Social Responsibility

Transcription

1 Social Responsibility Report of the BPM Group 2009

2 Prepared by the Corporate Social Responsibility Coordination Committee Layout and Art Direction Agema Rosso Milan. Printing Agema Grafiche S.p.A. Milan, Italy. Image coordination by the External Relations Department of Banca Popolare di Milano It is forbidden to reproduce the text and images contained in this report either in full or in part. Further information about this document, which is also downloadable from can be obtained by contacting the Corporate Social Responsibility and Social Responsibility Report Department of Banca Popolare di Milano via to: 2

3 From the union of many brands, the strength of a single Group. 3

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5 C O N T E N T S 8 Letter from the Chairman and General Manager 12 Methodology 17 BPM GROUP IDENTITY 19 Profile of the BPM Group 23 Values, mission and strategy Strategic Plan 30 Social Responsibility in the Strategic Plan 32 A structure that reacts to the market 32 Group companies 36 Equity investments 39 Distribution network 43 Governance 43 Corporate governance of the BPM Group 45 Key stages of corporate governance 49 Role of the Parent Bank 51 BPM s system of governance 51 Particular aspects of the BPM model 52 BPM s corporate bodies: an overview General Meeting of Members: renewal of the corporate bodies 54 Board of Directors 59 Board of Statutory Auditors and Arbitration Committee 60 Permanent board committees 63 BPM s control structure 67 Key documents to know more about BPM 71 Management structure of the Parent Bank 75 BPM GROUP ECONOMIC REPORT 77 Economic report 77 Key financial highlights 83 Calculation of value added 86 Distribution of value added to stakeholders 5

6 89 SOCIAL POLICY REPORT OF THE BPM GROUP 90 Social Policy Report 93 Customers 95 Customers expectations: listening 96 Customer satisfaction 99 Handling of complaints 100 Transparency: Commitments for quality 103 Products and services 103 Lending products to cope with the crisis 109 Lending products that promote environmentally sustainable lifestyles 112 Financial inclusion of weak categories 115 Diffusion of socially responsible investment products 119 Services and initiatives for the Third Sector 120 Services online 125 Upgrading self service tools 126 Operating in controversial markets 128 Corporate image 133 Members and Shareholders 135 BPM s share capital 135 Share capital structure 137 Limits on share ownership 138 Terms of admission to membership, exlclusion and rights 143 Value creation and return on capital 149 Relations with members, shareholders and the financial community 151 Financial community 153 Ratings 156 Involvement of Members 156 Participation in Members Meetings 160 Members Project 164 Members Associations 6

7 177 Personnel 179 Training and development 179 Training 182 Development 185 Remuneration system and fringe benefits 191 Wellbeing in the workplace 191 Health and Safety 192 Industrial relations 194 Involvement and communication 197 Making differences count 203 Suppliers 204 Mission and guidelines of the Central Buying Service 206 Relationship with suppliers 209 Community 211 Donations and gifts 221 Investing in the community 233 Commercial initiatives with an impact on the community 240 Media 245 Environment 246 Consumption, corporate travel and waste management 247 Energy and consumption and production 248 Paper 249 Car pool 250 Differentiated waste disposal 251 Promoting and sharing green attitudes 254 Commitment to the community and territory 255 Emission compensation: BPM Wood in Milan s North Park 257 Figures and Ratios 277 Glossary 7

8 L E T T E R F R O M T H E C H A I R M A N A N D G E N E R A L M A N A G E R Massimo Ponzellini Chairman Banca Popolare di Milano Fiorenzo Dalu General Manager Banca Popolare di Milano 8

9 This co-operative bank, whose mission is to spread the benefits of credit to small businesses and the working classes, continues to grow and to prosper. These were the words announced by Luigi Luzzatti, promoter and first Chairman of Banca Popolare di Milano at the General Meeting of 5 May Since then, BPM has continued to grow and now presents itself as a modern and dynamic group that operates in various banking and financial sectors. The BPM Group has always consciously played an important social role, promoting numerous projects in the field of solidarity, healthcare, culture, education and scientific research. Faithful to its tradition, Banca Popolare di Milano does not limit itself only to giving credit to those that deserve it, but encourages and fosters economic, civil, social and environmental development in the territories in which it operates. This commitment continued in 2009 as well. A year that revealed all of the consequences of the financial crisis at their worst. But it is fair to say that this crisis has helped us concentrate more on those values that ought to be the right way to act for any business, not just a co-operative bank like ours: transparency and profit as a means to an end, not the end in itself. 9

10 In particular, through various measures taken to provide support for customers in difficulty - households and small and medium-sized enterprises (SMEs) - in 2009 the BPM Group continued to play its role as a bank with strong roots in the local community. This has long been the emphasis, being mentioned already by the Chairman at the General Meeting of Members held on 30 January 1870: let us act in such a way that the name Banca Popolare is synonymous with order, honesty and hard work. For us, to be a responsible bank does not mean doing more, but doing well what we do on a day-to-day basis, in compliance with precise lines of action and a common system of values and rules. Principles that are the foundation of each employee s daily efforts and which are a guarantee for everyone. This is why Banca Popolare di Milano has drawn up a Charter of Values and Commitments, a document that will be widely distributed over the coming months. At the beginning of the year, we approved the BPM Group s Strategic Plan, which for the first time also includes important objectives in the field of Corporate Social 10

