Reports and Financial Statements

Reports
and Financial
Statements
2015
Translation from the Italian original
which remains the definitive version
13th financial year
Joint Stock Company
Head Office and General Management Bergamo – 8, Piazza Vittorio Veneto
Operating Offices: Bergamo, 8, Piazza Vittorio Veneto; Brescia, 74, Via Cefalonia
Member of the Interbank Deposit Protection Fund and the National Guarantee Fund
Tax Code, VAT No. and Bergamo Company Registration No. 03053920165
ABI (Italian Banking Association) 3111.2 Register of Banks No. 5678 Register of banking groups No. 3111.2
Parent of the Unione di Banche Italiane Banking Group
Share capital as at 31 December 2015: EUR 2,254,371,430 fully paid up
www.ubibanca.it
Contents
Letter from the chairmen ....................................................................................................... p.
UBI Banca: company officers .................................................................................................. p.
UBI Banca Group: the main investments as at 31st December 2015 ...................................... p.
UBI Banca Group: branch network as at 31st December 2015 ............................................... p.
UBI Banca Group: principal figures and performance indicators ............................................. p.
The rating .............................................................................................................................. p.
Notice of call .......................................................................................................................... p.
4
7
8
10
11
12
15
CONSOLIDATED FINANCIAL STATEMENTS OF THE UBI BANCA GROUP AS AT AND FOR
THE YEAR ENDED 31ST DECEMBER 2015
CONSOLIDATED MANAGEMENT REPORT ................................................................................... P.
23
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24
35
40
50
73
77
84
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The macroeconomic scenario ............................................................................................. p.
European banking union ................................................................................................... p.
Significant events in 2015 ................................................................................................. p.
Commercial activity ........................................................................................................... p.
The distribution network and market positioning .............................................................. p.
Human resources .............................................................................................................. p.
The scope of the consolidation ........................................................................................... p.
Reclassified consolidated financial statements, reclassified income statement net
of the most significant non-recurring items and reconciliation schedules ................. p.
The consolidated income statement ............................................................................................ p.
General banking business with customers: funding ........................................................... p.
- Total funding ..................................................................................................................... p.
- Direct funding ................................................................................................................... p.
- Indirect funding and assets under management .......................................................... p.
88
97
110
110
111
116
General banking business with customers: lending ........................................................... p.
- Performance of the loan portfolio .................................................................................... p.
- Risk .................................................................................................................................... p.
The interbank market and the liquidity position ................................................................ p.
Financial activities ............................................................................................................ p.
Equity and capital adequacy ............................................................................................. p.
Research and Development ............................................................................................... p.
The internal controls system ............................................................................................. p.
Transactions with related parties and with connected parties ............................................ p.
Consolidated companies: the principal figures ................................................................... p.
- Information on the network banks ................................................................................. p.
- Information of the main company product companies ................................................. p.
Other information ............................................................................................................. p.
- Treasury shares ................................................................................................................ p.
- Litigation ........................................................................................................................... p.
- Inspections ........................................................................................................................ p.
- Compound of interest ...................................................................................................... p.
- Tax aspects ....................................................................................................................... p.
- Investor and Media Relations activities .......................................................................... p.
- The “Italian Responsible Payments Code”...................................................................... p.
- Social and environmental responsibility ........................................................................ p.
Principal risks and uncertainties to which the UBI Banca Group is exposed ...................... p.
Subsequent events occurring and conslodated business outlook ...................................... p.
119
119
123
129
133
150
155
157
159
163
167
174
179
179
179
179
182
183
188
191
191
194
202
STATEMENT OF THE CHIEF EXECUTIVE OFFICER AND OF THE SENIOR OFFICER RESPONSIBLE FOR
PREPARING THE CORPORATE ACCOUNTING DOCUMENTS ......................................................... P.
203
INDEPENDENT AUDITORS' REPORT .......................................................................................... p.
207
1
CONSOLIDATED FINANCIAL STATEMENTS ................................................................................ p.
211
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▪
Consolidated balance sheet ............................................................................................... p.
Consolidated income statement ......................................................................................... p.
Consolidated statement of comprehensive income .................................................................... p.
Statements of changes in consolidated equity .................................................................... p.
Consolidated statement of cash flows ................................................................................ p.
212
213
214
215
217
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ......................................................... p.
219
▪
Part A – Accounting policies .............................................................................................. p.
- A.1 – General part ............................................................................................................. p.
- A.2 – The main items in the financial statements .......................................................... p.
- A.3 – Information on transfers between portfolios of financial assets ......................... p.
- A.4 – Information on fair value......................................................................................... p.
- A.5 – Information on “Day one profit/loss” ..................................................................... p.
Part B – Notes to the consolidated balance sheet ............................................................... p.
- Assets................................................................................................................................. p.
- Liabilities ........................................................................................................................... p.
- Other information.................................................................................................. p.
Part C – Information on the consolidated income statement ............................................... p.
Part D – Consolidated statement of comprehensive income ..................................................... p.
Part E – Information on risks and the relative hedging policies .......................................... p.
Part F – Information on consolidated equity ....................................................................... p.
Part G – Business combination transactions concerning companies or lines of business .... p.
Part H – Transactions with related parties ......................................................................... p.
Part I – Share-based payments .......................................................................................... p.
Part L – Segment reporting ................................................................................................ p.
220
220
241
267
267
278
279
279
309
336
340
358
359
463
473
474
478
482
ATTACHMENTS TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................................. p.
484
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▪
▪
▪
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Disclosures concerning the fees of the independent auditors and services other than
auditing in compliance with Art. 149-duodecies of Consob Issuers’ Regulations ....... p.
Information pursuant to letters a), b) and c) of Attachment A to Part One, Title III,
Chapter 2 of Bank of Italy Circular No. 285 of 17th December 2013.
Situation as at 31 December 2015 ........................................................................... p.
485
487
SEPARATE FINANCIAL STATEMENTS OF UBI BANCA SPA AS AT AND FOR THE YEAR
ENDED 31ST DECEMBER 2015
MANAGEMENT REPORT ........................................................................................................... P.
1*
▪
▪
▪
▪
▪
2*
3*
6*
6*
▪
▪
▪
▪
▪
▪
▪
▪
UBI Banca: key figures and performance indicators ........................................................... p.
The organizational structure of UBI Banca ........................................................................ p.
Introduction ...................................................................................................................... p.
Human resources .............................................................................................................. p.
Reclassified financial statements, reclassified income statement net of the most significant
non-recurring items and reconciliation schedules .............................................................. p.
The income statement ....................................................................................................... p.
General banking business ................................................................................................. p.
Funding ................................................................................................................................... p.
Lending ................................................................................................................................... p.
Operations on the interbank market ................................................................................... p.
Financial activities ............................................................................................................ p.
Equity and capital adequacy ............................................................................................. p.
Relations with Group member companies .......................................................................... p.
Transactions with related parties and connected parties ........................................................ p.
Share performance and shareholder structure ................................................................... p.
Share performance ..................................................................................................... p.
Report on corporate governance and the ownership structure ......................................... p.
Treasury shares ..................................................................................................................... p.
De jure and delegated powers of the corporate bodies....................................................... p.
Other information ............................................................................................................. p.
Litigation ................................................................................................................................. p.
Complaint management ........................................................................................................ p.
2
8*
16*
26*
26*
28*
33*
36*
43*
45*
45*
47*
47*
49*
50*
50*
51*
51*
51*
▪
▪
▪
Principal risks and uncertainties to which UBI Banca is exposed....................................... p.
Subsequent events and the business outlook
business outlook ............................................................................................................... p.
Proposal for the allocation of profit for the year and dividend distribution .......................... p.
53*
53*
54*
STATEMENT OF THE CHIEF EXECUTIVE OFFICER AND OF THE SENIOR OFFICER RESPONSIBLE FOR
PREPARING THE CORPORATE ACCOUNTING DOCUMENTS ......................................................... p.
55*
INDEPENDENT AUDITORS' REPORT .......................................................................................... p.
59*
SEPARATE FINANCIAL STATEMENTS ........................................................................................ p.
63*
▪
▪
▪
▪
▪
Balance sheet.................................................................................................................... p.
Income statement.............................................................................................................. p.
Statement of comprehensive income ........................................................................................... p.
Statement of changes in equity .......................................................................................... p.
Statement of cash flows ..................................................................................................... p.
64*
65*
66*
67*
69*
NOTES TO THE ACCOUNTS ...................................................................................................... p.
71*
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
▪
Parte A – Accounting policies ............................................................................................. p.
▪ A.1 – General part ................................................................................................................ p.
▪ A.2 – The main items in the financial statements ...................................................... p.
▪ A.3 – Information on transfers between portfolios of financial assets............................ p.
▪ A.4 – Information on fair value ........................................................................................... p.
▪ A.5 – Information on “Day one profit/loss” ....................................................................... p.
Part B – Notes to the balance sheet ................................................................................... p.
▪ Assets ................................................................................................................................... p.
▪ Liabilities ............................................................................................................................. p.
▪ Other information ............................................................................................................... p.
Part C – Notes to the income statement ............................................................................. p.
Part D – Comprehensive income ........................................................................................ p.
Part E – Information on risks and the relative hedging policies .......................................... p.
Part F – Information on equity ........................................................................................... p.
Part G – Business combination transactions concerning companies or
lines of business ............................................................................................................... p.
Part H – Transactions with related parties ......................................................................... p.
Part I – Share-based payments .......................................................................................... p.
Part L – Segment reporting ................................................................................................ p.
72*
72*
85*
108*
108*
120*
121*
121*
153*
171*
175*
195*
197*
286*
293*
294*
302*
305*
ATTACHMENTS TO THE SEPARATE FINANCIAL STATEMENTS .................................................... p.
306*
▪
▪
▪
307*
312*
List of real estate properties .............................................................................................. p.
Convertible bonds ............................................................................................................. p.
Disclosures concerning the fees of the independent auditors and services other than
revision in compliance with Art. 149-duodecies of Consob Issuers’ Regulations........ p.
REPORT ON THE CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE OF UBI BANCA SPA… p.
REPORT OF THE SUPERVISORY BOARD TO THE SHAREHOLDERS’ MEETING ……………………………p.
REPORTS ON THE OTHER ITEMS ON THE AGENDA OF THE SHAREHOLDERS’ MEETING…………..p.
GLOSSARY .............................................................................................................................. .p.
BRANCH NETWORK OF THE UBI BANCA GROUP
CALENDAR OF CORPORATE EVENTS OF UBI BANCA FOR 2016
CONTACTS
Key
The following abbreviations are used in the tables:
- dash (-): when the item does not exist;
- not significant (n.s.): when the information is not significant;
- not available (n.a.): when the information is not available
- a cross “X”: when no amount is to be given for the item (in compliance with Bank of Italy instructions).
All figures are given in thousands of euros, unless otherwise stated.
3
313*
1**
91**
109**
214**
Chairmen’s Letter
Dear shareholders,
After the impairments booked as a consequence of the turbulent and uncertain macroeconomic scenario led to
a loss of €726 million being recorded in 2014, UBI Banca Group closed 2015 with a net profit of €117 million,
allowing the Board to propose the distribution of a dividend of €0.11 per share, an increase on the €0.08 per
share paid the previous year.
In normalised terms, i.e. net of non-recurring items, net profit increased by 33% to €195 million. This result
was achieved thanks to constant cost control and a reduced need to make impairments on the loan portfolio,
although income trends remained weak, well below the levels that could potentially be generated by the
Group in a more benign scenario.
The annual income statement included numerous non-recurring items, including the extraordinary charge for
the intervention to rescue the four Central Italian banks placed in resolution proceedings, which burdened
year-end accounts for the entire banking system, and the larger and better capitalised banks in particular.
UBI Banca’s extraordinary contribution amounted to €65.3 million.
In a period of stuttering macroeconomic recovery, normal banking activity generated €3.4 billion of operating
income, more or less in line with the figure posted in 2014. In summary:
• Net interest income decreased by -€1.6 billion, due to the disinvestment from Italian sovereign bonds (-€3.6
billion) and also the impact of interest rates turning negative for shorter maturities as of March 2015;
• net fees and commissions income increased 6% to €1.3bn due to a good trend in investment services;
• net income from financial activity increased to €0.3 billion, thanks to a positive non-recurring item
(amounting to €82 million) from the partial disposal of the stake in Istituto Centrale delle Banche Popolari,
and above all to the sale of some of the government bonds held in the portfolio (generating earnings of
€170 million).
In addition to the above-mentioned extraordinary contribution to the Resolution Fund, operating costs were
also increased by the ordinary contribution to the Fund, made for the first time in 2015, as well as funding
provided to the Deposit Guarantee System (for €22 million and €11 million respectively). Net of these items,
overall costs decreased by 1.5% to €2.1 billion, a continuation of the Group’s strong track record in cost
management.
The Group also incurred €97 million of charges for early retirement packages, the lion’s share of which
derived from the trade union agreement signed in December 2015, which included the offer of voluntary
redundancy to all employees whose redundancy requests as part of the 2014 Framework Agreement were
not granted due to overall requests exceeding the pre-set target. In light of these agreed departures, and in
order to facilitate generational succession, in the 2016-17 the Group will step up recruitment, partly through
making existing temporary employment contracts permanent.
During the year, net impairment losses on loans decreased by 13.6% to €0.8 billion, driving an improvement
in the cost of credit from the 1.08% recorded in 2014 to 0.95%, despite the usual annual update of historical
series used in internal models, which now cover the entire period of the financial crisis up to the end of 2014.
The cost of credit reflects both the ongoing improvement in the risk profile of the portfolio of performing loans –
with the volume pertaining to the highest risk classes declining by 4.5% and those assigned the lowest class
of risk increasing to 73.6% - and the lowest increase for a number of years in the stock of gross deteriorated
loans, partially explained by a further drop in new inflows from the performing loans category (-7.5% over the
full year, -15% in the final quarter).
Taxation remained high - €161 million, a tax rate of 43.12% - although this includes a negative non-recurring
item of some €26 million.
As part of its efforts to limit the risks associated with contingent liabilities, including fiscal liabilities, on 4th
February 2016 UBI Banca negotiated a settlement with the Italian tax authorities. The settlement closed
litigation over preference shares and the “branch switch” for all years already assessed and those still being
assessed, through the payment of taxes as recalculated by tax authorities, along with the associated interest.
The impact on the consolidated income statement was calculated after deducting the relevant provisions
periodically booked in the accounts.
In terms of capital, total funding, comprising the sum of assets administered on behalf of customers, came to
€171 billion as at 31st December 2015, an increase of €2 billion on the previous year.
This growth was driven by indirect funding component (+€3.7 billion) and in particular assets under
management (+€5.2 billion), whereas direct funding tracked a negative trend (-€1.7 billion), suffering from
the reduction in medium to long term funding from bonds, due both to very low market yields (driving
customers towards asset management products) and the company’s decision only to turn to the wholesale
4
funding market for lower amounts and on a less frequent basis. At the same time, financial market
turbulence and regulatory developments in terms of protection for savers have created a climate of
uncertainty and trepidation that has translated into customers preferring to entrust their savings to current
accounts, deposits into which have proved resilient.
With regard to lending, the core business of the bank network is steadily confirming initial signs of a
recovery (+1.2% vs. December 2014); nevertheless, the loan portfolio at the end of 2015 was down slightly
to €84.6 billion, still affected by the reduction in the loan stock pertaining to captive customers of the
Group’s product companies (partly deriving from previous third party network activities that have been sold
and will not be replaced).
In confirmation of the solidity of the Group’s capital, as at 31st December 2015 the Common Equity Tier 1
ratio (the most important capital indicator) stood at 12.08% (including the impact from withdrawal rights),
283 basis points above the new SREP requirement of 9.25% announced by the ECB in November (lower
than the previous requirement of 9.50%), which the Group will have to meet as of 1st January 2016. The
Total Capital Ratio stood at 13.93%.
Dear Shareholders,
The year that has just closed featured a comprehensive repositioning of the Group. First and foremost, in
compliance with Law no. 33 of 24th March 2015, the Group initiated and completed the process of
transforming from a joint stock cooperative company into an ordinary joint stock company. This process
was carried out in a completely transparent manner, with full clarity being provided to both the Group’s
shareholders and the market.
In order to ensure the stability of the Bank and continue to operate in a prudential manner, the governing
bodies, which we represent, believed it was appropriate to present the 2016 Shareholders’ Meeting with
the opportunity to vote on the renewal of managerial mandates under the new legal configuration, with a
clear framework of rules to allow Shareholders to define the governance for the next three years.
As of 12th October 2015, when the relevant resolution adopted by the Extraordinary General Meeting on
10th October was filed with the Bergamo Companies Register, UBI Banca ceased to operate as a joint stock
cooperative company and became an ordinary joint stock company.
This involved the adoption of new Articles of Association, which were put to the same Shareholders’
Meeting for its approval. Most of the amendments related specifically to the rules that were no longer
compatible with the new legal status, chiefly: the category of Regulated Shareholders (with the abrogation
of all associated privileges), as in a regular joint stock company simple ownership of shares automatically
endows the relevant dividend and voting rights; the introduction of a provision temporarily limiting voting
rights to 5% of the share capital for a period of 24 months (up to 26th March 2017), although this limit will
not apply to Undertakings for Collective Investments in Transferable Securities; shareholders’ meetings to
be held in a single session and the abolition of secret ballots for appointments to the Boards of Directors;
the removal of limits to the number of proxy votes that can be presented by an individual shareholder; the
composition of the Management and Supervisory Boards, set at 7 and 15 members respectively (in
compliance with the provisions of the Bank of Italy’s Resolution on Corporate Governance), together with a
“simul stabunt, simul cadent” (“as they stand together, so shall they fall together”) clause and the
introduction of a threshold of 1% of the share capital for the right to present candidate lists for the election
of the Supervisory Board.
In reality, as long ago as September 2013 the Group had already launched a project to reform its
governance structure, which was completed in 2014. As part of a unitary and organic process, this selfreform, which was deployed taking regulatory developments, frequently reiterated guidance from the Bank
of Italy and market trends into account, enabled the gradual transformation of UBI Banca’s structure to
that of an “integrated cooperative bank”, allowing senior management to embody a balanced
representation of all components of the company’s structure while remaining true to the one shareholderone-vote principle.
Both of the steps outlined above were welcomed and approved by a large majority in Shareholders’
Meetings, echoing the response received in preparatory meetings carried out throughout the bank’s
reference territory.
Dear Shareholders,
The proposed renewal of the mandate of the Boards of Directors is the ideal time to assess the progress
made under the previous mandate in the 2013-15 period. For both the Supervisory and Management
Boards, this was a period of intense commitment and hard work, based on the underlying determination to
bank fairly and well and an unending commitment to quality banking.
5
From an organisational point of view, the Group’s structure has been streamlined through a series of
rationalisation actions, starting with the mergers of Centrobanca (the Corporate Bank) into the Parent
Company, of IW Bank (the on-line bank) into UBI Banca Private Investment (which has over 800 financial
advisors) and SOLIMM into S.B.I.M (a Brescia-based real estate company); continuing with the disposals of
Banque de Dépôts et de Gestion (Switzerland), UBI Insurance Broker, and other smaller companies, and
culminating in the restructuring of the joint ventures in life insurance with the Aviva Group and in non-life
insurance with the Cargeas group, as well as a disengagement from sectors that are no longer considered
to be strategically important, such as fiduciary activities.
In terms of governance, this entailed a cut in the number of Directors and Statutory Auditors, with a
reduction in the associated compensation on the consolidated income statement; by 2015 this item had
decreased by 23.5% from the figure booked in 2012.
Digitalisation trends have gained momentum, forcing a rethink of the bank’s distribution channels, with the
physical bank network steadily taking on a greater consultancy role and being less involved in traditional
banking activity, on which the slack has largely been taken up by the flourishing digital Bank, a project
that now encompasses over 100 personnel dedicated to the ongoing search for the best technological
applications in an attempt to offer an excellent, innovative service to customers. A key example of this
innovative approach is the award-winning “UBI PAY” service.
As a consequence, the scope of the physical branch network has been the subject of continuous
optimisation through huge branch closure and renovation programmes that have reduced the overall
number of branches from 1,727 at the end of 2012 to the current 1,554.
At the same time, the labour force has also been affected by the trend towards digital innovation, which
has driven the need for a reduction in headcount through voluntary retirement plans agreed from time to
time with trade unions. This has led to the overall workforce being reduced from 19,090 employees as at
31st December 2012 to 17,718 employees at the end of 2015.
As a result, annual operating costs (net of non-recurring items) have been structurally reduced by 8.6% in
the three-year period.
There has also been a contemporary commitment to enhancing the Group’s human capital, both through
investments in training programmes, enabling job conversion, upskilling and role-specific training, and in
terms of the implementation of appropriate remuneration and incentive schemes.
Faced with the severe global economic crisis experienced in the last three years, the Boards of Directors
have chosen to secure the bank’s balance sheet. First and foremost, this involved the implementation of a
de-risking policy through the abandonment of riskier activities in order strengthen capital solidity, while the
company also retained a constant focus on structural equilibrium in terms of the maturities of assets and
liabilities, a focus that has gone hand in hand with the formation of adequate liquidity reserves.
From a commercial point of view, consistently with the mission of Banca dei Territori, the Group has tried to
act as a “shock absorber”, guaranteeing its support to communities and businesses within its local
territory, partly through specific anti-crisis initiatives, and consolidating its position as a key point of
reference for non-profit organisations, thanks to “UBI Comunità”, the service model dedicated to the Third
Sector, and the issue of Social Bonds.
The Bank’s traditional vocation of financing its Territories is demonstrated by the 2015 accounts, which
report that 92% of outstanding loans are dedicated to families and businesses, with 67% of the total being
based in the Region of Lombardy, the company’s traditional stronghold.
Dear Shareholders,
The changes forced upon us by new regulations have affected governance rules, but not the guiding
principles of the UBI Banca Group. The values that have long set our Bank apart remain at the forefront of
all our actions, together with our commitment to economic and social growth in the Communities and
Territories that we serve, while retaining a constant focus on ensuring the long-term sustainability of our
business.
Confident that we have always acted in the best interests of all stakeholders – shareholders, investors,
customers, employees, suppliers and institutions – we would like to express our sincerest thanks to all
those that have accompanied the Group on its journey and supported its activities over the past years.
March 2016
The Chairman
of the Management Board
Franco Polotti
The Chairman
of the Supervisory Board
Andrea Moltrasio
6
UBI Banca: company officers
Honorary Chairman
Giuseppe Vigorelli
Supervisory Board (appointed by the Shareholders' Meeting of 20th April 2013)
Chairman
Senior Deputy Chairman
Deputy Chairman
Deputy Chairman
Management Board (appointed by the Supervisory Board on 23rd April 2013)
Chairman
Deputy Chairman
Chief Executive Officer and General Manager
General Management
General Manager
Senior Deputy General Manager
Deputy General Manager
Deputy General Manager
Andrea Moltrasio
Mario Cera
Alberto Folonari
Armando Santus
Dorino Mario Agliardi
Antonella Bardoni
Letizia Bellini Cavalletti
Marina Brogi
Pierpaolo Camadini
Luca Vittorio Cividini
Alessandra Del Boca
Ester Faia
Marco Giacinto Gallarati
Carlo Garavaglia
Gian Luigi Gola
Lorenzo Renato Guerini
Alfredo Gusmini(*)
Federico Manzoni
Mario Mazzoleni
Enrico Minelli
Sergio Pivato
Andrea Cesare Resti
Maurizio Zucchi
Franco Polotti
Giorgio Frigeri
Victor Massiah(**)
Silvia Fidanza
Luciana Gattinoni
Italo Lucchini
Ettore Giuseppe Medda(***)
Flavio Pizzini
Elvio Sonnino
Victor Massiah(**)
Elvio Sonnino
Rossella Leidi
Ettore Giuseppe Medda
Senior Officer Responsible in accordance with Art. 154 bis of the
Elisabetta Stegher
Consolidated Finance Act
DELOITTE & TOUCHE Spa
Independent auditors
(*) Secretary to the Supervisory Board
(**) Since 1st June 2015, Victor Massiah has filled the position of General Manager for a period that will not last beyond the expiry of
the Management Board’s term of office (2016 Annual General Meeting). The position became vacant after Francesco Iorio resigned
and also ceased to be a member of the Management Board at the same time.
(***) Appointed by the Supervisory Board on 14th July 2015.
7
UBI Banca Group: the main investments as
at 31st December 2015
8
9
UBI Banca Group: branch network as at 31st
December 2015
10
UBI Banca Group: principal figures and
performance indicators1
31.12.2015
31.12.2014
31.12.2013
31.12.2012
31.12.2011
31.12.2010
31.12.2009
31.12.2008
STRUCTURAL INDICATORS
Net loans and advances to customers/total assets
72.2%
70.3%
71.2%
70.1%
76.8%
78.0%
80.1%
79.0%
Direct funding from customers/total liabilities
Net loans and advances to customers/direct funding from customers
78.1%
92.4%
76.5%
91.9%
74.5%
95.5%
74.6%
94.0%
79.2%
97.0%
81.8%
95.4%
79.5%
100.8%
80.0%
98.7%
8.5%
8.1%
8.3%
7.4%
6.9%
8.4%
9.3%
9.1%
61.1%
57.1%
55.2%
54.3%
51.2%
54.6%
53.2%
53.1%
13.2
14.0
14.7
17.0
18.5
19.3
17.1
17.3
0.6%
Equity (including profit/loss for the year)/ total liabilities
Assets under management/indirect funding from private individual
customers
Financial leverage ratio (total assets - intangib le assets) /(equity inclusive
of profit (loss) for the year + equity attrib utab le to non-controlling interests intangib le assets )
PROFIT INDICATORS
ROE (Net profit/equity including profit (loss) for the year )
ROTE [net profit/tangib le equity (equity inclusive of profit (loss), net of
intangib le assets )]
1.2%
2.4%
2.4%
0.8%
3.9%
1.6%
2.4%
1.4%
2.9%
3.4%
1.2%
5.9%
3.1%
4.6%
1.2%
ROA (net profit/total assets )
The cost/income ratio (operating expenses/operating income )
Staff costs/operating income
Net impairment losses on loans/net loans to customers (loan losses )
0.10%
64.5%
38.4%
0.95%
0.19%
61.8%
38.2%
1.08%
0.20%
62.3%
37.9%
1.07%
0.06%
64.3%
39.0%
0.91%
0.27%
69.5%
41.4%
0.61%
0.13%
70.6%
41.5%
0.69%
0.22%
64.4%
37.5%
0.88%
0.06%
63.9%
38.8%
0.59%
Net interest income/operating income
Net fee and commission income/operating income
Net result on financial activities/operating income
48.4%
38.6%
8.6%
53.3%
36.0%
5.9%
50.9%
34.5%
9.4%
52.8%
33.5%
7.3%
61.7%
34.7%
0.2%
61.3%
33.9%
1.0%
61.5%
31.1%
3.2%
68.7%
33.3%
-5.9%
RISK INDICATORS
Net bad loans (prev. non-performing loans)/net loans to customer
Net impairment losses on bad loans/gross bad loans (coverage for b ad
loans - previously "non-performing loans" )
Coverage for bad loans, gross of write-offs of positions subject to
bankruptcy proceedings and the relative impairment losses
Net non-performing loans/net loans to customers
CAPITAL RATIOS Basel 3 from 31 3 2014
5.07%
4.70%
3.89%
3.18%
2.49%
1.91%
1.36%
0.88%
38.64%
38.56%
41.60%
42.60%
43.31%
48.69%
51.57%
54.58%
52.50%
11.45%
53.36%
11.10%
56.05%
10.53%
57.63%
8.73%
59.06%
6.30%
63.62%
5.17%
66.10%
4.62%
2.40%
12.08%
12.33%
13.23%
10.79%
9.09%
7.47%
7.96%
7.73%
2
Tier one 1 (tier 1 capital after filters and deductions/risk weighted assets )
Common Equity Tier 1 ratio (Common Equity Tier 1 capital after filters
and deductions/risk weighted assets )
12.08%
12.33%
12.60%
10.29%
8.56%
6.95%
7.43%
7.09%
Total capital ratio (total own funds/risk weighted assets]
Total own funds (figures in thousands of euro)
13.93%
8,545,017
15.29%
9,441,598
18.91%
11,546,144
16.01%
12,203,619
13.50%
12,282,153
11.17%
10,536,200
11.91%
10,202,555
11.08%
9,960,812
of which: Tier 1 capital after filters and deductions
Risk weighted assets
7,408,894
61,344,866
7,615,265
61,762,588
8,075,247
61,045,600
8,263,720
76,589,350
8,276,278
91,010,213
7,047,888
94,360,909
6,816,876
85,677,000
6,944,723
89,891,825
116,765
(725,767)
250,830
82,708
(1,841,488)
172,121
270,099
69,001
INCOME STATEMENT, BALANCE SHEET FIGURES (in thousands of euro),
STRUCTURAL DATA (number)
Profit (loss) for the year attributable to the shareholders of the Parent
Profit for the year attributable to the shareholders of the Parent before
redundancies and impairment
182,774
233,230
314,550
184,581
349,373
177,293
289,022
88,810
195,132
3,370,864
146,537
3,409,630
100,220
3,437,292
97,324
3,526,311
111,562
3,438,339
105,116
3,496,061
173,380
3,906,247
425,327
4,089,739
Operating expenses
Net loans and advances to customers
of which: net b ad loans
(2,175,181)
84,586,200
4,287,929
(2,108,222)
85,644,223
4,025,079
(2,141,798)
88,421,467
3,437,125
(2,266,660)
92,887,969
2,951,939
(2,389,626) (2,468,564)
99,689,770 101,814,829
2,481,417
1,939,916
(2,514,347)
98,007,252
1,332,576
(2,611,348)
96,368,452
848,671
net impaired loans
Direct funding from customers
9,688,549
91,512,399
9,508,105
93,207,269
9,312,273
92,603,936
8,105,174
6,279,884
5,261,129
98,817,560 102,808,654 106,760,045
4,532,234
97,214,405
2,315,913
97,591,237
Profit for the year attributable to the Parent normalised
Operating income
Indirect funding from customers
of which: assets under management
Total funding from customers
Equity attributable to the shareholders of the Parent (inclusive of profit
(loss) for the year )
Intangible assets
79,547,957 75,892,408 71,651,786 70,164,384 72,067,569 78,078,869 78,791,834 74,288,053
48,567,539 43,353,237 39,553,848 38,106,037 36,892,042 42,629,553 41,924,931 39,430,745
171,060,356 169,099,677 164,255,722 168,981,944 174,876,223 184,838,914 176,006,239 171,879,290
Total assets
Branches in Italy
117,200,765 121,786,704 124,241,837 132,433,702 129,803,692 130,558,569 122,313,223 121,955,685
1,554
1,668
1,725
1,727
1,875
1,892
1,955
1,944
Total staff at the end of the year (actual employees in service + workers
on agency leasing contracts )
Average total staff 3 (actual employees in service + workers on agency
leasing contracts )
Financial advisors
9,981,862
1,757,468
9,804,048
1,776,925
10,339,392
2,918,509
9,737,882
2,964,882
8,939,023
2,987,669
10,979,019
5,475,385
11,411,248
5,523,401
11,140,207
5,531,633
17,718
18,132
18,337
19,090
19,407
19,699
20,285
20,680
16,756
824
17,462
713
17,625
671
18,490
672
18,828
713
19,384
786
20,185
880
20,606
924
1 The indicators have been calculated using the reclassified figures contained in the section “Reclassified consolidated financial statements, reclassified income statement net of
the most significant non-recurring items and reconciliation schedules” in the Consolidated Management Report.
Information on the share is reported in the relative section of the UBI Banca Management Report.
The profit indicators for 2014 and 2011 were calculated on profit for the year before redundancy costs and impairment losses.
2 The figures as at 31st December 2013 and as at 31st December 2012 were calculated according to AIRB Basel 2 rules and relate to the following ratios respectively: the tier one
ratio (tier one capital/risk weighted assets); the core tier one ratio after specific deductions from the tier one capital (tier one capital net of preference shares and savings or
privileged shares held by non-controlling interests/risk weighted assets); total capital ratio (regulatory capital + tier three /risk weighted assets).
For previous periods the figures were calculated according to the Basel 2 standard rules.
3 Part time employees have been calculated within total average staff numbers according to convention on a 50% basis.
11
The rating
The ratings assigned to the UBI Banca Group by the main international agencies are given
below.
On conclusion of a consultation process started in September 2014, on 16th March 2015
Moody’s published its new rating methodology for banks.
The revision introduced important new changes: a macro profile and a broader range of qualitative and
quantitative items for observation for the determination of the BCA, an indicator which expresses the
intrinsic financial strength of a bank (while the Bank Financial Strength Rating was eliminated at the same
time); an analysis of the liability structure of banks subject to a resolution regime in order to assess the
impacts in terms of expected loss that a bank’s failure would have on its various debt instruments issued
and its deposits in the absence of any support (loss given failure – LGF – analysis) and an assessment of
counterparty risk i.e. the risk of default, in relation to the bank’s operating obligations and contractual
commitments (covered bonds, derivatives, guarantees, etc.), generally not considered by existing resolution
systems.
On 17th March this agency therefore revised its ratings of all banks worldwide.
On 22nd June 2015, on conclusion of the review for Italy, which also incorporated new
assessments regarding the reduced probability of government support, Moody’s announced
changes to ratings for 17 banks/banking groups, including UBI Banca.
The rating on deposits and on long-term debt was raised from “Baa3” to “Baa2”, with a stable
outlook. The short-term rating also rose from “P-3” to “P-2”, while the BCA remained
unchanged at “ba1”.
The long-term rating on deposits and senior debt benefited from a two notch upgrade with respect to the
BCA on the basis of the results of the LGF analysis carried out on the UBI Banca Group which, in
consideration of the high volume of senior debt and the limited amount of subordinated securities, showed
an extremely low expected loss in the event of resolution.
In the meantime UBI Banca has been assigned a “Baa1” and “P-2” rating for counterparty risk
which made an improvement from “Aa3” to “Aa2” possible for its first covered bond
programme, officially announced on 23rd June.
On 10th November the agency revised the outlook of the Italian banking system upwards, from
negative to stable.
Finally, on 25th January 2016, following the entry into force of the decrees transposing the
BRRD in Italy – which have set the date for application of the “extended depositor preference”
as 1st January 20191 – and having completed the review it started on 29th October 2015,
Moody's announced that it had increased the ratings on the long-term deposits of 18 Italian
banks.
The rating on UBI Banca long-term deposits has been upgraded to Baa1 from Baa2 (+1 notch),
with a stable outlook. All the other ratings have remained unchanged.
MOODY'S
Long-term Bank deposits rating (I)
Short-term Bank deposits rating (II)
Baseline Credit Assessment (BCA) (III)
Long-term Issuer Rating (IV)
Prime-2
(II) The ability to repay debt in local currency maturing in the
short-term (due in less than one year).
(Prime -1: highest quality – Not prime: not classifiable
within any of the prime categories)
ba1
Baa2
Long-term Counterparty Risk Assessment (V)
Baa1(cr)
Short-term Counterparty Risk Assessment (V)
Prime-2(cr)
Outlook
(I) The ability to repay long-term debt (maturing in or after one
year) in local currency
(Aaa: best rating – C: default)
Baa1
(III) The BCA is not a rating but an opinion on the intrinsic
financial strength of the bank in the absence of external
support (aaa: best rating – c: default)
(IV) Opinion on the issuer's ability to honour the senior debt
and the obligations
(Aaa: miglior rating – C: default)
(V) The counterparty risk (CR) assessment is not a rating but
an opinion on the likelihood of a default on certain senior
operating obligations and other contractual commitments
entered into by the bank
[Aaa(cr): best rating – C (cr): default)]
[P-1 (cr): best rating – Not Prime (cr): not classifiable within
any of the prime categories]
Stable
RATINGS ON ISSUES
Senior unsecured rating
Euro Commercial Paper Programme
Covered Bond
(First Programme – residential mortgages)
1
Baa2
Prime-2
Aa2
The section “European Banking Union” of the consolidated management report may be consulted for details;
12
After a consultation process started in November 2014, on 27th April 2015 Standard & Poor’s
published a development of its rating methodologies for banks with the introduction of a new
component of analysis, “Additional Loss-Absorbing Capacity (ALAC)”. This is a form of
potential outside support which could be incorporated in the issuer credit rating to take
account of the lower risk of default by senior bonds in the presence of regulations which
require banks to hold “bail-inable” liabilities, i.e. liabilities that can be written down and
converted into share capital to prevent the default or insolvency of the bank.
On 3rd July 2015 this agency revised its outlook on the Group’s long-term rating up from
negative to stable. According to S&P the stabilisation of economic conditions and the slowdown in the
deterioration of the UBI Banca’s assets will allow it to continue to gradually strengthen its core capital
through internal generation.
In November S&P revised economic and industry risk for the Italian banking sector from stable
to positive.
(i) The issuer credit rating reflects the agency’s opinion of the
intrinsic creditworthiness of the bank combined with an
assessment of the potential for future support that the bank
might receive in the event of default (from government or from
the group to which it belongs).
Short-term: ability to repay short-term debt with a maturity
of less than one year (A-1: best rating – D: default)
Long-term: ability to pay interest and principal on debt with
a maturity of longer than one year
(AAA: best rating – D: default)
(ii) The SACP is a rating of the intrinsic creditworthiness of the
bank in the absence of external support (from government or
from the group to which it belongs). It is calculated on the
basis of an “anchor SACP”, which summarises economic and
industry risk for the Italian banking sector. This is then
adjusted to take account of bank-specific factors such as
capitalisation, market positioning, exposure to risk and the
funding and the liquidity situation, which are also assessed
from a comparative viewpoint.
STANDARD & POOR’S
Short-term Issuer Credit Rating (i)
A-3
Long-term Issuer Credit Rating (i)
BBB-
Stand Alone Credit Profile (SACP) (ii)
bbb-
Outlook (long-term rating)
Stable
RATINGS ON ISSUES
Senior unsecured debt
French Certificats de Dépôt Programme
BBBA-3
As part of an annual review of its ratings for the four largest Italian Banks, on 1st April 2015,
Fitch Ratings downgraded its rating for UBI Banca to BBB/F3 (from BBB+/F2) with a stable
outlook. While acknowledging the improvements to UBI Banca’s operating profitability, its
sound capitalisation, its stable liquidity, its low risk appetite and sound franchise, the
Agency’s decision reflects its still substantial deteriorated assets generated in these recent
years of recession.
On 8th April 2015 its rating for the first covered bond programme was changed to “A” (from “A+”) and
placed on negative watch – which was then lifted on 28th April, with confirmation of the A rating and a
stable outlook – while the rating on the second programme remained unchanged on “BBB+” with a stable
outlook.
On conclusion of a review of government support at global level announced in March 2014, in
view of developments in progress concerning banking crisis resolution procedures, on 19th
May 2015 Fitch took action on the ratings of Italian banks.
In consideration of the disappearance of the likelihood of government intervention in the event
of default, for nine banks the support rating was reduced to “five”, the lowest level, while the
support rating floor became “NF” (no floor).
On 24th August 2015 UBI Banca announced that it had asked Fitch Ratings to withdraw its rating
assigned to the first covered bond programme with residential mortgages as the underlying, guaranteed by
UBI Finance Srl. On the basis of the request received, on 23rd September the agency first confirmed its “A”
rating with a stable outlook and then withdrew its rating on the programme.
With regard on the other hand to the second covered bond programme with commercial mortgages and
residential mortgages not used in the first programme as the underlying and backed by UBI Finance CB 2
Srl, following the non-renewal of the mandate granted to Fitch Ratings, on 19th October 2015 UBI Banca
officially abandoned its “BBB+” previously assigned by that agency.
At the request of UBI Banca, on 23rd December 2015 Fitch confirmed its F3 rating on the Euro Commercial
Paper and French deposit certificate short-term programmes, and then cancelled them.
13
(1) The capacity to repay debt in the short term (less than 13
months). (F1+: best rating – D: default)
(2) The ability to meet financial commitments in the long-term,
independently of the maturity of individual obligations. This
rating is an indicator of the probability that an issuer will
default.
(AAA: best rating – D: default)
(3) An assessment of a bank’s intrinsic strength in the event that
it cannot rely on forms of external support (aaa: best rating f: default).
(4) A rating of the possibility of concrete and timely external
support (from the state or large institutional investors) if the
bank finds itself in difficulty (1: best rating – 5: worst rating)
(5) This rating gives additional information, closely linked to the
Support Rating, in that for each level of the Support Rating it
identifies the minimum level which the Issuer Default Rating
could reach if negative events were to occurs.
FITCH RATINGS
Short-term Issuer Default Rating (1)
F3
Long-term Issuer Default Rating (2)
BBB
Viability Rating (3)
bbb
Support Rating (4)
5
Support Rating Floor (5)
Outlook (Long-term Issuer Default Rating)
NF
Stable*
RATINGS ON ISSUES
Senior unsecured debt
BBB
* On 24th March 2016, after the approval of the present document by the Supervisory Board of UBI Banca, Fitch downgraded the Outlook from Stable to Negative.
On 25th November 2015 the DBRS agency officially assigned its first public rating to the UBI
Banca Group.
In the previous weeks it had been announced that an “AA” (low) rating had been assigned to
the covered bond programme backed by residential mortgages (confirmed on 15th October)
and an “A” (low) rating had been assigned to the second covered bond programme, with
commercial mortgages and residential mortgages not used in the first programme as the
underlying (27th October 2015).
On 2nd February 2016 the Agency published the new methodology – Critical Obligations
Rating (COR) – involving assigning a specific rating in order to take into account the risks of
default inherent in some specific categories of bonds/exposures considered critical but highly
likely to be excluded from the bail-in (such as those resulting from derivatives, payment
services, the issue of covered bonds, etc.).
Then on 4th February DBRS announced the assignment of these new ratings to 33 European
banking groups, including UBI Banca: the ratings assigned are “R-1 (low)” and “A” for the
short term and the long term respectively (in the latter case with a two-notch increased from
the Intrinsic Assessment).
DBRS
Issuer rating (I)
BBB (high)
Senior Long-term Debt and Deposit rating (II)
BBB (high)
Short-term Debt and Deposit rating (III)
Intrinsic Assessment (IA) (IV)
Support Assessment (V)
(II) The capacity to repay long-term debt (maturing in more than
1 year)
(AAA: highest credit quality – C: very highly speculative)
R-1 (low)
BBB (high)
(III) The capacity to repay debt maturing in the short term (due
in less than 1 year)
[R-1 (high): highest credit quality - R-5: very highly
speculative]
SA3
Long-Term Critical Obligations rating
A
Short-Term Critical Obligations rating
R-1 (low)
Outlook (all ratings)
(I) Issuer Rating is not an issue rating but an issuer rating,
reflecting the basic assessment of its creditworthiness. The
opinion is generally assigned over a long-term horizon using
the long-term rating scale
(IV) The Intrinsic Assessment (IA) constitutes an opinion on the
intrinsic financial strength of the Bank in the absence of
external support. The Bank fundamentals are assessed in
five areas: the branch network, profitability, liquidity and
funding, risk profile and capitalisation
(V) Assessment of external support (group to which it belongs or
which controls it) in the event of default [SA1: internal
support from the group to which it belongs; SA2: external
support (government); SA3: no external support – SA4:
potential support for the group to which it belongs]
Stable
RATINGS ON ISSUES
Senior unsecured
BBB (high)
Euro Commercial Paper Programme
R-1 (low)
French Certificats de Dépôt Programme
Covered Bond
R-1 (low)
(First Programme – residential mortgages)
Covered Bond
(According to programme – commercial mortgages)
AA (low)
A (low)*
* On 10th March 2016, after the approval of the present document by the Supervisory Board of UBI Banca, DBRS upgraded the rating on Covered Bond –
Commercial Mortgage Programme from A (low) to A.
14
Notice of call2
An ordinary General Meeting of the Shareholders of Unione di Banche Italiane S.p.A. is
convened for the day
Saturday 2nd April 2016 at 9:30 a.m.
in a single call at the New Bergamo Trade Fair in via Lunga to discuss and resolve on the
following
Agenda
1. Proposal for the allocation of profits for the year relating to the financial statements for the
year ended 31st December 2015 and the distribution of a dividend, following the
presentation of the separate and consolidated financial statements as at and for the year
ended 31st December 2015.
2. Appointment of the members of the Supervisory Board, the Chairman and the Senior
Deputy Chairman for the years 2016-2017-2018.
3. Determination of the remuneration of the members of the Supervisory Board in accordance
with Art. 13, paragraph 2, letter a) of the Articles of Association.
4. Report on remuneration: resolution in accordance with Art. 123-ter, paragraph 6 of
Legislative Decree No. 58/1998.
5. Proposal for setting remuneration and incentive policies for members of the Supervisory
Board and members of the Management Board in accordance with the regulations and
legislation in force.
6. Remuneration schemes based on financial instruments:
- proposal to set a portion of the variable remuneration of “Key Personnel” by assigning
ordinary shares of the Parent, UBI Banca, and a proposal to purchase own shares to
service the incentive scheme;
- proposal to set amounts for the 2016 Incentive Scheme for Employees – excluding Key
Personnel – by assigning ordinary shares and a proposal to purchase own shares to
service the incentive scheme;
- proposal to set amounts for the 2015 and 2016 productivity bonus (the “Company
Bonus”) by assigning ordinary shares of the Parent, UBI Banca, and a proposal to
purchase own shares to service the Company Bonus.
7. Proposal regarding the criteria and limits for determining remuneration to be agreed in the
event of the early termination of an employment relationship or early retirement from
corporate office.
8. Proposal to increase the ratio of the variable to the fixed components of remuneration up to
a limit of 2:1.
In compliance with article 15 of the Articles of Association, arrangements have been made to
employ remote connection systems at the premises at PalaBREBanca in Via Viglione Cuneo,
which will be equipped with the necessary controls needed to ensure (i) identification of those
with a legitimate right to participate, (ii) the possibility for them to take part in proceedings of
the meetings and to vote on resolutions and also (iii) to ensure the security of the
communications.
In accordance with the provisions of the aforementioned Articles of Association, these
connections will allow Shareholders who do not intend to travel to the place in which the
meeting is convened at the New Bergamo Trade Fair in Via Lunga Bergamo – and who
therefore do not intend to speak and participate in the discussions – to nevertheless follow
the proceedings of the shareholders’ meeting and to cast their vote at the appropriate time
during the course of the meeting.
2 On 19th February 2016 an abstract of this Notice to Convene an Ordinary Shareholders’ Meeting was published not only in the daily
newspapers Il Sole 24Ore and MF, but also in other major national and some local newspapers.
15
***
INFORMATION ON THE SHARE CAPITAL AS OF TODAY
The subscribed and paid-up share capital of UBI Banca S.p.A. (hereafter also the “Bank” or the
“Company”) amounts to Euro €2,254,371,430.00, consisting of 901,748,572 shares.
At the date of this notice UBI Banca possesses 1,431,829 treasury shares.
PARTICIPATION IN THE SHAREHOLDERS’ MEETING
Those persons with the right to vote for whom a communication certifying their legitimate right has been
received by the Bank within the legal time limits may take part in the Shareholders’ Meeting; according
to the provisions of Art. 83-sexies of Legislative Decree No. 58/1998 (the “Consolidated Finance Act”),
that communication is made to the Bank by an authorised intermediary on the basis of the records
relating to the end of the accounting day of the seventh trading day prior to the date of the Shareholders’
Meeting (22nd March 2016 – “record date”).
Those who only became owners of shares of the Bank subsequent to that date shall have no right to take
part and vote in the Shareholders’ Meeting.
The communication from the intermediary must be received by the Bank by the end of the third trading
day prior to the date set for the Shareholders’ Meeting, which is 30th March 2016. The legitimate right to
attend and vote nevertheless remains, should the communications be received by the Bank later than the
aforementioned time limit, provided they are received before the commencement of the proceedings of the
Shareholders’ Meeting.
It is underlined that each ordinary share gives the right to one vote.
Furthermore, until 26th March 2017 no party with the right to vote may exercise it, for any reason, with a
quantity of shares greater than 5% of the share capital with voting rights. For this purpose, votes are
considered that are cast in relation to shares possessed directly and indirectly, through subsidiary
companies, trust companies or nominees and those cast in any other case in which the right to vote is
attributed, for any reason, to a party other than the owner of the shares; shares held by Italian or foreign
collective investment undertakings are never counted for the purposes of this limit. Control exists in
those cases specified by article 23 of Legislative Decree No. 385/1993 and subsequent amendments.
Shares for which the right to vote cannot be exercised are not counted for the purposes of the proper
convening of meetings.
Voting by mail is not permitted.
PARTICIPATION AND VOTING BY PROXY
Those with the right to vote may have themselves represented in Shareholders’ Meetings in compliance
with the relative provisions of the law by means of a proxy, with the option of using the facsimile proxy
form available on the corporate website “www.ubibanca.it – Shareholders Section – Shareholders’
Meetings – April 2016 Shareholders’ Meeting”.
The proxies may be conferred by means of an electronic document with an advanced electronic signature,
qualified or digital in accordance with Art. 21, paragraph 2 of Legislative Decree No. 82/2005.
Proxies may be notified by means of email, at the address “[email protected]”.
If a proxy holder transmits or delivers a copy of the proxy to the Company, that person must certify
under their own responsibility, when being accredited for access to the proceedings of the Shareholders’
Meeting, that it is a true copy of the original proxy and to the identity of the principal.
PROXY HOLDER DESIGNATED BY THE BANK
A proxy may be granted, free of charge, with voting instructions on all or some of the items on the
agenda, to Computershare S.p.A. as the “Designated Proxy Holder” in accordance with Art. 135-undecies
of the Consolidated Finance Act by the end of the second trading day prior to the date of the
Shareholders’ Meeting (and therefore by 31st March 2016). The proxy is valid solely for proposals in
relation to which voting instructions have been given. The proxy and the voting instructions may always
be revoked at any time within the time limit indicated above.
A special form must be made to confer a proxy on the Designated Proxy Holder which will be made
available on the corporate website “www.ubibanca.it – Shareholders Section – Shareholders’ Meetings –
April 2016 Shareholders’ Meeting”. If necessary, the proxy form will be transmitted in hardcopy form to
those who request this either of Computershare S.p.A. on the Tel. No. 011.0923200, or of the Relations
with Shareholders Service of the Bank.
The proxy must arrive with the voting instructions conferred on the Designated Proxy Holder by the
aforementioned time limit of 31st March 2016 following one of the procedures indicated on the proxy
form itself.
ADDITIONS TO THE AGENDA AND THE SUBMISSION OF NEW PROPOSALS FOR RESOLUTIONS
On the basis of Art. 126-bis of the Consolidated Finance Act, Shareholders who, either alone or jointly,
represent at least one fortieth of the share capital may ask, with a written application, within at least ten
days of the publication of this notice (i.e. by 29th February 2016) for items to be added to the agenda,
indicating the additional matters proposed, or submitting proposals for resolutions regarding matters
already on the agenda.
The written application must be submitted according to one of the following procedures:
16
- at the “Relations with Shareholders Service” of the Bank at 8 Piazza Vittorio Veneto Bergamo by 5.00
p.m. on 29th February 2016;
- by
sending
them
by
certified
electronic
mail
to
the
following
address
“[email protected]”, attaching the documents in pdf format with a digital
signature, by 29th February 2016.
The applications must be accompanied by a report which gives the reasons for the proposals for
resolutions on new matters which it is proposed should be addressed or the reason for the additional
proposals for resolutions submitted on matters already on the agenda.
The applicants must send communications to the Company through their intermediaries certifying to the
ownership of shares. If they have requested their intermediary to issue that communication, it is
sufficient to provide references to that communication in the request or at least the name of the
intermediary.
Any additions to the agenda or the submission of proposals for resolutions regarding matters already on
the agenda will be disclosed at least fifteen days before the date set for the Shareholders’ Meeting (i.e. by
18th March 2016) following the same procedures as those laid down for the publication of this notice. At
the same time, the reports prepared by applicants for additions and/or further proposals for resolutions
submitted, accompanied by any assessments that may be presented by the Governing Bodies, shall be
disclosed to the public according to the same procedures applying to documentation relating to the
Shareholders’ Meeting.
It is underlined that additions are not permitted for matters on which the shareholders vote in
accordance with the law on proposals submitted by the Management Board or the Supervisory Board or
on the basis of a draft document or a report prepared by them, other than those indicated in article 125ter, paragraph 1 of the Consolidated Finance Act.
THE RIGHT TO SUBMIT QUESTIONS ON MATTERS ON THE AGENDA
In accordance with Art. 127-ter of the Consolidated Finance Act, those holding the right to vote may
submit questions on the items on the agenda even before the Shareholders’ Meeting, ensuring that they
are received by the end of the third day prior to the date of the Shareholders’ Meeting, which is by 30th
March 2016. The questions can be sent by delivering them to the Relations with Shareholders Service at
8, Piazza Vittorio Veneto, Bergamo or by email to the address [email protected] or by fax
on the No. 035/3922704.
The applicants must send communications to the Company through their intermediaries certifying that
they may legitimately exercise this right. If they have requested their intermediary to issue that
communication to participate in the Shareholders’ Meeting, it is sufficient to provide references to that
communication in the request or at least the name of the intermediary.
Questions received before the Shareholders’ Meeting and which are found to be relevant to the items on
the agenda will be given answers in accordance with the law not later than during the Shareholders’
Meeting. The bank may provide a single answer to questions with the same content.
APPOINTMENT OF MEMBERS OF THE SUPERVISORY BOARD AND OF THE CHAIRMAN AND SENIOR DEPUTY
CHAIRMAN FOR THE THREE-YEAR PERIOD 2016-2017-2018.
As concerns the item on the agenda regarding the election of the members of the Supervisory Board, the
Shareholders’ Meeting shall proceed, in accordance with the law and the Articles of Association, on the
basis of lists submitted by shareholders by the twenty fifth day prior to the Shareholders’ Meeting (i.e. 8th
March 2016) according to the following procedures.
The legitimate right to submit lists, time limits and submission procedures
On the basis of Art. 37, paragraph 6 of the Articles of Association, shareholders who, either alone or
jointly, represent at least 1% of the share capital have the right to submit lists. Ownership of the number
of shares which, according to Art. 144-sexies of Consob Regulation No. 11971/1999 (the “Issuers’
Regulations”), are necessary for the submission of lists is certified by the relative special
communication. This communication may even be produced subsequent to the filing of lists, provided
this occurs at these twenty one days prior to the date of the Shareholders’ Meeting (i.e. by 12th March
2016).
Each shareholder, Shareholders belonging to the same group and shareholders who participate in
shareholders’ pacts concerning the shares of UBI Banca may neither submit nor vote for more than one
list, even if it is by proxy or a trust company. In the event of failure to observe this rule, the signature
and/or vote are not counted for any list at all.
The lists submitted must contain a number of candidates ranging from 2 (two) to 15 (fifteen). If they are
composed of at least 3 (three) candidates, the list must comply with the gender quota rules established
by Law No. 120/2011 and also the additional proportion pursuant to Art. 36, paragraph 8 of the Articles
of Association. Each candidate may be included in one list only on penalty of ineligibility.
In compliance with Art. 37, paragraph 2 of the Articles of Association, the lists of candidates, as
previously indicated, must be deposited at the registered offices of the Bank by the twenty fifth day prior
to the Shareholders’ Meeting (i.e. by 8th March 2016). If, on the expiration date of the time limit for the
deposit of lists, the possibility described in Art. 144-sexies, paragraph 5 of the Issuers’ Regulations
should occur, then the Bank will promptly report this in a special communication sent to at least two
17
press agencies. In this case lists may be submitted up to the third day subsequent to the aforementioned
expiration date (i.e. by 11th March 2016) by shareholders who either alone or jointly with others
represent 0.50% of the share capital, without prejudice to other conditions and procedures and
submission procedures.
Lists presented that fail to observe the procedures reported above are considered as not presented.
Documentation to accompany lists
The lists must be accompanied by the following documentation:
- information concerning the identity of the shareholders who have presented them, with indications of
the number of shares and therefore the total percentage of the shares held by the shareholders
submitting them;
- a declaration by shareholders other than those who hold, including jointly, a controlling interest or
relative majority, attesting to the absence of any forms of connection with the latter pursuant to Art.
144-quinquies del Issuers’ Regulations, with account also taken of the circumstances indicated in
Consob Communication No. DEM/9017893 of 26th February 2009. In this respect the shareholders
may visit the “Investor Relations” and “Shareholders” sections of the website www.ubibanca.it in
addition to the Consob website (www.consob.it) to verify which shareholders hold the largest number
of ordinary shares in the Bank;
- information on the personal and professional characteristics of candidates;
- a declaration by the candidates themselves certifying that they are in possession of the requirements
specified by the law and by regulatory and Articles of Association provisions and also that they accept
their candidature. The foregoing must be accompanied by a commitment to also specify, in
accordance with Art. 2400, paragraph 4 of the Italian Civil Code, a list of management and
supervision positions occupied in other companies on the date of the Shareholders’ Meeting.
In relation to the above and also in accordance with Bank of Italy recommendations on the organisation
and corporate governance of banks an invitation is made to take account of the Supervisory Board
document on its qualitative and quantitative composition in which it identifies and gives reasons for the
theoretical profile, inclusive of characteristics of professionalism and independence, considered advisable
for the purposes of effectively filling the role and carrying out the duties assigned to that body. The
document is available on the corporate website “www.ubibanca.it – Shareholders Section – Shareholders’
Meetings – April 2016 Shareholders’ Meeting”.
Procedure for the election of the Supervisory Board
The election of the Supervisory Board is performed as follows:
a) if one or more lists are submitted, the first two which received the greatest number of votes cast by
the Shareholders and which are not connected within the meaning of the regulations in force are
considered;
b.1) if the list which received the second greatest number of votes received less than 15% of votes cast in
the Shareholders’ Meeting, then 14 members of the Supervisory Board are taken from the list that
obtained the majority of the votes and one member of the Supervisory Board is taken from the list
which received the second greatest number of votes;
b.2) if the list which received the second greatest number of votes, received at least 15% and less than
30% of the votes cast in the Shareholders’ Meeting, then thirteen members of the Supervisory Board
shall be taken from the list which received the majority of the votes and two members of the
Supervisory Board shall be taken from the list which received the second greatest number of votes;
b.3) if the list which received the second greatest number of votes, received at least 30% of the votes cast
in the Shareholders’ Meeting, then twelve members of the Supervisory Board shall be taken from the
list which received the majority of the votes and three members of the Supervisory Board shall be
taken from the list which received the second greatest number of votes.
If, after identifying the candidates to be taken from the two lists which received the majority of the votes
on the basis of the order in which they are indicated on the lists to which they belong, the gender
proportions required under Law No. 120 of 12th July 2011 or the additional proportion specified in
paragraph 8 of Article 36 of the Articles of Association (“Furthermore, the composition of the Supervisory
Board must ensure, in compliance with the provisions of Law No. 120 of 12th July 2011, that a balance is
maintained between genders for the period provided for by that law and at least the majority of the
members of the Supervisory Board must not have occupied the position of member of the Supervisory
Board and/or member of the Management Board of the Bank continuously for the three previous terms
of office”) are not complied with, then those members of the Supervisory Board taken last from the
aforementioned lists whose appointment would violate the said legislation and regulations are considered
not elected. In this event the number of those Board Members indicated on the same list to which they
belong shall be appointed which allows compliance with the composition requirements for the
Supervisory Board in accordance with Law No. 120 of 12th July 2011 and with the Articles of Association,
again proceeding in the order in which those persons are indicated on the list to which they belong. In
particular, in this circumstance, the candidates to be appointed belonging to the gender that is less
represented on the basis of the results of the vote or which allow compliance with the additional
proportion specified in paragraph 8 of article 36 of the Articles of Association shall be taken from each
list in proportion to the total number of candidates elected on each list according to the results of the
18
voting. In this event, if the minority list has not complied with the gender proportions established by Law
No. 120 of 12th July 2011, or do not allow compliance with the additional proportion specified in
paragraph 8 of Article 36 of the Articles of Association the candidates to be appointed shall be taken from
the list that obtained the greatest number of votes only.
If only one list is validly proposed and this obtained the majority required for an ordinary Shareholders'
Meeting, then all 15 members of the Supervisory Board shall be taken from that list.
The Shareholders’ Meeting shall proceed by a relative majority vote to appoint those members of the
Supervisory Board, who for any reason whatsoever could not be elected by means of the procedures
described above or if no list at all is submitted, again in compliance with the requirements for the
composition of the Supervisory Board pursuant to Law No. 120 of 12th July 2011 and to the Articles of
Association; in the event of a tied vote the candidate more senior by age is elected.
If two or more lists obtain an equal number of votes, those lists must be voted on again until they no
longer receive an equal number of votes.
The positions of Chairman and Senior Deputy Chairman of the Supervisory Board are reserved to the
first and second members respectively on the list that obtains a majority of votes, or on the only list
presented or to the members appointed as such by the Shareholders’ Meeting if no list is presented at all.
Deposit of lists
The lists of candidates, together with the accompanying documentation, must be deposited according to
one of the following procedures:
- at the “Relations with Shareholders Service” of the Bank at 8 Piazza Vittorio Veneto Bergamo by, and
not later than, 5.00 p.m. on 8th March 2016;
- by
sending
them
by
certified
electronic
mail
to
the
following
address
“[email protected]”, by the absolute deadline of 8th March 2016 and by attaching
the documents in pdf format with a digital signature.
The lists received by the ”Relations with Shareholders Service” will be progressively registered and
numbered on the basis of the day and time of receipt.
When lists are deposited, a receipt will be issued by the Bank for the delivery of the list and of the
attached documentation.
In compliance with the regulations in force, the lists submitted shall be made available to the public at
least twenty one days before the Shareholders' Meeting on a storage facility named “1info” (www.1info.it)
and they will also be published on the corporate website of UBI Banca “www.ubibanca.it – Shareholders
Section – Shareholders’ Meetings – April 2016 Shareholders’ Meeting”.
In order to facilitate procedures for the submission of lists of candidates to the Supervisory Board, the
following may be downloaded from the UBI Banca website “www.ubibanca.it – Shareholders Section –
Shareholders’ Meetings – April 2016 Shareholders’ Meeting” as examples to follow:
- format of the letter accompanying the lists containing the list of documentation that must accompany
them;
- a template for the declaration by candidates containing their acceptance of their candidature and
certifying that they are in possession of the requirements for taking up the position required by the
law and regulations, with regard also to the requirements set by Art. 36 of the Articles of Association;
- a facsimile of the declaration pursuant to Art. 144-sexies paragraph 4, letter b) of the Issuers'
Regulations.
DOCUMENTATION FOR THE SHAREHOLDERS’ MEETING
The documentation relating to the items on the agenda is deposited and made available to the public at
the registered address of UBI Banca, on the website of the Bank (www.ubibanca.it,– Shareholders’
Section) and is filed on the storage facility named “1info” (www.1info.it) within the time limits and
according to the procedures of the Law and regulations.
Shareholders may view and obtain copies of the aforementioned documentation in accordance with the
law by applying in advance to the “Relations with Shareholders Service”.
This notice to convene is published in accordance with Art. 125-bis of the Consolidated Finance Act and
with Art. 15 of the Articles of Association on the corporate website of UBI Banca “www.ubibanca.it –
Shareholders Section – Shareholders’ Meetings – April 2016 Shareholders’ Meeting” and an abstract of it is
published in daily newspapers(Il Sole 24 Ore and MF).
It is also communicated on the storage facility named “1info” (www.1info.it) in accordance with
provisions of the law and regulations currently in force.
In accordance with Legislative Decree No. 196/2003, UBI Banca S.p.A. is the personal data controller.
Full information on personal data processing is provided on the corporate website www.ubibanca.it.
Bergamo, 16th February 2016
The Chairman of the Management Board
Franco Polotti
19
20
Consolidated
Financial
Statements of
the UBI Banca
Group
as at and for the year
ended 31st December 2015
22
CONSOLIDATED
MANAGEMENT
REPORT
The macroeconomic scenario1
In 2015 the international scenario was increasingly conditioned by a series of geopolitical
and other factors, which slowed the pace of economic recovery and accentuated volatility on
the financial markets:
 Unfolding of the Greek crisis
At the end of June the government called a halt to negotiations in progress to prolong financial support,
deciding to submit the proposal presented by creditor institutions and countries to a referendum on 5th
July. That proposal subjected the extension to compliance with stringent budgetary targets for the
period 2015-2018 and the approval of important reforms, including on pensions. Despite the fact that
the No vote won the referendum, the difficult liquidity situation facing the Greek banks meant that on
13th July the heads of state and of government in the euro area reached an agreement to open
negotiations for a third financial support programme, according to which the European Stability
Mechanism (ESM) will lend Greece a maximum of €86 billion over a three-year period. Delivery of the aid
is fully dependent on approval by the Greek parliament of a reform programme designed to guarantee
the sustainability of public finances, ensure financial stability and strengthen the economy’s potential
for growth and competitiveness. A programme of privatisations is also planned, from which proceeds of
€50 billion are expected. The first tranche of aid amounting to €13 billion was paid on 20th August, and
at the same time the ESM allocated a sum of €10 billion for intervention to assist the Greek banking
system. The ability to carry out reforms also appears to be supported by the results of general elections
held on 20th September, which saw the victory of Prime Minister Tsipras.

Signs of a slowdown in the Chinese economy
Doubts over the real pace of expansion in China, gradually heightened by the publication of a series of
poorer than expected macroeconomic data and by the repeated devaluation of the yuan renminbi in
August, were at the origin of the turmoil in the country’s financial market over the summer and again in
early 2016, which had a knock-on effect on the other major international markets. Between the middle
of June and the end of August, Chinese share prices adjusted after the exceptional rise in the first half,
and recorded a prolonged fall, losing approximately 40%. There were more falls in share prices in the
first ten days of 2016. Government authorities adopted a variety of support measures, both of a fiscal
and a monetary nature, reaffirming their determination to support the economy.
This situation helped weaken international commodity prices, with negative repercussions on major
exporters, and on Brazil in particular2.

Geopolitical factors
Despite the fact that a nuclear deal was reached between the United States and Iran in July, resulting
in the lifting of economic sanctions3 against the country, tensions in the Middle East remain high, also
as a result of the break in diplomatic relations between Iran and Saudi Arabia. There have been a series
of terrorist attacks by Islamic groups around the world, and North Korea declared that it has tested a
hydrogen bomb.

The European Union4.
The wave of migrants heading for continental Europe remains a matter for concern. The European Union
is struggling to reach a shared strategy for tackling the problem that does not involve an albeit partial
revocation of the Schengen Agreement seen by some countries as the only solution.
The political stalemate following elections in Portugal and Spain, victory of the nationalist, conservative
right in Poland and prospect of a referendum in the United Kingdom on remaining in the European
Union, together with the attacks in Paris last November, are further elements of uncertainty about the
future of the Europea project, increasingly at risk of the dominance of national interests.
In 2015 the peripheral country government bond spread continued to fall, thanks also to the
launch of public sector securities purchasing programmes by the ECB. As the graph shows,
the spread between 10-year BTP and German Bund yields – which peaked in early July after
1 Prepared on the basis of data available as at 28th January 2016.
2 In September Standard & Poor’s downgraded the country's foreign currency debt to speculative level, (BB+ with negative outlook),
followed in December by Fitch, which downgraded all the country's debt to BB+ with negative outlook.
3 After the preliminary agreement reached in July, in January 2016, the nuclear deal was signed in Vienna by Iran, the US and the
EU, after the International Atomic Energy Agency (IAEA) verified Iran's commitment to reducing its nuclear activity and to
abandoning its objective of building a nuclear bomb.
4 The European Union (EU) is a economic and political alliance of 28 European countries, of which: Nineteen countries have adopted
the euro as their official currency and are known as the euro area (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany,
Greece, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain and, from 1 January 2015,
Lithuania); seven countries have not yet met the economic and legal criteria for joining the monetary union (Bulgaria, Croatia,
Poland, Czech Republic, Romania, Sweden and Hungary) and two countries (Denmark and the United Kingdom) have negotiated an
exemption allowing them not to adopt the euro.
24
the Greek referendum – then fell sharply back to below 120 basis points once an agreement of
the Greek debt crisis had been found. Since the beginning of October, based on expectations of
an extension to the Quantitative Easing plan, which was decided in December, the spread has
remained at a record low, ending the year at 97 basis points (134 at the end of 2014).
Ten-year BTP-Bund spread
600
550
500
450
400
Basis
Points
350
300
250
200
150
100
50
0
G FM A MG L A S O N D G FM AM G L A S O N D G F M AM G L A S O N D G FM A M G L A S O N D G FMA M G L A S O N D G FM A MG L A S O N D
2010
2011
2012
2013
2014
2015
Source: Thomson Financial Reuters
In view of the fragility of the recovery and the imbalances existing at world level, the major central banks
continued to pursue accommodative monetary policies during 2015, even if a divergence between policies in
the United States and Europe began to emerge and take hold at the end of December.
As concerns the European Central Bank:
 In order to achieve adequate expansion of the Eurosystem’s balance sheet, and counter risks associated
with an excessively long period of low growth in prices, on 22nd January 2015 the ECB decided to
extend its programme to purchase securities for monetary policy purposes, which previously included
asset-backed securities and covered bonds only, to securities issued by member countries and by some
public sector agencies in the area (which included those of the Cassa Deposito e Prestiti (a state
controlled fund and deposit institution), as well as by some European institutions. The Public Sector
Purchase Programme on the secondary market was launched on 9th March and amounts to a total of
€60 billion per month. At the beginning of September the Governing Council of the ECB increased the
maximum limit that may be purchased for a single issue of public sector securities to 33% (from the 25%
initially agreed). Following increased uncertainty in the macroeconomic scenario, on 3rd December the
Council decided to take action on the Quantitative Easing programme, adding regional and local
securities issued in the euro area to the public sector securities that can be purchased, with
reinvestment of the repayments on maturity of the securities purchased, and extending the programme
expiry date from the end of September 2016 to the end of March 2017, and at least until inflation in the
euro area comes in line with the monetary policy target (around 2%)5;
 effective for three months, four other operations aiming at longer-term financing (TLTRO) were concluded,
in addition to the two concluded in September and December 20146. Participants in the sixth tender on
16th December numbered 55 intermediaries in the euro area, who obtained funds of €18.3 billion (a total
of €418 billion in the first six tenders). The Bank of Italy allotted €2.7 billion to its counterparties (€118
billion since the beginning of the programme);
5 As at 8th January 2016, €500 billion of government securities, €144 billion of covered bonds and €15 billion of ABS had been
purchased.
6 From March 2015 to June 2016 the banks can make quarterly borrowings of up to three times the amount of their net lending to the
euro area non-financial private sector (excluding residential mortgages to households), again with maturity in September 2018.
Should they not reach their targets by 30th April 2016 (borrower growth no higher than the assigned benchmark) they will be
required to pay back in full all the funds obtained by 30th September 2016. At the meeting on 22nd January 2015 the ECB decided
to apply the same interest rate to the remaining TLTRO as to the principal refinancing operations (0.05%), eliminating the additional
spread of 10 basis points applied to the first two operations carried out in 2014.
25

the rate on the principal refinancing operations has been kept at the record low of 0.05%, while in
December the rate on bank deposits with the ECB was reduced by 10 basis points, and currently
stands at -0.30% (from -0.20%)7.
The recent developments on the macroeconomic front, in the financial markets and in commodity prices
have increased the risks of downward growth and, above all, of falling inflation in the euro area. At the
meeting on 21st January 2016, a proposal was made for the March steering committee to consider
introducing new expansionary measures, which could involve both a further cut to deposit facility interest
and the extension/expansion of the securities purchasing programme.
Across the Atlantic, as expected, the last annual meeting of the Federal Reserve confirmed the start of
monetary tightening, with the first rise in interest rates for nine years. In view of the substantial
improvement in the labour market and inflation, aiming to achieve the medium-target of 2%, in December
the Fed Funds reference rate range was increased by 25 basis points, marking a departure from the policy
of zero interest rates in place since December 2008. The Federal Reserve confirmed that subsequent rises
will be gradual and will be monitored on the basis of the effective developments in inflation and the
macroeconomic framework, in order to avoid the possibility of excessive imbalances between the major
world economies in the medium term.
In December the Bank of Japan reaffirmed its objective for its monetary base by resuming its programme to
purchase 80 thousand billion yen per year in securities, at the same time announcing that it has expanded
the range of securities that can be purchased8.
The People’s Bank of China gradually reduced both its compulsory reserve requirement ratio by a total of
250 basis points (now at 17.5%) and its one-year interest rate on bank loans (down to 4.35%) by a total of
125 basis points. After modifying its regime for pegging exchange rates at the beginning of August9, the
Chinese central bank launched a massive campaign to support the market with strong injections of liquidity
to encourage purchases of equities and with the sale of currency reserves to curb the depreciation of the
Chinese currency.
Except for Brazil, the central banks of the other principal emerging countries progressively loosened their
monetary policies 10.
On the forex market, 2015
saw the euro become
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
% change
weaker against all the
A
B
C
D
E
A/E
main
international
Euro/Dollar
1.1176
1.1135
1.0730
1.2097
-10.2%
1.0860
currencies, especially the
Euro/Yen
133.93
136.39
128.89
144.78
-9.8%
130.65
dollar. This trend came to
Euro/Yuan
7.103
6.9037
6.6515
7.5057
-6.1%
7.0504
a halt mid-year following
Euro/Franc CH
1.0871
1.0415
1.0435
1.2026
-9.5%
1.0880
Euro/Sterling
0.7386
0.7086
0.7240
0.7766
-5.1%
0.7368
uncertainties about when
Dollar/Yen
119.84
122.49
120.12
119.68
0.5%
120.30
the
US
would
start
Dollar/Yuan
6.3556
6.2000
6.1990
6.2046
4.6%
6.4921
monetary
tightening,
and
Futures - Brent (in $)
48.37
63.59
55.11
57.33
-35.0%
37.28
picked up again in the last
CRB Index (commodities)
193.76
227.17
211.86
229.96
-23.4%
176.14
quarter
when
the
Source: Thomson Financial Reuters
expectations of contrasting
monetary policies on the part of the central banks became a reality in their respective
economies. From August the yuan was devalued against the dollar on several occasions, once
again sparking concerns over the real magnitude of the slowdown in progress in the world's
The main exchange rates and oil (Brent) and commodities prices
7 At the meeting on 3rd December, the ECB also decided to retain the principal refinancing operations and the quarterly operations,
using the fixed-rate full allotment tender mechanism, at least until the end of 2017.
8 In the last week of the year, it was decided to increase the duration of Japanese government bonds that can be purchased (from 10
to 12 years) and to allocate 300 billion yen to purchasing ETFs on shares of companies committed to increasing investment and
salaries.
9 The Chinese authorities have decided to change their procedures for pegging daily exchange rates for the renminbi to the dollar,
linking it to trading on the previous day. This decision, designed to give more weight to market forces in the determination of
exchange rates, translated into a sudden, although small, depreciation in the renminbi. The International Monetary Fund
welcomed the government's initiative, and at the end of November decided to make the yuan a reserve currency, including it in the
basket of currencies with Special Drawing Rights (together with the dollar, euro, yen and pound). Despite this recognition, also
intended to avoid competitive devaluations of the currency in response to the slowdown in the economy, in December the Chinese
authorities reduced the fluctuation range of the yuan against the dollar to the lowest level since 2011, as a stress test for the
currency prior to the expected rise in rates on the part of the Fed. In January the publication of macroeconomic data that were less
favourable than expected once again led to strong tensions on the Chinese market, resulting in yet more intervention by the
government to avoid excessive volatility on the financial markets.
10 In India the central bank made four reductions (in January, Match, June and September), bringing the repo rate gradually down to
6.75%. The Russian central bank also sought to try and bring interest rates down, cutting the official rate, now at 11%, (200 basis
points in January, 100 in March, 150 in April, 100 in June and 50 in July). Conversely, the central bank of Brazil tightened
monetary policy further by raising the reference rate five times (in January, March, April, June and July) to its current 14.25%, in
order to bring inflation within the target range.
26
second largest economy, and making the yen more attractive as it strengthened against other
major currencies.
Euro-dollar and dollar-yen exchange rates (2009-2015)
1.55
128
1.50
€/$
123
$/Yen (right)
1.45
118
1.40
113
1.35
108
1.30
103
1.25
98
1.20
93
1.15
88
1.10
83
1.05
78
1.00
G F M A MG L A S O N D G F M A MG L A S O N D G F M A MG L A S O N D G F M A MG L A S O N D G F M A MG L A S O N D G F M A MG L A S O N D G F M A MG L A S O N D
2009
2010
2011
2012
2013
2014
73
2015
The macroeconomic framework
In 2015 world economy growth was slightly down from the previous year and unevenly
distributed, reflecting China's loss of momentum and a slowdown in other emerging countries,
including Russia and Brazil. This was partially offset by growth in India and in advanced
economies,
especially the United States, while Japan and the euro area saw weak
improvements11.
The short-term outlook has continued to see especially low inflation rates in all the main
industrialised countries, and inflation remains high in just a few of the emerging economies.
The price trend is mainly due to the collapse in oil prices, as well as the generalised continuing
downturn in the price of other commodities, due also to the loss of momentum in China, the
world's leading consumer of commodities.
Brent oil prices (2009-2015)
130
125
120
115
110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
G F M AM G L A S O N D G F M AM G L A S O N D G F M AM G L A S O N D G F M AM G L A S O N D G F M AM G L A S O N D G F M AM G L A S O N D G F M AM G L A S O N D
2009
2010
2011
2012
2013
2014
2015
11 According to the most recent estimates of the International Monetary Fund (January 2016), world GDP grew by 3.1% in 2015
(+3.4% in 2014), again driven by emerging countries, albeit at a slower pace (+4%; +4.6% in 2014), while the contribution from the
advanced economies remained small (+1.9%; +1.8% in 2014). The FMI revised 2016 world economic growth forecasts downwards
(+3.4%), underlining the risks arising from the weak Chinese economy, as well as from the fall in oil prices and the monetary
tightening implemented by the Federal Reserve.
27
After stabilising at around 65 dollars a barrel between April and June, the price of Brent oil
continued to fall in the second half, losing over 40% and ending the year at 37 dollars a barrel,
the lowest since February 2009. The reason for this dramatic fall, as shown in the graph, is
first and foremost overproduction by the OPEC countries, due to the decision to abandon the
strategy first put in place in 1992 of setting an agreed production target, but also to
expectations of a rise in supply from Iran after the lifting of international sanctions, in the face
of extremely weak demand. In the first few weeks of the new year, the breaking off of
diplomatic relations between Iran and Saudi Arabia increased the volatility of crude oil prices,
which reached new lows.
Actual and forecast data: industrialised countries
Gross domestic product
Percentages
Consumer prices
(average annual rate)
Unemployment
(average annual rate)
2014
2015(2)
2016(2)
2014
2015(1)
2016(2)
2014
2015(1)
2016(2)
Deficit (+) Surplus (-)
Public sector (% of GDP)
2014
2015(2)
2016(2)
4.9
7.5
2.6
4.0
6.6
3.5
5.7
1.8
2.4
Japan
Euro Area
Italy
2.4
0.0
0.9
2.5
0.6
1.5
2.6
1.0
1.7
1.6
2.8
0.4
0.1
0.7
0.0
1.1
0.4
1.0
6.2
3.6
11.6
5.3
3.5
11.0
4.9
3.5
10.5
-0.4
0.8
1.3
0.2
0.1
0.7
12.7
12.2
11.9
3.0
2.0
2.6
Germany
France
1.6
0.2
1.5
1.1
1.7
1.3
0.8
0.6
0.1
0.1
1.2
1.0
5.0
10.3
4.7
10.2
4.7
9.9
-0.3
3.9
-0.9
3.8
-0.5
3.4
Portugal
0.9
1.6
1.5
-0.2
0.5
1.3
14.1
12.3
11.3
7.2
3.0
2.9
Ireland
Greece
5.2
0.8
4.8
-2.3
3.8
-1.3
0.3
-1.4
0.0
-1.1
1.5
0.0
11.3
26.5
9.6
26.8
8.5
27.1
3.9
3.6
2.2
4.6
1.5
3.6
United States
Spain
1.4
3.2
2.7
-0.2
-0.6
0.9
24.5
21.8
19.9
5.9
4.7
3.6
United Kingdom
2.9
2.2
2.2
1.5
0.1
1.5
6.2
5.6
5.5
5.7
4.4
3.0
(1) Official statistics or, if unavailable, forecasts
(2) Forecasts
Reference interest
rates
Dec-14
Dec-15
0-0,25 0,25-0,50
0-0,10
0.05
0.50
0-0,10
0.05
0.50
Sources: IMF, European Economic Forecasts and Official Statistics
In the third quarter, growth of the US economy was more moderate. Short-term GDP rose by
an annualised 2% (+3.9% in the second quarter and +0.6% in the first quarter) thanks to
consumption, which remained high, and to fixed investments, although these were down on
the previous quarter. Meanwhile the contribution of inventories was extremely negative, and
net exports fell, penalised by the stronger dollar.
After six consecutive rises in GDP, the initial data for the fourth quarter seems to indicate
continuing growth, albeit at a slower pace.
On the labour market conditions gradually improved during the year, with the unemployment
rate down to 5% since October, in line with levels in April 2008 (5.6% at the end of 2014). As a
result, average unemployment in 2015 (5.3%) was also lower than the previous year (6.2%).
Inflation remained more or less at zero for much of the year, rising to 0.7% in December, not
far off the level at the end of 2014 (0.8%). The core index (net of food and energy products) also
saw a slight acceleration in the last few months, ending at 2.1% in December (1.6% at the end
of 2014). The average figure for 2015 was 0.1% (1.6% in 2014).
Between January and November, the balance of trade deficit rose to 488 billion dollars (up
5.5% year on year), despite the significant improvement in the balance of trade with OPEC
countries (which became a surplus), as a result of a higher deficit with China, the euro area
and other emerging economies in Asia.
In 2015 China, the world's second largest economy, saw another slowdown, with GDP up
6.9% year on year (the year-on-year increases for the four quarters were +6.8%; +6.9%; +7%
and +7% ), compared with +7.3% in 2014, reflecting the continuing weakness in investments
in the real estate sector and its supply chain, together with a reduction in trade12.
The main indicators of domestic demand continue to show significant year-on-year growth,
although there has been a gradual slowdown compared with previous years: fixed investments
12 In 2016 China could be recognised as a market economy according to the rules of the World Trade Organisation (WTO). In 2001,
after China joined the WTO, it was decided that after 15 years the European Union would assess whether to award China market
economy status with the resulting elimination of the anti-dumping tariffs that prevent the sale of products abroad at a price below
a fair production cost. Any such proposal will have to be presented by the European Commission during 2016, and any resulting
legislative document will have to be approved by the European Parliament and Council by a majority of the twenty-eight European
Member-States, which at the moment do not seem to hold a unanimous view.
28
+10%, real estate investment +1% (+10.5% in 2014), retail consumer sales +10.7% and
industrial output +6.1% (manufacturing +7%).
With regard to the balance of trade, year-on-year trends for exports (-2.8%) and imports (14.1%) in the 12 months resulted in a surplus of $594.5 billion, which helped support
currency reserves which stood at $3.330 billion at the end of December, the lowest since
November 2012, around one third of which are stably invested in United States government
securities.
After a sharp fall in January, inflation has remained close to the levels at the end of 2014
(1.5%) peaking to 2% once in August, and ending the year at 1.6%, driven by the food
component and the tobacco/alcoholic beverage segment.
Actual and forecast data: the principal emerging countries
Gross dom estic product
Perc entages
2014
2015 (2)
2016(2)
Consumer prices (average
annual rate)
2014
2015(1 )
Unemployment (average
annual rate)
2016 (2)
China
7.3
6.9
6.3
2.0
1.4
1.8
India
7.0
7.3
7.5
6.7
5.4
5.5
2014
4.1
n.a
2015(1)
4.1
n.a
2016 (2)
4.1
n.a
Reference interest
rates
Dec-14
Dec-15
5.60
4.35
8.00
6.75
Brazil
0.1
-3.8
-3.5
6.3
9.0
6.3
4.8
6.6
8.6
11.75
14.25
Russia
0.5
-3.7
-1.0
7.8
15.8
8.6
5.1
6.0
6.5
17.00
11.00
(1) Official statistics or, if unavailable, forecasts
Sources: IMF, European Economic Forecasts and Official Statistics
(2) Forecasts.
In Japan the economy has continued to fluctuate, with GDP rising by 0.3% quarter-on-quarter
in the third quarter (-0.1% in the second quarter and +1.1% in the first quarter), as a result of
the positive, if modest contribution of consumption, investments and net exports (the latter
being particularly exposed to the Asian and emerging markets), while inventories saw a slight
slowdown.
The initial figures for the fourth quarter seem to indicate signs of a moderate recovery. The
confidence level measured by the Tankan quarterly survey appears to have improved only for
small to medium-sized non-manufacturing companies, while the industrial production index
showed conflicting signals, with a year-on-year increase of 1.7% in November after three
consecutive falls, but a month-on-month decrease of 0.9%.
In December the unemployment rate, which has been fairly stable since March, stood at 3.3%
(3.4% in December 2014). Inflation was 0.2% (2.4% in December 2014), also due to the
absence since April of the statistical impact of the increase in consumer tax in April 2014.
In the euro area growth continued, but remained fragile. In the third quarter GDP rose 0.3%
quarter-on-quarter (+0.4% and +0.5% respectively in the second and first quarters), supported
by an improvement in inventories and a sustained, if modest, contribution from consumption
compared with a negative balance of trade and zero contribution from investments for the
second consecutive quarter.
The initial evidence for the fourth quarter seems to confirm the recovery at a similar pace to
the previous quarter, with performance more more less uniform in the principal countries.
The €-coin indicator calculated by the Bank of Italy – which provides an estimate of the
underlying dynamic of European GDP – has been improving since November, and in December
reached its highest level since July 2011, driven by household consumption, the labour
market trend and the recovery in industrial production. So far the recent attacks in Paris seem
to have had a modest impact on the household and business confidence in the area overall. In
France there have however been concerns about the possible repercussions on the services
sector, especially on tourism.
Figures for industrial output continued to fluctuate in the short-term (-0.7% in November;
+0.8% in October), reflecting the performance of the major economies (-0.5% in Germany; 0.9% in Spain; -0.5% in Italy). Conversely, the long-term figure showed consecutive increases
since the beginning of the year, although not at a constant rate (+1.1% in November).
In November the unemployment rate fell to 10.5%, the lowest since October 2011 (11.4% at
the end of 2014), due to the critical situations in Greece (24.6% in September), Spain (21.4%)
and Portugal (12.4%).
29
Inflation in the euro area remained extremely low, ending the year at 0.2% (-0.2% at the end of
2014). Core inflation, net of foodstuffs and energy products, was instead 0.9%, basically
unchanged year on year (0.7%). Average annual inflation was zero (0.4% in 2014).
Growth prospects in the euro area are under the threat posed by continuing uncertainties about demand in
important potential sales markets, especially in emerging countries. In addition, increased geopolitical
tensions, especially in the Middle East, could have a negative impact on confidence levels and contribute to
holding back the recovery in consumption and business activities on a global level.
The third quarter saw the Italian economy come out of recession, although growth remains
fairly moderate. Over the summer months, the short-term change in GDP was +0.2%, slightly
down on the two previous quarters (+0.3% and +0.4% respectively in the second and first
quarters), due to the positive contribution of consumption 13 and inventories, offsetting the
negative contribution of net exports and gross fixed investments.
Based on the information available, the recovery seems to have continued at similar rates also
in the fourth quarter, supported by the services industry, and more favourable signals from
the real estate market.
After the appreciable progress recorded in October (+3%), industrial output figures adjusted
for seasonal effects recorded a smaller month-on-month increase of +0.9% in November, the
aggregate result of opposing performances in different sectors. The largest increases were in
the “manufacture of means of transport” sector (+13.6%), the “manufacture of coke and oil
products” sector (+10.5%) and the “manufacture of chemical products” sector (+5.2%), while
the main decreases were seen in the “textiles" sector (-5.1%), the "manufacture of computers,
electronic and optical products” (-4.9%) and the “food” sector (-3,6%).
Encouraging signals came from the labour market with the unemployment rate, which
remained essentially stable in the first part of the year, progressively down to 11.3% in
November from 12.4% in June (12.4% also in December 2014). Measures to reduce social
security contributions for new recruits introduced by the 2015 Legge di stabilità (“Stability
Law” – annual finance law) and the innovations contained in the Jobs Act 14 caused a
significant change in the composition of new recruits in favour of stable forms of employment
contract, also favouring growth in the demand for labour. After peaking in June (42.2%), the
unemployment rate for 15-24 year-olds settled at 38.1% in November, the lowest level since
the beginning of the year, although still amongst the highest levels in the euro area (41.2% at
the end of 2014)15.
The overall figure continues to be mitigated by state income benefits, which saw a significant
reduction in state lay-off and redundancy benefits between January and November: 634.8
million hours authorised compared with the 963.1 million of the same period of 2014 (-34.1%),
due to a general reduction of the various components (-26.1% ordinary hours; -29.4%
overtime; -55.4% redundancy funds).
After a slight recovery in the summer months, inflation, as measured by the harmonised
consumer price index, was only slightly up in December (0.1%; -0.1% at the end of 2014).
Average inflation for the year was 0.1%, slowing for the third consecutive year (0.2% in 2014),
with particularly significant slowdowns in the “Transport” and “Communications” sectors.
The surplus on the balance of trade improved to €39.2 billion in the first eleven months (€36.2
billion in the same period of 2014) due to a substantial surplus on non-energy products, two
thirds of which is stably attributable to plant and equipment, which more than offsets the
energy deficit (-€31 billion). The overall surplus was driven by higher volumes of trade, with
exports up by 3.8% year-on-year – albeit held back by the fall in demand from non-European
countries – and imports up by 3.3%.
13 The recovery in consumption reflects an increase in income which is benefiting, amongst other things, from budgetary policies
already in place with further prospects for improvement in view of intervention programmed for 2016.
14 The last four decrees to implement the Jobs Act came into force on 24th September (Legislative Decrees No. 148, No. 149, No. 150
and No. 151 of 14th September 2015), in addition to the four issued in the first half of the year (Legislative Decrees No. 22 and No.
23 of 4th March 2015; Legislative Decrees No. 80 and No. 81 of 15th June 2015).
15 This figure gives young people unemployed as a percentage of total young people in employment and in the process of being
employed.
30
On the question of public finances, according to official forecasts, which take into account the 2016 Stability
Law approved by Parliament in December, in 2016 the deficit-to-GDP ratio is expected to fall to 2.4% from
its 2015 level of 2.6% (3% in 2014), while the debt-to-GDP ratio should decrease to 131.4% from its 2015
level of 132.8% (132.3% in 2014). When drawing up its budget for 2016 and the following years, the Italian
government asked the EU Council to apply the flexibility margins under the clause for investments,
structural reforms and the immigration emergency16.
Based on the latest available data, as at 11th August 2015 funding of €44.6 billion had been made
available to debtor administrations, of which €38.6 billion had already been paid to creditors.
Financial markets
In 2015 the stock market trend The principal share indices in local currency
was
favourable
for
the
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
% change
A
B
C
D
E
A/E
European exchanges, with the
sole exception of London, and
Ftse Mib (Milan)
21,295
22,461
23,157
19,012
12.7%
21,418
22,845
23,985
24,734
20,138
15.4%
FTSE Italia All Share (Milan)
23,236
for
Japan,
despite
the
9,660
10,945
11,966
9,806
9.6%
Xetra Dax (Frankfurt)
10,743
considerable
fluctuations
4,455
4,790
5,034
4,273
8.5%
Cac 40 (Paris)
4,637
6,062
6,521
6,773
6,566
-4.9%
Ftse 100 (London)
6,242
during the year. As the table
1,920
2,063
2,068
2,059
-0.7%
S&P 500 (New York)
2,044
shows, the positive start of the
DJ Industrial (New York)
16,285
17,620
17,776
17,823
-2.2%
17,425
4,620
4,987
4,901
4,736
5.7%
Nasdaq Composite (New York)
5,007
first three months was followed
17,388
20,236
19,207
17,451
5.7%
Nikkei 225 (Tokyo)
18,451
by significant losses from April
1,411
1,630
1,543
1,408
7.2%
Topix (Tokyo)
1,510
MSCI emerging markets
776
972
975
956
-16.9%
794
to September, with a partial
Source: Thomson Financial Reuters
recovery in the latter part of the
year.
The markets were first of all conditioned by the continued uncertainty about the launch of the
exit strategy by the Fed, in addition to the adoption and subsequent expansion of quantitative
easing measures by the ECB.
The Greek crisis, Volkswagen scandal, Chinese financial upheaval and greater-than-expected
fall in oil prices all contributed to causing an overall adjustment of stock prices.
Having risen in the first half, the MSCI index – an indicator of performance by emerging
markets – recorded a fall of over 18% in the second half, as a result of the sharp drop in
Chinese stock prices.
In the first few weeks of the new year, fresh fears about the strength of the Chinese economy,
high terrorism risks and geopolitical tensions kept volatility levels high. The Milan Stock
Exchange was also affected by unjustified fears about the solidity of the Italian banking
system.
The stock markets managed by Borsa Italiana – which delivered the best performance in
Europe – were penalised in the middle part of the year, but ended 2015 with gains of more
than 12%. This result was accompanied by an increase in volumes, in terms of both assets
managed (71.1 million; +6.9%) and to an even greater extent in volumes (€805.6 billion;
+11.3%).
Borsa Italiana confirmed its position as European leader in the volume of contracts exchanged
on the electronic systems, including both ETF Plus and MOT. In particular, ETF Plus achieved
a record number of contracts exchanged in August. The volumes of assets managed reached
€47.7 billion (+29.3% year-on-year), while trading volumes rose to €104.3 billion (+41,6%) over
the twelve months.
Conversely, trading volumes on the fixed income markets (MOT and ExtraMOT) during the
year fell to €281.1 billion (down 14.6%) with a smaller fall in the assets managed (4.7 million, 4.4%).
16 The main measures provided for by the Stability Law concern cancelling for 2016 the safeguard clauses introduced by the Stability
Laws for 2014 and 2015 (which would have mainly led to increases in consumer taxes), the abolition of taxation on main residence
ownership and the extension of employment incentives. In the course of its passage through Parliament, the Stability Law also
incorporated Decree Law No. 183 of 22 November 2015 (on the rescue plan for four banks) and a packet of measures to help the
cultural sector and strengthen national security due to the high risk of terrorist attacks in the wake of recent events.
31
At the end of the year 356 companies were listed at Borsa Italiana, up from 342 at the end of
2014, with 3217 new admissions, the best result since 2007. Capitalisation reached €573.6
billion, up from €482.4 billion at the end of 2014, equivalent to 35.3% of Italian GDP (29.8%
the previous year).
Turnover velocity18 fell from 150% in 2014 to 140% in 2015, reflecting the different growth
dynamics of trading volumes and capitalisation.
Principal long-term interest rates (2010-2015)
7.50
7.00
US 10-year Treasury
10-year BTP
10-year Bund
6.50
6.00
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
G FM AM G L A S O N D G FM AM G L A S O N D G FM AM G L A S O N D G FM AM G L A S O N D G FM AM G L A S O N D G FM AM G L A S O N D
2010
2011
2012
2013
2014
2015
In the light of the continuing unusually low interest rates and maturity yields of government
bonds, 2015 was another extremely favourable year for the asset management industry (€141
billion in net funding), albeit driven by mutual investment funds. Net inflows for the sector
continued to slow, but reached a total of €94.3 billion, the best result since 1999, two thirds of
which came from funds managed under foreign law (+68 billion) and the remainder from funds
managed under Italian law (+26.3 billion).
In terms of the type of fund, good performance was recorded, although to differing extents, by
all the main categories: by flexible funds (+€51.5 billion), bond funds (+€14.9 billion), balanced
funds (+€12.4 billion), equity funds (+€9.5 billion) and monetary products (+€6.6 billion), with
hedge funds basically stable (-€0.6 billion).
At the end of December assets under management had reached €842.6 billion compared with
€683.3 billion at the end of 2014 (+23.3%), the aggregate result of a change in the composition
in percentage terms into flexible funds (up from 22% to 24.2%), into equity funds (up from
20.7% to 21.7%), into balanced funds (up from 6.4% to 8%), into monetary funds (up from
3.9% to 4.1%) and out of bond products (down from 46.1% to 41.4%).
The banking system
The fragility of the background environment continues to affect the Banking sector, in which
the trend for funding remains negative, due among other things to the continuing weakness of
lending, which was weaker during the year, compared with a slight improvement in credit
quality.
17 The 32 new admissions include 27 companies that were listed on the Borsa italiana markets through an Initial Public Offering
(IPO) and collected more than €5.7 billion at the placement stage. Note also that the Poste Italiane IPO, which collected more than
€3 billion in capital, is the biggest IPO in the last ten years (since 2006).
18 An indicator which, as the ratio of the volumes of shares traded to capitalisation, gives a measure of the turnover of shares traded.
32
On the basis of the first estimates published by the Italian Banking Association (ABI)19, at the
end of December the year-on-year rate of change in direct funding (deposits by residents and
bonds) was slightly down at -0.6% (-1.2% in December 2014).
A clear gap remains between funding from bonds (-13% compared with -13.6% at the end of
201420) and other forms of funding (+3.7% compared with +4% in December21).
As shown by detailed Bank of Italy data for November22, the latter item is benefiting both from
an increase in current account deposits (+6.3%) and from a recovery in repurchase
agreements (+8.8%) that occurred in 2015, notwithstanding the reduction in term deposits
with maturities of up to two years (-14.7%).
Again according to Italian Banking Association (ABI) reports, the annual change in loans to
private sector residents was slightly positive (+0.1%; -2% in December 2014).
In terms of borrowers, information for November published by the Bank of Italy23 – which
takes account of loans not recognised in the balance sheets of banks because they are
securitised and are net of changes in amounts not connected with transactions (e.g. changes
due to fluctuations in foreign exchange rates, to impairment or to reclassifications) – shows a
continuation of the positive trend that started in June for households after a fall lasting two
and a half years, and a return to growth for businesses for the first time since 2012, thanks
also to increasingly attractive terms and conditions.
The trend for the former (+0.8%; -0.6% in December 2014) is affected by the favourable
performance of new grants for the purchase of residential properties and consumer credit,
while the performance for non-financial companies, while still improving (+0.2%; -2.3% at the
end of December 2014), is still conditioned by a lack of demand, especially with regard to
investments, even though new grants are recovering.
From the viewpoint of risk, while signs of improvement exist, they still seem modest. In
November bad loans (previously termed "non-performing loans") to the private sector gross of
impairment losses 24 increased to €200.6 billion, progressively slowing year-on-year (+11%
down from +17.8% in 2014). The total outstanding consisted of €54 billion to households
(+9.4% compared with November 2014; +8.1% in 2014) and of €143.3 billion to businesses
(+10.3%; +20.7% in 2014).
Net bad loans of €88.8 billion increased by 4.7% over the twelve months (+5.6% in 2014).
As a result of the combined effect of the performances of the relative totals, the ratio of gross
private sector bad loans to private sector loans rose to 12.09% (11.11% December 2014), while
the ratio of net bad loans to total loans rose to 4.89% (4.64% at the end of 2014).
Securities issued by residents in Italy held in the portfolios of Italian banks stood at €746.8
billion in November, down €69.7 billion year-on-year (-8.5%).
The trend almost fully reflects that for “other certificates” (€340 billion), which fell sharply
compared with the year before (-€64.8 billion), due mainly to bonds issued by banks (-€52.8
billion), accounting for an even lower percentage of the total at 63.3%. Investments in Italian
government bonds (€406.8 billion) essentially remained stable (-€4.9 billion; -1.2%), also in
terms of the breakdown into short-term and medium to long-term securities.
The average interest rate on bank funding from customers calculated by the Italian Banking
Association (ABI)25 (which includes the yield on deposits, bonds and repurchase agreements
for households and non-financial companies) was down at 1.19% (1.5% at the end of 2014).
The average weighted interest rate on loans in euro to households and non-financial companies
fell to a record low of 3.26% (3.62% in December).
19 ABI Monthly Outlook, Economia e Mercati Finanziari-Creditizi, January 2016.
20 The changes were calculated by excluding the portion included within securities portfolio investments from bond funding. The
trend for the item was affected by the significant volumes of maturing securities as well as by the abundant and competitive
liquidity injected into the banking system by the ECB and short-term lines of financing.
21 The changes were calculated by excluding amounts relating to disposals of loans and transactions with central counterparties from
deposits.
22 Supplement to the Statistics Bulletin Moneta e Banche, 13th January 2016.
23 Press release: “The main items on banks’ balance sheets”, 13th January 2016.
24 Supplement to the Statistics Bulletin Moneta e Banche, 13th January 2016.
25 ABI Monthly Outlook, Economia e Mercati Finanziari-Creditizi, January 2016.
33
***
As regards the regulatory issue of implementing the banking union – referred to in the next chapter “The
European Banking Union” – 2015 was the first full year in which the Single Supervisory Mechanism was in
place. Important progress was also made in the introduction of the Single Resolution Mechanism, which
became fully operative in 2016. European Directive 2014/49/EU (Deposit Guarantee Scheme Directive –
DGSD) is still in the process of being transposed in some countries, including Itally and it will form the third
pillar of the Union.
The domestic regulatory plan saw the important reform of the "banche popolari" (cooperative-type people's
banks), which required banks with assets in excess of €8 billion euro to convert into "societa' per azioni"
(joint-stock companies) within 18 months of the implementing measures of the Bank of Italy coming into
effect (i.e. by the end of 2016). In addition to this, there have been ongoing changes to the regulatory
framework for Italian banks, requiring substantial alignment efforts26, especially of a fiscal nature.
Among the many new measures introduced to fiscal regulation – for which reference should be made to the
specific paragraph in the “Other information” – Law No. 95 of 18 June 2015, which transposed the Common
Reporting Standard (CRS) and the Directive on Administrative Cooperation (DAC 2) (amending the existing
directive DAC), introduced the automatic exchange of information between tax administrations in the EU
Member-States on the basis of CRS requirements. Both the CRS and DAC 2, in effect since 1st January
2016, aim to promote cooperation between Member-States for the purpose of combating tax evasion linked
to offshore investments and effectively constitute a multilateralisation of the FATCA (Foreign Account Tax
Compliance Act), which became law on 1st July 2014.
To resolve the problem of a lack of access to credit for companies, Decree Law (D.L. No. 83/2015) was
published in the Official Gazette on 27th June and converted into Law No. 132/2015 in August. It contains
urgent measures concerning bankruptcy, civil law and proceedings and the organisation and functioning of
judicial administration. As well as making credit impairment and losses immediately deductible for tax
purposes, the measures include regulations to make bankruptcy and executive proceedings quicker and
more efficient, in order to take direct action on some of the causes of the huge stock of bad loans.
An agreement which Italy finally managed to reach with the EU (for its compatibility with the law on state
aid) should, it is hoped, provide an incentive to the creation of a secondary market for non-performing
assets (previously termed "deteriorated assets") . The agreement involves securitising bad loans and
providing a government guarantee for the senior tranches, to be managed by special vehicles set up for the
purpose by the individual banks.
The total reform of bankruptcy law should also take place during 2016. Already in early January, a bill has
been presented to the government for the "systematic reform of the regulations governing businesses in
crisis and insolvency".
Finally, as already reported, Directive 2013/50/EU amended Directive 2004/109/EC (the “Transparency
directive”) in order to simplify and reduce the administrative costs for listed companies and ensure greater
transparency about the ownership of companies issuing securities admitted to trading on a regulated
market. The public consultation convened by the Ministry of Economy and Finance regarding the
amendments to the provisions of Legislative Decree No. 58 of 24 February 1998 (the Consolidated Banking
Act) necessary for transposing the aforementioned directive, based on the delegation contained in Law No.
114 of 9th July 2015, ended on 27th October 2015 27 . The draft legislative decree is currently being
examined by Parliament. The amendments contained in the aforementioned consultation document affect
various provisions of the Consolidated Banking Act and, once they have been made, will require a further
amendment to CONSOB regulations, in order to implement the reform.
26 See the section “Significant events in 2015” for further information.
27 The 2014 European Delegated Act requires the Government to comply with the following directive criteria when transposing the
directive in question: 1) to raise, where necessary, the minimum threshold of share capital held for communications regarding
significant shareholdings; 2) to grant CONSOB the power to introduce publication requirements for periodical reporting more
frequently than the annual and half-yearly financial statements in its rules, subject to an appropriate impact assessment; 3) to
make the necessary amendments to the existing legislation in order to ensure adequate transparency is applicable to the
information provided by issuers, in order to guarantee an appropriate level of protection for investors and to safeguard financial
stability as broadly as possible, ensuring the most appropriate information and accuracy requirements are in place.
34
European banking union
European Banking Union is a necessary complement to Economic and Monetary Union (EMU),
as it unifies responsibility for supervision, crisis resolution and financing, harmonising
regulations for euro-zone banks.
European Banking Union is built on three pillars.
While the Single Supervisory Mechanism can now be said to be fully up and running having
completed its first full year, during 2015 important progress was made towards
implementation of the Single Resolution Mechanism (SRM), introduced with European Directive
2014/59/EU (the Bank Recovery and Resolution Directive – BRRD), which came into full effect
this year.
The aim of this mechanism is to guarantee that the burden of every resolution is first and foremost
shouldered by the affected bank and its shareholders – and if necessary by the bank’s creditors – with the
Single Resolution Fund only intervening to provide aid if the contributions from shareholders and creditors
prove to be inadequate. With effect from 1st January 2015, each national resolution fund will have to work
towards reaching a target capacity equal to at least 1% of the total amount of covered deposits, a target
that must be reached by 31st December 2024. As of 1st January 2016 these national funds are set to merge
into the Single Resolution Fund managed by the new Single Resolution Board, which will have an 8 year
period (from 1st January 2016 to 31st December 2023) to gather resources equivalent to at least 1% of total
covered deposits in the euro zone (around €55 billion).
In 2015 banks in the member states participating in Banking Union (which include Italy) deposited their
contributions with their respective national funds. In 2016 these contributions will be transferred to the
Single Resolution Fund.
European Directive 2014/49/EU (the Deposit Guarantee Scheme Directive – DGSD), which
came into force in June 2014, is still in the transposition phase in some countries, including
Italy. The Directive created a common deposit guarantee scheme, stipulating that each member
state institute a deposit guarantee scheme (DGS) to reimburse holders of protected financial
instruments if the deposit-holding bank is declared bankrupt and the deposited funds become
unavailable.
All banks must participate in one of these systems, and as of the second half of 2015, provide annual
funding contributions (ex-ante) based on their respective risk profiles, among other factors. These funding
contributions must make up at least 70% of the overall funding of the DGS, while the remaining 30% will be
able to be generated from payment commitments (guaranteed by low risk assets). By 3rd July 2014 the
target level for these funds should amount to at least 0.8% of the covered deposits in each member state.
For information on the accounting impact of contributions to the two Funds, refer to the Notes
to the Consolidated Financial Statements, Part A.1, Section 5 “Other Aspects”.
Italian approval of “bail-in” rules for banks (transposition of
BRRD)
European Directive 2014/59/EU – BRRD – harmonised recovery and resolution regulations for
banks and investment firms. Law No. 114 of 9th July 2015 (the “2014 European Delegation
Law”) indicated the mandated criteria for the transposition of BRRD into national legislation.
On 10th September 2015 the Italian Cabinet granted preliminary approval for 2 legislative
Decrees governing the transposition of the Directive.
Specifically, Legislative Decree implementing Directive 2014/59/EU of the European Parliament
and the Council of 15th May 2014 contains rules for drawing up resolution measures,
managing crises at international groups, the powers and functions of the national resolution
authority and guidelines for the national resolution fund. Related activities are the
responsibility of the resolution authority, a function assigned to the Bank of Italy in
accordance with the specific criterion within the law.
35
As allowed by the Directive and provided for within the Delegation Law, application of the bailin mechanism will commence on 1st January 2016 (for more information see the dedicated
section later in this chapter).
The Legislative Decree amending Legislative Decree No. 385 of 1st September 1993 (the
Consolidated Banking Act) and Legislative Decree No. 58 of 24th February 1998 (the
Consolidated Finance Act) implementing Directive 2014/59/EU of the European Parliament and
the Council of 15th May 2014 amends the Consolidated Banking Act with the introduction of
rules on recovery and resolution plans, intra group financial support and early intervention
measures, while bringing procedures for the special administration of banks into line with
European regulations. It also amends the rules for compulsory administrative liquidation so
that they comply with the regulatory scenario introduced with the Directive, and introduces
some innovations in light of current practice.
On 6th November the Italian Cabinet approved two legislative decrees amending the original
legislation in order to transpose the postponement of “extended depositor preference”1 to 1st
January 2019, acknowledging the indications received from the Senate Finance Committee
when it issued its positive view.
Following approval by the Chamber of Deputies’ EU Policy Committee, the Cabinet definitively
issued two decrees at its 13th November 2015 meeting – Legislative Decree No. 180/2015 and
Legislative Decree No. 181/2015 – both of which came into force on 16th November 2015, the
day of their publication in the Official Journal.
With a provision dated 18th November 2015, the Bank of Italy formed the national resolution
fund stipulated in the Directive, in accordance with article 78 of Legislative Decree 180/2015.
The bail-in
The bail-in is an instrument that, when the conditions for the resolution of a credit institution arise, allows
the resolution authority to reduce the value of shares and some debt or convert debt into equity to absorb
losses and adequately recapitalise the bank to levels that will ensure the market’s confidence is retained.
The following are completely excluded from the scope of application, and therefore cannot be impaired or
converted into capital:
i) deposits (current accounts, savings accounts and certificates of deposit) protected by the deposit
guarantee system, i.e. with a value up to €100,000;
ii) guaranteed liabilities, including covered bonds and other guaranteed instruments;
iii) liabilities deriving from the holding of customer assets or in virtue of a fiduciary relationship, such as
the contents of safety deposit boxes or securities held in an appropriate account;
iv) interbank liabilities (excluding intra-group items) with an original duration of fewer than 7 days;
v) liabilities deriving from participation in payment systems with a residual duration of fewer than 7 days;
vi) payables towards employees, commercial and fiscal payables, provided they are assigned preferential
status by bankruptcy regulations.
Any liabilities that are not explicitly excluded can therefore be included in the bail-in. Nevertheless, in
exceptional circumstances, such as when inclusion in the bail-in mechanism could jeopardise financial
stability or compromise the continuity of essential functions, the authorities can, at their discretion, exclude
other liabilities. Any such exclusions are subject to specific limits and conditions, and must be approved by
the European Commission. Losses not absorbed by creditors that are excluded on a discretionary basis
may be transferred to the resolution fund, which can intervene for up to a maximum of 5% of total liabilities,
provided that the bail-in mechanism contributes a minimum of 8% of total liabilities.
The priority ranking for the bail-in is as follows: i) shareholders; ii) holders of other equity instruments, iii)
other subordinated creditors; iv) unsecured creditors (holders of bonds and other eligible liabilities); v)
private individuals and small companies with deposits in excess of €100,000; vi) the deposit guarantee
fund, which contributes to the bail-in on behalf of protected depositors.
For some time now, as part of its commitment to maintaining fair and transparent relations
with its customers, the UBI Banca Group has undertaken to inform them of the new
1 The draft transposition initially stipulated that depositor preference be extended to all categories of deposits, not just those held by
private investors and small companies as indicated in the Directive. The Italian Banking Association (ABI) proposed a postponement
of this extension to 2019 to avoid holders of senior bonds issued by banks having financial instruments in their portfolios that had a
different risk profile to what was advised at the time of issue.
36
regulations for the resolution of banking crises, and in particular of the use of the bail-in
mechanism. This information has been provided along with periodical account statements sent
to customers as well as in compliance with existing regulations regarding contractual
information.
With regard to liabilities that would potentially be subject to a bail-in, UBI Banca confirms
that it intends to maintain the level of its own funds and subordinated liabilities comfortably
above 8% of total liabilities, in order to guarantee the Group’s solidity and protect its
customers’ interests.
The resolution and rescue of four Italian banks
Decree Law No. 183 was issued on 22nd November 2015 and came into force the following day.
The Decree Law contained urgent measures for the banking sector, and resolved the crisis
situation at four Italian banks operating under special administration: Banca delle Marche,
Banca Popolare dell’Etruria e del Lazio, Cassa di Risparmio di Chieti e Cassa di Risparmio di
Ferrara. On the same date, the Ministry for the Economy and Finance approved a provision
that initiated the resolution of the four banks.
The resolution plan, which was compliant with European regulations on State Aid, involved:
• the separation of deteriorated assets from performing loans;
• the foundation of a “bad bank”, without a banking licence, to which the entire residual
stock of non-performing loans was transferred once the losses had been covered with
shares and subordinated bonds, with the resolution fund providing the additional capital
required to address the shortfall. These non-performing loans will be sold to credit recovery
specialists or managed directly in order to recover as much of the value as possible;
• the foundation of four new joint stock companies (in accordance with article 1 of the abovementioned Decree Law), each of which would be named after one of the four existing banks
with the inclusion of the adjective “Nuova” (“New”). These new banks are to operate as
bridge institutions in accordance with article 42 of Decree Law 180/2015, with the aim of
ensuring continuity of the essential functions previously carried out, and when market
conditions allow, selling the equity participations or rights, assets or liabilities acquired.
These banks are temporarily managed by special administrators appointed directly by the
Bank of Italy’s Resolution Unit2.
The share capital of the four newly-formed banks was entirely underwritten by the National
Resolution Fund. In order to allow the Fund to gather the liquidity required to make a
timely intervention, the following measures were agreed:

the payment, by Unicredit, Intesa Sanpaolo and UBI Banca, of:
- €2,350 million of financing (783 million euro from each bank) to be reimbursed at the
end of 2015 from contributions deposited with the Italian banking system fund;
- €1,650 million of financing3 (of which €516.7 million pertaining to UBI Banca) with
maturity of 18 months less one day, to be repaid with the proceeds of the disposal of
the bridge institutions. Cassa Depositi e Prestiti undertook to make up any shortfall if
the Fund is unable to do so when the financing expires;

