This is a summary version of the 2010 Financial Statements ...documentazionestoricacentrobanca.ubibanca.it/contenuti/file/2011-05-27-Annual-report...This is a summary version of the

This is a summary version of the 2010 Financial Statements (Bilancio di Esercizio 2010) whose complete version is avaible at www.centrobanca.it.

Annual Report 2010 • 1

2 • Annual Report 2010

CONTENTS

Centrobanca: profile and description of operationsGruppo UBI corporate structure and Centrobanca company structureNational networkDevelopment strategy of CentrobancaOperational support and organisational developmentOrganisational structure

Operational overviewLoansCorporate LendingCorporate FinanceInvestment BankingCorporate and Retail OTC derivativesFinance and MarketsPrivate equity

Capital structureLoans to customersLeveraged FinanceCredit qualityLoans to banksFinancial assetsInvestmentsFunding with chargesFinancial liabilitiesHedging derivatives

Economic trendInterest marginsOperating incomeOperating expensesPersonnel costsOther administravive expensesAdjustments to net values for impairment in loans and financial assets/liabilitiesProfits/loss from investmentsTaxes for the yearIncome Statement normalised for non-recurring items

Shareholders' fundsSharesAllocation of profit for the yearRegulatory capital and capital requirements

Fiancial StatementsBalance SheetIncome StatementStatement of comprehensive incomeStatement of changes in net equityCash Flow Statement - Indirect MethodReconciliation Key data and ratios

Company Officers 2010

445679

1010111212131314181920212222232425252626272929303131323234343435363637373840414142


GRUPPO UBI CORPORATE STRUCTURE AND CENTROBANCA COMPANY STRUCTURE

Gruppo UBI Banca is characterised by a federal, multifunctional and integrated organisational model, which guarantees brand identity and local autonomy.

The federated Network Banks operate according to this model, focussed on geographical markets in which they possess a deeply rooted territorial presence and strong client relationships, and are assisted and supported by specialised Product Factories and a Parent Company with responsibilities for guidance and governance.

Within Gruppo UBI Centrobanca performs the role of the “corporate bank" engaged in the issuing of medium and long term loans, investment banking, private equity and in Assisted Finance, on behalf of corporate clients, both captive and external to the Group.

There were no changes in the shareholding structure of Centrobanca during 2010: Ubi Banca holds 97.82% of Centrobanca (5.47% of which is held through its subsidiary Banca Popolare di Ancona); the remainder of the share capital is subdivided among 30 banks, primarily “Popolari” (cooperative banks).

Centrobanca holds shareholdings in other companies of the Group with the sole aim of carrying out its own business activities and consistent with its objectives:

Centrobanca Sviluppo Impresa SGR - 100% owned. This subsidiary is engaged in private equity: it promotes, sets up, administers and manages closed-end property investment funds.

IW Bank SpA - 23.5% owned. This shareholding was acquired as part of the private equity business.

The company is specialised in on-line trading, banking and savings, it is a leader in on-line trading and is amongst the leading companies in e-banking and on-line financial services.

Group SRL - 13.5% owned. A shareholding that is instrumental to the investment banking operations of the Bank. The company was set up in 2005 with equal shareholdings attributed to Banca Aletti, Banca Akros and BIMER. Its aim is to gain more senior roles in public issues of securities.

UBI Sistemi e Servizi - shareholding 1.48%. The common technical and administrative service operations of the Banks and Companies of Gruppo UBI are centralised in this company.

In December the merger by incorporation of the 100% owned subsidiary CB Invest SpA in Centrobanca was completed and became effective from the beginning of January 2010.


Centrobanca has six branch offices located throughout Italy. These work to develop the client base in close cooperation with the Corporate Banking Offices of the Gruppo UBI banks, thus enabling extensive and effective national coverage. As part of an internal process of refocussing on core activities, the closure of the Bari branch office was approved on 4 October.

National network

Release at 31 december 2010

348 250 181 5 Lombardia (855 )

Veneto (45)

Liguria(58)

1 Toscana(9)

Emilia Romagna(46)

Marche(106)

Umbria(23)

22 1

Abruzzo(17)

15 2

Molise 6

Puglia(115)

114 1

Basilicata 36

Lazio (119)

64 29 6 1 Campania (100) 115Calabria

Milan

Bologna

Bari

Rome

Naples

104 1 1 Ancona

53 24 20 117 4

7 1

224 1 1 Piemonte(226)

Turin

2 2 1 1 1

64 Trentino Alto Adige

12Friuli Venezia Giulia

256

1 Sardegna

32 13 1

2

Branches in Italy 1.946

UBI Banca Scpa 2

Banca Popolare di Bergamo Spa 375

Banco di Brescia Spa 362

Banca Popolare Commercio e Industria Spa 214

Banca Regionale Europea Spa 293

Banca Popolare di Ancona Spa 256

Banca Carime Spa 295

Banca di Valle Camonica Spa 59

Banco di San Giorgio Spa 53

UBI Banca Private Investment Spa 36

Centrobanca Spa 7

B@nca 24-7 Spa 1

IW Bank Spa 2

Valle d’Aosta1

Iesi

Branches abroad 11Banco di Brescia SpaLussemburgoBanca Regionale Europea Spa (France)Nizza e MentoneBanque de Dépõts et de Gestion Sa (Svizzera)Losanna, Lugano, Neuchatel, Mendrisio,Yverdon, GinevraUBI Banca International Sa (Lussemburgo)Monaco (Germania) - Madrid (Spagna)International officesUBI Factor SpaCracovia (Polonia)Gestioni Lombarda (Suisse) SaLuganoUBI Management Co.SaLussemburgoLombarda China Fund Management Co. SaShenzhen (Cina)UBI Trustee LtdJerseyUBI Trust Co. LtdLussemburgoBDG Singapore Pte LtdSingaporeRappresentative officesHong Kong, San Paolo (Brasile), Mumbay, Shanghai, Mosca


Centrobanca is specialised in the Corporate and Investment Banking services of Gruppo UBI in support of corporate clients with the objective of offering an integrated and specialised range of strategic finance products and services designed to support innovation, growth and the financial restructuring of businesses

In particular, the distinctive characteristics of Centrobanca’s business model are:

nComplete distribution platform. Centrobanca has access to a broad distribution platform which gives it a consolidated presence on the market, both in terms of its captive market, thanks to the distribution capacity of the Network Banks of Gruppo UBI, and as regards the non-captive market, taking advantage of its independent origination capability through its own Corporate Center network, the relationship with partnership banks with which it has agreements and its own network of relationships.nExhaustive range of products. Centrobanca offers a wide range of products which allow it

to take full advantage of cross-selling and up-selling opportunities, a result which has been achieved due to the strengthening of the offer and the acquisition in the market of highly qualified skills. Product synergies arise both within the credit area, where industrial credit acts as an “entry product” which allows cross-selling and high value added financial transactions to be carried out (e.g. structured finance), both in terms of financial relationships with clients and in carrying out extraordinary financial transactions.nSpecialisation. The concentration of highly specialised professional product responsibilities

in Centrobanca allows it to achieve: - innovation of the offer, taking advantage of the skills deriving from a supervised integrated

product range to propose financing dedicated to renewable energy, the development of loans incorporating step-up/step-down mechanisms, the offer of participating loans for innovation and, nell’ambito dell’investment banking, in the area of investment banking, the first intermediary in the Italian market to offer remedy shares;

- effective supervision of credit risk. The supervised integration of all strategic finance transactions allows Centrobanca effective control of medium-long term risks, as the quality of its portfolio demonstrates. This result derives from: (i) Centrobanca’s in-house specialised skills of business intelligence and understanding of the competitive positioning of sectors/companies; (ii) the possibility to concentrate in one unit a complete vision focussing on the medium termrequirements of its client base and to accompany it in all its extraordinary financial operations; iii) the efficiency of having unified, centralised internal control mechanisms, recently strengthened by significant investments aimed at enhancing the efficiency of internal controls, processes and the organisational structure.

- critical mass necessary to generate economies of scale and skills above all on productsof high value added and low frequency.

Development strategy of Centrobanca


Operational support and organisational

development

The principal organisational projects carried out by Centrobanca during 2010 were developed within the framework of the annual Project Plan.

The Project Plan identified and co-ordinated 36 development projects subdivided into the following categories:n23 “prescriptive” projects, involving initiatives to upgrade the company organisation to comply

with regulatory requirements or arising from analyses of plant/operations carried out by the company’s audit and control department;n10 business projects, aimed at strengthening commercial activities;n3 efficiency/effectiveness projects, aimed at restoring productivity or limiting operational risk.

A Work Plan was prepared for each project, and this was periodically monitored through the preparation of reports indicating stages of completion and delays/variances and the organisation of plenary meetings on the progress of projects attneded by:nSenior Management;nthe Organisation and Processes Service, in the capacity of project management;nthe various project managers;nthe personnel appointed by the Parent Company to co-ordinate the product companies;nthe main IT supplier (UBISS-DSSP);nthe Company control departments: Risk Management, Audit UBI and Compliance.

Following each meeting minutes were prepared indicating the subjects discussed and the actions proposed and this information was provided to the Board of Statutory Auditors.

The most important projects developed as part of the aforementioned Project Plan and the results achieved are listed below.

Basilea II - Adoption by Centrobanca of the Rating System for the Credit Risk SegmentThis project, part of the Group’s broader plan of operations, for the commencement in July 2011

of the Bank of Italy validation procedures of the internal rating models (AIRB), allows for pre-determined initiatives to be implemented by CB in 2010.

This initiative specifically involved, in accordance with Group guidelines, the revision/setting up of the following processes: nAttribution and Override Rating;nMonitoring and Revision Rating.Related procedure regulations were prepared for each of these procedures as well as specific

functions for the upgrade of the information system planned for the first half of 2011.


Investment Services Regulations developmentThe objective of this project was to update company regulations in order to bring the model for

the provision of investment services up to date with the related regulations. This initiative involved the following specific activities: nDefinition of a single Company Policy for Investment Services; nDefinition of a Company policy for Client classification and upgrades to the existing procedure

regulations;nImplementation of IT initiatives and processes arising from application of the aforementioned

Policies.

Development of ProcessesThe objective of this project, a natural continuation of an initiative that began in 2009, is to

consolidate the integrated corporate procedures management model. This involved the implementation of the following principal activities:nUpdating and development of the Corporate Procedures Map;nConsolidation of the management model, by structuring and formalising mapping/procedure

development and the qualitative/quantitative procedure evaluation methodologies;nAugmenting the corporate repository;nStart-up, with regard to the methodology adopted, of three improvement initiatives regarding

Securities and Derivatives Middle Office procedures, Middle and Back Office Financing and Legal Inquiries, as a result of which several improvement initiatives were identified and collated for implementation in appropriate project initiatives for 2011.


The organisational structure of the Bank was approved by the Board of Directors on 7 October 2009, following the creation of a Commercial Office, with departments to co-ordinate the management of the Corporate Lending, Corporate Finance, Capital Markets, Advisory and M&A divisions and the Commercial Network Management and Marketing and Commercial Co-ordination functions.

The Bank’s organisational structure is composed of a stable nucleus and a flexible nucleus. The stable nucleus is composed of:

1. Director General Management2. Executive Committee staff members3. Director General Staff members

a. Areasb. Functions

4. Business Division Senior ManagementAnd governed at the Corporate General Regulation level, approved by the Board of Directors. The flexible nucleus is represented by the corporate structures Staff reporting by Area and Division

directly to the Director General and the Business Division Senior Management and governed by the Company Regulations.

Organisational structure

Planning and ControlRisk ManagementHuman ResourcesAccounting and Financial ReportingOrganisation and ProcessesSafety and General ServicesMiddle - Back office fin.tiPurchasing and Cost Management

Lending PoliciesValuations And Issuance

Monitoring and Checking Legal Departement

PredisputeInvestigation

Business analysisEquity research

Macro economics and credit research

CDACE

Managing Director

Internal auditingCo-ordination of investments

Lending autority

Business intelligence

Gov. e macch. operativa

Finance & Markets OTC Derivatives Non-perform. Loans Advisory e M&A Capital Markets Corp. Finance Corp. Lending

Cons Legal, Affairs, Comp.

