THE BANCA CARIGE GROUP

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2 THE BANCA CARIGE GROUP CR Genova e Imperia Foundation BPCE Generali Assicurazioni Other Shareholders 44.05% 14.98% 2.97% 38.00% BANCA CARIGE S.p.A. - Cassa di Risparmio di Genova e Imperia Banking Group Insurance Group 95.90% Cassa di Risparmio di Savona S.p.A. Carige Vita Nuova S.p.A % 90.00% Cassa di Risparmio di Carrara S.p.A. Carige Assicurazioni S.p.A % 60.00% Banca del Monte di Lucca S.p.A. 1.16% held as treasury shares % Banca Cesare Ponti S.p.A % 99.50% Creditis Servizi Finanziari S.p.A. Carige A. M. SGR S.p.A. Centro Fiduciario CF S.p.A. 0.50% 76.95% 20.00% 58.97% % Assi90 S.r.l. I.H. Roma S.r.l. Dafne Immobiliare S.r.l % % Banca Carige Group % % 60.00% 60.00% 60.00% % Argo Finance One S.r.l. Priamar Finance One S.r.l. Argo Mortgage S.r.l. Argo Mortgage 2 S.r.l. Carige Covered Bond S.r.l. Columbus Carige Immobiliare S.p.A. Immobiliare Carisa S.r.l % Banking activities Trust activities Insurance activities Instrumental activities Financial activities 2

3 BANCA CARIGE GROUP HALF-YEARLY FINANCIAL REPORT AS AT 30 JUNE 2011 CONTENTS CONSOLIDATED FINANCIAL HIGHLIGHTS 4 MANAGEMENT OF THE PARENT BANK 5 INTERIM REPORT ON OPERATIONS 6 The real and monetary situation 7 Strategy 8 Business performance 10 Key events during the half-year period 11 Risk management 12 Events after the close of the half-year period 13 Main risks and uncertainties and business outlook 13 Information on transactions with related parties 13 CONDENSED CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS 15 Financial statements 16 - Consolidated balance sheet 17 - Consolidated income statement 18 - Statement of consolidated comprehensive income 19 - Statement of changes in consolidated shareholders equity 20 - Consolidated cash flow statement 23 Explanatory notes 24 - Accounting policies 24 - Area and methods of consolidation 27 - Intermediation activities 29 - Economic results 47 - Dividends distributed in the half-year period by Parent Bank Banca Carige 51 - Insurance activities 52 - Transactions with related parties 53 - Equity investments 54 - Own shares, cash flow statement and shareholders equity 55 - Resource management 55 - Risk management 57 - Results by business segment 63 - The Parent Bank: financial statements and explanatory notes 70 - Bank subsidiaries 95 - Insurance subsidiaries Financial subsidiaries The other main subsidiaries 105 ANNEXES 106 CERTIFICATION OF THE CONDENSED HALF-YEARLY FINANCIAL STATEMENTS PURSUANT TO ART. 81-TER OF CONSOB REGULATION NO OF 14 MAY 1999 AND SUBSEQUENT AMENDMENTS AND ADDITIONS REPORT OF THE INDEPENDENT AUDITORS ON THE LIMITED AUDIT OF THE CONDENSED CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS

4 CONSOLIDATED FINANCIAL HIGHLIGHTS BALANCE SHEET (1) Situation as at Change % 30/06/ /03/ /12/ /06/ / / / /2010 Total assets 42,374,106 40,428,390 40,009,957 39,442, Funding 31,256,275 29,583,627 29,545,550 28,636, Direct deposits (a) 28,311,847 26,667,451 26,583,549 26,217, * Amounts owed to customers 15,636,164 15,122,063 15,592,197 15,825, * Securities in issue 11,399,971 10,263,557 9,659,630 9,302, * Liabilities at fair value (2) 1,275,712 1,281,831 1,331,722 1,089, Amounts owed to banks 2,944,428 2,916,176 2,962,001 2,419, Indirect deposits (b) 24,280,660 24,481,780 24,090,570 23,028, Assets under management 10,185,111 10,285,940 10,341,649 9,861, Assets in custody 14,095,550 14,195,840 13,748,921 13,166, Financial Intermediation Activities (FIA) (a+b) 52,592,507 51,149,231 50,674,119 49,246, Investments 38,264,024 36,585,330 36,022,114 35,090, Loans to customers (3) (4) 26,560,685 25,188,496 25,373,267 24,274, Loans to banks (3) (4) 1,468,880 1,391,915 1,242,861 1,415, Securities portfolio (5) 10,234,459 10,004,919 9,405,986 9,400, Capital and reserves 3,595,757 3,792,739 3,516,943 3,503, INCOME STATEMENT (1) Situation as at Change % 30/06/ /03/ /12/ /06/ / /2011 (11) 12/ /2010 Gross operating income 541, ,898 1,067, , Net income from financial and insurance management 455, , , , Operating profit from ordinary activities before taxes 119,485 58, , , Profit for the period 75,158 37, ,241 71, RESOURCES (6) Number of branches Insurance agencies Number of bank employees 5,525 5,516 5,536 5, Number of bank and insurance employees 6,013 5,996 6,003 6, FINANCIAL RATIOS Operating costs Gross operating income 62.5% 60.6% 59.9% 62.4% Operating profit from ordinary activities before taxes /Capital and reserves 3.3% 1.5% 7.4% 3.3% ROE 2.1% 1.0% 5.0% 2.0% ROE (7) 2.7% 1.2% 6.5% 2.6% ROAE (8) 2.1% 1.0% 5.0% 2.0% ROAE (7) (8) 2.7% 1.3% 6.3% 2.6% Earnings per share (in Euro) - basic diluted RISK ASSETS AND REGULATORY RATIOS (9) Total weighted assets 22,338,871 22,200,435 21,887,400 20,453, Core Tier 1/Total Risk-Weighted Assets (10) 6.0% 5.9% 6.0% 6.1% Tier 1 capital / RWA 6.7% 6.6% 6.7% 6.9% Regulatory capital including Tier 3 capital/total weighted assets 9.2% 9.1% 9.1% 9.2% (1) Figures in thousands of euro (2) Carige Vita Nuova liabilities, designated at fair value and relating to products for which investment risk is borne by the insured, are not included in this table. (3) Before value adjustments. (4) Net of debt securities classified as L&R (5) Balance sheet items 20 (net of derivatives), 30, 40, 60 (only for the part relative to L&Rs) and 70 (only for the part relative to L&Rs) are included in the aggregate. (6) Statistics of the end of period. (7) Net of the AFS reserve established against the revaluation of the equity investment in the Bank of Italy. (8) Net profit on average shareholders' equity (Return On Average Equity). (9) Figures as at 30/06/2011 result from accounting and management estimates pending the official consolidated figures. (10) It includes savings shares following the changes to the articles of association approved during the Shareholders' Meeting on 29/4/2011 aimed at reaching the requirements for inclusion in Core Tier 1. (11) Figures as at 30/06/2010 have been restated in order to show the items concerning the discontinued groups of assets and liabilities (in particular the Custodian Bank business unit). 4

5 MANAGEMENT OF THE PARENT BANK BOARD OF GENERAL MANAGEMENT* BOARD OF STATUTORY DIRECTORS* AUDITORS* CHAIRMAN GENERAL MANAGER CHAIRMAN Giovanni Berneschi ** Ennio La Monica Andrea Traverso DEPUTY CHAIRMAN CO-GENERAL STANDING AUDITORS Alessandro Scajola ** MANAGER (CREDIT AND WEALTH Domenico Sardano Massimo Scotton MANAGEMENT) Mario Cavanna DIRECTORS Piergiorgio Alberti ** CO-GENERAL SUBSTITUTE AUDITORS Piero Guido Alpa MANAGER Stefano Lunardi Luca Bonsignore (ADMINISTRATION AND Cesare Castelbarco Albani RESOURCES) Remo Angelo Checconi ** Giacomo Ottonello AUDIT FIRM* Bruno Cordazzo Deloitte & Touche SpA Bruno Deletré DEPUTY GENERAL Gabriele Galateri di Genola MANAGER MANAGER RESPONSIBLE Luigi Gastaldi ** Paul Marie Le Bihan (GOVERNANCE AND CONTROL) FOR PREPARING THE COMPANY S Alain Jean Pierre Lemaire Daria Bagnasco FINANCIAL REPORTS* Paolo Cesare Odone ** Daria Bagnasco Renata Oliveri ** DEPUTY GENERAL Guido Pescione MANAGER Marco Simeon (COMMERCIAL) Mario Venturino Gabriele Delmonte * As at 30 June 2011 ** Member of the Executive Committee The Board of Directors was appointed by the Ordinary Shareholders Meeting of 29 April 2009 for the financial years The Ordinary Shareholders Meeting of 29 April 2010 appointed Mr. Bruno Deletré and Mr. Paul Marie Le Bihan - already co-opted by the Board of Directors on 14 December 2009 and 22 February 2010 to replace the outgoing Mr. Jean-Marie Paintendre and Mr. Jean-Jacques Bonnaud as members of the Board of Directors of CARIGE S.p.A., with the same expiry of term in office as the other Board members. The Ordinary Shareholders Meeting of 31 January 2011 appointed Mr. Marco Simeon - already co-opted by the Board of Directors on 18 October 2010, to replace the outgoing Pieto Isnardi as a member of the Board of Directors of CARIGE S.p.A., with the same expiry of term in office as the other Board members. The Executive Committee was appointed by the Board of Directors on 11 May 2009 with term of office up to 31 October In the meeting of 18 October 2010, the Board, in relation to the upcoming expiry of the term of the Executive Committee, confirmed the previous elective members and also appointed Ms. Renata Oliveri as a member, with a term from 1 November 2010 up to the date of the Shareholders Meeting called to approve the financial statements as at 31 December The Board of Statutory Auditors was appointed by the Ordinary Shareholders Meeting on 29 April 2011 for the financial years , hence with a term of office up to the date of the Shareholders Meeting called to approve the financial statements as at 31 December Standing Auditor Mr. Antonio Semeria, who passed away, was replaced in office on 12 May 2011, pursuant to art. 26 of the Articles of Association, by Substitute Auditor Mr. Domenico Sardano, who in accordance with art. 2401, par. 1, of the Italian Civil Code - shall remain in office until the next Shareholders' Meeting, which will appoint Auditors to the Board of Statutory Auditors as necessary. The mandate to the Audit Firm was granted by the Ordinary Shareholders Meeting of 20 April 2006 for the financial years

6 INTERIM REPORT ON OPERATIONS 6

7 THE REAL AND MONETARY SITUATION In the first six months of 2011, the macroeconomic scenario witnessed, on one hand, a slowdown in global production, with less expansionary economic policies; on the other, geopolitical tensions in North Africa and the growth of emerging countries pushed up the price of oil and other raw materials, with repercussions on consumer prices. In this context, a 4.2% increase in global GDP was estimated for the whole year (+5.1% in 2010), with international trade up 7.7% compared to 15.7% in In the United States, restrictive budgetary policies approved in December 2010 for the period have still not injected the desired impetus to domestic demand, also adversely impacted by the rise in inflation (3.1% as at April). In the first quarter of 2011, GDP growth (up 2.3% YoY) was lower than the expectations and than the 2010 figure, the unemployment rate stood at 9.1% in May, a little under the 9.6% recorded in 2010, and the rate of employment came to around 58.4%, compared to an average of 63% in the pre-crisis period ( ). Emerging countries implemented restrictive measures to keep inflation under control, in a context marked by dynamic growth in domestic demand. This led to strengthening in national currencies across the board and an increase in the inflow of foreign capital, but also to a slowdown in the rate of GDP growth, which remained, however, at high levels. The EU economy saw an acceleration in growth, driven by domestic demand (up 2.5% YoY in the first quarter of 2011, compared to 1.7% in 2010). This trend was the result of different development profiles in the Euro area: whilst Germany and France grow at sustained rates, Ireland, Greece, Spain and Portugal are still experiencing a recessionary phase, mainly due to the public debt crisis; in particular, a deepening of the tax crisis in Greece required a new European bailout of euro 12 billion in July, of which euro 8.7 billion contributed by EU Member States and euro 3.3 billion by the IMF. Industrial production in the whole Euro area recorded annual growth of 5.7% in April (+9.6% in Germany); new manufacturing orders (up 12.3% as at March) recorded sustained growth and retail sales a more contained recovery (up 1% as at April). The unemployment rate remained high, at 9.9% in May. Consumer prices recorded YoY growth of 2.7% as at May, due in particular to the energy component; core inflation rose too (+1.8% as at April). The Italian economy continued to be one of the slowest to recover, especially due to the stagnation in domestic demand. GDP, up 1.2% in 2010, rose by 1% YoY in the first quarter of 2011: the most significant contribution came from the trade balance (+0.7%), while public spending and private consumption each contributed 0.4%, with investments making almost a zero contribution. In the first five months of 2011, the growth in industrial production (+2.4% YoY) reflected the increase in capital (up 6.3%) and intermediate (+4%) goods, compared with a contraction in consumer goods (down 1.5%) and energy (- 1.6%). The performances of turnover and industrial orders were more dynamic, up 10.8% and 15.2% (YoY) respectively, while retail sales were essentially stationary (-0.1%), with a better performance for foodstuffs (+0.4%) and large-scale distribution (+0.3%). The labour market, despite still experiencing difficulties, especially in terms of youth employment, recorded a slight improvement YoY, relating to female employment: employment numbers rose 0.2% YoY as at May (+1.4% for women), with the unemployment rate down to 8.1% (8.6% as at May 2010). Inflation saw a sharp increase (+3% as at March), driven by the energy component (core inflation up 2.1%), but also sustained by dynamic trends in almost all areas of spending, particularly transport and foodstuffs. In terms of foreign trade, increases were recorded in both exports (+16.9% YoY in the first four months) and imports (up 22.5%), with a more dynamic trend in trading with non-eu countries. Public finance improved slightly: cumulative cash requirements of the Government sector in the first four months of 2011 stood at around euro 45 billion, lower than the euro 50 billion in the first four months of However, the public debt / GDP ratio rose to 120% and the spread between Italian Government bonds and the German bund surpassed 330 basis points in July. In this context, and in line with the requirements of international bodies, the Government implemented corrective public debt measures which aim to achieve a balanced budget by 7

8 2014. In the version approved by Parliament on 15 July, the corrective measures when fully operational in 2014 will equate to euro 47.9 billion, largely affecting the period, and 40% of which coming from spending cuts. The most significant measures were additional savings requested by local authorities, health measures with the increase/reintroduction of prescription charges, raising of the pension age, amnesty on pending legal disputes, and increase in IRAP (regional business tax) for banks and financial intermediaries and increase in stamp duty on share policies. The financial markets felt the effects of low economic growth and a heightening of the sovereign debt crisis which affected several countries in Europe. Market interest rates continued to increase, consistent with the less expansive monetary policy: the 3-month Euribor rate grew from 1.02% in December to 1.48% in June, the 6-month Euribor from 1.25% to 1.74% and the T-bill yield from 3.96% to 4.26%. In Italy, in particular, the yields of Government bonds also increased: treasury bills from an average of 1.86% as at December to 2.07% in June 2011, treasury credit certificates from 2.59% to 2.70% and long-term treasury bonds from 4.55% to 4.70%. In terms of monetary policy, in the wake of a rise in prices, the ECB raised the reference rate by another 0.25% on 7 July 2011, following the increase in April, bringing it to 1.50%. By contrast, the United States continued with its zero interest rate and high bank liquidity policy, launched at the end of 2008: the FED, whose mandate combines objectives regarding controlling the stability of prices and employment, kept the interest rate in the % band. The exchange rate market was characterised by a gradual appreciation of the Euro against the dollar in the first quarter, followed by a more up and down phase: on the whole, the exchange rate rose from 1.34 at the end of 2010 to 1.45 at the end of June. With reference to banking intermediation, direct deposits settled in May, registering growth of roughly 2% YoY: in particular, deposits decelerated (+1.1%; +6.6% in December 2010), whilst bonds recovered slightly (+3.3%; - 1.6% in December 2010). The trend in loans was more dynamic than in 2010, with YoY growth in loans to the private sector of 6.1% (+4.3% as at December 2010); in particular, loans to businesses strengthened (4.8% YoY), returning to the rates of growth recorded at the start of 2009, and loans to households (up 8.4%) registered an ever sustained increase. The quality of bank credit worsened further, with a net bad loans/loans ratio of 2.6% (2.4% as at December 2010). Bank interest rates, despite remaining low, increased slightly, consistent with the trend in the interbank market conditions. The average interest rate on loans to households and nonfinancial companies as at May was 3.82% (3.62% at the end of 2010) and 0.83% on deposits (0.69% as at December 2010). The interest rates on new transactions in Italy were lower than in the Euro area. STRATEGY The fundamental strategic goal of the Group, in line with the path started at the beginning of the 90s, is the creation of value in the medium/long-term for all stakeholders (shareholders, human resources, customers and the community) in a balanced manner, leveraging the development of relations with customers and dimensional growth, as a key requirement for maintaining an important position in the domestic banking system. In line with this objective, on 16 May the new Group Strategic Plan was approved, which confirms the mission of consolidating the role of banking, financial, welfare and insurance conglomerate at national level, with a strong presence in the individual local markets, able to distinguish itself for the quality of service offered to the customer, also through a multi-channel approach and the progressive development in the quality of resources and structures. Specifically, this mission is focused on the will to assert itself: - As financial conglomerate, in terms of a complete range of products and services offered, continuing to play a role of aggregating centre for other small and medium sized banks, overseeing profitability deriving from product companies; - At national level, in terms of a widespread presence in Italy, with a strong presence in Liguria and gradual expansion throughout Italy, with a particular focus on developing the relationship with local entities (multilocalism); 8

9 - Focused on retail customers, i.e. on households, small and medium size enterprises, craftsmen, merchants sectors as well as on local public entities, using simple and transparent products and leveraging on the widest use of technology; - Determined to continue the development of resources and structures, meaning a higher specialisation of networks and productive functions, a uniform management of key skills of the Group and the professional development of the employees for reaching ever increasing levels of efficiency also though an IT system compliant with banking system best practices; - Also determined to continue with multichannel development, and, therefore, of all the types of channels (traditional, remote, mobile) to allow customers to benefit from banking services at the time, in the manner and at the location they prefer. In line with the foregoing and in order to continue to improve the Group's overall productivity, consistent with the approach already adopted in the past, the Strategic Plan identified the following strategic guidelines for the near future, targeted at the creation of value: - Increase in revenues and expansion of the commercial offer, with the goal of identifying business areas (areas, products, customers) with untapped potential; - Rationalisation of costs and operating processes through a constant focus on technical-operational efficiency, particularly as regards the review of the processes which use a considerable amount of resources; - Optimisation of liquidity, capital and the cost of risk, aimed at allocating scarce resources efficiently; - Focus on innovation and on skills, for the continuous improvement in processes and products, but also the conduct and the relationship building capacity of human resources. These guidelines incorporate precise strategic objectives: - Increase in commercial productivity and the customer base, multi-channel development, refinement of the service model and revision of price policies; - Use of new sales processes to free up resources for business activity, proactive approach from personnel, efficient management of the cost base and of processes; - Attention to customer and institutional deposits, closure of the intermediation network, active management of capital in line with Basel 3, quality-based selection and management of credit; - Spread of technology, recognition of merit, skills development (knowledge and know-how). The strategic guidelines and objectives are implemented via 20 strategic initiatives identified by management and relating to: - The distribution network and service model, with measures that aim, in particular, to realign the performance of the Extra-Liguria Network with that of the Liguria Network, reduce the variance in the productivity and profitability between branches in the same area, and expand the distribution network with the opening of 48 branches as well as development of the multi-channel approach. In addition, measures are implemented to refine the business service model and develop the private segment, including through the Banca Cesare Ponti brand; - Products/services portfolio, allocation efficiency and price policies, whose key measures concern the improvement of the active management of loans throughout their entire life cycle and intense repricing of the Group s main products; - Resources, innovation and technicaloperational efficiency, which regard the gradual increase in operational efficiency through the constant monitoring of general and administrative costs and analysis of processes in order to identify opportunities to save time/resources, leveraging on technological innovation; - Solvency, solidity and low risk, in which the measures regard the balancing of financing structures, remix of funding products that qualify for improvement of the liquidity ratio, the development and implementation of credit rating and credit portfolio models, and capital management activities consistent with the regulations of the New Basel 3 Capital Accord. 9

10 Through the implementation of strategic initiatives, the plan has set the following economic and equity targets to be reached by 2014, to be achieved through natural growth: - Consolidated net profit of euro 263 million with average annual growth of 10.1% over 2010; - An increase in ROE (net of the AFS reserve established against the revaluation of the equity investment in Bank of Italy) to 8.1%; - A decrease in the cost/income ratio from 60% to 50.3%; - Average annual growth in volumes: 6.1% for total customer savings (FIA) and 5.2% for loans. From 1997 Banca Carige has requested and obtained ratings from the main specialised international rating agencies, Moody s, Standard & Poor s and IBCA (now Fitch). While the former have, from time to time, confirmed its judgments on Banca Carige, Fitch recently (25 July) downgraded Banca Carige s long-term rating from A to A- (outlook remained stable) and its short-term rating from F1 to F2. Similar decisions were also made recently to downgrade the ratings of other Italian issuers, also in relation to the change in the economic and financial context in which said issuers are operating. It should be emphasised, however, that the Carige Group, despite a difficult scenario like the current one, continued on its normal path of growth, maintaining constant profitability and recording better results even during the crisis; the Group did not suffer as much as the banking system from the deterioration in asset quality, also thanks to the high degree of customer fragmentation and significant number of positions backed by collateral; the Group continued to monitor capitalisation levels, including prospective, with potential leverage forecast during the course of the Strategic Plan. The ratings assigned to the Parent Bank are shown below: BANCA CARIGE RATINGS Date short-term long-term BFSR (1) (2) Individual (2) Support (3) Fitch July 2011 F2 A- - B/C 3 Moody's September 2010 (4) P-1 A2 C- - - Standard & Poor's May 2011 A2 A (1) Bank Financial Strength Ratings. (2) BFS ratings express the intrinsic strength and solidity of a bank, as well as its financial reliability given the bank's assets. Ratings range from A to E. (3) Support ratings indicate the likelihood of the Government or other public entity, or shareholders, stepping in to support the bank in the event of crisis. Ratings range from 1 to 5. (4) Date relative to the last credit opinion issued by the rating agency. BUSINESS PERFORMANCE The economic and financial context in the first half of 2011 confirmed the slow and difficult exit from the recession. In fact, Italian GDP growth remains low, accompanied by both stagnation in household consumption slowed by the weakness in disposable income, and uncertain income and employment prospects and low demand for investments by businesses. Turbulence in the financial market, which characterised the entire half, and concentrated in the last three months, quickly affected a significant part of the European sovereign debt market, in relation to anxiety over the public debts of peripheral EU member states and the United States. The Carige Group, which has a traditional presence in the area, continued to develop its intermediation activities, despite the difficult economic conditions, making it possible to increase net profit, thanks to the increase in net interest income, sustained by the gradually rising interest rates, and net commissions, which sufficiently offset the fall in income from financial items. Therefore, consolidated net profit amounted to euro 75.2 million, up 5.4% compared to the previous half (up 11.4% net of higher IRAP introduced with Decree no. 98 of 2011, converted to Law on 15 July Law no. 111/2011). The increase in net interest income (+9.2% to euro million) and the positive trend in net commissions (+5.3% to euro 147 million) offset the effects of market volatility (financial items down 29% to euro 22.5 million) and scenario risk (impairment of loans and other financial 10

11 items up 8.6% to euro 62 million); the cost/income ratio stood at 62.5% at the end of September. Support provided to the reference economic structure led to an increase in loans 1 granted to customers to euro 25.2 billion (+5.9% and +3.3% respectively in twelve and six months), both to businesses (euro 15.7 billion 2 ; +1.9% and +1%), and to households (euro 8 billion 2 ; +6.9% and +3.9%). In the context outlined, constant control of credit quality has allowed the bad loans/loans ratio to be maintained at 4.7%, in line with the banking system s 4.8% 3, in respect of which the annual increase in bad loans was lower 4 : 24.8% compared to 44.3%. Total customer savings amounted to euro 52.6 billion, up by 6.8% YoY and 3.8% in the half. Despite the tension regarding the procurement of funds on the financial markets, medium/longterm bond funding increased by 24.3% in the year and 17.4% in the half. In the first half too, a focus was maintained on the liquidity profile, specifically through the placement of around euro 2.7 billion in bonds with retail and institutional investors, both Italian and foreign. The consolidated supervisory ratios 5 remained at suitable levels Core Tier 1 ratio 6%, Tier 1 ratio 6.7% and Total Capital ratio 9.2%; it should be borne in mind that the full conversion, which can take place from the beginning of next September, of the Banca Carige 4.75% convertible bond with the option of redemption in shares, based on the current stock market share values would determine an increase of between 120 and 170 basis points 6 KEY EVENTS DURING THE HALF-YEAR PERIOD 1 Net of repurchase agreements with financial companies 2 Management data. 3 Source: ABI Monthly Outlook July Source: ABI Monthly Outlook July Estimated figures. 6 Estimates based on the assumed conversion at share values of euro 1.8 and euro 2.4 respectively. Effective as of 1 January 2011, Nuova Banca Cesare Ponti assumed the name Banca Cesare Ponti SpA and the new perimeter comprising the private banking activities of the former Banca Cesare Ponti (merged with the Parent Bank, effective as of 31 December 2010) and of Banca Carige in Lombardy. On 31 January, the extraordinary Shareholders Meeting of Banca Carige SpA approved certain amendments to its Articles of Association, mainly to comply with recent regulations governing the rights of shareholders of listed companies and regarding related parties. On 10 March, as part of the issue of covered bank bonds, Banca Carige SpA placed the third public issue on the institutional market for a nominal amount of euro 500 million. On 18 March, the extraordinary Shareholders Meeting of Carige Vita Nuova SpA resolved to proceed, subject to the necessary authorisations of the competent Supervisory Authorities, with the paid share capital increase for a value of euro 50 million, including share premium. On 25 March, as a result of the resolution by the extraordinary Shareholders Meeting of Banca del Monte di Lucca SpA on 1 March, the shareholders including the Parent Bank for its share - subscribed the euro 15 million share capital increase, including share premium. On 13 April, as part of the Euro Medium Term Note (EMTN) program, the Parent Bank placed the senior loan Banca Carige SpA Fixed Rate 4% 2011/2013 for a nominal amount of euro 750 million. On 29 April, the ordinary Shareholders Meeting of Banca Carige SpA, among other things, appointed the Board of Statutory Auditors for the three-year period (see page 5 "Parent Bank Management"). The extraordinary Shareholders Meeting approved certain amendments to Article 35 of the Articles of Association in relation to the changes made to regulatory capital rules. The Shareholders Meeting also made certain additional refinements to Articles 10, 11, 13 and 18 of the Articles of Association, in order to better specify certain aspects pertaining to the rights of shareholders of listed companies. In addition, on the justified proposal of the Board of Statutory Auditors, the Parent Bank assigned the job of auditing the accounts for the nine-year period to Independent Audit Firm Reconta Ernst & Young 11

12 SpA, pursuant to Legislative Decree no. 39 of 27 January The task of auditing the accounts was assigned before the expiry of the current independent audit firm s office (whose mandate, conferred for the six-year term cannot be renewed), to ensure the new independent audit firm had the necessary time to enhance its knowledge of the unique characteristics and complexities of the Group. On 16 March, the Banca Carige SpA Board of Directors approved the Group s Strategic Plan. As regards the contents, please refer to the section Strategy. In relation to the covered bond issue program started by the Parent Bank in 2008, Banca Carige SpA sold residential mortgages amounting to euro euro million in May which met the requirements of the applicable legislation, and the Boards of Directors of subsidiaries Banca del Monte di Lucca, Cassa di Risparmio di Carrara and Cassa di Risparmio di Savona expressed a favourable judgment on adhesion to the program, by resolving on 27 May - to transfer a portfolio of residential mortgages amounting to euro million to special purpose vehicle Carige Covered Bond Srl. In relation to the ongoing tax dispute, on 24 March the Provincial Tax Commission of Genoa accepted the Group s appeal against the finding pertaining to the accrual of costs deducted for tax purposes in 2004 by Carige Insurance SpA for about euro 7.6 million. At the same time, said Commission rejected the appeal against the assessment notice pertaining to the 2004 tax period that had qualified as abuse of right the use of the tax credit for taxes paid abroad on interest pertaining to UK bonds for about euro 4.3 million; an appeal has been filed against the aforementioned ruling. As regards the dispute relating to the 2004 tax year, the payment of tax and the associated interest relating to the provisional assessment of taxes is, at present, still in suspension, while awaiting the appeal submitted against the notice of tax payment for irregularities (suspension on 8 June by the Provincial Tax Commission of Genoa). By contrast, with reference to the 2005 tax year, on 28 May last year, appeals were presented to said Commission against tax notices received in The potential liabilities concerning the tax dispute based on the alleged applicability of the abuse of right principle were unchanged with respect to those detailed in the Explanatory Notes to the Consolidated Financial Statements for the year ended at 31 December 2010 (to which reference should be made for details). In this regard, the Group, backed by judgments from qualified external professionals, believes that there are substantial and legal grounds for their rationale regarding the legal nature of their transactions, a rationale that will be pursued at all appropriate national and international levels. The income statement also acknowledges the IRAP (regional business tax) provisions, increased from 4.82% to 5.57% (Law no. 111/2011), determining, at consolidated level, higher tax provisions of around euro 4 million (roughly euro 2.5 million in relation to current taxes and around euro 1.5 million for deferred taxes). RISK MANAGEMENT In the Carige Group, any policies related to the assumption of risks are set by the Board of Directors of the Parent Bank at the moment of preparation of strategic planning and the annual budget. The Parent Bank performs orientation and supervisory functions as regards all risks, in particular by managing, in an integrated context, the Pillar 1 and Pillar 2 risks, in accordance with the provisions contained in the Supervisory Instructions of the Bank of Italy (Circular No. 263 dated 27 December 2006 and subsequent updates). The Group banks operate within specific limits of independence and avail themselves of their own supervisory structures. The analyses are supported not only by regulatory models, but by more advanced methodologies which have made it possible, over time, to expand the range of risks monitored and to improve the assessment of the capital adequacy, from both a regulatory and an operational perspective. For details on risk management, please refer to the paragraph Risk management in the Explanatory notes of the Condensed Half- Yearly Financial Statements. 12

13 EVENTS AFTER THE CLOSE OF THE HALF- YEAR PERIOD On 25 July, ratings agency Fitch changed Banca Carige SpA s long-term rating from A to A- (outlook maintained at stable ) and its short-term rating from F1 to F2. MAIN RISKS AND UNCERTAINTIES AND BUSINESS OUTLOOK In a still highly critical first half of 2011, characterised by a slow economic recovery, interest rates remaining at all-time lows and continuous turbulence in the financial markets triggered by the public debt crisis of sovereign EU member states, the Group continued to develop traditional intermediation activities, closing the half with profits exceeding those recorded in the first half of The performance in the half, which confirms the solid strategic positioning of the Group in regionally-oriented traditional bankassurance activities, as well as the adequacy in terms of capitalisation and liquidity, has made it possible, also taking into consideration the information available on future trends, to assess the company as a going concern for the preparation of the half-yearly financial report. The Group manages the risks typical of banking activities, including, liquidity, market and credit risks, as well as those deriving from insurance activities, by using not only regulatory models, but more advanced methodologies, which have made it possible, over time, to expand the range of risks monitored and improve the assessment of the capital adequacy, from both a regulatory and an economic perspective (see the paragraph Risk management in the Explanatory notes ). Operations during the year will be exposed to various risks and uncertainties resulting from a context which will, foreseeably, remain critical in the second half too, relating, above all, to the difficulties in the real situation, which finds it difficult to consolidate the economic recovery and could lead to a reduction in household income and hence, consumption, and stagnation in investments from businesses, with a worsening in the creditworthiness of both the former and the latter. Furthermore, persistent tensions on the financial markets, affected by worries regarding the public debts of various EU member states and the US, took on particular significance for the financial sector, which encountered ever increasing problems and costs in obtaining funds and recorded significant capital losses on proprietary security portfolios, invested mainly in Government bonds. The high level of volatility in the financial markets which may also characterise the next few months, therefore requires a prudent policy for the management of the securities portfolio, by accepting lower profit levels to avoid assuming excessive risk. On the other hand, economic transactions should benefit from positive factors such as the restrictive monetary policy, which will allow at least a partial offsetting of the increased costs of funding, and the possibility of releasing, for tax purposes, some of the goodwill recorded in the consolidated financial statements (pursuant to art. 15, par. 10 bis and ter of Decree Law no. 185/2008, as amended by art. 23, par. 12 of Decree Law no. 98/2001 converted to Law no. 111/2011). With reference to Group goodwill, analyses have been conducted to verify the presence of impairment indicators and subsequent need to carry out a new calculation of the recoverable value of the various CGUs. The aforementioned analyses did not highlight any criticalities as such to significantly impact the recoverable value of the various CGUs determined for the purposes of the impairment test of the 2010 Financial Statements. Following an in-depth assessment of said factors and notwithstanding phenomena which are, at present, unforeseeable, the Group is confident that it can continue with its balanced path of growth in the remainder of the year. INFORMATION ON TRANSACTIONS WITH RELATED PARTIES This half-yearly financial report acknowledges the legislative changes made to IAS 24 Related Party Disclosures - published in November 2009 by the IASB (EC Reg. no. 632/2010 of 19 July 2010) in relation to the definition of the perimeter of related parties. The Group maintains relations with Banca Carige shareholders who are able to exercise a 13

14 significant influence, subsidiaries and other related parties regulated under market conditions. For details of existing relations, please refer to the paragraph transactions with related parties in the explanatory notes to the condensed consolidated half-yearly financial statements. It should be noted that in the first six months, no transactions with related parties subject to public disclosure were carried out. The completed transactions also fall within the Group s normal activities. 14

15 CONDENSED CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS 15

16 FINANCIAL STATEMENTS 16

17 CONSOLIDATED BALANCE SHEET ASSETS (figures in thousands of euro) 30/06/ /03/ /12/ /06/10 Change % 6/11 12/ CASH AND CASH EQUIVALENTS 283, , , , FINANCIAL ASSETS HELD FOR TRADING 203, , , , FINANCIAL ASSETS DESIGNATED AT FAIR VALUE 579, , , , AVAILABLE-FOR-SALE FINANCIAL ASSETS 9,135,871 8,761,785 8,109,848 7,828, LOANS TO BANKS 1,668,437 1,633,263 1,431,781 1,644, LOANS TO CUSTOMERS 25,996,442 24,679,267 24,899,599 23,872, HEDGING DERIVATIVES 88,620 57, , , EQUITY INVESTMENTS 55,853 54,994 54,994 62, TECHNICAL RESERVES CHARGED ON REINSURERS 155, , , , TANGIBLE ASSETS 1,144,042 1,140,569 1,130,288 1,115, INTANGIBLE ASSETS 1,858,701 1,859,638 1,858,779 1,853, of which: - goodwill 1,779,504 1,779,504 1,779,504 1,775, TAX ASSETS 495, , , , a) current 122, , , , b) advanced 373, , , , NON-CURRENT ASSETS AND DISCONTINUED GROUPS OF ASSETS , OTHER ASSETS 707, , , , TOTAL ASSETS 42,374,106 40,428,390 40,009,957 39,442, /11 6/10 LIABILITIES (figures in thousands of euro) 30/06/ /03/ /12/ /06/10 Change % 6/11 12/ AMOUNTS OWED TO BANKS 2,944,428 2,916,176 2,962,001 2,419, AMOUNTS OWED TO CUSTOMERS 15,636,164 15,122,063 15,592,197 15,825, SECURITIES IN ISSUE 11,399,971 10,263,557 9,659,630 9,302, FINANCIAL LIABILITIES FROM TRADING 54,062 65,966 69,345 90, FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE 1,880,416 1,909,293 1,998,959 1,776, HEDGING DERIVATIVES 687, , , , TAX LIABILITIES 352, , , , (a) current 44,598 39,546 17,334 45, (b) deferred 307, , , , LIABILITIES ASSOCIATED WITH DISCONTINUED GROUPS OF ASSETS , OTHER LIABILITIES 1,246,037 1,043, ,415 1,488, STAFF TERMINATION INDEMNITY 87,720 88,077 89,417 93, PROVISIONS FOR RISKS AND CHARGES: 322, , , , a) pensions and similar obligations 291, , , , b) other provisions 30,541 31,077 31,665 31, TECHNICAL RESERVES 4,044,959 3,915,876 3,823,093 3,578, VALUATION RESERVES 446, , , , CAPITAL INSTRUMENTS 15,768 15,773 15,784 15, RESERVES 329, , , , ADDITIONAL PAID-IN CAPITAL 1,013,280 1,013,279 1,013,164 1,012, CAPITAL 1,790,391 1,790,391 1,790,309 1,790, OWN SHARES (-) , MINORITY INTERESTS (+/-) 47,436 49,202 42,762 39, PROFIT (LOSS) FOR THE PERIOD (+/-) 75,158 37, ,241 71, TOTAL LIABILITIES 42,374,106 40,428,390 40,009,957 39,442, Figures as at 30/06/2010 have been restated in order to show balance sheet items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). 6/11 6/10 17

18 CONSOLIDATED INCOME STATEMENT INCOME STATEMENT (figures in thousands of euro) Change % 30/06/11 31/03/ /06/10 6/11 6/ INTEREST INCOME AND SIMILAR REVENUES 601, ,341 1,102, , INTEREST EXPENSES AND SIMILAR CHARGES -229, , , , NET INTEREST INCOME 372, , , , COMMISSION INCOME 163,091 82, , , COMMISSION EXPENSES -16,120-7,490-34,811-16, NET COMMISSIONS 146,971 75, , , DIVIDENDS AND OTHER SIMILAR REVENUES 8, ,607 6, NET INCOME FROM TRADING ACTIVITIES 15,189 2,694-6,629-3, NET INCOME FROM HEDGING ACTIVITIES , PROFIT (LOSS) ON DISPOSAL OR REPURCHASE OF: 146 1,048 58,632 26, a) loans ,176-1, b) available-for-sale financial assets 1, ,914 27, d) financial liabilities ,542 1, NET VALUE ADJUSTMENT ON FINANCIAL ASSETS AND LIABILITIES DESIGNATED AT FAIR VALUE -1,023-1,834 3,294 2, GROSS OPERATING INCOME 541, ,898 1,067, , NET VALUE ADJUSTMENTS DUE TO IMPAIRMENT OF: -61,987-30, ,317-57, a) loans -55,830-28, ,219-56, b) available-for-sale financial assets -4, , d) other financial assets -1,917-1, NET INCOME FROM FINANCIAL MANAGEMENT 479, , , , NET PREMIUMS 652, ,148 1,416, , MANAGEMENT -676, ,789-1,472, , NET INCOME FROM FINANCIAL AND INSURANCE MANAGEMENT 455, , , , ADMINISTRATIVE COSTS: -348, , , , a) staff costs -211,250-99, , , b) other administrative costs -137,407-73, , , NET PROVISIONS FOR RISKS AND CHARGES -1, ,206-1, DEPRECIATION OF TANGIBLE ASSETS -12,643-6,209-25,250-12, AMORTIZATION OF INTANGIBLE ASSETS -15,306-7,590-27,550-12, OTHER OPERATING EXPENSES AND REVENUES 40,027 27,238 71,467 36, OPERATING COSTS -338, , , , PROFIT (LOSS) FROM EQUITY INVESTMENTS 2,332-5,801 2, PROFIT (LOSS) FROM DISPOSAL OF INVESTMENTS OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES BEFORE TAXES 119,485 58, , , INCOME TAXES FOR THE PERIOD -43,332-21,238-97,954-46, OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAXES 76,153 37, ,701 71, PROFIT (LOSS) FROM DISCONTINUED OPERATIONS AFTER TAXES ,935 1, PROFIT (LOSS) FOR THE PERIOD 76,153 37, ,636 72, MINORITY INTERESTS , PROFIT (LOSS) FOR THE PERIOD ATTRIBUTABLE TO THE PARENT BANK 75,158 37, ,241 71, Earnings per share (in Euro) - basic diluted Figures as at 30/06/2010 have been restated in order to show economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). 18