The payment, over and above the ordinary contribution for 2015, of an extraordinary
contribution totalling up to three times the amount of the ordinary contribution, in
accordance with article 83 of Decree Law 180/2015.
For UBI Banca the total cost, booked under “Other administrative expenses” was €87.3 million, comprising a
€22 million ordinary contribution (vs. the estimated €22.8 million booked in the interim accounts) and a €65.3
million extraordinary contribution booked in the fourth quarter (a non-recurring item).
Despite the best efforts of the special administrators, a market solution could not be found for the four
banks in question, which between them have a market share of around 1% in terms of deposits. Nor were
the banks able to avail themselves of the Interbank Deposit Protection Fund, which had already indicated
2 On 30th December the Bank of Italy began the process for the disposal of the four bridge institutions, with the appointment of
financial, strategic and legal consultants.
3 Of which €100 million as a commitment to disburse funds (UBI Banca’s quota amounts to €33.,3 million).
37
that it was ready to intervene but was prevented from doing so by European Commission officials, who
consider such an intervention as equivalent to state aid even though this fund acquires its financing from
the private sector.
Given the rapid deterioration of the companies in question, the Bank of Italy’s Resolution Unit exercised the
powers afforded to it under new European crisis management regulations (introduced in Italy by Legislative
Decrees 180/2015 and 181/2015 that came into force on 16th November 2015, as described in more detail
above). This avoided the activation of the bail-in mechanism, which came into force on 1st January 2016
and would have had extensive repercussions for savings held at the banks in the form of deposits, current
accounts and ordinary bonds.
According to the extremely prudent assessment criteria employed by the Bank of Italy, the losses
accumulated by these banks over time were initially absorbed by the riskiest investment instruments:
shares and subordinated bonds, with the features of the latter exposing them to corporate risk. Resorting to
shares and subordinated bonds to cover losses is an explicit precondition for the orderly resolution of
banking crises, according to European regulations (article 27 of Legislative Decree No. 180/2015).
For its part, the Government subsequently approved measures to assist savers caught up in these banking
crises. The publication of the Official Journal on 30th December brought the “Stability Law” (annual finance
law) into force (Law No. 208 of 28th December 2015). Among other things, this law introduced
reimbursement procedures for the holders of subordinated bonds issued by the banks in question:
- the formation of a “solidarity fund” for up to a maximum of €100 million, initially funded by the
Interbank Deposit Protection Fund which will also be responsible for its management. The solidarity
fund will act on behalf of individual savers and businessmen who, at the time that Decree Law
183/2015 came into force, owned subordinated financial instruments issued by the four banks. By 30th
March the Ministry for the Economy and Finance must issue legislation establishing how the solidarity
fund will operate, including conditions for access, quantification criteria and the procedures to be
followed;
- the foundation of a dedicated fund from CONSOB’s budget (“Fund for Extrajudicial Protection of Savers
and Investors) with the aim of facilitating access for savers and investors that are not investment
professionals to the greater protection offered as part of out of court settlements of disputes, potentially
including free access.
Transposition of DGSD in Italy
The Deposit Guarantee Schemes Directive (2014/49/EU) aims to enhance the protection
granted to all depositors and to harmonise regulations across the EU, compelling all member
states to adopt an ex-ante financing system.
Law No. 114 of 9th July 2015 converted into law the Draft Bill that granted the Government a
mandate to transpose the European Directive and implement other European Union legislation
(the “2014 European Delegation Law”).
On 14th November Government Bill No. 241 was presented, containing a draft of the legislative
decree that would transpose the DGS Directive. The new rules govern the financing capacity of
guarantee systems, their scope and mode of operation, cooperation with EU guarantee
systems and supervisory powers, which have been assigned to the Bank of Italy.
The draft decree was sent to the 6th Permanent (Finance and Treasury) Committee for
consultation on 15th November 2015, and on 21st December 2015 the Committee expressed a
favourable view subject to a series of conditions.
While awaiting completion of the transposition process, the Interbank Depositor Protection
Fund (Fondo Interbancario Tutela dei Depositi - FITD), in its role as the national deposit
guarantee system, adjusted its articles of association with the aim of bringing some of the
Directive’s provisions into effect. Specifically, the changes refer to:
- the early introduction of the new ex-ante financing mechanism, aimed at funding the FITD
as stipulated by European Directive 2014/49/EU on deposit guarantee systems;
- a voluntary intervention scheme to support banks in special administration, entering
bankruptcy or at risk of bankruptcy.
38
Specific capital requirements demanded by ECB
Following the Supervisory Authority’s completion of the first Supervisory Review and
Evaluation Process (SREP), which involved an in-depth assessment of the balance sheets of
the leading banks in the euro zone, on 25th February 2015 UBI Banca received a
communication indicating the consolidated capital requirements for the bank in 2015: a
Common Equity Tier 1 capital ratio of 9.5% and a Total Capital Ratio of 11%.
On 27th November the ECB, with reference to the 2015 SREP exercise, announced its decision
on the capital requirements to be met as of 1st January 2016, which lowered the Common
Equity Tier 1 capital ratio requirement to 9.25% from the previous 9.50%.
On 6th January the ECB’s Supervision department published its 2016 priorities for euro zone
banks of significant dimensions, identifying the following five areas that it will scrutinise in
more depth:
 business model and profitability risk;
 credit risk;
 capital adequacy;
 risk management and data quality;
 liquidity.
EBA transparency exercise, 2015
On 24th February 2015 the EBA’s Board of Supervisors announced its decision to carry out a
Transparency Exercise in 2015, with a view to increasing compliance and improving
transparency within the European banking sector. The following April the Board defined the
methodology and scope of the transparency exercise, and in May to July 2015, in cooperation
with participating banks, it agreed details of the process and the statistics that would be
compiled and subsequently published.
As far as possible, data collection was based on information already supplied to the EBA as
part of periodical supervisory reports (namely FINREP and COREP) and the majority of the
statistics were compiled centrally by the EBA and subsequently forwarded to banks and
supervisory authorities for verification. The only exception to this process involved statistics
relating to the exposure to sovereign risk and leverage ratios, which were compiled directly by
the banks.
On 24th November 2015 the EBA published the results of the Transparency Exercise,
reporting data on capital positions, risk exposure and asset quality broken down for each
individual bank. Data was reported for 105 banks – including Gruppo UBI Banca – from 21
European countries: this extensive scope meant that the exercise covered around 70% of
European banking assets as at 31st December 2014 and 30th June 2015.
The figures highlight the increased resilience of the banking sector: specifically, European
banks demonstrated that they have continued to strengthen their capital positions, a
fundamental requirement for increasing the support provided to the real economy.
Asset quality and profitability levels also improved, although some critical situations persisted.
According to the data reported, problem loans made up around 6% of total loans, but with
major differences between different countries and individual banks. During 2015 some
progress was made on profitability, although margins remained weak both in a historical
context and in relation to the estimated cost of capital.
In terms of the exposure to sovereign risk, the exercise highlighted that in June 2015
investments in Italian government bonds remained substantial, but were gradually falling:
indeed, banks indicated a rising exposure to non-domestic government securities.
39
Significant events in 2015
The transformation of UBI Banca from a joint stock cooperative company into an ordinary joint stock company
The transformation of UBI Banca into a joint stock companies took effect on 12th October 2015
when the resolution of the Extraordinary General Meeting of the Shareholders held on 10th
October was filed with the Company Registrar of Bergamo.
The process of reforming the “popular” co-operative banks in Italy began on 20th January 2015 with
approval, by the Council of Ministers, of the Decree Law establishing entitled “Urgent Measures for the
Banking System and Investment” (Decree Law No. 3 of 24th January 2015).
Article 1 of the Decree, which went into effect the following 25th January following publication in the
Official Journal, amended Article 29 of the Consolidated Finance Act by introducing a new paragraph 2bis, which sets a cap of €8 billion on the assets of “popular” co-operative banks and establishes the
obligation to call a general meeting of shareholders, in the event of exceeding this limit, concerning
transformation of the bank into a joint-stock company.
On 25th March, Law No. 33 of 24th March 2015, which converted the Decree Law, was published in the
Official Journal. The final text confirmed the threshold of €8 billion assets for the transformation of
“popular” co-operative banks into joint-stock companies, with the possibility of inserting a ceiling on
voting rights in shareholders meetings in the articles of association, provided it was not less than 5% of
the share capital with the right to vote, for a maximum period of 24 months from the entry into force of
the law (i.e. 26th March, the day following publication in the Official Journal).
Once the consultation procedures were concluded, on 9th June the Bank of Italy issued secondary
legislation to implement the law, which came into force on 27th June 2015, thereby allowing the
corporate operations needed to comply with the new legislative framework (to be completed within 18
months as established by the law) to begin.
In compliance with the provisions for the initial application of the regime, the Supervisory Board of UBI
Banca, which met on 16th June 2015, verified that the consolidated assets of the Group exceeded the
limit of €8 billion, and it therefore resolved to commence procedures to transform UBI Banca into a joint
stock company, with the definition of a new text, on the basis of a proposal from the Management Board,
for the articles of association to submit for approval by the shareholders.
The Supervisory Board had also identified amendments to the Articles of Association, again on the basis
of a proposal from the Management Board, to be made before that transformation in compliance with
regulatory provisions concerning co-operative companies as follows:
- the increase to ten of the maximum number of proxies that may be granted to a registered shareholder
for participation in Shareholders’ Meetings;
- the decision-making powers of the Supervisory Board concerning the limitation or the postponement,
in full or in part, of the redemption of shares subject to withdrawal from the company1;
- the repeal of the provision concerning the status of registered shareholder for eligibility for filling
positions as company officers.
The key steps in the transformation process were completed during the third quarter of the
year:
1 With reference to the redemption of the shares subject to withdrawal, as part of the provisions of Law No. 33 of 24th March 2015,
paragraph 2-ter was introduced to article 28 of the Consolidated Banking Act and it states “the right to the redemption of shares in
the event of withdrawal, even following transformation, death or exclusion of the registered shareholders, is limited according to the
provisions made by the Bank of Italy, even as an exception to the provisions of the law, where that is necessary to ensure the
inclusion of the shares in the Common Equity Tier 1 regulatory capital of the bank”. The Bank of Italy issued the relative
implementation regulations, stating that the articles of association of the bank shall grant the body responsible for strategic
supervision (based on proposals from the body with the management function and having received an opinion from the control
functions) with the power to limit or postpone, wholly or in part and with no limit on the time, the redemption of shares and other
capital instruments of registered shareholders withdrawing from the company. On the question of the limit to the redemption of
shares subject to withdrawal, the necessary authorisation from the Bank of Italy to reduce the own funds of the bank remains
unchanged, according to the provisions of article 77 of Regulation (EU) No. 575/2013 and the Commission Delegated Regulation No.
241/2014.
40
• on 8th September 2015 the Bank of Italy issued the following authorisations in relation to:
- amendments to the articles of association of the co-operative company in compliance
with regulatory provisions, approved by the Supervisory Board on 4th September with a
resolution that was notarised and filed with the Bergamo Company Registrar on 11th
September;
- the new text of the articles of association of the joint stock company drawn up by the
Supervisory Board in a meeting on 16th June;
• A notice to convene a Shareholders’ Meeting was published on 9th September (convened in
first call on 9th October and in second call on 10th October) to resolve, in the extraordinary
session, on the proposal to transform into a joint stock company and the consequent
adoption of new articles of association and, in the ordinary session, on amendments to the
Regulations for Shareholders’ Meetings to comply with the aforementioned provisions of the
articles of association as a consequence of the change in the legal form of the Bank.
In consideration of the fact that in accordance with article 2437, paragraph 1 of the Italian
Civil Code, the transformation involved the right of withdrawal from the company for
registered shareholders who did not approve the resolution (as well as for other
shareholders), on that same date the amount of the payment for the UBI Banca shares
which may be subject to withdrawal was announced. That amount – set at €7.2880 per
share – was calculated in compliance with article 2437-ter, paragraph 3 of the Italian Civil
Code, by making exclusive reference to the arithmetic average of the closing prices of the
UBI Banca share in the six months prior to the publication of the notice to convene.
At the same time the Bank disclosed the criterion it intended to follow in its decisions on
possible withdrawal communications, in line with recommendations on the matter made by
the Supervisory Authority.
As defined by the Supervisory Board based on the proposal of the Management Board and
the opinion of the Internal Control Committee, this criterion consists in observing a
threshold (11.74% at the time it was defined2 ) on the Common Equity Tier 1 ratio (the
“CET1 ratio”) once fully phased in. This ratio which is the ratio of the Common Equity Tier
1 capital to risk-weighted assets is the primary indicator of capital strength monitored by
the ECB;
• with a view to continuing the traditional dialogue with the shareholder base, which has
accompanied the important phases in the life of the bank, in the second-half of September
the senior management of the Bank illustrated the transformation operation to registered
shareholders in a series of meetings entitled “UBI Banca: tradition and innovation”.
These meetings were held in towns and cities with a large presence of registered shareholders:
Bergamo, Brescia, Cuneo and Milan, linked up by video connections with Darfo-Boario Terme and
Varese. The initiative met with substantial appreciation, with the various stages of the roadshow
attended by over two thousand participants.
• In a press release of 8th October 2015, UBI Banca took note of the decisions taken by the
Regional Administrative Court of Latium the day before, confirming the proper conduction
of the shareholders’ meeting on the scheduled dates.
On 7th October the Regional Administrative Court of Latium had in fact ruled on three applications to
suspend provisions adopted by the Bank of Italy in implementation of the reform of “popular” cooperative banks. They had been filed with the court by two consumer associations and by some
shareholders of banks.
The court set the date for the trial hearings on 10th February 2016 for the two applications which
contested the constitutional legitimacy of the reform, the applicants having withdrawn the suspension
application.
With regard to the third application, which regarded the regulations to implement the law to reform
“popular” co-operative banks adopted by the Bank of Italy and, in particular, the ban on the formation of
a holding company, controlled by shareholders in the form of a co-operative, which holds the majority
stake in a joint stock company, the Regional Administrative Court rejected the application to suspend
the provisions made by the applicants because it did not find that the condition of “grave and
irreparable” damage had been met. The trial hearings were therefore also adjourned for this application
to the above-mentioned hearing of 10th February 2016;
2 The threshold of 11.74%, fully phased in, was calculated as the arithmetic average of the CET1 ratio of 9.50%, required of UBI Banca
by the ECB in a note dated 25th February 2015 (the “SREP decision” ratio), plus 150 b.p. and the average capitalisation as at 31st
December 2014 of banks subject to single European supervision, equal to 12.48%.
41
• the Shareholders’ Meeting therefore met in second call on 10th October and in the
extraordinary session it approved the proposal to transform UBI Banca into a joint stock
company and consequently adopt new articles of association. The resolution was approved
in the presence of 5.032 Registered Shareholders (approximately 2.500 attended in person),
representing 20.91% of the share capital. Votes in favour were 4.975 equivalent to 20.88%
of the share capital and 98.87% of the votes cast, while the votes against were 26 with 31
abstentions. Subsequently an ordinary session of the shareholders’ meeting approved
related amendments to the Regulations for Shareholders’ Meetings;
• on 12th October the resolution for the transformation into a joint stock company, with the
consequent adoption of new articles of association was filed with the Company Registrar of
Bergamo. Registered shareholders of UBI Banca who did not approve the resolution and
other holders of UBI Banca shares were able to exercise their right of withdrawal within the
time limits and according to the procedures laid down by article 2437 bis of the Italian Civil
Code and therefore before and not later than 27th October 2015 (fifteen calendar days
following the date of the filing of the shareholders’ resolution with the Bergamo Company
Registrar). The procedures for the exercise of the right of withdrawal were published,
amongst other things, in the newspapers “Il Sole 24 Ore” and “MF” on 13th October.
At the end of the period set, the right of withdrawal was found to have been validly
exercised on 35,409,477 shares, representing 3.927% of the paid-up and subscribed share
capital of UBI Banca. The total value, calculated on the basis of the payment amount of
€7.2880 per share was €258,064,268.38.
• in accordance with article 2437-quater of the Italian Civil Code, on 11th November 2015,
the option offer (with the ratio of one share for every 24.4259 rights held) on the shares
subject to withdrawal, with pre-emptive rights on any options not exercised, was filed with
the Bergamo Company Registrar. The option offer began the following day and ended on
12th January 2016;
• on 26th January 2016, UBI Banca reported that, upon completion of the option offer period
and pre-emptive rights on the shares withdrawn, requests to purchase 58,322 shares in
UBI Banca were received (at the aforementioned price of €7.2880 per share).
The 35,351,155 shares withdrawn for which options were not exercised were put on the
Italian screen-based stock market, Mercato Telematico Azionario (MTA), for the day of 28th
January 2016 by way of Banca Akros SpA. As none of these shares were purchased, on 3rd
February 2016 settlement of the sale and purchase of the 58,322 UBI Banca shares subject
to the exercise of option and pre-emption rights took place (distributed among the
withdrawing shareholders in proportion to the number of shares subject to withdrawal).
The payment of the amount for the shares purchased as well as the assignment of the
shares in favour of those holding those rights took place through Monte Titoli and the
respective intermediaries;
• with regard to the 35,351,155 shares that were not purchased following the option offer
and pre-emptive rights and subsequent placement on the MTA, the Management Board,
at its meeting of 10th February 2016, took note of the fact that, based on the criterion
specified in the report to the shareholders published on 9th September 2015 (see above)
and following the SREP decision of November 2015, the new CET1 threshold, now fully
phased in, is 11.62%3, whereas the actual CET1 ratio calculated as at 31st December
2015 is 11.64%. Therefore, the Supervisory Board has been presented with a proposal to
redeem 1,807,217 shares (rounded up to 1,807,220 shares in order to ensure equal
treatment of the withdrawing shareholders with the same number of withdrawn shares),
and a decision is expected to be reached in their meeting of 18th February 2016 after
hearing the opinion of the Internal Control Committee.
Based on the settlement price of €7.288 per share, the total value of the 1,807,220 shares to be
redeemed is €13,171,019.36.
Once the Supervisory Board has approved the proposal to redeem the 1,807,220 shares in
UBI Banca, payment to the withdrawing shareholders may be made once the required
authorisation for the reduction of own funds is obtained from the competent supervisory
authority in accordance with the provisions contained in articles 77 and 78 of Regulation
3 Following the SREP decision of 27th November 2015, which reduced the CET ratio required by the ECB to 9.25%, the threshold was
as follows: [(9.25% + 1.50%) + 12.48%]/2 = 11.62%
42
(EU) No. 575/2013 and also Section 2 of the Commission Delegated Regulation (EU) No.
241/2014.
It is expected that the relative investigation procedures carried out by the competent
supervisory authority should be completed by the end of next March.
The new Articles Of Association of UBI Banca Spa
In 2015 UBI Banca made a series of amendments, as did its subsidiary banks, to its articles of
association designed to implement provisions issued by the Bank of Italy (updates No. 1 and
No. 7 of Circular No. 285 of 17th December 2013) in order to implement the provisions of the
CRD IV Directive4 in national legislation. This was then followed by those mentioned above as
required of the co-operative company in light of the transformation authorised by the Bank of
Italy on 8th September.
The new text submitted to the Shareholders’ Meeting of 10th October 2015 was therefore
drawn up following an approach that focuses specifically on the provisions no longer
compatible with the new status of a joint stock company and on other changes that are in any
case related to, connected with and a consequence of the amendments mentioned.
The main questions subject to amendment concerned the following:
• acceptance as a registered shareholder: all the provisions relating to acceptance as a registered
•
•
•
•
•
shareholder were repealed because not compatible with the form of a joint stock company, where
the figure of the registered shareholder is precisely the same as that of any other shareholder. In
a joint stock company the mere ownership of shares normally automatically grants the bearer
both financial rights and corporate management rights;
the provision of a limit on voting rights: as is permitted in the transition period by Law No. 33 of
24th March 2015, a limit is inserted on voting rights equal to 5% of the share capital for 24
months from the date of entry into force of the aforementioned law (until 26th March 2017);
the convening of a shareholders’ meeting: in accordance with article 2369 of the Italian Civil
Code, unless the articles of association make other provision, the shareholders meetings of
companies that are not co-operative companies, which make recourse to the market for risk
capital are held in one single session; in this respect the Management Board may issue a single
notice to convene in one session, but being able as an alternative to convene a second session
and, limited to extraordinary shareholders’ meetings, a third session;
proxy to participate in shareholders meetings: because of the change in the form of company,
the status of registered shareholder as a requirement to be held by persons holding proxies to
participate in shareholders meetings no longer exists, nor does the limit on the number of
proxies that may be conferred on the same person exist any more. Consequently, the new
articles of association no longer contain the relative provisions;
the composition of the Management Board and the Supervisory Board: in compliance with and
in observance of the provisions of the Bank of Italy on the question of corporate governance, the
number of members of the Management Board is set at 7 and the number of members of the
Supervisory Board at 15 (supervisory regulations state that the total number of members of the
Management Board and the Supervisory Board must not be greater than 22);
the secret ballot for shareholders’ resolutions to appoint company officers: this was repealed
because it constitutes a specific feature of co-operative companies, where a secret ballot, if it is
provided for by the articles of association, is considered legitimate in virtue of the particular
features of the company and the interests of worker-members and customer-members to a cast
a vote that is free from potential conditioning;
4 At its meeting of 11th March 2015, the Supervisory Board, having consulted with the Management Board, approved changes to a
number of the articles of the co-operative company’s articles of association. These changes concerned the following articles: 22 (Title
V – Shareholders’ Meetings, revised in order to broaden the powers of the shareholders in relation to remuneration and incentive
policies and practice), 46 and 49 (Title VIII – Supervisory Board, revised in relation to measures of corporate governance in order to
extend the activities of the Supervisory Board to include new, specific responsibilities and to envisage the creation of Risks
Committee). The shareholders, in an extraordinary session on 25th April, then approved changes to articles 22, 28 (Title V –
Shareholders’ Meetings), 44 and 45 (Title VIII – Supervisory Board). As concerns the first two articles, the shareholders were granted
approval powers over setting the ratio of fixed to variable remuneration for key personnel, and the related voting quorums were set.
With regard to the latter two articles, the requirement of independence for members of the Supervisory Board and the criteria for
establishing said board were defined. The decisions of both the Supervisory Board and the shareholders were authorised by the
Bank of Italy on 7th May 2015 and filed with the Bergamo Company Registrar on the following 14th May.
43
•
•
•
•
•
•
the quorums for shareholders resolutions: because in accordance with articles 2368 and 2369 of
the Italian Civil Code, the extraordinary shareholders’ meetings of joint-stock companies which
make recourse to risk capital markets vote on resolutions in first session with the presence of at
least one half of the share capital (if the articles of association do not provide for a higher
majority) and with a vote in favour of at least two thirds of the share capital represented in the
shareholders meetings and in second session with the participation of over one third of the
share capital and with the vote in favour of at least two thirds of the share capital present, the
increased forums for resolutions previously provided for by article 28, paragraphs 3 and 4 of the
articles of association were repealed;
simul stabunt simul cadent: a “simul stabunt simul cadent” (together they stand, together they
fall) clause was introduced also for the Supervisory Board (already present for the Management
Board) stating that if the positions of more than half of the members of the Supervisory Board
originally elected are vacated then the entire board is retired;
the criterion for the appointment of the Supervisory Board: the percentage of the share capital
needed to submit a list for the election of the Supervisory Board has been set at 1%. This
threshold takes account of the provisions of article 144-quater of Consob Resolution No.
11971/1999 (Issuers’ Regulations) (applicable also to the Supervisory Board in accordance with
the combined provisions of articles 144-ter, paragraph 2 and 144-sexies, paragraph 2 of the
Issuers’ Regulations), on the basis of the capitalisation of UBI Banca, standardising the different
thresholds previously in force.
•The articles of association of the co-operative company provided that this could be submitted
either directly by at least 500 registered shareholders representing at least 0.5% of the share
capital, or by UCITSs who together were holders of at least 1% of the share capital, or by the
Supervisory Board with the support of 500 registered shareholders.
•The possibility of the Supervisory Board submitting a list was eliminated.
•The current criterion by which board members are drawn from lists, was maintained adapting
it to percentages of the share capital (only two lists, those with a majority vote; assignment to
the minority list of the number of board members determined on the basis of the percentage in
favour obtained in Shareholders’ Meetings; elimination of the provision relating to a share
capital “premium”, because it is no longer consistent in the context of a joint stock company).
Therefore, continuing with the same guiding criteria provided by the previous Articles of
Association, the new text of the articles provides for the assignment to the list that obtained the
second highest numbers of votes of a number of Supervisory Board members varying from 1 to 3
on the basis of the percentage of votes received in the Shareholders Meeting;
internal committees of the Supervisory Board: the provisions of the Articles of Association on the
subject of internal committees of the Supervisory Board were standardised;
the composition of the Appointments Committee: the number of members of the Appointments
Committee (currently six) was reduced, providing for a minimum of three and a maximum of five
members, in line with Bank of Italy provisions on corporate governance;
transition measures: two transition regulations were introduced designed to maintain the
composition of the Management Board and the Appointments Committee until the next renewal
of company officers; furthermore, for all the remaining transition regulations, the reference to
the date of the shareholders meeting was updated, replacing the date of 10th May 2014 with that
of the date of 10th October 2015.
The formation of a risk committee
In implementation of supervisory regulations concerning the corporate governance of banks and in
compliance with the provisions of the Articles of Association, in a meeting of 15th September 2015, the
Supervisory Board of UBI Banca formed an internal Risk Committee, composed of four members, and drew
up regulations for its proceedings.
The duty of the committee is to provide support to the Supervisory Board in carrying out its responsibilities
in its capacity as the body responsible for strategic supervision on matters concerning risks and internal
controls. It is composed of the following members of the Supervisory Board:
- Lorenzo Renato Guerini – Chairman of the Committee;
- Dorino Mario Agliardi;
- Marina Brogi;
- Federico Manzoni.
44
The Supervisory Board also passed resolutions revising the Regulations for the Internal Control
committee and eliminating the Accounts Committee, whose activities are now carried out by the new Risk
Committee and the Internal Control Committee.
See the Report on Corporate Governance and Ownership Structure of UBI Banca SpA included below for
more information on the Committee’s duties.
Group optimisation
Corporate rationalisation operations
The progressive discontinuation by the Group of activities that are not strictly core, such as
the fiduciary business segment, led to the conclusion of the following transactions during the
year:
 the sale, on 12th January 2015, to Corporate Family Office (CFO) SIM – a major
independent Italian brokerage focused on “family office” – of 100% of the share capital of
UBI Gestioni Fiduciarie SIM Spa, a “dynamic” fiduciary company, a leader in its business
segment, indirectly controlled by UBI Banca through UBI Fiduciaria Spa. Under the sale,
the UBI Banca Group maintained all its commercial agreements in the “fiduciary asset
management” sector;
 the conclusion on 30th April of the transfer to Unione Fiduciaria Spa of the UBI Fiduciaria
Spa (a company 100% controlled by UBI Banca) line of business dedicated to the
management of fiduciary services for Group customers. The transaction involved
maintaining commercial arrangements with the acquirer for the provision of these services
through the Group’s distribution networks.
•Discussions with trade unions had commenced on 4th March 2015 in order to reach an
understanding designed to save jobs, maintain salary levels and more generally to focus
maximum attention on possible hardship resulting from the transfer of the headquarters to
Milan. Despite the hard work and great efforts made it was not possible to agree on a
solution and the negotiations were therefore ended on 24th March 2015 with no agreement.
On 25th May 2015 the merger of IW Bank (the Group’s internet bank) into UBI Banca Private
Investment (the network of financial advisors) took effect. Full details of the underlying
reasons and implementation procedures for this merger were given in the Consolidated
Management Report in the 2014 Annual Report. The banking entity that resulted from the
operation took the name of IW Bank, thereby conserving a well-known and appreciated brand
on the market, with registered offices located in Milan.
The new bank is aimed at acquiring affluent customers in the wealth management sector and
at consolidating its online trading position. Its commercial and service model is based on
creating strong synergies between the online channel and the investment advisory services
provided by financial advisors and wealth bankers, through the provision of a range of
products consistent with the Bank’s strategic position and growth objectives.
The migration of the former IW Bank’s IT platform from its previous platform onto the Group
target platform, with the trading environment developed appropriately in order to ensure
continuity in the provision of customer services, took place on 25th May 2015 the same date on
which the merger took legal effect. This continuity was guaranteed in line with the normal time
needed to get the platform up and running.
In organisational terms, the model already in place within UBI Banca Private Investment was
adopted, thereby confirming that the functions of governance (i.e. planning, tax and financial
matters, and management control), control (i.e. risk management, anti-money laundering, and
compliance), and auditing were centralised at the Parent. In the same way, mortgage lending
to individuals has been transferred to UBI Banca, with the stock of existing loans now being
managed as a service, whereas proprietary-portfolio management, clearing, and treasury
functions have been entrusted to the Parent’s Finance unit. Management of areas of business
(i.e. Trading & Markets, the Commercial Area, the network of Financial Advisors, and Wealth
Banking), operational (Lending & Operations) and organisational (Human Resources &
45
Organisation) support have been kept as they were under the model previously in place within
both companies.
On 4th February 2015, an agreement was signed which regulates the repercussions of the
operation on staff. This agreement safeguards the careers of the employees concerned, setting
principles for the reallocation of human resources, mobility, training and retraining, and it
also lays down rules for supplementary pensions and additional health cover.
On 9th June 2015 the Management Board approved the proposed merger of SOLIMM Srl into
S.B.I.M. Spa. The company objects of both companies, 100% controlled by UBI Banca and
both with headquarters in Brescia, are to carry out property transactions, necessary for the
operations of the Group itself.
More specifically, SOLIMM was formed in 1996 with the aim of the acquiring properties, for
the purposes of subsequent disposal, destined to settle the lending positions of Group banks.
The company has no longer been required to carry out credit recovery action since 1999, at
the time of the formation of the former Banca Lombarda. Therefore, its activities focused on
the disposal of properties acquired previously, and this activity was completed in March 2015.
As a consequence it was considered appropriate to wind up this company and the most
convenient and consistent solution to achieve this was to merge it into S.B.I.M., an owned
company responsible for managing the property which houses the operating quarters of UBI
Banca in Brescia.
The merger went into effect on 23rd October 2015 with effect for tax and accounting purposes
from 1st January 2015. The operation followed the simplified procedures allowed by article
2505 of the Italian civil code.
With regard to the preliminary sales agreement signed on 19th June 2015 between Mercury
Italy Srl and the member banks of the Istituto Centrale delle Banche Popolari Spa (ICBPI)5,
UBI Banca agreed to sell 4.04% of the share capital held in ICBPI.
After obtaining authorisation from the competent supervisory authorities, the transaction was
completed on 18th December 2015. The total price was determined based on a value of 100% of
the capital of ICBPI of €2,150 million. The proportionate allocation of this price among the
selling banks resulted in UBI Banca receiving €82.2 million for a capital gain in the fourth
quarter, net of tax and related expenses, of €75.3 million. The positive impact on the CET1
ratio as at 31st December 2015 was roughly 10 basis points.
UBI Banca has maintained a 1% stake in the share capital of ICBPI.
The agreement also involves an additional price component in the form of an earn-out linked to future
earnings paid to CartaSi SpA by Visa Inc. on the sale of the equity investment held in Visa Europe.
Trade-union agreements aimed at controlling staff costs
Given the rapidly changing legislative and regulatory landscape, which remains critical in
terms of its financial impact and, above all, its effect on future earnings, and in line with
actions being taken since 2012, the UBI Banca Group has deemed it necessary to continue
pursuing gains in efficiency and profitability with a view to improving our positioning in a
market that we hope is in recovery.
To this end – and so as to provide solutions aimed at promoting greater work-life balance – two
important agreements were signed with the trade unions in the fourth quarter:
 on 21st November 2015, a memorandum of intent was signed that, in line with the
framework agreement of 26th November 2014 and taking advantage of the provisions of
article 57 of the national trade union agreement concerning the use of flexible forms of
employment, confirmed the intention of UBI Banca, as compatible with the technical,
organisational and operational needs of each Group company, to grant employees attractive
forms of leave (including down to a single day). For 2016, over 7 thousand requests for
extraordinary leave were submitted throughout the Group for a total of roughly 137
thousand days of leave granted – compared to 120 thousand days of leave granted in 2015.
These requests are currently being evaluated for approval.
5 Specifically: Credito Valtellinese, Banco Popolare, Banca Popolare di Vicenza, Veneto Banca, Banca Popolare dell’Emilia Romagna,
Iccrea Holding, Banca Popolare di Cividale, Banca Popolare di Milano, Banca Sella Holding, Banca Carige, and UBI Banca; the
transaction concerned the 85.29% stake held by these banks in ICBPI.
46
In the same way as with the previous memorandum of 2014, the current memorandum also
promotes the conversion of full-time employment to part-time, including the extension of
relationships that began in 2015 and the acceptance of additional requests. A total of 130
requests have been received and most of them were accepted.
With regard to maternity/paternity leave, it has also been agreed that employees taking
advantage of optional leave in 2016 will be granted an additional 20% of their wages on top
of those guaranteed by prevailing legislation (i.e. 30% of gross daily wages). Requests may
be submitted throughout the year;

an agreement was signed on 23rd December 2015 involving voluntary redundancies for
nearly 410 staff at Group level, with access to the sector “Income Support Fund”. More
specifically:
- 339 employees 6 were selected from among those who had made applications for
redundancy under the 2014 Framework Agreement and whose applications had then
been rejected because they were surplus to the goals set (500 redundancies). Of these,
only 334 confirmed the previous request for redundancy (and 317 employment
relationships were actually terminated on 31st January 2016);
- an additional 70 employees (at most) may adhere to the scheme on a voluntary basis
(with priority given to staff in serious conditions of health) by taking advantage of the
same incentives of the aforementioned 2014 Framework Agreement, with employment to
end by 31st March 2016. The exact number of such requests was not known as of the
date of approval of this report.
Against those staff leaving under the Agreement, in order to support generation turnover and
youth employment policies, in the two-year period 2016-2017, the Group will employ 130 new
staff (plus a maximum of 30 staff in proportion to the additional 70 redundancies) both by
means of new appointments and by the conversion of employment contracts already existing
in the Group to permanent contracts, with account also taken of the expiry dates for existing
contracts, also with resort to the use of intra-Group mobility.
The actions agreed are of a strong social-sustainability nature; the acceptance of the
approximately 410 redundancy applications will also give savings, when fully phased in, of
around €31 million gross annually, which will help to keep staff costs down.
Changes to the Group’s organisational model
After the many actions taken over the years – the latest of which, as mentioned in conjunction
with 2014 financial reporting given that it dates back to early 2015, affected the Group’s
branch network – the need for new solutions aimed at the simplification and rationalisation of
operating processes in order to promote further efficiency gains and reduce costs has led to a
new move to optimise the Group’s organisational model.
As such, on 25th January, the trade unions were informed of the need to begin talks.
The operation, which will concern UBI Banca, UBI Sistemi e Servizi, all network banks,
IWBank and Prestitalia, calls for a multitude of actions in the following areas:
- centralisation within the Parent of management of disputes and appeals to the Financial
Banking Arbitrator, which is currently done by the network banks;
- changes in the medium-term segment of UBI.S, centralising a number of processes being
managed by the network banks in order to create a single, specialised unit;
- further rationalisation of the branch network, including the closure of 24 branches and 25
mini branches together with the transformation of eight branches into mini-branches and
four mini-branches into branches. For IWBank, the opening of four branches and nine
advice centres is also planned;
- strengthening of delinquent loan management in the network banks by strengthening the
presence of loan-quality experts, which will be accompanied by a strengthening of
centralised management within UBI under the Chief Lending Officer;
- optimisation of the customer service units at UBI.S;
6 This is a difference of 13 compared to the figure published in the 2014 Annual Report (852 applications received and 500 approved,
for a remainder of 352) due to terminations of employment occurring in the meantime.
47
-
rationalisation of operations and administration related to the management of outstanding
UBI Banca loans (formerly B@nca 24-7 loans);
optimisation of the organisational structure of Prestitalia, taking account of the effects of the
migration to the new IT system (see below).
•On the whole, this operation will not result in redundancies, but it may require the adoption
of mobility measures and career retraining. The staff that will become available once the above
actions have been taken may be allocated to support commercial activities or to cover various
needs within the areas of the Group affected.
In accordance with the prevailing national trade union agreement, the process is to be
completed by mid-March.
Developments in the regulatory context
In addition to the developments in the complex regulatory framework regarding European
supervision, in 2015 the Group was compelled to commence and/or continue monitoring and
compliance activities following developments which similarly are affecting the remaining
regulatory framework as follows:
•
with regard to banking services, on 15th July 2015 the Bank of Italy published new provisions on the
subject of transparency which modify the regulations introduced in 2009 in terms of updating and
simplifying them. This will require a complete review of the disclosures for all the products in the
Group’s product catalogue, which is to say products still in the use by customers. For the products
concerned, these disclosures must be further updated in conjunction with the expected issuance of
legislative and regulatory provisions regarding the operating mechanisms of the Deposit Guarantee
Fund within the scope of transposition of the Bank Recovery and Resolution Directive.
•Furthermore, implementation which should be implemented by March 2016 by the Directive on
residential property mortgages for retail customers, which will involve a profound revision of
established practices;
•
as concerns regulation of the financial markets, beginning next year, EU Member States are to adopt the
measures contained in MiFID 2, along with the related implementing measures and guidelines issued by
the various supervisory authorities, which establish stricter obligations in the overall provision of the
various investment services to further strengthen and broaden the scope of application of the principles
of customer protection (as already partially transposed and implemented CONSOB, such as in the
reporting of customers’ propensity for risk and as concerns complex products) and also controls over
operational integrity.
•The legal and regulatory measures governing application of the new European Market Abuse
Directive (MAD 2) are to be transposed into national legislation by 1st July 2016 and are to be
accompanied by complementary efforts to update the 231 Model adopted by the UBI Banca Group.
•In implementation of the measures resulting from transposition of the Bank Recovery and Resolution
Directive (BRRD) and in line with the principles adopted in terms of transparency and integrity in
market disclosures and the provision of investment services, the Group has also updated the
prospectuses for our bond issues and has begun adapting operating procedures aimed at better
safeguarding our customers and investors;
•
Law No. 69 of 27th May 2015, which came into force on 14th June 2015, reformulated the crime of
fraudulent accounting applicable both to listed and unlisted companies as part of the general
introduction of more severe penalties for crimes against government and crimes involving the Mafia. It
also established co-ordination of this with legislation governing the administrative liability of entities
resulting from crimes pursuant to Legislative Decree No 231/2001. The Group has implemented a
review of its 231 (administrative liability) model in order to take account of the impacts of the new
regulations on certain internal processes;
•
a decree of the Ministry of the Economy and Finance published on 21st April 2015 implemented EU
Regulation 1210/2010 which assigns the duty to “handlers of cash” (e.g. banks, foreign exchange
dealers, etc.) to verify the authenticity and state of conservation of coins in order to identify false coins
and coins no longer suitable for circulation, to be sent to the competent authority. These handlers are
also assigned statistical reporting tasks. Having integrated the preventive measures required by the
231 Model, the Group has begun adapting internal procedures concerning the handling of cash;
•
on 15th June 2015 the Council of the European Union approved a proposal for a General Regulation
on Data Protection, concerning protection for natural persons with regard to the treatment of their
personal data and the free circulation of that data. When this comes into force it will repeal the
48
previous European Directive on privacy (95/46/EC) and as a consequence large part of Italian law on
privacy (Legislative Decree No. 196/2003);
•
the amendments to the Consolidated Banking Act (article 52-bis) and to the Consolidated Finance Act
(article 8-bis) by way of Legislative Decree 72/2015 introduced the obligation for Italian banks,
authorised parties, and related parent companies to establish internal systems of reporting by
employees (i.e. “whistleblowing”) of events or facts that could represent a violation of laws and
regulations governing the banking activity concerned. This issue was also the subject of the update to
the Code of Corporate Governance of Borsa Italiana SpA (July 2015), which the UBI Banca Group has
adopted, and of specific supervisory measures. The Parent has implemented the procedures envisaged
by the deadline of 31st December 2015 in line with the obligation to safeguard the whistleblower as
required by law.7
Prestitalia Business Plan
During the year, this company, which specialises in salary- and pension-backed loans, moved
forward with activity to implement its Business Plan drawn up at the end of 2014.
In particular, confirmation of the Plan’s guidelines and verification of observance of legal and regulatory
requirements have enabled Prestitalia to file, by way of the Parent, a request for authorisation for listing
with the single register of financial intermediaries pursuant to article 106 of the Consolidated Banking
Act in compliance with the new supervisory provisions for financial intermediaries established by way of
the Bank of Italy Circular no. 288 published in May 2015.7
The main focus is on commercial expansion to be implemented by developing a distribution
model and operating structure based on the use of agents and the creation of synergies with
bank branches. In detail:

an increase has been planned in numbers of traditional agents (operating mainly on noncaptive customers) to cover almost the entire country in order to reach provinces which
today are less well served. In 2015, seven new conventional agents were recruited, bringing
the total of such agents to 27 at year end;

UBI Banca Group bank branches will be supported by new consumer-credit specialists with
a specific network of mainly tied agents (and to a lesser extent by selected bank employees),
who will focus mainly on captive customers, each of whom will provide support to a given
number of branches in the local areas assigned to them. During the year under review, 32
such specialists were hired (16 agents and 16 employees of Group branches).
Plan implementation has been entrusted to an executive unit consisting of the leading
members of the company’s management, backed by a number of new managers from other
areas of the Group. In particular, a new General Manager was appointed effective as of 25th
May 2015. This manager has been with the UBI Banca Group since 2004 and has significant
experience in the creation and management of branch networks.
During the year, and line with the Plan, the project aimed at further developing the company’s
information was completed with the support of the Parent and of UBI.S as the outsourcer of IT
services for Prestitalia.
Migration to the new information system, which is equipped with architecture centred on the
software application OCS and interfaces with Group target software, was completed on 25th
July. At the same time, work began on the re-engineering of the company’s operating
processes aimed at realising the full potential of the new information system.
During the year, other important organisational changes were made, which has made it
possible to control the growing number of complaints that characterise the salary-backed
lending segment, particularly as concern operating methods that have been out of use for
some time.
7 See also the section entitled “The Internal Control System”.
49
Commercial activity
The principal objectives of the UBI Banca Group's commercial activities in the year 2015 were the growth of the
customer base through a series of recruitment initiatives, in particular for the "youth" segment, together with the
development of both financial wealth for the "individual" segment and of lending to businesses. These objectives
were supported by the constant attention to the improvement of the satisfaction levels as perceived by customers
in their experiences during dealings with the Bank, with the proposal of solutions and products that increasingly
respond to customer needs, while at the same favouring cross-selling and customer loyalty.
The development of a distinctive position with regard to the "youth" segment continued, with the adoption of a
strategy to reinforce the visibility of UBI Banca with specific target by the use, both in terms of the products
offered and in terms of communications methods, of an innovative approach that is open to new trends based on
the potentials offered by new social media channels.
At the same time, the role of the customer service centres of each network bank were confirmed, thanks also to
the addition of new staff specialised in making telephone contact, with the objective of:
-
monitoring satisfaction levels of customers who exhibit signs of "attrition", in order to prevent eventual sources of
dissatisfaction that might result in the customer leaving the Bank;
consolidating existing customer relations, and thus increasing cross-selling opportunities;
assisting the network in the development of new customers, increasing customer loyalty;
promoting the lending segment through the creation of a group of lending specialists whose task it is to facilitate the lending
process by assisting with the choice of the loan best adapted to the borrower's socio-economic profile.
Given the importance of the acquisition of new customers, the Group continues to reserve particular attention to
this activity, including through the development of the traditional commercial network, thanks to the progressive
insertion of staff dedicated exclusively to the group's development activities.
With regard to deposits, aggregate development initiatives continued, in accordance with the need to maintain a
proper structural balance. To that end, the campaign to develop new deposits, having now become one of the
Group's regular pro-active activities, was proposed once again, entitled, for the year 2015, "Percorsi premiati"
("Paths to Rewards").
Additionally, further improvements were made to the FPA (Financial planning and advice - Pianificazione e
Consulenza Finanziaria) - platform in order to enhance the "financial optimization engine" and to provide
solutions, in the form of financial consultancy, that better correspond to customer needs.
With an approach that is increasingly oriented toward consulting services, the Group implemented the "Pro Active
Wealth Advisory", dedicated to large estates, the "Corporate Advisory", directed at businesses and designed to
identify future business needs, and the "Family Business Advisory", which provides insurance planning and
policy advice.
In accordance with the Bank's role as a local community institution and leveraging the worldwide importance of
EXPO 2015, during the course of the year the Group continued a number of initiatives designed to support small
to medium-size businesses, focusing on those sectors representing Italian entrepreneurial excellence, focusing on
the agricultural and food category, commerce, and the tourism and restaurant sectors. The offer was not limited to
traditional operative and financial support, but also proposed consulting services, taking advantage, for example,
of UBI World network's specialised knowledge of foreign markets.
Thanks to the Group's associate company, SF Consulting, interested SME customers continued to receive
assistance in obtaining public subsidies, with significant returns in terms of customer loyalty.
In the year 2015 the Group followed through with its initiatives in favour of SMEs, taking action to implement the
new "2015 Credit Agreement" ("Accordo per il Credito 2015) with the renewal, as part of the Group's Business
Recovery (Imprese in Ripresa) initiative, of the measures providing deferred repayment and term extension
established by the previous "moratoria". UBI Banca additionally introduced two new initiatives providing specific
lines of credit, "Business Development" (Imprese in Sviluppo) and "Businesses and Public Aministration" (Imprese
e P.A.). Two specific initiatives providing support for the creation and development of SMEs (“Sviluppo PMI- SME
Development” and “Start-up") were extended for the entire year.
Attention to new digital services focused on developments necessary for the activation, scheduled for the first part
of 2016, of two new services for the app UBIMoney, Plan & Save and Ready to Invest.
Also intensified was the sale of the new app UBI PAY, launched in November 2014, which, at the end of 2015,
had been activated by approximately 134 thousand customers. Also emphasised was the improvement of the site
www.ubibanca.com; the year saw the creation of specific sections to support specialised commercial activities
designed to improved the user experience for both current and potential customers, including the availability of
online loan simulators.
A number of national initiatives were launched to further develop the youth category, including "Enjoy the Music",
targeted to users of UBI Banca credit and prepaid cards, allowing the purchase of tickets for important Italian
summer musical events, and "Enjoy Your Gift", to support the activation of the Ubi Community EnjoyCard, and
Happy Birthday (Buon Compleanno), featuring additional customer care for high value customers, and, finally,
"Ride the Wave of Your Savings - Sali sull'onda dei tuoi risparmi" (a contest for young investors featuring the
possibility of winning a Peugeot scooter).
As regards, finally, the non-profit sector and UBI Community, the service model known specifically created for this
category, in 2015 commercial activities were directed as increasing the customer base and cross-selling, defining
and augmenting a number of important agreements and partnerships with leading NPOs, amongst which are the
Associazione Italiana per la Ricerca sul Cancro - Italian Association for Cancer Research (AIRC), with which UBI
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Banca has been an in institutional partner since 2013 for the yearly "Research Days - I giorni della Ricerca"
fundraising campaign, as a distinct positioning strategy within the sector.
The Retail Market1
As a whole, the Group's retail market includes 3.5 million customers, consisting of 3.2 million
private individuals and families, 220 thousand businesses (small economic operators and
SMEs) and approximately 29 thousand authorities and associations.
The retail network consists of 1,550 Group branches, employing more than 9,000 individuals,
working in close coordination with the other distribution channels, represented by Customer
Services (telephone-based commercial support) and internet banking services (Qui UBI). Retail
branches additionally feature specialists dedicated to supporting particular customer
segments (Affluent and Small Business), focused on the growth of the customer portfolio
(developers) or specific service areas (banc assurance and the multichannel platform).
Private individual and family customers
In 2015, the Group's commercial activities were focused on the acquisition of new customers, the growth
in volumes of funding (including the "welcome edition" bond offering) and lending (in particular in the
"home mortgages" category), on the improvement of average cross-selling and on the increase of
satisfaction levels periodically surveyed and expressed throughout the entire commercial network.
QUBI’
With the intention of renewing and simplifying the offer, 19th October 2015 saw the launch of the Group's new QUBÌ,
the modular account featuring one obligatory module, Semplicità (Simplicity), which includes principal base services,
and three additional elective modules, Comodità (Convenience), Libertà (Freedom) and Protezione (Protection); the
customer can elect to purchase only those modules that best satisfy his her or needs, "mixing and matching" to find
the right combination of services.
The release of the new QUBI' platform allows the Group to achieve a number of important objectives:
• the pricing of the Simplicity module was reduced;
• the structure of the offer was simplified, in particular for the "payment card" category: the Convenience module
now corresponds to a card "type" and not to a "card package". The customer may freely purchase one or more
cards of the desired "type";
• the Freedom module has been enhanced and now features three versions: "on line" which includes all
commissions for operations performed via the Qui UBI platform, "withdrawal" which allows the customer to make
four ATM withdrawals from banks outside the UBI Banca Group without the application of any fees, and "all
inclusive", alternative to the first two, which includes fees for all operations performed via the Qui UBI platform
and four ATM withdrawals from non-Group banks;
• finally, a move was made away from a percentage discount based on the number of modules acquired in favour of
a reimbursement in absolute terms, applied the month following that in which the fee is charged to the customer's
account, in the presence of determined "rewarded" behaviours: direct deposits of salary or pension to QUBI current
account and payments on mortgages or loans made from the QUBI current account.
QUBI’ under 30 #Viaggiointesta (#Travelonmymind)
In December 2015 a new campaign targeted at young people highlighting UBI Bank's dedication to providing its
younger customers with all the tools they require to give shape to their ideas: a complete array of products ranging
from current accounts to loans to finance school or first business objectives, to mortgages.
The starting point is the set of services offered by QUBI, with its cost-free current account and Qui UBI internet
banking, with the Simplicity module, which includes an ATM card, provided free of charge to all young customers
until they turn thirty.
By opening a QUBÌ account and activating the Under 30 promotion, either at branch offices or online, the customer
automatically participates in the prize competition "QUBÌ IN VIAGGIO - QUBI TRAVEL", and receives a voucher
offering 2x1 travel possibilities that may be accessed via a dedicated portal: www.qubiinviaggio.it. Customers can also
use "QUBÌ TRAVEL" to access exclusive offers for free time activities as well.
Finally, to make the advertising campaign even more memorable and attractive for young people, a special initiative
called "Viaggio in testa - Travel on my mind" is provided, which has as its centre point the dedicated website
www.viaggiointesta.it and the hashtag #viagiointesta. Beginning on 27th November, young people under thirty are
1 The retail market includes the following customers: Mass Market customers (individuals with financial wealth – direct and indirect
funding – of less than €50 thousand); Affluent customers (private individuals with financial wealth – direct and indirect funding - of
between €50 thousand and €500 thousand) and Small Businesses (smaller economic operators with turnover of less than €300
thousand, and businesses with turnover between €300 thousand and €15 million).
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invited to access the site and to share their dreams for travel and how they envision their futures. This allows them to
participate in the prize competition "Travel on my mind".
Loans for younger customers.
With the aim of meeting the needs of younger customers (18-30 age group) who desire to invest in their professional
futures or cultivate new projects, in July 2015 two new personal loans at extremely favourable conditions were
launched.
• The "Piccole Spese - Spending Money" Loan: financing for up to €5,000 for small expenses, such as for the
purchase of a motorcycle or payment of university tuition and text books. During the year 2015, 98 loans were
concluded, amounting to €487,556;
• "Grandi Progetti - Great Projects" Loan: financing for up to €30,000 for larger projects, from paying the tuition for
graduate studies and professional specialization courses to financing important purchases such as a first car.
During the year, 107 loans were concluded, for a total amount of approximately €1.2 million.
Moreover, in order to permit all young couples to purchase and/or renovate their own homes, the "Young Couples'
Mortgage", targeted to couples under 40 who do not have permanent employment contracts continued (during the year
314 loans were concluded amounting to approximately €35.7 million), as did the "flexible series" mortgages, which
allow the borrower to better face certain life events, such as the birth of a child or the loss of a job, by requesting the
deferment of repayment for a period of up to 18 months, or by reducing the payment amounts by extending the
repayment schedule (in 2015, 1,191 loans of this type were concluded, for a total amount of approximately €129
million.
Advertising campaign - Risparmi Premiati (rewarded savings)
Among those actions dedicated to developing new deposits was a specific advertising campaign entitled Risparmi Premiati
(rewarded savings)
The campaign, now an established item in the context of the Group's advertising programme, represented an important
opportunity for dialogue and a check-up for customers on their savings by account managers. It is an occasion to
highlight new features in terms of UBI Banca’s financial planning and advice products and its service model relating to
financial planning and advice.
The campaign also included a prize drawing featuring the possibility of winning a car for participating customers meeting
certain requirements.
Financial Planning and Advice (FPA)
The need for constant improvement in the area of the Group's consulting activities requires the continued development of
its financial planning and advice platform; to that end, during the course of the year 2015 modifications were made to
integrate information from customer portfolios with the investment recommendation platform. The FPA 2.0 platform was
thus enhanced, with the addition of new functions in order to provide better speed and greater depth of information for
users.
The continuing innovation, together with training initiatives, resulted in the optimisation of over 50% of all
recommendations made throughout the course of the entire year.
Controls implemented to increase customer protection monitor the trading activities of complex products of nonprofessional customers. In particular, the UBI Banca Group has taken the decision to prevent its retail customers from
purchasing products which are so complex as to render them unsuitable for this customer category.
In light of the new bail-in regulations, a new method of calculating the insolvency risk of bond issuers (credit risk) was
introduced in order to allow better monitoring of the concentration of products issued by the same company in customer
portfolios. The control establishes the assignment of differentiated risk budgets with progressive logics based on the risk
propensity of each customer.
Beginning January 2016 a revision of the profile questionnaires will be performed, based on the indications provided by
the Supervisory Authority and with the aim of updating previously acquired information with the aim of providing
improved service.
Clubino and I WANT TUBì
The year saw the continued success of the "CLUBINO" programme, which features a convenient and low-cost savings
books targeted at children in the 0-12 age group and is available at all the Group's banks; to date more than 132
thousand accounts have been opened, 16,855 of which in 2015.
The related loyalty programme, Più CLUBINO più premi - More Clubino, more prizes allows holders of Clubino saving
books to automatically accumulate points each time the account's balance is increased; the points accrued may then
be used for prizes from a specially-created catalogue. The principal channel available to customers for the
management of "Più CLUBINO più premi" is the dedicated website www.clubino.ubibanca.com, where, after logging in,
account holders may sign up for prize contests, manage their profiles, check their total points, and request prizes from
the catalogue.
The catalogue, which is constantly updated, includes more than 50 prizes, divided by age and category: "free time and
travel", "teaching and learning", "dream house", "playing together", "building games" and "lets help the children".
As regards products and services, with the opening of over 20 thousand accounts - 6,200 of which in 2015 - the year
saw the confirmation of the success of I WANT TUBÌ, the innovative programme offering products and services for
young people between the ages of 13 and 18, featuring a dedicated, innovative website geared to young users. The
brand I WANT TUBÌ was chosen to represent the world of teenagers facing the stimulating and complex challenges of
becoming themselves, winning their own independence and establishing their own personalities in all aspects of life.
The account is completely free of charge and includes a “Bancomat” debit card, for secure cash withdrawals and
purchases in Italy, online and while on vacation abroad. The debit card features an ON/OFF function which allows the
card to be activated and deactivated at any moment, as needed. The Qui UBI Internet Banking information service is
also provided, so that customers can monitor spending. New customers gain access to a mix of true and genuine
opportunities, the result of co-operation agreements with partners and brands of interest to the target customers,
featuring prize contests and the possibility of being selected to receive a scholarship.
"UBI Rent" long-term automobile rental programme
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Among the numerous initiatives created to complete the array of mobile services offered to Retail customers was the
commercial collaboration agreement reached with ALD Automotive Italia, allowing our customers to access, from their
local bank offices, long-term rental plans for cars, motorcycles, and vans.
Long-term rental is a convenient, innovative formula that provides an alternative to ownership, providing for the rental
of one or more vehicles, selected by the customer, at a fixed monthly fee. The contract makes available to the customer
the chosen vehicles and is customised based on his or her requirements, for a fixed period and distance. The vehicles
come with a series of services, such as registration and insurance coverage.
Customers thus enjoy the advantages of long-term rental, including:
- definite, predictable costs, which include insurance and services for daily mobility;
- no tying up of capital, because the monthly fees include all costs related to the financing of the vehicle;
- reduced bank exposure (the monthly lease amount does not reduce the credit available to the customer);
- no impact to the balance sheet (no assets or amortisation to record);
- elimination of the financial and operational risks connected to re-selling the vehicle;
- insurance costs and coverage independent from residence and "seniority" of the driver's licence;
- consultancy on all operating, fleet and mobility optimisation processes and costs;
- no time or resources necessary for vehicle management and administration matters;
- no time or trouble in selling the vehicle at the end of the rental period, thanks to ALD Trade-in.
The offer, initially launched in 120 branches, was extended to include all Group branches in November 2015 and,
although targeted principally to the Small Business sector, may also be extended to individual customers.
In 2015, 72 vehicle rental contracts were concluded for a total value of over €1.4 million.
Small Business
Again in 2015, the Group was dedicated to assisting small to medium-size businesses, focusing on
companies which, during this initial stage of economic recovery characterised by improvement that is not
yet completely consolidated, demonstrate potential for development by implementing processes for
product innovation, updating production and distribution organisation and searching out new markets.
Particular attention was given to companies seeking to open in international markets or to consolidate
and develop in this direction.
With the aim of supporting further internationalisation, the Group concentrated on the support services
offered by its network of specialised centres and on consultancy provided by its subsidiary Go ToWorld
Consortium.
In the short-term lending category, the commercial choices are focused on support for working capital for
both companies operating in the domestic market and for those operating abroad.
The growth in medium to long term loans issued denotes the desire to support those realities which,
despite an as yet uncertain economic outlook, have elected to adapt their productivity structures, based
on feasible development projects.
Financial advice
2015 again saw close co-operation between the Group's associate company, SF Consulting, fully controlled by the
Group Finservice, which provided the Group's corporate customers with specialised financial advice in order to assess
eligibility for public subsidies.
In this context, SF Consulting assists the Group's corporate customers in the preparation of investment projects,
providing general assistance in presenting and processing applications for subsidised loans to the granting
authorities. SF Consulting's commercial activities, coordinated by the network banks, resulted in the activation of over
1,289 new potential applications with visits with 3,702 businesses from the SME and Corporate categories.
Of particular note is the convention between UBI Banca, SF Consulting and Finservice, in effect since February 2011,
for support and consulting in the procurement of guarantees pursuant to Law 662/1996 (SME Guarantee Fund). A
special IT platform, created by SF Consulting and implemented by the Group, allows the Group's network banks to
interact with SF Consulting during the Guarantee Fund application process.
Publicly subsidised loans
With the objective of ensuring complete assistance to SMEs in both short and medium to long term financial needs,
the Group has continued to issue loans subsidised by public funds, adhering to numerous initiatives promoted by
public authorities including those drawn from European Community funds, thus contributing to their full use, in
order to avoid the risk of de-commitment. In 2015 the following operations were activated:
• In the Piedmont Region, interventions pursuant to the PAR-FSC (Regional Implementation Programme for the
Development and Cohesion Fund) for the internationalisation, promotion and territorial marketing - foreign offices
underwritten by the Framework Convention for the Management of Guarantee Funds and the granting of
Guarantees; measures in support of self-employment and start-ups pursuant to Regional Law 34/2008 - Art. 42,
underwritten by the Framework Agreement for the Management of Loans Subsidised by Rotation Funds;
• In the Apulia Region, subsidies - pursuant to the Regional Operational Programme (ROP) 2014-2020 - targeted to
all small to medium-size businesses (Title II Paragraph III) and specifically to those in the tourism-hospitality
sector (Title II Paragraph VI);
• in Lombardy, the 2015 Bando Agevolacredito (Competition for Credit Easing), promoted by the Chamber of
Commerce of Milan, grants non-refundable interest subsidies for companies in all sectors.
In 2015, the UBI Banca Group also commenced operations for the nation-wide Smart&Start initiative, for the support
for start-ups and the development of innovative start-ups through interest free loans issued directly by Invitalia Spa,
the managing entity on behalf of the Ministry of Economic Development, as established by the Decree of 24th
September 2014.
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Interested companies must open a "bound" or "dedicated" current account to which the subsidised loan is issued in
order to make payment to suppliers of the goods covered by the subsidies in a timely fashion. The activation of these
current accounts is regulated by the agreement entered into on 28th April 2015 between the Italian Banking
Association, the Ministry of Economic Development and Invitalia Spa.
Commercial initiatives in the farm and food sector
Again in 2015 the food and agricultural sector, which contributes substantially to Italy's domestic GNP, due, amongst
other things, to the ever growing interest worldwide in Italian products, demonstrating strong "anti-cyclical" strengths
with the propensity to export showing continued growth. Concerns operating in this segment are in fact particularly
active in foreign markets: food and agricultural exports reached the record figure of nearly € 36 billion and continue to
expand.
The DOP (Denominazione di Origine Protetta - Protected Designation of Origin) category appears to be quite lively,
particularly with regard to the wine sector; this even in the presence of objective difficulties, such as the embargo
against Russia and the slowing of developing economies.
As part of the "Farm&Food" initiative, launched by the Group specifically for this sector in 2013, penetration in the
category was increased, creating positive commercial results, due, amongst other things, to the consolidation of cooperation agreements reached with important organisations (agricultural consortia and food industries) for the
purposes of providing support to the agro-industrial supply chains, beginning with the farms at the bottom.
During the year, an important agreement was reached with Creditagri Italia, a guarantee body operating throughout
Italy under Coldiretti (Italy's principal farmers' union), to work together to advance the direct payments to farms under
the Common Agricultural Policy 2014-2020, which significantly revised the methods by which subsidies are assigned
and calculated from 2015 onward.
Another relevant national-level agreement was successfully concluded during the year with Confagricoltura, another
leading Italian farmers' organisation, as part of the Agricheck project, launched by this important trade association to
analyse the economic and financial situations of farms and related businesses. On the basis of this agreement, the
Group undertook to utilise the data collected from local Confagricoltura offices to prepare requests for financing from
the farms taking part in the Agricheck project, granting them certain benefits.
Revival of the commerce sector
With the aim of providing continued support to the recovery in consumption and consequently the revival of the
commerce sector, the commercial co-operation agreement with Assofranchising - the Italian Franchising Association was renewed for the year 2015. The agreement provides both new (start-up) and established franchisees with a wide
range of products and services targeted especially to them, including a dedicated line of credit to better meet
investment needs, services to manage operating costs (current account, business credit card) and POS terminals at
favourable conditions. The structure of this programme, based additionally on co-operation with the leading guarantee
bodies in the commerce sector, has facilitated access to credit for this category. The Group also made itself available to
provide support for franchisors in their investments aiming to innovate processes and products and viable financial
operations.
Businesses intending to operate in foreign markets
Given the continued weakness of internal consumption, 2015 saw a growth in interest among Italian businesses in
foreign markets; hence the decision to further promote the array of products and services targeted to export activities: as
a result, the UBI World project, launched in 2013, was renewed, with the objective of fully developing all the potentials of
businesses working or intending to work with foreign markets, ensuring that they have all necessary financial assistance.
The activity, in partnership with its associate Go ToWorld Consortia, ensured a structured, concrete approach for the
support of SMEs in their international projects, providing assistance from the initial phases of the selection of
potential target markets to the final implementation phases of the operational plan.
Start Up and SME Development
Based on the significant commercial interest generated by these initiatives, launched in 2013, operations of both
programmes - in an effort to ensure their continued effectiveness - were renewed, under the specific initiatives to
support small to medium-size businesses in launching and consolidating commercial activities, and in particular:
•
the Start-up loan, for a maximum of €50 thousand, to promote the start-up of new economic concerns, financing
start-up costs, investments in production and recruitment of personnel. The loans, unsecured with a maximum
term of 60 months, are reserved for firms operating in all sectors, freelance professionals, associations and
government bodies (legal entities) that are newly established or are soon to be established; From the beginning of
activities until the end of 2015, over 110 loans were granted, amounting to €2.7 million, while at year's end loans
in place amounted to a residual debt of €11.1 million;
•
the Sviluppo PMI (SME Development) loan programme, aiming to promote development and entrepreneurship for
SMEs wishing to reach international markets in order to secure opportunities available in new markets. This
initiative, too, offers 60-month maximum, unsecured loans, reserved to companies from all sectors, freelance
professionals, associations and government bodies (legal entities) to be used for costs related to the hiring of staff,
research and development, internationalization, investments in production. From the beginning of activities until
the end of 2015, over 96 Start-up loans were granted, amounting to €3 million, while at year's end loans in place
amounted to a residual debt of €14.6 million.
Capital Goods Loan Pool (known as the “Nuova Sabatini”)
These are loans for small to medium-size businesses as part of the Capital Goods Loan Pool (known as the “Nuova
Sabatini”) made available by the state-controlled fund and deposit institution, Cassa Depositi e Prestiti Spa (CDP), for a
total amount of €2.5 billion as established by Law 98/2013, as converted to Legislative Decree 69/2013.
Loans are accompanied by an interest subsidy, provided by the Italian Ministry of Economic Development, paid in
annual instalments within the sixth year from the date of the finalisation of the investment. Recipients are SMEs from
any business segment, including the agricultural and fishing sectors.
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The subsidised tool, launched by the UBI Banca Group in April 2014, may be used for the purchase of machines,
plants, company capital goods and new factory production equipment in addition to hardware, software and digital
technology indicated in company balance sheets as assets and purchased for existing or future productive structures
located within Italy.
These unsecured loans for SMEs have the following characteristics:
- amount: from a minimum of €20,000 to a maximum of €2,000,000;
- maximum duration: 5 years, including an initial 6/12 month grace period;
- interest rate: indexed to the six-month Euribor plus a spread set in the contract;
- guarantees: it is possible to obtain guarantees from the SME Guarantee Fund (Law 662/1996) and from Confidi
guarantee bodies;
- interest subsidy contribution from the Ministry of Economic Development: equal to the normal interest for a fiveyear repayment schedule calculated at a rate of 2.75%.
The Group has also made an additional pre-financing tool available to interested SMEs for the purposes of making
payments for the capital goods for which the investment has been obtained.
From the beginning of activities to the end of 2015, 170 loans were concluded, amounting to €55.2 million; At year's
end there were 313 loans in place, with a residual debt of €87.5 million.
Memorandum of intent for the development and growth of prevalently female-owned businesses and female
professionals.
During the year 2015, activity under the €300 million loan pool made available by the memorandum of intent
concluded, on 4th June 2014, between the Italian Banking Association, the Department of Equal Opportunity of the
Prime Minister's Council, the Ministry of Economic Opportunity and Italy's leading employers' trade associations, with
the aim of supporting access to credit by female owned businesses and female professionals.
Funds form the loan pool may disbursed up to 31st December 2015 (unless extended) in the context of the following
lines of action :
•
"Investiamo nelle donne" (Investing in Women): new investments in tangible and intangible assets for development;
•
"Donne in start-up" (Female start-ups): to encourage the creation of new businesses and professional activities;
•
“Donne in ripresa” (Recovery for women-owned businesses):to encourage the recovery of SMEs and female
professionals experiencing difficulty due to the current economic crisis.
By prevalently female-owned businesses, the following is intended: sole proprietorships in which the owner is a
woman; partnerships in which the numerical majority of the female partners is not less than 60% of the partners;
joint stock companies in which at least two-thirds of the shares of ownership are owned by women and at least twothirds of the management positions are held by women; co-operatives in which the numerical majority of women is not
less than 60% of the members.
Loans feature the possibility of suspending repayment of the principal for business owners or self-employed women for
a period of up to twelve months (once only during the life of the loan) in the event one of the following: maternity,
serious illness (also of a spouse or partner or children, including adoptive children); serious illness resulting in the
invalidity of a parent or family member (up to third-degree relatives) living with the female business owner or
professional.
The Group's activity with this fund began in late 2014. From that moment, up to the end 2015, 26 loans were
concluded, amounting to €1.1 million;
"BluImpresa Infortuni" Insurance Policy
On 5th November 2015 the UBI Banca Group began distribution of the new CARGEAS Insurance policy “BluImpresa
Infortuni”.
The new policy, together with the policy "BluFamily XL" targeted at individual customers, completes the array of
accident insurance reserved for the Group's customers.
The new personal injury policy is targeted to companies of all kinds, including individual companies and partnerships,
and offers significant economic coverage, both while performing business activities and during free time as well, for
events that could permanently limit ability to produce income, or in the case of events that only temporarily limit
ability to produce income.
"BluImpresa Infortuni" establishes the following obligatory coverage, which is "always active": "Permanent invalidity
caused by injury", "Reimbursement for medical expenses", "Legal advice and assistance".
To this coverage may be added additional elective coverage plans, which also may be added individually: "Accidental
death", "Temporary inability and daily recovery allowance", "Bone fracture/plastering".
The policy additionally provides for the possibility of insuring differentiated limits; the policy's premiums are in fact
calibrated based on the limits chosen by the policyholder and differentiated in function of the policyholder's type of
activity.
Authorities, associations and the third sector
In 2015, actions aiming to develop relations with current and potential customers from this category,
particularly those from the third sector, were launched.
In addition to these activities, further products and services were introduced, in order to both augment
the available product range and to respond more effectively to the particular needs and requirements of
this customer segment.
Associations and Guarantee Bodies
The year saw the continued co-operation with trade associations and with their related guarantee bodies, an
important activity for the Bank both from the point of view of credit ratings and of the preparation of loan requests.
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After the operations finalised in 2015 - amounting to 16,595, for a total of €1.4 billion - the overall outstanding loans
backed by guarantee bodies and public guarantee funds, such as the SME Guarantee Fund (ex Law 662/1996) and
the ISMEA guarantee funds managed by the SGFA (Società Gestione Fondi per l'Agroalimentare - Fund Management
Company for the agricultural and food sectors) totalled at year's end approximately €3.5 billion.
During the year the products and services in support of the guarantee bodies were modified in order to better reflect
changing market conditions, while at the same time the necessary activity of revising existing conventions continued
as well. The guarantee bodies segment is, in fact, characterised by significant company re-organisations and mergers;
this is a period, moreover, in there are frequent changes to operations aiming, among other things, to overcome
"guarantee subsidies" in favour of "first demand" guarantees, in many cases backed by an SME Guarantee Fund
counter-guarantee (ex Law 662/1996).
The third sector
Given Group's mission as a community banking institution, UBI Banca's relationship with non-profit organisations
(NPOs) is strategic not only in terms of reputation and connection with the local territory, but also in consideration of
the significant development that this category has shown in the last two decades, and additionally due to the
increasing awareness of the important role that the civil economy can play in the country's economic and social
development.
With the creation in 2011 of a dedicated commercial division, known as UBI Community, the UBI Banca Group made
a clear strategic choice, recognizing in the non-profit sector not only a commercial segment with unique
characteristics, diverse from both the individual and corporate segments, but also reinforcing its desire to become an
essential partner for NPOs, ready to support them by supplying real answers to the needs of local communities.
During the year, commercial activities and initiatives undertaken were essentially directed at:
•
acquiring new customers, with specific initiatives that include ecclesiastic and religious authorities, under the care
of a specialised business unit at the Parent Bank which coordinates commercial initiatives and provides specialist
support to the network banks, with particular reference to local managers;
•
finalising or strengthening a number of important agreements and partnerships, some of many years, with leading
non-profit organisations, as a strategy to improve the Group's competitive positioning in the sector. As part of this
last objective, of particular note is the strategic partnership with the Associazione Italiana per la Ricerca sul Cancro
- the Italian Association for Cancer Research (AIRC) for the period 2013-2015, which establishes that UBI Banca
will lend its support to the AIRC as a corporate partner for the November fund-raising campaign for cancer
research known as "I giorni della Ricerca” - “Research Days”, and will contribute through a number of initiatives
(such as, for example, in 2015, the issue of a dedicated social bond, fund-raising in branch offices and via the
Group's internet banking platform, payroll giving, the AIRC customised Ubi Community EnjoyCard and new
functions for sending funds on the UBI PAY app that allow customers to make donations from their smartphones
and the Jiffy network targeted at both the Group's current and prospective customers and its staff. The 2015
campaign, which drew great attention on both national and local media, allowed the AIRC to collect approximately
€6.4 million, approximately €650 thousand of which was attributable to the various initiatives activated by the
Group, thus bringing the total contribution from UBI Banca in support of cancer research over the three year
period to over €2 million. During the year 2016, the strategic partnership with the AIRC will be renewed for an
additional three-year period, and further strengthened with additional initiatives and programmes. Also of note are
the joint programmes with the Dynamo Camp, the Italian Multiple Sclerosis Association (AISM), the Arca Project
Foundation, and UNICEF, which saw the Group support the respective campaigns “Project Outreach”, “Mambretti
Welcome Centre”, “Rehabilitation for Individuals with Multiple Sclerosis" “Youth & Innovation Lebanon” by
making available numerous fund-raising instruments and channels and the increased awareness of the Group's
customers and staff;
•
updating and augmenting the products and services targeted to both non-profit organisations and NPO
stakeholders (employees, consultants, volunteers, users, etc). In this context, the following are of particular note:
- the launch, by the Group's asset management company UBI Pramerica, in synergy with UBI Community, of
new asset management tools (Euro Corporate Ethical Bond Fund (Fondo Obbligazionario Euro Corporate Etico) March 2015 - and the new "Social 4 Future Sicav" - December 2015), aiming to highlight the growing
propensity and need for investors, including those from the individual segment, to combine both traditional
objectives of financial returns with ethical and social principles when making their investment choices. These
tools, part of the Group's array of social responsibility investments, are also characterised by their support for
projects having significant social value, in the context of UBI Community, promoted by leading client NPOs
through charitable donations of part of the commissions received by UBI Banca and/or the managing
companies;
- the creation - by the Project and Real Estate Finance team of the Unity Market in collaboration with UBI
Community - of a Finance and Social Impact Team". This tool grants medium-term loans in the form of project
financing and features the channelling back, in the form of charitable donations to social programmes
promoted by the operation's sponsor, of a portion of the operation's structuring commissions and the bank's
spread, based on the achievement of pre-established social objectives. The first operation, amounting to
approximately €8 million, was structured in the second half of the year with a leading Piedmont social cooperative, for an investment in the health and welfare sector;
- the initiative "VolontarioCard", a CSV (Centri dei Servizi per il Volontariato - Volunteer Services Centres) pilot
project, in collaboration with UBI Banca, aims to support the sense of belonging of volunteers to their
organisations and the volunteer world in general, while at the same time recognising the social value of these
activities through advantages for volunteers and the associations to which they belong. VolontarioCard is at
the same time a payment tool (pre-paid card from the Enjoy line) and an association membership card, and
may also be used to obtain discounts and advantages with participating businesses and entities and to use
funds received through donations which may be made by the network banks, of a portion of the proceeds
deriving from the active cards issued and relative POS terminal transactions. The pilot project will involve,
during the first stage, both CSV Milan (over 2,000 volunteer organisations with more than 40,000 volunteers)
and CSV Naples (over 1,300 organisations with 32,000 volunteers);
56
-
the competition "Coltiva l'idea giusta - Grow the right idea" - launched by UBI Banca in collaboration with
Make a Change, with the sponsorship of the Ministry for Agricultural, Food and Forestry Policies,
Confcooperative (the Confederation of Italian Co-operatives), the Italian Touring Club, AcliTerra (an Italian
farmers' association), ManagerItalia (national federation of Italian executives) and CGM (a network of Italian
social enterprises) - targeted toward agro-food start-ups and projects with significant social and environmental
impact. The competition, which has generated significant interest, already has nearly 180 project entries. The
digital advertising programme involves external sites that are particularly attractive for the programme's target,
in addition to the commercial site www.ubibanca.com and the UBI Banca Facebook page.
The Group additionally continued the issue of the "UBI Comunità Social Bonds" which maintained their significant
level of success with investors and are, moreover, extremely unique. These are bonds where, in addition to providing
remuneration at a market interest rate, the investment made by subscribers allows the issuing bank to allocate a
portion of the funding acquired (e.g. 0.50%) to support projects of high social value undertaken by non-profit
organisations, or to pay these funds into a loan pool for the disbursement of financing to third sector initiatives.
Again in 2015, UBI Banca was the confirmed sector leader, in terms of both volumes and impact generated, placing 14
new bonds, four of which were issued by the Parent, amounting to a total of €131 million, which resulted in donations
totalling €531.5 thousand. From 2012 (the year in which it was created) to the end of 2015, the Group has placed 72
issuances, collecting approximately €746.3 million, and resulting in charitable donations of €3.6 million and in over
€20 million in available loan pools or loans granted. A further noteworthy element is the introduction, as part of the
structuring process for the Social Bonds issued by the Parent, of SROI (Social Return on Investment), as an
instrument for measuring the social impact of projects supported by UBI Banca. This tool, which is an innovation for
the entire Italian banking system, is highly valuable in terms of accountability toward investors and toward
stakeholders in general, and will at the same time allow the Group to direct its interventions toward those initiatives
that most lead to real change.
Authorities with payment and collection/treasury management services
The “authorities” segment comprises public authorities and those institutions for which the banks in the Group
provide treasury management and payment and collection services (1,831 services of this type were managed at the
end of December).
During the year, the Group continued its activities to foster the adoption of the Ordinativo Informatico (IT Ordinance),
which lead to an increase of 11% in the number of active or soon-to-be active authorities, growing from 628 in 2014 to
the current 695, optimising and rendering the authority/treasury bank relationship increasingly efficient.
In 2015 the integrated platform for the management of activities regarding payment, reporting and reconciliation of
tax and capital revenues for public authorities was extended to all network banks; this platform permits the public
authority to make available to its users/debtors a variety of channels/payment tools, as set out by the Codice
dell’Amministrazione Digitale (CAD - digital administration code). The availability of the platform - in addition to
representing a fundamental tool for permitting participation in public authority tenders for the assignment of services
that require compliance, by the Treasurer, with the provisions of Art. 5 of the Digital Administration Code (CAD)
facilitates payments by participating authorities, thereby improving the overall management and efficiency of the
services performed. This is made possible by the automatic revenue reconciliation and reporting activities performed
by the "treasury" network bank on behalf of the authority.
Again as part of the digitalisation process begun by the public administration, during the first portion of the year the
network banks joined, as a Payment Services Provider (PSP), "pagoPA", an electronic service for payments to the public
administration and public services managers, created by the Agency for Digital Italy (AGID). Participation in the
system will allow network banks to take advantage of the business opportunities connected to the specific context of
payments to the public administration.
The full roll-out of the integrated platform and participation in "pagoPA" have permitted the Group to develop the skills
and technological infrastructures necessary to support authorities in adhering to the payment system, made
obligatory by the Agency for Digital Italy by 31st December 2015. To that end, in the month of December, the network
banks sent to all public authorities for which they perform treasury management services a reminder highlighting the
possibility of obtaining assistance for compliance with the above requirement, and indicating the range of solutions for
integration with the diverse payment and connection modalities offered for public authorities.
Financial education
2015 saw the continuation of the Group's commitment to financial education as an indispensable feature of active
citizenship, with particular attention to young people. The commitment, originally begun with the Italian Banking
Association's PattiChiari Consortium, during the year 2014 was renewed with the Foundation for Financial and
Savings Education (Feduf), created by the Italian Banking Association (ABI) and in which the network banks have
participated since its creation. The Foundation, with the mission of promoting financial and savings education,
performs the role of "sector vehicle" for the issues cited above, with a banking leadership and an original brand that is
at the same open to the participation of non-banking subjects (for example, the Italian Consumers' Association)2.
During in the 2014-2015 scholastic year the network banks, in particular, performed teaching activities, especially
with students, reaching out to approximately 100 schools and to over 6,700 students. The Group's contribution
represents a significant portion (over 30%) of all Feduf activities performed by the Italian banking system as a whole.
At the same time, the co-operation with private and/or institutional entities acting as driving forces in the
dissemination of educational initiatives for various target groups in the population continues to grow.
The commitment highlights the UBI Banca Group's awareness of and attention for socially useful initiatives within
Italy, in line with the desire to provide tangible responses to the increasing demands for financial education, in light
2 "The Foundation seeks to accomplish socially useful deeds, promoting financial education in the context of civic and economic
education, in order to develop and disseminate knowledge related to economic and financial issues (Art. 2, paragraph 1 of the
Statute). As of December 2015, 77 banks, representing 49% of the total branches and four associations, had joined the Foundation.
57
not only of the guidelines defined by the Italian Banking Association, but also with those of the government, as set out
in the 2015 "Buona Scuola" education reform (Law 107/2015), which introduced principals of economic education.
“Anti Crisis” measures to support small to medium-sized enterprises3 and
families
As part of their role as local community institutions, again in 2015 the banks in the Group participated in a series of
measures to help families and businesses in their respective markets, both locally and nationally, co-operating with
public institutions (chambers of commerce, regional and provincial governments) and guarantee bodies.
Already in 2009, as part of the initiatives promoted by the Italian Banking Association, moreover, the UBI Banca
Group was taking steps to support small to medium-sized businesses and families, with the implementation of
interventions undertaken by the “Avviso Comune” (Joint Announcement) of 3rd August 20094, by the “Accordo per il
Credito alle PMI” (Agreement on Loans to SMEs)5 of 16th February 2011, by the “Nuove Misure per il Credito alle PMI
(New Measures for Loans to SMEs)”6 Agreement of 28th February 2012 and by the “Accordo per il Credito 2013”
(Agreement on Loans 2013) of 1st July 20137, extended until 30th June 2015 by the new "Agreement on Loans 2015"
described below, in addition to supporting families with such measures as the "Mortgage Solidarity Fund for First
Homes" instituted by initiative of the Italian Ministry of Economy and Finance, in effect as of 27th April 2013.
Agreement on Loans 2015
On 31st March 2015, the Italian Banking Association and Italy's leading business associations entered into a new
agreement, valid until 31st December 2017, for SMEs, updating previously implemented measures to comply with the
current legislative context.
The new agreement is based on signs of improvement evident from the Italian productive sector, and aims to support
and encourage further growth, in part through measures facilitating SME access to credit.
In order to achieve the objectives of the 2015 Agreement on Credit, the following initiatives were introduced:
A. The Business Recovery - Imprese in Ripresa initiative (ex Agreement on Loans 2013) establishing deferred
repayment and term extension for loans;
B. Business Development - Imprese in Sviluppo (ex “Italy Investment Projects - Progetti Investimenti Italia” loan pool)
providing funding for business investment projects and to strengthen business capital structure;
C. Businesses and Public Administration - Imprese e P.A. (ex "Public Administration Receivables - Crediti PA" loan
pool) designed to support SMEs who find themselves in temporary difficulty due to delays in the payment of
receivables from public administrations.
3 According to the definition in EU regulations, small-to-medium size enterprises are considered entities which carry on a business
and regardless of their legal status employ fewer than 250 individuals, with an annual turnover of not more than €50 million or with
total assets of less than €43 million.
4 The agreement, which became operational on 28th September 2009 is for SMEs that were in temporary difficulty but which reported
good operating prospects and were going concerns. It enabled them to benefit from four measures: i) the deferral for twelve months of
principal repayments on mortgages; ii) the deferral for twelve or six months of the principal repayment portion of property or
equipment leasing instalments respectively; iii) an extension to 270 days for the repayment of bank advances on short-term
receivables; iv) special loans designed to strengthen capital.
5 This agreement, which became operational on 2st March 2011, involved the following: i) the extension until 31st July 2011 of the time
limit for the presentation of applications to defer loans to banks in accordance with the Joint Announcement (Avviso Comune); ii) the
extension of the repayment schedules for medium to long-term loans which had benefited from the deferment under the Joint
Announcement by up to a maximum of two years (three years for secured loans). The deadline that had been set for the presentation
of applications for extensions by businesses was 31st December 2011. The Group agreed to maintain the existing contractually
agreed interest rate for all extensions that were backed by the Cassa Deposito e Prestiti (CDP – state controlled fund and deposit
institution) on the basis of a special agreement signed on 31st May 2011, which involved the assignment of a budget of up to a
maximum of €54,529,000.
6 The agreement to which the Group adhered on 29th March 2012 established i) deferments of up to twelve months on the capital
repayments on medium to long-term mortgages and unsecured loans (ordinary and subsidised) and up to twelve or six months for
the repayment of the capital portion implicit in property and non-property lease instalments, respectively; ii) extension of the terms
of medium to long-term mortgages and unsecured loans (ordinary and subsidised) for a maximum period of two years for unsecured
loans and three years for mortgages; iii) extension of the maturities of short-term loans to 270 days to support cash flow
requirements, for advances on amounts that are certain, liquid and payable in cash (excluding import finance and advances on
contracts); iv) extensions for a maximum of 120 days of the terms for agricultural working capital credit pursuant to Art. 43 of
Legislative Decree No. 385/93 granted with or without bills of exchange. By signing that agreement, the Group committed to
maintaining the contractually agreed interest rate if, amongst the other conditions, the deferment or extension benefited from
backing from the Guarantee Fund for SMEs or the ISMEA (agricultural food market services institute) fund.
7 The agreement, to which the Group adhered on 11th September 2013, established i) deferments of up to twelve months on the capital
repayments on medium to long-term mortgages and unsecured loans (ordinary and subsidised) and up to twelve or six months for
the repayment of the capital portion implicit in property and non-property lease instalments, respectively; ii) extension of the terms of
medium to long-term mortgages and unsecured loans (ordinary and subsidised) for a maximum period of three years for unsecured
loans and four years for mortgages; iii) extension of the maturities of short-term loans to 270 days to support cash flow
requirements, for advances on amounts that are certain, liquid and payable in cash (excluding import finance and advances on
contracts); iv) extensions for a maximum of 120 days of the terms for agricultural working capital credit pursuant to Art. 43 of
Legislative Decree No. 385/93 granted with or without bills of exchange. Deferrals, extensions of the repayment schedules for shortterm and agricultural working capital loans are granted at the same interest rates established by the original contract. Extensions for
the repayment schedule of loans and mortgages were made at the same interest rates established by the original contract, provided
the company requesting the extension had initiated the process of effectively strengthening its capital base, or had initiated any
aggregation process, with aim of strengthening its financial profile.
58
The UBI Banca Group has also adhered to this new initiative, which provides continuity for the dispositions of
previous initiatives, and allows companies wishing to participate8 to apply by December 31st 2017. In joining the
Agreement, the Bank undertook to provide an answer generally within thirty working days of the date of application or
the date upon which any supplementary information subsequently requested from the applicant is provided, and to
ensure, as in the past, careful monitoring of the initiative.
A.
Business Recovery - Imprese in Ripresa (ex Agreement on Loans 2013)
The initiative renews the measures established by the 2013 Agreement on Loans, except for some variations due to
legislative changes, and includes the following measures:
Loan deferments:
deferments for twelve months for capital repayments on mid-to-long-term mortgages, even when subsidised or backed by the
issue of bills of exchange, including agricultural bills of exchange;
deferments for twelve or six months for the repayment the capital implicit in “property” or “equipment” lease instalments,
respectively;
The Bank has undertaken to maintain unchanged the interest rate indicated in original contract, without requiring additional
guarantees, provided there is no evidence that the recipient SME will have difficulty in repaying the loan, or, in the event of such
difficulty, on condition that the loan for which deferred repayment is requested is backed by the SME Guarantee Fund (or another
equivalent guarantee), even in the form of a counter-guarantee, or, alternatively, a new guarantee may be provided for the loan in
consideration. In other cases, the Bank will evaluate interest variation, solely for the deferment period; in any case, the variation
cannot be superior to any increases in capital charge - deriving from the application of regulations governing "forbearance" resulting from the deferment and in any event not superior to 75 bps.
-
Mortgage repayment extensions:
The maximum deferment period is 100% of the period remaining of the repayment schedule, and in any case may not be superior
to three years for unsecured loans and four years for mortgages.
The Bank may assess a possible variation of the interest rate to a degree that is, in the event of an increase, not, in any case,
greater than the increase in the bank's cost of funding as compared to that at the time the loan was initially issued. The increase in
the interest rate may not, as a rule, be greater than 100 bps. The need for additional guarantees for the loan will be evaluated by
the bank with the aim of minimising or avoiding possible interest rate increases, on the basis of the extent and quality of the
guarantee and the credit-worthiness of the firm.
Extensions are granted at the same interest rates established by the original contract when the business applicant, within twelve
months of having obtained the extension, commences either: i) processes to effectively increase capital, through stakeholder or
third-party contributions, including capital increases subject to concessions under the ACE (Aiuto alla Crescita Economica - Aid to
Economic Growth) programme; ii) any form of aggregation, with the aim of strengthening the business's financial profile. In the
event the company fails to commence, within the term established, at least one of above processes, the bank reserves the right to
modify the interest rate relative to the deferment, according to the dispositions of the contract.
Loan extensions:
-
Extension of the maturities of short-term loans to 270 days.
extensions for a maximum of 120 days of the terms for agricultural working capital loans pursuant to Art. 43 of the
Consolidated Banking Act, granted with or without bills of exchange.
At the end of 2015, approximately 940 deferments and extensions on loans had been processed by the UBI Banca
Group - mainly on medium to long-term loans – for a total of €300 million, in addition to 74 lease positions
amounting to €45 million. Nearly all applications meeting eligibility requirements were accepted.
B. Business Development - Imprese in Sviluppo (ex “Italy Investment Projects”)
Similarly to the "Italy Investment Projects"9 loan pool, this new initiative also called for participating banks to
create individual loan pools in which to place resources remaining from the previously created pools; the Group
has renewed the allocation of funds, amounting in 2015 to €600 million.
The loan pool may be used for loans taking various technical, including leasing, to finance any investment,
whether made by single firms or networks of firms, in material or immaterial goods that are instrumental for
company activities, diverse from those produced or marketed through the company's activities, including
investments initiated up to six months preceding the application. Increases of working capital for the
implementation of existing or planned investments may also be financed.
Also envisioned are loans for business development to companies set up as joint-stock companies (including cooperatives), in amounts that are proportional to the increase in capital raised by the company itself.
The interest rate applicable to these loans is determined on the basis of the costs of funding for the bank, plus a
spread based on the quality of both the firm and the investment project.
The costs of funding are determined on the basis of the costs of access to BCE funds as part of the Targeted
Longer Term Refinancing Operation.
During the year, 395 loans were granted, for a total of €17,176,383, with a residual debt at the end of 2015
amounting to approximately €133.4 million, under both the present and the previous initiatives.
C. Businesses and Public Administration - Imprese e P.A. (ex Public Administration Receivables)
Similarly to the "Public Administration Receivables - Crediti PA" 10 loan pool, this new initiative also called for
participating banks to create individual loan pools in which to place resources remaining from the previously
created pools; the Group reconfirmed the allocation of €600 million to this pool.
8 SMEs (as defined by EC regulations), operating in Italy and belonging to all sectors, without a debt position that has been classified
by the bank as "non-performing", "probable default" or having positions past due and/or in arrears over 90 days (i.e. the company is
"performing") on the date the application is filed.
9 As part of the “New measures for Credit to Small and Medium-Size Enterprises” Agreement of 28th February 2012, the UBI Banca
Group had allocated €600 million to the Italy Investment Projects loan pool, which had as its objective the support of investment
projects for capital goods for business activities. This loan pool may be used until 30th June 2015.
10 As part of the 2012 Credit Agreement, the UBI Banca Group had allocated funds to the "Public Administration Receivables" loan
pool - designed to support SMEs in temporary difficulty due to delays in the payment of receivables from public administrations by
paying advances on those receivables, with a total allocation to the pool of €600 million. This loan pool may be used until 30th June
2015.
59
Under this initiative, aiming, similarly to the previous edition, at providing advances on SME receivables 11 from
public administrations, advances may be granted to SMEs in an amount not less than 70% of the receivables held
- "certified" by the public entity 12 to be certain, liquid and payable in cash - for a duration that is consistent with
the date of payment of the certified receivables in question and, in any case, not longer than twelve months.
The Group has established the technical form of the advances with recourse of the receivables with the assignment
of the same.
The interest rate applicable to these advances is determined on the basis of the costs of funding for the bank
(generally not superior to the costs of access to BCE funds as part of the Targeted Longer Term Refinancing
Operation) plus a spread based on the quality of the firm, the guarantor and the structure/type of operation.
During the year seven advances were granted, for a total of €534,500, under both the present and the previous
initiatives.
Loans to SMEs drawn from Cassa Deposito e Prestiti funds
The granting of loans to small to medium-size businesses to support investments or working capital continued until
30th June 2015, which marked the end of availability of the funds used by the Group under the fourth (and last)
agreement, again by drawing from Cassa Deposito e Prestiti (CDP - Italy's state controlled fund and deposit institution)
funds resulting from post office savings, as established by the various agreements entered into with the Italian
Banking Association.
The Group used the CDP funding available from the “investment pool” for unsecured loans with a term of between 13
months (19 months if backed by the Guarantee Fund for SMEs pursuant to Law 662/1996) and 60 months, for
planned or existing investments and to increase working capital. Under the above-mentioned fourth convention in
2015 336 loans were concluded, amounting to over €12.4 million.
Guarantee fund for SMEs ex Law 662/1996
With a view to facilitating access to credit by SMEs, use of public sector tools, such as the Guarantee Fund for SMEs
pursuant to Law 662/1996 to mitigate credit risk, also continued. The Guarantee Fund provides its own guarantee on
behalf of businesses receiving financing of any type linked to the operating activities of the firm. The guarantees
protect the lending banks in variable percentages - depending upon the nature of eligible operations, the type of
beneficiaries and their location - based on the fund regulations currently in force, which are immediately implemented
by UBI Banca Group. Outstanding loans from the Group backed by this guarantee amounted to €1,178.6 million,
while disbursements in 2015 totalled €574.5 million.
Initiatives for populations affected by the earthquake in the Emilia Romagna, Lombardy and Veneto regions
Decree Law 74/2012 made available subsidised loans for the repair, return to working order and/or rebuilding of
commercial and residential properties damaged by the 2012 earthquake.
These are unsecured loans, issued on the basis of the specific Italian Banking Association- Cassa Deposito e Prestiti
(CDP) convention "2012 Earthquake Reconstruction Loan Pool" of 17 December 2012 and subsequent addenda, with a
life of 15-25 years, based on the amount of the loan. The sole source of repayment of these loans are the tax credits
which mature in favour of the loan beneficiaries in amounts equal to the repayment instalments due and to the sums
required by the lending bank to meet expenses strictly necessary for management of the loans. The above tax credit is
then used by the lending bank on the basis of the compensation procedures pursuant to Art. 17 of Legislative Decree
No. 241/1997.
In 2015, the network banks involved (Banco di Brescia and Banca Popolare Commercio e Industria) finalised 66 loans
amounting to € 5,367,254 million (of which 13, amounting to €1,002,429, went to businesses), for a residual debt at
year's end of approximately €7.9 million (of which approximately €1.6 million was for businesses), continuing with the
activity of concluding the operations found to be eligible for subsidies by the ordinances issued by the competent
authorities.
Initiatives to assist populations affected by natural calamities
Again in 2015, in light of the grave socio-economic hardship resulting from the exceptionally adverse weather events
that struck certain areas in Italy, the Italian government made it possible for borrowers holding mortgages on
properties that were destroyed or rendered uninhabitable by the above adverse events to request the deferment of
payment on the instalments of those loans, selecting between the suspension of the entire instalment or solely the
suspension of the principal repayment.
Legislative action affecting the Group's banks involve the following areas:
-
Emergency measures for the populations in the provinces of Florence, Arezzo, Lucca, Massa Carrara, Prato and Pistoia in order to
cope with damage resulting from the exceptionally adverse weather conditions of 5th March 2015;
Preliminary emergency civil protection measures as a consequence of the exceptional weather events of 8th July 2015 in the
municipalities of Dolo, Pianiga and Mira in the province of Venice and in Cortina d’Ampezzo in the Belluno province;
Emergency measures for the populations of the province of Siena after the exceptionally adverse weather conditions of 24th and
25th August 2015;
Emergency measures for the populations of the province of the Campania Region after the exceptionally adverse weather conditions
between 14th and 20th October 2015;
Emergency measures for the populations of the province of Genoa after the exceptionally adverse weather conditions of 13th and
14th September 2015;
11 For companies having "positions past due/in arrears" over 90 days (and up to a maximum of 180 days), the bank may elect to
evaluate the operation in consideration of the impacts and regulatory constraints, in the event the delay of payment by the
company can be considered to be attributable to its inability to collect on the public administration receivables for which the
company is requesting access to the loan pool created by the Agreement.
12 Pursuant to Law Decree 185/2008 and subsequent modifications, according to the procedure set out by the implementing decrees.
60
Initiatives designed to support families suffering from the economic crisis
In view of the continued difficulty in gaining access to credit and meeting the relative costs, the Group continued with
the various institutional initiatives launched in previous years to assist families hit by the economic crisis, such as the
loan programme Give them a future - Diamogli Futuro13 (in 2015, 98 loans were issued for total amount of €487,556).
The Group has also adhered to the “solidarity fund for mortgages or the purchase of a principal dwelling”14, which was
created as a result of an initiative by the Ministry of the Economy and Finance and became operational from 27th
April 2013. The initiative combines the two prior initiatives (“2010 Solidarity Fund” and “Families Plan – Italian
Banking Association Moratorium”), rendering them simpler and more effective operationally. Given the serious
economic and employment crisis which has hit the country, after adhering, in 2009, to the National Convention with
Confindustria (confederation of industry) and Confederation of trade union organisations and trade associations on
the question of advances on Cassa Integrazione Guadagni Straordinaria - the extraordinary state redundancy/lay-off
benefits - scheme (extended through 31st December 2015), Group banks signed specific agreements, some in their
major local markets as well (Lombardy Region). For example, the Protocol of accession to the Convention with
Finlombarda on the on the question of advances on Cassa Integrazione Guadagni Straordinaria - the extraordinary
state redundancy/lay-off benefits scheme - signed in September 2014 designed to provide relief for employees of
businesses operating the Lombardy Region (with the exception of the Province of Milan, already covered by a similar
initiative with the Ambrosiano Welfare Foundation) through advances on benefits from Cassa Integrazione Guadagni in
deroga – the exceptional state redundancy/lay-off scheme, Cassa Integrazione Guadagni Straordinaria anche in deroga
- the extraordinary state redundancy/lay-off scheme, including benefits paid on an exceptional basis, and solidarity
contracts, which are guaranteed by a special fund. During the year 2015, 143 advances were granted under the
Finlombarda Convention, amounting to approximately €187 thousand.
Digital Innovation
During the year, UBI Banca Group followed through with its Digital Innovation project,
commenced in 2014, updating and launch of a number of highly innovative services,
including:
• a new version of the Qui UBI internet banking platform for private and small business customers (available for PC,
with "responsive" navigation and graphics, and as an app for smartphones and tablets) which permits access to
online services at the same operational and quality standards, regardless of the type of device used for the
connection;
•
the CBILL service, for online payment of bills from institutions and businesses adhering to this payment method, in
addition to the personal financial management service UBI Money, providing not only a convenient platform to keep
track of and understand family income and spending, but also access to simulators, also available on the public
internet site, to facilitate the choice of the mortgage best adapted to the customer's requirements.
•
an enhanced version of the Qui UBI internet application (with both updates to both graphics and navigation),
featuring functions such as payment of automobile registration and bills by using a smartphone camera;
•
•
The release of the new Qui UBI Trading application for customers operating on financial markets;
•
•
the activation, in the final months of the year, of the online AES (advanced electronic signature), which permits a
state-of-the-art customer experience in terms of simplicity and transparency in the purchase of products via the
internet banking platform. This method of signing contracts is already in place for the new QUBÍ and QUBÍ under 30
accounts, and within the first months of 2016 will be extended to the entire online catalogue;
the extension of the sale of prepaid carts to non-resident individuals in possession of an Italian tax code (codice fiscale).
the update of the UBI PAY15 application to include non-profit entities. As a result of this innovation, customers may
now make donations with a text message, thanks to the application's "send money" function, by simply selecting the
name of the receiving entity from the device's contact list.
13 This is an initiative promoted by the Italian Banking Association and the Presidency of the Council of Ministers (Department of
Youth), to which the Group adhered in September 2011. The measure provides for unsecured loans from €3,000 to €25,000,
issued in annual portions (for a maximum of 60 months), with no transaction fees. Borrowers are not required to provide
guarantees (in order to maintain the bank risk within 70%, the public Guarantee Fund managed by "CONSAP - Concessionaire for
Public Insurance Services - Concessionaria Servizi Assicurativi Pubblici Spa” intervenes) and the loans, with a maximum life of 120
months, are granted at a subsidised fixed rate, equal to the "IRS 10 year" parameter plus 1.50 p.p. These loans offer the possibility
of deferring payment for a maximum of twelve months in the event of the loss of employment, death or the loss of self-sufficiency of
the borrower or a member of the household.
14 For mortgage contracts for the purchase of the borrower's primary dwelling, the fund establishes the possibility for a customer, if
certain conditions are met, to apply for the deferment of repayments not more than twice for a maximum period of not longer than
18 months in the life of the mortgage.
15 UBI PAY consists of a simple app, available for the three major mobile operating systems (Android, iOS and Windows Phone), and
allows users to: send funds to anyone on their telephone contact list over the Jiffy circuit, with an extremely simple user interface,
comparable to sending an SMS; make online purchases with eCommerce Merchants using MasterPass, rendering the check-out
process both simple and quick (one-click pay);make payments directly from NFC smartphones, simply by placing the phone next to
the merchant's contactless POS. In order to use UBI PAY, customers must first register for the services at their local branch, have
a Qui UBI internet banking account for which at least one of the three available services is activated, and have either a pre-paid
Enjoy card or be a current account holder with one of the UBI Banca Group' banks.
61
•
•
online sales of additional products, including UBI PAY and the above-mentioned QUBÍ and QUBÍ under 30;
the creation of the Instagram and Linkedin channel with the objective of acquiring new customers from the "youth"
target group, further consolidating the Group's social network presence.
Among the projects developed and launched in 2015, of note is the "Online Mortgage
Specialist", which represents a new way to offer mortgages to customers, in particular to those
who enter into contact with the Bank through its website www.ubibanca.com to use the
simulators, or request information by telephone, online chat and email.
The "Specialist" is a professional with expertise in providing the Group's customers with advice
in selecting the mortgage best suited to their specific requirements. Beginning in the month of
May, the initiative was extended to customers of the new IW Bank Spa, establishing, in this
case, the complete online management of the relationship, with the remote activation of the
preparatory and approval stages.
ALSO begun was the sale of the new range of IW Bank Spa payment cards (credit, debit, and
prepaid) and an important partnership with FISI (Federazione Italiana Sport Invernali - the
Italian Winter Sports Federation) providing additional features to the Enjoy SKI prepaid card.
A number of significant digital advertising initiatives served to support the Group's principal activities. In particular,
the diffusion of the UBI PAY app was backed by a multi-channel and multi-format advertising campaign: television
commercials; advertisements on leading national radio stations; a digital media programme; pages and banners added
to the www.ubibanca.com website; video tutorials 16 . From the launch of the advertising campaign, begun in
November 2014, to the end of 2015, the UBI PAY service gained 134,000 subscriptions.
For the "youth" target, the "Enjoy the Music" programme was launched, allowing credit and prepaid card holders to
purchase tickets at discounted prices and providing priority admission to events17. Again targeted to the "youth" category,
at the end of 2015 the "So many great ideas?" ("Hai tante idee in testa?") campaign was launched. The campaign, based
on relevant YouTube, digital PR and social network content, features a unique prize contest and offers target customers a
complete range of products at favourable prices.
For business customers, the Group launched the "Passionate about business - La passione di fare impresa", a series
of interviews giving voice to entrepreneurs who successfully completed important projects thanks to their passion,
using values such as creativity, tenacity and courage to reach their business goals. The digital media plan designed to
support the series employs not only external websites, in addition to the Group's website, but also its own YouTube
channel and UBI Banca's Facebook page.
Concurrently, the "Multi-Channel Promoter" initiative continued as well, featuring a team of
specially trained employees, equipped with dedicated IT work stations, with the task of
increasing the use of the multi-channel and electronic payment card services among
customers belonging to a set of branches selected from among the Group’s network banks:
during the year, 81 promoters sold over 40,000 products, including internet banking services,
cards and POS terminals.
In addition to the new digital services launched, the year also saw the development of new
operational tools for the network banks providing improved service, resulting from a multichannel approach to contract management, to both current and potential customers.
The new developments will continue in 2016, with:
-
new features for the internet banking platform Qui UBI for the individual and small business segments;
enhancements to UBI Money services;
an update for the Qui UBI Corporate Banking Interbank platform;
new online simulators, and online sales of additional products;
the introduction of mobile tokens and touch ID for UBI iPhone and iPad applications;
a new prepaid card created for minors;
further updates for the UBI PAY application, with a simplified "version" for customers who do not have further
dealings with the Group, in addition to a range of transaction services for e-Commerce merchants.
Moreover, during the course of 2016, numerous updates will be made to the
www.ubibanca.com website which, together with modifications made for IW Bank, aim to
enhance and improve user accessibility, optimising it for search motors. The objective of the
16 Additionally, an "instant win" advertising initiative was developed, featuring the possibility of winning one Microsoft Lumia 535
smartphone per day for all those who downloaded the app.
17 The advertising programme employs digital media - such as, for example, a landing page on TicketOne for the sale of discounted
tickets, mobile videos, banners on leading music and social media sites - in addition to update to the site and the Group's
Facebook page, announcements regarding numerous events, and radio advertisements.
62
updates will be to render more effective the online promotion of the Group's products and
services, including increased monitoring of the results achieved, which over time will allow
maximum use of available tools and channels.
The continued development and technological improvement of direct channels, is not only a
strategic tool for the acquisition of new customers and for the management of the Group's
relationship with the same, results in reduced operating expenses and the correct
management of product and process innovation, but is also particularly appreciated by the
Group's customers, who more and more frequently make use of remote channels for their
banking transactions.
As at 31st December 2015, the Group's multi-channel customers had grown by 24.5%,
totalling over 1.690.000 (multi-channel users totalled 1,350,000 at the end of 2014).
This growth was driven by encouraging trends for the Qui UBI internet banking platform (up
by 27.6% to 1,430,000 users, compared to 1,120,000 at the end of 2014) and for QUI UBI
Business, with users reaching 179 thousand at the end of December 2015, up from 157
thousand in December 2014 (+14.3%). Also noteworthy are the approximately 81,500 users of
the Qui UBI Imprese business services platform (+0,8% over the previous year's figure).
Customer interest is also confirmed by the following usage data18:
• +23.2% year-on-year for credit transfers, payments and reloads;
• 37% of security trades on regulated markets were performed via internet (33.8% at the end
of 2014)19;
• over one-fourth of payments into accounts in cash and cheques were performed using
evolved ATM machines.
Credit cards and electronic payment methods20
Despite the continuing difficulties in the economic context, the Group continues to be
extremely active in the electronic payment and credit card business, both in terms of seeking
out increasingly innovative technological solutions and through effective advertising initiatives
to support the products and services offered.
The range of credit cards and payment tools currently proposed by the Group satisfies the needs of every
sort of user, from both individual and business segments; at the same time, the range of tools for cardbased payment (POS) is substantial, and responds to the highest technological standards. In particular:
 "individual" customers may select between debit cards, flexible credit cards (which allow both full
repayment and instalment repayment of the balance due each month) and revolving credit cards cards,
in addition to prepaid cards (some of which feature an associated IBAN);
 "business" customers are offered business and corporate cards, with varying credit ceilings and services,
in addition to a complete range of technologically advanced payment processing systems (including both
physical and virtual POS terminals).
As a whole, as at end December 2015, the number of credit cards (Libra and Kalìa) and
CartaSi cards issued by UBI Banca was over 726 thousand, an increase over the
approximately 700 thousand issued in 2014. In terms of use, the data updated to November
2015 appears to be substantially unchanged when compared to the same period of the
previous year, despite an increase of over 6% in the use of Libra cards.
The increase in the overall stock of prepaid cards continued, rising to 486 thousand (+15.5%
over 2014 figures), driven by both currently available products: Enjoy Card - the prepaid card
with an associated IBAN, and, above all, the Like prepaid card, available since October 2013,
18 As of 25th May 2015, the merger of IW Bank Spa with UBI Banca Private Investment, with a change of name to IW Bank Spa,
became effective. The data presented does not include IW Bank Spa as at 31st December 2015 and UBI Banca Private Investment
as at 31st December 2014.
19 As compared to previous reports, this item incorporates the various partial results relative to the same purchase order.
20 Data regarding the total number of credit and payment cards as at 31st December 2015 refer to the aggregate network banks plus
new IW Bank (network banks + UBI Banca Private Investment as at 31st December 2014) while the usage data relative to the period
January-November 2015 do not include IW Bank.
63
featuring numerous additional innovative services and well-suited to those who do not require
the additional functionality of a card with an IBAN21 (over 170 thousand cards).
For the Enjoy card, in particular (over 300 thousand cards issued; +15.7 year-on-year), the
Group continued activities in collaboration with Italy's leading universities, which lead to an
interesting increase in issuance.
The success of prepaid cards is also reflected in their use, which grew in the eleven months of
the year by 19.4%, as compared to the same period of the previous year.
The debit cards (Libramat) issued by the Group as at end December 2015 numbered at
approximately 1.73 million, an increase of 10.3% over 2014. Overall card use dynamics were
positive as well, showing an increase of 4% in the eleven months of the year, with a +7%
increase in payments over the PagoBancomat network.
The rise in card use confirms new consumer tendencies that are increasingly oriented toward
using payment cards for sales transactions, even for smaller amounts.
As regards payment processing systems, the Group has installed over 68 thousand POS
terminals in retail outlets, an increase of 7.2% as compared to 2014. This growth was driven
both by recent legislation requiring merchants to accept payment cards for transactions of €30
or greater, and additionally by European Regulation 2015/751 22 , which placed a limit on
interbank commissions for credit and debit card payments and established new transparency
rules.
During the second semester, the UBI Banca Group made the modifications necessary to
comply with the above regulation, with the aim of improving the security, efficiency and the
competitivity of electronic payments and to render their use advantageous for both consumers
and merchants.
Due to the beginnings of an economic recovery, and to the initiatives carried out during the
year, the volume of POS transactions until November 2015 increased by 6.7% as compared to
the same period of the previous year.
In 2015, the Group implemented numerous activities aiming to develop the acquiring category(all activities relative to
managing the acceptance of payment cards and payment card transactions).
In particular, from May to October the Group was involved in the Bergamo Cashless City project, with the
participation of Banca Popolare di Bergamo (local banking institution in the project territory). Cashless City is an
initiative created in collaboration with CartaSi, the municipality of Bergamo and the leading payment networks in Italy
(PagoBancomat, Visa and MasterCard), with the aim of augmenting credit card payment processing networks through
a series of innovative operations, with particular attention to the public administration sector, in order to encourage
the use of electronic payment tools, even for smaller purchases. The Cashless City 2015 project was a success for all
parties involved: the municipality of Bergamo, upon reaching a determined volume of operations, was "rewarded" by
stakeholders with the implementation of projects for the city's inhabitants; consumers and merchants participated in
a drawing for gift certificates by using and accepting payment cards . The initiative was not only qualitatively
successful, but also quantitatively successful, with use of electronic payment tools increasing by 10% as compared to
the same period of the previous year.
Additionally, on 1st November 2015, the "Use a POS Terminal" prize contest was launched. The new initiative, targeted at
both current and potential customers, provides for the possibility of participating in a drawing for a Fiat 500 customised
with the the merchant's business logo, or 100 weekends for two people, by reaching a determined number of
transactions/operations or by entering into a new POS terminal contract.
21 The card is equipped with IBAN technology, which allows the receipt of credit transfers only for the purpose of reloads.
22 On 8th June 2015 EU Regulation 2015/751 of the European Parliament and of the Council came into effect, governing interbank
commissions on credit card transactions, and published in the Official Journal of the European Union May 19th, 2015. The
regulation has the objective of increasing the level of competition and integration for payment cards in the European market. To
that end, effective 9th December 2015, a limit was established on interbank commissions in the amount of 0.3% of the value of the
individual transaction for credit cards and 0.2% for debit and prepaid cards. Certain options were additionally established for debit
and prepaid cards, which may be activated at a national level and allow for compliance with the above-mentioned 0.2% limit at the
level of each payment card network rather than for individual transactions.
64
The “Private & Corporate Unity” Market23
Private & Corporate Unity proposes an integrated service model for both private banking and
corporate clients, with approximately 86 thousand customers and with managed assets
amounting to approximately €66 billion.
The highest level of service are ensured by approximately 300 Private and Wealth Bankers and
an equal number of Corporate Bankers, present throughout Italy in 48 integrated operational
units, and in specialist centres abroad as well.
The model is based on a solid organisational structure and sound teamwork; Private Bankers,
Wealth Bankers and Corporate Bankers are able to deal with client issues regarding family,
business or synergies between personal and corporate assets.
Through careful strategic and financial planning, "Personal & Corporate Unity" bankers create
an integrated consultancy service that takes into consideration every aspect of the diverse
private and professional moments of the client's life cycle.
In addition to the wide catalogue of products available at the branches of UBI Banca Group
banks, clients also have access to a wide range of innovative tools:
 investment solutions that are advanced, transparent and easily monitored over time, including through investment
consulting offered by Pro AWA (Pro Active Wealth Advisory), for the management of the largest estates. This
investment consultancy service features skilled, specialised professionals and a full technological platform. The
combination of these two elements allows an accurate assessment of the characteristics and needs of customers and
their families, in order to analyse estates and propose the best investment solutions available on international
financial markets.
As part of the Pro AWA investment consultancy service, the Institutional Pro AWA team's activities are dedicated
exclusively to institutional investors (foundations, funds, Onlus non-profit organisations) and companies. In
particular, and in keeping with the objectives of the "Unity" Project, during 2015 consultancy for those businesses,
especially for family concerns having surplus liquidity after covering operational costs and seek professional
consultancy for their medium to long-term financial investments.
Furthermore, the "Portfolio Advisory" project was completed, with the implementation of a consultancy model for
assets under custody portfolios, in addition to the range of consultancy services to be offered to those customers
with less propensity for delegation and having elevated equity and bond portfolios;

