at 31/12/04 reaching 2,238.5 million. financial intermediation volumes in comparison In particular, direct and indirect deposits rose by
237 0.9 per cent to 1,465.9 million, whilst lending Net profit for the year almost tripled in remained unchanged at 772.6 million. comparison to 2003 to reach 15 million. Net Direct or customer deposits fell 2.9 per cent to interest income remained unchanged at 31.6 814.5 million, whilst indirect deposits rose 5.9 million, whilst service-generated income per cent to 651.4 million, principally due to increased by 9.2 per cent to 17,9 million. Gross growth in asset management (+12.2 per cent; operating income consequently rose to 49.6 337.8 million). There was minimal variation in million (+3.2 per cent). Operational costs assets in custody (-0.1 per cent; 313.6 million). increased by 1.2 per cent to 35.8 million. Lending to customers (772.6 million) was little Writedowns on credits amounted to 1 milion, changed over 2003; there was a 12 per cent fall 60.5 per cent lower than in 2003. in short-term credits and a 9.2 per cent increase Profit from ordinary activities was 26 per cent in longer-term lending solutions. C.R. Carrara’s higher than in 2003, reaching 12.8 million. bad loans in portfolio rose 1.6 per cent during Taking into account a negative extraordinary 2004 to total 30.8 million. result of 0.1 million, a negative variation to the The bank’s securities portfolio rose 9.5 per cent general banking risks fund of 8.4 million and to 152.8 million. income tax of 6.1 million, net profit at 31/12/04 amounted to 15 million.
CASSA DI RISPARMIO DI CARRARA (millions of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
BALANCE SHEET Total assets 1,251.5 1,248.6 1,031.3 935.4 21.4 10.2 Direct deposits (a) 814.5 837.3 838.5 729.9 -2.9 14.9 Indirect deposits (b) 651.4 636.2 615.0 624.2 5.9 -1.5 - Assets under management 313.6 312.5 313.9 258.8 -0.1 21.3 - Assets in custody 337.8 323.7 301.1 365.4 12.2 -17.6 Total Financial Intermediation Activities (TFIA) (a+b) 1,465.9 1,473.5 1,453.5 1,354.1 0.9 7.3 Loans to customers (1) 772.6 761.4 772.4 735.0 0.0 5.1 Securities 152.8 159.2 139.5 146.2 9.5 -4.6 Capital and reserves (2) 81.8 81.8 89.6 89.2 -8.7 0.4
PROFIT & LOSS ACCOUNT Operating Income 13.8 10.0 12.7 12.4 8.6 2.6 Ordinary Income, net 12.8 8.7 10.1 9.2 26.0 10.2 Income before Taxation 12.6 9.2 10.6 8.5 18.8 24.4 Net profit 15.0 13.3 5.6 4.1 165.8 37.7
RESOURCES Branch network 33 33 33 31 0.0 6.5 Personnel 364 365 367 367 -0.8 0.0 (1) Gross of expected loss (2) Includes the general banking risk fund and excludes newly recorded profits and losses.
On 29th December 2004, the purchase by three years, to 78.75 per cent. After seven years Banca Carige of a controlling stake in Milan’s the remaining 21.25 per cent may also be sold, Banca Cesare Ponti was finalised. The 51.09 so bringing Carige’s holding up to 100 per cent. per cent holding is expected to rise to 58.75 per Total amounts handled (financial intermediation cent after the first year and then, after a further activities and lending) reached 1,086.5 million,
238 an increase of 7.9 per cent over the previous Turning to the profit and loss account, the bank year. In particular, direct and indirect deposits recorded a loss for the year of 0.6 million after rose 7.9 per cent to 913.3 million and lending having broken even in 2003. Net interest increased by 5.8 per cent to 173.2 million. income amounted to 4.5 million, 33.4 per cent There was a 6.4 per cent rise in customer down on the year before. Non interest or deposits to 235.6 million and an 8.4 per cent service-generated income was up 1.5 per cent increase in indirect deposits to 677,7 million, to 10.2 million. The gross operating result was particularly in asset management (+14.2 per 14.7 million (-12.5 per cent). Operating costs cent; 224.8 million). The second component of fell 3.8 per cent to 13.5 million and writedowns this aggregate, assets in custody, rose 5.8 per were 15.5 per cent lower at 3.1 million. cent to 452.9 million. The bank ended the year with a negative Growth in lending (+5.8 per cent) brought the ordinary result of 1.9 million (2003: -0.9 total of the bank’s credits to 173.2 million; million). After extraordinary income of 0.1 short-term credits dropped 3.6 per cent, whilst million, a negative variation in the general medium/long-term lending increased by 21.1 banking risks reserve of 0.3 million and per cent. The bank’s total bad loans were recovered income tax of 0.8 million, the bank basically unchanged over 2003 at 14.7 million. recorded a loss for the year of 0.6 million. The value of securities in portfolio fell 33.9 per cent to 43.6 million.
BANCA CESARE PONTI (millions of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
BALANCE SHEET Total assets 268.0 245.7 255.5 274.0 4.9 -6.8 Direct deposits (a) 235.6 216.3 221.4 236.2 6.4 -6.3 Indirect deposits (b) 677.7 668.2 625.0 597.5 8.4 4.6 - Assets under management 224.8 212.8 196.9 123.6 14.2 59.3 - Assets in custody 452.9 455.4 428.2 473.9 5.8 -9.7 Total Financial Intermediation Activities (TFIA) (a+b) 913.3 884.5 846.4 833.7 7.9 1.5 Loans to customers (1) 173.2 170.6 163.8 160.8 5.8 1.9 Securities 43.6 40.1 66.0 69.0 -33.9 -4.4 Capital and reserves (2) 20.4 17.2 16.7 17.3 22.1 -3.3
PROFIT & LOSS ACCOUNT Operating Income 1.2 0.7 2.8 1.7 -56.7 67.0 Ordinary Income, net -1.9 0.3 -0.9 1.1 116.7 -180.5 Income before Taxation -1.8 0.4 -1.0 1.4 85.5 -170.1 Net profit -0.6 0.5 0.0 0.4 … -96.4
RESOURCES Branch network 44440.00.0 Personnel 119 119 121 121 -1.7 0.0 (1) Gross of expected loss (2) Includes the general banking risk fund and excludes newly recorded profits and losses.
Insurance subsidiaries
Total premiums collected by the two insurance higher than 2003. Claims increased 1.7% to subsidiaries, Carige Assicurazioni and Carige 410.3 million. The number of employees of the Vita Nuova, amounted to 715.2 million at 31st companies was 378. Re-organisation of the December 2004. This figure was 6.6 per cent distribution network continued during the year
239 with the number of insurance offices falling from 416 to 405.
BANCA CARIGE GROUP INSURANCE COMPANIES (thousands of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Premiums issued 715,182 506,150 670,730 676,214 6.6 -0.8 of which non-life car insurance (third party, fire & theft) 241,654 181,347 255,656 280,347 -5.5 -8.8 Claims paid 410,337 286,474 403,508 430,307 1.7 -6.2 Employees 378 384 377 402 0.3 -6.2 Offices 405 407 416 443 -2.6 -6.1
Banca Carige’s holdings in Carige Assicurazioni Assicurazioni for 42.3 million and the purchase and Carige Vita Nuova rose, respectively, to from the Basilese insurance group of its residual 98.11 per cent and 100 per cent during the stakes in both insurance subsidiaries as foreseen year following the subscription by the parent by agreements signed in 1997. company to a share capital increase by Carige
CARIGE ASSICURAZIONI (thousands of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Investments 617,077 603,101 553,650 512,288 11.5 8.1 Technical reserves (1) 591,118 574,641 570,234 477,948 3.7 19.3 Shareholders' equity 175,811 163,365 140,862 120,115 24.8 17.3 Net profit 3,055 2,733 2,710 2,251 12.7 20.4 Premiums issued 507,277 364,134 480,411 478,409 5.6 0.4 of which non-life car insurance (third party, fire & theft) 241,654 181,347 255,656 280,855 -5.5 -9.0 Percentage share 47.6% 49.8% 53.2% 58.7%
Claims received 172,810 112,829 141,666 153,658 22.0 -7.8 of which non-life car insurance (third party, fire & theft) 63,816 45,122 67,062 83,409 -4.8 -19.6 Claims paid (2) 334,515 231,648 335,424 364,932 -0.3 -8.1 Employees 328 335 327 352 0.3 -7.1 Offices 405 407 416 443 -2.6 -6.1 (1) Excluding reinsurance. (2) Item includes expenses relating to damages paid during the year.
Carige Assicurazioni closed the year with a third-party car insurance premiums and a 12.7 per cent increase in net profit in reduction by more than 28,000 contracts. comparison to 2003, up from 2.7 million to 3.1 Despite this drop in third-party car insurance million. premiums, there was a 3.4 per cent increase Total premiums issued in 2004 were 5.6 per (from 39.9 to 41.2 million) in other car-related cent higher than in 2003 at 507.3 million. A insurance premiums. Diversification from third- policy of careful risk monitoring continued and party car insurance produced consistent growth brought with it a further fall (-5.5 per cent) in
228 in non marine branches: total premiums issued Protezione Valore and Carige Index Evoluzione amounted to 224.4 million, up 21.5 per cent. Valore. In the second half of the year a unit In 1999, third-party car insurance represented linked policy, named Carige Unit 65.6% of premiums issued, whilst at the end of Dinamicamente Protetta, was issued. Distribution 2004 the share was 47.6 per cent, below the of the product took advantage of the cross market average (September 2004: 53.5 per selling opportunities offered by the Group and is cent). Other motor insurance cover represented reflected by the fact that 77.5 per cent (2003: 8.1 per cent and the non marine branches 76.7 per cent) of total subscriptions were made accounted for 44.2 per cent (2003: 38.5 per at the counters of our banks (161.2 million), cent). whilst the remaining 22.5 per cent (2003: 23.3 There was a increase in the number of accident per cent) were made at Carige Vita Nuova claims of around 31,000 (+22 per cent) as a offices (46.7 million). result of 34,000 more claims in other branches Total claims paid out during the year amounted (+46.1 per cent). This increase stems from to 75.8 million, an increase of 11.4 per cent sickness claims, which rose from 2,763 at over the previous year’s figure of 68.1 million. 31/12/03 to 30,163. However, there was a 4.8 Other administrative costs fell by 21.7 per cent per cent fall in the number of third-party car after those recorded in 2003 relating to the insurance claims to 63,816. incorporation of OPA Srl, a firm that offered Management costs dropped 4.5 per cent administrative, organisational and training accounting for 11 per cent of premiums (2003: support to the insurance office network. Asset 12.1 per cent). Reserves, excluding reinsurance, management produced an average return on rose by 2 per cent to 416.6 million. The assets invested of 3.8 per cent (2003: 4.4 per company’s solvability margin was 2.4 times cent), which in terms of separate management greater than the minimum level required. The lines produced the following returns: Norvita retention quota was 0.77 (2003: 0.90). At 31st 4.16 per cent; Carige Vita Nuova 4.01 per cent. December 2004, there were 328 members of The company’s real estate assets rose from 61.3 staff, 1 more than at the end of the previous to 82.2 million following the purchase of a hotel year. Restructuring of the distribution network in Milan for an investment of 27.2 million. The resulted in the closure of 11 offices, bringing the purchase was financed, in part, by the sale of total at 31/12/04 to 405. The number of offices another property in Milan and the sale of settling claims dropped from 50 to 46. securities in portfolio. The industry watchdog ISVAP in its letter of 9th There were no changes in staff levels during the July 2004 communicated its approval of the year (50 employees). During 2004, 294 offices company’s three-year plan 2004-06 that distributed Vita Nuova products, as a result of 6 includes, in the light of ISVAP recommendations, new openings and 21 closures (2003: 309). The reductions over three years to reinsurance geographical distribution of the offices is as treaties. follows: 95 offices in the north (32.3 per cent); On 27th September 2004 the extraordinary 87 in the centre of the country (29.6 per cent); meeting of Carige Assicurazioni deliberated: 56 offices in the south (19.05 per cent); 56 • a fully paid up share capital increase of offices in the islands (19.05 per cent). 12,220,000 euros; In October 2003, the pilot phase began of a • the issue of a subordinated bond loan project (‘Insieme di Più’) aimed at integrating the for 2.5 million. Group’s distribution channels by means of the On 30th December 2004, following Bank of Italy organisation and monitoring of authorisation, Banca Carige subscribed the banking/insurance activities (insurance-in-bank entirety of both the share capital and bond ‘bancassurance’, and bank-in-insurance issues. ‘assurbanca’). At the end of 2004, banking Carige Vita Nuova, closed the year with a service products sold to around 1,800 insurance net profit of 4 million, up 5.6 per cent in customers (‘assurbanca’) amounted to 41 comparison to 2003. Premiums collected rose million and premiums of just over 1 million were from 190.3 million to 207.9 million (+9.2 per collected from 3,000 banking customers cent). Total premiums at 31/12/04 amounted to (‘bancassurance’) thanks to the involvement of 1,167.6 million, up 14.4 per cent over the 115 insurance offices and 107 bank branches. previous year. With regards to the company’s product portfolio, a further two tranches of index linked policies were issued: Carige Index
242 CARIGE VITA NUOVA (thousands of euros)
Change % 31/12/04 30/9/04 31/12/03 31/12/02 2004 2003
Investments (1) 1,142,389 1,094,317 1,001,843 866,735 14.0 15.6 Technical reserves (2) (3) 1,048,576 998,459 903,847 768,674 16.0 17.6 Shareholders' equity 49,964 49,600 49,226 48,997 1.5 0.5 Net profit 4,013 2,818 3,801 2,187 5.6 73.8 Gross premiums issued 207,905 142,016 190,319 197,805 9.2 -3.8 - Insurance offices 46,690 28,488 44,278 43,551 5.4 1.7 - Banking branches 161,215 113,528 146,041 154,254 10.4 -5.3 * Individual policies 85,782 54,703 68,235 73,075 25.7 -6.6 * Collective policies 4,685 1,409 5,144 4,381 -8.9 17.4 * Unit linked 117,438 85,904 116,940 120,349 0.4 -2.8
Amounts paid 75,822 54,826 68,084 65,375 11.4 4.1 Employees 50 49 50 50 0.0 0.0 Offices 294 293 309 320 -4.9 -3.4 (1) Includes those investments in which risk levels are recognised and backed by the assured and pension funds. (2) Includes those reserves in which risk levels are recognised and backed by the assured and pension funds. (3) Excluding reinsurance.
Financial subsidiaries those scheduled (forecasted amounts: 2003 4.8 million; 2004 4.5 million) and amounted to 8.8 Argo Finance One Srl was formed in 2000 million, of which 3.1 million during 2004. as the special purpose vehicle for the Carige Asset Management SGR SpA, securitisation of bad loans carried out by the formed in 2003, received Bank of Italy parent company, Banca Carige. After the authorisation to carry out asset management purchase of a 60% holding by the latter, Argo services on 10th January 2004. The company’s Finance was consolidated into the Banca Carige activities, consistent with Group strategy, can be Group in 2001. In the light of the existing summarised as follows: private banking solutions service contract, the company’s activities are both in securities and funds (operational on 1st defined by the parent company. During 2004, February with the transfer to the company of securitisation-related revenues totalled 33.3 Banca Carige’s and then C.R. Savona’s asset million. In particular, total revenues collected in management activities); pension funds (due to 2004 are in line with best scenario levels start in the near future and initially concentrating foreseen in the original collection programme on the management of the Carige Open (expected revenues for 2004: 19.2 million). Pension Fund); delegated management of part Amounts received so far have meant the full of the securities portfolios of the Group’s banks reimbursement of the class A securities (40 and insurance companies in addition to the million) and the reimbursement of 53.4 million management of mutual funds. Carige SGR of class B securities. brands include specific funds for customers of Priamar Finance Srl is the special purpose the Group previously managed by Eptafund SGR vehicle formed during the securitisation of (Epta Carige Cash, Epta Carige Bond and Epta outstanding bad loans carried out by Cassa di Carige Equity) and transferred to the company Risparmio di Savona at the end of 2002. on 23rd December 2004. From 2nd August 2004 Repayment flows at 30/12/04 were in line with Carige SGR also manages as own brands ex-
229 Nextra A.M. SGR funds (Carige Monetario, were acquired for trading purposes. Total Carige Obbligazionario and Carige Azionario). purchases amounted to 8.6 million and sales to Other fund products include four new open 1 million. Capital gains realised on the sale of mutual fund lines that are distributed at the real estate during the year totalled 170,000 counters of the Group’s banks: Carige Azionario (2003: 700,000). On 28th September 2004, the Italiano (an Italian equity fund), Carige company’s shareholders meeting deliberated an Obbligazionario Internazionale (an international increase in share capital from 25,823,000 euros bond fund), Carige Bilanciato Euro (a balanced to 36,823,000 euros via the issue of 21,300 eurozone fund) and Carige Azionario Europa (a ordinary shares with a nominal value of 516.45 European equity fund). each. The issue was subscribed in its entirety by The company also manages two funds - Carige Banca Carige. Forziere Obbligazinario and Carige Forziere Immobiliare Ettore Vernazza SpA Dinamico - relating to part of the securities recorded an increased profit of 1,007,000 portfolios of the Group’s banks: euros over the previous year’s result of Turning to private banking solutions, Banca 890,000n euros. With the completion of major Carige and C.R. Savona delegated their renovation works to a prime site in the centre of securities and fund management to the Genoa, the company’s exposure on its current company. Carige Asset Management also account with the parent company amounted to manages assets on behalf of institutions such as 0.7 million. Gestilink insurance funds and the Banca del Immobiliare Carisa Srl, a fully-owned Monte di Lucca and C.R. Carrara Foundations. subsidiary of Cassa di Risparmio di Savona, Total assets under management in this ended the year with a loss of 16,000 euros, aggregate amounted to 1.6 billion at 31/12/04. principally the result of interest charges of Net balances since starting business reached 1.8 96,000 euros payable to Carisa. Fixed assets billion; 1.2 billion in Group assets and the remained unchanged at 4.4 million. remaining 0.6 billion in private assets. Centro Fiduciario CF SpA closed the year Total funds under management amounted to with a profit of 141.500 euros, up 16.3 per cent around 6.1 billion at the end of 2004, of which in comparison to 2003. Production revenues 4.5 billion refers to mutual funds, 1.3 billion to rose 3.7 per cent to 852,800 euros, whilst costs delegated Carige and Carisa private banking increased by 4.3 per cent to 632,500b euros. lines and 0.3 billion to Gestilink insurance These costs were principally related to funds. extraordinary software and service expenses. Net After its first full year of business the company operating income was 220,300 euros, up 2 per already broke even. cent over 2003. In addition to contained but encouraging operating income, there was a fall in financial revenues from 425,000 euros to Other subsidiaries 395,000 euros, a result that stemmed from falls in interest rates and an increase in extraordinary Galeazzo Srl principally manages property items of 254,000 euros, after the previous year’s leased to Banca Carige in Lavagna (to the east being negatively affected by charges relating to of Genoa). It also manages other property a court settlement following litigation with an ex- leased to third parties in Genoa. The company employee. recorded a net profit for 2004 of 56,000 euros Turning to the balance sheet, asset items include in comparison to 68,000 euros in 2003. The fall a rise in lending to customers (+26.7 per cent), in profit is due to reduced current account mainly as a result of increased turnover, an interest after the distribution of 1.2 million from increase in bank deposits (+15.5 per cent) and extraordinary reserves to shareholders. on the liabilities side, increases in amounts owed Columbus Carige Immobiliare SpA, which to suppliers (from 9,200 euros to 29,700 euros) manages the property leases of the Group’s and accrued expenses and deferred income subsidiaries as well as investing in real estate, (+30,100 euros), the latter following higher closed the year with a net profit of 332,000 deferred income on trust commissions for 2005. euros in comparison to 505,000 euros in 2003. Amounts under trust management went beyond There was intense activity in both the company’s 251 million, a 7.8 per cent increase in management and dealing fields. With regards to comparison to 2003. the first, the company purchased three properties for a total of 2 million, whilst fifteen properties
243 SIGNIFICANT EVENTS AFTER and Ms Garibaldi to carry out Board duties in st 31 DECEMBER 2004 his absence. Following the resignation of Mr Rosina as Chairman of the Board of Statutory Auditors of In the westernmost Ligurian province of Imperia C.R. Savona, on 28th February 2005, pursuant a new branch was opened on 31st January to article 2401 Italian Civil Code, his place was 2005, replacing one previously closed in the taken by Mr Semeria; Mr Traverso became same area last September. acting board member. Banca Carige’s Board of Directors in their After receiving authorisation for the publication meeting of 21st February 2005 approved the of the issue prospectus from Consob, on 2nd new Group Regulatory Document which defines March 2005, trading of Carige’s 10-year the powers of the parent company in terms of subordinated bond issue began (“Banca Carige management and coordination with regards to 1.50 per cent 2003-2013 hybrid subordinated its subsidiaries. issue with premium at maturity convertible into The same meeting also approved a new branch ordinary shares”). network plan as part of the Carige Group’s On 2nd March 2005 the Bank of Italy strategic objectives of territorial growth. communicated the formal inclusion of Banca On 22nd February 2005, the annual meeting of Cesare Ponti in the area of consolidation of the Banca del Monte di Lucca deliberated the Banca Carige Group with effect 29th December appointment of its Board of Statutory Auditors: 2004. Mr Traverso as Chairman, Mr Scotton as acting On 24th February 2005 a tier 3 subordinated Chairman and in his absence, Mr Semeria. Mr loan issue of 80 million was completed (maturity Baldini was confirmed as Statutory Board 24/8/07). The Bank of Italy authorised the Member. inclusion of the issue within Carige’s capital The annual meeting of Carige Asset requirements for market risk (Bank of Italy Management SGR held on 28th February communication no. 172218 of 18th February approved the following appointments: 2005) as part of the calculation of total capital Chairman, Mr Rosina, Deputy Chairman, Mr ratio, which as a result of the issue, rose 56 Paintendre; Acting Chairman of the Board of basis points from 9.51 to 10.07 cent. Statutory Auditors, Mr Scotton with Mr Ferrari
Genoa, 25th March 2005 The Board of Directors
244 CONSOLIDATED FINANCIAL STATEMENTS AT 31/12/2004
245 CONSOLIDATED BALANCE SHEET
ASSETS Change % (thousands of Euros) 31/12/04 31/12/03 2004 2003 10 - CASH AND DEPOSITS WITH CENTRAL BANKS AND POST OFFICES 189,643 192,509 - 1.5 - 2.4 20 - TREASURY BILLS AND SIMILAR BILLS ELIGIBLE FOR REFINANCING WITH CENTRAL BANKS 663,505 884,964 - 25.0 … 30 - DUE FROM BANKS: 1,566,753 918,431 70.6 - 30.4 (a) repayable on demand 267,352 346,689 - 22.9 - 36.7 (b) other deposits 1,299,401 571,742 … - 26.0 40 - LOANS TO CUSTOMERS 10,599,765 9,421,748 12.5 7.7 including: – loans using funds managed on behalf of third parties 817 255 … 35.6 50 - BONDS AND OTHER DEBT SECURITIES: 1,530,526 1,501,080 2.0 - 14.7 (a) issued by public bodies 987,018 721,226 36.9 - 30.1 (b) issued by banks 148,770 421,719 - 64.7 - 1.8 including: – own securities 100,484 63,930 57.2 42.3 (c) issued by financial institutions 331,749 258,709 28.2 29.7 including: – own securities - - - - (d) issued by others 62,989 99,426 - 36.6 0.5 60 - SHARES, QUOTAS AND OTHER EQUITY SECURITIES 858,734 177,932 … - 11.2 70 - EQUITY INVESTMENTS 85,069 77,524 9.7 - 25.3 (a) carried at equity 64,561 59,361 8.8 - 21.9 (b) others 20,508 18,163 12.9 - 34.7 80 - INVESTMENTS IN GROUP COMPANIES 232,803 172,600 34.9 13.3 (a) carried at equity 232,803 172,600 34.9 13.3 (b) others - - - - 90 - POSITIVE DIFFERENCE ARISING FROM CONSOLIDATION 188,394 87,538 … - 6.1 100 -POSITIVE DIFFERENCE ARISING FROM APPLICATION OF THE EQUITY METHOD 14,026 16,168 - 13.2 8.8 110 -INTANGIBLE FIXED ASSETS 462,009 474,210 - 2.6 - 1.3 including: – start-up costs 2,397 3,268 - 26.7 … – goodwill 431,849 442,392 - 2.4 - 1.9 120 - TANGIBLE FIXED ASSETS 1,176,083 1,019,881 15.3 5.5 140 - OWN SHARES 1,301 - … - 100.0 (nominal value: 436) 150 - OTHER ASSETS 793,066 864,654 - 8.3 6.9 160 - ACCRUED INCOME AND PREPAID EXPENSES: 113,547 109,015 4.2 20.7 (a) accrued income 106,147 100,842 5.3 25.3 (b) prepaid expenses 7,400 8,173 - 9.5 - 16.7 including: – discount on bonds issued 2,745 3,596 - 23.7 - 18.7 TOTAL ASSETS 18,475,224 15,918,254 16.1 3.4
246 LIABILITIES AND STOCKHOLDERS’ EQUITY Change % (thousands Euro) 31/12/04 31/12/03 2004 2003 10 - AMOUNTS OWED TO CREDIT INSTITUTIONS: 979,342 1,006,049 - 2.7 - 31.4 (a) repayable on demand 13,794 20,329 - 32.1 - 54.0 (b) with agreed maturity dates or periods of notice 965,548 985,720 - 2.0 - 30.7 20 - AMOUNTS OWED TO CUSTOMERS: 8,416,843 6,861,171 22.7 - 0.6 (a) repayable on demand 8,030,071 6,595,428 21.8 5.7 (b) with agreed maturity dates or periods of notice 386,772 265,743 45.5 - 59.8 30 - DEBTS EVIDENCED BY CERTIFICATES: 5,332,443 4,512,775 18.2 23.4 (a) bonds 4,927,471 4,073,476 21.0 29.5 (b) certificates of deposits 321,443 351,316 - 8.5 - 18.2 (c) other 83,529 87,983 - 5.1 8.2 40 - FUNDS MANAGED ON BEHALF OF THIRD PARTIES 968 368 … 18.7 50 - OTHER LIABILITIES 781,214 655,700 19.1 - 23.0 60 - ACCRUED EXPENSES AND DEFERRED INCOME: 177,519 166,822 6.4 11.9 (a) accrued expenses 96,289 97,455 - 1.2 16.1 (b) deferred income 81,230 69,367 17.1 6.4 70 - RESERVE FOR TERMINATION INDEMNITIES 111,164 96,814 14.8 - 6.5 80 - RESERVES FOR RISKS AND CHARGES 475,779 440,194 8.1 4.6 (a) reserves for pensions and similar commitments 319,343 295,310 8.1 0.4 (b) reserves for taxation 113,654 106,847 6.4 20.6 (c) consolidation reserves for future risks and charges - - - - (d) other reserves 42,782 38,037 12.5 - 0.3 90 - RESERVES FOR LOAN LOSSES 1,922 19,997 - 90.4 36.6 100 - RESERVES FOR GENERAL BANKING RISKS 100 100 - - 98.1 110 - SUBORDINATED LOANS 519,555 517,055 0.5 29.3 130 - NEGATIVE DIFFERENCE ARISING FROM APPLICATION OF THE EQUITY METHOD 43,176 34,953 23.5 - 0.5 140 - MINORITY INTERESTS 34,686 17,362 99.8 - 1.0 150 - CAPITAL STOCK 1,113,327 1,113,327 - 9.1 160 - ADDITIONAL PAID-IN CAPITAL 262,839 255,023 3.1 87.4 170 - RESERVES 114,762 127,752 - 10.2 - 6.1 (a) legal reserve 77,971 67,351 15.8 18.4 (b) reserve for purchase of treasury stock 1,301 - … - 100.0 (c) statutory reserves - - - - (d) other reserves 35,490 60,401 - 41.2 12.9 180 - REVALUATION RESERVES 8,649 8,050 7.4 - 200 - NET INCOME 100,936 84,742 19.1 28.1
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 18,475,224 15,918,254 16.1 3.4
GUARANTEES AND COMMITMENTS 10 - GUARANTEES GIVEN 1,242,876 1,336,530 - 7.0 - 4.0 including: – acceptances 5,593 2,859 95.6 - 32.7 – other guarantees 1,237,283 1,333,671 - 7.2 - 3.9 20 - COMMITMENTS 1,440,989 989,572 45.6 20.5 including: – repurchase agreements - - - -