19 STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME Change 06/11-06/10 30/06/ /03/ /06/2010 absolute % 10 PROFIT (LOSS) FOR THE PERIOD 76,153 37, ,636 72,274 3, % Other income components after taxes 20 Available-for-sale financial assets 17,688 77,066 (150,830) (124,922) 142, Cash flow hedge 13,097 21,643 (19,129) (48,579) 61, Share of the valuation reserves of equity investments designated at equity (233) 0 (829) (1,308) 1, % 110 Total other income components after taxes 30,552 98,709 (170,788) (174,809) 205, TOTAL PROFITABILITY (Item ) 106, ,222 8,848 (102,535) 209, Total consolidated profitability attributable to minority interests 1, , % 140 Total consolidated profitability attributable to the Parent bank 105, ,636 6,332 (103,224) 208,854 Figures in thousands of euro 19

20 STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY Allocation of profits/losses for the previous year Changes in the period Balance as at 31/12/2010 Change in opening balances Balance as at 01/01/2011 Reserves Dividends and other allocations Capital: 1,811,150-1,811,150-3,202 (9) 1,790,391 23,952 a) ordinary shares 1,636,840 1,636,840-3,202 (9) 1,616,081 23,952 b) other shares 174, , ,310 - Changes in reserves New shares issued Transactions on the Shareholders' equity Own shares purchased Extraordinary distribution of dividends Changes in capital instruments Own shares derivatives Stock options Comprehensive income for the period as at 30/06/2011 Shareholders' equity as at 30/06/2011 Shareholders' equity as at 30/06/2011 Additional paid-in capital 1,023,099 1,023,099-2,996-1,013,280 12,815 Reserves: 289, ,276 48,527 - (53) - (311) ,996 7,443 a) profits 217, ,323 48,527 (53) - (311) - 258,240 7,246 b) other 71,953 71, , Valuation reserves 418, , , ,322 2,246 Capital instruments 15,784 15,784 - (16) - 15,768 - Own shares (15) (15) (15) Profit (Loss) for the period 179, ,636 (48,527) (131,109) 76,153 75, Shareholders' equity for the group 3,694,184-3,694,184 - (128,819) (54) 198 (208) - (16) ,630 3,670,915 X Minority interests 42,762-42,762 - (2,290) 1 6,000 (112) 1,075 X 47,436 Figures in thousands of euro 20

21 STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY Allocation of profits/losses for the previous year Changes in the period Balance as at 31/12/2009 Change in opening balances Balance as at 01/01/2010 Reserves Dividends and other allocations Capital: 1,810,531-1,810, (25) 1,790,309 20,841 a) ordinary shares 1,636,221 1,636, (25) 1,615,999 20,841 b) other shares 174, , ,310 - Changes in reserves New shares issued Transactions on the Shareholders' equity Own shares purchased Extraordinary distribution of dividends Changes in capital instruments Own shares derivatives Stock options Comprehensive income for the period as at 31/12/2010 Shareholders' equity as at 31/12/2010 Shareholders' equity as at 31/12/2010 Additional paid-in capital 1,021,418 1,021,418-1,787 (106) 1,013,164 9,935 Reserves: 221, ,587 59, , ,836 7,440 a) profits 149, ,634 59, , ,080 7,243 b) other 71,953 71, , Valuation reserves 589, ,283 (479) (170,788) 415,850 2,166 Capital instruments 1,178 1,178-14,606-15,784 - Own shares (15) (15) (15) Profit (Loss) for the period 209, ,019 (59,044) (149,975) 179, ,241 2,395 Shareholders' equity for the group 3,811,089-3,811,089 - (146,716) ,407-14, ,332 3,694,184 X Minority interests 41,912-41,912 - (3,259) (61) 2,000 (346) 2,516 X 42,762 Figures in thousands of euro 21

22 STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY Allocation of profits/losses for the previous year Changes in the period Balance as at 31/12/2009 Change in opening balances Balance as at 01/01/2010 Reserves Dividends and other allocations Capital: 1,810,531-1,810, (16) 1,790,301 20,215 a) ordinary shares 1,636,221 1,636, (16) 1,615,991 20,215 b) other shares 174, , ,310 - Changes in reserves New shares issued Transactions on the Shareholders' equity Own shares purchased Extraordinary distribution of dividends Changes in capital instruments Own shares derivatives Stock options Comprehensive income for the period as at 30/06/2010 Shareholders' equity as at 30/06/2010 Shareholders' equity as at 30/06/2010 Additional paid-in capital 1,021,418 1,021, (66) 1,012,742 8,610 Reserves: 221, ,587 59, , ,822 7,560 a) profits 149, ,634 59, , ,066 7,363 b) other 71,953 71, , Valuation reserves 589, , (174,809) 412,719 1,755 Capital instruments 1,178 1,178-14,607 15,785 - Own shares (15) (15) - (5,977) (5,977) (15) Profit (Loss) for the period 209, ,019 (59,044) (149,975) 72,274 71, Shareholders' equity for the group 3,811,089-3,811,089 - (146,716) (1,556) - 14, (103,224) 3,574,688 X Minority interests 41,912-41,912 - (3,259) 2 - (241) 689 X 39,103 Figures in thousands of euro 22

23 CONSOLIDATED CASH FLOW STATEMENT CONSOLIDATED CASH FLOW STATEMENT (figures in thousands of euro) Direct method A. OPERATING ACTIVITIES 30/06/ /03/ /12/ /06/ Management 410, , , ,235 - interest income received (+) 563, ,335 1,082, ,290 - interest expenses paid (-) (173,673) (91,895) (367,028) (166,498) - dividends and similar revenues (+) 5, ,607 6,786 - net commissions (+/-) 156,991 83, , ,791 - staff costs (-) (178,917) (87,375) (341,576) (168,796) - net premiums collected 650, ,256 1,413, ,546 - other insurance revenues and expenses (-) (500,475) (247,948) (823,916) (399,683) - other costs (-) (191,983) (96,342) (427,234) (234,994) - other revenues (+) 115,374 54, , ,175 - taxes and duties (-) (36,703) (2,845) (152,348) (80,355) - costs/revenues from discontinued group assets and net of tax effect (+/-) - - 2, Liquidity generated/absorbed by financial assets (2,178,547) (378,180) (3,611,733) (2,757,867) - financial assets held for trading 88,060 59, , ,345 - financial assets designated at fair value 56,178 29,997 82,559 55,923 - available-for-sale financial assets (630,432) (364,510) (1,738,488) (1,370,629) - loans to customers (1,134,024) 211,576 (2,196,196) (1,115,522) - loans to banks: at sight 27, ,034 (892,475) (23,619) - loans to banks: other loans (363,633) (648,242) 712,123 (31,450) - other assets (222,665) 120,130 40,467 (385,915) 3. Liquidity generated/absorbed by financial liabilities 1,915, ,863 2,982,588 2,545,531 - amounts owed to banks: at sight (66,155) 32,432 (20,897) 3,171,278 - amounts owed to banks: other amounts (167,246) (145,831) 2,222,659 (1,666,224) - amounts owed to customers 258,028 (251,083) 655, ,080 - securities in issue 1,573, ,163 (302,172) (661,355) - financial liabilities from trading 8,626 (6,300) (35,012) 37,592 - financial liabilities designated at fair value (48,618) (31,113) 711, ,587 - other liabilities 357, ,595 (249,295) 396,573 Net liquidity generated/absorbed by operating activities 147,359 (15,646) 317, ,899 B. INVESTING ACTIVITIES 1. Liquidity generated by 4, ,840 1,359 - dividends received on equity investments 4,234-5, tangible asset disposals subsidiary and business unit disposals , Liquidity absorbed by (42,550) (25,326) (189,753) (156,044) - equity investment acquisitions - - (41) (6,341) - tangible asset acquisitions (27,084) (17,022) (36,699) (9,888) - intangible asset acquisitions (15,466) (8,304) (28,169) (11,165) - business unit acquisitions - - (124,844) (128,650) Net liquidity generated/absorbed by investing activities (38,074) (25,324) (163,913) (154,685) C. FUNDING ACTIVITIES - own share issues/acquisitions 5,680 5,680 (12,666) (13,786) - capital instrument issues/acquisitions ,607 14,607 - dividend distribution and others (131,109) - (149,975) (149,975) Net liquidity generated/absorbed by funding activities (125,429) 5,680 (148,034) (149,154) NET LIQUIDITY GENERATED/ABSORBED DURING THE PERIOD (16,144) (35,290) 5,166 (10,940) KEY: (+) generated; (-) absorbed Balance sheet items RECONCILIATION 30/06/11 31/03/11 31/12/10 30/06/10 Cash and cash equivalents at the beginning of the period 300, , , ,937 Total net liquidity generated/absorbed during the period (16,144) (35,290) 5,166 (10,940) Cash and cash equivalents at period end 283, , , ,997 23

24 EXPLANATORY NOTES ACCOUNTING POLICIES The half-yearly financial report of the Banca Carige Group as at 30 June 2011 was prepared in conformance with IAS 34 (interim reports). The international accounting standards IAS/IFRS and the related interpretations (SIC/IFRIC), officially approved by the European Commission and in force on 30 June 2011, were applied for the valuation and measurement of the accounting balances, and, where necessary, the directions referred to in the Bank of Italy Circular no. 262 dated 22 December 2005 update of 18 November were observed (financial statements for banks: schemes and rules for preparation) and subsequent clarification letters (so-called Roneata ). The half-yearly financial report was prepared using the Euro as the accounting currency. Unless otherwise specified, the amounts indicated in the Financial Statements and in the Explanatory notes are expressed in thousands of Euro. As regards the phases of classification, recording, valuation and cancellation of asset and liability items involved in preparing this Report, as with the methods of entering costs and revenues, the same accounting standards used in preparation of the financial statements as at 31 December 2010 were applied, with the exception of the regulatory changes made to IAS 24 Related Party Disclosures. In November 2009, the IASB published the new version of IAS 24 (Commission Regulation (EU) No. 632/2010 of 19 July 2010) which revised the current definition of the scope of related parties and introduced a partial exemption on the disclosure to be provided for Government-related entities. In addition, effective obligatorily for all financial statements pertaining to financial years starting on or after 01 January 2011, the following standards (IAS/IFRS) and interpretations (SIC/IFRIC) will be applied to this half-yearly financial Report as well as the relative changes that have no significant impact on the preparation of said Report: - IAS 32 - Financial instruments: Presentation (EC Regulation no. 1293/2009 of 23 December 2009). The modified provisions shall be applied starting from the financial statements for the financial years that start on or after 1 February 2010; - Amendments to IFRS 1 - First time adoption of IFRS and to IFRS 7 - Financial instruments: additional information (EC Reg. no. 574/2010 of 30 June 2010). The amended provisions will enter into force with effect from the financial years beginning 1 July 2010 or later; - IFRS 8 Operating Segments: EC Reg. no. 632/2010 of 19 July 2010). The provisions apply starting from the financial statements for the financial years that start on or after 1 January 2011; - IFRIC 14 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements (EC Regulation 633/2010 of 19 July 2010). The amendments shall apply starting from the financial statements for the financial years that start on or after 1 January 2011; - Amendments to IFRIC 19 - Extinguishing financial liabilities with equity instruments and IFRS 1 First-time adoption of IFRS (EC Regulation no. 662/2010 of 23 July 2010). The provisions apply starting from the financial statements for the financial years that start on or after 1 July 2010; - Improvements to the IFRS in the framework of the annual improvement process aimed at simplifying and clarifying international accounting standards IAS/IFRS (EC Regulation No. 149/2011 of 18 February 2011); most amendments were effective starting from the financial years starting on or after 1 January 2011, although early application is allowed. Lastly, the documents published by the International Accounting Standards Board (IASB) should be noted. In the event the current version is approved by the European Commission, these documents could have accounting effects. In May 2011, the IASB published a set of new principles that introduced new regulations for 24

25 consolidated financial statements, Joint Ventures and the associated information requested. In particular: - IFRS 10 Consolidated financial statements. The new standard was borne out of the need to have a single document containing the rules and regulations of the consolidated financial statements by attempting to standardise the concept of control to minimise practical inconsistencies identified in the system replacing the provisions of IAS 27 Separate and consolidated financial statements and SIC Interpretation 12 Consolidation Special purpose entities"; - IFRS 11 - Joint Arrangement, relating to the accounting of agreements between companies, replacing IAS 31 "Interests in Joint Ventures" and SIC 13 "Jointly controlled entities - Non-monetary contributions by venturers"; - IFRS 12 Disclosure of information on interests in other entities. The IASB decided to incorporate in a single accounting standard the disclosure requirements for interests in subsidiaries, associates, entities not included in the area of consolidation and joint arrangements. At the same time as publication of the abovementioned standards, the following standards were amended: - IAS 27 - Separate financial statements. The standard was revised to remove the entire section on the consolidated financial statements, covered by IFRS 10; - - IAS 28 Interests in associates and joint ventures. The standard was revised to extend the field of application to Joint ventures too. - Other documents were also published by the IASB in the current half: - IFRS 13 - Fair value measurement. The standard was issued to harmonise and bring together in a single document the rules of fair value measurement and the associated information (published on 13 May 2011); - Amendments to IAS 1 Presentation of items of other comprehensive income in the financial statements (published on 16 June 2011); - Amendments to IAS 19 Employee benefits (published on 16 June 2011). THE ACQUISITION OF 22 BRANCHES FROM BANCA MONTE DEI PASCHI DI SIENA S.P.A. With reference to the Banca Carige Group s acquisition of business units relating to 22 branches from Banca Monte dei Paschi di Siena S.p.A. (hereinafter BMPS), effective from of 31 May 2010, the related accounting was defined as described below during the half: - The business units acquired are represented, respectively, by: - 20 branches acquired by Banca Carige S.p.A. at a contract price of euro million; - 1 branch acquired by subsidiary Banca del Monte di Lucca S.p.A. at a contract price of euro 9.2 million; - 1 branch acquired by subsidiary Cassa di Risparmio di Carrara S.p.A. at a contract price of euro 13.7 million; - the total initial provisional price of euro 130 million was defined on the basis of contractual adjustment mechanisms, amounting to euro million, of which euro million relating to the business unit acquired by Banca Carige S.p.A.; the provisional prices paid for the business units purchased by subsidiaries Banca del Monte di Lucca S.p.A. and Cassa di Risparmio di Carrara S.p.A. were not subject to adjustment; - The acquisitions were accounted for in accordance with the provisions of the new IFRS 3 Business combinations, and so: - The acquisitions of the business units were recorded on the date on which control over acquired assets was obtained; - The cost of the transactions was calculated as the sum of the fair value of the assets and liabilities acquired at the acquisition date; - All costs related to the acquisitions of the business units were recorded as expenses in the period in which said costs were incurred (par. 53 IFRS 3); - Goodwill was definitively recorded for euro million. 25

26 This half-yearly financial report should be read and analysed jointly with the financial statements for the year ended at 31 December The condensed consolidated half-yearly financial statements contained in this half-yearly financial Report were subject to a limited audit by the company Deloitte & Touche SpA, according to the task conferred by resolution of the Shareholders Meeting of 20 April 2006 for the six-year period , pursuant to art. 159 of Legislative Decree 58/1998 and subsequent amendments and additions deriving from art. 18 of Law 262/

27 AREA AND METHODS OF CONSOLIDATION 1. EQUITY INVESTMENTS IN FULLY AND JOINTLY CONTROLLED SUBSIDIARIES According to IAS/IFRS the consolidation area includes all directly or indirectly controlled subsidiaries: therefore, even companies not classified as credit, financial or instrumental institutions (i.e. dissimilar activities) have been consolidated on a line-by-line basis. The control concept applied is that established in IAS 27. During the course of the first six months of 2011, the consolidation area remained unchanged from that determined for preparation of the financial statements for the year ended at 31 December 2010, with the exception of the inclusion of Banca Cesare Ponti. 1. Equity investments in exclusive subsidiaries and subsidiaries subject to joint control (consolidated proportionally) Type of Shareholding relationship Availability of votes (2) (3) Name of the companies Head offices relationship Holding company (1) % Shareholding Actual % Potential % A. Companies A.1 Consolidated line-by-line Banking group 1. Banca CARIGE SpA Genoa 2. Cassa di Risparmio di Savona S.p.A. Savona 1 A Cassa di Risparmio di Carrara S.p.A. Carrara 1 A Banca del Monte Lucca SpA Lucca 1 A Banca Cesare Ponti SpA Milan 1 A Carige Asset Management SGR SpA Genoa 1 A A Creditis Servizi Finanziari SpA Genoa 1 A Centro Fiduciario SpA Genoa 1 A A Argo Finance One Srl Genoa 1 A Priamar Finance Srl Genoa 1 A Argo Mortgage Srl Genoa 1 A Argo Mortgage 2 Srl Genoa 1 A Carige Covered Bond Srl Genoa 1 A Columbus Carige Immobiliare SpA Genoa 1 A Immobiliare Carisa Srl Savona 1 A Insurance companies 16. Carige Assicurazioni SpA (4) Milan 1 A Carige Vita Nuova SpA Genoa 1 A Other companies 18. Dafne Immobiliare Srl Milan 1 A I. H. Roma Srl Milan 1 A Assi 90 Srl Genoa 1 A A A.2 Consolidated proportionally - Key (1) Type of relationship: 1 = majority of voting rights at ordinary shareholders meeting 2 = dominant influence at ordinary shareholders meeting 3 = agreements with other shareholders 4 = other forms of control 5 = single management pursuant to article 26, paragraph 1 of Legislative Decree 87/92 6 = single management pursuant to article 26, paragraph 2 of Legislative Decree 87/92 7 = joint control (2) Availability of voting rights at ordinary shareholders meeting, distinguishing between actual and potential (3) Figure entered only if different from the equity investment share (4) The percentage of actual availability of votes differs from the equity investment share as it is calculated on the capital excluding own shares. Concerning operations, the subsidiaries can be divided into banking (Banca Carige SpA, Cassa di Risparmio di Savona SpA, Cassa di Risparmio di Carrara SpA, Banca del Monte di Lucca SpA, Banca Cesare Ponti SpA), asset management (Carige Asset Management SGR SpA), consumer credit (Crediti Servizi Finanziari SpA), trust companies (Centro Fiduciario SpA), companies 27

28 for securitisation transactions (Argo Finance One Srl, Priamar Finance Srl, Argo Mortgage Srl, Argo Mortgage 2 Srl), special purpose vehicles for the issue of covered bonds (Carige Covered Bond Srl), insurance (Carige Vita Nuova Spa, Carige Assicurazioni SpA) real estate (Columbus Carige Immobiliare SpA, Immobiliare Carisa Srl, Dafne Immobiliare Srl and I.H. Roma Srl) and insurance agencies (Assi 90 Srl). With regard to the four companies established for the same number of securitisation transactions Argo Finance One, Priamar Finance, Argo Mortgage and Argo Mortgage 2 and to the company Carige Covered Bond please note that they have all been consolidated in these financial statements on a line-by-line basis. With regard to the securitisation of Banca Carige s performing loans carried out by Argo Mortgage 2 in 2004, as the transaction does not fully satisfy the conditions of the substantial transfer to third parties of related risks and rewards, consolidation was carried out on the basis of the company s segregated assets. The condensed consolidated half-yearly financial statements have been prepared using: - The condensed half-yearly financial statements of the Parent Bank and of the other consolidated companies as at 30 June 2011, approved by their respective Boards of Directors and prepared in accordance with the approved IAS/IFRS in force; - Reporting packages prepared by those companies that did not adopt the IAS/IFRS and approved by the respective Boards of Directors. All subsidiaries were also included in the consolidation area. Excluded from the consolidation area, however, were non-investee companies for which shares have been pledged with voting rights, as the guarantee obtained was intended as a credit protection instrument and not as an instrument allowing influence over the companies in question. 2. OTHER INFORMATION Associates, i.e. companies subject to significant influence, were measured using the equity method. Equity investments in companies subject to significant influence (consolidated using the equity method) Name of the companies Head offices Shareholding relationship Availability of votes Holding company % Shareholding Actual % Potential % A. Companies consolidated with the equity method 1. Autostrada dei Fiori SpA Savona Banca Carige S.p.A Cassa di Risparmio di Savona S.p.A Companies in which the Group exerts a significant influence that are not considered to be significant have been valued at cost, in accordance with the general principles set out in the framework. Equity investments in companies subject to significant influence excluded from the equity method Name of the companies Head offices Shareholding relationship Availability of votes Holding company % Shareholdin Actual % Potential % 1. Sport e Sicurezza Srl Milan Carige Ass.ni SpA Carige V. N. SpA Nuova Erzelli Srl Genoa Banca Carige S.p.A World Trade Center Genoa SpA in liq. Genoa Banca Carige S.p.A

29 INTERMEDIATION ACTIVITIES As at 30 June 2011 Financial Intermediation Activities (FIA) on behalf of customers direct and indirect deposits stood at euro 52.6 billion. The value does not include Carige Vita Nuova liabilities, designated at fair value, for which investment risk is borne by the insured. Direct deposits amounted to euro 28,311.8 million, whilst indirect deposits amounted to euro 24,280.7 million. Indirect deposits represent 46.2% of total FIA and are composed of assets under management (41.9%), and assets in custody, for the remaining 58.1%. FINANCIAL INTERMEDIATION ACTIVITIES (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Total (A+B) 52,592,507 51,149,231 50,674,119 49,246, Direct deposits (A) (1) 28,311,847 26,667,451 26,583,549 26,217, % on Total 53.8% 52.1% 52.5% 53.2% Indirect deposits (B) 24,280,660 24,481,780 24,090,570 23,028, % on Total 46.2% 47.9% 47.5% 46.8% - Assets under management 10,185,111 10,285,940 10,341,649 9,861, % on Total 19.4% 20.1% 20.4% 20.0% % on Indirect deposits 41.9% 42.0% 42.9% 42.8% - Assets in custody 14,095,550 14,195,840 13,748,921 13,166, % on Total 26.8% 27.8% 27.1% 26.7% % on Indirect deposits 58.1% 58.0% 57.1% 57.2% (1) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk is borne by the insured, are not included in this table. Total funding, which includes direct deposits from customers (euro 28,311.8 million) and banks (euro 2,944.4 million), amounted to euro 31,256.3 million, up both over six months (+5.8%) and on a YoY basis (9.1%). Funding rose by 6,5% over six months and 8% over twelve months (net of repurchase agreements, growth stood at 2.4% and 4.2% respectively); more specifically amounts owed to customers, standing at euro 15,636.2 million, were essentially stable in the six-month period (+0.3%) but fell over twelve months (-1.2%). Securities in issue and liabilities measured at fair value, as a whole, amounted to euro 12,675.7 million and grew 15.3% in the last half and 22% in the year. The aggregate is almost entirely made up of bonds, 59% of which are placed with ordinary customers, 29% relate to the EMTN and covered bond programmes, 9% are represented by subordinate loans and 3% by placements through the Bancoposta network. In the first six months of the year, in strict compliance with Mifid regulations governing investor protection, roughly euro 1,450 million in bonds were issued, subscribed by customers, against roughly euro 670 million due to mature. In addition, March saw the public placement of a covered bond for institutional investors for a total of euro 500 million and April the placement of the senior loan Banca Carige S.p.A. fixed rate 4% 2011/2013 for a nominal euro 750 million. Amounts owed to banks totalled euro 2,944.4 million, a slight decrease compared to the euro 2,962 million in December 2010 but an increase relative to euro 2,419.2 of June The increase is mainly due to borrowing repurchase agreements. 29

30 FUNDING (figures in thousands of euro) Situation as at Change % 30/06/ /03/ /12/ /06/10 (3) 06/11 06/11 12/10 06/10 Total (A+B) 31,256,275 29,583,627 29,545,550 28,636, Direct deposits (A) 28,311,847 26,667,451 26,583,549 26,217, Amounts owed to customers 15,636,164 15,122,063 15,592,197 15,825, current accounts and free deposits 13,121,616 13,449,138 14,212,395 14,353, repurchase agreements 2,366,965 1,532,169 1,235,022 1,310, term deposits 10,461 11,139 9,214 9, loans 3,271 3,600 2,972 3, commitments to repurchase own equity instruments 10,845 10,845 10,845 17, other deposits 123, , , , Securities in issue 11,399,971 10,263,557 9,659,630 9,302, bonds 11,306,639 10,162,212 9,549,063 9,165, other securities 93, , , , Liabilities at fair value (1) 1,275,712 1,281,831 1,331,722 1,089, bonds 1,275,712 1,281,831 1,331,722 1,089, short term 15,697,405 15,257,958 15,679,513 15,930, % on Total medium-long term 12,614,442 11,409,493 10,904,036 10,287, % on Total Amounts owed to banks (B) 2,944,428 2,916,176 2,962,001 2,419, Deposits of central banks (2) 700, , ,789 98, Current accounts and free deposits 75,518 72,357 66,266 30, Term deposits 130,322 92,671 63, , Repurchase agreements 1,677,347 1,726,708 1,671,345 1,180, Financing (2) 360, , , , Other (1) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk is borne by the insured, are not included in this table. (2) Figures as at 31/12/2010 have been reclassified since financing transactions in "pooling" with the Bank of Italy have been shown in the line "Financing" instead of in the line "Amounts owed to central banks". (3) Figures as at 30/06/2010 have been restated in order to show the liability items concerning the discontinued groups of assets and liabilities (in particular the Custodian Bank business unit of the Parent Bank). Liguria s contribution to direct deposits stood at 56.9% (56.6% at December and 55.8% at June 2010). Lombardy recorded the second biggest contribution with 9.1% (9.5% at December and 9.8% at June 2010). Tuscany, the third largest region after the acquisition of former BMPS branches, holds a share of 8.3% (8.2% in December and 8.5% in June 2010). Veneto holds a 6.1% share and Lazio 5.6%. The other regions shares are less than 5%. DIRECT DEPOSITS (1) - DISTRIBUTION BY BUSINESS SEGMENT (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Liguria 11,329, % 11,285, % 11,542, % 11,258, % Lombardy 1,820, % 1,778, % 1,934, % 1,980, % Tuscany 1,647, % 1,616, % 1,668, % 1,709, % Veneto 1,209, % 1,204, % 1,255, % 1,254, % Latium 1,115, % 1,109, % 1,147, % 1,170, % Sicily 979, % 967, % 967, % 955, % Piedmont 775, % 764, % 780, % 799, % Emilia Romagna 339, % 332, % 382, % 360, % Apulia 210, % 218, % 226, % 232, % Sardinia 195, % 198, % 206, % 205, % Marches 133, % 131, % 133, % 125, % Valle d'aosta 78, % 74, % 64, % 64, % Umbria 45, % 46, % 54, % 41, % Total Italy 19,879, % 19,727, % 20,363, % 20,158, % Abroad 22, % 22, % 22, % 22, % Total Italy + Abroad 19,902, % 19,750, % 20,386, % 20,180, % Other items (2) 8,409,794 6,917,345 6,197,011 6,037,188 Total direct deposits 28,311,847 26,667,451 26,583,549 26,217,782 (1) items 20, 30 and 50 of Liabilities and Shareholders' equity. Carige Vita Nuova liabilities, designated at fair value and relating to products for which investment risk is borne by the insured, are not included in this table. (2) Bonds issued under the EMTN programme, covered bonds, subordinated loans, bonds issued and placed through the BancoPosta network, repurchase agreements, convertible bonds not subscribed by customers, other bonds issued by the SPV relating to the securitization of loans, and deposits from the "contoconto" on line deposit account. 30

31 DIRECT DEPOSITS AS AT 30/06/ %= 19,902.1 MILLION DIRECT DEPOSITS AS AT 30/06/ %= 20,180.6 MILLION Liguria Lombardy Tuscany Veneto 3.9% 4.9% 5.6% 5.2% Liguria Lombardy Tuscany Veneto 4.0% 4.7% 5.8% 5.2% Latium Sicily 6.1% Latium Sicily 6.2% Piedmont Others 8.3% 56.9% Piedmont Others 8.5% 55.8% 9.1% 9.8% A total of 68% of the amounts owed to customers refers to consumer households with euro 9,024.5 million (67.6% at December and 69% at June 2010); the share of non-financial companies and personal businesses increased (euro 2,776.5 million) to 20.9%. Private social bodies intermediated euro million (4.3% of the total), public administrations euro million (3.9% of the total) and financial and insurance companies euro million (2.2% of the total). DIRECT DEPOSITS (1) - DISTRIBUTION BY BUSINESS SEGMENT (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Public Administration 514, % 564, % 508, % 630, % Financial and insurance businesses (2) 285, % 290, % 349, % 269, % Non-financial businesses and personal businesses 2,776, % 2,621, % 2,915, % 2,957, % Private social bodies and non classified entities 571, % 571, % 549, % 528, % Consumer households 9,024, % 9,304, % 9,699, % 10,019, % Total residents 13,172, % 13,352, % 14,021, % 14,407, % Non residents 96, % 237, % 335, % 106, % Total distribution by business segment 13,269, % 13,589, % 14,357, % 14,514, % Repurchase agreements 2,366,965 1,532,169 1,235,022 1,310,955 Total amounts owed to customers 15,636,164 15,122,063 15,592,197 15,825,098 Securities in issue 11,399,971 10,263,557 9,659,630 9,302,972 Liabilities at fair value 1,275,712 1,281,831 1,331,722 1,089,712 Total direct deposits 28,311,847 26,667,451 26,583,549 26,217,782 (1) Items 20, 30 and 50 of Liabilities and Shareholders' equity. Carige Vita Nuova liabilities, designated at fair value and relating to products for which investment risk is borne by the insured, are not included in this table. (2) Borrowing repurchase agreements are shown separately, for a homogenous comparison previous periods have therefore been reclassified. DEPOSITS FROM CUSTOMERS AS AT 30/06/ %= 13,269.2 MILLION 0.7% 3.9% Public Administration 2.2% DEPOSITS FROM CUSTOMERS AS AT 30/06/2010 (1) 100%= 14,514.1 MILLION 0.7% 4.3% Public Administration 1.9% Financial and insurance businesses (1) Non-financial businesses and personal businesses Private social bodies and non classified entities Consumer households 68.0% 20.9% 4.3% Financial and insurance businesses (1) Non-financial businesses and personal businesses Private social bodies and non classified entities Consumer households Non residents 69.0% 20.4% 3.6% Indirect deposits amounted to euro 24,280.7 million, up by 0.8% in the half and 5.4% in the twelve-month period, characterised by a gradual and significant increase in assets in custody and, in particular, Government bonds whose yields continue to rise. Assets under management, equal to euro 10,185.1 million, shrank by 1.5% compared to December 2010 and grew by 3.3% in the twelve-month period. As regards this component, mutual funds amounted to euro 5,321.5 million (down 3.3% and up 0.7% in six and twelve months respectively); similar to the situation throughout the banking system, following strong growth recorded in the second half of 2010, the total fell in the first half of 2011 due 31

32 to the crisis and increase in Government bonds. About 74% of the funds pertain to the subsidiary Carige A.M. SGR, whose management was characterised by the quality of the results obtained, borne out on one hand by the 2009 and 2010 recognition of significant performance commissions and, on the other hand, by the obtainment of third-party recognitions such as the Top Rating Milano Finanza Triple A award, won as a result of the excellent performance of the Carige Total Return 1 fund in the flexible funds category. In particular, the decrease in mutual funds from the start of the year was affected by the bond segment, which at banking system level too registered a downward trend; growth was shaped by the trend in the share segment over the twelve-month period. Despite the difficult economic situation, the mutual funds sector and, in particular, Carige AM SGR (which exclusively manages Italian funds) should benefit from the revision of regulations set forth in Legislative Decree 225 of 29 December 2010 (known as the Milleproroghe Decree 2011 ) which, effective as of 1 July 2011, established the same tax treatment for Italian funds as that of foreign funds. Bankassurance products amounted to euro 4,213.9 million (+1.9% and +9.5%); strong growth continued steadily in the twelve-month period. Asset management amounted to euro million (-7.8% and -10.5%). Assets in custody stood at euro 14,095.6 million, up 2.5% in six months and 7.1% in the year, driven by the performance of Government bonds. INDIRECT DEPOSITS (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Total (A+B) 24,280,660 24,481,780 24,090,570 23,028, Assets under management (A) 10,185,111 10,285,940 10,341,649 9,861, Mutual funds and unit trusts 5,321,549 5,391,339 5,502,726 5,286, Assets management 649, , , , Bancassurance products 4,213,900 4,211,642 4,134,007 3,849, Assets in custody (B) 14,095,550 14,195,840 13,748,921 13,166, Government securities 5,313,928 5,231,556 4,878,766 4,542, Other 8,781,622 8,964,284 8,870,154 8,624, Premiums collected on bank assurance products amounted to euro million, compared to euro million the first half of Nearly all of them pertain to traditional life insurance policies (euro million versus euro million in the six-month period of 2010) with a marginal amount from the Unit linked and Gestlink policies. Premiums collected on non-life insurance policies came to euro 4.2 million, recording sharp growth (+69%) compared to the euro 2.5 million at June 2010, mainly as a result of the trend in elementary segments; the car insurance segment, despite low volumes, grew by 78.7%. BANCASSURANCE (figures of thousands of euro), Change % % 30/06/11 31/03/ /06/10 06/11 06/10 Total premiums collected 312, , , , Life (1) 307, , , , Unit linked/index policies 2, ,524 2, Traditional policies 305, , , , Non-life (1) 4,190 2,548 6,643 2, Car insurance Elementary (non-car) insurance 3,557 2,309 5,873 2, (1) As a result of the changes in the product allocation, figures as at 30/06/2010 have been consistently restated. 32

33 Within indirect deposits, Liguria s contribution stood at 64.1% (63.4% in December and 64% in June 2010), followed by Lombardy (12.3%; 12.4% in December and 11.2% in June 2010) and Tuscany (7.1%;7.3% in December and 7.9% in June 2010). INDIRECT DEPOSITS - GEOGRAPHICAL DISTRIBUTION (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Liguria 15,566, % 15,570, % 15,282, % 14,737, % Lombardy 2,986, % 3,051, % 2,990, % 2,575, % Tuscany 1,712, % 1,763, % 1,767, % 1,818, % Veneto 1,151, % 1,172, % 1,153, % 1,117, % Piedmont 792, % 802, % 797, % 767, % Latium 722, % 739, % 722, % 694, % Sicily 679, % 705, % 712, % 698, % Emilia Romagna 269, % 277, % 270, % 251, % Apulia 101, % 102, % 99, % 92, % Valle d'aosta 90, % 89, % 86, % 81, % Sardinia 85, % 84, % 85, % 79, % Marches 72, % 73, % 72, % 66, % Umbria 46, % 46, % 45, % 43, % Total Italy 24,277, % 24,478, % 24,086, % 23,025, % Abroad 3, % 3, % 3, % 3, % Total indirect deposits 24,280, % 24,481, % 24,090, % 23,028, % INDIRECT DEPOSITS AS AT 30/06/ %= 24,280.7 MILLION INIRECT DEPOSITS AS AT 30/06/ %= 23,028.7 MILLION Liguria Lombardy Tuscany Veneto Piedmont Latium Sicily Others 7.1% 2.8% 2.8% 3.0% 3.3% 4.7% 12.3% 64.1% Liguria Lombardy Tuscany Veneto Piedmont Latium Sicily Others 7.9% 3.0% 3.0%2.7% 3.3% 4.9% 11.2% 64.0% The main portion of indirect deposits is concentrated in the consumer households segment, with 73.6% (74% at the end of the year and 74.6% in June 2010). Financial businesses represent 18.9% of the aggregate (18.4% in December and 18.7% in June 2010). INDIRECT DEPOSITS - DISTRIBUTION BY BUSINESS SEGMENT (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Public Administration 184, % 131, % 134, % 122, % Financial and insurance businesses 4,579, % 4,517, % 4,441, % 4,302, % Non-financial businesses and personal businesses 1,325, % 1,407, % 1,376, % 1,150, % Private social bodies and non classified entities 188, % 185, % 181, % 173, % Consumer households 17,863, % 18,102, % 17,821, % 17,182, % Total residents 24,141, % 24,344, % 23,955, % 22,930, % Non residents 139, % 136, % 135, % 97, % Total indirect deposits 24,280, % 24,481, % 24,090, % 23,028, % INDIRECT DEPOSITS AS AT 30/06/ %= 24,280.7 MILLION 0.6% 0.8% Public Administration Financial and insurance businesses Non-financial businesses and personal businesses Private social bodies and non classified entities Consumer households Non residents 73.6% 18.9% 5.5% 0.8% INDIRECT DEPOSITS AS AT 30/06/ %= 23,028.7 MILLION 0.4% 0.5% Public Administration Financial and insurance businesses Non-financial businesses and personal businesses Private social bodies and non classified entities Consumer households 74.6% 18.7% 5.0% 0.8% 33

34 Cash loans to customers, before value adjustments of euro million, stood at euro 26,560.7 million, up by 4.7% in the half and 9.4% over twelve months. The aggregate amounted to euro 25,220.5 million, up by 3.3% from the end of 2010 and 5.9% compared to June 2010 (net of repurchase agreement transactions). This performance confirms the traditional support to businesses and households, in whose favour the Group has also undertaken significant steps aimed at overcoming the challenging economic situation. Gross loans to customers presented a hedging degree of 2.7%, up over the 2.5% in June Personal loans, accounting for about 30% of the total, grew by 1.9% in the twelve-month period; loans to companies represent over 60% and, increased by 6.9% over June The short-term component (25.7% of total) amounted to euro 6,837.1 million, an increase of 23.9% in twelve months. The strong growth is mostly correlated to the increase in current accounts. The medium-long term component amounts to euro 18,486.6 million (+4.1% in the twelvemonth period) and about 68% of it is financed by funds beyond the short term. Loans, amounting to euro 13,812.4 million, accounted for the biggest share of the total, up 2.1% over December and up 6.6% compared to June Loans to businesses increased more (+2% and +6.3% in the six and twelve-month periods), constituting around 46% of total mortgages; personal loans increased by 1% and 2.2% respectively. The Group granted 2,893 new loans in the first six months of the year totalling euro million. Bad loans amounted to euro 1,237 million and increased by 11.4% over the year, in a generalised way due to the prolonged difficult economic situation. Subsequently, the incidence on total loans rose to 4.7%, compared to 4.4% in December and 4.1% in June 2010, however in line with the banking system (4.8%). Loans to banks, net of value adjustments of euro 0.9 million (same value in December and in June 2010), amounted to euro 1,468 million, up in six months and in twelve months; they are mostly comprised of short-term loans. The net interbank position (difference between loans and amounts owed to banks before repurchase agreement assets and liabilities) showed a net credit position of euro 2,503.2 million, compared with euro 1,996.7 million in December and euro 1,855.3 million in June This trend was a result of the performance of customer items that showed higher growth in loans with respect to funding. In any case, the liquidity position is adequate in consideration of the presence of suitable liquid reserves. 34

