San Paolo IMI Banca Fideuram

San Paolo IMI Banca Fideuram Italy - Banking SPI: BUY (unchanged) - TARGT 16.2 BFI: ACCUMULAT (prev. HOLD) - TARGT 5.7 January 25, 2006 Price : SPI: 12.99 BFI: 4.89 BCI Index: 1,706 N 20 RORGANISATION OF FIDURAM, NW STP AND SAN PAOLO ASST MANAGMNT MOR VISIBILITY ON SAN PAOLO IMI S VALUATION. COST SAVINGS FOR BANCA FIDURAM San Paolo IMI (SPI) and Banca Fideuram (BFI) have announced a number of initiatives designed to rationalise the group s presence in the wealth management segment. SPI will spin off San Paolo IMI Asset Management to New Step. The New Step company will be floated by the end of 2006. Banca Fideuram will spin off to Universo Servizi SpA (a company owned by AIP) its activities of back-office, IT, call centre, and general services to help streamline costs. The decision to spin off San Paolo IMI Asset Management was the real novelty emerging yesterday. For the valuation of San Paolo IMI Asset Management we have applied a 2005 P/ multiple of 14x, at a 15% discount to the multiple of 16.8x paid by Crédit Agricole for Nextra. 14x earnings implies a valuation of San Paolo IMI Asset management of about 2 bn. New Step will be listed, presumably in 4Q06. Its valuation is about 8.3 bn, with a neutral weight on the MIBtel index, which today is 1.2%. We have always maintained that New Step would be listed via a reverse merger of BFI. We confirm our BUY recommendation for SPI with a per-share target price of 16.2. Listing of New Step will make it even clearer that the group s banking business is trading at a discount to the sector. BFI will streamline its costs. We estimate that some 500-600 people will transfer to Universo Servizi, with a net saving, thanks to economies of scale, of some 15 mn a year. For the time being the Fideuram funds factory will remain within the company but we think that the IT platform and back office, etc. will ultimately be shared, with a further saving of 15-20 mn. The effect of overall cost synergies will be to increase 2008 earnings by roughly 8% (we currently estimate them to be 278 mn). For BFI we are upgrading our recommendation from Hold to ACCUMULAT mainly for two reasons: a. Cost synergies are by no means indifferent and increase the visibility of earnings growth b. The listing of New Step reduces the risk relating to a share swap with an unlisted entity. Our target price for BFI is 5.7 per share, equivalent to 25x 2006 earnings. STOCK DATA SAN PAOLO IMI PRIC PRFORMANC Bloomberg Code SPI IM 1M 3M 12M 52-week range 10.31 13.64 Absolute -2.95 6.44 24.97 Daily Volumes (mn) 9.0 mn Rel. to BCI Index -4.25-2.62 11.10 Matteo Ghilotti +39-02-6204.422 m.ghilotti@eurosim.it STOCK DATA BANCA FIDURAM PRIC PRFORMANC Bloomberg Code BFI IM 1M 3M 12M 52-week range 3.85 5.12 Absolute 4.82 8.04 19.00 Daily Volumes (mn) 4.7 mn Rel. to BCI Index 3.52-1.02 5.13 IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

San Paolo IMI / Banca Fideuram January 25, 2006 2 RORGANISATION OF TH WALTH MANAGMNT SCTOR SPI and BFI have announced a number of initiatives designed to rationalise the group s presence in the wealth management segment, i.e. 1. SPI will spin off San Paolo IMI Asset Management to New Step 2. The New Step company will be floated by the end of 2006 3. Banca Fideuram will spin off to Universo Servizi SpA (a company owned by AIP) its activities of backoffice, IT, call centre, and general services to help streamline costs. SAN PAOLO IMI: TH NW STRUCTUR NW STP (urizon Fin Group) 100% (to be reduced via an IPO) 100% 100% 74% A.I.P. SANPAOLO