Italian government-guaranteed bonds (3Y LTROs) and Italian banks

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1 Italian government-guaranteed bonds (3Y LTROs) and Italian banks This report focuses on Italian government-guaranteed bonds (GGBs). These have started to enter the secondary market at a time when Italian government bonds (BTPs) have become increasingly expensive as a result of the improving economic and political picture in Italy and the ongoing hunt for yield. In our view, Italian GGBs offer interesting yield pick-ups (some Italian GGBs that mature in 217 are priced at 11-2bp ASW, or above 5bp over BTPs, and, in extreme cases, up to some 13-17bp over BTPs, depending on the issuer) at similar risk levels as BTPs. We deem these GGBs to be explicit, irrevocable first-demand guarantees. Also, while unconditionality poses some questions, we believe that the reputational risk of the Italian state not honoring its guarantee is prohibitive. This entry of GGBs into the secondary market was largely triggered by the ECB s decision to end their eligibility as ECB collateral in March 215 if they are own-use and hence issued by the same bank that posted them as collateral at the ECB (3Y LTROs). However, a "non-own-use GGB can be sold on the secondary market and can be used as ECB collateral by the buyer, while the risk weighting is % if the buyer is a bank in an EU member state. It is worth noting that a significant number of GGBs mature as late as 217. This stems from Italian banks taking advantage of cheap funding at a time when funding was expensive (211/212). While Italian banks have, so far, kept significant ECB refinancing as a safety net in case market sentiment worsens again and as cheap funding, the ECB ruling eliminates that benefit for own-use GGBs and puts real pressure on Italian banks to deal with GGBs that mature after 1 March 215. Also, banks only have some 1 months left to deal with this matter. All outstanding Italian GGBs are based on Article 8 of Legislative Decree No. 21/211, which was transformed into Law No. 214 on 22 Dec 211 ( Article 8 ) and makes the GGBs comparable. Based on Bloomberg data, we counted 24 GGBs, of which the 2 largest issues represent 76%, or EUR 4.2bn, of all outstanding GGBs (EUR 52.7bn). Among these GGBs, the 2 banks responsible for the largest issues account for 88% of all outstanding GGBs or EUR 46.4bn. Some EUR 15.6bn, or 3% of all outstanding GGBs, will mature upon the introduction of the ECB s ban of own use GGBs on 1 March 215, while some EUR 37.2bn, or 7%, will mature thereafter. Of these 7%, around 6% mature in 1Q17, which is in line with the maximum allowable 5Y term in the guarantee law. Some 58% of GGBs will mature along with the 3Y LTROs in 215. With respect to the Regulation EU No. 575/213 (Capital Requirements Regulation [CRR]), exposures to EU member states' central governments, which are denominated and funded in the domestic currency of the respective central government, can be assigned a risk weight of %. With respect to the CRR, transferable assets representing claims on or guaranteed by the central government of a member state qualify as extremely high quality liquid assets. Hence, we deem these bonds to be fully eligible for the liquidity coverage ratio (LCR) without any haircut or other restrictions. Contents Italian government-guaranteed bonds 2 Banned: own-use of GGBs as ECB collateral (1 March 215) 5 List of Italian GGBs maturing after February 215 _ 6 Options to deal with leftover GGBs 7 Eligible bonds for the guarantee 8 Nature of the guarantee 9 RWAs, LCR, non-own-use 1 Investment and pricing considerations 11 Spreads Italian GGBs, BTPs, unsecured 13 Selected issuers maturity overviews up to 217 _ 16 Selected issuers ratings, P&L, B/S & key ratios 19 Trade ideas 21 List of all outstanding Italian GGBs 22 Italian economy Snapshot 26 Investment metrics: major Italian banks 28 Latest earnings of major Italian banks 38 Intesa Sanpaolo 38 Banca MPS 39 UBI Banca 4 Banco Popolare Scarl 41 Mediobanca 42 Banca Popolare di Milano 43 Banca Popolare dell'emilia Romagna 44 Credito Valtellinese 45 Authors Dr. Tilo Höpker, Senior Credit Analyst (UniCredit Bank) [email protected] Valentina Stadler, Deputy Head of Financials Credit Research (UniCredit Bank) [email protected] Bloomberg UCCR Internet UniCredit Research page 1 See last pages for disclaimer.

2 Italian government-guaranteed bonds Italian government-guaranteed bonds entering the secondary market at interesting yield pick-ups but credit risk similar to Italian government bonds (BTPs) Italian government-guaranteed bonds (GGBs) have started to enter the secondary market at a time when Italian government bonds (BTPs) have become increasingly expensive due to the improving economic and political picture in Italy and the ongoing hunt for yield. In our view, Italian GGBs offer interesting yield pick-ups. Some Italian GGBs, which mature in 217, are priced at 11-2bp ASW spread or above 5bp over BTPs and, in extreme cases, up to some 13-17bp over BTPs depending on the issuer at similar risk levels as BTPs. We deem these GGBs to be explicit, irrevocable first-demand guarantees. Also, while unconditionality poses some questions, we believe the reputational risk posed to the Italian state of not honoring its guarantee is prohibitive (we look into this issue in detail later in this report). The entry of GGBs into the secondary market was largely triggered by the ECB s decision to end their eligibility as ECB collateral in March 215 if they are own-use and hence issued by the same bank that posted them as collateral at the ECB. As most GGBs were issued for own use in order to create eligible collateral for the ECB s 212 3Y LTROs, the majority of GGBs mature at about the same time as the 3Y LTROs (1H15), while the other GGBs have to be dealt with somehow by the affected issuers. Against this backdrop, it is worth noting, that a significant amount of GGBs mature as late as 217. This stems from Italian banks taking advantage of cheap funding at a time when funding was expensive (211/212). Genesis of the GGBs On 6 Dec 211, at the peak of the financial crisis, the Italian state introduced Article 8 ( Misure per la stabilita' del sistema creditizio or Measures for the stability of the banking system) as part of Legislative Decree No. 21/211 ( decreto-legge 6 dicembre 211, n. 21, recante disposizioni urgenti per la crescita, l'equità e il consolidamento dei conti pubblici or containing urgent measures for growth, equity and the consolidation of public finances) which was transformed into Law No. 214 on 22 Dec 211 (referred to as Article 8 ). As their names indicate, these measures were carried out in order to stabilize the Italian credit system and to provide Italian banks with state guarantees on their bonds, which could then be posted as ECB collateral for muchneeded liquidity: 3Y LTROs. OUTSTANDING ITALIAN GGBS: SWOT-ANALYSIS Strengths/Opportunities Similar credit risk as Italian government bonds (BTPs) Sometimes significant yield pick-ups Many interesting GGBs have yet to enter the market Only one type of GGBs Overview of the potential GGB secondary market Italian banks were the largest drawer of 3Y LTROs and have not started reimbursing in earnest Weaknesses/Threats Questions regarding the conditionality of the guarantee Illiquid and non-transparent Source: UniCredit Research All outstanding Italian GGBs are based on Article 8, which makes them comparable to each other. As an aside, Article 8 section 34 also mentions the possibility of a state guarantee within the framework of emergency liquidity assistance (ELA) until 3 June 212, which, to our knowledge, has not been tapped by a single Italian bank. Based on Bloomberg data, we have counted 24 GGBs, of which the 2 largest issues represent 76%, or EUR 4.2bn, of all outstanding GGBs (EUR 52.7bn). Among these GGBs, the 2 banks responsible for the largest issues account for 88% of all outstanding GGBs or EUR 46.4bn. Some EUR 15.6bn, or 3%, of all outstanding bonds will mature upon the introduction of the ECB s ban of own use GGBs on 1 March 215, while some EUR 37.2bn, or 7%, will mature thereafter. Of these 7%, some 6% will mature in 1Q17 in line with the maximum-allowable 5Y term in the guarantee law. Some 58% of GGBs will mature along with the 3Y LTROs in 215. According to Bloomberg (as of 26 May 214), total LTRO liquidity drawn (tranches I and II) was some EUR 583bn, of which some EUR 389bn are outstanding. The two largest drawers were Italy and Spain. Italy drew some EUR 25bn (35% of total drawn) and has some EUR 159bn (41% of total outstanding) outstanding, while Spain drew some EUR 175bn (3% of total drawn) but now only has some EUR 97bn (25% of total outstanding) outstanding. UniCredit Research page 2 See last pages for disclaimer.

3 ...what to do with own-use Italian GGBs once LTRO repayments start in earnest? The next-largest player, Belgium, lags significantly in drawn and outstanding amounts: it drew some EUR 44bn (8% of total drawn) and has some EUR 36bn (9% of total outstanding) outstanding. Hence, Italy has some real catching up to do in reimbursing LTROs, both because it is the largest drawer and because it has not really started reimbursing LTROs in earnest. According to the Bank of Italy, by 23 April 214, 38 of the 112 Italian counterparties of the 3Y LTROs had repaid EUR 79bn or 31% of the total amount vs. 62% for the euro area. This compares to the picture on 6 November 213: 22 of the 112 Italian counterparties had repaid EUR 38bn or 15% of the total amount vs. 39% for the euro area as Italian banks remained more cautious. As of May, the Bank of Italy estimates, assuming continued favorable market conditions, that Italian banks will have an adequate buffer of liquid assets to lower their debt with the Eurosystem down to pre-sovereign-debt crisis levels. Only very few small banks (<1% of Italian banking system assets) would have to align the decrease in liquid assets with plans to raise funding, according to the Bank of Italy. However, the Bank of Italy has also said that, in a more prudent scenario (in which market conditions are roughly the same as in 213), total assets held by banks that would have to expand their funding are estimated to be close to 9%. The questions thus are as follows: 1. at what pace will Italian banks keep reimbursing LTROs (early); 2. how much of these LTRO amounts rely on Italian GGBs as collateral; and 3. what to do with these own-use Italian GGBs once LTRO repayments start in earnest? LTROS (MATURING 1H15) AMOUNTS DRAWN AND OUTSTANDING FOR ITALIAN BANKS Description Total LTRO drawn (EUR) Outstanding amount (after repayment) EUR ALL BANKS (that have publicly disclosed information) - ITALY 24,63,58, 159,33,58, Intesa Sanpaolo SpA 36,,, LTRO I 12,,, LTRO II 24,,, Banca Monte dei Paschi di Siena SpA 29,,, 29,,, LTRO I 14,,, 14,,, LTRO II 15,,, 15,,, UniCredit SpA 26,1,, 21,1,, LTRO I 16,1,, 11,1,, LTRO II 1,,, 1,,, Cassa Depositi e Prestiti SpA 26,,, 26,,, LTRO II 26,,, 26,,, Banco Popolare SC 13,5,, 13,5,, LTRO I 1,,, 1,,, LTRO II 3,5,, 3,5,, Iccrea Banca SpA 12,6,, 12,6,, LTRO I 7,6,, 7,6,, LTRO II 5,,, 5,,, Unione di Banche Italiane SCPA 12,,, 12,,, LTRO I 6,,, 6,,, LTRO II 6,,, 6,,, Mediobanca SpA 7,5,, 7,,, LTRO I 4,,, 3,5,, LTRO II 3,5,, 3,5,, Banca Nazionale del Lavoro SpA 5,194,548, 5,194,548, LTRO I 5,194,548, 5,194,548, Credito Emiliano SpA 5,,, 2,5,, LTRO I 2,5,, LTRO II 2,5,, 2,5,, Banca Popolare dell'emilia Romagna Scrl 4,4,, 4,4,, LTRO I 2,4,, 2,4,, LTRO II 2,,, 2,,, Continued overleaf UniCredit Research page 3 See last pages for disclaimer.

4 LTROS AMOUNTS DRAWN AND OUTSTANDING FOR ITALIAN BANKS (CONT.) Description Total LTRO drawn (EUR) Outstanding amount (after repayment) EUR Banca delle Marche SpA 4,35,, 4,35,, LTRO I 1,35,, 1,35,, LTRO II 3,,, 3,,, Banca Popolare di Milano Scarl 4,25,, 3,75,, LTRO I 2,25,, 1,75,, LTRO II 2,,, 2,,, Banca Popolare di Vicenza 3,3,, 3,3,, LTRO I 1,1,, 1,1,, LTRO II 2,2,, 2,2,, Banca Piccolo Credito Valtellinese Scarl 3,25,, 2,95,, LTRO I 1,5,, 1,5,, LTRO II 1,75,, 1,45,, Banca Mediolanum SpA 2,9,, 2,9,, LTRO I 2,,, 2,,, LTRO II 9,, 9,, Banca Carige 1,9,, 1,9,, LTRO I 1,3,, 1,3,, LTRO II 6,, 6,, Banca Popolare di Sondrio SCARL 1,8,, 1,3,, LTRO I 1,3,, 1,3,, LTRO II 5,, Banca Popolare dell'etruria e del Lazio 1,3,, 1,3,, LTRO I 1,1,, 1,1,, LTRO II 2,, 2,, Banca Generali SpA 1,2,, 1,2,, LTRO I 2,, 2,, LTRO II 1,,, 1,,, Unipol Banca SpA 85,, 85,, LTRO I 25,, 25,, LTRO II 6,, 6,, Banca Popolare dell'alto Adige - Volksbank Suedtirol SCPA 5,, 5,, LTRO I 2,, 2,, LTRO II 3,, 3,, Cassa di Risparmio di Bolzano SpA 5,, 5,, LTRO I 5,, 5,, Banco di Desio e della Brianza SpA 4,, 4,, LTRO I 2,, 2,, LTRO II 2,, 2,, Mediocredito Trentino Alto Adige SpA 3,, 3,, LTRO II 3,, 3,, Banca Sella Holding SpA 25,, 25,, LTRO I 25,, 25,, Banca Popolare di Cividale SCPA 13,, 13,, LTRO II 13,, 13,, Banca Popolare Valconca SCRL 5,, 5,, LTRO II 5,, 5,, Banca Popolare del Lazio Societa' Cooperativa per Azioni 4,1, 4,1, LTRO I 4,1, 4,1, Banca Popolare di Cortona 19,5, 19,5, LTRO II 19,5, 19,5, Banca Popolare di Sviluppo Scpa 19,, 19,, LTRO II 19,, 19,, Source: Bloomberg UniCredit Research page 4 See last pages for disclaimer.

5 GGBs represent EUR 52bn or 16% of the collateral pool by the Italian banking system to the Eurosystem According to the latest available financial stability report (May 214) by the Bank of Italy (which refers to the ECB), Italian banks had some EUR 325bn of collateral posted to the Eurosystem as of March 214, down from EUR 353bn in September 213. While government bonds represented some EUR 11bn or 31% of the collateral pool, covered bank bonds represented 19% or EUR 62bn and government-guaranteed bank bonds EUR 52bn or 16% of the collateral pool (down from EUR 71bn or 2% in September 213). The Bank of Italy also pointed out that Italian banks recourse to Eurosystem credit was down to EUR 23bn from EUR 231bn in November (and from the peak of EUR 284bn in July 212). This further decrease was again driven by the early repayment of 3Y LTRO funds, according to the Bank of Italy. We reiterate that as the Bank of Italy stated by 23 April, 38 of the 112 Italian counterparties of the 3Y LTROs had repaid EUR 79bn or 31% of the total amount vs. 62% for the euro area. Furthermore, we also reiterate that the Bank of Italy has estimated assuming continued favorable market conditions that Italian banks will have an adequate buffer of liquid assets to lower their debt with the Eurosystem down to pre-sovereign-debt crisis levels. Again, only very few small banks (<1% of the Italian banking system assets) would have to compensate for their decrease in liquid assets by raising funding, according to the Bank of Italy. In any event, there is ongoing pressure to repay the 3Y LTROs. At the end of 213, several Italian banks announced that they were going to cancel own-use GGBs in light of the reimbursement of 3Y LTROs (early). The Bank of Italy said the intention of this is to save paying commission fees to the state. An alternative scenario, however, is to convert GGBs then free from early LTRO repayments from their current shortterm funding (LTROs maturing in 1H15) to medium-term funding (maximum 5Y terms according to the state-guarantee law). Own-use of GGBs as ECB collateral is banned as of 1 March 215 Real pressure on Italian banks to deal with GGBs that mature after 1 March 215 Banned: own-use of GGBs as ECB collateral (1 March 215) Also, on 22 March 213, the ECB adopted Decision ECB/213/6, which changes the use of certain uncovered government-guaranteed bank bonds as collateral. According to this, as of 1 March 215, such GGBs can generally no longer be used as collateral in Eurosystem monetary policy operations issued by the counterparty itself or an entity closely linked to that counterparty (referred to as own-use ). This aims to ensure the equal treatment of counterparties in Eurosystem monetary policy operations. According to Article 5, section 4, of the guidelines of the ECB from 2 March 213 (ECB/213/4), temporary derogations for up to three years are only possible in exceptional cases and only if the issuer provides a funding plan that shows how the own-use of GGBs will be phased out during that time. It is interesting to note in this context that the ECB Decision from 22 March 213 does not have such an explicit exception nor does it refer to these guidelines. Hence, while most GGB maturities are synchronized with the LTRO tranches maturities (see tables below), this poses the further question of what to do with the corresponding and still outstanding material number of GGBs after 1 March 215. While Italian banks have so far kept significant ECB refinancing as a safety net in the event that market sentiment worsens again and as cheap funding, the ECB ruling eliminates that benefit for own-use GGBs and puts real pressure on Italian banks to deal with GGBs that mature after 1 March 215. Moreover, banks have only some 1 months left to deal with this matter. UniCredit Research page 5 See last pages for disclaimer.