Captive MarketDirect Market

ManagementComm.l Network

Marketing Coor. & Commercial

MarketingPlanning

Commercial

Affari societariComplianceConsulenza legale


It should be noted that following the resignation of Valeriano d’Urbano as Director General in October 2010, the operating powers for Director General were granted on an interim basis to Marco Mandelli - Vice Director General and Commercial Manager of Centrobanca.

During the year, given an uncertain economic environment characterised by weak signs of recovery in the economic cycle, the bank experienced a significant recovery in medium/long term lending activity. In particular the Bank’s activity was greater than in the preceding year both with regard to loans approved (+2.1% compared with the figure at December 2009) and loans granted (+0.5% compared with the figure at December 2009).

Requests for financing totaling ¤ 3.391M were being processed at the end of the year (+20.3 % compared with the figure at 2009). Total outstanding loans for financing granted fell by -1.1% from ¤ 7.2 billion at December 2009 to ¤ 7.1 billion at December 2010.

Most of the financing issued was granted to non-financial counterparties (¤ 1,824.2 million granted, representing 84.5% of the total compared with 78.0% at december 2009) of which a notable feature was the increase in lending to the manufacturing sector (48.7% of the total compared with 34.4% at December 2009) and the reduction of the commercial and services sector (46.2% of the total compared with 60.7% at December 2009).

OPERATIONAL OVERVIEW

Loans

Banks and financial entities

Families and other

Non-financial entities:

- agricolture

- manufacturing

- building and construction

- services and commerce

TOTAL

-31.4%

40.5%

9.0%

0.5%

14.7%

0.8%

84.5%

1.8%

48.7%

3.4%

46.2%

100.0%

Economic sector

Value %

Change %

316,9

18.2

1,824,2

32.3

888.0

61.8

842.1

2,159.3

Net loans issued

Dec. 2010 Dec. 2009

21.4%

0.6%

78.0%

0.1%

34.4%

4.8%

60.7%

100%

Value %

460.2

13.0

1,674.8

1.9

575.6

80.9

1,016.5

2,148.0

Funding flows:

- Transactions approved

- Financing issued

Outstanding at period end:

- operations accepted and to be contract

- operations accepted and yet to be issued

TOTAL LOANS

- value of loans currently in issue (*)

+ 2.1%

+ 0.5%

+ 21.8%

+ 15.3%

+ 20.3%

- 1.1%

3,350.6

2,159.3

2,617.2

773.8

3,391.1

7,120.7

3,281.3

2,148.0

2,148.7

670.9

2,819.6

7,202.7

Dec. 2010 Change %

(*)residual net loans for existing financing to customers and banks

Dec. 2009

North West

North East

Centre

South

Islands

Non-Resident

TOTAL

-10.6%

69.1%

-9.9%

40.5%

458.6%

-51.4%

0.5%

39.5%

13.5%

22.4%

13.3%

5.3%

6.0%

100.0%

Geographical area

Value %

Change %

853.2

292.1

484.2

286.3

113.4

130.0

2,159.2

Net loans issued

Dec. 2010 Dec. 2009

44.2%

8.0%

24.9%

9.5%

0.9%

12.4%

100.0%

Value %

950.0

172.8

535.4

203.7

20.3

265.8

2,148.0


In terms of the geographical breakdown, the North-West (where the commercial network of Centrobanca and Gruppo UBI is largely concentrated) remains the area that accounted for the majority of lending activity (39.5% of the total) in absolute terms. There was also an increase in lending activity in the North East, representing 13.5% of the total amount granted and the South, in particular for project finance. However the decline in lending to non-resident counterparties continued to decline in line with the decrease in corporate finance transactions.

Lending activity was substantially balanced between Corporate Finance related lending and traditional loans. Within Structured Finance activities there was a contraction of Acquisition Finance related transactions (-21.5% compared with the amount granted in 2009) counterbalanced by an increase in Project Finance lending which rose by 134.6% and accounted for15.2% of total loans granted.

The activities of the Corporate Lending division mainly pursued three directions:

nFocussing the activity on higher value transactions reserved under the new rules for Centrobanca; n Development of synergies with the Commercial Banks of UBI and with primary institutions

such as Real Estate Investment Funds and with leading operators in the Solar energy sector with regard to the Mini Project;

n management of credit risk and loan positions showing the first indications of financial vulnerability.

With regard to the first two objectives, despite the unfavourable economic environment the validity of the model of integration with the Corporate Network of Gruppo UBI allowed the Group to achieve the volume and yield objectives set for 2010.

Risk management and monitoring of the entire Corporate Lending loan portfolio was stepped up in order to put in place the necessary precautions to safeguard the loans granted, agreeing with the Parent Company the extraordinary review of major positions with particular reference to real estate transactions financed on a “completion of work” basis.

Assisted Finance activity during the year primarily involved the management of the existing direct portfolio and that of its associates; preliminary assessments primarily related to some interventions on Competitiveness Development projects (Economic Development Ministry) and Industrial Research (Universities and Research Ministry)

The agreement with the Universities and Research Ministry expired on 31 December 2010 and the bank did not participate in the competitive bidding tender issued last August. The agreement with the Economic Development Ministry for the transactions governed by Law 46/82 will expire in July 2011 and the issue of a new competitive bidding tender is expected for the selection of new assisted finance managers.

45 new requests received under Law 46/82 are being considered involving a total investment of more than ¤ 90 million.

Corporate Lending

Acquisition & Project Finance

- acquisition finance

- project finance

Corporate Finance

Lending

TOTAL

Type of transaction

Value %

Change %Net loans issued

Dec. 2010 Dec. 2009

Value %

21.4%

-21.8%

134.5%

90.4%

-18.0%

0.5%

28.4%

13.2%

15.2%

15.6%

56.0%

100.0%

23.4%

16.9%

6.5%

8.2%

68.3%

100%

503.4

363.6

139.8

176.7

1,467.9

2,148.0

613.3

285.4

327.9

337.2

1,208.8

2,159.4


The Corporate Finance division is dedicated to the medium sized corporate sector to which it is capable of providing a wide range of highly complex and innovative financial services, particularly in structuring ad hoc financial products to satisfy the client’s specific requirements of an extraordinary nature and to support the client in realising projects for growth.

Particular attention is dedicated to the core Corporate clients of the banks belonging to the Group, which work in close collaboration with the banks, as they represent a natural source of opportunity and development potential

During the financial year 2010, which continued to be characterised by a complex market scenario but one which also showed significant signs of recovery, there was a growing flow of transactions in the renewable energy sector (above all in solar and wind energy), typical of structures of project financing. The standing of the Bank and of the Group is now consolidated in this sector through the achievement of significant results further confirmed by the substantial pipeline of transactions expected in 2011.

Acquisition and LBO transactions in the mid-cap segment, in contrast with the opening months of the year which still reflected market uncertainty, showed important signals of recovery in the second half of the year and greater activity by specialised operators, which resulted in a greater number of transactions. However, operations continued to be selectively oriented towards transactions with a moderate risk profile and characterised by a high level of standing and profitability for the Bank.

This division’s activity, as a whole, continues to be characterised by constant attention to the preservation of high margins, increased procedural efficiency and the continual monitoring and containment of risk.

The Investment Banking division, dedicated to medium sized businesses, incorporates a series of highly specialised and innovative financial services which are capable of satisfying the requirements of corporate clients seeking to achieve growth involving extraordinary transactions (capital interventions) or corporate restructurings.

2010 provided confirmation of the consolidation of Centrobanca’s position in this sector with a strategy that is more focussed on mid-corporate rather than big deals and the consequent improvement in execution capacity in particular in support of the Group’s clients.

There was an improvement, compared with 2009, in the number of mandates received during the year (50 mandates compared to 40 in 2009); with an increase in the contribution of Advisory and M&A due to synergies with the Network Banks of the Group.

2010 was a particularly critical year for capital markets and the activity of the Capital Markets division was impacted by the negative economic climate. Despite this unfavourable environment the bank participated in the placing of ENEL Green Power, the only IPO transaction of significance during the year, with brilliant results in retail participation and was involved in placings and underwriter in several capital increases, notably including that of Terni Energia. In addition, for the first time, the bank participated, as manager, in some institutional EMTN (Euro Medium Term Note) bond issues, including those of Lottomatica and Sias.

Centrobanca continued to act as a specialist for a number of companies although rationalized its activities and it now operates as specialist for 12 companies listed on various markets.

Investment Banking

Corporate Finance

Mergers & Acquisition/Advisory

Capital Markets

- advisory

- specialist

TOTAL

+ 42.3%

- 7.1%

+ 80.0%

- 55.6%

+ 25.0%

N° mandates/transactions acquired during the year Change %

37

13

9

4

50

Dec. 2010 Dec. 2009

26

14

5

9

40


Advisory and Merger & Acquisition activities carried out in 2010 produced results in line with previous years, despite the fact that the M&A market remained weak during the year with some signs of recovery emerging only towards the end of the financial year.

Advisory activity therefore continued to contribute positively, both in the area of restructuring, in which 5 transactions were completed successfully, and with other products, notably including certification of renewable energy projects, in close synergy with the other areas of the bank involved in the growth experienced by this sector last year.

During 2010 the provision of derivative instruments to hedge risks deriving from the adverse trend of interest rates, foreign exchange rates or the cost of raw materials, rose significantly compared with the volumes reported during the previous year (the total notional amount trade rose +15.6% during 2010).

Thsi growth was made possible by the particular market conditions that allowed both corporate and retail Clients to put in place hedging transactions that, as a result of the crisis, produced attractive results. The growth of the Retail segment was particularly notable (notional amounts rose +106.2% compared with the previous year).

Despite the continuing crisis that weighed on equity investments by institutional clientts in Italy, the 2010 result for Equity Sales was better than in 2009, particularly due to the increase in counterparties and the change in depositary arrangements that resulted in savings in settlement and clearing costs. Within this market context, Equity Sales traded volumes rose to ca. ¤ 2.3 billion in 2010 compared to ¤ 1.7billion (+35%).

The activity of OTC pricing of interest and exchange rate derivatives by the Market Making desk, following a first half characterised by strong aversion to risk, reflected a reversal of the previous trend from September, with a trend that took rates to the levels of end-2009 in just three and a half months, with a consequent sharp increase in volatility.

These conditions of uncertainty generated higher demand for hedging with a positive effect on market making flows, favouring a trend of flows, and related revenues, that was more homogeneous and less volatile.

In addition, market making activity of bonds began in 2010, following a successful pilot period that confirmed the potential of this business segment in terms of profitability for Centrobanca.

In terms of asset financing 2010 opened with an initial reduction in the cost of bond issuance, a decline, however, that was reversed in the second half. Treasury fund raising activities concentrated on the issue of bond securities for a total of ¤ 2.8 billion, with average duration of 5-6 years, in line with the structural balance objectives of the bank and the ALM (asset and liability management) policies of the Parent Company. In addition, interbank financing activity, co-ordinated with the UBI Finance division, concentrated on the lengthening of expiry terms on interbank deposits.

Finance and Markets

Corporate and Retail

Otc Derivatives

Pair trades

Corporate clients

- Interest rates and other

- Exchange rates

Retail clients

TOTAL

+ 5.8%

- 20.7%

+ 61.0%

+ 106.2%

+ 15.6%

2,958

1,498

1,460

622

3,580

N° ops. Notional

value

Change 09-10 %

2,071

517

1,554

3,295

5,366

Dec. 2010 Dec. 2009

+ 49.9%

+ 29.6%

+ 58.1%

+ 135.5%

+ 93.0%

1,382

399

983

1399

2,781

2,795.3

1,888.2

907.1

301.7

3,097

N° ops. Notional

value

N° ops. Notional

value

(*) Activity in 2008 by the ex BL network alone(**) Figures for 2008 are the aggregate of activity by the ex BPU network and the ex BL network


Private equity/merchant banking activity continued during 2010 with the management of the existing portfolio and with an increase in invested capital

IWBank - The shareholding in IWBank was originally acquired as part of the private equity activities and was then subsequently classified for IAS purposes in the balance sheet item “Shareholdings” to reflect the fact that it is jointly controlled by Gruppo UBI and Centrobanca. Centrobanca reduced its shareholding in IWBank to 23.5% in 2009.

