UBI Banca Group

fixed assets, prior and current year losses, other negative items and negative prudent filters for
tier one capital (termed negative elements of tier one capital) are deducted from the total of the
items mentioned previously (termed positive elements of tier one capital). The algebraic sum of the
positive and negative components of the tier one capital constitutes the “tier one capital before
items to be deducted”. The tier one capital is constituted by the difference between the “tier one
capital before items to be deducted” and “items to be deducted from tier one capital”.
2. Tier two capital
The tier two capital comprises – with some limits on eligibility for inclusion – the fair value
reserves, non innovative and innovative capital instruments, hybrid capital instruments, tier two
subordinated liabilities, other positive elements and positive prudent filters (termed positive
elements of tier two capital). Other negative items and negative tier two prudent filters (termed
negative elements of tier two capital) are deducted from the total of those items.
Details of innovative equity instruments eligible for inclusion in the tier one capital, hybrid
capitalisation instruments and subordinated liabilities are given in Part B of these notes to the
financial statements, under Liabilities, Section 3, Securities issued – item 30.
3. Tier three capital
The Group has no subordinated debt eligible for inclusion in tier three.
B. Quantitative information
Use was made by the UBI Banca Group in the calculation of supervisory capital as at 31 st
December 2011 – in compliance with provisions issued by the Bank of Italy in May 2010 3 – of the
possibility of completely neutralising the impacts on supervisory capital of gains and losses
recognised in the fair value reserves relating to government securities issued by EU member
states held in the “available-for-sale financial assets” portfolio. This approach is in addition to
that already contained in regulations, which requires losses to be deducted entirely from
supervisory capital and gains to be only partially included. The option in question has been
applied across the board by all members of the banking group from 30 th June 2010.
The consolidated supervisory capital of UBI as at 31 st December 2011 amounted to €12,282
million, an increase compared to 31 st December 2010 (€10,536 million).
The increase in the tier one capital is mainly the result of the operation to increase the share
capital completed in July 2011. In addition, a negative filter relating to the substitute tax on
goodwill 4 was abolished with respect to 31 st December 2010 and there were increases in
3 With a provision of 18 th May 2010 and a later communication of 23 rd June 2010 (“Clarification of supervisory measures
concerning supervisory capital – prudential filters”), the Bank of Italy issued new instructions for the treatment of fair
value reserves relating to debt instruments held in the “available-for-sale financial assets” portfolio for the purposes of
calculating supervisory capital (prudential filters). More specifically, as an alternative to the “asymmetric approach” (full
deduction of net losses from the tier one capital and partial inclusion of net gains in the tier two capital) already provided
for by Italian regulations, it is now permitted – in compliance with 2004 CEBS guidelines –, limited to securities issued by
the central governments of countries belonging to the European Union, to completely neutralise gains and losses in the
reserves mentioned (“symmetrical approach”). The measure is designed to prevent unjustified volatility in supervisory
capital, caused by sudden changes in the prices of securities that are not related to changes in the credit ratings of the
issuers.
4 Bank of Italy, Supervisory Bulletin No. 3, March 2011, “Communication of 31 st March 2011 – Prudential filter relating to
the substitute tax on goodwill”, a measure issued as a result of the provisions of the “thousand extensions” decree
concerning deferred tax assets.
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