35 LOANS (1) (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/ /11 06/11 12/10 06/10 Total (A+B) 27,307,364 25,880,842 25,952,366 25,082, Loans to customers (A) 25,839,351 24,489,802 24,710,380 23,668, nominal value (2) 26,560,685 25,188,496 25,373,267 24,274, current accounts 3,232,812 3,217,003 3,064,385 2,967, lending repurchase agreements 1,340, , , , mortgage loans 13,812,427 13,792,334 13,525,404 12,962, credit cards, personal loans and salary-backed loans 496, , , , leasing 810, , , , factoring 199, , , , other loans 4,285,711 4,124,251 4,088,996 4,233, impaired assets 2,382,913 2,183,136 2,095,101 2,093, short term 6,837,074 5,609,519 6,122,255 5,518, % on nominal value medium/long term 18,486,562 18,379,836 18,140,829 17,765, % on nominal value Bad Loans 1,237,049 1,199,141 1,110, , % on nominal value Value adjustments (-) 721, , , , Loans to banks (B) 1,468,013 1,391,040 1,241,986 1,414, nominal value (2) 1,468,880 1,391,915 1,242,861 1,415, compulsory reserves 109, , , , current accounts and free deposits 121,727 83, , , term deposits 287, , , , repurchase agreements 285, ,917-96,988 loans 647, , , , impaired assets 16,407 16,280 16,159 15, short term 1,404,377 1,326,485 1,177,574 1,371, % on nominal value medium/long term 64,503 65,430 65,287 43, % on nominal value Value adjustments (-) (1) Net of debt securities classified as L&R. (2) Before value adjustments. As regards the geographical breakdown, Liguria accounts for 50.7% of the loans to customers, up from 49.3% in December and 48.6% in June Lombardy is the second region, with a share of 12.7% (13.2% in December and in June 2010), Tuscany is the third region with a share of 10% (10.6% and 11.2% in December and June 2010 respectively). TOTAL LOANS TO CUSTOMERS (1) - GEOGRAPHICAL DISTRIBUTION (2) (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Liguria 13,460, % 12,118, % 12,499, % 11,790, % Lombardy 3,381, % 3,383, % 3,355, % 3,207, % Tuscany 2,649, % 2,695, % 2,679, % 2,715, % Emilia Romagna 1,677, % 1,596, % 1,514, % 1,385, % Piedmont 1,492, % 1,469, % 1,440, % 1,406, % Veneto 1,269, % 1,256, % 1,222, % 1,158, % Latium 941, % 947, % 944, % 898, % Sicily 656, % 663, % 653, % 638, % Sardinia 350, % 344, % 340, % 334, % Apulia 228, % 232, % 230, % 231, % Marches 152, % 158, % 157, % 148, % Umbria 107, % 109, % 104, % 102, % Valle d'aosta 25, % 24, % 25, % 24, % Total Italy 26,392, % 25,000, % 25,168, % 24,042, % Abroad 167, % 187, % 204, % 231, % Total loans to customers 26,560, % 25,188, % 25,373, % 24,274, % (1) Gross of value adjustments and net of debt securities classified as L&R. (2) Figures per branch province. 35

36 TOTAL LOANS TO CUSTOMERS AS AT 30/06/ %= 26,560.7 MILLION 6.4% 3.5% Liguria 4.8% Lombardy Tuscany Emilia Romagna Piedmont Veneto Latium Others 5.6% 6.3% 10.0% 12.7% 50.7% Liguria Lombardy Tuscany Emilia Romagna Piedmont Veneto Latium Others TOTAL LOANS TO CUSTOMERS AS AT 30/06/ %= 24,274.9 MILLION 5.8% 5.7% 11.2% 3.7% 7.1% 4.8% 13.2% 48.6% With reference to the breakdown by business segment, non-financial businesses and personal businesses represented 59.8% of loans to customers, totalling euro 15,082.7 million (59.6% in December and 59.2% in June 2010); the share represented by consumer households was equal to 27.7% compared to 28.7% in December and 29.5% in June 2010, totalling euro 6,991.1 million; the share of public administrations was equal to 5.4%, up compared to December (4.7%) and to June 2010 (5%). Financial and insurance businesses share stood at 5.5%, up compared to the corresponding figures in December (5.4%) and June 2010 (4.5%). TOTAL LOANS TO CUSTOMERS (1) - DISTRIBUTION BY BUSINESS SEGMENT (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Public Administration 1,361, % 1,277, % 1,147, % 1,188, % Financial and insurance businesses (2) 1,396, % 1,307, % 1,312, % 1,071, % Non-financial businesses and personal businesses (2) 15,082, % 15,028, % 14,540, % 14,092, % Sales-related services 5,669, % 5,597, % 5,493, % 4,709, % Wholesale & retail trade, salvage and repairs 2,365, % 2,366, % 2,299, % 2,143, % Building and public works 2,078, % 2,103, % 1,999, % 2,379, % Hotel and catering services 718, % 735, % 720, % 723, % Shipping and air transport 395, % 381, % 368, % 454, % Other 3,855, % 3,843, % 3,658, % 3,681, % Private social bodies and non classified entities 136, % 141, % 132, % 139, % Consumer households 6,991, % 6,953, % 7,018, % 7,035, % Total residents 24,968, % 24,708, % 24,152, % 23,527, % Non residents 252, % 260, % 262, % 286, % Total distribution by business segment 25,220, % 24,968, % 24,414, % 23,814, % Lending repurchase agreements with financial firms 1,340, , , ,316 Total loans to customers 26,560,685 25,188,496 25,373,267 24,274,860 (1) Gross of value adjustments and net of debt securities classified as L&R. (2) Lending repurchase agreements with financial firms are shown separately, for a homogenous comparison previous periods have therefore been restated. TOTAL LOANS TO CUSTOMERS AS AT 30/06/2011 (1) 100%= 25,220.5 MILLION Public Administration 1.0% 5.4% 5.5% TOTAL LOANS TO CUSTOMERS AS AT 30/06/2010 (1) 100%= 23,814.5 MILLION Public Administration 1.2% 5.0% 4.5% Financial and insurance businesses 27.7% Financial and insurance businesses 29.5% Non-financial businesses and personal businesses (1) Private social bodies and non classified entities 0.5% Non-financial businesses and personal businesses (1) Private social bodies and non classified entities 0.6% Consumer households (1) Net of Lending repurchase agreements with financial firms. 59.8% Consumer households (1) Net of Lending repurchase agreements with financial firms. 59.2% Impaired loans rose to euro 2,420.9 million, up by 13.6% in the half and in the twelve-month period. A total of 99.3% of these relate to ordinary customers; the corresponding value adjustments stand at euro million (+10.4% and +19.7% in six and twelve months respectively). Impaired cash loans to customers equalled euro 2,382.9 million (+13.7% from December and +13.8% from June 2010). Impaired endorsement loans equalled euro 21.6 million (+7.3% in the six-month period and +3.9% in the twelve-month period). As regards cash loans to customers, the analy- 36

37 sis of the individual aggregates shows the following: Bad loans were equal to euro 1,237 million, up by 11.4% from the beginning of the year, and by 24.8% over the twelve-month period; they were written down by 45.3% (45.7% in December and 46.4% in June 2010). The bad loans/loans ratio as regards customers stood at 4.7% (4.4% in December and 4.1% in June 2010); Watchlist loans amounted to euro million, up by 17.8% over the end of the year and 32.7% in the twelve-month period. They were written down by 10.4% (11.2% in December and 12.5% in June 2010); Rescheduled loans amounted to euro million, up compared with euro 126 million in December 2010 (euro million in June 2010). They comprise some significant positions with a high level of collateral and, to a lesser extent, renegotiated loans pursuant to Law 126/2008 with overdue payments in existence at the time of renegotiation. They were written down by 2.5% (2.4% in December and 2.7% in June 2010); Past due loans amounted to euro million and increased in the last half (13.1%), while they fell in the year (29.1%). They are made up almost entirely of mortgage loans, mostly represented by positions with instalments overdue by between 90 and 180 days which must be included in the aggregate by banks that use the standard method in calculating capital requirements. They were written down by 2% (2% in December and 1.7% in June 2010). Impaired credit commitments amounted to euro 21.6 million, up by 7.3% in the six-month period and 3.9% in the twelve-month period; they were written down by 24.6% (24.9% in December and 24% in June 2010). Overall, also considering performing loans, value adjustments on cash and endorsement loans amounted to euro million, euro million of which refer to cash loans and euro 11.9 million of which refer to endorsement loans (2.5% hedging level). 37

38 CREDIT QUALITY (1) (figures in thousands of euro) 30/06/11 31/03/11 Gross exposure Value adjustments Net exposure % % Gross exposure Value adjustments Net exposure b/a b/a (a) (b) (a)-(b) (a) (b) (a)-(b) Cash loans Bad loans 1,237, , , ,199, , , customers 1,237, , , ,199, , , Watchlist loans 678,192 69, , ,135 61, , banks 16, , , , customers 661,785 68, , ,855 60, , Rescheduled loans 148,160 3, , ,495 3, , customers 148,160 3, , ,495 3, , Past due loans 335,919 6, , ,645 4, , customers 335,919 6, , ,645 4, , Total Impaired loans 2,399, ,342 1,758, ,199, ,264 1,591, Performing loans 25,630,245 81,859 25,548, ,380,995 91,305 24,289, banks 1,452,473-1,452,473-1,375,635-1,375, customers 24,177,772 81,859 24,095, ,005,360 91,305 22,914, Total cash loans 28,029, ,201 27,307, ,580, ,569 25,880, banks 1,468, ,468, ,391, ,391, customers 26,560, ,334 25,839, ,188, ,694 24,489, Endorsement loans Impaired 21,595 5,314 16, ,204 5,417 15, customers 21,595 5,314 16, ,204 5,417 15, Other loans 1,867,836 6,608 1,861, ,902,906 5,987 1,896, banks 47,487-47,487-50,651-50, customers 1,820,349 6,608 1,813, ,852,255 5,987 1,846, Total endorsement loans 1,889,431 11,922 1,877, ,924,110 11,404 1,912, banks 47,487-47,487-50,651-50, customers 1,841,944 11,922 1,830, ,873,459 11,404 1,862, Total 29,918, ,123 29,184, ,504, ,973 27,793, banks 1,516, ,515, ,442, ,441, customers 28,402, ,256 27,669, ,061, ,098 26,351, /12/ /06/10 (2) Gross exposure Value adjustments Net exposure % % Gross exposure Value adjustments Net exposure b/a b/a (a) (b) (a)-(b) (a) (b) (a)-(b) Cash loans Bad loans 1,110, , , , , , customers 1,110, , , , , , Watchlist loans 578,151 63, , ,607 63, , banks 16, , , , customers 561,992 62, , ,674 62, , Rescheduled loans 125,958 2, , ,349 3, , banks customers 125,958 2, , ,349 3, , Past due loans 296,968 5, , ,730 7, , banks customers 296,968 5, , ,730 7, , Total Impaired loans 2,111, ,966 1,531, ,109, ,319 1,575, Performing loans 24,504,868 83,796 24,421, ,580,612 72,947 23,507, banks 1,226,702-1,226,702-1,399,461-1,399, customers 23,278,166 83,796 23,194, ,181,151 72,947 22,108, Total cash loans 26,616, ,762 25,952, ,690, ,266 25,082, banks 1,242, ,241, ,415, ,414, customers 25,373, ,887 24,710, ,274, ,392 23,668, Endorsement loans Impaired 20,129 5,007 15, ,788 4,986 15, customers 20,129 5,007 15, ,788 4,986 15, Other loans 1,926,341 4,997 1,921, ,745,152 4,690 1,740, banks 48,286-48,286-52,591-52, customers 1,878,055 4,997 1,873, ,692,561 4,690 1,687, Total endorsement loans 1,946,470 10,004 1,936, ,765,940 9,676 1,756, banks 48,286-48,286-52,591-52, customers 1,898,184 10,004 1,888, ,713,349 9,676 1,703, Total 28,562, ,766 27,888, ,456, ,942 26,839, banks 1,291, ,290, ,467, ,467, customers 27,271, ,891 26,598, ,988, ,068 25,372, (1) Net of debt securities classified as L&R. (2) Figures as at 30/06/2010 have been restated in order to show the asset items concerning the discontinued groups of assets and liabilities (in particular the Custodian Bank business unit of the Parent Bank). In the first half of 2011, the incidence of bad loans in Liguria, Lombardy and Emilia Romagna fell by 30.6%, 24% and 7.6% respectively, the main regions in terms of exposure. The shares of Piedmont, Tuscany and, above all, Veneto, instead, increased, due to the entry of a significant position during the half. 38

39 BAD LOANS TO CUSTOMERS (1) - GEOGRAPHICAL DISTRIBUTION (2) (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Liguria 378, % 366, % 358, % 321, % Lombardy 296, % 287, % 275, % 247, % Piedmont 158, % 153, % 134, % 120, % Tuscany 114, % 106, % 98, % 87, % Emilia Romagna 92, % 91, % 85, % 74, % Veneto 59, % 59, % 31, % 26, % Latium 43, % 42, % 41, % 38, % Sicily 28, % 26, % 24, % 21, % Apulia 19, % 20, % 19, % 18, % Sardinia 18, % 18, % 15, % 13, % Marches 12, % 12, % 12, % 11, % Umbria 8, % 7, % 7, % 7, % Valle d'aosta 3, % 3, % 1, % 1, % Total Italy 1,234, % 1,196, % 1,107, % 989, % Abroad 2, % 2, % 2, % 1, % Total bad loans 1,237, % 1,199, % 1,110, % 990, % (1) Gross of value adjustments and net of debt securities classified as L&R. (2) Figures per branch province. BAD LOANS TO CUSTOMERS AS AT 30/06/ %= 1,237 MILLION BAD LOANS TO CUSTOMERS AS AT 30/06/ %= 991 MILLION Liguria Lombardy 3.6% 4.8% 7.6% 30.6% Liguria Lombardy Piedmont 3.8% 2.7% 7.6% Piedmont Tuscany Emilia Romagna Veneto Latium Others 7.4% 9.3% 12.8% 24.0% Tuscany Emilia Romagna Veneto Latium Others 7.6% 8.8% 12.1% 25.0% 32.4% The bad loans/lending ratio stood at 4.7%, a rise in all regions: Liguria recorded the lowest ratio (2.8%), however up over the 2.7% at June 2010; the ratio rose to 8.8% in Lombardy, compared to 7.7% in June 2010; in Piedmont, it increased to 10.6% (8.6% in June 2010). Valle d Aosta registered the highest ratio (12.2%), up over the 5.3% recorded in June BAD LOANS/LENDING RATIO (1) - GEOGRAPHICAL DISTRIBUTION (2) (Percentage values). Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 Liguria 2.8% 3.0% 2.9% 2.7% Lombardy 8.8% 8.5% 8.2% 7.7% Tuscany 4.3% 3.9% 3.7% 3.2% Emilia Romagna 5.5% 5.7% 5.6% 5.4% Piedmont 10.6% 10.5% 9.4% 8.6% Veneto 4.7% 4.8% 2.6% 2.3% Latium 4.7% 4.5% 4.4% 4.2% Sicily 4.3% 4.0% 3.8% 3.3% Sardinia 5.4% 5.3% 4.5% 4.1% Apulia 8.7% 8.6% 8.4% 7.8% Marches 8.5% 7.9% 7.9% 7.8% Umbria 7.6% 7.3% 7.3% 7.2% Valle d'aosta 12.2% 12.6% 6.0% 5.3% Total Italy 4.7% 4.8% 4.4% 4.1% Abroad 1.4% 1.3% 1.2% 0.6% Total 4.7% 4.8% 4.4% 4.1% (1) Gross of value adjustments and net of debt securities classified as L&R. (2) Figures per branch province. The breakdown by business segment showed an increase in bad loans for non-financial businesses and personal businesses (euro 873 million) with a share of 70.6% (68.1% in December and 67.4% in June 2010). The segment with the highest share of bad loans was the building and 39

40 public works segment (euro million, 17.3%), followed by the wholesale and retail trade and repairs segments (euro million, 13.9%). Households represented the second sector by volume with a share of 26.8% of the aggregate, significantly lower than December (29.2%) and June 2010 (29.1%). BAD LOANS (1) - DISTRIBUTION BY BUSINESS SEGMENT (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 % % % % Public Administration Financial and insurance businesses 25, % 24, % 22, % 22, % Non-financial businesses and personal businesses 872, % 838, % 755, % 668, % Building and public works 214, % 195, % 182, % 164, % Wholesale & retail trade, salvage and repairs 171, % 164, % 150, % 137, % Sales-related services 171, % 169, % 133, % 115, % Hotel and catering services 39, % 39, % 36, % 32, % Metal products 35, % 34, % 33, % 29, % Other 240, % 234, % 220, % 189, % Private social bodies and non classified entities 1, % 1, % 1, % 1, % Consumer households 331, % 328, % 324, % 288, % Total residents 1,231, % 1,193, % 1,104, % 981, % Non residents 5, % 5, % 5, % 9, % Total loans 1,237, % 1,199, % 1,110, % 990, % (1) Gross of value adjustments and net of debt securities classified as L&R. BAD LOANS TO CUSTOMERS AS AT 30/06/ %= 1,237 MILLION 0.5% Public Administration 2.0% BAD LOANS TO CUSTOMERS AS AT 30/06/ %= 991 MILLION 1.0% 2.3% Public Administration Financial and insurance businesses 26.8% Financial and insurance businesses 29.1% Non-financial businesses and personal businesses (1) Private social bodies and non classified entities 0.2% Non-financial businesses and personal businesses (1) Private social bodies and non classified entities 0.2% Consumer households 70.6% Consumer households 67.4% The bad loans/loans ratio is above average for non-financial companies and personal businesses, at 5.8% (5.2% and 4.7% in December and June 2010, respectively) while for households it is equal to 4.7% (4.6% in December and 4.1% in June 2010). BAD LOANS/LENDING RATIO (1) - DISTRIBUTION BY BUSINESS SEGMENT (Percentage values) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 Public Administration Financial businesses 1.8% 1.9% 1.7% 2.1% Non-financial businesses and personal businesses 5.8% 5.6% 5.2% 4.7% - of which (2): Sales-related services 3.0% 3.0% 2.4% 2.5% Wholesale & retail trade, salvage and repairs 7.3% 7.0% 6.5% 6.4% Building and public works 10.3% 9.3% 9.1% 6.9% Hotel and catering services 5.5% 5.4% 5.0% 4.5% Shipping and air transport 5.2% 5.4% 5.6% 1.2% Private social bodies and non classified entities 1.4% 1.4% 1.4% 1.4% Consumer households 4.7% 4.7% 4.6% 4.1% Total residents 4.9% 4.8% 4.6% 4.2% Rest of the world 2.2% 2.1% 2.1% 3.3% Total 4.7% 4.8% 4.4% 4.1% (1) Gross of value adjustments and net of debt securities classified as L&R. (2) Main business segments in terms of overall credit exposure shown. Securities in the portfolio amounted to euro 10,234.5 million, up by 8.8% in the last half and 8.9% in the year, mainly in relation to investments in Italian Government bonds classified as available for sale. Debt securities (euro 8,838.7 million) represented 86.4% of the portfolio, up by 10.3% in the year; Italian Government bonds came to euro 6,152.2 million. Equities amounted to euro 1,060.3 million. These include the 4.03% equity investment in the 40

41 Bank of Italy, accounted for at euro million; this figure resulted from a valuation at fair value - using shareholders equity as the most reliable proxy of fair value performed on the basis of the balance sheet data of the Bank of Italy as at 31 December 2010 (last approved set of financial statements), consistently with the accounting principle adopted for the preparation of the consolidated financial statements of the Banca Carige Group and of the financial statements of the Bank as at 31 December The effects of this valuation at fair value are sterilised by a valuation reserve of the same amount, net of differed taxes. Other equities and shares in collective investment schemes amounted to euro million, down compared to December (-2.3%) and June 2010 (- 2%). With regard to the breakdown prescribed by the international accounting standards IAS/IFRS, securities Available for Sale, or AFS (euro 9,135.9 million), which account for 89.3%, increased both in the last half (+12.7% for investments made mostly in Government bonds), and relative to June 2010 (+16.7%); securities Held for Trading, or HFT, amounting to euro million, account for 1.7% and decreased respectively by 39.4% and by 64.4% in the last half and in the year. Assets deriving from Loans and Receivables (L&R) amounted to euro million and fell by 5.7% in the last half (-17.7% in the year). Securities valued at fair value (euro million) represent 5.6% of the portfolio, and changed in size over the year. These are held in the portfolio of Carige Vita Nuova and, as they are issued against policies with risk covered by the insured party, they are offset for the same amount under liabilities. The Group exercised the right, provided by the Bank of Italy instruction of 18 May 2010 for the calculation of the regulatory capital to neutralise capital gains and capital losses on securities classified as AFS and issued by central governments of EU countries; the positive impact on the capital in terms of lower negative reserves as at the end of June 2011 amounted to euro 144 million net of tax effects. SECURITIES PORTFOLIO (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Debt securities 8,838,714 8,618,207 8,026,195 8,012, Held for trading 155, , , , Available for sale 7,942,164 7,583,100 6,937,801 6,657, Fair value 383, , , , Loans and Receivable 357, , , , Equities 1,060,340 1,044,699 1,036,475 1,044, Held for trading Available for sale 1,060,192 1,044,553 1,036,029 1,044, Shares in collective investment schemes 335, , , , Held for trading 15,151 15, ,630 Available for sale 133, , , , Fair value 186, , , , Total (1) 10,234,459 10,004,919 9,405,986 9,400, of which: Held for trading 170, , , , Available for sale 9,135,871 8,761,785 8,109,848 7,828, Fair value 570, , , , Loans and Receivable 357, , , , Held to maturity (1) Balance sheet items 20 (net of derivatives), 30, 40, 60 (only for the part relative to L&Rs) and 70 (only for the part relative to L&Rs) are included in the aggregate. The amendments made to international accounting standards IAS 39 and IFRS 7 in October and November 2008 allowed for new types of reclassifications, with the possibility of retroactive effectiveness to 1 July 2008 if carried out before 31 October Pursuant to said amendments, the Group reclassified securities, effective 1 July and 1 October, for a total residual amount of euro million as at 30 June 2011, as detailed in the table below: 41

42 TRANSFERS BETWEEN PORTFOLIOS: BOOK VALUE, FAIR VALUE AND IMPACT ON THE TOTAL PROFITABILITY (figures in thousands of euro) Type of financial instrument Origin portfolio Allocation portfolio Book value as at 30/06/11 Fair Value as at 30/06/11 Income components in the absence of the transfer (before taxes) Income components recorded for the period (before taxes) Valuation-related Others Valuation-related Others Debt securities HFT AFS 87,657 87,657 1,411 2, ,168 Equities HFT AFS 5,955 5,955 (737) 960 (547) 432 UCIT units HFT AFS 76,989 76,989 (3,491) - (2,853) 15 Debt securities HFT HTM (1) 2,998 2,998 (91) 111 (156) 183 Debt securities HFT L&R 114, ,663 1,724 1, Debt securities AFS L&R 175, ,933 (526) 4,083 4,046 Total 463, ,195 (1,710) 8,403 (2,834) 7,675 (1) An information disclosure has been provided for securities which, after being previously classified from HFT to HTM, have been reclassified from the latter to AFS following the application of forecasts set forth in paragraph 52 of IAS 39 in financial statements as at 31/12/2009. If the Group had not reclassified the financial assets listed above, the half would have recorded positive income components amounting to euro 6.7 million instead of the euro 4.8 million reported. The portfolio of debt securities reclassified in the AFS (Available For Sale, HTM (Held To Maturity) and L&R (Loans & Receivables) for a nominal value of euro 410 million has an effective interest rate of 4.0% with expected cash flows estimated at euro 569 million. The exposure of the Group to financial instruments that the marketplace now considers to be high-risk or involve more risk than previously thought (according to the definition in Recommendation issued on 7 April 2008 by the Financial Stability Forum and the joint document issued by the Bank of Italy / CONSOB / ISVAP no. 2 of 6 February 2009) amounted to euro million, equal to 1.7% of the securities portfolio and concerns: - Securities resulting from securitisation transactions (with the exclusion of CDOs Collateralised Debt Obligations), allocated to both the trading portfolio and to the portfolio of assets available for sale, for an aggregate book value of euro 51.2 million, (0.5% of the securities portfolio). Said securitisation transactions do not include any exposure to subprime mortgages, and 71.4% of these transactions is comprised of Junior, Mezzanine and Senior tranches of the securitisations of mortgages granted by the banks of the Group and originating from proprietary vehicles; SECURITIES FROM SECURITISATIONS (figures in thousands of euro) countervalues at cost price % portion on total securities portfolio Senior 12, % Mezzanine 1, % Junior - - Consumer credit securitisations, leases, mortgages and other 14, % Senior 1, % Mezzanine 2, % Junior 32, % Securitisations of mortgages of the Group 36, % Total 51, % - CDOs portfolio, for a book value of approximately euro 11.3 million (0.1% of the total portfolio), comprised of synthetic securitisations which include CDS (Credit Default Swap) and by securitisations of securitisations with exposures to RMBS (Residential Mortgage-Backed Securities) CMBS (Commercial Mortgage-Backed Securities) ABS (Asset-Backed Securities) and by subprime positions; 42

43 CDO PORTFOLIO (1) (figures in thousands of euro) Rating countervalues at cost price % portion on total securities portfolio A+ 4, % BB+ 2, % B+ 1, % CCC 3, % Total 11, % (1) CDO = Collateralized debt obligation (see glossary) - Securities and derivatives related to leveraged finance transactions comprised of funded and unfunded securities. The former have a book value of euro million (equal to 1.1% of the portfolio) and 97.7% of these are structured in a protected/guaranteed format, with the hedging of the specific risk or, in any case, with the provision for the repayment at par at maturity. - Unfunded securities are subdivided into credit and interest rate instruments; credit instruments have a notional amount of euro 10 million and had a negative economic impact of euro 1 million in Interest rate structured derivatives, on the other hand, against a notional amount of euro 25 million had a negative impact of euro 0.3 million. SECURITIES/DERIVATIVES FROM LEVERAGED OPERATIONS (figures in thousands of euro) % portion on total securities countervalues at cost price portfolio Unhedged leveraged instruments: 112, % credit 40, % of which with repayment at par 39, % rate 71, % of which with repayment at par 70, % Hedged leveraged instruments: 28, % rate 28, % Total 140, % The exposures towards Special Purpose Entities (SPE) were substantially limited to vehicle companies in the securitisation transactions carried out directly by the Group. As regards financial instruments issued in sovereign debt by countries in difficulty, the Carige Group is exposed, in nominal terms, to the Greek Government (roughly euro 55 million), the Portuguese Government (roughly euro 50 million), and to the Spanish Government (euro 18 million). There are no exposures to the Irish Government. On the whole these exposures amount to euro 123 million and represent about 1.20% of the book value of the securities portfolio. With reference to exposure to Greek sovereign debt, the Group holds a nominal total of euro 55 million in debt securities (of which euro 30 million maturing after 2020) under available for sale financial assets. Securities with maturity up to 2010 were recorded, amounting to euro 13.3 million with gross cumulated negative reserves of euro 12.5 million. As at 30 June 2011, valuation reserves pertaining to the Group and minority interests, relative to securities classified in the AFS (Available For Sale) category amounted to euro million (an increase of euro 17.7 million compared with the positive balance of euro million at 31 December 2010) and comprised euro million in positive reserves, relating mainly to the valuation of the equity investment in the Bank of Italy (euro million), and euro million in negative reserves. The latter refer to debt securities (euro million), composed almost entirely of Government, bank and corporate bonds with high credit ratings, and to equities of leading banking and insurance issuers and shares in collective investment schemes (euro million). 43

44 As required by the reference IAS/IFRS regulations (IFR7 Financial Instruments Additional information and IAS 39 Financial Instruments: Recognition and Measurement), and in compliance with Circular no. 262 of 22 December 2005 of the Bank of Italy Bank financial statements: schemes and rules for preparation, the Banca CARIGE Group provides, for each class of financial instrument, the fair value hierarchy level at which the entire fair value measurements are classified. The fair value hierarchy comprises the following levels: (1) Listed prices (not adjusted) on the active market for recognised assets or liabilities (Level 1); (2) Input data that does not include the listed prices of Level 1 that can be observed for the assets or the liabilities, both directly (as in the case of the prices) and indirectly (i.e. derived from the prices) (Level 2); and (3) Input data related to assets or liabilities that are not based on observable market data (non-observable data) (Level 3). Level 3 of the fair value hierarchy was used for the same financial instruments present as at 31 December 2010 net of the equity investment in the Bank of Italy. The percentage of instruments assessed using this methodology, out of all instruments evaluated at fair value for the Banca Carige Group, stood at 1% (1.12% as at 31 December 2010). The following table shows the breakdown according to fair value levels of the Banca CARIGE Group s accounting portfolios: FAIR VALUE HIERARCHY: CASH PORTFOLIOS, DIVISION BY LEVEL OF FAIR VALUE (figures in thousands of euro) 30/06/11 31/12/10 30/06/10 L1 L2 L3 L1 L2 L3 L1 L2 L3 1. Financial assets held for trading 160,475 43, , , , , Financial assets designated at fair value 196, , , , , , Available-for-sale financial assets 7,521, , ,230 6,029,142 1,153, ,325 5,641,860 1,249, , Hedging derivatives - 88, , ,790 - Total financial assets designated at fair value 7,878,584 1,174, ,256 6,391,450 1,866, ,344 6,182,881 2,053, , Financial assets held for trading 2,652 51,410-7,765 61,580-16,659 73, Financial liabilities designated at fair value 1,880, ,998, ,760,516 15, Hedging derivatives - 687, , ,919 - Total financial liabilities designated at fair value 1,883, ,902-2,006, ,014-1,777, ,009 - Key: L1 = Level 1; L2 = Level 2 L3 = Level 3 The notional value of derivative contracts is equal to euro 13,238.4 million, up by 18.6% in the twelve months (5.9% in the last half). Financial derivatives, which represent 96.1% of the total, increased by 15.5% in the year, to euro 12,724 million (+2.8% in the last half), credit derivatives increased to euro million (euro million in December and euro million in June 2010). NOTIONAL VALUES OF DERIVATIVE CONTRACTS (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Financial derivatives 12,724,017 12,568,156 12,372,549 11,013, futures forward agreements (1) 535, , , , swap 10,705,797 10,549,123 10,332,080 9,003, options purchased 1,349,568 1,275,653 1,210,794 1,054, others 132, , , , Credit derivatives 514, , , ,799 tror cds 114, , , , others 400, , Total 13,238,355 13,082,734 12,503,109 11,163, (1) Sub-item "forward agreements" includes also the so-called "regular way" transactions. The value of hedging derivatives (assets and liabilities) stood at euro million (euro million in December 2010; euro million in June 2010). Positive values amount to euro 88.6 million, while negative values amount to euro million. 44

45 ASSETS FROM HEDGING DERIVATIVES BY HEDGE TYPE (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Asset hedging derivatives 7,289 7,604 5,928 1, Fair value hedging ,033 1, interest rates ,033 1, Cash flow hedging 6,503 7,300 4, interest rates 6,503 7,300 4, General interest rate risk hedging Liability hedging derivatives 81,331 50, , , Fair value hedging 63,837 35,835 89, , interest rates 63,837 35,835 89, , Cash flow hedging General interest rate risk hedging 17,494 14,463 12,644 4, Total 88,620 57, , , LIABILITIES FROM HEDGING DERIVATIVES BY HEDGE TYPE (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Asset hedging derivatives 574, , , , Fair value hedging 574, , , , interest rates 574, , , , Cash flow hedging General interest rate risk hedging Liability hedging derivatives 113, , , , Fair value hedging 27,695 35,835 27, interest rates 27,695 35,835 27, Cash flow hedging General interest rate risk hedging 85,355 72, , , Total 687, , , , The positive and negative values of trading derivatives amount to euro 87.4 million, decreasing by 43.1% in the year (-23% in the last half). Positive values amounted to euro 33.3 million and negative values to euro 54.1 million. TRADING DERIVATIVES (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/ /12/10 30/06/10 06/11 06/11 12/10 06/10 Positive countervalues 33,305 40,054 44,052 63, Financial derivatives 30,936 38,561 41,648 59, forward agreements 6,422 13,273 4,048 9, swap 14,740 11,529 24,336 39, options purchased 9,774 13,759 13,264 10, others Credit derivatives 2,369 1,493 2,404 3, cds 2,369 1,493 2,404 3, Total 33,305 40,054 44,052 63, Negative countervalues 54,062 65,966 69,345 90, Financial derivatives 48,521 61,102 63,726 86, forward agreements 2,636 2,165 7,765 16, swap 43,709 55,567 53,258 67, issued options 2,176 3,370 2,703 2, Credit derivatives 5,541 4,864 5,619 3, tror cds 5,444 4,383 5,619 3, Total 54,062 65,966 69,345 90, Total 87, , , , Net income on derivative contracts was euro 12.1 million: it included, as indicated in the following table, also the Exchange rate differences related to the valuation of foreign currency assets and liabilities (negative by euro 21.4 million). The Group manages the overall exchange rate position with the aim to achieve an even balance; the position includes, in addi- 45

46 tion to assets and liabilities, also forward agreements on currencies, included in the financial derivatives per 1.1 above. NET INCOME ON DERIVATIVE CONTRACTS AS AT 30/06/2011 (figures in thousands of euro) Revaluations Write-downs Net profit/loss Net income on trading 1. Trading contracts 18,565-11,757 26,809 33, Financial derivatives 16,179-10,503 26,931 32, Credit derivatives 2,386-1, ,010 Revaluations Write-downs Changes in underlying Net income from hedging 2. Hedging contracts 25, , , Asset hedging 21, , ,671-1, Liability hedging 3,036-34,580 32, Currency differences - 21,429 Total 43, , ,962 12,097 46

47 ECONOMIC RESULTS The first six months of 2011 closed with a net profit of euro 75.2 million, versus euro 71.3 million in the same period in 2010 (+5.4%). In particular, net interest income and net commissions increased, as did value adjustments to loans and operating costs, while income from financial items fell. The income statement also acknowledges provisions relating to IRAP (regional business tax), increased from 4.82% to 5.57% (introduced with Decree no. 98 of 2011, including urgent provisions for financial stabilisation, converted to Law no. 111/2011 on 15 July), determining higher tax provisions of around euro 4 million (roughly euro 2.5 million relating to current taxes and around euro 1.5 million for deferred taxes). INCOME STATEMENT (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 (1) absolute % 10 - INTEREST INCOME AND SIMILAR REVENUES 601, ,341 1,102, ,190 78, INTEREST EXPENSES AND SIMILAR CHARGES -229, , , ,241-47, NET INTEREST INCOME 372, , , ,949 31, COMMISSION INCOME 163,091 82, , ,694 7, COMMISSION EXPENSES - 16,120-7,490-34,811-16, NET COMMISSIONS 146,971 75, , ,612 7, DIVIDENDS AND OTHER SIMILAR REVENUES 8, ,607 6,584 1, NET INCOME FROM TRADING ACTIVITIES 15,189 2,694-6,629-3,951 19, NET INCOME FROM HEDGING ACTIVITIES , PROFIT (LOSS) ON DISPOSAL OR REPURCHASE OF: 146 1,048 58,632 26,822-26, a) loans ,176-1,502 1, b) available-for-sale financial assets 1, ,914 27,122-25, d) financial liabilities ,542 1,202-2, NET VALUE ADJUSTMENT ON FINANCIAL ASSETS DESIGNATED AT FAIR VALUE -1,023-1,834 3,294 2,741-3, GROSS OPERATING INCOME 541, ,898 1,067, ,277 29, NET VALUE ADJUSTMENTS DUE TO IMPAIRMENT OF: -61,987-30, ,317-57,092-4, a) loans -55,830-28, ,219-56, b) available-for-sale financial assets -4, , ,362 d) other financial assets -1,917-1, , NET INCOME FROM FINANCIAL MANAGEMENT 479, , , ,185 24, NET PREMIUMS 652, ,148 1,416, ,222-89, BALANCE OF OTHER EXPENSES/REVENUES FROM INSURANCE MANAGEMENT -676, ,789-1,472, ,846 86, NET INCOME FROM FINANCIAL AND INSURANCE MANAGEMENT 455, , , ,561 20, ADMINISTRATIVE COSTS: -348, , , ,945-18, a) staff costs -211,250-99, , ,369-14, b) other administrative costs -137,407-73, , ,576-3, NET PROVISIONS FOR RISKS AND CHARGES -1, ,206-1, DEPRECIATION OF TANGIBLE ASSETS -12,643-6,209-25,250-12, AMORTIZATION OF INTANGIBLE ASSETS -15,306-7,590-27,550-12,800-2, OTHER OPERATING EXPENSES AND REVENUES 40,027 27,238 71,467 36,305 3, OPERATING COSTS -338, , , ,881-18, PROFIT (LOSS) FROM EQUITY INVESTMENTS 2,332-5,801 2, PROFIT (LOSS) FROM DISPOSAL OF INVESTMENTS OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES BEFORE TAXES 119,485 58, , ,185 2, INCOME TAXES FOR THE PERIOD -43,332-21,238-97,954-46,128 2, OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAXES 76,153 37, ,701 71,057 5, PROFIT (LOSS) FROM DISCONTINUED OPERATIONS AFTER TAXES ,935 1,217-1, PROFIT (LOSS) FOR THE PERIOD 76,153 37, ,636 72,274 3, MINORITY INTERESTS , PROFIT (LOSS) FOR THE PERIOD ATTRIBUTABLE TO THE PARENT BANK 75,158 37, ,241 71,296 3, (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). 47

