the banca intermobiliare companies · of veneto banca in cal and at the meetings with the top...

BANCA INTERMOBILIARE DI INVESTIMENTI E GESTIONI S.p.A.Via Gramsci, 7 - 10121 TURINTel. +39 011. 08.28.1 Fax +39 011. 08.28.800Website: www.bancaintermobiliare.com E-mail: [email protected] email: [email protected]

Parent CompanyVENETO BANCA S.p.A. LCA (Compulsory administrative liquidation)

Piazza G.B. Dall’Armi n. 1- 31044 Montebelluna (TV) (Registered office)

Via Feltrina Sud, 250 - 31044 Montebelluna (TV)

(Administrative Headquarters)

The Banca Intermobiliare CompaniesSYMPHONIA SGR S.p.A.10121 Turin – Via A. Gramsci, 7Tel. +39 02.77.7071 - Fax +39 02.77.707350Website: www.symphonia.it E-mail: [email protected] post: [email protected]

BIM FIDUCIARIA S.p.A.10121 Turin - Via Gramsci, 7Tel. +39 011.08.28.270 - Fax +39 011.08.28.852Website: www.bancaintermobiliare.comE-mail: [email protected]

BIM VITA S.p.A.10121 Turin - Via Gramsci, 7Tel. +39 011.08.28,411 - Fax +39 011.08.28,800Website: www.bimvita.it E-mail: [email protected]

BIM INSURANCE BROKERS S.p.A.Lloyd’s Correspondent

10121 Turin - Via Gramsci, 7Tel. +39 011.08.28.416 Fax +39 011.08.28.823Website: www.bimbrokers.it E-mail: [email protected]

BIM IMMOBILIARE S.R.L.10121 Turin - Via A. Gramsci, 7Tel. +39 011. 08.28.1 Fax +39 011. 08.28.800

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2017XXXVI FINANCIAL YEAR

CON

SOLI

DAT

ED A

ND

SEP

ARAT

E FI

NAN

CIAL

STA

TEM

ENTS

AT

31 D

ECEM

BER

201

7 -

XXXV

I FIN

ANCI

AL Y

EAR

Corporate websitewww.bancaintermobiliare.com

Telephone, Banca Intermobiliare:+39 011 - 0828.1

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2017XXXVI FINANCIAL YEAR

Board of Directors5 April 2018

REGISTERED OFFICE: VIA GRAMSCI, 7 10121 TURIN

SHARE CAPITAL€ 156,209,463 FULLY PAID-UP

BANK CODE NO. 3043.7BANKS REGISTER NO. 5319

TURIN COMPANY REGISTER OFFICE NO. 02751170016

CHAMBER OF COMMERCE OF TURIN REA NO. 600548 TAX ID CODE/ VATNO. 02751170016

REGISTERED IN THE REGISTER OF BANKS WITH NO. 5319

A SUBSCRIBER TO THE NATIONAL COMPENSATION FUND AND TO THE INTERBANK DEPOSIT PROTECTION FUND

PARENT COMPANY OF THE BANKING GROUP

(Registered with the Register of Banking Groups on 3.11.2017 code No. 3043)

BANCA INTERMOBILIARE CONSOLIDATED FINANCIAL STATEMENTS

MANAGEMENT REPORT TO THE CONSOLIDATED FINANCIAL STATEMENTS 5Highlights 6The macroeconomic scenario 12Main Consolidated Banca Intermobiliare data 16Reclassified consolidated financial statements 19Summary of operating results 232017-2021 Business Plan 25Business plan implementation status 27Main post-balance-sheet events 28Going concern 28Business outlook 28Operating figures and consolidated balance sheet data 29Consolidated economic results 53Consolidated comprehensive income 61Results of equity investments 62Market Disclosures 65Development and organisation activities 71Management and auditing activities 76The operating structure and personnel 79Other aspects 81

CONSOLIDATED FINANCIAL STATEMENTS 85Consolidated balance sheet 86Consolidated income statement 88Consolidated statement of comprehensive income 89Consolidated statement of changes in equity 90Consolidated statement of cash flows 92

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 95Part A - Accounting policies 96Part B - Information on the consolidated balance sheet 140Part C - Information on the consolidated income statement 185Part D - Consolidated statement of comprehensive income 202Part E - Information on risks and related hedging policies 203Part F - Information on consolidated equity 258Part G - Business combinations of companies or business units 265Part H - Related-party transactions 266Part I - Share-based payment agreements 271Part L - Segment information 272

ANNEXES TO THE CONSOLIDATED FINANCIAL STATEMENTS 275Annex 1 - Independent auditors’ fees related to the consolidated financial statements 276

REPORTS ON THE CONSOLIDATED FINANCIAL STATEMENTS 277Certification of the consolidated financial statements, in accordance with Article 81-ter of Consob Regulation No. 11971 of 14 May 1999 as amended and supplemented 278Independent Auditors’ report on the consolidated financial statements 279

SUMMARY

BANCA INTERMOBILIARE SEPARATE FINANCIAL STATEMENTS

MANAGEMENT REPORT TO THE SEPARATE FINANCIAL STATEMENTS 291Main Banca Intermobiliare data 292Reclassified statements of the separate financial statements 294Operating figures and balance sheet data 296Economic results 317Comprehensive income 324Other aspects 324Main post-balance-sheet events 325Going concern 325Business outlook 325Proposal for allocating profit of the year 326

SEPARATE FINANCIAL STATEMENTS 327Balance sheet 328Income statement 330Comprehensive income statement 331Statement of changes in equity 332Statement of cash flows 334

NOTES TO THE SEPARATE FINANCIAL STATEMENTS 337Part A - Accounting policies 338Part B - Information on the balance sheet 374Part C - Information on the income statement 416Part D - Statement of comprehensive income 433Part E - Information on risks and related hedging policies 434Part F - Information on equity 469Part G - Business combinations of companies or business units 473Part H - Related-party transactions 473Part I - Share-based payment agreements 477Part L - Segment information 478

ANNEXES TO THE SEPARATE FINANCIAL STATEMENTS 481Annex 2 - Independent auditors’ fees related to the financial statements 482

REPORTS TO THE SEPARATE FINANCIAL STATEMENTS 483Certification of the financial statements, in accordance with Article 81-ter of the Consob regulations no. 11971 of 14 May 1999 as amended and supplemented 484Statutory auditors’ report on the separate financial statements 485Independent auditors’ report on the separate financial statements 507

SUMMARY

CONSOLIDATED FINANCIAL STATEMENTS31 DECEMBER 2017

REPORT ON OPERATIONSIN THE CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS AT 31.12.2017

MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS

6 ■ Management report to the consolidated financial statements

HIGHLIGHTS

ADMINISTRATION AND CONTROL BODIES OF BANCA IMMOBILIARE

BOARD OF DIRECTORS

Chairperson Maurizio LAURI

Director with assignments Giorgio Angelo GIRELLI 1

Directors Paolo CICCARELLISimona HEIDEMPERGHERAlessandro POTESTÀMichele ODELLODaniela TOSCANIAlessandra ZUNINO DE PIGNIER

BOARD OF STATUTORY AUDITORS

Chairperson Luca Maria MANZI

Regular Auditors Elena NEMBRINIEnrico Maria RENIER

Alternate Auditors Alide LUPOMichele PIANA

GENERAL MANAGER Stefano GRASSI

FINANCIAL REPORTING MANAGER Mauro VALESANI

INDEPENDENT AUDITORS PRICEWATERHOUSECOOPERS S.p.A.

1 On 7 March 2018, the Director Giorgio Angelo Girelli informed the Board of Directors of Banca Intermobiliare that he will resign from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the shares of Veneto Banca S.p.A. in CAL, envisaged in the coming weeks.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS

Management report to the consolidated financial statements ■ 7

COMPULSORY ADMINISTRATIVE LIQUIDATION OF VENETO BANCA S.P.A.

With Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal ofthe Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to compulsory administrative liquidation. The Bank of Italy appointed as liquidators of Veneto Banca S.p.A., the lawyers Alessandro Leproux, Prof. Giuliana Scognamiglio and Fabrizio Viola, and the Oversight Committee of the same, who, implementing the ministerial indications, are overseeing:i) the continuation, where necessary, of the company’s business or of certain branches of activity for the technical

time necessary to implement the planned sales;ii) the disposal of corporate assets and liabilities in accordance with the binding offer formulated by the transferee

identified as Intesa Sanpaolo S.p.A., which will take over the relationships of the transferor without a break;iii) the sale to Società per la Gestione di Attività S.G.A (in which the public has a stake) of impaired loans and other

assets not disposed of. Banca Intermobiliare, in the context of the said decree, as confirmed on its website by the Bank of Italy with news of 26 June 2017, does not come within the perimeter of Art. 3 among the assets acquired by Intesa Sanpaolo S.p.A., and is continuing its operations in an orderly manner, ensuring the continuity of the existing relationships with its clients. With reference to the sale of corporate assets and liabilities - pursuant to the aforementioned point ii) - Veneto Banca C.A.L. and Intesa Sanpaolo are performing the activities to complete the precise attribution of the various assets.On 28 September 2017 Banca Intermobiliare was ascertained as a less significant bank and brought under the supervision of the Bank of Italy.

VENETO BANCA IN C.A.L. - DISPOSAL OF THE INVESTMENT IN BANCA INTERMOBILIARE

Veneto Banca in CAL by means of a press release on 6 July 2017, informed the market that it had begun, in the context of realisation of its assets, a process aimed at the sale of its controlling equity interest in BIM. During this past July and August, the stages of the procedure that enabled various interested parties to present non-binding offers for purchase of the controlling interest were completed, with consequent performance by the selected bidders of the subsequent due diligence activities. The various stages of the procedure were assisted for the majority shareholder by the financial advisor Lazard & Co S.r.l. and to protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG.The process was carried out through access to the data room specifically established at the request of the advisors of Veneto Banca in CAL and at the meetings with the top management of Banca Intermobiliare. A first selection made by the seller of the expressions of interest was followed by the definition of a short list, then the reduction to two bidders and finally – on 28 September 2017 – the communication of the receivership procedure of an exclusive period granted to Attestor Capital LLP.

SALE OF BANCA INTERMOBILIARE TO TRINITY INVESTMENTS DESIGNATED ACTIVITY COMPANY

On 24 October 2017 Veneto Banca S.p.A. in CAL communicated that on 24 October 2017 it had signed a sale contract in favour of Trinity Investments Designated Activity Company (“Trinity Investments”), an investment firm subject to Irish law and managed by Attestor Capital LLP (“Attestor”), under the terms of which, conditional on the granting of the applicable regulatory authorisations, Trinity Investments undertook to purchase from the CAL 107.483.080 BIM ordinary shares equivalent to a total of 68.807% of the share capital, as well as the remaining equity interest of approximately 2.606% of the BIM share capital which will be sold under the same terms and conditions subsequent to the occurrence of certain events provided for in the Contract within 2 years from that date.The price agreed will be paid as follows: i) initial price of €/Mln 24.1 (€ 0.22411 for each BIM share) at the closing of the sale;ii) any deferred (earn-out) price to be determined on the basis of the profits resulting from the BIM consolidated

financial statements at 31 December 2021, normalised to exclude extraordinary components according to criteria and parameters indicated in the Contract. This “earn out”:- will be payable in 2022;- will be quantified applying a multiplier of 4.0x to the positive difference between the 2021 Normalised Profit and

a fixed amount of €/Mln 20;- will be reduced, if existing, on the basis of: (a) the pro-rata amount (calculated according to criteria indicated

in the Contract) of any BIM provisions on the performing loan portfolio at 30 June 2017 set aside in the BIM


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


consolidated financial statements for financial years 2017, 2018 and 2019; and (b) any losses deriving from the occurrence of certain risk events related to BIM and its subsidiaries or from compensation payable by the CAL as better provided for in the Contract;

- provides for a total maximum which, in the event of sale of only the controlling interest, will be €/Mln 71.8 (this amount, if appropriate, will be increased in proportion to the further interest purchased by Trinity Investments with respect to the voting capital of BIM).

The Contract contains an interim management clause under the terms of which Veneto Banca CAL, within the limits permitted by law, assumes commitments of “reasonable effort” so that, between the signing date and the closing date, BIM and its investees do not carry out (or conclude agreements regarding) certain extraordinary or significant operations without prior written consent from Trinity Investments (among which, merely by way of example, actions disposing of equity investments held by BIM in investees, acquisitions or disposals, changes to the bylaws, mergers, demergers, winding up, issues of shares or other financial instruments that attribute the right to subscribe or purchase shares, distributions of dividends or reserves, purchase of treasury shares and other significant transactions according to thresholds and parameters specifically indicated in the Contract).

Execution of the sale of Banca Intermobiliare was subject to the condition precedent of obtainment of the following authorisations by 30 April 2018: a) with reference to the direct acquisition in BIM, the ECB’s authorisation required for the purchase of significant

equity investments in banks;b) with reference to the indirect acquisition of the equity investments held by BIM in Symphonia SGR S.p.A., BIM

Fiduciaria S.p.A., and BIM Vita S.p.A., the authorisations of the Bank of Italy and IVASS;c) a measure of the Bank of Italy that authorises the CAL to sell the Controlling Interest pursuant to art. 90,

paragraph 2, of the Consolidated Law on Banking (TUB) or which , in any case, including in the absence of this authorisation, acknowledges the sale with no objections.

With reference to the authorisation of the Antitrust Authority (Autorità Garante per la Concorrenza e il Mercato - AGCM), we can note that the said sale transaction is under the turnover threshold. After examining the documentation made available to it, on 12 December 2017, the AGCM communicated that it acknowledged the data provided without making further requests or objections to the reconstruction proposed.

After the authorisations have been obtained the sale contract will be concluded, and therefore Trinity Investments must launch an obligatory takeover bid on the BIM shares at the same price per BIM share paid to the CAL and, therefore, at a fixed unit price of € 0.22411 which will be paid to the BIM shareholders at the closing of the bid, plus the price per BIM share deriving from the earn-out that will accrue subsequently at the same terms and conditions agreed with the CAL. There may be an increase in the initial price if the Buyer (a) promotes the takeover bid (or increases the price offered) at a higher price than the initial unit price of € 0.22411 (excluding the cases of obligation or right to purchase pursuant to arts 108 and 111 of the TUB), or (b) transfers to third parties BIM shares at a higher price than the initial unit price within the 12 months following the closing of the bid or of any competing offer. For the purposes of obtaining the regulatory authorisations, Trinity Investments has presented a business plan for BIM up to 2021 which, after completion of the takeover bid, provides for a complex reorganisation of BIM which in addition will implement a: a. significant manoeuvre of de-risking BIM’s assets by deconsolidating the bank’s entire portfolio of impaired assets

for a gross value that can be estimated at around €/Mln 633, to be achieved through a so-called self-securitisation transaction and subsequent free assignment of the related “junior notes” to all BIM shareholders that remain such on the outcome of the takeover bid and of the capital strengthening operation pursuant to the next point;

b. an operation to strengthen BIM’s capital in 2018 for a total amount of €/Mln 121.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


BANK OF ITALY COMMUNICATION OF 5 APRIL 2018 TO BANCA INTERMOBILIARE - ACQUISITION OF THE CONTROLLING EQUITY INTEREST IN BANCA INTERMOBILIARE BY ATTESTOR CAPITAL

With a communication of 5 April 2018 the Bank of Italy made known to Banca Intermobiliare that the European Central Bank had taken, on the same date, the decision “not to oppose” the acquisition by Trinity Investments Designated Activity Company, Attestor Capital LLP, of the controlling equity interest in the capital of Banca Intermobiliare di Investimenti e Gestioni pursuant to the request made on 4 December 2017.In this regard, in noting the formalities provided for in the current supervisory regulations on the subject of communicating the conclusion of the acquisition operation, the Bank of Italy:i) invited Banca Intermobiliare to prepare suitable monitoring instruments as regards implementation of the business plan connected with the ownership restructuring; ii) requested that the group rescue plan provided for in art. 69-quinquies of the TUB and in the related implementing measures be transmitted within 4 months from conclusion of the acquisition.

ATTESTOR CAPITAL LLP

Attestor Capital LLP is an investment manager based in London that pursues a global investment strategy of the “fundamental value” type with a geographical focus on Europe. Attestor has funds under management for approximately $/Bln 4. The majority of the capital comes from endowments and family offices which agree with the long-term investment philosophy. Attestor has gained skills and a specific track record on the subject of investment in financial institutions thanks to execution of numerous operations in the sector. Attestor’s main focus is the acquisition of assets in which to provide skills and capital, with the aim of making them attractive operating platforms in profitable business segments.

APPEAL TO THE REGIONAL ADMINISTRATIVE COURT (RAC) BY BARENTS AGAINST THE SALE OF THE CONTROLLING STAKE TO ATTESTOR

After the contract was signed for the sale of the equity investment in Banca Intermobiliare held by Veneto Banca in CAL to Attestor, on 24 October 2017, Barents Reinsurance S.A. (“Barents”) presented, to the Regional Administrative Court (RAC), an appeal against:a) the decision on 28 September 2017, regarding the alleged “exclusion” from the competitive bids for the sale

by Veneto Banca S.p.A. in compulsory administrative liquidation of the controlling equity interest in Banca Intermobiliare and rejection of its offer presented on 29 August 2017;

b) and the actions connected with this decision, in particular that concerning (b) the appointment of Lazard S.r.l. as advisor to the liquidators;

c) the choice of Attestor Capital LLP as the buyer of the aforesaid equity interest.

On 4 December 2017 the RAC met in chambers, adjourning its judgement on the appeal. Barents with a plea of additional grounds, notified on 19 January to the Second Section Bis of the Lazio RAC, requested, with reference to the sale of Banca Intermobiliare by the liquidators of Veneto Banca to the Attestor fund, the cancellation of the Bank of Italy authorisation (no. 1330870/17 of 9 November 2017) and of the further actions and orders related to the operation. In particular the RAC judges were to be presented with evidence of further defects and illegitimacies of the procedure, and multiple errors in the assessments of the offers presented by Barents and Attestor.

With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC ruled on the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August 2017. On the basis of the reconstruction of the events and an in-depth examination of the nature of the actions challenged and the rules applied, the RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM, and referring the dispute in question to the jurisdiction of the Ordinary Court.

On 5 February 2018 Barents presented an appeal to the Council of State (general register number 900 of 2018), for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


REGISTRATION OF BANCA INTERMOBILIARE IN THE REGISTER OF BANKING GROUPS

The placing in compulsory administrative liquidation of Veneto Banca S.p.A. on 25 June 2017, and the ECB’s decision to withdraw Veneto Banca’s banking licence on 19 July 2017 determined the related measures concerning the cancellation of the same from the register of banking groups. On 30 September 2017, Banca Intermobiliare communicated to the Bank of Italy, under the terms of the Supervisory Rules for Banks (Bank of Italy Circular no. 285 of 17 December 2013), the fulfilment of the conditions for assuming the qualification of “Parent Company” and formally requested registration of the same in the register of banking groups providing subsequently, on 26 October 2017, an update on the group’s perimeter, after the sale of BIM Suisse to Banca Zarattini & Co SA.On 3 November 2017, the Bank of Italy communicated the registration of Banca Intermobiliare as Parent Company of the Banca Intermobiliare Banking Group with effects running from 30 September 2017.In particular the perimeter of the banking group includes the subsidiaries Symphonia SGR and Bim Fiduciaria, both subject to the management and coordination activity of Banca Intermobiliare under the terms of Italian Legislative Decree 385/1993 (Consolidated Law on Banking), and the subsidiary Bim Immobiliare, subject to the management and coordination activity of Banca Intermobiliare under the terms of the civil law pursuant to articles 2497 ff. of the Italian Civil Code. The following subsidiaries remain excluded from the banking group: Bim Suisse (sold on 18 October 2017), Bim Vita (held at 50% with UnipolSai and subject to the control of the latter on the basis of contractual commitments), Bim Insurance Brokers (held at 51%), and the non-instrumental property equity investments Immobiliare D, Paomar Terza and Patio Lugano (all held at 100%).

STRUCTURE OF BANCA INTERMOBILIARE

The disclosure on the structure of Banca Intermobiliare is provided below. This has changed with respect to the previous year owing to the operation to sell Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA completed on 18 October 2017 between Banca Zarattini & Co SA and Banca Intermobiliare.

Parent companyThe issuer Banca Intermobiliare S.p.A. is controlled by right by Veneto Banca S.p.A. in L.C.A..

Banca Intermobiliare: subsidiaries and associated companies• Symphonia SGR S.p.A., Bim Fiduciaria S.p.A., Bim Immobiliare S.r.l., Immobiliare D S.r.l., Paomar Terza S.r.l. and

Patio Lugano S.A. (from 18.10.2017) are controlled by right by Banca Intermobiliare S.p.A., which holds directly the entire share capital;

• Bim Vita S.p.A. is equally owned by Banca Intermobiliare (50%) and Fondiaria-Sai (50%) now UnipolSai (UGF Group) and is subject to the control of the latter pursuant to contractual commitments.

• Bim Insurance Brokers S.p.A. is controlled by Banca Intermobiliare S.p.A. which holds 51% of the share capital.

The following diagram represents the shareholdings of Banca Intermobiliare by business area, after the sale of the Swiss investees. The 100% equity investments in Immobiliare D S.r.l. and Paomar Terza S.r.l. (acquired for credit recovery purposes) and the subsidiary Patio Lugano S.A. were presented in “Other Property Companies”:

SYMPHONIA SGR S.p.A.

100%

BIM FIDUCIARIA S.p.A.

100%

BIM INSURANCE BROKER S.p.A.

51%

BIM VITAS.p.A.

50%

BIM IMMOBILIARE S.r.l.

100%

ALTRE IMMOBILIARI

100%

ASSET MANAGEMENT TRUSTEE SERVICES INSURANCE COMPANIES REAL ESTATE COMPANIES


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


CONSOLIDATION SCOPE

Following the communication of the Bank of Italy on the registration of Banca Intermobiliare as Parent Company of the “Banca Intermobiliare Group” with effect from 30.09.2017 the consolidation scope is presented updated indicating whether or not the investees belong to the banking group.

EQUITY INVESTMENTS BELONGING TO THE BANCA INTERMOBILIARE BANKING GROUPParent Company: • Banca Intermobiliare di Investimenti e Gestioni S.p.A.Wholly-owned subsidiaries (100%), fully consolidated:• Symphonia SGR S.p.A.• Bim Fiduciaria S.p.A.• Bim Immobiliare S.r.l.

EQUITY INVESTMENTS NOT BELONGING TO THE BANCA INTERMOBILIARE BANKING GROUPWholly-owned subsidiaries (100%), fully consolidated: • Immobiliare D S.r.l.• Paomar Terza S.r.l.Subsidiaries at 100%, consolidated according to IFRS 5:• Patio Lugano S.A.Partially-owned subsidiaries (less than 100%), fully consolidated:• Bim Insurance Brokers S.p.A.Associates measured using the equity method: • Bim Vita S.p.A.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


THE MACROECONOMIC SCENARIO

The improvement of the profile of economic growth at the global level, which for the first time in the last three years was uniform and synchronised, and maintenance of monetary policies overall still accommodating and expansive, thanks to inflation levels that remain still very low, enabled the financial markets to record very positive results this year, in particular as regards equities. The continuation by the American FED of a gradual normalisation of monetary policy, implemented both by moderately raising interest rates and progressively reducing the dimensions of its budget, determined a rise in yields limited to short-term American bonds but had, surprisingly, a negative effect on the dollar, which fell against the other currencies, with the dollar index down by approximately 10%. The raw material markets took advantage of the improvement in the growth of the industrialised countries and, in the case of oil, of the agreements reached by OPEC for the limitation of production capacity. A further positive element, in particular for the equity markets, came from approval, at the end of the year, of the American fiscal reform which reduced significantly the average tax rate of corporate profits, down from 35% to 21%. The political risk, potentially high in Europe, instead did not materialise given the results of the elections in the Netherlands, France and Germany. During the summer there was then an increase in tension between the United States and North Korea, as a consequence of a series of nuclear experiments conducted by the latter which led also to the launch of a number of missiles that flew over Japan. At the global level economic growth, for 2017, is forecast to have accelerated compared to previous years, coming out at a level currently estimated by the International Monetary Fund (IMF) of 3.7%, sharply up compared to 2016 and 2015 (3.2%). The growth profile in industrialised countries is expected to improve compared to the previous year and should be 2.3% compared to 1.7% in 2016. The highest growth will be recorded in Spain (+3.1%) and in Canada (+3%) while the lowest growth profiles will be recorded in Italy (1.6%) and in Great Britain (1.7%). In the Euro area as a whole, growth is forecast at 2.4% compared to 1.8% the previous year. Also in emerging countries growth in 2017 improved compared to the previous years, coming out at a level estimated by the IMF of 4.7% compared to 4.4% in 2016 and 4.1% in 2015. The highest growth should be recorded in China (+6.8%), while the lowest is expected in Brazil (+1.1%). The level of the inflation rate remained, also in 2017, at figures lower than the average, both in absolute terms and relatively with respect to the targets set by the Central Banks. Despite this, the improvement in the economic growth profile worldwide and the recovery of the prices of a number of raw materials determined a relative increase in inflation, in particular in the industrialised countries. In these latter, the recent IMF forecasts see inflation reaching 1.7% in 2017, up compared to the 2016 levels (0.8%). In emerging countries, however, inflation estimates are expected to be at 4.1%, slightly down compared to 2016 (4.3%). The monetary policies of the main central banks have continued to be divergent, in an environment of sharply-improved growth but low inflation. On the American front, the FED implemented three raises in the level of official interest rates, taking them up from a range of 0.5%-0.75% at the end of 2016 to the current 1.25%-1.5%. In addition, last October the American central bank began the programme of reducing its budget (so-called Quantitative Tightening) for an amount of 10 billion dollars a month up to the end of 2017, of which 6 made up of government securities and 4 of mortgage-backed securities. For 2018, the FED is planning three further interest-rate hikes, motivated by the improving estimates of economic growth, inflation and unemployment and to continue the Quantitative Tightening, taking the monthly reduction ceiling up from the initial 10 billion to a maximum of 50 billion a month, 30 for government securities and 20 billion for securitisations. The handover, this coming February, from the current governor Yellen to the new governor Powell could however determine different orientations with respect to the route followed up to now by the FED, in particular as regards the assessment of the impact on growth of the tax reform approved by the American congress. The ECB, instead, kept official interest rates unchanged (-0.4%), but the Quantitative Easing programme, originally planned to expire in December 2017 was reduced: from 60 billion of monthly purchases it will go down, from January 2018, to 30 billion. The duration of the programme was however prolonged by a further nine months: from the end of 2017 to September 2018 with the possibility, if considered necessary, to continue it. In Great Britain the BOE decided, for the first time for 10 years, to increase by 0.25% the level of official interest rates, taking them up to 0.5%, owing to fears associated with the expected increase in inflation. An analogous raise was decided also by the Canadian central bank which made the cost of money dearer for the first time since 2010, raising by a quarter of a point the level of official rates, from 0.5% to 0.75%. In India instead, the level of interest rates was lowered, taking them from the previous 6.25% to 6%, the lowest level since 2010. As far as sovereign debt is concerned, we can note, in the first half of the year, the lowering of the creditworthiness of Italian public debt by the Canadian agency DBRS, one of the four large global rating agencies, which reduced it, bringing it down from A- to BBB+, with prospects however stable, an adjustment which was besides delayed with respect to the other agencies (Standard & Poor’s, Moody’s and Fitch). Towards the end of the year, instead, the American agency Standard & Poor’s upgraded Italian creditworthiness, raising it to BBB. The reasons for the upgrade included the increase in GDP growth, the improvement in employment and the maintenance of the monetary stimulation by the ECB.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


