Values Creating Value
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Consolidated Report and Accounts as at 31 December 2005 Values creating Value UniCredito Italiano Italian Joint Stock Company Registered Office: Genoa, via Dante, 1 General Management: Milan, Piazza Cordusio Registered in the Genoa Trade and Companies Register (Courts of Genoa) Tax Code and VAT No. 00348170101 Entered in the Register of Banks Parent Company of the UniCredito Italiano Banking Group Banking Group Register No. 3135.1 Member of the Interbank Deposit Protection Fund Capital Stock: € 5,213,388,513 fully paid in RelazioneConsolidated Trimestrale Report and Consolidata Accounts al2005 31 marzo 2005 Board of Directors BOARD OF DIRECTORS, Dieter Rampl * Chairman Gianfranco Gutty * Deputy Chairmen BOARD OF AUDITORS (First Deputy Chairman) Franco Bellei * AND EXTERNAL Fabrizio Palenzona * AUDITORS Carlo Salvatori * Alessandro Profumo ** Managing Director/CEO as at 22 March 2006 Roberto Bertazzoni ** Directors Manfred Bischoff Vincenzo Calandra Buonaura Giovanni Desiderio Volker Doppelfeld Giancarlo Garino Francesco Giacomin ** Piero Gnudi Friedrich Kadrnoska ** Max Dietrich Kley Luigi Maramotti Diether Münich ** Carlo Pesenti Hans Jürgen Schinzler Giovanni Vaccarino Paolo Vagnone ** Nikolaus von Bomhard ** Anthony Wyand Marco Fantazzini Company Secretary Board of Auditors Gian Luigi Francardo Chairman Giorgio Loli Statutory Auditors Aldo Milanese Vincenzo Nicastro Roberto Timo Giuseppe Armenise Alternate Auditors Marcello Ferrari KPMG S.p.A. External Auditors * Member of the Chairman’s Committee and of the Executive Committee ** Executive Committee Member 3 GENERAL MANAGEMENT as at 22 March 2006 Management Committee Alessandro Profumo Managing Director / CEO Ranieri de Marchis Planning, Finance and Administration (CFO) * Sergio Ermotti Multinationals / Investment Banking Division * Paolo Fiorentino Global Banking Services Division * Dario Frigerio Private Banking and Asset Management Division * Erich Hampel Central Eastern Europe (CEE) Division * Andrea Moneta Chief Integration Officer * Roberto Nicastro Retail Division * Vittorio Ogliengo Corporates / SMEs Division * Johann Berger Commercial Real Estate Financing Division Henning Giesecke Risk Management (CRO) Franz Herrlein Deputy Integration Officer Rino Piazzolla Human Resources Strategy Wolfgang Sprißler German Region Strategic Advisory Staff Other Department Heads Maurizia Angelo Comneno Legal, Compliance and Corporate Affairs Chiara Burberi Group Organisation Elisabetta Magistretti Internal Audit Edoardo Massaglia Corporate Identity Umberto Quilici Group ICT Franco Leccacorvi Chief Accountant * Position held by Group Deputy General Manager 5 LETTER TO THE SHAREHOLDERS FROM THE CEO Letter to the Shareholders from the CEO Dear Shareholders, The year 2005 marked a turning point and a great change for your Group. A friendly approach by UniCredit, HypoVereinsbank and Bank Austria Creditanstalt resulted in the largest business combination at transnational level ever achieved in Europe. By combining our common aspirations, it ensures that your new Group will have a significant competitive edge and highly interesting growth prospects. For this reason I take pride in presenting to you the first report and accounts of this new Group, and I want to thank you for the trust you have placed in our large-scale and highly innovative project. Europe is the keystone of what we are building. We know we can compete and achieve excellent results in all the domestic markets where we are present, thanks to our professionalism and quality of service. We have become the first truly European Bank. Our people work in 19 countries and we speak 22 different languages. That is why it is so important that we should feel part of a single culture sharing common values and consider ourselves citizens of Europe. We have in fact created a leading banking Group in terms of the size of its business as well as the quality of its assets and the uniqueness of its strategic positioning. The industrial and financial soundness of our project was immediately confirmed by our credibility and the favourable reaction of the markets. Not only did the public share-swap offer for HypoVereinsbank achieve an extremely high level of acceptance 7 (93.93%), it is also worth recalling that from 30 May 2005, when the first rumours of the deal started to circulate, to 31 December 2005, the value of the UniCredit share rose by 38.5%, more than twice the European Equity Index. In only seven months, therefore, integration with HVB already created value of over €20 billion in terms of market capitalisation. Even more important than this is the fact that the solid foundations on which your new Group stands are the basis for sustainable growth over the long term. Our course has