The Group’s negative net result for the year ended 31 December 2010 was - ¤ 4.4 million, down from the result of ¤ 0,3 million reported for the year ended 31 December 2009. It should be noted that the result for the period includes costs from non-recurring events and the reorganisation of some business activities amounting to a total of ¤ 6.2 million which had a negative impact on the net profit of ¤ 5.8 million.

The trading margin in 2010 was ¤ 67.9 million, down by 11.9% compared to the ¤ 77.1 million reported for the year to 31 December 2009, mainly due to a lower contribution from the interest margin. Impairment charges on loans, equal to ¤ 1.0 million, were sharply down (-83.9%) compared to the ¤ 6.0 million at 31 December 2009.

Operating costs of ¤ 67.0 million were down 3.4% net of non-recurring items (¤ 65.9 million in the year to 31 December 2009).

Loans to clients, at 31 December 2010, amounted to ¤ 207.0 million representing an increase of more than 31% compared with ¤ 157.4 million at 31 December 2009. Indirect client deposits rose by 25.6% compared with the figure at end-2009, to ¤ 3.099 million (¤ 2.467 million at 31 December 2009).

At 31 December 2010, the Bank had about 105,842 active accounts, representing an increase of 7% compared with the position at December 2009.

Private equity

IW Bank Spa

Humanitas Spa*

Ecas (ex Techosp Clinical Serv.)*

Immobiliare Mirasole ord. (ex ACH IMM.)*

Immobiliare Mirasole priv. (ex ACH IMM.)*

Pellegrini Group Spa*

Pama Spa*

Frittelli Maritime Group

Biocell Center Spa

Other shareholdings

TOTAL INVESTMENTS

Private equity investments

/ Mechant Banking Value % holding

Change %2010 2009

Value % holding

* Investments managed with the assistance of the subsidiary Centrobanca Sviluppo Impresa Sgr

- 6%

+ 9%

+ 8%

+ 22%

- 83%

+ 5%

23%

9.1%

8.8%

37%

78%

7%

9%

11%

8%

2.2

24.2

2.3

24.1

13.6

12.1

5.5

1.6

1.0

0.1

86.7

23%

9.1%

8.8%

37%

78%

7%

9%

11%

2.2

25.7

2.3

22.2

12.6

9.9

5.5

1.6

-

0.6

82.5


Humanitas S.p.A. / E.C.A.S. S.p.A. - The Humanitas Group is one of the leading hospital companies in the Italian private healthcare sector which manages 6 clinics (all accredited with the SSN) located in Lombardy, Piedmont and Sicily. The Humanitas clinic in Milan also incorporates a University department

The draft results for 2010 reveal, in terms of management accounting, revenues of ¤ 445 million confirming the solidity of the aggregate Humanitas and ECAS business.

The net financial position is absolutely reassuring, even if slightly higher than the position at end-2009, entirely attributable to the trend of net working capital (ASL receivables are paid at year-end).

The robust financial position allows the Group to devote particular attention to the acquisition opportunities presented to it by the market, which the Group reviews very selectively.

Ecas, which only carries out private activity, reported further growth in both sales and margins, as anticipated in its budget plan.

IMMOBILIARE MIRASOLE S.p.A. (ex. ACH IMMOBILIARE S.p.A.) - This company’s main activity is the management of the real estate relating to the operation of the Humanitas and TCS clinics.

The result for the 2010 financial year, given the high degree of visibility available to management, is in line with the Budget for the period with sales of ¤ 25.5 million, representing growth compared to 2009 (¤ 21.4 million).

On 01.12.2010 a Merger agreement was signed according to which IMMOBILIARE MIRASOLE S.p.A. incorporated the subsidiary ICT IMMOBILIARE S.p.A., The merger became effective on 01.01.2010.

Taking account of the fact that ICT IMMOBILIARE was 97.016% owned by IMMOBILIARE MIRASOLE, the transaction involved an exchange of shares which resulted in non-controlling minority shareholders of ICT becoming owners of 0.734% of the share capital of IMMOBILIARE MIRASOLE S.p.A.

On 16 December 2010 the acquisition of land in Bergamo was completed involving a total investment of ¤ 3.3 million. It should be noted that this area is strategically important for the possibility of building a car park (capacity of about 300 vehicles) in the immediate vicinity of the owned buildings which host the Gavazzeni Clinics.

Further minor ordinary and extraordinary maintenance interventions on property were also approved, as well as updates on work in progress on some properties in the Rozzano and Turin complexes (Cellini Clinic).

The company’s Business Plan was reviewed last November in view of the aforementioned postponement of investments which necessitated a waiver request to the pool of banks (led by Centrobanca S.p.A.) for the extension of the remaining amount of Line D (about ¤ 16.5 million) of the total financing of ¤ 240 million.

The Exit process for this investment runs from 01.01.2014, from which date, till 30.06.2014, the HUMANITAS group holds a CALL option to purchase from Centrobanca and Aedes the shares held by them in Immobiliare Mirasole S.p.A.. In the event that the aforementioned CALL option is not exercised, Centrobanca S.p.A. will have the right to sell 100% of the company on the market.

2010 fcst.2009

RevenuesEbitdaNet Financial Position

445.0

56.1

-18.7

458.5

56.9

-11.3

Humanitas S.p.A./ECAS

Main economic and financial data

2010 fcst.2009


25.5

8.6

-210.9

21.4

16.5

-210.6

Immobiliare Mirasole S.p.A.



Pellegrini S.p.A. - This is the vehicle that was used to acquire 100% of the capital of PELLEGRINI S.p.A.. Centrobanca holds 7% of Pellegrini Group for a total investment of ¤ 6,667,500.

Revenues for the year were ¤ 414 million representing an increase of about 6% compared with the previous year, due to the notable growth of some divisions (Cleaning, Card) and the comprehensive containment of costs.

The Net Financial Position improved compared to 2009 due, on the one hand, to the increased revenue contribution of the Card division, which generates positive net cash flow, and on the other to lower investments following the stability of catering division revenues. The Net Financial Position at year-end was about ¤ 42 million following the ¤ 8.4 million repayment of the bond and repayment of ¤3.8 million of Senior Debt.

Pama S.p.A. - The investment in Pama S.p.A. was completed on 5 August 2009 for a total consideration of ¤ 5,525,000, with the acquisition from the company’s historical shareholders of no. 510 shares representing 8.5% of Pama’s capital.

This transaction is part of Gruppo UBI’s strategy of investment and support for medium sized companies characterised by high growth and industry leadership.

Pama S.p.A, based in Rovereto (TN) is amongst the world’s leading producers of horizontal spindle reaming/milling machines for processing large scale mechanical components used in the energy, earth moving and mechanical engineering industries.

2010 was a year of consolidation for PAMA following its excellent performance in previous years due to the less efficient management of industrial production following the postponement of some deliveries requested by some clients. The value of production for the year was ¤ 140 million, which was lower than the result for 2009 and lower than the budget for 2010.

However, the trend of the order portfolio, the real “barometer” of the company’s trend, revealed a better than expected result for 2010. At the end of 2010 the order backlog was about ¤ 201million, which should fully utilise production capacity in 2011.

Car Testing S.A. - This Luxembourg company controls the PROTOTIPO group, which provides highly specialised engineering services to the automobile industry. In particular it provides reliability and testing services to the world’s leading automobile producers. The parent company Prototipo S.p.A. operates in the region of Turin (Trofarello), while its 100% subsidiary Nardò Technical Center s.r.l. owns and operates the distinctive Nardò test circuit in the southern province of Lecce.

There were encouraging signs of recovery in 2010, revenues were ¤ 24.9 million and the final result revealed a profit of ¤ 0.4 million. The 2010 Budget objectives were achieved and surpassed, taking the full company back to its pre-crisis levels of profitability, even though the volume of business was still well below the revenues reported for 2008.

2010 fcst.2009


140.5

17.1

-25.5

155

24.9

-20.0

Pama S.p.A.


2010 fcst.2009


414.0

31.9

-42.3

390.6

31.4

-55.2

Pellegrini Group S.p.A.



The Budget for 2011 is for substantial stability in revenues, but with a different mix of activities, so that company margins expressed in terms of Ebitda are expected to be slightly lower than in 2010. In addition, investments are planned to improve the technical-industrial skills set offered to international clients in the core markets.

The company’s Net Financial Position declined due to the gradual exhaustion of the installment plan relating to prior years’ tax and social security arrears; this should take the NFP/EBITDA ratio to less than 4x, allowing a degree of self-financing to be dedicated in part to new investments.

2010 fcst.2009


24.9

4.2

-16.7

22.4

2.2

-18.3

Car Testing



The items shown in the reclassified balance sheet correspond to those in the draft balance sheet with the exception of the extrapolation of the bank debt of the subordinate deposit account.

CAPITAL STRUCTURE

Loans and Assets:

Loans to customer

- financing

- securities

- other credits

Loans to banks

- financing and deposits for pooled operations for customers

- securities

- current accounts, cds and other

Financial assets:

- assets for trading

- debt securities

- equity securities - shareholdings

- derivatives for trading

- embedded derivatives

- avaible for sale assets

- debt securities

- equity securities - shareholding

Shareholdings

- in being

Property and other tangible assets

Other intangibles

Funding with charges:

Securities in ussue

- bonds

- certificates of deposit (cds)

Due to banks

Due to customers

Subordinated liabilities

Financial liabilities for trading

- derivatives for trading

- embedded derivatives

Hedging:

- Hedging derivative assets

- Hedging derivative

- adjustment of asset value with general

cover -

customer financing

Dec. 10 vs Dec. 09Dec. 2010 Dec. 2009

+ 19.9%

- 1.1%

+ 362.4%

+ 8.2%

+ 11.9%

+ 5.4%

- 19.0%

- 1.3%

+ 20.7%

+ 33.1%

+ 7.1%

- 31.6%

+ 0.0%

+ 9.1%

+ 1485.7%

6,973.7

15.6

57.9

229.0

15.7

222.2

19.9

92.6

265.5

21.8

535.0

2.2

6.3

-3,994.2

-166.9

-247.5

-21.8

8,522.9

7,047.2

466.9

937.0

399.9

537.1

6.3

59.4

6.1

-7,886.3

-4,161.1

-3,244.1

-11.7

-200.0

-269.4

-2.1

112.1

-120.9

6.5

6,909.3

10.5

52.9

211.4

1,671.4

276.1

15.4

112.2

306.0

14.1

557.3

8.8

5.1

-5,411.7

-127.5

-279.9

-14.1

10,216.3

6,972.7

2,158.9

1,013.7

447.6

566.1

5.1

58.6

7.2

-9,514.9

-5,539.2

-3,473.7

-8.0

-200.0

-294.0

-33.4

135.6

-175.1

6.1


Customer Loans at 31 December 2010 totalled ¤ 6,972.7 million, slightly down (1.1%) compared to the position at the same date in 2009.

The composition of the stock of loans to customers in 2010 was similar to that at December 2009, with a slight reduction in Corporate Lending (-1.5%) and Corporate Finance (-1.1%) offset by an increase in Acquisition & Project Finance (+0.6%) supported by growth in Project Finance.

The breakdown by sector and economic activity reveals a decline in almost all sectors apart from the share represented by non-financial companies (+3.2% compared with December 2009). There was a sharp contraction in lending to the banking and financial sector (-29.1% compared with December 2009) which was related to the reduction in consumer lending.

The breakdown by geographical area confirms the results of the analysis of flows of lending: the North West continues to represent the highest share (+8.5% compared with December 2009), growth in the share represented by the North East (+16.1% compared with December 2009) and a decline in the share represented by non-residents (-34% compared with December 2009) as a result of the reduction in structured finance lending on the Euromarket.