247 INCOME STATEMENT
Change % (thousands of Euros) 31/12/04 31/12/03 2004 2003 10 - INTEREST INCOME AND SIMILAR REVENUES 694,586 613,535 13.2 - 3.4 including: – loans and advances to customers 521,547 494,103 5.6 1.6 – fixed-income securities 143,364 96,379 48.8 - 22.1 20 - INTEREST EXPENSE AND SIMILAR CHARGES - 289,512 - 238,334 21.5 - 14.9 including: – amounts owed to customers - 56,195 - 59,471 - 5.5 - 24.4 – securities issued - 155,778 - 135,891 14.6 - 7.9 30 - DIVIDENDS AND OTHER REVENUES: 4,306 18,536 - 76.8 … (a) from shares, quotas and other equity securities 1,667 13,085 - 87.3 … (b) from equity investments 2,639 5,451 - 51.6 - 7.2 (c) from equity investments in group companies - - … … 40 - COMMISSION INCOME 225,757 204,447 10.4 11.0 50 - COMMISSION EXPENSES - 19,580 - 16,351 19.7 19.3 60 - GAINS (LOSSES) FROM FINANCIAL TRANSACTIONS, NET 22,920 10,674 … … 70 - OTHER OPERATING INCOME 242,852 167,518 45.0 6.2 80 - ADMINISTRATIVE COSTS: - 470,598 - 416,916 12.9 11.5 (a) personnel - 291,869 - 268,412 8.7 15.3 including: – wages and salaries - 190,275 - 175,162 8.6 9.8 – social security costs - 52,832 - 49,179 7.4 10.2 – termination indemnities - 11,358 - 10,959 3.6 - 50.0 – pensions and similar commitments - 25,281 - 18,850 34.1 … (b) other administrative costs - 178,729 - 148,504 20.4 5.1 90 - DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS - 143,829 - 137,238 4.8 11.5 100 - PROVISIONS FOR RISKS AND CHARGES - 1,789 - 4,209 - 57.5 28.6 110 - OTHER OPERATING EXPENSES - 10,662 - 9,199 15.9 - 17.1 120 - PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS - 151,329 - 72,588 … 8.2 130 - RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS 9,010 11,295 - 20.2 - 14.8 140 - ADDITIONAL PROVISIONS FOR LOAN LOSSES - 1,470 - 19,744 - 92.6 13.9 150 - WRITE-DOWNS TO FINANCIAL FIXED ASSETS - - … … 160 - RECOVERIES OF FINANCIAL FIXED ASSETS 2- … … 170 - PROFIT (LOSSES) ON INVESTMENTS CARRIED AT EQUITY 23,507 10,030 … 17.8 180 - INCOME FROM ORDINARY ACTIVITIES 134,171 121,456 10.5 8.5 190 - EXTRAORDINARY INCOME 25,908 43,121 - 39.9 84.8 200 - EXTRAORDINARY EXPENSES - 8,690 - 8,149 6.6 18.7 210 - EXTRAORDINARY INCOME, NET 17,218 34,972 - 50.8 … 230 - VARIATION OF RESERVES FOR GENERAL BANKING RISKS - - 5,065 … … 240 - INCOME TAXES - 47,269 - 74,721 - 36.7 22.7 250 - MINORITY INTERESTS - 3,184 - 2,030 56.8 48.1 260 - NET INCOME 100,936 84,742 19.1 28.1
248 Company Activity Equity ratio CONSOLIDATED EXPLANATORY % NOTES Galeazzo Srl Real estate 100.000 Columbus Carige Real estate 100.000 Immobiliare SpA Immobiliare E. Vernazza Real estate 100.000 INTRODUCTION SpA Carige Asset Finance 100.000 These financial statements have been prepared in Management S.g.r. SpA ( compliance with Legislative decree 87/92 and the Centro Fiduciario SpA Trust 96.110 Bank of Italy provision dated 30/7/92 and company subsequent modifications. Cassa di Risparmio di Banking 95.901 The Balance Sheet and Income Statement show Savona SpA amounts in thousands of euros. Comparison is made Immobiliare Carisa Srl Real estate 95.901 to the business year ending 31/12/03. Captions Cassa di Risparmio di Banking 90.000 which show no amounts in the balance sheets of the Carrara SpA periods under examination have not been entered. Argo Finance One Srl Finance 60.000 In the explanatory notes, amounts are expressed in Priamar Finance Srl Finance 60.000 thousands of euros, unless otherwise stated. Captions Banca del Monte di Banking 54.000 which show no amounts for the periods under Lucca SpA examination have been omitted. Banca Cesare Ponti SpA Banking 51.857 Section 11.8 “Information regarding securitisation operations” contains details regarding the The following changes to the area of consolidation securitisation of performing loans carried out by the have taken place: Group leader in June 2004; the same section - on 14th January 2004, Banca Carige SpA provides details of previous securitisations completed the purchase of a further 55 per cent (performing and non performing credits) carried out of the share capital of Priamar Finance Srl from by Banca Carige and its subsidiary Cassa di Stitching Faro; Risparmio di Savona (Carisa), for which Carige also - on 16th January 2004, Banca Carige SpA acts as servicer. completed the purchase of 41.05 per cent of Section 12.6 “Securitisation transactions” provides Holding Carinord SpA’s share capital. The details of the securitisation-related activities carried acquisition provided Carige with access to out by the Group’s two special purpose vehicles, gaining control of Cassa di Risparmio di Carrara Argo One Finance Srl and Priamar Finance Srl. SpA (C.R. Carrara). On 21th April 2004 subject to In addition to details provided in the explanatory bank of Italy authorisation, Carinord 2 SpA was notes full details are also given in the Board of broken up and Carricarrara Holding SpA was Directors’ report. formed, the latter fully owned by Bance Carige, which had a 90 per cent holding in C.R. Carrara. On 2nd August, the Board of Directors of Banca Carige and the shareholders’ meeting of Caricarrara Holding approved the merger of the latter into Banca Carige. The merger deed granting Banca Carige a controlling stake of 90 per cent in Cassa di Risparmio di Carrara was signed on 1st September 2004 and recorded at the Registry of Companies in Genoa on 7th September; - on 30th July the meetings of Ligure Leasing SpA and C.R. Savona SpA approved the merger of the former into the latter following Bank of Italy authorisation. The merger deed was signed on 25th October 2004 and recorded at the Registry of Companies in Savona on 2nd November; Basis of consolidation - on 29th December the purchase of 51.09 per cent of the share capital of Banca Cesare Ponti SpA of The Consolidated Financial Statements contains Milan was completed. The ordinary and financial data relative to Banca Carige and all its extraordinary meeting of Banca Cesare Ponti subsidiaries operating directly or indirectly in approved the raising of the bank’s share capital banking, financial and non-financial services. from 12 to 13 million. Banca Carige’s The following companies were fully consolidated: shareholding in the bank following the share
249 capital increase rose (shareholders’ subscription: - during the year Carige Assicurazioni 807,740 euros) from 51.09 to 51.857 per cent. purchased a further 30 of its own shares; Following the acquisition of a controlling interest in - in December Banca Carige fully subscribed C.R. Carrara at the beginning of the year (initially via a share capital increase carried out by the acquisition of 41.05 per cent of Holding Carige Assicurazioni SpA of 12,220,000 Carinord 2 SpA on 16th January 2004), all costs and euros (from 132,872,800 to 148,085,600). revenues of the bank are recorded in the Banca Carige’s direct holding in the consolidated profit & loss account. In the light of the company rose to 98.239 per cent. fact that the purchase of a controlling interest in The Group’s equity ratio in the company rose from Banca Cesare Ponti was completed at the end of the 90.818 % to 99.505 % for Carige Assicurazioni and year (29th December 2004), only balance sheet from 92.809 % to 100 % for Carige Vita Nuova. captions were consolidated. During the year Assi 90 S.r.l. sold a 16 per cent With regards to changes recorded during the year interest in Assimilano S.r.l., so reducing its holding in following acquisitions, the table referring to Cassa di the company from 60 to 44 per cent. Consequently, Risparmio di Carrara states the opening balances of Assimilano S.r.l. is no longer a subsidiary of the the bank at the caption ‘other increases’; other Group, but a company in which the Group has a changes are recorded analytically. Following the substantial holding. purchase of Banca Cesare Ponti at the end of the The Group has significant positions in the ownership year, closing balances only were recorded at ‘other structures of the following companies: U.C. Sport e increases’. Sicurezza (49.876%); Atoma Srl (39.876%); Assistars Srl (20.439%); BDA SpA (11.963%); Fideass Srl (new The following companies were accounted by the denomination of Didiass Srl) (8.972%). The valuation equity method: of these companies is that stated in the respective financial statements in light of the fact that any Company Activity Equity valuation differences arising from the application of ratio % the equity method would be insignificant. Carige Vita Nuova SpA Insurance 100.00 For the same reason, the Group’s holding in Società 0 Consortile per il Diploma di Giurista d’Impresa a.r.l. was not valuated according to the equity method. Carige Assicurazioni SpA Insurance 99.505 Assi 90 Srl Insurance 59.814 Statements referred to related services The consolidated balance sheet was prepared by AG Srl Insurance 59.814 using the financial statements of the consolidated related services companies reclassified and adjusted to conform to Frankfurter Banking 47.500 regulations in force and the Group’s accounting Bankgesellschaft AG principles. Savona 2000 Srl Insurance 47.852 related services Reference date Assimilano Srl Insurance 26.318 Financial data from those statements used for related services consolidation are as at 31/12/04. The accounting of Autostrada dei Fiori SpA Other 20.456 the associated companies under the equity method Recina Servizi Srl Insurance 14.954 makes reference to the most recently approved related services balance sheet.
The consolidation of Carige Assicurazioni SpA and Consolidation principles Carige Vita Nuova was carried out by applying the Subsidiaries, excluding those operating in insurance, equity method in the light of the nature of insurance are fully consolidated. Therefore, assets, liabilities, companies’ activities and, subsequently, their off-balance sheet items as well as receivables and financial statements. payables are included. The insurance subsidiaries along with those companies offering insurance- With regards to the insurance subsidiaries: related services were accounted for under the equity - in March 2004, the Group leader Banca method. Carige subscribed 18,948 new shares with a Consolidated holdings in subsidiaries are offset by nominal value of 982 and a unitary issue the corresponding proportion of the subsidiaries’ premium of 193 as part of the equity raising carrying value of net assets recorded in the operation carried out by Carige consolidated statement for the first time. In the event Assicurazioni SpA for 18,636,396 euros; of differences emerging, these are put down to the - in June 2004, Banca Carige acquired from subsidiaries’ assets and liabilities. Differences for the La Basilese 8,672,000 Carige Assicurazioni year resulting from consolidation pertaining to third shares and 6,400,000 Carige Vita Nuova parties are recorded at a specific caption. shares; In accordance with the Bank of Italy’s instructions regarding consolidated statements, positive
250 differences arising from consolidation are partially On 15th June 2002 Law decree 63/2002 was offset by the relative revaluation and credit risk converted into Law 212/2002 implementing the reserve provisions of those subsidiaries to which they European Commission’s decision and suspending the refer. In addition, these are written down against tax relief contained in articles 22 and 23 of negative differences stemming from consolidation Legislative decree 153/99 from 2001 until the until the two amounts match. question is resolved. From 2001 onwards awaiting The remaining amount is considered goodwill and is judgement on ABI’s appeal, the Bank suspended charged to assets at “Positive differences arising from special reserve provisions. On 24th December 2002 consolidation”. Subsequent to the year in which Law decree 282/02 was enacted which, in carrying consolidation were calculated, changes pertaining to out the provisions of the EU Commission, obliged the Group in subsidiaries’ net assets are recorded in those banks which had benefited from Legislative the consolidated statements at the relevant caption decree 153/99 to return the sums owed plus interest under liabilities; changes relative to third parties are charges within 31/12/02. recorded at caption 140 “Minority interests”. The Group leader, Banca Carige SpA, repaid 1,557 Significant intra-subsidiary relations have been thousand. Given the nature of the case (litigation with eliminated. the European Community) this amount was recorded at item ‘tax credits’. The accounting principles applied in the preparation The total credit is matched by adequate provisions to of financial statements of those companies tax reserves in the event of a negative decision on the consolidated were brought into line in the case of part of the Court. significant differences being present at consolidation. Special rate mortgages (Law 133/99 and The value of insurance companies and those in which article 145 of Law accompanying 2001 Banca Carige has a significant holding was Budget) calculated by applying the equity method. In the case Article 29 of Law 133/99 foresees the re-negotiation of a company in which Banca Carige has a of mortgage with charges, all or in part, to be significant interest having itself to prepare a covered by the State or public bodies at an reference consolidated statement, consolidated net assets were interest rate equal to the system-wide average (as used as the basis for calculation. defined by article 145 of the Law accompanying the Positive differences arising from the increase in value 2001 budget). of the investment are recorded under net equity as “equity investments” for the share that refers to fixed The renegotiation rate to be applied was established assets, and at “Positive differences arising from by article 2 of the Economy and Finance Ministry’s application of the equity method” for the part related Decree dated 31/3/03. to goodwill. On renegotiation at the rate defined in the above Negative differences are classified under “Negative Decree, charges calculated by Banca Carige SpA for differences arising from application of the equity 2003 and previous years will be met by the specific method”. reserve constituted in 2000.
Increases or decreases occurring during the year not Capitalisation of interest due (Constitutional previously recorded are added to or subtracted from Court Sentence 425 of 9/10/00) those values of investments carried at equity recorded The Constitutional Court’s ruling number 425 of in the consolidated statements immediately prior to 9/10/00 declared illegitimate the contents of article these. The variation is recorded in the P&L at caption 25, Legislative decree 344/99. The article excluded 70 “gains (losses) on investments carried at equity” to from liability to legal action those clauses between the extent of the subsidiary’s gain or loss. banks and customers relating to capitalisation of interest due signed after the coming into effect of the Tax relief foreseen by articles 22 and 23 of Inter-ministerial Committee for Credit and Saving’s Legislative decree 153/99 deliberation of 22/4/00, enacting Legislative decree The European Commission in its decision of 11th 344/99. December 2001 judged the tax relief foreseen by The Constitutional Court confined its judgement Legislative decree 153/99 as State aid incompatible exclusively to a criticism of the government in its with the principles of the common market. enactment of the above-mentioned law. In the light of the above and the inevitability of further The Italian Government lodged an appeal against legislation on the matter, the banks of the Group the decision with the Court of European Justice. The have declined the requests they have received from Italian Banking Association (ABI) also presented on customers for the return of interest paid until June 25th February 2002 an appeal against the decision at 2000 as a result of the quarterly capitalisation of the Tribunal of Luxemburg. Banca Carige actively bank interest income. supports ABI’s decision and will give the necessary The number of actions started for the return of help required in preparing an effective line of interest charges paid has progressively decreased defence.
251 over time. Given that it is reasonable to expect that the actions will be time-barred after ten years, the exceptionable period of time as at 2004 is reduced from 1994 to These consolidated financial statements were 30th June 2000. audited by Deloitte & Touche SpA. The selection of For the limited number of actions started, the Bank the Bank’s auditors for the period 2003-2005 was strongly contests the grounds for returning amounts approved by the Shareholders’ Meeting of 31/3/03 previously paid also in the light of differing positions pursuant to Legislative decree 58/98. The duties of regarding the matter on the part of judges. If the auditors for the period are the auditing of the anything, the majority of first instance and appeal Bank’s financial statements, the consolidated court judges have so far upheld the validity of using financial statements, and a limited review of the half different time periods for the calculation of yearly report at 30 June. customers’ interest income and charges.
252 paragraph 26 of Law 350/2003) released capital PART A gains previously subject to suspended liability to tax ACCOUNTING PRINCIPLES (Law 218/90, “Amato Law”) through payment of a one-off tax charge (imposta sostitutiva) of 9 per cent. The freed-up capital allows for realignment in tax and book values of those assets (property, securities, SECTION 1 equity investments) valuated at the moment of transfer to the newly-formed Banca Carige SpA The Accounting Policies are in compliance with law following the provisions of the Amato Law. The tax decree 87/92 and the Bank of Italy’s provisions of paid totalled 14.6 million and is recorded at reserves 30/7/92 and subsequent modifications; one change (“Extraordinary taxed reserve”). to the accounting principles adopted has been made in comparison to those utilised in the preparation of With regards to the amortisation of real estate the 2003 Consolidated Statements; trading property, the criterion used to calculate the useful life securities are valuated at market price rather than the of the property portfolio was changed from the previously adopted criterion of the lowest between previous 3 per cent (corresponding to the maximum cost or market. The same criterion is applied to of ordinary tax rate applied up to 31/12/03) to an balance sheet transactions. The change, justified on annual flat rate of 1.5 per cent. organisational grounds, has generated an overall Total revaluations for 2004, including assets released positive effect on gross profit of the fully consolidated via the payment of tax pursuant to Law 218/90, were companies amounting to 10.3 million (6.5 million on 1.8 million lower than those generated under the net profit), of which 4.3 million refers to derivatives previous criterion. This result led to a corresponding and hedged listed securities, in addition to 6 million positive effect on the item “Tangible assets” and on referring to other listed securities. gross income (1.3 million on the net result). The economic effect is recorded in the P&L at caption 60 “Gains (losses) from financial transactions” despite the intrinsic difficulties the caption presents in LOANS, GUARANTEES AND COMMITMENTS terms of differentiating between present and past Loans are stated at their estimated realizable value earnings. and are determined according to debtors’ solvency The effect on the balance sheet refers to securities, and the debt-paying difficulty of the debtor’s home other assets and other liabilities. With regards to the country. Group’s insurance subsidiaries accounted for under The valuation of loans is made under the application the equity method, the new principle was not adopted of either an analytic or lump-sum method. in the preparation of the single companies’ The interest on overdue loans is adjusted by the statements. The effect of the change was, however, portion of loans considered to be irrecoverable. calculated and recorded in the consolidated Reserves for loan losses, recorded under “Liabilities”, statements. The positive effect on gross profit relative have been created only to offset contingent credit to the Group was 16 million (net profit: 10 million). risks. The positive net economic effect was recorded at Guarantees and commitments with intrinsic credit caption 170 ‘Gains (losses) on investments carried at risk, including derivatives on banking book credits equity’, whilst the financial effect was recorded at (the Bank takes on credit risk in its role as protection balance sheet caption 80 ‘Holdings in Group seller), are valued according to the same criteria as companies accounted for by the equity method’. those applied to credits. Expected losses on these transactions are covered by a specific fund for risks The time horizon adopted in the calculation of and charges recorded at liabilities. deferred assets and liabilities was extended in line with IAS 12 beyond the previous five-year period to an indefinite period of time and was applied for the SECURITIES PORTFOLIO AND OFF-BALANCE first time in the preparation of the interim statement SHEET TRANSACTIONS EXCLUDING THOSE at 30th June 2004. The extension appears justified on IN CURRENCY the basis of past performance and realistic expectations regarding future earnings as a result of Investment securities. which there presently appear no grounds to question Investment securities are valued at cost, adjusted on the certainty and reasonableness of recovery of the an accruals basis for the difference between cost and tax in question. their redemption at maturity and includes As a result of this change to the time horizon applied, unamortized issue premiums or discounts. increased deferred tax assets in the form of tax In the event of long term deterioration of the issuer’s advanced recorded at “other assets” amounted to solvency, the securities are written down. In the case 23.1 million, with a corresponding positive effect on of those securities deriving from structured securitised net profit. debt transactions, writing down is carried out on the basis of expected proceeds stemming from the The Bank in line with provisions of the Law underlying. accompanying the 2004 Budget (article 2,
253 The original value of investment securities is b) the residual commitments to purchase are reinstated when the reasons for writing down cease to evaluated at either settlement price or market apply. price, whichever is lower; c) the residual commitments to sell are evaluated at Trading securities. either settlement price or book value, whichever is a) trading securities quoted on organised markets lower. are valued at the average market price for the last month; in determining the market value of Derivative contracts on securities, interest rate etc., mutual fund quotas, reference is also made to are evaluated accordingly: prices supplied by asset manager trusts in their a) Trading contracts are valued as follows: communications to markets. contracts listed on organised markets are valued b) securities not quoted on organised markets are at market price; unlisted contracts are valued at valued at cost adjusted for market trends and either cost or market, whichever is the lower. issuer solvency. In the case of those securities Listed contracts include: deriving from structured securitised debt - contracts listed on organised markets, the market transactions, value adjustments are carried out price of which is the official price quoted on the on the basis of expected proceeds stemming last trading day of the year; from the underlying. - non-listed contracts subject to the application of c) in the case of publicly-traded own shares or official pricing mechanisms, the market price of bonds or those issued by companies of the which is the replacement price calculated on the Group, at either cost or market, whichever is basis of the same official pricing mechanisms on lower; in the case of own securities that are not the last trading day of the year. publicly-traded, at purchase price written down b) valuation of hedging contracts is consistent with as at point b). the underlying hedged assets and liabilities; c) contracts relating to the purchase of an investment The purchase price, determined according to the in a subsidiary are valuated at cost, written down in principle of daily weighted average, includes the case of a persistent worsening of the adjustments for the relevant annual quota of issue counterpart’s solvency. premium or discount accumulated during the period the securities are held. EQUITY INVESTMENTS Securities held at 1/12/91 and still in portfolio at The Bank’s stock rights in relation to its subsidiaries year end 2004 are valued at cost defined as the are included under holdings. These rights, in the form value of transfer to Banca Carige at 1/12/91 and of securities or not, are held for investment. adjusted for issue premium or discount pursuant to Subsidiaries either full consolidated or accounted for Legislative decree 719/94 and subsequent changes. according to the equity method are valuated The original value of the securities is reinstated when according to the principles of consolidated previously the reasons for writing down cease to apply. illustrated. Any securities to be transferred from the investment to Other holdings are valued at purchase cost or sub- trading portfolio will be recorded at the book value scription as according to Law 218/90. The cost is on the date of transfer calculated on the basis of the written down to reflect any permanent loss in value. criteria applied to investment securities foreseen in The original value is reinstated when the reasons for the Bank of Italy’s communication of 12/6/01, writing down ceased to apply. Dividends from CONSOB’s communication no.95001286 of holdings valued at cost are recorded in the 15/2/95, the latter modified by CONSOB’s letter accounting period in which they were deliberated, dated 15/6/01. Securities transferred still present in usually coinciding with the period of collection. portfolio at year end are valuated according to the criteria applied to the portfolio to which they are FOREIGN CURRENCY ASSETS AND destined LIABILITIES INCLUDING OFF-BALANCE SHEET TRANSACTIONS Off balance sheet operations, excluding Assets, excluding equity investments, and liabilities those in currency. expressed in foreign currencies are valued applying Unsettled securities transactions are evaluated the spot rate at 31/12/2004. according to the criteria of the portfolio to which they Equity investments expressed in foreign currencies are are destined. Unsettled trading securities transactions valued according to the rate in force at the time of are evaluated accordingly: purchase. a) with regards to commitments to purchase and Off-balance sheet transactions expressed in foreign commitments to sell which have the same currencies are valued: underlying securities with the same nominal value, – at the spot rate as of the last business day of the any positive difference between the settlement period in the case of unsettled spot contracts; price of the commitment to purchase and the – at the forward exchange rate as of the last settlement price of the commitment to sell is business day of the period for maturities recorded in the income statement;
254 corresponding to those of the contracts being securities, which are recorded at a value valued, in the case of forward transactions. corresponding to net proceeds plus accrued interest.
