Consolidated interim report on operations as at 30 September 2013

Transcription

1 Consolidated interim report on operations as at 30 September 2013

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3 Contents Banca popolare dell'emilia Romagna Banking Group contents Directors and officers of the Parent Company at the date of approval of the consolidated interim report on operations as at 30 September 2013 page 5 Group interim report on operations as at 30 September 2013 page 7 CONSOLIDATED FINANCIAL STATEMENTS Consolidated financial statements as at 30 September 2013 Consolidated balance sheet page 81 Consolidated income statement page 82 Statement of consolidated comprehensive income page 83 Statement of changes in consolidated shareholders' equity page 84 CONSOLIDATED EXPLANATORY NOTES Form and content of the consolidated interim report as at 30 September 2013 page 89 Information on the consolidated balance sheet page 99 Information on the consolidated income statement page 127 Information on risks and related hedging policy page 141 Information on consolidated shareholders equity page 145 Information on business combinations page 157 3

4 ATTACHMENTS contents Financial statements of the Parent Company as at 30 September 2013 Balance sheet page 167 Income statement page 168 Income statement by quarter page 169 Statement of changes in shareholders' equity page 170 Pro-forma financial statements of the Parent Company Balance sheet as at 31 December 2012 page 171 Income statement as at 30 September 2012 page 173 Certification on the consolidated quarterly financial statements as at 30 September 2013 page 175 4

5 Directors and officers of the Parent Company at the date of approving of the consolidated interim report on operations as at 30 September 2013 directors and officers Board of Directors Chairman: * Ettore Caselli Deputy chairmen: * Alberto Marri * Piero Ferrari * Giosuè Boldrini Chief Executive Officer: * Luigi Odorici Directors: Antonio Angelo Arru Giulio Cicognani * Pietro Ferrari Elisabetta Gualandri Manfredi Luongo Giuseppe Lusignani Valeriana Maria Masperi Giuseppina Mengano Fioravante Montanari Daniela Petitto * Deanna Rossi * Erminio Spallanzani * Angelo Tantazzi * Members of the Executive Committee Board of Statutory Auditors Chairman: Romano Conti Acting Auditors: Carlo Baldi Guglielmo Cacchioli Fabrizio Corradini Pier Paolo Ferrari Substitute Auditors: Luigi Fontana Luigi Attilio Mazzocchi 5

6 Board of Arbiters directors and officers Members: Miranda Corradi Federico Ferrari Amorotti Vittorio Rossi Roberto Bernardi Massimo Turchi Substitute members: Pier Luigi Cerutti Philip Bergamini General Management General Manager: Fabrizio Togni Deputy General Managers: Alessandro Vandelli Eugenio Garavini Manager responsible for preparing the company s financial reports Manager responsible for preparing the company s financial reports Emilio Annovi 6

7 GROUP INTERIM REPORT ON OPERATIONS as at 30 September 2013 Banca popolare dell Emilia Romagna Banking Group 7

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9 Gruppo BPER. La nostra forza è la tua forza. Banca Popolare dell Emilia Romagna Banca della Campania Banca di Sassari Banca Popolare del Mezzogiorno Banca Popolare di Ravenna Banco di Sardegna Cassa di Risparmio di Bra Questo è il marchio del Gruppo BPER. Un gruppo bancario composto da 7 banche con oltre 1300 sportelli e uomini.

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11 Contents INTRODUCTION 1. SIGNIFICANT EVENTS AND STRATEGIC TRANSACTIONS 1.1 Strategic transactions 1.2 The Group's Business Plan 1.3 Structured finance transactions 1.4 Recovery of doubtful loans 1.5 Other significant events group interim report 2. L'AREA DI CONSOLIDAMENTO DEL GRUPPO BPER 2.1 Group structure as at 30 September Composition of the Group at 30 September Changes in the scope of consolidation 3. RESULTS OF OPERATIONS 3.1 Introduction 3.2 Performance ratios 3.3 Balance sheet aggregates 3.4 Capital for supervisory purposes and capital ratios 3.5 Reconciliation of consolidated net profit/shareholders' equity 3.6 Income statement aggregates 3.7 Group employees 3.8 Geographical organisation of the Group 4. OTHER INFORMATION 4.1 Treasury shares 4.2 Ratings 4.3 Inspections by the Supervisory Authorities on Group Banks and Companies 4.4 Disclosure of exposures to sovereign debt held by listed companies 4.5 Main litigation and legal proceedings pending 5. SIGNIFICANT SUBSEQUENT EVENTS AND OUTLOOK FOR OPERATIONS 5.1 Subsequent events 5.2 Outlook for operations 11

12 INTRODUCTION group interim report After a second quarter that saw an acceleration in global economic growth, the third quarter of 2013 will probably show only a slight decrease in this upward trend. The trend in place since the end of the previous period will be further consolidated, with industrialised countries that ought to see the growth differential versus emerging nations getting narrower, after being negative for years. Fears about a decline in the amount of U.S. quantitative easing (the unconventional monetary policy adopted by Federal Reserve to support the economy and financial markets) have, in fact, caused a rush of investors to withdraw investments from developing countries and this has had a negative impact on the strength of their economic growth. Increasing imbalances in the balance of payments and geopolitical tensions have contributed to this trend. As regards individual countries, the economy in the USA continues to be supported by the "wealth effect". Rising financial markets (the S&P500 stock market posted new all-time highs during the quarter), the recovery in the real estate market and the labour market in slow but progressive improvement all help consumption and business confidence. However, the Federal Reserve has been worried about the marked increases in yields on U.S. government bonds and mortgages, which rose in May following fears, that subsequently failed to materialise, of "tapering", i.e. a gradual reduction in unconventional monetary stimulus from September In the third quarter, the Eurozone is expected to confirm the signs of recovery shown in the second quarter, when GDP turned in growth of 0.3% q/q thanks to better than expected figures from the German, Portuguese and French economies: this should be Europe coming out of recession after six consecutive quarters of falling GDP. Inflation (CPI +1.1% y/y in September 2013) continued its downward trend and does not worry the ECB which, in addition to keeping official interest rates at an all-time low of 0.5%, introduced for the first time in early July forward guidance for the expectations of markets and investors about future levels of interest rates. For the ECB, key rates, and therefore all those of the ECB, will remain at current levels, or even lower, for an extended period of time and this should help keep interest rates low on the money market. In the third quarter, after the eighth consecutive negative figure for GDP (the second quarter of 2013 posted a fall of 0.3% q/q) Italy was shaken by new worries about political stability, which fuelled tensions on local financial markets (which subsequently declined). At a macro level, inflation has continued to decline (+0.9% y/y in September 2013) and there has been an improvement in business and consumer confidence, but unemployment and public debt are continuing to rise. Among the major events of the quarter, in addition to what we have already said about central banks, worth noting is the "shutdown" in America. On 30 September 2013, the American fiscal year came to an end without Congress having passed the necessary laws to authorise the financing of certain federal agencies, which led to their temporary closure, putting thousands of public employees on compulsory leave. This, together with the October deadline for the public debt ceiling, left the world in a climate of uncertainty on the economic and financial front during the last quarter of Source: Bloomberg 12

13 1. SIGNIFICANT EVENTS AND STRATEGIC TRANSACTIONS 1.1 Strategic transactions Merger of Cassa di Risparmio della Provincia dell Aquila S.p.A., Banca Popolare di Lanciano e Sulmona S.p.A. and Banca Popolare di Aprilia S.p.A. to be absorbed by Banca popolare dell Emilia Romagna s.c. On 11 January 2013, the Board of Directors of Banca popolare dell Emilia Romagna s.c. ("BPER" or the "Merging Company") and the Boards of Directors of Cassa di Risparmio della Provincia dell Aquila s.p.a. (CARISPAQ), Banca Popolare di Lanciano e Sulmona s.p.a. (BPLS) and Banca Popolare di Aprilia s.p.a. (BPA) approved a merger plan for CARISPAQ, BPLS and BPA ("Companies Being Merged" or Banks of Central Italy) to be absorbed by BPER. The merger, which forms part of the activities envisaged in the Group's Business Plan, designed to simplify and streamline the organisational structure and governance of the Group, as well as to optimise and enhance resources and reduce operating costs, was approved by the Bank of Italy on 5 March The merger took place in a simplified form in accordance with art bis of the Italian Civil Code, as the merging company held more than 90% of the companies being merged. The Boards of Directors of the companies taking part in the merger, assisted by independent advisors, decided on the following share exchange ratios, without any balances to be paid in cash: 1.01 BPER ordinary shares for every CARISPAQ ordinary share; 1.76 BPER ordinary shares for every BPLS ordinary share; 8.76 BPER ordinary shares for every BPA ordinary share. Under art bis of the Italian Civil Code, the shareholders of the companies to be merged, other than BPER, had the right to have their shares bought by the merging company at a price set in the same way as for withdrawal. As the merger implicitly involved a heterogeneous transformation of the companies being merged and a modification of the voting and participation rights, the shareholders of the companies other than BPER, who did not vote in favour of the merger resolution, had the right to withdraw for all or part of the shares that they held, pursuant to art et seq of the Italian Civil Code. The liquidation value of the shares was determined by the Boards of Directors of the companies being merged, having obtained a favourable opinion from their Statutory Auditors and Independent Auditors, as follows: Euro 8.90 per CARISPAQ ordinary share; Euro per BPLS ordinary share; Euro per BPA ordinary share. These amounts were also defined as the consideration to be paid to shareholders of the companies being merged, who exercised their put option pursuant to art bis of the Italian Civil Code. group interim report On 8 March 2013, having obtained the necessary approval from the Supervisory Authority, the Parent Company filed the Merger Plan with the Modena Companies Register and on 11 March 2013 filed the deeds for the simplified procedure pursuant to art bis of the Italian Civil Code. This documentation remained available on file for thirty days prior to the merger resolution and, until it was adopted, it was also published on the Bank s website ( On 23 April 2013, after the approval of the Extraordinary Shareholders' Meetings of the three banks being merged on 14 April for BPLS and on 18 April for CARISPAQ and BPA, the Board of Directors of the Parent Company BPER approved the merger by absorption of the three 13

14 group interim report subsidiaries, as well as the related changes to art. 6 of BPER's articles of association (filed with the Modena Companies Register on 24 April 2013). The merger took place on the weekend of 25 and 26 May, with legal effect from 27 May 2013 and from 1 January 2013 for accounting and tax purposes. Nadia s.p.a. acquires controlling stakes in two property companies With a view to streamlining and reorganising its real estate assets, on 30 January 2013 Nadia s.p.a. signed an agreement to take over the holdings of the other two shareholders and to become the sole shareholder of Immobiliare Reiter s.p.a., already 34% owned at 31 December Within the same project, Nadia took over full control of another property company Galilei Immobiliare s.r.l.. The acquisition of these companies by Nadia s.p.a. will make it possible to monitor and manage more effectively the development of building land owned by the two companies, as well as the disposal of assets that are held for sale. Optima changes its name With effect from 1 February 2013, Optima s.p.a. SGR changed its name to Optima s.p.a. SIM, having obtained all the necessary approvals from the competent authorities, moving its head office from Milan to Modena. Sale of a controlling interest in IMMO.BI s.r.l. (property company) On 25 February 2013, the Parent Company reached an agreement with Sequenza s.p.a. to sell its entire controlling interest (80.90%) in Immo.Bi s.r.l. for Euro 245, The company, which at 31 December 2012 was shown under "Non-current assets and disposal groups held for sale", was excluded from the scope of consolidation in the first quarter of BPER acquires control of Cassa di Risparmio di Bra On 7 February 2013, having obtained the necessary approvals from the authorities, Banca popolare dell Emilia Romagna s.c. ("BPER") and Fondazione Cassa di Risparmio di Bra ("Fondazione") went ahead with the "Share purchase and sale contract" signed on 20 September 2012, involving the sale of 35.98% of Cassa di Risparmio di Bra ("CR Bra") by the Fondazione to BPER for a total of Euro 23.9 million, paying 50% in cash and the rest in fixed-rate BPER Lower Tier II Subordinated Bonds, maturity 7 years. This transaction gives BPER ownership of a 67% controlling interest in the share capital of CR Bra, which means including it in the scope of consolidation. With a letter dated 17 May 2013, the Bank of Italy authorised the changes to CR Bra's articles of association needed to reflect the fact that it now belongs to the BPER Group, as well as to carry out the increase in capital needed to strengthen its capital, as required by the Supervisory Authority at the beginning of the year. On 11 June 2013, CR Bra convened an extraordinary shareholders' meeting to approve an increase in capital of Euro 20,000,000, carried out by issuing 12,500,000 new shares; of these, 8,375,000 were subscribed by BPER and 4,125,000 by Fondazione. 14

15 Arca Impresa Gestioni SGR s.p.a. On 21 March 2013, after a period of exclusive negotiations with Iniziativa Gestione Investimenti SGR s.p.a., the shareholding in Arca Impresa Gestioni SGR s.p.a., which was held 100% by BPER, was transferred, as the required authorisations had all been granted to the buyer. Arca Impresa Gestioni SGR s.p.a. is an asset management company that specialises in the promotion and management of closed-end private equity funds; at the end of 2012 it managed four funds, two of which are in the investment phase, while the other two have nearly completed their disinvestment. On 23 July 2013, the parties decided on the final selling price and a price adjustment of Euro thousand was paid. Following completion of its sale, the company is no longer included in the scope of consolidation, having been shown under "Non-current assets and disposal groups held for sale" at 31 December group interim report Serfina Banca s.p.a. On 4 June 2013 BPER's Board of Directors decided to acquire the banking business of Serfina Banca s.p.a. in accordance with the objectives laid down in the Parent Company's Business Plan, having completed the due diligence and reached an agreement with the Trade Unions. On 15 July 2013, the Parent Company and Serfina Banca s.p.a. signed an agreement for BPER to purchase the affiliate's banking business, subject to the outcome of its shareholders' meeting. Serfina's shareholders' meeting held on 19 July voted in favour of selling the banking business on the following terms: the price is estimated at Euro 6,215 thousand, based on the company's book balances at 31 December 2012, net of the assets/liabilities not transferred and a further provision for loan losses; the company's winding-up pursuant to art of the Italian Civil Code and consequent measures, as stipulated in the sale agreement (art. 4.1). The transaction was completed on 30 September 2013, when the assets and liabilities that form part of the banking business were acquired and the winding-up of company took effect for legal purposes as it was impossible to achieve its corporate purpose, resulting in its liquidation. The assets acquired, on the basis of the book figures at 30 September 2013, amount to Euro 65,345 thousand, of which Euro 59,166 thousand are loans, against liabilities acquired of Euro 59,269 thousand, of which Euro 48,807 thousand are customers deposits, including Euro 11,333 thousand of bonds. At the same time, the two former Serfina Banca branches were structured as small branches linked to BPER as part of the Territorial Division of Lanciano (Chieti and Pescara Branch no. 3). 1.2 The Group's Business Plan At the meeting on 13 March 2012, the Board of Directors of Banca popolare dell'emilia Romagna approved the Business Plan: "The new BPER Group: growth, value and territory in a country that is changing". The Business Plan was then presented to the financial community on 14 March By developing the projects contained in the Business Plan, the Group has set as its main objective for to achieve an adequate level of profitability that is sustainable over time, through: 15

16 group interim report greater efficiency and higher revenue; containment of the cost base; strengthening of the Group's operational machine; in accordance with the strong local presence that has always been a characteristic of the BPER Group. The principal measures of the Business Plan can be divided into two broad categories: ordinary and extraordinary measures, originally made up of 82 projects, of which 68 ordinary and 14 extraordinary. To date, the 82 original projects envisaged in the Master Plan have been reduced to 74 by grouping four of them together and rescheduling another four beyond As regards implementation and the progress being made on these original projects, to date, 49 are in progress and 6 have already been completed (including all of the mergers with BPER envisaged in the Plan). The most important worth mentioning, including those in 2012, include: the integration of Meliorbanca (in 2012); the absorption of CARISPAQ, BPLS and BPA by the Parent Company, as explained in the section entitled "Strategic transactions"; a new model of governance for the Parent Company (already concluded in 2012): establishment of the roles of Chief Risk Officer (CRO), Chief Lending Officer (CLO), Chief Operating Officer (COO) and Chief Financial Officer (CFO) to enhance risk management and strengthen credit management; a new model of governance for Group banks (started in 2012): a new organisational model for the Group banks not involved in mergers is currently being adopted. It is geared to higher business orientation and faster implementation of the Parent Company's guidelines, with a particular focus on the Commercial and Lending functions; the "Efficient management of the Group's non-performing loans" project (started in 2012). Under ordinary operations: enhancement of multi-channel strategy; "Basel 2" programme: the BPER Group started work back in 2007 on the Basel 2 Programme, which is now in its final stages, dedicated to the optimisation and maintenance of the IRB (Internal Rating Based) system in terms of organisation, methodology and IT; collective agreement for the staff: on 9 April 2013, the Bank completed the process of verifying, together with the Trade Unions, the Personnel Manoeuvre included in the Group Framework Agreement signed on 15 September 2012 to simplify the Group's organisation and reduce overall operating costs in a structural manner. The main objective of the agreement was to reduce the workforce by 450 people, through voluntary application to join the redundancy incentive plan and access to the banking sector's Solidarity Fund for income support. At the end of this verification process, the acceptance period was extended by four months, with a consequent increase in the number of members and a higher cost for around Euro 9 million, which was already provided for in the Income Statement at 30 June

17 1.3 Structured finance transactions One of the guidelines of the Business Plan is to maintain an adequate liquidity profile. Accordingly, various initiatives were planned with a view to diversifying the forms of medium/long term financing, initially through Eurosystem's open market operations, while waiting for a revitalisation of operators' interest in transactions with Italian counterparties, which today is limited. In this context, the following actions were completed during the period under review: under the long-term programme of Guaranteed Bank Bonds ("Covered Bonds") of Euro 5 billion, intended for institutional investors, with the approval of the basic prospectus by the Luxembourg "Commission de Surveillance du Secteur Financier" on 30 November 2011, updated on 8 August 2013, a third portfolio was sold on 1 July 2013 for a total of some Euro 700 million, made up not only of BPER's 2012 production, but also of the loans of the three banks recently merged with BPER (CARISPAQ, BPLS and BPA). This sale was preparatory for a new bond issue, the third of the programme, for a total of Euro 750 million, which was carried out on 15 October 2013, as specified in the last part of this report under "Significant subsequent events and outlook for operations"; securitisation of loans to SMEs: similar to the Estense Finance operation carried out in 2009, in 2012 it was decided to sell and securitise loans issued by BPER, acquiring on subscription all of the securities originated by the operation, in order to have available additional instruments eligible for refinancing with the ECB. The loans involved in the sale were performing loans made to SMEs for a total of Euro 2.2 billion. The buyer was Estense S.M.E. s.r.l., a special purpose vehicle which issued Senior Securities (Class A) for Euro 1.5 billion, rated A-/A (low) by Standard & Poor s and DBRS respectively, and Junior Securities (Class B), which are unrated, for Euro 0.7 billion. In February 2013, the Senior issue became available for refinancing operations with the ECB, once it had obtained eligibility from the Central Bank of Luxembourg. The Senior Security is currently amortising according to expectations and the residual nominal capital after the payment date in September 2013 amounts to Euro 1,169 million; a "Multi-originator securitisation of lease receivables was carried out jointly by Sardaleasing and ABF Leasing through the sale without recourse of a portfolio of performing lease receivables, selected according to specific objective criteria, in a lump sum to a special purpose vehicle ("SPV") called MULTI LEASE AS s.r.l.. The sale of the receivables was formalised on 1 February 2013 and published in the Official Gazette no. 16 of 7 February The total value of the receivables sold amounted to approximately Euro 1,018 million, of which around Euro 580 million (57%) attributable to Sardaleasing and Euro 438 million (43%) to ABF Leasing. A "multi-originator" structure was chosen as it permitted a significant reduction in costs, in terms of both initial structuring costs and subsequent management costs. The SPV financed the purchase price of the receivables by issuing: group interim report Senior Class A securities of Euro 625,900,000, ISIN IT , rating: S&P s A and Fitch "A-", listed on the Dublin Stock Exchange and recognised as eligible by the Irish Central Bank; Junior Class B1 securities, of Euro 168,431,000, ISIN IT , unrated and unlisted, subscribed by the seller ABF Leasing; Junior Class B2 securities of Euro 223,417,000, ISIN IT , unrated and unlisted, subscribed by the seller Sardaleasing. 17

18 group interim report The aim is again to raise funds for the benefit of the entire Banking Group, at competitive costs, through refinancing with the ECB. The Senior Security is currently amortising according to expectations and the residual nominal capital after the payment date in July 2013 amounts to Euro million. 1.4 Recovery of doubtful loans: securitisations and other financial transactions Avia Pervia transaction Following the example of the Parent Company and Meliorbanca at the end of the previous year, on 21 March 2013, the other Group banks, excluding Cassa di Risparmio di Bra, contributed to the multi-originator securitisation of Avia Pervia s.r.l. (9.9% owned by BPER), with the sale of a portfolio of mortgage loans and unsecured loans classified by the Originators as non-performing, for a total transfer price of Euro million. 70% of the portfolios acquired (the "up-front purchase price") was financed by the SPV issuing on 17 May 2013 a series of asset-backed securities, unrated and unlisted, which will be fully subscribed by the Originators, while the other 30% (the "deferred purchase price") was financed by means of a credit line granted by the selling banks. As mentioned previously, the transaction is considered as a type of multi-originator securitisation, which involves the banks as both originators and investors. Consequently, as the risks and benefits of the portfolios have not been transferred, these loans have not been reversed out of the assets of the Group Banks. The management of items in dispute has been assigned to the Originator banks themselves (as sub-servicers) coordinated by a Group Company, Nettuno Gestione Crediti s.p.a. (as the master servicer). Efficient management of non-performing loans should enable the Group to take extraordinary measures to reduce the stocks of such positions, while also optimising the direct costs involved in managing them. The following table summarises the assigned portfolios and related issues (the BPER portfolio also includes the one relating to the sale made by the former Meliorbanca, which was merged in November 2012). 18

19 Originator bank Number of positions Nominal value (GBV) Sale proceeds Up-front purchase price Deferred purchase price Banca popolare dell'emilia Romagna 724 1, Banco di Sardegna group interim report Banca Popolare del Mezzogiorno Banca della Campania Banca Popolare di Aprilia Banca Popolare di Lanciano e Sulmona Banca Popolare di Ravenna Banca di Sassari Cassa di Risparmio della Provincia dell Aquila TOTAL 1,714 2, Mutina transaction Of the various securitisations carried out within the Group, still outstanding is the multi-originator one carried out in 2002 with Mutina s.r.l. (wholly owned by BPER), which was scheduled to expire during As regards management of this operation, based on checks carried out by Nettuno Gestione Crediti, acting as Master Servicer, there was evidence that the procedures for recovery of the non-performing loans transferred takes longer than estimated at the time the securities were issued, though the results are still positively assessed. So, as reflected in the updated dynamic Business Plan, taking into account that the SPV will continue to collect proceeds from the securitised portfolios well beyond the legal deadline of the Junior Securities (the second maturity date) and at least until December 2018, at the end of last year, an amendment to the maturity date was made, postponing the second maturity date, originally scheduled for 9 August 2013, to 9 February Polis fund During the first half of 2013, the BPER Group took part, together with 12 other banks, in the launch of "Asset Bancari III", a closed-end real estate mutual investment fund managed by Polis SGR. Operations began on 26 June 2013 with the early closure of subscriptions and an initial capital of Euro 98,750 thousand, divided into 395 units with a nominal value of Euro 250 thousand each. The BPER Group subscribed 82 units for a total nominal value of Euro 20,500 thousand, of which 61, valued at Euro 15,250 thousand resulting from the contribution of property portfolios by ABF Leasing and Melior Valorizzazioni Immobili and 21, valued at Euro 5,250 thousand, from the subscription of commitments to be released by paying in cash. Against these contributions, the Fund can acquire mortgage-backed non-performing loans from the participating companies. Following the conclusion of the first property contributions, 45 units were assigned to the portfolio valued at Euro 11,250 thousand, and included under "Financial assets available for sale". 19

20 group interim report Securis Real Estate Fund On 25 June 2013, Sardaleasing and Beni Stabili Gestioni SGR s.p.a. stipulated the first contribution of properties to the Securis Real Estate Fund, a closed-end real estate mutual investment fund reserved for qualified investors. This is a block of 20 properties worth a total of around Euro 8,238 thousand. The assets relate to positions in default for a net book value of Euro 8,841 thousand, which generated a loss of approximately Euro 600 thousand on the books of the subsidiary of the Banco di Sardegna. The contribution led to the subscription of 120 new units of the Fund with a provisional value of Euro 70,582 per unit, for a total of Euro 8,470 thousand. 1.5 Other significant events Earthquake in Emilia-Romagna: BPER supports its customers The earthquake that in May 2012 tragically hit the territory where the Parent Company has its historical roots was commented on in considerable detail in the annual report. Work on repairing the damage and restoring infrastructure and production facilities continued in 2013, with BPER in the front line. The Parent Company was recognised as support bank for the provision of subsidies to households and businesses affected by the earthquake, as established by the regional ordinances n. 29/2012 (for residential properties) and n. 57/2012 and subsequent (for business activities). Note that from December 2012, when this facility came to an end, the BPER Group autonomously extended the suspension of loan repayments up to June In June 2013 the BPER Group signed up for the ABI Agreement, which aimed to provide a further extension of this benefit to 31 December 2013 for customers still in difficulty. In addition to any immediate damage to the Group's assets, the earthquake also resulted in a need to pursue new activities to support and protect BPER's core activities, which immediately involved: mapping the effects of the earthquake on customers; one-to-one analysis of customers in critical situations; monitoring the evolution of critical situations over time. Immediately after the event, the branches involved, coordinated by the Markets Department, which collected and processed the data, carried out a census of 20,400 customers, in order to record the impact of the earthquake on their production (companies) or professional activities (individuals). Based on the data obtained from the census and ever since 30 June 2012, BPER arranged for a system of penalties to rating scores and to the value of guarantees to take into account the effects of the earthquake, resulting in additional prudential provisions on loans in the area concerned. Then, from July 2012, analyses and analytical monitoring of the most critical customers were carried out, above all business customers based in the so-called "red zone" and with loans in excess of Euro 100,000 at the time of the earthquake. The results of this process demonstrated that the earthquake had a significant impact with serious consequences on the business situation for a limited number of customers, even if they represented exposures of almost Euro 7 million. On the other hand, the majority of companies located within the scope of the investigation and granted loans of more than Euro 100,000, which had declared damages to their property and/or production facilities immediately after the earthquake, managed to overcome their difficulties 20

21 during the 12-month period under observation, either by their own means or the intervention of the shareholders, or thanks to insurance reimbursements. So in light of the results of these analyses, the analytical evaluations of impaired positions and considering that further investigations tend to indicate that the negative effect of the earthquake is already reflected in our internal ratings for both Corporate and Retail customers, the system of penalties originally applied was eliminated from 30 June group interim report Affiliated companies On 31 January 2013, the Board of Directors of the affiliate Cassa di Risparmio di Savigliano s.p.a. approved a bonus issue increase in capital pursuant to art of the Italian Civil Code, mainly using property revaluation reserves to strengthen its capital ratios, above all its Tier 1 capital ratio. The Extraordinary Shareholders' Meeting of Cassa di Risparmio di Savigliano held on 12 September 2013 approved the bonus issue increase in capital and the consequent change in the Articles of Association. At the board meeting of 17 December 2012, the Directors of Alba Leasing s.p.a. approved the Guidelines of the Business Plan which includes, in particular, its obtaining bank status. This transformation from its current status as a finance company under art. 107 requires it first to achieve adequate levels of capitalisation; to achieve this objective, the Board of the company has decided to ask the shareholders for fresh capital. On 28 January 2013, the Board of Directors of BPER approved the plan to subscribe the Euro 70 million increase in the subsidiary's share capital. As a result, Alba Leasing's share capital has gone from Euro 255 million to Euro 325 million. The Parent Company took part by subscribing 25,501,000 shares for a total of Euro 25.5 million, leaving its percentage ownership the same as at 31 December Alba Leasing's Business Plan, which was approved by the subsidiary's Board of Directors on 25 May 2013, provides, among other things, for the start of the reorganisation and rationalisation of the operating structure in order to achieve improvements in efficiency, as well as the revision of the service model in favour of the distribution network. Appointments and resignations from the Board of Directors of the Parent Company BPER On 11 January 2013, the Board of Directors of BPER voted unanimously to co-opt Pietro Ferrari onto the Board to replace Alessandro Fagioli, who resigned on 18 December Pietro Ferrari comes from Modena and graduated with a degree in Civil Engineering from the University of Bologna. In 1982, he joined the family business, Ing. Ferrari s.p.a., as sole director and in 1990 he became CEO. He holds various corporate positions and has been the President of the Modena branch of Confindustria since June The Shareholders' Meeting of 20 April confirmed Mr. Ferrari for the next three-year period On 23 April 2013, as a result of the appointments made by the Shareholders' Meeting of 20 April, the Board of Directors of Banca Popolare dell'emilia Romagna, decided to reconfirm Luigi Odorici as CEO. The same meeting also approved the appointment of Giosuè Boldrini as Deputy Chairman, who joins the other two Deputy Chairmen, Alberto Marri and Piero Ferrari. 21

22 On 4 July 2013, Mario Zucchelli, Independent Director has resigned from the post of Director of BPER due to conditions of incompatibility of office, in compliance with the provisions of art. 36 of Decree Law 201 of 6 December 2011, converted into Law 214 of 22 December group interim report The Board is currently made up of eighteen members, nine of whom are part of the Executive Committee. J.E.S.S.I.C.A. Sardinia Urban Development Fund In 2006, a joint initiative of the European Commission of the EIB, in collaboration with the Council of Europe Development Bank (CEB) gave rise to J.E.S.S.I.C.A. (Joint European Support for Sustainable Development in City Areas), a tool designed to encourage investment in urban areas by promoting the revolving use of European Structural Funds for projects of urban development, made available to the regions of EU Member States, also to foster the creation of public-private partnerships. The operating agreement was signed in July 2012 at the Regional Planning Centre of the Sardinia Region in Cagliari, between the European Investment Bank (EIB) and Banco di Sardegna, which in partnership with Sinloc (Sistemi iniziative locali) s.p.a. will manage the J.E.S.S.I.C.A. Sardinia Urban Development Fund. The resources acquired will amount to Euro 33 million and will be invested on a revolving basis in urban transformation projects, tourism infrastructure and local public transport, to which may be associated approximately Euro 99 million of co-financing from Banco di Sardegna directly for selected projects. Additional resources will be made available by the EIB through Banco di Sardegna. At 30 September 2013, the J.E.S.S.I.C.A. Fund, the activity of which is still starting, has received Euro 5 million and disbursed to Banco di Sardegna and Sinloc s.p.a. commissions for a total of Euro 430 thousand. 22

23 2. SCOPE OF CONSOLIDATION OF THE BPER GROUP 2.1 Group structure as at 30 September 2013 Bearing in mind the various matters discussed in the introduction, the Group structure at 30 September 2013 is as follows. group interim report 23

24 91.162% SITUATION AS AT 30/09/2013 Numera S.p.A % Tholos S.p.A % % Banca Popolare di Ravenna S.p.A % Cassa di Risparmio di Bra S.p.A % Banca della Campania S.p.A % Banca Popolare del Mezzogiorno S.p.A % Banco di Sardegna S.p.A % (a) % Banca di Sassari S.p.A % 1.000% % Banca Popolare dell'emilia Romagna (Europe) International S.A % Emilia Romagna Factor S.p.A % Optima S.p.A. - SIM % BPER Services S.C.p.A % (b) % 5.000% Sardaleasing S.p.A % Estense Covered Bond S.r.l % ABF Leasing S.p.A % Nettuno Gestione Crediti S.p.A % Nadia S.p.A % Modena Terminal S.r.l % BPER Trust Company S.p.A % EMRO Finance Ireland Limited % Mutina S.r.l % a) b) Equivalent to % of the entire Capital Stock consisting of ordinary, preferred and savings shares, the latter being non voting shares. The following banks also are shareholders of BPER Services S.C.p.A.: Banco di Sardegna S.p.A. (4.762%), Banca di Sassari S.p.A. (0.400%), Banca popolare di Ravenna S.p.A. (0.400%), Banca della Campania S.p.A. (0.400%), Banca popolare del Mezzogiorno S.p.A. (0.400%), Optima S.p.A. SIM (0.400%) and Sardaleasing S.p.A. (0.400%). In addition to the above members of the banking group, the scope of consolidation also includes the following subsidiaries of: - the Parent Bank: Melior Valorizzazioni Immobili S.r.l. ( %), Sarda Vibrocementi S.r.l. ( %) and Italiana Valorizzazioni Immobiliari S.r.l. ( %) - Banca della Campania S.p.A: Polo Campania S.r.l. ( %), - Nadia S.p.A.: Galilei Immobiliare S.r.l. ( %) and Immobiliare Reiter S.p.A. ( %), which are not members of the banking group, since they do not contribute directly to its activities.

