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CARIGE GROUPCARIGE GROUPCARIGE GROUPCARIGE GROUP

20112011 20142014 StrategicStrategic PlanPlan2011 2011 –– 2014 2014 StrategicStrategic PlanPlan

dd hh h hh h llSustainedSustained growthgrowth throughthrough value value creationcreation

Milan, 17 May 2011

Agenda

Our growth processOur Strategic Plan

•Scenario•Strategy•Strategic initiatives•Organisational structures•Targets

The first quarter of 2011Conclusions

2

Agenda

Our growth processOur Strategic Plang

•Scenario•Strategy•Strategic initiatives•Organisational structures•Targets


3

The Carige Group

Fondazione CR Genova e Imperia MarketBPCE SA

~50,000 small shareholders

AssicurazioniGenerali

44.06% 44.06% (1)(1)

Genova e Imperia

37.99% 37.99% (1)(1)14.98% 14.98% (1)(1)

Generali

2.97% 2.97% (1)(1)

BancaBanca CarigeCarige SpASpACassaCassa didi RisparmioRisparmio didi GenovaGenova e Imperiae Imperia

Insurance activitiesBanking activities Financial activities

• Banca Carige

• CR Savona

• Carige Vita Nuova (life

insurance)

• Carige AM SGR

• Creditis (Consumer

Trustee activities

• Trust CentreFederal model

• CR Savona

• CR Carrara

• BM Lucca

• B. Cesare Ponti

insurance)

• Carige Ass.ni (non-life

insurance)

• Creditis (Consumer

credit) Main companies

6,003EMPLOYEES

667 BRANCHES &1.9 M CUSTOMERS

(1 2 M BANK;SHAREHOLDERS' EQUITY

€ 3 5 BILLION

Proprietary product factories

(1) Ownership percentage calculated on the basis of ordinary shares only

EMPLOYEES 432 INSURANCE OUTLETS (1.2 M BANK;

0.7M INSURANCE)€ 3.5 BILLION

Data as at 31 December 2010

4

Equity investments

• Centralised consolidation of IT and management systems• Decentralised network and credit governance with a predetermined delegated powers system• Brand maintenance• Service contracts

FEDERAL MODEL

• Proximity to the territory through local directors and managers

Marginal administrative and organisational costs, largely lower than the benefits in terms of business and knowledge of the local realities

• Production margins complementing distribution margins• Greater control on business activities

Products tailored on the customersPRODUCT

FACTORIES • Products tailored on the customers• Lower organisational complexity due to owning the factory vs

partnerships• Cost, commercial and financial synergies

FACTORIES

5

An increasingly diversified network...

The network todayFormer

Unicredit Former

ISP new

branches

Former MPS

branchesbranches

643 22

branches branches

6672

56/3046/39

28/ 21

1/15 8

73/74

2522

79

643

40

22

1

28/ 21

79/222/9

5/12

16

254/ 14France

1994 2007 2009

204

TODAY

38 29/33

164

63

39/

96% 48%

100% 72%

39%

71%

38%

69%11/24

25

Insurance outlets 432Bank branches 667

% of branchesin the Liguria region

% of branchesin the North

63/48

in the Liguria region

6Data as at 31/12/10

… resulting from internal growth and M&A

GOALS Since 1990(1) 214 branches have been opened (103

in Liguria and 111 in 9 Extra-Liguria regions (Piedmont, Lombardy, Emilia Romagna, Veneto,te

rnal

ro

wth

Territorial diversification

Reduction of Acquisition of 4 banks and 6

business units for a total of 265

(Piedmont, Lombardy, Emilia Romagna, Veneto, Tuscany, Marche, Lazio, Sardinia, Sicily)In

tgr

Reduction of concentration risks (industry risks,

business units for a total of 265 branches and 2 insurance companies

Acquisition premiums in line with As of the date of listing (2):

&A

geographic risks, product risks, etc.)

strategic relevance (location, production characteristics, size, synergies with insurance agents, etc ) and with medium- to long-

of listing (2):

€ 2.6 billion invested in

M& Expansion of

the distribution network among which to

etc.) and with medium to longterm income outlook

Prices paid for insurance companies much lower than comparable

M&A

€ 3.8 billion financing which to

allocate the costs of central structures (scale

transactions (Price/Premiums for Life: 21.4% vs. an average of 60.8%; for non-Life: 63.8% vs. an average of 115 2%) in that they

financing sources

collected(3)

7(1) Primo Piano sportelli; (2) La quotazione è avvenuta il 17/1/1995 ;(3) Aumenti di capitale e prestiti subordinati

(scale economies)

average of 115.2%), in that they reflected the need for thorough restructuring and re-launching

Growth in the results of subsidiary banks...

Year of acquisition

CAGR

Loans and Deposits(€ bln)

P e 2010

Net profit(€ mln)

2010

C/I(%)

2010Pre Pre

Banca del MonteBanca del Monte

11.2%

Pre-acquisition

2010

17.7%

2010

3.6

2010

59 8

86.5

-26.7 p.p.∆ p.p.

Pre-acquisition

Pre-acquisition

1999Banca del MonteBanca del Montedi Luccadi Lucca

(22 (22 branchesbranches))

2.20.7

6.5%

0.6

11 4

59.8

-7.9 p.p.

4.3%

1999Cassa di RisparmioCassa di Risparmiodi Savona di Savona

(50 branches)(50 branches)

6 3%

2.8 4.5

2 1%

5.7

11.471.4

63.5

-1.8 p.p.

2003Cassa di RisparmioCassa di Risparmiodi Carrara di Carrara


6.3%

3.22.1

2.1%

4.1

4.7 71.873.6

December

2004

BancaBancaCesare Ponti Cesare Ponti (6 branches)(6 branches)

12.7%

1.1 2.3

…

1.7

91.6

-16.5 p.p.

75.1

“Pre-acquisition” data refer to the latest approved financial statements prior to the acquisition.“Pre-acquisition” data of Banca Cesare Ponti refer to the 2004 financial statements.

(6 branches)(6 branches)-0.6

CAGR= compound annual average growth rate 8

…and of the branches acquired

CAGR

2000 2010 2002 2010 2002 2010-10.6 p.p.

∆ p.p.

Year of acquisition

Loans and Deposits(€ bln)

Total revenues(€ m) (1)

C/I (2)

(%)

2000Banco di SiciliaBanco di Sicilia


6.7%

0.90.5

4.1%

10.1 14

2001 2010 2002 20102 8%

2002 2010

66.4 55.8

10.6 p.p.

2001Banca IntesaBanca Intesa(61 branches)(61 branches)

6.8%

2.0 3.6 43.7 54.7 59.0 51.3

-7.7p.p.2.8%

2003 2010

2002CapitaliaCapitalia(42 b h )(42 b h )

1.8%

2.42.140.1

2002 2010 2003 2010

38.3

2003 2010

59.474.4

-15 p.p.0.7%

2002(42 branches)(42 branches)

MarchIntesa Intesa

2008-1.6%

6 26 4

2010

76 684.8

2008 2010 +15.4 p.p.

70.955.5

2008 2010

-5%

March2008SanpaoloSanpaolo


6.26.4 76.684.8

DecemberUCBUCB3.5% -16.6 p.p.

73 690 124 1

…2008 2010 2008 2010

2008 2010

(2) includes direct costs only

ece be

2008UCBUCB

(40 branches)(40 branches) 1.61.573.690.124.1

3.0

(1) annualized data

9CAGR= compound annual average growth rate

Qualitative growth

Greater territorialLoans percentage in

Greater territorialdiversification

Liguria dropped from 64% to 38%

Reduction in the concentration of

The share of the top 20 Groups decreased by 8+

p.p. (to 9.7%)major borrowers

p.p. (to 9.7%) and that of the top 50 Groups by 9+ p.p. (to

15 3%)

Significant scale economies

15.3%)

The incidence of Significant scale economies operating costs per

branch dropped by 13%

10

Quantitative growth since listing…

TOTAL ASSETS(€ bln)

4 6x 40 0

FIA(€ bln)

4.4x50.7

EMPLOYEES (number)

4.6x 40.0

25 4

14.6

8.8

4.4x

24.1

11.6

6,0032x

Otherassets

LoansDirect

Indirect deposits

467 insurance

1994

5.6

2010

25.43.2

5.6

26.66.0

1994

3,226

2010

Directdeposits 5,536 banking

1994 2010

SHAREHOLDERS' EQUITY(€ bln)

NET PROFIT (€ mln)

COST INCOME

1.5 (1)

2.3x 3.510x177.2

79.6%

59.9%0.8

-20p.p.

1994

0.7

2.7

20101994

16.9

20101994 2010

0.8

(1) pro-forma figure inclusive of the AFS reserve established against the revaluation of the equity investment in the Bank of Italy

11

…and sustained growth during the crisis

COMPARISON OF PROFITS FOR THE 2005-2007 AND 2008-2010 PERIODS (€ Mln)

AVERAGE BANKS (2)

-51.1%

3,207

CARIGE+24%

AVERAGE PEERS (1)

-48.5%1,568

661474

340588

Italian banks Average peers Carige

Profits 2005 - 2007 Profits 2008 - 2010

12

(1) Source: financial statements of Banca Popolare Emilia Romagna, Banca Popolare di Milano, Banca Popolare di Vicenza, Credito Emiliano, Credito Valtellinese(2) Source: financial statements of Banco Popolare, Banca Popolare Emilia Romagna, Banca Popolare di Milano, Banca Popolare di Sondrio, Banca Popolare di Vicenza, Credito Bergamasco, Credito Emiliano, Credito Valtellinese, Intesa San Paolo, Monte Paschi Siena, Unione di Banche Italiane, Unicredit

Dividends policy

Dividends and share capital (1995-2010) (€ bln)Dividends per ordinary share(€)

1 4

2,4

1.4

2.4

1,41.4

Dividendi distribuiti Aumenti di capitaleDividends distributed

Capital increasesdistributed increases

• ensuring low volatility and improving trends in shareholder returns• creating favourable conditions for the success of

DIVIDENDS POLICY

AIMED AT:

13

• creating favourable conditions for the success of capital strengthening measures.