products and services specifically designed for businesses (Corporate Advisory), with an orientation that seeks to
bring the Bank closer to the business by sharing scenarios for future growth and by presenting a structured
services offer. Corporate Advisory features an innovative approach to business management and development,
based on the historical analysis of both a business' strong points and areas requiring improvement, with a view to
future growth built upon multi-year forecasts, and business development plans that take into account agreed
stress-tests.
During the year, four macro-sectors (fashion system, food, mechanical and chemical-rubber-plastics) were
identified, on which to focus activities in order to provide customers with a critical analysis of strategic scenario for
sector growth; a structured approach was therefore created in order to identify and present feasible solutions (both
ordinary and extraordinary) that the Bank is in the position to provide in order to best face the competitive
contexts in which companies operate; this "industry practice" approach will continue in 2016;

customised solutions for companies seeking access to structured debt and/or to capital markets in order to invest,
grow and innovate while keeping abreast of the fast pace set by international competition;

solutions designed for the owners and top management of companies, that will provide support at strategic
moments, assisting to provide the best financial conditions for periods of company continuity and discontinuity
alike;

planning and insurance packages designed to optimise equity and income flows over time, additionally guaranteed
by far-reaching consultancy activities (Family Business Advisory) with regard to the management of the personal,
business and real estate assets of the entire family. The Family Business Advisory provides customised solutions
for specific requirements relating to equity protection: capital reorganization and protection, family and corporate
governance, succession planning.
During the past twelve months, the asset management services and products were further
expanded through a number of new arrangements with third party providers.
With the aim of providing a complete and integrated service according to the principles of a
Multi Family Office, Private & Corporate Unity augmented its range of products and services to
include Corporate Lending and Structured Finance (Project and Real Estate Financing,
23 The “Private-Corporate Banking Market” comprises clients with financial wealth (direct and indirect funding) of greater than
€500,000 and firms with turnover of greater than €15 million. More specifically, clients with financial wealth of greater than €2
million are defined as “high net worth” and firms with turnover of over €250 million are defined as “large corporate”.
65
Acquisition Financing, syndicated and club loans, subsidised loans) and in the Investment
Banking area (M&A /Advisory, Equity Capital Market, Derivatives).
Initiatives in collaboration with the European Investment Bank (EIB)
During the last year, the UBI Banca Group continued to offer its corporate clients medium to long-term
financing, at advantageous conditions, of up to twelve years, thanks to the positive long-term
collaboration with the EIB.
In particular, in 2015 a total of 783 loans were granted for a total €357 million, from the following loan
pools.
 a loan pool of €150 million for the purpose of financing Mid Cap corporate customer investments
("Mid Cap II"), subscribed on 27th June 2014;
 a loan pool of €200 million for the purpose of financing SME corporate customer investments (SME
Loans II), subscribed on 18th December 2014;
 a loan pool of €50 million for the purpose of financing SME and Mid Cap business investments
providing employment to young people ("Jobs for Young People"), subscribed on 30th January 2014.
In light of the progressive reduction of the above loan pools, on 18th December 2015 a new loan pool
agreement was subscribed, creating a pool of €250 million for the purpose of financing SME corporate
investments (SME Loans IV).
Also of note is the creation of a loan pool of €50 million, signed on 28th May 2015, for the purpose of
financing medium to long term Mid Cap and SME corporate investments for companies operating in the
agricultural, agri-food and related sectors, such as forestry, fishing, and food production ("Loan for
Agriculture").
The positive co-operation with the EIB is scheduled to continue in 2016 as well, with new loan pools
planned for both SME and Mid Cap customer investments.
Customer Satisfaction
For the eighth consecutive year, Group Customer Satisfaction was surveyed, on the basis of
which each organisation unit is was assigned a satisfaction score relative to the quality of
services performed, as perceived by the unit's customers.
2015 saw an overall rise in levels of satisfaction, especially during the first part of the year.
Scores rose as compared to the previous year in all markets; in particular, the "Unity" market the sum of the Corporate and Private markets - recorded an increase of eight points, and
Retail market satisfaction levels increased by four points.24
For the first time since the customer satisfaction surveys began, individual and corporate
customer satisfaction levels - reaching UBIndex values of 68 and 66 points, respectively exceeded that of the retail segment, which nonetheless also rose, to 64 points.
The progress shown emphasises customer satisfaction as compared to the benchmarks in all
three markets (the levels of which are already superior to those of respective competitors in the
region). +8 point advantage for the Retail segment (still the highest), +5 for the individual
segment and +3 for Corporate sector.
24 Survey performed using CATI (Competitor-Assisted Telephone Interviewing) and CAWI (Computer-Assisted Web Interviewing)
technologies with over 103 thousand private and corporate customers and 11 thousand competitor customers.
66
In 2015 CAWI methodology, to supplement the traditional CATI method, was used to survey
customer satisfaction, in order to provide a "recording" of the Group's customers that is in line
with new operational and behavioural guidelines.
As in previous years, particular attention was paid to the process of the management of any
complaints that emerged during the interviews: the issues reported, corresponding to less than
10% of the interviews conducted, were immediately referred to the network banks in order to
expedite the rapid resolution of each problem.
Over the course of the year, UBI Banca proceeded with the release of the a new and updated
version of its online banking platform QuiUBI: an opinion survey conducted on the perception
of improvement of the services offered revealed that the approximately 80% of regular users
consider the platform to have improved, and over 80% indicate satisfaction in terms of having
their needs met, functionality, ease of navigation and intuitiveness.
As regards product companies, the survey of UBI Leasing services satisfaction levels revealed
score of 62, a 3-point increase over the 2014 figure: customers confirmed that they were very
satisfied with both the signing phase (94%) - which occurs almost exclusively at branch offices
- and with the post-sale stage (92%).
The survey of UBI Pramerica SGR customer satisfaction reveals that 95% of those interviewed
expressed satisfaction with mutual funds and/or portfolio management and related services.
Customer satisfaction levels for non-life insurance products were also above average. Among
the leading motivations for having purchased products were: product advantages, trust in the
intermediary and/or the company.
The customer satisfaction survey was augmented with "ad hoc" surveys aiming to analyse
specific aspects of customer relations with the Group.
Specifically, with regard to corporate customers, a specialised in-depth survey of Italian
companies gauged perceived quality of services received and value-added services offered in
strategic sectors. The survey underscored the increasing importance of professionalism and
the quality of the customer relationship: a framework in which UBI Banca has a wide window
of opportunity and in which the Unity model is demonstrated to be highly successful.
Following on from past surveys, customer satisfaction among companies operating abroad was
analysed: the customers (corporate and SME) utilising UBI Banca services and products were
revealed overall to have higher satisfaction levels (UBIndex 75) compared to regular customers,
67
with a higher score than in 2014; Foreign Banking centre (specialised units located
throughout the country) customers expressed even higher satisfaction levels (UBIndex 84).
The diffusion of the culture of quality and of customer satisfaction brings fundamental
importance to training as well; thus, specific sections on this issue were inserted in
professional training initiatives, such as, for example, training provided for future branch
manages, or as a part of specific human resource development projects. Training events were
also organised to discuss the results of the customer satisfaction surveys.
Internal Customer Satisfaction and the Mystery Client Programme
Internal Customer Satisfaction (CSI) surveys are conducted by interviewing "internal
customers", first and foremost in the distribution network who were asked to provide their
opinions on different products, applications and software provided by the Parent, UBI Sistemi
e Servizi and the product companies.
In 2015, in particular, research focused on satisfaction levels regarding the use of the apps
and management processes for:
• receivables (principally to support mid to long-term loans);
• investments (financial advice platform, and products and services offered by UBI Pramerica SGR);
• payment card payments (traditional and virtual POS terminals);
• relations with mid-corporate business customers (companies having annual turnover of €15-100 million).
Over 10,000 surveys were sent, with an average redemption rate (active participation in the
survey) of approximately 60%: the highest scores - as was found throughout the surveys were for process efficiency and application utility.
The Mystery Client survey permits the monitoring of the quality of bank services performed
during the principal stages of the purchase of products and services by customers (customer
journey), with particular reference to the customer experience.
During the year, the Mystery Client programme was implemented, with visits to a sample of
both the Group's network bank branch offices and to competitor bank branches.
Overall, over 800 visits were made during the principal stages of the customer journey
(welcome, consulting/profiling, proposal, cross-selling and follow-up), for the following
products and services: current account and related services, financial advice on investments
and home mortgages. All evaluations conducted resulted in positive results, but the highest
results were recorded during the welcome and client needs analysis stages.
Quality Project
2015 saw the development of a strategic project aiming to measure the quality expectations of
UBI Banca customers.
The research, which involved two thousand Retail segment customers, lead to the
identification of a number of fundamental quality values.
Specifically, during the first stage of research, approximately thirty quality requirements that
customers associate with the ideal bank were identified. In the remaining portion of the
project, participants were asked to chose, among the items identified, those they considered to
be most essential: simplicity and transparency, relationships and personal acquaintance,
attention to the customer (customer caring).
To respond promptly to the expectations that were revealed and to act upon the priorities that
emerged, the following initiatives were launched:
-
"We are simple and transparent": simplify pre-contract and contractual documentation and
communications, be transparent with regard to costs and adopt more immediate customer relations,
based additionally on simple, non-bureaucratic language.
As part of this initiative, the information sheets and summary documents for banking products, were
revised and simplified in conformity with the new dispositions of the Bank of Italy regarding
transparency and accuracy, and, at the same time, the revision of customer communication was
68
initiated, both in terms of streamlining graphic layout and of standardizing and simplifying language
and content. This initiative will conclude in 2016;
-
"We know you": assist customers in identifying the staff member to contact for diverse requirements
and ensure the continuity of the relationship with the bank, even in the event of a change of the
account manager, thereby ensuring that the customer's history and needs are known.
More specifically, rules for the transition from one account manager to another were defined, and a
number of initiatives aiming to help customers to get to know key staff members of their local
branches were initiated;
-
"Quality consultancy": communicate the value of consultancy services and foster awareness of
investment products.
Evidence collected during the project on quality expectations lead to the identification of the
principal stages of the product and services purchase process on the part of customers
(customer journey) and to the modification of commercial behaviour, also based on the various
types of products offered.
These "distinguishing" behaviours, modified on the basis of precise quality expectations and
therefore strategic for improving customer experience, were codified in a special quality
behaviour catalogue and subsequently sent to the network banks.
Complaint management
Complaint management is a fundamental element for the UBI Banca Group, both from a
commercial point of view, inherent to the customer relations, but also from a strategic point of
view, as a means of ensuring the continued development of products, services and company
processes.
Complaints are one of the sources of information for defining areas of further improvement,
especially because for every client who expresses dissatisfaction, there are likely to be others
who, despite having encountered problems, do not take concrete steps to report the issue.
For that reason, during the year 2015 the Group continued to consolidate a constructive and
pro-active approach to complaint management, including the Parent's constant commitment to
the prevention of controversies and its supervision and co-ordination of the activities of the
network banks and product companies. It is, in fact, extremely important to ensure the
uniformity of the strategies and joint actions employed throughout the Group, in accordance
with the competencies and responsibilities of each sector.
From a purely operational point of view, of note is the use of a software application to support
the central units of the Parent, network banks and subsidiary product companies (UBI
Leasing, UBI Factor, UBI Pramerica SGR and Prestitalia), permitting the annotation of all
issues reported in a "Complaints Register", in addition to the immediate sharing of all
information regarding complaint received, and which serves additionally as a tool for infragroup coordination to support the recording and analysis of results.
Initial complaints received by the Group in 2015 are as follows:
Total UBI Banca Group
-
of which network banks
of which product companies
of which UBI Banca
19,520
6,944
7,223
5,353
During the year, after having been implemented by the Bank of Italy, the "Guidelines for
complaints-handling for the securities and banking sectors", published on 13th June 2014 by
the Joint Committee of the European Supervisory Authorities and promoted by the EBA
(European Banking Authority) and the ESMA (European Securities and Markets Authority)
went into effect.
Following this regulatory development, and also in order to comply with revisions published on
the topic of transparency, the Group acted swiftly to carry out the necessary verifications for
the implementation of the changes.
In line with the directives on transparency and with the guidelines adopted by the Group,
customers may use all possible means of communication.
69
Thus it has emerged that remote communications channels (for example, email and dedicated
pages on the Group's company websites) represent, with approximately 86%, the most utilised
method for formally reporting complaints, while the paper channel represents 14%.
Distribution of complaints by channel of receipt in 2015
Verbal/Telephone
0.1%
Hardcopy
14.0%
Remote Channels
85.9%
Claims and complaint management in the network banks
In 2015, the network banks (including the new IW Bank Spa25) received 6,944 first instance
complaints, up approximately by 23% when compared with the previous year, attributable to
the inclusion (beginning at the end of 2014) of complaints regarding CartaSì debit and prepaid
cards.
The percentage of solutions in favour of customers was 47% (+37 compared with 2014), with an
increase of 5% in the overall amounts paid out compared with the twelve previous months.
On average, complaints were resolved in 28 days, in full conformity with legally established
deadlines.
In terms of complaints received per branch, 14% of the local branches did not receive any
complaint made against them at all during the entire twelve-month period.
Overall, the number of complaints received by network banks as compared to the entire
customer base totals 1.94 complaints per 1,000 customers.
Distribution of branches on the basis of complaints received
Branches with no
complaints14%
Branches with 1
complaint
16%
Branches with >2
complaints
55%
Branches with 2
complaints
15%
25 Following the merger operation that lead to the creation of the new IW Bank Spa, the composition of the aggregates of network
banks (where the new company was inserted) and product companies (among which are currently included UBI Leasing, UBI
Factor, Prestitalia and UBI Pramerica SGR) was modified. This modification also made necessary an adjustment, for the sake of
coherence, to the 2014 data base; therefore, the comparative data presented below (and in the following paragraph) vary from those
published in the 2014 Annual Accounts.
70
Analysis by product and/or service confirms, as mentioned above, the significant relevance of
the new segment credit and debit cards, with 39% of all complaints (17% in 2014), while other
significant categories, although all showed decreases, were current accounts and savings
deposits (falling from 37% to 27%) and loans and mortgages (from 22% to 12%). As a
percentage of the total, on the other hand, complaints regarding securities and investment
services and collection and payment services remained stable.
Complaints by Product or Service
0.0%
10.0%
20.0%
30.0%
17.0%
26.8%
Current and deposit accounts
37.1%
12.3%
Loans and mortgages
22.1%
Collection and payment
services
7.6%
7.4%
Securities and investment
services
7.6%
8.1%
Insurance products
Other
50.0%
39.2%
Credit and debit cards
General aspects
40.0%
2015
2014
1.5%
1.9%
1.1%
1.3%
3.9%
5.1%
An analysis of the reasons given for the complaints received demonstrates a decided increase
in the contestations connected to fraud and lost cards (debit cards) which, at 29% of the
overall, have become the leading segment, followed by the transactions performance stage
(rising from 19% to 25% and conditions/application of conditions (which fell from 21% to
12%).
The data, moreover, demonstrate a reduction of complaints connected to the compounding of
interest (from 11% in 2014 to 7%) and to customer communication and information (from 11%
to 8%).
Complaints by grounds
0.0%
10.0%
20.0%
14.1%
24.5%
Execution of transactions
19.3%
9.1%
Other
13.6%
7.8%
10.5%
7.1%
Communication and information to customer
Conditions
15.2%
6.9%
Compounding of interest
Organisational aspects
Reports to the centrale rischi (central credit bureau)
Creditworthiness or similar
Personnel
Equipment malfunctions
40.0%
28.6%
Frauds and losses
Application of conditions
30.0%
5.2%
6.1%
10.9%
2015
2014
2.8%
1.7%
2.7%
2.8%
2.5%
2.4%
1.6%
1.9%
1.2%
1.5%
Repetitions of initial complaints were as follows:
- 1,004 repetitions, a small increase from the 954 of 2014;
- 206 appeals to alternative mediation bodies (Financial Banking Arbitrator, Banking
Ombudsman, the Italian Personal Data Protection Authority, Consob – the Italian securities
market authority) compared to 172 in 2014.
Overall, 1,246 repetitions were filed (1,130 in 2014); in addition to direct repeat complaints to
the network banks, there were 262 complaints filed with various Supervisory Authorities, a
decrease from the 348 of the previous year.
71
During the year there were 1,166 mediation procedures, compared with 1,517 of the previous
year: of these, 1,142 (98%) were almost totally concluded during the course of the year.
Mediation procedures resulting in a positive outcome with a payment to the customer were
limited to 43.
Complaint and controversy management in the product companies
In the course of the year, the product companies received 7,223 initial complaints, 1,347
repeat complaints, 1,601 appeals to alternative mediation bodies (Financial Banking
Arbitrator, Banking Ombudsman, the Italian Personal Data Protection Authority, the Consob –
Italian securities market authority) and 112 complaints filed with various Supervisory
Authorities.
The companies were also invited to participate in 376 mediation processes.
The majority of complaints received by product companies related to Prestitalia (97%), an
increase of 112% over 2014, attributable to requests (increasingly frequent throughout the
system) for the "compensation" for loan commissions and insurance costs related to salary and
pension backed loans repaid ahead of schedule during the last ten years and based on
contracts which are by now out-of-date.
These specific complaints involved a number of significant law suits, brought by "specialised"
law firms.
In 2015 the product companies processed 8,416 complaints, 1,439 repeat complaints, 1,948
appeals (Financial Banking Arbitrator and the Banking Ombudsman), 111 complaints filed with
various supervisory authorities, and 374 mediation processes.
In particular, 54% of first instance complaints were resolved in favour of the customer, up
from 41% in 2014.
Overall, during the year 3,386 repeat complaints were resolved (535 in 2014).
In addition to direct repetitions, there were 112 complaints filed with Supervisory Authorities,
compared with 71 the previous year, while of the 374 total mediation procedures, only eleven
cases resulted in payment to the customer.
Claims and controversy management at the Parent
For information concerning the Parent please see the contents of the UBI Banca Spa
consolidated management report.
72
The distribution network and market
positioning
The Group’s branch network
The distribution network of the UBI Group as at 31st December 2015 consisted of 1,560
branches (unchanged as at the time of publication of the present report), of which 1,554 in
Italy; this was a decrease of 114 branches compared with the end of 2014.
The branch network of the UBI Banca Group in Italy and abroad
number o f branches
31.12.2015
31.12.2014
Change
UBI Banca Spa
Banca Popolare di Bergamo Spa
Banco di Brescia Spa
4
349
288
4
354
316
-5
-28
Banca Popolare Commercio e Industria Spa (1)
Banca Regionale Europea Spa (2)
Banca Popolare di Ancona Spa
Banca Carime Spa
196
210
208
216
212
243
213
242
-16
-33
-5
-26
65
21
3
66
21
3
-1
-
Banca di Valle Camonica Spa
IW Bank Spa (3)
UBI Banca International Sa - Luxembourg
TOTAL
1,560
1,674
-114
Total Branches in Italy
1,554
1,668
-114
Financial advisors (4)
ATMs
POS TERMINALS
824
2,326
68,082
713
2,268
63,491
111
58
4,591
(2)
(3)
(4)
1
The
year-to-year
change
is
attributable almost entirely to a
process of rationalising the branch
network’s geographical coverage,
which took effect on 19th January
2015 and led to the closure of 52
branches and 58 mini-branches 1 ,
along with the transformation of 57
branches into mini-branches and
two mini-branches into branches.
(
1
)
T
h
e figures do not include nine units dedicated exclusively to pawn credit.
The figures include three foreign branches.
Effective 25 May 2015, IW Bank merged into UBI Banca Private Investment, and the latter was renamed IW Bank SpA. The figures shown do not
include two supporting branches not open to the public that had been counted in the total number reported in the 2014 Financial Statements.
Includes the financial advisors belonging to the Wealth Management division of the new IW Bank Spa.
Here is a detailed list of the locations of branch closures effective 19 January 2015:
- BANCA POPOLARE DI BERGAMO: in Bergamo: Via Gleno; elsewhere in Bergamo province: Scanzorosciate (Via Collina Alta Frazione
Tribulina); in Como province: Mariano Comense (Viale Lombardia).
- BANCO DI BRESCIA: in Brescia: Via Trento, Via San Giovanni Bosco, Via della Chiesa, Via Prima Frazione Villaggio Badia, Piazzale
Nava Frazione Mompiano, and Via Vittorio Emanuele II; elsewhere in Brescia province: Botticino (Via Don Milani), Montichiari (Via
Cavallotti), Palazzolo sull’Oglio (Via Brescia), Roncadelle (Via Marconi c/o Auchan); in Bergamo: Via Don Luigi Palazzolo; elsewhere
in Bergamo province: Medolago; in Cremona province: Castelleone; in Mantua: Viale Divisione Acqui; elsewhere in Mantua
province: Asola and Magnacavallo; in Pordenone province: Prata di Pordenone; in Latina: Via della Stazione; in Viterbo: Via
Venezia Giulia; elsewhere in Viterbo province: Bassano in Teverina; in Padua province: Noventa Padovana; in Verona: Via Murari;
elsewhere in Verona province: Isola della Scala, San Bonifacio, San Martino Buon Albergo and Sona Frazione Lugagnano; in
Vicenza province: Montecchio Maggiore; in Treviso province: Oderzo;
- BANCA POPOLARE COMMERCIO E INDUSTRIA: in Milan: Viale Piave, Via Panizzi and Via Ampére; elsewhere in Milan province: Canegrate,
Cinisello Balsamo (Viale Umbria), Peschiera Borromeo and Pregnano Milanese; in Pavia: Viale Matteotti c/o Istituzioni
Assistenziali Riunite; elsewhere in Pavia province: Borgarello, Casei Gerola, Casorate Primo, Portalbera, Robbio, Vigevano (Via
Sacchetti) and Vistarino; in Reggio Emilia province: Correggio;
- BANCA REGIONALE EUROPEA: in Cuneo: Via Luigi Gallo, Corso Nizza and Piazzale Repubblica (Frazione Castagnaretta); in Alba: Corso
Langhe (Frazione Borgo Moretta); elsewhere in Cuneo province: Bastia Mondovì, Bernezzo Frazione San Rocco, Borgo San
Dalmazzo (Via Po), Bra (Via Don Orione, Frazione Bandito), Dronero (Viale della Stazione), Gaiola, Monastero Vasco, Mondovì
(Corso Europa), Robilante, Rossana, Torre San Giorgio; in Alessandria province: Brignano-Frascata and Silvano d’Orba; in Asti:
Corso Savona; in Novara: Corso della Vittoria; elsewhere in Novara province: Romentino; in Turin: Piazza Adriano and Corso
Sebastopoli; elsewhere in Turin province: Alpignana; Genoa: Via Fieschi; elsewhere in Genoa province: Recco; Imperia: Via
Puccini; La Spezia: Via di Monale and Piazza d’Armi c/o comprensorio Maridipart; elsewhere in La Spezia province: Portovenere; in
Savona province: Alassio, Celle Ligure and Finale Ligure;
- BANCA POPOLARE DI ANCONA: in Macerata province: Monte San Martino; in Caserta province: Marcianise Frazione Oromare and
Pignataro Maggiore; in Naples province: Casamicciola Terme; in Rome province: Guidonia Montecelio (Piazza Colleverde);
- BANCA CARIME: in Cosenza province: Corigliano Calabro, San Lucido and Spezzano della Sila (Via Roma); in Lamezia Terme: Via del
Mare; in Catanzaro province: Tiriolo; in Reggio Calabria province: Marina di Gioiosa Ionica; in Vibo Valentia: Via Emilia Frazione
Vibo Marina; elswherhe in Vibo Valentia province: Mileto; in Matera province: Ferrandina, Montescaglioso and Tursi; in Potenza:
Via Dante; elsewhere in Potenza province: Brienza, Palazzo San Gervasio, Sant’Arcangelo and Venosa; in Salerno: Viale Kennedy;
elsewhere in Salerno province: Amalfi and Vallo di Lucania; in Bari: Via Pescara; elsewhere in Bari province: Bitritto and
Conversano; in Andria: Via Barletta; in Barletta: Largo delle Palme; San Ferdinando di Puglia (Barletta Andria Trani province); in
Taranto province: Sava.
73
Changes to branches made in 2015
Closures/mergers of:
Merged
branches
branches
mini-branches
Transformation of Transformation of
branches into
mini-branches
mini-branches
into branches
IW Bank Spa
-
2
-
-
-
IW Bank Spa (former UBI BPI)
2
-
-
-
-
2
54
62
57
2
Banca Popolare di Bergamo Spa
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
Banca Regionale Europea Spa
Banca Popolare di Ancona Spa
Banca Carime Spa
Banca di Valle Camonica Spa
TOTAL
-
5
2
-
14
14
9
-
7
9
4
13
20
30
-
1
-
-
5
8
18
8
4
1
-
1
-
-
In addition to the changes cited above, we report that: a BPB mini-branch located within the
Novartis Italia offices in Saronno (Varese province) was closed in June; mini-branches of
Banca di Valle Camonica and BRE, with respective locations in Villa di Tirano (Sondrio
province) and Corso Vittorio Veneto, Savona, ended operations in July; and a BPB operating
point in Cuvio (Varese province) was closed in November.
A full list of all Group branches in Italy and abroad is given in the last pages of this publication.
The Italian branch network is completed by the UBI Banca Private & Corporate Unity division,
which at the end of the year had 125 centres (48 PCUs and 77 “corners”) operational
throughout Italy. This is three fewer than on Private & Corporate Banking Units
31st December 2014, after the closure of the
31.12.2015 31.12.2014
BRE Cuneo Nord PCU (in January) and the
Private & Corporate Banking Units
125
128
termination of operations at both a BPCI Private
& Corporate Banking "Unity" Units
“corner” in Reggio Emilia (in September) and a (PCU) (*)
48
49
Banca Popolare di Bergamo
12
12
BPA corner in Pescara (in December).
Coverage of the market continues to be
provided by a network of 824 financial advisors
who report to the new IW Bank SpA, up from
the 713 under UBI Banca Private Investment
at the end of December 2014, mainly as a
consequence of an external growth strategy.
Banco di Brescia
Banca Popolare Commercio e Indus tria
Banca Regionale Europea
Banca Carime
Banca Popolare di Ancona
Banca di Valle Camonica
"Corners"
Banca Popolare di Bergamo
Banco di Brescia
Banca Popolare Commercio e Indus tria
Banca Regionale Europea
Banca Carime
Banca Popolare di Ancona
Banca di Valle Camonica
9
7
6
5
7
2
77
9
7
7
5
7
2
79
24
12
8
4
6
21
2
24
12
9
4
6
22
2
(*) T he figures does not include three UBI Banca units operational
since 6th May 2013 and dedicated to corporate customers only.
74
International presence
At the date of this report the international presence of the UBI Banca Group was composed as
follows:

one foreign bank, UBI Banca International SA (with registered office in Luxembourg and
branches in Munich and Madrid);

three foreign branches of Banca Regionale Europea in France (in Nice, Menton and
Antibes);

representative offices in Sao Paulo in Brazil, Mumbai, Shanghai, Hong Kong 2 , Moscow,
Dubai3 and New York4;

investments (prevalently controlling interests) in three foreign companies: UBI Trustee SA,
UBI Management Co. SA and Zhong Ou Asset Management Co. Ltd;

a branch of UBI Factor SpA in Krakow, Poland;

34 commercial co-operation agreements with foreign banks (covering over 50 countries),
plus three trade facilitation agreements – with the European Bank for Reconstruction and
Development (EBRD), with the International Financial Corporation (IFC) and with the Asian
Development Bank (ADB)5 – as well as a “product partnership” in the Middle East and in
Asia to provide effective assistance to corporate customers in all the principal markets in
those areas.
The agreement with ADB, signed in the first half of the year, foresees the Parent and the network banks
subscribing as Confirming Banks, with the chief aim of acquiring new trade finance operations with Asian
countries and with Asian banks where the risk is mitigated, if not eliminated, by ADB guarantees.
Again in 2015, the UBI Banca Group sponsored events of national and international
importance in order to increase the visibility of its brand in Italy and abroad and to
consolidate its close relationships with customers operating on international markets.
2 As from 30th November 2015, following the publication of two ministerial decrees in the Official Journal on 18th November 2015,
Hong Kong is no longer on Italy’s “black list” for financial transactions. Since that date, all expenses and charges associated with
transactions executed with operators located in Hong Kong have been tax deductible according to ordinary business income rules,
and equity interests in Hong Kong resident companies are no longer subject to Controlled Foreign Companies (CFC) regulations.
Financial intermediaries that act as withholding agents in collecting the dividends distributed by such companies will now apply, for
Italian beneficiaries, the standard withholdings on foreign dividends
3 Having obtained the necessary authorisation and licence from local authorities on 28th May, the procedure to open a representative
office in Dubai was completed on 3rd August 2015.
4 Having received the necessary authorisation and licence from the US Federal Reserve and the New York State Department of Financial Services on 19th January
2016, the Group’s new representative office in New York was opened on 20th January. In addition, we report that after acquiring Casablanca Finance City status
in January, the Group received authorisation from the Moroccan Central Bank on 8th February 2016 to open a representative office in Casablanca.
5 ADB is a multilateral development bank headquartered in Manila, Philippines. Founded in 1966, it now has 67 member states, 48 of
which are Asian.
75
The positioning of the Group
The table summarises the positioning of the UBI
Group in terms of branches, both with respect to the
national and to the regional and provincial markets
where the banks operating in the Group have a
more significant presence.
The information is based on the most recent data made
available by Bank of Italy: 30th September 2015.
The updated figures show a decrease in some
provinces since the end of 2014, attributable in part
to the effects of the rationalisation carried out in
January 2015.
The Group’s national market share therefore
decreased to 5.1%, but was over 10% in 13 Italian
provinces and substantial in both Milan (9%) and
Rome (over 4%).
(*)
UBI Banca Group: market shares
North Italy
31.12.2014
Branches
Branches
6.0%
6.3%
Lombardy
Prov. of Bergamo
Prov. of Brescia
Prov. of Como
Prov. of Lecco
Prov. of Mantua
Prov. of Milan
Prov. of Monza Brianza
Prov. of Pavia
Prov. of Sondrio
Prov. of Varese
12.9%
22.6%
22.0%
6.3%
6.3%
4.6%
9.0%
8.6%
13.1%
7.4%
24.2%
13.2%
22.7%
22.7%
6.5%
6.3%
5.5%
9.1%
8.5%
15.0%
8.2%
24.3%
Piedmont
prov. of Turin
Prov. of Alessandria
Prov. of Cuneo
Prov. of Novara
6.9%
2.8%
10.8%
20.4%
2.5%
7.7%
3.0%
11.5%
22.7%
3.5%
Liguria
Prov. of Genoa
Prov. of Imperia
Prov. of La Spezia
Prov. of Savona
4.4%
4.0%
4.7%
6.5%
3.8%
5.5%
4.3%
5.7%
8.7%
6.1%
Central Italy
3.3%
3.3%
Marches
Prov. of Ancona
Prov. of Fermo
Prov. of Macerata
Prov. of Pesaro and Urb ino
7.4%
9.8%
10.6%
7.7%
5.0%
7.4%
9.6%
10.7%
8.1%
4.9%
Latium
Prov. of Rome
Prov. of Viterb o
4.1%
4.1%
13.4%
4.3%
4.1%
14.1%
South Italy
7.1%
7.7%
Campania
Prov. of Naples
Prov. of Caserta
Prov. of Salerno
5.3%
4.9%
8.6%
6.2%
5.6%
4.9%
9.3%
6.9%
18.5%
10.6%
22.3%
14.3%
20.2%
19.4%
19.8%
12.2%
23.1%
14.7%
20.9%
24.3%
Basilicata
Prov. of Potenza
Prov. of Matera
8.6%
8.6%
8.6%
11.8%
11.5%
12.5%
Apulia
Prov. of Bari
Prov. of Brindisi
Prov. of Barletta Andria Trani
Prov. of Taranto
7.3%
9.3%
9.7%
5.4%
8.4%
7.8%
9.8%
9.6%
7.8%
9.0%
Total Italy
5.1%
5.4%
Calabria
Prov. of Catanzaro
Prov. of Cosenza
Prov. of Crotone
Prov. of Reggio Calab ria
Prov. of Vib o Valentia
(*) So urce B ank o f Italy: Statistics B ulletin
76
30.9.2015
Human resources
The composition of Group staff and changes in 2015
Group staff
Employees actually in service
Number
Banca Popolare di Bergamo Spa
Banco di Brescia Spa
Banca Carime Spa
UBI Banca Spa
Banca Regionale Europea Spa
Banca Popolare Commercio e Industria Spa
Banca Popolare di Ancona Spa
Banca di Valle Camonica Spa
IW Bank Spa*
UBI Banca International Sa
TOTAL FOR BANKS
UBI Sistemi e Servizi SCpA
UBI Leasing Spa
Prestitalia Spa
UBI Pramerica SGR Spa
UBI Factor Spa
UBI Academy SCRL
UBI Trustee Sa
BPB Immobiliare Srl
UBI Fiduciaria Spa**
UBI Management Company Sa
S.B.I.M. Spa
Centrobanca Sviluppo Impresa SGR Spa***
TOTAL
Workers on staff leasing contracts
TOTAL STAFF
TOTAL STAFF FTE
On secondment outside the Group
- out
- in
TOTAL WORKFORCE
Employees on the payroll
31.12.2015
31.12.2014
Changes
31.12.2015
31.12.2014
Changes
A
B
A-B
C
D
C-D
3,588
2,368
1,827
1,730
1,653
1,559
1,545
349
298
88
3,614
2,434
1,935
1,675
1,765
1,607
1,588
353
348
101
-26
-66
-108
55
-112
-48
-43
-4
-50
-13
3,648
2,379
1,975
2,486
1,794
1,734
1,628
330
297
84
3,666
2,442
2,093
2,487
1,857
1,786
1,676
338
321
95
-18
-63
-118
-1
-63
-52
-48
-8
-24
-11
15,005
15,420
-415
16,355
16,761
-406
2,002
212
177
151
137
15
6
4
4
4
1
-
1,983
224
152
151
136
15
5
8
22
4
1
1
19
-12
25
1
1
-4
-18
-1
834
208
82
117
124
5
4
2
3
-
822
212
71
118
128
4
4
17
3
-
12
-4
11
-1
-4
1
-15
-
17,718
18,122
-404
17,734
18,140
-406
-
-
-
-
-
-
17,718
18,122
-404
17,177.9
17,661.9
-484.0
23
22
1
17,741
18,144
-403
7
7
-
17,741
18,147
-406
*
In data 25 maggio 2015 è divenuta efficace l’operazione di fusione per incorporazione di IW Bank in UBI Banca Private Investment. La nuova Società ha
assunto la denominazione di IW Bank Spa.
**
In data 30 aprile 2015 è stato perfezionato il trasferimento di un ramo d’azienda di UBI Fiduciaria Spa a favore di Unione Fiduciaria Spa che spiega il
decremento del numero di dipendenti effettivi e a libro paga rispetto al dicembre 2014.
***
Al 31 dicembre 2015 erano operative presso la Società 2 risorse parzialmente distaccate da altre Società del Gruppo e pertanto non computate tra i
dipendenti effettivi in servizio.
The table above gives details for each company of the actual distribution of ordinary employees (workers on permanent and temporary
contracts and on apprenticeship contracts) within the Group as at 31st December 2015, adjusted to take account of secondments to and
from other entities within or external to the Group (column A) compared with the position at the end of 2014 (column B) restated on a
consistent basis. Column C, on the other hand, gives details for each company of the number of employees on the payroll as at 31st
December 2015 compared with the end of 2014 restated on a consistent basis (column D).
The figures provided in the 2014 Financial Statements have been adjusted as follows:
UBI Gestioni Fiduciarie Sim Spa has been removed from the Group’s consolidation base as a consequence of the sale of that Company
on 12th January 2015. Because the company’s three employees thus went on secondment to a company outside of the Group, the
number of staff “on secondment outside the Group – out” has been increased accordingly as at 31st December 2014;
Coralis Rent Srl – in liquidation has been removed from the Group’s consolidation base, following the completion of that Company’s
liquidation proceedings on 31st December 2015.
77
At the end of 2015, the total workforce of the UBI Banca Group numbered 17,718 people, 404
fewer than the 18,122 (restated on a consistent basis) in December 2014.
In terms of full-time equivalents (FTE), that is, taking into account the effect of part-time employees, the group’s workforce
decreased by 484 units, from 17,661.9 to 17,177.9.
This significant decrease in the workforce was concentrated in the first quarter of the year,
when 86% of the 500 voluntary redundancies foreseen under the Framework Agreement of 26
November 2014 were completed. In order to promote generational turnover and youth
employment policies, this staff efficiency action was accompanied by the gradual hiring of 340
new employees (282 of which to their first job, while the other 58 had prior experience), as well
as the conversion of 223 temporary job contracts into permanent contracts, consistent with
the provisions of trade union agreements and memoranda of understanding signed over the
past few years.
With regard to the aforementioned redundancies, the total workforce was consequently
reduced in all of the Group’s main companies, with the following notable exceptions:
• UBI Banca, as a result of both the centralisation of some IW Bank activities outsourced to it
(most notably, tax and administrative affairs, loans, anti-money-laundering, legal affairs
and compliance) and the reinforcement of some specialised “multichannel” retail banking
activities and “banking service compliance”;
• UBI Sistemi e Servizi, related to the development of customer assistance services, contact
centres, digital and mobile banking services, support units and help desk services;
• Prestitalia, related to the reinforcement of complaints/ risk control units and distribution
network management.
The trend by contract type of
staff on permanent employment
contracts included in the table
shows an overall reduction in the
payroll of 406 staff over the
twelve months, mainly due to the
decrease in the number of
permanent contracts.
Employees on the payroll
31.12.2015
Number
Total employees
of which: permanent
on temporary contracts
apprentices
31.12.2014
17,734
17,647
18,140
17,943
84
153
3
44
Change
-406
-296
-69
-41
In detail, this decrease is the result of the following:
807 departures, of which 691 were permanent contracts (thanks in part to the use of the
sector fund), two apprenticeships and 114 temporary contracts;
- 401 new hires, of whom 162 on permanent contracts and 239 on temporary contracts.
-
Contributing to the change in the number of staff on flexible contracts shown in the table were
the 233 ‘stabilisations’ (i.e. transformations of temporary contracts into permanent ones) that
occurred in 2015 in accordance with the provisions of the aforementioned trade union
agreements.
Both appointments and departures due to the end of flexible contracts include movements of
43 seasonal employees in the workforce at BPB Immobiliare during the summer.
of reduced and/or suspended working hours requested
With regard to the provisions of the 26th November 2014 Framework Agreement regarding
extraordinary leave, the approximately 120 thousand days granted for 2015 were taken
compatibly with the workload and organisational requirements of individual Group units and
companies (compared with about 121 thousand days granted in 2014).
No significant changes in the composition of Bank staff by rank occurred compared with the
previous year.
As at 31st December 2015 the average age of Group employees was 46 years and five months,
only four months higher than the figure recorded at the end of 2014 (46 years, one month) due
to the impact of generation turnover related to departures by reason of adherence to
redundancy plans. The average length of service following similar dynamics was 19 years and
nine months, compared with 19 years and five months in 2014.
78
The percentage of ordinary Composition of staff in Group Banks by rank
employees
on
part-time
contracts was 12% at the end Number
31.12.2015
%
31.12.2014
%
of last year, up from 9.3% the
295
1.8%
315
1.9%
previous year. In fact, the Senior managers
2,925
17.9%
3,017
18.0%
Framework
Agreement
of Middle managers 3rd and 4th level
4,042
24.7%
3,976
23.7%
November
2014
facilitates Middle managers 1st and 2nd level
3rd Professional Area (office staff)
8,921
54.5%
9,266
55.3%
requests for changes from a 1st and 2nd Professional Area (other staff)
172
1.1%
187
1.1%
full-time to a part-time work
TOTAL FOR BANKS
16,355
100.0%
16,761
100.0%
contract, it whichever form it
may be, with particular attention to those staff members facing difficult family or personal
circumstances. Another possible reason for the increase in part-time employment is the
increase in the percentage of female staff to 38.5% of the total (from 37.8% at the end of 2014).
Further details on the composition of and changes in Group staff numbers are given in the
appropriate sections of the 2015 Social Report to be published shortly.
***
Compared with the 17,745 staff members employed as at 30th September 2015, in the fourth
quarter there was a net reduction in the workforce of 27 employees, as a result of 83 contract
terminations, 3 employees placed on secondment outside of the Group, and 59 new hires
(most of whom on permanent contracts).
Remuneration and incentive policies
The remuneration and incentives policies are found in the remuneration report in another part
of this publicationnnn and it may also be consulted on the corporate website at
www.ubibanca.it as part of “Shareholders’ Meetings” in the Shareholders Section –
Shareholders’ Meeting of 2nd April 2016.
The report was prepared in accordance with articles 123 ter of the Consolidated Banking Act
and 84 quater of the Issuers' Regulations and with the supervisory regulations on
“Remuneration and incentive policies and practices” of banks and banking groups issued on
18th November 2014 implementing the provisions contained in European Union Directive CRD
IV (2013/36/EU) and the policies developed internationally.
Reference is also made to public disclosure requirements under Pillar III as regulated by EU
Regulation No. 575/2013 (known as the CRR).
Further information is given on the matter in the UBI Banca report on corporate governance,
again in an attachment to this document.
79
Trade union relations
In 2015 relations with trade unions focused on reaching agreements to both protect and
transfer personnel involved in the Group’s corporate structure optimisation programmes, as
well as on the progressive monitoring of the implementation of the measures contained in
previous agreements.
Furthermore, bearing in mind that the market environment has remained critical in general,
the Group has continued to pursue the goal of recapturing operational efficiency and
profitability. Once again for 2016, the Group will adopt methods of work flexibility and staff
departure incentives.
The main areas on which discussions were held with union representatives are reported below;
for more details, please see the section entitled “Significant Events of 2015”.
• On 4th February 2015, a Statement of Agreement was signed to regulate the consequences
for personnel deriving from the merger of IW Bank into UBI Private Investment, which led to
the creation of the new IW Bank.
• From 10th to 23rd March 2015, the two sides discussed the consequences of the disposal of
a business line of UBI Fiduciaria (that manages fiduciary services for customers of the
Group) to Unione Fiduciaria SpA; this procedure was concluded on 24th March 2015.
• From 23rd June to 28th September 2015, with regard to the branch network, parent UBI
Banca, UBI Sistemi e Servizi, and the Group’s product companies, procedures to be used to
determine annual bonuses for the 2014 financial year were agreed and put into effect; for
each company, these procedures took into account financial trends for the period, the
overall economic situation, and the specific situation in the banking sector. In agreements
signed for all banks and companies of the Group involved, it was also established, as in
previous years, that it would be best to employ different and innovative instruments in
addition to a cash payment, including a “welfare plan option” allowing staff to use the
bonus compensation due to them to pay for services of a social nature (e.g. educational
expenses, or an additional contribution to the company pension fund).
• On 21st November 2015, a Memorandum of Intent was signed in regard to adopting
methods of work flexibility within the Group in 2016;
• On 23rd December 2015, for the entire Group, an agreement was reached that establishes
how the voluntary redundancy plan will be implemented, as already determined during the
previous year.
***
Periodic meetings were also held as required under the various labour contract procedures, as
were meetings to provide reciprocal updates and verification of prior agreements, plus
meetings for other occasions, such as equal partnership committees and bilateral oversight
committees on corporate social responsibility, the corporate climate, training and equal
opportunities matters.
***
At national level, on 31st March 2015, the Italian Banking Association (ABI) and various trade
unions agreed to extend the national labour contract (CCNL) pertaining to credit institutions.
This agreement was ratified by the parties involved on 8th July, after its contents were
approved at the trade unions’ general meetings. Also, on 13th July 2015, an agreement was
signed to renew the national labour contract for managerial staff.
80
Training
Over 87,000 days of training activities were delivered in 2015, above the goal of 80,000 days,
with an average of over five training days per person.
In terms of substance, training was provided in the following areas:
•
•
•
•
•
•
•
•
•
•
steady enhancement of the skills of distribution network personnel and support to develop the
customer service model and to spread a "culture of quality" through targeted sessions for key
salespersons on the Retail and Unity networks, as well as dedicated specialised training for
the best performers on the Unity market;
qualification courses for potential future Branch Managers;
introduction of a new methodology, on an experimental and voluntary basis, to verify
professional knowledge, in addition to the usual post-training tests, for staff in retail asset
management roles (Small Business and Affluent segments);
activities to improve abilities and behaviour through a new edition of the University Master’s
programme in Banking Company Management for young talents, in partnership with the
Milan Polytechnic School of Management (MIP); furthermore, continuation of the Talents
Project with mentoring and business case seminars, as well as attendance at the I.S.E.O.
Summer School and programmes on inclusion;
facilitation of active learning about new regulations, such as: new default classification
definitions (forbearance), updated anti-money-laundering regulations and Form 231, and
regulations on transparency;
support pertaining to the merger of IW Bank and UBI Banca Private Investment, by means of
plenary training sessions and side-by-side ‘internships’ to foster the integration of the two
companies’ information and commercial systems;
managerial training, focusing on: effective communications, team leadership, propensity for
change, specific managerial skills and behaviour via outdoor team-building sessions and
high emotional impact methods;
teacher training school, for the continuing qualification and training of over 500 employeeinstructors;
completion of the first year of a new two-year IVASS (insurance authority) regulations
refresher course, using methods consistent with the directives of Regulation no. 6/2014,
aiming to facilitate the use of appropriate sales propositions to customers for insurance
products;
English language skills improvement for about 1,400 employees of the Group, via a new
online platform with a leading language school.
Training activities by subject area in 2015
2015
Classroom
Subject area
Insurance
Remote
training
Internship
2014
Total person/days
%
of training
Total person/days
of training
%
5,709
18,837
3,457
28,003
32.2%
27,280
33.7%
10,760
1,883
6,205
18,848
21.7%
16,439
20.2%
Credit
Managerial-Behavioural
6,244
8,304
1,409
4,605
1,233
672
8,886
13,581
10.2%
15.6%
4,137
14,009
5.1%
17.2%
Regulatory
3,877
8,538
167
12,582
14.5%
14,149
17.4%
752
1,726
2,607
5,085
5.8%
5,217
6.4%
35,646
36,998
14,341
86,985
100.0%
81,231
100.0%
Commercial and Finance
Operational and other subjects
TOTAL
As shown in the table, about 38% of the total training activity (vs. 32% in 2014) was dedicated
to enhancing the technical and professional skills (operational, commercial, credit and
financial) of branch network staff. The subject of insurance accounted for 32% of the training
delivered during the year, while the remaining 30% was split nearly evenly between refresher
courses on regulations and managerial/behavioural training.
81
***
For 2016, the overall training programme foresees investing in about 80,000 days (50% in
traditional classroom settings, 35% remote and 15% using other methods such as internships
and on-the-job training).
The main goal of this plan is to foster the constant improvement of each individual’s
productivity, in concert with an improvement in the quality of customer relations, with
particular attention to:
• reinforcing skills and specialisation in each individual role by extending the “position skills
survey” to all sales positions, in order to design customised training courses;
• continuation of activities in support of improving abilities and behaviour, by means of training
courses aiming to cultivate the Group’s managerial culture, including the development of a
‘self-training’ platform;
• continuation of partnerships with leading local universities through special Master’s degree
programmes for young talented individuals and programmes on inclusion;
• developing a culture of certification for the various positions, something currently used only
for Branch Managers, by gradually introducing qualification for the position of Instructor;
• constant support for active learning of regulations and how they are evolving, by means of
interaction between instructors and learners enabling the latter to concretely apply their
knowledge in their jobs, particularly for credit loan quality monitoring, anti-moneylaundering, Form 231, transparency regulations, the ESMA/MiFID Directive,
whistleblowing procedures, the bail-in mechanism, cyber-security awareness, business
continuity and security management.
Internal communications
Over the course of 2015, internal communications evolved towards a Company Multichannel
Experience. The aim is to realise the full potential of all available internal communications
channels, first and foremost by taking advantage of current technology and ongoing digital
transformations so as to strengthen the sense of belonging, participation and motivation
among the staff.
Most communications are made through the UBILife Corporate Portal, by publishing videos,
news and articles on the home page, and by enhancing each section, especially the company’s
online magazine YOUBI with daily updates of key activities and events for each branch on the
network, including daily blog posts.
One new initiative is an online newsletter signed by the individual managing directors of the
network banks, sketched out for each respective audience. The first edition of this newsletter
was published early in the year and discussed the 2014 financial statements as well as
prospects and strategies for 2015. The second edition was published on the occasion of
interim results.
Also, in November, edition zero of UBI News was published: this newsletter will be released
every four months and is addressed to the members of the Boards of Directors of the banks
and companies within the Group. Along with the announcements of annual and interim
figures, videos were produced featuring an interview of the Chief Executive Officer with his
comments on the Group’s results.

With regard to customary publications and multimedia events, we report:
publication of the hardcopy magazine Almanacco YOUBI, in April, distributed not only to
employees but also to registered shareholders who took part in the UBI Banca
shareholders’ meeting on 25th April. The week after the general meeting, a special
shareholders’ meeting e-book was published with news and material about the main topics
covered, along with interviews of the Chief Executive, the Chairman of the Supervisory
Board and the Chairman of the Management Board;
82
UBIPods, corporate radio broadcasts that can be listened to on the UBILife portal, with
periodic interviews on pertinent company topics involving professional figures of varying
levels;

social collaboration activities and Professional Communities;

The annual convention of the BPB-CV and BPCI retired personnel associations, held in
the month of April in the town of Salsomaggiore, during which updates were provided
to the Group’s strategies and its consolidated 2014 results. All members of those two
associations were subsequently sent a hard copy of the YOUBI New Time magazine,
which contained an account of the event and other related articles;

the “Donate a Day” volunteer initiative, to which all Group staff were invited and 1,350
participated, featuring numerous volunteer projects on behalf of non-profit organisations
throughout Italy;

the Group’s “With Our Own Hands” Conference, where key trends and projects being
carried out by the Group during the year were examined, with a view towards prospects for
2016. This event took place on 10th December at the Bergamo trade fair centre. Keynote
speakers included the Chief Executive Officer, the Chairman of the Supervisory Board and
the Chairman of the Management Board, and top and middle managers of the Group’s
banks and other companies were in attendance.
Among the major internal communications projects, we report:

completion of a 2015-2016 Internal Communications Plan that identifies and the key
messages that need to be disseminated, with integrated programming of all major internal
communications events and activities between the top executives of the Parent and of other
Companies of the Group;

the “Io Ci Tengo” [“That’s important to me”] communications campaign, which aims to
promote best professional practices and behaviour within the Group in a unique and light
manner, using video quizzes to encourage direct participation by the staff;

presentation of the 2016 Commercial Plan in December, as well as specific formats for
subsequent On Boarding meetings for each of the network banks of the Group.

In 2016, in addition to ensuring incremental attention to existing tools, the Group will work
towards increasing corporate digitisation, especially through the following projects:
- redesign some of the perceived features and navigational aspects of the Group’s intranet,
and make its content more user-friendly, such that the site will have an informative
architecture that: establishes a single corporate network; enables the sharing of experience
and professional know-how; encourages appropriate professional behaviour; supports
training activities; connects people and information; enables the spread of company
notifications and memos via innovative instruments; and facilitates cooperation;
- enriching the services that can be accessed on the companies’ intranet;
- develop apps so that certain services can be enjoyed via mobile;
- integrating a sharing platform, categorised by job title, into the new intranet.
The work environment and welfare
The section “Principal risks and uncertainties to which UBI Banca Group is exposed” may be
consulted for information on matters regulated by Legislative Decree No. 81 of 9th April 2008
on health and safety at the workplace while information on environmental responsibility is
given as part of the information on corporate social and environmental responsibility
contained in the “Other Information” section.
The main initiatives carried forward in the field of welfare are described in the Social Report
which may be consulted.
83
The scope of the consolidation
The companies that formed part of the consolidation as at 31st December 2015 are listed
below, divided into subsidiaries (fully consolidated) and associates (consolidated using the
equity method).
The percentage of control or ownership attributable to the Group (direct or indirect), their
headquarters (registered address or operating headquarters) and the share capital is also
indicated for each of them.
Fully consolidated companies (control is by the Parent of the Group where no other indication is
given):
1. Unione di Banche Italiane Spa – UBI Banca (Parent)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: € 2,254,371,430
2. Banca Popolare di Bergamo Spa (100% controlled)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: €1,350,514,252
3. Banco di Brescia San Paolo CAB Spa (100% controlled)
Registered address: Brescia, Corso Martiri della Libertà, 13 – share capital: €615,632,230.88
4. Banca Popolare Commercio e Industria Spa (83.7631% controlled)
registered address: Milan, Via Monte di Pietà, 7 – share capital: €934,150,467.60
5. Banca Regionale Europea Spa (74.7766% controlled)1
registered address: Cuneo, Via Roma, 13 – share capital: €587,892,824.35
6. Banca Popolare di Ancona Spa (99.5782% controlled)
registered address: Jesi (Ancona), Via Don A. Battistoni, 4 – share capital: €147,301,670.32
7. Banca Carime Spa (99.9886% controlled)
registered address: Cosenza, Viale Crati snc – share capital: €1,468,208,505.92
8. Banca di Valle Camonica Spa (89.7917% controlled and BBS holds 8.8387%)
registered address: Breno (Brescia), Piazza Repubblica, 2 – share capital: €3,176,883
9. UBI Banca International Sa (91.1959% controlled and 5.4825% held by BBS, 3.1598% held by
BPB and 0.1618% by BRE)
registered address: 37/A, Avenue J.F. Kennedy, L - Luxembourg – share capital: €70,613,580
10. UBI Trustee Sa (100% controlled by UBI Banca International)
registered address: 37/A, Avenue J.F. Kennedy, L - Luxembourg – share capital: €250,000
11. Prestitalia Spa (100% controlled)
registered address: Bergamo, Via A. Stoppani, 15 – share capital: €205,722,715
12. IW Bank Spa (former UBI Banca Private Investment and former IW Bank - 100% controlled)
registered address: Milan, Piazzale F.lli Zavattari, 12 – share capital: €67,950,000
13. Centrobanca Sviluppo Impresa SGR Spa (100% controlled)
registered address: Milan, Corso Europa, 16 – share capital: €2,000,000
14. UBI Pramerica SGR Spa (65% controlled)
operating headquarters: Milan, Via Monte di Pietà, 5 – share capital: €19,955,465
15. UBI Management Company Sa (100% controlled by UBI Pramerica SGR)
registered address: 37/A, Avenue J.F. Kennedy, L - Luxembourg – share capital: €125,000
16. UBI Leasing Spa (99.6207% controlled)
registered address: Brescia, Via Cefalonia, 74 – share capital: €641,557,806
17. Unione di Banche Italiane per il Factoring Spa - UBI Factor Spa (100% controlled)
1
The percentage of control relates to the total share capital held.
84
registered address: Milan, Via F.lli Gabba, 1 – share capital: €36,115,820
18. BPB Immobiliare Srl (100% controlled)
registered address: Bergamo, Piazza Vittorio Veneto, 8 – share capital: €185,680,000
19. Società Bresciana Immobiliare Mobiliare - S.B.I.M. Spa (100% controlled)
registered address: Brescia, Via A. Moro, 13 – share capital: €35,000,000
20. UBI Fiduciaria Spa (100% controlled)
registered address: Brescia, Via Cefalonia, 74 – share capital: €1,898,000
21. UBI Sistemi e Servizi SCpA2 – Consortium Stock Company (71.8696% controlled and 4.3154%
held by BRE; 4.3142% held by IW Bank; 2.8769% held by: BPB, BBS, BPCI, BPA and Banca Carime;
and 1.4385% held by: Banca di Valle Camonica and UBI Pramerica SGR; 0.7192% held by UBI
Factor; 0.0719% held by Prestitalia and 0.0097% held by UBI Academy)
registered address: Brescia, Via Cefalonia, 62 – share capital: €36,149,948.64
22. UBI Academy SCRL – Limited Consortium Company (68.5% controlled and 3% held by: BPB,
BBS, BPCI, BPA, Banca Carime, BRE, IW Bank and UBI.S; 1.5% held by: Banca di Valle Camonica,
UBI Pramerica SGR, UBI Leasing, UBI Factor and Prestitalia)
registered address: Bergamo, Via F.lli Calvi, 9 – share capital: €100,000
23. UBI Finance Srl3 (60% controlled)
registered address: Milan, Foro Bonaparte, 70 – share capital: €10,000
24. UBI Finance CB 2 Srl4 (60% controlled)
Registered address: Milan, Foro Bonaparte, 70 – share capital: €10,000
25.
26.
27.
28.
24-7 Finance Srl5
UBI Lease Finance 5 Srl6
UBI Finance 2 Srl7 - in liquidation
UBI Finance 3 Srl8
29. UBI SPV BBS 2012 Srl9
30. UBI SPV BPCI 2012 Srl9
31. UBI SPV BPA 2012 Srl9
Companies consolidated using the equity method (the investment is by the Parent where no
other indication is given):
1.
Aviva Vita Spa (20% interest held)
2.
Aviva Assicurazioni Vita Spa (formerly UBI Assicurazioni Vita Spa, 20% interest held)
registered address: Milan, Via Scarsellini, 14 – share capital: €49,721,776
registered address: Milan, Via Scarsellini, 14 – share capital: €155,000,000
2
3
4
5
6
7
8
9
The Group holds a controlling 98,5615% interest in the share capital of UBI.S; the remaining 1.4385% is held by Cargeas
Assicurazioni Spa (formerly UBI Assicurazioni Spa).
A special purpose entity in accordance with Law No. 130/1999, this company, enrolled on the general list of intermediaries pursuant
to Art. 106 of the Consolidated Banking Act, was formed on 18th March 2008 to allow UBI Banca to implement the first programme
to issue Covered Bonds backed by residential mortgages.
A special purpose entity in accordance with Law No. 130/1999, this company, enrolled on the general list of intermediaries pursuant
to Art. 106 of the consolidated banking act, was formed on 20th December 2011 to allow the UBI Banca to implement a second
programme to issue Covered Bonds backed mainly by commercial non-residential mortgages.
A special purpose entity used in compliance with Law No. 130/1999 for the securitisations of the former B@nca 24-7, performed in
2008. It was consolidated because this company is in reality controlled, since its assets and liabilities were originated by a Group
member company. UBI Banca holds a 10% stake.
A special purpose entity formed in accordance with Law No. 130/1999 for the securitisation of performing loans by UBI Leasing in
November 2008. It was consolidated because this company is in reality controlled, since its assets and liabilities were originated by a
Group member company. UBI Banca holds a 10% stake.
A special purpose entity used in accordance with Law No. 130/1999 for the securitisation of a portfolio of performing loans of the
Banco di Brescia at the beginning of 2009. It was consolidated because this company is in reality controlled, since its assets and
liabilities were originated by a Group member company. UBI Banca holds a 10% stake.
A special purpose entity used in accordance with Law No. 130/1999 for the securitisation of a portfolio of performing loans
performed by Banca Popolare di Bergamo at the end of 2010. It was consolidated because this company is in reality controlled, since
its assets and liabilities were originated by a Group member company. UBI Banca holds a 10% stake.
A special purpose entity formed in accordance with Law No. 130/1999 for the securitisation of the performing loans to SMEs of some
network banks (Banco di Brescia, Banca Popolare Commercio e Industria and Banca Popolare di Ancona) carried out in the last part
of 2012. They were consolidated because they are in reality controlled, since their assets and liabilities were originated by Group
member companies. UBI Banca holds a 10% stake in each of them.
85
3.
Lombarda Vita Spa (40% interest held)
registered address: Brescia, Corso Martiri della Libertà, 13 – share capital: €185,300,000
4.
Polis Fondi SGRpA (19.6% interest held)
registered address: Milan, Via Solferino, 7 – share capital: €5,200,000
5.
Zhong Ou Asset Management Co. Ltd (già Lombarda China Fund Management - 35% interest held)
registered address: 8f Bank of East Asia Finance Tower, 66 Hua Yuan Shi Qiao Road, Pudong New
Area, 200120 Shanghai (China) – share capital: 188,000,000 yuan/renminbi
6.
SF Consulting Srl (35% interest held)
operating headquarters: Mantua, Via P.F. Calvi, 40 – share capital: €93,600
7.
UFI Servizi Srl (23.1667% interest held by Prestitalia)
registered address: Roma, Via G. Severano, 24 – share capital: €150,000
Changes in the scope of consolidation
There have been no changes to the scope of consolidation compared with 31st December 2014
except for those reported below, relating to marginal changes in the percentages of the control
of banks and to operations to rationalise the ownership structure with a view to increasing the
focus on the Group’s conventional domestic banking business:
• Banca Regionale Europea Spa: during the year the Parent acquired 151,287 ordinary
shares from non-controlling shareholders to bring its controlling interest in the ordinary
share capital up to 79.8951% (from 79.8760% at the end of December). Total percentage
control of the share capital (consisting of ordinary, privileged and savings shares) rose to
74.7766% from 74.7598%; before;
• Banca Popolare di Ancona Spa: Banca Popolare di Ancona Spa: in the twelve months
10,842 shares were purchased from small shareholders, with an effect on the percentage
control held by UBI Banca which rose to 99.5782% from 99.5339% at the end of 2014;
• Banca Carime Spa: in the same period 25,404 shares were sold to the Parent which
resulted in a further increase in the controlling interest, which rose from 99.9868% at the
end of 2014 to 99.9886% as at 31st December 2015;
• Banca di Valle Camonica Spa: in the second half UBI Banca purchased a total of 460,632
shares from the Banca di Valle Camonica (including stakes sold by Finanziaria di Valle
Camonica and by Cattolica Assicurazioni on 5th and 6th August 2015 respectively). The
capital percentage held by the Parent thus rose to 89.7917%, with no change in the other
shareholdeings, while in the twelve months the Group's control rose from 84.1309% to its
current 98.6304%;
• UBI Gestioni Fiduciarie Sim Spa: this company was sold on 12th January to Corporate
Family Office SIM, Milan;
• UBI Finance 2 Srl – in liquidation: the Annual General Meeting that took place on 26th
February 2015 voted for the early voluntary liquidation of the Company following closure of
the securitisation in May 2014 and the decision not to use the vehicle for further
operations;
• Lombarda Lease Finance 4 Srl – in liquidation: the Annual General Meeting that took place
on 26th February 2015 voted for the early voluntary liquidation of the Company following
closure of the securitisation in July 2014 and the decision not to use the vehicle for further
operations. On 22nd September 2015 the Company was liquidated and cancelled from both
the Company Register and the scope of consolidation;

Coralis Rent Srl – in liquidation: on 20th March 2015, the voluntary liquidation of the
company was recorded with the Company Registrar, as a consequence of the process to
rationalise subsidiaries currently in progress, and its commercial activity was transferred
directly to the Parent. On 31st December 2015 the liquidation was completed, and the
Company was cancelled from both the Company Register and the scope of consolidation;
86

UBI Fiduciaria Spa: on 30th April the transfer took place, with effect from 1st May 2015 of
UBI Fiduciaria Spa’s “static” fiduciary operations to Unione Fiduciaria Spa, a company
which operates in accordance with Law No. 1966 of 23rd November 1939 and subsequent
additions;

IW Bank Spa: on 25th May the merger of IW Bank into UBI Banca Private Investment took
effect (effective for accounting and tax purposes from 1st January 2015), with the change of
its name at the same time to IW Bank Spa and the transfer of the registered address to
Milan at 12, Piazzale Zavattari. The share capital of the new bank is €67,950,000.
The merger of the two companies, fully controlled by the Parent, is also reflected in the
shareholder structure of the consortium companies, which changed as follows from 25th
May 2015:
- UBI Sistemi e Servizi SCpA: the new IW Bank Spa holds a 4.3142% stake in the share
capital of the services company, the aggregate result of the stakes previously held by the
former UBI Banca Private Investment (1.4385%) and the former IW Bank (2.8757%);
- UBI Academy SCRL: the new IW Bank Spa holds a 3% stake in the share capital of the
training company, the aggregate result of the 1.5% stakes previously held by the former
UBI Banca Private Investment and the former IW Bank;

Società Lombarda Immobiliare Srl – SOLIMM: on 9th June 2015 the Management Board of
UBI Banca approved the merger of SOLIMM into S.B.I.M. Spa (Società Bresciana
Immobiliare Mobiliare). The merger became effective on 23rd October, while it is effective for
accounting and tax purposes from 1st January 2015. SOLIMM was therefore removed from
the Company Register and from the scope of the consolidation on the date on which the
merger took affect;

