Base Prospectus

BANCA SELLA S.p.A. (incorporated with limited liability under the laws of the Republic of Italy) €1,000,000,000 Euro Medium Term Note Programme

This document has been approved as a base prospectus (the “Base Prospectus”) issued in compliance with Article 5.4 of Directive 2003/71/EC, as amended (the “Prospectus Directive”) by the Commission de Surveillance du Secteur Financier (the “CSSF”) in its capacity as competent authority under the Loi relative aux prospectus pour valeurs mobilières dated 10 July 2005 which implements the Prospectus Directive in Luxembourg (the “Luxembourg Prospectus Law”). By approving this prospectus, the CSSF gives no undertaking as to the economic or financial suitability of the transaction or the quality and solvency of the Issuer in line with the provisions of Article 7(7) of the Luxembourg Prospectus Law.

Application has been made by Banca Sella S.p.A. (the “Issuer”) for notes (“Notes”) issued under the €1,000,000,000 Euro Medium Term Note Programme (the “Programme”) described in this Base Prospectus during the period of twelve months after the date hereof, being the approval date of this Base Prospectus, to be listed on the official list and admitted to trading on the regulated market of the Luxembourg Stock Exchange, which is a regulated market for the purposes of the Markets in Financial Instruments Directive 2014/65/EU (as amended, “MiFID II”, and each such regulated market being a “Regulated Market”). The Programme also allows for Notes to be unlisted or to be admitted to listing, trading and/or quotation by such other or further competent authorities, stock exchanges and/or quotation systems as may be agreed with the Issuer.

There are certain risks relating to the Issuer and the Notes which potential investors should ensure they fully understand. See “Risk Factors” on page 14. Pursuant to the Programme, the Issuer may from time to time issue Notes in bearer form denominated in any currency agreed between the Issuer and Banca IMI S.p.A. (the “Arranger”) and any additional dealer appointed under the Programme from time to time (each a “Dealer” and together the “Dealers”). Where Notes issued under the Programme are admitted to trading on a Regulated Market within the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive, such Notes will not have a denomination of less than €100,000 (or, where the Notes are issued in a currency other than euro, the equivalent amount in such other currency). The aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed €1,000,000,000 (or its equivalent in other currencies calculated as described herein). This Base Prospectus is available for viewing on the website of the Luxembourg Stock Exchange (www.bourse.lu). Arranger and Dealer Banca IMI The date of this Base Prospectus is 11 July 2019. TABLE OF CONTENTS

Page IMPORTANT NOTICES ...... 3 MARKET INFORMATION AND STATISTICS ...... 6 ALTERNATIVE PERFORMANCE MEASURES ...... 7

RISK FACTORS ...... 14 GENERAL DESCRIPTION OF THE PROGRAMME ...... 43 INFORMATION INCORPORATED BY REFERENCE ...... 51 FURTHER PROSPECTUSES ...... 52 FORMS OF THE NOTES ...... 53 TERMS AND CONDITIONS OF THE NOTES ...... 57 FORM OF FINAL TERMS ...... 102 OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM ...... 118

DESCRIPTION OF THE ISSUER ...... 122 OVERVIEW OF FINANCIAL INFORMATION OF THE ISSUER ...... 142 TAX AT ION ...... 146 SUBSCRIPTION AND SALE ...... 154 GENERAL INFORMATION ...... 159

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IMPORTANT NOTICES

This document constitutes a base prospectus for the purpose of Article 5(4) of the Prospectus Directive.

The Issuer accepts responsibility for the information contained in this document and to the best of the knowledge and belief of the Issuer (which has taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

This Base Prospectus should be read and construed together with any supplements hereto and with any other documents incorporated by reference herein and, in relation to any Tranche (as defined herein) of Notes, should be read and construed together with the relevant Final Terms (as defined herein).

The Issuer has confirmed to the Dealers that this Base Prospectus (including for this purpose, each relevant Final Terms) contains all information which is (in the context of the Programme and the issue, offering and sale of the Notes) material; that such information is true and accurate in all material respects and is not misleading in any material respect; that any opinions, predictions or intentions expressed herein are honestly held or made and are not misleading in any material respect; that this Base Prospectus does not omit to state any material fact necessary to make such information, opinions, predictions or intentions (in the context of the Programme and the issue, offering and sale of the Notes) not misleading in any material respect; and that all reasonable enquiries have been made to verify the foregoing.

No person has been authorised to give any information or to make any representation not contained in or not consistent with this Base Prospectus or any other document entered into in relation to the Programme or any information supplied by the Issuer or such other information as is in the public domain and, if given or made, such information or representation should not be relied upon as having been authorised by the Issuer or any Dealer.

No representation or warranty is made or implied by the Dealers or any of their respective affiliates, and neither the Dealers nor any of their respective affiliates makes any representation or warranty or accepts any responsibility as to the accuracy or completeness of the information contained in this Base Prospectus. Neither the delivery of this Base Prospectus or any Final Terms nor the offering, sale or delivery of any Note shall, in any circumstances, create any implication that the information contained in this Base Prospectus is true subsequent to the date hereof or the date upon which this Base Prospectus has been most recently supplemented or that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise), business, prospects or general affairs of the Issuer or any of its subsidiaries since the date thereof or, if later, the date upon which this Base Prospectus has been most recently supplemented or that any other information supplied in connection with the Programme is correct at any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.

This Base Prospectus may only be used for the purposes for which it has been published. Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for or purchase any Notes and none of them should be considered as a recommendation by the Issuer, the Dealers or any of them that any recipient of this Base Prospectus or any Final Terms should subscribe for or purchase any Notes. Each recipient of this Base Prospectus or any Final Terms shall be taken to have made its own investigation and appraisal of the condition (financial or otherwise), business, prospects or general affairs of the Issuer and its subsidiaries.

The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus or any Final Terms comes are required by the Issuer and the Dealers to inform themselves about and to observe any

3 such restrictions. Neither the Issuer nor any of the Dealers represents that this Base Prospectus may be lawfully distributed, or that Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, nor do they assume any responsibility for facilitating any such distribution or offering.

No action has been taken by the Issuer or the Dealers which is intended to permit a public offering of the Notes or the distribution of this Base Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Base Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations.

MIFID II PRODUCT GOVERNANCE / TARGET MARKET – The Final Terms in respect of any Notes will include a legend entitled “MiFID II Product Governance” which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a “distributor”) should take into consideration the target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels. A determination will be made in relation to each issue about whether, for the purpose of the MiFID II Product Governance rules under EU Delegated Directive 2017/593 (the “MiFID II Product Governance Rules”), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MIFID II Product Governance Rules.

PROHIBITION OF SALES TO EEA RETAIL INVESTORS – If the Final Terms in respect of any Notes includes a legend entitled “Prohibition of Sales to EEA Retail Investors”, the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the “IDD”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Directive. Consequently no key information document required by Regulation (EU) No. 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation.

For a description of certain other restrictions on offers, sales and deliveries of Notes and on the distribution of this Base Prospectus or any Final Terms and other offering material relating to the Notes, see “Subscription and Sale” below. In particular, the Notes have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the “Securities Act”) and are subject to U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons (as defined in Regulation S under the Securities Act).

The maximum aggregate principal amount of Notes outstanding at any one time under the Programme will not exceed €1,000,000,000 (and for this purpose, any Notes denominated in another currency shall be translated into euro at the date of the agreement to issue such Notes (calculated in accordance with the provisions of the Dealer Agreement as (defined under “Subscription and Sale”)). The maximum aggregate principal amount of Notes which may be outstanding at any one time under the Programme may be increased from time to time by way of a supplement prepared in accordance with Article 16 of the Prospectus Directive, subject to compliance with the relevant provisions of the Dealer Agreement.

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EU BENCHMARKS REGULATION - Amounts payable under Floating Rate Notes will be calculated by reference to one of EURIBOR, LIBOR or the Constant Maturity Swap rate (“CMS Rate”), in each case as specified in the relevant Final Terms. As at the date of this Base Prospectus, EURIBOR is provided and administered by the European Money Markets Institute (“EMMI”) and LIBOR and the CMS Rate are provided and administered by ICE Benchmark Administration Limited (“ICE”). At the date of this Base Prospectus, ICE and EMMI are both authorised as benchmark administrators, and included on, the register of administrators and benchmarks established and maintained by the European Securities and Markets Authority (“ESMA”) pursuant to Article 36 of Regulation (EU) No. 2016/1011 (the “Benchmarks Regulation”).

CREDIT RATING AGENCY REGULATION - Notes issued pursuant to the Programme may be rated or unrated. When an issue of Notes is rated, its rating will not necessarily be the same as the ratings assigned to Notes already issued. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. In general, European regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the European Union and registered under Regulation (EC) No. 1060/2009, as amended (the “CRA Regulation”) unless (1) the rating is provided by a credit rating agency operating in the European Union before 7 June 2010 which has submitted an application for registration in accordance with the CRA Regulation and such registration has not been refused, or (2) the rating is provided by a credit rating agency not established in the European Union but is endorsed by a credit rating agency established in the European Union and registered under the CRA Regulation or (3) the rating is provided by a credit rating agency not established in the European Union which is certified under the CRA Regulation. Whether or not each credit rating applied for in relation to the relevant Series of Notes will fall under any of the above categories will be disclosed in the Final Terms.

In this Base Prospectus, unless otherwise specified or where the context requires otherwise, references to a “Condition” are to the correspondingly numbered provision set forth in “Terms and Conditions of the Notes”; references to a “Member State” are references to a Member State of the European Economic Area; references to the “EEA” are references to the European Economic Area; references to “€”, “EUR”, “Euro” or “euro” are to the currency introduced at the start of the third stage of European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro, as amended; references to “U.S.$”, “U.S. dollars” or “dollars” are to the lawful currency for the time being of the United States; references to “£” and “Sterling” are to the lawful currency for the time being of the United Kingdom; and references to “billions” are to thousands of millions.

Certain figures included in this Base Prospectus have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

In connection with the issue of any Tranche of Notes under the Programme, the Dealer(s) (if any) named as the Stabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment must be conducted by the relevant Stabilising Manager(s) (or person(s) acting on behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.

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MARKET INFORMATION AND STATISTICS

Unless otherwise indicated, information and statistics presented in this Base Prospectus regarding the market share of the Issuer are either derived from, or are based upon, the Issuer’s analysis of data obtained from public sources. Although these sources are believed by the Issuer to be reliable, the Issuer has not independently verified such information.

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ALTERNATIVE PERFORMANCE MEASURES

This Base Prospectus contains the following financial measures that are not recognised as a measure of performance under IFRS or Italian GAAP, otherwise known as “Alternative Performance Measures” or “APMs”:

(i) coverage ratios for bad loans and for Total non-performing loans to customers as at 31 December 2018 and 2017 under the heading “Risk Factors – Risks relating to the Issuer – Risk relating to the quality of loans” on page 18;

(ii) the ratio of Net bad exposures, Net unlikely to pay exposures and Net deteriorated past due exposures to Total cash exposures to customers as at 31 December 2018 and 2017 under the heading “Description of the Issuer – Lending – Non-performing loans” in the table entitled “Net and gross non-performing loans” on page 130; and

(iii) Total deposits at market value, Net interest income, Net income from services, Net interest and other banking income as well as the Net NPL ratio and the Texas ratio, in each case as at and for the three months ended 31 March 2019 under the heading “Description of the Issuer – Recent Developments – Results of the first quarter as of 31 March 2019” on page 142.

Such financial measures should not be recognised as an alternative to performance measures recognised as such in accordance with IFRS, Italian GAAP or any other generally accepted accounting principles. Although used by management to monitor the underlying performance of the business and operations, they are not indicative of the historical operating results of the Issuer, nor are they meant to be predictive of future results. Therefore, undue reliance should not be placed on any such data.

The following table contains additional information on the above Alternative Performance Measures.

Page APM Definition / reconciliation number(s) 18 Coverage ratio of Calculated as the ratio between specific write-downs on bad loans and the bad loans gross amount of bad loans, and reconciled as follows: As at 31 December 2018 2017 Item (€ millions) Write-downs 288.0 369.0 Bad loans 467.4 632.8 (%) Coverage ratio 61.6 58.3

The higher the ratio, the lower the amount that the Issuer expects to recover from its bad loans.

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Page APM Definition / reconciliation number(s) 18 Coverage ratio of Calculated as the ratio between specific write-downs on Total non- Total non- performing loans and the gross amount of Total non-performing loans, and performing loans reconciled as follows: As at 31 December 2018 2017 Item (€ millions) Write-downs 347.9 430.1 Total non-performing loans 662.8 880.0 (%) Coverage ratio 52.5 48.9

The higher the ratio, the lower the amount that the Issuer expects to recover from its Total non-performing loans.

130 Ratio of Net bad Calculated as the ratio between (i) Bad loans net of write-downs and (ii) loans to Total cash Total cash loans to customers (excluding debt securities), providing an exposures to indicator of the quality of the Issuer’s loan book and reconciled as follows: customers As at 31 December 2018 2017 Item (€ millions) Net bad loans 179.4 263.8 Total cash loans to customers 6,986.8 7,003.8 (%) Ratio 2.6 3.8

The lower the ratio, the higher the quality of the loan book.

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Page APM Definition / reconciliation number(s) 130 Ratio of Net Calculated as the ratio between (i) Unlikely to pay exposures net of write- unlikely to pay downs and (ii) Total cash loans to customers (excluding debt securities), exposures to Total providing an indicator of the quality of the Issuer’s loan book and reconciled cash exposures to as follows: customers As at 31 December 2018 2017 Item (€ millions) Net unlikely to pay exposures 127.7 177.5 Total cash loans to customers 6,986.8 7,003.8 (%) Ratio 1.8 2.5

The lower the ratio, the higher the quality of the loan book.

130 Ratio of Net Calculated as the ratio between (i) Deteriorated past due exposures net of deteriorated past write-downs and (ii) Total cash loans to customers (excluding debt due exposures to securities), providing an indicator of the quality of the Issuer’s loan book Total cash and reconciled as follows: exposures to As at 31 December customers 2018 2017 Item (€ millions) Net deteriorated past due exposures exposures 7.2 6.5 Total cash loans to customers 6,986.8 7,003.8 (%) Ratio 0.1 0.1

The lower the ratio, the higher the quality of the loan book.

142 Total deposits at Calculated as the aggregate of total deposits valued at market prices, market value including administered funds and securities and net of deposits of Group banks, taken from internal management data of the Issuer. The direct deposits component is used to monitor the balance between assets and liabilities, while the indirect deposits component provides indications of the sources of fees and is a potential growth area for direct deposits.

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Page APM Definition / reconciliation number(s) 142 Net interest income Calculated by adding or subtracting (as applicable) the following: (i) Interest and similar income; (ii) Interest and similar expenses; (iii) Dividends and similar income, as set out below: As at and for the period ended 31 March 2019 Unaudited Item (€ thousands) Interest and similar income 47,962 Interest and similar expenses (12,330) Dividends and similar income 38 Total 35,670

Net interest income is used to monitor the value that the Issuer has managed to obtain from its main activity.

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Page APM Definition / reconciliation number(s) 142 Net income from Calculated by adding or subtracting (as applicable) the following: (i) Fee services income; (ii) Fee expenses; (iii) Recovery of expenses and other income; (iv) Variable administrative expenses; (v) Net gains/(losses) on trading activities; (vi) Net gains/(losses) on hedging activities; (vii) Profit (loss) from sale or repurchase of financial assets measured at amortized cost; (viii) Profit (loss) from sale or repurchase of financial assets measured at fair value with an impact on comprehensive income, and (ix) Net result of other financial assets and liabilities measured at fair value with impact on the income statement, as set out below: As at and for the period ended 31 March 2019 Unaudited Item (€ thousands) Fee income 72,179 Fee expenses (19,078) Recovery of expenses and other services 5,321 Variable administrative expenses (7,956) Net gains/(losses) on trading activities 268 Net gains/(losses) on hedging activities 14 Profit (loss) from sale or repurchase of financial assets measured at amortized cost 845 Profit (loss) from sale or repurchase of financial assets measured at fair value with an impact on comprehensive income (104) Net result of other financial assets and liabilities measured at fair value with impact on the income statement (128) Total 51,361

Net income from services is used to monitor the diversification of the Issuer’s revenues with respect to its traditional sources of income, e.g. interest income.

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Page APM Definition / reconciliation number(s) 142 Net interest and Calculated as the sum of (i) net interest income and (ii) net income from other banking services and reconciled as follows: income As at and for the period ended 31 March 2019 Unaudited Item (€ thousands) Net interest income 35,670 Net income from services 51,361 Total 87,031

Net interest and other banking income is used to monitor the value that the Issuer has managed to obtain from its two main activities. credit activity and service activity.

142 Net NPL ratio The ratio between the aggregates of Net non-performing loans to customers and Total net loans to customers (excluding debt securities), providing an indicator of the quality of the Issuer’s loan book and calculated as follows: As at and for the period ended 31 March 2019 Unaudited Item (€ millions) Net non-performing loans 306.3 Total net loans to customers 7,152.1 (%) Ratio 4.3

The lower the ratio, the higher the quality of the loan book.

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Page APM Definition / reconciliation number(s) 142 Texas Ratio Calculated as the ratio between (i) the gross amount of Total non-performing loans and (ii) Tangible net worth (being the sum of net worth and value adjustments on impaired loans, net of intangible assets), providing an indicator of the quality of the Issuer’s loan book and calculated as follows: As at and for the period ended 31 March 2019 Unaudited Item (€ millions) Total non-performing loans 660.2 Tangible net worth 1,054.7 (%) Ratio 62.6

The lower the ratio, the higher the quality of the loan book, and a ratio of at least 100% is considered a warning sign.

The Issuer believes that the above measures provide useful information to investors for the purposes of evaluating the financial condition and results of operations of the Group, the quality of its assets and the fundamentals of its business. In particular, the above ratios:

(i) are aimed at quantifying certain aspects of the Issuer's business and its strengths within the context of the Italian banking system; and

(ii) although not required by law in the preparation of financial statements, allow for comparisons with other banks (including as to size and different geographic location), over different periods of time and between the Issuer and the average industry standards.

Nevertheless, since companies do not all calculate alternative performance measures in an identical manner, the Issuer gives no assurance that the presentation of the above measures is consistent with similar indicators used by other companies.

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RISK FACTORS

The Issuer believes that the following factors may affect its ability to fulfil its obligations under Notes issued under the Programme. Most of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring.

In addition, factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below.

The Issuer believes that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Notes may occur for other reasons which may not be considered significant risks by the Issuer based on information currently available to it or which it may not currently be able to anticipate. In addition, the order in which the risk factors are presented below is not intended to be indicative either of the relative likelihood that each risk will materialise or of the magnitude of their potential impact on the business, financial condition and results of operations of the Issuer.

Prospective investors should also read the detailed information set out elsewhere in this Base Prospectus and consider carefully whether an investment in the Notes is suitable for them in the light of the information in this Base Prospectus and their personal circumstances, based upon their own judgment and upon advice from such financial, accounting, legal, tax and other professional advisers as they deem necessary.

Words and expressions defined in “Forms of the Notes” and “Terms and Conditions of the Notes” or elsewhere in this Base Prospectus have the same meaning in this section. Prospective investors should read the entire Base Prospectus, including the information incorporated by reference.

Risks relating to the Issuer

Risks relating to the Strategic Plan

In March 2018, the Parent Company approved the Group’s three year strategic plan for 2018-2020 (as subsequently updated in March 2019 to include the year 2021, the “Strategic Plan”). It is structured around two important phenomena influencing the financial sector: regulatory developments and technological innovation. The objective of the new business plan is to maintain the capital strength that is already a feature of the Bank, while increasing profitability and carrying out a radical organisational transformation that is necessary for it to evolve.

The Strategic Plan sets forth the Issuer’s financial forecasts for the period covered by the plan (the “Forecasts”), which are based on a number of assumptions regarding future events and actions to be taken by the Group, including the Issuer’s directors and management, as well as hypothetical and general assumptions. As such, the Forecasts have a subjective nature and are characterised by uncertainty. The Forecasts are based on certain assumptions that are subject to the risks and uncertainties of the current macroeconomic environment or that relate to future events and actions, which may not occur, as well as assumptions relating to future events and actions that are partially or completely outside management’s control. Data used in connection with the preparation of the Strategic Plan are based on assumptions relating to the Group’s operations and the results indicated therein are based on its current expectations regarding future actions and events. These may or may not occur, may occur only in part, or may evolve differently from the assumptions made in the Strategic Plan, with potential adverse effects on the Group and the Bank’s business, financial condition and results of operations. Actual results are therefore subject to significant uncertainties and may differ, even significantly, from the Forecasts, especially in light of the current macroeconomic and market conditions.

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Potential adverse effects on the assumptions underlying the Forecasts could derive, inter alia, from (i) macroeconomic and market conditions; (ii) the ongoing changes in the applicable regulatory framework; and, (iii) regulatory measures imposed by the supervisory authorities. As a result, there can be no assurance that the Issuer will meet the Forecasts set forth in the Strategic Plan, in whole or in part, and prospective investors should be aware that a number of factors, including factors beyond the Issuer’s control, might render the achievement of these Forecasts difficult or impossible. Furthermore, should any of the Issuer’s assumptions turn out to be inaccurate and/or the circumstances envisaged should not be fulfilled, or fulfilled only in part or in a different way to that assumed, the Issuer’s ability to meet the Forecasts may be adversely affected. Given the inherent uncertainty surrounding any future event, both in terms of the event’s occurrence as well as eventual timing, the differences between the actual values and the Forecasts could be significant. For all of these reasons, investors are cautioned against placing undue reliance on the Forecasts and/or making their investment decisions based exclusively on the forecast data included in the Strategic Plan.

Moreover, failure to achieve the objectives of and/or implement the Strategic Plan in the form and amount and within the time frame contemplated may lead to reputational damage and possible downgrading of the Issuer’s rating, causing the cost of funding of the Issuer’s operations to rise, as well as its failure to comply with regulatory capital ratios. These events could, in turn, have a material adverse effect on the Issuer’s business, financial condition and results of operations.

Geographical concentration of business

The Issuer has limited geographical coverage in Italy and, although in recent years it has expanded and developed its operations in numerous important Italian financial centres, its strongest presence is in the Piedmont region where, as at 31 December 2018, 130 of its 283 branches were located. As the Issuer's nationwide coverage is less extensive in comparison to some of Italy's larger banks, there is a correspondingly higher risk of over-concentration in certain geographical areas, such as the region of Piedmont. In addition, as the Issuer's loan portfolio is geographically limited and concentrated in industries that mirror the local economy, any downtown in economic conditions affecting the principal geographical areas where the Issuer operates and the main industries in those areas may have a material adverse effect on the Issuer's financial condition and results of operations.

Risks relating to economic and financial conditions

The earnings capacity and stability of the Issuer are affected by the general state of the economy, the dynamics of financial markets and, in particular, the strength and growth prospects of the economy in Italy (and the creditworthiness of its sovereign debt), as well as that of the Eurozone as a whole. In recent years, economic and political uncertainty has contributed to considerable volatility and uncertainty in the financial markets. This, in turn, has made access to these markets increasingly complex, with a consequent rise in credit spreads and the cost of funding, as well as a decline in the amount of proceeds that the Issuer can raise from sales of financial assets. In this regard, trends in the following factors are of particular significance to the Issuer: expectations and investor confidence; the level and volatility of interest rates in the short and long term; exchange rates; the liquidity of financial markets; the availability and cost of capital; the sustainability of sovereign debt; household incomes and consumer spending; and levels of unemployment, inflation and housing prices. In addition, the volatility or negative performance of financial markets could discourage investments by the Issuer’s customers (or induce customers to reallocate their investments in products with a lower risk profile) or have an adverse impact on its customers’ investment yields.

Negative trends in relation to any of these factors, particularly in times of economic and financial crisis, may cause the Issuer to suffer losses, increases in funding costs and a diminution in the value of its assets, with a potential adverse effect on its liquidity, financial position and results of operations.

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In addition, as nearly all of the Issuer’s business is concentrated in Italy, the financial performance of the Issuer is closely connected to the economic performance of the country, which in recent years has been poor. The persistence of adverse economic conditions in Italy or a slower recovery in Italy compared to other Organisation for Economic Co-operation and Development (OECD) nations could have a material adverse effect on the Issuer’s business, results of operations or financial condition.

One of the elements creating economic uncertainty is the political situation in Italy. An inconclusive general election in Italy in March 2018 led to a prolonged period of negotiation among the rival parties and the Italian President and a coalition government was finally formed at the beginning of June 2018. Italy’s government submitted to the European Commission its draft 2019 budget that includes plans to increase spending. The European Commission rejected the proposed budget for 2019 and requested the Italian government to review it. At the end of December 2018, after a period marked by tensions between the European Commission and Italy’s government, an agreement was reached on the basis of a lower deficit. Since then, however, the European Commission has made the first step towards an infringement procedure against Italy for excessive debt, relating in particular to projections for the year 2020, and served a warning letter on the Italian government on 29 May 2019.

The economic implications of the policies of the new Italian government remain uncertain. Political instability, if material, could negatively affect the country’s economic recovery, and changes to economic policies, including the risk of a showdown with the European Commission, and/or political instability could have a material adverse effect on the Issuer’s business, results of operations and financial condition.

Risks arising from the global financial crisis and economic recession

Although the global economy (including that of the Eurozone) has experienced a recovery in recent years, various concerns remain over the ability of certain countries to service their sovereign debt obligations. The significant economic stagnation in certain countries in the Eurozone, including Italy, in part due to the effects of the sovereign debt crisis and corresponding austerity measures in these markets, has added to these concerns. The measures implemented so far to reduce public debt and fiscal deficits have already resulted in lower or negative gross domestic product (GDP) growth and high unemployment rates in these countries. If the fiscal obligations of these or other countries continue to exceed their fiscal revenue, taking into account the reactions of the credit and swap markets, or if their banking systems are further destabilised, the ability of such countries to service their debt in a cost efficient manner could be impaired.

The continued uncertainty over the outcome of various international financial support programmes, the possibility that other countries might experience similar financial pressures, investor concerns about inadequate liquidity or unfavourable volatility in the capital markets, lower consumer spending, higher inflation or political instability could further disrupt the global financial markets and might adversely affect the economy in general. In addition, the risk remains that a default of one or more countries in the Eurozone, the extent and precise nature of which are impossible to predict, could lead to the expulsion or voluntary withdrawal of one or more countries from the Eurozone or a disorderly break-up of the Eurozone, either of which could significantly disrupt financial markets and possibly trigger another global recession. More recently, the decision of the United Kingdom to leave the European Union and the ongoing uncertainty over the terms of its exit could exacerbate financial market volatility (see “Risks relating to the Issuer-Risks relating to Brexit” below).

Finally, in Italy, there is a concern at present over the stability of its banking system (see “Risks relating to the Issuer - Risks relating to the Italian banking system” below).

All of the above risks could adversely affect the business, results of operations and financial condition of the Issuer, including its ability to access the capital and financial markets and to refinance debt in order to meet its funding and capital requirements.

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Risks relating to the performance of sovereign debt securities

The large sovereign debts and fiscal deficits in European countries have raised concerns regarding the financial condition of Eurozone financial institutions and their exposure to such countries, which may in turn have an impact on Eurozone banks’ funding. As at 31 December 2018, the Issuer’s exposure to debt securities issued by the Italian government amounted to €1,351.1 million, corresponding to 11.4 per cent. of the Issuer’s total assets. The Issuer is therefore exposed to adverse changes and fluctuations in the markets for Italian government securities, which in recent years have shown tension and volatility and are influenced by global macroeconomic conditions as well the political situation, the sovereign debt rating and the relative valuation of the Euro. If concerns persist over the ability of the Italian government to service its debt, the Issuer could suffer similar volatility in its business, financial condition or results of operations.

In particular, the Issuer's credit ratings are exposed to the risk of reductions in the sovereign credit rating of Italy. On the basis of the methodologies used by rating agencies, further downgrades of Italy's credit rating (or the perception that such a downgrade may occur) have had, and may continue to have, a knock-on effect on the credit rating of Italian issuers such as the Issuer, causing the credit rating of Notes issued under the Programme to be downgraded, with a consequent increase in funding costs. Moreover, a decrease in the market price of government securities that the Issuer holds in its portfolio could diminish the value of its assets. Finally, if the credit ratings of Italy and other relevant countries deteriorate, the Issuer may be required to revise the risk weighting attributed to these assets for the calculation of risk-weighted assets (RWA), which could have a material adverse effect on the Issuer’s capital ratios. All of the above circumstances could, either individually or cumulatively, have a material adverse effect on the Issuer’s business, financial condition and results of operations.

Inadequacy or discontinuation of government and central bank actions to support liquidity

Intervention with respect to the level of capitalisation of banking institutions has had to be further increased in response to the financial markets’ crisis, and specifically to face the reduced liquidity available to market operators in the industry, the upturn of risk premiums and the increase in quantity and quality of banking capital claimed by the investors. In many countries, this has been achieved through support measures for the financial system and direct intervention by governments in the share capital of banks in different forms. In order to permit such government support, financial institutions were required to pledge securities deemed appropriate by different central financial institutions as collateral.

The unavailability of liquidity through such measures or the decrease or discontinuation of such measures by governments and central authorities could result in increased difficulties in procuring liquidity in the market and/or result in higher costs for the procurement of such liquidity, thereby adversely affecting the Issuer’s business, financial condition and results of operations.

Risks relating to Brexit

In March 2017, the United Kingdom gave notice of its intention to withdraw from the European Union pursuant to Article 50 of the Treaty on the European Union, starting a two-year period of negotiations with the EU on the terms of an agreement on the UK’s withdrawal and of its future relationship with the EU (the so- called “withdrawal agreement”). As part of the withdrawal agreement that was subsequently negotiated between the British government and the EU, a transitional period was agreed in principle, extending the application of EU law and providing for continuing access to the EU single market until the end of 2020. However, the proposed withdrawal agreement is subject to ratification by the UK Parliament, the European Parliament and the European Council and, so far, the UK Parliament has rejected it. As a result, the UK and the European Council have agreed to extend the date of the UK’s exit from the EU until 31 October 2019. If the parties fail to agree the terms of any withdrawal agreement within this timeframe, the UK is currently set to leave the EU on 31 October 2019 and, from that date, all EU treaties will cease to apply to it, unless the

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European Council, in agreement with the UK, unanimously decides to extend this period once again or the UK decides to revoke Article 50 and remain in the EU.

There are a number of uncertainties in connection with the UK’s exit from the EU (so-called “Brexit”), including the timing and the future of the UK’s relationship with the EU. In particular, it remains uncertain whether any withdrawal agreement will be finalised and ratified by the UK and the EU ahead of the 31 October 2019 deadline. In addition, the UK’s decision to withdraw from the EU has also given rise to concerns that it might result in calls for the governments of other EU member states to consider a potential withdrawal. These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets, which could in turn depress economic activity and restrict the access to capital of the Issuer.

Until the terms and timing of the UK’s exit from the EU are clearer, it is not possible to determine the impact that Brexit and/or any related matters may have on the stability of the Eurozone or the European Union and, ultimately, on the Issuer’s business. As such, such matters could adversely affect the Issuer’s business, financial condition and results of operations, as well as the market value and/or the liquidity of the Notes on the secondary market.

Risk relating to the Italian banking system

Concerns remain in Italy over the stability of its banking system, particularly following the collapse of several Italian banks in recent years, starting with four central Italian banks at the end of 2015 and following the nationalisation of Monte dei Paschi di Siena in December 2016, and further government interventions to ensure an orderly liquidation of Banca Popolare di Vicenza and Veneto Banca in June 2017. More recently, in January 2019, the Italian government was forced to intervene to prevent the collapse of Banca Carige. Uncertainty has focused on a number of areas but, in particular, on the ability of a number of Italian banks to recover non-performing loans (“NPLs”) and to satisfy the new regulatory capital requirements. If the difficulties of certain Italian banks persist, this may result in an overall lack of confidence in the Italian banking sector, which in turn could affect the Issuer’s ability to obtain funding and have an adverse impact on its financial condition, liquidity and results of operations.

Risk relating to the quality of loans

The results of the Issuer may be affected by economic and financial conditions, both locally in Italy and worldwide. During a recession, there may be less demand for loan products and a greater number of the Issuer's customers may default on their loans or their obligations. Interest rates rises may also have an impact on the demand for mortgages and other loan products, and fluctuations in interest rates in Italy and the Eurozone may affect the Issuer's performance.

Credit quality is affected by the weakness of the economy and, within the banking system generally, a growing number of borrowers are struggling to repay loans. The Issuer’s Net bad loans (sofferenze) as at 31 December 2018 totalled €179.4 million, representing a decrease on €263.8 million as at 31 December 2017, while its Net unlikely to pay exposures (inadempienze probabili) at 31 December 2018 totalled €127.7 million, down from €177.5 million as at 31 December 2017. Adding on Net deteriorated past due exposures (esposizioni scadute deteriorate), the total amount of impaired cash exposure to customers as at 31 December 2018 was €314.3 million, down on the €447.8 million figure as at 31 December 2017. In addition, at 31 December 2018 the coverage ratio for bad loans was 61.6 per cent. (compared to 58.3 per cent. as at 31 December 2017) and, for total non-performing loans to customers, was 52.5 per cent. (compared to 48.9 per cent. as at 31 December 2017).

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Although the Issuer monitors credit quality and manages the specific risk of each counterparty and the overall risk of the respective loan portfolios, there can be no assurance that such monitoring and risk management will suffice to keep the Issuer's exposure to credit risk at acceptable levels. Any deterioration of the creditworthiness of significant individual customers or counterparties, or of the performance of loans and other receivables, as well as inaccurate assessments of creditworthiness or country risks may have a material adverse effect on the Issuer's business, financial condition and results of operations.

Competition in the Italian market

Competition is intense in all of the Issuer's primary business areas in Italy. The Issuer derives nearly all of its income from its banking activities in Italy. In recent years the Italian banking sector has been characterised by increasing competition, which is currently having two main effects:

• a progressive reduction in the differential between lending and borrower interest rates, which may result in the Issuer facing difficulties in maintaining a sound level in interest rate margins; and

• a progressive reduction in commissions and fees due to heavy competition on prices.

Both of the above factors may adversely affect the Issuer's financial condition and result of operations. In addition, downturns in the Italian economy could add to competitive pressure through, for example, increased price pressure and lower business volumes for which to compete.

Credit and market risk

The Issuer's business depends to a substantial degree on the creditworthiness of its customers. Notwithstanding the controls it carries out, including customer credit checks, it faces normal lending risks and thus may not, for reasons beyond its control (such as fraudulent behaviour by customers) have access to all relevant information regarding any particular customer, their financial position or their ability to pay amounts owed or repay amounts borrowed. Any failure by customers to report their financial and credit position accurately or to comply with the terms of their agreements or other contractual provisions could have an adverse effect on the Issuer's business and financial results.

Interest rate rises may also have an impact on the demand for mortgages and other loan products. The risks arising from the impact of the economy and business climate on the credit quality of the Issuer's borrowers and counterparties can affect the overall credit quality and the recoverability of loans and amounts due from counterparties. In addition, the continued liquidity crisis in other affected economies may create difficulties for the Issuer's borrowers to refinance or repay loans and potentially increase the Issuer’s non-performing loan levels.

Credit risk is also closely linked to concentration risk, which derives from exposure to borrowers and groups of connected borrowers that operate in the same industry, conduct the same business or are located in the same geographic area. The concentration of loans to borrowers and groups of related borrowers operating in the same economic sector, conducting the same business or located in the same geographical area involves a risk that, if the sectors of the economy towards which the Issuer has the greatest exposure experiences a contraction (for example, if economic conditions in north-west Italy deteriorate, whether or not as part of a broader contraction in the Italian economy), the Issuer would be likely to suffer greater losses than competitors with a more diversified loan portfolio, which could have an adverse impact on its financial condition and/or results of operations. See also “Geographical concentration of business” above.

Furthermore, to the extent that any of the instruments and strategies used by the Issuer to hedge or otherwise manage its exposure to credit or market risk are not effective, the Issuer may not be able to mitigate effectively its risk exposure, in particular to market environments or against particular types of risk. The Issuer's trading revenues and interest rate risks are dependent upon its ability to identify properly, and mark to

19 market, changes in the value of financial instruments caused by fluctuations in market prices or interest rates. The Issuer's financial results also depend upon how effectively it determines and assesses the cost of credit and manages its own credit risk and market risk concentration.

Liquidity risks

The Issuer’s businesses are subject to risks concerning liquidity which are inherent in its banking operations, and could affect the Issuer’s ability to meet its financial obligations as they fall due or to fulfil commitments to lend. In order to ensure that the Issuer continues to meet its funding obligations and to maintain or grow its business generally, it relies on customer savings and transmission balances, as well as ongoing access to the wholesale lending markets. The ability of the Issuer to access wholesale and retail funding sources on favourable economic terms is dependent on a variety of factors, some of which are outside of its control, such as liquidity constraints, general market conditions and confidence in the Italian banking system. Should the Issuer be unable to continue to source a sustainable funding profile, its ability to fund its financial obligations at a competitive cost, or at all, could be adversely affected.

Changes in interest rates

Fluctuations in interest rates in Italy affect the Issuer’s financial performance. The results of the Issuer’s banking operations are affected by its management of interest rate sensitivity and, in particular, changes in market interest rates. A mismatch of interest-earning assets and interest-bearing liabilities in any given period, which tends to accompany changes in interest rates, may have a material effect on the Issuer’s financial condition and results of operations. Rising interest rates in line with the yield curve can increase the Issuer’s cost of funding at a higher rate than the yield on its assets, due (for example) to a mismatch in the maturities of its assets and liabilities that are sensitive to interest rate changes or a mismatch in the degree of interest rate sensitivity of assets and liabilities with similar maturities. At the same time, decreasing interest rates can also reduce the yield on the Issuer’s assets at a rate which may not correspond to the decrease in the cost of funding.

Protracted market declines and reduced liquidity in the markets

In some of the Issuer's businesses, protracted adverse market movements, particularly the decline of asset prices, can reduce market activity and market liquidity. These developments can lead to material losses if the Issuer cannot close out deteriorating positions in a timely way. This may especially be the case for assets that did not enjoy a very liquid market to begin with. The value of the assets that are not traded on stock exchanges or other public trading markets, such as derivative contracts, may be calculated by the Issuer using models other than publicly quoted prices. Monitoring the deterioration of the prices of assets like these is difficult and failure to do so effectively could lead to unanticipated losses.

This in turn could adversely affect the Issuer's operation results and financial conditions. In addition, protracted or steep declines in the stock or bond markets in Italy and elsewhere may adversely affect the Issuer's securities trading activities and its asset management services, as well as the Issuer's investments in and sales of products linked to the performance of financial assets.

Risk relating to the real estate market

The Issuer has limited exposure to the real estate sector (6 per cent. of the Issuer’s total lending activity – excluding loans to private individuals in the form of mortgage loans), as it is a lender to companies in the real estate sector and to real estate investment funds, whose cash flows are mainly, or exclusively, backed by proceeds deriving from the construction, lease and/or sale of real estate.

The “real estate sector” includes loans to construction and real estate companies/economic groups, to real estate investment funds and to private individuals (in the form of mortgage loans or finance leases to buy a

20 house), together with loans to companies categorised within this sector but whose core business is not real estate (indotto immobiliare) as well as to companies in the public infrastructure construction sector.

The real estate sector has been particularly affected by the economic and financial crisis, resulting in a fall in asset prices as well as in the number of transactions, accompanied by an increase in the cost of funding and greater difficulties in obtaining access to credit. Consequently, companies operating in the real estate sector have experienced a decrease in transactions both in terms of volumes and margins, an increase in financial expenses, as well as greater difficulties in refinancing their debt. Continuing stagnation of the Italian economy in those geographic areas where the Issuer operates, an increase in unemployment and reduced earnings of customers in the real estate sector could increase the bankruptcy rate of both individual and corporate borrowers of the Issuer, resulting in defaults in the payment of lease and/or mortgage instalments.

The Issuer has put procedures in place to handle and monitor the risk of default by the borrowers and is supported, where appropriate, by external and internal experts to evaluate any real estate projects and any exposure to the real estate sector is subject to increased capital requirements imposed by the Bank of Italy. Notwithstanding the foregoing, any further deterioration of the real estate market conditions or of the economic and financial conditions in general and/or fall in the value of real estate properties placed as collateral could adversely affect the debt servicing ability of the Issuer’s borrowers and, in turn, have a negative adverse impact on the business, financial conditions and/or results of operations of the Issuer.

Risks relating to soundness of financial institutions

The Issuer is exposed to different industries and counterparties, including counterparties in the financial services industry. This exposure can arise through trading, lending, deposit taking, clearance and settlement and many other activities and relationships. Many of these relationships expose the Issuer to credit risk in the event of default of a counterparty or client.

Operational risk

The Issuer, like all financial institutions, is exposed to many types of operational risk, such as the risk of fraud by employees and outsiders, unauthorised transactions by employees and operational errors, including those resulting from faulty information technology or telecommunication systems, as well as the risk of cyber- crime, involving theft or corruption of data or disruption of business processes. Although the Issuer's systems and processes are designed to ensure that the operational risks associated with the Issuer's activities are appropriately monitored, any failure or weakness in these systems could adversely affect the Issuer's financial performance and business activities.

