Relazione sulla gestione_INGLESE DEFINITIVA

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REPORT ON OPERATIONS
AT 31 DECEMBER 2008
Banca Popolare di Vicenza Group
Report on Operations at 31 December 2008
CONTENTS
CORPORATE OFFICERS........................................................................................................................................... 5
BPVI GROUP STRUCTURE....................................................................................................................................... 6
TERRITORIAL PRESENCE OF THE BPVi GROUP AT 31 DECEMBER 2008 ................................................. 7
PRINCIPAL DATA AND SUMMARY INDICATORS FOR BANCA POPOLARE DI VICENZA .................... 9
PRINCIPAL DATA AND SUMMARY INDICATORS FOR THE BPVi GROUP............................................... 11
DIRECTORS' REPORT ON OPERATIONS........................................................................................................... 13
ECONOMIC AND FINANCIAL SCENARIO ......................................................................................................... 15
Overview of the macroeconomic situation................................................................................................................. 15
The international economic scenario......................................................................................................................... 16
The Italian economy .................................................................................................................................................. 19
The credit and savings market ................................................................................................................................... 21
The economic situation in the areas in which the Group operates............................................................................ 24
INNOVATIONS IN THE REGULATORY FRAMEWORK.................................................................................. 29
GROWTH OF THE BPVi GROUP: ACTIVITIES OF STRATEGIC IMPORTANCE ...................................... 33
The Business Plan 2008-2011 and the Master Action Plan....................................................................................... 34
Changes in equity investments................................................................................................................................... 37
Measurement of capital adequacy (ICAAP) .............................................................................................................. 39
Ratings....................................................................................................................................................................... 40
Other information ...................................................................................................................................................... 41
OPERATIONAL STRUCTURE ................................................................................................................................ 44
Territorial presence of the Banca Popolare di Vicenza Group ................................................................................. 44
Human resources ....................................................................................................................................................... 48
COMMERCIAL ACTIVITIES: CHARACTERISTICS AND RESULTS ............................................................ 56
Products, services and markets ................................................................................................................................. 59
Commercial communications and promotional initiatives ........................................................................................ 62
Research and development ........................................................................................................................................ 64
SYSTEMS .................................................................................................................................................................... 65
Markets ...................................................................................................................................................................... 65
Regulations ................................................................................................................................................................ 66
Finance ...................................................................................................................................................................... 67
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Lending ...................................................................................................................................................................... 67
Logistics, Purchasing and Security ........................................................................................................................... 69
Information Technology............................................................................................................................................. 69
THE SYSTEM OF INTERNAL CONTROLS AND AUDITING........................................................................... 71
The system of internal controls and audit functions .................................................................................................. 71
Compliance Function................................................................................................................................................. 74
Risk Management ...................................................................................................................................................... 74
Information about the exposure to high-risk financial products (pursuant to the recommendations on transparency
issued by the Financial Stability Forum - FSF)......................................................................................................... 83
Information about lending ......................................................................................................................................... 91
CORPORATE SOCIAL RESPONSABILITY AND IMAGE................................................................................. 95
Annual report on the mutualistic nature of the co-operative pursuant to art. 2545 of the Italian Civil Code........... 95
CONSOLIDATED RESULTS OF OPERATIONS ................................................................................................ 105
Scope of consolidation............................................................................................................................................. 105
Information on financial instruments reclassified following amendments to IAS 39 and IFRS 7 and methods of
determining fair value.............................................................................................................................................. 108
Direct deposits......................................................................................................................................................... 112
Indirect deposits ...................................................................................................................................................... 114
Loans to customers ................................................................................................................................................. 115
Financial assets ....................................................................................................................................................... 119
Interbank position and liquidity............................................................................................................................... 120
PRINCIPAL EQUITY INVESTMENTS ................................................................................................................ 123
EQUITY AND REGULATORY CAPITAL ........................................................................................................... 127
COMMENTS ON THE INCOME STATEMENT ................................................................................................. 130
PERFORMANCE OF BPVi GROUP COMPANIES............................................................................................. 139
Performance of the Parent Bank ............................................................................................................................. 140
Performance of other group banks .......................................................................................................................... 155
Performance of other group companies .................................................................................................................. 163
ATYPICAL AND/OR UNUSUAL TRANSACTIONS ........................................................................................... 168
INVESTOR PROTECTION ACT: NEW FIGURE OF THE “FINANCIAL REPORTING MANAGER”..... 168
SIGNIFICANT SUBSEQUENT EVENTS .............................................................................................................. 171
OUTLOOK FOR OPERATIONS............................................................................................................................ 171
PROPOSED ALLOCATION OF NET INCOME.................................................................................................. 174
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GLOSSARY ............................................................................................................................................................... 175
BRANCH NETWORK BANCA POPOLARE DI VICENZA............................................................................... 183
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CORPORATE OFFICERS
BOARD OF DIRECTORS
Chairman
* Giovanni Zonin
Deputy Chairmen
* Giovanni Bettanin
* Marino Breganze
Managing Director
* Divo Gronchi
Director and Secretary
* Giorgio Tibaldo
Director
Paolo Bedoni
Alessandro Benetton
Mario Bonsembiante
Giovanni Fantoni
* Zeffirino Filippi
Franco Miranda
Gianfranco Pavan
Paolo Sartori
* Fiorenzo Sbabo
Maurizio Sella
Paolo Tellatin
* Ugo Ticozzi
* Giuseppe Zigliotto
BOARD OF STATUTORY AUDITORS
Chairman
Giovanni Zamberlan
Acting Auditors
Giacomo Cavalieri
Laura Piussi
Alternate Auditors
Giuseppe Mannella
Marco Poggi
BOARD OF ARBITRATORS
Chairman
Gianfranco Corà
Acting Arbitrators
Gian Paolo Boschetti
Pierantonio Maule
Alternate Arbitrators
Altegrado Zilio
General Manager
Deputy General Manager
Samuele Sorato
Franco Tonato
Mauro Micillo
Emanuele Giustini
* Members of the Executive Committee.
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BPVI GROUP STRUCTURE
The structure of the Banca Popolare di Vicenza Group at 31 December 2008 is analysed below
by business area.
Banks
1.00%
1.00%
Banca Nuova S.p.A.
99.59%
CariPrato S.p.A.
79%
1.00%
Asset Management
B.P.Vi Fondi SGR S.p.A.
50%
Farbanca S.p.A.
47.52%
88.67%
Consumers Loans
Prestinuova S.p.A.
6.33%
Corporate & Investment Banking
Nordest Merchant S.p.A.
80%
Nuova Merchant S.p.A. (2)
100%
Services
Servizi Bancari S.p.A. (1)
97%
Proprietary Trading
Immobiliare Stampa
100%
(1): In February 2009 turned from S.p.a. into S.c.p.a.
(2): In March 2009 turned from S.p.a. into S.r.l.
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BPV Finance International Plc
99.99%
100%
NEM SGR S.p.A.
NEM DUE SGR S.p.A.
TERRITORIAL PRESENCE OF THE BPVi GROUP AT 31 DECEMBER 2008
Presence in Italy
Distribution of branches BPVi’s Group
at December 2008
1
87
2
4
260
68
BPVi
Cariprato
Banca Nuova
Farbanca
15
94
12
15
79
The sales network of the BPVi'
s
Group
31/12/2008
Branches
Financial
shops
Private bank.
outlets
TOTAL
Banca Popolare di Vicenza
Cassa di Risparmio di Prato
Banca Nuova
Farbanca
436
94
106
1
1
17
-
18
3
5
-
455
97
128
1
Total
637
18
26
681
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Geographical distribution of branches
31/12/2008
Number
Comp. %
Nord Italy
Center Italy
Sud Italy
437
106
94
68.6%
16.6%
14.8%
Total
637
100.0%
Presence abroad
The presence of the BPVi Group abroad is assured by three Representative Offices: in Hong
Kong, operational since the 1980s, in Shanghai, opened in June 2005, and in New Delhi, which
was opened in April 2006.
In addition, the BPVi Group holds equity investments in a number of Central and Eastern
European banks, in order to support those Italian firms that maintain commercial relations with
the countries concerned. This support is guaranteed by Italian-speaking personnel who work for
the International desks of the local banks in which investments are held.
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PRINCIPAL DATA AND SUMMARY INDICATORS FOR BANCA POPOLARE DI
VICENZA
Balance sheet highlights
(in millions of euro)
2008
Banking business
Direct deposits
Indirect deposits
Loans to customers
Total Assets
Risk-weighted assets (RWA)
Net interbank position
Equity (excluding net income for the year)
Regulatory capital
43,995
15,051
12,926
16,018
22,881
17,124
-467
2,693
2,859
Income statement highlights
2008
Net interest income
Net fee and commission income
Net interest and other banking income
Operating costs
of which: payroll
of which: other administrative costs
Profit from current operations before tax
Net income for the year
405.6
177.6
654.2
-434.1
-254.3
-179.4
190.3
151.0
Other information
2008
Number of employees at year-end (1)
Number of branches
3,508
436
(1) The figure at 31/12/2007 includes employees of the former UBI branches.
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2007
43,906
13,885
15,108
14,913
21,411
20,266
-743
2,674
2,665
2007
355.3
175.0
582.7
-364.0
-209.9
-162.5
149.1
110.1
2007
3,354
429
Change
% Change
89
1,166
-2,182
1,105
1,470
-3,142
276
19
194
0.2%
8.4%
-14.4%
7.4%
6.9%
-15.5%
-37.1%
0.7%
7.3%
Change
% Change
50.3
2.6
71.5
-70.1
-44.4
-16.9
41.2
40.9
14.2%
1.5%
12.3%
19.3%
21.2%
10.4%
27.6%
37.1%
Change
% Change
154
7
4.6%
1.6%
Key performance indicators
2008
2007
Change
2008 /2007
Structure ratios (%)
Loans to customers / Total assets
Direct deposits / Total assets
Loans to customers / Direct deposits
Asset management and retirement savings / Indirect deposits
Total Assets / Equity (leverage)
70.0%
65.8%
106.4%
30.8%
8x
69.7%
64.8%
107.4%
37.6%
7.7 x
0.3 p.p.
1.0 p.p.
-1.0 p.p.
-6.8 p.p.
0,3 x
5.6%
0.7%
3.0%
2.0%
65.4%
4.1%
0.6%
3.0%
2.0%
60.8%
1.5 p.p.
0.1 p.p.
0.0 p.p.
0.0 p.p.
4.6 p.p.
4.4
3.7
4.6
117.3
189.1
73.5
4.5
4.9
4.8
115.3
189.1
68.1
-3.4%
-23.8%
-4.3%
1.7%
0.0%
7.9%
74.80%
3.50%
1.38%
49.82%
34.52%
0.45%
94.70%
3.34%
1.48%
42.45%
31.75%
0.54%
-19.90 p.p.
0.16 p.p.
-0.10 p.p.
7.37 p.p.
2.77 p.p.
-0.09 p.p.
12.04%
12.04%
16.70%
9.69%
9.69%
13.15%
2.35 p.p.
2.35 p.p.
3.55 p.p.
Profitability and efficiency ratios (%)
Net income for the year / Equity excluding net income for the year (ROE)
(1)
Net income for the year / Total average assets (ROAA)
Net interest and other banking income / Total average assets
Administrative costs, amortization and depreciation / Total average assets
(2)
Cost/Income
Productivity ratios (3)
Direct deposits per employee (in millions of euro)
Indirect deposits per employee (in millions of euro)
Loans to customers per employee (in millions of euro)
Net interest income per employee (in thousands of euro)
Net interest and other banking income per employee (in thousands of euro)
Payroll costs per employee (in thousands of euro)
Risk ratios (%)
Risk-weighted assets / Total Assets
Net impaired loans/Net loans
Net non-performing loans/Net loans
Non-performing loans coverage (%)
Impaired loans coverage (%)
Performing loans coverage (%)
(4)
Capital adequacy ratios (%)
Core Tier 1
Tier 1 (Tier 1 capital / Total weighted assets)
Total Capital Ratio (Regulatory capital / Total weighted assets)
(1) Total average assets are determined as the simple average of total assets at the end of the current year and at the end of the previous year.
(2) This is the ratio of administrative costs (line item 150) plus net adjustments to property, plant and equipment and intangible assets
(line items 170 and 180) to net interest and other banking income (line item 120) plus other operating charges/income (line item 190).
(3) The productivity indicators are calculated with reference to the average number of employees.
(4) The coverage of non-performing loans at 31 December 2008, including receivables being written off for insolvency proceedings still in progress,
was 66.63%.
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PRINCIPAL DATA AND SUMMARY INDICATORS FOR THE BPVi GROUP
2008
Banking business
Direct deposits
Indirect deposits
Loans to customers
Total Assets
Equity (excluding net income for the year)
Regulatory capital
60,001
21,406
15,890
22,705
28,933
21,243
-771
2,621
2,425
2008
Net interest income
Operating costs
of which: payroll
of which: other administrative costs
Profit from current operations before tax
Net income for the year pertaining to the Parent Bank
652.9
271.9
952.4
-678.9
-411.5
-261.2
172.1
108.7
Other information
2008
Number of employees at year-end (1)
Number of branches
5,645
637
(1) The figure at 31/12/2007 includes employees of the former UBI branches.
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2007
58,854
19,484
18,531
20,839
27,255
25,672
-1,290
2,629
2,433
2007
589.8
265.4
877.2
-588.6
-349.4
-237.0
194.2
113.7
2007
5,432
628
Change
% Change
1,147
1,922
-2,641
1,866
1,678
-4,429
519
-8
-8
1.9%
9.9%
-14.3%
9.0%
6.2%
-17.3%
-40.2%
-0.3%
-0.3%
Change
% Change
63.1
6.4
75.2
-90.3
-62.1
-24.2
-22.0
-5.0
10.7%
2.4%
8.6%
15.3%
17.8%
10.2%
-11.4%
-4.4%
Change
% Change
213
9
3.9%
1.4%
2008
2007
Change
2008 /2007
Asset management and retirement savings / Indirect deposits
Total Assets / Equity (leverage)
78.5%
74.0%
106.1%
33.3%
10.6 x
76.5%
71.5%
107.0%
39.6%
9.9 x
2.0 p.p.
2.5 p.p.
-0.9 p.p.
-6.3 p.p.
0,7 x
4.1%
0.4%
3.4%
2.5%
70.2%
4.3%
0.4%
3.4%
2.4%
64.8%
-0.2 p.p.
0.0 p.p.
0.0 p.p.
0.1 p.p.
5.4 p.p.
3.8
2.9
4.1
117.3
171.2
74.0
3.8
3.6
4.1
114.9
170.9
68.1
1.3%
-20.9%
0.5%
2.1%
0.1%
8.6%
73.40%
3.72%
1.51%
49.36%
34.31%
0.49%
94.20%
3.44%
1.51%
44.49%
32.51%
0.52%
-20.80 p.p.
0.28 p.p.
0.00 p.p.
4.87 p.p.
1.80 p.p.
-0.03 p.p.
7.34%
7.34%
11.42%
5.96%
5.96%
9.48%
1.38 p.p.
1.38 p.p.
1.94 p.p.
Net income for the year / Total average assets (ROAA) (1)
Net interest and other banking income / Total average assets
Administrative costs, amortization and depreciation / Total average assets
Cost/Income (2)
Indirect deposits per employee (in millions of euro)
Net interest income per employee (in thousands of euro)
Payroll costs per employee (in thousands of euro)
Risk ratios (%)
Risk-weighted assets / Total Assets
Non-performing loans coverage (%) (4)
Performing loans coverage (%)
Core Tier 1
(1) Total average assets are determined as the simple average of total assets at the end of the current year and at the end of the previous year.
(2) This is the ratio of administrative costs (line item 180) plus net adjustments to property, plant and equipment and intangible assets
(3) The productivity indicators are calculated with reference to the average number of employees.
(4) The coverage of non-performing loans at 31 December 2008, including receivables being written off for insolvency proceedings still in progress,
was 63.60%.
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DIRECTORS' REPORT ON OPERATIONS
Stockholders,
The strong results presented in these financial statements were earned in a year without
precedent since the Second World War. The sweeping events that affected the domestic and
international economies, the financial markets and the banking sector are described in more
detail in the section of this report dealing with the macroeconomic situation.
Fortified by a strong balance sheet, the BPVi Group took inspiration from its mission and its
special characteristics as a people's bank in determining the strategic guidelines and drivers
required to face the operational challenges that, still today, are penalizing the entire financial
system. These strategic guidelines are in fact set down in the new Business Plan 2008-2011,
which was prepared during the first part of the year and definitively approved in September 2008.
Key aspects include the maintenance of capital adequacy, a focus on traditional banking activity,
improved equilibrium between the growth of lending and the level of direct customer deposits,
stronger management and control at Group level, attentive risk control and rigorous cost
management. In short, even before the crisis intensified so dramatically, the BPVi Group had
already determined its strategy for the consolidation of growth, with a view to improving the
profitability and efficiency of the core business over the medium term, and to creating the equity,
operational, financial and organizational foundations for a possible new phase of growth in the
future.
Given current conditions, activity was focused on achieving a priority objective: stand alongside
the local economies served by continuing to ensure lending support for households and
businesses, especially small and medium-sized firms. Indeed, when approving the 2009 Budget,
the Board decided to increase the size of available facilities in order to provide further oxygen to
the local economies and their businesses at this crucial time.
This approach is reflected in the balance sheet of Banca Popolare di Vicenza, which reports a
7.4% increase in lending over the year to 16 billion euro at the end of 2008. These loans were
financed entirely by the direct deposits taken from customers, which now exceed 15 billion euro
after a rise of 12.2%, ignoring the liabilities for assets sold but not derecognized. By contrast,
indirect deposits have fallen by 14.4% due to adverse conditions in the financial markets and the
lower demand for asset management products.
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The assurance sector has also performed well, with growth of 7.2% confirming the benefits of the
recent partnership with the Cattolica Assicurazioni Group.
The income statement reports net income of 151 million euro, which is more than 37% higher
than in the previous year. Despite the macroeconomic and banking sector complexities
mentioned earlier, this performance reflects a strong rise in the interest margin (+14.2%), the
stability of commission income (+1.5%) and a prudent approach to trading. Net interest and other
banking income consequently rose to 654 million euro, up 12.3% with respect to 2007. The
results of financial management were also up by more than 12% after adjustments to loans and
other financial assets. Operating costs were 19.3% higher than in 2007, due to the physiological
effects of the significant increase in scale achieved by the Bank in the recent past. The profit from
current operations before tax was 27.6% greater than in the prior year, assisted by pre-tax profits
from equity investments of 97.1 million euro, including the capital gain earned on the disposal of
the holding in Linea S.p.A..
The net income earned by the Parent Bank means that a dividend of 1.15 euro per share can be
proposed (+15% with respect to 2007). This amount, part to be paid in cash (12.5%), part via the
distribution of treasury shares, leaves room for a further improvement in the Group's capital ratios
and the natural continuation of support for households and businesses.
The growth in lending and deposits at a consolidated level reflects the trends already described in
relation to the Parent Bank. Loans verso customers amount to 22.7 billion euro at 31 December
2008, up by 9.0% since 31 December 2007. Direct deposits total 21.4 billion euro following a rise
of 13.4%, ignoring "liabilities for assets sold but not derecognized", while indirect deposits have
fallen due to the performance of the asset management and asset administration sector.
As stated, the capital ratios are very strong: The core tier 1 and tier 1 capital ratios are 7.3%,
while the total capital ratio is 11.4%. These amounts are considerably higher than those
recommended by the Supervisory Authorities and among the highest in the Italian banking
system.
The consolidated income statement reports net income of 108.7 million euro, down slightly (4.4%) with respect to 2007. This outcome was affected by the economic and financial crisis which
influenced the results of certain Group companies. It was mainly achieved due to the good
performance by Banca Popolare di Vicenza and the positive contribution made by most
subsidiaries that reported profits for the year.
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ECONOMIC AND FINANCIAL SCENARIO
Overview of the macroeconomic situation
Global economic conditions deteriorated during the last few months of 2008 at a rate not
seen since the Second World War. The contraction in GDP during the fourth quarter confirmed
the broad recession afflicting the majority of the world's leading economies. As a consequence,
the macroeconomic situation moving into 2009 is somewhat bleak. This picture is confirmed
by the changes in the most recent qualitative indicators, which do not suggest any significant
recovery during the first part of 2009. On the other hand, the weakness of international economic
activity together with the fall in consumption have lowered the rate of inflation in Europe and
Italy to less than 2%. This follows the rapid rise during the first part of the year, to a peak at the
end of the summer when the consumer price index touched 4% or so.
The extremely expansionary approach adopted by international monetary policy during the last
part of the year, assisted by the drop in inflation, caused reference rates to fall to historical lows.
This was done in an attempt to normalize the functioning of the financial markets and stimulate
both business and consumer demand. The effectiveness of this move, at least in the latter case,
might however be hampered by the credit-tightening measures implemented by the banking
system.
The performance of the Italian economy reflected these international trends (2008 GDP
was 1% lower than in 2007), although in this case the deterioration in the public sector accounts
restricts the scope for recourse to fiscal policy as a driver to stimulate recovery.
This extremely difficult and uncertain situation is also confirmed by the performance of
the banking sector, where operations were seriously affected by the intense and unexpected
credit crunch caused by the collapse of confidence within the financial system. The latest
available data shows both a progressive reduction in lending activities, due to the weakness
of demand and the tightening by banks of their criteria for the granting of loans, and an
acceleration in bank funding operations, especially the issue of bonds, in order to meet their
financing requirements despite the overall shortage of liquidity. The focus of the banking system
on the more traditional funding methods has penalized other types of investment including, in
particular, the asset management sector which suffered another year of major net outflows and
contractions in the volume of assets under management.
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With regard to bank rates, repeated policy action by the ECB resulted, from the end of
November, in a generalized fall in both lending and funding rates. Since the latter declined by a
lesser extent, the effect was to narrow the banking spread.
The international economic scenario
With its origins in the 2007 US sub-prime mortgage crisis, the financial crisis spread rapidly
throughout the world and has now, in recent months, begun to affect economic activity in
the developed countries, which were already weakened by the major rise in commodity prices
seen in past months. Indeed, almost all the leading economies reported a contraction in
GDP during the final quarter of the year, with a major drop in industrial production, a credit
squeeze and a collapse in the confidence of households and businesses to record lows. The
consequences for the emerging countries have also become clear, with both the flight of
foreign capital, via the sale of shares and bonds held by international banks and investment
funds, and the weakening of foreign demand. These factors have contributed to a marked
slowdown in economic activity in those countries too, despite their apparent immunity to the
financial crisis until a short while ago.
The weakness of international economic activity, combined with a fall in consumption, contributed
to a sharp fall in commodity prices including oil (stabilized in January at around 40 dollars,
compared with a peak of 143 dollars in July 2008), with a consequent reduction in the rate of
inflation (December y-o-y: USA +0.1%, Euro area +1.6%, Italy +2.4%). This situation has
enabled the leading central banks to adopt a strong expansionary policy in support of the
economy, and to help normalize the functioning of the financial markets. This action has involved
slashing official interest rates to unheard of levels by January 2009. (the ECB lowered the official
rates to 2% in January 2009, while the FED voted unanimously to lower the rates for Fed Funds
to between 0% and 0.25%, depending on the requirements). The many steps taken in recent
months by governments and central banks, designed to ensure the continuous flow of lending to
the economy by banks and restore market confidence, have had the effect of reducing market
rates to especially low level. For the moment, however, these moves have not had a significant
effect on the international economic situation, which continues to show worrying signs of
recession. In particular, GDP data for the principal advanced economies has been among the
worst in recent years: in December, the United States reported a drop in GDP for the second
consecutive quarter (-1.6% between September and December, -0.1% in the third quarter), while
three consecutive falls were reported in the Euro area (-1.5% in Q4, following -0.2% in both
September and June), mainly due to the stagnation of both exports and private consumption. The
extreme weakness of activity in the Euro area is confirmed by the performance of European
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industrial production, which suffered a record monthly fall of 2.6% in December 2008 and
slumped by 12.0% over the year as a whole. Serious pessimism also stems from the most recent
surveys of European business and consumer confidence, which highlight ongoing major
concerns about employment, the prospects for savings and the trend in sales. All this is
compounded by an extremely high level of uncertainty about the economic situation, as
frequently evidenced by the ECB in their most recent monthly bulletins. These doubts continue to
reduce the propensity to consume and investment, thus enhancing the risk of slower growth.
International monetary policy
The abrupt deterioration in the financial crisis and economic situation from the start of September
resulted, during the final months of the year, in a radical change in the monetary policy adopted
by the international central banks. Until last June, these were actually weighing the possibility of
further minor restrictive measures, especially in the Euro area, to combat inflationary pressures.
The worsening of the economic situation and the consequent drop in foreign demand caused the
prices for commodities, and oil in particular, to collapse and resulted in an unexpected change in
the overall picture, with low rates of inflation. These conditions allowed the international central
banks to take strong action to tackle the deepening financial crisis, with massive injections of
liquidity into the market and steps to save various international financial institutions. The first
coordinated monetary policy action in history took place on 8 October 2008, with a
simultaneous cut of 50 basis points in the policy rates of many leading international central
banks, including the FED, the ECB, the Bank of England and the Bank of Canada. In the
following months, there was more action from the FED (-50 basis points on 29 October, -75/-100
basis points on 16 December) and the ECB (-50 basis points on 6 November, -75 basis points on
4 December and -50 basis points on 15 January 2009), which lowered the cost of money to
historical minimums: between 0% and 0.25% in the United States and 2% in Europe. The
Bank of England also made additional cuts, lowering interest rates to 1% in February 2009, which
is the lowest rate since the foundation of the UK's central authority.
- 17 -
EUROPE AND USA
- Rates trend 6.0
5.0
4.0
3.0
2.0
1.0
D
ec
Ja 0 6
n0
Fe 7
bM 07
ar
-0
Ap 7
r -0
M 7
ay
Ju 07
n0
Ju 7
l-0
Au 7
gSe 0 7
p0
O 7
ct
-0
N 7
ov
D 07
ec
Ja 0 7
nFe 0 8
bM 08
ar
-0
Ap 8
r -0
M 8
ay
Ju -08
n0
Ju 8
l-0
Au 8
gSe 0 8
p0
O 8
ct
N 08
ov
-0
D 8
ec
Ja 0 8
n09
0.0
BCE
FED
These special measures eased the tensions in the financial markets, as shown by the marked
drop in interbank rates (3-month Euribor falling below 2%, a five-year minimum, in early February
2009), even though the level of uncertainty remains exceptionally high, as confirmed by
President Trichet during the press conference that followed the ECB meeting on 5 February
2009. On that occasion, the Governing Council decided to leave rates unchanged at 2%, while
remaining open to a further cut in March by between 25 and 50 basis points, given the sharp drop
in the rate of inflation.
International financial markets
2008 was one of the worst years ever in the world financial markets, with extreme volatility
and adverse performance that reached and, in some cases, exceeded declines of 50%. On the
Milan exchange, only 7 out of the 336 listings managed to close the year ahead; the overall
capitalization of this market essentially halved during the year (S&P/Mib down 49.5% from the
end of 2007), falling to 372 billion euro or about one quarter of domestic GDP (slightly less than
half in 2007). The Milan volatility index jumped from 12.5% in 2007 to 30.5% in 2008, peaking in
October at 69.1% which was the highest level in the history of the Italian market: in particular, the
exchange reported its largest fall on 1 October (-9.24%), followed by its largest gain on 13
October (+8.26%). The number of contracts made fell only slightly to 69.2 million, -4.6%
compared with 2007.
Ongoing financial tensions have continued to discourage IPOs on the Italian exchange. No new
companies were admitted during the last quarter of 2008, and there were just 7 initial public
offerings during the year, compared with 32 in 2007. The number of companies delisted, 18, was
- 18 -
broadly in line with recent experience (16 in 2007 and 17 in 2006). Overall, the Italian exchange
now lists 336 companies, compared with 344 at the end of 2007.
The financial crisis was felt more in Italy than elsewhere (S&P 500, New York -39.4%, Nikkei,
Tokyo -42.1%, FTSE, London -31.8%, DAX, Frankfurt -40.4%, CAC40, Paris -42.8%), mainly due
to the greater weighting of banking shares on the exchange. These shares were sold heavily
during the final months of the year, as news flooded in about the funding difficulties of Italy's
leading banks.
The Italian economy
The Italian economy moved into recession at the start of the second quarter of 2008.
Following a positive start to the year (GDP +0.3% in the first quarter), the Italian economy
deteriorated rapidly as the international crisis deepened, resulting in the worst slump in GDP for
the last 15 years. In particular, GDP fell 0.6% between March and June, 0.7% in the third quarter
and 1.9% in the final quarter, resulting in an average decline in 2008 of 1.0%. This sharp fall
essentially reflects the worsening of the international situation, with a consequent drop in
foreign demand to accompany the persistent weakness of domestic demand and the
stagnation of capital investment. Although the Italian statistics were the worst in the Euro area,
they were less dramatic than the situation that emerged in Germany, where the rate of growth
during the fourth quarter was 2.1 percentage points lower than in the previous quarter. The crisis
was also serious in France and Spain (Q4 down respectively 1.2% and 1.0% compared with Q3).
There were numerous leading indicators of this adverse performance, including four
consecutive monthly falls in domestic industrial production, resulting in a collapse of
12.2% over the year to December 2008. This was the worst result since 1991. Even the jobs
market is showing increasing signs of difficulty: employment, having grown for more than 10
years, received a set back in the third quarter of 2008, while the unemployment rate rose 0.5
percentage points over the year to 6.1%. There was also a significant rise in the recourse to
government-assisted lay-offs at the end of 2008.
Due to a further deterioration in public sector finances, the contribution made to economic
recovery by fiscal policy will be weak. Indeed, the most recent data from the Bank of Italy
highlights an increase in public borrowing of about 65 billion euro over the year to December
2008, to a staggering record level of 1,663.6 billion euro. This statistic places the ratio of public
borrowing to GDP at 105.8% (103.5% at the end of 2007), while the deficit has risen to 3.1%
of GDP (1.7% at the end of 2007). This breach of the Maastricht maximum was mainly due to the
marked reduction in inflows as a consequence of the economic slowdown.
- 19 -
Inflation has continued to fall rapidly from its peak back in the summer (+4.1% between July
and August): the consumer price index fell for the fifth consecutive month in January 2009, to
below the 2% threshold for the first time in about eighteen months (+1.6% in January 2009, down
sharply from +2.2% in December 2008). This effect was largely due to the large drop in the price
of fuel, while food products remain "hot" although without repeating the significant increases seen
throughout 2008. Continuation of this slowdown in the rate of inflation seems to be built into the
expectations of most operators. The economic surveys carried out by ISAE at the start of the year
have highlighted that both consumers and manufacturers expect a further significant reduction in
inflation over the coming months.
- 20 -
The credit and savings market
Trend of operating volum es
- % YoY 16.0%
Loans
14.0%
Deposits
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
12-07
01-08
02-08
03-08
04-08
05-08
06-08
07-08
08-08
09-08
10-08
11-08
12-08
Bank lending and non-performing loans
The growth of bank lending in Italy declined steadily during 2008, falling to +4.9% for the
year to December compared with +9.8% at the end of 2007. The brake on bank lending appears
closely linked with the weakness of demand for credit, given the prolonged slowdown of the
Italian economy, not to mention the tougher criteria adopted by banks for lending to
households and businesses. This last phenomenon, mainly reflecting the deterioration in the
economic situation and difficulties in the sourcing of funds, heightened from the second half of
September following the failure of Lehman Brothers, has been confirmed by the results of recent
surveys of banks and firms. These indicate a rise in the margins applied on loans and a
reduction, especially in the case of loans to households, of the ratio between the value of the loan
and that of the guarantees given.
- 21 -
Loans to customers and non financial companies
( % YoY )
customers
companies
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
12-07 01-08 02-08 03-08 04-08 05-08 06-08 07-08 08-08 09-08 10-08 11-08 12-08
-2.0%
The slowdown in lending compared with 2007 has also been affected by the upturn in
securitizations intended, for the most part, to create instruments then used to guarantee
refinancing transactions with the Eurosystem (retained securitizations). These exceeded 80
billion euro at the end of 2008, compared with 10 billion euro in 2007.)
The quality of lending by Italian banks has begun to show signs of deterioration, as
reflected in the most recent data available from the Supervisory Authorities at the time of this
report. This information, covering the third quarter of 2008, highlights a rise in new nonperforming loans (+18% with respect to September 2007), especially in Northern Italy and the
Islands. The stock of watchlist loans also appears to be rising rapidly, both in absolute
terms and as a percentage of lending: this dynamic is apparent in all geographical areas and
all principal sectors, especially in the Northern regions, and in the business sector (increase in
watchlist loans by 1.75 billion euro over the last twelve months) and the household sector
(increase of more than 1 billion euro over the past year).
Deposits
The growth in bank deposits from Italian residents accelerated in 2008, with annual growth
to December of +12.5% (+6.6% at the end of 2007) due to a rise in deposits and repurchase
agreements and, above all, to an upturn in bond issues. In particular, the market for deposits
and repos has been sustained in recent months by increased demand from households, due
- 22 -
to the low opportunity cost of holding liquidity. The continued riskiness of the financial markets is,
in fact, prompting a reallocation towards financial assets with a low risk-yield profile. The bond
sector has grown strongly (+20.6% over the year, compared with +12.1% at the end of 2007)
due to financial market tensions that have effectively forced Italian banks to make recourse to this
important instrument for their funding needs. Deposits from abroad (borrowing from nonresidents) contracted noticeably during the last part of the year, with the dynamic changing from
+20.6% at the end of 2007 to -8.9% in December 2008.
2008 was undoubtedly one of the most difficult years ever for the asset management
sector which, evidently, has not yet overcome the profound difficulties that emerged during 2007.
The wealth managed by open-end mutual funds and sicavs totaled just 409.2 billion euro in
December 2008, after falling 28.2% since the end of 2007. Net outflows continued throughout
2008, totalling about 140 billion euro over the year or almost triple those seen in 2007 (-53 billion
euro). The latest data published by Assogestioni, relating to January 2009, does however appear
to contain a small ray of hope. In particular, the rate of outflows from mutual funds has slowed
considerably with respect to that recorded in 2008 (-4.9 billion euro during the month), with
improvements in all segments except for bond funds, which still represent the largest source of
outflows from mutual funds.
There was also a further decline in the portfolio management activities of Italian banks, which
were down over the year to November 2008 by 36% (-12% at the end of 2007). The latest
available data for total securities deposited with Italian banks (both under management and
held directly by customers) reflects a slight, 2.0% rise over the year to November. Analysis of the
type of financial assets held shows, in particular, that savers strongly prefer bonds and short-term
treasuries (BOT) over mutual funds and longer-term treasuries (BTP and CCT).
Bank interest rates
Repeated cuts in the ECB's policy rates from October (-0.50 percentage points on 8 October, 0.50 on 6 November, -0.75 on 4 December and -0.50 on 15 January 2009), only began to
influence bank rates from the end of November.
Between October and December 2008, the weighted average of bank lending rates on loans to
households and non-financial businesses fell by 47 basis points (ABI data); this did not fully
reflect the collapse in market rates over the same period (for example, 3-month Euribor dropped
by 186 basis points between the end of October and the end of December). This sudden fall in
market rates, outpacing that seen in relation to bank lending rates, caused the mark-up to
increase from November to 3.19 percentage points at the end of December compared with 1.79
points just two months earlier. The slower dynamic of bank lending rates was partly due to the
repricing mechanism applicable to forms of lending indexed to market rates, which frequently
- 23 -
take a few months to reflect changes in their reference rate. It also took account of the higher
remuneration required for increased counterparty risk, due to the rapid deterioration of the
economic situation. This said, from January 2009 there was a more marked and generalized
reduction in the bank rates for all forms of lending, given the continued decline in market
rates.
Funding rates also fell considerably during the final two months of the year, although by
less than lending rates, resulting in a narrowing of the spread. At the end of December, the
rates paid on deposits and bonds were down by little more than 30 basis points: here too, rates
fell further at the start of 2009, albeit not in line with the trend in market rates given the
pressure on banks to source liquidity from their customers. The greater reduction in market rates
with respect to deposit rates has, over the past few months, given rise to a significant drop in the
mark down, to the lowest levels seen in recent years.
The economic situation in the areas in which the Group operates
Veneto
The steady slowdown of the Veneto economy during 2007 continued at a greater pace
throughout 2008, with recession setting in during the second part of the year. Based on a study
carried out by Unioncamere del Veneto, industrial production fell in the fourth quarter of
2008 both compared with the previous quarter (-2.5%) and with respect to the final quarter
of 2007 (-8.2%). This represents the worst result for the past thirty years. Considering the
business profile in terms of scale, the y-o-y fall in production during the final quarter of 2008
impacted small (10-49 employees) and medium-sized firms (50-249 employees), down by 7.1%
and 7.3% respectively, while large firms were hit even more significantly (-10.6%). The situation
for micro businesses (2-9 employees), appears even more critical with a contraction of 13.2%. In
sector terms, industrial production fell over the year to December 2008 in all sectors, including in
particular electronic and electrical machines (-13.3%), rubber and plastic (-11.6%) and the wood
and furniture industries (-9.6%). In line with the fall in production, sales also dropped by
7.4% over the year to December 2008. The contraction affected all sectors, except for food,
beverages and tobacco, which was essentially stable (+0.3%).
An analysis by province also shows a decline in production and sales across the board, with
the greatest impact on the provinces of Belluno (production -11.5%, sales -10.3%) and Vicenza
(production -10.2%, sales -9.4%).
There is also serious cause for concern on the employment front. With respect to the final
quarter of 2007, the indicator highlights a contraction of 2.9% in the fourth quarter of 2008, which
- 24 -
was more marked than the y-o-y falls seen in the second and third quarters (respectively -1.5%
and -1.6%). This situation affects firms of all sizes in every sector, with special problems for
manufacturers including, in particular, goldsmiths (-7.3%) and textiles, clothing and footwear (4.6%). Belluno and Vicenza were also the provinces with the greatest employment difficulties
(down 6.0% and 3.8% respectively over the year).
Based on the qualitative assessment of Veneto entrepreneurs, production, sales and employment
are all set to decline further over the next six months.
In terms of tourism, Veneto was confirmed as Italy's leading region with regard to the hospitality
industry during 2008. Given a 0.2% fall in arrivals and a 0.9% drop in stays with respect to 2007,
Veneto tourism has essentially held up while the industry in Italy as a whole appears to be
experiencing serious difficulties.
Specifically with regard to Vicenza, the latest economic survey of manufacturing performance
during the fourth quarter of 2008, carried out by the Vicenza Chamber of Commerce, confirms a
compounding of the difficulties already reported in relation to the first nine months of the
year. Small, medium and large-sized firms all reported adverse performance, although small
firms were the worst hit. Economic operators expect a further decline in manufacturing and
commercial activity in the province of Vicenza during the first part of 2009, with a probable
consequent fall in sales and employment.
- 25 -
Friuli Venezia Giulia
The latest data for industrial performance in the region confirms the critical state of the
manufacturing sector, which first became evident during the second half of 2007. All indicators
are down, both respect to the previous quarter and the same quarter in the prior year. Industrial
output remained down during the fourth quarter of 2008 (-3.6% compared with the previous
quarter, -14.5% compared with the prior year), despite a slight improvement with respect to the
position at the end of September; the situation is similar with regard to total sales, which fell by
2.4% with respect to the previous quarter (-15.7% compared with 2007). Considering other
economic indicators, the value of new orders has continued to fall with respect to both September
2008 (-9.9%) and the prior year (-17.7%), while capacity utilization dropped to 76.4% in the final
quarter from an average of around 85% in the earlier part of 2008. Examination of the region's
most representative manufacturing sectors shows that both "Engineering" and "Wood and
wooden furniture" are adversely affected by the downward economic trend. The short-term
expectations of industrial entrepreneurs at the end of 2008 also reflected growing concern,
especially about the future performance of foreign demand and production.
The latest employment statistics show a deterioration during the third quarter of 2008 (-0.9%
compared with June 2008) and the stabilization of the unemployment rate at above 4%.
Lombardy
Data from Unioncamere Lombardia concerning production in Lombardy during the fourth
quarter shows an acceleration in the pace of the deterioration that began in the first
quarter of 2008. At the end of December 2008, production was 6.0% below the level of the
prior year and down 4.1% (deseasonalized) with respect to the third quarter of 2008. This
slowdown is evident across many sectors. Indeed, only food remains positive, while other sectors
are in decline including, in particular, clothing and textiles. Even sectors important to Lombardy's
economy, such as engineering and chemicals, reported a significant decline in production over
the year. Similarly, output fell over the year in all the craft sectors. Total sales were also down
by 6.9% over the year, and by 3.6% with respect to the third quarter of 2008. Capacity utilization
has fallen below 70% with regard to manufacturers, but to around 63% for artisans.
The latest ISTAT data for employment, covering the third quarter of 2008, reflect an
essentially stable situation with respect to the previous quarter, with an unemployment rate
of just over 3%, which is well below the national average of 6.1%. There is however growing
recourse to government-assisted lay-offs, involving 15% of firms and 2.5% of total working hours.
- 26 -
Considering the medium/long-term trends, the flow of orders, expectations and the situation
"inherited" from 2008, Unioncamere Lombardia forecasts a further fall in industrial output in the
coming quarter. Despite the adverse economic climate, manufacturers in Lombardy still expect to
invest during 2009, although at levels below those seen in the past two years.
Tuscany
The regional economy was marked by a widespread decline during 2008, the first signs of
which emerged during the second half of 2007. The most recent data available regarding the third
quarter highlight a continuation of this downturn, with a further contraction in industrial
production (-3%) and sales (-2.3%). This decline is affecting all Tuscan provinces (except for
Livorno) including Prato in particular, which has reported a drop of 8.3% with respect to the
third quarter of 2007. Given the general recessionary outlook for manufacturing as a whole, large
firms held up well during the third quarter with production slightly ahead (+1.3%) due, in part, to
the containment of prices and margins. Performance at sector level varies between the essential
stability of metal products and engineering (+0.0% and +0.1% respectively), and the collapse of
non-metal products (-8.0%), wood and furniture (-7.0%), and textiles and clothing (-6.0%). This
industrial decline is a consequence of lower domestic and foreign demand. In the first case, the
weakness of domestic consumption has adversely affected both orders and retail sales,
especially in the non-food sector (including in particular durables, items for the home and
household appliances) and with regard to the medium-small distribution channels. In the second
case, the slowdown in exports is especially worrying since this does not reflect national trends,
which remained in positive territory (although not by much) during the period concerned.
The worsening local and international economic situation is beginning to have an effect on the
jobs market: there was a strong upturn in government-assisted lay-offs during the third quarter of
2008 and a brake on the deseasonalized growth in employment (+0.1% with respect to the
second quarter of 2008).
Sicily
The downturn in the Sicilian industrial sector began during the last quarter of 2007 and
continued throughout the first nine months of 2008. Plant utilization declined in the first half
of the year, confirming the slowdown in production, although there was a modest recovery during
the third quarter. Inventories of finished products remain higher than normal.
The construction sector showed signs of contraction, marking an inversion of the upward trend
seen over the past several years. In particular, prices for homes fell and the time taken to
complete transactions extended. Expectations for a good year in the agricultural sector
- 27 -
unfortunately seem set for revision. The harvest is estimated to be up 1.2%, compared with a
national average of 3.3%. The best results were achieved in the winegrowing sector with growth
of 19% (+10% nationally), while the worst performance came from fruit growing with a contraction
of 11% (essentially unchanged at national level). Services are also in progressive decline due to
weakness of demand from households and the public administration, as well as to the recent
deterioration of demand from businesses. Tourism was also down in terms of both arrivals and
stays (-2.7% and -1.4% respectively). In line with the past three years, the statistics for foreigners
were better than those for Italian visitors. Data from Assaeroporti for Sicily's three major airports
shows that passenger numbers rose by an annual rate of 3.1% during the first eight months of
the year, which was somewhat slower than in the prior year (+11.1%) due, most probably, to the
troubles that afflicted the national carrier.
There was also a deterioration on the jobs front, with a slight fall in employment during the
third quarter (-0.7%) with respect to the second, and an inversion of the downward trend in the
rate of unemployment which, after a decade, seems to have stabilized at 13% compared with a
national average of less than half that rate.
- 28 -
INNOVATIONS IN THE REGULATORY FRAMEWORK
The current regulatory framework reflects measures taken in the second half of the year to tackle
the serious crisis affecting the international economy.
The principal legislative changes affecting bank activity during the first half of the year mainly
comprised the publication on 30 April of the so-called "Consolidated Law on Safety at Work",
implementing art. 1 of Law 123 dated 3 August 2007 on the safeguarding of health and safety in
workplaces and, in particular, the publication of Decree 93 dated 27 May 2008, the so-called
"fiscal decree", which governs the renegotiation of mortgages on first homes in accordance with
criteria established in the convention signed between the Ministry of the Economy and ABI.
With regard to supervisory regulations relating to internal systems, the Bank of Italy issued its
“Supervisory instructions for the organization and governance of banks” on 4 March 2008.
These outlined a complete regulatory framework, as supplemented recently by measures
recognizing the central role of systems in the definition of business strategies and policies for the
management and control of the risks inherent in banking and financial activity. The general
objectives pursued by the new instructions comprise the clear segregation of functions and the
appropriate calibration of powers, the balanced membership of corporate bodies, an integrated
and effective system of controls, remuneration mechanisms that are consistent with risk
management policies and long-term strategies, and appropriate information flows that facilitate
knowledgeable operating decisions. In the light of the new instructions, the Board of Directors of
the Parent Bank arranged to check the organizational and financial structure, and the procedures
for managing conflicts of interest, against the essential governance characteristics described in
these instructions. As a result, a draft Group governance plan has been prepared, specifying the
organizational and governance measures deemed appropriate in order to comply with the above
supervisory instructions.
Other instructions affecting the sector were contained in Decree 112 dated 25 June 2008, as
converted into Law 133 dated 6 August 2008, containing "Urgent instructions for economic
development, the simplification, competitiveness and the stabilization of public finances,
and the equitable distribution of taxation". This decree deferred to 2009 application of the socalled "collective action" and introduced important changes to the privacy law by modifying arts.
34 and 38 of Decree 196/2003. The decree also established that a percentage of interest
expense (3% in 2008 and 4% from 2009) will not be deductible for IRES and IRAP purposes, and
reduced the annual deductible provision against receivables from 0.40% to 0.30% of their book
- 29 -
value; provisions in excess of this limit will be deductible on a straight-line basis over the following
18 years (previously over the following 9 years).
In the second half of the year, Decree 155 dated 9 October 2008 regarding "Urgent measures
to ensure the stability of the banking system and the continuity of lending to businesses
and consumers, given the current crisis in the international financial markets" represented
the start of action to deal with the crisis situation. Some of the more important measures included:
authorization for the Minister of the Economy to support, by subscribing for or underwriting capital
increases, the recapitalization of banks with an equity deficit; the ability of banks to go into special
receivership in critical situations, such as a liquidity crisis, that prejudice the stability of the
financial system, and the ability to use public funds to recapitalize such banks in special
receivership. Another notable measure was support for the deposit guarantee offered by banks
(on deposits of up to 103 thousand euro in Italy), whereby the Ministry of the Economy is
authorized, for a period of 36 months, to make up the difference if the available fund proves
insufficient, for the benefit of all depositors whether physical or legal persons (art. 4).
