ANNUAL REPORT 2007 121st FINANCIAL YEAR SELLA HOLDING BANCA) SELLA ER M FOR ( Joint Stock Company Head Office in Biella – Share Capital and Reserves € 448.757.834 Member of the Deposit Guarantee Scheme Registered on the Banks and Banking Groups Roll Tax and VAT number 01709430027 13900 Biella (Italy) – via Italia, 2 Tel. 015.35011 – Telefax 015.351767 – Swift SELB IT 22 Web site www.gruppobancasella.it This volume has been printed on ecological recycled paper This volume has been printed on ecological recycled Insert: photographs from the Fondazione Sella archive Vittorio Sella, A crevasse on the Gabelhorn glacier, August 1, 1887 Vittorio Sella, Mischabelhörner seen from the North summit of Alphubel, August 3, 1887 Vittorio Sella, Lower summit of Monte Rosa in the direction of Macugnaga from the summit of Dufourspitze, August 11, 1887 Vittorio Sella, Cervino and Monte Rosa seen from somewhere near the Colle delle Grandes Murailles, September 18, 1887 CONTENTS BOARD OF DIRECTORS 7 BOARD OF STATUTORY AUDITORS 7 CHart OF BANCA SELLA GROUP 8 TERRITORIAL ORGANISATION OF BANCA SELLA GROUP 10 CORRESPONDENT BANKS FOR BANCA SELLA HOLDING 21 SHAREHOLDERS’ MEETING – NOTICE OF MEETING 23 BOARD OF DIRECTORS’ ANNUAL REPORT 25 Rating . 27 Financial highlights . 28 Alternative performance indicators follows . 29 Macroeconomic scenario . 30 Strategic issues and state of progress of three-year strategic plan . 33 Operating result . 34 Trade policies . 38 Operating performance in main areas of activity . 42 Operating structure . 47 Outlook . 50 Significant events occurred after the close of the financial year . 52 Own shares and shares of the parent company . 52 Equity investments and dealings with Group companies . 53 Intended use of profits . 61 REPORT OF THE BOARD OF STATUTORY AUDITORS 63 Report of Board of Statutory Auditors . 64 FINANCIAL STATEMENTS OF COMPANY AT 31 DECEMBER 2007 67 Balance Sheet . 68 Income Statement . 70 Cash Flow Statement . 71 Statement of changes in shareholders’ equity . 72 NOTES TO THE FINANCIAL STATEMENTS 75 PART A – ACCOUNTING POLICIES 77 PART B – INFORMATION ON THE BALANCE SHEET 95 ASSETS Section 1 - Cash and liquidities . 96 Section 2 - Financial assets held for trading . 97 Section 4 - Financial assets available for sale . 100 Annual Report 2007 - Section 5 - Financial assets held to maturity . 102 Section 6 - Due from banks . 104 Section 7 - Due from customers . 105 Section 8 - Hedging derivatives . 107 Section 10 - Equity investments . 108 Section 11 - Tangible fixed assets . 110 Section 12 - Intangible fixed assets . 113 Section 13 - Tax assets and liabilities . 114 Section 15 - Other assets . 119 LIABILITIES Section 1- Due to banks . 122 Section 2 - Due to customers . 123 Section 3 - Outstanding securities . 124 Section 4 - Trading financial liabilities . 125 Section 6 - Hedging derivatives . 127 Section 10 - Other liabilities . 128 Section 11 - Staff severance . 129 Section 12 - Provisions for risks and charges . 130 Section 14 - Consolidated capital . 131 Other information . 136 PART C – INCOME STATEMENT 139 Section 1 - Interest . 140 Section 2 - Commissions . 142 Section 3 - Dividends and similar income . 