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FINANCIAL STATEMENTS 2013 FINANCIAL STATEMENTS AT 31 DECEMBER 2013 Financial Statements at 31 December 2013 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Table of contents - Report on Operations 9 Reference Context 10 Significant Aspects of Operations 13 Credit Aggregates 17 Deposits 25 Main financial aggregates 27 Equity Investments 38 Main economic aggregates and management indicators 41 Integrated Management of Risks and Capital 45 Human Resources 49 Organisational and Technological Dynamics 51 Internal Audit 52 Compliance 54 Environmental Issues 56 Relations with Group companies 57 Significant Events Subsequent to the End of the Year and Outlook on Operations 58 Proposals to the Shareholders’ Meeting 59 - Financial Statements 60 - Notes to the Accounts 70 Part A - Accounting Policies 72 Part B - Notes to the Balance Sheet 114 Part C - Notes to the Income Statement 188 Part D - Comprehensive Income 216 Part E - Information on Risks and Related Hedging Policies 218 Part F - Information on Equity 294 Part G - Business Combinations 304 Part H - Transactions with related parties 305 Part I - Share-based Payments 309 Part L - Segment Reporting 310 - Attachments to the Explanatory Notes 312 - Certification Report 324 - Board of Auditors’ Report 329 5 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Financial Statements at 31 December 2013 Company Profile Name MPS CAPITAL SERVICES BANCA PER LE IMPRESE S.p.A. “Monte dei Paschi di Siena” Banking Group Year of constitution 1954 as Mediocredito Regionale della Toscana Registered head office Florence - Via Pancaldo, 4 General Management Florence - Via Panciatichi, 48 Telephone +39 055-2498.1 - Fax +39 055-240826 Website www.mpscapitalservices.it Global Markets Siena - Viale G. Mazzini, 23 Telephone +39 0577-209111/ 53711 - Fax +39 0577- 209100 Investment Banking Head office Rome - Via Piemonte, 127 Telephone +39 06-42048325 - Fax +39 06-42016914 Market Protection Structure Milan - Via Rosellini, 16 Telephone +39 02-88891922/30 (Electronic Channels) Telephone +39 02-88891924/40/21 (Financial Institutions Italy and Abroad) Representative Offices Turin - c/o Banca Monte dei Paschi di Siena - Via Mazzini, 14/16 Telephone +39 011-837445 - Fax +39 011-8812091 Milan - Via Santa Maria Segreta, 5/b Telephone +39 02/88233220 - Fax +39 02/88233233 Padua - c/o Banca Antonveneta - Piazzetta Turati, 17 Telephone +39 049-6991659 - Fax +39 049-6992195 Mantua - c/o Banca Monte dei Paschi di Siena - Head office of North East Area Via Vittorio Emanuele II°, 30 Telephone +39 0376-313563 Bologna - Via Riva di Reno, 65 Telephone +39 051/6486718 - Fax +39 051/2960284 Siena - Viale G. Mazzini, 23 - Telephone +39 0577-271928 Perugia - c/o Banca Monte dei Paschi di Siena Ponte San Giovanni - Via Manzoni Telephone +39 075/398040 - Fax +39 055/240826 Ancona - c/o Banca Monte dei Paschi di Siena - Via 1° Maggio, 70/A Telephone +39 071-2905009 - Fax +39 055-240826 Rome - Via Marco Minghetti, 30 Telephone +39 06/42006611 - Fax +39 06/42006680 Naples - c/o Banca Monte dei Paschi di Siena Via Cervantes de Savaedra, 55 Telephone +39 081/6057393 - Fax +39 081/7341067 Bari - c/o Banca Monte dei Paschi di Siena - Piazza Aldo Moro, 21 Telephone +39 080/5226244 - Fax +39 055/240826 Catania - c/o Banca Monte dei Paschi di Siena Piazza della Repubblica, 32/38 Telephone +39 095-7348321 - Fax +39 095-7348300 6 Financial Statements at 31 December 2013 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Corporate Officers and Auditing Company BOARD OF DIRECTORS Chairman Aldighiero FINI Vice Chairman Paolo CAPELLI Vice Chairman Fabio CECCHERINI Director Graziano BATTISTI Director Gabriele BENI Director Federico FEDERICI Director Angelo MARTINELLI Director Pierandrea SEMERARO Director Cataldo STAFFIERI Director Claudio VIGNI BOARD OF AUDITORS Chairman Francesco BONELLI Acting Auditor Federico CAPUTI Acting Auditor Daniela MORONI Substitute Auditor Paolo BOCCI Substitute Auditor Vittorio MARRONI MANAGEMENT General Manager Giorgio PERNICI Assistant General Manager Carmine MANCINI Assistant General Manager Federico VITTO AUDITING COMPANY KPMG S.p.A. 7 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Financial Statements at 31 December 2013 Ratings The following ratings have been assigned to the Bank byMoody’s Investors Service Ltd: LONG-TERM DEBT RATING: B2 SHORT-TERM DEBT RATING: Not Prime FINANCIAL STRENGTH RATING: E In the first half of 2013, the long-term debt rating was downgraded by three notches, from Baa2 to the current B2. This revision is a direct consequence of the downgrade that involved the Parent Company Banca Monte dei Paschi di Siena. Moody’s outlook on all ratings is currently negative. 