In China we can note the lowering of creditworthiness by Moody’s which, for the first time since ’89, reduced the rating, bringing it down from A1 to Aa3, improving however the outlook from negative to stable. The reasons for the downgrading were expectations of a deterioration in the financial solidity of the country in the next few years, owing to continuously increasing debt and a slowdown of the economy. In the case of Standard & Poor’s instead, the downgrade of the rating was from AA- to A+, the first cut since 1999, and it was motivated by the prolonged period of growth of corporate loans, although the outlook of the debt was instead kept stable. In Venezuela Standard & Poor’s declared the selective default of the government debt owing to the non-payment of an instalment of 200 million dollars of interest on sovereign bonds while two other rating agencies, Fitch and Moody’s, declared in default the state oil company PDVSA for non-payments in October and November. In India we can note the revision of the rating by Moody’s, the first improvement of the creditworthiness of the Asian country for 14 years. The rating changed to Baa2 from Baa3 and was motivated by the positive effect that the economic reforms introduced by the Modi government (demonetisation, introduction of VAT) will have on the stabilisation of the growing levels of public and private debt. In Europe, finally, we can note the agreement reached unanimously by the ministers of the Eurogroup for a third tranche of aid to Greece for €/Bln 8.5, in which the IMF will also take part, for a maximum amount of two billion dollars. Participation of the IMF in this tranche, unlike in the two previous ones in which it took no part, was made possible thanks to the strong stress placed in this programme on growth and on the fact that Greece had observed its commitments and completed the work on the priority actions to be pursued. On the European political front, the numerous electoral appointments of the year did not bring negative surprises: in the Netherlands and in France, the populist candidates hostile to Europe and to the single currency were defeated while, in Germany only after long and extenuating negotiations with the social democrats a new government coalition was formed at the beginning of March 2018. In United Kingdom the outcome of the early general election was disappointing for the Conservative Party which did not obtain an absolute majority of seats. The objective of the early election was therefore not achieved. At this point it is probable that the election result, while not cancelling the decision of last year’s referendum on the United Kingdom leaving the European Union, will weaken the political line of the Conservative party, pushing it towards a softer attitude in relations with Europe. In Japan, instead, the outgoing prime minister came out the winner in the early general election of November. In the USA, finally, the long-awaited tax reform - one of the two economic pillars of Trump’s electoral programme - was approved by congress. The average rate of taxation of corporate profits comes down permanently from the current 35% to 21% while, at the level of individual taxes, the planned reductions will have a ten-year time deadline. To limit the costs of the reform, estimated by the Congressional Budget Office as an increase of a thousand billion in the public account deficit, a fiscal shield was introduced for American multinational companies, which will be able to repatriate profits accumulated abroad at lower rates (8% for non-liquid assets and 15.5 % for liquidity).On the context for listed companies the trend of profit in 2017 was decidedly positive, unlike what happened in the two previous years: for stocks belonging to the American S&P500 index the most recent estimates are for growth in profit of 10.9% on turnover growth of 5.5%. The sectors that showed the best profit trend (up to the third quarter of 2017) were energy and technology, while the weakest results were recorded in the financial and public utilities sectors. There is expected to be a further improvement in profit growth in 2018, currently estimated at 16.9% on turnover growth of 6.4%. Also in Europe in 2017 the profit growth estimates for the Eurostoxx50 index are for a sharp improvement compared to the previous years: +9.4% on a turnover increase of 3.8%. The sectors that show the best profit trend are energy and food, while the weakest results were recorded in the insurance and health sectors. Also in Europe there is expected to be a further improvement in profit growth in 2018, currently estimated at 9.9% on turnover growth of 3.7%. In this framework, the main equity indices achieved on average very positive results in the year, although they were greatly influenced by the currency component. The MSCI World Index closed 2017, in fact, with a positive performance of 16.3% in local currency but only 5.5% in Euro. The US S&P 500 closed the year up 19.4% and the Japanese Topix index analogously rose by 19.7%; the European Eurostoxx50 index closed the year instead up 6.5%. On the domestic front, the FTSE Italia All Share index recorded a rise of 15.6% while the analogous index specialised in small and medium-sized companies, the FTSE Italia Mid Cap, recorded a sharp rise of 35.5%, partly thanks to the introduction of the law on Individual Saving Plans (ISPs) which encouraged significant investment flows on this market segment. In the emerging equity markets, the MSCI Emerging Markets index rose by 27.8% in local currency and 18% in Euro. The market that obtained the best results was Hong Kong with the Hang Seng index up by 36%, while the index that recorded the least brilliant result was the Russian RTS, which was substantially unchanged (0.2%). The best performances by sector worldwide were recorded in the sectors of technology (+35.4%) and raw materials (+19.5%) while the worst results were recorded in the sectors of energy (-1.6%) and telecommunications (-2.2%). As regards raw materials, the overall CRB index rose by 0.7% with the highest increase recorded in the industrial metals sector, up 29.1%, while the largest downside figure was in “soft commodities” (-12.4%). Oil recorded an increase of 12.5% while gold rose by 13%. On the currency markets the Euro surprisingly rose significantly against all the main currencies, with the cross against the American Dollar rising by 13.8%. We can also note the sharp rise of the Euro against the main refuge currencies,up 10% against the Japanese Yen and 9.1% against the Swiss Franc.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


The performance of the bond markets continued to be positive, despite the moderate interest rate raise by the American FED and the improvement of economic growth at the global level. The fact that the inflation rate remains at levels always lower than the targets set by the Central Banks makes it possible, in fact, to keep monetary policies still decidedly expansive. In this situation, the index of US government 5 to 10-year securities rose by 2.1% and the US 10-year yield declined slightly from 2.44% at the end of 2016 to 2.41% at the end of 2017. On the European front, the ML EMU index for maturities between 5 and 10 years rose by 0.9% but the German 10-year yield moved from 0.2% at the end of 2016 to 0.4% at the end of 2017. Very positive results were recorded even in riskier segments of the bond market, with the EMU corporate index up by 2.4%, the European High Yield index up by 6.7% and the global index of emerging government issues up by 10.1%.

Il 2018The estimates for global economic growth for 2018, after a sound 2017 (+3.6%), are characterised by a context of global growth which will be positive (+3.7%) and quite widespread at the geographical level, driven by a generalised recovery of investments. In the United States the context is positive owing to the good conditions of the labour and financial markets, even before considering the positive contribution of the tax reform, above all on investments, which in the short term should accelerate growth. In the medium term, however, the effective tax benefits for businesses and individuals are still uncertain. In the Euro Area domestic demand and investments are driving the recovery, increasingly widespread and close to peak acceleration. In Great Britain the economic context remains less weak than the expectations, although the uncertainty on the outcome of Brexit is beginning to be felt on investments and property. Japan is benefiting from the positive global context and from the excellent conditions of the labour market. In China there are some evident signs of slowdown, but this could be slighter than the expectations thanks to the good performance of consumption and the gradual effects of the structural reform. In India recovery is gradual, with the electoral deadline of next year that could lead the government to expansive manoeuvres, bringing short-term benefits to the detriment of the trend in public accounts. In Russia the recovery is quite good, with the possible passing of the baton from investments to consumption as greatest contributor to growth, while the recovery of consumption in Brazil could offset the possible slowdown in investments due to the political uncertainty.As far as corporate profits are concerned, the growth estimates at the global level for 2018 are quite good at 10.5%, although slowing down slightly compared to 2017 (+15.1%), with positive revisions in the last few weeks. The caution of ‘bottom-up’ analysts and the not excessive expectations for growth, in some cases lower than what can be inferred from the early forecasts, could lead to further positive revisions of the estimates, above all if the macroeconomic context does not disappoint.On the inflation front the forecasts for the developed countries are for a recovery of consumer prices, above all in cases where the output gap is closer to zero, as in the USA, where the growth of salaries and the rising oil price could lead to a higher-than-expected rise. In most of the emerging countries, instead, inflation should be down slightly or stable, thanks to higher levels of unused capacity, although in some cases, as in China, increases are being seen.In terms of market interest rates, the current yields on government bonds are not very consistent with the estimated economic scenario so it is possible that they will rise, although the size of the change could be limited owing to the still significant presence of the Central Banks on the secondary market which will boost demand for instruments still capable of offering returns. In the light of the current QE programmes, in fact, the Central Banks will still be net purchasers on the secondary market for the whole of 2018, while they will change to being net sellers in 2019. The gradual reduction of purchases by the Central Banks could however lead to the Term Premium rising again and favour a partial steepening of the interest rate curves. Monetary policies will remain differentiated geographically, with the FED tending to be restrictive in terms of interest rates and budget assets, although with graduality as long as there are no surprises on inflation, while in all the emerging countries they will remain expansive. In Europe the ECB should proceed gradually to reduce securities purchases, while in Japan the latest statements of the governor Kuroda seemed to indicate less conviction on the usefulness of the existing aggressive manoeuvres so surprises in a less expansive direction cannot be excluded a priori.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


On the subject of systemic risk the political debate in the USA remains lively despite the approval of the tax reform and, as the mid-term election of next autumn comes closer, it will be possible to see a gradual intensification of political discussions. The geopolitical tensions between the USA and North Korea seem to benefit from a recent relaxation, but the event that will catalyse attention in the first half of the year is the Italian general election on 4 March: the risk of an exit of Italy from the Euro is not high, but it will be difficult for a government coalition in favour of structural reforms to come out of the ballot box.The absolute measurements of the main equity indices are more or less in line with their historical averages, except for some cases where higher figures can be seen, as is the case in the United States, driven by the notable weight of the technological sector. However, observations at the level of indices do not take into account the still significant differences among the various segments and sectors and, in any case, no particular excesses are evident. From a geographical point of view, the European and Japanese markets maintain quite a markdown compared to the other markets, as also some emerging countries, although these differences tend to reflect different levels of profitability. On the equity markets and on the overall economic scenario there is quiet confidence, although at the moment no extreme figures can be seen. On corporate bonds the yields remain positive relative to government bonds in terms of extra yield, although it remains difficult to imagine a further compression of spreads, already towards the bottom of the historical ranges. There remains reasonable value on the segment of subordinated bonds of the financial sector thanks to the gradual improvement of capital ratios achieved up to now and required by the legislation over the next few years. The yields offered by the bonds of emerging countries remain positive, above all on issues in local currencies, also in the light of the gradual improvements of the fundamentals.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


MAIN CONSOLIDATED BANCA INTERMOBILIARE DATA

SUMMARY DATA

RECLASSIFIED ECONOMIC VALUES (Thousands of €.)2

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Net interest income 11,783 21,834 (10,051) -46.0% 21,832

Operating income 86,299 91,948 (5,649) -6.1% 91,215

Operating profit (loss) 1,763 2,255 (492) -21.8% 1,967

Profit (loss) before non-recurring components (44,546) (105,564) 61,018 57.8% (105,852)

Profit (loss) before tax (46,400) (108,321) 61,921 57.2% (108,609)

Consolidated profit (loss) for the period (49,297) (93,371) 44,074 47.2% (93,371)

ASSETS AND OPERATING VALUES (in €/million)31.12.2017 31.12.2016 Change Change

%

Total deposits 7,424 9,372 (1,948) -20.8%

Direct deposits 931 1,450 (519) -35.8%

Indirect deposits 6,493 7,922 (1,429) -18.0%

- of which assets under administration 2,241 2,708 (467) -17.2%

- of which client assets under management 4,101 5,125 (1,024) -20.0%

- of which fiduciary assets deposited externally 150 89 61 68.5%

Loans to clients 632 843 (212) -25.1%

- of which performing loans to clients 344 508 (164) -32.2%

- of which net impaired assets 245 296 (50) -17.0%

Total Assets 1,599 2,599 (1,000) -38.5%

CAPITAL (in €/million) AND CAPITAL RATIOS UNDER BASEL III3

31.12.2017 31.12.2016 Change Change%

Consolidated equity 192.3 237.2 (45.0) -19.0%

Own Funds 121.6 159.8 (38.2) -23.9%

Surplus of Own Funds 35.3 54.1 (18.8) -34.8%

Capital conservation buffer 13.5 8.3 5.2 62.7%

Total RWAs 1,155.9 1,411.7 (255.8) -18.1%

CET1 - Fully Phased 10.22% 11.52% (1.31) N/a

CET1 - Phased in 10.44% 11.13% (0.69) N/a

T1 - Additional Tier 1 Capital 10.44% 11.13% (0.69) N/a

TCR - Total Capital Ratio 10.52% 11.32% (0.80) N/a

Index of capitalisation 1.32 1.41 (0.10) -7.0%

2 The economic figures have been reclassified compared to the income statement required by Bank of Italy Circular no. 262 of 2005 as currently applicable so as to achieve better representation of the results. Please see the notes beneath the table of the reclassified consolidated income statement. The comparative figure at 31.12.2016 was restated in the “pro forma” column in order to take into account the line-by-line recognition of the accounting balances of the subsidiary Bim Insurance Brokers no longer considered a non-current asset held for sale.

3 The CET1 – Fully Phased - was calculated not applying the exceptions deriving from the transitional provisions provided for in Bank of Italy Circular no. 285.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


PROFITABILITY INDICES31.12.2017 31.12.2016

pro-formaChange

points %31.12.2016

Net interest income/Net operating income 13.7% 23.7% -10.1 23.9%

Net fees and commissions/Net operating income 67.8% 66.1% 1.7 65.9%

Operating profit (loss)/Net operating income 2.0% 2.5% -0.4 2.2%

Cost/Income ratio (including other operating charges/income) 98.0% 97.5% 0.4 97.8%

Net profit (loss)/Average net equity (ROE) -23.0% -32.7% 9.7 -32.7%

Net profit (loss)/Total Assets (ROA) -2.3% -3.2% 0.9 -3.2%

CREDIT QUALITY RATIOS31.12.2017 31.12.2016 Change

points %

Performing exposures/Loans to clients 54.5% 60.2% (5.7)

Net impaired assets/Loans to clients 38.8% 35.1% 3.7

- of which Net non-performing loans/Loans to clients 23.8% 19.0% 4.8

- of which net probable defaults/Loans to clients 14.7% 15.4% (0.7)

Coverage rate of performing Exposures 0.7% 0.6% 0.1

Coverage rate of impaired Exposures 60.6% 53.1% 7.5

- of which due to non-performing loans 68.7% 64.1% 4.6

- of which due to probable defaults 34.2% 27.0% 7.2

OPERATING STRUCTURE31.12.2017 31.12.2016

pro-formaChange absolute

Change%

Number of employees and collaborators (total) 536 594 (58) -9.8%

- of which Private Bankers 149 164 (15) -9.1%

Number of Banca Intermobiliare branches 28 29 (1) -3.4%

INDICATORI PER DIPENDENTE (Valori espressi in €/Migl.)31.12.2017 31.12.2016

pro-formaChange absolute

Change%

Net Operating Income/Average No. of staff 189 186 3 1.6%

Personnel expenses/Average No. of employees 93 87 5 5.7%

Total assets/Total No. of staff 2,983 4,375 (1,392) -31.8%


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


31.12.2017 31.12.2016 Absolute change

Change%

No. of outstanding ordinary shares (excluding treasury shares) 149,632,100 149,627,772 4,328 -

Unit equity on shares outstanding 1.29 1.59 (0.30) -18.9%

Price per ordinary share during the year

Minimum 0.45 1.00 (0.55) -55.2%

Average 1.19 1.60 (0.41) -25.7%

Maximum 1.52 2.24 (0.72) -32.1%

Average stock exchange capitalisation 177 239 (62.00) -25.9%

Price/Book Value 0.92 1.01 (0.09) -8.6%

Basic EPS – EUR (0.33) (0.62) 0.29 -47.20%

Diluted EPS – EUR (0.33) (0.62) 0.29 -47.20%


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


RECLASSIFIED CONSOLIDATED FINANCIAL STATEMENTS

RECLASSIFIED CONSOLIDATED INCOME STATEMENT4

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Absolute Change

Change%

31.12.2016

Interest income and similar items 25,516 42,414 (16,898) -39.8% 42,411

Interest expense and similar items (13,733) (20,580) 6,847 33.3% (20,579)

Net interest income 11,783 21,834 (10,051) -46.0% 21,832

Fee and commission income 78,266 82,044 (3,778) -4.6% 81,050

Fee and commission expenses (19,719) (21,245) 1,526 7.2% (20,982)

Net fee and commission income 58,547 60,799 (2,252) -3.7% 60,068

Dividends 421 1,617 (1,196) -74.0% 1,617

Net gains (losses) on trading instruments 6,207 4,493 1,714 38.1% 4,493

Transactions on AFS securities and financial liabilities 9,377 3,382 5,995 177.3% 3,382

Net gains (losses) on hedging instruments (36) (177) 141 N/a (177)

Net gains (losses) on financial operations 15,969 9,315 6,654 71.4% 9,315

Operating income 86,299 91,948 (5,649) -6.1% 91,215

Personnel expenses (44,364) (44,334) (30) -0.1% (44,008)

Other administrative expenses (40,285) (41,280) 995 2.4% (41,148)

Operating amortisation and depreciation (2,521) (2,689) 168 6.2% (2,676)

Other operating expenses (income) 2,634 (1,390) 4,024 N/a (1,416)

Operating costs (84,536) (89,693) 5,157 5.7% (89,248)

Operating profit (loss) 1,763 2,255 (492) -21.8% 1,967

Write-downs of loans (45,643) (91,619) 45,976 50.2% (91,619)

Net provisions for risks and charges (2,145) (17,680) 15,535 87.9% (17,680)

Profit (Loss) of investee companies measured at equity 1,479 1,480 (1) -0.1% 1,480

Profit (loss) before non-recurring components (44,546) (105,564) 61,018 57.8% (105,852)

Write-downs on financial instruments (1,854) (2,757) 903 32.8% (2,757)

Profit (loss) before tax (46,400) (108,321) 61,921 57.2% (108,609)

Income tax for the period (1,176) 17,402 (18,578) N/a 17,499

Profit of continuing operations after tax (47,576) (90,919) 43,343 47.7% (91,110)

Profit (Loss) of assets held for sale, net of tax (1,651) (2,359) 708 30.0% (2,168)

Consolidated profit (loss) (49,227) (93,278) 44,051 47.2% (93,278)

Profit (Loss) pertaining to non-controlling interests (70) (93) 23 24.7% (93)

Consolidated Profit (Loss) of group (49,297) (93,371) 44,074 47.2% (93,371)

4 In order to provide a clearer representation of the results, the reclassified economic results differ from the Bank of Italy formats with the following reclassifications: the costs relating to the variable component of remuneration of the private bankers who are employees and other minor costs were reclassified from “Personnel expenses” to “Fee and commission expenses” (for €/thou 538 at 31.12.2017 and for €/thou 1,354 at 31.12.2016). The comparative figure at 31.12.2016 was restated in the “pro forma” column in order to take into account the line-by-line recognition of the accounting balances of the subsidiary Bim Insurance Brokers no longer considered a non-current asset held for sale.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


RECLASSIFIED CONSOLIDATED BALANCE SHEET5

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Absolute Change

Change%

31.12.2016

Cash 1,689 1,670 19 1.1% 1,669

Loans:

- Receivables from clients for performing loans 344,174 508,194 (164,020) -32.3% 507,719

- Receivables from clients: other 287,406 335,366 (47,960) -14.3% 335,366

- Loans to banks 108,090 371,245 (263,155) -70.9% 371,245

Financial assets:

- Held for trading 44,621 97,374 (52,753) -54.2% 97,374

- Available for sale 414,540 835,237 (420,697) -50.4% 834,780

- Hedging derivatives 1,607 1,327 280 21.1% 1,327

Fixed assets:

- Equity investments 14,365 14,020 345 2.5% 14,020

- Intangible and tangible 95,892 97,809 (1,917) -2.0% 97,779

- Goodwill 49,446 49,446 - - 49,446

Property held for sale 21,900 21,900 - - 21,900

Non-current assets held for sale 21,357 71,902 (50,545) -70.3% 73,480

Other asset items 193,931 193,318 613 0.3% 193,229

Total Assets 1,599,018 2,598,808 (999,790) -38.5% 2,599,334

Payables:

- Due to banks 183,232 509,294 (326,062) -64.0% 509,294

- Due to clients 985,633 1,285,540 (299,907) -23.3% 1,286,040

Outstanding securities 60,686 304,978 (244,292) -80.1% 304,978

Financial liabilities:

- Held for trading 39,858 67,969 (28,111) -41.4% 67,969

- Hedging derivatives 8,906 14,758 (5,852) -39.7% 14,758

Specific provisions 27,902 30,791 (2,889) -9.4% 30,744

Non-current liabilities held for sale 7,856 38,102 (30,246) -79.4% 38,914

Other liability items 92,641 110,176 (17,535) -15.9% 109,437

Shareholders’ equity 192,304 237,200 (44,896) -18.9% 237,200

Total liabilities 1,599,018 2,598,808 (999,790) -38.5% 2,599,334

5 In order to provide a better representation of operations, the reclassified balance sheet details differ from the Bank of Italy formats for the reclassification of assets arising from recovery claims from item 160 “Other assets” to the item “Property held for sale” (€/thou 21,900 at 31.12.2017 and at 31.12.2016). The comparative figure at 31.12.2016 was restated in the “pro forma” column in order to take into account the line-by-line recognition of the accounting balances of the subsidiary Bim Insurance Brokers no longer considered a non-current asset held for sale.