144 Section 4 - Result of trading activity . 145 Section 5 - Result of hedging activity . 146 Section 6 - Profits (losses) from dismissal/buy-back . 147 Section 8 - Net write-downs/write-ups due to deterioration . 148 Section 9 - Administrative expenses . 149 Section 10 - Net provisions for risks and charges . 151 Section 11 - Net write-downs/write-ups for tangible fixed assets . 152 Section 12 - Net write-downs/write-ups for intangible fixed assets . 153 Section 13 - Other operating charges/income . 154 Section 14 - Profits (losses) from equity investments . 155 Section 17 - Profits (losses) from dismissal of investments . 156 Section 18 - Income taxes on current operations for the year . 157 - BANCA SELLA HOLDING PART D – SECTOR INFORMATIVE REPORT 159 PART E – INFORMATION ON RISKS AND RELATED HEDGING POLICY 161 Section 1 - Credit risk . 162 Section 2 - Market risk . 175 Section 3 - Liquidity risk . 190 Section 4 - Operating risk . 198 PART F – INFORMATION ON CONSOLIDATED EQUITY 199 PART G – OPERATIONS OF AGGREGATION REGARDING COMPANIES OR BRANCHES OF BUSINESS 205 PART H – OPERATIONS WITH RELATED PARTIES 207 parte I - PAYMENT AGREEMENTS BASED ON OWN CAPITAL INSTRUMENTS 211 INDIPENDENT AUDITORS’ REPORT 213 DECISIONS OF THE ORDINARY SHAREHOLDERS’ MEETING 216 Decisions of the Ordinary Shareholders’ Meeting of 30 April 2008 . 216 Annual Report 2007 - BOARD OF DIRECTORS Appointed up to the approval of the 2009 financial statements Chairman * Maurizio Sella Vice Chairman * Lodovico Sella “ * Franco Sella CEO and General Manager * Pietro Sella Director Mario Cattaneo “ Mario Renzo Deaglio “ Pier Vittorio Magnani “ Enzo Panico “ Giovanni Rosso “ Marco Scarzella “ * Federico Sella “ * Sebastiano Sella “ Vittorio Sella “ Marco Weigmann “ Giovanni Zanetti * Member of the Executive Committee BOARD OF STATUTORY AUDITORS Appointed up to the approval of the 2008 financial statements Auditor - Chairman Alessandro Rayneri “ Paolo Piccatti “ Alberto Rizzo Supplementary Auditor Mario Pia “ “ Riccardo Foglia Taverna AUDIT COMMITTEE Chairman Marco Weigmann Mario Cattaneo Giovanni Zanetti Annual Report 2007 - CHART OF GRUPPO BANCA SELLA as at March 31, 2008 BANCA SELLA HOLDING S.P.A. (già Sella Holding Banca S.p.A.) SELLA BC HOLDING FINANZIARIA N.V. S.P.A. SELLA BANK BANCA DI BANCA SELLA BANCA BIELLA SELLA SELLA BANCA ARDITI NORD EST BANCA SELLA PATRIMONI CONSEL LUXEMBOURG PALERMO LEASING GESTIONI BANK AG GALATI S.P.A. BOVIO CALDERARI S.P.A. SELLA S.P.A. S.A. S.P.A. S.P.A. & C. S.P.A. S.P.A. SGR S.P.A. SELLA EASY NOLO SECURSEL SELGEST S.A. CORPORATE SELFID S.P.A. S.P.A. S.R.L FINANCE S.P.A. IMMOBILIARE SELLA SELIR IMMOBILIARE LANIFICIO SYNERGY INDIA MAURIZIO SELLA S.R.L. LTD. SELLA S.P.A. S.P.A. SELLA AUSTRIA FINANCIAL SERVICES AG in liquidazione SELSOFT DIRECT MARKETING S.P.A in liquidazione MARTIN MAUREL SELLA CAPITAL SELLA LIFE C.B.A.VITA MANAGEMENT SELLA S.A.M. BROSEL S.P.A. LTD. S.P.A. SGR S.P.A. in liquidazione INCHIARO ASSICURAZIONI S.C.P. VDP 1 S.P.A. - BANCA SELLA HOLDING BANCA SELLA HOLDING S.P.A. (già Sella Holding Banca S.p.A.) SELLA BC HOLDING FINANZIARIA N.V. S.P.A. SELLA BANK BANCA DI BANCA SELLA BANCA BIELLA SELLA SELLA BANCA ARDITI NORD EST BANCA SELLA PATRIMONI