SANPAOLO IMI SOCIAL REPORT 2003 Social Report REGISTERED OFFICE: PIAZZA SAN CARLO 156, TURIN, ITALY SECONDARY OFFICES: - VIALE DELL’ARTE 25, ROME, ITALY - VIA FARINI 22, BOLOGNA, ITALY COMPANY REGISTER OF TURIN N. 06210280019 SHARE CAPITAL 5,144,064,800 EURO FULLY PAID PARENT BANK OF THE SANPAOLO IMI BANKING GROUP MEMBER OF THE INTERBANK DEPOSIT GUARANTEE FUND Luigi Arcuti Honorary Chairman Board of Directors Rainer Stefano Masera (*) Chairman Pio Bussolotto (*) Managing Director Alberto Carmi Director Giuseppe Fontana Director Richard Gardner Director Alfonso Iozzo (*) Managing Director Mario Manuli Director Luigi Maranzana (*) Managing Director Antonio Maria Marocco Director Virgilio Marrone (*) Director Abel Matutes Juan Director Iti Mihalich (*) Director Anthony Orsatelli Director Emilio Ottolenghi Director Orazio Rossi (*) Deputy Chairman Gian Guido Sacchi Morsiani Director Enrico Salza (*) Deputy Chairman Remi François Vermeiren Director (*) Members of the Executive Committee Board of Statutory Auditors Mario Paolillo Chairman Aureliano Benedetti Auditor Maurizio Dallocchio Auditor Paolo Mazzi Auditor Enrico Vitali Auditor Stefania Bortoletti Auditor Antonio Ottavi (**) Auditor (**) Prof. Ottavi has resigned on January 19, 2004 Ethical Commitee Abel Matutes Juan Chairman Alberto Carmi Member Richard Gardner Member Mario Manuli Member Antonio Maria Marocco Member Rainer Stefano Masera Member Remi François Vermeiren Member Independent Auditors PricewaterhouseCoopers S.p.A. Contents 9 Letter to Stakeholders 12 Introduction and preparation principles 14 1.IDENTITY AND GOVERNANCE 16 Group profile 18 Historical evolution 20 Mission and values 22 Compliance with principles 24 The path of social responsibility 26 Strategy guide-lines 28 Geographical presence 32 Organization 34 Corporate governance 42 Relevant stakeholders 44 2.SOCIAL AND ENVIRONMENTAL REPORT 46 Customers 50 - Retail 66 - Corporate 86 People 106 Shareholders 116 Community 140 Environment 160 Suppliers 164 3.ECONOMIC REPORT 176 4.BANCA FIDEURAM 216 5.OBJECTIVES FOR 2004 226 6.PRICEWATERHOUSECOOPERS’ OPINION 230 ATTACHMENTS 232 Glossary 236 Index Letter to Stakeholders Rainer Masera Abel Matutes Juan Chairman of Sanpaolo IMI Chairman of the Sanpaolo IMI Ethical Committee 2003 Social Report 9 Last year, when we published our first Social Report, we set ourselves a new challenge: to make it an instrument of governance, not just communication, according to an increasingly systematic approach and organized by the issues of the social responsibility of a business. Today we can say that we have created the conditions to win this challenge. First, because this second edition of the Social Report involves the entire Group. This extension concerns above all the various Banking Networks, through a choice consistent with the Sanpaolo IMI organization and distribution model, based on the unity of lines and on a common business culture while, at the same time, valuing the identity and the strong territorial roots of the individual Banks. A greater emphasis has also been reserved for the specialized Group companies. Second, this year the Social Report is in line with the publication of the Annual Report: an increasingly widespread choice throughout Europe, which combines the presentation of the economic results with the social and environmental elements. Finally, we report on the achievement of the objectives set last year and we identify new objectives for this year, following a path of continual improvement. This is an approach which correctly represents our meaning of corporate social responsibility, based on the conviction that there should be complete consistency between the creation of value for shareholders and the moral behavior which is substantiated by the attention paid to relationships with all the stakeholders: the customers, the people that work for the Group, local communities and the environment in which we operate. Our activities are inspired by this virtuous circle in which the business and its interlocutors converge, to which the Ethical Committee actively contribute through its role as stimulus, evaluation and control. Our first and most important asset is composed of the 7 million private and business customers of the Group. In the current environment, the first and most urgent challenge is towards them. Our main objective is to reinforce the confidence of investors, by safeguarding and enhancing savings and, at the same time, providing adequate support to the development of the business system: two principles already contained in our mission. To this end we consider it important to underline how, in all seriousness, our Group has - for some time now – consistently continued to pursue its commitment to define and apply internally rules and