Caja de Ahorros y Pensiones de Barcelona Avenida Diagonal, Barcelona, Spain Tax ID Number: G Telephone: (34)

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2 Caja de Ahorros y Pensiones de Barcelona Avenida Diagonal, Barcelona, Spain Tax ID Number: G Telephone: (3) Fax: (3) Website:

3 2007 la Caixa Corporate Responsibility Report Trust, social commitment and quality

4 Index Letter from the Chairman and President & CEO of la Caixa 1. Introduction 1.1 Loyalty to our commitments 1.2 Corporate Governance of la Caixa 2. Social impact from the operations at la Caixa, objectives achieved in Principal social benefits of our financial activity 3.1 Financial Inclusion for People with Limited Resources 3.2 Answers to ever-changing Needs of each Generation, and its Enterprising Pioneers 3.3 Financial Products that Contribute to a more Sustainable World 3. Accessibility to Financial Services 3.5 Sustainable Finance. Tailored banking for our Customers.1 Sound Solutions to Meet Customers Needs.2 Customer Satisfaction.3 Innovation. Solvency, Security and Transparency 5. Commitment to the Environment 5.1 A Benefit to the Community 5.2 Environmentally Friendly 5.3 Suppliers 6. An excellent place to work 6.1 Recognizing diversity 6.2 Respect for Collective Rights 6.3 Social Advantages and Benefits 6. Fostering Professional Expertise 6.5 Technological Innovation 6.6 Internal Customer Satisfaction 7. Summary of Indicators 8. Verification Report

5 Isidre Fainé Chairman Joan Maria Nin President & CEO We are pleased to present the th Annual Corporate Responsibility Report detailing the foremost events and developments in the management of la Caixa in 2007, in terms of corporate responsibility. For the first time, this year the report presents data from subsidiaries of la Caixa GDS-Cusa, MicroBank, PromoCaixa, Serveis Informàtics, ServiHabitat, Sumasa and Vivenda Assequible, together with recommendations from expert independent consultants within the framework of the consultancy and dialogue process we carry out in accordance with the principles of standard AA1000. This report has been verified by external audit by Deloitte, complies with the indicators established by the Global Reporting Initiative (GRI-3), at its highest possible level (A+), and constitutes a presentation of the advances in the strategic objective of developing the Triple Bottom Line: Economic, Social and Sustainable. The report also details our actions in financial and social engagement with stakeholders, which consists of advancing people s social and financial integration, improving accessibility to financial services, and furthering both professional and personal development of employees. In order to enable financial and social integration of those at risk of exclusion, la Caixa has created MicroBank, the la Caixa community bank, which aims to provide support for personal, family, and self-employment projects by awarding social and financial microcredits. At the same time, we have provided our foreign customers with the necessary services and technological channels to help them integrate within our society and facilitate them in the transfer of in excess of 100,000 remittances to their native countries each month. With regard to access to financial services, all new branches of la Caixa incorporate the concept of no barriers eliminating the height difference between footpaths and the interior of the branches. All 8,000 ATMs have been adapted to include a keyboard for the visually impaired so that basic operations are no longer a problem. Also, our internet banking services have been modified to include several new operations, thereby providing access to a more complete range of services. Our commitment to respecting the environment is a reality for la Caixa with the entire branch network adopting sound initiatives, not to mention the ambitious projects undertaken by Obra Social. The most important event in 2007 has been the adoption of the Equator Principles by which the Institution makes the commitment that any project financing with a project capital financial threshold above USD10 million, rates positively in its environmental and social impact, in accordance with International Finance Corporation regulations. Finally, la Caixa continues to promote the personal and professional development of all those working for the Institution and to foster the reconciliation of family life and working life. In line with recent trends, once again in 2007 the increase in the number of staff, with 1,00 new employees, is a reflection of the growth and expansion of la Caixa, which has made us one of the most important full-time job creators in Spain. With regard to labour issues, la Caixa has reached an agreement with trade unions about a far-reaching protocol on Equality and Reconciliation to assist our employees in striking a balance between working life and family life. This agreement details the new measures affecting Equality, leaves of absence, and staff training programs. All these measures have contributed to la Caixa being named the top rated Institution to work for by a MERCO (Spanish Monitor of Corporate Reputation) study, for the second year running. With the present Corporate Responsibility Annual Report, we summarize la Caixa s commitment to our customers, employees, and the community in general. We take this opportunity to express our gratitude to all of you who have placed your trust in us and we hope that the information in this report is a suitable reflection and presentation of the principal developments and events over the past year.