25 2.2 Composition of the Group at 30 September 2013 The BPER Group has been registered since 7 August 1992 with code no in the Register of Banking Groups referred to in art. 64 of Legislative Decree 385 of 1 September group interim report The following is a list of the Banks and Companies included in the scope of consolidation at 30 September 2013, split between subsidiary banks and companies (consolidated line-by-line) and associate banks and companies (consolidated under the equity method). Details are also provided of the percentage held by the Group, with further specific information provided, where necessary, by means of footnotes. A) Companies consolidated on a line-by-line basis: 1) Banca popolare dell'emilia Romagna s.c., based in Modena (Parent Company) 2) Banca Popolare di Ravenna s.p.a., based in Ravenna (86.965%); 3) Banca Popolare del Mezzogiorno s.p.a., based in Crotone (96.772%); 4) Banca Popolare dell Emilia Romagna (Europe) International s.a., based in the Grand Duchy of Luxembourg (100%) 1 ; 5) Banca della Campania s.p.a., based in Naples (99.273%); 6) Banco di Sardegna s.p.a., based in Cagliari, which is held as follows: 51% of ordinary shares, % of preference shares and % of savings shares (without voting rights, listed on the Italian Stock Exchange), representing % of total capital; 7) Banca di Sassari s.p.a., based in Sassari (97.694%) 2 ; 8) Cassa di Risparmio di Bra s.p.a., based in Bra (Cuneo) (67%); 9) EMRO Finance Ireland limited, based in Dublin (Ireland), Irish investment company (100%); 10) Nadia s.p.a., based in Modena, property company (100%); 11) Modena Terminal s.r.l., based in Campogalliano (Modena), the activities of which are the storage of goods, the storage and ageing of cheeses and the cold storage of meat and perishable products (100%); 12) BPER Services s.cons.p.a., based in Modena, IT services consortium (100%) 3 ; 13) Mutina s.r.l., based in Modena, used as a vehicle for the securitisation of receivables (100%); 14) Nettuno Gestione Crediti s.p.a., based in Bologna, provider of debt recovery services (100%); 1 held by: the Parent Company (99%) and Banca Popolare di Ravenna s.p.a. (1%). 2 held by: Banco di Sardegna s.p.a. (79.722%) and the Parent Company (17.972%). 3 held by: the Parent Company (92.838% of which: 1.200% following the merger of Banca popolare di Aprilia s.p.a., Banca popolare di Lanciano e Sulmona s.p.a. and CARISPAQ s.p.a. which held 0.400% each), Banco di Sardegna s.p.a. (4.762%), Banca di Sassari s.p.a. (0.400%), Banca popolare di Ravenna s.p.a. (0.400%), Banca della Campania s.p.a. (0.400%), Banca popolare del Mezzogiorno s.p.a. (0.400%), Optima s.p.a. SIM (0.400%) and Sardaleasing s.p.a. (0.400%). 25

26 15) ABF Leasing s.p.a., based in Milan, a leasing company (100%); 16) Emilia Romagna Factor s.p.a, based in Bologna, a factoring company (60.710%); group interim report 17) Optima s.p.a. SIM, based in Modena, investment broker (100%); 18) Sardaleasing s.p.a., based in Sassari, leasing company (96.162%) 4 ; 19) Numera s.p.a., based in Sassari, IT company and subsidiary of Banco di Sardegna which holds 100% of share capital; 20) Tholos s.p.a., based in Sassari, property company and subsidiary of Banco di Sardegna which holds 100% of share capital; 21) Estense Covered Bond s.r.l. based in Conegliano (Treviso), a vehicle for the issue of Guaranteed Bank Bonds under art. 7 bis of Law 130/99 (60%); 22) Bper Trust Company s.p.a., based in Modena, with the role of trustee for trusts established by customers, as well as provider of advice on trust matters (100%); In addition to the above members of the banking group, the scope of consolidation also includes the following direct and indirect subsidiaries that are not members of the banking group, since they do not contribute directly to its activities, but are fully consolidated: Melior Valorizzazioni Immobili s.r.l. (100%); Immobiliare Reiter s.p.a. wholly owned by Nadia s.p.a.; Galilei Immobiliare s.r.l. wholly owned by Nadia s.p.a.. The following companies are not part of the Banking Group as they do not contribute to its activities: Sarda Vibrocementi s.r.l. (100%): not consolidated as it was only acquired a few months ago and it had not yet been possible to exercise control; the investment is therefore consolidated at equity; Italiana Valorizzazioni Immobiliari s.r.l. (100%), a company set up on 5 September 2013 for the management and enhancement of real estate assets acquired as a result of enforcing guarantees on problem loans. The company is still dormant at 30 September 2013 and the investment has been allocated to "Financial assets available for sale"; Polo Campania s.r.l. wholly owned by Banca della Campania s.p.a.. The company is still dormant at 30 September 2013 and the investment has been allocated to "Financial assets available for sale". 4 held by: Banco di Sardegna s.p.a. (91.162%) and the Parent Company (5%). 26

27 B) Companies consolidated under the equity method 1) Cassa di Risparmio di Fossano s.p.a., based in Fossano (Cuneo) (23.077%); 2) Cassa di Risparmio di Saluzzo s.p.a., based in Saluzzo (Cuneo) (31.019%); 3) Cassa di Risparmio di Savigliano s.p.a., based in Savigliano (Cuneo) (31.006%); group interim report 4) Banca della Nuova Terra s.p.a., based in Milan (30.369%); 5) Alba Leasing s.p.a., based in Milan (36.430%); 6) CO.BA.PO. - Consorzio Banche Popolari s.con., based in Bologna (26.044%) 5 ; 7) Sofipo Fiduciaire SA, based in Lugano, held by Banca Popolare dell Emilia Romagna (Europe) International s.a which holds 30% of share capital; 8) CONFORM - Consulenza Formazione e Management s.c.a.r.l., based in Avellino (49.405%) 6 ; 9) Sintesi 2000 s.r.l., based in Milan (33.333%); 10) CAT progetto Impresa Modena s.c.r.l., based in Modena (20%); 11) Resiban s.p.a., based in Modena (20%); 12) Unione Fiduciaria s.p.a., based in Milan (24%); 13) Atriké s.p.a., based in Modena (45%); 14) Sarda Factoring s.p.a., based in Cagliari (21.484%); 7 15) Emil-Ro Service s.r.l., based in Bologna (25%) Changes in the scope of consolidation Companies consolidated on a line-by-line basis On 30 January 2013 Nadia s.p.a. signed a purchase agreement to take over the interest of the two other shareholders and thus to become the sole shareholder of Immobiliare Reiter s.p.a., already 34% owned at 31 December Within the same project, Nadia took over full control of another property company Galilei Immobiliare s.r.l.. The other 66% of Immobiliare Reiter s.p.a. was bought at the symbolic price of Euro 2,000 as the balance sheet used for valuation purposes, prepared at 30 November 2012 by the Board of Directors of the company, shows zero net equity due to losses. In any case, the former shareholders have been exempted from any obligation to finance and recapitalise the company, as it is the acquiring company that will ensure its recapitalisation. On 25 March 2013, the Shareholders' Meeting of Immobiliare Reiter approved coverage of the accumulated losses and recapitalisation of the company. At 30 September 2013, the company has a reconstituted share capital of Euro 900 thousand; on 7 February 2013, the Parent Company acquired 35.98% of Cassa di Risparmio di Bra s.p.a., already 31.02% owned at 31 December 2012, giving it a 67% controlling interest, 5 held by: the Parent Company (23.587%) and Banca Popolare di Ravenna s.p.a. (2.457%). 6 held by: the Parent company (40.476%), Banca della Campania s.p.a. (5.952%) and Banco di Sardegna s.p.a.(2.976%). 7 held by: Banco di Sardegna s.p.a. (13.401%) and the Parent Company (8.083%). 8 held by: the Parent company (16.667%) and Emilia Romagna Factor s.p.a. (8.333%). 27

28 group interim report as explained in the previous chapter on "Significant events and strategic transactions". The Euro 20 million cash increase in the subsidiary's capital was completed on 11 June As a result, its share capital went from Euro 20.8 million to Euro 27.3 million. The Parent Company subscribed 8,375,000 shares for a total amount of Euro 13.4 million; the sale of the majority holding (80.90%) in Immo.Bi. s.r.l. was completed on 25 February 2013; the liquidation of Arca Merchant International s.a. was completed on 28 February It has been eliminated from the Banking Group; the sale of the 100% investment in Arca Impresa Gestioni SGR s.p.a. was completed on 21 March 2013; The merger of CARISPAQ, BPLS and BPA with the Parent Company was completed on 27 May The merger took effect for tax and accounting purposes from 1 January 2013; Italiana Valorizzazioni Immobiliari s.r.l., which is wholly owned by the Parent Company, was set up on 5 September 2013 for the management and development of real estate assets acquired as a result of enforcing guarantees on problem loans. The following changes also took place in the Parent Company's interest in certain subsidiary banks and companies during the period: Banco di Sardegna s.p.a.: the Parent Company's previous holding of % was raised to % after buying savings shares on the market; Banca Popolare di Ravenna s.p.a.: formerly held % by the Parent Company, it rose to % following various purchases from shareholders; Banca Popolare del Mezzogiorno s.p.a.: formerly held % by the Parent Company, it rose to % following various purchases from shareholders; Banca della Campania s.p.a.: formerly held % by the Parent Company, it rose to % following various purchases from shareholders; Banca di Sassari s.p.a.: formerly held % by the Parent Company, it rose to % following various purchases from shareholders. Companies consolidated under the equity method Cassa di Risparmio di Bra s.p.a. and Immobiliare Reiter s.p.a. are no longer classified as "significant investments" as BPER has taken over control of them, directly or indirectly, as mentioned in the previous point; Emilia Romagna Factor s.p.a. sold its entire 50% investment in Ekaton s.r.l. on 28 February 2013.; On 14 June 2013, the Parent Company acquired control of Sarda Vibrocementi s.r.l., as part of a complex debt collection operation, by subscribing a capital increase of Euro 3,000,000, offset by a receivables of the same amount against an equity that had been written off to cover past losses. As already mentioned, it was not fully consolidated; the Parent Company sold its entire 20% investment in Felsinea Factor s.p.a. on 19 September 2013; the Agreement for the sale by Serfina Banca s.p.a. to the Parent Company of assets and activities making up the banking business, as already mentioned in the section entitled "Significant events and strategic transactions", was executed on 27 September This transaction was followed by the simultaneous liquidation of the company with immediate annulment of the Board of Directors, of the pre-existing shareholder agreements and, consequently, of BPER's significant influence: Serfina (held %) is therefore no 28

29 longer consolidated using the equity method, but classified under "Financial assets available for sale". group interim report 29

30 3. RESULTS OF OPERATIONS group interim report 3.1 Introduction Despite the worst economic crisis since World War II, the Group has managed to retain a good overall level of profitability, while at the same time reducing operating costs; and despite the impact of including CR Bra in the Group, it is also showing an improvement in capital ratios. Also worth noting is the level of liquidity, which is already in line with the Basel 3 minimum requirements, as well as the Group's leverage, which is one of the lowest in the system. The Group's consolidated results at 30 September 2013 show a profit before tax of Euro 99.3 million, which includes the impact of hefty prudential adjustments on loans due to the application of more conservative classification and provisioning criteria since 31 December 2012, in line with the indications of the Supervisory Authority. The overall consolidated net profit for the period, which includes the net profit of assets held for sale, amounts to Euro 23.2 million (Euro 138 million at 30 September 2012). This result is affected by a high effective tax rate of 77.88% because of the non-deductibility of loan loss provisions and most of the payroll costs for IRAP purposes. The net result pertaining to the Parent Company, net of minority interests, is a profit of Euro 14.2 million (Euro million at 30 September 2012). Operating profitability, represented by the difference between revenues (net interest and other banking income) and operating costs, has increased by 3.74%, from Euro million (at 30 September 2012) to Euro million. Total revenues (net interest and other banking income) are slightly lower than at 30 September 2012 (-0.45%): Net interest income is down by 1.69% on September 2012 (-3.36% net of CR Bra), but slightly up on the second quarter (+0.28%), mainly due to lower funding costs. Net commission income is down by 2.06% compared with the first nine months of 2012, essentially due to changes in the regulations governing the commission structure introduced by the "Save Italy" Decree in force since the fourth quarter of 2012, which led to a different accounting allocation; on the other hand, there has been a sharp increase (+7.78%) if the calculation is made on a consistent basis. The net profit from financial activities shows strong growth (Euro million on Euro million at 30 September 2012), thanks to dividends of an extraordinary nature and substantial disposals from the securities portfolio. Operating costs have fallen by 3.66%, largely due to the increase in other operating income, mainly because of changes to the fee structure imposed by the "Save Italy" decree introduced in the fourth quarter of 2012, as well as a different accounting allocation. Operating and payroll costs are significantly lower. Net adjustments to loans (+40.81% compared with the first nine months of 2012) are down sharply on the previous quarter (-45.48%), returning to the levels of the first quarter, whereas the coverage of doubtful loans remains broadly stable. The cost of credit comes to 125 bps (167 bps on an annual basis) compared with 87 bps in the same period last year (199 bps for the whole of 2012); without the extraordinary provisions 30

31 accrued in the second quarter (Euro 158 million), the cost of credit for the period would have come to 92 bps. In the balance sheet, volumes are down compared with 31 December 2012, both for loans to customers (-1.75%) and for direct deposits (-3.68%), whereas the loans/deposits ratio is up from % to %. group interim report The liquidity position, which is already in line with the Basel 3 minimum requirements, remains good, while leverage is still among the lowest in the system (14.44x compared with 14.24x at the end of 2012). The Group's financial solidity is confirmed by a Core Tier 1 ratio of 8.43%, still calculated according to the Basel 2 standardised approach and taking into account the share of profits attributable to equity earned during the third quarter of the year and the net effects accrued during the same period from application of the fair value option, which compares with a Core Tier 1 ratio at 31 December 2012 of 8.27% and at 30 June 2013 of 8.22%. This improvement has been achieved despite the negative impact of including Cassa di Risparmio di Bra in the Group (13 bps). 31

32 3.2 Performance ratios (*) group interim report Financial ratios Structural ratios (%) net loans to customers/total assets 76.84% 77.95% net loans and advances to customers/direct deposits from customers % % fixed assets/total assets 2.02% 2.03% total risk-weighted assets (RWA)/total assets 72.13% 72.62% goodwill/total assets 0.62% 0.61% direct deposits/total assets 87.08% 88.37% deposits under management/indirect deposits 43.23% 41.01% leverage (**) net interbank lending/borrowing (in thousands of Euro) (6,333,356) (5,018,680) number of employees 11,723 11,834 number of national bank branches 1,326 1,297 Profitability ratios (%) ROE (Return On Equity) 0.47% -0.29% ROA (net profit/total assets) 0.04% 0.22% Cost/income ratio 54.75% 56.58% Net adjustments to loans and advances/net loans to customers 1.25% 0.87% Basic EPS Diluted EPS Risk ratios (%) net non-performing loans/net loans to customers 5.06% 3.92% net watchlist loans/net loans to customers 6.86% 5.23% adjustments to non-performing loans/gross non-performing loans 54.60% 54.87% adjustments to performing loans/gross performing loans 0.59% 0.66% Capital for supervisory purposes and capital ratios (***) Core Tier 1 capital 3,734,046 3,701,624 Tier 1 capital 3,756,411 3,714,841 Capital for supervisory purposes (including Tier 3) 5,337,739 5,427,499 Risk-weighted assets (RWA) 44,313,688 44,758,313 Core Tier 1 ratio 8.43% 8.27% Tier 1 capital ratio 8.48% 8.30% Total capital ratio 12.05% 12.13% Non-financial ratios Productivity ratios (in thousands) direct deposits per employee 3, , loans and advances to customers per employee 4, , assets managed per employee assets administered per employee 1, , net interest and other banking income per employee (*) The comparative figures for the income statement are as at 30 September 2012, except for the ROE which is calculated on a yearly basis. (**) Leverage = total tangible assets (total assets net of intangible assets)/tangible equity (total shareholders' equity net of intangible assets). (***) The ratios have been calculated based on equity that includes its share of net profit for the first nine months of the year and taking account of the net effects at 30 September 2013 of applying the fair value option, with an impact of 11 bps for the overall portion attributable to the results for the third quarter of

33 3.3 Balance sheet aggregates The more important consolidated balance sheet aggregates and captions at 30 September 2013, are shown below with comparative figures, at 31 December 2012, in thousands of Euro, indicating the changes between periods in absolute and percentage terms. group interim report ASSETS (in thousands of Euro) Assets Change %change 10. Cash and balances with central banks 421, ,873 (67,110) Financial assets held for trading 1,159,484 1,596,048 (436,564) Financial assets designated at fair value through profit and loss 151, , Financial assets available for sale 5,915,811 4,679,402 1,236, Financial assets held to maturity 1,203, , , Due from banks 1,702,179 2,250,781 (548,602) Loans to customers 47,207,476 48,048,735 (841,259) Hedging derivatives 2,381-2,381 n.s. 90. Remeasurement of financial assets backed by general hedges (+/-) - 1,060 (1,060) Equity investments 257, ,094 (11,723) Property, plant and equipment 982, ,217 (1,730) Intangible assets 475, ,488 8, of which: goodwill 383, ,935 7, Tax assets 987, ,066 30, a) current 64, ,483 (49,213) b) deferred 923, ,583 79, b1) of which L. 214/ , ,316 70, Non-current assets and disposal groups held for sale 2,817 18,329 (15,512) Other assets 967, ,165 60, Total assets 61,438,402 61,637,758 (199,356) The following tables provide detailed information on the Parent Company at 31 December 2012, taking into account the mergers of the three Banks of Central Italy, which was completed on 27 May 2013, with effect for accounting and tax purposes from 1 January Reconciliation schedules showing how these pro-forma figures of the Parent Company were calculated are attached to this consolidated quarterly report. These figures have not been audited by PricewaterhouseCoopers s.p.a.. 33

34 LOANS TO CUSTOMERS group interim report (in thousands of Euro) Captions Change %change Current accounts 7,961,961 8,092,862 (130,901) Mortgage loans 25,825,678 25,266, , Repurchase agreements 10, ,564 (94,383) Debt securities 261, ,806 (32,396) Other transactions 13,148,246 14,291,266 (1,143,020) Net loans to customers 47,207,476 48,048,735 (841,259) Loans to customers, net of adjustments, amount to Euro 47,207.5 million (Euro 48,048.7 million as at 31 December 2012) and are down since the start of the year (-1.75%) despite the inclusion in the scope of consolidation of Cassa di Risparmio di Bra, which contributed Euro 1,186.6 million at 30 September 2013, around 2.51% of the total. Net of this contribution, the decrease would have been 4.22%: the captions most affected by this reduction are current accounts, down by Euro million (-5.84%) and other financing transactions, mainly "bullet" loans (which decrease by Euro million, or 18.20%) and advances on invoices or notes subject to collection (which decrease by Euro million, or 17.76%), as well as repurchase agreements which have fallen by more than 90%. The average interest rate for the period, based on bank lending rates to customers, was 3.61%, a decrease of around 34 bps compared with the average rate for the same period last year. The spread between lending and deposit rates of banking relationships with customers came to 2.14%, down compared with the first nine months of 2012 (2.25%). The overall gap between the average annual rate of return on interest-bearing assets and the average annual cost of interest-bearing liabilities amounts to 2.06%, down on the same period last year (when it was 2.13%). 34

35 (in thousands of Euro) Captions Change %change Gross doubtful loans 10,177,188 8,226,027 1,951, Non-performing loans 5,263,797 4,175,886 1,087, Watchlist loans 3,894,416 3,138, , Restructured loans 364, ,949 (100,859) Past due loans 654, , , Gross performing loans 40,901,050 43,132,706 (2,231,656) Total gross exposure 51,078,238 51,358,733 (280,495) Adjustments to doubtful loans 3,628,215 3,025, , Non-performing loans 2,874,090 2,291, , Watchlist loans 657, ,405 30, Restructured loans 46,377 81,163 (34,786) Past due loans 49,874 25,647 24, Adjustments to performing loans 242, ,584 (42,037) Total loan loss provisions 3,870,762 3,309, , Net doubtful loans 6,548,973 5,200,613 1,348, Non-performing loans 2,389,707 1,884, , Watchlist loans 3,236,542 2,511, , Restructured loans 317, ,786 (66,073) Past due loans 605, , , Net performing loans 40,658,503 42,848,122 (2,189,619) Total net exposure 47,207,476 48,048,735 (841,259) group interim report The adjustments relate to performing loans for Euro million (Euro million at 31 December 2012; %), giving a coverage ratio of 0.59% (0.66% at 31 December 2012). The decline of 7 bps is due to three main factors: a) the first is a significant reduction in performing loans as a substantial quantity of such loans with the worst rating, i.e. penalising, were shifted to doubtful loan categories, essentially watchlist loans; b) as in June 2013, the second is the general loan adjustment, for which we applied advanced Basel 2 models for the calculation of PD and LGD (these models are now definitely consolidated and in force, only needing ratification by the Supervisory Authority for their application also in determining capital ratios). Use of these models made it possible to take advantage of additional information to extend the provisions also to endorsement credits issued by performing customers, which up until last year were automatically covered by any excess provisions on cash loans; c) the third factor is the removal in June 2013 of the penalties applied to exposures to customers resident in the areas affected by the earthquake that hit Emilia, Lombardy and Veneto in May These were for risks that are now reflected in the updated PD and LGD calculations, as explained above. The residual adjustments applied following the earthquake that hit L'Aquila in 2009 have also been removed for the same reason. 35

36 group interim report Adjustments to doubtful loans amount to Euro 3,628.2 million (Euro 3,025.4 million at 31 December 2012; %) with a coverage ratio of 35.65% (36.78% at 31 December 2012). The total coverage ratio is 7.58% versus 6.44% at 31 December If we take account of the direct writedowns made to non-performing loans involved in bankruptcy procedures for Euro 1,440.7 million (Euro 1,466.6 million at 31 December 2012), and of the default interest described below as regards CR Bra, the coverage ratio rises to 10.11% (9.04% at 31 December 2012). The total actual value of the claim for non-performing loans comes to Euro 6,704.5 million (Euro 5,642.5 million at 31 December 2012) and the effective coverage ratio comes to 64.36% (66.60% at 31 December 2012). Making the same considerations, the effective coverage of doubtful loans amounts to 43.63% (46.34% at 31 December 2012). Loans to customers Gross Net Gross Net % gross change (in thousands of Euro) % net change % coverage ratio 1. Banca popolare dell'emilia Romagna s.c. 31,427,978 29,216,594 32,292,220 30,517, Banca popolare di Ravenna s.p.a. 2,116,829 2,021,041 2,169,574 2,083, Banca popolare del Mezzogiorno s.p.a. 2,731,344 2,570,795 2,725,967 2,574, Bper (Europe) International s.a. 206, , , , Banca della Campania s.p.a. 2,816,657 2,571,439 2,968,007 2,740, Banca di Sassari s.p.a. 1,391,129 1,286,782 1,498,087 1,407, Banco di Sardegna s.p.a. 8,506,318 7,654,584 8,929,544 8,097, Cassa di Risparmio di Bra s.p.a. 1,226,930 1,186, n.s. n.s Total banks 50,423,608 46,712,718 50,765,238 47,601, Other companies and consolidation adjustments 654, , , , Total 51,078,238 47,207,476 51,358,733 48,048, The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 498,359 thousand gross and Euro 481,014 thousand net), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 2,756,317 thousand gross and Euro 2,549,848 thousand net) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 2,742,474 thousand gross and Euro 2,626,064 thousand net). 36

37 Doubtful loans (non-performing loans, watchlist loans, restructured loans and past due loans for more than 90 days) indicated here, relate solely to the portfolio of "Loans to customers. Their net amount of Euro 6,549 million (+25.93%) is equal to 13.87% of total net loans to customers (10.82% as at 31 December 2012), whereas, on a gross basis, it is equal to 19.92% (16.02% as at 31 December 2012). In detail, net non-performing loans amounted to Euro 2,389.7 million (+26.80%), net watchlist loans amounted to Euro 3,236.5 million (+28.89%), net restructured loans amounted to Euro million (-17.22%) and net past due loans totalled Euro 605 million (+43.69%). The coverage ratio is satisfactory and suitable for the portfolio's level of risk: the coverage ratio of total doubtful loans comes to 35.65% versus 36.78% at the end of group interim report The decline of one percentage point that emerges is largely due to the sharp increase in watchlist loans compared with non-performing loans, taking into account their lower level of coverage, as is natural. If we take into account the direct write-downs of non-performing loans involved in bankruptcy proceedings for Euro 1,440.7 million (Euro 1,466.6 million at 31 December 2012), the effective coverage ratio comes to 43.63% (46.34% as at 31 December 2012). Doubtful loans Gross Net Gross Net % gross change (in thousands of Euro) % net change % coverage ratio 1. Banca popolare dell'emilia Romagna s.c. 5,481,181 3,400,131 4,302,883 2,685, Banca popolare di Ravenna s.p.a. 299, , , , Banca popolare del Mezzogiorno s.p.a. 405, , , , Bper (Europe) International s.a. 35,708 34,185 2,293 1, Banca della Campania s.p.a. 706, , , , Banca di Sassari s.p.a. 249, , , , Banco di Sardegna s.p.a. 2,031,903 1,219,247 1,821,741 1,027, Cassa di Risparmio di Bra s.p.a. 197, , n.s. n.s Total banks 9,407,111 5,916,552 7,518,243 4,615, Other companies and consolidation adjustments 770, , , , Total 10,177,188 6,548,973 8,226,027 5,200, Direct write-downs of nonperforming loans 1,440,681-1,466, n.s Adjusted total 11,617,869 6,548,973 9,692,648 5,200, The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 32,585 thousand gross and Euro 18,779 thousand net), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 521,906 thousand gross and Euro 340,598 thousand net) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 280,264 thousand gross and Euro 181,860 thousand net). Note that CR Bra, which entered in the scope of consolidation in the first half of 2013, unlike the rest of the Group, does not accrue interest on arrears for individual debt positions, proceeding in fact to their total direct write-down. Considering the value of interest on arrears at 30 September 2013 relating to outstanding positions of Euro 6,048 thousand, the recalculated level of coverage comes to 19.98% compared with the figure of 18.50% shown in the table. 37