Derivatives contracts on currency are valuated TERMINATION INDEMNITY according to the criteria applied to derivatives Termination indemnity is in accordance with current recorded at “Off-balance sheet transactions legislation. (excluding those in currency)”. In the case of on-balance sheet assets and liabilities RESERVES FOR RISKS AND CHARGES - linked to off-balance sheet assets and liabilities, off- RESERVES FOR TAXATION balance sheet items are accounted for in a manner Provisions for tax were calculated by each company similar to the accounting of on-balance sheet items. on the basis of forecasted tax liabilities for the period. Deferred tax provisions have been made relating to TANGIBLE FIXED ASSETS those consolidated revaluations that have had a Tangible assets are recorded at purchase price plus material effect on the result for the accounting period related charges, and include leased assets and those and for which subsequently liability to tax is expected. assets that are to be leased. In order to present income statement and balance The value of tangible fixed assets includes revaluation sheet items more completely, taxes relating to in accordance with Laws 575/75, 72/83, 413/91 dividends distributed by subsidiaries and those and with reference to capital gains, Law 218/90. companies accounted for according to the equity Advances to supplies for the purpose of tangible fixed method are recorded net of benefits deriving from the assets are included under tangible fixed assets. use of related tax credits. Depreciation is determined by using the straight-line method over the useful life of each category. OTHER TAX ASPECTS - DEFERRED TAX: Objects of art, being assets which conserve if not POSITIVE AND NEGATIVE EFFECTS increase their value, are not amortized. The calculation of deferred tax is made on the basis Included in this category are leased assets, in line of the equity method with reference to the timing with the equity method. differences existing between the value attributed to an asset or liability under accounting criteria and the INTANGIBLE FIXED ASSETS value attributed to the same for the calculation of tax. Intangible fixed assets are, in those cases foreseen by Assets for tax advances the current financial year are relevant legislation, recorded with the consent of the recorded from the current financial year according to Board of Statutory Auditors and are amortized on a the criteria illustrated at the beginning of this section. straight-line basis. Start-up and improvement costs in The recording of liabilities for taxes payable in the addition to research and development costs are future is subject to the condition that there is a amortised over a period not exceeding five years. possibility of the liability to tax occurring. Amortisation of goodwill stemming from the purchase The treatment of deferred tax in these financial of branches from Banco di Sicilia, Intesa and statements is in accordance with the Bank of Italy's Capitalia will be carried out over twenty years from instructions dated 3/8/99. 1st January 2001, 1st October 2001 and 1st January 2003. SUPPLEMENTARY PENSION FUND The length of amortisation corresponds to the The subsidiaries’ supplementary pension funds are average length of time of goodwill intrinsic in the managed according to regulations specific to each branches acquired. company. Amortisation rates on goodwill deriving from the purchase of branches stem from the application of an ACCRUALS AND DEFERRALS analytical model which takes into account the Accruals and deferrals are calculated in accordance expected returns on the branches acquired and the with the matching principle. period of time required for their integration into the Banca Carige Group. The method utilises a rising-charge rate until the POSITIVE CONSOLIDATION AND NET integration of the branches acquired is completed EQUITY DIFFERENCES (2006 for the ex-Banco di Sicilia branches; 2007 for Positive consolidation and net equity differences are the ex-Intesa Group branches; 2008 for the ex- amortised over five years. Capitalia Group branches). Post-integration Positive net equity differences relative to majority amortisation will be on a fixed-charge basis. holdings in insurance subsidiaries are amortised over With the application of this methodology, a weighted a longer period of time in the light of the nature of average rate of 2.27 % was applied for 2004. insurance companies' activities and the reasonable expectation of slower depreciation. PAYABLES Payables are recorded at face value, with the exception of zero coupon and one coupon debt
255 Consequently, positive net equity differences SECTION 2 stemming from the consolidation of the insurance subsidiaries Carige Assicurazioni and Carige Vita TAX-RELATED ADJUSTMENTS AND Nuova are amortised over fifteen years. PROVISIONS Differences respectively of net equity and consolidation relative to Cassa di Risparmio di 2.1 Tax Adjustments Savona and Banca del Monte di Lucca are amortised Not carried out (1) over twenty years. With regards to consolidation differences arising from the acquisition of Banca 2.2 Tax Provisions Cesare Ponti SpA, no amortisation for the year was Not carried out (1) carried out following the incorporation of the bank at year end (29th December 2004). Amortisation will begin from 2005 for 20 years, the same period of (1) abrogation of article 15, paragraph 3 of time utilised by the other banks of the Groups. Legislative decree 87/92 pursuant to article 7, Legislative decree 37/2004.
256 PART B CONSOLIDATED BALANCE SHEET
SECTION 1
LOANS
The consolidated loans portfolio, summarized in this section, amounts to 12,356,161 thousands of euros and is analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Cash and deposits with central banks and post offices (caption 10) 189,643 1.5 192,509 1.8 – Due from banks (caption 30) 1,566,753 12.7 918,431 8.7 – Loans to customers (caption 40) 10,599,765 85.8 9,421,748 89.5 Total 12,356,161 100.0 10,532,688 100.0
Change 31/12/04 31/12/03 absolute % CAPTION 10 "CASH AND DEPOSITS WITH CENTRAL BANKS AND POST OFFICES” 189,643 192,509 -2,866 -1.5 Cash 189,132 191,271 -2,139 -1.1 Promissory notes of Bank of Italy and postal orders and cheques 6 134 -128 -95.5 Deposits with – central banks - - - - – post offices 505 1,104 -599 -54.3 Total 189,643 192,509 -2,866 -1.5
The caption includes the following amounts stemming from the first time incorporation of Cassa di Risparmio di Carrara and Banca Cesare Ponti: – Cassa di Risparmio di Carrara: 14,340,000 euros; – Banca Cesare Ponti: 633,000 euros.
Change 31/12/04 31/12/03 absolute % 1.1 CAPTION 30 "DUE FROM BANKS" 1,566,753 918,431 648,322 70.6 (a) deposits with central banks 179,469 114,306 65,163 57.0 (b) bills eligible for refinancing by central banks - - - - (c) loans for leased assests - - - - (d) repurchase agreements 224,295 - 224,295 … (e) loans of securities - - - -
257 Caption 30 detail by technical form is the following:
Change 31/12/04 31/12/03 absolute % Nominal value Deposits with central banks 179,469 114,306 65,163 57.0 – Compulsory reserves 179,469 114,306 65,163 57.0 Deposits with banks 1,392,023 808,021 584,002 72.3 – Deposits 1,058,299 725,486 332,813 45.9 – Repurchase agreements 224,295 - 224,295 … – Discounted notes 1,845 1,029 816 79.3 – Overdraft facilities 69,037 41,232 27,805 67.4 – Loans (Financial backing) 11,284 11,098 186 1.7 – Long term loans 918 1,364 -446 -32.7 – Bad loans 18,298 17,455 843 4.8 – Other 8,047 10,357 -2,310 -22.3 1,571,492 922,327 649,165 70.4 (–) Total specific allowances 4,739 3,896 843 21.6 – Long term loans 4,226 3,383 843 24.9 – Other loans 513 513 - - Total 1,566,753 918,431 648,322 70.6
The caption includes 12,617,000 euros (net of infragroup connections) referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA and 42,508,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA. At 31/12/04, all non-guaranteed credits to residents outside the OECD were valuated analytically; credit risk positions are classified as either bad loans or watchlists.
1.2 CASH CREDITS BANKS 31/12/04 31/12/03 Specific Specific CATEGORIES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at risks 19,521 4,739 14,782 19,281 3,896 15,385 A.1 Bad loans 18,298 4,226 14,072 17,455 3,383 14,072 A.2 Watchlists 703 513 190 792 513 279 A.3 Credits undergoing restructuring ------A.4 Restructured loans ------A.5 Non-guaranteed credits towards countries at risk 520 - 520 1,034 - 1,034 B. Performing credits 1,551,971 - 1,551,971 903,046 - 903,046
At 31/12/04, items A.1 “Bad loans” and A.2 “Watchlists” refer entirely to country-risk positions.
258 1.3 DOUBTFUL LOANS BANKS Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/03 17,455 792 - - 1,034 A.1 of which: interest on overdue loans 1,100 - - - - B. Increases 843 - - - 144 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 842 - - - - B.3 transfer from other doubtful loan categories - - - - - B.4 other increases 1 - - - 144 C. Decreases - 89 - - 658 C.1 re-performing credits - - - - - C.2 write offs - - - - - C.3 payments received - - - - 658 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - - C.6 other decreases - 89 - - - D. Total closing exposure at 31/12/04 18,298 703 - - 520 D.1 of which: interest on overdue loans 1,942 - - - -
Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/02 21,720 445 - - 967 A.1 of which: interest on overdue loans 364 - - - - B. Increases 1,101 502 - - 701 B.1 ex-performing loans - - - - - B.2 interest on overdue loans 1,100 - - - - B.3 transfer from other doubtful loan categories - 484 - - - B.4 other increases 1 18 - - 701 C. Decreases 5,366 155 - - 634 C.1 re-performing credits - - - - - C.2 write offs 5,366 - - - - C.3 payments received - - - - 1 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - - - - 484 C.6 other decreases - 155 - - 149 D. Total closing exposure at 31/12/03 17,455 792 - - 1,034 D.1 of which: interest on overdue loans 1,100 - - - -
259 1.4 TOTAL VALUE ADJUSTMENTS BANKS Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/03 3,383 513 - - - - A.1 of which: interest on overdue loans 1,100 - - - - - B. Increases 843 - - - - - B.1 adjustments 843 - - - - - B.1.1 of which: interest on overdue loans 843 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases ------C.1 recoveries stemming from evaluation ------C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs ------C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 31/12/04 4,226 513 - - - - D.1 of which: interest on overdue loans 1,942 - - - - -
Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/02 7,648 267 - - - - A.1 of which: interest on overdue loans 365 - - - - - B. Increases 1,101 296 - - - - B.1 adjustments 1,101 296 - - - - B.1.1 of which: interest on overdue loans 1,100 - - - - - B.2 amounts from credit risk fund ------B.3 transfer from other loan categories ------B.4 other increases ------C. Decreases 5,366 50 - - - - C.1 recoveries stemming from evaluation - 50 - - - - C.1.1 of which: interest on overdue loans ------C.2 recoveries stemming from payments received ------C.2.1 of which: interest on overdue loans ------C.3 write offs 5,366 - - - - - C.4 transfer to other loan categories ------C.5 other decreases ------D. Total closing adjustments at 31/12/03 3,383 513 - - - - D.1 of which: interest on overdue loans 1,100 - - - - -
Tables 1.3 and 1.4 were not affected by the first-time full consolidation of C.R. Carrara and Banca Cesare Ponti as both banks are the beneficiaries of non adjusted performing credits.
260 Change 31/12/04 31/12/03 absolute % 1.5 CAPTION 40 “LOANS TO CUSTOMERS” 10,599,765 9,421,748 1,178,017 12.5 (a) bills eligible for refinancing by central banks - - - - (b) loans for leased assets 13,127 13,917 -790 -5.7 (c) repurchase agreements - - - - (d) loans of securities - - - -
Coption 40 detail by technical form is the following:
Change 31/12/04 31/12/03 absolute % Nominal value Discounted notes 28,223 32,784 -4,561 -13.9 Advances with recourse 368,863 283,334 85,529 30.2 Current accounts 1,941,816 1,514,592 427,224 28.2 Other non-current account loans 2,114,359 2,091,211 23,148 1.1 Loans backed by pledged assets 16,159 14,981 1,178 7.9 Mortgage loans 5,356,022 4,925,453 430,569 8.7 Salary backed loans 25,602 16,977 8,625 50.8 Consumer credit loans 4,189 4,242 -53 -1.2 Factoring 90,147 99,141 -8,994 -9.1 Loans for leased assets 13,127 13,917 -790 -5.7 Bad loans 494,517 327,981 166,536 50.8 Loans for securitisations 103,690 8,728 94,962 … Postal bonds 132,000 211,000 -79,000 -37.4 Other 110,569 37,209 73,360 … 10,799,283 9,581,550 1,217,733 12.7 (–) Total specific allowances 199,518 159,802 39,716 24.9 – Bad loans 178,274 137,327 40,947 29.8 – Other 21,244 22,475 -1,231 -5.5 Total 10,599,765 9,421,748 1,178,017 12.5
The caption includes 749,420,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA and 164,250,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
The nominal value of the credits was adjusted to take into account expected losses as follows:
31/12/04 31/12/03 – analytic allowances 187,422 152,321 – lump-sum allowances 12,096 7,481 - country risks - - - other 12,096 7,481 Total 199,518 159,802
All bad loan positions are evaluated analytically as are significant watchlist and country-risk positions specified at 1.1. Other watchlists are evaluated on a lump-sum basis.
261 Rescheduled loans were evaluated analytically calculating future flows on the basis of the difference between renegotiated interest rates and the annual average yield for interbank company loans for 2004.
Change 31/12/04 31/12/03 absolute % 1.6 SECURED LOANS TO CUSTOMERS 6,500,396 5,610,934 889,462 15.9 (a) by mortgages 4,446,742 3,847,756 598,986 15.6 (b) by pledges on: 317,653 152,445 165,208 … 1. Cash deposits 12,707 3,592 9,115 … 2. Securities 274,692 133,390 141,302 … 3. Other valuables 30,254 15,463 14,791 95.7 (c) by guarantees from: 1,736,001 1,610,733 125,268 7.8 1. Governments - 50 -50 -100.0 2. Other public entities 25,938 8,084 17,854 … 3. Banks 17,156 13,513 3,643 27.0 4. Other operators 1,692,907 1,589,086 103,821 6.5
This detail does not include loans to government and public bodies.
1.7 CASH CREDITS CUSTOMERS 31/12/04 31/12/03 Specific Specific CATEGORIES/BALANCES Gross value Net value Gross value Net value allowances allowances A. Credits at risks 690,266 195,104 495,162 572,937 159,762 413,175 A.1 Bad loans 502,987 178,274 324,713 335,460 137,327 198,133 A.2 Watchlists 172,792 16,205 156,587 211,922 20,203 191,719 A.3 Credits undergoing restructuring 4,385 362 4,023 2,406 - 2,406 A.4 Restructured loans 4,290 263 4,027 11,717 2,232 9,485 A.5 Non-guaranteed credits towards countries at risk 5,812 - 5,812 11,432 - 11,432 B. Performing credits 10,827,743 4,414 10,823,329 9,628,669 40 9,628,629
The credits presented in the table refer to balance sheet asset caption 40 "Loans and advances to customers" and to credits related to leasing transactions which totalled 718,726 thousand euros at 31/12/04. In particular, 8,470 thousand euros is in the form of bad loans and is covered for 2,944 thousand euros by liabilities caption 80c "Reserves for loan losses - other reserves". Leasing transactions are included at assets caption 120 " Tangible assets" for a total of 780,400 thousand euros. Item A.1 “Bad loans” includes gross exposures and writedowns on country-risk positions of 106 and 36 thousand euros; item A.2 “Watchlists” does not include gross exposures and writedowns on country-risk positions. The first-time full consolidation of Cassa di Risparmio di Carrara had the following effects on cash credit items: Gross bad loans: 30,774,000 euros; writedowns on bad loans: 18,219,000 euros; gross watchlist positions: 7,361,000 euros; redress provisions to watchlists: 589,000 euros; gross restructured credits: 226,000 euros; writedowns on restructured credits: 1,000 euros; non-guaranteed country-risk credits: 50,000 euros; gross performing credits: 724,223,000 euros; writedowns to performing credits: 4,405,000 euros. The first-time full consolidation of Banca Cesare Ponti had the following effects on cash credit items: Gross bad loans: 14,659,000 euros; writedowns on bad loans: 8,994,000 euros; gross watchlist positions: 12,283,000 euros; redress provisions to watchlists: 2,583,000 euros; non-guaranteed country-risk credits: 55,000 euros; gross performing credits: 148,830,000 euros.
262 1.8 DOUBTFUL LOANS CUSTOMERS Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/03 335,460 211,922 2,406 11,717 11,432 A.1 of which: interest on overdue loans 47,259 5,060 - - - B. Increases 361,129 102,920 2,373 1,428 586 B.1 ex-performing loans 224,487 77,403 2,373 1,086 52 B.2 interest on overdue loans 18,001 2,467 - - - B.3 transfer from other doubtful loan categories 61,347 - - - - B.4 other increases 57,294 23,050 - 342 534 C. Decreases 193,602 142,050 394 8,855 6,206 C.1 re-performing credits 807 41,114 - 6,395 - C.2 write offs 149,154 5,956 - 2,429 - C.3 payments received 43,612 15,793 - 31 5,340 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories - 61,347 - - - C.6 other decreases 29 17,840 394 - 866 D. Total closing exposure at 31/12/04 502,987 172,792 4,385 4,290 5,812 D.1 of which: interest on overdue loans 58,398 4,809 - - -
Item B.4 “other increases” also includes: – amounts deriving from the first-time full consolidation of Cassa di Risparmio di Carrara (initial gross exposure) and in particular bad loans of 30,297,000 euros and watchlists of 5,036,000 euros. – amounts deriving from the first-time full consolidation of Banca Cesare Ponti (closing gross exposure) and in particular bad loans of 14,659,000, watchlists of 12,283,000 euros and non-guaranteed country-risk credits of 55,000 euros.
Country risk Loans subject Rescheduled non- CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed rescheduling loans A. Total opening exposure at 31/12/02 266,222 188,631 - 9,315 18,521 A.1 of which: interest on overdue loans 46,887 5,485 - - - B. Increases 167,934 122,261 2,406 2,775 1,366 B.1 ex-performing loans 91,168 113,017 2,406 2,775 - B.2 interest on overdue loans 13,902 1,881 - - - B.3 transfer from other doubtful loan categories 48,605 16 - - - B.4 other increases 14,259 7,347 - - 1,366 C. Decreases 98,696 98,970 - 373 8,455 C.1 re-performing credits - 35,157 - 275 - C.2 write offs 54,768 227 - - - C.3 payments received 43,347 7,480 - 98 4,883 C.4 gains from ceding - - - - - C.5 transfer to other doubtful loan categories 16 48,605 - - - C.6 other decreases 565 7,501 - - 3,572 D. Total closing exposure at 31/12/03 335,460 211,922 2,406 11,717 11,432 D.1 of which: interest on overdue loans 47,259 5,060 - - -
263 1.9 TOTAL VALUE ADJUSTMENTS CUSTOMERS Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/03 137,327 20,203 - 2,232 - 40 A.1 of which: interest on overdue loans 47,259 953 - - - 3 B. Increases 214,002 14,971 362 518 - 6,499 B.1 adjustments 153,784 11,731 362 516 - 1,310 B.1.1 of which: interest on overdue loans 16,500 - - - - - B.2 amounts from credit risk fund 18,997 70 - - - 512 B.3 transfer from other loan categories 12,914 - - - - - B.4 other increases 28,307 3,170 - 2 - 4,677 C. Decreases 173,055 18,969 - 2,487 - 2,125 C.1 recoveries stemming from evaluation 952 472 - 59 - - C.1.1 of which: interest on overdue loans 91 - - - - - C.2 recoveries stemming from payments received 4,295 109 - - - - C.2.1 of which: interest on overdue loans 1,651 53 - - - - C.3 write offs 149,155 5,956 - 2,428 - 1,094 C.4 transfer to other loan categories - 11,915 - - - 999 C.5 other decreases 18,653 517 - - - 32 D. Total closing adjustments at 31/12/04 178,274 16,205 362 263 - 4,414 D.1 of which: interest on overdue loans 58,488 - - - - -
Items B.1 ‘Increases - writedowns’ and C.5 ‘Decreases - other changes’ include 12,456 thousand euros corresponding to the annual charge for 2004 of losses relating to securitisation carried out by the Group leader at the end of 2000. Item B.4 “other increases” also includes: - amounts deriving from the first-time full consolidation of Cassa di Risparmio di Carrara (initial gross exposure) and in particular written down bad loans of 15,942,000 euros, redress provisions to watchlists of 587,000 euros and value adjustments to performing credits of 4,676,000 euros. - amounts deriving from the first-time full consolidation of Banca Cesare Ponti (closing gross exposure) and in particular written down bad loans of 8,994,000 and redress provisions to watchlists of 2,583,000 euros.
Country risk Loans subject Rescheduled non- Performing CATEGORIES/BALANCES Bad loans Watchlists to loans guaranteed loans rescheduling loans A. Total opening adjustments at 31/12/02 114,369 17,702 - 2,165 - 29 A.1 of which: interest on overdue loans 46,887 1,484 - - - 7 B. Increases 93,712 12,150 - 381 - 494 B.1 adjustments 71,250 12,122 - 381 - 73 B.1.1 of which: interest on overdue loans 13,706 - - - - - B.2 amounts from credit risk fund 13,962 8 - - - 421 B.3 transfer from other loan categories 8,113 - - - - - B.4 other increases 387 20 - - - - C. Decreases 70,754 9,649 - 314 - 483 C.1 recoveries stemming from evaluation 930 628 - 290 - - C.1.1 of which: interest on overdue loans - 39 - - - - C.2 recoveries stemming from payments received 2,886 681 - 24 - 13 C.2.1 of which: interest on overdue loans 1,066 491 - - - 13 C.3 write offs 54,399 227 - - - 439 C.4 transfer to other loan categories - 8,113 - - - - C.5 other decreases 12,539 - - - - 31 D. Total closing adjustments at 31/12/03 137,327 20,203 - 2,232 - 40 D.1 of which: interest on overdue loans 47,259 953 - - - 3
264 SECTION 2
SECURITIES
The securities held by the Bank amount to 3,052,765 thousand euros and are analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Treasury bills and other bills eligible for refinancing with central banks (caption 20) 663,505 21.7 884,964 34.5 – Bonds and other debt securities (caption 50) 1,530,526 50.2 1,501,080 58.5 – Shares, quotas and other equity securities (caption 60) 858,734 28.1 177,932 7.0 Total 3,052,765 100.0 2,563,976 100.0 of which: – Investment securities 196,316 6.4 215,697 8.4 – Trading securities 2,856,449 93.6 2,348,279 91.6
Change 31/12/04 31/12/03 absolute % 2.1 INVESTMENT SECURITIES 196,316 215,697 -19,381 -9.0
31/12/04 31/12/03 Book Market Book Market value value value value 1. Certificates of indebtedness 196,316 195,191 215,697 215,360 1.1 Government securities 82,258 83,022 101,526 101,839 – listed 82,258 83,022 101,526 101,839 – unlisted - - - - 1.2 Other securities 114,058 112,169 114,171 113,521 – listed 32,234 32,397 32,243 31,961 – unlisted 81,824 79,772 81,928 81,560 2. Shares and equity securities - - - - – listed - - - - – unlisted - - - - Total 196,316 195,191 215,697 215,360
Book value of investment securities comprises the difference, on the basis of “pro rata temporis” criteria, between cost and redemption value, including issue premium or discount; market value is the average price recorded during the first six months of the year. The difference between book and market value (1,125 thousand euros) represents the potential loss for the portfolio. The item includes 4,655,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA. The positive and negative differences between book value and re-payment value at maturity total 767 thousand euros and 334 thousand euros, respectively. These differences were calculated separately for each category.
265 Book Redemption Positive Negative value value differences differences 1. Listed certificates of indebtedness 124,672 124,193 767 288 Public bodies 82,258 81,611 695 48 Banks 25,056 25,015 72 31 Other 17,358 17,567 - 209 2. Unlisted certificates of indebtedness 71,644 71,690 - 46 Public bodies - - - - Banks 5,954 6,000 - 46 Other 65,690 65,690 - - Total 196,316 195,883 767 334
2.2 CHANGES IN INVESTMENT SECURITIES 31/12/04 31/12/03 A. Opening balances 215,697 241,968 B. Increases 4,696 35,749 B1. Purchases - 33,148 B2. Writebacks - - B3. Transfers from trading portfolio - - B4. Other changes - 2,601 C. Decreases 24,077 62,020 C1. Sales - 61,758 C2. Redemptions 23,893 25 C3. Adjustments including - - - permanent writedowns - - C4. Transfers to trading portfolio - - C5. Other changes 184 237 D. Closing balances 196,316 215,697
Transfers to and/or from the investment securities portfolio were carried out in accordance with the Bank of Italy’s communication of 12/6/01, CONSOB’s communication no.95001286 of 15/2/95, subsequently modified by CONSOB’s letter of 15/6/01, and the policy documents approved by the Board of Directors of Banca Carige. The item B.4 “other increases” also includes 4,655,000 euros referring to the closing gross exposure of Banca Cesare Ponti SpA.
Change 31/12/04 31/12/03 absolute % 2.3 TRADING SECURITIES 2,856,449 2,348,279 508,170 21.6
31/12/04 31/12/03 Book Market Book Market value value value value 1. Certificates of indebtedness 1,997,715 2,035,244 2,170,347 2,225,255 1.1 Government securities 1,162,818 1,162,855 1,141,384 1,150,627 – listed 1,159,954 1,159,955 1,139,235 1,148,461 – unlisted 2,864 2,900 2,149 2,166 1.2 Other securities 834,897 872,389 1,028,963 1,074,628 – listed 53,036 52,998 839,299 882,259 – unlisted 781,861 819,391 189,664 192,369 2. Shares and equity securities 858,734 860,594 177,932 185,705 – listed 112,860 112,860 175,612 183,132 – unlisted 745,874 747,734 2,320 2,573 Total 2,856,449 2,895,838 2,348,279 2,410,960
266 The difference between market value and book value represents potential non-recorded capital gains for the period and amounts to 39,389 thousand euros, of which 36,264 thousand euros related to hedging forward transactions (Section 10.5). The caption includes 152,779,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA and 37,014,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
2.4 CHANGES IN TRADING SECURITIES 31/12/04 31/12/03 A. Opening balances 2,348,279 2,145,739 B. Increases 8,764,605 8,861,914 B1. Purchases 8,537,204 8,816,018 - Certificates of indebtedness 6,796,943 7,732,418 . Government securities 4,587,875 5,514,304 . other securities 2,209,068 2,218,114 - Shares and other equity securities 1,740,261 1,083,600 B2. Writebacks and revaluations 22,490 1,650 B3. Transfers from investment portfolio - - B4. Other changes 204,911 44,246 C. Decreases 8,256,435 8,659,374 C1. Sales and redemptions 8,242,879 8,630,828 - Certificates of indebtedness 7,169,530 7,532,887 . Government securities 4,668,412 5,745,919 . other securities 2,501,118 1,786,968 - Shares and other equity securities 1,073,349 1,097,941 C2. Adjustments 8,516 6,881 C3. Transfers to investment portfolio - - C4. Other changes 5,040 21,665 D. Closing balances 2,856,449 2,348,279
The caption “B4 Other changes” includes: – 139,527,000 euros referring to the opening balances of Cassa di Risparmio di Carrara SpA; – 37,013,000 euros referring to the closing balances of Banca Cesare Ponti SpA.