Agenda


•Scenario•StrategyS a egy•Strategic initiatives•Organisational structuresg•Targets

The first quarter of 2011qConclusions

14

2011 - 2014 Targets

20142010CARIGE GROUPCARIGE GROUP CAGR2010PF-2014

( )

2010PF(1)

Direct deposits (€ bln) 32.9 5.5%26.6

(€ bl ) 31 1 5 2%25 4

26.6

25 4

Indirect deposits (€ bln) 31.2 6.7%24.1 24.1Total deposits (€ bln) 64.1 6.1%50.7 50.7

Net profit (€ mln) 263 10.1%Shareholders' equity (€ bln) 4 0 3 4%

177

3 5

Loans to customers (€ bln) 31.1 5.2%25.4

1793 5

25.4

Shareholders equity (€ bln) 4.0 3.4%

Cost income 50.3%

3.5

59.9% -9.7 pp60.0%

3.5

Cost of risk 0 45% 0 46% 0.50% +4 bps

ROTE (3) 11.5%9.9%ROE adj. (2) 8.1%6.5% +1.5 pp

+1.4 pp10.1%6.6%

Cost of risk 0.45% 0.46% 0.50% +4 bps

Core Tier 1/Common Equity 8.0%6.0%

20142010

Total capital ratio 10.2%9.1%

(1) Pro-forma figures are normalized by annualizing the contribution of former MPS branches acquired on 31/5/2010(2) Shareholders' equity net of the Bank of Italy equity investment revaluation reserve(3) Shareholders' equity net of goodwill 15

CAGR= compound annual average growth rate

Competitive scenario - Italy

• New standards governing the banking industry: Basel III(increased capital requirements and stricter liquiditymanagement requirements) and reputation risk

• Aging society and net population decrease• Integration: 2.4 million new immigrants, numbers growingfast low level of bankarisation

SOCIO-POLITICAL SCENARIO REGULATORY SCENARIO

management requirements) and reputation risk• Constraints and restrictions for consumer protection(maximum overdraft charges, usury interest rate, mortgageportability, Mifid, PSD,…)• Introduction of Solvency II on solvency requirements for theinsurance sector

fast, low level of bankarisation• Job instability and new family life cycles: increasing rates ofdivorces, common-law couples, “extended” and “mixed”• Decreased propensity to save and increased propensity toconsume and borrow

• Globalisation vs nationalistic tensions• Growth of global GDP driven mainly by emerging

t i (A i ll L ti A i d Af i )

ECONOMIC SCENARIO

countries (Asia as well as Latin America and Africa)• Slow recovery of the Italian economy (1% growth ofthe GDP over the plan period)• Progressive raise of interest rates as of 2011

• Widespread digitalisation• Use of technology and inter-channelling in areas where nophysical offices exist

• Possible new wave of M&As driven by the need to optimizecapital and liquidity• Shrinking of unit margins on traditional products and

TECHNOLOGY SCENARIO COMPETITION SCENARIO

physical offices exist• Opportunity to let customers' needs emerge: customersare called on to plan products and services interactively(e.g. “shopping cart style” modular current accounts)• New, technologically advanced payment methods toacquire new young customers

• Shrinking of unit margins on traditional products andsimultaneous search for maximum distribution efficiency andcommercial effectiveness• New competitors: large-scale distribution, telecomproviders, application and network/virtual communityadministrators

16

• Channels addressing the electronic social networks • Easier to compare prices of financial service offerings andcustomers' readiness to switch to a different provider

Economic scenario - Italy

ECONOMIC AND FINANCIAL VARIABLES 2010 2011 2012 2013 2014

Real GDP (Var %) 1.2 0.9 1.0 1.4 1.0

Inflation rate (%) 1.5 2.9 1.7 1.7 2.1

ECB rate (end of period) (%) 1.00 1.75 2.00 2.25 2.50

Average 6-month Euribor (%) 1.1 1.6 2.3 2.5 2.7

Customer deposits (Var %) 1 1 3 7 4 3 4 6 4 0

Source: Research institutes consensus

Customer deposits (Var %) 1.1 3.7 4.3 4.6 4.0

Loans to customers (Var %) 5.0 7.3 6.3 6.0 4.5

Modest GDP growth and interest rates still at historically low levels

17

“New normal” characterized by increasingly strictand lasting regulatory requirements

R l tRegulatory capital and financial leverage

Structural liquidity and

financing

Credit and risk of cost

Compliance and reputational

risk

New normal

What the regulators expect

Core capital (4.5%) + buffer (2.5%)=7%(as at 2019), min leverage TBD (2017)1

l 8

Liquidity coverage ratio and Net stable funding ratio > 100% (TBD) 2015 – 2018 requirements

Anti-cyclicalprovisions

ll

Full procedural compliance and observance of Mifid/ Anti-money laundering/ Transparency/other rules

What the market expects(shareholders and investors)

Wh t t t

Core capital 8%, min. leverage 3%

Sound balance sheet t t

Trade sources/ loans > 100%

Solvency

Provisions structurally < 50 bps

Access to credit

Full compliance with the rules

Simplicity, transparency d dWhat customers expect structure and advice

The challenge for Italian banks: to achieve adequate profitability

18

The challenge for Italian banks: to achieve adequate profitability consistent with the cost of capital

1 During the parallel run period (2013-2017), the Basel Committee will test a 3% minimum leverage ratio threshold.

Agenda




19

Underlying Strategic Approach

GROWTH FOR INDEPENDENCE

CUSTOMER FOCUS

INNOVATION

MEDIUM- TO LONG-TERM VALUE CREATIONFOR ALL STAKEHOLDERS

WITH A VIEW TO MAINTAINING A KEY INDEPENDENT ROLE IN THE ITALIAN BANKING SYSTEM

PROXIMITY TO THE LOCAL

COMMUNITIESWORK ETHICS SKILLS

COMMUNITIES

Bank accountable to the COMMUNITY

20

Strategic Mission

Financial National Retail

People and Inter-conglomerate

National Retailp

technology channelling

• Full range ofbanking, financial and

• Deeply rooted presence in Liguria,

• Focus on households, handicraft

• Unitarymanagement of“key” group skills

• Branch-baseddistribution witha progressivefinancial and

insuranceproducts and services;

• Control on profitability

Liguria, progressively extending to the national territory on a multi local

handicraft firms, shopkeepers, small and medium enterprices

key group skills• Employees'

professional/ personal development

• ICT as a driver

a progressive development ofinter-channelling

• Specializedservice modelaccording toprofitability

deriving fromproductfactories

multi-local basis

• Aggregating centre for local entities

enterprices, local bodies

• Focus on simple, transparent

• ICT as a driver of innovation

according tocustomer base segment

• Federal model to enhance the benefits of proximity to the local

products

21

o acommunities

Strategy: from definition…

• Higher commercial productivity:

STRATEGIC DIRECTIONS STRATEGIC GOALS

Development of revenues and commercial offering: “discover” business areas (territories,

1 Improvement of cross selling

Product portfolios evolving towards higher-margin, higher-commission products (upselling)

Lower business performance variance business areas (territories, products, customers) that still have untapped value potential

o e bus ess pe o a ce a a ce

• Broader customer base

• Development of inter-channelling

• Service model fine-tuning

Rationalisation of operating costs and processes: constant striving for technical and operating efficiency

2• Review of the pricing policies

• New sales processes to free up resources for commercial activities

• Personnel's proactive commercial attitude and operating efficiency

Optimisation of liquidity, capital and 3

• Efficient cost base and process management

• Focus on retail and institutional deposits

• Closing of the intermediation circuit cost of risk: efficient allocation of short resources

g

• Active capital management in a Basel 3 perspective

• Qualitative selection and management of credit

4 Focus on innovation and skills: not • Widespread use of technology

22

only on processes and products, but also on human resources' behaviours and social skills

• Widespread use of technology

• Recognition of merit

• Optimal use of skills and abilities (knowledge and know-how)

…to implementation

1. Strengthening of the Liguria network

STRATEGIC INITIATIVES


2. Reduction of the productivity gap between Liguria and Extra-Liguria operations

3. Reduction of the productivity variance between branches

4. Optimisation of the Group's local presence

5. Development of integrated inter-channelling

6 P i i ti i ti6. Pricing optimisation

7. Service model refinement for corporates

8. Proactive credit managementg

9. Risk monitoring and management

10. Development of corporate services

11. Private segment enhancement

12. Development of offerings to immigrants

13 Cost & lean management

23

13. Cost & lean management

14. Improved communications

Agenda




24


CURRENT POSITIONING

•History of strong roots in Liguria with a leading•History of strong roots in Liguria with a leading market share and good performance in terms of commercial productivity

•Areas of improvement in the ownership of products (cross selling) both for households andproducts (cross selling), both for households and for corporates, and in the acquisition of newly bankarized customers (young people, immigrants) Increase in commercial

performance, both in termsperformance, both in terms of loans and deposits per person (from approx. 28 to approx. 33 million; +15%) and of cross-selling (from LINES OF ACTION

•Opportunity to take advantage of the region's infrastructural revamping to play our role in supporting the community

a d o c oss se g ( o4.17 to 4.58; +10%)

•Micro-marketing programmes aimed at boosting cross-selling/upselling for customers, resulting in maintained number of customers and progressively increasing markets shares among young customers

25

Productivity in Liguria

Customer cross-selling Loans and Deposits x LU (Labour Units) (€ Mln)

32,8

4 17

4,58 +10% +15%4.58

4 17 28 5

32.8

2010 2014

28,54,17

2010 2014(1)

4.17 28.5

2010 2014Liguria NetworkLiguria Network

2010 2014

Customer cross-selling by segment

20102014

g y g

5,8

7,5

4 5 4 5

6,3

7,8

4,9 4 75.8 6.3

7.57.8

4 5 4.9 4 5 4.7

3,4 4,5 4,5

3,9 , 4,7

3.4 3.94.5 4.5 4.7

26(1) Estimated number of LUs assuming constant resources and 5 new resources per new branch

Mass Market Affluent Private Small Business Mid Corporate

2. Reduction of the productivity gap between Liguria and Extra-Liguria operations

•Growing proportion of the Extra Liguria network;

CURRENT POSITIONING

•Growing proportion of the Extra-Liguria network; however, gaps in productivity (revenues/ volumes per employee) and market shares are still to be filled

Reduce the gaps compared to the Liguria Network bothLINES OF ACTION

• Improve branch efficiency through the use of new online applications supporting sales activities with employees' schedules and

to the Liguria Network, both in terms of cross-selling (gap from -19% to -13%) and of loans and deposits per employee gap from

LINES OF ACTION

activities, with employees schedules and product catalogues fed by the CRM system

•Alignment of Liguria and Extra-Liguria network performances through the acquisition of new customers, with special focus on corporate

per employee gap from -46% to -40%)

customers, with special focus on corporate customers, and the development of closer relationships with local associations/entities.