Zhong Ou Asset Management Co. Ltd – China: in June UBI Banca reclassified one third of
the stake held in this Chinese registered fund management company (accounting for
approximately 11.7% of the total share capital) within non-current assets held for sale
according to IFRS 5.
UBI Banca has a 35% interest in the Company, which ended the year by confirming an
extremely good performance in both the increase in the volume of assets managed and the
result for the year. On the basis of agreements between the shareholders and management
of the company, UBI Banca is obliged to transfer part of the shares it holds to management
when determined quantitative objectives are achieved. Consequently, the transfer will be
completed in the first few months of 2016 once the necessary formalities have been
completed;
• UBI Finance 3 Srl: following the resolution adopted by the UBI Management Board on 7th
August 2015, which approved the early closing of the securitisation programme originated
by Banca Popolare di Bergamo in 2010, with underlying loans to SMEs, the relative legal
and documentary processes were completed on 15th December 2015. At the same time, the
repurchase of the residual loan portfolio by BPB (approx. €1.3 billion) was completed on
16th December, while repayment of the securities (senior and junior tranches) took place
on the 17th.
See the section “Significant events in 2015” contained in this consolidated management report for further
details of corporate rationalisation operations (discontinuation of fiduciary operations, merger of the internet
bank into the company that manages the financial advisor network and merger of property companies
located in Brescia).
87
Reclassified consolidated financial
statements, reclassified income statement
net of the most significant non-recurring
items and reconciliation schedules
Reclassified consolidated balance sheet
31.12.2015
31.12.2014
%
changes
Changes
Figures in thousands of euro
ASSETS
10.
Cash and cash equivalents
530,098
598,062
-67,964
-11.4%
20.
Financial assets held for trading
994,478
1,420,506
-426,028
-30.0%
30.
Financial assets designated at fair value
40.
Available-for-sale financial assets
50.
Held-to-maturity investments
60.
Loans and advances to banks
70.
Loans and advances to customers
80.
Hedging derivatives
90.
Fair value change in hedged financial assets (+/-)
196,034
193,167
2,867
1.5%
15,554,282
18,554,956
-3,000,674
-16.2%
3,494,547
3,576,951
-82,404
-2.3%
3,429,937
3,340,415
89,522
2.7%
84,586,200
85,644,223
-1,058,023
-1.2%
594,685
649,250
-54,565
-8.4%
59,994
64,124
-4,130
-6.4%
100.
Equity investments
120.
Property, plant and equipment
260,812
246,250
14,562
5.9%
1,744,463
1,729,107
15,356
0.9%
130.
Intangible assets
of which: goodwill
1,757,468
1,776,925
-19,457
-1.1%
1,465,260
1,465,260
-
-
140.
Tax assets
150.
Non-current assets and disposal groups held for sale
2,814,933
2,991,600
-176,667
-5.9%
11,148
69,893
-58,745
-84.0%
160.
Other assets
1,171,686
Total assets
117,200,765
931,275
240,411
25.8%
121,786,704
-4,585,939
-3.8%
-21.4%
LIABILITIES AND EQUITY
10.
Due to banks
10,454,303
13,292,723
-2,838,420
20.
Due to customers
55,264,471
51,616,920
3,647,551
7.1%
30.
Debt securities issued
36,247,928
41,590,349
-5,342,421
-12.8%
40.
Financial liabilities held for trading
531,812
617,762
-85,950
-13.9%
60.
Hedging derivatives
749,725
1,009,092
-259,367
-25.7%
80.
Tax liabilities
472,564
630,223
-157,659
-25.0%
2,354,617
1,994,340
360,277
18.1%
-12.8%
100.
Other liabilities
110.
Post-employment benefits
340,954
391,199
-50,245
120.
Provisions for risks and charges:
266,628
285,029
-18,401
-6.5%
70,237
80,529
-10,292
-12.8%
196,391
204,500
-8,109
-4.0%
a) pension and similar obligations
b) other provisions
140.+
170.+180.+
190.+ 200.
Share capital, share premiums, reserves, valuation reserves and
treasury shares
9,865,097
10,529,815
-664,718
-6.3%
210.
Non-controlling interests
535,901
555,019
-19,118
-3.4%
220.
Profit (loss) for the year
116,765
-725,767
842,532
n.s.
117,200,765
121,786,704
-4,585,939
-3.8%
Total liabilities and equity
88
Reclassified consolidated quarterly balance sheets
Figures in thousands of euro
31.12.2015
30.9.2015
30.6.2015
31.3.2015
31.12.2014
30.9.2014
30.6.2014
31.3.2014
ASSETS
10.
Cash and cash equivalents
530,098
506,505
484,055
466,288
598,062
497,623
486,807
492,398
20.
Financial assets held for trading
994,478
653,418
1,338,170
1,527,401
1,420,506
1,014,902
2,168,661
3,900,044
30.
Financial assets designated at fair value
40.
Available-for-sale financial assets
50.
Held-to-maturity investments
3,494,547
3,486,873
3,535,692
3,528,010
3,576,951
3,076,556
3,049,841
3,113,263
60.
Loans and advances to banks
3,429,937
3,632,477
3,191,584
3,331,195
3,340,415
3,329,046
4,078,892
4,009,183
70.
Loans and advances to customers
84,586,200
83,834,141
85,340,026
84,634,175
85,644,223
84,946,817
87,119,396
87,094,749
80.
Hedging derivatives
594,685
613,696
545,576
689,227
649,250
615,897
458,998
323,782
90.
Fair value change in hedged financial assets (+/-)
59,994
61,305
59,108
66,716
64,124
53,668
47,680
36,493
260,812
250,902
247,779
254,129
246,250
314,143
295,970
427,438
1,780,575
196,034
195,490
197,223
198,365
193,167
193,637
192,408
193,692
15,554,282
15,259,697
16,799,280
17,904,652
18,554,956
18,331,820
16,742,576
16,030,885
100.
Equity investments
120.
Property, plant and equipment
1,744,463
1,743,948
1,755,974
1,711,351
1,729,107
1,741,474
1,764,564
130.
Intangible assets
1,757,468
1,751,943
1,760,006
1,767,675
1,776,925
2,883,252
2,896,274
2,903,371
of which: goodwill
1,465,260
1,465,260
1,465,260
1,465,260
1,465,260
2,511,679
2,511,679
2,511,679
140.
Tax assets
2,814,933
2,727,227
2,753,059
2,927,911
2,991,600
2,566,942
2,566,975
2,824,368
150.
Non-current assets and disposal groups held for sale
11,148
11,163
11,286
68,798
69,893
195,469
188,358
79,769
160.
Other assets
1,171,686
960,349
1,434,917
847,697
931,275
777,806
1,168,828
773,252
Total assets
117,200,765
115,689,134
119,453,735
119,923,590
121,786,704
120,539,052
123,226,228
123,983,262
LIABILITIES AND EQUITY
10.
Due to banks
10,454,303
10,871,905
9,049,928
12,360,302
13,292,723
15,588,229
15,964,805
15,397,770
20.
Due to customers
55,264,471
50,759,665
55,331,195
50,817,925
51,616,920
45,581,825
47,126,528
46,366,664
30.
Debt securities issued
36,247,928
38,262,102
38,996,157
40,324,315
41,590,349
42,271,880
43,049,073
44,477,537
40.
Financial liabilities held for trading
531,812
526,212
647,508
740,247
617,762
586,243
496,946
1,409,672
60.
Hedging derivatives
749,725
871,163
788,565
1,217,816
1,009,092
806,325
623,610
528,059
80.
Tax liabilities
472,564
510,707
440,745
735,132
630,223
732,156
620,062
908,372
2,354,617
2,649,872
3,132,513
2,435,841
1,994,340
2,673,720
3,130,877
2,704,318
100.
Other liabilities
110.
Post-employment benefits
340,954
336,309
339,894
368,186
391,199
383,871
378,320
387,412
120.
Provisions for risks and charges:
266,628
296,309
291,748
289,799
285,029
282,886
303,897
320,253
70,237
70,230
71,515
79,457
80,529
80,000
81,134
76,251
196,391
226,079
220,233
210,342
204,500
202,886
222,763
244,002
a) pension and similar obligations
b) other provisions
140.+
170.+180.+
190.+ 200.
Share capital, share premiums, reserves, valuation reserves and
treasury shares
9,865,097
9,911,021
9,762,383
10,018,158
10,529,815
10,650,908
10,603,241
10,609,347
210.
Non-controlling interests
535,901
531,876
548,656
539,941
555,019
831,177
822,677
815,723
220.
Profit (loss) for the period
116,765
161,993
124,443
75,928
-725,767
149,832
106,192
58,135
117,200,765
115,689,134
119,453,735
119,923,590
121,786,704
120,539,052
123,226,228
123,983,262
Total liabilities and equity
89
Reclassified consolidated income statement
Figures in thousands of euro
10.-20.
70.
40.-50.
80.+90.+
100.+110.
220.
Net interest income
of which: effects of the purchase price allocation
Net interest income excluding the effects of the PPA
2015
2014
Changes
% changes
4th Quarter
2015
4th Quarter
2014
Changes
% changes
A
B
A-B
A/B
C
D
C-D
C/D
1,631,055
(27,149)
1,658,204
1,818,387
(28,540)
1,846,927
(187,332)
(1,391)
(188,723)
(10.3%)
(4.9%)
(10.2%)
385,240
(6,901)
392,141
442,074
(7,312)
449,386
(56,834)
(411)
(57,245)
(12.9%)
(5.6%)
(12.7%)
Dividends and similar income
10,349
10,044
305
3.0%
1,578
800
778
97.3%
Profits (losses) of equity-accounted investees
35,260
37,015
(1,755)
(4.7%)
12,104
8,198
3,906
47.6%
1,300,119
35,182
1,226,587
16,951
73,532
18,231
6.0%
107.6%
330,574
22,496
318,392
10,710
12,182
11,786
3.8%
110.0%
Net fee and commission income
of which performance fees
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value
290,633
199,658
90,975
45.6%
151,705
49,156
102,549
208.6%
Other net operating income/expense
103,448
117,939
(14,491)
(12.3%)
22,611
33,418
(10,807)
(32.3%)
Operating income
Operating income excluding the effects of the PPA
3,370,864
3,409,630
(38,766)
(1.1%)
903,812
852,038
51,774
6.1%
3,398,013
3,438,170
(40,157)
(1.2%)
910,713
859,350
51,363
6.0%
(0.9%)
180.a
Staff costs
(1,295,090)
(1,301,779)
(6,689)
(0.5%)
(322,360)
(325,142)
(2,782)
180.b
Other administrative expenses
(727,067)
(635,034)
92,033
14.5%
(272,472)
(176,742)
95,730
54.2%
Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets
of which: effects of the purchase price allocation
Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets
excluding the effects of the PPA
(153,024)
(13,158)
(171,409)
(21,416)
(18,385)
(8,258)
(10.7%)
(38.6%)
(38,294)
(3,283)
(43,716)
(6,648)
(5,422)
(3,365)
(12.4%)
(50.6%)
(5.5%)
200.+210.
Operating expenses
Operating expenses excluding the effects of the PPA
130.a
130. b+c+d
190.
240.+270.
(139,866)
(149,993)
(10,127)
(6.8%)
(35,011)
(37,068)
(2,057)
(2,175,181)
(2,108,222)
66,959
3.2%
(633,126)
(545,600)
87,526
16.0%
(2,162,023)
(2,086,806)
75,217
3.6%
(629,843)
(538,952)
90,891
16.9%
Net operating income
1,195,683
1,301,408
(105,725)
(8.1%)
270,686
306,438
(35,752)
(11.7%)
Net operating income excluding the effects of the PPA
1,235,990
1,351,364
(115,374)
(8.5%)
280,870
320,398
(39,528)
(12.3%)
(802,646)
(928,617)
(125,971)
(13.6%)
(245,013)
(302,466)
(57,453)
(19.0%)
(16,866)
(8,650)
8,216
95.0%
(10,464)
(6,382)
4,082
64.0%
(2,975)
(9,074)
(6,099)
(67.2%)
44,794
(5,123)
49,917
n.s.
464
94,007
(93,543)
(99.5%)
81
94,356
(94,275)
(99.9%)
Net impairment losses on loans
Net impairment losses on other financial assets and liabilities
Net provisions for risks and charges
Profits from the disposal of equity investments
Pre-tax profit from continuing operations
373,660
449,074
(75,414)
(16.8%)
60,084
86,823
(26,739)
(30.8%)
Pre-tax profit from continuing operations excluding the effects of the PPA
413,967
499,030
(85,063)
(17.0%)
70,268
100,783
(30,515)
(30.3%)
(161,121)
13,362
(186,926)
16,523
(25,805)
(3,161)
(13.8%)
(19.1%)
(33,342)
3,376
557
4,781
(33,899)
(1,405)
n.s.
(29.4%)
290.
Taxes on income for the period/year from continuing operations
of which: effects of the purchase price allocation
330.
Profit for the period/year attributable to non-controlling interests
of which: effects of the purchase price allocation
Profit for the year/period attributable to the shareholders of the Parent before redundancies and impairment excluding
the effects of the PPA
(29,765)
2,115
(28,918)
2,754
847
(639)
2.9%
(23.2%)
(7,151)
529
(3,982)
599
3,169
(70)
79.6%
(11.7%)
207,604
263,909
(56,305)
(21.3%)
25,870
91,978
(66,108)
(71.9%)
Profit for the period/year attributable to the shareholders of the Parent before redundancies and impairment
182,774
233,230
(50,456)
(21.6%)
19,591
83,398
(63,807)
(76.5%)
(62,705)
(76,311)
(13,606)
(17.8%)
(61,515)
(76,311)
(14,796)
(19.4%)
Redundancy expenses net of taxes and non-controlling interests
Impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment net of taxes and
200.+210.+260. non-controlling interests
180.a
340.
(3,304)
(882,686)
(879,382)
(99.6%)
(3,304)
(882,686)
(879,382)
(99.6%)
Profit (loss) for the period/year attributable to the shareholders of the Parent
116,765
(725,767)
842,532
n.s.
(45,228)
(875,599)
(830,371)
(94.8%)
Total impact of the purchase price allocation on the income statement
(24,830)
(30,679)
(5,849)
(19.1%)
(6,279)
(8,580)
(2,301)
(26.8%)
90
Reclassified consolidated quarterly income statements
2015
Figures in thousands of euro
10.-20.
70.
40.-50.
80.+90.+
100.+110.
220.
4th Quarter
180.b
200.+210.
130.
b+c+d
190.
240.+270.
330.
180.a
200.+210.
+260.
340.
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
398,667
(6,630)
405,297
3,452
3,583
300,467
878
416,543
(7,115)
423,658
4,786
13,405
327,886
4,934
430,605
(6,503)
437,108
533
6,168
341,192
6,874
442,074
(7,312)
449,386
800
8,198
318,392
10,710
467,785
(6,990)
474,775
376
8,155
298,502
2,766
454,056
(7,782)
461,838
8,081
9,763
309,583
2,824
454,472
(6,456)
460,928
787
10,899
300,110
651
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated
at fair value
Other net operating income/expense
151,705
22,611
27,830
24,162
53,074
27,186
58,024
29,489
49,156
33,418
13,860
33,025
74,031
26,950
62,611
24,546
Operating income excluding the effects of the PPA
Staff costs
Other administrative expenses
assets
of which: effects of the purchase price allocation
assets excluding the effects of the PPA
903,812
758,161
842,880
866,011
852,038
821,703
882,464
853,425
910,713
(322,360)
(272,472)
(38,294)
(3,283)
(35,011)
764,791
(317,957)
(141,642)
(36,952)
(3,285)
(33,667)
849,995
(319,843)
(165,021)
(39,280)
(3,316)
(35,964)
872,514
(334,930)
(147,932)
(38,498)
(3,274)
(35,224)
859,350
(325,142)
(176,742)
(43,716)
(6,648)
(37,068)
828,693
(328,694)
(147,078)
(42,497)
(4,969)
(37,528)
890,246
(321,849)
(158,598)
(42,663)
(4,888)
(37,775)
859,881
(326,094)
(152,616)
(42,533)
(4,911)
(37,622)
Operating expenses
(633,126)
(496,551)
(524,144)
(521,360)
(545,600)
(518,269)
(523,110)
(521,243)
Operating expenses excluding the effects of the PPA
(629,843)
(493,266)
(520,828)
(518,086)
(538,952)
(513,300)
(518,222)
(516,332)
Net operating income excluding the effects of the PPA
Net impairment losses on loans
Net impairment losses on other financial assets and liabilities
Net provisions for risks and charges
Profits (losses) from the disposal of equity investments
270,686
261,610
318,736
344,651
306,438
303,434
359,354
332,182
280,870
(245,013)
271,525
(168,534)
329,167
(198,907)
354,428
(190,192)
320,398
(302,466)
315,393
(197,050)
372,024
(230,475)
343,549
(198,626)
(10,464)
44,794
81
(3,054)
(18,634)
300
(2,382)
(24,816)
392
(966)
(4,319)
(309)
(6,382)
(5,123)
94,356
(267)
(1,249)
81
(3,674)
7,361
230
1,673
(10,063)
(660)
Pre-tax profit from continuing operations
290.
1st Quarter
385,240
(6,901)
392,141
1,578
12,104
330,574
22,496
Net operating income
130.a
2nd Quarter
Net interest income
of which: effects of the purchase price allocation
Net interest income excluding the effects of the PPA
Dividends and similar income
Profits of equity-accounted investees
Net fee and commission income
of which performance fees
Operating income
180.a
3rd Quarter
2014
60,084
71,688
93,023
148,865
86,823
104,949
132,796
124,506
Pre-tax profit from continuing operations excluding the effects of the PPA
Taxes on income for the period from continuing operations
of which: effects of the purchase price allocation
Profit for the period attributable to non-controlling interests
of which: effects of the purchase price allocation
Profit for the period attributable to the shareholders of the Parent before redundancies and impairment
excluding the effects of the PPA
Profit for the period attributable to the shareholders of the Parent before redundancies and
impairment
70,268
(33,342)
3,376
(7,151)
529
81,603
(28,632)
3,287
(5,506)
423
103,454
(37,149)
3,458
(7,359)
604
158,642
(61,998)
3,241
(9,749)
559
100,783
557
4,781
(3,982)
599
116,908
(52,115)
2,059
(9,194)
867
145,466
(76,666)
5,930
(8,073)
565
135,873
(58,702)
3,753
(7,669)
723
25,870
43,755
54,884
83,095
91,978
52,673
54,232
65,026
19,591
37,550
48,515
77,118
83,398
43,640
48,057
58,135
Redundancy expenses net of taxes and non-controlling interests
(61,515)
-
-
(1,190)
(76,311)
-
-
-
(3,304)
-
-
-
(882,686)
-
-
-
(45,228)
37,550
48,515
75,928
(875,599)
43,640
48,057
58,135
(6,279)
(6,205)
(6,369)
(5,977)
(8,580)
(9,033)
(6,175)
(6,891)
Impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment net of
taxes and non-controlling interests
Profit (loss) for the period attributable to the shareholders of the Parent
Total impact of the purchase price allocation on the income statement
91
Reclassified consolidated income statement net of the most
significant non-recurring items
2015
net of nonrecurring items
2014
net of nonrecurring items
Changes
%
changes
1,631,055
1,818,387
(187,332)
(10.3%)
Dividends and similar income
10,349
10,044
305
3.0%
Profits of equity-accounted investees
35,260
37,015
(1,755)
(4.7%)
1,300,119
1,226,587
73,532
6.0%
35,182
16,951
18,231
107.6%
Figures in thousands of euro
Net interest income (including the effects of the PPA)
Net fee and commission income
of which performance fees
Net income from trading, hedging and disposal/repurchase activities and
from assets/liabilities designated at fair value
208,437
188,924
19,513
10.3%
Other net operating income/expense
103,448
117,939
(14,491)
(12.3%)
Operating income (including the effects of the PPA)
3,288,668
3,398,896
(110,228)
(3.2%)
(1,295,090)
(1,301,779)
(6,689)
(0.5%)
Other administrative expenses
(653,880)
(633,494)
20,386
3.2%
Depreciation, amortisation and net impairment losses on property, plant
and equipment and intangible assets (including the effects of PPA)
(153,024)
(169,140)
(16,116)
(9.5%)
(2,101,994)
(2,104,413)
(2,419)
(0.1%)
Net operating income (including the effects of the PPA)
1,186,674
1,294,483
(107,809)
(8.3%)
Net impairment losses on loans
(802,646)
(928,617)
(125,971)
(13.6%)
Staff costs
Operating expenses (including the effects of the PPA)
Net impairment losses on other financial assets and liabilities
1,424
(3,192)
4,616
(2,975)
(7,527)
(4,552)
927
(89)
1,016
n.s.
383,404
355,058
28,346
8.0%
Taxes on income for the year from continuing operations
(157,096)
(178,693)
(21,597)
(12.1%)
Profit for the year attributable to non-controlling interests
(31,176)
(29,828)
1,348
4.5%
Profit for the year attributable to the shareholders of the Parent
195,132
146,537
48,595
33.2%
Net provisions for risks and charges
Profits (losses) from the disposal of equity investments
Pre-tax profit from continuing operations (including the effects of
the PPA)
92
n.s.
(60.5%)
Reclassified consolidated income statement net of the most significant non-recurring
items: details
non-recurring items
Impairment
IW Bank and UBI
losses on equity
Disposal of equity
Banca Private
instruments,
investments
Investment
bonds and units
integration costs
of UCITS (AFS)
2015
Figures in thousands of euro
Net interest income (including the effects of the PPA)
Redundancy
Impairment
expenses
losses on
(pursuant to
Extraordinary
property, plant
trade union
Conclusion of
and
agreements of contribution to the
tax litigation
Resolution Fund
equipment
4th February
(owned
2015 and 23rd
properties)
December
2015)
1,631,055
2015
net of nonrecurring items
1,631,055
Dividends and similar income
10,349
10,349
Profits of equity-accounted investees
35,260
35,260
1,300,119
1,300,119
Net fee and commission income
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities
designated at fair value
290,633
Other net operating income/expense
103,448
Operating income (including the effects of the PPA)
Staff costs
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant and equipment and
intangible assets (including the effects of PPA)
Operating expenses (including the effects of the PPA)
3,370,864
(82,196)
208,437
103,448
(82,196)
-
-
-
-
-
-
(1,295,090)
3,288,668
(1,295,090)
(727,067)
7,868
65,319
(653,880)
(153,024)
(153,024)
(2,175,181)
-
-
7,868
-
65,319
-
-
(2,101,994)
Net operating income (including the effects of the PPA)
1,195,683
(82,196)
-
7,868
-
65,319
-
-
1,186,674
Net impairment losses on loans
(802,646)
Net impairment losses on other financial assets and liabilities
Net provisions for risks and charges
Profits from the disposal of equity investments
(802,646)
(16,866)
18,290
1,424
(2,975)
(2,975)
464
463
373,660
(81,733)
18,290
7,868
Taxes on income for the year from continuing operations
(161,121)
6,411
(4,175)
(2,602)
(21,237)
Profit for the year attributable to non-controlling interests
(29,765)
(94)
(161)
(1,156)
14,021
5,105
Pre-tax profit from continuing operations (including the effects of the PPA)
Profit for the year attributable to the shareholders of the Parent before redundancies and
impairment
182,774
Redundancy expenses net of taxes and non-controlling interests
(62,705)
Impairment losses on goodwill, finite useful life intangible assets and property, plant and
equipment net of taxes and non-controlling interests
Profit for the year attributable to the shareholders of the Parent
ROE (Profit / (Equity + profit for the year))
(75,322)
927
-
-
65,319
42,926
-
383,404
25,628
(157,096)
(31,176)
-
25,628
62,705
3,304
(75,322)
14,021
5,105
62,705
195,132
-
(3,304)
116,765
-
42,926
3,304
25,628
195,132
1.2%
2.0%
Cost:income ratio (including the effects of PPA)
64.5%
63.9%
Cost:income ratio (excluding the effects of PPA)
63.6%
63.0%
93
continued
non-recurring items
2014
Impairment of
goodwill,
intangible
assets and
property, plant
and
equipment
Figures in thousands of euro
Net interest income (including the effects of the PPA)
Redundancy
Change in the
expenses
Profit on the substitute tax
(purs. to
Impairment of
on the new
Framework Disposal of equity disposal of
AFS
investments
property
profit sharing
Agreement
securities
investments stakes in the
26th
Bank of Italy
November
2014)
Integration
Interbank
costs of
Deposit
merger of
Protection
Write off of IT
UBI Banca Fund action
systems
Private
to assist
Investment
Banca
and IW Bank
Tercas
1,818,387
2014
net of nonrecurring
items
1,818,387
Dividends and similar income
10,044
10,044
Profits of equity-accounted investees
37,015
37,015
Net fee and commission income
1,226,587
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at fair value
199,658
Other net operating income/expense
117,939
Operating income (including the effects of the PPA)
Staff costs
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant and equipment and intangible assets (including
the effects of PPA)
Operating expenses (including the effects of the PPA)
1,226,587
(10,734)
188,924
117,939
3,409,630
-
-
(10,734)
-
-
-
-
-
-
(1,301,779)
3,398,896
(1,301,779)
(635,034)
1,540
(171,409)
(633,494)
2,269
(169,140)
(2,108,222)
-
-
-
-
-
-
2,269
1,540
-
(2,104,413)
Net operating income (including the effects of the PPA)
1,301,408
-
-
(10,734)
-
-
-
2,269
1,540
-
1,294,483
Net impairment losses on loans
(928,617)
Net impairment losses on other financial assets and liabilities
(8,650)
Net provisions for risks and charges
(9,074)
Profits (losses) from the disposal of equity investments
94,007
Pre-tax profit from continuing operations (including the effects of the PPA)
(928,617)
4,821
1,547
449,074
-
Taxes on income for the year from continuing operations
(186,926)
Profit for the year attributable to non-controlling interests
(28,918)
Profit for the year attributable to the shareholders of the Parent before redundancies and impairment
233,230
Redundancy expenses net of taxes and non-controlling interests
Impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment net of taxes and noncontrolling interests
(76,311)
(882,686)
882,686
Profit (loss) for the year attributable to the shareholders of the Parent
(725,767)
882,686
ROE (Profit before redundancy expenses and impairment /(Equity + loss for the year))
637
-
-
-
(3,192)
(7,527)
(84,384)
(9,712)
(95,118)
(9,712)
-
4,821
3,816
1,540
637
355,058
2,590
3,184
4,482
(169)
(1,169)
(510)
(175)
(178,693)
20
(705)
(204)
(21)
(29,828)
(6,508)
3,777
4,448
441
146,537
(92,528)
(89)
2,647
1,030
76,311
-
76,311
(92,528)
(6,508)
3,777
4,448
2,647
1,030
441
146,537
2.4%
1.5%
Cost:income ratio (including the effects of PPA)
61.8%
61.9%
Cost:income ratio (excluding the effects of PPA)
60.7%
60.8%
94
Reconciliation schedule for the year ended 31st December 2015
2015
RECLASSIFIED INCOME STATEMENT
Reclassifications
Mandatory
consolidated
financial
statements
Ite ms
Tax
recoveries
Figures in thousands of euro
10.-20.
70.
Net interest income
1,631,055
Dividends and similar income
10,349
35,260
Net fee and commission income
220.
Other net operating income/expense
Operating income
180.a
35,260
1,300,119
80.+90.+ Net income from trading, hedging and disposal/repurchase
100.+110. activities and from assets/liabilities designated at fair value
Staff costs
1,300,119
290,633
290,633
321,441
(221,448)
3,553,597
(221,448)
3,455
35,260
103,448
3,455
-
(1,391,732)
Other administrative expenses
Depreciation, amortisation and net impairment losses on property,
200.+210. plant and equipment and intangible assets
180.b
Operating expenses
Reclassified
consolidated
financial
statements
1,631,055
10,349
Profits of equity-accounted investees
40.-50.
2015
Net
Depreciation
impairment
for
Profit of equityRedundancy
losses on
accounted
improvements
expenses
goodwill and
investees
to leased
property, plant
assets
and equipment
-
96,642
(948,515)
3,370,864
(1,295,090)
221,448
(727,067)
(154,619)
(3,455)
5,050
(153,024)
(2,494,866)
221,448
-
(3,455)
96,642
5,050
(2,175,181)
-
35,260
-
96,642
5,050
1,195,683
Net operating income
1,058,731
130.a
Net impairment losses on loans
(802,646)
(802,646)
130.
b+c+d
Net impairment losses on other financial assets and liabilities
(16,866)
(16,866)
190.
Net provisions for risks and charges
(2,975)
240.+270. Profits from the disposal of equity investments
(2,975)
35,724
Pre-tax profit from continuing operations
(35,260)
271,968
-
464
-
-
96,642
5,050
373,660
290.
Taxes on income for the year from continuing operations
(127,502)
(31,960)
(1,659)
(161,121)
330.
Profit for the year attributable to non-controlling interests
(27,701)
(1,977)
(87)
(29,765)
Profit for the year attributable to the shareholders of the
Parent before redundancy expenses and impairment
116,765
62,705
3,304
180.a
Redundancy expenses net of taxes and non-controlling interests
200.+ Net impairment losses on goodwill and property, plant and
210.+260. equipment net of taxes and non-controlling interests
340.
Profit for the year attributable to the shareholders of the
Parent
-
-
-
-
(62,705)
116,765
-
-
-
-
182,774
(62,705)
(3,304)
(3,304)
-
116,765
Reconciliation schedule for the year ended 31st December 2014
RECLASSIFIED INCOME STATEMENT
Ite ms
2014
Reclassifications
2014
Mandatory
consolidate
d financial
statements
Impairment losses
Depreciation
on goodw ill, finite
Profit of equityfor
Tax
Redundancy useful life intangible
accounted
improvements
assets and
recoveries
expenses
investees
to leased
property, plant and
assets
equipment
Reclassified
consolidated
financial
statements
Figures in thousands of euro
10.-20.
70.
Net interest income
Dividends and similar income
1,818,387
1,818,387
10,044
10,044
Profits of equity-accounted investees
40.-50.
Net fee and commission income
80.+90.+ Net income from trading, hedging and disposal/repurchase activities and
100.+110. from assets/liabilities designated at fair value
220.
Other net operating income/expense
Operating income
180.a
Staff costs
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant
200.+210. and equipment and intangible assets
180.b
Operating expenses
37,015
37,015
1,226,587
1,226,587
199,658
199,658
336,366
(224,797)
3,591,042
(224,797)
6,370
37,015
6,370
(1,413,312)
(859,831)
117,939
-
-
111,533
3,409,630
(1,301,779)
224,797
(635,034)
67,026
(171,409)
(2,505,208)
(232,065)
224,797
-
(6,370)
(6,370)
111,533
67,026
(2,108,222)
-
37,015
-
111,533
67,026
1,301,408
Net operating income
1,085,834
130.a
Net impairment losses on loans
(928,617)
(928,617)
130.
b+c+d
Net impairment losses on other financial assets and liabilities
(8,650)
(8,650)
Net provisions for risks and charges
(9,074)
190.
240.+270. Profits (losses) from the disposal of equity investments
Pre-tax profit (loss) from continuing operations
(9,074)
(915,397)
(775,904)
(37,015)
-
-
-
1,046,419
94,007
111,533
1,113,445
449,074
290.
Taxes on income for the year from continuing operations
72,314
(30,671)
(228,569)
(186,926)
330.
Profit for the year attributable to non-controlling interests
(22,177)
(4,551)
(2,190)
(28,918)
(725,767)
76,311
882,686
-
(76,311)
Profit (loss) for the year attributable to the shareholders of the
Parent before redundancy expenses and impairment
180.a
Redundancy expenses net of taxes and non-controlling interests
200.+ Impairment losses on goodwill, finite useful life intangible assets and
210.+260. property, plant and equipment net of taxes and non-controlling interests
340.
Loss for the year attributable to the shareholders of the Parent
(725,767)
95
-
-
-
-
233,230
(76,311)
(882,686)
(882,686)
-
(725,767)
Notes to the reclassified consolidated financial statements
The mandatory financial statements have been prepared on the basis of Bank of Italy Circular No. 262 of
22nd December 2005 and subsequent updates. Therefore, as with the 2014 Annual Report, for the
purposes of the preparation of these financial statements, the provisions of the fourth update of that
document issued on 15th December 2015 have been observed.
The following rules are applied to the reclassified financial statements to allow a vision that is more
consistent with a management accounting style:
-
the item profits (losses) of equity-accounted investees includes the profits (losses) of equity-accounted investees
included within item 240 in the mandatory financial statements;
the item other net operating income/expense includes item 220, net of the reclassifications mentioned under other
points;
the tax recoveries recognised within item 220 of the mandatory financial statements (other net operating
income/expenses) were reclassified as a reduction in indirect taxes included within other administrative expenses;
the item net impairment losses on property plant and equipment and intangible assets includes items 200 and
210 in the mandatory financial statements and also the instalments relating to the depreciation of leasehold
improvements classified within item 220;
the item profits (losses) from the disposal of equity investments includes the item 240, net of profits (losses) of
equity-accounted investees and also item 270 in the mandatory financial statements;
net impairment losses on goodwill, on finite useful life intangible assets and property, plant and equipment (net of
taxation and non-controlling interests) partially include items 200 and 210 as well as item 260 in the mandatory
financial statements;
redundancy expenses (net of taxation and non-controlling interests) partially include item 180a in the mandatory
financial statements.
The reconciliation of the items in the reclassified financial statements with the figures in the mandatory
financial statements has been facilitated, on the one hand, with the insertion in the margin against each
item of the corresponding number of the item in the mandatory financial statements with which it is
reconciled and, on the other hand, with the preparation of special reconciliation schedules.
The comments on the performance of the main balance sheet and income statement items are made on
the basis of the reclassified financial statements and of the reclassified financial statements for the
comparative periods, and the tables providing details included in the subsequent sections of this
financial report have also been prepared on that same basis.
In order to facilitate analysis of the Group’s operating performance and in compliance with Consob
Communication No. DEM/6064293 of 28th July 2006, two special schedules have been included, the first
a brief summary (which provides a comparison of the normalised results for the period) and the second
more detailed, which shows the impact on earnings of the principal non-recurring events and items –
since the relative effects on capital and cash flow, being closely linked, are not significant – which are
summarised as follows:
Full year 2015:
- disposal of equity investments (Istituto Centrale delle Banche Popolari Italiane, partially and UBI Gestioni
Fiduciarie Sim, totally);
- impairment losses on AFS securities;
- integration costs for the merger of IW Bank into UBI Banca Private Investment;
- redundancy expenses charged in relation to trade union agreements of 4th February 2015 and 23rd December
2015
- extraordinary contribution to the Resolution Fund;
- impairment losses on property, plant and equipment (owned properties);
- conclusion of tax litigation.
Full year 2014:
-
impairment losses on goodwill, finite useful life intangible assets and property, plant and equipment;
redundancy expenses pursuant to the Framework Agreement of 26th November 2014;
disposal of equity investments (Aviva Vita, Aviva Assicurazioni Vita, UBI Assicurazioni and SIA Spa);
profit on the disposal of property investments;
change in the substitute tax on the new profit sharing stakes held in the Bank of Italy;
impairment of AFS securities;
write off of IT systems;
integration costs for the merger of IW Bank into UBI Banca Private Investment;
adjustment to the sales price of Banque de Dépôts et de Gestion Sa (Switzerland) and of Sofipo Sa
(Switzerland);
- intervention by the Interbank Deposit Protection Fund to support Banca Tercas.
96
The consolidated income statement
The income statement figures commented on are based on the reclassified consolidated financial
statements (the income statement, the quarterly income statements and the income statement net of the
most significant non-recurring items, condensed and complete) contained in another section of this report
and the tables furnishing details presented below are also based on those statements. The notes that
follow those reclassified financial statements may be consulted as may the reconciliation schedules for a
description of the reclassification. Furthermore, the commentary examines changes that occurred in both
2015 compared to 2014 and also those occurring in the fourth quarter of 2015 compared to the previous
three months (in the latter case the comments are highlighted with a slightly different background colour).
The recovery continued gradually throughout the year, driven in part by economic policies (the
Eurosystem's programme to purchase securities and the measures taken by the Italian
government) and by improving credit conditions. Consequently, the current situation suggests
that business cycle will continue to recover in the next two years, as long as the confidence of
households, businesses and financial operators can be maintained, despite the significant
risks associated with the international environment (the slowdown of emerging economies,
with possible severe repercussions on financial and currency markets, in addition to further
declines in commodities prices).
In this scenario, the Group's income statement, weighed down by the extraordinary
contributions paid into the Resolution Fund, the ordinary expenses required by the gradual
entry into force of European regulations, and the new redundancy scheme, showed a profit of
€116.8 million, compared to a loss of €725.8 million in 2014.
That loss was due to the significant impairment, identified in periodic testing, of goodwill, finite useful life intangible
assets and property, plant and equipment, amounting to €883 million, net of taxation and non-controlling interests,
on the book values at which those assets had been stated.
Although there were still no signs of recovery at the level of revenue, due to the constant focus
on costs - which remained stable despite the ordinary contributions to the Resolution Fund
and Deposit Guarantee Scheme - along with the decrease in impairment losses on loans, in
normalised terms (i.e. excluding the numerous non-recurring components for the year1), profit
was €195.1 million in 2015, an improvement of 33% on the €146.5 million of 2014.
At the quarterly level, the net loss was €45.2 million, affected by the aforementioned
extraordinary contribution, the settlement of litigation proceedings with the tax authorities
and redundancy expenses, despite the recovery of operating income both year-on-year and on
a quarterly basis. This net loss is to be compared with the +€37.6 million earned in the three
previous months (July-September 2015), which were affected by the traditional summer
decline in business, but also benefited from the decrease in quarterly operating expenses
throughout the two-year period 2014-2015.
In the corresponding quarter of 2014, the Group had recorded a loss of €875.6 million due to the recognition of the
aforementioned impairment losses and redundancy expenses (the profit before impairment and expenses was €83.4
million, also benefiting from the capital gains realised on the partial or total disposal of investments in insurance
companies).
Over the full year, ordinary operations generated operating income of €3,370.9 million,
essentially unchanged compared to 2014 (-1.1%), the aggregate result of the performance
reported below.
Net interest income, inclusive of the effects of the purchase price allocation of €27.1 million,
was €1,631.1 million (-€187.3 million), affected by both the performance of lending/funding
volumes and the change in the interest rate structure in the two years2.
1 Non-recurring components (considered net of taxes and non-controlling interests) came to a negative €78.4 million in 2015 (due to
the combination of impairment losses on securities and property, plant and equipment, the extraordinary contribution to the
Resolution Fund, redundancy schemes, and the settlement of a tax dispute, only partially offset by the disposal of the investment in
ICBPI), compared to a negative €872.3 million in 2014 (primarily due to impairment and redundancy expenses, partially offset by the
disposal of investments and properties).
Both periods included costs resulting from the purchase price allocation amounting to €24.8 million in 2015 and €30.7 million in
2014.
2 It should be considered that the one-month Euribor rate has been negative since March 2015, therefore the average over the twelve
months of 2015 was -0.071%, compared with +0.135% in 2014.
97
Interest and similar income: composition
Debt
instruments
Figures in thousands of euro
1. Financial assets held for trading
2. Financial assets designated at fair value
3. Available-for-sale financial assets
3. Held-to-maturity investments
Other
transactions
Financing
2015
2014
2,654
-
-
2,654
22,377
373,243
-
-
373,243
418,985
97,731
45,809
-
-
45,809
-
6,169
-
6,169
6,007
41
2,039,100
901
2,040,042
2,418,176
51,593
5. Loans and advances to banks
6. Loans and advances to customers
7. Hedging derivatives
X
X
41,048
41,048
8. Other assets
X
X
236
236
189
421,747
2,045,269
42,185
2,509,201
3,015,058
2015
2014
Total
Interest and similar expense: composition
Borrowings
Other
transactions
Securities
Figures in thousands of euro
1. Due to central banks
(7,111)
X
-
(7,111)
(19,847)
2. Due to banks
(11,307)
X
-
(11,307)
(23,379)
3. Due to customers
(83,047)
X
(124)
(83,171)
(181,263)
X
(2,199)
(774,342)
-
-
(774,342)
(2,199)
(956,223)
(15,959)
4. Debt securities issued
5. Financial liabilities held for trading
6. Financial liabilities designated at fair value
-
-
-
-
-
7. Other liabilities and provisions
X
X
(16)
(16)
-
X
(103,664)
X
(774,342)
(140)
(878,146)
(1,196,671)
1,631,055
1,818,387
8. Hedging derivatives
Total
Net interest income
In detail3:
• business with customers generated net interest income of €1,351.1 million (-€83.1 million
on the comparative period), which continued to be affected by the slowness of the recovery.
More specifically, on the one hand the performance of net interest income from customers
incorporated a reduction in volumes of assets (average assets were down €2 billion year-onyear) and, in more significant terms, the impact of interest rates on short-term loans, while
on the other hand it benefited from a combination of the downward trend for medium to
long-term funding and a reduction in the relative cost. The customer spread remained more
or less unchanged (-6 bps compared to 2014), due partly to constant effort to optimise the
liability structure.
The balance also includes the differentials received mainly on hedges on bonds (€168.6
million compared with €153.5 million before);
• the securities portfolio generated net interest income of approximately €292 million (€129.2 million), in the presence of investments in debt securities which reduced by €3.4
billion. The contribution provided by the AFS portfolio (down to €373.2 million from €419
million before) was accompanied by reductions in the contribution from both the held-tomaturity portfolio (€45.8 million compared with €97.7 million before, in relation to lower
returns on the reinvestments made at the end of 2014) and on the trading portfolio (€2.7
million compared with €22.4 million, after the progressive disposals carried out throughout
the year). This business was also affected by the costs of uncovered short positions
(although these decreased from €16 million to €2.2 million) and of partial hedges on fixedrate bonds (the differentials paid were up from €101.9 million to €127.5 million);
• business on the interbank market recorded expense of €12.2 million, sharply down
compared with expense of €37.2 million in 2014. The improvement is due to both a fall, on
an annual basis, in funding from central banks (down €2.2 billion due to the repayment of
ECB funding, net of new subscriptions) – against modest changes in volumes of business
with other banks – and to the drastic decrease in the rate applied to principal refinancing
operations, down from 0.25% at the beginning of 2014 to the current 0.05%. Net of
transactions with the ECB, the contribution from net business with banks was
approximately -€5.1 million, compared with -€17.4 million in 2014.
3 The calculation of net balances was performed by allocating interest income and expense on hedging derivatives and interest expense
on financial liabilities held for trading within the different areas of business (with customers, financial, with banks).
98
Dividends of €10.3 million were received during the year: of this total, €8.9 million related to
the UBI Banca portfolios (in further detail, €5.8 million of AFS securities and €3.1 million of
FVO and held-for-trading instruments) and a total of €1.4 million related to BRE and Carime
as remuneration on stakes held in the Bank of Italy.
In 2014 €10 million was collected, of which €3.2 million was paid by SIA S.p.A., disposed of in the fourth quarter of
2014, and €1.8 million by the BRE and Carmine portfolios (€1.6 million on the 1,259 stakes of the Bank of Italy and
€0.15 million on SIA).
Profits of equity-accounted investees 4 totalled €35.3 million (€37 million in 2014), the most
significant components of which were: Zhong Ou (€17.9 million, compared to €3.1 million
before), Lombarda Vita (€11.9 million, compared to €7.7 million), Aviva Vita (€3.1 million
compared to €17.1 million) and Aviva Assicurazioni Vita (€2.1 million compared to -€0.15
million).
Account should be taken of the following in the comparison with 2014:
- on 22nd December 2014 UBI Banca reduced its stakes held in both Aviva Vita Spa and Aviva Assicurazioni Vita
Spa from 50% to 20%;
- on 30th December 2014 the stake held in UBI Assicurazioni Spa (49.99%) was disposed of entirely, which had
contributed to the relative earnings in the year with €9.1 million.
Net fee and commission income, which includes €35.2 million of performance fees attributable
to UBI Pramerica SGR, increased to €1,300.1 million (+€73.5 million compared to 2014). It
was the aggregate result of good performance by the investment services business (+€74.9
million) and the slight decline in general banking services (-€1.4 million).
Fee and commission income: composition
Fee and commission expense: composition
2015
Figures in thousands of euro
a) guarantees granted
c) management, trading and advisory services
1. trading in financial instruments
2. foreign exchange trading
3. portfolio management
3.1. individual
3.2. collective
4. custody and administration of securities
5. depository banking
6. placement of securities
7. receipt and transmission of orders
8. advisory activities
8.1 on investments
9. distribution of third party services
9.1. portfolio management
9.1.1. individual
9.2. insurance products
9.3. other products
2014
47,030
51,128
799,193
713,279
19,611
6,979
22,111
6,456
341,735
73,742
267,993
279,941
67,619
212,322
8,488
-
9,154
-
194,364
170,381
43,084
5,454
5,454
49,002
4,358
4,358
179,478
171,876
29
29
149,607
32
32
133,063
29,842
38,781
d) collection and payment services
f) services for factoring transactions
160,099
15,749
163,087
18,703
i) current account administration
194,782
203,960
j) other services
272,000
253,149
1,488,853
1,403,306
Total
2015
Figures in thousands of euro
a) guarantees received
(1,755)
2014
(20,683)
c) management and trading services:
(93,373)
(82,918)
1. trading in financial instruments
2. foreign exchange trading
(10,360)
(1)
(10,433)
(5)
3. portfolio management
3.1. own
3.2. on behalf of third parties
(11,114)
(11,114)
(13,177)
(13,177)
(5,479)
(6,133)
(7,592)
(4,917)
(60,286)
(48,728)
(44,878)
(46,794)
(37,303)
(35,815)
(188,734)
(176,719)
1,300,119
1,226,587
4. custody and administration of securities
5. placement of financial instruments
6. financial instruments, products and
services distributed through indirect
networks
d) collection and payment services
e) other services
Total
Net fee and commission income
In detail:
• management, trading and advisory services contributed €698.8 million to the result5, driven
by portfolio management (+€63.9 million in relation to the higher average volumes of assets
under management), by the placement of securities (+€22.8 million, of which €3.1 million
from the subscription of UBI Pramerica Sicav’s and funds) and by the distribution of third
party services (+€7.6 million, primarily because of the average volumes of life policies sold,
but also due to improved profitability). The items relating to trading, the receipt of orders,
and custody and administration decreased on aggregate (-€5.8 million, partly attributed to
4 The item consists of the profits of the companies recognised on the basis of the percentage interest held by the Group.
5 The amount consists of management, trading and advisory services net of the corresponding expense items and is calculated
excluding currency trading.
99
the combined effect of lower flows of AUC associated with lower returns), affected by the
volatility that characterised the markets starting in the summer months. Fee and
commission expense for financial instruments, products and services distributed through
indirect networks climbed by €13.5 million, partly in relation to the increased numbers of
financial advisors;
• ordinary banking business6 - which continued to be affected by weak demand for credit –
generated €601.3 million, benefiting on the expenses front from the disappearance of the
cost of the guarantee on government backed bonds, redeemed on 7th March and on 7th
August 2014, with savings of €18.4 million compared with 2014.
Other items included the following: falls in collection and payment services (-€14.4 million,
mainly due to the lower returns on tax payment authorisations received), factoring business
(-€3 million) and current account administration (-€9.2 million, due to lower average unit
profitability on both conventional current accounts and on package/modular accounts),
which was partially offset by increases in other services (+€9.8 million, primarily from new
medium to long-term loan application processing fees; however, commitment fees,
contributing €139.8 million to the item, decreased by €9.9 million in relation to the reduced
volumes of short-term lending).
The net result for financial activity rose to €290.6 million, an increase of €91 million compared
with 2014, the result, amongst other things, of a non-recurring item, a profit (€82.2 million) on
the partial disposal of the investment held in Istituto Centrale delle Banche Popolari Italiane
(see the previous section “Significant events that occurred in 2015”). The composition of
contributions by portfolios and type of business is as follows:
• +€63.9 million (+€63.2 million in 2014) was generated by trading, of which +€10.4 million
by debt instruments (almost entirely profit-taking on trading), +€2.7 million by equity
instruments and above all by the closure of the related derivative contracts (nearly all listed
on regulated markets with equity indices as the underlying), +€40.3 million by foreign
exchange business7 (as a result large fluctuations in exchange rates that primarily affected
the assets/liabilities hedged on behalf of network bank customers and resulted in an
increase in such business), and +€11 million by derivatives on debt instruments and
interest rates (profits, gains and accruals). The latter are to be attributed to the differentials
accrued and the valuation of the derivatives themselves. On the aggregate, -€9.4 million
may be attributed to the unwinding phenomenon, which accelerated at the end of the year;
• +€11 million (-€11.2 million in 20148 ) from hedging, – consisting of changes in the fair
value of the derivatives and the relative items hedged – relating to the impacts of fair value
changes in derivatives on AFS securities (as the long-term swap rate curve rose in the
second quarter) and also due to fair value movements in bonds, which benefited from the
fall in the swap curve on shorter maturities in the fourth quarter;
• +€211.4 million (+€144.6 million in 2014 9 ) from the disposal/repurchase of financial
assets/liabilities, of which: +€82.2 million from the (partial) sale of the investment in ICBPI
(non-recurring); +€173.1 million from debt instruments, primarily Italian government
securities (of which €2.8 million refers to bonds, primarily issued by banks): +€6.9 million
from the sale of units in UCITS (ETFs that aimed to replicate the performance of the EURO
STOXX® 50 Index), all almost entirely attributable to the Parent; -€34.5 million from the
disposal of bad loans (previously termed "non-performing loans") of the network banks
(massive disposals, chiefly in November and December), of small former ex B@nca 24-7
loans and of a more substantial amount relating to the former Centrobanca; and -€16.3
6 All the changes were calculated by subtracting fee and commission expense from the respective fee and commission income.
7 The Group does not enter into speculative positions and the results relate to business with customers and on own behalf generally
balanced on the market. As a consequence the items in question (line items 1.5, 4.1 and 3) must be considered together as a
whole. On the whole the items relate to the results of spot and forward currency trading by customers (transactions closed and/or
existing), transactions on behalf of customers balanced operationally by UBI Banca on the market and domestic currency swaps,
opened on the two components, always balanced, and certificates of deposit (item 1.5) and the related derivatives (item 4.1).
8 The amount originated in fair value movements in derivatives on AFS securities and to a marginal extent in derivatives on
mortgages and other loans.
9 The aggregate consisted of debt securities of +€138 million (of which, €128.9 million of Italian government securities disposed of by
the Parent); units in UCITS (ETFs) of +€19.7 million; equity instruments of +€10.6 million (of which the non-recurring sum of
€10.7 million from the sale of SIA S.p.A. by the Parent and Banca Carime); -€15.3 million from the disposal of several packages of
bad loans (the most significant of which took place in December) of the network banks, the former B@nca 24-7 and the former
Centrobanca; and -€8.3 million from the repurchase of outstanding securities as part of normal direct business with customers.
100
million from the repurchase of outstanding securities as part of normal direct business with
customers in an environment of bond prices above par;
• €4.3 million (compared with €3.1 million before) from fair value movements in investments
in Tages Funds and in the private equity investments of the former Centrobanca. The
performance of the item also incorporated the exchange rate effect from a residual position
in hedge funds, while the fair value of these had a modest negative impact (-€0.2 million).
Net trading income
Figures in thousands of euro
Gains
Profits from
trading
Losses
Losses from
trading
Net income
2015
(A)
(B)
(C)
(D)
[(A+B)-(C+D)]
1. Financial assets held for trading
1.1 Debt instruments
1.2 Equity instruments
1.3 Units in UCITS
1.4 Financing
1.5 Other
2. Financial liabilities held for trading
2.1 Debt instruments
2.2 Payables
2.3 Other
3. Financial assets and liabilities: exchange rate differences
943
450
98
8
387
51,207
13,706
247
12
37,242
(4,041)
(1,298)
(998)
(53)
(1,692)
(29,126)
(2,429)
(128)
(4)
(26,565)
18,983
10,429
(781)
(37)
9,372
68,253
29,673
337
19
38,224
-
1,473
1,473
X
-
(1,543)
(1,543)
X
(70)
(70)
-
9,657
9,657
-
X
4. Derivative instruments
4.1 Financial derivatives
- on deb t instruments and interest rates
- on equity instruments and share indices
- on currencies and gold
- other
4.2 Credit derivatives
Total
2014
X
215,157
215,157
322,489
322,489
(227,515)
(227,515)
(296,108)
(296,108)
794
44,212
44,212
2,909
(17,653)
(17,653)
205,164
432
X
9,561
-
297,548
3,849
X
21,092
-
(218,168)
(4)
X
(9,343)
-
(273,493)
(741)
X
(21,874)
-
11,051
3,536
30,189
(564)
-
(4,876)
(1,094)
(11,370)
(313)
-
216,100
375,169
(231,556)
(326,777)
63,919
63,166
Net hedging income (loss)
2015
Figures in thousands of euro
Net hedging income (loss)
2014
10,968
(11,217)
Profit (loss) from disposal or repurchase
Profits
Net profit
2015
Losses
Figures in thousands of euro
Financial assets
1. Loans and advances to banks
2. Loans and advances to customers
3. Available-for-sale financial assets
3.1 Deb t instruments
3.2 Equity instruments
3.3 Units in UCITS
3.4 Financing
4. Held-to-maturity investments
Total assets
Financial liabilities
1. Due to banks
2. Due to customers
3. Debt securities issued
10,901
263,000
173,876
82,239
6,885
(45,428)
2014
(749)
(725)
(7)
(17)
(34,527)
262,251
173,151
82,232
6,868
(15,348)
168,304
137,980
10,648
19,676
-
-
-
-
273,901
(46,177)
227,724
152,956
792
(17,126)
(16,334)
(8,320)
Total liabilities
792
(17,126)
(16,334)
(8,320)
Total
274,693
(63,303)
211,390
144,636
Net profit on financial assets and liabilities designated at fair value
2015
Figures in thousands of euro
Net profit on financial assets and liabilities designated at fair value
Net income from trading, hedging and disposal/repurchase activities and from assets/liabilities designated at
fair value
101
2014
4,356
3,073
290,633
199,658
Other net operating income/expense
came to €103.4 million, down €14.5
million, the result of the following:
firstly a contraction in operating
income (-€16.6 million), attributable
primarily to prior year income,
which
included
fast
credit
processing fees, down by €14.4
million, as a result of monitoring
activity and also a downward trend
for loans to customers. At the same
time, expenses also decreased
(€2.1 million), and in particular prior
year expenses (-€2.7 million). In 2014
reimbursements to Prestitalia customers had
been recognised amounting to €12.7 million,
relating to the company’s operations prior to
its acquisition by the UBI Banca Group.
Other net operating income
2015
Figures in thousands of euro
Other operating income
Recovery of expenses and other income on current accounts
Recovery of insurance premiums
Recoveries of taxes
Rents and other income for property management
Recovery of expenses on finance lease contracts
Other income and prior year income
Reclassification of "tax recoveries"
Other operating expenses
Depreciation of leasehold improvements
Costs relating to finance lease contracts
Expenses for public authority treasury contracts
Other expenses and prior year expense
Reclassification of depreciation of leasehold improvements
Total
2014
159,097
22,104
21,413
221,448
4,610
14,039
96,931
(221,448)
175,717
23,568
23,672
224,797
4,868
13,892
109,717
(224,797)
(55,649)
(3,455)
(9,581)
(4,396)
(41,672)
(57,778)
(6,370)
(8,669)
(4,780)
(44,329)
3,455
6,370
103,448
117,939
From a quarter-on-quarter viewpoint operating income for the quarter (€903.8 million
compared with €852 million in the same period in 2014) increased by €145.6 million,
compared with €758.2 million in the previous three months. The improvement was driven by
both the capital gain on the disposal of the investment in Istituto Centrale delle Banche
Popolari Italiane and the stronger result of ordinary financial activities, in addition to the
greater contribution by fees and commissions, despite the continuing weakness of net interest
income. In detail:
•
net interest income fell to €385.2 million (-€13.4 million compared with the third quarter),
largely the result of the trend for interest rates 10 and the impact on business with
customers and on the debt securities portfolio. Business with customers
(-€6.2 million), which also benefited from the performance of medium-/long-term funding,
was penalised by the further narrowing, albeit to a modest degree, of the spread (-2 bps,
primarily correlated to the change in short-term interest rates). Debt securities also
provided a smaller contribution (-€5.4 million), despite the new investments during the
period, whereas the interbank balance was affected by the lower average lending volumes,
and thus yielded a larger negative contribution (approximately €2 million);
Quarterly net interest income
Figures in thousands of euro
Banking business with customers
2014
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
324,587
330,838
343,794
351,910
347,971
367,739
357,667
Financial activities
64,147
69,571
75,623
82,614
99,551
108,334
107,536
105,766
Interbank business
(3,690)
(1,748)
(2,924)
(3,887)
(5,867)
(8,207)
(11,089)
(12,056)
Other items
Net interest income
•
2015
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
360,853
196
6
50
(32)
419
(81)
(58)
(91)
385,240
398,667
416,543
430,605
442,074
467,785
454,056
454,472
the dividends collected amounted to €1.6 million and refer almost entirely to a privateequity investment by UBI Banca; during the comparative period, the €3.4 million collected derived from
funds included in the Parent Company's AFS portfolio (of which €3.2 million was attributable to a Luxembourg
UCITS);
•
profits of equity-accounted investees improved from €3.6 million to €12.1 million as a result
of the strong results recorded by Zhong Ou and Lombarda Vita;
•
net fee and commission income improved to €330.6 million (+€30.1 million) and included
€22.5 million of performance fees, attributable exclusively to UBI Pramerica SGR, the
“against the benchmark” component of which was recognised entirely in the fourth quarter
10 On average, the one month Euribor rate fell from -0.088% in the third quarter to -0.148% in the fourth quarter of 2015.
102
of the year (€0.9 million in the third quarter)11. Excluding those components, the aggregate
nonetheless grew (+€8.5 million), driven by the improvement in management, trading and
advisory services (a total of €158 million, +€9.4 million), and in particular by the
distribution of third party services, whereas banking services remained essentially
unchanged compared to the previous three months (-€0.9 million), due to the increases in
collection and payment services (larger number of transactions and bills presented; the
revenues in question are partially tied to the seasonal nature of business) and current
account administration (due in part to charges to traditional current accounts of
transactions subject to single payments undertaken during the year), offset by the decrease
in "other services" (including the commitment fee and commissions received for CPI policies
on the early repayment of loans of €3.5 million);
Quarterly net fee and commission income
Figures in thousands of euro
2015
2014
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Management, trading and advisory services
(net of the corresponding expense items):
trading in financial instruments
180,538
1,856
149,496
1,058
177,202
2,845
191,606
3,492
155,563
2,904
149,003
2,554
161,022
2,456
158,322
3,764
portfolio management
custody and administration of securities
98,494
881
74,992
1,004
79,849
934
77,286
190
75,665
639
67,435
358
64,093
239
59,571
326
placement of securities
receipt and transmission of orders
32,520
9,491
34,834
9,424
53,370
10,673
67,507
13,496
31,239
10,749
40,601
9,379
46,511
14,392
47,113
14,482
advisory activities
distribution of third party services
financial instruments, products and services
distributed through indirect networks
900
49,070
1,350
38,954
1,753
45,483
1,451
45,971
992
45,022
1,142
39,817
920
43,924
1,304
43,113
(12,674)
(12,120)
(17,705)
(17,787)
(11,647)
(12,283)
(11,513)
(11,351)
150,036
10,055
1,784
150,971
10,257
1,579
150,684
11,074
1,814
149,586
13,889
1,801
162,829
11,009
1,678
149,499
8,454
1,607
148,561
6,663
1,884
141,788
4,319
1,282
collection and payment services
services for factoring transactions
29,148
3,679
26,651
3,744
28,660
4,063
26,912
4,263
38,685
4,239
27,615
4,408
30,302
4,869
29,182
5,187
current account administration
other services
51,296
54,074
49,358
59,382
47,972
57,101
46,156
56,565
54,311
52,907
51,521
55,894
50,562
54,281
47,566
54,252
330,574
300,467
327,886
341,192
318,392
298,502
309,583
300,110
Banking services
(net of the corresponding expense items):
guarantees
foreign exchange trading
Net fee and commission income
•
financial activity generated profits of €151.7 million (€27.8 million in the previous three
months), of which €82.2 million consisted of the capital gain on the partial disposal of
ICBPI (non-recurring), and the remainder of the disposal of government securities of €90.7
million (primarily attributable to UBI Banca). In the fourth quarter, trading also contributed
€6.7 million (driven by €10.1 million of foreign exchange business with customers, in light
of the significant fluctuations during the period); a gain on hedging of €3.7 million
(primarily deriving from own issue liabilities); and fair value movements in assets
designated at fair value of €0.5 million; these positive contributions were offset by the loss
on the repurchase of own financial liabilities (in an environment of prices above par), but
above all by the disposal of non-performing loans (previously termed “deteriorated loans”),
essentially bad loans (€26.7 million), in relation to the massive disposals in November and
December involving both UBI Banca and the network banks;
Quarterly performance by financial activities
2015
4th Quarter
Figures in thousands of euro
2014
3rd Quarter 2nd Quarter 1st Quarter
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Net trading income
6,663
11,873
17,952
27,431
6,719
5,853
16,509
34,085
Net hedging income (loss)
3,695
543
9,746
(3,016)
(2,126)
(1,696)
(3,207)
(4,188)
Total assets
146,097
20,128
28,682
32,817
45,928
10,049
63,594
33,385
Total liabilities
(5,295)
(2,981)
(3,608)
(4,450)
(3,246)
(1,810)
(1,994)
(1,270)
Profit from disposal or repurchase
25,074
28,367
42,682
8,239
61,600
32,115
140,802
17,147
Net income (loss) on financial assets and
liabilities designated at fair value
545
(1,733)
302
5,242
1,881
1,464
(871)
599
Net income
151,705
27,830
53,074
58,024
49,156
13,860
74,031
62,611
11 Overall, performance commissions (approximately €35.2 million) accounted for 2.7% of net fee and commission income for the
year, compared with 1.4% in 2014, when performance commissions amounted to approximately €17 million.
103
•
Other net operating income/expenses declined from €24.2 million to €22.6 million, the
result of the difference in the rate of growth of income (+€4 million, of which +€3.2 million
for recoveries on current accounts) and expenses (+€5.5 million in relation to prior year
expenses). This phenomenon was concentrated on the network banks during the quarter,
which saw the resolution of claims of varying amounts brought by a large number of
counterparties. It must be considered that
because the underlying items of prior year
income and expense items are of a varied and
non-structural nature, they often fluctuate
greatly from one period to another.
Operating expenses rose to €2,175.2
million (+3.2% compared to the
previous year), albeit including the
extraordinary contribution to the
Resolution Fund (€65.3 million, nonrecurring), but also the ordinary
contributions to the Resolution Fund
and the Deposit Guarantee Scheme DGS (respectively, €22 million and
€11.4 million). Net of those items,
operating
expenses
amounted
to
€2,076.5 million (-1.5%). In detail these
consisted of:
Staff costs: composition
2015
2014
Figures in thousands of euro
1) Employees
a) Wages and salaries
b) Social security charges
c) Post-employment benefits
d) Pension expense
e) Provision for post-employment benefits
f) Pensions and similar obligations:
- defined contribution
- defined benefit
g) Payments to external supplementary pension funds:
- defined contribution
- defined benefit
(1,279,998)
(900,762)
(1,286,123)
(903,570)
(241,994)
(49,724)
(243,519)
(49,452)
(2,888)
(3,659)
(828)
(1,921)
(828)
(39,983)
(1,921)
(38,795)
(39,983)
(38,266)
(529)
h) Expenses resulting from share based payments
i) Other employee benefits
2) Other staff in service
-
-
(43,819)
(45,207)
(1,547)
(1,609)
- Expenses for agency staff on staff leasing contracts
(686)
(54)
- Other expenses
(861)
(1,555)
Directors and statutory auditors
(13,545)
(14,047)
• staff costs (which do not include 3)
4) Expenses for retired staff
redundancy expenses under the
Total
(1,295,090) (1,301,779)
trade union agreements of 4th
February 2015 and 23rd December 2015) fell to €1,295.1 million (-€6.7 million).
The change was concentrated at the level of staff costs for employees (directors'
remuneration decreased by €0.5 million) and was primarily due to the downsizing of the
workforce and new forms of flexible and part-time labour (-706 average resources, for a
total savings of €37.4 million), the Other administrative expenses: composition
variable components of remuneration
and the containment of other forms
2015
2014
Figures in thousands of euro
of compensation. However, the above
Other administrative expenses
(679,229)
(583,738)
decreases were partially offset by the A. Rent
payable
(52,069)
(57,245)
impact of the loss of the contribution
Professional and advisory services
(91,945)
(80,223)
Rentals hardware, software and other assets
(34,393)
(37,487)
from the Ordinary Solidarity Fund
Maintenance of hardware, software and other assets
(43,752)
(38,681)
for days of reduced or suspended
Tenancy of premises
(46,364)
(50,645)
working hours (since 2015 fully
Property maintenance
(26,426)
(27,712)
funded by the Group), the stagnation
Counting, transport and management of valuables
(12,220)
(12,893)
of remuneration (inclusive of the effects of
Membership fees
(111,371)
(9,637)
the renewal of the national trade union
agreement, with the resumption of length of
service rises and the inclusion of the separate
component of wages, the value of which had
been increased from 1st June 2014, in base
pay with effect from 1st January 2015) and
the release of provisions in 2014;
• other
administrative
expenses,
considered net of non-recurring
items (extraordinary contribution to the
Resolution Fund of €65.3 million and
integration costs of €7.9 million relating to the
merger between IW Bank and UBI Banca
Private Investment, the latter of which
amounted to €1.5 million in 2014) totalled
€653.9 million, up by €20.4 million
on a normalised basis. However, it
should
be
considered
that
membership fees also include the
Information services and land registry searches
Books and periodicals
Postal
(9,707)
(1,207)
(12,914)
(10,465)
(1,180)
(17,902)
Insurance premiums
Advertising
Entertainment expenses
Telephone and data transmission expenses
Services in outsourcing
(33,364)
(25,080)
(1,841)
(44,621)
(48,750)
(35,087)
(18,933)
(1,676)
(43,635)
(48,630)
Travel expenses
Credit recovery expenses
Forms, stationery and consumables
Transport and removals
Security
Other expenses
(14,815)
(42,265)
(6,116)
(6,243)
(7,608)
(6,158)
(16,307)
(48,719)
(6,922)
(6,699)
(8,167)
(4,893)
(47,838)
(22,622)
(206,280)
(19,923)
(20,461)
221,448
(727,067)
(51,296)
(25,474)
(211,917)
(19,226)
(19,476)
224,797
(635,034)
B. Indirect taxes
Indirect taxes and duties
Stamp duty
Municipal property tax
Other taxes
Reclassification of "tax recoveries"
Total
104
ordinary contributions to the Resolution Fund (€22 million) and to the Deposit Guarantee
Scheme - DGS (€11.4 million), both of which were paid for the first time in 2015; excluding
these items and indirect taxation (-€3.4 million), current general spending decreased by
€9.5 million to €572.7 million, continuing to reflect the strict monitoring measures.
In particular, there were decreases in: rent payable and tenancy and maintenance of
premises (-€10.7 million as a result of massive branch closures carried out in April 2014 and January 2015,
further renegotiations of contracts and energy savings); credit recovery expenses (-€6.4 million); postal
expenses (-€5 million due to fewer hardcopy communications and the start of a contract with a new supplier in
2015); hardware and software leasing instalments (-€3.1 million, essentially due to the stipulation of a
new contract); insurance premiums (-€1.7 million, as a function of the transactions undertaken); and
travel expenses (-€1.5 million).
These savings were only partially offset by higher expenses incurred for the following:
professional and advisory services (which net of the above-mentioned merger costs, mainly allocated here
and resulting from IT services and corporate and legal affairs advisory service, grew by €5.4 million, in relation to
new projects to be developed in support of the business); hardware and software maintenance (+€5.1
million, mainly in relation to upgrading systems for digital innovation); advertising (+€6.1 million, for the new
IW Bank advertising campaign and the other promotional initiatives for the brand); membership fees (+€3.1
million, excluding the contributions to the Resolution Fund and the Deposit Guarantee Scheme, due to Consob the Italian securities market authority - as a result of increased rates in 2015, as well as to the ECB for the new
supervisory contribution); and also telephone and data transmission expenses (+€1 million), where
lower telephone costs made it possible to curb growth in expenses for infoproviders in
relation not only to volumes but also to licence fees.
From the management accounting standpoint, it should be noted that while expenses on ordinary operations were
contained (-2.7%), initiatives relating to development projects (primarily digital innovation and commercial activity)
continued in 2015, resulting in an increase in the related project expenses of 7%;
• depreciation, amortisation and net impairment losses on property, plant and equipment and
intangible assets, amounting to €153 million, continued to decline, falling by €18.4 million,
of which -€8.3 million due to less amortisation on the purchase price allocation, after the
impairment recognised at the end of 2014. The ordinary reduction in the item (-€10.1
million) is a result of lower depreciation of real estate assets (-€5.8 million, partly due to
branch closures), lower amortisation of intangible assets (-€2.9 million, mainly on software
and communication equipment, as part of the natural life cycle) and of the presence in the
comparative period of a non-recurring item (-€2.3 million, in relation to the write-off of
several components of the Prestitalia and IW Bank IT platform).
As a result of the recognition of the aforementioned contributions to the Resolution Fund and
Deposit Guarantee Scheme (€98.7 million), at the quarterly level operating expenses
increased by €136.6 million, from €496.6 million to €633.1 million (€545.6 million in the
fourth quarter of 2014). In detail, compared to the third quarter:
• staff costs increased by €4.4 million to €322.4 million. The increase was the result of the
savings due to the downsizing of the workforce, offset by the increase in the variable
components of remuneration;
• other administrative expenses of €272.5 million were up by €130.8 million, of which €98.7
million was attributable to the aforementioned contributions in accordance with European
regulations, expensed in November 12 , and €0.2 million to the adjustment of expenses
relating to the merger of the subsidiaries IW Bank and UBI Banca Private Investment (nonrecurring, also included in the third quarter at €0.4 million). The remaining change in
current spending (€32.5 million, driven by the highly seasonal nature of several expense
items) was due to credit recovery, higher project expenses in the three months, property
maintenance work, the advertising campaign for the new IW Bank, the Extraordinary
Shareholders' Meeting held in October, and the member dues paid, in particular to the
ECB;
• depreciation, amortisation and net impairment losses on property, plant and equipment and
intangible assets increased by €1.3 million to €38.3 million, due to the higher depreciation
of peripheral hardware (workstations) and software.
12 The estimated amount of the expenses concerned had been recognised in the second quarter (for the annual contributions to the
Resolution Fund) and in the third quarter (for the half-yearly contributions to the Guarantee Deposit Scheme) within provisions for
risks and charges, pending a final decision by the two bodies, which was made in November.
105
As a summary of overall performance, net operating income reached approximately €1,195.7
million, compared with €1,301.4 million in the previous year.
On a quarterly basis, net operating income was €270.7 million (€306.4 million in the same
quarter of 2014), compared with the €261.6 million achieved between July and September
2015.
Net impairment losses on loans reduced by 13.6% (-€126 million) compared with 2014 to total
€802.6 million, consisting of €600.6 million (€674.8 million) relating to the network banks and
approximately €200 million (€235.9 million) to the product companies (which include UBI
Banca and IW Bank). 13
The aggregate was driven by specific net impairment losses on non-performing loans of €823
million, down by €79.2 million due to the general decline affecting the network banks (-€53.4
million), product companies (-€10.4 million, albeit to varying degrees) and UBI Banca
International (-€15.4 million), as a result of the absence of further impairment losses on
Pescanova (the final instalment of which was recognised in the first quarter of 2014).
Overall, specific write-downs benefited from reversals (net of present value discounts) of
€258.9 million (€166.5 million in the previous twelve months).
Net impairment losses on loans: composition
Impairment losses/
reversals of impairment losses, net
Specific
2015
Portfolio
Impairment losses/
reversals of impairment losses, net
Specific
Portfolio
4th Quarter
2015
Figures in thousands of euro
Loans and advances to banks
Loans and advances to customers
Total
(822,954)
13
20,295
13
(802,659)
(231,544)
(1)
(13,468)
(1)
(245,012)
(822,954)
20,308
(802,646)
(231,544)
(13,469)
(245,013)
Impairment losses/
reversals of impairment losses, net
Specific
Figures in thousands of euro
A. Loans and advances to banks
B. Loans and advances to customers
Total
2014
Portfolio
Impairment losses/
reversals of impairment losses, net
Specific
Portfolio
4th Quarter
2014
(902,161)
(26,456)
(928,617)
(242,443)
(60,023)
(302,466)
(902,161)
(26,456)
(928,617)
(242,443)
(60,023)
(302,466)
The Group recorded net reversals on the portfolio of performing loans of €20.3 million (in 2014
the portfolio of performing loans had recorded impairment losses of €26.5 million).
The item reflects the significant reversals by product companies (€49.6 million) as a function
of the reduction of volumes, which was most significant in the cases of UBI Banca, Presitalia
and UBI Leasing, offset by impairment losses of €29.2 million for the network banks, as a
result of the continuing uneven performance of lending volumes, but also of increased needs
for impairment losses due to the updating of historical data series, typically done in the fourth
quarter.
The loan loss rate (calculated as total net impairment losses as a percentage of net loans to
customers) decreased to 0.95% from 1.08% for 2014.
Quarterly net impairment losses stood at €245 million, an appreciable improvement year-onyear compared with €302.5 million in the same quarter of 2014, but up compared with €168.5
million in the third quarter, reflecting the typical year-end trend.
Compared to the July-September period, the increase in total impairment losses (+€76.5
million) is attributable to higher specific impairment losses of €47 million 14 (of which €37
million attributable to the network banks), and also to higher impairment losses on performing
loans of €29.5 million (in view of reversals of €16 million recognised in the third quarter of
2015). The net collective impairment losses are to be attributed to the network banks, as a
13 In 2015, the impairment losses recognised by UBI Banca International fell to €2.2 million from €17.9 million in 2014.
14 The amount benefited from reversals (other than for present value discounts) of €66.2 million.
106
result of the aforementioned update of the historical data series15 used in internal valuation
models, whereas the other Companies continued to record reversals of €19.7 million.
Net impairment losses/reversals of impairment losses on loans: quarterly performance
Figures in
thousands of
euro
Specific
Portfolio
1st
Quarter
Specific
Portfolio
2nd
Quarter
Specific
Portfolio
3rd
Quarter
Specific
Portfolio
4th
Quarter
2015
(199,326)
9,134
(190,192)
(207,544)
8,637
(198,907)
(184,540)
16,006
(168,534)
(231,544)
(13,469)
(245,013)
2014
(212,210)
13,584
(198,626)
(237,289)
6,814
(230,475)
(210,219)
13,169
(197,050)
(242,443)
(60,023)
(302,466)
2013
(155,657)
(2,085)
(157,742)
(212,689)
(13,461)
(226,150)
(192,435)
(314)
(192,749)
(347,302)
(19,035)
(366,337)
2012
(122,221)
(8,949)
(131,170)
(225,562)
22,381
(203,181)
(161,535)
1,207
(160,328)
(373,308)
20,773
(352,535)
2011
(96,010)
(9,364)
(105,374)
(142,877)
(15,271)
(158,148)
(110,779)
(24,364)
(135,143)
(195,114)
(13,299)
(208,413)
2010
(105,366)
(26,493)
(131,859)
(184,080)
(5,765)
(189,845)
(124,200)
(9,811)
(134,011)
(217,327)
(33,890)
(251,217)
2009
(122,845)
(36,728)
(159,573)
(176,919)
(58,703)
(235,622)
(178,354)
(18,995)
(197,349)
(281,668)
9,001
(272,667)
2008
(64,552)
4,895
(59,657)
(85,136)
(8,163)
(93,299)
(77,484)
(25,384)
(102,868)
(219,512)
(90,887)
(310,399)
The loan loss rate for the quarter therefore amounted to 1.16% compared to 0.80% in the
preceding three months and 1.41% in the fourth quarter of 2014 (annualised data).
The following was also recognised in the income statement in the first half:
•
€16.9 million as net impairment losses on other financial assets/liabilities16 consisting of: €18.3 million, entirely non-recurring, from item 130b, relating to impairment losses on
instruments held in the portfolios of the network banks (€2.7 million, primarily relating to
instruments of an investment nature) and the Parent (€15.5 million, of which €13.6 million
related to the write-off of two subordinated securities issued by Banca Marche and Banca
Popolare dell'Etruria, subscribed for, respectively, in 2005 and 2006, €1.5 million of units
in UCITS and €0.4 million of shares); and the remaining +€1.4 million from the item 130d
as reversals on guarantees;
•
€3 million of net provisions for risks Net provisions for risks and charges
and charges 17 ; the item, which
2015
2014
includes the amounts set aside on a
Figures in thousands of euro
prudential basis to account for
provisions for revocation clawback risks
(1,614)
(287)
various claims brought by different Net
Net provisions for staff costs
(55)
(66)
types of counterparties (in particular Net provision for bonds in default
154
120
in the line "other provisions") Net provisions for litigation
6,557
(8,689)
(8,017)
(152)
includes, in particular: the increase Other net provisions for risks and charges
Total
(2,975)
(9,074)
in the risk on a position subject to
revocation (clawback) attributable to
a network bank; but also the release of a provision of the former Centrobanca (of
approximately €10 million), recognised to cover a long dispute that was resolved in the
interim by a judgment of the Court of Cassation, which ruled in favour of the UBI Banca
Group's actions;
•
€0.5 million of profits on the disposal of equity investments 18 , which among the main
amounts includes a loss of €0.5 million (non-recurring) relating to the disposal at the
15 In the fourth quarter risk parameters are updated, resulting in the expansion of historical data series, as part of the ordinary
annual process, with the exclusion of the least recent year and the inclusion of the most recent.
16 In 2014 net impairment losses were €8.7 million, consisting of: €4.8 million of non-recurring impairment losses on AFS securities
(€3 million of securities and funds of the Parent and €1.8 million of network banks, of which €0.7 million for the impairment of the
investment held by BRE in G.E.C. S.p.A.; €0.6 million (non-recurring) of the additional contribution requested by the Interbank
Deposit Protection Fund for Tercas; and slightly more than €3.2 million from item 130d, relating to impairment losses on
guarantees.
17 In 2014 €9.1 million of provisions were made, the result of provisions for revocation (clawback) actions and legal action taken by
different types of counterparty (of which €2 million attributable to the Parent for tax litigation, €1.2 million to UBI Factor following
the determination of the amount of a risk on litigation proceedings and €1.5 million, non-recurring, provisioned by UBI.S in
relation to a penalty for the early termination of a service contract) and the release of €2.4 million from a provision formed in
previous years, following the conclusion of the dispute in question.
18 In 2014 profit on disposal was €94 million, almost entirely non-recurring, on the disposals carried out in December of stakes held
in insurance companies (+€59.7 million for 30% of Aviva Vita, -€1.5 million for 30% of Aviva Assicurazioni Vita and +€27.1 million
for the full disposal the 49.99% stake held in UBI Assicurazioni; amounts given net of consolidation adjustments); from the
adjustment to the price paid on the sale of the former Swiss subsidiary BDG (-€0.9 million); and from the disposal of real estate
investments, mainly held by BPA and Banco di Brescia (+€9.7 million).
107
beginning of the year of a stake held indirectly by the Parent; the adjustment (+€0.3 million)
to the sales price of the former UBI Assicurazioni (now Cargeas Assicurazioni); a gain (+€0.2
million) realised by BRE on the sale of a property located at Cuneo; and other minor
amounts deriving from the disposal of assets by the network banks.
In particular, in the fourth quarter of 2015 the following were recognised in the income
statement:
 €10.5 million of net impairment losses on other financial assets/liabilities consisting of +€4.5
million of impairment losses on unsecured guarantees and -€6 million of impairment losses
on AFS securities (of which €5.6 million relating to subordinated bonds issued by Banca
Marche and Banca Popolare dell'Etruria in the Parent's portfolio);
 €44.8 million of net releases of provisions for risks and charges due to the classification to
"Other administrative expenses" of the estimated provisions recognised in the third quarter
(€11.3 million to the Deposit Guarantee Scheme - DGS) and second quarter (€22.8 million
to the Resolution Fund). In addition to the customary prudential provisions, the item also
includes the release of the provision for the aforementioned claim brought against the
former Centrobanca, which was favourably concluded (approximately €10 million) and the
reversal of the provision covering the risk resulting from the commissions received for CPI
polices on the early repayment of loans (€3.4 million);
 €0.1 million of profits on the disposal of equity investments.
As a result of the performance described above, during the year profit on continuing
operations before tax fell to €373.7 million from the €449.1 million earned in 2014.
On a quarterly basis, profit on continuing operations came to €60.1 million (€86.8 million in
the same period of 2014), compared with €71.7 million in the third quarter of 2015.
Taxes on income for the period from continuing operations amounted to €161.1 million
(compared with €186.9 million19 in the comparative period) and they include a non-recurring
negative component amounting to €25.6 million.
As part of activities to contain risks connected with contingent liabilities, including those of a
tax nature, UBI Banca reached a settlement agreement with the tax authorities on two lines of
litigation: the “preference shares” matter (the Group’s greatest contingent tax risk) and the
“branch switching” operations. The settlement agreement, stipulated on 4th February 2016,
involved the conclusion of all the litigation for all years already assessed and currently being
assessed, by means of the payment of taxes in an amount recalculated by the tax authorities
and of the related interest. The impact on the consolidated income statement was calculated,
after the deduction of provisions made from time to time in the accounts to cover the tax risk.
The tax rate was therefore 43.12% (compared to the previous 41.62%), with an impact by IRAP
(regional production tax) of 6.89%, positively affected by the n impact of this deduction on
taxation for the year came to €32.6 million, of which €4.9 million relating to the Parent.
Compared with the theoretical rate (33.07%), the effective tax rate levied was mainly conditioned by the combined
effect of IRES (corporate income tax) and IRAP (regional production tax), due to:
-
the aforementioned non-recurring charges relating to the settlement of the Group's tax litigation with the revenue
authority (6.9 percentage points);
-
the partial non deductibility of interest expense (4%), introduced by Law No. 133 of 6th August 2008 (3.7
percentage points);
-
the higher taxation on dividends eliminated in the consolidation (1.8 percentage points);
non tax deductible expenses, costs and provisions accounting (2.2 percentage points);
the total non-deductibility for IRAP purposes of provisions for risks and charges and impairment losses on AFS
securities and the partial non-deductibility of staff costs (staff employed on temporary contracts), other
administrative expenses and depreciation and amortisation (1 percentage point).
These impacts were only partially cushioned by the following: the valuation of equity investments according to the
equity method not significant for tax purposes (3.1 percentage points); the Aiuto alla crescita economica (ACE – “aid to
19 The item included a non-recurring negative component of €4.5 million relating to the change in substitute tax on the new stakes
held in the Bank of Italy. In the 2013 financial statements, the Group recognised a capital gain of €29.2 million on the stakes held
by BRE and Carime, per Decree Law No. 133/2013, converted, with amendments, by Law No. 5/2014, subsequently amended per
the provisions of Decree Law No. 66/2014, converted into Law No. 89/2014, with an increase to 26% of the substitute tax rate,
previously 12%.
108
economic growth”) concessions (2.2 percentage points); the deduction for IRES purposes of an amount equal to the
IRAP corresponding to the taxable portion of employee and similar personnel expenses and the flat rate 10% deduction
(0.3 percentage points).
As a result of the performance reported and also of the profits earned by Group banks and
companies, profit for the year attributable to non-controlling interests (inclusive of the effects of
consolidation entries) improved to €29.8 million from €28.9 million in 2014.
The quarterly performance recorded a profit attributable to non-controlling interests that rose to
€7.2 million from the €4 million in the fourth quarter of 2014 and from the €5.5 million in the
period July-September 2015.
Finally, the following have been stated under separate items, net of taxes and non-controlling
interests:

redundancy expenses (€62.7 million) expensed in the first quarter following the signing of
the trade union agreement of 4th February 2015, relating to the merger of IW Bank into UBI
Banca Private Investment of €1.2 million (€1.6 million gross of taxes) and in the fourth
quarter following the signing of the union agreement of 23rd December 2015 of €61.5
million (€95 million gross of €31.5 million of taxes and €2 million of non-controlling
interests) referring to 405 staff;

impairment losses on property, plant and equipment of €3.3 million (€5.1 million gross of
€1.7 million of taxes and €0.1 million of non-controlling interests) refer to the results of the
periodic impairment tests of the value of owned properties. Of this amount, €1.4 million is
attributable to the Parent, approximately €2 million to the network banks and €1.7 million
to BPB Immobiliare (gross amounts).
In 2014, the following non-recurring expenses for the fourth quarter were stated under separate items, shown net of
taxes and non-controlling interests:
 €76.3 million of redundancy expenses (net of €30.7 million of taxes and €4.5 million of non-controlling interests),
charged to the income statement in the fourth quarter, in relation to the trade union agreement of 26th November
2014;
 €882.7 million (€1,113.4 million gross) of net impairment losses on goodwill, finite useful life intangible assets and
property, plant and equipment, consisting of:
• €838.7 million (net of €207.6 million of taxes and non-controlling interests of €58 thousand) to the goodwill of
the network banks (BBS, BRE, Carime and BPA) and of UBI Factor, as the result of the annual impairment
test;
• €42.6 million to finite useful life intangibles (net of €20.1 million of taxes and non-controlling interests of €2
million), subject to impairment testing pursuant to IAS 38 (PPA). The procedure gave rise to the complete writedown of core deposits, due to continuing very low interest rate conditions and poor income prospects, and to a
partial write-down of the brand, due to the importance of that the Group's brand has taken on compared to
those of the individual network banks;
• €1.4 million (net of taxes of €0.8 million and non-controlling interests of €0.15 million) to property, plant and
equipment, specifically properties, attributable to Banco di Brescia and BRE.
109
The comments that follow are based on items in the consolidated balance sheet contained in the reclassified
consolidated financial statements on which the relative tables furnishing details are also based. The section
“Consolidated companies: the principal figures” may be consulted for information on individual banks and Group
member companies.
General banking business with customers:
funding
Total funding
In 2015 there was a gradual, although still modest, improvement in the credit market, fostered by the
cyclical recovery - which remained weak in Italy - and by the measures adopted by the Eurosystem. While
more positive than in the previous year, the situation still does not present either the characteristics or
numbers to support an increase in the Group's total lending. Consequently, during the year it was not
necessary to increase direct funding volumes, and customers focused on, and were steered towards,
indirect funding instruments, resulting in a shift in the composition of total funding.
Furthermore, financial market fluctuations and the developing regulatory situation relating to the protection
of savings created an environment of uncertainty and fear that translated into stability of current accounts,
where customers often chose to hold their assets.
Against a market backdrop of negative interbank interest rates and returns on short to medium-term
government securities close to zero or negative, the Group observed a decrease in bond funding due to very
low yields on the newly issued securities subscribed for by ordinary customers and the choice to procure
funding on the institutional market, to a moderate extent and with limited frequency, in view of the partial
replacement of matured and soon-to-mature securities.
Short-term funding, previously characterised by high yields (forms of term deposit), was gradually
discontinued and institutional funding (repurchase agreements with the Cassa di Compensazione e
Garanzia - a central counterparty clearing house) was used to meet contingent liquidity needs, in
accordance with the evolution of the Group's financial portfolio and exposures to the European Central
Bank.
The asset management products offered were aimed at meeting the needs of investors in search of greater
diversification for their investments and returns eventually higher than those offered by corporate bonds, even
if lower on average than in previous years. The therefore Group continued with successful placement of
products in the Sicavs and mutual investment funds segment, and indirect funding showed a trend toward a
gradual increase.
Total funding from customers
Figures in tho usands o f euro
31.12.2015
A
%
30.9.2015
B
%
30.6.2015
C
%
31.3.2015
D
%
31.12.2014
E
%
Changes A/E
amount
%
Direct funding
91,512,399
53.5%
89,021,767
52.9%
94,327,352
54.4%
91,142,240
52.8%
93,207,269
55.1%
-1,694,870
-1.8%
Indirect funding
of which: assets under
management
79,547,957
46.5%
79,161,790
47.1%
79,070,259
45.6%
81,401,680
47.2%
75,892,408
44.9%
3,655,549
4.8%
48,567,539
28.4%
47,230,549
28.1%
47,773,645
27.6%
47,491,074
27.5%
43,353,237
25.6%
5,214,302
12.0%
Total funding from customers
171,060,356 100.0% 168,183,557 100.0% 173,397,611 100.0% 172,543,920 100.0% 169,099,677 100.0%
1,960,679
1.2%
Total funding net of CCG and
institutional funding
152,077,747
2,229,925
1.5%
150,068,922
150,802,126
154,102,009
149,847,822
Total Group funding, consisting of total amounts administered on behalf of customers,
amounted to €171.1 billion as at 31st December 2015, an increase of approximately €2 billion
year-on-year.
As may be seen from the details provided in the table, growth was due to the performance of
the indirect component (+€3.7 billion), and in particular asset management (+€5.2 billion).
On the other hand, direct funding declined (-€1.7 billion), despite the recovery in the fourth
quarter, due to the year-on-year reduction in medium to long-term funding for the reasons
indicated in the introduction. Excluding operations of an institutional nature, total funding
110
from customers increased by €2.2 billion to €152.1 billion (+€2 billion compared to September)
thanks to the performance of the indirect component.
Direct and indirect funding
(end of quarter totals in millions of euro)
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1Q 2Q 3Q 4Q
2008
1Q 2Q 3Q 4Q
2009
1Q 2Q 3Q 4Q
2010
1Q 2Q 3Q 4Q
2011
Direct funding
1Q 2Q 3Q 4Q
2012
1Q 2Q 3Q 4Q
2013
1Q 2Q 3Q4Q
2014
1Q 2Q 3Q 4Q
2015
Indirect funding
Direct funding
At the end of 2015, the direct funding of the UBI Banca Group amounted to €91.5 billion,
down €1.7 billion in comparison with the previous year, but up €2.5 billion in the fourth
quarter. An analysis of the components indicates a difference in the performances of shortterm funding, subject to a certain degree of quarterly fluctuation during the year, and medium
to long-term funding, which progressively declined.
In detail, amounts due to customers came to €55.3 billion, primarily consisting of:
 current accounts and free deposits of €47.7 billion, up €3.4 billion year-on-year. The item,
which remained stable at around €44 billion at the end of the interim periods, increased by
€3.6 billion in the October-December period due to the liquidity generated by bond
maturities (€2.7 billion in the fourth quarter, offset by new bond issuance of approximately
€1.1 billion) and to deposits, primarily of a temporary nature, by corporate customers;
 €6.1 billion of repurchase agreements with the Cassa di Compensazione e Garanzia (a central
counterparty clearing house), up from €5.5 billion in the previous year. This form of
funding, used as a flexible source of short-term funds, registered a volatile performance in
the twelve months, due to the Group's evolving liquidity needs in consideration of both the
volumes of the securities portfolio, down during the year, and the level of debt with the ECB
(€8.1 billion in December, €6.1 billion in June and €10.3 billion at the end of 2014)1;
 financing – other, amounting to €540.4 million (€489.8 million in the comparative period),
including the funds made available by the Cassa Depositi e Prestiti (CDP – a state
controlled fund and deposit institution) as part of anti-crisis initiatives to support small to
medium-sized businesses.
Debt securities issued declined gradually over twelve months to €36.2 billion from €41.6
billion in the comparative period.
1
Funding from repo business with customers remained wholly marginal (€65 million at the end of 2015 compared with €164 million
in December 2014).
111
Within the item, bonds, which accounted for 98.1% of the total, amounted to €35.6 billion,
from the previous €40 billion, down gradually over twelve months, essentially due to the
decrease in bonds subscribed by ordinary customers (-€3.9 billion, including the bonds of the
former Centrobanca), primarily affected by the maturities of the bonds previously issued by
the network banks and former Centrobanca, in addition to a general slowdown of placement
due to very low yield levels.
The aggregate also includes subordinated securities of €2.9 billion (€3.6 billion as at 31st December 2014), a decline of €0.7
billion during the year, attributable to the recognition of amortisation instalments on some securities accounting for €0.6
billion (eight of the twelve subordinated bonds outstanding are redeemed by means of amortisation on a straight-line basis)
and to the maturity in the last quarter of the year accounting for €0.1 billion.
Certificates of deposit, amounting to €0.6 billion (€1.4 billion in the comparative period),
showed a constant decline in the component subscribed for by ordinary customers (-€0.5
billion at the annual level), whereas the component relating to the institutional programme,
which increased in the first half of the year, decreased in the second half of the year, partly
affected by intermediate maturities, which were reflected in the period-end figure.
In addition, other securities, consisting solely of the Euro Commercial Paper institutional
programme, amounted to €80 million (€152 million at the end of 2014).
In terms of type of customer,
as follows:

FUNDING IN SECURITIES FROM INSTITUTIONAL CUSTOMERS
was composed
Euro Medium Term Notes (EMTNs) amounting to €2.5 billion, listed in Dublin and issued
as part of a programme with an issuance ceiling of €15 billion. The changes were
concentrated in the fourth quarter: private placements of €388 million were undertaken,
against maturities of a nominal amount of €965 million and repurchases of a nominal
amount of approximately €5 million (in this latter case, spread over the quarters); the
residual changes were due to accounting adjustments;
Direct funding from customers
31.12.2015
%
31.12.2014
%
Figures in thousands of euro
Changes
amount
Current accounts and deposits
Term deposits
Financing
- repurchase agreements
of which: repos with the CCG
- other
Other payables
Total amounts due to customers (item 20 liabilities)
Bonds
Certificates of deposit (a)+(c)
Other certificates (b)
Total debt securities issued (*) (item 30 Liabilities)
%
47,702,548
52.2%
44,317,163
47.6%
3,385,385
7.6%
183,042
0.2%
429,347
0.5%
-246,305
-57.4%
8.5%
6,712,891
7.3%
6,185,217
6.6%
527,674
6,172,495
6.7%
5,695,380
6.1%
477,115
8.4%
6,107,667
6.7%
5,531,586
5.9%
576,081
10.4%
540,396
0.6%
489,837
0.5%
50,559
10.3%
665,990
0.7%
685,193
0.7%
-19,203
-2.8%
55,264,471
60.4%
51,616,920
55.4%
3,647,551
7.1%
35,557,943
38.8%
40,037,379
43.0%
-4,479,436
-11.2%
609,989
0.7%
1,401,428
1.5%
-791,439
-56.5%
79,996
0.1%
151,542
0.1%
-71,546
-47.2%
36,247,928
39.6%
41,590,349
44.6%
-5,342,421
-12.8%
12,874,942
14.1%
13,720,269
14.7%
-845,327
-6.2%
2,539,326
2.8%
3,123,932
3.4%
-584,606
-18.7%
of which:
securities subscribed by institutional customers:
The EMTN programme (**)
French certificates of deposit programme (a)
349,978
0.4%
599,943
0.6%
-249,965
-41.7%
The euro commercial paper programme (b )
79,996
0.1%
151,542
0.2%
-71,546
-47.2%
9,905,642
10.8%
9,844,852
10.5%
60,790
0.6%
23,254,511
25.4%
27,700,833
29.7%
-4,446,322
-16.1%
The covered b ond programme
securities subscribed by ordinary customers:
of the Group:
- Certificates of deposit (c)
- Bonds:
issued b y UBI Banca
issued b y the network b anks
260,011
0.3%
801,485
0.9%
-541,474
-67.6%
20,223,298
22.1%
23,610,145
25.3%
-3,386,847
-14.3%
18,080,279
19.8%
17,930,309
19.2%
149,970
0.8%
2,143,019
2.3%
5,679,836
6.1%
-3,536,817
-62.3%
external distribution networks:
- Bonds issued b y the former Centrob anca
Total direct funding
2,771,202
3.0%
3,289,203
3.5%
91,512,399
100.0%
93,207,269
100.0%
-518,001
-15.7%
-1,694,870
-1.8%
Due to customers net of the CCG
49,156,804
46,085,334
3,071,470
6.7%
Total direct funding net of the CCG and institutional
funding
72,529,790
73,955,414
-1,425,624
-1.9%
(*) Within the item, subordinated securities, represented by Lower Tier 2 notes, amounted to €2,852 million nominal as at 31st December 2015
and to €3,584 million nominal as at 31st December 2014.
(**) The corresponding nominal amounts were €2,464 million as at 31st December 2015 and €3,046 million as at 31st December 2014.
112

Covered bonds of €9.9 billion, stable year-on-year due to the issue of €750 million nominal
in October 2015, offset by the maturity in October of a bond of €500 million nominal and
other marginal decreases (€50.6 million nominal over twelve months, of which €25.3 million
in the fourth quarter) tied to amortisation instalments of two "amortising" bonds. The
residual discrepancy between the comparative periods that emerges from the table is to be
attributed solely to the effects of accounting adjustments.
UBI Banca had eleven covered bonds in issue as at 31st December under the first
“multioriginator” programme backed by residential mortgages with a €15 billion ceiling for a
nominal amount of €9.3 billion (net of amortisation totalling €185.7 million)2. The securities
are traded in Dublin.
As at 31st December 2015 the residential mortgage asset pool formed at UBI Finance to back the
issuances totalled €14.5 billion, of which 23.8% originated by Banca Popolare di Bergamo, 18.4% by
Banco di Brescia, 14.2% by Banca Popolare Commercio e Industria, 12.9% by UBI Banca, 11.5% by
Banca Regionale Europea, 9% by Banca Popolare di Ancona, 6.8% by Banca Carime, 1.8% by Banca di
Valle Camonica and 1.6% by IW Bank (the former UBI Banca Private Investment).
The portfolio continued to show a high degree of fragmentation, including over 186 thousand mortgages
with average residual debt of €77.9 thousand, distributed with approximately 65.9% in North Italy and in
Lombardy especially (45.8% of the total).
In 2015 two transfers of mortgages were finalised: the first, with value date of 30th April and effect
from 1st May, was undertaken by Banca Carime, Banco di Brescia, Banca Popolare Commercio e
Industria e Banca Regionale Europea for total residual debt of €757 million, whereas the second, with
effect from 1st November, for total residual debt of €738 million, involved Banca Popolare di Bergamo,
Banca Popolare di Ancona, UBI Banca, Banca di Valle Camonica and IW Bank.
In addition, a second “multioriginator” programme is also operational; it has a ceiling of €5
billion and is backed by commercial and residential mortgages not used in the first
programme. So far this programme, listed on the Dublin stock exchange, has only been
used for self retained issuances3.
At the end of the year, the commercial and residential mortgage asset pool formed at UBI Finance CB 2
to back the issuances totalled €3.2 billion, originated as follows: 21.2% by Banca Popolare di Bergamo;
20.9% by Banco di Brescia; 17.5% by Banca Regionale Europea; 16.4% by Banca Popolare di Ancona;
9.5% by Banca Popolare Commercio e Industria; 9.4% by Banca Carime, 3.9% by Banca di Valle
Camonica and the remaining 1.2% by UBI Banca and IW Bank.
The portfolio included over 27 thousand mortgages with average remaining debt of €117.4 thousand,
distributed, as for the first programme, with a high concentration in North Italy (67.9%) and in Lombardy
especially (44.9% of the total).
Two transfers of mortgages were undertaken during the year: the first, with value date of 1st June,
involved Banco di Brescia, Banca Popolare Commercio e Industria, Banca Popolare di Ancona and
Banca Regionale Europea for total residual debt of €313 million, and the second, with effect from 1st
December, resulted in the transfer of mortgages with residual debt of €157 million, by Banca Popolare di
Bergamo, Banca Carime, IW Bank, UBI Banca and Banca di Valle Camonica.
French certificates of deposit of €350 million and Euro Commercial Paper amounting to €80
million, issued by UBI Banca International as part of programmes for €5 billion and €6
billion respectively, all listed in Luxembourg.
For this form of short-term funding, the development of quarterly balances reflects
maturities, which often coincide with the end of the month. The average annual balance of
funding in French CDs was €642.2 million, with a use of €920 million as at 1st February
2016.
Funding in ECP, which declined significantly in the first half of 2015 due to the loss of the
eligibility requirement, subsequently re-attained with the rating upgrade by Moody's, was
also affected by the short-term nature of the investments. Average annual funding in ECP
amounted to €196.7 million, with the use of €405 million as at 1st February 2016.
FUNDING IN SECURITIES FROM ORDINARY CUSTOMERS – consisting almost entirely of bonds –
declined to €23.3 billion (-€4.4 billion). In detail these consisted of:

2 A list is given in Part E, Section 1 of the Notes to the Financial Statements. Two self-retained issuances for €1.2 billion nominal also
existed under that same programme at the end of the period, an issuance for €0.7 billion nominal carried out in March 2014 and
second for €0.5 billion in December 2015. Two issues totalling €1.7 billion nominal were cancelled during the year. Because these
were repurchased by UBI Banca, these liabilities have not been recognised, in accordance with IFRS.
3 Two issuances in 2012 for a total of €1.4 billion nominal (net of the amortisation instalments falling due in the meantime), a €0.2
billion issuance in March 2014 and a fourth for €0.65 billion completed in July 2015. Because these were repurchased by UBI
Banca, these liabilities have not been recognised, in accordance with IFRS.
113
-
-
-
the securities attributable to UBI Banca increased slightly (+150 million), driven by
issuance of €4 billion nominal (of which €1.1 billion in the fourth quarter), almost entirely
offset by maturities of €3.4 billion nominal (of which €1.6 billion in the fourth quarter) and
repurchases of €462 million nominal (of which €233 million in the fourth quarter);
the securities issued by the network banks, involving an entirely marginal issuance of
social bonds (€39 million nominal in 2015), declined by €3.5 billion, due to maturities of
approximately €3.5 billion nominal over twelve months (of which €705 million in the fourth
quarter) and, to a marginal extent, to repurchases of €79 million nominal (of which €28
million in the fourth quarter);
residual funding from non-captive customers, previously obtained by the former
Centrobanca, and thus subject solely to reduction to the gradual maturity of the securities
in issue, amounted to €2.8 billion, reflecting maturities of €501 million nominal (€422
million of which was concentrated in the fourth quarter) and repurchases of €4 million
nominal during the year.
The table below summarises maturities for Group bonds in issue at the end of 2015.
Maturities of bonds outstanding as at 31st December 2015
Nominal amounts in millions of euro
1st quarter 2nd Quarter 3rd Quarter
2016
2016
2016
UBI BANCA
Bonds ordinary customers
Bonds institutional customers
of which: EMTNs
Covered b onds
Network banks
Other banks in the Group
Total
North
- North West
- North East
Central
South
2019
Subsequent
years
Total
2,198
1,198
1,000
1,000
187
-
2,245
2,070
175
150
25
243
-
5,566
3,477
2,089
1,038
1,051
536
-
4,427
4,225
202
151
51
339
2
6,296
4,245
2,051
1,000
1,051
33
-
5,834
448
5,386
25
5,361
19
-
32,447
20,669
11,778
2,464
9,314
2,111
2
4,514
2,121
2,385
2,488
6,102
4,768
6,329
5,853
34,560
31.12.2015
Total
2018
1,859
1,834
25
25
262
-
(excluding repurchase agreements and bonds) (*)
Lombardy
Latium
Piedmont
Apulia
Calabria
Campania
Marches
Liguria
Emilia Romagna
Veneto
Basilicata
Umbria
Abruzzo
Friuli Venezia Giulia
Tuscany
Molise
Trentino Alto Adige
Valle d'Aosta
2017
4,022
3,172
850
100
750
492
-
Geographical distribution of direct funding from
customers by region of location of the branch
Percentage of total
4th Quarter
2016
31.12.2014
60.39%
60.10%
7.99%
7.94%
4.50%
4.37%
3.95%
3.90%
1.97%
1.38%
1.00%
0.95%
0.49%
0.47%
0.27%
0.20%
0.18%
0.02%
0.03%
7.99%
7.71%
4.75%
4.63%
3.89%
3.89%
2.07%
1.34%
1.03%
0.99%
0.49%
0.46%
0.26%
0.20%
0.17%
0.02%
0.01%
100.00%
100.00%
73.0%
72.5%
70.3%
2.7%
69.9%
2.6%
12.6%
12.6%
14.4%
14.9%
Finally, the table “Geographical distribution of direct
funding from customers by region of location of the
branch” gives the geographical distribution of
traditional funding (consisting of current accounts,
savings deposits and certificates of deposit) in Italy.
The values confirm the Group's concentration in the
regions of North-Western Italy (70.3% from 69.9% at
the end of 2014) and in particular in Lombardy
(60.39% from the previous 60.10%).
Overall, the table shows a modest shift in the
composition of funding from Southern Italy to the
regions of Northern Italy.
The change in regional composition was also affected
by the measure aimed at optimising the operational
structure undertaken in January 2015 (in this
regard, see the section "The distribution network and
market positioning").
(*) The aggregates relate to banks only.
114
Listed securities
Bonds listed on the MOT (electronic bond market)
Nominal amount
of issue
ISIN number
Book value as at
31.12.2015
31.12.2014
€ 164,847,770
IT0001197083
Centrobanca zero coupon 1998-2018
L. 800 billion
€ 166,203,078
IT0001267381
Centrobanca 1998/2018 reverse floater capped
L. 320 billion
€ 125,316,647
€ 128,707,931
IT0001300992
Centrobanca 1999/2019 step dow n indicizzato al tasso sw ap euro 10 anni
€ 170,000,000
€ 111,845,679
€ 112,449,171
IT0001312708
Centrobanca 1999/2019 step dow n eurostability bond
€ 60,000,000
€ 67,684,774
€ 65,655,294
IT0004457070
UBI subordinato low er tier 2 fix to float con rimborso anticipato 13.3.2009-2019
€ 370,000,000
€ 368,888,723
€ 368,104,933
IT0004457187
UBI subordinato low er tier 2 a tasso variabile con ammortamento 13.3.2009-2016
€ 211,992,000
€ 42,379,466
€ 84,556,646
IT0004497050
UBI subordinato low er tier 2 fix to float con rimborso anticipato 30.6.2009-2019
€ 365,000,000
€ 361,575,612
€ 360,645,955
IT0004497068
UBI subordinato low er tier 2 a tasso variabile con ammortamento 30.6.2009-2016
€ 156,837,000
€ 31,288,581
€ 62,422,372
IT0004572860
UBI subordinato low er tier 2 a tasso variabile con ammortamento 23.2.2010-2017
€ 152,587,000
€ 60,939,415
€ 91,271,787
IT0004572878
UBI subordinato low er tier 2 a tasso fisso 3,10% con ammortamento 23.2.2010-2017
€ 300,000,000
€ 122,640,023
€ 185,488,925
IT0004645963
UBI subordinato low er tier 2 a tasso fisso 4,30% con ammortamento 5.11.2010-2017
€ 400,000,000
€ 162,639,114
€ 244,825,197
IT0004718489
UBI subordinato low er tier 2 tasso fisso 5,50% con ammortamento 16.6.2011-2018 Welcome Edition
€ 400,000,000
€ 246,505,425
€ 331,286,405
IT0004723489
UBI subordinato low er tier 2 tasso fisso 5,40% con ammortamento 30.6.2011-2018
€ 400,000,000
€ 246,369,698
€ 331,196,658
IT0004767742
UBI subordinato low er tier 2 tasso misto 18.11.2011-2018 Welcome Edition
€ 222,339,000
€ 220,039,976
€ 219,227,855
IT0004815715
Unione di Banche Italiane Scpa tasso fisso 3,80% 15.6.2012-15.6.2016
€ 20,224,000
€ 20,267,163
€ 20,290,203
IT0004841778
UBI subordinato low er tier 2 tasso misto 8.10.2012-8.10.2019 Welcome Edition
€ 200,000,000
€ 201,053,156
€ 200,831,075
IT0004842370
UBI subordinato low er tier 2 tasso fisso 6% con ammortamento 8.10.2012-8.10.2019
€ 970,457,000
€ 787,519,220
€ 984,597,162
IT0004851710
Unione di Banche Italiane Scpa tasso variabile 23.11.2012-23.11.2016 Welcome Edition
"UBI Comunità per l'imprenditoria sociale del sistema CGM"
€ 17,552,000
€ 17,602,437
€ 17,604,396
IT0004851728
Unione di Banche Italiane Scpa tasso fisso step up 4,00% 19.10.2012-19.10.2016 Welcome Edition
"UBI Comunità per la Comunità di Sant'Egidio"
IT0004874985
Unione di Banche Italiane Scpa tasso fisso step up 3,00% 31.1.2013-31.1.2017
€ 20,000,000
€ 20,401,166
€ 20,467,451
€ 157,532,000
€ 162,892,536
€ 163,571,882
IT0004895352
Unione di Banche Italiane Scpa step up 5.4.2013-5.4.2016 Welcome Edition C Cesvi
€ 20,000,000
€ 20,322,792
€ 20,627,712
IT0004908478
Unione di Banche Italiane Scpa tasso misto 24.5.2013-24.5.2016 Welcome Edition T2 Confapi
€ 20,000,000
€ 20,017,535
€ 20,095,027
Covered bonds listed on the Dublin stock exchange
Nominal amount
of issue
ISIN number
Book value as at
31.12.2015
31.12.2014
IT0004533896
UBI Covered Bonds due 23 September 2016 3,625% guaranteed by UBI Finance Srl
€ 1,000,000,000
€ 1,027,075,109
€ 1,050,594,067
IT0004558794
UBI Covered Bonds due 16 December 2019 4% guaranteed by UBI Finance Srl
€ 1,000,000,000
€ 1,112,515,954
€ 1,131,481,213
IT0004599491
UBI Covered Bonds due 30 April 2022 floating rate amortising guaranteed by UBI Finance Srl
€ 250,000,000
€ 147,645,650
€ 170,572,286
IT0004619109
UBI Covered Bonds due 15 September 2017 3,375% guaranteed by UBI Finance Srl
€ 1,000,000,000
€ 1,035,222,178
€ 1,049,765,120
IT0004682305
UBI Covered Bonds due 28 January 2021 5,25% guaranteed by UBI Finance Srl
€ 1,000,000,000
€ 1,185,813,635
€ 1,205,023,987
IT0004692346
UBI Covered Bonds due 22 February 2016 4,5% guaranteed by UBI Finance Srl
€ 750,000,000
€ 781,378,520
€ 798,888,169
IT0004777444
UBI Covered Bonds due 18 November 2021 floating rate amortising guaranteed by UBI Finance Srl
€ 250,000,000
€ 166,605,907
€ 194,361,284
IT0004966195
UBI Covered Bonds due 14 October 2020 3,125% guaranteed by UBI Finance Srl
€ 1,500,000,000
€ 1,605,549,654
€ 1,615,100,303
IT0004992878
UBI Covered Bonds due 5 February 2024 3,125% guaranteed by UBI Finance Srl
€ 1,000,000,000
€ 1,116,741,839
€ 1,131,352,483
IT0005067076
UBI Covered Bonds due 7 February 2025 1,25% guaranteed by UBI Finance Srl
€ 1,000,000,000
€ 987,741,523
€ 988,774,119
IT0005140030
UBI Covered Bonds due 27 January 2023 1,00% guaranteed by UBI Finance Srl
€ 750,000,000
€ 739,351,902
115
-
Indirect funding and assets under management
Indirect funding from ordinary customers
31.12.2015
%
31.12.2014
%
Changes
amount
Figures in thousands of euro
%
Assets under custody
30,980,418
38.9%
32,539,171
42.9%
-1,558,753
-4.8%
Assets under management
48,567,539
61.1%
43,353,237
57.1%
5,214,302
12.0%
Customer portfolio management
of which: fund b ased instruments
7,009,081
8.8%
6,790,285
8.9%
218,796
3.2%
1,851,916
2.3%
1,695,533
2.2%
156,383
9.2%
Mutual investment funds and Sicav’s
27,117,979
34.1%
23,948,103
31.6%
3,169,876
13.2%
Insurance policies and pension funds
14,440,479
18.2%
12,614,849
16.6%
1,825,630
14.5%
14,175,719
17.8%
12,345,893
16.3%
1,829,826
14.8%
79,547,957
100.0%
75,892,408
100.0%
3,655,549
of which: Insurance policies
Total
4.8%
At year-end, the UBI Banca Group's indirect funding amounted to €79.5 billion, up €3.6
billion over twelve months, of which €3.2 billion is attributable to the first half of the year.
The extraordinarily low levels reached by interest rates and yields to maturity on government
securities, favoured a growing allocation of household investments to asset management and
insurance products which also benefited, especially until May, from the good performance of
prices on financial markets. The increase in volatility over the summer months (following the
worsening of the Greek crisis, tensions on Chinese markets and the decline in the price of oil)
and the consequent appreciable reduction in the gains realised in previous months had their
effect on the performance of this item, without putting an end to the uptrend.
As shown in the chart, in 2015 the performance of indirect funding was driven mainly by
assets under management, which grew significantly between July 2014 and March 2015,
returning to pre-crisis levels. In particular, the results achieved in the fourth quarter (+€1.3
billion) more than offset the decline in the third quarter, following the impact of market
instability on valuations.
At year-end, assets under management amounted to €48.5 billion, equivalent to 61.1% of the
total aggregate (+€5.2 billion on an annual basis).
The general increase was driven primarily by mutual investment funds and Sicav’s, which rose
to €27.1 billion (+€3.2 billion over twelve months) partly the result of placements of UBI
Pramerica and UBI Sicav “upfront” funds made over the year (a total of approximately €1.6
billion of mutual funds4 and €1.9 billion of Sicav’s5).
Two new Sicav's (UBI Sicav Global Stars e UBI Sicav Social 4 Future) have also been placed since 9th
December 2015 for a total of over €1 billion which is not included in the totals for the end of December
because it was settled with a value date of 1st February 2016.
The growth of assets under management was also consistently driven by insurance policies
and pension funds, which gradually increased over twelve months to €14.4 billion (+€1.8
billion), buoyed by the positive trend in the insurance business. On the other hand, customer
portfolio management, amounting to €7 billion, was affected by opposing trends starting at the
beginning of the year, due to the effects of market valuations, with a modest increase
compared to twelve months before (+€0.2 billion).
The performance by assets under custody – €31 billion at the end of December (-€1.6 billion
year-on-year) – continued to fluctuate in the individual periods (-€1 billion; +€0.6 billion; -€2.6
billion; and +€1.4 billion in the fourth, third, second and first quarters, respectively) affected
at times by prices and at times by changes in the composition of portfolios by customers as
they moved into asset management instruments6.
4UBI Pramerica Obbligazionario obiettivo valore and UBI Pramerica Go@l – Growth Oriented Allocation.
5 UBI Sicav Global Multiasset 30 Class A and UBI Sicav Income Opportunities.
6 The trend for the third quarter of 2015 also incorporated a reclassification of positions relating to ordinary customers already
existing at the end of March but which as at 30th June had been temporarily classified under funding from institutional customers.
116
Indirect funding
(end of quarter totals in millions of euro)
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
1Q2Q3Q4Q
2008
1Q2Q3Q4Q
2009
1Q2Q3Q4Q
2010
1Q2Q3Q4Q
1Q2Q3Q4Q
2011
2012
1Q2Q3Q4Q
2013
1Q2Q3Q4Q
2014
1Q2Q3Q4Q
2015
Assets under management Assets under custody
***
At year-end, Assogestioni7 data relating to the UBI Banca Group asset management company
for mutual funds and Sicav’s, was as follows for ASSETS UNDER MANAGEMENT ORIGINATED8:
 positive net inflows of €3 billion, amounting to 14.7% of assets under management
originated at the end of 2014 (net inflows for the sector nationally on the other hand were
€94.3 billion, the best result since 1999, amounting to 13.8% of assets managed at the end
of the previous year);


an increase in assets over twelve months (+€3.2 billion; +15.5%) in line with the positive
performance by the banking sample (+€159.3 billion; +23.3%);
assets of €24 billion, which puts the Group in ninth place with market share of 2.85% (3.04% in
December 2014).
It must nevertheless be considered that Assogestioni’s sample also includes non-banking operators.
Consequently, market shares for the UBI Banca Group in the asset management sector are
naturally smaller than those for direct funding, lending and number of branches. If the analysis is
restricted to banks only, the Group’s market share as at 31st December 2015 was 5.42% – down on
5.50% one year earlier – placing UBI Banca stably in fifth position among Italian operators in the
sector.
The summary figures given in the table below confirm the prudential approach of Group
customers:


a percentage of lower risk funds (monetary funds and bonds) that is always higher than the figure
for the sector, but which has progressively and more sharply decreased over twelve months (down
from 57.5% to 51.4%) compared with the Assogestioni sample (down from 50% to 45.5%);
at the same time a greater percentage of balanced funds, up year-on-year from 25.1% to 26.5%
compared with an average figure for the sector nationally up from 6.4% to 8%;
7 “Monthly map of assets under management”, December 2015. For companies not included in the “Quarterly map of assets under
management”, September 2015.
8 As part of the periodic surveys performed by Assogestioni, since June 2012 the figure for assets under management for the UBI
Banca Group also includes, in consideration of their nature, the management mandates granted to Pramerica Financial – the brand
name used by Prudential Financial Inc. (USA) – a UBI Banca partner through UBI Pramerica SGR (€5.7 billion of mutual funds and
Sicav’s as at 31st December 2015, of which €1.7 billion in equities and €4 billion in bonds). This presentation provides a more
consistent account of the actual assets under management of the UBI Banca Group.
117



a percentage of equity funds down slightly and constantly lower than the benchmark sample
(11.9% compared with 21.7%);
a progressive increase in the proportion of flexible funds starting in March – in relation, amongst
other things, to some new products (funds and Sicav’s) placed in recent quarters – compared
with a decidedly stronger trend for the sector;
no investment in hedge funds (0.6% of the Assogestioni sample).
Fund assets (including assets managed for the UBI Banca Group under a mandate)
UBI Banca Group
31.12.2015
%
31.12.2014
%
Changes
amount
Figures in millions of euro
Equities
Balanced
Bond
Monetary funds
Flexible
Total (a)
Sector
%
2,845
6,353
11,371
11.9%
26.5%
47.4%
2,650
5,202
10,564
12.7%
25.1%
50.9%
195
1,151
807
7.4%
22.1%
7.6%
969
2,438
4.0%
10.2%
1,368
977
6.6%
4.7%
-399
1,461
-29.2%
149.5%
23,976
100.0%
20,761
100.0%
3,215
15.5%
31.12.2015
%
31.12.2014
%
Changes
amount
Figures in millions of euro
%
Equities
183,153
21.7%
141,612
20.7%
41,541
29.3%
Balanced
Bond
67,079
348,646
8.0%
41.4%
43,636
314,558
6.4%
46.1%
23,443
34,088
53.7%
10.8%
Monetary funds
Flexible
34,757
203,610
4.1%
24.2%
26,703
150,243
3.9%
22.0%
8,054
53,367
30.2%
35.5%
5,340
-
0.6%
-
5,621
918
0.8%
0.1%
-281
-918
-5.0%
-100.0%
842,585
100.0%
683,291
100.0%
159,294
23.3%
Hedge funds
Unclassified
TOTAL (B)
Market share of the UBI Banca Group (a)/(b)
2.85%
3.04%
Market share of the UBI Banca Group limited
to banking companies only
5.42%
5.50%
***
As concerns assets under management net of Group funds (which includes collective instruments
and customer portfolio management), at year-end the UBI Banca Group ranked in eighth place in
the sector (in sixth place among Italian banking groups), with assets amounting to €42.7 billion
and market share of 2.51%, up compared with December 2014 (2.40%).
If the analysis is limited to banks only, the Group’s market share in December 2015 was 5.86%, up
on 5.54% at the end of 2014, placing the UBI Banca stably in fourth position among operators in
the sector.
118
General banking business with customers:
lending
Performance of the loan portfolio
Composition of loans to customers
31.12.2015
%
Figures in thousands of euro
Current account overdrafts
Reverse repurchase agreements
Mortgage loans and other medium to
long-term financing
Credit cards, personal loans and
salary-backed loans
of which nonperforming (*)
31.12.2014
%
of which nonperforming (*)
Changes
amount
%
9,052,335
10.7%
1,476,281
10,082,582
11.8%
1,558,164
-1,030,247
-10.2%
770,503
0.9%
-
540,882
0.6%
-
229,621
42.5%
52,455,850
62.0%
5,360,803
51,860,841
60.6%
4,885,165
595,009
1.1%
3,015,405
3.6%
284,904
3,586,723
4.2%
388,444
-571,318
-15.9%
Finance leases
6,304,587
7.4%
1,239,777
6,905,789
8.1%
1,408,470
-601,202
-8.7%
Factoring
2,260,470
2.7%
300,867
2,085,756
2.4%
306,944
174,714
8.4%
Other transactions
10,719,690
12.7%
1,025,917
10,573,954
12.3%
960,918
145,736
1.4%
Debt instruments:
7,360
0.0%
-
7,696
0.0%
-
-336
-4.4%
- structured instruments
3
0.0%
-
3
0.0%
-
-
-
- other deb t instruments
7,357
0.0%
-
7,693
0.0%
-
-336
-4.4%
84,586,200
100.0%
9,688,549
85,644,223
9,508,105
-1,058,023
Total
100.0%
-1.2%
(*) previously termed "deteriorated"
The performance of the Group loan portfolio continues to be conditioned by that of the Italian
economy which, although improving progressively, is recording growth that is still only
modest, as shown by the levels of output and investment.
While the “core” perimeter of the network banks is confirming signs of recovery (+€0.7 billion
compared to December 2014; +1.2%), the overall trend for lending remained slightly negative
(even in the comparison with average data for the sector), affected by still weak demand from
businesses and also by the impact of loans from the non-captive customers of the product
companies, part of which is linked to previous business from discontinued external
distribution networks, which will not be replaced.
As at 31st December 2015, outstanding loans amounted to €84.6 billion, an annual change
of -€1.1 billion (-1.2%), entirely attributable to non-captive business, of which -€0.4 billion
attributable to the former B@nca 24-7 and -€0.2 billion to UBI Leasing.
The Parent's business with the Cassa di Compensazione e Garanzia (CCG – a central
counterparty clearing house), subject to a certain degree of variability during the year, saw an
overall increase of €0.2 billion over twelve months in the form of reverse repos.
The performance of the loan portfolio fluctuated during the year: the downtrend initially halted
in the second quarter, but then resumed in the following three months. In the fourth quarter,
loans increased by €0.8 billion (+0.9%), compared to +0.5% for the sector nationally.
While medium to long-term lending declined, short-term loans increased in the OctoberDecember period, due to a recovery of factoring (+€0.3 billion), but also to business of the
Parent with CCG (+€0.6 billion) and the disbursement of financing to the Resolution Fund for
the rescue of the four Italian banks in extraordinary administration1.
The "core" loan portfolio (relating to the business of the network banks and captive customers
of the product companies) shows signs of stabilisation due to the gradual consolidation of the
uptrend in the medium to long-term component, and in particular "mortgage loans and other
1 See in this respect the sub-section “The resolution and rescue of four Italian banks” in the section entitled “The European Banking
Union”.
119
medium to long-term financing", including the effects of the TLTRO financing (see the special
focus below in this respect).
At the network banks, the increase in new grants in the twelve months more than offset
repayments, with an improvement of the ratio of disbursements to repayments of
approximately 115% (slightly above 100% in 2014).
While it is still below 100%, the ratio of disbursements to repayments also appears to be
recovering for the product companies.
As concerns customer market segmentation, 48.6% of the consolidated portfolio at the end of
December consisted of loans to the retail market (49.6% in December 2014), 33.4% to the
corporate market (31.8%) and 1.1% to the private banking market (0.9%), while the remaining
16.9% consisted of types of lending not included in the commercial banking portfolio such as
leasing, factoring and UBI Banca loans other than those of the former merged product
companies (17.7%)2.
From the viewpoint of type of lending:

mortgage loans and other medium to long-term loans, amounting to €52.5 billion, despite a
decline of €0.2 billion in the fourth quarter, were up €0.6 billion on an annual basis, remaining
the main form of lending, accounting for 62% of the total. However, it must be remembered that
the performance of this item continues to reflect the normal decline in the residual outstanding
mortgage loans of the former B@nca 24-7, currently managed by the Parent (-€0.3 billion over
twelve months and -€0.1 billion compared to September).
According to management accounting figures, in December residential mortgage loans, net of
impairment losses, totalled €24.4 billion, of which €22.3 billion granted to consumer households
and €2.1 billion to businesses, essentially stable compared to the end of 2014 (€24.5 billion in
December 2014, of which €22.3 billion to households and €2.2 billion to businesses);

repurchase agreements, up €0.2 billion over twelve months (+€0.8 billion compared to
September), reflect the course of specific UBI Banca business with the CCG (reverse repurchase
agreements with Italian government securities as the underlying entered into as an investment
of liquidity);

finance lease lending, almost entirely attributable to UBI Leasing, came to €6.3 billion, marking
an annual decline of €0.6 billion, largely attributable to the first half of the year (-€78.5 million
compared to September). In addition to the economic scenario, the performance of the aggregate
continued to show the effects of the discontinuation of indirect distribution networks and the
consequent action taken to refocus business on the captive market in recent years (-€0.2 billion
over twelve months for non-captive loans);

factoring loans, granted mainly by UBI Factor, after remaining essentially stable in the first half
of the year, rose to €2.3 billion at the end of 2015, marking an annual increase of +€0.2 billion,
primarily attributable to the fourth quarter (+€0.3 billion), as a reflection of the first signs of
recovery of business with customers;

the different forms of consumer credit, which totalled €3 billion, are being affected more than
other items by the discontinuation of distribution networks and the rationalisation of noncaptive business. They fell by €0.6 billion over twelve months due to decreases both in the salary
backed lending business transferred to Prestitalia and in the remaining business of the former
B@nca 24-7 contributed to UBI Banca (personal, special purpose loans, credit cards, current
account overdrafts and other types of lending). This compares with the positive performance of
network bank business. The trend seems to have slowed in part in the fourth quarter (-€83
million overall);

other short-term forms of lending, which totalled €19.8 billion, declined by €0.9 billion
compared to one year prior, but as the effect of the uneven performances of the item's
components: a decline in current account overdrafts (-€1 billion), almost entirely attributable to
the second half of the year, was marginally offset by the fluctuating performance of "other
transactions" (loans for advances, portfolio, import/export transactions, very short terming
lending, etc.), which increased by €0.1 billion.
The fourth quarter saw persistent substantial weakness of demand for working capital
financing by Group customers. Volumes were essentially stable compared to September (+€17.4
million) due to the partial shift in internal composition from current account overdrafts to other
2 Any marginal differences there may be compared with the percentages published previously are the result of partial changes in the
composition of customer portfolios made in the last quarter.
120
transactions, the latter of which were also affected by the Parent's business with the CCG (-€0.2
billion) and the aforementioned financing for the Resolution Fund.
From the standpoint of maturities, at year-end the portfolio was composed of medium to longterm loans of €61.8 billion (-€0.6 billion compared to one year earlier) - equivalent to 73% of
the total - and short-term loans of €22.8 billion (-€0.5 billion), accounting for 27% of the total.
Given the trends of the two aggregates, the ratio of loans to deposits reached 92.4%, compared
to 91.9% at the end of 2014.
Distribution of loans by economic sector and NACE code
(Bank of Italy classification)
31.12.2014
31.12.2015
of w hich nonperforming (*)
of w hich bad
loans (**)
of w hich nonperforming (*)
of w hich Bad
loans (**)
12.0%
2.5%
6.9%
1.7%
11.2%
2.5%
6.1%
1.6%
4.3%
1.9%
1.8%
0.8%
0.2%
0.2%
0.5%
0.2%
0.1%
4.1%
1.6%
1.6%
0.8%
0.2%
0.2%
0.5%
0.2%
0.1%
1.5%
1.2%
0.4%
0.1%
0.3%
0.0%
1.4%
1.0%
0.4%
0.1%
0.3%
0.0%
1.0%
0.9%
0.8%
0.2%
0.1%
0.2%
0.1%
0.1%
0.2%
1.0%
0.9%
0.8%
0.2%
0.1%
0.2%
0.1%
0.1%
0.1%
0.6%
0.1%
0.1%
0.6%
0.1%
0.1%
0.5%
0.5%
9.4%
8.8%
8.6%
2.6%
2.5%
1.9%
1.9%
1.9%
1.2%
0.9%
0.5%
0.3%
0.1%
0.1%
2.2%
1.4%
3.5%
0.4%
0.2%
0.4%
0.4%
0.3%
0.1%
0.3%
0.0%
0.0%
0.1%
0.0%
1.0%
1.1%
2.0%
0.1%
0.0%
0.2%
0.2%
0.2%
0.1%
0.2%
0.0%
0.0%
0.5%
0.5%
9.0%
8.7%
8.8%
2.2%
2.4%
1.7%
1.9%
1.8%
1.2%
1.0%
0.4%
0.4%
0.1%
0.1%
1.9%
1.4%
3.1%
0.3%
0.3%
0.4%
0.4%
0.3%
0.1%
0.2%
0.0%
0.1%
0.1%
0.0%
0.8%
1.0%
1.7%
0.1%
0.0%
0.2%
0.2%
0.2%
0.1%
0.1%
0.0%
0.0%
0.1%
1.0%
0.1%
0.2%
3.6%
0.2%
0.1%
0.4%
0.0%
0.1%
1.9%
0.1%
0.0%
0.2%
0.1%
1.0%
0.0%
0.2%
3.5%
0.1%
0.0%
0.9%
0.0%
0.1%
1.8%
0.1%
0.0%
0.6%
Total
Manufacturing and service companies (non-financial companies and producer households)
of which: manufacturing activities:
- Metallurgy, fabrication of metal products and processing of
non-metallic minerals
- Foodstuff, beverage and tobacco industries
- Fabrication of machinery
- Textile industries, tailoring of articles in leather and fur,
fabrication of articles in leather and similar
- Fabrication of oil refinery, chemical and pharmaceutical products
- Fabrication of electronic products, electrical and non-electrical
equipment
- Fabrication of articles in rubber and plastic
- Timber industry and fabrication of furniture
- Fabrication of paper and paper products, printing and reproduction
of recorded media
- Fabrication of motor vehicles, trailers, semitrailers and other means
of transport
- Other manufacturing industries
Real estate activities
Wholesale and retail commerce, repair of motor vehicles and motorcycles
Constructions
Professional, scientific and technical activities
Supply of electricity, gas, steam and air conditioning
Transport and warehousing
Accommodation and catering services
Agriculture, forestry and fishing
Information and communication services
Hire, travel agency, b usiness support services
Water supply; sewerage, waste management and cleanup activities
Financial and insurance activities
Extraction of minerals from quarries and mines
Residual activities
Consumer households
Financial companies
Public administrations
Other (not-for-profit institutions and the rest of the world)
56.6%
15.0%
35.4%
4.0%
1.1%
2.9%
Total
100.0%
Total
54.6%
14.0%
36.0%
3.6%
1.3%
4.5%
100.0%
(*) previously termed "deteriorated"
(**) previously termed "non-performing loans"
Source: management accounting database (ICAAP).
Total gross lending inclusive of partial w rite-offs of bad loans (€89.4 billion as at 31st December 2015; €90.5 billion as at 31st December 2014)
The table gives, in management accounting figures, the distribution of lending by economic
sector and NACE code (economic sector - Bank of Italy classification) of consolidated loans
gross of impairment losses as at 31st December 2015.
As may be observed, manufacturing companies and households accounted for 92% of
outstanding loans, up from 90.6% at the end of 2014, confirming a recovery of lending, above
all in the manufacturing sector, but also the Group's traditional focus on supporting the
communities in which it operates.
A summary of the geographical distribution of lending in Italy is given in the table
“geographical distribution of loans to customers by region of location of the branch”.
121
At year-end, the total share of loans to northern
regions amounted to 81% of the total, (of which
76.3% to the North-West), down compared to
December 2014, while that granted to central
regions rose slightly to 10.8%. The remaining 8.2%
was to southern regions.
As concerns Lombardy in particular, the year-onyear decrease also reflects the trend in progress
for Parent loans (due to both the natural reduction of the
remaining former B@nca 24-7 loans, the decrease in former
Centrobanca business and a reduction in loans to Group
companies).
This tendency is being marginally offset by an
increase in lending business in Latium and Emilia
Romagna.
As concerns “large exposures”, the December 2015
supervisory report prepared on the basis of the
provisions of the new Basel 3 rules, in force since
1st January 2014 3 , shows four positions for an
amount equal to or greater than 10% of the
qualifying capital, for a total of €30.9 billion. In
detail these consisted of:
•
•
•
•
Geographical distribution of loans to customers
by region of location of the branch (*)
Percentage of total
31.12.2015
31.12.2014
Lombardy
Piedmont
67.32%
6.17%
67.95%
6.34%
Latium
Marches
Liguria
Campania
5.70%
4.14%
2.73%
2.69%
5.15%
4.11%
2.81%
2.62%
Emilia Romagna
Apulia
Calabria
2.59%
2.34%
1.80%
2.35%
2.33%
1.98%
Veneto
Umbria
Abruzzo
Basilicata
1.78%
0.71%
0.70%
0.42%
1.70%
0.71%
0.66%
0.43%
Friuli Venezia Giulia
Molise
Tuscany
0.34%
0.27%
0.24%
0.30%
0.26%
0.25%
Valle d'Aosta
Trentino Alto Adige
0.05%
0.01%
0.04%
0.01%
100.00%
100.00%
Total
North
- North West
81.0%
81.5%
76.3%
77.2%
- North East
€19.64 billion relate to the Ministry of the
4.7%
4.3%
10.8%
10.2%
Treasury, mainly for investments in government Central
South
8.2%
8.3%
securities by the Parent;
€7.43 billion to the CCG in relation to business by (*) The aggregates relate to banks only.
the Parent;
€2.81 billion to the Ministry of the Economy and Finance4;
€1.01 billion to a major large corporate counterparty; the amount reflects the credit facilities
granted as at the date (against actual drawings of €0.2 billion, chiefly relating to unsecured
guarantees).
In consideration, amongst other things, of the application of a zero weighting factor for
transactions with the government, after weightings the Group's actual risk position amounts
to just €0.4 billion.
The percentage of the qualifying capital is well below the limit of 25% set for banking groups
for each of the exposures reported.
In terms of concentration, the end of
December figure shows a marginal
increase compared with all the
comparative periods although still at
very low levels, which confirms the
constant commitment made by the
Group to this aspect.
Concentration of risk
(largest customers or groups as a percentage of total loans and guarantees)
Customers or
Groups
31.12.2015
Largest 10
3.2%
2.9%
2.8%
2.6%
2.7%
Largest 20
5.3%
4.8%
4.7%
4.5%
4.6%
Largest 30
7.0%
6.1%
6.1%
5.7%
6.0%
30.9.2015
30.6.2015
31.3.2015
31.12.2014
Largest 40
8.1%
7.2%
7.2%
6.7%
7.0%
At year-end, the guarantees granted
Largest 50
9.0%
8.1%
8.0%
7.6%
7.9%
by the Group totalled €5.45 billion,
down €269.5 million from €5.72
billion at the end of 2014 (-4.7%). In detail, more than two-thirds of the change was due to
guarantees of a financial nature, which declined to €1.71 billion (-€190.1 million), whereas
guarantees of a commercial nature of €3.74 billion declined only marginally.
3 Bank of Italy Circulars No. 285 and No. 286 of 17th December 2013 and subsequent updates.
4 Exposure to the Ministry of the Economy and Finance relates to current and deferred tax assets.
122
Financing with funds provided by the European Central Bank (TLTRO)
As concerns targeted longer-term refinancing operations (TLTROs) carried out by the ECB with a view to improving
the monetary policy transmission mechanism, after taking part in the second operation that took place in
December 2014 (TLTRO 2) for €3.2 billion and the third operation in March 2015 (TLTRO 3) for €2.9 billion, the
UBI Banca Group also took part in the fifth operation in September 2015 (TLTRO 5) to obtain a further €2 billion.
The total amount of €8.1 billion allotted to the Group was therefore used to form specific loan pools by UBI Banca
and the network banks - without any restrictions in terms of eligible projects and the amounts available - for
customers belonging to the “Private & Corporate Unity” (private and corporate banking) market and to the retail
market.
The final maturity of all financing received, regardless of the date of allotment, has been set as 26th September
2018.
As at 31st January 2016, financing totalling approximately €8.1 billion had been applied for by customers, of
which €5.5 billion had already been granted and €1.3 billion approved. In detail these consisted of:
€6.7 billion by private banking and corporate customers (€4.4 billion already granted and €1.2 billion
approved);
€1.4 billion by retail customers (€1.1 billion already granted and €0.1 billion approved)5.