Impact of austerity measures

The austerity measures introduced by the Italian government since 2011 have had an impact on disposable incomes of some households and the profitability of some businesses. Any similar measures introduced in the future could have the same effect and, consequently, may generate pressure on the ability of households and businesses to service their loans and meet their other financial obligations to the Issuer and/or to other operators in the Italian banking sector.

Risk relating to information technology systems, cyber-security threats and failure to comply with new data protection legislation

The Issuer depends on its information technology (“IT”) and data processing systems to operate its business, as well as on their continuous maintenance and constant updating. The Issuer is exposed to the risk that data could be damaged or lost, removed, disclosed or processed (data breach) for purposes other than those authorised by the customer, including by unauthorised parties. The possible destruction, damage or loss of customer, employee or third party data, as well as its removal, unauthorised processing or disclosure, could

21 disrupt the Issuer’s business, harm its reputation and lead to fines being imposed on it, all of which could have an adverse effect on the Issuer’s financial condition and results of operations. In addition, changes to relevant regulation could impose more stringent sanctions for violations and have an adverse impact on the Issuer’s business insofar as they lead to additional compliance costs.

There are possible risks with regard to the reliability of IT systems (disaster recovery), the quality and integrity of the data managed and the threats to which IT systems are subject, as well as physiological risks related to the management of software changes (change management), which could have negative effects on the Issuer’s operations, as well as on its capital and financial position. Risks faced by the Issuer relating to the management of IT systems include possible violations of its systems due to unauthorised access to the Issuer’s network or IT resources, the introduction of viruses into computers or any other form of abuse via the Internet. Such violations have become more frequent over the years throughout the world and are therefore a potential threat to the protection of information relating to the Issuer and its customers, as well as to the integrity of the Issuer’s IT systems, the confidence of its customers and the Issuer’s overall reputation. The materialisation of any of these threats could have adverse consequences for the Issuer’s business, financial condition and results of operations.

The Issuer’s operations involve daily processing and storage of large amounts of customer data and require uninterrupted, accurate, permanently available, real-time and safe transmission and storage of customer and other data in compliance with applicable laws and regulations. The Issuer may be held liable for the loss, release, disclosure or inappropriate modification of customer data stored on its equipment or carried by its networks. IT system failure, interruption of service availability, industrial espionage, cyber-attack or data leakage, in particular relating to customer data, could seriously limit the Issuer’s ability to service its clients, result in significant compensation costs for which indemnification or insurance coverage may be only partially available, result in a breach of laws and regulations under which it operates (including the new General Data Protection Regulation 2016/679/EU) or lead to fines and could cause long-term damage to its business and reputation.

Risk management and impact of events which are difficult to anticipate

The Issuer's earnings and business are affected by general economic conditions, the performance of financial markets, interest rate levels, currency exchange rates, changes in laws and regulation, changes in the policies of central banks, particularly the Bank of Italy and the European Central Bank, and competitive factors, at a regional, national and international level. Each of these factors can change the level of demand for the Issuer's products and services, the credit quality of borrowers and counterparties, the interest rate margin of the Issuer between lending and borrowing costs and the value of the Issuer's investment and trading portfolios.

The Issuer has devoted significant resources to developing policies, procedures and assessment methods to manage market, credit, liquidity and operating risks and intends to continue to do so in the future. Nonetheless, the Issuer's risk management techniques and strategies may not be fully effective in mitigating its risk exposure in all economic market environments or against all types of risks, including risks that the Issuer fails to identify or anticipate. If existing or potential customers believe that the Issuer's risk management policies and procedures are inadequate, the Issuer's reputation, as well as its revenues and profits, may be adversely affected.

The Issuer operates in a highly regulated industry

Banking, financial and insurance activities in Italy and in the EU are subject to extensive and detailed regulation and supervision by supervisory authorities, which have broad administrative power over many aspects of the financial and banking services business, including liquidity, capital adequacy and permitted investments, money laundering, privacy, debt and equity securities issuance and offering/placement, financial intermediation, record-keeping, marketing and selling practices, among others. For banks in the EU, the

22 burden of new legislation has been particularly heavy in recent years and the resources dedicated to ensuring compliance have a significant impact on the Issuer’s costs and its ability to increase income.

The laws governing banking, asset management, provision of financial services and other activities of the Issuer and the Group may change at any time in ways which may have an adverse effect on their business. Furthermore, the Issuer cannot predict the timing or form of any future regulatory initiatives. Changes in existing laws may materially affect the way in which the Issuer conducts its business, the products and services it can offer and the value of its assets.

Examples of recent regulatory changes include:

• MiFID II and Regulation 600/2014 (“MiFIR”) and Regulation 1286/2014 relating to retail and insurance-based investment products (“PRIIPs”), all of which entered into force or were required to be implemented on 2 January 2018 and which have required the Issuer to adopt new internal policies in order to ensure compliance; and

• the General Data Protection Regulation (Regulation (EU) No. 2016/679) (“GDPR”), in force since 25 May 2018, which is complex, costly and time-consuming for compliance purposes and involves the risk of reputational damage and/or significant fines in the event of non-compliance.

Moreover, the Issuer and the Group are subject to ongoing supervision from the Bank of Italy and, to the extent applicable based on the rules governing the functioning of the Single Resolution Mechanism, the ECB, as well as from the Commissione Nazionale per le Società e la Borsa (“CONSOB”). Non-compliance with rules and regulations enforced by the Bank of Italy, the ECB, the CONSOB or any other relevant authority may result in severe penalties and other sanctions such as bans, restrictions on activities and suspensions, which would have a direct impact on the Issuer’s ability to perform its activities. In addition, the Issuer’s operations are subject to complex regulation. Often, these regulations are complex and costly to comply with in terms of time and other resources. Breach of applicable regulations may lead to penalties, fines, compliance costs, reputational harm and even loss of licences to operate.

Uniform framework for recovery and resolution of credit institutions

Directive 2014/59/EU of 15 May 2014 (“BRRD” or the “Bank Recovery and Resolution Directive”) provides for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms. Implemented in Italy under Legislative Decree No. 180 of 16 November 2016, BRRD is designed to provide authorities with a credible set of resolution tools and powers to (among other things) protect depositors and investors and to minimise reliance on public financial support. BRRD’s broad range of resolution tools and powers may be used alone or in combination where the relevant resolution authority considers that certain required conditions are met, namely, that an institution is failing or likely to fail, that no alternative private sector measure, or supervisory action, would prevent the failure of the institution within a reasonable timeframe and that the taking of a resolution action is necessary to the public interest.

More recently, on 7 June 2019 the following measures were published in the Official Journal of the European Union:

• Directive (EU) 2019/879 amending BRRD as regards the loss-absorbing and recapitalisation capacity of credit institutions and investment firms (otherwise known as “BRRD II”); and

• Regulation (EU) 2019/877 amending Regulation (EU) No 806/2014 laying down uniform rules and procedures for the resolution of credit institutions and certain investment firms under the Single Resolution Mechanism and the Single Resolution Mechanism (“SRMR II”).

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The most significant amendments concern the minimum requirement for own funds and eligible liabilities (“MREL”). In particular, the rules on the subordination of MREL instruments were strengthened by introducing a new category of large banks (the so-called “top-tier banks”) with a balance sheet size greater than Euro 100 billion, in relation to which more prudent subordination requirements are formulated. National resolution authorities may also select other banks and subject them to the top-tier bank treatment.

BRRD II is required to be implemented under national legislation by Member States no later than 28 December 2020 (with some provisions applying from 1 January 2024 or later deadlines established by the resolution authority), while SRMR II is due to apply directly in Member States (without any requirement to be implemented under national legislation) from 28 December 2020.

The resolution powers under BRRD (as amended by BRRD II and SRMR II), by imposing funding obligations upon the Issuer and bail-in, write-down, conversion and other loss-absorption obligations upon its shareholders and creditors, may (as may perception of the exercise of any of these powers) have an impact on the manner in which the Issuer is managed and may adversely affect its credit rating.

Further information regarding BRRD from a Noteholder perspective its set out below under “The Bank Recovery and Resolution Directive may affect Notes issued under the Programme”.

Compliance with new and increased regulatory capital and liquidity requirements

The Issuer is required by the Applicable Banking Regulations, the Bank of Italy and the ECB to maintain minimum levels of capital and liquidity. The Issuer, its regulated subsidiaries and its branches may be subject to the risk of having insufficient capital resources to meet the minimum regulatory capital and/or liquidity requirements. In addition, the minimum regulatory capital and liquidity requirements may increase in the future, or the methods of calculating capital and liquidity resources may change. Changes in regulatory requirements may also require the Issuer to raise additional capital and liquidity. Failure to comply with minimum levels of capital may trigger, among others, restrictions on distributions and the need for the bank to adopt a capital conservation plan on necessary remedial actions.

In the wake of the global financial crisis that began in 2008, the Basel Committee on Banking Supervision (the “BCBS”) approved, in the fourth quarter of 2010, revised global regulatory standards (“Basel III”) on bank capital adequacy and liquidity, which impose requirements for, inter alia, higher and better-quality capital, better risk coverage, measures to promote the build-up of capital that can be drawn down in periods of stress and the introduction of a leverage ratio as a backstop to the risk-based requirement as well as two global liquidity standards. The Basel III framework adopts a gradual approach, with the requirements to be implemented over time, with full enforcement in 2019.

In January 2013, the BCBS revised its original proposal in respect of the liquidity requirements in light of concerns raised by the banking industry, providing for a gradual phasing-in of the Liquidity Coverage Ratio with a full implementation in 2019 as well as expanding the definition of high-quality liquid assets to include lower quality corporate securities, equities and residential mortgage backed securities. In June 2013, the European Parliament and the Council of Europe issued Directive 2013/36/EU (“CRD IV”) and Regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment firms, referred to as the EU Capital Requirements Regulation (“CRR” and, together with CRD IV, the “CRD IV Package”) which incorporate the key amendments of Basel III.

The Group is subject to the Pillar 2 requirements for banks imposed under the CRD IV Package, as subsequently amended and supplemented, which are impacted, on an ongoing basis, by the European Banking Authority’s (“EBA”) Supervisory Review and Evaluation Process (“SREP”) assessments. The SREP is aimed at ensuring that institutions have in place adequate arrangements, strategies, processes and mechanisms to maintain the amounts, types and distribution of internal capital commensurate to their risk profile, as well as

24 robust governance and internal control arrangements. The key purpose of the SREP is to ensure that institutions have adequate arrangements as well as capital and liquidity to ensure sound management and coverage of the risks to which they are or might be exposed, including those revealed by stress testing, as well as risks the institution may pose to the financial system.

In addition, the BRRD requires institutions to meet at all times a sufficient aggregate amount of own funds and “eligible liabilities” expressed as a percentage of the total liabilities and own funds of the institution (i.e. MREL). The aim is that the minimum amount should be proportionate and adapted for each category of bank on the basis of their risk or the composition of their sources of funding and to ensure adequate capitalisation to continue exercising critical functions post resolution. The final draft regulatory technical standards published by the EBA in July 2015 set out the assessment criteria that resolution authorities should use to determine the MREL for individual firms. The BRRD does not foresee an absolute minimum, but attributes the competence to set a minimum amount for each bank to national resolution authorities (for banks not subject to supervision by the ECB such as the Issuer) or to the Single Resolution Board (the “SRB”) for banks subject to direct supervision by the ECB.

On 23 November 2016, the European Commission published legislative proposals for amendments to CRR, CRD IV, the BRRD and the Single Resolution Mechanism (collectively, the “EC Proposals”). Amendments to the BRRD to introduce a new asset class of “non-preferred” senior debt were introduced by Directive (EU) 2017/2399 which entered into force on 28 December 2017 and was transposed in Italy by Law No. 205/2017. The EC Proposals cover multiple areas, including the Pillar 2 framework, a binding minimum leverage ratio requirement, a binding net stable funding ratio requirement, mandatory restrictions on distributions, permission for reducing own funds and eligible liabilities, macro-prudential tools, the Basel Committee’s new standardised approach for measuring counterparty credit risk exposures, the Basel Committee’s Fundamental Review of the Trading Book, the MREL framework and the integration of the Total Loss-absorbing Capacity (“TLAC”) standard into EU legislation. See also “- Risks relating to the Issuer - Uniform framework for recovery and resolution of credit institutions” above.

The final EC Proposals were agreed in February 2019 and on 7 June 2019 the following dispositions were published in the Official Journal of the European Union:

• Regulation (EU) No. 2019/876 amending CRR as regards, inter alia, the leverage ratio, net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements (“CRR II”); and

• Directive (EU) No. 2019/878 amending CRD IV as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures (the “CRD V”) (CRR II and CRD V, together, the “CRD V Package”).

In particular the most significant amendments are:

• Leverage Ratio: The CRD V Package introduces a binding leverage ratio requirement (i.e. a capital requirement independent from the riskiness of exposures, as a backstop to risk-weighted capital requirements) for all institutions subject to CRR, complementing the current requirements under the CRD IV Package to calculate the leverage ratio, to report it to supervisors and, since January 2015, to disclose it publicly.

• Net Stable Funding Ratio (“NSFR”): The CRD V Package introduces the NSFR standard agreed by the Basel Committee but including some adjustments concerning, for example, the treatment of short- term transactions with financial institutions, applying for a transitional period of four years, after which the Basel standard is expected to apply unless the European Commission submits a legislative

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proposal to amend the treatment of short-term transactions. The CRD V Package also allows small and non-complex institutions to use a simplified and less granular version of the NSFR, subject to supervisory approval based on factors including the size of assets, trading book and derivative positions.

The CRD V Package came into force on 27 June 2019. CRR II is due to apply from 28 June 2021 (subject to a number of exceptions set out in the regulation), while CRD V needs to be transposed into national legislation by Member States no later than 28 December 2020 (with the exceptions of certain provisions that apply from 28 June 2021 and from 1 January 2022).

Finally, on 7 December 2017, the Basel Committee and the Group of Governors and Heads of Supervision (“GHOS”) presented reforms to the Basel III regulatory framework also known as “Basel IV”. The final Basel III reforms include several policy and supervisory measures that aim to enhance the reliability and comparability of risk-weighted capital ratios and to reduce the potential for undue variation in capital requirements for banks across the globe. The measures comprise revisions to the standardised approach for credit risk, internal ratings based approaches for credit risk, the credit valuation adjustment risk framework, the operational risk framework, the leverage ratio framework and a revised output floor. The changes also include the introduction of a leverage ratio buffer requirement for globally systemic important banks, which the Issuer is not. The proposals contained in the Basel III reforms are intended to be applied from 2022 with a transitional period for the output floor until 2027, although these timelines remain unclear until such rules are translated into draft European and Italian legislation. The CRD V Package does not adopt all of the more recent amendments such as those on credit and operational risk agreed by the Basel Committee in December 2017 mentioned above, with the exception of the rules on the revised leverage ratio and the leverage ratio buffer. It is therefore expected that Basel IV framework will be implemented via the forthcoming CRD VI and CRR III framework.

If the Group does not satisfy the wide range of new requirements under recent and upcoming legislation, in particular with regard to capital ratio and liquidity requirements, it may be required to raise additional capital and liquidity or be subject to measures or sanctions by the Bank of Italy or the ECB. If the Issuer is required to raise further capital in the future after failing to satisfy the minimum capital ratio requirements, but is unable to do so or to do so on acceptable terms, the Issuer may be required to further reduce the amount of the Group’s risk weighted assets and engage in the disposition of core and non-core businesses, which may not occur on a timely basis or achieve prices which would otherwise be attractive to the Issuer. Any failure to maintain minimum regulatory capital ratios could result in administrative actions or other sanctions, which in turn may have a material adverse effect on the Issuer’s operating results, financial condition and prospects. In addition, if the Issuer is required to strengthen its capital position, and it is not possible for the Issuer to raise additional capital from the financial markets or to dispose of marketable assets, that could potentially lead to requests for state aid in the circumstances permitted under the BRRD, as implemented in Italy, which could result in the dilution or elimination of the interests of ordinary shareholders and the write-off or conversion of the Notes into shares, and have other material consequences on the Issuer.

Effective management of the Group’s regulatory capital and liquidity is critical to its ability to operate its business and to pursue its strategy. Any change that limits the Group’s ability to manage its balance sheet and regulatory capital and liquidity resources effectively, including, for example, reductions in profits and retained earnings as a result of write-downs or otherwise, increases in risk weighted assets, changes in its asset composition, delays in the disposal of certain assets or an inability to receive loans as a result of market conditions or otherwise to access funding sources, could have a material adverse impact on the Group’s business, financial condition and regulatory capital position.

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The Issuer may be affected by new accounting standards

The Issuer is exposed to the effects of the entry into force and subsequent application of new accounting principles or standards and regulations and/or changes to them, including those resulting from International Financing Reporting Standards, as adopted by the European Union and as implemented under the Bank of Italy's instructions contained in Circular No. 262 of 22 December 2005 and related transitional regulations in Italy (“IFRS”) and, in particular, IFRS 15, IFRS 16 and IFRS 9. As a result, the Issuer may in the future need to revise the accounting and regulatory treatment of some of its existing assets, liabilities and transactions (and related income and expenses), which may have a material adverse effect on financial planning and forecasts, and could lead to the Issuer having to restate financial data published previously.

For example, commencing from the year ended 31 December 2018, IFRS 9 (Financial Instruments) applies to the Issuer’s financial statements in place of IAS 39 (Financial Instruments: Recognition and Measurement) and has introduced:

• significant changes to the rules related to the classification and measurement of financial assets that are based on the management method (“business model”) and on the characteristics of the cash flows of the financial instrument (SPPI criterion—Solely Payments of Principal and Interests) which could involve different classification and measurement methods for financial instruments compared with IAS 39;

• new impairment accounting model based on a “forward looking expected losses” impairment model rather than an incurred losses approach as in IAS 39 (calculated over a 12-month time horizon) and on the concept of a lifetime expected loss which could lead to a structural anticipation and increase of the value adjustments, particularly those on receivables; and

• a “three stage impairment model” for impairment based on changes in credit risk of a financial asset since its initial recognition. These three stages then determine the amount of impairment to be recognised as expected credit losses.

In addition, in adopting IFRS 9 in its financial statements as at and for the year ended 31 December 2018, the Issuer has opted not to restate the comparative 2017 figures and, instead, additional IAS 39 line items for 2017 have been inserted in order to allow for some comparison.

For further information on the Issuer’s implementation of IFRS 9, see the section of this Base Prospectus entitled “Overview of Financial Information of the Issuer”.

Risks associated with recent ECB guidance on NPL provisioning

On 20 March 2017, the ECB published its final guidance on NPLs. It outlines measures, processes and best practices which banks should incorporate when tackling NPLs. The ECB expects banks to adhere fully to the guidance in line with the severity and scale of NPLs in their portfolios.

The guidance calls on banks to implement realistic and ambitious strategies to work towards a holistic approach regarding the problem of NPLs. This includes areas such as governance and risk management. For instance, banks should ensure that managers are incentivised to carry out NPL reduction strategies. This should also be closely managed by their management bodies. The ECB does not stipulate quantitative targets to reduce NPLs. Instead, it asks banks to devise a strategy that could include a range of policy options such as NPL work-out, servicing, and portfolio sales.

The guidance is applicable as of its date of publication and is currently non-binding in nature. However, banks should explain and substantiate any deviations upon supervisory request. This guidance is taken into

27 consideration in the Single Resolution Mechanism’s regular supervisory review and evaluation process and non-compliance may trigger supervisory measures.

The guidance does not intend to substitute or supersede any applicable regulatory or accounting requirement or guidance from existing EU regulations or directives and their national transpositions or equivalent, or guidelines issued by the Euro Banking Association. Instead, it is a supervisory tool with the aim of clarifying the supervisory expectations regarding NPL identification, management, measurement and write-offs in areas where existing regulations, directives or guidelines are silent or lack specificity. Where binding laws, accounting rules and national regulations on the same topic exist, banks should comply with those. It is also expected that banks do not enlarge already existing deviations between regulatory and accounting views in the light of this guidance, but rather the opposite: whenever possible, banks should foster a timely convergence of regulatory and accounting views where those differ substantially.

In addition, on 15 March 2018, the ECB published an addendum to the ECB guidance to banks on NPLs, specifying the ECB’s supervisory expectations for prudent levels of provisions for new NPLs. The addendum is not binding and is intended to form the basis for supervisory dialogue between the significant banks and the ECB Banking Supervision. During the supervisory dialogue, the ECB will discuss with each bank divergences from the prudential provisioning expectations laid out in the addendum. After the dialogue and taking into account the bank’s specific situation, ECB Banking Supervision will decide (on a case-by-case basis) whether and which supervisory measures are appropriate. The result of this dialogue will be incorporated, for the first time, in the 2021 Supervisory Review and Evaluation Process. The addendum is complementary to any future EU legislation based on the European Commission’s proposal to address NPLs under Pillar 1. The Commission’s proposal for a statutory provisioning backstop is conceived as a binding requirement that applies to all credit institutions.

Furthermore, on 11 July 2018 the ECB announced the intention to further engage with each credit institution subject to its supervision (which the Issuer is not) in order to define its supervisory expectations on the reduction of NPLs.

Considering that the relevant legislative framework is still evolving, it cannot be excluded that the supervisory authority may require the Issuer to maintain higher capital adequacy standards compared to those currently applicable.

It cannot be excluded that, in the future, a deterioration of the credit quality of the Issuer may occur, both due to factors out of the Issuer’s control – such as the persistence of the negative macroeconomic environment – and as a consequence of actions of the competent authorities, possibly after investigations.

In addition, any weakening of the NPLs market could have a negative impact on the Issuer’s estimated results due to the deterioration of credit quality and the additional provisions to be created in light of this deterioration, with possible negative effects on the business and the economic, capital and/or financial condition of the Issuer and/or the Group.

Risks associated with pending legal proceedings

As at the date of the Base Prospectus, the Issuer is party to a number of legal proceedings and disputes associated with their ordinary operations, and is periodically subject to inspections by the supervisory authorities. For some of these proceedings, the Issuer has allocated specific provisions in its consolidated financial statements to cover potential liabilities resulting from those proceedings.

Although the Issuer believes that these provisions are adequate, the outcome of the legal proceedings to which the Issuer is a party is intrinsically difficult to forecast and, as a result, an unfavourable outcome in some of them could have an impact on the Issuer’s financial condition and results of operations. Similarly, in the event of future assessments or specific requests by the supervisory authorities, the Issuer may encounter difficulties

28 in promptly adapting to those requests and/or fulfilling the obligations imposed by such authorities, which could lead to sanctions or other measures. Accordingly, unfavourable judgments in legal proceedings or measures taken by the supervisory authorities could have a material adverse effect on the Issuer’s financial conditions and results of operations.

For further information on pending legal proceedings to which the Issuer is a party, see “Description of the Issuer – Legal, administrative and tax proceedings” below.

Downgrade of the Issuer's credit ratings

The creditworthiness of the Issuer is measured, inter alia, through the ratings assigned by one or more international credit rating agencies. The rating is an assessment of the Issuer's ability to fulfil its financial obligations, including those relating to the Notes. As at the date of this Base Prospectus, the credit ratings of the Issuer by DBRS Ratings Limited (“DBRS”) are as follows:

• long-term debt BBB(low) and short-term debt R-2(middle); and

• long-term deposits BBB and short-term deposits R-2(high).

DBRS is established in the European Union and is registered under Regulation (EC) No. 1060/2009, as subsequently amended.

A downgrade of any of the Issuer's ratings (for whatever reason) could be an indicator of a reduced ability to fulfil its financial commitments compared to the past and might result in higher funding and refinancing costs for the Issuer in the capital markets. In addition, a downgrade of any of the Issuer's credit ratings may have a particularly adverse effect on the Issuer's reputation as a participant in the capital markets, as well as in the eyes of its clients. These factors may have an adverse effect on the Issuer's financial conditions and/or results of operations.

Value of financial instruments recorded at fair value

IFRS contains complex standards for the recording of the Issuer’s financial assets, including derivatives, each as further described in “Accounting Policies” in the notes to the audited consolidated annual financial statements of the Issuer for the years ended 31 December 2018 and 2017, which are incorporated by reference in this Base Prospectus. Generally, in order to establish the fair value of these instruments the Issuer relies on quoted market prices or, where the market for a financial instrument is not sufficiently active, internal valuation models that utilise observable market data. In certain circumstances, the data for individual financial instruments or classes of financial instruments utilised by such valuation models may not be available or may become unavailable due to changes in market conditions. In such circumstances, the Issuer's internal valuation models require the Issuer to make assumptions, judgments and estimates in order to establish fair value. In common with other financial institutions, these internal valuation models are complex, and the assumptions, judgments and estimates the Issuer is required to make often relate to matters that are uncertain, such as expected cash flows, the ability of the borrowers to service debt, appreciation and depreciation in property values, and relative levels of defaults and deficiencies. Such assumptions, judgments and estimates may need to be updated to reflect changing trends and market conditions. The resulting change in fair values of the financial instruments could have a material adverse effect on the Issuer's earnings and financial condition. See also “- The Issuer may be affected by new accounting standards” above.

Historical information

The historical financial and other information set out in this Base Prospectus represents the historical experience of the Issuer. Although the Issuer accepts responsibility for its fairness and accuracy, there can be

29 no assurance that the Issuer’s future performance will be similar to that experienced to date and described in this Base Prospectus.

Risks relating to the Notes

The Notes may not be a suitable investment for all investors

Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this Base Prospectus or any applicable supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact the Notes will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including Notes with principal or interest payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor’s currency;

(iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant indices and financial markets; and

(v) be able to evaluate (either alone or with the help of a legal, tax, accounting and/or financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a legal, tax, accounting and/or financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor’s overall investment portfolio.

Prospective investors in the Notes should make their own independent decision whether to invest in the Notes and whether an investment in the Notes is appropriate or proper for them, based upon their own judgement and upon advice from such advisers as they may deem necessary.

In addition, prospective investors should not rely on or construe any communication (written or oral) of the Issuer, the Arranger or the Dealer(s) as investment advice or as a recommendation to invest in the Notes, it being understood that information and explanations related to the Terms and Conditions of the Notes shall not be considered to be investment advice or a recommendation to invest in the Notes.

No communication (written or oral) received from the Issuer, the Arranger or the Dealer(s) shall be deemed to be an assurance or guarantee as to the expected results of an investment in the Notes.

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Risks related to the structure of a particular issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common features.

Notes subject to optional redemption by the Issuer

An optional redemption feature of Notes is likely to limit their market value. During any period when the Issuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. This also may be true prior to any redemption period. The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in the light of other investments available at that time.

CMS Linked Interest Notes

The Issuer may issue Notes with interest determined by reference to the CMS Rate which determine the amount of interest (a “relevant factor”). Potential investors should be aware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) the relevant factor may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices;

(iv) if the relevant factor is applied to the Notes in conjunction with a multiplier greater than one or contains any other leverage factor, the effect of changes in the relevant factor on interest payable is likely to be magnified; and

(v) the timing of changes in the relevant factor may affect the actual yield to investors, even if the average level is consistent with their expectations.

Fixed Rate Notes

A holder of Fixed Rate Notes is exposed to the risk that the price of those Notes falls as a result of changes in the current interest rate on the capital markets (the “Market Interest Rate”). While the nominal interest rate of Fixed Rate Notes is fixed during the life of such Notes or during a certain period of time, the Market Interest Rate typically changes on a daily basis. As the Market Interest Rate changes, the price of such Notes moves in the opposite direction. If the Market Interest Rate increases, the price of such Notes typically falls, until the yield of such Notes is approximately equal to the Market Interest Rate. Conversely, if the Market Interest Rate falls, the price of Fixed Rate Notes typically increases, until its yield is approximately equal to the Market Interest Rate. Investors should be aware that movements of the Market Interest Rate could adversely affect the market price of the Notes.

Floating Rate Notes

A key difference between Floating Rate Notes and Fixed Rate Notes is that interest income on Floating Rate Notes cannot be anticipated. Due to varying interest income, investors are not able to determine a definite yield of Floating Rate Notes at the time they purchase them, so that their return on investment cannot be compared with that of investments having longer fixed interest periods. If the terms and conditions of the Notes provide for frequent interest payment dates, investors are exposed to reinvestment risk if market

31 interest rates decline. In other words, investors may reinvest the interest income paid to them only at the relevant lower interest rates then prevailing. At the same time, the Issuer’s ability to issue also Fixed Rate Notes may affect the market value and the secondary market (if any) of the Floating Rate Notes (and vice versa). In addition, if Floating Rate Notes are structured to include caps or floors, or a combination of both or other similar related features, their market values may be even more volatile than those for securities that do not include those features.

Fixed/Floating Rate Notes

Notes to which Condition 8 (Change of Interest Basis) applies may bear interest at a rate that the Issuer may elect to convert from a fixed rate to a floating rate or from a floating rate to a fixed rate. The Issuer’s ability to convert the interest rate will affect the secondary market and the market value of the Notes since the Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate, the spread on such Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate, the fixed rate may be lower than then prevailing rates on its Notes.

Fixed Rate Reset Notes

Fixed Rate Reset Notes will initially bear interest at the Initial Rate of Interest from and including the Interest Commencement Date up to but excluding the First Reset Date. On the First Reset Date, the Second Reset Date (if applicable) and each Subsequent Reset Date (if any) thereafter, the interest rate will be reset to the sum of the applicable Mid-Swap Rate and the applicable Margin as determined by the Calculation Agent on the relevant Reset Determination Date (each such interest rate, a “Subsequent Reset Rate of Interest”). The Subsequent Reset Rate of Interest for any Reset Period could be less than the Initial Rate of Interest or the Subsequent Reset Rate of Interest for prior Reset Periods and could affect the market value of an investment in the Fixed Rate Reset Notes.

Notes issued at a substantial discount or premium

The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest- bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.

The regulation and reform of benchmarks may adversely affect the value of Notes linked to such benchmarks

Interest rates and indices which are deemed to be “benchmarks” (including EURIBOR, LIBOR and the CMS Rate), are the subject of recent national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective whilst others are still to be implemented. These reforms may cause such benchmarks to perform differently from the past, to disappear entirely, or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any Notes linked to such a Benchmark. Subject to various transitional provisions, Regulation (EU) 2016/1011 (the "Benchmarks Regulation") has been in force since 1 January 2018 and applies to the provision of benchmarks, the contribution of input data to a benchmark and the use of a benchmark within the EU. It, among other things, (i) requires benchmark administrators to be authorised or registered (or, if non-EU-based, to be subject to an equivalent regime or otherwise recognised or endorsed) and (ii) prevents certain uses by EU supervised entities (such as the Issuer) of benchmarks of administrators that are not authorised/registered (or, if non-EU based, not deemed equivalent or recognised or endorsed).

The Benchmarks Regulation could have a material impact on any Notes linked to or referencing a benchmark, in particular if the methodology or other terms of the benchmarks are changed in order to comply with the

32 requirements of the Benchmarks Regulation. Such changes could, among other things, have the effect of reducing, increasing or otherwise affecting the volatility of the published rate or level of the benchmark.

Any of the international, national or other proposals for reform or the general increased regulatory scrutiny of benchmarks could increase the costs and risks of administering or otherwise participating in the setting of a benchmark and complying with any such regulations or requirements.

Such factors may have the effect of discouraging market participants from continuing to administer or participate in certain benchmarks, trigger changes in the rules or methodologies used in certain benchmarks or lead to the disappearance of certain benchmarks. Any of the above changes or any other consequential changes as a result of international or national reforms or other initiatives or investigations, could have a material adverse effect on the value of and return on any such Notes.

Investors should consult their own independent advisers and make their own assessment about the potential risks imposed by the Benchmarks Regulation reforms, investigations and licensing issues in making any investment decision with respect to the Notes linked to a benchmark.

Future discontinuance of LIBOR may adversely affect the value of Floating Rate Notes which reference LIBOR

In July 2017, the Chief Executive of the United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it does not intend to continue to persuade, or use its powers to compel, panel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021. The announcement indicates that the continuation of LIBOR on the current basis is not guaranteed after 2021. It is not possible to predict whether, and to what extent, panel banks will continue to provide LIBOR submissions to the administrator of LIBOR going forwards. This may cause LIBOR to perform differently than it did in the past and may have other consequences which cannot be predicted.

Pursuant to the terms and conditions of any applicable Floating Rate Notes or any other Notes whose return is determined by reference to any benchmark, if the Issuer determines at any time that the Relevant Screen Page on which the Reference Rate for such Notes appears has been discontinued or following the adoption of a decision to withdraw the authorisation or registration as set out in Article 35 of the Benchmarks Regulation or any other benchmark administrator previously authorised to publish any Replacement Reference Rate under any applicable laws or regulations, the Issuer will appoint a Reference Rate Determination Agent to determine a Replacement Reference Rate, as well as any necessary changes to the business day convention, the definition of business day, the interest determination date, the day count fraction, and any method for obtaining the Replacement Reference Rate, including any adjustment factor needed to make such Replacement Reference Rate comparable to the Relevant Screen Page on which the Reference Rate appears. Such Replacement Reference Rate and any such other changes will (in the absence of manifest error) be final and binding on the Noteholders, the Issuer, the Calculation Agent and the Paying Agents and any other person, and will apply to the relevant Notes without any requirement that the Issuer obtain consent of any Noteholders.

The Replacement Reference Rate may have no or very limited trading history and accordingly its general evolution and/or interaction with other relevant market forces or elements may be difficult to determine or measure. In addition, the replacement rate may perform differently from the discontinued benchmark. For example, there are currently proposals to replace LIBOR (which generally has a term of one, three or six months) with an overnight rate. Similarly, proposals have been made to use a rate on highly rated government obligations to replace LIBOR, which is currently based on interbank lending rates and carries an implicit element of credit risk of the banking sector. These and other changes could significantly affect the performance of an alternative rate compared to the historical and expected performance of LIBOR or any other relevant benchmark. There can be no assurance that any adjustment factor applied to any Series of

33

Notes will adequately compensate for this impact. This could in turn affect the rate of interest on, and trading value of, the relevant Notes.

If the Reference Rate Determination Agent is unable to determine an appropriate Replacement Reference Rate for any discontinued Reference Rate or a decision to withdraw the authorisation or registration as set out in Article 35 of the Benchmarks Regulation or any other benchmark administrator previously authorised to publish any Replacement Reference Rate under any applicable laws or regulations is adopted but for any reason a Replacement Reference Rate is not determined, then the provisions for the determination of the rate of interest on the affected Notes will not be changed. In such cases, the Terms and Conditions of the Notes provide that the relevant Interest Rate on such Notes will be the last Reference Rate available for the immediately preceding Interest Period on the Relevant Screen Page as determined by the Calculation Agent, effectively converting such Notes into fixed rate Notes. As a result, in a rising interest rate environment, holders of such Notes will not benefit from any increase in rates and the trading value of such Notes could therefore be adversely affected.

Risks relating to Senior Preferred Notes and Senior Non-Preferred Notes

Regulatory classification of the Senior Preferred Notes and Senior Non-Preferred Notes

Both Senior Preferred Notes and Senior Non-Preferred Notes may be intended to qualify on issue as eligible liabilities for the purposes of meeting the Issuer’s MREL Requirements (as defined in Condition 3 (Definitions and Interpretation)). However, the MREL Requirements do not currently require (or customarily provide for) a confirmation prior to the issuance of Senior Preferred Notes and Senior Non-Preferred Notes that they will qualify as MREL eligible liabilities (either in whole or in part) on issue. Although it is the Issuer’s expectation that both Senior Preferred Notes and Senior Non-Preferred Notes qualify as eligible liabilities for the purposes of meeting the Issuer’s MREL Requirements, the Issuer may be subject to limits as to the quantum of Notes which may be included in its MREL eligible liabilities and, in any case, there can be no representation that any such Notes are or will remain MREL eligible liabilities during their life.

Optional redemption following an MREL Disqualification Event

If at any time an MREL Disqualification Event occurs and is continuing in relation to any Series of Senior Preferred Notes or Senior Non-Preferred Notes, if the applicable Final Terms for such Notes specify that Issuer Call due to MREL Disqualification Event is applicable, the Issuer may, at its option, redeem all but not some only of the Notes of such Series at the price set out in the relevant Final Terms, together with any outstanding interest in the circumstances described in, and in accordance with, Condition 10(d) (Redemption and Purchase – Redemption due to MREL Disqualification Event). Any redemption of those Notes is subject to compliance by the Issuer with any conditions to such redemption prescribed by the MREL Requirements at the relevant time (including any requirements applicable to such redemption due to the qualification of such Notes at such time as eligible liabilities available to meet MREL Requirements). See also “- Early redemption and purchase may be restricted” below for further information.

Subject to the provisions of the definition of “MREL Disqualification Event” set forth in Condition 3 (Definitions and Interpretation), an MREL Disqualification Event shall be deemed to have occurred if, by reason of the introduction of, or a change in, the MREL Requirements, which was not reasonably foreseeable by the Issuer at the Issue Date of the relevant Series of Senior Preferred Notes, all or part of the aggregate outstanding nominal amount of such Series of Notes is or will be excluded fully or partially from the liabilities that are eligible to meet the MREL Requirements.

If the Senior Preferred Notes or Senior Non-Preferred Notes (as the case may be) are to be so redeemed, there can be no assurance that Noteholders will be able to reinvest the amounts received upon redemption at a rate that will provide the same rate of return as their investment in the Notes to be redeemed. In addition, the

34 occurrence of an MREL Disqualification Event could result in a decrease in the market price of the Notes of such Series as during any period in which there is an actual or perceived increase in the likelihood that the Issuer may exercise such rights to redeem those Notes, the price of the Notes may be adversely impacted.

Early redemption and purchase may be restricted

Any early redemption or purchase of Senior Preferred Notes or Senior Non-Preferred Notes is subject to compliance by the Issuer with any conditions or restrictions to such redemption or repurchase prescribed at the relevant time under the MREL Requirements (including any requirements applicable to such redemption or repurchase due to the qualification of the relevant Notes at such time as liabilities eligible to meet MREL Requirements).

In addition, under the Banking Reform Package, the early redemption or purchase of Senior Preferred Notes or Senior Non-Preferred Notes which qualify as eligible liabilities to meet MREL Requirements at the relevant time is subject to the prior approval of the Relevant Authority, which will only be granted if:

• earlier or at the same time as such early redemption or purchase of those Notes, the Issuer replaces them with own funds or eligible liabilities of an equal or higher quality at terms that are sustainable for the income capacity of the Issuer;

• the Issuer has demonstrated to the satisfaction of the Relevant Authority that its own funds and eligible liabilities would, following such redemption or purchase, exceed the requirements required under CRD IV or BRRD or, in either case, any relevant provisions of Italian law implementing CRD IV or, as appropriate, BRRD by a margin that the Relevant Authority considers necessary; or

• the Issuer has demonstrated to the satisfaction of the Relevant Authority that the partial or full replacement of the eligible liabilities with own funds instruments is necessary to ensure compliance with the own funds requirements laid down in the CRR and in the CRD IV for continuing authorisation.

The Banking Reform Package have only recently been enacted and may be subject to change prior to their detailed implementation.

The Issuer’s obligations under Senior Non-Preferred Notes rank junior to unsecured and unsubordinated non- preferred obligations of the Issuer

The Issuer's obligations under Senior Non-Preferred Notes will be unsecured, unsubordinated and non- preferred obligations and will rank junior to Senior Preferred Notes and any other unsecured and unsubordinated obligations of the Issuer which rank, or are expressed to rank by their terms, senior to the Senior Non-Preferred Notes. Although Senior Non-Preferred Notes may pay a higher rate of interest than comparable unsecured obligations of the Issuer which rank senior to the Senior Non-Preferred Notes, there is a real risk that an investor in Senior Non-Preferred Notes will lose all or some of its investment should the Issuer be judged by the Relevant Authority to be failing or likely to fail, or insolvent. In addition, except where the Issuer is wound up or dissolved, holders of Senior Non-Preferred Notes are not entitled to accelerate the maturity of their Senior Non-Preferred Notes.

Senior Non-Preferred Notes are complex instruments that may not be suitable for certain investors

Senior Non-Preferred Notes are novel and complex financial instruments and may not be a suitable investment for certain investors. Each potential investor in such Notes should determine the suitability of such investment in light of its own circumstances and have sufficient financial resources and liquidity to bear the risks of an investment in the Senior Non-Preferred Notes, including the possibility that the entire amount invested in the Senior Non-Preferred Notes could be lost. A potential investor should not invest in the Senior Non-Preferred Notes unless it has the knowledge and expertise (either alone or with a financial advisor) to

35 evaluate how Senior Non-Preferred Notes will perform under changing conditions, the resulting effects on the market value of the Senior Non-Preferred Notes, and the impact of this investment on the potential investor’s overall investment portfolio.

Senior Non-Preferred Notes are new types of instruments for which there is no trading history

The issue of Senior Non-Preferred Notes has been provided for under relatively recent legislation which took effect on 1 January 2018. As a result, Senior Non-Preferred Notes are relatively new types of instruments and any prospective investors should be aware that, as at the date of this Base Prospectus, no interpretation of the relevant legislation has been issued by any court or regulator and no regulations have been issued by the Bank of Italy. Consequently, regulations and/or official interpretations relating to the above may be issued in the future by the Bank of Italy or another regulatory authority, the impact of which cannot be predicted by the Issuer as at the date of this Base Prospectus.