11 Responsibility. This is a very important step for us. It is formal recognition of a strategy that has always been part of our way of being and way of doing. For our Group, social responsibility is the tool to ensure effective implementation of those principles and values that form part of our history and identity; principles and values that we want to pursue through our business activity. Above all, trust, which for a banking group is strictly linked to the value of transparency in any type of relationship with all those that we feel close to: our members, our customers, our staff and the community. A vocation already expressed by Luigi Luzzatti, at the General Meeting on 5 May 1867: a Bank that aspires to earn itself a good reputation has to be like a house made of clear glass that anyone can look into and understand what is going on. Massimo Ponzellini Chairman Banca Popolare di Milano Fiorenzo Dalu General Manager Banca Popolare di Milano 11

12 M E T H O D O L O G Y This is the sixth edition of our Social Responsibility Report, which for the first time covers all aspects of the BPM Group, including the Social Policy Report. Unlike in previous years, the information and figures on the main Group companies are not contained in separate chapters, but included in the report together with those of the Parent Bank. This process has made it possible to highlight certain aspects that Banca Popolare di Milano shares with the other Group companies, without overlooking the particular characteristics of the individual entities, which have been suitably analysed and explained. Switching from an individual company approach to that of the Group has inevitably affected the timespan covered by the tables: however, we are of the opinion that limiting comparison to just the one prior year does not render the figures and analyses any less meaningful, while it will also act as a starting point for future editions that can cover Panoramic view of Banca Popolare di Milano s head office. 12

13 a longer period. As in the past, the Social Responsibility Report has as its main point of reference the Guidelines for the Preparation of Social Responsibility Reports drawn up by the GBS (the Social Responsibility Report Study Group) and the Manual for the Preparation of Social Responsibility Reports by the Banking Sector published by ABI. This year also sees the introduction in the Community chapter of the approach recommended by the London Benchmarking Group (LBG) for sub-dividing the initiatives that have been carried out. In accordance with the above mentioned standards, the Social Responsibility Report of the Group is split into three sections: IDENTITY This describes the BPM Group s profile, its mission, its guiding principles, strategies and governance. ECONOMIC REPORT This presents the Group s key financial highlights, the calculation of value added and how this wealth has been distributed among the various stakeholders. SOCIAL POLICY REPORT This explains the social commitment of the Group versus the various categories of stakeholder, showing above all the activities undertaken during the year. 13

14 The 2009 Social Responsibility Report refers to the BPM Group as identified in the Consolidated Financial Statements. To the extent that they are available, the figures and quantitative information cover the entire three-year period and have been taken from various sources: from the consolidated financial statements, official communications, internal procedures, announcements by competent external bodies and sometimes from estimates. Certain chapters of the Parent Bank s Social Responsibility Report also contain certain symbols: 3 this indicates objectives that were set in the 2008 Social Responsibility Report and realised during the course of 2009;! this is a reference to the closing chapter on Figures and Ratios which provides further details. As usual, with the intention of transmitting information also from a visual point of view, this document has been enriched with various images and photos that reflect the contents. For the third year on a row, the main periods in the Group s history are related along with those of the seven arts: we began in 2007 with the cinema, continued in 2008 with music and would like to carry on in 2009 with painting. In particular, the chronology of key events for the Group can be found in the lower half of each page on a grey background, accompanied by immediate references to salient moments for art during that period, from the 19th Century to the present day. 14

15 Then, to increase awareness of the Group s artistic heritage, various images of pictures owned by the Bank have been included as further confirmation of the close link between the BPM Group and the world of art. Numerous colleagues belonging to the various structures of the Bank and Group companies have helped in preparing the Social Responsibility Report 1. A reference person was chosen for each category of stakeholder, who integrated and coordinated the information gathered by colleagues, drawing up the drafts of the individual chapters. The Corporate Social Responsibility Department coordinated the entire process and wrote the introductory chapters of the report. A glossary can be found at the end of this document containing definitions of specialist terms. The structure, preparation methods and contents of the Social Responsibility Report were approved by the Board of Directors at the meeting held on 20 July We would like to thank Alessia Crovato for all the work she did during her student internship in the Corporate Social Responsibility Department of Banca Popolare di Milano. 15

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17 BPM GROUP IDENTITY c Via Senato, Umberto Lilloni. Owned by Banca Popolare di Milano 17

18 18 c Sunset in Val Malenco, Guido Cinotti. Owned by Banca Popolare di Milano

19 P R O F I L E O F T H E B P M G R O U P The BPM Group is one of Italy s largest banking groups. The Group is multiregional, prevalently in Lombardy, having grown over time while maintaining strong roots in its traditional territory with a firm commitment to integrate economic and social development. Under the guidance of Banca Popolare di Milano, the parent bank, and thanks to the commercial networks of Banca di Legnano, Cassa di Risparmio di Alessandria, Banca Popolare Luigi Luzzatti (Banca Popolare di Milano Historical Archives) 1865 Detail of Banca Popolare di Milano s first articles of association 19

