UBI Banca Group

1. CREDIT RISK
Qualitative information
1.1 General aspects
The strategies, policies and instruments for the assumption and management of credit risk are
defined by the Risk Management Area of the Parent in co-operation with the Credit and Credit
Recovery Macro Area and with support and co-ordination of the relative specialist units.
There is a particular focus in the formulation of policies to manage credit risk on maintaining an
appropriate risk-yield profile and on assuming risks that are consistent with the risk appetite defined
by senior management and, more generally, with the mission of the UBI Group.
The priorities in the orientation of the Group's credit management policies are to support local
economies, families, businessmen, professionals and small-to-medium sized enterprises.
The particular attention paid to maintaining relationships established with customers and to
developing them over the years is one of the strong points of the Group and it helps to eliminate
information asymmetries and offers continuity in customer relationships with a view to long term
support.
Even in the continuing and difficult current economic situation, the Bank is ensuring that the
economy has adequate access to credit by participating, amongst other things, in “Agreements”
stipulated between the Italian Banking Association, the Ministry of Finance and trade associations,
while preserving the quality of its assets and by employing an extremely selective approach to “non
core” exposures.
With regard to “business” customers in particular, lending rules have been formulated and are being
followed for the disbursement and management of loans, which in operational terms translate into
action which ranges from the development to the containment of exposures. These rules are based on
a number of drivers as follows:
internal counterparty rating (average weighted rating for Groups of companies), linked to the
degree of protection provided by any accessory guarantees there may be;
degree of engagement of the UBI Group with the counterparty or Group of companies;
the economic sector to which the counterparty or Group of companies belongs with a view to:
the level of sector risk;
the overall level of concentration of the UBI Group in the individual economic sector (with
verification also of the concentration at individual bank or company level).
Finally particular attention is paid to the definition of guidelines for the treatment of new products,
with adequate reporting to senior management concerning observance of risk-yield objectives, the
calculation of minimum interest rates for granting loans, the quality of borrowers, guarantees
received and expected rates of recovery in cases of insolvency.
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