267 SECTION 3
EQUITY INVESTMENTS
Equity investments amount to 317,872 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Equity investments (caption 70) (a) - carried at equity 64,561 20.3 59,361 23.7 (b) - others 20,508 6.5 18,163 7.3 – Investments in Group companies (caption 80) (a) - carried at equity 232,803 73.2 172,600 69.0 (b) - others - - - - Total 317,872 100.0 250,124 100.0
3.1 SIGNIFICANT INVESTMENTS Name (1) (2) (3) (4)(5) (6) (7) (5.1) (5.2) A. Companies included in the basis of consolidation A.1 Fully consolidated (a) 1. Banca CARIGE SpA Genoa 1 - - - - - XXX 2. Galeazzo Srl Genoa 1 3,904 56 A1.1 100.00 100.00 XXX 3. Cassa di Risparmio di Carrara SpA Carrara 1 84,021 15,125 A1.1 90.00 90.00 XXX 4. Columbus Carige Imm. SpA Genoa 1 36,428 332 A1.1 99.99 99.99 XXX A1.2 0.01 0.01 XXX 5. Cassa di Risparmio di Savona SpA Savona 1 153,058 13,503 A1.1 95.90 95.90 XXX 6. Banca Cesare Ponti SpA Milano 1 19,827 -615 A1.1 51.86 59.63 XXX 7. Immobiliare CARISA Srl Savona 1 1,790 -16 A1.5 100.00 100.00 XXX 8. Carige Asset Management S.G.R. SpA Genoa 1 5,706 323 A1.1 99.50 99.50 XXX B.2 0.50 0.50 XXX 9. Imm. Ettore Vernazza SpA (b) Genoa 1 5,184 1,007 A1.1 90.00 100.00 XXX 10. Centro Fiduciario SpA Genoa 1 994 142 A1.1 76.93 76.93 XXX A1.5 20.00 20.00 XXX 11. Argo Finance One Srl Genoa 1 10 - A1.1 60.00 60.00 XXX 12. Priamar Finance Srl Genoa 1 10 - A1.1 60.00 60.00 XXX 13. Banca del Monte di Lucca SpA Lucca 1 26,977 4,270 A1.1 54.00 54.00 XXX A.2 Proportional consolidation B. Companies accounted for under the equity method 1. Carige Assicurazioni SpA (c) (d) Milan 1 179,613 8,882 A1.1 98.24 99.51 176,067 2. Carige Vita Nuova SpA (d) Genoa 1 56,736 8,009 A1.1 100.00 100.00 56,736 3. Assi 90 Srl (a) Genoa 1 463 1,293 B.1 37.50 37.50 XXX B.2 22.50 22.50 4. AG Srl (a) Genoa 1 48 27 B.3 100.00 100.00 XXX 5. Savona 2000 Srl (a) Savona 1 71 2 B.3 40.00 40.00 XXX B.4 40.00 40.00 6. Assimilano Srl (e) Milan 1 63 -44 B.3 44.00 44.00 XXX 7. Frankfurter Bankgesellschaft AG (e) Frankfurt 8 22,653 329 A1.1 47.50 47.50 10,760 8. Autostrada dei Fiori SpA (a) Savona 8 263,009 30,965 A1.1 16.62 16.62 53,801 A1.5 4.00 4.00 9. Recina Servizi Srl (e) Rome 8 879 897 B.3 25.00 25.00 XXX C. Other substantial participating interest (e) 1. Consorzio per il Giurista di Impresa Scrl Genoa 8 15 -31 A1.1 22.73 22.73 20 2. Fideass Srl (ex Didiass Srl) Rome 8 46 21 B.3 9.00 9.00 XXX B.4 6.00 6.00 B.6 7.00 7.00 3. Assistars Srl Milan 8 51 1 B.3 34.17 34.17 XXX 4. BDA SpA Milan 8 58 -368 B.3 20.00 20.00 XXX 5. U.C. - Sport e Sicurezza Srl Milan 8 13 2 B.1 25.00 25.00 XXX B.2 25.00 25.00 6. Atoma Srl Milan 8 44 34 B.1 25.00 25.00 XXX B.2 15.00 15.00 (a) Captions are taken from the Board of Directors' Report at 31/12/2004. (b) The company holds 10% of its own shares. (c) The company holds 1.273% of its own shares. (d) Net equity and profit were calculated according to the companies’ financial statements as at 31/12/04 with value adjustments made where appropriate on the basis of valuation at equity rather than cost of the insurance-related service companies Assi 90 Srl, AG Srl, Assimilano Srl, Savona 2000 Srl and Recina Servizi Srl. Consequently, an autonomous value for each of these companies is not stated in these consolidated statements. (e) Captions are taken from financial statement approved at 31/12/2003.
268 Key (1) Head office (2) Type of participating interest (3) Net Assets 1 = controlling interest pursuant to art. 2359 c.c. par. 1 no. 1 (4) Gains/Losses (majority vote at Shareholders’ Annual General Meeting) (5) Type of participating interest 2 = controlling interest pursuant to art. 2359 c.c. par 1 no. 2 (5.1) Holding (major influence at Shareholders’ Annual General Meeting) (5.2) Participating interest expressed as a percentage 3 = controlling interest pursuant to art. 23 T.U. par. 2 no. 1 (6) Votes available at Shareholders’ Annual General 4 = other forms of controlling interest Meeting 5 = joint management pursuant to art. 26 par 1 of the “decreto” (7) Consolidated balance sheet value 6 = joint management pursuant to art. 26 par 2 of the “decreto” 7 = joint control 8 = associated undertaking
Change 31/12/04 31/12/03 absolute % 3.2 AMOUNTS DUE TO AND FROM GROUP COMPANIES (a) Assets 47,124 44,394 2,730 6.1 1. Amounts due from banks including: - - - - – subordinated - - - - 2. Amounts due from financial institutions - - - - including: – subordinated - - - - 3. Amounts due from other customers 320 90 230 … including: – subordinated - - - - 4. Bonds and other fixed-income securities 46,804 44,304 2,500 5.6 including: – subordinated 46,804 44,304 2,500 5.6 (b) Liabilities 69,686 55,412 14,274 25.8 1. Amounts due to banks - - - - 2. Amounts due to financial institutions - - - - 3. Amounts due to other customers 59,154 52,102 7,052 13.5 4. Securities issued 532 810 -278 -34.3 5. Subordinated liabilities 10,000 2,500 7,500 … (c) Guarantees and Commitments 3,462 3,431 31 0.9 1. Guarantees 3,462 3,431 31 0.9 2. Commitments - - - -
269 Change 31/12/04 31/12/03 absolute % 3.3 AMOUNTS DUE TO AND FROM OTHER NON-GROUP COMPANIES (a) Assets 417,875 362,506 55,369 15.3 1. Amounts due from banks including: 323,254 291,237 32,017 11.0 – subordinated - - - - 2. Amounts due from financial institutions 52,226 37,678 14,548 38.6 including: – subordinated - - - - 3. Amounts due from other customers 42,277 24,632 17,645 71.6 including: – subordinated - - - - 4. Bonds and other fixed-income securities 118 8,959 -8,841 -98.7 including: – subordinated - 3,696 -3,696 … (b) Liabilities 164,975 50,673 114,302 … 1. Amounts due to banks 90,094 18,354 71,740 … 2. Amounts due to financial institutions 42,677 17,110 25,567 … 3. Amounts due to other customers 22,356 7,239 15,117 … 4. Securities issued 9,848 7,970 1,878 23.6 5. Subordinated liabilities - - - - (c) Guarantees and Commitments 11,547 86,889 -75,342 -86.7 1. Guarantees 11,547 80,222 -68,675 -85.6 2. Commitments - 6,667 -6,667 …
Amounts due from banks include 179,469 thousand euros related to Compulsory Reserve of the Bank of Italy. Amounts due to banks include 90,002 thousand euros towards the Bank of Italy.
Change 31/12/04 31/12/03 absolute % 3.4 CAPTION 70 "EQUITY INVESTMENTS" 85,069 77,524 7,545 9.7 (a) in banks 13,656 18,162 -4,506 -24.8 1. listed 379 5,086 -4,707 -92.5 2. unlisted 13,277 13,076 201 1.5 (b) in financial institutions 11,703 6,875 4,828 70.2 1. listed 188 - 188 … 2. unlisted 11,515 6,875 4,640 67.5 (c) others 59,710 52,487 7,223 13.8 1. listed 723 723 - - 2. unlisted 58,987 51,764 7,223 14.0
270 Change 31/12/04 31/12/03 absolute % 3.5 CAPTION 80 "INVESTMENTS IN GROUP COMPANIES" 232,803 172,600 60,203 34.9 (a) in banks - - - - 1. listed - - - - 2. unlisted - - - - (b) in financial institutions - - - - 1. listed - - - - 2. unlisted - - - - (c) others 232,803 172,600 60,203 34.9 1. listed - - - - 2. unlisted 232,803 172,600 60,203 34.9
3.6 CHANGES IN PARTICIPATING INTERESTS
3.6.1 INVESTMENTS IN GROUP COMPANIES 31/12/04 31/12/03 A. Opening balances 172,600 152,385 B. Increases 65,682 23,963 B1. Purchases 39,649 20,001 B2. Recoveries - - B3. Revaluations 17,481 3,633 B4. Other changes 8,552 329 C. Decreases 5,479 3,748 C1. Sales - - C2. Write-downs - - including: - permanent write-downs - - C3. Other changes 5,479 3,748 D. Closing balances 232,803 172,600 E. Total revaluations - - F. Total write-downs - -
271 Details of all variations are given below:
PURCHASES
CARIGE VITA NUOVA SPA Purchase of 6,400,000 new shares of a unitary nominal value of 0,52 euros. (Variation in our share holding from 92.809% to 100.000%) 2,517
CARIGE ASSICURAZIONI SPA Subscription of 18,948 new shares of a unitary nominal value of 982 euros in addition to a unitary premium of 193 euros. (Variation in our share holding from 90.695% to 91.932%) 22,264
CARIGE ASSICURAZIONI SPA Purchase of 8,672 new shares of a unitary nominal value of 982 euros. (Variation in our share holding from 91.932% to 98.108%) 2,648
CARIGE ASSICURAZIONI SPA Subscription of 10,400 new shares of a unitary nominal value of 982 euros in addition to a unitary premium of 193 euros. (Variation in our share holding from 98.108% to 98.239%) 12,220
Total purchases 39,649
REVALUATIONS
INCREASES RELATED TO COMPANIES ACCOUNTED UNDER THE EQUITY METHOD
CARIGE ASSICURAZIONI SPA 9,231
CARIGE VITA NUOVA SPA 8,250
Total revaluations 17,481
OTHER INCREASES
CARIGE ASSICURAZIONI SPA Annual instalment for the value reintegration of the holding following the acquisition of Levante Assicurazioni by Banca Carige 329
CARIGE ASSICURAZIONI SPA Negative variation arising from the purchase of 8,672 shares 7,253
CARIGE VITA NUOVA SPA Negative variation arising from the purchase of 6,400,000 shares 970
Total other increases 8,552
OTHER DECREASES
CARIGE VITA NUOVA SPA Writing off of dividend distributed to the Parent Company during the year. 3,180
CARIGE ASSICURAZIONI SPA Writing off of dividend distributed to the Parent Company during the year 2,235
CARIGE ASSICURAZIONI SPA Positive difference arising from the subsidiary's purchase of a further 30 own shares. 18
272 CARIGE ASSICURAZIONI SPA Positive variation arising with the subscription of the capital increase 46
Total other decreases 5,479
3.6.2 OTHER PARTICIPATING INTERESTS 31/12/04 31/12/03 A. Opening balances 77,524 103,799 B. Increases 208,620 15,475 B1. Purchases 186,995 364 B2. Recoveries 2 - B3. Revaluations 6,334 5,032 B4. Other changes 15,289 10,079 C. Decreases 201,075 41,750 C1. Sales 25,466 36,479 C2. Write-downs - - including: - permanent write-downs - - C3. Other changes 175,609 5,271 D. Closing balances 85,069 77,524 E. Total revaluations - - F. Total write-downs 7,268 7,225
Details of all variations are given below:
PURCHASES
ARGO MORTGAGE 2 SRL Subscription of 500 shares, nominal unit value 1 euro. (Our holding: 5%) 1
CARINORD 2 SPA Purchase of 92,619,780 shares, nominal unit value 0.52 euro, for a total price of 183,764,644. ((Purchased post-sale percentage: 41.048%) 183,765
CENTRO SIM SPA Subscription of 33,330 new ordinary shares, nominal unit value 60 euros. (Our share holding 9.999%)) 2,000
INFRASTRUTTURE LAVORI ITALIA SPA Payment of residual 7/10 related to the subscription of 750,000 shares, nominal unit value 1 euro, made during past years. (Our share holding: 15.000%) 525
FILSE SPA Payment of residual 7/10 related to the subscription of 1,904,358 new shares, nominal unit value 0.52 euro, made past year. (Our share holding 12.319%) 693
273 CONSORZIO IDROENERGIA SCRL Purchase of n.4 shares, nominal unit value 516 euros, and payment of 1,032.92 euros, as grant, to the cooperative fund (Our share holding 0.267%) 3
AGENZIA LUCCHESE PER L’ENERGIA E IL RECUPERO DELLE RISORSE SRL (Payment annual grant) 8
Total purchases 186,995
VALUE RESUMPTIONS
CENTRO FACTORING SpA 2
Total value resumptions 2
REVALUATIONS
INCREASES RELATED TO COMPANIES ACCOUNTED UNDER THE EQUITY METHOD
AUTOSTRADA DEI FIORI SPA 6,334
Total revaluations 6,334
OTHER INCREASES
Investments deriving from the first-time consolidation of Cassa di Risparmio di Carrara SpA (opening balances) 2,155
Investments deriving from the first-time consolidation of Banca Cesare Ponti SpA (closing balances) 1,942
CARINORD 2 SPA Charged to the investment cost aid expenses and consulence 952
CONSORZIO PER IL GIURISTA DI IMPRESA SCRL Sum acknowledged as share charged to us for the covering of the loss related to the year 2002. 6
CASSA DI RISPARMIO DI FIRENZE SPA Profit made following sale of 8,766,953 shares 10,120
CENTRALE RISCHI FINANZIARIA SPA Profit made following sale of 2,070 shares 111
CFT FINANZIARIA Profit made following sale of 72,946 shares 3
Total other increases 15,289
SALES
CARINORD 2 SPA Sale of 5,192,231 shares, nominal unit value 0.52 euro, for a total price of 10,301,778 euros. (Sale happened contextually to the purchase, written above) 10,302
274 CASSA DI RISPARMIO DI FIRENZE SPA Sale of 8,766,953 shares for a nominal unit value of 0.57 euro. (Dismissal of entire holding) 14,991
BUSINESS DATENBANKEN INTERNATIONAL GMBH Amount received following distribution of assets sold in liquidation 1
CENTRALE RISCHI FINANZIARIA SPA Dismissal of 2,070 shares, nominal unit value 3 euros (Variation in our share holding from 0.594% to 0.297%) 119
CFT FINANZIARIA Profit made following sale of 72,946 shares (Dismissal of entire holding) 53
Total sales 25,466
OTHER DECREASES
CFT FINANZIARIA Amount received from partial sharing of shareholders' equity of the subsidiary 45
PRIAMAR FINANCE SRL Reclassification of the existing share holding from “Other participating interests” to “Investments in Group Companies” and consequent full consolidation 1
CARINORD 2 SPA Following the partial division the Society, 87,427,549 shares of Carinord 2 SpA, owned by Banca Carige SpA, were converted in 45,462,325 shares of Caricarrara Holding SpA 174,415
BUSINESS DATENBANKEN INTERNATIONAL GMBH Loss following distribution of assets sold in liquidation 6
FRANKFURTER BANKGESELLSCHAFT AG Writing off of dividend distributed to the Group leader in the year 152
AUTOSTRADA DEI FIORI SPA Writing off of dividends distributed related to the Group participating interest 982
INFORMATICA CASSE TOSCANE SPA Amount received from final sharing of assets of liquidation 7 Assessed loss from final sharing of assets of liquidation 1
Total other decreases 175,609
275 SECTION 4
TANGIBLE AND INTANGIBLE FIXED ASSETS
Tangible and intangible fixed assets amount to 1,638,092 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Tangible fixed assets (caption 120) 1,176,083 71.8 1,019,881 68.3 – Intangible fixed assets (caption 110) 462,009 28.2 474,210 31.7 Total 1,638,092 100.0 1,494,091 100.0
4.1 CHANGES IN TANGIBLE FIXED ASSETS 31/12/04 Properties Furniture Leased Total and fittings assets A. Opening balances 325,729 24,354 669,798 1,019,881 B. Increases 54,508 8,241 230,925 293,674 B1. Purchases 36,048 5,108 230,923 272,079 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes 18,460 3,133 2 21,595 C.Decreases 9,185 7,964 120,323 137,472 C1. Sales 2,314 198 27,122 29,634 C2. Depreciation and amortization 6,871 7,697 92,039 106,607 (a) amortization 6,871 7,697 92,039 106,607 (b) permanent write-downs - - - - C3. Other changes - 69 1,162 1,231 D. Closing balances 371,052 24,631 780,400 1,176,083 E. Total revaluations 4,530 - - 4,530 F. Total depreciation and amortization 144,507 119,722 268,930 533,159 (a) amortization 144,507 119,722 268,930 533,159 (b) permanent write-downs - - - -
Item A includes 18,733 thousand euros resulting from positive difference arising from consolidation allocated to tangible fixed assets. Item C2 includes depreciation related to the same allocated difference for 419 thousand euros. Item B.4 “other increases” includes: - the following opening balances referring to Cassa di Risparmio di Carrara SpA following first-time full consolidation: property 11,496,000 euros; furniture & fittings, machinery and equipment 1,327,000 euros; - the following closing balances referring to Banca Cesare Ponti SpA following first-time full consolidation: property 6,676,000 euros; furniture & fittings, machinery and equipment 1,475,000 euros.
276 31/12/03 Properties Furniture Leased Total and fittings assets A. Opening balances 327,130 25,725 614,271 967,126 B. Increases 12,189 6,149 171,350 189,688 B1. Purchases 12,189 6,149 170,397 188,735 B2. Recoveries - - - - B3. Revaluations - - - - B4. Other changes - - 953 953 C.Decreases 13,590 7,520 115,823 136,933 C1. Sales 5,767 335 19,608 25,710 C2. Depreciation and amortization 7,823 7,185 91,701 106,709 (a) amortization 7,823 7,185 91,701 106,709 (b) permanent write-downs - - - - C3. Other changes - - 4,514 4,514 D. Closing balances 325,729 24,354 669,798 1,019,881 E. Total revaluations 4,530 - - 4,530 F. Total depreciation and amortization 131,560 107,478 235,760 474,798 (a) amortization 131,560 107,478 235,760 474,798 (b) permanent write-downs - - - -
4.2 CHANGES IN INTANGIBLE FIXED ASSETS 31/12/04 Software Start-up Goodwill Other intangible Total charges fixed assets A. Opening balances 20,811 3,268 442,392 7,739 474,210 B. Increases 11,361 47 - 1,984 13,392 B1. Purchases 11,208 43 - 1,487 12,738 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes 153 4 - 497 654 C.Decreases 10,079 918 10,543 4,053 25,593 C1. Sales - - - - - C2. Depreciation and amortization 10,079 918 10,543 4,042 25,582 (a) amortization 10,079 918 10,543 4,042 25,582 (b) permanent write-downs - - - - - C3. Other changes - - - 11 11 D. Closing balances 22,093 2,397 431,849 5,670 462,009 E. Total revaluations - - - - - F. Total depreciation and amortization 29,879 2,195 31,813 20,636 84,523 (a) amortization 29,879 2,195 31,813 20,636 84,523 (b) permanent write-downs - - - - -
Item B.4 “other increases” includes: – the following opening balances referring to Cassa di Risparmio di Carrara SpA following first-time full consolidation: software 32,000 euros; other intangible assets 138,000 euros; – the following closing balances referring to Banca Cesare Ponti SpA following first-time full consolidation: software 121,000 euros; other intangible assets 358,000 euros.
277 31/12/03 Software Start-up Goodwill Other intangible Total charges fixed assets A. Opening balances 19,300 1,058 450,799 9,515 480,672 B. Increases 10,681 3,624 264 2,534 17,103 B1. Purchases 10,681 3,624 264 2,534 17,103 B2. Recoveries - - - - - B3. Revaluations - - - - - B4. Other changes - - - - - C.Decreases 9,170 1,414 8,671 4,310 23,565 C1. Sales - - - - - C2. Depreciation and amortization 8,911 1,414 8,671 4,277 23,273 (a) amortization 8,911 1,414 8,671 4,277 23,273 (b) permanent write-downs - - - - - C3. Other changes 259 - - 33 292 D. Closing balances 20,811 3,268 442,392 7,739 474,210 E. Total revaluations - - - - - F. Total depreciation and amortization 25,395 3,808 21,271 17,199 67,673 (a) amortization 25,395 3,808 21,271 17,199 67,673 (b) permanent write-downs - - - - -
278 SECTION 5
OTHER ASSETS
Other assets amount to 906,613 thousand euros and are analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Other assets (caption 150) 793,066 87.5 864,654 88.8 – Accrued income and prepaid expenses (caption 160) 113,547 12.5 109,015 11.2 Total 906,613 100.0 973,669 100.0
Change 31/12/04 31/12/03 absolute % 5.1 CAPTION 150 "OTHER ASSETS" 793,066 864,654 -71,588 -8.3 – miscellaneous accounts receivable from branches 108,343 266,275 -157,932 -59.3 – post-collection notes and other values 181,193 147,580 33,613 22.8 – amounts in transit between branches 61,661 2,755 58,906 … – current account cheques drawn on other banks 49,320 54,478 -5,158 -9.5 – premiums related to option transactions 38,860 38,721 139 0.4 – amounts to be collected from customers 27,575 27,292 283 1.0 – current account cheques drawn on the Bank 8,135 8,449 -314 -3.7 – accounts relating to tax collection services 205 180 25 13.9 – Bank guarantee deposits 1,421 346 1,075 … – off balance sheet revaluations 29,858 149 29,709 … – fiscal items: 216,415 169,719 46,696 27.5 tax advances 95,506 58,721 36,785 62.6 with-holding taxes 76,818 85,797 -8,979 -10.5 accounts receivable from the tax authorities 38,575 19,312 19,263 99.7 tax advance on provisions to reserve for termination indemnity (Law 140/97) 5,048 5,433 -385 -7.1 taxes paid in advance 468 456 12 2.6 – others 70,080 148,710 -78,630 -52.9
Caption includes: – 45,935,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections; – 6,738,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
279 Change 31/12/04 31/12/03 absolute % 5.2 CAPTION 160 “ACCRUED INCOME AND PREPAID EXPENSES” 113,547 109,015 4,532 4.2 Accrued income: 106,147 100,842 5,305 5.3 – interest income on loans and advances to credit institutions 11,157 4,725 6,432 … – interest income on loans to customers 19,638 18,447 1,191 6.5 – interest income on securities 38,812 33,751 5,061 15.0 – differentials stemming from derivatives contracts 31,856 41,395 -9,539 -23.0 – others 4,684 2,524 2,160 85.6 Prepaid expenses: 7,400 8,173 -773 -9.5 – premiums related to currency forward transactions 583 307 276 89.9 – differentials stemming from derivatives contracts - 10 -10 - – discounts on issuing of securities 2,745 3,596 -851 -23.7 – administrative charges 1,729 1,585 144 9.1 – other transactions 2,343 2,675 -332 -12.4
Caption includes: – 933,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections; – 1,164,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
Change 31/12/04 31/12/03 absolute % 5.4 DISTRIBUTION OF SUBORDINATED ASSETS 248,347 201,011 47,336 23.5 a) Loans and advances to credit institutions - - - - b) Loans and advances to customers 101,848 6,796 95,052 … c) Bonds and other fixed-income securities 146,499 194,215 -47,716 -24.6
Item c) ‘Bond and other fixed-income securities’ includes 65,690 thousand euros relating to the subscription of Junior class notes issued in relation to the securitisations carried out by Banca Carige in 2000 and 2001. These securities were inserted by the Bank into its investment securities portfolio. The item also includes 10,179 thousand euros relating to the subscription of Junior class notes issued in relation to the securitisation carried out by Cassa di Risparmio di Savona in 2002. The item “bonds and other debt securities” includes 2,587,000 euros deriving from the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
280 SECTION 6
PAYABLES
Payables amount to 14,729,596 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Amounts owed to credit institutions (caption 10) 979,342 8.1 1,006,049 8.1 – Amounts owed to customers (caption 20) 8,416,843 55.4 6,861,171 55.4 – Debts evidenced by certificates (caption 30) 5,332,443 36.5 4,512,775 36.5 – Funds managed on behalf of third parties (caption 40) 968 - 368 - Total 14,729,596 100.0 12,380,363 100.0
Change 31/12/04 31/12/03 absolute % 6.1 CAPTION 10 “AMOUNTS OWED TO CREDIT INSTITUTIONS” 979,342 1,006,049 -26,707 -2.7 (a) repurchase agreements 156,750 - 156,750 - (b) loans of securities - - - -
Caption 10 ”Amounts owed to credit institutions” detail by technical form is the following:
Change 31/12/04 31/12/03 absolute % Deposits 435,738 611,966 -176,228 -28.8 Current accounts 19,101 19,928 -827 -4.1 Financing 135,533 130,798 4,735 3.6 Long-term loans 232,167 243,245 -11,078 -4.6 Repurchase agreements 156,750 - 156,750 … Other 53 112 -59 -52.7 Total 979,342 1,006,049 -26,707 -2.7
Caption includes: – 202,160,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections; – 2,693,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
Change 31/12/04 31/12/03 absolute % 6.2 CAPTION 20 “AMOUNTS OWED TO CUSTOMERS” 8,416,843 6,861,171 1,555,672 22.7 (a) repurchase agreements 367,915 254,063 113,852 44.8 (b) loans of securities - - - -
281 Detail by technical form is as follows:
Change 31/12/04 31/12/03 absolute % Savings deposits 615,086 534,600 80,486 15.1 Current accounts 7,422,289 6,066,532 1,355,757 22.3 Funding from international organisations - - - - Long-term loans 1,527 - 1,527 … Repurchase agreements 367,915 254,063 113,852 44.8 Other 10,026 5,976 4,050 67.8 Total 8,416,843 6,861,171 1,555,672 22.7
Caption includes: – 533,874,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA; – 214,067,000 referring to the first-time full consolidation of Banca Cesare Ponti SpA.