6 List of Italian GGBs maturing after February 215 ITALIAN GGBS MATURING AFTER FEBRUARY 215 IN ORDER OF DESCENDING MATURITY (ALL BULLET EUR, NON-RATED) Short Name Coupon Maturity Issue Date Amount Issued Amount Outstanding Ask Price YAS ASW Spread Ask Yield To Maturity ISIN Number BANCA POP BARI* 5 6/28/217 6/28/212 14,, 14,, IT CREDITO VALTELLI 5.5 6/18/217 6/18/212 5,, 5,, n.a. n.a. n.a. IT CREDITO EMILIANO 5.4 6/15/217 6/15/212 26,, 26,, n.a. n.a. n.a. IT48253 INTESA SANPAOLO /28/217 3/28/212 4,,, 4,,, n.a. n.a. n.a. IT BANCA POP MILANO* 5.9 3/23/217 3/23/212 5,, 5,, IT BANCA POP EMILIA 4.4 3/23/217 3/23/212 4,, 4,, IT48375 BANCO POPOLARE 3.7 3/23/217 3/23/212 1,6,, 1,6,, n.a. n.a. n.a. IT CASSA RISP FERRA 4.5 3/23/217 3/23/ ,, 125,, IT VENETO BANCA 5 3/23/217 3/23/212 3,, 3,, n.a. n.a. n.a. IT BANCA CARIGE /2/217 3/2/212 6,, 6,, IT MONTE DEI PASCHI 3.5 3/2/217 3/2/212 4,,, 4,,, IT BANCA BOLOGNA /28/217 2/28/212 3,, 3,, IT4815 BCC CARAVAGGIO 5.2 2/28/217 2/28/212 1,, 1,, IT BCC PONTASSIEVE 5 2/28/217 2/28/212 1,, 1,, IT BANCA CENTRO EMI /27/217 2/27/212 7,5, 7,5, IT STEFANO MARTELLA 6.5 2/27/217 2/27/212 23,, 23,, IT UBI BANCA SPCA /27/217 2/27/212 1,,, 1,,, n.a. n.a. n.a. IT BCC CASTIGLIONE 5 2/24/217 2/24/212 5,, 5,, IT BANCA CIVIDALE 6.5 2/23/217 2/23/212 5,, 5,, n.a. n.a. n.a. IT BP CIVIDALE SCPA 6.5 2/23/217 2/23/212 75,, 75,, IT48857 CASSA RAIFFEISEN 6 2/23/217 2/23/212 5,, 5,, IT BANCA MEDIO FVG 4.8 2/22/217 2/22/212 65,, 65,, IT48311 BANCA POP SPOLET 6 2/21/217 2/21/212 7,, 7,, n.a. n.a. n.a. IT48212 CASS RISP CHIETI 5.8 2/2/217 2/2/212 6,, 6,, IT CASSA CENTRALE 6 2/2/217 2/2/212 5,, 5,, IT CASSA RISP ASTI 6.5 2/2/217 2/2/212 1,, 1,, IT CASSA RISP BOLZA 5.5 2/17/217 2/17/212 2,, 2,, IT BANCA SELLA 6 2/16/217 2/16/212 1,, 1,, IT BANCA POP ALTO /3/217 2/3/212 8,, 8,, IT CR RAVENNA /3/217 1/3/212 9,, 9,, IT UNIPOL BANCA SPA /2/217 1/2/212 2,, 2,, IT DEXIA CREDIOP 8 1/17/217 1/17/212 4,, 4,, IT UNICREDIT SPA /16/217 1/16/212 8,, 8,, IT BANCA MARCHE 5.5 1/11/217 1/11/212 3,, 3,, IT CASSA RISP CESEN /9/217 1/9/212 1,, 1,, IT UNICREDIT SPA 6.5 1/2/217 1/2/212 2,5,, 2,5,, IT UNIONE DI BANCHE 7 1/2/217 1/2/212 1,,, 1,,, IT BCC COLLI MORENI 5.2 2/21/216 2/21/212 29,, 29,, IT UNICREDIT SPA 6 1/2/216 1/2/212 2,5,, 2,5,, IT BP CIVIDALE SCPA 5.6 6/27/215 6/27/212 1,, 1,, IT BANCA POP ETRURI 4.6 6/2/215 6/2/212 1,, 1,, n.a. n.a. n.a. IT CREDITO EMILIANO 4.2 6/15/215 6/15/212 54,, 54,, IT48246 INTESA SANPAOLO /28/215 3/28/212 4,,, 4,,, n.a. n.a. n.a. IT48667 BANCA POP EMILIA 4 3/23/215 3/23/212 85,, 85,, IT BANCO POPOLARE /23/215 3/23/212 1,4,, 1,4,, IT CASSA RISP FERRA 3.5 3/23/215 3/23/212 25,, 25,, IT48692 VENETO BANCA /23/215 3/23/212 7,, 7,, n.a. n.a. n.a. IT BANCA CARIGE 6 3/2/215 3/2/212 8,, 8,, IT CASSA RISP CENTO 5 3/2/215 3/2/212 9,, 9,, IT MONTE DEI PASCHI 2.6 3/2/215 3/2/212 6,,, 6,,, n.a. n.a. n.a. IT ,159,5, 37,159,5, *GGB according to unconfirmed UniCredit information. Source: Bloomberg, company data, UniCredit Research UniCredit Research page 6 See last pages for disclaimer.

7 Options to deal with leftover GGBs Reasons for choosing to sell on the secondary market Timing of entry into the secondary market How Italian banks have chosen among these options so far Options to deal with leftover GGBs Italian banks have different options available for dealing with leftover GGBs: 1. to use them in private repo transactions; 2. to sell them to investors or "non-own-use banks, which could then post them as collateral themselves; 3. to cancel them entirely with regulatory approval (e.g. EUR 12bn of Intesa GGBs on 11 March; UBI Banca did the same after reimbursing EUR 3bn of its GGBs on 7 March). GGBs with maturities in 217 that are sold on the secondary market would replace 3Y LTRO liquidity (which, due to its 215 maturity, is now effectively only short-term funding) with actual medium-term funding (maturity in 217) at cheap terms (tighter spreads) because of the attached guarantee (lowered by the guarantee fee). This guarantee would be of particular benefit to smaller and fundamentally weaker banks that still face restricted market access. There may also be some tactical selling well before 1 March 215 in order to avoid competition with other GGB issues, which would increasingly be entering the market starting some time at the end of 214. According to the Bank of Italy, several Italian banks have already announced their intention to cancel own-use GGBs before maturity with the intention of saving on commission fees for the state in light of reimbursing the 3Y LTROs. As stated, with its announcement on 7 March, UBI Banca joined those banks and cancelled EUR 3bn of its GGBs. Also, at the end of 213, Intesa reimbursed all of its EUR 36bn LTROs and switched some EUR 21bn of this into standard ECB open-market operations, with maturities ranging from one week to three months. Intesa said that this would give it more efficiency and flexibility in its liquidity management and a cheaper alternative to short-term wholesale funding. Also, on 11 March 214 and with regulatory approval, Intesa cancelled all EUR 12bn of its retained GGBs which had never been put on the market. In May, Banco Popolare s board of directors approved subject to receiving the necessary authorisation the cancellation of GGBs provided as collateral for the 3Y LTROs for a nominal EUR 3.1bn and partial early repayment of some EUR 2.8bn in LTRO financing. Also, on 15 May, UniCredit announced its intention to cancel GGBs with a combined nominal value of EUR 1.1bn, for which it said it already received the required authorizations. On the other hand, some GGBs have entered the secondary market and, despite our general view that only the ECB s ban on own-use of GGBs after 1 March 215 will put real pressure on Italian banks to deal with GGBs, some banks are even considering selling GGBs with earlier maturities on the secondary market, as was apparently the case with Cassa di Risparmio di Ferrara (CRFERR), Banca Monte dei Paschi di Siena (MONTE) and Unipol (UNIIM), for example. On 29 April 214, Banca Monte Paschi announced its plan to reduce its LTRO funds from EUR 28bn to EUR 24bn by end-april and to gradually repay LTRO funds thereafter in 214, according to Bloomberg. Given Banca Monte Paschi s fundamental weaknesses and its associated higher wholesale funding costs, we assume that this bank is a good candidate for placing own-use GGBs on the secondary market. GGBs enter the secondary market According to the Bank of Italy, as of 31 March, the face value of outstanding Italian GGBs fell to EUR 61bn from EUR 86bn in June 212, when the Ministry of the Economy and Finance (MEF) stopped granting guarantees. The EUR 25bn decrease consists of EUR 1bn of maturing securities and of EUR 15bn of cancelled securities to avoid paying commissions to the state. Own-use securities for refinancing operations represented 58.7% of the issued amount; cancelled bonds represented 17.6%; and matured bonds represented 11.8%. Securities in the secondary market represented 12% of all GGBs. Over 5% of these were deposited as collateral by other banks (especially by central credit institutions), and the remainder were either sold or committed to on the collateralized secondary market, according to the Bank of Italy. UniCredit Research page 7 See last pages for disclaimer.

8 Eligible bonds for the guarantee Eligible bonds for the guarantee Eligible debt securities for the guarantee were required to conform to several requirements (Article 8) and were granted by the Bank of Italy on the basis of the assessment of the capitalization of the applicant bank and its ability to cope with obligations (Article 8, sections 2 and 23). Also, the amount of the guarantee was required to be limited to that which was strictly necessary to restore the ability of medium-to-long-term funding for the respective bank (Article 8, section 6). What follows is a legally non-binding excerpt of these requirements from a credit analyst s perspective. The decree and subsequent law were only available in Italian, and we would advise investors to seek legal counsel before acting on this information: Implied within Article 8, sections 1 and 12, eligible security types for the guarantee were either newly issued senior unsecured or newly issued covered bonds. However, we do not know of any actual issue of a guaranteed covered bond. In particular, subordinated debt or capital instruments, structured or otherwise complex products or those having derivative components, were not permissible. According to our interpretation of Article 8, section 1a, securities can be issued under existing bond programs. The debt instruments cannot have any call dates before maturity, must have a fixed coupon and must be denominated in EUR (Article 8, section 1). While extensions are possible by prime ministerial decrees (Article 8, section 1), the allowed maturity for guarantees is generally between three months and five years from the date on which the decree took effect (22 December 211). The MEF was authorized to grant guarantees until 3 June 212 (Article 8, sections 1 and 1a). For Italian covered bonds (conforming to Article 7-bis of law No. 13 from 3 April 1999), for which we know of no actual issue, the maximum term was seven years (Article 8, sections 1 and 1 a). Issuers were required to be Italian banks with a registered office in Italy (Article 8, section 5), and the Bank of Italy had to determine whether the issuer would conform to certain conditions, such as capital adequacy ratios or its ability to meet its obligations (Article 8, section 2). According to Article 8, section 13, the principal of GGBs with a maturity of more than three years could not be greater than a third of the total principal of an issuer s GGBs, and the total amount of GGBs for an issuer could not exceed its regulatory (including Tier-3) capital (Article 8, section 9). According to Article 8, sections 7 and 8, while apparently not affecting guarantees that had already been granted (Article 8, section 8: fatte salve le operazioni già in essere ), the violation of certain rules (e.g. no abuse, such as marketing the guarantee in business communications, etc.) could lead to the exclusion of issuers from future guarantees and it could lead to the European Commission being notified. According to Article 8, sections 14 and 15, and for securities that are also not covered bonds (Article 7-bis of law No. 13 from 3 April 1999), the quarterly payable, annual guarantee fee is based on the nominal amount and the duration of the respective GGB. It consists of a fixed percentage fee (.4pp for maturities over one year or.5pp below one year) plus a risk-related fee, which is generally based on ratings (maturity <one year) or CDS prices (maturity >one year). The fee could not be changed once a guarantee was granted but it could be adapted to future guarantees (Article 8, section 2). UniCredit Research page 8 See last pages for disclaimer.

9 Nature of the guarantee: 1. Explicit 2. Irrevocable 3. Unconditionality? Nature of the guarantee As credit analysts, we cannot provide a legal opinion on the nature or other legal aspects of the guarantee, according to Article 8 of Decree No. 21 (6 Dec 211), which was converted into Law No. 214 (22 Dec 211). Both of these are also only available in Italian, and what follows is an overview from a credit analyst s perspective. A real guarantee (according to our definition) has to fulfil three criteria: 1. it must be explicit, 2. it must be irrevocable and 3. it must be unconditional. 1. A guarantee is explicit if it is explained somewhere, for example, in a specific law, in the bond documentation or in the EMTN program. 2. A guarantee is irrevocable if the guarantee on a bond/issuance program/issuer cannot be removed, i.e. grandfathering exists for all guaranteed bonds. 3. A guarantee is unconditional if the investor can claim the principal and interest directly from the guarantor without any conditions attached. Recently, another feature of a real guarantee has become popular: a guarantee on first demand. With this feature, the guarantor must provide interest/redemption payments immediately upon the investor s first request ( at first demand ). To us, this is implied by a guarantee s unconditional attribute but with increasing sensitivity towards the exact design of guarantee structures, attaching at first demand to a guarantee seems to reassure investors. Looking at the guarantees for the Italian bank bonds, we can make the following observations: The guarantees are explicit, given that they are spelled out in a specific law (Article 8, section 3: La garanzia dello Stato di cui al comma 1 è incondizionata, irrevocabile e a prima richiesta / The guarantee of the state, referred to in paragraph 1, shall be unconditional and irrevocable and first demand ). The guarantee is irrevocable, according to the wording of Article 8, section 3. While violating certain rules (Article 8, sections 7 and 8: e.g. no abuse, such as marketing the guarantee in business communications, etc.) could lead to the exclusion of issuers from future guarantees and it could lead to the European Commission being notified, we understand that a violation would not affect guarantees that have already been granted (Article 8, section 8: fatte salve le operazioni già in essere ). The guarantee is on first demand (Article 8, section 3) by the Italian state and covers principal and interest (Article 8, section 11). However, there are doubts about the unconditionality of the securities: According to Article 8, section 26, the defaulting bank is required to submit a reasoned request to the Department of the Treasury and to the Bank of Italy, to which the relevant documents are attached and in which those financial instruments or contractual obligations that require the intervention and the amounts owed are indicated. The request should normally be made di norma" at least 3 days before the expiration of the guaranteed liabilities (due dates of principal or interest), except in cases of substantiated urgency. In our view, this requirement could potentially be regarded as a condition, and it is, therefore, not exactly clear what happens if the respective issuer does not apply for state intervention or does not do so in a timely enough fashion. Moreover, even if state intervention has been initiated, to our knowledge, it also remains unclear how or when investors actually receive payment and how and if investors need, or can enforce, this payment. UniCredit Research page 9 See last pages for disclaimer.

10 The application for state-guaranteed intervention will be evaluated for admissibility by the MEF s Treasury Department based on the Bank of Italy's evaluation, according to Article 8, section 27. The MEF s Treasury Department should then authorize the intervention of the guarantee on the day before the due date ( autorizza l'intervento della garanzia entro il giorno antecedente la scadenza dell'operazione ). Also, according to Article 8, section 27, where it is not possible to arrange the payment procedures on the basis of the above-mentioned authorization, the Bank of Italy will, apparently, make a payment to a collective account ( la Banca d'italia effettua il pagamento a favore dei creditori mediante contabilizzazione in conto sospeso collettivo ). The payment is to be affected within the following ninety days. While some investors may need 1% clarity on the matter of unconditionality, we feel that the reputational risk for the Italian sovereign to not honor the guarantee is too high. This has been the case so far for Austria, regarding discussions about the potential bail-in of guaranteed Hype Alpe Adria bonds (hot topic in early 214). Moreover, the wording of Article 8, section 3, is clear, and this would likely be one form of exegesis in court if it should come to that: 3. La garanzia dello Stato di cui al comma 1 è incondizionata, irrevocabile e a prima richiesta, which, as credit analysts, we translate as 3. the guarantee of the state, referred to in paragraph 1, shall be unconditional and irrevocable first demand. To summarize, we believe that, despite the questions surrounding the matter of unconditionality, we (as credit analysts) consider the credit risk of Italian GGBs to be aligned with that of the Italian sovereign. Risk-weighting of GGBs Liquidity coverage ratio eligibility of GGBs ECB eligibility for non-ownuse GGBs Implementation of the guarantee for the individual GGB Aftermath of guarantee intervention for the issuer RWAs, LCR, non-own-use With respect to the Regulation EU No 575/213 (the Capital Requirements Regulation [CRR]), exposures to EU member states' central governments, which are denominated and funded in the domestic currency of that central government, can be assigned a risk weight of %. If the guarantee of a GGB is explicit, irrevocable and unconditional, the same risk weight (i.e. %) can be assigned to that GGB. However, if a non-eu country invests in an Italian GGB, the risk-weighting depends on the rating of the warrantor, currently 5% for Italy. With respect to the CRR, transferable assets representing claims on, or guaranteed by, the central government of a member state qualify as extremely high quality liquid assets (Level 1 in Basel III terminology). Hence, we deem these bonds to be fully eligible for the liquidity coverage ratio (LCR) without any haircut or other restrictions. As stated, as of 1 March 215, uncovered bank bonds issued by the counterparty using them, or by entities closely linked to the counterparty and fully guaranteed by a central government (such as a GGB) can no longer be used as collateral by such a counterparty directly or indirectly via covered bonds. However, a GGB can be sold on the secondary market and can be used as ECB collateral by the buyer, while the risk weighting is % if the buyer is a bank in an EU member state. As we understand Article 8, section 1a, the guarantee could be implemented by adapting existing EMTN/bond program documentation or by creating a new program or specific new bond documentation. For example, with regard to its BPBARI 5% 6/28/217, Banca Popolare die Bari chose to refer to the guarantee in Article 9 of the Regolamento. While the International Swaps and Derivatives Association (ISDA) would have the final say, we assume that the non-payment of the principal or a coupon should constitute a general credit event and trigger the immediate payment of principal and accrued interest. Another aftermath of a guarantee intervention would be that the issuer would be required to repay with interest, and this situation will fall under the European rules on state aid. This would entail the submission of a restructuring plan to the European Commission within six months after the default (Article 8, sections 28 and 29). UniCredit Research page 1 See last pages for disclaimer.

11 Investment and pricing considerations Arguments for buying GGBs Potentially available GGB universe Pricing of GGBS In the hunt for yield, many investors have perceived BTPs as trading too tight, while, at same time, they consider Italian banks, especially smaller Italian banks, as unsecured exposure, to be too risky. Italian GGBs may offer a solution to this problem. In our view, Italian GGBs offer a similar credit risk as Italian BTPs (despite their unconditionality, as mentioned earlier) but offer more-interesting yields. We feel that the reputational risk of the Italian sovereign not honoring the guarantee is just too high, as has been the case so far with the GGBs from Austria, Tyrol and Hype Alpe Adria (a hot topic in early 214). The Italian GGBs we see on the secondary market are mostly from issuers with fundamental challenges, such as 3Y GGBs from MONTE. The pricing of Italian GGBs must take several topics into account: Given that ECB eligibility of own-use will end in end-february 215, very-interesting GGB spreads should only be observable after that cut-off date and should lead to a significant spread difference. Despite being guaranteed and, therefore, of similar credit risk to BTPs, Italian GGBs are non-rated, which rules them out for some investors and should lead to a spread premium. Moreover, one must incorporate doubts about the unconditionality of the bonds. The defaulting bank is required to submit an application to request state intervention, and it is not exactly clear how or when the investor will actually get paid. For details, please see above. Given the uncertainty of the unconditionality of GGBs, one cannot simply assign the same remaining credit risk as one allocates to BTPs but should add a spread for the issuer based on the senior unsecured spread. Again, it is hard to give a precise formula, as the bonds are neither senior unsecured nor actual BTPs but are somewhere in-between. Of course, national champions with good fundamentals, such as ISPIM, which apparently does not want to enter the secondary market, would have to be priced differently than smaller Italian banks that have no, or very weak, implicit support and weak fundamentals. This is especially acute for asset quality and capitalization, which is often very weak at smaller Italian banks due to the lasting economic challenges in Italy. The importance of the individual issuer s credit profile may lead to, or has already led to, issuer-linked risk lines. Apart from the fact that most GGBs are still at the ECB, the above bullet points and the often small outstanding amounts make illiquidity a real issue and should lead to the development of a spread premium. Also, GGBs are still in the early stages of entering the secondary market. It is difficult to incorporate all of these aspects into an exact formula. To give an extreme example, one could hardly compare a national champion s GGB, such as an ISPIM 4.28% 3/28/217 (again, ISPIM stated that it does not want to enter the secondary market), which has a very high outstanding amount of EUR 4bn, to a BCC CARAVAGGIO 5.2% 2/28/217 or to a BCC PONTASSIEVE 5% 2/28/217; both of these have an outstanding amount of EUR 1mn. One the other hand, despite its size, MONTE has already come to the secondary market (presumably to preempt the real wave of GGBs). Nevertheless, a combined premium of 5-6bp (ASW) and taking into account the senior unsecured issuer spread over BTP could be a first rule of thumb for value analysis. Thus, spreads of 7-9bp (ASW) over BTP can be very attractive. UniCredit Research page 11 See last pages for disclaimer.

