UBI Banca Group

managers of Banca Popolare Commercio e Industria. The relative defence documents were filed
with the Ministry of the Economy and Finance within the set time limits.
With regard to a notification served in 2006, the Ministry of the Economy and Finance
summoned the recipient of the provision, jointly with Banca Popolare di Bergamo, to a hearing
that was held on 8 th February 2011. The legal advisor of the bank presented defence
documents and the case was dismissed with a provision of the following 23 rd May.
Inspections
The Bank of Italy performed inspections of the Group between the end of January and the
end of June 2011, pursuant to Art. 68 of Legislative Decree No. 385/1993 (consolidated
banking act). They concerned the management and measurement of risks assumed by the
product companies which use large distribution networks (UBI Banca Lombarda Private
Investment and B@nca 24-7) or operate online (IW Bank).
On 23 rd September the supervisory authority communicated its “Remarks and observations”
with regard to those inspections. Some failings were reported into which the units responsible
at the Parent conducted a thorough investigation to assess the weaknesses found, together
with the lines of action already actually taken during the inspection. On 24 th October UBI
Banca furnished detailed replies to each of the remarks and observations contained in the
inspection report. Some of the actions of an ownership nature already taken with regard to
B@nca 24-7 are reported in the section on significant events that occurred during the year.
Moreover, with regard to B@nca 24-7, irregularities were alleged pursuant to Art. 145 of
Legislative Decree No. 385/1993 already mentioned, which mainly regarded the prior position
of the company, with the commencement of the relative penalty procedures concerning
company personnel. B@nca 24-7 presented its defence to the supervisory authority against
those claims.
On 14 th December 2011, the Italian Supervisory Authority announced the commencement of
inspections in accordance with articles 54 and 68 of Legislative Decree No. 385/1993,
designed to assess the adequacy of initiatives taken following the findings of the September
2010 inspections concerning liquidity risks and also in relation to the particular situation on
markets. The inspections were concluded on 16 th March 2012.
As part of the programme to validate internal models introduced by the Group some time ago,
in October and November 2011 the Bank of Italy carried out an initial survey (pre-validation)
of the activities undertaken by the Group in view of the introduction of an internal model for
the calculation of capital requirements for credit risk (A-IRB approach).
Following that action and further progress made on Group projects, on 9 th March 2012 the
Supervisory Authority officially announced the commencement of final verifications (validation)
of conformity of the system to the qualitative and quantitative requirements set by the relative
regulations.
At the same time, an official application was made by the UBI Banca Group for recognition for
supervisory purposes of its internal rating based, credit risk management system.
A similar programme was followed, although with different timing, for operational risks. The
pre-validation phase was carried by the Supervisory Authority in the first quarter of 2011,
while validation inspections at the Parent took place in February 2012.
With regard to the above, authorisation by the Bank of Italy for the use of internal models is
expected in time for the supervisory reports to be made as at 30 th June 2012.
On 12 th May 2011, the Consob (Italian securities market authority) notified Banca Popolare di
Bergamo of the results of inspections conducted in 2010 1 . It had found a few matters requiring
attention on which it asked the managing body of the bank to take corrective action.
1 The inspection, conducted by the Intermediaries Division – Supervisory Office of the Consob, commenced in December 2009 and was
concluded on 25 th October 2010. Its purpose was to ascertain the actual degree of compliance by the bank with regulations which
implemented the MiFID regarding the provision of investment services, with particular regard to the advisory service and the
progressive update of the solutions adopted pursuant to Consob Communication No. 9019104 of 2 nd March 2009 (Level 3 –
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