Decree 155 was followed by Decree 157 comprising "Additional urgent measures to ensure
the stability of the banking system", which has three articles. Pursuant to art. 1, the Ministry of
the Economy is authorized to guarantee the bonds with a duration of less than five years issued
by banks between the date when the decree came into force and 31 December 2009. The
availability of government guarantees, again until 31 December 2009, also extends to those
parties (e.g. insurance companies and pension funds) that make securities available to banks for
refinancing transactions with the Eurosystem.
Law 166 was also published in October 2008. This converted into law Decree 134 dated 28
August 2008 comprising "Urgent measures for the restructuring of major companies in
crisis"; certain modifications made on the conversion of this decree altered the requirements
applying to major companies that are insolvent, while others increased the resources of the Fund
initially consisting of the so-called "dormant accounts", via the addition of two paragraphs to art. 3
of Decree 134/08 to include the amount of bankers' drafts that are not collected before they
become time barred.
Lastly, Decree 185 was published on 29 November 2008 comprising "Urgent measures in
support of families, work, employment and business and to remodel national strategy on
an anti-crisis basis". The measures of principal interest to the banking system relate to current
mortgages (arranged by physical persons up to 31/10/2008) on principal residences (excluding
categories A1, A8 and A9), for which the floating rate for 2009 cannot exceed 4% (the difference
between the installments determined on this basis and those deriving from application of the
contractual conditions will be paid by the government), and to mortgage contracts (on principal
residences) arranged from 2009 onwards, for which the banks must offer customers the option of
- 30 -
a floating rate linked to the ECB rate. This decree also introduced regulations to strengthen the
Confidi system, in order to mitigate the credit crunch risk for small and medium-sized firms. The
objective is to ensure an adequate flow of finance to the economy and an adequate level of
capitalization for the banking system, by authorizing the Ministry of the Economy, until 31
December 2009, to subscribe - upon specific request from the banks concerned - for financial
instruments without voting rights (art. 2351 of the Italian Civil Code), included in the calculation of
regulatory capital, issued by Italian banks whose shares are listed in regulated markets or by the
parent companies of Italian banking groups whose shares are listed in regulated markets.
Among various tax innovations, the 2008 Finance Law (Law 244 dated 24 December 2007)
which came into force on 1 January 2008 introduced significant changes to corporate taxation.
The principal changes affecting the 2008 financial statements are summarized below:
−
Reduction in the standard rates of IRES (from 33% to 27.5%) and IRAP (from 4.25% to
3.9%).
−
Abolition of the ability to deduct directly in the tax return (section EC) any "off-books"
depreciation and writedowns not charged to the income statement. In this regard, an option
was introduced to frank the difference between the carrying amount and the tax value of
depreciable assets and off-book adjustments. The effect of franking is to realign the tax
value of assets with their carrying amounts. This realignment is subject to the application of
a flat-rate tax on the amount of the difference to be cancelled.
−
Changes to IRAP and IRES. With regard to IRAP, the tax base for this regional levy is
determined with reference to the amounts stated for statutory reporting purposes, while in
the case of IRES for companies that report under international accounting standards
(IAS/IFRS), the tax rules apply the accounting policies (measurement, accruals basis,
classification) required by those standards (this change envisages the issue of enabling
instructions which have not yet been published at the time of preparing this report).
With regard to VAT, art. 1.261 of the 2008 Finance Law introduced a new form of VAT exemption
from 1 July 2008, applicable - under the conditions established in the regulations - to services
provided by consortiums to their members. In addition, commencing from 1 January 2009, the
VAT exemption envisaged in art. 6 of Law 133/1999 and applying to ancillary services rendered
within banking (or insurance) groups has been abrogated.
Again with reference to corporate taxation, Decree 185 dated 29/11/2008, as converted with
modifications in Law 2 dated 28/01/2009, envisages inter alia the ability to deduct, with effect
from 2008, 10% of the IRAP due on the taxable portion of interest expense or, alternatively, on
payroll costs. The above decree also introduced special rules for realigning the differences
- 31 -
between tax values and carrying amounts created by the application of international accounting
standards.
- 32 -
GROWTH OF THE BPVi GROUP: ACTIVITIES OF STRATEGIC IMPORTANCE
The global crisis that swept the international financial markets from the middle of September,
combined with the general slowdown in economic growth, surprised a number of domestic and
international players in the banking world and, in some cases, caught them unprepared. This
situation forced many banking groups to make rapid and costly changes to their strategies, with a
view to recovering operational equilibrium and defending their capital adequacy following the
liquidity crisis and the change in market conditions. In these circumstances, the BPVi Group has
drawn on its financial solidity, the values embodied in its mission and the special
characteristics of people's banks, to define its strategic direction and identify the drivers
needed to tackle the operational difficulties weighing on the entire financial system. The strategic
guidelines set down in the new Business Plan 2008-2011, prepared earlier in the year and
approved in September 2008, thus embrace the maintenance of capital adequacy, a focus on
traditional banking, improved balance between the growth in lending and direct customer
deposits, a strengthening of the Group's management and control activities, close supervision of
risk and strict cost control. In short, even before the crisis became so evidently intense and
worrisome, the BPVi Group had already defined its strategy for the consolidation of growth.
The objective is to enhance operational profitability and efficiency over the medium term, and
create the necessary equity, operational, financial and organizational foundations for a new
phase of growth after a preparatory period of about 18-24 months. In order to achieve the
established objectives within the timeframe of the Plan, work during the last quarter focused on a
new and challenging operational plan that involved the Group's entire management team and
which has already achieved important early results.
In addition, significant action was taken with regard to equity investments during the year, in
order to optimize the structure of the Group by rationalizing non-strategic investments and
focusing on those companies that contribute to the development of the business. Action included
the reorganization of asset management activities via the merger of BPVi Fondi SGR and
Verona Gestioni SGR, the subsequent joint venture between Banca Popolare di Vicenza, Azimut
and Cattolica Assicurazioni, and the sale of the interest held in Linea S.p.A..
Lastly, work to manage liquidity risk more effectively during the last part of the year included the
securitization of the Group's residential mortgages, under the name Berica 7 Residential
MBS, for more than 1 billion euro. This is a “retained” transaction that was taken up in full by the
- 33 -
various banks within the BPVi Group, in proportion to the portfolio transferred, in order to create
securities for use in funding repurchase agreements with the ECB.
The Business Plan 2008-2011 and the Master Action Plan
In recent years, the BPVi Group has stood out in the Italian financial market for its relentless
pursuit of growth, culminating at the end of 2007 with the purchase of 61 branches from the UBI
Banca Group and the strategic partnership signed with the Cattolica Assicurazioni Group. The
growth in scale has strengthened Banca Popolare di Vicenza and the entire BPVi Group,
facilitating the defence of its autonomy and independence. These are essential conditions for
continuing to operate as an authentic people's bank serving the economies of its chosen
territories. The results achieved are highly satisfactory: the BPVi Group is now Italy's 11th
largest banking group, with a strong presence in the four home regions of the Group's banks.
This recent growth path and the good positioning achieved now need to be consolidated,
especially now at a time of profound financial crisis and general deterioration in the economic
situation. Consolidation will set the potential acquired to work, return efficiency to more
appropriate levels and create the conditions needed for the next stage of development.
Indeed, the consolidation of growth is the principal strategic guideline underpinning the new
Business Plan 2008-2011 approved by the Parent Bank's Board of Directors on 11 September
2008. This objective will be achieved by focusing on the traditional banking core business,
drawing on the strong grassroots presence already achieved and building on the ties with and
deep knowledge of local economic activity. Emphasis will be given to the role of Distributor Bank,
working in partnership with operators specializing in specific sectors (e.g. bankassurance,
merchant banking and asset management). Key elements include the renewed emphasis on the
performance of branches, the strengthening of the Parent Bank's management and
coordination capabilities, the active monitoring of credit risk, strict cost control, the
strengthening of the corporate culture and the development of human resources.
Subsequent to the 18/24-month consolidation period, the Group plan to review its strategic
positioning for the long term and examine new opportunities for growth.
Following approval of the Business Plan 2008-2011, steps were taken immediately in September
to implement the action planned and reach the established objectives. In particular, a program
for change was devised and launched, organized into 7 "Directions" that will involve the entire
Group over the plan period on the following main fronts:
- 34 -
−
Revision of the Group's governance model as an essential prerequisite for
strengthening the ability to govern, guarantee the uniformity and consistency of the
strategic/operational directions, and enhance operational efficiency.
−
Evolution of the processes and tools for governance and control, with particular
reference to strategic planning, operational control and systems of internal control.
−
Optimization of the corporate structure via work to rationalize, consolidate partnership
agreements and develop the existing product factories.
−
Relaunch of the Group's commercial strategy and rationalization of the sales
network, via the closure of branches to re-open them in more attractive areas, and the
selective strengthening of the team at "non-performing" branches with growth potential,
while aiming to maintain employment at end-2008 levels.
−
Control of credit risk, drawing on new systems for the measurement and monitoring of
risk while, at the same time, capitalizing on the wealth of information made available by the
Group's grassroots presence.
Work on the Plan, partly due to the immediate involvement and commitment of all Group
employees, has already achieved significant results, with the activation of 27 projects out of
the 30 envisaged, and the completion by 31 December 2008 of about 25% of all the
activities to be performed over the Plan period.
The principal results already achieved in each main area of the Business Plan are discussed
below.
Revision of the Group's governance model
As mentioned, the Business Plan envisages strengthening the Parent Bank's ability to direct
and coordinate activities by making changes to the way the Group is organized and to the
related governance processes. In part, the intention is to maximize profitability via operational
efficiency. In summary, the Group's new governance model envisages:
−
the strengthening of strategic guidance and control activities via both increased emphasis
on the role of the Group Coordination Committee, which is chaired by the Managing
Director and comprises the General Managers of BPVi and the other banks within the
Group, and the extension of the operational governance activities carried out by the Parent
Bank;
−
the simplification and streamlining of the organizational structure at Group banks via the
rationalization of duplicated functions;
−
the completion of work to centralize support activities within specialist service companies.
- 35 -
In line with these indications, the Boards of the Group's banks have recently approved the
centralization within the Parent Bank and Servizi Bancari, a subsidiary, a number of
significant activities (back office, court searches, ICT, purchasing and payroll). In addition, the
meeting of the Parent Bank's Board on 16 December 2008 approved, with effect from January
2009, the centralization of a series of additional activities in the areas of lending, marketing,
operations, personnel etc., as well as the guidelines for the next revision of the Group
Regulations "Guidelines and instructions for the coordination of the banks and companies
within the Banca Popolare di Vicenza Group". This document identifies a series of rules and
principles comprising the Group's Governance Model which enable the Parent Bank to specify
how its duty/powers to manage, coordinate and control the Group will be exercised, while offering
all banks/companies within the Group precise points of reference for their activities.
Evolution of the processes and tools for governance and control
The purpose of moving in this direction is to evolve the logic underlying the planning and
control processes towards the safeguarding of capital, enhancement of the ability to identify and
monitor risk, and rigorous cost management. Activity in this regard has included approval by the
Parent Bank's Board of Directors of the revisions to the Regulations for the Strategic and
Operational Planning Process, and the changes to the functions of the Group Coordination
Committee, which were subsequently adopted by the other companies within the BPVi Group.
The new Regulations formalize the strategic and operational planning process, the process of
evaluating strategic investments and the process of operational control. The primary purpose of
this is both to ensure consistency in the identification of objectives and related actions to be taken
by the Parent Bank and Group companies, as part of and consistent with a united business
approach, and to completely define the decision-making process underlying the selection of
strategic investments. In this regard, the Internal Audit function has recently been reorganized
and expanded, and guidelines have been prepared for the new architecture of the System of
Internal Controls, as described in the section on "System of internal controls and audit functions".
Optimization of the corporate structure
In terms of corporate structure, the Business Plan envisages the rationalization of nonstrategic investments and the promotion of companies contributing to the development of
the business.
Moves in this direction have included the reorganisation of asset management via the merger of
BPVi Fondi SGR and Verona Gestioni SGR and the subsequent joint venture between Banca
Popolare di Vicenza, Azimut e Cattolica Assicurazioni, the approval of a strategy to rationalize
- 36 -
merchant banking activities, and the sale of the interest held in Linea S.p.A. The above
transactions are described below in the section entitled “Changes in equity investments”.
Relaunch of the Group's commercial strategy and rationalization of the sales network
One of the Business Plan's key commercial guidelines refocuses the BPVi Group on its
traditional core business, placing emphasis on the multi-channel approach and relaunching the
branches in terms of both performance and image. A number of important results have already
been achieved in this area. These include identification of the first batch (10) of branches to be
closed and re-opened in more attractive areas, the start of a project to relaunch under-performing
branches and, lastly, activation of the new Network Model with a view to simplifying the chain of
command at branch level and refocusing on branch activities and the role of the branch manager.
A more detailed description of the new Network Model is provided in the section entitled
"Commercial Action".
Control of credit risk
The objective here is to ensure the more organized and effective control of credit risk when
granting, managing and recovering loans. Action has included implementing new internal
rating systems for the Private Customer, Small Business, Small and Mid Corporate
segments, as well as formalizing authorization systems and lending policies based on these
ratings and, consequently, including them in the loan granting and management processes. With
regard to work to prevent the deterioration of loans, via the development of methodologies and
analytical support tools and the implementation of any corrective action required, a new
operational "early warning" model has been devised, simulated and calibrated for the
environmental monitoring of lending. This model works with internal data and operational
experience, combined with the new rating models, and is described further in the section on Risk
Management.
Changes in equity investments
A number of important actions were taken with regard to equity investments during 2008. As
envisaged in the guidelines contained in the new Business Plan, the purpose of these steps was
to optimize the corporate structure by rationalizing non-strategic investments and
promoting those companies that contribute to the development of the business.
- 37 -
Sale of interest in Linea S.p.A.
As mentioned in the half-year report, Banca Popolare di Vicenza sold its 47.96% interest in
Linea S.p.A. to Compass S.p.A., a consumer credit subsidiary of Mediobanca, on 27 June 2008
following receipt of the necessary authorizations from the competent authorities. This transaction
was mirrored by Banco Popolare, which had the same percentage interest in the company sold.
The proceeds from the transaction amounted to 194.25 million euro, with a consolidated gross
capital gain of 91.6 million euro.
The BPVi Group will nonetheless continue to have a presence in the consumer credit sector both
by distributing Linea's products and through Prestinuova, a subsidiary specializing in loans
secured against "one-fifth of salary".
Merger of BPVi Fondi SGR S.p.A. with Verona Gestioni SGR S.p.A.
Having obtained the necessary authorizations from the competent authorities, the absorption of
Verona Gestioni SGR S.p.A. by BPVi Fondi SGR S.p.A. was completed on 3 November
2008. These two companies were the Group's principal asset management companies and both
were held jointly, 50% each, by BPVi and Cattolica Assicurazioni under the partnership
agreement signed in 2007. This transaction took place on a "simplified" basis (merger without
share exchange) given the identical ownership structure of both companies. The objective was to
create a "product factory" within the asset management sector for the benefit of the BPVi Group
and Cattolica Assicurazioni, while releasing the significant synergies deriving from the merger. As
of 31 December 2008, the new company is 50% held by BPVi and its carrying amount in the
financial statements is 25.8 million euro.
Joint venture between Banca Popolare di Vicenza, Cattolica Assicurazioni and Azimut
At the end of August 2008, Banca Popolare di Vicenza, Cattolica Assicurazioni and Azimut, an
established name in Italy's asset management sector, launched a project to establish an
independent asset management company (SGR) controlled equally by the three promoters.
This joint venture, still at the preparatory stage, would - among other factors - meet the frequently
expressed requirement of the Governor of the Bank of Italy to separate the ownership of SGR's
from their operating policies. Azimut, listed on the Milan stock exchange, is the holding company
for a group of companies that promote, manage and distribute financial and insurance products.
This project envisages Azimut Holding purchasing a 33% interest in BPVi Fondi Sgr, the asset
management company owned equally by Banca Popolare di Vicenza and Cattolica Assicurazioni,
from the two parent companies. Work is still in progress on the details of the project.
- 38 -
The first step in the joint venture with Azimut was the signature in January 2009 of a subplacement agreement between BPVi and Azimut for the distribution of the AZ Fund 1
Luxembourg funds to customers of the banking group.
Renegotiation of the joint venture agreement between the BPVi Group and the 21
Investimenti Group
Other agreements of strategic interest include the renegotiation in May 2008 of the joint venture
agreement signed between the BPVi Group and the 21 Investimenti Group in October 2004.
The earlier agreement covering a five-year period was signed to strengthen the merchant
banking and private equity activities of the Banca Popolare di Vicenza Group and the 21
Investimenti Group, via the concentration of these activities respectively within Nordest Merchant
S.p.A. and 21 Investimenti Partners S.p.A., subsidiaries of the two groups concerned.
The principal reasons inducing the partners to renegotiate the agreement in force were found in
the changes that have taken place since it was signed, which are influencing the current
development strategies of the two groups, and in the need to "streamline" the terms of the
agreement, especially with regard to the governance of the various companies linked to the joint
venture. In particular, under the new partnership agreement which will have a duration of three
years, compared with five previously, the no-competition restrictions applying to the BPVi Group
in relation to the private equity sector have been eased, since these limited the Bank in terms of
becoming more active in that sector.
In September 2008, 21 Investimenti S.p.A. sold its interest in 21 Investimenti Partners S.p.A. to
the managers of that company.
Measurement of capital adequacy (ICAAP)
In current market conditions, marked by considerable uncertainty and risk, the careful
quantification and planning of capital availability is an increasingly critical driver of operations. An
adequate level of capitalization provides room for operational maneuver, ensuring that
fluctuations in the economic cycle can be tackled and potential losses from extreme events
absorbed. The role of bank equity is strengthened within the new regulatory framework (Basel 2)
and the Supervisory Authorities now remind intermediaries with increasing frequency about the
need for capital adequacy in order to cover all the risks accepted. For these reasons, the process
of checking the overall risk exposure of intermediaries began in early 2008 as part of the socalled Second Basel II Pillar, together with verification of the Parent Bank's own assessment
of the capital adequacy of all the banks and companies within the Group. The Second Pillar
- 39 -
supplements the quantitative rules envisaged by the First Pillar for the determination of prudent
capital with a process (the prudent control process) that takes account, via self assessment and
discussions between the Supervisory Authorities and the intermediary, of the latter's special
cases and specific risk profiles. This means that the possible effect on intermediaries of changes
in markets, products and technologies can be evaluated more readily. In this context, the Banca
Popolare di Vicenza Group launched a project in April 2008 to prepare its first Statement on
the Internal Capital Adequacy Assessment Process (ICAAP), which was submitted on time to
the Supervisory Authorities. The key steps taken by the BPVi Group for the preparation of this
statement involved the identification of risks and the creation of a risk map for the Group and for
the individual functions within the Parent Bank and its subsidiaries, the development of
methodologies for the measurement of "quantifiable" risks and verification of the organizational
control over risks (both quantifiable and unquantifiable), the allocation of roles and
responsibilities to boards, committees and functions in relation to ICAAP, the preparation of
ICAAP Regulations, and the validation of the ICAAP Process by the internal audit function
prior to validation by the compliance function as part of the full statement to be completed in April
2009. The first ICAAP statement prepared in simplified form and relating to the situation at 30
June 2008 was therefore sent to the Bank of Italy at the end of October 2008, accompanied by a
favorable opinion from the Board of Statutory Auditors. In extreme summary, the assessment of
capital adequacy contained in the ICAAP statement shows that regulatory capital is adequate, on
both a current and forward-looking basis (31 December 2008), to deal with all the risks faced by
the BPVi Group in relation to its operations, reference markets and propensity to accept risk
which, as resolved by the Board of the Parent Bank, is measured with reference to a target level
of equity and external ratings. This Statement must be prepared on an annual basis and
delivered in April with reference to the data at 31 December.
Ratings
The most recent ratings for BPVi given by Standard & Poor’s and Fitch Ratings are
summarized below.
Rating'
s agency
Standard & Poor's
Fitch Ratings
Long term
Short term
Outlook
Date
AA-
A-2
F2
Negative
Negative
14/10/2008
14/07/2008
- 40 -
The usual meetings between the Parent Bank's management and analysts from the rating
agencies resulted in confirmation of the positive ratings given in the past, although the
changes in the financial and operational profile of the Group, associated with intensive growth at
a time of adverse conditions for the economy and the banking sector, have resulted in a revision
of the outlook from stable to negative.
In particular, the two agencies have recognized that the Bank's strengths include its good
positioning in the rich regions of Northern Italy, the good diversification of the loans portfolio and
the financial support available from the shareholder base, as confirmed on multiple occasions.
Nevertheless, the high level of operating costs, mainly associated with the rapid growth in
scale over the past few years, combined with the cost of credit risk, continue to penalize
overall performance; in addition, the growth in lending in prior years has increased the potential
credit risk in view of the general deterioration in the economic situation. The rating agencies have
however recognized that the Bank's renewed management team has already acted to
eliminate the critical points identified, and have confidence in the firm will shown to
maintain an adequate level of capital adequacy.
Other information
New securitization: Berica 7 Residential MBS
With the intention of managing liquidity risk more efficiently and effectively, the Bank has
securitized a new portfolio of residential mortgages, known as
Berica 7 Residential
MBS,totaling more than 1 billion euro. The related securities were fully taken up from within
the BPVi Group.
The financial crisis stemming from the US sub-prime mortgage collapse gave rise to a
widespread and dangerous international crisis of confidence among financial intermediaries
during 2008. This situation essentially froze the normal functioning of the interbank market,
making access uncertain to one of the principal sources of finance for financial intermediaries.
Banks tackled their funding requirements or managed the risk associated with uncertain access
to funds from the interbank market, partly by securitizing portfolios of loans that they then
subscribed for in full (so-called retained securitizations). These securities were then used, for
example, as collateral for refinancing transactions with the central bank (the total value of
retained securitizations exceeded 80 billion euro in Italy during 2008). The Berica 7 Residential
MBS transaction was arranged by the BPVi Group to obtain securities for use as collateral for
short-term loans, at relatively competitive rates, at times - like now - of liquidity stress in the
market.
- 41 -
Inspection by the Bank of Italy
As stated in the 2007 Annual Report and the Half-year Report at 30 June 2008, BPVi was
subjected to a general inspection by the Bank of Italy that commenced in October 2007. This
inspection was completed in March 2008 and, as a consequence, the Bank of Italy notified its
inspection report, containing remarks and issues, on 9 June 2008. On 2 July, the Bank sent its
initial thoughts on the observations and considerations expressed by the Bank of Italy to the
Supervisory Authorities. On 25 July, a detailed reply to the Inspection Report was prepared
containing the Bank's considerations about the matters raised. With regard to certain of the points
and exceptions raised in the Inspection Report, the Bank of Italy has commenced a disciplinary
procedure, pursuant to arts. 7 and 8 of Law 241 dated 7/8/1990, that may lead to fines for the
Directors, the Statutory Auditors and the General Manager in office at the time of the facts
identified in the Inspection Report. The outcome of this procedure is not known at the time of
preparing this report.
Other significant court cases
On 6 March 2008 a notice of indictment and a notice advising the conclusion of investigations
were served in relation to criminal proceedings brought by the Milan Public Prosecutor's Office.
The persons being investigated include Giovanni Zonin, BPVI chairman, and Divo Gronchi, for
having, in conjunction with other bank representatives, organized, conducted and taken part in a
secret build-up of shares in Banca Nazionale del Lavoro, with the goal of obtaining control of the
bank and of blocking the public offer for its shares announced by BBVA. Banca Popolare di
Vicenza is required to answer, as the party liable for the administrative offence under para.1 (a)
of art. 5, art. 6 and paras. 1 and 2 of art. 25-sexies of Decree 231/2001 governing the
administrative responsibility of legal persons, companies and associations without legal
personality, for not having, before commission of the deeds ascribed to Giovanni Zonin and Divo
Gronchi, adopted and effectively implemented organizational and management models capable
of preventing offences such as the one being investigated. The Bank has engaged an external
firm of lawyers for its defence. Subsequently, on 3 June 2008, the investigating magistrature
applied for the indictment of all the parties investigated for market fraud and other offences. The
preliminary hearing has not yet been heard in this case.
In March 2008, “Adusbef”, a consumers' association, filed a complaint with the Vicenza Court
that challenged the value of the Bank's shares and requested the magistrates to open criminal
proceedings against Bank personnel for the crimes envisaged in art. 2622 of the Italian Civil
Code (false corporate disclosures to the detriment of the company, the stockholders or the
creditors) and art. 2621 (false corporate disclosures), as well as arts. 173 bis (false prospectus),
- 42 -
184 (abuse of privileged information) and 185 (market manipulation) of Decree 58/1998, with
partial responsibility for the Supervisory Authorities (Bank of Italy and Consob) for failure to
check. Subsequent to this complaint, on 10 December 2008 the judge for the preliminary
investigation at the Vicenza Court, upon request from the investigating magistrate presented on
20 November 2008, notified the entire Board of Directors and the General Manager of the Bank
of the time extension of the preliminary investigation pursuant to art. 405 of the criminal
procedures code covering crimes the referred to in art. 2621 of Decree 58/1998, art. 2622 of
Decree 58/1998 and art. 173 of Decree 58/1998. The Bank's defence lawyers and the bank
personnel involved consider this complaint to be quite obviously without foundation and, for this
reason, the lawyers petitioned the Court on 30 March 2008 for the case to be closed.
Lastly, on 7 August 2008, Banca Popolare di Vicenza was notified of action by the Competition
Authority with regard to alleged improper commercial practices by the Banca and Banca Nuova,
a subsidiary, in relation to the free transferability of mortgages. This action, as widely reported in
the national press, was commenced following a complaint from a consumers' association that had
carried out an investigation, using its own personnel in the role of customers. These investigators
visited a number of branches of leading national banks, asking for information about
transferability. In particular, the two BPVi Group banks, together with 21 other banks investigated,
are accused of impeding the transfer of mortgages (envisaged in art. 8 of Decree 7 dated 31
January 2007, as modified by Law 40 dated 2 April 2007 and Law 244 dated 24 December 2007),
by offering customers "the most onerous solution, being replacement of the mortgage rather than
its transfer". As a consequence of this violation, Banca Popolare di Vicenza and Banca Nuova,
together with other banks, were subjected to an administrative fine of 440 thousand euro. An
appeal against this fine was presented to the Lazio Administrative Court (TAR) in mid November
2007. On 28 January 2009, the Lazio TAR ruled to accept the appeal and cancelled the
Competition Authority's action.
- 43 -
OPERATIONAL STRUCTURE
This section of the Report on Operations provides information about the territorial presence and
positioning of the branch network and the changes in employment by the BPVi Group.
Territorial presence of the Banca Popolare di Vicenza Group
Traditional distribution channels
The BPVi Group's branch network in present in 11 regions and 56 Italian provinces, with
roughly a 1.9% share of total branches nationwide.
At the end of 2008, the BPVi Group with 637 branches (9 more than at the end of 2007) is
Italy's 11th largest banking group.
T rend of branches BPVi's Group
628
528
492
500
99
100
61
67
80
332
332
333
345
de c-2003
de c-2004
de c-2005
de c-2006
453
67
54
BPVI
103
Cariprato
Banca Nuova
637
1
1
106
106
92
94
429
436
de c-2007
de c-2008
Farbanca
The 5 provinces with the largest number of branches are, in order: Vicenza, Treviso, Brescia,
Udine and Prato. The following table shows the territorial presence of the BPVi Group's branch
network, analyzed by region and principal province, at 31 December 2008.
- 44 -
Geographical distribution of
branches BPVi'
s Group
31/12/2008
31/12/2007
Change
Veneto
Vicenza
Treviso
Verona
Padova
Venezia
Friuli Venezia Giulia
Udine
Pordenone
Lombardia
Brescia
Bergamo
Milano
Emilia Romagna
Liguria
Piemonte
Trentino Alto Adige
NORD ITALY
260
98
56
32
31
23
68
39
15
87
40
24
12
15
4
2
1
437
258
98
56
30
31
23
67
39
15
86
40
25
10
13
4
2
0
430
2
0
0
2
0
0
1
0
0
1
0
-1
2
2
0
0
1
7
Toscana
Prato
Firenze
Pistoia
Lazio
Roma
CENTER ITALY
94
34
23
9
12
9
106
92
34
22
6
11
8
103
2
0
1
3
1
1
3
79
25
18
15
94
79
22
18
16
95
0
3
0
-1
-1
637
628
9
Sicilia
Palermo
Trapani
Calabria
SUD ITALY
TOTAL
The Parent Bank opened 9 branches during the year: Corsico (Mi), Castelnuovo del Garda (Vr),
Brescia, Cormons (Go) Faenza (Ra), Sesto San Giovanni (Mi), Villafranca di Verona (Vr),
Rovereto (Tn), Sassuolo (Mo). Two branches were closed, at Manerbio (Bs) just a few metres
from one of the 61 branches purchased from the Ubi Banca Group, and at Treviglio (Bg).
In the same period, Cariprato opened 2 branches at Pontassieve (Fi) and Follonica (Gr), while
the number of Banca Nuova branches remained unchanged (106) following the opening of 5
- 45 -
branches, 1 in Gela (CI), 2 in Palermo, 1 at Cinisi airport (Pa) and 1 in Rome, and the close of 5
branches at Raddusa (Ct), Monforte (Me), Gerace (Rc), Agrigento and Chiaramente Gulfi (Rg).
The following table shows the changes during the year in the branch network of each Group
bank.
Trend of branches BPVi'
s Group
31/12/2008
31/12/2007
Change
Cassa di Risparmio di Prato
Banca Nuova
Farbanca
436
94
106
1
429
92
106
1
7
2
0
0
Total
637
628
9
In addition to branches, the BPVi Group's sales network includes 18 finance shops (1 for BPVi
and 17 for Banca Nuova) and 26 private customer points (18 for BPVi, 3 for Cariprato and 5 for
Banca Nuova), as as well as a network of 160 financial promoters (150 with Banca Nuova).
Among the other traditional distribution channels, there has been a steady increase in the number
of ATMs, to more than 700 at Group level at the end of December (36 more than in 2007), and a
continuation of intensive commercial action in support of the POS (Point of Sale) service which
now has almost 19,100 active installations, following an increase of more than 1,800 units.
Other distribution channels
BPVi'
s Group
31/12/2008
18
26
160
702
19,084
Financial shops
Private banking outlets
Financial planners
(*)
ATM
(*)
POS
31/12/2007
17
22
163
666
17,261
Change
1
4
-3
36
1,823
(*) 2007 figureres include ATM and POS belonging to the 61 branches acquired from UBI Banca Group
Telematic channels
In addition to the traditional distribution channels, the Bank also provides an established rate of
telematic alternatives to the ordinary branch, allowing private customers and businesses to make
queries and give instructions in relation to their accounts.
In particular, @Time is a multichannel service that enables private customers to carry out, at low
cost on a 24/7 basis, all principal banking transactions via the Internet, by telephone or via Wap
- 46 -
and I-Mode. In addition, @Time c/Conto, a multichannel service reserved for holders of the
prepaid c/Conto card, was activated recently. A considerable number of Group customers have
subscribed to the multichannel @Time service: more than 64,000 at the end of 2008 (+25.0%
since the end of 2007). The volume of all types of transactions allowed on a telematic basis also
experienced two-digit growth (up 43.0% overall with respect to 2008), with particular emphasis on
bank transfers, telephone top-ups and F24 tax payments. Special efforts were made during 2008
to strengthen the security of the multichannel service, with the introduction of a security device
(personal key) that enables customers to display the password needed to confirm their
transactions. The availability of information has also been extended via the “Documents on line”
function, which allows customers to receive directly via their @Time service the paper documents
that the Bank usually sent out by post.
Companies on the other hand use @Time Impresa, a remote banking solution that connects
them directly to the Bank via the Internet. This multi-bank service enables collection and payment
instructions to be given to all the banks at which accounts are held, while also providing access to
various supporting services (Cerved, WebPos). At the end of December 2008, this service is
used Groupwide by almost 38 thousand companies (+12.7% since 2007), whose activities have
increased the total number of transactions by 17.2%.
Lastly, Treasuries have had access to the @Time Enti service for the past three years, This
remote banking product offers information to Treasuries, via the use of a web platform to query
accounting data and documents, and an ability to give instructions for the management of
payment and collection flows. By year end, 328 Treasuries have subscribed for the @Time Enti
service, with a rise over the year of 29.1% in terms of the number of contracts and 17.2% in
terms of instructions given.
Representative offices abroad
The BPVi Group has three long-established representative offices abroad: Hong Kong, opened
in the 1980s, Shanghai opened in June 2005, and New Delhi opened in April 2006. The purpose
of these representative offices is both to facilitate the commercial transactions between Italian
companies and the principal Asian markets, providing appropriate services for entrepreneurs
intending to expand in those areas, and to develop lasting business relations with the principal
and most experienced banking counterparts in Asia.
Collaboration agreements were signed with two foreign banks in 2008, Banco Credicoop in
Argentina and Wells Fargo Bank in the USA, in order to facilitate commercial activity and
investment by Italian firms in Argentina and the United States, as well as with the Interamerican
Development Bank (IDB), which is a sovranational entity based in Washington.
- 47 -
Human resources
The BPVi Group employs 5,645 persons at 31 December 2008, up by 432 since the end of
2007 (+8.3%). This increase mostly took place during the first half of the year, as a
consequence of the growth pursued until approval of the new Business Plan 2008-2011
which, by contrast, envisages a phase of consolidation and employment stability for the Group. In
particular, the rise in employment at the Parent Bank (+373 since 31 December 2007, +11.9%)
was mostly due to the addition to the Group of the persons employed at the 61 branches
acquired from the UBI Banca Group (219 persons), together with the strengthening of the
Commercial Network (+91 persons, including 56 allocated to the former UBI Banca branches)
and, to a lesser extent, the Central Functions (+55 persons) that provide support to the Group.
The remaining change related to the increase in employment by the commercial and business
functions at Banca Nuova (+49 persons since 31 December 2007, +5.8%) and, to a lesser extent,
at Cariprato (+10 persons since 31 December 2007, +1.0%). Among the other Group companies,
the rise in employment at Prestinuova (+10 persons, +19.2% over the year) was mainly due to
the strengthening of commercial activities in new territories.
The following table shows the changes in employment at each company within the BPVi Group.
- 48 -
Staff
31/12/2008
Number
31/12/2007
%
Number
Change
%
%
Cariprato
Banca Nuova
Farbanca
3,508
990
899
29
62.1%
17.5%
15.9%
0.5%
3,135
980
850
28
60.1%
18.8%
16.3%
0.5%
373
10
49
1
11.9%
1.0%
5.8%
3.6%
BANKS TOTAL EMPLOYEES
5,426
96.1%
4,993
95.8%
433
8.7%
62
6
37
10
0
5
0
82
17
1.1%
0.1%
0.7%
0.2%
0.0%
0.1%
0.0%
1.5%
0.3%
52
6
40
10
0
4
8
84
16
1.0%
0.1%
0.8%
0.2%
0.0%
0.1%
0.2%
1.6%
0.3%
10
0
-3
0
0
1
-8
-2
1
19.2%
0.0%
-7.5%
0.0%
n.s.
25.0%
-100.0%
-2.4%
6.3%
219
3.9%
220
4.2%
-1
-0.5%
5,645
100.0%
5,213
100.0%
432
8.3%
PrestiNuova
BPV Finance
(1)
B.P.Vi. Fondi SGR
Nordest Merchant
NEM SGR
NEM 2 SGR
Nuova Merchant
Servizi Bancari
Immobiliare Stampa
OTHER COMPANIES TOTAL EMPLOYEES
TOTAL EMPLOYEES
(1): 2007 figure include employees belonging to Verona Gestioni SGR S.p.A. (11 employees), company that during 2008 has been merged into BPVi Fondi SGR S.p.A..
Analysis by function of employment by the Group's banks (excluding persons who are inactive for
various reasons, such as those on leave of absence or who are on secondment) shows an
overall increase in persons working for the Commercial Network with respect to those at
Central Functions (General Management, Credit Assessment and Back Office), rising from 72.5%
at the end of 2007 to 73.3% at 31 December 2008. This change was due to addition of the 61
branches acquired from the UBI Banca Group and the policy of strengthening the Commercial
Network implemented, for the most part, by the Parent Bank.
BANKS EMPLOYEES
31/12/2008
Branch
network
Corp.
Center
31/12/2007
%
Branch
network
Corp.
Center
%
Cariprato
Banca Nuova
(1)
Farbanca
2,509
664
648
6
869
280
225
22
74.3%
70.3%
74.2%
21.4%
2,199
656
617
6
814
274
208
21
73.0%
70.5%
74.8%
22.2%
TOTAL
3,827
1,396
73.3%
3,478
1,317
72.5%
(1):Farbanca is on-line-bank and has a call center classificated into Corporate Center
With reference to the analysis of employment at Group companies by professional category,
there are 132 executives, 2,205 managers and 2,982 clerical employees at the end of December
2008. The "Other" category mainly comprises apprentices.
- 49 -
Employees by professional
category
Category
Senior
managers
Remaining
staff
Other staff
82
11
24
1
1
1
4
3
0
2
2
1
1,465
340
338
5
9
1
9
4
0
0
26
8
1,695
617
508
23
52
4
24
3
0
3
45
8
266
22
29
0
0
0
0
0
0
0
9
0
132
2,205
2,982
326
Cariprato
Banca Nuova
Farbanca
PrestiNuova
BPV Finance
B.P.Vi. Fondi SGR
Nordest Merchant
NEM SGR
NEM 2 SGR
Servizi Bancari
Immobiliare Stampa
TOTAL
Managers
At 31 December 2008, “effective” employment by the BPVi Group, considering the employees
of Group companies, persons on secondment and project workers, totals 5,675 persons, up by
8.4% since the end of 2007. The following table shows effective employment by BPVi Group
companies at 31 December 2008.
- 50 -
31/12/2008
Permanent Staff
Staff
(a)
seconded at
other BPVi's
Group
companies
(b)
seconded at
other
companies
(c)
seconded
from other
companies
(d)
Other staff (1)
(e)
Permanent
staff
(a-b-c+d+e)
Banca Pop. di Vicenza
Cariprato
Banca Nuova
Farbanca
PrestiNuova
BPV Finance
B.P.Vi. Fondi SGR
Nordest Merchant
NEM SGR
NEM 2 SGR
Nuova Merchant
Servizi Bancari
Immobiliare Stampa
3,508
990
899
29
62
6
37
10
0
5
0
82
17
10
17
15
1
0
0
0
4
0
0
0
2
0
2
0
2
0
0
0
0
0
0
0
0
0
0
24
5
2
1
3
0
0
1
3
0
1
0
9
15
0
11
0
8
0
0
0
0
0
0
0
0
3,535
978
895
29
73
6
37
7
3
5
1
80
26
TOTAL
5,645
49
4
49
34
5,675
Management and development of Human Resources
Significant organizational changes involving the commercial networks and the general
management functions at Group banks were made during the year, with consequent effects for
the management of employees. The changes involving the network included the opening of new
branches by Group banks and the launch of the new Bergamo-Brescia Area by BPVi, as well as
the recent reorganization of the Area model to optimize the commercial chain of command.
This has involved eliminating the intermediate level of "area leader" branches and the
introduction of the Market Manager role (Corporate, Small Business and Private Customers). In
terms of the management of human resources, this change involved identifying the persons
concerned and allocating them to their new roles, as well as the revision of job descriptions, in
order to draw on the professional skills and potential already available within the Group.
With regard to the central functions, internal audit was reorganized as part of work to
strengthen the organization and the system of internal controls in order to control business risks
and enhance governance. In addition, in order to ensure the consistent application of personnel
development policies within the BPVi Group, a support team has been formed at the Parent Bank
to help Group banks and companies design and implement personnel development initiatives and
programs, as well as design and present employee evaluation and incentive systems that are
consistent with the guidelines established by the Parent Bank. In this context, the “New
Employee Evaluation System” was developed during the first half of the year, with preparation
of the related manual and procedures so that the system can be applied effectively. This system
- 51 -
will be implemented by the Parent Bank and Farbanca during 2009, while the other Group
companies are expected to adopt it from 2010.
Other initiatives included the start of an experimental tutorship program at the Parent Bank,
involving individual meetings with "new colleagues" with about two years of seniority (about 80
persons involved by 31 December 2008), to identify any integration problems and assess both
their levels of satisfaction and their expectations for career development. This program will
continue in 2009.
Training activities
Training activities within the BPVi Group were developed and consolidated along the following
principal lines during 2008:
−
Induction training. This is training for new recruits and all those who change role and need
to acquire the technical-operational knowledge needed to perform their new tasks.
−
Ongoing training. Regular updates that reflect business objectives and convey specialist
technical-professional knowledge.
−
Development training. Programs intended to spread and enhance managerial skills.
−
Compulsory training. This is training required by laws and regulations (e.g. anti money
laundering, Isvap, Mifid etc.)
In particular with regard to the induction training, a special training path has been activated for
"Professional Apprentices", as required by law and regional regulations.
As part of ongoing training, a new module has been developed for branch managers covering the
legal and risk aspects of granting loans and, just at the Parent Bank, training on the new lending
policies has been delivered to Area Managers, Business Consultants and Branch Managers.
Work to enhance managerial skills has included the introduction of a training program for
candidate branch managers, comprising not only technical-specialist materials, but also modules
focused on the management of staff and the planning of activities.
The training requirements imposed by the various regulations in force have been considerable
covering, in particular, Isvap rules, anti money laundering, transparency, Decree 231/2001 on the
administrative responsibility of legal persons, health and safety in the workplace, with training on
hold-up risk and first aid, etc.
"Ad hoc" training projects were also devised during the year to meet the specific
requirements of individual banks. In this regard, the Parent Bank organized training for the
new colleagues joining from the 61 branches acquired from the UBI Banca Group, in order to
ensure operational continuity and full integration with BPVi's processes and internal regulations.
- 52 -
A training program was also introduced for internal auditors, covering the recent internal
reorganization and legal requirements, in order to update their skills. Training was also provided
to the branch managers at Banca Nuova covering managerial and risk control matters. Special
behavioral and management development training was developed for general management
personnel at Cariprato, together with updates on the new regulations (Isvap, Mifid, Basel 2). With
regard to the commercial network, branch managers received training on the analysis of
creditworthiness and the management of positions considered to be at risk.
The large majority of the above courses were delivered by internal "lecturers" with at least three
years' experience, thus ensuring the regular update of the training programs and materials. The
Group has also continued to work with the leading specialists in the sector, especially with
reference to behavioral training.
This extensive commitment to training is confirmed by the results shown in the following tables,
the first of which relates to the Group's banks while the second is specific to BPVi.
- 53 -
Training
(days)
Banks of BPVi Group
2008
2007
change
change %
5,196
3,129
4,873
5,405
367
5,246
2,378
3,221
2,332
0
-50
751
1,652
3,073
367
-0.9%
31.6%
51.3%
131.8%
n.s.
Total
18,970
13,177
5,793
44.0%
Mandatory
16,347
30,959
-14,612
-47.2%
Total including mandatory
35,317
44,136
-8,818
-20.0%
Entrance
Apprenticeship
Permanent
Development
Progect UBI
Training
(days)
BPVi
2008
2007
change
change %
2,653
2,862
2,294
4,234
367
2,461
2,287
1,853
2,142
0
192
575
441
2,092
367
7.8%
25.1%
23.8%
97.7%
n.s.
Total
12,410
8,743
3,667
41.9%
Mandatory
10,593
19,141
-8,548
-44.7%
Total including mandatory
23,003
27,884
-4,881
-17.5%
Entrance
Apprenticeship
Permanent
Development
Progect UBI
The employees of BPVi Group banks received a total of 35,300 mandays of training during
2008, of which 23,000 related to the Parent Bank. This was 20% less than in 2007 (-17.5% at
BPVi), when considerable training was required for the application of ISVAP regulations
(compulsory training). On the other hand, there was significant growth in the other types of
training (+44.0% at Group level and +41.9% at BPVi) including, in particular, an increased
commitment to the development of managerial skills (development training).
Employment policies
Internal discussions with the trade unions covered the organizational changes at the Parent Bank
concerning, in particular, certain general management functions and the commercial network. In
addition, consultations were still in progress at the end of 2008 regarding the transfer to Servizi
- 54 -
Bancari S.p.A., the BPVi Group company that provides IT and back office services, of certain
administrative, back and middle office activities previously carried out by the individual banks.
This transfer involved the sale of the related lines of business.
With regard to the other Group companies, Banca Nuova, Cariprato, BPVi Fondi SGR and Servizi
Bancari have signed the union agreements on bank bonuses for 2007 and 2008. Cariprato has
also reached an important agreement governing the provision of training to employees. Lastly,
other agreements were reached by BPVi Fondi SGR on the absorption of Verona Gestioni SGR
and by Cariprato on activation of the “Solidarity Fund for sustaining the income of bank
personnel”, while BPVi Fondi SGR and Servizi Bancari signed agreements to extend the cover
provided by Caspie.
During 2008, the Parent Bank commenced and concluded 13 disciplinary procedures, applying
the sanctions envisaged in the employment contract.
Examination has continued of the regulatory changes introduced by the "Welfare Protocol", the
decree governing tax relief for overtime working and variable remuneration, the renewal of the
national payroll contract on 8/12/2007 especially with regard to the treatment of apprentices, and
the changes to employment law contained in Decree 112 dated 25/6/2008 "Urgent instructions for
economic development, the simplification, competitiveness and the stabilization of public
finances, and the equitable distribution of taxation” (so-called “Summer Measures”).
Finally with regard to employment, the Parent Bank settled 6 disputes with employees before the
Mediation Commissions.
- 55 -
COMMERCIAL ACTIVITIES: CHARACTERISTICS AND RESULTS
Commercial activities by the BPVi Group during 2008 principally included action to broaden the
customer base and develop cross-selling via emphasis on the breadth and quality of services,
as well as by the use of promotions.
These strategic guidelines were reaffirmed in the new Business Plan 2008-2011, which
establishes that efforts to re-establish adequate levels of profitability and efficiency will include a
focus on the traditional banking core business, with emphasis for BPVi's role as a
"distributor bank", and the rebalancing of the loans-deposits ratio, thereby containing the
level of borrowing from the interbank market.
In order to facilitate achievement of the commercial objectives indicated in the Business Plan, the
BPVi Group has taken specific action to simplify the chain of command at branch level and
strengthen their commercial push capabilities, thus confirming the central importance of the
branch within the customer service-relations model. In particular, actions have included the
activation of the new Group Network Model by BPVi from January 2009, thus facilitating the
more effective and rapid delivery of services to customers. This model is currently being rolled
out to the other banks in the Group. Summarizing, the new model eliminates the intermediate role
of the "area leader" branch, creates the role of manager for each of the Corporate, Small
Business and Retail markets, and activates efficient mechanisms for coordination between
branches and the commercial areas.