6 1 Introduction 1.1 Loyalty to our commitments 1.2 Corporate Governance of la Caixa

7 1. Introduction 1.1 Loyalty to our commitments A history based on our commitment to responsible management The key elements and driving forces behind the activity of la Caixa are, to promote financial inclusion for those with limited resources, provide solutions to the ever-changing needs of each generation of customers and its enterprising pioneers, to offer a range of financial products and services that contribute to a more sustainable world, and to secure universal access to financial services and sustainable financing. Banking Access for those with limited resources Our response to our customers ever-changing needs Financial products to promote a more sustainable world Accessibility to financial services Sustainable Finance First branch office is inaugurated in Igualada (Barcelona). 190 Creation of la Caja de Pensiones para la Vejez Integration of Obra Social in the organisation Beginning of housing developments of a social nature la Caixa now has over 237 branches and 1,000 employees Computerisation of la Caja de Pensiones begins The first banking cards are introduced Automatic Teller Machines (ATMs) are introduced for the first time The Scholarship programme of la Caixa is started to further study programmes abroad.

8 1. Introduction Fruit of the merger between Caja de Pensiones para la Vejez y de Ahorros de Cataluña y Baleares and la Caja de Ahorros y Monte de Piedad de Barcelona (founded in 18), the Caja de Ahorros y Pensiones de Barcelona is born. The number of la Caixa branches reaches a total of 2,296, with 2,681 ATMs The ServiCaixa ATMs go into action Creation of the la Caixa website First donations from the Puntos Estrella programme to non-profit organisations. la Caixa celebrates its centenary year. The launch of the Libreta and Tarjeta Básica as well as the Microcredit line for persons with difficulty accessing the financial system. The portal is set up to provide resources and information for new residents. Creation of the Financial Advisor for Entrepreneurs. Creation of the Financial Advisor for Entrepreneurs and Obra Social Affordable Housing Programme la Caixa signs up to the United Nations Global Compact MicroBank, the community bank of la Caixa is founded The keys of 1,08 new homes presented, thereby completing Phase I of the Obra Social project, Affordable Housing Programme. Launch of the Depósito Estrella Solidario. la Caixa Group: 5,80 branches, 8,011 ATMs and 26,32 employees. 75% of all branches are completely accessible. la Caixa adopts the Equator Principles

9 1. Introduction Mission, Vision and Values The commitment of la Caixa to our customers, employees and the community is the foundation of its mission, and this is transmitted through its vision and values. Mission To promote saving and investment by offering the best and most complete financial service to the greatest number of customers and to contribute to our community in order to assist in covering basic financial and social needs, in whatever way best meets those needs. Vision To be the leading Spanish Finance Group in creating value for the community, customers and employees. Values The values that best define la Caixa have been present since its origins and have constituted the pillars on which our activity rests, and a benchmark for the entire organization. Trust, based on honesty and respect for others. Commitment to the Community, which is evident, not only in the Community Welfare Projects, but in all the activities of la Caixa. And finally, Quality, through professionalism and innovation. These are the three values which best define and identify la Caixa, shape the management model of the Institution, and establish the quality of the relationship between the organization, employees, customers, and the community. 9

10 1. Introduction Financial Bottom Line of la Caixa The growth of la Caixa is based on solvency, profitability, and efficiency. Efficiency Efficiency, together with solvency and profitability, is another of the key elements that constitute the basis for growth of la Caixa. The recurring efficiency ratio stood at 2.9%, with a reduction of 5 points. Profitability Profitability, the decisive factor and basis for the economic bottom line of la Caixa grew together with solvency. Recurring ROE (attributed profit/average equity) is 19.%. Recurring ROA (net recurring profit/ average total assets) stood at 1%. Recurring RORWA (net recurring profit/risk weighted assets) is 1.5%. Solvency Our risk policy at la Caixa is best defined as prudent and diversified, and this translates to a high level of solvency that surpasses the legally required standards. The capital ratio (BIS ratio) stood at 12.1%, TIER 1 at 9.8% and Core Capital at 8%. The NPL ratio stood at 0.55% NPL coverage ratio improved and reached 281.1%. Growth Successful management of challenges has meant that la Caixa is well established as the third biggest Spanish financial institution and the leading Spanish and European savings bank. EUR 385,639 million in total banking business volume. EUR 2,88 million attributed profit of the la Caixa Group. EUR 2,011 million recurring profit of the la Caixa Group. EUR 21,918 million market value of listed companies. EUR 12,033 million unrealised gains on listed companies. EUR 1,18 million in own funds. Economic value, generated, distributed and retained by the la Caixa Group (amount in thousands of euros) Economic value generated Gross income Sales less costs of sales Other operating income Other gains minus other losses Economic value distributed Other general administrative expenses (excluding taxes) plus other operating expenses Personnel expenses Income tax plus taxes included in other general operating expenses Result attributed to minority Obra Social Economic value retained 6,666,919 6,308,28 202, ,539-80,139 3,551, ,18 1,99, , , ,000 3,115,063 8,013,315 5,626,26 366,82 226,072 1,79,155 3,978,929 77,90 1,783,17 927,53 117, ,000,03,386 NOTE 1: Data taken from consolidated annual accounts of the la Caixa Group for financial year NOTE 2: given the scope of the report in the 2006 Corporate Responsibility Report the EC1 indicator was only given at an individual level for la Caixa. 10