In addition, market participants, including credit rating agencies, are in the initial stages of evaluating the risks associated with senior non-preferred obligations. The credit ratings assigned to senior non-preferred securities such as the Senior Non-Preferred Notes may change as the rating agencies refine their approaches, and the value of such securities may be particularly volatile as the market becomes more familiar with them. It is possible that, over time, the credit ratings and value of senior non-preferred securities such as the Senior Non-Preferred Notes will be lower than those expected by investors at the time of issuance of the Senior Non- Preferred Notes. If so, investors may incur losses in respect of their investments in the Senior Non-Preferred Notes.

Credit rating assigned to the Senior Non-Preferred Notes

The Senior Non-Preferred Notes, upon issue, may be rated by one or more credit rating agencies. Such credit rating may be lower than the Issuer's senior unsecured credit rating, to reflect the increased risk of loss in the event of the Issuer’s insolvency. As a result, Senior Non-Preferred Notes are likely to be rated by one or more credit rating agencies close to the level of subordinated debt and as such may be subject to a higher risk of price volatility than the Senior Preferred Notes. In addition, the rating may change in the future depending on the assessment, by one or more credit rating agencies, of the impact on the different instrument classes resulting from the modified liability structure following the issuance of the Senior Non-Preferred Notes. Moreover, rating organisations may seek to rate any Senior Non-Preferred Notes on an “unsolicited” basis and, if such “unsolicited ratings” are lower than the comparable ratings assigned to such Senior Non-Preferred Notes on a “solicited” basis, such shadow or unsolicited ratings could have an adverse effect on the value of any Senior Non-Preferred Notes.

Risks relating to Subordinated Notes

The Issuer’s obligations under Subordinated Notes are subordinated

If the Issuer is declared insolvent and a winding-up is initiated, it will be required to pay the holders of senior debt and holders of all other obligations which rank senior to the Subordinated Notes (including holders of Senior Preferred Notes and Senior Non-Preferred Notes) and meet its obligations to all such creditors in full before it can make any payments on the Subordinated Notes. If this occurs, the Issuer may not have enough assets remaining after these payments to pay amounts due under the Subordinated Notes. As a result, although Subordinated Notes may pay a higher rate of interest than comparable notes or other obligations of the Issuer which are not subordinated, there is a real risk that an investor in Subordinated Notes will lose all or some of its investment should the Issuer become failing or likely to fail, or insolvent. In addition, except where the Issuer is wound up or dissolved, holders of Subordinated Notes are not entitled to accelerate the maturity of their Subordinated Notes, including in respect of claims for amounts then due and payable on their Subordinated Notes.

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Regulatory classification of the Subordinated Notes

The intention of the Issuer is for Subordinated Notes to qualify on issue as Tier 2 Capital for the purposes of the Applicable Banking Regulations. The Applicable Banking Regulations do not require (or customarily provide for) a confirmation prior to the issuance of Subordinated Notes that such Subordinated Notes will qualify as Tier 2 Capital on issue. Although it is the Issuer’s expectation that any such Subordinated Notes qualify as Tier 2 Capital, there can be no representation that this is or will remain the case during the life of the Subordinated Notes or that, if relevant, the Subordinated Notes will be grandfathered under the implementation of any future EU capital requirement regulations.

Optional redemption of the Subordinated Notes following a Tier 2 Disqualification Event

If at any time a Tier 2 Disqualification Event occurs and is continuing in relation to any Series of Subordinated Notes, the Issuer may, at its option, redeem all but not some only of the Subordinated Notes of such Series at the price set out in the relevant Final Terms, together with any outstanding interest in the circumstances described in, and in accordance with, Condition 10(c) (Redemption and Purchase – Redemption of Subordinated Notes due to a Tier 2 Disqualification Event). Any redemption of Subordinated Notes is subject to compliance by the Issuer with any conditions to such redemption prescribed by the Applicable Banking Regulations at the relevant time (including Articles 77(b) and 78 of the CRR). See “Risk relating to Subordinated Notes - Early redemption and purchase of the Subordinated Notes may be restricted” below for further information.

Subject to the provisions of the definition of “Tier 2 Disqualification Event” set forth in Condition 3 (Definitions and Interpretation), a Tier 2 Disqualification Event shall occur if there is any change (or pending change which the Relevant Authority considers to be sufficiently certain) in the regulatory classification of the Subordinated Notes from their classification on the Issue Date that results, or would be likely to result, in their exclusion in full or, to the extent permitted under the Applicable Banking Regulations, in part, from the Tier 2 Capital of the Issuer or, where applicable in accordance with the Applicable Banking Regulations, a reclassification as a lower quality form of Own Funds.

If the Subordinated Notes are to be so redeemed, there can be no assurance that Noteholders will be able to reinvest the amounts received upon redemption at a rate that will provide the same rate of return as their investment in the Subordinated Notes. In addition, the occurrence of a Tier 2 Disqualification Event could result in a decrease in the market price of the Subordinated Notes of such Series as during any period in which there is an actual or perceived increase in the likelihood that the Issuer may exercise such rights to redeem the Subordinated Notes, the price of the Notes may be adversely impacted.

Early redemption and purchase of the Subordinated Notes may be restricted

The Applicable Banking Regulations prescribe certain conditions for the granting of permission by the Relevant Authority to a request by the Issuer to redeem a Series of Subordinated Notes prior to their stated maturity or repurchase the Subordinated Notes. Any early redemption or purchase of Subordinated Notes is subject to compliance by the Issuer with any conditions to such redemption or purchase set out in the Applicable Banking Regulations at the relevant time and to the other provisions set out in Condition 10(m).

Loss absorption at the point of non-viability of the Issuer

Investors in Subordinated Notes should be aware that, in addition to the general bail-in tool under the Bank Recovery and Resolution Directive (described in further detail in “- The Bank Recovery and Resolution Directive may affect Notes” below), resolution authorities have further powers under the BRRD to write down permanently or convert into equity capital instruments such as Subordinated Notes at the point of non- viability of the financial institution or the group and before any other resolution action is taken (“non- viability loss absorption”). Any shares issued to holders of Subordinated Notes upon any such conversion

37 into equity may also be subject to any application of the general bail-in tool. For the purposes of the application of any non-viability loss absorption measure, the point of non-viability under the BRRD is the point at which the relevant authority determines that the institution (or group) meets the conditions for resolution (but no resolution action has yet been taken) or that the institution (or group) will no longer be viable unless the relevant capital instruments (such as Subordinated Notes) are written-down or converted or extraordinary public support is to be provided. For further information, see “- Risks relating to the Issuer - Uniform framework for recovery and resolution of credit institutions” above.

Risks related to Notes generally

Set out below is a brief description of certain risks relating to the Notes generally:

The Bank Recovery and Resolution Directive may affect Notes

As described in “- Risks relating to the Issuer - Uniform framework for recovery and resolution of credit institutions” above, the Bank Recovery and Resolution Directive gives wide powers to governments aimed at addressing banking crises pre-emptively in order to safeguard financial stability and minimise taxpayers’ exposure to losses. These include the so-called “bail-in tool”, by which resolution authorities would have the power to write down the claims relating to the liabilities of a failing institution that are eligible for bail-in and/or to convert such liabilities into equity. In addition to the bail-in tool, the BRRD provides for additional resolution tools such as: (1) the sale of business assets or shares of the entity subject to resolution; (2) the establishment of a bridging organisation; and (3) the separation of the unimpaired assets of the failing organisation from those which are deteriorated or impaired.

The BRRD has required Member States to modify their national insolvency regimes so that deposits of natural persons and micro, small and medium-sized enterprises in excess of the coverage level contemplated by deposit guarantee schemes created pursuant to Directive 2014/49/EU have a ranking in normal insolvency proceedings which is higher than the ranking which applies to claims of ordinary, unsecured, non-preferred creditors (as well as unsecured, subordinated creditors), such as holders of the Notes. Furthermore, the BRRD does not prevent Member States, including Italy, from amending national insolvency regimes to provide other types of creditors, such as holders of corporate deposits or other operating liabilities of the Issuer with rankings in insolvency higher than ordinary, unsecured, non-preferred creditors, as well as unsecured, subordinated creditors (such as holders of the Notes). In this respect, Italian Legislative Decree No. 181/2015 has amended the creditor hierarchy in the case of admission of Italian banks and investment firms to liquidation proceedings (and therefore the hierarchy which will apply in order to assess claims pursuant to the safeguard provided for in the BRRD as described above), by providing that, as from 1 January 2019, all deposits other than those protected by the deposit guarantee scheme and excess deposits of individuals and micro, small and medium-sized enterprises (which benefit from the super-priority required under Article 108 of the BRRD) will benefit from priority over senior unsecured liabilities, albeit with a ranking which is lower than that provided for deposits held by individuals and micro, small and medium-sized enterprises exceeding the coverage limit of the deposit guarantee scheme.

As a result, significant amounts of liabilities that previously would have ranked pari passu with the Senior Preferred Notes under the national insolvency regime in Italy will be ranked higher than the Notes in normal insolvency proceedings and, on application of the general bail-in tool, such creditors will be written down or converted into equity after the Notes, meaning that holders of the Notes will therefore be subject to greater losses than the claims of other creditors. Furthermore, the right of holders of the Notes have only very limited rights to challenge and/or seek a suspension of any decision by resolution authorities or to have it reviewed by a judicial or administrative process or otherwise.

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In addition to the general bail-in tool, the BRRD contemplates that Subordinated Notes may be subject to a write-down or conversion into common shares at the point of non-viability of the Issuer should the Bank of Italy, the SRB or other authority or authorities having prudential oversight of the Issuer at the relevant time exercise the power to do so (for further information, see “Risks relating to Subordinated Notes - Loss absorption on at the point of non-viability of the Issuer” above).

The exercise of any power under the BRRD or any suggestion of such exercise taking place could, therefore, have a material adverse effect on the rights of Noteholders, the price or value of their investment in any Notes and/or the ability of the Issuer to satisfy its obligations under any Notes.

Notes may be subject to substitution and modification without Noteholder consent

If Substitution or Modification of the Notes is specified as being applicable in the relevant Final Terms:

• in cases where a Tier 2 Disqualification Event or a Tax Law Change has occurred and is continuing (with respect to Subordinated Notes) or an MREL Disqualification Event or a Tax Law Change has occurred and is continuing (with respect to Senior Preferred Notes and Senior Non- Preferred Notes); and/or

• with respect to all Notes, in order to ensure the effectiveness and enforceability of the Bail-In Power in accordance with Condition 23 (Contractual Recognition of Bail-In Power) or pursuant to applicable law, the Issuer shall be entitled to vary the terms of the Notes of such Series, or substitute all (but not some only) of such Notes, provided that certain conditions set out in the Terms and Conditions of the relevant Series of Notes are met. No assurance can be given as to whether any changes resulting from the substitution or modification of such Notes (including, without limitation, any changes to governing law and/or jurisdiction) will negatively affect any particular Noteholder. In addition, the tax and stamp duty consequences of holding such substituted or varied notes could be different for some categories of Noteholders from the tax and stamp duty consequences for them of holding the notes prior to such substitution or variation.

The Notes have limited Events of Default and remedies

The Events of Default in respect of Notes, being events upon which, in certain circumstances, the holders of the Notes may declare the Notes to be immediately due and repayable, are limited to circumstances in which the Issuer becomes subject to winding-up or an analogous event as set out in Condition 13 (Events of Default). Accordingly, other than following the occurrence of an Event of Default, even if the Issuer fails to meet any of its obligations under the Notes, including the payment of any interest, the holders of the Notes will not have the right of acceleration of principal. Notwithstanding the foregoing, the Issuer will not, by virtue of the institution of any such proceedings, be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it.

Waiver of set-off

As specified in Condition 4 (Status), the holder of a Note (whether a Senior Note or a Subordinated Note) will be deemed to have unconditionally and irrevocably waived any right of set-off, counterclaim, abatement, retention or other similar remedy which it might otherwise have under the laws of any jurisdiction in respect of such Note.

Redemption for tax reasons

In the event that the Issuer would be obliged to increase the amounts payable in respect of any Notes due to any withholding or deduction for or on account of, any present or future taxes, duties, assessments or

39 governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Italy or any political subdivision thereof or any authority therein or thereof having power to tax, the Issuer may redeem all outstanding Notes in accordance with the Conditions. In such circumstances an investor may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the relevant Notes.

Change of law

The conditions of the Notes are expressed to be governed by English law or, as regards the loss-absorption provisions described in Condition 4 (Status) and Condition 23 (Contractual Recognition of Bail-In Power) Italian law, and in both cases have effect from the date of this Base Prospectus. No assurance can be given as to the impact of any possible judicial decision or change to English law, Italian law or their respective administrative practice after the date of this Base Prospectus.

Noteholders’ meetings

The Terms and Conditions of the Notes and the Agency Agreement contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally, which may include modifications of the Terms and Conditions or waivers in relation to rights against the Issuer. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.

The Notes are not covered by the Italian Inter-Bank Fund for the Protection of Deposits

The obligations in respect of the Notes are not covered by the Fondo Interbancario di Tutela dei Depositi (Italian Inter-Bank Fund for the Protection of Deposits).

Reliance on clearing systems

Notes issued under the Programme may be represented by one or more Global Notes. Such Global Notes will be deposited with a common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the relevant Global Note, investors will not be entitled to receive definitive Notes. Euroclear and Clearstream, Luxembourg will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes, investors will be able to trade their beneficial interests only through Euroclear and Clearstream, Luxembourg. While the Notes are represented by one or more Global Notes, the Issuer will discharge its payment obligations under the Notes by making payments to the common depositary or common safekeeper for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the relevant Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes. Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear and Clearstream, Luxembourg to appoint appropriate proxies.

Delisting of the Notes

Application has been made for Notes issued under the Programme to be listed on the official list and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange and Notes issued under the Programme may also be admitted to trading, listing and/or quotation by any other listing authority, stock exchange or quotation system (each, a “listing”), as specified in the relevant Final Terms. Such Notes may subsequently be delisted despite the best efforts of the Issuer to maintain such listing and, although no assurance is made as to the liquidity of the Notes as a result of listing, any delisting of the Notes may have a material effect on a Noteholder’s ability to resell the Notes on the secondary market.

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Denominations and restrictions on exchange for Definitive Notes

Notes may in certain circumstances be issued in denominations including (i) a minimum denomination of €100,000 or, in the case of Senior Non-Preferred Notes, €250,000 (or, in each case the equivalent in another currency) (the “Minimum Denomination”) and (ii) an amount which is greater than the Minimum Denomination but which is an integral multiple of a smaller amount (such as €1,000). Where this occurs, Notes may be traded in amounts in excess of the Minimum Denomination that are not integral multiples of the Minimum Denomination. In such a case, a holder who as a result of trading such amounts, holds a principal amount of less than the Minimum Denomination will not receive a Definitive Note in respect of such holding (should Definitive Notes be printed) and would need to purchase a principal amount of Notes such that it holds an amount equal to an integral multiple of the Minimum Denomination.

Risks related to the market generally

Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:

The secondary market generally

Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes. In addition, the Notes might not be listed on a Stock Exchange or admitted to trading on a Regulated Market and, in these circumstances, pricing information may be more difficult to obtain and the liquidity and market price of the Notes may be adversely affected.

Exchange rate risks and exchange controls

The Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risks relating to currency conversions if an investor’s financial activities are denominated principally in a currency or currency unit (the “Investor’s Currency”) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An appreciation in the value of the Investor’s Currency relative to the Specified Currency would decrease (i) the Investor’s Currency-equivalent yield on the Notes, (ii) the Investor’s Currency-equivalent value of the principal payable on the Notes and (iii) the Investor’s Currency-equivalent market value of the Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.

Credit ratings may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. The ratings do not address, inter alia, the following: (i) the likelihood that the principal will be redeemed on the Notes, as expected, on the scheduled redemption dates; (ii) possibility of the imposition of Italian or European withholding taxes; (iii) the marketability of the Notes, or any market price for the Notes; or (iv) whether an investment in the Notes is a suitable investment.

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In general, European regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA Regulation (and such registration has not been withdrawn or suspended, subject to transitional provisions that apply in certain circumstances). Such general restriction will also apply in the case of credit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings are endorsed by an EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended, subject to transitional provisions that apply in certain circumstances). The list of registered and certified rating agencies published by ESMA on its website (at https://www.esma.europa.eu/supervision/credit-rating-agencies/risk) in accordance with the CRA Regulation is not conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between certain supervisory measures being taken against a relevant rating agency and the publication of the updated ESMA list.

A credit rating is not a recommendation to buy, sell or hold securities and may be revised, placed on “creditwatch”, suspended or withdrawn by the assigning rating agency at any time. There is no assurance that any such ratings will continue for any period of time or that they will not be reviewed, revised, suspended or withdrawn entirely by any of the rating agencies as a result of changes in or unavailability of information or if, in the sole judgement of the rating agencies, the credit quality of the Notes has declined or is in question. A qualification, downgrade or withdrawal of any of the ratings mentioned above may have an impact upon the value of the Notes.

Legal investment considerations may restrict certain investments

The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (i) Notes are legal investments for it, (ii) Notes can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.

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GENERAL DESCRIPTION OF THE PROGRAMME

This section is a general description of the Programme, as provided under Article 22.5 (3) of Regulation (EC) 809/2004 (as amended) implementing the Prospectus Directive. This description does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Base Prospectus and, in relation to the terms and conditions of any particular Tranche of Notes, the Terms and Conditions of the Notes of such Tranche and the relevant Final Terms. Words and expressions defined in “Forms of the Notes” or “Terms and Conditions of the Notes” below have the same meanings in this general description of the Programme.

Issuer Banca Sella S.p.A. Issuer’s Legal Entity Identifier 549300I7OIUB41P86L19 (LEI) Arranger Banca IMI S.p.A. Dealers Banca IMI S.p.A. and any other Dealer appointed from time to time by the Issuer, either generally in respect of the Programme or in relation to a particular Tranche of Notes. Fiscal Agent Deutsche Bank AG, London Branch Luxembourg Listing Agent Deutsche Bank Luxembourg S.A. Listing, Approval and Admission to The CSSF has approved this Base Prospectus as a base prospectus in Trading compliance with the Prospectus Directive. Application has also been made for Notes issued under the Programme to be listed on the official list of and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange. Notes may be listed or admitted to trading (as the case may be) on other or further stock exchanges or markets agreed between the Issuer and the relevant Dealer in relation to each Series. Notes may also be issued which are neither listed nor admitted to trading on any market. Clearing Systems Euroclear and/or Clearstream, Luxembourg and/or, in relation to any Tranche of Notes, any other clearing system as may be specified in the relevant Final Terms. Programme Amount Up to €1,000,000,000 (or its equivalent in other currencies) aggregate principal amount of Notes outstanding at any one time. The maximum aggregate principal amount of Notes outstanding under the Programme may be increased in compliance with the provisions of the Dealer Agreement. Issuance in Series Notes will be issued in series (each, a “Series”). Each Series may comprise one or more tranches (“Tranches” and, each, a “Tranche”) issued on different issue dates. The Notes of each Series will all be subject to identical terms, except that the issue date, the issue price, the denomination and the amount of the first payment of interest may be different in respect of different Tranches. The Notes of each Tranche will all be subject to identical terms in all respects save that a Tranche may comprise Notes of different denominations. Final Terms or Final Terms will be prepared in respect of each Tranche of Notes a Drawdown Prospectus copy of which will, in the case of Notes to be listed on the Official

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List of the Luxembourg Stock Exchange and admitted to trading on the regulated market of the Luxembourg Stock Exchange, be filed with the CSSF and delivered to the Luxembourg Stock Exchange on or before the date of issue of such Notes. Each Tranche will be the subject of Final Terms which, for the purposes of that Tranche only, completes the Terms and Conditions of the Notes and this Base Prospectus and must be read in conjunction with this Base Prospectus. The terms and conditions applicable to any particular Tranche of Notes are the Terms and Conditions of the Notes as completed by the relevant Final Terms. In the event of any inconsistency between the Terms and Conditions and the relevant Final Terms, the relevant Final Terms shall prevail. In addition, where the Issuer agrees with any Dealer to issue Notes in a form not contemplated in the section of this Base Prospectus entitled “Form of Final Terms”, a drawdown prospectus will be made available and will describe the effect of the agreement in relation to such Notes. Forms of Notes Notes may only be issued in bearer form. Each Tranche of Notes will initially be in the form of either a Temporary Global Note or a Permanent Global Note, in each case as specified in the relevant Final Terms. Each Global Note which is specified in the relevant Final Terms as a Classic Global Note (each a “Classic Global Note” or “CGN”) will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and each Global Note which is specified in the relevant Final Terms as a New Global Note (each a “New Global Note” or “NGN”) will be deposited on or around the relevant issue date with a common safekeeper for Euroclear and/or Clearstream, Luxembourg. New Global Notes are intended to be held in a manner which would allow Eurosystem eligibility, such eligibility depending upon satisfaction of the Eurosystem eligibility criteria. Each Temporary Global Note will be exchangeable for a Permanent Global Note or, if so specified in the relevant Final Terms, for Definitive Notes. If the TEFRA D Rules are specified in the relevant Final Terms as being applicable, certification as to non-U.S. beneficial ownership will be a condition precedent to any exchange of an interest in a Temporary Global Note or receipt of any payment of interest in respect of a Temporary Global Note. Each Permanent Global Note will be exchangeable for Definitive Notes in accordance with its terms. Definitive Notes will, if interest-bearing, have Coupons attached and, if appropriate, a Talon for further Coupons. Currencies Notes may be denominated in Euro or in any other currency or currencies, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. Payments in respect of Notes may, subject to such compliance, be made in and/or linked to any currency or currencies other than the currency in which such

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Notes are denominated. Status of the Notes Notes issued by the Issuer may be either senior preferred (“Senior Preferred Notes”), senior non-preferred (“Senior Non-Preferred Notes”) or subordinated (“Subordinated Notes”) as described below. Status of Senior Preferred Notes Senior Preferred Notes will constitute direct, unconditional, unsubordinated, unsecured and preferred obligations of the Issuer and will rank pari passu among themselves and (save for certain obligations required to be preferred by law) equally with all other unsecured and unsubordinated obligations of the Issuer, present and future (other than obligations ranking junior to the Senior Preferred Notes from time to time (including Senior Non-Preferred Notes and any further obligations permitted by law to rank junior to the Senior Preferred Notes following the Issue Date) if any) from time to time outstanding, as described in Condition 4(a) (Status of the Senior Preferred Notes). Status of Senior Non-Preferred The Senior Non-Preferred Notes will constitute direct, unconditional, Notes unsubordinated, unsecured and non-preferred obligations of the Issuer and will rank junior to all other unsecured and unsubordinated obligations of the Issuer which rank, or are expressed to rank by their terms, senior to the Senior Non-Preferred Notes, pari passu without any preference among themselves, and with all other present or future obligations of the Issuer which do not rank or are not expressed by their terms to rank junior or senior to the relevant Senior Non- Preferred Notes and in priority to any subordinated instruments and to the claims of shareholders of the Issuer, pursuant to Article 91, paragraph 1-bis, letter c-bis of the TUB, as amended from time to time, as described in Condition 4(b) (Status of the Senior Non- Preferred Notes). Status of Subordinated Notes Subordinated Notes will constitute direct, unsecured and subordinated obligations of the Issuer and will rank pari passu and without any preference among themselves and after all unsubordinated and unsecured creditors (including depositors and holders of Senior Preferred Notes and Senior Non-Preferred Notes) of the Issuer but pari passu with all of the present and future subordinated obligations of the Issuer that are not expressed by their terms to rank junior to or senior to the Subordinated Notes, and in priority to the claims of shareholders of the Issuer, as described in Condition 4(c) (Status of the Subordinated Notes). Issue Price Notes may be issued at any price, as specified in the relevant Final Terms. The price and amount of Notes to be issued under the Programme will be determined by the Issuer and the relevant Dealer(s) at the time of issue in accordance with prevailing market conditions. Maturities Any maturity, subject (in relation to specific currencies) to compliance with all applicable legal and/or regulatory and/or central bank requirements.

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In the case of Senior Non-Preferred Notes, pursuant to Article 12-bis, paragraph 1, letter a), of the TUB, the Maturity Date shall not fall earlier than twelve months after their Issue Date. In the case of Subordinated Notes, unless otherwise permitted under Applicable Banking Regulations applicable to the issue of Subordinated Notes by the Issuer, Subordinated Notes must have a minimum maturity of five years (or, if issued for an indefinite duration, redemption of such Notes may only occur five years after their date of issue). Notes having a maturity of less than one year Where Notes have a maturity of less than one year and either (a) the issue proceeds are received by the Issuer in the United Kingdom or (b) the activity of issuing the Notes is carried on from an establishment maintained by the Issuer in the United Kingdom, such Notes must: (i) have a minimum redemption value of £100,000 (or its equivalent in other currencies) and be issued only to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses; or (ii) be issued in other circumstances which do not constitute a contravention of section 19 of the Financial Services and Markets Act 2000 by the Issuer. According to the Luxembourg Prospectus Law, the CSSF is not competent to approve prospectuses for the admission of money market instruments (as defined in the Financial Services and Markets Act 2000) to trading on a regulated market situated or operating within the territory of Luxembourg having a maturity at issue of less than 12 months and complying also with the definition of securities in the Financial Services and Markets Act 2000. Redemption Unless previously redeemed or purchased and cancelled in accordance with the Conditions, each Note will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the relevant Final Terms. The Final Redemption Amount will always be equal to at least 100 per cent. of the aggregate principal amount of the Notes. The relevant Final Terms will indicate either that the relevant Notes cannot be redeemed prior to their stated maturity (other than for taxation reasons or following an Event of Default or due to a Tier 2 Disqualification Event) or that such Notes will be redeemable at the option of the Issuer and/or the Noteholders upon giving notice to the Noteholders or the Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the Issuer and the relevant Dealer. The redemption at maturity of Subordinated Notes shall be subject to the prior approval of the Relevant Authority, to the extent required by

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the Applicable Banking Regulations. Amounts that would otherwise be payable on the due date will continue to bear interest as provided in the Conditions of the Notes and the Agency Agreement. Optional Redemption Notes may be redeemed before their stated maturity at the option of the Issuer (either in whole or in part) and/or (where the Notes are Senior Preferred Notes and Senior Non-Preferred Notes) the Noteholders to the extent (if at all) specified in the relevant Final Terms and subject to all relevant legal and regulatory requirements. In the case of Subordinated Notes, early redemption may occur only with the prior approval of the Relevant Authority. In the case of Senior Non-Preferred Notes only, any redemption is subject to compliance by the Issuer with any conditions and restrictions to such redemption or repurchase prescribed at the relevant time under Articles 12-bis and 91, paragraph 1-bis, letter c-bis of the TUB and any relevant regulation which may be enacted from time to time for the purposes of implementing such provisions, and/or any laws, regulations or guidelines implementing the rules set forth in the Bank Creditor Hierarchy Directive. Tax or Regulatory Redemption Except as described in “Optional Redemption” above, early redemption will only be permitted for tax or, in the case of Subordinated Notes, due to a Tier 2 Disqualification Event as described in Condition 10(b) (Redemption and Purchase – Redemption for tax reasons) and Condition 10(c) (Redemption and Purchase – Redemption of Subordinated Notes due to a Tier 2 Disqualification Event). In addition, in the case of Senior Preferred Notes or Senior Non- Preferred Notes, if an Issuer Call due to a MREL Disqualification Event is specified in the relevant Final Terms as being applicable, where the Issuer determines that a MREL Disqualification Event has occurred and is continuing with respect to a Series of Senior Preferred Notes or Senior Non-Preferred Notes, any such Series may be redeemed at the option of the Issuer in whole, but not in part as described in Condition 10(d) (Redemption due to a MREL Disqualification Event). Interest Notes may be interest-bearing or non-interest bearing. Interest (if any) may accrue at (i) a fixed rate (ii) a floating rate (iii) a fixed rate of interest for an initial period and thereafter by reference to a fixed rate of interest recalculated on certain dates and by reference to a mid- market swap rate, as adjusted for any applicable margin, in each case, as may be specified in the relevant Final Terms. The method of calculating interest may vary during the lifetime of the relevant Series, in each case, as may be specified in the relevant Final Terms. Denominations Notes will be issued in such denominations as may be specified in the relevant Final Terms, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements and save that the minimum denomination of each Note admitted to trading on a Regulated Market within the European Economic Area or offered to

47

the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive will be €100,000 (or, where the Notes are denominated in a currency other than euro, the equivalent amount in such other currency). If the Final Terms so specify, and for so long as the Notes are represented by the Temporary Global Note or Permanent Global Note and the relevant clearing system(s) so permit, Notes may be issued in denominations of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000. Senior Non-Preferred Notes will have a denomination of at least €250,000 (or, where the Senior Non-Preferred Notes are denominated in a Specified Currency other than euro, the equivalent amount in such other Specified Currency). Negative Pledge The Notes will not have the benefit of a negative pledge. Taxation All payments of principal and interest in respect of the Notes and the Coupons by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any taxes, duties, assessments or governmental charges of whatsoever nature (“Taxes”) imposed, or levied, collected, withheld or assessed by the Republic of Italy or any political subdivision or any authority thereof or therein having power to tax, unless the withholding or deduction of such Taxes is required by law. In that event, the Issuer shall, save in certain limited circumstances provided in Condition 12 (Taxation) including, inter alia, the cases where the substitute tax (imposta sostitutiva) pursuant to Italian Legislative Decree No. 239 of 1 April 1996 falls due, be required to pay additional amounts to cover the amounts so deducted. See “Taxation” below. Governing Law and Jurisdiction English law, except for Condition 4(b) and (c) (Status), Condition 23 (Contractual Recognition of Bail-In Power) and any non-contractual obligations arising from or connected with those Conditions, which are governed by, and shall be construed in accordance with, Italian law. In addition, the operation of certain Conditions, such as Condition 12 (Taxation), may depend on the application of Italian statute law, its interpretation by the courts and/or the relevant government bodies, and other matters of Italian law. The courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with the Notes (including a dispute relating to the existence, validity or termination of the Notes or any non-contractual obligation arising out of or in connection with the Notes) or the consequences of their nullity. Enforcement of Notes in Global In the case of Global Notes, investors’ rights against the Issuer will be Form supported by a Deed of Covenant dated 11 July 2019, a copy of which will be available for inspection at the specified office of the Fiscal Agent. Ratings Notes issued pursuant to the Programme may be rated or unrated.

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Where a tranche of Notes is rated, such rating will not necessarily be the same as the ratings assigned to the Programme. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. The Final Terms will disclose whether or not each credit rating applied for in relation to the relevant Series of Notes will be (1) issued by a credit rating agency established in the European Union and registered (or which has applied for registration and not been refused) under Regulation (EU) No. 1060/2009, as amended (the “CRA Regulation”), or (2) issued by a credit rating agency which is not established in the European Union but will be endorsed by a credit rating agency which is established in the European Union and registered under the CRA Regulation or (3) issued by a credit rating agency which is not established in the European Union but which is certified under the CRA Regulation. In general, European regulated investors are restricted from using a rating for regulatory purposes unless such rating falls within any of the above categories. Selling Restrictions There are restrictions on the offer, sale and transfer of the Notes in the United States, the European Economic Area (including the Republic of Italy, France, Belgium and the United Kingdom) and Japan and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes. See “Subscription and Sale”. United States Selling Restrictions Regulation S, Category 2. TEFRA C or D or TEFRA Not Applicable, as specified in the relevant Final Terms. Risk Factors There are certain factors that may affect the Issuer’s ability to fulfil its obligations under Notes issued under the Programme. These are set out under “Risk Factors” above and include risks relating to competition and other operating and general banking risks, such as credit risk and interest rate risk. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme and include risks related to the structure of a particular issue of Notes and risks common to the Notes generally. Limited Events of Default The Events of Default in respect of Notes are limited to circumstances in which the Issuer becomes subject to winding-up or an analogous event as set out in Condition 13 (Events of Default). Accordingly, other than following the occurrence of an Event of Default, even if the Issuer fails to meet any of its obligations under the Notes, including the payment of any interest, the holders of the Notes will not have the right of acceleration of principal and the Issuer will not, by virtue of the institution of any such proceedings, be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it. Substitution or Modification If Substitution or Modification of the Notes is specified as being

49 applicable in the relevant Final Terms, (i) in cases where a Tier 2 Disqualification Event or a Tax Law Change has occurred and is continuing (with respect to Subordinated Notes), or an MREL Disqualification Event or a Tax Law Change has occurred and is continuing (with respect to Senior Preferred Notes and Senior Non- Preferred Notes), and/or (ii) with respect to all Notes, in order to ensure the effectiveness and enforceability of the Bail-In Power in accordance with Condition 23 (Contractual Recognition of Bail-In Power) or pursuant to applicable law, the Issuer shall be entitled to vary the terms of the Notes of such Series, or substitute all (but not some only) of such Notes, provided that certain conditions set out in the Terms and Conditions of the relevant Series of Notes are met. No assurance can be given as to whether any changes resulting from the substitution or modification of such Notes (including, without limitation, any changes to governing law and/or jurisdiction) will adversely affect any particular Noteholder. In addition, the tax and stamp duty consequences of holding such substituted or varied notes could be different for some categories of Noteholders from the tax and stamp duty consequences for them of holding the Notes prior to such substitution or variation.

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INFORMATION INCORPORATED BY REFERENCE

This Base Prospectus should be read and construed in conjunction with the following documents incorporated by reference which form part of this Base Prospectus:

(i) the audited annual financial statements of the Issuer as at and for the year ended 31 December 2018; and

(ii) the audited annual financial statements of the Issuer as at and for the year ended 31 December 2017, in each case together with the accompanying notes and auditors’ reports, save that any statement contained in the documents incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Base Prospectus to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall be deemed, except as so modified or superseded, not to constitute a part of this Base Prospectus.

Any statement contained in this Base Prospectus or in any of the documents incorporated by reference in, and forming part of, this Base Prospectus shall be deemed to be modified or superseded to the extent that a statement contained in any document subsequently incorporated by reference by way of supplement prepared in accordance with Article 16 of the Prospectus Directive modifies or supersedes such statement.

The Issuer will, at the specified offices of the Paying Agent, provide, free of charge, upon oral or written request, a copy of this Base Prospectus (or any document incorporated by reference in this Base Prospectus). Written or oral requests for such documents should be directed to the specified office of any of the Paying Agents or to the specified office of the Listing Agent in Luxembourg. In addition such documents will be available, without charge, on the website of the Luxembourg Stock Exchange (www.bourse.lu).

Cross-reference List

The following table shows where the information required under Annex IX, paragraph 11.1 of Commission Regulation (EC) No. 809/2004 can be found in the above mentioned financial statements incorporated by reference in this Base Prospectus.

Banca Sella S.p.A. - Annual financial statements Commission Regulation (EC) No. 809/2004, Annex IX, Paragraph 11.1

2018 2017 Balance Sheet ...... 63 74 Income Statement ...... 65 75 Comprehensive Income ...... 66 76 Statement of Changes in Shareholders’ Equity ...... 67 78 Cash Flow Statement – Direct Method ...... 69 79 Notes to the Financial Statements ...... 71-312 80-288 Independent Auditors’ Report ...... 317-331 289-294

The information incorporated by reference that is not included in the cross-reference lists above is considered additional information and is not required by the relevant schedules of Commission Regulation (EC) No. 809/2004 (as amended).

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FURTHER PROSPECTUSES

The Issuer will prepare a replacement prospectus setting out the changes in the operations and financial condition of the Issuer at least every year after the date of this Base Prospectus and each subsequent prospectus.

The Issuer has undertaken that, for the duration of the Programme, if at any time there is a significant new factor, material mistake or inaccuracy relating to the Programme which is capable of affecting the assessment of the Notes, it shall prepare a supplement to this Base Prospectus or, as the case may be, publish a replacement Base Prospectus for use in connection with any subsequent offering of the Notes and shall supply to each Dealer any number of copies of such supplement as a Dealer may reasonably request.

In addition, the Issuer may agree with any Dealer to issue Notes in a form not contemplated in the section of this Base Prospectus entitled “Form of Final Terms”. To the extent that the information relating to that Tranche of Notes constitutes a significant new factor in relation to the information contained in this Base Prospectus, a separate prospectus specific to such Tranche (a “Drawdown Prospectus”) will be made available and will contain such information. Each Drawdown Prospectus will be constituted either (1) by a single document containing the necessary information relating to the Issuer and the relevant Notes or (2) pursuant to Article 5.3 of the Prospectus Directive, by a registration document containing the necessary information relating to the Issuer, a securities note containing the necessary information relating to the relevant Notes and, if necessary, a summary note. In the case of a Tranche of Notes which is the subject of a Drawdown Prospectus, references in this Base Prospectus to information specified or identified in the Final Terms shall (unless the context requires otherwise) be read and construed as information specified or identified in the relevant Drawdown Prospectus.

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FORMS OF THE NOTES

Each Tranche of Notes will initially be in the form of either a temporary global note (a “Temporary Global Note”), without Coupons (as defined herein), or a permanent global note (a “Permanent Global Note”), without Coupons, in each case as specified in the relevant Final Terms. Each Temporary Global Note or, as the case may be, Permanent Global Note (each a “Global Note”) which is not intended to be issued in a new global note form (a “Classic Global Note” or “CGN”), as specified in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche of the Notes with a depositary or a common depositary for Euroclear Bank SA/NV (“Euroclear”) and/or Clearstream Banking S.A. (“Clearstream, Luxembourg”) and/or any other relevant clearing system and each Global Note which is intended to be issued in new global note form (a “New Global Note” or “NGN”), as specified in the relevant Final Terms, will be deposited on or around the issue date of the relevant Tranche of the Notes with a common safekeeper for Euroclear and/or Clearstream, Luxembourg.

In June 2006, the European Central Bank (the “ECB”) announced that Notes in NGN form are in compliance with the “Standards for the use of EU securities settlement systems in ESCB credit operations” of the central banking system for the euro (the “Eurosystem”), provided that certain other criteria are fulfilled. At the same time, the ECB also announced that arrangements for Notes in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and debt securities in global bearer form issued through Euroclear and Clearstream, Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN form is used.

The relevant Final Terms will also specify whether United States Treasury Regulation §1.163-5(c)(2)(i)(C) (the “TEFRA C Rules”) or United States Treasury Regulation §1.163- 5(c)(2)(i)(D) (the “TEFRA D Rules”) are applicable in relation to the Notes or, if the Notes do not have a maturity of more than 365 days, that neither the TEFRA C Rules nor the TEFRA D Rules are applicable.

Temporary Global Note exchangeable for Permanent Global Note

If the relevant Final Terms specifies the form of Notes as being “Temporary Global Note exchangeable for a Permanent Global Note”, then the Notes will initially be in the form of a Temporary Global Note without Coupons, interests in which will be exchangeable, in whole or in part, for interests in a Permanent Global Note, without Coupons, not earlier than 40 days after the issue date of the relevant Tranche of the Notes upon certification as to non-U.S. beneficial ownership. No payments will be made under the Temporary Global Note unless exchange for interests in the Permanent Global Note is improperly withheld or refused. In addition, interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.

Whenever any interest in the Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge to the bearer) of such Permanent Global Note to the bearer of the Temporary Global Note or (in the case of any subsequent exchange) an increase in the principal amount of the Permanent Global Note in accordance with its terms against:

(i) presentation and (in the case of final exchange) surrender of the Temporary Global Note to, or to the order of, the Fiscal Agent; and

(ii) receipt by the Fiscal Agent of a certificate or certificates of non-U.S. beneficial ownership, within 7 days of the bearer requesting such exchange.

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The principal amount of Notes represented by the Permanent Global Note shall be equal to the aggregate of the principal amounts specified in the certificates of non-U.S. beneficial ownership; provided, however, that in no circumstances shall the principal amount of Notes represented by the Permanent Global Note exceed the initial principal amount of Notes represented by the Temporary Global Note.

The Permanent Global Note will be exchangeable in whole, but not in part, for Notes in definitive form (“Definitive Notes”):

(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or

(ii) at any time, if so specified in the relevant Final Terms; or

(iii) if the relevant Final Terms specifies “in the limited circumstances described in the Permanent Global Note”, then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or (b) any of the circumstances described in Condition 13 (Events of Default) occurs.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to, or to the order of, the Fiscal Agent within 30 days of the bearer requesting such exchange.

Where interests in the Permanent Global Note are to be exchanged for Definitive Notes in the circumstances described in (i) and (ii) above, Notes may only be issued in denominations which are integral multiples of the minimum denomination and may only be traded in such amounts, whether in global or definitive form. As an exception to the above rule, where the Permanent Global Note may only be exchanged in the limited circumstances described in (iii) above, Notes may be issued in denominations which represent the aggregate of: (a) in the case of Senior Preferred Notes and Subordinated Notes, a minimum denomination of €100,000 plus integral multiples of €1,000, provided that such denominations are not less than €100,000 nor more than €199,000; or (b) in the case of Senior Non-Preferred Notes, a minimum denomination of €250,000 plus integral multiples of €1,000, provided that such denominations are not less than €250,000 nor more than €499,000. For the avoidance of doubt, each holder of Notes of such denominations will, upon exchange for Definitive Notes, receive Definitive Notes in an amount equal to its entitlement to the principal amount represented by the Permanent Global Note. However, a Noteholder who holds a principal amount of less than the minimum denomination may not receive a Definitive Note and would need to purchase a principal amount of Notes such that its holding is an integral multiple of the minimum denomination.