27

Realignment of commercial performances between networks

Customer cross-selling

4,58 -13%

-19%P i 4 17

4.584,17

,

3,35 3,96 Progressive

realignment between the two networks through an

4.17

3.353.96

Liguria Non-L Liguria Non-L

through an improvement in commercial productivity in terms of increased

Loans and Deposits x LU (€ mln)

32 8

2010 2014(1)in terms of increased cross-selling (from 3.35 to 3.96, or +18%) and of loans and deposits 32 8

28,5

32,8

15,518,1

-46%-40%

20

of loans and deposits per employee from 15.5 to 20 million (+29%)

28.5

15.5

32.8

,(+29%)

28(1) Estimated number of LUs assuming constant resources and 5 new resources per new branch

Liguria Non-L

2010

Liguria Non-L

2014(1)

3. Reduction of productivity variance between branches

•Strong variance in commercial performance

CURRENT POSITIONING

•Strong variance in commercial performance between the branches, even within the same local markets

•Greater internal variance for the Extra-Liguria network in particular with reference to newly P i fnetwork, in particular with reference to newly opened or recently acquired branches

Progressive recovery of potential revenues for a total of 8 million through multiple measures: acquisition and i d b fLINES OF ACTION

•Full implementation of the new commercial mechanism consisting of the central analytical CRM and sales support tools

increased number of customers, development in breadth and depth (number and average quantity of p od cts) p od ct emi ( p

LINES OF ACTION

• Launch of local micro-marketing actions focused on under-performing branches, accompanied by a turnover of branch managers and local market managers, so as to align the best resources with

products), product remix (up -selling) and repricing

the best commercial potentials.

•Full implementation of service models still only partially in place, and careful assessment of options for reallocation/conversion into lean, l t i ll t d b h

29

electronically operated branches

The new commercial mechanism

The reduction in productivity variance between branches is achieved through the adoption of:

• a business mechanism organized and supported by an innovative central analytical CRM and aided, during the operational phase, by the use of different channels, and within the Branch by easy-to-access and easy-to-use sales support tools

• • a shared commercial method built and maintained “with the network” and “for the network”

Analytical CRM Operational CRM

A l i f t b h i ith

“Grounding” of the commercial opportunities generated by analytical marketing, to reach the customer with the best business

Analysis of customer behaviours, with the support of innovative statistical models for the banking sector (use of the Current and prospective value of the relations, constant monitoring of relation

The new commercial mechanism customer with the best business

proposition using the different interconnected channels.

migrations in the different value statuses in order to identify their needs and define a business strategy to meet these needs in the most appropriate way

mechanism

The new business mechanism supports the Network's development actions, and enables the systematic, widespread adoption of a shared commercial method

30

Analytical CRM

Young high-debt customers generally active on traditional channels

Adult, low-debt customers, very active on direct channels

1.200

1.400

1.600

er'

s valu

e

Sub-segmentation by value

Breakdown of customers i i

• Better knowledge of customers, of their overall “value” and of the

Low-activity customers holding current accounts only

"Dormant" customers without a current accounts

Young, high activity customers with many services but

no investment and lending products

Senior customers low-activity

investorsHigh-debt adults, very active on direct channels

0

200

400

600

800

1.000

1.200

- 0 1 2 3 4 5 6

Cu

sto

me

Services owned

into consistent groups based on their value and purchase behaviours

P it i

of their overall value and of the most appropriate commercial strategies for its sustainable growth over time

Propensity scoring

Forecast of the likelihood that the customer will accept the

• Support to business development through initiatives accurately addressed at customers' specific needs, and

offer and buy

Abandonment scoring

Prior identification of

customers specific needs, and therefore “targeted”

• Preservation of the customer base, by anticipating the signs ofPrior identification of

deteriorating relationshipsand assignment of a score indicating the likelihood that each individual customer

base, by anticipating the signs of dissatisfaction that may lead customers to abandon the Bank

• Implementation of commercial will abandon the Bank

Analysis of inter-segment dynamics

Identification of the main “migrations” of customers

Risparmiatori AttiviValore Alto

Giovani indebitatiValore Alto

Adulti indebitati

p e e tat o o co e c ainitiatives on the basis of budget allocation optimisation methodologies (customer/contact ROI)

High activity investorsHigh Value

Young high-debt customersHigh Value

High-debt, high-activity

31

gbetween different value statuses and analysis of the effectiveness of business initiatives

molto attivi Valore Medio/Alto

Adulti risparmiatori poco attiviValore Medio

Giovani molto attivi senza

finanziamenti/InvestimentiValore Medio/Basso

Clienti poco attivi con c/c

Valore Basso

Clienti dormienti no c/c

Valore Bassissimo

Churn

Valo

re

)g g yactivity adultsMedium-high Value

Low activity adults investors

Medium-high Value

Low-activity customers with current accounts

Low value

Young, high-activity customers

without loans/investmentsMedium-high Value

Dormant customers, no current accounts

Very low value

Val

ue

Operational CRM

I di id l C Sh i di i i ddi i h

Reactive commercial action

Any contact is a sales

Individual Customer Sheet indicating, in addition to the customer's position:

• customer's value• product to be offered/ “best next action”• customer alerts, if any (e.g. customer at risk of !!!!y

opportunity, y ( g

leaving the bank)

Branch alert highlighting the presence of ongoing initiatives on the customer

Proactive commercial action

Contacts on the

Business Form containing lists of customers to be contacted for commercial actions

Documentation in support of branch colleagues with product selling arguments commercial speeches

maximized, optimized branch Network

product selling arguments, commercial speeches

Increasingly simple, integrated tools with operating procedures to close the

32

sale; by becoming part of day-by-day operations, these tools support commercial activities based on a common approach

Productivity(1) by branch clusters

23 19

24 21

16

-40% -33%

-26% -24%

14 16

2010 2014 2010 2014 2010 2014

T i til MTop quintile - Mean Top 4 quintiles - Mean Last quintile - Mean

E pected es lt of

Cluster 1 (2)

19 15

24 19

-53% -46%

-40% -32%

Expected result of branch productivity realignment: higher

revenues for € 8 million 15

913

Top quintile - Mean Top 4 quintiles - Mean Last quintile - Mean2010 2014 2010 2014 2010 2014

p q p q q

14 branch clusters have been identified

Cluster 2 (3)

33

(1) Number of products sold (excluding the Finance area) / LU/ month(2) Cluster 1: large, historical branches, high-value customers, saturated market, focus on deposits(3) Cluster 2: medium-size branches, deeply rooted, medium-saturation market, focus on deposits

4. Optimisation of the Group's local presence

•10 provinces with market shares > 5% and 17 with

CURRENT POSITIONING

market shares > 3%; the remaining 42 provinces have market shares lower than 3% and show areas of operational improvement (management of human resources mobility, costs and investments in the territory, etc.) as well as commercial improvement ( l d ff l b d(scale and scope effects on circularity, brand, pricing, etc.)

•Extra-Liguria Network requiring further rationalisation/strengthening actions

•Selective growth of market shares in the provinces with existing branches to achieve critical mass, and penetration into new

•Opening/ reallocation of branches in particularly attractive locations to improve

provinces considered attractive (48 openings planned in the Branch Plan)

LINES OF ACTIONattractive locations, to improve

• Local coverage and create synergies with the existing bank branches and insurance outlets

•Opening of semi-automated branches as an alternative or replacement of existing branches

•Achievement of the break-even point no later than 3 years after branch start-up

alternative or replacement of existing branches

•Progressive seamless integration of the branches with the other channels

•Development priority in Northern Italy (Veneto

•Total additional net profit at the end of the plan period: € 4.5 million

34

Development priority in Northern Italy (Veneto, Piedmont, Emilia Romagna, Lombardy) and possible implementations in a rationalisation/completion perspective in other regions

Branch market shares by province

35,00%

>20% >5% >3% >2% >1% <1%

35.00%

30,00%30.00%

20,00%

25,00%25.00%

20.00%

10,00%

15,00%15.00%

10.00%

0,00%

5,00%5.00%

0.00%,

SA

VO

NA

GE

NO

VA

MA

SS

A

IMP

ER

IA

LA

SP

EZ

IA

EN

NA

LU

CC

A

PA

LE

RM

O

CO

MO

AL

ES

SA

ND

RIA

FR

OS

INO

NE

OL

BIA

-TE

MP

IO

ME

SS

INA

VE

NE

ZIA

PA

VIA

PIS

TO

IA

AG

RIG

EN

TO

TR

AP

AN

I

SA

SS

AR

I

LA

TIN

A

PA

DO

VA

SIR

AC

US

A

PIA

CE

NZ

A

FIR

EN

ZE

TO

RIN

O

AS

TI

CA

TA

NIA

RA

GU

SA

NU

OR

O

CU

NE

O

ON

ZA

E B

RIA

NZ

A

LIV

OR

NO

PA

RM

A

OR

IST

AN

O

RE

GG

IO E

MIL

IA

RIE

TI

TA

RA

NT

O

O-C

US

IO-O

SS

OL

A

RO

MA

AN

CO

NA

AO

ST

A

CA

GL

IAR

I

NO

VA

RA

BO

LO

GN

A

MIL

AN

O

BA

RI

TA

-AN

DR

IA-T

RA

NI

VE

RC

EL

LI

PR

AT

O

PIS

A

CR

EM

ON

A

BE

RG

AM

O

RIM

INI

VA

RE

SE

MO

DE

NA

GR

OS

SE

TO

TR

EV

ISO

MA

NT

OV

A

AS

OL

I PIC

EN

O

RO

VIG

O

BR

ES

CIA

VIT

ER

BO

VIC

EN

ZA

PE

RU

GIA

FO

GG

IA

AR

EZ

ZO

VE

RO

NA

LE

CC

E

FO

RL

I'-C

ES

EN

A

35

M

VE

RB

AN

O

BA

RL

ET

TData as at 31/12/10

2011-2014 Branch Plan

Lombardy

THE NETWORK IN 2014 (715 BRANCHES; 440 INSURANCE OUTLETS)

RESULTS OF NEW OPENINGS 2014

Valle d'Aosta

1

Lombardy 14

Veneto4

Emilia2

(€ bln)

TOTAL DEPOSITS (FIA)

~1,547.5

Marche 2Piedmont

4

Emilia Romagna

660

2 87

259

50

34

(FIA) ,

GROSS LOANS ~884.8

2

Liguria5

Tuscany

4 791

39

2France 1

NET PROFIT ~4.52y

12

11

9

NET PROFIT 4.5

NUMBER OF 215

2011-2014

11 EMPLOYEES 215

NUMBER OF 482011-2014

48 OPENINGS

Openings 2011-2014

63

Number of branches as at 31/12/2014 36

BRANCHES 48

5. Development of integrated inter-channelling

•Progressive increase of the time dedicated to consulting,

CURRENT POSITIONING

•Highly customized service offerings through 'high-touch' relationships (i.e. managed directly by branch personnel), vital for local presence, but resulting in high industrial production costs

g,relationship management and sale of products

•Achievement of excellence • “Opportunity” cost, relating to the time dedicated by network resources to low-value added activities, which could otherwise be devoted to business and customer relation development

levels in the inter-channel service, leading to increased customer satisfaction and loyaltyy y