Caption 30 “Debts evidenced by certificates” is the following:
Change 31/12/04 31/12/03 absolute % Certificates of deposits 321,443 351,316 -29,873 -8.5 Bonds certificates 4,927,471 4,073,476 853,995 21.0 Own cheques in circulation 83,529 87,983 -4,454 -5.1 Total 5,332,443 4,512,775 819,668 18.2
Caption includes: – 272,408,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA; – 21,524,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
Caption 40 “Funds managed on behalf of third parties” (968 thousand euros) includes interest-bearing funds supplied by the State and other public bodies for the financing of specific projects foreseen by relevant legislation; the lending transactions carried out on behalf of public bodies, exclusively at fixed remuneration, are stated at section 12. Caption includes 626,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
282 SECTION 7
RESERVES
Reserves, summarized in this section, amount to 588,865 thousand euros and are represented in the balance sheet as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Reserves for loan losses (caption 90) 1,922 0.3 19,997 3.6 – Reserves for risks and charges (caption 80) 475,779 80.8 440,194 79.0 – Reserve for termination indemnities (caption 70) 111,164 18.9 96,814 17.4 Total 588,865 100.0 557,005 100.0
Change 31/12/04 31/12/03 absolute % 7.1 CAPTION 90 "RESERVE FOR LOAN LOSSES" 1,922 19,997 -18,075 -90.4
This caption includes 1,375 thousand euros relating to third parties.
7.2 CHANGES IN THE "RESERVES FOR LOAN LOSSES" (CAPTION 90) 31/12/04 31/12/03 A.Opening balances 19,997 14,644 B. Increases 1,505 19,744 B1. Provisions 1,469 19,744 B2. Other changes 36 - C Decreases 19,580 14,391 C1. Utilizations 19,580 14,391 C2. Other changes - - D Closing balances 1,922 19,997
Change 31/12/04 31/12/03 absolute % 7.3 COMPOSITION OF CAPTION 80 (D) "OTHER RESERVES" 42,782 38,037 4,745 12.5 Reserves for personnel charges 24,803 21,797 3,006 13.8 Reserves for future charges 1,098 1,361 -263 -19.3 Reserves for guarantees and commitments 3,966 4,124 -158 -3.8 Reserves for in-house insurance scheme - 1,570 -1,570 -100.0 Reserves for finance lease transactions 2,944 3,368 -424 -12.6 Reserves for legal proceedings 6,010 5,563 447 8.0 Reserves for renegotiation loan building ex L. 113/99 - - - … Other 3,961 254 3,707 …
The caption includes 2,449,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA and 843,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
283 CHANGES IN THE “RESERVES FOR TAXATION” (CAPTION 80 B) 31/12/04 31/12/03 A. Opening balances 106,847 88,574 B. Increases 119,844 84,159 C. Decreases 113,037 65,886 D. Closing balances 113,654 106,847
During 2004, Banca Carige, in addition the following companies of the Group - Cassa di Risparmio di Savona SpA, Banca del Monte di Lucca SpA, Carige Asset Management SGR SpA, Carige Assicurazioni SpA, Carige Vita Nuova SpA, Galeazzo S.r.l., Columbus Carige Immobiliare SpA and Immobiliare Ettore Vernazza SpA, adhered to the national consolidated corporation tax (IRES) regime foreseen by article 117 et seq. of Decree of the President of the Republic 917/96 subsequently modified by Legislative decree 344/2003. According to the terms of the regime (‘consolidato fiscale’), the parent company or consolidator (Banca Carige SpA) shall prepare a consolidated tax return (calculating the tax base of the companies taking part in the regime adjusted by amounts written down in accordance with article 122 of the Consolidated Tax Law) in addition to settling tax owed (advances and settlements). On effecting payment, the consolidator will be repaid the amounts owed by each consolidated company. During the initial phase of application, tax advances are to be paid by the consolidated companies rather than the consolidator.
Deffered tax: positive and negative effects
As foreseen by international accounting principles, Assets in the form of advanced payment of taxation and Liabilities for taxes payable have been calculated on the basis of tax rates in force at 31 December 2004 and which apply for the period in which timing differences will cancel out; as outlined in the valuation criteria, the temporal horizon was extended to an unlimited period given that there are no grounds for retaining that the recovery of the tax in question is improbable.
.4 CH A N G ES IN A SSETS IN TH E FO RM O F A D V A N CED PA YM EN T O F TA X A TIO N a) recorded in the incom e statem ent w ith counter entry 1. Opening balances 14,672 2. Increases 38,372 2.1 D eferred taxation originating in the year 33,666 2.2 O ther increases 4,706 3. Decreases 14,470 3.1 D eferred taxation w ritten off in the year 14,457 3.2 O ther decreases 13 4. Closing balances 38,574
Assets representing advance payment of taxation totalled 14,672 thousand euros at 31/12/03; in the year these increased by 24,554 thousand euros.
The extension of the time horizon led to increased advanced tax of 23,165,000 euros.
In accordance with Bank of Italy instructions of 3/8/99, assets in the form of tax advanced relative to timing differences arising in 2004, which will be reversed in following years, were recorded at caption 240, “Income tax for the year”; during 2004 this caption was increased by the reversal for assets in the form of advanced taxation recorded in previous years.
284 7.4 CHANGES IN ASSETS IN THE FORM OF ADVANCED PAYMENT OF TAXATION a) recorded in the net value with counter entry 1. Opening balances 4,640 2. Increases - 2.1 D eferred taxation originating in the year - 2.2 O ther increases - 3. D ecreases 4,640 3.1 D eferred taxation written off in the year 4,640 3.2 O ther decreases - 4. Closing balances -
Deferred tax credits relating to net equity originate from the utilisation (49,822 thousand euros) on the part of Banca Carige of the share premium reserve to cover four fifths of negative differences arising from securitisation carried out in 2000. As a result, assets of 19,960,000 in the form of taxes advanced was recorded in the consolidated statements for 2000 as counterpart in the share premium reserve. During the year one fifth of this negative differential (6,228 thousand euros) was recorded at the income statement pursuant to article 6, Law 130/99 as a result of provisions totalling 3,643 thousand euros to the share premium reserve and the related writing off of 2,585 thousand euros in tax advanced.
7.5 CH AN G ES IN LIABILITIES FO R TAXES PAYABLE a) recorded in the incom e statem ent with counter entry 1. Opening balances 9,007 2. Increases 20,697 2.1 D eferred taxation originating in the year 20,359 2.2 O ther increases 338 3. D ecreases 3,279 3.1 D eferred taxation written off in the year 3,279 3.2 O ther decreases - 4. Closing balances 26,425
With regards to timing differences liable to taxation, provisions for differed tax liability amounting to around 20,697 thousand euros were recorded.
Deferred tax liabilities written off in 2004 amounted to 3,279 thousand euros.
No provisions were made with regard to deferred tax liabilities on reserves benefiting from tax relief totalling 63,496 thousand euros as distribution is not foreseen and there is little likelihood of the conditions requiring payment arising.
CAPTION 80 (A) “RESERVES FOR PENSIONS AND SIMILAR COMMITMENTS”
31/12/04 31/12/03 A. Opening balances 295,310 294,061 B. Net change 24,033 1,249 C. Closing balances 319,343 295,310
The closing balance represents the total of in-house funds which are destined for purposes defined by the Group’s banks; fund use is without legal personality. The item “net variation” includes 18,027,000 euros referring to Cassa di Risparmio di Carrara SpA following first- time full consolidation.
285 CHANGES IN CAPTION 70 "RESERVE FOR TERMINATION INDEMNITIES" 31/12/04 31/12/03 A. Opening balances 96,814 103,515 B. Increases 27,265 13,352 C. Decreases 12,915 20,053 D. Closing balances 111,164 96,814
The item “increases” includes 11,068,000 euros referring to opening balances of Cassa di Risparmio di Carrara SpA and 1,920,000 euros referring to closing balances of Banca Cesare Ponti SpA.
286 SECTION 8
SUBSCRIBED CAPITAL, EQUITY RESERVES, RESERVES FOR GENERAL BANKING RISKS AND SUBORDINATED LIABILITIES
This section presents liabilities captions 100, 110, 130, 140, 150, 160, 170, 180, and 200 and assets captions 90, 100 and 140.
31/12/04 31/12/03 thousands of € % thousands of € % – Capital stock (caption 150) 1,113,327 66.3 1,113,327 67.8 – Additional paid-in capital (caption 160) 262,839 15.7 255,023 15.5 – Reserves (caption 170) 114,762 6.8 127,752 7.8 – Revaluation reserves (caption 180) 8,649 0.5 8,050 0.5 – Reserves for general banking risks (caption 100) 100 - 100 - – Negative difference arising from application of the equity method (caption 130) 43,176 2.6 34,953 2.1 – Minority interests (caption 140) 34,686 2.1 17,362 1.1 – Net income (caption 200) 100,936 6.0 84,742 5.2 Total 1,678,475 100.0 1,641,309 100.0 – Subordinated loans (caption 110) 519,555 517,055 – Positive difference arising from consolidation (caption 90) 188,394 87,538 – Positive difference arising from application af the equity method (caption 100) 14,026 16,168 – Own shares (caption 140) 1,301 -
Change 31/12/04 31/12/03 absolute % CAPTION 150 "CAPITAL STOCK" (*) 1,113,327 1,113,327 - - - ordinary shares 959,898 959,898 - - - saving shares 153,429 153,429 - - (*) Item refers to Banca Carige SpA.
Share capital amounts to € 1,113,326,839 in the form of 1,113,326,839 shares of a unitary nominal value of € 1. No changes were recorded during the year.
Change 31/12/04 31/12/03 absolute % CAPTION 160 "ADDIONAL PAID-IN CAPITAL" (*) 262,839 255,023 7,816 3.1 (*) Item refers to Banca Carige SpA.
Changes recorded during the year result from an increase of 7,816 thousand euros in the form of provisions made to the reserve within the confines of the securitisation of non performing loans carried out in 2000 pursuant to Law 130/99, article 6, paragraph c. In particular, this change corresponds to the difference between the provision quota for the period of the reduced value of the loans sold (12,456 thousand euros) and related tax advances (€4,640 thousand euros);
287 Change 31/12/04 31/12/03 absolute % CAPTION 170 "RESERVES" 114,762 127,752 -12,990 -10.2 a) legal reserve 77,971 67,351 10,620 15.8 b) reserve for purchase of treasury stock 1,301 - 1,301 … d) other reserves 35,490 60,401 -24,911 -41.2
Change 31/12/04 31/12/03 absolute % CAPTION 180 "REVALUATION RESERVES" 8,649 8,050 599 7.4 Revaluation reserves pertaining to the Group 8,050 8,050 - - Revaluation reserves pertaining to third parties 599 - 599 …
Reserves pertaining to the Group do not include 599,000 euros, which represents 10 per cent of the same reserves at the moment of C.R. Carrara’s first time consolidation.
Change 31/12/04 31/12/03 absolute % CAPTION 100 "RESERVES FOR GENERAL BANKING RISKS" 100 100 - -
The General banking risk fund had no variation during the year.
Change 31/12/04 31/12/03 absolute % CAPTION 130 "NEGATIVE DIFFERENCE ARISING FROM APPLICATION OF THE EQUITY METHOD" 43,176 34,953 8,223 23.5
The increase derives from purchases made relating to holdings in Carige Vita Nuova SpA and Carige Assicurazioni SpA (see section 3.6.1).
Change 31/12/04 31/12/03 absolute % CAPTION 110 "SUBORDINATED LOANS" 519,555 517,055 2,500 0.5
The increase derives from the first-time consolidation of Banca Cesare Ponti SpA.
288 The item is now made up by the following bonds:
Code Amount Currency Interest rate Maturity
XSO135565637 400,000 euro Euribor 3 months + 28/11/2011 annual spread of 0.80
IT0003563035 102,055 euro 1,5% + 16% at maturity 5/12/2013
IT0003499297 15,000 euro Euribor 6 months + 30/6/2013 annual spread of 0.80 for the first 5 years Euribor 6 months + annual spread of 1.40 for the other 5 years
IT0003117402 2,500 euro Euribor 6 months 10/05/2006
With regards to the first loan issue, reimbursement will be effected at maturity in one payment. The Bank can, however, anticipate repayment after the fifth year with Bank of Italy authorisation. In the eventuality of liquidation, the bonds will be repaid only after all other claims have been met.
The repayment ranking of the bond issue ‘Banca Carige 1.50% 2003-2013’ performed during the year in case of the Bank’s going into liquidation or receivership is as follows: the bonds will be repaid only after all other creditors subordinated or otherwise have been repaid with the exception of those creditors with an equal or more accentuated degree of subordination. Further characteristics of the issue are as follows: - from 1st January 2006 until 31st October 2013 the bonds can be converted into shares of the Bank on a one-to- one basis; - for those bonds for which no conversion right has been exercised as at 31st October, the principal shall be repaid in one payment on 5th December 2013 with a 16% premium on the nominal value.
The third loan was issued by Banca del Monte di Lucca. Reimbursement will be effected at maturity in one payment. The Bank can, however, anticipate repayment after the fifth year with Bank of Italy authorisation. In the eventuality of liquidation, the bonds will be repaid only after all other claims have been met.
The final loan was issued by Banca Cesare Ponti in May 2001. Reimbursement will be effected at maturity in one payment. The Bank can, however, anticipate repayment after the 18th month with Bank of Italy authorisation. In the eventuality of liquidation, the bonds will be repaid only after all other claims have been met.
Change 31/12/04 31/12/03 absolute % CAPTION 200 "NET INCOME" 100,936 84,742 16,194 19.1
The caption reflects gains generated by the fully consolidated subsidiares of 34,743 thousand euros. Profit destined to third parties for the year amounted to 3,184 thousand euros
Change 31/12/04 31/12/03 absolute % CAPTION 90 AND 100 "POSITIVE DIFFERENCE ARISING FROM CONSOLIDATION AND FROM APPLICATION OF THE EQUITY METHOD" 202,420 103,706 98,714 95.2 Positive difference arising from consolidation 188,394 87,538 100,856 … Positive difference arising from the application of the equity method 14,026 16,168 -2,142 -13.2
289 Increases resulting from fully consolidated subsidiaries amounted to 15 thousand euros. Positive net equity variations refer entirely to the insurance subsidiaries. Positive consolidation variations, before taking into account negative variations, refer substantially to Cassa di Risparmio di Savona SpA (46,602,000 euros), Cassa di Risparmio di Carrara SpA (81,293,000 euros), Banca del Monte di Lucca SpA (36,660,000 euros) and Banca Cesare Ponti SpA (23,846,000 euros).
Increases resulting from fully consolidated subsidiaries are as follows:
31/12/04 31/12/03 Opening balance 87,538 93,236 Decreases 10,072 5,698 – Amortization for the period 10,072 5,698 Increases 110,928 - – positive variation arising from the CR Carrara's first time consolidation 85,572 - – positive variation arising from the capitalisation of legal expenses - referring to the purchase of the holding in Cassa di Risparmio di Savona SpA 1,509 - – positive variation arising from the capitalisation of legal expenses referring to the purchase of the holding in Banca Cesare Ponti SpA 920 - – positive variation arising from the first time consolidation of Banca Cesare Ponti 22,927 - Closing balance 188,394 87,538
Positive difference arising from the application of the equity method are as follows:
31/12/04 31/12/03 Opening balance 16,168 14,859 Decreases 2,210 1,558 – Amortization for the period 1,566 1,558 – Amortization for the period of the positive difference relating to Assi 90 Srl, Ag Srl and Assimilano Srl. This amortization weighs upon the rectified period outcome of Carige Vita Nuova SpA and Carige Assicurazioni SpA 635 - – Decrease subsequent to the transfer of a 16% holding of Assimilano Srl from Assi 90 Srl 9 - Increases 68 2,867 - Positive difference arising from the purchase of own shares on the part of Carige Assicurazioni SpA 18 75 - Positive difference arising from the first-time application of the equity method on holdings in Assi 90 Srl, AG Srl and Assimilano Srl - 2,791 - Increase in Positive difference relating to Carige Assicurazioni SpA arising on the subscription of the share capital 50 1 Closing balance 14,026 16,168
Change 31/12/04 31/12/03 absolute % CAPTION 140 "OWN SHARES" 1,301 - 1,301 …
Banca Carige SpA owns 436,099 shares with an overall nominal value of 436,099 euros in addition to 227.92 shares equivalent to 44/50 of 259 non-converted shares.
The table below provides details of the Bank’s total capital and prudential management requirements as requested by the Bank of Italy in its letter of 14/12/98 relating to increased transparency of bank balance sheets.
290 Consolidated assets and capital adequacy requirements at 31/12/04.
CATEGORIES/VALUES 31/12/04 31/12/03 A. Total capital A.1 Tier 1 918,210 969,457 A.2 Tier 2 518,099 526,081 A.3 Deductions 237,332 182,644 A.4 Total capital 1,198,977 1,312,894 B. Prudential requirements B.1 Credit risks 866,846 773,203 B.2 Trading risks 73,974 87,662 including: – trading securities risks 73,974 87,662 – exchange rate risks - - B.3 Subordinated loans of third level - - B.4 Other prudential requirements 54,354 39,477 B.5 Total prudential requirements 995,174 900,342 C. Capital adequacy ratios C.1 Risk-Weighted Assets (*) 12,439,675 11,254,275 C.2 Tier 1% of RWA 7.38% 8.61% C.3 Total capital % of RWA 9.64% 11.67%
(*) Total prudential requiriments multiplied by the reciprocal minimum obligatory credit risk coefficent.
291 SECTION 9
OTHER LIABILITIES
Other liabilities amount to 958,733 thousand euros and are analysed as follows:
31/12/04 31/12/03 thousands of € % thousands of € % – Other liabilities (caption 50) 781,214 81.5 655,700 79.7 – Accrued expenses and deferred income (caption 60) 177,519 18.5 166,822 20.3 Total 958,733 100.0 822,522 100.0
Change 31/12/04 31/12/03 absolute % 9.1 CAPTION 50 "OTHER LIABILITIES" 781,214 655,700 125,514 19.1 – amounts due to customers 77,726 64,443 13,283 20.6 – adjustment differential on discounted notes 216,204 178,227 37,977 21.3 – miscellaneous accounts payable to branches 190,762 224,597 -33,835 -15.1 – amounts in transit with branches 62,195 7,168 55,027 … – amounts relating to securities transactions 2 - 2 … – amounts due to tax authorities on behalf of third parties 19,477 14,903 4,574 30.7 – beneficiaries of outstanding invoices 36,283 33,728 2,555 7.6 – staff charges 18,518 15,374 3,144 20.5 – amounts related to writedown on off-balance sheet transactions 46,885 5,301 41,584 … – premiums related to option transactions 12,238 5,607 6,631 … – guarantee deposits from third parties 1,229 1,044 185 17.7 – amounts relating to tax collection service counter entry to write down on dividends distributed by Cassa di Risparmio di Savona SpA in 1997 and 1998 360 499 -139 -27.9 – accrued costs to be recognised 1,409 2,113 -704 -33.3 – other 97,926 102,696 -4,770 -4.6
Caption includes: – 62,357,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA; – 4,109,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
292 Change 31/12/04 31/12/03 absolute % 9.2 CAPTION 60 "ACCRUED EXPENSES AND DEFERRED INCOME" 177,519 166,822 10,697 6.4 Accrued expenses: 96,289 97,455 -1,166 -1.2 – interest expenses due to banks 3,022 3,095 -73 -2.4 – interest expenses due to customers 573 437 136 31.1 – interest payable on debt securities 60,220 48,534 11,686 24.1 – differentials stemming from derivatives contracts 28,179 41,697 -13,518 -32.4 – others 4,295 3,692 603 16.3 Deferred income: 81,230 69,367 11,863 17.1 – premiums related to currency forward transactions 1,160 636 524 82.4 – differentials stemming from derivatives contracts 2,895 3,777 -882 -23.4 – discounted notes 1,200 1,738 -538 -31.0 – advanced rents and others related to finance lease 71,516 59,838 11,678 19.5 – others 4,459 3,378 1,081 32.0
Caption includes: – 1,807,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA; – 221,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
293 SECTION 10
GUARANTEES AND COMMITMENTS
Guarantees and commitments amount to 2,683,865 thousand euros and are analysed below:
31/12/04 31/12/03 thousands of € % thousands of € % – Guarantees given (caption 10) 1,242,876 46.3 1,336,530 57.5 – Commitments (caption 20) 1,440,989 53.7 989,572 42.5 Total 2,683,865 100.0 2,326,102 100.0
Change 31/12/04 31/12/03 absolute % 10.1 CAPTION 10 "GUARANTEES GIVEN" 1,242,876 1,336,530 -93,654 -7.0 (a) commercial guarantees 1,107,664 1,233,281 -125,617 -10.2 (b) financial guarantees 60,890 34,220 26,670 77.9 (c) assets held in guarantee 74,322 69,029 5,293 7.7 Total 1,242,876 1,336,530 -93,654 -7.0 Caption 10 is analysed below: – joint securities 67 - 67 … – sureties 1,091,243 1,204,061 -112,818 -9.4 – documentary and non documentary credits 71,929 60,583 11,346 18.7 – acceptances on behalf of third parties 5,593 2,858 2,735 95.7 – bond sureties on behalf of third parties 73,022 69,027 3,995 5.8 – other sureties on behalf of third parties 1,022 1 1,021 …
Credit commitments related to non-performing loans amount to 27,342 thousand euros. Cover of relative risks is in the form of risk reserves for guarantees and commitments, which totalled at 31/12/04 3,966,000 euros. Caption includes 24,561,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA and 10,728,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
294 Change 31/12/04 31/12/03 absolute % 10.2 CAPTION 20 "COMMITMENTS" 1,440,989 989,572 451,417 45.6 (a) Commitments to extend credit (certain to be called on) 758,029 462,116 295,913 64.0 (b) Commitments to extend credit (not certain to be called on) 682,960 527,456 155,504 29.5 Commitments are analysed as follows: – stipulated mortgages to be granted 457,933 393,440 64,493 16.4 – purchases of securities to be settled 156,515 112,223 44,292 39.5 – deposits to be made with banks 103,558 616 102,942 … – unused irrevocable lines of credit 184,543 143,389 41,154 28.7 – commitments with Deposit Protection Fund Liabilities (FITD) 20,676 18,026 2,650 14.7 – amounts to be granted to customers 239,830 14,010 225,820 … – derivatives contracts on credits 150,245 194,087 -43,842 -22.6 – option on securities 86,181 - 86,181 … – stipulated finance lease transactions to be granted 36,627 15,800 20,827 … – investment shares and quotas to be received 4,881 97,981 -93,100 -95.0 Total 1,440,989 989,572 451,417 45.6
Caption includes 1,799,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA and 14,797,000 euros referring to the first-time full consolidation of Banca Cesare Ponti SpA.
Change 31/12/04 31/12/03 absolute % 10.3 ASSETS HELD TO GUARANTEE THE BANK’S LIABILITIES 425,628 217,970 207,658 95.3 Securities held to guarantee: – advance from Bank of Italy - 1,008 -1,008 … – bank drafts issued by Carige 30,388 26,478 3,910 14.8 – repurchase agreements 370,782 190,484 180,298 94.7 – others 24,458 - 24,458 … Total 425,628 217,970 207,658 95.3
Change 31/12/04 31/12/03 absolute % 10.4 UNUSED LINES OF CREDIT BY THE BANK 208,655 141,633 67,022 47.3 (a) central banks 170,255 114,306 55,949 48.9 (b) other banks 38,400 27,327 11,073 40.5
295 10.5 FORWARD TRANSACTIONS 31/12/04 31/12/03 Hedging Trading Other Hedging Trading Other 1. Purchase/sale of: 230,000 617,338 - - 325,956 - 1.1 Securities 230,000 239,348 - - 140,145 - – purchases - 153,623 - - 112,223 - – sales 230,000 85,725 - - 27,922 - 1.2 Currency - 377,990 - - 185,811 - – currency against currency - 2,621 - - - - – purchases against euro - 196,351 - - 45,560 - – sales against euro - 179,018 - - 140,251 - 2. Deposits and loans - - 410,050 - - 70,856 – to be made - - 341,277 - - 16,210 – to be received - - 68,773 - - 54,646 3. Derivatives contracts 4,494,955 2,943,166 213,342 3,868,957 2,763,316 181,694 3.1 With exchange of principal 253,230 353,594 131,942 274,227 125,636 102,171 (a) securities 96,000 26,145 131,942 116,997 15,980 102,171 – purchases 300 29,887 300 - – sales 96,000 25,845 102,055 116,997 15,680 102,171 (b) currency 157,230 327,449 - 157,230 109,656 - – currency against currency - 21,043 - - - - – purchases against euro 157,230 153,203 - 157,230 54,828 - – sales against euro - 153,203 - - 54,828 - (c) other instruments ------– purchases ------– sales ------3.2 Without exchange of principal 4,241,725 2,589,572 81,400 3,594,730 2,637,680 79,523 (a) currency ------– currency against currency - - - - - – purchases against euro ------– sales against euro ------(b) other instruments 4,241,725 2,589,572 81,400 3,594,730 2,637,680 79,523 – purchases 1,740,250 1,352,335 - 1,391,324 1,345,481 - – sales 2,501,475 1,237,237 81,400 2,203,406 1,292,199 79,523 Total 4,724,955 3,560,504 623,392 3,868,957 3,089,272 252,550
With regards to derivatives contracts, the column ‘other transactions’ includes 183,5 million, corresponding to the notional value of options stated separately from the related underlying structured bond issue of the Bank. In particular, in capital-exchange contracts, the values recorded are those of the options implicitly sold to the subscribers of convertible bonds (into ordinary shares) issued during 2003 (see section 8). The notional value of options incorporated in assets or liabilities which allow either the Bank or the counterparty to transform, after a certain period of time, the interest rate stipulated in the contract from fixed to floating, or vice versa, was recorded at section 11.6 ‘Maturities of assets and liabilities’.
10.6 DERIVATIVES CONTRACTS ON CREDITS 31/12/04 31/12/03 Trading Banking Trading Banking book book book book 1. Purchases 35,341 - 20,918 - 1.1 With exchange of principal 35,341 - 20,918 - - Credit default product 35,341 - 20,918 - 2. Sales 118,245 32,000 162,087 32,000 2.1 With exchange of principal 12,000 32,000 2,000 32,000 - Credit default product 12,000 32,000 2,000 32,000 2.2. Without exchange of principal 106,245 - 160,087 - - Total rate of return swap 106,245 - 160,087 - Total 153,586 32,000 183,005 32,000
296 Total principal of derivatives contracts amounts to 7,837.0 million (inclusive of basis swaps contracts for 1,059.2 milion, the notional value of which is recorded at section 10.5).