38 group interim report The non-performing loans shown here relate solely to the portfolio of "Loans to customers". Their net amount of Euro 2,389.7 million (+26.80%) comes to 5.06% of total net loans to customers (3.92% at 31 December 2012), whereas, on a gross basis, the ratio of non-performing loans to total loans to customers comes to 10.31% (8.13% at 31 December 2012). The coverage ratio of non-performing loans is at 54.60% compared with 54.87% in December If we make the comparison on a consistent basis (i.e. without the figures for Cassa di Risparmio di Bra, which was consolidated for the first time in 2013, and taking into account the status changes in the first quarter, mainly coming from watchlist loans, as a result of the inspection by the Bank of Italy and that already discounted adequate provisions in line with the assessments of the Inspection Team of approximately Euro 310 million on a gross basis and Euro 150 million of net loans), the coverage ratios are in line with the end of If we take account of the direct writedowns made to non-performing loans involved in bankruptcy procedures for Euro 1,440.7 million (Euro 1,466.6 million at 31 December 2012), the total actual value of the claim for non-performing loans comes to Euro 6,704.5 million (Euro 5,642.5 million at 31 December 2012) and the effective coverage ratio is 64.36% (66.60% at 31 December 2012). Non-performing loans Gross Net Gross Net % gross change (in thousands of Euro) % net change % coverage ratio 1. Banca popolare dell'emilia Romagna s.c. 2,883,239 1,243,892 2,179, , Banca popolare di Ravenna s.p.a. 119,922 65,332 95,216 46, Banca popolare del Mezzogiorno s.p.a. 211,143 96, ,429 85, Bper (Europe) International s.a Banca della Campania s.p.a. 362, , , , Banca di Sassari s.p.a. 145,766 62, ,868 52, Banco di Sardegna s.p.a. 1,122, ,492 1,007, , Cassa di Risparmio di Bra s.p.a. 47,602 23, n.s. n.s Total banks 4,891,816 2,126,814 3,872,016 1,672, Other companies and consolidation adjustments 371, , , , Total 5,263,797 2,389,707 4,175,886 1,884, Direct write-downs of non-performing loans 1,440,681-1,466, n.s Adjusted total 6,704,478 2,389,707 5,642,507 1,884, The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 18,829 thousand gross and Euro 7,502 thousand net), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 255,988 thousand gross and Euro 109,372 thousand net) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 120,457 thousand gross and Euro 45,418 thousand net). 38

39 The watchlist loans shown here relate solely to the portfolio of "Loans to customers". Their net amount of Euro 3,236.5 million (+28.89%) comes to 6.86% of total net loans to customers (5.23% at 31 December 2012), whereas, on a gross basis, the ratio of watchlist loans to total loans to customers comes to 7.62% (6.11% at 31 December 2012). The coverage ratio of watchlist loans comes to 16.89% compared with 19.99% at the end of 2012; the decrease reflects the change in administrative status of non-performing loans: net of this, coverage has gone down by 0.40%. group interim report Watchlist loans Gross Net Gross Net % gross change (in thousands of Euro) % net change % coverage ratio 1. Banca popolare dell'emilia Romagna s.c. 2,029,752 1,654,348 1,566,423 1,232, Banca popolare di Ravenna s.p.a. 151, , ,433 97, Banca popolare del Mezzogiorno s.p.a. 170, , , , Bper (Europe) International s.a. 35,708 34,185 2,293 1, Banca della Campania s.p.a. 308, , , , Banca di Sassari s.p.a. 81,277 69,495 68,624 58, Banco di Sardegna s.p.a. 724, , , , Cassa di Risparmio di Bra s.p.a. 91,575 81, n.s. n.s Total banks 3,593,703 2,962,024 2,836,292 2,235, Other companies and consolidation adjustments 300, , , , Total 3,894,416 3,236,542 3,138,499 2,511, The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 10,691 thousand gross and Euro 8,416 thousand net), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 202,627 thousand gross and Euro 171,357 thousand net) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 131,704 thousand gross and Euro 111,006 thousand net. 39

40 Distribution of loans to resident non-financial businesses (in thousands of Euro) % %change group interim report A. Agriculture, forestry and fishing 1,211,855 1,138, B. Mining and quarrying 72,407 83, C. Manufacturing 7,661,206 7,885, D. Provision of electricity, gas, steam and air-conditioning 658, , E. Provision of water, sewerage, waste management and rehabilitation 410, , F. Construction 5,910,486 6,105, G. Wholesaling and retailing, car and motorcycle repairs 5,456,552 5,557, H. Transport and storage 1,086,028 1,165, I. Hotel and restaurants 1,774,849 1,789, J. Information and communication 440, , K. Finance and insurance 548, , L. Real estate 3,598,322 3,734, M. Professional, scientific and technical activities 1,022,403 1,053, N. Rentals, travel agencies, business support services 623, , O. Public administration and defence, compulsory social security 8,631 7, P. Education 31,206 26, Q. Health and welfare 461, , R. Arts, sport and entertainment 202, , S. Other services 233, , Total loans to resident non-financial businesses 31,413,884 32,164, Loans to non-resident, non-financial businesses 182, , Total loans to non-financial businesses 31,595,965 32,579, Individuals and other not included above 10,785,349 10,497, Financial businesses 2,588,872 2,731, Securities 261, , Governments and other public entities 1,970,262 1,939, Insurance companies 5,618 6, Total loans to businesses 47,207,476 48,048, The sectors that show a reduction in both absolute and percentage terms are those related to the property sector (construction and real estate), manufacturing and commerce. If we exclude the adjustments made at 30 September 2013 following CR Bra's inclusion in the scope of consolidation, i.e. making the comparison on a consistent basis, we can see significant reductions, essentially in the following sectors: construction, down by Euro million (-6.50%); real estate, down by Euro 262 million (- 7.02%); manufacturing, down by Euro million (-5.80%); commerce, down by Euro million (-4.5%). In addition to the decline attributable to these sectors, there is also the decrease relating to financial companies of Euro million (-5.22%). 40

41 group interim report 41

42 FINANCIAL ASSETS AND EQUITY INVESTMENTS group interim report (in thousands of Euro) Captions Change %change 20. Financial assets held for trading 1,159,484 1,596,048 (436,564) of which: derivatives 220, ,949 (90,083) Financial assets designated at fair value through profit and loss 151, , Financial assets available for sale 5,915,811 4,679,402 1,236, Financial assets held to maturity 1,203, , , Total financial assets 8,430,753 7,244,950 1,185, Financial assets amount to Euro 8,430.8 million, including Euro 7,581.3 million of debt securities (89.92% of the total): of these, Euro 6,158.2 million relate to sovereign States and Central Banks, Euro 1,214.5 million to Banks. Exposure to debt securities of issuers resident in the so-called PIGS countries (Portugal, Ireland, Greece and Spain) amounted to Euro 140 million (of which Euro 36.2 million relating to government securities): Portugal Euro 14.3 million, Ireland Euro 30.6 million, Spain Euro 95.1 million, while there are no Greek bonds in portfolio. Compared with 31 December 2012, this aggregate has decreased by Euro 28.9 million. For their characteristics, most of the securities in portfolio, being highly liquid, are eligible for use as collateral for refinancing transactions on the institutional market or with the European Central Bank. Equities come to Euro million (5.62% of the total), inclusive of Euro million of stable equity investments; equities held for trading are totally marginal. "Financial assets held for trading" include financial derivatives of Euro million (-28.97%) made up of Euro million (-34.57%) of derivatives linked to debt securities classified in "Financial assets designated at fair value through profit and loss" and in "Financial liabilities designated at fair value through profit and loss" (fair value option) and forward transactions in foreign currencies (traded with customers and/or used in managing the foreign exchange position), interest rate and foreign exchange derivatives intermediated with customers, derivatives related to securitisations and other operational hedging derivatives. At 30 September 2013 the Group has not entered into any of the "long-term structured repo transactions" mentioned in the document issued jointly by the Bank of Italy, CONSOB and IVASS on 8 March 2013 (as explained in the Explanatory Notes to this quarterly report). The significant increase in "Financial assets available for sale" (+26.42%) is attributable mainly to the purchase of government bonds of Italy and other core countries, essentially by the Parent Company. The increase also reflects the first-time inclusion of CR Bra's AFS portfolio in the scope of consolidation (Euro million). Against the "Financial assets available for sale" of Euro 5,915.8 million, there are positive net valuation reserves for a total of Euro million, net of the related tax effect, as a result of the sum of positive reserves relating to debt securities, equities and UCITS of Euro 148 million and negative reserves of Euro 36.4 million; the net reserve only for government bonds was a positive Euro 15.6 million. Financial assets held to maturity have also increased significantly. The plafond of HTM securities has been increased to support net interest income and reduce its exposure to fluctuations in interest rates and market values, still in a predictable scenario of exceptionally low risk-free rates for long time. 42

43 (in thousands of Euro) Financial assets Change %change 1. Banca popolare dell'emilia Romagna s.c. 6,785,675 5,853, , Banca popolare di Ravenna s.p.a. 88, ,160 (25,079) Banca popolare del Mezzogiorno s.p.a. 190,806 93,534 97, Bper (Europe) International s.a. 64, ,907 (43,889) Banca della Campania s.p.a. 108, ,266 (143,282) Banca di Sassari s.p.a. 9,748 24,190 (14,442) Banco di Sardegna s.p.a. 822, ,519 76, Cassa di Risparmio di Bra s.p.a. 204, ,133 n.s. Total banks 8,274,048 7,191,510 1,082, Other companies and consolidation adjustments 156,705 53, , Total 8,430,753 7,244,950 1,185, group interim report The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 24,924 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 93,753 thousand) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 125,940 thousand), net of intercompany balances (Euro -39,619 thousand). The same adjustment was made to "Other companies and consolidation adjustments. (in thousands of Euro) % Captions Change change % Equity investments 257, ,094 (11,723) This caption relates to significant equity investments (i.e. non-group companies subject to significant influence, represented by holdings of 20% or more of their share capital); these interests are measured using the equity method. Changes during the period are mainly due: (in negative) to the share of the results of the main investments (Euro 3.4 million), as well as to the transfer of the Cassa di Risparmio di Bra s.p.a. to controlling investments (Euro 27.6 million in the 2012 financial statements, including Euro 9.4 million for goodwill), to the sale of Ekaton s.r.l. (Euro 1.4 million), to the impairment of the investment in BNT (Euro 0.8 million) to the sale of Felsinea Factor s.p.a. (Euro 0.8 million), as well as to the transfer of Serfina Banca s.p.a. under "Financial assets available for sale" (Euro 2.6 million) as a result of acquiring the business; (in positive) to the increase in capital subscribed by BPER in Alba Leasing s.p.a. (Euro 25.5 million). Goodwill comes to a total of Euro 24.6 million (Euro 34.1 million at 31 December 2012). 43

44 FIXED ASSETS group interim report (in thousands of Euro) Captions Change %change Intangible assets 475, ,488 8, of which: goodwill 383, ,935 7, Intangible assets include goodwill for a total of Euro 383 million. The change from 31 December 2012 is due to the goodwill recognised on first-time consolidation of Cassa di Risparmio di Bra s.p.a. (Euro 7.1 million). Goodwill includes Euro 83.6 million for the acquisition in 2008 of the branches formerly owned by Unicredit, (of which Euro 30.5 million relates to Banca popolare del Mezzogiorno and Euro 53.1 million to BPER), and Euro million for the acquisition of investments in Group companies. Following the merger of the three Banks of Central Italy, at 30 September 2013 the amounts of goodwill of Banca Popolare di Lanciano e Sulmona (Euro 1.7 million), Banca Popolare di Aprilia (Euro 10.1 million) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila (Euro 13.5 million) are already reported in the separate financial statements of the Parent Company, in addition to which there is the goodwill already recorded at the time of the mergers of Banca CRV (Euro 2.3 million) and Meliorbanca (Euro million). (in thousands of Euro) Captions Change %change Property, plant and equipment 982, ,217 (1,730) including owned land and properties 894, ,292 (1,206)

45 INTERBANK POSITION (in thousands of Euro) Net interbank position Change %change group interim report A. Due from banks 1,702,179 2,250,781 (548,602) Current accounts and deposits 777, ,097 (216,736) Repurchase agreements 57, ,051 (105,031) Debt securities 278, ,902 (408,749) Other 589, , , B. Due to banks 8,035,535 7,269, , Total (A-B) (6,333,356) (5,018,680) (1,314,676) The following table gives details of such operations with the ECB. The Euro 145 thousand change in the capital portion compared with 31 December 2012 is entirely due to CR Bra joining the Group, as it also has outstanding long-term refinancing operations, with Euro 85 million expiring in January 2015 and Euro 60 million expiring in February (in millions of Euro) Refinancing transactions with the European Central Bank Capital Maturity 1. Long-Term Refinancing Operation (LTRO) December ,485 January Long-Term Refinancing Operation (LTRO) February ,060 February Short-Term Refinancing Operations - Total 4,545 At 30 September 2013, the market value, including the interest portion, amounts to Euro 4,623 million. On the same date, the Central Treasury held significant resources relating to securities eligible for refinancing at the European Central Bank, of an overall amount, net of margin calls, of Euro 12,225 million. Counterbalancing Capacity Nominal value Guarantee value (in millions of Euro) Restricted Available portion portion Eligible securities and loans 12,225 8,470 3,755 1 Securities as collateral for own and third-party commitments Securities subject to funding repurchase agreements 3,593 3,593 3 Securities and loans not transferred to the Pooling Account 1,619 1,619 4 Securities and loans transferred to the Pooling Account 6,758 4,623 2,135 of which:, Own debt guaranteed by the Italian Government 1,300 1,179 Own securitisations 2,972 2,242 Guaranteed Bank Bonds issued by the Bank 1, Collaterized Bank Assets (A.BA.CO.) The net interbank position is negative for Euro 6.3 billion, including Euro 4.5 billion from LTRO operations, and is adequately covered by the above securities eligible for refinancing and cash reserves, resulting in a positive net cash position. 45

46 LIABILITIES AND SHAREHOLDERS' EQUITY group interim report Liabilities and shareholders' equity Change %change 10. Due to banks 8,035,535 7,269, , Due to customers 32,504,053 32,288, , Debt securities in issue 9,818,702 11,047,786 (1,229,084) Financial liabilities held for trading 196, ,864 (20,334) Financial liabilities designated at fair value through profit and loss 3,143,502 3,865,649 (722,147) Hedging derivatives 39,920 37,661 2, Tax liabilities 165, ,626 (4,278) a) current 57,820 46,426 11, b) deferred 107, ,200 (15,672) Liabilities associated with non-current assets held for sale - 8,800 (8,800) Other liabilities 2,352,135 1,465, , Provision for termination indemnities 206, ,324 (16,436) Provisions for risks and charges 279, ,329 (1,910) a) pensions and similar commitments 107, ,833 2, b) other provisions 172, ,496 (4,140) Valuation reserves 118, ,447 (81,184) Reserves 2,266,222 2,264,190 2, Share premium reserve 624, ,462 4, Share capital 1,001, ,165 3, Treasury shares (7,272) (7,266) (6) Minority interests 679, ,325 (21,010) Profit (loss) for the period pertaining to the Parent Company 14,206 (11,271) 25, Total liabilities and shareholders' equity 61,438,402 61,637,758 (199,356)

47 BORROWING (in thousands of Euro) Captions Change %change group interim report Current accounts and demand deposits 25,028,531 23,907,807 1,120, Restricted deposits 3,944,514 4,318,870 (374,356) Repurchase agreements 1,132,257 1,339,596 (207,339) Other short-term loans 2,398,751 2,722,215 (323,464) Bonds 9,395,685 10,541,534 (1,145,849) subscribed by institutional customers 255, ,931 (634,852) subscribed by ordinary customers 9,140,606 9,651,603 (510,997) Certificates of deposit 3,566,519 4,371,901 (805,382) Direct customer deposits 45,466,257 47,201,923 (1,735,666) Indirect deposits (off-balance sheet figure) 25,949,356 25,148, , of which managed 11,217,009 10,313, , of which administered 14,732,347 14,835,436 (103,089) Customer funds under management 71,415,613 72,350,359 (934,746) Bank borrowing 8,035,535 7,269, , Funds under administration or management 79,451,148 79,619,820 (168,672) Direct customer deposits, amounting to Euro 45,466.3 million, show a decrease of 3.68% with respect to December 2012, despite the overall rise of Euro 1,094.6 million (2.41% on total at 30 September 2013), attributable to the inclusion of Cassa di Risparmio di Bra in the scope of consolidation. Net of this contribution, on a consistent basis of comparison, the reduction comes to 6%, primarily due to: repurchase agreements ("repos"), down by Euro million (-15.48%); bonds, down by Euro 1,649.4 million ( %); certificates of deposit, down by Euro 825 million (-18.87%); other short-term loans (in particular cold money), with a decrease of Euro million (-11.89%). Conversely current accounts increase by Euro million (+2.59%). Indirect customer deposits, marked to market, come to Euro 25,949.4 million, up on 31 December 2012 (+3.18%). The total nominal value of indirect borrowing of Euro 21,342.3 million has increased by 1.91% since 31 December Total funds administered or managed by the Group, including deposits from banks (Euro 8,035.5 million) amount to Euro 79,451.1 million, a slight decrease of 0.21% compared with 31 December Group banks' average cost of borrowing from customers during the first nine months was 1.47%, which is down on the same period of last year (1.70%), a decrease of around 23 basis points. Against total interest-bearing liabilities, the cost incurred in the period came to 1.32%, a decrease of 27 bps compared with the first nine months of

48 (in thousands of Euro) Direct deposits Change %change group interim report 1. Banca popolare dell'emilia Romagna s.c. 27,273,895 29,866,725 (2,592,830) Banca popolare di Ravenna s.p.a. 1,970,568 2,065,648 (95,080) Banca popolare del Mezzogiorno s.p.a. 3,190,157 3,354,231 (164,074) Bper (Europe) International s.a. 506, ,783 2, Banca della Campania s.p.a. 3,737,780 3,584, , Banca di Sassari s.p.a. 1,398,845 1,376,895 21, Banco di Sardegna s.p.a. 9,187,042 9,100,089 86, Cassa di Risparmio di Bra s.p.a. 1,094,571-1,094,571 n.s. Total banks 48,359,058 49,852,181 (1,493,123) Other companies and consolidation adjustments (2,892,801) (2,650,258) (242,543) 9.15 Total 45,466,257 47,201,923 (1,735,666) The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 627,048 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 2,787,890 thousand) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 3,643,253 thousand), net of intercompany balances (Euro 1,123,403 thousand). The same adjustment was made to "Other companies and consolidation adjustments". Direct deposits include subordinated liabilities: (in thousands of Euro) Captions Change %change Convertible subordinated liabilities 49, ,851 (227,946) Non-convertible subordinated liabilities 1,592,181 1,736,180 (143,999) Total subordinated liabilities 1,642,086 2,014,031 (371,945) Convertible subordinated liabilities: The nominal value of subordinated liabilities convertible into shares of consolidated banks and companies is Euro 49.9 million. These liabilities include a bond allocated to Fondazione Banco di Sardegna as part payment for ordinary shares representing the "controlling interest" in that bank, Euro 31.2 million. The decrease is mainly due to the repayment on 1 January 2013 of the BPER 3.70% loan which expired on 31 December 2012 with a marginal conversion of only 70 bonds into the same number of BPER shares. Non-convertible subordinated liabilities: The decrease relates primarily to the partial repayment of the BPER 4.75% loan for a nominal amount of Euro 140 million. 48

49 (in thousands of Euro) Indirect deposits Change %change 1. Banca popolare dell'emilia Romagna s.c. 19,508,914 18,324,484 1,184, Banca popolare di Ravenna s.p.a. 1,137,674 1,096,594 41, Banca popolare del Mezzogiorno s.p.a. 985, ,414 (1,061) Bper (Europe) International s.a. 680, , , Banca della Campania s.p.a. 1,159,086 1,150,416 8, Banca di Sassari s.p.a. 315, ,357 (12,169) Banco di Sardegna s.p.a. 2,922,390 3,121,649 (199,259) Cassa di Risparmio di Bra s.p.a. 537, ,223 n.s. Total banks 27,246,757 25,570,447 1,676, Other companies and consolidation adjustments (1,297,401) (422,011) (875,390) Total 25,949,356 25,148, , group interim report The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 210,150 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 451,172 thousand) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 768,949 thousand). The increase in "consolidation adjustments" is derived from the elimination of indirect deposits of Euro 1,018 million acquired from BPER by Multilease AS (an SPV), represented by securities issued against the multi-originator selfsecuritisation of loans from leasing transactions, carried out jointly by Companies of the Sardaleasing Group and ABF Leasing. Indirect deposits do not include the placement of insurance policies, which shows a good increase compared with 31 December 2012 (+13.84%), mainly due to the life insurance business. (in thousands of Euro) Bancassurance Change %change Insurance policy portfolio 2,511,154 2,205, , of which: life sector 2,434,384 2,130, , of which: non-life sector 76,770 75,313 1, The impact of CR Bra was marginal: Euro 37.6 million related entirely to life insurance. 49

50 SHAREHOLDERS EQUITY (in thousands of Euro) group interim report Captions Change %change Consolidated shareholders' equity 4,017,055 4,062,727 (45,672) of which: net profit (loss) for the period 14,206 (11,271) 25, of which: shareholders' equity excluding net profit (loss) for the period 4,002,849 4,073,998 (71,149) (in thousands of Euro) Captions Change %change Minority interests 679, ,325 (21,010) of which: net profit (loss) pertaining to minority interests 9,014 (21,327) 30, of which: shareholders' equity pertaining to minority interests excluding their share of net profit (loss) for the period 670, ,652 (51,351) (in thousands of Euro) Captions Change %change Total shareholders' equity 4,696,370 4,763,052 (66,682) This figure is made up of liability captions 140, 170, 180, 190, 200, 210 and 220. (in thousands of Euro) Shareholders' equity Change %change 1. Banca popolare dell'emilia Romagna s.c. 3,541,846 3,624,418 (82,572) Banca popolare di Ravenna s.p.a. 308, ,314 10, Banca popolare del Mezzogiorno s.p.a. 365, ,426 17, Bper (Europe) International s.a. 46,238 43,677 2, Banca della Campania s.p.a. 482, ,346 1, Banca di Sassari s.p.a. 237, ,723 5, Banco di Sardegna s.p.a. 1,123,301 1,149,506 (26,205) Cassa di Risparmio di Bra s.p.a. 84,306-84,306 n.s. Total banks 6,189,202 6,176,410 12, Other companies and consolidation adjustments (1,507,038) (1,402,087) (104,951) 7.49 Total 4,682,164 4,774,323 (92,159) Net profit (loss) for the period 14,206 (11,271) 25, Total shareholders' equity 4,696,370 4,763,052 (66,682) The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of the Group banks absorbed on 27 May 2013: Banca Popolare di Aprilia s.p.a. (Euro 114,167 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 319,555 thousand) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 190,075 thousand), net of intercompany balances (Euro 467,623 thousand). The same adjustment was made to "Other companies and consolidation adjustments". The decline is mainly due to the negative change in valuation reserves relating to "Financial assets available for sale", as a result of the significant sales of government bonds from this portfolio. 50

51 3.4 Capital for supervisory purposes and capital ratios Capital for supervisory purposes as at 30 September 2013 was determined for Bank of Italy purposes in accordance with Circular 263 "New instructions for the prudent supervision of banks" of 27 December 2006 and subsequent amendments, so without the net profit for the period, while total risk-weighted assets (RWA) were calculated on the basis of the Basel 2 standardised approach. The figures for capital for supervisory purposes to be calculated as a ratio of total risk-weighted assets of Euro 44,313.7 million (Euro 44,758.3 million at 31 December 2012), are as follows: Tier 1 capital: Euro 3,706.2 million, with a Core element of Euro 3,683.9 million. The Core Tier 1 ratio and the Tier 1 ratio therefore come to 8.31% and 8.36%. Total capital for supervisory purposes: Euro 5,287.6 million. The Total capital ratio comes to 11.93%. Taking into account, for comparison purposes, the net profit at 30 September 2013 attributable to shareholders' equity (Euro 21.4 million) and the effects of applying the fair value option for the quarter, net of tax, for a positive value with respect to the elements be deducted of Euro 7.5 million, capital for supervisory purposes can be quantified as follows: Tier 1 capital: Euro 3,756.4 million (Euro 3,714.8 million at 31 December 2012). The Core element amounts to Euro 3,734 million (Euro 3,701.6 million at 31 December 2012). Tier 2 capital: Euro 1,581.3 million (Euro 1,712.7 million at 31 December 2012). Total capital for supervisory purposes: Euro 5,337.7 million (Euro 5,427.5 million at 31 December 2012), without any Tier 3 elements as in the comparison period. Capital as a proportion of the total of the above asset exposures gives the following capital ratios: Core Tier 1 ratio: 8.43% (8.27% in December 2012); Tier 1 capital ratio: 8.48% (8.30% in December 2012); Total capital ratio: 12.05% (12.13% in December 2012); with committed capital of Euro 3,545.1 million (Euro 3,580.7 million at 31 December 2012). group interim report The inclusion of CR Bra in the Group's scope of consolidation has had a negative effect that can be quantified at around -13 bps and -11 bps on the Core Tier 1 and Tier 1 ratios respectively. 51

52 group interim report as per law pro-forma (in thousands of Euro) Change %change Core Capital 3,850,629 3,900,810 3,865,844 34, items to be deducted (166,764) (166,764) (164,220) (2,544) 1.55 Core Tier 1 capital 3,683,865 3,734,046 3,701,624 32, Hybrid instruments and preference shares 22,365 22,365 13,217 9, Tier 1 capital 3,706,230 3,756,411 3,714,841 41, Tier 2 capital 1,581,328 1,581,328 1,712,658 (131,330) Capital for supervisory purposes 5,287,558 5,337,739 5,427,499 (89,760) Tier 3 capital Capital for supervisory purposes including Tier 3 5,287,558 5,337,739 5,427,499 (89,760) Risk-weighted assets 44,313,688 44,313,688 44,758,313 (444,625) Committed capital: - Credit and counterparty risk 3,132,961 3,132,961 3,171,674 (38,713) Market risk 31,098 31,098 30, Operational risk 320, , ,835 5, Other precautionary requirements 60,055 60,055 62,757 (2,702) Total committed capital 3,545,095 3,545,095 3,580,665 (35,570) Core Tier 1 ratio 8.31% 8.43% 8.27% 0.16 Tier 1 capital ratio 8.36% 8.48% 8.30% 0.18 Total capital ratio 11.93% 12.05% 12.13%

53 3.5 Reconciliation of consolidated net profit/shareholders' equity Consolidated net profit comprises the sum of the Group's interest in the net profits (losses) at 30 September 2013 of the following Group Banks and Companies included within the scope of consolidation. group interim report (in thousands of Euro) Reconciliation of consolidated net profit Banca popolare dell'emilia Romagna s.c. (20,070) Other Group companies: 59,103 Banca popolare di Ravenna s.p.a. 2,831 Banca popolare del Mezzogiorno s.p.a. 21,535 BpER (Europe) International s.a. 694 Banca della Campania s.p.a. 14,182 Banco di Sardegna s.p.a. (consolidated value) 6,554 Cassa di Risparmio di Bra s.p.a. (955) Nadia s.p.a. 872 BPER Services s.cons.p.a. 1,825 EMRO Finance Ireland limited 4,109 Mutina s.r.l. - Nettuno Gestione Crediti s.p.a. 99 Optima s.p.a. SIM 2,400 Modena Terminal s.r.l. 986 Emilia Romagna Factor s.p.a. 2,843 Estense Covered Bond s.r.l. - A.B.F. Leasing s.p.a. 878 Melior Valorizzazioni Immobili s.r.l. 503 BPER Trust Company s.p.a. (103) Immobiliare Reiter s.p.a. (113) Galilei immobiliare s.r.l. (37) Total Group share 39,033 Consolidation adjustments (24,827) Consolidated net profit (loss) 14,206 53

54 As required by current regulations, the following statement is presented with regard to the position at 30 September 2013: group interim report Reconciliation of the shareholders equity and results of the Parent Company with the related consolidated amounts Increase (decrease) Net profit (loss) Shareholders' equity AMOUNTS RELATING TO THE PARENT COMPANY (20,070) 3,521,776 DIFFERENCES between the shareholders' equity of companies consolidated on a line-by-line basis (net of minority interests) and the book value of the related equity investments held by their parent companies, as follows: 56, ,213 - adjustments to goodwill related to consolidated companies - - elimination of intercompany profits and losses (3,001) - share of the results of fully consolidated companies, net of tax effect 59,458 DIVIDENDS collected from companies consolidated on a line-byline basis or stated under the equity method (18,773) 1 DIFFERENCE between book value and the interest in shareholders' equity (including results for the period) of companies carried at equity (3,408) 3,065 NET PROFIT AND SHAREHOLDERS' EQUITY OF THE PARENT COMPANY AS AT ,206 4,017,055 NET PROFIT AND SHAREHOLDERS' EQUITY OF MINORITY INTERESTS 9, ,315 TOTAL CONSOLIDATED NET PROFIT AND SHAREHOLDERS' EQUITY AS AT ,220 4,696,370 TOTAL CONSOLIDATED NET PROFIT AS AT ,041 TOTAL CONSOLIDATED SHAREHOLDERS' EQUITY AT ,763,052 54

