UBI Banca Group

Second level impairment test
Because the UBI Group presents costs that were not allocated to single CGUs, a second level
impairment test was performed on the Group as a whole in accordance with sections 101 and
103 of IAS 36 (and illustrative example 8 of IAS 36). The second level impairment test
compared the total recoverable amount for UBI Banca with the consolidated equity of the
Group.
Impairment test results
As a consequence of the above, the impairment tests performed on the single CGUs resulted in
the need to recognise total impairment losses on goodwill of €1,873,849 thousand (of which
€126.3 million already recognised as at 30 th June 2011), with €1,410,721 thousand allocated
to the network banks and €463,128 thousand to the other Group member companies.
Impairment tests on finite useful life intangible assets
Finite useful life assets are subject to systematic amortisation over the estimated useful life of
the asset. As described in Part A.2 of the notes to the financial statements, at the end of each
financial period, tests are also performed for impairment losses resulting from differences
between the carrying amount and the recoverable amount for the assets.
Following changes in the macroeconomic and financial environment, the results of that test
resulted in the recognition of impairment losses on all finite useful life intangible assets,
except for those attaching to assets under custody business and software.
To complete the information, for all the intangible assets subjected to impairment testing, the
analyses performed on the remaining economic lives as at 31.12.2011 found no requirements
to reduce them.
Details are given below on finite useful life intangible assets subjected to impairment tests,
while, as already reported, the intangible assets resulting from the By You distribution
agreements were entirely written down by €19.5 million as at 30 th June 2011 as described in
the previous section 13.1.
Brand names
Impairment was recognised on the brand name because the total estimated value of the UBI
brand name made by independent experts, and on which the previous measurements used for
impairment testing were based, was revised downwards below the level of annual amortisation
charge for it.
The impairment test on the value of the brand name was based on public independent
estimates of the value of the UBI brand. Those estimates were linked to the network banks of
the former Banca Lombarda e Piemontese, for which the brand names were identified among
the intangible assets when the purchase price allocation was performed.
The analysis, based on the multiple “value of the brand/pre-tax income” implied in the
independent estimate by the public source already mentioned, resulted in a total impairment
loss of €193,053 thousand.
Core Deposits
The assets attaching to core deposits were tested for impairment because of continuing flat
curves for interest rates, which reduced the profits on these assets due to the low markdowns
on them.
The value of core deposit goodwill was estimated for impairment test purposes on the basis of
the present value of the income from these assets over their residual useful life.
The estimate of the value was based on the following assumptions:
a remaining useful life of the core deposit goodwill, equal to the life of the purchase
price allocation (PPA) adjusted for the time elapsing between the date of the PPA
(1.4.2007) and the measurement date (31.12.2011). This was performed once it had
308