12 Pricing of other bonds with government guarantees Such a pick-up is highly attractive when comparing other issuers with government guarantees. These can be found particularly among European agencies. There are many issuers with explicit, irrevocable and unconditional guarantees from their respective sovereigns. For example, bonds issued by the French agency UNEDIC (with an explicit, unconditional and irrevocable guarantee from the French sovereign) trade around 1-12bp above French sovereign bonds. Bonds issued by Spanish and Austrian agencies with a government guarantee (ICO, FADE, FROB, ASINFAG, OBND) trade in the area of 1-15bp above the Spanish/Austrian sovereign. The highest pick-up of guaranteed agencies over their sovereigns can be found in Germany. Here, the pick-up tends to be larger than it is in other countries due to the benchmark status and associated liquidity premium on Bunds. KFW currently trades with a pick-up of 25-35bp above the German sovereign, further highlighting the attractiveness of Italian GGBs. UniCredit Research page 12 See last pages for disclaimer.

13 Spread comparisons: Italian GGBs, BTPs, unsecured Spreads Italian GGBs, BTPs, unsecured Below, we provide spread comparisons of those Italian GGBs, BTPs and bonds in the unsecured universe that are interesting as a result of their spread levels and our pricing criteria. Also included in the comparison are those bonds that we assume already have (or may) enter the secondary market. The comparison builds on our statements in the section above, titled How Italian banks have chosen between these options so far. We assume that the most likely Italian GGBs to enter the secondary market will probably be 5Y (a result of the ECB s ban on own-use and 3Y LTRO maturities in 215) from issuers that face fundamental challenges, such as MONTE; that have rather difficult market access; or those issuers for whom entering the market makes clear sense from an economic perspective. For this last category of issuer, the spread difference to muchmore-expensive unsecured funding makes entering the secondary market very attractive, even if the guarantee fees are higher for issuers with weaker ratings or fundamentals. ITALIAN GGB VS. UNSECURED VS. BTP (ASW SPREAD) ITALIAN GGB VS. BTP (ASW SPREAD) 3 25 BANCAR 6% 3/15 BPBARI 5% 6/17 PMIIM 5.9% 3/17 bp 25 unsecured 2 15 GGB 1 5 BTP mdur bp CRFERR 3.5% 3/15 CASBOL 5.5% 2/17 2 CRFERR 4.5% 3/17 BANMAR 5.5% 1/17 DEXGRP 8% 1/17 15 BANCAR 6.75% 3/17 BPEIM 4.4% 3/17 CRDEM 4.2% 6/15 UNIIM 5.55% 1/17 BPEIM 4% 3/15 GGB UCGIM 6.5% 1/17 MONTE 3.5% 3/17 1 BTPS 4.75% 5/17 CARCES 5.75% 1/17 BCGAR 5.2% 2/16 5 CIVIDA 6.5% 2/17 BTP BTPS 3% 4/15 BANBOL 5.75% 2/17 CIVIDA 5.6% 6/15 BNSELL 6% 2/17 CENTO 5% 3/15 UCGIM 6% 1/ mdur BANCAR (ASW SPREAD) BANMAR (ASW SPREAD) bp 35 BANCAR (GGB) BANCAR (unsec.) 3 BTP 25 BANCAR 6% 3/ BANCAR 3% 3/15 1 BANCAR 3.5% 2/15 5 BANCAR 3% 2/17 BANCAR 6.75% 3/17 BANCAR 4% 11/17 BANCAR 3.25% 7/17 BTPS 4.75% 5/17 bp BANMAR (GGB) BANMAR (unsec.) BTP BANMAR 5.5% 1/17 BANMAR 4.2% 4/17 BANMAR 4.25% 4/17 BANMAR 5.75% 6/17 BTPS 4.75% 5/17 BANMAR 5.3% 7/17 BANMAR 4.5% 7/17 BTPS 3% 4/ mdur mdur Source: iboxx, MarkIT, Bloomberg, UniCredit Research UniCredit Research page 13 See last pages for disclaimer.

14 BPBARI (ASW SPREAD) BPEIM (ASW SPREAD) bp BPBARI (GGB) BPBARI (unsec.) BTP BPBARI 2.75% 9/16 BPBARI 3.5% 4/17 BPBARI 5% 6/17 BTPS 4.75% 5/17 bp BPEIM (GGB) BPEIM (unsec.) BTP BPEIM 3.2% 6 5/15 BPEIM 3% 5/15 BPEIM 1.75% 2/17 BPEIM 4.85% BPEIM 5% 4/17 1/16 BPEIM 4.4% 3/17 BTPS 4.75% 5/17 BTPS 2.25% 5/ mdur BTPS 3% 4/ mdur CARCES (ASW SPREAD) CASBOL (ASW SPREAD) bp 3 2 CARCES (GGB) CARCES (unsec.) BTP CARCES 1.6% 7/16 CARCES 3.4% 9/17 CARCES 1.8% 8/17 bp CASBOL 2.5% 7/16 CASBOL 5.5% 2/17 CASBOL 2.5% 6/17 1 BTPS 4.75% 5/17 CARCES 5.75% 1/ mdur 1 CASBOL (GGB) BTPS 3.75% BTPS 4.75% CASBOL (unsec.) 8/16 5/17 BTP mdur CIVIDA (ASW SPREAD) CRDEM (ASW SPREAD) bp 2 14 CIVIDA (GGB) CIVIDA (unsec.) BTP 8 CIVIDA 5.6% 6/15 CIVIDA 4.5% 3/17 CIVIDA 4% 2/17 CIVIDA 6.5% 2/17 CIVIDA 3.25% 8/17 CIVIDA 3.15% 8/17 2 BTPS 3% 4/ mdur BTPS 4.75% 5/17 bp CRDEM (GGB) CRDEM (unsec.) BTP CRDEM 4.2% 6/15 BTPS 4.5% 5 7/15 BTPS 3% 4/15 BTPS 3% 6/15 BTPS 3.75% 8/ mdur Source: iboxx, MarkIT, Bloomberg, UniCredit Research UniCredit Research page 14 See last pages for disclaimer.

15 CRFERR (ASW SPREAD) DEXGRP (ASW SPREAD) bp 21 CRFERR 3.5% 3/ CRFERR 4.25% 1/15 CRFERR 4.575% 2/17 CRFERR 3.4% 9/17 CRFERR 4.5% 3/17 BTPS 4.75% 5/17 6 CRFERR (GGB) BTPS 3% 4/15 CRFERR (unsec.) BTP mdur bp DEXGRP 3.6% 6/16 DEXGRP 8% 1/17 DEXGRP 5% 12/17 1 DEXGRP (GGB) BTPS 4.75% DEXGRP (unsec.) BTPS 2.25% 5/17 5/16 BTP mdur MONTE (ASW SPREAD) PMIIM (ASW SPREAD) MONTE (GGB) MONTE (unsec.) BTP MONTE 4.1% 11/16 MONTE 4.3% 3/17 MONTE 4.5% 4/ PMIIM 2.9% 8/16 PMIIM 2% 3/17 PMIIM 2% 1/17 PMIIM 5.9% 3/17 PMIIM 3.875% PMIIM 2.25% 1/17 3/17 bp 15 BTPS 2.75% 11/16 MONTE 4.2% 3/17 MONTE 3.5% 3/17 BTPS 4.75% 5/ mdur bp BTPS 4.75% 5/17 1 BTPS 3.75% 8/16 PMIIM (GGB) PMIIM (unsec.) BTP mdur UNIIM (ASW SPREAD) VENBAN (ASW SPREAD) NO PRICING FOR GGB AVAILABLE 2 UNIIM 5% 1/17 UNIIM 5.55% 1/17 UNIIM 3% 5/17 UNIIM 2.5% 3/ VENBAN (unsec.) BTP VENBAN 4% 1/17 VENBAN 4.5% 12/17 bp 1 BTPS 3.75% 8/16 BTPS 4.75% 5/17 UNIIM (GGB) UNIIM (unsec.) BTP mdur bp 2 1 BTPS 4.75% 5/ mdur Source: iboxx, MarkIT, Bloomberg, UniCredit Research UniCredit Research page 15 See last pages for disclaimer.

16 Selected issuers overall maturity overviews up to 217 Who is likely to convert LTRO/GGB short-term funding into (cheap) medium-term funding? Selected issuers maturity overviews up to 217 The following is an analysis of Italian bank issuers overall maturity overviews up to 217. The issuers included are those which we find interesting according to the above analysis of their spread levels, according to our pricing criteria and due to the fact that we assume they have already entered or may enter the secondary market. The aim of this analysis was to identify those issuers that are likely to convert LTRO/GGB short-term funding into (cheap) mediumterm funding. There are two things to look out for: 1. Which issuers have material (including LTRO) funding maturing in 215 that could be replaced by GGBs that mature in 217? 2. Which issuers have material maturities of GGBs in 217 that could be used to replace such short-term funding (especially LTRO funding) that matures in 215? This can be seen above in the list of GGBs that mature after 1 March 215. BANCAR (EUR MN) BANMAR (EUR MN) 35 3 Subordinated Senior Secured Senior Unsecured Government-Guaranteed Debt Subordinated Senior Secured Senior Unsecured Government-Guaranteed Debt BPBARI (EUR MN) BPEIM (EUR MN) 6 5 Subordinated Senior Unsecured Subordinated Senior Secured Senior Unsecured Government-Guaranteed Debt Source: Bloomberg UniCredit Research page 16 See last pages for disclaimer.

17 CARCES (EUR MN) CASBOL (EUR MN) 3 25 Subordinated Senior Unsecured 8 7 Senior Unsecured Government-Guaranteed Debt CIVIDA (EUR MN) CRDEM (EUR MN) 25 2 Subordinated Senior Unsecured Government-Guaranteed Debt 3 25 Subordinated Senior Secured Senior Unsecured Government-Guaranteed Debt CRFERR (EUR MN) DEXGRP (EUR MN) Subordinated Senior Unsecured Government-Guaranteed Debt Subordinated Junior Subordinated Senior Unsecured Senior Secured Government-Guaranteed Debt Source: Bloomberg UniCredit Research page 17 See last pages for disclaimer.

18 MONTE (EUR MN) PMIIM (EUR MN) 25 2 Subordinated Senior Unsecured Government-Guaranteed Debt Junior Subordinated Senior Secured Subordinated Senior Unsecured Senior Secured UNIIM (EUR MN) VENBAN (EUR MN) 9 8 Subordinated Senior Unsecured Government-Guaranteed Debt 25 Subordinated Senior Unsecured Government-Guaranteed Debt Source: Bloomberg UniCredit Research page 18 See last pages for disclaimer.

19 Selected issuers ratings, P&L, B/S & key ratios SELECTED ISSUERS RATINGS Agency Moody's Banca Carige Caa1 outlook negative S&P B- watch negative Fitch BB outlook negative Banca Popolare di Milano Scarl B1 outlook negative B+ watch negative BB+ outlook negative Banca Popolare di Bari Cassa di Risparmio di Bolzano -- Ba1 outlook negative Banca Popolare dell'emilia Romagna BB- Watch positive BB+ outlook negative Cassa di risparmiodi Ferrara Credito Emiliano Baa3 outlook negative -- BBB- outlook negative -- BBB+ outlook negative Dexia Crediop B2 outlook stable BBoutlook negative BBB outlook negative Source: Rating agencies; UniCredit Research SELECTED ISSUERS P&L HIGHLIGHTS (1Q14) Figures in EUR mn Banca Carige* Banca Popolare di Milano Scarl Banca Popolare di Bari* Cassa di Risparmio di Bolzano* Banca popolare dell'emilia Romagna Cassa di risparmio di Ferrara** Credito Emiliano Dexia Crediop* Net interest revenue Net Fees & commissions Trading income Other Operating Income n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Net Income -1, Total Non-interest expenses Loan-loss provisions 1, Operating profit Pre-tax profit -2, Attributable net profit -1, *Data as of FY13; **data as of FY12; Source: Rating agencies, Bankscope, company data, UniCredit Research SELECTED ISSUERS : B/S HIGHLIGHTS (1Q14) Figures in EUR mn Assets Banca Carige* Banca Popolare di Milano Scarl Banca Popolare di Bari* Cassa di Risparmio di Bolzano* Banca popolare dell'emilia Romagna Cassa di risparmio di Ferrara** Credito Emiliano Dexia Crediop* Cash & cash equivalents Liquid Assets 1,694. 4, , , , ,22.3 Securities 11, , , ,78.8 9, ,47. 8, ,27.9 Customer loans 25, , , , , , , ,912.7 Total assets 42, ,25.5 1, , , , , ,37.1 Risk-weighted assets 21, , , , , , , ,441.6 Liabilities & Equity Total Customer Deposits 14, ,775. 5, , , , , Senior Debt Maturing after 1 Year 9,37. 7, , , ,474. 6,119. 4,272. Subordinated Borrowing 1, , n.a. n.a. Total Equity 1, , , ,22.7 1,154.6 Total Liabilities and Equity 42, ,25.5 1, , , , , ,37.1 *Data as of FY13; **Data as of FY12; Source: Rating agencies, Bankscope, company data, UniCredit Research UniCredit Research page 19 See last pages for disclaimer.

20 SELECTED ISSUERS KEY RATIOS (1Q14) Figures in % Profitability Banca Carige* Banca Popolare di Milano Scarl Banca Popolare di Bari* Cassa di Risparmio di Bolzano* Banca popolare dell'emilia Romagna Cassa di risparmio di Ferrara** Credito Emiliano Dexia Crediop* Net Interest Margin Cost to Income Ratio Return on Average Assets (ROAA) Return on Average Equity (ROAE) Liquidity Interbank Ratio Loans / Customer Deposits n.a. Net Loans / Total Assets Liquid Assets / Dep & ST Funding Asset quality Loan Loss Reserve / Gross Loans NPL ratio NPL coverage Capital Tier 1 Regulatory Capital Ratio Total Capital Ratio Equity / Total Assets *Data as of FY13; **Data as of FY12; Source: Rating agencies, Bankscope, company data, UniCredit Research UniCredit Research page 2 See last pages for disclaimer.

21 Trade ideas Trade ideas Assuming the respective GGBs should enter/remain on the secondary market at current price levels, we suggest the following trade ideas (see also table below), which are based on the following: 1. our pricing advice on Italian GGBs, 2. the above spread differences between the respective issuers GGBs to BTPs and unsecured bonds, 3. the maturity profiles of the respective issuers and 4. the above fundamental overview. Nevertheless, GGBs often require counterparty credit lines. Many GGBs and their respective comparable unsecured bonds may have very small outstanding and often very illiquid issues of these credit lines; in some cases, they amount to less than a few million euros. The indicated price levels should, therefore, be taken only as a current indication and can easily be distorted by small market transactions. GGBs may, therefore, potentially have to be held to maturity. We are currently restricted with regards to BANCAR and BANMAR and cannot comment on these names. Also, given UBI Banca s recent behavior, we do not expect UNIONE DI BANCHE 7% 1/2/217 to be realistically available, at least not at these price levels. Given these caveats, we find these Italian GGBs interesting (listed according to falling maturities after February 215): INVESTMENT IDEAS: ITALIAN GGBS MATURING AFTER FEBRUARY 215 (ALL BULLET EUR, NON-RATED) Short name Coupon Maturity Issue date Amount issued Amount outstanding Ask price YAS ASW spread Ask yield to maturity ISIN number BANCA POP BARI* 5 6/28/217 6/28/212 14,, 14,, IT BANCA POP MILANO* 5.9 3/23/217 3/23/212 5,, 5,, IT CASSA RISP FERRA 4.5 3/23/217 3/23/ ,, 125,, IT VENETO BANCA 5 3/23/217 3/23/212 3,, 3,, n.a. n.a. n.a. IT BANCA POP EMILIA 4.4 3/23/217 3/23/212 4,, 4,, IT48375 CASSA RISP FERRA 4.5 3/23/217 3/23/ ,, 125,, IT MONTE DEI PASCHI 3.5 3/2/217 3/2/212 4,,, 4,,, IT CASSA RISP BOLZA 5.5 2/17/217 2/17/212 2,, 2,, IT UNIPOL BANCA SPA /2/217 1/2/212 2,, 2,, IT DEXIA CREDIOP 8 1/17/217 1/17/212 4,, 4,, IT UNIONE DI BANCHE 7 1/2/217 1/2/212 1,,, 1,,, IT CREDITO EMILIANO 4.2 6/15/215 6/15/212 54,, 54,, IT48246 BANCA POP EMILIA 4 3/23/215 3/23/212 85,, 85,, IT *GGB according to unconfirmed UniCredit information. Source: Bloomberg, company data, UniCredit Research ITALIAN GGB VS. UNSECURED VS. BTP (ASW SPREAD) ITALIAN GGB VS. BTP (ASW SPREAD) 3 25 BANCAR 6% 3/15 BPBARI 5% 6/17 PMIIM 5.9% 3/17 bp 25 unsecured 2 15 GGB 1 5 BTP mdur bp CRFERR 3.5% 3/15 BPEIM 4% 3/15 BTPS 3% 4/15 CIVIDA 5.6% 6/15 CENTO 5% 3/15 CRDEM 4.2% 6/15 BCGAR 5.2% 2/16 BTP UCGIM 6% 1/16 GGB CRFERR 4.5% 3/17 BANMAR 5.5% 1/17 DEXGRP 8% 1/17 BANCAR 6.75% 3/17 BPEIM 4.4% 3/17 UNIIM 5.55% 1/17 CARCES 5.75% 1/17 BANBOL 5.75% 2/17 CASBOL 5.5% 2/17 UCGIM 6.5% 1/17 MONTE 3.5% 3/17 BTPS 4.75% 5/17 CIVIDA 6.5% 2/17 BNSELL 6% 2/ mdur Source: iboxx, MarkIT, Bloomberg, UniCredit Research UniCredit Research page 21 See last pages for disclaimer.