With regard to the strengthening of commercial-push capabilities, a plan has been devised for
renewal of the range of products and services offered to all customer segments including, in
particular, retail customers. This segment in fact affords the greater growth opportunities (e.g.
renewal of the range of current accounts, solutions for the transfer of mortgages, development of
the insurance catalog, etc.). Consistent with the strategic guidelines contained in the Business
Plan, work to develop the product catalog during 2008 therefore mainly concentrated on
expanding the range of direct deposit products and implementing the partnership agreements
reached with Cattolica Assicurazioni and, more recently, Azimut. The principal innovations made
to the product catalog during 2008 are described in the section of this report entitled “Products,
services and markets”.
- 56 -
Segment analysis of the BPVi Group's customers
Analysis of the customers served and the operations of the banks within the BPVi Group
demonstrates the commercial vocation towards private customers and family firms that is
typical of people's banks, confirming the close ties established with the various local economies.
The distribution of BPVi Group customers
Clients composition
at
31
December
2008
confirms
the
preponderance of private customers (mass
market and affluent customers), comprising
more than 80% of the total, followed by the
Vip
3.5%
Private
80.5%
retail business segment (firms with sales of
Small
business
10.8%
Companie
s
Other
2.2%
3.1%
up to 2.5 million euro), representing 11% of
the total. The percentage of customers
belong to the VIP segment (managed by
the private banking area and by promoters)
and the corporate segment (firms with
sales of more than 2.5 million euro) is
smaller, representing respectively 3.5%
and 2.2% of the total. The "Other" category comprises employees, disputed accounts, firms
managed directly by central functions etc.
Deposits composition
Vip
15.1%
Private customers also dominant the
volume
of
direct
deposits
taken,
contributing more than 57% of the funds
Small
business
8.5%
gathered by the commercial networks of
the BPVi Group's banks. The VIP and
Companie
s
14.1%
corporate segments follow, contributing
respectively 15% and 14% of the total,
Private
57.5%
with retail businesses further behind at
Other
4.8%
8.5%.
- 57 -
Loans composition
By contrast, analysis of the contribution made
Companie
s
51.4%
to the growth in lending confirms the leading
role of the corporate segment, which
absorbs about 51% of total loans. The private
customer
segment
follows
with
28.5%,
together with the retail business segment with
more than 15%. Lending to th VIP segment is
marginal (2.8%).
Small
business
15.5%
Vip
2.8%
Private
28.5%
Other
1.9%
Indirect deposits composition
With regard to indirect deposits however,
Vip
38.9%
the weight of the VIP segment is evident with
about 39% of the total from just 3.5% of total
customers. The contribution from private
customers is also significant, at 51.5% of the
total,
while
corporate
the
contributions
segment
(6.5%)
from
and
the
Small
business
0.9%
retail
businesses (0.9%) are much lower.
Private
51.5%
Considering the net interest and other
Other
2.1%
Companie
s
6.5%
Banking income composition
banking income generated by the Group's
Small
business
20.5%
Vip
6.1%
commercial network, the greatest contribution
is made by private customers (43.3%). These
are followed by the corporate segment
(28.2%)
and
retail
businesses
(20.5%).
Finally, the VIP segment contributes 6.1% of
the total net interest and other banking
income
generated
by
the
Private
43.3%
commercial
networks of the BPVi Group's banks.
Other
2.0%
- 58 -
Companie
s
28.2%
Products, services and markets
As mentioned earlier, work continued during 2008 to upgrade the product catalog available to
Group banks, and to refine the tools available in support of commercial activity including, above
all, CRM tools. Activity in this last area has focused on two key aspects: support for branches in
the management of customer relationships and guidance for the management of the sales
network. In the first case, improvements have been made in the analysis of customer behavior,
with a view to increasing both their loyalty and their satisfaction with their relationships with Group
banks. With regard to the second aspect, the tools for monitoring commercial performance have
undergone significant renewal, now focusing great attention on the individual customer segments
ahead of the introduction of the new Network Model in early 2009.
Geomarketing tools have also been upgraded and refined in support of territorial development,
with a view to identifying growth potential better and accelerating growth both in the newer
territories and in more established areas.
The principal commercial innovations made in order to upgrade the product catalog are
summarized below in relation to the two macrocategories: private customers and businesses.
Private Customers and VIP Segment
A new range of current accounts for households was launched in 2008 under the name of
“SemprePiù”. This comprises four different proposals that accurately target the specific
requirements of customers regarding the remuneration of deposits (“SemprePiù Rendimento”),
the containment of costs (“SemprePiù Risparmio”), the certainty of costs for a full range of
services (“SemprePiù Famiglia”) and remote current account access (“SemprePiù On-line”). The
presentation of these proposals commenced in April with the launch of “SemprePiù Rendimento”
and was completed during the second half of the year.
With regard to consumer credit, distribution of “Presto” from Linea S.p.A. has continued. Work
with this partner during the second half of the year involved making some innovations to further
extend the range of available solutions, including the presentation of “Maxiprestito” for loans up to
55,000 euro.
Given the increasing importance of the energy issue and the government assistance available for
renewable and alternate energy sources, a new line of loans called “Credito Solare” has been
introduced to finance the installation by households of solar-powered installations. BPVi has won
- 59 -
significant recognition with “Credito Solare”, in the form of the “MF Innovazione Award 2008”
first prize in the personal loans category..
In line with market trends with regard to lending to private customers, efforts to sell the Transfer
of one-fifth of Salary (CQS) and Payment Authorization products via the branch network were
augmented from the middle of 2008. These products are supplied by Prestinuova S.p.A., a
specialist company operating within the Group.
Considering the regulatory changes influencing the home mortgages market during the year, the
Group has developed a complete range of solutions for the transfer of mortgages from other
banks, encompassing the possibility of transfer or replacement, as well as opportunities to obtain
additional finance.
With regard to multi-channel activities, the introduction of the "personal key" and the "Documenti
On Line" service mentioned earlier has further increased the quality and security of @Time,
BPVi's home banking service.
Working with the insurance companies owned together with Cattolica Assicurazioni, the range of
products available in the loss insurance, life assurance and investment policy sectors has been
rationalized and extended. In particular, in the loss sector, new or restyled insurance products
have been presented together Compagnia ABC Assicura. These solutions are either linked to
major banking products (such as credit protection insurance for home mortgages), or respond to
the need to protect individuals, households or wealth (e.g. accident cover, head-of-household
third-party liability, travel-related losses etc.). The range of life assurance policies has been
extended, in collaboration with Compagnia Berica Vita, by introducing the “Berica Energy
Rendita Immediata” policy for those who wish to ensure a guaranteed income, immediate and
adjusted over time, for themselves or their loved ones. In addition, the range was reviewed as a
whole in order to enhance the yields recognised to customers. With regard to life assurance for
investment purposes, two new lines of investment have been introduced and a new range of unitlinked products has been launched under the name “Guida Life Swing”. This range was
developed together with Vicenza Life and is linked to investments in ETFs, with an orientation
towards prudent financial investment that, to some extent, is decoupled from equity market
trends.
In addition to the launch of Fondo Arca Capitale Garantito, created and promoted in the asset
management sector by Arca Sgr S.p.A., the portfolio management catalog of BPVI Fondi Sgr
has also been revised in order to respond appropriately to changing market conditions, and to the
entry into force of the new MiFID regulations. Bonds and certificates issued by third parties were
also placed during the year, with a view to offering customers new investment solutions and
diversification given the extreme volatility of European and world stock exchanges and of interest
rates.
- 60 -
Lastly, following the agreement reached with Azimut, preparatory work began ahead of the
placement of the “Az Fund” sicav funds by Group banks from the start of 2009.
In terms of Assurance products for VIP customers, the Group has continued to place established
products (unit-linked, index-linked, standard life policies) and has also been successful in placing
Personal Portfolio, a product that provides insurance cover for portfolios of securities. The bond
sector has also been developed, with the issue of bonds specifically for the this segment.
Business Segment
During the year, the BPVi Group distinguished itself with the creation of new products including,
as already mentioned, the “Credito Solare” loans to finance investment in renewable sources of
energy. In addition, consistent with its vocation as a territorial bank attentive to the growth and
development needs of small and medium-sized businesses, BPVi has signed a global loan
agreement with the European Investment Bank (EIB) for the granting of loans totaling 130
million euro to small and medium-sized businesses. Available for periods of up to 12 years, these
loans can finance investment in new works, the acquisition of plant and machinery, restructuring
and modernization.
The catalog of assisted finance has been expanded significantly, involving agreements with
Finlombarda and the EIB, the activation of loans pursuant to Regional Law FVG 29/2005
(commerce), and a contract for the management of grants from the Campania Region.
In order to assist customers with their business in foreign markets, the BPVi Group signed
important new collaboration agreements during the year with Wells Fargo Bank, San
Francisco,, the USA's fifth largest bank with about 6,000 branches, Arab African International
Bank, Egypt, and Banco Credicoop, Argentina. Agreements were also signed with
Interamerican Development Bank, Washington, with a view to hedging political and
commercial risks in Latin America and the Caribbean, and with Istituto per il Commercio con
l’Estero (ICE), in order to facilitate the internationalization of Italian companies by making various
forms of assistance available to customers.
The successful strategic partnership with Volksbank has continued.
Banca Popolare di
Vicenza's collaboration with this Austrian group has been consolidated by investment in the
capital of seven banks situated in Central and Eastern Europe. The international desks staffed by
Italian-speaking staff offer specific and professional on-site assistance, as well as consultancy to
Italian firms that are either present in the countries concerned or interested in commercial
expansion or other investment there. In addition, a representative of the Parent Bank is present
on the international desk of Volksbank Romania in Timisoara, with a view to supporting the
consolidation and expansion of Italian firms in Romania.
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The gold and silver sector has continued to decline both at home and abroad, where the large
majority of domestic production is sent. This contraction is principally due to the deterioration of
the international economy, the volatility of the metals market and the changing tastes of end
consumers who are tending to purchase alternate discretionary goods.
Commercial communications and promotional initiatives
The commercial activities addressing private customers and businesses during 2008 were
accompanied and sustained by a series of communications campaigns and promotional
initiatives.
Advertising activities
A major advertising campaign covering several channels was launched to support the
presentation of the new range of current accounts for households: “SemprePiù”. There were
three distinct stages in this campaign. In particular, multimedia campaigns focused mainly on
advertising in local media, such as daily newspapers, free press and static/dynamic street
hoardings available in the cities and provinces served. Promotional action on the web included a
BPVi presence on some of Italy's most important national portals (Corriere.it, Gazzetta.it, Ansa.it,
Tiscali.it, Virgilio.it, Libero.it), as well as keyword advertising on the Google search engine. These
actions were also supported by the product's own website, www.contosemprepiu.it, referenced by
the various promotional tools and the landing site for web advertising, as well as by the despatch
of about 1,400,000 promotional e-mails.
The addition to the catalog of the “Credito Solare” loan product was supported advertising in the
free press and local newspapers, in addition to a campaign in Italy's leading financial press (Il
Sole24Ore, MF, Milan Finanza). The advertising campaign also involved Radio 24 and the
leading radio stations in the Bergamo and Brescia areas. In order to provide further support for
“Credito Solare”, BPVi also took part in the renewal energy sector's principal show with the
distribution of brochures.
Following the recent legislation relating to mortgages, the Group has launched the “SOS Mutui”
project which envisages the activation of a toll-free number for both customers and noncustomers, staffed by specially trained personnel who are able to provide appropriate assistance
on the subject. A pilot initiative was carried out in Tuscany during the year, with related
advertising by Cariprato in the leading regional newspapers.
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Last but not least, the Banca Popolare di Vicenza brand was promoted to the residents of the
Bergamo and Brescia provinces via a press campaign in the leading daily newspapers and the
free press. Special attention was given to the development of business customers, with a view
to building relations between the Bank and businesses in the Lombardy region.
Promotional initiatives
Promotional initiatives included the “Vola al Sole” campaign, focused on arranging standing
orders for utility payments, which included a trip to Mexico as a prize.
The second year of the “Operazioni Studenti” initiative is also worthy of mention. This addresses
students between the ages of 13 and 30 and reflects an agreement signed between Banca
Popolare di Vicenza and F.T.V., which operates the bus services in the province of Vicenza. This
initiative, which commenced in August, offered prizes and discounts to all students using F.T.V.'s
services who open a free current account (Amici or Feel Free).
Sponsorship of the youth section of Vicenza Calcio included the “Amici – City Camp 2008”
initiative which, with a view to drawing the attention of young people to the management of
money, made free banking products (deposit books, accounts) available to participants at the
summer camps organized by the football club. Persons opening accounts were "rewarded" with
the official football of the European Cup.
Again with a view to spreading awareness about the management of money among the younger
section of the population, the “Scuole a Palazzo Thiene” initiative made free banking products
(deposit books, accounts) to children on school visits to Palazzo Thiene. Those opening accounts
were "rewarded" with an mp3 player.
A further initiative by Banca Popolare di Vicenza involving the local school system resulted in the
development of a new automated system for the management of school meals and bus
services for infants and primary school children in the Municipality of Vicenza. This initiative was
organized with the Municipality as an extension of its treasury management contract. The new
system will replace paper meal tickets and travel passes with a prepaid top-up card, using
contactless technology, dedicated solely to the use of and payment for these services. Testing of
this new automated system for the management of school meals and bus services began at 9
schools in the Municipality of Vicenza at the start of the 2008-2009 school year.
Given the success of initiatives that associate tangible rewards with the placement of banking
products, an experimental marketing program was tested at just 51 BPVi branches. In particular,
persons subscribing for Certificates of Deposit were given a "material" product for daily use in the
home (a double quilt). This represents an innovative approach to promotion in the Italian market.
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During this promotion, the branches concerned were supported by posters, brochures, counter
displays and special presentations (e.g. free-standing displays).
Research and development
In view of its business and industry sector, the BPVi Group does not generally carry out research
and development as such. As a result, it has not recognized any intangible assets or costs in this
regard.
The usual activities of implementing and updating the product catalog, designed to
ensure that each business line has a complete range of products and services in line with major
competitors, and the revision of procedures and internal processes to ensure that the operational
structure functions adequately, do not result in new or significantly improved products, services or
processes relative to those already present on the market, since they are not the result of
research and development in the strict sense.
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SYSTEMS
As always, the systems area was particularly active during the year. In addition to working on the
implementation of the Business Plan 2008-2011, as described in the section on "Activities of
strategic importance", the systems area has supported the activities within the Group's Basel II
project leading to delivery of the first Statement of Internal Capital Adequacy Assessment
Process (ICAAP) to the Supervisory Authorities, and the initial use of the new rating models
within the lending process by all BPVi Group banks.
The systems area has also been active as part of major revisions to some of the Group's
business models involving the chain of command at branch level, the finance area, and the
decentralization of the analysis of loan applications, which was previously performed by the
central loan labs. In addition, various significant activities (back office, court searches, ICT,
purchasing and payroll) described in the section on "Activities of strategic importance" have been
centralized within the Parent Bank and Servizi Bancari, and the internal audit function has
been reorganized, as discussed in the section on the "System of strategic controls and auditing".
The principal activities of the systems area during 2008 with regard to the organization of the
Group, IT and procedures are described below with respect to each operational area.
Markets
The organization model for this area's functions has been updated to reflect related
developments within the central functions at the BPVi Group's banks, and the network structure
has been revised to take account of changes in the reference markets.. In particular, the new
organizational model approved by the Boards of the Group's banks is intended to simplify - by
revising the network model - the chain of command at branch level in order to refocus on the
branch, and the branch manager in particular, in terms of the provision of customer service.
Action included elimination of the intermediate level of "area leader" branches, the creation of
three markets (Corporate, Small Business and Retail) and the activation of effective mechanisms
for coordinating the activities of branches and commercial areas. This has involved the
introduction of two new roles, Business Manager and Private Customer Manager, with a view to
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focusing the internal organization of areas on the core operating segments (businesses, private
customers).
Systems work in the markets area also included changes to central functions to make the
commercial activities of the network structure more incisive. This action involved the creation of
a commercial coordination function that reports directly to the commercial manager at each
bank. The new function comprises the managers of the commercial areas and, at the Parent
Bank, representatives from two staff functions: branch development and shareholder relations.
The new function therefore acts as a point of reference for all business functions responsible for
operations and business development. In addition, the CRM and Commercial Planning function
has been established with the key objective of improving customer understanding, thereby
helping to focus business development initiatives and equip the networks with the sales support
tools they need.
Regulations
In accordance with the supervisory instructions for banks regarding the management and
assessment of risk (Bank of Italy circ. no. 263/2006: Basel II), the Banca Popolare di Vicenza
Group launched its Basel II project in 2006 in order to define, implement, coordinate and
monitor the action needed to ensure that the Group's banks and companies complied with Basel
II by the time the new regulations came into force. In this regard, the Group along with the vast
majority of the banking system, decided to adopt the new prudential regime from 1 January 2008.
As already described in previous Reports on Operations, this project comprised two macro areas:
Compliance with Basel II and Development of rating systems. The Banca Popolare di
Vicenza Group has adopted the standard methodology for credit and market risks and the basic
methodology for operating risks, since it belongs to "class 2".
In terms of Compliance with Basel II and, in particular, the Second Basel II Pillar, the process
of checking the overall exposure of intermediaries began at the start of 2008, together with the
checks on the self-assessment by the Parent Bank, on behalf of all Group banks and companies,
of their capital adequacy (ICAAP). The resulting first Statement on the Internal Capital
Adequacy Assessment Process (ICAAP) is described in the section on “Activities of strategic
importance”.
The development of rating systems is described in relation to the Credit area.
With regard to the Market in Financial Instruments Directive (MiFID), work continued during
2008 on the adoption and consolidation of this directive throughout the Banca Popolare di
Vicenza Group, having regard for the related regulatory changes. Actions involved the launch of a
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free investment consultancy service available to all customers, review of the product range for
consistency with regulatory requirements and business objectives, the development of
procedures for managing conflicts of interest and internal Group operations, as well as the
improvement of procedures to make IT applications more efficient while continuing to comply with
regulatory requirements. Work also continued on the refinement of operating processes, the
design and development of the "advanced" consultancy service, and the monitoring of contract
completeness.
Lastly, in compliance with the supervisory instructions for banks regarding the regulations issued
by the Bank of Italy, the Board of the Parent Bank created a Compliance function in late
January 2008, tasked with monitoring and managing at Group level the risk of non-compliance
with laws and self-imposed regulations (articles of association, codes etc.). See the section on
“System of strategic controls and auditing” for a description of the objectives and activities of the
new Compliance function.
Finance
As discussed in the 2007 Annual Report and the Half-year Report at 30 June 2008, work was
completed during the year on the strategic review of the business model. This was performed
to ensure that Group banks and companies attain significant qualitative and quantitative results
by sharing their specific skills, all highly correlated, in the areas of asset management, financial
services, wealth management, and the management of Group offerings to the VIP segment.
Following this review, in March 2008 the Board approved the new organizational structure
which has involved dividing the Finance area into three separate departments (Global Markets,
Wealth Management, Private Banking) with their own specific internal controls and reporting
lines, regardless of business function. The management and monitoring of market risks has also
been simplified and made more efficient via the definition of a new hierarchy of operational
portfolios.
Lending
With regard to the development of rating systems as part of the broader Group Basel II project,
new rating models for the corporate and retail segments have now been introduced. These
were developed during 2007, drawing on the databases held by the entire banking group, with
support from leading Italian consultancy firms. Fully automated statistical models have been
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devised for private, small business and small corporate customers (with sales of up to 2.5 million
euro), while the model for mid corporate customers (with sales of between 2.5 and 50 million
euro) has been supplemented with a "qualitative" module and includes the ability to amend the
counterpart rating, partly with reference to group membership criteria.
Lastly, for larger
corporates (with sales in excess of 50 million euro), an ad hoc model has been developed that
envisages a more judgemental component, with assessments made by highly experienced
personnel. Following a test period of 5 months, the new rating models were integrated within
the Electronic Credit Approval Platform for use within the lending process by the entire BPVi
Group network from April 2008.
In addition, as part of the review of rating models to enhance the tools previously in use,
development work has been completed on the new early warning model of credit
performance, which takes account of internal data and operational experience as well as the
new rating models. Subsequent to the introduction of these more reliable tools that take account
of internal experience and information, work is now proceeding on the definition and update of the
rules and the process for classifying positions into the various operational states. The result will
be to limit the discretion allowed to employees, consistent with the new credit management
policies.
With regard to the management of lending anomalies, work has commenced on a revision of the
organizational structure and processes for credit recovery, as well as on the industrialization
of the anomaly management processes, adopting different approaches based on value/customer
risk and using supporting tools on an ad hoc basis. In particular, the regulations for the
administration of non-performing loans were updated and supplemented during 2008, while the
new procedure for the active management of non-performing loans is scheduled for introduction
in early 2009.
Lastly with regard to Lending, the analysis of loan applications has now been pushed down to the
Territorial Areas. This activity was previously performed by central functions at each Group bank
(so-called Loan Labs). The problems of inconsistent methodologies and processes that led to the
centralization of these functions were deemed to have been overcome in 2008. Accordingly, a
project to reorganize them was started and completed, with a view to improving credit culture
within the sales network, ensuring on-site collaboration and support for the network organization,
and guaranteeing proper control over credit risk. The new decentralized functions, known as
“Area Lending”, are coordinated by a person within the Lending function, who also provides
guidance on credit management (including credit policies, decisions and opinions on loan
applications). These units report functionally to the Area Managers with regard to their objectives
for efficiency, credit quality and the development of network credit management skills.
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Logistics, Purchasing and Security
Various activities were completed during the year in relation to health and safety at work. These
included completion of the "risk assessment" at all Parent Bank locations (including the 61
branches acquired from the UBI Banca Group) and preparation of the related "Improvement
plan". In addition, the principal requirements/improvements envisaged by the new "Consolidated
law on health and safety at work" (Decree 81/08, replacing Decree 626/94 as amended) have
also been identified and implemented, including the provision of safety training (how to deal with
hold-ups, fire prevention, first-aid). Lastly, a new "post hold-up" procedure has been prepared
and implemented. This classifies such action between "serious" and "not serious", depending on
its gravity, and makes "post event trauma assistance" available on a voluntary basis with support
from the doctor concerned.
Other work performed in relation to security has included the preparation and issue of a new
Group Safety Manual, following update of the security features and insurance cover at each
branch; branches deemed to be at higher risk of theft (especially those acquired from UBI Banca
and those recently opened) have also been equipped with new generation “Cash-in Cash-out”
safes. Relations with the police forces have been strengthened by signing a "Protocol of
understanding for the prevention and repression of crime" and, in general, security standards at
the branches acquired from the UBI Banca Group have been aligned with those of BPVi (alarm
systems, access control, strong equipment, transport of valuable, security signage, anti hold-up
training, surveillance, etc.).
The use of VoIP fixed line telephony has been tested at 19 BPVi branches, using the data
transmission lines that are part of the technological infrastructure that links the Parent Bank with
Sec Servizi. This experiment was successful and all BPVi telephone traffic will be moved over to
VoIP technology during the first half of 2009.
Lastly, pursuant to point 26 of the “Technical document on minimum security measures”,
attachment B to Decree 196/2003 ("Privacy Code"), it is confirmed that the "Security Planning
Document" is kept up to date on a periodic basis. This document describes the measures
taken to guarantee the privacy of the personal data processed.
Information Technology
The principal activities carried out within the Information Technology area included the
implementation and introduction of new infrastructure. This has optimized the data traffic over the
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network used by BPVi, via the replacement of servers at branch level with servers installed at the
SEC Servizi consortium. This activity involved all the branches acquired from the UBI Banca
Group and has recently been extended to other branches with obsolete servers. The new
infrastructure will be extended in future to the other Group banks. Following the same logic, but
using different technology, the virtual workplace concept has been introduced for personnel who
work on the move and who therefore need remote access to the branch system.
The IT systems used by Farbanca were improved and migrated during the year, involving the
provision of technical/systems support at the time of the move.
Lastly, implementation of the “New Branch System” project began in September 2008, with a
view to introducing innovations to users of the network and optimizing operational processes at
branch level. Analysis and development activities included:
−
designing the new desktop in the form of a Web Home Page Web accompanied by new
tools, commercial information and operational warning messages,
−
releasing the new “Commercial Platform” that allows the adoption of new commercial
approaches and ways to sell products and services, thus accelerating both operational and
consultancy activities,
−
introducing the advanced ATM, which will have many more functions in future,
−
creation of a unified dashboard for the management of all conditions, regardless of the
originating application.
At the end of 2008, the New Branch System was already installed at 31 BPVi branches, 1 branch
of Banca Nuova and 1 branch of Cariprato. The system will be rolled out to the rest of the Group
network progressively during the year.
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THE SYSTEM OF INTERNAL CONTROLS AND AUDITING
The system of internal controls and audit functions
The System of Internal Controls comprises the collection of rules, procedures and
organizational structures that seeks to ensure compliance with business strategies and the
achievement of effective and efficient business processes, ensure the safeguarding of assets and
protection from loss, ensure the reliability, completeness and accuracy of accounting and
operational information, and ensure that transactions comply the law, supervisory regulations and
internal instructions. The system of internal controls is an integral part of the daily activities of the
Group's banks and companies and operates on three levels:
−
line controls (first level): designed to ensure that transactions are carried out properly.
These controls are performed within the same production unit (e.g. hierarchical controls) or
are included in the procedures and information systems, or are carried out as a back-office
activity;
−
second-level controls: these controls are performed by functions outside of the production
unit and are intended to:
o
contribute to the definition of methodologies for the measurement of risk, check
compliance with the limits granted to the various operational functions and check the
consistency of the transactions carried out by each production unit with the risk/yield
objectives allocated to them. These activities are assigned to the risk management
function.
o
contribute to the definition of methodologies for the measurement/assessment of
compliance risk, identify suitable procedures for preventing the risks identified and
request their adoption. This activity is assigned to the new Compliance function
described below.
o
certify corporate accounting information in accordance with legal requirements. This
activity is performed by the authorized executive.
−
Internal audit activity (third level): designed to identify anomalous trends, violations of
procedures and regulations, and evaluate the functioning of the system of internal controls,
taken as a whole. This work is carried out on a continuous, periodic or exception basis by
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functions other than independent of the production units, and includes on-site inspections
(as required by the Supervisory Instructions, Book IV, Chapter 11, Section II).
A significant overhaul of the Group's internal audit activities was carried out in 2008 with a
view to redefining the role performed by this function within the Group. The most significant
elements of the reorganization included, in the first place, the split of the internal audit function
into two distinct organizations: Inspection and Audit. The Inspection team is tasked with
checking behavioral compliance with procedures, internal regulations and corporate standards
throughout the branch network; in this context, the established methodology based on the
inspection of individual processes (lending, finance and operations-accounting) was modified,
with the adoption of full branch-level inspections (covering all the various business processes) in
order to formulate an overall opinion about the branch concerned. The Audit team on the other
hand is focused on the performance of direct verification to assess the functioning of rules,
processes and the organizational structure intended to monitor all forms of business risk.
Actions taken as part of the above reorganization included the preparation of a plan to
strengthen the Internal Audit team, with a view to improving the effectiveness of checking
activities and inspections in particular, and introduction of the role of Internal Audit Manager to
the BPVi Group's other banks and companies. This person reports to the Manager of the Parent
Bank's internal audit function and is the point of reference on internal audit matters for the
Group's supervision, management and control bodies. A project has been activated as part of
work to implement the Business Plan 2008-2011, with a view to preparing the tools and
methodologies to be applied by the internal auditors (inspection guides, checklist, audit
tracking tools, methodology for assessing the system of internal controls etc.).
Lastly, the reorganization also affected the structure and responsibilities of the Control
Committee. In particular, the responsibilities associated with the management of the model
pursuant to Decree 231/01, previously attributed to the Control Committee, have now been
attributed to a specific Supervisory Body comprising two external members and the Manager of
the Internal Audit function; in addition, the responsibilities attributed to the Control Committee
have been revised, in order to adopt the new Supervisory Instructions on the Basel II principles
(circular 253/2006) and the organization and governance of banks (circular dated 4 March 2008).
The changes regarding the Control Committee and the Supervisory Body 231/01 were later
adopted by the Group's other banks having regard for their specific situations. With regard to the
activities of these two bodies at the Parent Bank during 2008, the Control Committee met 9 times
and its analysis included assessment of: the action taken to align the Bank with the anti moneylaundering and Mifid regulations; the audit work performed on processes and central functions;
the checks on and analysis of the branch network performed by the Internal Audit department;
the risk profile of the loans portfolio; the trends in market risk, and the first ICAAP statement. The
Supervisory Body 231/01 met 6 times and focused, in particular, on its own Regulations; analysis
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of the Organizational Model for prevention of the crimes referred to in Decree 231/2001; analysis
of the Parent Bank's regulatory and procedural framework with regard to the new Consolidated
Law on Safety at Work, Decree 81/2008 (formerly 626/1994), and in relation to Decree 231/2007
adopting Directive 2005/60/EC on prevention of the use of the financial system for recycling the
proceeds of criminal activities and for the financing of terrorism. Lastly, as described in the
section on activities of strategic importance, during the year BPVi was charged with
administrative improprieties, pursuant to arts. 5 (para. 1.a), 6, 25-sexies, paras. 1 and 2 of
Decree 231/2001, for not having adopted and effectively implemented organizational and
management models suitable for preventing the alleged crime notified to the Chairman, Giovanni
Zonin, and Divo Gronchi who, together with other banking personnel, are claimed to have
promoted, conducted and taken part in a hidden build up of capital in Banca Nazionale del
Lavoro. See the “Other information” part of the section on activities of strategic significance for a
more detailed description of the charges.
The Inspection team carried out 605 routine inspections of the BPVi Group's branch network
during 2008, including 330 at the Parent Bank, 120 at Cariprato, 151 at Banca Nuova and 4 at
Farbanca. This work was accompanied by activity to obtain information or form an opinion about
special circumstances, such as hold-ups, suspected internal or external fraud, analysis of the
causes of lending disputes, evaluation of customer transactions etc. The checks envisaged by
the regulations that require suspected money laundering transactions and market abuse to be
reported are also performed in this context. Turning to the audit of processes and central
functions by the Audit team, a series of processes and sub-processes were analyzed at Group
level during 2008. This work involved Lending, Finance and ICT, Governance and Support, and
operational processes (e.g. the management of savings books, certificates of deposit, credit
and/or debit cards).
The complaints received were treated as usual in accordance with the “Rules for the
management of complaints”, which call for an in-depth analysis of each case.. Consistent with
these rules, complaints were drawn to the attention of the Complaints Committee, which met 13
times during 2008. Adequate provisions have been made in relation to the contingencies
associated with the complaints, as discussed in the related section of the explanatory notes.
Group banks received a total of 2,012 complaints during 2008 (1,428 BPVi, 297 Cariprato, 286
Banca Nuova, and 1 Farbanca), of which 1,587 (78.9%) related to ordinary banking activities and
425 (21.1%) to investment services. About 40% of the complaints relating to ordinary banking
activities related to requests for reimbursement due to cloning, theft or loss of debit cards. The
Group's banks are not directly responsible for these losses incurred by customers. In certain
cases, reimbursements are "advanced" if the related insurance indemnities have not yet been
paid out.
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Compliance Function
As described earlier, the Compliance function performs second-level control activities for the
purpose, envisaged in the regulations (Supervisory Instructions no. 688006 dated 10 July 2007
entitled "The compliance function"), of preventing and managing the risk of non-compliance
with the regulations, in order to safeguard the good name of the Parent Bank and the Group
and the confidence of the public in the propriety of their operations and management. To this end,
the function identifies, assesses and manages the risk of regulatory violations, and ensures that
internal procedures are consistent with the objective of preventing the violation of laws, external
regulations and self-imposed rules (codes of conduct, ethical codes) applicable to BPVi and to
the Group.
The Compliance function was established by the Board of the Parent Bank on 29 January 2008.
The project to activate the function commenced on that date, bearing in mind the criteria of
efficiency and proportion with respect to scale and operational complexity, drawing on the
synergies between the various functions and eliminating unnecessary duplications. The first part
of the year was therefore dedicated to designing the function in terms of its organizational model
and structure, resources and methodologies, as well as the identification of possible relations with
other business functions and teams. This project also involved the other banks in the BPVi
Group, Prestinuova and the asset management companies. During the second part of the year,
actions were taken to strengthen and stabilize the function and a series of compliance-related
activities were performed. Typical compliance function activities (assessment of the risk of non
conformity) essentially comprised making assessments in relation to the "Management of
conflicts of interest regarding the governance and obligations of banking personnel and related
parties", the management of the depositary bank and the analysis of the proper completion of
portfolio management contracts. At Group level, the function verified compliance with internal
regulations and that all responsible persons at Group companies were involved in the
assessment work, in order to assist the Parent Company by highlighting specifics in relation to
applicable regulations, processes, procedures, functions and internal regulations.
Risk Management
This section of the report provides significant information about the activities/results of the Group
during 2008 with regard to the management of typical banking and financial risks, with
special reference to the risk management function. Further details and quantitative information is
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provided in “Part E" of the explanatory notes entitled “Information about risks and the related
hedging policies”.
The purpose of the risk management function is to measure and check risk (credit, market,
rate, liquidity and operational) on behalf of the Parent Bank and the Group, supporting the
delegated functions in determining parameters and methods for the definition of objectives, as
well as in the assessment of risk/return and other results. This mission involves:
−
the definition and development of models and tools for the measurement and control
of risk at Group level, as well as the systematic and ongoing verification of the adequacy
of the risk management models and tools used, while also monitoring changes in the
regulatory guidelines that influence risk management activities, including reference to the
matters involved in applying Basel II.
−
verification that the risk profiles of the Group's banks and companies comply with the
limits established by the respective Boards of Directors.
In particular, with reference to credit risk, the risk management function develops rating and
scoring models, and takes part in the definition at Group level of methodologies for estimating the
general and specific provisions needed with reference to the related components of risk. More
generally, the function also provides support for the definition of measurement methodologies for
accounting purposes. Additionally, a dedicated organizational unit monitors changes in the risk
profile of the loans portfolio at a consolidated level and for each Group bank.
With regard to market risks, the main activities of the risk management function are to propose,
together with the finance function, a system of VaR and operational limits that are consistent with
the propensity to accept risk expressed by the Board. The function also monitors compliance with
these limits, validates and documents the sources of and the processes for gathering market
data, and determines and validates the methodologies and criteria adopted for pricing the
financial instruments used by various entities within the Group.
In relation to rate and liquidity risks, the risk management function develops strategic ALM
models and tools, and produces daily operational maturity ladders and monthly structural maturity
ladders, while also analyzing, maintaining and developing the reports that are generated. The
function guarantees coordination with the authorized functions within other Group banks and
companies.
Lastly, with regard to operational risk, the risk management function develops and maintains a
system for the identification of operational risks, with particular reference to the process of selfassessment, and determines how to collect data on the operational losses incurred at Group
level.
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Risk profile of the BPVi Group
Consistent with the self-assessment of capital adequacy and changes in the operating
environment, the Board of the Parent Bank determines the Group's propensity to accept
risk each year as part of the strategic planning and budgeting process. The BPVi Group's
propensity to accept risk was determined in terms of both a target level of capitalization
for the Group, by fixing minimum levels for both the Tier one ratio and the Total capital ratio, and
a target external rating, by defining an objective for the outlook rating attributed to the Parent
and the Group by the rating agencies. With regard to the first and most significant aspect, the
level of capitalization, the BPVi Group took account of the changing macroeconomic and sector
conditions when approving the 2009 budget, requiring the Tier one ratio and the Total capital ratio
to remain consistently above 6.5% and 10.5% respectively. This is higher than the minimums
specified by the Supervisory Authorities. In terms of the target rating, the ongoing objective is to
maintain the current short, medium and long-term ratings expressed by the rating agencies.
Credit risk
The BPVi Group has defined credit risk as the risk of loss due to an unexpected deterioration
in the creditworthiness of a borrower, whether following contractual non-performance or
otherwise. Counterparty risk is included in this context, being the risk that the counterparty to a
transaction involving specified financial instruments will default prior to settlement, as is
concentration risk, being the risk deriving from a concentration of exposures in the portfolio of
loans to counterparties or groups of counterparties operating in the same economic sector,
industry or geographical area.
In order to support the management of credit risk, the BPVi Group has implemented an internal
rating system that has been integrated with its business processes and assists with the
assessment of creditworthiness. The internal rating represents a summary assessment, for the
coming year, of the credit quality of the customer expressed as a probability that the counterparty
may become insolvent. This assessment is expressed on an internal scale of 11 rating classes. A
probability of default is associated with each rating class. The rating classes are ordered as a
function of credit risk: moving from a lower risk class to a higher risk class means an increase in
the probability of default by the debtor.
The BPVi Group has decided to develop internal rating models that primarily cover the types of
counterparts with which it usually works and to which it is most exposed: retail (private customers
and small businesses), small corporate (sales between 2.5 and 50 million euro) and mid
corporate (sales between 50 and 200 million euro). The new models for the various segments
were completed and put into practice during 2008. The rating system for the corporate segment,
used on an experimental basis by the Parent Bank's Loan Lab, has been subjected to a
- 76 -
planned revision with reference to the customer database and qualitative information, resulting
in improved performance. Work has also been completed on the new internal rating model
for the retail segment (private customers and small businesses). Both models have been tested
by analysts at the Parent Bank and, with regard to the corporate segment, at Banca Nuova and
Cariprato. This testing provided comforting results in terms of the consistency of the output from
the models with the assessments made by the experts. Accordingly, the models became
operational from the end of April 2008 throughout the Parent Bank's commercial network,
and from the beginning of June at Banca Nuova and Cariprato. Companies with sales of
more than 200 million euro are currently excluded. Implementation of the model for this segment,
based largely on actual experience, is now at an advanced stage at various functions within the
Parent Bank.
Routine monitoring is based on the performance scoring system used by the three banks within
the Group. This is known as SGR (meaning risk management system) and is used to check on
the performance of lending relationships. This tools assigns a monthly score to loan positions in
excess of 200 euro outstanding with private customers and businesses, and automatically
proposes a classification of customers into three classes of increasing risk: “performing”,
“ under observation” and “high risk”. In addition to this, the system considers the relations
between customers, tracks discussions between account managers and the control bodies, and
manages the entire process of classification, authorization and verification of the related powers.
Backtesting and monitoring of the model has identified that the environmental rating system has a
certain predictive ability, considering the defaults observed over a period of one year. The system
is now undergoing profound revision in order to make the tool more effective and timely in the
identification of anomalous events, and to integrate it with the new internal rating models. Without
altering the current SGR tool and thus protecting the network from operational problems, the new
system for the identification of anomalies has already been fully programmed and, following a test
phase, will become operational during the first half of 2009.
In support of credit management activities, "Credit Policies" also came into force within the
Parent Bank's network in October 2008. These govern how the Parent Bank intends to accept
credit risk in relation to its customers and cover both granting/renewal and the credit
management phase. The purpose of the policies is to facilitate the balanced growth of lending to
lower risk customers and limit lending to customers that are less creditworthy. In particular, four
different credit policies have been identified: development, operations and protection, rebalancing
and withdrawal. The assessment is made by the authorized functions, while the system
automatically establishes, based on internal rating and environmental score, the powers of the
network authorization committees based on the level of risk (lower powers in the case of high risk
and greater powers in relation to more creditworthy customers).
- 77 -
See the section on credit risk in "Parte E" of the explanatory notes for more details about the
above and other quantitative information.
Market risk
The BPVi Group has defined market risk as the risk of adverse changes in the value of its
exposure to financial instruments included in the trading portfolio for supervisory purposes,
due to unfavourable changes in risk factors (interest rate, exchange rate, market prices,
credit spread, commodity prices) and their volatility.
For some time now, the BPVi Group has quantified market risk and, as a consequence, set
operating limits by using a Value-at-Risk model derived from historical simulation. In short, VaR
is a statistic measure that indicates the maximum potential loss on an investment in a given
period of time. The current process for determining VaR involves estimating the portfolio risk, with
a time interval of one day and a 99% confidence interval, with reference to historical market
changes. A quantitative analysis relating to 2008 is presented in “Part E” of the explanatory
notes. Since this is an estimate, the above internal system for the measurement of risk is
subjected to backtesting in order to assess the forecasting efficiency of the VaR results. This
involves comparing the loss estimated by the model with the profit & loss effect of measuring the
positions using actual market data. In addition, a stress test is performed to assess the ability, in
terms of capital availability, to absorb the effects of significant market shocks. This involves re
measuring the portfolio using extremely adverse risk factors, as well as remeasuring it using
historical market crash scenarios (e.g. the terrorist attack on 11 September 2001, the failure of
Lehman Brothers etc.). The stress test therefore complements the VaR and measures the
potential vulnerability to exceptional, but nevertheless plausible events.
Compliance with the limits set for VaR during the budgeting process should cap, within the
established confidence interval, the maximum daily loss. An individual unit may comply with the
established limits on daily VaR and report losses over a period of days that fall within these limits;
however, the sum of the losses accumulated over a given period of time may still be deemed
excessive. This risk is tackled by associating indicators with the daily VaR limits designed to
monitor any losses arising over longer periods (Stop Loss). This represent the maximum allowed
loss that can be accumulated over a given period of time (one month and the entire year), at a
given level of authorization, without the need to take specific action. Lastly, for completeness,
additional operational limits have been defined in terms of sensitivity, delta, vega,
concentration and credit risk.
The risk management function is responsible for the quantification and control of the VaR limits,
while the Financial Control function within the Finance Division is responsible for the daily
checking of operational and stop-loss limits.
- 78 -
During the year, the risk management function carried out the routine monitoring of the VaR limits
that were, as usual, revised at the time of preparing the budget. This work was performed for both
the Parent Bank and BPV Finance using the system based on the Murex VaR model. The Group
has in fact migrated to a single system (Murex) for the calculation of risk, with a view to
obtaining a consistent view of the underlying risk factors from the application of consistent
methodology. This decision has a double advantage. The same position keeping system can be
used for both the measurement and management of risk, while obtaining significant operational
synergies with such activities as backtesting and stress testing.. In addition, operational risks
have also been reduced as a result of no longer having to replicate in an external system the
positions and deals contained in the Group's official system.
Interest-rate risk
Interest-rate risk may be defined as the current and prospective risk of volatility affecting profits or
equity due to adverse changes in interest rates. Interest-rate risk is associated with asset and
liability positions within the banking portfolio and mainly derives from the transformation of
maturities. In particular, it is generated by the mismatch between interest-earning assets and
interest-bearing liabilities in terms of volume, maturity and rate.
The Group's exposure to the change in the interest-rate curve is monitored each month using
ALMPro, an asset and liability management tool, which measures in "static" conditions the
effect on the financial margin and equity of a change in interest rates. Operational and strategic
decisions regarding the banking book by the Finance and ALMS Committee are designed to
minimize the volatility in net interest income expected in the financial year (12 months) and so
minimize the volatility in total equity value when interest rates change. The project to revise the
methodologies adopted for the measurement of financial risk was completed at the end of 2007.
With regard to interest-rate risk, the decision was taken to migrate from the previous platform to
the ALMPro System from Prometeia, a sector leader, with a view to adopting a tool with more
structured input processes that allows for the implementation of a dynamic model so that more
realistic simulations can be made using diverse scenarios. The BPVI Group's exposure to
interest-rate risk has been reduced significantly following completion of the project work, the
introduction of a new internal model for demand positions with customers and the activation of
hedge accounting tools and processes. These last were approved by the Parent Bank's Board on
3 June 2008 and used for the first time in July 2008 in order to hedge the Bank's long-term fixed
rate loans.
The Parent Bank's Board is ultimately responsible for the management of interest-rate risk, as
assisted by the Finance and ALM Committee and the business functions responsible for the
strategic and operational management of such risk, both at Group level and at all companies
- 79 -
within the Group. The Parent Bank's Board approves the strategic guidelines and operational
limits proposed by the Finance and ALM Committee, and is periodically informed about changes
in the exposure to interest-rate risk and the way it is managed.
The risk management function inputs a complex and continuous flow of data into the Asset &
Liability Management system, and is also responsible for reporting and the monitoring of
operational limits. Lastly, the Finance Division is directly responsible for the operational
management of interest-rate risk.
In order to mitigate its exposure to interest-rate risk, the Group arranges specific hedges for
bonds issued at fixed or structured rates, in order to reduce the duration of the liabilities and fix
the cost of structured issues. The hedge accounting tools and processes needed for the specific
hedge of clusters of similar fixed-rate loans were defined during the first half of 2008. The
hedges arranged during the second half of 2008 covered loans that mature after more than 10
years, which do not benefit from the natural hedge generated by the inelastic core component of
demand deposits from customers.
Further details and quantitative information are provided in the section on credit risk in “Part E” of
the explanatory notes.
Liquidity risk
The BPVI Group has defined Liquidity as the risk of being unable to meet payment obligations
caused by inability to obtain funding (funding liquidity risk) and/or the presence of restrictions on
the ability to sell assets (market liquidity risk). This risk can also take the form of a loss relative to
fair value deriving from a forced sale of assets or, more generally, of a loss in terms of reputation
or business opportunities. Funding liquidity risk is incurred in banking activities when institutional
counterparties withdraw their usual funding, or request a significantly higher return than in normal
circumstances. Market liquidity risk on the other hand relates to the risk that the Group may be
unable to sell an asset, except at a capital loss, due to the illiquid nature of the market and/or due
to the timing required for the transaction.
The exposure of the financial system to liquidity risk and the consequent, sometimes dramatic
impact that this risk may have on banking activity emerged with unexpected intensity during
2008. Given this experience, liquidity risk has been classified among the killer risks, being those
that have a low probability of arising but which may have major consequences for the operations
of the intermediary. During the past year, the financial crisis that began in the US sub-prime
mortgage market during 2007 generated, in fact, a widespread and dangerous international crisis
of confidence among financial intermediaries. This essentially blocked the functioning of the
interbank market, causing serious funding difficulties for financial intermediaries. This crisis of
- 80 -
confidence then transformed into a dramatic liquidity crisis which forced the international
banking system to rapidly recapitalize and restrict the criteria for the granting of loans. Given
events of this gravity, governments and central banks reacted with massive and, for the first time,
coordinated action designed to re-establish confidence in the markets, ensure the continuity of
lending to financial institutions and to the economy, and extend and strengthen the guarantees
for depositors. The effect of the various actions taken has been to reduce market rates to
particularly low levels, even if the differential between the rates for unsecured loans(Euribor) and
those for secured loans (Eurepo) highlights the ongoing high level of risk in the interbank market.
In this context, the BPVi Group reacted promptly via a careful and diversified funding
policy, with a progressive move towards longer maturities for its interbank funding while avoiding
significant exposures in the very short term. In order to contain market liquidity risk, steps were
also taken to sell the less immediately liquid investments in the trading portfolio. In addition, a
new securitization of residential mortgages was arranged in November 2008, as described in the
section on activities of strategic importance, mainly to increase the quantity of instruments
available as collateral for intraday advances. This securitization has enabled the Group to fund
lending at relatively competitive rates at a time of liquidity stress. The arrangement of funding
repurchase agreements with the ECB and direct customers has broadened the sources of
finance with respect to the interbank market, especially considering the recent issues of liquidity
by the Central Bank via an unlimited volume of fixed-rate (TUR) repo transactions.