Risk
Against a background of modest
growth in the Italian economy, credit
risk grew further at sector level
although at a slower pace, without,
however, showing signs of a clear
reversal of the trend.
Annual increase in gross non-performing exposures
(in millions of euro)
2,800
2,600
2,400
2,200
At the end of December, total gross
non-performing
loans
(previously
termed "deteriorated loans") of the
Group had reached €13.4 billion, an
increase of €385.4 million on an
annual basis (+3%).
As shown in the chart, while in line
with
2014,
the
increase
was
significantly lower than in previous
years, which confirms the signs that
the stabilisation of credit quality in
progress since the beginning of 2014
is continuing.
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
In the fourth quarter, the item
declined (-€217 million; -1.6%), due to
the transfers of bad loans (previously termed “non-performing loans”) during the period and to
the conversion into equity instruments of a portion of the loans relating to Nuova Sorgenia
Holding.
0
2008
2009
2010
2011
2012
2013
2014
2015
This trend was accompanied by a further fall in new inflows from performing status (-7.5%
over twelve months; -15% in the fourth quarter) down to the lowest levels in recent years.
The overall increase in gross non-performing (previously termed “deteriorated”) exposures over
twelve months, over 70% of which was attributable to the third quarter, was due to an
increase in bad loans (+€436.1 million) and unlikely to pay loans (+€236.4 million), only partly
5 As at 31st December 2015, financing totalling €8 billion had been applied for by customers, of which €5.2 billion already granted
and €1.3 billion approved. In detail these consisted of: €6.6 billion from private banking and corporate customers (€4.2 billion of
financing already granted and €1.2 billion approved); €1.4 billion from retail customers (€1 billion already granted and
approximately €0.1 billion approved).
123
offset by a significant decline in exposures past due and/or in arrears, which were more than
halved during the period (-€287.1 million; -51.9%).
Gross non-performing exposures (*):
quarterly changes
Figures in thousands of euro
Bad loans (**)
2015
4Q
3Q
2014
2Q
1Q
4Q
3Q
2Q
1Q
67,703
90,922
101,554
175,956
-24,157
225,254
335,287
Unlikely to pay loans
-144,085
174,421
107,800
98,263
107,182
83,458
-210,088
8,456
Exposures past due and/or in arrears
-140,624
18,098
-68,867
-95,716
-123,460
-7,552
4,309
-153,887
-15,236
Gross non-performing loans (*)
130,195
-217,006
283,441
140,487
178,503
-40,435
301,160
129,508
transfers from performing exposures
532,763
627,823
625,082
649,925
708,389
663,234
637,065
623,163
transfers into performing exposures
-98,398
-44,578
-147,623
-212,358
-140,876
-99,302
-171,812
-356,074
(*) previously termed "deteriorated"
(**) previously termed "non-performing loans"
The signs of improvement on the risk front are also result of the following:
 on the one hand, a more favourable risk profile in the performing portfolio, which over twelve months
saw a further increase in the lowest risk classes from 71% to 73.6% of the total and a reduction in the
highest risk classes from 5.5% to 4.5%6;
 on the other hand, the numerous initiatives taken by the Group in recent years in terms of internal
reorganisation and operating processes to improve credit risk management, as well as a decision taken
to focus lending on the captive channel.
Net non-performing loans totalled €9.7 billion at year-end, up €180.4 million compared to
twelve months earlier (+1.9%), but down €183 million in the fourth quarter, which more than
halved the increase in the previous quarters.
In terms of types of loan, the table “composition of loans to customers”, shows that growth in
net non-performing loans is again concentrated prevalently in the item “mortgage loans and
other medium to long-term loans”, backed moreover by collateral, which results automatically
in a lower level of coverage.
Total coverage improved over twelve months from 27.13% to 27.88%, partly due to increased
provisioning, notwithstanding the high percentage of positions backed by collateral - written
down less also in relation to the precautionary loan to value (LTV) ratio employed for loans
granted by the Group - and transactions to dispose of non-performing loans concluded during
the year, which involved a series of positions with high levels of provisioning.
If loan write-offs are included (relating to creditor legal action in progress), coverage increased
on an annual basis to 37.38% (37.14% at the end of 2014).
For performing loans, which resumed growth in the fourth quarter, at the end of December
coverage was 0.55%, stable on September, but progressively down slightly from 0.63% at the
end of 2014. This trend was affected both by an improved risk profile for the performing
portfolio, as described above, and also by recoveries in value recognised by the product
companies as a consequence of the reduction in volumes of lending.
Forborne exposures gross of impairment losses totalled €5.4 billion in December, up €1 billion
(+23.5%) compared to the end of 2014 (€4.4 billion). The change – attributable entirely to nonperforming exposures (which rose from 44.19% to 56.21% of the total) – also reflects the
introduction of forbearance regulations7 starting in September 2014. Non-performing positions
must pass a minimum period of one year (cure period), after which the return of the
customer’s credit quality is assessed before it can be reclassified among performing positions.
On the other hand forborne positions classified as performing must pass a minimum period of two years (“probation
period”) before a position can lose its forborne classification and therefore no longer appear in relative reports.
6 The management accounting figures relate to the internal rating perimeter (the network banks and UBI Banca).
7 See the glossary attached to this report for a definition of forbearance.
124
Loans and advances to customers as at 31st December 2015
Impairment
losses
Gross exposure
Figures in thousands of euro
Non-performing exposures (**)
- Bad loans (***)
- “Unlikely to pay” loans
- Past due loans
(15.14%)
(7.87%)
(6.96%)
(0.31%)
Performing loans
(84.86%)
Total
13,434,287
6,987,763
6,179,999
266,525
Carrying amount
Coverage (*)
3,745,738
2,699,834
1,032,900
13,004
(11.45%)
(5.07%)
(6.09%)
(0.29%)
9,688,549
4,287,929
5,147,099
253,521
27.88%
38.64%
16.71%
4.88%
75,314,190
416,539
(88.55%)
74,897,651
0.55%
88,748,477
4,162,277
84,586,200
4.69%
The item as a percentage of the total is given in brackets.
Loans and advances to customers as at 31st December 2014
Impairment
losses
Gross exposure
Figures in thousands of euro
Non-performing exposures (**)
- Bad loans (***)
- “Unlikely to pay” loans (****)
- Past due loans
(14.55%)
(7.31%)
(6.63%)
(0.61%)
Performing loans
(85.45%)
Total
13,048,862
6,551,628
5,943,600
553,634
Carrying amount
Coverage (*)
3,540,757
2,526,549
989,889
24,319
(11.10%)
(4.70%)
(5.78%)
(0.62%)
9,508,105
4,025,079
4,953,711
529,315
27.13%
38.56%
16.65%
4.39%
76,617,912
481,794
(88.90%)
76,136,118
0.63%
89,666,774
4,022,551
85,644,223
4.49%
The item as a percentage of the total is given in brackets.
(*) The coverage is calculated as the ratio of impairment losses to gross exposure. For bad loans (previously termed “non-performing loans”) only, impairment losses and
gross exposures are given net of write-offs of positions subject to bankruptcy proceedings.
(**) Previously termed "deteriorated loans"
(***) Previously termed "non-performing loans"
(****) On the basis of the new classification rules and internal regulations, exposures previously classified as “impaired” or “restructured” have been included in this class
which did not satisfy the requirements for being classified as “non-performing” and “exposures past due and/or in arrears”.
Forborne exposure s as at 31st De ce mbe r 2015
Gross exposure
Figures in thousands of euro
Non-performing exposures (**)
- Bad loans (***)
- Unlikely to pay loans ***
- Past due loans
(56.21%)
(6.12%)
(49.26%)
(0.83%)
Performing loans
(43.79%)
Total
3,021,055
328,787
2,647,466
44,802
Im pairm ent
losses
Carrying amount
478,244
91,078
384,691
2,475
(52.34%)
(4.89%)
(46.58%)
(0.87%)
2,353,732
38,485
(47.66%)
5,374,787
516,729
2,542,811
237,709
2,262,775
42,327
Coverage (*)
15.83%
27.70%
14.53%
5.52%
2,315,247
1.64%
4,858,058
9.61%
The item as a percentage of the total is given in brackets.
Forborne exposure s as at 31st De ce mbe r 2014
Gross exposure
Figures in thousands of euro
Im pairm ent
losses
Carrying amount
Coverage (*)
Non-performing exposures (**)
(44.19%)
1,922,814
269,707
(40.86%)
1,653,107
Performing loans
(55.81%)
2,428,813
35,722
(59.14%)
2,393,091
1.47%
4,351,627
305,429
4,046,198
7.02%
Total
14.03%
The item as a percentage of the total is given in brackets.
(*) Coverage is calculated as the ratio of impairment losses to gross exposure.
(**) previously termed "deteriorated loans"
(***) previously termed "non-performing loans"
BAD LOANS
Gross bad loans (previously termed "non-performing loans") rose over twelve months from €6.6
billion to €7 billion, an increase of €436.1 million euro (+6.7%).
As may be observed from the quarterly changes table, in the fourth quarter the increase in
loans was smaller than in all of the other quarters, due in part to the effect of transfers of
significant overall amounts.
It should be recalled that various transfers of bad loans, primarily unsecured loans, were undertaken
during the year, with a gross book value of €297.3 million (of which €166.3 million in the final three months
of the year), subject to average impairment losses of 70% and attributable to the Parent, network banks
and UBI Leasing.
The annual change in outstanding gross loans was primarily due to the network banks,
although with different performances by the individual banks, and to UBI Leasing, against
marginal decreases for UBI Banca and UBI Factor.
Net bad loans rose over the year from €4 billion to €4.3 billion, up €262.9 million (+6.5%), of
which only €43.6 million relating to the fourth quarter.
125
Net bad loans backed by collateral rose to nearly €3 billion (+€0.3 billion), increasing as a
percentage of the total to 69.3% (67.5% in December 2014), due in part to the primarily
unsecured nature of the positions transferred.
At year-end, net bad loans with no backing in terms of either collateral or personal guarantees
stood at 11.63% of the total, up slightly from 11.52% at the end of 2014.
An analysis of migrations in 2015 shows the following:
a reduction in total new inflows (-16.3%), relating to transfers from other categories of nonperforming loans, above all from unlikely to pay loans, but also from performing loans, although
the latter remained marginal;
a substantial reduction to nil of outflows to performing status;
a decrease in write-offs;
an increase in profits on disposals, relating mainly to the fourth quarter, at the same time as an
increase in receipts.
-
-
Over twelve months, the ratio of bad loans to loans increased from 7.31% to 7.87% in gross
terms, remaining essentially stable compared to September, due in part to the quarter-onquarter increase in the loan portfolio. In net terms, the ratio increased from 4.70% to 5.07%
(5.06% in September 2015).
Coverage was 38.64%, a marginal improvement compared to the end of 2014 (38.56%), but
essentially stable compared to the last two periods, reflecting the inflow of several positions
with high provisioning and the effects of the transfer of unsecured positions, characterised by
a higher level of coverage8.
If cases written-off to the income statement relating to creditor actions still in progress are also
considered, coverage would in reality have been 52.5%9 (53.36% in December 2014). At yearend coverage for non-performing loans not backed by collateral considered gross of those
write-offs was 67.84% (69.40% in December 2014).
“UNLIKELY TO PAY” LOANS
Gross unlikely to pay loans (which include positions previously classified as impaired and
restructured loans) stood at €6.2 billion, up over twelve months +€236.4 million (+4%). The
annual change is the result of opposing performances by the various Group companies: the
increases for the network banks (although with differences between the individual companies),
UBI Leasing and UBI Factor was offset by reductions for Prestitalia, UBI Banca (former
Centrobanca and former B@nca 24-7 portfolios) and, to a more modest degree, UBI Banca
International.
An analysis of migrations in 2015 shows the following:
-
-
the essential stability of total inflows which reflects an increase in transfers from performing
status – partly in relation to the appearance of substantial new positions – offset by a reduction
in transfers from exposures past due and/or in arrears;
a reduction in outflows to performing status;
an increase in write-offs and receipts;
a fall in transfers to other non-performing categories and mainly to bad loans.
Net unlikely to pay loans of €5.2 billion consequently increased compared to one year earlier
(+€193.4 million; +3.9%).
Net unlikely to pay loans backed by collateral, considering only the former impaired loans
classified as such for management purposes, amounted to €3.2 billion, stable compared with
September, but up over twelve months (+€0.3 billion), accounting for 73.3% of total net former
impaired, unlikely to pay exposures (69% in December 2014).
8 In the absence of the aforementioned transfers of bad loans, the coverage ratio would have been 39.9%.
9 In the absence of the aforementioned transfers of bad loans, the coverage ratio would have been 54.2%.
126
Coverage of 16.71% was essentially line with December 2014 (16.65%), but down on
September (17.13%). Although the first nine months showed a more than proportional
increase in impairment losses, the final part of the year was influenced by the conversion into
securities of the loans relating to Nuova Sorgenia Holding Spa for €72 million, characterised
by high coverage levels.
SORGENIA
The agreement pursuant to article 182 bis of the Bankruptcy Law signed by Sorgenia Spa on 14th
November 2014 and registered by the Court of Milan on 25th February 2015 took final effect on 16th March
2015.
On the following 27th of March contract documents were signed with the banking sector for the final
implementation of the agreement which involved the following with regard to the most important accounting
aspects:
• the subscription by UBI Banca of a 16.67% 10 stake in Nuova Sorgenia Holding Spa, the parent of
Sorgenia Spa, for approximately €8 thousand, recognised within item 40 “available-for-sale financial
assets”.
For the purposes of classifying this shareholding an investigation was carried out to see if situations
existed which might indicate the presence of control or joint control (e.g. shareholder agreements);
• the sale without recourse by the UBI Banca Group to Nuova Sorgenia Holding Spa of a portion of the
receivables owed by the Sorgenia Group, for valuable consideration of €72 million (i.e. the face value of
the receivables);
• the subscription by the UBI Banca Group, at the time of the sale of the receivables mentioned in the
previous point, of “profit-sharing equity instruments” in Nuova Sorgenia Holding Spa, designed to endow
the company with the necessary initial liquidity, for a total of €220 thousand (approximately 13.4%). The
instruments in question were recognised within item 40 “available-for-sale financial assets”;
• the derecognition, since the conditions pursuant to IAS 39 are met, of additional receivables due from
Sorgenia Spa, subject to their transformation into convertible bonds (with compulsory conversion)
subscribed by the creditor banks. As a result of subscribing the convertible bonds, the UBI Banca Group
recognised a new financial, asset with different characteristics to the receivables derecognised,
amounting to €25.2 million within item 40 “available-for-sale financial assets”.
As a result, amongst other things, of the conclusion of the disposal of its renewable energy business, in
April Sorgenia was able to repay the creditor banks a sum of €70 million, as provided for by the plan, €11.4
million of which to the UBI Banca Group.
The UBI Banca Group exposure to the Sorgenia Group as at 31st December 2015 recognised within
“unlikely to pay” loans amounted to €38.9 million (of which unsecured guarantees of €6.3 million) drawn on
authorised credit lines totalling €110.1 million (of which unsecured guarantees of €20.3 million), which
include €71 million of new credit lines granted as part of the restructuring plan.
In the case of Nuova Sorgenia Holding Spa, in December 2015 the transformation of most of the receivables
claimed by the banks from Nuova Sorgenia Holding Spa into "profit-sharing equity investments" was
finalised in accordance with the restructuring agreement. Of the total receivables of €396.7 million,
receivables of €378.4 million were transformed into profit-sharing equity investments, of which €72 million
was attributable to the UBI Banca Group. The aim of the transaction was to enhance the financial position
of the sub-holding that controls Sorgenia Spa, in light of market dynamics and the ongoing concentration
process in the industry.
EXPOSURES PAST DUE AND/OR IN ARREARS
Gross exposures past due and/or in arrears more than halved over twelve months, falling from
€553.6 million to €266.5 million, a decrease of -€287.1 million, approximately 50% of which
was attributable to the fourth quarter of 2015 (-€140.6 million), in part as a consequence of
the transfer of two significant positions of UBI Factor to performing status. This change
reflects the essentially universal decline for all Group companies, with reductions
concentrated in the first half of the year for UBI Leasing, UBI Factor and UBI Banca.
Signs of a progressive normalisation seem also to be emerging from an analysis of migrations
in 2015, which shows the following compared with the same period in 2014:
10 The UBI Banca Group is represented on the Board of Directors of Nuova Sorgenia Holding Spa, composed of ten directors and two
executive directors.
127
-
a fall of approximately €500 million in new inflows from performing loan status, which confirms
the underlying trend in progress since the beginning of 2013;
a natural reduction at the same time in transfers to other categories of non-performing loans,
mainly to unlikely to pay the loans (-€347 million);
a decrease in outflows to performing status (-€118 million) in relation to the progressive
reduction in the volumes of inflows.
Coverage, amounting to 4.88% at the end of 2015, was up compared to twelve months before
(4.39%) in accordance with the Group's credit policy.
Loans to customers: changes in non-pe rforming (*) gross exposures in 2015
Figures in thousands of euro
Bad loans (**)
Past-due
exposures
Unlikely to pay
loans
Total
Initial gross exposure as at 1st january 2015
6,551,628
5,943,600
553,634
Increases
1,544,824
2,520,953
913,968
4,979,745
121,807
1,415,371
898,415
2,435,593
1,344,070
759,871
915
2,104,856
78,947
345,711
14,638
439,296
-1,108,689
-2,284,554
-1,201,077
-4,594,320
-502,957
transfers from performing exposures
transfers from other classes of non-performing exposures (*)
other increases
Decreases
transfers into performing exposures
13,048,862
-2,973
-199,519
-300,465
write-offs
-587,942
-100,746
-26
-688,714
payments received
-375,377
-596,060
-63,055
-1,034,492
disposals
-118,973
-
-
-118,973
-9,976
-1,267,393
-827,487
-2,104,856
transfers to other classes of non-performing (*) exposure
other decreases
Final gross exposure as at 31st December 2015
-13,448
-120,836
-10,044
-144,328
6,987,763
6,179,999
266,525
13,434,287
Loans to customers: changes in non-pe rforming (*) gross exposures in 2014
Figures in thousands of euro
Bad loans (**)
Unlikely to pay
loans
Past-due
exposures
Total
Initial gross exposure as at 1st January 2014
5,885,049
5,954,592
834,224
12,673,865
Increases
1,853,254
2,429,561
1,431,878
5,714,693
138,721
1,095,165
1,397,965
2,631,851
1,613,226
1,059,187
5,472
2,677,885
transfers from performing exposures
transfers from other classes of non-performing exposures (*)
other increases
Decreases
101,307
275,209
28,441
404,957
-1,186,675
-2,440,553
-1,712,468
-5,339,696
-768,064
transfers into performing exposures
-12,814
-337,274
-417,976
write-offs
-734,151
-18,673
-61
-752,885
payments received
-306,652
-576,575
-90,030
-973,257
disposals
-67,359
-919
-
-68,278
transfers to other classes of non-performing (*) exposure
-26,652
-1,476,381
-1,174,852
-2,677,885
other decreases
Final gross exposure as at 31st December 2014
-39,047
-30,731
-29,549
-99,327
6,551,628
5,943,600
553,634
13,048,862
(*) previously termed "deteriorated"
(**) previously termed "non-performing loans"
128
The interbank market
and the liquidity position
At the end of the year, the net interbank position of the UBI Banca Group was a debtor
position of €7 billion, an improvement compared to approximately -€10 billion at the end of
December 2014.
The negative balance, which was seen in all interim periods of the year, albeit at various levels,
is closely related to debt with the central bank for refinancing operations (a total of €8.1 billion
of TLTROs). Net of all relationships with central banks, the net interbank position was one of
funding of €0.7 billion, up from -€231 million as at 31st December 2014 (partly in relation to a
fall in volumes of lending).
The Group also continues to very safely maintain a positive position in terms of liquidity
reserves, demonstrated, amongst other things, by specific short-term (liquidity coverage ratio)
and structural (net stable funding ratio) Basel 3 indicators, both greater than 100%1.
It must also be stated that these indicators would be greater than one even in the presence of an
ordinary funding structure not based on TLTRO support.
Net interbank position
Figures in thousands of euro
Loans and advances to banks
of which: loans to central banks
Due to banks
of which: due to central banks
31.12.2015
30.9.2015
30.6.2015
31.3.2015
31.12.2014
3,429,937
3,632,477
3,191,584
3,331,195
395,449
580,810
295,626
312,770
3,340,415
584,353
10,454,303
10,871,905
9,049,928
12,360,302
13,292,723
8,106,441
8,104,588
6,103,196
9,101,548
10,305,964
-7,024,366
-7,239,428
-5,858,344
-9,029,107
-9,952,308
Loans and advances excluding central banks
3,034,488
3,051,667
2,895,958
3,018,425
2,756,062
Due to banks excluding central banks
2,347,862
2,767,317
2,946,732
3,258,754
2,986,759
Net interbank position net of central banks
686,626
284,350
-50,774
-240,329
-230,697
Net interbank position
Figures in thousands of euro
Loans and advances to banks
of which: loans to central banks
Due to banks
of which: due to central banks
Net interbank position
31.12.2014
30.9.2014
30.6.2014
31.3.2014
31.12.2013
3,340,415
3,329,046
4,078,892
4,009,183
584,353
602,076
649,941
309,971
4,129,756
860,080
13,292,723
15,588,229
15,964,805
15,397,770
15,017,266
10,305,964
12,184,683
12,180,750
12,173,833
12,166,333
-9,952,308
-12,259,183
-11,885,913
-11,388,587
-10,887,510
Loans net of central banks
2,756,062
2,726,970
3,428,951
3,699,212
3,269,676
Amounts due net of central banks
2,986,759
3,403,546
3,784,055
3,223,937
2,850,933
Net interbank position net of central banks
-230,697
-676,576
-355,104
475,275
418,743
Details of performance on the interbank market during the year are given below.
Loans and advances to banks of €3.4 billion were up slightly (+€89 million) compared to
December 2014, the result of opposite tendencies:

-€189 million due to the decrease in liquidity held with central banks in the central
compulsory reserve account (which amounted to €0.4 billion at the end of the year).
In reality, the changes in end of period figures are operational and depend on balance management
strategies, with account taken of average deposit requirements to be complied with in the reporting
period. The Group normally maintains average deposits in line with the requirement;
1 The agreement reached by the Basel Committee on 6th January 2013 established the introduction of the LCR indicator with effect
from 2015, with an initially required minimum level of 60%, and then of 70% from 1st January 2016.
129

+€278 million due to loans to other banks, which rose to €3 billion. Within the item,
current accounts decreased (-€120 million, in the context of ordinary operations on the
interbank market), offset by an increase in "Other financing - other" (+€391 million),
primarily due to the credit activity of network banks in relation to customers (for example,
lending to bank borrowers controlled by industrial and/or financial groups). In the
comparison with 2014, the item was also affected by the reclassification of a loan to a financial
company (previously included amongst loans to customers) that received authorisation to conduct
banking business in the second half of 2015.
Loans to banks: composition
31.12.2015
%
31.12.2014
Changes
%
Figures in thousands of euro
amount
Loans to central banks
Compulsory reserve requirements
Other
Loans and advances to banks
Current accounts and deposits
Term deposits
Other financing:
395,449
394,226
11.5%
11.5%
584,353
582,171
17.5%
17.4%
-188,904
-187,945
-32.3%
-32.3%
1,223
0.0%
2,182
0.1%
-959
-44.0%
3,034,488
1,733,046
88.5%
50.5%
2,756,062
1,853,551
82.5%
55.5%
278,426
-120,505
10.1%
-6.5%
32,368
0.9%
24,572
0.7%
7,796
31.7%
1,269,074
37.1%
877,939
26.3%
391,135
44.6%
- reverse repurchase agreements
- other
-
-
4
0.0%
-4
-100.0%
1,269,074
37.1%
877,935
26.3%
391,139
44.6%
-
-
-
-
-
Debt instruments
Total
%
3,429,937
100.0%
3,340,415
100.0%
89,522
2.7%
Interbank funding amounted to approximately €10.5 billion at year-end, down €2.8 billion
compared to December 2014.
In particular, as at 31st December 2015 the Group had €8.1 billion 2 of outstanding
unconventional refinancing operations with the ECB, consisting entirely of TLTROs (targeted
refinancing operations aimed at increasing lending to companies and families), subscribed as
follows:
- on 17th December 2014, through participation in the second auction (after not participating in the first
auction held in September 2014) and the allotment of €3.2 billion (four-year funds maturing on 26th
September 2018);
- on 25th March 2015, through participation in the third auction, obtaining €2.9 billion (these funds
mature on 26th September 2018). The Group did not take part in the fourth auction held in June 2015;
- on 24th September 2015, through participation in the fifth auction, in which €2 billion was allotted
(these funds mature on 26th September 2018).
The change in “Debt to central banks”, -€2.2 billion2 compared to December 2014, reflects the
following repayments, in addition to the subscriptions indicated above:
- on 29th January 2015, the natural maturity date of the first LTRO, UBI Banca repaid the last €2 billion
of the financing subscribed on 21st December 2011 for €6 billion of which €4 billion had already been
repaid in October and November 2014;
- on 26th February 2015, the natural maturity date of the second LTRO, UBI Banca repaid the last €5
billion outstanding (after an initial repayment of €1 billion on 17th December 2014) of the second
three-year financing that the Group had been allotted on 29th February 2012.
Excluding such funding from central banks, amounts due to banks were €2.4 billion, down
slightly (-€0.6 billion on an annual basis), due to similar decreases in current accounts (-€339
million, in the context of ordinary market operations), repurchase agreements (-€198 million,
due in part to the maturity in the second quarter of a securities operation by the Parent that
was not renewed) and financing - other (-€101 million).
The latter item includes repayments of EIB loans, i.e. the medium- to long-term funding
transactions with the European Investment Bank to support SMEs, which as at 31st
2 The carrying amount includes interest expense accruing.
130
December totalled €1.34 billion. That funding may be drawn on directly not only by the
Parent, for a total of €570 million, but also by the network banks.
Finally, other payables consisted largely of funds relating to credit card settlement
arrangements with Istituto Centrale delle Banche Popolari Italiane (totalling €21 million, down
over €16 million on an annual basis).
Due to banks: composition
31.12.2015
%
31.12.2014
%
Figures in thousands of euro
Changes
amount
%
Due to central banks
8,106,441
77.5%
10,305,964
77.5%
-2,199,523
-21.3%
Due to banks
2,347,862
22.5%
2,986,759
22.5%
-638,897
-21.4%
720,487
6.9%
1,059,939
8.0%
-339,452
-32.0%
60,844
0.6%
46,590
0.3%
14,254
30.6%
1,530,870
14.7%
1,830,471
13.8%
-299,601
-16.4%
-51.5%
Current accounts and deposits
Term deposits
Financing:
- repurchase agreements
- other
Other payables
Total
186,635
1.8%
384,897
2.9%
-198,262
1,344,235
12.9%
1,445,574
10.9%
-101,339
-7.0%
35,661
0.3%
49,759
0.4%
-14,098
-28.3%
10,454,303
100.0%
13,292,723
100.0%
-2,838,420
-21.4%
***
As at 31st December 2015, the portfolio of assets eligible for refinancing with the central bank,
totalled €21.2 billion net of haircuts (consisting of €13.2 billion in the ECB pool and of €8
billion of non-pool government securities), down compared with €24.2 billion recorded twelve
months earlier. The reduction of €3 billion (in terms of eligible amount, net of haircuts) was
primarily due to the following:
-
a decrease in government securities (-€2.9 billion), as a result of a gradual decline in the
AFS portfolio, at the same time as and consistent with the share committed to ECB
auctions (-€2.3 billion compared to December 20143). The change related to the pool of
assets securing ECB financing (-€1.8 billion) and eligible assets not included in the pool
(-€1.5 billion), against a marginal greater use of refinancing with Cassa di Compensazione e
Garanzia (a central counterparty clearing house).
The strategy of streamlining the portfolios nonetheless aims to retain an amount of domestic government
securities sufficient to ensure optimal management of the Group's liquidity profile, through the eligibility
of such assets;
-
a decrease (-€1 billion) in the self-retained covered bonds issued under the first programme,
due to the cancellation of two securities (in April and October 2015, with a total nominal
amount of €1.7 billion), partially offset by a new issuance with a nominal value of €500
million in December 2015;
-
an increase (+€0.4 billion) in the self-retained covered bonds issued under the second
programme, due to a new issuance (the fourth under the programme) with a nominal value
of €650 million in July, partially offset by amortisation (half-yearly payments for a single
security, being made since 2013);
-
a decrease (-€1.2 billion) in securitisation, due to normal repayments during the period, but
also to the withdrawal in November of the securities (€0.4 billion) issued by UBI Finance 3
due to the early winding-up of the transaction;
-
an increase in ABACO loans (€1.8 billion) and in other securities held (in residual terms), as
part of the portfolio diversification strategy, which is reducing the weight of Italian
government securities in favour of corporate and financial securities.
3 See also the above summary of repayments/new subscriptions of loans from the ECB.
131
Eligible assets
31.12.2015
Figures in billions of euro
Securities owned (AFS, HTM and L&R) (*)
30.9.2015
amount
eligible (net
of haircuts)
nominal
amount
nominal
amount
amount
eligible (net
of haircuts)
30.6.2015
nominal
amount
31.3.2015
amount
eligible (net
of haircuts)
amount
eligible (net
of haircuts)
nominal
amount
31.12.2014
nominal
amount
amount
eligible (net
of haircuts)
11.40
12.81
11.34
12.74
10.05
10.81
13.87
15.90
14.43
15.87
3.45
3.08
3.83
3.10
3.18
2.63
4.36
3.67
4.36
3.64
Covered bonds ("self-retained" issues)
Securitisation of residential mortgages of the
former B@nca 24-7
0.93
0.76
0.97
0.78
1.01
0.82
1.04
0.85
1.07
0.88
UBI Leasing leased assets securitisation
Banco di Brescia securitisation of performing
loans to SMEs
Banca Popolare di Bergamo securitisation of
performing loans to SMEs
Banca Popolare Commercio e Industria
securitisation of performing loans to SMEs
Banca Popolare di Ancona securitisation of
performing loans to SMEs
Loans eligible resulting from participation in
ABACO (**)
0.47
0.40
0.55
0.47
0.64
0.55
0.74
0.63
0.84
0.72
0.24
0.20
0.28
0.23
0.31
0.27
0.35
0.30
0.39
0.29
0.20
0.17
0.27
0.23
0.35
0.30
0.43
0.37
6.40
3.54
5.73
3.08
4.56
2.27
4.09
2.01
3.79
1.70
Total
23.39
21.21
23.48
21.06
20.68
18.14
25.55
24.30
26.14
24.18
(*)
-
-
0.16
0.13
0.19
0.16
0.22
0.19
0.26
0.22
0.29
0.25
0.34
0.29
0.39
0.33
0.44
0.37
0.49
0.42
0.54
0.46
These include government securities not committed with the ECB which potentially can be refinanced with the Cassa di Compensazione e Garanzia for
the following amounts:
- 31st December 2015: €12.2 billion (net of haircuts), of which €4.2 billion contributed to the pool and €8 billion available, non-pool;
- 30th September 2015: €12.4 billion (net of haircuts), of which €4.5 billion contributed to the pool and €7.9 billion available, non-pool;
- 30th June 2015: €10.5 billion (net of haircuts), of which €3.3 billion contributed to the pool and €7.2 billion available, non-pool;
- 31st March 2015: €15.2 billion (net of haircuts), of which €4.1 billion contributed to the pool and €11.1 billion available, non-pool;
- 31st December 2014: €13.8 billion (net of haircuts), of which €4.2 billion contributed to the pool and €9.6 billion available, non-pool.
(**) ABACO (bank assets eligible as collateral) is the name given to procedures drawn up by the Bank of Italy for the management of loans eligible for
refinancing. In order to qualify as eligible, an asset must meet specific requirements contained in Bank of Italy regulations concerning the following: type of
debtor (public sector, non-financial company, international and supranational institutions), credit rating (set by external ratings, rating tools of approved
providers and internal ratings [for banks authorised by the Bank of Italy to use internal rating models]), minimum amount (€0.03 million for domestic loans)
and type of asset.
If government securities subject to refinancing operations with the Cassa di Compensazione e
Garanzia (CCG – a central counterparty clearing house) of €5.2 billion at year-end (+€0.4
billion) are added to the portfolio of eligible assets, then total eligible assets of the Group stand
at €26.4 billion (€29 billion as at 31st December 2014).
As at 31st December 2015, given the portion already pledged of €8.1 billion (€10.4 billion at
the end of 2014), the margin of liquidity still available amounted to €13.1 billion (€13.8 billion
at the end of the previous year), of which €12.2 billion of Italian government securities eligible
for the purposes of the LCR indicator.
Available liquidity reserve
31.12.2015
%
31.12.2014
%
Management accounting figures in millions of euro - net of haircuts
ECB pool
of which government securities (A)
Securities eligible not included in the ECB pool
of which government securities (B)
Total assets eligible
Government securities refinanced with the CCG (C)
Total assets eligible
of which government securities (A+B+C)
Changes
amount
%
13,209
50.0%
14,610
50.3%
-1,401
-9.6%
4,185
15.8%
5,937
20.5%
-1,752
-29.5%
8,011
30.3%
9,555
32.9%
-1,544
-16.2%
8,011
30.3%
9,552
32.9%
-1,541
-16.1%
21,220
80.3%
24,165
83.2%
-2,945
-12.2%
5,218
19.7%
4,861
16.7%
26,438
17,414
29,026
65.9%
20,350
357
7.3%
-2,588
-8.9%
70.1%
-2,936
-14.4%
ECB auctions (portion pledged)
-8,106
-30.7%
-10,405
-35.8%
-2,299
-22.1%
Government securities refinanced with the CCG
-5,218
-19.7%
-4,861
-16.7%
357
7.3%
13,114
49.6%
13,760
47.4%
-646
-4.7%
12,196
46.1%
13,757
47.4%
-1,561
-11.3%
Available liquidity reserve
of which unpledged government securities
(eligible for the purposes of the LCR)
132
Financial activities
The financial assets of the Group as at 31st December 2015 totalled €20.2 billion, down
compared with €23.7 billion at the end of 2014. If financial liabilities are considered,
consisting solely of financial derivatives, then net assets came to €19.7 billion (€23.1 billion).
As shown in the table, total government securities held reduced during the year (down to
€18.3 billion from €21.9 billion) following profit-taking which affected the AFS and HFT
portfolios.
An operation commenced in the fourth quarter to change the portfolio mix by purchasing
corporate bonds in the AFS class and US Treasury securities in the trading class. The
operation forms part of a policy to reduce Italian government securities held (while
maintaining a sufficient amount to ensure both optimum management of Group liquidity, by
means of the eligibility of these securities for refinancing, and also a contribution, although
falling, to net interest income) and to diversify investments which will continue to a more
substantial extent in 2016.
Financial assets/liabilities
31.12.2015
Carrying
amount
(A)
Figures in tho usands o f euro
Financial assets held for trading
30.9.2015
%
Carrying
amount
(B)
30.6.2015
%
Carrying
amount
(C)
31.3.2015
%
Carrying
amount (D)
31.12.2014
%
Carrying
amount (E)
%
Changes (A) / (E)
amount
%
994,478
4.8%
653,418
3.3%
1,338,170
6.1%
1,527,401
6.6%
1,420,506
6.0%
-426,028 -30.0%
of which: financial derivatives contracts
522,429
2.6%
544,925
2.8%
512,176
2.3%
671,128
2.9%
618,454
2.6%
-96,025 -15.5%
Financial assets designated at fair value
196,034
1.0%
195,490
1.0%
197,223
0.9%
198,365
0.9%
193,167
0.8%
15,554,282
76.9%
15,259,697
77.9%
16,799,280
76.8%
17,904,652
77.3% 18,554,956
78.1%
17.3%
3,486,873
17.8%
3,535,692
16.2%
3,528,010
Available-for-sale financial assets
Held-to-maturity investments
Financial assets (a)
3,494,547
20,239,341
100.0% 19,595,478
100.0% 21,870,365 100.0% 23,158,428
15.2%
2,867
1.5%
-3,000,674 -16.2%
3,576,951
15.1%
-82,404
-2.3%
100.0% 23,745,580
100.0%
-3,506,239
-14.8%
of which:
- deb t instruments
19,244,392
95.1%
18,542,692
94.6%
20,851,133
95.3%
22,046,039
95.2% 22,619,761
95.3%
-3,375,369 -14.9%
18,336,961
90.6%
18,176,438
92.8%
20,472,426
93.6%
21,603,439
93.3% 21,904,867
92.2%
-3,567,906 -16.3%
- equity instruments
288,177
1.4%
331,873
1.7%
326,956
1.5%
260,819
1.1%
255,809
1.1%
- Units in UCITS.
184,343
0.9%
175,988
0.9%
180,100
0.8%
180,442
0.8%
251,556
1.1%
531,812
100.0%
526,212
100.0%
647,508 100.0%
740,247
100.0%
617,762
100.0%
528,362
740,247 100.0%
- of which: Italian government securities
Financial liabilities held for trading (b)
of which: financial derivatives contracts
Net financial assets (a-b)
531,812 100.0%
19,707,529
526,212 100.0%
19,069,266
21,222,857
81.6%
22,418,181
617,762 100.0%
23,127,818
32,368
12.7%
-67,213 -26.7%
-85,950
-13.9%
-85,950 -13.9%
-3,420,289
-14.8%
The financial assets held for trading portfolio (€994,478 thousand) was smaller than the same portfolio held by the Parent (€1,088,262 thousand) due to the presence of
financial derivatives contracts entered into by UBI Banca with the Group network banks and product companies. These instruments, in addition to being subject to
intragroup elimination in the consolidation, were classified by the Parent as held for trading because the relative assets hedged were recognised in the balance sheets of the
Group network banks and product companies. When the consolidation was prepared, those same instruments, entered into to hedge the underlying assets, were
recognised within hedging derivatives.
Financial derivatives classified as held for trading held by the Parent at the end of 2015 amounted to €617,226 thousand while the figure for the Group was €522,429 thousand.
Management accounting figures1 as at 31st December 2015, show the following:
- in terms of type of financial instrument, the securities portfolio of the Group was composed as follows:
94.6% (95.8% at the end of 2014) of government securities; 4.4% (3.1%) of corporate securities (of
which 45% issued by major Italian and international banks and financial institutions; 91% of these
investments in corporate securities also carry an investment grade rating); 0.6% (0.5%) of hedge
funds; and the remaining 0.4% (0.6%) consisted of funds and equities;
- from a financial viewpoint, floating rate securities accounted for 65% (59.1%) of the portfolio2 and
fixed rate securities for 32.2% (36.9%), while the remainder was composed of structured instruments
(held mainly in the AFS portfolio), equities, funds and convertible securities;
- as regards the currency of denomination, 99.5% (99.7%) of the securities were denominated in euro
and 0.4% (0.2%) in dollars with currency hedges, while in terms of geographical distribution, 98.5%
(99.9%) of the investments (excluding hedge funds) were issued from countries in the euro area;
- finally, an analysis by rating (for the bond portfolio only) shows that 99.5% (99.4%) of the portfolio
consisted of “investment grade” securities with an average rating of Baa2 (unchanged).
1 The management accounting analysis relates to a smaller portfolio than that stated in the consolidated financial statements,
because they exclude equity investments, some smaller portfolios and also financial derivatives contracts held for trading.
2 Fixed rate securities purchased as part of asset swaps are also considered as floating rate (99% of the floating rate securities). The
partial change in the mix affecting floating rate and fixed-rate securities is attributable to the sale of fixed-rate government securities
classified in the HFT portfolio that took place in the third quarter.
133
Available-for-sale financial assets
“Available-for-sale financial assets” (AFS), asset item 40, are measured at fair value with the recognition of changes in a
separate fair value reserve in equity, except for losses due to reductions in value that are considered significant or
prolonged. In this case the reduction in value that occurred in the period is recognised through profit or loss, the amount
being transferred from the negative or positive reserve that may have been recognised in equity previously. Following the
recognition of impairment losses, recoveries in value continue to be recognised in the separate fair value reserve in equity
if they relate to equity instruments and through profit and loss if they relate to debt instruments. Any decreases below
the level of the previous impairment losses are recognised through profit and loss.
Definitions relating to the fair value hierarchy (levels one, two and three) are given in Section A.4 of Part A – Accounting
Policies in the Notes to the Consolidated Financial Statements.
Available-for-sale financial assets: composition
31.12.2015
31.12.2014
Carrying
amount
L1
L2
Debt instruments
14,943,588
313,310
of which: Italian
government securities
14,269,042
154,582
3,261
-
208,748
212,009
12,405
46,600
-
-
-
-
14,959,254
359,910
Figures in tho usands o f euro
Equity instruments
Units in UCITS
Financing
Total
L3
Changes
Carrying
amount
L1
L2
L3
amount
26,370 15,283,268
17,336,688
908,890
- 14,423,624
17,063,694
469,455
2,495
94
177,101
179,690
59,005
83,882
44,793
-
-
-
-
-
235,118 15,554,282
17,423,065
953,777
%
1,013 18,246,591
-2,963,323
-16.2%
- 17,533,149
-3,109,525
-17.7%
32,319
18.0%
128,675
-69,670
-54.1%
-
-
178,114 18,554,956
-3,000,674
-16.2%
Available-for-sale financial assets stood at €15.6 billion as at 31st December 2015 (-€3 billion
year-on-year) and were held almost entirely in UBI Banca’s AFS portfolio amounting to €15.4
billion (€18.1 billion in December 2014). The remaining €0.2 billion, approximately half of
which consisting of CCTs, were divided among the network banks and product companies. In
the fourth quarter, IW Bank’s portfolio, which at the end of 2014 had amounted to €313
million, was almost reduced to zero (€5.4 million remained) following sales and maturities of
CCT and Republic of Italy securities.
Debt securities, which account for 98% of the portfolio, fell to €15.3 billion 3 , while €14.4
billion of these consist of Italian government securities. In addition to the disposals already
mentioned by IW Bank, the investment in government securities was also affected by the
following transactions performed by the Parent:
 sales of BTPs for €825 million nominal in the first quarter;
 the disposal of a Republic of Italy security for €250 million nominal and the maturity of a
CTZ for €50 million nominal in the second quarter;
 disposals of BTPs for €1.75 billion nominal in the third quarter;
 purchases of BTPs for €610 million nominal, partially offset by the sale of BTPs for €350 million
nominal and a Republic of Italy security for €50 million nominal in the fourth quarter.
In June and October-November, UBI Banca also carried out two switching operations which together
involved BTPs for a nominal amount of €2.75 billion. These transactions lengthened the maturities of the
investments slightly.
-
- Other debt instruments grew to €0.9 billion from €0.7 billion before. Redemptions and sales of
corporate bonds occurring mainly in the first quarter (€0.3 billion) and regarding securities
issued by Italian European banks classified mainly in fair value level two held in UBI Banca’s
portfolio, were followed in the fourth quarter by purchases amounting to €0.5 billion of corporate
bonds, again in the Parent’s portfolio, classified mainly in fair value level one.
The operation carried out in the fourth quarter regarded a basket of securities differentiated by sector and
by rating which forms part of a policy to diversify investments and change the mix of portfolios mentioned in
the introduction to this section.
-
3 As at 31st December 2015, as before at the end of 2014, these did not include direct investments in ABS instruments.
134
Finally we report that €25.2 million was recognised in fair value level three for the convertible
bond issued by Sorgenia Spa, as part of the agreement pursuant under article 182 bis of the
Bankruptcy Law4.
-
Equity instruments 5 recorded growth compared with December (up €212 million from
€179.7 million before).
- This item was affected over the twelve month period by the following movements in fair
value level three:
- the partial sale, concluded in December 2015 of the interest held in ICBPI (572,566 shares,
accounting for 4.04% of the share capital of this institute): the fair value fell year-on-year by
€10.9 million, but the investment had been revalued in the second and third quarter for a
total of €75.8 million, consistent with the valuations involved when a preliminary contract
was stipulated for the sale of this investment, with the receipt of gross consideration
amounting to €82.2 million6;
- the recognition, again in December, of €36 million for “profit-sharing equity instruments”
(“SFP Patrimonializzazione”) issued by Nuova Sorgenia Holding in conversion of original debt
to the UBI Banca Group4;
- the revaluation by €8.4 million of Visa Europe Limited shares following a communication
received from Visa Inc. stating its intention to purchase 100% of the share capital of that
company at a pre-agreed price by the end of the first half of 2016.
Finally units in UCITS – relating almost entirely to UBI Banca – fell to €59 million from €128.7
million following the sale at the beginning year of an ETF fund with a carrying amount of
€73.8 million in December 2014 (classified in fair value level one).
Property funds held in the UCITS portfolio totalled €17.8 million (€15.6 million at the end of 2014): €12.4
million was recognised in fair value level one (€10.1 million in 2014) relating to the Polis Fund, affected by a
partial early redemption amounting to €2.2 million during the year.
Held-to-maturity investments
“Held-to-maturity investments”, asset item 50, are comprised of financial instruments that an entity intends and is able
to hold to maturity.
These assets are measured at amortised cost with the recognition of impairment losses, or recoveries in value when the
reason for the impairment no longer exists, through profit or loss.
Held-to-maturity investments: composition
31.12.2015
Carrying
amount
L1
F igure s in tho us a nds o f e uro
L2
L3
Changes
31.12.2014
Carrying
amount
Fair Value
Fair Value
L1
Total
L2
L3
%
amount
Total
Debt instruments
3,494,547
3,599,957
-
- 3,599,957
3,576,951
3,607,673
-
- 3,607,673
-82,404
-2.3%
of which: Italian
government securities
3,494,547
3,599,957
-
- 3,599,957
3,576,951
3,607,673
-
- 3,607,673
-82,404
-2.3%
-
-
-
-
-
-
-
-
-
-
-
-
3,494,547
3,599,957
-
- 3,599,957
3,576,951
3,607,673
-
- 3,607,673
-82,404
Financing
Total
-2.3%
Held-to-maturity investments, consisting of BTP’s with maturities between 2020 and 2022 and
totalling €3.05 billion nominal, recorded a book value of €3.5 billion at the end of December
2015, with changes resulting solely from the effects of accounting valuations.
4 For further details see the section “General banking business with customers: Lending”.
5 Shareholdings that are not classified as companies subject to control, joint control or significant influence are recognised here.
6 For further details see the section “Significant events in 2015”.
135
Financial instruments held for trading
Financial assets held for trading
Asset item 20, “Financial assets held for trading” (HFT), comprises financial trading instruments “used to generate a
profit from short-term fluctuations in price”. They are recognised at fair value through profit or loss – FVPL.
Definitions relating to the fair value hierarchy (levels one, two and three) are given in Section A.4 of Part A – Accounting
Policies in the Notes to the Consolidated Financial Statements.
Financial assets held for trading: composition
31.12.2015
Figures in tho usands o f euro
L1
L2
31.12.2014
Carrying
amount
L3
L1
L2
Changes
Carrying
amount
L3
amount
%
On-balance sheet assets
Debt instruments
of which: Italian
government securities
100
466,577
795,206
759
-
-
418,790
794,767
-
2
4,616
4,544
275
-
581
856
-
-
-
471,209
157
803
-
Total (b)
Total (a+b)
Equity instruments
Units in UCITS
Financing
Total (a)
466,320
157
254
796,219
-329,642
-41.4%
418,790
4,614
-
-
794,767
-375,977
-47.3%
-
447
4,991
-375
-7.5%
241
1
600
842
14
1.7%
-
-
-
-
-
-
683
472,049
799,991
760
1,301
802,052
-330,003
-41.1%
504,871
16,755
522,429
890
605,577
11,987
618,454
-96,025
-15.5%
-
-
-
-
-
-
-
-
803
504,871
16,755
522,429
890
605,577
11,987
618,454
-96,025
-15.5%
472,012
505,028
17,438
994,478
800,881
606,337
13,288
1,420,506
-426,028
-30.0%
-
Derivative instruments
Financial derivatives
Credit derivatives
-
At the end of 2015 financial assets held for trading amounted to €994 million, consisting of
on-balance sheet assets of €472 million and financial derivatives of €522 million, for which the
performance and amount must be interpreted in strict relation to the corresponding item
recognised within financial liabilities held for trading.
Within the on-balance sheet assets, Italian government securities, which account for almost
the whole amount, fell to €418.8 million from approximately €795 million a year earlier as a
consequence of the following sales and purchases made by the Parent:

purchases in the first quarter of €850 million nominal against sales of €800 million
nominal;

purchases in the second quarter of €775 million nominal against sales of €790 million
nominal;

disposals in the third quarter for €725 million nominal;

purchases in the fourth quarter for €300 million.
-
Other debt instruments included in the portfolio amounted to €47.8 million (€1.5 million in
December 2014) of which €45 million relating to a US Treasury security with a nominal value
of €50 million, purchased in the fourth quarter as part of the risk diversification policy
mentioned in the introduction.
-
The remaining categories were again of negligible amount, composed as follows:
- equity instruments amounting to €4.6 million, largely unchanged during the year, and
consisting entirely of shares classified within fair value level one;
- units in UCITS amounting to €856 thousand (down from €842 thousand before), of which
€581 thousand relating to residual investments in hedge funds made before 30th June
2007.
136
Financial liabilities held for trading
Financial liabilities held for trading: composition
31.12.2015
L1
Figures in tho usands o f euro
L2
31.12.2014
Carrying
amount
L3
L1
L2
Changes
Carrying
amount
L3
amount
%
On-balance sheet liabilities
Due to banks
-
-
-
-
-
-
-
-
-
-
Due to customers
-
-
-
-
-
-
-
-
-
-
Debt instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial derivatives
7
531,773
32
531,812
300
617,452
10
617,762
-85,950
Credit derivatives
-
-
-
-
-
-
-
-
-
-
Total (b)
7
531,773
32
531,812
300
617,452
10
617,762
-85,950
-13.9%
Total (a+b)
7
531,773
32
531,812
300
617,452
10
617,762
-85,950
-13.9%
Total (a)
Derivative instruments
-13.9%
Financial liabilities held for trading, amounted to €531.8 million and consisted solely of
financial derivatives, the performance of which should be interpreted in relation to the trend
recorded by derivative instruments recognised within financial assets.
As in the comparative year, no on-balance sheet liability positions existed, although UBI
Banca had taken limited uncovered short positions on Italian government securities during
the year.
Financial assets designated at fair value
The item “financial assets designated at fair value” is comprised of financial instruments classified as such in
application of the fair value option (FVO). These financial assets are recognised at fair value through profit or loss.
Definitions relating to the fair value hierarchy (levels one, two and three) are given in Section A.4 of Part A – Accounting
Policies in the Notes to the Consolidated Financial Statements.
Financial assets designated at fair value: composition
31.12.2015
L1
Figures in tho usands o f euro
Debt instruments
Equity instruments
Units in UCITS
Financing
Total
L2
31.12.2014
Carrying
amount
L3
L1
L2
Changes
Carrying
amount
L3
amount
%
-
-
-
-
-
-
-
-
-
-
1,700
3,000
66,852
71,552
3,224
3,000
64,904
71,128
424
0.6%
119,082
-
5,400
124,482
116,802
-
5,237
122,039
2,443
2.0%
-
-
-
-
-
-
-
-
-
-
120,782
3,000
72,252
196,034
120,026
3,000
70,141
193,167
2,867
1.5%
Financial assets designated at fair value, relating totally to the Parent, were composed as
follows:
- equity instruments, held as part of merchant banking and private equity business,
amounting to €71.5 million (€71.1 million in the comparative period);
- €124.5 million of units in UCITS which included the listed Tages funds in level one
amounting to €119.1 million (€116.8 million recognised at the end of the previous year) and
investments in hedge funds in fair value level three amounting to €5.4 million (€5.2 million
137
at the end of 2014). The remaining hedge funds are also present, amounting to €581
thousand, recognised within financial assets held for trading.
***
There are no developments to report with regard to the Madoff affair: UBI Banca is monitoring the class
actions brought in the USA and the liquidation proceedings in progress in the British Virgin Islands in order
to protect its creditor rights in relation to the three funds involved in the affair which are Fairfield Sigma
Ltd, Kingate Euro Ltd and Kingate Global Ltd.
As already reported, an official claim has been submitted for compensation to the Madoff Victim Fund with
regard to all the UBI Banca positions in Madoff funds. This fund was created by the U.S. Attorney’s Office
for the Southern District of New York and the Department of Justice. Its purpose is to compensate the
“victims” of the investments in funds involved in the Madoff affair by distributing the sums so far recovered
through various criminal, civil and confiscation actions initiated against the various parties involved in the
fraud.
On the other hand, recovery activities are still in progress with regard to the Dynamic Decisions Growth
Premium 2X fund, in liquidation. An agreement had been signed with the receivers which gives UBI Banca
preference in the redemption of sums recovered in the liquidation, in return for financing paid to the
receivers.
Exposure to sovereign debt risk
Details of the UBI Banca Group exposures are given on the basis that, according to the instructions issued by the
European supervisory authority (European Securities and Markets Authority, ESMA), “sovereign debt” is defined as
debt instruments issued by central and local governments and by government entities and also as loans granted to them.
UBI Banca Group: exposures to sovereign debt risk
31.12.2015
Country / portfolio of classification
Figures in tho usands o f euro
- Italy
Nominal
amount
16,414,709
financial assets and liabilities held for trading
(net exposure)
available-for-sale financial assets*
held-to-maturity investments
loans and receivables
- Spain
loans and receivables
- France
31.12.2014
Carrying
amount
Fair value
Nominal
amount
18,955,442
19,060,853
19,999,977
Carrying
amount
Fair value
22,730,431
22,761,148
400,000
418,790
418,790
800,374
794,767
794,767
12,358,255
14,436,231
14,436,231
15,327,035
17,538,510
17,538,505
3,050,000
3,494,547
3,599,957
3,050,000
3,576,951
3,607,673
606,454
605,874
605,875
822,568
820,203
820,203
-
-
-
8
8
8
-
-
-
8
8
8
-
-
-
364
364
364
-
-
-
364
364
364
10
10
10
10
10
10
10
10
10
10
10
10
- Argentina**
financial assets and liabilities held for trading
(net exposure)
805
830
830
813
659
659
805
830
830
813
659
659
- United States
financial assets and liabilities held for trading
(net exposure)
50,000
44,990
44,990
-
-
-
50,000
44,990
44,990
-
-
-
Total on-balance sheet exposure
16,465,524
19,001,272
19,106,683
20,001,172
22,731,472
22,762,189
loans and receivables
- Holland
loans and receivables
* The carrying amount is different from that reported in the line “Italian government securities” in the tables relating to “Available-for-sale financial assets”
due to the presence in this table of Cassa Deposito e Prestiti (a state controlled fund and deposit institution) bonds (a government issuer) amounting to
€12.6 million as at 31st December 2015 and to €5.4 million as at 31st December 2014.
** The figures as at 31st December 2014 are different from those reported in the last financial report due to a more accurate statement of the existing
exposure, which excludes an interest rate derivative entered into on Argentinian securities held in portfolio.
138
The sovereign risk exposures of the UBI Banca Group as at 31st December 2015 were again
concentrated in Italy, with a total book value of approximately €19 billion, down compared
with the end of 2014 (€22.7 billion) due to reductions made in the amounts held in the AFS
and HFT portfolios.
Loans to Italian public administrations fell slightly to €606 million from €820 million before.
The table also shows the following:
 the reduction to zero of lending exposures to France and Spain, while that with Holland
remained negligible and unchanged;
 Argentinean securities increased due to changes in market fair values;
 an exposure to the United States, relating to a Treasury security purchased in the fourth
quarter as part of trading activity.
The following table shows the distribution by maturity of Italian government securities held in
portfolio.
Maturities of Italian government securities
31.12.2015
Financial
assets held
for trading
Figures in tho usands o f euro
Up to 6 months
Available-forsale financial
assets
31.12.2014
Held-tomaturity
investments
Carrying
amount
%
Financial
assets held
for trading
Available-forsale financial
assets
Held-tomaturity
investments
Carrying
amount
%
100,029
-
-
100,029
0.5%
372
50,062
-
50,434
0.2%
Six months to one year
-
156,271
-
156,271
0.9%
199,612
99,212
-
298,824
1.4%
One year to three years
50,226
4,877,932
-
4,928,158
26.9%
594,780
3,743,926
-
4,338,706
19.8%
-
1,405,203
2,336,591
3,741,794
20.4%
-
7,851,586
-
7,851,586
35.8%
268,535
6,187,391
1,157,956
7,613,882
41.5%
1
3,395,529
3,576,951
6,972,481
31.8%
1,796,827
9.8%
2
2,392,834
-
2,392,836
11.0%
18,336,961 100.0%
794,767
17,533,149
3,576,951
Three years to five years
Five years to ten years
Over ten years
Total
-
1,796,827
-
418,790
14,423,624
3,494,547
21,904,867 100.0%
The average life of the AFS portfolio was 6.2 years (6 years in December 2014), that of the HTM
portfolio is 4.8 years (5.8 years), while that of government securities classified within the held
for trading portfolio was 4.1 years (1.4 years).
Changes in the middle ranges emerge from a comparison with the previous year as follows:
 increases in the “one to three years” and “five to ten years” ranges attributable to the AFS
class: in the first case this is due to the presence of securities maturing in 2018 (which in
the comparative year fell within a different time range) that more than offset disposals made
in the second part of the year; in the second case it relates not only to switching operations
carried out during the year, which lengthened the maturities (notwithstanding the
movement of over 60% of the HTM portfolio into the shortest range), but also to investments
made in the trading portfolio in the fourth quarter;
 a reduction in the middle range “three to five years” as a result of the above-mentioned
sales made as part of the switching operations.
***
With a view to greater transparency on credit risk exposures consisting of debt instruments
other than sovereign debt – as requested by the European Securities and Markets Authority
(ESMA) in Document No. 725/2012 of 12th November 2012 – a table has been provided
summarising total debt instruments other than sovereign debt recognised among the assets
of the UBI Banca Group balance sheet as at 31st December 2015 (available-for-sale financial
assets, financial assets held for trading, loans and advances to banks and loans and
advances to customers).
139
Debt instruments other than government securities recognised within consolidated assets
31.12.2015
figures in tho usands o f euro
Issuer
Corporate
Corporate
Nationality
Italy
88,473
28,079
11,034
28,895
10,111
26,200
10,185
25,240
8,987
22,640
10,226
43,967
22,640
10,226
43,967
20,271
10,000
40,000
-
-
-
-
-
-
557,400
178,800
5,003
27,000
9,500
245,550
432,565
2
21,552
245,550
432,565
2
21,552
229,356
418,000
3
18,000
10,381
66
10,381
66
10,000
9,500
7,565
15,228
7,012
8,083
7,515
14,500
6,500
8,000
-
-
-
-
-
-
5,088
19,111
8,118
5,000
19,000
7,500
-
-
Sweden
5,088
19,111
8,118
-
Luxembourg
276,490
-
276,490
-
288,318
-
Denmark
Finland
Mexico
Germany
Corporate
Corporate
Corporate
Total Corporate
Banking
Banking
Banking
Banking
Banking
Italy
Germany
Luxembourg
United Kingdom
Cyprus
Holland
Australia
Banking
Banking
Banking
Banking
Finland
France
Ireland
Spain
Banking
Banking
Banking
Total Banking
E.I.B.
103,722
112,908
103,722
112,908
111,700
106,776
77,262
9
76,663
41,522
77,262
9
76,663
41,522
72,872
1,827
74,037
37,900
9,626
70,787
-
9,626
70,787
-
9,000
66,000
62
20,297
119
15,725
8,075
20,297
119
15,725
8,075
20,100
126
14,500
7,500
2,033
8,325
26,690
2,033
8,325
26,690
2,000
7,500
25,500
573,763
172,723
5,760
27,738
64
573,763
172,723
5,760
27,738
64
7,565
15,228
7,012
8,083
Nominal
amount
Fair value
90,598
Brazil
Ireland
Argentina
Australia
Corporate
Corporate
Corporate
Corporate
Carrying
amount
90,598
Spain
Hungary
Norway
France
Corporate
Corporate
Corporate
Corporate
Nominal
amount
Fair value
28,079
11,034
28,895
10,111
Holland
United States
Luxembourg
United Kingdom
Corporate
Corporate
Corporate
Corporate
Carrying
amount
31.12.2014
-
-
-
464,566
3
464,566
3
455,503
2
Total Supranational
-
-
-
3
3
2
Total debt instruments
850,253
850,253
845,718
710,119
710,119
684,861
The book value of these investments totalled €850.3 million, up compared with €710 million a
year before, the aggregate result of an increase in exposures to both ordinary corporate and
banking issuers (relating almost totally to the Parent and attributable to the operation to
diversify the AFS portfolio carried out in the fourth quarter for €500 million nominal, after the
partial disposals carried out during the year) and, on the other hand, of the reductions
recorded for Italian banking exposures, relating to the maturity in the first quarter of the year
of a bond issued by major Italian bank.
To complete the disclosures required by the ESMA, at the end of 2015 (as also in December
2014) the Group held no credit default products, nor did the Group carry out any
transactions in those instruments during the year, either to increase its exposure or to
acquire protection.
140
Derivative financial instruments
TRADING ACTIVITIES
As shown in table “A.1 Supervisory trading portfolio: notional, end of period and average
figures” contained in the Notes to the Consolidated Financial Statements, Part E, the notional
value of the derivatives recognised in the trading portfolio existing at the end of 2015 was
€26.1 billion (€23.6 billion at the end of 2014).
Moreover, the fair value movements again confirmed a break-even result between contracts
entered into with customers and those traded on own account: a total of €522.4 million
recognised within financial assets held for trading and €531.8 million within financial
liabilities held for trading.
HEDGING ACTIVITIES
As detailed in table “A.2.1 Banking portfolio: notional end of period and average amounts – For
hedging” contained in the Notes to the Consolidated Financial Statements, Part E, the notional
value of hedging derivatives held in December 2015 was €36.7 billion (€38.2 billion at the end
of 2014).
These mainly consisted of instruments to hedge interest rate risk relating to debt securities
and in particular to fixed-rate bonds and securities classified as available-for-sale.
For a proper understanding of overall trading in these instruments, their measurement at fair
value must be considered in combination with the fair value of the corresponding hedged
assets/liabilities. More precisely:
 the overall positive fair value of hedging derivatives at €594.7 million must be considered in
combination with the fair value delta relating to interest rate risk on bonds issued (€456.8
million);
 the overall negative fair value shown at €749.7 million must be attributed to the fair value
delta relating to the interest rate risk of loans to customers and available-for-sale securities
(€702.7 million).
MANAGEMENT ACTIONS
Group management of interest rate risk hinges primarily on a natural hedging model which
tends to pursue natural offsetting of risks generated by assets and liabilities.
Recourse to the use of derivative instruments is therefore only made when commercial
volumes do not naturally produce that offsetting or when the Group intends to reposition itself
on determined levels of risk.
The ALM policy pursued maintained new commercial business unhedged, offsetting interest
rate risk generated by ECB refinancing drawings (TLTROs) by means of fixed-rate financial
assets held in the HTM portfolio.
While the macroeconomic environment sent out more positive than negative signals, in the last
quarter of 2015 an assessment was made of the risk that the weak recovery seen during the
year could slow down with a consequent further fall in interest rates in the shorter part of the
yield curve.
In consideration of the asymmetry of the possibility of transferring changes in market interest
rates to interest rates (income and expense) applied to Group customers and considering that,
at least for the moment, the application of negative interest rates on deposits is not feasible,
the impact on net interest income of a further decrease in yields would have an extremely large
effect.
In view of this consideration, hedges were taken out on liability items with a maturity of
between seven and ten years for a total of €1.75 billion.
141
Exposures to certain types of products
This section provides an update of the position of the UBI Banca Group with regard to some
types of financial instruments, which are considered at high risk since the subprime mortgage
crisis in 2007.
Special purpose entities
The involvement of the UBI Group in special purpose entities (SPEs7) concerns the following
types:
1. conventional securitisation transactions 8 performed by Group member companies in
accordance with Law No. 130 of 30th April 1999;
2. the issue of covered bonds, in accordance with Art. 7-bis of Law No,130/1999.
1.
The list of special purpose entities (SPEs) used for the securitisations in which the Group is
involved is as follows:
UBI Lease Finance 5 Srl,
24-7 Finance Srl,
UBI SPV BPA 2012 Srl,
UBI SPV BPCI 2012 Srl,
UBI SPV BBS 2012 Srl.
As already reported, the UBI Finance 3 Srl securitisation relating to performing loans to small to
medium-size enterprises granted by Banca Popolare di Bergamo was permanently closed down in
December 2015.
The securitisations concerning 24-7 Finance Srl, UBI Lease Finance 5 Srl, UBI SPV BPA 2012 Srl,
UBI SPV BPCI 2012 Srl and UBI SPV BBS 2012 Srl were performed in order to create a portfolio of
assets eligible as collateral for refinancing with the European Central Bank, consistent with Group
policy for the management of liquidity risk.
The securitisations were of the following: performing residential mortgages of the former B@nca 24-7
(24-7 Finance Srl); UBI Leasing lease contracts (UBI Lease Finance 5 Srl); performing loans to small to
medium-sized enterprises of Banca Popolare di Ancona (UBI SPV BPA 2012 Srl), Banca Popolare
Commercio e Industria (UBI SPV BPCI 2012 Srl) and Banco di Brescia (UBI SPV BBS 2012 Srl).
Although Group investment in the ownership capital of the SPEs is limited, the entities listed above
are included in the consolidated accounts because these companies are in reality controlled, since
their assets and liabilities were originated by Group companies.
In the securitisations in question the senior securities issued by the entities – assigned a rating – are
listed on the Dublin Stock Exchange.
In October 2015 asset repurchase transactions were carried out totalling €68.5 million which involved
the following SPEs: UBI SPV BPA 2012 Srl (€34.5 million), UBI SPV BPCI 2012 Srl (€12.9 million) and
UBI SPV BBS 2012 Srl (€21.1 million).
2.
With regard to the issue of covered bonds, the creation of the SPEs UBI Finance Srl (in
2008) and UBI Finance CB 2 Srl (in 2011) was performed for the purchase of loans from
banks in order to create cover pools for covered bonds issued by the Parent9.
The issue of covered bonds is designed to diversify the sources of funding and also to contain its cost.
- Transfers were made in the first half of 2015 to the SPEs UBI Finance Srl and UBI Finance CB 2
Srl involving assets of €757 million (with effect for accounting purposes from May 2015) €313
million (with effect for accounting purposes from June 2015) respectively, held by Banca Regionale
Europea, Banca Popolare di Ancona, Banca Popolare Commercio e Industria, Banca Carime and
Banco di Brescia.
7 Special Purpose Entities (SPEs) are special companies formed to achieve a determined objective.
8 With normal securitisations the originator sells the portfolio to a special purpose entity which then issues tranches of asset-backed
securities in order to purchase it. With a synthetic securitisation, on the other hand, the originator purchases protection for a pool of
assets and transfers the credit risk attaching to the portfolio – either fully or in part – by using credit derivatives such as CDSs
(credit default swaps) and CLNs (credit-linked notes) or by means of personal guarantees.
9 The transfers are designed to create segregated portfolios to back the issues and do not involve derecognition of the assets in the
financial statements of the originators.
142
- Transfers were made in the second half of 2015 to the SPEs UBI Finance Srl and UBI Finance CB 2
Srl involving assets of €738 million (with effect for accounting purposes from November 2015) and
€157 million (with effect for accounting purposes from December 2015) respectively, held by Banca
Popolare di Bergamo, Banca Popolare di Ancona, Banca di Valle Camonica, IW Bank, Banca
Carime and UBI Banca.
At the date of this report, UBI Banca has issued covered bonds totalling €10.5 billion nominal (of
which €1.2 billion relating to two retained issuances) under the “first programme” (residential
mortgages) for a maximum issuance of €15 billion and for a total of €2.3 billion nominal (all retained
issuances) under the “second programme” (mainly commercial mortgages) with a maximum issuance
of €5 billion. The originator banks issued subordinated loans to the SPE UBI Finance Srl and to the
SPE UBI Finance CB 2 Srl, equal to the value of the loans progressively transferred, in order to fund
the purchase. As at 31st December 2015 these loans amounted to €14.5 billion for UBI Finance Srl
(€15.6 billion in December 2014) and to €3.2 billion for UBI Finance CB 2 Srl (unchanged compared
with December 2014).
Exposures are present in the Group which relate solely to the SPEs formed for the securitisations
mentioned and they all fall within the scope of the consolidation.
Ordinary lines of liquidity existed at the end of the year granted by the Parent to the SPE 24-7
Finance Srl for a total of €97.6 million, entirely drawn on (€97.6 million entirely drawn on also
at the end of 2014).
Subordinated loans were disbursed for the three transactions completed in 2012 as a further
form of guarantee when the securities were issued, which in December 2015, amounted to:
€29.4 million for UBI SPV BBS 2012 Srl, €46.7 million for UBI SPV BPA 2012 Srl and €31.2
million for UBI SPV BPCI 2012 Srl.
The securitisations (except for the three structured in 2012) were backed by swap contracts
where the main objective is to normalise the flow of interest generated by the transferred or
securitised portfolio, providing de facto immunisation to the SPE against interest rate risk. As
a consequence of the downgrading of UBI Banca’s rating, which occurred starting in 2011, it
became necessary to provide margin deposits for the swap contracts entered into between the
Parent or other Group companies and the SPEs for the securitisations.
Margin accounts were opened with an eligible institution which was the London Branch of
Bank of New York Mellon (ratings: Moody’s Aa1 stab/S&P AA- stab/Fitch AA stab). The margin
deposits mentioned were paid starting on 26th October 2011 for an initial total amount of a
little more than €1,015 million, of which €717 million for the covered bond programme and
€298 million for the securitisations.
The total balance in December 2015 was €594 million, of which €495 million for the covered
bond programme and €99 million for the internal securitisation transactions.
With a view to diversifying the risks, on 10th December 2014, the margin account for the
swaps relating to the first covered bond programme was transferred from Bank of New York
Mellon to BNP Paribas Securities Services (ratings: Moody’s A1 stab/S&P A+ neg/Fitch A+
stab).
No exposures exist to SPEs or other conduit operations with underlying securities or investments
linked to United States subprime and Alt-A loans.
The total assets of SPEs relating to securitisations and to covered bonds amounted to €23
billion (€25.5 billion at the end of 2014). The table below reports details by asset class:
143
SPE underlying assets
Classification of underlying assets of the securitisation
Figures in millions of euro
Entity
24-7 Finance
UBI Lease Finance 5
UBI Finance
UBI Finance CB 2
UBI Finance 3
UBI SPV BBS 2012
UBI SPV BPA 2012
UBI SPV BPCI 2012
Total assets
1,330.7
2,272.7
14,736.3
3,196.5
440.7
596.8
410.9
Class of underlying asset
Mortgages
Leasing
Mortgages
Mortgages
Loans to businesses
Loans to SMEs
Loans to SMEs
Loans to SMEs
Accounting
Classification
Measurement
criteria
adopted
L&R
L&R
L&R
L&R
L&R
L&R
L&R
L&R
AC
AC
AC
AC
AC
AC
AC
AC
Total impaired assets, mortgages and loans
Total impaired assets, leasing
TOTAL
22,984.6
31.12.2015
Gross of
impairment
losses
31.12.2014
Net of
impairment
losses
Gross of
impairment
losses
Net of
impairment
losses
1,131.2
1,852.0
14,246.3
2,970.1
410.4
555.2
389.0
1,128.7
1,839.0
14,227.3
2,957.6
408.2
551.6
387.3
1,287.6
2,176.5
14,556.7
3,011.5
1,264.0
547.4
744.4
512.3
1,280.0
2,176.5
14,531.5
2,999.0
1,257.4
544.1
739.0
509.9
1,263.1
527.3
1,051.1
433.7
1,225.3
513.3
1,030.6
432.6
23,344.6
22,997.5
25,839.0
25,500.6
Exposures in ABS, CDO, CMBS and other structured credit products
As at 31st December 2015 the Group held no direct investments in ABS instruments.
Own securitisations, eliminated when consolidating the accounts, totalled €3.7 billion in
notional terms: €2.1 billion of senior notes used as collateral for advances from the ECB (see
the previous section “The interbank market and the liquidity situation”) and €1.6 billion of
junior notes.
In addition to the direct exposures, hedge funds or funds of hedge funds were identified among
the assets present in Group portfolios with exposures to CDO and CMBS structured credit
products. At the end of 2015 indirect exposure to CDOs and CMBSs was €1 million
(approximately €2 million in December 2014) compared with a total investment in these funds
of €125 million (net of impairment losses/reversals).
Other subprime, Alt-A and monoline insurer exposures
Again in December 2015 indirect exposures to subprime and Alt-A mortgages and to monoline
insurers existed that were contained in hedge funds or funds of hedge funds held by the
Parent. The percentages of exposure to subprime and Alt-A mortgages were again low (no fund
had a percentage exposure of greater than 0.5%), with total exposure to subprime and Alt-A
mortgages and to monoline insurers of approximately €0.8 million (€1.5 million at the end of
2014).
Leveraged Finance
The term leveraged finance is used in the UBI Banca Group to refer to finance provided for a
company or an initiative which has debt that is considered higher than normal on the market
and is therefore considered a higher risk. Usually this finance is used for specific acquisition
purposes (e.g. the acquisition of a company by other companies – either directly or through
vehicles/funds – owned by internal [buy-in] or external [buy-out] management teams). They
are characterised by “non investment grade” credit ratings (less than BBB-) and/or by
remuneration that is higher than normal market levels. This definition coincides essentially
with acquisition finance (AF) business.
An acquisition involves a substantial change in the economic, financial and capital profile of
the debtor. The main source of funds for the repayment of the debt contracted for the
acquisition finance itself is from the future cash flows generated by the entity (a single
company or a Group) after the acquisition.
The three requirements necessary for the identification and consequent classification of a
customer as an acquisition finance client, consistent with the definition used in the validated
internal models, are as follows:
144



credit lines are granted to finance the acquisition of control of one or more third party
companies and/or activities held by third parties and/or the refinancing of prior exposures
relating to the same companies/activities subject to the acquisition (purpose requirement);
the effect of the acquisition consists of an increase in the turnover of the “enlarged” group
of companies, i.e. the sum of the turnover of the acquiring group and the turnover of the
target group is 40% greater than that of the acquiring group alone (size requirement)10;
no more than four years have passed since the date of the first grant of credit lines to
finance the acquisition (“vintage” requirement)11.
Once that time has passed the transactions are considered “conventional corporate”
transactions and therefore in the presentation that follows, only transactions classified as
“acquisition finance” as at the dates indicated have been considered.
The table summarises on- and offUBI Banca leveraged finance business (Acquisition Finance)
balance sheet exposure for leveraged
On-balance sheet exposure
Unsecured guarantees
finance by the UBI Banca at the end of
gross exposure to customers
gross exposure to customers
used
impairment
used
impairment
December. These loans (on-balance
31
December
2015
491.0
-22.4
20.7
-1.5
sheet) accounted for approximately
31 December 2014
401.4
-22.6
15.5
-1.5
0.5%. of total UBI Banca Group loans.
The amounts shown (on- and off-balance sheet) relate to 58 positions (counterparties) for a total
average net exposure per position of €8.4 million. Six positions existed with exposures of greater
than €20 million, all relating to on-balance sheet loans and receivables, and they account for
around 40% of the total.
The graphs show the distribution of leveraged exposures by geographical area and sector.
figure s in m illio ns o f e uro
Distribution of UBI Banca leveraged exposures as at 31st December 2015
(the figures as at 31st December 2014 are given in brackets)
EXPOSURE BY GEOGRAPHICAL AREA
EXPOSURE BY SECTOR
Other: 5%
(0%)
Commerce
and services:
27% (25%)
Europe: 2%
(3%)
Manufacturing
sector:
73% (75%)
Italy 93%
(97%)
Residual exposures also existed within the Group amounting to €30.8 million, relating to
transactions performed by the network banks for a total of 22 positions with average exposure
per transaction of €1.4 million.
10 The threshold has been set at 40% because on the basis of experience it is considered that this percentage of change in
“dimension” involves a significant discontinuity for the Group after the operation compared with before it and therefore the official
operating and financial documentation (consolidated/separate financial statements of the acquirer) will not be representative of the
new reality. This threshold was also set along the same lines as the requirements for the “special procedure” set for other
counterparties assessed using the corporate rating model. Where an acquisition is concluded by using a specially formed vehicle, a
newco (and therefore usually irrelevant from the viewpoint of dimension), this second requirement is deemed always satisfied.
11 This is considered sufficient time to absorb the impacts of the discontinuity determined by the acquisition, described in footnote
10.
145
The distribution of the loans disbursed was as follows: Banca Popolare di Ancona €13.6
million, Banca Popolare di Bergamo €9.1 million, Banco di Brescia €6.4 million and Banca
Popolare Commercio e Industria €1.7 million.
Financial derivative instruments for trading with customers
The periodic analysis performed for internal monitoring purposes confirms that the risks
assumed by customers continue to remain generally low and they outlined a conservative
profile for UBI Group business in OTC derivatives with customers.
A quantitative update as at 31st December 2015 showed the following:
- the notional amount for existing contracts, totalling €5.876 billion, was attributable to
interest rate derivatives amounting to €5.345 billion and currency derivatives amounting to
€0.493 billion plus a marginal notional amount for commodities contracts (€38 million);
- transactions in hedging derivatives accounted for 99.9% of the notional amount traded and
97.4% of the notional amount in the case of currency derivatives;
- the net total mark-to-market value (interest rate, currency and commodities derivatives)
amounted to -€350 million. Those contracts with a negative mark-to-market for customers
were valued at -€366 million.
- the total negative mark-to-market for customers stood at 6.2% of the notional amount of
the contracts, compared with 8.2% at the end of 201412.
The rules governing trading in OTC derivatives with customers are contained in the “Policy for
the trading, sale and subscription of financial products” and in the relative documents to
implement it, updated in 2015, which provide details of the following:
• customer segmentation and classes of customers associated with specific classes of
products, stating that the purpose of the derivatives transactions must be hedging and that
transactions containing speculative elements must be of a residual nature;
• rules for assessing the appropriateness of transactions, defined on the basis of the products
sold to each class of customer;
• principles of integrity and transparency on which the range of OTC derivatives offered to
customers must be based, in compliance with the guidelines laid down by the Italian
Banking Association (and approved by the Consob) for illiquid financial products and with
the recent ESMA opinions and a Consob communication on complex products;
• rules for assessing credit exposure, which grant credit lines with maximum limits for
trading with “qualified”, “professional” and “non-individual retail” counterparties and
provide credit lines for single transactions for trading with individual retail counterparties,
while counterparty risk is assessed on the basis of Regulation EU 575/2013;
• rules for managing restructuring operations, while underlining their exceptional nature;
• the rules for the settlement of transactions in OTC derivative instruments with customers
that are subject to verbal or official dispute;
• the catalogue of products offered to customers and the relative credit equivalents.
12 The figure at the end of 2014 incorporated the impacts of the progressive reduction in interest rates, which have fallen to extremely
low levels. At the end of 2015 short-term swap rates had fallen further against a rise in the same medium to long-term rates, which
caused an improvement in the mark-to-market prices for longer maturity products.
146
OTC interest rate derivatives: details of instrument types and classes of customer
Data as at 31st December 2015
Product
class
Type of instrument
Customer classification
Number of
transaction
Notional
MtM
of which negative MtM
1
Purchase of caps
Qualified
13
35,441,232.54
25,435.92
-
3: Professional
49
100,863,873.46
216,405.12
-
2: Non private individual retail
1: Private individual retail
Purchase of caps Total
706
251,629,311.28
616,615.24
-
644
1,412
71,390,051.23
459,324,468.51
175,594.22
1,034,050.50
-
2
2
25,573,233.44
25,573,233.44
420,528.77
420,528.77
-
Purchase of floors
Purchase of floors Total
3: Professional
Capped swaps
Qualified
15
13,580,071.13
-240,723.02
-240,723.02
3: Professional
57
211,403,473.05
-7,179,847.35
-7,179,847.35
-11,920,329.81
2: Non private individual retail
1: Private individual retail
Capped swaps Total
IRS Plain Vanilla
904
527,673,078.71
-11,920,329.81
1,519
162,555,227.97
-2,861,603.71
-2,861,603.71
2,495
915,211,850.86
-22,202,503.89
-22,202,503.89
Qualified
29
112,050,606.04
-7,739,793.26
-7,739,793.26
345
1,668,892,314.90
-105,654,822.22
-106,511,924.65
1,294
1,701,537,446.56
-142,237,253.74
-142,600,431.33
345
66,545,463.65
-2,841,120.75
-2,911,327.12
2,013
3,549,025,831.15
-258,472,989.97
-259,763,476.36
3: Professional
24
243,302,726.74
-57,379,394.09
-57,379,394.09
2: Non private individual retail
32
60,513,725.31
-15,947,907.41
-15,947,907.41
2
1,020,553.25
-176,130.29
-176,130.29
58
304,837,005.30
-73,503,431.79
-73,503,431.79
3: Professional
6
34,413,793.11
-258,002.03
-258,002.03
2: Non private individual retail
4
2,066,070.05
-23,458.00
-23,458.00
1: Private individual retail
3
458,508.78
-10,751.06
-10,751.06
13
36,938,371.94
-292,211.09
-292,211.09
-395,521.41
3: Professional
2: Non private individual retail
1: Private individual retail
Plain Vanilla IRS Total
IRS Step up
1: Private individual retail
IRS Step up Total
Floored Swaps
Floored Swaps
Purchase of collars
Qualified
1
4,957,288.67
-395,521.41
3: Professional
1
7,500,000.00
-36,629.29
-36,629.29
2: Non private individual retail
3
3,862,754.42
-105,658.19
-106,584.57
Purchase of collars Total
5
16,320,043.09
-537,808.89
-538,735.27
Total Class 1: hedging derivatives
Class 1: % of Group total
5,998
99.8%
5,307,230,804.29
99.3%
-353,554,366.36
99.4%
-356,300,358.40
99.4%
Purchase of caps with KI/KO 3: Professional
2: Non private individual retail
Purchase of caps with KI/KO Total
1
3
4
13,297,872.42
1,911,348.92
15,209,221.34
-171,962.41
-9,184.04
-181,146.45
-171,962.41
-9,184.04
-181,146.45
Purchase of collars with KI/KO2: Non private individual retail
Purchase of collars with KI/KO Total
1
1
2,924,800.00
2,924,800.00
-828,998.17
-828,998.17
-828,998.17
-828,998.17
IRS Convertible
1
1
4
8,192,835.73
2,916,666.67
4,430,652.56
-116,008.59
-39,490.52
-717,148.94
-116,008.59
-39,490.52
-717,148.94
6
15,540,154.96
-872,648.05
-872,648.05
11
33,674,176.30
-1,882,792.67
-1,882,792.67
0.2%
0.6%
0.5%
0.5%
1
1
2,000,000.00
2,000,000.00
-140,502.75
-140,502.75
-140,502.75
-140,502.75
-140,502.75
-140,502.75
-244,815.39
-244,815.39
-244,815.39
-244,815.39
2
Qualified
3: Professional
2: Non private individual retail
IRS Convertible Total
Total Class 2: hedging derivatives with possible exposure
to contained financial risks
Class 2: % of Group total
3a
IRS Range
IRS Range Total
2: Non private individual retail
1
Total Class 3a: partial hedging derivatives and
maximum pre-established loss
2,000,000.00
3b
Gap floater swaps
Gap floater swaps Total
2: Non private individual retail
1
1
Total Class 3b: speculative derivatives and maximum loss
unquantifiable
Total Class 3: derivatives not for hedging
1,710,627.00
1,710,627.00
1
1,710,627.00
-244,815.39
-244,815.39
2
3,710,627.00
-385,318.14
-385,318.14
Class 3: % of Group total
0.0%
0.1%
0.1%
0.1%
Total UBI Banca Group
6,011
5,344,615,607.59
-355,822,477.17
-358,568,469.21
147
OTC currency derivatives: details of instrument types and classes of customer
Data as at 31st December 2015
Product
class
Type of instrument
Customer classification
Number of
transactions
Notional
of which negative
MtM
MtM
1
Forward synthetic
Qualified
3: Professional
2: Non private individual retail
3
99
56
158
1,536,580.27
55,653,740.38
13,603,590.72
70,793,911.37
63,680.54
149,550.96
157,995.65
371,227.15
-1,609.25
-656,662.77
-52,205.41
-710,477.43
Qualified
3: Professional
2: Non private individual retail
10
190
348
548
7,924,807.79
211,566,093.21
115,787,124.90
335,278,025.90
-106,762.19
2,154,951.52
118,154.38
2,166,343.71
-125,756.40
-2,590,324.54
-1,624,192.78
-4,340,273.72
3: Professional
2: Non private individual retail
3
1
4
738,167.60
675,675.68
1,413,843.28
-41,950.40
-253.48
-42,203.88
-41,950.40
-253.48
-42,203.88
Qualified
3: Professional
2: Non private individual retail
1
10
1
12
2,290,076.34
2,487,127.88
892,857.14
5,670,061.36
457,893.76
47,437.87
33,282.14
538,613.77
Forward synthetic Total
Plafond
Plafond Total
Currency collars
Currency collars Total
Vanilla currency options purchased
Vanilla currency options purchased
Total Class 1: hedging derivatives
722
413,155,841.91
79.1%
83.8%
3: Professional
2: Non private individual retail
29
1
30
9,853,690.09
1,785,714.29
11,639,404.38
-76,364.37
54,470.96
-21,893.41
-117,793.12
-117,793.12
3: Professional
2: Non private individual retail
73
12
85
46,752,430.15
4,588,247.50
51,340,677.65
2,874,544.08
38,839.24
2,913,383.32
-110,391.30
-4,995.93
-115,387.23
3: Professional
2: Non private individual retail
5
1
6
3,291,034.99
913,182.79
4,204,217.78
-13,034.35
11,863.66
-1,170.69
-13,452.78
-13,452.78
121
67,184,299.81
2,890,319.22
-246,633.13
13.2%
13.6%
3: Professional
60
60
7,093,719.82
7,093,719.82
7,032.52
7,032.52
-38,285.23
-38,285.23
Vanilla currency options sold by the customer 3: Professional
Vanilla currency options sold by the customer Total
10
10
5,722,087.31
5,722,087.31
-97,890.64
-97,890.64
-97,890.64
-97,890.64
-90,858.12
-136,175.87
Class 1: % of Group total
3,033,980.75
-
-
-5,092,955.03
93.0%
2
Knock in collars
Knock in collars Total
Knock in forwards
Knock in forwards Total
New collars
New collars Total
Total Class 2: hedging derivatives with possible exposure
to contained financial risks
Class 2: % of Group total
-
4.5%
3b
Knock out knock in forwards
Knock out knock in forwards Total
Total Class 3: derivatives not for hedging
70
12,815,807.13
Class 3: % of Group total
7.7%
2.6%
Total UBI Banca Group
913
493,155,948.85
148
-
5,833,441.85
2.5%
-5,475,764.03
OTC commodities derivatives: details of instrument types and classes of customer
Data as at 31st December 2015
Product
class
Type of instrument
Customer classification
Number of
transactio
Notional
of which negative
MtM
MtM
2
Commodity swaps
Qualified
3: Professional
2: Non private individual retail
1
56
8
65
2,483,246.12
21,260,592.22
1,205,403.65
24,949,241.99
1,710,104.65
-740,971.63
-26,612.00
942,521.02
-1,456,210.63
-27,832.00
-1,484,042.63
Qualified
3: Professional
2: Non private individual retail
1
40
8
49
217,650.00
9,667,395.52
2,592,105.00
12,477,150.52
-1,650.00
-700,855.98
-1,695.00
-704,200.98
-1,650.00
-757,464.98
-47,687.00
-806,801.98
Commodity swaps Total
Forward synthetic commodities
Forward synthetic commodities Total
Total Class 2: hedging derivatives with possible exposure
to contained financial risks
Class 2: % of Group total
3
Vanilla options on commodities purchased
3: Professional
Vanilla options on commodities purchased
114
37,426,392.51
238,320.04
-2,290,844.61
99.1%
99.0%
-
99.4%
1
1
394,748.92
394,748.92
-13,855.69
-13,855.69
-13,855.69
-13,855.69
1
394,748.92
-13,855.69
-13,855.69
Class 3: % of Group total
0.9%
1.0%
-
0.6%
Total UBI Banca Group
115
37,821,141.44
224,464.36
-2,304,700.30
7,039
5,875,592,697.88
-349,764,570.96
-366,348,933.54
Total Class 3: derivatives not for hedging
TOTAL UBI BANCA GROUP
OTC derivatives: first five counterparties by bank
(figures in euro)
Data as at 31st December 2015
Bank
UBI Banca
Banca Popolare Commercio e Industria
Banca Popolare di Ancona
Banco di Brescia
Banca Popolare di Bergamo
Banca Regionale Europea
Banca Carime
Banca di Valle Camonica
Classification
3: Professional
3: Professional
3: Professional
3: Professional
3: Professional
2: Non private individual
Qualified
3: Professional
2: Non private individual
2: Non private individual
3: Professional
2: Non private individual
3: Professional
2: Non private individual
2: Non private individual
3: Professional
Qualified
2: Non private individual
2: Non private individual
3: Professional
3: Professional
2: Non private individual
2: Non private individual
2: Non private individual
2: Non private individual
2: Non private individual
3: Professional
3: Professional
3: Professional
2: Non private individual
2: Non private individual
3: Professional
2: Non private individual
2: Non private individual
2: Non private individual
2: Non private individual
2: Non private individual
3: Professional
2: Non private individual
3: Professional
149
MtM
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
retail
-54,070,974
-27,014,195
-8,705,765
-7,476,494
-5,607,717
-6,654,080
-3,676,080
-2,631,241
-1,989,363
-1,571,506
-1,840,370
-1,669,266
-1,295,180
-1,227,130
-1,174,578
-3,794,332
-2,526,998
-2,137,876
-1,866,080
-1,147,563
-3,177,821
-2,050,480
-1,063,266
-801,971
-713,890
-842,952
-694,998
-579,955
-551,818
-401,149
-432,392
-170,221
-77,760
-29,831
-29,513
-215,956
-197,715
-197,085
-140,503
-107,725
of which negative MtM
-54,070,974
-27,014,195
-8,705,765
-7,476,494
-5,607,717
-6,654,080
-3,676,080
-2,631,241
-1,989,363
-1,571,506
-1,840,370
-1,669,266
-1,295,180
-1,227,130
-1,174,578
-3,794,332
-2,526,998
-2,137,876
-1,866,080
-1,147,563
-3,177,821
-2,050,480
-1,063,266
-801,971
-713,890
-842,952
-702,843
-579,955
-551,818
-401,149
-432,392
-170,221
-77,760
-29,831
-29,513
-215,956
-197,715
-197,085
-140,503
-107,725
Equity and capital adequacy
Changes in consolidated shareholders’ equity
Reconciliation between equity and profit for the year of the Parent with consolidated equity as at 31st December 2015 and
profit for the year then ended
Figures in thousands of euro
of which: Net profit for
the year
Equity
Equity and profit for the year as in the financial statements of the Parent
8,758,946
123,423
639,166
176,483
Effect of the consolidation of subsidiaries including joint ventures
Effect of measuring other significant equity investments using the equity method
Dividends received during the year
Other consolidation adjustments (including the effects of the PPA)
Equity and profit for the year as in the consolidated financial statements
39,896
35,260
-
-240,646
543,854
22,245
9,981,862
116,765
Changes in consolidated equity of the Group in 2015
Balances as
at
31.12.2014
Figures in thousands of euro
Share capital:
Equity
Consolidated attributable to
comprehensive
the
Stock options
income
shareholders of
the Parent
Equity transactions
Changes in
reserves
Dividends
and other
uses
Reserves
31.12.2015
2015 Changes
Allocation of prior year
profit
New share
issues
2,254,371
-
-
-
-
2,254,371
-
-
-
-
-
-
-
2,254,371
2,254,371
Share premiums
4,716,866
-918,436
-
-
-
-
-
3,798,430
Reserves
3,450,082
192,669
-75,630
-10,518
-
-
-
3,556,603
113,836
-
-
-
-
147,012
260,848
-5,340
-
-
185
-
-
-
-5,155
-725,767
725,767
-
-
-
-
116,765
116,765
9,804,048
-
-75,630
-10,333
-
-
263,777
9,981,862
a) ordinary shares
b ) other shares
Valuation reserves
Treasury shares
Result for the year
Equity attributable to the
shareholders of the Parent
-
The equity attributable to the shareholders of the Parent, UBI Banca, as at 31st December
2015 inclusive of profit for the year, was €9,982 million, an increase compared with €9,804
million at the end of 2014.
As shown in the table “Changes in the consolidated equity of the Group in 2015”, the increase
of approximately €178 million is the result of the following:

the allocation of €75.6 million for dividends (UBI Banca) and other uses (other Group
banks) drawn from the
Valuation reserves attributable to the Group: composition
extraordinary reserve1;

a further improvement Figures in thousands of euro
31.12.2015
31.12.2014
of €147 million in the
Available-for-sale financial assets
288,538
154,926
positive
balance
on
Cash
flow
hedges
-285
-851
valuation
reserves,
Currency translation differences
-243
-243
generated entirely by
Actuarial gains/losses for defined benefit pension plans
-86,177
-99,011
the
impact
of
Special revaluation laws
59,015
59,015
comprehensive income
Total
260,848
113,836
as
follows:
€133.6
1 Due to the loss incurred by the Parent recognised in 2014, amounting to €725.8 million (-€703.6 million inclusive also of noncontrolling interests), the share premium reserve was reduced by €918.4 million and over €192.6 million was allocated to reserves of
profits.
150



million for available for sale financial assets; €12.8 million for actuarial gains/losses
relating to defined benefit pension plans; €0.6 million for cash flow hedges;
a decrease of €10.5 million in other reserves;
an increase of €0.2 million following the grant of shares to the “Key Personnel” of the Group
in relation to incentive schemes;
recognition of the profit for the year amounting to €116.8 million.
Fair value reserves of available-for-sale financial assets attributable to the Group: composition
31.12.2014
31.12.2015
Figures in thousands of euro
Positive reserve
1. Debt instruments
2. Equity instruments
3. Units in UCITS
Total
Positive reserve
Negative reserve
Total
236,554
-19,484
217,070
263,655
-180,211
83,444
59,421
12,314
-257
-10
59,164
12,304
63,449
11,600
-1,306
-2,261
62,143
9,339
4. Financing
Total
Negative reserve
-
-
-
-
-
-
308,289
-19,751
288,538
338,704
-183,778
154,926
Fair value reserves of available-for-sale financial assets attributable to the Group: annual changes
Figures in thousands of euro
1. Opening balances as at 1st January 2015
2. Positive changes
2.1 Increases in fair value
2.2 Transfer to income statement of negative reserves
Debt instruments
3.3 Transfer to income statement of positive reserves: from disposal
Total
62,143
9,339
-
154,926
25,226
24,108
15,333
12,294
-
337,254
305,371
27,698
1,118
3,039
-
31,855
361
370
1,309
2,040
27,337
748
1,730
29,815
28
-
-
-163,069
-65,866
-501
-28,205
-7,736
-
-12,368
-11,007
-524
-96,682
-20,469
-837
-20
-
-
217,070
59,164
12,304
3.4 Other changes
4. Closing balances as at 31st December 2015
Financing
83,444
2.3 Other changes
3. Negative changes
3.1 Reductions in fair value
3.2 Impairment losses
UCITS units
296,695
268,969
- following impairment losses
- from disposal
Equity
instruments
28
-
-203,642
-84,609
-1,025
-117,988
-20
-
288,538
As shown in the table, the increase mentioned above of €133.6 million in the “fair value
reserve for available-for-sale financial assets” is entirely attributable to debt instruments held
in portfolio (for which the positive balance improved to €217.1 million net of tax and noncontrolling interests) and to Italian government securities in particular. The relative reserve,
which was positive by €212.4 million, recorded a recovery of €129.3 million compared with
December 2014, attributable entirely to the Parent’s portfolio.
Over twelve months, the reserve for debt instruments recorded increases in fair value of €269
million, of which €217.9 million relating to the Parent (almost entirely on Italian government
securities), and €51.1 million to Lombarda Vita (primarily on its Italian government securities
portfolio).
The table also shows “transfers to income statement of negative reserves” amounting to €27.7
million: €27.3 million for disposals, relating mostly to UBI Banca for the sale of government
securities and to a minor extent to Lombarda Vita, and €0.4 million for impairment, of which
€0.3 million due to the write-down of a bond held by the Parent.
Decreases include the following:
 reductions in fair value amounting to €65.9 million, of which: €51.5 million relating to
Lombarda Vita; €13.7 million to UBI Banca (over 90% of which on government securities);
€0.7 million to the network banks (relating to the Italian government securities portfolio);
 “transfers to the income statement from positive reserves from disposals” amounting to
€96.7 million, of which: €90.3 million by UBI Banca due primarily to the disposal of Italian
government securities; €3 million relating to Lombarda Vita and €3.4 million to IW Bank;
 impairment losses of €0.5 million attributable entirely to Lombarda Vita.
151
Equity instruments held in portfolio benefited from increases in fair value of €24.1 million of
which €14 million relating to the stake held by the Parent in Istituto Centrale delle Banche
Popolari Italiane2 and €7 million (of which €2 million relating to UBI Banca and €5 million to
IW Bank) to the revaluation in December of Visa Europe Limited shares3 and €2.5 million to
Lombarda Vita.
We also report “transfers to the income statement of negative reserves” amounting to €1.1
million (attributable almost entirely to Lombarda Vita), and reductions in fair value of €7.7
million (€2.3 million for UBI Banca concerning S.A.C.B.O., €2.9 million for Lombarda Vita and
€2.5 million for Banca Popolare di Bergamo) and “transfers to the income statement from
positive reserves from disposals” amounting to €20.5 million relating primarily to the disposal
of the interest held by the Parent in ICBPI and to a minor extent to Lombarda Vita (€0.7
million).
Units in UCITS recorded increases in fair value amounting to €12.3 million, of which €8.1
million relating to Lombarda Vita and €4.2 million to UBI Banca, in addition to “transfers of
negative reserves to the income statement” of €3 million, which included €1.7 million from
disposal (€1.3 million relating to Lombarda Vita and €0.4 million to UBI Banca) and €1.3
million due to impairment (€1 million relating to Lombarda Vita and €0.3 million to the Parent
for the write-down of an ETF fund).
Reductions included decreases in fair value of €11 million (€9.6 million for Lombarda Vita;
€1.4 million for UBI Banca), “transfers to the income statement of positive reserves from
disposals” of €0.8 million (Lombarda Vita) and impairment losses of €0.5 million relating to the
write-down of two UBI Banca funds in the third quarter.
Capital adequacy
The new prudential rules for banks and investment companies contained in EU Regulation 575/2013 (the Capital
Requirements Regulation, known as the CRR) and in the EU Directive 2013/36/EU (the Capital Requirements Directive,
known as CRD IV), came into force on 1st January 2014. These transpose standards defined by the Basel Committee on
Banking Supervision (known as the Basel 3 framework) into European Union regulations.
The CRR came directly into force in member states, while the regulations contained in CRD IV were implemented in
national legislation with Legislative Decree No. 72 of 12th May 2015, which came into force on 27th June 2015.
On conclusion of a public consultation process started in November 2013, on 17th December the Bank of Italy published
Circular No. 285 “Regulations for the prudential supervision of banks”, which updated, within the scope of its remit, the
new EU regulations, together with Circular No. 286 “Instructions for compiling supervisory reports for banks and stock
brokerage firms” and an update to Circular No. 154 “Supervisory reporting for credit and financial institutions. Tables for
data and instructions for filing reports” (a set of regulations that was updated several times in 2014 and 2015).
As already reported, the introduction of Basel 3 rules is subject to a transitional regime during which, in most cases, the
new rules will be applied to an increasing degree until 2019, when they will reach full application. At the same time,
capital instruments that no longer qualify will be gradually excluded from total capital for regulatory purposes by 2021.
The minimum capital requirements requested by regulations for 2015 given as a percentage of risk weighted assets
(RWA) are as follows:
- the Common Equity Tier 1 capital must be equal to at least 4.5% of total RWA;
- the Tier 1 capital must be equal to at least 5.5% of total RWA;
- own funds (the sum of Tier 1 and Tier 2 capital) must be equal to at least 8% of total RWA.
Additionally, banks are obliged to hold a capital conservation buffer equal to 2.5%. Therefore, the minimum capital ratios
requested inclusive of the capital conservation buffer are 7% for the Common Equity Tier 1 ratio, 8% for the Tier 1 ratio
and 10.5% for the total own funds ratio.
As already reported, on the basis of the SREP decision communicated on 25th February 2015, for 2015 the UBI Banca
Group was required to comply with a CET1 ratio of 9.5% and a Total Capital Ratio of 11%. The SREP decision
communicated on 27th November 2015 reduced the CET1 ratio required for 2016 to 9.25%.
The capital ratios commented on below incorporate the hypothesis of the redemption of shares
subject to withdrawal up to a maximum of €13.2 million4, equivalent to 2 basis points of the
capital.
2 Due to the change in the fair value of the investment that occurred consistent with the valuations performed when a preliminary
contract for the sale of part of the stake held was signed.
3 The revaluation was carried out in December following the receipt of a communication from Visa Inc. stating its intention to
purchase 100% of the share capital of the company at a pre-agreed price.
4 See the section “Significant events that occurred during the year” for further information.
152
On the basis of the transition criteria applied for 2015, as at 31st December 2015, the UBI
Banca Group had a Common Equity Tier 1 (CET1) Ratio and a Tier 1 Ratio of 12.08%5 (12.33%
in December 2014), 283 basis points higher than the new SREP requirement of 9.25%.
The pro forma CET1 ratio as at 31st December 2015, calculated on the basis of the rules that will be in force at the end of
the transitional period (known as the fully phased-in CET1 ratio) is estimated at 11.62%.
The ratios reported were affected primarily by a reduction recorded in the level of the CET1
capital (from €7,615 million to €7,409 million, a decrease of €206 million). In addition to the
€13 million already mentioned concerning the right of withdrawal, the CET1 capital was
affected mainly by the following:
 -€178 million attributable to an increase in the shortfall of provisions to expected losses;
 -€81 million due to a decrease in eligible non-controlling interests as a result both of
transitional provisions which require a gradual exclusion of non-controlling interests as not
eligible (40% in 2015 compared with 20% in 2014) and the purchase of stakes by noncontrolling interests in Banca di Valle Camonica;
 +€33 million from an increase in the net AFS reserves of unrealised profits on equity
instruments and debt instruments that are not EU government securities, as a result of the
60% sterilisation impact in 2015 compared with 100% in 2014.
The total capital ratio (TCR) stood at 13.93% (15.29% in December 2014), the result of two
opposing impacts:
 a reduction in total own funds (down to €8.5 billion from €9.4 billion before) as a result of
the decrease in the CET1 capital mentioned above and a reduction in the Tier 2 capital
(down to €1.1 billion from €1.8 billion at the end of 2014), due to the progressive
amortisation of the eligible subordinated securities;
 a slight reduction in risk weighted assets down from €61.8 billion to €61.3 billion.
The regulatory requirements, which are the basis for the calculation of risk weighted assets,
resulted in a slight fall in the absorption of capital for credit risk. This was the aggregate
result on the one hand of the impact of the annual update of the risk parameters (the
historical data series for credit parameters) and the exposure to the Resolution Fund for the
rescue of the four Italian banks (see the section “the European Banking Union”) and on the
other hand of the fall in lending by the product companies which still employ the
standardised approach and the migrations to default status that affected the AIRB
portfolios.
A decrease was also recorded in the capital requirements for operational risk (following
updates and modifications to the databases, e.g. updating historical data depth, the merger
of IW Bank into UBI Banca Private Investment) offset by a greater requirement for market
risk in relation to the increased diversification of investments towards corporate bonds in
the AFS portfolio.
The CET1 ratio fell by 92 basis points (from 13%) compared with 30th September 2015,
affected by the increase in capital requirements for credit risk (+€246 million) attributable
primarily to the update of the historical data series (in order to include trends observed up to
the end of 2014 with a historical depth of eight years for the corporate segment and five years
for the retail segment) but also to a recovery in lending which included the loan to the
Resolution Fund.
Recent changes in the ratio were also affected by the impact of the extraordinary contribution
to that fund on the CET1 capital.
Finally with regard to Basel 3 requirements, the leverage ratio stood at 6% (5.95% in December
2014)6, while the fully loaded ratio is 5.81%.
5 Inclusive of profit for 2015 net of the deduction for the proposed dividends.
6 Under Basel 3, leverage is calculated as the ratio of Tier 1 capital to total on- and off-balance sheet assets, with a minimum
requirement of 3%. The ratio was calculated according to the provisions of the CRR, as amended by Commission Delegated Act (EU)
No. 62/2015: for consistency, the comparison figure as at 31st December 2014 was recalculated and therefore differs from that
published in the 2014 annual report.
153
Capital ratios (Basel 3)
31.12.2015
Figures in thousands of euro
Common Equity Tier 1 capital before filters and transitional provisions
Effects of transitional provisions provided for by the regulations (minority interests)
Effects of transitional provisions provided for by the regulations (AFS reserves)
Adjustments to Common Equity Tier 1 capital due to prudential filters provided for by the regulations
Government securities sterilisation effect*
Common Equity Tier 1 capital net of prudential filters
Deductions from Common Equity Tier 1 capital in relation to negative items for shortfall of provisions
to expected losses, inclusive of the application of transitional provisions
Common Equity Tier 1 capital
Additional Tier 1 capital before deductions
Deductions from Additional Tier 1 capital in relation to negative items for shortfall of provisions to
expected losses, inclusive of the application of transitional measures
Additional Tier 1 capital
31.12.2014
8,182,013
8,029,856
176,599
258,088
-59,068
-92,457
-3,136
-1,896
-190,983
-59,989
8,105,425
8,133,602
-696,531
-518,337
7,408,894
7,615,265
38,891
37,627
-38,891
-37,627
-
-
Tier 1 capital (Common Equity Tier 1 + Additional Tier 1)
7,408,894
7,615,265
Tier 2 capital before transitional provisions
1,443,464
2,187,759
Effects of grandfathering provisions on Tier 2 instruments
Tier 2 capital after transitional provisions
Deductions from Tier 2 capital
of which: negative items due to shortfall of provisions to expected losses, inclusive of the
application of transitional provisions
-
-
1,443,464
2,187,759
-307,341
-361,426
-315,181
-370,643
Tier 2 capital after specific deductions
1,136,123
1,826,333
Total own funds
8,545,017
9,441,598
4,536,654
4,572,697
Credit valuation adjustment risk
15,519
14,721
Market risk
78,762
56,539
276,654
297,050
Credit risk
Operational risk
Total prudential requirements
Risk weighted assets
4,907,589
4,941,007
61,344,866
61,762,588
12.08%
12.33%
12.08%
12.33%
13.93%
15.29%
Common Equity Tier 1 ratio
Common Equity Tier 1 capital after filters and deductions / Risk w eighted assets)
Tier 1 ratio
(Tier 1 capital after filters and deductions / Risk w eighted assets)
Total capital ratio
(Total ow n funds / Risk w eighted assets)
* In compliance with transition measures concerning own funds contained in Part II, Chapter 14 of Bank of Italy Circular No.
285 of 17th December 2013 and subsequent amendments (“Regulations for the supervision of banks”), advantage was taken
in the calculation of the regulatory capital of the UBI Banca Group of the option to not include unrealised gains or losses
relating to exposures to central governments classified within “available-for-sale financial assets” in any element of own
funds. That option was exercised within the time limit set of 31st January 2014 and was applied at separate company and at
consolidated level.
This item, which was negative, therefore relates to the sterilisation from the CET1 capital of AFS reserves on Italian
government securities, which increased during the year.
154
Following
the
authorisations
received
from
the
Bank of Italy, the UBI
Banca Group uses
internal models to
calculate
capital
requirements to meet
credit risk relating to
the
corporate
segment
(exposures
to companies) and to
operational risks from
the
consolidated
supervisory report as
th
at 30
June 2012
and relating to the
retail
regulatory
segment
(exposures
to small and mediumsize enterprises and
exposures backed by
residential properties)
from the consolidated
supervisory report as
at 30th June 2013.
Research & Development
Given that the Group offers chiefly financial and banking services, its research and
development activities prevalently seek to study the possible applications of new technology
developments in customer relations, to improve and/or augment the range of products and
services offered by the Group and its internal corporate processes, with the aim of simplifying
and streamlining them. These activities are performed centrally by UBI Sistemi e Servizi.
In 2015 the company continued the work begun the previous year to develop the technological
platform for its “Digital Innovation” project.
In the first quarter, focus was on delivering this project, with significant improvements made
to the performance and reliability of the www.ubibanca.com website and related mobile
applications.
Attention subsequently shifted to the integration of IW Bank’s systems and applications with
the Group’s IT system, enabling communication between the two platforms ahead of the
merger of IW Bank into UBI Banca Private Investment, which took place on 25th May. This was
the first phase of a wider project, to be rolled out in full during 2016, involving the
convergence of legacy IT systems into a single platform, generating synergies in terms of both
cost and know-how.
In the second half of the year efforts turned to further development of the “Digital Innovation”
project, such as: the integration of advanced electronic signatures (Firma Elettronica Avanzata
– FEA) with the new Internet banking offer, and the development of PCF1 instruments and new
authentication infrastructure, which will allow customers to access online instruments more
securely.
The introduction of FEA for the new internet banking offer and for mobile applications allows
signature methodology to be harmonised with the in-branch situation, removing the risk
inherent in the previous system of legal complications relating to the possibility of the same
contracts being signed using different tools (FEA vs. Remote Digital Signature). This solution,
which is in the process of being implemented, will reduce recurring signature authentication
costs as it will introduce a single contract that can be signed with a simple electronic
signature, and that brings together the different signature methods offered through the bank’s
various channels.
Thanks to the commitment to FEA, which was introduced in November, customers will be able
to sign remotely for financial instruments proposed by the new PCF financial advice system,
which is due to be launched this year.
Within branch operations, on the other hand, a series of activities have been launched that
will lead to the introduction during 2016 of advanced solutions enabling the graphometric
signature of contracts, thus extending the range of documents that can be signed using a
tablet.
Further research has also been carried out into adjusting systems to accommodate the new
cheque format stipulated by the Bank of Italy, which is expected to be adopted this year. The
new format adds a further layer of security thanks to some cutting edge technological
mechanisms (DataMatrix, micro printing, etc.), enabling fully automated processing.
As well as being used in developing applications for customers, technological innovation has
also had an impact on the Group’s internal instruments:
 Following positive results from the research carried out in 2014, work has begun on full
implementation of Cloud Social Enterprise, with the activation of a new messaging and
corporate collaboration system to be integrated with the current IT system;
1 PCF – Financial advice planning: an online tool for remote financial advice, through which customers can receive recommendations
on and potentially subscribe to financial instruments
155

The platform for reporting problems and requesting assistance has been replaced with a
new market-leading solution, providing all Group employees with an effective tool for
requesting support for the resolution of problems relating to processes, applications and
technology.
Finally, 2015 witnessed the foundation of a new operating division of UBI Sistemi e Servizi,
which will be dedicated to topics related to Big Data, in particular the use of technological
instruments for the storage and treatment of large volumes of data, as well as statistical
analysis of the information contained therein. The objective will be to extract useful
information from the data that can support the business in identifying and understanding
trends emerging both within and outside the company.
156
The internal controls system
For a description of the internal controls system in terms of its architecture, rules and
structure, please see the document “Report on the corporate governance and ownership
structure of UBI Banca Spa” included in these reports, which also includes the specific
information required by Art. 123 bis, paragraph 2b) of the Consolidated Finance Act
(Legislative Decree No. 58/1998) concerning the risk management and internal control
systems that govern the financial reporting process.
Compliance with supervisory regulations on internal controls
As already reported in previous financial reports, on 2nd July 2013 the Bank of Italy issued
new provisions on the “System of internal controls, the IT system and operational continuity”
(Prudential supervision of banks – Circular No. 263 of 27th December 2006 – 15th update) with
progressive effect from 1st July 2014.
These provisions, which were subsequently incorporated in Circular No. 285 of 17th December
2013 by means of the 11th update of 21st July 2015, introduced important changes to the
regulatory framework in order to furnish banks with a complete, adequate, functional and
reliable system of internal controls, by regulating, amongst other things, the following: the role
of corporate bodies within the internal control system; the role of corporate control functions,
the outsourcing of corporate functions, the IT system and operational continuity.
With effect from 1st January 2016, the 11th update also introduced enabling legislation
covering internal reporting of violations (whistleblowing). The Parent therefore introduced
specific internal rules providing employees of subsidiary companies with processes to follow
for reporting actions and facts that may constitute regulatory violations, in order to contribute
to the identification and prevention of risks and situations detrimental to the specific
company, thus acting in the interests of the whole of the UBI Banca Group and all of its
stakeholders.
It is worth noting that in 2014 – ahead of the first set deadline (1st July 2014) – initial
regulatory compliance actions were carried out, relating specifically to the internal control
system, the outsourcing of corporate functions, the Risk Appetite Framework (RAF), the
coordination of control functions and business continuity. Subsequent activities guaranteed
operational implementation of these actions.
Subsequently, the Group completed the required changes to its internal regulations regarding
the IT system, with effect from 1st February 2015, with particular reference to:

the IT function: formalisation of decision-making and authorisation processes designed to
ensure strategic and operational control of the IT system;

IT compliance: specification of roles, process responsibilities and lines of reporting to
ensure compliance with IT regulations relating to the governance and organisation of the IT
system;

IT risk: identification of the methodological, organisational and procedural framework to
employ for the analysis and management of IT risk and the definition of the relative levels
of risk appetite;

Logical security: update of the principles, the organisational model and the security
requirements and measures needed to protect the Group’s tangible and intellectual assets
and the security of its information and its IT resources;

Data governance: formalisation of the principles, the components and the logical
functioning of the data processing system with the identification of the roles and
responsibilities and functions involved in the use and processing of data for operational
and management purposes;
157