22 List of all outstanding Italian GGBs ITALIAN GGBS SINCE END-211 (ALL BULLET EUR, NON-RATED) Short Name Coupon Maturity Issue Date Amount Issued Amount Outstanding Ask Price YAS ASW Spread Ask Yield To Maturity ISIN Number ALTO CHIESE 5 2/21/215 2/21/212 24,, 24,, IT BA ALPI MARITTIM 5.2 2/21/215 2/21/212 48,, 48,, IT BA CARNIA GEMON 4 2/27/215 2/27/212 1,, 1,, IT BA CESENA E RONT 5 2/28/215 2/28/212 5,, 5,, IT BA FRUSINATE 5 2/28/215 2/28/212 2,, 2,, IT BA MALATESTIANA 5 2/27/215 2/27/212 1,, 1,, IT BA MANTOVACREDIT 4.5 2/28/215 2/28/212 4,, 4,, IT BA PICENA CAST /23/215 2/23/212 34,, 34,, IT BA PISTOIA SCARL /24/215 2/24/212 3,, 3,, IT BA POP VALCONCA 4.9 2/28/215 2/28/212 5,, 5,, IT BA PORDENONESE S 4 2/27/215 2/27/212 6,, 6,, IT BA PROVINCIA MAC 5 2/28/215 2/28/212 1,, 1,, IT BA ROMAGNA EST 5 2/28/215 2/28/212 5,, 5,, IT BA ROMANO E SCA 4.9 2/24/215 2/24/212 21,, 21,, IT BA SALA CESENATI 5 2/27/215 2/28/212 44,, 44,, IT BA SAN MARCO DEI 5 2/28/215 2/28/212 5,, 5,, IT BA TUSCIA CREDIT 5 2/27/215 2/27/212 4,, 4,, n.a. n.a. n.a. IT BA UDINE SCPARL 4.5 2/27/215 2/27/212 13,5, 13,5, IT BA VALDARNO CRED 4 2/24/215 2/24/212 45,, 45,, IT BA VITERBO SCARL 5 2/2/215 2/2/212 35,, 35,, IT BAN PO PUG BASIL 4.5 2/28/215 2/28/212 89,, 89,, IT BAN POP LAJATICO 5 2/2/215 2/2/212 43,, 43,, IT BANC AGRI RAGUSA 5 2/28/215 2/28/212 43,, 43,, IT48634 BANCA ATESTINA 6 2/24/215 2/24/212 8,6, 8,6, IT BANCA BERGAMASCA 4.5 2/24/215 2/24/212 35,, 35,, IT BANCA BOLOGNA /28/217 2/28/212 3,, 3,, IT4815 BANCA CARIGE 5.8 8/1/214 2/1/212 6,, 6,, IT BANCA CARIGE 6 3/2/215 3/2/212 8,, 8,, IT BANCA CARIGE /2/217 3/2/212 6,, 6,, IT BANCA CENTRO EMI 4.5 2/27/215 2/27/212 15,5, 15,5, IT BANCA CENTRO EMI /27/217 2/27/212 7,5, 7,5, IT BANCA CIVIDALE 6 2/23/215 2/23/212 1,, 1,, IT BANCA CIVIDALE 6.5 2/23/217 2/23/212 5,, 5,, n.a. n.a. n.a. IT BANCA COOP VALSA 5 2/21/215 2/21/212 15,, 15,, n.a. n.a. n.a. IT BANCA CREMONESE 4 2/21/215 2/21/212 4,, 4,, IT BANCA FORLI' 5 2/27/215 2/27/212 4,, 4,, IT BANCA MARCHE 5 1/11/215 1/11/212 7,, 7,, IT BANCA MARCHE 5.5 1/11/217 1/11/212 3,, 3,, IT BANCA MEDIO FVG 4.1 2/22/215 2/22/212 13,, 13,, IT48329 BANCA MEDIO FVG 4.8 2/22/217 2/22/212 65,, 65,, IT48311 BANCA POP ALTO 4.5 2/3/215 2/3/212 17,, 17,, IT BANCA POP ALTO /3/217 2/3/212 8,, 8,, IT BANCA POP BARI* 5 6/28/217 6/28/212 14,, 14,, IT BANCA POP EMILIA 4 3/23/215 3/23/212 85,, 85,, IT BANCA POP EMILIA 4.4 3/23/217 3/23/212 4,, 4,, IT48375 BANCA POP ETRURI 4.6 6/2/215 6/2/212 1,, 1,, n.a. n.a. n.a. IT BANCA POP MILANO* 5.9 3/23/217 3/23/212 5,, 5,, IT BANCA POP SPOLET 5 2/21/215 2/21/212 14,, 14,, n.a. n.a. n.a. IT4822 BANCA POP SPOLET 6 2/21/217 2/21/212 7,, 7,, n.a. n.a. n.a. IT48212 BANCA REG CRED 5 2/23/215 2/23/212 6,, 6,, IT BANCA SAN GIORGI 5 2/24/215 2/24/212 65,, 65,, IT BANCA SCAFATI 5 2/27/215 2/27/212 7,, 7,, IT BANCA SELLA 5.5 2/16/215 2/16/212 2,, 2,, IT Continued overleaf UniCredit Research page 22 See last pages for disclaimer.

23 ITALIAN GGBS SINCE END-211 (ALL BULLET EUR, NON-RATED) CONTINUED Short Name Coupon Maturity Issue Date Amount Issued Amount Outstanding Ask Price YAS ASW Spread Ask Yield To Maturity ISIN Numb BANCA SELLA 6 2/16/217 2/16/212 1,, 1,, IT BANCO POPOLARE /23/215 3/23/212 1,4,, 1,4,, IT BANCO POPOLARE /28/215 2/28/212 1,7,, 1,7,, n.a. n.a. n.a. IT BANCO POPOLARE 3.7 3/23/217 3/23/212 1,6,, 1,6,, n.a. n.a. n.a. IT BCA COOP TRIUGGI /28/215 2/28/212 3,, 3,, IT BCA CRD COOP SES 6 2/24/215 2/28/212 29,, 29,, IT BCC ABRUZZESE 5 2/24/215 2/24/212 7,, 7,, IT BCC ALBA LANGHE 4.5 2/22/215 2/22/212 1,, IT BCC ALTA BRIANZA /28/215 2/28/212 3,, 3,, IT BCC ANCONA 5 2/23/215 2/23/212 9,, 9,, IT BCC BASSA 4 2/27/215 2/27/212 2,, 1,, IT BCC BENE VAGIENN 5 2/24/215 2/24/212 37,, 37,, IT BCC BUSTO GAROLF 5 2/28/215 2/28/212 43,, 43,, IT BCC CAMPIGLIA DE 4.5 2/23/215 2/23/212 7,5, 7,5, IT BCC CAPACCIO 4.5 2/27/215 2/27/212 1,, 1,, IT BCC CARATE BRIAN 4.8 2/24/215 2/24/212 15,, 15,, IT BCC CARAVAGGIO 4.8 2/28/215 2/28/212 22,, 22,, IT BCC CARAVAGGIO 5.2 2/28/217 2/28/212 1,, 1,, IT BCC CARSO SCPARL 4 2/27/215 2/27/212 24,, 24,, IT BCC CARTURA 5 2/24/215 2/24/212 2,8, 2,8, IT BCC CASALGRASSO /24/215 2/24/212 39,, 39,, IT BCC CASTAGNETO C 5 2/24/215 2/24/212 42,, 42,, IT48618 BCC CASTEL GOFFR /21/215 2/21/212 23,, 23,, IT BCC CASTELLI ROM 5.3 2/23/215 2/23/212 6,15, 6,15, IT BCC CASTENASO 4.9 2/2/215 2/2/212 18,, 18,, IT BCC CASTIGLIONE 4.5 2/24/215 2/24/212 15,, 15,, IT BCC CASTIGLIONE 5 2/24/217 2/24/212 5,, 5,, IT BCC CHERASCO 5.1 2/23/215 2/23/212 58,, 18,, IT BCC CHIANTI FIOR /21/215 2/21/212 16,, 16,, n.a. n.a. n.a. IT BCC COLLI MORENI 5 2/21/215 2/21/212 75,, 75,, IT BCC COLLI MORENI 5.2 2/21/216 2/21/212 29,, 29,, IT BCC CORINALDO 5 2/23/215 2/23/212 15,, 15,, IT BCC CREDIUMBRIA 4.6 2/27/215 2/27/212 31,, IT BCC DELLA MARCA 6 2/24/215 2/24/212 9,4, 9,4, IT BCC DI FANO 5 2/23/215 2/23/212 44,, IT BCC DI TERAMO 5 2/24/215 2/24/212 5,7, 5,7, IT BCC DOBERDO E SA 4 2/23/215 2/23/212 5,5, 5,5, IT BCC FALCONARA /27/215 2/27/212 22,, 22,, IT BCC FILOTTRANO 5 2/23/215 2/23/212 35,, 35,, IT BCC FIUGGI 5 2/28/215 2/28/212 5,, 5,, IT BCC FIUMICELLO E 4 2/27/215 2/27/212 11,, 11,, IT BCC GAMBATESA 5 2/27/215 2/27/212 3,3, 3,3, n.a. n.a. n.a. IT BCC GARIGLIANO 5 2/23/215 2/23/212 3,3, 3,3, n.a. n.a. n.a. IT BCC GATTEO /27/215 2/27/212 35,, 35,, IT BCC GHISALBA 4.5 2/28/215 2/28/212 45,, 45,, IT BCC GRADARA 5 2/27/215 2/27/212 31,, 31,, IT BCC IMPRUNETA 5 2/27/215 2/27/212 18,, 18,, IT BCC INZAGO 4.5 2/24/215 2/24/212 1,, 1,, IT BCC LESMO 5 2/24/215 2/24/212 9,, 9,, IT BCC MARCON 4 2/24/215 2/24/212 25,, 25,, IT BCC MASIANO 4 2/24/215 2/24/212 15,, 15,, IT BCC METAURO-SCRL 4.5 2/23/215 2/23/212 39,, 39,, IT BCC MONTECORVINO 5 2/27/215 2/27/212 5,, 5,, IT BCC MONTEPULCIAN 5 2/2/215 2/2/212 2,, 2,, IT BCC NETTUNO 5 2/23/215 2/23/212 2,2, 2,2, n.a. n.a. n.a. IT BCC PACHINO 4.5 2/23/215 2/23/212 1,2, 1,2, IT Continued overleaf UniCredit Research page 23 See last pages for disclaimer.

24 ITALIAN GGBS SINCE END-211 (ALL BULLET EUR, NON-RATED) CONTINUED Short name Coupon Maturity Issue date Amount issued Amount outstanding Ask price YAS ASW spread Ask yield to maturity ISIN number BCC PERGOLA 5 2/23/215 2/23/212 35,, IT BCC PIANFEI E RO 5.2 2/22/215 2/22/212 17,, IT BCC PICENA 5 2/23/215 2/23/212 35,, 35,, IT BCC PIOVE DI SAC 5 2/27/215 2/27/212 5,, 5,, IT BCC PITIGLIANO /27/215 2/27/212 9,, 9,, IT BCC POLESINE - R 5 2/24/215 2/24/212 15,, 15,, IT BCC POMPIANO FR 5.2 2/21/215 2/21/212 2,, 2,, IT BCC PONTASSIEVE 4.5 2/28/215 2/28/212 2,, 2,, IT BCC PONTASSIEVE 5 2/28/217 2/28/212 1,, 1,, IT BCC PRATOLA PELI 5 2/27/215 2/27/212 22,, 22,, IT BCC RIANO 5 2/23/215 2/23/212 2,1, 2,1, n.a. n.a. n.a. IT BCC RIPATRANSONE 4.5 2/23/215 2/23/212 13,6, 13,6, IT BCC S. PIETRO IN /27/215 2/27/212 16,, 16,, IT47982 BCC SAN BIAGIO 5 2/24/215 2/24/212 32,, 32,, IT BCC SAN GIORGIO 4 2/24/215 2/24/212 23,8, 23,8, IT BCC SAN GIOVANNI 5 2/27/215 2/27/212 25,, 25,, IT BCC SANGRO TEATI 5 2/24/215 2/24/212 8,9, 8,9, IT BCC SANT ELENA /24/215 2/24/212 42,, 42,, IT BCC SIGNA 4 2/21/215 2/21/212 35,, 35,, IT BCC SORISOLE E L 4.5 2/24/215 2/24/212 15,, 15,, IT BCC STARANZANO 4 2/27/215 2/27/212 12,, 12,, IT BCC VALLE TRIGNO 4.8 2/24/215 2/24/212 5,, 5,, IT BCC VELINO 5 2/23/215 2/23/212 4,4, 4,4, n.a. n.a. n.a. IT BCC VENEZIANO 5 2/24/215 2/24/212 3,, 3,, IT BCC VERGATO 4.5 2/27/215 2/27/212 7,, 7,, IT BCC VIGNOLE 4.5 2/24/215 2/24/212 28,, 28,, IT BP CIVIDALE SCPA 5.6 6/27/215 6/27/212 1,, 1,, IT BP CIVIDALE SCPA 6 2/23/215 2/23/212 55,, 55,, IT BP CIVIDALE SCPA 6.5 2/23/217 2/23/212 75,, 75,, IT48857 C RAIFF VAL BADI 5 2/27/215 2/28/212 25,, 25,, IT C RAIFF VALLE IS 5 2/27/215 2/28/212 13,, 13,, IT CASS RISP CHIETI 5 2/2/215 2/2/212 12,, 12,, IT CASS RISP CHIETI 5.8 2/2/217 2/2/212 6,, 6,, IT CASSA ALDENO 5 2/21/215 2/21/212 32,, 32,, IT CASSA BRUNICO 5 2/27/215 2/28/212 36,5, 36,5, IT CASSA CENTRALE 5 2/2/215 2/2/212 1,, 1,, IT CASSA CENTRALE 6 2/2/217 2/2/212 5,, 5,, IT CASSA DI RISPARM 5 1/16/215 1/16/212 1,, 1,, IT CASSA PADANA BCC 4.5 2/21/215 2/21/ ,, 125,, IT47966 CASSA RAIFFEISEN 5 2/22/215 2/23/212 11,, 11,, IT CASSA RAIFFEISEN 6 2/23/217 2/23/212 5,, 5,, IT CASSA RISP ASTI 5.5 2/2/215 2/2/212 24,, 24,, IT CASSA RISP ASTI 6.5 2/2/217 2/2/212 1,, 1,, IT CASSA RISP BOLZA 4.5 2/17/215 2/17/212 4,, 4,, IT CASSA RISP BOLZA 5.5 2/17/217 2/17/212 2,, 2,, IT CASSA RISP CENTO 5 3/2/215 3/2/212 9,, 9,, IT CASSA RISP CESEN 5.5 1/9/215 1/9/212 2,, 2,, IT CASSA RISP CESEN /9/217 1/9/212 1,, 1,, IT CASSA RISP FERRA 3.5 3/23/215 3/23/212 25,, 25,, IT48692 CASSA RISP FERRA 4.5 3/23/217 3/23/ ,, 125,, IT CASSA RURALE 5 2/2/215 2/2/212 25,, 25,, IT CC FRIULI SOC CO 4 2/27/215 2/27/212 39,, 39,, IT CERNUSCO NAVIGLI 4 2/28/215 2/28/212 35,, 35,, IT CR ALTA VALDISOL 5 2/21/215 2/21/212 19,, 19,, IT CR ALTO GARDA 5 2/21/215 2/21/212 62,, 62,, IT CR BASSA VALLAGA 5 2/21/215 2/21/212 15,, 15,, IT Continued overleaf UniCredit Research page 24 See last pages for disclaimer.

25 ITALIAN GGBS SINCE END-211 (ALL BULLET EUR, NON-RATED) CONTINUED Short name Coupon Maturity Issue date Amount issued Amount outstanding Ask price YAS ASW spread Ask yield to maturity ISIN number CR BASSA VALSUGA 5 2/21/215 2/21/212 13,, 13,, IT CR BASSA VALSUGA 5 2/21/215 2/21/212 8,, 8,, IT CR BRENTONICO 5 2/22/215 2/22/212 5,, 5,, IT CR ED ARTIGIANA /27/215 2/28/212 49,, 49,, IT CR ED ARTIGIANA 5 2/28/215 2/28/212 18,, 18,, IT CR FIEMME 5 2/21/215 2/21/212 3,, 3,, IT CR MEZZOCORONA 5 2/2/215 2/2/212 1,, 1,, IT CR MORI VAL GR 5 2/21/215 2/21/212 14,, 14,, IT CR PERGINE BCC 5 2/21/215 2/21/212 28,, 28,, IT CR RABBI E CALDE 4.5 2/23/215 2/23/212 7,, 7,, IT47958 CR RAVENNA 5 1/3/215 1/3/212 18,, 18,, IT CR RAVENNA /3/217 1/3/212 9,, 9,, IT CR ROVERETO CRED 5 2/2/215 2/2/212 16,, 16,, IT CR TASSULLO E NA 5 2/23/215 2/23/212 5,, 5,, IT CR TUENNO VAL NO 5 2/2/215 2/2/212 21,, 21,, IT CREDITO EMILIANO 4.2 6/15/215 6/15/212 54,, 54,, IT48246 CREDITO EMILIANO 5.4 6/15/217 6/15/212 26,, 26,, n.a. n.a. n.a. IT48253 CREDITO VALTELLI 5.2 1/2/215 1/2/212 1,,, 1,,, IT CREDITO VALTELLI 5.5 6/18/217 6/18/212 5,, 5,, n.a. n.a. n.a. IT CREDIVENETO COOP 5 2/27/215 2/27/212 3,, 3,, IT DEXIA CREDIOP 8 1/17/217 1/17/212 4,, 4,, IT INTESA SANPAOLO /28/215 3/28/212 4,,, 4,,, n.a. n.a. n.a. IT48667 INTESA SANPAOLO /28/217 3/28/212 4,,, 4,,, n.a. n.a. n.a. IT MONTE DEI PASCHI 2.6 3/2/215 3/2/212 6,,, 6,,, n.a. n.a. n.a. IT48437 MONTE DEI PASCHI 3.5 3/2/217 3/2/212 4,,, 4,,, IT MONTE DEI PASCHI 3.6 2/28/215 2/28/212 3,,, 3,,, n.a. n.a. n.a. IT48774 OSTRA E MORRO D' 5 2/27/215 2/27/212 22,5, 22,5, IT STEFANO MARTELLA 6 2/27/215 2/27/212 47,, 47,, IT STEFANO MARTELLA 6.5 2/27/217 2/27/212 23,, 23,, IT UBI BANCA SPCA /27/217 2/27/212 1,,, 1,,, n.a. n.a. n.a. IT UNICREDIT SPA /16/217 1/16/212 8,, 8,, IT UNICREDIT SPA 6 1/2/216 1/2/212 2,5,, 2,5,, IT UNICREDIT SPA 6.5 1/2/217 1/2/212 2,5,, 2,5,, IT UNIONE DI BANCHE 6.5 1/2/215 1/2/212 2,,, 2,,, n.a. n.a. n.a. IT UNIONE DI BANCHE 7 1/2/217 1/2/212 1,,, 1,,, IT UNIPOL BANCA SPA 4.9 1/2/215 1/2/212 4,, 4,, IT UNIPOL BANCA SPA /2/217 1/2/212 2,, 2,, IT VENETO BANCA /23/215 3/23/212 7,, 7,, n.a. n.a. n.a. IT VENETO BANCA 5 3/23/217 3/23/212 3,, 3,, n.a. n.a. n.a. IT TOTAL 53,3,95, 52,726,95, *GGB according to unconfirmed UniCredit information. Source: Bloomberg, company data, UniCredit Research UniCredit Research page 25 See last pages for disclaimer.