55 3.6 Income statement aggregates 0 (in thousands of Euro) Captions Change %change group interim report 10. Interest and similar income 1,555,772 1,655,108 (99,336) Interest and similar expense (591,589) (674,307) 82, Net interest income 964, ,801 (16,618) Commission income 559, ,006 (11,421) Commission expense (40,099) (40,576) Net commission income 519, ,430 (10,944) Dividends and similar income 23,530 4,547 18, Net trading income 32,874 90,382 (57,508) Net hedging gains (losses) (191) (1,074) Gains/losses on disposal or repurchase of: 112,496 50,039 62, a) loans (1,215) (468) (747) b) financial assets available for sale 110,062 25,990 84, c) financial assets held to maturity - (179) d) financial liabilities 3,649 24,696 (21,047) Net results on financial assets and liabilities designated at fair value (46,820) (42,310) (4,510) Net interest and other banking income 1,605,558 1,612,815 (7,257) Net impairment adjustments to: (623,106) (423,654) (199,452) a) loans (591,383) (419,978) (171,405) b) financial assets available for sale (4,621) (4,828) d) other financial assets (27,102) 1,152 (28,254) Net profit from financial activities 982,452 1,189,161 (206,709) Administrative costs: (975,761) (966,095) (9,666) 1.00 a) payroll (591,780) (600,671) 8, b) other administrative costs (383,981) (365,424) (18,557) Net provision for risks and charges (20,078) (10,696) (9,382) Net adjustments to property, plant and equipment (30,426) (32,163) 1, Net adjustments to intangible assets (15,817) (11,279) (4,538) Other operating charges/income 162, ,690 55, Operating costs (879,107) (912,543) 33, Profit (loss) from equity investments (4,415) 6,106 (10,521) Adjustments to goodwill - (36) Gains (losses) on disposal of investments 341 (2,649) 2, Profit (loss) from current operations before tax 99, ,039 (180,768) Income taxes on current operations (77,309) (142,480) 65, Profit (loss) from current operations after tax 21, ,559 (115,597) Profit (loss) after tax on non-current assets held for sale 1, Net profit (loss) 23, ,041 (114,821) Net profit (loss) pertaining to minority interests (9,014) 3,666 (12,680) Profit (loss) for the period pertaining to the Parent Company 14, ,707 (127,501)

56 group interim report Consolidated income statement by quarter as at 30 September rd quarter th quarter rd quarter st quarter nd quarter 2012 Captions 1st quarter nd quarter Interest and similar income 522, , ,407 1,555, , , ,942 1,655, ,341 2,196, Interest and similar expense (211,799) (196,370) (183,420) (591,589) (229,990) (226,019) (218,298) (674,307) (212,603) (886,910) 30. Net interest income 311, , , , , , , , ,738 1,309, Commission income 184, , , , , , , , , , Commission expense (13,457) (12,997) (13,645) (40,099) (11,292) (13,955) (15,329) (40,576) (14,289) (54,865) 60. Net commission income 171, , , , , , , , , , Dividends and similar income , , , , , Net trading income 8,317 12,041 12,516 32,874 72,137 (19,714) 37,959 90,382 7,995 98, Net hedging gains (losses) (280) (191) (329) (362) (383) (1,074) (160) (1,234) 100. Gains/losses on disposal or repurchase of: 24,834 73,324 14, ,496 11,984 21,060 16,995 50,039 41,941 91,980 a) loans 36 (723) (528) (1,215) 169 (515) (122) (468) (306) (774) b) financial assets available for sale 23,417 74,004 12, ,062 11,077 (351) 15,264 25,990 42,024 68,014 c) financial assets held to maturity (179) - - (179) - (179) d) financial liabilities 1, ,225 3, ,926 1,853 24, , Net results on financial assets and liabilities designated at fair value (18,215) (17,230) (11,375) (46,820) (26,380) 10,768 (26,698) (42,310) (14,438) (56,748) 120. Net interest and other banking income 497, , ,696 1,605, , , ,760 1,612, ,043 2,154, Net impairment adjustments to: (167,766) (300,049) (155,291) (623,106) (99,622) (195,405) (128,627) (423,654) (548,270) (971,924) a) loans (161,628) (278,131) (151,624) (591,383) (98,725) (190,883) (130,370) (419,978) (538,415) (958,393) b) financial assets available for sale (670) (2,528) (1,423) (4,621) (201) (4,672) 45 (4,828) (4,011) (8,839) d) other financial assets (5,468) (19,390) (2,244) (27,102) (696) 150 1,698 1,152 (5,844) (4,692) 140. Net profit from financial activities 329, , , , , , ,133 1,189,161 (6,227) 1,182, Administrative costs: (323,000) (340,128) (312,633) (975,761) (320,719) (333,107) (312,269) (966,095) (293,371) (1,259,466) a) payroll (198,440) (208,169) (185,171) (591,780) (197,918) (205,333) (197,420) (600,671) (168,906) (769,577) b) other administrative costs (124,560) (131,959) (127,462) (383,981) (122,801) (127,774) (114,849) (365,424) (124,465) (489,889) 190. Net provision for risks and charges (5,318) (13,060) (1,700) (20,078) (4,907) (3,654) (2,135) (10,696) (18,436) (29,132) 200. Net adjustments to property, plant and equipment (10,081) (10,155) (10,190) (30,426) (10,315) (11,414) (10,434) (32,163) (12,685) (44,848) 210. Net adjustments to intangible assets (4,958) (5,307) (5,552) (15,817) (3,581) (3,637) (4,061) (11,279) (4,733) (16,012) 220. Other operating charges/income 57,822 55,765 49, ,975 31,283 30,255 46, ,690 35, , Operating costs (285,535) (312,885) (280,687) (879,107) (308,239) (321,557) (282,747) (912,543) (293,262) (1,205,805) 240. Profit (loss) from equity investments (5) (8,200) 3,790 (4,415) (233) 5, ,106 9,085 15, Adjustments to goodw ill (36) - (36) (12) (48) 270. Gains (losses) on disposal of investments (27) (1,633) (989) (2,649) 2, Profit (loss) from current operations before tax 44,417 (28,868) 83,722 99, ,523 4, , ,039 (287,452) (7,413) 290. Income taxes on current operations (30,509) (5,374) (41,426) (77,309) (64,748) (20,701) (57,031) (142,480) 117,295 (25,185) 300. Profit (loss) from current operations after tax 13,908 (34,242) 42,296 21,962 93,775 (16,537) 60, ,559 (170,157) (32,598) 310. Profit (loss) after tax on non-current assets held for sale 1,525 (1,082) 815 1, (482) Net profit (loss) 15,433 (35,324) 43,111 23,220 93,775 (16,537) 60, ,041 (170,639) (32,598) 330. Net profit (loss) pertaining to minority interests (1,041) (532) (7,441) (9,014) (6,038) 11,577 (1,873) 3,666 17,661 21, Profit (loss) pertaining to the Parent Company 14,392 (35,856) 35,670 14,206 87,737 (4,960) 58, ,707 (152,978) (11,271) 56

57 The following table shows the summary data of the consolidated income statement at 30 September 2013, with comparative figures from the previous year, which when referring to the Parent Company, in the detailed information, take into account the merger: of the wholly-owned subsidiary Meliorbanca, carried out on 26 November 2012 and effective for accounting and tax purposes from 1 January 2012; of the subsidiaries CARISPAQ, BPLS and BPA, carried out on 27 May 2013 and effective for tax and accounting purposes from 1 January Reconciliation schedules showing how these pro-forma figures of the Parent Company were calculated are attached to this consolidated quarterly report. These figures have not been audited by PricewaterhouseCoopers s.p.a. group interim report Net interest income comes to Euro million, a decrease of 1.69% (Euro million at 30 September 2012). The result is positively influenced by the inclusion in the consolidation of CR Bra for an amount in excess of Euro 16 million, while negatively affected by the continuing decline in market interest rates (average 3-month Euribor in the first nine months declining by 50 bps compared with the same period in 2012) and weak demand for commercial loans, only partially offset by the increase in the contribution from the portfolio of financial assets. net of CR Bra, there has been a decrease of 3.36%. Compared with the previous quarter, however, net interest income is substantially in line (Euro 327 million compared with Euro million, +0.28%) with the yield spread at much the same levels as last quarter, with both the mark-up and mark-down falling by the same amount. (in thousands of Euro) Net interest income Change %change 1. Banca popolare dell'emilia Romagna s.c. 491, ,489 2, Banca popolare di Ravenna s.p.a. 45,679 44, Banca popolare del Mezzogiorno s.p.a. 75,132 75,958 (826) Bper (Europe) International s.a. 2,442 2,877 (435) Banca della Campania s.p.a. 82,569 86,716 (4,147) Banca di Sassari s.p.a. 38,701 38, Banco di Sardegna s.p.a. 162, ,257 (32,810) Cassa di Risparmio di Bra s.p.a. 16,354-16,354 n.s. Total banks 915, ,433 (18,359) Other companies and consolidation adjustments 49,109 47,368 1, Total 964, ,801 (16,618) The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of Meliorbanca s.p.a. (Euro 29,490 thousand), a Group company merged on 26 November 2012, of Banca Popolare di Aprilia s.p.a. (Euro 15,125 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 60,085 thousand) and CARISPAQ Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 43,210 thousand), Group companies merged on 27 May 2013, net of intercompany balances (Euro 181 thousand). The same adjustment was made to "Other companies and consolidation adjustments. 57

58 group interim report Net commission income, Euro million, decreased (-2.06% on 30 September 2012). The comparison is marginally affected by changes in the scope of consolidation (CR Bra has been consolidated at 30 September 2013 with a contribution of Euro 7.7 million, whereas at 30 September 2012 there was a contribution of commission income on the part of the custodian bank business of Euro 1.8 million); on the other hand, a significant impact was made by regulatory changes during the period (introduced by the "Save Italy" decree in force from the fourth quarter of 2012 which led to a different accounting allocation from "Commission income" to "Other operating income"); at 30 September 2013 these changes had an impact of Euro 58 million. Recalculating these commissions pro-forma, taking into account the items mentioned above, results in an increase of 7.78%. (in thousands of Euro) Net commission income Change %change Trading in currency/financial instruments 5,330 6,694 (1,364) Indirect deposits and insurance policies 94,402 80,874 13, Credit cards, collections and payments 113, ,829 1, Loans and guarantees 282, ,012 (24,815) Other commissions 24,163 24, Total net commission income 519, ,430 (10,944) The net result from trading activities (including dividends) is positive for Euro million, up on the first nine months of 2012 (Euro million). The key elements in forming this result were profits on the sale of financial assets (Euro million, all of Euro 60.3 million higher than the figure at 30 September 2012), dividends (Euro 23.5 million, higher by Euro 19 million compared with 30 September 2012 because of a sizeable extraordinary dividend received from Arca Vita) and capital gains on financial assets of Euro 18.2 million (of which Euro 9.9 million on debt securities), compared with Euro 79.6 million in the same period of By contrast, application of the fair value option to liabilities shows a negative value of Euro 54.2 million (it was negative by Euro 51.8 million at 30 September 2012). (in thousands of Euro) Net trading income (including dividends) Change %change Dividends 23,530 4,547 18, Gain on disposal of financial assets 116,393 56,088 60, Gains on financial assets 18,151 79,633 (61,482) Losses on financial assets (7,054) (6,281) (773) Fair value option (54,210) (51,827) (2,383) 4.60 Other revenues/losses 25,079 19,424 5, Total 121, ,584 20,

59 Net interest and other banking income amounts to Euro 1,605.6 million, substantially unchanged with respect to the same period last year (-0.45%), and benefits from the significant contribution of CR Bra. (in thousands of Euro) Net interest and other banking income Change %change group interim report 1. Banca popolare dell'emilia Romagna s.c. 888, ,965 5, Banca popolare di Ravenna s.p.a. 63,387 73,950 (10,563) Banca popolare del Mezzogiorno s.p.a. 115, ,636 (11,446) Bper (Europe) International s.a. 4,840 7,144 (2,304) Banca della Campania s.p.a. 127, ,929 (32,405) Banca di Sassari s.p.a. 72,103 69,182 2, Banco di Sardegna s.p.a. 255, ,118 (69,984) Cassa di Risparmio di Bra s.p.a. 31,778-31,778 n.s. Total banks 1,558,693 1,644,924 (86,231) Other companies and consolidation adjustments 46,865 (32,109) 78, Total 1,605,558 1,612,815 (7,257) The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of Meliorbanca s.p.a. (Euro 45,445 thousand), a Group company merged on 26 November 2012, of Banca Popolare di Aprilia s.p.a. (Euro 29,049 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 91,343 thousand) and CARISPAQ Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 68,053 thousand), Group companies merged on 27 May 2013, net of intercompany balances (Euro 3,163 thousand). The same adjustment was made to "Other companies and consolidation adjustments. Net adjustments to loans and other financial assets amount to Euro million, a significant increase on the first nine months of 2012 (+47.08%). This increase is a result of both the continuing economic recession and the serious difficulties suffered by companies and households as a consequence, and of more restrictive classification and provisioning criteria. The level of coverage of doubtful loans is satisfactory and suitable for the portfolio's level of risk: ample information is given on the coverage ratio in the part of this Report that deals with Loans to customers. The significant increase in adjustments to other financial assets (Euro 27.1 million versus write-backs of Euro 1.2 million at 30 September 2012) refers largely to the provisions made in respect of endorsement loans related to performing customers. This provision derives from the way in which the general loan adjustment was determined, as we applied advanced Basel 2 models for the calculation of PD and LGD (these models are now definitely consolidated and in force); this made it possible to take advantage of additional information to extend the provisions also to this type of loans, which up to now were automatically covered by any excess provisions on cash loans. It is therefore a one-off adjustment offset to a large extent by the realignment of the level of coverage of performing cash loans. The adjustments made on Financial assets available for sale amount to Euro 4.6 million (-4.29% compared with 30 September 2012) and refer to the identification of impairment losses, consistent with the accounting policies adopted by the Group, recorded for Euro 1.7 million on the equity portfolio and Euro 2.9 million on the UCITS portfolio. 59

60 Net impairment adjustments to loans (caption 130 a) (in thousands of Euro) Change %change group interim report 1. Banca popolare dell'emilia Romagna s.c. 437, , , Banca popolare di Ravenna s.p.a. 16,258 15, Banca popolare del Mezzogiorno s.p.a. 10,247 14,792 (4,545) Bper (Europe) International s.a. 1, Banca della Campania s.p.a. 18,382 29,571 (11,189) Banca di Sassari s.p.a. 15,090 10,919 4, Banco di Sardegna s.p.a. 54, ,060 (45,960) Cassa di Risparmio di Bra s.p.a. 16,532-16,532 n.s. Total banks 569, , , Other companies and consolidation adjustments 22,032 13,577 8, Total 591, , , The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of Meliorbanca s.p.a. (Euro 15,380 thousand), a Group company merged on 26 November 2012, and of Banca Popolare di Aprilia s.p.a. (Euro 1,919 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 22,375 thousand) and CARISPAQ - Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 14,039 thousand), the Group banks absorbed on 27 May The total cost of credit at 30 September 2013 comes to 125 bps, corresponding to 167 bps on an annualised basis, although it is worth pointing out that the sizeable one-off adjustment recorded at 30 June 2013 (Euro 158 million) suggests that this assessment is not in line with expectations. The cost of credit in the same period last year amounted to 87 bps, whereas the effective cost at 31 December 2012 was 199 bps. The net profit from financial activities, Euro million, shows a decrease of 17.38% on 30 September On a quarterly basis there has been an increase of Euro 68.2 million, accounting for 23.35%, on the last quarter. Operating costs, net of other operating charges/income, amount to Euro million, 3.66% down on the same period last year: a decrease that is even more significant if we exclude CR Bra's contribution (-5.38%). The decrease is mainly attributable to the rise in "Other operating income" (Euro 163 million: % on 30 September 2012). Since the fourth quarter of 2012, the change to the fee structure imposed by the "Save Italy" decree is recorded under caption 220 (Euro 58 million). Taking into account these elements and certain extraordinary items accounted for in the two periods: legal costs incurred for the management of non-performing loans, some of which (in the case of certain Group banks) were allocated directly to the debtor (Euro 6.5 million at 30 September 2013); personnel charges relating to provisions for redundancy incentives and the Solidarity Fund (Euro 9 million in 2013 and Euro 22.5 million in 2012); the capital gain realised in the previous year for the sale of the custodian bank business (Euro 20.9 million); operating costs compared on a consistent basis are down by 0.55%. 60

61 (in thousands of Euro) Operating costs Change %change group interim report 1. Banca popolare dell'emilia Romagna s.c. 421, ,523 (19,739) Banca popolare di Ravenna s.p.a. 38,548 39,986 (1,438) Banca popolare del Mezzogiorno s.p.a. 67,737 74,013 (6,276) Bper (Europe) International s.a. 2,735 2, Banca della Campania s.p.a. 83,165 88,667 (5,502) Banca di Sassari s.p.a. 51,834 54,087 (2,253) Banco di Sardegna s.p.a. 182, ,072 (15,033) Cassa di Risparmio di Bra s.p.a. 15,682-15,682 n.s. Total banks 863, ,855 (34,331) Other companies and consolidation adjustments 15,583 14, Total 879, ,543 (33,436) The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of Meliorbanca s.p.a. (Euro 19,140 thousand), a Group company merged on 26 November 2012, of Banca Popolare di Aprilia s.p.a. (Euro 16,696 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 52,736 thousand) and CARISPAQ Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 39,770 thousand), Group companies merged on 27 May 2013, net of intercompany balances (Euro 182 thousand). The same adjustment was made to "Other companies and consolidation adjustments. Payroll costs, Euro million, are down by 1.48% compared with 30 September 2012; net of extraordinary costs mentioned above (Euro 9 million in 2013 and Euro 22.5 million in 2012) and the impact for the consolidation of CR Bra (Euro 10.2 million), they show a decrease of 0.97%. Other administrative costs amount to Euro 384 million, a rise of 5.08%, which decline to 3.20% if calculated net of the contribution of CR Bra (Euro 6.9 million); the increase is due to the legal costs incurred for the management of the above non-performing loans (Euro 6.5 million recorded at 30 September 2013). The "taxation" element, almost entirely recovered in "other charges/income", totals Euro 99.5 million (Euro 86.9 million at 30 September 2012); other costs (Euro million) increase by 2.15% (Euro million at 30 September 2012), but only by 0.29% net of the consolidation of CR Bra (Euro million). Net provisions for risks and charges (Euro 20.1 million) are up by Euro 9.4 million. There has been an increase of 6.45% in net impairment losses on tangible and intangible assets (Euro 46.2 million). The profit from current operations before tax amounts to Euro 99.3 million (Euro 280 million at 30 September 2012, %). Income taxes for the period are estimated at Euro 77.3 million, giving an effective tax rate of 77.88%, mainly because of the non-deductibility of loan loss provisions and most payroll costs for IRAP purposes. 61

62 group interim report Net profit, net of taxes and including the result of the assets held for sale, is Euro 23.2 million (Euro 138 million at 30 September 2012). The profit pertaining to minority interests amounts to Euro 9 million (at 30 September 2012 there was a loss of Euro 3.7 million). The net profit pertaining to the Parent Company amounts to Euro 14.2 million (Euro million at 30 September 2012). (in thousands of Euro) Net profit Change %change 1. Banca popolare dell'emilia Romagna s.c. (20,070) 125,466 (145,536) Banca popolare di Ravenna s.p.a. 3,256 11,751 (8,495) Banca popolare del Mezzogiorno s.p.a. 22,254 24,046 (1,792) Bper (Europe) International s.a ,021 (2,326) Banca della Campania s.p.a. 14,286 25,088 (10,802) Banca di Sassari s.p.a. 1,737 1,743 (6) Banco di Sardegna s.p.a. 9,605 14,667 (5,062) Cassa di Risparmio di Bra s.p.a. (1,425) - (1,425) n.s. Total banks 30, ,782 (175,444) Other companies and consolidation adjustments (16,132) (64,075) 47, Total 14, ,707 (127,501) The comparative figures of Banca popolare dell Emilia Romagna s.c. include those of Meliorbanca s.p.a. (Euro 4,278 thousand), a Group company merged on 26 November 2012, of Banca Popolare di Aprilia s.p.a. (Euro 7,145 thousand), Banca Popolare di Lanciano e Sulmona s.p.a. (Euro 8,966 thousand) and CARISPAQ Cassa di Risparmio della provincia dell Aquila s.p.a. (Euro 9,026 thousand), Group companies merged on 27 May 2013, net of intercompany balances (Euro 6,032 thousand). The same adjustment was made to "Other companies and consolidation adjustments". 62

63 3.7 Group employees Employees Change 1. Banca popolare dell'emilia Romagna s.c. 5,759 5,881 (122) 2. Banca popolare di Ravenna s.p.a (9) 3. Banca popolare del Mezzogiorno s.p.a (18) 4. Bper (Europe) International s.a Banca della Campania s.p.a. 1,064 1,094 (30) 6. Banca di Sassari s.p.a (9) 7. Banco di Sardegna s.p.a. 2,424 2,557 (133) 8. Cassa di Risparmio di Bra s.p.a Total banks 11,399 11,521 (122) Other companies Total 11,723 11,834 (111) group interim report The number of employees indicated for each bank takes account of staff seconded to other Group companies. In particular, BPER s employees at 30 September 2013 include 657 people seconded to the Group, of which 622 are with BPER Services S.C.p.A.; the equivalent numbers at 31 December 2012 were 659 and 629, respectively. The positive change compared with 31 December 2012 is given by the consolidation of Cassa di Risparmio di Bra s.p.a. (198 people) and the acquisition of the banking business of Serfina Banca s.p.a. (21 people); the negative change mainly relates to the outputs for the agreement signed with the Trade Unions on the subject of voluntary redundancies and the "Solidarity Fund" (269 people) with effect from 1 July

64 3.8 Geographical organisation of the Group group interim report Branches Change 1. Banca popolare dell'emilia Romagna s.c Banca popolare di Ravenna s.p.a Banca popolare del Mezzogiorno s.p.a Banca della Campania s.p.a Banca di Sassari s.p.a Banco di Sardegna s.p.a Cassa di Risparmio di Bra s.p.a Total commercial banks 1,326 1, Bper (Europe) International s.a Total 1,327 1, The number of branches of Banca popolare dell Emilia Romagna s.c. at 31 December 2012 includes 25 of Banca Popolare di Aprilia s.p.a., 78 of Banca Popolare di Lanciano e Sulmona s.p.a. and 54 of CARISPAQ Cassa di Risparmio della provincia dell Aquila s.p.a., Group companies merged on 27 May The Group's commercial banks are located throughout the country as can be seen from the following table: 64

65 Details BPER BPRA BPMEZZ BCAM BSSS BSAR CRBRA Emilia - Romagna Bologna Ferrara Forlì Cesena Modena Parma Piacenza Ravenna Reggio Emilia Rimini Abruzzo Chieti L Aquila Pescara Teramo Basilicata Matera Potenza Calabria Catanzaro Cosenza Crotone Reggio Calabria Vibo Valentia Campania Avellino Benevento Caserta Naples Salerno Lazio Frosinone Latina Rieti Rome Viterbo Liguria Genoa La Spezia Savona Lombardy Bergamo Brescia Cremona Lecco Lodi Mantua Milan Monza Brianza Varese Marche Ancona Ascoli Piceno Fermo 1 1 Macerata Pesaro-Urbino group interim report 65

66 group interim report Details BPER BPRA BPMEZZ BCAM BSSS BSAR CRBRA Molise Campobasso Isernia Piedmont Alessandria 3 3 Asti 4 4 Cuneo Turin 4 4 Apulia Bari Barletta Andria Trani Foggia Taranto Sardinia Cagliari Carbonia-Iglesias Medio Campidano Nuoro Ogliastra Olbia-Tempio Oristano Sassari Sicily Agrigento Catania Messina Palermo Siracusa Tuscany Florence Grosseto Livorno Lucca Massa Carrara Pisa Pistoia Prato Trentino-Alto Adige Trento Umbria Terni Veneto Belluno Padua Rovigo Treviso Venice Verona Vicenza Total ,326 1,297 Total ,

67 4. OTHER INFORMATION 4.1 Treasury shares No quotas or shares in Group companies are held through trust companies or other third parties; furthermore, such parties were not used during the period to buy or sell shares or quotas in Group companies. group interim report The carrying amount of the Group s interest in the treasury shares held by consolidated companies, classified as a deduction from liability caption 200, is Euro 7,272 thousand. The table below shows the details at 30 September 2013: Number of shares Total par value Group interest Banca popolare dell'emilia Romagna s.c. 455,458 1,366,374 7,270,068 Banca di Sassari s.p.a. 25,255 30,306 2,324 Total as at ,713 1,396,680 7,272,392 Total as at ,887 1,391,699 7,266, Ratings On 9 July, Standard & Poor's lowered its assessment of the creditworthiness of Italian sovereign debt, downgrading the medium-to-long term rating from BBB+ to BBB and assigning a negative outlook, as did Fitch Rating at the beginning of March, revising it downwards from A- to BBB+, subsequently confirming this rating on 25 October These agencies also downgraded a good part of their ratings of the national banking system, including BPER: International Rating Agency Issue date Long-term Short-term Outlook Standard & Poor's 29 August 2013 BB- B Stable Fitch Ratings 26 July 2013 BB+ B Negative Standard & Poor s On 29 August 2013, Standard & Poor's, the international rating agency, has revised the long-term rating to BB- from BB, while confirming the short-term rating to B and, at the same time, improving the outlook to "stable" from "negative". Fitch Ratings On 26 July 2013, as part of various rating changes on mid-sized Italian banks, Fitch Ratings revised its long-term rating to BB+ from BBB, its short-term rating to B from F3 and its Viability rating to bb+ from bbb. The Support rating and Support rating floor were confirmed at 3 and BB+, respectively. The outlook remains negative 67

68 4.3 Inspections by the Supervisory Authorities on Group Banks and Companies group interim report CONSOB On the basis of the commitments made by the Parent Company with its communication of 31 October 2012 following the inspection begun on 13 April 2011 and ended on 17 February 2012, CONSOB sent a letter on 26 April 2013 to Banca popolare dell Emilia Romagna requesting further details and reminding the Bank to resolve the matters raised during the inspection. The Parent Company sent CONSOB the documentation requested by the deadline, sending a copy to the sister banks so that they are aware of the situation. In another letter dated 10 May 2013, CONSOB also requested additional information on certain contracts entered into and on the amount of financial instruments traded on the BPER Group's Systematic Internaliser called Melt, in addition to the total number of persons who have access to that system, with a view to mapping and reviewing the micro-structural characteristics of Italian trading platforms. This data will have to be sent monthly to the Supervisory Authority. The Parent Company has complied with this request by sending a data stream for all Group banks. In the first half of 2012, CONSOB officially began an inspection at Banca Popolare di Ravenna s.p.a. to review: transactions in the ordinary shares of Banca Popolare di Ravenna s.p.a. since January 2010; the activities carried out in connection with the acceptance of the voluntary Public Exchange Offer of Banca popolare dell'emilia Romagna s.c. for the ordinary shares of Banca Popolare di Ravenna s.p.a. The inspection officially ended on 26 September In a letter dated 18 March 2013, the Supervisory Authority asked the Bank to take corrective action to bring internal procedures into line with the MiFID; these interventions are currently being prepared or are already in place at the Parent Company, having been identified as a result of the inspection carried out by CONSOB, given that the procedures adopted are the same as those recommended. With the same communication, the Supervisory Authority asked the Board of Directors, Statutory Auditors and the Compliance function to provide their thoughts on the adaptation activities undertaken by the Parent Company. On 14 June 2013, the Supervisory Authority also requested information on the portfolio management business. The Bank prepared two different communications for the Supervisory Authority in response to its requests, which were sent in July Bank of Italy The inspection at the Parent Company, valid for the entire BPER Group, that began on 12 November 2012, was concluded on 1 March Its purpose was to look into the assessment of adequacy of loan losses provisions for non-performing loans, watchlist loans and restructured loans, and the related application policies and practices. The inspection had systemic connotations as it involved other major banking groups and various small and medium-sized entities at the same time, such that the principal methods applied and the main results were the subject of a public notice released by the Bank of Italy at the end of July. On 24 June, the Supervisory Authority notified to the Bank the results of the inspection, conducted in accordance with criteria that reflect the deepening economic downturn and the growing difficulties in the housing market, which gave rise to partially unfavourable results; these form part of the evaluation of the prudent process and derive from certain weaknesses found in the internal rules and practices in use, in addition to the need for higher provisions. The Supervisory Authority 68

69 has, however, acknowledged that the higher estimates of loan losses were almost entirely incorporated in the 2012 financial statements and that corrective action has been initiated to improve the organisational controls in this area. In view of the observations made, the Corporate Bodies promptly formulated their own considerations, and activated an acceleration in the steps already taken to update procedures in this area. group interim report On 4 March 2013, the Bank of Italy began a new inspection, in continuation of the previous one, to carry out assessments on the "adequacy of the system of governance, management and control of credit risk, as well as recognition of the work undertaken by the BPER Group for the introduction of an internal model to calculate capital requirements for this type of risk". The intervention of the Supervisory Authority is consistent with the activities of BPER on one of the key topics of the Industrial Plan (Basel 2 programme: activation of a process of ratification of internal models for credit risk and evolution of the methodology for calculating the capital requirement). The inspection was completed on 5 July. On 17 September 2013, the Supervisory Authority notified to the Bank the results of its inspection, which was concluded with partially favourable results. In a nutshell, despite the highly critical economic situation it was found that the Bank had a relatively low exposure to credit risk. The Bank of Italy also invited BPER to strengthen its activities of guidance, coordination and control of the Group. In view of the observations made, the Corporate Bodies promptly formulated their own considerations. With reference to the inspection that ended in December 2011 at Banca della Campania s.p.a., the results of which have been notified in March 2012, the Bank of Italy issued notice in February 2013 that imposed administrative sanctions against members of the Board of Directors, the General Manager and the members of the Board of Statutory Auditors. During the first half of 2012, the Bank of Italy carried out an ordinary inspection on Banco di Sardegna s.p.a. as part of its normal supervisory activities, which ended in the same year. The Supervisory Authority notified in July 2013 that it was imposing administrative sanctions against the members of the Board of Directors, the General Manager and the members of the Board of Statutory Auditors. 69