already been set. We have a clear, strongly agreed vision of our business model that will enable your new Group to leverage the uniqueness of its assets and make the most of its considerable growth prospects. We intend to become the first bank of choice for our customers in all the markets in which we operate thanks to our highly specialised service offer and thorough knowledge of banking needs based on our closeness to our roots in local communities. Belonging to a leading European group means sharing best practice and the ability to innovate, and these will be further strengths as we set out to maximise customer satisfaction. Moreover, the Group will be better placed to use its expertise in those areas of the banking business – such as asset management and investment banking - in which reach and international standing are critical success factors. On the other hand, the setting up of centres of excellence and the development of cost synergy will be the growth drivers in those business lines whose success is based on economies of scale and process efficiency. Your Group therefore has all the characteristics and the leverage needed to successfully compete in an increasingly dynamic and aggressive market. CONSOLIDATED REPORT AND ACCOUNTS 8 AS AT 31 DECEMBER 2005 LETTER TO THE SHAREHOLDERS FROM THE CEO Now the integration process, with the complexity typical of a transaction on such a large scale, is continuing as planned and is beginning to produce its first significant results. The business choices we are implementing are aimed at value generation and the establishment of long-term relationships based on the good reputation and social legitimation of your Group. We believe that this can be achieved only with the support of a clear mission and a strong set of values based on integrity - the prerequisite for the sustainability of results over time and the transformation of profit into value for all our stakeholders. Yours truly, ALESSANDRO PROFUMO Managing Director/CEO 9 Report on Operations Introductory Notes to the Accounts 14 UniCredit Financial Summary 15 Shares and Shareholders 16 The UniCredit Group at the end of 2005 18 The Business Combination with HVB Group 18 The Organisational Structure 28 Operating Structure, Balance Sheet and Profit and Loss Account 36 CONTENTS Group Results for 2005 45 World Economy 45 Reclassified Accounts 48 Operating Profit 52 Net Profit 60 Reconciliation of the Parent Company’s Shareholders’ Equity and Net Profit to Consolidated Shareholders’ Equity and Net Profit 65 Corporate Transactions in 2005 66 Divisional Operations and Results 75 Retail Division 76 Corporate and Investment Banking Division 86 Private Banking and Asset Management Division 94 New Europe Division 102 Subsequent Events and Outlook 113 Subsequent Events 113 Outlook 114 Consolidated Accounts Consolidated Accounts 117 Notes To The Consolidated Accounts 127 Part A) Accounting Policies 129 Part B) Consolidated Balance Sheet 181 Part C) Consolidated Profit and Loss Account 239 Part D) Segment Reporting 261 Part E) Risks and Hedging Policies 269 Part F) Consolidated Shareholders’ Equity 353 Part G) Business Combinations 357 Part H) Related-Party Transactions 363 Part I) Share-based Payments 367 Part L) Information on Financial Instruments as at 31.12.2004 under Italian GAAP 373 Part M) The Transition to IFRS 387 Annexes 399 Report of the External Auditors 437 Branch Networks in Italy and Abroad 443 11 REPORT ON OPERATIONS Introductory Notes to the Accounts 14 UniCredit Financial Summary 15 Shares and Shareholders 16 The UniCredit Group at the end of 2005 18 The Business Combination with HVB Group 18 The Organisational Structure 28 Operating Structure, Balance Sheet and Profit and Loss Account 36 Group Results for 2005 45 World Economy 45 Reclassified Accounts 48 Operating Profit 52 Net Profit 60 Reconciliation of the Parent Company’s Shareholders’ Equity and Net Profit to Consolidated Shareholders’ Equity and Net Profit 65 Corporate Transactions in 2005 66 Divisional Operations and Results 75 Retail Division 76 Corporate and Investment Banking Division 86 Private Banking and Asset Management Division 94 New Europe Division 102 Subsequent Events and Outlook 113 Subsequent Events 113 Outlook 114 Note to the Report on Operations: The following conventional symbols have been used in the tables: • A dash (-) indicates that the item/fi gure is inexistent; • Two stops (..) or (n.s.) when the fi gures do not reach the minimum considered signifi cant or are not in any case considered signifi cant; • “N.A.” indicates that the fi gure is not avalailable. 13 Unless otherwise indicated, all amounts are in millions of euros. Introductory Notes to the Accounts Transition to IFRS UniCredit’s consolidated accounts as at 31 December 2005 were prepared under IFRS as adopted