26 Italian economy Snapshot The Italian economy at a glance Taking stock of the further improvement in sentiment in April, our economists believe that economic activity data will soon catch up with the more upbeat message coming from the business surveys. Therefore, our economists continue to see GDP expanding by % annualized over the coming quarters. Nevertheless, GDP surprised on the downside in 1Q14, contracting by.1% qoq, after a marginal expansion in 4Q13. They were expecting a.2-.3% qoq expansion, consistently with the upward trend in monthly soft and hard data. Also, the weak start to the year mechanically lowers our full-year GDP forecast for 214 from.9% to.5%. ISTAT has not yet released numerical details for 1Q GDP, but it stated that, on the output side, the GDP fall stemmed from a contraction in industrial activity (including construction) and stagnation in the service sector. The weak performance of the industrial sector was driven by a large one-off drop in energy production monthly IP data suggest it was probably in the 4.% qoq area and a likely further sizeable drop in construction activity, which failed to benefit from mild weather. Regarding the stagnation in services, our economists note that this outcome was weaker than suggested by the ongoing improvement in the services PMI, whose quarterly average settled above the 5-threshold. Looking beyond 1Q, our economists remain comfortable with our view that the economic recovery will strengthen and become more broad-based. Beyond the surveys, this is suggested by the improvement already seen in key monthly hard data. Exports and industrial output, particularly, showed expansion in the sectors of capital and intermediate goods. Higher production of capital goods bodes well for the investment recovery. The end of profit recession and the liquidity provided by the re-payment of public sector arrears are expected to fuel the process. The recovery in private consumption is projected to be more gradual, given a slower recovery in the Italian labor market compared to eurozone peers. However, consumer confidence recorded an improvement recently, amid weak inflation, and this trend is expected to be reinforced by the reduction in the personal income tax for low-income households, which was approved by the government in April. The outlook of public finance remains constructive. The fiscal deficit target, in terms of percentage of GDP (Maastricht definition), was set by the government in April at 2.6% for 214 (vs. 3.% in 213), slightly above the previous target (2.5%) and in line with our expectations. However, 1Q GDP is likely to generate a small fiscal slippage to the tune of.1-.2pp. The early indications coming from the state-sector borrowing requirement (SSBR), which is computed on cash basis and is the more up-to-date statistics available, reveal a trend towards improvement. In January-April, the SSBR amounted to about EUR 42bn vs. EUR 48bn in 213 and a government target for the full year of EUR 76bn (or 4.8% of GDP, including the arrears effect). UniCredit Research page 26 See last pages for disclaimer.

27 ITALY: RATINGS Agency Long-term issuer rating Outlook Short-term issuer rating Moody's Baa2 Stable P-1 S&P BBBu Negative A-2u Fitch BBB+ Stable F2 RATING AGENCIES' COMMENTS ON ITALY: Agency Moody's 14 February 214 (Rating Action) S&P 7 December 212 (Full Rating report) Fitch 3 April 214 (Full rating report) Comment Rating Rationale: The key drivers for changing the rating outlook to stable are: 1.) The resilience of Italy's government financial strength. This is reflected in (i) Moody's expectations of a levelling-off of Italy's general government debt-to-gdp ratio in 214; and (ii) the country's robust debt-affordability profile, which is underpinned by low funding costs by historical standards, and a largely stable ratio of interest payments-to-general government revenues throughout the euro area debt crisis. 2.) The reduction of the risks for the Italian government's balance sheet related to contingent liabilities from (i) the potential recapitalization needs of Italian banks; and (ii) loans by the European Financial Stability Facility (EFSF, Aa1 negative) and the European Stability Mechanism (ESM, Aa1 negative) provided to euro area countries under an EU/IMF support program. Italy's foreign and local-currency country ceilings for debt and deposits remain unchanged at A2/P-1. These ceilings act as a cap on ratings that can be assigned to the foreign and local-currency obligations of entities domiciled in the country. What could move the rating up/down: Moody's would consider upgrading Italy's government bond rating if there is an effective strengthening of the economy's growth prospects triggered by the successful implementation of economic and labor market reforms. Moreover, a sustained reversal of the upward trajectory of Italy's debt-to-gdp ratio against the backdrop of a resumption of significant growth would be credit positive. Moody's would consider downgrading Italy's government bond rating in the event of a deterioration in the country's economic prospects, a decrease in its primary surplus, a deterioration in the sovereign's funding conditions, or a need for a significant recapitalization of banks by the government. That said, Italy's Baa2 rating and its stable outlook are resilient to bank contingent claims against the government materializing in amounts equal to the current range of market estimates, i.e. below EUR2 billion. Rating Rationale: Strengths: (I) A wealthy diversified economy. (II) Strong household and corporate balance sheets. (III) Reformed pension system and hence lower budgetary sensitivity to population aging. Weaknesses (I) High gross and net general government debt. (II) Weak real and nominal growth prospects. (III) Sizable short-term external debt. Outlook The negative outlook on the long-term rating on Italy reflects what we view as mostly downside risks to its reform policy agenda, overall economic outlook, and its debt reduction plans. We note, in particular, the uncertainty around whether the next government coalition would remain committed to the structural reform agenda initiated by the current government. Additionally, we believe there is significant risk that the Italian economy might not recover in the second half of 213, but will continue to contract. This could not only result in more-significant fiscal slippage, but also potentially undermine political and social support for reform. If these risks materialize and result in the general government debt burden increasing more than we currently anticipate, we could lower the ratings. Rating Rationale Key Rating Drivers: (I) End of Deep Recession: The Italian economy experienced one of the sharpest recessions among eurozone members, contracting by more than 4% from mid-211. The recession ended in 4Q13, in line with Fitch Ratings forecasts, as GDP grew by.1% qoq, after % the previous quarter. Nevertheless, labor market indicators and inflation reflect the fragility of the economy. (II) Weak Growth to Follow: Italy s growth potential is weak compared with rating peers and eurozone members. Real GDP will grow by.6% in 214 and 1% in 215 and it will not accelerate substantially further over the medium term, notwithstanding the various rounds of proposed structural reforms and the closing of the likely large negative output gap. Based on its real economic forecast and gradual increase in inflation from the current low level, the nominal growth of the Italian economy will remain below 3% until 218. (III) Improving Financing Conditions: Italian sovereign yields have continued to decline since Fitch s last review in October 213. Its 1-year yields dropped to 3.2% in April 214 and in 1Q14 the average issuing yield was 1.6%, a historical low for the sovereign. Italy demonstrated financing flexibility and resilience during the sovereign debt crisis and the average life of gross general government debt (GGGD) was 6.4 years at end-213. (IV) Financial Sector Risks Decline: Larger Italian banks took advantage of improved market conditions to strengthen capital ahead of the ECB s comprehensive asset-quality review and about EUR1bn new share issues have been announced to date. Debt issuance of Italian banks in 1Q14 was markedly higher than in the previous year. (V) Reform Agenda and Budget Rules: The new government announced a structural reform agenda with an ambitious timetable and confirmed in the 214 Stability Program the previous government s commitment to the eurozone fiscal framework, in particular keeping deficit below 3% of GDP in 214 and maintaining the medium-term fiscal consolidation path. (VI) Very High Debt Peak: GGGD will peak at 135% of GDP in 214, marginally higher than Fitch s previous forecast (133% of GDP), due to weaker nominal GDP growth. Fitch expects GGGD to decline slowly and remain above 13% of GDP until 217, compared with the BBB median of 4%. The high debt leaves very limited fiscal space to respond to any adverse shock. Current Account Improvement: Italy recorded a surplus in 213, the first time since the start of the eurozone crisis. The surplus will widen in 214, driven by stronger export demand, not least from eurozone partners, while imports will remain subdued due to the weakness of domestic demand. Rating Sensitivities Political Risks: Political turmoil resulting in paralyzed economic and fiscal policies, or weakening political support for the medium-term fiscal consolidation path would be negative for the rating. Debt Dynamics: Nominal and real economic shocks or fiscal measures that reduce confidence that GGGD/GDP will be placed on a downward path would be rating negative. Stabilization of GGGD/GDP and increasing confidence that it will be firmly placed on a downward path would be positive. Sustained and broad economic recovery, including acceleration in nominal GDP growth and marked decline in the net external debt to GDP ratio would also be positive. Source: rating agencies UniCredit Research page 27 See last pages for disclaimer.

28 Investment metrics: major Italian banks MAJOR ITALIAN BANKS: RATINGS Agency UniCredit Intesa Sanpaolo Banca Monte Paschi Banco Popolare Scarl UBI Banca Moody's S&P Fitch Baa2 outlook stable BBB outlook negative BBB+ outlook negative Baa2 outlook stable BBB outlook negative BBB+ outlook stable B2 outlook negative BBB Outlook negative Ba3 outlook positive BBoutlook negative BBB outlook negative Baa3 outlook negative BBBoutlook negative BBB+ outlook negative Source: rating agencies; UniCredit Research MAJOR ITALIAN BANKS: P&L HIGHLIGHTS (1Q14) Figures in EUR mn UniCredit Intesa Sanpaolo Banca Monte Paschi Banco Popolare Scarl UBI Banca Net interest revenue 3,181. 2, Net Fees & commissions 1,89. 1, Trading income Operating Income (Memo) 5,543. 4, Net Income Total Non-interest expenses 3,51. 2, Loan-loss provisions , Operating profit 1, Pre-tax profit 1, Attributable net profit MAJOR ITALIAN BANKS: B/S HIGHLIGHTS (1Q14) Figures in EUR mn UniCredit Intesa Sanpaolo Banca Monte Paschi Banco Popolare Scarl UBI Banca Assets Cash & cash equivalents 12,499. n.a. 3, Liquid Assets 164,96. 86,379. 2, , ,16. Securities 221,45. 26,. 45,37. 26, ,212.7 Customer loans 484, ,2. 132, , ,97.6 Total assets 841, , , , ,983.3 Risk-weighted assets 418, , ,51.7 n,a, 61,54.1 Liabilities & Equity Total Customer Deposits 397, , , , ,662.1 Senior Debt Maturing after 1 41,27. Year 163, , , ,477.5 Subordinated Borrowing n.a. 12,687. n.a n.a. Total Equity 5, ,63. 6,285. 6, ,483.2 Total Liabilities and Equity 841, , , , ,983.3 Source: rating agencies, Bankscope, company data, UniCredit Research UniCredit Research page 28 See last pages for disclaimer.

29 MAJOR ITALIAN BANKS: KEY RATIOS (1Q14) Figures in % UniCredit Intesa Sanpaolo Banca Monte Paschi Banco Popolare Scarl UBI Banca Profitability Net Interest Margin Cost to Income Ratio Return on Average Assets (ROAA) Return on Average Equity (ROAE) Liquidity Interbank Ratio Loans / Customer Deposits Net Loans / Total Assets Liquid Assets / Dep & ST Funding Asset quality Loan Loss Reserve / Gross Loans NPL ratio NPL coverage Capital Tier 1 Regulatory Capital Ratio Total Capital Ratio Equity / Total Assets Source: rating agencies, Bankscope, company data, UniCredit Research UniCredit Research page 29 See last pages for disclaimer.

30 Italian issuance activity Italian banks issued 1.5% of all (unsecured) iboxx debt securities in the last 12 months and were thus the third-largest issuers. LAST 12-MONTH ISSUANCE VOLUME BY COUNTRY ISSUANCE BY COUNTRY (TOP 1) Other 23.6% United States 12.1% United Kingdom 9.9% 35, 3, 25, 2, All Countries Sweden Australia Spain Switzerland Italy Germany Netherlands France United Kingdom United States 3, 25, 2, Sweden 5.5% France 16.% 15, 1, 15, 1, Australia 1.3% 5, 5, Spain 7.6% Switzerland.% Italy 1.5% Germany 3.2% Netherlands 1.4% Feb-9 May-9 Aug-9 Nov-9 Feb-1 May-1 Aug-1 Nov-1 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Source: iboxx, UniCredit Research New Italian debt issues Recent Italian debt issues are listed in the tables below. NEW ISSUANCE TABLE FIXED (ABOVE EUR 5MN) Issuer Issue date Amount outstanding Coupon Maturity Rating BELFIUS BANK SA 22-May May-17 NR BPCE 22-May-14 1, May-19 A BANCO POPOLARE 22-May Jan-18 BB+ CITIGROUP INC 22-May-14 1, May-24 NR SPAREBANK 1 SMN 2-May May-19 NR BNP PARIBAS 2-May-14 1, May-24 A+ CREDIT AGRICOLE 2-May-14 1, May-24 A VENETO BANCA 2-May May-19 NR SPARK GOSLAR/HAR 19-May May-22 n.a. LA CAIXA 9-May-14 1, May-19 NR BANK OF IRELAND 8-May May-17 BB+ BANCO ESPIRITO 8-May May-17 BB NEW ISSUANCE TABLE FLOATING RATE NOTES (ABOVE EUR 5MN) Issuer Issue date Amount outstanding Coupon Maturity Rating ING BANK NV 26-May May-16 n.a. BPCE 26-May May-16 n.a. RABOBANK 22-May-14 1, Nov-15 NR ABBEY NATL TREAS 22-May May-19 A BNP PARIBAS 2-May May-19 A+ BELFIUS BANK SA 19-May May-15 NR JPMORGAN CHASE 7-May-14 1, May-19 A ING BANK NV 28-Apr Oct-15 A+ MACQUARIE BK LTD 24-Apr Apr-16 A WELLS FARGO CO 24-Apr-14 1, Apr-19 A+ RABOBANK 17-Apr-14 1, Apr-15 AA INTESA SANPAOLO 17-Apr-14 1, Apr-19 BBB ABN AMRO BANK NV 16-Apr Apr-16 A DEUTSCHE BANK AG 15-Apr-14 1, Apr-19 A BELFIUS BANK SA 11-Apr Apr-16 A- Source: Bloomberg, UniCredit Research UniCredit Research page 3 See last pages for disclaimer.

31 Italian Financials iboxx volume development Regarding Italian Financials iboxx volume development, please refer to the chart below. IBOXX FINANCIALS VOLUME DEVELOPMENT BY ISSUER COUNTRY 7, 6, Germany France United Kingdom Italy United States Spain Netherlands Switzerland Other 5, 4, 3, 2, 1, Source: iboxx, UniCredit Research Outstanding Italian debt issues The following charts provide a more-detailed analysis of outstanding Italian debt issues. IBOXX BANKS SENIOR OUTSTANDING BY ISSUER COUNTRY IBOXX BANKS LT2 OUTSTANDING BY ISSUER COUNTRY Australia 4.1% Switzerland 3.2% Denmark.9% Norway 1.9% Other 7.2% Germany 3.6% France 17.6% Norway 2.% Switzerland.% Other 11.% Germany 2.2% France 19.% Sweden 5.4% Finland 4.% Netherlands 13.8% Spain 5.9% United States 14.1% Italy 7.6% United Kingdom 1.6% Finland 3.9% Netherlands 14.2% Spain 2.% United States 5.% Italy 1.1% United Kingdom 24.8% IBOXX BANKS T1 OUTSTANDING BY ISSUER COUNTRY Other 21.9% Germany 17.6% Sweden 17.6% France 29.8% United Kingdom 13.2% Source: iboxx, UniCredit Research UniCredit Research page 31 See last pages for disclaimer.

32 Outstanding Italian debt issues in perspective As depicted in the charts below, Intesa Sanpaolo is the largest Italian iboxx bank senior unsecured issuer. BIG THREE CONCENTRATION IN IBOXX FIN SECTOR iboxx (Outstanding in EUR bn) Big 3 Top 3 Concentration Banks Senior (377.6) Rabobank (9%), BNP Paribas (5%), Intesa Sanpaolo (4%) 18% Banks Lower Tier II (76.) HSBC (7%), Crédit Agricole (6%), ING (6%) 2% Banks Upper Tier II (.5) Deutsche Postbank (1%) 1% Banks Tier I (5.7) BNP Paribas (3%), Deutsche Bank (18%), HSBC (13%) 74% Insurance Senior (21.4) Allianz (27%), Assicurazioni Generali (16%), ING (12%) 55% Insurance Sub (31.6) Allianz (2%), Assicurazioni Generali (14%), AXA (13%) 47% Financial Services Senior (58.2) GE (industrial) (34%), Unibail-Rodamco (12%), Klepierre (5%) 51% Financial Services Sub (3.5) GE (industrial) (86%), Credit Logement SA (14%) 1% Source: iboxx, UniCredit Research Italian iboxx issuers The biggest Italian iboxx Financials issuer, Intesa Sanpaolo (weight: 3.2%), is the fourth-largest iboxx Financials issuer overall and is followed with a gap by UniCredit (weight: 2.1%). BIGGEST IBOXX FINANCIALS BOND ISSUERS iboxx out. iboxx FIN Current Rating Issuer iboxx Sector (mn) weight (Moody's/S&P/Fitch) Rabobank (RABOBK) Banks 38, % Aa2/AA-/AA- BNP Paribas (BNP) Banks 24,54 4.2% A2/A+/A+ GE (industrial) (GE) Financial Services 22,778 4.% A1/AA+/-- Intesa Sanpaolo (ISPIM) Banks 18, % Baa2/BBB/BBB+ HSBC (HSBC) Banks 17, 3.% Baa1/A/A+ Crédit Mutuel (BFCM) Banks 16,5 2.8% Aa3/A/A+ Crédit Agricole (ACAFP) Banks 15, % WR/NR/NR ING (INTNED) Banks 13,87 2.4% A3/A-/A Nordea (NDASS) Banks 13,75 2.4% Aa3/AAA/AA- UniCredit (UCGIM) Banks 12,35 2.1% WR/BBB/BBB+ Allianz (ALVGR) Insurance 12,15 2.1% WR/NR/NR BPCE (BPCEGP) Banks 12,7 2.1% A2/A+/A+ Banco Santander (SANTAN) Banks 11,87 2.1% Aa1/BBB/BBB+ Svenska Handelsbanken (SHBASS) Banks 11,65 2.% WR/A/A+ Morgan Stanley (MS) Banks 11,642 2.% Baa2/A-/A Deutsche Bank (DB) Banks 11,88 1.9% WR/NR/A+ Société Générale (SOCGEN) Banks 1, % WR/NR/NR JPMorgan Chase (JPM) Banks 1,35 1.8% A3/A/A+ Goldman Sachs (GS) Banks 1,25 1.8% Baa1/A-/A Barclays (BACR) Banks 1, % A3/A/A Citigroup (C) Banks 9, % Baa2/A-/A ABN Amro Bank (ABNANV) Banks 9, % Aaa/AAA/AAA Standard Chartered (STANLN) Banks 9,1 1.6% A2/A+/AA- BBVA (BBVASM) Banks 9,25 1.6% WR/NR/BBB+ Lloyds Banking Group (LLOYDS) Banks 8, % Baa3/BBB/BBB Credit Suisse (CS) Banks 8,55 1.5% WR/A/A Bank of America (BAC) Banks 8, % WR/NR/NR Assicurazioni Generali (ASSGEN) Insurance 8,25 1.4% Baa2/BBB+*-/BBB+ Source: iboxx, UniCredit Research UniCredit Research page 32 See last pages for disclaimer.

