UBI Banca Group

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Banco di Brescia Spa, the former Banca Popolare di Bergamo-Credito Varesino Scrl and the former Banca Popolare Commercio e Industria Scrl each individually conducted operations to strengthen capital, the results of which are still in existence, by issuing preference shares through special companies located in the State of Delaware (U.S.A.). These operations were authorised by the Bank of Italy and were conducted in compliance with the authorisation received. As already reported, at the time (1999-2000) and in any case until the introduction of the company reform pursuant to Legislative Decree No. 6/2003 (the “Vietti Reform”), the direct issue in Italy of financial instruments with the characteristics necessary to comply with the requirements of the above supervisory regulations was forbidden and, in view of that circumstance, those same supervisory recommendations stated that “the innovative capital instruments, such as preference shares, are instruments issued by foreign subsidiaries included in the banking group”. Between 2009 and 2011, the Large Taxpayers Office of the Lombard Regional Department of the tax authorities served specific notices of tax assessment on UBI Banca and Banco di Brescia for the years 2004, 2005 and 2006 in relation to those transactions (for a total of €41.363 million of which €17.997 million for increased corporate income tax, €2.568 million for interest and €20.780 million of fines) alleging the failure to apply a withholding tax of 12.5% pursuant to article 26 paragraph 5 of Presidential Decree No. 600/1973 by the Italian bank (UBI Banca and BBS) on the interest paid on the subordinated deposit made by the LLC located in Delaware. The tax authorities’ argument is based on a change in the classification for tax purposes only of the subordinated deposit from the foreign company to the Italian company (exempt from withholding tax) as a loan (subject to withholding tax of 12.5%). The banks appealed against those notices. After a number of hearings, on 22 nd December 2011 section 35 of the Tax Commission of Milan rejected the appeal presented by UBI Banca relating to 2004, based on the statements made by the Bank of Italy for supervisory capital purposes, rather than on the provisions of the Italian Civil Code or tax legislation. Moreover, that same commission held that fines were not due because of the objective uncertainty surrounding the regulations. The hearing that regards Banco di Brescia in relation to 2004 is set for 25 th October 2012. With regard to the litigation in question, in the light, amongst other things, of expert opinions received by the Parent and Banco di Brescia, the risk of losing is considered unlikely and more specifically it is held that the legal basis of the appeal will be recognised in the courts. UBI Banca, BPB Immobiliare and Banca Carime – These companies in the UBI Banca Group have appealed against notices of tax assessment with which the tax authorities have reclassified transactions as property disposals, which the companies had considered contributions of property operations performed in 2003 to Immobiliare Serico, with a consequent demand for increased corporate income tax and VAT and the relative fines for a total of approximately €82.8 million. These companies won their cases in the court of first instance and in 2011 hearings were held in the competent regional tax commissions initiated by the relative departments of the tax authorities which had lost. The Lombard Regional Tax Commission upheld the decision of the court of first instance with regard to both UBI Banca and BPB Immobiliare, while a ruling by the Calabria Regional Tax Commission regarding Carime has not yet been issued. UBI Leasing: on 20 th June 2011, on conclusion of a tax inspection which initially concerned the tax year 2007, but was subsequently extended to also include the following years, the Brescia tax unit of the Guardia di Finanza (finance police) issued a tax assessment report to UBI Leasing (the inspection, which was interrupted repeatedly, had started in February 2009). The tax assessment report was centred primarily on the legality in civil (violation of the prohibition on agreements of forfeiture) and tax law of sale and lease back transactions on property (land), from which greater VAT payable arose amounting to €7.2 million. The company considers that the inspectors classified the transaction incorrectly and in that respect it commenced negotiations with the relative department of the tax authorities and filed its observations on the tax assessment report (in accordance with the Taxpayers Statute Law 212/2000). Banque de Dépôts et de Gestion: in May the Swiss tax authorities rejected the appeal made by UBI Banca and Banque de Dépôts et de Gestion against a demand concerning the failure by BDG to apply a withholding tax of 15% on dividends paid in the years 2006-2008 to its parent, UBI Banca, because in the opinion of the Swiss authorities, as a co-operative UBI Banca is not entitled to the exemption allowed for joint stock companies. Since it is held, on the contrary, that grounds exist in the case in question for the application of the parent-subsidiary directives, a further appeal was lodged against the decision in the competent Federal Administrative Court. That court rejected the appeal in January 2012. The litigation regards a sum of €1.59 million in addition to tax credits recognised by the Swiss tax authorities worth approximately €2 million. UBI Banca will assess the action to be taken in the light of studies currently in progress in order to see its right to refunds or tax relief upheld, partly in the light of the bilateral Italian-Swiss Convention. An appeal was lodged in this respect on 23 rd February 2012 with the Federal Court against the decision of the Federal Administrative Court. 207
Further details of tax inspections concerning the Group in recent years are given in the Notes to the Consolidated Financial Statements, Part B, Section 12.5 Liabilities, Contingent Liabilities, which may be consulted. 208
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Joint stock co-operative company Re
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▪ Principal risks and uncertainti
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REPORT ON CORPORATE GOVERNANCE AND
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A low risk profile The Group has no
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UBI Banca: company officers Honorar
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UBI Banca Group: the main investmen
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The rating As the sovereign debt cr
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Notice of call 1 An Ordinary Genera
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The macroeconomic scenario In a gen
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Monetary policy action taken by the