48 INCOME STATEMENT - RESULTS FOR THE PERIOD (figures in thousands of euro) 30/06/11 30/06/10 (1) CHANGE 2nd quarter nd quarter 2010 CHANGE 1st quarter INTEREST INCOME AND SIMILAR REVENUES 601, ,190 78, , ,321 43, , INTEREST EXPENSES AND SIMILAR CHARGES -229, ,241-47, ,529-89,998-37, , NET INTEREST INCOME 372, ,949 31, , ,323 6, , COMMISSION INCOME 163, ,694 7,397 80,270 78,848 1,422 82, COMMISSION EXPENSES -16,120-16, ,630-8, , NET COMMISSIONS 146, ,612 7,359 71,640 70,088 1,552 75, DIVIDENDS AND OTHER SIMILAR REVENUES 8,304 6,584 1,720 8,286 6,561 1, NET INCOME FROM TRADING ACTIVITIES 15,189-3,951 19,140 12,495-9,553 22,048 2, NET INCOME FROM HEDGING ACTIVITIES , PROFIT (LOSS) ON DISPOSAL OR REPURCHASE OF: ,822-26, ,823-15,725 1,048 a) loans ,502 1, ,761 1, b) available-for-sale financial assets 1,594 27,122-25, ,782-16, c) financial assets held to maturity d) financial liabilities ,202-2,149-1,328-1, NET VALUE ADJUSTMENT ON FINANCIAL ASSETS DESIGNATED AT FAIR VALUE -1,023 2,741-3, , GROSS OPERATING INCOME 541, ,277 29, , ,143 17, , NET VALUE ADJUSTMENTS DUE TO IMPAIRMENT OF: -61,987-57,092-4,895-31,274-32,485 1,211-30,713 a) loans -55,830-56, ,162-30,938 3,776-28,668 b) available-for-sale financial assets -4, ,362-3, , d) other financial assets -1, , , NET INCOME FROM FINANCIAL MANAGEMENT 479, ,185 24, , ,658 18, , NET PREMIUMS 652, ,222-89, , ,215 15, , BALANCE OF OTHER EXPENSES/REVENUES FROM INSURANCE MANAGEMENT -676, ,846 86, , ,517-19, , NET INCOME FROM FINANCIAL AND INSURANCE MANAGEMENT 455, ,561 20, , ,356 14, , ADMINISTRATIVE COSTS: -348, ,945-18, , ,897-6, ,683 a) staff costs -211, ,369-14, , ,825-9,204-99,221 b) other administrative costs -137, ,576-3,831-63,945-67,072 3,127-73, NET PROVISIONS FOR RISKS AND CHARGES -1,715-1, , DEPRECIATION OF TANGIBLE ASSETS -12,643-12, ,434-6, , AMORTIZATION OF INTANGIBLE ASSETS -15,306-12,800-2,506-7,716-6,603-1,113-7, OTHER OPERATING EXPENSES AND REVENUES 40,027 36,305 3,722 12,789 20,193-7,404 27, OPERATING COSTS -338, ,881-18, , ,326-15, , PROFIT (LOSS) FROM EQUITY INVESTMENTS 2,332 2, ,332 2, PROFIT (LOSS) FROM DISPOSAL OF INVESTMENTS OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES BEFORE TAXES 119, ,185 2,300 60,734 61, , INCOME TAXES FOR THE PERIOD -43,332-46,128 2,796-22,094-22, , OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAXES 76,153 71,057 5,096 38,640 38, , PROFIT (LOSS) FROM DISCONTINUED OPERATIONS AFTER TAXES - 1,217-1, PROFIT (LOSS) FOR THE PERIOD 76,153 72,274 3,879 38,640 39, , MINORITY INTERESTS PROFIT (LOSS) FOR THE PERIOD ATTRIBUTABLE TO THE PARENT BANK 75,158 71,296 3,862 38,153 39,203-1,050 37,005 (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). Net interest income amounted to euro million, up by 9.2%, compared to June 2010 thanks to the consistently positive performance of volumes. Interest income grew to euro million (+15%) while interest expenses grew to euro million (+25.9 %). INTEREST INCOME (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 (1) absolute % Financial assets held for trading 3,110 1,798 18,607 12,216-9, Available-for-sale financial assets 139,408 63, , ,504 37, Loans to banks 10,491 5,575 12,738 6,677 3, Loans to customers 445, , , ,931 43, Other assets 2,716 1,002 2, ,854 Total interest income 601, ,341 1,102, ,190 78, (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). INTEREST EXPENSES (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 (1) absolute % Amounts owed to banks 16,664 6,227 17,858 5,468 11,196 Amounts owed to customers 44,045 20,080 83,560 44, Securities in issue 153,608 69, , ,227 36, Financial liabilities designated at fair value 10,150 5,102 16,129 5,497 4, Other liabilities Hedging derivatives 4, ,192 9,273-5, Total interest expenses 229, , , ,241 47, (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). Net commissions increased by 5.3% (euro 147 million). Commission income, at euro million, increased by 4.8%, mainly due to the rise in current account fees, commissions for intermedia- 48

49 tion, management and consultancy services and payment and collection services. Commission expenses, at euro 16.1 million, grew by 0.2% without significant changes in the various components. COMMISSION INCOME (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 (1) absolute % Guarantees issued 7,765 4,423 15,549 6,164 1, Management, intermediation and consultancy services: 45,833 23, ,703 44,774 1, Financial instruments trading Currency trading 1, ,236 1, Portfolio management 21,800 11,212 51,922 20,384 1, Securities custody and administration 1, ,090 1, Custodian bank (1) Placement of securities 5,952 2,956 13,595 6, receipt and issue of orders 5,859 3,136 12,002 6, Consultancy services Distribution of third-party services 9,010 4,571 17,471 8, portfolio management insurance products , other products 8,116 4,073 15,668 7, Collection and payment services 32,009 16,250 62,899 30,545 1, Servicing for securitizations Factoring services 1, , Maintenance and management of the current accounts 57,216 28, ,023 48,830 8, Other services 18,929 9,937 46,292 24,175-5, Total commission income 163,091 82, , ,694 7, (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). COMMISSION EXPENSES (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 (1) absolute % Guarantees received Management and intermediation services 1, ,938 1, Financial instruments trading Portfolio management Securities custody and administration (1) , Financial instruments placement Door-to-door sale of securities, financial products and services Collection and payment services 8,845 3,830 19,169 8, Other services 6,064 3,010 12,199 6, Total commission expenses 16,120 7,490 34,811 16, (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). Dividends and similar income amounted to euro 8.3 million (euro 6.6 million in the first half of 2010). Net revenues from Finance amounted to euro 23 million, compared to euro 33.2 million in the first half of 2010, suffering from the more unfavourable financial situation. More specifically, net income from trading activities was a positive euro 15.2 million, compared to a negative euro 4 million in June NET INCOME FROM TRADING ACTIVITIES (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/2010 absolute % Debt securities ,278-5,089 6,086 Equities & collective investment schemes Total equities, debt securities & collective investment schemes 1, ,173-4,935 6,054 Financial derivatives 32,607 19,807-26,659-52,896 85,503 Credit derivatives 1, ,871 1, Currency differences -21,429-18,674 28, ,542 Other financial assets/liabilities from trading 1, ,758 52,617-50, Total net income from trading activities 15,189 2,694-6,629-3,951 19,140 Net income from hedging activities was a negative euro 91 thousand, an improvement when compared to the negative euro 480 thousand in June Profit from the disposal or repurchase of loans and financial assets/liabilities was lower (euro 146 thousand compared to 49

50 euro 26.8 million in June 2010), while net income from financial assets designated at fair value was a negative euro 1 million, compared to a positive result of euro 2.7 million in June Gross operating income reached euro million, an increase of 5.7%. Impairment losses on loans and other credit risk provisions amounted to euro 62 million, 8.6% above the figure recorded in the first half of As regards this component, cash and endorsement loans totalled euro 1.5 million (+2.7%). NET VALUE ADJUSTMENTS TO LOANS AND OTHER FINANCIAL ITEMS (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/2010 absolute % Loans to banks Loans to customers 55,839 28, ,217 56, Credit commitments (other financial transactions) 1,917 1, ,798 Available-for-sale financial assets 4, , ,362 Total net value adjustments to loans and other financial items 61,987 30, ,317 57,092 4, Insurance management yielded a net loss of euro 24.2 million (net loss of euro 20.6 million in June 2010): the net premiums (euro million) decreased by 12.1% and the net charges (euro million) by 11.3%. This result would seem to contradict the significant increase in Insurance Company activities, and is due to the special accounting treatment which only considers the technical items and not the financial items that go to make up the gross operating margin; the net income from insurance management, including the financial items, is positive for about euro 32 million. Please refer to the section on Insurance activities herein for more details. Net income from financial and insurance management increased by 4.8%, amounting to euro million. Operating costs amounted to euro million, up by 5.8% compared to June In detail, administrative costs amounted to euro million, up by 5.7% over the twelvemonth period and within these: - Staff costs rose by 7.6% to euro million, as a result of the acquisition of the former BMPS branches; - Other administrative expenses amounted to euro million (+2.9%), general expenses were contained (-6.9%), while indirect taxes increased by 40.4% over the first half of 2010 due to the inclusion of substitute tax on lease contracts which had a contra-entry under item 220 in Other operating income and expenses. Net provisions for risks and charges amounted to euro 1.7 million (euro 1.3 million in June 2010, +33.8%). Value adjustments on tangible and intangible fixed assets amounted to euro 27.9 million, up over the euro 25 million in the first half of 2010 because of sizeable investments made, especially in information technology, to maintain high levels of profitability in the future. The cost/income ratio was 62.5%, up from 62.4% in June OPERATING COSTS (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 (1) absolute % Staff costs 211,250 99, , ,369 14, Other administrative costs 137,407 73, , ,576 3, general costs 98,525 48, , ,875-7, indirect taxes(2) 38,882 24,976 55,002 27,701 11, Net provisions for risks and charges 1, ,206 1, Amortization and depreciation on: 27,949 13,799 52,800 24,959 2, intangible fixed assets 15,306 7,590 27,550 12,800 2, tangible fixed assets 12,643 6,209 25,250 12, Other operating expenses and revenues - 40,027-27,238-71,467-36,305-3, Total operating costs 338, , , ,881 18, (1) Figures as at 30/06/2010 have been restated in order to show the economic items concerning the discontinued groups of assets (in particular the Custodian Bank business unit of the Parent Bank). (2) The Item includes the substitute tax due on existing leasing agreements set forth in L. 220/2010, the recovery of which from the customers has been recorded in Item 220 of the income statement "Other operating revenues/expenses ". 50

51 Other net operating revenues increased by 10.3% to euro 40 million relative to the first half of 2010, mainly due to the inclusion of the recouped substitute tax on lease contracts, whose cost is included among general expenses. OTHER OPERATING REVENUES AND EXPENSES ((figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/2010 absolute % Lease income and rent 6,716 3,157 14,627 8,341-1, Charges to third parties: 34,432 23,050 46,327 23,427 11, recovery of taxes (1) 34,401 23,034 46,261 23,371 11, customer insurance premiums Other revenues 11,720 5,073 34,229 15,491-3, Total other revenues 52,868 31,280 95,183 47,259 5, Operating costs on financial leases Ordinary maintenance costs on - 2,863-1,192-3,230-2, Expenses for improvement of third Other expenses - 8,980-2,422-19,023-8, Total other expenses - 12,841-4,042-23,716-10,954-1, Total net revenues 40,027 27,238 71,467 36,305 3, (1) The Item includes the recoveries from the customers of the substitute tax due on existing leasing agreements set forth in L.220/2010, the cost of which is recorded in Item 180 b) "Other administrative costs - indirect taxes". Profit from ordinary activities amounted to euro million (+2% compared with euro million in the first half of 2010). Net of income tax provisions, equal to euro 43.3 million (euro 46.1 million in June 2010), and profit attributable to minority interests, equal to euro 1 million, net profit pertaining to the parent bank amounted to euro 75.2 million, up 5.4% over the euro 71.3 million of the first half of The consolidated comprehensive income attributable to the Parent Bank, which includes income components charged directly to shareholders equity, stood at euro million (a negative euro million in the first half of 2010). Item 20 Available-forsale financial assets include the revaluation of the equity investment in the Bank of Italy of euro 21.6 million. DIVIDENDS DISTRIBUTED IN THE HALF-YEAR PERIOD BY PARENT BANK BANCA CARIGE In the first half, in line with Shareholders Meeting resolution of 29 April 2011, the Parent Bank distributed euro 180,601,274.41, equal to the net profit achieved in the 2010 financial year (euro 180,601,256.17) and the reserve for dividends on own shares (euro 18.24) as follows: DISTRIBUTION OF NET PROFIT (figures in euro) Net profit 180,601, Reserve for dividends on own shares Total 180,601, Allocation to the legal reserve 18,060, Allocation to the extraordinary reserve 33,727, Dividend of ordinary shares (0.07 euro per share) 113,125, Dividend of savings shares (0.09 euro per share) 15,687, Dividend payment will take place starting 26 May 2011 (coupon detachment date 23 May 2011), in compliance with the express recommendation of Borsa Italiana S.p.A., to the companies issuing shares listed on the Stock Exchange. 51

52 INSURANCE ACTIVITIES The IAS consolidated income of the insurance group amounted to euro 8 million, a decrease from euro 17 million in June The premiums from insurance activities, net of reinsurance, amount to euro million, still high though down by 12.1% from June 2010; in detail, net premiums from non-life business increased by 19.7% to euro million, whilst those from life business decreased from euro million to euro 334 million. The largest portion refers to the bank channel, which accounts for 90.6% of the total, while the agency channel recorded euro 31.8 million. The net change in technical reserves was euro 256 million (euro million as at June 2010) and net insurance management costs were euro 86.8 million, compared to euro 76.6 million in June Technical reserves stood at euro 4,045 million, up 5.8% compared to December 2010; the change mainly concerned the life insurance segment, with an increase of 8% (up from euro 2,921 million to euro 3,155 million in the six-month period) while the technical reserves of the non-life insurance segment fell by 1.3% (from euro 902 million to euro 890 million in the six-month period). Technical reserves charged on reinsurers (euro million) decreased by 5.3% relative to December Net income decreased from June 2010, from euro 17 million to euro 8 million due in part to the missed contribution of the trading transactions carried out during the previous financial year whose benefits, at June 2010, had not yet been fully allocated to the insured by separate management mechanisms. 52

53 PREMIUMS-RESERVES-ECONOMIC RESULT (1) (figures in thousands of euro) Change % 06/11 06/11 Figures relative to the insurance group 30/06/ /03/ /12/ /06/ /10 06/10 Insurance management -34,523-19,849-76,941-31, Premiums excluding reinsurance 652, ,148 1,416, , Life insurance 333, , , , recognised gross premiums (+) 337, , , , premiums ceded to reinsurers (-) 3,629 1,908 8,144 3, Non-life insurance 318, , , , recognised gross premiums (+) 346, , , , premiums ceded to reinsurers (-) 22,274 14,492 57,970 13, variations (+/-) to premium reserve gross balances -7, ,948-15, variations (-/+) to premium reserves charged on reinsurers 2, Net variations to technical reserves -255, , , , Life insurance -255, , , , Non-life insurance Claims incurred and settled during the period -344, , , , Life insurance -109,232-59, ,001-76, Non-life insurance -235, , , , Other insurance revenues and expenses -86,771-42, ,219-76, Life insurance -11,232-6,254-13,008-3,365 Non-life insurance -75,539-35, ,211-73, Net income from financial management 67,622 32, ,654 73, Other items in the income statement -18,319-8,246-35,015-15, Gross profit 14,780 4,895 29,698 26, Taxation -6,790-2,215-11,980-9, Minority interests Net profit 7,976 2,670 17,703 17, Technical reserves 4,044,959 3,915,876 3,823,093 3,578, Non-life insurance 890, , , , premium reserves 255, , , , accident reserves 633, , , , other reserves Life insurance 3,154,890 3,026,916 2,921,011 2,655, mathematical reserves 3,262,644 3,129,725 3,010,609 2,691, reserves for amounts payable 6,708 6,962 12,239 4, other reserves -114, , ,837-41, Technical reserves charged on reinsurers 155, , , , Non-life insurance 81,717 81,723 84,669 97, premium reserves 13,272 9,137 10,007 14, accident reserves 68,445 72,586 74,662 82, other reserves Life insurance 73,584 75,167 79,261 82, mathematical reserves 73,203 75,072 77,286 82, reserves for amounts payable 3,457 3,260 5,220 2, other reserves -3,076-3,165-3,245-1, (1) Figures are gross of relations with the companies belonging to the banking group TRANSACTIONS WITH RELATED PARTIES The Group maintains relations with Banca Carige shareholders who are able to exercise a significant influence, subsidiaries and other related parties regulated at market conditions. It should be noted that in the first six months of 2011, no transactions with related parties subject to public disclosure were carried out. As at 30 June 2011, asset and liability transactions (with the exception of directors and statutory auditors fees, which are published annually in the Explanatory Notes to the Consolidated Financial Statements) were as follows: 53

54 - Subjects TRANSACTIONS WITH SHAREHOLDERS EXERCISING SIGNIFICANT INFLUENCE AND WITH INVESTEES (1) (figures in thousands of euro) Shareholders and their subsidiaries who are able to exercise a significant influence on the Parent Bank (4) Subsidiaries outside the area of consolidation Assets Liabilities Guarantees Revenues Expense Dividends (2) (3) and commitments 99, ,290 45,773 7,707 14,699 66, Companies and their subsidiaries subject to significant influence 10, TOTAL 109, ,922 46,052 7,812 15,047 66,781 (1) Relations with subsidiaries included in the area of consolidation were not taken into account. (2) Dividends collected by companies subject to significant influence netted off in the consolidation process were not shown. (3) Dividends distributed by Banca Carige. (4) Items "Other revenues" and "Expenses" include also evaluation items relative to hedging and offset trading derivatives executed with companies belonging to the BPCE group. TRANSACTIONS WITH OTHER RELATED COMPANIES (figures in thousands of euro) Assets Liabilities Guarantees Revenues Expense Purchase of assets Insurance Indemnities and commitments and services redemptions and insurance redemptions 20,002 9,088 1, ,002 9,088 1, Overall, the share of the total of transactions with related parties is shown in the following table: WEIGHT OF TRANSACTIONS WITH OTHER RELATED PARTIES AS AT 30/6/2011 (figures in thousands of euro) transactions with related parties Amount of balance sheet item % weight Assets Item 70 - Loans to customers 104,019 25,996, % Other asset items 25,836 16,377, % Liabilities Item 20 - Amounts owed to customers 77,022 15,636, % Other liability Items (1) 156,988 23,019, % Income statement Item 10 - Interest income , % Item 20 - Interest expenses net of hedging spreads (5,862) (225,421) 2.6% Item 20 - Interest expenses hedging spreads 4,743 (4,007) Item Balance of other expenses/revenues from insurance management (+/-) (8,095) (676,728) 1.2% Other positive Items in the income statement 1, , % Other negative Items in the income statement (2) -10 (457,542) 0.0% (1) The weight is calculated on the other liability items, except for those referred to the shareholders' equity. (2) The weight is calculated on the other negative items, except for taxes and profit attributed to minority interests. Based on the new version of IAS 24 Related party disclosures published in November 2009 (EC Regulation no. 632/2010 of 19 July 2010) other related parties include: - Executives with strategic responsibility for the entity and its Parent Bank; this refers to those who have the power and responsibility, directly or indirectly, for the management and control of the Parent Bank's activities, including the Directors, the Statutory Auditors, the Managing Director or the General Manager, the Deputy General Managers and the Central Managers; - Close relatives of one of the subjects referred to in the previous point; this refers to persons that can be expected to influence, or be influenced by, the interested party in their relations with the Group and therefore, by way of example, may include the common-law spouse and persons dependent upon the interested party or upon the common-law spouse; controlled or jointly controlled by one of the entities referred to in the previous points. EQUITY INVESTMENTS Equity investments amounted to euro 55.9 million, (euro 62.3 million in June 2010); they refer to Autostrada dei Fiori, a company subject to significant influence, valued in accordance with the equity method, and euro 2.6 million refers to the companies valued at cost where there is significant influence. 54

55 ANNUAL CHANGES IN EQUITY INVESTMENTS (figures in thousands of euro) 30/06/ /03/ /12/ /06/2010 A. Opening balance 54,994 54,994 55,601 55,601 B. Additions ,752 B.1 Acquisitions ,300 B.4 Other changes C. Decreases C2. Value adjustments C3. Other changes D. Closing balance 55,853 54,994 54,994 62,345 OWN SHARES, CASH FLOW STATEMENT AND SHAREHOLDERS EQUITY As at 30 June 2011, Banca Carige holds a portfolio that contains 44 old shares with nominal values of Lire 10,000 thousand, equivalent to 228 current ordinary shares, for a value of euro 426. The Group absorbed liquidity of euro 16.1 million in the first six months. Operating assets generated cash amounting to euro million. In particular, management generated a positive cash flow of euro million, financial activities absorbed liquidity totalling euro 2,178.5 million, and financial liabilities generated cash amounting to euro 1,915.7 million. Liquidity absorbed by investment activities amounted to euro 38.1 million, and that absorbed by funding activity totalled euro million. The consolidated shareholders' equity and the net consolidated income pertaining to the Parent Bank are obtained from Banca Carige's net shareholders equity and income for the year through the following changes: RECONCILIATION STATEMENT OF BANCA CARIGE SHAREHOLDERS' EQUITY AND INCOME AND CONSOLIDATED FIGURES (figures in thousands of euro) Shareholders' equity Income statement Balance as at 30/06/ Banca Carige 3,801,619 83,666 Variations on book value -31,176 32,947 Value adjustments to allocated gains -3, Share options survey - subsidiaries -10,845 - Amortised goodwill (previous accounting periods) -43,298 - Dividends distributed by subsidiaries and written off -40,878-40,878 Dividends distributed by associated companies and written off -1,227-1,227 Other 356 1,029 Consolidated balance as at 30/06/2011 3,670,915 75,158 RESOURCE MANAGEMENT The Carige Group s distribution system is split into three major categories of channels: traditional, remote and mobile. The system of traditional channels are made up of branches, private and corporate consultancy districts, affluent advisors and small business advisors, based on a customer service specialisation model that provides for the gradual passage, when possible and deemed useful, from one management of relations connected with an operating unit to a customised management of customers, looked after by specific advisors. As at June 2011, branches numbered 670, including 3 private centres, an increase over the twelve-month period due to the opening of 2 private centres in Monza and Brescia in July 2010, the opening of the Ag.9 Stazione Metropolitana Duomo di Milano under the Carige name in January 2011 and two new Carige branded branches in Piacenza and Monza in May A total of 254 of these branches are 55

56 in Liguria and 416 in other regions. Furthermore, on 29 July, a new Banca Cesare Ponti branded private centre was opened in Varese, bringing the number of Group branches to 671. The new Banca Cesare Ponti private centres are significant in this regard. The private centres are branches whose operations relate solely to asset management and the granting of credit directly attributable to natural persons and that avail themselves of the support of traditional Group branches located in the surrounding areas. In fact, Banca Cesare Ponti focuses its actions on private customers with a view to examining indepth and reinforcing the relationship with customers of a high financial standing, by proposing products and services under transparent and competitive conditions with solid performances for customers. From a geographical point of view, the Lombardy region has greater coverage, with the inclusion of private Banca Carige customers in Lombardy in the perimeter of the new bank, which represents a genuine platform for the development of asset management activities thanks to the presence of operators specialised in the role. The number of private advisors amounted to 140 (130 in December and 128 in June 2010) while the number of affluent advisors was 320 (307 in December and in June 2010). The financial consultancy service, composed of 151 advisors (148 in December and 151 in June 2010), is dedicated to corporate customers, and the small business service is structured into a network of 287 advisors, an increase compared to 265 in December and to 271 in June Within remote channels, the number of "Bancacontinua" branches remained unchanged at 19, while ATM branches totalled 781 (777 in December and 784 in June 2010). Contracts for on-line and call centre services were roughly 298 thousand, an increase over both the six and twelve-month periods. With regard to mobile channels, the Group also has a network of 436 insurance agencies (292 of which also place bank products) located throughout Italy (432 in December and 427 in June 2010). BRANCH NETWORK A) TRADITIONAL CHANNELS 30/06/11 31/03/ /06/2010 number % number % number % number % NORTHWEST Liguria Genoa Savona Imperia La Spezia Lombardy Piedmont Valle d'aosta NORTHEAST Veneto Emilia Romagna CENTRE Tuscany Latium Marches Umbria SOUTH AND ISLANDS Sicily Apulia Sardinia ABROAD: Nice (France) Total number of branches /06/11 31/03/ /06/10 Private consultants Corporate consultants Affluent consultants Small business consultants Total consultants B) REMOTE CHANNELS 30/06/11 31/03/ /06/10 ATM - Bancomat Self-service "Bancacontinua" branches On line services (1) 298, , , ,046 C) MOBILE CHANNELS 30/06/11 31/03/ /06/10 Insurance agencies of which: distributing banking products (1) Number of Internet banking and Call center contracts. 56

57 At the end of June 2011, Group personnel totalled 6,013 units (6,003 in December and 6,038 in June 2010). Bank personnel numbered 5,525 units, down by 11 units in the half due to the appointment of 73 new staff members and 84 terminations, of which 43 retirements. Executives represented 1.4% of the aggregate and managers 25.2%, while the rest of the personnel accounted for 73.4% of the aggregate. The number of employees operating on the market came to 71.5% (71.9% as at December and 71.8% as at June 2010); female staff accounted for 47.5% (47% in both December and June 2010). The average age was roughly 45 and average length of service around 20 years. Almost all personnel were on permanent contracts, with roughly 93% of these full-time. Insurance personnel amounted to 488 units (467 and 461 as at 31 December and 30 June 2010, respectively). PERSONNEL 30/06/11 31/03/ /06/10 number % number % number % number % Number of bank employees Grade Executives Managers 1, , , , Other employees 4, , , , Total 5, , , , Assets Offices (1) 1, , , , Market (1) 3, , , , Total insurance employees Total (banking and insurance) 6,013 5,996 6,003 6,038 (1) Figures related to the previous periods have been reclassified based on a different criterion of allocation of personnel absent from the service. RISK MANAGEMENT A. General aspects Any policies related to the assumption of risks are set by the Parent Bank s Board of Directors when strategic planning and the annual budget are prepared. The various risk categories are monitored by the competent functions of the Parent Bank: Research, Risk Management, Credit Monitoring, Compliance (which contains the anti-money laundering function) - and the outcome is subject to periodic reporting to the Board of Directors, the Asset & Liability Management Committee and to the ICAAP (Internal Capital Adequacy Assessment Process) Committee and to the Executive Management: The analyses are supported not only by regulatory models, but by more advanced methodologies which have made it possible, over time, to expand the range of risks monitored and to improve the assessment of the capital adequacy, from both a regulatory and an economic perspective. The Parent Bank performs orientation and supervisory functions as regards all risks, in particular by managing, in an integrated context, the Pillar 1 and Pillar 2 risks, in accordance with the provisions contained in the Supervisory Instructions of the Bank of Italy (Circular No. 263 dated 27 December 2006 and subsequent updates). The Group banks operate within specific limits of independence and avail themselves of their own supervisory structures. The Second Pillar regulations provide that the Banks, also through the use of proprietary procedures, assess their current and future capital adequacy, expanding the range of risks to be taken into account compared with the First Pillar. Carige carried out activities aimed at identifying the risks to which the Group is exposed, with regard to its own operations and reference markets and were included within the perimeter of analysis for ICAAP purposes, as well as credit, market, operating, concentration (both the single name and geo-sectorial components), interest rate, liquidity, insurance, reputational, strategic and residual risks, and those deriving from securitisations. Then, the related assessment procedures - of a quantitative nature when measurement methods are present, of a qualitative nature if related to organisational controls - were defined. In the 57

58 risk area, management activities, which are mostly already in place, were traced to an organic framework. With reference to the methods used, internal models for the quantification of the credit, market and interest rate risks were used, together with regulatory models for operating and concentration risk. The analyses related to the remaining risks were performed though the use of specific scorecards aimed at using qualitative techniques to identify the potential level of risk and the supervision measures introduced. As regards capitalisation aspects and the hedging of existing risk with its own capital means, the Group confirms its compliance with the expected thresholds for all Bank of Italy ratios currently in force and calculated on the basis of Instructions for the compilation of reports on the regulatory capital and prudential coefficients (Bank of Italy circular no. 155 of 18 December 1991), and new provisions of prudential supervision for banks (Bank of Italy circular no. 263 of 27 December 2006). As regards the Bank of Italy Measure of 18 May 2010: Regulatory Capital Prudential filters 1, at a meeting on 14 June, the Board of Directors resolved to exercise the option to apply the approach in accordance with annex a) of the Provision with application to the calculation of regulatory capital starting with the one referred to 30 June The Group thus showed higher Total Capital Ratio (9.16%) Tier 1 Ratio (6.69%) and Core Tier 1 Ratio (5.98%) than the supervisory limits, and an excess capital of euro million, and it expects, also in the remainder of the financial year, to maintain capitalisation levels above the supervisory limits. The analyses of the impacts on capital of the second pillar regulations confirm, increasing it, the solid capitalisation of the Group because the proprietary methods set up in this sector, albeit with a prudential attitude, take into account some assets for which first pillar regulations im- pose neutralisation in the regulatory capital: this refers specifically to controlling interests in insurance companies and to the portion of goodwill deriving from acquisitions made in recent years, deemed for all intents and purposes to be tangible assets. This setup allows the implicit higher capitalisation of the Carige Group to fully emerge, it is able more than adequately to face all first and second pillar risks, as well as the insurance risk in a financial conglomerate context, both in case of normal business conditions and in case of stress. From 1 January 2013 on, the new supervisory regulations known as Basel 3 will progressively take effect. The Group s target is to comply as soon as possible with the more stringent capital requirements of the new regulations, leveraging, on one hand, the capital strengthening steps taken in 2010 and, on the other hand, the ability to generate new capital resources internally. As regards the first aspect, with the issue, in March 2010, of a convertible bond, Banca Carige has already strengthened its capital structure; the characteristics of the loan allow for conversion into shares both at the subscriber s and at the Bank s initiative starting from September 2011 and through 2015: any conversion would take place, obviously, at the most convenient time on the basis of market conditions. In addition to this opportunity, the activation of initiatives to optimise the capital structure and to attain adequate economic results enable the Group to await the conclusion of the Basel 3 regulatory process without any trouble. 1 This provision gives Banks, Stock Brokerage Firms and financial intermediaries registered in the Special List limited to securities issued by central administrations of EU countries included in the available for sale financial assets (AFS) portfolio the possibility of adopting, for the purposes of determination of regulatory capital, an approach that makes provision for "fully neutralising both capital gains and losses, as if securities were valued at cost" - subapproach a) as an alternative to the approach set out by the supervisory provisions in force sub-approach b) which provides for fully deducting capital losses from tier 1 capital and partially including capital gains in tier 2 capital, according to an asymmetric" approach. 58

59 BREAKDOWN OF CONSOLIDATED REGULATORY CAPITAL (figures in thousands of euro) Situation as at 30/06/ /03/ /12/ /06/2010 (1) (2) Tier 1 capital: positive elements (a) 3,468,947 3,457,074 3,450,918 3,404,260 Share capital 1,813,628 1,813,628 1,810,426 1,809,792 Reserves 457, , , ,292 Additional paid-in capital 1,025,937 1,025,937 1,022,942 1,021,195 Profit for the period 11,873 44,383 44,383 4,081 Innovative capital instruments (h) 159, , , ,900 Tier 1 capital: negative elements (b) 1,763,954 1,775,682 1,775,682 1,787,242 Goodwill 1,686,746 1,698,474 1,698,474 1,706,269 Other negative elements 77,208 77,208 77,208 80,973 Prudential filters for regulatory capital (c) -112, , , ,602 Deductions (d) 97,429 97,521 97,521 93,207 Total Tier 1 capital (e = a-b+c-d) 1,494,929 1,474,039 1,464,116 1,409,209 Core Tier 1 Capital (e-h) (3) 1,335,029 1,314,139 1,304,216 1,249,309 Tier 2 capital (f) 875, , , ,407 Deductions (g) 340, , , ,214 Regulatory capital (e+f-g) 2,029,596 2,000,004 1,983,021 1,880,402 Tier 4 capital 27,433 40,814 45,741 0 Not calculable portion of Tier 3 16,968 18,273 18,238 0 Regulatory capital including Tier 3 2,046,563 2,018,277 2,001,259 1,880,402 Subordinated loans not calculable as Tier 3 10,465 22,541 27,503 0 (1) Figures as at 30/06/2011 result from accounting and management estimates pending the official consolidated figures. (2) Figures as at 31/03/2011 are the official figures and therefore they differ from the management data shown in the quarterly report. (3) It includes savings shares following the changes to the articles of association approved during the Shareholders' Meeting on 29/4/2011 aimed at reaching the requirements for inclusion in Core Tier 1. (4) It is the portion of Lower Tier 2 subordinates exceeding the limit for the calculation of the Tier 2 capital. CONSOLIDATED REGULATORY CAPITAL AND SOLVENCY RATIOS (figures in thousands of euro) Situation as at 30/06/11 31/03/ /12/ /06/2010 (1) (2) Regulatory capital Core Tier 1 Capital 1,335,029 1,314,139 1,304,216 1,249,309 Tier 1 capital 1,494,929 1,474,039 1,464,116 1,409,209 Regulatory capital including Tier 3 2,046,563 2,018,277 2,001,259 1,880,402 Weighted assets Credit risk 20,200,591 20,039,300 19,726,863 18,271,775 Market risk 297, , , ,288 Operational risk 1,841,225 1,841,225 1,841,225 1,831,150 Other prudential requirements Total weighted assets 22,338,871 22,200,435 21,887,400 20,453,213 Capital requirements Credit risk 1,616,047 1,603,144 1,578,149 1,461,742 Market risk 23,764 25,593 25,545 28,023 Operational risk 147, , , ,492 Other prudential requirements Total 1,787,110 1,776,035 1,750,992 1,636,257 Subordinated loans covering market risks Surplus capital 259, , , ,145 Solvency ratios (%) Tier 1 capital/credit risk weighted assets 7.4% 7.4% 7.4% 7.7% Regulatory capital/credit risk weighted assets 10.0% 10.0% 10.1% 10.3% Core Tier 1/Total Risk-Weighted Assets (3) 6.0% 5.9% 6.0% 6.1% Tier 1 capital/total weighted assets 6.7% 6.6% 6.7% 6.9% Regulatory capital including Tier 3 capital/total weighted assets 9.2% 9.1% 9.1% 9.2% (1) Figures as at 30/06/2011 result from accounting and management estimates pending the official consolidated figures. (2) Figures as at 31/03/2011 are the official figures and therefore they differ from the management data shown in the quarterly report. (3) It includes savings shares following the changes to the articles of association approved during the Shareholders' Meeting on 29/4/2011 aimed at reaching the requirements for inclusion in Core Tier 1. 59

60 B. Risks Credit and counterparty risk The risk measurement, management and control process is carried out through the activities of: Credit Risk Management, aimed at the strategic governance of the Group s lending activities, through the monitoring of the portfolio quality on the basis of analyses regarding the performance of the risk indicators from rating sources (Probability of Default PD, Loss Given Default LGD and Exposure At Default EAD) and the timely verification of compliance with the limits prescribed by the Supervisory Regulations pertaining to concentration and capital adequacy in view of the risks assumed. In fact, the Parent Bank has developed internal rating models on historical data with reference to the Retail segments (Private individuals and Small Businesses), Corporate (SME) and Large Corporate for the determination of the PD, LGD and EAD The Expected Loss (product of PD, LGD and EAD) is used as a parameter for the deliberation of loan approval procedures to counterparts in the Retail, Corporate and Large Corporate segments; Operational nature, aimed at overseeing the quality of the credit disbursed, by means of diversified action based on differentiated criteria on the basis of the customer segment, the product type, etc., which envisage a standardised approach on the portions of portfolio with greater fragmentation of the risk and targeted measures for the positions which, by size or pertinent segment, are included within the core business of the Bank s lending activities. Market risk This is measured on the securities and derivatives portfolio through the daily determination of the Value at Risk (VaR) in accordance with the Montecarlo approach, with a confidence interval of 99% and a holding period of ten days. VaR analysis is supplemented by daily monitoring of profitability profiles with the calculation of accrued interests, profit and loss, and capital gains/losses recognised on the financial instruments held in the portfolio. The profitability determined in this way is constantly compared with the scenarios set out in the budget. The foreign exchange risk and the gamma and vega risk on options are calculated with the standard Bank of Italy approach. Operational risk The basic Bank of Italy approach is used, which provides for capital absorption equal to 15% of the average gross operating income of the last three years. Since its inception at the ABI s initiative, the Group has participated in the DIPO Consortium (Database Italiano Perdite Operative, Italian Database of Operating Losses) and it defined a Business Continuity and Disaster Recovery plan aimed at identifying critical processes and strategies to minimise their risks and the correlated economic consequences, in order to guarantee a timely resumption of operating processes. Interest rate risk The analysis of the interest rate risk is performed on a monthly basis with Gap analysis (with the three methodologies of incremental gap, incremental beta gap and shifted beta gap), Duration analysis and Sensitivity analysis techniques. In addition, at the consolidated level, the Parent Bank periodically monitors its exposure to interest rate risk, in application of the standard Supervisory model. Concentration risk This risk is quantified using the Herfindhal index in accordance with the procedures provided by the Bank of Italy, as regards the single name application; as regards geo-sectorial concentration risk, reference is made to the method proposed by ABI and validated by the Bank of Italy. Liquidity risk Many analyses are performed which are aimed at assessing the financial balance in both the treasury items and at the structural level. Exposure to short term liquidity risk is assessed on the basis of instruments and methods (Maturity Ladder and Stress Testing) expressed in the Group s Liquidity Policy, which prescribes specific operating limitations on the time buckets calibrated using a stress test scenario. The medium/long term liquidity risk is analysed by monitoring both asset and liability items maturing in the future and comparing them with the growth objectives provided under strategic planning. In addition, on one hand, indicators have been defined in terms of gap ratios on maturities beyond one year which place restrictions on the possibility of financing long-term assets with 60

61 short-term liabilities, consistent with the maturity transformation limitation approach; on the other, a Contingency Plan was defined, approved by the Board of Directors, which defines and describes the intervention strategies and processes in stress and crisis situations, the reference organisational structure and risk indicators, with the associated trigger points and calculation methods. Reputational risk, strategic risk, risk on securitisations and residual risk Risk is analysed through the use of specific scorecards which assess the risk exposure as well as the control processes and the existing mitigation instruments. In particular, reputational risk is assessed through certain indicators related to a variety of stakeholders (customers, shareholders, bond holders and employees) and is mitigated by providing organisational controls. Strategic risk is monitored through a scorecard which assesses aspects such as the extent of the difference between forecasts and final results, the solidity of the market assumptions underlying the model, the ability to understand the impact of relevant normative drivers, as well as the risk of inadequate implementation of decisions. Securitisation transaction risks are assessed through a qualitative investigation, with reference to the monitoring of expected cash flows linked to securitisation, entities involved in the transaction and legal aspects. Finally, residual risk is evaluated on the basis of qualitative opinions provided by different managers regarding the process of acquisition, management, monitoring and enforcement of guarantees. In line with legal and supervisory regulations, and in compliance with the Code of Conduct for Listed Companies, in order to ensure sound, prudent management which combines business profitability with a consistent assumption of risks and operations based on criteria of transparency and correctness, the Parent Bank set up an internal control system (the Internal Control System or ICS ) suitable to continuously detect, measure and verify the typical risks of the company s business. From the operating point of view, the ICS includes 3 levels of control: 1. Line controls (1st level) for the purpose of ensuring the correct performance of operations; these are carried out by the operating structures or included in the supporting IT procedures; 2. Risk management controls (2nd level) aimed at defining the methods for measuring risk and verifying compliance with the limits assigned to the various operating departments. These are assigned to structures other than productive departments: The Officer in charge of preparing the company s accounting documents, Risk Management (which includes the Ratings System Validation Office), Credit Monitoring, Planning and Management Control, Insurance Company Planning and Control, Compliance (which includes the Anti-Money Laundering Department); 3. Internal Audit (3rd level) is carried out by the Internal Audit departments (which are different and independent from the production structures), and is aimed at controlling operational regulatory and the performance of risks, monitoring compliance with internal and external regulations. The organisation of the Internal Controls System is discussed more thoroughly in the Annual Report on Corporate Governance and the ownership structures for financial year 2010, available on the website C. Risks of the insurance sector The operations of Group insurance companies are subject to three distinct risk categories: Insurance risks, which are generated from the specific activities of the insurer, which acts as an intermediary able to determine an assignment and a subsequent reduction of the risk, through the professional centralised management of risks; Financial risks, generated by the management of the investment portfolios of the Companies, comprised of real estate properties, securities, receivables of different types and other liquid assets; Operational risks, or possible losses, including missed opportunities, originating from deficiencies and/or inadequate performances of processes and/or control systems, due to both internal and external reasons. Insurance risks result from the fact that insurance policies are characterised by the nonfinancial risk that an uncertain event may occur. The uncertainty concerns the likelihood, timing and the seriousness of the occurrence of that event. 61

