GRUPPO BANCA CARIGE Ennio La Monica General Manager Presentation to the Financial Community Milan, 22 May 2012 Page | 1 Contents • Carige Group today • New market scenario • Carige Group Reorganisation Project • Target organisational structure • Economic impact of the Reorganisation • Timeline •Contacts Page | 2 Complex banking, insurance and social security organisation... ~50,000 minor shareholders MktMarket 9.999.99%% 46.9946.99%% 43.0243.02%% Banca Carige SpA Listed companies Federal Mkt Cap: €1.2 Bln model Cassa di Risparmio di Genova e Imperia Insurance Finance TtTrustee Banking activities1 activities 1 activities 1 activities 1 Banca Carige Carige Vita Nuova (vita) Carige AM SGR Centro Fiduciario CR Savona Carige Ass.ni (danni) Creditis (Credito al CR Carrara consumo) BM Lucca B. Cesare Ponti Own Product Factories 5,974 677 branches & Shareholders’ equity ~ 2 Mln customers Employees 432 insurance outlets ~€2.9 Bln 1 Major companies Source: company data to May 2012 Page | 3 ...with 677 branches in 5 banks Branches distribution by bank (as at 31/12/2011) of which #207 in Liguria1 and 84% 560 #353 outside Liguria 7% 50 5% 37 3% 23 1% 7 100% 677 1 Liguria includes Nice branch SOURCE: Company data Page | 4 Carige Group showed strong resilience during the crisis, particularly if compared with peers... Comparison of pre and post crisis cumulated profits (€ Mln) 2005-2007 2008-2011 +64% -53% 775 661 474 309 Peers average1 Carige 1 BPER, BPM, BPVi, Credem, Creval SOURCE: Banca Carige, annual reports Page | 5 … and confirming the federal model’s worth Federal model: marginal administrative and organisational costs against significant commercial benefits and territorial presence CAGR Aquired Inter mediation activ ities Net Pr ofit C/I Pre-deal/2011 (€ Bln) (€ Mln) (%) ∆ p.p. Dic Dic Dic Pre-deal Pre-deal Pre-deal/2011 2011 2011 Pre-deal 2011 -24. 0 ppp.p. 10.6% 12.7% Banca del Monte 86.5 2.5 di Lucca 1999 2.3 62.5 (#23 branches) 0.7 0.6 -13.2 p.p. 4.4% 7.3% Cassa di 13.3 Risparmio 4.7 71.4 di Savona 1999 2.8 58.2 5.7 (#50 branches) -6.3 p.p. 5.3% 2.4% Cassa di Risparmio 73.6 3.2 4.9 67.3 di Carrara 2003 2.1 4.1 (#37 branches) -15.3 p.p. 11.7% … Banca Dicembre 91.6 Cesare Ponti 8.8 76.3 2.4 (#7 branches) 2004 1.1 -0.6 The data "Pre-deal" refers to the last balance sheet prior to the acquisition. For Banca Cesare Ponti data "pre deal" refers to the 2004 balance Source: company data Page | 6 Contents • Carige Group today • New market scenario • Carige Group Reorganisation Project • Target organisational structure • Economic impact of the Reorganisation • Timeline •Contacts Page | 7 The crisis impacted significantly the banking sector… Period Effect Impact on Banking system Focus Sub-prime mortgages and Asset 2007-2008 toxic assets: Limited quality low asset quality Economic recession: high Significant 2009-2010 credit risk cost Liquidity crisis on Limited, due to institutional markets: 2011 Retail funding sourcing and disposal Retail funding cost increase: Sign ificant Lia bilities Tomorrow structural margin reduction quality Impacts on Italian banks P&L are strictly connected to the traditional banking model Page | 8 … with several factors putting under pressure the traditional retail banking model Macro- - Overall uncertainty and higher volatility than in the past economic - Global economic re-balancing, with significant growth of emerging countries that will contttext cause banking resources (capital) transfer across markets - Worsening conditions of funding market, which have already transformed liquidity in a scarce and costly resource - Change in the European Banking system regulatory framework, with the Regulation introduction of Basel III, resulting in: . Higher capital requirements . Stricter liquidity management rules •c - Tightening consumer protection - Change in customers’ key needs and behaviours driven by demographic and economic trends: . Older customers, on average, but with different needs and expectations compared to current “elderly people” Customers . Greater confidence and usage of remote channels and,,qy,g consequently, lower usage of physical branches . Reduction in saving propensity and increase in borrowing and consumprion propensity . Increasing churn rates, shopping around and mobility to other banks Page | 9 Profitability recovery must be achieved by reducing service cost and increasing commercial productivity… European Banking system profitability evolution1 –ROE, % 16.7 Despite the expected market growth and the decreasing risk costs, a performance improvement of 25-30% 797.9-929.2 7.4-8.6 iddis needed thito achieve pre- 1.7-2.0 crisis profitability levels, 1.2-1.4 via: . Reduction of service cost . Increase of commercial productivity 2007 2010 Regulatory Inertial 2015 E