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21 di Mantova and WeBank, as well as the other points of sale and product companies, the Group is able to offer its vast clientele - made up principally of private individuals and SMEs - qualified and personalised services in the field of asset management and financial assistance for individuals and companies. Banca Popolare di Milano (BPM) is a co-operative bank with a history that goes back more than 140 years. Founded in 1865 on the initiative of Luigi Luzzatti, it has always been considered the bank of the Milanese ; nowadays, it heads up one of Italy s principal banking groups. The BPM Group, as it is today, is in fact the result of various mergers and acquisitions over time of territorial banks and product companies, as well as the creation of brand-new entities. Figures at end 2009 ID CARD Distribution network: 822 points of sale, including 793 retail branches (market share: 2.1%) Headcount: 8,833 resources, including: 8,661 employees and 172 with other types of contract (temps, short-term contracts) Commercial bank customers: more than 1.3 million, almost 90% private individuals Shareholders: 93,691, of whom 50,823 members Direct deposits: 35.8 billion euro Indirect deposits: 45.7 billion euro Loans to customers: 32.9 billion euro Net profit for the year: 104 million euro Shareholders equity: 3,789 million euro (excluding net profit) Photo on other page: detail of the cupola in the Central Hall of Banca Popolare di Milano s head office 21

22 An Episode of the Flood, Domenico Induno. Owned by Banca di Legnano

23 VALUES, MISSION AND STRATEGY In line with our origins as a co-operative bank, our commitment is to enhance the value of household savings and to provide credit to the production system to help it grow, always with a eye on the needs of all our stakeholders and without losing sight of the social and environmental aspects. During the course of 2009, Banca Popolare di Milano equipped itself with a Charter of Values and Commitments, the joint result of the labours of various structures, which was approved by the Board of Directors in July. The purpose of the Charter of Values and Commitments is to codify and spread a culture of responsibility, rendering explicit the principles that the Bank wants to apply in all relations with stakeholders that it interacts and cooperates with in the pursuit of its mission. The document focuses on the positive actions to be taken, offering itself as a point of reference for the values and policies to be followed in decision-making processes and for the way that its people are meant to behave on a day-to-day basis. In 1835 Pietro Parvopassu, a lawyer, expressed the desire to create a savings bank in the city of Alessandria. Romanticism blooms in Europe at the beginning of the 19 th Century, exalting passion, inwardness, the religious and the sublime, which comes from awe when faced with the grandeur of Nature. 23

24 THE VALUES OF BANCA POPOLARE DI MILANO INTEGRITY Fairness and respect for commitments Our approach to banking is based on personal honesty and fairness; we carry on professional relationships with impartiality, independent judgement and respect for the rules; we undertake to fulfil all of our commitments with a sense of responsibility. TRANSPARENCY Provide full information so people can decide knowingly We want to communicate clearly, punctually and fairly, making sure that the information is comprehensible and without any spin ; we want to base our relationships on a sense of loyalty and mutual trust so that anyone can reach an independent decision being fully aware of what is involved. THE IMPORTANCE OF DIALOGUE Know to appreciate We pay particular attention to dialogue and discussion with all of our interlocutors to foster their differences and potential, to understand their expectations and to try and satisfy them. RESPONSIBILITY Awareness of one s role Each of us is committed to being our own entrepreneur within the scope of our functions, maintaining a responsible and positive attitude and performing our duties efficiently and effectively. The quality of how we act is measured in terms of our ability to create innovation and development for our Bank. CO-OPERATIVE SPIRIT Participation and proximity We privilege a system of interpersonal relationships based on active participation in key decisions, common responsibility and sharing results. Our co-operative approach versus outsiders aims to develop the Bank s proximity to the territories where we are present, to promote and sustain their economic, civil, social and environmental development. 24

25 The Charter of Values and Commitments is structured by stakeholder: for each of them we have established commitments which express lines of policy to be pursued in the medium/long term with reference to each of the five values listed above. In this connection, in September, the Board of Directors of Banca Popolare di Milano, on the request of the Members Relations Commission, delegated by the Board to superintend the document s preparation and implementation, appointed a Charter Application Officer as an institutional point of reference responsible for divulging and implementing the Charter. Before distributing the Charter, BPM carried a survey to measure the extent to which the values and commitments expressed in the Charter were already rooted in the organisation. Reference should be made to the 2010 Social Responsibility Report for further details about the Charter and the results of this survey. The Four Seasons: Spring, (detail) Filippo Palizzi. Owned by Banca di Legnano 25

26 STRATEGIC PLAN With the expiry of the Strategic Plan, in January 2010, the Board of Directors of Banca Popolare di Milano approved a new Group Strategic Plan for the three-year period With the new Plan, still in the context of a macro-economic scenario featuring a high level of uncertainty, even if the situation is gradually improving, the Group intends to exploit its competitive advantage by taking certain steps that are small in numerical terms, but of high impact in economic terms, based on specific objectives STRATEGIC PLAN The three years of the Strategic Plan came to an end in The tensions on financial markets and the general deterioration in business activity profoundly modified the reference context of the Plan. This meant redefining part of the objectives. Despite this unfavourable situation, the Group managed to achieve good results in the scheduled programmes, especially as regards improving operating efficiency. 26