Loans to customers

Acquisition & Project Finance

Corporate Finance

Lending

Other loans

TOTAL

Operation by type

Value %

Change %

Dec. 10 - Dec. 09

Value %

Outstanding loans

Dec. 2010 Dec. 2009

0.6%

-1.1%

-1.5%

-34.8%

-1.0%

29.1%

10.7%

59.8%

0.3%

100.0%

2,032.2

743.9

4,172.8

23.8

6,972.7

28.7%

10.7%

60.1%

0.5%

100.0%

2,020.6

752.3

4,237.8

36.5

7,047.2

States and public entities

Banks and financial entities

Families and other

Non financial entities:

- agricolture

- manufacturing

- building and costruction

- services and commerce

TOTAL

Economic sector

Value %

Change %

Dec. 10 - Dec. 09

Outstanding loans

Dec. 2010 Dec. 2009

Value %

-9.25%

-29.1%

-2.2%

3.2%

-1.1%

0.4%

8.8%

3.3%

87.4%

1.0%

31.8%

3.7%

38.1%

100.0%

29.4

615.8

231.8

6,095.7

68.4

2,214.6

256.4

2,660.0

6,972.7

0.5%

12.3%

3.4%

83.9%

0.6%

44.7%

3.0%

35.6%

100.0%

32.4

868.2

237.0

5,909.5

41.4

3,151.2

209.2

2,507.7

7,047.2

North West

North East

Centre

South

Islands

Non-Residents

TOTAL

Geographical area

Value %

Change %Outstanding loans

Dec. 2010 Dec. 2009

Value %

+ 8.5%

+ 16.1%

- 13.7%

+ 19.0%

+ 70.4%

- 34.0%

- 1.1%

45.3%

13.8%

15.7%

9.7%

2.6%

12.9%

100.0%

3,157.6

959.9

1,094.3

675.0

183.9

901.8

6,972.7

41.3%

11.7%

18.0%

8.1%

1.5%

19.4%

100.0%

2,911.5

826.5

1,268.2

567.3

107.9

1,365.7

7,047.2


The “Acquisition and Project Finance” segment includes “leveraged finance” loans represented by financing for companies or initiatives that involve a level of debt greater than that considered usual by the market and which, therefore, carries greater risk. Such financing is usually utilised for specific acquisition objectives (e.g. acquisition of companies by other companies - directly or through vehicles/funds - led by internal management (buy in) or external managers (buy out) and characterised by “non investment grade” ratings (less than BB) and/or by repayments that are greater than normal market levels.

In accordance with the Group’s business model, structured finance activities are centralized in Centrobanca. In order to render this organisational model operative, a dedicated unit has been set up in Centrobanca and a specific policy has been adopted which is intended to combine the attainment of budgeted objectives for volumes and profitability with supervision of related risk. In summary, the activity is based on a complete platform definition which is reviewed annually, sub-divided on the basis of the class of rating of the transaction in accordance with pre-established maximum percentages

The system of limits is determined in such way as to seek greater diversification of the highest credit risk levels and particular attention is given to the concentration of individual nominated risks, both internal to Centrobanca and collectively within Gruppo UBI (the so-called “Group of the Group” concept). Adequate guidelines and suitable supervision are provided both with reference to sectoral concentration that must be consistent with the Group’s credit policy, as well as in relation to the duration/amortisation of the operations themselves.

At end December 2010, the exposure by cash and consent of leveraged finance (shown below together with “Acquisition e Project Finance”) led by Centrobanca, totaled ¤ 905 million, representing a reduction compared to the ¤1,285 million reported at December 2009.

The following charts illustrate the distribution of leveraged finance exposure by sector and by geographical area.

Leveraged Finance

Geographical breakdown Sector breakdown

4% USA and Messico 21% Europe

75% Italy

39% Service and Commerce

61% Manufacturing

Leveraged finance

impairmentutilised

Gross credit consent exposure

to clients

Gross cash credit exposure

to clients

utilised impairment

-6.0853.0 -7.7 51.9


At 31 December 2010 the net total of “doubtful debts” totalled ¤ 437.8 million, in line with the value reported at December 2009 (+1.4%).

The ratio of doubtful debts to total loans rose to 6.3% compared with 6.1% at December 2009.

Given these figures that are, in absolute and in percentage terms, in line with 2009, the following items illustrate the change in composition of the various stages of default:

nNet doubtful loans rose by 71.2% due, in particular, to the reclassification of positions previously included amongst watch-list loans such as those relating to Mariella Burani Family Holding and Mariella Burani Fashion Group and Eutelia Spa. The ratio of net doubtful loans to total net loans rose by 0.7% to 1.2%;nWatch-list loans declined significantly by -34% due to the aforementioned reclassification to

doubtful loans and restructured positions, which reduced the percentage of these loans on total loans by one percentage point; nThe restructured loans segment rose sharply to ¤ 168.4 million (+249.2%) following inclusion

of some performing (in bonis) loan positions. This trend increased the ratio of restructured loans to total doubtful debts to 2.4% compared with 0.7% at December 2009;nExpired positions were sharply down compared to December 2009 (-62.7%). It should be noted

that expired positions , as defined by the Bank of Italy circular no. 272/2008 applied from 30 December 2009, allows for the definition of exposure on the basis of the client and not by individual relationshipe and also the inclusion of the portion 90/180 days overdue.

The coverage ratio for doubtful debts was 48.0% compared with 44.3% at December 2009. The coverage ratio, at the level of doubtful loans, fell to 81.7% from 84.1% at December 2009.

With reference to the bankruptcy proceedings involving Mariella Burani Family Holding S.p.A. - MBFH, Burani Designer Holding N.V. - BDH, Burani Private Holding S.p.A. - BPH, Mariella Burani Fashion Group S.p.A. - MBFG, a definitive ruling has admitted Centrobanca’s claim, to the liability involving all procedures regarding the loan relating to financing granted in August 2008 to MBFH relating to the public tender offer (OPA) for shares in MBFG, as well as loans relating to other financing granted to MBFG between March 2004 and June 2007. It should also be noted that the exposure to Gruppo Burani was adjusted by ¤ 47 million, the charge being imputed to the financial statements for 2009.

The top 50 clients at 31 December accounted for 41.9% of loans, representing a stable but slight increase on the underlying trend (40.5% at 31 December 2009). The concentration of the top 10 clients at 31 December 2010 was 16.8% which also reflects a slight increase compared to December 2009.

Credit quality

(*) the percentage covered is equal to the ratio of adjustments to gross credits

Non performing

Watch-list

Restructured

Overdue

DOUBFUL LOANS

Loans in bonis

Countries at risk

LOANS IN BONIS

TOTAL IN LOANS

Gro

ss c

red

it

% o

f ne

t tot

al

Change % Dec. 10 - Dec. 092010 2009

% c

over (*

)

Net

cre

dit

Gro

ss c

red

it

% o

f ne

t tot

al

% c

over (*

)

Net

cre

dit

% o

f ne

t tot

al

% c

over (*

)

Net

cre

dit

Customer loans

81.2

144.2

168.4

44.0

437.8

6,521.3

13.6

6,534.9

6,972.7

443.9

175.6

178.6

44.2

842.3

6,550.2

13.9

6,564.1

7,406.4

1.2%

2.1%

2.4%

0.6%

6.3%

93.5%

0.2%

93.7%

100.0%

81.7%

17.9%

5.7%

0.4%

48.0%

0.4%

2.2%

0.5%

5.9%

299.2

305.2

53.1

118.5

776.0

6,644.9

1.8

6,646.6

7,422.6

47.4

218.3

48.2

117.9

431.9

6,613.8

1.5

6,615.3

7,047.2

0.7%

3.1%

0.7%

1.7%

6.1%

93.9%

0.0%

93.9%

100.0%

84.1%

28.5%

9.3%

0.5%

44.3%

0.5%

15.5%

0.5%

5.1%

71.2%

-34.0%

249.2%

-62.7%

1.4%

-1.4%

800.1%

-1.2%

-1.1%

0.5%

-1.0%

1.7%

-1.0%

0.2%

-0.3%

0.2%

-0.2%

0.0%

-2.4%

-10.6%

-3.6%

-0.1%

3.7%

0.0%

-13.3%

0.0%

0.8%


At 31 December 2010, the balance of loans to banks was ¤ 2.159 million, sharply higher than at the same date in 2009.

The increase is most evident in the item, “Securities” following the purchase of Ubi bonds carried out as part of the bond raising activities conducted on behalf of the Parent Company.

The performance of financial assets, represented by securities and receivables and directly attributable to activity to service corporate clients, is illustrated below and classified by balance sheet category according to IAS criteria.

Equity securities - This category includes both the holdings acquired in the course of merchant banking operations, and the equity shareholdings attributable to Capital Market activity. The change relative to December 2009 is primarily attributable to the higher value of investments forming part of the merchant banking and investment banking activities, particularly the purchase of a shareholding in Vallourec (¤ 19.9 million), a position that was however liquidated at the start of 2011.

Derivatives for trading - The total market value of these is almost entirely attributable to hedging derivatives for clients of Gruppo UBI where Centrobanca acts as a specialised skills “product factory” between the market and the Network Banks. The amount and changes thereto are matched with a corresponding entry under tradeable financial liabilities.

Loans to banks

Financial assets

Loans to banks

- Client pooled financing and cds

- Securities

- current accounts deposit

accounts and other

TOTAL

Value %

Change %

Dec. 10 - Dec. 09

Outstanding loans

Dec. 2010 Dec. 2009

Value %

-7.7%

n.s.

-24.3%

362.4%

9.8%

77.4%

12.8%

100.0%

211.4

1,671.4

276.1

2,158.9

49.0%

3.4%

47.6%

100.0%

229.0

15.7

222.2

466.9

Debt securities

Equity securities

Derivatives for trading

Embedded derivatives

TOTAL

Change % Dec.10 - Dec. 09Financial assets for trading

(e million)

2010 2009

- 22.6%

+ 21.1%

+ 15.2%

- 35.3%

+ 11.9%

15.4

112.2

306.0

14.1

447.7

19.9

92.6

265.5

21.8

399.9

Humanitas

Ecas (ex Techosp Clinical Serv.)

Immobiliare Mirasole Ord. (ex Ach Imm.)

Immobiliare Mirasole Priv. (ex Ach Imm.)

Pellegrini Group Spa

Pama Spa

Frittelli Maritime Group

Biocell Center Spa

Cogeme Spa

Meridie Spa

Arkimedica

Vallourec SA

Other shareholdings

TOTAL

Financial assets held for trading Change %2010 2009

- 5.8%

+ 8.5%

+ 8.5%

+ 22.2%

- 38.1%

- 4.0%

- 15.4%

- 65.3%

+ 21.1%

24.2

2.3

24.1

13.6

12.1

5.5

1.6

1.0

2.6

2.4

1.1

19.9

1.7

112.1

25.7

2.3

22.2

12.6

9.9

5.5

1.6

-

4.2

2.5

1.3

-

4.9

92.6


Embedded derivatives - These are embedded options in structured financial instruments which are matched by corresponding amounts included under financial liabilities.

Available for sale financial assets

Debt securities - This item includes corporate bonds from activities related to the strategic role of the Bank in supporting businesses.

The investment policies of the Corporate Bonds Portfolio during 2010 - 72.5% composed of investment grade companies - were refocussed on the captive client base of the Group, with investments targeted on Italian corporate issuers and leading European companies with commercial operations and subsidiaries in Italy.

In addition, the dramatic slowdown in the deterioration of credit quality that occurred in 2010, primarily illustrated by a net reduction in the number of cases of default at a systemic level and the consequent tightening of credit spreads on corporate issues, resulted in a recovery in the value of the bonds.

Equity securities - This category includes shareholdings which are not controlling shareholdings and which are not held as part of the Private equity business.

The change compared to December 2009 relates to the merger by incorporation of 100% of the subsidiary CB Invest and the reduction in the shareholding in Group Srl from 20% to 14.3% representing an exit from shareholdings subject to significant influence.