impact on growth impact capital 1 Europe-27 and Switzerland SOURCE: External provider analyses based on Thomson-Reuters data Page | 10 … and leveraging the increasing usage of remote channels, driven by technology innovation and lower costs Online bankinggg usage1 Percent 80 Norway Netherlands I 70 Finland SdSweden Denmark “Self- 3-5 years 60 service” Canada 50 Switzerland US Luxembourg Belgium Japan UK 7-10 years 40 II France Germany Australia “Multi- Austria channel” 30 Ireland III Spain 10-15 years Slovenia South Korea Poland 20 Brazil Portugal Czech “Brick & IV Middle Hungary Republic“Online Argentina Italy 10 mortar” East adaptors” ColombiaMexico Russia Serbia India China Romania Greece Macedonia Turkey Bulgaria 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 Internet usage1 Percent 1 Percentage of individuals using the internet/online banking in the last 3 months Page | 11 Contents • Carige Group today • New market scenario • Carige Group Reorganisation Project • Target organisational structure • Economic impact of the Reorganisation • Timeline •Contacts Page | 12 The Strategic Plan identifies four main strategic guidelines Carige Group Strategic Plan 2011 - 2014 has identified strategic guidelines and actions to enable Carige Group to overcome the limits of profitability related to the maturity condition of the Banking sector STRATEGIC GUIDELINES STRATEGIC GOALS 1 Higher commercial productivity : − Improvement of cross selling − Product portfolios evolving towards higher-margin, higher -commission Development of revenues and commercial offering: “discover” business areas (territories, products (upselling) products, customers) that still have untapped − Lower business performance variance value potential Broader customer base Development of inter-channelling Service model fine-tuning •c Review of the pricing policies 2 Rationalisation of operating costs and New sales processes to free up resources for commercial activities processes: constant striving for technical and Personnel's proactive commercial attitude operating effi c iency Efficient cost base and process management 3 Focus on retail and institutional deposits Optimisation of liquidity, capital and cost of Closing of the intermediation circuit risk: efficient allocation of short resources Active capital management in a Basel 3 perspective Qualitative selection and management of credit 4 Widespread use of technology Focus on innovation and skills: not only on processes and products, but also on human Recognition of merit resources' behaviours and social skills Optimal use of skills and abilities (knowledge and know-how) Page | 13 By spinning-off Extra-Liguria branch network from Banca Carige and establishing Banca Carige Italia, the bank will reach the Plan’s targets Two sepp,arate banks, specialised on CiCarige G roup – NtiNet income their own geographical areas of reference, with different mission and, €Mln as a consequence, radical differences in strategy, distribution model and commercial approach . Preserving the current CAGR: 10% positioning in the 330 historical areas of Liguria presence, defending the customer base, the market leadership and thus the profitability of the bank 187 . Accelerating the acquisition of customers and the growth of Extra- voldithlumes reducing the Liguria cost of service to self- finance growth . Reducing the funding gap 2011 2017 Page | 14 Banca Carige Italia will be a network bank, consistently with the federal model of the Group Set up of a new bank, Carige Italia, that will receive Banca Reorganisation CiCarige’ s bhbranches of the EtExtra-LiLigur ianetk(twork (except Nice Project branch) Market 9.99% 46.99% 43.02% NewCo Banca Carige SpA -listed- Target Structure of the Group 100% 95.9% 90.0% 60.0% 100% Carige Italia SpA Other companies (1) 1) Insurance companies, financial, fiduciary and instrumental Page | 15 Two branch networks significantly different for history, geographical presence and productivity Liguria network Extra-Liguria network • Historical presence in Liguria region for over • Significant presence in the territory outside 500 years Liguria only from early ’90s History • Mature network and stable number of • “Young” network, develop in the last 15 years branches (207 at date) through branches acquisition and new openings (from 40 branches in 1998 to the actual 353) • High market share (over 20% in terms of • Low market share (below 1.5% in all the regions of Market branches and deposits) presence except Piedmont, Sicily and Sardinia) share and coverage • Diffuse coverage, based on branches • Low coverage (few, distant branches to cover larger proximity, close to each other territory) • Higher productivity by branch, thanks to • Branch productivity far from Liguria’s, due to hig