•Improved revenues and penetration of new customers linked to LINES OF ACTION

• Local presence through a hub-and-spoke service model, based on hub branches and full-service or cashless lean branches (spokes)

innovative products

•Increased contacts (approx. 6 mln per year)

•Development of technology to support distribution through “integrated inter-channelling”; these applications recognize the customers consistently - allowing them to interact whenever, wherever and any way they

f d ll i diff ti ti

p y )

•Operations on other channels from 39% to 50%

37

prefer – and allow price differentiation

•Reduction of service costs by shifting operations to innovative channels

The inter-channel distribution model

Branch

Call

Internet Banking

Kiosk terminals/

ATMs

Branch counter Consultants

Call CenterMobile

banking

Totem

Customer experience

Improvement of inter-channel customer experience: an “always on” bank with a significant increase (approx. 6 mln per year) of proactive

38

g ( pp p y ) pcontacts generated on the different channels corresponding to future investments for approx. € 30 mln

Use of the operational CRM in an inter-channel perspective

1

The current or The website advertises a new mortgage with the

2Example: Mortgages

potential customer visits the website

new mortgage with the possibility of simulating a repayment plan

3

The current or potential customers perform the

Marketing

initiatives based

on inter-channel

Marketing

initiatives based

on inter-channel

5a

The call centre contacts the potential customer

customers perform the simulation

4strategiesstrategies

potential customer to offer products

4

The current or potential customers provide their personal data for future contact

The current or potential

5b

The manager meets current and/or potential customers

5

contact

customers receive promotional materials via mail/ e-mail

potential customers to provide further information

39

Inter-channelling for higher operational efficiency

400

+1.7% +5.1% +13.6%

Operations by channelCAGR

2010-2014

61%

39% 50%240

662900

715

1100 61% 50%

2010 2014

668

Sportelli ATM e Cash In

2010 2014

Online (1) Branch Other channels

(thousand)

Number of branches

Number of ATMs and cash-ins

Online contracts


6.1 Pricing optimisation: Loans

S i l i h i f

CURRENT POSITIONING

•Strong variance on loan rates, with margins forimprovement of the correlation between priceand strategic considerations on the level of theoverall business relationship, or between priceand counterparty riskiness •Progressive increase of the

• Increasing legal and reputational constraints(usury rate, transparency, mortgage portability,etc.) limiting the possibility of optimal loanpricing at system level

ROA on loans and increase of the net interest income, the loan volumes/risk undertaken/regulatory capital absorbed being equal

•Progressive loan remix based on risk-return

dLINES OF ACTION

•Use if the new CRM system to assess the overallbusiness relation with the counterparty todetermine the interest rate to be applied

considerations

•Greater use of methodologies for thedetermination and application of the riskadjusted minimum rate

•Greater control on the actual application ofb i d i k b d i i l b th i

41

business and risk-based pricing rules, both inthe sale and post-sale phase

Risk adjusted pricing

Pricing - Risk class

0.0%

-1 4%

-0.4%-0.7%-0.9%

-0.2%-0.8%-0.6%

0.0%-0.7%

-1.4%-1.8%

4 6%% misalignment of -4.6%

-12.6%-12.8%

% misalignment ofthe actual pricingcompared to thetheoretical pricingconsistent with therisk class

Total

-76.9%

1 10 11 12 13 142 3 4 5 6 7 8 9PD Classes

0.0 -0.3 -0.7 -1.5 -2.3 -4.1 -9.50.0 0.0 0.0 -0.1 0.0 -0.1 -0.2 -0.1Value (€ mln)

Excellent/Good Fair/Uncertain Bad/Very bad

42

Analysis performed on a sample of the current Small Business customer base

6.2 Pricing optimisation: new current account offering

•Offering to be reviewed in light of a currentaccount market characterized by growing

CURRENT POSITIONING

y g gdecomposition and dynamism of product andservice offerings (from "package" to modular"shopping cart" current accounts)

•Simplification of the offering and reduction of organisational complexity

•Increased sales and cross-selling volumesLINES OF ACTION

•Development and full implementation of a newcurrent account offering

• Introduction of limits to the use of derogations

•Incremental revenues estimated in approx. 7-10 millionIntroduction of limits to the use of derogations

for accessory services, with the development ofnew sales tools (configurator)

43

The new current account offering: rationales

Development of the range of the current accounts offered to customersDevelopment of the range of the current accounts offered to customers

Greater customisation and modularity of the services offered

Focus on simpler communication aspectsFocus on simpler communication aspects

More advisory approach focused on service contents

Use of commercial leverage (dynamic discount mechanisms) to promote cross sellingUse of commercial leverage (dynamic discount mechanisms) to promote cross-selling

Incentivise inter-channelling with a push approach on products like internet banking and ATMand ATM

44

Estimated financial benefits

LeverageAction Action

+ pricing+ volumes/products

New offerings for new customers Sale of new offering

+ pricing+ volumes/products

+ pricing

Reactivation of old products

P i i

Migration to new offering

Higher standard prices of branch wire transfers

- waivers

Pricing adjustments

wire transfers

Fewer permanent waivers on branch wire transfers

- waiversLimits to waiversIntroduction of a floor for spot

waivers on branch wire transfers

45

Flow of incremental revenues: 7 - 10 million

7. Service model refinement for corporates

•Progressive growth of

CURRENT POSITIONING

•Widely diverse Small Business segment: (independent contractors, Small Economic Operators (SEOs), small corporates); the services currently provided by SB managers are

•Progressive growth of revenues generated by small business. On the Small Business segment: increased percentage of customersunable to take full advantage of the

opportunities

•Some adjustments are also required in the other business segments

percentage of customers managed with a relational approach from 57% to 81%; greater commercial effectiveness: increasedeffectiveness: increased revenues from the 7.5 million segment

•Progressive growth of theLINES OF ACTION

•Refinement of segmentation criteria to identify current small business and to offer more advanced service models and greater use of consultants

•Progressive growth of the revenues (particularly from commissions) generated by high-potential SMEs and higher profitability on

• In the future, possible separate service offerings to professionals and to SEOs (shop owners etc.)

•Refinement of the segmentation criteria and the

higher profitability on capital/financing represented by loans to large corporates

46

related service models for large corporates and high-potential SMEs

The new segmentation of corporates

• Large Corporate focused on TO BEAS IS

Large Corporate Large Corporateno. of customers: ~ 420no. of teams: 3

no. of customers: ~ 600no. of teams: 5

‘key Corporate customers’

• Team with growing operating independence (also for assistants) to stimulate aSales revenues > € 100M Sales revenues > € 100M

f t 9 300no. of customers: ~ 7,500Mid Corporate

Mid Corporate

assistants) to stimulate a greater propensity to conduct development activities, particularly outside Liguria

Bank credit lines > € 10MSa es e e ues € 00Bank credit lines > € 10M“High-potential” customers

no. of customers: ~ 9,300no. of teams: ~ 60

no. of teams: ~ 55 • Strong commission generating offering

• Management of Small Business customers through a dedicated

Sales revenues > € 1.5MShort-term System credit lines

€ 250K

Sales revenues > € 2.5MShort-term System credit lines > € 500K

no. of customers: ~ 31,000no. of employees: ~ 210

Small Business

Small Business

customers through a dedicated in-branch advisor

• Management of the Small Business segment in a retail

> € 250K

no. of customers: ~ 62,200d l

POE (retail)no. of customers: ~ 32,800

logic and modelno. of customers: 62,200no. of employees: ~ 260 System credit lines > € 30K

47

8. Proactive credit management

•Careful and prudent credit management also considering

CURRENT POSITIONING

Careful and prudent credit management, also considering the specific phase of the economic cycle, with areas for improvement in the proactive management of lending policies: from the definition of the target portfolio allocated by area/ segment/ economic sector/ rating class, to the dynamic management of non-performing (NPL) and pre-

•Progressive improvement of the risk/return profile of the total loan portfolio, recovery of the repricing margins and dynamic management of non performing (NPL) and pre

non-performing loans (“grey area”)p g g

reduction of the expected loss associated with new disbursements (containment of the cost of risk within 50

• Active loan management throughout the entire life cycle: from the planning of targets and lending policy restrictions to the dynamic management of both performing and non-performing

b.p.)

•Increase of the net current value recovered from loans

LINES OF ACTION

dynamic management of both performing and non performing loans:

1.. Definition of the target portfolio to improve diversification andcredit quality, and to reduce the cost of risk;2. Strong supervision and constant monitoring also of the “greyareas” relating to pre-non-performing loans;

under restructuring and non-performing loans

•Containment of future losses 3. Strengthening of corporate loan restructuring activities, alsothrough synergies to be developed using the SMEs/LargeCorporate enterprise service model and a new segmentationmodel;4. Review of the level of independence and loan approvalprocesses on the basis of ratings with progressive repricing of the

associated with pre-non-performing loans (so-called "grey area")

48

processes on the basis of ratings with progressive repricing, of theexpected loss and of the price applied;5. Strengthening of the systems, resources and organisation of in-court and out-of-court proceedings for the recovery of non-performing loans

Evolution of active loan management and effects on capital, funding and cost of risk

Loan granting Monitoring of restrictions

Capital Liquidity Profitability

Strategic orientation

Steps

Definition of

Functions in charge

Loans/ Loan G

Actions

Definition of √√ √√ √√lending policies/3-year target portfolio

Rating

Governance, Governance and Control (for impacts on capital/ funding/risk concentration)Risk Management,

target portfolio/ loan allocation by area/segment/rating

Segmentation of

√√√√√√√√

√√√√

√√√√√√√√

√√ √√

√√

√√Rating assignment/ Resolution and indication of risk-based pricing

A t f

g ,Loans and Lending Committee (Sales for overall customer profitability issues)

Risk Management

Segmentation of service/ product offerings and processes provided. Risk-based priceS it l

√√√√√√

√√√√

√√√√

√√√√√√√√

√√Assessment of securities (firstly real estate)

Syndacation (in sales), performing portfolio transfers

Risk Management, Loans (LGD impact, price mitigation)

Risk Mgt, Loan Mgt, Governance and

Security value dynamic analysis

Assessment of profitability trade-off vs RWA/

√√

√√√√√√

√√√√√√√√√√

√√√√√√√√√√portfolio transfers,

including synthetic transfers Management and restructuring of pre-non-

Control, Finance (securitisations)

Loan Management, Loans, Corporate Services, Sales

off vs. RWA/ funding/ concentrationProactive M&A, restructuring actions

√√√√√√√√√√

√√√√

√√√√

√√

√√√√√√performing loans

Credit collection, foreclosure of securities and sale of NPL portfolios

Services, Sales

Credit collection-Litigations, Governance and Control (for impacts on capital and i d /IR)

Bankruptcy proceedings, participation in RE auctions

√√√√√√

√√√√√√

√√

√√√√

49Loan repayment

of NPL portfolios indexes/IR)

Performing portfolio monitoring model

• Detect positions with signs of deterioration on the basis of rating systems and other indicators if applicable (early warnings)

• Calculate synthetic anomaly indicators summarizing potential risks at individual customer level

• Provide a wide ranging in depth view of the causes that have led to the specific

Detection

PROCESS AND • Provide a wide-ranging, in-depth view of the causes that have led to the specific management situation

• Identify macro-objectives and a set of actions to be undertaken for each of the management situations, in line with the manager's decision-making independence

• Determine the process that will give the account managers and the NetworkManagement

PROCESS AND TOOLS

(“Monitora”)

CENTRALISED FUNCTIONS DECENTRALISED FUNCTIONS

• Determine the process that will give the account managers and the Network responsibility for the execution of management plans

• Monitor the adoption of appropriate management actions and the effects thereof

Management

LOANS DEPARTMENT

LOAN MANAGEMENT

DEPARTMENT

LOAN GOVERNANCE

DEPARTMENT

TERRITORIALAREA DEPT.