Temporary Global Note exchangeable for Definitive Notes

If the relevant Final Terms specifies the form of Notes as being “Temporary Global Note exchangeable for Definitive Notes” and also specifies that the TEFRA C Rules are applicable or that neither the TEFRA C Rules nor the TEFRA D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note without Coupons, interests in which will be exchangeable, in whole but not in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes.

If the relevant Final Terms specifies the form of Notes as being “Temporary Global Note exchangeable for Definitive Notes” and also specifies that the TEFRA D Rules are applicable, then the Notes will initially be in the form of a Temporary Global Note without Coupons, interests in which will be exchangeable, in whole or in part, for Definitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes

54 upon certification as to non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership.

Whenever the Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons (as defined herein) attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note to, or to the order of, the Fiscal Agent within 30 days of the bearer requesting such exchange.

Where the Temporary Global Note is to be exchanged for Definitive Notes, Notes may only be issued in denominations which are integral multiples of the minimum denomination and may only be traded in such amounts, whether in global or definitive form.

Permanent Global Note exchangeable for Definitive Notes

If the relevant Final Terms specifies the form of Notes as being “Permanent Global Note exchangeable for Definitive Notes”, then the Notes will initially be in the form of a Permanent Global Note without Coupons, interests in which will be exchangeable in whole, but not in part, for Definitive Notes:

(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or

(ii) at any time, if so specified in the relevant Final Terms; or

(iii) if the relevant Final Terms specifies “in the limited circumstances described in the Permanent Global Note”, then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or (b) any of the circumstances described in Condition 13 (Events of Default) occurs.

Where interests in the Permanent Global Note are to be exchanged for Definitive Notes in the circumstances described in (i) or (ii) above, Notes may only be issued in denominations which are integral multiples of the minimum denomination and may only be traded in such amounts, whether in global or definitive form. As an exception to the above rule, where the Permanent Global Note may only be exchanged in the limited circumstances described in (iii) above, Notes may be issued in denominations which represent the aggregate of: (a) in the case of Senior Preferred Notes and Subordinated Notes, a minimum denomination of €100,000 plus integral multiples of €1,000, provided that such denominations are not less than €100,000 nor more than €199,000; or (b) in the case of Senior Non-Preferred Notes, a minimum denomination of €250,000 plus integral multiples of €1,000, provided that such denominations are not less than €250,000 nor more than €499,000. For the avoidance of doubt, each holder of Notes of such denominations will, upon exchange for Definitive Notes, receive Definitive Notes in an amount equal to its entitlement to the principal amount represented by the Permanent Global Note. However, a Noteholder who holds a principal amount of less than the minimum denomination may not receive a Definitive Note and would need to purchase a principal amount of Notes such that its holding is an integral multiple of the minimum denomination.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agent within 30 days of the bearer requesting such exchange. Where the Notes are listed on the Luxembourg Stock Exchange and its rules so

55 require, the Issuer will give notice of the exchange of the Permanent Global Note for Definitive Notes pursuant to Condition 19 (Notices).

Terms and Conditions applicable to the Notes

The terms and conditions applicable to any Definitive Note will be endorsed on that Note and will consist of the terms and conditions set out under “Terms and Conditions of the Notes” below and the provisions of the relevant Final Terms which complete those terms and conditions.

The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under “Overview of Provisions Relating to the Notes while in Global Form” below.

Legend concerning United States persons

In the case of any Tranche of Notes having a maturity of more than 365 days, the Notes in global form, the Notes in definitive form and any Coupons and Talons appertaining thereto will bear a legend to the following effect:

“Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code.”

The sections referred to in such legend provide that a United States person who holds a Note, Coupon or Talon will generally not be allowed to deduct any loss realised on the sale, exchange or redemption of such Note, Coupon or Talon and any gain (which might otherwise be characterised as capital gain) recognised on such sale, exchange or redemption will be treated as ordinary income.

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TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions which, as completed by the relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under “Overview of Provisions Relating to the Notes while in Global Form” below. References in the Conditions to “Notes” are to the Notes of one Series only, not to all Notes that may be issued under the Programme.

1 Introduction

(a) Programme

Banca Sella S.p.A. (the “Issuer”) has established a Euro Medium Term Note Programme (the “Programme”) for the issuance of up to €1,000,000,000 in aggregate principal amount of notes (the “Notes”).

(b) Final Terms

Notes issued under the Programme are issued in series (each a “Series”) and each Series may comprise one or more tranches (each a “Tranche”) of Notes. Each Tranche is the subject of final terms (the “Final Terms”) which completes these terms and conditions (the “Conditions”). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as completed by the relevant Final Terms. In the event of any inconsistency between these Conditions and the relevant Final Terms, the relevant Final Terms shall prevail.

(c) Agency Agreement

The Notes are the subject of an amended and restated issue and paying agency agreement dated 11 July 2019 (the “Agency Agreement”) between the Issuer and Deutsche Bank AG, London Branch as fiscal agent (the “Fiscal Agent”, which expression includes any successor fiscal agent appointed from time to time in connection with the Notes) and the other paying agents named therein (together with the Fiscal Agent, the “Paying Agents”, which expression includes any successor or additional paying agents appointed from time to time in connection with the Notes).

(d) The Notes

All subsequent references in these Conditions to “Notes” are to the Notes which are the subject of the relevant Final Terms. Copies of the relevant Final Terms are available for inspection during normal business hours at the Specified Office of the Fiscal Agent, the initial Specified Office of which is set out below.

(e) Summaries

Certain provisions of these Conditions are summaries of the Agency Agreement and are subject to their detailed provisions. The holders of the Notes (the “Noteholders”), the holders of the related interest coupons, if any, (the “Couponholders” and the “Coupons”, respectively) and, where applicable, talons for further Coupons (“Talons”) are bound by, and are deemed to have notice of, all the provisions of the Agency Agreement applicable to them. Copies of the Agency Agreement are available for inspection during normal business hours at the Specified Offices of each of the Paying Agents, the initial Specified Offices of which are set out below.

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2 Form, Denomination and Title

The Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Final Terms, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. Title to the Notes and the Coupons will pass by delivery. The holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such holder. No person shall have any right to enforce any term or condition of any Note under the Contracts (Rights of Third Parties) Act 1999.

The Notes may be Fixed Rate Notes, Fixed Rate Reset Notes, Floating Rate Notes, CMS Linked Interest Notes or Zero Coupon Notes or a combination of any of the foregoing, depending upon the Interest Basis shown in the relevant Final Terms.

The Notes may also be senior preferred notes (“Senior Preferred Notes”), senior non-preferred notes (“Senior Non-Preferred Notes” and, together with the Senior Preferred Notes, the “Senior Notes”) or subordinated notes (“Subordinated Notes”), depending on the status of the Notes specified in the relevant Final Terms.

The Notes are denominated in such currency as may be specified in the relevant Final Terms (the “Specified Currency”). and in the denomination or denominations specified in the relevant Final Terms (a “Specified Denomination”), provided that Senior Non-Preferred Notes will have a denomination of at least €250,000 (or, where the Senior Non-Preferred Notes are denominated in a Specified Currency other than Euro, the equivalent amount in such other Specified Currency). Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination.

3 Definitions and Interpretation

(a) Definitions

In these Conditions, unless the context otherwise requires, the following expressions shall have the following meanings:

“Accrual Yield” has the meaning given in the relevant Final Terms;

“Additional Business Centre(s)” means the city or cities specified as such in the relevant Final Terms;

“Additional Financial Centre(s)” means the city or cities specified as such in the relevant Final Terms;

“Anniversary Date(s)” means each date specified as such in the Final Terms;

“Applicable Banking Regulations” means at any time the laws, acts, regulations, requirements, guidelines, rules, standards, policies and instruments relating to capital adequacy then in effect in the Republic of Italy and applicable to the Issuer or the Group (as the case may be) including, without limitation, the BRRD, the BRRD Implementing Decrees, the CRD IV Package, the Capital Instruments Regulations, Circular No. 285, the Banking Reform Package, the SRM Regulation and any other laws, acts, regulations, requirements, guidelines, rules, standards, policies and instruments relating to capital adequacy then in effect of the Relevant Authority or of the institutions of the European Union and/or the Republic of Italy (whether or not such laws, acts, regulations,

58 requirements, guidelines, rules, standards, policies or instruments have the force of law and whether or not they are applied generally or specifically to the Issuer or the Group, as the case may be);

“Bail-In Power” means any statutory write-down, conversion, transfer, modification and/or suspension power existing from time to time under any laws, regulations, rules or requirements whether relating to the resolution, or independent of any resolution action (including, without limitation, the application of the Loss Absorption Power), of credit institutions, investment firms and/or group entities in effect and applicable in the Relevant Member State to the Issuer or other entities of the Group (as the case may be), including but not limited to any such laws, regulations, rules or requirements set forth in or implementing the BRRD, the BRRD Implementing Decrees and/or the SRM Regulation or any successor laws, regulations, rules or requirements establishing a framework for the recovery and resolution of the Issuer (and/or other entities of the Group, where applicable) within the context of a relevant Member State resolution regime or otherwise, pursuant to which liabilities of the Issuer (and/or other entities of the Group, where applicable) can be reduced, cancelled, transferred, modified, suspended for a temporary period and/or converted into shares or obligations of the obligor or any other person, whether in combination with a resolution action or otherwise;

“Bank Creditor Hierarchy Directive” means Directive (EU) 2017/2399 of the European Parliament and of the Council of 12 December 2017 amending the BRRD as regards the ranking of unsecured debt instruments in insolvency hierarchy, as amended, supplemented or replaced from time to time;

“Banking Reform Package” means (i) Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No. 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposure to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No. 648/2012, (ii) Regulation (EU) 2019/877 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EU) No. 806/2014 as regards the loss-absorbing and recapitalization capacity of credit institutions and investment firms, (iii) Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 amending Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures, and (iv) Directive (EU) 2019/879 of the European Parliament and of the Council of 20 May 2019 amending Directive 2014/59/EU as regards the loss-absorbing and recapitalization capacity of credit institutions and investment firms and Directive 98/26/EC;

“Benchmarks Regulation” means Regulation (EU) No. 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No. 596/2014, as amended or superseded from time to time;

“Broken Amount” has the meaning given in the relevant Final Terms;

“BRRD” means Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms, as amended, supplemented or replaced from time to time (including, without limitation, as a consequence of the entry into force of the Banking Reform Package);

“BRRD Implementing Decrees” means the Legislative Decrees No. 180 and 181 of 16 November 2015, implementing the BRRD in the Republic of Italy, as amended or replaced from time to time (including, without limitation, as a consequence of the transposition of the Banking Reform Package into Italian law);

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“Business Day” means:

(i) in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and

(ii) in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

“Business Day Convention” in relation to any particular date, has the meaning given in the relevant Final Terms and, if so specified in the relevant Final Terms, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:

(i) “Following Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day;

(ii) “Modified Following Business Day Convention” or “Modified Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

(iii) “Preceding Business Day Convention” means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

(iv) “FRN Convention”, “Floating Rate Convention” or “Eurodollar Convention” means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is the number of months specified in the relevant Final Terms as the Specified Period after the calendar month in which the preceding such date occurred provided, however, that:

(A) if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(B) if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(C) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and

(v) “No Adjustment” means that the relevant date shall not be adjusted in accordance with any Business Day Convention;

“Calculation Agent” means the Fiscal Agent or such other Person specified in the relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s);

“Calculation Amount” has the meaning given to it in relevant the Final Terms;

“Capital Instruments Regulations” means the Delegated Regulation and any other rules or regulations of the Relevant Authority or of the institutions of the European Union or which are

60 otherwise applicable to the Issuer or the Group (as the case may be), whether introduced before or after the Issue Date, which prescribe (alone or in conjunction with any other rules or regulations) the requirements to be fulfilled by financial instruments for their inclusion in the Own Funds of the Issuer or the Group (as the case may be) to the extent required under the CRD IV Package (including, without limitation, any rules or regulations implementing the Banking Reform Package);

“Change of Interest Basis” means, if applicable, the Change of Interest Basis of the Notes as specified in the relevant Final Terms and in accordance with the provisions set out in Condition 8 (Change of Interest Basis);

“Circular No. 285” means the Bank of Italy Circular No. 285 of 17 December 2013, setting forth the supervisory provisions for banks (Disposizioni di Vigilanza per le Banche), as amended, supplemented or replaced from time to time (including, without limitation, as a consequence of the transposition of the Banking Reform Package into Italian law);

“CMS Rate” means the applicable swap rate for swap transactions in the Reference Currency with a maturity of the Designated Maturity, expressed as a percentage, which appears on the Relevant Screen Page as at the Relevant Time on the Interest Determination Date in question, all as determined by the Calculation Agent;

“CMS Reference Banks” means (i) where the Reference Currency is Euro, the principal office of five major banks in the Euro-zone inter-bank market, (ii) where the Reference Currency is Sterling, the principal London office of five major banks in the London inter-bank market, (iii) where the Reference Currency is U.S. dollars, the principal New York City office of five major banks in the New York City inter-bank market, or (iv) in the case of any other Reference Currency, the principal Relevant Financial Centre office of five major banks in the Relevant Financial Centre interbank market, in each case selected by the Issuer in its discretion or, where appointed by the Issuer, the Reference Banks Agent, in its discretion after consultation with the Issuer;

“Consolidated Banking Act” means Legislative Decree No. 385 of 1 September 1993, as amended or supplemented from time to time (including, without limitation, as a consequence of the transposition of the Banking Reform Package into Italian law);

“Coupon Sheet” means, in respect of a Note, a coupon sheet relating to the Note;

“CRD IV” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, as amended, supplemented or replaced from time to time (including, without limitation, as a consequence of the entry into force of the Banking Reform Package);

“CRD IV Package” means (i) the CRR and (ii) the CRD IV;

“CRR” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, as amended, supplemented or replaced from time to time (including, without limitation, as a consequence of the entry into force of the Banking Reform Package);

“Credit Rating” means the publicly announced rating assigned to the Issuer by a Rating Agency, including any reference to positive, stable or negative outlook or any placing of the Issuer on “Creditwatch” with negative implications or similar publication of formal review by a Rating Agency;

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“Day Count Fraction” means, in respect of the calculation of an amount for any period of time (the “Calculation Period”), such day count fraction as may be specified in these Conditions or the relevant Final Terms and:

(i) if “Actual/Actual” or “Actual/Actual (ISDA)” is specified, the actual number of days in the Calculation Period in respect of which payment is being made divided by 365 (or, if any portion of that Calculation Period falls in a leap year, the sum of (i) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);

(ii) if “Actual/Actual (ICMA)” is so specified, means:

(A) where the Calculation Period is equal to or shorter than the Regular Period during which it falls, the actual number of days in the Calculation Period divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(B) where the Calculation Period is longer than one Regular Period, the sum of:

(1) the actual number of days in such Calculation Period falling in the Regular Period in which it begins divided by the product of (a) the actual number of days in such Regular Period and (b) the number of Regular Periods in any year; and

(2) the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (a) the actual number of days in such Regular Period and (b) the number of Regular Periods in any year;

(iii) if “Actual/365 (Fixed)” is specified, the actual number of days in the Calculation Period in respect of which payment is being made divided by 365;

(iv) if “Actual/360” is specified, the actual number of days in the Calculation Period in respect of which payment is being made divided by 360;

(v) if “30/360, 360/360” or “Bond Basis” is specified, the number of days in the Calculation Period in respect of which payment is being made divided by 360, calculated on a formula basis as follows: [360 ( )] ± [30 ( )] + ( ) = 360 𝑥𝑥 𝑌𝑌2 − 𝑌𝑌1 𝑥𝑥 𝑀𝑀2 − 𝑀𝑀1 𝐷𝐷2 − 𝐷𝐷1 where: 𝐷𝐷𝐷𝐷𝐷𝐷 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹

“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M2” is the calendar month, expressed as number, in which the day immediately following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such

number would be 31, in which case D1 will be 30; and

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“D2” is the calendar day, expressed as a number, immediately following the last day included in

the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which

case D2 will be 30”;

(vi) if “30E/360” or “Eurobond Basis” is specified, the number of days in the Calculation Period in respect of which payment is being made divided by 360, calculated on a formula basis as follows: [360 ( )] ± [30 ( )] + ( ) = 360 𝑥𝑥 𝑌𝑌2 − 𝑌𝑌1 𝑥𝑥 𝑀𝑀2 − 𝑀𝑀1 𝐷𝐷2 − 𝐷𝐷1 where: 𝐷𝐷𝐷𝐷𝐷𝐷 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹

“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such

number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day included in

the Calculation Period, unless such number would be 31, in which case D2 will be 30; and

(vii) if “30/360 (ICMA)” is specified, the number of days in the Calculation Period in respect of which payment is being made divided by 360, calculated on a formula basis as follows: [360 ( )] ± [30 ( )] + ( ) = 360 𝑥𝑥 𝑌𝑌2 − 𝑌𝑌1 𝑥𝑥 𝑀𝑀2 − 𝑀𝑀1 𝐷𝐷2 − 𝐷𝐷1 where: 𝐷𝐷𝐷𝐷𝐷𝐷 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹𝐹

“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M2” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that

day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Termination

Date or (ii) such number would be 31, in which case D2 will be 30;

63 provided, however, that in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period.

“Delegated Regulation” means Commission Delegated Regulation (EU) No. 241/2014 of 7 January 2014 supplementing the CRR with regard to the regulatory technical standards for Own Funds requirements for institutions, as amended, supplemented or replaced from time to time (including, without limitation, as a consequence of any rules or regulations implementing the Banking Reform Package);

“Designated Maturity” has the meaning given in the relevant Final Terms;

“Early Redemption Amount (MREL Disqualification Event)” means, in respect of any Senior Preferred Note or Senior Non-Preferred Note, as the case may be, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Early Redemption Amount (Tier 2 Disqualification Event)” means, in respect of any Subordinated Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Early Redemption Amount (Tax)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Early Termination Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, these Conditions or the relevant Final Terms;

“Eligible Liabilities” means at any time eligible liabilities as interpreted and applied in accordance with the Applicable Banking Regulations;

“Eligible Liabilities Instruments” means at any time eligible liabilities instruments as interpreted and applied in accordance with the Applicable Banking Regulations;

“EURIBOR” means, in respect of any specified currency and any specified period, the interest rate benchmark known as the Euro zone inter-bank offered rate which is calculated and published by a designated distributor (currently Thomson Reuters) in accordance with the requirements from time to time of the European Money Market Institute (or any other person which takes over the administration of that rate) based on estimated interbank borrowing rates for a number of designated currencies and maturities which are provided, in respect of each such currency, by a panel of contributor banks (details of historic EURIBOR rates can be obtained from the designated distributor);

“Extraordinary Resolution” has the meaning given in the Agency Agreement;

“Final Redemption Amount” means, in respect of any Note, its principal amount;

“First Reset Date” means the date specified as such in the Final Terms;

“First Reset Period” means the period from and including the First Reset Date up to but excluding the Second Reset Date or, if no such Second Reset Date is specified in the Final Terms, the date fixed for redemption of the Notes (if any);

“First Reset Rate of Interest” means the rate of interest as determined by the Calculation Agent on the Reset Determination Date corresponding to the First Reset Period as the sum of the relevant Reset Rate plus the relevant Margin;

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“Fixed Coupon Amount” has the meaning given in the relevant Final Terms;

“Fixed Leg” has the meaning given in the relevant Final Terms;

“Floating Leg” has the meaning given in the relevant Final Terms;

“Guarantee” means, in relation to any Indebtedness of any Person, any obligation of another Person to pay such Indebtedness including (without limitation):

(i) any obligation to purchase such Indebtedness;

(ii) any obligation to lend money, to purchase or subscribe shares or other securities or to purchase assets or services in order to provide funds for the payment of such Indebtedness;

(iii) any indemnity against the consequences of a default in the payment of such Indebtedness; and

(iv) any other agreement to be responsible for such Indebtedness;

“Group” means Banca Sella Holding S.p.A. (the “Parent Company”), the Issuer and the Parent Company’s other Subsidiaries;

“Independent Adviser” means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by the Issuer;

“Initial Rate of Interest” means the initial rate of interest per annum specified in the Final Terms;

“Interest Amount” means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;

“Interest Commencement Date” means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;

“Interest Determination Cut-off Date” means the date which falls fifteen (15) calendar days before the end of the Interest Period relating to the Interest Determination Date in respect of which the provisions of paragraphs (ii) to (iv) of Condition 7(c) shall be applied by the Issuer;

“Interest Determination Date” has the meaning given in the relevant Final Terms;

“Interest Payment Date” means the Interest Payment Date and any other date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:

(i) as the same may be adjusted in accordance with the relevant Business Day Convention; or

(ii) if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Final Terms as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the Interest Payment Date) or the previous Interest Payment Date (in any other case);

“Interest Period” means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;

“ISDA Definitions” means the 2006 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.);

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“Issue Date” has the meaning given in the relevant Final Terms;

“Issue Price” has the meaning given in the relevant Final Terms;

“LIBOR” means, in respect of any specified currency and any specified period, the London inter-bank offered rate for that currency and period displayed on the appropriate page (being currently Reuters screen page LIB0R01 or LIB0R02) on the information service which publishes that rate;

“Loss Absorption Power” means the power of the Relevant Authority to impose that Own Funds Instruments or other liabilities of the Issuer or entities of the Group (as the case may be) are subject to full or partial write-down of the principal or conversion into equity or quasi-equity instruments or other instruments of ownership in accordance with Article 59 of the BRRD and the related national implementing provisions applicable to the Issuer or entities of the Group (as the case may be);

“Margin” has the meaning given in the relevant Final Terms;

“Maturity Date” has the meaning given in the relevant Final Terms;

“Maturity Period” means the period from and including the Issue Date to but excluding the Maturity Date;

“Maximum Redemption Amount” has the meaning given in the relevant Final Terms;

“Mid-Swap Quotations” means the arithmetic mean of the bid and offered rates:

(i) if the Specified Currency is euro, for the annual Fixed Leg (calculated on a 30/360 day count basis) of a fixed for floating interest rate swap transaction in euro which (i) has a term commencing on the relevant Reset Date which is equal to that of the relevant Swap Rate Period; (ii) is in an amount that is representative of a single transaction in the relevant market at the relevant time with an acknowledged dealer of good credit in the relevant swap market; and (iii) has a floating leg based on the 6-month EURIBOR rate (calculated on an Actual/360 day count basis), unless as otherwise specified in the Final Terms; or

(ii) if the Specified Currency is not euro, for the Fixed Leg (as set out in the Final Terms) of a fixed for floating interest rate swap transaction in that Specified Currency which (i) has a term commencing on the relevant Reset Date which is equal to that of the relevant Swap Rate Period; (ii) is in an amount that is representative of a single transaction in the relevant market at the relevant time with an acknowledged dealer of good credit in the relevant swap market; and (iii) has a Floating Leg (as set out in the Final Terms);

“Mid-Swap Rate” means in respect of a Reset Period, (i) the applicable semi-annual or annualised (as specified in the applicable Final Terms) mid-swap rate for swap transactions in the Specified Currency (with a maturity equal to that of the relevant Swap Rate Period specified in the Final Terms) as displayed on the Screen Page at 11.00 a.m. (in the principal financial centre of the Specified Currency) on the relevant Reset Determination Date (which rate, if the relevant Interest Payment Dates are other than semi-annual or annual Interest Payment Dates, shall be adjusted by, and in the manner determined by, the Calculation Agent) or (ii) if such rate is not displayed on the Screen Page at such time and date, the relevant Reset Reference Bank Rate;

“Minimum Redemption Amount” has the meaning given in the relevant Final Terms;

“MREL Disqualification Event” means that, by reason of the introduction of, or a change in, the MREL Requirements, which was not reasonably foreseeable by the Issuer at the Issue Date of the relevant Series of Notes, all or part of the aggregate outstanding nominal amount of a Series of Senior

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Preferred Notes and/or of Senior Non-Preferred Notes (as the case may be) are or will be excluded fully or partially from the liabilities that are eligible to meet the MREL Requirements. For the avoidance of doubt: (a) the exclusion of a Series of Notes from the liabilities that are eligible to meet the MREL Requirements due to the remaining maturity of such Notes being less than any period prescribed thereunder does not constitute a MREL Disqualification Event; and (b) the exclusion of all or some of a Series of Notes from the MREL Requirements due to there being insufficient headroom for such Notes within any prescribed exception to the otherwise applicable general requirements for liabilities that are eligible to meet the MREL Requirements does not constitute a MREL Disqualification Event;

“MREL Requirements” means the laws, regulations, requirements, guidelines, rules, standards, measures and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments applicable to the Issuer or the Group (as the case may be) from time to time, including, without limitation to the generality of the foregoing, any delegated or implementing acts (such as implementing technical standards or regulatory technical standards) adopted by the European Commission or any other relevant authority and any regulations, requirements, guidelines, rules, standards, measures and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments adopted by the Republic of Italy or a Relevant Authority from time to time (whether or not such regulations, requirements, guidelines, rules, standards, measures or policies are applied generally or specifically to the Issuer or the Group), as any of the preceding laws, regulations, requirements, guidelines, rules, standards, measures, policies or interpretations may be amended, supplemented, superseded or replaced from time to time;

“New Issuer” means a Surviving Entity which, following a Permitted Reorganisation, is a Person other than the Original Issuer;

“Non-core Business” means any business carried on by a Person other than its principal business;

“Optional Redemption Amount (Call)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms, which shall be at least equal to the principal amount of any Note;

“Optional Redemption Amount (Put)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms, which shall be at least equal to the principal amount of any Note;

“Optional Redemption Date (Call)” has the meaning given in the relevant Final Terms;

“Optional Redemption Date (Put)” has the meaning given in the relevant Final Terms;

“Original Issuer” means, for the purposes of a Permitted Reorganisation, the body corporate having the obligations as Issuer under the Notes prior to completion of such Permitted Reorganisation;

“Own Funds” shall have the meaning given to such term in the CRR, as interpreted and applied in accordance with the Applicable Banking Regulations;

“Own Funds Instruments” means at any time own funds instruments as interpreted and applied in accordance with the Applicable Banking Regulations;

“Participating Member State” means a Member State of the European Union which has adopted or adopts the euro as its lawful currency in accordance with the Treaty;

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“Payment Business Day” means:

(i) if the currency of payment is euro, any day which is:

(A) a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and

(B) in the case of payment by transfer to an account, a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

(ii) if the currency of payment is not euro, any day which is:

(A) a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and

(B) in the case of payment by transfer to an account, a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;

“Permitted Reorganisation” means:

(i) in the case of a Subsidiary, an amalgamation, reorganisation, merger, consolidation or restructuring whilst solvent whereby the assets and undertaking of such Subsidiary are transferred to or otherwise vested in the Issuer or another Subsidiary of the Issuer; or

(ii) in the case of the Issuer, a reconstruction, amalgamation, reorganisation, merger, demerger, consolidation, transfer of business or similar transaction whilst solvent where all of the following conditions are fulfilled:

(A) upon completion of such transaction:

(1) where the Surviving Entity is the Original Issuer, the Original Issuer shall continue:

(a) to carry on all or substantially all of its business; and

(b) to hold all or substantially all of the assets held by it before such transaction,

provided that, for the avoidance of doubt, the conditions set out in (a) and (b) above shall not apply in the case of a demerger, transfer or business or similar transaction by which a Non-core Business or a non-substantial part of the business of the Original Issuer is vested in a Subsidiary of the Original Issuer, all or substantially all of whose share capital giving the right to vote at shareholders’ meetings is owned or controlled by the Original Issuer; or

(2) where the Surviving Entity is a New Issuer:

(a) such New Issuer shall be a body corporate in good standing validly organised and existing under the laws of the Republic of Italy;

(b) such New Issuer shall continue to carry on all or substantially all of the business of the Original Issuer; and

(c) all or substantially all of the assets held by the Original Issuer before such transaction shall be vested in such New Issuer;

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(B) both before and after completion of such transaction, no Event of Default shall have occurred and be continuing or would thereupon occur;

(C) upon completion of such transaction, the Surviving Entity shall have the same or an improved Credit Rating or Credit Ratings (as the case may be) in comparison to the Credit Rating or Credit Ratings assigned to the Original Issuer by the relevant Rating Agency immediately before completion of such transaction, evidenced by a certificate or announcement to that effect from such Rating Agency or Rating Agencies (as the case may be) (which certificate shall be available for inspection at the specified office of the Fiscal Agent);

(D) upon completion of such transaction, no tax, duty, assessment or governmental charge shall be imposed on Noteholders or Couponholders by the Republic of Italy which would not have been so imposed had such transaction not taken place;

(E) where the Surviving Entity is a New Issuer, such New Issuer shall either assume the obligations of the Original Issuer under the Notes by operation of law under the doctrine of universal succession or:

(1) by means of the Deed Poll and such other documents (if any) as are necessary for such purpose (“Additional Documents”), undertake to the Noteholders to be bound by the provisions of the Notes as fully as if the New Issuer had been named in the Notes as the debtor in respect of the Notes in place of the Original Issuer;

(2) have entered into a supplemental agency agreement (“Supplemental Agency Agreement”) agreeing to be bound by the Agency Agreement as if it had been a party thereto in place of the Original Issuer;

(3) have maintained the listing of the Notes on each Stock Exchange (including the regulated market of the Luxembourg Stock Exchange) on which the Notes are listed following such transaction and, if required by such Stock Exchange, have published a supplement to the base prospectus in accordance with applicable law and/or the rules of such Stock Exchange and have provided notice to Noteholders of the New Issuer in accordance with Condition 19 (Notices); and

(4) have appointed the process agent appointed by the Original Issuer in Condition 22(e) (Governing Law and Jurisdiction – Process agent) as its agent in England to receive service of process on its behalf in relation to any legal actions or proceedings arising out of or in connection with the Notes, the Deed Poll, the Additional Documents or the Supplemental Agency Agreement;

(F) all action, conditions and things required to be taken, fulfilled and done (including the obtaining of any necessary consents) to ensure that the Notes, the Coupons and the Agency Agreement and (if applicable) the Deed Poll, the Additional Documents and the Supplemental Agency Agreement represent valid, legally binding and enforceable obligations of the Surviving Entity shall have been taken, fulfilled and done and are in full force and effect; and

(G) the Surviving Entity shall have obtained opinions addressed to the Fiscal Agent from legal counsel with a leading securities practice in the relevant jurisdiction as follows (and where applicable):

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(1) in the Republic of Italy, as to the fulfilment of the conditions in paragraphs (A)(2)(a), (D) and (F) above; and

(2) in England, as to the fulfilment of the condition in paragraph (F) above, which opinions shall be available for inspection at the specified office of the Fiscal Agent,

and, in the event of any Permitted Reorganisation of the Issuer whereby the Surviving Entity is a New Issuer, any reference in these Conditions to the “Issuer”, shall be a reference to such New Issuer, with effect from the date on which a Permitted Reorganisation becomes effective under applicable law.

“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

“Principal Financial Centre” means, in relation to any currency, the principal financial centre for that currency provided, however, that:

(i) in relation to euro, it means the principal financial centre of such Member State of the European Union as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and

(ii) in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to New Zealand dollars, it means either Wellington or Auckland (in each case, as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent);

“Put Option Notice” means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

“Put Option Receipt” means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

“Rate of Interest” means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Final Terms;

“Rating Agency” means Moody’s Investors Service, Inc., Standard & Poor’s Rating Services, a division of McGraw-Hill Companies, Inc., Fitch Ratings Limited or DBRS Ratings Limited or any other rating agency of similar international standing;

“Redemption Amount” means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Early Redemption Amount (Tier 2 Disqualification Event), the Early Redemption Amount (MREL Disqualification Event), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount;

“Reference Banks” has the meaning given in the relevant Final Terms or, if none, four major banks selected by the Issuer in its discretion or, where appointed by the Issuer, the Reference Banks Agent, in its discretion after consultation with the Issuer, in the market that is most closely connected with the Reference Rate;

“Reference Banks Agent” means the entity (if any) appointed by the Issuer for the purpose of selecting the Reference Banks and/or the Reset Reference Banks;

“Reference Currency” has the meaning given in the relevant Final Terms;

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“Reference Price” has the meaning given in the relevant Final Terms;

“Reference Rate” means EURIBOR, LIBOR or the CMS Rate as specified in the relevant Final Terms in respect of the currency and period specified in the relevant Final Terms;

“Regular Period” means:

(i) in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;

(ii) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls; and

(iii) in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period.

“Relevant Authority” means, as the context may require, (i) the Bank of Italy or, within the limits of and subject to the rules governing the Single Supervisory Mechanism, the European Central Bank, or any successor or replacement authority having responsibility for the prudential oversight and supervision of the Issuer or the Group (as the case may be), and/or (ii) the Bank of Italy, or, within the limits of and subject to the rules governing the Single Resolution Mechanism, the Single Resolution Board, the European Council or the European Commission, or any successor or replacement authority having responsibility for the resolution of the Issuer or any other entity of the Group (as the case may be);

“Relevant Date” means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Fiscal Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;

“Relevant Financial Centre” has the meaning given in the relevant Final Terms;

“Relevant Screen Page” means the page, section or other part of a particular information service (including, without limitation, the Reuters Money 3000 Service) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;

“Relevant Swap Rate” means:

(i) where the Reference Currency is Euro, the mid-market annual swap rate determined on the basis of the arithmetic mean of the bid and offered rates for the annual fixed leg, calculated on a 30/360 day count basis, of a fixed for floating euro interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap

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market, where the floating leg, in each case calculated on an Actual/360 day count basis, is equivalent to EUR EURIBOR Reuters (as defined in the ISDA Definitions) with a designated maturity determined by the Calculation Agent by reference to standard market practice and/or the ISDA Definitions;

(ii) where the Reference Currency is Sterling, the mid-market semi-annual swap rate determined on the basis of the arithmetic mean of the bid and offered rates for the semi-annual fixed leg, calculated on an Actual/365 (Fixed) day count basis, of a fixed for floating Sterling interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, where the floating leg, in each case calculated on an Actual/365 (Fixed) day count basis, is equivalent (A) if the Designated Maturity is greater than one year, to GBP LIBOR BBA (as defined in the ISDA Definitions) with a designated maturity of six months or (B) if the Designated Maturity is one year or less, to GBP LIBOR BBA with a designated maturity of three months;

(iii) where the Reference Currency is U.S. dollars, the mid-market semi-annual swap rate determined on the basis of the mean of the bid and offered rates for the semi-annual fixed leg, calculated on a 30/360 day count basis, of a fixed for floating United States dollar interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, where the floating leg, calculated on an Actual/360 day count basis, is equivalent to USD LIBOR BBA (as defined in the ISDA Definitions) with a designated maturity of three months; and

(iv) where the Reference Currency is any other currency or if the Final Terms specify otherwise, the mid-market swap rate as determined in accordance with the applicable Final Terms;

“Relevant Time” has the meaning given in the relevant Final Terms;

“Representative Amount” means an amount that is representative for a single transaction in the relevant market at the relevant time;

“Reserved Matter” shall have the meaning given to it in the Agency Agreement and includes, inter alia, any proposal to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes, to alter the method of calculating the amount of any payment in respect of the Notes or the date for any such payment, to change the currency of any payment under the Notes, to alter the provisions regarding subordination referred to in Condition 4 (Status), or to change the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution;

“Reset Date” means each of the First Reset Date, the Second Reset Date and each of the Anniversary Dates (if any) as is specified in the Final Terms;

“Reset Determination Date” means, in respect of a Reset Period, (a) each date specified as such in the Final Terms or, if none is so specified (b) (i) if the Specified Currency is euro, the day falling two TARGET Business Days prior to the first day of such Reset Period; or (ii) for any other Specified Currency, the day falling two Business Days in the principal financial centre for such Specified Currency prior to the first day of such Reset Period;

“Reset Period” means the First Reset Period or a Subsequent Reset Period;

“Reset Rate” means the relevant Mid-Swap Rate as specified in the Final Terms;

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“Reset Reference Bank Rate” means the percentage rate determined on the basis of the Mid-Swap Quotations provided by the Reset Reference Banks to the Calculation Agent at or around 11:00 a.m. in the principal financial centre of the Specified Currency on the relevant Reset Determination Date and, rounded, if necessary, to the nearest 0.001 per cent. (0.0005 per cent. being rounded upwards). If at least four quotations are provided, the Reset Reference Bank Rate will be the rounded arithmetic mean of the quotations provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest). If only two or three quotations are provided, the Reset Reference Bank Rate will be the rounded arithmetic mean of the quotations provided. If only one quotation is provided, the Reset Reference Bank Rate will be the rounded quotation provided. If no quotations are provided, the Reset Reference Bank Rate will be determined by the Independent Adviser in its sole discretion following consultation with the Issuer;

“Reset Reference Banks” means five leading swap dealers in the principal inter-bank market relating to the Specified Currency selected by the Issuer in its discretion or, at the option of the Issuer, selected by the Reference Banks Agent in its discretion after consultation with the Issuer;

“Screen Page” means Reuters screen page “ISDAFIX1”, “ISDAFIX2”, “ISDAFIX3” or “ISDAFIX4” as specified in the Final Terms or such other page on Thomson Reuters as is specified in the Final Terms, or such other screen page as may replace it on Thomson Reuters or, as the case may be, on such other information service that may replace Thomson Reuters, in each case, as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying comparable rates;

“Second Reset Date” means the date specified as such in the Final Terms;

“Single Resolution Mechanism” means the single resolution mechanism established pursuant to the SRM Regulation;

“Single Supervisory Mechanism” means the single supervisory mechanism established pursuant to the SSM Regulation;

“Specified Currency” has the meaning given in the relevant Final Terms;

“Specified Denomination(s)” has the meaning given in the relevant Final Terms;

“Specified Office” has the meaning given in the Agency Agreement;

“Specified Period” has the meaning given in the relevant Final Terms;

“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund, as amended, supplemented or replaced from time to time (including as a consequence of the entry into force of the Banking Reform Package);

“SSM Regulation” means Council Regulation (EU) No. 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions, as amended, supplemented or replaced from time to time;

“Subsequent Reset Period” means the period from and including the Second Reset Date to but excluding the next Reset Date, and each successive period from and including a Reset Date to but excluding the next succeeding Reset Date;

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“Subsequent Reset Rate of Interest” means, in respect of any Subsequent Reset Period, the rate of interest determined by the Calculation Agent on the Reset Determination Date corresponding to such Subsequent Reset Period as the sum of the relevant Reset Rate plus the relevant Margin;

“Subsidiary” means in relation to the Issuer at any particular time, any Person:

(i) at whose shareholders’ ordinary meetings the Issuer has at its disposal either (A) a majority of the votes that may be cast or (B) a sufficient number of votes to give it a dominant influence over such shareholders’ meetings;

(ii) over whom the Issuer exercises a dominant influence by virtue of certain contractual relationship(s); or

(iii) whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the Issuer; in the case of (i) and (ii) above, whereby any rights or votes referred to above include the rights and votes (i) of any other Subsidiary of the Issuer and (ii) which are exercisable by any trustee or fiduciary or other intermediate person as provided under Article 2359 first and second paragraphs of the Italian Civil Code;

“Surviving Entity” means, for the purposes of a Permitted Reorganisation, the body corporate having the obligations as Issuer under the Notes upon completion of such Permitted Reorganisation;

“Swap Rate Period” means the period or periods specified as such in the Final Terms;

“Switch Option Expiry Date” shall mean the date specified as such in the relevant Final Terms, such date being no less than 2 Business Days prior to the Switch Option Effective Date;

“Switch Option Effective Date” shall mean any date specified as such in the relevant Final Terms provided that any such date (i) shall be an Interest Payment Date and (ii) shall be deemed as such subject to the exercise of the relevant Switch Option having been notified by the Issuer pursuant to this Condition and in accordance with Condition 19 (Notices) prior to the relevant Switch Option Expiry Date;

“Talon” means a talon for further Coupons;

“TARGET Settlement Day” means any day on which TARGET2 is open for the settlement of payments in euro;

“TARGET2” means the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007;

“Tax Law Change” means any change in, or amendment to, the laws or regulations of the Republic of, or applicable in, Italy or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of issue of the first Tranche of the Notes;

“Tier 2 Capital” means at any time tier 2 capital as interpreted and applied in accordance with the Applicable Banking Regulations ;

“Tier 2 Disqualification Event” means any change (or pending change which the Relevant Authority considers to be sufficiently certain) in the regulatory classification of the Subordinated Notes from their classification on the Issue Date that results, or would be likely to result, in their exclusion in full

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or, to the extent permitted under the Applicable Banking Regulations, in part, from the Tier 2 Capital of the Issuer or, where applicable in accordance with the Applicable Banking Regulations, a reclassification as a lower quality form of Own Funds;

“Treaty” means the Treaty on the Functioning of the European Union, as amended; and

“Zero Coupon Note” means a Note specified as such in the relevant Final Terms.

(b) Interpretation

In these Conditions:

(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Talons are not applicable;

(iv) any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 12 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

(v) any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

(vi) references to Notes being “outstanding” shall be construed in accordance with the Agency Agreement;

(vii) if an expression is stated in Condition 3(a) (Definitions and Interpretation – Definitions) to have the meaning given in the relevant Final Terms, but the relevant Final Terms gives no such meaning or specifies that such expression is “not applicable” then such expression is not applicable to the Notes; and

(viii) any reference to the Agency Agreement shall be construed as a reference to the Agency Agreement as amended and/or supplemented up to and including the Issue Date of the Notes.

4 Status

(a) Status of the Senior Preferred Notes

(i) Application

This Condition 4(a) applies only to Notes specified in the relevant Final Terms as being Senior Preferred Notes.