With regard to the way liquidity risk is managed, the BPVi Group approved a policy in
October 2008 that describes the methodologies for the measurement of risk, the roles and
responsibilities of the committees and business functions involved, and the related management
reports. The guiding principles underlying the model for the governance of liquidity risk are:
-
liquidity is managed on a centralized basis by the Parent Bank;
-
the Parent Bank's Board is responsible for preparing guidelines for the management of
liquidity and the related risk, and delegates the task of defining strategic guidelines and the
related operational management to the operations committee and the authorized business
functions.
In particular, short-term liquidity (less than 12 months) is managed using the operational maturity
ladder, which determines the mismatch between expected cash inflows and outflows in each
time period. The accumulated mismatch is used to calculate the net financing requirement /
surplus over the various time horizons considered. Medium/long-term liquidity is managed, on the
other hand, using the structural maturity ladder which evaluates the equilibrium between
assets and liabilities, not only in terms of the related cash flows, but also and above all with
reference to the related balance sheet ratios. The objective is to maintain a sufficiently balanced
- 81 -
profile of structural liquidity, placing restrictions on the possibility of financing medium/long-term
assets with liabilities whose duration is not consistent.
The operational management of liquidity risk is entrusted to a dedicated function within
the Finance Division, whose objective is to maintain the best balance between the medium-term
maturities of loans and short-term funding, taking care to diversify it by counterparty and maturity
arranged over the counter and in the interbank deposits market. In addition to the usual banking
treasury activities (daily monitoring of the Group's liquidity and optimization of its short-term
management), any medium and long-term imbalances are managed using appropriate funding
policies established by the Finance and ALM Committee.
Operational risks
Operational risk is defined as the risk of losses deriving from inadequate or dysfunctional
procedures, human resources or internal systems, or from external events. This category
includes losses deriving from fraud, human error, the interruption of operations, the nonavailability of systems, contractual non-performance and natural catastrophes. Operational risk
also includes legal risk, but excludes strategic and reputation risk.
Back in 2006, the Parent Bank launched the “ORM” (Operational Risk Management) project as
part of work to adopt the Basel II requirements. The objective of this project was to define an
integrated framework for the measurement and management of operational risks, with a view to
working gradually towards the requirements for adoption of the standardized method. During
2007, work on this project resulted in completion of the following phases: “Classification and Riskmapping Models”, “Policy and Governance in the Operational Risk Management process” and
“Self Risk Assessment”. The “Operational Risks Manual – Loss Date Collection” was also issued.
During 2008, the work performed for the Parent Company, was repeated at a local level for
Banca Nuova and Cassa di Risparmio di Prato, in order to enable operational risks to be
managed at Group level. This work was completed in June 2008 with the adoption by the two
subsidiaries of the “Operating Risks Manual – Loss Date Collection”, while the process of
extending risk self-assessment activities to the subsidiaries is still in progress.
With regard to the monitoring of operational risks, the Parent Bank was a founding member in
2002 of DIPO, the interbank consortium promoted by ABI that maintains an Italian database
of operational losses. As a consequence, the Group gathers regular information about its
operational losses. The reporting of such losses continued during the year, benefiting in terms of
completeness of the information gathered, from the improved organization of the process
following issue of the manual. Commencing from the June 2008 reporting date, Banca Nuova and
Cariprato gather information in the same way as the Parent Bank following the above extension
of activities and adoption of the related manual. With regard to the way operating risks are
- 82 -
managed, the internal audit function carries out remote and on-site checks of the distribution
network to verify the consistency of their behavior with corporate standards (in essence: proper
application of the regulations and proper performance of line controls).
Quantitative information about the operational losses identified for DIPO purposes is presented in
“Part E – Operating Risks” of the explanatory notes.
Information about the exposure to high-risk financial products (pursuant to the
recommendations on transparency issued by the Financial Stability Forum - FSF)
The turbulence in the international financial markets from August 2007, caused by the increasing
number of insolvencies linked to US sub-prime mortgages, resulted in a general distrust by
operators of a vast range of structured credit products. This meant that the markets for these
products became highly illiquid and credit spreads widened. Market confidence was further
eroded by the inadequate information provided by certain financial intermediaries, which did not
always provide sufficient information about the nature of their on and off balance sheet exposures
to those instruments and the related level of risk.
With a view to encouraging the gradual return to normal market conditions, the report of the
Financial Stability Forum (FSF) issued on 7 April 2008 called on financial institutions to provide
broad and detailed information about their exposures to certain instruments deemed by the
market to be high risk. The report also called for information about the risks accepted by trading,
whether directly or via vehicle companies or other non-consolidated entities, in such structured
credit products as Collateralized Debt Obligations (CDO), residential mortgage-backed securities
(RMBS), commercial mortgage-backed securities (CMBS), other special-purpose entities (SPE)
and leveraged finance.
Considering these issues, Bank of Italy communication no. 671589 dated 18 June 2008, entitled
“instructions about market information”, invited banks to comply with the FSF's transparency
recommendations on a complete and timely basis.
Consistent with this invitation from the Supervisory Authorities, the following disclosure are
provided about the Group's exposure to the above financial products.
- 83 -
Exposure to structured credit products deriving from securitization transactions
originated by the Group.
Exposure to special-purpose entities (SPE)
Between 2000 and 2008, the BPVi Group has arranged seven securitizations of its performing
portfolio of mortgages:Berica MBS Srl, Berica 2 MBS Srl, Berica 3 MBS Srl, Berica Residential
MBS 1 Srl, Berica 5 Residential MBS Srl, Berica 6 Residential MBS Srl and Berica 7 Residential
MBS Srl.
In addition, prior to joining the BPVi Group, Cassa di Risparmio di Prato had securitized
performing mortgages under the name of “Siena Mortgages 02-3 Srl”.
All the above securitizations were carried out pursuant to Law 130/1999 via the formation of a
special-purpose entity (SPE) to which the securitized assets were sold without recourse. None of
the above SPEs has been consolidated, since the conditions envisaged by IAS 27 and SIC 12 do
not apply. Nevertheless, with regard to the securitizations denominated “Berica 5 Residential
Mbs”, “Berica 6 Residential Mbs” and “Berica 7 Residential MBS”, arranged subsequent to
1/1/2004, the residual securitized assets and related liabilities have been written back to the
balance sheet, and the related asset-backed securities (ABS) held have been eliminated, since
the conditions envisaged by IAS 39 for the derecognition of such assets and liabilities were not
met because the Group continued to hold the junior tranche of the ABS issued by the vehicle
companies.
The most recent multioriginator securitization, “Berica 7 Residential MBS Srl”, was arranged on 1
October 2008 via the sale without recourse of performing mortgages by the Parent Bank, Banca
Nuova and Cassa di Risparmio di Prato to Berica 7 Residential MBS Srl, the special-purpose
entity formed for the transaction. Mortgage loans totaling 1,012.8 million euro were sold. The
transaction was completed in November with the issue of ABS totaling 1,005 million euro (senior
notes of 930 million euro and junior notes of 75 million euro) which were taken up in full by the
originating banks. The purpose of the transaction was to obtain ABS usable as collateral for
funding repo transactions with the European Central Bank.
At 31 December 2008, the cash exposures to SPEs in relation to securitization arranged by the
Group are summarized below:
- 84 -
Isin code
IT0004432222
IT0004013790
IT0003765176
IT0003641005
IT0004013824
IT0003765184
IT0003765200
IT0003641047
IT0003422117
IT0003422141
IT0003247530
IT0003247563
IT0004432230
IT0004013832
IT0003765218
IT0003641054
IT0003422158
IT0003247571
IT0003112254
Description
BERICA 7 MBS MBS A (2)
BERICA 6 RES MBS A2 (2)
BERICA 5 RES MBS A (2)
BERICA RES MBS 1 A
BERICA 6 RES MBS D (2)
BERICA 5 RES MBS B (2)
BERICA 5 RES MBS C (2)
BERICA RES MBS 1 C
BERICA 3 MBS B
BERICA 3 MBS C
BERICA 2 MBS B
BERICA 2 MBS C
BERICA 6 RES MBS E (2)
BERICA 7 MBS MBS B (2)
BERICA 7 MBS MBS B (2)
BERICA 6 RES MBS E (2)
BERICA 5 RES MBS D (2)
BERICA RES MBS 1 D
BERICA 3 MBS D
BERICA 2 MBS D
BERICA MBS D
BERICA RES MBS 1 D
SIENA MORGAGES 02-3
Rating Rating Rating Classification
(1)
S&P Moody'
s Fitch
Tranche
Senior
Senior
Senior
Senior
Mezzanine
Mezzanine
Mezzanine
Mezzanine
Mezzanine
Mezzanine
Mezzanine
Mezzanine
Junior
Junior
Junior
Junior
Junior
Junior
Junior
Junior
Junior
Junior
Junior
AAA
AAA
AAA
AAA
B+
A
BBB
BBB
A+
BBB
AABBB
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Total
n.a.
Aaa*n.a.
n.a.
B1/*n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
AAA
AAA
AAA
n.a.
A
BBB
BBB
A
BBB
A+
BBB
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
AFS
AFS
AFS
AFS
CFV
CFV
CFV
L&R
L&R
Book value
930,000,000
144,232,047
60,715,556
1,129,641
8,565,000
4,000,000
16,897,000
8,478,281
5,559,984
3,593,176
3,353,321
4,083,919
1,118,725
21,287,538
75,000,000
4,600,000
35,400,000
22,921,951
8,443,409
5,691,848
2,941,797
3,374,762
1,208,883
1,372,596,837
(1)
The acronyms included in this column are used to classify the following financial assets: L&R (loans and
receivables): Loans and amounts due from customers/banks; AFS (available for sale): financial assets available for
sale; CFV (carried at fair value): financial assets measured at fair value; HFT (held for trading): financial assets
held for trading.
(2)
The exposures considered are not reported as assets since the securities concerned have been eliminated from the
balance sheet. This is because the residual securitized assets and related liabilities do not qualify for derecognition
under IAS 39 and have been written back. The amounts indicated reflect the residual nominal value of the various
tranches of ABS held by the Group.
The senior tranches subscribed for and/or repurchased by Group banks were used for
refinancing purposes with the European Central Bank.
At the same date, the "off balance sheet" exposures towards the above SPEs related to the
margins available on lines of credit totaling 11.4 million euro, which were granted to the SPEs
solely for use under difficult conditions.
Exposures as investor to structured credit products deriving from securitizations
originated by third parties
At 31 December 2008, the Group's exposures to financial products deriving from securitizations
originated by third parties are held solely by Banca Nuova and BPV Finance, as described below.
- 85 -
Exposures held by Banca Nuova S.p.A.
The exposures of Banca Nuova, totaling 30.6 million euro, comprise ABS issued in relation to
securitizations arranged pursuant to Law 130/1999 by the Palermo Chamber of Commerce and
small and medium-sized businesses in Sicily.
This subsidiary acted as arranger in the structuring of the transactions and also acts as servicer,
calculation agent, cash manager, paying agent and collection account bank. It has no equity
interest in the vehicle company.
This activity, carried out by a dedicated internal team, is part of Banca Nuova's investment
strategy, in view of the particular attention given to the business world in Sicily.
Isin code
Description
Tranche
Maturity
date
Originator
Geographical
distribution
IT0004306640
TURCHESE A
senior
31/12/17
C.C.I.A.A. di Palermo
Italy
IT0004314164
IT0004250483
TURCHESE A 2
BOREALE FIN. CLASSE A
senior
senior
31/12/18
23/07/12
PMI siciliane
Italy
Italy
IT0003856611
LIBECCIO TV CLASSEA
senior
30/12/15
Italy
IT0003702211
MEMOSEC CLASSE 1
senior
31/12/14
Italy
IT0004314198
TURCHESE 4,75%18 B 2
mezzanine
31/12/18
Italy
IT0004306905
TURCHESE 4,75% 17 B
mezzanine
31/12/17
Italy
Total
Type of asset securitized
Performing receivables of Palermo
Chamber of commerce (annual fees)
Loans
Rating
S&P
Rating Rating Classification
(1)
Moody'
s Fitch
Book value
n.a.
n.a.
n.a.
L&R
8,011,478
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
L&R
L&R
8,097,708
7,080,555
n.a.
n.a.
n.a.
L&R
577,013
n.a.
n.a.
n.a.
L&R
258,877
n.a.
n.a.
n.a.
L&R
3,583,236
n.a.
n.a.
n.a.
L&R
2,964,247
30,573,114
(1)
receivables): loans and amounts due from customers/banks.
The securities issued by “Boreale”, an SPE, do not have an official rating from specialist agencies
given the "limited" size of the transactions. Nevertheless, they are well guaranteed from a credit
standpoint since the sources of cash flow are governed by legislation published in the Official
Gazette of the Sicily Region. In particular, the Decree of the General Director of the Sicily Region,
no. 1646/7S dated 17/07/07, allocates funds from the Sicily Region directly to the vehicle and,
therefore, to Banca Nuova.
More than half of the senior securities issued by “Boreale” are due for repayment in 2009,
together with all the senior securities and an as yet unknown percentage of the mezzanine
securities issued by "Turchese", another SPE.
Neither of the above SPEs have been consolidated, since the conditions envisaged by IAS 27
and SIC 12 are not met.
- 86 -
All the above exposures are reported as "Loans and advances to customers" and are not subject
to impairment losses, as defined in IAS 39.
Exposures of BPV Finance (International) PLC
The exposures of BPV Finance totaling 123.1 million euro relate to a Collateralized Debt
Obligation (CDO) and various Asset-Backed Securities (ABS).
BPV Finance specializes in the management of multiple investment portfolios, including one
entirely dedicated to transactions in ABS deriving from the securitization of residential and
commercial mortgages, as well as leasing receivables, loans to small and medium-sized
businesses and credit cards. This subsidiary's investment policy is to optimize the medium-term
value of the ABS, requiring that they be denominated in euro and have a minimum rating of single
A (unless approved otherwise by the Board). The geographical breakdown of the assets
underlying these transactions principally encompasses Western Europe and North America.
The exposures to structured credit instruments are measured in accordance with the relevant
accounting standards. Except for the positions deriving from the Zoo III securitization, which have
been written down in full, this portfolio is not subject to the recognition of any further impairment.
Although the ABS portfolio held by the company has not been significantly downgraded by the
specialist agencies (except for the OXFORD 2005-1 A1 security which Moody's downgraded from
Aaa to Baa2 during 2008), its overall fair value at 31 December 2008 is 85.8 million euro,
representing a reduction of about 37.3 million euro with respect to its carrying amount.
This adverse effect, principally associated with the illiquid nature of these securities in the
financial markets, has not been recognised in the income statement since the entire ABS portfolio
is classified among Loans and Receivables, consistent with the amendment to IAS 39 published
by the IASB on 13 October 2008 and endorsed by the European Commission on 15 October
2008, Regulation EC no. 1004/2008. The portfolio is not subject to impairment losses pursuant to
IAS 39.
The exposures at 31 December 2008 are analyzed by type below.
1) Exposures to CDOs (Collateralised Debt Obligations)
BPV Finance (International) PLC is exposed to the OXFORD 2005-1 A1 (Isin code
XS0232966910) CDO with a nominal value of 5,000,000 euro, being the senior tranche of a CDO
issued by Oxford Street Finance Ltd, a SPE based in Jersey. This company appears to be owned
by the KBC Financial Products Group, which is entitled to the residual value of the vehicle.
- 87 -
Isin code
Description
XS0232966910 OXFORD 2005-1 A1
Tranche
senior
Expected
maturity (1)
Legal
maturity
07/01/16
07/04/44
Originator Rating S&P
KBC Bank
n.a.
Rating
Moody'
s
Rating
Fitch
Classification
Baa2 -
n.a.
HFT
Total
(2)
Book value
1,942,892
1,942,892
(1)
The expected maturity is estimated with reference to the average duration of the underlying portfolios and the latest
available information about the incidence of early repayments.
(2)
The acronyms included in this column are used to classify the following financial assets: HFT (held for trading):
financial assets held for trading.
The collateral backing the entire CDO (2 billion euro) consists of an exposure to individual
corporate securities (57%), to corporate inner tranches (30%) and to a portfolio of ABS securities
(13%). This last element amounts to 260 million euro and the concentration of US sub-prime debt
at 30 October 2008 is 53.62% (43 individual ABS) according to Moody’s. The percentage of the
entire CDO collateral invested in US sub-prime securities is therefore 6.970% (being 53.62% of
13%). Accordingly, the total indirect exposure to BPV Finance to US sub-prime securities at 31
December 2008 is 348,530 euro.
The Oxford Street Finance Ltd CDO comprises two parts: the first is a privately-placed senior
credit default swap (representing the most senior part of the credit risk), while the second
comprises 9 tranches of publicly-placed asset-backed bonds representing the remainder of the
credit risk.
The publicly-placed notes totaling 382 million euro are analyzed as follows:
Tranche Currency
A1
A2
B
C
D
E
F
G
H
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
Nominal
87,000,000.00
80,000,000.00
64,000,000.00
43,000,000.00
33,000,000.00
28,000,000.00
17,000,000.00
16,000,000.00
14,000,000.00
Rating
Moody'
s
Baa2
Ba1
Ba3
Caa2
Caa3
Caa3
Caa3
Caa3
Caa3
The percentage invested in corporate represents investments in "individual names", while the
corporate inner tranche part represents tranches of sub-portfolios also deriving from a portfolio of
"individual names".
According to Moody’s, the ABS part comprises: 4.88% Commercial Real Estate, 1.54% credit
card, 1.92% IG Corporate CDO, 3.92% SME Corporate CDO, 4.97% ABS CDOs, 5.08% RMBS
Mid-Prime, 8.45% RMBS Prime, 15.62% HY Corp CDO totaling 46.38%.
- 88 -
The sub-prime ABS (totaling 53.62%) are analyzed below by age of origination:
−
2007: 21%
−
2006: 25%
−
2005: 40%
−
2004: 11%
−
2003: 3%
2) Commercial Mortgage-Backed Securities - CMBS
BPV Finance (International) PLC is exposed for a total of 45.0 million euro towards Commercial
Mortgage-Backed Securities, as detailed below:
Cod Isin
XS0230464314
XS0239251092
XS0246905805
XS0261650674
XS0235420725
XS0310524599
FR0010251504
FR0010255141
IT0004070055
XS0301457635
IT0003872774
FR0010247593
XS0220767106
Description
Tranche
RECR IV A3
MESDG 1 B
PARGN 11X CB
PARGN 12X C1B
PARGN 10X C1B
PARGN 15X CB
EURO 21 B
EURO 21 C
PTRMO 2006-1 C
IMMEO 2 C
FIPF 1 A2
PROUD 1 C
FORES 1 B
senior
senior
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
Expected
(1)
maturity
Legal
maturity
20/10/12
25/01/14
15/04/10
15/08/10
15/12/10
15/06/12
15/08/12
15/08/12
31/12/12
15/12/13
10/07/14
18/08/14
12/05/15
20/10/14
25/07/16
15/10/41
15/11/38
15/06/41
15/12/39
15/08/15
15/08/15
31/12/21
15/12/16
10/01/23
18/08/17
12/05/18
Originator
NM Rothschild
NIBC Bank
Paragon Mortgage Ltd
Morgan Stanley Bank International
Morgan Stanley Bank International
Banca Nazionale Lavoro Fondi SGR
Morgan Stanley Mtge Serv
Fondo Immobiliare Pubblico Funding
FCC Proudreed Properties
Immofinanz.
Geographical
distribution
United Kingdom
Germany
United Kingdom
United Kingdom
United Kingdom
United Kingdom
France
France
Italy
Germany
Italy
France
Austria
Rating
S&P
Rating Rating
Moody'
s Fitch
AAA
AA
A
A
A
A
AA
A
AA
AA
A+
AA
AA
Aaa
n.a.
A2
A2
A2
A2
n.a.
n.a.
n.a.
n.a.
Aa2
n.a.
n.a.
Classification
n.a.
AAA
A
A
A
A
n.a.
n.a.
AAAA
AAAA
AA
(2)
Book value
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
4,746,990
3,778,840
3,294,210
5,602,354
2,872,212
3,478,886
1,813,039
2,911,781
3,031,230
2,510,334
5,512,121
2,086,575
3,378,499
Total
45,017,071
(1)
(2)
3) Residential Mortgage-Backed Securities - RMBS
BPV Finance (International) PLC is exposed for a total of 23.3 million euro towards Residential
Mortgage-Backed Securities, as detailed below:
Cod Isin
FR0010029231
IT0003683262
XS0274611317
XS0168666013
XS0184563111
ES0337985024
XS0298976621
Description
LOGGI 2003-1 A
CREDI 3 B
EMACP 2006-3 C
GRAN 2003-2 2B
GRAN 2004-1 2B
UCI 17 B
GRANM 2007-2 3M2
Tranche
Epected
(1)
maturity
Legal
maturity
senior
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
24/02/14
20/08/16
25/10/13
21/07/14
22/09/14
17/09/20
18/05/15
24/11/25
20/11/25
25/04/39
20/07/43
20/03/44
17/12/49
17/12/54
Originator
Electricite de France, Gas de France
ICCREA
GMAC RFC NL
Northern Rock Plc
Northern Rock Plc
Union de Creditos Inmobiliarios
Northern Rock Plc
Total
Geographical
distribution
France
Italy
Netherlands
United Kingdom
United Kingdom
Spain
United Kingdom
Rating
S&P
Rating
Moody'
s
Rating
Fitch
Classification
n.a.
A
A
AA+
AA+
BBB
A
Aaa
A1
n.a.
Aa1
Aa2
n.a.
A2
AAA
n.d.
AAAA
AAA
AA
L&R
L&R
L&R
L&R
L&R
L&R
L&R
(2)
Book value
2,774,296
3,251,122
1,940,004
1,227,968
2,970,530
5,405,819
5,770,473
23,340,212
(1)
(2)
- 89 -
4) ABS with other forms of underlying loans
BPV Finance (International) PLC is exposed for a total of 52.8 million euro towards the SPEs of
third parties, as detailed below:
Cod Isin
XS0254042541
ES0337710026
XS0272064337
XS0190180918
XS0143891488
ES0312271010
ES0312284013
XS0253600521
IT0004137433
IT0003940050
IT0003951123
XS0238920655
Description
HARVT IV A1B
SANTM 3 A3
EIRLES TWO LIMITED 303
EXPLO 2004-1 M
CLISL 1X II
AYTBT 2006-II B
AYTDS 2006-I B
RMFE IV-A III
AGRI 2006-1 B
PHARM 2 B
LOCAT 2005-3 B
SMILS 05 C
Tranche
senior
senior
senior
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
mezzanine
Expected
Legal
maturity (1) maturity
29/07/11
16/10/11
15/05/14
25/03/09
21/09/15
25/02/13
26/11/11
11/09/16
08/03/15
28/04/13
12/12/13
20/01/12
29/07/21
16/10/49
17/05/21
25/09/12
19/03/20
24/02/16
17/11/19
11/09/22
08/12/23
28/01/25
12/12/26
20/01/15
Geographical
distribution
Originator
Mizuho Corporate Bank
Banco Santander
Winchester Capital
Governo Portoghese
Allied Irish Bank
Ahorro y Titulizacion
Ahorro y Titulizacion
RMF Group
Banca Agrileasing
Comifin SpA
Locat SpA
ABN AMRO
Global
Spain
Global
Portugal
Global
Spain
Spain
Global
Italy
Italy
Italy
Netherlands
Type of asset securitized
Loans
Loans
Loans
Taxes and social contributions
Loans
Loans
Loans
Loans
Leases
Leases
Leases
Loans
Total
Rating
S&P
AAA
AAA
AAA
AAA
AA
n.a.
BBBA
A
A
A
A
Rating Rating Classification
(2)
Moody'
s Fitch
n.a.
Aaa
Aaa
A1
Aa2
A2
n.a.
A2
n.a.
A2
A2
A2
AAA
AAA
n.a.
AAA
n.d.
A+
A/n.d.
A
n.a.
n.a.
AA-
L&R
L&R
HFT
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
HFT
Book value
2,881,866
12,427,379
4,577,259
6,990,152
3,521,188
4,306,833
3,183,923
3,213,410
3,211,295
3,161,658
3,340,562
2,014,905
52,830,430
(1)
(2)
receivables): loans and amounts due from customers/banks; HFT (held for trading): financial assets held for trading.
None of the above SPEs have been consolidated, since the conditions envisaged by IAS 27 and
SIC 12 are not met.
5) Other exposures to subprime and Alt-A loans
In addition to the sub-prime mortgages and/or Alt-A loans described in point 1) above, BPV
Finance also has indirect exposure to the US sub-prime sector via its investment in Blackstone
Partners Offshore Sterling Fund Ltd. At 31 December 2008 this is not significant (less than 1,000
euro).
6) Leveraged Finance
The BPVi Group has no significant exposure to leveraged finance.
- 90 -
Information about lending
Information about lending by the Group is presented below in terms of concentration,
geographical distribution and distribution by economic sector, together with a number of
risk indicators. Except for the parameters relating to doubtful loans, the data used in this
analysis was drawn from the financial statements and the information reported to the Central
Risks Database, including cash loans, guarantees and derivatives. Group banks and companies
are excluded from the aggregates, which however do include securitized mortgages in order to
provide a complete picture of the way the Group's loans portfolio is structured.
Concentration of customers
The Group's loans portfolio is well spread overall with 255 thousand positions, of which 247
thousand representing just over 93% of the total have facilities of less than 250 thousand euro.
The most numerous band with facilities of up to 25 thousand euro represents 51.3% of the
total positions at 31 December 2008, just slightly lower than at the end of 2007 (52.0%) The
bands from 26 to 250 thousand euro account for 41.9%, while those with greater facilities
represent 6.8% of the total, much in line with 2007. Considering the amounts drawn down, the
band with facilities up to 25 thousand euro accounts for just 2.7% of total loans granted by the
Group (2.8% in 2007), while the bands from 26 to 250 thousand euro account for 34.7% (35.5%
in 2007) and those drawing against greater facilities represent 62.6% of the total (61.7% in 2007).
In particular, facilities in excess of 5 million euro account for 28.2% of the total loans drawn down.
With regard to the Parent Bank, the Board has taken a clear internal position on the control of
concentration risk: in addition to having established in the past that facilities in excess of 60
million euro must not exceed 12% of total facilities granted by the Bank, the Board has also
defined new thresholds for the monitoring and control of concentration risk in relation to
facilities that exceed 5 million euro. This said, in December 2008 the loans granted to
individual counterparts, or those belonging to the same economic group, with facilities in excess
of 60 million euro represent 10.7% of total facilities granted by the Bank. This is slight more than
10.4% at the end of 2007 but still below the limit of 12%. With regard to the other facilities, the
concentration of the 5 to 30 million euro band has fallen from 26.2% at the end of 2007 to 25.7%
in December 2008, while that of the 30 to 60 million euro band is essentially unchanged at
10.7%.
As at the Parent Bank, Cassa di Risparmio di Prato and Banca Nuova have established limits
for individual counterparts and those belonging to the same economic group, although the scale
limit for the 12% threshold is 26 million euro at Cariprato and 20 million euro for Banca Nuova. In
the first case, at 31 December 2008 the facilities belonging to this band represented 11.4% of the
- 91 -
total, which is just below the limit having increased from 10.6% at the end of 2007; with regard to
Banca Nuova, on the other hand, utilization is much lower (4.1%), although higher than at the end
of 2007 (2.4%).
Geographical distribution
The geographical distribution of Group lending at 31 December 2008, by province of residence
for physical persons and by location of registered office for companies, shows clearly the addition
of the branches acquired from the UBI Banca Group which has helped to reduce the
concentration of lending in the original home provinces.
Distribution by geographic area
December 2007
Distribution by geographic area
December 2008
Vicenza,
17.6%
V icenza,
18.4%
Other
areas,
38.3%
Other
areas,
41.0%
Milano,
7.7%
Milano,
8.2%
Treviso,
8.1%
Palermo,
4.3%
Treviso,
7.0%
Prato, 6.2%
Prato, 7.8%
V erona,
5.0%
Udine,
5.2%
Palermo,
4.6%
Padova,
5.3%
V erona,
5.1%
Udine,
5.1%
Padova,
5.2%
In particular, 17.6% of total lending is distributed in the province of Vicenza, down from 18.4% at
the end of 2007. The concentration in the province of Treviso has also declined from 8.1% al
7.0%, thus reducing its relative importance from 2nd to 3rd place. Similarly, the weighting of Prato
has fallen (from 7.8% to 6.2%, from 3rd to 4th place). Padua and Udine at respectively 5.2% and
5.1% have decline slightly in percentage terms with respect to 2007. Considering the provinces
where Banca Nuova is present, Palermo has increased its weighting from 4.3% at the end of
2007 to 4.6% in December 2008, while Trapani is stable at around 1.90%. The province of Milan
has grown strongly to 8.2% from 7.7% in December 2007, becoming the Group's second most
important province, while Brescia (2.6%) and Bergamo (1.4%) together account for 4% of all
Group loans, compared with 0.8% at the end of 2007.
- 92 -
Distribution by economic sector
Distribution by business sector
December 2008
Non
Distribution by business sector
December 2007
Non
f inancial
companies,
55.6%
f inancial
companies,
59.8%
Households
, 31.1%
Other
sectors,
0.6%
Individual
companies,
6.4%
Other
sectors,
0.7% Individual
companies,
6.7%
Finance
companies,
6.3%
Households
, 30.2%
Finance
companies,
2.6%
Analysis of the distribution of the loans portfolio by economic sector highlights, at Group level, a
marked increase in "Non-financial companies" from 55.6% at the end of 2007 to 59.8% in
December 2008. By contrast, there has been a notable reduction in the weighting of loans to
"Financial companies" (from 6.3% to 2.6%). "Households" absorbed 31.1% of total lending in
December 2007, but this weighting is now 0.9 percentage points lower due to the slowdown in
demand for residential mortgages. “Personal businesses” now represent 6.7% of total lending,
up over the year by 0.3 percentage points.
Analyzing the loans to non-financial companies and personal businesses, which together
represent 66.5% of the total loans portfolio, the Group is found to be mainly present in 6
segments: “Other services for sale” represent 21.6% of total lending, Commerce 11.6%,
Construction 6.6%, Engineering (total of “Metal products” and “Agricultural and industrial
machinery”) 4.5%, “Textiles, leather and footwear, clothing” (which includes tanning and, in
particular, the districts of Prato and Alto Vicentino) 3.8%, and “Other industrial products”
(including gold and furniture) 2.6%.
Risk indicators
At 31 December 2008, consolidated gross impaired loans (including non-performing, watch
list, past due, over drawn and restructured) amount to 1,285 million euro, up by 224 million
euro (+21.1% since 31 December 2007). This rise in impaired loans reflects an increase in nonperforming loans (+110 million euro, or +19.4% since the end of 2007), watchlist loans (+94
million euro, +26.1%) due to a more restrictive definition of objective watchlist loans established
by the Bank of Italy, and past due loans (+34 million, +36.4%). Despite this increase, the quality
of the Group's loans portfolio expressed as the ratio of doubtful loans to total lending has
- 93 -
deteriorated only moderately since the end of 2007: the ratio of gross impaired loans to gross
lending has risen from 4.98% at the end of 2007 to 5.52% at December 2008, while the ratio of
non-performing loans to gross lending has increased from 2.67% to 2.92%. This increase should
be assessed in the light of the slowdown in the growth of lending during 2008.
Changes in the risk relating to performing loans are monitored using the Risk Management
System (SGR). This has been operational for more than three years and uses a system of
counterpart scoring that classifies customers is decreasing order of credit quality. The
calculations are based on trend indicators and information received from the IT systems of Group
banks that might be relevant to a change in the level of risk associated with the counterpart. In
particular, the SGR system classifies performing positions with anomalous trends into two
categories: “under observation” or “high risk”. At Group level, the loans classified as "under
observation" as a percentage of the total loans portfolio has risen from 2.8% at the end of 2007 to
3.3% in December 2008, while "high risk" loans have increased from 1.3% to 1.7%.
With reference to the most significant economic sectors in terms of total Group lending, the
highest risk sectors (lowest percentage of "performing" loans) are “Textiles, leather and footwear,
clothing” (performing at 78.3%), “Other industrial products” (79.6%) and Construction (85.5%).
The principal sectors with the lowest level of risk, on the other hand, include "Agricultural and
industrial machinery" (93.4%), “Other services for sale” (92.3%) and "Commerce" (89.9%).
- 94 -
CORPORATE SOCIAL RESPONSABILITY AND IMAGE
This chapter will describe projects supported and actions adopted by the Parent Bank for the
benefit of all its stakeholders. The purpose is to confirm our Bank's firm desire to be an active and
responsible part of the social and environmental context in which it operates, knowing that
contributing to the economic and social progress of its local area and residents is part of the
essence of co-operative banking with its central values and principles of mutualism and solidarity.
Annual report on the mutualistic nature of the co-operative pursuant to art. 2545 of
the Italian Civil Code
When co-ordinating the provisions of the Italian Civil Code with the special rules for co-operative
banks contained in articles 29 et seq of the Consolidated Law on Banking and Lending, the
legislator has restated that «popolare» banks belong to the co-operative category and has
recognized the specific nature of their mutualistic purpose, stating that the associated principles
adopted must be suitably disclosed in the present report.
The mutualistic purpose, especially in a co-operative bank, is pursued not only in the typical
forms of "internal" mutuality, but also those of "external" mutuality relating to the community
and social context in which the bank itself operates and which is increasingly important in terms
of corporate social responsibility.
In the case of Banca Popolare di Vicenza, its mutualistic purpose involves:
−
providing members with banking services at times under preferential conditions;
−
taking actions in favour of the local area, households and businesses aimed at enhancing
the local economy for the specific benefit of the community as a whole;
−
allocating funds to projects of social benefit, charities, welfare and cultural initiatives with
benefits for the community and local area in which the Bank directly operates.
Banking services for Members
An effective mutualistic relationship with its Members also involves the specific offer of financial
services relating to the principal products and services, starting with current accounts.
- 95 -
The main product for Members is called the “Socio Più” (Members Plus) account, a complete
package offered by Banca Popolare di Vicenza for the personal and family needs of its Members
under absolutely preferential conditions. The package includes some of its more exclusive
services free of charge, such as the Oro Socio Più (Gold Members Plus) credit card and the
international debit card which now boasts microchip security and functionality, the securities
deposit service, the safety deposit box, discounts on mortgage and loan arrangement fees,
access to the latest multi-channel banking services and the prestigious fur coats custody service.
Members also enjoy exclusive insurance coverage: the Lost Baggage policy, which covers all
material damage to the personal effects and baggage of Members and their family as a result of
theft, robbery, fire and other accidents, the Member-Customer Accidents policy which insures
against occupational and non-occupational accidents resulting in death or permanent disability
and the Medical policy which offers a daily reimbursement for hospital stays resulting from
accidents or major surgery plus a specialist information and booking service.
Members who opt for the "Socio Più" account are entitled to access a series of non-banking
services, some of which provided through “Carta SemprePiù”, the prestigious service card
provided free of charge which offers a series of discounts and benefits on exclusive goods and
services supported by a freephone service and special website. Members are also entitled to
free guided tours of Palazzo Thiene (the bank's historic headquarters) and its rich art collection
and are constantly kept abreast of what is going on in the Bank through free subscription to the
"BPVI Oggi" magazine sent to them at home.
Member admission criteria and management of member relationships
The close relationship between the Bank and its Members is one of the hallmarks of the cooperative banking model, featuring the presence of a large number of Members each with one
vote and prevention of the formation of controlling majorities. The close relationship between the
Bank and its Members is evident from the very moment of a new member's admission, which is
governed by art. 8 et seq of the articles of association. Applications for admission to membership
are examined, before presentation to the Board of Directors, by a special Members Committee,
set up under a board resolution adopted on 23 February 1999, which has the task of evaluating
whether such applications satisfy the requirements contained in the acceptance clause in the
articles of association and comply with the co-operative spirit. In particular, the Members
Committee checks that existing or new members seeking the allocation of new shares are not
acting for purely speculative ends, but have demonstrated their loyalty and attachment to the
Bank over time; in this way, the committee puts forward only those applications that best respond
to the nature and goals of co-operative banking.
- 96 -
An intense mutualistic relationship with Members is also reflected in constant, effective
communications. Among the tools adopted are the publication of the annual Social Report, which
looks in detail at the relationship between the Bank and its stakeholders, with particular reference
to internal stakeholders such as Members, and the letter sent at least twice a year in which the
Bank's management provides information on the Bank's results and performance, in compliance
with the principle of providing the market with the same information.
Information on the shareholding structure of Banca Popolare di Vicenza
Banca Popolare di Vicenza had 53,329 Members at the end of 2008 (+1.6% compared with the
end of 2007), plus 3,425 simple stockholders without voting rights, for a total of 56,754. Our
Bank's commercial development has been put on a more solid footing thanks to the entry of new
Members, especially in the recent, new areas of operation in Bergamo and Brescia, while
membership in our traditional areas has continued to rise steadily.
The analysis of members' composition reveals one of the typical hallmarks of the co-operative
model, namely a large number of Members, almost entirely comprising natural persons
(99.0%) with a small representation of companies, entities and institutions (1.0%).
Shareholders composition
Men
Women
Companies, administrative body, institution
Total
2008
Comp. %
2007
Change
Change %
33,616
22,565
573
59.2%
39.8%
1.0%
33,136
22,441
528
480
124
45
1.4%
0.6%
8.5%
56,754
100.0%
56,105
649
1.2%
Another feature which also reflects the primarily mutualistic character of BPVi is the huge
number of private individuals and personal businesses who are both customers and
Members of an entity that since its origin has sought to act “…so that the working classes, small
businesses, retailers and shopkeepers” can “easily access credit born of the fruitful and liberal
principle of providence and mutuality”. In fact, around 97.5% of all the Members are individuals
falling into the category of consumer households, followed by 1.5% who belong to the personal
businesses category. The rest of the shares are held by companies, religious institutes, banks,
financial institutions, insurance companies and public entities.
- 97 -
by business sector
Households
Individual companies
Companies
Religious institutions
Banks, insurances, etc.
Administrative body
Total
2008
Comp. %
2007
Change
Change %
55,341
861
453
41
50
8
97.5%
1.5%
0.8%
0.1%
0.1%
0.0%
54,758
840
420
36
46
5
583
21
33
5
4
3
1.1%
2.5%
7.9%
13.9%
8.7%
60.0%
56,754
100.0%
56,105
649
1.2%
More than 62% of the stockholders have been Members of the Bank for over 10 years. This
figure reflects the long-term, non-speculative nature of investing in BPVi and the close fiduciary
relationship that has always bound the Bank to its Members.
by ageing of the relationship
2008
Less than 5 years
Between 6 and 10 years
More than 10 years
Total
Change %
21,313
16,105
19,336
37.6%
28.4%
34.1%
56,754
100.0%
In fact, the expectations of these Members are many and complex, being not only investors but
also customers, employees of the Bank and many players from the traditional areas of operation,
whose objective is not based on mere short-term economic “return” on the investment but above
all aimed at ensuring lasting, balanced development for the Bank itself, in harmony with the local
social and economic environment, thereby creating the necessary conditions for uninterrupted
pursuit of the corporate mission.
The Bank's ties with its local area are even more evident from the geographical breakdown of
Members, which confirms its deep roots in its traditional regions: over 80% of Members reside
in the Veneto region and around 14% in Friuli Venezia Giulia. The proportion in Lombardy has
increased because of the admission of new Members presented by the branches acquired from
the UBI Banca Group in the provinces of Brescia and Bergamo.
- 98 -
Shareholders distribution
by geographical area
Veneto
Vicenza
Treviso
Padova
Verona
Venezia
Belluno
Rovigo
Friuli V. G.
Udine
Pordenone
Gorizia
Trieste
Lombardia
Emilia Rom.
Sicilia
Lazio
Other italian area
Abroad
Total
2008
2007
Comp. %
N.
N.
Change
%
45,774
28,085
8,122
4,058
3,049
1,619
732
109
7,900
6,307
1,158
214
221
1,445
380
246
227
665
117
80.7%
49.5%
14.3%
7.2%
5.4%
2.9%
1.3%
0.2%
13.9%
11.1%
2.0%
0.4%
0.4%
2.5%
0.7%
0.4%
0.4%
1.2%
0.2%
45,680
28,216
8,052
4,028
2,995
1,579
734
76
7,941
6,385
1,112
218
226
971
375
216
207
599
116
0.2%
-0.5%
0.9%
0.7%
1.8%
2.5%
-0.3%
43.4%
-0.5%
-1.2%
4.1%
-1.8%
-2.2%
48.8%
1.3%
13.9%
9.7%
11.0%
0.9%
56,754
100.0%
56,105
1.2%
Banca Popolare di Vicenza and the community
The mission of "external" mutuality harmoniously complements that of "internal" mutuality and
involves numerous actions by the Bank in favour of the local area and the local community.
In fact, as required by art. 53 of the Parent Bank's articles of association, BPVi distributed a
total of 1,869,311 euro in 2008 from the sum approved by the Members' Meeting for charitable
works, welfare, culture and projects of social benefit. The sums donated to projects of social
benefit were basically the same as in 2007 and involved 965 individual donations (+2.7% relative
to 2007), of which 38.7% in the sector of culture and safeguarding of artistic heritage, 19.7% in
the sector of health and welfare, 14.4% for research, studies and education, 13.4% to voluntary
entities and associations involved in social and cultural aggregation and in support of the
underprivileged (which received 40.3% of total donations in this category), 4.9% for sport and
youth associations, and the remaining 8.9% to other minor causes.
- 99 -
Donations in support of art and culture included:
−
a contribution to the Fondazione Teatro Comunale Città di Vicenza (Vicenza's Municipal
Theatre), of whom the Parent Bank is a founding member, in support of the programme of
activities in 2008;
−
support for the Bertoliana Civic Library in Vicenza for the celebration of its 300th
anniversary and the publication of a book on the history of this institution;
−
a contribution to the Cathedral in Castelfranco Veneto for restoring the eighteenth century
wooden choir stalls flanking the high altar;
−
support for making a copy of the crown of the statue of the Monte Berico Madonna, stolen
at the end of 2008;
Donations in support of studies, education and research included:
−
a major three-year contribution to the Vicenza University Campus, particularly in support of
the degree course in Business Economics and Administration;
−
a contribution in support of the Centro Universitario di Organizzazione Aziendale (Corporate
Organization University Centre) in Altavilla Vicentina, traditionally backed by BPVi, for the
establishment of a scholarship to attend the Masters course in Banking and Finance;
−
a contribution to the Centro Internazionale di Studi di Architettura Andrea Palladio (Andrea
Palladio International Centre for Architectural Studies), in support of the traditional course
on Palladian architecture for young Italian and foreign student;
−
support to the University of Venice for the annual seminar on banking contracts;
Donations in the field of medical care and welfare were made to:
−
the Vicenza Green Cross to buy an ambulance;
−
the S.O.S. Village in Vicenza to buy a property to house children from difficult family
backgrounds;
−
the Padua section of the Italian Multiple Schlerosis Association to buy a specially equipped
vehicle for transporting the disabled.
Still in the area of medical care and welfare, of particular relevance was the renewed contribution
to medical facilities operating in the Vicenza area and in Italy's North East. The "Progetto Sanità
2008" (Health Project 2008), to which a total of 250,000 euro was allocated, included the
following principal donations:
−
donation of equipment to the Urological Unit at Vicenza Hospital (for treating prostatic
adenoma), to the Spinal Unit at Vicenza Hospital (for rehabilitating patients with medullar
injury) and to the Pro Senectute Association in Vicenza (for the experimental treatment of
Alzheimer's disease);
−
scholarships for specialization and medical research in the Pediatric Surgery Unit and
Plastic Surgery Unit at Vicenza Hospital, for Vicenza's Friends of the Kidney Association
- 100 -
(for the doctor working in the Nephrology Unit at Vicenza Hospital) and for the Foundation
for Advanced Biomedical Research in Padua.
Donations in the field of sport included:
−
renewed support for the mini-marathon in Udine, now part of the sporting tradition in the
Veneto and Friuli Venezia Giulia;
Lastly, all the ticket sales from the exhibition entitled “Returned Masterpieces - Paintings in the
collection of the Banca Popolare di Vicenza Group”, held in Rome from 28 February to 15
June 2008, were donated to the Italian Cancer Research Association.
Corporate Social Responsibility Report
During 2008 the Parent Bank presented the sixth edition of its Corporate Social
Responsibility Report for 2007. It considers this an increasingly important tool for clearly and
transparently communicating the effects that its activities have on all the principal stakeholders
operating within and without its business, namely Human Resources, Members, Customers
and the Community as a whole.
In fact, Banca Popolare di Vicenza firmly believes that the primary need of creating lasting value
for any business cannot be separated from the close and growing interdependence between
economic results and social performance. Attention to progress and establishment of its role
in its local areas is even more important for a co-operative bank like ours whose core values and
operational guidelines are based on mutuality and solidarity. These principles now appear to be
even more relevant for the banking system as a whole, exposed to high reputational risk in an
increasingly difficult and complex market.
This document, which is available on the website, briefly summarizes the key stages in the
Bank's history, its underlying values and its mission. As usual, plenty of room is given to the
section entitled “Social Report”, which identifies and examines the most useful and effective
indicators of actions taken in the interests of all stakeholders. This section begins with a
presentation of the “Social Dashboard”, comprising a “system of indicators”, representing the
results of the Bank's “social performance”, thus providing an overview of how our Bank fits into
its local environment and interacts with local players.
External communication and corporate image
The economic and socio-cultural role played by Banca Popolare di Vicenza in its local areas has
been enhanced during the year by many, valid initiatives and by its continued support for
- 101 -
institutions like Vicenza Calcio (Vicenza football club), of which BPVi is co-sponsor, and of the
junior team of which the bank is official sponsor.
Other initiatives include the official sponsorship of the 81st National Alpine Corps Meeting, held
in May in Bassano del Grappa 60 years after the corps' undertaking to rebuild the Bassano
Bridge, and the sponsorship of the Rovigo Rugby Club. We have also been involved in a number
of high profile national events, such as renewed sponsorship for the Campiello Literary Prize,
organized by Confindustria Veneto and the Guido Piovene Journalism Prize, created to
celebrate this great Vicenza-born writer and organized by the Bank once every two years,
reaching its fifth edition in 2008, accompanied by the second edition of the Piovene Youth
Competition, organized in partnership with "Il Giornale di Vicenza", a local newspaper and open
to students of upper secondary schools in Vicenza and its province.
In the musical sphere, the Bank continued its intense programme of events, including the
“Spring Concert”, offered by the Bank to the City of Udine and performed by the Orchestra of
the Olympic Theatre in Vicenza, the much applauded concert of the Solisti Veneti,
accompanied by James Galway on the flute, in the Hermitage Church in Padua, the traditional
choral concert entitled “Invitation to Summer” hosted in June in the Palladian courtyard of the
historic headquarters of Palazzo Thiene and performed by the Cadore Brigade choir, the concert
of the Solisti Veneti in Castelfranco Veneto in November, and the traditional “Christmas
Concert” offered to the City of Vicenza which saw the St. John’s Orchestra and the OSJ London
Voices conducted by John Lubbock perform in the Temple of the Sainted Crown.