COCS

ORGANIsationALCHANGES

IMPAIRED LOANS OFFICE

LOAN

MONITORING

OFFICELOAN

MONITORINGOFFICER

COCSCHANGES

Constant monitoring for the early identification and management of any signs g y g y gof deterioration of the positions, assignment of responsibilities and actions to

be implemented according to severity50

Impaired loans portfolio monitoring model

55 1%

AVERAGE RATE OF RECOVERY ON SETTLED POSITIONS

55.1%48%

40%53%

CARIGE Player1 Player2 Player3

Average lifeAverage ticket (K€)mortgage %

2.480

28%

4.496

20%

3.061

16%

7.0136

33% Maintenance of high

•New application•Construction of a

mortgage % 28% 20% 16% 33%

Tool

Maintenance of high recovery

performances also in the near future

Source: Bain analysis

Co st uct o o aportfolio from the non-performing positions under a manager•Concomitant reorganisation of the

MEASURES ADOPTED IN THE

LAST THREE YEARS IN ANTICIPATION

Tool

Organisation gLitigation Department (Redistribution of workloads, segmented by type, use of external credit collectors, etc.)

IN ANTICIPATION OF CREDIT QUALITY

DETERIORATION Process

g

51

•Review of recovery management processes

9. Risk monitoring and management

CURRENT POSITIONING

•Strong credit risk monitoring, related to theGroup's prudence and long-term culture

•Progressive implementation of analysis,monitoring and management models, still to be

•Benefits from a capitalisation increase in the order of 100-200 b.p. at core capital level, in the event of advanced IRBg g ,

improved in a perspective of proactivemanagement and advanced qualification towardsthe Regulators

• "Improvable" integration of the risk views

in the event of advanced IRBadjustment

•Strengthening of the bank's perception as a solid, solvent and risk-advanced bank

assumed at product company leveland risk advanced bank

•Top positioning among medium-sized Italian banks for the internalisation of ratings in commercial proceduresLINES OF ACTION

•Development and full implementation of creditrating and loan portfolio models, and review ofthe lending processes and organisational/ICT

d t bt i d d IRB li

commercial procedures (segmentation criteria, delegations, risk pricing etc.)

•Top positioning for compliance and reputation risk

LINES OF ACTION

procedures to obtain advanced IRB compliance

• Integration of the views of financial, loan andpure risks, consolidated by the Group CRO(including, for market risks, also the insurancecompany portfolio)

and reputation risk management

52

company portfolio)

•Strengthening of the monitoring of fraud andreputation/compliance risk

Level of coverage

The level of coverage of impaired loans is in line with the System coverage level(1), keeping in mind the following:

High portion of the impaired loan portfolio supported by mortgage securities (59% vs. 48% System average)

Less risky composition of the impairment loan portfolio (non-performing loans: 47.7% vs. 54.4% System average; watch list loans: 27.9% vs. 31.5%; past due loans: 18.2% vs. 5.5%)

Intensive write-off policy conducted over time on impairment loans still recorded in the financial statements

Loan portfolio characterized by high granularity of the positions and turnoverLoan portfolio characterized by high granularity of the positions and turnover

High percentage of mortgage loans (47%) taken out in Liguria, where the real estate market maintains steady prices

(1) Peer group used for benchmarking on data as at 30/9/2010: Unicredit Intesa San

53

30/9/2010: Unicredit, Intesa San Paolo, Banco popolare, Monte Paschidi Siena, Unione di Banche Italiane, Banca Popolare di Milano, CreditoEmiliano, Banca Popolare Emilia Romagna

Switching to the IRB Advanced system

ACTIONS

New segmentation

LGD model fo La ge Co po atesEstimated expected benefits in terms ofLGD model for Large Corporates

Development of non-ratedcounterparty models

benefits in terms of core capital:

100-200 b.p. p y

PD recalibration for Privates andSmall businesses, and 10% LGDincreaseincrease

54

10. Development of corporate services

•Increased profitability from support to SME internationalisation, also through industrial alliances

CURRENT POSITIONING

•Creation of a new Business Services departmentto launch systematic initiatives for thedevelopment of commission income (foreignoperations, insurance and financial coverage,corporate portal)

t oug dust a a a ceswith international banks (higher revenues for approx. €12-15 million once fully implemented)

corporate portal)

•Customers on "traditional" managementmethods, based on loans, with modestdevelopment of supplementary services. Limitedoffering of advanced services to large corporates

•Support to the growing complexity of business activities - as a result of globalisation technologyoffering of advanced services to large corporates

and high-potential medium sized corporatesglobalisation, technology innovation and constantly evolving supply and target markets - through electronic solutions (e.g. Corporate Portal

LINES OF ACTION

•Offer competitive international services designedto meet SME needs, in support of theinternationalisation process, through "local"alliances if appropriate

solutions (e.g. Corporate Portal and related service offering) that will generate new customer-side commission income and improve banking

•Take full advantage of CARIGE Group'sexcellence and skills (products and technologies)in the Corporate area, including through thedevelopment of the new corporate portal

and corporate process efficiency

•Increased insurance coverage rate for the corporate

55

•Strengthen synergies with the Group's insurancecompanies for the offering of products tocorporate customers

rate for the corporatesegment, with positive effects on commission income

Service generated revenues: Growth margins

Segmentation of Carige Corporate customers

% of customers with international loans

Percentage of customers with international loans by sales revenues

Esterocon Carige

Estero solocon CarigeIntl loan withCarige only

Intl loans with Carige

% of customers with international loans

40

60%61%

50%

37% System

Estero solocon altre banche

(12%)

e altri(9%)

(2%) & othersIntl loans with

other banks only

0

20 System 23%

Carige 11%

>50 €mln

26%

20-50 €mln

21%

5-20 €mln

16%

< 5 €mln

13%7%

Carige

Senzaestero(77%)

No intl loans

>50 €mln 20 50 €mln 5 20 €mln < 5 €mln

Use of online channels – Carige Corporate

100%

74%

26%

17%9%

43%

5%

74% of Mid Corporate customersoperate with online tools; of

Analysis basemid Corporates

No onlinechannels

Non-operatingonline

banking

Customerswith active

onlinechannels

Passive CBI Active CBI Operatingonline

banking

26%5%these, only 5% has an activeCBI

56

Support to companies' internationalisation

… requirements/ opportunities for CARIGE… emerging Countries…Where it would be interesting to go …

Eastern Europe

• Strengthened ability to assist SME customers in conducting import/export business; distinctive ability to support SMEs in the development and realisation of their competitive globalisation

Russia

Cairo

of their competitive globalisation projects (delocalisation, JV with local partners)Development of international services “at home”D l f i h

China

I di Development of support services that can be offered through correspondent banks, and through cooperation agreements with specialized partners if possible

India

Indonesia

Industrial alliance, if the conditions exist, with an investment bank for globalisation (M&A, JV, obtainment of capital, etc.)Africa

Brazil

57

11. Private segment enhancement

CURRENT POSITIONING

•Banca Cesare Ponti is a commercial bank with its •Development of Banca

for Banca Ponti

own legal personality and brand, dedicated to thePrivate segment

•Central competence structures (Ponti, PrivateDept., Finance, CARIGE SGR, etc.) in network with

Ponti's customer portfolio through the service model

•Opening of new branches p , , , )each other, with differentiated approachesaccording to territory (Banca Ponti dedicated toLombardy, Banca Carige's Private Division providingservice in other regions)

based on private bankers

for Carige

• Differentiation of the service offerings. Consultingservices extended to asset protection, management of

LINES OF ACTION•Development of the Private customer portfolio and of “false mass market customers”p , g

generational passages, portfolio risk governance andmonitoring

• Development of Banca Cesare Ponti as a centre ofexcellence of the Group. In Lombardy, centralisation

d “ l ” it hi f P i t d ti

•Constant interaction with Corporate and Small business consultants

and “seamless” switching of Private and prospectivePrivate customers from Carige to Ponti withdevelopment of strong interactions with the Carigenetwork (branches, Corporate managers, SmallBusiness managers)

•Increase in the average number of products held from 7.2 to 7.5 (+4%)

58

• Extension of the common service model to all of theGroup's Private customers, and development of stronginteractions with the Bank's territorial network.Adoption of a Private branch model

•15% reduction of administrative processing time

Banca Ponti: economic and financial targets

Banca Ponti's Net Profit growth (€ mln)

32.1%CAGR 2010-2014

Banca Ponti's FIA growth (€ mln)

2,907 3,04011.9%

1,935

2,4342,694

,

CAGR= compound annual

59

compound annual average growth rate

Direct Deposits Indirect Deposits

Development of Carige's potential Private customers

There is a 40% potential ofk t lti l b k

61%

mass-market, multiple bankcustomers

39%

39%

Mass Marketcustomers

Multiple bankcustomers

39%

Holding "active" accounts with other

Holding “marginal” accountswith Carige

61%

customers customers accounts with other Banks

with Carige

Customer base expansion: use the broad Mass Market

60

Customer base expansion: use the broad Mass Market customer base to identify potential Affluent/ Private customers