27 The new mission statement contained in the Plan has provided important support in guiding this process of development. It is worded differently than the previous one, but does not contradict it, being essentially an evolution of the same concepts: it defines the Group s policies versus stakeholders and focuses attention on Corporate Social Responsibility. MISSION To be the local bank of reference for the development of households and businesses, with a strong emphasis on creating a long-term relationship with customers: To continue the BPM tradition of customer centrality (for both households and companies) and strong orientation towards a transparent relationship, significantly improving the service provided by means of a straightforward offer oriented towards the needs of the customer. To be a co-operative that is careful about its economic results and capital solidity with respect for the commitments made with members and shareholders. To enhance the value of its human capital and to maintain a system of employee relations that generates motivation and a sense of belonging, in order to achieve its corporate objectives. To maintain an attentive approach to questions of corporate social responsibility and sustainable growth initiatives on the territory. In 1837 the Internal Ministry approves the project to set up the Cassa di Risparmio di Alessandria. A key aspect of Romanticism is The Genius : he who is able to capture the vertigo of the sublime thanks to his artistic sensitivity and the techniques by which he is able to translate it into a finished work of art. 27

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29 The Strategic Plan is split into three lines of action which are implemented through specific programmes. Developing relationships with existing customers Boosting market shares Improving efficiency Better identification of customers potential and needs Focus on satisfying customers needs by simplifying the product catalogue and monitoring pricing Upgrading the range of high value-added products to be offered to SMEs and companies New model for the financial advisory service Adoption of a business model able to compete in the non-captive market by developing specialist companies that will contribute towards building the customer base: asset management (Anima SGR) consumer credit (ProFamily) online banking (WeBank) investment banking (Banca Akros) Management of staff turnover Measures to rationalise and optimise the traditional commercial network Optimisation of production processes Reinforcement of the integration between credit policies and commercial strategy for risk control For more details on the Piano, see section Presentations on the Investor Relations page of the website: (document dated , Strategic Plan of the BPM Group) In 1838 with a Royal Patent signed by Carlo Alberto, the Cassa di Risparmio di Alessandria is formally recognised as a legal entity. In Italy, the affirmation of romantic poetry coincides with the historical period of the Risorgimento ( ) and painting finds inspiration in moments of patriotic struggle on the part of the people. Photo on other page: detail of the Central Hall of Banca Popolare di Milano s head office 29

30 SOCIAL RESPONSIBILITY IN THE STRATEGIC PLAN While BPM is well aware that any activity ought to be carried on in a responsible manner, the new Strategic Plan contains explicit references to Corporate Social Responsibility for the first time. The objective to be reached over the period of three years is in fact the inclusion of Corporate Social Responsibility as an integral part of the Group s strategies by defining lines of action geared to stakeholders The Cattle Market, Pietro Morando. Owned by Cassa di Risparmio di Alessandria 30

31 In addition to this commitment that applies across the board to all of the Group s activities, the Strategic Plan also identifies certain other specific projects, which are outlined below: MAIN PROJECTS Customers: integration of commercial policies with initiatives aimed at green customers, socially responsible investors and access to banking and financial services for the disadvantaged. Members: initiatives geared to developing the shareholder base, to acquire members from among current customers and to increase cross selling with them. Personnel: initiatives geared to improving the working environment and the tools used at work. Environment: definition of objectives and verification of the results for the community and for the environment, responsible use of resources and reduction of the environmental impact. A new structure was set up at the Parent Bank to supervise these various initiatives and topics involving social responsibility and to provide better support to the Group in this process. A NEW STRUCTURE DEDICATED TO CORPORATE SOCIAL RESPONSIBILITY Following the reorganisation, from 25 January 2010 the Parent Bank now has a new sector entitled Corporate Social Responsibility and Social Responsibility Report, which is a staff function for General Management. This formalisation bears witness to the growing importance that the Bank is attributing to questions of social responsibility: strategic importance, not operating. 31

32 A S T R U C T U R E T H A T R E A C T S T O T H E M A R K E T GROUP COMPANIES The BPM Group, which is present almost exclusively 1 in Italy, operates in all banking and financial sectors. The Group operates through an articulated structure, led by the Parent Company, Banca Popolare di Milano, which is made up of commercial banks, specialist companies and other service companies. 1 Except for BPM Ireland, BPM Fund Management and Tirving, which are based in Dublin, and BPM Capital I and BPM Luxembourg, which are based respectively in the USA and in Luxembourg Man with Child, Trento Longaretti. Owned by Banca Popolare di Milano 32

33 THE PARENT COMPANY Banca Popolare di Milano In addition to performing its important role as a territorial bank, BPM also has management control and coordination functions in its role as a operating holding company. COMMERCIAL BANKS They preside over specific territorial areas, prevalently in Northern Italy. Company name Banca di Legnano SpA Cassa di Risparmio di Alessandria SpA Banca Popolare di Mantova SpA WeBank SpA Territory Lombardy and Piedmont Piedmont and Liguria Province of Mantua Whole of Italy MAIN SPECIALIST AND SERVICE COMPANIES These operate in various lines of activity with a view to developing the business both inside and outside the Group. They carry on activities that are instrumental to the functioning of the Group. Company name Anima SGR SpA, Akros Alternative Investment SGR SpA, BPM Fund Management WeTrade SIM SpA ProFamily SpA 1 Bipiemme Private Banking SIM 2 Banca Akros SpA, BPM Ireland Plc Ge.Se.So. (GEstione SErvizi SOciali) Field of activity Mutual funds and hedge funds Trading online Consumer credit Private banking Investment banking Canteen management for the Parent Bank 1 The consumer credit project was launched in 2009; the company will start operations in the first half of An Extraordinary General Meeting of Members has been called on 24 April 2010 to approve the merger of Bipiemme Private Banking SIM with Banca Popolare di Milano. 33