instruments of absolute transparency, aimed at providing substance and solidity to ethical principles and social responsibilities, so that they do not remain mere statements of principle. In particular, 2003 saw considerable efforts to encourage greater internalization of these values and their daily application at all levels of business. In our relations with private customers and businesses, we adopted charters of value which confirm the importance of operating in the interests of and to satisfy customers, our commitment to offer expertise and professionalism, as well as the respect toward the ethical principles recognized by the Group. These were widely diffused, accompanied by intensive training of employees and the development of particularly advanced computer software. We reasserted and strengthened the Group’s orientation to asset management, an area in which Sanpaolo IMI is leader in Italy, in the belief that professional management of assets is the most appropriate, efficient and secure approach for our customers. We have also developed new instruments and methods to support businesses in an environment which, unfortunately, still does not show any significant and long-term sign of recovery. Finally, we prepared an Ethical Code which was sent out at the beginning of 2004 to all Group employees and private bankers. This Code defines the general principles and rules of conduct which all internal and external interlocutors must adhere to. There is no doubt that the serious illegal accounting practices, which came to light within important quoted industrial groups in the United States and in Italy, originated from a deviation from the most elementary principles of correctness and honesty. These events have determined a situation in which the aspiration for ethics has assumed a crucial function and become an urgent matter of priority. As a matter of fact, over a span of two years these events have seriously damaged the entire economic-financial system, creating a climate that is irreconcilable with the needs of a market which is ever more global and, for this reason, increasingly in need of guarantees and certainties. On the basis of the above projects and major actions, which by now constitute structural elements of our commitment, we have started an initiative aimed, on one side, at intervening in respect of holders of bonds in default where, from the positions of some customers, it may emerge that case by case valuations would not be sufficient and, on the other side, at offering concrete support to the Committee of Group customers holding Parmalat bonds. 2003 Social Report 11 We believe that our efforts to refine and constantly improve the mechanisms of support to operators and preventive and internal controls should be combined with a commitment common to all economic and social parties, in which each, within its own specific role, will contribute toward the ethical growth of the company, thereby giving rise to consent and solidarity. Also on our part, exactly in this spirit, in this second edition of the Social Report we have especially dedicated ample space to the topics of corporate governance. As a matter of fact we consider that these are essential elements of corporate social responsibility, in that they safeguard not only the shareholders, but all the interlocutors of a company and contribute towards upholding the medium/long-term value created by the company. Sanpaolo IMI, the only Italian bank quoted on the New York exchange, accomplished further significant steps in 2003, in compliance with the strict provisions of American law, in particular the Sarbanes-Oxley Act. Submitting this Social Report to the stakeholders for their evaluation, we would like to underline that we are convinced of the importance of forceful and constructive communication with all our interlocutors. Only through open and constant communication, of which the Social Report is a periodical summary, shall we be able to comprehend the external perception of the importance and social impact of our decisions and actions, to prevent any risk of conceit, and in strong and concrete form, characterize our way of being a socially responsible business. Rainer Stefano Masera Abel Matutes Juan Chairman of Sanpaolo IMI Chairman of the Sanpaolo IMI Ethical Committee 12 2003 Social Report Introduction and preparation principles This second Social report is presented from the registered the trend of the indicators used in the 2002 structure’s viewpoint for the purposes of continuity: Report and the level of progress of the activities to our initial intent to use this tool to carry out a self- achieve the aims set: the results have been summarized analysis of our activities in the light of the principles in special schedules. of social corporate