Development of Carige's Private segment

+4%Cross-selling by segment

7,1

6,0

7,4

+11%

6.0

7.17.4

5,4

4,1 4,1

,

4,4 4,4 4.44.1

+19%

+7% +7%5.4

4.44.1

3,1

4,1 3,7

3.13.7

2010 2014 2010 2014 2010 2014 2010 2014 2010 2014


61


12. Development of offerings to immigrants

•Higher number of newCURRENT POSITIONING

•Growing number of immigrants in Italy (approx. 5million, including 2 million Muslims sensitive to theShariah rules of Islamic finance) only partially addressedby CARIGE

G i b d t f itt t th

Higher number of new immigrant customers acquired through the physical network and h h di i l i i i i•Growing number and amounts of remittances to the

immigrants' families in the countries of origin (transfersthrough companies specialising in remittances)

•Agreement with foreign banks for remittances abroad;some branches with specific layouts dedicated to the

through digital initiatives addressed to ethnic communities

immigrant population •Customers' average age decreasing (focus on younger, more "dynamic"

t )LINES OF ACTION

• Identification of customer potential in relation to thepresence of branches in areas with large ethniccommunities

customers)

•Increase in direct and indirect deposits, also

LINES OF ACTION

• Implementation of ad hoc business partnerships andalliances with companies specializing in immigrants'online remittances to their Countries of origin

• Identification of specific requirements and new offeringof Islamic finance/insurance products

indirect deposits, also through the remittance service

62

p

•Careful monitoring of key risk factors associated withthis customer segment

Financial inclusion as a key integration factor for the "new Italians"

CARIGE has approximately 58,000 foreign customers, over a total population in Italy ofmore than 5 million. CARIGE's target customer base is composed by 30% of LatinAmericans (particularly from Ecuador), with dedicated remittance programmes alreadyl h d h h hi i h di b k i i i

Legal status

launched through partnerships with corresponding banks in Latin America

Life cycle SettlingLegal status acquisition &

definitive settling

Integraton and consolidation

Financial needs

Send money home

Send money home

Manage cashPurchase

Send money homeManage cash

Purchase durable goods

O hneeds homedurable goods

Own a homeGet insured

Products typically owned

Remittances

Current accountATM

Consumer financeCredit cards

Basic saving and insurance

products

Personal loansMortgagesInsurance products

63

ATMPrepaid cards

Credit cards

An increasingly important customer segment

The “non-EU cistizens" market share has grown from 0 73% tofrom 0.73% to 0.80%

9.4% growth of

Increase in traded volumes for non-EU citizens (€ mln) (32,000 customers in 2010)

+9.4%CAGR2010 2014

751,4

1.075,2 Va

traded volumes

Expected revenues: ~ 9

2010-2014

751.4

1,075.2

revenues: 9 million by the end of the plan period

2010 2014

64CAGR – Compound annual growth rateTraded volumes = FIA + loans

13. Cost & lean management

CURRENT POSITIONING

•Good level of operating efficiency compared withaverage industry levels. However, there areareas for improvement, including processsimplification and load disbursement time •Further improvement of

ASA efficiency throughASA efficiency through savings from renegotiations and selection of preferred

liLINES OF ACTION

•Constant monitoring of overhead andadministrative costs, with opportunities for thefurther promotion of marketing programmes andcentralised, competitive supplier management

•Process analysis to identify time/resource saving

suppliers

•Savings on costs and FTE resources related to•Process analysis to identify time/resource saving

opportunities•Strengthening of the parent company'smonitoring on subsidiaries' costs processes(including insurance companies etc.).

•Roll-out and full implementation of the back

FTE resources related to the process efficiency programme and back office centralised

lid ti•Roll-out and full implementation of the backoffice centralisation programme, aimed atreducing costs through scale/scope economies,as well as improving the quality of the servicesprovided (common standards, less reworking,and Six Sigma total quality programmes)

consolidation

65

and Six Sigma total quality programmes).Opportunity to develop non-captive offerings ofsaid services with profit objectives

Cost reduction

0,52%-5 bps

Staff costs/Loans and Deposits(1)

0.52%

0,47%Staff costs+Overhead costs/Loans and Deposits(1)0.47%

2010 2014

0,79%-2 bps-7 bps

0.79%

Overhead costs/Loans and Deposits(1)

0,72%0.72%

0,27%-2 bps-2 bps

2010 20140.27%

0,25%0.25%

66(1) FIA + Gross loans to customers

2010 2014

14. Improved communications

•Areas for improvement in institutional

•Optimized perception by the financial community, resulting in lower stock

CURRENT POSITIONING

communications to the domestic andinternational financial community, particularly interms of structured and proactivecommunication planning

•Communications to other non-financial( l b

resulting in lower stock rating volatility (improved stock performance)

•Optimized communicationsinstitutions (consumer associations, labourunions, printed and online media, TV,Universities etc.) mainly implemented on specificoccasions

•Advertising campaigns and sponsorships in lineith b d t li it ti

•Optimized communications with the different stakeholders, supporting the Group's image of transparency strong sharedwith budget limitations transparency, strong shared values and openness to dialogue

•Optimised costs of customerLINES OF ACTION

•Revamping of communications to the financialcommunity through structured, proactiveplanning of meetings and events aimed atimproving the amount and quality of theinformation provided, as well as "listening"

•Optimised costs of customer contact/new customer acquisition and strengthened commercial “brand equity” of the bank increasingly

opportunities for senior management•Revamping of communications to non-financialinstitutions, with more proactive interventionproposals (in coordination with Investor andMedia Relations)

the bank, increasingly perceived as "multi-territorial"

67

•Revamping and review of advertising andsponsorship campaigns (with a focus oninvestment/event managed on a "localcommunity" basis)

Agenda


•Current scenario•StrategyS a egy•Strategic initiatives•Organisational structuresg•Targets


68

Organisation Chart

ProductionNon-life

InsuranceLife

Insurance Finance Loans Consumer credit

Investment management

Corporate Services

Commercial planning and support

Business segmentsand CRM

Distribution channels and payment services

Insurance Insurance credit management Services

Retail Banking

support and CRM p y

Distribution and Marketing

Bank branches

Private Banking

Corporate Banking Direct channels

Insurance outlets

Bank branches

Administrative services

Human & technological resources

69

Governance and Control

Technology: Management and development

•Intensive investments processTechnological

•Improved production efficiency

•Higher commercial efficiency

g

innovation

•Reduction of back-office processing time and activities,resulting in the freeing up of resources for commercialactivities, thus reducing costs and improving process quality

•Development of new sales software functionalities inter-ICT •Development of new sales software, functionalities, interchannelling and new highly digitalized products/ services,aimed at maximizing effectiveness and business returns oncurrent and new customers (particularly digital natives andyoung people)

C

Development

•Significant increase of the time dedicated by branch employees tocustomer relation and sales activities; improved effectivenesscustomer relation and sales activities; improved effectivenessfrom the use of online sales support software

•Establishment of CARIGE as a “best practice” medium-sizedItalian bank in ICT innovation, using the latter as a lever to

Value

creation

70

differentiate offerings and to increase customers even in areasnot directly managed through the physical network

Technological development projects

Development

CRM Management dashboard Online bank

Accounting information system

Mobile banking

Terms & Conditions system

Payment systems Mortgages and loans

Customer database

CO GE and financial statements Web finance

Product catalogue

New front office

CO.GE. and financial statements

Credit lines, Basel II and III

Branch security

Internet security Totem and communications

a c secu ty

Disaster recovery

Transparency Reports to Security

Paper dematerialisation

Strength-ening

Transparency

71

InnovationOptimisation

Technology investments

Technology expenditures and investments (€ mln)

currentexpenditures

investments

72

152 million69 million



Total 4 yearsof which investments:

Human Resources Management: strategic approach and action areas

•Variable management systems depending on strategic choices and on the environmental/economic context

•Consistent use of resources along the entire “life l ” ( d l )

Human Resources

1. Optimisation of human capital as ability to attract, retain and develop human resources,

cycle” (acquisition, integration, development, exit) within the corporate system

•New network dimensioning system•Full implementation of a new HR information system

Management operating systems

p ,and careful management of related and derivative costs

2. People as vital assets for

•Talent selection and retention•Training in support of change•Professional development paths•Ensure a more stringent link between company needs and hiring policies/selection criteria with

the company's life, source of knowledge and innovation capabilities

3. Development of the di ti ti liti f needs and hiring policies/selection criteria, with

training aimed not only at technical specialisation but also at cross-company movement, and development paths inspired by the principle of mobility, both geographically and horizontally (between functions, in terms of on-the-job t i i )

Development systemsdistinctive qualities of CARIGE employees in an entrepreneurial/business perspective and in terms of positive behaviours, both internally and training)

•Remuneration system•Assessment system

both internally and externally towards customers

4. Strengthening of the sense of belonging

•Career system• Careful management of the interdependence levels between the three systems, aimed at optimizing/ realizing the potential of objectively assessed, consistently paid resources, within a career path designed to enhance the long term

Reward systems

sense of belonging (particularly for employees coming from other banking institutions)

73

career path designed to enhance the long-term contribution of individual employees with respect to company strategies

5. Development of relational skills for sales network, account managers and consultants

Human Resources

CAGR

STAFF COSTS EVOLUTION (€ mln)HEADCOUNT EVOLUTION

0 42% CAGR2010 - 2014

CORE GROWTH (1)

1 3%

Turnover~69%

0.31% 0.42%

392 4 397 3452,1

3.3%

1.3%

397 3392 4452.1

392,4 397,3 397.3392.4

2010 2010 PF 2014

5% benefit in terms of number of f ff

2010 2014

(1)= excluding Branch Plan and non-recurring items

74

resources from process efficiency improvement69.2% 73.3%Network

employees

2010 pro-forma figures are normalized by annualizing the contribution of former MPS branches acquired on 31/5/2010


Effects of ICT and Human Resources costs on the grossoperating income

EFFECTS OF ICT AND STAFF COSTS ON THE GROSS OPERATING INCOME

39 0% 38 8%39.0% 38.8% 36.6% 35.1%33.3%

36.8% 36.4% 34.2% 32.9% 31.3%

2.2% 2.4% 2.4% 2.1% 2.0%

2010 p.f. 2011 2012 2013 2014

ICT costs Staff costs


Agenda




76

“New normal”: regulatory constraints and key indicators

Regulatory capital and financial leverage

Structural liquidity and

financing

Credit and risk of cost

Compliance and reputational

risk

New normal leverage

CARIGE today (YE 2010)

CARIGE target (YE 2014)

Core Capital at 6%Leverage at 4.7%

Core capital 8%, Leverage at 4 9%

Deposits/ imp. 105%, LCR 57%, NSFR 99%

All 3 ratios > 100%

Allocations = 45 bps (last 3 years)