The entry “Other asset items” includes balance sheet items 130 and 150 of Bank of Italy Circ. no. 262 net of the properties mentioned above. The item “Specific provisions” includes balance sheet items 110 and 120 of Bank of Italy Circ. no. 262. “Other liability items” includes balance sheet items 80 and 100 of Bank of Italy Circ. no. 262.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


QUARTERLY CONSOLIDATED/RECLASSIFIED INCOME STATEMENT DATA(Thousands of €)

2017 2016

4Q17 3Q17 2Q17 1Q17 4Q16pro-forma

3Q16pro-forma

2Q16 1Q16

Interest income and similar items 4,543 4,773 6,669 9,531 7,367 11,965 12,886 10,196

Interest expense and similar items (1,867) (1,824) (4,130) (5,912) (2,926) (5,874) (6,980) (4,800)

Net interest income 2,676 2,949 2,539 3,619 4,441 6,091 5,906 5,396

Fee and commission income 23,194 21,592 16,608 16,872 22,813 18,458 19,938 20,835

Fee and commission expenses (5,671) (4,598) (4,863) (4,587) (5,237) (4,672) (5,411) (5,925)

Net fee and commission income 17,523 16,994 11,745 12,285 17,576 13,786 14,527 14,910

Dividends 68 41 294 18 122 814 658 23

Net gains (losses) on trading instruments 706 749 3,025 1,727 1,648 246 1,908 691

Transactions on AFS securitiesand financial liabilities 1,071 (642) 4,698 4,250 697 141 1,723 821

Net gains (losses) on hedging instruments (337) 175 50 76 (37) 265 (190) (215)

Net gains (losses) on financial operations 1,508 323 8,067 6,071 2,430 1,466 4,099 1,320

Operating income 21,707 20,266 22,351 21,975 24,447 21,343 24,532 21,626

Personnel expenses (13,037) (9,559) (11,046) (10,722) (11,052) (9,919) (11,790) (11,573)

Other administrative expenses (9,907) (11,298) (8,841) (10,239) (12,258) (8,970) (10,417) (9,635)

Operating amortisation and depreciation (618) (632) (635) (636) (676) (675) (624) (714)

Other operating expenses (income) 1,213 (92) 1,100 413 (1,665) 414 (451) 312

Operating costs (22,349) (21,581) (19,422) (21,184) (25,651) (19,150) (23,282) (21,610)

Operating profit (loss) (642) (1,315) 2,929 791 (1,204) 2,193 1,250 16

Write-downs of loans (18,301) (3,301) (22,665) (1,376) (64,970) (13,786) (11,022) (1,841)

Net provisions for risks and charges 774 (783) (2,135) (1) (12,713) (1,240) (3,802) 75

Net profit (loss) of subsidiaries carried at equity 385 241 509 344 519 179 457 325

Profit (loss) before non-recurring components (17,784) (5,158) (21,362) (242) (78,368) (12,654) (13,117) (1,425)

Write-downs on financial instruments (249) 73 (473) (1,205) 284 (749) (1,513) (779)

Profit (loss) before tax (18,033) (5,085) (21,835) (1,447) (78,084) (13,403) (14,630) (2,204)

Income tax for the period (495) (888) 94 113 11,601 2,988 2,788 25

Profit (Loss) of current operations after tax (18,528) (5,973) (21,741) (1,334) (66,483) (10,415) (11,842) (2,179)

Profit (Loss) of assets held for sale, net of tax 1,030 (863) (1,097) (721) (799) (889) (529) (142)

Consolidated profit (loss) (17,498) (6,836) (22,838) (2,055) (67,282) (11,304) (12,371) (2,321)

Loss attributable to non-controlling interests (58) (48) 14 22 (77) (47) 14 17

Consolidated Profit (Loss) of group (17,556) (6,884) (22,824) (2,033) (67,359) (11,351) (12,357) (2,304)


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


QUARTERLY CONSOLIDATED/RECLASSIFIED BALANCE SHEET DATA(Thousands of €)

Financial Year 2017 Financial Year 2016

31.12 30.09 30.06 31.03 31.12 30.09 30.06 31.03

Cash 1,689 1,628 1,624 1,474 1,670 1,618 1,758 1,815

Loans:

- Receivables from clients for performing loans 344,174 371,886 402,613 468,328 508,194 621,374 645,772 708,324

- Receivables from clients: other 287,406 310,774 319,325 325,616 335,366 370,165 404,762 392,078

- Loans to banks 108,090 103,866 144,371 141,738 371,245 184,717 215,491 199,986

Financial assets:

- Held for trading 44,621 103,731 153,428 113,894 97,374 282,577 288,922 287,566

- Available for sale 414,540 456,387 475,827 755,947 835,237 934,531 960,086 977,473

- Hedging derivatives 1,607 1,630 2,044 2,140 1,327 242 248 87

Fixed assets:

- Equity investments 14,365 13,938 13,677 14,294 14,020 13,755 13,491 14,162

- Intangible and tangible 95,892 96,327 96,907 97,373 97,809 98,567 99,027 99,172

- Goodwill 49,446 49,446 49,446 49,446 49,446 49,446 49,446 49,446

Property held for sale 21,900 21,900 21,900 21,900 21,900 21,900 21,900 21,900

Non-current assets held for sale 21,357 67,330 63,621 69,268 71,902 102,988 126,241 108,752

Other asset items 193,931 178,836 190,481 194,757 193,318 183,121 201,661 183,915

Total Assets 1,599,018 1,777,679 1,935,264 2,256,175 2,598,808 2,865,001 3,028,805 3,044,676

Payables:

- Due to banks 183,232 246,036 302,786 331,265 509,294 651,899 760,671 457,943

- Due to clients 985,633 965,387 1,010,264 1,177,809 1,286,040 1,299,171 1,297,321 1,581,840

Outstanding securities 60,686 132,809 174,516 246,675 304,978 336,488 350,235 378,277


- Held for trading 39,858 79,151 78,314 81,298 67,969 118,177 123,089 142,412

- Hedging derivatives 8,906 8,677 7,254 15,807 14,758 16,872 12,119 13,447

Specific provisions 27,902 30,058 32,332 30,527 30,791 20,993 19,786 15,731

Non-current liabilities held for sale 7,856 34,525 28,489 31,536 38,102 42,686 64,128 46,515

Other liability items 92,641 72,355 87,462 109,444 110,176 73,745 86,452 80,804

Shareholders’ equity 192,304 208,681 213,847 231,814 237,200 304,970 314,366 327,707

Total liabilities 1,599,018 1,777,679 1,935,264 2,256,175 2,598,808 2,865,001 3,028,805 3,044,676


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


SUMMARY OF OPERATING RESULTS

For Banca Intermobiliare financial year 2017 was greatly affected by the situation of the majority shareholder Veneto Banca, which led last June to the process of compulsory administrative liquidation, with a consequent impact on the operating and profit trends. The commitment of the new Board of Directors, of the renewed management and of the entire corporate structure however made it possible to limit the negative effects of this situation, implementing the guidelines of the strategic plan which provides for the relaunch of the Bank. At the same time the authorisation procedure with the Bank of Italy is proceeding for Attestor Capital LLC which on 24 October 2017 signed with Veneto Banca CAL a contract to purchase BIM. Among the documentation provided in the authorisation procedure, the buyer presented a business plan for BIM up to 2021 which, after completion of the takeover bid provides for a complex reorganisation, in 2018, including a further manoeuvre for the de-risking of BIM’s assets through deconsolidation of the entire portfolio of impaired assets and a capital strengthening operation of €/Mln 121. In this context, Banca Intermobiliare carried out a series of managerial actions which made it possible to limit the loss for the period 2017. The loss of €/Mln 49.3, was better than that of 2016 (+€/Mln 93.4), and in line with what was provided for in the 2017-2021 business plan.Client Assets Under Management amounted to €/Bln 7.4 net of duplications and recorded a reduction of 20.8% yoy (-18.4% yoy net of Bim Suisse deposits). Direct deposits amounted to €/Bln 0.9 (-35.8% yoy), while indirect deposits came out at €/Bln 6.5 (-18% yoy), of which invested for €/Bln 4.1 in managed products and €/Bln 2.2 in administered products. As regards receivables, performing loans to clients, of €/Mln 344.2 (€/Mln 508.2 at 31.12.2016), were further reduced by 32.3%, implementing the business plan which provides for gradual disposal of loan exposures to the Corporate segment. The exposure of net impaired assets, of €Mln 245.4, was down 17% compared to 31.12.2016. The coverage rate of “impaired assets” rose to 60.6% (53.1% at 31.12.2016) higher than the average figure for the industry (47.5% referred to the category of “Non-Significant Banks”).As regards consolidated prudential supervision, it is confirmed that there is adequate capital strength in relation to the criteria set out in the Basel III agreement. Consolidated Own Funds are €/Mln 121.6 (€/Mln 159.8 at 31.12.2016), with a surplus of Own Funds on the risk-weighted assets of €/Mln 35.3 (€/Mln 54.1 at 31.12.2016). The Capital conservation buffer of €/Mln 13.5 was up compared to €/Mln 8.3 at the end of 2016. Significant reduction of RWAs (€/Mln 1,156 against €/Mln 1,412 -18.1% yoy) as a consequence of implementation of the de-risking policy resolved by the BoD by means of reducing the non-core loan portfolio, securities recognised in the “banking book” and sale of the equity investment in Bim Suisse. The consolidated regulatory capital ratios at 31.12.2017 (CET1 Phased in 10.44%, T1 10.44% and TCR 10.52%) are higher than the minimum levels required by the Basel III accord. Finally, it should be noted that the Fully Phased as at 31.12.2017, estimated by applying the parameters that will be fully in force from 1 January 2019, stands at 10.22%.Capital resources – adequate for the current technical coordinates - are destined, according to the statements of the Prospective Buyer, to be increased significantly (€/Mln 121), in order to give the Bank what it needs to support a significant relaunch.As regards equity investments, recognised as asset disposal groups, in October 2017, as all the conditions precedent had been fulfilled, the sale of Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA to Banca Zarattini & Co SA was completed at a final price of Chf/Mln 39.4, determining a positive result in the consolidated income statement of €/Mln 0.7. In the context of the above operation, as provided for, Banca Intermobiliare purchased from BIM Suisse the entire share capital of Patio Lugano S.A. for Chf/Mln 15.05.

Regarding the consolidated economic results for the year, the following information is provided.Net interest income amounted to €/Mln 11.8 with a decrease of 46% YOY (€/Mln 21.8 at 31.12.2016), as a result both of the de-risking strategy, which involves a gradual reduction of loan exposures to corporate clients and of the securities portfolio, and of reinvestment in securities with shorter duration. Net fee and commission income of the period amounted to €/Mln 58.5, a decrease of 3.7%, yoy (€/Mln 60.8 at 31.12.2016), despite a drop in AUM of 20.8%. Fees and commissions related to Asset Management grew by 5.1%, as a consequence of the good performance fees, the higher proportion of Asset Management out of total deposits and the improved profitability of the assets, while fees deriving from the Administered segment fell (-34.7%).The result of financial operations came out at €/Mln 16 compared to €/Mln 9.3 recorded in the previous year. The increase was due to the profits made on sales of securities recognised among financial assets available for sale, in the context of the aforementioned “derisking” strategy. Operations on financial instruments recognised in the banking book contributed €/Mln 9.4 (€/Mln 3.4 at 31.12.2016).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


The operating income amounted to €/Mln 86.3, down compared to 31.12.2016 (-6.1% yoy). The excellent performance obtained by management of the proprietary portfolio almost totally offset both the drop in net interest income, and the slight reduction in net fees and commissions.Operating costs amounting to €/Mln 84.5 (€/Mln 89.7 at 31.12.2016) were down by 5.7% yoy.Net of extraordinary expenses of approximately €/Mln 4.4 due to projects for the re-internalisation of outsourced activities, for reorganisation of the Bank and activities that led to signing of the BIM sale contract, operating costs would have recorded a significant reduction of 10.7%. Personnel expenses amounted to €/Mln 44.4 at 31.12.2017, and were in line with 31.12.2016. Other administrative expenses, including the extraordinary expenses mentioned above, amounted to €/Mln 40.3, down by 2.4% compared to 31.12.2016. Net of extraordinary expenses, the yoy comparison shows expenses down 13.1%. The contribution of other operating expenses and income was a positive €/Mln 2.6 (a negative €/Mln 1.4 at 31.12.2016).

The operating profit came out at €/Mln 1.8 (€/Mln 2.3 at 31.12.2016), a decrease of 21.8% compared to 31.12.2016. Net of the above extraordinary expenses, the operating profit would have been €/Mln 6.2, a sharp increase compared to 31.12.2016.Net write-downs on loans amounted to €/Mln 45.6, a decrease of 50.2% compared to the write-downs made at 31.12.2016 (€/Mln 91.6). The provisions set aside during the period were made in keeping with the current policies, which provide for periodic revisions of estimates regarding foreseeable losses, with reference both to the economic and financial situation of clients, and to the evolution of the value of the guarantees received.There was a loss before tax of €/Mln 46.4 (a loss of €/Mln 108.3 at 31.12.2016) after performing value adjustments on loans of €/Mln 45.6 (€/Mln 91.6 at 31.12.2016), allocations to provisions for risks of €/Mln 2.1 (€/Mln 17.7 at 31.12.2016) and impairment on financial instruments of €/Mln 1.9 (€/Mln 2.8 at 31.12.2016). There was a loss on continuing operations after tax at 31.12.2017 of €/Mln 47.6 (loss of €/Mln 90.9 at 31.12.2016). The current and deferred tax burden was a negative €/Mln 1.2 (a positive €/Mln 17.4 at 31.12.2016). The probability test performed on deferred taxation confirmed the recoverability of the deferred tax assets recognised in the previous year, while no deferred tax assets were set aside on the tax losses of financial year 2017.The Group’s consolidated loss, therefore, came out at €/Mln 49.3 (loss of €/Mln 93.4 at 31.12.2016) after determining the losses of assets held for sale, after tax, which were €/Mln 1.7 (result of the sale of Bim Suisse and operating loss of the subsidiary Patio Lugano) and a loss pertaining to non-controlling interests of €/Mln 0.070.

Lastly, if we look closely at the reclassified income statement for each company at the date of 31.12.2017, we can note the results of the consolidating company Banca Intermobiliare and the subsidiary Symphonia SGR.

Banca Intermobiliare S.p.A. recorded a net operating income of €/Mln 67.9 (€/Mln 83.2 at 31.12.2016), an operating loss of €/Mln 4.5 (a positive €/Mln 6 as at 31.12.2016), and a loss for the year of €/Mln 43.1 (loss of €/Mln 83.1 at 31.12.2016). The negative result for the financial year was determined mainly by significant adjustments, in particular from net write-downs on loans of €/Mln 45.5 (€/Mln 91.6 as at 31.12.2016), and allocations to provisions for risks and charges of €/thou 2 (€/Mln 17.9 as at 31.12.2016) and impairment on financial instruments of the “banking book” of €/Mln .9 (€/Mln 2.8 at 31.12.2016). As regards operating income, it was negatively affected by the generalised decline in interest rates which lowered net interest income (-45.2% yoy) and by the decrease in net fees and commissions (-18.6% yoy) owing to the decrease in assets managed (-17.9% yoy), despite the fact that a good profit was recorded on financial operations in the year (+10.6%) and operating costs fell significantly (-6.2% yoy). Symphonia SGR S.p.A. closed 2016 with a profit for the year of €/Mln 9.5 at 31.12.2017, an increase compared to €/Mln 6.8 at 31.12.2016. Net fee and commission income amounted to €/Mln 26 up by 24.2% compared to the previous year (€/Mln 20.9 at 31.12.2016). Operating costs amounted to €/Mln 12.4 at 31.12.2017 (€/Mln 11.3 at 31.12.2016, -10.1% yoy). At 31.12.2017 the assets managed by Symphonia, including those received under delegated management, amounted to €/Bln 2.9, and were down compared to €/Bln 3.8 at 31.12.2016 due to outflows of managed assets of clients in part offset by the positive market effect.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


2017-2021 BUSINESS PLAN

On 18 July 2017 the Board of Directors of BIM approved the bank’s Business Plan, prepared according to a “stand-alone” logic, assuming that a new shareholder will acquire, very soon, in the context of the liquidation process, the majority stake held by Veneto Banca in C.A.L. The Business Plan was prepared in substantial consistency with the strategic plan guidelines (approved by the Board of Directors of BIM on 10 February 2017), which, as is known, considered – in the light of the information available at the time – a presumable exit of BIM from the perimeter of Veneto Banca before the end of summer 2017; this changein governance had been considered decisive to enable a credible autonomous development strategy in private banking, which would take advantage of an effective retention of the network and the clients and a significant recruitment action.Subsequently the deterioration of Veneto Banca’s situation and the related news in the press modified the context, delaying in practice the process of selling BIM. The Veneto Banca liquidation process launched on 25 June 2017 and the consequent acceleration of the process of selling the equity investment in BIM - which led on 24 October 2017 to the signing of a sale contract (albeit conditional on the obtainment of the applicable regulatory authorisations) - represent today a turning point for the future of the company.In July therefore, the Board of Directors made the decision to complete the process launched in the first quarter of 2017 with the definition of the “Business Plan” for an autonomous BIM, independent and ready for a pathway of relaunching and growth, accompanied by a restructuring process, already well under way, which has already seen the renewal of a significant part of the corporate Top Management.The Board of Directors of BIM has confirmed its conviction that there is in the Italian market room for growth for a high-grade Private Banking service, for clients with assets of more than €/Mln 1, who today find a weak specialised offer, since the Italian market is mainly focused on “Mass Affluent” clients (with average customer assets of around €/Mln 0.3). This market segment can evidently be served by a limited number of highly-qualified private bankers, capable of guaranteeing a really tailor-made service dedicated to clients with considerable assets and advanced financial consultancy needs. Even after the strong growth in recent years of Wealth Management, the current market, on the other hand, as stated in recent independent analyses, sees a preponderance of often standardised financial services, with clients sometimes being charged very high costs. BIM believes that the adoption of MiFid2 in January 2018 could be extremely favourable for its project of high-end Private Banking, because it will provide the client with a clear explanation of all the costs actually paid, and because it will lead to service models with a high propensity towards the provision of advice at the expense of those based on selling products with high profitability for the distributors.BIM is already in a very favourable position as regards this scenario, with a network almost entirelyfree from commission rebates and with a pricing system that is substantially already aligned with European Private Banking best practices, to which the Italian market will also align itself soon.The decision – already made and implemented - to stop lending to corporate clients was confirmed and extendedfor the whole horizon of the plan. This business is incompatible with Private Banking and in the past has led to the accumulation of impaired loans which have over time penalised BIM.It was therefore decided that BIM will only provide “Lombard” loans to Private clients, with a rigorous and precise process of assessment of the creditworthiness regarding such loans, while the existing portfolio of corporate loans will be managed with a view to gradual reduction and “run-off”.

The Board of Directors has also identified a new policy for managing the Bank’s capital geared to a “Capital Light” model, which allows a reduction in the risks that may be incurred by thecapital of a private bank. The “Capital Light” bank model is expressed through:• reduction of RWAs pursued through among other things a process of selling and realisation of non-strategic assets,

which will involve the entire property portfolio and the equity investment in BIM Suisse (sale made on 18.10.2017 after the fulfilment of certain conditions precedent);

• low Market Risk, with a securities portfolio of a limited size and mitigation of exposure to country risk pursued through diversification of issuers;

• low Operational Risk, with a service model compliant with the regulations and particularly attentive to ex ante management;

• low Credit Risk, with a portfolio concentrated exclusively on “Lombard” exposures.

This model aims to be highly innovative also with respect to Italian private banks, which often have substantial securities portfolios that are mainly exposed to government bonds without any diversification of the issuing countries.Therefore, given the highly turbulent moment in financial markets and geopolitics, BIM intends to present itself as a real “safe haven” in the Italian panorama, where savers can invest their savings with absolute peace of mind, where conflicts of interest are completely absent and the costs are in line with best practices.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


In this context the bank also wants to achieve a high level of efficiency in its business model, quickly recovering from its current Cost Income Ratio towards best practice levels This result may be achieved either by simplifying and strongly innovating its operational and IT processes, and consequently realising significant efficiencies and significantly helping the assets under management to grow. In the plan period a first stage is provided for - expected to end in 2018 - characterised by implementation of a number of restructuring initiatives aimed at reducing overheads, and a subsequent period concentrated mainly on development.The Plan, in fact, indicates for 2017 and 2018 numerous actions for restructuring, investment for innovation and making the business platform more efficient, made possible by, among other things, the renewal of the management team carried out in this financial year.The growth of assets under management will instead be possible through the development of new clients and through the ability to attract professionals who today seek an environment where individual clients can be treated with great personal attention and be totally disconnected from budget policies which generally direct choices towards products with higher profit margins.The main KPIs that today may be assumed for the end of 2021 are entirely consistent with the pattern of a high-end, sophisticated and exclusive Private Bank, with a growing network of staff compared to the current situation, but where it is always possible to have a direct channel between Top Management and the individual Private Banker.

Main drivers:• evolution of deposits: the addition to the network of more than 130 bankers is planned over the horizon of the plan;• asset mix with orientation to conserving and increasing the capital;• new loan disbursements limited to a total of €/Mln 365 over the horizon of the plan, of which only 10% planned

in 2018, with a gradual increase in subsequent years;• reduction in operating expenses thanks to the definition of a new structure and migration to a different platform

on outsourced IT systems; main savings areas identified by targeted actions on rentals, infoproviders, advice;• actions on personnel expenses thanks to the adoption of new computerised systems and processes;• RWAs down by €/Mln 1,412 in 2016 to €/Mln 945 in 2021: in this context sales have an impact of more than

€/Mln 150, while the remaining reduction is achieved thanks to derisking actions;• an increasing CET1 Ratio: 11.9% at 2019 and 18.6% at 2021.

The main KPIs provide for the following targets for 2021:• AUM of about €/Bln 15 (€/Bln 7.4 at 31.12.2017);• a network of 296 Private Bankers (149 at 31.12.2017);• a ratio between net operating income and deposits of 95bps (103 bps at 31.12.2017);• RoA of 125bps (compared to 94 bps at 31.12.2017);• a Cost/Income Ratio in recovery from the current 98% to about 52%, taking advantage of the growth in assets

and greater efficiency of the business model;• a Costs/AUM ratio down from the current 101 bps to about 49bps;• a PBT Margin of 41bps.

The business plan, approved by the Board of Directors of Banca Intermobiliare on 18 July 2017, did not take into account, nor could it, either any contribution of capital from its shareholders or transaction to sell impaired receivables. In the light of the intention of the vehicle company Trinity Investments to proceed with a capital increase of €/Mln 121 and with the sale of the NPL (Non-Performing Loan) portfolio, the KPIs presented above will be the subject of future revisions.

With reference to the impaired receivables portfolio, Banca Intermobiliare has confirmed its intention to proceed as quickly as possible with the derisking given the intention expressed by the prospective buyer to proceed, after conclusion of the sale contract conditional on obtaining the necessary authorisations and subsequently on completion of the takeover bid, with the securitisation of the aforesaid portfolio. Therefore, the Bank, considering also the regulatory developments associated with the transitory management of the effects deriving from first adoption of the accounting standard IFRS9 (Regulation EU no. 575/2013), decided to take into consideration the possibility of bringing forward the said derisking also through sale transactions and on 1 February 2018 it communicated to the Bank of Italy its intention to accept the transitory rules.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


BUSINESS PLAN IMPLEMENTATION STATUS

Following up on the disclosure published in the previous financial reports, the stage of progress, at the publication date of the Consolidated Financial Statements at 31.12.2017 is presented below, also taking into account the significant events after the reporting date and the main initiatives planned: a) renewal of the first managerial line of Banca Intermobiliare (selection of highly qualified professional figures

to replace the positions of General Manager, Managers of Control Departments - Internal Audit, Compliance, Risk Management - of the Legal Counsel, as well as the Managers of the Sales, Marketing, Finance and Human Resources Departments), and continuation of the activities of recruiting private bankers. The resources recruited come from leading companies in the Private Banking and Wealth Management sector;

b) completion of the actions to renew the governance of the subsidiaries: in Symphonia SGR defining the new governance structure with renewal of the Board of Directors and appointment of the new Chief Executive Officer; in Bim Fiduciaria appointing the new Chief Executive Officer and launching a process of rationalising and developing the services offered and the organisational activities;

c) establishment of a new Wealth Management unit with the role of directing the management of complex assets, focusing on “Private & High Net Worth Individual” (HNWI) clients, leveraging the “multi-family office” activities offered by BIM Fiduciaria and BIM’s already consolidated expertise in the field of Corporate Finance activities (namely Capital Markets and M&A) necessary for managing the complex stages of generational turnover and corporate discontinuity;

d) sale, on 18 October 2017, as part of the focus on the core business and the enhancement of strategic equity investments, of the 100% equity interest in BIM Suisse to Banca Zarattini & Co SA; with the latter strategic collaboration of a commercial nature was also agreed in order to expand the solutions available to clients;

e) Continuation of the activities aimed at reducing credit and counterparty risk, by disbursing only “Lombard loans” to borrowers with high creditworthiness; in addition the process of re-internalising the management of NPLs was completed, facilitating more active management of their recovery. The Bank, in addition, launched a process of updating its lending model that was completed, in the early months of 2018, with approval of the new lending policies and their subsequent expression in parameters and assessment models updated and adopted in preparing the annual financial statements at 31.12.2017;

f) following decision no. ECB/SSM/2017 - 49300W9STRUCJ2DLU64/31, of 19 July 2017 with which the ECB revoked the licence of the former Parent Company Veneto Banca S.p.A., BIM, in virtue of the equity investments held, assumed the characteristics required for acquiring the qualification of Parent Company. On 3 November 2017, the Bank of Italy communicated the registration of Banca Intermobiliare as Parent Company of the Banca Intermobiliare Banking Group with effects running from 30 September 2017. In the context of the “Supervisory Review and Evaluation Process” (SREP) Decision, new Pillar II target capital ratios must be attributed; at the moment of publication of the present financial report these have not yet been defined by the supervisory authority;

g) continuation of the activities for redefining the new operational and organisational structure of Banca Intermobiliare at the head of a new banking group, including the updating of internal regulations. These activities, launched in the first half of the year, necessarily had to be adjusted in the light of the new facts related to the corporate context, and in particular to the compulsory administrative liquidation of the former Parent Company Veneto Banca. In the context of the redefinition of relations with Veneto Banca in CAL, as provided for in the plan approved in July, the full re-entry of the outsourced activities is being completed, thanks also to an operational support agreement signed with the Intesa Sanpaolo Group which in the meantime has taken over some of the activities previously performed by the former Parent Company;

h) continuation of the planning activities related to the new structure of the Information Technology systems to be created through two distinct steps: in December, in view of the modified structure of the former parent company and to the changes made to the operating relations with Veneto Banca and Banca Intesa Sanpaolo, the bank’s IT systems within the systems managed by the current outsourcer were segregated (Step 1); after a careful assessment of the IT system most suitable for the BIM Group, the Board of Directors also confirmed its intention to proceed with migration of the entire IT platform, to another provider (Step 2);

i) definition of a new policy for managing the Bank’s capital geared to a “Capital Light” model, aimed at reducing the risks that may be incurred by the capital of a private bank. This model is characterised by: “reduction of RWAs” pursued through, among other things, a process of sales and realisation of non-strategic assets (in particular of the entire property portfolio); “low market risk”, including a Banking Book of a limited amount, with a mitigation of exposure to country risk pursued through diversification of issuers; “low operational risk”, with a service model compliant with the legislation and particularly attentive to ex ante management; “low credit risk”, with a portfolio concentrated exclusively on Lombard exposures.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


MAIN POST-BALANCE-SHEET EVENTS

The Board of Directors of Banca Intermobiliare announced its preliminary results in a press release on 9 February 2018 and then examined the draft consolidated financial statements on 21 March 2018, and authorised their publication as provided for by law.It should be noted that, subsequent to 31 December 2017 and up to the date of approval of this financial report, there have been no corporate events that may have significant consequences on the results and financial position shown herein with the exception of what is presented below. With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC ruled on the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August 2017. On the basis of the reconstruction of the events and an in-depth examination of the nature of the actions challenged and the rules applied, the RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM, and referring the dispute in question to the jurisdiction of the Ordinary Court.On 5 February 2018 Barents presented an appeal to the Council of State (general register number 900 of 2018) for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.On 7 March 2018, the Director with assignments Giorgio Angelo Girelli, informed the Board of Directors of Banca Intermobiliare that he had concluded on that date with Trinity Investments an agreement that provided for his resignation from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the equity interest in Banca Intermobiliare held by Veneto Banca S.p.A. in CAL.With a communication of 5 April 2018 the Bank of Italy made known to Banca Intermobiliare that the European Central Bank had taken, on the same date, the decision “not to oppose” the acquisition by Trinity Investments Designated Activity Company, Attestor Capital LLP, of the controlling equity interest in the capital of Banca Intermobiliare di Investimenti e Gestioni pursuant to the request made on 4 December 2017.

GOING CONCERN

In the light of the overall framework of reference, of the initiatives taken and being implemented and considering the status of the information available, about which information was provided in the Notes to the Consolidated Financial Statements Part A – Accounting Policies – Section 2 - Paragraph “Going concern”, the Board of Directors of Banca Intermobiliare prepared the annual financial statements at 31 December 2017 on the assumption that the bank would continue as a going concern.