70 4.4 Disclosure of exposures to sovereign debt held by listed companies group interim report With communication DEM/ of 5 August 2011 CONSOB pointed out that on 28 July 2011 the European Securities Markets Authority (ESMA) published Document no. 2011/266 on the disclosures concerning sovereign debt (i.e. bonds issued by central and local governments and by government entities, as well as loans granted to them) to be included in annual and interim financial statements prepared by listed companies that have adopted International Accounting Standards (IAS/IFRS). As a result of the increased interest of markets in sovereign debt, ESMA has stressed the need for greater transparency on the subject in financial statements of European listed issuers that apply IAS/IFRS. With its document, which does not have any independent prescriptive authority, ESMA has tried to assist issuers in preparing disclosures on sovereign debt that fully comply with the related principles. In accordance with these instructions, the following is a summary of the relevant information on exposures of the Banca popolare dell Emilia Romagna Group to the aggregate in question. 70

71 Debt securities Issuer Rating Cat Nominal value Book value Fair value AFS Reserves % group interim report Governments: 5,822,273 6,158,169 6,166,835 23, % Italy BBB+ 5,568,374 5,907,581 5,916,532 23, % HFT 519, , ,358 # CFV 25,020 29,629 29,629 # AFS 4,326,064 4,553,443 4,553,443 23,440 HTM 697, , ,102 # L/R # The Netherlands AAA 57,500 55,637 55,637 (1,967) 0.90% HFT # CFV # AFS 57,500 55,637 55,637 (1,967) HTM # L/R # Belgium AA 100,000 97,911 97, % HFT # CFV # AFS 100,000 97,911 97, HTM # L/R # Germany AAA 25,002 24,644 24, % HFT # CFV # AFS 25,000 24,642 24, HTM # L/R # Austria AAA 20,494 20,321 20, % HFT 3,994 3,863 3,863 # CFV # AFS 11,500 11,265 11, HTM 5,000 5,193 5,329 # L/R # Spain BBB 15,000 15,760 16, % HFT # CFV # AFS 10,000 10,594 10, HTM 5,000 5,166 5,416 # L/R # 71

72 group interim report Issuer Rating Cat Nominal value Book value Fair value AFS Reserves % Ireland BBB+ 10,000 10,288 10, % HFT # CFV # AFS HTM 10,000 10,288 10,390 # L/R # Portugal BB+ 10,000 10,135 9, % HFT # CFV # AFS HTM 10,000 10,135 9,362 # L/R # France AA+ 9,000 8,681 8,681 (513) 0.14% HFT # CFV # AFS 9,000 8,681 8,681 (513) HTM # L/R # Australia AAA 6,903 7,211 7,211 (1) 0.12% HFT # CFV # AFS 6,903 7,211 7,211 (1) HTM # L/R # Other public entities: 2,861 2,884 2, % Italy - 2,861 2,884 2, % HFT # CFV # AFS HTM # L/R 2,839 2,863 2,855 # Total debt securities 5,825,134 6,161,053 6,169,711 23, % 72

73 Loans Issuer Rating Cat Nominal value Book value Fair value AFS Reserves % group interim report Governments: 1,495,112 1,495, % Italy BBB+ 1,495,112 1,495, % HFT # CFV # AFS HTM # L/R 1,495,112 1,495,112 - # Other public entities: 475, , % Italy - 470, , % HFT # CFV # AFS HTM # L/R 470, ,875 - # Algeria - 4,275 4, % HFT # CFV # AFS HTM # L/R 4,275 4,275 - # Total loans 1,970,262 1,970, % The ratings indicated are those of Fitch Rating at 30 September Based on their book value, repayment of these exposures is distributed as follows: on demand up to 1 year 1 to 5 years over 5 years Total Debt securities - 808,023 3,447,541 1,905,489 6,161,053 Loans 263, , ,896 1,038,005 1,970,262 Total 263,723 1,139,661 3,784,437 2,943,494 8,131,315 73

74 4.5 Main litigation and legal proceedings pending group interim report Tax disputes With reference to the subsidiary EMRO Finance Ireland Ltd, on 19 July 2011 the tax police notified an official report of findings to the Irish Company at the end of an audit relating to the tax years On 12 March 2012, the Modena Tax Office filed a notice of assessment, which is not enforceable, relating to tax years 2005 and 2006, in which they contest the company's foreign status, involving total taxes of Euro 11.2 million. Management, with the support of authoritative legal advice, considers that there are all the elements to appeal against this assessment and does not consider it likely that this matter will have negative consequences. In any case, at the end of April 2012 the Irish company filed a proposal to come to a settlement in order to assess possible alternatives to litigation, starting with the inclusion in taxable income of very minor amounts in relation to the activity carried on by EMRO Finance Ireland, while confirming their absolute conviction that they had acted correctly. At the end of this attempt to come to a settlement, which ended in a stalemate, the company filed an appeal with the Modena Tax Commission. In December 2012, the company received a tax bill for part of the taxes contained in the notices of assessment for 2005 and 2006, against which the company obtained a stay of execution from the Provincial Tax Commission of Modena filed on 5 March The hearing before the Commission was held on 23 September 2013 and we are waiting for the judgement to be announced. Alongside the dispute, the Mutual Agreement Procedure (MAP) between Ireland and the Ministry of Economy and Finance - Finance Department, pursuant to Article 25 of the OECD Model, has been activated as an alternate path for an amicable settlement of the Company's tax residence. In the absolute conviction that they had acted correctly, with the support of important external legal advice, the Company did not consider there to be the conditions to make any provision for the taxes in dispute, but for prudence sake posting to the provision for risks and charges the estimated value of the legal costs involved, given the uncertainty as to how long the litigation is likely to last. Investigation into what the media have labelled the Parioli scam It should be noted that certain individuals, who are suspects in the investigation into what the media have labelled the Parioli scam, held accounts, also by means of companies held by them, with a Rome branch of CARISPAQ, from 27 May 2013 absorbed by the Group, In this context it should be noted that CARISPAQ has been cited as being responsible in civil proceedings no /2011 R.G.T. before the Court of Rome in a panel, IX Criminal Chamber, in which Gianfranco Lande stands accused of alleged conspiracy to carry out fraud as well as other crimes against property, unauthorised financial practices and trying to obstruct the supervisory functions; crimes committed through companies controlled by Lande, some of which had current accounts at a Rome branch of CARISPAQ. In this regard, it should be noted that CARISPAQ has been cited for third-party liability by 249 persons. 28 June 2012, the Court of Rome condemned Gianfranco Lande to 9 years and 8 months in prison and a fine of Euro 20,

75 CARISPAQ was also ordered, jointly and severally with the defendant, to pay damages in favour of plaintiffs, to be paid in separate proceedings, as well as reimbursement of the legal expenses incurred by the plaintiffs, as quantified by the Court. The Court rejected all requests for a provisional award. It follows that, according to the judgement, CARISPAQ is not currently required to pay any sum. The written judgement with the reasons underlying the sentence was filed on 27 December CARISPAQ had appeal against the sentence on 20 March 2013 before the Court of Appeal of Rome. In fact, the first degree judgement affirms the Bank's responsibility on a questionable legal basis and never applied to date against a private entity, given that it has no indirect liability for the facts ascribed to Lande. The judgement on appeal is in progress and the next hearing is scheduled for 12 November It should also be noted that some of those alleged to have been damaged by Lande's conduct, some of whom did not present themselves as plaintiffs in these criminal proceedings, have sued the Bank under civil law for reimbursement of the damage suffered, even in the absence of any causal link between the damage alleged by the plaintiffs and any illegal acts or irregularities carried out by CARISPAQ, where definitively established. These civil proceedings are still at the preparatory stage. group interim report For completeness of information, it should be noted that three CARISPAQ employees, who were in charge of the Rome branch at the time, have been indicted by the Public Prosecutor: one for participation in the fraud committed by Lande; two for alleged irregularities against the anti-money laundering legislation in the management of the E.I.M. accounts at their branch. The preliminary hearing held on 4 April 2013 was dedicated exclusively to filing numerous plaintiff's briefs and the Judge, reserving the right to handle any of the matters involving these briefs, adjourned the hearing to 20 May At that hearing, the Judge admitted the summons of BPER for possible civil liability as the merging company of CARISPAQ, adjourning the matter to the hearing on 1 July At this last hearing, the same Judge admitted as plaintiffs all those who had applied. The next hearing was held on 21 October The Bank has duly appeared as defendant, contesting both the issue of the inadmissibility of the plaintiff's filings and the fact that it is not possible to duplicate the requests for compensation already made in Lande's trial. These requests were, however, rejected by the Court, mainly because the condemnation of civil liability, already pronounced in the first lawsuit, was not yet covered by res judicata. At present, no direct requests for damages have been received in relation to the facts of which employees have been accused. For an assessment of the potential financial and economic impacts that could arise from this situation, during the preparation of this consolidated quarterly report, CARISPAQ, now BPER following its recent merger, has over time obtained a number of legal opinions from the law firms that assist it in the various trials and pro veritate opinions prepared by a respected professional totally unrelated to the Bank's defence, as well as contributions from another respected professional, the latest being at the end of June In particular, a detailed study has been made of the merits of the judgment of conviction issued against the bank, in the light of the rules and principles applicable in our legal system with regard to passive legitimation of third-party liability and compensation for damages in criminal proceedings. Particular attention has been given to issues relating to the lack of a causal link between the alleged damage and the conduct of CARISPAQ. In particular, then, with reference to the conviction suffered by CARISPAQ and commented on earlier, all of the said professionals unanimously considered as remote the risk of CARISPAQ 75

76 group interim report (now BPER) having to pay damages, both in terms of an, and in terms of a hypothetical quantum, as they believe that the conviction can be overturned at the next level of justice. Given the above, it is currently believed that there is only a remote possibility that the bank will suffer adverse consequences as a result of this matter; consequently, in accordance with IAS 37, it was decided not to make any provision. Judgment of the Court of Modena You are reminded that the Court of Modena, in its judgment of 24 February 2012, cancelled the shareholders' resolution of 16 April 2011 for partial renewal of the Board of Directors of the Parent Company, which appointed as Directors for the three-year period Piero Ferrari (current member of the Executive Committee), Alberto Marri (current member of the Executive and Strategy Committees), Giuseppe Lusignani (current member of the Internal Audit and Strategy Committees), Fioravante Montanari, Erminio Spallanzani (current member of the Executive Committee) and Manfredi Luongo (Minority Director). Given that this is a constitutive judgement, which is not enforceable, the composition of the BPER Board - as far as the Directors involved in the judgment are concerned - remains as it was, as do the resolutions that it has passed and the responsibilities and powers that have been attributed. The Bank appealed against this judgement, serving notice on 19 June 2012 and highlighting the serious argumentative gaps in it, also with reference to key legal questions. In the appeal proceedings, at the hearing of 16 January 2013, the Bologna Court of Appeal set the date for the next hearing on 21 October 2014, for the statement of conclusions. 76

77 5. SIGNIFICANT SUBSEQUENT EVENTS AND OUTLOOK FOR OPERATIONS 5.1 Subsequent events Issue and placement of Covered Bonds Under the long-term programme of Guaranteed Bank Bonds ("Covered Bonds") of Euro 5 billion, intended for institutional investors, with the approval of the base prospectus by the Luxembourg "Commission de Surveillance du Secteur Financier" on 30 November 2011, updated on 8 August 2013, a new bond issue, the third of the programme and the first placed on the market, was carried out on 15 October 2013 for an amount of Euro 750 million. The security, issued with a fixed annual rate of 3.375% and maturing in 5 years, was received by investors with considerable interest and demand was more than twice the nominal value issued. group interim report Data collection for the ECB-SSM (SPE2) On 11 October 2013, the Parent Bank BPER was asked by the Italian Supervisory Authority, in coordination with the European Central Bank in the context of the broader Banking Union project as regards the imminent start of the Single Supervisory Mechanism (SSM), to produce a set of data not currently available in the streams already forwarded to the Bank of Italy, designed to feed the regulatory analytical models being developed for the supervision of major banking groups. Strategic project to simplify and streamline the Group On 30 October 2013, the Board of Directors of the Parent Bank approved the guidelines of a strategic project to simplify and streamline the organisational and governance structure of the Banking Group: the plan is for the banks having their registered office in the Italian peninsula to be absorbed by the Parent Company between the end of 2014 and the first half of This integrates what was already planned and implemented under the Business Plan and forms a base on which to establish priorities for the next Plan. The purpose of this project is to make the guidance, supervision and control activities within the Group more effective and to achieve significant synergies, while expanding the range of services offered to customers. The staff of the banks due to be absorbed will be given the utmost consideration to ensure an appropriate enhancement of the resources. In addition, attention to the particular characteristics of the various local communities that we serve will be ensured by setting up suitable delocalised control units (Territorial Divisions) and Territorial Committees with the task of developing interventions to support local communities and their economy, as we have already carried out successfully during previous mergers. 77

78 5.2 Outlook for operations group interim report In the latter part of the year, it seems that a slow and gradual recovery in economic activity has begun, despite a business environment that remains difficult, conditioned by significant uncertainty on the political and economic front. The weakness in domestic demand will continue to limit the chances of a recovery in lending activities and could lead to pressure on the revenues of the banking system. Credit quality will continue to influence the banking system's earnings prospects, albeit to a lesser extent than last year, while the process of cost control should continue. The BPER Group's main objectives for the latter part of the year are to maintain an adequate level of financial solidity, to strengthen traditional banking profitability and to reduce operating costs even more. While initial signs of normalisation are visible, the cost of credit is expected to remain high, but still lower than in Modena, 12 November 2013 The Board of Directors The Chairman Ettore Caselli 78

79 CONSOLIDATED FINANCIAL STATEMENTS Banca popolare dell Emilia Romagna Banking Group 79

80

81 Consolidated balance sheet as at 30 September 2013 (in thousands of Euro) Assets consolidated financial statements 10. Cash and balances with central banks 421, , Financial assets held for trading 1,159,484 1,596, Financial assets designated at fair value through profit and loss 151, , Financial assets available for sale 5,915,811 4,679, Financial assets held to maturity 1,203, , Due from banks 1,702,179 2,250, Loans to customers 47,207,476 48,048, Hedging derivatives 2, Remeasurement of financial assets backed by general hedges (+/-) - 1, Equity investments 257, , Property, plant and equipment 982, , Intangible assets 475, ,488 of which: goodwill 383, , Tax assets 987, ,066 a) current 64, ,483 b) deferred 923, ,583 b1) of which L. 214/ , , Non-current assets and disposal groups held for sale 2,817 18, Other assets 967, ,165 Total assets 61,438,402 61,637,758 Liabilities and shareholders' equity Due to banks 8,035,535 7,269, Due to customers 32,504,053 32,288, Debt securities in issue 9,818,702 11,047, Financial liabilities held for trading 196, , Financial liabilities designated at fair value through profit and loss 3,143,502 3,865, Hedging derivatives 39,920 37, Tax liabilities 165, ,626 a) current 57,820 46,426 b) deferred 107, , Liabilities associated with non-current assets held for sale - 8, Other liabilities 2,352,135 1,465, Provision for termination indemnities 206, , Provisions for risks and charges 279, ,329 a) pensions and similar commitments 107, ,833 b) other provisions 172, , Valuation reserves 118, , Reserves 2,266,222 2,264, Share premium reserve 624, , Share capital 1,001, , Treasury shares (7,272) (7,266) 210. Minority interests 679, , Profit (loss) for the period pertaining to the Parent Company 14,206 (11,271) Total liabilities and shareholders' equity 61,438,402 61,637,758 81

82 Consolidated income statement as at 30 September 2013 consolidated financial statements (in thousands of Euro) Captions Interest and similar income 1,555,772 1,655, Interest and similar expense (591,589) (674,307) 30. Net interest income 964, , Commission income 559, , Commission expense (40,099) (40,576) 60. Net commission income 519, , Dividends and similar income 23,530 4, Net trading income 32,874 90, Net hedging gains (losses) (191) (1,074) 100. Gains/losses on disposal or repurchase of: 112,496 50,039 a) loans (1,215) (468) b) financial assets available for sale 110,062 25,990 c) financial assets held to maturity - (179) d) financial liabilities 3,649 24, Net results on financial assets and liabilities designated at fair value (46,820) (42,310) 120. Net interest and other banking income 1,605,558 1,612, Net impairment adjustments to: (623,106) (423,654) a) loans (591,383) (419,978) b) financial assets available for sale (4,621) (4,828) d) other financial assets (27,102) 1, Net profit from financial activities 982,452 1,189, Administrative costs: (975,761) (966,095) a) payroll (591,780) (600,671) b) other administrative costs (383,981) (365,424) 190. Net provision for risks and charges (20,078) (10,696) 200. Net adjustments to property, plant and equipment (30,426) (32,163) 210. Net adjustments to intangible assets (15,817) (11,279) 220. Other operating charges/income 162, , Operating costs (879,107) (912,543) 240. Profit (loss) from equity investments (4,415) 6, Adjustments to goodwill - (36) 270. Gains (losses) on disposal of investments 341 (2,649) 280. Profit (loss) from current operations before tax 99, , Income taxes on current operations (77,309) (142,480) 300. Profit (loss) from current operations after tax 21, , Profit (loss) after tax on non-current assets held for sale 1, Net profit (loss) 23, , Net profit (loss) pertaining to minority interests (9,014) 3, Profit (loss) for the period pertaining to the Parent Company 14, ,707 Earnings per share Earnings per share (Euro) (Euro) Basic EPS Diluted EPS

83 Statement of consolidated comprehensive income (in thousands of Euro) Statement of consolidated comprehensive income consolidated financial statements 10 Profit (loss) for the period 23, ,041 Other elements of income, net of income taxes 20 Financial assets available for sale (91,780) 167, Cash flows hedges 2,365 (1,870) 90 Actuarial gains (losses) on defined-benefit pension (1,198) (16,782) 100 Portion of the valuation reserves of equity investments carried at equity 2,800 (968) 110 Total other elements of income (net of income taxes) (87,813) 148, Total comprehensive income (Captions ) (64,593) 286, Comprehensive income attributable to minority interests 7, Total consolidated comprehensive income pertaining to Parent (71,876) 285,553 Company 83

84 consolidated financial statements Statement of changes in consolidated shareholders' equity (in thousands of Euro) Shareholders equity as at Changes during the period Allocation of prior year results Balance as at Changes in opening balances Balance as at Comprehensiv e income as at Transactions on shareholders' equity Stock options Changes in reserves Reserves Group M inority interests Derivative s on treasury shares Changes in equity instruments Extraordinary distribution of dividends Purchas e of treasury shares Issue of new shares Dividends and other allocations Share capital: 1,098,431-1,098, (3,502) 3, ,001,482 96,764 a) ordinary shares 1,098,431-1,098, (3,502) 3, ,001,482 96,764 b) other shares Share premium reserve 691, , (10,638) 4, ,154 61,614 Reserves: 2,768,717-2,768,717 (32,598) - (1,794) ,266, ,103 a) from profits 2,702,649-2,702,649 (32,598) - (181,749) ,020, ,968 b) other 66,068-66, , , Valuation reserves: 244, , , (87,813) 118,263 43,822 Equity instruments Treasury shares (7,268) - (7,268) (10) (7,272) (2) Net profit (loss) (32,598) - (32,598) 32, ,220 14,206 9,014 Group shareholders' equity 4,062,727-4,062, ,201 8,013 (10) (71,876) 4,017,055 - Shareholders' equity as at M inority interests 700, , (28,293) , ,315 Changes during the period Allocation of prior year results Balance as at Comprehensiv e income as at Transactions on shareholders' equity Changes in opening balances (*) Balance as at Stock options Changes in reserves Issue of new shares Reserves Group M inority interests Derivative s on treasury shares Changes in equity instruments Extraordinary distribution of dividends Purchas e of treasury shares Dividends and other allocations Share capital: 1,113,172-1,113, (15,573) 1, , ,173 a) ordinary shares 1,113,172-1,113, (15,573) 1, , ,173 b) other shares Share premium reserve 752, , (4,959) (55,907) ,462 72,528 Reserves: 2,536,259 (19,170) 2,517, ,256-26, ,262, ,105 a) from profits 2,465,785 (19,170) 2,446, ,256-26, ,192, ,724 b) other 70,474-70, (610) ,483 (619) Valuation reserves 90,106 19, , (13,307) , ,090 40,959 Equity instruments Treasury shares (83,362) - (83,362) , (7,290) (26) Net profit (loss) 237, ,359 (209,256) (28,103) , ,707 (3,666) Group shareholders' equity 3,930,715-3,930,715 - (28,103) (11,220) 21, ,553 4,198,823 - M inority interests 715, , , ,073 (*) The change in the opening balances of reserves from profits and valuation reserves is in line with the approach adopted by the National Association of Actuaries (Circular no. 35 of 21 December 2012), as detailed in Part A of the Explanatory Notes to the 2012 consolidated financial statements. 84

85 CONSOLIDATED EXPLANATORY NOTES Banca popolare dell Emilia Romagna Banking Group 85

86

87 consolidated explanatory notes Form and content of the consolidated interim report as at 30 September 2013 pag. 89 Information on the consolidated balance sheet pag. 99 Information on the consolidated income statement pag. 127 Information on risks and related hedging policy pag. 141 Information on consolidated shareholders' equity pag. 145 Information on business combinations pag. 157 Key to abbreviations in tables: FV: Fair value FV*: Fair value excluding variations due to changes in the credit worthiness of the issuer since the issue date NV: Nominal or notional value BV: Book value L 1 : Fair value hierarchy - Level 1 L 2 : Fair value hierarchy - Level 2 L 3 : Fair value hierarchy - Level 3 #: not applicable 87

88

89 FORM AND CONTENT OF THE CONSOLIDATED INTERIM REPORT AS AT 30 SEPTEMBER 2013 consolidated explanatory notes 89

90 1 Introduction consolidated explanatory notes The consolidated quarterly report as at 30 September 2013 ("the report") of the Banca popolare dell'emilia Romagna Group has been prepared in compliance with art. 154-ter of the Consolidated Finance Act ("CFA" - Decree 58 of 24 February 1998 and subsequent amendments). 2 Declaration of compliance with International Financial Reporting Standards The figures contained in the report have been determined in accordance with the accounting rules set by the IAS/IFRS endorsed by the European Commission under the procedure referred to in art. 6 of EC Regulation 1606/2002 and already used in the preparation of the consolidated financial statements as at 31 December 2012 and in the consolidated interim financial report at 30 June 2013, as well as by the IAS/IFRS that became mandatory from 2013, which are shown in the following table. In any case, this document does not constitute an "interim financial report" as intended by International Accounting Standard (IAS)

91 EC Approval Regulation Title 475/2012 Amendments to IAS 1 - Presentation of Items of Other Comprehensive Income In force from years beginning 1 July 2012 consolidated explanatory notes The amendments are intended to clarify the presentation of the increasing number of items of other comprehensive income and to help users of financial statements to distinguish between those that may and those that may not be subsequently reclassified to profit and loss. 475/2012 Amendments to IAS 19 - Employee Benefits 1 January 2013 These changes should help users of financial statements to understand better how defined-benefit plans affect the company's financial position, results of operations and cash flows. 1255/2012 Amendments to IFRS 1, IAS 12, IFRS 13 and IFRIC 20 1 January 2013 The objective of the amendments to IFRS 1 is to enable entities that have been subject to severe hyperinflation to use fair value as the deemed cost of their assets and liabilities in the opening statement of financial position prepared in accordance with IFRS. The objective of the amendments to IAS 12 is to clarify that the carrying amount of investment property measured on the basis of the fair value model would be recovered through its sale and an entity would be required to use the tax rate applicable to the sale of the underlying asset. IFRS 13 establishes a single IFRS framework for measuring fair value; it is to be applied when another IFRS requires or permits fair value measurements or requires disclosures about fair value measurements. The objective of IFRIC 20 is to provide guidance on the recognition of certain types of costs during the production phase of an opencast mine. 1256/2012 Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities 1 January 2013 The purpose of these changes is to prescribe additional quantitative information to help users compare and reconcile information under IFRS and those resulting from the application of American Generally Accepted Accounting Principles (US GAAP). 183/2013 Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Government Loans These amendments relate to government loans at an interest rate that is lower than the market. The aim is to exempt first-time adopters of IFRS from full retrospective application of the relevant provisions during the transition to IFRS. 1 January /2013 Improvements to IFRS Cycle 1 January 2013 The objective of these Improvements is to deal with inconsistencies in IFRSs on topics that are not particularly urgent. 91

92 consolidated explanatory notes The following table shows the new international accounting standards or amendments to standards already in force, whose application is mandatory from 1 January 2014 or later date (if the financial statements do not coincide with the calendar year). The Group has decided not to take advantage of the possibility of early implementation. EC Approval Regulation Title In force from years beginning 1254/2012 Regulation that adopts IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 The objective of IFRS 10 is to provide a single model for the consolidated financial statements. This new standard replaces IAS 27 Consolidated and Separate Financial Statements and SIC 12 - Special Purpose Entities (aka "special purpose vehicles"). IFRS 11 establishes principles for financial reporting by entities that are party to joint control arrangements and replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers. IFRS 12 combines, enhances and replaces the disclosure requirements for subsidiaries, joint arrangements, associates and unconsolidated structured entities. As a result of these new IFRS, the IASB also issued IAS 27 Revised and IAS 28 Revised. 1256/2012 Amendments to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities. The changes to IFRS 7 also resulted in amendments to IAS 32, providing additional guidance so as to reduce inconsistencies in the practical application of the Standard 1 January January /2013 Guide to transitional provisions (Amendments to IFRS 10, 11 and 12). The amendments provide for a simpler transition to IFRS 10, IFRS 11 and IFRS 12, limiting the requirement to provide adjusted comparative information only to the previous comparative period. In addition, for information relating to structured entities that are not consolidated, the amendments suppress the requirement to present comparative information for periods prior to the date on which IFRS 12 is applied for the first time. 1 January

93 3 General policies This report consists of the consolidated balance sheet, the consolidated income statement, the statement of consolidated comprehensive income and the statement of changes in consolidated shareholders' equity, as well as the consolidated explanatory notes and the information on operations. The schedules provide comparative figures from the balance sheet as at 31 December 2012 and from the income statement as at 30 September consolidated explanatory notes The schedules and the rules governing their preparation comply with the updated version of Circular no. 262/2005, issued by the Bank of Italy on 18 November 2009 and published in the Gazzetta Ufficiale no. 238 on 21 December Unless stated otherwise, the amounts shown in the financial statements and explanatory notes are expressed in thousands of Euro. The balance sheet, income statement and statement of changes in shareholders' equity of Banca popolare dell'emilia Romagna s.c., the Parent Company, are provided in attachments to this report. The report also includes pro-forma schedules following the mergers: of the three Banks of Central Italy (CARISPAQ, BPLS and BPA) completed on 27 May 2013, for the balance sheet and income statement; of the subsidiaries Em.Ro. popolare and Meliorbanca completed on 24 September 2012 and 26 November 2012 respectively, only for their income statement aggregates. The general principles adopted for the preparation of the quarterly report, the consolidation principles and the accounting policies applied in the phases of recognition, classification, measurement and derecognition of assets and liabilities, as well as the bases for recognising revenues and costs, are the same as those reported in Part A of the Notes to the 2012 consolidated financial statements. 93

94 4 Scope of consolidation and methodology consolidated explanatory notes Investments in subsidiaries and companies under joint control (consolidated on a proportional basis) Name of the company Head office Type of relationship (a) Share capital in Euro Nature of holding Parent company % held Voting rights (b) A. Companies included in consolidation A.1 Companies consolidated line-by-line 1. Banca Popolare di Ravenna Ravenna 1 54,408,227 B.P.E.R s.p.a. 2. Banca Popolare del Crotone 1 134,970,564 B.P.E.R Mezzogiorno s.p.a. 3. Banca della Campania s.p.a. Naples 1 83,223,210 B.P.E.R Banco di Sardegna s.p.a. Cagliari 1 155,247,762 B.P.E.R Banca di Sassari s.p.a. Sassari 1 74,458,607 B. Sard B.P.E.R Cassa di Risparmio di Bra Bra 1 27,300,000 B.P.E.R s.p.a. 7. Banca pop. Em. Rom. (Europe) Int. s.a. Luxembourg 1 30,667,500 B.P.E.R B.P.R EMRO Finance Ireland ltd. Dublin 1 155,000 B.P.E.R Nadia s.p.a. Modena 1 87,000,000 B.P.E.R BPER Services s.cons.p.a. Modena 1 10,920,000 B.P.E.R B. Sard B.S.S B.P.R B.d.C B.P.Mezz Optima Sardaleasing Sardaleasing s.p.a. Sassari 1 51,650,000 B. Sard B.P.E.R Optima s.p.a. S.I.M. Modena 1 13,000,000 B.P.E.R Tholos s.p.a. Sassari 1 17,015,995 B. Sard Numera s.p.a. Sassari 1 2,065,840 B. Sard Mutina s.r.l. Modena 1 10,000 B.P.E.R Nettuno Gestione Crediti Bologna 1 1,500,000 B.P.E.R s.p.a. 17. Modena Terminal s.r.l. Campogalliano 1 8,000,000 B.P.E.R Emilia Romagna Factor s.p.a. Bologna 1 36,393,940 B.P.E.R ABF Leasing s.p.a. Milan 1 7,800,000 B.P.E.R