Change and incident management: identification of users responsible for IT resources and
formalisation of procedures designed to guarantee control over changes, replacements or
technological upgrades. Detailed procedures for identifying and responding promptly and
effectively to IT incidents or malfunctions.
Following these regulatory changes the specific action plans were launched for the relative
operational implementation.
***
Referring specifically to the Compliance function, on 25th July 2015 the Bank of Italy updated
its clarification note relating to methods for complying with the new supervisory provisions on
internal controls, providing further indications on the general organisational principles that
must be respected in this area, stressing:
- the mandatory requirement for IT compliance to come under the remit of the Compliance
function;
- that the possibility of compliance responsibilities being split between a number of different
functions remains an exception to the general principle, and can only be used by banks in
the areas explicitly indicated in the regulations (health and safety, data protection and
fiscal compliance).
This therefore necessitated a review of the Group’s compliance risk management model, which
will be completed during the first few months of 2016.
***
On 12th May the Bank of Italy published Circular No. 288 "Supervisory provisions for financial
intermediaries”, which came into force on 11th July 2015. The circular regulates procedures
for the registration of financial intermediaries on a single register pursuant to Art. 106 of the
consolidated banking act and it confirms a supervisory regime for them equivalent to that of
banks. It also defines a uniform set of rules for all intermediaries based on the principle of
proportionality with the same obligations and requirements commensurate to the complexity
of the entities concerned.
Following the issue of these provisions a specific initiative was launched, in which not only the
Parent but also the Group companies concerned (UBI Leasing, UBI Factor and Prestitalia)
participated, in order to draw up an application for authorisation for registration in the single
register of financial intermediaries and to draw up a general plan of action for compliance with
the aforementioned provisions. This initiative concluded with requests for the registration of
UBI Leasing, UBI Factor and Prestitalia in the single register of financial intermediaries being
sent to the Bank of Italy before the prescribed deadline (11th October 2015).
158
Transactions with related parties
and with connected parties
Related parties
With Resolution No. 17221 of 12th March 2010 – amended by the subsequent Resolution No.
17389 of 23rd June 2010 – the Consob (Italian securities market authority) approved a
Regulation concerning related-party transactions. The regulations concern the procedures to
be followed for the approval of transactions performed by listed companies and the issuers of
shares with a broad shareholder base with parties with a potential conflict of interest,
including major or controlling shareholders, members of the management and supervisory
bodies and senior managers including their close family members.
The regulations currently apply within the UBI Banca Group to the Parent UBI Banca Spa
only, as a listed company. In November 2010 the Supervisory Board had already appointed a
specific committee from among its members to which transactions falling within the scope of the
regulations must be submitted in advance.
Pursuant to article 2391 of the Civil Code and the Consob Regulations governing related parties,
UBI Banca has adopted specific “Regulations for UBI Banca related-party transactions” which
govern rules relating to the identification, approval and implementation of related-party
transactions performed by UBI Banca, either directly or through its subsidiaries, in order to
ensure their substantive and procedural fairness.
In compliance with Consob recommendations, transactions with related-parties of UBI Banca
performed by subsidiaries are also subject to the regulations in question if, under the
provisions of the Articles of Association or internal regulations adopted by the Bank, the
Management Board, the Supervisory Board, in response to a proposal of the Management
Board, or even an officer of the Bank on the basis of powers conferred on that officer, must
preliminarily examine or approve a transaction to be performed by subsidiaries.
Transactions of greater importance
In accordance with article 5, paragraph 8 of Consob Resolution No. 17221/12 March 2010,
“Public disclosures on related-party transactions”, the following related-party transactions
concluded in 2015 were excluded from the scope of application of the regulations for relatedparty transactions with UBI Banca, because they were concluded with subsidiaries:
 resolution for two transactions for the transfer of eligible assets by Banca Popolare di
Bergamo to UBI Finance for a maximum of €900 million, of which €700 million under the
first covered bond programme (residential mortgages) and €200 million under the second
covered bond programme (commercial mortgages and residential mortgages not used in the
first programme);
 resolution for two transactions for the transfer of eligible assets by Banco di Brescia to UBI
Finance for a total of €650 million, of which €400 million under the first covered bond
programme (residential mortgages) and €250 million under the second covered bond
programme (commercial mortgages and residential mortgages not used in the first
programme);
 resolution for two transactions for the transfer of eligible assets by Banca Popolare
Commercio e Industria to UBI Finance for a maximum of €470 million, of which €400
million under the first covered bond programme (residential mortgages) and €70 million
under the second covered bond programme (commercial mortgages and residential
mortgages not used in the first programme);
159





one “repurchase agreement” transaction by UBI Banca, with Banca Popolare di Ancona as
the counterparty, for €458,017,179 (on 5th January 2015);
ten “repurchase agreement” transactions by UBI Banca, with UBI Leasing as the
counterparty, for the following amounts: €713,260,427 (29th January 2015), €630,619,567
(25th February 2015), €630,949,855 (25th March 2015), €631,142,440 (28th April 2015),
€548,200,221 (27th May 2015), €547,811,321 (25th June 2015), €547,431,259 (28th July
2015), €467,550,188 (27th August 2015), €468,254,278 (28th September 2015) and
€468,596,100 (28th October 2015);
resolution for two new “very short term” credit line transaction for UBI Leasing on 12th
March 2015 for €600 million and on 1st July 2015 for €650 million;
resolution for 1 new “very short term” credit line transaction and seven short-term loans to
UBI Leasing on 29th May 2015 for a total of €3.5 billion;
Payout by UBI Banca on 23rd November 2015, of two subordinate loans to UBI Finance,
respectively for €900,000,000 and €968,864,158, relating to the sale on 1st November 2015
of asset portfolios, as part of the first covered bond issue programme.
We also report that:
- on 9th June 2015 the Management Board, and on 11th June the Supervisory Board,
passed resolutions, within the scope of their respective responsibilities, regarding the
merger of SOLIMM Srl into SBIM Spa, companies which carry out property transactions
necessary for Group operations and 100% controlled by UBI Banca;
- on 9th June 2015 the Management Board, and on 16th June the Supervisory Board,
passed resolutions, within the scope of their respective responsibilities, regarding a
commitment to sell a stake held by UBI Banca in ICBPI - Istituto Centrale delle Banche
Popolari Italiane Spa, amounting to 4.04% of the share capital of that company in such a
manner as to maintain a post-closing stake of 1%. The sale was completed on 18th
December 2015.
As already reported, the merger of IW Bank into UBI Banca Private Investment took legal effect
on 25th May 2015, having been approved by the Management Board on 11th November 2014
on the basis of strategic guidelines issued by the Supervisory Board on 24th July 2014, while
for accounting and tax purposes it took effect from 1st January 2015.
Finally, we also report that:
- no transactions were performed in the reporting period with other related parties which
influenced the capital position or the results of the Parent, UBI Banca, to a significant
extent;
- there have been no modifications and/or developments of transactions with related parties,
which may have been reported in previous financial reports, that could have a significant
effect on the capital position or the results of the Parent, UBI Banca.
In compliance with IAS 24, Part H of the Notes to the Consolidated Financial Statements and
Part H of the Notes to the Separate Financial Statements provide information on balance sheet
and income state transactions between related parties of UBI Banca and Group member
companies and also on balance sheet and income statement transactions between UBI Banca
and its own related parties, as well as those items as a percentage of the total for each item in
the consolidated financial statements and in the separate financial statements.
160
Connected parties
In implementation of article 53, paragraphs 4 et seq. of the Consolidated Banking Act and
Inter-Ministerial Credit Committee Resolution No. 277 of 29th July 2008, on 12th December
2011 the Bank of Italy issued the ninth update of the “New prudential supervisory provisions
for banks” (published in the Official Journal of 16th January 2012) regarding risk asset
exposures and conflicts of interest concerning parties connected to banks or banking Groups,
where connected parties are defined as a related party and all the parties connected to it.
The regulations are designed to guard against the risk that the closeness of persons to
decision-making centres might compromise the objectivity and impartiality of decisions
concerning loans to and/or other transactions with those persons.
The first measure therefore regards the introduction of supervisory limits for risk asset
exposures (of the Bank and/or the Group) lent to connected parties. These limits differ
according to the type of related party, with stricter levels for relations between banks and
industry.
The supervisory limits have been supplemented in the regulations with special approval
procedures, together with specific recommendations concerning organisational structure and
internal controls.
In compliance with the provisions of Title V, Chapter 5 of Circular No. 263 of 27th December
2006, UBI Banca has adopted specific “Regulations for transactions with Connected Parties of
the UBI Group” containing measures concerning “risk asset exposures and conflicts of interest
with regard to connected parties”, which governs procedures designed to preserve the integrity
of decision-making processes concerning transactions with connected parties carried out by
UBI Banca and by the banking and non-banking members of the Group that it controls
including foreign subsidiaries, compatibly with the regulations of the country in which these
are registered.
The regulations also require the bodies of Group companies with strategic supervisory
responsibility to oversee (with support from the competent functions) the proper application of
the provisions of the regulations governing transactions carried out by the respective
companies.
In order to achieve this, each of those bodies shall update, on at least a quarterly basis, a list
of all the transactions concluded in the previous quarter, inclusive of those not subject to a
prior opinion from the committee in accordance with the regulations. It shall specify the
connected party, the type of transaction and its value and, if the transaction has not been
subjected to prior examination by the committee, the reasons given for the exemption, the
maximum limit set for the “General Approvals” and a detailed report on its periodic use.
Also in order to allow the Parent to constantly comply with the consolidated limit on risk asset
exposures, the Supervisory Board oversees compliance of the Regulations with the principles
recommended in the Supervisory Provisions and also observance, at consolidated level, of the
procedural and substantive rules contained in them and it reports to shareholders in
accordance with Art. 153 of the Consolidated Finance Act. To achieve this bodies of other
Group companies with responsibility for strategic supervision submit lists quarterly to the
Supervisory Board, through the Management Board, of all transactions with connected parties
concluded in the previous quarter.
Finally we report that:
- on 13th May 2015 the Supervisory Board (in accordance with article 38 of the UBI Banca
Articles of Association) approved the overall agreements with the Cassa di Risparmio di
Cuneo Foundation relating to the stake held in Banca Regionale Europea, as resolved by
the Management Board on 12th May 2015 and it also acknowledged the favourable opinion
given by the Related and Connected Parties Committee of UBI Banca in a meeting of 13th
May 2015 regarding renewal of the agreements in question, which positively assessed the
existence of an interest in concluding the operation and the substantially proper nature of
the relative conditions;
161
-
on 7th August 2015 the Supervisory Board (in accordance with article 38 of the Articles of
Association) approved the overall agreements with the Banca del Monte di Lombardia
relating to the stake held in Banca Popolare Commercio e Industria, as resolved by the
Management Board on 7th August 2015 and it also acknowledged the favourable opinion
given by the Related and Connected Parties Committee of UBI Banca in the meeting of 7th
August 2015 regarding the renewal of the agreements in question, which positively
assessed the existence of an interest in concluding the operation and the substantially
proper nature of the relative conditions.
The UBI Banca Group has always been within the limits laid down by supervisory regulations in
all the consolidated quarterly reports to the Supervisory Authority made from 31st March 2015
until 31st December 2015.
***
Further information is given on the Related and Connected Parties Committee of UBI Banca in
the “Report on corporate governance and the ownership structure of UBI Banca Spa”
contained in another part of this publication in which information is also given on internal
policies on controls for risk asset exposures and conflicts of interest relating to connected
parties.
162
Consolidated
figures
companies:
the
principal
Profit/loss for the year
Figures in thousands of euro
2015
2014
Change
% change
Unione di Banche Italiane Spa (1)
Banca Popolare di Bergamo Spa
123,423
127,264
(918,437)
143,569
1,041,860
(16,305)
n.s.
(11.4%)
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
Banca Regionale Europea Spa
(11,155)
34,677
960
9,046
35,843
950
(20,201)
(1,166)
10
n.s.
(3.3%)
1.1%
Banca Popolare di Ancona Spa
Banca Carime Spa (2)
15,952
(20,849)
7,817
(466,881)
8,135
(446,032)
104.1%
(95.5%)
3,376
(184)
1,902
(244)
1,474
(60)
77.5%
(24.5%)
IW Bank Spa (3)
UBI Banca International Sa (*)
UBI Pramerica SGR Spa
(4,336)
(356)
63,542
7,215
(13,124)
43,400
(11,551)
(12,768)
20,142
n.s.
(97.3%)
46.4%
UBI Leasing Spa
UBI Factor Spa
(3,928)
2,486
(38,887)
8,174
(34,959)
(5,688)
(89.9%)
(69.6%)
Prestitalia Spa
BPB Immobiliare Srl
Società Bresciana Immobiliare Mobiliare - S.B.I.M. Spa (4)
(2,278)
(2,569)
2,330
(7,175)
274
1,974
(4,897)
(2,843)
356
(68.3%)
n.s.
18.0%
UBI Sistemi e Servizi SCpA (5)
UBI Fiduciaria Spa (6)
(537)
(530)
7
1.3%
Cargeas Assicurazioni Spa (già UBI Assicurazioni Spa) (7)
Aviva Assicurazioni Vita Spa (20%) (8)
2,080
9,145
(150)
(9,145)
2,230
(100.0%)
n.s.
3,100
11,941
1,429
17,050
7,735
492
(13,950)
4,206
937
n.s.
54.4%
190.5%
88
116
(28)
(23.8%)
116,765
(725,767)
842,532
n.s.
Banca di Valle Camonica Spa
Centrobanca Sviluppo Impresa SGR Spa
Aviva Vita Spa (20%) (8)
Lombarda Vita Spa (40%)
UBI Management Co. Sa
UBI Trustee Sa
CONSOLIDATED
(*) The result shown is from the financial statements prepared for the consolidation according to the accounting policies followed by the
Parent.
(1) The figure for 2014 includes impairment losses of €1,251.9 million (net of tax) on Group equity investments.
(2) The figure for 2014 includes the effects of the recognition of impairment losses of €443.1 million on goodwill (net of tax).
(3) On 25th May 2015 the merger of IW Bank into UBI Banca Private Investment took effect. The new company took the name IW Bank
Spa. The figures for 2014 have therefore been restated by summing the balances to take account of the operation.
(4) On 23rd October 2015 with effect for accounting and tax purposes from 1st January 2015, the merger of SOLIMM Srl into S.B.I.M.
Spa (Società Bresciana Immobiliare Mobiliare) became effective.
(5) Since this is a consortium company with mutual, not-for-profit objects, UBI Sistemi e Servizi ends the year with a break-even
result.
(6) On 30th April 2015 the transfer of the line of business dedicated to the management of fiduciary services to Unione Fiduciaria Spa
was completed.
(7) On 30th December 2014 the sale of the entire stake held by UBI Banca (50%-1 share) to the Ageas Group and BNP Paribas Cardif
was concluded.
(8) On 22nd December 2014 the sale of 30% of the two joint insurance ventures to the Aviva Group was concluded which reduced UBI
Banca’s stake in both companies to 20%. Therefore the comparative figures are not fully comparable.
163
Net loans and advances to customers
Figures in thousands of euro
31.12.2015
Unione di Banche Italiane Spa
Banca Popolare di Bergamo Spa
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
Banca Regionale Europea Spa
31.12.2014
Change
% change
21,901,390
18,736,138
12,295,453
8,957,102
8,162,878
23,330,321
18,679,641
12,615,509
8,419,620
8,456,552
-1,428,931
56,497
-320,056
537,482
-293,674
-6.1%
0.3%
-2.5%
6.4%
-3.5%
Banca Popolare di Ancona Spa
Banca Carime Spa
Banca di Valle Camonica Spa
Prestitalia Spa
UBI Banca International Sa
7,794,538
4,091,660
1,740,753
1,433,272
426,539
7,701,242
4,366,169
1,779,208
1,916,577
551,103
93,296
-274,509
-38,455
-483,305
-124,564
1.2%
-6.3%
-2.2%
-25.2%
-22.6%
IW Bank Spa*
UBI Factor Spa
UBI Leasing Spa
757,087
2,237,554
6,619,022
851,017
2,016,103
6,941,652
-93,930
221,451
-322,630
-11.0%
11.0%
-4.6%
84,586,200
85,644,223
-1,058,023
-1.2%
CONSOLIDATED
Risk indicators
Total net nonperforming loans
Net bad loans
(previously termed
"non-performing
loans") / Net loans
Percentages
31.12.2015
31.12.2014
(previously termed
"deteriorated
loans") /Net loans
31.12.2015
31.12.2014
Unione di Banche Italiane Spa
1.46%
1.36%
5.55%
5.49%
Banca Popolare di Bergamo Spa
4.49%
4.33%
8.21%
7.93%
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
3.73%
3.74%
3.26%
4.42%
12.16%
8.52%
11.92%
8.72%
Banca Regionale Europea Spa
6.00%
4.70%
12.05%
9.71%
Banca Popolare di Ancona Spa
Banca Carime Spa
6.50%
6.63%
6.20%
5.20%
13.76%
12.02%
12.88%
11.26%
Banca di Valle Camonica Spa
4.70%
4.65%
10.85%
9.73%
Prestitalia Spa
UBI Banca International Sa
0.95%
3.40%
0.91%
2.45%
11.57%
14.47%
13.50%
9.67%
IW Bank Spa*
UBI Factor Spa
UBI Leasing Spa
CONSOLIDATED
1.77%
1.72%
3.43%
3.03%
9.78%
10.93%
11.03%
9.54%
13.90%
20.78%
14.08%
20.29%
5.07%
4.70%
11.45%
11.10%
* On 25th May 2015 the merger of IW Bank into UBI Banca Private Investment took effect. The new company took the name IW Bank
Spa. The figures as at 31st December 2014 have therefore been restated by summing the balances to take account of the operation.
164
Direct funding from customers
Figures in thousands of euro
31.12.2015
31.12.2014
Change
% change
Unione di Banche Italiane Spa
40,669,221
41,284,254
-615,033
-1.5%
Banca Popolare di Bergamo Spa
15,612,014
15,941,728
-329,714
-2.1%
Banco di Brescia Spa
8,041,806
8,634,427
-592,621
-6.9%
Banca Popolare Commercio e Industria Spa
Banca Regionale Europea Spa
6,242,340
4,925,895
5,975,615
5,135,369
266,725
-209,474
4.5%
-4.1%
Banca Popolare di Ancona Spa
4,947,113
5,279,096
-331,983
-6.3%
Banca Carime Spa
Banca di Valle Camonica Spa
5,489,156
985,427
5,761,011
1,136,942
-271,855
-151,515
-4.7%
-13.3%
UBI Banca International Sa
1,540,519
960,802
579,717
60.3%
IW Bank Spa*
2,848,627
3,063,545
-214,918
-7.0%
91,512,399
93,207,269
-1,694,870
-1.8%
CONSOLIDATED
Direct funding from customers includes amounts due to customers and debt securities issued, with the exclusion of bonds and other
securities subscribed directly by companies in the Group.
Direct funding for the following banks was therefore adjusted as follows:
Figures in millions of euro
31.12.2015
31.12.2014
Bonds
Unione di Banche Italiane Spa
Banca Popolare di Bergamo Spa
2,953.6
1,007.5
2,326.7
1,015.7
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
2,155.2
297.6
1,920.6
297.7
Banca Regionale Europea Spa
Banca Popolare di Ancona Spa
Banca di Valle Camonica Spa
1,272.8
1,155.0
404.1
1,240.9
819.0
429.2
10.0
10.0
766.7
2,104.8
IW Bank Spa*
Euro Commercial Paper and French certificates of deposit
UBI Banca International Sa
* On 25th May 2015 the merger of IW Bank into UBI Banca Private Investment took effect. The new company took the name IW Bank
Spa. The figures as at 31st December 2014 have therefore been restated by summing the balances to take account of the operation.
165
Indirect funding from ordinary customers (at market prices)
Figures in thousands of euro
31.12.2015
31.12.2014
Change
% change
Unione di Banche Italiane Spa
Banca Popolare di Bergamo Spa
5
32,385,044
5
30,465,728
1,919,316
6.3%
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
17,062,911
11,073,614
16,791,303
10,879,880
271,608
193,734
1.6%
1.8%
Banca Regionale Europea Spa
Banca Popolare di Ancona Spa
Banca Carime Spa
10,527,572
5,261,708
6,760,003
10,028,791
4,953,822
6,917,646
498,781
307,886
-157,643
5.0%
6.2%
-2.3%
Banca di Valle Camonica Spa
UBI Pramerica SGR Spa
1,512,689
27,705,037
1,423,090
24,745,067
89,599
2,959,970
6.3%
12.0%
UBI Banca International Sa
IW Bank Spa*
Lombarda Vita Spa (1)
3,107,370
9,065,992
5,684,570
2,700,517
8,974,638
5,142,780
406,853
91,354
541,790
15.1%
1.0%
10.5%
Aviva Vita Spa (1)
Aviva Assicurazioni Vita Spa (1)
6,621,442
2,255,064
5,209,134
2,146,357
1,412,308
108,707
27.1%
5.1%
79,547,957
75,892,408
3,655,549
4.8%
CONSOLIDATED
The totals for the network banks also include indirect funding consisting of bonds issued by UBI Banca.
Assets under management (at market prices)
Figures in thousands of euro
31.12.2015
Unione di Banche Italiane Spa
Banca Popolare di Bergamo Spa
Banco di Brescia Spa
Banca Popolare Commercio e Industria Spa
Banca Regionale Europea Spa
Banca Popolare di Ancona Spa
Banca Carime Spa
Banca di Valle Camonica Spa
UBI Pramerica SGR Spa
UBI Banca International Sa
IW Bank Spa*
Lombarda Vita Spa (1)
Aviva Vita Spa (1)
Aviva Assicurazioni Vita Spa (1)
CONSOLIDATED
31.12.2014
Change
% change
-
-
-
16,411,767
7,932,526
5,790,122
5,145,208
14,372,201
7,093,297
5,113,427
4,653,814
2,039,566
839,229
676,695
491,394
14.2%
11.8%
13.2%
10.6%
-
2,325,665
3,847,889
630,993
1,983,715
3,372,817
556,341
341,950
475,072
74,652
17.2%
14.1%
13.4%
27,705,037
102,962
5,865,415
5,684,570
24,745,067
131,663
5,509,682
5,142,780
2,959,970
-28,701
355,733
541,790
12.0%
-21.8%
6.5%
10.5%
6,621,442
2,255,064
5,209,134
2,146,357
1,412,308
108,707
27.1%
5.1%
48,567,539
43,353,237
5,214,302
12.0%
(1) The figure shown on this line is for total assets managed by the Company. However, the calculation of consolidated funding is
based solely on the portion placed by companies in the UBI Banca Group.
* On 25th May 2015 the merger of IW Bank into UBI Banca Private Investment took effect. The new company took the name IW Bank
Spa. The figures as at 31st December 2014 have therefore been restated by summing the balances to take account of the operation.
166
Information on the network banks
Summary financial statements containing the main income statement and balance sheet figures for the
individual network banks are given in order to provide a disaggregated view of the performance of general
banking business analysed at consolidated level.
BANCA POPOLARE DI BERGAMO SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
of which: deteriorated loans
Direct funding (*)
Net interbank debt
18,736,138
18,679,641
56,497
1,539,043
1,481,689
57,354
0.3%
3.9%
16,619,485
76,584
16,957,402
327,811
-337,917
-251,227
-2.0%
-76.6%
Financial assets held for trading
43,253
54,883
-11,630
-21.2%
Available-for-sale financial ass ets
27,274
31,031
-3,757
-12.1%
2,196,469
21,861,066
2,188,458
21,379,427
8,011
481,639
0.4%
2.3%
32,385,044
30,465,728
1,919,316
6.3%
16,411,767
14,372,201
2,039,566
14.2%
Equity (excluding profit for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
of which: assets under management
Income statement
Net interest income
402,800
436,068
(33,268)
(7.6%)
357,100
366,324
(9,224)
(2.5%)
4,912
22,885
7,901
27,809
(2,989)
(4,924)
(37.8%)
(17.7%)
Operating income
Staff costs (**)
787,697
(290,737)
838,102
(277,960)
(50,405)
12,777
(6.0%)
4.6%
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
(183,522)
(172,882)
10,640
6.2%
(6,007)
(6,951)
(944)
(13.6%)
Operating expenses
(480,266)
(457,793)
22,473
4.9%
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
307,431
(122,739)
216
380,309
(147,368)
(1,765)
(72,878)
(24,629)
1,981
(19.2%)
(16.7%)
n.s.
2,268
160
(1,105)
(915)
3,373
1,075
n.s.
n.s.
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations (******)
187,336
(60,072)
229,156
(85,587)
(41,820)
(25,515)
(18.2%)
(29.8%)
Profit for the year
127,264
143,569
(16,305)
(11.4%)
349
3,588
354
3,614
-5
-26
5.79%
60.97%
6.56%
54.62%
4.49%
4.33%
8.21%
7.93%
18.19%
17.53%
18.19%
18.19%
17.53%
17.53%
Net fee and commission income
Net income from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
Net provisions for risks and charges (****)
Profit (loss) on the disposal of equity investments (*****)
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
(*)
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €1,007.5 million (€1,015.7 million as at 31st
December 2014).
(**)
The item includes redundancy expenses of €25.8 million in 2015 and €15.4 million in 2014.
(***) The figure for 2015 includes €3.3 million for the contribution to the Deposit Guarantee Scheme (DGS) and €12.6 million for the
contribution to the Resolution Fund, of which €9.4 million as an extraordinary non-recurring contribution.
(****) The item for 2015 includes provisions for compounding of interest, investment services and banking contract claims amounting to
approximately €2.4 million and the positive impact of the release of provisions amounting to approximately €4.7 million as a consequence
of the settlement of litigation with no payouts and of settlements for amounts lower than the provisions that had been made.
(*****) The figure for 2014 included the impact of impairment losses of €1 million on the stake held in UBI Banca International.
(******) The item as at 31st December 2015 includes the positive impact of the tax credits amounting to €1.3 million (65% of the €2 million
donation made by the bank to the Donizetti Theatre of Bergamo Foundation), in accordance with Art. 1 of Decree Law No. 83 of 31st May
2014 “Tax credit for charitable donations to support Art-Bonus Culture”.
The share capital of Banca Popolare di Bergamo as at 31st December 2015 was wholly owned by UBI Banca.
167
BANCO DI BRESCIA SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
12,295,453
12,615,509
-320,056
1,494,883
1,504,072
-9,189
-0.6%
Direct funding (*)
10,197,052
10,555,021
-357,969
-3.4%
Net interbank debt
Financial assets held for trading
-1,152,081
34,812
-1,174,110
46,827
-22,029
-12,015
-1.9%
-25.7%
Available-for-sale financial assets
Equity (excluding profit/including loss for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
49,909
1,387,644
13,545,318
30,361
1,396,881
13,991,526
19,548
-9,237
-446,208
64.4%
-0.7%
-3.2%
17,062,911
16,791,303
271,608
1.6%
7,932,526
7,093,297
839,229
11.8%
247,131
28
262,372
30
(15,241)
(2)
(5.8%)
(6.7%)
192,303
3,050
8,237
212,360
4,509
16,205
(20,057)
(1,459)
(7,968)
(9.4%)
(32.4%)
(49.2%)
Operating income
Staff costs (**)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
450,749
(172,038)
(121,837)
495,476
(167,135)
(113,277)
(44,727)
4,903
8,560
(9.0%)
2.9%
7.6%
(7,059)
(8,727)
(1,668)
(19.1%)
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
(300,934)
149,815
(163,491)
(1,557)
(289,139)
206,337
(183,519)
(847)
11,795
(56,522)
(20,028)
710
4.1%
(27.4%)
(10.9%)
83.8%
Net provisions for risks and charges
Profit on the disposal of equity investments (****)
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
(1,016)
60
(16,189)
5,034
(1,153)
4,498
25,316
(16,270)
(137)
(4,438)
(41,505)
21,304
(11.9%)
(98.7%)
n.s.
n.s.
Profit (loss) for the year
(11,155)
9,046
(20,201)
n.s.
288
2,368
316
2,434
-28
-66
of which: non-performing (previously termed "deteriorated") loans
of which: assets under management
Income statement
Net interest income
Dividends and similar income
Net fee and commission income
Net income (loss) from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
n.s.
66.76%
3.73%
0.65%
58.36%
3.26%
12.16%
11.92%
14.30%
13.57%
14.30%
14.30%
13.57%
13.57%
(*)
-2.5%
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €2,155.2 million (€1,920.6 million as at 31st
December 2014).
(**)
The item includes redundancy expenses of €16.9 million in 2015 and €12.5 million in 2014.
(***) The figure for 2015 includes €1.8 million for the contribution to the Deposit Guarantee Scheme (DGS) and €11.1 million for the
contribution to the Resolution Fund, of which €8.3 million as an extraordinary non-recurring contribution.
(****) The item for 2014 included €5.4 million from the sale of a property and the impact of impairment losses of €0.8 million on the stake held
in UBI Banca International.
The share capital of Banco di Brescia as at 31st December 2015 was wholly owned by UBI Banca.
168
BANCA POPOLARE COMMERCIO E INDUSTRIA SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
8,957,102
8,419,620
537,482
763,217
733,997
29,220
4.0%
6,539,963
6,273,269
266,694
4.3%
-1,518,369
37,992
16,112
1,171,620
9,707,228
-1,372,530
48,961
16,625
1,168,737
9,314,244
145,839
-10,969
-513
2,883
392,984
10.6%
-22.4%
-3.1%
0.2%
4.2%
11,073,614
10,879,880
193,734
1.8%
5,790,122
5,113,427
676,695
13.2%
168,408
1
154,305
1,168
10,562
180,897
159,766
2,700
9,719
(12,489)
1
(5,461)
(1,532)
843
(6.9%)
n.s.
(3.4%)
(56.7%)
8.7%
Operating income
Staff costs (**)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets (****)
334,444
(121,614)
(96,613)
353,082
(130,233)
(95,995)
(18,638)
(8,619)
618
(5.3%)
(6.6%)
0.6%
(6,505)
(4,551)
1,954
42.9%
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
Net provisions for risks and charges
(224,732)
109,712
(58,436)
(539)
(612)
(230,779)
122,303
(60,262)
(18)
(1,450)
(6,047)
(12,591)
(1,826)
521
(838)
(2.6%)
(10.3%)
(3.0%)
n.s.
(57.8%)
of which: deteriorated loans
Direct funding (*)
Net interbank debt
Financial assets held for trading
Available-for-sale financial assets
Equity (excluding profit for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
of which: assets under management
Income statement
Net interest income
Dividends and similar income
Net fee and commission income
Net income from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
Profit on the disposal of equity investments
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
Profit for the year
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
6.4%
94
101
(7)
(6.9%)
50,219
(15,542)
60,674
(24,831)
(10,455)
(9,289)
(17.2%)
(37.4%)
34,677
35,843
(1,166)
(3.3%)
196
1,559
212
1,607
-16
-48
2.96%
67.20%
3.07%
65.36%
3.74%
4.42%
8.52%
8.72%
17.73%
17.73%
17.73%
19.11%
19.11%
19.11%
(*)
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €297.6 million (€297.7 million as at 31st
December 2014).
(**)
The item includes redundancy expenses of €5.8 million in 2015 and €11.8 million in 2014.
(***) The figure for 2015 includes €1.3 million for the contribution to the Deposit Guarantee Scheme (DGS) and €5.3 million for the contribution
to the Resolution Fund, of which €4 million as an extraordinary non-recurring contribution.
(****) In 2015 the item includes depreciation of real estate property amounting to €1.8 million recognised in June 2015, because the sale of the
property owned on the site in via Moscova (previously classified as an asset held for sale) was reclassified into the item real estate property
with the relative impact on the income statement of the depreciation accruing in the meantime.
As at 31st December 2015, UBI Banca held 83.763% of the share capital of Banca Popolare Commercio e Industria and
the Banca del Monte di Lombardia Foundation held 16.237%.
169
BANCA REGIONALE EUROPEA SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
of which: deteriorated loans
Direct funding (*)
8,162,878
8,456,552
-293,674
-3.5%
983,351
821,278
162,073
19.7%
6,198,736
6,376,298
-177,562
-2.8%
-1,068,968
-1,351,148
-282,180
-20.9%
Financial assets held for trading
10,529
20,624
-10,095
-48.9%
Available-for-sale financial assets
33,760
33,422
338
1.0%
1,284,301
9,235,430
1,294,593
9,448,281
-10,292
-212,851
-0.8%
-2.3%
10,527,572
10,028,791
498,781
5.0%
5,145,208
4,653,814
491,394
10.6%
154,517
175,094
(20,577)
(11.8%)
860
967
(107)
(11.1%)
122,470
849
135,988
1,323
(13,518)
(474)
(9.9%)
(35.8%)
Net interbank debt
Equity (excluding profit for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
of which: assets under management
Income statement
Net interest income
Dividends and similar income
Net fee and commission income
Net income from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
Operating income
Staff costs (**)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities (****)
12,887
16,748
(3,861)
(23.1%)
291,583
(118,958)
330,120
(136,853)
(38,537)
(17,895)
(11.7%)
(13.1%)
(86,244)
(86,788)
(544)
(0.6%)
(13.0%)
(7,855)
(9,027)
(1,172)
(213,057)
(232,668)
(19,611)
(8.4%)
78,526
(74,686)
97,452
(82,702)
(18,926)
(8,016)
(19.4%)
(9.7%)
956
(1,654)
2,610
n.s.
Net provisions for risks and charges
(1,207)
(568)
639
112.5%
Profit (loss) on the disposal of equity investments (*****)
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
279
3,868
(2,908)
(51)
12,477
(11,527)
330
(8,609)
(8,619)
n.s.
(69.0%)
(74.8%)
960
950
10
1.1%
Profit for the year
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
210
243
-33
1,653
1,765
-112
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
0.07%
0.07%
Cost:income ratio (operating expenses/operating income)
73.07%
70.48%
6.00%
4.70%
12.05%
9.71%
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
18.58%
18.80%
18.58%
18.58%
18.80%
18.80%
(*)
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €1,272.8 million (€1,240.9 million as at 31st
December 2014).
(**)
The item includes redundancy expenses of €6.9 million in 2015 and €15 million in 2014.
(***) The figure for 2015 includes €1.2 million for the contribution to the Deposit Guarantee Scheme (DGS) and €5.5 million for the contribution
to the Resolution Fund, of which €4.1 million as an extraordinary non-recurring contribution.
(****) The item for 2014 included €0.7 million of impairment on the investment in G.E.C. Spa.
(*****) The figure for 2015 includes a gain of €0.2 million on the disposal of a real estate property in June.
As at 31st December 2015, UBI Banca held 74.777% of the share capital of Banca Regionale Europea, the Cassa di
Risparmio di Cuneo Foundation held 24.904% and the remaining 0.319% was held by individual shareholders.
170
BANCA POPOLARE DI ANCONA SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
of which: deteriorated loans
Direct funding (*)
Net interbank debt
Financial assets held for trading
Available-for-sale financial assets
Equity (excluding profit for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
of which: assets under management
Income statement
Net interest income
Net fee and commission income
Net income (loss) from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
Operating income
Staff costs (**)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
7,794,538
7,701,242
93,296
1,072,486
991,536
80,950
1.2%
8.2%
6,102,142
6,098,054
4,088
0.1%
-1,158,801
-1,156,483
2,318
0.2%
41,224
18,513
59,303
18,636
-18,079
-123
-30.5%
-0.7%
868,857
8,555,944
867,741
8,604,200
1,116
-48,256
0.1%
-0.6%
5,261,708
4,953,822
307,886
6.2%
2,325,665
1,983,715
341,950
17.2%
195,836
120,111
186,053
126,964
9,783
(6,853)
5.3%
(5.4%)
1,826
2,311
(485)
(21.0%)
13,832
16,425
(2,593)
(15.8%)
331,605
(115,769)
331,753
(124,842)
(148)
(9,073)
(0.0%)
(7.3%)
(85,718)
(80,647)
5,071
6.3%
(8,698)
(9,575)
(877)
(9.2%)
(210,185)
(215,064)
(4,879)
(2.3%)
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
121,420
(96,170)
(896)
116,689
(100,833)
45
4,731
(4,663)
(851)
4.1%
(4.6%)
n.s.
Net provisions for risks and charges
Profit on the disposal of equity investments (****)
(1,167)
41
(1,662)
5,492
(495)
(5,451)
(29.8%)
(99.3%)
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
23,228
(7,276)
19,731
(11,914)
3,497
(4,638)
17.7%
(38.9%)
Profit for the year
15,952
7,817
8,135
104.1%
Operating expenses
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
208
213
-5
1,545
1,588
-43
1.84%
63.38%
0.90%
64.83%
6.50%
6.20%
13.76%
12.88%
13.93%
13.93%
13.93%
14.67%
14.67%
14.67%
(*)
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €1,155 million (€819 million as at 31st
December 2014).
(**)
The item includes redundancy expenses of €5.2 million in 2015 and €10.7 million in 2014.
(***) The figure for 2015 includes €1.1 million for the contribution to the Deposit Guarantee Scheme (DGS) and €6.3 million for the contribution
to the Resolution Fund, of which €4.7 million as an extraordinary non-recurring contribution.
(****) The figure for 2014 included €5.5 million from the sale of a property.
As at 31st December 2015, UBI Banca held 99.578% of the share capital of the Banca Popolare di Ancona and the
remaining 0.422% was held by non-controlling shareholders.
171
BANCA CARIME SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
4,091,660
4,366,169
-274,509
491,816
491,557
259
0.1%
Direct funding
5,489,156
5,761,011
-271,855
-4.7%
Net interbank debt
Financial assets held for trading
2,254,231
1,026
2,129,804
1,696
124,427
-670
5.8%
-39.5%
Available-for-sale financial assets
Equity (including loss for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
31,767
1,054,676
7,154,337
32,022
1,074,134
7,269,863
-255
-19,458
-115,526
-0.8%
-1.8%
-1.6%
6,760,003
6,917,646
-157,643
-2.3%
3,847,889
3,372,817
475,072
14.1%
149,055
571
173,688
831
(24,633)
(260)
(14.2%)
(31.3%)
108,379
(3,349)
12,443
117,207
(129)
15,396
(8,828)
(3,220)
(2,953)
(7.5%)
n.s.
(19.2%)
267,099
(131,882)
306,993
(145,711)
(39,894)
(13,829)
(13.0%)
(9.5%)
(85,536)
(87,358)
(1,822)
(2.1%)
(5.4%)
of which: non-performing (previously termed "deteriorated") loans
of which: assets under management
Income statement
Net interest income
Dividends and similar income
Net fee and commission income
Net income/expenses from trading, hedging and disposal/repurchase activities (*)
Other net operating income/(expense)
Operating income
Staff costs (**)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
-6.3%
(12,101)
(12,797)
(696)
(229,519)
(245,866)
(16,347)
(6.6%)
37,580
(68,842)
(802)
61,127
(83,352)
64
(23,547)
(14,510)
(866)
(38.5%)
(17.4%)
n.s.
1,940
(1,255)
3,195
n.s.
Profit (loss) on the disposal of equity investments and impairment of goodwill (****)
Loss on continuing operations before tax
Taxes on income for the year from continuing operations
42
(30,082)
9,233
(650,800)
(674,216)
207,335
(650,842)
(644,134)
(198,102)
n.s.
(95.5%)
(95.5%)
Loss for the year
(20,849)
(466,881)
(446,032)
(95.5%)
216
1,827
242
1,935
-26
-108
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
Net provisions for risks and charges
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
n.s.
85.93%
n.s.
80.09%
6.63%
5.20%
12.02%
11.26%
41.24%
41.24%
41.24%
38.20%
38.20%
38.20%
(*)
(**)
(***)
The figure for 2014 included a gain of €0.8 million on the sale of the interest held in SIA Spa.
The item includes redundancy expenses of €14.3 million in 2015 and €21.3 million in 2014.
The figure includes €1.5 million for the contribution to the Deposit Guarantee Scheme (DGS) and €2.8 million for the contribution to the
Resolution Fund, of which €2.1 million as an extraordinary non-recurring contribution.
(****) The item for 2014 included the effects of the recognition of impairment losses on goodwill of €650.8 million (€443.1 million net of tax).
As at 31st December 2015 UBI Banca held 99.989% of the share capital of the Banca Carime and the remaining 0.011%
was held by minority shareholders.
172
BANCA DI VALLE CAMONICA SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
of which: non-performing (previously termed "deteriorated") loans
Direct funding (*)
Net interbank debt
Financial assets held for trading
Available-for-sale financial assets
Equity (excluding profit for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
of which: assets under management
Income statement
Net interest income
1,740,753
1,779,208
-38,455
188,810
173,029
15,781
-2.2%
9.1%
1,389,538
-247,714
1,566,172
-116,175
-176,634
131,539
-11.3%
113.2%
2,763
1,534
3,774
1,524
-1,011
10
-26.8%
0.7%
145,496
1,867,987
143,523
1,911,456
1,973
-43,469
1.4%
-2.3%
1,512,689
1,423,090
89,599
6.3%
630,993
556,341
74,652
13.4%
38,507
36,792
1,715
4.7%
24,148
(1,675)
2,624
26,216
(208)
2,791
(2,068)
1,467
(167)
(7.9%)
n.s.
(6.0%)
Operating income
Staff costs (**)
63,604
(23,698)
65,591
(24,459)
(1,987)
(761)
(3.0%)
(3.1%)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
(18,873)
(17,480)
1,393
8.0%
(1,573)
(1,652)
(79)
(4.8%)
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
(44,144)
19,460
(16,194)
(41)
(43,591)
22,000
(16,757)
(253)
553
(2,540)
(563)
(212)
1.3%
(11.5%)
(3.4%)
(83.8%)
Net provisions for risks and charges
(469)
(182)
287
157.7%
Profit (loss) on the disposal of equity investments
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
2,756
620
4,808
(2,906)
(2,052)
3,526
(42.7%)
n.s.
Profit for the year
3,376
1,902
1,474
77.5%
65
349
66
353
-1
-4
2.32%
69.40%
1.33%
66.46%
4.70%
4.65%
10.85%
9.73%
11.55%
11.61%
11.55%
13.23%
11.61%
13.22%
Net fee and commission income
Loss from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
(*)
(**)
(***)
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €404.1 million (€429.2 million as at 31st
December 2014).
The item includes redundancy expenses of €1.4 million in 2015 and €2.3 million in 2014.
The figure includes €0.3 million for the contribution to the Deposit Guarantee Scheme (DGS) and €1.6 million for the contribution to the
Resolution Fund, of which €1.2 million as an extraordinary non-recurring contribution.
As at 31st December 2015, UBI Banca held 89.792% of the share capital of the Banca di Valle Camonica, 8.839% was
held by the Banco di Brescia and the remaining 1.369% was held by non-controlling shareholders.
173
Information on the main product companies
IW BANK SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
757,087
851,017
-93,930
25,947
25,766
181
0.7%
Direct funding (*)
2,858,634
3,073,547
-214,913
-7.0%
Net interbank debt
Financial assets held for trading
2,162,209
1
1,979,274
405
182,935
-404
9.2%
-99.8%
5,387
156,052
312,692
156,911
-307,305
-859
-98.3%
-0.5%
3,293,995
3,975,732
-681,737
-17.1%
9,065,992
8,974,638
91,354
1.0%
5,865,415
5,509,682
355,733
6.5%
36,097
60,732
43,286
59,752
(7,189)
980
(16.6%)
1.6%
5,646
(1,365)
2,340
2,905
3,306
(4,270)
141.3%
(147.0%)
Operating income
Staff costs
101,110
(22,737)
108,283
(25,497)
(7,173)
(2,760)
(6.6%)
(10.8%)
Other administrative expenses (***)
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
(74,831)
(63,421)
11,410
18.0%
(993)
(1,759)
(766)
(43.5%)
Operating expenses
(98,561)
(90,677)
7,884
8.7%
2,549
(3,303)
17,606
(1,550)
(15,057)
1,753
(85.5%)
113.1%
of which: non-performing (previously termed "deteriorated") loans
Available-for-sale financial assets
Equity (excluding profit / including loss for the year)
Total assets
Indirect funding from customers (inclusive of insurance investment and UBI Banca
bonds)
of which: assets under management
Income statement
Net interest income
Net fee and commission income
Net income from trading, hedging and disposal/repurchase activities (**)
Other net operating income/(expense)
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
-11.0%
(57)
(105)
(48)
(45.7%)
Net provisions for risks and charges
(2,946)
(1,772)
1,174
66.3%
Profit (loss) on the disposal of equity investments
Pre-tax profit (loss) from continuing operations
Taxes on income for the year from continuing operations
(22)
(3,779)
(557)
14,179
(6,964)
(22)
(17,958)
(6,407)
n.s.
n.s.
(92.0%)
Profit (loss) for the year
(4,336)
7,215
(11,551)
n.s.
Other information
Number of branches
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Total net non-performing (previously termed "deteriorated") loans/net loans to
customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
21
21
-
298
348
-50
n.s.
97.48%
4.60%
83.74%
1.77%
1.72%
3.43%
3.03%
19.40%
19.40%
21.37%
n.a.
n.a.
n.a.
On 25th May 2015 the merger of IW Bank into UBI Banca Private Investment took effect, and it was effective for accounting and tax
purposes from 1st January 2015. The new company took the name IW Bank Spa.
The figures as at and for the year ended 31st December 2014 have therefore been restated by summing the balances to take account of
the operation.
(*)
(**)
(***)
The figure as at 31st December 2015 includes bonds subscribed by the Parent amounting to €10 million (€10 million as at 31st December
2014).
The figure for 2015 includes €5.3 million of profits from the disposal of government securities (of which €5.1 million relating to sales of
CCTs). The item for 2014 included €0.8 million of profits on the disposal two CCTs, carried out in the fourth quarter.
The figure for 2015 includes €10.8 million of expenses (€9.8 million charged by UBISS and the remainder by other suppliers) resulting
from the integration of BPI and IW Bank, considered a non-recurring event. It also includes €0.8 million for a contribution to the Deposit
Guarantee Scheme (DGS) and €0.1 million for a contribution to the Resolution Fund. In 2014 it included €1.5 million of expenses in
relation to the write-off of IT systems.
The share capital of IW Bank as at 31st December 2015 was wholly owned by UBI Banca.
174
UBI PRAMERICA SGR SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
OWN "RETAIL CUSTOMERS"
Of which: customer portfolio management
FUND BASED INSTRUMENTS
FUNDS
of which: Pramerica funds included in fund based instruments
Other duplications
6,606,676
299,443
4.5%
5,054,203
4,911,143
143,060
2.9%
1,851,916
1,695,533
156,383
9.2%
15,309,241
13,799,113
1,510,128
10.9%
661,464
686,695
-25,231
-3.7%
90,985
102,868
-11,883
-11.6%
SICAV’s and other (net of duplications)
6,242,126
5,128,841
1,113,285
21.7%
TOTAL ASSETS UNDER MANAGEMENT
27,705,037
24,745,067
2,959,970
12.0%
160
967
(807)
(83.5%)
95,732
33,590
7
(35)
22
77,562
16,556
9
963
(22)
18,170
17,034
(2)
(998)
(100.0%)
23.4%
102.9%
(22.2%)
n.s.
Operating income
Staff costs
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
129,454
(18,016)
(15,425)
96,079
(15,948)
(14,454)
33,375
2,068
971
34.7%
13.0%
6.7%
(98)
(95)
3
3.2%
Operating expenses
Net operating income
(33,539)
95,915
(30,497)
65,582
3,042
30,333
10.0%
46.3%
Net provisions for risks and charges
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
(88)
95,827
(32,285)
61
65,643
(22,243)
(149)
30,184
10,042
n.s.
46.0%
45.1%
63,542
43,400
20,142
46.4%
151
151
-
Income statement
Net interest income
Dividends and similar income
Net fee and commission income
Performance fees
Net income from trading, hedging and disposal/repurchase activity
Other net operating income/(expense) (*)
Profit for the year
Other information
Total work force (actual employees+staff on leasing contracts)
(*)
6,906,119
In 2014 the item included prior year income of approximately €1 million, resulting from the repayment of sums advanced by the company in
relation to a VAT dispute.
As at 31st December 2015, UBI Banca held 65% of the share capital of UBI Pramerica SGR and the remaining 35% was
held by Prudential International Investments Corporation.
175
UBI LEASING SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
6,619,022
6,941,652
-322,630
1,375,589
1,408,470
-32,881
-2.3%
228,322
-5,996,771
112,127
-6,440,481
116,195
-443,710
103.6%
-6.9%
10,909
9
10,900
n.s.
518,869
6,920,820
522,672
7,250,040
-3,803
-329,220
-0.7%
-4.5%
87,387
56,817
30,570
53.8%
(94)
(54)
83
(15)
(177)
39
n.s.
260.0%
of which: non-performing (previously termed "deteriorated") exposures
Due to customers
Net interbank debt
Financial assets available-for trading
Available-for-sale financial assets
Equity (including loss for the year)
Total assets
Income statement
Net interest income
Net fee and commission income (expense)
Net loss from trading, hedging and disposal/repurchase activities
Other net operating income/(expense)
8,607
10,307
(1,700)
(16.5%)
Operating income
Staff costs (*)
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
95,846
(16,439)
(23,366)
67,192
(16,502)
(22,566)
28,654
(63)
800
42.6%
(0.4%)
3.5%
(1,695)
(1,665)
30
1.8%
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
(41,500)
54,346
(68,536)
(538)
(40,733)
26,459
(87,644)
(66)
767
27,887
(19,108)
472
1.9%
105.4%
(21.8%)
n.s.
693
17
(1,096)
1
1,789
16
n.s.
n.s.
(14,018)
10,090
(62,346)
23,459
(48,328)
(13,369)
(77.5%)
(57.0%)
(3,928)
(38,887)
(34,959)
(89.9%)
212
224
-12
43.30%
10.93%
60.62%
9.54%
20.78%
20.29%
Net provisions for risks and charges
Profit on the disposal of equity investments
Loss on continuing operations before tax
Taxes on income for the year from continuing operations
Loss for the year
Other information
Total work force (actual employees+personnel on leasing contracts)
Financial ratios
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Net non-performing exposures (previously termed "deteriorated exposures")/net
loans to customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
(*)
-4.6%
11.12%
10.64%
11.12%
12.96%
10.64%
12.63%
The item includes redundancy expenses of €0.7 million in 2015 and €0.5 million in 2014.
As at 31st December 2015 UBI Banca held 99.621% of the share capital of UBI Leasing and the remaining 0.379% was
held by Banca Cooperativa Valsabbina Scpa.
Performance by business sector
2015
Figures in thousands of euro
number
2014
amount
number
% change
amount
number
amount
Auto
of which: - motor vehicles
- commercial vehicles
- industrial vehicles
Machinery and equipment
Aeronautical
Property
Energy
1,740
871
586
283
1,440
9
248
2
66,910
27,926
14,908
24,076
181,036
52,139
325,245
3,017
1,740
924
528
288
1,624
8
216
3
72,199
30,014
15,157
27,028
235,122
2,847
188,233
3,932
-5.7%
11.0%
-1.7%
-11.3%
12.5%
14.8%
-33.3%
-7.3%
-7.0%
-1.6%
-10.9%
-23.0%
n.s.
72.8%
-23.3%
Total
3,439
628,347
3,591
502,333
-4.2%
25.1%
176
UBI FACTOR SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
of which: non-performing (previously termed "deteriorated") exposures
Due to customers
Net interbank debt
Equity (excluding profit for the year)
Total assets
Income statement
Net interest income
Net fee and commission income
Other net operating income/(expense)
Operating income
Staff costs
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets
Operating expenses
Net operating income
Net impairment losses on loans
Net impairment losses on other assets/liabilities
Net provisions for risks and charges
Pre-tax profit from continuing operations
Taxes on income for the year from continuing operations
Profit for the year
Other information
Total work force (actual employees+staff on leasing contracts)
Financial ratios
ROE [profit for the year/equity (excluding profit for the year)]
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Net non-performing exposures (previously termed "deteriorated exposures")/net
loans to customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
2,237,554
2,016,103
221,451
310,973
283,796
27,177
9.6%
6,530
4,433
2,097
47.3%
-2,089,856
137,463
-1,864,489
134,905
225,367
2,558
12.1%
1.9%
2,291,161
2,088,131
203,030
9.7%
26,178
31,703
(5,525)
(17.4%)
4,227
5,720
(1,493)
(26.1%)
1,040
2,152
(1,112)
(51.7%)
31,445
(10,547)
39,575
(10,766)
(8,130)
(219)
(20.5%)
(2.0%)
(9,796)
(9,926)
(130)
(1.3%)
(63)
(159)
(96)
(60.4%)
(20,406)
11,039
(7,473)
(130)
(20,851)
18,724
(5,287)
-
(445)
(7,685)
2,186
(130)
(2.1%)
(41.0%)
41.3%
n.s.
140
(1,193)
1,333
n.s.
3,576
(1,090)
12,244
(4,070)
(8,668)
(2,980)
(70.8%)
(73.2%)
2,486
8,174
(5,688)
(69.6%)
137
136
1
1.81%
6.06%
64.89%
9.78%
52.69%
11.03%
13.90%
14.08%
9.87%
10.38%
9.87%
9.84%
10.38%
10.34%
The share capital of UBI Factor as at 31st December 2015 was wholly owned by UBI Banca.
177
11.0%
PRESTITALIA SPA
31.12.2015
31.12.2014
Change
% change
Figures in thousands of euro
Balance sheet
Loans and advances to customers
1,433,272
1,916,577
-483,305
165,881
258,785
-92,904
-35.9%
Due to customers
780
907
-127
-14.0%
Net interbank debt
-1,217,571
-1,672,845
-455,274
-27.2%
228,066
230,333
-2,267
-1.0%
1,770,603
2,682,988
-912,385
-34.0%
(10.5%)
of which: non-performing (previously termed "deteriorated") loans
Equity (including loss for the year)
Total assets
Income statement
Net interest income
Net fee and commission income
Net loss from trading, hedging and disposal/repurchase activity
Other net operating income/(expense) (*)
-25.2%
51,160
57,191
(6,031)
(6,145)
(6,111)
34
0.6%
-
(620)
(620)
(100.0%)
1,183
(12,434)
13,617
n.s.
46,198
(9,697)
38,026
(9,328)
8,172
369
21.5%
4.0%
Other administrative expenses
Depreciation, amortisation and net impairment losses on property, plant and
equipment and intangible assets (**)
(20,894)
(18,479)
2,415
13.1%
(809)
(2,894)
(2,085)
(72.0%)
Operating expenses
(31,400)
(30,701)
699
2.3%
Net operating income
Net impairment losses on loans
14,798
(16,407)
7,325
(24,700)
7,473
(8,293)
102.0%
(33.6%)
163.7%
Operating income
Staff costs
Net impairment losses on other assets/liabilities (***)
2,342
888
1,454
Net provisions per risks and charges (****)
(7,300)
3,803
(11,103)
n.s.
Loss on continuing operations before tax
Taxes on income for the year from continuing operations
(6,567)
4,289
(12,684)
5,509
(6,117)
(1,220)
(48.2%)
(22.1%)
Loss for the year
(2,278)
(7,175)
(4,897)
(68.3%)
177
152
25
67.97%
80.74%
0.95%
0.91%
11.57%
13.50%
20.64%
20.64%
20.64%
16.00%
16.00%
16.00%
Other information
Total work force (actual employees+staff on leasing contracts)
Financial ratios
Cost:income ratio (operating expenses/operating income)
Net bad loans (previously termed "non-performing loans")/net loans to customers
Net non-performing exposures (previously termed "deteriorated exposures")/net
loans to customers
Capital ratio
Common Equity Tier 1 ratio
Tier 1 ratio
Total capital ratio
(*)
(**)
(***)
In 2014 the item included expenses of €10.3 million relating to reimbursements to customers for early repayments of debt.
In 2014 the figure included €1.5 million of expenses in relation to the write-off of IT systems.
In 2015 the item benefited from €1.6 million resulting from a revision of guarantees and commitments towards non-Group financial
companies.
(****) In 2015 the figure included €2.7 million of provisions for claims on salary backed loans. In 2014 it included the release of provisions
amounting to €3 million, recognised to meet the final quantification of risks on claims made at the time of the IT migration.
The share capital of Prestitalia as at 31st December 2015 was wholly owned by UBI Banca.
178
Other information
Treasury shares
The companies included in the consolidation did not hold any of their own shares in portfolio,
nor those of the Parent during the course of 2015.
Litigation
Full information is reported on tax and other Group litigation as well as on anti-money
laundering affairs in the Notes to the Consolidated Financial Statements, Part B – Section 12
of Liabilities.
Inspections
As already reported in last year’s Financial Statements, as part of a systemwide inquiry, on 3rd
October 2014 the Bank of Italy began a regulatory assessment of the REMUNERATION AND
INCENTIVE POLICIES AND PRACTICES in force within the UBI Banca Group. At the beginning of
December the inspection team already present at UBI Banca to study these matters was
temporarily added to in order to verify the APPROPRIATENESS OF PROCEDURES USED TO MANAGE AND
TRANSMIT INFORMATION ON LOANS LODGED AS COLLATERAL for Eurosystem credit operations
(ABACO). The inspections were concluded on 19th December 2014.
With regard to the inspections into remuneration and incentive policies and practices, on 11th
March 2015 the Bank of Italy delivered its findings, which were positive, and at the same time
it reported possible areas for improvement. A letter of 10th April 2015 addressed to the
supervisory authority contained details of specific initiatives programmed to implement the
refinements desired.
On the question of controls on procedures used to manage bank loans lodged as collateral for
Eurosystem credit operations, in a communication of 17th March 2015 the Bank of Italy
expressed a positive opinion, but here too underlined some areas requiring attention. The
subjects brought up by the supervisory authority on this matter were studied and analysed
and the activities programmed and the related plan to implement them were communicated in
a letter dated 27th April 2015.
Subsequently the Bank of Italy added to the inspections, proceeding from 21st to 23rd April
2015 to carry out a brief inspection designed to verify the ADEQUACY OF PROCEDURES AND
PROCESSES IN PLACE TO ACQUIRE INFORMATION ON DEBTORS POTENTIALLY SUITABLE FOR MONETARY
POLICY REFINANCING, in terms of monitoring the performance of IRB systems. At present, no
indications regarding this verification have been received from the Bank of Italy.
In the second quarter the UBI Banca Group also received an on-site inspection visit conducted
by a team of senior managers from the Bank of Italy and the ECB into the question of IT RISK.
The inspections commenced on 30th March and were concluded on 19th June 2015.
On 18th November 2015, a report was received that features an abundantly satisfactory
opinion of the Group’s overall IT risk management. At the same time, the supervisory
authorities underlined some areas that can be refined and improved, such as in operational
continuity and in preventing cyber-attacks and computer fraud. Before the end of the year, the
Bank provided its preliminary considerations regarding the suggestions received, while a more
179
detailed response is being drafted that will illustrate an implementation plan for the measures
requested, with related timescales.
Following procedures already tried and tested with other national competitors as part of a
"THEMATIC REVIEW OF RISK GOVERNANCE AND RISK APPETITE", in the period from 15th to 19th June
2015 senior managers from the ECB and the Bank of Italy Joint Supervisory Team visited UBI
Banca to attend a meeting of the Supervisory Board and to meet senior managers of the Bank,
members of the governing bodies and managers of organisational units.
Further information for assessment was gathered by the authorities in meetings with the
Bank’s senior managers on 25th and 26th November 2015. On 13th January 2016, the ECB
sent the bank specific notification regarding this “Thematic review of risk governance and risk
appetite”, pointing out several areas for improvement, which are currently being evaluated in
depth.
Finally, it should be noted that in a statement issued on 4th September 2015, the Bank of
Italy began auditing the UBI Banca Group in order to assess its COMPLIANCE WITH REGULATIONS
ON TRANSACTION TRANSPARENCY, ON APPROPRIATE CONDUCT IN CUSTOMER RELATIONSHIPS, AND ON ANTIMONEY LAUNDERING PRACTICES. The inspection team’s review, conducted partly at single bank
branches within the Group, ended on 23rd December 2015138.
In the meantime, the Group began an internal audit procedure of its own to assess certain
matters including fees on credit lines and overdrafts, as well as revolving credit card policies.
Following appropriate in-depth assessments, some recalculations were made for potential
reimbursements, although for a minor amount.
***
With a letter of 30th April 2014, the Consob (Italian securities market authority) launched
proceedings in accordance with article 195 of the Consolidated Finance Act relating to
Members of the Supervisory Board – in office from 2009 until 30th April 2014, but excluding
othe Members Agliardi, Cividini, Gallarati, Resti and Zucchi – concerning a possible violation
of article 149 of the Consolidated Finance Act in relation to aspects concerning information
disclosed in the Corporate Governance Report. The relative defence documents, to which all
the Supervisory Board members in receipt of the notification adhered, were submitted to the
Consob within the time limits set.
In 2015 the Consob Administrative Penalties Office then delivered its report containing a
reasoned proposal for penalties (the “Report”) to the senior officers of the Bank involved in the
penalty procedure and to the bank, as jointly and severally liable.
On conclusion of the procedure, in October 2015 the Consob decided to impose administrative
fines – in an amount equal to or close in percentage terms to the minimum penalty allowed –
for those members of the Supervisory Board only who were in office in the year 2009 or who
were appointed to the Supervisory Board in subsequent years, but were members of the
Management Board again in the year 2009.
UBI Banca – as jointly liable – and those concerned lodged an appeal against the Consob
ruling.
We report at the same time that when the Consob made this ruling it approved an application
for non-publication (article 195, paragraph 3 of the Consolidated Finance Act) because it
considered the relative conditions were satisfied (grave risks for financial markets/damage out
of proportion for the parties concerned).
Regarding investigations initiated by the Public Prosecutors’ Office of Bergamo in 2014, please
refer to the information provided in the 2014 Consolidated Financial Statements, as no new
information has arisen since. These relate in particular to activities initiated and still in
progress as a result of different reports made at the time (2012 and 2013 respectively) relating
138 With regard to TRANSPARENCY AND APPROPRIATE CONRIGHT DUCT IN CUSTOMER RELATIONSHIPS (Title VI of the Consolidated Banking Act), we
once again report that, following supervisory authority requests that some Group banks (Banca Popolare di Ancona and Banca
Carime) undertake initiatives to solve problems found during inspections carried out previously at individual branches of those
banks (without however commencing penalty procedures), both banks sent the supervisory authority a detailed plan of initiatives
identified and programmed to overcome the problems.
180
to alleged matters concerning UBI Leasing and UBI Factor and a supposed failure to
communicate shareholder agreements to the competent authorities and presumed influence
exerted on the proceedings of shareholders’ meetings. The Group had already provided
answers and clarifications at the time to the competent supervisory authorities on the matters
contained in the reports and no new events have occurred to report, nor is there any
additional news.
Therefore, the deadlines for the end of the investigations covering the matters mentioned above
have been extended until 28th January 2016 and 23rd March 2016 respectively.
In consideration of their nature, it is considered that the procedures initiated by the Consob and the Public
Prosecutor’s Office of Bergamo can have no repercussions on Group assets.
***
With regard to ANTI MONEY-LAUNDERING, on 24th December 2014 a statement was received from
the Bank of Italy addressed to the subsidiary IW Bank and to the Parent, UBI Banca,
concerning the results of inspections carried out by the “Financial Intelligence Unit” (FIU) from
6th November 2013 to 10th March 2014. Together with the relative units at the Parent and at
UBI.S, action was taken and a reply was written – on 20th February 2015 – with the
formulation of an action plan to address some shortcomings that had been found. IW Bank
subsequently sent a statement to the Bank of Italy to report on the implementation status of
the aforementioned plan as at 30th June 2015.
On 31st March 2015, the FIU concluded inspections it had begun on 17th November 2014 at
Banca Popolare di Bergamo pursuant to articles 47 and 53, paragraph 4 of Legislative Decree
No. 231/2007 (anti money-laundering legislation). No findings of non-compliance have, at
present, been signalled.
With regard to the PROVISION OF INVESTMENT SERVICES, on 29th January 2015, Consob informed
Banca Popolare di Bergamo of areas requiring attention arising from the follow-up inspection
carried out from 4th February to 7th August 2014, requesting in particular a programme of
organisational and IT intervention designed to solve the problems identified. More specifically,
the matters underlined by the authority regard sales policies and the personal incentive
scheme, procedures for providing advisory services and the procedures for assessing the
adequacy of investments.
At the beginning of April that bank submitted its report illustrating the assessments and the
initiatives taken and/or programmed.
With a subsequent communication dated 4th August 2015 the Consob requested clarifications
and updates on the measures and initiatives undertaken. The bank replied to that request on
15th October 2015.
On 13 November 2015, Borsa Italiana initiated an examination of UBI Banca’s activities as
Nominated Adviser (Nomad) for a company that floated on AIM Italia (the alternative
investment sub-market of the Italian Stock Exchange) in April 2015. This examination came to
a conclusion on 14th December 2015, when Borsa Italiana representatives visited UBI Banca’s
offices in Corso Europa in Milan.
The Nomad plays a central role on the AIM Italia market. Listed on a specific register kept by Borsa Italiana, the Nomad
must assess whether it would be appropriate for the company to be admitted for trading on the stock market, and then
support the company in maintaining adequate transparency in providing information to investors, as well as promote
compliance with the rules associated with being listed on AIM Italia and the multilateral trading facility (MTF) run by
Borsa Italiana for SMEs.
More specifically, the examination related to compliance with the following duties and
responsibilities of the Nomad under AIM Italia regulations:
- legal and tax due diligence;
- financial due diligence;
- transactions with related parties and the management control system;
- placement activities.
181
Regarding the outcome of this inspection, Borsa Italiana drafted a report, which did not have a
critical tone, containing suggestions to refine some details of operational procedures in this
activity; the departments involved have already begun adopting those suggestions.
In a subsequent letter dated 22nd January 2016, Borsa Italiana officially stated that it did not
find any problematic issues with respect to compliance with Nomad regulations in the
activities conducted in relation to the listing process in question.
***
On 3rd December 2015, some IW Bank representatives/managers and employees received
notification of a search and seizure warrant, also informing them they are suspects in
investigations, pursuant to articles 366 and 369 of the Italian Penal Code, under the Milan
Public Prosecutor. The alleged offences are: criminal conspiracy, money laundering,
conspiracy to launder money, self-money laundering, conspiracy to commit self-money
laundering, as well as the criminal tax code offence of “fraudulent concealment of assets in
relation to the payment of taxes” (as per article 11 of Legislative Decree no. 74/2000), and
finally, criminal violation of customer due diligence obligations (as per ex-article 55 of
Legislative Decree no. 231/2007).
Finally, in a statement dated 22nd December 2015, Consob summoned the Managing Director,
the Chairman of the Board of Statutory Auditors and the Head of Compliance of IW Bank to its
headquarters, pursuant to Article 7, paragraph 1 of the Consolidated Finance Law (Legislative
Decree no. 58/1998). The purpose of this meeting, held in late January 2016, was for the
company to illustrate its business model and foreseen organisational and procedural steps –
following the incorporation of the former IW Bank into UBI Banca Private Investment, which
was then renamed IW Bank – in terms of investment services for which the bank is certified to
provide. Consob reserved the right to request further information regarding the issues
discussed during the meeting.
Compounding of interest
The UBI Banca Group has always paid the greatest attention to the well-known issue of
compounding of interest in its banking relationships, both to the arguments which historically
have legitimated that practice in the past and to the implementation of new rules each time
that Parliament has amended the legislative framework.
More specifically, the revision made by the 2014 Legge di stabilità (“stability law” – annual
finance law) contains undoubtedly complex aspects, addressed in the courts with differing
outcomes. The Parent is monitoring developments in the regulatory framework directly with a
view to implementing the new regulations now about to be issued.
As already reported – even after the amendment to the 2014 Legge di stabilità just mentioned –
for the provision of detailed regulations, Art. 120 of the consolidated banking act continues to
make reference to an implementation regulation of the interministerial committee for credit
and saving (ICCS), which at the date of this report has not yet been issued.
On 25th August 2015 the Bank of Italy put a proposed ICCS resolution out for public
consultation, highlighting the difficulties of construal arising from the literal content of the
provisions of the amended law and the need for interpretation in order to fully bring out the
purpose aimed at by the reform, avoiding potential negative impacts for customers. The
proposed resolution – which if confirmed, would introduce completely new rules for the
calculation and payment of interest (allowing under certain conditions even the possibility of
payment by means of debiting an account, or by using funds destined to a current account) –
hypothesises the first application of interest accruing starting on the 1st January 2016. Even
though the consultation period closed on 23rd October 2015, the final resolution has not yet
been issued, probably due to the complexity of the problems that have emerged.
182
The UBI Banca Group will in any event promptly implement the resolution once the final
version is published, with the hope that some of the doubts over interpretation and application
brought up in the public consultation will be resolved in the meantime (e.g. with regard to coordination with the rules on usury).
In this regulatory framework not yet fully defined, some courts – with rulings made mainly
before the public consultation on the proposed CRIC resolution was opened – have issued
injunctions in proceedings brought by consumer associations against some banks including
Banca Regionale Europea and IW Bank, claiming that the ban on compounding of interest is
applicable immediately notwithstanding the aforementioned absence of provisions to
implement it provided for by the law. Other courts, on the other hand, have thrown out action
taken by the association, ruling in favour of other banks. The Group banks involved are
considering taking further action to obtain a new ruling which takes account, amongst other
things, of the ICCS resolution, the timing of its enforcement and the difficulties in immediate
application confirmed by the accompanying documents.
Tax aspects
In 2015, Italy began a process of reforming its taxation system, implementing measures
contained in Law 23/2014, which will be examined in detail below. Over the course of the
year, further tax measures were introduced that specifically concern credit institutions. These
measures relate, most notably, to taxation on loans to customers and to financial institutions’
obligations as withholding agents in financial transactions, whether proprietary or for their
customers.
Law No. 23 of 11th March 2014 (Law to revise the tax system)
Law 23/2014 gave the Italian Government a mandate to enact significant reforms of the
taxation system based on certain criteria contained in the law. As a result, the following
government decrees have since been approved:

Decree on “Electronic invoices” (Legislative Decree No. 127 of 5th August 2015);

Decree on “Certainty of Right” (Legislative Decree No. 128 of 5th August 2015);

Decree on the “Internationalisation of Businesses” (Legislative Decree No. 147 of 14th
September 2015);

Decree on measures for the revision of regulations governing “private letters”/“tax
clearance” and tax legislation (Legislative Decree No. 156 of 24th September 2015);

Decree on measures for the revision of regulations governing the organisation of tax
authority departments (Legislative Decree No. 157 of 24th September 2015);

Decree to revise the penalty system (Legislative Decree No. 158 of 24th September 2015);

Decree on measures for the simplification and rationalisation of legislation on tax collection
(Legislative Decree No. 159 of 24th September 2015);

Decree to estimate and monitor tax evasion and reorganisation of tax erosion regulations
(Legislative Decree No. 160 of 24th September 2015);

Decree on “tax simplifications” (Legislative Decree No. 175 of 21st November 2014);

Decree for the taxation of tobacco (Legislative Decree No. 188 of 15th December 2014);

Decree on the composition of cadastral commissions (Legislative Decree No. 198 of 17th
December 2014).
Not all of the measures foreseen in the delegated law have been implemented. In particular,
one of the matters not covered concretely in any of the subsequent government decrees is a
revision of the indirect taxation system and an introduction of the so-called “Group VAT”
method. The latter consists in attributing a single VAT identification number to any group of
companies, a measure that, if applied, would have a substantial bearing on the UBI Banca
Group.
The Italian tax authorities are currently working on guidelines for applying and interpreting
the various measures cited above. To this end, Circular no. 38/E issued on 29th December
2015 illustrates the contents of Legislative Decree No. 156 of 24th September 2015 with
specific regard to tax litigation.
183
Of the numerous areas covered in the measures, the noteworthy points as far as the UBI
Banca Group is concerned are as follows:
•
the principle of abuse of rights is to be applied whenever an otherwise legal transaction is
found to have no economic substance and a tax position gained is both in contrast with the
purpose of related tax laws and is effectively the essential aspect of the transaction.
However, a transaction designed to improve the functioning of an enterprise is considered a
legitimate tax saving (e.g. as part of company reorganisation);
•
doubling the time limits for tax assessment, which is now only admissible if the charge
brought by the judicial authority is materially carried out before the expiry of the ordinary
time limits for assessment. This new measure cannot be applied to proceedings already in
progress. This regulation was also further amended in the 2016 “Stability Law”;
•
co-operative tax compliance by putting organised corporate systems in place to manage and
monitor taxation in large size companies. The purpose of this provision is for the tax
authorities to take on a new role in relations with taxpayers, one purpose of which is to
prevent tax litigation;
•
the general introduction of electronic invoices;
•
modifications to tax collection laws to give taxpayers an incentive to pay of their own accord,
including more extensive payment instalment formats and lighter penalties for minor
infractions;
•
changes to criminal penalties, setting new criteria for defining tax fraud and the minimum
amounts punishable as a criminal offence. Also, the law on criminal penalties for filing a
tax return “in bad faith” has been significantly changed, as (i) the minimum amounts for
which this violation can be considered a crime have been raised, and (ii) new measures
have been introduced to exclude criminal penalties in the event of improper classification or
valuation of balance sheet items. A further point concerns the “dutiful acknowledgement of
unpaid taxes”, which makes some tax crimes no longer punishable in cases in which
spontaneous payment of tax debts is carried out before the taxpayer learns of assessment
activity already commenced by the tax authorities. As for civil law administrative penalties,
they are now (as from 2016) proportional to the amount of unpaid taxes and also a function
of whether the taxpayer’s intent is considered insidious (as per the 2016 “Stability Law”); in
light of the principle of favor rei, the new calculations can be extended to penalties relating
to past years;
•
tax litigation, where out-of-court “deflationary” instruments are introduced with regard to
all litigation independently of the tax levying institution and at all instances of judgement.
Similarly, precautionary protection for taxpayers is introduced at all stages of tax litigation
– suspension of orders, effects of rulings, etc. – as is the immediate enforcement of the
rulings, while the effectiveness of a ruling in favour of the taxpayer may be made subject to
the provision of appropriate guarantees by the judge;
•
changes to tax law regarding the conversion of credit into equity (previously established
under art. 113 of Presidential Decree No. 917 of 22nd December 1986). Credit institutions
are no longer required to have purchased equity interests in the context of credit recovery
actions or in a conversion of debt into newly issued shares for companies in temporary
financial difficulty, in order to submit a request to the tax authorities for an opinion vis-àvis not applying the typical exemption from capital gains tax on the equity interests
acquired;
•
“private letter”/“tax clearance” procedures are broadened and streamlined. The principle of
the general application of “silent consent” is introduced for interpretation proposals made
by taxpayers where the period set for reply, in some cases reduced from 120 to 90 days,
has expired. Furthermore, there are now fewer cases in which it is mandatory to submit an
advance request for an opinion to the tax authorities.
Decree Law No. 83 of 27th June 2015 (Urgent measures concerning bankruptcy, civil law
and the functioning of judicial administration).
This decree, converted into a full law (No. 132 of 6th August 2015), contains significant
changes to the rules on the tax deductibility of losses and impairments taken on loans to
customers by credit institutions. According to the tax rules already in force until the end of
2012, write-downs were deductible up to 0.30% of total outstanding loans at the end of the
184
year. The remaining part of the deductible amount was spread over the following 9 or 18 years,
depending on the year in which they occurred. With Law No. 147 of 27th December 2013, the
2014 Legge di Stabilità (“Stability Law” – annual finance act), that regime was changed with
effect from 2013 with the spread of losses (other than those arising from the sale of loans and
receivables) and write-downs over five years. The deductibility of these costs was introduced
on a similar basis for IRAP (regional production tax) purposes.
Effective from the 2015 fiscal year onward, losses and impairments on loans to customers
become immediately tax deductible, thus aligning taxation on the Italian banking system with
the criteria in place in the other major EU member states in this respect. In this way, a factor
that had been distorting competition, and at the same time discouraging lending, has been
eliminated. That same decree contains measures to simplify and speed up legal proceedings
taken by creditors against debtors that will thereby allow banks to manage problem loans
more effectively and rapidly from a legal and taxation viewpoint.
For the 2015 fiscal year only, for the evident purpose of sustaining tax receipts, the items
described above will be 75% tax deductible, while the remaining 25% will be added to
impairments and losses pertaining to previous years that as at 31st December 2014 had not
yet been recovered in terms of taxes.
The total amount not deducted arising in this manner will be recovered from a tax viewpoint
over a period of 10 years – from 2016 to 2025 – on the basis of annual percentages specified in
the legislation and these will replace the recovery percentages and the schedules originally
recorded for companies. In practice, the government has reprogrammed the tax deductions for
the costs in question on the basis of estimates of expected tax revenues over the next decade.
One consequence of the above, is the expected no change in the tax rules for the purposes of
calculating the amount of corporate income tax (IRES) to be paid on account for the three-year
period 2015-2017, or in other words the version of the provisions contained in article 106,
paragraph 3 of Presidential Decree No. 917 22nd December 1986 in force prior to the
amendments made by the Decree will be maintained. The amendment described above is also
applicable for the purpose of the regional production tax (IRAP).
With account taken of the Consob/Bank of Italy/Isvap (insurance authority) Document No. 5
of 15th May 2012, the different timing for the tax recoveries of the annual excesses will have no
impact on the amount of the DTAs recognised in balance sheets for IRES and IRAP purposes.
This same decree law also introduces a rule that is unfavourable to the banking sector, whereby
for extraordinary transactions executed as from 2015, DTAs recognised in balance sheets in
order to realign the values of intangible assets (e.g. goodwill and trademarks) in statutory
accounts with those in tax accounts can no longer be converted into actual tax credits pursuant
to Decree Law No. 225 of 29th December 2010 (converted, with amendments, into Law No. 10 of
26th February 2011). The new measure does not affect the conversion into tax credits of DTAs
already present on the balance sheet that are associated with previous years.
Law No. 186 of 15th December 2014 (voluntary co-operation)
This law – which enabled taxpayers (chiefly natural persons) with undeclared assets held
abroad to regularise their tax position with regard to prior fiscal years – generated only limited
effects on income and assets, owing to the complexity of the procedure, to repeated legislative
postponements, as well as to these taxpayers’ choices.
Related transactions have had a significant bearing on anti-money laundering procedures and,
strictly in terms of tax matters, on the identification of various financial instruments already
held abroad.
FATCA Regulations and automatic exchange of tax information at international level
FATCA – on 7th July 2015 the law was published in the Official Journal that ratifies the
agreement between the Italian government and the United States government designed to
apply the FATCA legislation and implement the automatic exchange of the information
resulting also from agreements with other foreign countries (Law No. 95 of 18th June 2015).
This law, in force from 8th July 2015, has retroactive effect from the 1st July 2014.
The original purpose of FATCA was to provide the United States of America with certain
financial information about natural and legal persons, so as to verify the presence of United
States persons. The regulations stipulated that individual agreements were to be signed
between US tax authorities and financial intermediaries and other institutions located outside
185
of the USA. FATCA was then changed to allow agreements to be reached between sovereign
governments, so as to regulate application of the procedures in various countries around the
world and overcome the impediments associated with needing separate agreements with each
individual financial institution. The need to endorse FATCA stems from the possibility of
receiving tax treatment that is not penalising with regard to income flows from the USA
belonging to both financial institutions themselves and their customers.
In this context, the Italian government, along with other countries, signed an
intergovernmental agreement (an “IGA model 1”) according to which, under the FATCA
procedures and on the basis of reciprocity between countries, in return for information
transmitted by Italy to the United States, similar information will be transmitted by the United
States to Italy. Thanks to this intergovernmental agreement, information is now exchanged
between the two countries’ tax authorities and no longer through individual financial
intermediaries and other institutions required to collect information relevant for FATCA
purposes.
The Italian law to ratify this agreement, an implementation/supplement ministerial decree
issued on 6th August 2015, as well as instructions issued on 7th August 2015 by the Director
of Agenzia delle Entrate on how the information should be submitted, together aim to provide
financial institutions with the information they need to activate this exchange of information
by implementing appropriate procedures in terms of both customer due diligence and
subsequent submissions of information to the tax authorities.
The first transmission of information on United States financial accounts or in other words
relating to financial institutions that do not adhere to FATCA was made by intermediaries to
the tax authorities by 31st August 2015, while the transmission by the latter to the United
States tax authorities took place with a deadline of 30th September 2015.
The FACTA legislation affects the main companies in the Group (classified as financial
institutions required to make FATCA reports), with the exception of UBI Leasing, UBI Factor,
Prestitalia, BPB Immobiliare, S.B.I.M., UBI Sistemi e Servizi and UBI Academy.
The UBI Banca Group rendered its processes and procedures compliant with the FATCA
regulations from the date on which they took effect retroactively (1st July 2014).
INFORMATION SHARING – On 29th October 2014, over 50 countries, including Italy, agreed to the
automatic multilateral exchange of information on financial accounts held by non-resident
customers with financial institutions according to a Common Reporting Standard (CRS)
broadly based on FATCA regulations.
Furthermore, on 1st December 2014 the European Council amended the directive on
administrative and tax co-operation (Dir. 2011/16/EU – known as "DAC") by means of a
further directive (Dir. 2014/107/UE – “DAC 2”), providing for the automatic exchange of
information based on the CRS standard between EU member countries. In Italy, both the CRS
and the DAC 2, which had both been partially implemented under Law no. 95/2015, came
into force on 1st January 2016. An implementation/supplement ministerial decree for the two
directives, signed on 28th December 2015, was published in the Official Journal on 31st
December 2015. Under these regulations, financial intermediaries must fulfil significant
compliance duties. Notably, intermediaries must notify Agenzia delle Entrate (the Italian tax
authorities) of all financial accounts held by residents of 53 specific countries by 30th April
2017, and all accounts held by residents of a further 23 countries by 30th April 2018, as listed
in an appendix to the decree.
The UBI Banca Group is currently updating its CRS and DAC 2 processes and protocols even
though Agenzia delle Entrate has yet to provide instructions on how the information should be
submitted.
Under this emergent framework, financial institutions are required to set up an up-to-date
computer system to identify customers, their tax residence and, if residents outside of Italy,
their foreign tax identification numbers wherever applicable, so as to transmit this information
to Agenzia delle Entrate, which will then forward it to the tax authorities in the customer’s
country of residence.
The onerous nature of procedures of this kind is very clear and it accompanies similar
obligations, not entirely replicable, ordinarily provided for by domestic tax regulations.
Law No. 190 of 23rd December 2014 (Patent Box Law)
The Patent Box is a tax incentive whereby a portion of a company’s income attributable to the
use of inventions, industrial patents, trademarks, or legally protected innovative processes or
186
formulas may be exempted from taxation. It is applicable for the purposes of both IRES
(corporate income tax) and IRAP (regional production tax) and is valid for five years.
Companies wishing to benefit from this incentive must file an application in advance to the
Italian tax authorities containing basic information about the intangible assets that could
generate income eligible for the tax exemption; they must subsequently submit a request for
the tax authorities’ estimate of the effect this income exemption will have. The UBI Banca
Group filed such an application during the 2015 financial year with regard to its trademarks
and copyright-protected software.
Law No. 208 of 28th December 2015 – Legge di Stabilità 2016 (the “Stability Law”, i.e.
annual financial law for 2016)
Of the many and varied tax measures contained in Italy’s 2016 financial law, those pertinent
to the banking sector are as follows:
- as from 2017, the IRES rate will be reduced from 27.5% to 24%;
- as from the same year, a supplemental IRES of 3.5% will be levied on lenders and other
financial institutions. This supplemental tax will be applied to each individual company,
regardless of whether that company belongs to a group that has opted for tax consolidation;
- as from 2017, repeal of the non-deductibility, for the purposes of IRES and IRAP, of 4% of
interest expense for banks and other financial institutions; as such, all interest expense will
henceforward be tax-deductible;
- a 40% premium is to be applied to the cost of new capital goods purchased between 15th
October 2015 and 31st December 2016 for the purpose of depreciation calculations. This
premium is applicable even if the purchase is made through a leasing contract;
- the amortisation period will be reduced from ten years to five for intangible assets (e.g.
goodwill and trademarks) booked in accounts as from 1st January 2016 if they are related
to company mergers or acquisitions effective on or after that date and fiscally realigned
pursuant to Article 15, paragraph 10 of Law Decree No. 185 of 29th November 2008;
- the new penalty system set out in Decree Law No. 158 of 24th September 2015 (as cited
earlier) became effective on 1st January 2016. These new measures are also applicable to
measures that have been announced but not yet established in detail;
- as from 2016, changes will be made to regulations concerning “blacklisted” countries,
particularly with regard to the method of determining expenses and income pertaining to
residents of those countries. The main criterion foreseen to determine a resident company’s
specific tax obligations is a nominal foreign income tax rate 50% below the rate that would
be applied in Italy;
- permanent extension of a tax credit of 65% of the amount spent as donations to cultural
projects and artistic heritage restoration projects (the so-called “Art Bonus”);
- changes to limits on the use of cash as a payment method (raised from €1,000 to €3,000)
and more general changes to payment method regulations;
- changes to the statute of limitations for tax audits on IRES, IRAP and VAT: notifications
may be submitted up to the fifth year after tax returns are filed or the seventh year after the
fact in the event of failure to file a tax return. The clause whereby the statute of limitations
is doubled if criminal violations are involved has been abrogated. These new limits will be
applied as from tax returns on 2016 income and notifications that have already been made
remain valid;
- cancellation of a previous law that would have raised VAT as from 2016, although VAT
increases from the current rates of 10% and 22% are still foreseen in 2017 and 2018;
- changes to the legislation on corrections to VAT due, originally established in Article 26 of
Presidential Decree No. 633/1972.
The law also contains more general measures pertaining to all businesses:
- “corporate welfare”, whereby companies are not taxed on labour for social services or social
works projects;
- a one-year extension on the option to revaluate the company assets and investments
declared in 2014 financial statements.
***
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With regard to interpretations we report that interpretation practices issued by the tax
authorities mainly involved provisions introduced by Law No. 190 of 23rd December 2014 (the
Legge di stabilità, “stability law” or 2015 annual finance law), such as the “split payments” or
“reverse charge” and IRAP. The following circulars worthy of mention issued in the 2015 are as
follows:
•
•
•
•
Circular No. 36/E/2015: Patent Box – the tax authorities provided instructions and
deadlines for submitting applications for the tax exemption procedure, with clarifications
regarding how the Patent Box option can be exercised and its effects;
Circular No. 22/E/2015: providing recommendations on the IRAP (regional production tax)
expense regime for employees with permanent contracts, the tax authorities clarified the
operational details for cases of personnel on secondment;
Circular No. 21/E/2015: the tax authorities provided recommendations on interpretation
and application regarding the increase in the Aiuto alla Crescita Economica (ACE – aid to
economic growth) subsidy and the transformation of excess IRES tax into an IRAP tax
credits. The clarifications do not have a direct impact on tax for the UBI Banca Group,
although it confirms the correctness of the Group’s practices with regard to the calculation
of intragroup loans;
Circular No. 9/E/2015: on the subject of credit for foreign taxes in relation to receipt of
income produced abroad by a taxpayer who is a natural person or company, the circular
confirms the correctness of the tax treatment practised in the various tax periods by the
UBI Banca Group.
Investor and Media Relations activities
Relations with international markets and the media are managed on a centralised basis by a
specialist area at UBI Banca which reports directly to the Chief Executive Officer. This area is
also responsible for programming and organising institutional events and Parent sponsorships
as well as supporting the communication activities of Group companies.
The integration of the above activities enables synergies to be created in the production and
distribution of content directed mainly outside the Group, but also internal to it and to
thereby improve co-ordination (in terms of synchronising timing, the use of a variety of
channels, including digital channels, and the details of messages) in communications with the
principal stakeholders.
Investor Relations: relations with analysts and institutional investors
The year 2015 saw the growth of interest in the Group on the part of financial markets, in
search of solid realities in a context that is, in certain regards, still somewhat difficult and
uncertain. The investor relations unit therefore paid particular attention not only to
maintaining existing relationships but also to gaining access to new investors both in the
“equity” (investors in shares) and in the “debt” (investors in Group debt instruments) markets.
Opportunities for interaction with the financial community multiplied both through the use of
the well-established tools of press releases, conference calls and presentations mainly
addressed to the general public at large and through a greater frequency of meetings with
investors and international investors in particular.
As concerns analysts, the UBI Banca Group is currently followed by 23 brokerage houses (the
“sell side”) of which 18 are international and the remainder Italian and by a very large number
of analysts (the “buy side”) belonging to investment houses.
As concerns activities with investors, over the twelve months of 2015 senior management
and/or the investor relations team met over 500 institutional investors (equity and debt).
These investors are generally seen several times during the year.
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As a result of this intense activity, according to the results of the most recent survey of
shareholders relating to August 2015, institutional investors identified by name held around
40% of the share capital of UBI Banca.
Media Relations
The objective of media relations activity is to favour transparency, by promoting constant,
prompt, impersonal and organised access to the bank and to all important information for the
media.
The public agenda for media in 2015 was marked by the principal topics currently affecting
the development of the Italian and European banking systems: single supervision in Europe
and the change in status for many of Italy's leading banks to joint stock companies were the
matters that received most coverage by national newspapers and radio and television news
programmes.
Additionally, the apparently irreversible trend, toward the ever-growing use of digital media for
all issues related to products and customer services continued.
In this context, the Group's strategy is oriented toward the consolidation of the interaction
between Media and Investor Relations in order to ensure homogeneous and detailed
information on financial and regulatory topics that affect the bank and the sector. At the same
time the Group sought to increase its proactive support, in order to better reflect:
 The Group's relevance to the growth process of the Italian banking system and its ability to
respond to new regulations, confirming its values of solidity and dependability;
 the quality of its commercial actions, through products, services and behaviour consistent
with the principle of "fare banca per bene" (being a good banker);
 the ability to innovate for private customers, also in light of the massive on-going trend
toward digitalisation, for companies increasingly facing significant development and
internationalisation processes and for the third sector, by now affirmed to be a fundamental
feature of the functioning of the market economy.
In order to pursue these objectives, the activities of the Media Relations office were directed at
both traditional and digital media, thanks to the work of the Digital Press Office, active since
2013.
As regards the activities of the network banks and product companies, of particular note are
the activities carried out in connection with the merger of IW Bank and UBI Banca Private
Investment and with the new Prestitalia business plan. At the same time, this area continued
to coordinate the media activities of the Group's subsidiary companies with regard to principal
company events (nominations, results, extraordinary operations, etc.).
The results: Traditional media
In 2015 UBI Banca was cited in 7,503 articles, 62.1% of which were relevant in that they
featured the description of the Group, the network banks, their activities and the economic
and commercial results achieved.
Readership (an estimate of the number of times in which articles on UBI Banca were read, as
determined by Audiopress surveys) reached 1.42 billion units, an increase of over 50 million
compared with 2014.
Based on the yearly analysis, carried out on behalf of UBI Banca by an independent auditor,
the number of relevant articles increased by approximately 10% compared with 2014.
Sentiment for the Bank is prevalently favourable: 11.5% of the articles were favourable, 83.9%
were neutral and only 4.6% were negative.
The over 538 positive articles were dedicated in 65.5% of the cases exclusively to UBI Banca: a
result providing excellent visibility, achieved primarily through the positive attitudes of the
media toward the change in status to joint stock company, the Group's solidity indicators and
its support of the third sector through its UBI Community initiatives .
Local newspapers published on Group markets again generated the largest number of articles
due to their large numbers, followed by national daily newspapers and specialist periodicals in
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the economic and financial spheres and finally by non-specialist publications. The Group was
also featured in numerous articles in the international press.
The results: the Digital Press Office
The activities of this office, thanks to the development of language and tools specific to internet
sites, smartphones and social media, provided a clear indication of the growing presence of
UBI Banca on digital media.
During the year 2015 there were 24,356 articles, an increase of 88% compared to the 12,957
in 2014 and 136% when compared to 2013: in two years articles featuring the Group
published on digital media sites more than doubled.
Sharing on online social media of those same pieces totalled 780,328, bringing the “virality
index” (the number indicating the average times each article is shared on social media) to 32.0
on an annual basis (18.7 in 2014). The online articles shared by users increased by +486% in
two years.
Against the growing interest in digital articles, social media posts are falling: 7,469 compared
to the 12,596 in 2014, although social media shares of posts mentioning the Group grew:
90,670 in 2015 compared to 71,813 in 2014.
UBI Banca events and sponsorships
The most significant events of 2015 are summarised below:
- Roadshow Soci (Shareholder Road Show): the Presidents and top management held two sets
of meetings with shareholders, in April and in September.
The April meetings were devoted to illustrating the results achieved during the course of the
previous year and the guidelines for future development, while the special September
meetings explained to shareholders the laws and the Bank of Italy regulations related to the
change of status to joint stock company of eight of Italy's leading "popular" banks.
Returning to the now traditional formula which sees meetings in the cities with the greatest
Group presence, the road shows were held in Bergamo, Brescia, Milan, Cuneo, with video
links with Varese and Darfo Boario Terme;
- International Banking Forum: the seventh edition of this biennial event took place during
two days in the Conference Hall of the UBI Banca Brescia headquarters; attending were
representatives from the Group's primary Correspondent Banks, in addition to economists
and experts on the Italian and international banking systems. Promoted and organised by
the Group, many of the most important economic and financial topics facing the sector
were discussed; this edition, given the concurrence of the 2015 Milan Expo, was dedicated
to exploring the connections between finance and the agri-food production system;
- “A discussion on the internationalization of Italian Companies”: held at the Italian
Consulate in New York City, in view of the future opening of a UBI Banca representative
office, this event featured a discussion of the growth prospects for Italian businesses in the
current economic environment.
Participating were the Group's top management, in addition to representatives from
international banks, New York branches of Italian banks and the primary Italian economic
institutions present in the city.
Generally with regard to sponsorships and cultural activities, while the economic environment
required attention to costs and therefore a certain rationalisation of events, the Group decided
to maintain long-standing relationships such as its partnership with the Einaudi Centre for
the Report on the global economy and Italy (in 2015 fifteen meetings were organised in towns
and cities which included Milan, Bergamo, Brescia, Turin, Cuneo, Varese, Como, Genoa and
Jesi, to end the series in Rome) and the partnership with the Accademia Teatro alla Scala (La
Scala Theatre Academy) with the organisation of events for Group customers and financial
support to train students at the Academy.
Again in 2015 UBI Banca was the primary sponsor of "Supernova", the Italian festival
organised by Talent Garden to bring together innovation and creativity, held in Turin on 26th
and 27th September and in Brescia from the 2nd to the 4th of October. Overall, the event
welcomed over 80,000 visitors, involving institutions, businesses and civil society with the aim
of raising awareness among all citizens of their fundamental role in defining future changes.
190
UBI Banca supported this initiative because it believes very strongly that one of the main
resources the country can use to drive economic growth again is the strength of ideas and
plans, especially those generated by young people.
Finally, among the many initiatives carried out in the social sector, of note is the partnership
finalised between UBI Banca, Banco di Brescia and Banca di Valle Camonica with the nonprofit Associazione Time to Love Onlus for the project “Nulla può accadere senza un incontro
(Nothing can happen without a meeting)” which, through support for the Buni Sehat
Foundation of Bali (Indonesia), helps hundreds of women each year to give birth, even in cases
of extreme urgency and difficulty.
In addition to those activities organised by the Parent, the network banks continue to support and organise
local initiatives some of which are based on very long-standing partnerships, with a view to supporting and
being close to the local communities in which they operate.
The “Italian Responsible Payments Code”
The UBI Banca Group has adhered to the “Italian Responsible Payments Code” organised by
Assolombarda (Lombard employers’ association) since 15th October 2014.
As a consequence, the Group is committed to rigourously complying with the terms and
conditions of payment agreed in each purchase contract.
At present UBI Banca Group suppliers have signed contracts which involve payment terms
ranging from a minimum of on receipt of invoice up to a maximum of 120 days from the date
of invoice (a very marginal proportion accounting for 0.039% of the total).
The average supplier payment time in 2015 was approximately 33 days.
Social and environmental responsibility
The UBI Banca Group pursues policies oriented towards the creation of sustainable value, in
compliance with the values and principles set out in its Charter of Values and Code of Ethics
and with the ethical, social and environmental expectations of its stakeholders. It does this
through a strong and distinctive corporate identity, the pursuit of a climate of trust with its
staff, its shareholder base and markets and through its robust control of risks, including
reputational risks.
The year 2015 saw the conclusion of the project, begun the previous year, for the transition to
the new GRI-G4 version of the guidelines for reporting to stakeholders proposed by the Global
Reporting Initiative. The project, in addition to redefining the framework and the contents of
the Social Report, which from the present edition takes the new name of Sustainability Report,
directly involved top management for the identification of the most relevant sustainability
topics for the Bank and its stakeholders and in the subsequent planning of objectives and
initiatives.
The principal governing tool of the Group's social and environmental responsibility is its Code
of Ethics, currently being updated to reflect not only UBI Banca's new status as a joint stock
company, but also the new stakeholder map, affirming the universal principals of the United
Nation's Global Compact, to which the Group has adhered and which it has undertaken to
promote and respect. The Sustainability Report also includes a Communication on Progress
section, providing information for stakeholders on the implementation of the principles set out
by the Global Compact.
In 2015 there were four reports of alleged violations of the Code of Ethics (two in 2014, four in
2013 and nine in 2012). At year's end two reports were still being evaluated by the auditors
responsible, while the investigations carried out into the remaining two reports did not result
in the confirmation of any violation.
191
Referring for all further details to the Sustainability Report - the publication of which is
forthcoming - subject to independent auditing by the independent auditors Deloitte & Touche
Spa, the present section provides the principal results achieved during the year in the three
aspects of sustainability: economic, social, and environmental.
Economic value generated and distributed to stakeholders
In 2015 the Group generated economic value of €2.7 billion, essentially unvaried (-0.6%)
compared to the previous year.
The economic value distributed to stakeholders was €2.6 billion (+1.0% compared with 2014),
composed as follows:
 53.0% to employees for salaries, training and company benefits;
 21.8% to suppliers for the purchase of goods and services;
 19.9% to the public administration for taxes and contributions to the Bank Resolution
Fund and to the Deposit Guarantee Scheme (DGS European Directive), contributions in the
context of treasury management services;
 4.9% to shareholders in the form of dividends and to third-party subsidiary shareholders;
 0.4% to the community in the form of donations to institutions and non-profit
organisations for social activities.
Social responsibility
The attention to its staff is a distinguishing feature of UBI Banca's social responsibility and is
concretely implemented through its on-going training programmes (approximately 87
thousand hours of training provided in 2015), in the promotion of workplace health and safety
(€1.5 million spent for prevention and support activities), and in its dedication to equal
opportunity. Also particularly relevant are the Group's company benefit initiatives, with
attention to the balance between work and family (work flexibility, leaves), supplementary
health and pension plans (€51.8 million), study awards and other grants to families (€4.8
million), discounts on banking products and services, support of company recreational clubs
(€483 thousand), and services such as shuttle buses, children's nurseries and summer camps
(€1.2 million).
In the commercial sector, action continued during the year to assist families and businesses
affected by the economic crisis, in addition to partnerships with local non-profit organisations,
as described in the section on commercial activities, which may be consulted for further
details.
Environmental responsibility
In addition to full and substantial compliance with the relative regulations and legislation in
force, the Group contributes, within its own sphere of responsibility, to sustainable economic
development according to the lines of action identified by the environmental policy approved in
December 2008.
In co-operation with the CSR Manager, the Group Energy Manager and Mobility Manager are
the main protagonists assigned the duty of developing initiatives designed to reduce direct
impacts, such as the rational and responsible management of resources, the reduction and
proper management of waste, the reduction of emissions of harmful substances into the
atmosphere and the diffusion of virtuous behaviour by staff.
2015 confirmed the trend towards the reduction of energy consumption, achieved, among
other fashions, thanks to initiatives seeking to modernise and to render the Group's offices
and equipment more energy efficient. In compliance with Legislative Decree 102/2014
"Implementation of EU Directive 2012/27 on energy efficiency", in 2015 eleven energy audits
were performed, which lead to a series of activities aiming to reduce energy consumption.
Electrical power-related CO2 emissions have been drastically reduced through the purchase of
“guarantee of origin” (GO) certificates for electricity produced from renewable sources, for over
99% of the electrical power supplied to the Group.
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In order to promote the rational and respectful use of paper and energy, in 2015 the Group
launched a series of awareness and training initiatives for its employees, such as the online
course “Risparmio Energetico - L’energia consapevole (Energy Awareness - Energy Saving)”
taken by over 12,400 employees.
As concerns indirect impacts, the Group has been active for some time in its commercial
activities with “green” products, and that is credit lines (ordinary and project finance) provided
for investments in energy savings and in the diversification of energy sources, above all from
renewable sources or those with a low environmental impact, by both individuals and
businesses.
Social intervention
The Group's social responsibility is also expressed through the allocation of a portion of the
economic value generated by its activities for the support and improvement of the extensive
network of local non-profit organisations operating in the sectors of volunteer work, recreation
and sports, assistance and solidarity, instruction and training, culture, university and
research, the conservation of artistic heritage and environmental protection.
The network banks and the product companies operate independently in response to the
demands they encounter in local communities and consider consistent with their own values
and social responsibility objectives. They co-ordinate with the Parent on the larger projects.
The Foundations are all separate from the Group: they are not subject to the Parent's policy
and supervision functions and operate exclusively in conformity with their own institutional
guidelines.
While greater detail is provided in the Sustainability Report, in which the activities conducted
during the year are reported in accordance with the international standards recommended by
the London Benchmarking Group, here we report the overall amount of contributions made:
€14.9 million, of which €11.4 million in donations (including donations made in connection
with the issue of UBI Community social bonds for €531.5 thousand and contributions made in
the context of treasury management and payment and collection services to specific
destinations totalling €2.3 million) and €3.5 million for social sponsorships.
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Principal risks and uncertainties to which
the UBI Banca Group is exposed
Risks
The UBI Banca Group attributes primary importance to the measurement, management and
monitoring of risk, as activities necessary to the sustainable creation of value over time and to
the consolidation of its reputation on its markets.
In compliance with the regulations in force for the prudential supervision of banks (Bank of
Italy Circular No. 285/2013), the Group has put a process in place to calculate its capital
adequacy requirement – for the present and the future – to meet all significant risks to which
the Group is or might be exposed (ICAAP - Internal Capital Adequacy Assessment Process).
In this respect very careful identification is performed on a continuous basis of the risks
subject to measurement. Risk identification activity is designed to verify the magnitude of
Group risks already subject to measurement and to detect signals of other types of risk which
may manifest. Identification involves precise conceptual definition of the risks to which the
Group is exposed, an analysis of the factors which combine to generate them and a description
of the relative manner in which they manifest. This activity is achieved by means of a
centralised process of analysis supplemented by self assessment conducted on all the entities
of the Group.
Once the activity to identify significant risks is completed, the ICAAP process involves the
measurement of the risks identified and the calculation of the “Available Financial Resources”
(AFR)1 required to meet them (capital adequacy), both at present and in the future. Use is also
made of specific (by assessing impacts on a single risk) and global (by assessing impacts on all
risks at the same time) stress tests to perform a better assessment of exposure to risk and of
systems for mitigating and monitoring it and calculating capital requirements.
The UBI Banca Group has a system of risk governance and management in place which takes
account of organisation, regulations and methods in order to ensure consistency in its
operations and its relative risk appetite (RAF - Risk Appetite Framework).
In consideration of its mission, its operations and also the market context in which it operates,
the risks to be subjected to measurement in the ICAAP assessment process have been
identified and divided into the categories: First Pillar and Other Pillar risks.
First pillar risks – already managed under the requirements of supervisory regulations – are as
follows:
•
credit risk (including counterparty risk): the risk of incurring losses resulting from the default of a
counterparty with whom a position of credit exposure exists. This also comprises counterparty risk in
the definition, which constitutes a particular type of credit risk. It is the risk that a counterparty to a
transaction defaults before final settlement of the cash flows on the transaction;2
•
market risk: risk of changes in the market value of financial instruments held, due to unexpected
changes in market conditions and in the credit rating of the issuer;
1 Available financial resources (AFR) or alternatively total capital, is defined as the sum of the capital items that the Group considers
can be used to meet “internal capital” and “total internal capital” requirements. “Internal capital” is defined as risk capital, the
capital requirement for a determined risk that is considered necessary to cover losses above a given expected level. “Total internal
capital” is defined as internal capital required for all significant risks assumed by the Group, including possible internal capital
requirements due to considerations of a strategic character.
2 Exposure to country risk (risk of losses caused by events occurring in a country other than Italy) and transfer risk (the risk that a
bank, exposed to a counterparty which is financed in a currency that is different from that in which it receives its main sources of
income, incurs losses due to the difficulties of a debtor in converting its currency into the currency in which the exposure is
denominated) are also monitored as part of credit risk.
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•
operational risk: the risk of incurring losses resulting from the inadequacy or malfunction of
procedures, human resources and internal events or from exogenous events. This includes losses
resulting from fraud, human error, business disruption, system failure, non-performance of contracts
and natural disasters and it comprises legal risk3.
In addition to first pillar risks, other risks were identified, consisting of the following:
-
-
-
measurable risks, for which established quantitative methods have been identified, which lead to the
determination of internal capital and which, combined with qualitative measurements, allow
allocation and monitoring processes to be defined;
risks subject to quantitative limits, for which operational limits can be defined consistent with risk
appetite (of a quantitative nature and on which there is a broad consensus including in the literature,
or subject to regulatory requirements) for their measurement and monitoring and mitigation;
non-measurable risks, (or risks subject to assessment) for which policies and measures for control,
reduction or mitigation are considered more appropriate because no established approaches exist for
the measurement of internal capital that are useful for allocation purposes.
The Other Risks subject to analysis are as follows:
MEASURABLE RISKS
•
•
•
•
•
concentration risk: risk resulting from (i) exposures to counterparties, including central
counterparties, groups of connected counterparties and counterparties in the same economic sector,
in the same geographical region or who carry on the same activity or deal in the same goods and (ii)
the application of credit risk mitigation techniques including, in particular, risks resulting from
indirect exposures such as for example with regard to single suppliers of guarantees;
interest rate risk arising from activities other than trading: the current or future risk of a change in net
interest income and in the economic value of the Group following unexpected changes in interest
rates which have an impact on the banking book;
business risk: the risk of adverse and unexpected changes in commission margins with respect to
forecasts, connected with volatility in volumes of business due to competitive pressures and market
conditions;
equity risk: the risk of losses incurred in equity investments that are not fully consolidated on a lineby-line basis;
fixed asset risk: the risk of changes in the value of the tangible fixed assets of the Group.
RISKS SUBJECT TO QUANTITATIVE LIMITS
•
•
liquidity risk: the risk of the failure to meet payment obligations which can be caused either by an
inability to raise funds or by raising them at higher than market costs (funding liquidity risk), or by
the presence of restrictions on the ability to sell assets (market liquidity risk) with losses incurred on
capital account4;
excessive leverage risk: the risk that too high a level of debt with respect to its own funds would make
a bank vulnerable thereby making the adoption of corrective action to its business plan necessary,
inclusive of the sale of assets with the realisation of losses, which could result in the recognition of
impairment losses on the remaining assets.
NON-MEASURABLE RISKS, (OR RISKS SUBJECT TO ASSESSMENT)
•
•
•
•
•
compliance risk: the risk of incurring legal or administrative penalties, substantial financial losses or
damage to reputation resulting from violations of laws and mandatory external regulations or internal
regulations (by-laws, codes of conduct and voluntary codes);
reputational risk: the present or future risk of incurring loss of profits or capital resulting from a
negative perception of the image of a bank by customers, counterparties, shareholders of the bank,
investors or supervisory authorities;
residual risk: the risk that established methods of mitigating credit risk used by a bank are less
effective than expected;
strategic risk: the current or future risk of a fall in profits or in capital resulting from changes in the
operating context, errors in corporate decision-making, inadequate implementation of decisions,
failure to react to change in a competitive environment;
risks resulting from securitisations: the risk that the underlying economic substance of a securitisation
is not fully reflected in decisions made to measure and manage risk.
3 IT risk is also considered in this class, defined as the risk of incurring economic loss and loss of reputation and market share in
relation to the use of information and communication technology (ICT).
4 Liquidity risk as defined above also comprises consideration of medium to long term (structural) equity risk resulting from a
mismatch between the sources of funding and lending.
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Details are given below of risks which have significant impacts for the UBI Banca Group and
the action taken to mitigate them. It is considered that risks other than those reported below,
which are of marginal importance within the Group, will not change during the course of the
year.
Credit risk
Credit risk, which consists of the risk of incurring losses resulting from the default of
counterparties with whom credit exposure exists, constitutes the most important
characteristic risk of the UBI Banca Group. On a historical basis it absorbs around 90% of the
regulatory risk capital.
The Group has always considered the quality of its loan portfolio and efficient management of
non-performing (previously termed “deteriorated”) loans to be one of its top strategic priorities.
In this sense, activity continued again in 2015 to optimise credit processes with the following
aims:
- to maintain the percentage of the high risk lending portfolio within performing loans
extremely low;
- to manage forborne positions effectively;
- to reduce flows of performing loans to non-performing (previously termed “deteriorated”)
status;
- to manage the gradual reduction of the non-performing loan portfolio by means, amongst
other things, of carefully targeted disposals outside the Group;
- to optimise the process for the management of guarantees to back loans, by, amongst other
things, acquiring increasingly more accurate and complete information.
In 2016 the UBI Group intends to refine its processes and its integrated IT platform for the
management of default loans by means of specific action designed to further strengthen credit
risk management and processes for the approval of credit authorisations through automated
integration of monitoring processes managed using PEF (Pratica Elettronica di Fido) software.
Also, with regard to the risk of incurring losses resulting from the depreciation of the value of
assets lodged as collateral to guarantee loans which, in the current economic context, could
reduce in value thereby diminishing the intrinsic level of protection, as a consequence of its
lending policies the UBI Banca Group has lower loan to value ratios than the average for the
sector nationally.
Business risk
The current scenario of slow and weak economic recovery is continuing to have a negative
impact on operating conditions in the banking system. This was accompanied by a strongly
expansionary monetary policy in a scenario of continuously falling interest rates, now at
minimum levels. In this context, there is particularly strong competition on prices with regard
to the loans granted by banks following access to forms of funding regulated by the European
Central Bank (i.e. Targeted Longer Term Refinancing Operations - TLTROs). The
macroeconomic environment, the extreme volatility on markets and the pressure of aggressive
competition resulting from the substantial liquidity flooding credit markets has compressed
margins and the profitability of operators. In this context the UBI Banca Group has taken
appropriate action on its distribution network designed to achieve goals identified in terms of
volumes and pricing of loans consistent with targets for the quality of credit.
Sovereign risk
The Group’s sovereign risk exposure continues to be concentrated in Italy consisting of
national government securities5. With regard to that risk for the banking book, the UBI Banca
Group is taking appropriate steps to increase the diversification of the portfolio and to
gradually reduce that concentration in compliance with strategic guidelines.
Detailed information on financial risk management objectives and policies and also on the
exposure of the Group to price risk, credit risk, liquidity risk and the risk of changes in cash
flows – pursuant to article 2428 of the Italian Civil Code – is given in Part E of the notes to the
consolidated financial statements, which may be consulted.
5 See the sub-section “Exposure to sovereign debt risk” in the section “Financial Activities” of this report for details of the value of
sovereign debt risk exposures.
196
Uncertainties
An uncertainty is defined as a possible event for which the potential impact, attributable to one
of the risk categories just mentioned, cannot be determined and therefore quantified at present.
The Group is operating in a scenario that is expected to improve, but which is nevertheless
overshadowed by certain risks, potentially negative for growth, connected with various sources
of tension. These factors of uncertainty could manifest with impacts attributable primarily to
credit, but without affecting the capital strength of the UBI Banca Group.
In detail, the main uncertainties identified for 2016 are linked to the following aspects:
-
developments in the macroeconomic situation. As found in 2015, the world economy should
continue to expand in 2016 although moderately, accompanied by low inflation and
characterised by consolidation of the recovery for developed countries and a slowdown in
the pace of growth in emerging countries. As concerns the euro zone more specifically,
signs of the recovery consolidating in a context of low levels of inflation are emerging in view
of stronger exports driven by a weaker euro on currency markets, by a fall in commodity
prices (primarily oil), by an increase in household wealth, a consequence of rallies on
financial markets in recent years and by the accommodative monetary policy pursued by
the European Central Bank which should ensure abundant liquidity and low interest rates
at least in the medium term. The macroeconomic scenario in Italy is again one of slow
improvement with a decidedly moderate pace of expansion. The improvement in the
environment in the eurozone has in fact had a positive impact on Italy, although with
growth rates penalised by continuing and significant structural problems. These prospects
of economic recovery, although at an extremely slow pace, appear to be vulnerable to
considerable downside risks in consideration of the negative impacts resulting from
potential external shocks. These regard the following: a possible deterioration on the
geopolitical scene (the outbreak of “large-scale” military conflicts and/or the possible spread
of terrorist attacks); a potentially greater than expected slowdown in Chinese growth and
that of emerging countries connected with energy resources and commodities; and looking
at the medium to long term future, the growing gaps between the monetary policies of the
major central banks, which today are all still pursuing strongly expansionary policies;
-
developments in the regulatory context. The regulatory context is subject to various
processes of change following both the issue of a number of regulatory provisions at
European and national level, with the introduction of the relative regulations to implement
them, relating to the provision of banking services and also the related legal
recommendations. This scenario requires particular effort both in terms of interpretation
and implementation and has at times directly affected the profits of banks, and/or costs for
customers. The UBI Banca Group continuously studies action to soften the impacts of
measures, which includes constant and attentive monitoring of operating costs and a
constant search for greater efficiency in internal processes.
With regard to aspects of immediate and future importance, we report the new IFRS 9
financial reporting standard and proposals to amend supervisory regulations with potential
impacts on loan write-downs and capital adequacy. Significant proposals include those
regarding the process for the classification and management of past due loans, a proposal
to revise the regulatory approach to the management, regulatory treatment and supervision
of interest rate risk and, with the aim of standardising the calculation of regulatory
requirements, a proposal to bring greater alignment at European level to some regulatory
areas by reducing national discretion and through changes to be made to internal rating
models for credit risk by the supervisory authorities 6 . Operational and reputational
difficulties and the costs of implementation could also be determined by the coming
adoption of the new Payment Services Directive (PSD2), by the Interchange Fee Regulation
6 Cfr. Draft Regulatory Technical Standards “On the specification of the assessment methodology for competent authorities regarding
compliance of an institution with the requirements to use the IRB Approach in accordance with Articles 144(2), 173(3) and 180(3)(b)
of Regulation (EU) No 575/2013, e “Public consultation on a draft of the regulation of the European Central Bank on the exercise of
options and discretions available in Union law”, novembre 2015.
197
(IFR) on multilateral interchange fees and by new regulations governing the compounding of
interest and transparency in banking;
-
Supervisory Review and Evaluation Process (SREP). The adoption of EBA guidelines on the
supervisory review and evaluation process carried out by the European Central Bank could
lead to the introduction of new supervisory practices, different from those previously
employed by national authorities. Further requirements in addition to the regulations
currently in force could arise, requiring specific action including that of an organisational
nature.
***
The risks and uncertainties described above were subject to a process of assessment designed, amongst
other things, to examine the impacts of changes in market parameters and conditions on corporate
performance. The Group does in fact possess instruments to measure the possible impacts of risks and
uncertainties on its operations (sensitivity analysis and stress tests in particular), which allow it to rapidly
and continuously adapt its strategies – in terms of its distribution, organisation and cost management
systems – to changes in the operating context. Risks and uncertainties are also under constant observation
through the implementation of the policies and regulations to manage risk adopted by the Group: policies
are updated in relation to changes in strategy, context and market expectations. Periodic monitoring of
policies is designed to verify their state of implementation and their adequacy. The findings of the analyses
performed show that the Group is able to meet the risks and uncertainties to which it is exposed, which
therefore confirms the assumption that it is a going concern.
198
Risks relating to health and safety at the workplace
(Legislative Decree No. 81 of 9th April 2008)
The multidisciplinary aspects of health and safety at workplace are constantly addressed and
managed by a special unit at the Parent (on the staff of the Chief Operating Officer who fills
the role for the bank of “Prevention Employer”) which has the following duties: (i) to oversee
the proper implementation of regulations concerning health and safety at the workplace; (ii) to
officially fill the role of the Prevention and Protection Service for Group companies for which a
specific service provision contract is in place; (iii) as a consequence to process and maintain
risk assessment documents; and (iv) in implementation, amongst other things, of Bank of Italy
provisions (Circular No. 285, 11th update of 21st July 2015 and “Clarification note” of 22nd July
2015) to fill the role of “compliance oversight specialist” in order to ensure risk oversight on
the specific question of safety at work of compliance risk based on general policies in the UBI
Banca Group.
In 2015 ordinary activities to update measurement of conventional risk prevention were
carried out by means of periodic on-site inspections conducted at the sites where staff in
Group companies work with the consequent preparation of reports and recommendations to
the competent units to draw up operational plans to eliminate and/or mitigate these risks.
This was accompanied by constant monitoring of the proper implementation of the health and
safety training programme, which is of primary importance in the prevention process. In
addition to these activities a particular focus was placed during the year on the following
aspects:
•
development of the occupational health and safety management system (HSMS) based on
UNI-INAIL guidelines, updating of the regulations establishing the health and safety policies
approved by the Supervisory Board and of the rule book governing related corporate
processes, and extension of the HSMS to the Group’s product companies;
•
completion of the related assessment of stress in the workplace, including the processing of
the subjective data gathered from all employees by way of the questionnaire designed by the
departments of Occupational Psychology and Medicine of a leading university;
•
verification of the effective implementation of new criteria for the management over time of
the compliance levels with an approach that is increasingly integrated in company risk
management processes;
•
analysis of criminal phenomena (robberies) which have a direct impact on the mental and
physical well-being of personnel.
The adoption of a health and safety management system
The adoption of a health and safety at the workplace management system (HSMS) based on UNI-INAIl
guidelines constitutes the concrete implementation of the recommendations already contained in the
“231” Model of Management and Organisation. It must be considered that the adoption of an HSMS is
not only designed to ensure that the “231” Model of Management and Organisation results in greater
release from administrative liability with respect to the commission of crimes on the question of
prevention (Legislative Decree No. 231/2001), but it also disseminates a shared and participatory culture
of safety partly through formulation of specific rules and procedures therefore ensuring that the “231”
model possesses the fundamental principle of efficacy in the specific area of the application of prevention
rules.
One further aspect not to be overlooked is the overall reduction in safety costs that can be achieved by
reducing errors, accidents and near accidents resulting from greater awareness by staff due to the lower
insurance premiums that INAIl (national insurance institute for accidents at the workplace) charges
companies that can demonstrate that they have adopted virtuous practices.
Extension of the health and safety management system to the product companies was achievable in 2015
when said companies adopted the system of accident prevention authorisations previously adopted by
the Parent, by UBI.S, and by the network banks, which is closely connected with the Group’s
organisation model and which calls for all core activities to be centralised within the consortium
company, including those activities that have a significant impact on meeting obligations that concern
the assurance of health and safety in the workplace.
199
Work-related stress assessment
On a par with risk assessment traditionally considered in a prevention context, the assessment of workrelated stress is a continuous and detailed process conducted in several connected and sequential
stages. The UBI Banca Group has always approached this legal obligation not merely with the goal of
formal compliance, but rather seeing this legislation, based on European regulations, as an opportunity
to lay the groundwork for achieving a high degree of organisational wellbeing, as is key to achieving high
levels of performance.
As concerns the “preventive” phase (which involves the collection, processing, and analysis of the
numerically significant objective data, such as “alarm bell” events and indicators relating to the working
context and content), we gathered and analysed the data for each year from 2009 onward, progressively
fine-tuning the level of analysis by implementing the various elements considered. The analysis of this
objective data pointed to no particularly critical issues, which is in line with results found at the sector
level and confirms the working conditions and the efficacy of the risk-mitigation measures previously
adopted within the scope of human resources management policies.
By applying the principle of banking fairly and banking well to matters of health and safety in the
workplace, it was deemed essential to assess the level of awareness of organisational wellbeing within the
various companies of the Group and to involve all employees through a questionnaire designed to
understand individual views on the potential sources of work-related stress. This questionnaire was
specifically designed by a team of experts from the departments of Occupational Psychology and
Occupational Medicine of the University of Padua based on the characteristics of the banking industry.
The initiative forms part of safety policies adopted by the Group for the voluntary and constructive
pursuit of the maximum protection for individual and collective health – a subject of particular interest
and attention for trade unions and workers’ health representatives – consistent with the Code of Ethics
and the principles set forth in the Sustainability Report.
In 2015, after an initial phase of testing based on a sampling of heads of organisational units, the
questionnaire was issued online to all employees – to be completed on a voluntary basis and absolutely
anonymously – and the responses were analysed solely by the experts from the University of Padua.
The questionnaire was properly completed by 51% of the Group’s workforce, reaching over 63%
participation within some companies; therefore, the data gathered is statistically significant and is suited
to providing in-depth knowledge of the perceived sources of stress, of individual and organisational
resources and strategies implemented, and of the effects of the interaction of these factors on (physical,
psychological, and behavioural) wellbeing, work satisfaction and engagement, and consequent
performance.
The results of the survey were presented to senior management, to the trade unions, and to the worker
safety representatives in specifically organised meetings.
At the Group level, what we have seen is an organisation in which there is essential equilibrium between
the factors of stress and the individual and systemic resources. Particularly encouraging were the level of
work engagement, the relationships between employees and supervisors, the perceived prestige towards
the outside world, trust and sense of belonging, ethics, satisfaction in one’s role, and the level of work-life
balance. Areas for improvement concerned organisational support, change and communication, whereas
workloads are generally offset by worker autonomy and social relations, by the system of intrinsic and
extrinsic rewards, and individual capacity for psycho-physical recover.
Risk assessment, improvement programme and accident phenomena
The constant commitment to achieve a medium level of compliance and the absence of serious risks to
health has produced appreciable results.
Again in 2015 no significant accidents occurred connected with accident prevention shortcomings and
the inspections carried out by the public authorities responsible for monitoring compliance with
prevention regulations (mainly the local health authority and the fire brigade) resulted in no fines.
In this regard, it should be noted that the model for assessing work-related stress as described above has
been analysed on multiple occasions by a number of hospitals within the scope of a nation-wide plan to
monitor the degree of implementation of applicable laws and regulations and has always received
favourable comments.
Maintenance of safety at the workplace was possible as a result both of continuous activity to promptly
eliminate those few “technical” risks with a high magnitude (16 and 12) and of a virtuous process
designed to identify and, where possible, eliminate even at source those factors in the design,
construction and maintenance of workplace environments considered likely to create risk situations
which, on the basis of accident phenomena actually detected in Group companies, from the viewpoint of
frequency and seriousness, were found to be statistically significant.
The phenomenon of accidents travelling to and from work continue to account for over 70% of the total
accidents in which employees are involved. While the Group has limited power to reduce these, partly
due to the degree to which the banking sector is spread geographically and to the lack of an integrated
public transport network to cover the entire country, travel policies pursued to reduce the risk of road
accidents at source again proved effective as they give priority to the use of public transport for work
travel and make collective means of transport available where significant geographical mobility has taken
200
place. At the same time, the experimental smart-working project launched by the UBI Banca Group in
collaboration with the Region of Lombardy and a group of companies and involving a limited number of
units and employees of the Parent and of UBI Sistemi e Servizi has produced positive results. In the near
future, and with a view to reducing social costs (e.g. reducing pollution, achieving greater work-life
balance, etc.), this project is to be extended to the other companies of the Group, given the positive
changes in national legislation (i.e. “Lavoro agile”) that are expected to be implemented in the near
future.
Analyses of robbery risk and violence to staff
The number of robberies occurring at Group banks in 2015 was greater than in 2014 (45 vs. 36). This
25% increase is essentially attributable to the significant level of crime against banks in Milan, a city in
which the Group has numerous branches. There was also an increase in the percentage of robberies that
involved temporarily holding bank employees hostage, which ranks such events as “severe” in terms of
the psychological impact on the employees involved.
The forms of primary deterrence adopted to apply Group security policies have an impact on the
attractiveness of branches for criminals working alone, but they do not prevent the risk of robberies
carried out by organised gangs who attempt to steal large quantities of money, by obliging employees to
wait for long periods until time mechanisms open.
Psychological assistance accompanied by full-day classroom training provided by a team of psychologists
has been in place for many years now for those personnel involved in criminal events. The combination of
these forms of prevention and protection reduces the risk that, if not adequately treated by specialist
psychologists and supported by the ability of individuals to adapt, the acute stress generated by the
event may lead to chronic effects (i.e. post-traumatic stress syndrome). Despite this increase in crime
with hostage taking, there has not been a correlated increase in requests for psychological assistance by
the employees involved. After an analysis of the phenomenon by a team of psychologists, it was found
that the extensive classroom training gave employees a heightened capacity to cope and manage stress is
these situations.
There has also been a significant increase in ATM theft, although this does not have an impact on the
employees’ psychological or physical wellbeing, given that such events generally occur at night when the
branches are closed.
Although there were no cases of violence against employees by customers dealing with extreme financial
hardship, there remains the possibility for targeted psychological assistance in the event of need.
201
Subsequent events and consolidated
business outlook
For a discussion of subsequent events, see Part A, Section 4, of the notes to the financial
statements.
***
With regard to the business outlook for operations, we report the forecasts given below on the
basis of information currently available.
The quarterly performance of net interest income in 2016 is forecast to grow compared with
the minimum recorded in the last quarter of 2015.
Net fee and commission income is forecast to benefit again in 2016 from the re-composition
process of total funding in favour of assets under management and from the gradual recovery
in lending to customers.
In the context of a start to the year characterised by greater volatility on markets, profit-taking
on positive fair value reserves relating to the securities portfolio should make it possible to
offset the forecast lower contribution from trading and hedging activity compared with 2015.
The continuous optimisation of other administrative expenses and the recent trade union
agreement should make it possible to maintain operating expenses in line with those for 2015,
notwithstanding the increase in costs relating to the contribution to the European Resolution
Fund and the Deposit Guarantee Scheme.
The particularly prudent approach to the performing portfolio and the reduction in progress of
new inflows to non performing status should make it possible to reduce loan losses in the
coming year, net of any extraordinary components resulting from a possible acceleration of the
process to dispose of bad loans (“sofferenze”, previously termed “non performing loans”).
Bergamo, 10th February 2016
THE MANAGEMENT BOARD
202
Statement of the
Chief Executive
Officer and of the
Senior Officer
Responsible for
preparing the
corporate
accounting
documents
Certification of the separate financial statements pursuant to Art. 81-ter of the Consob
Regulation 14th May 1999, No. 11971 and subsequent modifications and integrations
1. The undersigned Victor Massiah, Chief Executive Officer, and Elisabetta Stegher, Senior
Officer Responsible for preparing the company accounting documents of UBI Banca Spa,
having taken account of the provisions of paragraphs 3 and 4 of article 154 bis of
Legislative Decree No. 58 of 24th February 1998, hereby certify:


the adequacy in relation to the characteristics of the company and
the effective application
of the administrative and accounting procedures for the preparation of the consolidated
financial statements during the course of 2015.
2. The model employed
The assessment of the adequacy of the administrative and accounting procedures for the
preparation of the consolidated financial statements as at and for the year ended 31st
December 2015 was based on an internal model defined by UBI Banca Spa and developed in
accordance with the framework drawn up by the Committee of Sponsoring Organisations of
the Treadway Commission (COSO) and with the framework Control Objectives for IT and
related technology (COBIT) which represent the generally accepted international standards for
internal control systems.
3. Furthermore, it is certified that:
3.1 the consolidated financial statements:
a) were prepared in compliance with the applicable international financial reporting
standards recognised by the European Community in accordance with the Regulation
No. 1606/2002 (EC) issued by the European Parliament on 19th July 2002;
b) correspond to the records contained in the accounting books;
c) give a true and fair view of the capital, operating and financial position of the issuer
and of the group of companies included in the consolidation.
3.2 the management report comprises a reliable analysis of the performance, operating results
and position of the issuer, together with a description of the main risks and uncertainties to
which it is exposed.
Bergamo, 10th February 2016
Victor Massiah
(signed on the original)
Elisabetta Stegher
(signed on the original)
Chief Executive Officer
Senior Officer Responsible for
preparing the company accounting
205
206
Independent
Auditors’ Report
Deloitte & Touche S.p.A.
Via Tortona, 25
20144 Milano
Italia
Tel: + 39 02 83322111
Fax: + 39 02 83322112
www.deloitte.it
INDEPENDENT AUDITORS’ REPORT
PURSUANT TO ART. 14 AND 16 OF
LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010
To the Shareholders of
UNIONE DI BANCHE ITALIANE S.p.A.
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Unione di Banche Italiane
S.p.A. and its subsidiaries (the Unione di Banche Italiane Group), which comprise the balance sheet as
at December 31, 2015, and the income statement, statement of comprehensive income, statement of
changes in equity and cash flow statement for the year then ended, and the related explanatory notes.
Management Board’s Responsibility for the Consolidated Financial Statements
The parent’s Management Board is responsible for the preparation of these consolidated financial
statements that give a true and fair view in accordance with International Financial Reporting Standards
as adopted by the European Union and the requirements of national regulations issued pursuant to art. 9
of Italian Legislative Decree n° 38/2005.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing (ISA Italia)
issued pursuant to art. 11, n° 3, of Italian Legislative Decree 39/10. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation that give a true and fair view of consolidated financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the Management Board, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova
Palermo Parma Roma Torino Treviso Verona
Sede Legale: Via Tortona, 25 – 20144 Milano - Capitale Sociale: Euro 10.328.220,00 i.v.
Codice Fiscale/Registro delle Imprese Milano n. 03049560166 – R.E.A. Milano n. 1720239
Partita IVA: IT 03049560166
Member of Deloitte Touche Tohmatsu Limited
2
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position
of the Unione di Banche Italiane Group as at December 31, 2015, and of its financial performance and
cash flows for the year then ended in accordance with International Financial Reporting Standards as
adopted by the European Union and the requirements of national regulations issued pursuant to art. 9 of
Italian Legislative Decree n° 38/2005.
Report on Other Legal and Regulatory Requirements
Opinion on the consistency of the management report and of certain information included in the report
on corporate governance with the consolidated financial statements
We have performed the procedures indicated in the Auditing Standard (SA Italia) n° 720B in order to
express, as required by law, an opinion on the consistency of the management report and of certain
information included in the report on corporate governance required by art. 123-bis, n° 4, of Italian
Legislative Decree n° 58/98, which are the responsibility of the Management Board of Unione di
Banche Italiane S.p.A., with the consolidated financial statements of the Unione di Banche Italiane
Group as at December 31, 2015. In our opinion the report on operations and the information included in
the report on corporate governance referred to above are consistent with the consolidated financial
statements of the Unione di Banche Italiane Group as at December 31, 2015.
DELOITTE & TOUCHE S.p.A.
Signed by
Marco Miccoli
Partner
Milan, Italy,
March 2, 2016
This report has been translated into the English language solely for the convenience of international
readers.
Consolidated Financial
Statements
Consolidated Balance Sheet
ASSET ITEMS (f igures in thousand euro)
31.12.2015
10. Cash and cash equivalents
20. Financial assets held for trading
30. Financial assets designated at fair value
40. Available-for-sale financial assets
50. Held-to-maturity investments
60. Loans and advances to banks
70. Loans and advances to customers
80. Hedging derivatives
90. Fair value change in hedged financial assets (+/-)
100. Equity investments
120. Property, plant and equipment
130. Intangible assets
of which:
- goodwill
140. Tax assets:
a) current
b) deferred
- of which pursuant to Law No. 214/2011
150. Non current assets and disposal groups held for sale
160. Other assets
Total assets
31.12.2014
530,098
994,478
196,034
15,554,282
3,494,547
3,429,937
84,586,200
594,685
59,994
260,812
1,744,463
598,062
1,420,506
193,167
18,554,956
3,576,951
3,340,415
85,644,223
649,250
64,124
246,250
1,729,107
1,757,468
1,776,925
1,465,260
2,814,933
605,770
2,209,163
1,966,054
11,148
1,171,686
117,200,765
1,465,260
2,991,600
547,704
2,443,896
2,078,403
69,893
931,275
121,786,704
Table 1: 100O|1 - NOTA1
ai “Criteri di redazione” .
LIABILITIES AND EQUITY (f igures in thousand euro)
31.12.2015
10. Due to banks
20. Due to custo mers
30. Debt securities issued
40. Financial liabilities held for trading
60. Hedging derivatives
80. Tax liabilities:
a) current
b) deferred
100. Other liabilities
110. Post employment benefits
120. Provisions for risks and charges:
a) pension and similar obligations
b) other provisions
140. Valuation reserves
170. Reserves
180. Share premiums
190. Share capital
200. Treasury shares
210. Non-controlling interests
220. Profit (loss) for the year
Total liabilities and equity
10,454,303
55,264,471
36,247,928
531,812
749,725
472,564
171,620
300,944
2,354,617
340,954
266,628
70,237
196,391
260,848
3,556,603
3,798,430
2,254,371
(5,155)
535,901
116,765
117,200,765
ldi di confronto al 31 dicembre 2006 si riferiscono al solo ex Gruppo BPU Banca.ai
212
31.12.2014
13,292,723
51,616,920
41,590,349
617,762
1,009,092
630,223
303,740
326,483
1,994,340
391,199
285,029
80,529
204,500
113,836
3,450,082
4,716,866
2,254,371
(5,340)
555,019
(725,767)
121,786,704
“Criteri di redazione” .
Notes to the consolidated accounts
Consolidated Income Statement
2015
Items (figures in thousands of euro)
2014
10. I nterest and similar income
2,509,201
3,015,058
20. I nterest expense and similar
(878,146)
(1,196,671)
1,631,055
1,818,387
40. Fee and commission income
30. Net interest income
1,488,853
1,403,306
50. Fee and commission expense
(188,734)
(176,719)
1,300,119
1,226,587
70. Dividends and similar income
80. Net trading income
10,349
10,044
63,919
63,166
90. Net hedging income (loss)
10,968
(11,217)
211,390
144,636
60. Net fee and commission income
100. Income from disposal o r repurchase of:
a) loans and receivables
(34,527)
(15,348)
b) available-for-sale financial assets
262,251
168,304
d) financial liabilities
(16,334)
(8,320)
110. Net income on financial assets and liabilities designated at fair value
120. Gross income
130. Net impairment losses on:
a) loans and receivables
b) available-for-sale financial assets
d) other financial transactions
4,356
3,073
3,232,156
3,254,676
(819,512)
(937,267)
(802,646)
(928,617)
(18,290)
(4,821)
1,424
(3,829)
140. Net financial income
2,412,644
2,317,409
170. Net income from bankin g and insurance operations
2,412,644
2,317,409
180. Administrative expenses
(2,340,247)
(2,273,143)
(1,391,732)
(1,413,312)
(948,515)
(859,831)
a) staff costs
b) other administrative expenses
190. Net provisions for risks and charges
(2,975)
(9,074)
200. Net impairment losses on property, plant and equipment
(88,096)
(88,924)
210. Net impairment losses on intangible assets
(66,523)
(143,141)
220. Other net operating income/(expense)
321,441
336,366
(2,1 76,400)
(2,177,916)
230. Operating expenses
240. Profits of equity investments
260. Net impairment losses on goodwill
270. Profits on disposal of investments
35,516
122,293
-
(1,046,419)
208
8,729
280. Pre-tax profit (loss) from contin uing operations
271,968
(775,904)
290. Taxes on income fo r the year from continuing operations
(127,502)
72,314
300. Post-tax profit (loss) from continuing operations
144,466
(703,590)
320. Profit (loss) for th e year
144,466
(703,590)
330. Profit attributable to non-controlling interests
340. Profit (loss) for th e year attributable to the Parent
(27,701)
(22,177)
116,765
(725,767)
In considerazione dell’allineamento delle prassi contabili resesi necessarie a seguito della fusione tra gli ex Gruppi BPU e
Bana Lombarda, nonché della variazione del principio contabile relativo ai piani a benefici definiti per i dipendenti, i
rispetto a quelli già pubosito si rimanda a quanto I
Iesposto nella sezione relativa ai “Criteri di redazione” .
icembre 2006 si riferiscono a
l solo ex Gruppo BPU Banca.
213
Notes to the consolidated accounts
Consolidated statement of comprehensive income
Figures in thous ands of euro
10.
2015
PROFIT (LOSS) FOR THE YEAR
2014
144,466
(703,590)
14,458
(26,375)
Other comprehensive income net o f taxes without trans fer to the income statement
40.
De fined benefit plans
Other comprehensive income net o f taxes with trans fer to the income statement
90.
1 00.
Cash flow he dges
Available -for- sale financial asse ts
573
1,255
136,938
317,113
1 20.
Share of valuation rese rve s of equity- acc ounted investe es
(3,372)
(6,843)
130.
Total other comprehensive incom e net of taxes
148,597
285,150
140.
COMPREHENSIVE INCOME (item 10 + 130)
293,063
(418,440)
29,286
22,798
263,777
(441,238)
1 50.
CONSOLIDATED COMPREHENSIVE INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
160.
CONSOLI DATED COMPREHENSIVE INCOME ATTRIBUTABLE TO THE SHAREHOLDERS OF THE
PARENT
214
Notes to the consolidated accounts
Statement of changes in consolidated equity
to 31/12/2015
- ordinary shares
Total equity as at 31/12/2015
Equity attributable to non-controlling
interests as at 31/12/2015
Consolidated comprehensive income
Change in equity stakes
Stock options
Derivatives on treasury shares
Change in equity instruments
New share issues
Repurchase of treasury shares
Equity transactions
Changes in reserves
Dividends and other uses
Reserves
Balances as at 01/01/2015
Restatement of opening balances
Balances as at 31/12/2014
Share capital:
Allocation of prior year profit
Equity attributable to the shareholders
of the Parent as at 31/12/2015
Changes during the year
(figures in thousands of euro)
Extraordinary distribution of
dividends

2,566,663
-
2,566,663
-
-
-
-
-
-
-
-
-
(727)
-
2,254,371
311,565
2,565,936
2,521,556
-
2,521,556
-
-
-
-
-
-
-
-
-
(727)
-
2,254,371
266,458
2,520,829
-
- other shares
45,107
-
45,107
-
-
-
-
-
Share premiums
4,744,986
-
4,744,986
(918,436)
-
-
-
-
Reserves
3,646,157
-
-
-
-
-
-
-
45,107
45,107
-
-
-
(8,526)
-
3,798,430
19,594
3,818,024
3,737,499
3,646,157
214,846
(101,596)
(1,216)
-
-
-
-
-
-
(20,692)
-
3,556,603
180,896
- of profits
1,692,842
1,692,842
214,846
(101,596)
-
-
-
-
-
-
-
-
-
1,729,957
76,135
1,806,092
- other
1,953,315
1,953,315
-
-
(1,216)
-
-
-
-
-
-
(20,692)
-
1,826,646
104,761
1,931,407
256,993
Valuation reserves
110,191
-
110,191
-
-
-
-
-
-
-
-
-
(1,795)
148,597
260,848
(3,855)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,340)
-
(5,340)
-
-
185
-
-
-
-
-
-
-
-
(5,155)
-
(5,155)
(703,590)
10,359,067
-
(703,590)
10,359,067
703,590
-
(101,596)
(1,031)
-
-
-
-
-
-
(31,740)
144,466
293,063
116,765
9,981,862
27,701
535,901
144,466
10,517,763
9,804,048
-
9,804,048
-
(75,630)
(1,031)
-
-
-
-
-
-
(9,302)
263,777
X
X
9,981,862
555,019
-
555,019
-
(25,966)
-
-
-
-
-
-
-
(22,438)
29,286
X
X
535,901
Equity instruments
Treasury shares
Profit (loss) for the year
Equity:
- attributable to shareholders of
the Parent
- attributable to non-controlling
interests
The figures presented in this statement of changes in equity correspond to those reported in Table B.1 (Consolidated equity by type of company) contained in Part F of the Notes to the Financial Statements.
Details of valuation reserves:
a) available-for-sale
31/12/14
Shareholders
of the Parent
31/12/14
Noncontrolling
interests
31/12/15
Shareholders of the
Parent
31/12/15
Noncontrolling
interests
154,926
221
288,538
175
b) cash flow hedge
-851
-7
-285
0
c) foreign currency differences
-243
0
-243
0
-99,011
-6,342
-86,177
-4,718
d) actuarial gains/losses
e) special revaluation laws
59,015
2,483
59,015
688
113,836
-3,645
260,848
-3,855
215
Notes to the consolidated accounts
 to 31/12/2014
- ordinary shares
Total equity as at 31/12/2014
Consolidated comprehensive income
Change in equity stakes
Stock options
Derivatives on treasury shares
Change in equity instruments
Extraordinary distribution of
dividends
New share issues
Repurchase of treasury shares
Equity transactions
Changes in reserves
Dividends and other uses
Reserves
Balances as at 01/01/2014
Restatement of opening balances
Balances as at 31/12/2013
Share capital:
Equity attributable to the shareholders
of the Parent as at 31/12/2014
Changes during the year
Allocation of prior year profit
Equity attributable to non-controlling
interests as at 31/12/2014
(figures in thousands of euro)
2,762,447
-
2,762,447
-
-
-
-
-
-
-
-
-
(195,784)
-
2,254,371
312,292
2,566,663
2,717,340
-
2,717,340
-
-
-
-
-
-
-
-
-
(195,784)
-
2,254,371
267,185
2,521,556
-
-
-
-
-
-
-
45,107
45,107
-
-
-
(27,281)
-
4,716,866
28,120
4,744,986
- other shares
45,107
-
45,107
-
-
-
-
-
Share premiums
4,772,267
-
4,772,267
-
-
-
-
-
Reserves
3,553,596
-
3,553,596
274,137
(92,113)
(778)
-
-
-
-
-
-
(88,685)
-
3,450,082
196,075
3,646,157
- of profits
1,508,859
1,508,859
274,137
(92,113)
-
-
-
-
-
-
-
1,959
-
1,612,912
79,930
1,692,842
- other
2,044,737
2,044,737
-
-
(778)
-
-
-
-
-
-
(90,644)
-
1,837,170
116,145
1,953,315
110,191
Valuation reserves
(174,959)
-
(174,959)
-
-
-
-
-
-
-
-
-
-
285,150
113,836
(3,645)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,121)
-
(6,121)
-
-
781
-
-
-
-
-
-
-
-
(5,340)
-
(5,340)
274,137
11,181,367
-
274,137
11,181,367
(274,137)
-
(92,113)
3
-
-
-
-
-
-
(311,750)
(703,590)
(418,440)
(725,767)
9,804,048
22,177
555,019
(703,590)
10,359,067
10,339,392
-
10,339,392
-
(58,591)
24
-
-
-
-
-
-
(35,539)
(441,238)
X
X
9,804,048
841,975
-
841,975
-
(33,522)
(21)
-
-
-
-
-
-
(276,211)
22,798
X
X
555,019
Equity instruments
Treasury shares
Profit (loss) for the year
Equity:
- attributable to shareholders of
the Parent
- attributable to non-controlling
interests
The figures presented in this statement of changes in equity correspond to those reported in Table B.1 (Consolidated equity by type of company) contained in Part F of the Notes to the Financial Statements.
Details of valuation reserves:
a) available-for-sale
b) cash flow hedge
c) foreign currency differences
d) actuarial gains/losses
e) special revaluation laws
31/12/13
31/12/13
31/12/14
31/12/14
Shareholders of
the Parent
Noncontrolling
interests
Shareholders
of the Parent
Noncontrolling
interests
-155,515
392
154,926
221
-2,037
-76
-851
-7
-243
0
-243
0
-71,914
-7,064
-99,011
-6,342
58,741
2,757
59,015
2,483
-170,968
-3,991
113,836
-3,645
216
Notes to the consolidated accounts
Consolidated Statement of Cash Flows (indirect method)
2015
F igu res in thou sands of euro
2014
A. O PER ATING ACTIVITIES
1 . Ord inary acti vi ties
1 ,031 ,8 70
88 4, 66 5
144 ,46 6
( 703 ,590 )
- gain s/ losses on fin ancial a ssets held for tradin g an d on fin ancial a ssets/liabilities at fair value (-/+)
(68 ,27 5)
(66 ,239 )
- gain s/ losses on hedgin g activities (-/+)
(10 ,96 8)
11 ,217
- n et im pa irment losses on loans (+/-)
819 ,51 2
937 ,267
- n et im pa irment losses on prop erty, pl ant an d equipm ent and in tan gible assets (+ /-)
154 ,61 9
1, 278 ,484
2 ,97 5
9 ,074
- n et p remiums n ot received (-)
-
-
- other in sura nce income/exp ense n ot received (+/-)
-
-
19 ,00 8
( 284 ,548 )
- p rofit (loss) f or the year (+/-)
- n et p rovi sion s f or risks an d char ges and oth er expense/in com e (+/-)
- outstand ing taxes, duties an d tax cred its (+/ -)
- n et im pa irment losses on disposal gr oups held for sale af ter tax (+/ -)
-
- other a djustmen ts (+/ -)
2 . Net ca sh flo ws from/ used by fi nancial assets
- f inancial assets h eld for tra ding
- f inancial assets d esignated at fa ir value
- availab le-for-sale fin ancial assets
- loan s to banks: repayable on demand
- loan s to banks: oth er loan s
- loan s to custom ers
- other a ssets
3 . Net ca sh flo ws from/ used by fi nancial liabil it ies
- am ounts due to b ank s r ep ayab le on d em and
- am ounts due to b ank s: other payables
- d ue to custom ers
- d eb t securities issued
- f inancial liabil ities held for tradin g
- f inancial liabil ities designated at fair value
- other li abilities
Net cash flow s fr om/used in op erating activi ties
-
(29 ,46 7)
( 297 ,000 )
3 ,776 ,5 06
1, 15 9, 28 5
441 ,55 5
2, 598 ,494
83 6
14 ,970
3, 306 ,53 9
(4, 010 ,857 )
-
-
(89 ,52 2)
789 ,341
255 ,37 7
1, 848 ,627
(138 ,27 9)
(81 ,290 )
( 4, 70 0, 46 3)
( 1,5 1 5, 77 1)
-
-
(2, 838 ,42 0)
(1, 724 ,543 )
3, 647 ,55 1
914 ,763
(5, 342 ,42 1)
( 311 ,430 )
(85 ,95 0)
( 778 ,588 )
-
-
(81 ,22 3)
384 ,027
107 ,9 13
52 8, 17 9
13 ,5 34
3, 19 7, 06 3
1 ,63 2
182 ,158
B. INVES TING ACTIVITIES
1 . Cash fl ows ge ner ated by
- d isp osals of equity investmen ts
- d ivid ends received on equity investm en ts
10 ,34 9
10 ,044
-
3, 000 ,000
- d isp osals of property, equip ment an d in vestment p roperty
71 8
4 ,861
- d isp osals of intangibl e a ssets
83 5
-
- d isp osals of held-to-m aturity investm en ts
- d isp osals of subsidiaries an d lin es of busin ess
2 . Cash fl ows u sed i n
-
-
(8 7, 81 5)
( 3,6 2 4, 77 2)
- p urch ases of equity in vestm ents
-
-
- p urch ases of h eld -to-maturity investmen ts
-
(3, 543 ,159 )
- p urch ases of property, plan t and equip ment
(39 ,82 9)
(32 ,083 )
- p urch ases of in ta ngible assets
(47 ,98 6)
(49 ,530 )
- p urch ases of subsid iaries and lines of b usin ess
-
-
Net cash flow s fr om/used in investing activities
(7 4, 28 1)
(4 2 7, 70 9)
C. FINANCING ACTIVITIES
-
-
- issues/rep ur ch ases of treasury shar es
-
-
- issues/purch ases of equity instr um ents
-
-
- d istribution of dividen ds and other uses
(101 ,59 6)
(92 ,113 )
( 10 1, 59 6)
(9 2, 11 3)
(6 7, 96 4)
8, 35 7
Net cash flow s fr om/used in financ ing act ivities
CAS H FLO WS G ENERATED /USED D URING THE YEAR
Key: (+) generated (-) ab sorb ed
217
Notes to the consolidated accounts
Reconciliation
Carrying amounts
Figu res in thousands of euro
2 015
2 014
Cash and cas h e quiv alents at be gin ning of ye ar
598,062
589,705
Total n et cas h flows gen erate d/used during the year
(67,964)
8,357
Cash and cash equivalents at end of year
530 ,0 98
598 ,0 62
218
Notes to the consolidated accounts
PART A – Accounting policies
A.1 – General Part
A.2 – The main items in the financial statements
A.3 – Information on transfers between portfolios
of financial assets
A.4 – Information on fair value
A.5 – Information on “Day One Profit/Loss”
PART B – Notes to the consolidated balance sheet
Assets
Liabilities
Other information
PART C – Notes to the consolidated income statement
PART D – Consolidated statement of comprehensive
income
Notes to the
Consolidated
Financial
Statements
PART E – Information on risks and the relative
hedging policies
PART F – Information on consolidated equity
PART G – Business combination transactions
concerning companies or lines of business
PART H – Transactions with related parties
PART I – Share-based payments
PART L – Segment Reporting
219
Notes to the consolidated accounts
Part A – Accounting policies
A.1 – GENERAL PART
Section 1 Statement of compliance with IFRS
This consolidated annual report of Unione di Banche Italiane has been prepared in compliance
with the international financial reporting standards (IFRS)1 issued by the International
Accounting Standards Board (IASB) and with the relative interpretations of the International
Financial Reporting Interpretations Committee (IFRIC) as endorsed by the European
Commission and in force as at 31st December 2015, implemented in Italian law by Legislative
Decree No. 38/2005, which exercised the option under EC Regulation 1606/2002 concerning
international accounting standards.
No exceptions have been made in the application of IFRS international accounting standards.
The consolidated financial statements, consisting of the balance sheet, income statement,
statement of comprehensive income, statement of cash flows, statement of changes in equity
and the notes to the financial statements, accompanied by the consolidated management
report, include the Parent UBI Banca S.p.A. and its subsidiaries included in the scope of
consolidation. They have been prepared on the basis of the positions of the single companies
included in the consolidation, corresponding to the relative individual company financial
statements, examined and approved by their respective governing bodies and appropriately
modified and reclassified, where necessary, for compliance with the accounting policies
adopted by the Group.
The consolidated management report on operations and the notes to the financial statements
furnish information required by international reporting standards, by law, by the Bank of Italy
and by the Commissione Nazionale per le Società e la Borsa (Consob – National Commission for
Companies and the Stock Exchange), in addition to other information which is not
compulsory, but is considered equally necessary for the purposes of a true and accurate
presentation of the accounts of the Group.
The proposed consolidated annual financial statements approved by the Management Board
on 10th February 2016 and submitted to the Supervisory Board for approval on 8th March
2016, contain a statement by the Chief Executive Officer and the Senior Officer Responsible
pursuant to Art. 154 bis of Legislative Decree No. 58/1998 and they have been subjected to
audit by the independent auditors Deloitte & Touche Spa.
Section 2 Basis of preparation
These financial statements have been prepared in accordance with measurement criteria,
adopted on the basis of a going concern assumption and in compliance with accrual
accounting principles, the relevance of the information and the predominance of substance
over form.
The financial statements have been clearly stated and give a true and fair view of the capital
and financial position, the result for the year, the changes in equity and the cash flows.
Unless otherwise indicated, the information contained in this annual report is expressed in as
the accounting currency and the financial information, the balance sheet and income
statement, the notes and comments and the explanatory tables are presented in thousands of
1
Those standards and the relative interpretations are applied on the basis of events occurring that are disciplined by them from the
date on which their application becomes compulsory, unless specified otherwise.See the “List of IAS/IFRS standards endorsed by the
European Commission” for full details.
220
Notes to the consolidated accounts
euro. The relative rounding of the figures has been performed on the basis of Bank of Italy
instructions.
The mandatory financial statements used in this annual report comply with those defined in
Bank of Italy Circular No. 262/2005 and subsequent amendments and additions. Therefore,
for the purposes of the presentation of these financial statements, the provisions pursuant to
the fourth update of the aforementioned circular issued on 15th December 2015 by the Bank of
Italy2 have been observed.
In addition to information on the accounts as at and for the period ended 31st December 2015,
these financial statements also provide the same comparative information as at and for the
year ended 31st December 2014 (which did not require adjustments with respect to the figures
published in those financial statements) and they do not include items for which there was no
data for the current and the previous year.
To complete the information, account was also taken of the following documents in the
preparation of this separate annual report:
 the ESMA3 document of 27th October 2015, “European common enforcement priorities
for 2015 financial statements”, designed to promote uniform application of IFRS to
ensure transparency and the proper functioning of financial markets by identifying
certain issues considered particularly significant for the 2015 financial statements of
listed European companies, in consideration, amongst other things, of current market
conditions4;
 the ESMA document of 27th October 2015, “Improving the quality of disclosures in the
financial statements” designed to underline the importance of providing information in
financial reports that takes account of both relevant and material aspects;
 Consob Communication No. 0007780/16 of 28th January 2016 entitled “Communication
concerning issues of greater relevance to 2015 financial reports”, designed to call the
attention of the authors of financial reports to aspects underlined in the abovementioned ESMA public statement document, in relation to the disclosures that listed
companies must make in their financial reports as at and for the period ended 31st
December 2015 and in future reports.
Accounting policies
The accounting policies contained in Part A.2 concerning the classification, measurement and
derecognition stages are essentially the same as those adopted for the preparation of the 2014
separate financial statements.
Where it is impossible to measure items in the financial statements with precision, the
application of those policies involves the use of estimates and assumptions which may have a
significant effect on the amounts recognised in the balance sheet and in the income statement.
The use of reasonable estimates forms an essential part of the preparation of financial
statements and we have listed here those items in the financial statements in which the use of
estimates and assumptions is most significant:
 measurement of loans and receivables;
 measurement of financial assets not listed on active markets;
 measurement of indefinite useful life intangible assets and equity investments;
More specifically, we report that with that update the information supplied in the notes to the financial statements on the “quality of
credit” now complies with the new definitions of non-performing financial assets (termed “deteriorated” assets in previous financial
reports) (solely as an example “unlikely to pay loans and “forborne exposures”), in line with the concepts of non-performing exposures
and forborne exposures established by the European Commission on the basis of a proposal from the EBA.
Furthermore:
 in Part E Information on risks and hedging policies, the tables relating to pledged assets provided in Section 3 “Liquidity risk” are
no longer presented.
 in the Part B Notes to the balance sheet and in Part E Information on risks and hedging policies of the notes to the financial
statements, changes have been made to rationalise the notes designed to make them easier to use and understand and also to
shorten the time required to prepare them.
3 European Securities and Markets Authority.
4 The priorities in terms of disclosures recommended by the ESMA for the 2015 financial statements are as follows:
 impact of the financial markets conditions on the financial statements;
 statement of cash flows and related disclosures;
 fair value measurement and related disclosures;
 possible impacts from the application of accounting standards soon to come into force.
2
221
Notes to the consolidated accounts
 quantification of provisions for risks and charges;
 quantification of deferred taxes;
 definition of the depreciation and amortisation charges for property, plant and equipment
and intangible assets with finite useful lives;
 measurement of the provision for post-employment benefits.
An adjustment may be made to an estimate following a change in the circumstances on which
it was based or if new information is acquired or yet again on the basis of greater experience.
A change in an estimate is applied prospectively and it therefore generates an impact on the
income statement in the year in which it is made and, if it is the case, also in future years.
No changes were made in 2015 to the criteria previously employed for estimates in the
financial statements as at and for the year ended 31st December 2014.
*******
The following is reported with regard to changes in IFRS accounting standards.
International accounting standards in force from 2015
As already reported in the interim financial report, for the preparation of the 2015 Annual
Report some provisions relating to regulations issued by the European Union have come into
force for the first time. A brief report on the most relevant aspects is given:
 No. 634/2014 which made the introduction of the interpretation IFRIC 21 “Levies”
compulsory as of the 2015 financial statements. The document in question addresses the
accounting treatment for a liability relating to a levy that is not a tax on income and
therefore does not fall within the scope of application of IAS 12. The accounting treatment
of the liability must comply with the provisions of IAS 37 “Provisions, contingent liabilities
and contingent assets”. IFRIC 21 gives clear details of: i) the obligating event which gives
rise to a liability to pay a levy; ii) when a liability to pay a levy must be recognised; iii) the
effects of that interpretation on interim financial reports (former IAS 34)5.
 No. 1361/2014 which made amendments to accounting standards in accordance with
“Annual Improvements to IFRS: 2011-2013 Cycle” as part of the normal annual process to
improve them developed in the context of ordinary activities of rationalisation and
clarification of international accounting standards. The purpose of annual improvements is
to address the necessary issues concerning inconsistencies found in international reporting
standards or to clarify terms which are not of an urgent nature.
The amendments regard the following accounting standards:
IFRS 3 Business combinations
This amendment makes it clear that the formation of all types of joint arrangement, as
defined by IFRS 11, are excluded from the application of IFRS 3;
IFRS 13 Fair Value Measurement
This amendment makes clear that the exception contained in paragraph 48 of IFRS 13
concerning the possibility of measuring the fair value of a net position (in cases where
financial assets and liabilities exist with positions which offset market or credit risks)
applies to all contracts included within the scope of application of IAS 39 (and in future
of IFRS 9) regardless of whether it satisfies the definition of financial assets and
liabilities provided in IAS 32;
IAS 40 Investment Property
This amendment makes it clear that IFRS 3 and IAS 40 are not mutually exclusive and
that reference must be made to the specific instructions contained in the respective
standards to determine whether the purchase of a property falls within the scope of
application of IFRS 3 or IAS 40. An assessment must in fact be made to determine
The interpretation in question constitutes an important source of interpretation for defining the accounting treatment to be applied to
contributions to the Single Resolution Fund (SRF) and to the Deposit Guarantee Schemes (DGS), under Directives 2014/59/EU and
2014/49/EU respectively, details of which are given in the following Section 5 “Other aspects”.
5
222
Notes to the consolidated accounts
whether the acquisition of a property investment constitutes the acquisition of an asset,
a group of assets or even a business combination in accordance with IFRS 3.
The adoption of the above-mentioned provisions has no appreciable impacts on the financial
statements of the UBI Group.
International accounting standards with application subsequent to 2015
The provisions of some EU regulations come into force in 2016. The most relevant aspects are
given below.
On 17th December 2014 the European Commission endorsed the following regulations:
 No. 28/2015 which introduces the 2010-2012 annual cycle of improvements to
international accounting standards developed in the context of ordinary activities to
rationalise and clarify international accounting standards.
The main changes regard the following:
- IFRS 2 “Share-based payments”
Changes were made in the standard to the definitions of “vesting conditions” and
“market conditions” and further definitions of “performance conditions” and “service
conditions” were added previously included in the definition of “vesting conditions”;
- IFRS 3 “Business combinations”
The amendment makes clear that a “contingent consideration” pursuant to IFRS 3
recognised as a financial asset or liability (in accordance with IAS 39/IFRS 9) must be
subject to subsequent measurement at fair value at each reporting date and the
changes in fair value are recognised through profit or loss or through other
comprehensive income on the basis of the requirements of IAS 39 (or IFRS 9);
- IFRS 8 “Operating segments”
The amendments require an entity to disclose judgements made by management in
applying the criteria for the aggregation of operating segments, including a description
of the aggregated segments and the economic indicators considered in determining
whether the operating segments share “similar economic characteristics”.
Furthermore, it is specified that the reconciliation between the total of the segment
assets subject to disclosure and the assets of the entity must be reported if the segment
assets are reported periodically to the chief operating decision-maker;
- IAS 16 “Property, plant and equipment” and IAS “38 Intangible assets”
The amendments have eliminated the inconsistencies in the calculation of accumulated
depreciation when an item of property, plant and equipment, or an intangible asset is
revalued (i.e. when the option to value at cost is discarded in favour of the alternative
option to measure at fair value). The new requirements clarify that the gross carrying
amount must be adjusted in a manner consistent with the revaluation of the carrying
amount of the asset and that the accumulated depreciation must therefore be equal to
the difference between the gross carrying amount and the carrying amount net of the
impairment recognised;
- IAS 24 " Related party disclosures"
The new provisions clarify that where an entity provides key management personnel
services to a reporting entity, that entity is deemed a related party.
 No. 29/2015 which amends IAS 19 “Employee benefits”.
The amendments are designed to regulate the recognition of employee (or third party)
contributions where defined benefit plans require them to contribute to the cost of the plan.
In fact in some countries pension plans require employees (or third parties) to contribute to
a pension plan.
The amendment makes it possible to only deduct contributions from personnel expenses
that are connected with the service provided in the period in which the service is provided6.
Contributions that are connected with the service, but vary on the basis of the duration of
In the current version of the standard, contributions are deducted from personnel expense in the accounting period in which they are
paid.
6
223
Notes to the consolidated accounts
the service provided, must be allocated to the period of service using the same method of
allocation applied to the benefits.
On 23rd November 2015 the European Commission endorsed Regulation (EU) No. 2113/2015
which endorses the amendments published by the IASB on 30th June 2014, to the accounting
standards IAS 16 “Property, plant and equipment” and IAS 41 “Agriculture”.
While this amendment is of extremely little importance to a company in the banking sector, we
report that the amendment made consists of putting the accounting treatment for plants that
are used for the cultivation of farming products over a number of years, known as produce
bearing plants, on the same basis as that reserved for tangible assets dealt with in IAS 16
“Property, plant and equipment”.
On 24th November 2015 the European Commission endorsed Regulation (EU) No. 2173/2015
which endorsed the amendments, published by the IASB on 6th May 2014, to the accounting
standard IFRS 11 “Joint arrangements”.
This amendment provides new guidelines on the accounting treatment for acquisitions of
interests in joint operations which constitute a business.
In other words, the standard as amended requires the application of the provisions of IFRS 3
in terms of the purchase method for recognising the purchase of a joint operation,
commensurate naturally to the percentage interest acquired. On the basis of the “purchase
method”, the identifiable assets acquired (inclusive of any intangible assets previously not
recognised by the enterprise acquired) and the identifiable liabilities assumed (inclusive of the
contingent liabilities) must be recognised at their respective fair value on the acquisition date.
On 2nd November 2015 the European Commission endorsed Regulation (EU) No. 2231/2015
which endorsed the amendments published by the IASB on 12th May 2014 to accounting
standards IAS 16 “Property, plant and equipment” and IAS 38 “Intangible assets”.
The amendment in question clarifies when it might be appropriate to use depreciation
methods based on revenue or on the basis of a schedule that depreciates tangible and
intangible assets on the basis of revenue generated by the use of those assets.
On 15th December 2015 the European Commission endorsed Regulations (EU) No. 2343/2015
which introduces the 2012-2014 annual cycle of improvements to international accounting
standards. The main changes made regard the following:
- IFRS 5 Non-current assets held-for-sale and discontinued operations
The amendment introduces specific guidance on IFRS 5 for cases where an entity
reclassifies an asset out of the held-for-sale class into the held-for-distribution class (or
vice versa), or when the requirements for the classification of an asset held-fordistribution are no longer met.
The amendments state that:
 these reclassifications do not constitute a change to a plan (to sell or to distribute)
and therefore the classification and measurement criteria remain valid;
 the assets that no longer meet the criteria for classification as held-for-distribution
should be treated in the same way as an asset that ceases to be classified as heldfor-sale.
- IFRS 7 Financial instruments: disclosures
The amendment regulates the introduction of further guidance to clarify whether a
servicing contract constitutes a remaining involvement in a transferred asset for the
purposes of the disclosures required in relation to transferred assets.
It further clarifies that disclosures on offsetting financial assets and liabilities are not
explicitly required for all interim financial statements, but that nevertheless those
disclosures could be necessary to comply with the requirements of IAS 34 in cases
where the information is significant.
- IAS 19 Employee benefits
The document clarifies that in order to determine the discount rate for post-employee
benefits reference must be made to high quality corporate bonds denominated in the
same currency used for the payment of the benefits and that the depth of the relative
market should therefore be assessed at currency level.
- IAS 34 Interim financial reporting
224
Notes to the consolidated accounts
The document introduces amendments in order to clarify that some information
requested must be included in interim financial statements or at least in other parts of
the documents such as the interim financial report but with the proviso that crossreferences to that other section must be given in the interim financial statement. In
this last case the report must be made available to readers of the financial statements
in the same way and at the same time as for the interim financial report, otherwise the
latter is to be considered incomplete.
On 18th December 2015 the European Commission endorsed the following regulations:
 No. 2406/2015 endorses the amendment published by the IASB on 18th December 2014
to accounting standard IAS 1 “Presentation of Financial Statements”. As part of the
broader process to improve financial reporting disclosures, the amendment in question
makes limited changes to IAS 1 designed to provide clarification on matters which might
be perceived as an impediment to the clear and intelligible preparation of financial
reports;
 No. 2441/2015 which endorses the amendment published by the IASB on 12th August
2014 to accounting standard IAS 27 “Consolidated and separate financial statements”
The amendment in question introduces the possibility in the separate financial
statements of the investor to measure investments in subsidiaries, joint ventures or
companies subject to significant influence using the equity method.
The adoption of the above-mentioned provisions will have no appreciable impacts on the
financial statements of the UBI Group7.
International accounting standards not endorsed as at 31st December 2015
The standards listed above are not applicable for the purposes of the preparation of the 2015
consolidated annual report because their application is subject to endorsement by the
European commission through the issue of specific EU Regulations.
To provide full information we report that after 31st December 2015 the IASB issued the
following:
 on 13th January 2016, the accounting standard IFRS 16 “Leases” destined to replace
IAS 17 “Leases” from the financial year 2019;
 on 19th January 2016, an amendment to IAS 12 “Recognition of deferred tax assets for
unrealised losses”;
 on 29th January 2016, an amendment to IAS 7 “Disclosure initiative”.
***
Amendments to IAS 39
As already reported in the 2014 Consolidated Annual Report, which may be consulted for full
information, on 24th July 2014 the IASB issued the accounting standard IFRS 9 “Financial
Instruments”, which therefore brought to conclusion the process of the full revision of IAS 39
“Financial Instruments: Recognition and Measurement”, divided into three stages:
With specific reference to the option introduced with regulation EU No. 2442/2015, by the amendment to IAS 27, the UBI Group will
consider whether to take this up during the current year.
7
225
Notes to the consolidated accounts
 “Classification and Measurement”;
 “Impairment”; and
 “General Hedge Accounting”8.
The standard in question, adoption of which will be compulsory from 1st January 2018 is still
going through the endorsement process by the European Commission as part of which the
European Financial Reporting Advisory Group (EFRAG)9 issued a favourable opinion on 4th
May 2015.
Endorsement of the accounting standard is scheduled for the first half of 2016 and only after
that will it become applicable in the member states of the European Union.
The main provisions of the new standard are summarised below.
Recognition and derecognition
With IFRS9 the criteria for the initial recognition and the derecognition of financial assets and
liabilities are substantially the same as for IAS39.
Classification and measurement
IFRS 9 lays down the following criteria for the classification of financial assets10:
a) the business model of the company to manage financial assets; and
b) the characteristics of the contractual cash flows from the financial assets,
and on this basis it establishes the following three categories for the classification and
measurement of financial assets:

“Amortised Cost” (AC);
 “Fair value through other comprehensive income (FVOCI)";
 “Fair value through profit or loss (FVPL)”.
The “Amortised Cost” category
Financial assets held to collect their contractual cash flows are classified and measured
according to this criteria.
The occurrence of a sale is not necessarily inconsistent with the definition of a business model
required for measurement using “amortised cost”. For example infrequent sales of modest
amount may take place as part of that business model. Furthermore, disposals carried out
due to increases in credit risk11 in financial assets subject to disposal are not important.
The “Fair value through other comprehensive income (FVOCI)" category
This category is for the classification of financial assets:
 for which the contractual cash flows consist exclusively of the payment of principal and
interest;
 held to collect the contractual cash flows and also cash flows from the sales of the assets.
This business model may involve greater sales activity than that of the business model
associated with the “Amortised cost” category.
The interest income, gains and losses from exchange rate losses and the recognition of
impairment losses on financial instruments classified in the FVOCI category together with
reversals of impairment losses are recognised through profit or loss, while other changes in
fair value are recognised through other comprehensive income (OCI).
For full information we report that in April 2014 the IASB published the discussion paper “Accounting for Dynamic Risk Management:
a Portfolio Revaluation Approach to Macro Hedging” which, in line with the dynamic procedures for the management of interest rate risk
adopted by banks, sets out a possible accounting approach (a “portfolio revaluation approach”) designed to better reflect the dynamic
management of risk by management in the financial statements of an entity.
Following the observations received during the consultation stage, in July 2015 the IASB decided to assign the “macrohedging” project
to the relative research programme and it postponed publication of the Exposure Draft until after a further discussion paper had been
prepared.
9 Body responsible for assessing the adoption of IFRS in Europe.
10 Financial assets are classified in their entirety, and therefore those that contain embedded derivatives are not subject to bifurcation
rules.
11 Nevertheless, if the sales carried out by a company are not infrequent and of insignificant amount, it must be considered within which
limits that sales activity is consistent with a business model that consists mainly of collecting contractual cash flows.
8
226
Notes to the consolidated accounts
At the time of sale (or possible reclassification into other categories due to a change of
business model), accumulated profits or losses recognised in OCI are reclassified through
profit or loss.
The“fair value through profit or loss” category
Financial assets are classified and measured according to this criteria, that are not managed
on the basis of the two business models specified for the “amortised cost” and “fair value
through other comprehensive income” categories.
For equity instruments only, an irrevocable option may be exercised on initial recognition for
the classification and measurement of the financial assets at FVOCI. Exercise of this option
involves recognising all changes in fair value within other comprehensive income (OCI) without
the possibility of reclassifying them through profit or loss (neither for impairment loss nor for
subsequent disposal). Dividends are recognised through profit and loss.
As concerns financial liabilities, the provisions of IAS 39 have been reproduced almost entirely
in IFRS 9. As provided for by IAS 39, this standard allows financial liabilities to be measured
on the basis of the “fair value through profit or loss” criterion (i.e. the “fair value option”) in the
presence of determined conditions, but nevertheless providing for changes in the fair value of
financial liabilities due to changes in the credit rating of the issuer to be recognised through
other comprehensive income and no longer through profit or loss.
Impairment
The IFRS 9 impairment model, which has a forward-looking vision, requires immediate
recognition of credit losses even if they are only forecast as opposed to IAS 39, according to
which the measurement of credit losses is based solely on those resulting from past events
and current conditions.
The IFRS 9 impairment model requires an estimate of credit losses to be made on the basis of
supportable information, that is available without unreasonable cost or effort and that
includes historical, current and forecast information12.
As opposed to IAS 39, IFRS 9 has a single impairment model to be applied to different
financial instruments such as financial assets measured at amortised cost and those
measured at fair value through other comprehensive income.
More specifically, for financial assets that are not impaired when purchased (or originated) the
recognition of impairment for expected credit losses must be calculated by one of the following
methods:
 basing it on the amount of the expected credit losses in the following twelve months
(expected losses resulting from default events on financial assets considered possible
within twelve months from the date of the end of the financial year). That method must
be applied when the credit risk at the balance sheet date is low or has not increased
significantly since initial recognition; or,
 basing it on the amount of the expected credit losses over the full lifetime of the
instrument (expected losses resulting from default events on financial assets considered
possible over the full lifetime of the financial asset). This method must be applied when
the credit risk has increased significantly since initial recognition.
The standard involves the division of financial assets into three stages on the basis of the
credit risk specific to each relationship:
 stage one: performing financial assets for which no significant increase in the credit risk
has been found. Calculation of the expected loss is carried out over a time horizon of
twelve months;
 stage two: performing financial assets for which a significant increase in the credit risk
has been found. Calculation of the expected loss is carried out over the full lifetime of the
instrument;
12 The standard defines expected credit losses as the “weighted average of credit losses with the respective risks of a default occurring
as the weights”.
Expected losses must be estimated by considering possible scenarios and therefore by considering the best available information on
past events, current conditions and supportable forecasts of future events, known as a “forward looking approach”.
227
Notes to the consolidated accounts
 stage three: non-performing financial assets.
Hedge accounting
IFRS 9 contains provisions relating to what is termed the “general hedge accounting model”
designed to better reflect risk management policies adopted by management in the financial
reporting.
To give examples, but not limited to these, the standard therefore broadens the range of risks
for which hedge accounting may be applied to non-financial items. It eliminates the
compulsory quantitative effectiveness test, it no longer requires retroactive assessment of the
effectiveness of a hedge and it no longer allows hedge accounting to be voluntarily revoked
once it has been designated.
While more flexibility is introduced, the new standard requires even more detailed disclosure
on risk management activities by management.
To complete the information we report that the current text of the standard does not include
details of the accounting model provided for relationships for the collective hedging of loan
portfolios.
In this respect, in April 2014 the IASB published the discussion paper “Accounting for
Dynamic Risk Management: a Portfolio Revaluation Approach to Macro Hedging” which, in line
with the dynamic procedures for the management of interest rate risk adopted by banks, sets
out a possible accounting approach (a “portfolio revaluation approach”) designed to better
reflect the dynamic management of risk by management in the financial statements of an
entity.
Following the observations received during the consultation stage, in July 2015 the IASB
decided to assign the “macrohedging” project to the relative research programme and it
postponed publication of the Exposure Draft until after a further discussion paper had been
prepared.
The IFRS9 Project in the UBI Banca Group
The importance of the future changes introduced by the new accounting standard appear
quite clear from the above, especially with regard to the expected loss model applicable to
estimates of the value of financial instruments.
For this reason, and in consideration of the consequent complexity of the implementation of
the standard in question, the UBI Banca Group has taken part from the outset in a project
run by the Italian Banking Association and in the second half of 2015 it launched its own
transition project (moving on from preliminary assessment activity), the main details of which
are given below.
The architecture of the project runs along three lines of activity:
1. preliminary assessment: the aim is to assess the potential impacts of the new
standard with respect to regulatory aspects, risk models, administration,
organisation, IT software and business;
2. design: aimed in particular at defining detailed specifications in IT and
organisational terms;
3. implementation: aimed at the implementation and execution of the actions identified
and defined in the previous stages of the project.
Assessment activity is currently in progress at present. It will probably come to a close by the
end of the first quarter of 2016 and the main preliminary results can be summarised as
follows:
 identification of regulatory and accounting modifications and the consequent preliminary
definition of accounting guidelines for the necessary aspects;
 identification of the preliminary impacts in terms of business, risk models, organisation
and IT systems;
228
Notes to the consolidated accounts
 definition of criteria for the recognition and transfer of financial instruments and for
loans in particular, among the three stages laid down by IFRS 9 on the basis of credit
quality, with consequent different estimates of the value of the instrument (twelve month
expected credit loss vs. lifetime expected credit loss).
The studies conducted so far with the project confirm the significance of the changes
introduced by the new standard in relation in particular to the impairment model applicable to
all financial assets (except for those recognised at FVPL). This lends weight as a consequence
to the expectation held by the whole national and international banking industry that the
degree of write-downs will increase compared with those estimated with the model currently in
use, especially with regard to financial assets that have not defaulted13, or in other words
those located in stages one and two as defined in the standard.
On the other hand there are no significant expectations of asset reclassifications on the basis
of the provisions for the classification of financial assets contained in IFRS 9.
As already stated, the project will continue with design activity in the second half and
subsequently with implementation. Future interim financial reports will provide information
on this.
IFRS 15 “Revenue from Contracts with Customers”
On 28th May 2014 the IASB published the standard IFRS 15 which from 1st January 2018 will
replace14 the standards IAS 18 “Revenue” and IAS 11 “Construction contracts”, as well as the
interpretations IFRIC 13 “Customer loyalty programmes”, IFRIC 15 “Agreements for the
construction of real estate”, IFRIC 18 “Transfers of assets from customers” and SIC 31
“Revenue – Barter transactions involving advertising services”.
The standard establishes new procedures for the recognition of revenue, which will apply to all
contracts entered into with customers except for those that fall within the scope of application
of other IFRS standards such as leases, insurance contracts and financial instruments.
The fundamental steps in the accounting treatment of revenues according to the new standard
are as follows:
 the identification of a contract with the customer;
 the identification of the performance obligations of the contract;
 determination of the price;
 allocation of the price to the performance obligations of the contract;
 the criteria for the recognition of revenue when an entity satisfies each performance
obligation.
The main components of the Group’s revenues do not fall within the scope of application of
IFRS 15, because they are regulated by the provisions of IAS 39 (and IFRS 9).
As concerns those components of revenues of a fee and commission nature that do not fall
within the scope of application of IAS 39 or IFRS 9, assessments must be carried out on first
time adoption of IFRS 15 to determine the following:
 the prices of the relative transactions including the variable components, which must be
allocated to one or more performance obligations; and
 whether the performance obligations are satisfied “over time” or at a “point in time”.
Furthermore, the presentation of revenue on a gross or net basis will depend on an analysis of
the “principal” or “agent” role played by the entity in the transaction.
At present, while waiting to start a detailed analysis of contracts with customers, it is not
possible to provide a reasonable estimate of the impacts resulting from the application of the
standard, which the Group expects will not be significant.
It is reasonable to consider that, within the meaning of IFRS 9, defaulted financial instruments will be placed in stage three.
Application of the lifetime expected credit loss model is conceptually similar to the model currently in use for measuring write-downs on
a case-by-case basis.
14 While early application is allowed, it is underlined that as can be seen from the table which lists accounting standards issued but not
yet endorsed as at 31st December 2015, the standard has not yet been endorsed by the European Commission. At present endorsement
is expected for the second half of 2016.
13
229
Notes to the consolidated accounts
SECTION 3 Consolidation scope and methods
The consolidated financial statements include the financial and operating results of UBI Banca
Spa and the companies either directly or indirectly controlled by it, including within the scope
of consolidation companies which operate in sectors different from that to which the Parent
belongs and the special purpose entities, when the conditions of effective control exist, even in
the absence of an equity stake, but in relation to what is termed “business”.
Compared with 31st December 2014, no changes have occurred in the scope of consolidation
except for a series of transactions to purchase shares in companies already controlled, which
resulted solely in a change in the percentage shareholdings held in some Group companies.
These transactions did not determine changes in the consolidation methods. Therefore no
sales of shares in subsidiaries took place during the year which resulted in the loss of control.
Further information on the changes described above is given in the section “The scope of
consolidation” contained in the Management Report, which may be consulted.
With regard to the consolidation methods used, companies subject to control are consolidated
using the full line-by-line method, while those interests over which the Group exercises
significant influence are measured using the equity method.
Changes in the consolidation scope
The following transactions occurred in 2015 which changed the scope of consolidation of the
Group:
-
-
-
-
-
UBI Fiduciaria Spa: on 30th April the transfer took place, with effect from 1st May 2015,
of UBI Fiduciaria Spa’s “static” fiduciary operations to Unione Fiduciaria Spa, a
company which operated in accordance with Law No. 1966 of 23rd November 1939 and
subsequent additions;
IW Bank Spa: on 25th May the merger of IW Bank into UBI Banca Private Investment
took effect, with the change of its name at the same time to IW Bank Spa and the
transfer of the registered address to Milan at 12, Piazzale Zavattari. The share capital of
the new bank is €67,950,000. The merger of the two companies, fully controlled by the
Parent, is also reflected in the shareholder structure of the consortium companies,
which changed as follows from 25th May 2015:
- UBI Sistemi e Servizi spa: the new IW Bank Spa holds a 4.3142% stake in the share
capital of the services company, the aggregate result of the stakes previously held by
the former UBI Banca Private Investment (1.4385%) and the former IW Bank
(2.8757%);
- UBI Academy SCRL: the new IW Bank Spa holds a 3% stake in the share capital of
the training company, the aggregate result of the 1.5% stakes previously held by the
former UBI Banca Private Investment and the former IW Bank;
Società Lombarda Immobiliare Srl – SOLIMM: on 9th June 2015 the Management Board
of UBI Banca approved the merger of SOLIMM into S.B.I.M. Spa (Società Bresciana
Immobiliare Mobiliare). The operation was completed on 20th October 2015;
Banca di Valle Camonica Spa: during the year, UBI Banca purchased a total of
460,632 shares from other shareholders (including stakes sold by Finanziaria di Valle
Camonica and by Cattolica Assicurazioni on 5th and 6th August 2015 respectively) for
consideration of €31.3 million. The control exercised by the Group therefore rose from
84.131% as at 31st December 2014 to 98.63% as at 31st December 2015;
Zhong Ou Asset Management Co. Ltd – China: in June UBI Banca reclassified one third
of the stake held in this Chinese registered fund management company (accounting for
approximately 11.7% of the total share capital) within non-current assets held for sale
according to IFRS 5.
This company, in which UBI Banca holds a 35% stake, achieved significant results in
2015, both in terms of capital inflows and in terms of operating performance. On the
basis of agreements between the shareholders and management of the company, UBI
Banca is obliged to transfer part of the shares it holds to management when
230
Notes to the consolidated accounts
-
determined quantitative objectives are achieved. Consequently UBI Banca has
reclassified that portion of the shares which presumably will be transferred in the first
months of 2016;
Coralis Rent Srl: the liquidation of the company was completed on 31st December 2015
and it was removed from the Company Registry.
Further details relating to transactions which modified the ownership structure of the Group
in 2015 are given in the section “The consolidation scope” of the consolidated management
report.
231
Notes to the consolidated accounts
1.
Equity investments in companies subject to exclusive control
D e t a ils o f in v e s t m e n t
Name
R e g is t e re d a d d re s s
O p e ra t in g h e a d q u a rt e rs
T yp e o f
o wn e rs h ip ( 1)
% o f v o te s (2 )
In v e s t in g c o m p a n y
1. Unio ne di B a nc he Ita lia ne S pa - UB I B a nc a
2. 24-7 F ina nc e S rl
3. B a nc a C a rim e S pa
4. B a nc a di Va lle C a m o nic a S pa
B e rga m o
B re s c ia
C o s e nza
B re no (B S )
B re s c ia
C o s e nza
B re no (B S )
4
1
1
5. B a nc a P o po la re C o m m e rc io e Indus tria S pa
6. B a nc a P o po la re di Anc o na S pa
7. B a nc a P o po la re di B e rga m o S pa
8. B a nc a R e gio na le Euro pe a S pa (*)
9. B a nc o di B re s c ia S pa
10. B P B Im m o bilia re S rl
11. C e ntro ba nc a S viluppo Im pre s a S GR S pa
12. IW B a nk S pa (e x UB I B a nc a P riva te Inve s tm e nt)
13. P re s tita lia S pa
14. S o c ie tà B re s c ia na Im m o bilia re - M o bilia re S B IM S pa
15. UB I B a nc a Inte rna tio na l S a
M ila n
J e s i ( AN)
B e rga m o
C une o
B re s c ia
B e rga m o
M ila n
M ila n
B e rga m o
B re s c ia
Luxe m bo urg
M ila n
J e s i ( AN)
B e rga m o
C une o
B re s c ia
B e rga m o
M ila n
M ila n
B e rga m o
B re s c ia
Luxe m bo urg
1
1
1
1
1
1
1
1
1
1
1
16. UB I F a c to r S pa
17. UB I F iduc ia ria S pa
18. UB I F ina nc e S rl
19. UB I F ina nc e 2 S rl
20. UB I F ina nc e 3 S rl
21. UB I Le a s e F ina nc e 5 S rl
22. UB I Le a s ing S pa
23. UB I M a na ge m e nt C o m pa ny S a
24. UB I P ra m e ric a S GR S pa
25. UB I S is te m i e S e rvizi S c pa
M ila n
B re s c ia
M ila n
B re s c ia
B re s c ia
B re s c ia
B re s c ia
Luxe m bo urg
M ila n
B re s c ia
M ila n
B re s c ia
M ila n
B re s c ia
B re s c ia
B re s c ia
B re s c ia
Luxe m bo urg
M ila n
B re s c ia
1
1
1
4
4
4
1
1
1
1
P AR ENT
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
B a nc o di B re s c ia S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
B a nc o di B re s c ia S pa
B a nc a R e gio na le Euro pe a S pa
B a nc a P o po la re di B e rga m o S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I P ra m e ric a S GR S pa
UB I B a nc a S pa
UB I B a nc a S pa
B a nc a C a rim e S pa
B a nc a P o po la re C o m m e rc io e Indus tria S pa
B a nc a P o po la re di Anc o na S pa
B a nc a P o po la re di B e rga m o S pa
B a nc a R e gio na le Euro pe a S pa
B a nc o di B re s c ia S pa
B a nc a di Va lle C a m o nic a S pa
IW B a nk
UB I P ra m e ric a S GR S pa
UB I F a c to r S pa
UB I Ac a de m y
P re s tita lia S pa
232
% h e ld
10.000%
99.989%
89.792%
8.838%
83.763%
99.578%
100.000%
74.777%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
91.196%
5.483%
0.161%
3.160%
100.000%
100.000%
60.000%
10.000%
10.000%
10.000%
99.621%
100.000%
65.000%
71.870%
2.877%
2.877%
2.877%
2.877%
4.315%
2.877%
1.439%
4.314%
1.439%
0.719%
0.010%
0.072%
Notes to the consolidated accounts
10.000%
99.989%
98.630%
83.763%
99.578%
100.000%
79.895%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
100.000%
60.000%
10.000%
10.000%
10.000%
99.621%
100.000%
65.000%
98.561%
26. UB I Trus te e S a
27. UB I F ina nc e C B 2 S rl
28. UB I S P V B B S 2012 S rl
29. UB I S P V B P C I 2012 S rl
30. UB I S P V B P A 2012 S rl
31. UB I Ac a de m y S c rl
Luxe m bo urg
M ila n
M ila n
M ila n
M ila n
B e rga m o
Luxe m bo urg
M ila n
M ila n
M ila n
M ila n
B e rga m o
1
4
4
4
4
1
UB I B a nc a Inte rna tio na l S a
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
UB I B a nc a S pa
B a nc a P o po la re di B e rga m o S pA
B a nc o di B re s c ia S pA
IW B a nk S .p.A.
UB I F a c to r S pA
UB I P ra m e ric a S GR S .p.A.
B a nc a Va lle C a m o nic a S pA
B a nc a P o po la re C o m m e rc io & Indus tria S .p.A.
B a nc a R e gio na le Euro pe a S pA
B a nc a C a rim e S pA
B a nc a P o po la re di Anc o na S pA
UB I S is te m i e S e rvizi S pA
UB I Le a s ing S pA
P re s tita lia S pa
100.000%
60.000%
10.000%
10.000%
10.000%
68.500%
3.000%
3.000%
3.000%
1.500%
1.500%
1.500%
3.000%
3.000%
3.000%
3.000%
3.000%
1.500%
1.500%
100.000%
60.000%
10.000%
10.000%
10.000%
100.000%
(*) The percentage of voting rights shown relates to ordinary shareholders’ meetings.
Key
(1) Type of ownership:
1 = majority of voting rights in ordinary general meetings
2 = dominating influence over ordinary general meetings
3 = agreements with other shareholders
4 = other forms of control
5 = “unitary management” control under Art. 26, paragraph 1, of “Legislative Decree No. 87/92”
6 = “unitary management” control under Art. 26, paragraph 2, of “Legislative Decree No. 87/92
7 = joint control
(2) (Votes available at ordinary shareholders’ meetings, distinguishing between actual and potential)
233
Notes to the consolidated accounts
2. Assessments and significant assumptions to determine scope of consolidation
The full line-by-line consolidation method
Subsidiaries subject to control are consolidated using the full line-by-line method. In compliance
with IFRS 10, the concept of control goes beyond a majority percentage interest in the share
capital of an investee and it arises when an entity is exposed to variable returns or holds rights on
those returns resulting from its relationship with the subsidiary and at the same time it has the
ability to influence those returns by exercising its power over that entity.
The line-by-line consolidation method involves summing the items of the income statements and
balance sheets of subsidiaries on a line-by-line basis The following adjustments are made for this
purpose:
(a) the carrying amounts of the subsidiaries held by the Parent and the corresponding part of the
equity are eliminated;
(b) the proportion of equity and of profit or loss for the year attributable to other shareholders is
stated under a separate item
If the results of the above adjustments are positive, then they are recognised (after first allocating
them if possible to the assets or liabilities of the subsidiary) as goodwill within item 130
“Intangible assets” on the date of the first consolidation, if the necessary conditions apply. If the
resulting differences are negative they are normally charged to the income statement.
Intragroup balances and transactions, including revenues, costs and dividends are completely
eliminated.
The operating results of a subsidiary that is acquired during the year are included in the
consolidated balance sheet starting from the date on which it is acquired. Similarly, the operating
results of a subsidiary that is disposed of are included in the consolidated balance sheet until the
date on which control over the company is released.
The accounts used in the preparation of consolidated financial statements are stated as of the
same date.
The consolidated financial statements have been prepared using uniform accounting policies for
like transactions and events.
If a subsidiary uses different accounting policies from those employed in the consolidated
financial statements for like transactions and other events in similar circumstances, adjustments
are made to its accounts for the purposes of the consolidation.
The equity method
Equity investments over which the Group exercises significant influence or has joint control, as
defined in IAS 28 and IFRS 11, are measured using the equity method.
Under this method an equity investment is initially recorded at cost and the carrying amount is
increased or decreased to reflect the investor's share of the profit or loss of the associate after the
acquisition date. The proportion of the profit or loss for the year made by the investee attributable
to the investor is stated in the income statement of the latter. Dividends received from an investee
reduce the carrying value of the investment; adjustments to the carrying amount may also be
required arising from a change in the portion of the investee's equity attributable to the investor
that have not been recognised in the income statement. These changes include changes arising
from the revaluation of property, plant and equipment from exchange rate differences on items in
foreign currency. The portion of those changes attributable to the investor are recorded directly in
its equity.
Where potential voting rights exist, the investor's share of profit or loss of the investee and of
changes in the investee's equity is determined on the basis of present ownership interests and
does not reflect the possible exercise or conversion of potential voting rights.
Where the investee incurs continued losses, if these exceed the carrying value of the investee,
then this is written off and further losses are only recognised if the investor has contracted legal
or implicit obligations or has made payments on behalf of the investee. If the investee
234
Notes to the consolidated accounts
subsequently realises a profit, the investor resumes recognition of its share of the profits only
after reaching the share of the profit which was previously not recognised.
For the purposes of consolidating investments in associates and/or companies subject to joint
control, the figures from the financial statements prepared and approved by the boards of
directors of the individual companies are used. Where accounts prepared according to
international standards are not available those prepared according to national accounting
standards are used after first verifying that there are no significant differences.
The consolidating entity ceases use of the equity method from the date on which it ceases to
exercise significant influence or joint control over the investee and it is recognised within either
“financial assets held for trading” or “available-for-sale financial assets”, in accordance with the
treatment mentioned previously, starting from that date on condition that the associate or
company subject to joint control does not become a subsidiary.
3.
Equity investments in companies subject to exclusive control with significant noncontrolling interests
For the purposes of preparing the tables that follow, an interest was considered significant when:


the non-controlling interest is greater than or equal to 10% of the share capital of the
investee and
the accounting data of the investee are significant for a reader of the consolidated financial
statements.
3.1 Non-controlling interests, availability of non-controlling interest votes and dividends
distributed to non-controlling interests
25.223%
Dividends
distributed to
non-controlling
interests
20.105%
5,197
2. Banca Popolare Commercio e Industria SpA
16.237%
16.237%
5,470
3. UBI Pramerica SGR SpA
35.000%
35.000%
15,184
Percentage of
non-controlling
interests
Name of companies
1. Banca Regionale Europea SpA
Percentage of
non-controlling
interest votes (1)
(1) Voting rights relate to ordinary Shareholders’ Meeting.
3.2 Equity investments with significant non-controlling interests: accounting figures
Name
Cash and
Total assets
cash
equivalents
Financial
assets
Property,
plant and
equipment
and
intangible
assets
Financial
liabilities
Equity
Net interest
Operating
Gross income
income
expenses
Profit (loss) Post tax
Post-tax
Other
on
profit (loss) profit (loss) Profit (loss) comprehensi Comprehensi
continuing
from
from
for the year ve income ve income (3)
operations continuing discontinued
(1)
net of taxes = (1) + (2)
before tax operations operations
(2)
1. Banca Regionale Europea
9,235,430
44,780 8,569,745
360,098 7,639,515 1,285,261
154,517
278,695
-201,375
3,869
960
0
960
4,627
5,587
2. Banca Popolare Commercio e Industria
9,707,228
43,667 9,182,166
124,212 8,268,665 1,206,297
168,407
323,881
-214,781
50,219
34,677
0
34,677
1,011
35,688
160
129,489
-33,662
95,827
63,542
0
63,542
10
63,552
3. UBI Pramerica
261,601
1
219,917
173
70,460
141,926
235
Notes to the consolidated accounts
4.
Significant restrictions
As concerns regulatory requirements we report that the UBI Group is a banking Group subject to
the regulations contained in Directive 2013/36/EU on access to the activity of credit institutions
and the prudential supervision of credit institutions and investment firms (CRD IV) and in
Regulations (EU) No. 575/2013 relating to “Prudential requirements for credit institutions and
investment firms” (CRR) and that it controls financial institutions subject to the same regulations.
The ability of the subsidiary banks to distribute capital or dividends must therefore comply with
those regulations both in terms of the amount of minimum own funds they may hold and in terms
of the maximum amount of the profits they may distribute.
Furthermore, some Group banks have commitments contained in their articles of Association
which require them to allocate part of their profits to specific initiatives.
As concerns liquidity within the Group no restrictions exist of a company ownership or legal
nature to its transfer. Information on liquidity risk is given in Part E - Information on risks and
hedging policies, Section 3 - Liquidity risk.
5.
Other information
Companies in which no equity investment is held, but for which shares have been received as
pledges are excluded from the scope of the consolidation, in consideration of the purpose of
possession, which is to secure the loan granted and not to exercise control and determine
financial and operating policies in order to obtain the economic benefits deriving from them.
The balance sheet, income statement and statement of cash flows of consolidated companies
which operate with a reference currency other than the euro are translated at the exchange rate
ruling at the end of the year. All the exchange rate differences resulting from the translation are
recognised in a separate reserve in equity. If an investment is disposed of, this reserve is
eliminated with a simultaneous profit or loss in the income statement at the time of disposal.
International financial reporting standards require the recognition in the financial statements of
corporate events in a manner which reflects the underlying economic substance of them.
No equity investments held directly or indirectly by the Parent with an interest of less than 20%,
or for which voting rights below that threshold were held, over which it is considered it exerted
significant influence existed as at the balance sheet. Furthermore, with the exception of equity
investments held for merchant banking activities classified within item 30 “Assets designated at
fair value”, no equity investments held directly or indirectly by the Parent with an interest of more
than 20% are held over which it is considered it did not exert significant influence.
No significant restrictions existed as at the balance sheet date on the capacity of associate
companies to transfer funds to the investing company in payment of dividends or repayment of
loans or advances.
The balance sheet dates of the companies measured according to the equity method were the
same as that of the Parent.
SECTION 4 Subsequent events
With regard to the provisions of IAS 10, subsequent to 31st December 2015, the reporting date,
and until 10th February 2016, the date on which the proposed consolidated Annual Report was
authorised by the Management Board for submission to the Supervisory Board, no events
occurred to make adjustments to the figures presented in the report necessary.
For information purposes, the following events are mentioned:
 on 19th January 2016 UBI Banca received authorisation and a licence from the Federal Reserve
and from New York State Department of Financial Services to open a representative office in
New York. The official opening took place on 20th January 2016;
236
Notes to the consolidated accounts
 on 25th January 2016, with the presentation of the necessary information to trade unions, UBI
Banca commenced negotiation procedures regarding the refinement and optimisation of the
Group’s organisational structure. Further details are given in the section “Significant events
occurring in 2015” in the Consolidated Management Report;
 on 26th January 2016 UBI Banca communicated the results of the option and pre-emption
offering at a price of €7.2880 each on the 35,409,477 shares of the Bank subject to withdrawal
following the transformation into a joint stock company (the offering closed on 12th January).
Requests were received to purchase 58,322 of these shares and the remaining 35,351,155
shares on which options had not been taken up were offered on the Mercato Telematico
Azionario (“MTA” – electronic stock exchange) for one day on 28th January 2016, but no shares
were purchased. As a consequence, on 3rd February 2016 settlement of the trades of the
58,322 UBI Banca shares subject to the exercise of option and pre-emption rights took place.
The payment of the consideration for the shares purchased as well as the assignment of the
shares in favour of those holding those rights took place through Monte Titoli and the
respective intermediaries;
 on 27th January 2016 a shareholders’ pact was stipulated entitled Patto dei Mille (“Pact of the
Thousand”) for the purpose of governing prior consultation between the holders of syndicated
shares, the exercise of voting rights attaching to the syndicated shares and some limits on the
circulation of these shares. The Patto dei Mille is open in nature and was formed with a view to
safeguarding the underlying principles which have characterised the activities of Banca
Popolare di Bergamo in enhancing the resources of the community in which it is based. On 1st
February 2016, 65 shareholders adhered to the pact, who as a whole pledged 20,500,412
ordinary shares to it, accounting for 2.273% of the total voting rights representing the share
capital of UBI Banca.
 on 8th February 2016, after obtaining Casablanca Finance City status, UBI Banca received
authorisation from the Moroccan Central Bank to open a representative office in Casablanca.
SECTION 5 Other aspects
BRRD Directive (Bank Recovery and Resolution Directive – 2014/59/EU) and DGS Directive (Deposit
Guarantee Schemes – 2014/49/EU)
As already fully reported in the half year financial report for 2015 and making reference to the
section “European banking union” in the “Consolidated management report”, we report that with
regard to compliance with national and regulatory EU regulations the following EU directives are
of importance for the 2015 annual report:
 The BRRD Directive (Bank Recovery and Resolution Directive – 2014/59/EU) which defines
the new resolution rules applicable to all banks in the European Union from 1st January 2015.
The measures will be financed by the National Resolution Fund that has been paid into the
Single Resolution Fund (SRF) since 1st January 2016 and will be managed by the Single
Resolution Board (SRB).
 The DGS Directive (Deposit Guarantee Schemes – 2014/49/EU) is designed to strengthen
depositor protection and harmonise the regulatory framework at EU level and it requires all
member states to adopt ex-ante financing procedures.
In its 2015 financial statements, the UBI Banca Group has recognised the following costs in the
income statement under the item “Other administrative expenses”15, in application of the
interpretation IFRIC 21 “Levies”, according to which the liability relating to the payment of a levy,
which the contributions in question can be classified as, arises at the time when the “obligating
event” occurs:
15 In this respect, the national supervisory authority made an announcement in a communication dated 19th January 2015 with specific
regard to BRRD costs, stating that these expenses related to forms of contribution considered on a par with levies from an accounting
viewpoint.
237
Notes to the consolidated accounts
 €87.3 million in relation to the annual quota due to the National Resolution Fund.
More specifically, €22 million of this amount is attributable to the annual “ordinary
contribution” to the fund mentioned and €65.3 million relates to the “extraordinary
contribution” requested by the fund in the maximum amount allowed under Art. 83 of
Legislative Decree No. 180/2015, which is three times the average annual amount of the
ordinary contributions. The latter contribution was due to the measures taken by the fund for
the resolution of the crises of the following banks: Banca Marche, Banca Popolare dell’Etruria e
del Lazio, Cassa di Risparmio di Ferrara and CariChieti all in extraordinary administration.
 €11.4 million, in relation to the quota for the year 2015, accruing for the first half only in
accordance with the DGS Directive.
Since the procedures for the national implementation of the directive had not been completed,
these contributions were requested by the Interbank Deposit Protection Fund (IDPF), after first
making amendments to its constitution which basically introduced the new financing
mechanism in advance.
The aforementioned amendments also introduced a voluntary provision (“voluntary scheme”) in
addition to that regulated by Directive 49, designed to support banks in extraordinary
administration or conditions of great difficulty where concrete turnaround prospects are found
and measures adopted by the Bank of Italy have been taken designed to reduce and/or convert
capital instruments into Common Equity Tier 1 capital.
Adherence on a voluntary basis to the scheme involves signing up to a two-year maximum
industry-wide commitment of €300 million. The request to make that commitment is taken on
the basis of decisions made by the governance of the scheme in a manner totally independent
and separate from the obligatory scheme and is at the moment made only with regard to
intervention made by the sector nationally in the years 2013 and 2014 to assist Banca Tercas,
for a total of €295 million, if the European commission should consider the operation as “state
aid”.
In this respect we report that the intervention will not involve any further costs for the UBI
Group, over and above those already incurred in the aforementioned years totalling €17.7
million, because the funds raised by means of the voluntary scheme would essentially replace
those already paid by the Interbank Deposit Protection Fund and returned in the meantime by
Banca Tercas.
Finally to complete this information we report that the 2016 Legge di stabilità (“stability law” –
annual finance law) created a solidarity fund designed to reimburse investors holding
subordinated financial instruments issued by the four banks subject to resolution procedures.
While at present the relative ministerial decrees that will define and regulate the contribution are
still in the pipeline, we report that in future the fund in question, which will amount to up to
€100 million, will receive its financing from the Interbank Deposit Protection Fund.
Leaving incentives – Company reorganisation
The programme of rationalisation initiatives, connected, amongst other things, with containing
operating costs is fully described in the section “Significant events that occurred during the year”
in the Management Report, which may be consulted.
With particular regard to the redundancy scheme, as concerns the more strictly accounting
aspects of the operation, procedures relating to trade union negotiations were concluded on 23rd
December 2015, with an agreement containing provisions for the voluntary early retirement of
around 410 staff.
In relation to the aforementioned programme, an expense of €95 million was recognised in the
income statement for 2015 under the item “staff costs” net of discounting to present values
amounting to €0.1 million and subject to normalisation given the non-recurring nature of the
item. These expenses were composed as follows:
 €78 million against the item “other liabilities” on the basis of the final nature of the amount
because it relates to staff who had already applied to participate in the November 2014
redundancy scheme and were surplus to it;
238
Notes to the consolidated accounts
 €17 million against the item “Provisions for risks and charges”, because it related to staff
whose application approval will be finalised in February 2016.
The national consolidated tax option
The Testo Unico delle Imposte sui Redditi (Consolidated Income Tax Act) grants the option for
companies belonging to the same Group to calculate a single total income corresponding,
generally speaking, to the algebraic sum of the taxable income of the different companies (the
Parent and companies directly and/or indirectly controlled by more than 50% according to certain
requirements) and as a consequence to calculate a single tax on the income of the companies in
the Group (known as a “national tax consolidation”, regulated by articles 117-129 of the
Consolidated Income Tax Act).
In view of this option, the Italian companies in the Group adhered to the national tax
consolidation of the Parent, UBI Banca, and calculated the tax expense relating to them by
transferring the corresponding taxable income to the Parent.
*******
List of the main IFRS standards endorsed by the European Commission
IAS/IFRS
ACCOUNTING POLICIES
ENDORSEMENT
IAS 1
Presentation of financial statements
IAS 2
IAS 7
Inventories
Statement of cash flows
IAS 8
Accounting policies, changes in accounting estimates and errors
IAS 10
Events after the reporting date
IAS 11
IAS 12
Construction contracts
Income taxes
IAS 16
Property, plant and equipment
IAS 17
Leases
IAS 18
Revenue
IAS 19
Employee benefits
IAS 20
IAS 21
Accounting for government grants and disclosure of government
assistance
The effects of changes in foreign exchange rates
IAS 23
IAS 24
Borrowing costs
Related party disclosures
IAS 26
IAS 27
Retirement benefit plans
Consolidated and separate financial statements
IAS 28
IAS 29
Investments in associates
Financial reporting in hyperinflationary economies
239
Reg. 1274/08, 53/09, 70/09,
494/09, 243/10, 149/11,
475/12, 1254/12, 1255/12,
301/13, 2113/15, 2173/15,
2406/15
Reg. 1126/08, 1255/12
Reg. 1126/08, 1274/08, 70/09,
494/09, 243/10, 1254/12,
1174/13
Reg. 1126/08, 1274/08, 70/09,
1255/12
Reg. 1126/08, 1274/08, 70/09,
1142/09, 1255/12
Reg. 1126/08, 1274/08
Reg. 1126/08, 1274/08,
495/09, 475/12, 1254/12,
1255/12, 1174/13
Reg. 1126/08, 1274/08, 70/09,
495/09, 1255/12, 301/13,
28/15, 2113/15, 2231/15
Reg. 1126/08, 243/10, 1255/12,
2113/15
Reg. 1126/08, 69/09, 1254/12,
1255/12
Reg. 1126/08, 1274/08, 70/09,
475/12, 1255/12, 29/15,
2343/15
Reg. 1126/08, 1274/08, 70/09,
475/12, 1255/12
Reg. 1126/08, 1274/08, 69/09,
494/09, 149/11, 475/12,
1254/12, 1255/12
Reg. 1260/08, 70/09, 2113/15
Reg. 632/10, 475/12, 1254/12,
1174/13, 28/15
Reg. 1126/08
Reg. 1254/12, 1174/13,
2441/15
Reg. 1254/12, 2441/15
Reg. 1126/08, 1274/08, 70/09
Notes to the consolidated accounts
IAS 32
Financial instruments: presentation
IAS 33
Earnings per share
IAS 34
Interim financial reporting
IAS 36
Impairment of assets
IAS 37
Provisions, contingent liabilities and contingent assets
IAS 38
Intangible assets
IAS 39
Financial instruments: recognition and measurement
IAS 40
Investment property
IAS 41
Agriculture
IFRS 1
First-time adoption of international financial reporting standards
IFRS 2
Share-based payment
IFRS 3
Business combinations
IFRS 4
Insurance contracts
IFRS 5
Non-current assets held for sale and discontinued operations
IFRS 6
IFRS 7
Exploration for and evaluation of mineral resources
Financial instruments: disclosures
IFRS 8
Operating segments
IFRS
IFRS
IFRS
IFRS
Consolidated financial statements
Joint arrangements
Disclosure of interests in other entities
Fair value measurement
10
11
12
13
SIC/IFRIC
Reg. 1126/08, 1274/08, 53/09,
70/2009, 495/09, 1293/09,
149/11, 475/12, 1254/12,
1255/12, 1256/12, 301/13,
1174/13
Reg. 1126/08, 1274/08, 495/09,
475/12, 1254/12, 1255/12
Reg. 1126/08, 1274/08, 70/09,
495/09, 149/11, 475/12,
1255/12, 301/13, 1174/13,
2343/15, 2406/15
Reg. 1126/08, 1274/08, 69/09,
70/09, 495/09, 243/10,
1254/12, 1255/12, 1374/13,
2113/15
Reg. 1126/08, 1274/08,
495/09, 28/15
Reg. 1126/08, 1274/08, 70/09,
495/09, 243/10, 1254/12,
1255/12, 28/15, 2231/15
Reg. 1126/08, 1274/08,
53/2009, 70/09, 494/09,
495/09, 824/09, 839/09,
1171/09, 243/10, 149/11,
1254/12, 1255/12, 1174/13,
1375/13, 28/15
Reg. 1126/08, Reg. 1274/08,
Reg. 70/09, 1255/12, 1361/14,
2113/15
Reg. 1126/08, 1274/08, 70/09,
1255/12, 2113/15
Reg. 1126/09, 1164/09, 550/10,
574/10, 662/10, 149/11,
475/12, 1254/12, 1255/12,
183/2013, 301/13, 313/13,
1174/13, 2343/15, 2441/15
Reg. 1126/08, 1261/08, 495/09,
243/10, 244/10, 1254/12,
1255/12, 28/15
Reg. 495/09, 149/11, 1254/12,
1255/12, 1174/13, 1361/14,
28/15
Reg. 1126/08, 1274/08,
1165/09, 1255/12
Reg. 1126/08, 1274/08, 70/09,
494/09, 1142/09, 243/10,
475/12, 1254/12, 1255/12,
2343/15
Reg. 1126/08
Reg. 1126/08, 1274/08, 53/09,
70/2009, 495/09, 824/09,
1165/09, 574/10, 149/11,
1205/11, 475/12, 1254/12,
1255/12, 1256/12, 1174/13,
2343/15, 2406/15
Reg. 1126/08, 1274/08, 243/10,
632/10, 475/12, 28/15
Reg. 1254/12, 313/13, 1174/13
Reg. 1254/12, 313/13, 2173/15
Reg. 1254/12, 313/13, 1174/13
Reg. 1255/12, 1361/14
INTERPRETATION DOCUMENTS
ENDORSEMENT
IFRIC 1
Changes in existing decommissioning, restoration and similar liabilities
IFRIC 2
Members' shares in co-operative entities and similar instruments
IFRIC 4
IFRIC 5
IFRIC 6
IFRIC 7
Reg. 1126/08, 53/09, 1255/12,
301/13
Reg. 1126/08, 70/09, 1255/12
Determining whether an arrangement contains a lease
Rights to interests arising from decommissioning, restoration and
environmental rehabilitation funds
Liabilities arising from participating in a specific market - waste electrical
and electronic equipment
Applying the restatement approach under IAS 29 “Financial reporting in
hyperinflationary economies”
240
Reg. 1126/08, 1274/08
Reg. 1126/08, 1254/12
Reg. 1126/08
Reg. 1126/08, 1274/08
Notes to the consolidated accounts
Reg. 1126/08, 495/09, 1171/09,
243/10, 1254/12
Reg. 1126/08, 1274/08
IFRIC 9
Reassessment of embedded derivatives
IFRIC 10
Interim financial reporting and impairment
IFRIC 12
Service concession arrangements
IFRIC 13
Customer loyalty programmes
IFRIC 14
Prepayments of a minimum funding requirement
IFRIC 15
Agreements for the construction of real estate
IFRIC 16
Hedges of a net investment in a foreign operation
IFRIC 17
Distributions of non-cash assets to owners
IFRIC 18
Transfers of assets from customers
IFRIC 19
Extinguishing financial liabilities with equity instruments
IFRIC 20
Stripping costs in the production phase of a surface mine
IFRIC 21
Levies
SIC 7
Introduction of the euro
SIC 10
Government assistance – no specific relation to operating activities
SIC 15
Operating leases – Incentives
SIC 25
Income taxes – Changes in the tax status of an enterprise or its
shareholders
SIC 27
Evaluating the substance of transactions in the legal form of a lease
SIC 29
Service concession arrangements: disclosures
SIC 31
Revenue – Barter transactions involving advertising services
SIC 32
Intangible assets – Website costs
Reg. 254/09
Reg. 1262/08, 149/11, 1255/12
Reg. 1263/08, Reg. 1274/08,
633/10, 475/12
Reg. 636/09
Reg. 460/09, Reg. 243/10,
1254/12
Reg. 1142/09, 1254/12,
1255/12
Reg. 1164/09
Reg. 662/10, 1255/12
Reg. 1255/12
Reg. 634/14
Reg. 1126/08, 1274/08, 494/09
Reg. 1126/08, 1274/08
Reg. 1126/08, 1274/08
Reg. 1126/08, 1274/08
Reg. 1126/08
Reg. 1126/08, 1274/08, 70/09
Reg. 1126/08
Reg. 1126/08, 1274/08
A.2 – THE MAIN ITEMS IN THE FINANCIAL STATEMENTS
1.
Financial assets and liabilities held for trading and financial
assets and liabilities designated at fair value
This category includes:
1.1. Definition of financial assets and liabilities held for trading
A financial asset or liability is classified as held for trading (at fair value through profit or loss –
FVPL) and is stated within either item 20 “Financial assets held for trading” or item 40 “Financial
liabilities held for trading”, if it is:
acquired or incurred for sale or repurchase in the short term;
part of a portfolio of identified financial instruments which are managed together and for
which there is evidence of a recent and effective strategy of short term profit taking;
 a derivative (except for derivatives designated and effective as a hedging instrument – see the
relative section below).


241
Notes to the consolidated accounts
1.1.1.
Derivative financial instruments
A “derivative” is defined as a financial instrument or other contract with the following
characteristics:
its value changes in response to the change in an interest rate, in the price of a financial
instrument, in a commodity price, in a foreign currency exchange rate, in a price, interest rate
or credit rating index, or credit worthiness index or other specific variable;
 it requires no initial investment, or a net initial investment that is smaller than would be
required for other types of contract from which a similar response to changes in market factors
would be expected;
 it is settled at a future date.

The UBI Group holds derivative financial instruments for both trading and for hedging purposes
(see the relative section below for information on the latter).
1.1.2.
Embedded derivative financial instruments
An "embedded derivative financial instrument" is defined as a component of a hybrid (combined)
instrument which also includes a “host” non derivative contract such that some of the cash flows
of the combined instrument behave in a way similarly to the derivative as a stand-alone
instrument. The embedded derivative is separated from the host contract and treated in the
accounts as a stand-alone derivative if and only if:
 the economic risks and characteristics of the embedded derivative are not closely related to
the economic risks and characteristics of the host contract;
 a separate instrument with the same conditions as the embedded derivative would satisfy the
definition of a derivative;
 the hybrid (combined) instrument is not recognised within financial assets or liabilities held
for trading.
1.2. Definition of financial assets and liabilities designated at fair value
Financial assets and liabilities may be designated on initial recognition under “financial assets
and liabilities at fair value” and recorded under items 30 “Financial assets at fair value” and 50
“Financial liabilities at fair value”.
A financial asset/liability is designated at fair value through profit or loss on initial recognition
only when:
a) it is a hybrid contract containing one or more embedded derivatives and the embedded
derivative significantly alters the cash flows that would otherwise be generated by the contract;
b) the designation at fair value through profit or loss allows better information to be provided
because:
 it eliminates or considerably reduces an asymmetry in the measurement or in the
recognition, which would otherwise result from the valuation of assets or liabilities or from
recognition of the relative profits and losses on a different basis;
or
 a group of financial assets, financial liabilities or of both is managed and its performance
is measured on the basis of its fair value according to a documented risk management
procedure or investment strategy and the information on the group is provided internally
on that basis to senior managers with strategic responsibilities.
242
Notes to the consolidated accounts
1.3. Recognition criteria
The financial instruments “Financial assets and liabilities held for trading and financial assets
and liabilities designated at fair value” are recognised either:
 at the time of settlement if they are debt or equity instruments; or,
 on the trade date if they are derivative contracts.
Measurement on initial recognition is at cost considered to be the fair value of the instrument
without considering any transaction costs or income directly attributable to the instruments
themselves.
1.4. Measurement criteria
Subsequent to initial recognition, the financial instruments in question are measured at fair value
with changes recognised in the income statement within item 80 “Net trading income (loss)”, for
assets/liabilities held for trading and within item 110 “Net income/expense on financial assets
and liabilities designated at fair value” for financial assets/liabilities designated at fair value”. The
measurement of the fair value of the assets and liabilities in question is based on prices quoted on
active markets or on internal valuation models which are generally used in financial practice as
described in greater detail in Part A.4 “Information on fair value” of the Notes to the financial
statements.
1.5. Derecognition criteria
“Financial assets and liabilities held for trading and financial assets and liabilities designated at
fair value” are derecognised in the accounts when the rights to the cash flows from the financial
assets or liabilities expire or when the financial assets or liabilities are transferred with the
substantial transfer of all the risks and rewards deriving from ownership of them.
The result of the transfer of financial assets or liabilities held for trading is recognised in the
income statement within item 80 “Trading income (loss)”, while the result of the transfer of
financial assets or liabilities designated at fair value is recognised within item 110 “Net
income/expense on financial assets and liabilities designated at fair value.
2.
Available-for-sale financial assets
2.1 Definition
Available-for-sale financial assets (AFS) are defined as non-derivative financial assets designated
on initial recognition as such or that are not classified as:
(1) loans and receivables (see section below);
(2) financial investments held until maturity (see section below);
(3) financial assets held for trading and measured at fair value recognised through profit or loss
(see section below).
These financial assets are recognised within item 40 “Available-for-sale financial assets”.
243
Notes to the consolidated accounts
2.2 Recognition criteria
Available-for-sale financial assets are recognised initially when, and only when, the company
becomes a party in the contract clauses of the instrument and that is on the date of settlement, at
fair value which generally coincides with the cost of them. This value includes costs or income
directly connected with the instruments themselves.
The recognition of available-for-sale financial assets may result also from the reclassification out
of “held-to-maturity investments” or, but only and only in rare circumstances and in any case
only if the asset is no longer held for sale or repurchase in the short term, out of “financial assets
held for trading”; in this case the recognition value is the same as the fair value at the moment of
reclassification.
2.3 Measurement criteria
Subsequent to initial recognition, available-for-sale financial assets continue to be recognised at
fair value with interest (resulting from application of the amortised cost) recognised through profit
or loss and changes in fair value recognised in equity within item 140 “Valuation reserves”, except
for losses due to impairment, until the financial asset is derecognised, at which time the profit or
loss previously recognised in equity must be recognised through profit or loss. Equity instruments
for which the fair value cannot be reliably measured are recognised at cost.
The measurement of the fair value of available-for-sale financial assets is based on the prices
quoted on active markets or on internal measurement models which are generally used in
financial practice as described in greater detail in Part A.4 “Information on fair value” of the Notes
to the financial statements.
At the end of each financial year or interim reporting period, objective evidence of impairment is
assessed, which in the case of equity instruments is also held to be significant or prolonged.
As concerns the significance of the impairment, significant indications of impairment exist where
the market value of an equity instrument is less than 35% of its historical cost of acquisition. In
this case impairment is recognised through profit or loss without further analysis. If the
impairment is less then it is recognised only if the measurement of the instrument performed on
the basis of its fundamentals does not confirm the soundness of the company, which is to say its
earning prospects.
As concerns the permanence of the impairment, it is defined as prolonged when the fair value
remains below its historical cost of purchase for a period of longer than 18 months. In this case
the impairment is recognised through profit or loss without further analysis. If the fair value
continues to remain below its historical purchase cost for periods shorter than 18 months, then
the impairment to be recognised through profit or loss is determined by considering, amongst
other things, whether the impairment is attributable to general negative performance by stock
markets rather than to the specific performance of the individual counterparty.
If there is permanent impairment, the cumulative change, including that previously recognised in
equity under the aforementioned item, is recognised directly in the income statement within item
130 “Net impairment losses on b) available-for-sale financial assets”.
Permanent impairment loss is recognised when the acquisition cost (net of any repayments of
principal and amortisation) of an available-for-sale financial asset exceeds its recoverable amount.
Any recoveries of value, which are only possible when the causes of the original permanent
impairment no longer exist are treated as follows:
if they relate to investments in equity instruments, then with a balancing entry directly in the
equity reserve;
 if they relate to investments in debt instruments, they are recognised in the income statement
within item 130 “Net impairment losses on b) available-for-sale financial assets”.

244
Notes to the consolidated accounts
The amount of the reversal of the impairment loss may not in any case exceed the amortised cost
which, in the absence of previous impairment losses, the instrument would have had at that time.
Because the UBI Group applies IAS 34 “Interim financial reporting” to its half year interim reports
with consequent identification of a half year “interim period”, any impairment incurring is
recognised historically at the end of the half year.
2.4 Derecognition criteria
Available-for-sale financial assets are derecognised in the accounts when the contractual rights to
the cash flows from the financial assets expire or when the financial assets are sold with the
substantial transfer of all the risks and benefits deriving from ownership of them.
The result of the disposal of available-for-sale financial assets is recognised in the income
statement within item 100 “Income/expense from the disposal or repurchase of b) available-forsale financial assets”. Upon derecognition, any corresponding amount of what was previously
recognised in equity under item 140 “Valuation reserves” is written off against the income
statement”.
3.
Held-to-maturity investments
3.1 Definition
Held-to-maturity investments (HTM) are defined as non-derivative financial assets with fixed or
determinable payments and fixed maturity that an entity intends and is able to hold to maturity.
Exception is made for those:
(a) held for trading and those designated upon initial recognition at fair value through profit or
loss (see previous section);
(b) designated as available for sale (see previous section);
(c) which satisfy the definition of loans and receivables (see section below).
When annual and interim reports are prepared the intention and ability to hold financial assets
until maturity is assessed.
The assets in question are recognised under item 50 “Held-to-maturity investments”.
3.2
3.3 Recognition criteria
Held-to-maturity investments are recognised initially when, and only when, the company becomes
a party in the contract clauses of the instrument and that is on the date of settlement, measured
at cost inclusive of any costs and income directly attributable to it. If the recognition of assets in
this category is the result of the reclassification out of “available-for-sale financial assets” or, but
only and only in rare circumstances if the asset is no longer held for sale or repurchase in the
short-term, out of the “financial assets held for trading”, the fair value of the assets as measured
at the time of the reclassification is taken as the new measure of the amortised cost of the assets.
245
Notes to the consolidated accounts
3.4 Measurement criteria
Held-to-maturity investments are valued at amortised cost using the criteria of the effective
interest rate (see the section below “loans and receivables” for a definition). The result of the
application of this method is recognised in the income statement within item 10 “Interest and
similar income”.
When annual financial statements or interim reports are prepared, objective evidence of the
existence of an impairment of the value of the assets is assessed. If there is permanent
impairment, the difference between the recognised value and the present value of expected future
cash flows discounted at the original effective interest rate is included in the income statement
under the item 130 “Net impairment losses on c) held-to-maturity investments”. Any recoveries of
value recorded, should the cause that gave rise to the previous recognition of impairment loss no
longer exist, are recognised under the same item in the income statement.
The fair value of held-to-maturity investments is measured for disclosure purposes or where
effective currency or credit risk hedges exist (in relation to the risk hedged) and it is estimated as
described in greater detail in Part A.4 “Information on fair value” of the Notes to the financial
statements.
3.5 Derecognition criteria
Held-to-maturity investments are derecognised when the rights to the cash flows from the
financial assets expire or when the financial assets are sold with the substantial transfer of all the
risks and rewards deriving from ownership of them. The result of the disposal of held-to-maturity
financial assets is recognised in the income statement under the item 100 “Income/expense from
disposal or repurchase of c) held-to-maturity investments”.
4.
Loans and receivables
4.1 Definition
Loans and receivables (L&R) are defined as non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. The following are exceptions:
(a) those which it is intended to sell immediately or in the short-term, that are classified as held
for trading and those that may have been designated on initial recognition as at fair value
through profit or loss;
(b) those designated upon initial recognition as available for sale;
(c) those for which the holder may not recover substantially all of its initial investment, other
than because of credit deterioration; in this case they are classified as available-for-sale.
Loans and receivables are recognised under the items 60 “Loans and advances to banks” and 70
“Loans and advances to customers”.
246
Notes to the consolidated accounts
4.2 Recognition criteria
Loans and receivables are initially recognised in the accounts when the company becomes part of
a loan contract, which is to say when the creditor acquires the right to the payment of the sums
agreed in the contract. That moment corresponds to the date on which the loan is granted.
Recognition in this category may result also from the reclassification out of “available-for-sale
financial assets” or, but only and only in rare circumstances if the asset is no longer held for sale
or repurchase in the short term, out of “financial assets held for trading”.
The amount initially recognised is that of the fair value of the financial instrument which is the
same as the amount granted inclusive of costs or income directly attributable to it and
determinable from the outset, independently of when they are paid. The amount of the initial
recognition does not include all those expenses that are reimbursed by the debtor counterparty or
that are attributable to internal expenses of an administrative character.
If the recognition is the result of reclassification, the fair value of the asset recognised at the time
of the reclassification is taken as the new measure of the amortised cost of the assets.
For loans not granted under market conditions, the initial fair value is calculated by using special
measurement techniques described below; in these circumstances the difference between the fair
value that is calculated and the amount granted is included directly in the income statement
within the item interest.
Contango and repo agreements with the obligation or right to repurchase or resell at term are
recognised in the accounts as funding or lending transactions. For transactions with a spot sale
and forward repurchase, the spot cash received is recognised in the accounts as borrowings, while
the spot purchase transactions with forward resale are recognised as lending for the spot amount
paid.
4.3 Measurement criteria
Loans and receivables are measured at amortised cost using the criteria of effective interest.
The amortised cost of a financial asset or financial liability is the amount at which the financial
asset or financial liability was measured upon initial recognition net of principal repayments, plus
or minus the cumulative amortisation using the effective interest criterion on any difference
between that initial amount and the maturity amount, minus any reduction (arising from an
impairment or uncollectibility).
The effective interest criterion is a method of calculating amortised cost of an asset or liability (or
group of assets and liabilities) and of allocating the interest income or expense over the relevant
period. The effective interest rate is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the financial instrument. To determine the
effective interest rate, the cash flows must be estimated considering all the contractual terms of
the financial instrument (e.g. prepayment, call and similar options), but future credit losses shall
not be considered. The calculation includes all fees and basis points paid or received between
parties to the contract that are an integral part of the effective interest rate, the transaction costs
and all other premiums or discounts.
At each reporting date or when interim reports are prepared, any objective evidence that a
financial asset or group of financial assets has suffered impairment loss is assessed. This
circumstance occurs when it is probable that a company may not be able to collect amounts due
on the basis of the original contracted conditions or, for example, in the presence of:
(a) significant financial difficulties of the issuer or obligor;
(b) a breach of contract such as a default or delinquency in interest or principal payments;
(c) the lender, for economic or legal reasons relating to the borrower’s financial difficulty,
granting to the borrower a concession that the lender would not otherwise consider;
(d) the probability of the beneficiary declaring procedures for loan restructuring;
(e) the disappearance of an active market for that financial asset due to financial difficulties;
247
Notes to the consolidated accounts
(f)
observable data indicating an appreciable decrease in estimated future cash flows from a
similar group of financial assets since the time of the initial recognition of those assets,
although the decrease cannot yet be identified with the individual financial assets of the
group.
The measurement of non-performing loans (termed “deteriorated loans” in previous financial
reports) (in accordance with the definitions contained in current Bank of Italy supervisory
regulations divided into: bad-loans (termed “non-performing” previously), unlikely to pay, past
due) is performed on a case-by-case basis.
The method for calculating the impairment losses recognised on non-performing loans is based on
discounting expected future cash flows for principal and interest, taking account of any
guarantees attached to positions and of any advances received. The basic elements for
determining the present value of cash flows are the identification of the estimated receipts, the
relative maturity dates and the discount rate to apply. The amount of the loss is equal to the
difference between the recognised value of the asset and the present value of expected future cash
flows, discounted at the original effective interest rate.
The remaining loans are measured using, collective, statistical methods which group uniform
classes of risk together.
If a loan is subject to individual measurement and shows no objective impairment loss, it is
placed in a class of financial assets with similar credit risk characteristics and subjected to
collective measurement.
Permanent impairment that is found is immediately recognised in the income statement under the
item 130 “Net impairment losses on a) loans” as are reversals of part or all of the impairment
losses previously recognised. Reversals of impairment losses are recognised where there is an
improvement in credit quality sufficient to provide reasonable certainty of prompt collection of the
principal and the interest according to the original conditions of the original loan contract, or in
the presence of a progressive reversal of the present value calculated at the time of recognising the
impairment loss. Where loans are measured on a collective basis, any upward value adjustments
or reversals of impairment losses are recalculated on a differential basis in relation to each
performing loan at the measurement date.
The methods used to determine the fair value of loans and receivables are described in Part A.4
“Information on fair value” of the Notes to the financial statements. The fair value is measured for
all loans for information purposes only. For loans and receivables subject to effective hedging, the
fair value is calculated in relation to the risk that is hedged for measurement purposes.
4.4 Derecognition criteria
Loans are derecognised from the balance sheet when the rights to the cash flows from the
financial assets expire or when the financial assets are sold with the substantial transfer of all the
risks and rewards deriving from ownership of them and also when events to extinguish the debt
occur, in accordance with the definition provided in the supervisory regulations in force.
Otherwise loans continue to be recognised on the balance sheet for an amount equal to the
remaining involvement, even if legal title has been transferred to a third party.
The assets in question are derecognised in the balance sheet even when the Bank maintains the
contractual right to receive cash flows from them, but when at the same time it has a contractual
obligation to pay those cash flows to a third party.
If it results from disposals, the profit or loss from the derecognition of loans and receivables is
recognised in the income statement within item 100 “Income (loss) from the disposal or
248
Notes to the consolidated accounts
repurchase of a) loans”, or if it results from the aforementioned events to extinguish debt, within
item 130 “Net impairment losses on a) loans and receivables”. In the latter case the events to
extinguish debt consist of either official actions taken by the competent bodies of the Bank from
which the total or partial non-recoverability of the financial asset results or the waiver of recovery
activities for reasons of financial expediency.
5.
Hedging derivatives
5.1 Definition
Hedging transactions are designed to neutralise potential losses on a specific item (or group of
items) attributable to a determined risk, by means of the gains realised on another instrument or
group of instruments if that particular risk should actually result in losses.
The UBI Group uses the following type of hedging transactions, appropriately represented in the
accounts and described below:
a fair value hedge: the objective is to offset adverse changes in the fair value of the asset or
liability hedged;
 a cash flow hedge: the objective is to hedge against the exposure to variability in expected
cash flows with respect to the initial expectations.