PRINCIPAL (1) Interest Exchange Share Other Total rate rate rates 1. Trading contracts 1,722,999 327,449 542,998 201,432 2,794,878 1.1 Non-quoted trading contracts 1,722,999 327,449 535,529 175,587 2,761,564 Swaps (2) 1,626,847 - - - 1,626,847 Options bought 48,777 163,294 168,672 - 380,743 Options sold 47,375 164,155 366,857 - 578,387 Derivatives on credits - - - 175,587 175,587 1.2 Quoted trading contracts - - 7,469 25,845 33,314 Futures bought - - 1,972 - 1,972 Futures sold - - 5,197 25,845 31,042 Options bought - - 300 - 300 Options sold - - - - - 2. Non-quoted hedging contracts 3,638,325 157,230 177,400 10,000 3,982,955 Swaps (2) 3,291,542 157,230 - - 3,448,772 Options bought 346,783 - 129,400 - 476,183 Options sold - - 48,000 - 48,000 Derivatives on credits - - - 10,000 10,000 Total 5,361,324 484,679 720,398 211,432 6,777,833 (1) Principal in basis swaps is stated once. (2) Caption includes basis swaps, cross currency swaps, interest rate swaps and overnight indexed swaps.
PRINCIPAL IN HEDGING CONTRACTS (1) Swaps Options Options Derivatives Total bought sold on credits 1. Assets 1,908,192 172,283 48,000 10,000 2,138,475 Loans to customers 444,281 124,283 - - 568,564 Trading securities 726,911 48,000 48,000 10,000 832,911 Equity investments 737,000 - - - 737,000 2. Liabilities 1,540,580 303,900 - - 1,844,480 Bonds 1,540,580 303,900 - - 1,844,480 Total 3,448,772 476,183 48,000 10,000 3,982,955 (1) Principal in basis swaps is stated once.
297 PRINCIPAL IN CONTRACTS CLASSIFIED BY REMAINING CONTRACT LIFE (1) Up to 12 From 1 to 5 More than Total months years 5 years 1. Trading contracts 1,316,141 806,704 672,033 2,794,878 1.1 Non-quoted trading contracts 1,283,127 806,404 672,033 2,761,564 Swaps 746,381 388,427 492,039 1,626,847 Options bought 208,820 135,702 36,221 380,743 Options sold 209,681 224,933 143,773 578,387 Derivatives on credits 118,245 57,342 - 175,587 1.2 Quoted trading contracts 33,014 300 - 33,314 Futures bought 1,972 - - 1,972 Futures sold 31,042 - - 31,042 Options bought - 300 - 300 Options sold - - - - 2. Non-quoted hedging contracts 1,357,823 1,425,821 1,199,311 3,982,955 Swaps 1,254,323 1,204,421 990,028 3,448,772 Options bought 55,500 211,400 209,283 476,183 Options sold 48,000 - - 48,000 Derivatives on credits - 10,000 - 10,000 Total 2,673,964 2,232,525 1,871,344 6,777,833 (1) Principal in basis swaps is stated once.
Derivatives business is carried out exclusively with primary banking and financial institutions. During the year, no credit losses for derivatives were noticed and no provisions for counterparty risk have been made. At 31/12/2004, there were no unsettled contracts. Non-quoted contracts accounted for 99% of all derivatives contracts.
NON-QUOTED DERIVATIVES CONTRACTS (1) Banks Financial Others Total bodies 1. Principal 5,888,747 433,504 422,268 6,744,519 2. Trading contracts (2) Positive market value 26,270 432 2,015 28,717 Negative market value 30,317 3,405 5,608 39,330 Potential credit equivalent 39,684 3,958 22,188 65,830 3. Hedging contracts Positive market value 60,200 14,741 - 74,941 Negative market value 86,716 30,331 - 117,047 Potential credit equivalent 36,662 3,635 - 40,297 (1) Principal relative to basis swaps is stated once. (2) The trading contracts segment includes negative market values of 11.5 million euros relating to options incorporated into structured bond issues of the Group offset by positive market values of the same amount in the hedging derivatives segment.
Derivatives-related capital losses of 97.3 million euros and capital gains of 61.4 million euros were not recorded in the income statement. In particular, capital losses and gains stemming from hedging contracts related to the trading securities portfolio of 31.4 million euros and 0.3 million euros respectively, were not recorded (see section 2.3); capital losses and gains stemming from hedging contracts related to bonds issued of 27.8 million euros and 61.1 million euros respectively and to loans to costumers capital losses of 26.6 million were also not recorded.
298 DEFERRED GAINS AND LOSSES Losses Gains 1. Trading contracts 11,515 - 1.1 Non-quoted trading contracts 11,515 - Swaps - - Options 11,515 - Derivatives on credits - - 1.2 Quoted trading contracts - - Futures - - Options - - 2 Non-quoted hedging contracts 85,802 61,369 Swaps 83,373 41,474 Options 2,097 19,895 Derivatives on credits 332 - Total 97,317 61,369
299 SECTION 11
CONCENTRATION AND DISTRIBUTION OF ASSETS AND LIABILITIES
Breakdowns of loans related to lists 11.2, 11.3, 11.5, 11.6 and 11.7 of this section include leased assets, which amount to 780,314 thousand euros and are exclusively connected to transactions with customers in euro. On this basis, loans to customers amount to 11,380,079 thousand euros and not to 10,599,765 thousand euros (as caption 40 of assets).
11.1 SIGNIFICANT EXPOSURES 31/12/04 31/12/03 (a) amount 301,555 150,000 (b) number 21
Significant exposures are those identified on the basis of “major lines of credit” as defined by the Bank of Italy.
11.2 DISTRIBUTION OF LOANS AND ADVANCES TO CUSTOMERS, BY CATEGORY 31/12/04 31/12/03 (a) Governments 554,359 502,116 (b) Other public entities 566,797 596,570 (c) Non-financial businesses 6,376,898 5,658,442 (d) Financial institutions 529,251 374,126 (e) Personal businesses 650,143 572,154 (f) Other operators 2,702,631 2,388,138 Total 11,380,079 10,091,546
11.3 DISTRIBUTION OF LOANS TO RESIDENT NON-FINANCIAL BUSINESSES AND PERSONAL BUSINESSES 31/12/04 31/12/03 (a) 1st branch of economic activity Other market services 1,627,815 1,298,059 Wholesale and retail trade, salvage and repairs (b) 2nd branch of economic activity Wholesale and retail trade, salvage and repairs 1,293,771 1,158,286 Building and construction (c) 3rd branch of economic activity Building and construction 1,057,558 839,548 Other market services (d) 4th branch of economic activity Air and sea transport 373,056 329,702 (e) 5th branch of economic activity Hotel and catering services 344,755 311,667 (f) Other branches 2,248,805 2,061,517 Total 6,945,760 5,998,779
300 11.4 DISTRIBUTION OF GUARANTEES GIVEN, BY CATEGORY OF COUNTERPART 31/12/04 31/12/03 (a) Governments 22,001 1 (b) Other public entities 9,544 13,592 (c) Banks 92,903 136,034 (d) Non-financial businesses 1,003,875 1,038,938 (e) Financial institutions 60,158 94,065 (f) Personal businesses 17,488 16,168 (g) Other operators 36,907 37,732 Total 1,242,876 1,336,530
11.5 GEOGRAPHIC DISTRIBUTION OF ASSETS AND LIABILITIES
31/12/04 Caption/countries ItalyOther EU OtherTotal countries countries 1. Assets 14,344,431 1,584,791 70,375 15,999,597 1.1 Due from banks 971,523 568,138 27,092 1,566,753 1.2 Loans to customers 11,097,083 271,020 11,976 11,380,079 1.3 Securities 2,275,825 745,633 31,307 3,052,765 2. Liabilities 14,101,220 928,833 219,098 15,249,151 2.1 Due to banks 292,349 680,389 6,604 979,342 2.2 Deposits from customers 8,355,979 38,435 22,429 8,416,843 2.3 Securities issued 5,332,369 9 65 5,332,443 2.4 Others 120,523 210,000 190,000 520,523 3. Guarantees and Commitments 2,377,083 278,650 28,132 2,683,865
31/12/03 Caption/countries ItalyOther EU OtherTotal countries countries 1. Assets 12,735,526 713,356 125,071 13,573,953 1.1 Due from banks 555,752 332,786 29,893 918,431 1.2 Loans to customers 9,828,349 216,529 46,668 10,091,546 1.3 Securities 2,351,425 164,041 48,510 2,563,976 2. Liabilities 11,826,461 823,010 247,947 12,897,418 2.1 Due to banks 438,165 525,123 42,761 1,006,049 2.2 Deposits from customers 6,758,182 87,871 15,118 6,861,171 2.3 Securities issued 4,512,691 16 68 4,512,775 2.4 Others 117,423 210,000 190,000 517,423 3. Guarantees and Commitments 2,243,549 26,596 55,957 2,326,102
Geographic distribution is analysed by reference to the counterparts’ country of residence.
301 11.6 MATURITIES OF ASSETS AND LIABILITIES
31/12/04 Repayable Up to Between 3 Between 1 and 5 Beyond 5 Unspecified Captions/Residual life on demand 3 months and 12 years years duration Total months fixed rate indexed rate fixed rate indexed rate 1. Assets 3,215,157 3,677,633 4,308,360 1,788,696 3,056,370 1,628,855 3,751,319 642,291 22,068,681 1.1 Treasury bonds eligible for refinancing 8 13,636 63,008 305,361 203,667 47,346 30,479 - 663,505 1.2 Due from banks 267,116 743,752 351,702 351 10,000 897 - 192,935 1,566,753 1.3 Loans to customers 2,859,822 344,746 1,338,062 456,023 2,035,503 668,778 3,227,789 449,356 11,380,079 1.4 Bonds and other fixed income securities 1,815 98,278 47,335 36,842 805,035 82,981 458,240 - 1,530,526 1.5 Off-balance sheet transactions 86,396 2,477,221 2,508,253 990,119 2,165 828,853 34,811 - 6,927,818 2. Liabilities 9,230,565 3,727,989 2,317,839 1,269,814 2,502,078 1,541,903 1,580,813 5,000 22,176,001 2.1 Due to banks 477,169 154,048 7,512 63,945 69,583 77,266 129,819 - 979,342 2.2 Deposits from customers 8,040,815 364,622 9,788 118 38 - 1,462 - 8,416,843 2.3 Securities issued 116,922 624,399 445,158 516,948 2,035,971 657,954 935,091 - 5,332,443 – bonds 19,391 473,732 311,104 505,958 2,024,241 657,954 935,091 - 4,927,471 – certificates of deposits 14,002 150,667 134,054 10,990 11,730 - - - 321,443 – other securities 83,529 ------83,529 2.4 Subordinated liabilities - - - - 2,500 102,055 415,000 - 519,555 2.5 Off-balance sheet transactions 595,659 2,584,920 1,855,381 688,803 393,986 704,628 99,441 5,000 6,927,818
Caption “repayable on demand” includes assets and liabilities with residual life of not more than 24 hours. Unspecified duration includes compulsory reserve, overdue loans and bad loans.
31/12/03 Repayable Up to Between 3 Between 1 and 5 Beyond 5 Unspecified Captions/Residual life on demand 3 months and 12 years years duration Total months fixed rate indexed rate fixed rate indexed rate 1. Assets 3,180,058 3,108,427 2,983,281 2,030,282 2,336,253 1,499,694 3,557,956 515,605 19,211,556 1.1 Treasury bonds eligible for refinancing 6,326 61,998 93,601 322,419 204,084 32,783 163,753 - 884,964 1.2 Due from banks 351,524 390,380 36,899 762 - 983 10,000 127,883 918,431 1.3 Loans to customers 2,150,004 798,029 1,204,665 463,415 1,670,721 675,869 2,741,121 387,722 10,091,546 1.4 Bonds and other fixed income securities 15,121 60,787 171,354 92,511 432,345 88,586 640,376 - 1,501,080 1.5 Off-balance sheet transactions 657,083 1,797,233 1,476,762 1,151,175 29,103 701,473 2,706 - 5,815,535 2. Liabilities 7,189,731 3,239,093 1,671,693 1,580,899 1,979,380 1,321,108 1,730,649 32 18,712,585 2.1 Due to banks 45,367 489,846 122,106 40,887 61,957 104,488 141,398 - 1,006,049 2.2 Deposits from customers 6,601,160 247,911 11,695 373 - - - 32 6,861,171 2.3 Securities issued 175,462 349,123 337,333 473,074 1,906,792 99,669 1,171,322 - 4,512,775 – bonds 71,831 185,156 192,086 460,156 1,893,256 99,669 1,171,322 - 4,073,476 – certificates of deposits 15,648 163,967 145,247 12,918 13,536 - - - 351,316 – other securities 87,983 ------87,983 2.4 Subordinated liabilities - - - - - 102,055 415,000 - 517,055 2.5 Off-balance sheet - transactions 367,742 2,152,213 1,200,559 1,066,565 10,631 1,014,896 2,929 - 5,815,535
Change 31/12/04 31/12/03 absolute % 11.7 ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCY a) Assets 367,035 446,198 -79,163 -17.7 1. Due from banks 130,539 75,445 55,094 73.0 2. Loans to customers 217,939 328,875 -110,936 -33.7 3. Securities 9,209 35,328 -26,119 -73.9 4. Participating interests 479 382 97 25.4 5. Other 8,869 6,168 2,701 43.8 (b) Liabilities 552,968 457,270 95,698 20.9 1. Due to banks 217,832 245,314 -27,482 -11.2 2. Deposits from customers 114,621 11,960 102,661 … 3. Securities issued 220,515 199,996 20,519 10.3 4. Other - - - -
302 11. 8 SECURITISATION
Banca Carige carried out three securitisation operations: the first at the end of 2000 relating to non performing credits; the second at the end of 2001 relating to performing credits (mortgages), the third in the first half of 2004 relating to performing credits. The Group’s banking subsidiary Cassa di Risparmio di Savona securitised its bad loans portfolio at the end of 2002. Details are given below.
BANCA CARIGE’S SECURITISATION a) Securitisation of bad loans; year 2000
At the end of 2000 the Bank securitised without recourse a part of its bad loans portfolio. These loans were backed either fully or in part by voluntary or legally-enforced guarantees (gross value of pro soluto credits: ITL 566.4 bn, 292.5 million euros; book value: ITL 440.6 bn, 227.6 million euros; sale price: ITL 320 bn, 165.3 million euros).
As special purpose vehicle for the transaction, Argo Finance a subsidiary of the Carige Group, issued the following three types of bonds: - Class A ‘Senior’ bonds amounting to 40 million euros. - Class B ‘Mezzanine’ bonds amounting to 70 million euros. - Class C ‘Junior’ bonds amounting to 56.5 million euros; fully subscribed by Banca Carige, this issue is fully subordinate in principal and coupon payments to classes A and B.
The placement of the securities was carried out by Credit Suisse First Boston.
At 31st December 2004, of the three classes issued, Banca Carige held in its securities portfolio exclusively and fully the class C ‘Junior’ bonds for a value of 56.5 million euros. These securities were placed in the Bank’s investment portfolio. No writedowns have been effected on the book value of these securities in the light of the positive performance of receipts. The securitised bad loans represent the underlying for all three classes of securities issued.
Risks for the Bank resulting from this transaction are represented by: the class C bonds both for principal and interest; guarantees granted to holders of class B securities for both principal and interest; the credit line of 15 million euros backing the class B bond issues granted by Banca Carige to Argo Finance; a limited recourse mortgage bond loan of 51 million euros; an interest rate cap. The positive performance in repayment flows has meant that no writedowns were carried out. The credit line, which at 31/12/04 was unused, was recorded at balance sheet caption 20 ‘Guarantees’, whilst the limited recourse mortgage, also unused, was recorded, as required by the Bank of Italy, at caption 10 ‘Guarantees given’. The positive performance in repayment flows has meant that no value adjustments were required.
Banca Carige is the servicer for the transaction. Revenues on the credit portfolio at 30/12/04 amounted to 122.8 million euros, of which 33.3 million euros collected during 2003. These amounts are in line with the repayment schedule defined at the start of the transaction. Banca Carige bills Argo Finance One on a monthly and half-yearly basis for the service activity it performs. The half-yearly accounts are inspected by the auditors KPMG SpA. The service activity carried out by Banca Carige generated 1,3 million euros in commission revenues and 1,6 million euros in reimbursed legal costs; 2,3 million euros in interest were received on the class C Junior bonds. On the basis of interest-rate trends and conditions contained in the contract, no additional revenues were payable on the limited recourse mortgage.
As a result of the positive performance recorded by the repayment schedule, Fitch on 6/3/02 upgraded the class A securities transaction from “AA” to “AAA”; on 13th December 2002 the same institute upgraded the transaction relating to the class B securities from “AA-“ to “AA”. On 10th August 2004 Fitch upgraded the class B securities transaction from “AA” to “AAA”.
The positive trend allowed for the full repayment of the class A securities (40 million) in addition to the repayment of part (53.4 million) of the capital relating to the class B securities. After the end of the year, in the month of January 2004, 10.3 million of class B securities was also repaid.
303 The limited recourse mortgage in Italian government stock in support of class B subscribers, previously reduced to 69 million in December 2003, was redefined at a nominal value of 51 million at the beginning of 2004. b) Securitisation of performing loans: year 2001
At the end of 2001, Banca Carige securitised its performing mortgages in order to improve liquidity in the light of considerable expansion in long-term lending to the family (mortgages, in particular). A total of 13,858 mortgages was sold with a residual debt at 31/12/01, the date of ceding, on the part of customers amounting to 511.5 million euros.
The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99).
In particular, the bundle of credits sold were mortgages granted to private customers for the purchase or renovation of property. The bundle of credits ceded, whose characteristics were published in the Gazzetta Ufficiale of 25/2/2002, were as follows: 1) index-linked, first recorded mortgages/landed property loans distributed to private individuals prior to 31/7/2001; 2) mortgages with: a fixed repayment schedule with instalment due 31/12/2001; repayments in order with schedule via current account direct debit. 3) mortgages/landed property loans not classified either as bad loans or watchlists between 31/12/93 (exclusive) and 31/12/01 (inclusive).
The bundle of credits described above was sold on 31/12/01 for 535.5 million euros to the special purpose vehicle Argo Mortgage Srl, in which Banca Carige has a 5% indirect holding via its subsidiary Columbus Carige Immobiliare (the regularity of the operation was evidenced by the signing of servicing, and guarantee and indemnity contracts in the time prescribed).
The price of the credits ceded was calculated as the sum of the following two components: - an initial price of 511.5 million euros equivalent to the nominal value of the credits ceded; - a deferred price of 24.0 million euros calculated on the basis of profit extraction which, in particular, took into account the excess spread after the transaction costs relating to each payment date, intrinsic risk levels of the credits, possibility of anticipated re-payment of loan. This spread was actualised using market rates at 31/12/01 on the basis of the duration of the transaction.
The determination of deferred price was carried out with a financial model verified by an auditor. It is paid pro quota at each payment date in reference to the procedures foreseen in the contract and the payment priorities defined in the transaction. During 2002, 2003 and 2004 deferred-price account payments totalled 7.1 million. The remaining credit of 16.9 million euros at 31/12/2004 with Argo Mortgage Srl related to deferred-price is recorded at the caption 40 “Loans to customers”.
The securities issued by Argo Mortgage are as follows:
Class Amount Rating by Expected Contractual Effective Euribor 3 months Credit in millions Moody’s/Fitch duration Maturity expected margin in basis enhancement of euro (***) (*) duration (*) points (**) A 478.0 Aaa/AAA March 2009 October 2036 4.3 years 26 8.2% B 22.0 Aa2/AA March 2009 October 2036 6.8 years 45 4.0% C 11.5 Baa2/BBB March 2009 October 2036 6.8 years 145 1.8% D 9.2 Not rated October 2036 (*) assuming Argo Mortgage exercises its call option in January 2009; (**) step up of applicable spread if call option is not exercised; (***) the rating was assigned by Moody’s and Fitch/IBCA on the basis of due diligence. The rating will be reviewed annually on the basis of collection flows and deviance from business plans.
The class A, B and C securities are quoted on the Luxemburg bond market and have been fully subscribed exclusively by European institutional investors, Italian included.
304 Class B and C securities were subscribed by Banca Carige. The class D issue was subscribed fully by Banca Carige and placed in the Bank's investment portfolio.
At 31th December 2004, the transaction-related securities held in Banca Carige’s investment securities portfolio were exclusively class D securities and amounted to 9.2 million.
Payment priority will be as follows: - the payment of senior expenses and swap interest rate, followed by: - the payment of coupon on class A securities at maturity dates prior to maturity at October 2003, followed by: - the payment of coupon on class B securities on the basis of cumulative default ratio, followed by: - the payment of coupon on class C securities with residual available amounts at each payment date to be paid into a capital accumulation account.
From the October 2003 date of payment onwards, the order of priority is as follows: - the repayment of redemption instalment on class A securities, followed, on the basis of the cumulative default ratio, by: - the payment of coupon on class B securities and the repayment of redemption instalment on class B securities, followed by: - the payment of coupon on class C securities and redemption instalment of amortisation relating to the same securities.
At 31/12/2004 Class A securities amounting 185,9 million were repaied. The repayment of principal and interest of class D securities is subordinate to the first three classes.
The role of servicer of the transaction was carried out on Argo Mortgage’s behalf by Banca Carige.
Banca Carige bills Argo Mortgage on a three-monthly basis for the service activity it performs. The yearly accounts are inspected by the auditors KPMG SpA.
All proceeds relating to the securitised credits will be paid by mortgage borrowers at the counters of Banca Carige, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the corporate service contract in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.
During 2004, total revenues collected amounted to 74.6 million euros, of which 43.5 million euros in capital instalments, 15.9 million euros in interest instalments, 15.2 million in advanced repayments, interest and penalty charges. In 2004 commissions on revenues for 0.3 million euros accrued. The transaction is proceeding according to schedule, consequently no value adjustments relating to the Bank’s relations with Argo Mortgage were required.
The transaction is monitored by the Bank of New York in its payment report and by Banca Carige in its quarterly and investor reports, and certified by the independent auditor (KPMG SPA).
Banca Carige SpA provided the special purpose vehicle with the cash collateral foreseen by the transaction (quota of the tranche of class D securities totalling 7.8 million) which during the year, as a result of the regular repayment flows scheduled by the contract, reached the figure of 10.9 million, of which 0.5 million of accrued interest.
The London offices of the Bank of New York will represent the bond holders as well as being agent for calculation and security trustee. The same bank’s Luxemburg offices will act as agent for Luxemburg. The Milan offices of BNP Paribas Security Services will be payment agent for the transaction. The arrangers of the transaction were CSFB and CDC IXIS.
The counterparty of the swap contracts utilised by Argo Mortgage for cover against interest rate fluctuations latent in the securitised credits is CDC IXIS.
305 c) Securitisation of performing credits: 2004
In June 2004, the Bank securitised part of its performing mortgage portfolio in the light of increasing demand for long-term lending on the part of households and the need to satisfy the requirements of prudential liquidity management.
A total of 13,272 mortgages were sold to special purpose vehicle (SPV) Argo Mortgage 2 Srl for a book value of 864.5 million at 30th June 2004.
The mortgages were selected on the basis of criteria required by Law 130/99 (“Securitisation Law”).
The mortgages in question were granted to households for the purchase or renovation of residential property.
A description of the underlying credits was published in the Official Gazette of the Italian Republic of 2/7/04. The credits were mortgage loans: 1. granted to households prior to 31st December 2003 at varying interest-rate solutions that include floating, fixed, floating with cap, mixed (fixed for the first two years and subsequently floating); 2. with instalments due at 30th June 2004 and with repayment schedules effected by direct debit; 3. not classified as non performing (watchlists or bad loans) from 31st December 1994 (inclusive) to 30th June 2004 (inclusive).
The above-described credits were sold to Argo Mortgage 2 Srl (Banca Carige has a 5 per cent indirect holding in the company via its subsidiary Columbus Carige Immobiliare SpA) on 30th June 2004 for an overall price of 925.6 million. The sale was completed with the signing of the servicing contract.
The price is the sum of the following two components: - an initial price of 864.5 million corresponding to the book value of the credits sold; - a deferred price of 61.1 million generated by the application of a profit extraction mechanism which took into account, in particular, excess spread at every payment date, the degree of risk latent in the credits sold, and the possibility of early extinction of the mortgage loan, calculated utilising market rates as at 30/6/04 on the basis of the length of the transaction.
The adequacy of the financial model utilised for the calculation of the deferred price was confirmed by a leading firm of auditors.
Payment of the first price component (864.5 million) was made according to the terms of the transaction on 23rd July 2004 along with the issue of the securities. Payment of the deferred price (61.1 million) will be made in instalments at each payment date on the basis of the forecasts and payment priorities defined in the contract.
The remaining credit in favour of Argo Mortgage 2 Srl relating to the deferred price (61.1 million) is recorded at balance sheet caption 40 “Amounts owed to customers”; transaction revenues (61.1 million) are recorded in the Profit & Loss Account at caption 70 “Other operating revenues”.
The transaction was completed in the time prescribed with the signing of the servicing contract, which also includes the guarantee and compensation agreement.
Banca Carige was appointed by Argo Mortgage 2 Srl as servicer for the transaction.
Banca Carige will report on its activities as servicer to the SPV on a quarterly basis; these reports will, in turn, be subject to annual review by auditors (KPMG SpA).
Receipts for the securitised credits will be paid by mortgage borrowers over the counters of Banca Carige in its role as account bank and cash manager; both roles are compatible with the corporate service contract signed by Carige and Argo Mortgage 2.
Reporting will be carried out by Deutsche Bank AG in London branch (Payment Report) and by Banca Carige (Quarterly Report and Investor Report). The transaction will be certified annually by KPMG SpA.
306 The Deutsche Trustee Company is security trustee, whilst Deutsche Bank AG (London) is paying agent. The Luxemburg branch of Deutsche Bank AG is the Luxemburg agent.
CDC IXIS Capital Markets is counterpart in swap contracts offering Argo Mortgage 2 Srl cover against interest rate risk latent in the underlying securitised.
The issuance of asset backed securities by Argo Mortgage 2 Srl and related payments took place on 23rd July 2004 as scheduled. The securities are as follows:
Class Amount in millions Rating supplied by Moody’s/Fitch Maturity Margin on Euribor 3 of euros (***) months (**) A 808.30 Aaa/AAA October 2043 Bps 18 B 26.80 Aa2/AA- October 2043 Bps 32 C 29.35 Baa2/BBB October 2043 Bps 83
Rating followed due diligence carried out on the part of each agency. Ratings are subject to annual review on the basis of receipts and variations to the business plan.
