UBI Banca Group

PART F – Information on consolidated equity
Section 1 – Consolidated equity
A. Qualitative information
Equity is defined by international financial reporting standards in a residual manner as “what
remains of an entity’s assets after all the liabilities have been deducted”. From a financial
viewpoint equity is the means measured in monetary form contributed by the owners or generated
by the entity.
Operational levers are developed on a broader base, consistent with the supervisory aggregate,
which are characterised not just by equity in the strict sense but also by intermediate
instruments such as innovative instruments, hybrid instruments and subordinated liabilities.
As the Parent of the Group, UBI Banca performs supervision and co-ordination activities for the
companies in the Group and, without prejudice to the independence of each of them in terms of
business and company by-law, lays down appropriate policies for them. The Parent assesses
capitalisation requirements in both the strict sense and also by issuing subordinated liabilities or
hybrid capitalisation instruments of subsidiaries. The senior management of the Parent submits
proposals to its governing bodies which decide accordingly.
The proposals, once approved by the governing bodies of the Parent, are then submitted to the
competent bodies of the subsidiaries.
In compliance with regulatory constraints and internal objectives, the Parent analyses and coordinates
capital requirements on the basis of the business plan, the budget and the related risk
profiles and it acts as a privileged counterparty in gaining access to capital markets applying an
integrated approach to optimising capital strength.
The following analysis metrics are used from the viewpoint of capital management to cover risks:
supervisory capital, defined as a regulatory measurement of capital – specified in
supervisory regulations – to be held to cover capital requirements (Pillar 1 risks);
total capital, or available financial resources (AFR), defined as the sum of capital elements
that the Group considers can be used to cover internal capital and total internal capital
requirements 1 (Pillar 2 risks).
Capital management activity is designed to govern the current and future capital solidity of the
Group by verifying compliance with the supervisory requirements of Pillar 1 and by continuously
monitoring the adequacy of the total capital to meet Pillar 2 risks. This activity regards above all
an analysis of capital requirements in relation to budget and business plan objectives and it is
carried out at both consolidated and single legal entity level.
1 “Internal capital” is defined as risk capital, the capital requirement for a determined risk that the bank considers
necessary to cover losses above a given expected level. “Total internal capital” is defined as internal capital required for all
significant risks assumed by the bank, including possible internal capital requirements due to considerations of a strategic
character.
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