Derivative contracts stipulated with external counterparties are designated as hedging
instruments.
5.2 Recognition criteria
As with all derivatives, derivative financial instruments used for hedging are initially recognised
and subsequently measured at fair value and are classified in the balance sheet under assets
within item 80 “Hedging derivatives” and under liabilities within item 60 “Hedging derivatives”.
A relationship qualifies as a hedge and is appropriately represented in the accounts if, and only if,
all the following conditions are satisfied:





at the start of the hedging transaction the relationship is formally designated and
documented, including the company’s risk management objective and strategy for undertaking
the hedge. This documentation includes identification of the hedging instrument, the item or
transaction hedged, the nature of the risk being hedged, and how the entity will assess the
hedging instrument's effectiveness in offsetting the exposures to changes in the fair value of
the item hedged or in the cash flows attributable to the risk hedged;
the hedging is expected to be highly effective;
the planned transaction hedged, for hedging cash flows, is highly probable and presents an
exposure to changes in cash flows that could have effects on the income statement;
the effectiveness of the hedging can be reliably measured;
the hedging is measured on an ongoing basis and is considered highly effective for all the
financial years in which it was designated.
5.2.1
Methods for testing effectiveness
A hedge relationship is judged effective, and as such is appropriately represented in the accounts,
if at its inception and during its life the changes in the fair value or cash flows of the hedged item
attributable to the hedged risk are expected and have almost always been completely offset by the
changes in the fair value or cash flows of the hedging instrument. This conclusion is reached
when the actual result falls within a range of between 80% and 125%.
249
Notes to the consolidated accounts
The effectiveness of a hedge is tested at inception and at each reporting date by means of a
prospective test designed to demonstrate the expected effectiveness of the hedge during its life.
Further retrospective tests are conducted monthly on a cumulative basis where the objective is to
measure the degree of effectiveness of the hedge in the reporting period and therefore to verify
whether the hedge has actually been effective in the period.
Derivative financial instruments that are considered hedges from a profit and loss viewpoint but
which do not satisfy the requirements to be considered effective instruments for hedging are
recognised under item 20 “Financial assets held for trading” or under item 40 “Financial liabilities
held for trading” and the profits and losses under the corresponding item 80 “Trading income
(loss)”.
If the above tests do not confirm the effectiveness of the hedge, then if it is not derecognised, the
derivative contract is reclassified within derivatives held for trading and the instrument hedged is
again measured according to the criterion applied for its balance sheet classification.
5.3 Measurement criteria
5.3.1
Fair value hedging
Fair value hedging is treated as follows:
the profit or loss resulting from measuring a hedging instrument at fair value is included in
the income statement under item 90 “Net hedging income (loss)”;
 the profit or loss on the item hedged attributable to the hedged risk adjusts the value in the
accounts of the hedged item and is recognised immediately, regardless of the type of asset or
liability hedged, in the income statement within the aforementioned item.

Hedge accounting is discontinued prospectively in the following cases:
1. the hedging instrument expires or is sold, terminated, or exercised;
2. the hedge no longer meets the hedge accounting criteria described above;
3. the entity revokes the designation.
If the asset or liability hedged is measured at amortised cost, the higher or lower value resulting
from measuring them at fair value as a result of the hedge becoming ineffective is recognised
through profit or loss, according to the effective interest rate method or at constant rates in the
event of a hedge on a portfolio of assets and liabilities where that method is not feasible, or in a
single amount if the hedge has been derecognised.
The methods used for measurement of the fair value of the risk hedged in the assets or liabilities
subject to hedging are described in Part A.4 “Information on fair value” of the Notes to the
financial statements.
5.3.2
Cash flow hedging
When a derivative is designated as a hedge of exposure to changes in expected cash flows from an
asset or liability in the balance sheet or a future transaction considered highly probable, the
accounting treatment of the hedge is as follows:
the profits or losses (from the valuation of the hedging derivative) attributable to the effective
portion of the hedge are recognised in a special reserve in equity termed 140 “Valuation
reserves”;
 the profits or losses (from measurement of the hedging derivative) attributable to the
ineffective portion of the hedge are recognised directly in the income statement under item 90
“Net hedging income (loss)”;
 the asset or liability hedged is measured according to the class of asset or liability to which it
belongs.

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Notes to the consolidated accounts
If a future transaction occurs which involves recognising non financial assets and liabilities, the
corresponding profits or losses initially recognised under item 140 “Valuation reserves” are then
transferred from that reserve and included as an initial cost of the asset or liability that is
recognised. If the future hedged transaction subsequently involves recognition of a financial asset
or liability, the associated profits or losses that were originally recognised under the item 140
“Valuation reserves” are reclassified to the income statement in the same reporting period or
periods during which the assets acquired or liabilities incurred have an effect on the income
statement. If a portion of the profits or losses recognised in the aforementioned reserve are not
considered recoverable, it is reclassified into the income statement within item 80 “Net trading
income (loss)”.
In all cases other than those already described, the profits or losses initially recognised under the
item 140 “Valuation reserves” are transferred to the income statement to reflect the time and
manner in which the future transaction is recognised in the income statement.
An entity must
circumstances:
discontinue
hedge
accounting
prospectively
in
each
of
the
following
(a) the hedging instrument expires or is sold, terminated, or exercised (for this purpose the
replacement or exchange of one hedging instrument with another hedging instrument is not a
conclusion or termination if that replacement or exchange forms part of an entity’s
documented hedging strategy). In this case the total profit (or loss) on the hedging instrument
continues to be recognised directly in equity until the reporting period in which the hedge
became effective and it continues to be recognised separately until the programmed hedging
transaction occurs;
(b) the hedge no longer satisfies the criteria for hedge accounting. In this case the total profit or
loss on the hedging instrument continues to be recognised directly in equity starting from the
reporting period in which the hedge became effective and it continues to be recognised
separately in equity until the programmed hedging transaction occurs;
(c) it is no longer considered that the future transaction should occur, in which case any related
total profit or loss on the hedging instrument recognised directly in equity starting from the
reporting period in which the hedge became effective must be recognised through profit or
loss;
(d) the entity revokes the designation. For hedges of a programmed transaction, total profits or
losses on the hedging instrument recognised directly in equity starting from the reporting
period in which the hedge became effective continues to be recognised separately in equity
until the programmed transaction occurs or it is expected that it will no longer occur.
If it is expected that the transaction will no longer occur the total profit (or loss) that had been
recognised directly in equity is transferred to the income statement.
5.3.3
Hedging portfolios of assets and liabilities
Hedging of portfolios of assets and liabilities (“macrohedging”) and appropriate accounting
treatment is possible after first:
-
identifying the portfolio to be hedged and dividing it by maturity dates;
designating the risk to be hedged;
identifying the interest rate risk to be hedged;
designating the hedging instruments;
determining the effectiveness.
The portfolio for which the interest rate risk is hedged may contain both assets and liabilities.
This portfolio is divided on the basis of expected maturity or repricing dates of interest rates after
first analysing the structure of the cash flows.
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Notes to the consolidated accounts
Changes in the fair value of the hedged instrument are recognised in the income statement under
item 90 “Net hedging income (loss)” and in the balance sheet under item 90 “Fair value change in
hedged financial assets” or under item 70 “Fair value change in hedged financial liabilities”.
Changes occurring in the fair value of the hedging instrument are recognised in the income
statement within item 90 “Net hedging income (loss)” and under assets in the balance sheet
within item 80 “Hedging derivatives” or under liabilities side within item 60 “Hedging derivatives”.
6.
Equity investments
6.1 Definition
6.1.1 Subsidiaries
A “subsidiary” is defined as a company over which the Parent exercises control. Such a condition
occurs when the latter is exposed to variable returns or holds rights on those returns resulting
from its relationship with the subsidiary and at the same time it has the ability to influence those
returns by exercising its power over that entity.
The existence of control is also determined by considering the presence of potential voting rights
and contractual rights which empower the owner to significantly influence the returns of the
subsidiary.
6.1.2 Companies subject to joint control
A “company subject to joint control” is defined as a company governed by a contractual
arrangement whereby the parties to it that hold joint control enjoy rights over the net assets of the
arrangement. Joint control assumes that control over the arrangement is shared contractually
and that it only exists when the unanimous consent of all the parties that share the control is
required for decisions that regard important activities.
6.1.3 Associates
An “associate” is defined as a company in which the investor exercises significant influence.
Significant influence is the power to participate in the financial and operating policy decisions of
the company invested in but not to control or have joint control of it.
6.2 Recognition criteria
Equity investments in associates or joint ventures are recognised at cost of purchase plus any
accessory costs.
6.3 Measurement criteria
In the consolidated financial statements equity investments in subsidiaries are fully consolidated
line-by-line. Investments in associates and companies subject to joint control are measured by
adopting the equity method.
Any objective evidence that an equity investment has been subject to impairment is assessed as
at each annual or interim reporting date. The recoverable amount is then calculated, considering
252
Notes to the consolidated accounts
the present value of the future cash flows which may be generated by the investment, including
the final disposal value. If the recoverable amount calculated in this way is less than the carrying
value, the difference is recognised in the income statement under 240 “Profits (losses) of equity
investments (valued at equity)”. Any future reversals of impairment are also included in the item
where the reasons for the original impairment no longer apply.
6.4 Derecognition criteria
Equity investments are derecognised in the balance sheet when the contractual rights to the cash
flows from the financial assets expire or when the financial assets are sold with the substantial
transfer of all the risks and rewards deriving from ownership of them. The result of the disposal
on investments valued using the equity method recognised in the income statement under item
240 “Profits (losses) of equity investments (valued at equity)”; the result of the disposal of equity
investments other than those valued using the equity method is recognised in the income
statement under item 270 “Profits (losses) on the disposal of investments
7.
Property, plant and equipment
7.1 Definition of assets for functional use
“Assets for functional use” are defined as tangible assets possessed to be used for the purpose of
carrying on a company’s business and where the use is planned to last longer than one year.
Assets for functional use also include properties rented to employees, ex employees and their
heirs, as well as works of art.
7.2 Definition of investment property
“Investment property” is defined as properties held in order to earn rentals or for capital
appreciation. As a consequence, investment property is to be distinguished from assets held for
the use of the owner because they generate cash flows that are very different from the other assets
held by the banking group.
Finance lease contracts are also included within tangible assets (for functional use and held for
investment) even if the legal title to the assets remains with the leasing company.
7.3 Recognition criteria
Tangible assets, functional and other, are initially recognised at cost (item 120 “Property, plant
and equipment”), inclusive of all costs directly connected with bringing it to working condition for
the use of the assets and of purchase taxes and duties that are not recoverable This amount is
subsequently increased to include expenses incurred from which it is expected future benefits will
be obtained. The costs of ordinary maintenance are recognised in the income statement at the
time at which they are incurred, while extraordinary maintenance costs (improvements) from
which future benefits are expected are capitalised by increasing the value of the relative asset.
Improvements and expenses incurred to increase the value of leased assets from which future
benefits are expected are recognised:
–
under the most appropriate category of item 120, “Property, plant and equipment”
if they are independent and can be separately identified, whether they are leased
253
Notes to the consolidated accounts
assets the property of others or whether they are held under a financial leasing
contract;
– under item 120 “Property, plant and equipment” if they are not independent and
cannot be separately identified as an increase to the type of assets concerned if
held by means of a financial lease contract or under item 160 “Other assets” if they
are held under an ordinary lease contract.
The cost of property, plant and equipment is recognised as an asset if, and only if:
it is probable that the future economic benefits associated with the asset will flow to the
enterprise;
 the cost of the asset can be reliably determined.

7.4 Measurement criteria
Subsequent to initial recognition, items of property, plant and equipment for use in operations are
recognised at cost, as defined above, net of accumulated depreciation and any permanent
cumulative impairment. The depreciable amount, equal to cost less the residual value (i.e. the
amount that would be normally obtained from disposal, less disposal costs, if the asset was
normally in the conditions, including age, expected at the end of its useful life), should be
allocated on a systematic basis over the asset's useful life by adopting the straight line method of
depreciation. The useful life of an asset, which is reviewed periodically to detect any significant
change in estimates compared to previous figures, is defined as:


the period of time over which it is expected that the asset can be used by a company or,
the quantity of products or similar units that an entity expects to obtain from the use of the
asset.
Since property, plant and equipment may consist of items with different useful lives, land,
whether by itself or as part of the value of a building is not depreciated since it constitutes a fixed
asset with an indefinite life. The value attributable to the land is deducted from the total value of
a property for all buildings in proportion to the percentage of ownership. Buildings, on the other
hand, are depreciated according to the criteria described above.
Works of art are not depreciated because they generally increase in value over time.
Depreciation of an asset starts when it is available for use and ceases when the asset is written off
the accounts, which is the most recent of when it is classified as for sale and the date of
elimination from the accounts. As a consequence depreciation does not stop when an asset is left
idle or is no longer in use, unless the asset has already been fully depreciated.
Improvements and expenses which increase the value are depreciated as follows:
 if they are independent and can be separately identified, according to the presumed useful life
as described above;
 if they are not independent and cannot be separately identified, then if they are held under an
ordinary leasing contract, over the shorter of the period in which the improvements and
expenses can be used and that of the remaining life of the contract taking account of any
individual renewals, or if the assets are held under a finance lease contract, over the expected
useful life of the assets concerned.
The depreciation of improvements and expenses to increase the value of leased assets recognised
under item 160 “Other assets” is recognised under item 220 “Other operating income (expense)”.
At the end of each annual or interim reporting period the existence of indications that
demonstrate the impairment of the value of an asset are assessed. The loss is determined by
comparing the carrying amount of the tangible asset with the lower recoverable amount. The
latter is the greater of the fair value, net of any sales costs, and the relative use value intended as
the present value of future cash flows generated by the asset. The loss is immediately recognised
in the income statement under item 200 “Net impairment losses on property, equipment and
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Notes to the consolidated accounts
investment property”; the item also includes any future recovery in value if the causes of the
original write down no longer exist.
7.4.1
Definition and measurement of fair value
7.4.1.1 Properties
The methods used to determine the fair value of properties are described in Part A.4 “Information
on fair value” of the Notes to the financial statements.
7.4.1.2 Determination of the value of land
The methods used to determine the fair value of land are described in Part A.4 “Information on
fair value” of the Notes to the financial statements.
7.5 Property, plant and equipment acquired through finance leases
A finance lease is a contract that substantially transfers all the risks and rewards incident to
ownership of an asset. Legal title may or may not be transferred at the end of the lease term.
The beginning of the lease term is the date on which the lessee is authorised to exercise his right
to use the asset leased and therefore corresponds to the date on which the lease is initially
recognised.
When the contract commences, the lessee recognises the financial lease transactions as assets
and liabilities in its balance sheet at the fair value of the asset leased or, if lower, at the present
value of the minimum payments due. To determine the present value of the minimum payments
due, the discount rate used is the contractual interest rate implicit in the lease, if practicable, or
else the lessee’s incremental borrowing rate is used. Any initial direct costs incurred by the lessee
are added to the amount recognised for the asset.
The minimum payments due are apportioned between the finance charges and the reduction of
the residual liability. The former are allocated over the lease term so as to produce a constant rate
of interest on the residual liability.
The finance lease contract involves recognition of the depreciation charge for the asset leased and
of the finance charges for each financial year. The depreciation policy used for assets acquired
under finance leases is consistent with that adopted for owned assets. See the relative paragraph
for a more detailed description.
7.6 Derecognition criteria
Property, plant and equipment are derecognised in the balance sheet when they are disposed of or
when they are permanently retired from use and no future economic benefits are expected from
their disposal. Any gains or losses resulting from the retirement or disposal of the property,
equipment and investment property, calculated as the difference between the net consideration on
the sale and the carrying amount of the asset are recognised in the income statement under item
270 “Profit (loss) on the disposal of investments”.
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Notes to the consolidated accounts
8.
Intangible assets
8.1 Definition
An intangible asset is defined as an identifiable non-monetary asset without physical substance
that is used in carrying on a company’s business.
The asset is identifiable when:
it is separable, which is to say capable of being separated and sold, transferred, licensed,
rented, or exchanged;
 it arises from contractual or other legal rights, regardless of whether those rights are
transferable or separable from other rights and obligations.

An asset possesses the characteristic of being controlled by the enterprise as a result of past
events and the assumption that its use will cause economic benefits to flow to the enterprise. An
entity has control over an asset if it has the power to obtain future economic benefits arising from
the resource in question and may also limit access by others to those benefits.
Future economic benefits arising from an intangible asset might include receipts from the sale of
products or services, savings on costs or other benefits resulting from the use of the asset by an
enterprise.
An intangible asset is recognised if, and only if:
(a) it is probable that the expected future economic benefits attributable to the asset will flow to
the entity;
(b) the cost of the asset can be measured reliably.
The probability of future economic benefits occurring is assessed on the basis of reasonable and
supportable assumptions that represent the best estimate of the economic conditions that will
exist over the useful life of the asset.
The degree of probability attaching to the flow of economic benefits attributable to the use of the
asset is assessed on the basis of the sources of information available at the time of initial
recognition, giving greater weight to external sources of information.
In addition to goodwill and software used over several years, brands, assets under management
and assets under management recognised following the merger of the former BPU Banca and the
former Banca Lombarda e Piemontese are also considered as intangible assets.
8.1.1 Intangible assets with a finite useful life
A finite useful life is defined for an asset where it is possible to estimate a limit to the period over
which the related economic benefits are expected to be produced.
Intangible assets considered as having a finite useful life include software, assets under
management and brands.
8.1.2 Intangible assets with an indefinite useful life
An indefinite useful life is defined for an asset where it is not possible to estimate a predictable
limit to the period over which the asset is expected to generate economic benefits for the Bank.
The attribution of an indefinite useful life to an asset does not arise from having already
programmed future expenses which restore the standard level of performance of the asset over
time and prolong its useful life.
Intangible assets considered as having an indefinite useful life include goodwill.
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Notes to the consolidated accounts
8.2 Recognition criteria
An indefinite useful life is defined for an asset where it is not possible to estimate a predictable
limit to the period over which the asset is expected to generate economic benefits for the Bank.
The attribution of an indefinite useful life to an asset does not arise from having already
programmed future expenses which restore the standard level of performance of the asset over
time and prolong its useful life.
Intangible assets considered as having an indefinite useful life include goodwill.
8.3 Measurement criteria
Subsequent to initial recognition intangible assets with a finite useful life are recognised at cost
net of total amortisation and any losses in value that may have occurred. Amortisation is
calculated on a systematic basis over the estimated useful life of the asset (see definition included
in the section “Property, equipment and investment property”) using the straight line method for
all intangible assets with the exception of intangible assets relating to customer accounts
recognised following the purchase price allocation resulting from the merger of the former BPU
Banca and the former Banca Lombarda e Piemontese. In this case the amortisation is calculated
using percentage rates of amortisation which represent the probability of the customer accounts
ending over time.
Amortisation begins when the asset is available for use and ceases on the date on which the asset
is eliminated from the accounts.
Intangible assets with an indefinite useful life (see, goodwill, as defined in the section below if
positive) are recognised at cost net of any impairment loss resulting from periodic reviews when
tests are performed to verify the appropriateness of the carrying amount of the assets (see section
below). As a consequence amortisation of these assets is not calculated.
No intangible assets arising from research (or from the research phase of an internal project) are
recognised. Research expenses (or the research phase of an internal project) are recognised as
expenses at the time at which they are incurred.
An intangible asset arising from development (or from the development phase of an internal
project) is recognised if, and only if the following can be demonstrated:
(a) the technical feasibility of completing the intangible asset so that it becomes available for sale
or use;
(b) the intention of the company to complete the intangible asset to use it or sell it;
(c) the capacity of the company to use or sell the intangible asset.
At the end of each annual or interim reporting period the existence of potential impairment of the
value of intangible assets is assessed. The impairment is given by the difference between the
carrying value of the assets and the recoverable amount and is recognised, as are any recoveries
of value, under the item 210 “Net impairment losses on intangible assets”, with the exception of
impairment losses on goodwill which are recognised under item 260 “Net impairment losses on
goodwill”.
8.4 Goodwill
Goodwill is defined as the difference between the purchase cost and the fair value of assets and
liabilities acquired as part of a business combination which consists of the union of separate
enterprises or businesses in a single entity required to prepare financial statements. The result of
almost all business combinations consists in the fact that a sole entity, an acquirer, obtains
257
Notes to the consolidated accounts
control over one or more separate businesses of the acquiree. When an entity acquires a group of
activities or net assets that do not constitute a business it allocates the cost of the group to
individual assets and liabilities identified on the basis of their relative fair value at the date of
acquisition.
A business combination may give rise to a holding relationship between a parent company and a
subsidiary in which the acquirer is the parent company and the acquiree is the subsidiary.
All business combinations are accounted for using the purchase method of accounting.
The purchase method involves the following steps:
(a) identification of the acquirer (the acquirer is the combining enterprise that obtains control of
the other combining enterprises or businesses);
(b) determination of the acquisition date;
(c) determination of the cost of the business combination, intended as the consideration
transferred by the purchaser to the shareholders of the acquiree;
(d) the allocation, as at the acquisition date, of the cost of the business combination by means of
the recognition, classification and measurement of the identifiable assets acquired and the
identifiable liabilities assumed;
(e) recognition of any existing goodwill.
Business combinations performed with subsidiary undertakings or with companies belonging to
the same group are recognised on the basis of the significant economic substance of the
transactions.
In application of that principle, the goodwill arising from those transactions in the separate
financial statements is recognised:
(a) within asset item 120 of the balance sheet if significant economic substance is found;
(b) as a deduction from equity if it is not found.
These transactions are eliminated from the consolidated financial statements and are therefore
recognised solely as the relative costs incurred in relation to parties external to the Group.
The goodwill recognised in the consolidated financial statements of the Group (“goodwill arising on
consolidation” resulting from the elimination of the equity investments in subsidiaries) is the
result of all the goodwill and positive consolidation differences relating to some of the companies
controlled by the Parent.
Any changes in the share of ownership which do not result in the loss or acquisition of control are
to be considered, in compliance with IFRS 10, as transactions between shareholders and as a
consequence the relative effects must be recognised as either an increase or a decrease in equity.
8.4.1.
Allocation of the cost of a business combination to assets and liabilities and
contingent liabilities
The acquirer:
(a) recognises the goodwill acquired in a business combination as assets;
(b) measures that goodwill at its cost to the extent that it is the excess of the cost of the business
combination over the acquirer's share of interest in the net fair values of the acquiree's
identifiable assets, liabilities and contingent liabilities.
Goodwill acquired in a business combination represents a payment made by the acquirer in the
expectation of receiving economic future benefits from the asset which cannot be identified
individually and recognised separately.
After initial recognition, the acquirer values the goodwill acquired in a business combination at
the relative cost net of cumulative impairment.
The goodwill acquired in a business combination must not be amortised. The acquirer tests the
asset for impairment annually or more frequently if specific events or changed circumstances
258
Notes to the consolidated accounts
indicate that it may have suffered a reduction in value, according to the relative accounting
standard.
The standard states that an asset (including goodwill) has suffered an impairment loss when the
amount recognised in the accounts exceeds the recoverable amount understood as the greater of
the fair value, net of any sales expenses and its value in use, defined by section 6 of IAS 36.
In order to test for impairment, goodwill must be allocated to cash generating units or to groups of
cash generating units, in observance of the maximum aggregation limit which cannot exceed the
operating segment identified in accordance with IFRS 8.
8.4.2.
Negative goodwill
If the acquirer’s share of the net fair value of the identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination the acquirer:
(a) reviews the identification and measurement of the identifiable assets, liabilities and
contingent liabilities of the acquiree and the determination of the cost of the business
combination;
(b) immediately recognises any excess existing after the new measurement in the income
statement.
8.5 Derecognition criteria
Intangible assets are derecognised in the balance sheet following disposal or when no economic
future benefit is expected from its use or disposal.
9.
Liabilities, debt securities issued (and subordinated liabilities)
The various forms of interbank and customer funding are recognised within the balance sheet
items 10 “Due to banks”, 20 “Due to customers” and 30 “Debt securities issued”. These items also
include liabilities recognised by a lessee in financial leasing operations.
9.1 Recognition criteria
The liabilities in question are recognised in the balance sheet at the time when the funding is
received or when the debt securities are issued.
The amount initially recognised is the fair value, which is normally the same as either the
consideration received or the issue price, inclusive of any additional expenses or income that are
directly attributable to the transaction and determinable from the outset, regardless of when they
are paid.
The amount of the initial recognition does not include all those costs that are reimbursed by the
creditor counterparty or that are attributable to internal costs of an administrative character.
9.2 Measurement criteria
After initial recognition medium to long-term financial liabilities are measured at amortised cost
using the effective interest method as defined in previous paragraphs.
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Notes to the consolidated accounts
Short-term liabilities, for which the time factor is insignificant, are measured at cost.
The methods used to determine the fair value of liabilities and debt securities issued, performed
for information purposes only, are described in Part A.4 “Information on fair value” of the Notes to
the financial statements.
9.3 Derecognition criteria
Financial liabilities are derecognised in the balance sheet when they mature or are extinguished.
The repurchase of own securities issued results in derecognition of the securities with the
consequent redefinition of the liability for debt instruments issued. Any difference between the
repurchase value of the own securities and the corresponding carrying value of the liabilities is
recognised in the income statement under the item 100 “Income from the disposal or repurchase
of d) financial liabilities”. Any subsequent re-issue of the securities previously subject to
derecognition in the accounts constitutes a new issue for accounting purposes with the
consequent recognition at the new issue price without any effect in the income statement.
10. Tax assets and liabilities
Tax assets and liabilities are stated in the balance sheet under the items 140 “Tax assets” and 80
“Tax liabilities”.
10.1. Current tax assets and liabilities
Current tax for the current and prior periods is recognised as a liability to the extent that it has
not yet been settled; any excess compared to the amount due is recognised as an asset.
Current tax liabilities (assets) for the current and prior years, are measured at the amount
expected to be paid to/recovered from taxation authorities, using the tax rates and tax laws in
force.
Current tax assets and liabilities are derecognised in the accounts in the year in which the assets
are realised or the liabilities are extinguished.
10.2. Deferred tax assets and liabilities
Deferred tax liabilities are recognised for all taxable temporary differences unless the deferred tax
liability arises from:


goodwill for which amortisation is not deductible for tax purposes or
the initial recognition of an asset or a liability in a transaction which:


is not a business combination and
at the time of the transaction, affects neither the accounting nor the taxable profit.
Deferred tax assets are not calculated for higher values of assets for which the tax regime has
been suspended relating to equity investments and to reserves for which the tax regime has been
suspended because it is considered there are no reasonable grounds to assume they will be taxed
in future.
Deferred tax liabilities are recognised within the balance sheet item 80 “Tax liabilities b) deferred”.
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Notes to the consolidated accounts
A deferred tax asset is recognised for all deductible temporary differences if it is probable that a
taxable income will be used against which it will be possible to use the deductible temporary
difference, unless the deferred tax asset arises from:


negative goodwill which is treated as deferred income;
the initial recognition of an asset or liability in a transaction which:


is not a business combination and
affects neither the accounting profit nor the taxable profit at the time of the transaction.
Assets for prepaid taxes are recognised under the balance sheet item 140 “Tax assets b) deferred”.
Deferred tax assets and deferred tax liabilities are subject to constant monitoring and are
measured using the tax rates that it is expected will apply in the period in which the tax asset will
be realised or the tax liability will be extinguished on the basis of the tax regulations established
by laws currently in force.
Deferred tax assets and deferred tax liabilities are derecognised in the accounts in the year in
which:
 the temporary difference which gave rise to them becomes payable with regard to deferred
tax liabilities or deductible with regard to deferred tax assets;
 the temporary difference which gave rise to them is no longer valid for tax purposes.
Deferred tax assets and deferred tax liabilities must not normally be discounted to present values
nor offset one against the other.
11. Non-current assets and disposal groups held for sale –
Liabilities associated with disposal groups held for sale
Non-current assets and liabilities and groups of non-current assets and liabilities for which it is
presumed that the carrying value will recovered by selling them rather than by continued use are
classified respectively under items 150 “Non-current assets and disposal groups held for sale” and
90 “Liabilities associated with disposal groups held for sale”.
In order to be classified within these items the assets or liabilities (or disposal groups) must be
immediately available for sale and there must be active, concrete programmes to sell the assets or
liabilities in the short term.
These assets or liabilities are measured at the lower of the carrying amount and their fair value
net of disposal costs. Profits and losses attributable to groups of assets or liabilities held for sale
are recognised in the income statement under item 310 “Pre-tax profit from discontinued
operations”. Profits and losses attributable to individual assets held for disposal are recognised in
the income statement under the most appropriate item.
12. Provisions for risks and charges
12.1. Definition
A provision is defined as a liability of uncertain timing or amount.
A contingent liability, however, is defined as:
 a possible obligation, the result of past events, the existence of which will only be confirmed
by the occurrence or (non-occurrence) of future events that are not totally under the control of
the enterprise;
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Notes to the consolidated accounts

a present obligation that is the result of past events, but which is not recognised in the
accounts because:


it is improbable that financial resources will be needed to settle the obligation;
the amount of the obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognised in the accounts, but are only reported, unless they are
considered a remote possibility.
12.2. Recognition criteria and measurement
A provision is recognised if and only if:
there is a present obligation (legal or implicit) that is the result of a past event and
it is probable that the use of resources suitable for producing economic benefits will be
required to fulfil the obligation; and
 a reliable estimate can be made of the amount arising from fulfilment of the obligation.


The amount recognised as a provision represents the best estimate of the expenditure required to
settle the present obligation at the reporting date and reflects the risks and uncertainties that
inevitably characterise a number of facts and circumstances. The amount of a provision is
measured by the present value of the expenditure that it is assumed will be necessary to settle the
obligation where the effect of the present value is a substantial aspect. Future events that might
affect the amount required to settle the obligation are only taken into consideration if there is
sufficient objective evidence that they will occur.
Provisions made for risks and charges include those for the risk attaching to any existing tax
litigation.
12.3. Derecognition criteria
The provision is reversed when it becomes improbable that the use of resources suitable for
producing economic benefits will be required to settle the obligation.
13. Foreign currency transactions
13.1. Definition
A foreign currency is a currency other than the functional currency of the entity, which is the
currency of the primary economic environment in which an entity operates.
13.2. Recognition criteria
A foreign currency transaction is recorded at the time of initial recognition in the functional
currency applying the spot exchange rate between the functional currency and the foreign
currency ruling on the date of the transaction.
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Notes to the consolidated accounts
13.3. Measurement criteria
At each reporting date:
(a) foreign currency monetary amounts16 are translated using the closing rate;
(b) non-monetary items17 measured at historical cost in foreign currency are translated using the
exchange rate at the date of the transaction;
(c) non-monetary items carried at fair value in a foreign currency are translated using the
exchange rates that existed on the dates when the fair values were determined.
Exchange rate differences arising from the settlement of monetary items, or from the translation
of monetary items at rates different from those at which they were translated when initially
recognised during the year or in previous financial statements, are recognised in the income
statement for the period except for exchange rate differences arising on monetary items that form
part of a net investment in a foreign operation.
Exchange rate differences arising from a monetary item that forms part of a net investment in a
foreign operation of an entity that prepares financial statements are recognised in the income
statement of the individual company financial statements of the entity that prepares the financial
statements or the individual company financial statements of the foreign operation. These
exchange rate differences in the financial statements that include the foreign operation (e.g. in the
consolidated accounts when the foreign operation is a subsidiary) are initially recognised as a
separate component in equity and are recognised in the income statement at the time of the
disposal of the net investment.
When a profit or loss on a non-monetary item is recognised directly in equity, each change in that
profit or loss is also recognised directly in equity. However, when a profit or loss on a nonmonetary item is recognised in the income statement each change in that profit or loss is
recognised in the income statement.
The financial statements of foreign subsidiaries and associates which employ an accounting
currency that is different from that of the Parent are translated using the exchange rates ruling at
the reporting date
14. Other information
14.1 Treasury shares
Treasury shares present in the UBI Group portfolio are deducted from equity. No profit or loss
arising from the purchase, sale, issue or cancellation of treasury shares is recognised in the
income statement.
The differences between the purchase and sale price arising from these transactions are recorded
in equity reserves.
16
“Monetary” items are defined as relating to determined sums in foreign currency, which is to say to assets and liabilities
which must be received or paid for a determined amount in foreign currency. The defining characteristic of a monetary
item is therefore the right to receive or an obligation to pay a set or calculable number of foreign currency units.
17 See the note on “monetary” items for the contrary.
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Notes to the consolidated accounts
14.2 Provisions for guarantees granted and commitments
Provisions made on a cases by case and collective basis to estimate possible payments to be made
connected with the assumption of credit risks attaching to guarantees granted and commitments
assumed are calculated by applying the same criteria as that reported for loans.
These provisions are recognised within the item 100 “Other liabilities” against the item in the
income statement 130d “Net impairment losses on: other financial transactions”.
14.3 Employee benefits
14.3.1 Definition
Employee benefits are defined as all forms of consideration given by an enterprise in exchange for
services rendered by employees. Employee benefits can be classified as follows:

short-term benefits (not including benefits due to employees for end of contract) which it is
planned to pay entirely within twelve months from the end of the year in which the employees
provided their services;

post-employment benefits at the end of an unemployment contract due after the contract of
employment has terminated;


benefits due to employees for the ending of an employment contract;
other long-term benefits, other than the previous, which it is not planned to pay entirely
within the twelve months from end of the financial year in which employee rendered the
relative employment service.
14.3.2 Post employment benefits and defined benefit plans
14.3.2.1 Recognition criteria
Following the reform of supplementary pensions pursuant to Legislative Decree No. 252/2005,
portions of post-employment benefit funds maturing from 1st January 2007 constitute a “defined
benefit plan”.
The liability relating to those portions is measured on the basis of the contributions due without
the application of any actuarial methods.
However, post-employment benefits maturing up until 31st December 2006 continue to constitute
a “post-employment benefit” belonging to the “defined benefit plan” series and as such require the
amount of the obligation to be determined on an actuarial basis and to be discounted to present
values because the debt may be extinguished a long time after the employees have rendered the
relative service.
The amount is accounted for as a liability amounting to:
(a) the present value of the defined benefit obligation as at the reporting date;
(b) plus any actuarial gains (less any actuarial losses) recognised in a separate reserve in equity;
(c) less the fair value at the reporting date of any assets at the service of the plan.
14.3.2.2 Measurement criteria
“Actuarial gains/losses”, recognised in a special valuation reserve in equity, comprise the effects
of adjustments arising from the reformulation of previous actuarial assumptions as a result of
actual experience or from changes in the actuarial assumptions themselves.
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Notes to the consolidated accounts
The “Projected Unit Credit Method” is used to calculate the present value. This considers each
single period of service as giving rise to an additional unit of severance payment and therefore
measures each unit separately to arrive at the final obligation. This additional unit is obtained by
dividing the total expected service by the number of years that have passed from the time service
commenced until the expected payment date. Application of the method involves making
projections of future payments based on historical analysis of statistics and of the demographic
curve and discounting these flows on the basis of market interest rates. The rate used for present
value discounting purposes is determined by making reference to market yields observed as at the
reporting date for “high quality corporate bonds” or to yields on securities with a low credit risk.
14.3.2.3 Stock Options/Stock Grants
Stock option and stock grant plans are defined as personnel remuneration schemes where the
service rendered by an employee (or a third party) is remunerated by using equity instruments
(including options on shares).
The cost of these transactions is measured at the fair value of equity instruments granted and is
recognised in the income statement under item 180 “Administrative expenses a) personnel
expense” on a straight line basis over the vesting period of the plan.
The fair value determined relates to the equity instruments granted at the time of grant and takes
account of market prices, if available, and the terms and conditions upon which the instruments
were granted.
14.4 Segment reporting
Segment reporting is defined as the manner in which financial information on an enterprise is
reported by operating segment.
An operating segment is intended as a component of an entity:
 that engages in business activities that generate revenues and expenses;
 whose operating results are reviewed regularly by the entity’s chief operating decision
maker, to make decisions about the resources to be allocated to the segment and assess
its performance; and
 for which discrete financial information is available.
Segment reporting is based on elements that senior management uses to make operating
decisions (a “management approach”) and consequently the identification of operating segments is
performed on the basis of the current system of reporting to management which is based
primarily on management analysis of legally recognised entities.
Segment reporting is completed by information on the geographical areas in which revenues are
produced and assets are held.
14.5 Revenue
14.5.1 Definition
Revenues are the gross inflow of economic benefits resulting from business arising from the
ordinary operating activities of an enterprise when these inflows create an increase in equity other
than an increase resulting from payments made by shareholders.
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Notes to the consolidated accounts
14.5.2 Recognition criteria
Revenues are measured at the fair value of the consideration received or due and are recognised
in the accounts when they can be reliably estimated.
The result of the rendering of services can be reliably estimated when the following conditions are
met:




the amount of revenue can be measured reliably;
it is probable that the economic benefits arising from the transaction will flow to the company;
the stage of completion of the operation as at the reporting date can be measured reliably;
the costs incurred, or to be incurred, to complete the transaction can be measured reliably.
Revenue received in return for services rendered is recognised by reference to the stage of
completion of the transaction.
Revenue is only recognised when it is probable that the economic benefits arising from the
transaction will be enjoyed by the company. Nevertheless when the recoverability of an amount
already included within revenues is uncertain, the amount not recoverable, or the amount for
which recovery is no longer probable is recognised as a cost instead of adjusting the revenue
originally recognised.
Revenue arising from the use by third parties of the company’s assets which generate interest or
dividends are recognised when:
it is probable that the economic benefits arising from the transaction will be received by the
enterprise;
 the amount of the revenue can be reliably measured.

Interest is recognised on an accruals basis that takes into account the effective yield of the asset.
In detail:
interest income includes the amortisation of any discounts, premiums or other differences
between the initial carrying amount of a security and its value at maturity. Negative
components of income accruing on financial instruments are recognised within the item
“Interest and similar expense”, while positive components accruing on financial liabilities are
recognised within the item “Interest and similar income”;
 arrears of interest that are considered recoverable are recognised within the item 10 “Interest
and similar income”, but only the part considered recoverable.

Dividends are recognised when shareholders acquire the right to receive payment.
Expenses or revenues resulting from the sale or purchase of financial instruments, determined by
the difference between the amount paid or received for the transaction and the fair value of the
instrument are recognised in the income statement on initial recognition of the financial
instrument when the fair value is determined:
 by making reference to current and observable market transactions in the same instrument;
 by using measurement techniques which use, as variables, only data from observable markets.
14.6 Expenses
Expenses are recognised in the accounts at the time at which they are incurred while following
the criteria of matching expenses to revenues that result directly and jointly from the same
transactions or events. Expenses that cannot be associated with revenues are recognised
immediately in the income statement.
Expenses directly attributable to financial instruments measured at amortised cost and
determinable from the outset, regardless of the time at which they are settled, flow to the income
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Notes to the consolidated accounts
statement by applying the effective interest rate, a definition of which is given in the section
“Loans and receivables”.
Impairment losses are recognised through profit and loss in the year in which they are measured.
A.3 – INFORMATION ON TRANSFERS BETWEEN PORTFOLIOS OF
FINANCIAL ASSETS
A.3.1 Reclassified financial
comprehensive income
assets:
carrying
amount,
fair
value
and
effects
on
No reclassifications have been performed either in the current year, or in the previous year in
financial asset portfolios from asset classes recognised at fair value into classes recognised at
amortised cost with regard to the possibilities introduced by EC Regulation No. 1004/2008 of the
European Commission.
A.3.2 Reclassified financial assets: effects on comprehensive income before the transfer
No items of this type exist.
A.3.3 Transfer of financial assets held for trading
No items of this type exist.
A.3.4 Effective interest rate and expected cash flows from reclassified assets
No items of this type exist.
A.4 INFORMATION ON FAIR VALUE
Qualitative information
IFRS 13 – “Fair Value Measurement” defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. This value is therefore what is known as an “exit price” which reflects the
properties of the asset or liability subject to measurement from the perspective of a third party
market participant.
A fair value measurement relates to an ordinary transaction carried out or which could be carried
out between market participants, where, the market is defined as:
 the principal market, which is the market with the highest volume and level of
transactions for the asset or liability in question to which the Bank has access;
 or, in the absence of a principal market, the most advantageous market, which is that in
which it is possible to obtain the highest price for the sale of an asset or the lowest
purchase price for a liability with account taken of transaction and transport costs.
To increase consistency and comparability in fair value measurements and related disclosures,
IFRS 13 establishes a fair value hierarchy that categorises into three levels the inputs to valuation
techniques used to measure fair value.
The objective of this classification is to establish a hierarchy in terms of the objectivity of the fair
value as a function of the degree of discretion adopted, by giving priority to observable market
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Notes to the consolidated accounts
inputs which reflect the assumptions that market participants would use in the measurement of
assets and liabilities.
The fair value hierarchy is defined on the basis of the data inputs (with reference to their origin,
type and quality) using the models for determining fair value and not on the basis of the
measurement models themselves. In this perspective the highest priority is given to input level
one.
Fair value determined on the basis of level one inputs:
Fair value is determined on the basis of observable inputs, i.e. quoted prices in active markets for
the financial instrument, that the entity can access at the measurement date of the instrument.
The existence of quoted prices in an active market is the most reliable evidence of fair value and
therefore these quoted prices shall be given priority as the input to be used in the valuation
process.
According to IFRS 13, a market is defined as active when transactions for the asset or liability
take place with sufficient frequency and volume to provide pricing information on an ongoing
basis.
More specifically, equities and bonds quoted on a regulated market (e.g. MOT/MTS – electronic
corporate/government bond markets) and those not quoted on regulated markets for which prices
are available on a continuous basis from the main information platforms which represent actual
and orderly market transactions.
The fair value of listed securities on regulated markets is normally given by the reference price
published on the last trading day of the reporting period on the respective markets on which they
are quoted. For securities not quoted on regulated markets, the fair value is given by the price on
the last transaction date considered representative on the basis of internal policies.
As concerns other financial instruments with a level one input such as, for example, derivatives,
exchange traded funds and listed property funds, the fair value is given by the closing price on the
respective listed markets on the measurement date or in the case of listed UCITS, mutual funds,
Sicav’s and hedge funds, it is given by the official NAV (net asset value), if this is considered
representative according to internal policies.
Fair value determined on the basis of level two inputs
Where no prices are available on active markets, the fair value is measured by using prices
observable on inactive markets or by using measurement models which make use of market
inputs.
The valuation is performed by using inputs that are either directly or indirectly observable, such
as for example:
 prices listed on active markets for identical assets or liabilities;
 observable inputs such as interest rates or yield curves, implicit volatilities, early
repayment risk, default rates and illiquidity factors.
On the basis of the above, the valuation resulting from the technique adopted involves marginal
use of unobservable inputs because the most important inputs used in the valuation are taken
from the market and the results of the calculation methods used replicate quotations on active
markets.
The following are included in level two:
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Notes to the consolidated accounts
 OTC derivatives;
 equity instruments;
 bonds;
 shares of private equity funds
Assets and liabilities measured at cost or at amortised cost, for which the fair value is given in the
notes to the financial statements purely for information purposes, are classified in level two only if
the unobservable inputs do not have a significant impact on the result of the valuation. Otherwise
they are classified in level three.
Fair value determined on the basis of level three inputs
The valuation is determined by the use of significant inputs not taken from the market, which
therefore involve the adoption of estimates and internal assumptions.
The following are included in level three of the fair value hierarchy:


OTC derivatives
equity instruments measured:
a. with the use of significant unobservable inputs;
b. using methods based on an analysis of the fundamentals of the investee;
c. at cost.
 hedge funds, for which consideration is given not only to the official NAVs, but also to
liquidity and/or counterparty risk;
 options on financial equity investments;
 bonds resulting from the conversion of loans and receivables.
Finally, fair value is classified in level three as a result of the use of market inputs that have been
adjusted significantly to reflect valuation aspects inherent to the instrument measured.
A.4.1 Fair value levels two and three
This sub-section provides information on the measurement techniques and inputs used to
determine the fair value of assets and liabilities subject to measurement in the balance sheet and
those for which the fair value is given purely for information purposes.
Assets and liabilities subject to fair value measurement
OTC derivatives
The method adopted to calculate the fair value of OTC derivatives involves the use of closed
formula models. In detail, the main pricing models used for OTC derivatives are: Black Yield,
Black Fwd, Black Swap Yield, Cox Fwd, Trinomial, Lnormal, Normal and CMS Convexity
Analytical.
Derivative instruments that are not managed in the target software applications, relating to
instruments used to hedge some types of embedded options in structured bonds issued, are
measured using internal models (stochastic models with MonteCarlo simulations).
The pricing models implemented for derivatives are used on an ongoing basis and are subject to
periodic verification designed to assess their reliability over time.
The market data used to calculate the fair values of derivatives is classified, according to its
availability, as follows:

the prices of quoted instruments: all products quoted on major international exchanges or
on the main data provider platforms;
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Notes to the consolidated accounts

market inputs available on info provider platforms: all instruments which, although not
quoted on an official market, are readily available on info provider networks by means of
guaranteed ongoing contributions from brokers and market makers.
The inputs used to calculate the fair value of OTC derivatives include yield curves and Cap&Floor
volatilities for major currencies (euro, US dollar, GBP, yen, CHF), the main exchange rates and
the relative volatilities and the FX swap points. As explained later in greater detail, the fair value
of some types of OTC derivatives takes counterparty risk into account. The calculation of this
component is carried out by using default probabilities and the percentage of credit recovery from
counterparties.
As concerns credit risk, market practice is to adopt two measures capable of identifying the
impacts of possible changes in counterparty credit rating and incorporating this in the fair value:
credit value adjustment (counterparty non-performance risk) and debt value adjustment (own
non-performance risk).
The approach adopted by the Group to calculate these measurements, termed the “spread curve”
method, involves the use of credit spread curves to calculate the two components. More
specifically it involves the following steps:
 an estimate of the future cash flows of the OTC derivative using risk free curves. The
resulting net cash flow calculated is then discounted using counterparty credit curves (for
positive cash flows) or UBI Banca’s credit curve (negative cash flows) described in the
points below;
 the creation of an “adjusted” curve for the counterparty, obtained by applying the relative
spread to the risk-free discount curve, for each maturity;
 the creation of an “adjusted” curve for UBI Banca, obtained by applying the relative spread
to the risk-free discount curve, for each maturity.
The method implemented by the group is applied to OTC derivatives in the Group’s portfolio,
entered into with external counterparties for which CSA agreements exist with complete daily or
weekly margin accounts.
Given the predominant use of unobservable inputs, the fair value of OTC derivatives is classified
in level two of the hierarchy, except for those derivatives where the CVA (estimated internally) is
important for determination of the fair value. The fair value of these instruments is classified in
fair level three of the hierarchy.
The UBI Banca Group’s policy for options on equities is to measure the fair value by taking
account of the probability of exercise given the specific nature of the options in question. The fair
value calculated in this way is classified in level three of the hierarchy.
Equity instruments
As concerns the methods used to measure the fair value of equity instruments not quoted on an
active market, the UBI Banca Group has identified the following hierarchy of valuation
techniques:
1) the direct transactions method;
2) the comparable transactions method;
3) the stock market multiples method
4) financial and earnings methods;
5) balance sheet methods.
Equity instruments are measured by considering the applicability of the methods in the order
given above. In the final instance, where it is impossible to use the above techniques, these
instruments are measured at cost.
The characteristics of the valuation techniques used as at 31st December 2015 are given below.
The direct transactions method;
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Notes to the consolidated accounts
Application of the direct transactions method involves applying the implicit value resulting from
the most recent significant transaction recorded on the shares of the investee. By using
observable inputs, the fair value thereby obtained is classified in level two of the hierarchy.
If the transaction that occurred on the market involved a controlling stake or one which gave
significant influence over the investee by the acquirer, then it is possible that the price paid
incorporated a premium for control. This aspect is considered by a possible adjustment to the
value of the investment. Therefore the pro rata value of the economic capital of the company is
reduced by between 25% and 35%. That adjustment, resulting from the use of unobservable and
significant inputs results in classification of the fair value in level three of the hierarchy.
The comparable transactions method
Application of the comparable transactions method involves analysis of transactions to purchase
shares in companies with operating and capital characteristics of the same type as those of the
investee and the subsequent calculation of an implicit multiple given by the transaction price. By
using observable inputs, the fair value thereby obtained is classified in level two of the hierarchy.
If the transaction that occurred on the market involved a controlling stake or one which gave
significant influence over the investee by the acquirer, then it is possible that the price paid
incorporated a premium for control. This aspect is considered by a possible adjustment to the
value of the investment. Therefore the pro rata value of the economic capital of the company is
reduced by between 25% and 35% to reflect the lack of powers within the investee. That
adjustment, resulting from the use of unobservable and significant inputs results in classification
of the fair value in level three of the hierarchy.
The stock market multiples method
This method allows a company to be valued on the basis of data derived from quotations of
comparable companies (in terms of sales turnover, equity, leverage) observed on the relative stock
market in a period within the last 30 days and last year prior to the measurement date. It is
performed by processing the most significant multipliers (stock market multiples) resulting from
the ratio between the value that the stock market attributes to these companies and those of their
operating and capital performance indicators that are considered most significant. By using
observable inputs, the fair value thereby obtained is classified in level two of the hierarchy.
The need to adjust the valuations obtained, which is not infrequent, when applying the stock
market multiple methods in order to take account of possible differences in the compatibility of
the companies used and the liquidity of the instruments measured, the pro rata value of the
economic capital of the company is reduced by between 10% and 40% to reflect the limited
liquidity of the investment and/or significant differences in size between the investee and the
companies in the sample. This adjustment, resulting from the use of unobservable and significant
inputs results in the classification of the fair value in level three of the hierarchy.
Balance sheet methods
Balance sheet methods provide a calculation of the fair value of an investee based on balance
sheet figures, adjusted in the light of gains and losses implicit in the assets and liabilities of the
investee and the possible valuation of intangible components. The fair value determined by using
these methods, based on unobservable inputs, is classified in level three of the hierarchy.
Bonds
The procedure for estimating the fair value adopted by the UBI Banca Group for bonds involves
the use of a specific valuation model, the discounted cash flow model. The valuation process in
question can be summarised in the following steps:
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Notes to the consolidated accounts
an estimate of the cash flows paid by the instrument both in terms of interest and
repayment of capital;
 an estimate of the spread which represents the credit rating of the issue of the instrument;
 an estimate of a spread which represents the illiquidity of the instrument in order to take
account of the low liquidity which characterises the pricing of a “non-contributed”
instrument (not officially quoted).
Given the predominant use of unobservable inputs, the fair value thereby calculated is classified
in level two of the hierarchy, except for those instruments where the component of the spread that
represents the illiquidity is important for determining the fair value and for some bonds resulting
from the conversion of loans and receivables, which are classified in level three of the hierarchy.

The following are comprised within the inputs used to calculate the fair value of bonds: interest
rate curves of major currencies (Euro, USD, GBP, YEN, CHF), the credit spreads of the issuers of
the bond subject to measurement (taken from instruments quoted on markets considered active)
and a spread representative of the illiquidity of the instrument measured, calculated on the basis
of the credit spread of the issuer.
Shares of private equity funds
The fair value of shares in private equity funds is calculated on the basis of the last NAV available
and considering the various communications received from the fund (e.g. redemptions, dividend
distributions) from the date of the last available NAV until the measurement date. The NAV is
then adjusted if necessary to take into consideration situations of particular risk and nonperformance associated with the investment.
Shares of hedge funds
The fair value of shares of hedge funds is classified in level three of the hierarchy and is
calculated on the basis of the official NAV adjusted by a percentage of at least 20% to take
account of liquidity and/or counterparty risks.
Assets and liabilities, the fair value of which is given in the notes to the financial
statements
Loans and receivables
Determination of the fair value of loans and advances to customers, calculated for disclosure in
the notes to the financial statements, is carried out by using valuation techniques, except for
those loans and receivables for which the book value is considered an adequate representation of
the fair value, such as for example defaulted loans, transactions with no repayment schedules
(current account overdrafts and unsecured guarantees) and loans due in less than one year which
for that reason are classified in level three of the hierarchy.
The method adopted by the UBI Banca Group to estimate the fair value of loans and receivables
involves discounting cash flows, defined as the sum of the principal and interest resulting from
the different due dates of the repayment schedule, reduced by the amount of the expected loss
and discounted at a rate which incorporates the risk-free component and a spread representing
the cost of capital and funding.
More specifically, the following inputs are used:
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Notes to the consolidated accounts



a base discount rate, based on the Euribor yield curve;
default risk and risk of potential loss, expected and unexpected, measured on the specific
loan during its entire life. These values are represented by internal credit risk
measurement parameters such as the rating, the PD and LGD, differentiated by customer
segment. The PD associated with each rating is measured on a multi-year basis. Finally,
the unexpected loss component takes account of the Group’s cost of equity;
the UBI Banca Group’s funding components. These components are based on the average
cost of financing incurred by the Group in the wholesale, retail and covered bond markets
with a ten-year cap.
In order to identify the correct level in the fair value hierarchy obtained using the above valuation
technique, the level of significance of the unobservable inputs must be properly assessed.
In this respect, the fair value resulting from the application of the method described above is
compared with a benchmark that is calculated which employs a discount curve composed from
observable market data.
If the comparison shows that the fair value is significantly different from that calculated using the
aforementioned benchmark, the fair value is classified in level three. Otherwise it is classified in
fair value level two.
The fair value of loans and advances to banks is normally calculated for the purposes of
disclosure in the notes to the financial statements for on-balance sheet transactions with a time
horizon of longer than one year.
The method adopted involves calculating the net present value of the cash flows from these
instruments on the basis of the current market interest rate for transactions of the same
duration, inclusive of the risk factors implicit in the transaction. Because this method is based on
observable inputs, it results in classification of the fair value in level two of the hierarchy.
For transactions with no repayment schedules (current account overdrafts and unsecured
guarantees), for defaulted loans and for transactions with a maturity of shorter than one year, the
book value is considered an adequate approximation of the fair value, which as a consequence
results in classification in level three of the hierarchy.
Tangible assets held for investment
Reference is made for the determination of the fair value of investment properties to the market
value, determined mainly by means of outside appraisers, defined as the highest price at which
the sale of a property might reasonably be expected to have been concluded unconditionally for
cash consideration on the measurement date between independent counterparties.
The procedures adopted for determining the market value are based on the following methods:
 the direct comparative or market method, based on a comparison between the asset in
question and other similar assets subject to sale or currently on sale on the same market or
competing markets;
 the income method based on the present value of potential market incomes for a similar
property, obtained by capitalising the income at a market interest rate.
The above methods are carried out individually and the values obtained are appropriately
averaged.
The method used for identifying the percentage of the market value attributable to land is based
on an analysis of the location of the property, taking account of the type of construction, the state
of conservation and the cost of rebuilding the entire building.
The fair value determined in this manner is classified in level three of the hierarchy due to the
absence in the Italian market of reference indicators which might confirm the reliability of the
valuation. As a consequence, the inputs used cannot be classified in level two.
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Notes to the consolidated accounts
Borrowings and payables
The fair value of amounts due to banks and customers is normally calculated for the purposes of
disclosure in the notes to the financial statements for liabilities due after one year.
The valuation is carried out by discounting future cash flows using an interest rate that
incorporates the component relating to its own credit risk. Since it is based on observable inputs
from the relative market, this method results in the classification of the fair value in level two of
the hierarchy.
For liabilities due within one year or with an indeterminate due date, the book value recognised
can be considered an adequate approximation of the fair value, which as a consequence results in
classification in level three of the hierarchy.
This classification is also adopted for amounts due to the European Central Bank.
Securities issued
As these are liabilities issued, held as assets by third parties, the valuation techniques used have
been developed from the perspective of a market participant who holds the debt securities as
assets. In this specific case the components considered are as follows:
 the time value of the money, measured by the risk-free yield curve;
 the risk of failing to satisfy own obligations, measured by own credit spread.
The inputs used to measure the fair value include the yield curves of major currencies (Euro,
USD, GBP, YEN, CHF) and UBI Banca’s issue spreads, measured from the funding conditions
existing as at the reporting date, classified by type of counterparty for whom the security issued is
destined.
The inputs used are observable and result in classification in level two of the hierarchy, except for
bonds issued by the Bank linked to loans granted to customers. In these cases the fair value of
the security is determined using the loan inputs themselves and both instruments are classified
in level three of the hierarchy.
A.4.2 Valuation processes and sensitivities
The UBI Banca Group has set a special policy for the determination of fair values officially set out
in special regulations approved by the members of governing bodies. The purpose of these policies
is to ensure proper and consistent application of the provisions of IFRS 13.
An analysis is given below of the sensitivity of equity instruments for which the fair value
measurement is classified in level three of the hierarchy as a result of the use of unobservable
significant inputs.
This analysis was conducted by formulating a stress test for the inputs in question, which takes
account of the minimum and maximum value that these inputs can take, reported for each
valuation technique used in the previous sub-section A.4.1 “Fair value levels two and three”.
For equity instruments classified within the AFS portfolio for which sensitivity analysis is
possible, on the basis of the valuation model used, if the maximum impairment value for the
unobservable inputs is used, the gross valuation reserve would be €6.7 million lower than the
book value recognised if no further impairment was detected. Otherwise, if the minimum
impairment value is used, the gross valuation reserve would be €13.3 million higher than the
book value recognised.
For equity instruments classified within the FVO portfolio for which sensitivity analysis is
possible, on the basis of the valuation model used, if the minimum impairment value for the
unobservable inputs is used, the amounts recognised in the income statement item 110 ”Net
274
Notes to the consolidated accounts
income of financial assets and liabilities designated at fair value” would be €1.8 million higher
than that recognised in the accounts. The use of the highest impairment value would, on the
contrary, have no impact.
As concerns other financial instruments subject to fair value measurement and classified within
level three of the fair value hierarchy (OTC derivatives, hedge funds, bonds resulting from the
conversion of loans and options on equity investments), no sensitivity analysis is conducted either
because the methods of quantifying the fair value do not allow alternative hypotheses to be made
concerning the unobservable inputs used for the purposes of valuation, or because the effects of
changing those inputs are not considered important.
A.4.3 Fair value hierarchy
With regard to assets and liabilities subject to fair value measurement on a recurring basis,
classification in the right level of the fair value hierarchy is carried out by making reference to
rules and methods contained in Bank regulations. Possible transfers to a different level of the
hierarchy are identified on a monthly basis. Examples might be transfers resulting from the
“disappearance” of an active market on which they are quoted or the use of a different method of
measurement not previously applicable.
A.4.4 Other information
No situations exist in the UBI Banca Group in which the maximum or best use of a non-financial
asset is different from its current use.
Furthermore, no situations exist in which financial assets and liabilities managed on a net basis
in relation to market or credit risk are subject to fair value measurement on the basis of the price
that would be received from the sale of a net long position or from the transfer of a net short
position.
Quantitative information
A.4.5 Fair value hierarchy
A.4.5.1 Assets and liabilities measured at fair value on a recurring basis
Assets/l i abi l i ti es measu red at f ai r val u e
31.12 .2 0 15
L evel 1
L evel 2
31.12 .2 0 14
L evel 3
L evel 1
L evel 2
L evel 3
1. Fin an cial assets h eld for tradin g
472,012
505,028
17,438
800,881
606,337
13,288
2. Fin an cial assets design ated at fair value
120,782
3,000
72,252
120,026
3,000
70,141
3. A vailable-for-sale fin an cial assets
14,959,254
359,910
235,118
17,423,065
953,777
178,114
4. Hedgin g derivatives
-
594,322
363
-
649,250
-
5. P roperty, plan t an d equipmen t
-
-
-
-
-
-
6. In tan gible assets
-
-
-
-
-
-
15,552 ,0 48
7
1,462 ,2 60
531,773
32 5,171
32
18,343,972
300
2 ,2 12 ,364
617,452
2 61,543
10
-
-
Total
1. Fin an cial liabilities h eld for tradin g
2. Fin an cial liabilities design ated at fair value
-
3. Hedgin g derivatives
749,725
Total
7
1,2 81,498
32
-
-
-
-
1,009,092
-
30 0
1,62 6,544
10
The impact of CVA and DVA on the determination of the fair value derivative financial
instruments at consolidated level came to €13,374 thousand and €227 thousand respectively.
275
Notes to the consolidated accounts
No transfers were made between level one and two in the fair value hierarchy for assets and
liabilities measured at fair value on a recurring basis.
A.4.5.2 Annual changes in assets measured at fair value (level three)
Fi nancial assets
desi gnated at fai r
val ue
Financi al assets
hel d for trading
Avai l abl e-for-sal e
financi al assets
Hedgi ng
deri vati ves
Property,
pl ant and
equipment
Intangi bl e
assets
1. Openi ng bal ances
13,288
70,141
178,114
-
-
-
2. Increases
2.1. P urchases
11,020
62
3,539
-
170,112
5,338
363
-
-
-
2.2.1. Income statement
148
2,895
61,223
363
-
-
- of w hich gains
138
2,846
31
363
-
-
24,148
-
-
-
2.2. P rofits recognised in:
2.2.2. Equity
X
2.3. T ransfers from other levels
2.4. Other increases
3. Decreases
3.1.Sales
3.2. Redemptions
X
10,742
644
13,240
-
-
-
68
-
66,163
-
-
-
(6,870)
(118)
(1,428)
-
(113,108)
(87,241)
-
-
-
-
(84)
(9)
-
-
-
(3,633)
(1,121)
(16,354)
-
-
-
(2,313)
(1,121)
(16,354)
-
-
-
(6,248)
-
-
-
3.3. Losses recognised in:
3.3.1. Income statement
- of w hich losses
3.3.2. Equity
3.4. T ransfers to other levels
X
X
(3,119)
-
-
-
3.5. Other decreases
-
(223)
(3,256)
-
-
-
4. Cl osing bal ances
17,438
72,252
235,118
363
-
-
-
Financial assets held for trading
The increases in “financial assets held for trading” are due mainly to transfers from other
levels. Approximately €10.7 million of these are the consequence of the impact of credit
value adjustments (CVAs) on the fair value of derivatives (reclassified to level three if the
CVA affects the fair value by an amount exceeding 10%, a limit set by UBI policy).
The decreases were due mainly to transfers to other levels. Approximately €3.1 million of
these relate to derivatives reclassified into level three in December 2014, for which the
CVA is now below that limit).
Losses recognised through profit or loss are the result of fair value movements on financial
derivatives classified within fair value level three.
-
Financial assets designated at fair value
Increases in “financial assets designated at fair value” relate mainly to profits recognised
through profit or loss as a consequence of gains on shareholdings in Immobiliare Mirasole
Spa amounting to €1.3 million (ordinary shares) and to €0.1 million (privileged shares);
and in E.C.A.S. Spa (€0.6 million) and in hedge funds (€0.8 million).
Transfers from other levels included the currency translation effect on hedge funds
amounting to €0.4 million and side pocket position switches amounting to €0.2 million.
Decreases were mainly the result of losses recognised through profit or loss on hedge
funds (approximately €0.9 million) and other decreases regarded the balancing entry for
the already mentioned side pocket position switches amounting to €0.2 million.
-
Available-for-sale financial assets
Inreases of “available-for-sale financial assets” included, among purchases, those relating
to CAPITAL FOR PROG. Spa shares amounting to €4.9 million.
Increases in equity regarded the company VISA EUROPE Ltd ORD. amounting to €8
million and ICBPI Spa amounting to €15.2 million.
Transfers to other levels regarded the subordinated bonds BCA MARCHE 05/15 TV
amounting to €3.6 million and BCA POP. ETRURIA 06/16 amounting to €9.5 million.
Those same positions resulted in decreases because they were completely written off.
276
Notes to the consolidated accounts
Profits recognised through profit and loss related to a gain on the partial disposal (4.04%)
of an investment in ICBP Spa amounting to €61.2 million.
Other increases relate to the restructuring of the Sorgenia Spa One Coupon conv. Cat. A
and the Nuova Sorgenia Holding Spa SFP positions for €25.2 million and €36 million
respectively.
Decreases of “available-for-sale financial assets” include sales relating to the partial
disposal of the investment in ICBP Spa amounting to €87.2 million.
Losses recognised through profit and loss related to BANCA MARCHE 05/15 TV and BCA
POP. ETRURIA 06/16.
Losses recognised in equity related to the company SACBO Spa amounting to €2.5 million
and to Carlo Tassara SFP amounting to €3.7 million.
Derivatives
-
The amount of €363 thousand relates to the fair value component of a CCS derivative to
hedge a loan denominated in AED. The classification in level three is due to the degree of
liquidity of the currency.
A.4.5.3 Annual changes in financial liabilities measured at fair value (level three)
F in a n c ia l lia b ilit ie s
d e s ig n a t e d a t f a ir
v a lu e
F in a n c ia l lia b ilit ie s
h e ld f o r t ra d in g
H e d g in g d e riv a t iv e s
1. O p e n in g b a la n c e s
10
-
-
2 . In c re a s e s
32
-
-
2.1. Is s ue s
-
-
-
2.2. Lo s s e s re c o gnis e d in:
2.2.1. Inc o m e s ta te m e nt
- o f whic h lo s s e s
32
-
-
32
-
-
2.2.2. Equity
X
X
2.3. Tra ns fe rs fro m o the r le ve ls
-
-
-
2.4. Othe r inc re a s e s
-
-
-
3 . D e c re a s e s
( 10 )
-
-
3.1.R e de m ptio ns
-
-
-
3.2. R e purc ha s e s
-
-
-
3.3. P ro fits re c o gnis e d in:
3.3.1. Inc o m e s ta te m e nt
- o f whic h ga ins
3.3.2. Equity
3.4. Tra ns fe rs to o the r le ve ls
-
-
-
-
X
X
(10)
-
-
-
-
-
3.5. Othe r de c re a s e s
4 . C lo s in g b a la n c e s
-
32
-
-
A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a nonrecurring basis: distribution by fair value level
31.12.2015
Assets/l i abi l iti es measured at fai r val ue
BV
Level 1
31.12.2014
Level 2
Level 3
BV
Level 1
Level 2
Level 3
1. Held-to-maturity investments
3,494,547
3,599,957
-
-
3,576,951
3,607,673
-
-
2. Loans and advances to banks
3,429,937
-
1,222,089
2,209,598
3,340,415
-
1,205,027
2,127,419
84,586,200
-
37,690,187
48,588,797
85,644,223
-
37,525,374
50,556,959
171,270
-
-
223,835
186,226
-
-
3. Loans and advances to customers
4. T angible assets held for investment
5. Non-current assets and disposal groups held for sale
Total
1. Due to banks
242,320
11,148
-
-
-
69,893
-
-
-
91,693,102
10,454,303
3,599,957
-
38,912,276
24,123
51,022,230
10,377,626
92,817,708
13,292,723
3,607,673
-
38,730,401
13,945
52,926,698
13,838,738
2. Due to customers
55,264,471
-
1,565,999
53,698,673
51,616,920
-
965,765
50,667,896
3. Debt securities issued
36,247,928
15,426,790
21,295,682
78,172
41,590,349
16,277,423
26,050,714
153,675
-
-
-
-
-
-
-
-
101,966,702
15,426,790
22,885,804
64,154,471
106,499,992 16,277,423
27,030,424
64,660,309
4. Liabilities associated w ith assets held for sale
Total
277
Notes to the consolidated accounts
A.5 – INFORMATION ON “DAY ONE PROFIT/LOSS”
The information relates to paragraph 28 of the IFRS which concerns differences between
transaction prices and the value obtained by using measurement techniques that emerge on
initial recognition and that are not immediately recognised through profit and loss on the basis of
paragraph AG76 of IAS 39.
Where this type of event occurs, indication must be given of the accounting policies adopted by
the bank for recognition through profit or loss of the differences that arise in this manner
subsequent to initial recognition of the instrument.
The Group has not performed any transactions for which a difference between the purchase price
and the value of the instrument obtained using internal measurement techniques has arisen on
initial recognition.
278
Notes to the consolidated accounts
PART B – Notes to the consolidated
balance sheet
ASSETS
SECTION 1 Cash and cash equivalents – Item 10
1.1 Cash and cash equivalents: composition
31.12.2015
a) Cash in hand
b) Deposits with central banks
Total
31.12.2014
530,098
530,098
598,062
598,062
SECTION 2 Financial assets held for trading – Item 20
2.1 Financial assets held for trading: composition by type
3 1.12 .2 0 15
It e m s / A m o u n t s
L 1
3 1.12 .2 0 14
3 1.12 .2 0 15
L 2
L 3
L 1
3 1.12 .2 0 14
L 2
L 3
A . O n - b a la n c e s h e e t a s s e t s
1. De bt ins trum e nts
466,320
157
100
466,577
795,206
759
254
1.1 S truc ture d ins trum e nts
1,714
24
100
1,838
1
419
254
674
1.2 Othe r de bt ins trum e nts
464,606
133
-
464,739
795,205
340
-
795,545
2. Equity ins trum e nts
796,219
4,614
-
2
4,616
4,544
-
447
4,991
275
-
581
856
241
1
600
842
-
-
-
-
-
-
-
-
4.1 R e ve rs e re purc ha s e a gre e m e nts
-
-
-
-
-
-
-
-
4.2 Othe r
-
-
-
-
-
-
-
-
3. Units in UC ITS
4. F ina nc ing
Total A
4 7 1,2 0 9
15 7
683
4 7 2 ,0 4 9
7 9 9 ,9 9 1
760
1,3 0 1
8 0 2 ,0 5 2
B . D e riv a t iv e in s t ru m e n t s
1. F ina nc ia l de riva tive s
1.1 fo r tra ding
803
504,871
16,755
522,429
890
605,577
11,987
618,454
803
504,871
16,755
522,429
890
605,577
11,987
618,454
1.2 c o nne c te d with fa ir va lue o ptio ns
-
-
-
-
-
-
-
-
1.3 o the r
-
-
-
-
-
-
-
-
2. C re dit de riva tive s
-
-
-
-
-
-
-
-
2.1 fo r tra ding
-
-
-
-
-
-
-
-
2.2 c o nne c te d with fa ir va lue o ptio ns
-
-
-
-
-
-
-
-
2.3 o the r
-
-
-
-
-
-
-
-
Total B
Total (A+B)
803
5 0 4 ,8 7 1
16 ,7 5 5
5 2 2 ,4 2 9
890
6 0 5 ,5 7 7
11,9 8 7
6 18 ,4 5 4
4 7 2 ,0 12
5 0 5 ,0 2 8
17 ,4 3 8
9 9 4 ,4 7 8
8 0 0 ,8 8 1
6 0 6 ,3 3 7
13 ,2 8 8
1,4 2 0 ,5 0 6
The contraction in debt instruments (level 1), compared with the previous year is
attributable mainly to sales of Italian government securities by the Parent.
Item 3 “UCITS units” relates mainly to remaining investments in units of hedge funds.
The financial derivatives (level two) relate mainly to OTC transactions connected with
trading activity and were composed mainly of interest rate swaps.
279
Notes to the consolidated accounts
2.2 Financial assets held for trading: composition by debtors/issuers
31.12.2015
31.12.2014
466,577
796,219
464,610
795,437
b) Other public authorities
1
1
c) Banks
4
7
1,962
774
4,616
4,991
A. ASSETS
1. Debt instruments
a) Governments and central banks
d) Other issuers
2. Equity instruments
1
1
4,615
4,990
a) Banks
b) Other issuers:
-
2
609
596
4,006
4,392
- insurance companies
- financial companies
- non financial companies
-
-
856
842
- other
3. Units in UCITS
-
-
a) Governments and central banks
-
-
b) Other public authorities
-
-
c) Banks
-
-
d) Other
-
-
472,049
802,052
4. Financing
Total A
B. DERIVATIVE INSTRUMENTS
150,590
165,778
- fair value
150,590
165,778
b) Customers
371,839
452,676
- fair value
371,839
452,676
Total B
522,429
618,454
Total (A+B)
994,478
1,420,506
a) Banks
SECTION 3 Financial assets designated at fair value – item 30
3.1 Financial assets designated at fair value: composition by type
31.12.2015
Items/Amounts
1. Debt instruments
1.1 Structured instruments
1.2 Other debt instruments
31.12.2014
Total
L3
L1
Total
L1
L2
-
-
-
-
-
L2
-
L3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,700
3,000
66,852
71,552
3,224
3,000
64,904
71,128
119,082
-
5,400
124,482
116,802
-
5,237
122,039
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4.2 Other
Total
120,782
3,000
72,252
196,034
120,026
3,000
70,141
193,167
Cost
117,088
2,481
83,907
203,476
120,026
3,000
70,141
193,167
2. Equity instruments
3. Units in UCITS
4. Financing
4.1 Structured
: 103000O|1 – NOTA
Level one investments in units of UCITS consisted of shares in hedge funds managed by the
company Tages Capital SGR. The amount stated within level three relates to the remaining
value of further investments in hedge funds.
280
Notes to the consolidated accounts
3.2 Financial assets designated at fair value: composition by debtors/issuers
Items/Amounts
31.12.2015
31.12.2014
-
-
a) Governments and central banks
-
-
b) Other public authorities
-
-
c) Banks
-
d) Other issuers
-
-
71,552
71,128
1. Debt instruments
2. Equity instruments
-
-
71,552
71,128
a) Banks
b) Other issuers:
-
-
-
- financial companies
23,982
24,049
- non financial companies
47,570
47,079
- insurance companies
-
-
124,482
122,039
- other
3. Units in UCITS
-
-
a) Governments and central banks
-
-
b) Other public authorities
-
-
c) Banks
-
4. Financing
-
-
-
196,034
193,167
d) Other
Total
SECTION 4 Available-for-sale financial assets – Item 40
4.1
Available-for-sale financial assets: composition by type
31.12.2015
Items/Amounts
1. Debt instruments
31.12.2014
Total
L1
L2
L3
Total
L1
L2
L3
14,943,588
313,310
26,370
15,283,268
17,336,688
908,890
1,013
1.1 Structured instruments
168,669
313,310
26,356
508,335
75,316
641,276
1,000
18,246,591
717,592
1.2 Other debt instruments
14,774,919
-
14
14,774,933
17,261,372
267,614
13
17,528,999
2. Equity instruments
3,260
-
208,748
212,008
2,495
94
177,101
179,690
2.1 At fair value
3,260
-
165,442
168,702
2,495
94
103,472
106,061
-
-
43,306
43,306
-
-
73,629
73,629
12,406
46,600
-
59,006
83,882
44,793
-
128,675
2.2 At cost
3. Units in UCITS
4. Financing
Total
-
-
-
-
-
-
-
-
14,959,254
359,910
235,118
15,554,282
17,423,065
953,777
178,114
18,554,956
“Structured debt instruments” (level one) include investments in bonds issued by major
national and international banks, financial institutions and other companies. Level 2
contains investments in Italian banks and government securities amounting to €158.7
million and in Italian government securities amounting to €154.6 million. Level three
contains bonds issued by Sorgenia Spa.
“Other debt instruments” (level one) mainly include investments in bonds issued by the
major national and international banks, financial institutions and other companies
amounting to €505.9 million and Italian government securities amounting to €14.2 billion.
281
Notes to the consolidated accounts
4.2 Available-for-sale financial assets: composition by debtors/issuers
Items/Amounts
31.12.2015
31.12.2014
1. Debt instrument s
15,283,268
18,246,591
14,423,625
17,538,513
a) Gover nments and central banks
b) Other public authorities
c) Banks
d) Other issuers
2. Equity instruments
a) Banks
b) Other issuers:
- insurance companies
- financial companies
- non financial companies
-
-
262,488
464,564
597,155
243,514
212,008
179,690
54,717
65,617
157,291
114,073
2,825
2,825
24,762
11,582
129,139
99,101
- other
3. Units in UCITS
565
565
59,006
128,675
4. Financing
-
-
a) Governments and central banks
-
-
b) Other public authorities
-
-
c) Banks
-
-
d) Other
-
-
15,554,282
18,554,956
Tot al
|1 - NOTA
4.3 Available-for-sale financial assets: subject to specific hedging
Items/Components
31.12.2015
31.12.2014
1. Financial assets subject to fair value specific hedge
12,530,669
13,083,168
12,530,669
13,083,168
b) price risk
-
-
c) currency risk
-
-
d) credit risk
-
-
-
-
a) interest rate risk
-
-
b) curr ency risk
-
-
c) other
-
-
12,530,669
13,083,168
a) interest rate risk
e) multiple risks
2. Financial assets subject to cash flow specific hedge
Total
The assets subject to specific fair value hedges on interest rate risk consisted of debt
instruments issued by the Italian government and by major Italian banks. Fair value
changes in the instruments in question and the relative hedging contracts are recognised
within item 90 of the income statement – “net hedging income”.
SECTION 5 Held-to-maturity investments – Item 50
5.1 Held-to-maturity investments: composition by type
31.12.2014
31.12.2015
Type of transaction /Group items
1. Debt instruments
1.1 Structured
1.2 Other debt instruments
2. Financing
Fair value
Carrying Amount
L1
L2
Carrying
Amount
L3
Fair value
L1
L2
L3
3,494,547
3,599,957
-
-
3,576,951
3,607,673
-
-
-
-
-
-
-
-
-
-
3,494,547
3,599,957
3,576,951
3,607,673
-
-
-
-
-
-
-
-
This item is composed of government securities acquired with a view to supporting net
interest income.
282
Notes to the consolidated accounts
5.2.
Held-to-maturity investments: debtors/issuers
Type of transactio n/ Amount s
31.12.2015
31.12.2014
1. Debt instrument s
3,494,547
3,576,951
3 ,494,547
3,576,9 51
b) Other public authorities
-
-
c) Banks
-
-
d) Other issuers
-
-
a) Gover nments and central banks
2. Financing
-
-
a) Gover nments and central banks
-
-
b) Other public authorities
-
-
c) Banks
-
-
d) Other
-
-
Tot al
3,494,547
3,576,951
Tot al fair v alue
3,599,957
3,607,673
5.3 Held-to-maturity investments: subject to specific hedging
No items of this type exist in the UBI Group.
5030O|1 - NOTA
SECTION 6 Loans and advances to banks – Item 60
6.1 Loans and advances to banks: composition by type
3 1.12 .2 0 15
T yp e o f t ra n s a c t io n / A m o u n t s
BV
Le v e l 1
A . Lo a n s t o c e n t ra l b a n k s
F A IR VA LUE
BV
Le v e l 3
Le v e l 1
-
-
-
X
X
X
394,226
X
X
X
3 9 5 ,4 4 9
Le v e l 2
Le v e l 3
-
-
-
X
X
X
582,171
X
X
X
5 8 4 ,3 5 3
5 8 2 ,17 1
-
X
X
X
-
X
X
X
1,223
X
X
X
2,182
X
X
X
3. R e ve rs e re purc ha s e a gre e m e nts
4. Othe r
Le v e l 2
3 9 5 ,4 4 9
1. Te rm de po s its
2. C o m puls o ry re s e rve re quire m e nt
3 1.12 .2 0 14
F A IR VA LUE
B . Lo a n s t o b a n k s
3 ,0 3 4 ,4 8 8
-
1,2 2 2 ,0 8 9
1,8 14 ,14 9
2 ,7 5 6 ,0 6 2
-
1,2 0 5 ,0 2 7
1,5 4 5 ,2 4 8
1 Lo a ns
3 ,0 3 4 ,4 8 8
-
1,2 2 2 ,0 8 9
1,8 14 ,14 9
2 ,7 5 6 ,0 6 2
-
1,2 0 5 ,0 2 7
1,5 4 5 ,2 4 8
1.1 C urre nt a c c o unts a nd de po s its
1.2. Te rm de po s its
1.3. Othe r fina nc ing
1,733,046
X
X
X
1,853,551
X
X
X
32,368
X
X
X
24,572
X
X
X
1,269,074
X
X
X
877,939
X
X
X
-
X
X
X
4
X
X
X
X
- R e ve rs e re purc ha s e a gre e m e nts
-
X
X
X
-
X
X
1,269,074
X
X
X
877,935
X
X
X
-
-
-
-
-
X
- F ina nc e le a s e s
- o the r
2. De bt ins trum e nts
-
-
2.1 S truc ture d s e c uritie s
-
X
X
X
-
X
X
2.2 Othe r de bt ins trum e nts
-
X
X
X
-
X
X
To ta l
6.2
3 ,4 2 9 ,9 3 7
1,2 2 2 ,0 8 9
2 ,2 0 9 ,5 9 8
3 ,3 4 0 ,4 15
1,2 0 5 ,0 2 7
X
2 ,12 7 ,4 19
Loans and advances to banks: subject to specific hedging
No items of this type exist in the UBI Group.
6.3 Finance leases
No items of this type exist in the UBI Group.
283
Notes to the consolidated accounts
SECTION 7 Loans and advances to customers – Item 70
7.1 Loans and advances to customers: composition by type
31.12.2015
31.12.2014
Carrying amount
Type of transaction/Amounts
Performing
Non-performing (previously
termed "deteriorated")
Purchased
Financing
1. Current account overdrafts
2. Reverse repurchase agreements
3. Mortgages
4. Credit cards, personal loans and salary-backed
loans
5. Finance leases
Fair value
L1
Carrying amount
L2
L3
Fair value
Non-performing (previously
termed "deteriorated")
Performing
Other
Purchased
-
9,688,549
-
9,508,105
-
1,476,281
X
X
X
8,524,418
-
1,558,164
X
X
X
770,503
-
-
X
X
X
540,882
-
-
X
X
X
47,095,047
-
5,360,803
X
X
X
46,975,676
-
4,885,165
X
X
X
2,730,501
-
284,904
X
X
X
3,198,279
-
388,444
X
X
X
-
1,408,470
X
1,239,777
X
76,128,422
L3
7,576,054
-
48,581,737
L2
Other
74,890,291
5,064,810
37,690,187
L1
X
5,497,319
37,525,374
X
50,549,625
X
X
6. Factoring
1,959,603
-
300,867
X
X
X
1,778,812
-
306,944
X
X
X
7. Other financing
9,693,773
-
1,025,917
X
X
X
9,613,036
-
960,918
X
X
X
Debt instruments
7,360
-
-
3
-
-
X
X
X
3
-
-
X
X
7,357
-
-
X
X
X
7,693
-
-
X
X
74,897,651
-
9,688,549
76,136,118
-
9,508,105
8. Structured securities
9. Other debt instruments
Total
7,060
-
37,690,187
7,696
48,588,797
-
-
7,334
-
X
X
37,525,374
50,556,959
Reverse repurchase agreements were performed with Cassa di Compensazione e Garanzia
Spa (a central counterparty clearing house) as part of liquidity management.
Other financing included guarantee transactions with the Cassa di Compensazione e
Garanzia Spa (€463.8 million) and financing to the National Resolution Guarantee Fund
(€470 million).
7.2 Loans and advances to customers: composition by debtors/issuers
31.12.2015
31.12.2014
Non-performing (previously t ermed
"de teriorat ed")
Type of tr ansaction/Amounts
Per forming
Purc hased
1. Debt instrument s
Non-pe rforming (pr eviously ter med
"deter ior ated")
Performing
Other
Purchased
Other
7,360
-
-
7,696
-
-
-
-
-
-
-
-
a) Governments
b) Other public authorities
6,104
-
-
6,433
-
-
c) Other issuers
1,256
-
-
1,263
-
-
- non financial companies
1,256
-
-
1,263
-
- f inancial companies
-
-
-
-
-
-
- insurance companies
-
-
-
-
-
-
-
-
-
-
-
-
2. Financing to
- other
74,890,291
-
9,688,549
76,128,422
-
9,508,105
a) Governments
135,447
-
-
184,100
-
-
b) Other public authorities
499,417
-
38, 068
659,765
-
43,986
c) Other
- non financial companies
- f inancial companies
- insurance companies
- other
Tot al
74, 255,427
-
9,650, 481
75,284,557
-
9,464,119
40, 400,284
-
6,985, 268
41,059,573
-
7,048,034
4, 471,195
-
143, 693
3,693,710
-
132,230
131,930
-
82
131,424
-
225
29, 252,018
-
2,521, 438
30,399,850
-
2,283,630
74,897,651
-
9,688,549
76,136,118
-
9,508,105
7.3 Loans and advances to customers: assets subject to specific hedging
Type of transaction/Amount s
31.12.2015
31.12.2014
1. Loans subject to fair value specif ic hedge:
a) interest rate risk
28,264
75,965
c) currency risk
-
-
d) credit risk
-
-
e) multiple risks
-
-
a) interest rate risk
-
-
b) curr ency risk
-
-
c) other
-
-
28,264
75,965
2. Loans subject to cash flow specifi c hedge:
Tot al
284
Notes to the consolidated accounts
7.4 Finance leases
Duration
minimum payments
nonperforming
exposures
of which
secured
remaining
amount
(pre v io us ly te rm e d
"de te rio rate d
e xpo s ure s ")
on demand
gross investment
capital portion
of which
unsecured
remaining
amount
interest
portion
44,274
77,073
18,326
-
77,229
-
up to 3 months
172,389
109,809
7,012
32,454
143,695
-
between 3 months and 1 year
598,321
440,130
34,486
136,090
581,648
-
between 1 year and 5 years
378,602
1,800,528
96,996
537,478
2,361,205
-
40,518
2,633,501
663,144
424,704
3,088,937
-
more than 5 years
indeterminate maturity
total
5,673
3,769
-
-
3,769
-
1,239,777
5,064,810
819,964
1,130,726
6,256,483
-
1,239,777
5,064,810
-
-
Net loans to customers for finance leases, net of intercompany eliminations, totalled
€6,304,587 thousand of which €1,239,777 thousand were non-performing (previously
termed “deteriorated”) assets.
The lending portfolio for the finance leases of UBI leasing consisted of 35,454 contracts,
composed, by remaining debt, as follows:
- 79% property sector;
- 9% machinery and equipment sector;
- 8% energy sector;
- 2% auto sector;
- 2 % nautical sector.
The ten most significant exposures had a total remaining value of €278,247 thousand.
A negative balance for potential lease instalments (relating to the index value of the
instalments) was recognised during the year amounting to €89,858 thousand.
SECTION 8 Hedging derivatives – Item 80
8.1 Hedging derivatives: composition by type of hedge and hierarchical level
FV 31.12.2015
FAIR VALUE 31.12.2014
NA
L1
L2
NA
L3
A) Financial derivatives
-
594,322
L1
L2
L3
363
20,265,752
-
649,250
-
23,580,071
1) Fair value
-
593,014
-
20,166,974
-
649,127
-
23,560,341
2) Cash flow
-
1,308
363
98,778
-
123
-
19,730
3) Foreign investments
-
-
-
-
-
-
-
-
B) Credit derivatives
-
-
-
-
-
-
-
-
1) Fair value
-
-
-
-
-
-
-
-
2) Cash flow
Total
-
594,322
363
20,265,752
-
649,250
-
23,580,071
Key
FV = fair value
NA = notional amount
Financial derivatives consist exclusively of interest rate hedges of the interest rate swap type
on the bonds issued. The fair value movement is recognised in item 90 of the income
statement – Net profit hedging income (loss).
285
Notes to the consolidated accounts
8.2 Hedging Derivatives: composition by portfolios hedged and type of hedge
Cash flow
Fair Value
Specific
Transactions /Type of
hedging
Interest rate
risk
1. Available-for-sale financial
assets
2. Loans
Currency
risk
Macro-hedge
Credit risk
Specific
Macro-hedge
Foreign
investments
Multiple
risks
Price risk
7,572
-
-
-
-
X
-
X
X
-
-
-
X
-
X
363
X
X
3. Held-to-maturity
investments
X
-
-
X
-
X
-
X
X
4. Portfolio
X
X
X
X
X
-
X
-
X
-
-
-
-
-
X
-
X
-
7,572
-
-
-
-
-
363
-
-
5. Other transactions
Total assets
1. Financial liabilities
2. Portfolio
Total liabilities
585,442
-
-
X
-
X
1,308
X
X
X
X
X
X
X
-
X
-
X
585,442
-
-
-
-
-
1,308
-
-
1. Expected transactions
X
X
X
X
X
X
-
X
X
2. Portfolio of financial assets
and liabilities
X
X
X
X
X
-
X
-
-
SECTION 9 Fair value change in hedged financial assets – Item 90
9.1 Fair value change in hedged assets: composition by portfolios hedged
Fair value change in hedged assets/Gr oup components
31.12.2015
31.12.2014
1. Positiv e changes
1. 1 of specific portfolios:
a) loans and r eceivabl es
b) available-for-sale f inancial assets
1. 2 general
59,994
64,124
59,994
64,124
-
-
-
-
2. Negative changes
2. 1 of specific portfolios
-
-
a) loans and r eceivabl es
-
-
b) available-for-sale f inancial assets
-
-
2. 2 general
Tot al
-
-
59,994
64,124
09000O|1 - NOTA
9.2 Assets subject to interest rate risk macro hedge
Hedg ed a ssets
31.12.2015
1. Loans
31.12.2014
1,527,454
1,692,322
2. Availa ble-for -sale assets
-
-
3. Portfolio
-
-
1,527,454
1,692,322
Tot al
Total assets subject to fair value macro hedges on interest rate risk consisted of loans, the
change in value of which together with that of the relative hedging contracts, is recognised
within item 90 of the income statement – “net hedging income”.
286
Notes to the consolidated accounts
SECTION 10 Equity investments – Item 100
10.1 Equity investments: information on investments
Details of investment
Name
Registered address
Operating headquarters
Type of ownership
% of votes
Investing
company
% held
B. Companies subject to considerable influence
1. Lombarda Vita Spa
Brescia
Verona
significant influence
UBI Banca Spa
40.000%
40.000%
2. Aviva Vita Spa
Milan
Milan
significant influence
UBI Banca Spa
20.000%
20.000%
3. Aviva Assicurazioni Vita Spa
Milan
Milan
significant influence
UBI Banca Spa
20.000%
20.000%
4. Zhong Ou Fund Management Co.
Shenzen (China)
Shenzen (China)
significant influence
UBI Banca Spa
35.000%
35.000%
5. Polis Fondi SGR Spa
Milan
Milan
significant influence
UBI Banca Spa
19.600%
19.600%
6. SF Consulting Srl
Bergamo
Mantua
significant influence
UBI Banca Spa
35.000%
35.000%
7. UFI Servizi Srl
Rome
Rome
significant influence
Prestitalia Spa
23.167%
23.167%
As at 31st December 2015 the item equity investments included solely investments
recognised using the equity method.
10.2 Significant investments: book value, fair value and dividends received
Name
Carrying amount
Fair value (*)
Dividends
received
B. Companies subject to considerable influence
1. Lombarda Vita Spa
154,997
2. Aviva Vita Spa
55,897
3. Aviva Assicurazioni Vita Spa
23,942
TOTAL
234,836
8,598
1,960
-
10,558
(*) The fair value of the equity investments is not given in the table because they are companies that are not listed.
The larger equity investments, for which the carrying amount includes goodwill arising on
consolidation, were tested for impairment, using the average of the multiples of a sample of
comparable companies.
The market value for the insurance companies Aviva Assicurazioni Vita Spa, Aviva Vita Spa
and Lombarda Vita Spa was calculated on the basis of a sample of companies quoted on
active European stock markets considering the price/book value (P/BV) multiple adjusted
for non-controlling interests and for intangible assets. The source for the amounts used was
Bloomberg. The value (pro rata) was compared with the carrying amount of the equity
investments in the consolidated financial statements.
- Aviva Vita Assicurazioni Spa: the equity attributable to the Shareholders’ of the
Parent, amounting to €23.9 million, inclusive of profit for 2015 and also of a positive
consolidation difference amounting to €1.04 million;
- Aviva Vita Spa: the equity attributable to the Shareholders’ of the Parent, amounting to
€55.9 million, inclusive of profit for 2015;
- Lombarda Vita Spa: the equity attributable to the Shareholders’ of the Parent,
amounting to €155.0 million, inclusive of the result for 2015 and also of a positive
consolidation difference amounting to €29.4 million.
Testing of the amounts recognised for the equity investments in the consolidated financial
statements against the “pro rata” fair value found no evidence of impairment losses as at
31st December 2015.
For further details “Part A. Accounting policies – Section 3 – Consolidation scope and
methods” of this report may be consulted.
287
Notes to the consolidated accounts
discontinued operations
Post-tax profit (loss) from
continuing operations
Post tax profit (loss) from
operations before tax
Profit (Loss) on continuing
intangible assets
and equipment and
reversals on property, plant
Impairment losses and
Net interest income
Total revenues
Non-financial liabilities
Financial liabilities
Non-financial assets
Financial assets
Name
Cash and cash equivalents
10.3 Significant investments: accounting information
Profit (loss)
for the year
(1)
Other
comprehensive income
net of taxes
(2)
Comprehensive income (3)
= (1) + (2)
B. Companies subject to considerable influence
1. Lombarda Vita Spa (*)
X
6,465,045
348,547
6,277,475
222,039 1,604,077
2. Aviva Vita Spa (*)
X
7,056,200
176,800
6,618,700
335,500 1,659,200
X
X
30,800
15,500
-
15,500
-
15,500
3. Aviva Assicurazioni Vita Spa (*)
X
2,652,900
84,500
2,309,000
313,900
X
X
14,700
10,400
-
10,400
-
10,400
435,200
X
X
45,158
29,854
-
29,854
(8,429)
21,425
(*) Profit (loss) for the year as in the reporting package prepared by the companies invested in for the preparation of the consolidated financial statements and subject to audit
288
Notes to the consolidated accounts
10.4 Non-significant investments: accounting information
Name
Companies subject to joint control
Companies subject to considerable influence
Carrying
amount of the
equity
investments
25,976
Total
assets
Total
liabilities
-
-
285,681
172,712
Total
revenues
Post-tax
Other
Post tax profit (loss) profit (loss) Profit (loss) comprehens- Comprehensfrom continuing
from
for the year ive income ive income (3)
operations
discontinued
(1)
net of taxes
= (1) + (2)
operations
(2)
268,488
-
-
-
-
-
64,794
-
64,794
-
64,794
The accounting information relates to the following investments:
 Zhong Ou Fund Management Co.;
 Polis Fondi Sgrpa;
 UFI Servizi Srl;
 SF Consulting Srl.
10.5 Annual changes in equity investments
31.12.2015
A Opening bal ances
B Increases
B.1 P urchases
31.12.2014
246,250
411,886
35,773
-
40,615
-
B.2 Reversals of impairment losses
-
-
B.3 Revaluations
-
-
B.4 Other changes
C Decreases
C.1 Sales
C.2 Impairment losses
C.3 Other changes
D Final bal ances
35,773
40,615
(21,211)
-
(206,251)
(173,429)
-
-
(21,211)
(32,822)
260,812
246,250
E Total reval uations
-
-
F Total impairment l osses
-
-
The amount recognised on line B.4 “Other changes” consists mainly of the following:
-
an amount of €1,147 thousand due to exchange rate differences;
-
profits for the year totalling €34,605 thousand. In detail these included:
Zhong Ou Fund Management Co.
€17,265 thousand
Lombarda Vita S.p.A.
€11,941 thousand
Aviva Vita S.p.A.
€3,100 thousand
Aviva Assicurazioni Vita S.p.A.
€2,080 thousand
The amount recognised on line C.3 “Other changes” consists mainly of the following:
-
dividends of €8,598 thousand received from Lombarda Vita Spa and of €1,960
thousand from Aviva Vita Assicurazioni Spa;
-
changes in reserves due mainly to Lombarda Vita amounting to €3,372 thousand
and to Zhong Ou Fund Management Co. amounting to €7,133 thousand.
Further details are given in section “The consolidation scope” of the consolidated
management report.
289
Notes to the consolidated accounts
10.6 Significant assessments and assumptions to establish the existence of joint
control or significant influence
Part A, Section 6 of these notes to the financial statements may be consulted for further
information.
10.7 Commitments relating to equity investments in companies subject to joint
control
Commitments relating to the possible exercise of options
Nothing to report.
Commitments connected with the possible payment of further tranches of a price
Nothing to report.
10.8 Commitments relating to equity investments in companies subject to significant
influence
Commitments relating to the possible exercise of options
Lombarda Vita Spa: as part of the renewal of life banc assurance agreements with the
Cattolica Assicurazioni Group concluded on 30th September 2010, the options on the
respective investments in the Lombarda Vita joint venture were reformulated with purchase
options only, exercisable on the basis of the occurrence of predetermined conditions.
Aviva Vita Spa and Aviva Assicurazioni Vita Spa: as part of the definition of the new
partnership agreements between the Aviva Group and the UBI in the life insurance
distribution sector concluded on 22nd December 2014, purchase options were agreed on the
respective stakes held in the two life insurance companies, exercisable on the basis of the
occurrence of predetermined conditions.
Zhong Ou Asset Management Company (formerly Lombarda China Fund Management
Company): a partnership agreement entered into as part of asset management business
focused on the Chinese market signed between UBI Banca and the current shareholders,
which involves a series of call options which can be exercised if determined trigger events
occur concerning the respective investment held in Zhong Ou Fund Asset Management
Company. In June UBI Banca reclassified one third of the stake held in this Chinese
registered fund management company (accounting for approximately 11.7% of the total
share capital) within non-current assets held for sale according to IFRS 5, on the basis of
agreements entered into between the shareholders and the management of the company.
Recapitalisation commitments
Nothing to report.
10.9 Significant restrictions
Nothing to report.
10.10 Other information
Nothing to report.
290
Notes to the consolidated accounts
SECTION 11 Technical reserves of reinsurers – Item 110
No items of this type exist.
SECTION 12 Property, plant and equipment – Item 120
12.1 Property, plant and equipment for functional use: composition of assets valued
at cost
Assets/amounts
31.12.2015
1. Ow ned assets
a) land
b) buildings
c) furnishings
d) electronic equipment
e) other
31.12.2014
1,542,441
835,289
609,227
27,459
31,851
38,615
1,511,513
784,772
620,639
29,207
34,431
42,464
30,752
16,546
14,206
31,368
16,559
14,809
c) furnishings
-
-
d) electronic equipment
-
-
e) other
-
-
1,573,193
1,542,881
2. Assets acquired through finance l eases
a) land
b) buildings
Total
12.2 Tangible assets held for investment: composition of assets valued at cost
Assets/amounts
31.12.2015
Carryi ng
amount
1. Ow ned assets
- land
- buildings
2. Assets acquired through finance l eases
a) land
b) buildings
Total
31.12.2014
171,070
110,546
60,524
-
Fair Val ue
L2
-
200
33
167
-
-
L1
171,270
185,930
113,771
72,159
-
Fai r Val ue
L2
-
200
30
170
296
47
249
-
-
223,835
186,226
L3
223,635
128,435
95,200
Carrying
amount
L1
L3
241,895
135,042
106,853
425
56
369
242,320
12.3 Property, plant and equipment for functional use: composition of assets
revalued
No property, plant and equipment for functional use revalued are held.
12.4 Tangible assets held for investment: composition of assets measured at fair
value
No tangible assets held for investment recognised at fair value are held.
291
Notes to the consolidated accounts
12.5 Property, plant and equipment for functional use: annual changes
Land
Buildings
Electronic
equipment
Furnishings
Total
Other
A. Gross opening balances
A.1 Total net reductions in value
830,678
(29,347)
1,245,653
(610,205)
183,688
(154,481)
397,064
(362,633)
349,127
(306,663)
3,006,210
(1,463,329)
A.2 Net opening balances
B. Increases
B.1 Purchases
B.2 Capitalised improvement expenses
B.3 Reversal of impairment losses
B.4 Positive changes in fair value recognised in:
a) equity
b) income statement
801,331
85,913
3,286
-
635,448
62,279
4,538
1,600
-
29,207
3,722
3,547
-
34,431
13,132
13,087
-
42,464
15,626
13,351
-
1,542,881
180,672
37,809
1,600
-
-
-
-
-
-
-
2,398
80,229
7,519
48,622
175
45
2,275
9,917
131,346
a) tangible assets held for investment
b) assets held for sale
C.7 Other changes
(35,409)
(246)
(1,321)
(1,321)
(549)
(62)
(487)
(33,293)
(74,294)
(264)
(40,765)
(2,679)
(2,679)
(373)
(145)
(228)
(30,213)
(5,470)
(1)
(5,249)
(220)
(15,712)
(31)
(15,597)
(84)
(19,475)
(83)
(17,070)
(148)
(148)
(2,174)
(150,360)
(625)
(78,681)
(4,000)
(4,000)
(1,070)
(207)
(863)
(65,984)
D. Final net balances
D.1 Total net reductions in value
851,835
(29,221)
623,433
(679,991)
27,459
(158,309)
31,851
(430,502)
38,615
(320,881)
1,573,193
(1,618,904)
D.2 Final gross balances
E. Value at cost
881,056
-
1,303,424
-
185,768
-
462,353
-
359,496
-
3,192,097
-
B.5 Positive exchange rate differences
B.6 Transfers from properties held for investment
B.7 Other changes
C. Decreases
C.1 Sales
C.2 Depreciation
C.3 Impairment losses recognised in:
a) equity
b) income statement
C.4 Negative changes in fair value recognised in:
a) equity
b) income statement
C.5 Negative exchange rate differences
C.6 Transfers to:
12.6 Tangible assets held for investment: annual changes
Total
Land
A. Opening balances
B. Increases
B.1 Purchases
B.2 Capitalised improvement expens es
B.3 Positive change s in fair value
B.4 Reve rsals of impairment losses
B.5 Positive exc hange rate differe nces
B.6 Transfers from properties use d in operations
B.7 Other changes
C. Decreases
C.1 Sale s
C.2 De preciation
C.3 Negative changes in fair value
C.4 Impairme nt losses
C.5 Negative exchange rate difference s
C.6 Transfers to othe r as set portfolios
a) prop erties for functional use
b) non-current assets he ld for disposal
C.7 Other changes
D. Final balances
E. Fair value
113,818
172
8
-
Buildings
72,408
603
53
366
-
62
145
102
(3,411)
(322)
(681)
-
39
(12,320)
(93 )
(4,366 )
(317 )
-
(2,398)
(2,398)
(7,519 )
(7,519 )
(10)
110,579
128,465
(25 )
60,691
95,370
Since land and buildings are recognised at cost, the Group arranged for expert external
appraisers to estimate the fair value of all property assets for the purposes of the annual
impairment test on the carrying amounts.
The estimate was based on generally accepted valuation principles, by applying the
following measurement criteria:
 the direct comparative or market method, based on a comparison between the asset in
question and other similar assets subject to sale or currently on sale on the same
market or competing markets;
292
Notes to the consolidated accounts

the income method, based on the present value of potential market incomes for a
property, obtained by capitalising the income at a market rate.
The above methods were performed individually and the values obtained or each one were
appropriately averaged.
The results of the appraisal method described resulted in a write-down of property positions
amounting to approximately €3.3 million.
12.7 Commitments for the purchase of property, plant and equipment
Assets/amounts
31.12.2015
31.12.2014
A. Assets for functi onal use
1.1 ow ned
5,656
4,632
- land
-
-
- buildings
-
-
- furnishings
-
143
5,656
4,489
-
-
-
-
- land
-
-
- buildings
-
-
- furnishings
-
-
- electronic equipment
-
-
- other
-
-
5,656
4,632
2.1 ow ned
-
-
- land
-
-
- buildings
-
-
-
-
- land
-
-
- buildings
-
-
- electronic equipment
- other
1.2 Finance lease
Total A
B. Assets hel d for i nvestment
2.2 Finance lease
Total B
Total (A+B)
293
-
-
5,656
4,632
Notes to the consolidated accounts
SECTION 13 Intangble assets – Item 130
13.1 Intangible assets: composition by type of asset
b) Other assets
37
37
useful life
Indefinite
X
311,628
311,628
1,465,260
37
37
-
-
47
-
292,171
37
311,581
37
A.2.2 Assets at fair value:
a) Internally generated intangible assets
b) Other assets
Total
Finite
1,465,260
292,171
292,171
a) Internally generated intangible assets
useful life
Indefinite
X
A.2 Other intangibl e assets
A.2.1 Assets measured at cost:
31.12.2014
useful life
Finite
A.1 Goodw il l
useful life
31.12.2015
Assets/amounts
-
-
-
-
-
-
-
-
-
-
-
-
292,171
1,465,297
311,628
1,465,297
Details of the item “Goodwill” are given below.
31.12.2015
Figures in thousands of e uro
31.12.2014
changes
Banco di Bres cia Spa
570,392
570,392
-
Banca Popolare di Ancona Spa
166,364
166,364
-
Banca Popolare Commercio e Industria Spa
209,258
209,258
-
Banca Re gionale Europe a Spa
106,557
106,557
-
UBI Pramerica SGR Spa
170,284
170,284
-
Banca Popolare di Be rgamo Spa
100,045
100,045
-
88,754
43,224
8,260
2,122
88,754
43,224
8,260
2,122
-
1,465,260
1,465,260
-
IW Bank Spa (*)
Banca di Valle Camonica Spa
UBI Factor Spa
UBI Sis temi e Serv izi SCpA
TOTAL
(*) This bank was formed from the merger of IW Bank into UBI Banca Private Investm ent SpA
The goodwill recognised in the consolidated financial statements of the UBI Banca Group
(“goodwill arising on consolidation” resulting from the elimination of the equity investments
in subsidiaries) is the result of all the goodwill items relating to some of the companies
controlled by UBI Banca.
The Group performed no purchase and/or sales transactions of shareholdings during the
year which led to a change in the scope of consolidation for subsidiaries. IFRS 10 states
that any changes in stakes held subsequent to the acquisition of control which do not
determine loss of control are considered transactions between owners and as a consequence
the relative impacts must be recognised as an increase or decrease in equity. In this
respect, only changes in the consolidation scope which have resulted in the acquisition or
loss of control determine the appearance or disappearance of goodwill.
In compliance with IAS 36, an impairment test is performed at the end of each year (or more
frequently if an analysis of internal or external circumstances should give rise to doubts
that the value of the assets can be recovered).
294
Notes to the consolidated accounts
The result of the impairment test as at 31st December 2015 did not find any need to proceed
to recognition of impairment losses on the item goodwill.
“Other finite useful life intangible assets” amounting to €292,171 thousand were comprised
mainly of the following:




“brands” totalling €65,368 thousand. This amount relates to the value of the brands of
the banks in the former Banca Lombarda Group subject to amortisation since 2010
(residual life of 19 years). The amortisation for the year amounted to €5,028 thousand
down on the previous year following the recognition of amortisation of €7,414 thousand.
“asset management business” consisting both of the actual management and the
relative distribution activities totalled €46,211 thousand. These assets are amortised
over the useful remaining life of the customer relationships. Amortisation for the year
came to €3,821 thousand (€4,135 thousand for the year ended 31st December 2014).
“assets under custody” business totalled €37,146 thousand with total amortisation of
€2,542 thousand (€2,933 thousand as at 31st December 2014).
the remaining balance consists almost exclusively of software, allocated mainly to
UBISS spa, the UBI Group service company.
All the specific intangible assets of the UBI Banca Group (brands, core deposits, intangible
assets connected with assets under management and under custody) have a finite useful
life. Therefore in accordance with IAS 38 there is no obligation to subject those assets to
impairment tests on an annual basis, but only each time evidence appears of impairment
that is greater than the amortisation.
Intangible assets associated with assets under management and assets under custody were
not tested for impairment because no changes were recorded in the relative assets which
determine the value of the intangible assets associated with them (within the perimeter of
the PPA) by an amount greater than the annual amortisation rate and no changes occurred
in terms of the profitability of those assets.
With regard to the brand name, in the absence of any significant change in the overall value
of the UBI brand name provided by independent experts, and on which the previous
measurements used for impairment testing of the brand were based, it is considered that no
grounds exist to trigger an impairment test.
295
Notes to the consolidated accounts
13.2 Annual changes in intangible assets
Othe r intangible asse ts: internally
generated
Goodwill
A Opening gross balances
A.1 Total ne t reduc tions in value
A.2 Net opening balances
B. Increases
B.1 Purc hases
B.2 Inc rease s in intangible internal ass ets
Othe r intangible asse ts: other
Indefinite useful
life
F inite use ful life
Balances as at
Inde finite useful
life
Finite useful life
31.12.2015
2,780,406
( 1,315,146)
47
-
-
1,432,082
( 1,120,501)
37
4,212,572
( 2,435,647)
1,465,260
X
47
-
-
311,581
47,986
47,986
-
37
-
1,776,925
47,986
47,986
-
X
-
-
-
-
-
-
-
-
B.3 Rev ers al of impairment loss es
B.4 Positive changes in fair value
- in equity
X
-
- in the inc ome state me nt
B.5 Positive exchange rate differenc es
X
-
-
B.6 Other c hange s
-
-
-
-
-
-
C. Decreases
C.1 Sales
-
( 47)
-
-
( 67,396)
( 835)
-
( 67