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imports (+24.9%) than in exports (+
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permanently balance public accounts
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In the light of the very serious cr
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total of the variable component of
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The “hour glass” shaped distrib
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dynamic use of credit recovery serv
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The contribution of the outstanding
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4 th -7 th July 2011 (offer period
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Action undertaken on the branch net
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Disposal of UBI Pramerica SGR opera
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Finally, the UBI Banca Group increa
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• the “Italian Banking Associat
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- the global financial crisis, whic
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As a result of new loan disbursemen
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Again with regard to financial educ
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As concerns the Foreign-Commercial
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This dialogue with customers is not
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The distribution network and positi
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The Italian distribution network of
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Remote channels Market coverage by
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• private individual customers ca
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Human resources The composition of
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The percentage of part-time employe
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Personnel management policies and i
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• the implementation of the “Va
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editions were published in 2011). A
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15. Barberini Sa (100% controlled)
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Companies consolidated using the eq
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- 22 nd February 2011: UBI Banca de
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total price of €77 million. Conse
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Reclassified consolidated financial
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Reclassified consolidated income st
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Reclassified consolidated income st
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Notes to the reclassified consolida
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marked improvement compared to €8
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elation to higher volumes of busine
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equity investments (including PerMi
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(+0.9%). The changes summarise the
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Brescia and €116.3 million of imp
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- the partial non deductibility of
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The comments that follow are based
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Total funding Total group funding,
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On the other hand, while significan
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In detail, institutional funding wa
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The public tender offer to purchase
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As concerns mutual investment funds
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General banking business with custo
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The ratio of lending to funding in
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The change recorded was caused by a
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unsecured non-performing loans (€
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Loans to customers: changes in dete
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The interbank market and the liquid
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Loans to banks: composition Changes
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The collateral pool also benefited
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Financial assets The year 2011 was
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- the Centrobanca corporate bond po
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Financial instruments held for trad
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Financial liabilities held for trad
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As concerns, on the other hand, por
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Exposures to some types of products
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SPE underlying assets Figures in mi
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The table below summarises on- and
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OTC interest rate derivatives: deta
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OTC derivatives: first five counter
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Fair value reserves of available-fo
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illion) and on the other hand for t
Page 157 and 158: The system of internal control The
Page 159 and 160: from the scope of the regulations f
Page 161 and 162: Consolidated companies: the princip
Page 163 and 164: Direct funding from customers Figur
Page 165 and 166: The performance of the main consoli
Page 167 and 168: exposures secured by real estate pr
Page 169 and 170: million) and other services (+€5.
Page 171 and 172: BANCA POPOLARE COMMERCIO E INDUSTRI
Page 173 and 174: accounts and deposits and term depo
Page 175 and 176: - net interest income reached €16
Page 177 and 178: BANCA POPOLARE DI ANCONA SPA Figure
Page 179 and 180: under management, which fell overal
Page 181 and 182: million) and the repurchase of own
Page 183 and 184: CENTROBANCA SPA Figures in thousand
Page 185 and 186: principally to new classifications
Page 187 and 188: - the net result for financial acti
Page 189 and 190: IW BANK SPA Figures in thousands of
Page 191 and 192: overdrafts, while the remaining €
Page 193 and 194: y the “Company restructuring prog
Page 195 and 196: UBI PRAMERICA SGR SPA Figures in th
Page 197 and 198: UBI FACTOR SPA Figures in thousands
Page 199 and 200: impaired loans - attributable mainl
Page 201 and 202: managers of Banca Popolare Commerci
Page 203 and 204: Development Decree - Decree Law No.