8 Financial Statements at 31 December 2013 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Shareholding Structure As of 31 December 2013, the Share Capital broke down as follows: Shareholder Number of shares Amount in units Percentage of one Euro Banca Monte dei Paschi di Siena SpA 891,017,041 276,215,282 99.92% I.N.A.I.L. 239,634 74,287 0.03% Other shareholders 468,313 145,177 0.05% Total 891,724,988 276,434,746 100.00% 9 REPORT ON OPERATIONS Financial Statements at 31 December 2013 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Reference Context 013 was a year that continued to feature central banks as protagonists, with overall positive performance of the 2main financial assets. Among the main exceptions are the core bond markets (the US and Germany at the top) and the emerging equity and bond segment. Fig.1 - 10 YEAR SPREAD ITALY AND SPAIN Fig. 2 - US UNEMPLOYMENT RATE Fonte: Bloomberg Fonte: Bloomberg Fonte: Bloomberg Source: Bloomberg Variazione nuovi occupati (000) asse dx Change in newly employed (000) right axis Tasso di disoccupazione Unemployment rate In the US, the focus was on the pre-announced start of tapering (reduction of the asset acquisition plan), announced regarding its guidelines in May by the Chairman, Bernanke, in accordance with the following term: start by the end of 2013 with completion around the middle of 2014. The official announcement was them made in December 2013, with the start in January 2014. In the Eurozone, the ECB, in addition to further reducing the reference rate, also introduced explicit future directives in July: the reference rates will be kept at contained levels or even lower-than-current levels for an extended period of time. This forecast was then confirmed at the end of 2013, when the ECB pre-announced that full allocation of requests for major 7 day and 3 month operations will be guaranteed through to the middle of 2015. In April 2013 in Japan, the Bank of Japan (BoJ) pre-announced a colossal new asset acquisition plan, after the restructuring of the institution’s top management, which is now much more pro-government than previously. Regarding the macroeconomic situation, 2013 ended with the continuation of the recession in the Eurozone and fairly weak trends (below potential) for the US economy. IMF estimates indicate that the changes in GDP in the Eurozone and the US in 2013 should be expected to be around -0.4% and +1.9%, respectively. Nonetheless, the second half of the year saw improvements in both the Eurozone and in the United States, in contrast to fairly weak performance for the emerging economies. Regarding Euro government rates, the first part of the year involved an extension of the spreads in the peripheral countries in a context of rising rates. This trend was then inverted after the ECB’s decision to cut rates in May. In May 2013, the ten year BTP rate registered its lowest level of the year at around 3.76%, with a spread of around 260 bp. During the second part of the year, the decrease in the spreads was more notable, mainly thanks to the increase in German rates. It was not by coincidence that the lowest level of the spreads seen to that point in 2013, at around 220 bp, was not accompanied by a new low in the ten-year BTP rate, which in that case was a little above 4%. The potential causes for serious issues demonstrated a lesser impact than in the recent past, in particular the negotiations around the middle of the year regarding the granting of an additional tranche of aid to Greece as well as regarding the fear of a political crisis in Portugal in July. In fact, it was in this latter month that the ECB’s commitment to maintaining the rates low or at even lower levels for an extended period was made clear, which in part has already been made concrete through the 25 bp cut in the reference rate in November. In the United States, 2013 once again saw the Fed as the centre of attention. The intention indicated by the Institute in May to begin a quantitative easing ( tapering) plan by the end of the year took the markets by surprise, leading to a marked 13 MPS CAPITAL SERVICES BANCA PER LE IMPRESE Financial Statements at 31 December 2013 increase in medium/long-term government rates. In fact, the ten-year rate rose to over the 3% threshold, and remained at fairly high levels for the entire second half of the year. The actual decision regarding reduction of quantitative easing took place at the last meeting of the year. The total amount of purchases was reduced by 10 billion US dollars, settling at a monthly amount of 75 billion US dollars. Regarding currencies, 2013 featured contrasting performance in the first and second half of the year. In fact, during the first six months the Euro was relatively weak against the US dollar which, after having reached its highest exchange rate since November 2011 at around 1.36/1.37, underwent a substantial change after the Fed announced its hypothesis of a gradual quantitative easing plan (tapering), in any case remaining strong at around 1.28/1.30.
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