Centrobanca Sviluppo Impresa SGR - The activities of the subsidiary, which reported a net profit for 2010 of ¤ 0.3 million, are focussed on:

1. managing the portfolio of investments of the Fondo Sviluppo Impresa (6 shareholdings at the start of the year subsequently reduced to 5 following the sale of the shareholding in Giugno 2008 Srl);

2. providing consultancy services to the parent Centrobanca S.p.A. for its Private Equity holdings (at year end it had 5 investments of which 2 were held jointly with the Fund and 3, relating to a single corporate group [Humanitas, Ecas and Immobiliare Mirasole], were held separately);

3. promotion of the new Closed End Investment Fund “SVILUPPO ENERGIA”, reserved for qualified investors. The objective being to raise funds of ¤ 30 million, for investment in companies engaged in the alternative energy sector.

Investments

(*) Control exercised by the Parent Company UBI

Debt securities

Equity securities

TOTAL

Change % Dec. 10 - Dec. 09Available for sale financial assets Dec. 2010 Dec. 2009

+ 4.2%

+ 300.0%

+ 5.4%

557.3

8.8

566.1

535.0

2.2

537.1

Exclusively controlled shareholdings

CENTROBANCA SVIL. IMPRESA SGR

Jointly controlled

UBI SISTEMI E SERVIZI

TOTAL

Shareholdings subject to significant influence

IW BANK SPA (*)

TOTAL

TOTAL SHAREHOLDING

N. shares ValueShareholding % holdingYear

acquired

100.0%

1.48%

23.5%

20.000

1.000.000

17.297.576

2,162.9

776.3

2,939.2

2,169.9

2,169.9

5,109.1

2002

2008

2003


The following operations were carried out during 2010, as part of investment portfolio management on behalf of Fondo Sviluppo Impresa: n subscription to a capital increase by Gatto Astucci Spa aimed at financing expansion of of its

business operations through an acquisition, which increased its shareholding from 53.68% to 58.47%;n purchase of a further shareholding in Car Testing Spa for a symbolic value taking its shareholding

to 50%;n divestment of the shareholding in Giugno 2008 srl generating a capital gain of ¤ 1.2 million.

IW Bank SpA - The shareholding in IW Bank was originally acquired as part of the Group’s private equity activities and was subsequently classified for IAS purposes amongst “Shareholdings” to reflect the joint control exercised by Gruppo UBI and Centrobanca over this company. Centrobanca reduced its shareholding to 23.5% during 2009.

At 31 December 2010 the Group’s net result was - ¤4.4 million, down from the ¤ 0.3 million reported for the year to December 2009.

The main forms of Centrobanca funding are securities issues (bonds and certificates of deposit) and recourse to short term interbank lending made available by the Parent Company. Debt to other banks is almost entirely composed of certificates of deposit with guarantees closely linked to lending activity and derivatives trading on behalf of the clients of Gruppo UBI.

There was an increase in interest bearing funding with charges at the year end compared to December 2009 (+21.1%). This increase is partcularly attributable to:

n the financial requirement to rebalance the proportion of short term funding with medium and long term funding, within the parameters set by regulations in force and the limits established by Parent Company policy;n the development of funding activity conducted on behalf of the Parent Company carried out

by placing Centrobanca securities through third party networks and the simultaneous purchase of UBI bonds with the same characteristics.

During 2010, despite the expiry of a total of ¤ 570 million of its own securities, Centrobanca placed ¤ 2.8 billion of its own securities, primarily through third parties, to finance expansion of its assets, of which ¤ 1.66 billion was transferred to the Parent Company as part of the aforementioned service activities.

During 2010, in accordance with the Parent Company’s risk and liquidity management policies, Centrobanca gradually increased the term of its interbank funding from UBI underwriting deposits of 6/9 months which substitute very short term and demand deposits.

Funding with charges includes a subordinated loan of ¤200 million with expiry in 2014 from the Parent Company, recognised as part of Regulatory Tier 2 capital.

Funding with charges

Securities in issue:

- bonds

- certificates of deposit

Due to banks:

- to UBI

- to other banks

Subordinated liabilities (tier 2)

Due to clients

TOTAL

Value %

Change% Dec. 10 - Dec. 09

Value

Dec. 2010 Dec. 2009

Value %

Funding with charges

+ 35.5%

- 23.6%

+ 33.1%

+ 8.4%

- 48.6%

+ 7.1%

- 31.6%

+ 21.0%

54.6%

42.6%

2.6%

0.2%

100.0%

3.994.2

166.9

4.161.1

3.167.6

76.6

3.244.1

200.0

11.7

7.616.9

60.1%

37.7%

2.2%

0.1%

100.0%

5,411.7

127.5

5,539.2

3,434.3

39.4

3,473.7

200.0

8.0

9,220.9


As for the assets, available for sale financial liabilities are composed of the following:n the market value of derivatives which are the hedging derivatives for clients of Gruppo UBI

where Centrobanca acts a specialist skills centre between the market and the network banks of the Group. The amount of and changes in these items is substantially in line with the matching entry under tradeable financial assets. n embedded derivatives in structured financial instruments which are matched by corresponding

amounts included under financial assets.

Hedging transactions, part of ALM, are undertaken to minimise financial risk deriving from the varied composition of assets and liabilities in terms of expiry, indexation and currency. In particular, they cover three areas:

1) Coverage of structured and fixed rate loans to bring the cost into line with non-option levels and money market levels (essentially 3 or 6 month Euribor rates). Notional value of ¤ 4,641 million (+85% compared to 2009);

2) Coverage of structured or fixed rate corporate bonds to bring yields into line with the market and without option components. Notional value of ¤ 483 million (+7% compared to 2009).

3) Specific cover of the amount of fixed rate financing that exceeds an amount with similar characteristics through interest rate swaps. The remaining contracts have a notional value of ¤ 80.6 million (-6% compared to 2009) in aggregate and notional value of ¤ 133.2 million (+1% compared to 2009) for the specific microcover quota.

Financial liabilities

Hedging derivatives


The income statement items included in the reclassified financial statements correspond to those in the draft income statement with the exception of the amount relating to tax rebates which is net of both administrative expenses and management income.

Centrobanca generated a gross operating margin of ¤ 108.2 million for the financial year ended 31.12.2010 (¤ 140.9 million for the year ended 31.12.2009) composed of operating income of ¤

163.2 million (down by 17.8% compared to the ¤ 198.5 million reported for the year ended 31.12.2009) and operating costs of ¤ 55.0 million (compared to ¤ 57.6 million in the year ended 31.12.2009).

The Pre-tax profit was ¤ 31.5 million compared to ¤ 44.5million reported for the year ended 31.12.2009; the net profit for the year was ¤ 16.2million compared to ¤ 28.04 million in the previous year (-42.4%).

The main features of the Income statement are described below:

During the year the Bank took action to counteract the pressure on interest margins from low interest rates by adopting selective growth in lending activity and a careful pricing policy

The interest margin in the year to 31 December was ¤ 100.2 million, down by 20.6% compared with the result for the year to December 2009. The ratio of interest margin to total income declined slightly from 62.8% last year to 61.4%.

The contraction in interest margins was the result of the decrease in margins on yield-bearing assets (¤ -41.4 million compared to December 2009) due to the following factors:n The contraction in loans to clients the average amount of which was 4.1% lower than at

December 2009;n The yield curve which was less favourable than the situation in the first six months of 2009

that was more positive on mark-up. The mark up on Euro denominated loans to clients fell to 1.98% compared with 2.48% in December 2009..

ECONOMIC TRENDS

Interest margins

Interest margin

Dividends

Net commission

Trading

Hedging

Profit/loss from sale/rep. of loans and fin. assets/liabs.

Trading, Hedging and other

Other operating

Operating

Personnel

Other administrative

Total other administrative

Impairment/value ad.to material

Operating expences

Operating result

Net adjustments to the value of loans

Net adjustments to other financial

Net provisions for risks and charges

Profit/loss from shareholdings

Pre-Tax profit/loss of continuing operations

Tax for the period on continuing

Profit/loss for the period

Income statement

(e ‘000)

2010 2009

Change %

reclassified

Accounting Reclassification Reclassified

2010 2009

Impostasostitutiva

2010 2009

100,212

1,532

42,102

14,270

6,956

(7,215)

14,011

8,721

166,579

(32,957)

(24,421)

(57,378)

(1,003)

(58,381)

108,198

(65,430)

(3,564)

(7,669)

(15)

31,520

(15,367)

16,153

100,212

1,532

42,102

14,270

6,956

(7,215)

14,011

5,349

163,207

(32,957)

(21,049)

(54,006)

(1,003)

(55,009)

108,198

(65,430)

(3,564)

(7,669)

(15)

31,520

(15,367)

16,153

126,192

3,686

40,890

21,950

3,515

(1,201)

24,264

3,543

198,575

(33,449)

(23,234)

(56,683)

(993)

(57,676)

140,899

(112,386)

(2,476)

679

17,798

44,513

(16,471)

28,042

-20.6%

-58.5%

3.0%

-35.0%

97.9%

n.s

-42.3%

51.0%

-17.8%

-1.5%

-9.4%

-4.7%

1.0%

-4.6%

-23.2%

-41.8%

43.9%

n.s

-100.1%

-29.2%

-6.7%

-42.4%

126,192

3,686

40,890

21,950

3,515

(1,201)

24,264

5,856

200,888

(33,449)

(25,548)

(58,997)

(993)

(59,990)

140,899

(112,386)

(2,476)

679

17,798

44,513

(16,471)

28,042

(3,372)

3,372

(2,314)

2,314


Despite this environment, the Bank succeeded in containing the aforementioned negative effects through careful attention to its loan pricing policy thanks to which it succeeded in keeping the all-in spread of new loans granted (180bp, which was 13bp higher than that of December 2009) and in increasing the supplementary components of margins such as commissions for “non-use” which supported the profitability of loans during the year.

The shape of the yield curve, in contrast to its effect on yield-bearing assets, had a beneficial effect on interest-bearing liabilities which, at December, revealed a mark-down that was 42 basis points lower than that in 2009, which in total generated benefits for the margin although these were insufficient to offset lower income from yield-bearing assets. The mark-down of interest bearing liabilities were also depressed by ALM initiatives implemented during the last quarter of the year aimed at re-balancing the structure of deposits from short to medium-long term, in particular by lengthening the term of interbank funding.

Finally, the components of interest margin include the receipt of late interest payments of about ¤ 5.9 million relating to the recovery of value in disputed transactions.

Compared to last year the results for 2010 reveal a reduction in operating income other than interest margin (-15.7% from ¤ 74.6 million to ¤ 62.9 million).

The decline in dividends (-58.5%) is primarily attributable to lower contributions from IW Bank and the investments forming part of the private equity division (Humanitas).

Operating income (other than

interest margin)

Euribor 1 mm (benchmark)

Loans to clients in euro

Loans to cients in other currencies

Securities (corporate bond)

Total int. baring assets

Total int. bearing assets

Securities in issue (po & cd)

Interbank funding in foreign currencies

Interbank funding

Total int. bearing liabs.