CONSEL LUXEMBOURG PALERMO LEASING GESTIONI BANK AG GALATI S.P.A. BOVIO CALDERARI S.P.A. SELLA S.P.A. S.A. S.P.A. S.P.A. & C. S.P.A. S.P.A. SGR S.P.A. SELLA EASY NOLO SECURSEL SELGEST S.A. CORPORATE SELFID S.P.A. S.P.A. S.R.L FINANCE S.P.A. IMMOBILIARE SELLA SELIR IMMOBILIARE LANIFICIO SYNERGY INDIA MAURIZIO SELLA S.R.L. LTD. SELLA S.P.A. S.P.A. SELLA AUSTRIA FINANCIAL SERVICES AG in liquidazione SELSOFT DIRECT MARKETING S.P.A in liquidazione MARTIN MAUREL SELLA CAPITAL SELLA LIFE C.B.A.VITA MANAGEMENT SELLA S.A.M. BROSEL S.P.A. LTD. S.P.A. SGR S.P.A. in liquidazione INCHIARO ASSICURAZIONI S.C.P. VDP 1 S.P.A. Annual Report 2007 - territorial organiZation of GRUPPO BANCA SELLA (April 2008) SELLA HOLDING BANCA S.p.A. Head Office 13900 BIELLA, Via Italia 2 Tel . 015 35011 - Fax 015 2433900 Swift SELB IT 22 Web site: www .gruppobancasella .it ITALIAN DISTRIBUTION NETWORK Piemonte BIELLA - SEDE Via Italia 2 015/3500 FOREIGN DISTRIBUTION NETWORK Luxembourg SELLA BANK LUXEMBOURG Boulevard Royal 4 00352 26 860 United States of America MIAMI, Florida 801 Brickell Avenue suite 1970 001 (305) 5391000 Venezuela CARACAS Rapresentative Office Avenido Francisco de Miranda Centro Lido, Torre Oficina 740 A . El Rosal 0058 (2) 9522345 BANKS OF THE GROUP BANCA SELLA S.p.A. Head Office 13900 BIELLA, Via Italia 2 Tel . 015 35011 - Fax 015 2433900 Swift SELB IT 2B - Telegr . Banca Sella Web site: www .sella .it Regione Piemonte ACQUI TERME (AL) Via Marconi 15/17/19 0144 325077 ALBA (CN) Piazza Cristo Re 12 0173 284244 ALBA (CN) Private Banking Piazza Cristo Re 12 0173 281221 10 - BANCA SELLA HOLDING ALESSANDRIA Via Migliara 5 0131 68154 ALESSANDRIA Private Banking Via Milano 21 0131 254458 ALPIGNANO (TO) Via Mazzini 33 011 9664431 ANDORNO MICCA (BI) Via Cavalieri di Vittorio Veneto 77 015 2475211 AVIGLIANA (TO) Corso Torino 37/39/43 011 9312925 BANCHETTE (TO) Via Castellamonte 3 0125 612766 BEINASCO (TO) Strada Torino 104 011 3499873 BIELLA Borsino Via Italia 2 015 23291 BIELLA Sede Via Italia 2 015 35011 BIELLA Private Banking Via Matteotti 7 015 3500263 BIELLA 1 Via Lamarmora 18 015 28669 BIELLA 2 Piazza Martiri della Libertà 8 015 355459 BIELLA 3 Piazza Adua 12 015 8408192 BIELLA 4 Via Milano 53 015 355237 BIELLA 5 Via Fratelli Rosselli 108 015 8408205 BIELLA 6 Via Pettinengo 22 015 562676 BIELLA 7 Via Torino 53 015 406287 BIELLA 8 Via Tripoli 33 ang . Via Galimberti 015 403149 BIELLA Large Private Via Matteotti 7 015 3500528 BORGARO TORINESE (TO) Via Gramsci 2 011 4500276 BORGO S. DALMAZZO (CN) Via Boves 17/D 0171 261947 BORGOMANERO (NO) Corso Garibaldi 106 0322 835920 BORGOSESIA (VC) P zza. Mazzini 5 (ang . Via G B. d . Bianca) 0163 200379 BRA (CN) Via Verdi 15 0172 432158 BRUSNENGO (BI) Piazza Ubertalli 12 015 985476 BUSSOLENO (BI) Via Torino 29 0122 640466 CALUSO (TO) Via Bettoia 61 011 9831684 CANDELO (BI) Piazza Castello 17/18 015 2536815 CARIGNANO (TO) Via Umberto I 27 011 9697115 CARMAGNOLA (TO) Corso Matteotti 6/8 ang . Via Chiffi 011 9713077 CASALE MONFERRATO (AL) Via Saffi 33 0142 454133 CASTELLAMONTE (TO) Via P . Educ 48 0124 513185 CASTIGLIONE TORINESE (TO) Piazza Vittorio Veneto 1 011 9818393 CAVAGLIÀ (BI) Via Rondolino 1 0161 96397 CHIAVERANO