34 The table shown on the previous page takes account of some important events that took place in 2009 with a view to reinforcing the strategic and competitive positioning of the Group in the online distribution of products and services and in the field of asset management: acquisition by Banca Popolare di Milano of IntesaTrade SIM, the company of the Intesa Sanpaolo group that operated in the field of online trading, whose name was changed to WeTrade SIM; transformation of We@service, the Group company dedicated to the IT, commercial and consulting development of the Group s online activities, into a bank called WeBank SpA; setting up of the new Anima SGR SpA born as a result of the merger of Bipiemme Gestioni SGR with Anima SGR, the asset management company that BPM acquired 100% control of in early To facilitate the definition of marketing policies in line with the segmentation of the clientele, the Group has been split into specific business units. Seascape with Boat and Fisherman Guglielmo Ciardi. Owned by Banca di Legnano 34

35 GROUP COMPANIES AND BUSINESS UNITS Commercial Banking Corporate Banking Treasury and Investment Banking Asset Management Corporate Centre and other Banca Popolare di Milano Banca Popolare di Milano BANCA POPOLARE DI MILANO ANIMA SGR Banca Popolare di Milano Banca di Legnano Banca di Legnano BANCA DI LEGNANO BPM FUND MANAG. Ge.se.so. CASSA DI RISPARMIO DI Alessandria BANCA POPOLARE DI Mantova CASSA DI RISPARMIO DI Alessandria BANCA POPOLARE DI Mantova CASSA DI RISPARMIO DI ALESSANDRIA BANCA POPOLARE DI MANTOVA AKROS ALTERNATIVE INVESTMENTS SGR BPM Capital I BPM Luxembourg WEBANK/WETRADE BANCA AKROS BANCA AKROS BPM IRELAND BIPIEMME PRIVATE BANKING SIM TIRVING PROFAMILY Field of activity Banking and financial services, private banking, insurance and loans Banking and financial services and loans Portfolio management for financial market investments Activities related to asset management Activities in support of the Group s operations and hedging of risks Customers served Individuals, households, small and medium businesses (turnover of less than 50 million euro) Medium and large companies (turnover of over 50 million euro) Ordinary and institutional customers Prevalently retail Proportion of operating income at the end of % 12.5% 10.8% 4.7% 6.1% 35

36 EQUITY INVESTMENTS In addition to the commercial banks and other specialist and service companies, the Group can also count on a substantial network of strategic alliances with third-party companies that has been consolidated over time and developed in the following two directions: Collaboration with banking companies with strong roots in the territory and other external partners with top quality specialist skills in specific sectors of activity in order to maintain a high level of service offered to customers (table 1); Collaboration with organisations involved in socially significant activities from an environmental, cultural and territorial development point of view (table 2). The following tables show the principal alliances with third-party companies in which the Group has also become a shareholder. Unless stated otherwise, these equity investments are all held by the Parent Bank. c Outside Porta Vittoria, Umberto Lilloni. Owned by Banca Popolare di Milano 36

37 COMPANIES IN WHICH INVESTMENTS HELD TABLE 1 Affiliate with specialist skills Bipiemme Vita 1 (insurance company that was controlled by the Group until June 2007) SelmaBipiemme Leasing (market leader in leasing) Aedes BPM Real Estate (closed-end real estate fund management) ESN North America (broker dealer based in New York) Etica SGR (ethical mutual fund management) Pitagora 1936 (lending against one-fifth of salary) Group (market research and shareholder services for the placement of financial instruments) Cassa di Risparmio di Asti (historical bank with strong roots in the Asti area) Wise Venture SGR (closed-end and private equity fund management) % interest 49% 40% 39% 37.06% (Banca Akros) 27,5% 24% 22.5% (Banca Akros) 20% (Banca di Legnano) 20% TABLE 2 Affiliate involved in socially significant activities 2 Genextra (research and development in biotechnology, biomedicine and functional genomics) Istituto Europeo di Oncologia (Cancer research and therapy) Fiera di Milano (trade fair management in the Milan area and at the new Rho-Pero hub) % interest 4.37% 3.53% 2.52% 1 Following the agreement to acquire 51% stipulated at the end of 2009 between BPM and Fondiaria SAI, Bipiemme Vita will return under control of the Group in early Excluding the companies in liquidation. 37

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39 DISTRIBUTION NETWORK The Group s distribution structure is located entirely in Italy, especially in Lombardy, and is made up of: 793 branches (791 of the territorial banks, 1 of Banca Akros and 1 of WeBank, the new online bank); 15 Private Banking Centres (13 of Bipiemme Private Banking SIM and 2 of Banca Akros) able to provide personalised financial advisory services to high net worth customers; the network of financial advisors (52 of BPM, 20 of Banca Akros, 6 of Bipiemme Private Banking SIM) which is the point of reference for the personalised financial advisory and asset management activities; 14 points of sale dedicated to companies: 4 Large Corporate branches and 10 SME units; The Call Centre provides customers with remote access and includes telephone and Internet banking services; more than 900 ATMs, including 41 self service terminals, and 30,000 POS. During 2009, the number of Group branches increased by a net of five (ten new branches opened and five closed). The growth policy is geared to reinforcing the Group s presence in the areas where it has its historical roots, as well as to enter new markets in provinces that are adjacent to those currently occupied, while avoiding overlaps between the various Group banks. A number of branches in Milan and Rome were closed as a measure to improve operating efficiency in accordance with the Strategic Plan. Photo on other page: 16 th Century Madonna with Child, School of Parmigianino. Owned by Banca di Legnano 39