11 1. Introduction Contribution to economic growth Active contribution with a positive impact The direct contribution of la Caixa to the Spanish GDP over the financial year 2007 accounted for 0.3% of the overall total. In addition, the indirect effects of the Institution s activity have a significant impact on GDP. These effects are the result of the economic activity derived from the purchases la Caixa makes from our suppliers. In order to meet this demand, our suppliers, who in turn, increase purchases from their suppliers; also generate a contribution to GDP. To calculate this indirect effect, the input-output table of the Spanish economy is used, which provides data regarding structure of intermediate purchases between the different sectors of the economy. According to this table, for every EUR 100 added value of the financial intermediary services sector, the sector in which la Caixa operates, approximately EUR 29 is generated indirectly within the economy. This represents an overall effect of 29% greater than the direct effect. The sum, therefore, of both direct and indirect contributions by la Caixa over the financial year 2007 accounted for 0.55% of Spanish GDP. Source: Research Department of la Caixa la Caixa has been the biggest creator of steady employment in the country over the past few years la Caixa is the most prominent financial institution in the entire country. The 5,68 branches located throughout the country, as well as 1 in Poland, 1 in Romania and 10 representative branches have become a driving force in job creation. During the period , the Institution has taken on an additional 1,000 new members of staff. The team of professionals at la Caixa have a calling for service that contributes to making the Institution s Project a reality. This natural calling has meant that la Caixa has become the number one financial institution in Spain for creating fulltime employment. Dialogue with our stakeholders Stakeholders of la Caixa la Caixa is a privately founded non-profit Savings and Provision Institution, independent of all other companies dedicated to raising, managing and investing savings deposited. The stakeholders of la Caixa who form part of the General Assembly are its customers, its employees and the community. These three groups are represented in the General Assembly, the Institutions highest governing and decision-making body. The Caja de Ahorros y Pensiones de Barcelona has made provision in its Statutes for the percentage representation in the following way: From a total of 160 members of the Assembly: 58 members representing deposit holders, or 36% 8 members representing founding institutions and other community interest entities (30%). 3 members representing local corporations (21%). 20 representatives of employees (13%). 11

12 1. Introduction Management model For la Caixa, corporate responsibility means operating in a manner that reflects, and is in accordance with, our corporate values of Trust, Social Commitment and Quality, and taking these values one step beyond the legal requirements. Furthermore, we aim to share the profits of our actions with employees, customers and the community. These values lay down the business and organizational strategy of la Caixa. In order to assure coherent application of these principles, la Caixa has a management model resting on five principal mainstays: Focused on the customer and their social and financial needs. Personalised attention from our 26,32 professionals in the la Caixa Group. Risk management based on prudence and solvency. Multi-channel management to enable greater access to the services offered by la Caixa. Close ties to each community with the largest network of branches in the country. Principal headway made in terms of responsible management in 2007 Setting up of Committee for Corporate Reputation made up of the different areas of management in la Caixa. Completion of roadmap for reputation risk of la Caixa. Adoption of the RepTrak Pulse for monitoring stakeholders perception of la Caixa. Launching a process of dialogue between la Caixa and its stakeholders: customers, employees and the community. Adopting the Equator Principles. Setting up of the MicroBank, the Community Bank of la Caixa. Joining the European Alliance for Corporate Social Responsibility. Dialogue and main aspects la Caixa provides a range of channels for dialogue with its stakeholders, among which the principal elements are: A network of 5,80 branches and 2,725 employees in la Caixa. Internal and external instruments of communication. Research and studies detailing financial and social needs. Contact and collaboration with organisations and bodies from the world of business, society, culture, education, and the environment. These channels provide la Caixa with the information regarding what is expected of us. This data is then used by the Institution to design the actions required to provide appropriate solutions, thereby reducing the probability of risks and optimising opportunities. Stemming from a desire to improve dialogue with stakeholders, in 2007 la Caixa initiated a process based on the AA1000 standard. This process consisted of several meetings with those responsible for the business areas and subsidiaries of la Caixa (GDS-Cusa, MicroBank, Promocaixa, Serveis Informàtics, Servihabitat, Sumasa and Vivenda Assequible) reporting herein and organising two workshops with representatives from those organisations and bodies of the stakeholders of la Caixa : customers, employees, the community and the environment. Overall, 25 people took part in the study, 7 of whom represented the different areas of the organisation and the remaining 18 were representatives from organisations and bodies. During these meetings several aspects regarding the structure, style and treatment of the contents of the 2006 Annual Report were discussed, as well as the issues which should be included in the la Caixa 2007 Corporate Responsibility Report. Operating principles Organisational principles A benefit to the community, demonstrated in financial terms and through Obra Social Constant innovation, focused on the capacity for turning ideas into value Proactive approach to finding solutions to meet the needs of our customers Efficiency in business management Excellent service received from the team of professionals working for the Institution Challenge-driven Management Decentralization and independence of decision making Personal and professional betterment of employees Flexibility and adaptability 12

