UBI Banca Group

Exposures to some 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 since the subprime mortgage crisis in 2007, are now
considered at high risk.
Special purpose entities (SPEs)
The involvement of the UBI Group in special purpose entities (SPEs 14 ) concerns the following
types:
- entities formed to allow the issue of preference shares;
- conventional securitisation transactions 15 performed by Group member companies in
accordance with Law No. 130 of 30 th April 1999;
- the issue of covered bonds, in accordance with Art. 7 bis of Law No.130/1999.
Special purpose entities existed as at 31 st December 2011, within the UBI Banca Group for the
issue of preference shares used as innovative equity instruments on international capital
markets. These issues, which current supervisory regulations allow to be included in the
consolidated tier one capital, take the form of non redeemable instruments and they have
particularly junior levels of subordination. The preference shares included in the tier one
capital amounted to €453.46 million and they were issued by a number of the banks which
formed the Group prior to the merger.
On the one hand, securitisations form part of a strategic policy to expand lending by
simultaneously freeing up part of the supervisory capital relating to the amounts transferred
and on the other they constitute an important medium to long-term funding instrument. The
underlying assets securitised consist of performing assets of the network banks and other
product companies.
The list of SPEs used for the securitisations in which the Group is involved is as follows:
Orio Finance Nr. 3 Plc,
Albenza 3 Srl,
Lombarda Lease Finance 4 Srl,
UBI Lease Finance 5 Srl,
24-7 Finance Srl (multi compartment SPE – 3 securitisations),
UBI Finance 2 Srl,
UBI Finance 3 Srl.
Finally, with regard to the issue of covered bonds, the SPEs UBI Finance Srl and UBI Finance
CB 2 Srl (the latter formed on 20 th December 2011) were formed for the purchase of loans from
banks in order to create cover pools for covered bonds issued by the Parent, in accordance
with the structure of these operations.
The special purpose 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 member companies. As concerns Sintonia Finance, this securitisation (of a multioriginator
nature) was wound up at the end of November 2011 by the repurchase of the
remaining loans by Centrobanca and the other originator, the early redemption of the bonds
and the winding up of the related hedging derivatives.
The securitisations concerning the special purpose entities, 24-7 Finance Srl, UBI Lease
Finance 5 Srl, UBI Finance 2 Srl and UBI Finance 3 Srl were performed in order to form a
14 Special Purpose Entities (SPEs) are special companies formed to achieve a determined objective.
15 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.
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