The bonds are traded on the Luxemburg bond market.
Payment claims rank in the following order: - senior expenses, the interest rate swap and interest due on class A securities prior to maturity at January 2006, followed by - according to cumulative default ratio trends interest due on class B securities, followed by - interest due on class C securities with payment of residual amounts to the capital accumulation account at every payment date.
From payment date January 2006, the priority ranking is as follows: - payment of class A securities redemption instalments, followed by - on the basis of the cumulative default ratio, payment of class B securities interest and redemption instalments, followed by - payment of class C securities interest and redemption instalments.
Banca Carige provided Argo Mortgage 2 Srl the necessary cash collateral for: - the purchase of an IRS from CDC IXIS ; - start-up costs. Collateral was in the form of subordinated loan of 22.7 million. Repayment of the loan will occur at each payment date according to the availability of funds and the order of payment priority, prior to the payment of the deferred price. At 31th December 2004, the outstanding amounted to 21.7 million.
During the second half of 2004 receipts totalled 55.5 million, of which 24.5 million in capital, 16.9 million in interest and 13.2 million in early repayment, interest and penalty charges. In 2004 0.2 million euros in servicing commission accrued.
CASSA DI RISPARMIO DI SAVONA’S SECURITISATION
At the end of 2002, Cassa di Risparmio di Savona securitised a part of its bad loans portfolio. The advantages of this transaction can be summarised as follows: - previously illiquid asset positions with low returns can now benefit from higher-yielding market interest rates; - securitisation achieves qualitative improvements in the bank’s risk portfolio; - higher credit rating of the bank has cost benefits for the Banca Carige Group in its funding requirements on international markets.
The special purpose vehicle Priamar Finance Srl ownership structure is as follows: Stichting Faro of Amsterdam 95%; Banca Carige 5%. The bad loans securitised were classified as such at 31/12/01 and were still effective at 11/12/02.
307 On 14th January 2004 Banca Carige acquired a majority holding in Priamar Finance Srl, which subsequently was incorporated into the Banca Carige Group with effect from the business year 2004. Priamar Finance’s share capital ownership structure is as follows: - 60% Banca Carige SpA - 40% Stichting Faro (Amsterdam).
The portfolio subject to sale was identified on the basis of objective criteria foreseen by relevant legislation (Law 130/99 and article 58, Law decree 385/93).
The credits sold (contract date: 23/12/02 with effect from 11.59 pm of 31/12/02) consisted of 1,085 debt positions (equivalent to 2,238 sub-items).
The gross value of credits sold excluding previous reductions was calculated at 68.8 million. The corresponding net value was 33.7 million after previous writedowns. The sale price, fixed at 28 million, determined a loss on securitisation of 5.7 million, registered in the profit and loss account of 2002..
All the loans securitised were denominated in euro and were granted to customers resident in Italy.
All proceeds relating to the securitised credits will be collected at the counters of Banca Carige, the latter, as foreseen in the contractual documentation regulating the securitisation transaction, carrying out the role of both account bank and cash manager. Both roles are compatible with the administrative service contract signed between Banca Carige and Priamar Finance in that Banca Carige will perform the accounting duties on behalf of the special purpose vehicle.
The role of servicer of the transaction was assigned to Banca Carige by Priamar Finance.
Banca Carige bills Priamar Finance on a monthly and half-yearly basis for the service activity it performs. The yearly accounts are inspected by the auditors KPMG SpA.
Priamar Finance is both assignee of the credits and issuer of the securities.
The London offices of the Bank of New York will represent the bond holders in addition to performing the duties of calculation agent, security trustee, and payment agent. The same bank’s Luxembourg offices will act as agent for Luxembourg.
Arranger and lead manager of the operation is WestLB AG.
The asset backed securities issued by Priamar Finance on 21st February 2003 are as follows:
Class Amount in millions of Expected duration Interest rate euro A 18.0 4.6 years Euribor 6 months + 0.15% B 10.2 4% plus any residual portfolio cash flows
The maturity indicated in the table is that forecasted by the business plan. The expiry date of the operation has been fixed at 31/12/2016.
The class A securities are quoted on the Luxembourg bond market; class B securities are unquoted.
Class B securities were subscribed by Cassa di Risparmio di Savona and were placed in that bank’s investment securities portfolio.
The securities are not rated.
Payment priority will be as follows: - the payment of coupon on class A securities, followed by the principal; on completion of this - the payment of coupon on class B securities, followed by the principal.
308 As stated above, the payment of coupon and principal relating to class B securities is fully subordinated to the class A issue.
Credit enhancement of the issue is represented, in addition to the class categorization and payment priority described above, by a line of credit, a limited recourse bond loan, and an interest cap covering interest rate risk exposure.
Banca Carige has opened a revolving credit line in favour of Priamar Finance of 2.5 million for the duration of the bond issue, renewable on a yearly basis. This line of credit will be used in the case of any temporary interruptions in repayment flows. Reimbursement of the credit to Banca Carige will be effected according to the conditions stipulated in the contract between Banca Carige and Priamar Finance. Repayment of the line of credit utilised is subordinated to the interest and capital repayments relating to the class A securities.
As stated above, Priamar Finance is covered by an interest rate cap the premium of which was paid by Banca Carige up front at the issuing of the securities.
Cassa di Risparmio di Savona has made available a limited recourse mortgage in the form of Italian government stock of nominal 22 million.
Risks for Cassa di Risparmio di Savona resulting from this transaction are represented by: the class B bonds both for principal and interest and a limited recourse mortgage bond loan. Risks for Banca Carige, the servicer, are: the credit line, an interest rate cap and subordinate credits related to the role of servicer.
The transaction proceeds according to schedule. Consequently, no value adjustments were required (the proceeds at 31/12/2004 were 8.8 million euros, of which 3.1 million euros in the year 2004). For the same reason neither the credit line, nor mortgage bond loan was used.
Given market trends, the interest rate cap was not utilised.
In 2004 the following amounts accrued: 0.1 million euros in servicing commission; 0.6 million euros in recovered expenses (0.1 million euros anticipated).
Securities deriving from securitisation transactions carried out by other parties: Asset backed securities in portfolio at 31/12/04.
Within the trading securities portfolio at 31/12/04 are not securities deriving from securitisation transactions carried out by other parties.
The economic effects resulting from the investments carried out during the period are stated at P&L captions 10 “Interest income” (1,258,000 euros) and 60 “Profit (Loss) from financial transactions” (560,000 in losses on securities and exchange rates). Details are provided in the table below:
EFFECTS ON INCOME STATEMENTS 2004 STEMMING FROM ASSET BACKED SECURITIES IN PORTFOLIO AT 31/12/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY OTHER PARTIES Senior securities Mezzanine securities Junior securities Net Net Net Underlying Svalut Svalut Svalut Interests incomes Interests incomes/ Interests incomes ations ations ations / Losses Losses / Losses a) Mortgages 379 49 - 27 25 - - - - b) Corporate loans 79 63 - 100 184 - - - - c) Consumer credits 112 134 ------d) Securities ------e) Various other credits 109 2 ------f) Various other non- 307 69 - 145 34 - - - - performing credits Total 986 317 - 272 243 - - - -
309 C2) ASSET BACKED SECURITIES IN PORTFOLIO AT 31/12/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY BANCA CARIGE GROUP COMPANIES Underlying Senior securities Mezzanine Junior securities Securities (a) Mortgages - 9,190 (b) Corporate loans - - - (c) Consumer credits - - - (d) Securities - - - (e) Various other credits - - - (f) Various other non-performing credits - - 66,679 Total - 75,869
Writedowns relating to the above carried out according to the accounting principles illustrated in section 1 of the explanatory notes.
Investments made in the form of these securities during 2004 are accounted at income statement caption 10 ‘Interest income’ for 3,119 thousand euros (interest income) and caption 60 “Gains and losses from financial transactions” for 10,000 thousand euros (incomes / losses on securities). Details are given in the table below:
EFFECTS ON INCOME STATEMENT 2004 STEMMING FROM ASSET BACKED SECURITIES IN PORTFOLIO AT 31/12/04 DERIVING FROM STRUCTURED SECURITISED CREDITS CARRIED OUT BY BANCA CARIGE GROUP COMPANIES Underlying Senior securities Mezzanine securities Junior securities
Interest Gains/ Write- Interest Gains/ Write- Interest Gains/ Write- Losses downs Losses downs Losses downs a) Mortgages - - - 5 1 - 383 - - b) Corporate loans ------c) consumer credits ------d) securities ------e) various other credits ------f) various other non- - - - 19 9 - 2,712 - - performing credits Total - - - 24 10 - 3,095 - -
310 SECTION 12
ADMINISTRATION AND DEALING ON BEHALF OF THIRD PARTIES
Change 31/12/04 31/12/03 absolute % 12.1 DEALING OF SECURITIES a) Purchases 909,837 848,935 60,902 7.2 1. Settled 905,313 847,456 57,857 6.8 2. Unsettled 4,524 1,479 3,045 … (b) Sales 867,250 863,375 3,875 0.4 1. Settled 863,249 858,144 5,105 0.6 2. Unsettled 4,001 5,231 -1,230 -23.5
Change 31/12/04 31/12/03 absolute % 12.2 PRIVATE BANKING 1,562,335 1,353,959 208,376 15.4 1. Securities issued by the Bank - 38 -38 -100.0 2. Other securities 1,562,335 1,353,921 208,414 15.4
The figures shown correspond to total market values of property included within administration and trading on behalf of third parties. At 31st December 2004 all management lines were performed by third parties pursuant to article 24, paragraph 1, lett. f of Legislative decree 58/98. The caption includes 64,175,000 euros in Carige Open Pension Fund investments (fund created in 1999 pursuant to article 9, Legislative decree 124/93) and 67,148,000 euros referring to asset management lines offering a guarantee of initial invested capital via the sale of an accessory put option.
Change 31/12/04 31/12/03 absolute % 12.3 CUSTODY AND ADMINISTRATION OF SECURITIES (a) third-party securities held in deposit 20,687,692 17,079,348 3,608,344 21.1 (private banking not included) 1. Securities issued by Group companies 5,395,248 4,632,359 762,889 16.5 2. Other securities 15,292,444 12,446,989 2,845,455 22.9 (b) third-party securities deposited with third-parties 17,903,150 15,593,807 2,309,343 14.8 (c) portfolio securities deposited with third parties 1,645,599 2,030,337 -384,738 -18.9
Depositary bank-related securities in custody amounted to 3,902,450 thousand euros.
311 12.4 COLLECTION OF THIRD PARTY RECEIVABLES: DEBIT AND CREDIT ADJUSTMENTS 31/12/04 31/12/03 (a) debit adjustments 1,343,120 919,405 1. current accounts 168,886 13,765 2. bills portfolio 853,884 643,415 3. cash 36,041 43,499 4. other 284,309 218,726 (b) credit adjustments 1,559,815 1,096,147 1. current accounts 171,753 9,127 2. bills and other items for collection 1,384,250 1,086,938 3. other 3,812 82
Change 31/12/04 31/12/03 absolute % 12.5 OTHER TRANSACTIONS 565,407 877,277 -311,870 -35.5 – Other banks’ share of pool operations 380,318 689,254 -308,936 -44.8 – Total bills related to factoring transactions (“pro solvendo”) 173,319 173,267 52 0.0 – Amounts managed on behalf of public bodies 11,770 14,756 -2,986 -20.2
12.6 INFORMATION CONCERNING STRUCTURED SECURITISED CREDITS
A) BANCA CARIGE: SECURITISATION OF BAD LOANS
At the end of 2000, Banca Carige securitised a part of its bad loan portfolio pursuant to Law 130/99 in collaboration with the special purpose vehicle, Argo Finance One; as at 31/12/01, Argo Finance One was a member of the Banca Carige Group (Group holding: 60%). In relation to this transaction and in accordance with the Bank of Italy’s ruling the following details are given below: information required regarding transactions carried out with Argo Finance One in the form given in part D of the explanatory notes and the relative attachment to the financial statements of the transferee and issuer of asset backed securities prepared in accordance to the Bank of Italy’s guidelines contained in note no. 3019 of 5th April 2000.
1. QUALITATIVE INFORMATION
1.1 A description of the transaction and its progress
Date of transaction: 21st December 2000: with effect from 11.59 pm of 31st December 2000, the completion of the contract regarding the purchase of the credits; 27th March 2001: the issue of securities financing the purchase.
Transferor: Banca Carige SpA with its head offices in Via Cassa di Risparmio 15, Genoa.
Credits transferred: Banca Carige transferred against payment of 165.3 million pursuant to articles 1 and 4, Law 130/99 a portfolio of bad loans relating principally to secured loans subject to recovery proceedings. At the date of transfer, the portfolio of credits amounted to a gross total of 292.5 million, with a corresponding book value for Banca Carige of 227.6 million.
The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99 and D.L. 385/93). The credits sold were of the following types: a) landed property loans, b) lending of various forms backed by voluntary and/or legally-enforced guarantees in the form of real estate in addition to non-mortgaged loans of
312 various types. Credits not transferred included syndicated loans, leasing, and credits below 25,822.84 €. (Lit. 50 million).
The state of the transaction: the transaction, started in January 2001, is progressing according to schedule. In particular, collection flows at 31st December 2004 amounted to 122.8 million euros, 33.3 of which was collected in 2004. The regular collection allowed for the entire repayment of the class A securities (40 million) and 53.4 million of the class B securities issue. In January 2005 a further 10.3 million relating to class B securities was repaid, leaving an outstanding of 6.3 million.
1.2 The Parties involved
Purchaser of the credit: Argo Finance One, a company formed on 27th October 2000 in accordance to article 3 of Law 130/99 with its head offices in Via Cassa di Risparmio 15, Genoa. The company is enrolled with the Genoa companies register and with the register of monetary financial institutions held by the Italian exchange office – Ufficio Italiano Cambi, as foreseen by article of 106 of the Italian consolidated banking Law, and enrolled in the special list of companies foreseen by the same Law (article 107).
Servicer: The transferor Banca Carige SpA is encharged with the collection of the credits ceded in addition to the payment services foreseen by the servicing contract stipulated between Banca Carige and Argo Finance One for which it, Banca Carige, will receive commission and reimbursement of expenses incurred.
Representative of the Noteholders: The Bank of New York, London branch.
Collection account bank: Banca Carige SpA
Investment account bank/cash manager: Banca Carige SpA
Calculation agent/Paying agent: The Bank of New York, London branch
CAP Counterparty: Banca Carige SpA
Luxembourg agent: Kredietbank S.A. Luxemburgeoise
Administrative services provider: Banca Carige SpA
Transferor’s obligations: at the transfer date, Argo Finance One, as issuer, and Banca Carige SpA as transferor, stipulated a contract of guarantee and indemnity according to the terms of which the transferor provides the issuer with specific guarantees in relation to the portfolio and accepts to bear any specific costs, expenses and liabilities of the issuer deriving from the purchase and holding of the portfolio.
1.3 The nature of the securities issued
Limited recourse asset backed securities: the notes issued by the SPV Argo Finance One on 27th March 2001 are made up by floating-rate bonds with the following characteristics:
Class A Currency: euro Amount: 40 million € Rate: floating Parameter: Euribor at 6 months + 0.60% p.a. Coupon: twice-yearly Duration: 19 years, 3 months (maturity July 2020) average expected duration 1.89 years. Re-payment: re-payment related to recovery of underlying credits Rating: Moody’s: Aaa; Fitch-Ratings: AA Listing: Luxemburg bond market
313 Class B Currency: euro Amount: 70 million € Rate: floating Parameter: Euribor at 6 months + 0.45% p.a. Coupon: twice-yearly Duration: 19 years and 3 months (maturity July 2020) average expected duration 4.90 years Re-payment: re-payment related to recovery of underlying credits Rating: Moody’s: Aa1; Fitch-Ratings Ltd: AA Listing: Luxemburg bond market
Class C Currency: euro Amount: 56.5 million € Rate: floating Parameter: 4% p.a. plus a further remuneration equal to residual yields subordinate to payment of classes A and B, and portfolio payment cash flows Coupon: twice-yearly Duration: 19 years and 3 months (maturity July 2020) average expected duration 8 years Re-payment: re-payment related to recovery of underlying credits Listing: not listed The ratings assigned refer to the probability of principal and interest re-payments at maturity. Class C notes are not rated.
The re-payment of capital can occur no sooner than 18 months after issue. After this, repayment will be made at the same time as the coupon according to the repayment schedule for an amount corresponding to available funds on the basis of the following order of priority: 1. Coupon class A notes; 2. Coupon class B notes; 3. Principal class A notes; 4. Principal class B notes; 5. Coupon class C notes; 6. Principal class C notes.
1.4 Other financial transactions
Banca Carige has opened a credit line in favour of Argo Finance One with regards specifically to the issue of class A and B securities amounting to 15 million euros indexed at euribor 6 months plus 0.20% per annum. This credit line will guarantee the prompt payment of interest payable on the above-mentioned securities and the repayment of principal at maturity. Banca Carige also granted Argo Finance One a limited recourse mortgage to be supplied in the form of Italian state securities for a total of 84,316,000 euros with maturity at 31st July 2020. Related interest corresponds to yields on government stock collected by the issuer at each payment date in addition to a further income payment that is calculated as follows: the difference between an amount equivalent to the interest stated at euribor that would accrue on the funds provided, and an amount equivalent to the interest on Italian government stock collected by the issuer. The limited recourse mortgage supplied the issuer with government securities to be pledged in favour of class B bondholders. In light of its credit line function, the mortgage will be repaid only after these bondholders have been fully reimbursed (principal and interest). Positive performances in collection and repayment of class B securities meant that the mortgage was lowered to a nominal 69,000,000 euros in December 2003 and 51,000,000 euros in February 2004. An interest rate cap has also been stipulated between Banca Carige and Argo Finance One in order to offer Argo Finance cover against latent interest rate risk in the underlying as a result of possible misalignment between securitised assets on the one hand and liabilities in the form of securities issued on the other.
314 2. TRANSACTION AS AT 31st DECEMBER 2004
Attachment 1 to the explanatory notes is summarised as follows:
Synthesis of securitised assets and securities issued
Euro Transaction as Transaction as at 31/12/04 at 31/12/03 ASSETS A. Assets securitised 82,594,315 103,306,739 - loans 82,594,315 103,306,739 B. Use of available amounts stemming from securitisation 13,135,943 16,961,069 - debt securities - - - others 13,135,943 16,961,069 Available amounts in liquid form 12,419,223 16,073,810 Others 716,720 887,259 TOTAL ASSETS 95,730,258 120,267,808 LIABILITIES C. Securities issued 73,098,811 150,568,706 - class A: - - - class B: 16,598,811 49,068,706 - class C: 56,500,000 56,500,000 D. Financing received - - E. Other liabilities 16,285,259 10,577,098 Balance 2002 3,815,301 (306,703) Amounts payable to Banca Carige SpA 11,256,463 9,326,134 Other items 1,213,495 1,557,667 TOTAL LIABILITIES 89,384,070 116,145,804 COSTS F. Interest charges payable on securities issued 3,046,624 4,131,048 G. Transaction-related commissions and fees 2,956,789 2,653,517 - servicing 2,891,881 2,604,979 - other services 64,908 48,538 H. Other charges 10,012,588 11,369,972 - loan losses 705,267 936,798 - expected losses on loans 8,884,292 10,197,586 - other management charges 423,029 235,588 TOTAL COSTS 16,016,001 18,154,537 PROCEEDS I. Interest generated by securitised assets 8,884,292 10,197,586 L. Other proceeds 13,477,897 12,078,955 - interest income on securities 98,957 204,313 - interest income from bank deposits 116,274 120,050 - recoveries on loans (amounts collected) 13,262,666 11,754,592 TOTAL PROCEEDS 22,362,189 22,276,541
315 3. QUANTITATIVE INFORMATION
3.1 Credit–related flows Details given below relate to the situation of the securitised assets at 31/12/2004 and subsequent positive and negative variations recorded during the year.
(in millions of euros) Amount of credits purchased at 31/12/2003 103.3 Decreases related to collections for the year -33.3 Decreases from losses -0.7 Increases stemming from writebacks 13.3 Increases stemming from interest on late payment 8.9 Decreases for expected losses -8.9 Balance at 31/12/2004 82.6
3.2 Cash flows Cash flows relating to amounts collected from securitised credits totalled 122.8 million euros in line with the payment scheduled defined.
The table below illustrates the flows forecasted in the offering circular for the asset backed securities for the first 12 years along with flows already collected.
(millions of euros) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Foreseen 33.2 25.3 21.8 19.2 16.5 15.1 12.9 11.0 10.1 9.1 7.7 6.9 Collected 33.8 28.0 27.8 33.3
As a result of the positive performance recorded by the repayment schedule, Fitch IBCA on 6/3/02 upgraded the class A securities transaction from “AA” to “AAA”; on 13th December 2002 the same institute upgraded the transaction relating to the class B securities from “AA-“ to “AA”; on 10th August 2004 Fitch IBCA upgraded the transaction relating to the class B securities from “AA“ to “AAA”.
Liabilities There is no pre-defined payment schedule for Class A, B and C notes as this is directly dependant on the proceeds stemming from the credits sold (class A securities were totally repaid on January 2003) All classes have a July 2020 maturity.
3.3 Breakdown by location and risk concentration All the credits are denominated in euro and all the customers owing amounts are resident in Italy. At 31st December 2004, the portfolio is made up by 1,132 customers owing amounts and includes 3,377 debt items. The composition of the portfolio at 31/12/04 is shown by subdivisions according to amounts owed. There are five credit positions which singly account for more than 2% of the total portfolio. The five positions total 15 million euros.
Amounts owed in euros Items Net amounts in euros at 31/12/04 < 25,823 2,744 11,262,714 25,823 – 77,469 419 18,545,666 77,469 – 258,228 171 22,304,602 > 258,228 43 30,481,333 Total 3,377 82,594,315
4. TRANSACTION RELATED EVENTS FOLLOWING 2004
After 31st December 2004, the operation proceeded according to schedule.
On January 2005, the positive trend allowed a further repayment of part (10.3 million) of the capital relating to the class B securities.
316 B. CASSA DI RISPARMIO DI SAVONA: SECURITISATION OF BAD LOANS
At the end of 2002, pursuant to Law 130/99 the banking subsidiary Cassa di Risparmio di Savona securitised bad loans. Special Purpose Vehicle for the transaction was Priamar Finance Srl, which at 31/12/04 was part of the Banca Carige Group (Group holding: 60 per cent). In accordance with Bank of Italy regulations, further information is provided on transactions carried out with the SPV regarding the presentation and illustration of details stated at part D of the explanatory notes and related attachment contained in the financial statements of the assignee and issuer of the asset backed securities prepared according to Bank of Italy guidelines (note no. 3019 of 5th April 2000).
1. Quantitative information
1.1 The transaction and its progress
Transaction dates: - 23rd December 2002: signing of purchase contract with effect 11.59 pm of 31st December 2002 - 20th February 2003: issue of securities financing the transaction.
Transferor: Cassa di Risparmio di Savona, with its registered office in Savona in Corso Italia 10.
Credits transferred: Cassa di Risparmio di Savona, pursuant to articles 1 and 4, Law 130/99, transferred against payment of 28 million a portfolio of bad loans relating principally to secured loans subject to recovery proceedings. At the date of transfer, the portfolio of credits amounted to 68.8 million, with a corresponding book value for Banca Carige of 33.7 million.
The portfolio subject to sale was identified on the basis of objective criteria foreseen by the relevant legislation (Law 130/99 and D.L. 385/93). The credits sold were of the following types: a) landed property loans, b) lending of various forms backed by voluntary and/or legally-enforced guarantees in the form of real estate in addition to non-mortgaged loans of various types.
State of the transaction: The transaction, which began in January 2003, is proceeding according to schedule. Receipts at 31/12/04 amounted to 8.8. million, of which 3.1 million collected during 2004.
1.2 The Parties
The Purchaser of the credits: Priamar Finance Srl, formed on 11th November 2002 pursuant to article 3, Law 130/1999, with its registered office in Genoa in Via Cassa di Rispramio di Genova, 15. The company is registered at the Registry of Companies of Genoa and is enrolled in the register of finance companies, Ufficio Italiano Cambi, foreseen by article 106, Consolidated Banking Law and recorded at the special list foreseen by article 107 of the same law.
Servicer: Banca Carige is responsible for collection, accounts and payment in accordance with the terms of the servicing contract. The same contract specifies commission revenues and refundable expenses payable to Banca Carige.
Representative of the Noteholders: The Bank of New York, London branch.
Collection account bank: Banca Carige SpA
Investment account bank/Cash Manager: Banca Carige SpA
Calculation Agent / Paying Agent: The Bank of New York, London branch
CAP Counterparty: Banca Carige SpA
Luxemburg Agent: The Bank of New York, Luxemburg branch
317 Administrative services provider: Banca Carige SpA
Transferor’s duties: On the date of the sale, Priamar Finace Srl, the issuer and Cassa di Risparmio di Savona, the transferor, signed a guarantee and compensation agreement according to the terms of which the latter provides the former with specific guarantees relating to the portfolio and agrees to cover specific costs and charges that the issuer would otherwise be exposed to resulting from the purchase and ownership of the portfolio.
1.3 Features of the Transaction
Limited recourse asset backed securities: on 20th February 2003, Priamar Finance Srl issued floating rate bonds with the following characteristics:
Class A
Currency: euro Amount: 18,000,000 euros Interest rate: floating Parameter: euribor 6 months + 0.15 per cent p.a. Coupon: half yearly Maturity: 31st December 2016 Reimbursement: redemption linked to recovery of underlying credits Rating: no rating Listing: Luxemburg bond market
Class B
Currency: euro Amount: 10,178,970 euros Interest rate: floating Parameter: 4 per cent with a further remuneration equivalent to residual yields of portfolio cash flows following the payment of class A securities. Coupon: half yearly Maturity: 31st December 2016 Reimbursement: redemption linked to recovery of underlying credits Listing: not listed
Repayment of capital shall start no sooner than 18 months after issue. Following this period, the securities shall be repaid on the same date as interest payments, with reference to available funds according to the following order of priority: Interest class A securities; Capital class A securities; Interest Class B securities; Capital class B securities.