IMI ASST MANAGMNT BANCA FIDURAM In an interview with the leading Italian business daily Il Sole 24 Ore, the CO Mario Greco has stated that: - New Step will change its name to urizon Financial Group - The group does not intend to acquire the Toro or Reale Mutua insurance companies - BFI will remain listed in parallel with New Step and then we will see. We think that Mr. Greco s medium term project is to use New Step as a vehicle for mergers in urope (CDC Asset Management?) and the name of the company (urizon Financial Group) is a hint to its future mission. Impact on San Paolo IMI The decision to spin off San Paolo IMI Asset Management was the real novelty emerging yesterday. According to our estimates San Paolo IMI Asset Management ended 2005 with 140 mn of net profit and 120 bn of AUM. For the valuation of San Paolo IMI Asset Management we have applied a P/ multiple of 14x, at a 15% discount to the multiple of 16.8x paid by Crédit Agricole for Nextra. We think there has to be a discount because in Crédit Agricole s case the deal was strategic (making it one of the top 5 players in urope) and integration of Nextra with CAAM should permit major synergies against earnings of just 80 mn. 14x earnings implies a valuation of San Paolo IMI Asset management of about 2 bn. SAN PAOLO IMI ASST MGT: A TNTATIV VALUATION ( mn) San Paolo IMI AM Nextra Net profit 2005 140 80 AUM 2005 120,000 120,000 P/ 14.2 16.8 Valuation 1,993 1,340 P/AUM 1.7% 1.1% Source: uromobiliare SIM estimates New Step will be listed, presumably in 4Q06. Its valuation is about 8.3 bn, with a neutral weight on the MIBtel index, which today is 1.2%. The valuation will obviously have to be adjusted if changes are made to the profitsharing agreement between New Step and SPI. NW STP: VALUATION ( mn) SPI Asset Management 1,993 2005 P/ = 14x AIP 2,890 1.25x 2006 V or P/ = 15x 74% of Banca Fideuram 3,502 Mkt. price Total 8,385 Weight in the MIBtel Index 1.2% Source: uromobiliare SIM estimates IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

San Paolo IMI / Banca Fideuram January 25, 2006 3 We have always maintained that New Step would be listed via a reverse merger of BFI. But reading Mr. Greco s interview we understand that SPI had a preference for direct listing of New Step. Merger of BFI and New Step remains a medium-term option, as we do not think it is very efficient to have two listed vehicles. At the same time, the fact of having both stocks listed has the advantage of making any merger more transparent. From SPI s point of view the move (spin-off of San Paolo IMI Asset Management and listing of New Step) permits achievement of a series of objectives, i.e. it: 1. Increases the visibility of wealth management s value and the creation of value that we expect to be generated by the action of the CO Mario Greco and his team 2. Aids the quest for further cost synergies (even although it will be hard for them to exceed 100 mn on a normalised basis) 3. Aids possible acquisitions/mergers of New Step with other players in the sector 4. nables the group parent company San Paolo IMI to make a capital gain (which we estimate to be as much as 1.5 bn) and/or to increase New Step s capital, financing growth of the insurance business. We confirm our BUY recommendation for SPI with a per-share target price of 16.2. Listing of New Step will make it even clearer that the group s banking business is trading at a discount to the sector. COMPARABL VALUATION OF TH LARGST ITALIAN BANKS 2006 2007 PS Large joint-stock banks Adj P PBV