BUSINESS OUTLOOK

Signing of the contract for the sale of BIM by Veneto Banca CAL and Trinity Investments is the turning point for the relaunch of the Bank. The new corporate group is a leading player at the international level that pursues long-term investment strategies acquiring assets in which to provide skills and capital, for the purpose of making them attractive operating platforms in profitable business segments. For the purposes of obtaining the regulatory authorisations, Trinity Investments has presented a business plan up to 2021 which provides for an overall reorganisation of BIM. Implementation of the plan also involves the deconsolidation of the entire portfolio of impaired assets to be achieved through self-securitisation, and a capital strengthening operation planned for 2018 for €/Mln 121.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


OPERATING FIGURES AND CONSOLIDATED BALANCE SHEET DATA

TOTAL CUSTOMER DEPOSITS

Total client assets amounted to €/Bln 7.4 net of duplications and recorded a fall of 20.8% compared to the figure as at 31.12.2016. The reduction in volumes involved both direct deposits, down by €/Mln 0.5 (-35.8% compared to 31.12.2016) and indirect deposits, down by €/Mln 1.4, which saw mainly a decrease in client assets under management, while the decrease in assets under administration was less. The change is attributable both to the exit of a significant institutional customer, and to outgoing assets consequent to the termination of Private Bankers.The comparative figure includes deposits of €/Mln 277 (of which €/Mln 138 under administration and €/Mln 104 under management) attributable to the former subsidiary Bim Suisse S.A. sold on 18 October 2017. Net of the Bim Suisse deposits the decrease would have been 18.4% yoy.

Breakdown of total client deposits

(Millions of €)

31.12.2017 31.12.2016 Absolute change

Change%

Direct deposits 931 1,450 (519) -35.8%

Indirect deposits 6,493 7,922 (1,429) -18.0%

- Assets under administration 2,241 2,708 (467) -17.3%

- Assets under management 4,101 5,125 (1,024) -20.0%

- BIM Fiduciaria assets deposited externally 151 89 62 69.7%

TOTAL CUSTOMER DEPOSITS 7,424 9,372 (1,948) -20.8%

As of 31.12.2017 the total deposits consist of indirect deposits (87.5%) of which 55.2% were invested in managed products.

Direct depositsConsolidated direct deposits at 31.12.2017 were down by 35.8% compared to the figure at 31.12.2016. In particular there was a decline in client current accounts of €/Mln 337 and in payables represented by bonds issued by Banca Intermobiliare and subscribed by clients of €/Mln 244. The liquidity of managed monetary assets (GPM) at 31.12.2017 in Banca Intermobiliare current accounts amounting to €/Mln 115, was deducted from direct deposits and included in invested assets among the management lines. The comparative figure includes deposits attributable to the former subsidiary Bim Suisse of €/Mln 35.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Details of direct deposits

(Millions of €)

31.12.2017 31.12.2016 Absolute change

Change%

Current accounts 983 1,320 (337) -25.5%

Duplications of liquidity present in monetary asset management (115) (176) 61 -34.7%

Repurchase agreements and securities lending 2 1 1 100.0%

Due to clients 870 1,145 (275) -24.0%

Outstanding securities 61 305 (244) -80.0%

Payables representing securities 61 305 (244) -80.0%

DIRECT DEPOSITS 931 1,450 (519) -35.8%

La raccolta indirettaAs at 31.12.2017, invested assets stood at €/Bln 6.5, a decrease of 18% compared to 31.12.2016. Assets under management amounted to €/Bln 4.1, down during the year by €/Bln 1 (-20% compared to 31.12.2016); just as assets under administration fell by €/Bln 0.5 or 17.3% coming out at €/Bln 2.2. It should be noted that the figures for the above assets under management were shown net of duplications - which include the share of assets under management invested in funds and insurance policies having individual asset management as their underlying asset – shown in the table under the item “duplication between managed products”.

Details of total customer assets

(Millions of €)

31.12.2017 31.12.2016 Absolute change

Change%

DIRECT DEPOSITS

Due to clients 985 1,321 (336) -25.4%

Duplications of liquidity present in monetary asset management (115) (176) 61 -34.7%

Payables represented by securities 61 305 (244) -80.0%

Total direct deposits 931 1,450 (519) -35.8%

INDIRECT DEPOSITS

Assets under administration 2,241 2,708 (467) -17.3%

Assets under management 4,101 5,125 (1,024) -20.0%

Management lines 1,335 2,215 (880) -39.7%

Mutual funds 2,463 2,552 (89) -3.5%

Hedge Funds 93 132 (39) -29.6%

Insurance products 353 406 (53) -13.1%

Duplication between managed products (143) (180) 37 -20.6%

Total assets administered and under management 6,342 7,833 (1,491) -19.0%

- of which products managed by BIM companies 3,145 4,101 (956) -23.3%

Bim Fiduciaria assets deposited externally 151 89 62 69.7%

Total invested assets 6,493 7,922 (1,429) -18.0%



MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Client assets under management

(Millions of €)

31.12.2017 31.12.2016

Products of Bim

Third party products

Total Client assets

Products of Bim

Third party products

Total Client assets

Assets under management

Collective Asset Management 1,506 956 2,463 1,528 1,024 2,552

Individual Asset Management 1,335 - 1,335 2,215 - 2,215

Hedge Funds 93 - 93 132 - 132

Insurance products 353 - 353 406 - 406

Duplication between managed products (142) - (143) (180) - (180)

TOTAL ASSETS UNDER MANAGEMENT 3,145 956 4,101 4,101 1,024 5,125

Of the overall decrease of 20% of deposits invested in client assets under management, we can observe mainly the drop in products offered by the Group companies, which went down from €/Bln 4.1 to the current €/Bln 3.1 (-23.3%). The products of the Group companies are entirely attributable to the range of products offered by Symphonia SGR, except for insurance products issued by the investee company Bim Vita, 50% controlled together with UnipolSai (UGF Group). The products managed by third parties in the portfolios of clients of Banca Intermobiliare are represented exclusively by mutual investment funds issued by “asset management companies” outside the Group.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


LOANS AND OTHER RECEIVABLES FROM CLIENTS

During 2017, the activity of reducing loan exposure to clients continued. These activities were provided for in the “guidelines” approved on 10 February 2017 and repeated in the “2017-2021 Business Plan” approved by the B.o.D. of BIM on 18 July 2017, where, among other things, the decision was confirmed to stop lending to corporate clients, to concentrate on “Lombard” exposures to Private clients. Performing loans to clients therefore recorded a reduction of 32.3% going down from an exposure of €/Mln 508.2 at the beginning of the year to the current €/Mln 344.2. In absolute terms the reduction was €/Mln 164 of which€/Mln 117.8 related to current account overdrafts and €/Mln 42,2 related to loans. As regards impaired exposuresthe net decrease, of €/Mln 50.3, was mainly due to the higher provisions set aside in the year. Impaired assets went down from €/Mln 295.8 at 31.12.2016 to the current €/Mln 245.4.As illustrated in previous reports, starting from the fourth quarter of 2016 and for the whole of 2017, Banca Intermobiliare carried out an overall analytical review of the status of the loan positions according to a rigorous provisions policy in the context of the revisions of the estimates regarding foreseeable losses, in the light of the most up-to-date information made available, both as regards the economic and financial situation of clients, and the evolution of the value of the guarantees received. With reference to the updating of its lending policies, the BIM Board of Directors, also to implement the guidelines of the Business Plan, launched an updating process relating to the management and assessment processes and to the internal control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the annual financial statements at 31.12.2017.The valuations carried out on the basis of the new policy determined in financial year 2017 net value adjustments on receivables for a total of €/Mln 45.6, significantly down compared to the previous year (€/Mln 91.6 in 2016) increasing the current coverage rates. In relation to the ECB inspection of the former Parent Company Veneto Banca, conducted from 10 October 2016 to 10 February 2017, we have no updates to report with respect to what was published in the previous financial reports. As of today, Banca Intermobiliare, in the light of the corporate evolution of the former Parent Company Veneto Banca now in compulsory administrative liquidation, considers it improbable that the process of communicating the results of the inspections will be formalised. As of today, they have not been received either from the inspection team, or from the former Parent Company Veneto Banca. We can specify that Banca Intermobiliare had adopted precisely, already in the 2016 annual financial statements, the indications destined to reflect in the accounts the points raised during the inspection.At the same time as the Veneto Banca compulsory liquidation procedure, Banca Intermobiliare began a processof re-internalising the management of NPLs, in order to permit more active management of their recovery and completed by the end of the year. We can also note that the possible future strategies for managing the NPL portfolio may be affected by the possible securitisation transaction planned by the prospective buyer (Trinity Investments), made know to the market in the context of the business plan presented for the purpose of obtaining the regulatory authorisations as illustrated above.

Quantitative information on loan exposures at 31.12.2017 is provided below.

Details of loans to clients

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Change Absolute

Change%

31.12.2016

Performing loans to clients 344,174 508,194 (164,020) -32.3% 507,719

Other loans to clients 287,406 335,366 (47,960) -14.3% 335,366

Total loans to clients 631,580 843,560 (211,980) -25.1% 843,085

As at 31.12.2017, loans to clients amounted to €/Mln 631.6 (€/Mln 843.6 at 31.12.2016) down by 25.1% owing mainly to the contraction of performing loans and the reduction of net impaired assets.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Performing loans to clients

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Change Absolute

Change %

31.12.2016

Current account overdrafts 180,662 298,493 (117,831) -39.5% 298,493

Mortgages 156,167 198,381 (42,214) -21.3% 198,381

Short-term loans 5,723 8,823 (3,100) -35.1% 8,823

Other loans 1,622 2,497 (875) -35.0% 2,022

Total performing loans 344,174 508,194 (164,020) -32.3% 507,719

Performing loans to clients amounted to €/Mln 344.2 (€/Mln 508.2 at 31.12.2016) down by 32.3%, with a coverage rate of 0.7%, (0.6% at 31.12.2016). Compared to the system data published in the aforementioned “Financial Stability Report” we can note a higher coverage rate of “performing assets” compared to that of “Non-Significant Banks”, 0.6%.The composition of the loan portfolio to clients for performing loans, according to the various forms, was as follows: 52.5% was made up of current account overdrafts (€/Mln 180.7), 45.4% of mortgage loans (€/Mln 156.2), 1.7% of short-term loans (€/Mln 5.7) and 0.5% of other loans. Loans are mainly secured by rotating pledges or property mortgages, with a suitable spread according to prudential parameters required by the loan policy and regularly monitored.

Other receivables from clients

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Margins with clearing houses/non-banking brokers 25,089 24,883 206 0.8% 24,883

Net impaired assets 245,441 295,773 (50,332) -17.0% 295,773

Other positions 16,876 14,710 2,166 14.7% 14,710

Total other receivables from clients 287,406 335,366 (47,960) -14.3% 335,366

Other receivables from clients, of €/Mln 287.4 at 31.12.2017, fell compared to €/Mln 335.4 at 31.12.2016, mainly due to the reduction of 17% in impaired assets, amounting to €/Mln 50.3.

Net impaired assetsThe following provides information relating to net impaired assets according to the classification provided for in the regulations issued by the Bank of Italy on regulatory reporting (Circular No. 272) and preparation of financial statements (Circular No. 262), which envisage, for impaired assets, classification as “non-performing loans”, “probable defaults”, “expired exposures”.“Non performing loans” include all on- and off-balance-sheet loan exposures in relation to a party in a condition of insolvency (even if not ascertained judicially) or in substantially equivalent situations, independently of any loss forecasts formulated by the bank. “Probable defaults” consist of loan exposures, other than non-performing loans, for which the intermediary considers it improbable that, without recourse to actions such as enforcement of the guarantees, the debtor will fulfil its loan obligations fully. This category includes restructured loans, watchlist positions (with the exception of objective watchlist positions) and forborne non-performing positions. The category “past-due impaired loans” includes exposures, other than those classified as non-performing loans and as probable defaults, which, at the reference date of the report, are past due by more than 90 days and exceed a pre-set significance threshold. This includes therefore, in addition to objective watch list positions, any past-due loans and the other “forborne non-performing” positions not included in the previous category of probable defaults.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Breakdown of net impaired on-balance-sheet assets

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%Net

ExposureNet

Exposure

Non-performing loans 150,209 159,934 (9,725) -6.1%

Probable defaults 93,020 129,653 (36,633) -28.3%

Past-due exposures 2,212 6,186 (3,974) -64.2%

Net impaired assets 245,441 295,773 (50,332) -17.0%

The exposure of net impaired assets amounted to €/Mln 245.4, down by 17% compared to 31.12.2016 owing mainly to the reclassification as non-performing of positions classified among probable defaults for which increased write-downs were recognised at 31.12.2017. In particular gross exposures saw an increase in gross bad positions of €/Mln 33.1, and a reduction instead in gross probable defaults of €/Mln 36.3 and in past-due exposures of €/Mln 4.8. The change in value adjustments saw instead an increase of a total of €/Mln 42.4 due mainly to non-performing positions. The coverage rate of “impaired assets” was 60.6% (53.1% at 31.12.2016) higher than the average figure for the industry (47.5% referred to the category of “Non-Significant Banks”).

Gross and net exposure of impaired on-balance-sheet assets

(Thousands of €)

31.12.2017

Gross exposure

Specific write-downs

Net Exposure

Coverage%

Non-performing loans 479,207 (328,998) 150,209 68.7%

Probable defaults 141,238 (48,218) 93,020 34.1%

Past-due exposures 2,606 (394) 2,212 15.1%

Net impaired assets 623,051 (377,610) 245,441 60.6%

31.12.2016

Gross exposure


Net Exposure

Coverage%

a) Non-performing loans 446,069 (286,135) 159,934 64.1%

b) Probable defaults 177,499 (47,846) 129,653 27.0%

c) Past-due loans 7,447 (1,261) 6,186 16.9%

Net impaired assets 631,015 (335,242) 295,773 53.1%


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Credit quality ratiosAs regards credit quality, the table below shows the coverage rates of loan exposures to clients divided into “performing assets” and “impaired assets”. The “company data” relating to 31.12.2017 and to 31.12.2016 were compared with the “system data” inferable from the latest Bank of Italy publication in the “Financial Stability Report 2/2017” released on 17 November 2017 and prepared on the basis of the final figures at 30.06.2017. In particular, a decision was taken to compare the consolidated data of Banca Intermobiliare with the relevant category of “Non-Significant Banks” (supervised by the Bank of Italy in close collaboration with the ECB).

company data system data

31.12.2017 31.12.2016 30.06.2017

Performing assets 0.7% 0.6% 0.7%

Impaired assets 60.6% 53.1% 47.5%

a) Non-performing loans 68.7% 64.1% 60.8%

b) Probable defaults 34.1% 27.0% 29.4%

c) Past-due 15.1% 16.9% 9.5%

Exposure to large exposures (consolidated financial statements)Presented below the accounting disclosure related to “large exposures” as per Regulation (EU) No. 680/2014 Annex IX which establishes the implementing technical standards under the terms of Regulation (EU) No. 575/2013. The supervisory body defines “large exposures” as receivables from a customer or a group of connected clients, the value of which is equal to or more than 10% of Own Funds.

Large exposures

(Millions of €)

31.12.2017 31.12.2016

nominal weighted nominal weighted

a) Amount 984 262 2,072 310

b) Number 12 12 13 13

Large exposures – by category

(Millions of €)

31.12.2017 31.12.2016

number nominal weighted number nominal weighted

Impaired 3 74 70 4 110 96

Clients 5 101 60 3 131 101

Bim Group companies 1 161 30 - - -

Former Veneto Banca Group companies - - - 1 1,013 28

Banks 1 134 102 3 85 85

Institutions 2 514 - 2 733 -

Total large exposures 12 984 262 13 2,072 310

At 31.12.2017, excluding from the 12 positions a leading Italian banking group, the exposure towards the companies of the Banca Intermobiliare Group and the 2 institutions (Italian Ministry of the Economy and the Cassa di Compensazione e Garanzia (the Clearing House)), the remaining positions consist of 5 “performing” loan exposures


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


and 3 “impaired” loan exposures for a total weighted exposure of €/Mln 130 (€/Mln 241 at 31.12.2016). Of these one position exceeds the parameters pursuant to Art. 395 paragraph 1 of Regulation (EU) no. 575/2013 (CRR) and relates to the exposure to an impaired customer for which Banca Intermobiliare is studying the possibility of disposing of the receivable.

For further information relating to the on- and off-balance-sheet exposures to clients please see Part E “Information on risks and related hedging policies” in the explanatory notes to the consolidated Financial Statements as at 31.12.2017.

EXPOSURE TO THE BANKING SYSTEM

Net financial position

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

Loans

Current accounts and demand deposits 66,783 317,753 (250,970) -79.0%

Loans and time deposits 10,140 13,646 (3,506) -25.7%

Income for on-demand derivative operations 15,111 17,590 (2,479) -14.1%

Securities lending and repurchase agreements 16,056 12,269 3,787 30.9%

Debt securities - 9,987 (9,987) -100.0%

Total loans to banks 108,090 371,245 (263,155) -70.9%

Payables

Current accounts and other on-demand deposits (143,461) (119,367) (24,094) -20.2%

Loans and other forward debts (13,008) (505) (12,503) -2475.8%

Securities lending and repurchase agreements (20,963) (374,580) 353,617 94.4%

Other payables (5,800) (14,842) 9,042 60.9%

Total due to banks (183,232) (509,294) 326,062 64.0%

NET FINANCIAL POSITION (75,142) (138,049) 62,907 45.6%

During 2017 the Banca Intermobiliare Group reduced to zero its net financial position in relation to the former parent company Veneto Banca, except for a residual debt of €/Mln 5.9, and forged new relationships with several counterparties in order to optimise the financing and investment needs.In particular the net financial position with banks, a debt of €/Mln 75.1, decreased by 45.6% compared the figure at 31.12.2016 which had closed with a debit balance of €/Mln 138. Receivables from banks amounted to €/Mln 108.1, recording a decrease of 70.9% compared to 31.12.2016, owing mainly to the lower positive balance present in reciprocal accounts. Payables to banks amounted to €/Mln 183.2 down compared to €/Mln 509.3 in being at 31.12.2016, mainly as a result of the lower exposure in securities lending and in repurchase agreements.

For a description of the interest rate risk and liquidity risk management strategies, please refer to the section “Market Disclosures” - “Information on risks and factors influencing profitability” and Part E “Information on risks and related hedging policies” - the “Market Risks” section of the Notes to the Consolidated Financial Statementsat 31 December 2017.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


FINANCIAL INSTRUMENTS

Financial instruments breakdown

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Securities portfolio

High frequency trading (HFT) assets 29,226 43,602 (14,376) -33.0% 43,602

Trading liabilities (24,533) (14,186) (10,347) -72.9% (14,186)

Available-for-sale assets (AFS) 414,540 835,237 (420,697) -50.4% 834,780

Loans&Receivables - 9,987 (9,987) -100.0% 9,987

Total securities portfolio 419,233 874,640 (455,407) -52.1% 874,183

Derivatives portfolio

High frequency trading (HFT) assets 15,395 53,772 (38,377) -71.4% 53,772

Trading liabilities (15,325) (53,783) 38,458 71.5% (53,783)

Total derivatives portfolio 70 (11) 81 N/a (11)

TOTAL FINANCIAL INSTRUMENTS 419,303 874,629 (455,326) -52.1% 874,172

The total exposure in financial instruments is made up primarily of on-balance-sheet assets (securities portfolio) held both for “trading book” and “banking book” purposes, and marginally of derivative assets (derivatives portfolio).At 31.12.2017, the total of financial instruments amounted to €/Mln 419.3, and was down compared to €/Mln 874.6 in the financial year ended 31.12.2016. The reduction in the securities portfolio - which began towards the end of 2016 - continued also during 2017, in order to limit the Bank’s exposure to market and counterparty risks, thorough a Banking Book of a limited size and mitigation of exposure to country risk through diversification of issuers. In absolute terms, the investments in on-balance-sheet financial instruments recorded a decrease of 52.1%, in particular due to the reduction in assets available for sale which went down from €/Mln 835.2 at 31.12.2016 to the current €/Mln 414.5. As for the derivatives portfolio, the volumes fell further compared to the 2016 end-of-year figure. Finally we can note that Banca Intermobiliare, at 31.12.2017, no longer has any exposure in financial instruments in relation to the former Parent Company Veneto Banca (there were €/Mln 7.4 at 31.12.2016).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Below, investments in financial instruments per portfolio type are listed.

Financial assets held for trading

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Trading securities

- Debt securities 28,735 43,254 (14,519) -33.6%

- Equity securities 321 333 (12) -3.6%

- Shares in UCIs 170 15 155 1033.3%

Total securities portfolio 29,226 43,602 (14,376) -33.0%

Trading derivative instruments

- Financial derivatives 15,347 53,523 (38,176) -71.3%

- Credit derivatives 48 249 (201) -80.7%

Total derivatives portfolio 15,395 53,772 (38,377) -71.4%

TOTAL FINANCIAL ASSETS 44,621 97,374 (52,753) -54.2%

“Financial assets held for trading” consist of 65% from the “securities portfolio” (45% at 31.12.2016) and the “derivatives portfolio” for the remaining 35% (55% at 31.12.2016).

The “securities portfolio” recorded an exposure of €/Mln 29.2, of which 98% consisted of debt securities, mainly to Governments and Central Banks and of Italian and European Bank bonds with average maturity of less than three years. Banca Intermobiliare’s exposure to the Italian State is €/Mln 0.7 (€/Mln 13.6 at 31.12.2016) which represents 2.3% of the total portfolio of securities held for trading.

The “derivatives portfolio”, composed primarily of exchange rate derivatives traded between clients and institutional counterparties, presented at 31.12.2017 an exposure in derivatives of €/Mln 15.4, recognised among trading assets, substantially offset with the derivative instruments recognised among trading liabilities. The exposure in derivatives decreased sharply compared to the figure at 31.12.2016 which was €/Mln 53.8 recording a gradual decline throughout the year.

Financial liabilities held for trading

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%


Cash liabilities 24,533 14,186 10,347 72.9%

Derivative Instruments 15,325 53,783 (38,458) -71.5%

TOTAL FINANCIAL LIABILITIES HELD FOR TRADING 39,858 67,969 (28,111) -41.4%

“Financial liabilities held for trading” amounted to €/Mln 39.9 down by 41.4% compared to 31.12.2016. These liabilities consist of €/Mln 24.5 of cash liabilities and €/Mln 15.3 of derivative instruments.The financial liabilities refer to technical overdrafts on equity securities and debt securities for which arbitrations are under way with trading derivatives entered among financial assets held for trading. In particular the increase recordedin the period involved “relative value” strategies on government exposures. Trading derivative instruments consist mainly of cross currency swaps balanced with similar derivative contracts on currencies, entered among financial assets held for trading.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


From an economic point of view, the trading portfolio (securities and derivatives), during 2017, generated revenue of €/Mln 6.9 (€/Mln 7.7 at 31.12.2016), of which: net interest and dividends of €/Mln 0.6 (€/Mln 3.4 at 31.12.2016) and net trading gain of €/Mln 6.2 (€/Mln 4.5 at 31.12.2016).

Financial assets available for sale

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016


- Debt securities 402,338 777,481 (375,143) -48.3% 777,024

- Equity securities 3,999 12,438 (8,439) -67.8% 12,438

- Shares in UCIs 8,203 45,318 (37,115) -81.9% 45,318

TOTAL FINANCIAL ASSETS AVAILABLE FOR SALE 414,540 835,237 (420,697) -50.4% 834,780

The “portfolio of financial assets available for sale” at 31.12.2017 recorded a decrease of 50.4% (amounting to €/Mln 420.7), which affected mainly investments related to the debt security segment. The significant reduction came in the context of the Bank’s strategy of reducing risks as illustrated above. As regards the breakdown we can note, also for the “banking book”, a high concentration of debt securities, approximately 97.1% of the total of the segment. These debt securities were mainly allocated to the treasury portfolio and consisted of short/medium-term government bonds of Italian and European issuers. Banca Intermobiliare’s exposure to the Italian State is €/Mln 358.8 (€/Mln 589.4 as at 31.12.2016) which represents 86.6% of the total portfolio of financial assets available for sale. At 31.12.2017 Banca Intermobiliare’s exposure to the former Parent Company Veneto Banca had been completely liquidated (€/Mln 82.6 at 31.12.2016).With regard to the economic results recorded in the period, financial assets available for sale generated revenue of €/Mln 15 (€/Mln 14.1 at 31.12.2016), of which: net interest income and dividends of €/Mln 11.6 (€/Mln 17.7 at 31.12.2016); spreads relating to existing hedges of a negative €/Mln 4.1 (a loss of €/Mln 4.1 at 31.12.2016); a positive result from the sale of securities of €/Mln 9.4 (€/Mln 3.5 at 31.12.2016); net hedging gain of €/Mln 0.036 (a loss of €/Mln 0.177 at 31.12.2016); impairment of €/Mln 1.9 (€/Mln 2.8 at 31.12.2016).

Debt securities Loans & Receivables

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Debt securities Loans&Receivables

- Debt securities due to banks - 9,987 (9,987) -100.0%

- Debt securities due to clients - - - -

TOTAL DEBT SECURITIES LOANS & RECEIVABLES - 9,987 (9,987) -100.0%

At 31.12.2017 there were no longer any securities recognised in the “Loans & Receivables” portfolio. The comparative balance at 31.12.2016 consisted of 2 bank bonds, not quoted on active markets, which had been acquired as “private placements” and were not held for trading. One bond of €/Mln 5 reached maturity in February 2017, while the second maturing in January 2018 of €/Mln 4.9 was sold on the market during October.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Outstanding securities

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Bond issues

- structured 17,608 34,724 (17,116) -49.3%

- other 43,078 270,254 (227,176) -84.1%

TOTAL BONDS 60,686 304,978 (244,292) -80.1%

Outstanding securities, made up entirely of bond loans issued by Banca Intermobiliare, amounted to €/Mln 60.7. The 80.1% reduction compared to the previous year was due to repayments made of securities at maturity. No new bond issues were place in the period. At 31.12.2017 fixed-rate issues represent 58% of the total debt in issue while floating-rate issues account for 42%. As regards bond issues we can note that they will reach maturity for €/Mln 35 in 2018,€/Mln 17.3 in 2019 and €/Mln 8 in 2021.

Hedging derivatives At 31.12.2017, the positive balances of hedging derivatives amounted to €/Mln 1.6 (€/Mln 1.3 at 31.12.2016), and the negative balances amounted to €/Mln 8.9 (€/Mln 14.8 at 31.12.2016). The hedging activities carried out in the period are mainly attributable to fair value hedging of Italian BTPs in asset swaps recognised among financial assets available for sale and to bond loans issued.During 2017, there was a reduction in the volumes of hedging derivative contracts following the lower exposure of the “banking book”.

The breakdown by type of instrument hedged is presented below.