40 TERRITORIAL NETWORK BPM GROUP TOTAL BRANCHES 793 Banca Popolare di Milano 570 Banca di Legnano 120 Cassa di Risparmio di Alessandria 92 Banca Popolare di Mantova 9 WeBank 1 1 Banca Akros

41 Banca Popolare di Milano Banca di LEGNANO CASSA DI RISPARMIO DI ALESSANDRIA 77 2 Banca Popolare di MANTOVA 9 1 WeBank and Banca Akros only have a presence in Lombardy. In 1840 Cassa di Risparmio di Alessandria inaugurates its head office and first branches. It begins its territorial expansion and becomes a development engine in the areas where it is present. The romantic concept of a People is connected to the idea of Nation, i.e. a series of individuals who are linked to each other by indissoluble ties of language, religion, culture and traditions. 41

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43 G O V E R N A N C E C O R P O R AT E G O V E R N A N C E O F T H E B P M G R O U P Being well aware of the importance of an effective system of corporate governance to ensure healthy and prudent management, the BPM Group has developed a system whose objective is to guarantee adequate division of responsibilities and powers, with a proper balance between management and control functions. The administration and control model adopted by the Parent Bank and by the other Group companies is the so-called traditional model, which BPM considers to be the most suitable to ensure greater operational efficiency and effective controls, guaranteeing full use of management and greater satisfaction of the interests of members and shareholders. DEFINITION OF CORPORATE GOVERNANCE Corporate governance defines the structure by which a company lays down its objectives and organises the means to achieve them while respecting the interests of the various stakeholders. Photo on other page: the Banca Popolare di Milano branch in Via Dante, Milan. 43

44 The traditional model, which is the one that the Parent Bank has always applied in the past, is made up of the following bodies: Board of Directors, with the function of strategic supervision, appointed by the General Meeting of Members; Board of Statutory Auditors, with control functions, also appointed by the General Meeting of Members; Executive Committee and General Management, with management functions (subject to the powers of the Board of Directors) St. George s Day, Vespasiano Bignami. Owned by Banca Popolare di Milano 44

45 KEY STAGES OF CORPORATE GOVERNANCE Over the years, the Group has carried out a constant process of selfassessment of its system of Corporate Governance, making suitable amendments where necessary. The key stages of the adjustment process can be summarised in the following points: from 2001: adoption by the Parent Bank of the Code of Conduct for Listed Companies promoted by Borsa Italiana SpA (including the subsequent versions introduced in 2002 and 2006). Since then, BPM has always published a yearly report on its adoption of the Code s recommendations; 2003: introduction into the articles of association of the list voting system (at that time not obligatory for the election of the boards of directors of listed companies) for the appointment of the members of BPM s Board of Directors; 2006: amendments to the articles of association of the rules introduced by the so-called Savings Reform (e.g. independence requirements for directors under the Consolidated Finance Act, chairman of the Board of Statutory Auditors reserved for minorities, etc.); 2008: approval of the General Meeting of the amendments to Banca Popolare di Milano is founded in 1865 on the initiative of Luigi Luzzatti with the help of 350 citizens from all walks of life sees the development in Italy of the Scapigliatura, an artistic movement that aims to portray the truth, reality described in a way that is objective and anatomical. 45

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47 the Parent Bank s articles of association in accordance with the indications of the Bank of Italy (see 2008 Social Responsibility Report, pages 56-58); 2009 (May): further amendments to the articles of association of the Parent Bank (April) and to those of Group banks based on BPM s guidelines; 2009 (June): Parent Bank approval of the Regulations governing its Corporate Bodies (added to the Consolidated Text of Regulations for Corporate Bodies) and of the Regulation on Information Flows; approval by BPM and the Group banks of their respective remuneration and incentive policies; approval by BPM and subsequent transmission to the Bank of Italy of the Corporate Governance Project (for BPM and the other Group banks) Farmland at Rovetta, Arturo Tosi. Owned by Banca di Legnano Photo on other page: panoramic view of the Central Hall of Banca Popolare di Milano s head office 47

48 Maria, Donato Frisia. Owned by Banca Popolare di Milano

49 ROLE OF THE PARENT BANK As the Parent Bank, Banca Popolare di Milano, a listed company, establishes the lines of strategy, performs coordination functions and exercises overall control over Group companies and structures. Consistency between strategic decisions, models, rules and organisational processes is guaranteed by the Group Regulations, which ensure integrated and standardised management. Exercising its management control and coordination function, the Parent Bank: identifies the Group s strategic objectives, principally by means of the Strategic Plan and the budget; lays down the strategic lines of development of each Group company, bearing in mind that each of them retains their independence in terms of having their own articles of association and operating autonomy; supervises those operating and service functions that have been centralised; in the field of risk management and control, it regulates the identification of risks and explains how they are to be controlled by means of a Group regulation; it also ensures that the same methods, measurement criteria and control tools are used throughout the Group and that they are suitable for the type and size of the risks being taken on. In the pages that follow there is a more detailed explanation of the governance model adopted by the Group, essentially with reference to that of BPM, which being a co-operative bank, has a number of peculiarities compared with the other companies. In 1870 Banca Popolare di Milano transfers to its new head office in the Palazzo dei Giureconsulti. The Scapigliatura refers to a group of non-conformist youngsters in constant revolt against order and tradition, dominated by a search for alternative values in society, morals and art. 49