62 Three sub-categories may be identified: assumed risk, reserve risk and reinsurance risk. Assumed risk is linked to the underwriting of insurance policies, for which actuarial models are used to determine pricing needs and to monitor claims. In addition, underwriting guidelines are issued along with rules for assumption limits for each individual risk category. As regards the reserve risk, which represents the possibility that the actual amounts of claims and settlements to be paid would exceed the book value of the insurance liabilities, comprised of amounts registered under reserve, the Company constantly monitors the development in the reserves related to claims occurred but not yet paid and the changes in said reserves. For this purpose, independent actuaries are appointed to apply special actuarial methods. With regard to reinsurance risks, after the definition of self-retention levels, arrangements are made to underwrite cover contracts for the main business lines, only with leading market counterparts, in order to mitigate the risk of insolvency. Financial risks affecting companies may be broken down into credit risks, liquidity risks and market risks. The companies manage the credit risk level through a careful and appropriate counterpart selection policy. Credit risks are inherent in loans to customers, receivables from reinsurers, in securities and other financial instruments including derivative contracts. Loans to customers are managed through the direct collection carried out by the intermediaries, the payments of which, made on a decadal basis, are subject to careful supervision by the central and peripheral structures for the purpose of limiting the risk of insolvency. As regards receivables from reinsurers, the counterparties are constantly monitored and the exposure limits are reviewed annually, in compliance with the reinsurance policy outlined by Management, in order to verify the credit standing of the reinsurer and any potential need to carry out write-downs. With regard to securities and other financial instruments, the Boards of Directors of the Companies defined the limits of investment as regards the individual issuer based on the nature and on the rating of the counterparty and on the type of instruments purchased. Finally, as regards derivative instrument transactions, the Insurance Companies operate in compliance with the provisions of the Supervisory Body and in accordance with the resolutions of the individual Boards of Directors. Derivative contracts for hedging and for the effective management of investments are stipulated with counterparties of high standing and involve financial instruments with a high degree of liquidity. In any case, the Insurance Companies do not take any proprietary positions, except for the derivatives implicit in the structured financial instruments and for the derivatives with exclusively defensive purposes that may be connected with the unit- or index-linked policies marketed by Carige Vita Nuova. The company manages and minimises the liquidity risk in the short-term by accurately managing the incoming cash flows (premiums and other amounts collected), linking them to the outgoing cash flows (settlements and other payments), whereas for long-term management, an ALM (Asset Liability Management) system is being implemented, which will allow a comparative analysis between the incoming flows from investments and the expected maturities of the liability commitments (as of now, the incoming cash flow component has been completed while the part relating to the outgoing cash flows is in the implementation phase). The Insurance Companies control the market risk through sensitivity analysis and stress testing, also conducting impairment tests for the purpose of identifying, where it may be objectively determined, the need for value adjustments. As regards specifically the activities of Carige Vita Nuova, in some cases there is a direct link between investments and obligations towards the insured; in addition, certain types of Life insurance policies are subject to the minimum guaranteed interest rate risk; said risk is monitored through specific Asset Liability Management (ALM) models. For the management of operational risks, the Risk Management function has been implemented, with the definition of an operational information collection tool (database) in which the company risks subject to monitoring are assessed. They are attributed to different risk areas and company processes, and in addition, assigned a risk owner. This function is implementing the methods and analyses aimed at obtaining a more efficient risk evaluation that conforms to the requirements of Solvency Directive II which will come into force on 31 October 2012 and makes provision, for 62

63 insurance companies and Groups, for: the change of the capital requirement calculation method; different methods of calculation of technical reserves and of solvency requirements; amendments to the criteria for the admissibility of assets for the hedging of reserves and the elements of available capital. RESULTS BY BUSINESS SEGMENT Carige Group's business model has a dual dimension: territorial, since the sales network is broken down into geographical areas, Liguria and Extra Liguria; and the dimension by customer segment, considering that the organisational and operational structure provides for specific service approaches (in terms of products, prices and infrastructures) aimed at the different types of customer. In accordance with the management approach defined by IFRS 8, the bank chose the territory model as a model of reference for segment reporting, which breaks down the results and the activities into the following operating segments: - Liguria : operating customers at branches of the Parent Bank in that geographic area, together with the results of Cassa di Risparmio di Savona, prevalently located in that area; - Extra Liguria : operating customers at the branch banks of the Parent Bank located in other regions, together with the results of subsidiary banks located in these geographical areas (Cassa di Risparmio di Carrara, Banca del Monte di Lucca and Banca Cesare Ponti); - Other operating segments : include residual customers 2 and the other Group companies that perform asset management, insurance (life and nonlife segments), financial and instrumental activities; - Netting and unallocated items : remaining segment explicitly envisaged in the regulations for reporting intragroup netting and reconciliation items compared to the accounting figures. This report will be integrated with a summary illustration by customer segment of the income statement and balance sheet values. So as to allow a significant time-based comparison, the data for previous periods are reworked in line with current disclosure approaches. The income statement and balance sheet results for the first half of 2011, in relation to the regional operating sectors, are as follows: - The Liguria network recorded gross operating income of euro million, up by 13.4% compared to the first half of 2010; net of value adjustments, the result from financial management amounts to euro million; operating costs stood at euro million, up by 5.8% over the first half of 2010; the cost/income ratio at the end of the first half of 2011 was 52.1% (55.8% at 30 June 2010). As regards the trend in volumes, loans to customers stood at euro 11,218 million (+9.1% compared to 30 June 2010), amounts owed to customers fell by 6.1% over 30 June 2009, standing at euro 6,590 million; securities in issue and financial liabilities designated at fair value recorded an 8.4% increase as at 30 June 2010, amounting to euro 4,403 million. The Financial Intermediation Activities (FIA) amounted to euro 22,943 million (+2.4%); 2 Residual customers are institutional customers and customers that do not fall under the Liguria or Extra Liguria operating segments. 63

64 - The extra Liguria network recorded gross operating income of euro million, up by 14.4% compared to the first half of 2010 and a result from financial management of euro million (+14.2% compared to the first half of 2010). Operating costs rose by 5.2% over the first half of 2010, up to euro million; therefore, the cost/income ratio stood at 67.5% (73.4% as at 30 June 2010). With reference to volumes, loans to customers totalled euro 12,080 million, recording growth of 5.8% over 30 June 2010, by contrast, amounts owed to customers amounted to euro 6,492 million (down 4.2% compared to June 2010). Financial Intermediation Activities (FIA) amounted to euro 19,020 million, an increase of 7.5% on 30 June 2010; - The other operating sectors recorded operating profit from ordinary activities of euro 32.7 million, down against the figure recorded in the first half of 2010 (euro 79.5 million); securities in issue and financial liabilities designated at fair value for the sector accounted for 53.9% of the Group's total. By contrast, Financial Intermediation Activities (FIA) amounted to euro 13,692 million, representing 26% of the Group s total. 64

65 Business geographic areas (Figures in thousands of euro) Liguria Outside the region of Liguria Other operating segments Netting-off and other items TOTAL Gross operating income (1) 1st half , ,750 91,763-39, ,428 1st Q , ,248 24,406-1, ,257 year , , ,115-53,687 1,012,052 1st half , , ,271-54, ,653 Net income from financial and insurance management (2) 1st half , ,220 89,066-39, ,779 1st Q ,169 90,214 22,991-1, ,546 year , , ,812-47, ,729 1st half , , ,320-51, ,066 Operating costs 1st half , ,675-56,321-3, ,294 1st Q ,697-76,366-24,045-1, ,795 year , , ,401-7, ,074 1st half , ,870-52,790-3, ,881 Operating profit (Loss) from ordinary activities 1st half ,454 33,545 32,745-43, ,485 1st Q ,472 13,848-1,054-3,515 58,751 year ,922 78,392 53,411-55, ,655 1st half ,044 17,631 79,530-55, ,185 Cost income (%) 1st half st Q year st half Net interbank 30/06/ , ,788-1,275,991 31/03/ , ,671-1,282,913 31/12/ , ,065-1,530,220 30/06/ , , ,544 Loans to customers 30/06/ ,217,644 12,079,606 3,270, ,265 25,996,442 31/03/ ,056,004 12,030,511 2,078, ,763 24,679,267 31/12/ ,507,199 11,692,080 3,146, ,963 24,899,599 30/06/ ,283,718 11,421,635 2,561, ,085 23,872,552 Amounts owed to customers (a) 30/06/2011 6,589,973 6,492,399 2,913, ,881 15,636,164 31/03/2011 6,773,678 6,557,616 2,171, ,633 15,122,063 31/12/2010 6,980,975 6,921,757 2,061, ,100 15,592,197 30/06/2010 7,020,297 6,780,130 2,433, ,755 15,825,098 Securities in issue and financial liabilities designated at fair value (3) (b) 30/06/2011 4,403,010 2,909,842 6,836,807-1,473,976 12,675,683 31/03/2011 4,232,457 2,715,037 6,018,356-1,420,462 11,545,388 31/12/2010 4,141,660 2,104,571 6,816,039-2,070,918 10,991,352 30/06/2010 4,062,153 2,051,151 5,930,707-1,651,327 10,392,684 Other financial assets (c) 30/06/ ,950,188 9,617,607 3,941,323-1,228,458 24,280,660 31/03/ ,865,961 9,598,785 3,941, ,289 24,481,780 31/12/ ,826,396 9,270,142 3,830, ,723 24,090,570 30/06/ ,324,366 8,858,088 3,704, ,158 23,028,692 Financial Intermediation Activities (FIA) (d= a+b+c) 30/06/ ,943,170 19,019,847 13,691,805-3,062,315 52,592,507 31/03/ ,872,096 18,871,438 12,131,080-2,725,383 51,149,231 31/12/ ,949,031 18,296,471 12,708,357-3,279,740 50,674,119 30/06/ ,406,815 17,689,369 12,068,530-2,918,240 49,246,474 (1) Including income from insurance management (2) Including profits from equity investments and disposal of investments. (3) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk of the investment is borne by the insured, are not included in this table. 65

66 Business geographic areas (% on total) Liguria Outside the region of Liguria Other operating segments Netting-off and other items TOTAL Gross operating income (1) 1st half st Q year st half Net income from financial and insurance management (2) 1st half st Q year st half Operating costs 1st half st Q year st half Operating profit (Loss) from ordinary activities 1st half st Q year st half Loans to customers 30/06/ /03/ /12/ /06/ Amounts owed to customers (a) 30/06/ /03/ /12/ /06/ Securities in issue and financial liabilities designated at fair value (3) (b) 30/06/ /03/ /12/ /06/ Other financial assets (c) 30/06/ /03/ /12/ /06/ Financial Intermediation Activities (FIA) (d= a+b+c) 30/06/ /03/ /12/ /06/ (1) Including income from insurance management (2) Including profits from equity investments and disposal of investments. (3) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk of the investment is borne by the insured, are not included in this table. With regard to customer segments, the gross operating income fell when compared to the first half of 2010, amounting to euro million. The Private and Affluent segment recorded gross 66

67 operating income of euro 99.3 million, up by 34.2% compared to the first half of 2010 and the Retail segment closed the first half of 2011 at euro million (up 16.4% over the first half of 2010). This increase is mainly due to an improvement in funding spreads. By contrast, the Corporate segment recorded a gross operating income of euro 135 million (+6.6% over the first half of The income from financial and insurance management for the Private and Affluent segment amounted to euro 99.3 million, +34.6% on June The Corporate segment generated income of euro 99.4 million, -7.2% on June 2010; the Retail segment with an income of euro million, increased by 26.5%. Retail and Private and Affluent customers recorded an increase in operating costs compared to the first half of 2010: the Private and Affluent segment recorded costs of euro 71.8 million; the Corporate segment registered costs of euro 56.6 million; the Retail segment closed the first half of 2010 at euro million. With reference to volumes, loan to ordinary to customers were essentially stable when compared to 30 June 2010; in fact, the Corporate segment recorded growth of 8%, totalling euro 11,809 million, while the Retail and Private and Affluent segments recorded decreases of 8% (euro 8,150 million as at 30 June 2011) and 5.6% (euro million as at 30 June 2011) respectively. As regards indirect deposits, ordinary customers recorded a general decrease in volumes compared to the first half of 2010: the Private and Affluent segment amounted to euro 5,678 million (36.3% of the Group s total), while the Retail segment recorded euro 4,938 million (31.6% of the Group's total). Indirect deposits increased from all ordinary customers; in particular, the Private and Affluent segment accounts for 64% of the Group's total, amounting to euro 15,534 million (+5.1% compared to 30 June 2010). The FIA amounted to euro 26,016 million for the Private and Affluent segment (49.5% of the Group total), euro 2,698 million for the Corporate segment, and euro 9,575 million for the Retail segment (18.2% of the Group total). 67

68 Customer segments (Figures in thousands of euro) Private e Affluent Corporate Retail Total customer segments Total financial statements 34.2% 6.6% 16.4% 16.6% 5.2% Gross operating income (1) 198, , , ,129 1,034,856 1st half , , , , ,428 1st Q ,855 66,253 99, , ,257 year , , , ,981 1,012,052 1st half , , , , , % -7.2% 26.5% 17.2% 4.7% Net income from financial and insurance management (2) 198, , , , ,558 1st half ,326 99, , , ,779 1st Q ,898 45,661 89, , ,546 year , , , , ,729 1st half , , , , , % 15.2% 12.6% 17.0% 5.8% Operating costs -143, , , , ,588 1st half ,824-56, , , ,294 1st Q ,224-26,139-73, , ,795 year ,712-98, , , ,074 1st half ,645-49, , , , % -26.1% 251.2% 17.9% 2.0% Operating profit (Loss) from ordinary activities 55,004 85,467 58, , ,970 1st half ,502 42,734 29,145 99, ,485 1st Q ,674 19,522 16,798 49,994 58,751 year , ,401 48, , ,655 1st half ,154 57,849 8,298 84, , % 6.7% -1.6% -1.3% -1.2% Number of customers -1,478 1,155-14,693-15,016-13,578 1st half ,376 18, ,899 1,109,603 1,141,257 1st Q ,191 17, ,063 1,111,583 1,143,450 year ,030 17, ,805 1,119,053 1,149,729 1st half ,854 17, ,592 1,124,619 1,154,835 Profit per customer (figures in euro) 1st half , st Q , year , st half , Cost income (%) st half st Q year st half % 8.0% -8.0% 0.7% 8.9% Loans to customers -32, , , ,003 2,123,890 30/06/ ,722 11,809,464 8,149,763 20,506,949 25,996,442 31/03/ ,882 11,654,868 8,710,087 20,954,837 24,679,267 31/12/ ,257 11,282,604 8,933,006 20,824,867 24,899,599 30/06/ ,209 10,936,104 8,855,633 20,371,946 23,872, % -3.3% -8.3% -7.9% -1.2% Amounts owed to customers (a) -540,576-55, ,375-1,042, ,934 30/06/2011 5,677,929 1,613,649 4,937,629 12,229,207 15,636,164 31/03/2011 5,883,550 1,476,890 5,011,277 12,371,717 15,122,063 31/12/2010 6,041,045 1,752,798 5,085,413 12,879,256 15,592,197 30/06/2010 6,218,505 1,669,247 5,384,004 13,271,756 15,825, % 4.8% 4.3% 5.4% 22.0% Securities in issue and financial liabilities designated at fair value (3) (b) 263,767 7,494 61, ,364 2,282,999 30/06/2011 4,804, ,936 1,487,389 6,454,407 12,675,683 31/03/2011 4,501, ,925 1,422,812 6,088,800 11,545,388 31/12/2010 4,548, ,945 1,430,490 6,144,684 10,991,352 30/06/2010 4,540, ,441 1,426,287 6,122,043 10,392, % 16.2% 1.1% 4.9% 5.4% Other financial assets (c) 752, ,673 34, ,707 1,251,968 30/06/ ,534, ,403 3,149,884 19,605,442 24,280,660 31/03/ ,705, ,431 3,187,284 19,887,964 24,481,780 31/12/ ,414,151 1,015,134 3,148,630 19,577,915 24,090,570 30/06/ ,781, ,730 3,115,468 18,689,735 23,028, % 3.1% -3.5% 0.5% 6.8% Financial Intermediation Activities (FIA) (d = a + b + c) 475,808 80, , ,520 3,346,033 30/06/ ,016,165 2,697,988 9,574,902 38,289,055 52,592,507 31/03/ ,089,862 2,637,245 9,621,373 38,348,480 51,149,231 31/12/ ,003,445 2,933,877 9,664,533 38,601,855 50,674,119 30/06/ ,540,357 2,617,419 9,925,759 38,083,535 49,246,474 (1) Including income from insurance management (2) Including profits from equity investments and disposal of investments. (3) Carige Vita Nuova liabilities, designated at fair value and relating to products for which risk is borne by the insured, are not included in this table. 68

69 69

70 THE PARENT BANK: FINANCIAL STATEMENTS AND EXPLANATORY NOTES Financial highlights BALANCE SHEET (1) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Total assets 35,507,224 33,634,516 33,491,277 32,446, Funding 29,512,026 27,738,495 27,844,425 26,319, Direct deposits (a) 26,375,631 24,698,018 24,798,250 23,832, * Amounts owed to customers 13,666,225 13,213,185 13,933,214 13,864, * Securities in issue 11,435,151 10,204,583 9,535,038 8,880, * Liabilities at fair value 1,274,255 1,280,250 1,329,998 1,087, Amounts owed to banks 3,136,395 3,040,477 3,046,175 2,486, Indirect deposits (b) 20,095,582 20,219,452 21,601,123 19,484, Assets under management 8,443,457 8,544,490 9,149,946 8,357, Assets in custody 11,652,125 11,674,962 12,451,177 11,127, Financial Intermediation Activities (FIA) (a+b) 46,471,213 44,917,470 46,399,373 43,317, Investments 31,586,680 29,869,382 29,598,151 28,256, Loans to customers (2) (3) 22,927,991 21,503,178 21,861,238 20,605, Loans to banks (2) (3) 1,862,700 1,755,200 1,391,888 1,719, Securities portfolio (4) 6,795,989 6,611,004 6,345,025 5,931, Capital and reserves 3,717,953 3,908,768 3,632,626 3,628, Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 INCOME STATEMENT (1) Gross operating income 428, , , , Net income from financial management 378, , , , Operating profit from ordinary activities before taxes 117,342 42, , , Profit for the period 83,666 28, ,601 93, RESOURCES (5) Number of branches Staff 4,616 4,609 4,692 4, FINANCIAL RATIOS Operating costs / Gross operating income 60.8% 64.1% 60.6% 59.4% Operating profit from ordinary activities before taxes /Capital and reserves 3.2% 1.1% 6.4% 3.4% ROE 2.3% 0.7% 5.0% 2.6% ROE (6) 2.9% 0.9% 6.3% 3.3% ROAE (7) 2.3% 0.8% 4.9% 2.5% ROAE (6) (7) 2.9% 0.9% 6.2% 3.2% RISK ASSETS AND REGULATORY RATIOS (8) Total Risk-Weighted Assets (1) 19,668,141 19,552,389 19,342,954 17,990, Core Tier 1/75%Total Risk-Weighted Assets (9) 10.1% 10.0% 9.8% 10.6% Tier 1 capital / 75% RWA 11.2% 11.1% 10.9% 11.8% Regulatory capital including Tier 3 capital/ 75% Total weighted assets 14.9% 14.8% 14.7% 15.2% (1) Figures in thousands of euro (2) (3) Before value adjustments. Net of debt securities classified as L&R (4) (5) Balance sheet items 20 (net of derivatives), 30, 40, 60 (only for the part relative to L&Rs) and 70 (only for the part relative to L&Rs) are included in the aggregate. Statistics of the end of period. (6) (7) Net of the AFS reserve established against the revaluation of the equity investment in the Bank of Italy. Net profit on average shareholders' equity (Return On Average Equity). (8) (9) Figures as at 30/06/2011 result from accounting and management estimates pending the official figures ("Y" information form). It includes savings shares following the changes to the articles of association approved during the Shareholders' Meeting on 29/4/2011 aimed at reaching the requirements for inclusion in Core Tier 1. 70

71 1. Financial statements as at 30 June 2011 BALANCE SHEET (figures in thousands of euro) ASSETS Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 12/10 06/10 06/ CASH AND CASH EQUIVALENTS 228, , , ,739 (9.7) (1.9) 20 -FINANCIAL ASSETS HELD FOR TRADING 278, , , ,908 (25.3) (54.9) 40 -AVAILABLE-FOR-SALE FINANCIAL ASSETS 5,399,823 5,161,459 4,851,828 4,476, LOANS TO BANKS 3,004,491 2,901,071 2,507,446 2,590, LOANS TO CUSTOMERS 22,381,110 20,992,790 21,373,808 20,185, HEDGING DERIVATIVES 81,711 48, , ,817 (18.9) (41.6) 100 -EQUITY INVESTMENTS 1,104,320 1,104,350 1,044,350 1,076, TANGIBLE ASSETS 669, , , ,375 (1.6) INTANGIBLE ASSETS 1,595,467 1,595,627 1,634,043 1,585,510 (2.4) 0.6 of which: - goodwill 1,526,407 1,526,407 1,564,992 1,518,561 (2.5) TAX ASSETS 303, , , ,075 (6.3) 4.3 a) current 70,238 74,809 84,981 73,887 (17.3) (4.9) b) advanced 233, , , ,188 (2.4) 7.5 NON-CURRENT ASSETS AND DISCONTINUED GROUPS OF ASSETS ,176 (100.0) 150 -OTHER ASSETS 460, , , , (22.6) TOTAL ASSETS 35,507,224 33,634,516 33,491,277 32,446, LIABILITIES Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 12/10 06/10 06/ AMOUNTS OWED TO BANKS 3,136,395 3,040,477 3,046,175 2,486, AMOUNTS OWED TO CUSTOMERS 13,666,225 13,213,185 13,933,214 13,864,982 (1.9) (1.4) 30 -SECURITIES IN ISSUE 11,435,151 10,204,583 9,535,038 8,880, FINANCIAL LIABILITIES FROM TRADING 119, , , , (27.6) 50 -FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE 1,274,255 1,280,250 1,329,998 1,087,772 (4.2) HEDGING DERIVATIVES 630, , , , TAX LIABILITIES 245, , , , (a) current 29,742 27,151 12,664 25, (b) deferred 215, , , , LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE ,761 (100.0) 100 -OTHER LIABILITIES 841, , ,031 1,102, (23.7) 110 -STAFF TERMINATION INDEMNITY 62,609 62,773 64,266 65,434 (2.6) (4.3) 120 -PROVISIONS FOR RISKS AND CHARGES: 294, , , ,660 (0.6) (2.1) a) pensions and similar obligations 271, , , ,613 (0.1) (1.7) b) other provisions 22,567 23,170 24,029 24,047 (6.1) (6.2) 130 -VALUATION RESERVES 468, , , , CAPITAL INSTRUMENTS 15,768 15,773 15,784 15,785 (0.1) (0.1) 160 -RESERVES 429, , , , ADDITIONAL PAID-IN CAPITAL 1,013,280 1,013,279 1,013,164 1,012, CAPITAL 1,790,391 1,790,391 1,790,309 1,790, OWN SHARES (-) (5,977) (100.0) 200 -PROFIT (LOSS) FOR THE PERIOD 83,666 28, ,601 93,008 (53.7) (10.0) TOTAL LIABILITIES 35,507,224 33,634,516 33,491,277 32,446, Figures as at 30/06/2010 have been restated in order to highlight income items of the Custodian Bank business unit which has been disposed of in

72 INCOME STATEMENT (figures in thousands of euro) Change % 30/06/11 31/03/ /12/ /06/ /11 06/ INTEREST INCOME AND SIMILAR REVENUES 468, , , , INTEREST EXPENSES AND SIMILAR CHARGES (226,715) (100,512) (368,191) (176,809) NET INTEREST INCOME 241, , , , COMMISSION INCOME 137,594 70, , , COMMISSION EXPENSES (15,050) (7,031) (33,017) (14,470) NET COMMISSIONS 122,544 63, , , DIVIDENDS AND OTHER SIMILAR REVENUES 47, ,664 58,503 (19.2) 80 - NET INCOME FROM TRADING ACTIVITIES 16,124 3,868 (8,802) (5,761) 90 - NET INCOME FROM HEDGING ACTIVITIES (3) (1,039) 452 (298) (99.0) PROFIT (LOSS) ON DISPOSAL OR REPURCHASE OF: 2, ,244 11,673 (82.4) a) loans (435) (1,529) (71.6) b) available-for-sale financial assets 3,468 (13) 18,119 12,150 (71.5) d) financial liabilities (982) ,350 1, NET VALUE ADJUSTMENT ON FINANCIAL ASSETS AND LIABILITIES DESIGNATED AT FAIR VALUE (949) (1,600) 2,752 1, GROSS OPERATING INCOME 428, , , , NET VALUE ADJUSTMENTS DUE TO IMPAIRMENT OF: (50,561) (25,308) (95,532) (46,599) 8.5 a) loans (46,341) (24,059) (95,026) (46,583) (0.5) b) available-for-sale financial assets (2,370) - (101) (69) d) other financial assets (1,850) (1,249) (405) NET INCOME FROM FINANCIAL MANAGEMENT 378, , , , ADMINISTRATIVE COSTS: (280,255) (138,283) (531,939) (262,676) 6.7 a) staff costs (170,275) (79,233) (320,125) (156,671) 8.7 b) other administrative costs (109,980) (59,050) (211,814) (106,005) NET PROVISIONS FOR RISKS AND CHARGES (694) (197) (1,885) (649) DEPRECIATION OF TANGIBLE ASSETS (8,734) (4,260) (17,178) (8,160) AMORTIZATION OF INTANGIBLE ASSETS (13,217) (6,444) (23,899) (11,099) OTHER OPERATING EXPENSES AND REVENUES 42,062 27,409 72,109 36, OPERATING COSTS (260,838) (121,775) (502,792) (246,111) PROFIT (LOSS) FROM EQUITY INVESTMENTS (29) - (83) (8) PROFIT (LOSS) FROM DISPOSAL OF INVESTMENTS 3-3 (8) 250 -OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES BEFORE TAXES 117,342 42, , ,915 (3.8) INCOME TAXES FOR THE PERIOD (33,676) (14,280) (66,074) (30,013) OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER TAXES 83,666 28, ,776 91,902 (9.0) PROFIT (LOSS) OF GROUPS OF OPERATIONS BEING DISCONTINUED AFTER TAXES ,825 1,106 (100.0) 290 -PROFIT (LOSS) FOR THE PERIOD 83,666 28, ,601 93,008 (10.0) Figures as at 30/06/2010 have been restated in order to highlight income items of the Custodian Bank business unit which has been disposed of in

73 INCOME STATEMENT - QUARTERLY RESULTS (figures in thousands of euro) 30/06/11 30/06/10 CHANGE 2nd quarter nd quarter 2010 CHANGE 1st quarter INTEREST INCOME AND SIMILAR REVENUES 468, ,474 59, , ,455 35, , INTEREST EXPENSES AND SIMILAR CHARGES -226, ,809-49, ,203-87,235-38, , NET INTEREST INCOME 241, ,665 10, , ,220-3, , COMMISSION INCOME 137, ,382 6,212 67,392 65,874 1,518 70, COMMISSION EXPENSES -15,050-14, ,019-7, , NET COMMISSIONS 122, ,912 5,632 59,373 58,061 1,312 63, DIVIDENDS AND OTHER SIMILAR REVENUES 47,274 58,503-11,229 47,262 58,488-11, NET INCOME FROM TRADING ACTIVITIES 16,124-5,761 21,885 12,256-9,838 22,094 3, NET INCOME FROM HEDGING ACTIVITIES , ,597-1, PROFIT (LOSS) ON DISPOSAL OR REPURCHASE OF: 2,051 11,673-9,622 1,697 8,232-6, a) loans ,529 1, ,747 1, b) available-for-sale financial assets 3,468 12,150-8,682 3,481 11,305-7, d) financial liabilities ,052-2,034-1,296-1, NET VALUE ADJUSTMENT ON FINANCIAL ASSETS AND LIABILITIES D ,947-2, , GROSS OPERATING INCOME 428, ,641 14, , ,428 4, , NET VALUE ADJUSTMENTS DUE TO IMPAIRMENT OF: -50,561-46,599-3,962-25,253-24, ,308 a) loans -46,341-46, ,282-23,927 1,645-24,059 b) available-for-sale financial assets -2, ,301-2, ,265 - d) other financial assets -1, , , NET INCOME FROM FINANCIAL MANAGEMENT 378, ,042 10, , ,798 3, , ADMINISTRATIVE COSTS: -280, ,676-17, , ,413-6, ,283 a) staff costs -170, ,671-13,604-91,042-82,027-9,015-79,233 b) other administrative costs -109, ,005-3,975-50,930-53,386 2,456-59, NET PROVISIONS FOR RISKS AND CHARGES DEPRECIATION OF TANGIBLE ASSETS -8,734-8, ,474-4, , AMORTIZATION OF INTANGIBLE ASSETS -13,217-11,099-2,118-6,773-5,710-1,063-6, OTHER OPERATING EXPENSES AND REVENUES 42,062 36,473 5,589 14,653 20,341-5,688 27, OPERATING COSTS -260, ,111-14, , ,500-13, , PROFIT (LOSS) FROM EQUITY INVESTMENTS PROFIT (LOSS) FROM DISPOSAL OF INVESTMENTS OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES B 117, ,915-4,573 74,546 84,281-9,735 42, INCOME TAXES FOR THE PERIOD -33,676-30,013-3,663-19,396-13,876-5,520-14, OPERATING PROFIT (LOSS) FROM ORDINARY ACTIVITIES A 83,666 91,902-8,236 55,150 70,405-15,255 28, PROFIT (LOSS) FROM DISCONTINUED OPERATIONS AFTER TAXES - 1,106-1, PROFIT (LOSS) FOR THE PERIOD 83,666 93,008-9,342 55,150 70,996-15,846 28,516 Figures as at 30/06/2010 have been restated in order to highlight in Item 280 income items of the Custodian Bank business unit which has been disposed of. 73

74 STATEMENT OF COMPREHENSIVE INCOME 30/06/11 31/03/11 31/12/10 30/06/10 Change 06/11-06/10 absolute % 10 PROFIT (LOSS) FOR THE PERIOD 83,666 28, ,601 93,008 (9,342) (10.0) Other income components after taxes 20 Available-for-sale financial assets 14,005 67,482 (145,638) (120,581) 134, Cash flow hedge 13,014 21,534 (19,066) (48,338) 61, Total other income components after taxes 27,019 89,016 (164,704) (168,919) 195, TOTAL PROFITABILITY (Item ) 110, ,532 15,897 (75,911) 186,596 Figures in thousands of euro 74

75 STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (figures in thousands of euro) Balance as at 31/12/2010 Change in opening balances Balance as at 01/01/2011 Allocation of profits/losses for the previous year Reserves Dividends and other allocations Capital: 1,790,309-1,790, ,790,391 a) ordinary shares 1,615,999-1,615, ,616,081 b) other shares 174, , ,310 Additional paid-in capital 1,013,164-1,013, ,013,280 Reserves: 377, ,877 51, ,665 a) profits 347, ,371 51, ,159 b) other 30,506-30, ,506 Valuation reserves: 435, , , , ,849 Capital instruments 15,784-15, (16) ,768 Own shares Profit (Loss) for the period 180, ,601 (51,788) (128,813) ,666 83,666 Shareholders' equity 3,813,228-3,813,228 - (128,813) 6, (16) ,685 3,801,619 Changes in reserves New shares issued Own shares purchased Changes in the period Transactions on shareholders equity Extraordinary distribution of dividends Changes in capital instruments Own shares derivatives Stock options Comprehensive income for the period as at 30/06/2010 Shareholders equity as at 30/06/

76 STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (figures in thousands of euro) Balance as at 31/12/2009 Change in opening balances Balance as at 01/01/2010 Allocation of profits/losses for the previous year Reserves Dividends and other allocations Capital: 1,790,300-1,790, ,790,309 a) ordinary shares 1,615,990-1,615, ,615,999 b) other shares 174, , ,310 Additional paid-in capital 1,012,742-1,012, ,013,163 Reserves: 323, ,298 54, ,877 a) profits 292, ,978 54, ,371 b) other 30,320-30, ,506 Valuation reserves: 600, , (782) (164,704) 435,492 Capital instruments 1,178-1, , ,784 Own shares Profit (Loss) for the period 201, ,103 (54,393) (146,710) , ,601 Shareholders' equity 3,929,600-3,929,600 - (146,710) (596) , ,897 3,813,226 Changes in reserves New shares issued Own shares purchased Changes in the period Transactions on shareholders equity Extraordinary distribution of dividends Changes in capital instruments Own shares derivatives Stock options Comprehensive income for the period as at 31/12/2010 Shareholders equity as at 31/12/

77 STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY (figures in thousands of euro) Balance as at 31/12/2009 Change in opening balances Balance as at 01/01/2010 Allocation of profits/losses for the previous year Reserves Dividends and other allocations Capital: 1,790,300-1,790, ,790,301 a) ordinary shares 1,615,990-1,615, ,615,991 b) other shares 174, , ,310 Additional paid-in capital 1,012,742-1,012, ,012,742 Reserves: 323, ,298 54, ,691 a) profits 292, ,978 54, ,371 b) other 30,320-30, ,320 Valuation reserves 600, , (168,919) 432,059 Capital instruments 1,178-1, , ,785 Own shares (5,977) (5,977) Profit (Loss) for the period 201, ,103 (54,393) (146,710) ,008 93,008 Shareholders' equity 3,929,600-3,929,600 - (146,710) - 1 (5,977) - 14, (75,911) 3,715,609 Figures in thousands of euro Changes in reserves New shares issued Own shares purchased Changes in the period Transactions on shareholders equity Extraordinary distribution of dividends Changes in capital instruments Own shares derivatives Stock options Comprehensive income for the period as at 30/06/2010 Shareholders equity as at 30/06/

78 CASH FLOW STATEMENT Direct method Amount A. OPERATING ACTIVITIES 30/06/11 31/03/11 31/12/10 30/06/10 1. Management 177,860 45, , ,879 - interest income received (+) 448, , , ,363 - interest expenses paid (-) (182,495) (95,176) (352,949) (169,189) - dividends and similar revenues (+) 5, ,847 6,335 - net commissions (+/-) 122,543 63, , ,213 - staff costs (-) (141,330) (67,510) (276,074) (136,123) - other costs (-) (149,325) (79,860) (336,149) (172,445) - other revenues (+) 98,510 46, , ,917 - taxes and duties (-) (23,639) (544) (94,265) (50,054) - costs/revenues from discontinued group assets and net of tax effect - - 2, Liquidity generated/absorbed by financial assets (2,284,861) (375,026) (3,001,642) (2,329,144) - financial assets held for trading 93,680 70, ,010 91,505 - available-for-sale financial assets (542,271) (405,426) (1,205,770) (891,930) - loans to customers (1,161,031) 279,380 (1,941,866) (940,571) - loans to banks: at sight (126,530) (35,749) (629,681) (1,191) - loans to banks: other loans (406,270) (394,732) 440,186 (222,790) - other assets (142,439) 111,386 (15,521) (364,167) 3. Liquidity generated/absorbed by financial liabilities 2,201, ,068 3,028,237 2,433,431 - amounts owed to banks: at sight 117,007 27,859 (73,370) 3,109,576 - amounts owed to banks: other amounts (29,457) (33,889) 2,143,195 (1,727,482) - amounts owed to customers 78,614 (370,731) 492, ,544 - securities in issue 1,844, ,239 6,768 (497,588) - financial liabilities from trading 6,753 (7,857) (35,087) 37,214 - financial liabilities designated at fair value (48,346) (30,965) 711, ,697 - other liabilities 232, ,412 (217,510) 324,470 Net liquidity generated/absorbed by operating activities 94,319 (14,608) 281, ,166 B. INVESTING ACTIVITIES 1. Liquidity generated by 42,172-74,576 52,168 - dividends received on equity investments 42,169-55,072 52,168 - tangible asset disposals intangible asset disposals business unit disposals , Liquidity absorbed by (32,238) (19,968) (212,314) (138,005) - equity investment acquisitions (9,000) (9,000) (55,040) (14,398) - tangible asset acquisitions (10,004) (4,347) (29,995) (7,491) - intangible asset acquisitions (13,234) (6,621) (25,200) (10,306) - business unit acquisitions - - (102,079) (105,810) Net liquidity generated/absorbed by investing activities 9,934 (19,968) (137,738) (85,837) C. FUNDING ACTIVITIES - own share issues/acquisitions (5,977) - additional paid-in capital capital instrument issues/acquisitions ,606 14,607 - dividend distribution and others (128,813) - (146,710) (146,710) Net liquidity generated/absorbed by funding activities (128,813) - (132,104) (138,080) NET LIQUIDITY GENERATED/ABSORBED DURING THE PERIOD (24,560) (34,576) 11,361 (8,751) - KEY: (+) generated, (-) absorbed RECONCILIATION Amount Balance sheet items 30/06/11 31/03/11 31/12/10 30/06/10 Cash and cash equivalents at the beginning of the period 252, , , ,490 Total net liquidity generated/absorbed during the period (24,560) (34,576) 11,361 (8,751) Cash and cash equivalents at period end 228, , , ,739 Figures in thousands of euro Figures as at 30/06/2010 have been restated in order to highlight income items of the Custodian Bank business unit which has been disposed of in

79 2. Intermediation activities It should be pointed out that, effective from 2006 (Law 262/2005, Provisions for the protection of savings and regulation of financial markets), the Carige Group introduced an organisational change which reserves the role of bond issuer for the Parent Bank, and entrusts the activity of placement to all Group Banks; subsequently, to avoid problems connected with maturity transformation, Carige s Board of Directors resolved the hedging of the medium/long-term financial requirements of subsidiary banks through the subscription of bonds issued by the subsidiary. For the Parent Bank, said operations determined a recomposition of FIA in favour of direct deposits and an increase in the volume of the securities portfolio. Moreover, for the purposes of comparison, in 2010 the implementation process of the business plan of Banca Cesare Ponti was started, which led to the merger by take-over of the subsidiary into Banca Carige on 31 December On 1 January 2011, Carige transferred a business unit constituted by the trademark and by the private banking activities of the incorporated Banca Cesare Ponti, and by the activities relating to the private customers of Banca Carige in Lombardy, as an increase in kind of the share capital of Nuova Banca Cesare Ponti, which changed its name to Banca Cesare Ponti SpA on the same date. As a result of these transactions, the changes to intermediation items were not homogeneous during the half. Total Financial intermediation activities on behalf of customers (FIA) direct and indirect deposits amounted to euro 46,471.2 million, up 0.2% in the half and 7.3% over twelve months; net of the transfer of Banca Cesare Ponti in December 2010 the change in the half comes to 4.7%. Direct deposits came to euro 26,375.6 million, up 6.4% in six months (+8.4% net of the contribution of Banca Cesare Ponti in December) and 10.7% in twelve months. Indirect deposits came to euro 20,095.6 million, down 7% from the start of the year (+0.2% net of the transfer of Banca Cesare Ponti) and up 3.1% over twelve months; 42% relates to assets under management and 58% to assets in custody. FINANCIAL INTERMEDIATION ACTIVITIES (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Total (A+B) 46,471,213 44,917,470 46,399,373 43,317, Direct deposits (A) 26,375,631 24,698,018 24,798,250 23,832, % on Total 56.8% 55.0% 53.4% 55.0% Indirect deposits (B) 20,095,582 20,219,452 21,601,123 19,484, % on Total 43.2% 45.0% 46.6% 45.0% - Assets under management 8,443,457 8,544,490 9,149,946 8,357, % on Total 18.2% 19.0% 19.7% 19.3% % on Indirect deposits 42.0% 42.3% 42.4% 42.9% - Assets in custody 11,652,125 11,674,962 12,451,177 11,127, % on Total 25.1% 26.0% 26.8% 25.7% % on Indirect deposits 58.0% 57.7% 57.6% 57.1% Total funding, which includes direct deposits from customers (euro 26,375.6 million) and banks (euro 3,136.4 million), amounted to euro 29,512 million, up by 6% since December 2010 and 12.1% since the start of the year. Direct deposits increased by 6.4% since December and by 10.7% from the start of the year. The short-term component (51.2% of total) amounted to euro 13,500.4 million, down by 1.9% in the half and 1.5% in twelve months. Medium/long-term deposits, equal to euro 12,875.2 million, rose by 16.6% during the half and by 27.1% during the year, accounting for 48.8% of the total (44.5% as at December and 42.5% as at June 2010). Within direct deposits, amounts owed to customers totalled euro 13,666.2 million (-1.9% and -1.4% in six and twelve months respectively). Securities in issue 79