In the sphere of art and culture, the Bank confirmed its commitment to promoting and enhancing
the value of its artistic heritage through a series of important local and national events. Apart from
the usual “Sunday lectures”, on the myth of Venus and Love, held in Palazzo Thiene in the first
quarter of the year and following on from the “Returned Masterpieces” exhibition in 2007, the
Bank organized, a major exhibition in the first half of the year, together with the Memmo
Foundation in Rome, entitled “Returned Masterpieces. Paintings in the collection of the
Banca Popolare di Vicenza Group”. This event, receiving the patronage of the Ministry of
Culture, and the high patronage of the President of Italy, saw the prestigious setting of Palazzo
Ruspoli in Rome host over 100 masterpieces from the collections of Banca Popolare di Vicenza,
Cariprato and Banca Nuova. At the same time as this important event in Rome, the Republic of
San Marino decided to issue a collection of stamps reproducing four masterpieces from the
Group's collection, thus confirming the importance of the Bank's cultural project to recover great
works of Venetian art from the art markets and safeguard them. In exchange for this initiative, last
summer the Bank lent the St. Frances Art Gallery in San Marino three of the four paintings for the
exhibition: “Tiepolo Pellegrini Bassano. Three masterpieces in San Marino from the collection of
the Banca Popolare di Vicenza Group”.
- 102 -
Since 2008 marked the Vth centenary of the birth of Andrea Palladio, the Bank had the
honour to host at Palazzo Thiene, a masterpiece of Palladian architecture and a Unesco world
heritage site, Giorgio Napolitano, the President of Italy, during his visit to Vicenza for the
Palladio anniversary celebrations. The visit, on 19 September 2008, came 56 years after the visit
by another Italian President, Luigi Einaudi, and has been commemorated by a special plaque in
the palace's porch. To mark the Palladian anniversary our Bank not only supported a series of
events organized for the occasion by the Province of Vicenza with the patronage of the Veneto
Region, it also organized the “Schools Project at Palazzo Thiene”, involving the exceptional
opening of Palazzo Thiene for school year 2008-2009 to pupils of primary and secondary schools
in the Veneto, Friuli Venezia Giulia, Bergamo and Brescia, with special educational tours for
visiting the palace and its collections. Still as part of the Palladian anniversary celebrations, in
September the Bank organized at Palazzo Thiene the exhibition “The Doge of Palladio.
Portraits of Nicolò da Ponte by Tintoretto in the 1700s”, which paid homage to the doge
serving in the year of the celebrated architect's death. This was also the occasion for presenting
the city with the “Portrait of the Doge Nicolò da Ponte”, a recently purchased eighteenth century
Venetian school replica of the Tintoretto original already in the Bank's collection.
As for the Bank's art collection, we recall the acquisition of the matching paintings by Giulio
Carpioni: “Bacchanal” and “The plage of Aegina”; precious canvases by the Venetian
seventeenth century master and now on display in Palazzo Thiene, and the purchase of a
medallion of the Doge Andrea Gritti, year IV – 1526, adding to the Bank's collection of Venetian
medallions which is now missing only one example to be complete. The Bank also purchased
“Alexander's triumph in Babylon”, a large painting by Antonio Zanchi, a seventeenth century
Venetian master; this painting, recovered on the North American art market and brought back to
Italy by the Bank, was the centrepiece of the traditional exhibition of “Returned Masterpieces”
organized at year end in Palazzo Thiene. The exhibition entitled “Antonio Zanchi. Alexander
the Great in triumph” displayed, in addition to the rediscovered masterpiece, several works from
public and private collections and a multi-media section on the topic of “Film triumphs”.
Internal communication
Internal communication activities continued in 2008, with them playing an important role in quickly
spreading information and enhancing a common corporate culture throughout the Group. In
particular, efforts focused on improving the quantity and quality of the services broadcast by the
BPVI Channel, the Corporate TV channel of the BPVi Group, by increasing the time devoted to
commercial and other initiatives by all the Group's banks with the goal of creating a real corporate
community around this medium.
- 103 -
The corporate publications BPV OGGI and Linea Diretta also continued to appear regularly and
actually increased the number of topics addressed and improved the quality of their pictures. As
regards the house organ "BPV OGGI" (BPV TODAY), the editorial style was consolidated in 2008
with the goal of reporting the key facts relating to all the Group's banks as well as giving ample
space to exclusive articles on economics, finance, foreign politics, art and culture by national
journalists or experts. The "Linea Diretta" (Direct Line) magazine has established itself as the
periodical for the Group's employees, which consider it theirs and eagerly anticipate its
publication. The articles and reports about employees in their daily jobs are very popular, like
those on leisure and sport. In almost eight years of publication, the "La parola ai Colleghi"
(Employee forum) column has never been short of input, confirming the attention and affection
that the magazine enjoys; the "Bear or Bull" competition devised and organized by "Linea Diretta"
also proved a great success with over 3,500 participants.
- 104 -
CONSOLIDATED RESULTS OF OPERATIONS
Scope of consolidation
The scope of consolidation at 31 December 2008 is summarized below:
Companies consolidated on a line-by-line
basis
Companies consolidated at
net equity
Parent Bank
S.c.p.A.
99.59%
Banca Nuova
S.p.A.
30%
Farmanuova
S.p.A.
88.67%
Prestinuova S.p.A.
6.33%
79%
47.52%
21 investimenti
Partners S.p.A.
Cariprato S.p.A.
20%
SEC Servizi
S.c.p.A.
47.04%
Magazzini Generali e
Derrate S.p.A.
25%
50%
NEM SGR S.p.A.
Bpvi – Cattolica
Mediaz. Creditizia
S.p.A.
NEM 2 SGR S.p.A.
Cattolica di
Assicurazione S.c.p.A.
1.66%
0.10%
50%
BPVI Fondi SGR
S.p.A.
80%
Nordest Merchant
S.p.A.
20%
50%
100%
100%
100%
100%
50%
BPV Finance
International Plc
Vicenza Life Ltd.
1%
Servizi bancari
S.c.p.A.
100%
50%
49%
Berica Vita S.p.A.
1%
1%
50%
50%
100%
12.72%
Nuova Merchant
S.p.A.
1%
97%
Interporto della
Toscana S.p.A.
1.02%
Farbanca S.p.A.
50%
20%
Immobiliare
Stampa S.p.A.
Monforte 19 S.r.l.
- 105 -
50%
ABC Assicura S.p.A.
The scope of consolidation has undergone the changes discussed below since 31 December
2007.
Acquisitions, mergers and cancellations
Verona Gestioni SGR S.p.A.: on 15 October 2008 this company was merged into BPVI Fondi
SGR S.p.A. (50% controlled), effective from 1 January 2008 for accounting purposes pursuant to
art. 2504 of the Italian Civil Code, and resulting in the cancellation of Verona Gestioni SGR S.p.A.
Linea S.p.A.: on 27 June 2008 the entire 47.96% interest in Linea S.p.A. was sold to Compass
S.p.A. (Mediobanca Group). In compliance with IFRS 5, this equity investment had been
classified in “Non-current assets held for sale” at 31 December 2007.
Otto a Più Investimenti SGR S.p.A.: the subsidiary BPVI Fondi SGR S.p.A. sold its entire
20.00% interest in this company during the year.
Changes in equity interests
Farbanca S.p.A.: during the year the Parent Bank acquired another small interest in this
company, taking its holding from 47.44% in December 2007 to 47.52% at the end of 2008.
Other changes
Società Cattolica di Assicurazione S.c.p.A.: further to Cattolica di Assicurazione S.c.p.A.
taking a 0.50% interest in Banca Popolare di Vicenza on 31 October 2008, a "significant
influence" is now considered to exist between our Group and this company as defined by IAS 28
“Investments in associates”. In fact, this interest by Cattolica Assicurazioni in the Bank has sealed
the existing strategic and business alliance between the two groups, further strengthening their
major partnership in the sector of insurance, banking and financial services, also confirmed by
the fact that each has a representation on the other's Board of Directors.
The 12.72% interest held in Cattolica Assicurazioni, previously classified in “financial assets
available for sale”, has now been reclassified to “equity investments” at the carrying amount
against cancellation of the previously recognized valuation reserve.
This company has therefore been consolidated in 2008 using the equity method, with the share of
its related income and expenses included from 1 November 2008.
Temporary investments held as part of merchant banking activities and insignificant interests
have been excluded from the scope of consolidation, even though such holdings may exceed
- 106 -
20% of capital, and are classified as "financial assets available for sale" (note that insignificance
is defined in terms of the effect of exclusion on the financial and operating structure of the
consolidated financial statements, with regard to potential line-by-line consolidations, and on the
components of equity, with regard to potential measurement using the equity method).
The balance sheets and income statements used for consolidation purposes (line-by-line,
proportional, equity method) are those approved by the Boards of Directors of the individual
companies as of 31 December 2008. These financial statements have been adjusted, where
necessary, to align them with proper and consistent accounting policies adopted by the Group.
The financial statements of companies consolidated line-by-line, but presented using formats that
differ from those established in Circular 262 of 22 December 2005, have been duly reclassified in
accordance with these formats.
The investments in Interporto della Toscana Centrale S.p.A.1 and Magazzini Generali e Derrate
S.p.A. have been reported using the equity method with reference to their 2007 financial
statements, while the holdings in Cattolica di Assicurazione S.c.p.A. and 21 Investimenti Partners
S.p.A. have been carried at equity with reference to their financial statements at 31 December
2008 and 31 December 2007 respectively.
The consolidated financial statements of the Banca Popolare di Vicenza Group as of 31
December 2008 therefore comprise, as required by IAS 27, the financial information reported by
the Parent Bank and its direct and indirect subsidiaries and associated companies:
1) consolidated line-by-line (unless otherwise specified, control is held by the Parent Bank):
−
Banca Popolare di Vicenza S.C.p.A. - Parent Bank
−
Banca Nuova S.p.A. (99.59% controlled)
−
Cassa di Risparmio di Prato S.p.A. (79.00% controlled)
−
Farbanca S.p.A. (47.52% controlled)
−
B.P.Vi. Fondi SGR S.p.A. (50.00% controlled)
−
Nordest Merchant S.p.A. (80.00% controlled)
−
NEM SGR S.p.A. (100% controlled by Nordest Merchant S.p.A.)
−
NEM 2 SGR S.p.A. (100% controlled by Nordest Merchant S.p.A.)
−
Nuova Merchant S.p.A. (100% controlled)
−
BPV Finance (International) Plc (99.99% controlled)
−
Servizi Bancari S.c.p.A. (97.00% controlled with 1.00% owned by Banca Nuova S.p.A.,
1.00% by Cassa di Risparmio di Prato S.p.A. and 1.00% by Farbanca S.p.A.)
−
1
PrestiNuova S.p.A. (6.33% owned with 88.67% controlled by Banca Nuova S.p.A.)
Although the interest in the company's equity exceeds the carrying amount of the investment, the company has
reported losses in recent years and, for the sake of prudence, its carrying amount has not been adjusted.
- 107 -
−
Immobiliare Stampa S.p.A. (100% controlled)
−
Monforte 19 S.r.l. (100% controlled)
2) consolidated using the equity method (unless otherwise specified, the equity investment is
held by the Parent Bank):
−
Berica Vita S.p.A. (49.00% owned with 1.00% held by Banca Nuova S.p.A.)
−
Vicenza Life Ltd (50.00% owned)
−
ABC Assicura S.p.A. (50.00% owned)
−
Cattolica di Assicurazione S.c.p.A. (12.72% owned)
−
21 Investimenti Partners S.p.A. (20.00% owned)
−
Farmanuova S.p.A. (30.00% owned by Banca Nuova S.p.A.)
−
BPVI – Cattolica Mediazione Creditizia S.p.A. (50.00% owned)
−
Magazzini Generali Merci e Derrate S.p.A. (25.00% owned)
−
SEC Servizi S.C.p.A. (47.04% owned, with 1.66% held by Banca Nuova S.p.A., 1.02% by
Cassa di Risparmio di Prato S.p.A. and 0.10% by Farbanca S.p.A.)
−
Interporto della Toscana Centrale S.p.A. (20% owned by Cassa di Risparmio di Prato
S.p.A.).
Information on financial instruments reclassified following amendments to IAS 39
and IFRS 7 and methods of determining fair value.
The serious crisis hitting financial markets in the second half of 2008 led governments in the
European Union to ask the International Accounting Standards Board (IASB), an independent
body responsible for issuing international accounting standards, to amend the accounting
standards applying to the classification of financial instruments (also to bring them into line with
the related US standards) and the method of determining their fair value in situations of market
illiquidity like at present.
The following paragraphs will describe the amendments made in October 2008 to IAS 39,
allowing the possibility of reclassifying financial instruments, and the IASB's recommendations
concerning measurements in light of the problems of measuring fair in unstable financial markets.
The decisions adopted by the BPVi Group in this regard will also be discussed.
- 108 -
Reclassification of financial instruments: changes introduced following the amendments
to IAS 39 and IFRS 7
With reference to the classification of financial assets, on 13 October 2008 the IASB published
some amendments to IAS 39 “Financial instruments: recognition and measurement” and to IFRS
7 “Financial instruments: disclosures” in a paper entitled “Reclassification of Financial Assets”,
endorsed under urgent procedures by the European Commission on 15 October 2008 in
Regulation EC 1004/2008.
In brief, these amendments allow companies that apply international accounting standards the
option to reclassify certain financial instruments from their originally designated category in
accordance with specific instructions and in rare circumstances. The current situation on financial
markets undoubtedly qualifies as one of the “rare circumstances” envisaged by the amendments.
In more detail, the amendment to IAS 39 has removed the previous ban on reclassifying nonderivative financial instruments from the assets held for trading category (measured at fair value
through profit or loss) to other categories (assets held to maturity, asset available for sale, and
loans and receivables). It is now also possible to reclassify certain financial assets available for
sale to loans and receivables.
Such reclassifications are permitted when a financial asset, in rare circumstances, is no longer
held for near-term trading, even though it was purchased primarily for such purpose, and the
company has the intention and ability to hold it for the foreseeable future or to maturity. The
financial instrument's characteristics must nonetheless be such as to allow its transfer into the
new category at the reclassification date.
The provisions of IAS 39 already permitting reclassification of financial instruments from “financial
assets held to a maturity” to “financial assets available for sale” and vice versa still hold good.
A reclassified financial asset is recorded in its new category at its fair value on the reclassification
date and profits and losses previously recognized in the income statement must not be reversed.
Solely for reclassifications approved before 1 November 2008 is it permitted, in view of the
exceptional circumstances, to use the fair value of the financial instrument at 1 July 2008 as the
transfer value.
In the event of reclassifying a financial instrument from “financial assets available for sale”, the
profits and losses previously deferred in equity, if referring to an instrument with a predetermined
maturity, are amortized over the term of the investment using the effective interest method;
conversely, if the instrument does not have a predetermined maturity, such profits and losses
stay in the reserve until the instrument is sold or cancelled.
- 109 -
Reclassifications by the Banca Popolare di Vicenza Group
The turmoil on financial markets and the reduced liquidity of certain financial instruments means
that it is no longer possible to pursue in the near term the intent under which they were originally
classified as financial assets held for trading, effectively forcing them to be held over the
medium/long term or to maturity. In view of these circumstances, the Banca Popolare di Vicenza
Group has applied the options allowed by the amendments to the international accounting
standards discussed above and made the following reclassifications totalling 465.7 million euro
(of which 118.9 million euro pertaining to the Parent Bank Banca Popolare di Vicenza and 346.8
million euro to the subsidiary BPV Finance Plc):
(in millions of Euro)
Category before
reclassfication
Category after
reclassfication
Amount
reclassified
Financial assets available for
sale
Loans and advances to
customers
253.3
29.4
223.9
sale
banks
149.2
44.1
105.1
Financial assets held for
trading
Financial assets available
for sale
63.2
45.4
17.8
465.7
118.9
346.8
Total
of which:
BPVI
of which:
BPV Finance
Since the Boards of Directors of the Parent Bank and the subsidiary BPV Finance resolved to
make these reclassifications before 1 November 2008, they have been made with effect from 1
July 2008 (as permitted by the amendment to IAS 39), with the fair value recognized in the new
category equal to the related book value at 30 June 2008. Purchases of additional securities after
30 June 2008 have been reclassified with effect from the purchase date, using the price on such
date as the fair value. As a result of these reclassifications, the financial instruments reclassified
to “loans and advances to customers” and “loans and advances to banks” are now being
measured at “amortized cost” as adjusted to take account of any impairment in compliance with
IAS 39.
At 31 December 2008 the book value of financial assets reclassified in the year amounted to
461.8 million euro compared with a fair value of 387.9 million euro. The fair value of the above
financial assets has been determined on the basis of the related market prices at 31 December
2008 which in some cases reflect situations of severe illiquidity.
The following table provides the information required by paragraph 12A of IFRS 7 in the event of
reclassifying financial instruments from the fair value through profit or loss category (in
- 110 -
compliance with paragraph 50B or 50D of IAS 39) or from the “available for sale” category (in
compliance with paragraph 50E of IAS 39):
Category before
reclassfication
Category after
reclassfication
fair value gain/loss:
Book value Fair value recognised in
not
recognised in
not recognised
as at
as at
profit/loss in
recognised in
profit/loss
in
in AFS reserve
31/12/2008 31/12/08 the previous
profit/loss in
the year
year
sale
sale
trading
customers
banks
for sale
Total
in the year
the year
257.9
199.2
-
-
-
-58.7
150.7
135.5
-
-
-
-15.2
53.2
53.2
-6.7
-16.1
-2.4
-
461.8
387.9
-6.7
-16.1
-2.4
-73.9
At the reclassification date, the effective interest rate of the financial assets reclassified from
“financial assets available for sale” and “financial assets held for trading” to “loans and advances
to customers” or to “loans and advances to banks” is close to the nominal interest rate of the
reclassified financial instruments, and in view of the fact that they are classified as performing,
the estimated amount of expected cash flows are near to their book value.
Determination of fair value of financial assets
With reference to the methods of measuring financial instruments if their market is “not active”,
the IASB set up an advisory panel in May 2008 to define the rules for determining fair value in
illiquid or no longer active markets; the results were published on 31 October 2008 in a paper
entitled "Measuring and disclosing the fair value of financial instruments in markets that are no
longer active".
These guidelines are consistent with those already issued by the Financial Accounting Standards
Board (FASB) in the United States and are designed to allow greater use of valuation techniques,
also based on assumptions by management, if the market for an asset is no longer considered to
be active.
In brief, the paper includes the following indications:
−
no deviations are permitted from fair value;
−
the objective of a fair value measurement is to establish the price at which a transaction
would ordinarily take place between market participants, not the price resulting from a
forced liquidation or a distress sale;
- 111 -
−
even at times of market crisis not all market activity represents forced liquidations or
distress sales, meaning that even if a market is inactive the price of transactions cannot be
ignored;
−
the fundamental value (independent estimate by a company's management on the basis of
expected cash flows) if left unadjusted, is unsuitable for determining fair value since it does
not consider factors that the market would consider (credit/liquidity risk);
−
if a market becomes inactive - meaning there is little observable input data - it is possible to
determine values other than market prices that are equally reliable using valuation
techniques and models which consider the different factors of risk;
−
if a valuation technique is used for determining fair value, it is necessary to periodically
calibrate the model used for observable market data to ensure that it represents current
market conditions and to identify any weaknesses in it;
−
if the fair value measurement differs from market prices, the disclosures are of prime
importance for the purposes of measurement transparency.
As regards the criteria for determining fair value, the new guidelines have confirmed the approach
already generally followed by the Group.
Direct deposits
Direct deposits, excluding “liabilities for assets sold but not derecognized”, amounted to 20,253
million euro at 31 December 2008, reporting an increase of 13.4% on the year before (+9.9%
including “liabilities for assets sold but not derecognized”).
Direct deposits
Current accounts and unrestricted deposits
Current accounts and restricted deposits
Repurchase agreements and other payables
Bonds
Certificates of deposit and other securities
31/12/2008
10,002
182
801
8,968
300
31/12/2007
Changes
(+/-)
%
8,625
25
1,074
7,827
302
1,377
157
-273
1,141
-2
16.0%
628.0%
-25.4%
14.6%
-0.7%
sub-total
20,253
17,853
2,400
13.4%
Liabilities for assets sold but not derecognized
1,153
1,631
-478
-29.3%
Total direct deposits
21,406
19,484
1,922
9.9%
- 112 -
The changes in the different types of direct deposit reflect strong growth in “bonds” (+14.6%) and
“current accounts and unrestricted deposits” (+16.0%), but a contraction in “repurchase
agreements and other payables” (-25.4%). This downward trend in repurchase agreements in
favour of other types of funding is a positive sign in terms of liquidity, with our Group closing such
funding transactions with lending transactions generally in the same technical form. “Certificates
of deposit and other securities” and “current accounts and restricted deposits” have settled for
some time now at much reduced levels: while the former posted a modest decrease over the
twelve months of 0.7%, the later grew by 157 million euro in absolute terms (+628.0%).
With reference to the Group's own bond issues, which account for 42% of all direct deposits, the
Group made no new issues in the year under its European Medium Term Notes programme ,
after issuing more than 1,815 million euro in notes in 2007; consequently, the entire change for
the year is attributable to ordinary placement activities with retail customers , with obvious
benefits in terms of diversification of the sources and cost of funding.
“Liabilities for assets sold but not derecognized” were 29.3% lower than at 31 December 2007.
These relate to the "Berica 5 Residential MBS" and “Berica 6 Residential MBS” securitizations
arranged in 2004 and 2006 respectively, which, as discussed in the section on loans, have been
“reinstated” in the balance sheet, as required by IAS 39. In fact, they represent notes issued by
vehicle companies that are backed by securitized home mortgages; their decrease since 31
December 2007 reflects partial repayment of such securities and the Parent Bank's repurchase of
208.9 million euro in senior and mezzanine notes issued as part of the above securitizations
which have consequently been derecognized.
With reference to the latest securitization known as “Berica 7 Residential MBS”, carried out in
November 2008 and also “reinstated” in the balance sheet under IAS 39, since all the related
asset backed securities (ABS) were subscribed by the originator banks (BPVi, Banca Nuova and
Cariprato), no “liabilities for assets sold but not derecognized” have been recognized.
- 113 -
Direct deposits
25,000
( in millions of Euro)
20,000
21,406
19,484
15,000
10,000
+9.9%
5,000
0
31/12/2008
01/01/2008
31/12/2007
01/01/2007
Indirect deposits
Indirect deposits had a total market value of 15,890 million euro at 31 December 2008, reporting
a decrease of 14.3% on a year earlier.
This aggregate has been seriously affected by the recent turmoil on financial markets and the
decline in its value is almost entirely attributable to negative performance in the asset
management sector, which although accounting for only 20% of all indirect deposits, posted an
absolute decrease in value of 2,142 million euro over the year (-40.0%).
Assets under
administration, which represent 67% of the total aggregate, also reported a negative performance
although not as large (-5.3%). Pension premiums, accounting for 13% of total indirect deposits,
increased by 4.8% over the year, reflecting the benefits of partnership with the Cattolica
Assicurazioni Group.
Indirect deposits
31/12/2008
31/12/2007
Changes
(+/-)
%
Mutual funds
Personal asset management
Pension premiums
Shares
Other securities
Treasury shares
2,484
735
2,078
1,347
5,519
3,727
3,845
1,516
1,982
2,198
5,255
3,735
-1,361
-781
96
-851
264
-8
-35.4%
-51.5%
4.8%
-38.7%
5.0%
-0.2%
Total indirect deposits
15,890
18,531
-2,641
-14.3%
-2,142
96
-595
-40.0%
4.8%
-5.3%
assets under management
retirement savings
assets under administration
3,219
2,078
10,593
- 114 -
5,361
1,982
11,188
Looking at the various forms of indirect deposits, the sharp contraction in assets under
management, which for some time has witnessed a reduction in volumes due to investor
disaffection for this sector, reflects decreases in both “mutual funds” (-35.4%) and “personal asset
management” (-51.5%). With regard to assets under administration, “shares” were 38.7% lower
mainly because of the steep drop in global share prices, while “other securities” were 5.0%
higher. “Treasury shares” were generally stable. Lastly, “pension premiums” posted an annual
increase of 4.8% to more than 2 billion euro at 31 December 2008.
Indirect deposits
20,000
18,531
15,890
15,000
10,000
-14.3%
5,000
0
31/12/2007
1-gen-07
31/12/2008
1-gen-08
Loans to customers
The volume of loans to businesses and households in our home regions continued to grow in a
satisfactory fashion in 2008, all of which was funded by the growth in direct deposits from
customers.
- 115 -
Loans to customers
31/12/2008
31/12/2007
Changes
(+/-)
%
Ordinary current accounts
Mortgage loans
Syndicated loans
Import/export loans
Other loans
Debt securities
Repurchase agreements
(1)
Net non-performing loans
4,573
9,064
1,736
1,374
2,907
331
32
312
4,354
8,562
1,650
1,316
2,908
38
8
300
219
502
86
58
-1
293
24
12
5.0%
5.9%
5.2%
4.4%
0.0%
771.1%
300.0%
4.0%
sub-total
20,329
19,136
1,193
6.2%
Assets sold but not derecognized
2,376
1,703
673
39.5%
Total net loans
22,705
20,839
1,866
9.0%
(1)
This does not include non-performing loans related to “assets sold but not derecognized”.
Net of impairment adjustments, loans to customers increased by 9.0% on the prior year to 22,705
million euro at 31 December 2008 (+6.2% excluding “assets sold but not derecognized”). This
increase also reflects the reclassification of 253.3 million euro in debt securities from “financial
assets available for sale” to “loans and advances to customers”, after the Group took up the
option allowed by the IASB, as endorsed by the European Commission (Regulation 1004/2008
of 15 October 2008), of reclassifying certain financial instruments in rare circumstances like those
caused by the current financial crisis. Ignoring these reclassifications, discussed in a specific
section of this report, cash loans to customers would have amounted to 22,452 million euro, with
an increase of 7.7% on 31 December 2007 (+4.9% excluding “assets sold but not
derecognized”).
In terms of individual lending products, all the different technical forms grew despite the economic
slowdown. In particular, “mortgage loans” grew by 5.9%, “ordinary current accounts” by 5.0%,
“syndicated loans” by 5.2% and “import-export loans” by 4.4%. The increase in “debt securities”
(+771.1%) reflects the effect of the above reclassification of financial instruments further to the
amendments to IAS 39. “Repurchase agreements”, of relatively immaterial absolute amount,
were up 300%, while “other loans” were unchanged.
- 116 -
Loans to customers
25,000
22,705
20,839
20,000
15,000
+9.0%
10,000
5,000
0
31/12/2007
31/12/2008
“Mortgage loans”, grew at a slower pace than in the past, reflecting a contraction in individual
customer demand throughout the banking industry as a whole, and the securitization, carried out
in November 2008, under which the Parent Bank, Banca Nuova and Cariprato sold 968.4 million
euro in performing residential mortgage loans to a special purpose entity called “Berica 7
Residential MBS Srl”. Like the “Berica 5 Residential Mbs” and “Berica 6 Residential MBS”
securitizations, this securitization does not meet the derecognition requirements of IAS
39;2accordingly, the residual securitized assets have been “reinstated” in the balance sheet at 31
December 2008 as “assets sold but not derecognized”, which have therefore increased by 673
million euro (+39.5%).
“Mortgage loans” nonetheless continued to represent around 40% of total loans (and over 50%
including the securitized mortgages classified in “assets sold but not derecognized”).
Credit risk indicators have deteriorated throughout the banking industry in the wake of the
financial market crisis in the second half of the year and the resulting deterioration in an already
weak economy. These events have had a negative impact on the quality of the Group's loan
book, which has deteriorated at the end of 2008 relative to 31 December 2007. This deterioration,
expressed in terms of the ratio between impaired loans and total loans, was less than for the
banking industry as a whole.
2
With regard to the other securitizations carried out before 1 January 2004, the securitized assets were not
reinstated on first-time adoption of IAS 39, as allowed by paragraph 27 of IFRS 1.
- 117 -
Impaired loans net
1,000
750
843.9
716.0
500
+17.9%
250
0
31/12/2007
31/12/2008
Impaired loans to customers (net of adjustments and including any impaired loans classified as
“assets sold but not derecognized”) were 127.9 million euro higher (+17.9%) at 31 December
2008 than a year earlier; however, as a percentage of total net loans, impaired loans increased
by just 0.28 percentage points, from 3.44% at 31 December 2007 to 3.72% at the end of 2008.
The ratio of net non-performing loans to net loans to customers was 1.51%, the same as at 31
December 2007.
Looking at the composition of impaired loans, it is mainly the watchlist loans and positions past
due by more than 180 days that have deteriorated most, increasing by 79.0 million euro (+29.0%)
and 33.8 million euro (+38.6%) respectively;
non-performing loans have increased by 28.1
million euro (+8.9%), while restructured loans have fallen by 13.0 million euro (-32.2%).
In terms of coverage, meaning the ratio between total provisions and gross exposure, the
coverage of impaired loans has increased from 32.51% at 31 December 2007 to 34.31% at 31
December 2008, mainly due to higher provisions against non-performing loans, whose coverage,
ignoring partial write-offs, has risen from 44.49% at 31 December 2007 to 49.36% at the end of
20083.
Lastly, the “general provision” for “performing” loans amounted to 106.7 million euro at 31
December 2008, providing coverage of 0.49%, slightly down from 0.52% at 31 December 2007.
3
The coverage of non-performing loans, including write-offs for bankruptcy proceedings still in progress at
31 December 2008, was 63.60% at year end, while that of gross impaired loans would be 45.55%.
.
- 118 -
Financial assets
The Group's financial assets amounted to 1,273 million euro at 31 December 2008, 41.4% below
the figure of 2,174 million euro reported at the end of 2007.
Financial assets
31/12/2008
Financial assets held for trading
Financial assets at fair value
Financial assets available for sale
Financial assets held to maturity
Total
31/12/2007
Changes
(+/-)
%
794
17
436
26
886
26
1,216
46
-92
-9
-780
-20
-10.4%
-34.6%
-64.1%
-43.5%
1,273
2,174
-901
-41.4%
Under the option allowed by the IASB and endorsed by the European Commission (Regulation
1004/2008 of 15 October 2008) to reclassify certain financial instruments in rare circumstances,
such as those caused by the current financial crisis, the Group has transferred 402.5 million euro
in debt securities from “financial assets available for sale” to “loans and advances to customers”
and “loans and advances to banks” and 63.2 million euro in debt securities from “financial assets
held for trading” to “financial assets available for sale”. Excluding these reclassifications,
described in a specific section of this report, financial assets would have amounted to 1,676
million euro at the end of 2008, with a decrease of 22.9% on 31 December 2007.
Financial assets breakdown
Financial assets held to
maturity
2.0%
for sale
34.3%
trading
62.4%
Financial assets at fair
value
1.3%
Assets held for trading represented 62.4% of the Group's financial assets at 31 December 2008,
10.4% below the year before. Over 91% of these assets were derivatives (724 million euro).
- 119 -
Financial assets available for sale accounted for 34.2% of total financial assets, down 64.1% on
2007.
Excluding the reclassifications described earlier, “financial assets available for sale” would have
amounted to 775 million euro, with a decrease of 36.2% relative to 31 December 2007, and
representing 46.3% of total financial assets.
Financial assets are analyzed by type of assets as follows:
Financial assets breakdown
31/12/2008
Debt securities
Equities
Mutual funds
Financial derivatives
Loans
Total
Changes
31/12/2007
(+/-)
%
216
164
109
50
724
10
1,058
365
96
81
574
-
-842
-201
13
-31
150
10
-79.6%
-55.1%
13.5%
-38.3%
26.1%
n.s.
1,273
2,174
-901
-41.4%
Interbank position and liquidity
The Group's net exposure to the interbank market was a negative 771 million euro at 31
December 2008, down from -1,290 million euro a year earlier. The improvement in the interbank
position is attributable to better matched growth between customer lending and deposits, one of
the Group's top priorities, and to the cash generated from selling financial assets and equity
investments.
31/12/2008
31/12/2007
Changes
(+/-)
%
Loans and advances to banks
2,306
1,989
317
15.9%
Deposits from banks
3,077
3,279
- 202
-6.2%
Total
-771
-1,290
519
-40.2%
The following table summarizes the cash flow statement for 2008 and 2007 presented in the
consolidated financial statements at 31 December 2008 and prepared on the basis of IAS/IFRS.
- 120 -
This shows that the Group absorbed 12.0 million euro in net liquidity in 2008, having generated
31.4 million euro in net liquidity the year before.
Changes
31/12/2008
31/12/2007
186,946
155,504
31,442
20.2%
Net liquidity generated/absorbed by operating activities
76,157
134,409
- 58,252
-43.3%
Net liquidity generated/absorbed by investing activities
85,066
- 470,904
555,970
-118.1%
- 173,235
367,937
- 541,172
-147.1%
- 12,012
31,442
- 43,454
-138.2%
(in thousands of Euro)
Cash and cash equivalents at the beginning of the year
Net liquidity generated/absorbed by funding activities
Net liquidity generated/absorbed in the year
Cash and cash equivalents at the end of the year
174,934
186,946
(+/-)
-12,012
%
-6.4%
Net liquidity generated by operating activities amounted to 76.2 million euro in 2008 (134.4
million euro in 2007) and is the product of:
-
liquidity of -2,142.7 million euro absorbed by financial assets (-3,547.1 million euro in 2007)
of which -2,086.7 million euro for increased loans to customers (-4,347.8 million euro in
2007); it is recalled that a total of 968.4 million euro in loans were sold during the year as
part of the “Berica 7 Residential MBS” securitization.
-
liquidity of 1,941.8 million euro generated by financial liabilities (3,254.2 million euro in
2007);
-
liquidity of 277.1 million euro generated by operations (427.3 million euro in 2007).
With reference to liquidity generated by financial liabilities, deposits from banks decreased by 202
million euro, while amounts due to customers increased by 1,160.5 million euro, debt securities in
issue by 387.4 million euro and financial liabilities at fair value by 573.8 million euro.
Net liquidity generated by investing activities amounted to 85.1 million euro in 2008 (-470.9
million euro in 2007). In particular:
-
liquidity generated by investing activities amounted to 216 million euro (79.4 million euro in
2007), of which 194.3 million euro from the sale of the entire interest in Linea S.p.A.
-
liquidity absorbed by investing activities amounted to -130.9 million euro (-550.3 million
euro in 2007), of which -85.3 million euro relating to the purchase of a new property in Milan
by the subsidiary Monforte S.r.l.
- 121 -
Lastly, net liquidity absorbed by funding activities amounted to -173.2 million euro in 2008
(+367.9 million euro generated in 2007), as follows:
-
liquidity of 100.6 million euro absorbed to buy back equity instruments and treasury shares
(+436.2 million euro generated in 2007 following the issue of new shares);
-
liquidity of -72.6 million euro absorbed by paying dividends (-68.3 million euro in 2007).
- 122 -
PRINCIPAL EQUITY INVESTMENTS
The Group continued to work in 2008 towards a more rational, effective management of its equity
investments, including in relation to the Parent Bank's co-ordinating role and its assistance to
subsidiaries with their own equity investments and partnership agreements.
In completion of the information presented in the section on activities of strategic importance, the
principal agreements, acquisitions and disposals relating to equity investments made in 2008 will
now be described.
Agreements
Strategically important agreements include the joint venture between Banca Popolare di
Vicenza, Azimut and Cattolica Assicurazioni and the renegotiation of the agreement
between the BPVi Group and the 21 Investimenti Group, already described in the section on
activities of strategic importance.
In May 2008, Banca Popolare di Vicenza made an agreement with Banco di Sicilia S.p.A.
(Unicredit Group) to buy a controlling 76.26% interest in IRFIS, a bank based in Palermo that
specializes in medium/long-term lending to small and medium businesses. The remaining interest
in IRFIS is held by the Region of Sicily (21.00%) and other smaller stockholders (2.74%). The
Bank of Italy had not yet authorized the purchase of the controlling interest in IRFIS at 31
December 2008, having requested Banca Popolare di Vicenza to provide it with additional
information.
Lastly, the controlling stockholders of Polis Fondi SGR S.p.A. (some of whom are major cooperative banks) entered an agreement in October 2008 to sell a controlling interest in this
company to Sopaf S.p.A., a property company listed on the Milan Stock Exchange. Under this
agreement Banca Popolare di Vicenza would sell a 9.80% interest in this company; the sale is
subject to the Bank of Italy's authorization.
Corporate actions
Changes in holdings of equity investments during 2008 are described below.
The following changes took place in investments held by the Parent Bank Banca Popolare di
Vicenza:
- 123 -
−
Compagnia Investimenti e Sviluppo S.p.A.
Banca Popolare di Vicenza subscribed to its share of a capital increase, from 60 million to 75
million euro, by Compagnia Investimenti e Sviluppo S.p.A. in February 2008. By taking up its
rights, the Bank subscribed to 625,000 new shares, thus increasing the value of its investment in
this company by 1.25 million euro. The Bank's equity interest of 4.167% in Compagnia
Investimenti e Sviluppo S.p.A. was carried at a value of 6.25 million euro in the balance sheet at
31 December 2008.
−
Equitalia S.p.A.
In the first half of 2008 the Bank was allocated 5 financial instruments with a nominal value of 250
thousand euro in exchange for its interest in S.F.E.T. S.p.A., the company previously responsible
for tax collection in Friuli Venezia Giulia; this was the conclusion of an operation that saw Banca
Popolare di Vicenza, along with other shareholder banks, sell their interests in S.F.E.T. S.p.A. in
September 2006 to Equitalia S.p.A. (a state-controlled company under whom all tax collecting
activities have been centralized nationally, having been previously decentralized to regional
collection agencies). These instruments, which earn interest for their holders, will be purchased
by the public shareholders of Equitalia by the end of 2010.
−
Veneto Sviluppo S.p.A.
The Bank subscribed its share of a capital increase in 2008, which was partly a bonus issue and
partly a rights issue; as a result, it subscribed to 23,549 new shares for 235 thousand euro,
increasing the carrying amount of the equity investment to 1.5 million euro at 31 December 2008.
−
Hopa S.p.A.
Under a settlement for the repayment of a customer loan, the Bank took over ownership of a
package of shares in Hopa S.p.A. worth around 700 thousand euro, thereby increasing its
existing interest in this company. The Bank held 1.202% of Hopa S.p.A. at 31 December 2008,
with a book value of 3.3 million euro.
−
Cattolica-BPVI Mediazione Creditizia S.p.A.
This company was set up in 2007 under the partnership agreement with Cattolica Assicurazioni
for the placement of basic banking products through the latter's agency network and is owned in
equal shares by the two partners.
Cattolica Assicurazioni and BPVi paid in a total of 800 thousand euro, split equally between the
two, to this company in 2008 in order to strengthen its capital structure; the sum paid in by the
Bank has increased the book value of the equity investment to 550 thousand euro at 31
December 2008.
- 124 -
−
Nuova Merchant S.p.A.
Following a recapitalization of Nuova Merchant, in which Banca Nuova S.p.A. did not participate
(it used to hold 20% while the other 80% was held by Banca Popolare di Vicenza), Banca
Popolare di Vicenza subscribed to all of the new capital stock for 120 thousand euro, thus
becoming this company’s sole stockholder at 31 December 2008.
The extraordinary
stockholders' meeting of Nuova Merchant resolved on 10 March to transform it legal status from
that of an "S.p.A." (joint stock company) to an "S.r.l." (limited liability company) with a consequent
change of name to "NUOVA MERCHANT S.r.l.". Capital stock, all of which owned by the sole
stockholder Banca Popolare di Vicenza, was reduced and reinstated to the legal minimum of
10,000 euro for limited liability companies. The change of legal status is in preparation for the
subsequent merger of Nuova Merchant into Nordest Merchant, the BPVi Group's other
merchant banking company, with the goal of rationalizing corporate structure as set out in the
new Business Plan for 2008-2011. The merger will come into effect during the first half of 2009.
−
Servizi Bancari S.p.A.
In December 2008, the Bank sold its banking subsidiaries (Cariprato, Banca Nuova and
Farbanca) an overall 3% interest in Servizi Bancari S.p.A., the group company that provides IT
and back office services. The sale of this interest, which reduced the Parent Bank's share from
100% to 97%, was a precursor to transforming the company from a joint stock company into a cooperative and took place at a value based on the company's equity. Furthermore, in February
2009, with 60 days having passed since filing the resolution of transformation without any
opposition from creditors, Servizi Bancari was transformed from a joint stock company into a cooperative; this transformation had been approved in an extraordinary stockholders' meeting in
December 2008 with the aim of optimizing the benefits of rationalizing back office processes for
the banking group as a whole. Lastly, on 27 February 2009 Banca Popolare di Vicenza, Cariprato
and Banca Nuova formalized the transfer of their respective back offices to Servizi Bancari, as
envisaged in the Business Plan for 2008-2011; at the same time, Servizi Bancari transferred its
ICT activities to Banca Popolare di Vicenza.
In addition, on 19 December 2008 the extraordinary stockholders' meetings of Banca Nuova
S.p.A. and Cariprato S.p.A. voted to make bonus increases in capital of 12.9 and 50 million
euro respectively (with the par value of outstanding shares increased from 3.0 euro to 4.3 euro
in the case of Banca Nuova and from 51.65 euro to 76.65 euro in the case of Cariprato), by
allocating almost all of the existing “revaluation reserves” to capital stock. This bonus increase in
capital has a positive impact on the Tier 1 capital of these two banks, with these reserves now
included in Tier 1 capital rather than in Tier 2 like before.
- 125 -
Lastly, the Parent Bank's Board of Directors decided in December 2008 to transfer Banca
Popolare di Vicenza's interest in Cattolica Assicurazioni from the AFS portfolio to the “Equity
investments” portfolio. This transfer is mainly the result of strengthening the strategic and
business alliance between these two financial groups in 2008 such that there is now a "significant
influence" between our Group and Cattolica Assicurazioni within the meaning of IAS 28. For the
purposes of ensuring a consistent accounting treatment between the separate and consolidated
financial statements, the entire interest held by BPV Finance (International) Plc in Cattolica
Assicurazioni comprising 458,000 shares was transferred to the Parent Bank on 22 December
2008 involving a wholesale market transaction at a carrying amount of 21.5 million euro.
As regards the other banks in the BPVi Group, Cariprato subscribed to a capital increase by
Lineapiù S.p.A., a company operating in the textiles and yarn sector, which required an
investment of 126 thousand euro, and paid in the remaining 75%, corresponding to 105 thousand
euro, of a capital increase by Fidi Toscana S.p.A., a company operating in the collective
underwriting of loans, for which the original 25% had been paid in 2007. Banca Nuova
subscribed to its 30% share of a capital increase by Farmanuova S.p.A. involving an investment
of 122 thousand euro (following on from a previous capital increase for 717 thousand euro in
December 2007), raising the book value of this equity investment to 1.1 million euro at 31
December 2008.
Sale of equity investments
Apart from the sale of the equity investment in Linea S.p.A., already described in the section on
activities of strategic importance, in January 2008 BPVi sold its 14.44% interest in Santex
Holding S.p.A. after the controlling stockholder exercised a call option. Under the terms of the
option contact, the Bank received 739 thousand euro for the sale of its 520,000 shares in Santex
Holding S.p.A., realizing a capital gain of almost 170 thousand euro.
Other equity investments classified as “available for sale” (AFS)
BPVi purchased 200 thousand shares in Aachener und Munchener Beteiligung A.G. (AMB),
corresponding to a 0.37% interest, for 15.6 million euro. This German company, listed on the
Frankfurt Stock Exchange, heads up the business of the Generali Group in Germany, and is in
turn controlled by its Italian parent.
Lastly, in December 2008 the Bank acquired a package of shares representing a 1.95% interest
in Banca Profilo S.p.A., a company listed on the Milan Stock Exchange, for 1.3 million euro, and
0.20% of Autostrada Brescia – Verona – Vicenza – Padua S.p.A., manager of the motorway
between Brescia and Padua, for 2.2 million euro.
- 126 -
EQUITY AND REGULATORY CAPITAL
Consolidated equity pertaining to the Group amounted to 2,729.9 million euro at 31 December
2008, reporting a decrease of 13.0 million euro (-0.5%) since 31 December 2007.
Group equity
Capital stock
Additional paid-in capital
Equity instruments
Valuation reserves
Reserves
Treasury shares
31/12/2008
261,460
1,960,355
13,104
90,362
392,812
- 96,981
Equity
Net income for the year pertaining to the Group
Total equity
31/12/2007
261,656
1,963,297
13,630
66,081
324,487
-
2,621,112
2,629,151
108,739
113,731
2,729,851
2,742,882
Changes
(+/-)
%
- 196
- 2,942
- 526
24,281
68,325
- 96,981
-8,039
- 4,992
-13,031
-0.1%
-0.1%
-3.9%
36.7%
21.1%
n.s.
-0.3%
-4.4%
-0.5%
The decreases of 196 thousand euro in “capital stock” and of 2,942 thousand euro in “additional
paid-in capital” reflect the combined effect of issuing new shares allotted to employees after
achieving a specific length of service and of reimbursing shares to estates of deceased members
and then cancelling them.
“Equity instruments” of 13.1 million euro at 31 December 2008 refer to the equity component
embedded in the convertible bond known as “BPVI 13.a Emissione 2007-2015”, placed by the
Parent Bank in July 2007, and reported separately in accordance with IAS 32. The decrease of
526 thousand euro reflects bonds that were bought back but have not yet been resold.
Apart from the changes in fair value recognized in the year for financial instruments classified as
“financial assets available for sale”, the increase of 24.3 million euro in the "valuation reserves"
mainly reflects:
-52.4 million euro for the bonus increase in capital by Banca Nuova and Cassa
di Risparmio di Prato in October, using 12.9 and 39.5 million euro respectively in revaluation
reserves; +65.7 million euro for cancelling the negative valuation reserves relating to the interest
in Cattolica Assicurazioni after reclassifying it to “equity investments” with effect from 31 October
2008.
- 127 -
The "valuation reserves" also include the reserves arising from the valuation of land, buildings
and works of art at deemed cost on the first-time adoption of IAS/IFRS, as well as the reserves
relating to special revaluation laws.
The increase of 68.3 million euro in other “reserves” reflects +41.1 million euro in allocations of
prior year net income to the Group's reserves, -23.2 million euro for the effects of the first-time
consolidation of the interest in Cattolica Assicurazioni at equity, +52.4 million euro for the effect,
described above, of reducing the revaluation reserves of the subsidiaries Banca Nuova S.p.A.
and Cassa di Risparmio di Prato S.p.A involving a matching increase in other reserves forming
part of consolidated equity4 and -2 million euro in other effects. These reserves also include
reserves formed from prior year earnings, as well as the positive and negative reserves arising on
first-time adoption of IAS-IFRS not recognized in other equity accounts. These reserves also
include the former "reserve for general banking risks" recorded pursuant to Decree 87/92 which,
in accordance with IAS, has been reclassified to equity.
A total of 1,616,346 treasury shares were held at 31 December 2008 with a value of 97.0 million
euro. These were the result of buy-backs in the year using the specific reserve for treasury
shares previously set up.
The amount of the Group's capital is adequate and provides reliable coverage of business risks,
while fully satisfying the minimum requirements established by the Supervisory Authorities.