13 1. Introduction Summary of opinions regarding structure, style, and contents of 2006 Report: The clarity, structure and layout of the report was seen in a positive light, with a recommendation to report information regarding the main corporate responsibility actions of la Caixa to customers and society at large, in a more comprehensible and straightforward manner. Greater emphasis should be given to reporting long-term vision, by establishing challenges in each of the areas, in such a way as to measure and observe the progress in attaining this vision. More detailed information outlining the degree to which established goals are being met. With regard to quantitative data, a request was put forward to provide the information, not only in percentage form, but also in terms of absolute value. Aspects to be included in the la Caixa 2007 Corporate Responsibility Report The following method was used in order to decide what material should be used in the Report: Comparative analysis of data included in reporting from other companies in the sector. To do this we conducted an exhaustive revision process of the main Reports at a national and international level. Parallel to this, a review of channels of communication was conducted with the intention of identifying the principal issues affecting stakeholders. Finally, extensive internal and external consultations were performed to determine expectations and pinpoint the most prominent issues. The result of this process is the following list detailing the most prominent issues affecting stakeholders: Customers employees society environment Ethics and transparency (7) Dialogue (8) Contribution to economic and social development (12) Direct environmental impact (8) Quality (7) Communication and participation (2) Actions of a financial nature in the community and Obra Social (3) Environmental management (3) Risk management, solvency and security (7) Managing diversity (2) Relationship with suppliers (2) Environmental risk analysis (3) Universal service and financial inclusion (3) Satisfaction (2) Standards and Certifications (2) Innovation (2) Training (2) Environmental training and awareness (2) Accessibility (1) Employee Code of Ethics (2) Professional advancement (2) Recognition of a job well done (1) Freedom of Association (1) 13

14 1. Introduction 1.2 Corporate Governance at la Caixa Governing bodies Caja de Ahorros y Pensiones de Barcelona, la Caixa, is a financial institution governed by Legislative Decree 1/199, of 6 April, regulating Catalan savings banks and is registered in the special register of the Catalonia Autonomous Community Government. In accordance with its constituent origin, it is a non-profit financial institution promoting social and welfare goals; it is privately managed and independent of any other company or institution and engages in attracting, administering and investing the savings entrusted to it. According to the powers established in the law and its bylaws, la Caixa is governed, ruled, run, represented and controlled by the General Assembly, the Board of Directors and the Control Committee. The General Assembly The General Assembly is the highest governing and decision-making body of la Caixa. In addition to its general governing powers, the following duties also fall especially and exclusively within its powers: to appoint directors and members of the Control Committee; to decide upon the reasons for the removal and revocation of the powers of the members of the governing bodies before the end of their term of office; to approve and amend the Bylaws and Regulations governing the system for electing the members of the governing bodies; to resolve upon the change of registered office; to resolve upon the alteration of the Institution s legal form, or its merger with other institutions, or make any decision affecting its nature, and resolve upon dissolution and liquidation; to define the general guidelines for the Institution s annual action plan; to approve management of affairs by the Board of Directors, the notes to the financial statements, annual balance sheet and income statement, and the allocation of its profit to the aims of la Caixa ; to approve management of Welfare Projects, and the related annual budgets and expenditure; to confirm the appointment of the Chairman and President & CEO of the Institution; to designate, at the proposal of the Board of Directors, the communityinterest entities that are able to appoint members of the General Assembly; to deal with any other matter submitted to it for consideration by the bodies empowered to do so. The General Assembly is the highest governing and decision-making body of la Caixa Relation of members in the General Assembly 3 (21%) 20 (13%) Deposit holders Founding entities and other communityinterest entities Local government corporations Employees 8 (30%) 58 (36%) total: 160 The members of the General Assembly, known as General Advisors, oversee that the interests of deposit holders and customers are safeguarded, that the Institution s community-oriented aims in its area of influence are fulfilled and that the integrity of its assets is preserved, while setting the regulations guiding the Institution s activities. The stakeholders making up the General Assembly are represented. The Catalan savings bank law divides these stakeholders into four separate groups: a) deposit holders b) founding entities and other community-interest entities c) local government corporations d) the employees of the institution The first three sectors always refer to the geographical sphere of influence of la Caixa and this requirement is also implicit in the fourth sector. Pursuant to the law, each of the above sectors must be proportionally represented as follows: a) between 30% and 0% representing the deposit holders; b) between 25% and 35% representing the founder entities and other community-interest entities; c) between 15% and 25% representing the local government corporations; d) between 5% and 15% representing the employees. Caja de Ahorros y Pensiones de Barcelona has stipulated these percentages in its Bylaws in the following manner, from a total of 160 General Assembly members: a) 58 members representing the deposit holders (36.25%); 1