33 Analysis of investment metrics Funding conditions Profitability Capitalization Exposure Asset quality In the following, we give an overview of key investment metrics for the Italian banking system. According to the Financial Stability Report by the Bank of Italy from May 214, Italian banks have benefitted from improving funding conditions, as the mark-up between the yield on bank bonds and the swap rate fell to 17bp (1Q14). Also, better funding conditions support the gradual repayment of longer-term refinancing operations. The profitability of Italian banks deteriorated in 213 due to substantial loan loss provisions. The Bank of Italy stated in May that, net of non-recurring items, ROE was -1.3% in 213 (vs. +1% in 212). Also, loan-loss provisions exceeded operating profits in FY13. The rise in provisions involved both the banks subject to the ECB s Comprehensive Assessment and, to a lesser extent, the remaining banks, whose provisions absorbed 8% of operating profits. Operating profits fell 2.4% owing to the sharp fall in net interest income (-1%), only somewhat offset by higher other income. The lowering of banks operating costs has continued, thanks in part to the rationalization of branch networks. Italian banks capitalization deteriorated due to massive loan loss provisions made at end However, several banks have undertaken capital increases for a total of EUR 1bn, and Italian banks leverage remains lower, on a European scale, according to the Financial Stability Report by the Bank of Italy from May 214. Moreover, according to the Bank of Italy (May 214), its exposure to the Italian government (EUR 22bn net sale of government securities) fell to 1.2%, or EUR 382bn of its assets. It also reported that, at the end of 213, Italian banks exposure to residents in central and eastern Europe was EUR 171bn, equal to just over a quarter of its total exposure to nonresidents. The ratio of NPA was just under 1% of the total. The exposure to Russia was EUR 21bn, or 12% of total balance-sheet lending to the area, and the ratio of non-performing loans was low overall and fell, from 4.3% at the end of 212, to 3.2% at the end-213. The exposure to Ukraine was EUR 4.6bn, or 2.7% of total lending to the area, and the ratio of NPLs rose to 47.2% yoy from 33.5% at end-212. The exposure to other developing countries outside of central and eastern Europe was small. In this section, we provide an overview of relevant investment metrics for Italian banks within a European-peer context. It is important to bear in mind that the EBA's definition of forbearance and non-performing exposures (NPEs) is broadly in line with Italy's definition of non-performing assets. However, as the Bank of Italy pointed out, Italy has some definitions that are broader (e.g. exposures in credit and financial derivatives and those in the trading book) and some that are stricter (e.g. exiting the category of restructured loans; about 1% of loans to the customers of Italian banks). Italian banks rank somewhere in the middle terms of total assets in the European banking system (see charts below). Despite relatively strict definitions, there is a danger that some performing loans may actually have to be reclassified as problem loans in the ECB s ongoing Asset Quality Review and in the EBA s stress test given the prolonged economic challenges in Italy. In light of this, and based on asset quality as measured by the uncovered NPL ratio, Italian banks possess relatively weak asset quality. The aggregate picture is confirmed when looking at individual banks (see charts below). Concerning loss-absorbency (measured by the Tier-1 ratio), Italian banks rank in the middle-to-low region of the majority of banks. The aggregate picture is again confirmed when looking at individual banks (see charts below). UniCredit Research page 33 See last pages for disclaimer.

34 Upon closer inspection, one can see that the Tier-1 ratios of Italian banks at the end of March 214 generally varied between slightly above 1% and around/above 12%. Moreover, the banks can be distinguished in terms of asset quality: Banca Monte dei Paschi di Siena features the highest uncovered NPL ratio (at around 8%), followed by the majority of the banks, which have uncovered NPL ratios of between 4-5%. With an NPL ratio that is slightly above 3%, Banca Popolare di Milano ranks best but it also has the lowest capitalization. EUROPE: KEY CREDIT METRICS AT A GLANCE NATIONAL CHAMPIONS: KEY CREDIT METRICS AT A GLANCE 23% Bubble size reflects total assets 14% Bubble size reflects total assets Tier 1 ratio 21% 19% 17% 15% 13% Credit Suisse DNB Crédit Agricole UBS Deutsche Bank Rabobank ING Bank Santander BNP Lloyds Banking Group Intesa Sanpaolo Barclays 11% HSBC RBS BBVA Caixa Geral de Erste Bank RZB UniCredit Depositos Nordea BPCE 9% -.5%.5% Commerzbank 1.5% 2.5% 3.5% 4.5% 5.5% Uncovered NPL ratio = Gross NPL ratio x (1 - NPL coverage) BCP Tier 1 ratio 13% 12% 11% 1% 9% 8% 7% Banca Popolare di Milano Intesa Sanpaolo UniCredit UBI Banca Banco Popolare Monte dei Paschi 6%.% 1.% 2.% 3.% 4.% 5.% 6.% 7.% 8.% 9.% Uncovered NPL ratio = Gross NPL ratio x (1 - NPL coverage) Source: Company data, UniCredit Research According to the Financial Stability Report by the Bank of Italy from May 214, the deterioration in banks loan asset quality has eased. The flow of new bad debts ("sofferenze") as a ratio to outstanding loans stabilized in 4Q13, and preliminary data indicate that in 1Q14 it declined. However, the volume of NPLs (all four Italian categories of problem loans) is still growing (December 213). NPLs were 15.9% of total customer loans (vs. 14.4% in June); the ratio was 1.% (vs. 9.6%) for net NPLs. Moreover, according to the Bank of Italy, the coverage ratio has increased since to 41.8% in December 213 from 39.9% in June 213 for the entire Italian banking system. It stands at 44.6% for the five largest groups vs. 44.8% (September) for a sample of leading European banks. According to the Financial Stability Report by the Bank of Italy from May 214, there were indications that the flow of bad debt ("sofferenze") slowed in the early months of 214. The ratio of new bad debts to outstanding loans stabilized at some 3% and fell from 4.8% to 4.5% for loans to firms (4Q13); it remained stable, at around 1.3%, for loans to households (4Q13). ITALIAN BANKS NPL RATIOS BY SEGMENT AND IN DETAIL 16.% 14.% 12.% 1.% 8.5% 14.4% 12.1% Gross NPL ratio Gross NPL ratio SMEs Gross NPL ratio firms Total impaired 1. Bad debts ("sofferen ze") 2. Substandard ("incagli") Five largest groups Large banks Small banks "Minor" banks Total system % Coverage ratio % Coverage ratio % Coverage ratio % Coverage ratio % Coverage ratio % 6.% 4.% 6.5% 2.8% 7.1% 3. Restructur ed ("ristruttur ati") 4. Pastdue ("scaduti") Customer loans (EUR mn) ,253, ,249 13, ,72 2,6,828 2.%.% Feb 214 Feb 213 FY7 Source: Italian Banking Association (ABI) Monthly Outlook April 214, Bank of Italy's Financial Stability Report (May 214), UniCredit Research UniCredit Research page 34 See last pages for disclaimer.

35 Ways to reduce NPL stock Asset Quality Review While it has been challenging to securitize NPL portfolios or to transfer loan assets to nonbank credit recovery firms, in its preceding Financial Stability Report from November 213, the Bank of Italy pointed out ways to reduce NPL stock: 1. Recent checks introduced by the Bank of Italy on the adequacy of value adjustments, gradual economic recovery and reduced financial market fragmentation within the euro area should reduce uncertainty over the quality of banks assets and lower the risk premium demanded by investors. 2. Thus, the securitization market should pick up this helped Italian banks during the last crisis (Italian banks sold some EUR 6bn in bad debts with loan securitizations between 1999 and 28). 3. The 214 Stability Bill provides for less burdensome tax treatment of loan losses and value adjustments, which should incentivize banks to adopt stricter policies on provisioning, especially in cyclical downturns. 4. Reforms to speed up credit recovery could also make an important contribution, according to the Bank of Italy. According to the Financial Stability Report by the Bank of Italy from May 214, the central bank reported a narrowing between book value and investor valuation for NPLs and said that the increase in coverage ratios following the loan-loss provisions led to a reduction of uncertainty regarding asset values due to improved economic conditions. The Bank of Italy also said that the massive loan loss provisions entered in the banks accounts at the end of 213 completely absorbed operating profits. However, at the same time, they resulted in a significant rise in coverage ratios. This development may help revive the market for non-performing loans. Some large banks have announced that they are optimizing the management of these exposures through the sale or securitization of EUR 2bn of bad debt in 1Q14 vs. EUR 3bn in FY13 (of which EUR 1bn in December). Regarding the ECB's Asset Quality Review (AQR), as of the release date, 15 Italian banking groups will take part. According to the Bank of Italy, their weighted average CET1 ratio was 9.9% (estimate) as of 1 January 214 (vs. actual core Tier-1 ratio of 1.% on 31 December 213), adopting restrictive assumptions for the exercise of national discretion, vs. the benchmark-level of 8%. Moreover, several intermediaries already closely monitored by the Bank of Italy and asked to raise additional capital would have recorded a capital shortfall of EUR 1.2bn (about 1% of RWA) as of November 213 (Bank of Italy). The financial leverage (Bank of Italy as of November 213) was as follows: 1. total assets to T1 capital: 19 (European average: 22), as of December 212 the data used is not consistent with Basel III definitions due to limited availability; 2. T1 capital to total exposures (calculation in line with Basel III guidelines) was 4.1% vs. the required 3% minimum, as of 3 June 213. Regarding capital requirements (Bank of Italy as of November 213), the Bank of Italy looked at a sample of 13 Italian banking groups (ca. 7% of the total assets of the banking system), which are subject to periodical monitoring by the Basel Committee and the EBA (as of 3 June 213). All 13 Italian banks were already in compliance with the 215 liquidity coverage ratio of 6% (June 213). The Bank of Italy further said that the CET1 capital need was EUR 6.1bn (fully phased-in) vs. EUR 8.8bn in December 213 to achieve a CET1 ratio of 7% (4.5% minimum requirement plus a capital conservation buffer of 2.5%) was EUR 23.2bn (EUR 22.4bn in December 212). This is based on the Bank of Italy s statements in November 213 and the excess capital of the banks that have already met the requirement was EUR 23.2bn (EUR 22.4bn in December 212). UniCredit Research page 35 See last pages for disclaimer.

36 Major Italian banks bonds within a European context (iboxx) BANK SENIOR ASW SPREAD/MODIFIED DURATION, SEP 211 AND MAY ASW Spread Italy France Austria Netherlands Spain Denmark Sweden Switzerland United States United Kingdom Germany Norway ASW Spread Austria Italy United States Spain France 5 Australia Canada mod. Duration 5 Norway Sweden Germany United Kingdom Netherlands Switzerland Australia mod. Duration BANK LT2 ASW SPREAD/MODIFIED DURATION, SEP 211 AND MAY ASW Spread United States Italy France Switzerland Spain United Kingdom Germany Netherlands Australia ASW Spread United Kingdom France Australia Germany Italy United States Netherlands mod. Duration mod. Duration Source: iboxx, MarkIT, UniCredit Research 5Y CDS SPREAD IN A EUROPEAN CONTEXT Source: iboxx, MarkIT, UniCredit Research UniCredit Research page 36 See last pages for disclaimer.

37 5Y CDS SPREAD DISTRIBUTION BANKS SENIOR < 15 bp 15-2 bp 2-25 bp 25-3 bp 3-5 bp > 5 bp Australia Aust. & NZ. Banking Group, Westpac, National Australia Bank Austria Hypo Alpe-Adria Erste Bank BAWAG P.S.K. UniCredit Bank Austria Belgium KBC Dexia Canada Denmark France Germany Toronto-Dominion Bank Danske Bank BNP Paribas, Crédit Natixis, Crédit Mutuel Agricole, Société Générale Depfa Pfandbriefbank, Commerzbank, BayernLB, Helaba, HypoVereinsbank, HSH Deutsche Bank, Nord/LB, Nordbank Landesbank Berlin Greece Ireland Bank of Ireland Italy Mediobanca UBI Banca, Intesa Sanpaolo, UniCredit Banco Popolare Scarl, Banca MPS Japan Sumitomo Mitsui Netherlands Rabobank ING NIBC Bank NV SNS Bank Norway Portugal Caixa Geral de Depositos Spain Banco Santander BBVA, Banco Popular Espanol Sweden Switzerland United Kingdom United States Svenska Handelsbanken, SEB, Swedbank UBS, Credit Suisse HSBC, Nationwide, Lloyds Banking Group, Standard Chartered, Abbey National, RBS Barclays Wells Fargo & Co, JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs, Morgan Stanley 5Y CDS SPREAD DISTRIBUTION BANKS SUBORDINATED < 15 bp 15-2 bp 2-25 bp 25-3 bp 3-5 bp > 5 bp Australia Aust. & NZ. Banking Group, National Australia Bank, Westpac Austria BAWAG P.S.K., Erste Bank UniCredit Bank Austria Belgium KBC Dexia Denmark Danske Bank France BNP Paribas Natixis, Crédit Agricole, Société Générale Germany Deutsche Bank, Deutsche BayernLB HypoVereinsbank, Commerzbank, HSH Postbank Nordbank Greece Ireland Bank of Ireland Italy Mediobanca, UBI Banca Intesa Sanpaolo, UniCredit, Banco Popolare Scarl, Banca MPS Japan Sumitomo Mitsui Netherlands Rabobank ING SNS Bank Norway Portugal Caixa Geral de Depositos Spain Banco Santander, BBVA Banco Popular Espanol Sweden Svenska Handelsbanken SEB, Swedbank Switzerland Credit Suisse, UBS United Kingdom HSBC Standard Chartered Abbey National, Nationwide, Barclays Lloyds Banking Group, RBS United States Wells Fargo & Co, JPMorgan Chase, Citigroup Bank of America, Goldman Sachs, Morgan Stanley Source: UniCredit Research UniCredit Research page 37 See last pages for disclaimer.

38 Latest earnings of major Italian banks Intesa Sanpaolo Event Impact Intesa Sanpaolo (Baa2s/BBBn/BBB+s) reported EUR 53mn net attributable profit in 1Q14 (+64% yoy and compared to a loss of EUR 5.2bn in 4Q13), which was the highest in the past eight quarters and compares to market estimates of EUR 281.5mn (Bloomberg). The results were driven by 4% yoy higher net interest income, 8% yoy higher net fees and commissions and 7% lower provisions yoy (-65% qoq). Intesa reported positive results from all its business units, with pre-tax profit of EUR 318mn from Retail Italia (Banca dei Territori excluding Intesa Sanpaolo Private Banking and Insurance) (+31% yoy), EUR 57mn (+3%) from Fideuram Private (Banca Fideuram Group and Intesa Sanpaolo Private Banking) and Wealth Management (Eurizon Capital and Intesa Sanpaolo Vita), EUR 619mn from Corporate and Investment Banking (-9% and +8% excluding trading profits), and EUR 124mn (+44%) from International Subsidiary Banks. Intesa also reported a lower NPL inflow from performing loans. Specifically, the net inflow fell 58% qoq and 24% yoy. The gross inflow fell 41% qoq and 18% yoy. The pro forma Basel 3 CET1 ratio (fully loaded) rose to 12.6% qoq from 12.3%, which equals excess capital of some EUR 9bn (compared with Basel 3 maximum compliance level for Global SIFIs of 9.5%: 4.5% CET1 +2.5% conservation buffer +2.5% current maximum Global SIFI buffer) and a capital buffer of some EUR 12bn ahead of the AQR. The phased-in CET1 ratio (not incorporating the benefit from the Bank of Italy stake) was 12.2% including net income after pro-quota dividends and 12.1% excluding it, up from 11.9% qoq. Outlook: Intesa intends to focus on sustainable results by focusing on profitability targets, costs, asset quality and other risk and liquidity, as well as capitalization. Intesa also plans repricing actions to somewhat mitigate the expected negative environment for market rates. These results are credit positive. INTESA SANPAOLO KEY FINANCIAL HIGHLIGHTS Reclassified figures in EUR mn 1Q13 4Q13 1Q14 yoy qoq Net interest income 2,17 2,32 2,1 4.1% 3.3% Net fees & commissions 1,462 1,62 1, % -2.2% Trading income % 118.8% Insurance income % 76.8% Other income n.m % Total income 4,18 3,931 4,18.% 4.5% Operating expenses -2,83-2,188-2,86.1% -4.7% Pre-provision income 2,25 1,743 2,22 -.1% 16.% Loan-loss provisions & adj. -1,158-3,98-1,77-7.% -65.2% Attributable net income 36-5, % n.m. Cost-income ratio 5.7% 55.7% 5.8% 7 bp -488 bp Return on equity (net) 2.5% -46.6% 4.6% 29 bp 5121 bp Reclassified figures in EUR bn 1Q13 4Q13 1Q14 yoy qoq Total assets %.2% Risk-weighted assets % -1.% Shareholders equity % -1.2% Core Tier-1 ratio 11.3% 11.3% n.a. n.a. n.a. CET1 ratio (phase-in) n.a. 11.9% 12.1% n.a. 2 bp CET1 ratio (fully loaded) n.a. n.a. 12.6% n.a. n.a. Tier-1 ratio 12.1% 12.3% 12.5% 4 bp 2 bp Total capital ratio 13.6% 15.1% 15.3% 17 bp 2 bp Total gross impaired loan (all 4 Italian categories) ratio 13.7% 16.7% 17.2% 349 bp 56 bp Total gross impaired loan (all 4 Italian categories) coverage 43.3% 46.% 46.7% 339 bp 7 bp Source: Company data, UniCredit Research UniCredit Research page 38 See last pages for disclaimer.

39 Banca MPS Event Impact Banca Monte dei Paschi di Siena (B2n/--/BBBn) reported a 1Q14 net loss of EUR 174mn vs. a net loss of EUR 11mn in 1Q13. 1Q14 total revenues were EUR 957.2mn, compared to market estimates of EUR 1.9bn (Bloomberg). 1Q14 recurring net interest income (net of one-offs due to the repayment of state aid Monti bonds) rose 4.3% qoq despite actions to contain funding costs and an upturn in interest rates qoq. Yoy, recurring NII was stable according MPS despite deleveraging (total assets were down 7% yoy) and a higher level of costly Monti bonds. Net fee and commission income rose 1% qoq due to 23.3% higher revenues from asset management and 13.3% qoq growth in payment services. Operating costs fell 3.8% qoq, largely driven by structural cost measures. The cost of credit was down to 144bp and impaired loan inflows fell 19% yoy and 3% qoq. Impaired loan provisioning was flat qoq and +12 bp yoy. Net impairment losses (reversals) on loans fell EUR 733mn qoq to some EUR 477mn (-1.6% yoy). In 1Q14, the aggregate was driven by falling gross impaired loan inflows qoq. The net exposure to impaired loans rose EUR.9bn to some EUR 22 bn qoq. NPLs rose 5.1% qoq and 2.3% qoq for watch list loans. Restructured loans rose 9.5% qoq, and past due loans rose by 5% qoq. The coverage of impaired loans stood fell 2bp to 41.6% qoq and the NPL coverage fell 3bp to 58.5%, while the coverage for watch list loans rose 3bp qoq to 2.7%. MPS s ECB exposure fell to EUR 24bn as of end-april after the reimbursement of EUR 4bn of LTROs. Also, MPS is currently selling a EUR 5mn NPL portfolio, to be completed in 1H14. AFS portfolio optimization progresses by selling government bonds, financial securities and equity investments. The HFT portfolio increases due to the temporary purchase and sale in April of government bonds linked to MPS Capital Services in its capacity as primary dealer. The phased-in CET1 ratio was 1.8%, flat qoq with pro forma data in end-213. On a pro-forma basis (after the EUR 5 bn capital increase and assuming repayment of a nominal EUR 3bn of Monti bonds, the phased-in CET1 ratio at 31 March would be 13.3%. MPS' results are credit-negative despite a somewhat quarterly amelioration. MPS (RECLASSIFIED) - KEY FINANCIAL HIGHLIGHTS Figures in EUR million 1Q13 4Q13 1Q14 yoy qoq Net interest income % -21.% Net commissions % 1.% Other income % n.m. Total income 1, % 3.2% Operating expenses % -3.8% Pre-provision income % 56.7% Loan-loss provisions , % -6.6% Attributable net income % -81.% Cost-income ratio 62.2% 93.3% 69.% 677 bp bp Return on equity (net) -6.4% -59.6% -11.1% -471 bp 4849 bp Figures in EUR billion 1Q13 4Q13 1Q14 yoy qoq Total assets % 1.3% Risk-weighted assets % -1.5% Shareholders' equity % 1.7% Core Tier-1 ratio 11.1% 1.% n.a. n.a. n.a. CET1 (phase-in) n.a. n.a. 1.8% n.a. n.a. Tier-1 ratio 11.8% 1.7% n.a. n.a. n.a. Total capital ratio 16.3% 15.2% 14.9% -14 bp -3 bp Total gross impaired (all 4 Italian categories) loan ratio Total gross impaired (all 4 Italian categories) loan coverage n.a. 27.5% 28.4% n.a. 9 bp n.a. 41.8% 41.6% n.a. -2 bp Source: Company data, UniCredit Research UniCredit Research page 39 See last pages for disclaimer.