50 Celebrating Columbus, Pompeo Mariani. Owned by Banca Popolare di Milano

51 BPM S SYSTEM OF GOVERNANCE PARTICULAR ASPECTS OF THE BPM MODEL BPM s model of corporate governance is based on the following cardinal points, which are typical of co-operative banks: One-man-one-vote Each member has the right to one vote at General Meetings, however many shares they own. Restrictions on the distribution of earnings Co-operative banks have to allocate at least 10% of their annual earnings to the legal reserve. The portion of earnings not allocated to reserves, to other destinations envisaged in the articles of association nor distributed to the shareholders, has to be given to charity or some form of social assistance. Limit on share ownership No shareholder can own more than 0.50% of the share capital, except for undertakings for collective investment in transferable securities (UCITS), including mutual funds, which are subject to their own internal regulations. Approval clause The right to attend and vote at General Meetings is reserved for shareholders who are members, i.e. holders of BPM shares who have applied and been accepted as members and recorded in the Register of Members for at least 90 days prior to the General Meeting at first calling. The Board of Directors can reject a request for admission to membership, giving the reason for the refusal. The applicant can appeal against this decision to the Board of Arbitrators within 30 days of receiving the communication. Limit on voting proxies In co-operatives each member can bring to the General Meeting a maximum of ten proxies (art. 2539, Civil Code), though individual companies can provide for a lower number in their articles of association. For BPM, this limit has been set at two proxies per member (art. 13 of the articles of association), excluding Directors, Statutory Auditors and employee members, who are not allowed to bring any proxies (art. 2372, Civil Code). Mechanisms designed to facilitate members participation at General Meetings are currently being studied. In 1876 BPM joins the National Association of Co-operative Banks. The second half of the 19th Century is also Impressionism, which rediscovers the importance of the artist s subjectivity, an interest in colour and painting landscapes. 51

52 BPM S CORPORATE BODIES: GENERAL MEETING OF MEMBERS It represents all of the members and is called by the Board of Directors at least once a year to approve the financial statements. The following can take part: the Members, Directors, Acting Statutory Auditors and General Management, with the right to speak and to vote; non-members, if authorised, without the right to speak or to vote. Depending on the topic to be decided, the Meeting may be: ORDINARY (art. 26 Articles of Association) Approves the financial statements Appoints and revokes corporate bodies and the Independent Auditors Establishes the remuneration of Directors and Statutory Auditors Approves the Regulations for General Meetings Approves the Bank s remuneration policies. Renews the corporate bodies every three years, appointing candidates from among the Members. EXTRAORDINARY (art. 27 Articles of Association) Decides on amendments to the Articles of Association Decides any increase in capital involving an issue of new shares not in the ordinary manner Decides on the appointment, replacement and powers of the liquidators Decides on other matters for which it is solely responsible. Articles of Association (arts ) Regulations for General Meetings Civil Code arts

53 AN OVERVIEW BOARD OF DIRECTORS It is currently made up of 18 Directors, including the Chairman and two Deputy Chairmen. Requirements (of the Articles of Association and legislation): integrity, professionalism, independence For further details on the requirements and possible executive status of Directors, see the Report on Corporate Governance and Ownership Structure. Functions: it has powers of ordinary and extraordinary management, excluding those that are reserved to the General Meeting of Members; it decides on general policies regarding management, organisation and the granting of loans, strategic operations, business and financial plans, buying and selling of property and major shareholdings; it approves and amends internal regulations; it decides on the structure and attributes of General and Head Office Management, appoints, revokes and establishes the duties, powers and emoluments of the General Manager and of the other Managers; it appoints, in accordance with the law and the Articles of Association, the Financial Reporting Manager and the person in charge of the internal auditing and compliance functions. Resolutions are normally passed by an absolute majority of the votes and are valid if at least a majority of the current Directors are present. Executive Committee Each year, the Board delegates some of its functions to an Executive Committee made up of the Chairman, the Deputy Chairmen and other Directors, in such a way that the total number of Committee members is no less than five and no more than seven. Without prejudice to the Board s exclusive powers under law and the articles of association, the delegated authority may concern in particular matters relating to personnel, organisation and the buying and selling of minor shareholdings. BOARD OF STATUTORY AUDITORS It is made up of the Chairman, 4 Acting Statutory Auditors e 4 Alternate Statutory Auditors. Functions: it monitors, among other things, compliance with the rules of law, regulations and the articles of association, correct administration and the adequacy of the organisational and accounting structures of the Bank; it reports to the Bank of Italy any cases of operational irregularity or violation of the regulations encountered as they perform their duties. ARBITRATION COMMITTEE It is made up of 3 Acting Members and 2 Alternate Members. Functions: it decides, by an absolute majority of the votes, all disputes referred to it under the articles of association including those between members or between the members and directors for reasons concerning such relationships. 53