15 1. Introduction b) 8 members representing the founder entities and other community-interest entities (30%); c) 3 members representing the local government corporations (21.25%); d) 20 members representing the employees (12.5%). General Assembly Meetings may be held annually or extraordinarily. Annual Assembly Meetings are held once a year within the first six months of the calendar year to approve, where applicable, the notes to the financial statements, balance sheet, income statement, the proposed transfer to Welfare Projects, and to reappoint, where required, positions on the Board of Directors and the Control Committee, and to discuss and make decisions in relation to the other matters and proposals on the agenda. Extraordinary Assembly Meetings are held as and when they are called, and may only deal with the purpose for the meeting. The Board of Directors Pursuant to the law, the Board of Directors is the body appointed by the General Assembly to govern, manage and run the savings bank and may be made up of a minimum of 10 and a maximum of 21 members. Its composition must reflect the composition of the General Assembly. The Board of Directors is charged with deciding the actions to be taken for developing the goals and objectives of la Caixa The Board of Caja de Ahorros y Pensiones de Barcelona is made up of 21 members. As it is the largest savings bank in Spain, it is reasonable for it to have chosen to appoint the maximum number of Board members (and General Assembly members) to ensure that its governing bodies are as representative as possible, both in terms of the four main stakeholders represented as well as from a geographical standpoint, in view of the areas where the Institution pursues its activities and the close ties that savings banks have in the territories where they operate. This relationship is especially clear in the way in which its Community Welfare Projects are distributed. The Board of Directors is made up of: 8 members representing deposit holders, of which 6 must be elected from among the General Assembly Members representing this sector and 2 may be elected from among non members meeting the appropriate professional conduct requirements; 6 members representing the founder entities or community interest institutions, elected from among the General Assembly Members representing this sector; members representing local government corporations, of which 2 must be elected from among the General Assembly members representing this sector and 2 may be elected from among non members meeting the appropriate professional conduct requirements; 3 members representing employees, elected from among the General Assembly members representing this sector. Board meetings are attended by the members as well as the Chairman and President & CEO of la Caixa, who pursuant to the law, may intervene and vote. The Welfare Projects Committee and the Executive Committee are delegate committees of the Board of Directors. Community Welfare Projects Committee The role of the Community Welfare Projects Committee is to submit for Composition of the Board of Directors 3 Deposit holders Founding entities and other communityinterest entities Local government corporations Employees 6 8 Total: 21 approval by the Board of Directors all new community welfare projects for which support has been sought from la Caixa, and the budgets for existing projects, and to manage and run the projects, in accordance with criteria of economic rationality and to serve the general interests of the area where they are carried out to the fullest possible extent. The members of the Community Welfare Projects Committee are the Chairman of the Board of Directors and eight people elected by the Board of Directors from among its members, in proportion to the sectors represented on the Board. The Chairman and President & CEO of la Caixa and the Executive Vice- President in charge of Community Welfare Projects also attend committee 15