Consolidated regulatory capital is made up as follows:
Changes
31/12/2008
31/12/2007
1,559.1
872.3
-18.9
1,529.6
906.7
-29.4
29.5
-34.4
10.5
1.9%
-3.8%
-35.7%
2,412.5
2,406.9
5.6
0.2%
12.4
25.8
-13.4
-51.9%
2,424.9
2,432.7
-7.8
-0.3%
Tier 1 capital
Tier 2 capital
Deductions
Regulatory capital
Tier 3 capital
Regulatory capital including Tier 3 capital
4
(+/-)
%
Consolidated equity includes not only the Parent Company's “valuation reserves” but also those of its subsidiaries, in
proportion to its interest in such companies. Therefore, every change in the “valuation reserves” of subsidiaries has a
corresponding opposite impact on the Group's “Other reserves”.
- 128 -
The consolidated prudential ratios are as follows:
Capital adeguacy ratios
Core Tier 1 capital ratio
Tier 1 capital ratio (Tier 1 capital/Risk-weighted assets)
Total capital ratio (Regulatory capital/ Risk-weighted assets)
31/12/2008
31/12/2007
7.34%
7.34%
11.42%
5.96%
5.96%
9.48%
Changes
2008/2007
1.4 b.p.
1.4 b.p.
1.9 b.p.
Regulatory capital and risk assets were calculated at 31 December 2007 using the previously
applicable rules of Basel I, while those at 31 December 2008 have been determined under the
rules of Basel II.
- 129 -
COMMENTS ON THE INCOME STATEMENT
Despite the most unprecedented financial crisis in recent history, the impact of which started to
spill over into the real economy in the last part of the year, the Banca Popolare di Vicenza Group
closed 2008 with 108.7 million euro in net income, only 4.4% below the prior year. The Group
was able to face the effects of the crisis in a calm fashion thanks to the nature of the Group,
comprising banks focused on their core business with deep roots in their home areas, and its
time-honoured attention to a solid balance sheet. Consolidated net income primarily reflected the
results of core retail banking activities, even if it included the increase in operating costs due to
the rapid growth in size in recent years and the prudent policy of providing against risks and
charges, especially necessary at times of great uncertainty. Income and expenses not relating to
the core business, particularly the capital gain on the sale of the interest in Linea S.p.A., reported
a net positive balance of 525 million euro and helped further strengthen the Group's capital base.
The good resistance of the Parent Bank's results and the performance of the subsidiary Banca
Nuova, which closed the year with 15.2 million euro in net income (+51.5% on 2007), have
supported the Group's results, despite the loss of 21.7 million euro reported by the subsidiary
BPV Finance (which had 2.0 million in net income in 2007) and the modest contribution of 462
thousand euro from the subsidiary Cassa di Risparmio di Prato (12.2 million euro in 2007).
This result, combined with the establishment of adequate capital buffers against risks and further
potential for growth thanks to our increase in size in recent years make us moderately optimistic
about the future despite the significant uncertainties permeating the environment.
For the purposes of better appreciating the contribution of the various areas of the Group's
operations to consolidated net income, trends in the principal performance indicators during 2008
are discussed below and compared with those in the prior year.
Changes in the scope of consolidation in 2007, particularly the method of consolidating the
insurance companies Berica Vita and Vicenza Life, which were consolidated line-by-line up until
31 August 2007 and thereafter at equity, as well as the impact of acquiring 61 branches from the
UBI Group at the end of 2007, mean that there are some limits on the comparability of a number
of lines in the income statement.
5
Calculated by deducting the amount reported in line item 130 b) “Net impairment adjustments to financial assets available for sale” (-33.2 million
euro) from the sum of line items 240 “Income from equity investments” (86.4 million euro), 250 “net gains (losses) arising on fair value
adjustments to tangible and intangible fixed assets” (95 thousand euro), 260 “Adjustments to goodwill” (-1.4 million euro) and 270 “Profits/losses
from disposals of investments” (-0.2 million euro).
- 130 -
Net interest income
Captions
10.
20.
Interest income and similar revenues
Interest expense and similar charges
30.
Net interest income
Changes
31/12/2008
31/12/2007
1,533,552
(880,602)
1,256,160
(666,324)
277,392
(214,278)
22.1%
32.2%
652,950
589,836
63,114
10.7%
(+/-)
%
Net interest income of 652.9 million euro was 10.7% up on 2007, reflecting higher volumes as
well as spread management policies, fostered by the favourable trend in market rates in 2008.
Captions
31/12/2008
31/12/2007
Changes
(+/-)
%
30.
Net interest income
652,950
589,836
63,114
10.7%
40.
50.
Fee and commission income
Fee and commission expense
300,321
(28,467)
304,508
(39,092)
(4,187)
10,625
-1.4%
-27.2%
60.
271,854
265,416
6,438
2.4%
70.
80.
90.
100.
110.
Dividend and similar income
Net trading income
Net hedging gains (losses)
Gains (losses) on disposals/repurchases of:
a) loans and advances
b) financial assets available for sale
d) financial liabilities
Net change in financial assets and liabilities at fair value
29,114
(13,226)
461
13,548
(50)
(931)
14,529
(2,324)
38,824
(16,329)
6,264
(1)
4,538
1,727
(6,845)
(9,710)
3,103
461
7,284
(49)
(5,469)
12,802
4,521
-25.0%
-19.0%
n.s.
116.3%
n.s.
-120.5%
741.3%
-66.0%
120.
952,377
877,166
75,211
8.6%
Net interest and other banking income came to 952.4 million euro in 2008, reporting an
increase of 8.6% on the prior year. This is a particularly satisfying result in view of the difficult
circumstances in which it was achieved.
Net fee and commission income was 2.4% higher than in 2007 at 271.9 million euro.
Even
this result is gratifying given the growing loss of customer confidence in financial markets and the
consequently sharp fall in the acceptance of orders and placement of asset management
products. The breakdown of fees and commission by type of business shows a steep contraction
in those from placement of personal asset management products but an increase in those from
the sale of other products, primarily insurance.
- 131 -
Dividend and similar income of 29.1 million euro was 25.0% lower than in the prior year which
had benefited from a number of short-term investment transactions in equities close to their exdiv dates.
Net trading income reported a loss of 13.2 million euro, compared with a loss of 16.3 million
euro in the prior year. Given the major turmoil affecting global financial and stock markets in
2008, even if this result is negative it should be seen in a positive light and reflects the particularly
prudent, vigilant management of the Group's trading activities.
Net hedging gains (losses) reported a net gain of 461 thousand euro, having been zero at 31
December 2007.
Losses on disposal of financial assets available for sale (caption 100 b) amounted to 931
thousand euro, compared with gains of 4.5 million euro in the prior year, almost all of which refers
to the sale of the sale of shares in Banca Popolare di Intra.
Gains on repurchases of financial liabilities (caption 100 d) amounted to 14.5 million euro
(compared with 1.7 million euro in 2007) and mostly refer to the repurchase of part of the senior
and mezzanine notes relating to the fifth and sixth securitizations organized by the Group, which
are “reinstated” in the financial statements.
The net change in financial assets and liabilities at fair value was a negative 2.3 million euro
compared with a negative 6.8 million euro in the prior year, with this year's figure penalized by the
negative change in fair value of junior notes relating to the first three of the securitizations
organized by the Parent Bank.
Comparison of net interest and other banking income reported in 2008 with the prior year shows
increased contributions from net interest income (68.6% versus 67.2%), from net gains on the
disposal or repurchase of financial assets and liabilities, caption 100 (1.4% versus 0.7%) and
from the net change in financial assets and liabilities at fair value (-0.2% versus -0.8%). Although
net trading income made a generally stable contribution (-1.4% versus -1.9%), net fee and
commission income made a smaller contribution (28.5% versus 30.3%) as did dividend and
similar income (3.1% versus 4.4%).
- 132 -
Net income from financial and insurance activities
Captions
120.
130.
Net impairment adjustments to:
d) other financial transactions
140.
Net income from financial activities
150.
160.
Net premium income
Other insurance income (charges)
170.
Net income from financial and insurance activities
Changes
31/12/2008
31/12/2007
952,377
877,166
75,211
8.6%
(186,319)
(152,115)
(33,237)
(967)
(146,291)
(135,843)
(10,022)
(426)
(40,028)
(16,272)
(23,215)
(541)
27.4%
12.0%
231.6%
127.0%
766,058
730,875
35,183
4.8%
241,177
(236,330)
(241,177)
236,330
n.s.
n.s.
735,722
30,336
4.1%
-
766,058
(+/-)
%
Net income from financial and insurance activities was 4.1% higher at 766.1 million euro, up
from 735.7 million euro in the prior year.
Net impairment adjustments to loans and advances were 12.0% higher at 152.1 million euro,
up from 135.8 million euro in the prior year, also reflecting increased coverage of impaired loans
due to vigilant and prudent policies of credit risk evaluation.
Net impairment adjustments to financial assets available for sale amounted to 33.2 million
euro, compared with 10.0 million euro in the prior year. These adjustments include another
writedown of 3.4 million euro against the investment in Hopa Spa, taking its carrying amount to
0.25 euro per share. Net impairment adjustments also include 15.3 million euro in writedowns
against a structured loan provided under the sale agreement completed in the year relating to all
the shares in Linea S.p.A.
Net impairment adjustments to other financial transactions amounted to 967 thousand euro
(426 thousand euro in 2007) and refer to adjustments against guarantees and commitments to
disburse funds.
Unlike in the prior year, the Group's consolidated results do not contain any contribution from net
income from insurance activities; this is because 50% of Berica Vita and Vicenza Life was sold
under the partnership agreement with the Cattolica Assicurazioni Group made in the last quarter
of 2007, meaning that these companies are now being consolidated at equity.
- 133 -
Operating costs
Captions
180.
190.
200.
210.
220.
Administrative costs:
a) payroll
b) other administrative costs
Net provisions for risks and charges
Net adjustments to property, plant and equipment
Net adjustments to intangible assets
Other operating charges/income
230.
Operating costs
Changes
31/12/2008
31/12/2007
(672,697)
(411,516)
(261,181)
(22,464)
(20,427)
(5,729)
42,453
(586,427)
(349,420)
(237,007)
(41,092)
(17,401)
(3,752)
60,074
(86,270)
(62,096)
(24,174)
18,628
(3,026)
(1,977)
(17,621)
14.7%
17.8%
10.2%
-45.3%
17.4%
52.7%
-29.3%
(678,864)
(588,598)
(90,266)
15.3%
(+/-)
%
Operating costs were 15.3% higher at 678.9 million euro, reflecting the natural effects of the
Group's recent growth in size.
Analysis of the different components of cost reveals that payroll increased by 17.8% on 2007 to
411.5 million euro, mainly because of the cost of staff in the former UBI branches (not included at
31 December 2007), new recruits to staff newly opened branches and the costs for accessing
the Law 449/1997 solidarity fund during the year. Other administrative costs climbed by 10.2%
to 261.2 million euro, reflecting the costs of the new branches acquired from the UBI Group and
higher costs associated with internally-driven expansion .
Net provisions for risks and charges amounted to 22.5 million euro and were 45.3% lower
than at 31 December 2007; last year's figure included major provisions against possible negative
outcomes on certain types of financial products acquired from customers, which, given the state
of financial markets, had suggested making suitable provisions against the related risks.
Net adjustments to property, plant and equipment increased by 17.4% from 17.4 million euro
in 2007 to 20.4 million euro in 2008, while those to intangible assets increased by 52.7% from
3.8 to 5.7 million euro; the increase in net adjustments to intangible assets mostly reflects higher
amortization (of 1.6 million euro) after allocating 24.1 million euro of the purchase price paid for
acquiring the former UBI branches to “intangibles” (which reduced the amount provisionally
booked to goodwill in the prior year and reflects the value of the acquired relationships), in
compliance with the treatment envisaged by IFRS 3 “Business combinations”.
Other operating charges/income reported 42.5 million euro in net income, down 29.3% on 60.1
million euro in 2007, partly due to costs of closing out early certain financial instruments
subscribed by customers and costs of renegotiating securitized mortgage loans.
- 134 -
The cost/income ratio1 was 70.25% compared with 64.83% in 2007.
Profit (loss) from current operations before tax
Captions
240.
250.
31/12/2008
31/12/2007
46,911
Changes
(+/-)
%
86,445
260.
270.
Profit (loss) from equity investments
Net gains (losses) arising on fair value adjustments to
property, plant and equipment and intangible assets
Adjustments to goodwill
Gains (losses) on disposal of investments
39,534
84.3%
95
(1,386)
(201)
172
(660)
645
(77)
(726)
(846)
-44.8%
110.0%
-131.2%
280.
172,147
194,192
(22,045)
-11.4%
Profit (loss) from current operations before tax was 11.4% below the prior year at 172.1
million euro.
Profits from equity investments amounted to 86.4 million euro, compared with 46.9 million euro
in 2007, and reflect the capital gain of 91.6 million euro realized on the disposal of the entire
interest in Linea S.p.A. to Compass S.p.A., less the losses for the year of certain associates
consolidated at equity.
Net gains (losses) arising on fair value adjustments to property, plant and equipment and
intangible assets reported immaterial amounts.
Adjustments to goodwill amounted to 1.4 million euro, compared with 660 thousand euro in the
prior year, and reflect the recognition of impairment losses on all the remaining goodwill arising
on consolidation relating to the subsidiary Nuova Merchant.
Lastly, losses on disposal of investments amounted to 201 thousand euro compared with
gains of 645 thousand euro in the prior year.
1
This indicator reports administrative costs (caption 180) plus net adjustments to property, plant and
equipment and intangible assets (captions 200 and 210) as a proportion of net interest and other banking
income (caption 120) plus other operating charges/income (caption 220).
- 135 -
Net income for the year pertaining to the Parent Bank
Captions
31/12/2008
31/12/2007
Changes
(+/-)
%
280.
172,147
194,192
(22,045)
-11.4%
290.
Income taxes on current operations
(61,092)
(76,652)
15,560
-20.3%
300.
Profit (loss) from current operations after tax
111,055
117,540
(6,485)
-5.5%
320.
111,055
117,540
(6,485)
-5.5%
330.
Minority interests
(2,316)
(3,809)
1,493
-39.2%
340.
Net income (loss) for the year pertaining to the
parent bank
108,739
113,731
(4,992)
-4.4%
Income taxes amounted to 61.1 million euro (with a tax rate of 35.5%), compared with 76.7
million euro in 2007 (with a tax rate of 39.5%).
Following the above charge for tax, profit (loss) from current operations after tax and net
income for the year amounted to 111.1 million, down 5.5% on the prior year.
Net income pertaining to minority interests in subsidiary companies came to 2.3 million euro
compared with 3.8 million euro in 2007, while net income for the year pertaining to the Parent
Bank was 108.7 million euro, down 4.4% on the prior year.
Reconciliation of equity and net income of the Parent Bank with the related consolidated
amounts
The following table reconciles equity and net income reported in the Parent Bank's individual
financial statements for 2008 with the corresponding figures in the consolidated financial
statements.
- 136 -
Parent bank'
s financial statement
31/12/2008
of which: net
Equity
profit for the
year
2,844,153
151,035
31/12/2007
of which: net
Equity
profit for the
year
2,783,607
110,090
Year results pertaining to the Gruop, as to:
- companies consolidated line-by-line
- companies valued at shareholders'equity
- 17,030
- 17,030
33,214
33,214
- 948
- 948
12,757
12,757
- 3,838
23,226
- 24,323
- 415
- 28,419
- 19,305
7,729
- 776
Differences compared to carrying values, as to:
Write-off of dividends collected during the year from:
Derecognition of intercompany profit and loss
Derecognition of intercompany capital gains from
discontinuing and contributing operations
Other consolidation adjustments
Consolidated financial statement
- 27,688
- 33,218
- 2,943
- 8,608
10,474
2,226
4,606
1,859
- 83,831
- 66
- 83,765
82
9,290
232
9,057
- 1,254
2,729,851
108,739
2,742,882
113,731
Consolidated equity pertaining to the Parent Bank of 2,729.9 million euro is 114.3 million euro
lower than that reported in the Parent Bank's individual financial statements. The changes in
consolidated equity are detailed in a specific schedule forming part of the consolidated financial
statements.
Consolidated net income for the year pertaining to the Parent Bank of 108.7 million euro is 42.3
million euro lower than that reported in the Parent Bank's individual financial statements; this
difference mainly reflects the negative contribution by the subsidiaries BPV Finance (-21.7 million
euro after consolidation adjustments) and Nuova Merchant (-4.9 million euro after consolidation
adjustments) which were affected by the difficulties on financial markets, and the smaller amount
of the capital gain reported for consolidation purposes (-19.4 million euro) on the sale of all the
shares in Linea S.p.A. during the year.
Information relating to the ownership and sale of treasury shares
Information relating to treasury shares of the Parent Bank and of companies included in the
consolidation is provided in the explanatory notes.
- 137 -
Audit of the consolidated financial statements
The Parent Bank has had its individual and consolidated financial statements audited by KPMG
SpA, who were reappointed as the Group's auditors for the three-year period 2008-2011 at the
stockholders' meeting held on 19 April 2008, with the approval of the Board of Statutory Auditors.
- 138 -
PERFORMANCE OF BPVi GROUP COMPANIES
Highlights from the 2008 balance sheets and income statements of the Group's companies are
presented and discussed below.
The principal aggregates of each of the Group's banking subsidiaries are presented below,
thereby putting them into perspective within the Group as a whole and providing an overview of
the scale of its banking activities.
Intercompany transactions and balances have not been eliminated from these figures.
Items
BPVi
Banca
Nuova
Cariprato
Farbanca
Gruppo
1
BPVi
Loans to customers
16,018
2,856
3,394
319
22,705
Direct deposits
15,051
3,494
2,871
95
21,406
Indirect deposits
12,926
1,271
1,671
21
15,890
Equity
2,844
210
279
37
2,730
151.0
15.2
0.5
2.7
108.7
Number of outlets 2
455
128
97
1
681
Number of branches
436
106
94
1
637
3,508
899
990
29
5,645
Number of employees 3
1
The Group's figures refer to the consolidated financial statements and not to the sum of the companies presented above.
The number of outlets includes bank branches, money shops and private banking offices.
3
As of 31 December 2008.
2
- 139 -
Performance of the Parent Bank
Direct deposits
Direct deposits, excluding “liabilities for assets sold but not derecognized”, amounted to 14,271
million euro at 31 December 2008, reporting an increase of 12.2% on the year before (+8.4%
including “liabilities for assets sold but not derecognized”).
Direct deposits
31/12/2008
31/12/2007
Changes
(+/-)
%
Current accounts and unrestricted deposits
Current accounts and restricted deposits
Repurchase agreements and other payables
Bonds
Certificates of deposit and other securities
5,946
200
575
7,386
164
5,344
22
604
6,571
180
602
178
-29
815
-16
11.3%
809.1%
-4.8%
12.4%
-8.9%
sub-total
Liabilities for assets sold but not derecognized
14,271
780
12,721
1,164
1,550
-384
12.2%
-33.0%
Total direct deposits
15,051
13,885
1,166
8.4%
The changes in the different types of direct deposit reflect strong growth in “bonds” (+12.4%) and
“current accounts and unrestricted deposits” (+11.3%), but a contraction in “repurchase
agreements and other payables” (-4.8%). This downward trend in repurchase agreements in
favour of other types of funding is a positive sign in terms of liquidity, with the Bank closing such
funding transactions with lending transactions generally in the same technical form. “Certificates
of deposit and other securities” and “current accounts and restricted deposits” have settled for
some time now at much reduced levels:
while the former posted a decrease over the twelve
months of 8.9%, the later grew by 178 million euro in absolute terms (+809.1%).
With reference to the Bank's own bond issues, which account for 49% of all direct deposits, the
Bank made no new issues in the year under its European Medium Term Notes programme, after
issuing more than 1,815 million euro in notes in 2007; consequently, the entire change for the
year is attributable to ordinary placement activities with retail customers, with obvious benefits in
terms of diversification of the sources and cost of funding .
“Liabilities for assets sold but not derecognized” were 33.0% lower than at 31 December 2007.
These relate to the "Berica 5 Residential MBS" and “Berica 6 Residential MBS” securitizations
- 140 -
arranged in 2004 and 2006 respectively, which, as discussed in the section on loans, have been
“reinstated” in the balance sheet, as required by IAS 39. In fact, they represent notes issued by
vehicle companies that are backed by securitized home mortgages; their decrease since 31
December 2007 reflects partial repayment of such securities and the Bank's repurchase of 208.9
million euro in senior and mezzanine notes issued as part of the above securitizations which have
consequently been derecognized.
With reference to the latest securitization known as “Berica 7 Residential MBS”, carried out in
November 2008 and also “reinstated” in the balance sheet under IAS 39, since all the related
asset backed securities (ABS) were subscribed by the originator banks (BPVi, Banca Nuova and
Cariprato), no “liabilities for assets sold but not derecognized” have been recognized.
Direct deposits
20,000
15,000
15,051
13,885
10,000
+8.4%
5,000
0
31/12/2008
31/12/2007
Indirect deposits
Indirect deposits had a total market value of 12,926 million euro at 31 December 2008, reporting
a decrease of 14.4% on a year earlier.
This aggregate has been seriously affected by the recent turmoil on financial markets and the
decline in its value is almost entirely attributable to negative performance in the asset
management sector, which although accounting for only 19% of all indirect deposits, posted an
absolute decrease in value of 1,792 million euro over the year (-42.2%).
Assets under
administration, which represent 69% of the total aggregate, also reported a negative performance
although not as large (-5.2%).
Pension premiums, accounting for 12% of total indirect deposits,
increased by 7.2% over the year, reflecting the benefits of partnership with the Cattolica
Assicurazioni Group.
- 141 -
Indirect deposits
31/12/2008
31/12/2007
Changes
(+/-)
%
Mutual funds
Personal asset management
Pension premiums
Shares
Other securities
Treasury shares
1,993
457
1,536
1,202
4,029
3,709
3,148
1,094
1,433
1,938
3,773
3,722
-1,155
-637
103
-736
256
-13
-36.7%
-58.2%
7.2%
-38.0%
6.8%
-0.3%
Total indirect deposits
12,926
15,108
-2,182
-14.4%
assets under management
retirement savings
assets under administration
2,450
1,536
8,940
4,242
1,433
9,433
-1,792
103
-493
-42.2%
7.2%
-5.2%
Looking at the various forms of indirect deposits, the sharp contraction in assets under
management, which for some time has witnessed a reduction in volumes due to investor
disaffection for this sector, reflects decreases in both “mutual funds” (-36.7%) and “personal asset
management” (-58.2%). With regard to assets under administration, “shares” were 38.0% lower
mainly because of the steep drop in global share prices, while “other securities” were 6.8%
higher. “Treasury shares” were generally stable. Lastly, “pension premiums” posted an annual
increase of 7.2% to 1,536 million euro at 31 December 2008.
Indirect deposits
20,000
( in milions of Euro)
15,000
15,108
12,926
10,000
-14.4%
5,000
0
31/12/2007
31/12/2008
Loans to customers
The volume of loans to businesses and households in our home regions continued to grow in a
satisfactory fashion in 2008, all of which was funded by the growth in direct deposits from
customers.
- 142 -
Loans to customers
31/12/2008
Ordinary current accounts
Mortgage loans
Syndicated loans
Import/export loans
Other loans
Debt securities
Repurchase agreements
Net non-performing loans
sub-total
(1)
Changes
(+/-)
%
3,265
5,910
1,541
1,177
2,160
48
47
193
3,194
5,364
1,468
1,132
2,332
18
7
207
71
546
73
45
-172
30
40
-14
2.2%
10.2%
5.0%
4.0%
-7.4%
166.7%
571.4%
-6.8%
14,341
13,722
619
4.5%
1,677
1,191
486
40.8%
16,018
14,913
Total net loans
31/12/2007
1,105
7.4%
This does not include non-performing loans related to “assets sold but not derecognized”.
Net of impairment adjustments, loans to customers increased by 7.4% on the prior year to 16,018
million euro at 31 December 2008 (+4.5% excluding “assets sold but not derecognized”).
In terms of individual lending products, almost all the different technical forms grew despite the
economic slowdown. In particular, “mortgage loans” grew by 10.2%, “ordinary current accounts”
by 2.2%, “syndicated loans” by 5.0% and “import-export loans” by 4.0%. The increase in “debt
securities” (+166.7%) is mainly due to the reclassification in the year of certain financial
instruments previously classified as “financial assets available for sale”; this reclassification was
permitted under the amendments to IAS 39 endorsed in Regulation EC 1004/2008, as already
discussed in an earlier section of this report.
“Repurchase agreements”, of relatively immaterial absolute amount, were 40 million euro higher
(+571.4%), while “other loans” were 7.4% lower.
- 143 -
Loans to customers
20,000
15,000
16,018
14,913
10,000
+7.4%
5,000
0
31/12/2007
31/12/2008
“Mortgage loans” grew at a slower pace than in the past, reflecting a contraction in individual
customer demand throughout the banking industry as a whole, and the new securitization carried
out in November 2008, under which BPVi, Banca Nuova and Cariprato sold a total of 968.4
million euro in performing residential mortgage loans (of which 682.4 million euro related to BPVi)
to a special purpose entity called “Berica 7 Residential MBS Srl”. Like the “Berica 5 Residential
Mbs” and “Berica 6 Residential MBS” securitizations, this securitization does not meet the
derecognition requirements of IAS;6 accordingly, the residual securitized assets have been
“reinstated” in the financial statements at 31 December 2008 as “assets sold but not
derecognized” (which have therefore increased by 486 million euro (+40.8%).
“Mortgage loans” nonetheless continued to represent around 37% of total loans (and over 47%
including the securitized mortgages classified in “assets sold but not derecognized”).
Credit risk indicators have deteriorated throughout the banking industry in the wake of the
financial market crisis in the second half of the year and the resulting deterioration in an already
weak economy. These events have had a negative impact on the quality of the Bank's loan book,
which has deteriorated somewhat at the end of 2008 relative to 31 December 2007.
This
deterioration, expressed in terms of the ratio between impaired loans and total loans, was less
than for the banking industry as a whole.
6
With regard to the other securitizations carried out before 1 January 2004, the securitized assets were
not reinstated on the first-time adoption of IAS 39, as allowed by paragraph 27 of IFRS 1.
- 144 -
Impaired loans net
1,000
800
600
560.8
498.3
+12.5%
400
200
0
31/12/2007
31/12/2008
Impaired loans to customers (net of adjustments and including any impaired loans classified as
“assets sold but not derecognized”) were 62.5 million euro higher (+12.5%) at 31 December 2008
than a year earlier; however, as a percentage of total net loans, impaired loans increased by just
0.16 percentage points, from 3.34% at 31 December 2007 to 3.50% at the end of 2008. The ratio
of net non-performing loans to net loans to customers was 1.38%, marking an improvement of
0.10 percentage points on the figure of 1.48% reported at the end of 2007.
Looking at the composition of impaired loans, it is mainly the watchlist loans and positions past
due by more than 180 days that have deteriorated most, increasing by 64.3 million euro (+34.5%)
and 11.3 million euro (+19.0%) respectively;
non-performing loans have increased by 928
thousand euro (+0.4%), while restructured loans have fallen by 14.0 million euro (-44.3%).
In terms of coverage, meaning the ratio between total provisions and gross exposure, the
coverage of impaired loans has increased from 31.75% at 31 December 2007 to 34.52% at 31
December 2008, mainly due to higher provisions against non-performing loans, whose coverage,
ignoring partial write-offs, has risen from 42.45% at 31 December 2007 to 49.82% at the end of
20087.
Lastly, the “general provision” for “performing” loans amounted to 69.2 million euro at 31
December 2008, providing coverage of 0.45%, down from 0.54% at 31 December 2007. This
reduction is mainly due to the smaller impact of discounting after the cuts in interest rates in the
last part of the year.
7
The coverage of non-performing loans, including write-offs for bankruptcy proceedings still in progress at 31 December 2008, was 66.63% at
year end, while that of gross impaired loans would be 48.01%.
- 145 -
Equity and regulatory capital
The equity of Banca Popolare di Vicenza amounted to 2,844.2 million euro at 31 December 2008,
reporting an increase of 60.5 million euro (+2.2%) since 31 December 2007.
Equity
Capital stock
Additional paid-in capital
Equity instruments
Valuation reserves
Reserves
Treasury shares
31/12/2008
261,460
1,960,355
13,104
38,049
517,131
- 96,981
Equity
Total equity
31/12/2007
261,656
1,963,297
13,630
- 43,225
478,159
-
2,693,118
2,673,517
151,035
110,090
2,844,153
2,783,607
Changes
(+/-)
- 196
- 2,942
- 526
81,274
38,972
- 96,981
19,601
%
-0.1%
-0.1%
-3.9%
-188.0%
8.2%
n.s.
0.7%
40,945
37.2%
60,546
2.2%
The decreases of 196 thousand euro in “capital stock” and of 2,942 thousand euro in “additional
paid-in capital” reflect the combined effect of issuing new shares allotted to employees after
achieving a specific length of service and of reimbursing shares to estates of deceased members,
now cancelled.
“Equity instruments” of 13.1 million euro at 31 December 2008 refer to the equity component
embedded in the convertible bond known as “BPVI 13.a Emissione 2007-2015”, placed by the
Parent Bank in July 2007, and reported separately in accordance with IAS 32. The decrease of
526 thousand euro reflects bonds that were bought back but have not yet been resold.
The increase of 81.3 million euro in the "valuation reserves" reflects the changes in fair value
recognized in the year for financial instruments classified as “financial assets available for sale”
as well as 60.7 million euro for cancelling the negative valuation reserves relating to the interest
in Cattolica Assicurazioni after reclassifying it to “equity investments” with effect from 31 October
2008.
The "valuation reserves" also include the reserves arising from the valuation of land, buildings
and works of art at deemed cost on the first-time adoption of IAS/IFRS, together with the reserves
relating to special revaluation laws.
The increase of 39.0 million euro in other "reserves" reflects 37.5 million euro in allocations of
prior year net income to the Group's reserves, and 1.5 million euro in other changes. These
reserves also include reserves formed from prior year earnings, as well as the positive and
- 146 -
negative reserves arising on first-time adoption of IAS-IFRS not recognized in other equity
accounts. They also include the former "reserve for general banking risks" recorded pursuant to
Decree 87/92 which, in accordance with IAS, has been reclassified to equity.
A total of 1,616,346 treasury shares were held at 31 December 2008 with a value of 97.0 million
euro. These were the result of buy-backs in the year using the specific reserve for treasury
shares previously set up.
Capital
stock
comprised
69,722,736
shares
at
31
December
2008
compared
with
69,775,066 at 31 December 2007, reporting a net decrease of 52,330 reflecting the issue of
5,620 new shares to employees upon reaching a specific length of service and the cancellation of
57,950 shares. Excluding the 1,616,346 treasury shares held by the Bank, the number of
outstanding shares at 31 December 2008 was 68,106,390.
The shares of the Bank, which is one of the Relevant Issuers listed in CONSOB Resolutions
11.768/98 and 11.862/99, are dematerialized and centralized with Monte Titoli, in accordance
with the provisions of Decree 58/98 and Decree 213/98.
The following table reports the Bank's purchases and sales of its shares in accordance with art.
18 of the articles of association.
Treasury shares
31/12/07
Purchases
Sales
31/12/2008
(1)
Number of shares
% on Equity (1)
Amount
5,211,730
3,595,384
7.47%
5.15%
312,704
215,723
1,616,346
2.32%
96,981
% determined with reference to the number of shares outstanding at year end.
Capital stock at 31 December 2008 was held by 53,329 Members; this was 849 more than at 31
December 2007, reflecting the admission of 3,234 new Members in the year and the departure of
2,385 Members.
- 147 -
Number of Shareholders
55,000
50,000
53,329
52,480
47,561
45,000
40,000
2006
2007
2008
The amount of the Bank's capital is adequate and provides reliable coverage of business risks,
while satisfying the minimum requirements established by the Supervisory Authorities.
The Bank's regulatory capital is made up as follows:
Changes
31/12/2008
31/12/2007
2,061.8
823.9
-26.8
1,963.9
728.1
-26.8
97.9
95.8
0.0
5.0%
13.2%
0.0%
2,858.9
2,665.2
193.7
7.3%
Tier 1 capital
Tier 2 capital
Deductions
Regulatory capital
(+/-)
%
The prudential ratios are as follows:
Capital adeguacy ratios
Core Tier 1 capital ratio
Tier 1 capital ratio (Tier 1 capital/Risk-weighted assets)
Total capital ratio (Regulatory capital/ Risk-weighted assets)
31/12/2008
31/12/2007
12.04%
12.04%
16.70%
9.69%
9.69%
13.15%
var.
2008 /2007
2.4 b.p.
2.4 b.p.
3.6 b.p.
Regulatory capital and risk assets were calculated at 31 December 2007 using the previously
applicable rules of Basel I, while those at 31 December 2008 have been determined under the
rules of Basel II.
- 148 -
Comments on the income statement
Banca Popolare di Vicenza closed 2008 with 151.0 million euro in net income, 37.2% above the
prior year. This result is more than satisfactory in view of the context in which it was achieved,
with the most unprecedented financial crisis in recent history starting to spill over into the real
economy in the last part of the year. The Bank was able to face the effects of the crisis in a calm
fashion thanks to its focus on core business and its deep roots in its home areas, combined with
time-honoured attention to a solid balance sheet. Net income primarily reflected the results of
core retail banking activities and careful management of the Bank's own portfolios, even if it
included the increase in operating costs due to the rapid growth in size in recent years and the
prudent policy of providing against risks and charges, especially necessary at times of great
uncertainty. Income and expenses not relating to the core business, particularly the capital gain
on the sale of the interest in Linea S.p.A., reported a net positive balance of 728 million euro and
helped further strengthen the Group's capital base.
This result, combined with the good
resistance of the core business, the establishment of adequate capital buffers against risks and
further potential for growth thanks to our increase in size in recent years make us moderately
optimistic about the future despite the significant uncertainties permeating the environment.
For the purposes of better appreciating the contribution of the various areas of the Bank's
operations to net income, trends in the principal performance indicators during 2008 are
discussed below and compared with those in the prior year.
Net interest income
Captions
10.
20.
Interest income and similar revenues
Interest expense and similar charges
30.
Net interest income
Changes
31/12/2008
31/12/2007
1,110,538
(704,906)
877,720
(522,448)
232,818
(182,458)
26.5%
34.9%
405,632
355,272
50,360
14.2%
(+/-)
%
Net interest income of 405.6 million euro was 14.2% up on 2007, reflecting higher volumes as
well as spread management policies, fostered by the favourable trend in market rates in 2008.
8
Calculated by deducting the amount reported in line item 130 b) “Net impairment adjustments to financial assets available for sale” (-24.5 million
euro) from the sum of line items 210 “Income from equity investments” (97.1 million euro) and 240 “Profits/losses from disposals of investments”
(-0.2 million euro).
- 149 -
Captions
31/12/2008
31/12/2007
Changes
(+/-)
%
30.
Net interest income
405,632
355,272
50,360
14.2%
40.
50.
Fee and commission income
Fee and commission expense
194,894
(17,325)
193,435
(18,446)
1,459
1,121
0.8%
-6.1%
60.
177,569
174,989
2,580
1.5%
70.
80.
90.
100.
110.
Dividend and similar income
Net trading income
Net hedging gains (losses)
Gains (losses) on disposals/repurchases of:
d) financial liabilities
Net change in financial assets and liabilities at fair value
55,340
1,485
273
17,670
(38)
3,961
13,747
(3,723)
68,299
(18,437)
5,122
(17)
4,055
1,084
(2,566)
(12,959)
19,922
273
12,548
(21)
(94)
12,663
(1,157)
-19.0%
n.s.
n.s.
245.0%
123.5%
-2.3%
n.s.
45.1%
120.
654,246
582,679
71,567
12.3%
Net interest and other banking income came to 654.2 million euro in 2008, reporting an
increase of 12.3% on the prior year. This is a particularly satisfying result in view of the difficult
circumstances in which it was achieved.
Net fee and commission income was 1.5% higher than in 2007 at 177.6 million euro.
Even
this result is gratifying given the growing loss of customer confidence in financial markets and the
consequently sharp fall in the acceptance of orders and placement of asset management
products. The breakdown of fees and commission by type of business shows a steep contraction
in those from placement of personal asset management products but an increase in those from
the sale of other products, primarily insurance.
Dividend and similar income of 55.3 million euro was 19.0% lower than in the prior year which
had benefited from a number of short-term investment transactions in equities close to their exdiv dates.
Net trading income reported a profit of 1.5 million euro, compared with a loss of 18.4 million
euro in the prior year. Given the major turmoil affecting global financial and stock markets in
2008, this result should be seen in a positive light and reflects the particularly prudent, vigilant
management of the Bank's trading activities.
Net hedging gains (losses) reported a net gain of 273 thousand euro, having been zero at 31
December 2007.
- 150 -
Gains on disposal of financial assets available for sale (Caption 100 b) amounted to 4.0
million euro, staying generally in line with the prior year (-2.3%).
Gains on repurchases of financial liabilities (caption 100 d) amounted to 13.7 million euro
(compared with 1.1 million euro in 2007) and mostly refer to the repurchase of part of the senior
and mezzanine notes relating to the fifth and sixth securitizations organized by the Group, which
are “reinstated” in the financial statements.
The net change in financial assets and liabilities at fair value was a negative 3.7 million euro,
compared with a negative 2.6 million euro in the prior year, with this year's figure penalized by the
negative change in the fair value of junior notes relating to the first three of the securitizations
organized by the Parent Bank.
Comparison of net interest and other banking income reported in 2008 with the prior year shows
increased contributions from net interest income (62.0% versus 61.0%), from net gains on the
disposal or repurchase of financial assets and liabilities, caption 100 (2.7% versus 0.9%) and
from net trading income (0.3% versus -3.2%). Although the net change in financial assets and
liabilities at fair value made a generally stable contribution (-0.6% versus -0.4%), net fee and
commission income made a smaller contribution (27.1% versus 30.0%) as did dividend and
similar income (8.5% versus 11.7%).
Captions
120.
130.
Net impairment adjustments to:
d) other financial transactions
140.
Changes
31/12/2008
31/12/2007
654,246
582,679
71,567
12.3%
(126,710)
(101,313)
(24,475)
(922)
(112,206)
(102,790)
(9,117)
(298)
(14,504)
1,477
(15,358)
(624)
12.9%
-1.4%
168.5%
209.4%
527,536
470,473
57,063
12.1%
(+/-)
%
Net income from financial activities amounted to 527.5 million euro compared with 470.5
million euro in the prior year, posting an increase of 12.1%.
Net impairment adjustments to loans and advances were 1.4% lower at 101.3 million euro,
down from 102.8 million euro in the prior year.
Net impairment adjustments to financial assets available for sale amounted to 24.5 million
euro, compared with 9.1 million euro in the prior year.
These adjustments include another
writedown of 3.4 million euro against the investment in Hopa Spa, taking its carrying amount to
- 151 -
0.25 euro per share. Net impairment adjustments also include 15.3 million euro in writedowns
against a structured loan provided under the sale agreement completed in the year relating to all
the shares in Linea S.p.A.
Net impairment adjustments to other financial transactions amounted to 922 thousand euro
(299 thousand euro in 2007) and refer to adjustments against guarantees and commitments to
disburse funds.
Operating costs
Captions
150.
160.
170.
180.
190.
Administrative costs:
a) payroll
b) other administrative costs
Net provisions for risks and charges
Net adjustments to property, plant and equipment
Net adjustments to intangible assets
Other operating charges/income
200.
Operating costs
Changes
31/12/2008
31/12/2007
(433,704)
(254,337)
(179,367)
(15,332)
(7,456)
(4,430)
26,831
(372,363)
(208,897)
(162,466)
(26,105)
(5,673)
(2,199)
42,339
(62,341)
(45,440)
(16,901)
10,773
(1,783)
(2,231)
(15,508)
16.7%
21.8%
10.4%
-41.3%
31.4%
101.5%
-36.6%
(434,091)
(364,001)
(71,090)
19.5%
(+/-)
%
Operating costs were 19.3% higher at 434.1 million euro, reflecting the natural effects of the
Bank's recent growth in size.
Analysis of the different components of cost reveals that payroll increased by 21.2% on 2007 to
254.3 million euro, mainly because of the cost of staff in the former UBI branches (not included
at 31 December 2007) and of new recruits to staff newly opened branches. Other administrative
costs climbed by 10.4% to 179.4 million euro, reflecting the costs of the new branches acquired
from the UBI Group and higher costs associated with internally-driven expansion.
Net provisions for risks and charges amounted to 15.3 million euro and were 41.3% lower
than at 31 December 2007;
last year's figure included major provisions against possible
negative outcomes on certain types of financial products acquired from customers, which, given
the state of financial markets, had suggested making suitable provisions against the related risks.
Net adjustments to property, plant and equipment increased by 31.4% from 5.7 million euro in
2007 to 7.5 million euro in 2008, while those to intangible assets increased by 101.5% from 2.2
to 4.4 million euro; the increase in net adjustments to intangible assets mostly reflects higher
amortization (of 1.6 million euro) after allocating 24.1 million euro of the purchase price paid for
acquiring the former UBI branches to “intangibles” (which reduced the amount provisionally
booked to goodwill in the prior year and reflects the value of the acquired relationships), in
compliance with the treatment envisaged by IFRS 3 “Business combinations”.
- 152 -
Other operating charges/income reported 26.8 million euro in net income, down 36.6% on 42.3
million euro in 2007, partly due to costs of closing out early certain financial instruments
subscribed by customers and costs of renegotiating securitized mortgage loans.
The cost/income ratio1 was 65.42% compared with 60.84% in 2007.
Captions
31/12/2008
210.
240.
Profit (loss) from equity investments
Gains (losses) on disposal of investments
97,070
(178)
250.
190,337
31/12/2007
Changes
(+/-)
%
42,628
9
54,442
(187)
127.7%
-2077.8%
149,109
41,228
27.6%
Profit (loss) from current operations before tax was 27.6% above the prior year at 190.3
million euro.
Profit from equity investments amounted to 97.1 million euro, compared with 42.6 million euro
in 2007, and reflects the capital gain of 110.0 million euro realized on the disposal of the entire
interest in Linea S.p.A. to Compass S.p.A., less the impairment losses recognized against the
value of certain subsidiaries.
Lastly, losses on disposal of investments amounted to 178 thousand euro compared with
gains of 9 thousand euro in the prior year.
Captions
31/12/2008
31/12/2007
Changes
(+/-)
%
250.
190,337
149,109
41,228
27.6%
260.
Income taxes on current operations
(39,302)
(39,019)
(283)
0.7%
270.
Profit (loss) from current operations after tax
151,035
110,090
40,945
37.2%
290.
151,035
110,090
40,945
37.2%
1
This indicator reports administrative costs (caption 150) plus net adjustments to property, plant and
equipment and intangible assets (captions 170 and 180) as a proportion of net interest and other banking
income (caption 120) plus other operating charges/income (caption 190).
- 153 -
Income taxes amounted to 39.3 million euro (with a tax rate of 20.6%), compared with 39.0
million euro in 2007 (with a tax rate of 26.2%).
Following the above charge for tax, profit (loss) from current operations after tax and net
income for the year amounted to 151.0 million euro, up 37.2% on the prior year.
- 154 -
Performance of other group banks
Banca Nuova S.p.A.
Balance sheet and income statement highlights
2008
2007
Change
% Change
Direct deposits
Indirect deposits
Loans to customers
Total Assets
Equity (including net income for the year)
Regulatory capital
3,494.5
1,271.4
2,856.3
4,087.8
2,214.0
210.3
186.4
2,887.1
1,333.5
2,520.3
3,263.0
2,371.8
205.0
194.4
607.4
-62.1
336.0
824.8
-157.8
5.3
-8.0
21.0%
-4.7%
13.3%
25.3%
-6.7%
2.6%
-4.1%
98.9
144.4
-108.0
-60.1
15.2
91.8
136.9
-103.4
-55.1
10.0
7.1
7.5
-4.6
-5
5.2
7.7%
5.5%
4.4%
9.1%
52.0%
Net interest income
Operating costs
of which: payroll
Other information
2008
Number of employees at year-end
Number of branches
2007
899
106
2008
Change
850
106
2007
% Change
49
0
Change
2008 /2007
69.9%
85.5%
81.7%
77.2%
88.5%
87.3%
-7.3 p.p.
-3.0 p.p.
-5.6 p.p.
7.8%
0.4%
74.2%
5.1%
0.3%
72.1%
2.7 p.p.
0.1 p.p.
2.1 p.p.
4.0
3.3
165.8
3.4
3.0
162.4
17.1%
9.7%
2.1%
3.70%
1.67%
57.38%
41.82%
3.49%
1.67%
57.10%
42.31%
0.21 p.p.
0.00 p.p.
0.28 p.p.
-0.49 p.p.
6.44%
6.44%
8.42%
5.29%
5.29%
8.20%
1.15 p.p.
1.15 p.p.
0.22 p.p.
Cost/Income (2)
Productivity ratios
(1)
(3)
Risk ratios (%)
Core Tier 1
(1)
(2)
Total average assets are determined as the simple average of total assets at the end of the current year and at the end of the previous year.
This is the ratio of administrative costs (line item 150) plus net adjustments to property, plant and equipment and intangible assets
(3)
The productivity indicators are calculated with reference to the average number of employees.
- 155 -
5.8%
0.0%
Banca Nuova, 99.59% owned by Banca Popolare di Vicenza (which carries it at a book value of
284.1 million euro), is a retail bank with deep roots in Sicily, where it has branches in every
province, and which has gradually expanded into the regions of Calabria and Lazio in recent
years.
Its commercial network had 128 outlets at 31 December 2008: 106 bank branches, 17 money
shops and 5 private banking offices.
It had 899 employees at this date, of whom 22 under fixed-term contracts, 7 under apprenticeship
contracts and 24 part-timers, with a net increase of 49 since the end of the prior year. The
Financial Promoter network had 150 consultants at 31 December 2008, two fewer than a year
earlier.
Banca Nuova managed to expand its banking business significantly in 2008: the bank's total
deposits amounted to 4,765 million euro at 31 December 2008, 12.9% more than a year earlier,
while net loans were 13.3% higher at 2,856 million euro.
Direct deposits increased by 607 million euro to 3,494 million euro (+21%). Most of this increase
was attributable to growth in “current accounts and unrestricted deposits” and “bonds”. In fact,
current accounts and unrestricted deposits grew by more than 563 million euro (+31.5%) since 31
December 2007, while bonds increased by around 124 million euro (+19.7%).
Indirect deposits amounted to over 1,271 million euro, reporting a decrease of 63 million euro
since the end of the prior year (-4.7%). In particular, the largest decreases were in the mutual
funds and shares sectors, only partly offset by growth in asset administration and in other
securities.
Net loans increased by 336 million euro to 2,856 million euro (13.3%);
in detail, “current
accounts” increased by over 111 million euro (+34.6%), “repurchase agreements” by more than
31 million euro (considered exceptional following a transaction at year end), “mortgage loans” by
162 million euro (+11.2%), “import-export loans ” by more than 10 million euro (+46.1%) and
“debt securities” by 10 million euro (+53.5%).
In contrast, “syndicated loans ” decreased by
around 16 million euro (-28.1%) and “other loans” by 130 million euro (-31.3%), mostly
attributable to a loan repaid by the subsidiary Prestinuova.
Assets sold but not derecognized increased by 151 million euro (+75.2%) following the new multioriginator securitization carried out in the year known as “Berica 7 Residential MBS”.