Allocations ≤ 50 bps

Constant risk monitoring and supervisionOrganisational and process actions/

Plan constraint indexes to be monitored

Leverage at 4.9%

“Revenues/ RWA” (4 6% today; target >

“Revenues/ sources” (3 8% today; target >

“Revenues/ Alloc.” (8.9 today; target > 12)

process actions/ CARIGE values approach

“Customer satisfaction” todaybe monitored

(1)(4.6% today; target > 6%)

(3.8% today; target > 5%)

today; target > 12) satisfaction today 68% (2); target > 75%)

Goals: maximisation of revenues and profitability in accordance with the constraintsGoals: maximisation of revenues and profitability in accordance with the constraints

(1) Revenues = gross operating income + net result of insurance management; (2) Source: ABI monitoring; the system percentage is 56%; 77

2014 Results: FIA

DIRECT DEPOSITSCAGR2010 - 2014

€mln

FIA26.584

32.931

5,5%

26,58432,931

5.5%

FIA€mln

6 1%6 1%

INDIRECT DEPOSITS 50.674

64.139

6,1%Ci 2010 2014

€mln50,67464,139

6.1%

24 09131.208

6,7%

31,208

6.7%

2010 2014 24.091 24,091

2010 2014


2014 Results: direct deposits

SHORT€mln

CAGR2010 - 2014

DIRECT DEPOSITS 17 825

3,3%

€mln

17,825

3.3%

5,5%

DIRECT DEPOSITS15.680

17.825

€mln 15,680

17,825

5.5%

26.584

32.931

MEDIUM LONG

2010 2014

26,58432,931

8,5%

MEDIUM LONG€mln

8.5%

10.904

15.106 2010 2014 10,904

15,106

2010 2014 79CAGR= compound annual average growth rate

2014 Results: AAF

ASSETS UNDER MANAGEMENT

8,3%

€mlnCAGR2010 - 2014

8.3%

10.342 14.242

,

10,34214,242

INDIRECT DEPOSITS

6,7%CUSTOMER ASSETS IN CUSTODY

2010 2014€mln

€mln6.7%

24.091

31.208 9.922 11.198

3,1%

24,091

31,2089,922 11,198

3.1%

2010 2014

INSURANCE COMP. ASSETS IN CUSTODY €mln

2010 2014

5.769

10,8%

INSURANCE COMP. ASSETS IN CUSTODY €mln

5,769

10.8%

3.827


3,827

2014 Results: assets under management

%7 5%

MUTUAL FUNDS€mlnCAGR

2010 - 2014

5.503 7.348

7,5%7.5%


5,5037,348

2010 2014


8,3%BANCASSURANCE PRODUCTS

€mln

€mln

8.3%

4.134 5.941

9,5%9.5%

10.342

14.242

10,342

14,242

4,1345,941

2010 2014

ASSETS MANAGEMENT

953

7,8%7.8%2010 2014

ASSETS MANAGEMENT€mln

953705


705

2014 Results: loans

LOANS TO INDIVIDUALS (1) LOANS TO CORPORATES (1)€mln€mln

CAGR2010 - 2014

15.086 18.837

5,7%5.7%

7.877 9.938

6,0%

7,8779,938

15,08618,837

6.0%

2010 2014

LOANS

2010 2014€mln

25 37331.130

5,2%

SHORT (2) MEDIUM LONG

5.2%

25 37331,130

2,3%2.3% 6,0%6.0%

25.373 SHORT (2) MEDIUM LONG€mln€mln

25,373

6.539 7.150 17.724

22.402 2010 2014

6,539 7,15017,724

22,402

2010 2014 2010 2014

(1) Management breakdown; (2) Including currency, excluding non-performing 82CAGR= compound annual average growth rate

2014 Results: credit risk

-18 3%

NET IMPAIRED AND NON-PERFORMING LOANS NET NON-PERFORMING LOANS (%) ON CT1€mln

CAGR2010 2014 18.3%2010 - 2014

CORE TIER 1/CET1 1,304.2 2,198.5

COMPOSITION OF IMPAIRED LOANS AVAILABLE MARGIN AND COST OF RISK

CORE TIER 1/CET1 1,304.2 2,198.5

CAGR 2010 PF - 2014

According to the Strategic Plan,by 2014 the percentage of non-by 2014 the percentage of non-performing loans will bemaintained around 50%

832010 pro-forma figures are normalized by annualizing the contribution of former MPS branches acquired on 31/5/2010CAGR – Compound annual growth rate (1) gross operating income/net loans

2014: Results interest rate scenario

CARIGE RETAIL CUSTOMERS SPREAD

+ 49 b.p.

SYSTEM RATES2,36

2,85

p

2.362.85

2,50 2,55 2,73

+1,50 +1,74 +1,65+1.74

2010 20142.50 2.55 2.73

+1.50 +1.65

1,000,81

1,08

CARIGE RETAIL AND INSTITUTIONALCUSTOMERS SPREAD (1)

2010 2014

1.000.81

1.08

Tasso BCE (fine i d )

Tasso Euribor 3m ( di )

Tasso Euribor 6m ( di )

2,11 2,16

+ 5 b.p.

2.11 2.16ECB rate (end ofi d)

Euribor 3m rate(average)

Euribor 6m rate(average)periodo) (medio) (medio)

2010 2014period) (average) (average)

2010 2014

84

(1) Loans to customers and direct deposits according to the accounting definition: it includes, among the loans, active repos and interest bearing postal bonds, as well as other minor non-commercial entries; among the deposits, loans issued on institutional markets (EMTN, Covered bonds and subordinated loans), as well as other non-commercial entries.

2014 Results: gross operating income

NET INTEREST INCOME€mln

CAGR

CAGR2010 - 2014

GROSS OPERATING INCOME

CAGR 2010 PF - 2014

€mln

REVENUES FROM SERVICES€mln

2010 2010 P.F. 2014

Bank Group 880.7 894.4 1,167.5

852010 pro-forma figures are normalized by annualizing the contribution of former MPS branches acquired on 31/5/2010CAGR – Compound annual growth rate

Insurance Group 186.7 186.7 278.5

2014 Results: revenues from services

NET COMMISSIONS

6,3%5,8%

€mln

CAGR2010 - 2014

5.8%6.3%

297,3 302,2 379,2

,CAGR

2010 PF - 2014297.3 302.2

379.2

REVENUES FROM SERVICESFINANCE (1)

2010 2010 PF 2014

9 9%

€mln €mln

9 9%

362,3 367,2 420,6

3,8%3,5%

62,8 62,8 41,4

-9,9%-9,9%3.5%

3.8%-9.9%

-9.9%

362 3 367.2420.6

62.8 62.841.4

362,3 367,

2010 2010 PF 2014

OTHER REVENUES (2) €mln

362.3

2010 2010 PF 2014 2,2 2,2

( )

(1): dividends, profits/losses on trading, plus/minus from evaluation

€mln

2.2 2.2

-

2010 2010 PF 2014

(items 70, 80, 90, 100 b-c-d and 110).(2): profits/losses from loan sales/repurchases (item 100 a).



Gross operating income evolution

BANK NET INTEREST INCOME€mln

CAGR 2010 PF - 2014

NET BANK COMMISSIONS€mln


2014 Results: operating costs

STAFF COSTS

Core growth1.3%

€mln

CAGR

CAGR2010 - 2014

OPERATING COSTS

2010 PF - 2014

OVERHEAD COSTS

1.4% net of new openings

€mln

€mln

openings

OTHER COSTS

COST INCOME

59,9% 50,3%60.0%59.9% 50.3%

2010 20142010 PF

2010 pro-forma figures are normalized by annualizing the contribution of former MPS branches acquired on 31/5/2010CAGR – Compound annual growth rate 88

Operating cost evolution

CAGR

CAGR2010 PF - 2014

CAGR 2010 PF adj. - 2014

89(1) Without the deduction of social security costs not recorded in the income statement for non-recurrent events


2014 Results: profits

PROFIT€mln

CAGR

CAGR2010 - 2014

CAGR 2010 PF - 2014

9 9%11,5%11.5%

Adj. ROE . (2)

8,1%

ROTE (1)

17.5% Adj.8.1%9 9%9,9%6,5%

,(2)6.5% 9.9%

2010 20142010 2014

90

(1) ROTE: Return on tangible equity: net profit /Shareholders' equity net of goodwill

2010 pro-forma figures are normalized by annualizing the contribution of former MPS branches acquired on 31/5/2010CAGR – Compound annual growth rate(2) Shareholders' equity net of the Bank of Italy equity investment revaluation reserve

Product company targets

INSURANCE COMPANIES SGR CREDITIS

CAGR 2010 - 2014

9,9%9.9%

0 5%

791

18,6%18.6%

350

8,0%

5.063

6.879 6,879

5,063

8.0%

542 575 893

1.304 1,5%0.5%

, 400

5,063618605

5.063 6.529

-,

6,529

2010 2014Danni Vita

Net premiums Assets Under Management Outstanding

2010 2014Non-lifeinsurance LifeLife

insurance

2010 2014di cui non captiveOf which non-captive

p g Outstanding€mln€mln €mln

91CAGR – Compound annual growth rate

Carige Assicurazioni's turnaround (Non-life company)

Actions envisaged in the Industrial Plan

Distribution

• Turnaround of the Agency Network and Brokers (with critical profitability)

• Divestment of business lines (Lega, healthcare facilities, ...)

• General portfolio restructuring/cleaning

• Bancassurance Auto

St t l i f thi d t li bilit t ( i f t

Rates

• Structural review of third-party liability rates (review of parameters as well as prices)

• Review of Elementary insurance pricing

• Full implementation of the current settlement model (in-sourcing, t k t )

Claimsnetwork, etc.)

• Strengthening of previous generation crash programme

• Innovation of the settlement model (Bancassurance, initiatives for the reduction of the average current cost etc )reduction of the average current cost, etc.)