Page 205 and 206: ‐ the tax treatment of provisions
Page 207: a different criterion is used to ca
Page 211 and 212: In 2011, UBI Banca obtained visibil
Page 213 and 214: meetings with representatives of bo
Page 215 and 216: Legislation on the protection of pe
Page 217 and 218: • risks defined as measurable, fo
Page 219 and 220: uncertainty surrounding the outcome
Page 221 and 222: Compliance of corporate health and
Page 223 and 224: STATEMENT OF THE CHIEF EXECUTIVE OF
Page 225 and 226: Certification of the consolidated f
Page 227 and 228: Independent auditors’ report 226
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Page 231 and 232: Consolidated Balance Sheet
Page 233 and 234: Consolidated Income Statement figur
Page 235 and 236: Statement of changes in consolidate
Page 237 and 238: Consolidated Statement of Cash Flow
Page 239 and 240: PART A - Accounting policies A.1 -
Page 241 and 242: Accounting policies The accounting
Page 243 and 244: The income statement of the investo
Page 245 and 246: 39. UBI Finance Srl Milan euro 10,0
Page 247 and 248: ▪ ▪ ▪ 14 th March 2012: the U
Page 249 and 250: consequent absence of taxable incom
Page 251 and 252: List of the main IFRS standards end
Page 253 and 254: Reg. 1126/2008, SIC 7 Introduction
Page 255 and 256: 1.2. Definition of financial assets
Page 257 and 258: performance by stock markets rather
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3.4 Derecognition criteria Held-to-
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original loan contract, or in the p
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The methods used for measurement of
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6.3 Measurement criteria Investment
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individual renewals, or if the asse
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An intangible asset is recognised i
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(a) within asset item 120 of the ba
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10.1. Current tax assets and liabil
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might affect the amount required to
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14.3.2 Post-employment benefits and
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Interest is recognised on an accrua
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Level 2 Where no prices are availab
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A.3.2.1 Accounting portfolios: dist
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2.2 Financial assets held for tradi
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3.3. Financial assets at fair value
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4.4 Available-for-sale financial as
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6.2 Loans to banks: assets subject
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- 5 % auto sector; - 3 % aeronautic
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SECTION 10 Equity investments - Ite
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10.3 Annual changes in equity inves
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SECTION 11 Technical reserves of re
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These valuation methods were perfor
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Details of the item “Goodwill”
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13.2 Annual changes in intangible a
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comparable transactions for corpora
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Second level impairment test Becaus
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Cash Generating Unit Increase in th
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No deferred tax assets were recogni
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14.7 Other information The tables a
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15.2 Other information Nothing to r
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SECTION 2 Due to customers - Item 2
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Details of item A.1 “Subordinated
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SECTION 4 Financial liabilities hel
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6.2 Hedging derivatives: compositio
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11.2 Other information The demograp
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demographic tables; the characteri
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Changes in liabilities in 2011 for
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The economic and financial assumpti
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• degree of “innovation” in t
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year, for 2004 the tax authorities
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Banca Carime (2003 and 2004) increa
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15.2 Share capital - Number of shar
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Also, with regard to the conversion
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UBI Leasing SpA + €353 thousand R
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5. Management and intermediation on
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1.4 Interest expense and similar: c
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2.2 Commission expense: composition
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SECTION 6 Income (loss) from dispos
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8.2 Net impairment losses on availa
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SECTION 9 Net premiums - Item 150 9
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SECTION 12 Net provisions for risks
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SECTION 16 Profits (losses) of equi
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SECTION 19 Profits (losses) on disp
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SECTION 21 Post-tax profit after ta
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(v) (vi) (vii) (viii) (ix) (x) on 5
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368
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- AMA) - in combined use with the t
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1.2 Policies for the management of
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- it works with the Rating Desk and
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Credit processes within the network
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Credit risk management policy A pro
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Policy for the distribution of mort
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- pledge. In the case of mortgage c
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Quantitative information A. Credit
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A.1.3 Banking Group - On- and off-b
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A.1.7 Banking Group - On-balance sh
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A.3.1 Banking Group - Guaranteed/se
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B. Distribution and concentration o
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B.3 Banking group - Geographical di
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of a loan portfolio was signed, whi
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• performing loans resulting from
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Orio Finance 3 Originator UBI Banca
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Tabella 7: 190090O|1 - NOTA C.1.6 I
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C.2 Transfers C.2.1 Financial asset
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C.3 Banking Group - Covered bond op
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transferred. Each of these swaps ha
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3. management of the operations. Th
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Subsequently, in November 2011, aft
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D. Banking group - Models for the m
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one day VaR limit for the UBI Group
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Backtesting analysis Backtesting an
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The analysis shows a very heightene
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different hypotheses for the elasti
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2.3 Currency risk Qualitative infor
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2.4 Derivative financial instrument
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A.3 Financial derivatives: gross po
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A.7 OTC financial derivatives: bank
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B. Credit derivatives B.1 Credit de
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The system for the management of li
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Quantitative information 1.1 Distri
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1.3 Distribution over time by resid
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1.5 Distribution over time by resid
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4 BANKING GROUP - OPERATIONAL RISKS
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- Local Operational Risk Support Of
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16031). It must also be underlined
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Quantitative information The graphs
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Operational losses detected in 2011
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B. Quantitative information Informa
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Section 2 - Capital and banking sup
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deductions and negative filters, to
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PART G - Business combination trans
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the consolidated income tax act) co
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Transactions with related parties -
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Principal income statement items wi
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it is calculated on the basis of th
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Distribution by business segment: b
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Assistance activities (risk assessm
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UBI Banca Group

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