Adj Roe Adj P PBV Adj Roe Cagr 05-07 Bca Intesa 12.0 1.8 15.5% 11.6 1.7 15.1% 7.1% Bca Antonveneta 20.3 2.2 11.2% 16.6 2.0 12.7% 20.0% Bca MPS 14.0 1.6 12.1% 12.0 1.5 13.1% 15.9% BNL 18.6 1.6 9.0% 15.2 1.5 10.3% 10.3% Capitalia 12.1 1.5 13.0% 10.0 1.4 14.4% 23.5% San Paolo IMI (ex New Step) 11.8 1.4 11.6% 9.9 1.3 13.0% 15.8% Mediobanca (excl HPs) 15.7 1.7 11.0% 13.1 1.5 12.1% 19.9% Unicredito 12.9 1.9 15.3% 10.4 1.7 17.5% 20.3% Median 13.4 1.6 11.9% 11.8 1.5 13.1% 17.9% Source: uromobiliare SIM estimates Impact on Banca Fideuram BFI will streamline its costs. We estimate that some 500-600 people will transfer to Universo Servizi, with a net saving, thanks to economies of scale, of some 15 mn a year. For the time being the Fideuram funds factory will remain within the company but we think that the IT platform and back office, etc. will ultimately be shared, with a further saving of 15-20 mn. The effect of overall cost synergies will be to increase 2008 earnings by roughly 8% (we currently estimate them to be 278 mn). For BFI we are upgrading our recommendation from Hold to ACCUMULAT mainly for two reasons: a. Cost synergies are by no means indifferent and increase the visibility of earnings growth b. The listing of New Step reduces the risk relating to a share swap with an unlisted entity. Our target price for BFI is 5.7 per share, equivalent to 25x 2006 earnings. IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

San Paolo IMI / Banca Fideuram January 25, 2006 4 SAN PAOLO IMI MAIN FIGURS ( mn) 2003 % 2004 % 2005 % 2006 % 2007 % Interest Margin 3,716 50 3,709 49 3,871 47 4,195 48 4,716 50 Change 2% 0% 4% 8% 12% Net Fees 3,036 41 3,239 43 3,455 42 3,606 41 3,805 40 Change 9% 7% 7% 4% 6% Total Income 7,482 100 7,594 100 8,297 100 8,691 100 9,457 100 Change 6% 1% 9% 5% 9% Operating costs -4,765-64 -4,813-63 -4,678-56 -4,803-55 -4,939-52 Change 1% 1% -3% 3% 3% Gross Op. Profit 2,717 36 2,781 37 3,619 44 3,888 45 4,518 48 Change 16% 2% 30% 7% 16% Net Income 972 13 1,256 17 1,799 22 1,865 21 2,171 23 Change 8% 29% 43% 4% 16% Client Loans (bn) 124.6 126.3 139.7 150.0 162.0 Change 0% 1% 11% 7% 8% AUC (bn) 92.6 97.8 100.7 102.7 104.8 Change 5% 6% 3% 2% 2% AUM (bn) 143.7 144.5 157.2 168.9 179.3 Change 9% 1% 9% 7% 6% BRAKDOWN OF RVNUS 100% 0.2 0.3 0.3 90% 1.2 80% 3.1 2.8 3.0 70% 3.2 60% 50% 0.3 0.3 0.4 0.3 40% 30% 20% 4.0 3.7 3.7 4.7 10% 0% 2001 2002 2003 2004 Interests Trading Fees Other Source: uromobiliare SIM estimates PR SHAR DATA (PS and DPS in cent) 2003 2004 2005 2006 2007 ps 53 80 96 100 116 Change 8% 51% 20% 4% 16% Adj ps 66 78 90 99 116 Change 95% 17% 16% 9% 18% NAVPS 6.0 6.5 6.9 7.4 7.9 DPS 39.0 47.0 56.7 59.8 69.7 MARKT RATIOS 2003 2004 2005 2006 2007 P 18.8 13.2 13.5 13.0 11.2 Adj P 15.0 13.7 14.4 13.2 11.2 PNAV 1.7 1.6 1.9 1.8 1.6 Yield (%) 3.9 4.4 4.4 4.6 5.4 OTHR DATA 2003 2004 2005 2006 2007 Adj. RO (%) 11.2 12.5 13.5 13.8 15.2 SUM OF TH PARTS VALUATION ( mn) NPLs (%) 0.9 1.0 0.8 0.8 0.7 Coverage (%) 73 75 75 75 75 Banking operations 19,613 Provisions (bp) 58 43 38 41 46 Banca Fideuram's stake 3,528 Core Tier 1 (%) 6.6 7.4 7.4 7.3 7.4 AIP 2,890 Free capital @ 7% 165 1,186 1,327 1,333 1,457 San Paolo IMI Asset Mgt 1,929 Loans / Deposits (%) 147 136 150 160 172 Minority stakes (BSCH, CFI, Fiat, H3G) 2,373 Interest margin (%) 2.17 2.04 2.26 2.45 2.59 Overall value of San Paolo IMI 30,333 Branches 3,168 3,183 3,198 3,213 3,228 Nr. of shares 1,870 mployees 43,465 42,500 41,800 42,200 42,600 Target price 16.2 160 140 120 100 80 60 40 20 0 20.0 10.7 107.7 MANAGD SAVINGS: BRAKDOWN OF ASSTS ( mn) 27.2 9.4 94.9 33.5 40.4 1.8 108.3 105.5 2001 2002 2003 2004 Mutual funds and GPF Adjustments Life reserv es IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