With reference to the indicators of credit risk, the ratio of net impaired loans to net loans
(including those loans represented by "Assets sold but not derecognized") went from 3.49% at 31
December 2007 to 3.70% at 31 December 2008, while the ratio of net non-performing loans to
net loans was stable at 1.67%.
- 156 -
In terms of the subsidiary's income statement, it reported 15.2 million euro in net income for the
year (+51.5% on 2007), particularly reflecting the improvement in net interest income which was
7.1 million euro higher at 98.9 million euro (+7.8%).
Even though net fee and commission income was generally stable (+0.8%) largely because of
downturn in the asset management business, net interest and other banking income was 7.5
million euro higher at 144.4 million euro (+5.5%).
Net income from financial activities improved by 5.8% to 133.6 million euro.
Operating costs rose by 4.5% to 108 million euro.
Profit (loss) from current operations before tax came to 25.1 million euro, posting an absolute
increase of around 3 million euro (+13.5%) on 2007.
Income taxes were 2.2 million euro lower than in the prior year at 9.9 million euro (-18.1%). The
reduction reflects 1.9 million euro for franking the differences between asset book and tax values
arising from off-book adjustments made up until 31 December 2007 (so-called franking of Form
EC).
Net income for the year came to 15.2 million euro, reporting an absolute increase of 5.2 million
euro (+51.5%) on 2007.
- 157 -
Cariprato S.p.A.
2008
2007
Change
% Change
Direct deposits
Indirect deposits
Loans to customers
Total Assets
Regulatory capital
2,871
1,671
3,394
3,897
3,041
279.1
267.0
2,684
2,064
3,193
3,811
3,394
288.8
268.1
187
-393
201
86
-353
-9.7
-1.1
7.0%
-19.0%
6.3%
2.3%
-10.4%
-3.4%
-0.4%
122.1
161.4
-117.4
-73.2
0.5
109.4
156.3
-109.8
-64.7
12.2
12.7
5.1
-7.6
-9
-11.7
11.6%
3.3%
6.9%
13.1%
-96.2%
Net interest income
Operating costs
of which: payroll
Other information
2008
Number of branches
2007
990
94
2008
Change
980
92
2007
% Change
10
2
Change
2008 /2007
87.1%
73.7%
118.2%
83.8%
70.4%
119.0%
3.3 p.p.
3.3 p.p.
-0.8 p.p.
0.2%
0.0%
71.4%
4.4%
0.3%
66.7%
-4.2 p.p.
-0.3 p.p.
4.7 p.p.
3.0
3.5
165.9
2.8
3.4
165.2
4.0%
3.3%
0.4%
4.96%
2.16%
39.82%
27.95%
3.84%
1.64%
38.73%
27.68%
1.12 p.p.
0.52 p.p.
0.27 p.p.
1.09 p.p.
8.86%
8.86%
8.78%
6.47%
6.47%
7.90%
2.4 p.p.
2.4 p.p.
0.9 p.p.
(1)
(2)
Cost/Income
Risk ratios (%)
Core Tier 1
(1)
(2)
(3)
- 158 -
1.0%
2.2%
Cariprato, 79% owned by Banca Popolare di Vicenza (which carries it at a book value of 404.8
million euro), is a retail bank with its home in the Prato business district. It has expanded
significantly in recent years (as many as 25 new branches were opened between 2006 and
2007), with the number of branches rising from 53 at the end of 2002, concentrated just in the
provinces of Prato, Florence and Pistoia, to 94 at present, which are spread all over Tuscany.
At 31 December 2008, the bank had 990 employees, of whom 89 with part-time contracts.
This was 10 more than a year earlier (+1%) and reflected 36 joiners and 26 leavers. The net
increase of 10 since the end of 2007 involved strengthening both the commercial network and the
management team.
The bank's total deposits amounted to 4,542 million euro at 31 December 2008, 4.3% less than a
year earlier.
Direct deposits from customers amounted to 2,871 million euro at 31 December 2008, up 7.0%
on a year earlier, while indirect deposits were 19.0% lower at 1,671 million euro, with 28.8% of
the decrease attributable to asset management and 9.9% to asset administration, reflecting not
only the collapse in market values, particularly of shares and corporate bonds, but also the
transfer of funds into the bank's bonds, preferred by customers as a low-risk investment.
Loans to customers rose by 6.3% on 2007 to 3,394 million euro at the end of 2008.
With reference to the indicators of credit risk, the ratio of net impaired loans to net loans
(including those loans represented by "Assets sold but not derecognized") went from 3.8% at 31
December 2007 to 5.0% at 31 December 2008, while the ratio of net non-performing loans to net
loans climbed from 1.6% to 2.2%.
The coverage of impaired loans went from 27.7% at 31 December 2007 to 28.0% at 31
December 2008, while that of non-performing loans rose from 38.7% to 39.8%.
In terms of the income statement, net interest income rose by 11.7% on 2007 to 122.1 million
euro, while net interest and other banking income climbed by 3.3% to 161.4 million euro.
Net fee and commission income was 4.2% lower, entirely attributable to lower income from
placement activities and operations in the asset administration and management sector.
Commission on commercial operations with customers were stable, while that on the
disbursement of syndicated loans rose considerably.
The negative performance of the local economy caused an increase in impaired loans with a
consequent increase in loan impairment adjustments, which rose from 21.8 million euro in 2007
to 36.7 million euro in 2008 (+68.2%).
Payroll costs, excluding 4.7 million euro in charges for accessing the Solidarity Fund in 2008,
climbed by 5.5%. This partly reflects increases after fully staffing the branches opened in 2007.
- 159 -
The growth of 6.5% in other administrative costs is largely a reflection of the bank's territorial
expansion.
Operating costs as a whole increased by 6.9%.
As a consequence of the above factors, profit from current operations before tax came to 7.2
million euro, compared with 24.4 million euro in 2007, while net income for the year was 96.2%
lower at 0.46 million euro, down from 12.2 million euro in 2007.
- 160 -
Farbanca S.p.A.
2008
2007
Change
% Change
Direct deposits
Indirect deposits
Loans to customers
Total Assets
Regulatory capital
95.5
21.2
319.0
341.2
287.5
37.4
35.9
65.0
25.7
206.0
239.5
226.2
35.8
34.7
30.5
-4.5
113.0
101.7
61.3
1.6
1.2
46.9%
-17.5%
54.9%
42.5%
27.1%
4.5%
3.5%
8.9
9.7
-4.2
-2.4
2.7
6.1
6.7
-4.0
-1.8
1.6
2.8
3.0
-0.2
-0.6
1.1
45.9%
44.8%
5.0%
33.3%
68.8%
Net interest income
Operating costs
of which: payroll
Other information
2008
Number of branches
2007
29
1
2008
Change
28
1
2007
% Change
1
0
Change
2008 /2007
93.5%
28.0%
334.0%
86.0%
27.1%
316.9%
7.5 p.p.
0.9 p.p.
17.1 p.p.
7.8%
0.9%
44.3%
4.7%
0.7%
58.0%
3.1 p.p.
0.2 p.p.
-13.7 p.p.
3.3
11.0
334.5
2.3
7.4
239.3
41.9%
49.5%
39.8%
1.41%
0.20%
76.61%
37.53%
1.90%
0.28%
66.28%
28.06%
-0.49 p.p.
-0.08 p.p.
10.33 p.p.
9.47 p.p.
12.49%
12.49%
12.49%
15.34%
15.34%
15.34%
-2.9 p.p.
-2.9 p.p.
-2.9 p.p.
(1)
(2)
Cost/Income
Risk ratios (%)
Core Tier 1
(1)
(2)
(3)
- 161 -
3.6%
0.0%
Farbanca is an on-line bank specializing in the offer of banking services to pharmacies; the
Parent Bank Banca Popolare di Vicenza owns a direct interest of 47.52%, carried at a book value
of 22.9 million euro.
It had 29 employees at 31 December 2008; its commercial structure at this date was unchanged,
with three representative offices in Milan, Naples and Catania which follow customers in these
areas, while the office in Bologna follows all other customers. The bank has a team of financial
promoter employees for door-to-door services, who have been trained in-house to acquire
knowledge of this sector and the ability to serve the bank's pharmacist customers.
Net of impairment adjustments, loans amounted to 319.0 million euro at 31 December 2008,
54.9% more than at 31 December 2007; direct deposits climbed by 47.0% to 95.5 million euro
while indirect deposits fell by 17.6% to 21.2 million euro.
The income statement reports 9.7 million euro in net interest and other banking income, an
increase of 43.8% on the prior year primarily thanks to a 45.1% growth in net interest income to
8.9 million euro, reflecting significant growth both in average volumes and in market rates.
Net impairment adjustments to loans amounted to 1.1 million euro, compared with 141 thousand
euro in writebacks in 2007.
Operating costs were 5.5% higher at 4.2 million euro, up from 4.0 million euro in 2007. The
containment of costs combined with an increase in margins helped the cost/income ratio improve
from 58.0% in 2007 to 44.3% in 2008.
Profit (loss) from current operations before tax was significantly higher, climbing from 2.8 million
euro in 2007 to 4.3 million euro at 31 December 2008 (+52.0%).
Net income for the year soared 70.9% to 2.7 million euro from 1.5 million euro in 2007.
- 162 -
Performance of other group companies
PrestiNuova S.p.A.
Banca Popolare di Vicenza has a direct interest of 6.33% in PrestiNuova and an indirect one of
88.67% through Banca Nuova; this company has a total carrying amount 33.1 million euro. Its
core business comprises “lending secured against one-fifth of salary/pension” and loans,
particularly
to
public-sector
employees,
that
are
repaid
through
withholdings
from
salaries/pensions.
In fact, PrestiNuova was set up to rationalize and enhance the Group's existing business in the
consumer credit sector, especially after Banca Nuova made a three-year agreement in 2004 with
INPDAP (Italy's social security agency for public-sector employees) for the disbursement of loans
to pensioners as well, with repayment automatically deducted at source. This agreement was
renewed during the second half of 2007.
The temporary business group (comprising
PrestiNuova, Banca Popolare di Vicenza, Banca Nuova and Cassa di Risparmio di Prato) is one
of the leading banks and financial institutions partaking in the new agreement (which involves
managing loans secured against/repaid from pensions and public-sector employee wages, and
disbursing specific consumer loans and mortgages). This has placed PrestiNuova in a position of
privilege as well as offering it important opportunities for development.
The company's distribution network at 31 December 2008 comprised 25 offices within branches
of group banks and 4 separate offices in the cities of Genoa, Naples, Padua and Vicenza.
PrestiNuova had 65 employees at 31 December 2008.
At 31 December 2008 "Loans secured against one-fifth of salary", representing all of the
company's lending, amounted to 368.5 million euro, net of impairment adjustments, compared
with 313.4 million euro at 31 December 2007 (+17.6%).
In terms of its income statement, Prestinuova closed 2008 with 2.8 million euro in net income,
1.7% more than the year before.
Net interest income was 16.4% higher than in 2007 at 10.3 million euro, accounting for 91.1% of
net interest and other banking income.
Net fee and commission income of 1.0 million euro accounted for the remaining 8.9% of net
interest and other banking income, most of which commission income passed back to the
company from insurance companies in relation to life and job-loss insurance policies taken out by
customers to secure the loans received.
Net interest and other banking income was 13.4% up on the prior year at 11.4 million euro.
- 163 -
Net impairment adjustments to loans came to 1.2 million euro in 2008 compared with 201
thousand euro in 2007.
Administrative costs were 24.6% higher at 5.8 million euro, of which 3.9 million euro related to
payroll costs (+27.0%) and 1.9 million euro to other administrative costs (+20.0%). The increase
in administrative costs particularly reflects investment in strengthening the company's structure
and sales network.
Profit from current operations before tax came to 4.9 million euro, down 6.1% on 2007.
The cost/income ratio, serving as an overall indicator of operating performance, was 50.5% in
2008 compared with 49.7% in the previous year.
After deducting 1.8 million euro in tax (corresponding to a tax rate of 39.6%), net income for the
year came to 2.8 million euro, an increase of 1.7% on the prior year.
BPV Finance (International) Plc
This Irish-registered company is 99.99% owned by Banca Popolare di Vicenza and operates out
of Dublin's International Financial Services Centre. The carrying amount of this investment is 93.4
million euro. BPV Finance specializes in proprietary trading, and carries out its business by
investing in securities of Italian and international companies and by providing loans to foreign
subsidiaries of the Group's corporate customers in Italy.
More specifically, the company's
portfolio, which has a generally high rating, mostly consists of bonds issued by European and US
banks and financial institutions, corporate securities, asset backed securities (ABS) (with
European and US collateral), shares traded on the Italian Stock Exchange and commercial loans
granted to foreign subsidiaries of Italian companies.
The year 2008 was a rather critical one for BPV Finance with the recent financial crisis having a
major impact on its investment portfolio, which suffered severe losses in view of its typical
investment activities, the types of securities in its portfolio and the evident instability of financial
markets during the year.
The portfolio of banking securities was hard hit by this crisis, being the prime sector affected by
defaults on US subprime loans. BPV Finance nonetheless managed to limit its losses by reducing
exposure to positions considered most at risk and by exploiting the few market opportunities
emerging during the year.
The corporate portfolio suffered less than the financial sector one, even if it now reflects
expectations for lower profits in every segment of industry; BPV Finance's exposure to the
corporate segment is nonetheless very limited.
- 164 -
The subsidiary's ABS portfolio suffered serious losses in 2008, mainly because of the impairment
of certain positions relating to European residential mortgages and to the commercial sector.
Despite the high credit rating of the bonds held, this portfolio is exposed to the market risks of this
sector, even if the portfolio does not contain any “toxic” securities and its exposure to the United
States is only marginal.
The subsidiary's equity portfolio suffered from its exposure to the financial sector, with regard to
financial instruments held both for trading and for investment purposes. This portfolio also
suffered a major loss on a single position relating to a hedge fund associated with a recent
financial fraud by a US businessman, that came to light in December 2008.
As a result, the subsidiary closed 2008 with a loss of 37.2 million euro, with a negative
contribution on the Group’s result of 21.7 million euro (after consolidation adjustments), and a
reduction of 7.6 million euro in its equity for changes in the fair value of available-for-sale financial
instruments. The company's equity amounted to 41.2 million euro at 31 December 2008.
B.P.Vi Fondi SGR S.p.A.
This company is 50% controlled by Banca Popolare di Vicenza, which carries it at a value of 5.2
million euro. B.P.Vi Fondi acts as the asset manager for the entire Banca Popolare di Vicenza
Group and supports the placement business by the provision of training and information to the
sales network.
Verona Gestioni Sgr was merged into BPVi Fondi Sgr in November 2008, with the goals of
creating a “product factory” devoted to the asset management sector at the service of the BPVi
Group and Cattolica Assicurazioni and of achieving major synergies through this combination.
The company reported a considerable outflow of assets in 2008, like for the rest of the asset
management industry nationwide, causing a contraction in the assets under management. This
trend was particularly affected by customer disaffection for asset management products,
especially by those customers with a low propensity for risk, who preferred liquid investments
with known returns given the highly uncertain and volatile situation on financial markets. The
contraction in volumes had a consequent impact on the company's results, which closed 2008
with 914 thousand euro in net income.
Nordest Merchant S.p.A.
This company, 80% owned by Banca Popolare di Vicenza and reported in its financial statements
at a carrying value of 3.3 million euro, is the Group's merchant bank. Its main business is the
provision of extraordinary finance to small and medium enterprises, particularly involving
- 165 -
acquisition financing, corporate finance and mergers and acquisitions, also through its two
wholly-owned managers of closed-end and speculative investment funds (NEM Sgr and NEM 2
Sgr). The company reported 828 thousand euro in net income for 2008.
NEM SGR S.p.A.
This wholly-owned subsidiary of Nordest Merchant S.p.A. carries out collective asset
management activities by promoting, launching and managing closed-end mutual funds. The
company reported 433 thousand euro in net income for 2008.
NEM 2 SGR S.p.A.
This company, formed in October 2006 as a wholly-owned subsidiary of Nordest Merchant S.p.A,
carries out collective asset management by promoting, launching and managing speculative
mutual funds and particularly mezzanine funds. NEM 2 SGR, in operation since May 2007,
continued to manage the “NEM Mezzanine” fund throughout 2008 but terminated “NEM
Mezzanine II”, a new speculative fund, in advance of its natural expiry. The company reported
579 thousand euro in net income for 2008.
Nuova Merchant S.p.A.
This wholly-owned subsidiary of the Banca Popolare di Vicenza Group provides support and
development services for business projects in Central and Southern Italy. Nuova Merchant closed
2008 with a loss of 3.5 million euro. As a result of the subsidiary's negative performance, the
Parent Bank voted to cover its losses and reinstate its capital stock to the legal minimum after
having resolved to transform its legal status from that of an "S.p.A." (joint stock company) to an
"S.r.l." (limited liability company). In order to ensure continued business, it was also resolved that
the company would be absorbed by Nordest Merchant S.p.A., a BPVi Group company also
active in the merchant banking sector. The merger will come into effect during the first half of
2009.
Servizi Bancari S.p.A.
This wholly-owned subsidiary of Banca Popolare di Vicenza provides back office and IT services
to the Group's companies. The transformation of Servizi Bancari from a joint stock company into
a co-operative came into effect in February 2009; this transformation had been approved in an
extraordinary stockholders' meeting in December 2008 with the aim of optimizing the benefits of
rationalizing back office processes for the banking group as a whole. In addition, during the same
- 166 -
month Banca Popolare di Vicenza, Cariprato and Banca Nuova formalized the transfer of their
respective back offices to Servizi Bancari, as envisaged in the Business Plan for 2008-2011; at
the same time, Servizi Bancari transferred its ICT activities to Banca Popolare di Vicenza.
The company reported 324 thousand euro in net income for 2008.
Immobiliare Stampa S.p.A.
This wholly-owned subsidiary of Banca Popolare di Vicenza, with a carrying value of 195.9 million
euro, manages the real estate portfolio of Banca Popolare di Vicenza and provides it, along with
Cariprato and Banca Nuova, with real estate services, as well as carrying out administrative
activities relating to the management of group properties leased to third parties and of third-party
properties leased by group companies. The company reported 2.8 million euro in net income for
2008.
Monforte 19 S.r.l.
This company, a wholly-owned subsidiary of Banca Popolare di Vicenza, is the owner of two
prestigious buildings in Milan, let to third parties outside the banking group. This company's
carrying amount is 13.7 million euro. It closed 2008 with a loss of 1.7 million euro.
- 167 -
ATYPICAL AND/OR UNUSUAL TRANSACTIONS
Atypical and/or unusual transactions are defined as all significant transactions, as defined in the
explanatory notes to the condensed consolidated, which due to the nature of the counterparties,
the purpose of the transactions, the method of determining the transfer price or the timing of the
event (proximity to the accounting reference date) may give rise to doubts about the
correctness/completeness of the information reported in the financial statements, about possible
conflicts of interest, the safeguarding of company assets or the protection of minority
stockholders.
As required by CONSOB Communication 6064293 dated 28 July 2006, it is
reported that no atypical and/or unusual transactions were undertaken in 2008 such as to have a
significant impact on the balance sheet, results of operations and financial position of the Banca
Popolare di Vicenza Group.
INVESTOR PROTECTION ACT: NEW FIGURE OF THE “FINANCIAL REPORTING
MANAGER”
The process of revising the rules and models of corporate governance already started for listed
companies under Law 262 dated 28 December 2005 (“Provisions for the protection of investors
and regulation of financial markets”, which amended the Consolidated Financial Markets Act
(Decree 58/98), has been extended under Decree 195 dated 6 November 2007 to companies
which issue financial instruments that are admitted to trading on regulated markets; the latter
decree was in implementation of the Transparency Directive (Directive 2004/109/EC) on the
harmonization of transparency requirements.
Like with the US experience of implementing the Sarbanes-Oxley Act, these laws address the
problems of financial markets, and enhance and amend the rules on corporate governance,
banking transparency, auditing, systems of administration and control, and the system of
penalties and fines, with the aim of integrating and perfecting the tools for protecting investors
and restoring confidence in the markets and their credibility.
These new laws have introduced the new figure of the “Financial reporting manager” (art. 154-bis
– Consolidated Financial Markets Act) and establish that the Board of Directors (or other
- 168 -
delegated bodies) and the Financial Reporting Manager have specific responsibilities and duties
in order to ensure the true and fair presentation of the balance sheet, income statement and
financial position of the issuer and of the group of companies included in the consolidation.
Banca Popolare di Vicenza has issued bonds that are listed on the Luxembourg Stock Exchange
as part of its European Medium Term Notes programme, choosing Italy as its member state of
origin. As a result, it is now obliged under art. 154-bis of the Consolidated Financial Markets Act
as amended by Decree 195/2007 which adopted the Transparency Directive, to establish the
position of a Financial Reporting Manager.
In view of these legal requirements, the Parent Bank's Board of Directors:
−
amended the Bank's articles of association (art. 39) on 3 June 2008 to establish the
position of “Financial Reporting Manager”, as well as the required experience that such
person must have and the methods of their appointment;
−
appointed Franco Tonato, the Deputy General Manager in charge of the Financial
Reporting and Equity Investments Department, as Financial Reporting Manager on 17 June
2008, after verifying his integrity and experience and having obtained the consent of the
Board of Statutory Auditors;
−
delegated its functions on 28 August 2008 regarding the attestation under art. 154-bis of the
Consolidated Financial Markets Act to Divo Gronchi, the Managing Director;
−
approved on 23 September 2008 the Governance and Control Model for accounting and
administrative processes (Organizational and methodological model of the Financial
Reporting Manager).
In compliance with the mandate received from the Board of Directors, the Financial Reporting
Manager had rapidly embarked on a project with the assistance of Deloitte Consulting, designed:
−
to foster full compliance with the new law, with particular reference to the contents of
art.154-bis of the Consolidated Financial Markets Act;
−
to adopt a method of governance and control that ensures the Financial Reporting Manager
a constant and complete vision of the areas of business that are effectively relevant for the
purposes of preparing the company's financial reports.
This project, which was started in July 2008, involved two modules:
−
Module 1: Design of the Financial Reporting Manager Model;
−
Module 2: Development and application of the Model to the processes of Credit, Finance
and Consolidation, deemed to be particularly “sensitive” for financial reporting purposes.
- 169 -
Module 1 was completed on 23 September 2008 when the Board of Directors of Banca Popolare
di Vicenza approved the Financial Reporting Manager Governance and Control Model and the
related operational manual.
Module 2, which started in September 2008, has developed and applied the Model relating to:
−
the process of Credit at Banca Popolare di Vicenza and its subsidiaries Cariprato and
Banca Nuova;
−
the process of Finance at Banca Popolare di Vicenza and BPV Finance;
−
the process of the Group's financial consolidation.
The review of the adequacy of the processes examined revealed that the Group is exposed to a
generally “acceptable” level of accounting and administrative risk
These results provide top management and the Financial Reporting Manager with reasonably
certainty that the above processes which generate accounting data are adequately controlled and
that the related controls are effectively applied, and allow the Financial Reporting Manager and
Managing Director to make their attestation on the individual and consolidated financial
statements for 2008.
- 170 -
SIGNIFICANT SUBSEQUENT EVENTS
With reference to the disclosure of significant events subsequent to year end, required by article
2428 (5) of the Italian Civil Code, this information can be found in the explanatory notes in Part A
"Accounting policies" - Section 3 "Subsequent events".
OUTLOOK FOR OPERATIONS
The latest economic data and market surveys confirm that the Euro-zone and its principal trading
partners are going through a prolonged period of major economic slowdown, made worse by a
persistent and exceptionally high level of uncertainty. The latest forecasts for 2009 have revised
down economic growth in the Euro-zone to around -2.5%, with only a slight recovery in 2010.
Inflationary pressures are diminishing in the Euro-zone. Annual inflation could come down even
more in coming months, mainly because of the underlying effects of past trends in energy prices,
and by mid-year it could reach a very low level indeed. However, inflation is expected to start
increasing again in the second half of the year because of the same underlying effects.
As for the Italian economy, the signs are that 2009 will also be a year of recession. GDP is
expected to contract by around 2.5% relative to 2008, the same amount currently estimated for
the Euro-zone as a whole. The additional contraction in economic activity in 2009 will be mostly
determined by the strong adverse impact bequeathed by the downturn in the last part of 2008 to
the current year. Furthermore, the most recent economic indicators, especially in the first part of
2009, reveal a situation dominated, with few exceptions, by negative signs. There are a few weak
signs of improvement in consumer confidence, thanks to the rapid retreat in inflation, while
the news relating to industrial activity continues to be very bad. In fact, business confidence
is at an all-time low, affected by a fresh shrinkage in order books for both the domestic and export
markets, while there is a continued increase in the number of businesses that are practising
forms of credit rationing to others.
As for credit markets, the outlook is equally difficult and uncertain for the whole of 2009, due
not only to the slower growth in volumes intermediated but also to the expected reduction in
the spread between banking lending and borrowing rates. In fact, the business of financial
- 171 -
intermediaries will probably continue to be severely affected throughout 2009 by the effects of
the liquidity crisis exploding in 2008. This factor, combined with the deterioration in the
macroeconomic environment will cause a further slowdown in the growth in bank lending.
With continued lack of confidence on the interbank market, the need for banks to satisfy their
funding requirements should carry on supporting the growing trend in direct funding from
traditional channels, especially from bonds. The worsening economic scenario will cause an
increase in problem loans (watchlist and non-performing) both in the household and corporate
segments, with a consequent rise in risk indices. As regards the asset management sector, the
liquidity needs of banking intermediaries and continued high demand for government debt
securities by savers should penalize net inflows to funds and personal asset management,
causing another contraction in volumes, which are expected to start rising only in 2010. The
profitability and efficiency of the banking system is expected to worsen in 2009 relative to
2008, basically because of a contraction in net interest and other banking income and an
increase in adjustments, only partly offset by greater focus on reducing operating costs.
Income, in particular, could be affected by reduced volumes of lending and a reduction in the
spread between bank lending and borrowing rates, as well as by another decrease in asset
management revenue.
In this decidedly unfavourable context that is opening up for 2009, the BPVi Group is seeking to
face the risks and operational difficulties with prudence, but also with reasonable
optimism, in compliance with the values of a co-operative bank at the service of its
territory. The level of capitalization achieved, considered adequate and reassuring, and the
policy of reducing liquidity risks, implemented by developing “traditional” direct funding from
customers and using and increasing the quantity of securities that can be refinanced with the
ECB, should make it possible to provide constant support to companies and individuals,
through a growth in lending, albeit selectively, by exploiting the competitive advantage typical
of local banks, based on their extensive knowledge of local business, supported by the new
methods and instruments for more effective credit risk management described in this report. The
Parent Bank's Board of Directors has approved a budget which forecasts loans to grow by more
than 10%, dependent on the Group's ability to finance this with direct customer deposits. A key
contribution to the Group's profitability should nonetheless come, as predicted in the
Business Plan 2008-2011 and confirmed in the Budget for 2009, from enlargement of the
customer base, full operation of the new branches, resulting from recent internal and
external-led growth, and from full exploitation of the strategic partnerships in the sectors of
insurance/pensions and asset management. There nonetheless continue to be high risks
relating to the economy and strong uncertainties over the recovery in financial markets,
which could cause a higher-than-expected level of adjustments and an insufficient contribution
from trading activity, with a consequently negative impact on the Group's earnings. In summary,
- 172 -
as stated in the Budget for 2009, the BPVi Group considers that it is adequately “equipped” to
face the risks and uncertainties of the current year and to continue effectively pursuing its
corporate mission, with the achievement of another positive set of results in 2009.
- 173 -
PROPOSED ALLOCATION OF NET INCOME
Stockholders,
We propose that you should approve the following allocation to equity reserves out of the net
income for the year, which amounted to Euro 151,035,348.32:
Euro
10,000,000.00 = to the Legal reserve;
Euro
32,000,000.00 = to the Extraordinary reserve;
Euro
28,000,000.00 = to the reserve for the purchase of treasury shares.
Following these allocations, we propose that you allocate the residual amount of Euro
81,035,348.32 as follows:
Residual income available for allocation
•
•
81,035,348.32
To the Stockholders:
€. 1.15 for each of the 68,106,390 shares outstanding
with full enjoyment rights (on the basis described below)
78,322,348.50
1,437,158.47
To the Directors
•
To social support, charities, culture and the public
interest
Total
1,275,841.35
81,035,348.32
The dividends declared will become payable with a value date of 30 April 2009.
In terms of how the dividend will be paid, we propose making the payment partly in cash
(12.50%) and partly by allotment of the treasury shares held by the Bank (87.50%).
The treasury shares held by the Bank would be allotted to each stockholder in proportion to the
shares already held, as rounded down if the number of shares due is not a whole number. Any
fractions of shares would be also be settled as a cash payment.
The above proposal is justified by the need to strengthen consolidated stockholders' equity and
improve the Group's prudential coefficients. Considering that the shares to be allotted were
purchased by the Bank at a price of 60 euro per share, this method of payment will not dilute the
stockholders, which would be the situation in the event of a capitalization issue of shares.
- 174 -
GLOSSARY
ABS (Asset-backed Securities deriving from securitizations and, therefore, guaranteed by a
securities)
portfolio comprising various underlying assets (consumer loans, credit cards,
mortgages, lease installments etc.).
Acquisition
Loans financing the acquisition of businesses
financing
ALMS
Asset & Liability Management System. This is an instrument for measuring
interest rate risk relating to interest-bearing assets and liabilities and identifies
how changes in rate curves influence the Bank's future profit margins.
The ALMS is a valid tool for management allowing it to assess ex-ante at what
level of risk the Bank intends to position itself in expected financial scenarios
and to estimate the value of balance sheet items by discounting future cash
flows, thus keeping a constant eye on the Bank's value.
Euro-zone
The group of countries which have adopted the euro as the single currency.
The Euro-zone comprises the following countries: Belgium, Germany, Greece,
Spain, France, Ireland, Italy, Cyprus, Luxembourg, Malta, Holland, Austria,
Portugal, Finland, Slovenia and, starting from 1 January 2009, Slovakia.
Assessment
An assessment is an evaluation involving an opinion on the likely turn of the
events assessed.
Asset management The management of wealth on behalf of third parties, comprising collective
management (open-end and closed-end mutual funds, real estate funds,
pension funds and SICAVs), endowment assurance products and individual
management (by banks, brokers and trust companies).
ATM
Automatic Teller Machine: a machine for dispensing cash. The "Bancomat"
machines installed by banks are ATMs.
Back office
The department of a financial institution which deals with all the disclosure,
accounting and administrative requirements relating to transactions carried out
by the front office (branches).
- 175 -
Back testing
Retrospective analysis to test the reliability of measurements of the sources of
risk associated with asset positions.
Banking book
Generally relates to securities and financial instruments in general, identifying
that part of the investment portfolio held for internal purposes.
ECB
European Central Bank. This meets periodically to analyze the economic
situation in Europe (GDP, inflation, unemployment rate etc) and to decide
monetary policy.
Benchmark
Indicator, measure, reference parameter against which a company assesses
its performance relating to products, services, business processes.
Securitization
A securitization represents a special issue of bonds with the payment of
coupons and the redemption of principal on maturity funded by the cash flows
deriving from a portfolio of financial assets (mortgages, commercial paper,
leasing contracts) held by the vehicle company (v.) issuing the securitization.
Each securitization is divided into various tranches of bonds with different
ratings (from AAA to BBB or even lower), depending on the credit risk
involved.
CDO (Collateralized Securities issued as part of securitization transactions, guaranteed by an
Debt Obligations)
underlying represented by loans, securities or other financial assets.
Certificates
These are derivative instruments quoted on a market in the form of negotiable
securities. They replicate the performance of an underlying asset. They can
have a leverage effect or otherwise. The issuer who quotes them is liable for
reimbursing them to the holder at maturity.
Compliance
The compliance function serves to prevent the risk of non-compliance by
(function)
company activity with compulsory regulations and laws or self-regulatory ones
(for example, articles of association, codes of conduct, self-regulatory codes
etc.).
Economic trend
This indicates the general state of the national economy and its related growth
trend.
- 176 -
CONSOB
The "Commissione Nazionale per le Società e la Borsa" (Italian stockmarket
regulator), set up under Law 216 dated 7 June 1974, is an independent
administrative authority, with a separate legal identity and full autonomy under
Law 281/1985, whose activities are aimed at investor protection, and the
efficiency, transparency and development of the Italian stock market.
Corporate finance
Comprises the full range of products offered by the Bank to meet the financing
and consultancy needs of businesses.
Cost income
An economic indicator which expresses in percentage terms the ratio between
a bank's cost and its income. The lower it is the more efficient the bank.
Performing loans
Loans for which no risk of default is perceived.
Creditor protection An insurance policy combined with financial products which allow customers to
insurance
insure the residual debt or repayment instalment against the occurrence of
events that might make such repayment difficult (eg. death, permanent
disability or loss of employment).
Period-on-period
Growth relative to the previous reporting period (for example, the previous
growth
quarter).
Year-on-year
Growth relative to the same period in the prior year.
growth
CRM (Customer
Methods and software products that contribute to optimizing the management
Relationship
of customer relationships.
Management)
Cross selling
This is an indicator of the average number of products held by each customer;
the higher the number of products held, the greater the degree of customer
loyalty and the more profitable the relationship.
Probability of
The probability that a counterparty enters a state of default, even if
default (PD)
temporarily, before the end of the reference period (one year). This measure is
the output of a rating system.
- 177 -
Euribor
Euribor (Euro Interbank Offered Rate) is the principal market reference rate
and is calculated as the weighted average of interest rates applied to financial
transactions in euro between prime European banks. It is published on a daily
basis by the European Banking Federation with quotations for 1 month, 3
month and 6 month maturities.
Fair value
The amount at which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm's length transaction.
FED
Federal Reserve System. This is the central bank of the United States,
authorized by Congress to issue money and implement monetary policy; it
thus determines the quantity of the money supply and sets the level of interest
rates.
Financial Stability
The FSF is an international entity created by the G7 in February 1999 with a
Forum (FSF)
view to promoting the stability of the international financial system. The Forum
comprises senior members from the national financial authorities (e.g. central
banks, supervisory authorities, treasury departments), international financial
institutions and international supervisory and regulatory bodies, committees of
central bank experts and the European Central Bank. Mario Draghi, governor
of the Bank of Italy, is currently chairman of the Forum. The FSF maintains a
small secretariat at the Bank for International Settlements in Basel.
Governance
This term is used to refer to the governing bodies of a company and the
associated rules (voting rights, hierarchies etc.). It indicates the set of
principles and processes adopted by a company to create value for its
stockholders and the well-being of its other stakeholders.
Home banking,
Telematic connection to access bank accounts, carry out transactions and
Remote banking
check movements and terms and conditions.
House organ
Periodic publication by a business to communicate with its employees and/or
customers.
- 178 -
IAS/IFRS
International
Accounting
Standards/International
Financial
Reporting
Standards. These are the international accounting standards issued by the
IASB (International Accounting Standards Board), whose application is
compulsory (under a decree published in November 2004) for the purposes of
preparing separate and consolidated financial statements by a wide array of
companies, including banks.
Impairment
In the context of international accounting standards (IAS), impairment
represents the loss in the value of an asset that is recognized if its carrying
amount exceeds its recoverable value, being the amount that could be
obtained by selling it or using it in the business. Impairment testing must be
performed on all assets, except for those measured at fair value since, in this
case, any losses (or gains) are implicit in such value.
ISAE
ISAE (Institute for studies and economic analysis) is a public research body
that mainly carries out analysis and studies in support of the social and
economic policy decisions taken by the government, parliament and the public
administration.
ISTAT
Italy's publicly-operated central statistics office. It has been in operation since
1926 and is the principal producer of official statistics in support of citizens and
public policy-makers.
ISVAP
This institute supervises the insurance industry. It has a separate legal identity
under public law and was set up under Law 576 dated 12 August 1982 to
supervise insurance and reinsurance companies, and all other parties
governed by the law on private insurers, including agents and insurance
brokers. ISVAP carries out its duties on the basis of government-determined
policy.
Joint venture
A company or business set up under joint ownership for a specific purpose.
Mark-down
Negative differential relative to a reference indicator, normally an interbank
rate, applied to the rate on customer deposits.
- 179 -
Mark-up
Positive differential relative to a reference indicator, normally an interbank rate,
applied to the rate on loans to customers.
Merchant Banking
This comprises a series of services to companies such as: investments in risk
capital, advice on special financing transactions etc., mainly for the purpose of
company reorganization, growth in business, or satisfaction of financial needs
in view of a subsequent sell-off.
Mezzanine
A type of financing with characteristics partly similar to debt and partly similar
financing
to an equity interest. It generally takes the form of convertible bonds or
warrants.
Mission
A clear statement of strategic objectives that a company wants to achieve and
which must be widely shared by its entire organization.
Multi-channel
The offer of retail banking products and services both through traditional
activities
physical channels (branches) and through telematic channels.
OTC (market)
Over the counter market. All those “markets” in which financial assets are
traded other than official regulated ones. The methods of contracting are not
standardized and it is possible to agree "atypical" contracts. Securities traded
on an OTC market are generally less liquid that those traded on official
markets.
Outlook
When used by rating agencies, this means a company's forecast or prospects.
GDP
Acronym of Gross Domestic Product. It refers to the value of all goods and
services produced by an economy, plus indirect taxes on imports less goods
for intermediate consumption. It is the fundamental measure of economic
activity. In national accounting, GDP is the same as national income.
POS
POS (Points of Sale) are small terminals at cash registers in shops and
supermarkets used for making payments with debit or credit cards.
- 180 -
Rating
Classification or rating of an issuer of securities on international financial
markets, by a specialist agency. A rating expresses the creditworthiness of
issuers of bonds using letters that indicate the debtor's reliability. For example,
a triple A (AAA) rating represents the highest quality investment grade; the
scores descend progressively (AA, A, BBB, BB, B). Triple C (CCC) ratings are
awarded to the least reliable debtors.
Recession
Negative economic situation featuring a reduction in industrial output, a fall in
consumption, and a decrease in household income.
Risk management
This refers to all practices (measurements, estimates, analyses, actions) that
allow the Bank to be constantly and promptly informed about the status of
risks to which it is exposed and any changes therein and to be able to
intervene when the risks requires mitigating and/or the instruments and
functions of control require revision. The Risk Management unit is independent
from the units that assume risk and is responsible for developing methods and
principles for measuring credit, financial and operational risks so as to let top
management and the Board of Directors govern the exposure to such risks.
The Risk Management unit is therefore part of the wider spectrum of the
Bank's risk management.
Sec Servizi
SEC SERVIZI is a credit and finance outsourcing co-operative which provides
highly innovative services ranging from software applications, centralized back
office services and advanced multi-channel solutions, consulting, training and
support services.
Sgr
SGRs (Società di Gestione del Risparmio) or asset management companies
are companies authorized to promote, set up, organize and manage the
assets of a mutual fund (collective asset management), keeping their own
assets separate from those of the fund. An SGR can also manage funds set
up by other asset management companies.
Small business
Market segment relating to small and very small businesses (typically
tradesmen and shopkeepers).
Stress testing
Simulation used to measure the impact of extreme market scenarios on the
bank's overall exposure to risk.
- 181 -
Subprime
Literally “less than prime”, being a residential mortgage that carries more risk
that prime quality US mortgages. Sub-prime mortgages are granted to low
quality borrowers: in many cases, installments in the first two years are
extremely low. Alt-A mortgages fall half way between sub-prime (for high risk
borrowers) and prime (top-end borrowers), and target borrowers with low
savings.
VaR
Value at Risk is an estimate of the expected potential loss on a portfolio of
financial instruments in a specified time period, with a defined level of
probability, upon the occurrence of unfavourable market conditions.
VIP
Category of very wealthy customers who require advisory services and
sophisticated investment management.
- 182 -
BRANCH NETWORK BANCA POPOLARE DI VICENZA
- 183 -
REGISTERED OFFICE AND
GENERAL MANAGEMENT
I-36100 Vicenza
Via Btg. Framarin, 18
Tel. (0444) 339111
CENTRAL SERVICES
36100 Vicenza
Tel. (0444) 339111
Telefax (0444) 329364
Teltex 480178 BPVSCE
Swift BPVIIT 22
• Stock Exchange
Tel. (02) 62481800
Telefax (02) 29062724
• Exchange office
Tel. (02) 62481000
Telefax (02) 29062724
• Gold
Tel. (0444) 339133
Telefax (0444) 545982
• Treasury
Tel. (02) 62481260
Telefax (02) 29062724
• International
Tel. (0444) 339577/339564
Telefax
From Italy 199 1511247455
From abroad +39 0444 537455
BRANCHES
Province of Vicenza
• 36100 Vicenza
Contrà Porti, 12
Tel. (0444) 906411
Telefax (0444) 320059
• 36100 Vicenza – Branch no. 1
Corso Ss.Felice e Fortunato, 145
Tel. (0444) 327460
Telefax (0444) 321118
• 36100 Vicenza - Branch no. 2
Corso Padova, 42
Tel. (0444) 505466
Telefax (0444) 512273
Viale delle Fornaci, 2
Tel. (0444) 961047
Telefax (0444) 962075
Via S. Agostino, 9/11
Tel. (0444) 963223
Telefax (0444) 566999
Viale Trieste, 335
Tel. (0444) 512655
Telefax (0444) 512403
Tel. (0444) 339197
Telefax (0444) 339563
Via Vecchia Ferriera, 72
Tel. (0444) 961509
Telefax (0444) 961450
Viale dal Verme, 100
Tel. (0444) 927222
Telefax (0444) 927255
Via Giuriato, 67
Tel. (0444) 301700
Telefax (0444) 301698
Via F.lli Rosselli, 58
Tel. (0444) 240334
Telefax (0444) 240318
Via Ca’ Balbi, 309
Tel. (0444) 912733
Telefax (0444) 912742
Via dell’Oreficeria, 16/A
Tel. (0444) 565656
Telefax (0444) 963988
Via E. Fermi, 130
Tel. (0444) 964694
Telefax (0444) 964697
Via Marosticana, 345 Loc. Polegge
Tel. (0444) 945729
Telefax (0444) 595143
S.S. Pasubio, 335 - Loc. Maddalene
Tel. (0444) 980610
Telefax (0444) 980695
Piazzola Gualdi, 10
Tel. (0444) 320447
Telefax (0444) 326219
Via Zamenhof, 94
Tel. (0444) 914462
Telefax (0444) 914437
Corso Palladio, 13
Tel. (0444) 325044
Telefax (0444) 321597
Viale della Pace, 234
Tel. (0444) 304878
Telefax (0444) 304842
• 36020 Albettone
Piazza Umberto I, 15
Tel. (0444) 790355
Telefax (0444) 790555
• 36077 Altavilla Vicentina - Branch no. 1
Via Vicenza, 232
Tel. (0444) 348833
Telefax (0444) 348848
• 36041 Alte di Montecchio M.