(Thousands of €) Positive fair value

Negative fair value

Notional Value

AFS - Italian BTPs in ASW 1,319 (8,800) 280,260

AFS - Other securities - (106) 7,500

OFL - Fixed-rate securities 288 - 17,390

TOTAL at 31.12.2017 1,607 (8,906) 305,150

(Thousands of €) Positive fair value

Negative fair value

Notional Value




TOTAL at 31.12.2016 1,327 (14,759) 475,050

For more information please see the notes to the present annual financial statements and in particular as regards the accounting aspects Part A - Accounting Policies and as regards market risks Part E - Information on risks and related hedging policies.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


SPECIFIC PROVISIONS

The specific provisions at 31.12.2017 amounted to €/Mln 27.9 down compared with the figure at 31.12.2016 by 9.4%.

Specific provisions

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Provisions for risks and charges 23,535 25,937 (2,402) -9.3% 25,937

Employee severance fund 4,367 4,854 (487) -10.0% 4,807

TOTAL SPECIFIC PROVISIONS 27,902 30,791 (2,889) -9.4% 30,744

At 31.12.2017, “Provisions for risks and charges” amounted to €/Mln 23.5 (-9.3% compared to 31.12.2016) and were established primarily against probable liabilities and risks associated with various kinds of disputes related, inter alia,to customer complaints and disputes, tax disputes and contractual indemnities owed, which were measured according to actuarial criteria under the IAS 37 accounting standard. During the year 2017 an overall amount of net allocations was included in the income statement totalling €/Mln 2.1 (€/Mln 17.7 at 31.12.2016).

The “Employee severance indemnity fund” at 31.12.2017 amounted to €/Mln 4.4 and decreased 10% comparedto 31.12.2016 owing to the reduction in employed personnel. The fund is recognised in the accounts on the basis of its actuarial value determined by independent actuaries.

A breakdown of provisions for risks and charges by liability type is provided below together with a description of the main disputes and claims in being at 31.12.2017.

Fondi rischi ed oneri

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

Disputes and complaints against Veneto Banca Shares 8,963 10,022 (1,059) -10.60%

Other disputes and complaints against clients 4,282 6,603 (2,321) -35.20%

Tax Disputes 5,015 4,859 156 3.20%

Indemnities, charges on personnel and other allocations 5,275 4,453 822 18.50%

PROVISIONS FOR RISKS AND CHARGES 23,535 25,937 (2,402) -9.3%

In particular in relation to disputes and complaints received by BIM from clients regarding the trading of Veneto Banca shares the provisions in being at 31.12.2017 were €/Mln 9 (compared to a petitum of €/Mln 17.3). We can specify that the determination of provisions for risks did not take into account Banca Intermobiliare clients that have accepted the former Parent Company’s Settlement Offer the costs of which are all chargeable to Veneto Banca. The Board of Directors of Veneto Banca passed a resolution on 9 January 2017, to initiate a group settlement initiative under which the former Parent Company had proposed a pre-set flat-rate, all-inclusive compensation, by way of settlement, to a large section of its shareholder base (without this being able to be inferred, even implicitly, as recognition of liability), of 15% for each Veneto Banca share purchased or subscribed, respectively, from or at a bank of the Veneto Banca Group in the period between 1 January 2007 and 31 December 2016, net of any sales and some other kinds of operations described in the settlement offer regulations, with all charges to be paid directly by it.On 11 April 2017, the Board of Directors of Veneto Banca, after assessing the definitive result of the Settlement Offer (final acceptances of 54,374 shareholders, equivalent to 72.6% of the total), had resolved to waive the condition precedent that entailed reaching 80% of acceptances and to proceed, and consequently, it had paid the compensation due to the shareholders that had accepted the Settlement Offer.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


781 Banca Intermobiliare clients accepted the Settlement Offer for which against a disputed amount of €/Mln 20.5 the compensation paid was €/Mln 3.4. The following provides summary information on the inspections and tax audits carried out on Banca Intermobiliare and its subsidiaries in the period or which were still ongoing as at 31.12.2017. Please refer to the information in the Notes to the financial statements for further details.

“ECB” Inspection of the former Parent Company Veneto Banca and indirectly of BIM In October 2016, the ECB had initiated a further inspection at the Parent Company Veneto Banca, with the aim of evaluating, with reference to the perimeter of Italian banks belonging to the Veneto Banca Group and therefore indirectly in relation to Banca Intermobiliare, the management of credit and counterparty risk and the risk control systems. With reference to Banca Intermobiliare, the inspectors had analysed a sample of loans, with reference to the date of 30.06.2016, having a gross exposure amounting to €/Mln 536 and identified €/Mln 375 relating to impaired exposures (57.4% of the total impaired portfolio) and €/Mln 162 relating to the performing portfolio (28.4% of the gross exposure of performing loans to clients). As of today, Banca Intermobiliare, in the light of the corporate evolution of the former Parent Company Veneto Banca now in compulsory administrative liquidation, considers it improbable that the process of communicating the results of the inspections will be formalised. As of today, they have not been received either from the inspection team, or from the former Parent Company Veneto Banca.We can specify that Banca Intermobiliare had adopted precisely, already in the 2016 annual financial statements, the indications destined to reflect in the accounts the points raised during the inspection. In addition the BIM Board of Directors, also to implement the guidelines of the Business Plan, launched an updating process relating to the management and assessment processes and to the control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the financial statements at 31.12.2017. CONSOB inspections and sanctioning processesSanctioning proceedings for violation of disclosure requirements on Repo Operations.On 23 December 2016 CONSOB notified Banca Intermobiliare that it had opened sanction proceedings, considering that the disclosure transparency obligations provided for in the legislation had been breached with reference to three transactions of major significance with Related Parties, consisting of “Repurchase Agreement” (Repo) transactions in favour of the Parent Company Veneto Banca S.p.A.. With resolution no. 20099 of 30 August 2017, notified to Banca Intermobiliare on 29 September 2017, CONSOB imposed on Banca Intermobiliare a fine of a total of €/thou 470. Within the deadline of 30 days from the notification, Banca Intermobiliare, lodged an appeal under art. 195 of the Consolidated Law on Finance (TUF) with the Court of Appeal. Banca Intermobiliare has considered that the sanction measure may be cancelled or at least the amount imposed is likely to be reduced. It has therefore set aside a provision of €/thou 235.

Sanctioning proceedings against corporate officers pursuant to arts. 190 and 195 of Legislative Decree No. 58 of 24 February 1998, and, by way of joint liability, against Banca Intermobiliare.On 19 January 2017 - following the inspection conducted in the period 2015-2016 - CONSOB notified Banca Intermobiliare of the launch of sanctioning proceedings against 29 corporate officers – between administrative officers and managers - as it considered that the legislation on investment services had been infringed. After obtaining access to the records, the Bank delivered the counterclaims on 21 April 2017. In the meantime, the necessary planning activities were launched for remedying the anomalies found. On 16 November 2017, the Administrative Sanctions Office presented the proposed sanctions to the Commission, for 28 of the 29 officers, from a minimum of € 7,500 to a maximum of € 85,500 per capita, for a total of €/Mln 1.080: an amount for which the Bank is merely jointly liable with the obligation of recourse.Against the allegations described above, on 15 December 2017, Banca Intermobiliare presented its counter-arguments, contesting, among other things, its passive joint liability and the amount of the same. Although the Commission’s decision is pending, and taking into account the fragmentation of the sanctions, for prudential reasons, and only in the event that any and all of the amounts paid in advance cannot be recovered, it was decided to set aside a provision of €/thou 100.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Sanctioning proceedings against corporate officers for infringements of art. 149, paragraph 1, letter a) of Legislative Decree No. 58 of 1998, and, by way of joint liability, against BIM.With resolution no. 19821 of 21 December 2016 CONSOB, considering that the legislation on transactions of major significance with related parties had been breached, in relation to the sale to Veneto Banca of the 67.22% equity interest in the share capital of Banca IPIBI Financial Advisory S.p.A. (now Banca Consulia S.p.A.) determined sanctions, chargeable to the auditing body (former members of the board of statutory auditors) under the terms of art. 193, paragraph 3, of the CLF, for a total of €/thou 85. All the statutory auditors paid the amount of the sanction.

Sanctioning proceedings against BIM for infringement of the combined provisions of art. 114, paragraph 5, of Legislative Decree No. 58 of 1998 and art. 5 of CONSOB Regulation No. 17221/2010, art. 114, paragraph 1, of Legislative Decree No. 58/1998, as implemented by art. 109 of CONSOB Regulation n. 11971/1999 – which in turn invokes art. 66 of the same Regulation - as well as art. 114, paragraph 5, of Italian Legislative Decree No. 58/1998, in conjunction with art. 6 of Regulation No 17221/2010.CONSOB, considered that the combined provisions of arts 114, paragraph 5, of the CLF and art. 5 of the TRP Regulation and arts 114, paragraph 5, of the aforementioned Decree and art. 6 of the said Regulation were infringed, in relation to a transaction of major significance with related parties, carried out on 7 August 2014, consisting of the sale to Veneto Banca of the 67.22% equity interest in the share capital of Banca IPIBI Financial Advisory S.p.A. (now Banca Consulia S.p.A.) held by BIM, a company controlled by Veneto Banca and subject to activity of direction of coordination by the same. After granting access to the records of the proceedings and assessing the overall defensive position, with resolution no. 19822 of 21 December 2016, CONSOB expressed its conclusions stating that the alleged infringements appeared proven and established the related penalties to be paid by BIM, totalling €/thou 25. The sanction was paid on 24 November 2017.

Tax audits of Banca Intermobiliare, Symphonia and BIM Vita As regards the tax audits that involved Banca Intermobiliare and its investee companies Symphonia SGR and Bim Vita, information was provided on the objections raised, on the years covered by the inspections, on the petitum and any charges payable by the company in Part B Section 14 - “Tax assets and tax liabilities” in the Notes to the Consolidated Financial Statements, to which you are referred.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


FIXED ASSETS

The fixed assets, totalling €/Mln 159.7 consisted of a shareholding in an associated company of €/Mln 14.4; property, plant and equipment and intangible fixed assets of €/Mln 95.9 and goodwill entered in previous years against a business combination for €/Mln 49.4.

Fixed assets

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Fixed assets:

- Equity investments 14,365 14,020 345 2.5% 14,020

- Intangible and tangible 95,892 97,809 (1,917) -2.0% 97,779

- Goodwill 49,446 49,446 - - 49,446

TOTAL FIXED ASSETS 159,703 161,275 (1,572) -1.0% 161,245

The “equity investments” recorded in the consolidated Financial Statements refer solely to the non-controlling equity interest in the share capital of Bim Vita S.p.A. held by Banca Intermobiliare and UnipolSai (UGF Group) at 50% each, which is subject to the control of the latter pursuant to contractual commitments. At 31.12.2017, the equity investment measured using the equity method amounted to €/Mln 14.4 (€/Mln 14 at 31.12.2016). The positive change of €/Mln 0.3 was due to the share of the decrease in the reserves of €/Mln 1.2 and the share in the profit for the period of €/Mln 1.5. It should also be noted that Banca Intermobiliare and UnipolSai, acting as parent companies of the equity investment in Bim Vita, have exercised the option for the fiscal transparency regime pursuant to art. 115 of the Income Tax Law for the three years 2016-2018.

The “tangible and intangible fixed assets” amounted to a total of €/Mln 95.9 down compared to €/Mln 97.8 at 31.12.2016. Intangible fixed assets amounted to €/Mln 0.9 and are mainly attributable to software whereas tangible fixed assets amounted to €/Mln 94.9 of which €/Mln 93.4 relating to real estate properties (corporate headquarters and branches located in Turin, Milan, Rome, Cuneo and Bologna) and a further €/Mln 1.5 mostly regarding furniture, fittings and devices in use at the headquarters and branches.

As for the “goodwill”, entered at €/Mln 49.4 (Symphonia goodwill), an impairment test was conducted without encountering any impairment losses. As regards the methodology used and the results of the test carried out, please see Part A - Accounting policies and Part B - Sect. 13 of the Notes to the Consolidated Financial statements.

PROPERTY HELD FOR SALE

The properties deriving from credit recovery operations were transferred, for more correct presentation and better legibility of the accounting data, in the reclassified balance sheet from the item “Other assets” to the item “Properties held for sale” and measured according to the international accounting standard IAS 2 – Inventories. At 31.12.2017, the exposure on the balance sheet of property held for sale amounted to €/Mln 21.9 (unchanged compared to 31.12.2016). As defined in the 2017-2021 business plan, the entire property portfolio comes within the scope of the process of disposing of and realising non-strategic assets.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


NON-CURRENT ASSETS/LIABILITIES HELD FOR SALE

At its meeting held on 9 and 10 February 2017, the Board of Directors had approved the guidelines of the strategic development plan which define Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. and Bim Insurance Brokers S.p.A. as non-strategic investments. As from 31.12.2016 and on the basis of IFRS 5, Banca Intermobiliare had reclassified its controlling stakes in BIM Suisse (including its subsidiary Patio Lugano S.A.) and in BIM Insurance Brokers S.p.A. from the item “Equity investments” to the item “Non-current assets and disposal groups held for sale”. On 31 May 2017 the Board of Directors had decided not to proceed any longer with the disposal of BIM Insurance Brokers S.p.A..

Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. In November 2016, after receiving informal expressions of interest shown by market counterparties for the Swiss investee, Banca Intermobiliare had given a mandate to the advisors Rothschild and Orrick to assess any possibilities of realising the same. During the financial year 2017 specific informative material was made available to certain selected counterparties and on 26 April 2017 the advisors received a number of binding offers. On 5 May 2017, Banca Intermobiliare gave Banca Zarattini & Co SA an exclusive period of 30 days starting from 6 June 2017, subsequently extended up to 31 July 2017. On 31.07.2017 Banca Zarattini & Co SA and Banca Intermobiliare S.p.A signed an agreement for the sale of 100% of the share capital of BIM Suisse SA held by BIM. Following fulfilment of the conditions precedent: i) authorisation from the Swiss Supervisory Authority; ii) completion of the purchase by Banca Intermobiliare of the property company Patio Lugano, held by Bim Suisse for Chf/Mln 15.05 and iii) the definition of a receivable position being analysed, on 18.10.2017 the purchase and sale contract was concluded. The initial price agreed of CHF/Mln 40.4 was subject to a “price adjustment” mechanism when the economic result and the performance of the assets managed by Bim Suisse between 30 June 2017 and 18 October 2017 were known. Disposal of the equity investment determined a benefit in the income statement of €/Mln 0.7 recognised in the accounting item Profit (loss) of assets held for sale, after tax.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


OTHER ASSET AND LIABILITY ITEMS

The “Other assets items” amounting to €/Mln 193.9 (€/Mln 193.3 as at 31.12.2016) consisted of “Tax assets” totalling €/Mln 118.2 (€/Mln 122.8 at 31.12.2016) and “Other Assets” totalling €/Mln 75.7 (€/Mln 70.6 at 31.12.2016).

Other asset items

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Tax assets 118,245 122,753 (4,508) -3.7% 122,715

a) current 39,747 16,650 23,097 138.7% 16,612

b) deferred 78,498 106,103 (27,605) -26.0% 106,103

Other Assets 75,686 70,565 5,121 7.3% 70,514

TOTAL OTHER ASSET ITEMS 193,931 193,318 613 0.3% 193,229

The “Tax assets” consist of “Current tax assets” for €/Mln 39.7 and “Deferred tax assets” (DTAs) for 78.5 of which referring primarily to prepaid taxes convertible into tax credits, pursuant to art. 2, paragraph 55, of Italian Law Decree 225/2010 and subsequent regulatory changes, for €/Mln 48.9 (€/Mln 31.7 for write-downs on loans and €/Mln 17.2 for realignment of goodwill performed according to Italian Legislative Decree 98/11).

DTAs - Deferred tax assets

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Noble DTAs 48,925 71,634 (22,709) -31.7%

- generated on loans 31,699 47,025 (15,326) -32.6%

- generated on goodwill 17,226 24,609 (7,383) -30.0%

Non-noble DTAs 6,690 11,600 (4,910) -42.3%

DTAs from tax losses 22,883 22,869 14 0.1%

Total DTAs - Deferred tax assets 78,498 106,103 (27,605) -26.0%

It should be noted that during 2017, steps were taken, pursuant to Art. 2, paragraph 55, of Italian Law Decree 225/2010, to convert the deferred tax assets into tax credits for Banca Intermobiliare for a total amount of €/Mln 22.7, since for the same a loss had been recognised in the previous financial year. At the moment of setting aside the deferred taxation for 31.12.2017, the Bank allocated non-noble DTAs, while it has not yet allocated DTAs deriving from the tax loss of the period. The “Other assets” amounted to €/Mln 75.7 (€/Mln 70.6 as at 31.12.2016) with a reduction compared to the previous financial year, and mainly consisted of tax receivables from the Tax Authority amounting to €/Mln 35.7 (€/Mln 44.2 at 31.12.2016), and items being processed totalling €/Mln 11.1 (€/Mln 11.3 at 31.12.2016).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Other liability items

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Tax liabilities 18,192 19,616 (1,424) -7.3% 19,598

a) current 1,029 661 368 55.7% 643

b) deferred 17,163 18,955 (1,792) -9.5% 18,955

Other liabilities 74,449 90,560 (16,111) -17.8% 89,839

TOTAL OTHER LIABILITY ITEMS 92,641 110,176 (17,535) -15.9% 109,437

The “Other liability items” amounted to €/Mln 92.6 (€/Mln 110.2 as at 31.12.2016), and included “Tax liabilities” of €/Mln 18.2 (€/Mln 19.6 as at 31.12.2016), and “Other liabilities” of €/Mln 74.5 (€/Mln 90.6 at 31.12.2016). “Other liabilities” consist mainly of taxes payable to the Tax Authority for €/Mln 32.6 (€/Mln 29.1 at 31.12.2016) and trade payables totalling €/Mln 24.8 (€/Mln 14.5 at 31.12.2016).

SHAREHOLDERS’ EQUITY AND REGULATORY AGGREGATES

The total consolidated Shareholders’ equity for Banca Intermobiliare as at 31.12.2017, including the result for the period amounted to €/Mln 192.3 against a result of €/Mln 237.2 recorded in the previous year.

Consolidated equity

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Share Capital 156,209 156,209 - -

Treasury shares (-) (29,711) (29,731) 20 0.1%

Reserves 92,664 98,990 (6,326) -6.4%

Issue premiums - 77,823 (77,823) -100.0%

Valuation reserves 21,992 26,905 (4,913) -18.3%

Profit (Loss) for the period (49,297) (93,371) 44,074 47.2%

Group equity 191,857 236,825 (44,968) -19.0%

Equity attributable to non-controlling interests 447 375 72 19.2%

TOTAL EQUITY 192,304 237,200 (44,896) -18.9%

The Share Capital is made up of 156,209,463 ordinary shares with a face value of €1. The change in equity during the period, amounting to €/Mln 44.9, was determined mainly by the loss for the period of €/Mln 49.3. The loss for the period of the separate financial statements at 31.12.2016 of Banca Intermobiliareof €/Mln 83.1 was entirely covered by using equity reserves (€/Mln 77.8 of Share premium reserve, €/Mln 3.4 of Legal Reserve and €/Mln 1.9 of Other Reserves).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Summary of changes in consolidated equity

(Thousands of €)

Group equity

Equity pertaining to non-controlling interests

Total equity

Equity at 31.12.2016 236,825 375 237,200

Treasury shares 20 - 20

Purchase and sale of treasury shares 20 - 20

Valuation reserves (4,915) 2 (4,913)

Valuation reserves for adjustment of the fair value of the AFS portfolio 6,641 2 6,643

Readjustment of reserves for companies measured with the equity method 15 - 15

Exchange differences on assets held for sale (2,298) - (2,298)

Valuation reserve realised on assets sold (9,302) - (9,302)

Actuarial gains (losses) on defined benefit pension plans 29 - 29

Issue premiums (77,823) - (77,823)

Utilisation to cover previous year losses (77,823) - (77,823)

Reserves (6,324) 93 (6,231)

Utilisation to cover previous year losses (15,548) 93 (15,455)

Other changes referring to assets available for sale 9,279 - 9,279

Other changes (55) - (55)

Changes on the result 44,074 (23) 44,051

Reversal of result from previous year 93,371 (93) 93,278

Profit (loss) for the period (49,297) 70 (49,227)

Equity at 31.12.2017 191,857 447 192,304

Details of changes in equity in the consolidated financial statements for 2017 are reported in the specific table in the “Financial statements” Section. For details relating to changes in treasury shares, see the information in Part B - Section 15 in the Notes to the Consolidated Financial Statements.

Reconciliation between the shareholders’ equity and net profit (loss) of the Parent Company and the corresponding data at the consolidated level

Profit (Loss) for the year Shareholders’ equity

Parent Company’s financial statements at 31.12.2017 (43,115) 142,500

Intercompany dividend elimination (7,966) -

Difference between investments values and their equity - (7,592)

Profits of consolidated companies 10,777 10,777

Goodwill - 49,446

Write-back for adjustment of tax rate on tax assets and liabilities 1,587 (2,837)

Reversal of BIM’s improvement expenses on leased properties (Bim Immobiliare) - 10

Write-backs of equity investments or provisions on equity investments 544 -

Gains (losses) on realisation of groups of assets classified as held for sale (11,054) -

Consolidated financial statements at 31.12.2017 (49,227) 192,304

Non-controlling interests 70 447

Group consolidated financial statements at 31.12.2017 (49,297) 191,857


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Own Funds and regulatory capital ratios

Legislative referencesBanca Intermobiliare calculated its own funds and the banking regulatory requirements on the basis of the Bank of Italy Circular No. 285 (Supervisory provisions for banks) of 17 December 2013 and subsequent amendments, Circular No. 286 (“Instructions for completing prudential reports for banks and stock broking companies”) and Circular No. 154 which governs the reporting schedules and technical aspects related to regulatory reporting.The regulations issued by the Bank of Italy assimilate the harmonised rules for banks and investment firms contained in Regulation (EU) no. 575/2013 (“CRR”) and in Directive 2013/36/EU (“CRD IV”) transposing into the European Union the standards defined by the Basel Committee on banking supervision (the so-called “Basel III”) to limit the risk of insolvency of financial intermediaries by defining for all financial intermediaries the rules for calculating regulatory capital, risk assets and prudential requirements.

European RegulationsWith the EU Regulation no. 1024/2013 of 15 October 2013, the European Central Bank (ECB) was given specific tasks relating to prudential supervision of credit institutions, in cooperation with the national supervisory authorities of the participating countries, in the framework of the Single Supervisory Mechanism (SSM). Since 4 November 2014 the ECB in collaboration with the Bank of Italy, has been responsible for the prudential supervision of “significant banks”, as identified in the list published by the ECB on 4 September 2014.

Prudential supervision of Banca IntermobiliareWith effect from 4 November 2014, Veneto Banca (in its capacity as “significant bank”), and indirectly Banca Intermobiliare as its subsidiary, had been placed under the direct supervision of the European Central Bank, in cooperation with the Bank of Italy. On 25 June 2017 Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. were placed in compulsory administrative liquidation with Italian Law Decree no. 99 at the order of the Ministry of the Economy and Finance, following the decisions of the European Authorities on the proposal of the Bank of Italy.Subsequently the competent authorities launched a process of assessing the qualification of Banca Intermobiliare as a significant supervised subject for the purpose of a possible classification of the Bank as less significant. With a letter dated 1 August 2017 the ECB had announced its intention to change the classification of the Bank to less significant, giving Banca Intermobiliare the possibility of presenting observations within the deadline of two weeks. Banca Intermobiliare, with a letter dated 4 August 2017, confirmed its agreement with this decision.Therefore, on 7 August 2017, the Governing Council of the European Central Bank communicated to Banca Intermobiliare that it was classified as a “less significant” supervised institution and therefore was no longer classified as a significant supervised institution in the meaning pursuant to Art. 6, paragraph 4, of Regulation (EU) no. 1024/2013. In particular the ECB based its decision on the following points:i) Subsequent to the withdrawal of the licence of Veneto Banca S.p.A. Banca Intermobiliare is now a branch of a

legal entity which is not classifiable as a credit institution, financial holding company or mixed financial holding company under the terms, respectively, of points 1, 20) or 21) of ‘article 4, paragraph 1, of Regulation (EU) no. 575/2013. Consequently, the supervised institution is assessed separately in order to determine whether one of the criteria pursuant to article 6, paragraph 4, of Regulation no. 1024/2013;

ii) Banca Intermobiliare is no longer part of a significant supervised group and does not meet any other criterion of significance pursuant to article 6 paragraph 4, of Regulation (EU) no. 1024/2013. In particular, neither the significance thresholds based on its importance for the national economy nor the significance thresholds based on cross-border activities are met;

iii) There is not even any indication that any criterion of significance will be met in the next three years. Following this decision, the direct supervision on Banca Intermobiliare ended one month after notification of the said decision and at the same time Banca Intermobiliare was made subject to the direct supervision of the Bank of Italy under the terms of articles 46, paragraphs 1 and 3, and 52, paragraph 3, of Regulation (EU) no. 468/2014 (ECB/2014/17). Under the rules on “Own Funds” and “Capital ratios”, the calculations were made by taking into account the transitional measures currently in force, as well as the so-called “prudential filters” and regulatory adjustments and including among its Own Funds only profits certified by persons outside the entity (articles 4 (121), 26 (2) and 36 (1) point (a) of the CRR) according to the procedures confirmed by the Bank of Italy in its Communication dated 22 January 2016 “Calculability of period or end-of-year profits in Common Equity Tier 1”.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Registration of Banca Intermobiliare in the Register of Banking GroupsThe placing in compulsory administrative liquidation of Veneto Banca S.p.A. on 25 June 2017, and the ECB’s decision to withdraw Veneto Banca’s banking licence on 19 July 2017 determined the related measures concerning the cancellation of the same from the register of banking groups. On 30 September 2017, Banca Intermobiliare communicated to the Bank of Italy, under the terms of the Supervisory Rules for Banks (Bank of Italy Circular no. 285 of 17 December 2013), the fulfilment of the conditions for assuming the qualification of “Parent Company” and formally requested registration of the same in the register of banking groups providing subsequently, on26 October 2017, an update on the group’s perimeter, after the sale of BIM Suisse to Banca Zarattini & Co SA.On 3 November 2017, the Bank of Italy communicated the registration of Banca Intermobiliare as Parent Company of the Banca Intermobiliare Banking Group with effects running from 30 September 2017.In particular the perimeter of the banking group includes the subsidiaries Symphonia SGR and Bim Fiduciaria, both subject to the management and coordination activity of Banca Intermobiliare under the terms of Italian Legislative Decree 385/1993 (Consolidated Law on Banking), and the subsidiary Bim Immobiliare, subject to the management and coordination activity of Banca Intermobiliare under the terms of the civil law pursuant to articles 2497 ff. of the Italian Civil Code. The following subsidiaries remain excluded from the banking group: Bim Suisse (sold on 18.10.2017), Bim Vita (held at 50% with UnipolSai and subject to the control of the latter on the basis of contractual commitments), Bim Insurance Brokers (held at 51%), and the non-instrumental property equity investments Immobiliare D, Paomar Terza and Patio Lugano (all held at 100%).In this context, Banca Intermobiliare determined the capital requirements and own funds at separate and consolidated levels according to the current legislation.

