UBI Banca Group

overdrafts, while the remaining €11.5 million related to other transactions (postal deposits,
security deposits, commercial loans and guarantee margins with clearing houses).
The net interbank position, consisting mainly of positions with the Parent, more than doubled
to €852.1 million (€401.3 million in December 2010).
The portfolio of available-for-sale financial assets, amounting to €721.8 million (-€123.3
million; -14.6%), consisted mainly of Italian government securities, including €714 million of
floating rate certificates (CCT).
In September, the equity of the Bank decreased as a result of the creation of a negative fair value reserve
in application of international accounting standards due to the change in the fair value of the availablefor-sale
financial assets held in its securities portfolio. In consideration of the transitory nature of those
reserves – which are negative because of changes in the prices of Italian government securities of which
almost all of the owned portfolio of IW Bank is composed – and the probability that they will presumably
be eliminated (especially if the securities are held until their natural maturity), on 29 th September 2011,
UBI Banca, the sole and controlling shareholder made a “payment into an account for a future increase
in the share capital to be decided by 27 th April 2012” amounting to €60,179 thousand, equal to the
negative amount of the fair value reserve recognised as at 28 th September 2011 and not eligible for
inclusion in the supervisory capital.
In a later disclosure of 22 nd November 2011, the Parent reported that given the continuing high volatility
on bond markets, as a partial rectification and in order to provide greater stability, the “payment”
mentioned was to be considered as being without the time limit of the 27 th April 2012, and that the
decision on the best timing for the conversion into share capital, if necessary, or its return should the
negative effects of the fluctuations in the prices on the securities in the Bank’s portfolio be reversed was
to be made by IW Bank, in co-ordination with UBI Banca. In the light of those developments, IW Bank
decided to postpone all decisions on the question during the course of the year in order to acquire a
clearer view of the outlook in both capital and corporate terms.
An appreciable recovery in the prices of the Italian government securities held in portfolio occurred after
the end of the year, with a consequent positive impact on the “fair value reserves” recognised within the
equity of the Bank, which rose from a negative balance of €71,452 thousand as at 31 st December 2011 to
a negative balance of €18,390 thousand as at 8 th March 2012.
Capital ratios as at 31 st December 2011 consisted of a tier one ratio (tier one capital to risk
weighted assets) of 13.02% (10.91% at the end of 2010) and a total capital ratio (supervisory
capital and reserves to risk-weighted assets) of 13.01% (10.99%).
The proposal for the allocation of profit is to allocate €2,673 thousand to retained earnings,
after allocating €141 thousand to the legal reserve.
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