95 Name of the company Head office Type of Relationship (a) Share capital in Euro Nature of holding Parent company % held 20. Immobiliare Reiter s.p.a. Modena 1 900,000 Nadia Galilei Immobiliare s.r.l. Modena 1 100,000 Nadia Melior Valorizzazioni Immobili Milan 1 10,000 B.P.E.R s.r.l. 23. Estense Covered Bond s.r.l. Conegliano 1 10,000 B.P.E.R BPER Trust Company s.p.a. Modena 1 500,000 B.P.E.R Polo Campania s.r.l. Naples 1 110,000 B.d.C Sarda Vibrocementi s.r.l. Sassari 1 1,954,535 B.P.E.R Italiana Valorizzazioni Immobiliari s.r.l. Milan 1 2,000,000 B.P.E.R Voting rights (b) consolidated explanatory notes A.2 Consolidated on a proportional basis Key: (a) Type of relationship: 1 Majority of votes at the ordinary shareholders' meeting (b) Voting rights at ordinary shareholders' meeting, distinguishing between actual and potential. Consolidation principles This document is the result of consolidating the interim reports of the Banks and Companies making up the Group or, in any case, under its control. No interim report has been prepared for Polo Campania s.r.l. and Italiana Valorizzazioni Immobiliari s.r.l. as they were formed recently and are not yet operational. For consolidation purposes we used the reports prepared in accordance with IAS/IFRS by the individual banks and financial companies subject to Bank of Italy supervision, as well as by Em.Ro. Finance Ireland. All of the other Group companies that are subject to local accounting principles have had to prepare accounting schedules with figures restated in accordance with IAS/IFRS. As regards the companies in which a significant interest is held (20% or more), for Cassa di Risparmio di Savigliano s.p.a., Cassa di Risparmio di Fossano s.p.a., Cassa di Risparmio di Saluzzo s.p.a., Banca della Nuova Terra s.p.a. and Alba Leasing s.p.a. their half-year accounts at 30 June 2013 have been used, when available; otherwise, the annual financial statements at 31 December 2012, the latest ones to be approved, have been used. 95

96 5 Subsequent events consolidated explanatory notes This report was approved on 12 November 2013 by the Board of Directors of Banca popolare dell Emilia Romagna. Reference is made to the detailed information provided in the Significant subsequent events and outlook for operations section of the Group interim report on operations. 6 Other information Bank of Italy Circulars and other documents of the Supervisory Authority On 15 January 2013, the Bank of Italy issued a technical note that stressed the importance of transparency of information on disposals of financial instruments. It is also worth noting the document issued jointly by the Bank of Italy/CONSOB/IVASS no. 6 dated 8 March 2013 on the "Accounting treatment of term structured repos (transactions involving a purchase of securities, a hedging derivative and a repurchase agreement). Application of this standard requires careful assessment by management of the specific characteristics of the transactions carried out, especially when they involve complex operations such as those mentioned in this document. The Authorities are of the opinion that management has to carefully consider the purposes underlying the combination of contractual arrangements that make up term structured repo transactions, even if formally they are considered separate elements, in order to decide on the most appropriate accounting treatment. In practice, if management concludes that the conditions of paragraph B.6, IAS 39, Guidance on Implementing, do not apply, each of the individual components of the contract has to be recognised separately. With this document, the Bank of Italy/CONSOB/IVASS draw the attention of the members of management and supervisory boards and of managers responsible for preparing financial reports on the need to ensure adequate and complete information on term structured repos as regards their presentation, impact on the results and financial position, including pro-forma figures, and the underlying risks and related management strategies. The Group has not carried out any such transactions as of 30 September On 18 June 2013 the Bank of Italy issued Circular no. 284 Archive of historically registered losses on default positions. This circular provides for the creation of an archive for the collection of data on loan recoveries by regulated intermediaries (banks and financial entities) that makes it possible to calculate loss rates historically recorded on loans in default (commonly known as "LGD reporting"). The creation of such an archive is linked to the new accounting model for impairment being defined by the IASB, which will replace the current one based on incurred losses in accordance with IAS 39. The report also serves as a source of information for the Supervisory Authority on intermediaries who adopt or intend to adopt the advanced internal models to calculate capital requirements for credit risk (AIRB), with particular reference to the determination of the rate of loss given default (LGD). On 7 August 2013, the Supervisory Authority sent a note setting out the operative implications for financial intermediaries as a result of the matters set out in the Exposure Draft "Financial 96

97 Instruments: Expected Credit Losses" published by the IASB on 13 March 2013, which contains a proposal for a new accounting model for the calculation of value adjustments to receivables based on "expected losses" rather than "incurred losses". The proposed model provides for the classification of financial instruments to which it applies in three functional classes to reflect the progressive increase in credit impairments consistent with the process of deterioration of the quality of debtors with respect to the starting moment and to which the different methods of measuring impairment losses correspond. Correct application of the model therefore requires intermediaries to trace the history of each financial instrument in order to handle transfers from one class to another properly. During initial adoption of the model it is also expected that if application of the classification criteria of the stock of financial assets existing in the various classes is particularly onerous, reference should be made to the credit quality of the receivables at the date of valuation. The Bank of Italy notes that the new rules present aspects of operational complexity for intermediaries and how, if confirmed, the ability of intermediaries to reconstruct the evolution of the credit quality of financial instruments with respect to the time they were granted ("purchase") can affect, even quite significantly, the amount of new value adjustments required, particularly on first-time application of the model. consolidated explanatory notes On 12 September 2013, the Supervisory Authority made Circular no. 262/2005 "Banks' financial statements: layout and preparation" available for a 60-day consultation. Audit The report is not subject to a formal review by the auditors PricewaterhouseCoopers s.p.a., but only to routine accounting checks. 97

98

99 INFORMATION ON THE CONSOLIDATED BALANCE SHEET consolidated explanatory notes 99

100 ASSETS consolidated explanatory notes Financial assets held for trading Caption Financial assets held for trading: breakdown by sector Description/Amounts L1 L2 L3 L1 L2 L3 A. Cash assets 1. Debt securities 568, ,852 46, , , Structured securities 1 1,572-2, Other debt securities 568, ,280 46, , , Equities 20, , UCITS units 31, , Loans Repurchase agreements Other Total A 620, ,853 46, , , B. Derivatives 1. Financial derivatives 7, ,911 40,712 6, ,641 49, Trading 7,243 68,690 40,712 6,282 96,363 49, Connected with the fair value option - 104, , Other Credit derivatives Trading Connected with the fair value option Other Total B 7, ,911 40,712 6, ,641 49,026 Total A+B 627, ,764 87, , ,963 49,147 The financial derivatives connected with the fair value option are mainly associated with debt securities classified as financial liabilities designated at fair value through profit and loss (liability caption 50). Impaired cash assets ( 1 thousand) relate to securities issued by a company of the Lehman Brothers Group. 100

101 2.2 Financial assets held for trading: breakdown by issuer/borrower Description/Amounts A. Cash assets 1. Debt securities 887,072 1,244,231 a) Governments and Central Banks 541, ,370 b) Other public entities c) Banks 310, ,794 d) Other issuers 35,691 71, Equity instruments 20,382 12,603 a) Banks 4,338 1,844 b) Other issuers 16,044 10,759 - insurance companies 1,526 1,700 - financial companies non-financial companies 14,492 8,721 - other UCITS units 31,164 28, Loans - - a) Governments and Central Banks - - b) Other public entities - - c) Banks - - d) Other parties - - Total A 938,618 1,285,099 B. Derivative instruments a) Banks 146, ,558 - fair value 146, ,558 b) Customers 74,650 99,391 - fair value 74,650 99,391 Total B 220, ,949 Total (A+B) 1,159,484 1,596,048 consolidated explanatory notes 101

102 Financial assets designated at fair value through profit and loss Caption 30 consolidated explanatory notes 3.1 Financial assets designated at fair value through profit and loss: breakdown by sector Description/Amounts L1 L2 L3 L1 L2 L3 1. Debt securities 38,964 35, ,504 34, Structured securities - 4, , Other debt securities 38,964 31, ,504 30, Equity instruments 1,906-3,897 2,211-3, UCITS units 64,237 1,051 6,246 60,547 1,014 6, Loans Structured Other Total 105,107 36,329 10, ,262 35,577 10,611 Cost 96,895 38,604 13, ,907 40,436 14,683 Financial assets designated at fair value through profit and loss: use of the fair value option Description a) Natural hedges using derivatives 35,059 b) Natural hedges using other financial instruments - c) Other cases of accounting mismatches - d) Financial instruments managed and measured at fair value 112,702 e) Structured products with embedded derivatives 4,158 Total 151,

103 3.2 Financial assets designated at fair value through profit and loss: breakdown by borrower/issuer Description/Amounts Debt securities 74,582 77,394 a) Governments and Central Banks 29,629 29,767 b) Other public entities - - c) Banks 23,965 26,632 d) Other issuers 20,988 20, Equity instruments 5,803 6,023 a) Banks 967 1,183 b) Other issuers: 4,836 4,840 - insurance companies financial companies non-financial companies 4,836 4,816 - other UCITS units 71,534 68, Loans - - a) Governments and Central Banks - - b) Other public entities - - c) Banks - - d) Other parties - - Total 151, ,450 consolidated explanatory notes 103

104 Financial assets available for sale Caption 40 consolidated explanatory notes 4.1 Financial assets available for sale: breakdown by sector Description/Amounts L1 L2 L3 L1 L2 L3 1. Debt securities 5,109, ,885 11,116 3,835, , Structured securities Other debt securities 5,109, ,885 11,116 3,835, , Equity instruments 8, ,519 6, , Valued at fair value 8, ,116 6, , Valued at cost , , UCITS units 3,966-47,427 4,290-23, Loans Total 5,121, , ,062 3,847, , ,356 Financial assets available for sale are measured at fair value on the basis described in Part A of the explanatory notes in the 2012 consolidated financial statements. Debt securities mainly relate to investments made in government bonds with the aim of returning to a more balanced asset sensitivity structure. Equity instruments are represented by stable equity investments. The UCITS units consist of closed-end investment and real estate funds. 4.2 Financial assets available for sale: breakdown by borrower/issuer Description/Amounts Debt securities 5,416,097 4,187,634 a) Government and Central Banks 4,769,384 3,701,802 b) Other public entities - - c) Banks 505, ,473 d) Other issuers 141,213 36,359 2.Equity instruments 448, ,846 a) Banks 234, ,715 b) Other issuers: 214, ,131 - insurance companies 62,809 76,829 - financial companies 83,563 95,222 - non-financial companies 67,729 62,633 - other UCITS units 51,393 27, Loans - - a) Government and Central Banks - - b) Other public entities - - c) Banks - - d) Other parties - - Total 5,915,811 4,679,

105 4.3 Micro-hedged financial assets available for sale Financial assets covered by specific fair value hedges - - a) Interest rate risk - - b) Price risk - - c) Foreign exchange risk - - d) Credit risk - - e) Multiple risks Financial assets covered by specific cash flow hedges 370, ,389 a) Interest rate risk 370, ,389 b) Foreign exchange risk - - c) Other - - Total 370, ,389 consolidated explanatory notes 105

106 Financial assets held to maturity Caption 50 consolidated explanatory notes 5.1 Financial assets held to maturity: breakdown by sector FV FV BV L1 L2 L3 BV L1 L2 L3 1. Debt securities 1,203,539 1,124, , , , , Structured securities Other 1,203,539 1,124, , , , , Loans Key: FV = fair value BV = book value 5.2 Financial assets held to maturity: breakdown by issuer/borrower Type of transaction/amounts Debt securities 1,203, ,050 a) Governments and Central Banks 817, ,503 b) Other public entities - - c) Banks 374, ,315 d) Other issuers 10,687 13, Loans - - a) Governments and Central Banks - - b) Other public entities - - c) Banks - - d) Other entities - - Total 1,203, ,050 Total fair value 1,251, ,

107 Due from banks Caption Due from banks: breakdown by sector Type of transaction/amounts consolidated explanatory notes A. Due from Central Banks 354, , Restricted deposits Reserve requirement 354, , Repurchase agreements Other - - B. Due from banks 1,347,850 2,037, Current accounts and demand deposits 235, , Restricted deposits 541, , Other loans 292, , Repurchase agreements 57, , Finance leases Other 235, , Debt securities 278, , Structured securities Other debt securities 278, ,902 Total (book value) 1,702,179 2,250,781 Loans to customer Caption Loans to customers: breakdown by sector Type of transaction/ Amounts Performing Doubtful loans Performing Doubtful loans loans Purchased Other loans Purchased Other 1. Current accounts 6,783,625-1,178,336 7,135, , Repurchase agreements 10, , Mortgage loans 22,443,232-3,382,446 22,665,829-2,600, Credit cards, personal loans and assignments of one-fifth of salary 1,294,741-74,930 1,366,676-56, Finance leases 2,388, ,045 2,592, , Factoring 610,645-41, ,260-67, Other loans 6,867,785-1,291,397 7,995,843-1,003, Debt securities 259,988-1, ,394-1, Structured securities Other debt securities 259,988-1, ,394-1,412 Total (book value) 40,658,503-6,548,973 42,848,122-5,200,613 The sub-caption Other loans of performing loans includes 3,069 million of bullet loans, 2,283 million of advances on invoices subject to collection, 871 million of import/export advances, 167 million of credit assignment and 478 million of other miscellaneous entries. 107

108 7.2 Loans to customers: breakdown by issuer/borrower consolidated explanatory notes Type of transaction/values Performing loans Doubtful loans Performing Doubtful loans Purchased Other loans Purchased Other 1. Debt securities: 259,988-1, ,394-1,412 a) Governments b) Other public entities 7, , c) Other issuers 252,064-1, ,408-1,412 - non-financial companies financial companies 134, , insurance companies 114, , other 2, Loans to 40,398,515-6,547,551 42,555,728-5,199,201 a) Governments 1,495, ,451, b) Other public entities 467,083-8, ,008-3,162 c) Other parties 38,436,320-6,539,484 40,619,359-5,196,039 - non-financial companies 25,987,368-5,608,597 28,191,025-4,388,767 - financial companies 2,436, ,802 2,614, ,113 - Insurance companies 5, , other 10,007, ,085 9,807, ,159 Total 40,658,503-6,548,973 42,848,122-5,200, Loans to customers: hedged assets Loans subject to micro-hedging of fair value 24,854 24,173 a) Interest rate risk 24,854 24,173 b) Price risk - - c) Foreign exchange risk - - d) Credit risk - - e) Other risks Loans subject to micro-hedging of cash flow - - a) Interest rate risk - - b) Foreign exchange risk - - c) Other - - Total 24,854 24,

109 Hedging derivatives Caption Hedging derivatives: breakdown by type and level consolidated explanatory notes FV NV FV NV L1 L2 L3 L1 L2 L3 A. Financial derivatives - 2,381-90, ) Fair value - 2,228-82, ) Cash flows , ) Foreign investments B. Credit derivatives ) Fair value ) Cash flows Total - 2,381-90, The cash flow hedge agreements will expire in 2015 Key: NV = nominal value L1 = Level 1 L2 = Level 2 L3 = Level Hedging derivatives: breakdown by hedged portfolio and type of hedge (book value) Operation/Type of hedge Interest rate risk Exchange risk Specific Credit risk Fair value Price risk Multiple risks Macro-hedge Specific Cash flows 1. Financial assets available for sale Loans Financial assets held to maturity Portfolio Other operations Total assets Financial liabilities 2, Portfolio Total liabilities 2, Expected transactions Portfolio of financial assets and liabilities Macro-hedge Foreign investments 109

110 Remeasurement of hedged assets backed by general hedges Caption 90 consolidated explanatory notes 9.1 Remeasurement of hedged assets: breakdown by hedged portfolio Type of transaction/amounts Positive adjustment - 1, of specific portfolios: - 1,060 a) loans - 1,060 b) financial assets available for sale general adjustment Negative adjustment specific portfolios: - - a) loans - - b) financial assets available for sale general adjustment - - Total - 1,

111 Property, plant and equipment Caption Property, plant and equipment: breakdown of assets valued at cost Description/Amounts consolidated explanatory notes A. Assets used in business 1.1 Owned 724, ,766 a) land 169, ,571 b) buildings 475, ,630 c) furniture 36,434 36,749 d) electronic systems 19,284 21,449 e) other 23,920 26, Purchased under finance leases 4,258 4,360 a) land - - b) buildings 4,246 4,339 c) furniture - - d) electronic systems - - e) other Total A 728, ,126 B. Investment property 2.1 Owned 249, ,091 a) land 84,914 80,842 b) buildings 164, , Purchased under finance leases - - a) land - - b) buildings - - Total B 249, ,091 Total (A+B) 977, ,

112 consolidated explanatory notes 12.3 Property, plant and equipment used for business purposes: change in the period Land Buildings Furniture Electronic systems Other A. Opening gross amount 171, , , , ,391 1,366,556 A.1 Total net write-downs - 180, , , , ,430 A.2 Opening net amount 171, ,969 36,749 21,449 26, ,126 B Increases 2,127 10,184 5,409 3,819 5,300 26,839 B.1 Purchases 2,127 8,801 4,971 3,442 4,896 24,237 - of which business combinations 2,140 8, ,132 13,254 B.2 Capitalised improvement expenditure - 1, ,210 B.3 Write-backs B.4 Positive changes in fair value posted to: a) shareholders equity b) income statement B.5 Positive exchange rate adjustments B.6 Transfer from properties held for investment B.7 Other changes ,392 C. Decreases 4,095 18,531 5,724 5,984 7,756 42,090 C.1 Sales - 1, ,383 C.2 Depreciation - 10,999 4,783 5,715 6,448 27,945 C.3 Impairment charges posted to: a) shareholders equity b) income statement C.4 Negative changes in fair value posted to: a) shareholders equity b) income statement C.5 Negative exchange rate adjustments C.6 Trasfer to: 4,095 6, ,222 a) properties held for investment 4,095 6, ,222 b) non-current assets held for sale C.7 Other changes ,095 1,440 D. Closing net balance 169, ,622 36,434 19,284 23, ,875 D.1 Total net write-downs - 188, , , , ,091 D.2 Closing gross amount 169, , , , ,071 1,375,

113 12.4 Investment property: change in the period Land Buildings A. Opening gross amount 80, ,123 A.1 Total net write-downs - 32,874 A.2 Opening net amount 80, ,249 B. Increases 5,975 10,093 B.1 Purchases 1,880 2,863 - of which business combinations 1,880 2,622 B.2 Capitalised improvement expenditure B.3 Positive changes in fair value - - B.4 Write-backs - 8 B.5 Exchange gains - - B.6 Transfers from assets used in business 4,095 6,127 B.7 Other changes C. Decreases 23 2,524 C.1 Sales C.2 Depreciation - 2,381 C.3 Negative changes in fair value - - C.4 Impairment changes - - C.5 Exchange losses - - C.6 Transfers to other asset portfolios: - - a) property used in business - - b) non-current assets held for sale - - C.7 Other changes D. Closing net balance 86, ,818 D.1 Total net write-downs - 32,874 D.2 Closing gross amount 86, ,692 E. Measured at fair value 80, ,131 consolidated explanatory notes Depreciation is calculated with reference to the estimated useful lives of the assets concerned, commencing from when they enter into service. The useful lives of the principal categories of property, plant and equipment are summarised below. Category Useful life Land Buildings Office furniture and machines Furnishings Lifting equipment Motor vehicles Alarm systems IT hardware not depreciated based on the useful lives identified from specific appraisals 100 months 80 months 160 months 48 months 40 months 60 months 113

114 Intangible assets Caption 130 consolidated explanatory notes 13.1 Intangible assets: breakdown by type Description/Amounts Limited duration Unlimited duration Limited duration Unlimited duration A.1 Goodwill # 383,045 # 375,935 A.1.1 attributable to the Group # 383,045 # 375,935 A.1.2 attributable to minority interests # - # - A.2 Other intangible assets 92,946-91,553 - A.2.1 Carried at cost: 92,946-91,553 - a) Intangible assets generated internally b) Other assets 92,923-91,522 - A.2.2 Carried at fair value: a) Intangible assets generated internally b) Other assets Total 92, ,045 91, ,935 "Other intangible assets" include 17,669 thousand representing the value of the client relationships identified on final allocation of the purchase price paid at the end of 2008 for the former Unicredit branches; these relationships are estimated as having a useful life of 18 years. The remaining "Other intangible assets" mainly comprise applications software measured at cost and amortised on a straight-line basis over a period that can vary, but not exceeding five years, depending on the degree of obsolescence. 114

115 13.2 Intangible assets: change in the period Goodwill Other intangible assets: generated internally Other intangible assets: other Lim. Unilm. Lim. Unilm consolidated explanatory notes A. Opening balance 459, , ,111 A.1 Total net write-downs 83, , ,623 A.2 Opening net amount 375, , ,488 B Increases 7, ,211-24,321 B.1 Purchases 7, ,211-24,321 - of which business combinations 7, ,375 B.2 Increases in intangible assets generated internally # B.3 Write-backs # B.4 Positive changes in fair value posted to shareholders equity # posted to income statement # B.5 Exchange gains B.6 Other changes C. Decreases ,810-15,818 C.1 Sales C.2 Adjustments ,810-15,818 - Amortisation # 8-15,810-15,818 - Write-downs shareholders equity # posted to income statement C.3 Negative changes in fair value # posted to shareholders equity # income statement # C.4 Transfer to non-current assets held for sale # C.5 Exchange losses # C.6 Other changes # D. Closing net balance 383, , ,991 D.1 Total net value adjustments 83, , ,313 E. Closing gross amount 466, , ,304 All intangibile assets are stated at cost Key: Lim.: finite useful life Unlim.: indefinite useful life 115

116 13.3 Other information Goodwill consolidated explanatory notes The goodwill arising during the period and that already recorded in the financial statements are summarised in the following table: Goodwill Group companies 352, , Banks 158, ,788 - Banca Popolare di Ravenna s.p.a. 6,876 6,876 - Banca Popolare del Mezzogiorno s.p.a. 6,124 6,124 - Banca della Campania s.p.a. 51,346 51,346 - Banco di Sardegna s.p.a. 82,256 82,256 - Banca di Sassari s.p.a. 4,904 4,904 - Banca Popolare di Lanciano e Sulmona s.p.a. (*) - 1,655 - Banca Popolare di Aprilia s.p.a. (*) - 10,150 - CARISPAQ - Cassa di Risparmio dell'aquila s.p.a. (*) - 13,477 - Cassa di Risparmio di Bra s.p.a. 7, Parent Company BPER 185, ,075 - Purchase of UNICREDIT branches 53,118 53,118 - Meliorbanca s.p.a. 104, ,685 - Banca CRV - Cassa di Risparmio di Vignola s.p.a. 2,273 2,272 - Banca Popolare di Lanciano e Sulmona s.p.a. (*) 1, Banca Popolare di Aprilia s.p.a. (*) 10, CARISPAQ - Cassa di Risparmio dell'aquila s.p.a. (*) 13, Other companies 8,428 8,428 - ABF Leasing s.p.a. 1,657 1,657 - Emilia Romagna Factor s.p.a. 6,769 6,769 - Estense Covered Bond s.r.l Other goodwill 30,644 30,644 - Leasinvest s.p.a. business segment Purchase of UNICREDIT branches 30,532 30,532 Total 383, ,935 (*) absorbed by BPER on 27 May

117 Non-current assets and disposal groups held for sale and associated liabilities Asset caption 150 and liability caption Non-current assets and disposal groups classified as held for sale: breakdown by asset type consolidated explanatory notes A. Individual assets A.1 Financial assets - - A.2 Equity investments - - A.3 Property, plant and equipment 2,817 2,980 A.4 Intangible assets - - A.5 Other non-current assets - - Total A 2,817 2,980 B. Assets groups classified as held for sale B.1 Financial assets held for trading - 1,026 B.2 Financial assets designated at fair value through profit and loss - - B.3 Financial assets available for sale B.4 Financial assets held to maturity - - B.5 Due from banks - 6,033 B.6 Loans to customers - 41 B.7 Equity investments - - B.8 Property, plant and equipment - 66 B.9 Intangible assets - 15 B.10 Other assets - 8,030 Total B - 15,349 C. Liabilities associated with individual assets held for sale C.1 Payables - - C.2 Securities - - C.3 Other liabilities - - Total C - - D. Liabilities associated with groups of assets held for sale D.1 Due to banks - - D.2 Due to customers - - D.3 Debt securities in issue - - D.4 Financial liabilities held for trading - - D.5 Financial liabilities designated at fair value through profit and loss - - D.6 Provisions - - D.7 Other liabilities - 8,800 Total D - 8,800 Pursuant to IFRS 5, the assets reclassified to this caption are those for which an approved disposal plan was in place and negotiations with potential buyers were at an advanced stage at the balance sheet date. For the current quarter, this caption includes a property which is expected to be sold in the coming months. 117

118 LIABILITIES consolidated explanatory notes Due to banks Caption Due to banks: breakdown by type Type of transaction/members of the group Due to Central Banks 4,604,235 4,441, Due to banks 3,431,300 2,827, Current accounts and demand deposits 173, , Restricted deposits 31, , Loans 3,174,962 2,291, Repurchase agreements 2,590,858 1,684, Other 584, , Payables for commitments to repurchase own equity instruments Other payables 51,062 1,440 Total 8,035,535 7,269,461 Due to customers Caption Due to customers: breakdown by sector Type of transaction/members of the group Current accounts and demand deposits 25,028,531 23,907, Restricted deposits 3,944,514 4,318, Loans 2,671,997 3,081, repurchase agreements 1,132,257 1,339, other 1,539,740 1,742, Payables for commitments to repurchase own equity instruments Other payables 859, ,185 Total 32,504,053 32,288,

119 Debt securities in issue Caption Debt securities in issue: breakdown by sector consolidated explanatory notes Type of security/amounts Book Fair value Book Fair value value Level 1 Level 2 Level 3 value Level 1 Level 2 Level 3 A. Securities 1. Bonds 6,252,183-6,278,371-6,675, ,837 6,472, structured other 6,252,183-6,278,371-6,675, ,837 6,472, Other securities 3,566, ,548,519 4,371, ,371, structured other 3,566, ,548,519 4,371, ,371,901 Total 9,818,702-6,278,371 3,548,519 11,047, ,837 6,472,180 4,371,901 Bonds include subordinated bonds issued by the Group totalling 806,518 thousand, as analysed in table 3.2 below. The "Level 3" column of point 2.2 reports the nominal value of certificates of deposit, the fair value of which has not been disclosed since these are short-term transactions. 119

120 3.2 Analysis of caption 30 "Debt securities in issue": subordinated securities Book value Book value consolidated explanatory notes B.P.E.R. subordinated convertible bond 2.75%, ,441 63,336 B.P.R. subordinated convertible bond 3.50%, ,351 8,956 B.P.L.S. subordinated convertible bond 4.50%, ,113 8,919 Total convertible bonds 49,905 81,211 B.P.E.R. subordinated convertible bond 3.70%, ,640 Total expired convertible bonds - 196,640 EMTN B.P.E.R. subordinated non-convertible bond floating rate 3-month Euribor +100 bps, ,593 75,573 EMTN B.P.E.R. subordinated non-convertible bond floating rate 3-month Euribor +95 bps, , ,134 Lower Tier II B.P.E.R. subordinated non-convertible bond floating rate 3- month Euribor +130 bps, ,984 39,909 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.75%, , ,179 Lower Tier II B.P.E.R. subordinated non-convertible bond 5.81%, ,387 - Cassa di Risparmio di Bra s.p.a. floating-rate subordinated bond nom. 10,000,000 9,914 - Cassa di Risparmio di Bra s.p.a. fixed-rate Lower Tier II subordinated bond amortising 4% 8,048 - Cassa di Risparmio di Bra s.p.a. fixed-rate Lower Tier II subordinated bond amortising nom. 7,000,000 7,160 - Cassa di Risparmio di Bra s.p.a. subordinated bond amortising 5.25% 5,033 - Cassa di Risparmio di Bra s.p.a. floating-rate irredeemable Tier I bond 10,003 - BPER (Europe) int. S.a. subordinated non-convertible bond floating rate 6 month Euribor, %, ,149 Lower Tier II CARISPAQ subordinated non-convertible bond floating rate, ,250 4,276 Total non-convertible bonds 756, ,220 Total bonds 806,518 1,024,071 As shown in the table, the amount of 40,554 thousand relates to bonds convertible into shares of the Parent Company, including the convertible bond issued by BPLS ( 9,113 thousand), while 9,351 thousand relates to bonds convertible into shares of other Group banks. The BPER 3.70% loan which expired on 31 December 2012, including the interest to be paid, was repaid almost entirely to customers on 1 January 2013 (the only exception being the conversion of 70 bonds into the same number of shares with rights from 1 January 2013). The BPER (Europe) Int. S.a. floating rate 6-mth Euribor +0.50%, subordinated non-convertible bond expired on 14 January 2013; Banca popolare dell Emilia Romagna (Europe) International s.a. then issued a new Lower Tier II subordinated bond for 20 million at a fixed rate of 4.80%, which was fully subscribed by the Parent Company. The loans issued by CARISPAQ and BPLS have kept their original name even after the merger with BPER. 120