Consolidated prudential supervisionAt 31.12.2017, despite the significant loss in the period and the simultaneous reduction in shareholders’ equity, we can confirm that there is adequate capital strength in relation to the criteria set out in the Basel III agreement. Own Funds were reduced to €/Mln 121.6 (€/Mln 159.8 as at 31.12.2016), and the surplus of Own Funds over weighted risk assets amounted to €/Mln 35.3 (€/Mln 54.1 at 31.12.2016). The Capital conservation buffer amounted to €/Mln 13.5, up compared to €/Mln 8.3 at 31.12.2016.

Supervisory aggregates on a consolidated basis

(Millions of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Own Funds 121.6 159.8 (38.0) -23.8%

Surplus of Own Funds 6 35.3 54.1 (19.0) -35.1%

Capital conservation buffer 7 13.5 8.3 5.2 63.6%

6 Surplus of Own Funds: difference between “Own Funds” and “Risk-weighted assets” (not including own requirements for specific provisions).7 Capital conservation buffer: this is a reserve aimed at preserving the minimum level of regulatory capital in times of adverse market through setting aside capital resources

of high quality in periods not characterised by market tensions, and is 1.25% of risk-weighted assets (at 31.12.2016 the ratio was 0.625% of risk-weighted assets).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Fondi Propri consolidati

(valori espressi in €/Mln.)

31.12.2017 31.12.2016

A. Common Equity Tier 1 (CET1) before application of prudential filters 191.9 236.8

B. CET1 prudential filters (+/-) (0.4) (0.6)

C. CET1 before items to be deducted and the effects of the transitional arrangements 191.5 236.2

D. Items to be deducted from CET1 (73.3) (73.9)

E. Transitional arrangements - Impact on CET1 (+/-), including non-controlling interests subject to transitional rules 2.5 (5.2)

F. Total Common Equity Tier 1 (CET1) 120.7 157.2

G. Additional Tier 1 Capital (AT1) before items to be deducted and effects of transitional arrangements

H. Items to be deducted from AT1 -

I. Transitional arrangements - Impact on AT1 (+/-), including instruments issued by subsidiaries and included in the AT1 due to transitional rules -

L. Additional Tier 1 - AT1 -

M. Tier 2 Capital (T2) before items to be deducted and effects of transitional arrangements -

N. Items to be deducted from T2 -

O. Transitional arrangements - Impact on T2 (+/-), including instruments issued by subsidiaries and included in the T2 due to transitional rules 0.9 2.6

P. Total Tier 2 Capital - T2 (M - N + /- O) 0.9 2.6

Q. Total Regulatory Capital (F + L + P) 121.6 159.8

Following entry into force of Regulation (EU) 2016/445 of the ECB, at 31.12.2017, 80% of the realised gains and losses on financial instruments recognised in the “Financial assets available for sale” portfolio were included in the calculation of the capital ratios (on full implementation, in 2018, the realised gains and losses will be included at 100%). The comparative figure included, according to the legislation in force at the time, 60% of the unrealised gains and losses with the exception of government securities the unrealised results of which were not included.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Consolidated capital requirements (weighted amounts)

(Millions of €)

Risk type 31.12.2017 31.12.2016 Absolute change

Change%

Credit and counterparty risk 67.8 85.6 (17.8) -20.8%

Market risks 3.4 2.3 1.1 47.8%

Operational risk 15.1 17.8 (2.7) -15.2%

Other minimum requirements 6.1 7.3 (1.2) -16.4%

Total consolidated capital requirements 92.4 112.9 (20.5) -18.2%

Risk Weighted Assets (RWAs) 8

(Millions of €)

Risk type 31.12.2017 31.12.2016 Absolute change

Change%

Credit and counterparty risk 847.9 1,069.3 (221.4) -20.7%

Market risks 42.4 28.3 14.1 49.8%

Operational risk 189.1 222.7 (33.6) -15.1%

Other minimum requirements 76.5 91.4 (14.9) -16.3%

Total RWAs 1,155.9 1,411.7 (255.8) -18.1%

During the year, the risk-weighted assets related to credit and counterparty risk declined by €/Mln 221.4 owing essentially to the contraction of loans to clients and the reduction in the “financial assets available for sale ” securities portfolio. The Risk Weighted Assets (RWAs) related to operational risk also fell (-15.1% yoy) as did other minimum requirements (-16.3% yoy), while market risks increased by €/Mln 14.1. Following the trend in RWAs, the capital requirements at 31.12.2017 decreased by €/Mln 20.5.

Consolidated regulatory capital ratios

31.12.2017 31.12.2016 Changeabsolute

CET1 - Fully Phased 10.22% 11.52% (1.31)

CET1 - Phased in 10.44% 11.13% (0.69)

T1 - Additional Tier 1 Capital 10.44% 11.13% (0.69)

TCR - Total Capital Ratio 10.52% 11.32% (0.80)

Index of capitalisation 9 1.32 1.41 (0.10)

At 31.12.2017 CET 1 - Fully Phased, estimated applying the parameters indicated on full implementation in force from 1 January 2019, came out at 10.22% while CET 1 - Phased in was 10.44%, down compared to the 11.13% recorded at the end of the year.We can note that the consolidated regulatory capital ratios of Banca Intermobiliare at 31.12.2017 were higher than the minimum levels required by the Basel III accord, both in relation to Phased In (CET1 5.75%, T1 7.25% and TCR 9.25%) and in relation to the Fully Phased-In requirements in force at 01.01.2019 (CET1 7%, T1 8.5% and TCR 10.5%).

For further quantitative and qualitative information, please see the notes to the consolidated financial statements Part F “Information on consolidated capital” Section 2 - “The capital and capital ratios”.

8 Risk-Weighted Assets including specific requirements9 Index of capitalisation: difference between “Own Funds” and “Total Capital Requirements”.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


CONSOLIDATED ECONOMIC RESULTS

The explanatory notes and comments below include an analysis of the consolidated/reclassified economic results of Banca Intermobiliare at 31.12.2017. The comparative figure at 31.12.2016 was placed in the “pro forma” column in order to take into account the line-by-line presentation of the accounting balances of the subsidiary Bim Insurance Brokers following the decision of the BIM Board of Directors to no longer consider the company as a non-current asset held for sale with respect to the published figure at 31.12.2016 when the balances were represented according to the accounting standard IFRS5.

Net interest income

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

Interest income

- financial assets held for trading 818 3,881 (3,063) -78.9% 3,875

- financial assets available for sale 11,201 16,428 (5,227) -31.8% 16,431

- on loans to banks 734 1,395 (661) -47.4% 1,395

- on loans to clients 12,763 20,710 (7,947) -38.4% 20,710

Total interest income 25,516 42,414 (16,898) -39.8% 42,411

Interest expenses

- on payables due to banks and other financing bodies (540) (702) 162 23.1% (700)

- on payables due to clients (4,446) (5,519) 1,073 19.4% (5,520)

- outstanding securities (4,449) (9,331) 4,882 52.3% (9,331)

- financial liabilities held for trading (201) (882) 681 77.2% (882)

- hedging differentials (4,097) (4,146) 49 1.2% (4,146)

Total interest expense (13,733) (20,580) 6,847 33.3% (20,579)

NET INTEREST INCOME 11,783 21,834 (10,051) -46.0% 21,832

As at 31.12.2017, net interest income stood at €/Mln 11.8 with a decrease of 46%, YOY (€/Mln 21.8 at 31.12.2016), as a result both of the de-risking strategy, which involves a gradual reduction of loan exposures to corporate clients and of the securities portfolio, and of reinvestment in securities with shorter duration.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Net interest income – Financial investments

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

Net interest “trading book”

- financial assets held for trading 818 3,881 (3,063) -78.9% 3,875

- financial liabilities held for trading (201) (882) 681 77.2% (882)

Total “trading book” interest 617 2,999 (2,382) -79.4% 2,993

Net “banking book” interest

- financial assets available for sale 11,201 16,428 (5,227) -31.8% 16,431

- hedging differentials (4,097) (4,146) 49 1.2% (4,146)

Total “banking book” interest 7,104 12,282 (5,178) -42.2% 12,285

Net interest income - Financial investments 7,721 15,281 (7,560) -49.5% 15,278

Net interest income on financial investments (“trading book”, “banking book” and related “hedging differentials”) came out at €/Mln 7.7, a decrease of 49.5% compared to €/Mln 15.3 of 31.12.2016, also as a result of the reduction in overall exposure to (trading book and banking book) debt securities from €/Mln 830.7 at 31.12.2016 to €/Mln 431.1 at 31.12.2017. The reduction in the securities portfolio – which began already towards the end of 2016 – continued also during 2017 in order to limit the Bank’s exposure to market and counterparty risks, also in a strategy involving the “derisking” in relation to countries at the greatest risk and reinvestment of securities maturing at lower interest rates. The net interest income of the “trading book” amounted to €/Mln 0.6 (€/Mln 3 at 31.12.2016) and was down by 79.7%, as was the net interest income of the “banking book” which recorded a reduction of 42.1% to €/Mln 7.1 (€/Mln 12.3 at 31.12.2016).

Net interest income - Clients

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

- interest income on loans to clients 12,763 20,710 (7,947) -38.4% 20,710

- interest expenses on payables due to clients (4,446) (5,519) 1,073 19.4% (5,520)

- interest expenses on outstanding securities (4,449) (9,331) 4,882 52.3% (9,331)

Net interest income - Clients 3,868 5,860 (1,992) -34.0% 5,859

Net interest income from clients (loans and direct deposits from clients) amounted to €/Mln 3.9 at 31.12.2017, a reduction of 33.9% compared to 31.12.2016. A reduction in interest income from clients was recorded in the period of €/Mln 7.9 owing to the contraction in the balances of performing loans. As for the charges paid to clients on direct deposits, the decrease was €/Mln 1.1 on client deposits and €/Mln 4.9 on bond loans.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Net interest income - Banking System

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

- interest income on loans to banks 734 1,395 (661) -47.4% 1,395

- interest expenses on payables due to banks and other lenders (540) (702) 162 23.1% (700)

Net interest income – Banking System 194 693 (499) -72.0% 695

Net interest income from the banking system was a positive €/Mln 0.2 at 31.12.2017, down compared to €/Mln 0.7 recorded in the previous year. The effect was mainly due to the trend of the average net financial position in relation to banks.

Operating income

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

NET INTEREST INCOME 11,783 21,834 (10,051) -46.0% 21,832

Net fee and commission income 58,547 60,799 (2,252) -3.7% 60,068


OPERATING INCOME 86,299 91,948 (5,649) -6.1% 91,215

The operating income amounted to €/Mln 86.3, down compared to 31.12.2016 (-6.1%). The excellent performance obtained by management of the proprietary portfolio almost totally offset both the drop in net interest income, and the slight reduction in net fees and commissions.

Net fee and commission income

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

Fee and commission income

- trading, administration and order collection 10,636 16,296 (5,660) -34.7% 16,296

- assets under management 62,686 59,659 3,027 5.1% 58,665

- financial advice 1,445 1,786 (341) -19.1% 1,786

- other banking services 3,499 4,303 (804) -18.7% 4,303

Total fee and commission income 78,266 82,044 (3,778) -4.6% 81,050

Fee and commission expenses

- remuneration of the commercial network and other distributors (15,886) (16,972) 1,086 6.4% (16,972)

- trading and administration (3,187) (3,432) 245 7.1% (3,432)

- other banking services (646) (841) 195 23.2% (578)

Total fee and commission expenses (19,719) (21,245) 1,526 7.2% (20,982)

TOTAL NET FEE AND COMMISSION INCOME 58,547 60,799 (2,252) -3.7% 60,068


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Net fee and commission income of the period amounted to €/Mln 58.5, a decrease of 3.7%, yoy (€/Mln 60.8 at 31.12.2016), despite a drop in AUM of 20.5%. Fee and commission income reached €/Mln 78.3 down compared to €/Mln 82 recorded on 31.12.2016. Fees and commissions related to Asset Management grew by 5.1%, as a consequence of the good performance fees, the higher proportion of Asset Management out of total deposits and the improved profitability of the assets, while fees deriving from the Administered segment fell (-34.7%).Fee and commission expenses amounted to €/Mln 19.7 down by 7.2% compared to 31.12.2016.The item “returns to commercial network,” in addition to the remuneration of the financial promoters of Banca Intermobiliare, consisted of commission returns paid to other institutional distributors. For operational purposes, as indicated at the bottom of the reclassified income statement, the variable components of the remuneration of private bankers who are employees were also reclassified under fee and commission expenses and recognised in the financial statements under “Personnel expenses”.

Commission on assets under management

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

Commission on assets under management

- individual asset management 17,750 20,021 (2,271) -11.3% 20,021

- collective asset management 33,620 27,205 6,415 23.6% 27,205

- distribution of third-party services 11,316 12,433 (1,117) -9.0% 11,439

Total commissions on assets under management 62,686 59,659 3,027 5.1% 58,665

Asset management recorded fees on an individual basis of €/Mln 17.8 (-11.3% yoy), commissions on a collective basis of €/Mln 33.6 (+23.6% yoy), and fees for third party service delivery of €/Mln 11.3 (-9% yoy).

Performance fees

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

Performance fees

- on individual asset management 2,727 141 2,586 1834.0%

- on collective asset management 11,729 4,399 7,330 166.6%

Total performance fees 14,456 4,540 9,916 218.4%

Net gains (losses) on financial operations

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016


Dividends 421 1,617 (1,196) -74.0% 1,617

Net gains (losses) on trading instruments 6,207 4,493 1,714 38.1% 4,493

Transactions on AFS securities and financial liabilities 9,377 3,382 5,995 177.3% 3,382

Net gains (losses) on hedging instruments (36) (177) 141 79.7% (177)



MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


At 31.12.2017, net gains (losses) on financial operations came out at €/Mln 16 up compared to €/Mln 9.3 recorded at 31.12.2016, thanks to the profits made on sales of securities recognised among financial assets available for sale, in the context of the aforementioned “derisking” strategy.

Dividends

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

Dividends and similar income

- from financial assets held for trading 34 368 (334) -90.8%

- from financial assets available for sale 387 1,249 (862) -69.0%

TOTAL DIVIDENDS AND SIMILAR INCOME 421 1,617 (1,196) -74.0%

Dividends recorded in the period amounted to €/Mln 0.4 down compared to €/Mln 1.6 at 31.12.2016.

Net gains (losses) on trading instruments

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

Net gains (losses) on trading

- On-balance-sheet financial instruments 2,100 (1,581) 3,681 232.8% (1,581)

- Derivative financial instruments 2,968 4,642 (1,674) -36.1% 4,642

Total financial instruments(on-balance-sheet and derivatives) 5,068 3,061 2,007 65.6% 3,061

- Other instruments: foreign-exchange differences 1,139 1,432 (293) -20.5% 1,432

NET GAINS (LOSSES) ON TRADING INSTRUMENTS 6,207 4,493 1,714 38.1% 4,493

Net gains (losses) on trading instruments amounted at 31.12.2017 to €/Mln 6.2, an increase compared to the result of 31.12.2016 which had come out at €/Mln 4.5. In particular net gains (losses) on trading instruments (on-balance-sheet and derivatives), generated revenue of €/Mln 5.1, up compared to €/Mln 3.1 at 31.12.2016.

Gains (losses) on the sale of other financial instruments

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%


- financial assets available for sale 9,355 3,505 5,850 166.9%

- financial liabilities 22 (123) 145 N/a

Total gains (losses) on the sale of other financial instruments 9,377 3,382 5,995 177.2%

Gains on the sale of other financial instruments recorded an excellent performance, coming out at €/Mln 9.4 at 31.12.2017, against €/Mln 3.4 at 31.12.2016. The result benefited mainly from sales of securities recognised among “financial assets available for sale” of which €/Mln 7.9 for debt securities, €/Mln 1.9 for equity securities, while sales of UCIs units recorded a loss of €/Mln 0.5. Net gains (losses) on “financial liabilities” refers to marginal financial operations related to the activity of repurchasing own bonds.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Net gains (losses) on hedging instrumentsFinally, gains (losses) on financial operations recorded a loss of hedging activities of €/Mln 0.036 (a loss of €/Mln 0.177 at 31.12.2016) owing to the ineffective part related to activities to hedge the fair value of some securities.

Operating profit (loss)

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

OPERATING INCOME 86,299 91,948 (5,649) -6.1% 91,215

Operating costs (84,536) (89,693) 5,157 5.7% (89,248)

OPERATING PROFIT (LOSS) 1,763 2,255 (492) -21.8% 1,967

At 31.12.2017, operating profit came out at €/Mln 1.8 (€/Mln 2.3 at 31.12.2016), down 21.8% compared to 31.12.2016, as the combined result of the contraction of operating income and a reduction in operating costs.

Operating costs

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

Administrative expenses (84,649) (85,614) 965 1.1% (85,156)

- personnel expenses (44,364) (44,334) (30) -0.1% (44,008)

- other administrative expenses (40,285) (41,280) 995 2.4% (41,148)

Operating amortisation and depreciation (2,521) (2,689) 168 6.2% (2,676)

Other operating expenses (income) 2,634 (1,390) 4,024 N/a (1,416)

OPERATING COSTS (84,536) (89,693) 5,157 5.7% (89,248)

Operating costs amounting to €/Mln 84.5 (€/Mln 89.7 at 31.12.2016) declined by 5.7% YoY, thanks both to the reduction in administrative expenses and to the improvement in other operating income and expenses. Net of extraordinary expenses of approximately €/Mln 4.4 due to projects for the re-internalisation of outsourced activities, for reorganisation of the Bank and activities that led to signing of the BIM sale contract, operating costs would have recorded a significant reduction of 10.7%.

Personnel expenses amounted to €/Mln 44.4 at 31.12.2017, and were in line with 31.12.2016. Personnel costs consist of salaries and related employed personnel expenses (adjusted for the secondment of personnel into and out of the former Parent Company), emoluments to directors and the board of statutory auditors; also, in order to give a better operational presentation, the variable part of the remuneration of employees belonging to the commercial network has been reclassified among fee and commission expenses.

Other administrative expenses, including the extraordinary expenses mentioned above, amounted to €/Mln 40.3, up 2.4% compared to 31.12.2016. Net of extraordinary expenses, the yoy comparison shows expenses down 13.1%. The major cost items include charges related to the maintenance and leasing of real estate for the branches, expenditure relating to info providers and data transmission and costs relating to outsourcing and legal services and various advice.

Operating amortisation and depreciation totalled €/Mln 2.5 at 31.12.2017 and was down compared to the previous period by 5.7%. We can remind you that the properties from credit recovery operations which were disclosed in the balance sheet, were recognised pursuant to the international accounting standard “IAS 2” and therefore were not depreciated.

Other operating income/expenses mainly include income from rents on properties used for purposes other than the main business, expenses for improvements of assets owned by third parties, costs for settling disputes and transactions that exceeded the amount allocated to the provision for risks and charges, charges for the payment of penalties and interest to the tax authorities and other contingent assets and liabilities for costs and revenues which do not accrue to the


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


period. As of 31.12.2017 other operating expenses and income were a positive €/Mln 2.6 (€/Mln 1.4 at 31.12.2016) owing mainly to contingent assets.

Current profit (loss)In order to make the reclassified profit and loss account more clearly readable, the current result is shown as “profit (loss) before non-recurring components” which is the result of operations less write-downs on loans, net provisions for liabilities and charges and net profit (loss) of investees measured using the equity method.

Profit (loss) before non-recurring components

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

OPERATING PROFIT (LOSS) 1,763 2,255 (492) -21.8% 1,967

Net write-downs on loans (45,643) (91,619) 45,976 50.2% (91,619)

Net provisions for risks and charges (2,145) (17,680) 15,535 87.9% (17,680)

Net profit (loss) of subsidiaries carried at equity 1,479 1,480 (1) -0.1% 1,480

PROFIT (LOSS) BEFORE NON-RECURRING COMPONENTS (44,546) (105,564) 61,018 57.8% (105,852)

As of 31.12.2017, there was a loss before non-recurring components of €/Mln 44.6 (a loss of €/Mln 105.6 at 31.12.2016) after calculating write-downs on loans and net provisions for risks and charges, and measuring the associate (Bim Vita) using the equity method.

“Net write-downs on loans” amounted to €/Mln 45.6, a decrease of 50.2% compared to the write-downs made at 31.12.2016 (€/Mln 91.6). The provisions set aside during the period were made in keeping with the current policies, which provide for periodic revisions of estimates regarding foreseeable losses, with reference both to the economic and financial situation of clients, and to the evolution of the value of the guarantees received.

As regards “net allocations to provisions for risks and charges” of €/Mln 2.1 (€/Mln 17.7 at 31.12.2016) during the period provisions for risks were updated both for positions in being at the end of the year, and in relation to the new disputes and claims raised against the company. For more information please see what was previously illustrated in the section “Provision for risks and charges”.

“The net profit (loss) of subsidiaries measured using the equity method”, a positive €/Mln 1.5, was entirely due to the portion of the profit for the period of the equity investment in Bim Vita S.p.A. 50% of which is owned by UnipolSai (UGF Group), which was measured in the accounts using the equity method.

Profit (loss) before tax

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

PROFIT (LOSS) BEFORE NON-RECURRINGCOMPONENTS (44,546) (105,564) 61,018 57.8% (105,852)

Write-downs on financial instruments (1,854) (2,757) 903 32.8% (2,757)

PROFIT (LOSS) BEFORE TAX (46,400) (108,321) 61,921 57.2% (108,609)


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


As of 31.12.2017 “write-downs on financial instruments” amounted to €/Mln 1.9 (€/Mln 2.8 at 31.12.2016) after the results of the impairment test performed on the AFS portfolio, according to the methods described in Part A “Accounting policies” of the Explanatory Notes to the Statements. Write-downs in the period regarded mainly the private equity fund Charme III for €/Mln 1.3 and €/Mln 0,4 for bank securities coming from the interventions of the Interbank Deposit Protection Fund (Cesena-S. Miniato-Rimini).

Profit (loss) from continuing operations after tax

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

PROFIT (LOSS) BEFORE TAX (46,400) (108,321) 61,921 57.2% (108,609)

Income tax for the period (1,176) 17,402 (18,578) N/a 17,499

PROFIT (LOSS) FROM CONTINUING OPERATIONS AFTER TAX (47,576) (90,919) 43,343 47.7% (91,110)

There was a loss on continuing operations after tax at 31.12.2017 of €/Mln 47.6 (loss of €/Mln 90.9 at 31.12.2016). The current and deferred tax burden was a negative €/Mln 1.2. The probability test on deferred taxation confirmedthe recoverability of the deferred tax assets recognised in the previous year, while no deferred tax assets were set aside on the tax losses of financial year 2017.

Consolidated profit (loss)

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

PROFIT (LOSS) FROM CONTINUING OPERATIONS AFTER TAX (47,576) (90,919) 43,343 47.7% (91,110)

Profit (Loss) of assets held for sale, net of tax (1,651) (2,359) 708 30.0% (2,168)

CONSOLIDATED PROFIT (LOSS) (49,227) (93,278) 44,051 47.2% (93,278)

There was a loss for the period to 31.12.2017 of €/Mln 49.2 (a loss of €/Mln 93.3 at 31.12.2016) after determining the losses of assets held for sale, after tax, which were €/Mln 1.7 (the result of the sale of the subsidiary Bim Suisse and the result of Patio Lugano).

Consolidated Profit (Loss) of Group

(Thousands of €)

31.12.2017 31.12.2016pro-forma

ChangeAbsolute

Change%

31.12.2016

CONSOLIDATED PROFIT (LOSS) (49,227) (93,278) 44,051 47.2% (93,278)

Profit attributable to non-controlling interests (70) (93) 23 24.7% (93)

CONSOLIDATED PROFIT (LOSS) OF GROUP (49,297) (93,371) 44,074 47.2% (93,371)

The Group consolidated loss was €/Mln 49.3 (a loss of €/Mln 93.4 at 31.12.2016) after determining the portion attributable to non-controlling interests (for the non-controlling interests in the subsidiary BIM Insurance Brokers S.p.A.).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


CONSOLIDATED COMPREHENSIVE INCOME

During the year 2017, the consolidated comprehensive income of Banca Intermobiliare was a negative €/Mln 44.8 (a negative €/Mln 98.1 at 31.12.2016) of which €/Mln 44.9 as a negative result related to components pertaining to the consolidating company and €/thou 71 as a positive result pertaining to non-controlling interests.

Breakdown of comprehensive income

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

PROFIT (LOSS) FOR THE YEAR (49,227) (93,278) 44,051 47.2%

Change in the “AFS” valuation reserves 6,643 (5,126) 11,769 N/a

Non-current assets held for sale (2,298) 320 (2,618) N/a

Other income components 44 (55) 99 180.0%

COMPREHENSIVE INCOME (44,838) (98,139) 53,301 54.3%

of which pertaining to non-controlling interests 71 91 (20) -22.0%

of which pertaining to the Parent Company (44,908) (98,230) 53,322 54.3%

The most significant change concerned the movements in valuation reserves, and in particular the one concerning the valuation of financial assets available for sale which improved by €/Mln 11.8.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


RESULTS OF EQUITY INVESTMENTS

Below is a summary of the economic and financial trends of Banca Intermobiliare’s subsidiaries and associates other than the real estate companies; for inter-group transactions see the Notes to the Consolidated Financial Statements (Part H - Transactions with related parties) and the disclosure on business segments (Part L – Segment information).