92

Non-life insurance segment: development of the banking channel

Collection of non-life premiums through the banking channel (€ mln)

CAGRCAGR 2010-2014

+46.4%


Non-life insurance segment: strengthening of previousgeneration reserves

Balance of previous generation reserves (€ mln)

ty c

arTh

ird

part Total ‘10-‘14:

-99.8 € mln

T Reserves/Premiums(%) 109% 104% 105% 103% 105%

enta

ry

Total ‘10-‘14:45 € mln

Elem

e -45 € mln

Reserves/Premiums(%) 122% 135% 140% 135% 135%

94

Development of Carige Vita Nuova(Life company)

Assumed

• Innovation of the offering range as a key factor to compete in the market, in the face of increased competition and rising rates

market scenario competition and rising rates

• Assumed scenario of evolution of the financial markets in line with the post-crisis trend

• Ability to innovate the offering range:-Strengthening of the roles dedicated to product

Internal key factors

Strengthening of the roles dedicated to product development and competition monitoring

-Optimisation of the IT system in support of business development (e.g. development of more complex p ( g p pproducts)

• Improvement of the operating mechanism's efficiency

95

Life premiums portfolio

Collection of Carige Vita Nuova premiums (€ mln)Collection of Carige Vita Nuova premiums (€ mln)

CAGR 2010-2014 +9.9%

Weight of the banking channel

~ 90%~ 90%


Insurance Companies' profitability

Carige Assicurazioni's net income according to the statutory financial statements (€ mln)

31 0

CAGR 2010-2014

…

31 0

19,0

27,0 31,0

19.0

27.031.0

2,0 2.0

-6,1

2010 2011 2012 2013 2014

Carige Vita Nuova's net income according to the statutory financial statements (€ mln)

-6.1

(€ mln)

16 5 17,5 18,120,9

22,6CAGR

2010-2014+8.2%

16 5 17.5 18.120.9

22.6

16,516.5

972010 2011 2012 2013 2014

CAGR – Compound annual growth rate

Potential for shared bank/insurance customers

Customer sharing within the Group (100% = 1 9 mln)

New bank customers referred by insurance agents(100% = 1.9 mln) insurance agents

2011E:4 4%

4,00051.9%

4.4%

1,550

5/2011/

43.7%

Strong commitment to making use of the commercial synergies derivingfrom cross offerings to the two customer bases, which is progressively

98

g , p g yproducing significant results. It is estimated that shared customers will

be 7% of the total by 2014.

Capital management

PRIORITYOBJECTIVES

Achievement of the 8% requirement withinthe Plan period, through organic growth

MEASURES THAT CAN BE LEVERAGED ADDITIONAL ELEMENTS

condition created in 2010: 1. issue of the 2010-

2. allocation of future profits 3. optimisation of the

4. Validation of internal rating system5. Recognition (at least partial) of 1. issue of the 2010

2015 soft mandatory loan, convertible on initiative of the

b ib d f

3. optimisation of the balance sheet structure (e.g.: sale of interests of less than 10% in b k d i

g ( p )goodwill6. management of insurance risk in a conglomerate perspective

subscribers and of the Bank from September 2011

banks and insurance companies)

The Group could implement additional capital strengthening measures toi th t iti th t h ld t th l lt f thseize the opportunities that should present themselves as a result of the

possible competitive evolution characterizing the Italian banking system99

Common Equity evolution with the regulations in force from time to time

7.7 – 8.28.3 – 8.8

1.3 – 1.8

(1) Including deduction of savings shares (-0.8), calculation of dividends (+0.7), impacts for the deduction of non-significant equity investments (-

€ Milion

(2) Conversion price ranging from 1.8 to 2.4 euro

1.1), benefits for the deduction of insurance (+0.4), non-calculation of negative reserves on AFS (+0.6) and the effects of the weighting ofdeductibles (-0.5)

(3) Including deduction of the remaining percentage (50%) of equity investments in banks, financial and insurance companies (-0.4) anddeduction of insurance shareholdings (-0.9) 100

Funding policies

PRIORITY OBJECTIVES

• Achievement and maintenance of new liquidity levels and source/loan stability in accordance with BIS III > 100%

OBJECTIVES • Containment of the funding gap on the Extra-Liguria network (from 11.2% to 7.5%)

Obtainment of steady

MEASURES THAT CAN BE LEVERAGED

Additional lending Remix of retail deposit Obtainment of steady medium-term liquidity and funding at the most favourable financial

di i f i l

Additional lending structure balancing initiatives: new covered bond issues,

i i i d

pproducts qualified to improve the liquidity ratio: fixed deposits and repos with durations longer than 1

conditions for capital balancing and early adjustment to the new Basel III standards: structured

securitisations and sales of NPLs; valuation of financial assets that can be

gmonth.In the Extra-Liguria network, closing of the intermediation circuit: “support” to loans III standards: structured

programme of institutional bond issues in 2014

assets that can be placed with the EBC

ppgranted to corporatesthrough deposit flows (e.g.: opening of current accounts by company partners, y p y p ,employees, supplies)

101

Maturities and new medium-long term flows

Medium-long term deposits (€ bln)Medium long term deposits (€ bln)Balance

(new flows –maturities)

1.5 0.9 1.0 1.2

1 7

2.01.7

1.7

1 4

1.7

-1.7-1.3

-1.6

-1.4

102

Closing of the intermediation circuit

Closing of the funding gap (€ bln)

8.5 9.8 8.5 7.69.9 11.3

10.8 10

Closing of the funding gap (€ bln)

-15.9%11.2%

-14 4%7.5%

Imp Racc GAP Imp Racc GAPImp Racc GAP Imp Racc GAP

14.4%

-1.31

-1.40.8

Loans Loans Loans LoansDeposits Deposits Deposits DepositsImp Racc GAP Imp Racc GAPImp Racc GAP Imp Racc GAP

Liguria Extra-Liguria

2010

Liguria

2014

Extra-LiguriaLiguria

2010

Liguria

2014

Loans Loans Loans LoansDeposits Deposits Deposits Deposits

Funding Gap: Percentage of loans not funded through direct customer deposits

103

Profit sensitivity

Net profit sensitivity to variations in Italy's GDP and ECB rates (€ mln)Net profit sensitivity to variations in Italy s GDP and ECB rates (€ mln)

104

Agenda


•Scenario•Strategygy•Strategic initiatives•Organisational structuresg•Targets


105

First quarter 2011: Growing volumes…

FIA LOANS (1)€ bln € bln

DIRECT DEPOSITS LOANS TO INDIVIDUALS (2)€ bln € bln

INDIRECT DEPOSITS LOANS TO CORPORATES (2)€ bln € bln

106(1) excluding repos; (2) management breakdown

…with positive income returns

NET PROFIT GROSS OPERATING INCOME€mln€mln

OPERATING COSTS NET INTEREST INCOME €mln€mln

€mlnLOAN VALUE ADJUSTMENTS NET COMMISSIONS

€mln

107

Retail bond maturities and placement

Total maturities 2011: 1.1 bln

New bdg production 2011: 1.7 bln

January sales € 304 mln: € 297 mln placements € 7 mln price list purchases

February sales € 358 mln: € 344 mln placements € 14 mln price list purchases

304

358 March sales € 263 mln: € 250 mln placements € 13 mln price list purchases

Total sales as at 30 April €1,043 mln VS maturities of €557 mln

249

263

April sales € 118 mln: € 111 mln placements € 7 l i li t h

138187

118

€ 7 mln price list purchases

7942

77

39

80 88

32922

AprilMarch

42May June July September October November DecemberJanuary AugustFebruary

108


•Scenario•Strategygy•Strategic initiatives•Organisational structuresg•Targets


109

Strategic initiatives under the responsibility of the different Organisational Areas

Revenue and offering development

1DISTRIBUTION

• Strengthening of the Liguria network• Reduction of the productivity gap between Liguria and Extra-Liguria

operationsdevelopment

Operating cost optimisation

2

p• Reduction of the productivity variance between branches • Optimisation of the Group's local presence • Development of integrated inter-channelling • Service model refinement for corporates• Private segment enhancementoptimisation

Optimisation3

PRODUCTION• Proactive credit management• Development of corporate services• Pricing optimisationOptimisation

of liquidity capital andcost

Pricing optimisation• Development of offerings to immigrants • Product factory optimisation

RESOURCESof risk • Cost & lean management

• Technology management and development• Human Resources management• Improved communications

Focus on4GOVERNANCE AND CONTROL

• Funding policies • Capital optimisation policies (capital management)• Risk monitoring and management

Focus on innovation and skills

Risk monitoring and management

110

CARIGE in 2014: a new step in the long-term value creation process…

Gl b li i

…

Globalisation

CARIGE in the new digital and

h

…

…

2014

Digitalisation

CARIGE today

Carige Group with 667 b anches 432

new digital and global normal

Carige Group is an independent financial conglomerate, focusing

CARIGE at the end of the plan period

Carige Group with 715 branches, 440 insurance outlets

2010Deregulation

CARIGE post listing

Carige Spa with 204 branches (of

hi h 187 i

branches, 432 insurance outlets, 6,003 employees; €76 bln loans and deposits; SE 3.5 bln; net profit

focusing selectively on product factories; market leader in high concentration

insurance outlets, 6,100 employees; €95 bln loans and deposits; SE 4 bln; net profit 263 mln in 2014

1995

1989 CARIGE before the enforcement of new rules for savings banks, with 137 branches, 2,962 employees; €6.6 blnl d d it

which 187 in Liguria), 3,226 employees; €10.2 blnloans and deposits; Equity 0 7 bln;

bln; net profit 177 mln

Fifth largest capitalisation bank in Italy

Tenth largest

concentration areas; leading ICT inter-channel intermediary; top performer in service and

Among the top 10 groups for branch network size

1989

loans and deposits; SE 0.2 bln; net profit 20.5 mln

Equity 0.7 bln; net profit 36.2 mln

gbranch network in Italy

profitability/creation of economic value

111

Disclaimer

This document has been prepared by Banca Carige S.p.A. solely for information purposes andsolely to present the Group's strategies and key financial data.

The Company, its consultants and representatives shall not be held responsible (for losses arising from negligence or any other

reasons) for any losses arising from the use of this document and of the contents hereof.) y gAll forward-looking information contained in this document have been prepared on the basis of

assumptions that may prove incorrect, and therefore the results may vary.In forming their own opinion, readers should keep in mind the aforesaid factors.

This document does not constitute an offer or solicitation to purchase or subscribe shares, and no part of this document can be regarded as the basis of any contract or agreement.

None of the information contained herein may be reproduced, published or distributed, infull or in part, for whatever purpose.

By accepting this notice you agree to all the limits listed above.

*****

The Officer in charge of preparing the Company’s accounting documents, Daria Bagnasco, Deputy General Manager Governance and Control of Banca CARIGE S.p.A., declares, under subparagraph 2

of art. 154 bis of the Consolidated Financial Act, that the consolidated accounting information l ti t B CARIGE G id d i thi t ti t h th i f ti t drelating to Banca CARIGE Group provided in this presentation matches the information reported on

the Company’s documents, books and accounting records.

112

Contacts

Gi BGiacomo BurroCFO & Wealth Management Head Office Manager

[email protected]: +390105794580

M i i M hi iMaurizio MarchioriHead of Planning & Control


Emilio ChiesiEmilio Chiesi International [email protected]: +390105794568

Roberta FamàRoberta FamàHead ofAnalysis, Planning & IR Dept.


Investor RelationsInvestor [email protected]

Tel: +390105794877

113

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