121 3.3 Analysis of caption 30 "Debt securities in issue": micro-hedged securities consolidated explanatory notes 1. Payables with fair value micro-hedge 81,432 a) interest rate risk 81,432 b) foreign exchange risk - c) multiple risks - 2. Payables with cash flow micro-hedge - a) interest rate risk - b) foreign exchange risk - c) multiple risks - Total 81,

122 Financial liabilities held for trading Caption 40 consolidated explanatory notes 4.1 Financial liabilities held for trading: breakdown by sector Type of transaction/members of the group NV FV FV* NV FV FV* L1 L2 L3 L1 L2 L3 A. Cash liabilities 1. Due to banks Due to customers 25,089 25, , Debt securities Bonds Structured # # Other bonds # # 3.2 Other securities Structured # # Other # # Total A 25,089 25, , B. Derivatives 1. Financial derivatives ,914 41, ,941 47, For trading # ,429 41,722 # # ,900 47,469 # 1.2 Connected with the fair value option # - 6,485 - # # - 7,041 - # 1.3 Other # # # # 2. Credit derivatives For trading # # # # 2.2 Connected with the fair value option # # # # 2.3 Other # # # # Total B # ,914 41,722 # # ,941 47,469 # Total (A+B) # 25, ,914 41,722 # # ,941 47,469 # The caption "cash liabilities" concerns the balance of "technical shorts" generated by capital market transactions. The financial derivatives connected with the fair value option are mainly associated with debt securities classified as financial liabilities designated at fair value through profit and loss (liability caption 50). Key: FV = Fair value FV* = Fair value excluding variations due to changes in the creditworthiness of the issuer since the issue date NV = Notional or nominal value L1 = Level 1 L2 = Level 2 L3 = Level 3 122

123 Financial liabilities designated at fair value through profit and loss Caption Financial liabilities designated at fair value through profit and loss: breakdown by sector consolidated explanatory notes Type of security/amounts FV FV NV L1 L2 L3 FV* NV L1 L2 L3 FV* 1. Due to banks Structured # # 1.2 Other # # 2. Due to customers Structured # # 2.2 Other # # 3. Debt securities 3,079,069-3,143,502-3,200,789 3,799,922-3,865,649-3,974, Structured # # 3.2 Other 3,079,069-3,143,502 - # 3,799,922-3,865,649 - # Total 3,079,069-3,143,502-3,200,789 3,799,922-3,865,649-3,974,279 The cumulative change in fair value attributable to the change in credit risk amounts to 57,286 thousand; this change had a negative effect during the period of 10,481 thousand. Key: FV = Fair value FV* = Fair value excluding variations due to changes in the credit worthiness of the issuer since the issue date NV = Nominal or notional value L1 = Level 1 L2 = Level 2 L3 = Level 3 Financial liabilities designated at fair value through profit and loss: use of the fair value option Captions/Amounts Due to banks Due to customers Debt securities Natural hedges using derivatives - - 3,143,502 Natural hedges using other financial instruments Other accounting mismatches Financial instruments managed and measured at fair value Structured products with embedded derivatives Total - - 3,143,

124 5.2 Analysis of caption 50 "Financial liabilities designated at fair value through profit and loss": subordinated securities consolidated explanatory notes Lower Tier II B.P.E.R. subordinated non-convertible bond 5.20%, , ,884 Lower Tier II B.P.E.R. subordinated non-convertible bond 5.90%, ,161 41,417 Lower Tier II B.P.E.R. subordinated non-convertible bond, amortizing 5.12%, ,432 16,039 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.35%, ,073 17,952 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.94%, ,556 51,014 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.75%, , ,654 Total non-convertible bonds 835, ,960 Total bonds 835, ,

125 Hedging derivatives Caption Hedging derivatives: breakdown by type and by levels consolidated explanatory notes Fair value Fair value NV L1 L2 L3 L1 L2 L3 A. Financial derivatives - 39, ,431-37, ,296 1) Fair value - 2,768-23,431-4,646-37,296 2) Cash flows - 37, ,000-33, ,000 3) Foreign investments B. Credit derivatives ) Fair value ) Cash flows Total - 39, ,431-37, ,296 NV The cash flow hedge agreements have the following expiry dates: notional value of 100 million in 2014, 115 million in 2017, 50 million in 2021 and 50 million in The related cash flows will impact the income statement up to the relevant expiration dates. Key: NV = Nominal or notional value L1 = Level 1 L2 = Level 2 L3 = Level Hedging derivatives: analysis by hedged portfolio and type of hedge Operation/Type of hedge Interest rate risk Exchange risk Fair value Specific Credit risk Price risk Multiple risks General Specific Cash flows General Foreign investments 1. Financial assets available for sale # 37,152 # # 2. Loans 2, # - # - # # 3. Financial assets held to maturity # - - # - # - # # 4. Portfolio # # # # # - # - # 5. Other operations # - # - Total assets 2, , Financial liabilities # - # - # # 2. Portfolio # # # # # - # - # Total liabilities Expected transactions # # # # # # - # # 2. Portfolio of financial assets and liabilities # # # # # - #

126

127 INFORMATION ON THE CONSOLIDATED INCOME STATEMENT consolidated explanatory notes 127

128 Interests Captions 10 and 20 consolidated explanatory notes 1.1 Interest and similar income: breakdown Captions/Technical forms Debt securities Loans Other transactions Financial assets held for trading 17,681-40,551 58,232 61, Financial assets designated at fair value through profit and loss 2, ,213 2, Financial assets available for sale 114, ,589 90, Financial assets held to maturity 33, ,185 18, Due from banks 6,880 12,854-19,734 40, Loans to customers 7,170 1,314,678-1,321,848 1,440, Hedging derivatives # # 5,719 5,719 2, Other assets # # Total 181,718 1,327,532 46,522 1,555,772 1,655, Interest and similar expense: breakdown Captions/Technical forms Debts Securities Other transactions Due to central banks 21,525 # - 21,525 31, Due to banks 11,153 # - 11,153 19, Due to customers 253,591 # - 253, , Debt securities in issue # 211, , , Financial liabilities held for trading Financial liabilities designated at fair value through profit and loss - 93,339-93, , Other liabilities and provisions # # Hedging derivatives # # Total 286, , , ,

129 Commissions Captions 40 and Commission income: breakdown consolidated explanatory notes Type of service/amounts a) Guarantees given 28,365 27,730 b) Credit derivatives - - c) Management, brokerage and consulting services 127, , trading in financial instruments 2,038 3, trading in foreign exchange 3,845 4, asset management 14,334 13, individual 14,119 13, collective custody and administration of securities 3,244 3, custodian bank - 1, placement of securities 49,432 35, order taking 11,437 10, advisory services 2,596 7, regarding investments regarding financial structuring 2,376 6, distribution of third-party services 40,469 39, asset management 1, individual collective insurance products 16,068 15, other products 23,325 23,271 d) Collection and payment services 100,009 99,355 e) Servicing related to securitisation 1,082 1,158 f) Services for factoring transactions 5,763 7,198 g) Tax collection services - - h) Management of multilateral trading systems - - i) Maintenance and management of current accounts 128, ,979 j) Other services 167, ,822 - Commission income on other loans to customers 130, ,798 - Commission income on cash card services 18,248 17,349 - Other commission income 18,862 16,675 Total 559, ,006 Commission income is earned solely by members of the Banking Group. 129

130 2.2 Commission expense: breakdown Type of service/amounts consolidated explanatory notes a) Guarantees received 11,792 9,693 b) Credit derivatives - - c) Management and brokerage services 1,742 1, trading in financial instruments trading in foreign exchange asset management: own portfolio third-party portfolio custody and administration of securities 1,189 1, placement of financial instruments offer of securities, financial products and services through financial promoters - - d) Collection and payment services 4,863 4,875 e) Other services 21,702 24,259 Total 40,099 40,576 Commission expense is incurred solely by members of the Banking Group. 130

131 Net trading income Caption Net trading income: breakdown consolidated explanatory notes Transactions/Income items Capital gains Trading profits Capital losses Trading losses Net result (A) (B) (C) (D) [(A+B)- (C+D)] 1. Financial assets held for trading 11,078 8,487 (5,942) (1,129) 12, Debt securities 6,796 7,341 (4,686) (1,083) 8, Equity instruments 1,967 1,025 (759) (46) 2, UCITS units 2,315 1 (497) - 1, Loans Other Financial liabilities held for trading Debt securities Debts Other Other financial assets and liabilities: exchange differences # # # # (483) 4. Derivatives 48, ,233 (41,542) (133,331) 20, Financial derivatives: 48, ,233 (41,542) (133,331) 20,863 - On debt securities and interest rates 48, ,458 (40,092) (132,640) 18,424 - On equities and equity indices (1,450) (571) (1,444) - on currency and gold # # # # 3,726 - Other (120) Credit derivatives Total 59, ,720 (47,484) (134,460) 32,874 Trading activities are carried out solely by members of the Banking Group. Following the application of corrective measures in determining the fair value of OTC derivatives, in accordance with the clarifications introduced by IFRS 13 with reference to the measurement of "non-performance risk", there has been a modest increase in "losses" of 1,129 thousand. 131

132 Net hedging gains (losses) Caption 90 consolidated explanatory notes 5.1 Net hedging gains (losses): breakdown Income items/amounts A. Income relating to: A.1. Fair value hedges 1, A.2. Hedged financial assets (fair value) - 1,278 A.3. Hedged financial liabilities (fair value) A.4. Cash flow hedges - - A.5. Foreign currency assets and liabilities - - Total income from hedging activity (A) 1,880 1,393 B. Charges relating to: B.1. Fair value hedges 627 2,467 B.2. Hedged financial assets (fair value) 1,358 - B.3. Hedged financial liabilities (fair value) 86 - B.4. Cash flow hedges - - B.5. Foreign currency assets and liabilities - - Total charges from hedging activity (B) 2,071 2,467 C. Net hedging gains (losses) (A-B) (191) (1,074) 132

133 Net result on financial assets and liabilities designated at fair value Caption Net result on financial assets and liabilities designated at fair value: breakdown consolidated explanatory notes Transactions/Income components Capital gains Gains on disposal Capital losses Losses on disposal Net result (A) (B) (C) (D) Financial assets 7, (1,112) (16) 6, Debt securities 3, (299) (1) 2, Equity securities (85) (1) UCITS units 3, (728) (14) 3, Loans Financial liabilities 6,336 4,035 (14,253) (613) (4,495) 2.1 Debt securities 6,336 4,035 (14,253) (613) (4,495) 2.2 Due to banks Due to customers Other financial assets and liabilities: exchange differences # # # # (4) 4. Derivatives 1,937 (1) (47,681) (2,725) (48,470) Total 15,346 4,238 (63,046) (3,354) (46,820) Assets and liabilities are measured at fair value solely by members of the Banking Group. The net result of the measurement of financial liabilities at fair value and of derivatives connected operationally (fair value option for financial liabilities) is -54,210 thousand. 133

134 Net impairment adjustments Caption 130 consolidated explanatory notes 8.1 Net impairment adjustments to loans and advances: breakdown Transactions/Income items Adjustments Write-backs Specific Specific Portfolio Write-offs Other Portfolio Interest Other writebacks Interest Other writebacks A. Due from banks (169) (2,081) (2,250) - - Loans Debt securities (169) (2,081) (2,250) - B. Loans to customers (35,533) (878,218) (993) 77, ,829-41,788 (589,133) (419,978) Doubtful loans acquired Loans Debt securities Other receivables (35,533) (878,218) (993) 77, ,829-41,788 (589,133) (419,978) - Loans (35,533) (878,218) - 77, ,829-41,788 (588,140) (420,282) - Debt securities - - (993) (993) 304 C. Total (35,702) (880,299) (993) 77, ,829-41,788 (591,383) (419,978) 8.2 Net impairment adjustments to financial assets available for sale: breakdown Transactions/Income items Adjustments Write-backs Specific Specific Write-Offs Other Interest Other writebacks A. Debt securities (94) B. Equity instruments - (2,986) - - (2,986) (1,322) C. UCITS units - (1,635) - - (1,635) (3,412) D. Due from banks E. Loans to customers F. Total - (4,621) - - (4,621) (4,828) 134

135 8.4 Impairment losses on other financial assets: breakdown Transactions/Income items Specific Adjustments Write-backs Specific Portfolio consolidated explanatory notes Write-offs Other Portfolio Interest Other writebacks Interest Other writebacks A. Guarantees given - (25,763) (9,666) - 8, (27,108) 1,152 B. Credit derivatives C. Commitments to disburse funds D. Other transactions E. Total - (25,763) (9,666) 6 8, (27,102) 1,

136 Administrative expenses Caption 180 consolidated explanatory notes 11.1 Payroll: breakdown Type of expense/amounts ) Employees 574, ,096 a) wages and salaries 412, ,540 b) social security charges 105, ,760 c) termination indemnities 22,848 16,519 d) pension expenses - - e) provision for termination indemnities 3,495 5,307 f) provision for post-retirement benefits and similar commitments: ,494 - defined contribution - 9,641 - defined benefit g) payments to external supplementary pension funds: 11,439 6,978 - defined contribution 11,439 6,978 - defined benefit - - h) costs deriving from payment agreements based on own capital instruments - - i) other personnel benefits 17,614 31,498 2) Other active employees 7,365 4,708 3) Directors and auditors 8,200 8,940 4) Retired personnel 1,451 1,927 Total 591, ,671 CR Bra's total contribution is 10.2 million. On 31 December 2012, following an agreement reached with the Trade Unions, the Parent Company transferred the Staff Pension Fund with defined contribution and its related assets to the Arca Previdenza Open-ended Pension Fund. This is the reason for the increase in "payments to external supplementary pension funds" and the related elimination of the defined contribution component of the "provision for post-retirement benefits and similar commitments". The increase in "other personnel benefits" refers to provisions for extraordinary voluntary redundancies and the Solidarity Fund for 9 million ( 22.5 million as at 30 September 2012), provisions for risks and charges for further assessments following the verification periods with the Trade Unions (9 April 2013), as provided for in the agreements signed on 15 September 2012, which also involved extending the time period for another four months. 136

137 11.2 Average number of employees, by level Employees: 11,528 11,531 a) Managers b) Middle managers 3,410 3,323 c) Other employees 7,885 7,980 Other personnel consolidated explanatory notes CR Bra's total contribution is 184 people, including 3 managers Number of employees, by level: banking group Employees: 11,723 11,865 a) Managers b) Total 3rd and 4th level middle managers 1,401 1,411 c) Total 1st and 2nd level middle managers 2,026 1,980 d) Other employees 8,065 8,235 Other personnel CR Bra has 198 employees. 137

138 11.5 Other administrative expenses: breakdown consolidated explanatory notes Taxation 99,488 86,909 Stamp duty 82,258 67,746 Municipal property tax 6,640 5,755 Other 10,590 13,408 Other costs 284, ,515 Maintenance and repairs 26,773 24,613 Rental expense 44,175 37,626 Post office, telephone and telegraph 18,850 23,537 Data transmission fees and use of databases 24,144 27,823 Advertising 8,277 8,197 Consulting and other professional services 35,255 35,007 Lease of IT hardware and software 16,851 14,028 Insurance 7,197 7,851 Cleaning of office premises 9,204 8,857 Printing and stationery 7,472 7,059 Energy and fuel 14,524 13,952 Transport 11,057 10,309 Staff training and expense refunds 10,212 8,780 Information and surveys 10,236 11,349 Security 8,463 8,733 Use of external data gathering and processing services 4,758 7,232 Membership fees 3,995 4,152 Condominium expenses 2,311 2,199 Sundry other 20,739 17,211 Total 383, ,424 Consulting and other professional services expenses are attributable to two different categories of legal and consulting services, which were needed to provide support for in-house professionals in highly specialised activities or projects, as well as to assist in adjusting to changes in regulations, developments in the internal control system or in connection with the Business Plan. The details are as follows: - professional services of a legal or tax nature, particularly in connection with the various types of disputes for 18.6 million, including legal fees for the management of non-performing loans. In this context, note that some of them, estimated at around 6.5 million and referring to various Group entities, were previously charged directly to the debtor; - professional services from various parties, needed for the completion of multiple funding transactions during the period (issue of covered bonds, updates and issues as part of the Euro Medium Term Note programme), for the audit of the financial statements, for ratings, as well as support provided for specific property and financial valuations for financial statement purposes, for a total of 2.4 million; - other sundry professional services (for example, appraisals and other technical support) for 4.1 million; - interdisciplinary consulting support to ensure compliance with continuous regulatory changes, for strengthening the System of Internal Control and with respect to projects developed in connection with the Business Plan. These can therefore be considered more appropriately as medium term investments, as is the case, for example, with activities carried out for developments in the overall management processes attributable to Basel 2 regulations, with a view to the validation of methodologies developed for credit assessment and the consequent capital benefits obtainable. The total of this type of expense came to 10.2 million. Other administrative expenses relating to CR Bra amounted to 6.9 million. 138

139 Other operating charges/income Caption Other operating charges: breakdown consolidated explanatory notes Description/Amounts Loss on disposal of leased assets 4,120 Reimbursement of interest for collections and payments settled through the clearing house 8 Amortisation of leasehold improvement expenditure 5,126 Out-of-period expense 2,217 Other 19,751 Total 31, Other operating income: breakdown Description/Amounts Rental income 6,433 Recovery of taxes 87,336 Recovery of interest for collections and payments settled through the clearing house 8 Gains on disposal of fixed assets given under finance leases 1,727 Other income 98,693 Total 194,

140 Earnings per share consolidated explanatory notes IAS 33 requires disclosure of basic and diluted earnings per share (EPS), specifying how each is calculated. Basic earnings per share reflect the relationship between: a) the earnings attributable to ordinary shareholders, b) and the weighted average number of shares outstanding during the period. Diluted earnings per share reflect the relationship between: a) the earnings used to calculate basic EPS, as adjusted by the economic effects of converting all outstanding convertible bonds into shares at period end, b) and the number of shares used to calculate basic EPS, as adjusted by the weighted average of the potential ordinary shares with a diluting effect deriving from the conversion of bonds outstanding at period end Attributable earnings Weighted average ordinary shares Earnings per share (Euro) Attributable earnings Weighted average ordinary shares Earnings per share (Euro) Basic EPS 13, ,373, , ,267, Diluted EPS 15, ,550, , ,764,

141 INFORMATION ON RISKS AND RELATED HEDGING POLICY consolidated explanatory notes 141

142 A. Credit Quality consolidated explanatory notes A.1 Doubtful and performing loans: amounts, adjustments, trends, economic and territorial distribution A.1.1 Distribution of credit exposure by portfolio and quality of lending (book values) Portfolio/Quality Banking Group Other businesses Non-Performing loans Watchlist loans Restructured loans Past due loans Other assets Doubtful loans Others Total 1. Financial assets held for trading 5 2,406 1,741-1,103, ,107, Financial assets available for sale ,416, ,416, Financial assets held to maturity ,203, ,203, Due from banks ,702, ,702, Loans to customers 2,389,707 3,236, , ,011 40,658, ,207, Financial assets designated at fair value through profit and loss - - 3,058-71, , Financial assets being sold Hedging derivatives , ,381 Total ,389,864 3,238, , ,011 50,157, ,714,192 Total ,884,688 2,511, , ,046 51,737,160-7,100 56,944,

143 A.1.2 Distribution of credit exposures by portfolio and quality of lending (gross and net values) Portfolio/quality Gross exposure Doubtful loans Performing loans Total Specific provisions Net exposure Gross exposure General portfolio provisions Net exposure (Net exposure) consolidated explanatory notes A. Banking Group 1. Financial assets held for trading 4, ,152 1,103,786 # 1,103,786 1,107, Financial assets available for sale ,416, ,416,097 5,416, Financial assets held to maturity ,203,539-1,203,539 1,203, Due from banks 2,233 2, ,702, ,702,027 1,702, Loans to customers 10,177,188 3,628,215 6,548,973 40,901, ,547 40,658,503 47,207, Financial assets designated at fair value through profit and loss 3,058-3,058 71,524 # 71,524 74, Financial assets being sold Hedging derivatives ,381 # 2,381 2,381 Total A 10,187,132 3,630,797 6,556,335 50,400, ,636 50,157,857 56,714,192 B. Other consolidated companies 1. Financial assets held for trading # # Financial assets available for sale Financial assets held to maturity Due from banks Loans to customers Financial assets designated at fair value through profit and loss # # Financial assets being sold Hedging derivatives # # - - Total B Total ,187,132 3,630,797 6,556,335 50,400, ,636 50,157,857 56,714,192 Total ,226,528 3,025,914 5,200,614 52,028, ,585 51,744,260 56,944,

144 A.1.3 Banking Group - Cash and off-balance sheet exposures to banks: gross and net values consolidated explanatory notes Type of exposure/amounts Gross exposure Specific provisions General portfolio provisions Net exposure A. Cash exposures a) Non-performing loans 2,233 2,081 # 152 b) Watchlist loans - - # - c) Restructured loans - - # - d) Past due loans - - # - e) Other assets 2,916,549 # 1 2,916,548 Total A 2,918,782 2, ,916,700 B. Off-balance sheet exposures a) Doubtful loans - - # - b) Others 418,533 # - 418,533 Total B 418, ,533 Total (A+B) 3,337,315 2, ,335,233 A.1.6 Banking Group - Cash and off-balance sheet credit exposures to customers: gross and net values Type of exposure/amounts Gross exposure Specific provisions General Portfolio provisions Net exposure A. Cash exposures a) Non-performing loans 5,264,299 2,874,591 # 2,389,708 b) Watchlist loans 3,894, ,874 # 3,236,542 c) Restructured loans 367,148 46,377 # 320,771 d) Past due loans 654,885 49,874 # 605,011 e) Other assets 47,306,520 # 242,635 47,063,885 Total A 57,487,268 3,628, ,635 53,615,917 B. Off-Balance Sheet exposure a) Doubtful loans 267,024 42,732 # 224,292 b) Others 4,470,004 # 16,750 4,453,254 Total B 4,737,028 42,732 16,750 4,677,546 Total (A+B) 62,224,296 3,671, ,385 58,293,

145 INFORMATION ON CONSOLIDATED SHAREHOLDERS EQUITY consolidated explanatory notes 145

146 Consolidated shareholders' equity consolidated explanatory notes QUALITATIVE INFORMATION Group shareholders' equity comprises share capital and all types of reserve, together with the net profit for the period. In accordance with current supervisory regulations, the Group is required to maintain a minimum capital adequacy ratio of 8%, which is the normal limit for banking groups. Compliance with this limit is monitored constantly by the appropriate departments within the Parent Company, partly with a view to maintaining the regulatory "free capital" needed at a consolidated level to sustain the Group's growth strategies. 146

147 QUANTITATIVE INFORMATION B.1 Consolidated shareholders' equity: breakdown by business type Captions Banking Group Insurance companies Other businesses Consolidation adjustments and eliminations Share capital 1,749,352-1,010 (652,116) 1,098,246 Share premium 1,363, (678,051) 685,768 Reserves 3,794,066 - (4) (1,059,737) 2,734,325 Interim dividends Equity instruments (Treasury shares) (7,272) - - (2) (7,274) Valuation reserves 155, , ,085 - Financial assets available for sale 111, ,595 - Property, plant and equipment consolidated explanatory notes - Intangible assets Foreign investments hedges Cash-flow hedges (8,636) (8,636) - Exchange differences Non-current assets and disposal groups held for sale Actuarial gains (losses) on defined-benefit pension plans (84,184) (84,184) - Portion of valuation reserves relating to investments carried at equity ,722 5,722 - Special revaluation laws 144, ,818 - Other (7,229) - - (1) (7,230) Profit (loss) of the year pertaining to the Group and minority interests 48, (25,360) 23,220 Consolidated shareholders' equity 7,104,115-1,359 (2,409,104) 4,696,

148 B.2 Valuation reserves for financial assets available for sale: breakdown consolidated explanatory notes Assets/Amount Banking Group Insurance companies Positive reserve Negative reserve Positive reserve Negative reserve Other businesses Positive reserve Negative reserve Consolidation adjustments and eliminations Positive reserve Negative reserve Positive reserve Negative reserve 1. Debt securities 41,591 22, (25) 41,591 22, Equity instruments 105,032 11, (600) (182) 104,432 11, UCITS units 1,943 3, (834) 1,943 2, Loans Total ,566 37, (600) (1,041) 147,966 36,371 Total ,177 18, (1,145) (73) 222,032 18,657 The valuation reserve for financial assets available for sale at 30 September 2013 has a positive balance of 111,595 thousand; at 31 December 2012 it had a positive balance of 203,375 thousand. B.3 Valuation reserves for financial assets available for sale: change in the period Captions/Amounts Debt securities Equity instruments UCITS units Loans 1. Opening balance 87, ,112 (393) - 2. Positive changes 70,420 5,618 4, Increases in fair value 25,171 2, Release to the income statement of negative reserves: , from impairment , from disposal Other changes 44,953 2, of which business combinations 1, Negative changes 139,103 28,312 4, Reductions in fair value 38,514 27,752 2, Impairment write-downs Releases to the income statement of positive reserves: - da realizzo 91, Other changes 8, , of which business combinations Closing balance 18,973 93,418 (796) - 148

149 Capital and capital adequacy ratios Scope of application and regulations The Group's capital for supervisory purposes and capital adequacy ratios have been determined in accordance with the Bank of Italy s Circular 263 "New regulations for the prudent supervision of banks" of 27 December 2006 and subsequent amendments and updates, and with Circular 155/91 "Instructions for the reporting of capital adequacy and prudent coefficients" and subsequent amendments and updates. As envisaged in these regulations, in order to calculate consolidated capital for supervisory purposes, the equity method is used to measure "the businesses - other than banking, financial and banking-related companies - that are directly or jointly controlled by the banking group (or a sub-holding group or the lead company or the individual bank) or over which significant influence is exercised". The "New instructions for the prudent supervision of banks" allow banks and banking groups to adopt internal systems for calculating the capital requirement for credit risk, once authorisation has been obtained from the Bank of Italy. consolidated explanatory notes At present, the BPER Group uses the standardised approach to calculate the capital requirements for credit risk. Capital for supervisory purposes QUALITATIVE INFORMATION 1 Tier 1 capital Tier 1 capital includes among its positive elements the share capital, the share premium reserve and revenue reserves. It also includes a Tier 1 non-innovative capital instrument issued on 30 March 2012 by Cassa di Risparmio di Bra s.p.a.. The instrument has the following features: it amounts to Euro 10 million, is perpetual, floating rate and non-convertible. Tier 1 capital also includes Euro 12.4 million attributable to savings shares and preferred shares, currently subject to transitional provisions (known as "grandfathering). The core element amounts to Euro 3,683.9 million. Among the negative elements, Tier 1 capital is shown net of the treasury shares held in portfolio, the prudential filters, such as the fair value option, and intangible assets including goodwill. 2 Tier 2 capital Tier 2 capital includes the valuation reserves, to the extent permitted, having regard for the related precautionary filters, and the eligible portion of outstanding subordinated bonds, up to a maximum of 50% of Tier 1 capital, gross of the elements to be deducted. At 30 September 2013 the eligible portion amounted to Euro 1,596.7 million. The subordinated loans included in Tier 2 capital are listed below: 149

150 consolidated explanatory notes Characteristics of subordinated instruments B.P.E.R. subordinated convertible bond 2.75%, Interest rate Step up Maturity date Currency Original amount (in Euro) Contribution to capital for supervisory purposes (in thousands of Euro) 2.75% NO Eur 124,999,991 31,233 EMTN B.P.E.R. subordinated non-convertible bond floating rate 3-month Euribor +100 bp, EMTN B.P.E.R. subordinated non-convertible bond floating rate 3-month Euribor +95 bp, Lower Tier II B.P.E.R. subordinated non-convertible bond floating rate 3-month Euribor +130 bp, floating rate floating rate floating rate YES Eur 400,000,000 75,646 YES Eur 400,000, ,292 NO Eur 100,000,000 40,001 Lower Tier II B.P.E.R. subordinated non-convertible bond 5.20%, % NO Eur 350,000, ,980 Lower Tier II B.P.E.R. subordinated non-convertible bond 5.90%, Lower Tier II B.P.E.R. subordinated non-convertible bond, amortising 5.12%, Lower Tier II B.P.E.R. subordinated non-convertible bond 4.35%, % NO Eur 100,000,000 40, % NO Eur 25,000,000 10, % NO Eur 18,000,000 18,000 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.94%, % NO Eur 51,000,000 51,000 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.75%, % NO Eur 700,000, ,006 Lower Tier II B.P.E.R. subordinated non-convertible bond 4.75%, % NO Eur 400,000, ,000 Lower Tier II B.P.E.R. subordinated non-convertible bond 5.81%, % NO Eur 11,945,000 11,