San Paolo IMI / Banca Fideuram January 25, 2006 5 BANCA FIDURAM MAIN FIGURS ( mn) NW LIF PRMIUMS COLLCTD ( mn) 2002 2003 2004 2005 2006 2007 2003 2004 2005 Premiums 3,095 2,116 1,860 1,460 1,465 1,511 Change 128% -32% -12% -21% 0% 3% Recurring Prem. 94 93 35 Net Fees 487 480 551 590 607 656 Change -1% -62% Change -1% -2% 15% 7% 3% 8% Single Prem. 1,572 1,250 846 Pre Tax Income 162 211 255 262 274 320 Change -20% -32% Change -32% 30% 21% 3% 5% 17% Total New Pr. 1,666 1,343 881 Net Income 150 175 203 209 219 256 Change -19% -34% Change -33% 17% 16% 3% 5% 17% New Business Value 196 393 310 213 225 228 Change -18% 101% -21% -31% 6% 1% TOTAL V ARNINGS ( m n) mb. V. arnings -310 370 416 323 348 358 Change 933% -219% 12% -22% 8% 3% 2003 2004 2005 MB. VALU 2,606 2,213 2,488 2,654 2,822 3,180 Value Added from x. B. -23 106 110 ROV -11% 15% 18% 13% 13% 12% New Business Life 206 165 57 New Business Funds 187 145 156 PR SHAR DATA (PS and DPS in cent) 2002 2003 2004 2005 2006 2007 Tot. New Business 393 310 213 ps 16 18 21 21 22 26 Change -35% 10% 16% 3% 5% 17% Change -21% -31% ps Adj. 19 19 23 20 22 26 Tot. V arnings 370 416 323 Change -28% 0% 17% -13% 13% 17% mb. Value 2.66 2.26 2.54 2.71 2.88 3.24 Dividend 16 16 16 18 19 22 IMPLICIT GOODWILL VS VALU OF NW BUSINSS MARKT RATIOS 2003 2004 2002 2003 2004 2005 2006 2007 Mkt cap 4,803 3,970 P 26 27 20 22 22 19 mbedded value 2,606 2,488 P Adj. 22 25 18 23 22 19 Implicit goodw ill 2,197 1,482 Goodwill vs NBV 5 6 6 10 9 9 NBV 393 310 P/MB. V. 1.58 2.17 1.60 1.72 1.70 1.51 Goodwill/Value of new b. 5.6 4.8 Yield 3.8% 3.3% 4.0% 4.0% 3.9% 4.5% OTHR FIGURS ( mn) COMPANY VALUATION ( mn) 2002 2003 2004 2005 2006 2007 Total v alue of mutual funds&life 5,509 Net Inf. Of Man. Assets -838 3,493 440 925 1,976 1,846 Net Inf. Of Non M. Assets 3,176-2,353-1,239 120-276 436 Free capital 54 Total Net Inflows 2,338 1,140-799 1,045 1,700 2,282 Company evaluation 5,564 Assets Um 54,790 58,067 59,453 62,235 65,746 69,981 Nr. of shares 980 Change 13% 6% 2% 5% 6% 6% Value per share ( ) 5.68 Ifas 3,442 4,543 4,313 4,150 4,290 4,445 Implicit 2006 P 25.4 Source: uromobiliare SIM estimates IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT

San Paolo IMI / Banca Fideuram January 25, 2006 6 DISCLAIMR This publication has been prepared by Matteo Ghilotti In the past uromobiliare SIM has published studies on San Paolo IMI and Banca Fideuram. uromobiliare SIM is distributing this publication to some 500 qualified operators today and will distribute it to unqualified operators via Borsa Italiana website as from March 26, 2006. uromobiliare SIM intends to provide continuous coverage of the financial instrument forming the subject of the present publication, with a semiannual frequency and, in any case, with a frequency consistent with the timing of the issuer s periodical financial reporting and of any exceptional event occurring in the issuer s sphere of activity. The information contained in this publication is based on sources believed to be reliable. Although uromobiliare SIM makes every reasonable endeavour to obtain information from sources that it deems to be reliable, it accepts no responsibility or liability as to the completeness, accuracy or exactitude of such information uromobiliare SIM has adopted internal procedures able to assure the independence of its financial analysts and that