(ii) Status

The Senior Preferred Notes and any related Coupons are direct, unconditional, unsubordinated and unsecured obligations of the Issuer and rank pari passu among themselves.

The payment obligations of the Issuer under the Senior Preferred Notes and the Coupons related to them shall at all times rank (save for certain obligations required to be preferred by law,

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including any obligations permitted by law to rank senior to the Senior Preferred Notes following the Issue Date, if any) equally with all other unsecured and unsubordinated obligations of the Issuer from time to time outstanding (other than obligations ranking junior to the Senior Preferred Notes from time to time, including any obligations under Senior Non- Preferred Notes and any further obligations permitted by law to rank junior to the Senior Preferred Notes following the Issue Date, if any).

Each holder of a Senior Preferred Note unconditionally and irrevocably waives any right of set- off, netting, counterclaim, abatement or other similar remedy which it might otherwise have under the laws of any jurisdiction in respect of such Senior Preferred Note.

(b) Status of the Senior Non-Preferred Notes

(i) Application

This Condition 4(b) applies only to Notes specified in the relevant Final Terms as being Senior Non-Preferred Notes.

(ii) Status

The Senior Non-Preferred Notes and any related Coupons are direct, unconditional, unsubordinated, unsecured and non-preferred obligations of the Issuer that are intended to qualify as strumenti di debito chirografario di secondo livello of the Issuer in accordance with, and for the purposes of, Article 12-bis of the Consolidated Banking Act.

The payment obligations of the Issuer under the Senior Non-Preferred Notes and the Coupons related to them shall at all times rank:

(A) junior to all present or future unsecured and unsubordinated obligations of the Issuer which rank, or are expressed by their terms to rank, senior to the Senior Non-Preferred Notes (including, without limitation, any obligations under the Senior Preferred Notes);

(B) pari passu among themselves and with any other present or future obligations of the Issuer which do not rank, or are not expressed by their terms to rank, junior or senior to the Senior Non-Preferred Notes; and

(C) senior to any present or future obligations of the Issuer which rank, or are expressed by their terms to rank, junior to the Senior Non-Preferred Notes (including, without limitation, the claims of the shareholders of the Issuer and any obligations under the Subordinated Notes),

in all such cases in accordance with the provisions set forth in Article 91, paragraph 1-bis, letter c-bis) of the Consolidated Banking Act and any relevant regulation which may be enacted from time to time for the purposes of implementing such provisions and/or any laws, regulations or guidelines implementing the rules set forth in the Bank Creditor Hierarchy Directive.

Each holder of a Senior Non-Preferred Note unconditionally and irrevocably waives any right of set-off, netting, counterclaim, abatement or other similar remedy which it might otherwise have under the laws of any jurisdiction in respect of such Senior Non-Preferred Note.

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(c) Status of the Subordinated Notes

(i) Application

This Condition 4(c) applies only to Notes specified in the relevant Final Terms as being Subordinated Notes.

(ii) Status of Subordinated Notes

The Subordinated Notes and any related Coupons are direct, unsecured and subordinated obligations of the Issuer that are intended to qualify for regulatory purposes as Tier 2 Capital of the Issuer in accordance with Article 63 of the CRR and Part II, Chapter 1 of Circular No. 285 (or any successor rules under the Applicable Banking Regulations).

The payment obligations of the Issuer under the Subordinated Notes and the Coupons related to them shall at all times rank:

(A) junior to all present or future unsecured and unsubordinated obligations of the Issuer (including, without limitation, any obligations under the Senior Notes) or any other present or future subordinated obligations of the Issuer which rank, or are expressed by their terms to rank, senior to the Subordinated Notes;

(B) pari passu among themselves and with any other present or future obligations of the Issuer which do not rank, or are not expressed by their terms to rank, junior or senior to the Subordinated Notes; and

(C) senior to any present or future obligations of the Issuer which rank, or are expressed by their terms to rank, junior to the Subordinated Notes (including, without limitation, the claims of the shareholders of the Issuer).

Each holder of a Subordinated Note unconditionally and irrevocably waives any right of set-off, netting, counterclaim, abatement or other similar remedy which it might otherwise have, under the laws of any jurisdiction, in respect of such Subordinated Note.

The Subordinated Notes (including, for the avoidance of doubt, payments of principal and/or interest) shall be subject to the Loss Absorption Power, if so required under the BRRD and/or the SRM Regulation, in accordance with the powers of the Relevant Authority and where the Relevant Authority determines that the application of the Loss Absorption Power to the Subordinated Notes is necessary pursuant to applicable law and/or regulation in force from time to time.

5 Fixed Rate Note Provisions

(a) Application

This Condition 5 is applicable to the Notes only if (a) the Fixed Rate Note Provisions are specified in the relevant Final Terms as being applicable or (b) if a Change of Interest Basis is specified in the relevant Final Terms as being applicable, in respect of those periods for which the Fixed Rate Note Provisions are stated to apply.

(b) Accrual of interest

The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable annually, semi-annually, quarterly or monthly in arrear, as specified in the Final Terms, on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the

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due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 5 (both before and after judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Fixed Coupon Amount

The amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d) Calculation of interest amount

The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount is not specified shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards). For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent. Where the Specified Denomination of a Fixed Rate Note comprises more than one Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.

6 Fixed Rate Reset Note Provisions

(a) Application

This Condition 6 is applicable to the Notes only if the Fixed Rate Reset Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interest

The Notes bear interest:

(i) from the Interest Commencement Date up to but excluding the First Reset Date at the Initial Rate of Interest;

(ii) in the First Reset Period, at the First Reset Rate of Interest; and

(iii) for each Subsequent Reset Period thereafter (if any), at the relevant Subsequent Reset Rate of Interest,

payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments).

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(c) Fixed Coupon Amount

The amount of interest payable in respect of each Note for any Interest Period from (and including) the Interest Commencement Date to (but excluding) the First Reset Date shall be the relevant Fixed Coupon Amount. Payments of interest on any corresponding Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.

(d) Calculation of interest amount

The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Reset Determination Date, calculate the Interest Amount payable in respect of each Note for such Interest Period or, if determining the First Reset Rate of Interest or a Subsequent Reset Rate of Interest pursuant to this Condition 6, the Interest Amount for each Interest Period falling within the relevant Reset Period. The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount or Broken Amount is not specified shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards). For this purpose a “sub-unit” means, in the case of any currency other than Euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of Euro, means one cent. Where the Specified Denomination of a Note comprises more than one Calculation Amount, the amount of interest payable in respect of such Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.

For the avoidance of doubt, in the event that the sum of the Rate of Interest and the Margin results in a negative amount, such amount shall be deemed to be zero.

(e) Publication

The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period.

(f) Notifications etc.

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 6 by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

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7 Floating Rate and CMS Linked Interest Note Provisions

(a) Application

This Condition 7 is applicable to the Notes only if the Floating Rate Note Provisions or the CMS Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable or if a Change of Interest Basis is specified in the relevant Final Terms as being applicable, in respect of those periods for which the Floating Rate Note Provisions or the CMS Linked Interest Note Provisions are stated to apply

(b) Accrual of interest

The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 7 (both before and after judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Screen Rate Determination for Floating Rate Notes other than CMS Linked Interest Notes

(i) If Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined and “CMS Rate” is not specified as the Reference Rate in the Final Terms, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

(A) if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(B) in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(C) if, in the case of (A) above, such rate does not appear on that page or, in the case of (B) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable:

(x) the Issuer or, at the option of the Issuer, the Reference Banks Agent will request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre inter-bank market in an amount that is representative for a single transaction in that market at that time and will provide the relevant quotation to the Calculation Agent; and

(y) the Calculation Agent will determine the arithmetic mean of such quotations; and

(D) if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as

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determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Issuer or the Reference Banks Agent, as the case may be, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time,

and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined, and subject to any adjustments as set out in Condition 21 (Margin, Maximum Rate of Interest, Minimum Rate of Interest and Rounding); provided, however, that if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period, and subject to any adjustments as set out in Condition 21 (Margin, Maximum Rate of Interest, Minimum Rate of Interest and Rounding); except that, (A) if the Issuer determines that the absence of quotation is due to the discontinuation of the Relevant Screen Page, or (B) following the adoption of a decision to withdraw the authorisation or registration of the administrator of the Reference Rate, as provided under the Benchmarks Regulation, the Reference Rate will be determined in accordance with paragraph (ii) below.

For the avoidance of doubt, in the event that the sum of the Rate of Interest and the Margin results in a negative amount, such amount shall be deemed to be zero.

(ii) (A) If the Issuer determines at any time prior to, on or following any Interest Determination Date, that the Relevant Screen Page on which appears the Reference Rate has been discontinued, or (B) following the adoption of a decision to withdraw the authorisation or registration of the administrator of the Reference Rate, as provided under the Benchmarks Regulation, the Issuer will as soon as reasonably practicable (and in any event prior to the next relevant Interest Determination Date) appoint an agent (the “Reference Rate Determination Agent”), which will not later than the Interest Determination Cut-off Date determine in a commercially reasonable manner whether a substitute or successor rate for purposes of determining the Reference Rate on each Interest Determination Date falling on such date or thereafter that is substantially comparable to the discontinued Reference Rate is available. If the Reference Rate Determination Agent determines that there is an industry accepted successor rate, the Reference Rate Determination Agent will use such successor rate to determine the Reference Rate. If the Reference Rate Determination Agent has determined a substitute or successor rate in accordance with the foregoing (such rate, the “Replacement Reference Rate”), for purposes of determining the Reference Rate on each Interest Determination Date falling on or after such determination: (x) the Reference Rate Determination Agent will also determine changes (if any) to the business day convention, the definition of business day, the interest determination date, the day count fraction, and any method for obtaining the Replacement Reference Rate, including any adjustment factor needed to make such Replacement Reference Rate comparable to the discontinued Reference Rate, in each case in a manner that is consistent with industry-accepted practices for such Replacement Reference Rate; (y) references to the Reference Rate in the Conditions and the Final Terms applicable to the relevant Notes will be deemed to be references to the Replacement Reference Rate, including any alternative method for determining such rate as described in (x) above; (z) the

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Reference Rate Determination Agent will notify the Issuer of the foregoing as soon as reasonably practicable; and (aa) the Issuer will give notice as soon as reasonably practicable to the Noteholders, the relevant Paying Agent and the Calculation Agent specifying the Replacement Reference Rate, as well as the details described in (x) above.

(iii) The determination of the Replacement Reference Rate and the other matters referred to above by the Reference Rate Determination Agent will (in the absence of manifest error) be final and binding on the Issuer, the Calculation Agent, the relevant Paying Agent, and the Noteholders, unless the Issuer considers at a later date that the Replacement Reference Rate is no longer substantially comparable to the Reference Rate or does not constitute an industry accepted successor rate, in which case the Issuer shall re-appoint a Reference Rate Determination Agent (which may or may not be the same entity as the original Reference Rate Determination Agent) for the purpose of confirming the Replacement Reference Rate or determining a substitute Replacement Reference Rate in an identical manner as described in paragraph (ii) above, which will then (in the absence of manifest error) be final and binding on the Issuer, the Calculation Agent, the relevant Paying Agent and the Noteholders. If the Reference Rate Determination Agent is unable to or otherwise does not determine a substitute Replacement Reference Rate, then the last known Replacement Reference Rate will apply.

(iv) If (A) the Reference Rate Determination Agent determines that the Relevant Screen Page on which appears the Reference Rate has been discontinued or a decision to withdraw the authorisation or registration of the administrator of the Reference Rate, as provided under Article 35 of the Benchmarks Regulation has been adopted but for any reason a Replacement Reference Rate has not been determined later than the Interest Determination Cut-off Date, or (B) if the provisions relating to the occurrence of a Tier 2 Disqualification Event in case of a Replacement Reference Rate are specified as applicable in the relevant Final Terms, the provisions under paragraphs from (ii) to (iii) above would cause the occurrence of a Tier 2 Disqualification Event, no Replacement Reference Rate will be adopted, and the Relevant Screen Page on which appears the Reference Rate for the relevant Interest Period will be equal to the last Reference Rate available at the immediately preceding Interest Period on the Relevant Screen Page as determined by the Calculation Agent.

(v) The Reference Rate Determination Agent may be (A) a leading bank or a broker-dealer in the principal financial centre of the Specified Currency (which may include one of the Dealers involved in the issue of the Notes) as appointed by the Issuer, (B) the Issuer or an affiliate of the Issuer (in which case any such determination shall be made in consultation with an independent financial advisor), (C) the Calculation Agent (if agreed in writing by the relevant Calculation Agent) or (D) any other entity which the Issuer considers has the necessary competences to carry out such role.

(vi) Notwithstanding any other provision of this Condition 7(c), if in the Calculation Agent’s opinion there is any uncertainty between two or more alternative courses of action in making any determination or calculation under this Condition 7(c), the Calculation Agent shall promptly notify the Issuer thereof and the Issuer shall direct the Calculation Agent in writing as to which alternative course of action to adopt. If the Calculation Agent is not promptly provided with such direction, or is otherwise unable to make such calculation or determination for any reason, it shall notify the Issuer thereof and the Calculation Agent shall be under no obligation to make such calculation or determination and shall not incur any liability for not doing so.

(vii) Notwithstanding any other provision of this Condition 7(c), neither the Fiscal Agent nor the relevant Paying Agent nor the Calculation Agent shall be obliged to concur with the Issuer in

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respect of any changes described in this Condition 7(c) which, in the sole opinion of the Fiscal Agent or the relevant Paying Agent or the Calculation Agent (as applicable), would have the effect of (i) exposing the Fiscal Agent or the relevant Paying Agent or the Calculation Agent (as applicable) to any liability against which it has not been indemnified and/or secured and/or prefunded to its satisfaction or (ii) increasing the obligations or duties, or decreasing the rights or protections, of the Fiscal Agent or the relevant Paying Agent or the Calculation Agent (as applicable) in the Agency Agreement and/or these Conditions.

(d) Screen Rate Determination for Floating Rate Notes which are CMS Linked Interest Notes

Subject to any adjustments as set out in Condition 21 (Margin, Maximum Rate of Interest, Minimum Rate of Interest and Rounding), if Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined and “CMS Rate” is specified as the Reference Rate in the Final Terms, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent by reference to the following formula:

CMS Rate plus Margin

If the Relevant Screen Page is not available, the Issuer or, at the option of the Issuer, the Reference Banks Agent shall request each of the CMS Reference Banks to provide the Calculation Agent with its quotation for the Relevant Swap Rate at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the Interest Determination Date in question. If at least three of the CMS Reference Banks provide the Calculation Agent with such quotation, the CMS Rate for such Interest Period shall be the arithmetic mean of such quotations, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest).

If on any Interest Determination Date less than three or none of the CMS Reference Banks provides the Calculation Agent with such quotations as provided in the preceding paragraph, the CMS Rate shall be determined by the Calculation Agent in good faith on such commercial basis as considered appropriate by the Calculation Agent in its absolute discretion, in accordance with standard market practice.

For the avoidance of doubt, in the event that the sum of the Rate of Interest and the Margin results in a negative amount, such amount shall be deemed to be zero.

(e) ISDA Determination

Subject to any adjustments as set out in Condition 21 (Margin, Maximum Rate of Interest, Minimum Rate of Interest and Rounding), if ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where “ISDA Rate” in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Final Terms;

(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Final Terms; and

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(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Final Terms.

Investors should consult the Issuer in case they require a copy of the ISDA Definitions.

For the avoidance of doubt, in the event that the sum of the Rate of Interest and the Margin results in a negative amount, such amount shall be deemed to be zero.

(f) Linear Interpolation

Where Linear Interpolation is specified in the relevant Final Terms as applicable in respect of an Interest Period, the Rate of Interest for such Interest Period shall be calculated by the Calculation Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified hereon as applicable) or the relevant Floating Rate Option (where ISDA Determination is specified hereon as applicable), one of which shall be determined as if the Applicable Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which shall be determined as if the Applicable Maturity were the period of time for which rates are available next longer than the length of the relevant Interest Period, provided, however, that if there is no rate available for the period of time next shorter or, as the case may be, next longer, then the Calculation Agent shall determine such rate at such time and by reference to such sources as it determines appropriate.

In this Condition, “Applicable Maturity” means: (a) in relation to Screen Rate Determination, the period of time designated in the Reference Rate, and (b) in relation to ISDA Determination, the Designated Maturity.

(g) Calculation of Interest Amount

The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the Calculation Amount during such Interest Period and multiplying the product by the relevant Day Count Fraction and rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards). For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent. Where the Specified Denomination of a Floating Rate Note or CMS Linked Interest Note comprises more than one Calculation Amount, the Interest Amount payable in respect of such Note shall be the aggregate of the amounts (determined in the manner provided above) for each Calculation Amount comprising the Specified Denomination without any further rounding.

(h) Publication

The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Issuer, the Paying Agents and each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of

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the foregoing provisions) in the event of an extension or shortening of the relevant Interest Period. If the Calculation Amount is less than the minimum Specified Denomination the Calculation Agent shall not be obliged to publish each Interest Amount but instead may publish only the Calculation Amount and the Interest Amount in respect of a Note having the minimum Specified Denomination.

(i) Notifications etc.

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 7 by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Paying Agents, the Noteholders and the Couponholders and (subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

8 Change of Interest Basis

If Change of Interest Basis is specified as applicable in the applicable Final Terms, the interest payable in respect of the Notes will be calculated in accordance with Condition 5 (Fixed Rate Note Provisions) or Condition 7 (Floating Rate and CMS Linked Interest Note Provisions), each applicable only for the relevant periods specified in the applicable Final Terms.

If Change of Interest Basis is specified as applicable in the applicable Final Terms, and Issuer’s Switch Option is also specified as applicable in the applicable Final Terms, the Issuer may, on one or more occasions, as specified in the applicable Final Terms, at its option (any such option, a “Switch Option”), having given notice to the Noteholders in accordance with Condition 19 (Notices) and delivering such notice to the Paying Agent and the Calculation Agent on or prior to the relevant Switch Option Expiry Date, change the Interest Basis of the Notes from Fixed Rate to Floating Rate or Floating Rate to Fixed Rate or as otherwise specified in the applicable Final Terms with effect from (and including) the Switch Option Effective Date specified in the applicable Final Terms to (but excluding) the Maturity Date (or, where more than one Switch Option Effective Date is specified in the applicable Final Terms, up to and excluding the next following Switch Option Effective Date), provided that (A) the Switch Option may be exercised only in respect of all the outstanding Notes, (B) upon exercise of a Switch Option, the Interest Basis change will be effective from (and including) the relevant Switch Option Effective Date until the Maturity Date (or, where more than one Switch Option Effective Date is specified as applicable in the applicable Final Terms, up to and excluding the next following Switch Option Effective Date to the extent the related Switch Option is exercised), and (C) where a Switch Option has not been exercised prior to the relevant Switch Option Expiry Date, the Issuer shall no longer be entitled to exercise such Switch Option and the Interest Basis shall not change.

9 Zero Coupon Note Provisions

(a) Application

This Condition 9 is applicable to the Notes only if the Zero Coupon Note Provisions are specified in the relevant Final Terms as being applicable.

(b) Late payment on Zero Coupon Notes

If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

(i) the Reference Price; and

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(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price on the basis of the relevant Day Count Fraction from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Fiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

10 Redemption and Purchase

(a) Scheduled redemption

Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments) and in this Condition 10.

Pursuant to Article 12-bis, paragraph 1, letter a), of the Consolidated Banking Act, the Maturity Date of the Senior Non-Preferred Notes shall not fall earlier than twelve months after their Issue Date.

The Maturity Date of Subordinated Notes shall not fall earlier than five years after their Issue Date, as provided under the Applicable Banking Regulations.

(b) Redemption for tax reasons

The Notes may be redeemed at the option of the Issuer in whole, but not in part:

(i) at any time (if neither the Floating Rate Note Provisions nor CMS Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate Note Provisions or the CMS Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable),

on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if:

(1) the Issuer has or will become obliged to pay additional amounts as provided or referred to in Condition 12 (Taxation) as a result of a Tax Law Change; and

(2) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided, however, that no such notice of redemption shall be given earlier than:

(A) where the Notes may be redeemed at any time, 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due; or

(B) where the Notes may be redeemed only on an Interest Payment Date, 60 days prior to the Interest Payment Date occurring immediately before the earliest date on which the Issuer would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Fiscal Agent (A) a certificate signed by two directors of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred and (B) an opinion of independent legal

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advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment. Upon the expiry of any such notice as is referred to in this Condition 10(b), the Issuer shall be bound, subject as set out below, to redeem the Notes in accordance with this Condition 10(b). The Fiscal Agent is not responsible, nor shall it incur any liability, for monitoring or ascertaining as to whether any certifications required by this Condition 10(b) is provided, nor shall it be required to review, check or analyse any certification produced nor shall it be responsible for the contents of any such certifications or incur any liability in the event the content of such certification is inaccurate or incorrect.

Notes redeemed pursuant to this Condition 10(b) will be redeemed at the Early Redemption Amount (Tax) together (if appropriate) with interest accrued to (but excluding) the date of redemption.

In the case of Senior Notes, any redemption pursuant to this Condition 10(b) shall be subject to Condition 10(l) (Regulatory conditions for call, redemption, repayment and repurchase of Senior Notes).

In the case of Subordinated Notes, any redemption pursuant to this Condition 10(b) shall be subject to Condition 10(m) (Regulatory conditions for call, redemption, repayment or repurchase of Subordinated Notes).

(c) Redemption of Subordinated Notes due to a Tier 2 Disqualification Event

This Condition 10(c) applies only to Notes specified in the relevant Final Terms as being Subordinated Notes.

If, at any time the Issuer determines that a Tier 2 Disqualification Event has occurred, the Notes may be redeemed at the option of the Issuer, in whole, but not in part, at any time (if this Note is neither a Floating Rate Note nor a CMS Linked Interest Note) or on any Interest Payment Date (if the Note is either a Floating Rate Note or a CMS Linked Interest Note), on giving not less than 15 nor more than 30 days’ notice to the Fiscal Agent and, in accordance with Condition 19 (Notices) to the Noteholders.

Prior to the publication of any notice of redemption pursuant to this Condition 10(c), the Issuer shall deliver or procure that there is delivered to the Fiscal Agent a certificate signed by two authorised signatories of the Issuer stating that the said circumstances prevail and describe the facts leading thereto, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. The Fiscal Agent is not responsible, nor shall it incur any liability, for monitoring or ascertaining as to whether any certifications required by this Condition 10(c) is provided, nor shall it be required to review, check or analyse any certification produced nor shall it be responsible for the contents of any such certifications or incur any liability in the event the content of such certification is inaccurate or incorrect.

Upon the expiry of any such notice as is referred to in this Condition 10(c), the Issuer shall be bound, subject as set out below, to redeem the Notes in accordance with this Condition 10(c), at their Early Redemption Amount (Tier 2 Disqualification Event) described in the relevant Final Terms, or together with accrued interest (if any) to (but excluding) the date fixed for redemption.

Any redemption pursuant to this Condition 10(c) shall be subject to Condition 10(m) (Regulatory conditions for call, redemption, repayment or repurchase of Subordinated Notes).

(d) Redemption of Senior Notes due to a MREL Disqualification Event

This Condition 10(d) applies only to Notes specified in the relevant Final Terms as being Senior Preferred Notes or Senior Non-Preferred Notes.

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If an Issuer Call due to a MREL Disqualification Event is specified in the relevant Final Terms as being applicable, then in cases where the Issuer determines that a MREL Disqualification Event has occurred and is continuing with respect to a Series of Senior Preferred Notes or Senior Non-Preferred Notes, any such Series may be redeemed at the option of the Issuer in whole, but not in part:

(a) at any time (if neither the Floating Rate Note Provisions, nor the CMS Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable); or

(b) on any Interest Payment Date (if either the Floating Rate Note Provisions or the CMS Linked Interest Note Provisions are specified in the relevant Final Terms as being applicable),

on giving not less than 30 days nor more than the maximum period of notice specified in the relevant Final Terms to the Fiscal Agent and, in accordance with Condition 19 (Notices), the Noteholders (which notice shall be irrevocable).

Upon the expiry of any such notice as is referred to in this Condition 10(d), the Issuer shall be bound, subject as set out below, to redeem the Notes in accordance with this Condition 10(d), at their Early Redemption Amount (MREL Disqualification Event) together (if appropriate) with interest accrued to (but excluding) the date of redemption.

Prior to the publication of any notice of redemption pursuant to this Condition 10(d), the Issuer shall deliver or procure that there is delivered to the Fiscal Agent a certificate signed by two authorised signatories of the Issuer stating that the said circumstances prevail and describe the facts leading thereto, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. The Fiscal Agent is not responsible, nor shall it incur any liability, for monitoring or ascertaining as to whether any certifications required by this Condition 10(d) is provided, nor shall it be required to review, check or analyse any certification produced nor shall it be responsible for the contents of any such certifications or incur any liability in the event the content of such certification is inaccurate or incorrect.

Any redemption pursuant to this Condition 10(d) shall be subject to Condition 10(l) (Regulatory conditions for call, redemption, repayment or repurchase of Senior Notes).

(e) Redemption at the option of the Issuer

If the Call Option is specified in the relevant Final Terms as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Final Terms, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer’s giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to (but excluding) such date).

In the case of Senior Notes, the call option pursuant to this Condition 10(e) shall be subject to Condition 10(l) (Regulatory conditions for call, redemption, repayment and repurchase of Senior Notes).

In the case of Senior Non-Preferred Notes, no call option in accordance with this Condition 10(e) may be exercised by the Issuer to redeem, in whole or in part, such Notes on any date falling less than 12 months after the Issue Date.

In the case of Subordinated Notes, no call option in accordance with this Condition 10(e) may be exercised by the Issuer to redeem, in whole or in part, such Notes prior to the fifth anniversary of

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their Issue Date. Starting from the fifth anniversary of their Issue Date, the redemption of Subordinated Notes pursuant to this Condition 10(e) shall be subject to Condition 10(m) (Regulatory conditions for call, redemption, repayment or repurchase of Subordinated Notes).

(f) Partial redemption

If the Notes are to be redeemed in part only on any date in accordance with Condition 10(e) (Redemption and Purchase – Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawing of lots in such place as the Fiscal Agent approves and in such manner as the Fiscal Agent considers appropriate, subject to compliance with applicable law and the rules of each listing authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation, and the notice to Noteholders referred to in Condition 10(e) (Redemption and Purchase – Redemption at the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Final Terms, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified. This Condition 10(f) shall not apply to Subordinated Notes.

(g) Redemption at the option of Noteholders

This Condition 10(g) applies only to Senior Notes and if the Put Option is specified in the relevant Final Terms as being applicable.

The Issuer shall, at the option of the holder of any Note redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice (which date, in the case of Senior Non-Preferred Notes, shall not fall less than 12 months after the Issue Date) at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(g), the holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together with all unmatured Coupons relating thereto and a duly completed Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(g), may be withdrawn; provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(g), the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.

(h) No other redemption

The Issuer shall not be entitled to redeem the Notes otherwise than as provided in Conditions 10(a) (Redemption and Purchase – Scheduled redemption) to 10(g) (Redemption and Purchase – Redemption at the option of Noteholders) above.

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(i) Early redemption of Zero Coupon Notes

Unless otherwise specified in the relevant Final Terms, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the relevant Final Terms for the purposes of this Condition 10(i) or, if none is so specified, a Day Count Fraction of 30E/360.

(j) Purchase

To the extent permitted by law, including the Applicable Banking Regulations, the Issuer or any of its Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, provided that all unmatured Coupons are purchased therewith and such Notes may be held, reissued, resold or, at the option of the Issuer, cancelled.

In the case of Senior Notes, any purchase pursuant to this Condition 10(j) shall be subject to Condition 10(l) (Regulatory conditions for call, redemption, repayment or repurchase of Senior Notes).

(k) Cancellation

All Notes which are so redeemed or purchased and subsequently surrendered for cancellation by the Issuer or any of its Subsidiaries and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.

(l) Regulatory conditions for call, redemption, repayment or repurchase of Senior Notes

This Condition 10(l) applies only to Notes specified in the relevant Final Terms as being Senior Preferred Notes or Senior Non-Preferred Notes.

In the case of Senior Notes, any call, redemption, repayment or repurchase pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(d) (Redemption of Senior Notes due to a MREL Disqualification Event), Condition 10(e) (Redemption at the option of the Issuer), Condition 10(g) (Redemption at the option of Noteholders) or Condition 10(j) (Purchase) is subject, to the extent such Senior Notes qualify at such time as liabilities that are eligible to meet the MREL Requirements, to the condition that the Issuer has obtained the prior permission of the Relevant Authority in accordance with Article 78a of the CRR, where one of the following conditions is met:

(A) on or before such call, redemption, repayment or repurchase (as applicable), the Issuer replaces the Senior Notes with Own Funds Instruments or Eligible Liabilities Instruments of equal or higher quality at terms that are sustainable for its income capacity;

(B) the Issuer has demonstrated to the satisfaction of the Relevant Authority that its Own Funds and Eligible Liabilities would, following such call, redemption, repayment or repurchase, exceed the requirements for Own Funds and Eligible Liabilities laid down in the Applicable Banking Regulations by a margin that the Relevant Authority considers necessary; or

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(C) the Issuer has demonstrated to the satisfaction of the Relevant Authority that the partial or full replacement of the Eligible Liabilities with Own Funds Instruments is necessary to ensure compliance with the Own Funds requirements laid down in the Applicable Banking Regulations for continuing authorization,

subject in any event to any different conditions or requirements as may be provided from time to time under the Applicable Banking Regulations.

For the avoidance of doubt, any refusal of the Relevant Authority to grant its permission in accordance with Article 78a of the CRR shall not constitute a default of the Issuer for any purposes.

(m) Regulatory conditions for call, redemption, repayment or repurchase of Subordinated Notes

This Condition 10(m) applies only to Notes specified in the relevant Final Terms as being Subordinated Notes.

In the case of Subordinated Notes, any call, redemption, repayment or repurchase pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(c) (Redemption of Subordinated Notes due to a Tier 2 Disqualification Event), Condition 10(e) (Redemption at the option of the Issuer) or Condition 10(j) (Purchase) is subject to the following conditions:

(a) the Issuer giving notice to the Relevant Authority and the Relevant Authority granting prior permission to redeem or purchase the relevant Subordinated Notes (in each case to the extent, and in the manner, required by the Applicable Banking Regulations, including Articles 77(b) and 78 of the CRR);

(b) compliance by the Issuer with any alternative or additional pre-conditions to redemption or purchase, as applicable, set out in the relevant Applicable Banking Regulations for the time being;

(c) the Issuer demonstrating to the satisfaction of the Relevant Authority that its Own Funds would, following such call, redemption, repayment or repurchase, exceed the capital requirements laid down in the Applicable Banking Regulations by a margin that the Relevant Authority considers necessary; and

(d) in respect of a call, redemption or repurchase proposed to be made prior to the fifth anniversary of the Issue Date of the relevant Notes, if and to the extent required under Article 78(4) of the CRR or the Capital Instruments Regulation:

(i) in the case of a proposed redemption pursuant to Condition 10(b) (Redemption for tax reasons), the Issuer has demonstrated to the satisfaction of the Relevant Authority that the change in the applicable tax treatment of the Notes is material and was not reasonably foreseeable by the Issuer as at the Issue Date;

(ii) in case of a proposed redemption pursuant to Condition 10(c) (Redemption of Subordinated Notes due to a Tier 2 Disqualification Event), the Issuer has demonstrated to the satisfaction of the Relevant Authority that the change in the regulatory classification of the Notes was not reasonably foreseeable by the Issuer as at the Issue Date:

(iii) on or before the relevant call, redemption, repayment or repurchase, the Issuer replaces the Notes with Own Funds Instruments of equal or higher quality at terms that are sustainable for its income capacity and the Relevant Authority has permitted that action

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on the basis of the determination that it would be beneficial from a prudential point of view and justified by exceptional circumstances; or

(iv) the Subordinated Notes are repurchased for market making purposes,

subject in any event to any different conditions or requirements as may be provided from time to time under the Applicable Banking Regulations.

For the avoidance of doubt, any refusal of the Relevant Authority to grant its permission in accordance with Article 78 of the CRR shall not constitute a default of the Issuer for any purposes.

11 Payments

(a) Principal

Payments of principal shall be made only against presentation and (provided that payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London).

(b) Interest

Payments of interest shall, subject to Condition 11(h) (Payments – Payments other than in respect of matured Coupons) below, be made only against presentation and (provided that payment is made in full) surrender of the appropriate Coupons at the Specified Office of any Paying Agent outside the United States in the manner described in Condition 11(a) (Payments – Principal) above.

(c) Payments in New York City

Payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

(d) Payments subject to fiscal laws

All payments in respect of the Notes are subject in all cases to (i) any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 12 (Taxation) and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 or otherwise imposed pursuant to Sections 1471 through 1474 of that Code, any regulations or agreements thereunder, official interpretations thereof or (without prejudice to the provisions of Condition 12 (Taxation)) any law implementing an intergovernmental approach thereto. No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

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(e) Deductions for unmatured Coupons

If the relevant Final Terms specifies that the Fixed Rate Note Provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

(A) so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the “Relevant Coupons”) being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and

(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in Condition 11(a) (Payments – Principal) above against presentation and (provided that payment is made in full) surrender of the relevant missing Coupons.

(f) Unmatured Coupons void

If the relevant Final Terms specifies that this Condition 11(f) is applicable or that the Floating Rate Note Provisions or the CMS Linked Interest Note Provisions are applicable, on the due date for final redemption of any Note or early redemption in whole of such Note pursuant to Condition 10(b) (Redemption and Purchase – Redemption for tax reasons), Condition 10(c) (Redemption and Purchase – Redemption of Subordinated Notes due to a Tier 2 Disqualification Event), Condition 10(d) (Redemption and Purchase – Redemption of Senior Notes due to a MREL Disqualification Event) Condition 10(e) (Redemption and Purchase – Redemption at the option of the Issuer), Condition 10(g) (Redemption and Purchase – Redemption at the option of Noteholders) or Condition 13 (Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(g) Payments on business days

If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

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(h) Payments other than in respect of matured Coupons

Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted under Condition 11(c) (Payments – Payments in New York City) above).

(i) Exchange of Talons

On or after the maturity date of the final Coupon which is (or was at the time of issue) attached to the Notes, the Talon attached to such Coupon Sheet may be exchanged at the Specified Office of the Fiscal Agent for further Coupons (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 14 (Prescription). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

12 Taxation

All payments of principal and interest in respect of the Notes and the Coupons by or on behalf of the Issuer shall be made free and clear of, and without withholding or deduction for or on account of, any taxes, duties, assessments or governmental charges of whatsoever nature (“Taxes”) imposed, or levied, collected, withheld or assessed by the Republic of Italy or any political subdivision or any authority thereof or therein having power to tax, unless the withholding or deduction of such Taxes is required by law. In that event, the Issuer shall pay such additional amounts as may be necessary in order that the net amounts received by the Noteholders or Couponholders after the withholding or deduction shall equal the respective amounts of principal and interest in the case of Senior Notes (if permitted by the MREL Requirements), or interest only, in the case of Subordinated Notes which would have been received in respect of the Notes or (as the case may be) Coupons in the absence of the withholding or deduction, except that no additional amounts shall be payable in relation to any payment in respect of any Note or Coupon:

(a) presented for payment by, or on behalf of, a holder who is liable to Taxes in respect of the Note or Coupon by reason of his having some connection with the Republic of Italy other than the mere holding of the Note or Coupon; or

(b) presented for payment in the Republic of Italy; or

(c) in relation to any payment or deduction of any interest, premium or other proceeds of any Note or Coupon on account of imposta sostitutiva pursuant to Legislative Decree No. 239 of 1 April 1996 (“Decree 239”), as amended from time to time; or

(d) in all circumstances in which the procedures to obtain an exemption from imposta sostitutiva set forth in Decree 239, as amended from time to time, or related implementing regulations, have not been met or complied with, except where such procedures have not been met or complied with due to the actions or omissions of the Issuer or its agents; or

(e) presented for payment by a holder who is a non Italian resident legal entity or a non Italian resident individual, to the extent that interest or other amounts is paid to a non Italian resident legal entity or a non Italian resident individual which is resident in a country which does not allow for a satisfactory exchange of information with the Republic of Italy; or

(f) presented for payment more than thirty (30) days after the Relevant Date except to the extent that the holder thereof would have been entitled to an additional amount on presenting the same for payment on such thirtieth day; or

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(g) presented for payment by, or on behalf of, a holder who is entitled to avoid such withholding or deduction in respect of such Note or Coupon by making a declaration or any other statement to the relevant tax authority, including, but not limited to, a declaration of residence or non-residence or other similar claim for exemption.

13 Events of Default

The Notes are, and they shall immediately become, due and payable at their Early Termination Amount together with, if appropriate, accrued interest thereon if the Issuer is subject to compulsory winding-up (liquidazione coatta amministrativa) pursuant to Articles 80 and following of the Consolidated Banking Act or voluntary winding-up (liquidazione volontaria) in accordance with the relevant provisions of the Italian Civil Code and/or Article 96-quinquies of the Consolidated Banking Act, provided that repayment of the Notes will only be effected after the Issuer has obtained the prior approval of the Relevant Authority (if so required), and provided further that no payments will be made to the Noteholders or Couponholders before all amounts due, but unpaid, to all other creditors of the Issuer ranking ahead of the Noteholders and the Couponholders, as described in Condition 4 (Status) have been paid by the Issuer, as ascertained by the liquidator.

Proceedings for the opening of a compulsory winding-up (liquidazione coatta amministrativa) in respect of the Issuer may only be initiated in the Republic of Italy (and not elsewhere) in accordance with the laws of the Republic of Italy.

No remedy (including any remedy under the Italian Civil Code) against the Issuer other than as specifically provided by this Condition 13 shall be available to the holders of the Notes and the related Coupons, whether for the recovery of amounts owing in respect of the Notes and the related Coupons or in respect of any breach by the Issuer of any of its obligations under the Notes and the related Coupons or otherwise.

For the avoidance of doubt, the non-payment by the Issuer of any amount due and payable under these Notes, or the taking of any crisis prevention measure or crisis management measure in relation to the Issuer in accordance with the BRRD, is not an event of default.

14 Prescription

Claims for principal shall become void unless the relevant Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date.

15 Replacement of Notes and Coupons

If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Fiscal Agent (and, if the Notes are then admitted to listing, trading and/or quotation by any listing authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Paying Agent having its Specified Office in the place required by such listing authority, stock exchange and/or quotation system), subject to all applicable laws and listing authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

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16 Agents

In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents act solely as agents of the Issuer and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.

The initial Paying Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any) is specified in the relevant Final Terms. The Issuer reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint a successor fiscal agent or calculation agent and additional or successor paying agents; provided, however, that:

(a) the Issuer shall at all times maintain a Fiscal Agent; and

(b) if a Calculation Agent is specified in the relevant Final Terms, the Issuer shall at all times maintain a Calculation Agent; and

(c) the Issuer shall at all times maintain a Paying Agent outside the Republic of Italy; and

(d) if and for so long as the Notes are admitted to listing, trading and/or quotation by any listing authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Issuer shall maintain a Paying Agent having its Specified Office in the place required by such listing authority, stock exchange and/or quotation system.

Notice of any change in any of the Paying Agents or in their Specified Offices shall promptly be given to the Noteholders.

17 Meetings of Noteholders; Modification; Substitution or Modification of the Notes

(a) Meetings of Noteholders

The Agency Agreement contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer and shall be convened by it upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be one or more Persons holding or representing one more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, one or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; provided, however, that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which one or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

With respect to the Senior Non-Preferred Notes, any modification of the Notes may be sanctioned in accordance with the provisions of this Clause 17 only to the extent permitted under Article 12-bis, paragraph 3, of the Consolidated Banking Act.

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(b) Modification

The Notes and these Conditions may be amended without the consent of the Noteholders or the Couponholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof, but the Issuer shall not agree, without the consent of the Noteholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of the Issuer, not materially prejudicial to the interests of the Noteholders. In addition, no consent of the Noteholders or Couponholders shall be required in connection with effecting the Replacement Reference Rate as described in Condition 7(c) or such other relevant changes.