80 were represented almost entirely by bonds (+20.3% in six months and +29.7% in the year), equalling a total of euro 11,435.2 million (+19.9% and +28.8% in six and twelve months respectively). Liabilities measured at fair value (euro 1,274.3 million) decreased by 4.2% in the half but increased by 17.1% in the twelve-month period; they are mostly made up of step up bonds which, for hedging reasons, were classified at fair value, and partially by structured bonds placed through Poste Italiane. Amounts owed to banks (euro 3,136.4 million) increased by 3% in the half, and 26.1% over the twelve months. The increase is mainly due to borrowing repurchase agreements and amounts owed to Central Banks. FUNDING (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Total (A+B) 29,512,026 27,738,495 27,844,425 26,319, Direct deposits (A) 26,375,631 24,698,018 24,798,250 23,832, Amounts owed to customers 13,666,225 13,213,185 13,933,214 13,864, current accounts and free deposits 11,018,288 11,387,708 12,343,849 12,183, repurchase agreements 2,293,959 1,467,857 1,212,675 1,273, term deposits 4,839 5,527 6,270 6, loans 2,162 1,770 2,972 1, funds managed on behalf of third parties other deposits 346, , , , Securities in issue 11,435,151 10,204,583 9,535,038 8,880, bonds 11,345,470 10,107,318 9,428,850 8,747, other securities 89,681 97, , , Liabilities at fair value 1,274,255 1,280,250 1,329,998 1,087, bonds 1,274,255 1,280,250 1,329,998 1,087, short term 13,500,413 13,041,690 13,757,007 13,702, % on Total medium-long term 12,875,218 11,656,328 11,041,243 10,130, % on Total Amounts owed to banks (B) 3,136,395 3,040,477 3,046,175 2,486, Deposits of central banks 700, , ,789 98, Current accounts and free deposits 135, , ,218 32, Term deposits 191, ,198 76, , Repurchase agreements 1,751,663 1,779,194 1,674,212 1,200, Loans 357, , , , Indirect deposits amounted to euro 20,095.6 million, a decrease in six months (- 7%; +0.2% excluding Banca Cesare Ponti), but an increase of 3.1% in the twelve-month period. Assets under management amount to euro 8,443.5 million, down from December 2010 (- 7.7%; -3.1% excluding Banca Cesare Ponti) but up slightly from June 2010 (+1%); the component in custody, amounting to euro 11,652.1 million, decreased from December 2010 (-6.4%; +2.7% excluding Banca Cesare Ponti) and increased from June 2010 (+4.7%). With reference to assets under management, mutual funds amounted to euro 4,232.9 million (-10.3% in the six-month period; -5.4% excluding Banca Cesare Ponti; - 2.2% in the twelve-month period), asset management amounted to euro million (- 33.8% in the six-month period, -10.2% excluding Banca Cesare Ponti; down 16.7% in the twelve-month period), and bankassurance products amounted to euro 3,763.7 million (+0.2% in the six-month period, +0.6% excluding Banca Cesare Ponti; +7.7% in the twelve-month period). As regards assets in custody, Government bonds increased by 1.3% in six months (up 8.6% excluding the contribution from BCP) to euro 4,211.3 million and 15.4% YoY; other securities (shares, bonds, etc.) came to euro 7,440.9 million, a decrease over the end of the year (- 10.3%, -0.4% excluding BCP) while they were essentially stable with respect to June 2010 (- 0.5%). 80

81 INDIRECT DEPOSITS (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Total (A+B) 20,095,582 20,219,452 21,601,123 19,484, Assets under management (A) 8,443,457 8,544,490 9,149,946 8,357, Mutual funds 4,232,907 4,305,257 4,718,406 4,327, Assets management 446, , , , Bancassurance products 3,763,667 3,773,643 3,756,820 3,493, Assets in custody (B) 11,652,125 11,674,962 12,451,177 11,127, Government securities 4,211,257 4,132,697 4,158,961 3,650, Other 7,440,868 7,542,265 8,292,216 7,477, Cash loans to customers, net of value adjustments of euro million, amounted to euro 22,315.1 million, up by 4.8% on December and 11.1% in the twelve-month period. This figure does not include debt securities classified as L&R. Before adjustments, the total came to euro 22,928 million, marking an increase of 4.9% in six months (up 6.1% excluding the transfer of BCP) but up 11.3% in twelve months. The aggregate amounted to euro 21,524.6 million, up by 3% in the half and 6.8% in the twelve-month period (net of repurchase agreement transactions with financial businesses). The growth in credits confirms the traditional support both to businesses and to households, in whose favour the Bank has also undertaken significant steps aimed at overcoming the challenging economic situation. The positive trend is linked to the performance of loans; they came to euro 11,800.4 million (up 1% in the half and 7.4% in the year). The short-term component, equal to 28.1% of total, amounted to euro 6,437.7 million, up by 16.2% in six months and 32.3% in twelve months. The medium/long-term component amounted to euro 15,398.1 million (+0.4% since December and +3.5% in the twelve-month period), with 83.6% of it covered by medium/long-term deposits. Value adjustments have a hedging degree of 2.7%, up from 2.5% in June Personal loans, accounting for about 30% of the total, grew by 0.1% in the twelve-month period; loans to companies represent almost 60% of the total and, relative to June 2010, they grew by 8.7%. The annual increase is also due to the trend in repurchase agreements, which trebled over the twelve-month period. The trend in consumer credit credit cards, personal loans and salary backed loans felt the effects, as of 1 July 2008, of the placement activities of subsidiary Creditis Servizi Finanziari SpA; if we include loans granted by Creditis, consumer credit rises by 9.1% in the half and by 17.8% in twelve months. Bad loans amounted to euro 1,092.2 million (+10.6% since December and +25.9% in the twelve-month period), i.e. 4.8% of total loans, higher than the 4.5% of December and the 4.2% of June 2010, but still lower than the banking system ratio (5.7% in April 2011). Net of value adjustments of euro 0.9 million, Loans to banks amounted to euro 1,861.8 million, up by 33.8% in the half but down by 8.3% in the year. The net interbank position (difference between loans and amounts owed to banks before lending and borrowing repurchase agreements) showed a net debit balance of euro 2,164.3 million, compared to a net debit balance of euro 1,908.7 million in December and euro 1,580.5 million in June This trend was due to the growth in borrowing repurchase agreements and amounts owed to Central Banks; the liquidity position is adequate in any case, in consideration of the presence of suitable liquid reserves. 81

82 LOANS (1) (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Total (A+B) 24,176,899 22,670,395 22,687,388 21,809, Loans to customers (A) 22,315,066 20,916,070 21,296,375 20,090, nominal value (2) 22,927,991 21,503,178 21,861,238 20,605, current accounts 2,695,902 2,651,487 2,557,488 2,405, repurchase agreements 1,403, , , , mortgage loans 11,800,391 11,779,353 11,678,887 10,982, credit cards, personal loans and salary-backed loans 153, , , , leasing 810, , , , factoring 199, , , , other loans 3,756,813 3,722,350 3,604,192 3,745, impaired assets 2,107,949 1,946,057 1,863,172 1,844, short term 6,437,665 5,117,530 5,537,877 4,864, % on nominal value medium/long term 15,398,119 15,321,085 15,335,925 14,874, % on nominal value Bad loans 1,092,207 1,064, , , % on nominal value Value adjustments (-) 612, , , , Loans to banks (B) 1,861,833 1,754,325 1,391,013 1,718, nominal value (2) 1,862,700 1,755,200 1,391,888 1,719, compulsory reserves 109, , , , other loans to central banks current accounts and free deposits 332, , , , term deposits 323, , , , repurchase agreements 432, ,181 47, , loans 647, , , , impaired assets 16,407 16,280 16,159 15, short term 1,798,197 1,689,769 1,326,602 1,675, % on nominal value medium/long term 64,503 65,431 65,286 43, % on nominal value Bad loans % on nominal value Value adjustments (-) (1) Net of debt securities classified as L&R. (2) Before value adjustments. Non-performing loans amount to euro 2,143.7 million, up by 13% since December and by 14.1% in the twelve-month period. A total of 99.2% of these relate to ordinary customers; the corresponding value adjustments stand at euro million (+9.9% and +20.9% in six and twelve months respectively). Impaired loans were written down by 26.8%. Impaired cash loans to customers equalled euro 2,107.9 million (+13.1% from December and +14.3% from June 2010). Impaired endorsement loans equalled euro 19.4 million (+7.3% in the six-month period and +3.3% in the twelve-month period). As regards cash loans to customers, the following should be highlighted: Bad loans totalled euro 1,092.2 million, up by 10.6% during the half, and by 25.9% in the year; they were written down by 45.4% (45.7% in December and 46.7% in June 2010). The bad loans/loans ratio, with reference to customers, is equal to 4.8%. Watchlist loans amounted to euro million, up by 16.6% in the half and 32.3% in the twelve-month period. They were written down by 10.4%; Rescheduled loans amounted to euro million, up 17.8% in the six-month period and by 13.8% since June They comprise some significant positions with a high level of collateral and, to a lesser extent, renegotiated loans pursuant to Law 126/2008 with overdue payments in existence at the time of renegotiation. They were written down by 2%; Past due loans amounted to euro million, up by 13.9% since December 2010 and down by 29.3% from June They are almost entirely made up of mortgage loans, mostly represented by positions with instalments overdue by between 90 and 180 days which must be included in the aggregate by banks that use the standard method in calculating capital requirements. They were written down by 2%. 82

83 Impaired credit commitments amounted to euro 19.4 million, up by +7.3% in the sixmonth period and +3.3% in the twelve-month period; they were written down by 26.1% (26.6% in December and 25.4% in June 2010). Overall, value adjustments on cash and endorsement loans amounted to euro million, euro million of which refers to cash loans and euro 11.2 million of which refers to endorsement loans. 83

84 CREDIT QUALITY (1) (figures in thousands of euro) Gross exposure (a) Value adjustments (b) Net exposure (ab) % Gross exposure (a) Value adjustments (b) Net exposure (a-b) b/a b/a Cash loans Bad loans 1,092, , , ,064, , , customers 1,092, , , ,064, , , Watchlist loans 601,326 61, , ,475 53, , banks 16, , , , customers 584,919 60, , ,195 52, , Rescheduled loans 138,169 2, , ,241 2, , customers 138,169 2, , ,241 2, , Past due loans 292,654 5, , ,058 4, , customers 292,654 5, , ,058 4, , Total Impaired loans 2,124, ,990 1,558, ,962, ,240 1,423, Performing loans 22,666,335 47,802 22,618, ,296,041 48,743 21,247, banks 1,846,293-1,846,293-1,738,920-1,738, customers 20,820,042 47,802 20,772, ,557,121 48,743 19,508, Total cash loans 24,790, ,792 24,176, ,258, ,983 22,670, banks 1,862, ,861, ,755, ,754, customers 22,927, ,925 22,315, ,503, ,108 20,916, Endorsement loans Impaired 19,387 5,069 14, ,150 5,213 13, customers 19,387 5,069 14, ,150 5,213 13, Other loans 1,746,893 6,102 1,740, ,783,145 5,357 1,777, banks 48,153-48,153-49,452-49, customers 1,698,740 6,102 1,692, ,733,693 5,357 1,728, Total endorsement loans 1,766,280 11,171 1,755, ,802,295 10,570 1,791, banks 48,153-48,153-49,452-49, customers 1,718,127 11,171 1,706, ,752,843 10,570 1,742, Total 26,556, ,963 25,932, ,060, ,553 24,462, banks 1,910, ,909, ,804, ,803, customers 24,646, ,096 24,022, ,256, ,678 22,658, Gross exposure (a) Value adjustments (b) Net exposure (ab) % Gross exposure (a) Value adjustments (b) Net exposure (a-b) b/a b/a Cash loans Bad loans 987, , , , , , customers 987, , , , , , Watchlist loans 517,792 56, , ,007 53, , banks 16, , , , customers 501,633 55, , ,074 52, , Rescheduled loans 117,250 2, , ,370 2, , banks customers 117,250 2, , ,370 2, , Past due loans 256,853 5, , ,951 7, , banks customers 256,853 5, , ,951 7, , Total Impaired loans 1,879, ,762 1,364, ,860, ,717 1,393, Performing loans 21,373,795 50,976 21,322, ,464,576 48,391 20,416, banks 1,375,729-1,375,729-1,703,502-1,703, customers 19,998,066 50,976 19,947, ,761,074 48,391 18,712, Total cash loans 23,253, ,738 22,687, ,325, ,108 21,809, banks 1,391, ,391, ,719, ,718, customers 21,861, ,863 21,296, ,605, ,234 20,090, Endorsement loans Impaired 18,072 4,807 13, ,763 4,758 14, customers 18,072 4,807 13, ,763 4,758 14, Other loans 1,808,220 4,515 1,803, ,616,918 3,986 1,612, banks 47,340-47,340-51,624-51, customers 1,760,880 4,515 1,756, ,565,294 3,986 1,561, Total endorsement loans 1,826,292 9,322 1,816, ,635,681 8,744 1,626, banks 47,340-47,340-51,624-51, customers 1,778,952 9,322 1,769, ,584,057 8,744 1,575, Total 25,079, ,060 24,504, ,960, ,852 23,436, banks 1,439, ,438, ,771, ,770, customers 23,640, ,185 23,066, ,189, ,978 21,665, (1) Net of debt securities classified as L&R. 30/06/11 31/03/11 31/12/ /06/2010 % % The securities portfolio amounts to euro 6,796 million, up 7.1% since December and 14.6% in the twelve-month period and it is made up for about 83.1% by debt securities, 84

85 which increased by 7.9% since December and by 17.2% in the twelve-month period. Equities rose by 2.4% since December and 1.8% in twelve months; shares in UCITS grew by 13% in the six-month period and 16% in the twelvemonth period. Equities available for sale included the equity investment of 3.96% in the Bank of Italy, accounted for at euro million; this figure results from a valuation at fair value - using shareholders equity as the most reliable proxy of fair value performed on the basis of the balance sheet data of the Bank of Italy as at 31 December 2010 (last approved financial statements), consistent with the accounting principle adopted for the preparation of the financial statements of the Bank and of the consolidated financial statements of the Banca Carige Group as at 31 December The effects of this valuation at fair value are sterilised by a valuation reserve of the same amount, net of differed taxes. With regard to the breakdown prescribed by the international accounting standards IAS/IFRS, securities Available for Sale, or AFS (euro 5,399.8 million), which account for 79.5%, increased both in the last half (+11.3%), and relative to June 2010 (+20.6%) for investments made mostly in Government bonds; securities Held for Trading, or HFT, amounting to euro million, account for 2.8% and decreased respectively by 37.4% and by 61.6% in the last half and in the year. Assets deriving from Loans and Receivables (L&R) amount to euro 1,208.7 million and grew by 1.2% in the last half (+25% in the year) and they mostly comprise subsidiary banks bonds. SECURITIES PORTFOLIO (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Debt securities 5,646,034 5,476,934 5,232,030 4,815, Held for trading 172, , , , Available for sale 4,265,167 4,042,586 3,739,364 3,366, Loans & Receivable 1,208,702 1,223,466 1,193, , Held to maturity Equities 1,036,719 1,020,448 1,012,779 1,017, Held for trading Available for sale 1,036,571 1,020,303 1,012,332 1,017, Shares in collective investment schemes 113, , ,216 97, Held for trading 15,151 15, ,630 Available for sale 98,085 98, ,132 91, Total (1) 6,795,989 6,611,004 6,345,025 5,931, of which: Held for trading 187, , , , Available for sale 5,399,823 5,161,459 4,851,828 4,476, Loans & Receivable 1,208,702 1,223,466 1,193, , (1) Balance sheet items 20 (net of derivatives), 30, 40, 60 (only for the part relative to L&Rs) and 70 (only for the part relative to L&Rs) are included in the aggregate. The amendments made to international accounting standards IAS 39 and IFRS 7 in October and November 2008 allowed for new types of reclassifications, with the possibility of retroactive effectiveness to 1 July 2008 if carried out before 31 October Pursuant to said amendments, Banca Carige reclassified securities, effective 1 July and 1 October 2008, for a total residual amount of euro million as at 31 June 2010, as detailed in the table below: TRANSFERS BETWEEN PORTFOLIOS: BOOK VALUE, FAIR VALUE AND IMPACT ON THE TOTAL PROFITABILITY (figures in thousands of euro) Type of financial instrument Origin portfolio Allocation portfolio Book value as at 30/06/2011 Fair Value as at 30/06/2011 Income components in the absence of the transfer (before taxes) Income components recorded for the period (before taxes) Valuation-related Others Valuation-related Others Debt securities HFT AFS 48,063 48, ,295 (363) 561 Equities HFT AFS 5,674 5,674 (735) 952 (545) 424 UCIT units HFT AFS 54,916 54,916 (3,401) - (2,763) 15 Debt securities HFT HTM (1) Debt securities HFT L&R 105,398 94,844 1, Debt securities AFS L&R 32,808 30,637 (1,693) Total 247, ,336 (3,950) 3,690 (3,670) 2,119 (1) An information disclosure has been provided for securities which, after being previously classified from HFT to HTM, have been reclassified from the latter to AFS following the application of forecasts set forth in paragraph 52 of IAS 39 in financial statements as at 31/12/

86 If the Bank had not reclassified the financial assets detailed above, the half would have recorded negative income components of euro 3.95 million instead of a negative euro 3.67 million. The portfolio of debt securities reclassified in the AFS (Available For Sale, HTM (Held To Maturity) and L&R (Loans & Receivables) for a nominal value of euro 191 million has an effective interest rate of 3.3% with expected cash flows estimated at euro 267 million. As at 30 June 2011, valuation reserves related to securities classified in the AFS (Available For Sale) category amounted to euro million (an increase of euro 20.3 million compared with the positive balance of euro million at 31 December 2010) and were made up by euro million of positive reserves, relating mainly to the valuation of the equity investment in the Bank of Italy (euro million), and by euro million of negative reserves. The latter refer to debt securities (euro million), composed almost entirely of Government, bank and corporate bonds with high credit ratings, and to equities of leading banking and insurance issuers and shares in collective investment schemes (euro million). The fair value hierarchy comprises the following levels: (1) Listed prices (not adjusted) on the active market for recognised assets or liabilities (Level 1); (2) Input data that does not include the listed prices of Level 1 that can be observed for the assets or the liabilities, both directly (as in the case of the prices) and indirectly (i.e. derived from the prices) (Level 2); and (3) Input data related to assets or liabilities that are not based on observable market data (non-observable data) (Level 3). The percentage of level 3 instruments stood at 1.6% of total instruments valued at fair value (1.9% as at 31 December 2010) net of the equity investment in the Bank of Italy. The following table shows the breakdown according to fair value levels of Banca Carige s accounting portfolios: FAIR VALUE HIERARCHY: CASH PORTFOLIOS, DIVISION BY LEVEL OF FAIR VALUE (figures in thousands of euro) 30/06/11 31/12/10 Financial assets/liabilities measured at fair value L1 L2 L3 L1 L2 L3 1. Financial assets held for trading 133, , , , Financial assets designated at fair value 3. Available-for-sale financial assets 4,348, , ,140 3,352, , , Hedging derivatives - 81, ,708 - Total 4,482, , ,166 3,498, , , Financial assets held for trading 2, ,061-7,736 99, Financial liabilities designated at fair value 1,274, ,329, Hedging derivatives - 630, ,539 - Total 1,276, ,277-1,337, ,054 - Key: L1 = Level 1; L2 = Level 2 L3 = Level 3 The notional value of derivative contracts is equal to euro 13,709.5 million, up by 7% in the half and 15.4% in the twelve-month period. Financial derivatives, which represent 96.2% of the total, increased by 4% in the half, to euro 13,195.2 million (+12.5% in twelve months), credit derivatives increased to euro million (euro million in December and euro million in June 2010). 86

87 NOTIONAL VALUES OF DERIVATIVE CONTRACTS (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Financial derivatives 13,195,177 13,147,162 12,683,327 11,733, futures forward agreements (1) 524, , , , swap 10,973,292 10,921,684 10,442,803 9,511, options purchased 1,349,663 1,276,603 1,211,797 1,057, others 347, , , , Credit derivatives 514, , , ,799 cds 114, , , , others 400, , Total 13,709,515 13,661,740 12,813,887 11,883, (1) Sub-item "forward agreements" includes also the so-called "regular way" transactions. The value of hedging derivatives (assets and liabilities) stood at euro million (euro million in December and euro million in June 2010). Positive values amount to euro 81.7 million, while negative values amount to euro million. ASSETS FROM HEDGING DERIVATIVES BY HEDGE TYPE (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Asset hedging derivatives ,033 1, Fair value hedging ,033 1, interest rates ,033 1, Cash flow hedging General interest rate risk hedging Liability hedging derivatives 80,925 48,401 99, , Fair value hedging 63,508 34,030 87, , interest rates 63,508 34,030 87, , Cash flow hedging General interest rate risk hedging 17,417 14,371 12,531 4, Total 81,711 48, , , LIABILITIES FROM HEDGING DERIVATIVES BY HEDGE TYPE (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Asset hedging derivatives 517, , , , Fair value hedging 517, , , , interest rates 517, , , , Cash flow hedging General interest rate risk hedging Liability hedging derivatives 112, , , , Fair value hedging 27,695 35,835 27, interest rates 27,695 35,835 27, Cash flow hedging General interest rate risk hedging 84,967 71, , , Total 630, , , , The total positive and negative values of trading derivative contracts amounted to euro million, up from euro million in December and down compared to the euro million in June

88 TRADING DERIVATIVES (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 Positive countervalues 91,050 87,594 73, , Financial derivatives 88,681 86,101 71, , forward agreements 6,309 13,163 4,018 9, swap 72,519 59,086 53, , options purchased 9,853 13,852 13,388 10, Credit derivatives 2,369 1,493 2,404 3, cds 2,369 1,493 2,404 3, Negative countervalues 119, , , , Financial derivatives 114, , , , forward agreements 2,540 2,061 7,736 16, swap 102, ,528 83, , issued options 9,142 10,617 10,430 10, Credit derivatives 5,541 4,864 5,619 3, cds 5,444 4,383 5,619 3, others Total 210, , , , Net income on derivative contracts was euro 12.2 million including, as indicated in the following table, also the Exchange rate differences related to the valuation of foreign currency assets and liabilities (negative by euro 21.5 million). In fact, the Bank manages its overall exchange rate position with the aim to achieve a balance; the position includes not only assets and liabilities, but also forward agreements on currencies, included in financial Derivatives as per point 1.1 above. NET INCOME ON DERIVATIVE CONTRACTS AS AT 30/06/2011 (figures in thousands of euro) Revaluations Write-downs Net profit Net income on trading 1. Trading contracts 32,726-25,772 26,816 33, Financial derivatives 30,340-24,518 26,938 32, Credit derivatives 2,386-1, ,010 Revaluations Write-downs Changes in underlying Net income from hedging 2. Hedging contracts 21, , , Asset hedging 18, , , Liability hedging 3,036-34,151 32, Currency differences - 21,548 Total 54, , ,655 12,219 88

89 3. Economic results As at 30 June 2011, the income statement posted a net profit of euro 83.7 million against euro 93 million in 2010 (-10%). In particular, net interest income increased, mainly in relation to the positive performance of traded volumes, an improvement in the commission margin and profit from trading activities. On the other hand, lower dividends were registered, as well as lower income from the disposal and repurchase of financial assets and liabilities and higher value adjustments and operating costs. The income statement was drafted in acknowledgement of an increase in the Irap (regional business tax) rate from 4.82% to 5.57% (introduced with Decree no. 58 of 2011, converted to Law no. 111/2011 on 15 July) which involved higher tax expenses of roughly euro 2.9 million (euro 1.8 million relating to current taxes and euro 1.1 million relating to deferred taxes). The net interest income amounted to euro million, up by 4.3%. More specifically, interest income came to euro million, up by 14.7% due to the increase in interest on loans to customers and on available for sale financial assets; interest expense totalled euro million, up by 28.2%, due mainly to the rise in interest on securities issued by the Bank (+38.4% to euro million). INTEREST INCOME (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Financial assets held for trading 3,703 2,094 18,643 11,022-7, Available-for-sale financial assets 69,869 31, ,959 48,657 21, Loans to banks (1) 21,863 10,631 28,597 13,643 8, Loans to customers (1) (2) 370, , , ,476 35, Other assets 2, , ,894 Total interest income 468, , , ,474 59, (1) This item includes interest income on the L&R credit component. (2) Figures as at 30/06/2010 have been restated in order to show in Item 280 of the income statement income items of the Custodian Bank business unit which has been disposed of. INTEREST EXPENSES (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Amounts owed to banks 17,273 6,430 16,346 5,831 11,442 Amounts owed to customers (1) 41,104 18,923 84,474 45,052-3, Securities in issue 155,143 69, , ,127 43, Financial liabilities designated at fair value 10,132 5,094 16,089 5,475 4, Other liabilities Hedging derivatives 2, ,532 8,133-5, Total interest expenses 226, , , ,809 49, (1) Figures as at 30/06/2010 have been restated in order to show in Item 280 of the income statement income items of the Custodian Bank business unit which has been disposed of. Net commissions amounted to euro million, up by 4.8% over the first half of Commission income amounted to euro million, 4.7% higher than June 2010; a strong increase was recorded in commissions related to the holding of current accounts (euro 47.4 million, an increase of 18.9%), and payment and collection services (euro 26.7 million, up 6.5%). Commission expense amounted to euro 15.1 million, up by 4% due to the growth in commissions for payment and collection and other services. 89

90 COMMISSION INCOME (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Guarantees issued 7,071 4,078 14,165 5,460 1, Management, intermediation and consultancy services: 41,818 21,617 94,520 43,259-1, Financial instruments trading , Currency trading 1, ,859 1, Assets management 2,261 1,347 7,290 2, Securities custody and administration 1, ,664 1, Placement of securities 16,082 8,114 35,773 16, Collection of the orders 4,307 2,337 10,561 4, Consultancy services Distribution of third-party services 16,420 8,405 34,119 16, portfolio management , insurance products 7,826 4,109 16,937 8, other products 7,953 3,981 16,042 7, Collection and payment services 26,704 13,768 52,193 25,065 1, Servicing for securitizations 1, ,561 1, Factoring services 1, , Maintenance and management of the current accounts 47,447 23,255 85,383 39,914 7, Other services 12,052 6,334 31,309 15,618-3, Total commission income 137,594 70, , ,382 6, (1) Figures as at 30/06/2010 have been restated in order to show in Item 280 of the income statement income items of the Custodian Bank business unit which has been disposed of. COMMISSION EXPENSES (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Guarantees received Management and intermediation services 2,549 1,277 6,434 2, Financial instruments trading Portfolio management , Securities custody and administration , Financial instruments placement 1, ,714 1, Door-to-door sale of securities, financial products and services Collection and payment services 7,593 3,258 16,504 7, Other services 4,716 2,336 9,595 4, Total commission expenses 15,050 7,031 33,018 14, Dividends came to euro 47.3 million (down 19.2%). The net result from trading activities showed a positive balance of euro 16.1 million (versus a negative balance of euro 5.8 million last year). INCOME FROM TRADING ACTIVITIES (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Debt securities 1,980 1,111 (10,321) (5,654) 7,634 Equities & collective investment schemes (29) Total equities, debt securities & collective investment schemes 2,098 1,113 (10,220) (5,507) 7,605 Financial derivatives 32,760 19,952 (27,362) (53,597) 86,357 Credit derivatives 1, (1,872) 1,151 (141) Currency differences (21,548) (18,686) 28,253 (120) (21,428) Other financial assets/liabilities from trading 1, ,399 52,312 (50,508) Total income from trading activities 16,124 3,868 (8,802) (5,761) 21,885 Profit from the disposal of loans and financial assets/liabilities came to euro 2.1 million (euro 11.7 million as at 30 June 2010), due to the disposal of available for sale financial assets (up euro 3.5 million). Net income from financial assets/liabilities designated at fair value was a negative euro 0.9 million (positive euro 1.9 million as at June 2010). Gross operating income amounted to euro million, an increase of 3.4%. Net value adjustments due to impairment of loans and of other financial items totalled euro 50.6 million, up by 8.5% relative to June This item includes adjustments to loans of euro 46.3 million, down by 0.5%, and those on available for sale financial assets amounted to euro 2.4 million. Therefore, the net income from financial management amounted to euro million, up by 2.8% YoY. 90

91 NET ADJUSTMENTS TO LOANS AND OTHER FINANCIAL ITEMS (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Loans to banks (8) Loans to customers 46,349 24,059 95,023 46, Credit commitments (other financial transactions) 1,850 1, (53) 1,903 Available-for-sale financial assets 2, ,301 Total net value adjustments to loans and other financial items 50,561 25,309 95,531 46,599 3, Operating costs amounted to euro million, up by 6% compared to June In detail, administrative costs amounted to euro million, up by 6.7% over the twelvemonth period and these include: - Staff costs, increased by 8.7% to euro million; - Other administrative expenses amounted to euro million (+3.7%), general expenses were contained (-8.6%), while indirect taxes increased by 49.2% over the first half of 2010 due to the inclusion of substitute tax on leasing contracts, whose recovery from customers is shown under item 130 in Other income and expenses. Net provisions for risks and charges amounted to euro 694 thousand (euro 649 thousand in June 2010; +6.9%). Value adjustments on tangible and intangible fixed assets amounted to euro 22 million, increasing by 14% in the twelve-month period because of sizeable investments made, especially in information technology, to maintain high levels of profitability in the future. The cost/income ratio was 60.8%, up from 59.4% in June OPERATING COSTS (figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Staff costs (1) 170,275 79, , ,671 13, Other administrative costs 109,980 59, , ,005 3, general costs 76,206 36, ,378 83,370-7, indirect taxes(2) 33,774 22,344 45,436 22,635 11, Net provisions for risks and charges , Amortization and depreciation on: 21,951 10,704 41,077 19,259 2, intangible fixed assets 13,217 6,444 23,899 11,099 2, tangible fixed assets 8,734 4,260 17,178 8, Other operating expenses and revenues (42,062) (27,409) (72,109) (36,473) -5, Total operating costs 260, , , ,111 14, (1) Figures as at 30/06/2010 have been restated in order to show in Item 280 of the income statement income items of the Custodian Bank business unit which has been disposed of. (2) The Item includes the substitute tax due on existing leasing agreements set forth in L. 220/2010, the recovery of which from the customers has been recorded in Item 190 of the income statement "Other operating revenues/expenses ". Other net operating income increased by 15.3%, reaching euro 42.1 million as a result of the inclusion of euro 11.2 million pertaining to the recouped substitute tax from customers on lease agreements. 91

92 OTHER OPERATING REVENUES AND EXPENSES ((figures in thousands of euro) Change 06/11-06/10 30/06/11 31/03/ /06/10 absolute % Lease income and rent 2,650 1,395 5,269 2, Charges to third parties: 29,638 20,570 37,634 19,248 10, recovery of taxes (1) 29,611 20,556 37,577 19,218 10, customer insurance premiums Other revenues 15,775 7,591 39,331 18,355-2, Total other revenues 48,063 29,556 82,234 40,525 7, Operating costs on financial leases (522) (103) (509) (205) -317 Ordinary maintenance costs on investment property (848) (284) (572) (194) -654 Expenses for improvement of third parties assets (307) (153) (624) (317) Other expenses (4,324) (1,607) (8,419) (3,336) Total other expenses (6,001) (2,147) (10,124) (4,052) -1, Total revenues and expenses 42,062 27,409 72,110 36,473 5, (1) The Item includes the recoveries from the customers of the substitute tax due on existing leasing agreements set forth in L.220/2010, the cost of which is recorded in Item 150 b) "Other administrative costs - indirect taxes". Taking into consideration income tax provisions of euro 33.7 million, which were affected by the increase in the Irap rate from 4.82% to 5.57%, net profit amounts to euro 83.7 million, down by 10% compared to euro 93 million in the first half of Comprehensive income, which includes the income components booked directly to shareholders equity was a positive euro million, compared to a negative euro 75.9 million in June Item 20, Available for sale financial assets, includes the revaluation of the equity investment in the Bank of Italy (euro 21.2 million). 92

93 4. Transactions with related parties Asset and liability relations with shareholders who are able to exercise a significant influence, relations with investee companies (subsidiaries subject to considerable influence) and with other related parties (excluding the fees paid to Directors and Statutory Auditors, which are published annually in the Explanatory Notes to the Consolidated Financial Statements) are shown in the table below: RELATIONS WITH SHAREHOLDERS AND WITH INVESTEE COMPANIES (figures in thousands of euro) 30/06/11 Assets Liabilities Guarantees Dividends Other revenues Expense and commitments distributed CARIGE SHAREHOLDERS WHO EXERCISE A SIGNIFICANT INFLUENCE 92, ,290 45,773 66,781 7,558 14,699 Fondazione Cassa di Riparmio di Genova e Imperia 32, ,463-49, ,436 Caisses d'epargne Participations - Groupe BPCE (1) 59,948 87,827 45,773 16,944 7,289 9,263 30/06/11 Assets Liabilities Guarantees Dividends Other revenues Expense and commitments collected SUBSIDIARIES 2,088, ,457 27,585 38,241 69,438 16,329 Cassa di Risparmio di Carrara S.p.A. 456, , ,052 6,736 4,029 Cassa di Risparmio di Savona S.p.A. 604,572 82,060 2,240 10,249 8,337 4,427 Banca del Monte di Lucca SpA 403,029 41,763 4,191 2,024 6,279 1,265 Banca Cesare Ponti SpA 96,000 99, ,588 1,195 Carige Asset Management Sgr SpA 7,483 11,459-6,380 13, Centro Fiduciario SpA Argo Finance One Srl Argo Mortgage Srl Argo Mortgage 2 Srl Priamar Finance Srl Columbus Carige Immobiliare SpA 4, Carige Vita Nuova SpA 3, ,746-10,019 8,415 4,405 Carige Assicurazioni SpA 70,811 40,987 19,386-3, Assi 90 Srl 26 2, Dafne Immobiliare Srl IH Roma Srl - 1, Creditis Servizi Finanziari SpA 440,665 18,899 1,700 5,190 9, Carige Covered Bond Srl ENTITIES SUBJECT TO SIGNIFICANT INFLUENCE 9, Autostrada dei Fiori SpA 9, Sport e Sicurezza Srl WTC SPA in liq Nuova Erzelli Srl Total 2,097, ,089 27,864 39,238 69,473 16,399 (1) Items "Other revenues" and "Expenses" include also evaluation items relative to hedging and offset trading derivatives. TRANSACTIONS WITH OTHER RELATED PARTIES (figures in thousands of euro) Assets Liabilities Guarantee s and commitme Revenues Expense Purchase of goods and services Other related parties 20,002 8,785 1, TOTAL 20,002 8,785 1, For the definition of other related parties, please refer to the paragraph "Transactions with related parties in the Explanatory Notes to the Condensed Consolidated Half-yearly Financial Statements. 93

94 5. Regulatory capital REGULATORY CAPITAL AND SOLVENCY RATIOS (figures in thousands of euro) Situation as at 30/06/11 31/03/11 31/12/10 30/06/10 (2) Regulatory capital Core Tier 1 Capital (1) 1,492,624 1,464,226 1,421,675 1,790,301 Tier 1 capital 1,652,524 1,624,126 1,581,575 1,593,614 Tier 2 capital 887, , , ,213 minus: deductions -340, , , ,214 Total capital 2,199,150 2,172,207 2,127,622 2,047,613 Tier 3 capital Tier 3 calculable portion Regulatory capital including Tier 3 2,199,150 2,172,207 2,127,622 2,047,613 Weighted assets Credit risk 17,827,470 17,685,598 17,474,351 16,108,763 Market risk 259, , , ,488 Operational risk 1,581,444 1,581,444 1,581,444 1,554,387 Other prudential requirements Total weighted assets 19,668,141 19,552,389 19,342,954 17,990,637 Capital requirements Credit risk 1,426,198 1,414,848 1,397,948 1,288,701 Market risk 20,738 22,828 22,973 26,199 Operational risk 126, , , ,351 Other prudential requirements Capital reduction by 25% 393, , , ,813 Total requirements 1,180,088 1,173,143 1,160,577 1,079,438 Surplus capital 1,019, , , ,175 Solvency ratios (%) Tier 1 capital/credit risk weighted assets 9.3% 9.2% 9.1% 9.9% Regulatory capital/credit risk weighted assets 12.3% 12.3% 12.2% 12.7% Core Tier 1/Total Risk-Weighted Assets (1) 10.1% 10.0% 9.8% 10.6% Tier 1 capital/ 75% Total weighted assets 11.2% 11.1% 10.9% 11.8% Regulatory capital including Tier 3 capital/ 75% Total weighted assets 14.9% 14.8% 14.7% 15.2% (1) It includes savings shares following the changes to the articles of association approved during the Shareholders' Meeting on 29/4/2011 aimed at reaching the requirements for inclusion in Core Tier 1. (2) Figures as at 30/06/2011 result from accounting and management estimates pending the official figures ("Y" information form). 94

95 BANK SUBSIDIARIES It should be noted that, in 2006, the Parent bank decided to be the only bond issuer, leaving only placement activity to the other banks of the Group: consequently, subsidiary banks do not take account of bonds placed with customers in direct deposits, but in indirect deposits, especially in the assets in custody segment. In this context, in order to maintain a balanced distribution of maturities, subsidiary banks issue bonds fully subscribed by the Parent Bank and recognised in direct deposits. For bank subsidiaries these transactions resulted in a higher amount of assets in custody and bonds and a decrease in interbank liabilities. 95

