UBI Banca Group

Specific limits are set for this business which combine the achievement of budget targets in terms of
volumes disbursed and profitability with appropriate management in terms of distribution by rating
and transaction classes, concentration for single exposures and maximum duration.
The Centrobanca Credit Monitoring Service introduced a target process for monitoring limits, with the
relative monthly reporting.
Private equity
A specific focus was placed for ordinary customers on private equity business which consists of
acquiring stakes in a target company either by purchasing existing shares from third parties or by
subscribing new share issues to bring new capital to the target company. More specifically the
mission and relative strategies are specified, distinguishing between the acquisition of direct interests
and the subscription of units in private equity funds formed by entities within the Group or outside
it.
Institutional counterparty and country risk
For institutional and ordinary customers resident in high risk countries, the risk management policy,
the relative regulations to implement it and the documents containing the limits, set standards,
principles and limits designed to ensure proper management of the entire process of the assumption,
management and monitoring of credit risk in this area.
Limits are set for maximum exposure to credit risk as follows:
maximum exposure limits: maximum limits on total authorised credit for the different risk
classes of the exposures (combinations of counterparty ratings and country ratings) at Group
and individual company level;
single name concentration limits: maximum limits on total authorised credit for each borrower
for the different risk classes (combinations of counterparty ratings and country of residence
ratings) defined at Group level;
country concentration limits: maximum limits on total authorised credit for each country defined
at Group and individual company level.
Concentration risk
Geo-sectoral concentration risk is dealt with as part of second pillar risks. The policy sets a specific
capital requirement to take account of the higher sensitivity of a more concentrated portfolio.
Single name concentration risk is addressed by setting maximum exposure limits on single
counterparties in order to limit risks of instability that would arise from high rates of concentration
for loans to major borrowers if one of these should default. The limits set are based on counterparty
ratings and the type of transaction.
The contents of the policy have been set out in regulations and in a document which gives details of
the limits approved by the Management Board.
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