REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES 2020 www.gruppo. bancobpm.it (9 March 2021) 1 2 CONTENTS - BANCO BPM S.p.A. INTRODUCTION .............................................................................................................................................................. 4 1) PROFILE OF THE ISSUER ................................................................................................................................. 5 2) INFORMATION ON THE OWNERSHIP STRUCTURE (pursuant to article 123-bis, paragraph 1, of the Consolidated Law on Finance) ............................................................................................................. 11 3) COMPLIANCE (pursuant to article 123-bis, paragraph 2, letter a), of the Consolidated Law on Finance) ........................................................................................................................................................ 16 4) MANAGEMENT AND COORDINATION: the role of the Parent Company and the Banco BPM group ............................................................................................................................................................. 18 5) SHAREHOLDERS’ MEETING ........................................................................................................................ 19 6) BOARD OF DIRECTORS ............................................................................................................................. 23 6.1 APPOINTMENT, REPLACEMENT AND COMPOSITION OF THE BOARD OF DIRECTORS....................... 23 6.2 ROLE OF THE BOARD OF DIRECTORS ........................................................................................................ 53 6.3 MEETINGS ....................................................................................................................................................... 61 6.4 INDIVIDUAL BODIES ...................................................................................................................................... 66 6.5 INTERNAL COMMITTEES OF THE BOARD OF DIRECTORS ........................................................................ 71 6.6 REMUNERATION ............................................................................................................................................ 84 6.7 INDEPENDENT AND NON-EXECUTIVE DIRECTORS ................................................................................... 84 7) BOARD OF STATUTORY AUDITORS ........................................................................................................... 90 7.1 APPOINTMENT, REPLACEMENT AND COMPOSITION OF THE BOARD OF STATUTORY AUDITORS .... 90 7.2 ROLE OF THE BOARD OF STATUTORY AUDITORS .................................................................................... 107 7.3 REMUNERATION .......................................................................................................................................... 110 8) COMPANY DEPARTMENTS AND PROCEDURES ..................................................................................111 8.1 PROCEDURES FOR PROCESSING CORPORATE INFORMATION .......................................................... 111 8.2 THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM ............................................................... 113 8.3 STATUTORY AUDIT OF THE ACCOUNTS .................................................................................................... 122 8.4 FINANCIAL REPORTING MANAGER ......................................................................................................... 122 8.5 ORGANISATION, MANAGEMENT AND CONTROL MODEL pursuant to Italian Legislative Decree no. 231/01 and relating to the Supervisory Board of Banco BPM .................................................... 124 8.6 THE INVESTOR RELATIONS DEPARTMENT ................................................................................................. 125 8.7 DIRECTORS’ INTERESTS AND TRANSACTIONS WITH RELATED PARTIES .............................................. 127 9) RELATIONS WITH SHAREHOLDERS AND THE FINANCIAL COMMUNITY .............................................130 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 Banco Popolare - Società Cooperativa and 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 Banco Popolare and BPM, to be implemented, in accordance with articles 2501 et seq. of the Italian 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 Banco Popolare and BPM approved the Merger Plan in accordance with article 2502 of the Italian Civil Code (hereinafter the “Merger Plan”) as subsequently amended up to 12 September 2016. The extraordinary Shareholders’ Meetings of Banco Popolare and BPM on 15 October 2016, approved the Merger Plan 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 deed (entered into on 13 December 2016) with the applicable Company Registration Offices of Verona and Milan, in accordance with article 2504 of the Italian Civil Code. 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. Effective from 1 January 2021, the new Code of Corporate Governance (hereinafter also “the new Code”) came into force, which Banco BPM adhered to by means of resolution of the Board of Directors of 14-15 December 2020, replacing the Borsa Italiana Code of Best Practice previously in force, whose effectiveness therefore came to an end on 31 December 2020. The new Code is the result of in-depth discussions with listed companies, as well as careful analysis of international developments in corporate governance and the continuous monitoring of implementation of the Code performed over the years by the Italian Corporate Governance Committee. The provisions of the new Code involve some updates to the internal regulations/documentation of Banco BPM that provide for the gradual adoption of the new recommendations from 2021, notifying the market of them in the report on corporate governance to be published in 2022. 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 January 2017) and the specific nature of banking companies, which have to strictly comply with the regulations contained in Italian 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 Italian 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 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. 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 Italian 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