96 Financial intermediation activities (FIA) of the Cassa di Risparmio di Savona SpA, amounted to euro 3,078.7 million, remaining essentially stable compared to December 2010 and rose by 7.3% compared to June Direct deposits stood at euro 1,229.1 million, down by 5.2% in the half and up 8.5% in the year. Excluding bonds issued fully subscribed by the Parent Bank, at euro 349 million, and including those issued by the Parent Bank and placed with customers of the subsidiary, at euro million, direct deposits total euro 1,326.9 million (-0.2% and -2.8% in six and twelve months respectively). Short-term deposits, at euro million, decreased by 3.7% compared to the end of the year and by 6.4% in the twelve months. The medium/long-term component, at euro million, fell by 8.2% in six months and increased by 65.1% in twelve months. Indirect deposits increased by 3.5% in the six months and 6.6% in the twelve months, amounting to euro 1,849.6 million; more specifically, assets under management came to euro million (-3% and +1.4% respectively in six and twelve months), while assets in custody amounted to euro 1,154.7 million (+7.9% and +9.9% respectively in six and twelve months). Excluding bonds issued by the Parent Bank and placed with customers of Cassa di Risparmio di Savona, indirect deposits total euro 1,402.7 million (-0.4% and +3.5% in six and twelve months respectively). Loans to customers amounted to euro 1,452.1 million (+5.4% and +9.9% in six and twelve months). The bad loans/gross loans ratio stood at 2.5% (1.9% in December and 1.8% in June 2010). The securities portfolio totalled euro million, a 4.8% increase over December and 8.7% over twelve months. The income statement registered net profit of euro 4.4 million, up 6.6% compared to June In particular, net interest income and net commissions rose over the previous year, and operating costs fell; on the other hand, net income from trading activities was lower and adjustments to loans higher. Furthermore, the income statement acknowledges the provisions governing Irap, increased from 4.82% to 5.57% (introduced with Decree no. 98 of 2011, converted to Law no. 111/2011 on 15 July). The cost/income ratio fell from 68.6% to 62.4% in the year. Net interest income grew by 10.5% to euro 19.7 million; net commissions grew by 3% to euro 11.3 million; the net result from trading activities, a positive euro 245 thousand in June 2010, amounted to euro 26 thousand; gross operating income rose by 6.7%, reaching euro 31.4 million. Net value adjustments for impairment of loans and other financial items amounted to euro 3.8 million, against euro 2.5 million in June Operating costs totalled euro 19.6 million, down by 2.9%. Profit from ordinary activities before taxes amounted to euro 8.1 million (up 17.4% over June Net of income taxes of euro 3.6 million, profit for the year therefore amounts to euro 4.4 million, up by 6.6%, compared with June Staff numbers fell by 6 units in the half, due to 6 voluntary redundancies. CASSA DI RISPARMIO DI SAVONA (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 BALANCE SHEET Total assets 1,817,823 1,701,032 1,659,531 1,612, Direct deposits (a) 1,229,069 1,246,672 1,296,444 1,132, Indirect deposits (b) 1,849,634 1,826,138 1,787,382 1,735, Assets under management 694, , , , Assets in custody 1,154,698 1,121,326 1,070,606 1,050, Financial Intermediation Activities (FIA) (a+b) 3,078,703 3,072,810 3,083,826 2,868, Loans to customers (1) 1,452,093 1,428,423 1,377,798 1,321, Securities portfolio 186, , , , Capital and reserves 176, , , , INCOME STATEMENT Gross operating income 31,448 15,341 60,798 29, Net income from financial management 27,686 13,397 56,764 26, Operating profit from ordinary activities before taxes 8,074 3,728 18,256 6, Profit for the period 4,443 2,121 11,388 4, RESOURCES) Number of branches Staff (1) Before value adjustments. 96

97 Financial intermediation activities on behalf of customers (FIA) of Banca del Monte di Lucca SpA totalled euro 1,348.4 million, up 1.8% in the last half and up by 4.5% in the twelve-month period. Within FIA, direct deposits totalled euro million (-3.7% and +2.7% in six and twelve months respectively) while indirect deposits amounted to euro million (+11.4% and +17.5% over December and June 2010). Excluding bonds issued fully subscribed by the Parent Bank, at euro 297 million, and including those issued by the Parent Bank and placed with customers of the bank, at euro million, direct deposits total euro million (+2.6% and -0.5% in six and twelve months respectively). Short-term deposits, at euro million, showed an increase of 2.3% in six months but a decrease of 1.6% over the year. The medium/long-term component, equal to euro million, decreased by 9.6% against December, and rose by 3.9% over June Within indirect deposits, assets under management amounted to euro million (- 5.9% over six months and -0.2% over twelve months), while assets in custody totalled euro million (+18.9% and +24.2% respectively); excluding bonds issued by the Parent Bank and placed with the customers of Banca del Monte di Lucca, indirect deposits total euro million (+1.2% and +5.1% in six and twelve months respectively). Loans to customers amounted to euro 922 million (-0.2% and +1.1% in six and twelve months). The bad loans/gross loans ratio stood at 6.2% (higher than the 5.3% in December and 4.6% in June 2010). The securities portfolio amounted to euro 28.7 million, euro 25.9 million at December and euro 19.2 million at June The income statement showed a net profit of euro 1.1 million, 11.5% lower than the first six months of This performance, despite the increase in net interest income and net commissions, is connected with the rise in operating costs and taxes affected by recent provisions governing Irap, increased from 4.82% to 5.57% (introduced with Decree no. 98 of 2011, converted to Law no. 111/2011 on 15 July) which involved higher tax provisions; the cost/income ratio grew from 62.7% in June 2010 to 64.8%. Net interest income increased by 3%, to euro 10.8 million. Net commissions rose by 7%, standing at euro 4.7 million. In total, the gross operating income increased by 2.9%, to euro 15.5 million. Net value adjustments due to impairment of loans and other financial items amounted to euro 3 million (euro 3.1 million at 30 June 2010). Operating costs increased by 6.3% to euro 10 million. In particular, staff costs rose by 8.1%, reaching euro 6.3 million, while other administrative costs increased by 3.1% to euro 4.4 million. Operating profit from ordinary activities before taxes amounted to euro 2.4 million, 4.9% less compared to the euro 2.5 million of June After income taxes amounting to euro 1.3 million, the profit for the year totalled euro 1.1 million, marking an 11.5% decrease with respect to June There are 167 employees, three fewer that at year end as a result of 3 terminations. BANCA DEL MONTE DI LUCCA (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 BALANCE SHEET Total assets 998,329 1,002, ,132 1,005, Direct deposits (a) 809, , , , Indirect deposits (b) 539, , , , Assets under management 125, , , , Assets in custody 413, , , , Financial Intermediation Activities (FIA) (a+b) 1,348,420 1,320,839 1,324,363 1,290, Loans to customers (1) 922, , , , Securities portfolio 28,712 26,449 25,874 19, Capital and reserves 65,905 69,259 50,661 50, INCOME STATEMENT Gross operating income 15,460 7,647 30,438 15, Net income from financial management 12,423 6,342 24,552 11, Operating profit from ordinary activities before taxes 2,409 1,332 6,366 2, Profit for the period 1, ,603 1, RESOURCES Number of branches Staff (1) Before value adjustments. 97

98 Financial intermediation activities on behalf of customers (FIA) of Cassa di Risparmio di Carrara SpA totalled euro 2,140.7 million, down 1% in the last half and up by 2.4% in the twelve-month period. Within FIA, direct deposits totalled euro 1,070.3 million, down 3.5% from December but up 2.2% over June 2010; excluding bonds fully subscribed by the Parent Bank, at euro million, and including those issued by the Parent Bank and placed with customers of the bank, at euro 377 million, direct deposits total euro 1,096.4 million (-0.1% and +1.1% in six and twelve months respectively). Short-term deposits, at euro million, showed a decrease of 4.7% in six months and were up by 3.4% over the year. The medium/long-term component, standing at euro million, was down over December (-1%) and up 15.6% compared to June Indirect deposits came to euro 1,070.4 million (up 1.5% and 2.5% in six and twelve months); these include assets under management amounting to euro 730 million (+2.4% and 4% over December and June 2010) and assets in custody totalling euro million (-0.3% and -0.8% in six and twelve months respectively). Excluding bonds issued by the Parent Bank and placed with customers of Cassa di Risparmio di Carrara, indirect deposits total euro million (-3.1% and -3.7% in six and twelve months respectively). Loans to customers amounted to euro 1,059.6 million, essentially stable from the start of the year (+0.4%) but down over twelve months (-1%). The bad loans/gross loans ratio stood at 4.4% (4.3% in December and 3.9% in June 2010). The securities portfolio amounted to euro million, a rise of 11.5% over December and a decrease of 13.8% compared to June The income statement showed a net profit of euro 3.6 million, up 52% compared to June 2010, mainly due to the reduction in value adjustments on loans, to lower operating costs and to higher net commissions. Furthermore, the income statement acknowledges the provisions governing Irap, increased from 4.82% to 5.57% (introduced with Decree no. 98 of 2011, converted to Law no. 111/2011 on 15 July). The cost/income ratio fell to 70.6%, compared to 73.7% in June The net interest income was up by 1.9% relative to June 2010, at euro 14.5 million. Net commissions rose by 4.7% to euro 7.9 million; net income from trading activities was a negative euro 69 thousand compared to a profit of euro 139 thousand in The gross operating income stood at euro 22.4 million (1.9%). As at 30 June 2011, net value adjustments due to impairment of loans and other financial items amounted to euro 0.3 million, compared to euro 1.4 million in June Operating costs fell by 2.4% to euro 15.8 million, due to the increase in other operating income (up 22.5% to euro 1.9 million). Operating profit from ordinary activities before tax amounted to euro 6.3 million, 44.9% higher than the figure in the corresponding period in the previous year. Net of income taxes of approximately euro 2.7 million, the profit for the year amounts to euro 3.6 million, up by 52%, compared with June The Bank s staff comprised 318 employees; their number decreased during the half as a result of seven terminations (of which six were voluntary redundancies). CASSA DI RISPARMIO DI CARRARA (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 31/12/10 30/06/10 06/11 06/11 12/10 06/10 BALANCE SHEET Total assets 1,376,888 1,378,042 1,338,112 1,366, Direct deposits (a) 1,070,306 1,091,182 1,108,569 1,046, Indirect deposits (b) 1,070,409 1,062,487 1,054,609 1,044, Assets under management 340, , , , Assets in custody 729, , , , Financial Intermediation Activities (FIA) (a+b) 2,140,715 2,153,669 2,163,178 2,091, Loans to customers (1) 1,059,589 1,087,763 1,055,349 1,070, Securities portfolio 140, , , , Capital and reserves 118, , ,084 99, INCOME STATEMENT Gross operating income 22,355 10,997 43,952 21, Net income from financial management 22,054 10,468 40,026 20, Operating profit from ordinary activities before taxes 6,279 2,247 8,457 4, Profit for the period 3,594 1,255 4,742 2, RESOURCES Number of branches Staff (1) Before value adjustments. 98

99 To be able to carry out a homogeneous comparison with the intermediation figures for the period, the values as at 1 January 2011 are shown; on that date, Banca Carige transferred the business unit constituted by the trademark and by the private banking activities of the old perimeter of the bank and of the private activities of the Parent Bank in Lombardy. The Financial Intermediation Activities (FIA) on behalf of Banca Cesare Ponti SpA customers increased by 3.1% in the half to euro 2, FIA includes direct deposits of euro 370 million (+1.4% compared to 1 January 2011) and indirect deposits of euro 1,830.4 million (+3.4%); the latter includes assets under management of euro million (+10.4% in six months of new operations); assets in custody amounted to euro 1,249.7 million (+0.5%). Short-term direct deposits totalled euro million, an increase of 1.5% in six months, while medium/long-term deposits fell by 2.1% to euro 16.1 million. Including bonds issued by the Parent Bank and placed with customers of the bank, amounting to euro million, direct deposits would increase by 8.8% in the sixmonth period while indirect deposits would increase by 1.6% in the six-month period. Loans to customers, amounting to euro million, grew by 4.4% over six months. The bad loans/gross loans ratio stood at 0.2%; bad loans amounted to euro 195 thousand. The securities portfolio amounted to euro 292 million, up 42.8% in the six-month period. The income statement showed a net profit of euro 7.5 million, benefitting from the effects of the option of tax release of goodwill recorded under assets following the transfer of the business unit by the Parent Bank at the start of the year. The cost/income ratio is 76.5%. Net interest income amounted to euro 4.2 million. Net commissions were euro 3.7 million: commission income amounted to euro 3.9 million and commission expense was euro 0.2 million. Hence, the gross operating income amounts to euro 8 million. Net value adjustments due to impairment of credit and of other financial items totalled euro 109 thousand. Operating costs stood at euro 6.1 million, of which euro 3.9 million staff costs and euro 2.4 million other administrative expenses. The profit from ordinary activities before taxes amounted to euro 1.8 million. Taking into consideration the effects of the option of tax release of goodwill recorded under assets following the transfer of the business unit by the Parent Bank at the start of the year, net profit amounts to euro 7.5 million. The Bank s staff comprises 81 employees, of which 22 work at the main office and 59 in the market. BANCA CESARE PONTI (figures in thousands of euro) Situation as at Change % 30/06/11 31/03/11 01/01/11 06/11 (1) 12/10 BALANCE SHEET Total assets 545, , , Direct deposits (a) 369, , , Indirect deposits (b) 1,830,425 1,838,434 1,769, Assets under management 580, , , Assets in custody 1,249,660 1,267,952 1,243, Financial Intermediation Activities (FIA) (a+b) 2,200,422 2,166,281 2,134, Loans to customers (2) 113, , , Securities portfolio 291, , , Capital and reserves 51,206 53,706 50, INCOME STATEMENT Gross operating income 7,969 3, Net income from financial management 7,860 4, Operating profit from ordinary activities before taxes 1, Profit for the period 7, RESOURCES Number of branches Staff (1) For the purposes of a homogeneous comparison, figures of the bank upon the contribution of business unit by the Parent Bank are compared (01/01/2011). (2) Before value adjustments. 99

100 INSURANCE SUBSIDIARIES The results of the two insurance companies of the Group (Carige Assicurazioni SpA and Carige Vita Nuova SpA) are presented below, prepared in accordance with the applicable provisions of the Italian Civil Code and with the provisions specific for the insurance industry in Italy (Legislative Decree 175/1995, Legislative Decree 174/1995, Legislative Decree 173/1997, Legislative Decree 209/2005, ISVAP Regulation No. 22/2008 amended and supplemented by ISVAP Provision 2771/2010 and by ISVAP Provision No. 2845/2010). It should be noted that such results are different from those reported in the section Insurance activities of this Report in which the information, gathered from the so-called reporting packages, is prepared by the companies based on the joint provisions of Bank of Italy Instruction no. 262 dated 22 December 2005, of ISVAP Regulation no. 7 dated 13 July 2007 amended by ISVAP Provision No. 2784/2010 and consistent instructions from the Parent Bank. As at 30 June 2011, the shareholders' equity of Carige Assicurazioni SpA (operating in the non-life segment) amounted to euro million; technical reserves net of reinsurance fell by 1.1% over December to euro million, while investments (including liquidity positions) fell by 0.8% to euro 823 million. The 1 st half closed with a negative result of euro 0.8 million compared to a positive result of euro 5.1 million in the same period in More specifically, said result was characterised by the transfer of a share of the profit from investments of euro 5.0 million compared to euro 11.4 million in the previous year, the increase in expenses relating to claims, including those of previous years, net of reinsurance (up 29% to euro million) and operating costs (+11% to euro 80.5 million) while premiums for the period increased, net of reinsurance (up 20.2% to euro million). Expenses relating to claims include the increase in the balance of claims from previous years, confirming the company s settlement policy, oriented towards a rapid closing of positions relating to past years. The income statement consolidates the effects of the ISVAP s issuing of Provision no of 6 August 2010, which reiterates the provisions in Decree Law no. 2 of 28 January 2009, which permits the sterilisation of value adjustments on securities, a measure already used in the 2010 financial statements. In fact, as regards the monitoring of the undistributable reserve determined according to ISVAP Regulation no. 28 and subsequent amendments, with respect to 31 December 2010, an improvement was recorded, from euro 11.8 million to euro 10.3 million as at 30 June The result includes net value adjustments of euro 1.8 million, against write-backs of euro 1.6 million in the first half of In addition, a slight decrease of euro 0.6 million was recorded in profit from the technical account, compared to euro 8.4 million in June CARIGE ASSICURAZIONI (figures in thousands of euro) Situation as at Change % 06/11 06/11 30/06/11 31/03/11 31/12/10 30/06/10 (2) 12/10 06/10 Recognised gross premiums 346, , , , Premiums excluding reinsurance 318, , , , Claims incurred and settled net of reinsurance 235, , , , Operating costs 80,532 36, ,383 72, Profit/loss from technical account ,531 8, Net profit ,086 5,121 Investments (1) 822, , , , Technical reserves net of reinsurance 813, , , , Shareholders' equity with income 136, , , , Insurance agencies Staff (1) Included cash equivalents. (2) Final figures approved by the Board of Directors of the company on 24 September

101 As at 30 June 2011, the shareholders equity of Carige Vita Nuova SpA (operating in the life insurance segment) amounted to euro million; investments (including liquidity positions) and net technical reserves grew by 4.4% (to euro 3,963 million) and by 5.2% (to euro 3,831 million) respectively over December The first half of 2011 recorded a positive result of euro 6.9 million, against euro 5.6 million in June The result for the year, in line with the expectations for 2011, was determined by an increase in income from technical management following the rise in net income from investments, up from euro 49.6 million in June 2010 to euro 58.0 million in June More specifically, net value adjustments stood at a negative euro 6.3 million (down euro 5.1 million as at June 2010). It should be pointed out that the income from financial management of euro 58.0 million was determined by an increase in ordinary income on securities resulting from the increase in financial volumes managed which offset a negative market alignment of the securities portfolio, caused by fresh upheaval on the financial markets. Issued premiums, despite remaining at high levels, decreased from euro million to euro million; the bankassurance channel decreased by 30.1% mainly because of the contraction in traditional individual products, and a reduction of 22.1% in the deposits of the agencies channel, concentrated in the individual capitalisations sector. The amounts paid for claims (net of reinsurance ceded), which also included redemptions and expirations, amount to euro million, up by 42.4% over the same period last year. This increase is due mainly to the expiration, during the financial year, of an index-linked policy, and it also includes the payment of coupons on the Soluzione Rendimento product, for a total amount of euro 21.3 million versus euro 12.3 million in the same period in CARIGE VITA NUOVA SPA (figures in thousands of euro) Situation as at Change % 06/11 06/11 30/06/11 31/03/11 31/12/10 30/06/10 (3) 12/10 06/10 Recognised gross premiums 339, , , , Premiums excluding reinsurance 336, , , , Claims incurred and settled net of reinsurance (1) 190,079 98, , , Operating costs 13,458 6,558 28,412 14, Profit/loss from technical account 7,456 4,059 12,467 2,161 Net profit 6,922 4,253 16,476 5, Investments (2) 3,962,618 3,887,639 3,795,785 3,487, Technical reserves net of reinsurance (2) 3,830,811 3,718,776 3,641,442 3,330, Shareholders' equity with income 171, , , , Insurance agencies Staff (1) The item includes the amounts paid net of reinsurance ceded. (2) Including investments where risk is borne by the insured and pension funds. These are mainly investments in index- and unit-linked products. (3) Final figures approved by the Board of Directors of the company on 24 September

102 FINANCIAL SUBSIDIARIES Carige A.M. SGR SpA manages 15 mutual Funds (of which 14 targeted at retail customers and one reserved for institutional investors), the 4 sub funds of the Fondo Pensione Aperto Carige, as well as the portfolios of products for which Group companies delegated the management of the related financial resources; specifically, asset management lines of the Parent Bank, 3 internal lines of the Gestilink insurance fund, and the insurance product Rosa dei Venti. Overall assets under management amounted to euro 4.9 billion, down by 4.1% over December. The first half recorded heavy decreases in all products managed with the exception of pension funds. This decrease mirrors the performance in assets under management at banking system level which, in the first six months of the year, recorded a sustained decrease in net deposits as such to neutralise the significant growth recorded in Net profit amounted to euro 511 thousand (euro 503 thousand at 30 June 2010). In particular, the gross operating income was euro 4.4 million as the balance between euro 19.5 million in commission income and euro 15.1 million in commission expense. Operating and running costs amounted to euro 3.5 million. The resulting profit from operations stood at around euro 876 thousand. After taxes for euro 365 thousand, the profit for the half amounted to euro 511 thousand. Carige A.M. SGR has 33 employees, all seconded by the Parent Bank. CARIGE A.M. SGR (figures in thousands of euro) Situation as at Change % 06/11 06/11 30/06/11 31/03/11 31/12/10 30/06/10 12/10 06/10 DEALING Assets under management 4,912,697 4,992,832 5,122,834 4,972, Mutual funds 3,991,510 4,060,037 4,162,017 4,029, Assets management (customer assets) 466, , , , Insurance products (customer assets) 154, , , , Pension funds 300, , , , Total assets 18,145 23,770 24,045 17, Capital and reserves 7,443 13,845 7,123 7, INCOME STATEMENT Net commissions 4,412 2,196 16,590 4, Administrative costs 3,499 1,784 6,524 3, Operating income , Profit for the period , RESOURCES Staff (1) (1) Seconded Parent Bank personnel. 102

103 Creditis Servizi Finanziari SpA, operating since 2007, continued to consolidate its activities. Loans reached euro million, compared to euro million at the end of During the half, almost 9 thousand personal loans were granted totalling euro million, and over 2,000 salary-backed loans to pensioners under INPS, for a financed amount of 24.4 million. In the same period, almost 8 thousand revolving cards were issued and approximately 4 thousand were activated by customers; there were 71 thousand uses for a total of euro 8.9 million. More than 3,900 instant credit contracts were agreed (revolving credit lines using the insurance network to divide the third party motor liability policies into instalments when subscribing to the policy or renewing it) by the 156 insurance agents with arrangements with the Company, with a total of euro 2.5 million financed. From an economic perspective, the first half of 2011 closed with a profit of euro 3.7 million. The net interest income stood at euro 9.8 million. Interest income, at euro 15.8 million, is made up mainly by interest on personal loans (euro 13.1 million). Interest payable amounts to euro 6 million and was generated by loans given by the Parent Bank. Commission income amounted to euro 2.3 million, of which euro 1.6 million in commission from insurance companies for the distribution of policies. Commission expense amounted to euro 0.4 million, of which euro 0.2 million in bank commissions paid to the Parent Company. Net value adjustments for impaired loans amounted to euro 1.3 million. In terms of expenses, costs for staff, fully seconded by the Parent Bank amounted to euro 1.6 million. Other administrative costs, including amortisation and depreciation, total euro 3.2 million. The pre-tax result was a positive euro 5.9 million; net of income taxes of euro 2.2 million, a profit of euro 3.7 million was generated. CREDITIS SERVIZI FINANZIARI (figures in thousands of euro) Situation as at Change % 06/11 06/11 30/06/11 31/03/11 31/12/10 30/06/10 12/10 06/10 DEALING Loans to customers (1) 459, , , , Personal loans (1) 384, , , , Revolving credit cards (1) 18,323 16,535 15,641 14, Salary-backed loans (1) 56,791 43,718 35,447 11, Total assets 490, , , , Capital and reserves 39,860 45,238 39,533 20, INCOME STATEMENT Net interest income 9,827 4,749 15,477 7, Net commissions 1, ,645 1, Administrative costs 4,559 2,347 8,183 4, Operating income 5,905 2,936 8,509 3, Profit for the period 3,696 1,907 5,464 2, RESOURCES Staff (2) (1) Before value adjustments. (2) Seconded Parent Bank personnel. 103

104 Argo Finance One Srl, vehicle company in the securitisation of bad loans, carried out by Banca Carige at the end of 2000, recorded takings euro 3.6 million in the first half of Against a net value from disposal of loans of euro million, year-to-date collections amounted to euro million. A total of euro 17.8 million in class C securities entirely subscribed by Carige remain to be paid. and Banca del Monte di Lucca S.p.A. On the basis of these disposals, as at 30 June, loans granted by the Banca Carige Group to the special purpose vehicle totalled euro 5.1 billion, and came to euro 4.0 billion as at 30 June Secured bank bonds issued and still not redeemed, as at 30 June 2011, amounted to euro 2,393.5 million. Priamar Finance Srl, special purpose vehicle for the securitisation of bad loans established by Cassa di Risparmio di Savona at the end of 2002, collected euro 1.1 million in the first half of Against a net value from disposal of loans of euro 28 million, collections from the start of the operation amounted to euro 40 million. A total of euro 4.3 million in class B securities entirely subscribed by subsidiary Cassa di Risparmio di Savona remain to be paid. Argo Mortgage Srl, a special purpose vehicle for the securitisation of private mortgage loans established by Banca Carige at the end of 2001, collected a total of euro million, of which euro 9.4 million in the first half of At 30 June 2011 the following securities were in issue: - euro 24.9 million in class A securities; - euro 22 million in class B securities; - euro 11.5 million in class C securities; - euro 9.2 million in class D securities. Argo Mortgage 2 Srl, a special purpose vehicle in the securitisation of mortgage loans to private customers, established by Banca Carige in June 2004, had total collections of euro million, euro 28.8 million of which in the first half of At 30 June 2011 the following securities were in issue: - euro million in class A securities; - euro 26.8 million in class B securities; - euro 29.3 million in class C securities. Carige Covered Bond Srl is the special purpose vehicle used to carry out the medium/long-term deposit programme for a maximum of euro 5 billion, to be implemented over a period of five years ( ). During the half, three other blocks of loans deriving from residential mortgages were disposed of. In particular, the company purchased loans, originating not only from Parent Bank, Banca Carige S.p.A., but from subsidiary banks Cassa di Risparmio di Savona S.p.A., Cassa di Risparmio di Carrara S.p.A. 104

105 THE OTHER MAIN SUBSIDIARIES Columbus Carige Immobiliare SpA closed the 1 st half of 2011 with a loss of euro 110 thousand (the loss in the same period in 2010 had been euro 215 thousand), mainly due to a slow-down in property sales and interest paid on credit lines granted by the Parent Bank. Immobiliare Carisa Srl reported a final loss of euro 8 thousand in the first half of 2011 (the loss had been euro 41 thousand in the same period in the previous year); this result is mainly connected with the lack of property sales in the half and incurring of necessary extraordinary expenses on properties owned. Centro Fiduciario C.F. SpA ended the first half of 2011 with a net profit of euro 209 thousand, up by 4% compared to the same period in Revenues from production totalled euro 737 thousand, down by 7.6%, as a result of the marked decrease in compensation for fiduciary services paid by the Parent Company, because of the significant margin contraction in the banking industry. However, this decrease was partially offset by a solid increase recorded by fiduciary commissions, up by 5.1% compared to Typical costs, which reached euro 435 thousand, down by 16.4%. The heavy decrease is mainly a result of provisions to the write-down reserve, a result of the presence, last year, of extraordinary allocations to the taxed provision, and decrease in staff costs, following the reduction in the company workforce from 9 to 8 staff members in The ordinary operating profit amounted to euro 302 thousand, an increase of 8.9%. Non-typical management contributed to the positive result in the period with a surplus of euro 21 thousand, largely a result of financial income, up considerably after a few years of sharp decreases. Net of taxes of euro 114 thousand, net profit stood at euro 209 thousand. Genoa, 1 August 2011 The Officer in charge of preparing the company s accounting documents The Chairman of the Board of Directors The General Manager 105

106 ANNEXES 106

107 GLOSSARY OF TECHNICAL TERMS AND ACRONYMS USED of which depends on the margin produced by the transaction (in turn reflecting the performance of the securitised assets). Advisor Financial intermediary who assists government authorities or companies involved in privatisations or other corporate finance transactions, whose tasks range from the preparation of appraisals, drawing up of documents and provision of general advisory services on the specific transaction. A ABS - Asset-Backed Securities Financial instruments issued against securitisations (see definition) whose returns and redemption are guaranteed by the assets of the originator (see definition), exclusively earmarked for satisfaction of the rights implicit to these financial instruments. Technically, debt securities are issued by an SPV (see definition). The portfolio underlying the securitisation may comprise mortgages, loans, bonds, trade receivables, credit card receivables and so on. Based on the underlying asset type, ABS may be classified as: - Credit loan obligations (the portfolio is composed of bank loans); - collateralised bond obligations CBO (the portfolio is composed of junk bonds); - Collateralised debt obligations CDO (the portfolio is composed of bonds, debt instruments and securities in general); - Residential mortgage-backed securities RMBS (the portfolio is composed of mortgages on residential properties); - Commercial mortgage-backed securities CMBS (the portfolio is composed of mortgages on commercial properties); Absorbed capital Absorbed capital is the capital required to cover business risks. It equals the maximum between the regulatory capital (obtained by multiplying the weighted assets by the risk for the core tier 1 ratio objective) and internal capital. Internal capital is the amount of capital that must be retained to withstand potential losses and is needed to support business activities and the positions held. Total capital is given by the sum of the economic capital, obtained by aggregating the different risk types, in addition to a reserve to take account of the effects of the cycle and risk model. ABS CDO CDO type securities (see definition) with underlying ABS tranches. ABX index CDS ABX indices fall under the ABS Index type. Every ABX refers to a basket of 20 reference obligations belonging to a specific ABS segment. Each ABX (a total of five) reproduces a rating class (AAA, AA, A, BBB, and BBB-). In fact, for ABX the market does not provide credit curve valuations, but rather a direct price evaluation. As detailed in the ISDA 2005 documentation, the settlement permitted for ABX Index contracts is PAUG (Pay As You Go). This requires the protection seller to pay any incurred losses to the protection buyer as and when they occur, without however determining termination of the contract. It has to be borne in mind that hedging through ABI Index purchases, even if structured to give the best possible match for the characteristics of the hedged portfolio, remains subject to basis risk. In other words, as it is not a hedge specific to individual positions it may generate income statement volatility in phases of less than perfect correlation between index prices and market values of the hedged positions. Additional return Form of remuneration on junior securities deriving from securitisations. In addition to a fixed coupon, these securities accrue periodic earnings (quarterly, half-yearly, etc.), the amount AFS - Available For Sale IAS accounting category used to classify assets available for sale. ALM Asset & Liability Management Integrated management of assets and liabilities designed to allocate resources with a view to optimising the risk-return ratio. ALT-A Agency Securities backed by Alt-A mortgages, guaranteed by specialised Government Agencies. ALT- A - Alternative A Loan Residential mortgages generally of prime quality; however the LTV ratio, the documentation provided, the work/employment situation, the type of property or other factors, do not allow their qualification as standard contracts for use in subscription programmes. The main reason for a loan being classified as Alt- A is the non-submission of all the required documentation. Alternative investment Alternative investments cover a broad range of investment types, including private equity (see definition) and hedge funds (see definition). Amortised cost Differs from cost in that it allows for the progressive amortisation or depreciation of the differential between book value and nominal value of an asset or liability in accordance with the actual rate of return. AP Attachment Point Level above which a protection seller would start to cover losses borne by a protection buyer. Typically used in synthetic CDOs. Arranger In structured finance, the arranger is the person who albeit in different forms with different titles (mandated lead arranger, joint lead arranger, sole arranger etc.) acts as coordinator of the organisational aspects of the transaction. Arrangement (commission) Commission payment for advisory and support services in the structuring and organisation stage of a loan. Asset allocation Choice of markets, geographical areas, sectors and products in which to invest. Asset management Various forms of activity relating to the management and administration of customer assets. ATM - Automated teller machine An automatic electronic device that allows customers to carry out transactions, e.g. cash withdrawals, paying-in of cash or cheques, account information requests, bill payments, phone top-ups, etc. Customers activate the terminal by introducing a card and entering their PIN (personal identification number). Audit In listed companies, the series of controls of a company s business and accounts, performed both in-house (internal audit) and by independent audit firms (external audit). 107

108 B Back office The unit of a bank or finance company that handles all transactions performed by the operating units (front office). Back testing Retrospective analysis performed to verify the reliability of the measurement of risk sources associated with the asset portfolio positions. Bancassurance Offer of insurance products, normally through the operating network of a bank. Banking book Normally refers to securities or financial instruments in general, identifying the portion of a portfolio dedicated to proprietary" trading. Basel 2 The new international accord on capital which redefines the guidelines for the calculation of minimum capital requirements for banks. The new prudential regulation is based on three pillars: - First pillar (Pillar 1): without prejudice to the objective of an 8% risk-weighted capital ratio, a new system of rules has been outlined for the measurement of typical banking and financial risks (credit, counterparty, market and operating risks) which provides alternative calculation methods characterised by varying levels of complexity, with the option - subject to prior approval of the Supervisory Body - of using models developed in-house: - Second pillar (Pillar 2): banks must be equipped with the processes and tools to assess the overall level of internal capital (Internal Capital Adequacy Assessment Process ICAAP) necessary to face all types of risk, including those not covered by Pillar 1 (total capital requirement). The Supervisory Body is responsible for examining the ICAAP process, formulating an overall opinion and where necessary implementing appropriate corrective measures; - Third pillar (Pillar 3): transparency obligations have been introduced with regard to disclosure to the public of capital levels, risks and their management. Basis point Corresponds to one hundredth of one percentage point (0.01%). Basis swap Contract providing for the exchange between two counterparties of payments linked to different floating rates. Benchmark Reference parameter for financial investments: can also be represented by the most well-known market indices or other indexes believed to better represent the investment s risk/return profile. Best practices Identifies conduct commensurate with the more important and/or highest-level skills and techniques achieved in a given technical/professional sphere. Bid-ask spread The difference between the bid price and the ask price of a given financial instrument or set of financial instruments. Bookrunner See Lead Manager definition. Business risk Risks of adverse or unexpected changes in profits/margins compared to forecasts, related to volatility in turnover due to competitive pressure or market situations. C CAGR Compound annual growth rate The year by year growth rate applied to an investment or other assets over a multi-year period. The CAGR calculation formula is (current value/base value)^(1/no. of years). Capital allocation A process for reaching a decision on how to divide an investment between the different financial asset classes (in particular, bonds, shares and liquidity). Capital allocation decisions are determined by the need to optimise the risk/return ratio in relation to the investor s time horizon and expectations. Capital Asset Pricing Model The Capital Asset Pricing Model (or CAPM) is a financial model that establishes a relationship between the return on a security and its risk level. It has several financial applications, including the opportunity cost calculation, i.e. the amount of income needed by a company to fund the cost of capital. Capitalisation policies See definition Capital bonds (insurance) Capital structure As part of a securitisation (see definition), the SPV issues various classes of bond (tranches) - guaranteed by the acquired portfolio - with different risks and returns to satisfy the needs of different investor categories. All the tranches combined constitute the Capital Structure. The subordination ratios between the various tranches are governed by a series of regulations that specify the distribution of collateral losses: Equity Tranche: the most risky portion of the portfolio, also known as first loss and is subordinate to all other tranches; it is therefore the first to bear losses that may occur during recovery of the underlying assets. Mezzanine Tranche: the intermediate tranche ranking between the equity tranche and the senior tranche. The mezzanine tranche is normally subdivided into 2-4 tranches with different levels of risk, each subordinated to the others. They are typically characterised by a rating in the BBB-AAA range. Senior/Supersenior Tranche: the tranche with the highest level of credit enhancement (see definition), i.e. the highest level of privilege in terms of remuneration and redemption priority. Captive Term generically referring to networks or companies operating in the sole interest of the company or the Group to which they belong. Cash flow hedge The hedging of exposure to cash flow fluctuations attributable to a particular risk. Cash management A banking service which, in addition to making a whole series of information available to companies on the status of relations with the bank, provides an operating tool that allows businesses to transfer funds and thereby achieve a more efficient treasury management. Categories of financial instruments envisaged in IAS 39 Held for trading (HFT) which includes the following: assets purchased for short-term sale or included in portfolios of instruments managed for the sole purpose of achieving short-term 108

109 gains, and assets that the entity decides to record at fair value with changes in value recognised to the income statement (Fair Value Through Profit & Loss FVTPL); Held to Maturity (HTM), nonderivative assets with a fixed term and fixed or calculable payments for which there is a real intention and capacity to hold them to maturity; Loans & Receivables (L&R), non-derivative assets with fixed or calculable payments, not listed on an active market; Available For Sale (AFS), specifically designated as such or in any event not classifiable under the previous types. CBO - Collateralised Bond Obligation CDO type securities (see definition) with underlying bonds. CDO - Collateralised Debt Obligation Debt securities issued by an SPV, with underlying loans, bonds, Asset-Backed Securities (see definition) or other CDOs. These structure types are set up to both derecognise assets from the balance sheet and to arbitrage the differences in returns between the securitised assets and the securities issued by the SPV. CDOs can by funded, if the SPV legally purchases ownership of the assets, or synthetic ("unfunded") if the SPV acquires the underlying risk of the assets through Credit Default Swaps (see definition) or similar forms of guarantee. CDS - Credit Default Swaps Derivative contract under which one party (protection seller) agrees to pay a pre-established amount to another party (protection buyer) if a previously agreed event should occur in relation to the default (see definition) of a third counterparty (reference entity). Capital bonds (insurance) These capitalisation contracts fall under the field of application of direct life insurance pursuant to Legislative Decree no. 174 of 17 March As defined in article 40 of the decree, it involves contracts whereby an insurance company - with no agreement on life expectancy - undertakes to pay capital on expiry of a long-term period in exchange for single or regular premiums paid. The contract cannot be for less than five years and includes an option for the contracting party to claim redemption of the contract from the beginning of year two. In accordance with article 31, Legislative Decree 174/1995, the financial assets to hedge the technical reserves are linked solely to performance of the related capital bonds (separate management). Therefore in the event of winding-up of the insurance company (art. 67), the beneficiaries of these policies in effect hold a preferential payment position as creditors. CLN - Credit Linked Note Security with an embedded credit derivative, typically a credit default swap (CDS). CLO - Collateralised Loan Obligation A CDO backed by loans granted to registered Corporates. CMBS - Commercial Mortgage-Backed Securities Loan securitisations backed by mortgages on commercial properties. CMO - Collateralised Mortgage Obligation Mortgage-backed securities in which the total amount of the issue is broken down into tranches with different maturities and returns. The tranches are repaid in the order specified on issue. Commercial paper Short-term notes issued to gather funds from third-party subscribers as an alternative to other forms of borrowing. Concentration risk A risk resulting from exposures in the banking book to counterparties, groups of counterparties in the same economic sector or exercising the same activity or located in the same geographical area. Concentration risk can be divided between two sub-classes: - Single name concentration risk; - Sector concentration risk. Conduits Asset-Backed Commercial Paper Conduits are a specific type of Special Purpose Vehicle established for the securitisation of different types of assets and financed through the Commercial Paper issues. Commercial Papers are typically securities with a 270-day maturity, for which capital and interest repayment depend on cash flows from the underlying assets. Based on the number of underlying asset portfolios, ABCP conduits may be classified as single-seller or multi-seller. In general, the structure of ABCP conduits provides for the setup of multiple SPVs. In fact, top level companies issue commercial papers and finance one or more second level SPVs that acquire the securitised assets. The typical elements of an ABCP Conduit are: Issue of short-term securities resulting in a maturity mismatch between assets held and securities issued; Inclusion of lines of liquidity to cover the maturity mismatch; Inclusion of guarantees to cover the insolvency risk of assets, both specific and used on the programme as a whole. Consumer ABS ABS backed by consumer credit. Contingency funding plan Intervention plans for liquidity management in crisis conditions; their main objective is to protect the bank s capital in the event of a liquidity drain, through the preparation of crisis management strategies and procedures for obtaining emergency funding. Core Business Primary area of business constituting the focal point of a company s strategies and policies. Core Tier 1 Capital Value calculated by subtracting innovative capital instruments from Tier 1 Capital (see definition). It is the net tangible equity of the bank. Core tier 1 ratio Indicates the ratio of Tier 1 capital, excluding preference shares, to total risk-weighted assets. Preference shares are innovative capital instruments normally issued by foreign subsidiaries, and included in Tier 1 capital if they have characteristics that guarantee the bank's capital stability. The Tier 1 ratio is the same ratio but with preference shares included in the numerator. Corporate Segment of customers corresponding to medium- and large-sized companies (mid-corporate and large corporate). Corporate governance Through the composition and operation of internal and external corporate bodies the corporate governance structure defines the distribution of rights and responsibilities among those participating in the company s business, with reference to the breakdown of tasks, acceptance of responsibilities and decision-making powers. The fundamental objective of corporate governance is to maximise value for shareholders, which in the medium/long-term also leads to positive results for other stakeholders, i.e. customers, suppliers, employees, creditors, consumers and the community. Cost/Income Ratio The ratio of operating costs to gross operating income. This is one of the key indicators of a bank s operating efficiency: the lower the indicator value, the more efficient the bank. Cost of risk The ratio between net adjustments to loans and loans to customers. It is one of the risk indicators for bank assets: as the indicator diminishes, so does the level of bank asset risk. 109