Via Trieste, 7
Tel. (0444) 698533
Telefax (0444) 698090
• 36011 Arsiero
Piazza Francesco Rossi, 37
Tel. (0445) 740308
Telefax (0445) 742032
• 36071 Arzignano
Via Trento, 59
Tel. (0444) 673000
Telefax (0444) 674240
• 36071 Arzignano - Branch no. 1
Viale del Lavoro, 39/A
Tel. (0444) 477711
Telefax (0444) 675549
• 36012 Asiago
Piazza G. Carli, 61
Tel. (0424) 64546
Telefax (0424) 462641
• 36061 Bassano del Grappa
Via Roma, 85
Tel. (0424) 527111
Telefax (0424) 524966
• 36061 Bassano - Branch no. 1
Viale Pecori Giraldi, 24
Tel. (0424) 502405
Telefax (0424) 503998
• 36061 Bassano - Branch no. 2
Via Cellini, 2 - Loc. Ca’ Baroncello
Tel. (0424) 510280
Telefax (0424) 512263
• 36050 Bolzano Vicentino
Via Zuccola, 3
Tel. (0444) 350034
Telefax (0444) 350775
• 36042 Breganze
Piazza Mazzini, 27
Tel. (0445) 873133
Telefax (0445) 300373
• 36040 Brendola
Via Roccolo, 1
Tel. (0444) 400831
Telefax (0444) 601973
• 36030 Caldogno
Via Risorgimento, 2
Tel. (0444) 585799
Telefax (0444) 905133
• 36043 Camisano Vicentino
Piazza Umberto I, 11
Tel. (0444) 610170
Telefax (0444) 410489
• 36010 Canove di Roana
Via Milano
Tel. (0424) 692090
Telefax (0424) 692838
• 36010 Carrè
Piazza 4 Novembre
Tel. (0445) 892777
Telefax (0445) 892594
• 36050 Cartigliano
Piazza Concordia, 14
Tel. (0424) 828541
Telefax (0424) 827354
• 36065 Casoni di Mussolente
Via Cuccarollo, 1/A
Tel. (0424) 573088
Telefax (0424) 573107
• 36022 Cassola
Via Valsugana, 70
Tel. (0424) 566738
Telefax (0424) 566767
• 36030 Castelnovo di Isola Vic.na
Via S. Antonio, 6
Tel. (0444) 977388
Telefax (0444) 977382
• 36010 Cavazzale
Via Chiesa, 3
Tel. (0444) 595144
Telefax (0444) 595699
• 36072 Chiampo
Piazza Stazione, 7
Tel. (0444) 420966
Telefax (0444) 420970
• 36010 Chiuppano
Via Amabile Peguri, 1
Tel. (0445) 891955
Telefax (0445) 390144
• 36073 Cornedo Vic. no
Via Monte Verlaldo,16 - Loc. Cereda
Tel. (0445) 446389
Telefax (0445) 953466
• 36051 Creazzo
Viale Italia, 200
Tel. (0444) 521400
Telefax (0444) 340291
• 36056 Cusinati di Tezze sul Brenta
S.S. 47- Via Nazionale
Tel. (0424) 560011
Telefax (0424) 561452
• 36031 Dueville
Piazza Monza, 39
Tel. (0444) 360400
Telefax (0444) 360438
• 36060 Fellette di Romano d’Ezzelino
Via Bassanese, 32
Tel. (0424) 512559
Telefax (0424) 512554
• 36032 Gallio
Piazza Gen. Turba, 3
Tel. (0424) 445171
Telefax (0424) 445415
• 36053 Gambellara
Piazza Marconi, 5
Tel. (0444) 444622
Telefax (0444) 444125
• 36040 Grisignano di Zocco
Via Serenissima, 3
Tel. (0444) 614558
Telefax (0444) 414358
• 36023 Longare
Via Marconi, 38
Tel. (0444) 953580
Telefax (0444) 953585
• 36045 Lonigo
Via Q. Rossi, 5
Tel. (0444) 830542
Telefax (0444) 831259
- 185 -
• 36046 Lusiana
Viale Europa, 12/A
Tel. (0424) 406014
Telefax (0424) 406438
• 36034 Malo
Via Raffaello, 2
Tel. (0445) 602021
Telefax (0445) 580410
• 36035 Marano Vicentino
Piazza Silva, 30
Tel. (0445) 621013
Telefax (0445) 560038
• 36063 Marostica
Piazza Castello, 44
Tel. (0424) 73641
Telefax (0424) 72103
• 36040 Meledo di Sarego
Via D. Chiesa
Tel. (0444) 820355
Telefax (0444) 820430
• 36060 Molvena
Via Ponticello, 30
Tel. (0424) 411996
Telefax (0424) 411091
• 36054 Montebello Vicentino
Via Marconi, 15
Tel. (0444) 649033
Telefax (0444) 649472
• 36075 Montecchio Maggiore
Via S. Valentino
Tel. (0444) 696668
Telefax (0444) 491221
• 36030 Montecchio Precalcino
Via Summano, 12/B
Tel. (0445) 864433
Telefax (0445) 334044
• 36047 Montegalda
Via D. Cattaneo, 30
Tel. (0444) 737100
Telefax (0444) 737213
• 36024 Nanto
Via Riviera Berica, 73
Tel. (0444) 639955
Telefax (0444) 638437
• 36025 Noventa Vicentina
Corso G. Matteotti, 84
Tel. (0444) 860177
Telefax (0444) 760030
• 36040 Orgiano
Via Libertà, 1
Tel. (0444) 874100
Telefax (0444) 874617
• 36013 Piovene Rocchette
Via Libertà, 2
Tel. (0445) 650444
Telefax (0445) 550105
• 36026 Pojana Maggiore
Via Matteotti, 8/A
Tel. (0444) 794079
Telefax (0444) 794084
• 36021 Ponte di Barbarano
Via Riviera Berica, 25
Tel. (0444) 795305
Telefax (0444) 795298
• 36050 Pozzoleone
Via Roma, 2
Tel. (0444) 462212
Telefax (0444) 462198
• 36050 Quinto Vicentino
Via Martiri della Libertà, 25
Tel. (0444) 357674
Telefax (0444) 357668
• 36027 Rosà
Via Capitano A.lessio, 69
Tel. (0424) 581890
Telefax (0424) 581905
• 36028 Rossano Veneto
Viale Monte Grappa 15
Tel. 0424 219682
Telefax 0424 541403
• 36070 San Pietro Mussolino
Via Risorgimento, 59/B
Tel. (0444) 487487
Telefax (0444) 487288
• 36030 San Vito di Leguzzano
Via Roma, 1
Tel. (0445) 519655
Telefax (0445) 519699
• 36066 Sandrigo
Piazza Vittorio Emanuele, 11
Tel. (0444) 658477
Telefax (0444) 750048
• 36014 Santorso
Piazzetta Villa Vicentina, 3
Tel. (0445) 640820
Telefax (0445) 640774
• 36015 Schio
Piazza Garibaldi, 2
Tel. (0445) 529790
Telefax (0445) 531093
• 36015 Schio - Branch no. 1
Via Veneto, 2/B
Tel. (0445) 575492
Telefax (0445) 575508
• 36015 Schio - Branch no. 2
Via Riva di Magrè
Tel. (0445) 530670
Telefax (0445) 530680
• 36040 Sossano
Via Roma, 20
Tel. (0444) 888406
Telefax (0444) 885911
• 36050 Sovizzo
Viale degli Alpini, 11
Tel. (0444) 536384
Telefax (0444) 536619
• 36067 Termine di Cassola
Viale Venezia, 33
Tel. (0424) 32100
Telefax (0424) 511575
• 36016 Thiene
Via Trento, 2
Tel. (0445) 854211
Telefax (0445) 363999
• 36016 Thiene - Branch no. 1
Viale del Lavoro, 2
Tel. (0445) 369700
Telefax (0445) 368825
• 36036 Torrebelvicino
Piazza A. Moro
Tel. (0445) 570200
Telefax (0445) 570057
• 36040 Torri di Quartesolo
Via Roma, 33
Tel. (0444) 581933
Telefax (0444) 380293
• 36070 Trissino
Via dell’Industria, 91
Tel. (0445) 491044
Telefax (0445) 491180
• 36078 Valdagno
Piazza Dante, 8
Tel. (0445) 409200
Telefax (0445) 408933
• 36010 Velo D’Astico
Via Roma, 16
Tel. (0445) 740900
Telefax (0445) 740141
• 36020 Villaganzerla
Via Piazza, 118
Tel. (0444) 639121
Telefax (0444) 638460
• 36030 Villaverla
Via Milano, 1
Tel. (0445) 855622
Telefax (0445) 856388
- 186 -
• 36010 Zanè
Via Manzoni 26
Tel.(0445) 380224
Telefax (0445) 381118
• 36050 Zermeghedo
Via Michelangelo, 3
Tel. (0444) 484099
Telefax (0444) 484222
• 36030 Zugliano
Via Roma, 68
Tel. (0445) 330200
Telefax (0445) 330093
Province of Asti
• 14100 Asti
Piazza Medici, 18
Tel. (0141) 598798
Telefax (0141) 598808
Province of Belluno
• 32021 Agordo
Via XXVII Aprile 1945, 44
Tel. (0437) 640606
Telefax (0437) 640631
• 32030 Arten di Fonzaso
Piazza San Gottardo, 23
Tel. (0439) 568125
Telefax (0439) 568015
• 32041 Auronzo di Cadore
Via Roma, 63/A
Tel. (0435) 400805
Telefax (0435) 400806
• 32100 Belluno
Via Vittorio Veneto, 187
Tel. (0437) 9351
Telefax (0437) 931800
• 32100 Belluno - Branch no. 1
Piazza Martiri, 27/C
Tel. (0437) 950807
Telefax (0437) 950726
• 32016 Farra d’Alpago
Via Matteotti, 75/B
Tel. (0437) 46096
Telefax (0437) 454751
• 32032 Feltre
Viale Monte Grappa, 18/B
Tel. (0439) 840813
Telefax (0439) 83035
• 32013 Longarone
Via Marconi, 1
Tel. (0437) 573425
Telefax (0437) 578780
• 32026 Mel
Via Tempietto, 15/B
Tel. (0437) 540240
Telefax (0437) 540257
• 32010 Pieve d’Alpago - Loc. Paludi
Via dell’Industria, 6/A
Tel. (0437) 989283
Telefax (0437) 989317
• 32014 Ponte nelle Alpi
Viale Dolomiti, 23
Tel. (0437) 990562
Telefax (0437) 990522
• 32035 Santa Giustina
Via Roma, 15/D
Tel. (0437) 859355
Telefax (0437) 859362
• 32036 Sedico
Piazza della Vittoria, 19/B
Tel. (0437) 853109
Telefax (0437) 82548
• 32040 Tai di Cadore
Piazza Venezia, 14
Tel. (0435) 501538
Telefax (0435) 501540
• 32028 Trichiana
Via Roma, 35
Tel. (0437) 555571
Telefax (0437) 555564
• 32040 Vallesella di Cadore
Tel. (0435) 728150
Telefax (0435) 728292
Province of Bergamo
• 24061 Albano Sant’Alessandro
Via Aldo Moro, 8/10
Tel. (035) 583220
Telefax (035) 583231
• 24052 Azzano San Paolo
Via Trieste, 16
Tel. (035) 534141
Telefax (035) 534079
• 24123 Bergamo
Viale Giulio Cesare, 69
Tel. (035) 363220
Telefax (035) 345216
• 24020 Casnigo
Piazza San Giovanni Battista, 30
Tel. (035) 724370
Telefax (035) 724371
• 24020 Cene
Tel. (035) 716211
Telefax (035) 716207
• 24060 Costa di Mezzate
Via Roma, 10
Tel. (035) 683563
Telefax (035) 680772
• 24035 Curno
Via Terzi di Sant’Agata, 2/4
Tel. (035) 4158011
Telefax (035) 4158034
• 24044 Dalmine
Viale Betelli, 32/34
Tel. (035) 4157211
Telefax (035) 4157298
• 24064 Grumello del Monte
Via Roma, 95
Tel. (035) 4495411
Telefax (035) 4495440
• 24040 Lallio
Via Mascagni, 2/A
Tel. (035) 201191
Telefax (035) 201250
• 24044 Mariano al Brembo
Piazza Vittorio Emanuele II, 8
Tel. (035) 502882
Telefax (035) 502664
• 24030 Mozzo
Piazza Trieste
Tel. (035) 4376849
Telefax (035) 4376447
• 24027 Nembro
Via Roma, 13
Tel. (035) 470241
Telefax (035) 470791
• 24022 Nese
Via Europa, 67
Tel. (035) 514471
Telefax (035) 513150
• 24050 Orio al Serio
Via Locatelli, 10
Tel. (035) 318780
Telefax (035) 320227
• 24010 Petosino
Tel. (035) 577211
Telefax (035) 577239
• 24058 Romano di Lombardia
Via Duca d’Aosta, 44
Tel. (0363) 901832
Telefax (0363) 902867
• 24068 Seriate
Piazza Giovanni XXIII, 6/A
Tel. (035) 301401
Telefax (035) 300396
• 24040 Stezzano
Piazza Libertà, 12
Tel. (035) 4540371
Telefax (035) 4540372
- 187 -
• 24047 Treviglio - Branch no. 1
Piazza Mentana, 1/A
Tel. (0363) 312811
Telefax (0363) 312898
• 24047 Treviglio - Branch no. 2
Via De Gasperi, 3
Tel. (0363) 303967
Telefax (0363) 304729
• 24040 Verdellino
Piazza Affari, 32
Tel. (035) 4820355
Telefax (035) 4820517
• 24018 Villa D’Almè
Via Roma, 31
Tel. (035) 639860
Telefax (035) 639896
Province of Bologna
• 40122 Bologna
Viale Vicini, 16/18
Tel. (051) 6494777
Telefax (051) 6494761
• 40033 Casalecchio di Reno
Via Ronzani, 7/40
Tel. (051) 6132829
Telefax (051) 6130484
• 40068 San Lazzaro di Savena
Via Emilia Est, 214
Tel. (051) 465216
Telefax (051) 467416
Province of Brescia
• 25043 Breno
Piazza Vittoria, 3
Tel. 0364 320822
Telefax 0364 22219
• 25124 Brescia
Via Malta, 16
Tel. (030) 2428866
Telefax (030) 2425658
• 25125 Brescia - Branch no. 1
Via Orzinuovi, 46/A
Tel. (030) 3462711
Telefax (030) 347305
Via Farfengo, 65
Tel. (030) 2411500
Telefax (030) 2411077
Via Orzinuovi, 82
c/o Mercato Ortofrutticolo
Tel. (030) 3541180
Telefax (030) 349862
Via Crocifissa di Rosa, 1
Tel. (030) 390239
Telefax (030) 390774
Via Triumplina, 125
Tel. (030) 2016411
Telefax (030) 2016444
Via Trento, 3
Tel. (030) 3707711
Telefax (030) 3707740
Via San Bartolomeo, 17
Tel. (030) 304122
Telefax (030) 301072
Via Malta, 43 - Fraz. Folzano
Tel. (030) 2160720
Telefax (030) 266553
Corso Giuseppe Garibaldi, 14/E
Tel. (030) 3754555
Telefax (030) 3752499
Via San Zeno, 121
Tel. (030) 3533910
Telefax (030) 3533786
Via Volturno, 62
Tel. (030) 293176
Telefax (030) 40825
• 25031 Capriolo
Via Vittorio Emanuele II°, 5
Tel. (030) 7461131
Telefax (030) 7461150
• 25030 Castel Mella
Via Quinzano, 80/A
Tel. (030) 2685911
Telefax (030) 2685935
• 25020 Flero
Piazza IV Novembre, 105
Tel. (030) 2560233
Telefax (030) 2560235
• 25063 Gardone Val Trompia
Via Matteotti, 71 - Inzino
Tel. (030) 8911906
Telefax (030) 8911909
• 25085 Gavardo
Via Quarena, 145
Tel. (0365) 372007
Telefax (0365) 374438
• 25016 Ghedi
Via XX Settembre, 112
Tel. (030) 9050702
Telefax (030) 9050755
• 25064 Gussago
Viale Italia, 1
Tel. (030) 2523911
Telefax (030) 2524367
• 25065 Lumezzane
Via Monsuello, 29/D
Tel. (030) 8921895
Telefax (030) 8922787
• 25065 Lumezzane - Branch no. 1
Via Virgilio Montini, 19
Tel. (030) 8925988
Telefax (030) 8925087
• 25040 Malonno
Via Torre, 10
Tel. (0364) 635579
Telefax (0364) 635028
• 25025 Manerbio - Branch no. 1
Via Roma, 18/20
Tel. (030) 9389711
Telefax (030) 9389712
• 25080 Mazzano
Via Alcide de Gasperi, 6
Tel. (030) 2120787
Telefax (030) 2120805
• 25018 Montichiari
Via Trieste, 68
Tel. (030) 9653411
Telefax (030) 9653440
• 25034 Orzinuovi
Via Giordano Bruno
Tel. (030) 944332
Telefax (030) 9941070
• 25060 Polaveno
Via Tonetti, 27
Tel. (030) 84814
Telefax (030) 8940115
• 25011 Ponte San Marco
Piazza della Preistoria, 11
Tel. (030) 9980988
Telefax (030) 9980979
• 25037 Pontoglio
Piazza XXVI Aprile, 21
Tel. (030) 7471231
Telefax (030) 7376306
• 25024 Porzano di Leno
Via San Martino, 24
Tel. (030) 9048118
Telefax (030) 906499
• 25070 Preseglie
Via Roma, 58
Tel. (0365) 824313
Telefax (0365) 824030
- 188 -
• 25086 Rezzato
Via Garibaldi, 1/3
Tel. (030) 2498511
Telefax (030) 2498540
• 25030 Roncadelle
Via Enrico Mattei, 37/39
Tel. (030) 2583253
Telefax (030) 2583166
• 25038 Rovato
Corso Bonomelli, 40/42
Tel. (030) 7720311
Telefax (030) 7720398
• 25087 Salò
Via Montessori, 1
Tel. (0365) 521846
Telefax (0365) 521847
• 25010 San Martino della Battaglia
Piazza della Concordia, 11
Tel. (030) 9108269
Telefax (030) 9910304
• 25068 Sarezzo
Via Antonini, 26
Tel. (030) 8935411
Telefax (030) 8935498
• 25080 Serle
Via Galileo Galilei, 1
Tel. (030) 6896783
Telefax (030) 6910993
Province of Como
• 22100 Como
Piazza Cavour, 24
Tel. (031) 303544
Telefax (031) 309217
Province of Ferrara
• 44100 Ferrara
Via S. Balboni, 7
Tel. (0532) 470276
Telefax (0532) 766269
Province of Genoa
• 16043 Chiavari
Corso Dante, 39
Tel. (0185) 323400
Telefax (0185) 323074
• 16121 Genoa
Via delle Casaccie, 78/98
Tel. (010) 5762811
Telefax (010) 585908
Province of Gorizia
• 34071 Cormons
Via Matteotti, 44
Tel. (0481) 639270
Telefax (0481) 639350
• 34170 Gorizia
Corso Italia, 45
Tel. (0481) 538902
Telefax (0481) 538905
• 34072 Gradisca d’Isonzo
Piazzale dell’Unità, 20
Tel. (0481) 969605
Telefax (0481) 92240
• 34073 Grado
Tel. (0431) 877044
Telefax (0431) 877037
• 34074 Monfalcone
Via Duca d’Aosta, 97
Tel. (0481) 413654
Telefax (0481) 414106
• 34077 Ronchi dei Legionari
Via Roma, 94
Tel. (0481) 776451
Telefax (0481) 474600
Province of Imperia
• 18100 Imperia
Via della Repubblica, 7
Tel. (0183) 299011
Telefax (0183) 299005
• 18038 Sanremo
Corso Mombello, 33/35
Tel. (0184) 503121
Telefax (0184) 506424
Province of Mantua
• 46043 Castiglione delle Stiviere
Via Cavour
Tel. (0376) 670311
Telefax (0376) 631981
• 46100 Mantua
Corso Vittorio Emanuele, 31
Tel. (0376) 329605
Telefax (0376) 328912
• 46019 Viadana
Piazza Benedetto Cellini, 9
Tel. (0375) 782266
Telefax (0375) 781077
Province of Milan
• 20094 Corsico
Via Vincenzo Monti, 46
Tel. (02) 4402933
Telefax (02) 45119850
• 20123 Milan
Via Torino - Ang. Via S. Vito
Tel. (02) 864941
Telefax (02) 86450672
• 20136 Milan - Branch no. 1
Via Col di Lana, 6
Tel. (02) 8360048
Telefax (02) 8378762
Corso Como, 15
Tel. (02) 29010129
Telefax (02) 29010321
Via Civitali, 23
Tel. (02) 4039350
Telefax (02) 4075146
Via Tolentino, 1
Tel. (02) 316064
Telefax (02) 315709
Via San Michele del Carso, 13
Tel. (02) 4694299
Telefax (02) 4694499
Viale Ungheria, 20
Tel. (02) 58011002
Telefax (02) 58018062
Piazza Schiavone ang. V.R.M. De Capitani, 14
Tel. (02) 39312917
Telefax (02) 39322534
Viale Tunisia, 12 - ang. Via Lecco
Tel. (02) 29401695
Telefax (02) 20240606
• 20099 Sesto San Giovanni
Viale Fratelli Casiraghi, 79
Tel. (02) 24839279
Telefax (02) 24412158
• 20059 Vimercate
Via Luigi Cadorna, 2
Tel. (039) 6260568
Telefax (039) 6084230
Province of Modena
• 41100 Modena
Via Pietro Giardini, 187
Tel. (059) 239307
Telefax (059) 237977
• 41049 Sassuolo
Via Radici in Piano, 61/63
Tel. (0536) 580399
Telefax (0536) 815494
Province of Padua
• 35031 Abano Terme
Via Martiri d’Ungheria, 14
Tel. (049) 8602928
Telefax (049) 8602691
• 35020 Albignasego
Via Roma, 117
Tel. (049) 8626728
Telefax (049) 8626732
- 189 -
• 35010 Busa di Vigonza
Via Regia, 37
Tel. (049) 8935025
Telefax (049) 8935057
• 35010 Cadoneghe
Strada del Santo, 17
Tel. (049) 8871951
Telefax (049) 8872654
• 35012 Camposampiero
Via Rialto, 1
Tel. (049) 9303022
Telefax (049) 9303218
• 35010 Carmignano di Brenta
Via Roma, 14
Tel. (049) 9430792
Telefax (049) 9430262
• 35013 Cittadella
Borgo Padova, 6
Tel. (049) 5979343
Telefax (049) 9403578
• 35026 Conselve
Viale Venezia, 1
Tel. (049) 5384039
Telefax (049) 9501342
• 35042 Este
Via G. Matteotti, 23
Tel. (0429) 604317
Telefax (0429) 601482
• 35015 Galliera Veneta
Via Roma, 164
Tel. (049) 5969133
Telefax (049) 5969460
• 35010 Limena
Via del Santo, 4
Tel. (049) 8842956
Telefax (049) 8842163
• 35010 Loreggia
Piazza Papa Luciani, 8
Tel. (049) 5793055
Telefax (049) 5794442
• 35015 Mottinello di Galliera V.
Via Mottinello Nuovo, 31
Tel. (049) 9440066
Telefax (049) 9440301
• 35027 Noventa Padovana
Via Roma, 1
Tel. (049) 8935936
Telefax (049) 8935940
• 35010 Onara di Tombolo
Via Sen. G. Cittadella, 5/A
Tel. (049) 5993788
Telefax (049) 5993761
• 35121 Padua
Via Trieste, 45
Tel. (049) 660222
Telefax (049) 660952
• 35139 Padua - Branch no. 1
Corso Milano, 22
Tel. (049) 656132
Telefax (049) 8756129
Corso Stati Uniti, 23
Tel. (049) 6988333
Telefax (049) 8704758
• 35133 Padua - Branch no.3
Via Tiziano Aspetti, 246
Tel. (049) 600849
Telefax (049) 8644462
Via Facciolati, 59
Tel. (049) 756008
Telefax (049) 8033060
• 35028 Piove di Sacco
Via Marconi, 2
Tel. (049) 9701428
Telefax (049) 5842652
• 35020 Ponte S. Nicolò
Via Volturno, 2
Tel. (049) 8962205
Telefax (049) 8962148
• 35030 Rubano
Via Rossi, 3/N
Tel. (049) 8987272
Telefax (049) 8987274
• 35010 Saletto di Vigodarzere
Via Leonardo Da Vinci, 101
Tel. (049) 8849110
Telefax (049) 8849101
• 35010 San Giorgio in Bosco
Via Valsugana, 86
Tel. (049) 9451053
Telefax (049) 9451085
• 35018 San Martino di Lupari
Via Roma, 68
Tel. (049) 9461288
Telefax (049) 9461261
• 35011 Sant’Andrea di Campodarsego
Via Caltana, 182
Tel. (049) 9201226
Telefax (049) 9200911
• 35010 Sant’Eufemia di Borgoricco
Via della Pieve, 43
Tel. (049) 9335454
Telefax (049) 9335144
• 35030 Tencarola di Selvazzano
Via Padova, 24
Tel. (049) 8687071
Telefax (049) 8687074
• 35019 Tombolo
Via Roma, 7/A
Tel. (049) 9470813
Telefax (049) 9470893
• 35010 Trebaseleghe
Via C. Menotti, 32
Tel. (049) 9386810
Telefax (049) 9386813
Province of Parma
• 43043 Borgo Val di Taro
Piazzale Lauro Grossi, 2
Tel. (0525) 920018
Telefax (0525) 920037
• 43036 Fidenza
Via Cornini Malpeli, 13
Tel. (0524) 528180
Telefax (0524) 528140
• 43100 Parma
Via Emilia Est, 56/B
Tel. (0521) 480411
Telefax (0521) 242408
• 43100 Parma - Branch no. 1
Piazzale Santa Croce, 29
Tel. (0521) 207122
Telefax (0521) 231223
• 43100 Parma - Branch no. 2
Via Toscana, 94
Tel. (0521) 460714
Telefax (0521) 460916
Province of Pavia
• 27020 Alagna
Piazza Castello, 15
Tel. (0382) 818137
Telefax (0382) 818129
• 27030 Castello d’Agogna
Via Novara, 1
Tel. (0384) 256550
Telefax (0384) 256555
• 27100 Pavia
Via Golgi, 63/A
Tel. (0382) 422766
Telefax (0382) 422934
• 27020 Sartirana Lomellina
Via Cavour, 133
Tel. (0384) 800203
Telefax (0384) 800223
• 27020 Scaldasole
Via Roma, 5
Tel. (0382) 907772
Telefax (0382) 907962
- 190 -
• 27029 Vigevano
Via Merula, 24/26
Tel. (0381) 88607
Telefax (0381) 75675
Province of Piacenza
• 29100 Piacenza - Branch no. 1
Via Medaglie d’Oro, 7
Tel. (0523) 713081
Telefax (0523) 758113
Province of Pordenone
• 33082 Azzano Decimo
Via Maestri del Lavoro, 28
Tel. (0434) 633438
Telefax (0434) 640898
• 33080 Bannia
Piazza E. Fermi, 1
Tel. (0434) 560465
Telefax (0434) 957535
• 33084 Cordenons
Piazza della Vittoria, 36
Tel. (0434) 581285
Telefax (0434) 581275
• 33080 Fiume Veneto
Via San Francesco, 36/38
Tel. (0434) 564211
Telefax (0434) 561563
• 33085 Maniago
Piazza Italia, 32
Tel. (0427) 733044
Telefax (0427) 733028
• 33075 Morsano al Tagliamento
Piazza Daniele Moro, 3
Tel. (0434) 697014
Telefax (0434) 697839
• 33087 Pasiano di Pordenone
Via Roma, 102
Tel. (0434) 604077
Telefax (0434) 604078
• 33080 Porcia
Piazzetta Conte Silvio
di Porcia e Brugnera, 1
Tel. (0434) 923108
Telefax (0434) 591366
• 33170 Pordenone
Via Martelli, 14
Tel. (0434) 241477
Telefax (0434) 241166
• 33080 Prata di Pordenone
Via Cesare Battisti, 68
Tel. (0434) 611177
Telefax (0434) 621992
• 33077 Sacile
Viale Lacchin, 64
Tel. (0434) 737208
Telefax (0434) 737209
• 33078 San Vito al Tagliamento
Piazza del Popolo, 62
Tel. (0434) 875095
Telefax (0434) 875223
• 33079 Sesto al Reghena
Via degli Olmi, 11/A
Tel. (0434) 699010
Telefax (0434) 699292
• 33097 Spilimbergo
Via Barbacane, 6
Tel. (0427) 926123
Telefax (0427) 419080
• 33080 Zoppola
Via Pancera, 4
Tel. (0434) 574522
Telefax (0434) 574512
Province of Ravenna
• 48018 Faenza
Via G. Marconi, 32
Tel. (0546) 21075
Telefax (0546) 665531
Province of Reggio Emilia
• 42027 Montecchio Emilia
Via Prampolini, 48/50
Tel. (0522) 861312
Telefax (0522) 865531
• 42100 Reggio Emilia
Via Emilia all’Ospizio, 18
Tel. (0522) 580914
Telefax (0522) 454683
Province of Rovigo
• 45011 Adria
Corso Garibaldi, 38/A
Tel. (0426) 900514
Telefax (0426) 900878
• 45030 Occhiobello
Via Eridania, 153/F
Tel. (0425) 758267
Telefax (0425) 758347
• 45014 Porto Viro
Via Risorgimento, 157
Tel. (0426) 320205
Telefax (0426) 323388
• 45100 Rovigo
Via Sacro Cuore, 5
Tel. (0425) 423853
Telefax (0425) 29822
Province of Turin
• 10123 Turin
Via Lagrange, 10
Tel. (011) 5424010
Telefax (011) 539988
Province of Trento
• 38068 Rovereto
Via Cavour, 31
Tel. (0461) 870067
Telefax (0461) 480887
Province of Treviso
• 31040 Bavaria di Nervesa della B.
Via Aldo Moro, 2
Tel. (0422) 882266
Telefax (0422) 882267
• 31030 Bessica di Loria
Via D. Alighieri, 22
Tel. (0423) 471001
Telefax (0423) 471010
• 31030 Bigolino
Piazza Mons. Guadagnini, 58
Tel. (0423) 981385
Telefax (0423) 982015
• 31031 Caerano S. Marco
Via A. Gramsci, 9
Tel. (0423) 859679
Telefax (0423) 859680
• 31011 Casella d’Asolo
Via Tiziano, 150
Tel. (0423) 950860
Telefax (0423) 950861
• 31033 Castelfranco
Corso XXIX Aprile, 23
Tel. (0423) 423211
Telefax (0423) 423214
• 31033 Castelfranco - Branch no. 1
Borgo Treviso, 159/161
Tel. (0423) 722801
Telefax (0423) 722859
Loc. Treville
Via Castellana, 29
Tel. (0423) 472985
Telefax (0423) 472488
Via Brenta, 10
Tel. (0423) 720025
Telefax (0423) 721176
Borgo Padova, 34
Tel. (0423) 721902
Telefax (0423) 721774
Piazza della Serenissima, 32
Tel. (0423) 722578
Telefax (0423) 744098
• 31030 Castello di Godego
Via Marconi, 22
Tel. (0423) 469041
Telefax (0423) 469881
- 191 -
• 31034 Cavaso del Tomba
Loc. Caniezza
Via San Pio X, 2
Tel. (0423) 543401
Telefax (0423) 543402
• 31030 Cison di Valmarino
Via IV Novembre, 11
Tel. (0438) 975375
Telefax (0438) 85400
• 31010 Col San Martino
Via Giarentine, 1
Tel. (0438) 898104
Telefax (0438) 989567
• 31015 Conegliano
Via XXIV Maggio, 12
Tel. (0438) 415462
Telefax (0438) 415526
• 31030 Dosson di Casier
Piazza Leonardo Da Vinci, 2
Tel. (0422) 491419
Telefax (0422) 491429
• 31050 Fanzolo di Vedelago
Via Stazione, 28/A
Tel. (0423) 487011
Telefax (0423) 476507
• 31010 Farra di Soligo
Via Calnova, 1/A
Tel. (0438) 900101
Telefax (0438) 900121
• 31010 Fregona
Via Mezzavilla Centro, 3
Tel. (0438) 915009
Telefax (0438) 915090
• 31040 Guia di Valdobbiadene
Strada di Guia, 16
Tel. (0423) 901090
Telefax (0423) 901090
• 31036 Istrana
Piazzale Roma, 91 Est
Tel. (0422) 832414
Telefax (0422) 832394
• 31037 Loria
Via Roma, 19
Tel. (0423) 755125
Telefax (0423) 755090
• 31021 Mogliano Veneto
Piazza Caduti, 38/39
Tel. (041) 5904333
Telefax (041) 5904340
• 31044 Montebelluna
Via Roma, 51
Tel. (0423) 614165
Telefax (0423) 614173
• 31010 Moriago della Battaglia
Via A. Moro, 46
Tel. (0438) 890083
Telefax (0438) 890133
• 31045 Motta di Livenza
Via Sante Nardini, 22
Tel. (0422) 861556
Telefax (0422) 860009
• 31046 Oderzo
Via Spinè, 2
Tel. (0422) 815957
Telefax (0422) 815959
• 31050 Onigo di Pederobba
Via Case Rosse, 2/A
Tel. (0423) 688686
Telefax (0423) 688942
• 31038 Paese
Via Postumia, 130
Tel. (0422) 450480
Telefax (0422) 450483
• 31053 Pieve di Soligo
Piazza Caduti nei Lager, 1
Tel. (0438) 841859
Telefax (0438) 82045
• 31047 Ponte di Piave
Via Roma, 24
Tel. (0422) 857986
Telefax (0422) 857987
• 31022 Preganziol
Via Roma, 4
Tel. (0422) 331564
Telefax (0422) 639070
• 31023 Resana
Via Castellana, 41
Tel. (0423) 480105
Telefax (0423) 480216
• 31039 Riese Pio X
Via A. De Gasperi, 5/A
Tel. (0423) 483207
Telefax (0423) 454330
• 31056 Roncade
Piazza I Maggio, 15
Tel. (0422) 841531
Telefax (0422) 841532
• 31020 Rua di S. Pietro di Feletto
Via Roma, 17/D
Tel. (0438) 486997
Telefax (0438) 486997
• 31020 San Fior
Via Europa, 67
Tel. (0438) 260303
Telefax (0438) 260265
• 31020 San Giacomo di Veglia
Piazza Fiume, 37
Tel. (0438) 912080
Telefax (0438) 912111
• 31020 San Polo di Piave
Via Roma, 60
Tel. (0422) 856688
Telefax (0422) 856689
• 31020 San Vendemiano
Via Roma, 13
Tel. (0438) 400378
Telefax (0438) 400347
• 31020 San Zenone degli Ezzelini
Via Marconi, 68
Tel. (0423) 968080
Telefax (0423) 968989
• 31040 Segusino
Viale Italia, 229
Tel. (0423) 978971
Telefax (0423) 978977
• 31020 Sernaglia della Battaglia
Piazza Martiri, 24
Tel. (0438) 966230
Telefax (0438) 966184
• 31040 Signoressa di Trevignano
Via Feltrina, 1/F-1/G
Tel. (0423) 677173
Telefax (0423) 671043
• 31058 Susegana
Via Conegliano, 96
Tel. (0438) 60813
Telefax (0438) 451511
• 31100 Treviso
Viale Luzzatti, 82
Tel. (0422) 431970
Telefax (0422) 432467
• 31100 Treviso - Branch no. 1
Via G. Dannunzio, 17/B
Tel. (0422) 591047
Telefax (0422) 540738
Via S. Pelajo, 119
Tel. (0422) 307246
Telefax (0422) 307193
Via Montegrappa, 32
Tel. (0422) 264282
Telefax (0422) 234110
Via 4 Novembre, 84/A
Tel. (0422) 546192
Tel. (0422) 546129
- 192 -
• 31049 Valdobbiadene
Piazza Marconi, 15
Tel. (0423) 970611
Telefax (0423) 972625
• 31050 Vedelago
Via Crispi, 8
Tel. (0423) 400116
Telefax (0423) 401331
• 31020 Vidor
Via Capitello, 7
Tel. (0423) 987121
Telefax (0423) 987101
• 31050 Villorba
Via A. Pacinotti, 1/C
Tel. (0422) 608368
Telefax (0422) 918128
• 31029 Vittorio Veneto
Via Dante, 133
Tel. (0438) 940980
Telefax (0438) 940951
Province of Trieste
• 34015 Muggia
Via Manzoni, 4
Tel. (040) 9278651
Telefax (040) 9278664
• 34121 Trieste
Via Mazzini, 12
Tel. (040) 662662
Telefax (040) 662002
• 34122 Trieste - Branch no. 1
Piazza San Giovanni, 1
Tel. (040) 662750
Telefax (040) 662796
Via Locchi, 26/1
Tel. (040) 313333
Telefax (040) 312323
Via Settefontane, 37
Tel. (040) 9380282
Telefax (040) 9380283
Via Coroneo, 17/E
Tel. (040) 3478145
Telefax (040) 630297
Via Flavia, 120
Tel. (040) 281291
Telefax (040) 8320070
Via L. Stock, 4/4
Tel. (040) 420771
Telefax (040) 418247
Province of Udine
• 33041 Aiello del Friuli
Piazza Roma, 19
Tel. (0431) 973011
Telefax (0431) 973200
• 33030 Buia
Via S. Stefano, 105
Tel. (0432) 965109
Telefax (0432) 965110
• 33042 Buttrio
Via Cividale, 10
Tel. (0432) 636000
Telefax (0432) 673702
• 33052 Cervignano del Friuli
Piazza Libertà, 16/17
Tel. (0431) 32320
Telefax (0431) 32708
• 33043 Cividale del Friuli
Via Europa, 2
Tel. (0432) 701055
Telefax (0432) 701105
• 33033 Codroipo
Via IV Novembre, 5
Tel. (0432) 908688
Telefax (0432) 908677
• 33100 Cussignacco
Via Verona, 6
Tel. (0432) 602306
Telefax (0432) 602308
• 33010 Feletto Umberto
Via Udine, 18
Tel. (0432) 573027
Telefax (0432) 573573
• 33013 Gemona del Friuli
Via Dante Alighieri, 207
Tel. (0432) 971496
Telefax (0432) 971525
• 33050 Gonars
Via A. De Gasperi, 1
Tel. (0432) 992412
Telefax (0432) 992288
• 33054 Lignano Sabbiadoro
Viale Europa, 19/A
Tel. (0431) 723011
Telefax (0431) 723069
• 33044 Manzano
Via San Giovanni, 6/A
Tel. (0432) 740046
Telefax (0432) 740225
• 33035 Martignacco
Via Cividina, 16
Tel. (0432) 678833
Telefax (0432) 678534
• 33057 Palmanova
Piazza Grande, 2
Tel. (0432) 928300
Telefax (0432) 929754
• 33037 Pasian di Prato
Via S. Caterina, 23/A
Tel. (0432) 699033
Telefax (0432) 69585
• 33027 Paularo
Via S. Sbrizzai, 12
Tel. (0433) 71056
Telefax (0433) 71062
• 33040 Povoletto
Via Ermes di Colloredo, 30
Tel. (0432) 679217
Telefax (0432) 664270
• 33050 Pozzuolo del Friuli
Via della Cavalleria, 13
Tel. (0432) 665050
Telefax (0432) 669788
• 33040 Pradamano
Via I Maggio, 62
Tel. (0432) 670688
Telefax (0432) 671201
• 33040 Premariacco
Piazza Marconi, 9
Tel. (0432) 729867
Telefax (0432) 729868
• 33038 San Daniele del Friuli
Via Garibaldi, 11
Tel. (0432) 940906
Telefax (0432) 940924
• 33048 San Giovanni al Natisone
Piazzetta Brazzà, 5
Tel. (0432) 743296
Telefax (0432) 756331
• 33050 San Vito al Torre
Via Roma, 27
Tel. (0432) 997001
Telefax (0432) 997727
• 33017 Tarcento
Via Garibaldi, 5
Tel. (0432) 783915
Telefax (0432) 783923
• 33018 Tarvisio
Via Roma, 22
Tel. (0428) 41029
Telefax (0428) 41043
• 33028 Tolmezzo
Piazza XX Settembre, 12
Tel. (0433) 41900
Telefax (0433) 44300
- 193 -
• 33019 Tricesimo
Piazza Garibaldi, 45
Tel. (0432) 881725
Telefax (0432) 881372
• 33100 Udine
Via Cavour, 24
Tel. (0432) 516501
Telefax (0432) 516356
• 33100 Udine - Branch no. 1
Viale Europa Unita, 85
Tel. (0432) 503020
Telefax (0432) 501147
Piazzale Chiavris, 36
Tel. (0432) 547200
Telefax (0432) 546222
Viale L. Da Vinci, 107
Tel. (0432) 402828
Telefax (0432) 400460
Viale Forze Armate, 4
Tel. (0432) 581827
Telefax (0432) 284810
Via Pozzuolo, 143
Tel. (0432) 532353
Telefax (0432) 532301
Via Marghera, 2
Tel. (0432) 503437
Telefax (0432) 512470
Via Gemona, 35
Tel. (0432) 229362
Telefax (0432) 229354
Viale Vat, 109
Tel. (0432) 471693
Telefax (0432) 471721
Piazzale XXVI Luglio, 62
Tel. (0432) 534378
Telefax (0432) 534075
Via Pradamano, 41/B
Tel. (0432) 526153
Telefax (0432) 524363
Province of Varese
• 21052 Busto Arsizio
Via Zappellini, 17
Tel. (0331) 677293
Telefax (0331) 670843
Province of Venice
• 30020 Bibione
Corso del Sole, 49
Tel. (0431) 437418
Telefax (0431) 437207
• 30021 Caorle
Via Strada Nuova, 30
Tel. (0421) 212429
Telefax (0421) 211153
• 30020 Cinto Caomaggiore
Via Roma, 125
Tel. (0421) 241274
Telefax (0421) 241254
• 30016 Jesolo
Via Aquileia, 221
Tel. (0421) 630255
Telefax (0421) 371105
• 30020 Marcon
Via Alta, 55
Tel. (041) 5950663
Telefax (041) 5952177
• 30030 Martellago
Via Castellana, 40/H
Tel. (041) 5402332
Telefax (041) 5402600
• 30030 Mellaredo di Pianiga
Via Noalese Sud , 44/1
Tel. (041) 5190339
Telefax (041) 5190342
• 30020 Meolo
Riviera 18 Giugno, 62
Tel. (0421) 345431
Telefax (0421) 345424
• 30174 Mestre
Via F.lli Rondina, 3 - P.zza A. Coin
Tel. (041) 959952
Telefax (041) 958497
• 30172 Mestre - Branch no. 1
Ca’ Marcello, 67/A
Tel. (041) 5310005
Telefax (041) 5316713
• 30174 Mestre - Branch no. 2
Via Terraglio, 17 - c/o Coin
Tel. (041) 958054
Telefax (041) 979395
• 30034 Mira
Via Nazionale, 226
Tel. (041) 4265144
Telefax (041) 4265834
• 30035 Mirano
Via Gramsci, 54
Tel. (041) 5701500
Telefax (041) 5701320
• 30026 Portogruaro
Tel. (0421) 280496
Telefax (0421) 72299
• 30028 San Michele al Tagliamento
Via Venudo, 15
Tel. (0431) 521838
Telefax (0431) 521801
• 30027 San Donà di Piave
Corso Silvio Trentin, 75
Tel. (0421) 332188
Telefax (0421) 332180
• 30036 Santa Maria di Sala
Via Cavin di Sala, 53
Tel. (041) 5760235
Telefax (041) 5760234
• 30037 Scorzè
Via Venezia, 33
Tel. (041) 5841932
Telefax (041) 5840962
• 30019 Sottomarina di Chioggia
Viale Veneto, 20
Tel. (041) 5500995
Telefax (041) 5501102
• 30039 Stra
Piazza O. Tombolan Fava
Tel. (049) 9801544
Telefax (049) 9801536
• 30020 Stretti di Eraclea
Via Cadorna, 21
Tel. (0421) 316500
Telefax (0421) 316496
• 30125 Venice Rialto
S. Polo 370/371 (Campo Beccarie)
Tel. (041) 5210722
Telefax (041) 5205987
• 30125 Venice S. Croce
Sestiere S. Croce, 509
Tel. (041) 2770530
Telefax (041) 2412053
• 30124 Venice S. Marco
Calle Goldoni, 4403
Sestiere di S. Marco
Tel. (041) 2413240
Telefax (041) 2413237
Province of Verona
• 37040 Bevilacqua
Via Roma, 45/A
Tel. (0442) 93666
Telefax (0442) 93650
- 194 -
• 37040 Bonavigo
Via Trieste, 13/15
Tel. (0442) 670077
Telefax (0442) 670090
• 37051 Bovolone
Via Giuseppe Garibaldi, 52/54
Tel. (045) 6901911
Telefax (045) 7100462
• 37012 Bussolengo
Via Verona, 8/A
Tel. (045) 6700377
Telefax (045) 6700504
• 37043 Castagnaro
Via D. Alighieri, 40
Tel. (0442) 675588
Telefax (0442) 675582
• 37014 Castelnuovo del Garda
Via Marconi, 17
Tel. (045) 6450895
Telefax (045) 6450089
• 37053 Cerea
Via Roma, 2
Tel. (0442) 320871
Telefax (0442) 321042
• 37044 Cologna Veneta
Corso Gua’ Dea Piccini, 76
Tel. (0442) 412467
Telefax (0442) 410360
• 37030 Colognola ai Colli
Via Stra’, 52
Tel. (045) 6151400
Telefax (045) 6151404
• 37020 Dolcè
Via Passo di Napoleone, 1103 E/F/G
Tel. (045) 6862896
Telefax (045) 7732655
• 37063 Isola della Scala
Via Marconi, 13
Tel. (045) 7300142
Telefax (045) 7301043
• 37017 Lazise
Loc. La Pezza, 4/B
Tel. (045) 7581318
Telefax (045) 7581286
• 37045 Legnago
Via Duomo, 17
Tel. (0442) 603245
Telefax (0442) 602414
• 37054 Nogara
Via Maso, 1
Tel. (0442) 510749
Telefax (0442) 89581
• 37019 Peschiera del Garda
Via Risorgimento, 5/B
Tel. (045) 6401612
Telefax (045) 7552340
• 37047 Prova di S. Bonifacio
Via Prova, 47/C
Tel. (045) 6101544
Telefax (045) 6102079
• 37034 Quinto di Valpantena
Via Valpantena, 31
Tel. (045) 8700769
Telefax (045) 8700818
• 37056 Salizzole
Via Roma, 53
Tel. (045) 6901444
Telefax (045) 6901448
• 37035 San Giovanni Ilarione
Via Ca’ Rosse, 32
Tel. (045) 7465200
Telefax (045) 7465233
• 37057 San Giovanni Lupatoto
Via Roma, 3
Tel. (045) 8752848
Telefax (045) 9250160
• 37036 San Martino Buon Albergo
Via Nazionale, 1/C
Tel. (045) 995224
Telefax (045) 995434
• 37040 Santo Stefano di Zimella
Tel. (0442) 490064
Telefax (0442) 490559
• 37067 Valeggio sul Mincio
Piazza Vittorio Veneto, 5/C
Tel. (045) 7952226
Telefax (045) 6370620
• 37122 Verona
Corso Cavour, 29
Tel. (045) 8057611
Telefax (045) 8031242
• 37138 Verona - Branch no. 1
Corso Milano, 114
Tel. (045) 8101088
Telefax (045) 8100953
Largo Perlar, 8/10
Tel. (045) 502090
Telefax (045) 506693
Via del Capitel, 3/D
Tel. (045) 524635
Telefax (045) 8402458
Via Todeschini, 19
Tel. (045) 8350985
Telefax (045) 8350692
Via Mameli, 152
Tel. (045) 8309088
Telefax (045) 8309152
• 37047 Villabella di S. Bonifacio
Crosaron di Villabella, 18
Tel. (045) 7613822
Telefax (045) 7613647
• 37069 Villafranca di Verona
Corso Vittorio Emanuele II, 131
Tel. (045) 6305547
Telefax (045) 7903577
• 37062 Villafranca - Loc. Dossobuono
Via Cavour, 71
Tel. (045) 8600642
Telefax (045) 8600150
REPRESENTATIVE OFFICES
• Hong Kong
Room 1306, Nine Queen’s Road
Central - Hong Kong
Tel. 00852-21472955
Telefax 00852-21472997
• Shanghai
Unit 3307b, The Center, No. 989
Changle Road,
Xuhui District, Shanghai
P.R. China
Postcode: 200030
Tel. (86.21) 540754455, 54075456
Telefax (86.21) 54075457
• New Delhi
1510-12, Narain Manzil
23 Barakhamba Road,
New Delhi, India
Postcode: 110001
Tel. +91-11-41524344/41524345
Telefax +91 11 41524346
SUBSIDIARY BANKS
• Dublin
BPV Finance (International) P.l.c.
KBC House - 4 George’s Dock
IFSC - International Financial
Service Centre - Dublin (Ireland)
Tel. 00353-1-6720630
Telefax 00353-1-6720633
Swift BPVIIE21
E-mail: [email protected]
- 195 -
MINORITY PARTICIPATIONS
• Bratislava
Volksbank Slovensko A.S.
Namestie SNP 15
SK-81000 Bratislava
Slovakia
Tel. 00421-2-59651298
Swift LUBA SK BX
Mr. Miroslav Gecik
• Bucharest
Volksbank Romania S.A.
Apolodor Street 42 District 5
RO 050741 - Bucharest - Romania
Tel. 004021-4056530
Swift VBBU RO BU
Mr. Angelo Manera
• Budapest
Magyarorszagi Volksbank Zrt
Rákóczi út 7
H-1088 Budapest - Ungheria
Tel. 0036-1-3286677
Swift MAVO HU HX
Ms. Kinga Szekelyhidy
• Ljubljana
Volksbank-Ljudska Banka D.D.
Dunajska 128A
SLO-1000 Ljubljana - Slovenia
Tel. 00386-1-5307596
Swift SLBV SI 2X
Mr. Tadej Sˇenk
• Praga
Volksbank CZ A.S.
Lazarska 8/13
CZ-12000 Praha 1 - Repubblica Ceca
Tel. 00420-234-706827
Swift: VBOE CZ 2X
Mr. Giorgio Migliorini
• Sarajevo
Volksbank BH D.D.
Fra Anðela Zvizdovića 1
BIH-71000 Sarajevo-Bosnia Erzegovina
Tel. 00387-33-250010
Swift: VBSA BA 22
Mr. Edin Zeco
• Zagabria
Volksbank D.D.
Varšavska 9
HR-10000 Zagreb - Croazia
Tel. 00385-1-6001285
Swift: VBCR HR 22
Ms. Sandra Posic´
ASSOCIATED BANKS
• Beograd
Volksbank A.D.
Bulevar M. Pupina, 165g
RS-11070 Beograd
Serbia
Tel. 00381-11-2017083
Swift: VBOE CS BG
Ms. Dragona Cvetkovic
• Sliema
Volksbank Malta LTD
Dingli Street, 53
SLM 09 Sliema - Malta
Tel. 00356-234-94211
Swift: VBMA MT M3
Ms. Jeannette Apap
• Lviv
Volksbank Ukraine
Grabovskogo, 11
UA - 79000 LVIV
Tel. 00380-32-2550279
Mr. Karl Schlagenhaufen
- 196 -

Relazione sulla gestione_INGLESE DEFINITIVA

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