16 1. Introduction meetings. Executive Committee The Executive Committee is the permanent delegate body of the Board of Directors. Its powers include those delegated to it by the Board of Directors. The following Board members sit on the Executive Committee: the Chairman, the Deputy Chairmen and four members, one from each of the sectors represented at the General Assembly. The Chairman and President & CEO of la Caixa also attend executive Committee meetings. The Investment Committee and the Remuneration Committee are formed within the Board of Directors and play an informative role. Investment Committee The role of the Investment Committee is to inform the Board of Directors or the Executive Committee of the investments or divestitures which, in accordance with current legislation, are of a strategic and stable nature. It must also inform on the financial viability of these investments and how they fit in with the Institution s budgets and strategic plans. Current legislation defines strategic as the purchase or sale of a significant investment in a listed company or participation in business projects with a presence on managing or governing bodies which entail a total investment by la Caixa of over 3% of its equity. The Investment Committee is made up of the Chairman of the Board of Directors and two directors, who must be elected in view of their technical ability and professional experience. The Chairman and President & CEO of la Caixa also attend meetings. Remuneration Committee The role of the Remuneration Committee is to inform the Board of Directors or the Executive Committee of the general remuneration and incentives policy for the members of the Board of Directors and executive personnel. The Remuneration Committee is made up of the Chairman of the Board of Directors and two directors. The Chairman and President & CEO of la Caixa also attend meetings. Steering Committee The role of the Steering Committee is to act as an independent supervisory body of the Board of Directors, though it stands independently of the latter and is not subordinate to it. Its supervisory role not only encompasses financial issues but it also plays a predominant role in the Institution s election processes and can even make recommendations to the Department of Economy and Finance of the Catalonian Autonomous Community Government regarding the suspension of any Board resolutions it considers to contravene current provisions. Its composition must reflect the proportional representation of the various interest groups in the General Assembly. Moreover, there may be no duplication of representatives so that no entity may have representatives on both the Board of Directors and the Steering Committee at the same time. To carry out these duties the Steering Committee has the following powers: to oversee management of affairs by the Board of Directors, while ensuring that their decisions are consistent with the guidelines and resolutions of the General Assembly and with the aims of the Institution; to monitor the operation of, and tasks carried out by the Institution s supervisory bodies; to examine the external auditors reports and be familiar with any recommendations made therein; to review the balance sheet and income statement for each year and make such observations as it sees fit; to report on its activities to the General Assembly at least once a year; to request that the Chairman call an extraordinary General Assembly Meeting whenever it sees fit; to supervise elections for members of the General Assembly and Board of Directors, jointly with the Department of Economy and Finance. Also, the Steering Committee will often supervise elections of new Steering Committee members; to examine the reports of the delegate Community Welfare Projects Committee and issue its opinion thereon; to propose to the Department of Economy and Finance to suspend the Board of Directors resolutions if they contravene current provisions; all of the duties conferred upon the Audit Committee by virtue of additional provision eighteen of Securities Market Law 2/1998, of 28 July, with regard to the whatever area they have not previously been attributed powers, in particular: a) to inform the General Assembly of issues arising in their committee meetings and which fall within their area of responsibility. b) to propose the appointment of external financial auditors to the Board of Directors for submission to the General Assembly. c) to supervise internal audit services. d) to be familiar with the financial reporting process and internal control systems. e) to contact the external auditors to receive information on any issues that could jeopardize their independence, including issues related to the audit process and any other communications envisaged under current legislation. Any other powers conferred upon it by the General Assembly within the framework of the guidelines set out in the foregoing paragraphs. 16

17 1. Introduction The Steering Committee safeguards correct management of the Board of Directors Composition of the Control Committee 2 1 Deposit holders Founding entities and other communityinterest entities Local government corporations Employees 3 3 Total: 9 The Steering Committee has 9 members elected by the General Assembly from among its non-director members, in the following proportions: 3 members from deposit holders sector. 3 members from the sector of the founding institutions and community interest groups. 2 members from the local government corporation sector. 1 member from the employee sector. In addition to the above bodies, it is also important to highlight the figure of the Chairman and President & CEO of la Caixa as the executive to responsible by law for performing the resolutions of the Board and carrying out the other duties entrusted to him under the Institution s bylaws or regulations. The role of the Chairman and President & CEO is especially important as, although appointed by the Board, the office must be confirmed by the General Assembly, as well as removal from office. Moreover, Catalan law provides that the Chairman and President & CEO have a voice and a vote on the Board of Directors. Hence, there is a separation between the various bodies with different functions, which acts as a means of control and, in line with codes of good corporate governance, provides a balance. Each of the governing bodies contains a suitable balance between the various sectors, thereby ensuring equal proportionality. Regime applicable to members of the Governing Bodies As far as the characteristics of the members of the Board of Directors are concerned, it is worth noting that with respect to savings banks there is no need to apply marks for practice in the governing codes, since there cannot be nominee directors as the institution is foundational in nature. All directors are attached to or represent a specific interest group, although within the depositors groups and those of local corporations directors may be appointed as members of the Board of Directors. There can be up to 2 members for each of these groups elected from people who do not have the capacity of members of the General Assembly and who meet the suitable professional requirements. This does not necessarily mean that representatives from the aforementioned groups who are members of the General Assembly can be present on the Board. With respect to the circumstances surrounding both the members of the Assembly and the members of the Board of Directors and the Steering Committee, current legislation stipulates various incompatibilities. Consequently, these posts cannot be taken up by: a) Debtors under bankruptcy or reorganisation proceedings not following rehabilitation, in addition to persons sentenced to penalties that entail being banned from holding public posts; b) Those who prior to appointment or during the exercise of their post breach their obligations with la Caixa. c) Administrators and members of governing bodies of more than three trading companies, delegate directors, members of the Board, directors, advisors and employees of other credit institutions or companies attached thereto, or of Caja de Ahorros y Pensiones de Barcelona and corporations and institutions promoting, supporting or warranting credit establishments or institutions; d) Public servants with duties directly related to the activities of savings banks; e) Those holding public offices by political appointment of public authorities and the Chairman of the founding institution or corporation; f) Those who have held the offices of Board Member or Chairman and President & CEO for more than 20 years in the same savings bank or in an another which has been absorbed or merged. The term of office of the members of the General Assembly, the Board of Directors and the Steering Committee is 6 years, and members are eligible for re-election for a second term if they meet the conditions for appointment, up to a maximum term of 12 continuous or uninterrupted years. The calculation of this limit does not include periods when the office may have been held through substitution, since the term must be calculated in its entirety for the person who was appointed in the first instance. Once 8 years have expired since the end of the previous term, the limit is once again calculated for a period of 12 years. In addition, members of the General Assembly, of the Board of Directors and the Steering Committee may not be linked to la Caixa or to companies in which la Caixa holds over 25% due to work, services, supplies or paid work contracts during the period in which they hold said office and in the two 17