SYMPHONIA SGR S.P.A.Established in the first half of the 1990s, Symphonia SGR has managed to become one of the major operators in the Italian asset management sector, offering to the market a range of products and services which is wide and articulated. Symphonia SGR was acquired in 2003 by Banca Intermobiliare and in the years that followed the two asset management companies belonging to Banca Intermobiliare: BIM SGR and BIM Alternative Investments SGR (which is specialised in the handling of alternative investment funds) were merged by incorporation, on 1 January 2008 and 1 January 2010 respectively. During 2011, in view of Veneto Banca’s acquisition of the controlling interest in Banca Intermobiliare, Symphonia SGR had become one of the main partners in the asset management sector in the Veneto Banca Banking Group.As a result of Italian Law Decree no. 99 of 25 June 2017, the compulsory administrative liquidation of Veneto Banca was launched, and on 24 October 2017 the Liquidators signed a sale contract (as of today conditional on authorisation from the Bank of Italy) in favour of Trinity Investments, an investment firm subject to Irish law and managed by Attestor.As regards the future of the subsidiary, as already reported in the previous reports on the subject of “Guidelines of the strategic development plan”, the asset management company was considered strategic as part of the strategy of pure “Private Banking” and so it will undergo a strengthening process in order to make it more qualified and will have an increasingly active management.On 3 November 2017, the Bank of Italy communicated the registration of Banca Intermobiliare as Parent Company of the Banca Intermobiliare Banking Group with effects running from 30 September 2017. In particular the perimeter of the banking group includes the subsidiary Symphonia SGR, subject to the management and coordination activity of Banca Intermobiliare under the terms of Italian Legislative Decree No. 385/1993 (Consolidated Law on Banking);Currently, the products offered by Symphonia SGR, among the most complete in Italian asset management include: portfolio management lines, UCIs (Italian and Luxembourg law) and alternative investment products (Single and Multi-Manager Hedge Funds), distributed by placers such as Banca Intermobiliare, Banca Apulia, Banca Fideuram, SanPaolo Invest, Banca Consulia, CheBanca and Banca Finnat. With regard to governance, on 16 February 2017, the new Board of Directors of Symphonia was installed. For the next three years, the Board will be chaired by Nicola Rossi, while the executive powers have been assigned to Sergio Vicinanza. To complete the Board the following Directors were appointed: Alessandra Viscovi, who then resigned and was replaced by Dario Brandolini, Massimo Paolo Gentili and Pierlugi Molajoni. These appointments will strengthen the structure of Symphonia and will enable it to embark on an important path of growth and innovation, while maintaining standards of excellence that have always characterised its activity in the asset management market.

At 31.12.2017 the assets managed by Symphonia, including those received under delegated management, amounted to €/Bln 2.9, and were down compared to €/Bln 3.8 at 31.12.2016 due to outflows of managed assets of clients in part offset by the positive market effect.The profit for the period came out at €/Mln 9.5 at 31.12.2017, an increase compared to €/Mln 6.8 at 31.12.2016. Net fee and commission income amounted to €/Mln 25.9 up by 24% compared to the previous year (€/Mln 20.9 at 31.12.2016). Operating costs amounted to €/Mln 12.4 at 31.12.2017 (€/Mln 11.3 at 31.12.2016 -10.1% yoy). The main summary data at 31.12.2017 are presented below:• Gross total assets under management amounted to €/Bln 2.9 (€/Bln 3.8 at 31.12.2016);

- of which for individual products €/Bln 1.3 (€/Bln 2.1 at 31.12.2016) including assets under delegated management;- of which for UCIs €/Bln 1.60 (€/Bln 1.68 at 31.12.2016) including assets under delegated management;

• Net fees and commissions amounted to €/Mln 25.9 (€/Mln 20.9 at 31.12.2016);• Operating profit of €/Mln 13.6 (€/Mln 9.7 at 31.12.2016) • Profit for the period €/Mln 9.5 (€/Mln 6.8 at 31.12.2016);• Operating profit (loss)/Net operating income stood at 53.5% (46.3% as at 31.12.2016);• Cost/Income Ratio (including other income and charges) stood at 44.8% (52.1% to 31.12.2016);• Shareholders’ equity amounted to €/Mln 56.3 (€/Mln 53.5 at 31.12.2016);• ROE at 17.4% (12.3% at 31.12.2016).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


BIM FIDUCIARIA S.P.A.Bim Fiduciaria is owned 100% by Banca Intermobiliare. It is authorised to provide static trust services and offers consulting and assistance to private clients on financial and taxation issues, particularly risks and instruments used to protect assets and successions. Circular no. 288 of 2015 issued following the amendments envisaged by Italian Legislative Decree no. 141/2010 established that trust companies controlled directly or indirectly by a bank or a financial institution, or that have taken the form of joint-stock company and have a paid-up capital of not less than twice that required by article 2327 of the Italian Civil Code, are obliged to request permission for registration in the separate section of the register under article 106 of the Consolidated Law on Banking. In compliance with this regulation, on 11.02.2016 Bim Fiduciaria filed for registration in the separate section of the Register of Financial Intermediaries provided by article 106 of Italian Legislative Decree no. 385 of 1 September 1993 (TUB) obtaining authorisation on 1.3.2017. BIM Fiduciaria, as previously stated for the group’s asset management company, was considered strategic within the “guidelines of the strategic development plan”, and therefore it is hoped that the subsidiary will grow in order to provide clients with an increasingly more professional private service. On 3 November 2017, the Bank of Italy communicated the registration of Banca Intermobiliare as Parent Company of the Banca Intermobiliare Banking Group with effects running from 30 September 2017. In particular the perimeter of the banking group includes the subsidiary Bim Fiduciaria, subject to the management and coordination activity of Banca Intermobiliare under the terms of Italian Legislative Decree No. 385/1993 (Consolidated Law on Banking).

As regards the results at 31.12.2017 the trust company recorded a loss for the period of €/Mln 0.153 compared to a profit for the year to 31.12.2016 of €/Mln 0.011. The decrease was due to the reduction in fee and commission income of 6.7% (€/Mln 0.479 at 31.12.2017, against €/Mln 0.513 at 31.12.2016) and to the growth of personnel expenses which went up from €/Mln 0.460 at 31.12.2016 to €/Mln 0.584 at 31.12.2016. The growth was mainly due to the increase from 3 to 5 of the directors and to the higher emoluments of the Board of Directors and the Board of Statutory Auditors. There was an operating loss of €/Mln 0.379 (a loss of €/Mln 0.220 al 31.12.2016) owing to net operating income down 6.7% yoy and an increase in operating costs of 16.9% yoy.Assets under trust management came out at €/Mln 311 (€/Mln 309 at 31.12.2016).Below are the main summarised figures at 31.12.2017:• Assets under trust management at €/Mln 311 (€/Mln 309 at 31.12.2016);• Net fees and commissions of €/Mln 0.479 (€/Mln 0.514 at 31.12.2016);• Current operating profit (loss)/Net operating income -33.6% (+2.2% at 31.12.2016);• Cost Income ratio 124.3% (96.8% at 31.12.2016);• Profit (loss) for the period €/Mln 0.153 (a profit of €/Mln 0.011 at 31.12.2016).

BIM INSURANCE BROKERS S.P.A.Bim Insurance Brokers, which is controlled by Banca Intermobiliare (51%) is an insurance brokerage firm established at the end of 2006, which began operations at the beginning of 2007. It has been registered with the Registro Unico degli Intermediari di Assicurazione (RUI) [Single Registry of Insurance Brokers] since 18 May 2007 and is thus subject to control by IVASS.The company offers brokering services to provide highly professional insurance support to all clients who request it, (industrial, commercial or service companies, both private or public entities, but also natural persons, for issues involving private as well as professional insurance issues). Following the decision of the Board of Directors of Banca Intermobiliare to no longer consider the company a “Non-current asset held for sale”, as it was previous defined when the “guidelines of the strategic development plan” were approved, the subsidiary Bim Insurance Brokers was reconsidered strategic and reclassified among existing equity investments.The subsidiary Bim Insurance Brokers recorded at 31.12.2017 a statutory profit for the period of €/Mln 0.145 compared to €/Mln 0.191 at 31.12.2016. Fee and commission income reached €/Mln 0.928 (€/Mln 0.989 at 31.12.2016), and operating costs fell, going down from €/Mln 0.750 to the current €/Mln 0.732.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


BIM VITA S.P.A.Bim Vita is a Private Insurance company, established as a result of an agreement concluded between Banca Intermobiliare and UnipolSai, a multi-class insurance company in the Unipol Group, with the objective of offering a complete service to clients by adding together the knowledge and values of the two entities which focus on searching for solutions to cover needs in the areas of income protection, pension planning and savings. The result of the synergy between the two institutions operating in their respective sectors is a global service which covers the entire range of people’s requirements throughout their lifetimes. Bim Vita is owned 50% by Banca Intermobiliare and 50% by UnipolSai, and it is subject to the direction and coordination of the UGF Group and the control of the Italian insurance authority (Istituto per la vigilanza sulle assicurazioni private e di interesse collettivo) (IVASS). The Company has a specific range of products, broken down into the following insurance classes, and distributed by Banca Intermobiliare:

• Savings area “Rendita Garantita di BIM” [BIM Guaranteed Annuity]

“Patrimonio Garantito di BIM VITA” [BIM VITA Guaranteed Assets]

• Investment area “Freefinance di BIM VITA”

“Freefunds di BIM VITA”

“Freefunds Base Selection”

• Pensions area “Fondo pensione aperto BIM VITA” [BIM VITA open pension fund]

The financial statements at 31.12.2017 (prepared according to the IASs/IFRSs) showed a profit for the period of €/Mln 2.959 against €/Mln 2.961 at 31.12.2016. Technical reserves amounted to €/Mln 576.4, down compared to the previous year (€/Mln 665.7 at 31.12.2016). Shareholders’ equity amounted to €/Mln 28.7 slightly down compared to €/Mln 28 at 31.12.2016.During the period, the investee company Bim Vita had net premiums of €/Mln 83.4 (€/Mln 77.5 at 31.12.2016). Net expenses related to loss events increased, going from €/Mln 84 to the current €/Mln 102.7.

As regards the results of the other subsidiaries for the year, there were no significant economic impacts or significant capital movements.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


MARKET DISCLOSURES

INFORMATION ON RISKS AND FACTORS INFLUENCING PROFITABILITY As explicitly required by the Financial Stability Forum in April 2008, with the publication of the first update of Bank of Italy Circular no. 262 on 18 November 2009, below is a summary of the main quantitative information for the period from 01.01.2017 to 31.12.2017, regarding credit and market risks and the relevant additional information. For information of a qualitative nature please see Part E “Information on risks and related hedging policies” in theNotes to the Annual Financial Statements at 31.12.2017.The overall risk management of Banca Intermobiliare and its subsidiaries has been performed over the last few years through a process presided over and coordinated by the former Parent Company Veneto Banca, discussed with the Board of Directors of BIM and with the aid of the head offices of BIM and of the former Parent Company and governed by an outsourcing contract. Following Italian Law Decree no. 99, which placed Veneto Banca in compulsory administrative liquidation, the activities outsourced by BIM to Veneto Banca, (carried out by personnel transferred to Banca Intesa Sanpaolo), have been ensured up to now enabling their regular performance within a plan that provided for them to come back gradually within BIM. The risk management, compliance and internal audit activities are now carried out by non-operating and independent departments. Up to 30 September 2017 these activities were performed according to a centralised model by the then Parent Company Veneto Banca with Bim personnel seconded to the same. Starting from 1 October, the Compliance and Internal Audit Departments were set up in BIM, with appointment of internal managers and re-entry of people previously seconded.As regards the Risk Management control function, on 1 October the Risk Management Department was created, and it is now managing the activities in outsourcing and their gradual re-internalisation planned in the early months of 2018.

The complexity and uncertainty of the macroeconomic context and the trend of the financial markets require continual monitoring and observation of factors that enable pursuance of profitability sustainable over time: adequate level of liquidity, funding capacity, limited financial leverage, adequate level of capital.To this end, in the re-internalisation process, a stand-alone Risk Appetite Framework (hereinafter, “RAF”) was defined for Banca Intermobiliare. The RAF has the aim of guaranteeing that the Group achieves its strategic objectives ensuring that the business develops within the risk limits defined by the Board of Directors in terms of maximum risk (e.g. in stress conditions) and target risk (e.g in normal conditions). In addition, the RAF defines the mechanisms for monitoring the risk level and the consequent managerial actions in the event that the specific predefined tolerance thresholds are exceeded. The RAF originates from identification of the taxonomy of significant risks for Banca Intermobiliare, whichguide the definition of the significant contexts for the RAF.In this context the activities of identifying, managing and controlling the following related risks have been carried out:• credit and counterparty risk;• market risk;• liquidity risk;• exchange rate risk;• operational risk.

Credit and counterparty riskThe exposure to credit risk arises mainly from lending to clients, and to a lesser extent by exposure with loans to banks, from counterparty risk for investments in financial instruments recognised in the “available for sale” and “loans and receivable” portfolios. The risk is seen as the probability that the debtor fails to fulfil its obligations thereby generating capital losses or lost revenues of income economic components.

As previously stated in the section “Loans and other receivables from clients”, during 2017, Banca Intermobiliare continued the activities devoted to reducing credit and counterparty risks as outlined in the “strategic guidelinesfor the business plan” and repeated in the “2017-2021 Business Plan” by disbursing only “Lombard loans” through a rigorous and precise process of assessing the creditworthiness of such loans.During 2017 net write-downs on loans to clients were also carried out for €/Mln 45.6, a decrease of 50.2% compared to the write-downs made at 31.12.2016 (€/Mln 91.6). The provisions set aside during the period were made in keeping with the current policies, which provide for periodic revisions of estimates regarding foreseeable losses, with reference both to the economic and financial situation of clients, and to the evolution of the value of the guarantees received.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


At 31.12.2017 the coverage rates of the loan portfolio compared with the system levels inferable from the latest Bank of Italy publication, the “Financial Stability Report 2/2017” released on 17 November 2017 and prepared on the basis of the final figures at 30.06.2017, recorded a coverage rate of “impaired assets” of 60,6% (53.1% at 31.12.2016) higher than the average figure for the system (47.5% referred to the category “Non-Significant Banks”). The coverage rate of “performing assets” of 0.7% is higher than that of the “Less Significant Banks” of 0.6%.

As mentioned above in relation to the ECB inspection of the former Parent Company Veneto Banca, conducted from 10 October 2016 to 10 February 2017, we have no updates to report with respect to what was published in the previous financial reports. As of today, Banca Intermobiliare, in the light of the corporate evolution of the former Parent Company Veneto Banca now in compulsory administrative liquidation, considers it improbable that the process of communicating the results of the inspections will be formalised. As of today, they have not been received either from the inspection team, or from the former Parent Company Veneto Banca. We can specify that Banca Intermobiliare had adopted precisely, already in the 2016 annual financial statements, the indications destined to reflect in the accounts the points raised during the inspection.

At the same time as the Veneto Banca compulsory liquidation procedure, Banca Intermobiliare had begun a process of re-internalising the management of NPLs, completed by the end of the year, in order to permit more active management of their recovery. In such a context, a reconnaissance process was begun with the aim of identifying possible strategies for managing the NPL portfolio which, in addition, must also take into account the possible securitisation transaction planned by the prospective buyer (Trinity Investments) and made known to the market as one of the actions to be undertaken on the Group in the context of the business plan presented for the purpose of obtaining the regulatory authorisations as illustrated above.

In addition with reference to the updating of its lending policies, the Banca Intermobiliare Board of Directors, also to implement the guidelines of the Business Plan, launched an updating process relating to the management and assessment processes and to the internal control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the annual financial statements at 31.12.2017.

Market riskThis derives from the activity of own-account trading of financial instruments carried out by the consolidating company Banca Intermobiliare. The risk may occur if losses are recorded owing to market swings. Risks are managed within administrative and operational limits defined by the Board of Directors. With reference to market risks, the guidelines of the multi-annual strategic development plan establish Banca Intermobiliare’s intention to maintain a low level of this type of risk, with a small banking book portfolio with exposures having short durations and with low country risk exposure through investments in Government bonds diversified in terms of the issuers.During 2017, the market risk relating to Banca Intermobiliare’s proprietary account was always within the supervisory limits set forth in the internal policy, as regards both the “trading book” and the “banking book”. The Value at Risk of the trading position fluctuated between €/Mln 0.258 and €/Mln 1.070. The Value at Risk at 31.12.2017 was €/Mln 0.505 (€/Mln 0.264 at 31.12.2016). The average value observed during 2017 was €/Mln 0.673 (€/Mln 1.145, during 2016).


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Var Portafoglio Trading Book al 31.12.2017

1,200,000

1,000,000

800,000

600,000

400,000

200,000

1/2/20

17

1/17/2

017

2/1/20

17

2/16/2

017

3/3/20

17

3/18/2

017

4/2/20

17

4/17/2

017

5/2/20

17

5/17/2

017

6/1/20

17

6/16/2

017

7/1/20

17

7/16/2

017

7/31/2

017

8/15/2

017

8/30/2

017

9/14/2

017

9/29/2

017

10/14

/2017

10/29

/2017

11/13

/2017

11/28

/2017

12/13

/2017

12/28

/2017

0

Value at Risk (99%) related to the period 01.01.2017 - 31.12.2017, holding period of 10 days.

The Value at Risk of the banking book was between €/Mln 2.268 and €/Mln 15.191. The Value at Risk at 31.12.2017 was €/Mln 2.268 (€/Mln 15.257 at 31.12.2016). The average value observed during 2017 was €/Mln 6.239(€/Mln 13.488 in 2016).

Var Portafoglio Banking Book al 31.12.2017

12,000,000

14,000,000

16,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0

1/2/20

17

1/17/2

017

2/1/20

17

2/16/2

017

3/3/20

17

3/18/2

017

4/2/20

17

4/17/2

017

5/2/20

17

5/17/2

017

6/1/20

17

6/16/2

017

7/1/20

17

7/16/2

017

7/31/2

017

8/15/2

017

8/30/2

017

9/14/2

017

9/29/2

017

10/14

/2017

10/29

/2017

11/13

/2017

11/28

/2017

12/13

/2017

12/28

/2017

Value at Risk (99%) related to the period 01.01.2017 - 31.12.2017, holding period of 10 days.

The most significant exposure of the portfolio, at an overall level, consisted of Italian Government securities (Government securities and Government agency securities), whose fair value (“trading book” and “banking book”) at 31.12.2017 totalled €/Mln 359.460 (€/Mln 602.979 at the end of 2016).

Liquidity riskExposure to liquidity risk comes from funding and lending operations performed by the Bank as well as the presence in proprietary portfolios of unlisted financial instruments, and manifests itself in its failure to perform its payment obligations due to an inability to gather funds or critical aspects relating to the unfreezing of illiquid financial assets. Banca Intermobiliare has a system of internal management limits regarding liquidity and funding risk, which is specifically calibrated to reflect the type of business and the risk profile associated with it. Within this system of limits, management of Banca Intermobiliare’s liquidity position is the responsibility of Banca Intermobiliare’s Financial Markets Department, while monitoring of the same is as of today ensured by the aforementioned outsourcing contract. From the periodic monitoring activity it emerges that the “short-term operational liquidity position” of Banca Intermobiliare in the year did not encounter any particular stressful stages; the operating limits and the supervisory thresholds for the various time buckets were regularly complied with and maintained at safe levels.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


At 31.12.2017 the Liquidity Coverage Ratio (LCR) was equal to 114.79%, above the regulatory limit laid down for 2017. We can note, in this regard, that the regulatory limit was set at 80% starting from 1 January 2017 and up to 31 December 2017 and will be 100% starting from 1 January 2018.As regards “Structural Liquidity” we can note instead a gradual worsening and the consequent criticality in observing the operational limits provided for in the internal policy on Liquidity Risk. However in consideration of the intentions expressed by the prospective majority shareholder to proceed quickly with the deconsolidation of NPLs and with a share capital increase at the same time, the Bank’s balance of structural liquidity will increase significantly.

Exchange rate riskThe strategies underlying the investment policies of the trading book which is exposed to exchange rate risk are essentially the following:• Trading on foreign currencies in the short term through the use of spot contracts;• position on foreign currencies through purchase/sale of Options and trading of Forex Swap and Forward contracts.The price risk of the trading book is monitored in terms of Value at Risk.Exposure to exchange rate risk, for both the trading book and the banking book was extremely low during 2017.

Operational riskThe exposure to operational risk is seen as the risk of sustaining losses that derive from the inadequacy or malfunctioning of procedures, human resources and internal systems or from external events. This type also includes losses caused by fraud, human error, interruptions in operations, unavailability of systems, contractual default or natural catastrophes. It also includes legal risk. During 2017 the operating loss data were collected through the “Loss Data Collection” process. The analysis of the allocation data by Event Type shows that both the gross effective loss and the frequency are mainly due to the category related to the execution, delivery and management of operating processes with clients. We can also note the presence of a contingency plan (“Business Continuity and Disaster Recovery Plan”) with the objective of preparing organisational oversight systems and technological infrastructures which aim to reduce - within limits considered acceptable – any damages deriving from sensational events, thereby guaranteeing that the re-activation of critical processes and the coordination of activities until the restoration of full operations occurs in accordance with the established time periods and methods. We must specify that the Bank has decided on migration to a new information technology platform, considered more functional to the needs and to the business model to which Banca Intermobiliare aspires, a choice which will enable better oversight of the processes aimed at mitigating operational risks. Further reviews are also in progress of the Bank’s operating structure in relation to which please see the specific paragraph “development and organisation activities”.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


STRUCTURED LOAN PRODUCTS CONSIDERED RISKY BY THE MARKET

Below is some additional information on investments that the market considers to be highly risky because of the financial crisis that originated from American sub-prime mortgage loans and on derivative trading with clients.Below is information at 31.12.2017 on: i) structured credit products – no existing position;ii) operations through Special Purpose Entities (SPEs) – no existing position;iii) operations on derivatives with clients and related counterparty risk – Banca Intermobiliare carried out transactions

with clients (balanced with banking and financial counterparties) having as underlying “Over the Counter” (OTC) financial instruments namely: “fx options”, “commodity options”, “interest rate swaps”, “credit default swaps” and “forward contracts on currencies”.

As regards the third point we can note that determination of the fair value of “Over the Counter” (OTC) financial instruments, including those traded with clients, is carried out using valuation models and methods that are explained in the Notes to the Annual Financial Statements to which you are referred. The activity of Banca Intermobiliare in Over the Counter derivatives with clients provides for and requires the signature of a specific margin agreement by the client who intends to deal in derivatives; the risk exposure is monitored through the “degree of risk”, represented by the ratio between the margins required and the equity available at the Institute, which must not normally exceed 50%, and with constant monitoring of the leverage assumed. The main types of Over the Counter derivatives traded with clients are represented by “fx options”, “commodity options”, “interest rate swaps”, “credit default swaps” and “forward contracts on exchange”.In relation to daily margining, considering as reference perimeter only trading in derivatives with clients as at 31.12.2017, Banca Intermobiliare presented a positive fair value to clients of €/Mln 1.83 (negative fair value of €/Mln 4.8 al 31.12.2016) against which customer margins are set aside, for €/Mln 13.1 (€/Mln 12.3 at 31.12.2016).

As regards the distribution to Retail clients of complex products and illiquid products according to the CONSOB definitions, the bank made some important changes to the internal regulations with a view to simplifying and making totally objective the process of managing these types of financial instruments introducing very precise limitations on their trading, limiting their distribution to clients in possession of adequate characteristics in terms of knowledge and risk propensity. An extremely important aspect was the bank’s choice to appoint, as single information provider relating to the classification of this type of instrument, a leading company at the global level for providing financial information services in order to guarantee maximum transparency and objectivity of the parameters used to identify and classify these types of financial products.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


DISCLOSURE REQUIRED BY COMMUNICATION NO. DEM/RM 11070007 OF 5 AUGUST 2011 Following the publication on 28 July 2011 by the European Securities and Markets Authority (ESMA) of document 2011/266 which was taken up by CONSOB on 5 August 2011, we provide the information required regarding exposures to bonds issued by central and local governments and government entities (“sovereign debt”).Banca Intermobiliare as at 31.12.2017 had an exposure (nominal value) of €/Mln 345. (€/Mln 585 as at 31.12.2016) of which €/Mln 343 recognised in the portfolio of “Financial assets available for sale” and €/Mln 2 recognised in the portfolio of “Financial assets held for trading”.The exposures shown mainly refer to debt securities issued by the Italian government (government securities, securities issued by government entities), which represent almost all Sovereign exposures.As regards the methodology applied to fair value calculation, please refer to the information in Part E in the Notes to the Annual Consolidated Financial Statements at 31.12.2017.

Sovereign credit risk exposure

(Thousands of €)

Issuing entity country AssetIAS

31.12.2017 31.12.2016

Nominal value

Book value

Fair Value

Nominal value

Book value

Fair Value

Italy HFT 324 675 675 13,147 13,567 13,567

AFS 342,850 358,785 358,785 570,821 589,412 589,412

Total 343,174 359,460 359,460 583,968 602,979 602,979

Germany HFT 365 383 383 129 145 145

AFS - - - - - -

Total 365 383 383 129 145 145

Spain HFT 474 516 516 425 470 470

AFS - - - - - -

Total 474 516 516 425 470 470

Other EU countries HFT 676 706 706 264 279 279

AFS - - - - - -

Total 676 706 706 264 279 279

Other countries HFT 8 13 13 8 10 10

AFS - - - - - -

Total 8 13 13 8 10 10

Overall on-balance-sheet exposure HFT 1,847 2,292 2,292 13,973 14,471 14,471

AFS 342,850 358,785 358,785 570,821 589,412 589,412

Total 344,697 361,078 361,078 584,794 603,883 603,883


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


DEVELOPMENT AND ORGANISATION ACTIVITIES

COMPLIANCE WITH MIFID2

Ensuring compliance with the MiFid2 regulation was managed through a specific project that involved a significant review of the processes and procedures related to providing Investment Services. A number of criticisms that Consob had raised in Proceeding 56522/2017 were also incorporated into the project; this was possible also considering the entry into force of the new Regulation. In this context and at the same time as the new regulation came into force, the model for providing the Consultancy Service was redefined, identifying new rules on the subject of adequacy and appropriateness of investments by clients and a new questionnaire was prepared, to be submitted to clients to determine the investor profile, in compliance with the requirements of the new Regulation. With specific reference to the MiFid2 rules, the ex-ante and ex-post disclosure to be provided to clients on the subject of the adequacy of transactions and the costs of products and services was identified and formalised, the Product Governance rules were defined - also on the basis of the information transmitted by the “manufacturers” - and the provisions on the subject of “Market Transparency” were adopted. As regards experience and knowledge of the personnel responsible for providing the consultancy service and issuing information relating to investments, opportune analyses were carried out in order to identify any training gaps. All the activity in question entailed the optimisation of a number of processes and internal procedures, above all those characterising the direct relationship between the Relationship Manager and the customer in the stage of profiling and collection of order instructions. The activities described were implemented in accordance with the European legislation and are currently the subject of “fine tuning” and optimisation in consideration of the provisions of the New Intermediaries Regulation, approved by Consob during February 2018, of the notable IT impacts deriving from the new rules and of the in-depth studies in progress in the industrial associations.