1.4 Related transactions
Banca Carige has extended a liquidity line in favour of Priamar Finance Srl of 2,500,000 euros in order to guarantee solely the repayment of interest and principal at maturity of class A securities. In addition, Cassa di Risparmio di Savona has extended a limited recourse mortgage in favour of the same SPV amounting to 22,000,000 euros in the form of Italian government stock. Such stock shall represent security in favour of class of A bondholders. Repayment of the mortgage, given its function as a line of credit, shall be subordinate to the full repayment of interest and capital on class A securities.
Furthermore, Priamar Finance Srl signed an interest cap (expiry 31/12/2010) with Banca Carige which offers the former cover against misalignment in underlying interest rates between the securitised credits on one hand and the bonds issued on the other. The premium was paid up front concurrent with the bond issue.
318 2. TRANSACTION AS AT 31st DECEMBER 2004
Attachment 1 to the explanatory notes is summarised as follows:
Synthesis of securitised assets and securities issued
Transaction as Transaction as at 31/12/04 at 31/12/03 ASSETS A. Assets securitised 21,642,491 23,726,272 - loans 21,642,491 23,726,272 B. Use of available amounts stemming from securitisation 8,091,184 5,742,378 - debt securities - 4,158,299 - others 8,091,184 1,584,079 Available amounts in liquid form 7,962,332 1,428,125 Others 128,852 155,954 TOTAL ASSETS 29,733,675 29,468,650 LIABILITIES C. Securities issued 28,178,970 28,178,970 - class A: 18,000,000 18,000,000 - class B: 10,178,970 10,178,970 D. Financing received - - E. Other liabilities 2,033,227 10,551,846 Balance 2002 (262,166) - Amounts payable to Cassa di Risparmio di Savona SpA 969,917 595,342 Amounts payable to Banca Carige SpA 939,440 572,400 Other items 386,036 384,104 TOTAL LIABILITIES 30,212,197 29,730,816 COSTS F. Interest charges payable on securities issued 831,445 745,201 G. Transaction-related commissions and fees 738,465 792,339 - servicing 718,490 762,382 - other services 19,975 29,957 H. Other charges 2,569,021 3,019,822 - loan losses 263,014 43,193 - expected losses on loans 2,243,842 2,509,294 - depreciation adjustments - 321,413 - other management charges 62,165 145,922 TOTAL COSTS 4,138,931 4,557,362 PROCEEDS I. Interest generated by securitised assets 2,243,842 2,509,294 L. Other proceeds 1,416,567 1,785,902 - interest income on securities 93,615 36,819 - interest income from bank deposits 28,001 17,222 - recoveries on loans (amounts collected) 1,294,951 1,731,861 TOTAL PROCEEDS 3,660,409 4,295,196
3. Quantitative information
3.1 Credit flows
Provided below are positive and negative variations relating to the underlying securitised credits recorded between 31st December 2003 and 31st December 2004.
319 (in millions of euros) Total credits at 31/12/03 23.7 Decreases relating to receipts collected during the year -3.1 Decreases on losses -0.3 Increases on writebacks 1.3 Increases on accrued interest on arrears 2.2 Decreases relating to expected losses -2.2 Credits at 31/12/04 21.6
3.2 Cash flows
Cash flows at 31/12/04 on receipts from securitised credits amounted to 8.8 million as scheduled in the collection programme.
The table below illustrates the flows forecasted in the offering circular for the first 12 years along with those so far realised: millions 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Forecasted 4.8 4.5 3.9 3.6 3.2 2.4 1.5 1.3 1.2 1.1 0.9 0.8 Realised 5.6 3.2
Liabilities As repayment is directly dependant on receipts from the securitised credits (mortgage instalment repayments), class A, B and C securities have no predetermined reimbursement programme. The maturity of all the securities is at 31st December 2016
3.3 Geographical localisation and risk location All underlying credits are in euro and all debtors are resident in Italy. At 31st December 2004, the portfolio consisted of 753 mortgage borrowers and 1,820 single mortgage entries. The subdivision of the portfolio according to the size of the loan is presented below. Five debtors singly have exposures greater than 2 per cent of the total loan portfolio. The total of the five exposures amounts to 4.2 million.
Range of loan size in euro Number of mortgage entries Total at 31/12/04 < 25,823 1,646 5,010,197 25,823 – 77,469 108 4,818,847 77,469 – 258,228 57 7,581,234 > 258,228 9 4,232,213 Totals 1,820 21,642,491
4. The transaction after 31/12/04
The transaction is proceeding to schedule. In January 2005, 7.2 million relating to class A securities was repaid.
320 PART C CONSOLIDATED INCOME STATEMENT
SECTION 1
INTEREST
Change 2004 2003 absolute % 1.1 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES” 694,586 613,535 81,051 13.2 (a) on deposits with banks 28,746 21,691 7,055 32.5 including: – deposits with central banks 3,167 3,167 - - (b) on loans and advances to customers 521,547 494,103 27,444 5.6 including: – loans using funds managed on behalf of third parties 5 6 -1 -16.7 (c) on certificates of indebtedness 143,364 96,379 46,985 48.8 (d) other interest income 929 1,362 -433 -31.8 (e) positive differentials on hedging transactions - - - …
Caption includes 48,109,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections.
Change 2004 2003 absolute % 1.2 CAPTION 20 “INTEREST EXPENSE AND SIMILAR CHARGES” 289,512 238,334 51,178 21.5 (a) on deposits from banks 21,031 28,156 -7,125 -25.3 (b) on deposits from customers 56,194 59,470 -3,276 -5.5 (c) on securities issued 141,787 122,287 19,500 15.9 including: – certificates of deposits 5,761 8,408 -2,647 -31.5 (d) on funds managed on behalf of third parties 1 1 - - (e) on subordinated liabilities 13,991 13,604 387 2.8 (f) negative differentials on hedging transactions 56,508 14,816 41,692 …
Caption includes 19,801,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections.
321 Change 2004 2003 absolute % 1.3 CAPTION 10 "INTEREST INCOME AND SIMILAR REVENUES” a) on foreign currency assets 9,309 10,010 -701 -7.0
Change 2004 2003 absolute % 1.4 CAPTION 20 “INTEREST EXPENSE AND SIMILAR CHARGES” a) on foreign currency liabilities 9,123 21,461 -12,338 -57.5
322 SECTION 2
COMMISSION
Change 2004 2003 absolute % 2.1 CAPTION 40 “COMMISSION INCOME” 225,757 204,447 21,310 10.4 (a) guarantees given 8,191 8,166 25 0.3 (b) credit risk derivatives 464 461 3 0.7 (c) management, dealing and consultancy services: 74,674 75,361 -687 -0.9 1. securities dealing 1,697 1,889 -192 -10.2 2. foreign currency dealing 3,284 3,082 202 6.6 3. private banking 9,657 9,115 542 5.9 3.1 individuals 8,964 8,624 340 3.9 3.2 collective 693 491 202 41.1 4. custody and administration of securities 3,097 2,505 592 23.6 5. depositary bank 2,670 2,454 216 8.8 6. placement of securities 38,978 42,851 -3,873 -9.0 6.1 placement of quotas in mutual funds 36,942 42,675 -5,733 -13.4 6.2 placement of other securities 2,036 176 1,860 … 7. acceptance of orders 5,621 4,578 1,043 22.8 8. Consultancy - - - - 9. distribution of third party products 9,670 8,887 783 8.8 9.1 private banking 62 7 55 … a) individuals 62 4 58 … b) collective - 3 -3 -100.0 9.2 insurance products 4,031 4,411 -380 -8.6 9.3 other products 5,577 4,469 1,108 24.8 (d) collection and payment services 47,957 42,480 5,477 12.9 (e) servicing relating to securitisation 2,022 1,683 339 20.1 (f) tax and rates collection - - - - (g) other services 92,449 76,296 16,153 21.2
Caption includes 11,627,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections.
Change 2004 2003 absolute % 2.2 CAPTION 40 “COMMISSION INCOME”: “DISTRIBUTION CHANNELS OF PRODUCTS AND SERVICES (a) distribution at Carige branches 58,044 60,716 -2,672 -4.4 1. asset management 9,579 9,046 533 5.9 2. securities placement 38,847 42,796 -3,949 -9.2 3. services relating to third party products 9,618 8,874 744 8.4 (b) distribution at outlets other than at head office 261 137 124 90.5 1. asset management 78 69 9 - 2. securities placement 131 55 76 … 3. services relating to third party products 52 13 39 …
323 Change 2004 2003 absolute % 2.3 CAPTION 50 “COMMISSION EXPENSES” 19,580 16,351 3,229 19.7 (a) guarantees received 1,043 1,188 -145 -12.2 (b) credit risk derivatives - - - - (c) management and dealing services: 3,452 3,225 227 7.0 1. securities dealing 767 1,134 -367 -32.4 2. foreign currency dealing - - - - 3. private banking 642 394 248 62.9 3.1 own portfolio 364 266 98 36.8 3.2 third party portfolio 278 128 150 … 4. custody and administration of securities 1,805 1,203 602 50.0 5. placement of securities 38 74 -36 -48.6 6. securities, products and services not delivered at the Bank’s head office 200 420 -220 -52.4 (d) collection and payment services 11,055 9,838 1,217 12.4 (e) other services 4,030 2,100 1,930 91.9
Caption includes 1,246,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections.
324 SECTION 3
GAINS FROM FINANCIAL TRANSACTIONS, NET
Change 2004 2003 absolute % 3.1 CAPTION 60 “GAINS FROM FINANCIAL TRANSACTIONS, NET” 22,920 10,674 12,246 …
2004 Transactions securities currency other A.1 Revaluations 28,710 - 37,293 A.2 Write-downs 14,055 - 49,421 B. Other gains and losses 15,574 4,663 156 Total 30,229 4,663 -11,972 1. Government securities 18,230 2. Certificates of indebtedness 2,684 3. Shares and other equity securities 13,248 4. Derivatives on securities as underlying -3,933
Caption includes 600,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections.
2003 Transactions securities currency other A.1 Revaluations 1,556 - 2,581 A.2 Write-downs 7,103 - 864 B. Other gains and losses 8,928 3,265 2,311 Total 3,381 3,265 4,028 1. Government securities 3,743 2. Certificates of indebtedness 4,899 3. Shares and other equity securities -1,684 4. Derivatives on securities as underlying -3,577
325 SECTION 4
ADMINISTRATIVE COSTS
Change 2004 2003 absolute % 4.1 AVERAGE NUMBER OF EMPLOYEES, BY GRADE 4,801 4,225 576 13.6 (a) managers 62 52 10 19.2 (b) officials 415 344 71 20.6 (c) other employees 4,324 3,829 495 12.9
The caption includes the following members of staff of Cassa di Risparmio di Carrara and Banca Cesare Ponti:
Executives Managers Other C.R. Carrara 1 36 328 Banca Cesare Ponti 1 36 82
Change 2004 2003 absolute % CAPTION 80 A "PERSONNEL" 291,869 268,412 23,457 8.7 – wages and salaries 190,275 175,162 15,113 8.6 – social security costs 52,832 49,179 3,653 7.4 – termination indemnities 11,358 10,959 399 3.6 – pensions and similar commitments 25,281 18,850 6,431 34.1 – others 12,123 14,262 -2,139 -15.0
Caption includes 21,214,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
326 Change 2004 2003 absolute % CAPTION 80 B "OTHER ADMINISTRATIVE COSTS" 178,729 148,504 30,225 20.4 Postage and telephone 16,082 14,883 1,199 8.1 Maintenance of tangible and intangible fixed-assets 13,532 13,469 63 0.5 Advertising, promotion and publishing 10,474 10,283 191 1.9 Professional fees 20,927 9,777 11,150 … Lighting and heating 4,139 5,313 -1,174 -22.1 Rental expenses 9,654 6,173 3,481 56.4 Donations 5,138 4,741 397 8.4 Travelling and transport 9,198 7,898 1,300 16.5 Other banking services 5,727 4,944 783 15.8 Printing and stationery 4,434 4,442 -8 -0.2 Software maintenance 4,277 4,055 222 5.5 Banking premises security services 3,409 3,556 -147 -4.1 Hardware leasing charges 4,196 3,242 954 29.4 Insurance premiums 3,445 2,933 512 17.5 Office cleaning 2,636 2,924 -288 -9.8 EDP processing with third parties 4,077 3,773 304 8.1 Association fees 951 662 289 43.7 Indirect taxes 42,112 31,064 11,048 35.6 – stamp duty and stock exchange contracts 25,170 23,383 1,787 7.6 – ”imposta sostitutiva” Presidential Decree 601/73 5,519 3,760 1,759 46.8 – ICI (Municipal real estate tax) 2,023 1,817 206 11.3 – local council taxes 1,950 1,517 433 28.5 – taxes paid abroad 7,005 250 6,755 … – other indirect taxes 344 265 79 29.8 – INVIM (tax on increased value on properties) 11 32 -21 -65.6 – penalties for late tax rolls 90 40 50 … Others 14,321 14,372 -51 -0.4
Caption includes 13,665,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA, net of infragroup connections.
327 SECTION 5
DEPRECIATION AND AMORTIZATION, PROVISIONS AND RECOVERIES
Change 2004 2003 absolute % CAPTION 90 "DEPRECIATION AND AMORTIZATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS” 143,829 137,238 6,591 4.8
Caption includes 881,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
Depreciation and amortization comprise the following:
Change 2004 2003 absolute % Tangible fixed assets – Properties 6,871 7,823 -952 -12.2 – Furniture and fittings 1,463 986 477 48.4 – Machinery and equipment 6,236 6,199 37 0.6 – Leased assets 92,039 91,701 338 0.4 Total (a) 106,609 106,709 -100 -0.1 Intangible fixed assets (1) – Software 10,079 8,911 1,168 13.1 – Installation costs 918 1,414 -496 -35.1 – Goodwill 10,543 8,671 1,872 21.6 – Goodwill arising from consolidation 10,072 5,698 4,374 76.8 – Goodwill arising from application of equity method 1,566 1,558 8 0.5 – Others 4,042 4,277 -235 -5.5 Total (b) 37,220 30,529 6,691 21.9
Total (a+b) 143,829 137,238 6,591 4.8
Change 2004 2003 absolute % CAPTION 100 "PROVISIONS FOR RISKS AND CHARGES” 1,789 4,209 -2,420 -57.5 Provisions: – for convertible bond fund 1,636 116 1,520 … – for in-house insurance scheme - 500 -500 -100.0 – for loan renegotiations L.133/99 - - - - – others 153 3,593 -3,440 -95.7
Caption includes 10,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
328 Change 2004 2003 absolute % 5.1 CAPTION 120 "PROVISIONS FOR LOAN LOSSES AND FOR GUARANTEES AND COMMITMENTS" 151,329 72,588 78,741 … (a) provisions for loan losses 151,321 72,317 79,004 … including: – lump-sum allowances for country risks - - - - – other lump-sum allowances 7,847 7,452 395 5.3 (b) provisions for guarantees and commitments 8 271 -263 -97.0 including: – lump-sum allowances for country risks - - - - – other lump-sum allowances - - - -
Caption includes 3,982,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA. This amount includes 944,000 euros in increased writedowns carried out at Group level, in comparison to those recorded by C.R. Carrara in its financial statements, and substitutes the utilisation of credit risk reserves (caption 90) for that part annulled on consolidation.
Change 2004 2003 absolute % CAPTION 130 "RECOVERIES OF LOANS AND REVERSALS OF PROVISIONS FOR GUARANTEES AND COMMITMENTS" 9,010 11,295 -2,285 -20.2 – bad loans -principal 3,457 2,722 735 27.0 – watchlists - principal 586 1,152 -566 -49.1 – interest - others 53 522 -469 -89.8 – interest arrears on loans 1,640 1,012 628 62.1 – interest credits related to tax collection services - 8 -8 -100.0 – credits written-off 2,952 5,181 -2,229 -43.0 – country risks - - - - – provision for guarantees and commitments 322 698 -376 -53.9
Recoveries for which the reasons for previous provisions cease, either fully or in part, to apply.
Caption includes 2,191,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
Change 2004 2003 absolute % CAPTION 140 “ADDITIONAL PROVISIONS FOR LOAN LOSSES” 1,470 19,744 -18,274 -92.6
329 Change 2004 2003 absolute % CAPTION 160 “RECOVERIES OF FINANCIAL FIXED ASSETS” 2 - 2 …
Items refers entirely to Cassa di Risaprmio di Carrara SpA.
Change 2004 2003 absolute % CAPTION 230 “CHANGES IN RESERVES FOR GENERAL BANKING RISKS" - 5,065 -5,065 …
330 SECTION 6
OTHER INCOME STATEMENT CAPTIONS
Change 2004 2003 absolute % 6.1 CAPTION 70 “OTHER OPERATING INCOME” 242,852 167,518 75,334 45.0 Deferred price for securitisation 61,125 - 61,125 … Leasing rents 123,198 123,219 -21 -0.0 Amounts recovered from third parties 40,364 32,178 8,186 25.4 including: stamp duty recovered 22,016 3,059 18,957 … Rental income 5,106 5,159 -53 -1.0 Repayments from leased assets 988 1,008 -20 -2.0 Gains from transfer and revaluation of leased assets 305 699 -394 -56.4 Gains from sale of credits - 79 -79 -100.0 Others 11,766 5,176 6,590 …
Caption includes 6,827,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
Change 2004 2003 absolute % 6.2 CAPTION 110 “OTHER OPERATING EXPENSES” 10,662 9,199 1,463 15.9 Recognised losses on leased assets sold 7,934 7,168 766 10.7 Leasing charges 917 1,520 -603 -39.7 Premiums paid on hedging options 1,051 251 800 … Other 760 260 500 …
Caption includes 25,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
Change 2004 2003 absolute % CAPTION 170 "PROFIT (LOSSES) ON INVESTMENTS CARRIED AT EQUITY" 23,507 10,030 13,477 … Eptaconsors SpA - -1,307 1,307 -100.0 Carige Assicurazioni SpA 9,164 2,768 6,396 … Carige Vita Nuova Assicurazioni SpA 8,009 3,536 4,473 … Frankfurter Bankgesellschaft AG - 161 -161 -100.0 Autostrada dei Fiori SpA 6,334 4,872 1,462 30.0
331 Change 2004 2003 absolute % 6.3 CAPTION 190 “EXTRAORDINARY INCOME" 25,908 43,121 -17,213 -39.9 Surplus in reserves for taxation 87 3,028 -2,941 -97.1 Gains from releases: holdings 10,234 10,079 155 1.5 Gains from releases: furniture and premises 2,046 1,817 229 12.6 Gains from sale of investment securities - 2,494 -2,494 -100.0 Taxes paid abroad and tax sparing 2,941 1,566 1,375 87.8 Adjustments stemming from consolidation - 2 -2 -100.0 In-house insurance scheme repayment 1,213 - 1,213 … Other 9,387 24,135 -14,748 -61.1
Caption includes 799,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
Change 2004 2003 absolute % 6.4 CAPTION 200 “EXTRAORDINARY EXPENSES” 8,690 8,149 541 6.6 Retirement incentives 3,211 4,177 -966 -23.1 Losses from releases: furniture and premises 179 373 -194 -52.0 Losses from releases: holdings 7 - 7 … Adjustments stemming from consolidation 23 - 23 … Other 5,270 3,599 1,671 46.4
Caption includes 942,000 euros referring to the first-time full consolidation of Cassa di Risparmio di Carrara SpA.
Change 2004 2003 absolute % CAPTION 240 “INCOME TAXES” 47,269 74,721 -27,452 -36.7 Current tax expense 49,464 70,188 -20,724 -29.5 Changes in taxes paid -19,276 -87 -19,189 … Changes in deferred tax 17,081 4,620 12,461 … Income tax for the year 47,269 74,721 -27,452 -36.7
As illustrated in the accounting principles stated at section 1, part A of the explanatory notes, in order to establish the tax rate for the period, the time horizon adopted for the calculation of deferred tax assets was extended indefinitely as there appear no grounds to question the certainty and reasonableness of recovery of the tax in question. The calculation of deferred tax charges beyond 2009 has meant a reduction in the tax charge for the year of 23,165,000 euros (Carige: 20,898; Carisa: 1,839; BML: 428) of which 14,515 relates to timing differences arising in previous accounting periods (Carige: 12,427; Carisa: 1,693 BML: 395).
332 SECTION 7
OTHER INFORMATION REGARDING THE INCOME STATEMENT
7.1 GEOGRAPHIC DISTRIBUTION OF REVENUES
Banca Carige prevalently works in Italy; the only branch outside Italy was opened in Nice (France) on July 1994.
2004 Other Italy Total Captions countries 10 Interest income and similar revenue 691,951 2,635 694,586 30 Dividends and other revenues 4,306 - 4,306 40 Commission income 225,120 637 225,757 60 Gains from financial transactions, net 22,907 13 22,920 70 Other operating income 242,807 45 242,852 Total 1,187,091 3,330 1,190,421
2003 Other Italy Total Captions countries 10 Interest income and similar revenue 610,448 3,087 613,535 30 Dividends and other revenues 18,536 - 18,536 40 Commission income 203,953 494 204,447 60 Gains from financial transactions, net 10,638 36 10,674 70 Other operating income 167,478 40 167,518 Total 1,011,053 3,657 1,014,710
333 PART D OTHER INFORMATION
SECTION 1
DIRECTORS AND STATUTORY AUDITORS
31/12/04 31/12/03 1.1 EMOLUMENTS (a) directors 2,912 2,947 (b) statutory auditors 441 265
The figures supplied refer to emoluments paid to the Directors and Statutory Auditors of Banca Carige in performance of their duties on behalf of Banca Carige and its subsidiaries.
31/12/04 31/12/03 1.2 CREDITS AND GUARANTEES GIVEN (a) directors - clean credits 18,975 23,872 - guarantees given 9,589 3,975 (b) statutory auditors - clean credits 256 355 - guarantees given - -
334 REPORT OF THE BOARD OF STATUTORY AUDITORS ON THE BANCA CARIGE GROUP CONSOLIDATED FINANCIAL STATEMENTS AT 31/12/2004
To the shareholders of Banca Carige SpA, The Directors of Banca Carige SpA have prepared the Consolidated Financial Statements at 31/12/04 in accordance with relevant legislation. We carried out our supervisory duties according to the codes of best practice for statutory auditors of publicly-traded companies recommended by the Italian Council of Chartered Accountants. These financial statements were audited by the Group’s auditors, Deloitte & Touche SpA. In the course of our direct inspections and on the basis of information provided to us by the external auditors, we can state that the consolidated financial statements of the Banca Carige Group have been prepared in accordance with relevant regulations regarding the form and content of financial statements. We confirm the existence of effective co-ordination in activities and information flows between the parent company and its subsidiaries and associated companies. In particular: • the accounting principles are in compliance with legislation and are appropriate to the Group’s activities; • balance sheet and income statement figures are expressed in thousands of euros; • the area of consolidation conforms to the provisions of Legislative decree 87/92; • the methods of consolidation adopted are those foreseen by relevant legislation. With reference to the methods of consolidation we can report that: - the subsidiaries operating in banking and finance-related activities have been fully consolidated. They are: Cassa di Risparmio di Savona SpA; Cassa di Risparmio di Carrara SpA; Banca del Monte di Lucca SpA; Banca Cesare Ponti SpA; Carige Asset Management SGR SpA; Centro Fiduciario CF SpA; Argo Finance One S.r.l.; Priamar Finance S.r.l.; Galeazzo S.r.l; Columbus Carige Immobiliare SpA; Immobiliare Ettore Vernazza SpA; Immobiliare Carisa S.r.l.; - holdings in the following companies were valued according to the equity method: Carige Vita Nuova SpA; Carige Assicurazioni SpA; Assi 90 S.r.l.; AG S.r.l.; Frankfurhter Bankgesellschaft AG; Savona 2000 S.r.l.; Assimilano S.r.l.; Autostrada dei Fiori SpA; Recina Servizi S.r.l.. During the year, the following three companies were incorporated into the Banca Carige Group, all three as a result of direct acquisitions on the part of Banca Carige of a controlling interest in the companies’ equity: a) Cassa di Risparmio di Carrara SpA; b) Banca Cesare Ponti SpA; c) Priamar Finale S.r.l.. - the insurance companies, Carige Assicurazioni and Carige Vita Nuova, albeit subsidiaries, in addition to Assi 90, AG and Savona 2000, were accounted for under the equity method in the light of the nature of insurance-related activities and the characteristics of insurance companies’ balance sheets; - the consolidation-related transactions described in the Board of Directors’ Report conform to relevant legislation. We confirm that the Directors’ Report for the year, which accompanies these consolidated statements, is in accordance with the contents required by article 3, Legislative decree 87/92. During the writing of this report, the Bank’s auditors, Deloitte & Touche SpA, informed us that their report will declare that these consolidated financial statements are clearly stated and give a true and fair view of the financial position and results of the Banca Carige Group.
Accordingly, we release our Report on the consolidated financial statements of the Banca Carige Group as at and for the year ended 31/12/2004.
Genoa, 8th April 2005
The Board of Statutory Auditors
335 REPORT OF THE INDEPENDENT AUDITORS
336
ATTACHMENTS
339 STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS’ EQUITY
(thousands of euros)
Capital Additional paid Legal Other stock in capital reserve reserves
Shareholders' equity at 31/12/2003 1,113,327 255,023 67,351 60,401 Allocation of 2003 net income - reserves 10,620 - 9,301 - dividends paid Allocation to reserve for dividends on own shares - 140
Utilization of taxed surplus reserve following the release of capital gains ex L.218/90 - 14,576 Increase of share premium reserve 267 Reintegration of share premium reserve following securitisation 7,816 Changes in reserve for the purchase of treasury stock - 1,301 Reserve for the purchase of treasury stock Increase of revaluation reserve following the first-time consolidation of Cassa di Risparmio di Carrara SpA Changes in the reserves for loan losses Changes in decreases in net equity Increased value stemming from the application of the equity method and from the recording of sundry consolidation items 140 2004 net income Shareholders' equity at 31/12/2004 1,113,327 262,839 77,971 35,490
340 Reserve for the Negative difference Reserve for Revaluation Net income Reserves Total purchase of arising from the general banking reserve for loans treasury stock application of the risks losses equity method - 34,953 100 8,050 84,742 19,997 1,643,944
- 1,447 - 128 - 83,295 - 83,295
- 140
- 14,576 267
7,816
- 1,301 1,301 1,301
599 599 - 18,075 - 18,075 8,223 8,223
140 100,936 100,936 1,301 43,176 100 8,649 100,936 1,922 1,645,711
341