UBI Banca Group

12.5 Contingent liabilities
31/12/2011 31/12/2010
for personnel litigation 499 246
for revocation risks 2,210 2,857
for bonds in default 11 -
for compounding of interest 1,127 1,394
for claim risks 547 660
for tax litigation 238,260 183,600
for other litigation 73,506 73,390
Total 316,160 262,147
The liabilities regulated by IAS 37, characterised by the absence of certainty over the timing or the
amount of future expense required to settle presumed liabilities, can be classified as being of two
types:
• probable liabilities;
• contingent liabilities (possible or remote).
The correct identification of the nature of liabilities is of fundamental importance because it
determines whether or not the risk deriving from an obligation must be recognised in the financial
statements.
The recognition of a provision for risks and charges in the financial statements represents a
probable liability of uncertain timing or amount 2 and the amount recognised in the accounts
represents the best estimate of the expenditure required to settle the obligation existing as at the
reporting date and reflects the risks and uncertainties that inevitably characterise a number of
different facts and circumstances.
The amount of a provision is measured by the present value of the expenditure that it is assumed
will be necessary to settle the obligation where the effect of the present value is significant.
Future events that might affect the amount required to settle the obligation are only taken into
consideration if there is sufficient objective evidence that they will occur.
The measurement of provisions is periodically reviewed to verify that they are reasonable.
The general and theoretical legal parameters which govern the process of determining the present
value of provisions, which is performed for each single case of litigation and for the relative
residual life, are given below:
• type/nature of the litigation, to be assessed in the light of the legal claims formulated by the
counterparty. Various “macro-families” are identifiable in this respect such as corporate litigation,
labour law cases, financial intermediation litigation, litigation generically definable as
compensation for damages (resulting from non performance of contract obligations, illegal actions,
violation of regulations) etc.;
2 Details of the criteria for recognising provisions are given in Part A.2 of the notes to the financial statements “The main
items in the financial statements”, section 12 “Provisions for risks and charges”, which may be consulted.
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