establish appropriate rules of conduct for them. However, it is pointed out that uromobiliare SIM SpA is an intermediary licensed to provide all investment services as per Italian Legislative Decree no. 58/98. Given this, uromobiliare SIM might hold positions in and execute transactions concerning the financial instruments covered by the present publication, or could provide, or wish to provide, investment and/or related services to the issuers of the financial instruments covered by this publication. Consequently, it might have a potential conflict of interest concerning the issuers, financial issuers and transactions forming the subject of the present publication. As on today s date it has been ascertained that, as regards the listed companies covered by the present publication, the Credem group (to which uromobiliare SIM belongs) does not have relationships of control or major shareholdings, either direct or indirect, with/in the same. However, Credem group could provide them with corporate finance services, could have issued financial instruments linked to the issuers stock and could have directors who are members of the issuers corporate bodies. AbaxBank S.p.A. (Credem Group) performs the role of market maker for financial instruments whose underlying assets are shares issued by BANCA FIDURAM SPA AbaxBank S.p.A. (Credem Group) performs the role of market maker for financial instruments whose underlying assets are shares issued by SAN PAOLO - IMI SPA In addition, it is pointed out that, within the constraints of current internal procedures, uromobiliare SIM s directors, employees and/or outside professionals might hold long or short positions in the financial instruments covered by this publication and buy or sell them at any time, both on their own account and that of third parties. The purpose of this publication is merely to provide information that is up to date and as accurate as possible. The publication does not represent to be, nor can it be construed as being, an offer or solicitation to buy, subscribe or sell financial products or instruments, or to execute any operation whatsoever concerning such products or instruments. uromobiliare SIM does not guarantee any specific result as regards the information contained in the present publication, and accepts no responsibility or liability for the outcome of the transactions recommended therein or for the results produced by such transactions. ach and every investment/divestiture decision is the sole responsibility of the subject receiving the advice and recommendations, who is free to decide whether or not to implement them. Therefore, uromobiliare SIM and/or the author of the present publication cannot in any way be held liable for any losses, damage or lower earnings that the subject using the publication might suffer following execution of transactions on the basis of the information and/or recommendations contained therein. The estimates and opinions expressed in the publication may be subject to change without notice. SPI: MOST RCNT RCOMMNDATIONS Date Rec. Comment 18 January 2005 ACCUMULAT 27 January 2005 BUY change in upside/downside potential because of stock performance 24 March 2005 BUY 6 April 2005 BUY 16 May 2005 BUY 7 September 2005 BUY 29 September 2005 BUY 27 October 2005 BUY 15 November 2005 BUY BFI: MOST RCNT RCOMMNDATIONS Date Rec. Comment 12 November 2004 HOLD 24 February 2005 HOLD 17 March 2005 HOLD 11 May 2005 HOLD 28 September 2005 HOLD 11 November 2005 HOLD IMPORTANT DISCLOSURS APPAR AT TH BACK OF THIS RPORT