18 1. Introduction years following their cessation, except in the case of labour relations when the position is held in representation of employees. Moreover, concession of credits, endorsements and guarantees to members of the Board of Directors, the Steering Committee, to the CEO and his or her spouses, ascendants, descendents and collateral relatives up to the second degree, and also to companies for which these persons own a majority investment, either jointly or individually, or even for those companies in which they hold executive posts, must be approved by the Board of Directors and expressly authorised by the Ministry of Economy and Finance of the Generalitat. This regime is also applicable to operations by the aforementioned individuals or legal entities or issued by the latter for the purposes of disposing of assets, property rights or values they own to the Institution. Operations by individuals to a value not exceeding a total of EUR 132,193 and those not exceeding EUR 330,9 in the case of legal entities are generally given approval. However, operations with legal entities in which the executive acts on behalf of the Institution and has no personal or family financial interest, either directly or through a nominee, do not require authorisation. From another standpoint, as an Institution that issues securities, Caja de Ahorros y Pensiones de Barcelona is bound by the Standard Internal Rules of Conduct on the Securities Market, approved by the Spanish Confederation of Savings Banks, which it adhered to by a resolution of the Board of Directors dated 19th July These regulations govern various areas such as compliance with current legislation, abuse of the market, relevant information, general rules of conduct, acting on behalf of third parties and on behalf of oneself, operations on behalf of directors or employees of another institution, information of conflicts of interest, obligations of issuers, information barriers and the supervisory body in charge of monitoring and ensuring compliance with the Regulations. Therefore, the current Regulations have been adapted to the latest changes with respect to Spanish Financial Market Law which, in turn, has been implemented and completed by a set of Circulars approved by the Institution which relate to a series of specific issues such as the control structure and compliance, scope of application and operations for persons bound, separate areas and information barriers, abuse of the market, communication of suspicious operations and the policy on conflict of interests. Other Corporate Governance measures Having set forth above the legal regime applicable to the governing bodies of Caja de Ahorros y Pensiones de Barcelona, there follows a description of certain measures adopted by the Institution concerning Corporate Governance: 1) In order to address one of the accusations traditionally made against savings banks, namely that they are subject to excessive political influence, Caja de Ahorros y Pensiones de Barcelona chose a system for the election of members of the General Assembly to represent deposit holders based on delegates drawn by lots and elected from among the members in each electoral district. A direct electoral system could distort representation of these interests as there are very few 18

19 1. Introduction organisations the size of la Caixa, besides political parties, capable of organising candidatures and a genuine electoral campaign throughout the territory where they operate. The mediator system and the election of mediators in each district seeks to prevent the election of representatives for the depositors being affected by politics and from exerting an excessive influence on la Caixa. 2) With regard to the duties the law attributes to the Audit Committee (the delegate body of the Board of Directors) in the sphere of corporations, pursuant to the Bylaws of the Caja de Ahorros y Pensiones de Barcelona, it has been decided that they should be taken on by the Steering Committee. The reason for this is that this committee is a body that is not in any way related to the Board of Directors, thereby enabling it to fulfil recommendations for good governance with greater strictness. 3) The Institution has chosen to establish the maximum age for its Board members as well as Steering Committee members at 78, although the member in question may continue to hold the position until the first Annual General Assembly following the person reaching the age of 78. In addition, in order to avoid short-term appointments, members must be under 75 years of age at the time of appointment. ) The bylaws of Caja de Ahorros y Pensiones de Barcelona also stipulate that persons belonging to the Board of Directors or Steering Committee of another savings bank or financial or credit institution are incompatible and may not take a seat on the Institution s Board of Directors. Public or private entities and local government corporations represented on the Board of Directors or Steering Committee of another savings bank may not have the same representatives on the Steering Committee of Caja de Ahorros y Pensiones de Barcelona. Finally, in accordance with recommendations made by corporate governing bodies, faced with the flotation of its subsidiary, Criteria CaixaCorp, S.A., on September 19th 2007 la Caixa subscribed to an Internal Relations Protocol. The aim of this Protocol is to regulate relations between la Caixa and Criteria CaixaCorp, S.A., and their respective groups, with the intention of defining the required methods to assure optimal level of coordination and which will benefit and be an advantage to the entire la Caixa Group (of which Criteria CaixaCorp, S.A. is a part), as well as the floated company itself, while assuring the due respect and protection of all shareholders of Criteria CaixaCorp, S.A. within a framework of transparency. However, the main objective of the Protocol is to achieve a balance in the operating relationship that will allow a reduction in the appearance and regulation of conflicts of interest, as well as responding to demands of the market and the various regulating bodies. In accordance with these objectives, the Protocol regulates the following areas: principles and objectives, the main areas of activity of Criteria CaixaCorp Group, Intra-group transactions and services, the flow of information and the follow up of the Protocol. You may consult the Protocol by visiting the website of the CNMV ( or the website of Criteria CaixaCorp, S.A. ( 19