151 Characteristics of subordinated instruments Cassa di Risparmio di Bra s.p.a. floating-rate subordinated bond nom. 10,000,000 Interest rate floating rate Step up Maturity date Currency Original amount (in Euro) Contribution to capital for supervisory purposes (in thousands of Euro) NO Eur 10,000,000 4,000 consolidated explanatory notes Cassa di Risparmio di Bra s.p.a. fixed-rate Lower Tier II subordinated bond amortising 4% 4.00% NO Eur 10,000,000 8,000 Cassa di Risparmio di Bra s.p.a. fixed-rate Lower Tier II subordinated bond amortising nom. 7,000, % NO Eur 7,000,000 7,000 Cassa di Risparmio di Bra s.p.a. subordinated bond amortising 5.25% 5.25% NO Eur 5,000,000 5,000 Banca Popolare di Ravenna subordinated convertible bond 3.50%, Banca popolare di Lanciano e Sulmona subordinated convertible bond 4.50%, % NO Eur 30,235,890 6, % NO Eur 26,771,430 5,354 Lower Tier II CARISPAQ subordinated non-convertible bond floating rate, floating rate NO Eur 25,000,000 4,250 Emil-Ro Factor s.p.a floating-rate subordinated liability floating rate NO Eur 7,000, Total 2,801,952,311 1,596,654 Amount not considered, having exceeded the threshold of 50% of Tier1 capital - Total 1,596,

152 3 Tier 3 capital consolidated explanatory notes Tier 3 capital comprises that part of subordinated loans outstanding not already considered, for an amount that does not exceed 71.4% of the capital required to cover market risks, excluding the requirement to cover the counterpart and settlement risks relating to the "trading portfolio for supervisory purposes". There have been no issues of subordinated loans with characteristics for inclusion in Tier 3 capital and neither are there any subordinated loans in excess of the portion to be computed for supplementary capital purposes. 152

153 INFORMAZIONE DI NATURA QUANTITATIVA A. Core capital (Tier 1 capital before the application of prudential filters) 3,913,724 3,930,869 B. Prudential filters of Tier 1 capital (40,730) (51,808) - B.1 positive IFRS prudential filters B.2 negative IFRS prudential filters (40,730) (51,808) C. Tier 1 capital gross of items to be deducted (A+B) 3,872,994 3,879,061 D. Items to be deducted from Tier 1 capital 166, ,220 E. Total Tier 1 capital (C-D) 3,706,230 3,714,841 consolidated explanatory notes F. Supplementary capital (Tier 2 capital before the application of prudential filters) 1,754,714 1,884,311 G. Prudential filters for Tier 2 capital (6,622) (7,433) - G.1 positive IFRS prudential filters G.2 negative IFRS prudential filters (6,622) (7,433) H. Tier 2 capital gross of items to be deducted (F+G) 1,748,092 1,876,878 I. Items to be deducted from Tier 2 capital 166, ,220 L. Total Tier 2 capital (H-I) 1,581,328 1,712,658 M. Items to be deducted from Tier 1 and Tier 2 capital - - N. Capital for supervisory purposes (E+L-M) 5,287,558 5,427,499 O. Tier 3 capital - - P. Capital for supervisory purposes including Tier 3 (N+O) 5,287,558 5,427,499 At 30 September 2013, Core Tier 1 capital amounts to 3,683,865 thousand. It differs from Tier 1 capital for the component represented by savings shares and preference shares issued by Banco di Sardegna s.p.a. for a total of 12,365 thousand and by the Tier 1 non-innovative capital instrument of 10,000 thousand. With reference to the prudential filters for AFS reserves, it should be noted that: a) electing for the option provided in the Bank of Italy s instructions of 18 May 2010, pertaining to European Union debt securities, has led to a positive impact of 2.4 million, net of the tax effect; b) to permit a reconciliation with Table B.2 "Valuation reserves for financial assets available for sale: breakdown" between debt securities and the information reported in capital for supervisory purposes, it should be noted that in adopting the Bank of Italy's instructions of 18 May 2010, debt securities issued by the central governments of EU countries were excluded for a total of 15.6 million, net of the tax effect. In accordance with the Bank of Italy's Circular 155/91 and subsequent amendments and updates, debt securities related to banking, financial and insurance companies were also excluded for a total of 0.3 million, net of the tax effect. The valuation reserves on bonds that EMRO Finance Ireland Limited reclassified from "Available For Sale" (AFS) to "Loans and Receivables" (L&R) with effect from 1 July 2008 pursuant to the amendment to IAS 39 on 13 October 2008 (negative for 0.8 million, net of tax), continue to be accounted for in the calculation of the prudential filter; c) to permit a reconciliation with Table B.2 "Valuation reserves for financial assets available for sale: breakdown" between equity instruments and the information reported in capital for supervisory purposes, it should be noted that in accordance with the Bank of Italy's Circular 155/91 and subsequent amendments and updates, equity instruments related to banking, financial and insurance companies were excluded for a total of 81.6 million, net of the tax effect. 153

154 Capital adequacy QUALITATIVE INFORMATION consolidated explanatory notes Particular importance is attached to checking compliance with the capital adequacy requirements, both at Core Tier 1 level and in total. The responsible functions at the Parent Company perform this work on an ongoing basis, with the various departments involved (Capital Management, Risk Management and Group Financial Reporting) issuing regular reports as part of the broader process of verifying consolidated capital adequacy. The guidelines for this activity are stated in BPER Group's annual report on the verification of capital adequacy (ICAAP). This report identifies the functions, methodology and approach for measuring and assessing accepted risk on an ongoing basis, with a view to guiding operations and quantifying the capital required by the Group to cover the various risks accepted. 154

155 QUANTITATIVE INFORMATION Description/Amounts Unweighted amounts Weighted amounts/requirements consolidated explanatory notes A. Assets at risk A.1 Credit and counterparty risk 61,548,144 61,561,918 39,162,017 39,645, Standardised methodology 61,434,946 61,445,864 38,754,431 39,337, Methodology based on internal ratings Basic Advanced Securitisations 113, , , ,101 B. Capital adequacy requirements B.1 Credit and counterparty risk 3,132,961 3,171,674 B.2 Market risk 31,098 30, Standard methodology 31,098 30, Internal models Concentration risk - - B.3 Operational risk 320, , Basic method 320, , Standardised method Advanced method - - B.4 Other precautionary requirements - - B.5 Other elements for the calculation 60,055 62,757 B.6 Total precautionary requirements 3,545,095 3,580,665 C. Risk assets and capital ratios C.1 Risk-weighted assets 44,313,688 44,758,313 C.2 Tier 1 capital/risk-weighted assets (Tier 1 capital ratio) 8.36% 8.30% C.3 Capital for supervisory purposes including Tier 3/Risk-weighted assets (Total capital ratio) 11.93% 12.13% The amount indicated in item B.5 consists of specific capital requirements required by the Bank of Italy for assets at risk relating to credit risk, pertaining to Banco di Sardegna, Banca di Sassari and Sardaleasing. The Core Tier 1 ratio comes to 8.31% versus 8.27% at 31 December Taking account of the capital figures shown in the above table in relation to total risk assets gives the following capital ratios: Core Tier 1 ratio: 8.43% (8.27% in December 2012); Tier 1 capital ratio: 8.48% (8.30% in December 2012); Total capital ratio: 12.05% (12.13% in December 2012); with committed capital of Euro 3,545.1 million (Euro 3,580.7 million at 31 December 2012). The inclusion of CR Bra in the Group's scope of consolidation has had a negative effect that can be quantified at around -13 bps and -11 bps on the Core Tier 1 and Tier 1 ratios respectively. 155

156

157 INFORMATION ON BUSINESS COMBINATION consolidated explanatory notes 157

158 Transactions carried out at 30 September 2013 consolidated explanatory notes 1.1 Acquisition of CR Bra Description of the transaction The acquisition of the investment in Cassa di Risparmio di Bra ("CR Bra") from Fondazione Cassa di Risparmio di Bra took place on 7 February As a result of this transaction, BPER's investment in CR Bra increased from 31.02% to 67%, which allows it to be included in the Banking Group. The following table shows the figures involved in the business combination (in thousands of Euro). Name Cassa di Risparmio di Bra s.p.a. Date of the transaction (a) 7 February 2013 Cost of the transaction Interest acquired (b) Total revenues (c) Net profit/(loss) of the Company (d) 52, % 37,823 3,218 Key: (a) Date of acquisition of control (b) Percentage interest acquired with voting rights at ordinary shareholders' meeting (c) Net interest and other banking income (caption 120 of the income statement) at 31 December 2012 (d) Net profit (loss) recorded by the subsidiary at 31 December 2012 For the accounting treatment of CR Bra in BPER's consolidated financial statements, reference has been made to IFRS 3 - Business Combinations. This standard defines: a business combination as a transaction or other event in which a purchaser obtains control of one or more businesses and provides for the consolidation of the assets, liabilities and contingent liabilities of the acquired company at their fair value at the date of acquisition, including any identifiable intangible assets not recognised in the acquiree's financial statements; goodwill as the difference between the cost of the business combination and the fair value of the assets, liabilities and contingent liabilities identified (purchase method). Under international accounting standards, the cost of the combination, Euro 52,073 thousand, has to be allocated by measuring the identifiable assets acquired and liabilities assumed at their fair values, including any identifiable intangible assets not recognised in the acquiree's financial statements. What remains after this allocation must be recorded as goodwill, which represents a payment made by the acquirer in anticipation of future economic benefits arising from assets that cannot be individually identified and recognised separately. 158

159 Allocation of the cost of the transaction As explained above, at the date of acquisition, the cost of the combination has to be allocated by recognising the assets, liabilities and contingent liabilities of the acquired entity at their fair values at the date of acquisition, including any identifiable intangible assets not recognised in the acquiree's financial statements. The amount remaining after this allocation has to be recorded as goodwill. However, paragraph 45 of IFRS 3 provides that in the event that "the initial accounting for a business combination is incomplete, the acquirer shall recognise in its financial statements provisional amounts for the items for which the accounting is incomplete. During the assessment period, the acquirer shall adjust retrospectively the provisional amounts recognised at the acquisition date, so as to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of amounts recognised as of that date. During the assessment period, the acquirer also has to recognise additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The assessment period ends as soon as the acquirer receives the information it was seeking about facts and circumstances that existed as of the acquisition date or establishes that it will not be possible to obtain further information. However, the assessment period must not exceed one year from the date of acquisition." consolidated explanatory notes We have therefore followed IFRS 3 by making a provisional allocation of the cost of the business combination; we will have to complete the purchase price allocation on a definitive basis within a maximum of 12 months from the date of acquisition. The provisional allocation resulted in goodwill of Euro 7,109 thousand, equal to the difference between the purchase price and the book value. The assessment period will only be concluded once the assets acquired and liabilities assumed can be recognised at their fair value in accordance with IFRS 3, in compliance with the 12 month time period. To date, the purchase price allocation (PPA) has been started and will end no later than 31 December Acquisition of control of property companies As already mentioned in the interim report on operations, with a view to streamlining and reorganising its real estate assets, on 30 January 2013 Nadia s.p.a. signed an agreement to become the sole shareholder of Immobiliare Reiter s.p.a., already 34% owned at 31 December 2012, and to take over 100% control of another property company, Galilei Immobiliare s.r.l.. For the accounting treatment of these two companies, reference has been made to the same standard as explained in the previous chapter. The purchase cost of the two companies is in line with the fair value of their assets, liabilities and contingent liabilities, so there was no goodwill. 1.3 Banking business acquisition As already mentioned in the interim report on operations at 30 June, on 15 July 2013 the Parent Company BPER signed an agreement to purchase the banking business of Serfina Banca s.p.a.. The transaction was completed on 30 September 2013, when the assets and liabilities that form part of the banking business were acquired and the winding-up of the company took effect for legal purposes as it was impossible to achieve its corporate purpose, resulting in its liquidation. 159

160 consolidated explanatory notes BPER paid the counterparty a provisional price of Euro 6.2 million, based on the difference between the assets and the liabilities transferred at 31 December 2012: that price will then be subject to adjustment depending on the actual amount of the items transferred at 30 September To cover any future obligations to pay indemnities because of violations of contractual guarantees given by Serfina, it set up an escrow account in the name of BPER for an amount of Euro 3 million: this guarantee will remain in force for the next 24 months. In this case we again made use of the provisions of IFRS 3 45 by making a provisional allocation of the cost of the combination and we will have to carry out final allocation of the purchase price within a maximum of 12 months from the date of acquisition, but in any event no later than 31 December Combinations under common control As already explained in detail in the interim report, CARISPAQ, Banca Popolare di Lanciano e Sulmona and Banca Popolare di Aprilia were absorbed by the Parent Company BPER on 27 May, with effect for accounting purposes from 1 January These transactions form part of the activities designed to simplify and streamline the organisational structure and governance of the Group, as well as to optimise and enhance resources and reduce operating costs. They have been considered "internal" business combinations between entities under common control, which are outwith the scope of IFRS 3 and therefore recorded without any change in their carrying value. 160

161 Transactions arranged subsequent to the period end No business combinations have been carried out after 30 September consolidated explanatory notes 161

162

163 ATTACHMENTS Banca popolare dell Emilia Romagna s.c. 163

164

165 Financial statements of the Parent Company Balance sheet as at 30 September 2013 Income statement as at 30 September 2013 Income statement by quarter Statement of changes in shareholders' equity attachments Pro-forma financial statements of the Parent Company Balance sheet as at 31 December 2012 Income statement as at 30 September

166

167 Balance sheet as at 30 September (in thousands of Euro) Assets Change Change % attachments 10. Cash and balances with central banks 188, ,988 37, Financial assets held for trading 995,026 1,243,352 (248,326) Financial assets designated at fair value through profit and loss 95, ,350 (9,943) Financial assets available for sale 4,491,703 3,482,184 1,009, Financial assets held to maturity 1,203, , , Due from banks 2,168,642 3,132,714 (964,072) Loans to customers 29,216,594 24,860,426 4,356, Hedging derivatives n.s. 90. Remeasurement of financial assets backed by general hedges (+/-) - 1,060 (1,060) Equity investments 2,276,846 2,687,564 (410,718) Property, plant and equipment 295, ,216 92, Intangible assets 198, ,432 26, of which: goodwill 185, ,075 25, Tax assets 669, , , a) current 48,853 57,619 (8,766) b) deferred 620, , , b1) of which L. 214/ , , , Non-current assets and disposal groups classified as held for sale - 6,550 (6,550) Other assets 550, , , Total assets 42,350,324 37,726,550 4,623, (in thousands of Euro) Liabilities and shareholders' equity Change Change % 10. Due to banks 9,491,420 9,041, , Due to customers 17,081,432 13,067,800 4,013, Debt securities in issue 7,344,534 7,356,927 (12,393) Financial liabilities held for trading 210, ,988 (26,651) Financial liabilities designated at fair value through profit and loss 2,847,929 3,507,210 (659,281) Hedging derivatives 37,600 34,783 2, Tax liabilities 80,847 98,993 (18,146) a) current 43,633 35,912 7, b) deferred 37,214 63,081 (25,867) Other liabilities 1,476, , , Provision for termination indemnities 81,563 65,833 15, Provisions for risks and charges 176, ,175 32, a) pensions and similar commitments 106,691 98,667 8, b) other provisions 69,884 45,508 24, Valuation reserves 12, ,745 (95,044) Reserves 1,910,778 1,750, , Share premium reserve 624, ,462 4, Share capital 1,001, ,165 3, Treasury shares (7,270) (7,264) (6) Net profit (loss) (+/-) (20,070) 784 (20,854) -- Total liabilities and Shareholders' Equity 42,350,324 37,726,550 4,623,

168 Income statement as at 30 September 2013 attachments 0 (in thousands of Euro) Captions Change Change % 10. Interest and similar income 958, , , Interest and similar expense (466,743) (456,031) (10,712) Net interest income 491, , , Commission income 314, ,064 56, Commission expense (31,840) (28,660) (3,180) Net commission income 282, ,404 53, Dividends and similar income 41,006 34,160 6, Net trading income 25,766 41,034 (15,268) Net hedging gains (losses) (171) - (171) n.s Gains/losses on disposal or repurchase of: 91,341 48,898 42, a) loans (241) (766) b) financial assets available for sale 88,200 25,463 62, c) financial assets held to maturity - (179) d) financial liabilities 3,382 24,380 (20,998) Net results on financial assets and liabilities designated at fair value (43,949) (48,982) 5, Net interest and other banking income 888, , , Net impairment adjustments to: (461,814) (180,967) (280,847) a) loans (437,607) (181,343) (256,264) b) financial assets available for sale (2,974) (1,075) (1,899) d) other financial assets (21,233) 1,451 (22,684) Net profit from financial activities 426, ,945 (38,021) Administrative costs: (495,038) (360,151) (134,887) a) payroll (260,113) (197,231) (62,882) b) other administrative costs (234,925) (162,920) (72,005) Net provisions for risks and charges (5,377) (859) (4,518) Net adjustments to property, plant and equipment (11,324) (7,860) (3,464) Net adjustments to intangible assets (956) (660) (296) Other operating charges/income 90,910 56,167 34, Operating costs (421,785) (313,363) (108,422) Profit (loss) from equity investments 336 (1,446) 1, Gains (losses) on disposal of investments (71) Profit (loss) from current operations before tax 5, ,249 (144,732) Income taxes on current operations (25,587) (60,230) 34, Profit (loss) from current operations aftere tax (20,070) 90,019 (110,089) Net profit (loss) (20,070) 90,019 (110,089)

169 Income statement by quarter as at 30 September 2013 Captions 1st quarter nd quarter rd quarter st quarter nd quarter rd quarter th quarter Interest and similar income 261, , , , , , , , ,639 1,103, Interest and similar expense (141,454) (180,031) (145,258) (466,743) (157,275) (151,602) (147,154) (456,031) (149,795) (605,826) 30. Net interest income 120, , , , , , , , , , Commission income 86, , , ,835 83,619 87,670 86, ,064 96, , Commission expense (10,248) (11,029) (10,563) (31,840) (8,032) (10,251) (10,377) (28,660) (10,441) (39,101) 60. Net commission income 75, ,175 92, ,995 75,587 77,419 76, ,404 86, , Dividends and similar income , , ,376 1,228 34,160 1,143 35, Net trading income 6,187 9,073 10,506 25,766 35,895 (10,581) 15,720 41,034 8,032 49, Net hedging gains (losses) (175) 67 (63) (171) (1,184) (1,184) 100. Gains/losses on disposal or repurchase of: 19,489 58,600 13,252 91,341 11,598 21,342 15,958 48,898 39,778 88,676 a) loans 440 (559) (122) (241) (1,035) (766) (248) (1,014) b) financial assets available for sale 17,761 59,211 11,228 88,200 10,834 (429) 15,058 25,463 39,689 65,152 c) financial assets held to maturity (179) - - (179) - (179) d) financial liabilities 1,288 (52) 2,146 3, ,771 1,935 24, , Net results on financial assets and liabilities designated at fair value (16,297) (17,127) (10,525) (43,949) (33,553) 14,433 (29,862) (48,982) (16,396) (65,378) 120. Net interest and other banking income 206, , , , , , , , , , Net impairment adjustments to: (93,968) (260,960) (106,886) (461,814) (37,201) (84,939) (58,827) (180,967) (335,815) (516,782) a) loans (88,811) (244,199) (104,597) (437,607) (36,960) (83,696) (60,687) (181,343) (324,249) (505,592) b) financial assets available for sale - (2,974) - (2,974) - (1,076) 1 (1,075) (6,415) (7,490) d) other financial assets (5,157) (13,787) (2,289) (21,233) (241) (167) 1,859 1,451 (5,151) (3,700) 140. Net profit from financial activities 112, , , , , , , ,945 (62,334) 402, Administrative costs: (125,401) (209,241) (160,396) (495,038) (118,686) (124,439) (117,026) (360,151) (125,650) (485,801) a) payroll (65,888) (110,243) (83,982) (260,113) (63,806) (67,916) (65,509) (197,231) (55,839) (253,070) b) other administrative costs (59,513) (98,998) (76,414) (234,925) (54,880) (56,523) (51,517) (162,920) (69,811) (232,731) 160. Net provisions for risks and charges (1,642) (3,165) (570) (5,377) (167) (321) (371) (859) (3,193) (4,052) 170. Net adjustments to property, plant and equipment( (2,655) (4,965) (3,704) (11,324) (2,654) (2,609) (2,597) (7,860) (3,406) (11,266) 180. Net adjustments to intangible assets (268) (350) (338) (956) (218) (215) (227) (660) (300) (960) 190. Other operating charges/income 25,133 35,950 29,827 90,910 15,185 11,947 29,035 56,167 22,476 78, Operating costs (104,833) (181,771) (135,181) (421,785) (106,540) (115,637) (91,186) (313,363) (110,073) (423,436) 210. Profit (loss) of equity investments 1,618 (1,090) (192) (944) (502) (1,446) 14,599 13, Gains (losses) on disposal of investments (2) Profit (loss) from current operations before tax 8,930 (36,609) 33,196 5,517 61,945 42,090 46, ,249 (157,794) (7,545) 260. Income taxes on current operations (10,456) 6,056 (21,187) (25,587) (25,386) (12,928) (21,916) (60,230) 68,559 8, Profit (loss) from current operations after tax (1,526) (30,553) 12,009 (20,070) 36,559 29,162 24,298 90,019 (89,235) Net profit (loss) (1,526) (30,553) 12,009 (20,070) 36,559 29,162 24,298 90,019 (89,235) 784 attachments 169

170 attachments Statement of changes in shareholders' equity (in thousands of Euro) Shareholders equity as at Changes during the period Allocation of prior year results Balance as at Changes in opening balances Balance as at Comprehensive income as at Transactions on shareholders' equity Stock options Derivatives on treasury shares Changes in equity instruments Extraordinary distribution of dividends Issue of new shares Changes in reserves Reserves Dividends and other allocations Purchase of treasury shares Share capital: 998, , , ,001,482 a) o rdinary shares 998, , , ,001,482 b) o ther shares Share premium reserve 619, , , ,154 Reserves: 1,750,136-1,750, , ,910,778 a) fro m pro fits 1,660,498-1,660, , ,665,787 b) o ther 89,638-89, , ,991 Valuation reserves 107, , (95,098) 12,701 Equity instruments Treasury shares (7,264) - (7,264) (10) (7,270) Net profit (loss) (784) ,070 (20,070) Shareholders equity 3,469,028-3,469, ,912 8,013 (10) (115,168) 3,521,775 Shareholders' equity as at Changes during the period Allocation of prior year results Balance as at Balance as at Comprehen sive income as at Transactions on shareholders' equity Reserves Changes in opening balances (*) Stock options Changes in reserves Purchase Extraordinary distribution of dividends Issue of new shares Dividends and other allocations Derivatives on treasury Changes in equity instruments of treasury h h Share capital: 996, , , ,16 5 a) o rdinary shares 996, , , ,165 b) o ther shares Share premium reserve 619, , , , (55,907) Reserves: 1,586,996 (9,042) 1,577, ,298-65, ,776,217 a) fro m pro fits 1,518,978 (9,042) 1,509, , ,642,234 b) o ther 68,018-68, , ,983 Valuation reserves (81,424) 9,042 (72,382) , ,206 Equity instruments Treasury shares (83,311) - (83,311) , (7,264) Net profit (loss) 160, ,401 (132,298) (28,103) ,019 90,019 Shareholders equity 3,254,457-3,254,457 - (28,103) 83,704 21, ,225 3,593,162 (*) The change in the opening balances of reserves from profits and valuation reserves is in line with the approach adopted by the National Association of Actuaries (Circular no. 35 of 21 December 2012), as detailed in Part A of the Explanatory Notes to the 2012 financial statements. 170

171 Pro-forma financial statements of the Parent Company Balance sheet as at 31 December 2012 (in thousands of Euro) Total Merger adjustments Assets BPER BPLS CARISPAQ BPA 10. Cash and balances with Central Banks 150,988 31,982 23,446 12, , Financial assets held for trading 1,243,352 1,442 22,571 9,812 (21,574) 1,255, Financial assets designated at fair value through profit and loss 105, (17,805) 88, Financial assets available for sale 3,482,184 92, ,816 15,112 (240) 3,692, Financial assets held to maturity 818, , Due from banks 3,132, ,365 1,122, ,020 (2,047,985) 2,895, Loans to customers 24,860,426 2,549,848 2,626, ,014-30,517, Hedging derivatives Remeasurement of financial assets backed by general hedges 1, , Equity investments 2,687,564 2, (481,437) 2,208, Property, plant and equipment 203,216 30,105 56,697 13, , Intangible assets 172, , ,859 of which: goodwill 160, , , Tax assets: 544,714 44,884 71,827 3, ,878 a) current 57,619 1,722 42, ,895 b) deferred 487,095 43,162 29,672 3, ,983 b1) of which L. 214/ ,637 37,463 23,781 2,151 (1) 499, Non-current assets and disposal groups held for sale 6, , Other assets 317,950 26,821 12,246 4,772 3, ,969 TOTAL ASSETS 37,726,550 3,226,329 4,038, ,600 (2,540,577) 43,233,615 attachments 171

172 attachments (in thousands of Euro) Liabilities and shareholders equity BPER BPLS CARISPAQ BPA Merger adjustments Total 10. Due to banks 9,041,971 20, ,646 11,371 (933,664) 8,242, Due to customers 13,067,800 1,699,020 2,928, ,738 (71,519) 18,095, Debt securities in issue 7,356,927 1,088, , ,397 (1,031,489) 8,279, Financial liabilities held for trading 236, , (2,226) 236, Financial liabilities designated at fair value through profit and loss 3,507, ,913 (20,395) 3,491, Hedging derivatives 34, , Tax liabilities: 98,993 1,046 3, , ,996 a) current 35, ,966 b) deferred 63, , ,872 72, Other liabilities 702,842 66,833 65,805 15,319 (5,570) 845, Provision for termination indemnities 65,833 6,670 12,910 3,286-88, Provisions for risks and charges: 144,175 17,649 13,619 1, ,144 a) pensions and similar commitments 98,667-6, ,833 b) other provisions 45,508 17,649 7,453 1,701-72, Valuation reserves 107,745 (2,075) (2,070) (265) - 103, Reserves 1,750, ,825 60,770 71,767 (159,789) 1,902, Share premium reserve 619,462 84,427 51,374 27,654 (158,761) 624, Share capital 998,165 57,378 80,001 15,011 (149,073) 1,001, Treasury shares (7,264) (7,264) 200. Net profit (loss) 784 4,997 6,728 9,191 (12,963) 8,737 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 37,726,550 3,226,329 4,038, ,600 (2,540,577) 43,233,

173 attachments Income statement as at 30 September 2012 (in thousands of Euro) Income Statement BPER MELIORBANCA BPLS CARISPAQ BPA Merger adjustments Total 10. Interest and similar income 797,429 50, ,672 93,805 23,556 (45,039) 1,027, Interest and similar expense (456,031) (21,470) (46,587) (50,595) (8,431) 45,220 (537,894) 30. Net interest income 341,398 29,490 60,085 43,210 15, , Commission income 258,064 8,027 29,449 20,542 11,532 (125) 327, Commission expense (28,660) (144) (2,078) (671) (375) 126 (31,802) 60. Net commission income 229,404 7,883 27,371 19,871 11, , Dividends and similar income 34, (6,050) 29, Net trading income 41,034 6, , (110) 49, Net hedging gains (losses) - (1,074) (1,074) 100. Gains/losses on disposal or repurchase of: 48,898 1,676 3,424 3,329 2,137 7,605 67,069 a) loans (766) (766) b) financial assets available for sale 25,463 1,669 3,382 3,218 2,137 7,605 43,474 c) financial assets held to maturity (179) (179) d) financial liabilities 24, , Net results on financial assets and liabilities designated at fair value (48,982) - (17) 244 (5) 1,536 (47,224) 120. Net interest and other banking income 645,912 45,445 91,343 68,053 29,049 3, , Net impairment adjustments to: (180,967) (18,528) (22,343) (13,810) (1,939) 2,159 (235,428) a) loans (181,343) (15,380) (22,375) (14,039) (1,919) (1) (235,057) b) financial assets available for sale (1,075) (3,118) ,160 (2,033) c) financial assets held to maturity d) other financial assets 1,451 (30) (20) - 1, Net profit from financial activities 464,945 26,917 69,000 54,243 27,110 5, , Administrative costs: (360,151) (20,127) (53,420) (43,476) (17,332) 1,023 (493,483) a) payroll costs (197,231) (9,377) (29,602) (25,505) (9,669) 1 (271,383) b) other administrative costs (162,920) (10,750) (23,818) (17,971) (7,663) 1,022 (222,100) 160. Net provisions for risks and charges (859) 157 (2,740) (136) (5) 1 (3,582) 170. Net adjustments to property, plant and equipment (7,860) (384) (1,359) (1,513) (820) - (11,936) 180. Net adjustments to intangible assets (660) (51) (4) (16) - (1) (732) 190. Other operating charges/income 56,167 1,265 4,787 5,371 1,461 (841) 68, Operating costs (313,363) (19,140) (52,736) (39,770) (16,696) 182 (441,523) 210. Profit (loss) from equity investments (1,446) (1,446) 230. Adjustments to goodwill Gains (losses) on disposal of investments (8) Profit (loss) from current operations before tax 150,249 7,777 16,264 14,477 10,406 5, , Income taxes on current operations (60,230) (3,499) (7,298) (5,451) (3,261) 527 (79,212) 270. Profit (loss) from current operations after tax 90,019 4,278 8,966 9,026 7,145 6, , Profit (loss) after tax on non-current assets held for sale Net profit (loss) 90,019 4,278 8,966 9,026 7,145 6, ,

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177 Banca popolare dell Emilia Romagna Cooperative Bank with head office in Modena (Italy) Via San Carlo, 8/20 Tel Fax Telex / emipop Bank Registration n 4932 ABI code Parent Company of Banca popolare dell Emilia Romagna Banking Group Registered in the Register of Banking Group with code , since 7 August [email protected] Tax code, VAT number and Business Register n Modena Chamber of Commerce n Share capital as at 31/12/ ,164,965 Member of the Interbank Deposit Guarantee Fund Ordinary shares listed on the MTA market