(c) Substitution or modification of the Notes

If a Substitution or Modification of the Notes is specified as being applicable in the relevant Final Terms, (i) in cases where a Tier 2 Disqualification Event or a Tax Law Change has occurred and is continuing (with respect to Subordinated Notes), or a MREL Disqualification Event or a Tax Law Change has occurred and is continuing (with respect to Senior Notes), and/or (ii) with respect to all Notes, in order to ensure the effectiveness and enforceability of Condition 23 (Contractual Recognition of Bail-In Power) or in accordance with applicable law, the Issuer shall be entitled, having given not less than 30 nor more than 60 days’ notice to the Fiscal Agent and, in accordance with Condition 19 (Notices), the Noteholders (which notice shall be irrevocable), at any time either to modify the provisions of the Agency Agreement and/or the terms of the Notes of such Series, or substitute all (but not some only) of such Notes with other securities, which substitution or modification, for the avoidance of doubt, in each case shall be treated as being outside the scope of the Reserved Matters, provided that

(i) such substitution or modification is reasonably necessary in the sole opinion of the Issuer to ensure, as applicable, that no Tier 2 Disqualification Event, Tax Law Change or MREL Disqualification Event would exist thereafter, or that the effectiveness and enforceability of the Bail-In Power in accordance with Condition 23 (Contractual Recognition of Bail-In Power) or in accordance with applicable law is ensured;

(ii) following such substitution or modification of the existing Notes (the “Existing Notes”):

(A) the terms and conditions of the Notes, as so modified (the “Modified Notes”), or the terms and conditions of the securities issued to substitute the Existing Notes (the “New Securities”), as applicable, are not materially less favourable to a holder of the Existing Notes (as reasonably determined by the Issuer and other than in respect of the effectiveness and enforceability of Condition 23 (Contractual Recognition of Bail-In Power) or in accordance with applicable law and other than as referred to under (v) below) than the terms and conditions applicable to the Existing Notes prior to such substitution or modification;

(B) the Modified Notes or the New Securities, as applicable, shall have a ranking at least equal to that of the Existing Notes and shall feature the same tenor, principal amount, interest rates (including applicable margins), Interest Payment Dates and redemption rights as the Existing Notes;

(C) the Modified Notes or the New Securities, as applicable, are assigned (or maintain) the same solicited credit ratings (if any) as were assigned to the Existing Notes immediately prior to such substitution or modification, provided that such change in rating, if any, shall only be relevant for the purposes of this Condition 17(c)(ii)(C), if

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related specifically to the substitution or modification (save that, for the avoidance of doubt, where any credit rating was, as a result of Condition 23 (Contractual Recognition of Bail-In Power) becoming ineffective and/or unenforceable, amended prior to such substitution or variation, reference in this sub-clause (C) shall be to such credit rating prior to such amendment);

(D) the Modified Notes or the New Securities, as applicable, continue to be listed on a recognised stock exchange, if the Existing Notes were listed immediately prior to such substitution or modification;

(iii) the substitution or modification does not itself give rise to any right of the Issuer to redeem the Existing Notes prior to their Maturity Date, without prejudice to the provisions under Condition 10(e) (Redemption at the option of the Issuer);

(iv) the Relevant Authority has approved such substitution or modification (if such approval is required under the Applicable Banking Regulations or the MREL Requirements at the relevant time, as appropriate), or has received prior written notice thereof (if such notice is required under the Applicable Banking Regulations or the MREL Requirements applicable at that time) and, following the expiry of all relevant statutory time limits, the Relevant Authority is no longer entitled to object or impose changes to the proposed substitution or modification; and

(v) any substitution or modification made under this Condition 17(c) may result in a change in the governing law provided under Condition 22(a) (Governing law) from English law to another law and/or in the jurisdiction and service of process provisions set out in Conditions 22 (Governing Law and Jurisdiction) if deemed reasonably necessary in the sole opinion of the Issuer to ensure, as applicable, that no Tier 2 Disqualification Event or MREL Disqualification Event would exist thereafter, or that the effectiveness and enforceability of Condition 23 (Contractual Recognition of Bail-In Power) is ensured.

In connection with any substitution or modification made in this Condition 17(c), the Issuer shall comply with the rules of any stock exchange on which the Notes are then listed or admitted to trading and of any authority that is responsible for the supervision or regulation of such exchange.

Any such substitution or modification shall be binding on all Noteholders and Couponholders and shall be notified by the Issuer as soon as reasonably practicable to the Noteholders in accordance with Condition 19 (Notices).

18 Further Issues

The Issuer may from time to time, without the consent of the Noteholders or the Couponholders, but subject to any prior approval required from the Relevant Authority, create and issue further notes having the same terms and conditions as the Notes in all respects (or in all respects except for the Issue Price, the Issue Date and/or the first payment of interest) so as to form a single series with the Notes.

19 Notices

Notices to the Noteholders shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) and, if the Notes which are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or on the website of the Luxembourg Stock Exchange (www.bourse.lu) or, in either case, if such publication is not practicable, in a

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leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers). Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.

20 Currency Indemnity

If any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given or made in relation thereto has to be converted from the currency (the “first currency”) in which the same is payable under these Conditions or such order or judgment into another currency (the “second currency”) for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining an order or judgment in any court or other tribunal or (c) enforcing any order or judgment given or made in relation to the Notes, the Issuer shall indemnify each Noteholder, on the written demand of such Noteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (ii) the rate or rates of exchange at which such Noteholder may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof.

This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to a separate and independent cause of action.

21 Margin, Maximum Rate of Interest, Minimum Rate of Interest and Rounding

(a) Margin

If any Margin is specified in the Final Terms (either (A) generally or (B) in relation to one or more Interest Periods or (C) in relation to one or more Reset Periods), an adjustment shall, unless the relevant Margin has already been taken into account in determining such Rate of Interest, be made to all Rates of Interest, in the case of (A), or the Rates of Interest for the specified Interest Periods or Reset Periods, in the case of (B) or (C), calculated, in each case, in accordance with Condition 6 (Fixed Rate Reset Note Provisions) or Condition 7 (Floating Rate and CMS Linked Interest Note Provisions) as the case may be, by adding (if a positive number) or subtracting (if a negative number) the absolute value of such Margin subject (in the case of Floating Rate Notes only) to the next paragraph.

(b) Maximum Rate of Interest and Minimum Rate of Interest

If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Final Terms, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

(c) Rounding

For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Final Terms), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in

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or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

22 Governing Law and Jurisdiction

(a) Governing law

The Notes and any non-contractual obligations arising out of or in connection with the Notes are governed by English law, except for Conditions 4(b) and (c) (Status), Condition 23 (Contractual Recognition of Bail-In Power) and any non-contractual obligations arising out of or in connection with those Conditions, which are governed by, and shall be construed in accordance with, Italian law.

(b) Submission to jurisdiction

The courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with the Notes (including a dispute relating to the existence, validity or termination of the Notes or any non-contractual obligation arising out of or in connection with the Notes) or the consequences of their nullity.

(c) Appropriate forum

The Issuer agrees that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue to the contrary.

(d) Process agent

The Issuer agrees that the documents which start any proceedings and any other documents required to be served in relation to those proceedings may be served on it by being delivered to The Italian Chamber of Commerce and Industry at 1 Princes Street, London W1B 2AY or, if different, its registered office for the time being or at any address of the Issuer in Great Britain at which process may be served on it in accordance with Parts 34 and 37 of the Companies Act 2006. If such Person is not or ceases to be effectively appointed to accept service of process on behalf of the Issuer, the Issuer shall appoint a further Person in England to accept service of process on its behalf. Nothing in this paragraph shall affect the right of any Noteholder to serve process in any other manner permitted by law.

23 Contractual Recognition of Bail-In Power

Notwithstanding any provision of these Conditions or any other agreements, arrangements, or understandings between the Issuer and any holder of the Notes and without prejudice to Article 55(1) of the BRRD, each Noteholder, by virtue of its acquisition of the Notes (whether on issuance or in the secondary market), acknowledges and accepts the existence of, agrees to be bound by and consents to:

(a) the effects of the exercise of the Bail-In Power by the Relevant Authority, which exercise may include and result in, without limitation, any of the following, or some combination thereof:

(i) the reduction of all, or a portion, of the principal amount in respect of the Notes together with any accrued but unpaid interest due thereon and any additional amounts (if any) due in relation thereto;

(ii) the conversion of all, or a portion, of the principal amount in respect of the Notes together with any accrued but unpaid interest due thereon and any additional amounts (if any) due in relation thereto, into ordinary shares, other securities or other obligations of the Issuer or another person

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(and the issue to or conferral on the holder of such shares, securities or obligations), including by means of an amendment, modification or variation of these Conditions;

(iii) the cancellation of the Notes or the principal amount in respect of the Notes together with any accrued but unpaid interest due thereon and any additional amounts (if any) due in relation thereto; and

(iv) the amendment or alteration of the maturity of the Notes or amendment of the amount of interest payable on the Notes, or the date on which the interest become payable, including by suspending payment for a temporary period; and

(b) the variation of these Conditions, as deemed necessary by the Relevant Authority, to give effect to the exercise of the Bail-In Power by the Relevant Authority.

Each Noteholder further agrees that the rights of the Noteholders are subject to, and will be varied if necessary so as to give effect to, the exercise of any Bail-In Power by the Relevant Authority.

Upon the Issuer being notified of the exercise of the Bail-In Power by the Relevant Authority with respect to the Notes, the Issuer shall provide a notice to the holders of the Notes in accordance with Condition 19 (Notices) as soon as reasonably practicable. The Issuer shall also deliver a copy of such notice to the Fiscal Agent for information purposes. Any delay or failure by the Issuer to give notice shall not affect the validity and enforceability of the Bail-In Power nor the effects on the Notes described in this Condition 23.

The exercise of the Bail-In Power by the Relevant Authority with respect to the Notes shall not constitute an Event of Default and the terms and conditions of the Notes shall continue to apply to the outstanding principal amount of the Notes subject to any modification of the amount of interest payments to reflect the reduction of the outstanding principal amount, and any further modification of the terms that the Relevant Authority may decide in accordance with applicable laws and regulations, including in particular the BRRD and the SRM Regulation, and any other relevant provisions under the Applicable Banking Regulations.

Each Noteholder also acknowledges and agrees that this provision is exhaustive on the matters described herein to the exclusion of any other agreements, arrangements or understandings relating to the application of the Bail-In Power to the Notes, and any other relevant provisions under the Applicable Banking Regulations.

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FORM OF FINAL TERMS

The Final Terms in respect of each Tranche of Notes will be substantially in the following form, duly completed to reflect the particular terms of the relevant Notes and their issue. Text in this section appearing in italics does not form part of the form of the Final Terms but denotes directions for completing the Final Terms.

[PROHIBITION OF SALES TO EEA RETAIL INVESTORS – The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); or (ii) a customer within the meaning of Directive (EU) 2016/97, as amended or superseded, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive 2003/71/EC (as amended or superseded, the “Prospectus Directive”). Consequently no key information document required by Regulation (EU) No. 1286/2014 (the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPS Regulation.]

MIFID II product governance / Professional investors and ECPs only target market – Solely for the purposes of each manufacturer’s product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only, each as defined in MiFID II; and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a “distributor”) should take into consideration the manufacturers’ target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturers’ target market assessment) and determining appropriate distribution channels.

Final Terms dated [●]

BANCA SELLA S.p.A. Legal Entity Identifier (LEI): 549300I7OIUB41P86L19

Issue of [currency] [Aggregate Nominal Amount of Tranche] [Title of Notes]

under the €1,000,000,000 Euro Medium Term Note Programme

PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the “Conditions”) set forth in the Base Prospectus dated 11 July 2019 [and the supplement[s] to the base prospectus dated [●]] which [together] constitute[s] a base prospectus for the purposes of Article 5.4 of Directive 2003/71/EC, as amended (the “Prospectus Directive”). This document constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with the Base Prospectus [as so supplemented].

Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Base Prospectus [as so supplemented]. The Base Prospectus [and the supplement[s] to the Base Prospectus] [is/are] available for viewing at [address] and [website] and copies may be obtained

102 from [address]. The Base Prospectus [and the supplement[s]] and, in the case of Notes admitted to trading on the regulated market of the Luxembourg Stock Exchange, the applicable Final Terms will also be published on the website of the Luxembourg Stock Exchange (www.bourse.lu).

[Include whichever of the following apply or specify as “Not Applicable”. Note that the numbering should remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]

[When completing any final terms consideration should be given as to whether such terms or information constitute “significant new factors” and consequently trigger the need for a supplement to the Prospectus under Article 16 of the Prospectus Directive.]

[If the Notes have a maturity of less than one year from the date of their issue, the minimum denomination may need to be €100,000 or its equivalent in any other currency. Senior Non-Preferred Notes must have a denomination of at least €250,000 – or, where the Senior Non-Preferred Notes are denominated in a Specified Currency other than euro, the equivalent amount in such other Specified Currency]

1 (i) Series Number: [●]

(ii) Tranche Number: [●] [(iii) Date on which the Notes become [Not Applicable/The Notes shall be fungible,

fungible:] consolidated, form a single series and be interchangeable for trading purposes with the [●] on [[●]/the Issue Date/exchange of the Temporary Global Note for interests in the Permanent Global Note, as referred to in paragraph 20 (Form of Notes) below [which is expected to be on or about [●].] 2 Specified Currency or Currencies: [Euro (“EUR”)] [●] (Condition 3(a) (Definitions and Interpretation – “Specified Currency”)) 3 Aggregate Nominal Amount: (i) Series: [●] (ii) Tranche: [●] 4 Issue Price: [●] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date]] (in the case of fungible issues only, if applicable) 5 (i) Specified Denomination(s): [●] [and integral multiplies of [●] in excess thereof (Condition 3(a) (Definitions and up to and including [●]. No Notes in definitive form Interpretation – “Specified will be issued with a denomination above [●].] Denomination(s)”)) (The minimum denomination of Notes admitted to trading on a regulated market within the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive will be €100,000 (or， if the Notes are denominated in a currency other than euro, the equivalent amount of such currency)) (Senior Non-Preferred Notes must have a

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denomination of at least €250,000 (or, where the Senior Non-Preferred Notes are denominated in a Specified Currency other than Euro, the equivalent amount in such other Specified Currency) (Notes including Notes denominated in Sterling, in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of Financial Services and Markets Act 2000 and which have a maturity of less than one year must have a minimum redemption value of £100,000 (or its equivalent in other currencies)) (ii) Calculation Amount: [●] (Condition 3(a) (Definitions and (If only one Specified Denomination， insert the Interpretation – “Calculation Specified Denomination. If more than one Specified Amount”)) Denomination, insert the highest common factor. There must be a common factor in the case of two or more Specified Denominations.) 6 (i) Issue Date: [●] (Condition 3(a) (Definitions and Interpretation – “Issue Date”)) (ii) Interest Commencement Date (if [Specify/Issue Date/Not Applicable] different from the Issue Date): (Condition 3(a) (Definitions and Interpretation – “Interest Commencement Date”)) 7 Maturity Date: [Specify date or (for Floating Rate Notes) Interest (Condition 3(a) (Definitions and Interpretation – Payment Date falling in the relevant month and “Maturity Date”)) year] [If the Maturity Date is less than one year from the Issue Date and either (a) the issue proceeds are received by the Issuer in the United Kingdom or (b) the activity of issuing the Notes is carried on from an establishment maintained by the Issuer in the United Kingdom, (i) the Notes must have a minimum redemption value of £100,000 (or its equivalent in other currencies) and be sold only to “professional investors” or (ii) another applicable exemption from section 19 of the FSMA must be available.] 8 Interest Basis: [[●] per cent. Fixed Rate] (Condition 5 (Fixed Rate Note Provisions) / [●] per cent. to be reset on [●] [and [●]] [and every Condition 6 (Fixed Rate Reset Note Provisions) / [●] anniversary thereafter] Condition 7 (Floating Rate and CMS Linked [[●] per cent. Fixed Rate from [●] to [●], then [●] Interest Note Provisions) and Condition 9 (Zero per cent. Fixed Rate from [●] to [●]]

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Coupon Note Provisions)) [[EURIBOR]/[LIBOR] +/- [●] per cent. per annum Floating Rate] [CMS Linked Interest] [Zero Coupon] (further particulars specified below) 9 Change of Interest Basis Provisions: [Applicable / Not Applicable] (If applicable, specify the date when any fixed to floating rate or vice versa change occurs or cross refer to paragraphs 12 and 14 (as appropriate) below and identify there) (If not applicable, delete the remaining sub- paragraphs of this paragraph) (N.B. To be completed in addition to paragraphs 12 and 14 (as appropriate) if any fixed-to-floating or floating-to-fixed rate change occurs) (i) Reset Date(s): [●] (ii) Switch Options: [Applicable - [Specify details of the change(s) in Interest Basis and the relevant Interest Periods to which the change(s) in Interest Basis applies]/[Not Applicable] (N.B. The Issuer must give notice of the exercise of the Switch Option to Noteholders in accordance with Condition 19 (Notices) on or prior to the relevant Switch Option Expiry Date) (iii) Switch Option Expiry Date: [●] (iv) Switch Option Effective Date: [●] 10 Put/Call Options: [Investor Put] (Condition 10(g) (Redemption and Purchase – [Issuer Call] Redemption at the option of Noteholders) or [(Further particulars specified below)] (Condition 10(e) (Redemption and Purchase – Redemption at the option of the Issuer) and Condition 10(f) (Redemption and Purchase – Partial redemption)) 11 (i) Status of the Notes: [Senior Preferred Notes/Senior Non-Preferred (Condition 4 (Status)) Notes/Subordinated Notes] (ii) Date of [Board] approval for issuance [●]/ [Not Applicable] of Notes obtained: (N.B Only relevant where Board (or similar) authorisation is required for the particular tranche of Notes) PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 12 Fixed Rate Note Provisions [Applicable/Not Applicable / (If a Change of (Condition 5 (Fixed Rate Note Provisions)) Interest Basis applies): Applicable for the period starting from [and including] [●] ending on [but

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excluding] [●])] (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Rate(s) of Interest: [●] per cent. per annum [payable [annually/semi- (Condition 5(b) (Fixed Rate Note annually/quarterly/monthly] in arrear] Provisions – Accrual of interest)) (ii) Interest Payment Date(s): [●] in each year up to and including the Maturity (Condition 3(a) (Definitions and Date Interpretation – “Interest Payment Date”)) (iii) Fixed Coupon Amount(s): [●] per Calculation Amount (Condition 3(a) (Definitions and (Specify different Fixed Coupon Amounts if different Interpretation – “Fixed Coupon Rates of Interest are specified as being applicable in Amount”)) respect of different Interest Periods) (iv) Broken Amount(s): [●] per Calculation Amount, payable on the Interest (Condition 3(a) (Definitions and Payment Date falling [in/on] [●] Interpretation – “Broken Amount”)) (v) Day Count Fraction: [Actual/Actual]/ (Condition 3(a) (Definitions and [Actual/Actual (ISDA)]/ Interpretation – “Day Count [Actual/Actual (ICMA)]/ Fraction”)) [Actual/365 (Fixed)]/ [Actual/360]/ [30/360]/ [360/360]/ [Bond Basis] / [30E/360]/ [Eurobond Basis]/ [30/360 (ICMA)] 13 Fixed Rate Reset Note Provisions [Applicable/Not Applicable] (Condition 6 (Fixed Rate Reset Note Provisions)) (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Initial Rate of Interest: [●] per cent. per annum [payable [annually/semi annually/quarterly/monthly] in arrear] (ii) Interest Payment Date(s): [●] [and [●]] in each year [from and including [●]][until and excluding [●]] (iii) First Reset Date: [●] (iv) Second Reset Date: [[●]/Not Applicable] (v) Anniversary Date(s): [[●]/Not Applicable] (vi) Reset Determination Dates: [●] (vii) Reset Rate: [Semi-annual][Annualised]Mid-Swap Rate] (viii) Swap Rate Period: [[●]/Not Applicable]

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(ix) Screen Page: [ISDAFIX1]/[ISDAFIX2]/[ISDAFIX3]/ [ISDAFIX4]/[●]/[Not Applicable] (x) Fixed Leg: [annual calculated on a 30/360 day count basis] / [●] day count basis]/[Not Applicable] (xi) Floating Leg: [6-month EURIBOR] / [[●] rate calculated on an [Actual/360] / [●] day count basis] / [Not Applicable] (xii) Margin(s): [+/–] [●] per cent. per annum (xiii) Fixed Coupon Amount[(s)] in respect [[●] per Calculation Amount] of the period from (and including) the Interest Commencement Date up to (but excluding) the First Reset Date: (xiv) Broken Amount(s): [[●] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [●]/Not Applicable] (xv) Day Count Fraction: [Actual/Actual]/ [Actual/Actual (ISDA)]/ [Actual/Actual (ICMA)]/ [Actual/365 (Fixed)]/ [Actual/360]/ [30/360]/ [360/360]/ [Bond Basis] / [30E/360]/ [Eurobond Basis]/ [30/360 (ICMA)] (xvi) Determination Dates: [[●] in each year/Not Applicable] (xvii) Party responsible for calculating the [[Name] shall be the Calculation Agent Rate(s) of Interest and Interest (No need to specify if the Fiscal Agent is to perform Amount(s) (if not the Fiscal Agent): this function)] (Condition 3(a) (Definitions and Interpretation – “Calculation Agent”)): 14 Floating Rate Note Provisions [Applicable/Not Applicable (If a Change of Interest (Condition 7 (Floating Rate and CMS Linked Basis applies): Applicable for the period starting Interest Note Provisions)) from [and including] [●] ending on [but excluding] [●])] (If not applicable，delete the remaining sub- paragraphs of this paragraph.) (i) Interest Payment Dates: [●] (Condition 3(a) (Definitions and Interpretation – “Interest Payment Date”))

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(ii) Business Day Convention: [Floating Rate Convention/ (Condition 3(a) (Definitions and Following Business Day Convention/ Modified Interpretation – “Business Day Following Business Day Convention/ Convention”)) Preceding Business Day Convention] (iii) Specified Period: [Not Applicable]/[●] (Condition 3(a) (Definitions and Interpretation – “Specified Period”)) (iv) Additional Business Centre(s): [Not Applicable]/[●] (Condition 3(a) (Definitions and Interpretation – “Additional Business Centre(s)”)) (v) Manner in which the Rate(s) of [Screen Rate Determination/ISDA Determination] Interest is/are to be determined: (Condition 7 (Floating Rate and CMS Linked Interest Note Provisions)) (vi) Party responsible for calculating the [[Name] shall be the Calculation Agent Rate(s) of Interest and Interest (No need to specify if the Fiscal Agent is to perform Amount(s) (if not the Fiscal Agent): this function)] (Condition 3(a) (Definitions and Interpretation – “Calculation Agent”)) (vii) Screen Rate Determination: [Applicable/Not Applicable] (Condition 7 (Floating Rate and CMS Linked Interest Note Provisions)) - Reference Rate: [EURIBOR/LIBOR/CMS Rate/[●]] (Condition 3(a) (Definitions and Interpretation – “Reference Rate”)) - Reference Banks: [Not Applicable]/[●] (Condition 3(a) (Definitions and Interpretation – “Reference Banks”)) - Interest Determination Date(s): [●] (Condition 3(a) (Definitions and (In the case of a CMS Rate where the Reference Interpretation – “Interest Currency is euro):[Second day on which the Determination Date”)) TARGET2 is open prior to the start of each Interest Period] (In the case of a CMS Rate where the Reference Currency is other than euro):[Second [specify type of day] prior to the start of each Interest Period] - Relevant Screen Page: [For example, Reuters page EURIB0R01] (Condition 3(a) (Definitions and (In the case of CMS Linked Interest Note, specify Interpretation – “Relevant Screen relevant screen page and any applicable headings Page”)) and captions)

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- Relevant Time: [For example, 11.00 a.m.[London/Brussels] time] (Condition 3(a) (Definitions and Interpretation – “Relevant Time”)) - Relevant Financial Centre: [For example, London/Euro-zone (where Euro-zone (Condition 3(a) (Definitions and means the region comprised of the countries whose Interpretation – “Relevant Financial lawful currency is the euro)] Centre”)) - [Reference Currency:] [●] (only relevant where the CMS Rate is the Reference Rate) (Condition 3(a) (Definitions and Interpretation – “Reference Currency”)) - [Designated Maturity:] [●] (only relevant where the CMS Rate is the Reference Rate) (Condition 7(d) (Floating Rate and CMS Linked Interest Note Provisions – Screen Rate Determination for Floating Rate Notes which are CMS Linked Interest Notes)) (viii) ISDA Determination: [Applicable/Not Applicable] (Condition 7(e) (Floating Rate and CMS Linked Interest Note Provisions – ISDA Determination)) - Floating Rate Option: [●] - Designated Maturity: [●] - Reset Date: [●] (In the case of a LIBOR or EURIBOR or CMS Rate based option, the first day of the Interest Period) (ix) Margin(s): [+/-][●] per cent. per annum (Condition 3(a) (Definitions and Interpretation – “Margin”)) (x) Minimum Rate of Interest: [Not Applicable/[●] per cent. per annum] (Condition 21(b) (Margin, Maximum Rate of Interest, Minimum Rate of Interest and Rounding – Maximum Rate of Interest and Minimum Rate of Interest)) (xi) Maximum Rate of Interest: [Not Applicable/[●] per cent. per annum] (Condition 21(b) (Margin, Maximum, Minimum Rate of Interest and Rounding – Maximum Rate of Interest

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and Minimum Rate of Interest)) (xii) Day Count Fraction: [Actual/Actual]/ [Actual/Actual (ISDA)]/ [Actual/Actual (ICMA)]/ [Actual/365 (Fixed)]/ [Actual/360]/ [30/360]/ [360/360]/ [Bond Basis] / [30E/360]/ [Eurobond Basis]/ [30/360 (ICMA)] (xiii) Linear Interpolation: [Not Applicable/Applicable – the Rate of Interest (Condition 7(f) (Floating Rate and for the [long/short] [first/last] Interest Period shall CMS Linked Interest Note Provisions be calculated using Linear Interpolation (Specify for – Linear Interpolation)) each short or long interest period)]] 15 Zero Coupon Note Provisions [Applicable/Not Applicable] (Condition 9 (Zero Coupon Note Provisions)) (If not applicable, delete the remaining sub- paragraphs of this paragraph) (i) Accrual Yield: [●] per cent. per annum (Condition 3(a) (Definitions and Interpretation – “Accrual Yield”)) (ii) Reference Price: [●] (Condition 3(a) (Definitions and Interpretation – “Reference Price”)) PROVISIONS RELATING TO REDEMPTION 16 Call Option [Applicable/Not Applicable] (Condition 10(e) (Redemption and Purchase – (If not applicable, delete the remaining sub- Redemption at the option of the Issuer) and paragraphs of this paragraph) Condition 10(f) (Redemption and Purchase – Partial redemption)) (i) Optional Redemption Date(s) (Call): [●] (Condition 3(a) (Definitions and (If the Notes are Subordinated Notes, unless Interpretation – “Optional otherwise permitted by current laws, regulations, Redemption Date (Call)”)) directives and/or the Relevant Authority’s requirements applicable to the issue of Subordinated Notes by the Issuer, the Optional Redemption Date shall not be earlier than five years after the Issue Date) (ii) Optional Redemption Amount(s) [●] per Calculation Amount (Call): (Condition 3(a) (Definitions and Interpretation – “Optional

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Redemption Amount (Call)”)) (iii) Partial redemption: [Applicable/Not Applicable] (If not applicable, delete the remaining items of this subparagraph) If redeemable in part: (a) Minimum Redemption [●] per Calculation Amount Amount: (Condition 3(a) (Definitions and Interpretation – “Minimum Redemption Amount”)) (b) Maximum Redemption [●] per Calculation Amount Amount: (Condition 3(a) (Definitions and Interpretation – “Maximum Redemption Amount”)) (iv) Notice period (if other than as set out [●] in the Conditions): (Condition 10(e) (Redemption and Purchase – Redemption at the option of the Issuer) and Condition 10(f) (Redemption and Purchase – Partial redemption) 17 Regulatory Call [Condition 10(c) (Redemption and Purchase – (Condition 10(c) (Redemption and Purchase – Redemption of Subordinated Notes due to a Tier 2 Redemption of Subordinated Notes due to a Tier Disqualification Event) is applicable/Not 2 Disqualification Event)) Applicable] (Only applicable for Subordinated Notes. If not applicable, delete the remaining sub-paragraphs of this paragraph) 18 Issuer Call due to a MREL Disqualification [Condition 10(d) is applicable/Not Applicable] Event (Condition 10(d) (Redemption due to MREL (Only applicable for Senior Preferred Notes and Disqualification Event)) Senior Non-Preferred Notes) (a) Maximum notice period: [●] 19 Put Options [Applicable/Not Applicable] (Condition 10(g) (Redemption and Purchase – (Applicable only to Senior Preferred Notes and Redemption at the option of Noteholders)) Senior Non-Preferred Notes/if not applicable, delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s) (Put): [●] (Condition 3(a) (Definitions and Interpretation – “Optional

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Redemption Date (Put)”)) (ii) Optional Redemption Amount(s) [●] per Calculation Amount (Put): (Condition 3(a) (Definitions and Interpretation – “Optional Redemption Amount (Put)”)) (iii) Notice period (if other than as set out [●] in the Conditions): (Condition 10(g) (Redemption and Purchase – Redemption at the option of Noteholders)) 20 Early Redemption Amount Early Redemption Amount(s) payable on [Not Applicable (If Early Redemption Amount (Tax), redemption for taxation or due to a Tier 2 Early Redemption Amount (Tier 2 Disqualification Disqualification Event or on event of default: Event) and Early Redemption Amount (MREL (Condition 3(a) (Definitions and Interpretation – Disqualification Event) and Early Termination “Early Redemption Amount (Tax)”, “Early Amount are the principal amount of the Notes)/ Redemption Amount (Tier 2 Disqualification Specify [●] per Calculation Amount] Event)” and “Early Redemption Amount (MREL Disqualification Event)”)) GENERAL PROVISIONS APPLICABLE TO THE NOTES 21 Substitution or Modification: [Not Applicable/Applicable] 22 Form of Notes: [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes on [●] days’ notice/at any time/in the limited circumstances specified in the Permanent Global Note.] [Temporary Global Note exchangeable for Definitive Notes on [●] days’ notice.] [Permanent Global Note exchangeable for Definitive Notes on [●] days’ notice/at any time/in the limited circumstances specified in the Permanent Global Note]. [In relation to any Notes issued with a denomination of €100,000 (or equivalent) and integral multiples of €1,000 (or equivalent), the Permanent Global Note representing such Notes shall only be exchangeable to Definitive Notes in the limited circumstances of (1) closure of the ICSDs; and (2) default of the Issuer.] 23 New Global Note Form: [Applicable/Not Applicable] 24 Additional Financial Centre(s) or other special [Not Applicable/give details. Note that this provisions relating to Payment Business Days: paragraph relates to the place of payment] 25 Talons for future Coupons to be attached to [Yes/No. If yes, insert as follows:

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Definitive Notes (and dates on which such Talons One Talon in the event that more than 27 Coupons mature): need to be attached to each Definitive Note. On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheet matures, the Talon comprised in the Coupon sheet may be surrendered at the specified office of the Paying Agent in exchange for a further Coupon sheet. Each Talon shall be deemed to mature in the Interest Payment Date on which the final Coupon comprised in the relevant Coupon sheet matures.]

Signed on behalf of the Issuer:

By:

Duly authorised

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PART B – OTHER INFORMATION

1 LISTING AND ADMISSION TO TRADING (i) Listing: [Official List of Luxembourg Stock Exchange/other (Specify)/None] (ii) Admission to trading: [Application has been made for the Notes to be admitted to trading on [the Regulated Market of the Luxembourg Stock Exchange]/[●] with effect from [●].]/[Not Applicable] (Where documenting a fungible issue need to indicate that original securities are already admitted to trading.) (iii) Estimated total expenses of admission [●]/[Not Applicable] to trading: 2 RATINGS Ratings: [The Notes are not expected to be rated / The Notes [are expected to be /have been] rated: [[DBRS:] [●]] [[Other]: [●]]] (Insert where the issue has been specifically rated) (The above disclosure should reflect the rating allocated to the Notes) (Insert the following where the relevant credit rating agency is established in the EEA:) [[Insert legal name of particular credit rating agency entity providing rating] is established in the EEA and [is included in the list of registered credit rating agencies published on the website of the European Securities and Markets Authority at http://www.esma.europa.eu/page/List-registered- and-certified-CRAs]/[has applied for registration although notification of the corresponding registration decision has not yet been provided by the relevant competent authority]/[is neither registered nor has it applied for registration] under Regulation (EU) No. 1060/2009, as amended (the “CRA Regulation”).] (Insert the following where the relevant credit rating agency is not established in the EEA:) [[Insert legal name of particular credit rating agency entity providing rating] is not established in the EEA [but the rating it has given to the Notes is endorsed by [Insert legal name of credit rating agency], which is established in the EEA and is included in the list of registered credit rating agencies published on the website of the European

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Securities and Markets Authority at http://www.esma.europa.eu/page/List-registered- and-certified-CRAs] / [but is certified] / [and is not certified under nor is the rating it has given to the Notes endorsed by a credit rating agency established in the EEA and registered] under Regulation (EU) No. 1060/2009, as amended (the “CRA Regulation”).] 3 INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE [Need to include a description of any interest, including conflicting ones, that is material to the issue/offer, detailing the persons involved and the nature of the interest. May be satisfied by the inclusion of the following statement: “Save for any fees payable to the [[Joint Lead] Managers/Dealers], so far as the Issuer is aware, no person involved in the offer of the Notes has an interest material to the offer.”] [Amend as appropriate if there are other interests]. 4 YIELD [●]/[Not Applicable] Indication of yield: (State “Not Applicable” if the Notes are not Fixed Rate Notes.) 5 BENCHMARKS [Applicable / Not Applicable] (State “Not Applicable” if the Notes are not Floating Rate Notes.) [Statement on benchmarks: Amounts payable under the Notes will be (Article 29(2) of EU Benchmarks Regulation) calculated by reference to [●] which is provided by [●]. As at [●], [●] [appears/does not appear] on the register of administrators and benchmarks established and maintained by the European Securities and Markets Authority pursuant to Article 36 of the Benchmarks Regulation (Regulation (EU) No. 2016/1011) (the “Benchmarks Regulation”). [As far as the Issuer is aware, the transitional provisions in Article 51 of the Benchmarks Regulation apply, such that [●] is not currently required to obtain authorisation or registration.]] 6 THIRD PARTY INFORMATION [Not Applicable]/[The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by [(specify source)], no facts have been omitted which would render the reproduced information inaccurate or misleading.] 7 OPERATIONAL INFORMATION (i) ISIN: [●] (ii) Common Code: [●] (iii) [FISN Code:] [●] (iv) [CFI Code:] [●] (v) New Global Note intended to be held in a [Yes] [No].

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manner which would allow Eurosystem eligibility [Yes. Note that the designation “yes” means that Notes are intended upon issue to be deposited with the one of the ICSDs as common safekeeper and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria.] [No. Whilst the designation is specified as “no” at the date of these Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with one of the ICSDs as common safekeeper. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the ECB being satisfied that Eurosystem eligibility criteria have been met.]] (vi) Any clearing system(s) other than Euroclear [Not applicable/Give name(s), number(s) and Bank S.A./N.V. and Clearstream Banking, address(es)] société anonyme, Luxembourg and the relevant identification number(s): (vii) Delivery: Delivery [against/free of] payment (viii) Names and addresses of additional Paying [Not Applicable/(Insert name(s) and address(es))] Agent(s) (if any): 8 DISTRIBUTION (i) Method of distribution: [Syndicated/Non-syndicated] (ii) If syndicated, names of Managers: [Not Applicable/Give names] (iii) Stabilising Manager(s) (if any): [Not Applicable/Give name(s)] (iv) If non-syndicated, name of Dealer: [Not Applicable/Give name] (v) US Selling Restrictions: [Reg. S Compliance Category 2 / TEFRA [C/D] Not Applicable] (vi) Prohibition of Sales to EEA Retail Investors: [Applicable/Not applicable] (If Notes clearly do not constitute “packaged” products, “Not Applicable” should be specified. If the Notes may constitute “packaged” products and no key information document will be prepared,

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“Applicable” should be specified.) (vii) Prohibition of Sales to Belgian Consumers: [Applicable/Not applicable]

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OVERVIEW OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM

Clearing System Accountholders

Each Global Note will be in bearer form. Consequently, in relation to any Tranche of Notes represented by a Global Note, references in the Terms and Conditions of the Notes to “Noteholder” are references to the bearer of the relevant Global Note which, for so long as the Global Note is held by a depositary or a common depositary (in the case of a CGN) or a common safekeeper (in the case of an NGN) for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, will be that depositary or common depositary or, as the case may be, common safekeeper.

Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Global Note (each an “Accountholder”) must look solely to Euroclear and/or Clearstream, Luxembourg and/or such other relevant clearing system (as the case may be) for such Accountholder’s share of each payment made by the Issuer to the bearer of such Global Note and in relation to all other rights arising under the Global Note. The extent to which, and the manner in which, Accountholders may exercise any rights arising under the Global Note will be determined by the respective rules and procedures of Euroclear and Clearstream, Luxembourg and any other relevant clearing system from time to time. For so long as the relevant Notes are represented by the Global Note, Accountholders shall have no claim directly against the Issuer in respect of payments due under the Notes and such obligations of the Issuer will be discharged by payment to the bearer of the Global Note.

Exchange of Temporary Global Notes

Whenever any interest in a Temporary Global Note is to be exchanged for an interest in a Permanent Global Note, the Issuer shall procure:

(a) in the case of first exchange, the prompt delivery (free of charge to the bearer) of such Permanent Global Note, duly authenticated and, in the case of an NGN, effectuated, to the bearer of the Temporary Global Note; or

(b) in the case of any subsequent exchange, an increase in the principal amount of such Permanent Global Note in accordance with its terms, in each case in an aggregate principal amount equal to the aggregate of the principal amounts specified in the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and received by the Fiscal Agent against presentation and (in the case of final exchange) surrender of the Temporary Global Note to, or to the order of, the Fiscal Agent within 7 days of the bearer requesting such exchange.

Whenever a Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Temporary Global Note to the bearer of the Temporary Global Note against the surrender of the Temporary Global Note to, or to the order of, the Fiscal Agent within 30 days of the bearer requesting such exchange.

If:

(a) a Permanent Global Note has not been delivered or the principal amount thereof increased by 5.00 p.m. (Luxembourg time) on the seventh day after the bearer of a Temporary Global Note has requested exchange of an interest in the Temporary Global Note for an interest in a Permanent Global Note; or

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(b) Definitive Notes have not been delivered by 5.00 p.m. (Luxembourg time) on the thirtieth day after the bearer of a Temporary Global Note has requested exchange of the Temporary Global Note for Definitive Notes; or

(c) a Temporary Global Note (or any part thereof) has become due and payable in accordance with the Terms and Conditions of the Notes or the date for final redemption of a Temporary Global Note has occurred and, in either case, payment in full of the amount of principal falling due with all accrued interest thereon has not been made to the bearer of the Temporary Global Note in accordance with the terms of the Temporary Global Note on the due date for payment, then the Temporary Global Note (including the obligation to deliver a Permanent Global Note or increase the principal amount thereof or deliver Definitive Notes, as the case may be) will become void at 5.00 p.m. (Luxembourg time) on such seventh day (in the case of (a) above) or at 5.00 p.m. (Luxembourg time) on such thirtieth day (in the case of (b) above) or at 5.00 p.m. (Luxembourg time) on such due date (in the case of (c) above) and the bearer of the Temporary Global Note will have no further rights thereunder (but without prejudice to the rights which the bearer of the Temporary Global Note or others may have under a deed of covenant dated 11 July 2019 (the “Deed of Covenant”) executed by the Issuer). Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Temporary Global Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Temporary Global Note became void, they had been the holders of Definitive Notes in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.

Definitive Notes will not be printed in respect of an amount of Notes which are less than the Minimum Denomination.

Where the Notes are listed on the Luxembourg Stock Exchange and its rules so require, the Issuer will give notice of the exchange of the Permanent Global Note for Definitive Notes pursuant to Condition 19 (Notices).

Exchange of Permanent Global Notes

Whenever a Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and, where applicable, with Coupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note at the specified office of the Fiscal Agent within 30 days of the bearer requesting such exchange.

If:

(a) Definitive Notes have not been delivered by 5.00 p.m. (Luxembourg time) on the thirtieth day after the bearer of a Permanent Global Note has duly requested exchange of the Permanent Global Note for Definitive Notes; or

(b) a Permanent Global Note (or any part of it) has become due and payable in accordance with the Terms and Conditions of the Notes or the date for final redemption of the Notes has occurred and, in either case, payment in full of the amount of principal falling due with all accrued interest thereon has not been made to the bearer of the Permanent Global Note in accordance with the terms of the Permanent Global Note on the due date for payment, then the Permanent Global Note (including the obligation to deliver Definitive Notes) will become void at 5.00 p.m. (Luxembourg time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m. (Luxembourg

119 time) on such due date (in the case of (b) above) and the bearer of the Permanent Global Note will have no further rights thereunder (but without prejudice to the rights which the bearer of the Permanent Global Note or others may have under the Deed of Covenant). Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as being entitled to an interest in a Permanent Global Note will acquire directly against the Issuer all those rights to which they would have been entitled if, immediately before the Permanent Global Note became void, they had been the holders of Definitive Notes in an aggregate principal amount equal to the principal amount of Notes they were shown as holding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system.

Definitive Notes will not be printed in respect of an amount of Notes which are less than the Minimum Denomination.

Where the Notes are listed on the Luxembourg Stock Exchange and its rules so require, the Issuer will give notice of the exchange of the Permanent Global Note for Definitive Notes pursuant to Condition 19 (Notices).

Conditions applicable to Global Notes

Each Global Note will contain provisions which modify the Terms and Conditions of the Notes as they apply to the Global Note. The following is an overview of certain of those provisions:

Payments

All payments in respect of the Global Note will be made through Euroclear and Clearstream, Luxembourg against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of the Global Note to, or to the order of, any Paying Agent and will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of principal or interest is made in respect of the Global Note, the Issuer shall procure that, in respect of a Classic Global Note, the payment is noted on a schedule thereto and, in respect of a New Global Note, the payment is entered pro rata in the records of Euroclear and Clearstream, Luxembourg.