20 Social impact from the operations at la Caixa, objectives achieved in

21 2. Social impact from the operations at la Caixa, objectives achieved in 2007 The management model used by la Caixa integrates corporate responsibility. As a result, the organisation defines objectives to be achieved, which are detailed below. Prioritary components in our financial activity Objectives achieved in 2007 Financial inclusion for those with limited resources Answers to ever-changing needs of each generation, and its enterprising pioneers Financial products which contribute to a more sustainable world Accessibility to financial services and products Sustainable Financing Creation of MicroBank, the Community Bank of la Caixa focused on providing microcredit aimed at fostering personal, family or self-employment projects. Increase of 32% in the number of remittances made by new residents, reaching a steady rate of over 117,000 operations every month. Affordable Housing Programme (Vivienda Asequible): construction of 3,000 properties for the young and elderly. In 2007, 1,08 homes were handed over, thus completing the 1st phase of the project. Direct financing for 56 new projects and co-financing of a further 32 with an overall investment of EUR 17.9 million. Creation of the Premio Emprendedor XXI, in collaboration with the Ministry of Industry. Launch of the Depósito Estrella Solidario, an innovative long-term savings deposit that enables customers to finance any one of the four NGO projects by allocating the interest from the deposit. EUR million donated over the past 10 years through Puntos Estrella to more than 30 non-profit organisations devoted to activities of a welfare nature. Addition to the Puntos Estrella Catalogue of welfare products created by groups at risk of social exclusion. Extension of the network to every community where its presence can make a positive impact. In 2007, an additional 98 branches were opened in small rural communities providing a service for more than 26,000 people. New branches opened in Poland and Romania. AA rating for the La Caixa and Obra Social websites, in accordance with the Web Accessibility Initiative (WAI) standards. Adoption of the Equator Principles. 21

22 2. Social impact from the operations at la Caixa, objectives achieved in 2007 Tailored banking for customers Quality Innovation Security Objectives achieved in 2007 Improved response time to customer complaints (by letter and phone) from.2 days to 3.9. Decrease in the overall ratio of customer complaints to the Customer Care Line for every 100,000 customers from 20.5 in 2006 to 19.9 in Creation of a training programme for employees with the specific goal to achieve maximum customer satisfaction (COR: Calidad Orientada a Resultados). Launch of new products and services for customers of la Caixa : Implementation of Financial Terminal TF7, installation of IP Telephony in the entire branch network, E-billing for companies, new functions My Regular Operations and Menu CaixaFácil in the finance terminals, the beginning of introduction of the Cajero Punto Amarillo, Contactless project for payment by credit card, new savings product Ahorra el Cambio to promote thrift and savings. Improved security for both customers and employees. Once again, this year la Caixa registers the lowest number of robberies for any financial institution in the entire sector, with a ratio that fell from 1.% in 2006 to 1.3% in In 2007, la Caixa had a team of 25 people collaborating in the tasks to prevent money laundering. Since 2007, all employees of the Institutions branch network can avail of an online course on prevention of money laundering. In 2007, 2,29 employees participated in the course. 22

23 2. Social impact from the operations at la Caixa, objectives achieved in 2007 Commitment to our environment A benefit to the community The relationship with our suppliers Objectives achieved in 2007 Investment of EUR 00 million in the community through Obra Social. Leaders in job creation. Over 1,000 new employees joined the Group in Joined the European Alliance for Corporate Social Responsibility, an initiative by the European Commission. Beginning of the supplier satisfaction survey, the result of which was published in the final quarter of Addition of a clause in all new contracts regarding suppliers obligation to be in full compliance with the United Nations Global Compact. The awarding of over 0% of contracts through public tender in an effort to improve transparency. An excellent place to work Recognition of diversity Professional excellence Signing of the Equality and Reconciliation Protocol with trade unions. Objectives achieved in 2007 Promotion of the financial advisors programme with 939 new members. Development of managerial responsibilities and skills through the introduction of the FOCUS and GPS programmes for Business Division and Operations Management at Head Office. 23