Free capital

Gross interest margins

Late payment interest and other

Net interest margin

Ave

rag

eva

lue

Change 2010/2009Balance Dec. 2010

Mar

gin

(e million)

Interest margins consuntivo 2009

mar

k up

/do

wn

Ave

rag

eva

lue

Mar

gin

mar

k up

/do

wn

Ave

rag

eva

lue

Mar

gin

mar

k up

/do

wn

-37,7

1,6

-2,9

-2,4

-41,4

20,4

0,0

12,3

32,7

-1,9

-10,6

-15,4

-26,0

0.57%

1.98%

1.41%

1.44%

0.00%

1.81%

-1.08%

0.79%

-0.14%

-0.62%

0.57%

1.22%

6.261,8

543,3

551,0

353,6

7.709,7

3.894,8

19,4

3.559,2

7.473,4

236,2

124,0

7,7

8,0

0,0

139,6

-42,0

0,2

-4,8

-46,7

1,4

94,3

5,9

100,2

6.529,4

654,3

513,3

307,2

8.004,2

3.833,9

144,3

3.670,5

7.648,7

355,5

0.93%

2.48%

0.93%

2.11%

0.77%

2.26%

-1.63%

0.09%

-0.47%

-1.04%

0.93%

1.31%

161,7

6,1

10,9

2,4

181,0

-62,4

0,1

-17,1

-79,3

3,3

104,9

21,3

126,2

-267,7

-111,0

37,7

46,5

-294,5

61,0

-124,9

-111,3

-175,2

-119,3

-0.35%

-0.50%

0.48%

-0.67%

-0.77%

-0.43%

0.55%

0.70%

0.33%

0.42%

-0.35%

-0.09%

(*) from shareholdings acquired as part of private equity and capital market operations

(**) profit net of sales of non-performing loans and securities that are not part of private equity

Dividends (*)

Net commissions

Net result from trading activities

Income from services/corporate asctivity

Other

Net result of hedging activity

Profit/loss on sale/repo of financial assets/liabs. (**)

Other operating income/expenses

Other income

Total operating income (other than interest margin)

Change %2010 2009

(e ‘000)

-58.5%

3.0%

-35.0%

-13.0%

97.9%

500.7%

51.0%

-13.4%

-12.6%

1,532

42,102

14,270

57,904

6,956

(7,215)

5,349

5,090

62,995

3,686

40,890

21,950

66,526

3,515

(1,201)

3,543

5,875

72,383


Net Commissions in the year to 31 December totalled ¤ 42.1million, an increase of 3.1% compared to the previous year.

The component deriving from lending activity was the most profitable due to the contribution from commissions on financing driven by structured finance, and from project finance in particular which became the area generating the highest commission returns for the bank (31% of commissions on lending).

The component deriving from Investment Banking activity, which declined slightly compared to December 2009, is due to a) the underwriting contribution from Capital Markets, b) Advisory and M&A debt restructuring consultancy services and c) the recovery in Equity Sales trading activity with third parties which generated better results than last year.

The trading result of ¤ 14.2 million, was 35% lower than in 2009. This result is primarily attributable to:n The result of corporate and retail derivatives sales which was significantly higher than in

2009 (+46.2%) particularly due to hedging of Centrobanca direct flows originated as part of its structured finance operations;n Profits from OTC derivatives pricing provided by the market making desk (+22.5% compared

to December 2009);n Revaluations of investments in the private equity portfolio, totalling ¤ 0.9 million, of which ¤

+2.2 million relates to the investment in Pellegrini Spa and ¤ -1.5 million Humanitas;n Capital losses in the proprietary portfolio (¤ -6.4 million) attributable to both the equity

component of the portfolio (¤ -4.8 million, of which Cogeme ¤ -2.4 million and Meridie ¤ -1.1 million ) and the bond component (Eurinvest ¤ -1.0 million).n The result of rate transactions, equal to ¤ 1.8 million, is attributable to capital gains on ALM

transactions on interest rate and foreign exchange risk.

Hedging transactions generated a positive net result of ¤ 6.9 million, mainly relating to the unwinding of hedging positions relating to the repurchase of own seurities (¤ 7.4 million) which offset losses from the sale/repurchase of own securities recognised amongst sale/repurchase of financial assets/liabilities (¤ -3.7 million).

Hedging of AFS

Unwinding of liabilities

Hedging of financing and liabilities

NET HEDGING RESULT

Variazione %2010 2009

(e ‘000)

Income from OTC transactions

Result of market making

Income from Private equity

Income form the Investment banking portfolio

Result from interest rate transactions

NET TRADING RESULT

Change %2010 2009

(e ‘000)

Commission from lending activity

Commission from investment banking

Commission from other services

NET COMMISSION

Change %2010 2009

(e ‘000)

3.9%

-2.8%

1.2%

3.0%

35,113

5,454

324

40,891

36,474

5,300

328

42,102

46.2%

22.5%

-85.8%

n.s.

3.0%

-35.0%

11,547

6,475

869

(6,453)

1,832

14,270

7,898

5,284

6,137

853

1,779

21,950

-39.7%

121.9%

-109.5%

97.9%

(404)

7,440

(79)

6,957

(670)

3,353

832

3,515

Profit/loss from the sale/repo of financial

Sale of

Sale of

PROFIT/LOSS FROM THE SALE/REPURCHASE OF FIN.

n.s.

n.s.

n.s.

500.7%

Variazione %

(3,725)

(5,307)

1,817

(7,216)

2010 2009

0

(59)

(1,142)

(1,201)

(e ‘000)


The negative result relating to the item profit/loss from the sale/repurchase of financial assets/ liabilities, in addition to the aforementioned component, is composed of:n A profit of ¤ 1.8 million relating to the sale of corporate bonds classified as afs (available for

sale);n Losses on the sale of non-performing loans (totalling ¤ -5.3 million, of which OC Oerlikon for

¤ -1.8 million and Arketipo ¤ -3.5 million).

The item “other management income and expense” includes income relating to the recovery of legal expenses incurred by the bank totalling ¤ 2.1 million and income (¤ 2.3 million) relating to the income from the price adjustment relating to the sale of the investment in Radici Film, prudentially neutralised by the corresponding provision to the reserve for risks and charges.

Total Operating expenses in the period to 31 December were down by 4.6% compared to the 2009 financial year, particularly due to the reduction in Other Administrative Expenses which declined by 9.4% while Personnel costs fell by 1.5%.

Personnel costs in the period to December 2010 were down -1.5% compared to 2009 as the average number of employees was 13 less than in the previous year.

Costs were contained despite the impact of some extraordinary items as a result of a) lower bonuses and incentives b) a reduction of 9 employees who took advantage of early retirement schemes c) lower utilisation of temporary employees and external consultants and d) the efficient management of staff turnover and less expensive hirings.

The average unit cost per employee nevertheless rose from ¤ 95,000 in 2009 to ¤ 98,000 in 2010 as a consequence of the aforementioned extraordinary costs.

The average number of employees at end 2010 was 338 compared to 351 at end-2009. The main trends affecting employment levels in 2010 were:

(e ‘000)

Operating expenses

Personnel costs

Personnel costs

Other administrative costs

TOTAL ADMINISTRATIVE COSTS

Net adj. to the value of tangible and intangible assets

TOTAL OPERATING EXPENSES

Change %2010 2009

(e ‘000)

- 1.5%

- 9.4%

- 4.7%

+ 1.0%

- 4.6%

32,957

21,050

54,006

1,003

55,009

33,449

23,234

56,683

993

57,676

Personnel costs

Wages and salaries

National insurrance and vouchers

Training

Temporary staff and collaborators

Directors remuneration

Redundancy fund

Statutory auditors remuneration (*)

TOTAL

Change %2010 2009

(*) In 2008 statutory auditors’ remuneration was included in Other costs while in 2009 they are included in Personnel costs.

- 1.3%

- 3.2%

- 68.2%

- 100.0%

+15.7%

- 85.0%

- 2.8%

- 1.5%

30,073

1,510

49

-

1,147

4

173

32,947

30,477

1,560

154

63

991

27

178

33,449

Personnel costs

Total costs

Average number of employees

Average unit cost

Change %2010 2009

(e ‘000)

- 1.5%

- 3.8%

+ 3.1%

32,957

338

98

33,449

351

95


n With regard to staff structure, the efficiency of the Governance structure and operating structure affected by the early retirement incentives; n With regard to the business, the rationalisation of the Corporate Lending structure, also

following the revision of the operating perimeter of traditional lending activity.

In total at 31 December 2010, the ratio of employees dedicated to business as a proportion of the entire work force was 56%.

The careful monitoring of the trend in direct costs and constant cost management measures put in place during the year, allowed the bank to reduce Other Administrative expenses which were down 9.4% compared with the previous year.

The operational breakdown of administrative expenses into indirect costs (managed by Group Companies) and direct costs (managed by Centrobanca), reveals a 4.9% reduction in indirect costs. This category also includes the containment of costs relating to outsourcing of Parent Company services and a reduction in Group IT services costs, which benefited from the deductability of IVA deriving from the establishment of the UBISS consortium in which Centrobanca and its partners participate.

Direct costs fell by -13% compared to 2009; and reflect: a) structural growth in operational IT costs, relating to access to the Stock Market and to trading platforms, and to project costs, which this year again focussed on the usual mandatory areas (compliance, Basle, Investment Services, tecnological innovation P&C) and b) a sharp reduction in business support costs, primarily legal and consultancy costs deriving from initiatives to optimise the input of the relevant professionals, despite the existence of disputes that have reached a critical stage.

Other administrative expenses

(e ‘000)

Change %2010 2009

General management

Compliance and Istitutional Affairs

Lending Authority

Governance and Operating structure

Commercial co-ordination

Business Intelligence

Corporate Finance

M&A

Capital Markets

Fianance and Markets

Derivatives

Corporate Lending

Non performing loans

TOTAL WORKFORCE

AVERAGE

4

10

43

86

18

10

29

13

10

20

14

54

14

325

338

6

9

44

91

19

10

29

13

12

20

13

71

14

351

351

- 2

+ 1

- 1

- 5

- 1

- 2

+ 1

- 17

- 26

- 13


Expenses for infragrup professional services

Expenses for infragup IT services

TOTAL indirect costs

IT operating expences

General services operating expenses

Business support expenses

Project completion expenses

TOTAL Centrobanca direct costs

TOTAL OTHER ADMINISTRATIVE COSTS

Change %2010 2009

- 29.2%

+ 1.3%

- 4.9%

+ 1.6%

- 9.8%

- 20.3%

+ 1.9%

- 13.0%

- 9.4%

1,476

8,288

9,764

1,684

3,519

5,250

834

11,287

21,050

2,086

8,181

10,267

1,657

3,901

6,591

818

12,968

23,234


Adjustments to net values for impairment in loans and financial

assets/liabilities

Impairment adjustments to the net value of loans to clients at 31 December totalled ¤-65.4 million compared to ¤ -112.4 million in 2009 (making a total improvement of 41.8%) and is made up of net analytical adjustments of ¤ -68.2 million (¤ -104.8 million at December 2009) and recovery of value on the collective cash component of ¤ 2.8 million (¤ -6.7 million at December 2009).

The cost of credit at 31 December fell to -0.94% compared to -1.58% at December 2009.

The analytical component of impairment adjustments to loans concentrated particularly on some positions of significant size: the top 5 positions represent about 40% of the total analytical adjustment (the top three positions relate to Gruppo Landi ¤ -10.4 million, Gruppo Mariella Burani ¤ -6.0 million and Gruppo Abm Merchant ¤ -4.7 million). The analytical recovery in value of cash loans amounted to ¤ 4.6 million, down from the ¤ 6.6 million reported in 2009.

The total amount of collective inpairment in 2010 shows a declining trend. The reserve declined from ¤ 36.8 million at December 2009 to ¤ 32.5 million at end-2010, giving a ratio of reserve to carrying amount (utilised for signed and guaranteed, as well as loans to be granted) which fell from 0.46% at end-2009 to 0.40% at end-2010, symptomatic of a gradual improvement in the quality of performing (in bonis) loans. This trend allowed the bank to recognise recovery in value of cash loans in its income statement totalling ¤ +2.8 million compared to charges of ¤ -6.7 million last year.

Net provisions to reserves for risks and charges at end-2010 were ¤ -7.6 million, of which ¤ 2 million relates to risk positions regarding Mariella Burani and ¤ 2.7 million relates to risk positions regarding TD Group. A further ¤ 2.3 million of provisions were also inserted prudentially relating to the receipt of the price adjustment relating to the sale of the investment in Radici Film.

The loss from investments relates to the liquidation of the company H&G, an investment belonging to Medinvest SpA incorporated in Centrobanca during 2010. The figure for 2009, equal to ¤17.8 million, was entirely attributable to profits from the sale to Webstar S.A. of 7.7 million shares in IW Bank (representing 10.5% of the capital) which were acquired as part of the private equity portfolio and subsequently classified under “Investments” in accordance with IAS criteria.

