Report on Corporate Governance and Ownership Structures 2019

REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2019 www.bancobpm.it (10 March 2020) 1 2 CONTENTS - BANCO BPM S.p.A. INTRODUCTION .......................................................................................................................................... 4 1) PROFILE OF THE ISSUER ............................................................................................................... 5 2) INFORMATION ON THE SHAREHOLDING STRUCTURE (pursuant to article 123 bis, paragraph 1 of the Consolidated Law on Finance) ......................................................................... 10 3) COMPLIANCE (pursuant to article 123-bis, paragraph 2, letter a), Consolidated Law on Finance) ............................................................................................................................................. 14 4) MANAGEMENT AND COORDINATION: the role of the Parent Company and the Banco BPM group ................................................................................................................................... 16 5) SHAREHOLDERS’ MEETINGS ..................................................................................................... 17 6) BOARD OF DIRECTORS ............................................................................................................ 20 6.1 APPOINTMENT, REPLACEMENT AND COMPOSITION OF THE BOARD OF DIRECTORS....................... 20 6.2 ROLE OF THE BOARD OF DIRECTORS ........................................................................................................ 51 6.3 MEETINGS ....................................................................................................................................................... 58 6.4 INDIVIDUAL BODIES ...................................................................................................................................... 62 6.5 INTERNAL COMMITTEES OF THE BOARD OF DIRECTORS ........................................................................ 69 6.6 REMUNERATION ............................................................................................................................................ 89 6.7 INDEPENDENT AND NON-EXECUTIVE DIRECTORS ................................................................................... 89 7) BOARD OF STATUTORY AUDITORS .......................................................................................... 96 7.1 APPOINTMENT, REPLACEMENT AND COMPOSITION OF THE BOARD OF STATUTORY AUDITORS .... 96 7.2 ROLE OF THE BOARD OF STATUTORY AUDITORS .................................................................................... 113 7.3 REMUNERATION .......................................................................................................................................... 116 8) COMPANY DEPARTMENTS AND PROCEDURES .................................................................. 116 8.1 PROCEDURES FOR PROCESSING CORPORATE INFORMATION ......................................................... 116 8.2 THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM ............................................................... 118 8.3 STATUTORY AUDIT OF THE ACCOUNTS .................................................................................................... 126 8.4 FINANCIAL REPORTING MANAGER ......................................................................................................... 126 8.5 ORGANISATION, MANAGEMENT AND CONTROL MODEL pursuant to Legislative Decree no. 231/01 and relating to the Supervisory Board of Banco BPM ........................................................... 128 8.6 THE INVESTOR RELATIONS OFFICE ........................................................................................................... 129 8.7 DIRECTORS’ INTERESTS AND TRANSACTIONS WITH RELATED PARTIES ................................................ 131 9) RELATIONS WITH SHAREHOLDERS AND THE FINANCIAL COMMUNITY ............................. 133 3 INTRODUCTION The Banco BPM Società per Azioni, (hereinafter “Banco BPM” or the “Company”) is a bank in the form of a company limited by shares, resulting from the merger (hereinafter the “Merger”) between the Banco Popolare - Società Cooperativa and the Banca Popolare di Milano S.c. a r.l., which took effect on 1 January 2017 (hereinafter also referred to as the “Date of Establishment”). The main information regarding the Merger is set out below. On 23 March 2016, subject to approval by the respective governing bodies, Banco Popolare and BPM signed a memorandum of understanding concerning the essential points of the merger (known as “own”) between the Banco Popolare and BPM, to be implemented, in accordance with article 2501 et seq. of the Civil Code, by creating a new company with the legal form of a company limited by shares and with the name “Banco BPM Società per Azioni”. On 24 May 2016, the governing bodies of the Banco Popolare and BPM approved the proposed merger in accordance with article 2502 of the Civil Code (hereinafter the “Proposed Merger”) as subsequently amended up to 12 September 2016. The extraordinary Shareholders’ Meetings of the Banco Popolare and BPM on 15 October 2016, approved the Proposed Merger subject to the required authorisations being issued by the Supervisory Authorities. The Merger took effect on 1 January 2017, subject to issue of the authorisations by Borsa Italiana S.p.A. for the newly issued Banco BPM shares from the Merger to be admitted to listing on the Electronic Stock Exchange, and authorisations from CONSOB to publish the prospectus needed for that purpose, and subject to registration, on said date, of the merger agreement (entered into on 13 December 2016) with the applicable Company Registration Offices of Verona and Milan, in accordance with article 2504 of the Civil Code. The Banco BPM has followed the Code of Best Practice of Listed Companies (hereinafter the “Borsa Italiana Code of Best Practice” or the “Borsa Italiana Code”) of Borsa Italiana S.p.A. (hereinafter “Borsa Italiana”) from its establishment (January 2017), with certain exceptions as described in more detail below. The aim of this document is to provide shareholders, investors and the market with adequate information on the corporate governance and the main actions taken to this end by Banco BPM, and how the Borsa Italiana Code was applied by Banco BPM, providing disclosure on the principles and application criteria that were fully adhered to and the ones that the Company decided to make exceptions to in part, also considering the date of establishment of the Company (1 July 2017) and the specific nature of banking companies which have to strictly comply with the regulations contained in Legislative Decree 385/1993 (Consolidated Banking Law) and the Supervisory Provisions of the Bank of Italy. This was prepared in accordance with article 123-bis of Legislative Decree 58/1998, considering, in view of the nature and content of the information, the suggestions provided by Borsa Italiana in its “Format for the Report on corporate governance and ownership structures”. 4 1) PROFILE OF THE ISSUER The governance of Banco BPM, intended as the set of rules that governs and controls the company and that it has to refer to in order to provide guidelines for its line of conduct and to fulfil its responsibilities with respect to the shareholders, investors and all the stakeholders, is in line with the principles indicated in the Borsa Italiana Code and the recommendations made by Consob to that effect, and also takes account of the specific nature of Banco BPM, a company resulting from the merger between two companies established as cooperatives and “people’s” banks, with strong roots in their respective territories. The governance adopted by the Banco BPM is also in line with the best practices that can be found at a national and international level, where the goal is to ensure an adequate distribution of responsibilities and powers through a proper balance between management and control functions. The Banco BPM adopted, upon its establishment, the traditional governance system, based on the presence of a Board of Directors and a Board of Statutory Auditors pursuant to articles 2380-bis et seq. of the Civil Code. In establishing the corporate governance structure, account was always taken of the instructions, for listed issuers, contained in the Borsa Italiana Code, and when defining the division of powers, special attention was paid to protecting the various roles of the Bodies (Board of Directors, Executive Committee, Chairperson of the Board of Directors, Chief Executive Officer, Managing Director, General Co-Managers and Board of Statutory Auditors), also in accordance with their respective responsibilities, both with respect to general law and regulations, while ensuring the necessary coordination of their actions. In accordance with the provisions of prevailing law, Banco BPM identified, within the scope of its governance, its corporate bodies, and as at the date of this report, organised as described below: the Shareholders’ Meeting, which generally meets once a year to decide on, inter alia, the approval of the financial statements for the financial year, the appropriation and distribution of the profits, the appointment of the members of the Board of Directors and the Board of Statutory Auditors, determining their remuneration; the Board of Directors, comprising 18 members; the Executive Committee, comprising 5 directors; the Chairperson of the Board of Directors;

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