40 UBI Banca Event Impact UBI Banca (Baa3n/BBB-n/BBB+n) reported 1Q14 net profit of EUR 58mn (+12% yoy and -61% qoq), compared to market estimates (Bloomberg) of EUR 49.8mn. The results were driven by both net interest income (despite lower volumes) of EUR 454mn (+8.9% yoy), by financial activities (fall in spreads on government securities) and lower structural operating costs. Trading income was up 49% yoy. In terms of gross flows, UBI reported lower migrations to new deteriorated loans from performing loans (-41.7% yoy to EUR 623mn) and returns from deteriorated to performing loans rose 2.3% yoy to EUR 356mn. Also repayments on deteriorated loans rose 23% yoy to EUR 235mn. Total net deteriorated loans fell EUR 14mn qoq to EUR 9.2bn. The CET1 ratio (phased-in) was 12.2% (not including retained profit for 1Q14) and the total capital ratio (phased-in) was 17.7% after the reimbursement of preference shares to the end of March. The CET1 ratio (fully loaded) was some 1.5%. Also, both the LCR and NSFR (Basel 3) are >1 even net of LTRO. UBI s exposure to the ECB was flat at EUR 12bn nominal (3 LTRO). UBI s assets eligible for refinancing (as of 5 May) were EUR 33.2bn net of haircuts (of which EUR 19.6bn available). Regarding outlook, UBI expects better net interest income, driven by current market conditions, better funding costs and ongoing replacements of medium to long-term loans with higher spreads. UBI also anticipates resilient fee and commission income performance and that another fall in sovereign-debt risk could lead to positive trading and hedging activity. UBI also expects administrative expenses to continue falling, while staff costs will depend on the outcome of the renewal of the national trade union contract. Also, the slowdown in the pace of new defaults on loans makes UBI expect a yoy improvement in regard to loan losses. UBI's results are credit neutral given the generally solid underlying results, cost cuts, and capitalization, liquidity and funding levels, in spite of ongoing adverse economic impacts. UBI (RECLASSIFIED) KEY FINANCIAL HIGHLIGHTS Figures in EUR million 1Q13 4Q13 1Q14 yoy qoq Net interest income % -1.1% Net commission income %.4% Trading income % -59.9% Profits of equity-accounted investees % 274.2% Other income % -24.8% Total income % -1.3% Operating expenses % -3.2% Pre-provision income % -19.5% Loan-loss provisions % -45.8% Attributable net income % -61.% Cost-income ratio 67.3% 56.6% 61.1% -623 bp 446 bp Return on equity (net) 1.1% 5.9% 2.2% 11 bp -371 bp Figures in EUR billion 1Q13 4Q13 1Q14 yoy qoq Total assets % -.2% Shareholders equity % 5.2% Core Tier-1 ratio 1.5% 12.6%.% -15 bp -126 bp CET1 ratio (fully loaded) n.a. n.a. 1.5% n.a. n.a. CET1 ratio (phased-in) n.a. n.a. 12.2% n.a. n.a. Total capital ratio 16.4% 18.9% 17.7% 131 bp -12 bp Total gross impaired loan ratio 12.5% 14.4% 14.5% 27 bp 17 bp Total gross impaired loan coverage n.a. 26.8% 27.3% n.a. 49 bp Source: Company data, UniCredit Research UniCredit Research page 4 See last pages for disclaimer.

41 Banco Popolare Scarl Event Impact The Banco Popolare Group (Ba3p/BB-n/BBBn) reported 1Q14 net attributable income of EUR -19mn vs. EUR 92mn in 1Q13. The results were driven by EUR 2mn in charges due to the effects of rating changes on debt securities issued at fair value (FVO). Net interest income fell 8% yoy and 4.5% qoq to EUR 372.5mn due to lower loan volume, partially mitigated qoq by customer spreads. 1Q14 net write-downs were EUR 328 (+43% yoy but - 67% qoq) due to the weak economic environment. The cost of credit rose to 144bp yoy from 96bp. The CET1 ratio was 1.1%. As the bank lacks assets eligible for AT1 capital, the Core Tier-1 ratio was flat at 1.1%. The estimated total capital ratio was 12.7%. Capitalization benefited from the capital increase, after which, all other things being equal, the estimated pro forma CET1 ratio was 13.%. Also incorporating the approved mergers of Credito Bergamasco and Banca Italease, the pro forma CET1 ratio was 13.2%. The pro forma CET1 ratio based on the fully-loaded rules was estimated at 11.2%. ECB exposure was flat at EUR 13.5bn and assets eligible for refinancing with the ECB still unencumbered to date, net of haircuts, were EUR 17.6bn and basically consist of Italian government securities. BPIM said that these assets would cover the LTROs. The estimated LCR and NSFR, reported at more than 1%, were well above current Basel 3 targets. The board of directors has also approved, subject to the obtainment of the necessary authorizations, the cancellation of stateguaranteed bonds provided as collateral for the LTRO financing for a nominal of EUR 3.1bn and partial early repayment of some EUR 2.8bn in LTRO financing. The results are credit neutral. The bank will likely continue to suffer from worse credit quality due to the subdued Italian economy. BANCO POPOLARE GROUP (RECLASSIFIED) KEY FINANCIAL HIGHLIGHTS Figures in EUR mn 1Q13 4Q13 1Q14 yoy qoq Net interest income % -4.5% Net fees & commissions % 16.7% Net financial income % -26.9% Other income %.2% Total income %.3% Operating expenses % -7.1% Pre-provision income % 15.6% Loan-loss provisions , % -67.4% Attributable net income n.m % Cost-income ratio 61.8% 67.1% 62.1% 39bp -5bp Return on equity (net) 4.2% -37.8% -.9% -516bp 3684bp Figures in EUR bn 1Q13 4Q13 1Q14 yoy qoq Total assets %.6% Risk-weighted assets n.a. n.a. n.a. Shareholders equity %.2% Core Tier-1 ratio 1.% 9.7% 1.1% 1bp 4bp CET1 (phase-in) ratio n.a. n.a. 1.1% n.a. n.a. Total capital ratio 13.6% 13.3% 12.7% -9bp -6bp Total gross impaired loan ratio.% 2.9% 21.6% 216bp 69bp Total gross impaired loan coverage.% 26.9% 26.5% 2653bp -32bp Source: Company data, UniCredit Research UniCredit Research page 41 See last pages for disclaimer.

42 Mediobanca Event Mediobanca SpA (--/BBBn/--) reported net attributable income in fiscal 9M14 (ending 31 March) of EUR 393mn (+984% yoy). 3Q14 net income was EUR 91mn, compared to a loss of EUR 87mn a year ago and compared to market estimates of EUR 75mn (Bloomberg). The results were mainly driven by non-recurring events (disposal gains and lack of equity losses in past) in the Principal division (PI). Net interest income also rose, by 6% yoy to EUR 89mn, with retail RCB +11% yoy to EUR 571mn and corporate CIB -4% to EUR 26mn. PI reported a EUR 34mn gain vs. a EUR 194mn loss a year ago due to equity disposals and higher profits from Generali (EUR 174mn vs. EUR -64mn a year ago). This offset lower trading revenues of EUR 1mn vs. EUR 27mn in 9M13. Fee income fell 8% yoy to EUR 275mn, which does not reflect the robust capital market pipeline, with ECM/DCM deals worth more than EUR 28bn in the next few quarters. Costs were flat at EUR 563mn, with labor costs down 6% but 7% higher administrative expenses. The cost of risk rose to 187bp from 184bp qoq due to high reserving (NPL coverage ratio stable at 45%) and the new EBA criteria. In line with the Strategic Plan, the AML optimization process continued: equity disposals amounted to some EUR 8mn and gains of EUR 221mn or EUR 69mn for 3Q14. Half of the disposals targeted in the three-year plan have been completed. Treasury assets fell to EUR 2bn from EUR 22bn to reimburse another tranche of the LTRO and MB bonds (EUR 1bn and EUR 2.3bn, respectively). CheBanca! s indirect funding almost doubled, to EUR 1.3bn (more than EUR 2mn of which in asset management). There was also a remix of deposits, which were stable at EUR 11.8bn, to less expensive forms. Mediobanca also reported recovery in lending in all segments; RCB drawn loans were up 1% to EUR 4.2bn, CIB drawn loans rose to EUR 2.8bn from EUR 2.6bn qoq. The loan book was stable qoq at EUR 32.3bn, driven by early repayments in CIB of EUR 1.5bn. Impact Mediobanca's results are credit neutral as they were mainly driven by non-recurring events. The Italian economy and preparation for the AQR continue to pose a challenge. MEDIOBANCA - KEY FINANCIAL HIGHLIGHTS Restated figures in EUR million 3Q13 9M13 2Q14 3Q14 9M14 yoy 9M yoy Q qoq Net interest income % 11.6% 3.6% Net fees & commissions % -16.4% -23.% Trading income % n.m. n.m. Equity-accounted income n.m. n.m % Total income 283 1, , % 39.% -13.2% Operating expenses % -23.8% % Pre-provision income , % 53.9% 133.% Loan loss provisions % 2.9% -8.6% Attributable net income % n.m % Cost-income ratio 65.7% 46.8% 44.4% -49.1% 14.% bp bp bp Return on equity (annualized) -4.8%.7% 7.6% 5.1% 7.3% 667 bp 993 bp -253 bp Restated figures in EUR billion 3Q13 9M13 2Q14 3Q14 9M14 yoy 9M yoy Q qoq Total assets % -8.8% -7.9% Risk-weighted assets n.a. n.a. n.a. n.a. n.a. Shareholders equity % -.5% 1.6% Core Tier-1 ratio 12.% 12.% 11.9% n.a. n.a. n.a. n.a. n.a. Tier-1 ratio 12.% 12.% 11.9% n.a. n.a. n.a. n.a. n.a. Total capital ratio 15.2% 15.2% 15.9% n.a. n.a. n.a. n.a. n.a. Source: Company data, UniCredit Research UniCredit Research page 42 See last pages for disclaimer.

43 Banca Popolare di Milano Event Impact Banca Popolare di Milano Scarl (B1n/B+wn/BB+n) reported a net attributable profit of EUR 64mn (+12% yoy), compared to market estimates (Bloomberg) of EUR 55.4mn. Total income rose 3.3% yoy to EUR 442mn, with net interest income down 8% yoy to EUR 26mn, net fees and commissions up 6.6% yoy to EUR 14mn and trading income flat yoy at EUR 79mn. With expenses down 4% yoy to EUR 237mn, the cost-income ratio fell 4pp yoy to 53.6%. The CET1 ratio was 7.3%, the Tier-1 ratio was 7.8 % and the Total Capital Ratio was 1.81%. PMI said that because the regulatory authorities have postponed the release of the new capital requirements until 3 June, the criteria used to calculate the capital ratios are provisional. Also, the capital ratios have higher weightings as demanded by the Bank of Italy, leading to EUR 8.1bn higher RWAs and a negative impact of 169bp on the CET1 ratio, 18bp on the Tier-1 ratio and 25bp on the total capital ratio. Regarding outlook for FY14, while PMI believes that the recession is over, PMI also points to the still fragile recovery and stated that the banking sector will also suffer from low interest rates. On a positive note, PMI expects lending to companies to pick up. PMI said that it sticks to its Business Plan from March. Also, PMI anticipates commercial business to be focused on improving the group's foothold on its local territory and its client base, while managing and cutting costs and risks and strengthening liquidity and capital, in particular by the ongoing rights issue. Also, PMI states that it is planning efficiency and restructuring actions. PMI further states it wants to focus on raising funding and slowing the decline in lending, while watching credit quality. PMI's results are credit-neutral. While top line figures seem to improve, PMI is still suffering from a weak operating environment. PMI (RECLASSIFIED) KEY FINANCIAL HIGHLIGHTS Figures in EUR million 1Q13 4Q13 1Q14 yoy qoq Net interest income %.% Net fees & commissions % -1.3% Trading income % 334.8% Other income % -55.5% Total income % 9.7% Operating expenses % -4.7% Pre-provision income % 32.9% Loan-loss and other provisions % -74.1% Attributable net income % n.m. Cost-income ratio 57.5% 61.7% 53.6% -394 bp -812 bp Return on equity (net) 5.8% -11.7% 6.9% 18 bp 1855 bp Figures in EUR billion 1Q13 4Q13 1Q14 yoy qoq Total assets % -.7% Shareholders equity % 3.8% Core Tier-1 ratio 8.4% 7.2% n.a. n.a. n.a. CET1 ratio (transitional) n.a. n.a. 7.3% n.a. n.a. Tier-1 ratio 9.% 7.8% 7.8% -118 bp -2 bp Total capital ratio 12.1% 1.7% 1.8% -131 bp 13 bp Source: Company data, UniCredit Research UniCredit Research page 43 See last pages for disclaimer.

44 Banca Popolare dell'emilia Romagna Event Impact Banca Popolare dell'emilia Romagna Scrl (--/BB-wp/BB+n) reported a net attributable profit of EUR 28mn (+96% yoy) compared to a loss of EUR 7mn in 4Q13. The results were driven by solid core revenues, thanks to a material rise in net interest income and gains on financial assets available for sale (government securities) of EUR 67.8mn vs. EUR 23.4mn a year ago. 1Q14 net adjustments to loans and other financial assets rose 28% yoy to EUR 214.7mn, largely driven by the lending sector (EUR 211.8mn). Higher yoy loan loss provisions were due to the weak Italian economy and an extremely conservative approach in the assessment of credit and, in particular, of guarantees, also in light if the ECB s Asset Quality Review. The cost of credit was 46bp, or 185bp annualized. The coverage of nonperforming loans rose 4bp qoq to 55.4%. This includes direct write-downs on non-performing loans outstanding of EUR 1.4bn. The bank reported a CET1 ratio of 9.24% (phase-in) and 8.75% (fully phased) under the standardized approach for the measurement of credit and market risk. The fully phased CET1 ratio was 1.44% including the planned capital increase and without considering the benefits of the validation of internal models ("AIRB"). Liquidity ratios are compliant with Basel 3 minimum requirements and the leverage ratio is 14.x, down from 14.5x qoq. Also, the board of directors approved a share capital increase of up to EUR 75mn, fully underwritten by a syndicate made up of Citigroup Global Markets, JP Morgan and Mediobanca Banca di Credito Finanziario S.p.A, with approval by the extraordinary shareholders meeting set for 6-7 June. The results are neutral as we expect continued pressure from the subdued economy. BANCA POPOLARE DELL'EMILIA ROMAGNA: KEY FINANCIAL HIGHLIGHTS Figures in EUR mn 1Q13 4Q13 1Q14 yoy qoq Net interest income % 1.2% Net commissions % -4.1% Trading income % -71.8% Other income % 128.6% Total income % 3.5% Operating expenses % -5.3% Pre-provision income % 15.5% Loan-loss provisions % 11.4% Attributable net income % n.m. Cost-income ratio 57.4% 57.6% 52.6% -474bp -493bp Return on equity (net) 1.5% -.7% 2.9% 141bp 359bp Figures in EUR bn 1Q13 4Q13 1Q14 yoy qoq Total assets % -1.7% Risk-weighted assets n.a. n.a. n.a. Shareholders equity % 1.1% Core Tier-1 ratio 8.2% 8.6% n.a. n.a. n.a. CET1 ratio (fully loaded) n.a. n.a. 8.8% n.a. n.a. CET1 ratio (phase-in) n.a. n.a. 9.2% n.a. n.a. Tier-1 ratio 8.3% 8.6% n.a. n.a. n.a. Total capital ratio 11.8% 11.9% 11.5% -3bp -4bp Source: Company data, UniCredit Research UniCredit Research page 44 See last pages for disclaimer.

45 Credito Valtellinese Event Impact Credito Valtellinese (Ba3n/BB+n/BBBLn) reported 1Q14 net attributable income of EUR.8mn vs. EUR.3mn in 1Q13. 1Q14 net interest income rose 18% yoy or 6% qoq to EUR 127mn, driven by pricing actions and better funding costs, despite low interest-rates levels, fewer loans and a reduced securities portfolio. Net fee and commission income was roughly flat yoy at EUR 66mn and profit from trading, hedging and sale/repurchase transactions rose to EUR 3.6mn yoy from EUR 11mn thanks to favorable financial markets and profits on government securities. Profit on equity investments also rose to EUR 4.4mn from EUR 1.6mn yoy. Total operating income rose 22% yoy to EUR 233mn. Net loan loss provisions and other financial assets almost doubled yoy to EUR 12mn due to the weak Italian economy and more conservative valuations of impaired loans. The cost of risk was 25bp. Impaired loans, net of impairment losses, rose to EUR 2.9bn from EUR 2.7bn qoq. Concretely, NPLs rose to EUR 86mn from EUR 89 million or +6.2% qoq, leading to an NPL ratio of 4.3% (considering the reclassification of assets as held for sale from loans and receivables with customers) and NPL coverage of 57.3%. Other doubtful loans rose 7.8% qoq to EUR 2.1bn (other doubtful loans ratio 1.5%), of which EUR 1.2bn (vs. EUR 1.1bn at end-213) were watch-list loans, EUR 264mn (vs. EUR 216mn at end-december) were restructured loans and EUR 572mn (flat qoq) were past-due loans. Regarding outlook, CVAL said that despite some signs of improvement, recovery prospects continue to be fragile and uncertain, that economic activity is still in recession and that the labor market continues to be weak, with high levels of unemployment. CVAL further stated that income is expected to suffer from the likely still-high cost of risk, unless the economic recovery picks up significantly. The results are credit neutral. While Credito Valtellinese continues to be impacted by the weak Italian economy (as can be seen by the lower net interest income from fewer loans and worse asset-quality ratios), it was able to turn a profit and increase capitalization. CREDITO VALTELLINESE FINANCIAL HIGHLIGHTS Figures in EUR million 1Q13 4Q13 1Q14 yoy qoq Net interest income % 5.7% Net fees & commissions % -9.1% Net gains on equity-acc. investments % -22.7% Trading income % 12.9% Other income % n.m. Total income % 4.4% Operating expenses % 1.6% Pre-provision income % -2.% Loan-loss and other provisions % -4.3% Pre-tax profit % % Net attributable income % -49.5% Cost-income ratio 67.% 51.1% 54.1% -1287bp 3 bp Return on equity (net).1%.3%.2% 12bp -18 bp Figures in EUR billion 1Q13 4Q13 1Q14 yoy qoq Total assets % -2.1% Risk-weighted assets n.a. n.a. n.a. Shareholders equity % 2.7% Core Tier-1 ratio 8.2% 8.6% n.a. n.a. n.a. CET1 ratio (phase-in) n.a. n.a. 9.2% n.a. n.a. Tier-1 ratio 8.2% 8.6% n.a. n.a. n.a. Total capital ratio 11.4% 12.2% 12.% 57bp -2 bp Source: Company data, UniCredit Research UniCredit Research page 45 See last pages for disclaimer.