Profits/lossfrom investments

Analytical write-downs

Analytical write-backs

Net Analytical adjustments

Analytical adjustments to L&R securities

Collective adjustments to cash credits

Adjustments to net value of loans

Other value adjustments

TOTAL value adjustments

Change %2010 2009

(e ‘000)

-34.6%

-29.5%

-34.9%

-91.2%

n.s.

-41.8%

+43.9%

-39.9%

-72,876

4,657

-68,219

-76

2,866

-65,429

-3,564

-68,993

-111,391

6,609

-104,782

-866

-6,738

-112,386

-2,476

-114,862


Taxes amounting to 51.5% of gross pre-tax profit was higher than last year (37%), and reflects the different and broader taxable base for IRES corporate income tax which in 2009 benefited from the realisation of significant “pex” (participation exemption) capital gains on the sale of investment assets (IW Bank SpA). The difference between the theoretical income tax rate (32.32%) and the effective tax rate is due particularly to the non-deductability for IRAP purposes of adjustments to the value of loans which again remained at a significant level in 2010.

In order to facilitate the analysis of the economic trend of the Bank, in accordance with Consob Communication no. DEM/6064293 of 28 July 2006, a normalised schedule has been included to illustrate only the economomic impact of the main non-recurring items. The normalisation for 2010 concerns the costs relating to early retirement schemes that affected the Bank (and the Group) during the year. Figures for 2009 have been normalised from the impact of the capital gain relating to the sale of IW Bank, an investment that was originally acquired as part of the Private Equity portfolio (and subsequently reclassified amongst “Investments” in view of the control held by Gruppo Ubi), as well as the tax factors (deductability of Irap and the tax effect of non-recurring items).

The 2009-2010 income statements have been reclassified with the elimination of non-recurring items and those that are not part of the bank’s normal operations in order to show comparable figures.

Taxes for the year

Income Statement normalised for non-recurring items

Early retirement

Profit/loss from investments

Taxes for the period

TOTAL INCLUDING TAXES

20092010Item affected

Integration costs

Profit from sale of IW Bank

Deductability of 10% IRAP

Tax effect on non-recurring component

Non-recurring

(e ‘000)

-

(17.798)

(813)

270

(18.341)

611

-

-

(168)

443


On a normalised basis, the operating costs were ¤ 54.4 million (-5.7% compared to 2009) and the bank’s Net profit was ¤16.5 million compared to ¤ 9.7 million at December 2009 (+71.1%).

Interest margin

Dividends

Net

Net trading result

Net hedging resut

Profit/loss on sale/repo of loans and financial assets and liabil.

Hedging, trading and other

Other operating income/expense

Operating income

Personnel costs


TOTAL ADMINISTRATIVE COSTS

Net adjustments to the value of tangible and intangible fixed assets

Operating expenses

Operating result

Impairment charges to

Impairment charges to other financial

Net provisions for risks and

Profit/loss from shareholdings

PRE-TAX PROFIT/LOSS FROM CONTINUING OPERAT.

Tax for the period on continuing operations

PROFIT/LOSS FOR THE PERIOD

Cost/Incom

Cost of

ROE (annual)

Variazione %2010 2009Reclassified normalised income statement

(e ‘000)

126,192

3,686

40,890

21,950

3,515

(1,201)

24,264

3,543

198,575

(33,449)

(23,234)

(56,683)

(993)

(57,676)

140,899

(112,386)

(2,476)

679

0

26,715

(17,014)

9,701

29.0%

-1.6%

1.7%

-20.6%

-58.5%

3.0%

-35.0%

97.9%

n.s

-42.3%

51.0%

-17.8%

-3.3%

-9.4%

-5.8%

1.0%

-5.7%

-22.8%

-41.8%

43.9%

n.s

n.s

20.3%

-8.7%

71.1%

4.3%

0.7%

1.2%

100,212

1,532

42,102

14,270

6,956

(7,215)

14,011

5,349

163,206

(32,346)

(21,050)

(53,396)

(1,003)

(54,398)

108,809

(65,430)

(3,564)

(7,669)

(15)

32,131

(15,535)

16,596

33.3%

-0.9%

2.9%


SHAREHOLDERS' FUNDS Total Shareholders’ Funds at year-end were 1.5% lower than those reported at end-2008.

The change is attributable in particular to the reduction of net negative differences in the reserve of valuations in previous years, due to the recovery in market value of the corporate bond portfolio calssified amongst available for sale financial assets.

The share capital is composed of 336,000,000 shares.

It has been decided to propose that the net profit for the period of ¤ 16,152,939 be allocated as follows:

Shares

Allocation of profit for the year

5% to Legal reserve 807,646.97Eur 0.046 dividend payable to 336,000,000 shares in circulation 15,456,000.00Remainder to the “Retained profits” Reserve -110,707.53

16,152,939.44

Capital

Reserves

Revalutation reserve

Profit (Loss) for the period

TOTAL

NET EQUITY NET OF RESULT FOR THE

369,600

234,258

-29,305

28,042

602,595

574,553

Change %

369,600

235,756

-28,233

16,153

593,276

577,123

2010Item

(importi in migliaia di euro)

+ 0.0%

+ 0.6%

- 3.7%

- 42.4%

- 1.5%

+ 0.4%

2009

(*) The “Retained profits” reserve would be reduced from e 464,073 to e 353,365.


Given the proposed allocation of profit for the year, the regulatory capital is as follows:

The Regulatory capital at 31 December 2010 was ¤ 731.1 million, down by 5% compared to the previous year (¤ 769.8 million at December 2009). Given the susbstantial stability of basic capital, the decline compared to the figure reported at December 2009 is attributable in particular to the 20% reduction (equal to ¤ 40 million) in the contribution to regulatory capital of the subordinated deposit underwritten by the Parent Company with expiry in 2014.

Excess capital declined compared to 31 December 2009, (from ¤ 261.5 million to ¤ 208.4 million) as a result of:n The aforementioned reduction in regulatory capital;n An increase of 2.6% in total prudential requirements as a result of the increase in market risk

(+46%), prevalentemente concentrato sui titoli di debito.

The ratio calculated on basic capital (core tier 1) was 6.54% (vs 6.71% at December 2009), while the total ratio calculated on regulatory capital (Total capital ratio) was 8.40% (vs 9.08% at December 2009), which nevertheless remains above the minimum level required by banks belonging to a banking group (6,0%).

Regulatory capital and capital requirements

Base Capital (narrow definition)

Intangible fixed assets

Negative reserve for AFS securities

Shareholdings in banks & financial companies to be deducted

Base Capital (a)

Revalutation reserve

Reserves for computable AFS securities

Subordinated liabilities

Other

Shareholdings in banks & financial companies to be deducted

Supplementary Capital (b)

Regualatory Capital (c) = (a+b)

Total risk requirements (**)

- Credit risk

- Market risk

risk on debt securities held

risk on equity securities held

exchange rate risk

other market risk

- Other risk requirements

- Operating risk

- Reduction for banks belonging to groups

Free capital

Risk weighted assets (RWA) (d) (Total requirement/6%)

Base capital / RWA (a/d)

Regulatory capital / RWA (c/d)

+ 0.1%

+ 18.3%

- 3.7%

+ 0.1%

- 20.0%

- 19.6%

- 5.0%

+ 2.6%

+ 0.8%

+ 46.0%

- 0.2%

+ 2.6%

- 20.2%

+ 2.6%

- 0.2%

- 0.7%

Change %

606.1

(7.2)

(29.3)

569.6

1.7

160.0

(0.1)

161.6

731.1

522.2

627.5

42.0

23.4

12.8

5.8

26.8

(174.1)

208.4

8,703.1

6.54%

8.40%

2010 2009

(**) main amendments introduced in March 08 by Basel 2 for banks belonging to groups:

- credit risk calculated as 8% (previously 7%); subsequent reduction to 6%

- introduced operating risk (% intermediation margin differentiated by line of business)

605.4

(6.1)

(30.5)

568.8

1.7

0.3

200.0

0.1

(1.1)

201.0

769.8

508.8

622.8

28.8

16.0

11.0

1.8

26.8

(169.6)

261.0

8,480.0

6.71%

9.08%


At 31.12.2010 compared with that at 31.12.2009

FINANCIAL STATEMENTS

BALANCE SHEET

(46.3%)

11.9%

5.4%

362.4%

(1.1%)

21.0%

(9.6%)

(18.7%)

(1.3%)

18.3%

18.3%

3.4%

(24.6%)

10.3%

(16.7%)

19.4%

%

6.7%

(32.0%)

33.1%

9.1%

44.7%

(28.7%)

(17.8%)

(57.6%)

19.7%

(6.1%)

35.0%

(9.2%)

37.1%

3.7%

0.6%

-

(42.4%)

19.4%

10.

20.

40.

60.

70.

80.

90.

100.

110.

120.

130.

150.

10.

20.

30.

40.

60.

80.

100.

110.

120.

130.

160.

180.

200.

39,649

399,861,106

537,143,243

466,930,537

7,047,209,624

112,074,333

6,768,812

6,286,235

59,395,404

6,079,462

6,079,462

87,225,415

17,164,109

70,061,306

77,060,559

8,806,074,379

3,444,132,996

11,706,395

4,161,059,207

269,370,585

120,944,027

15,743,423

11,409,727

4,333,696

152,797,673

5,722,878

22,002,537

1,001,176

21,001,361

(29,304,852)

234,257,693

369,600,000

28,041,817

8,806,074,379

Cash and cash equivalents

Financial assets held for trading

Financial assets available for sale

Loans to banks

Loans to customers

Hedging derivatives

Value adjustments to generically hedged financial

assets (+/-)

Shareholdings

Tangible assets

Intangible assets

of which:

- goodwill

Tax assets

a) current

b) prepaid

Other assets

TOTAL ASSETS

Due to banks

Due to customers

Debt securities in issue

Tradeable financial liabilities

Hedging derivatives

Tax liabilities

a) current

b) deferred

Other liabilities

Employment termination fund (TFR)

Provisions for risks and charges

a) retirement provisions

b) other provisions

Revaluation reserve

Reserves

Share capital

Profit/ Loss for the period (+/-)

TOTAL LIABILITIES AND NET EQUITY

(18,348)

47,771,875

28,991,936

1,692,016,246

(74,531,274)

23,535,147

(649,763)

(1,177,098)

(778,526)

1,113,139

1,111,809

2,988,113

(4,214,506)

7,202,619

(12,901,023)

1,706,360,424

-

229,590,600

(3,744,291)

1,378,139,468

24,639,232

54,110,445

(4,524,432)

(2,026,554)

(2,497,878)

30,123,002

(349,653)

7,694,840

(92,254)

7,787,094

1,072,274

1,497,817

-

(11,888,878)

1,706,360,424

Change 31.12.10 versus 31.12.09

Assets 31.12.2010 31.12.2009Absolute change % change

Change 31.12.10 versus 31.12.09

21,301

447,632,981

566,135,179

2,158,946,783

6,972,678,350

135,609,480

6,119,049

5,109,137

58,616,878

7,192,601

7,191,271

90,213,528

12,949,603

77,263,925

64,159,536

10,512,434,803

3,673,723,596

7,962,104

5,539,198,675

294,009,817

175,054,472

11,218,991

9,383,173

1,835,818

182,920,675

5,373,225

29,697,377

908,922

28,788,455

(28,232,578)

235,755,510

369,600,000

16,152,939

10,512,434,803

31.12.2010 31.12.2009Absolute change % change

Liabilities and Net Equity


Income statement for the year to 31.12.2010 compared with that to 31.12.2009 INCOME STATEMENT

STATEMENT OF COMPREHENSIVE

INCOME

10.

20.

30.

40.

50.

60.

70.

80.

90.

100.

120.

130.

140.

150.

160.

170.

180.

190.

200.

210.

240.

250.

260.

270.

290.