Exercise of put option

In order to exercise the option contained in Condition 10(h) (Redemption and Purchase – Redemption at the option of Noteholders) the bearer of the Permanent Global Note must, within the period specified in the Conditions for the deposit of the relevant Note and put notice, give written notice (which, for the avoidance of doubt, may be sent in electronic form) of such exercise to the Fiscal Agent specifying the principal amount of Notes in respect of which such option is being exercised. Any such notice will be irrevocable and may not be withdrawn.

Partial exercise of call option

In connection with an exercise of the option contained in Condition 10(e) (Redemption and Purchase – Redemption at the option of the Issuer) in relation to some only of the Notes, the Permanent Global Note may be redeemed in part in the principal amount specified by the Issuer in accordance with the Conditions and the Notes to be redeemed will not be selected as provided in the Conditions but in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg (to be reflected in the records of Euroclear and Clearstream, Luxembourg, at their discretion, as either a pool factor or a reduction in principal amount).

Notices

Notwithstanding Condition 19 (Notices), while all the Notes are represented by a Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are) deposited with a depositary or a common

120 depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system or a common safekeeper, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 19 (Notices) on the date of delivery to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, except that for so long as such Notes also are admitted to trading on the regulated market of the Luxembourg Stock Exchange and it is a requirement of applicable law or regulations, such notices shall be published in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxemburger Wort) or published on the website of the Luxembourg Stock Exchange (www.bourse.lu).

Payment Business Day

Notwithstanding the definition of “Payment Business Day” in Condition 3 (Definitions and Interpretation), while all the Notes are represented by a Permanent Global Note (or by a Permanent Global Note and/or a Temporary Global Note) and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are) deposited with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system, “Payment Business Day” means:

(a) if the currency of payment is euro, any day which is a Target Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

(b) if the currency of payment is not euro, any day which is a day on which dealings in foreign currencies may be carried on in the Principal Financial Centre payment and in each (if any) Additional Financial Centre.

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DESCRIPTION OF THE ISSUER

Incorporation

Banca Sella S.p.A. (“Banca Sella” or the “Bank” or the “Issuer”) is a credit institution incorporated under the laws of Italy as a company limited by shares (società per azioni), with a duration running until 31 December 2075, which may be extended with shareholder approval. Banca Sella is registered at the Companies’ Registry of Biella under registration number 02224410023 and has its registered office at Piazza Gaudenzio Sella 1, 13900 Biella, Italy. Its telephone number is +39 015 35011.

Historical Background

The history of the Bank and its business dates back to the end of the 19th century, when some members of the Sella family, who had been running a textile business for over three centuries, decided to establish a banking institution which was founded on 23 August 1886 as a limited partnership under the name “Banca Gaudenzio Sella & C.”. The first branch was opened soon afterwards.

In 1933, when Gaudenzio Sella died, his son, Ernesto Sella, became Managing Partner of the banking institution, which was converted in 1949 into a company limited by shares (società per azioni), with Ernesto and his brother Giorgio Sella respectively as Chairman and Managing Director. In 1965 its name was changed to “Banca Sella S.p.A.”.

In 1974 Giorgio became Chairman, while the son of Ernesto, Maurizio Sella, became Managing Director. The company started expanding from its base in Piedmont in North-west Italy to other Italian regions, either through the opening of new branches or through acquisition of existing banks.

The process of fast and steady growth led to the creation of “Gruppo Banca Sella” which, on 11 August 1992, was enrolled on the register of banking groups kept by the Bank of Italy.

The Issuer was incorporated on 8 September 2005 under the name “Sella Distribuzione S.p.A.” and, on 1 January 2006, the network of branches of its parent company (then known as “Banca Sella S.p.A.”) was transferred to Sella Distribuzione S.p.A. Subsequently, the Issuer changed its name from “Sella Distribuzione S.p.A.” to “Banca Sella S.p.A.”, while the parent company changed its name to “Banca Sella Holding S.p.A.”.

Group Structure

The Banca Sella group comprises Banca Sella Holding S.p.A. (“Banca Sella Holding” or the “Parent Company”), the Issuer and the Parent Company’s other subsidiaries (together, the “Group”) and is coordinated and supervised by the Parent Company. Performing various financial activities and providing a wide range of products and services with 4,508 employees as at 31 December 2018, the Group currently includes 27 companies, plus one company in the insurance business, one special purpose vehicle for securitisation transactions and two still inactive companies, included in the scope of consolidation of the Group for accounting purposes, but not in the banking group.

The Issuer carries on the principal banking activity of the Group and is the most significant company in the Group in terms of assets and revenues. As the Group’s commercial bank, the Issuer offers a wide range of financial services, including commercial banking, consumer credit, asset management, insurance, private banking, securities brokerage and e-banking.

The Parent Company's share capital is wholly owned by the Sella family through a structure of holding companies (limited partnerships) which, together with specific clauses in the Parent Company’s articles of association (mainly relating to pre-emption rights) protect Banca Sella Holding from hostile takeovers.

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The intention of the Sella family to retain control of the Parent Company is also underlined by the number of Sella family members holding various positions within the Group: Maurizio Sella, for example, is Chairman of the Bank and of the Parent Company, while his son, Pietro Sella, is a Director of the Bank and Managing Director and General Manager of the Parent Company. To improve corporate governance, several measures have been implemented, including the appointment of independent directors to the Parent Company's and to the Issuer’s board of directors and the creation, within the Parent Company, of the Risks Committee and the Remuneration Committee, which are entirely composed of independent directors.

The following chart shows the structure of the Group as at the date of this Base Prospectus:

MAURIZIO SELLA

BANCA SELLA HOLDING SELBAN

79.14% 72.32% FABRICK Sella Ventures BANCA BANCA S.p.A. 66.00% Partners SGR S.p.A. SELLA & C.

51.00% AXERVE 97.90% 49.00% SELLA Sella Broker FAMILY 75.00% S.p.A. ADVISORY SIM S.p.A. SELLA & PARTNERS dPIXEL S.r.l. 25.00% 51.00% HI-MTF SIM 49.00% Sella Personal Credit 25.00% 70.00% Sella Fiduciaria Beesy S.r.l.

ENERSEL SELLA SGR 3.64% 83.98% Sella Technology 95.17% S.p.A. 100.00% Solutions S.p.A. AX2 S.p.A. 10.00% Mars 2600 S.r.l. 100.00% HYPE S.p.A. 100.00% FINANZIARIA SELIR S.r.l. 2010 S.p.A.

Kubique

23.67% MIRET SA 85 75% Smartika Codd&Date S.r.l.

SELLA Codd&Date SYNERGY Suisse S.a.g.l. INDIA PLtd

Vipera 29.00% S.C.P. VDP 1

Vipera

Vipera

Subsidiaries but not part of the "Gruppo Sella" banking group Vipera

Vipera Associated companies

Vipera Securitisation vehicle, fully consolidated but not part of the "Gruppo Sella" banking group

Companies included in the scope of prudential consolidation, but not part of the "Gruppo Sella" banking group

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For regulatory capital purposes, the scope of consolidation of the Group also includes Maurizio Sella S.A.p.A. and Selban S.p.A.

Business and Strategic Objectives

Although the core business of Banca Sella is commercial banking, the Bank has dealt with the challenge of the limitations resulting from its size by developing internet banking, mobile banking and other innovative channels and specialising in business areas with high expected growth rates and relatively higher returns, such as private banking, asset management and electronic payment systems.

The management’s strategy of developing new areas of business and new delivery channels has led the Bank to focus on opportunities offered by technological innovation, aiming at offering customers the most suitable products and enabling the Bank to reach a broader market, removing some of the hurdles arising from the Bank’s size. For example, the Bank, along with Intesa Sanpaolo and UniCredit, was one of the first banks in Italy to make payment services based on the new SEPA Instant Credit Transfer (SCT Inst) format from the European Payment Council available to their customers.

In the second half of 2017, the Group developed its three-year strategic plan for 2018-2020, approved in mid- March 2018, as subsequently updated in March 2019 for the period up to 2021 (the “Strategic Plan”). The Strategic Plan is structured around two important phenomena influencing the financial sector: regulatory developments and technological innovation. The objective of the business plan is to maintain the capital strength that is already a feature of the Bank, while increasing profitability and carrying out a radical organisational transformation that is necessary for it to evolve. Of the four business lines covered by the Strategic Plan, the one that most significantly affects the Bank is that of the commercial banking sector, which involves various projects including the completion of the commercial model and of the transition to a portfolio segmentation model by 2020. Other objectives of the Strategic Plan are the adoption of customer-centric design and a review of the Bank's operating processes in order to achieve (through innovative digitalisation activities and Robot Process Automation (RPA), as well as through adoption of Agile) the resource efficiency goals established in the Strategic Plan, with a consequent reduction in operating expenses. The objectives set out in the new Strategic Plan can therefore be summarised as:

• increasing the number of customers;

• improving the quality of relationships with customers; and

• implementing a variety of innovative technological solutions to be combined with the customer relationships.

The Strategic Plan confirms Banca Sella’s targets of solidity, liquidity and prudence, particularly in terms of credit quality, which have always characterised its management. At the same time, greater attention to capital and operational efficiency needs to be developed through a strategy based on customer growth and increasing profitability.

The following table shows a breakdown of the Issuer's branches by region as at 31 December 2018:

Italian branches of the Issuer by geographical area as at 31 December 2018

Region Number Abruzzo 1 Campania 14 Emilia Romagna 13 Friuli Venezia Giulia 1

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Region Number Lazio 17 Liguria 9 Lombardy 20 Marche 3 Molise 1 Piedmont 130 Puglia 27 Sardinia 3 Sicily 19 Tuscany 8 Valle d’Aosta 7 Veneto 10 Total 283

Lending

Banca Sella focuses its activity on the provision of banking services for individuals and corporate customers. It offers short-term, medium-term and long-term loans. Corporate lending is mainly provided to small and medium- sized companies, mostly active on a regional or local basis and, to a limited extent, also to large companies.

As at 31 December 2018, the Issuer’s overall short-term financing amounted to €694.6 million, being 5.9 per cent. of total assets and 9.9 per cent. of total cash loans to customers (excluding debt securities).

The following tables show the Bank's amounts due from banks and cash loans to customers as at 31 December 2018 and 2017, broken down according to the type of loan:

Due from banks

As at 31 December

2018 2017

(€ millions) (%) (€ millions) (%)

Due from central banks - - - -

Due from banks 2,326.6 100.0 2,787.9 100.0

Current accounts and demand deposits 2,077.9 89.3 2,579.2 92.5

Term deposits 125.1 5.4 111.3 4.0

Other loans and advances 78.7 3.4 97.4 3.5

Debt securities 44.9 1.9 - -

Total due from banks 2,326.6 100.0 2,787.9 100.0

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Cash loans to customers

As at 31 December

2018 2017

(€ millions) (%) (€ millions) (%)

Current accounts 694.6 8.6 718.0 10.3

Repurchase agreements - - 2.1 -

Mortgages 3,724.1 46.1 4,005.2 57.2

Credit cards, personal loans, salary- backed loans 239.4 3.0 227.6 3.2

Financial leasing - - - -

Factoring - - - -

Other loans 2,328.7 28.8 2,050.8 29.3

Debt securities 1,093.9 13.5 0.1 -

Total cash loans to customers 8,080.7 100.0 7,003.8 100.0

The following table shows the Bank’s market share in relation to cash loans as at 31 December 2018 and 2017:

Cash loans market share

As at 31 December

2018 2017

(%)

Italy 0.415 0.407

Piedmont (region) 3.206 3.142

______

Source: Data prepared by the Issuer on the basis of system data provided by the Bank of Italy.

Credit policy

When an application for credit is received by the Bank, the proposal is first evaluated by the decision-making body at the relevant branch receiving the application directly on the basis of enquiries made on the applicant and on the security which may be taken in respect of the loan. This body may, within the limits of its autonomy, accept or refuse the request, sometimes modifying the original proposal (for example by requesting further security or proposing a reduction in the credit requested).

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Depending on the size and type of loan requested, loans are approved at various levels of each branch's management structure, from the lower level of branch manager and potentially progressing to approval by the Board of Directors.

A large portion of these cash loans are secured by mortgages, pledges or other collateral or covered by various types of security. As at 31 December 2018, secured cash loans to customers represented 53.1 per cent. of total cash loans to customers (excluding debt securities).

The following table shows the Issuer's security over its cash loans to customers as at 31 December 2018 and 2017, broken down according to the type of security:

Security over cash exposure to customers

As at 31 December

2018 2017

(€ thousands)

Security over:

Real Estate 2,669,309 2,752,415

Financial instruments 150,513 144,545

Other security 29,157 33,836

Guarantees given by:

Governments and central banks 1,562 1,959

Other public bodies - 881

Banks 23,855 33,325

Other subjects 832,320 800,910

Total security over cash exposure to customers 3,706,716 3,767,871

Credit risk evaluation and monitoring

Banca Sella is progressively developing its own internal rating systems in accordance with supervisory standards under the CRR and regulatory technical standards or implementing technical standards published by the European Banking Authority.

At present, Banca Sella’s process of assigning a rating applies to all customers with a loan or a credit. A credit rating or a credit score is assigned to retail customers and to all entities which operate in the industrial, trade, services, long-term production (grandi opere), financial and agricultural sectors, as well as cooperatives and government organisations.

Lending activity is subject to monitoring of the credit quality of borrowers carried out by the Credit Control Department. For this purpose the department constantly verifies trends and the use of credit lines granted to customers using special procedures, which take into consideration various anomalies that might be identified in the relationship with customers and the specific type of credit and automatically reports the anomaly directly to the branch responsible for each customer. The branch is then required to take the necessary actions to resolve the anomaly.

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Non-performing loans

In accordance with the Bank of Italy's system of classification, impaired exposures towards borrowers are divided into three categories:

• bad loans (sofferenze), in cases where the borrower is in a state of insolvency due to being unable to pay its debts, where there is a failure to comply with a debt restructuring plan previously agreed upon or where insolvency proceedings have been commenced or there are other adverse circumstances;

• unlikely to pay (inadempienze probabili), in cases where it is unlikely that, without having to resort to action such as enforcing security, the borrower will comply in full with its payment obligations; and

• deteriorated past due loans (esposizioni scadute deteriorate), for loans other than those classified as bad loans or unlikely to pay that have expired and which may be so categorised by reference either to an individual debtor or to an individual transaction.

In the course of 2018, the Issuer completed various disposal transactions on bad loans, involving a total gross amount of €185.4 million. These transactions improved the quality of the Issuer’s loan portfolio, contributing to a reduction in the Issuer's gross stock of bad loans by 26.1 per cent. and making a positive contribution to the income statement of approximately €0.3 million. In the first half of 2019, the Issuer completed several further disposals of bad loans, representing a total gross amount of €50.6 million, which contributed approximately €0.4 million to the income statement.

The following table shows a breakdown of the Issuer’s impaired cash exposure to customers as at 31 December 2018 and 2017.

Non-performing cash exposures to customers

As at 31 December

2018 2017

(€ millions)

Customers:

Net bad loans 179.4 263.8

Net unlikely to pay exposures 127.7 177.5

Net deteriorated past due exposures 7.2 6.5

Total 314.3 447.8

Total cash loans to customers (excluding debt securities) 6,986.8 7,003.8

As at 31 December 2018 and 2017, the Issuer had no non-performing cash exposures to banks.

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The following table shows a breakdown of the Issuer’s net and gross non-performing loans as at 31 December 2018 and 2017:

Net and gross non-performing loans

As at 31 December

2018 2017

Specific Specific value Total cash value Total cash Gross adjust- Net exposure to Gross adjust- Net exposure to exposure ments exposure customers exposure ments exposure customers

(€ millions) (%) (€ millions) (%)

Net bad loans 467.4 288.0 179.4 2.6% 632.8 369.0 263.8 3.8% Net unlikely to pay exposures 186.0 58.3 127.7 1.8% 236.7 59.2 177.5 2.5% Net deteriorated past due exposures 8.8 1.6 7.2 0.1% 7.6 1.1 6.5 0.1% Total 662.2 347.9 314.3 877.1 429.3 447.8 Total cash exposures to customers (excluding debt securities) 6,986.8 7,003.8

Large exposures

The following table shows the Issuer’s large exposures as at 31 December 2018 and 2017. Large exposures As at 31 December

2018 2017

(€ thousands)

Amount (book value) 5,677.9 5,646.1

Amount (weighted value) 117.5 118.3

Number 2 2

The two positions referred to in the table above were with Group companies and the Republic of Italy (represented by government bonds).

Positions with other Group companies

Amounts due to the Issuer from other Group companies comprise loans to Sella Leasing S.p.A. (“Sella Leasing”) and Sella Personal Credit S.p.A. (“Sella Personal Credit”), recorded in the Issuer’s financial statements as at 31 December 2018 as amounts due from customers and amounting to €1.52 billion, and deposits held with Banca Sella Holding, recorded in the same financial statements as amounts due from banks and representing approximately €2.24 billion. Positions are held with Group companies substantially on market conditions.

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Funding

Banca Sella benefits from a historically large and stable customer base through its branch network and obtains funding mainly through retail customers, deposit-taking, repos and bonds and, to a minimal extent, by recourse to the interbank market. In addition, through the Parent Company, the Issuer may obtain funding from the European Central Bank, through refinancing transactions backed by ECB-eligible collateral. For this purpose, the Issuer may grant, as collateral for these transactions, securities resulting from self-securitisation, other eligible securities held in the Bank’s portfolio, as well as non-marketable assets (bank loans) accepted by the European Central Bank.

The following table shows the Bank's customer deposits as at 31 December 2018 and 2017, broken down according to type of funding:

Direct deposits (due to customers including repos and outstanding securities)

As at 31 December

2018 2017

(€ millions)

Current accounts and demand deposits 8,893.3 8,520.9

Term deposits 448.1 571.6

Loans and advances 39.3 54.6

Repurchase agreements 4.4 6.8

Other 34.9 47.8

Liabilities for commitments to repurchase own equity instruments - -

Other debts 234.5 227.7

Outstanding securities 344.9 410.6

Total due to customers and outstanding securities 9,960.1 9,785.4

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The following table shows the Bank's amounts due to banks as at 31 December 2018 and 2017, broken down according to type of funding:

Due to banks

As at 31 December

2018 2017

(€ millions)

Due to central banks - -

Due to banks 720.4 738.9

Current accounts and demand deposits 16.3 24.0

Term deposits 684.0 686.9

Loans and advances 20.0 27.0

Liabilities for commitments to repurchase own equity instruments - -

Other liabilities 0.1 1.0

Total due to banks 720.4 738.9

The following table shows the Bank’s market share in relation to customer deposits as at 31 December 2018 and 2017:

Customer deposits market share

As at 31 December

2018 2017

(%)

Italy 0.610 0.597

Piedmont (region) 3.651 3.781

______Source: Data prepared by the Budgetary Control Department on the basis of system data provided by Bank of Italy.

Risk Management

Market risk, interest rate risk and price risk connected to the trading book arise from the possibility that a swing in interest rates may have an adverse effect on the value of the trading portfolio generated by the financial positions held by the Issuer. For prudential purposes, the measurement of these risks is performed by the Issuer using the "standardised" method defined in the Supervisory Regulations for Banks in the Bank of Italy Circular No. 285 of 17 December 2013 (“Circular No. 285”), whereas, for management purposes, the Issuer measures and monitors market risk generated by its trading portfolio through the analysis of VaR (value at risk), calculated mainly according to the historical simulation approach.

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The main sources of interest rate risk with respect to the Issuer’s banking book portfolio are due to maturity mismatches and mismatches arising from the imperfect correlation between lending and deposit rates on the different instruments. This risk is measured through proprietary models for the treatment of liabilities with undefined contractual maturity. For all other assets and liabilities, the Issuer measures risk through the rules defined in Circular No. 285.

For the monitoring of foreign exchange rate risk, the Issuer uses the "standardised" method defined in Circular No. 285. The Issuer’s main activity subject to this risk is from loans and deposits in foreign currencies to customers, which correspond to a fraction of the Issuer’s banking book.

In relation to the monitoring of the Issuer’s liquidity risk, the Issuer follows the guidelines under Circular No. 285, which aims to implement and integrate the principles stated in the CRR and those covered by Basel III, in force since 1 January 2015.

The management of liquidity is entrusted to the Finance Department of Banca Sella Holding, which, with the support of the Group’s Asset & Liability Management Committee, promptly intervenes with corrective actions if and when needed. Second level controls related to liquidity risk are made by the Parent Company’s Risk Management Department.

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Regulatory Capital

The following table shows the Issuer's capital levels and relevant ratios as at 31 December 2018 and 2017. Figures were calculated in accordance with the Basel III rules laid down by the CRD IV Directive, CRR and Circular No. 285 and take into account the adjustments provided for by the transitional provisions.

Regulatory capital

As at 31 December

2018 2017

(€ millions)

Common Equity Tier 1 730.6 735.2

Additional Tier 1 - -

Tier 2 capital 171.1 214.4

Total capital 901.7 949.6

Credit and counterparty risks 337.9 332.4

Credit valuation adjustment risk - -

Regulatory risk - -

Market risk 3.8 0.2

Operational risk - 56.9

Other calculation elements 57.8 -

Total capital requirements 399.5 389.5

Risk weighted assets 4,993.6 4,869.5

(%)

CET1 capital ratio 14.63 15.10

Tier 1 capital ratio 14.63 15.10

Total capital ratio 18.06 19.50

Specialist Financial Services of Other Group Companies

Customer financing is mainly carried out by Banca Sella, principally in the form of personal loans, mortgage loans and current account financing. The sub-sections below describe other financial services provided by members of the Group.

Leasing

The Group’s financial leasing service is performed by Sella Leasing, which was established in Biella in 1980 and in which, as at the date of this Base Prospectus, the Parent Company holds 49.0 per cent. of the ordinary share capital, while Banca Sella holds the remaining 51.0 per cent. The total assets of Sella Leasing amounted to €1,058.2 million as at 31 December 2018.

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Consumer credit

Consumer credit, including revolving credit card and online credit facilities, is provided by Sella Personal Credit, in which, as at the date of this Base Prospectus, Banca Sella Holding holds 49.0 per cent. of the ordinary share capital, with Banca Sella holding the remaining 51.0 per cent. Sella Personal Credit's total assets as at 31 December 2018 amounted to €1,031.0 million.

Private banking and asset management

As regards private banking, the Group operates through Banca Sella and through the private banking company, Banca Patrimoni Sella & C. S.p.A. (“Banca Patrimoni”). Banca Patrimoni also operates in the sector of individual asset management, and includes a network of financial agents (promotori finanziari). It works in synergy with Banca Sella and supports the distribution of banking and financial products of the Group in many Italian regions.

As at the date of this Base Prospectus, Banca Sella Holding holds 72.32 per cent. of Banca Patrimoni’s ordinary share capital. As at the date of this Base Prospectus, Banca Patrimoni has a network of sixteen branches and its assets under management amounted to €4,513.5 million as at 31 December 2018. In addition, Banca Patrimoni holds 75 per cent. of the ordinary share capital of Family Advisory SIM S.p.A. Sella & Partners, a multi-family office.

Asset management is carried out by Sella SGR S.p.A. (“Sella SGR”) for retail clients and institutional investors. As at the date of this Base Prospectus, Banca Sella Holding holds 95.17 per cent of Sella SGR’s ordinary share capital. Sella SGR's assets under management as at 31 December 2018 amounted to €1,953.0 million.

Sella Venture Partners SGR S.p.A. is an asset management company dedicated to alternative investment instruments in venture capital. As at the date of this Base Prospectus, Banca Sella Holding holds 66.0 per cent. of its ordinary share capital, Banca Patrimoni holds 15.0 per cent. and Banca Sella holds the remaining 9.0 per cent.

Insurance brokerage

The insurance brokerage business is carried on by Sella Broker S.p.A., in which, as at the date of this Base Prospectus, Banca Sella Holding holds 97.90 per cent. of the ordinary share capital. In accordance with the Bank of Italy’s regulations, this subsidiary is not included in the scope of consolidation of the Group for supervisory purposes, as it does not carry on any banking activity, but it is nonetheless included in the Group’s scope of consolidation for accounting purposes.

IT, fintech and related services

At the end of December 2017, Fabrick S.p.A. (“Fabrick”) was incorporated to operate through participation and support activities in companies active in payment services and systems and in the digital technology solutions sectors in respect of personal and commercial finance, and in the design, development and management of infrastructures and technological platforms. As at the date of this Base Prospectus, Banca Sella Holding holds 76.83 per cent. of Fabrick and Banca Sella holds a further 13.1 per cent.

Fabrick in turn:

• holds 99.89 per cent. of the ordinary share capital of Axerve S.p.A., a company operating in the business of electronic payment systems;

• wholly owns Kubique S.p.A., a fintech company specialising in the supply of platforms and software solutions for the management of companies’ supply chain financing services;

• wholly owns Vipera Limited, a UK-based parent company of an international group of companies specialising in providing mobile digital solutions and services for the financial and retail market, Vipera S.r.l. and Vipera Services S.r.l.; and

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• wholly owns two still inactive companies, AX2 S.p.A., a company that will operate in the business of electronic payment systems, and HYPE S.p.A., that is due to become an electronic money institution.

The Parent Company also has a shareholding in Sella Synergy India P.Ltd (included in the Group), an Indian company, which on 15 February 2010 sold its information technology activities to the Chennai branch of Banca Sella.

The multibank portal Sella.it is the Group's online platform and also represents a sales channel (in particular for products such as current accounts, payment services, mutual funds, POS and e-commerce), completely integrated with the Bank’s network of branches physically located within Italian territory. During the last two decades, the Group has constantly developed its range of services in order to make the most of business opportunities.

Group services

Sella Technology Solutions S.p.A. ("STS"), which has been operational since 1 March 2019, was established to provide technological and administrative services to all Group companies and third-party customers. STS pursues the strategy of opening to third-party customers, enhancing skills and information and communications technology and business process outsourcing services. About 400 members of staff in Italy have joined this new company, coming from different service areas of Banca Sella and Banca Sella Holding.

As at the date of this Base Prospectus, Banca Sella holds 83.98 per cent. of the ordinary share capital of STS, 3.64 per cent. is held by Banca Sella Holding and the remaining 12.38 per cent. by Finanziaria 2010 S.p.A. (“Finanziaria 2010”), which is in turn wholly owned by Banca Sella Holding. Finanziaria 2010 was created in 2011 through the transfer of the registered office of Sella Holding N.V. (then incorporated in the Netherlands) to Italy and the change of its name to Finanziaria 2010 S.p.A.

In addition, STS holds a 99.90 per cent. shareholding in Selir S.r.l., which is a data processing company.

Other services

Other businesses carried on by the Group are:

• trusteeship (attività fiduciaria), carried out by Sella Fiduciaria S.p.A., in which Banca Sella Holding holds a 25 per cent. stake and Banca Patrimoni holds a further 70 per cent.;

• peer-to-peer lending by Smartika S.p.A., in which Banca Sella Holding holds an 85.75 per cent. stake; and

• real estate, performed by Immobiliare Lanificio Maurizio Sella S.p.A., which is wholly owned by Banca Sella Holding.

Finally, the Group also includes Miret S.A., a company operating under Luxembourg law, dealing exclusively with residual activities following the sale of Sella Bank Luxembourg S.A. As at the date of this Base Prospectus, Banca Sella Holding holds 23.67 per cent. of the ordinary share capital, with Finanziaria 2010 holding the remaining 76.33 per cent.

Share Capital

The authorised and paid up share capital of Banca Sella as at 31 December 2018 was €334.2 million, divided into 668,456,168 ordinary shares of a nominal value €0.50 each. Of the Issuer’s shares, 105,263,158 were subscribed for in a capital increase completed in December 2015 and carry one vote per share at shareholders’ meetings, while the remaining 563,193,010 shares (being those already issued prior to the capital increase) carry three votes per share.

As at the date of this Base Prospectus, Banca Sella Holding, which is wholly controlled by members of the Sella family, has a controlling stake in the Issuer representing 79.14 per cent. of its share capital, with the remaining

135 shares held by approximately 3,000 shareholders. For further information on the controlling shareholders of Banca Sella Holding, see “Group Structure” above.

Legal, administrative and tax proceedings

The Bank is involved in a number of legal, administrative and tax proceedings of various types originating in the ordinary course of its business. While it is not possible to predict the final results with certainty, the Bank believes that any unfavourable outcome of those proceedings should not have, either individually or in the aggregate, significant adverse consequences on the financial and economic situation of the Bank. Below is a summary of the more significant proceedings to which the Bank is currently subject.

Bank of Italy audit

On 14 December 2018, the Issuer received a report from the Bank of Italy after follow-up inspection visits to assess transparency issues which were carried out at five branches between February and April 2018, following an inspection in 2016 to assess fees charged for credit lines and overdrafts. The supervisory body indicated certain anomalies associated with procedural issues which were subsequently examined in depth, partly with reference to the existence of analogous cases, and in respect of which corrective actions were adopted, in some cases have already been carried out and in other cases are already planned but are still to be implemented. On 13 March 2019, the Issuer sent an appropriate response to the Bank of Italy, the content of which was examined by and shared with the administrative bodies of the Issuer and the Parent Company.

Assertion of withdrawal rights by minority shareholders of Banca Sella Sud Arditi Galati

A claim is pending in relation to the merger by incorporation of Banca Sella Sud Arditi Galati S.p.A.(“BS SAG”) into Banca Sella in 2011. The claim was originally filed with the court of Lecce by certain minority shareholders of BS SAG, whose objective was to assert their withdrawal rights, based on the alleged violation of their right to decide whether to participate in an investment or not. The Bank appealed against the judgment of the court of first instance which had found in favour of the claimants.

On 21 March 2017, the Court of Appeal confirmed the first instance judgment but allowed one of Banca Sella's grounds for appeal. Subsequently, an appeal by the Bank to the Court of Cassation in October 2017 was also dismissed.

Lawsuit with CDP

In April 2016 Cassa Depositi e Prestiti S.p.A. (“CDP”) brought a claim for approximately €18.4 million in relation to a loan granted by CDP in favour of a municipalised company with an account held at Banca Sella. CDP alleged that the Bank had an obligation to pay the remaining debt of the municipalised company on the basis of a payment delegation signed by the Bank as treasurer of CDP. After the Bank successfully challenged the claim on procedural grounds, CDP served notice of a new claim in March 2017, on the same grounds and for the same amount as set out in the original claim. The Bank is defending the claim and the proceedings are ongoing.

Lawsuit with AFK

AFK S.r.l. appealed against a judgment of the Court of Lecce in June 2018 against the Bank for the payment of approximately €10 million. The judgment was partially unfavourable to the Bank and the claim relates to alleged irregularities in operations carried out in relation to the company's customer account.

Management

The top management of Banca Sella includes the CEO, Managing Director and General Manager, Claudio Musiari, and the Co-General Manager Giorgio De Donno.

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Board of Directors

As at the date of this Base Prospectus, the Board of Directors of Banca Sella is composed as follows:

Name Title Principal roles performed outside the Bank Maurizio Sella Chairman Chairman Banca Patrimoni Sella & C. S.p.A.

Chairman Banca Sella Holding S.p.A. Chairman Maurizio Sella S.A.p.A.

Chairman Selban S.p.A.

Director Buzzi Unicem S.p.A.

Director Finind S.p.A.

Director Tollegno Holding S.p.A.

Partner Turlo s.s.

Franco Sella Vice Chairman Acting partner Maurizio Sella S.A.p.A.

Vice Chairman Sella SGR S.p.A.

Claudio Musiari CEO, Managing Director and Director Sella Personal Credit S.p.A. General Manager Director Sella Leasing S.p.A.

Director Sella Technology Solutions S.p.A.

Viviana Barbera Director Director Sella Personal Credit S.p.A.

Director Sella Leasing S.p.A.

Maria Clara Covini Director Director Jasper S.r.l.

Elisabetta Galati Director N/A

Helga Garuzzo Director N/A

Andrea Lanciani Director N/A

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Name Title Principal roles performed outside the Bank Ferdinando Parente Director Director Parente & Partners S.r.l.

Director Salini Impregilo S.p.A.

Pietro Sella Director Managing Director and General Manager Banca

Sella Holding S.p.A.

Chairman Sella Venture Partners SGR S.p.A.

Chairman Fabrick S.p.A.

Vice Chairman Maurizio Sella S.A.p.A.

Partner Turlo s.s.

Sebastiano Sella Director Vice Chairman Banca Sella Holding S.p.A.

Vice Chairman Sella Leasing S.p.A.

Director Banca Patrimoni Sella & C. S.p.A.

Managing Director Kitenergy S.r.l.

Director Arabesque A.S.

Director Finvet S.R.O. Director Star Palace S.R.O.

Acting Partner Maurizio Sella S.A.p.A.

Paolo Tosolini Director Chairman LB Lyopharm S.r.l.

Vice Chairman Consortium Centrum S.r.l.

Chief Executive Costruzioni Tridentine S.r.l.

Acting partner Konzentra S.A.p.A.

Director Habitat S.p.A.

Director Hotel Palace Gestioni S.r.l. Director MIT S.r.l.

Director Palace Hotel S.p.A.

Director Generalbau S.p.A.

Director Iniziative Methab S.r.l.

Vice Chairman Generalmarket S.r.l.

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Name Title Principal roles performed outside the Bank Attilio Viola Director Co-General Manager Banca Sella Holding S.p.A.

Chairman Finanziaria 2010 S.p.A.

Chairman Immobiliare Lanificio Maurizio Sella S.p.A.

Vice Chairman Sella Personal Credit S.p.A.

Director Banca Patrimoni Sella & C. S.p.A.

Vice Chairman Selban S.p.A.

Director Family Advisory SIM S.p.A. Sella & Partners

Director Sella Broker S.p.A.

According to the articles of association of Banca Sella, the Board of Directors must consist of no less than five and no more than thirteen members. The number of members of the Board of Directors is set forth by the shareholders' meeting convened to resolve on the appointment of the Board of Directors, at least a quarter of whom must be independent Directors.

Directors are appointed for a period of no more than three financial years and may be re-appointed. Their appointment lasts until the date of the shareholders' meeting called for the approval of the financial statements in respect of the third financial year of appointment. The appointment of the current members of the Board of Directors will expire on the date of the at the shareholders' meeting called for approval of the financial statements for the year ending 31 December 2019.

The Board of Directors meets as a rule once a month and each time the Chairman or the Managing Director or three directors or two members of the Board of Statutory Auditors deem that it is necessary to call a meeting and in all other cases as provided for by law.

The Board of Directors is fully empowered to undertake the ordinary and extraordinary management of the Issuer in order to carry out all actions that it considers appropriate to achieve and implement the Issuer's corporate purposes, except for those powers that, by law, must be exercised by a shareholders' meeting.

The business address of each of the directors is Piazza Gaudenzio Sella, 1, 13900 Biella, Italy.

Conflicts of interest

As far as the Issuer is aware, there are no relevant potential conflicts of interest arising from the duties of the directors to the Issuer and their private interests or other duties, save for those which may arise from the other roles set out in the table above and those which may be inherent in the transactions submitted to the competent bodies of the Issuer, in strict compliance with the law.

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Board of Statutory Auditors

As at the date of this Base Prospectus, the Board of Statutory Auditors of Banca Sella is as follows (having been appointed until the shareholders' meeting called for approval of the financial statements for the year ending 31 December 2019):

Name Title Paolo Piccatti Chairman Claudio Sottoriva Standing Auditor Valerio Carlo Ticozzi Standing Auditor Daniele Frè Alternate Auditor Michela Rayneri Alternate Auditor

Under the articles of association of Banca Sella, the Board of Statutory Auditors is appointed by the shareholders and consists of three standing auditors, among whom a Chairman is appointed, and two alternate auditors. The shareholders' meeting fixes their remuneration. All statutory auditors remain in office for three financial years and may be re-appointed after expiry of their term. Standing auditors must attend meetings of the Board of Directors and of the shareholders, and must themselves meet at least every 45 days.

Independent Auditors

Deloitte & Touche S.p.A. was appointed as external auditor to the Issuer for the financial years from 2011 to 2019 pursuant to a shareholders' resolution passed on 2 May 2011. Deloitte & Touche S.p.A. is a member of Assirevi, the Italian Association of Auditors.

Employees

The following table shows the number of employees of the Issuer as at 31 December 2018 and 2017:

As at 31 December

2018 2017

No. of employees of the Issuer 2,878 2,862

Recent Developments

Results of the first quarter as of 31 March 2019

On 10 May 2019, the Issuer published a press release announcing its 2019 first-quarter financial results. The unaudited interim financial results as of 31 March 2019, approved by the Board of Directors of Banca Sella, recorded a net profit equal to €5.6 million, compared to €7.6 million in the same period of the previous year. As regards capital strength, CET1 was 14.48 per cent., compared to 14.63 per cent. as at 31 December 2018, whereas the Total Capital Ratio reached 17.68 per cent., compared to 18.06 per cent. as at 31 December 2018. Total deposits at market value grew by 4.8% reaching €26.7 billion, compared to €25.5 billion as at 31 December 2018. The direct deposits component increased by 3.5%, amounting to €10.3 billion, compared to €10 billion as at 31 December 2018. Net interest income, compared to the same period of the previous year, grew by 5.4%, reaching €35.7 million, and net interest and other banking income, compared to the same period of the previous year, increased by 0.4%, standing at €87 million. Net income from services, compared to the same period of the previous

140 year, decreased by 2.8%, amounting to €51.4 million. Loans, supporting the activities of families and businesses, grew by 1.9%, reaching €7.2 billion, compared to €7.0 billion as at 31 December 2018. The net NPL ratio showed a further improvement, decreasing to 4.3%, compared to 4.5% as at 31 December 2018.

The Issuer’s Texas ratio is 62.6 per cent., further improving from 63.8 per cent. as of 31 December 2018. For Further details regarding the indicators referred to in this paragraph, please see “Alternative Performance Measures” above. Liquidity ratios were positive as well: LCR was 205.9 %, while NSFR was 151.2% (for both ratios the minimum required amount is 100%).

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OVERVIEW OF FINANCIAL INFORMATION OF THE ISSUER

The following tables contain the Issuer’s balance sheet and income statement data as at and for the years ended 31 December 2018 and 2017 which is derived from, should be read in conjunction with, and is qualified in its entirety by reference to the Issuer’s audited annual financial statements as at and for the years ended 31 December 2018 and 2017, together with the accompanying notes and auditors’ reports, all of which are incorporated by reference in this Base Prospectus. See the section “Information Incorporated by Reference” of this Base Prospectus.

The Issuer has prepared the annual financial statements referred to above in accordance with International Financial Reporting Standards, as adopted by the European Union, and Deloitte & Touche S.p.A., the current auditors to the Issuer, have audited such annual financial statements without qualification.The financial statements as at and for the year ended 31 December 2018 were prepared with reference to the instructions on the matter of banks’ financial statements under the Bank of Italy Circular 262 of 22 December 2005 (5th update of 22 December 2017).

Following the entry into force of IFRS 9 and the choice made by the Issuer not to proceed with the recalculation of amounts from the preceding year, the financial tables provided for under the above Circular were appropriately modified with additional line items to allow for comparison with 2017, in respect of which the columns were prepared in accordance with the provisions of IAS39 and set out in accordance with the Bank of Italy Circular 262 (4th update of 15 December 2015).

The Issuer has not published interim financial statements and, accordingly, this Base Prospectus does not incorporate any financial statements subsequent to 31 December 2018.

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BANCA SELLA S.p.A. AUDITED ANNUAL BALANCE SHEETS

Assets

As at 31 December

2018 2017

Bank of Italy Bank of Italy Circular Circular 262/05 4th 262/05 5th update update (IAS 39 (IFRS 9 criteria) criteria)

(€ thousand)

Cash and cash equivalents 147,815 139,631 Financial assets measured at fair value through profit and loss 86,158 - a) financial assets held for trading 36,981 - c) other financial assets necessarily measured at fair value 49,177 - Financial assets held for trading(1) - 23,282 Financial assets measured at fair value through other comprehensive income 452,409 - Financial assets available for sale(1) - 1,060,968 Financial assets measured at amortised cost 10,407 - a) Due from banks 2,326 - b) Due from customers 8,081 - Financial assets held to maturity(1) - 90,646 Due from banks(1) - 2,787,881 Due from customers(1) - 7,003,762 Hedging derivatives 1,974 3,715 Value adjustment of financial assets subject to macro-hedging (+/-) 78,927 87,203 Equity investments 105,236 88,536 Tangible assets 36,907 46,769 Intangible assets 55,887 54,598 of which: - goodwill 12,992 13,181 Tax assets 176,322 157,916 a) current 40,412 44,278 b) deferred 135,910 113,638 Non-current assets and asset groups held for sale 17,132 - Other assets 144,959 208,771 Total assets 11,811,040 11,753,678 ______

(1) Set out as provided under Bank of Italy Circular 262 (4th update of 15 December 2015), in accordance with IAS39 (as at 31 December 2017 only).