110 Covered bond A special bank bond which, in addition to the issuing bank guarantee, can also use the guarantee on a portfolio of mortgage loans or other prime quality loans granted to a specific SPV for this purpose. Banks that intend to issue covered bonds must possess capital of no less than euro 500 million and a capital coefficient at consolidated level no lower than 9%. For assets that may potentially be used as a guarantee, the portion transferred cannot exceed the following limits, fixed according to the level of capitalisation: - 25% when the capital coefficient is 9% and < 10%with Tier I ratio 6%. - 60% when the capital coefficient is 10% and <11% with Tier I ratio 6.5%; - No limit when the capital coefficient is 11% with Tier I ratio 7%. CPPI - Constant Proportion Portfolio Insurance A capital guarantee security with an embedded dynamic trading strategy for participation in the performance of a specified underlying asset. Credit derivatives Derivative contracts with the effect of transferring credit risks. These products allow investors to perform arbitrage and/or hedging on the credit market mainly through recourse to non-cash instruments, to obtain credit exposures diversified by maturity and intensity, modify the risk profile of a portfolio and separate credit risks from other market risks. Credit enhancement Techniques and instruments used by issuers to improve the rating of their issues (pledges, granting of cash credit facilities, etc.). Credit-linked notes See CLN - Credit Linked Note Credit risk The risk that an unexpected change in the credit rating of a counterparty, the value of the guarantees given by this party, or the margins used in the event of insolvency, generate an unexpected change in the bank s credit position value. Credit spread option Contract where, against payment of a premium, the protection buyer reserves the right to collect a sum from the protection seller depending on the positive difference between the market spread and that established under contract, applied to the notional value of the bond. Cross selling Activity designed to increase customer loyalty through the sale of integrated products and services. D Default Failure to honour debts and/or pay related interest. Delinquency Irregularity in payments due at a given date, normally after 30, 60 and 90 days. Derivatives Financial instruments where the value depends on the performance of one or more underlying parameters (interest rates, exchange rates, share prices, commodity prices, etc.); they can be listed on regulated markets or unlisted (see OTC derivatives). DGV VaR - Delta-Gamma-Vega Parametric model for the calculation of VaR, able to assess risk factors having both a linear and non-linear trend. Directional (Funds) Funds investing in financial instruments that profit from market movements of a directional type, sometimes linked to macroeconomic analyses. Domestic Currency Swap Contract settled in Euro, whose economic effect is equal to that of a forward purchase or sale of a foreign currency in exchange for domestic currency. At the maturity date the differential between the forward rate as per the contract and the current spot rate. Duration An interest rate risk indicator on a security or securities portfolio. In its most frequent format, it is calculated as the weighted average of a bond s interest and capital payment dates. Duration analysis Technique supporting Asset and Liability Management (see definition), which analyses the impact of interest rate changes on the market value of capital. E EAD Exposure At Default Relating to on or off-balance sheet positions, it is defined as the estimated future value of an exposure at the time a debtor defaults. Only banks meeting the requirements for the adoption of the Advanced IRB approach may legally estimate EAD. All others must refer to regulatory estimates. EPS - Earnings Per Share Indicator of the profitability of a company calculated by dividing net profit by the average number of shares in issue net of own shares. Equity hedge / long-short (Funds) Funds that predominantly invest in shares with the option of creating hedging strategies through short sales of the shares or strategies involving equity-linked or index-linked derivative contracts. Equity origination Increase in a company s risk capital achieved by arranging a new share issue. Exotics (derivatives) Non-standard derivatives, normally not listed on regulated markets. EVA - Economic Value Added EVA is an indicator of value generated by a company. It expresses the capacity to generate value in monetary terms, as the difference between net operating profit (NOPAT) and the cost of invested capital. F Factoring A disposal contract with recourse (credit risk borne by the factor) or without recourse (credit risk borne by the seller) transferring accounts receivable to banks or specialist companies for 110

111 management and collection purposes, which may be associated with a loan granted to the seller. Fairness/Legal opinion An opinion given on request by experts with proven professional capacity and competence, relating to the fairness of economic terms and/or lawfulness and/or technical aspects of a given transaction. Fair value The amount for which an asset could be traded or a liability settled in a free market economy between willing and knowledgeable parties. Often identical to the market price. Based on IAS (see definition), banks apply fair value to the measurement of financial instruments (assets and liabilities) for trading and available for sale and to derivatives, and can use it to measure equity investments, tangibles and intangibles (with different forms of impact on the income statement depending on the assets considered). Fair value hedge Hedging against exposure to a change in the fair value of a balance sheet item, attributable to a specific risk. Floating Leg Floating leg of an IRS (see definition) under which two parties swap a fixed interest rate flow (fixed leg) for a floating interest rate flow (floating leg) calculated on a notional amount. Floor OTC interest rate derivative contract which sets a minimum limit on decreases in the buyer rate. Forwards Forward contracts on interest rates, exchange rates or share indices, generally traded on OTC markets, for which the terms are established on stipulation of the contract but executed at a predetermined future date, through the receipt or payment of differentials calculated on benchmarks that vary according to the purpose of the contract. FRA - Forward Rate Agreement Contract by which the parties agree to receive (pay) on maturity the difference between the value calculated by applying a predetermined interest rate to the transaction value and the value achieved by a benchmark rate chosen in advance by the parties. Funding Procurement of funds, in various forms, required to finance business activities or specific financial transactions. Futures Standardised future contracts under which the parties agree to exchange securities or commodities at a fixed forward price and at a future date. These contracts are normally traded on organised markets where their execution is guaranteed. In practice, futures on securities often do not involve the physical exchange of the underlying value. G Gap Analysis Technique supporting Asset and Liability Management (see definition) which analyses the difference (gap) between asset and liability items, based on their interest rate review date. A positive gap indicates a positive change in expected interest margin widens as interest rates increase. Vice versa in the opposite case. Gap Ratios Gap-related indicators. Goodwill Identifies the amount paid to acquire a shareholding and is equal to the difference between the cost and the corresponding percentage of shareholders equity, for the part not attributable to elements making up the assets of the acquired company. Governance Identifies the set of instruments and regulations that govern the way a company is run, with particular reference to the transparency of corporate documents and records and to the completeness of disclosures to the market. Greeks Parameters that measure the sensitivity with which a derivative contract (e.g. an option) reacts to changes in value of the underlying asset, or other parameters (typically intrinsic volatility, interest rates, share prices, etc.). H Hedge accounting Rules on the accounting of hedging transactions. Hedge fund A mutual investment fund - denied to traditional investors - able to use sophisticated tools or investment strategies such as "short selling", derivatives (options or futures, even above 100% of capital), hedging (of the portfolio against market volatility through short selling and use of derivatives) and financial leverage (borrowing for the purpose of investing the sum borrowed). Herfindahl Index Index (calculated in relation to exposures) used in the algorithm that determines the extent of internal capital relating to concentration risk. n 2 ( EAD ) i= 1 i H = n ( EAD ) i= 1 i HFT - Held For Trading IAS accounting category used to classify trading assets and liabilities. HTM - Held To Maturity IAS accounting category used to classify assets held to maturity (financial instruments). I IAS/IFRS International accounting standards issued by the IASB (International Accounting Standard Board), set up in April 2001 as an international independent body with members taken from the major EU countries accounting professions and, as observers, the European Union, IOSCO (International Organisation of Securities Commissions) and the Basel Committee. This body succeeded the International Accounting Committee (IASC) formed in 1973 to promote the harmonisation of regulations for the preparation of corporate financial statements. On transformation to IASB, amongst other things it was decide to give the name International Financial Reporting Standards (IFRS) to the new standards. Impairment 111

112 Under IAS (see definition), impairment refers to the loss in value of a balance sheet asset, recorded if the book value exceeds the recoverable value or the amount that could be obtained from selling or using the asset. All assets must be impairment tested, with the exception of those designated at fair value, for which any loss (and gain) in value is intrinsic. Incremental Beta Gap Gap analysis method which, for customer-originated items, takes into account the percentage of absorption by internal rates of a change in the external market rate. Index linked Policies with performance directly linked to a share index or other reference value. Interest rate risk Current or prospective risk of a change in the interest margin and economic value of the company following unexpected changes in interest rates with an impact on the banking book. Internal dealing Transactions executed among separate business units of a company. The associated documentation assumes accounting significance and contributes to determining the position (trading or hedging) of the individual units that performed the transaction. Intraday Used to refer to an investment/disinvestment transaction performed on the same market trading day in reference to a given security. It is also used in reference to prices listed during the course of any one day. Investment banking This is a highly specialised finance segment that deals in particular with helping companies and governments issue securities and, more generally, to gather funds on the capital market. Investment grade Term used with reference to high quality bonds that have received a medium/high rating (e.g. no less than BBB on Standard & Poor s scale). IRB - Advanced Internal Rating Based Approach The advanced internal rating approach indicated in the New Basel Accord, the alternative being the basic approach. The advanced approach can only be used by institutions that meet the strictest minimum requirements with respect to the basic approach. In this case, all input estimations PD, LGD, EAD, Maturity) for the credit risk assessment are made internally. In the basic approach, only the PD is estimated by the Bank. IRS Interest Rate Swap A contract in which two parties agree to exchange flows on predetermined notional amount with a fixed/floating or floating/floating rate. J Judgmental A rating assignment method also based on a subjective opinion. Junior The lowest-ranking tranche of the securities issued in a securitisation, being the first to bear any loss occurring during recovery of the underlying assets. Junior, Senior and Mezzanine exposures Junior exposures are those redeemed last, therefore absorbing the initial losses produced by a securitisation. Senior exposures are the first exposures to be redeemed. The mezzanine class includes exposures with intermediate redemption priority. L L.A.T. - Liability Adequacy Test Procedure involving adequacy testing of the book value of net reserves (i.e. balance sheet reserves less the acquisition costs to be deferred and intangible assets) based on the discounting of expected future cash flows generated by contracts in the policy portfolio examined and using the best and most consistent actuarial assumptions. Should this test show that the net reserves are less than the realistic reserve", the resulting reserve deficit would have to be recorded in the income statement. Lead arranger Bank responsible for organising a securitisation. Arranger activities include, for example, checking the portfolio to be securitised through quality-quantity analysis, handling relations with ratings agencies, preparing a prospectus and identifying and solving accounting and legal problems. Lead manager Bookrunner The lead figure in an issuing syndicate of a bond loan; negotiates with the debtor, is responsible for choosing the co-lead manager and other members of the underwriting syndicate in agreement with the debtor; determines the terms and conditions of issue, manages the issue (almost always arranging placement of most of the issue on the market) and keeps the books (bookrunner). In addition to the reimbursement of expenses and usual fees, the lead manager receives a special commission for this service. L&R - Loans & Receivables IAS accounting category used to classify financial assets other than derivatives and not listed on active markets, with fixed or calculable payments measured at amortised cost. LGD - Loss Given Default Indicates the estimated loss rate in the event of debtor default. Liquidity risk The likelihood that a company fails to meet its payment commitments due to an inability to liquidate assets or obtain sufficient market funding (funding liquidity risk) or the difficulty/impossibility of easily converting financial asset positions into cash without significantly and unfavourably affecting the price due to insufficient depth of the financial market or its temporary malfunction (market liquidity risk). Lower Tier II Subordinated liabilities forming part of Tier II capital (see definition) provided that the contracts governing their issue expressly envisage: a) In the event of winding-up of the issuer, that the debt is redeemed only after all other creditors not equally subordinated have been paid; b) The term of the contractual relations is equal to or greater than 5 years and, should the maturity be undetermined, notice of at least 5 years is required for repayment; c) Early repayment of the liabilities only at the issuer s initiative and requires specific approval from the Bank of Italy. The amount of subordinated loans admitted to Tier 2 capital is reduced by one fifth each year during the 5 years prior to expiry of the contract, in the absence of an amortisation plan that produces similar effects. LTV Loan to Value Ratio 112

113 Ratio between the amount of the mortgage and the value of the property for which the loan is required or the price paid by the debtor to acquire the property. The LTV ratio measures the amount of own funds used by the debtor to purchase the property as a proportion of the value of the asset guaranteeing the loan. The higher the LTV ratio, the lower the amount of own funds needed by the debtor to purchase the property, and the lower the protection of the lender. M Mark to Market Process of evaluating a portfolio of securities or other financial instruments based on the application of mathematical financial models. Mark to Model Process of evaluating a portfolio of securities or other financial instruments, which value adjustments on mark to market estimates (see definition), in order to incorporate in the balance sheet values the element of "uncertainty" which cannot be shown in a model. These adjustments, which satisfy the general principle of caution and are based on experience, are performed, for example, when inputs to the model are mainly estimated within the company ( entity-specific ), when it is known that the model does not incorporate certain recent structural changes in the market and, in general, each time that a part of the phenomenon is not explained by the variables considered. This valuation policy must be applied consistently in the long term and accompanied by suitable disclosures to the public on the estimation methods used and reasons underlying the adjustments made. Market dislocation Financial market turbulence characterised by a sharp decrease in trading on financial markets with difficulty in obtaining price information from specialised info-providers. Market making Financial activity carried out by specialised intermediaries, whose task consists of guaranteeing liquidity and depth to the market, both through their continuous presence and through their role as competitive pricing guide. Market risk Risk of changes in the market value of positions in the regulatory trading portfolio due to unexpected changes in market conditions and credit ratings. This also includes the risks from unexpected changes in exchange rates and commodity prices relating to balance sheet positions. Mark up Margin applied as remuneration, which for a bank is given at aggregate level by the difference between the average active interest rate of the technical forms of application considered and the Euribor rate. Maturity Ladder The increasing scale of maturities of treasury asset and liability items. Medium Term note Debt securities with a maturity of 5-10 years. Merchant banking This includes the subscription to shares or debt securities issued by corporate customers for subsequent market placement, acquisition of shareholdings for longer periods but always with a view to future disposal, and the provision of business consulting services on mergers and acquisitions or reorganisations. Mezzanine In a securitisation this is the tranche with an intermediate ranking between the junior and senior tranches. Monoline Insurance companies which, in exchange for a commission, guarantee the redemption of given bond issues. Established in the 1970s to ensure the issues of local entities against insolvency, their services were particularly appreciated for issues of complex financial products: the structure and underlying assets of these issues are often extremely problematic. Through monoline coverage, the portions of debt guaranteed become much easier to evaluate and more attractive to risk-averse investors, given that the insolvency risk is covered by the insurance. N NAV - Net Asset Value The value of the unit into which the fund s capital is divided. Non-performing Term generally referring to loans characterised by irregular performance. O Operational risk The risk of suffering losses due to the inadequacy or inefficiency of procedures, human resources or internal systems, or following external events. Operational risk also includes legal risk, or the risk of loss due to the infringement of laws or regulations, contractual or off-contract liability or other disputes; however it does not include strategic risk (loss due to incorrect management strategies) or reputation risk (loss of market share when the bank brand becomes associated with negative events). Option Represents the right, but not the commitment, acquired on payment of a premium, to purchase (call option) or sell (put option) a financial instrument at a determined price (strike price) by (American option) or at a fixed date in the future (European option). Originator The party transferring an owned portfolio of assets with deferred liquidity to an SPV (see definition) for securitisation. OTC - Over-The-Counter Transactions carried out directly between parties, rather than through an organised market. Over-collateralisation Form of credit guarantee in which the portfolio of assets pledged as collateral to the securities issued must have a higher value than securities offered. Overdue receivables Overdue exposures are exposures that are overdue and/or borderline as defined in current supervisory instructions. OTC derivatives Over-The-Counter (OTC) derivatives are those agreed directly between the parties outside a regulated market. P 113

114 Past due Exposures that are continuously overdue and/or borderline for more than 90/180 days, in accordance with the definition provided in current Supervisory Instructions. Payout ratio Indicates the percentage of net profit distributed to shareholders. This amount depends largely on the company s self-financing needs and the returns expected by shareholders. PD - Probability of Default Represents the probability of a debtor defaulting within a one-year time horizon. Performing Term generally referring to loans with a steady performance. Plain vanilla (derivatives) Derivative products (see definition) where the contractual terms are considered standard (e.g. Call/Put, Futures, Swap). Price sensitive Term that generally refers to data or information not of public domain which, if made public, could considerably affect the price of a security. Price-to-Book Ratio Ratio between capitalisation and the book value of a listed company. Pricing Broadly speaking, it generally refers to the methods used to determine returns and/or costs of products and services offered by the Bank. Private banking Business designed to provide high-end customers with asset management, advisory and other customised services. Private equity Activity targeting the acquisition of equity interests and their subsequent sale to specific counterparties, without public placement. R RARORAC - Risk Adjusted Return On Risk Adjusted Capital An indicator calculated as the ratio between EVA (see definition) and allocated/absorbed capital. It is the value generation capacity per unit of risk assumed, expressed in percentage terms. Rating An assessment of the quality of a company or its debt security issues, based on the company s financial strength and outlook. This assessment is performed by specialist agencies. Regulatory capital Comprises Tier 1 capital admitted in the calculation without limits and Tier 2 capital admitted up to the maximum Tier 1 capital. Equity investments, innovative capital instruments, hybrid capitalisation instruments and subordinated assets held in other banks and finance companies (specifically, equity investments in banks and finance companies higher than 10% and not consolidated are deducted, along with all equity investments in banks and finance companies less than 10% and subordinated assets with banks, considered for the portion that exceeds 10% of Tier 1 and Tier 2 capital) are deducted - 50% from Tier 1 capital and 50% from Tier 2 capital. Equity investments in insurance companies, subordinated liabilities issued by these insurance companies and securitisation positions are also deducted. Reputation risk Risk of incurring losses as a result of negative perception of the bank s image by customers, counterparties, bank shareholders, investors, supervisory authorities or other stakeholders. Restructured credit Position whereby the Bank has agreed to extend the repayment terms, renegotiating the exposure at interest rates that are lower than market rates. Risk-weighted assets This is the amount obtained by multiplying the total regulatory capital (credit risk, market risk and other prudential requirements) by a coefficient equal to: for companies belonging to banking groups; for banking groups (consolidated) and companies not belonging to banking groups. Risk free rate Interest rate on a no-risk asset. In practice this indicates the interest rate of short term government securities, which in effect cannot be considered risk free. Risk management Acquisition, measurement, assessment and overall management of the various types of risk and related hedging. RMBS - Residential Mortgage-Backed Securities ABS issued under securitisations of loans backed by residential property mortgages. RWA - Risk Weighted Assets Cash and off-balance sheet assets (derivatives and guarantees) classified and weighted according to different risk-related ratios, pursuant to banking regulations issued by the supervisory authorities (e.g.: Bank of Italy, Bafin, etc.) for the calculation of solvency ratios. S Scorecard System of expert quality assessment methods. Scoring System of analysis of company clientele, resulting in an indicator obtained from the examination of financial statements figures and assessment of sector performance forecasts, analysed using statistical methods. Securitisation Disposal of loans or other non-negotiable financial assets to a qualified company (SPV) created for the sole purpose of implementing such transactions and arranging conversion of the loans or assets into securities that can be traded on a secondary market. Senior/super senior In a securitisation, the tranche with the highest privilege in terms of remuneration and redemption priority. Sensitivity analysis An analysis that examines sensitivity of the current value of a bank s assets and liabilities to changes in external interest rate scenarios. This analysis is more refined than duration analysis in that, rather than assessing the impact of a parallel shift in the interest rate curve, it assesses the market value of the bank s assets and liabilities, and consequently the market value of capital, using alternative rather than current interest rate curves. 114

115 Servicer In securitisations, the servicer - operating according to a special servicing contract - continues to manage the securitised loans or assets after transfer to the SPV responsible for issue of the securities. Shadow accounting Accounting method that provides for the allocation to technical reserves of insurance or investment contracts with discretionary profit sharing, unrealised capital losses and/or gains from related activities, as if they had been realised. This adjustment is recognised to shareholders equity or the income statement according to where the corresponding gains or losses are recognised. Net capital losses are attributed to the insured only after having confirmed the guaranteed minimum using the Liability Adequacy Test; if not, they remain under company liability in full. For example, if assets are classified as Available for Sale then at year end their book value is aligned to market value at the end of the financial year, recognition of shadow liabilities are recognised to technical reserves in the balance sheet to the extent of latent capital gains/losses pertaining to the insured, countered by recognition to shareholders equity for an amount equal to the latent capital gains/losses of the portion pertaining to shareholders. On the other hand, if the related securities are recognised at FVTPL, account will be taken of the effect of the latent capital gains/losses by shadow accounting of liabilities and transfer to the income statement, with a change in technical reserves for the share pertaining to the insured. Shifted Beta Gap Gap analysis method which, in addition to the repositioning ratios mentioned earlier, in determining the impact on the interest margin also takes into account phenomenon of shifts in customeroriginated items; i.e. the fact that the rates of a single customeroriginated item will not react immediately to decisions to adjust market rates but, due to stickiness, will be gradual and diluted. SPE/SPV Special Purpose Entities (SPE) or Special Purpose Vehicles (SPV) are companies, trusts or other entities especially created to achieve a well-defined, restricted set objective or to perform a specific transaction. SPE/SPVs have a legal structure independent of other parties to the transaction and generally have no operating or management structures of their own. Speculative grade Term used to identify issuers with a low rating (e.g.: below BBB on the Standard & Poor s scale). Spread This term usually indicates the difference between two interest rates, the difference between the bid and ask price in securities trading or the price paid by a securities issuer in addition to the reference rate. Stakeholders Persons or entities who, in different capacities, interact with the company, contribute to results, influence its performance and assess its economic, social and environmental impact. Standards This term applies without distinction to both IAS/IFRS (International Accounting Standards/International Financial and Reporting Standards) and FAS (Financial Accounting Standards). Stock option Term used to define options offered to company managers providing entitlement to buy shares in the company at a specific strike price. Strategic risk Current or prospective risk of a reduction in profits or capital due to: - Changes in the operating context; - Erroneous corporate decisions; - Inadequate implementation of decisions; - Poor reaction to changes in the competitive context. Stress test A simulating procedure designed to assess the impact of extreme market scenarios on a bank s overall risk exposure. Structured bonds Bonds for which the interest and/or redemption value depend on a real parameter (linked to the commodity price) or index performance. In these cases the implicit option is separated out for accounting by the host contract. In the event of parametrisation to interest rates or inflation (for example treasury certificates) the implicit option is not separated out for accounting by the host contract. Subordinated loans Financial instruments where the contractual terms envisage that holders of documents representing the loan have rights that are subordinate to other creditors in the event of winding-up of the issuer. Subprime loans The subprime concept does not refer to the loan operation per se, but rather to the borrower. Technically subprime refers to a borrower that does not have a fully positive credit history as it contains negative credit elements such as: amounts unpaid on past loans, bounced cheques, protests, etc. These past events can indicate a greater inherent counterparty risk, corresponding to higher payments required by the intermediary granting the loan. Operations with subprime customers developed on the American financial market, often using securitisation and security issues against such loan agreements. Alt-A mortgages refer to mortgages granted on the basis of incomplete or inadequate documentation. Swaps (of interest rates and currencies) Transactions involving an exchange of financial flows between operators according to specific contractual terms. In interest rate swaps (IRS), the counterparties swap interest payment flows calculated on a notional reference capital according to differentiated criteria (e.g. one counterparty pays a fixed rate, the other a floating rate). In currency swaps, the counterparties swap specified amounts of two different currencies, with gradual repayments according to predefined arrangements on both capital and interest. Synthetic securitisation Securitisation structure (see definition) whereby transfer of the asset portfolio is performed through the use of credit derivatives or similar types of guarantee that allow transfer of the portfolio risk. T Tainting Rule Rule defined in paragraph 9 of IAS 39, applicable to financial instruments classified as HTM on the strength of which "(...) an entity must not classify any financial asset as held to maturity if, during the course of the current or previous two financial years, it has sold or reclassified, prior to maturity, a significant amount of investments held to maturity (not insignificant in relation to the overall held to maturity portfolio), (...). Tier 1 Capital Ratio Ratio of a bank s Tier 1 capital to its risk-weighted assets (see definition). 115

116 Tier 1 Capital This consists of paid-up capital, reserves (including share premium), innovative capital instruments (only the terms fully guarantee bank stability), profit for the year and positive Tier 1 prudential filters. Own shares, goodwill, intangible fixed assets, losses recorded in previous and current years, value adjustments calculated on the regulatory trading portfolio and negative Tier 1 prudential filters are deducted from these elements. Tier 2 capital This consists of valuation reserves, innovative capital instruments not included in Tier 1 capital, hybrid capitalisation instruments (irredeemable liabilities and other instruments repayable on demand by the issuer with prior consent of the Bank of Italy), subordinated liabilities (according to an amount reduced by one fifth during the five years preceding the maturity date), net capital gains on equity investments, positive Tier 2 prudential filters, any excess of total net value adjustments with respect to expected losses and positive exchange differences. The following negative elements are deducted: net capital losses on equity investments, negative Tier 2 prudential filters and other negative elements. Tier 3 (subordinated loans) Subordinated loans that satisfy the following conditions: - Are fully paid up; - Are not included in the Tier 2 capital calculation (see definition); - Have an original term equal to or greater than 5 years; should the maturity be undetermined, at least 2 years notice of repayment is required; - Meet the terms for similar liabilities included in Tier 2 capital with the obvious exception of that regarding the loan term; - Are subject to a lock in clause, by which the capital and interest cannot be repaid if the repayment reduces the overall amount of the bank s capital funds to less than 100% of its total capital requirements. Time value Change in the financial value of an instrument in relation to a different time horizon when certain cash flows will become available or due. Total return swap A contract under which one party, usually the holder of the reference security or loan, agrees to make periodic payments to an investor (protection seller) based on the capital and interest flows generated by that asset. Vice versa, the investor agrees to pay a floating rate, plus any asset depreciation compared to when the contract was signed. Trading book Usually refers to securities or in any event financial instruments in general, identifying the portion of the portfolio held for trading. Trigger event A contractually predefined event triggering specified contracting party rights. Trigger Point Thresholds. TROR - Total rate of return swap A contract under which the protection buyer (or total return buyer ) undertakes to transfer all cash flows generated by the reference obligation to the protection seller (or total return receiver ), who in counteraction transfers cash flows linked to the reference rate performance to the protection buyer. At the cash flow coupon date (or contract expiry), the total return payer pays the total return receiver any appreciation of the reference obligation; vice versa, in the event of depreciation of the reference obligation it is instead the total return receiver that pays the related amount to the total return payer. Essentially, a TROR is a structured financial product combining a credit derivative with an interest rate swap. U UCIT - Undertaking for Collective Investment in Transferable Securities Pursuant to article 1, paragraph m) of the Consolidated Law on Finance, UCITs invest sums of money collected from the investor public in financial instruments or other assets in accordance with the risk apportionment principle. They include mutual funds (open and closed end, Italian and foreign) and SICAVs. Underwriting (commission) Commission claimed in advance by the bank based on assumption of the underwriting risk associated with a loan. Unit-linked Life insurance policies with performance linked investment fund values. Upfront Amount paid to a counterparty at the time of signing a derivative contract. Upper Tier II Hybrid capitalisation instruments included in Tier II capital (see definition) when the contract envisages that: a) In the event of balance sheet losses resulting in a decrease in paid-up capital and reserves to below the minimum required capital for banking activity authorisation, amounts collected on the aforementioned liabilities and accrued interest can be used to cover such losses, allowing the issuer to continue operations; b) In the event of a negative operating performance, the right to repayment can be suspended to the extent necessary to avoid or limit potential losses as much as possible; c) In the event of winding-up of the issuer, the debt is redeemed only after all other creditors not equally subordinated have been paid; Redeemable hybrid capitalisation instruments must have a term equal to or more than 10 years. The contract must explicitly contain the clause subordinating redemption of the loan to Bank of Italy approval. V VaR - Value at Risk Value indicating the maximum possible loss on a portfolio due to the effect of market performance, with a certain probability and assuming that the positions require a given period of time for related disposal. W Warrant Negotiable instrument offering the holder the right to buy or sell fixed income securities or shares according to precise methods from/to the issuer. Watchlist loans Loans at nominal value in respect of which subjects are in a situation of objective difficulty which, however, can be surmounted in a suitable period of time. 116

117 Z Zero coupon A bond without coupon, the return on which is the difference between the issue price (or purchase price) and the redemption value. 117

118 List of the IAS/IFRS standards and related interpretations (SIC/IFRIC) endorsed by the European Commission and effective as at the balance sheet date 1) International accounting standards (IAS/IFRS) IAS/IFRS Description Endorsement EC Regulation (1) Framework Framework See note (2) IAS 1 Presentation of Financial Statements Reg. 1274/2008 (18/12/2008); Reg. 53 (22/01/2009), Reg. 70 (24/01/2009), Reg. 494 (12/06/2009), Reg. 243/2010 (24/03/2010) IAS 2 Inventories Reg. 1126/2008 (29/11/2008), Reg. 70 (24/01/2009) IAS 7 Cash flow statement Reg. 1126/2008 (29/11/2008), Reg (17/12/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009); Reg. 494/2009 (12/06/2009); Reg. 243/2010 (24/03/2010) IAS 8 IAS 10 IAS 11 IAS 12 Accounting Policies, Changes in Estimates and Errors Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009) Events after the Balance Sheet Date Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (23/01/2009), Reg (27/11/2009) Construction Contracts Taxes on income Reg. 1126/2008 (29/11/2008), Reg (17/12/2008), Reg (18/12/2008) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 495 (12/06/2009) IAS 16 Property, Plant and Equipment Reg. 1126/2008 (29/11/2008), Reg (17/12/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009); Reg. 495 (12/06/2009) IAS 17 Leasing Reg. 1126/2008 (29/11/2008), Reg. 243/2010 (24/03/2010) IAS 18 Revenue Reg. 1126/2008 (29/11/2008), Reg. 69 (24/01/2009) IAS 19 IAS 20 Employee Benefits Accounting for Government Grants and Disclosure of Government Assistance Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 69 IAS 21 The Effects of Changes in Foreign Exchange Rates (24/01/2009), Reg. 494 (12/06/2009) IAS 23 Financial charges Reg (17/12/2008), Reg. 70/2009 (24/01/2009) IAS 24 Related Party Disclosures Reg. 1126/2008 (29/11/2008), Reg (18/12/2008) IAS 26 Accounting and Reporting by Retirement Benefit Plans Reg. 1126/2008 (29/11/2008) IAS 27 IAS 28 IAS 29 IAS 31 Consolidated and Separate Financial Statements Investment in Associate Financial Reporting in Hyperinflationary Economies Interests in Joint Ventures Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 69/2009 (24/01/2009), Reg. 70/2009 (24/01/2009), Reg. 494/2009 (12/06/2009) Reg. 1126/2008 (29/11/2008), Reg ( ), Reg. 70/2009 (24/01/2009), Reg. 494 (12/06/2009), Reg. 495 (12/06/2009) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009) Reg. 1126/2008 (29/11/2008), Reg. 70/2009 (24/01/2009), Reg. 494 (12/06/2009) IAS 32 Financial Instruments: presentation Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 53/2009 (22/01/2009), Reg. 70/2009 (24/01/2009), Reg. 494 (12/06/2009), Reg. 495 (12/06/2009) IAS 33 IAS 34 Earnings per Share Interim Financial Reporting Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 494 (12/06/2009, Reg. 495 (12/06/2009) Reg. 1126/2008 (29/11/2008)), Reg (18/12/2008), Reg. 70/2009 (24/01/2009), Reg. 495 (12/06/2009) 118

119 IAS 36 IAS 37 IAS 38 Impairment of assets Provisions, Contingent Liabilities and Contingent Assets Intangible assets Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 69/2009 (24/01/2009), Reg. 70/2009 (24/01/2009), Reg. 495 (12/06/2009), Reg. 243/2010 (24/03/2010) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 495 (12/06/2009) Reg. 1126/2008 (29/11/2008), Reg (17/12/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009), Reg. 495 (12/06/2009), Reg. 243/2010 (24/03/2010) IAS 39 IAS 40 IAS 41 Financial Instruments: recognition and measurement Investment Property Agriculture Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 53 (22/01/2009), Reg. 70 (24/01/2009); Reg. 494 (12/06/2009), Reg. 495 (12/06/2009), Reg. 824/2009 (10/09/2009); Reg. 839/2009 (16/09/2009); Reg. 1171/2009 (01/12/2009); Reg. 243/2010 (24/03/2010) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009) Reg. 1126/2008 (29/11/2008), Reg (18/12/2008), Reg. 70/2009 (24/01/2009) IFRS 1 IFRS 2 First adoption of the international accounting standards Share-based payments Reg. 1126/2008 (29/11/2008), Reg (17/12/2008), Reg (18/12/2008), Reg. 69 (24/01/2009), Reg. 70 (24/01/2009), Reg. 254 (26/03/2009), Reg. 494 (12/06/2009), Reg. 495 (12/06/2009), Reg (26/11/2009), Reg (01/12/2009), Reg. 550/2010 (24/06/2010) Reg. 1126/2008 (29/11/2008), Reg (17/12/2008), Reg. 495 (12/06/2009), Reg. 243/2010 (24/03/2010); Reg. 244/2010 (24/03/2010) IFRS 3 Business combinations Reg. 1126/2008 (29/11/2008), Reg. 495/2009 (12/06/2009) IFRS 4 Insurance agreements Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008), Reg. 494/2009 (12/06/2009), Reg. 1165/2009 (01/12/2009) IFRS 5 Non-current Assets Held for Sale and Discontinued Operations IFRS 6 Exploration for and Evaluation of Mineral Resources Reg. 1126/2008 (29/11/2008) Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008), Reg. 70/2009 ( ); Reg. 494/2009 ( ), Reg. 1142/2009 ( ), Reg. 243/2010 (24/03/2010) IFRS 7 Financial Instruments: disclosure Reg. 1126/2008 ( ), Reg. 1274/2008 ( ), Reg. 53/2009 ( ), Reg. 70/2009 ( ), Reg. 495/2009 ( ), Reg. 824/2009 ( ); Reg. 1165/2009 (01/12/2009) IFRS 8 Financial Instruments: disclosure Reg. 1126/2008 ( ), Reg. 1274/2008 ( ), Reg. 243/2010 (24/03/2010) 119

120 2) Interpretations (SIC/IFRIC) SIC / IFRIC Description Endorsement EC Regulation (1) IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities Reg. 1126/2008 ( ), Reg. 1260/2008 (17/12/08), Reg. 1274/2008 (18/12/2008) IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments Reg. 1126/2008 (29/11/08), Reg. 53/2009 (22/01/2009) IFRIC 4 Determining Whether an Arrangement Contains a Lease Reg. 1126/2008 (29/11/08), Reg. 254/2009 (26/03/2009) IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Reg. 1126/2008 (29/11/2008) IFRIC 6 IFRIC 7 Liabilities Arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment Reg. 1126/2008 (29/11/2008) Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies Reg. 1126/2008 (29/11/08), Reg. 1274/2008 (18/12/2008) IFRIC 9 Reassessment of Embedded Derivatives Reg. 1126/2008 (29/11/08), Reg. 495/2009 (12/06/09), Reg. 1171/2009 (01/12/09); Reg. 243/2010 (24/03/2010) IFRIC 10 Interim Financial Reporting and Impairment Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008) IFRIC 12 Agreements for services licensed Reg. 254/2009 (26/03/2009) IFRIC 13 Customer Loyalty Programmes Reg. 1262/2008 (17/12/2008) IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction Reg. 1263/2008 (17/12/2008); Reg. 1274/2008 (18/12/2008) IFRIC 15 Agreements for the construction of real estate Reg. 636/2009 (23/07/2009) IFRIC 16 Hedge of net investment in a foreign management Reg. 460/2009 (05/06/09); Reg. 243/2010 (24/03/2010) IFRIC 17 Distributions of non-cash assets to owners Reg. 1142/2009 (27/11/2009) IFRIC 18 Transfers of assets from customers Reg. 1164/2009 (01/12/2009) SIC 7 Introduction of the Euro Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008), Reg. 494/2009 (12/06/2009) SIC 10 Government Assistance No Specific Relation to Operating Activities Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008) SIC 12 Consolidation Special Purpose Entities Reg. 1126/2008 (29/11/2008) SIC 13 Jointly Controlled Entities Non-Monetary Contributions by Venturers Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008) SIC 15 Operating Leases Incentives Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008) SIC 21 Income Taxes Recovery of Revalued Non- Depreciable Assets Reg. 1126/2008 (29/11/2008) SIC 25 Income Taxes Changes in the Tax Status of an Enterprise or its Shareholders Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008) SIC 27 Evaluating the Substance of Transactions in the Legal Form of a Lease Reg. 1126/2008 (29/11/2008) SIC 29 Disclosure Service Concession Arrangements Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008), Reg. 254/2009 (26/03/2009) SIC 31 Revenue Barter Transactions Involving Advertising Services Reg. 1126/2008 (29/11/2008) SIC 32 Intangible Assets Web Site Costs Reg. 1126/2008 (29/11/2008), Reg. 1274/2008 (18/12/2008) (1) The reported date refers to the publication of the Regulation in the Official Gazette of the European Community. (2) The framework of the international accounting standards is not an applicable accounting standard and can not be used to justify exceptions to the standards adopted. On the contrary, it can be used to interpret and apply existing standards. The objectives of the reference framework include support to IASB and national accounting standards boards for the development of new standards and the implementation of convergence projects for national and international standards. In case the reference framework and some accounting standards are in contrast, the international accounting standard would prevail. It is divided in four main parts: a) purpose of the financial statements: b) quality characteristics determining the usefulness of the information contained in the financial statements; c) definition, accounting and valuation of the elements composing the financial statements; d) concepts of capital and capital preservation. 120

121 CERTIFICATION OF THE CONDENSED HALF-YEARLY FINANCIAL STATEMENTS PURSUANT TO ART. 81-TER OF CONSOB REGULATION NO OF 14 MAY 1999 AND SUBSEQUENT AMENDMENTS AND ADDITIONS 121

122 Certification of the condensed half-yearly financial statements pursuant to art. 81-ter of Consob Regulation no of 14 May 1999 and subsequent amendments and additions 1. The undersigned Giova nni Berneschi, in his capacity as Chairman of t he Board of Directors, and Daria Bagnasco, in her capacity as Mana ger responsible for preparing the Compan y's financial reports, of Banca CARI GE S.p.A. certify, taking also into consideration Article 154- bis, paragraphs 3 and 4, of the Italian Legislative Decree no. 58 of 24 February 1998: - the adequacy in relation of the Company features and - the actual application of the administrative and accounting procedures put in place for preparing the condensed halfyearly financial statements, in the first half of The assessment of the adequacy of the administrative and accounting procedures put in place for preparing the condensed half-yearly financial statements as at 30 June 2011 is based on a Model defin ed by Banca CARIGE S.p.A. consist ently with the Internal Control I ntegrated Framework issued by the Committee of Sponsoring Organisations of the Treadwa y Commission, which represents the internation al commonl y accepted standard for internal control system. 3. The undersigned also certify that: 3.1 the condensed half-yearly financial statements: a) have been drawn up in compliance with applicable intern ational acco unting stan dards recognised by the Euro pean Community purs uant to European Parliament and Council Regulation no. 1606/2002 of 19 July 2002; b) correspond to the results of the accounting books and records; c) are suitable to provide a true and co rrect representation of t he asset and liabilities and of the economic and f inancial situation of the issuer and of the group of companies included in the scope of consolidation. 3.2 The interim report on operations contains a reliable analysis of the references to the more significant events occurred in the first six months of this financial year an d their impact on the conden sed half-yearly financia l statements, together with a descr iption of the mai n risks and uncertainties faced in the remaining six months of the financial year. The interim report on o perations a lso conta ins a reliab le analysis of the information on significant related party transactions. Genoa, 1 August 2011 The Chairman of the Board of Directors Giovanni Berneschi The Manager responsible for preparing the Company s financial reports Daria Bagnasco This document has been translated into the English language solely for the convenience of international readers. It has been signed on the Italian original version. 122

123 REPORT OF THE INDEPENDENT AUDITORS ON THE LIMITED AUDIT OF THE CONDENSED CONSOLIDATED HALF-YEARLY FINANCIAL STATEMENTS 123

124 124