Voci 31.12.2010 31.12.2009

Interest income and similar income

Interest costs and similar expenses

Interest margin

Commission income

Commission expenses

Net commissions

Dividends and similar income

Net result of trading activities

Net result of hedging activities

Prof/loss from sale or repurchase of:

a) loans

b) available for sale financial assets

Net trading result

Adjustments to net values for deterioration in:

a) loans

b) available for sale financial assets

c) other financial operations

Net result of financial operations

Administrative expenses:

a) personnel expenses

b) other administrative expenses

Net provisions for risks and charges

Adjustments to net values of tangible assets

Adjustments to net values of intangible assets

Other operating expenses/ income

Operating expenses

Profit/loss on shareholdings

Profit/loss on disposal of investments

Profit/loss from continuing operations before taxes

Income taxes for the period on continuing operations

Profit/loss from continuing operations net of taxes

Net profit/loss for the period

Absolute change % change

Change 31.12.10 versus 31.12.09

Profit (loss) for the period

Other components of income net of taxes

Available for sale financial assets

Tangible assets

Intangible assets

Hedging of foreign investments

Hedging of financial flows

Exchange rate differences

Non-current assets in process of sale

Actuarial profit (loss) on defined benefit plans

Share of the investment valuation reserve valued at net equity

Total other components of income net of taxes

Comprehensive income (items 10 + 110)

28,041,817

57,327,824

-

-

-

(925,518)

-

-

72,097

-

56,474,403

84,516,220

31.12.2010 31.12.200910.

20.

30.

40.

50.

60.

70.

80.

90.

100.

110.

120.

16,152,939

321,759

-

-

-

892,046

-

-

(141,531)

-

1,072,274

17,225,213

(14.5%)

(9.7%)

(20.6%)

3.2%

6.2%

3.0%

(58.5%)

(35.0%)

97.9%

500.7%

n.s.

n.s.

n.s.

(19.1%)

(39.9%)

(41.8%)

n.s

57.4%

10.8%

(2.7%)

(1.5%)

(4.4%)

n.s

1.0%

48.9%

7.2%

n.s

n.s.

(29.2%)

(6.7%)

(42.4%)

(42.4%)

288,277,337

(162,085,281)

126,192,056

43,522,711

(2,632,629)

40,890,082

3,686,435

21,949,633

3,515,181

(1,201,140)

(59,000)

(1,142,140)

-

195,032,247

(114,862,297)

(112,385,974)

(361,807)

(2,114,516)

80,169,950

(58,996,580)

(33,449,077)

(25,547,503)

678,791

(993,296)

5,856,224

(53,454,861)

17,797,657

150

44,512,896

(16,471,079)

28,041,817

28,041,817

246,561,657

(146,349,608)

100,212,049

44,896,915

(2,794,673)

42,102,242

1,531,546

14,270,499

6,956,212

(7,215,220)

(5,306,793)

1,817,105

(3,725,532)

157,857,328

(68,993,468)

(65,429,564)

(234,710)

(3,329,194)

88,863,860

(57,378,053)

(32,956,613)

(24,421,440)

(7,669,047)

(1,002,950)

8,721,310

(57,328,740)

(14,899)

-

31,520,220

(15,367,281)

16,152,939

16,152,939

(41,715,680)

15,735,673

(25,980,007)

1,374,204

(162,044)

1,212,160

(2,154,890)

(7,679,134)

3,441,031

(6,014,080)

(5,247,793)

2,959,245

(3,725,532)

(37,174,920)

45,868,829

46,956,410

127,097

(1,214,678)

8,693,909

1,618,527

492,464

1,126,063

(8,347,838)

(9,654)

2,865,086

(3,873,879)

(17,812,556)

(150)

(12,992,676)

1,103,798

(11,888,878)

(11,888,878)


STATEMENT OF CHANGES IN NET EQUITYAT 31 DECEMBER 2010

Reserves

Share Capital:

a) ordinary shares

b) other shares

Share price premium

Reserves:

a) retained profits

b) other shares

Revaluation reserve:

Equity securities

Treasury shares

Profit for the period

Net Equity

369,600,000

369,600,000

-

-

234,257,693

124,215,166

110,042,527

(29,304,852)

-

-

28,041,817

602,594,658

Allocation

of previous year profits

-

-

1,497,817

1,497,817

-

(1,497,817)

-

Balance at

all’1.1.2010

Dividends and

other distributions

Changes

in reserves

(26,544,000)

(26,544,000)

369,600,000

369,600,000

-

-

234,257,693

124,215,166

110,042,527

(29,304,852)

-

-

28,041,817

602,594,658

Balance at

al 31.12.2009

Change

in opening

balance

-

-

-

-

-

-

-

- -


New

shares issued

Purchase

of own shares

Derivatives

on own

shares

Distribution of

Extraordinary

Dividends

Changes

in Equity

securities

Stock

options

Net Equity Operations Changes in the period

Comprehensive

income

for the period

Net Equity at

al 31.12.2010

1,072,274

16,152,939

17,225,213

369,600,000

369,600,000

-

-

234,755,510

125,712,983

110,042,527

(28,232,578)

-

-

16,152,939

593,275,871 - - - - - -


CASH FLOW STATEMENTINDIRECT METHOD

106,563,814

28,041,817

(46,372,607)

(3,515,181)

111,395,390

993,297

(449,981)

16,471,079

-

-

463,837,705

(1,512,801)

-

(20,784,797)

107,526,883

(10,606)

329,715,464

48,903,562

(538,812,948)

718,232,591

(1,908,555,215)

(624,871)

747,139,354

26,776,511

-

(121,781,318)

31,588,571

22,440,773

18,754,188

3,686,435

-

150

-

-

(11,017,841)

(1,546,045)

-

(84,594)

(1,424,960)

(7,962,242)

11,422,932

-

-

(43,008,000)

(43,008,000)

3,503

A. Operating activity 31.12.2009

1. Operations

- result for the period (+/-)

- capital gains/losses on financial assets held for trading and on financial assets/ liabilities

valued at fair value (-/+)

- gains/losses on hedging transactions (-/+)

- write-downs/write-backs of net values for impairment (-/+)

- write-downs/write-backs of net values of tangible and intangible fixed assets (+/-)

- net provisions for risks and charges and other expenses/ income (-/+)

- unpaid taxes (+/-)

- write-downs/write-backs of net values, net of any tax effect, of assets in course of divestment (+/-)

- other adjustments

2. Cash generated/absorbed by financial assets

- financial assets held for trading

- financial assets valued at fair value

- available for sale financial assets

- loans to banks: current

- loans to banks: other

- loans to customers

- other assets

3. Cash generated/absorbed by financial liabilities

- due to banks: current

- due to banks: other

- due to customers

- debt securities in issue

- tradeable financial liabilities

- financial liabilities valued at fair value

- other liabilities

NET CASH GENERATED/ ABSORBED BY OPERATIONS

B. INVESTMENT ACTIVITY

1. Cash generated by

- sales of shareholdings

- dividends received from shareholdings

- sales of financial assets held to maturity

- sales of tangible assets

- sales of intangible assets

- sales of business units

2. Cash absorbed by

- purchase of shareholdings

- purchase of financial assets held to maturity

- purchase of tangible assets

- purchase of intangible assets

- purchase of business units

NET CASH GENERATED/ ABSORBED BY INVESTMENTS

C. FUNDING ACTIVITY

- issue/purchase of own shares

- issue/purchase of equity instruments

- dividend distribution and other allocations

Net cash generated/ absorbed by funding activity

NET LIQUIDITY GENERATED/ABSORBED IN THE PERIOD (D = A+/-B+/-C)

LEGEND: (+) generated; (-) absorbed

77,470,905

16,152,939

(27,088,175)

(6,956,212)

71,411,099

1,002,950

7,581,022

15,367,282

-

-

(1,764,727,202)

(4,794,190)

-

(12,289,045)

905,431

(1,692,898,174)

6,696,354

(62,347,578)

1,712,468,120

528,266,690

(298,676,090)

(3,744,292)

1,441,057,582

8,749,722

-

36,814,508

25,211,823

1,531,546

-

1,531,546

-

-

-

-

(217,717)

-

-

(217,717)

-

-

1,313,829

-

-

(26,544,000)

(26,544,000)

(18,348)

31.12.2010


RECONCILIATION

KEY DATAAND RATIOS

Cash and cash equivalents at the start of the period (E)

Total cash generated/absorbed in the period (D)

Cash and cash equivalents : exchange rate effect (F)

Cash and cash equivalents at the end of the period (G = E+/-D+/-F)

36.146

3.503

-

39.649

39.649

(18.348)

-

21.301

Items 31.12.2010 31.12.2009

STRUCTURAL INDICES AND DATA

Net customer loans / total assets

Customer deposits / interbank deposits

Bonds and subordinated loans / mortgages and loans

Net equity (excluding profit for the period) / total liabilities

Average number of employees

Number of branches

VALUE CREATION INDICES

ROE (profit/net equity excluding profit for period)

Rorac

PROFITABILITY INDICES AND DATA

Net profit for the period (e '000)

ROA (profit for the period/total assets)

COST / INCOME (expenses/operating income)

Interest margin / operating income

Personnel expenses / operating income

RISK INDICES

Net non-performing loans / loans to customers

% non-performing loan cover (write-downs / gross non-performing loans)

Net non-performing loans / Regulatory capital

Net non-performing and watch-list loans / loans to customers

% cover of non performing loans + watch-list

CAPITAL RATIOS

Tier 1 (base assets/total weighted assets)

Solvency ratio (Regulatory capital / total weighted capital)

PRODUCTIVITY INDICATORS (e '000)

Total assets / average number of employees

Operating income / average number of employees

Personnel costs / average number of employees

CAPITAL DATA

Net loans to customers

of which: net non-performing loans

Net Equity (excluding profit for the period)

Regulatory Capital

December 2008 Change %December 2009

Reclassified

- 13.70%

+ 29.84%

+ 20.97%

- 1.03%

- 7.4%

- 14.3%

- 2.08%

- 2.41%

- 42.4%

- 0.16%

+ 4.66%

- 2.15%

+ 3.35%

+ 0.49%

- 2.44%

+ 4.94%

- 0.54%

+ 7.59%

- 0.13%

- 0.63%

+ 28.9%

- 11.2%

+ 6.4%

- 1.1%

+ 71.2%

+ 0.4%

- 5.0%

66.33%

151.00%

80.48%

5.49%

325

6

2.80%

3.09%

16.153

0.15%

33.71%

61.40%

20.19%

1.16%

81.71%

11.11%

3.23%

63.62%

6.54%

8.40%

32,346

502

101

6,972,678

81,204

577,123

731,113

80.03%

121.16%

59.52%

6.52%

351

7

4.88%

5.50%

28.042

0.32%

29.05%

63.55%

16.84%

0.67%

84.14%

6.16%

3.77%

56.03%

6.67%

9.03%

25,089

566

95

7,047,210

47,439

574,553

769,812


Board of Directors

Chairman Andrea Moltrasio

Vice Chairman Giorgio Frigeri, Piero Bertolotto

Directors Adolfo Beneduci (*),Adolfo Beneduci, Argante Del Monte, Massimo Capuano, Luciano Goffi, Victor Massiah,Giuseppe Masnaga, Andrea Pisani Massamormile, Giorgio Ricchebuono, Enrico Minelli(*), Costantino Vitali.

Secretary Marco Trabattoni

Stautory Auditors:

Chairman Luigi Guatri

Acting Auditors Giovanni Frezzotti, Pecuvio Rondini

Supplementary Auditors Alberto Carrara, Marco Confalonieri

Chief Executive Officer Massimo Capuano

Management:

Vice Director General Marco Mandelli

Vice Director General Leonardo Siccoli

Manager responsible for preparing the Company accounts Doriano Cartabia

Independent Auditors: KPMG S.p.A.

(*) Independent Director(**) As of 4th May 2011

COMPANY OFFICERS 2011(**)


Documents

This is a summary version of the 2010 Financial Statements ...documentazionestoricacentrobanca.ubibanca.it/contenuti/file/2011-05-27-Annual-report...This is a summary version of the