46 Notes UniCredit Research page 46 See last pages for disclaimer.

47 Notes UniCredit Research page 47 See last pages for disclaimer.

48 Notes UniCredit Research page 48 See last pages for disclaimer.

49 Disclaimer Our recommendations are based on information obtained from, or are based upon public information sources that we consider to be reliable but for the completeness and accuracy of which we assume no liability. All estimates and opinions included in the report represent the independent judgment of the analysts as of the date of the issue. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we reserve the right not to update this information or to discontinue it altogether without notice. This analysis is for information purposes only and (i) does not constitute or form part of any offer for sale or subscription of or solicitation of any offer to buy or subscribe for any financial, money market or investment instrument or any security, (ii) is neither intended as such an offer for sale or subscription of or solicitation of an offer to buy or subscribe for any financial, money market or investment instrument or any security nor (iii) as an advertisement thereof. The investment possibilities discussed in this report may not be suitable for certain investors depending on their specific investment objectives and time horizon or in the context of their overall financial situation. The investments discussed may fluctuate in price or value. Investors may get back less than they invested. Changes in rates of exchange may have an adverse effect on the value of investments. Furthermore, past performance is not necessarily indicative of future results. In particular, the risks associated with an investment in the financial, money market or investment instrument or security under discussion are not explained in their entirety. This information is given without any warranty on an "as is" basis and should not be regarded as a substitute for obtaining individual advice. Investors must make their own determination of the appropriateness of an investment in any instruments referred to herein based on the merits and risks involved, their own investment strategy and their legal, fiscal and financial position. As this document does not qualify as an investment recommendation or as a direct investment recommendation, neither this document nor any part of it shall form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment whatsoever. Investors are urged to contact their bank's investment advisor for individual explanations and advice. Neither UniCredit Bank nor any of their respective directors, officers or employees nor any other person accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection therewith. This analysis is being distributed by electronic and ordinary mail to professional investors, who are expected to make their own investment decisions without undue reliance on this publication, and may not be redistributed, reproduced or published in whole or in part for any purpose. Responsibility for the content of this publication lies with: a) UniCredit Bank AG (UniCredit Bank), Am Tucherpark 16, 8538 Munich, Germany, (also responsible for the distribution pursuant to 34b WpHG). The company belongs to UniCredit Group. Regulatory authority: BaFin Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, 6439 Frankfurt, Germany. b) UniCredit Bank AG London Branch (UniCredit Bank London), Moor House, 12 London Wall, London EC2Y 5ET, United Kingdom. Regulatory authority: BaFin Bundesanstalt für Finanzdienstleistungsaufsicht, Lurgiallee 12, 6439 Frankfurt, Germany and subject to limited regulation by the Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS, United Kingdom and Prudential Regulation Authority 2 Moorgate, London, EC2R 6DA, United Kingdom. Further details regarding our regulatory status are available on request. POTENTIAL CONFLICTS OF INTERESTS Aareal Bank 3; ABN Amro Bank 3; Aegon 3; Allianz 1b, 3; Allied Irish Banks 3; Assicurazioni Generali 3, 4, 7; Aust. & NZ. Banking Group 3; AXA 3, 7; Banca MPS 3, 4; Banca P. Emilia Romagna 3; Banca Popolare di Milano 3, 4; Banco de Sabadell 3; Banco Espirito Santo 3; Banco Popolare Scarl 3, 4; Banco Popular Espanol 3; Banco Santander 3; Bank of America 3; Bank of Montreal 3; Bankinter, S.A. 3; Barclays 3; BBVA 3; BCP 3; BNP Paribas 3; CAFFIL 7; Caja Mediterraneo 3; Cerved 4; Citigroup 3; Commerzbank 2, 3, 4; Crédit Agricole 3, 4; Credit Suisse 3, 4; Danske Bank 3; Deutsche Bank 3, 4; Deutsche Börse 3; Deutsche Hypothekenbank Hannover 4; Deutsche Postbank 3; Dexia 3; DNB 3; DVB Bank 4; DZ Bank 3; Eika BoligKreditt 3; Eureko 4; Exor 3, 7; Fonciere des Regions 7; GE (industrial) 3, 7; General Electric Capital Corporation 3, 7; Goldman Sachs 3; HSBC 3; IKB 3; ING 3; Intesa Sanpaolo 4; IsBank 7; JPMorgan Chase 7; Landesbank Berlin 3; Lloyds Banking Group 3; Mediobanca 1a, 3, 4; Morgan Stanley 3; Münchener Hypothekenbank 3; Munich Re 3, 7; Nord/LB 3; Nordea 3; PKO Bank 3; Raiffeisen Bank International 3; Raiffeisenlb. Niederoesterreich-Wien 4; RBS 3; Royal Bank of Canada 3; SEB 3; Société Générale 3, 4; Svenska Handelsbanken 3; Swedbank 3; Swiss Re 7; UBI Banca 3, 4; UBS 3, 4; Unibail-Rodamco 7; UniCredit 2, 3; UniCredit Bank Austria 3, 4; Unipol 3, 7; Vienna Insurance Group 3; Wells Fargo & Co 3; Westfälische Landschaft Bodenkreditbank AG 4; Yorkshire Building Society 4; ZFS 3, 7; Key 1a: UniCredit Bank AG and/or a company affiliated with it (pursuant to relevant domestic law) owns at least 2% of the capital stock of the company. Key 1b: The analyzed company owns at least 2% of the capital stock of UniCredit Bank AG and/or a company affiliated with it (pursuant to relevant domestic law). Key 2: UniCredit Bank AG and/or a company affiliated with it (pursuant to relevant domestic law) belonged to a syndicate that has acquired securities or any related derivatives of the analyzed company within the twelve months preceding publication, in connection with any publicly disclosed offer of securities of the analyzed company, or in any related derivatives. Key 3: UniCredit Bank AG and/or a company affiliated (pursuant to relevant domestic law) administers the securities issued by the analyzed company on the stock exchange or on the market by quoting bid and ask prices (i.e. acts as a market maker or liquidity provider in the securities of the analyzed company or in any related derivatives). Key 4: The analyzed company and UniCredit Bank AG and/or a company affiliated (pursuant to relevant domestic law) concluded an agreement on services in connection with investment banking transactions in the last 12 months, in return for which the Bank received a consideration or promise of consideration. Key 5: The analyzed company and UniCredit Bank AG and/or a company affiliated (pursuant to relevant domestic law) have concluded an agreement on the preparation of analyses. Key 6a: Employees of UniCredit Bank AG Milan Branch and/or members of the Board of Directors of UniCredit (pursuant to relevant domestic law) are members of the Board of Directors of the Issuer. Members of the Board of Directors of the Issuer hold office in the Board of Directors of UniCredit (pursuant to relevant domestic law). Key 6b: The analyst is on the supervisory/management board of the company they cover. Key 7: UniCredit Bank AG Milan Branch and/or other Italian banks belonging to the UniCredit Group (pursuant to relevant domestic law) extended significant amounts of credit facilities to the Issuer. RECOMMENDATIONS, RATINGS AND EVALUATION METHODOLOGY Company Date Rec. Company Date Rec. Company Date Rec. ACHMEA 5/12/213 Marketweight CS 5/2/214 no rec. ISPIM 13/3/214 Marketweight ACHMEA 29/1/213 Restricted CS 27/8/213 Marketweight ISPIM 5/2/214 no rec. AXASA 15/5/214 Restricted CS 7/8/213 no rec. MONTE 1/4/214 no rec. BPIM 13/3/214 no rec. EXOIM 26/5/214 Hold NYKRE 16/5/214 Restricted BPIM 13/2/214 Restricted EXOIM 23/9/213 Marketweight NYKRE 8/11/213 Marketweight CAT 8/5/214 no rec. GPBRU 17/6/213 Hold NYKRE 31/1/213 Restricted CERTCH 3/4/214 Restricted IKB 28/11/213 Marketweight RABOBK 5/2/214 Marketweight CMZB 16/7/213 Marketweight IKB 19/9/213 Restricted RABOBK 7/11/213 no rec. CMZB 7/6/213 no rec. INTNED 7/11/213 Marketweight CS 13/3/214 Marketweight INTNED 6/11/213 Restricted Overview of our ratings You will find the history of rating regarding recommendation changes as well as an overview of the breakdown in absolute and relative terms of our investment ratings on our website Note on the evaluation basis for interest-bearing securities: Recommendations relative to an index: For high grade names the recommendations are relative to the "iboxx EUR Benchmark" index family, for sub investment grade names the recommendations are relative to the "iboxx EUR High Yield" index family. Marketweight: We recommend having the same portfolio exposure in the name as the respective iboxx index. We expect that the average total return of the instruments of the issuer is equal to the total return of the index. Overweight: We recommend having a higher portfolio exposure in the name as the respective iboxx index. We expect that the average total return of the instruments of the issuer is greater than the total return of the index. Underweight: We recommend having a lower portfolio exposure in the name as the respective iboxx index. We expect that the average total return of the instruments of the issuer is less than the total return of the index. UniCredit Research page 49

50 Outright recommendations: Hold: We recommend holding the respective instrument for investors who already have exposure. We expect that the total return of the instruments of the issuer is equal to the yield. Buy: We recommend buying the respective instrument for investors who already have exposure. We expect that the total return of the instruments of the issuer is greater than the yield. Sell: We recommend selling the respective instrument for investors who already have exposure. We expect that the total return of the instruments of the issuer is less than the yield. We employ three further categorizations for interest-bearing securities in our coverage: Restricted: A recommendation and/or financial forecast is not disclosed owing to compliance or other regulatory considerations such as a blackout period or a conflict of interest. Coverage in transition: Due to changes in the research team, the disclosure of a recommendation and/or financial information are temporarily suspended. The interest-bearing security remains in the research universe and disclosures of relevant information will be resumed in due course. Not rated: Suspension of coverage. Trading recommendations for fixed-interest securities mostly focus on the credit spread (yield difference between the fixed-interest security and the relevant government bond or swap rate) and on the rating views and methodologies of recognized agencies (S&P, Moody s, Fitch). Depending on the type of investor, investment ratings may refer to a short period or to a 6 to 9-month horizon. Please note that the provision of securities services may be subject to restrictions in certain jurisdictions. You are required to acquaint yourself with local laws and restrictions on the usage and the availability of any services described herein. The information is not intended for distribution to or use by any person or entity in any jurisdiction where such distribution would be contrary to the applicable law or provisions. Coverage Policy A list of the companies covered by UniCredit Bank is available upon request. Frequency of reports and updates It is intended that each of these companies be covered at least once a year, in the event of key operations and/or changes in the recommendation. SIGNIFICANT FINANCIAL INTEREST: UniCredit Bank and/or a company affiliated (pursuant to relevant national law) with them regularly trade shares of the analyzed company. UniCredit Bank and/or a company affiliated may hold significant open derivative positions on the stocks of the company which are not delta-neutral. Analyses may refer to one or several companies and to the securities issued by them. In some cases, the analyzed issuers have actively supplied information for this analysis. ANALYST DECLARATION The author s remuneration has not been, and will not be, geared to the recommendations or views expressed in this study, neither directly nor indirectly. 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The publisher and distributor of the recommendation certifies that it has acted with due care and diligence in preparing the recommendation, however, assumes no liability for its completeness and accuracy. Notice to Russian investors As far as we are aware, not all of the financial instruments referred to in this analysis have been registered under the federal law of the Russian Federation "On the Securities Market" dated 22 April 1996, as amended (the "Law"), and are not being offered, sold, delivered or advertised in the Russian Federation. This analysis is intended for qualified investors, as defined by the Law, and shall not be distributed or disseminated to a general public and to any person, who is not a qualified investor. Notice to Turkish investors Investment information, comments and recommendations stated herein are not within the scope of investment advisory activities. Investment advisory services are provided in accordance with a contract of engagement on investment advisory services concluded with brokerage houses, portfolio management companies, non-deposit banks and the clients. Comments and recommendations stated herein rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not suit your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely on the information stated here may not result in consequences that meet your expectations. Notice to UK investors This communication is directed only at clients of UniCredit Bank who (i) have professional experience in matters relating to investments or (ii) are persons falling within Article 49(2)(a) to (d) ( high net worth companies, unincorporated associations, etc. ) of the United Kingdom Financial Services and Markets Act 2 (Financial Promotion) Order 25 or (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons ). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. UniCredit Research page 5

51 Notice to U.S. investors This report is being furnished to U.S. recipients in reliance on Rule 15a-6 ("Rule 15a-6") under the U.S. Securities Exchange Act of 1934, as amended. Each U.S. recipient of this report represents and agrees, by virtue of its acceptance thereof, that it is such a "major U.S. institutional investor" (as such term is defined in Rule 15a-6) and that it understands the risks involved in executing transactions in such securities. Any U.S. recipient of this report that wishes to discuss or receive additional information regarding any security or issuer mentioned herein, or engage in any transaction to purchase or sell or solicit or offer the purchase or sale of such securities, should contact a registered representative of UniCredit Capital Markets, LLC. Any transaction by U.S. persons (other than a registered U.S. broker-dealer or bank acting in a broker-dealer capacity) must be effected with or through UniCredit Capital Markets. The securities referred to in this report may not be registered under the U.S. Securities Act of 1933, as amended, and the issuer of such securities may not be subject to U.S. reporting and/or other requirements. Available information regarding the issuers of such securities may be limited, and such issuers may not be subject to the same auditing and reporting standards as U.S. issuers. The information contained in this report is intended solely for certain "major U.S. institutional investors" and may not be used or relied upon by any other person for any purpose. Such information is provided for informational purposes only and does not constitute a solicitation to buy or an offer to sell any securities under the Securities Act of 1933, as amended, or under any other U.S. federal or state securities laws, rules or regulations. The investment opportunities discussed in this report may be unsuitable for certain investors depending on their specific investment objectives, risk tolerance and financial position. In jurisdictions where UniCredit Capital Markets is not registered or licensed to trade in securities, commodities or other financial products, transactions may be executed only in accordance with applicable law and legislation, which may vary from jurisdiction to jurisdiction and which may require that a transaction be made in accordance with applicable exemptions from registration or licensing requirements. The information in this publication is based on carefully selected sources believed to be reliable, but UniCredit Capital Markets does not make any representation with respect to its completeness or accuracy. All opinions expressed herein reflect the author s judgment at the original time of publication, without regard to the date on which you may receive such information, and are subject to change without notice. UniCredit Capital Markets may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. These publications reflect the different assumptions, views and analytical methods of the analysts who prepared them. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is provided in relation to future performance. UniCredit Capital Markets and any company affiliated with it may, with respect to any securities discussed herein: (a) take a long or short position and buy or sell such securities; (b) act as investment and/or commercial bankers for issuers of such securities; (c) act as market makers for such securities; (d) serve on the board of any issuer of such securities; and (e) act as paid consultant or advisor to any issuer. The information contained herein may include forward-looking statements within the meaning of U.S. federal securities laws that are subject to risks and uncertainties. Factors that could cause a company s actual results and financial condition to differ from expectations include, without limitation: political uncertainty, changes in general economic conditions that adversely affect the level of demand for the company s products or services, changes in foreign exchange markets, changes in international and domestic financial markets and in the competitive environment, and other factors relating to the foregoing. All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement This document may not be distributed in Canada. CR e 2 UniCredit Research page 51

52 UniCredit Research* Michael Baptista Global Head of CIB Research Dr. Ingo Heimig Head of Research Operations Credit Research Luis Maglanoc, CFA, Head Credit Strategy & Structured Credit Research Dr. Philip Gisdakis, Head Credit Strategy Dr. Christian Weber, CFA, Deputy Head Credit Strategy Dr. Tim Brunne Quantitative Credit Strategy Markus Ernst Credit Strategy & Structured Credit Dr. Stefan Kolek EEMEA Corporate Credits & Strategy Manuel Trojovsky Credit Strategy & Structured Credit Financials Credit Research Franz Rudolf, CEFA, Head Covered Bonds Valentina Stadler, Deputy Head Sub-Sovereigns & Agencies Florian Hillenbrand, CFA Covered Bonds Dr. Tilo Höpker Banks Luis Maglanoc, CFA Regulatory & Accounting Service Natalie Tehrani Monfared Regulatory & Accounting Service Emanuel Teuber Banks, Financial Services, Insurance Robert Vielhaber Sub-Sovereigns & Agencies Dr. Claudia Vortmüller Banks Corporate Credit Research Stephan Haber, CFA, Co-Head Telecoms, Technology Dr. Sven Kreitmair, CFA, Co-Head Automotive & Mobility Jana Arndt, CFA Basic Resources, Industrial G&S, Construction & Materials Christian Aust, CFA Industrial Transportation, Media, Pulp & Paper Olga Fedotova Russia/CIS (Banks, Oil & Gas, Basic Resources, Telecoms) Dr. Manuel Herold Consumers, Oil & Gas Susanne Reichhuber Utilities Alexander Rozhetskin Russia/CIS (Banks, Oil & Gas, Basic Resources, Telecoms) Dr. Silke Stegemann, CEFA Health Care & Pharma, Food & Beverage, Tobacco Publication Address UniCredit Research Corporate & Investment Banking UniCredit Bank AG Arabellastrasse 12 D Munich Bloomberg UCCR Internet *UniCredit Research is the joint research department of UniCredit Bank AG (UniCredit Bank), UniCredit Bank AG London Branch (UniCredit Bank London), UniCredit Bank AG Milan Branch (UniCredit Bank Milan), UniCredit Bulbank, Zagrebačka banka d.d., UniCredit Bank Czech Republic (UniCredit Bank Czechia), Bank Pekao, ZAO UniCredit Bank Russia (UniCredit Russia), UniCredit Bank Slovakia a.s. (UniCredit Slovakia), UniCredit Tiriac Bank (UniCredit Tiriac). CR 4 UniCredit Research page 52