UBI Banca Group

1.2 Policies for the management of credit risk
1.2.1 Organisational aspects
In the performance of its traditional banking business, the Group is exposed to the risk that the
loans it grants will not be repaid by borrowers when they are due and that partial or full impairment
losses must be recognised on them. More specifically the risk profile for lending is sensitive to the
performance of the economy as a whole, to the deterioration in the financial position of
counterparties (shortage of liquidity, insolvency, etc.), or to changes in their competitiveness, to
structural or technological changes in corporate debtors and to other external factors (e.g. changes in
legislation, deterioration in the value of financial guarantees and mortgages connected with market
performance). A further risk factor to which the Group pays particular attention is the degree of
diversification in the lending portfolio among different borrowers and among the different sectors in
which they operate.
The organisational model on which the units which manage lending activity is based is as follows:
Parent units for centralised monitoring and co-ordination;
the General Managements of banks and Group companies, to which the following report:
- credit departments;
- local credit centres,
- branches;
- corporate banking units (CBUs);
- private banking units (PBUs).
The characteristics of that organisational model ensure strong standardisation between the units of
the Parent and the corresponding units in the network banks, with consequent linearity in the
processes and the optimisation of information flows. Loan granting activity is also differentiated, at
local level, by customer segment (retail/private banking/corporate and institutional) and specialised
by the status of the loan: “performing” (managed by retail, private banking and corporate lending
units) and “default” (managed by problem loan units).
Furthermore, with regard to banks, the introduction of decentralised Local Credit Units to support
retail branches and corporate banking and private banking units, ensures effective co-ordination and
liaison between units operating on their respective markets. The Parent oversees policy management,
overall portfolio monitoring, the refinement of assessment systems, problem loan management and
compliance with regulations through the Credit and Credit Recovery, Risk Control, Strategic
Development and Planning and the Parent and Group Audit Macro Areas.
For all those entities (individual companies or groups) with authorised credit from banks and
companies in the Group (including risk activities involving issuer and related risks), which totals
more than €50 million, the Parent must set an operational limit which is the maximum credit that
may be authorised for the counterparty at UBI Group level. The Management Board of the Parent is
responsible for granting, changing and renewing operational limits on the proposal of the UBI Credit
Area after first consulting the UBI Credit Committee.
The banks and companies of the Group must also request a prior, consultative, non binding opinion
from the Parent for combinations of a) amounts of authorised credit and b) determined internal rating
classes. It is the Parent’s duty to assess whether it is consistent with the credit policies of the Group,
according to the criteria and parameters laid down in the credit authorisation regulations of the
Group. A prior opinion is not required for credit authorisations for single counterparties or groups of
companies which fall within the operational limits that have been set.
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