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BANCA SELLA S.p.A. AUDITED ANNUAL BALANCE SHEETS

Liabilities

As at 31 December

2018 2017

Bank of Italy Bank of Italy Circular Circular 262/05 4th 262/05 5th update update (IAS 39 (IFRS 9 criteria) criteria)

(€ thousand) Financial liabilities measured at amortised cost 10,680,515 - a) Due to banks 720,366 - b) Due to customers 9,615,271 - c) Securities in issue 344,878 - Due to banks(1) - 738,902 Due to customers(1) - 9,374,893 Securities issued(1) - 410,564 Financial liabilities held for trading 11,500 16,033 Hedging derivatives 81,563 90,493 Tax liabilities: 9,675 8,831 a) current 3,114 2,202 b) deferred 6,560 6,630 Liabilities associated with assets held for sale 7,285 - Other liabilities 229,066 260,853 Provision for severance indemnities 24,072 29,583 Provisions for risks and charges: 16,697 26,122 a) commitments and guarantees given 3,534 - b) other provisions for risks and charges 13,163 26,122 Valuation reserves (6,038) 1,683 Reserves 31,242 81,287 Share premiums 366,090 366,090 Capital 334,228 334,228 Profit (Loss) for the year (+/-) 25,145 14,116 Total liabilities and shareholders’ equity 11,811,040 11,753,678 ______

(1) Set out as provided under Bank of Italy Circular 262 (4th update of 15 December 2015), in accordance with IAS39 (as at 31 December 2017 only).

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BANCA SELLA S.p.A. AUDITED ANNUAL INCOME STATEMENTS

Year ended 31 December 2018 2017 Bank of Italy Bank of Italy Circular Circular 262/05 4th 262/05 5th update (IFRS 9 update (IAS 39 criteria) criteria)

(€ thousand) Interest receivable and similar income 203,741 193,848 of which: interest income calculated using the effective interest method 194,700 - Interest payable and similar expenses (51,227) (52,408) Net interest income 152,514 141,439 Fee income 293,660 278,394 Fee expenses (80,049) (74,455) Net fees 213,611 203,939 Dividends and similar income 3,312 192 Net income from trading 4,472 6,831 Net gains/(losses) on hedging activities 103 126 Income/(losses) from sale or repurchase of: (100) 3,584 a) financial assets measured at amortised cost 271 - a) receivables(1) - (2,955) b) financial assets measured at fair value through other comprehensive income (372) - b) financial assets available for sale(1) - 6,547 d) financial liabilities(1) - (9) Net gains/(losses) on other financial assets and liabilities measured at fair value through profit and loss (2,145) - b) other financial assets necessarily measured at fair value (2,145) - Net banking income 371,766 356,111 Net loan loss provisions: (42,052) (44,147) a) financial assets measured at amortised cost (42,074) a) receivables(1) - (33,885) b) financial assets measured at fair value through other comprehensive income 22 - b) financial assets available for sale(1) - (7,826) d) other financial transactions(1) - (2,436) Profit/loss from contractual changes without write-offs (661) - Net financial operating gains (losses) 329,052 311,964 Administrative expenses: (291,521) (308,423) a) personnel expenses (137,732) (158,515) b) other administrative expenses (153,789) (149,908) Net provisions for risks and charges (3,881) (16,141) a) commitments and securities issued (223) - b) other net provisions (3,658) - Net value adjustments on tangible assets (4,192) (7,914) Net value adjustments on intangible assets (13,146) (14,315) Other operating expenses/income 47,714 53,757 Operating expenses (265,027) (293,037) Value adjustments on goodwill (189) (350) Income(losses) for the disposal of investments 26 23 Profit/(loss) on continuing operations before tax 63,863 18,600 Income taxes for the period on continuing operations (17,874) (4,483) Profit/(loss) on continuing operations after tax 45,989 14,116 Profit/(loss) from discounted operations after tax (20,844) - Profit (loss) for the period 25,145 14,116 ______

(1) Set out as provided under Bank of Italy Circular 262 (4th update of 15 December 2015), in accordance with IAS39 (year ended 31 December 2017 only).

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TAXATION

The statements herein regarding taxation are based on the laws and practice in force as at the date of this Base Prospectus and are subject to any changes in law occurring after such date, which changes could be made on a retroactive basis. The following overview does not purport to be a comprehensive description of all the tax considerations which may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or commodities) may be subject to special rules.

Prospective purchasers of the Notes are advised to consult their own tax advisers concerning the overall tax consequences of their ownership of the Notes.

Taxation in the Republic of Italy

Tax treatment of the Notes

Italian Legislative Decree No. 239 of 1 April 1996, as amended and supplemented (“Decree No. 239”), regulates the tax treatment of interest, premium and other income (including the difference between the redemption amount and the issue price) (hereinafter collectively referred to as “Interest”) from certain securities issued, inter alia, by Italian resident banks. The provisions of Decree No. 239 apply to Notes issued by the Issuer that qualify as obbligazioni (bonds) or titoli similari alle obbligazioni (securities similar to bonds) pursuant to Article 44 of Presidential Decree No. 917 of 22 December 1986, as amended and supplemented (“Decree No. 917”). Pursuant to Law Decree No. 138 of 13 August 2011, converted into Law No. 148 of 14 September 2011 (“Decree No. 138”), the described tax treatment applies irrespective of the maturity date of the Notes.

Taxation of interest

Italian resident Noteholders

Where an Italian resident Noteholder is (a) individuals resident in Italy for tax purposes not holding the Notes in connection with entrepreneurial activities, unless they have entrusted the management of their financial assets, including the Notes, to an authorised intermediary and have opted for the Risparmio Gestito regime according to Article 7 of Legislative Decree No. 461 of 21 November 1997 (see “- Capital gains tax” below); (b) a non commercial partnership; (c) a non-commercial private or public institution; or (d) an investor exempt from Italian corporate income taxation (), interest, premium and other income relating to the Notes, accrued during the relevant holding period, are subject to a substitute tax, referred to as “imposta sostitutiva”, levied at the rate of 26 per cent. In the event that the Noteholders described under (a) and (c) above are engaged in an entrepreneurial activity to which the Notes are connected, the imposta sostitutiva applies as a provisional tax.

Pursuant to Decree No. 239, imposta sostitutiva is applied by authorised Intermediaries (as defined below) which intervene in any way in the collection of Interest or in transfers or disposals of the Notes.

Subject to certain limitations and requirements (including a minimum holding period), Italian resident individuals not acting in connection with an entrepreneurial activity to which the Notes are connected or social security entities pursuant to Legislative Decree No. 509 of 30 June 1994 and Legislative Decree No. 103 of 10 February 1996 may be exempt from any income taxation, including the imposta sostitutiva, on interest, premium and other income relating to the Notes if the Notes are included in a long-term individual savings account (piano individuale di risparmio a lungo termine) that meets the requirements set forth in Article 1(88-114) of Law No. 232 of 11 December 2016, as subsequently amended (the “Finance Act 2017”).

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Where an Italian resident Noteholder is a company or similar commercial entity, or a permanent establishment in Italy of a foreign company to which the Notes are effectively connected, and the Notes are deposited with an authorised intermediary, interest, premium and other income from the Notes will not be subject to imposta sostitutiva, but must be included in the relevant Noteholder’s income tax return and are therefore subject to general Italian corporate taxation (and, in certain circumstances, depending on the “status” of the Noteholder, also to the regional tax on productive activities (“IRAP”)).

Under the current regime provided by Law Decree No. 351 of 25 September 2001 converted into law with amendments by Law No. 410 of 23 November 2001 (“Decree 351”), and Article 9, par. 1, Legislative Decree No. 44 of 4 March 2014, payments of interest, premiums or other proceeds in respect of the Notes made to Italian resident real estate investment funds established pursuant to Article 37 of Legislative Decree No. 58 of 24 February 1998 (the “Financial Services Act”) or pursuant to Article 14-bis of Law No. 86 of 25 January 1994, and Italian real estate investment companies with fixed capital (the Real Estate SICAFs and, together with the Italian resident real estate investment funds, the “Real Estate Funds”) are subject neither to imposta sostitutiva nor to any other income tax in the hands of the Real Estate Fund, but subsequent distributions made in favour of unitholders or shareholders will be subject, in certain circumstances, to a withholding tax of 26 per cent.; subject to certain conditions, depending on the status of the investor and percentage of participation, income of the Real Estate Fund is subject to taxation in the hands of the unitholder or shareholder regardless of distribution.

If the investor is resident in Italy and is an open-ended or closed-ended investment fund, a SICAF (an investment company with fixed capital other than a Real Estate SICAF) or a SICAV (an investment company with variable capital) established in Italy and either (i) the fund, the SICAF or the SICAV or (ii) their manager is subject to the supervision of a regulatory authority (the “Fund”), and the relevant Notes are held by an authorised intermediary, interest, premium and other income accrued during the holding period on such Notes will not be subject to imposta sostitutiva nor to any other income tax in the hands of the Fund, but subsequent distributions made in favour of unitholders or shareholders will be subject, in certain circumstances, to a withholding tax of 26 per cent. (the “Collective Investment Fund Withholding Tax”).

Where an Italian resident Noteholder is a pension fund (subject to the regime provided for by Article 17 of Legislative Decree No. 252 of 5 December 2005) and the Notes are deposited with an authorised intermediary, interest, premium and other income relating to the Notes and accrued during the holding period will not be subject to imposta sostitutiva, but must be included in the result of the relevant portfolio accrued at the end of the tax period to be subject to a 20 per cent. substitute tax. Subject to certain conditions (including minimum holding period requirement) and limitations, interest, premium and other income relating to the Notes may be excluded from the taxable base of the 20 per cent. substitute tax if the Notes are included in a long-term savings account (piano di risparmio a lungo termine) that meets the requirements set forth in Article 1 (88-114) of Finance Act 2017.

Pursuant to Decree 239, imposta sostitutiva is applied by banks, Italian investment companies (società di intermediazione mobiliare) (“SIMs”), fiduciary companies, Italian asset management companies (società di gestione del risparmio) (“SGRs”), stockbrokers and other entities identified by a decree of the Ministry of Finance (each an “Intermediary”).

An Intermediary must (a) be resident in Italy or be a permanent establishment in Italy of a non-Italian resident financial intermediary and (b) intervene, in any way, in the collection of interest or in the transfer of the Notes. For the purpose of the application of the imposta sostitutiva, a transfer of Notes includes any assignment or other act, either with or without consideration, which results in a change of the ownership of the relevant Notes or in a change of the Intermediary with which the Notes are deposited.

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Where the Notes are not deposited with an Intermediary, the imposta sostitutiva is applied and withheld by any entity paying interest to a Noteholder.

Non-Italian Resident Noteholders

Interest in respect of Notes paid to non-Italian resident beneficial owners of the Notes with no permanent establishment in Italy to which the Notes are effectively connected, are not subject to imposta sostitutiva provided that:

(a) such beneficial owners are resident, for tax purposes, in a State or territory allowing for an adequate exchange of information with Italy; and

(b) all the requirements and procedures set forth in Decree No. 239 and in its implementation rules in order to benefit from the exemption from imposta sostitutiva are met and complied with in due time.

Decree No. 239 also provides for additional exemptions from imposta sostitutiva on Interest paid to (i) international bodies or entities set up in accordance with international agreements which have entered into force in Italy; (ii) institutional investors, whether or not subject to tax, established in a State or territory allowing for an adequate exchange of information with Italy; and (iii) Central Banks or other entities managing, inter alia, the official reserves of a foreign State.

The imposta sostitutiva will be applicable at the rate of 26 per cent. (or at the reduced rate provided for by the applicable double tax treaty, if any) to interest, premium and other income paid to Noteholders who are resident, for tax purposes, in countries which do not allow for a satisfactory exchange of information with Italy.

In order to ensure gross payment, non-Italian resident Noteholders must be the beneficial owners of the payments of interest, premium or other income and (a) deposit, directly or indirectly, the Notes with a resident bank or SIM or a permanent establishment in Italy of a non-Italian resident bank or SIM or with a non-Italian resident entity or company participating in a centralised securities management system which is in contact, via computer, with the Ministry of Economy and Finance and (b) file with the relevant depository, prior to or concurrently with the deposit of the Notes, a statement of the relevant Noteholder, which remains valid until withdrawn or revoked, in which the Noteholder declares to be eligible to benefit from the applicable exemption from imposta sostitutiva. Such statement, which is not requested for international bodies or entities set up in accordance with international agreements which have entered into force in Italy nor in case of foreign Central Banks or entities which manage, inter alia, the official reserves of a foreign State, must comply with the requirements set forth by Ministerial Decree of 12 December 2001, as subsequently amended.

Atypical securities

Interest payments relating to Notes that are not deemed to fall within the category of bonds (obbligazioni) or debentures similar to bonds (titoli similari alle obbligazioni) may be subject to a withholding tax, levied at the rate of 26 per cent. For this purpose, debentures similar to bonds are securities that incorporate an unconditional obligation to pay, at maturity, an amount not lower than their nominal value with or without the payment of periodic interest, and do not give any right to directly or indirectly participate in the management of the issuer or to the business in connection to which the securities were issued, nor to control the same.

Subject to certain limitations and requirements (including a minimum holding period), Italian resident individuals not acting in connection with an entrepreneurial activity or social security entities pursuant to Legislative Decree No. 509 of 30 June 1994 and Legislative Decree No. 103 of 10 February 1996 may be exempt from any income taxation, including the withholding tax on interest, premium and other income relating to the Notes not falling within the category of bonds (obbligazioni) or debentures similar to bonds

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(titoli similari alle obbligazioni), if such Notes are included in a long-term individual savings account (piano individuale di risparmio a lungo termine) that meets the requirements set forth in Article 1(100-114) of the Finance Act 2017.

Where the Noteholder is (a) an Italian individual engaged in an entrepreneurial activity to which the Notes are connected; (b) an Italian company or a similar Italian commercial entity; (c) a permanent establishment in Italy of a foreign entity; (d) an Italian commercial partnership; or (e) an Italian commercial private or public institution, such withholding tax is a provisional withholding tax. In all other cases, including when the Noteholder is a non-Italian resident, the withholding tax is a final withholding tax. For non-Italian resident Noteholders, the withholding tax rate may be reduced by any applicable tax treaty.

Fungible issues

Pursuant to Article 11, paragraph 2 of Decree No. 239, where the Issuer issues a new Tranche forming part of a single series with a previous Tranche, for the purposes of calculating the amount of Interest subject to imposta sostitutiva, the issue price of the new Tranche is deemed to be the same amount as the issue price of the original Tranche. This rule applies where the (a) the new Tranche is issued within 12 months from the issue date of the previous Tranche and (b) the difference between the issue price of the new Tranche and that of the original Tranche does not exceed 1 per cent. of the nominal value of the Notes multiplied by the number of years of duration of the Notes.

Capital gains tax

Italian resident Noteholders

Any gain obtained from the sale or redemption of the Notes would be treated as part of the taxable income (and, in certain circumstances, depending on the “status” of the Noteholder, also as part of the net value of the production for IRAP purposes) if realised by an Italian company or a similar commercial entity (including the Italian permanent establishment of foreign entities to which the Notes are connected) or Italian resident individuals engaged in an entrepreneurial activity to which the Notes are connected.

Where an Italian resident Noteholder is an (i) an individual holding the Notes not in connection with an entrepreneurial activity, (ii) a non-commercial partnership, (iii) a non-commercial private or public institution, any capital gain realised by such Noteholder from the sale or redemption of the Notes would be subject to an imposta sostitutiva, levied at the current rate of 26 per cent. Noteholders may set off losses with gains.

Subject to certain limitations and requirements (including a minimum holding period), Italian resident individuals not engaged in an entrepreneurial activity to which the Notes are connected or social security entities pursuant to Legislative Decree No. 509 of 30 June 1994 and Legislative Decree No. 103 of 10 February 1996 may be exempt from Italian capital gain taxes, including the imposta sostitutiva, on capital gains realised upon sale or redemption of the Notes, if the Notes are included in a long-term individual savings account (piano individuale di risparmio a lungo termine) that meets the requirements set forth in Article 1(88-114) of Finance Act 2017.

In respect of the application of imposta sostitutiva, taxpayers may choose one of the three regimes described below.

Under the tax declaration regime (regime della dichiarazione), which is the default regime for Noteholders under (i) to (iii) above, the imposta sostitutiva on capital gains will be chargeable, on a cumulative basis, on all capital gains, net of any incurred capital loss, realised by the investor in connection with an entrepreneurial activity pursuant to all sales or redemptions of the Notes carried out during any given tax year. The relevant Noteholder must indicate the overall capital gains realised in any tax year, net of any relevant incurred capital loss, in the annual tax return and pay imposta sostitutiva on such gains together with any balance of income

149 tax due for such year. Capital losses in excess of capital gains may be carried forward against capital gains realised in any of the four succeeding tax years..

As an alternative to the tax declaration regime, Italian resident Noteholders under (i) to (iii) above may elect to pay the imposta sostitutiva separately on capital gains realised on each sale or redemption of the Notes (the “risparmio amministrato” regime). Such separate taxation of capital gains is allowed subject to (a) the Notes being deposited with Italian banks, SIMs or certain authorised financial intermediaries (including permanent establishments in Italy of foreign intermediaries) and (b) an express election for the risparmio amministrato regime being timely made in writing by the relevant Noteholder. The depository is responsible for accounting for imposta sostitutiva in respect of capital gains realised on each sale or redemption of the Notes (as well as in respect of capital gains realised upon the revocation of its mandate), net of any incurred capital loss, and is required to pay the relevant amount to the Italian tax authorities on behalf of the taxpayer, deducting a corresponding amount from the proceeds to be credited to the Noteholder or using funds provided by the Noteholder for this purpose. Under the risparmio amministrato regime, where a sale or redemption of the Notes results in a capital loss, such loss may be deducted from capital gains subsequently realised, within the same securities management, in the same tax year or in the following tax years up to the fourth. Under the risparmio amministrato regime, the Noteholder is not required to declare the capital gains in the annual tax return.

Any capital gains realised by Italian resident Noteholders under to below who have entrusted the management of their financial assets, including the Notes, to an authorised intermediary and have opted for the so-called “risparmio gestito” regime will be included in the computation of the annual increase in value of the managed assets accrued, even if not realised, at year end, subject to a substitute tax at a rate of 26 per cent., to be paid by the managing authorised intermediary. Under the risparmio gestito regime, any depreciation of the managed assets accrued at year end may be carried forward against increase in value of the managed assets accrued in any of the four succeeding tax years. Under the risparmio gestito regime, the Noteholder is not required to declare the capital gains realised in the annual tax return.

Any capital gains realised by a Noteholder who is a Real Estate Fund will be subject neither to imposta sostitutiva nor to any other income tax at the level of the Real Estate Fund, but subsequent distributions made in favour of unitholders or shareholders will be subject, in certain circumstances, to a withholding tax of 26 per cent.; subject to certain conditions, depending on the status of the investor and percentage of participation, income of the Real Estate Fund is subject to taxation in the hands of the unitholder or the shareholder regardless of distribution.

Any capital gains realised by a Noteholder which is a Fund will not be subject to imposta sostitutiva. Such result will not be taxed with the Fund, but subsequent distributions in favour of unitholders of shareholders may be subject to the Collective Investment Fund Withholding Tax.

Any capital gains realised by a Noteholder who is an Italian pension fund (subject to the regime provided for by article 17 of the Legislative Decree No. 252 of 5 December 2005) will be included in the result of the relevant portfolio accrued at the end of the tax period, to be subject to the 20 per cent. substitute tax. Subject to certain conditions (including minimum holding period requirement) and limitations, interest, premium and other income relating to the Notes may be excluded from the taxable base of the 20 per cent. substitute tax if the Notes are included in a long-term savings account (piano di risparmio a lungo termine) that meets the requirements set forth in Article 1 (88-114) of Finance Act 2017.

Capital gains realised by non-Italian resident Noteholders, not having a permanent establishment in Italy to which the Notes are connected, from the sale or redemption of Notes traded on regulated markets are neither subject to the imposta sostitutiva nor to any other Italian income tax.

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Non Italian resident Noteholders

The 26 per cent. Italian capital gains tax may in certain circumstances be payable on capital gains realised upon sale, transfer or redemption of the Notes by non-Italian resident individuals and corporations without a permanent establishment in Italy to which the Notes are effectively connected, if the Notes are held in Italy.

However, any capital gain realised by non-Italian residents without a permanent establishment in Italy to which the Notes are effectively connected through the sale for consideration or redemption of the Notes are exempt from taxation in Italy to the extent that the Notes are listed on a regulated market (as defined in the EC Directive No. 2004/39/EC) in Italy or abroad, and that in certain cases subject to timely filing of required documentation (in the form of a declaration (autocertificazione) of non-residence in Italy) with Italian qualified intermediaries (or permanent establishments in Italy of foreign intermediaries) with which the Notes are deposited, even if the Notes are held in Italy and regardless of the provisions of any applicable double tax treaty.

Where the Notes are not listed on a regulated market in Italy or abroad:

(a) pursuant to the provisions of Legislative Decree No. 461, Law Decree No. 350 of 25 September 2001 and Decree No. 239, as modified in particular by Article 41 of Law Decree No. 269 of 30 September 2003, non-Italian resident beneficial owners of Notes with no permanent establishment in Italy to which the Notes are effectively connected are exempt from taxation in Italy on any capital gains realised upon sale for consideration or redemption of the Notes if they are resident, for tax purposes, in a country which recognises the Italian tax authorities' right to a satisfactory exchange of information.

In this circumstance, if non-Italian residents without a permanent establishment in Italy to which the Notes are effectively connected elect for the Risparmio Amministrato regime or the Risparmio Gestito regime, exemption from Italian taxation on capital gains applies on the condition that they file in time with the authorised financial intermediary an appropriate declaration (autocertificazione) stating that they meet the requirement of residence, for tax purposes, in one of the above mentioned countries which recognises the Italian fiscal authorities' right to a satisfactory exchange of information;

(b) in any event, non-Italian resident individuals or entities without a permanent establishment in Italy to which the Notes are effectively connected that may benefit from a double taxation treaty with Italy providing that capital gains realised upon sale or redemption of Notes are to be taxed only in the country of tax residence of the recipient, subject to the relevant procedural requirements are not subject to taxation in Italy on any capital gains realised upon sale for consideration or redemption of the Notes.

In these circumstances, if non-Italian residents without a permanent establishment in Italy to which the Notes are effectively connected elect for the Risparmio Amministrato regime or the Risparmio Gestito regime, exemption from Italian taxation on capital gains generally applies on the condition that they file in time with the authorised financial intermediary appropriate documents which include, inter alia, a certificate of residence from the competent tax authorities of the country of residence of the non-Italian resident.

Inheritance and gift taxes

Pursuant to Law Decree No. 262 of 3 October 2006, converted into Law No. 286 of 24 November 2006, as subsequently amended, the transfers of any valuable asset (including shares, notes or other securities) as a result of death or donation are taxed as follows:

(i) transfers in favour of spouses and direct descendants or direct ancestors are subject to an inheritance and gift tax applied at a rate of 4 per cent. on the value of the inheritance or the gift exceeding, for each beneficiary, €1,000,000;

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(ii) transfers in favour of relatives to the fourth degree or relatives-in-law to the third degree are subject to an inheritance and gift tax at a rate of 6 per cent. on the entire value of the inheritance or the gift. Transfers in favour of brothers/sisters are subject to the 6 per cent. inheritance and gift tax on the value of the inheritance or the gift exceeding, for each beneficiary, €100,000; and

(iii) any other transfer is, in principle, subject to an inheritance and gift tax applied at a rate of 8 per cent. on the entire value of the inheritance or the gift.

If the transfer is made in favour of persons with severe disabilities, the tax is levied at the rate mentioned above in (i), (ii) and (iii) on the value exceeding, for each beneficiary, €1,500,000.

Transfer tax

Following the repeal of the Italian transfer tax, contracts relating to the transfer of securities are subject to the following registration tax: (i) public deeds and notarised deeds are subject to fixed registration tax at a rate of €200.00; (ii) private deeds should be subject to lump sum of €200.00 registration tax only in case of use or of voluntary registration.

Stamp duty

Pursuant to Article 19(1) of Decree No. 201 of 6 December 2011 (“Decree 201”), a proportional stamp duty applies on an annual basis to the periodic reporting communications sent by financial intermediaries to their clients for the Notes deposited in Italy. The stamp duty applies at a rate of 0.20 per cent.; and cannot exceed €14,000 for taxpayers other than individuals; this stamp duty is determined on the basis of the market value or, if no market value figure is available, the nominal value or redemption amount or in the case the nominal or redemption values cannot be determined, on the purchase value of the Notes held. Based on the wording of the law and the implementing decree issued by the Italian Ministry of Economy on 24 May 2012, the stamp duty applies to any investor who is a client (as defined in the regulations issued by the Bank of Italy) of an entity that exercises in any form a banking, financial or insurance activity within the Italian territory.

Wealth tax on financial products held abroad

Pursuant to Article 19(18) of Decree 201, Italian resident individuals holding the Notes outside the Italian territory are required to pay an additional tax at a rate of 0.20 per cent (“IVAFE”).

This tax is calculated on the market value of the Notes at the end of the relevant year or, if no market value figure is available, the nominal value or the redemption value or in the case the nominal or redemption values cannot be determined, on the purchase value of such financial assets held outside the Italian territory. Taxpayers are entitled to an Italian tax credit equivalent to the amount of wealth taxes paid in the State where the financial assets are held (up to an amount equal to the Italian wealth tax due).

Tax monitoring obligations

According to Law Decree No. 167 of 28 June 1990, converted by Law No. 227 of 4 August 1990, as amended from time to time, individuals, non-profit entities and certain partnerships (società semplici or similar partnerships in accordance with article 5 of Presidential Decree 917) resident in Italy for tax purposes, under certain conditions, are required to report for tax monitoring purposes in their yearly income tax the amount of investments (including the Notes) directly or indirectly held abroad.

The requirement applies also where the persons above, being not the direct holder of the financial instruments, are the actual owner of the instrument.

Furthermore, the above reporting requirement is not required to comply with respect to: (i) Notes deposited for management or administration with qualified Italian financial intermediaries; (ii) contracts entered into

152 through their intervention, upon condition that the items of income derived from the Notes have been subject to tax by the same intermediaries: or (iii) if the foreign investments which are only composed by deposits and/or bank accounts when their aggregate value does not exceeds a €15,000 threshold throughout the year.

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SUBSCRIPTION AND SALE

Notes may be sold from time to time by the Issuer to any one or more of the Dealers. The arrangements under which Notes may from time to time be agreed to be sold by the Issuer to, and purchased by, Dealers are set out in an amended and restated dealer agreement dated on or about the date hereof (the “Dealer Agreement”) and made between the Issuer and the Arranger. Any such agreement will, inter alia, make provision for the form and terms and conditions of the relevant Notes, the price at which such Notes will be purchased by a Dealer and the commissions or other agreed deductibles (if any) payable or allowable by the Issuer in respect of such purchase. The Dealer Agreement makes provision for the resignation or termination of appointment of the existing Dealer and for the appointment of additional or other Dealers either generally in respect of the Programme or in relation to a particular Tranche of Notes.

United States of America

Regulation S Category 2; TEFRA D or TEFRA C as specified in the relevant Final Terms or neither if TEFRA is specified as not applicable in the relevant Final Terms.

The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) or any other applicable U.S. state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act (“Regulation S”).

The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the United States Internal Revenue Code of 1986 and Treasury regulations thereunder.

The Arranger has represented and agreed, and each further Dealer appointed under the Programme will be required to agree, that, except as permitted by the Dealer Agreement, it has not offered, sold or delivered and will not offer, sell or deliver the Notes of any identifiable Tranche, (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution of such Tranche, as determined and certified to the Fiscal Agent or the Issuer by such Dealer (or, in the case of a sale of a Tranche of Notes to or through more than one Dealer, by each of such Dealers as to the Notes of such Tranche purchased by or through it, in which case the Fiscal Agent or the Issuer shall notify each such Dealer when all such Dealers have so certified) within the United States or to, or for the account or benefit of, U.S. persons, and such Dealer will have sent to each dealer to which it sells Notes during the distribution compliance period relating thereto a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Accordingly, each Dealer represents and agrees that neither it, its affiliates, nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Notes, and it and they have complied and will comply with the restrictions of Regulation S under the Securities Act.

In addition, until 40 days after the commencement of the offering of Notes comprising any Tranche, any offer or sale of Notes within the United States by any Dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act, if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act.

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Prohibition of Sales to EEA Retail Investors

Unless the Final Terms in respect of any Notes specifies the “Prohibition of Sales to EEA Retail Investors” as “Not Applicable”, the Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by this Base Prospectus as completed by the Final Terms in relation thereto, to any retail investor in the EEA.

For the purposes of this provision:

(a) the expression “retail investor” means a person who is one (or more) of the following:

(i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or

(ii) a customer within the meaning of IDD where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or

(iii) not a qualified investor as defined in the Prospectus Directive; and

(b) the expression an “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.

If the Final Terms in respect of any Notes specifies “Prohibition of Sales to EEA Retail Investors” as “Not Applicable”, in relation to each Member State of the EEA, the Dealer has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree, that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Base Prospectus as completed by the Final Terms in relation thereto to the public in that Member State, except that it may make an offer of such Notes to the public in that Member State:

(a) Qualified investors: at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(b) Fewer than 150 offerees: at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the Issuer for any such offer; or

(c) Other exempt offers: at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive. provided that no such offer of Notes referred to in (a) to (c) above shall require the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Directive, or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision:

(a) an “offer of Notes to the public” in relation to any Notes in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and

(b) “Prospectus Directive” means Directive 2003/71/EC as amended and superseded, and includes any relevant implementing measure in the Member State.

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United Kingdom

The Arranger has represented in the Dealer Agreement and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that:

(a) No deposit-taking

in relation to any Notes having a maturity of less than one year:

(i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business; and

(ii) it has not offered or sold and will not offer or sell any Notes other than to persons:

(A) whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses; or

(B) who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses,

where the issue of the Notes would otherwise constitute a contravention of section 19 of the Financial Services and Markets Act 2000 (the “FSMA”) by the Issuer;

(b) Financial promotion

it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer; and

(c) General compliance

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in, from or otherwise involving the United Kingdom.

The Republic of Italy

The offering of the Notes has not been registered with the Commissione Nazionale per le Società e la Borsa (“CONSOB”) (the Italian Securities Exchange Commission) pursuant to Italian securities legislation and, accordingly, the Dealer represents and agrees and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or delivered, and will not offer, sell or deliver, any Notes and has not distributed, and will not distribute, copies of this Base Prospectus, any Final Terms or any other document relating to the Notes in the Republic of Italy except:

(a) to qualified investors (investitori qualificati), as defined pursuant to Article 100, paragraph 1, letter (a) of Legislative Decree No. 58 of 24 February 1998, as amended (otherwise known as the Testo Unico della Finanza or the “TUF”) and Article 34-ter, paragraph 1, letter b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended (the “Issuers’ Regulation”) and by Article 35, paragraph 1, letter d), of CONSOB Regulation No. 20307 of 15 February 2018, as amended (“Intermediaries’ Regulation”); or

(b) other than in relation to Senior Non-Preferred Notes, in other circumstances which are exempted from the rules on public offerings pursuant to Article 100 of the TUF and Article 34-ter of Issuers’ Regulation or pursuant to Regulation (EU) 2017/1129.

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Any offer, sale or delivery of the Notes or distribution of copies of this Base Prospectus, any Final Terms or any other document relating to the Notes in the Republic of Italy must be made in compliance with the selling restrictions under paragraphs (a) or (b) above and must:

(i) be made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the TUF, the Intermediaries’ Regulation and the TUB; and

(ii) comply with any other applicable laws and regulations or requirement imposed by CONSOB, the Bank of Italy (including, to the extent applicable to such Dealer, the reporting requirements pursuant to Article 129 of the TUB and the implementing guidelines of the Bank of Italy, issued on 25 August 2015 and amended on 10 August 2016, as further amended from time to time) or any other Italian authority.

France

The Arranger has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold and will not offer or sell, directly or indirectly, Notes to the public in the Republic of France, and it has not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France, the Base Prospectus, the relevant Final Terms or any other offering material relating to the Notes and such offers, sales and distributions have been and will be made in the Republic of France only to (a) providers of investment services relating to portfolio management for the account of third parties (personnes fournissant le service d’investissement de gestion de portefeuille pour compte de tiers), and/or (b) qualified investors (investisseurs qualifiés), all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1 of the French Code monétaire et financier.

Belgium

Other than in respect of Notes for which “Prohibition of Sales to Belgian Consumers” is specified as “Not Applicable” in the applicable Final Terms, each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that an offering of Notes may not be advertised to any individual in Belgium qualifying as a consumer within the meaning of Article I.1 of the Belgian Code of Economic Law, as amended from time to time (a “Belgian Consumer”) and that it has not offered, sold or resold, transferred or delivered, and will not offer, sell, resell, transfer or deliver, the Notes, and that it has not distributed, and will not distribute, any prospectus, memorandum, information circular, brochure or any similar documents in relation to the Notes, directly or indirectly, to any Belgian Consumer.

Japan

The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the “FIEA”) and, accordingly, the Dealer has represented and agreed that it will not offer or sell, and each further Dealer appointed under the Programme will be required to represent and agree, that it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan or to, or for the benefit of, any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person, except pursuant to an exemption from the registration requirement of, and otherwise in compliance with, the FIEA and other relevant laws and regulations in Japan. For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organised under the laws of Japan.

General

The Arranger has represented, warranted and agreed, and each further Dealer appointed under the Programme will be required to represent, warrant and agree that, to the best of its knowledge and belief, it has complied and will comply with all applicable laws and regulations in each country or jurisdiction in or from which it

157 purchases, offers, sells or delivers Notes or possesses, distributes or publishes this Base Prospectus or any Final Terms or any related offering material, in all cases at its own expense. Other persons into whose hands this Base Prospectus or any Final Terms comes are required by the Issuer and the Dealers to comply with all applicable laws and regulations in each country or jurisdiction in or from which they purchase, offer, sell or deliver Notes or possess, distribute or publish this Base Prospectus or any Final Terms or any related offering material, in all cases at their own expense.

The Dealer Agreement provides that the Dealers shall not be bound by any of the restrictions relating to any specific jurisdiction (set out above) to the extent that such restrictions shall, as a result of any change(s) or any change(s) in official interpretation, after the date hereof, of applicable laws and regulations, no longer be applicable but without prejudice to the obligations of the Dealers described in the preceding paragraph headed “General” above.

Selling restrictions may be supplemented or modified with the agreement of the Issuer. Any such supplement or modification may be set out in a supplement to this Base Prospectus.

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GENERAL INFORMATION

Listing, approval and admission to trading

This Base Prospectus has been approved as a base prospectus issued in compliance with the Prospectus Directive by the CSSF in its capacity as competent authority in Luxembourg for the purposes of the Prospectus Directive. Application has been made for Notes issued under the Programme to be listed on the official list of the Luxembourg Stock Exchange and admitted to trading on the Regulated Market of the Luxembourg Stock Exchange.

However, Notes may be issued pursuant to the Programme which will not be listed on the official list of the Luxembourg Stock Exchange or admitted to trading on the Luxembourg Stock Exchange or any other stock exchange or which will be listed on or admitted to trading on such stock exchange as the Issuer and the relevant Dealer(s) may agree.

The CSSF may, at the request of the Issuer, send to the competent authority of another Member State of the European Economic Area: (i) a copy of this Base Prospectus; and (ii) a certificate of approval attesting that this Base Prospectus has been drawn up in accordance with the Prospectus Directive.

Authorisations

The 2019 annual update of the Programme was authorised by resolutions of the Board of Directors of the Issuer passed on 21 December 2018 and 3 June 2019. The Issuer has obtained or will obtain from time to time all necessary consents, approvals and authorisations in connection with the issue and performance of the Notes.

Legal Entity Identifier

The Legal Entity Identifier (LEI) of Banca Sella is 549300I7OIUB41P86L19.

Conditions for determining price

The price and amount of Notes to be issued under the Programme will be determined by the Issuer and the relevant Dealer at the time of issue in accordance with prevailing market conditions.

Use of proceeds

The net proceeds of the issue of each Tranche of Notes will be applied by the Issuer for general funding purposes.

Clearing of the Notes

The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The appropriate common code and the International Securities Identification Number in relation to the Notes of each Tranche will be specified in the relevant Final Terms. The relevant Final Terms shall specify any other clearing system as shall have accepted the relevant Notes for clearance together with any further appropriate information.

The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels and the address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855 Luxembourg.

Litigation

Save as disclosed in “Description of the Issuer - Legal, administrative and tax proceedings”, the Issuer is not and has not been involved in any governmental, legal, arbitration or administrative proceedings in the 12 months preceding the date of this document relating to claims or amounts which may have, or have had in the

159 recent past, a significant effect on the Issuer’s financial position or profitability and, so far as the Issuer is aware, no such litigation, arbitration or administrative proceedings are pending or threatened.

No material adverse change

The earnings capacity and stability of the Issuer are largely conditioned by the general economic situation, trends in financial markets and the strength of prospects for economic growth, in particular in Italy. The persistence of difficulties in the general economic situation, notwithstanding signs of gentle recovery, could have an adverse effect on the ability of the Issuer to generate achievable profits in the near future, with possible consequences for the Issuer’s balance sheet and income. Subject to the foregoing, since 31 December 2018 (being the last day of the financial period in respect of which the most recent published audited financial statements of the Issuer have been prepared), there has been no material adverse change in the prospects of the Issuer.

No significant change

Since 31 December 2018 (being the last day of the financial period in respect of which the most recent published financial statements of the Issuer have been prepared), there has been no significant change in the financial or trading position of the Issuer.

Auditors

The annual financial statements of the Issuer have been audited without qualification for the years ended 2017 and 2018 by Deloitte & Touche S.p.A. of Via Tortona 25, 20144 Milan, Italy. Deloitte & Touche S.p.A. is registered under No. 46 in the special register (albo speciale) maintained by CONSOB and set out under Article 161 of the Financial Services Act and under No. 132587 in the Register of Accountancy Auditors (Registro dei Revisori Contabili) in compliance with the provisions of Legislative Decree No. 88 of 27 January 1992. Deloitte & Touche S.p.A. is a member of Assirevi (the Italian auditors’ association).

Minimum denomination

Where Notes issued under the Programme are admitted to trading on a Regulated Market within the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the Prospectus Directive, such Notes will not have a denomination of less than €100,000 (or, where the Notes are issued in a currency other than euro, the equivalent amount in such other currency).

Pursuant to Article 1.1105 of Law No. 205 of 27 December 2017 on the budget of the Italian government for 2018, Senior Non-Preferred Notes will not have a denomination of less than €250,000.

Interests of natural and legal persons involved in the issue/offer

The Arranger, any Dealer appointed under the Programme and its or their affiliates (including parent companies) have engaged, and may in the future engage, in financing, investment banking and/or commercial banking transactions, including securitisation transactions and may perform services for the Issuer and its affiliates in the ordinary course of business. The relevant Final Terms will specify any other interests of natural and legal persons involved in each issue/offer of Notes under the Programme.

In addition, in the ordinary course of their business activities, the Arranger, any Dealer appointed under the Programme and its or their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of the Issuer or the Issuer’s affiliates. The Arranger, any Dealer appointed under the Programme and/or its or their affiliates that have a lending relationship with the Issuer

160 routinely hedge their credit exposure to the Issuer consistent with their customary risk management policies. Typically, the Arranger and its affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities, including potentially the Notes issued under the Programme.

Any such short positions could adversely affect future trading prices of Notes issued under the Programme. The Arranger, any Dealer appointed under the Programme and its or their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. For the purpose of this paragraph the term “affiliates” includes also parent companies.

Documents on display

For so long as the Programme remains in effect or any Notes are outstanding, electronic copies of the following documents may be inspected (and, in the case of (d) and (e) below, are available for collection) during normal business hours at the specified office of the Fiscal Agent, namely:

(a) the Agency Agreement;

(b) the Deed of Covenant;

(c) the Programme Manual (being a manual signed for the purposes of identification by the Issuer and the Fiscal Agent, containing suggested forms and operating procedures for the Programme, including the forms of the Notes in global and definitive form);

(d) any Final Terms relating to Notes which are listed on any stock exchange (save that Final Terms relating to Notes which are neither admitted to trading on a Regulated Market in the European Economic Area or offered in the European Economic Area in circumstances where a base prospectus is required to be published under the Prospectus Directive will only be available for inspection by the relevant Noteholders and such holder must produce evidence satisfactory to the Issuer and the Paying Agent as to its holding of Notes and identity);

(e) this Base Prospectus and any supplement to this Base Prospectus and any other document incorporated by reference herein or therein;

(f) the By-Laws (statuto) of the Issuer; and

(g) the most recent publicly available audited annual financial statements of the Issuer, beginning with such financial statements as at and for the years ended 31 December 2017 and 2018.

161

REGISTERED OFFICE OF THE ISSUER

Banca Sella S.p.A Piazza Gaudenzio Sella, 1 13900 Biella Italy

ARRANGER AND DEALER

Banca IMI S.p.A. Largo Mattioli, 3 20121 Milan Italy FISCAL AGENT AND PAYING AGENT

Deutsche Bank AG, London Branch Winchester House 1 Great Winchester Street London EC2N 2DB United Kingdom

LEGAL ADVISERS

To the Issuer as to English and Italian law

Gianni, Origoni, Grippo, Cappelli & Partners Piazza Belgioioso, 2 20121 Milan Italy

To the Dealers as to English and Italian law

White & Case LLP Piazza Diaz, 2 20123 Milan Italy

AUDITORS TO THE ISSUER

Deloitte & Touche S.p.A. Via Tortona, 25 20144 Milan Italy

LUXEMBOURG LISTING AGENT

Deutsche Bank Luxembourg S.A. 2 Boulevard Konrad Adenauer L-1115 Luxembourg

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