54 2009 GENERAL MEETING OF MEMBERS: RENEWAL OF THE CORPORATE BODIES The General Meeting of Members on 25 April 2009 decided to renew the appointment of all of BPM s corporate bodies for the three-year period , based on the new rules following the December 2008 amendments to the articles of association. BOARD OF DIRECTORS The current Board of Directors is made up of 16 Directors elected by the General Meeting based on lists of candidates presented by the members. The list THE LIST VOTING SYSTEM voting system has led to The list voting system, which BPM was one the appointment of: of the first co-operative banks to introduce - by a large majority at an Extraordinary 10 Directors taken from General Meeting in December the list that obtained makes it possible for minority groups of members to be represented on the the highest number of corporate bodies. votes; 6 Directors taken from the various minority lists. 54

55 The General Meeting has also appointed (unanimously with an open ballot) another 2 Directors on the basis of lists of candidates presented by the Board of Directors in order to fulfil the commitments taken by BPM with Fondazione Cassa di Risparmio di Alessandria and Crédit Industriel et Commercial (art. 50 Articles of Association). BREAKDOWN OF VALID VOTES FOR THE RENEWAL OF THE BOARD OF DIRECTORS Participants at the General Meeting on own account or by proxy: 10,024 Votes cast: 9,721, of which 40 blank 9,681 valid BREAKDOWN OF VALID VOTES List 1 Lead candidate Massimo Ponzellini 5,294 (54.68%) List 2 Lead candidate Franco Del Favero 1,363 (14.08%) List 3 Lead candidate Antonello Polita 391 (4.04%) List 4 Lead candidate Roberto Mazzotta 2,633 (27.20%) On 11 June 1887 Banca di Legnano is founded to respond to the needs of manufacturing industry, a sector of primary importance in the area north of Milan. Impressionist painting wants to express the extreme variability of colours with as much immediacy as possible, trying to catch a fleeting moment, the sensation of an instant. 55

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57 The following table gives a complete list of the directors with an indication of the specific positions that they hold on the Board, whether they have executive status and whether they qualify as independent directors based on the requisites laid down by the CFA and the Code of Conduct for Listed Companies (March 2006 version, which the Bank adopted at the time). Name Office held Executive Requisite of independence A B Massimo Ponzellini 1 Chairman NO YES YES Mario Artali 1 Deputy Chairman YES NO NO Graziano Tarantini 1 Deputy Chairman YES NO NO Beniamino Anselmi 1 Director YES NO NO Antoniogiorgio Benvenuto Director NO YES YES Francesco Bianchi 1 4 Director YES NO NO Giovanni Bianchini Director NO YES YES Giuseppe Coppini Director NO YES YES Enrico Corali Director NO NO NO Franco Debenedetti 3 Director NO YES YES Franco Del Favero 1 2 Director YES NO NO Roberto Fusilli 3 Director NO NO NO Piero Lonardi 1 3 Director YES NO NO Roberto Mazzotta 3 (*) Director NO YES NO Marcello Priori Director NO NO YES Leone Spozio 2 Director NO YES NO Jean-Jacques Tamburini 5 Director NO NO YES Michele Zefferino Director NO NO YES Meetings from 25 April to 31 December 2009: Board of Directors: 15 meetings Executive Committee: 28 meetings A) Independence in accordance with art. 147-ter, paragraph 4, CFA (relevant for the purposes of art. 32 of the Bank s articles of association) assessed by the Board of Directors on 26 May B) Independence in accordance with art. 3 of the Code of Conduct for Listed Companies (March 2006 version) assessed by the Board of Directors on 26 May Member of the Executive Committee, appointed on 28 April Minority Director (List no. 2). 3. Minority Director (List no. 4). 4. Director elected under art. 50 of the Articles of Association (Fondazione Cassa di Risparmio di Alessandria ). 5. Director elected under art. 50 of the Articles of Association (Crédit Industriel et Commercial). NB: List no. 1 is the majority list. Based on the quotient mechanism, List no. 3 did not manage to obtain a seat on the Board. (*) In May 2010, Roberto Mazzotta handed in his resignation as he had been appointed to the Board of another bank, which is a situation of incompatibility that is explicitly foreseen in the Bank s articles of association. Claudio Danelon was co-opted as his replacement. Photo on other page: 1958 Woman on the Stairs, Massimo Campigli. Owned by Banca Popolare di Milano 57

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59 BOARD OF STATUTORY AUDITORS AND ARBITRATION COMMITTEE The same General Meeting renewed the Board of Statutory Auditors, with two Acting Auditors (including the Chairman) and two Alternative Auditors being elected from the minority lists, as well as the Arbitration Committee. Based on the outcome of the voting, the two bodies are made up as follows: Board of Statutory Auditors Salvatore Rino Messina b Carlo Bellavite Pellegrini c Enrico Castoldi a Stefano Salvatori a Ezio Simonelli a Emilio Luigi Cherubini b Enrico Radice a Giuseppe Zanzottera a Giorgio Zoia c a) Majority Auditor (List no. 1) b) Minority Auditor (List no. 4) c) Minority Auditor (List no. 2) Chairman of the Board of Statutory Auditors Acting Auditor Acting Auditor Acting Auditor Acting Auditor Alternate Auditor Alternate Auditor Alternate Auditor Alternate Auditor Arbitration Committee Arbitrators: Italo Ciancia Anna Maria Sanchirico Carlo Felice Varini Alternate Arbitrators: Guido Mina Giuseppe Molinari (resigned on 22 June 2009) Photo on other page: the Committee Room at Banca Popolare di Milano s head office 59