NEW “WEALTH MANAGEMENT” UNIT

In order to qualify better the activities in support of more demanding clients, the process of strategic repositioning of the Banca Intermobiliare Group was launched through consultancy services with high added value as strategic support for the new business model which defines a revolution of the commercial processes associated with product logics that are now obsolete. This involves setting up a new Wealth Management unit, which has assumed a controlling role in the management of complex assets and will devote its attention to Private & High Net Worth Individual (HNWI) clients, leveraging the multi-family office activity carried out by BIM Fiduciaria and Banca Intermobiliare’s already consolidated expertise in the field of Corporate Finance activities, such as Capital Markets and M&A, to manage the complex stages of succession and business discontinuity. The new unit, has set itself the objective of offering the Group’s clients advice on every other non-financial investment sector, from properties to art, as well as national and international tax assistance, through agreements with leading professional and financial planning offices.A service based on an overall picture of the assets as a whole, through an approach based on the absolute centrality of the customer and on the ability to identify independent and customised solutions with high levels of assistance. “Fairness”, partnerships of excellence, specialist evolution of Corporate Finance and Fiduciary services, are the indispensable components of the new-generation Wealth Management on which Banca Intermobiliare has invested and defined the business plan. On the front of external Collaborations, BIM has already concluded important agreements with Professional Offices and Service Companies, such as to guarantee assistance to HNWI and UHNWI on complex asset components and others will be defined during 2018.The offer perimeter, which is evolving continually, includes among other things, Services for Art and valuable items: Law - Advisory & sales, logistics and storage, Enhancing corporate and private collections, Tax & legal, Protection and succession, Corporate Governance, national and international company law, Family Businesses. The Services of Bim Corporate Finance in the IPO & Equity Capital Market and M&A field, of BIM Fiduciaria which operates also as a Trust Company, complete, also in a “linked” logic, the new commercial paradigm of the Banca Intermobiliare Group.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


IFRS 9 “FINANCIAL INSTRUMENTS” IMPLEMENTATION PROJECT

During 2015 the former Veneto Banca Group - in collaboration with the SEC Servizi consortium and making use of the collaboration of a leading consultancy – began a project aimed at full implementation of the new accounting standard to guarantee its adoption within the deadline indicated by the standard itself. The said project, which continued for the whole of 2016 and in 2017 despite the events that involved the former Parent Company, had an impact also on the Banca Intermobiliare Group, in particular on the methods for classifying and measuring financial instruments, on the logics and methods for calculating value adjustments and on the hedge accounting model. The project, coordinated by the central departments of the former Parent Company (Finance, Risks and Operations), was divided, over time, into the following “vertical” work areas:• Classification and Measurement - C&M;• Impairment;• Financial Reporting;and into two “horizontal” work areas, transversal to the vertical ones mentioned above:• IT Work Area;• Organisation Work Area (Target Operating Model – TOM).For each of the aforesaid areas, the same methodological approach was used, organised in the following macro-phases of activities:• analysis and preliminary (mainly accounting and model) choices;• target operating model design and definition of related IT impacts;• application and organisational development and impact analysis.On the basis of the plan developed, the activities that were carried out concerned the identification and analysis of the product portfolio, the definition and simulation related to the new C&M rules (Business Model and Solely Payments of Principal and Interest -SPPI Test), as well as the identification of parameters for the definition of “significant impairment” and, consequently, for the staging of credit exposures and calculation of “expected loss”. In this context and given the pervasive impacts of the changes introduced by IFRS 9, both on the business and of an organisational and reporting type, the Banca Intermobiliare Group resumed individually, in the second half of 2017, a specific project aimed at finalising/consolidating the activities originally provided for in the consortium project, defining its qualitative and quantitative impacts, and implementing the application and organisational actions necessary for a consistent, organic and effective adoption in the Group as a whole. For the purpose of analysing the evolution of the IFRS 9 project, a brief examination of the activities carried out is provided below.

Classification and Measurement In application of IFRS 9 Banca Intermobiliare at the same time assessed the contractual characteristics of the cash flows of the instruments and analysed the operational intention with which the assets are held, formalising the business models adopted.In relation to the first classification driver which involves analysing the characteristics of the contractual cash flows of the instruments (SPPI test) the disclosure is provided for the loans and securities segments. For the loans segment a “contractual screening” activity was carried out; this provides for:1. identification of “standard” contracts (with assimilable characteristics and with the absence of “tailor-made” clauses)

and non-standard (“tailor-made”) contracts;2. analysis of a sample of standard contracts using a tool for the SPPI test;3. analysis of non-standard contracts, using a tool for the SPPI test;4. surveying of contracts that do not present a correspondence between tenor rate, refixing and periodicity o

f the instalments and subsequent analysis using a specific model (the so-called “Benchmark Cash Flow Test”).For the loan segment no contractual clauses or kinds of loan which would have determined failure of the SPPI test were found. For the securities segment, and in particular for debt securities, a detailed examination was carried out of the characteristics of cash flows of instruments classified in the category of Financial assets available for sale according to IAS 39, in order to identify the assets that, if they do not pass the SPPI test, must be measured at fair value through profit and loss according to IFRS 9. Only three debt securities did not pass the SPPI test and therefore were classified in the category of financial assets obligatorily measured at fair value.In relation to the second classification driver of financial assets (business model), on 14 December 2017 the Board of Directors approved the “Target Business Model” to be adopted with IFRS 9 in force, divided according to the level of the single structures involved (Loans Department and Financial Markets Department). For the Hold to Collect portfolios, the thresholds were defined for considering admissible frequent but not significant sales (individually and in aggregate) or infrequent sales but of a significant amount. At the same time the parameters were established to enable sales in continuity with the business model in the presence of a significant increase in credit risk. In principle, in addition, the current method of managing loans, to both retail and corporate counterparties, is attributable essentially to a Hold to Collect business model.For debt securities currently classified as “Financial assets available for sale” the adoption of a Hold to Collect and Sell


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


business model has been defined (after checking that the SPPI Test as described above has been passed; investment funds, also on the basis of the in-depth studies carried out and the clarifications provided by the IFRS Interpretation Committee, were obligatorily measured at fair value through profit and loss, with a consequent future increase of volatility in the income statement for this category of instruments classified, under the terms of IAS 39, in Assets available for sale; for almost all equity securities classified in the category of financial assets available for sale under the terms of IAS 39, it was decided to take on FTA the option of classification at fair value through comprehensive income (without recycling in the income statement) formalising the general criteria on full implementation that guide the related organisational process.

ImpairmentAs regards the area of Impairment:• the methods were defined for measuring the evolution (so-called “tracking”) of the credit quality of the portfolios

of financial assets carried at amortised cost (loans segment) and at fair value through shareholders’ equity (securities segment);

• the parameters were defined for determining the significant deterioration of the credit risk, for the purposes of correct allocation of the performing exposures in Stage 1 or in Stage 2. With reference, instead, to impaired exposures, the alignment of the definitions of accounting and regulatory default – already present today – makes it possible to consider uniform the current logics of classification of “deteriorated”/“impaired” exposures with allocation of the exposures in Stage 3;

• models - including forward looking information - were developed to be used for the purpose of calculating the Expected Credit Loss (ECL) at one year (for exposures in Stage 1) and multi-period or lifetime (for exposures in Stage 2 and Stage 3). To take into account:

- forward looking information;- macroeconomic scenarios in which the Group could operate;- alternative recovery scenarios, in the light of the Bank’s decision to assess a possible sale operation considering:

the intention expressed by the prospective buyer to proceed with a securitisation transaction involving impaired receivables; the regulatory developments; and the assessments made by the Board of Directors;

it was decided to adopt a satellite model that would make it possible to quantify the impact attributing a probability to the different potential scenarios identified.In relation to the criteria for allocating exposures in the three Stages provided for in the regulatory framework, the main drivers that will determine the “passages” between different Stages will regard, for the loans segment:• the change in the rating with respect to the moment of initial recognition in the accounts of the financial instrument;• any presence of a past-due loan which– subject to the significance thresholds identified by the legislation – has been

such for at least 30 days. In the presence of such a case, in other words, the credit risk of the exposure is considered presumably “significantly increased” and, therefore, “passage” to Stage 2 follows (if the exposure was previously included in Stage 1);

• any presence of forbearance measures which – again presumably – entail classification of the exposure among those whose credit risk is “significantly increased” with respect to initial recognition;

• other indicators from the credit monitoring systems specifically used by the bank (e.g. “widened non-performing”).In relation to the staging of securities it was decided to use the so-called “low credit risk exemption” provided for in IFRS 9, on the basis of which exposures that, at the date of transition to the new standard, have a rating equal to or higher than “investment grade” (or similar quality) will be identified as at low credit risk (and therefore can be allocated to Stage 1).

Hedge accountingAs regards Hedge Accounting, the regulatory changes regard exclusively General Hedges and are closely linked to the choice to make use of the opt-in/opt-out option (that is the possibility of implementing the new standard IFRS 9 rather than maintaining the old standard IAS 39). On the basis of the studies carried out on the current management of hedging transactions, it was decided to take the opt-out option, at the IFRS 9 FTA stage. In the light of this indication, all types of hedging transactions will continue to be managed observing the provisions of IAS 39 (carve-out), currently in force.

Financial ReportingThe work on Financial Reporting involved updating the accounting procedures to incorporate the new requirement of the standard, with particular reference to the accounting areas, to preparing the financial statements and to supervisory reports, both statistical and prudential also in order to guarantee adequate disclosures, as provided for, among other things, in the new version of the FINREP and in the 5th update of Bank of Italy Circular 262, valid from 1 January 2018.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


The effects of First Time Adoption (FTA)The activities regarding the determination of the accounting effects related to First Time Adoption of IFRS 9 and which will have an impact on shareholders’ equity with effect from 1 January 2018, are as of today still being completed. Therefore at the date of approval of the present financial report reliable estimates are currently not available on the quantitative impact that first adoption of the standard will have on the Bank’s capital amounts. On the basis of the activities carried out we can report below the effects deriving from First Time Adoption of IFRS 9. For the loans segment the value adjustments carried out using the “expected credit losses” model instead of the previous “incurred credit losses” model determined for: • performing exposures, an increase in write-downs ascribable (i) to the allocation of a portion of the performing

portfolio to Stage 2, on the basis of the stage allocation criteria defined and (ii) to the inclusion of forward-looking parameters deriving from the future macroeconomic scenarios;

• impaired receivables, the impact is mainly ascribable to inclusion in the calculation of expected losses of the application of alternative recovery scenarios such as those of sale of loan assets.

For the financial assets in the portfolio from the need to reclassify certain assets on the basis of the combined result of the two classification drivers provided for in the standard: the business model on the basis of which these instruments are managed and the contractual characteristics of the related cash flows (SPPI test).

DECLARATION OF A NON-FINANCIAL NATURE

The Banca Intermobiliare Group, in adoption of the Consob Regulation implementing Italian Legislative Decree no. 254 of 30 December 2016, is obliged to prepare the annual declaration of a non-financial nature, or Non-Financial Declaration (“NFD”) as a large entity of public interest (“EPI”) with reference to art. 2 of the Decree. The disclosure of a non-financial nature is aimed at ensuring an understanding of the company’s business as regards significant subjects with particular attention to environmental and social issues, and matters related to the personnel, respect for human rights, and combating active and passive corruption.To the extent necessary to ensure understanding of the Banca Intermobiliare Group’s business, its performance, its results and the impact produced by the same, the consolidated declaration includes the data of Banca Intermobiliare and of its fully-consolidated investees.To this end Banca Intermobiliare has launched and coordinated a work group in order to involve the corporate Departments in preparing the disclosure. The process of defining the significant aspects was developed in line with the main international standards, identifying the Stakeholders of reference, the significant issues and finally the materiality matrix. To prepare the declaration corporate meetings were organised in order to collect all the information necessary and useful for describing the business model, the policies practised by the company and the main risks generated or incurred.As regards the publication methods, Banca Intermobiliare made use of the possibility granted by art. 5 of the Decree and therefore publishes the consolidated NFD in a report separate from the annual Financial Statements, which is subject to the approval and review of the corporate bodies, and to a check by an independent auditor. The declaration, finally, is published within the legal deadline at the companies registry and on the bank’s website.

ADJUSTMENT OF PROCESSES, SYSTEMS, INFRASTRUCTURES

During financial year 2017 the activities of managing and developing the corporate systems and organisation were focused on governing the change determined by the variation of the Bank’s ownership structures. In particular, the aforementioned placing in liquidation of Veneto Banca determined the need to recover full autonomy both with reference to the regulatory structure of the company - which recovered during the second half of the year the status of Parent Company under the terms of the Supervisory legislation - and in relation to the operating structure of the same, which had been integrated with that of the former Parent Company also in virtue of a contract for the outsourcing of services.During the first half of the year, on the basis of the indications received on approval of the guidelines of the strategic plan, planning activity was carried out with the aim of examining the feasibility of a migration of the corporate IT systems to another provider, considered more adequate, to be accompanied by a redefinition of the corporate operating structures in view of recovering the autonomy prospected on completion of a sale which was also being studied.The placing in liquidation of Veneto Banca determined the need to use - at least partially - the analyses conducted in the project, bringing forward and accelerating however the actions aimed at recovering operational autonomy in view of the new corporate structure. In this direction a series of actions were carried out, with the support of a consultancy company and in agreement and collaboration with Banca Intesa Sanpaolo which in the meantime had integrated the structures and resources of Veneto Banca which performed among other things operating and auditing activities on


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


behalf of Banca Intermobiliare in the context of the existing outsourcing contract; the main planning areas regarded:a) a complete revision of the corporate governance regulations, aimed at ensuring oversight of the activities and

responsibilities as new Parent Company by Banca Intermobiliare, and at redesigning the governance processes in an autonomous logic;

b) the preparation and performance of an action to separate the IT systems - outsourced to Sec Servizi - needed to segregate from the logical and IT point of view the operating environments of Banca Intermobiliare with respect to the other Veneto Banca group companies, the operational and IT design of which involved Banca Intermobiliare sharing a group structure, by now no longer suitable. The action was performed on 8-10 December;

c) a gradual exit from operating relationships with the structures of the former Parent Company Veneto Banca, managed with “change management” activities that led to internalised management of all the banking activities previously managed in outsourcing: the actions regarded all the corporate operations (the main activities - in terms of complexity - being management of the auditing system, management of non-performing loans and impaired receivables, management of the operating back offices). On completion of the actions, defined with a succession of steps in the last 4 months of the year, Banca Intermobiliare concluded the outsourcing contract at the planned expiry of 31 December 2017, closed all the human resource secondment relationships, redesigned its organisational structure and recovered full operating and IT autonomy from the former Parent Company.

d) The actions made necessary and urgent by the placing in liquidation of Veneto Banca determined the need to postpone the migration of the IT system to conclusion of the initiatives to recover the Bank’s operating autonomy; during 2017 preparatory analyses were carried out both with reference to the target technical infrastructure and as regards the contractual and economic aspects of the agreements. The project is still in progress with the objective of carrying out the action before the end of the year.

ASSESSMENT OF THE BANCA INTERMOBILIARE GROUP PROPERTY ASSETS

In line with its Business Plan, Banca Intermobiliare S.p.A. is proceeding with the project to assess its property assets which provides for, among other things, a gradual optimisation of the spaces occupied by its personnel and a process of sales and realisations that will regard the entire property portfolio in a logic of a capital-light bank.

LOANS PROJECT

Activities continued with the aim of reducing credit and counterparty risk, by disbursing only “Lombard loans” to creditworthy borrowers; in addition the process of re-internalising the management of NPLs was completed, facilitating more active management of their recovery.With reference to the updating of its lending policies, as provided for in the Business Plan, the Bank began an updating process, which was completed in the early months of 2018 with the approval of the new lending policies, and their subsequent development in updated parameters and valuation models adopted in preparing the annual financial statements at 31.12.2017.

ANACREDIT PROJECT

On 18 May 2016 with Regulation EU 2016/867 issued by the European Central Bank the new collection of data on lending and credit risk entitled AnaCredit was established; on the basis of this the National Central Banks will collect harmonised and extremely detailed information on loans and guarantees referred, in a first stage, to counterparties identified as legal persons. In October 2017 Banca Intermobiliare began a project in order to ensure preparation of the new reporting. The first report must be prepared and sent to the Bank of Italy on 3 September 2018 with reference date 30 June 2018. The target architectural scenario was therefore defined and the opportune alignment and contingency solutions necessary to guarantee observance of the first regulatory deadlines were identified.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


MANAGEMENT AND AUDITING ACTIVITIES

ADMINISTRATION AND CONTROL BODIES

The Board of Directors of Banca Intermobiliare, in office for the corporate years 2016/2018 (and therefore until the Shareholders’ Meeting called to approve the financial statements at 31 December 2018), was appointed by the Shareholders’ Meeting of 18 October 2016.

The Shareholders’ Meeting also passed the following resolutions:• establishing that the new Board of Directors would be composed of 9 (nine) members;• electing the following persons as members of the Board of Directors (also establishing their fees) for the years 2016-

2017-2018 (and thus until the Shareholders’ Meeting called to approve the financial statements as at 31 December 2018): Maurizio Lauri, Beniamino Anselmi, Giorgio Angelo Girelli, Daniela Toscani, Alessandra Zunino De Pignier, Giampaolo Provaggi (independent director), Anna Maria Chiodaroli (independent director), Simona Heidempergher (independent director), Michele Odello.

On 18 October 2016, the Board of Directors proceeded to:• Appoint Maurizio Lauri as Chairperson of the Board of Directors;• Appoint Giampaolo Provaggi as Deputy Chairperson of the Board of Directors;• Appoint Giorgio Angelo Girelli as a Director with assignments.

On 7 November 2016, Beniamino Anselmi resigned from his position as member of the Board of Directors of Banca Intermobiliare with immediate effect. The shareholders’ meeting of 21.04.2017 supplemented the Board with the appointment of Alessandro Potestà, co-opted on 18 January 2017.

On 16 May 2017, Giampaolo Provaggi resigned from his position as director and Deputy Chairperson of the Board of Directors of Banca Intermobiliare di Investimenti e Gestioni S.p.A.. On 24 May 2017 the Board of Directors coopted Paolo Ciccarelli as director.

On 21 June 2017 Anna Maria Chiodaroli resigned from the position of director and from the Committees on which she sat.

On 18 July 2017 the Board of Directors of Banca Intermobiliare ascertained the existence of the requisites of independence provided for in the Corporate Governance Code of Listed Companies and in Art. 148, paragraph 3, of the Consolidated Law on Finance (T.U.F.) held by the following non-executive directors: Paolo Ciccarelli, Simona Heidempergher, Michele Odello, Alessandro Potestà, Daniela Toscani, Maria Alessandra Zunino De Pignier.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


In light of the above changes in the Board of Directors is currently composed of the following:Maurizio LAURI ChairpersonGiorgio Angelo GIRELLI 10 Director with assignmentsPaolo CICCARELLI Independent directorSimona HEIDEMPERGHER Independent directorAlessandro POTESTÀ Independent directorMichele ODELLO Independent directorDaniela TOSCANI Independent directorMaria Alessandra ZUNINO DE PIGNIER Independent director

As reported in the significant subsequent events after the reporting date on 7 March 2018, the Director with assignments Giorgio Angelo Girelli informed the Board of Directors of Banca Intermobiliare that he had concluded on that date with Trinity Investments an agreement that provided for his resignation from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the equity interest in Banca Intermobiliare held by Veneto Banca S.p.A. in CAL.

As a consequence of the changes that had occurred in the composition of the Board of Directors, the Board of Directors, with resolutions passed on 24 May and 18 July 2017, determined as follows the current composition of the Committees within the board:

Control and Risks Committee Appointments CommitteePaolo Ciccarelli (Chairperson) Alessandro Potestà (Chairperson)Simona Heidempergher Simona HeidempergherDaniela Toscani Michele Odello

Committee of independent directors for transactions with related parties

Remuneration Committee

Simona Heidempergher (Chairperson) Simona Heidempergher (Chairperson)Paolo Ciccarelli Michele OdelloDaniela Toscani Maria Alessandra Zunino De Pignier

On 24 February 2017 the Board of Directors appointed Stefano Grassi as the new General Manager.

The Board of Statutory Auditors in office for the period 2016-2018 (and therefore until the Shareholders’ Meeting which will be called to approve the financial statements for the year ending 31 December 2018), appointed by the Shareholders’ Meeting of Banca Intermobiliare held on 5 April 2016, is made up as follows:

Luca Maria MANZI ChairpersonElena NEMBRINI Regular statutory auditorEnrico Maria RENIER Regular statutory auditorAlide LUPO Alternate Statutory AuditorMichele PIANA Alternate Statutory Auditor

PricewaterhouseCoopers S.p.A is the independent auditor for the financial years from 2012 to 2020.

10 On 7 March 2018, the Director Giorgio Angelo Girelli informed the Board of Directors of Banca Intermobiliare that he will resign from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the shares of Veneto Banca S.p.A. in CAL, envisaged in the coming weeks.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


INFORMATION ON CONTROLLING COMMUNITY CREDIT INSTITUTION

The issuer Banca Intermobiliare S.p.A. is controlled by right by Veneto Banca S.p.A. CAL, with registered office in Montebelluna (TV) at Piazza G.B. Dall’Armi n. 1, placed in compulsory liquidation with Italian Law Decree no. 99 of 25 June 2017.

For more details, please refer to the documents published on the website of Banca Intermobiliare at: http://www.bancaintermobiliare.com/corporate-governance/comunicati-obbligatori.html

ADAPTATION TO CONDITIONS UNDER ART. 36, CONSOB REGULATIONS NO. 16191/2007(Listing of parent companies’ shares set up and regulated by the laws of countries which do not belong to the European Union)

Pursuant to art. 2.6.2, paragraph 8, of the Stock Market Regulations applicable to the Markets Organised and Managed by Borsa Italiana, Banca Intermobiliare is compliant with the conditions established by paragraph 1 of art. 36 of the CONSOB Regulation 16191/2007, with reference to the Swiss-law subsidiary Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. for which the sale of all the capital to Banca Zarattini & Co SA was completed on 18 October 2017. The company Patio Lugano S.A., 100% controlled by Banca Suisse at 30 September 2017, was not of significant importance under the terms of art. 36 of Consob Regulation 16191/2007: again on 18 October 2017, all the capital of Patio Lugano was acquired by Banca Intermobiliare S.p.A..

DECLARATION UNDER ART. 37, CONSOB REGULATION NO. 16191/2007 (Conditions that prevent the listing of shares of subsidiaries subject to management and coordination of other companies)

Pursuant to article 2.6.2, paragraph 9 of the Regulation for the Markets Organised and Managed by Borsa Italiana S.p.A., none of the inhibiting conditions indicated under article 37 of Consob Regulation 16191/2007 applies to Banca Intermobiliare (since it has been subject to the management and coordination of Veneto Banca S.p.A., now in CAL, since 25 February 2011).

REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURES

The information on Corporate Governance and Ownership structures required by art. 123 bis of the CFA is provided, as permitted, in a separate report, approved by the Board of Directors of Banca Intermobiliare. This is published together with the present financial statements, and can be consulted in the Corporate governance section of the website at the address www.bancaintermobiliare.com.

REGULATORY SIMPLIFICATION PROCESS ADOPTED PURSUANT TO CONSOB RESOLUTION NO.18079 OF 20 JANUARY 2012

Pursuant to article 3 of CONSOB resolution 18079 of 20 January 2012, Banca Intermobiliare di Investimenti e Gestioni accepts the opt out regime as provided by articles 70, paragraph 8 and 71, paragraph 1-bis of CONSOB Regulation 11971/99, and is therefore entitled to omit the disclosures required in Annex 3B of the aforementioned CONSOB Regulation in the event of significant mergers, demergers, capital increases through contributions in kind, acquisitions and sales.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


THE OPERATING STRUCTURE AND PERSONNEL

On 31.12.2017, the workforce at Banca Intermobiliare and its subsidiaries amounted to 536 resources, of which 495 employees consisting of 25 senior executives, 234 middle managers and 236 office staff. There is a total of 149 private bankers (whether employees or not). The figure for 31.12.2016, restated without taking into account the 19 resources related to the former investee Bim Suisse (sold during the year), would come out at 575 resources, of whom 164 private bankers.

Human resources

(in units)

31.12.2017 31.12.2016

Total of which: private bankers Total of which:

private bankers

Employed personnel

Executives 25 5 32 7

Middle Managers 234 103 255 111

Office staff 236 - 261 -

Total employed personnel 495 108 548 118

Promoters and collaborators

Banca Intermobiliare’s Private Bankers 41 41 46 46

Total promoters and collaborators 41 41 46 46

TOTAL HUMAN RESOURCES 536 149 594 164

At 31.12.2017, there were 495 employees, of whom seconded to the former Parent Company Veneto Banca (now seconded to Intesa Sanpaolo) 25 resources (65 resources at 31.12.2016); conversely, no resources of the former Veneto Banca Group are as of today seconded to the offices of Banca Intermobiliare (1 resource at 31.12.2016). The number of employees fell compared to the figure at 31.12.2016. From the start of the year 74 employees left, as well as the resources of the former investee Bim Suisse who no longer come within the perimeter of the group (19 at 31.12.2016), while 40 people were recruited. The total for private bankers is 149 (152 at 31.12.2016) of whom 108 employees (109 at 31.12.2016) and 41 agents (43 at 31.12.2016). The activity of recruiting commercial personnel continued also in 2017 as was provided for in the guidelines of the strategic development plan, and confirmed with approval of the 2017-2021 business plan, for the strategic repositioning of Banca Intermobiliare in order to offer a high-end Private Banking service provided by a small number of highly-qualified private bankers, capable of guaranteeing a truly “tailor-made” service to clients with considerable assets and advanced financial consultancy needs. On the basis of this orientation the guidelines of the plan provide for raising the number of private bankers by the end of 2021 to 296 resources compared to the current 149.

Changes in employed personnel

(in units)

31.12.2016 Resignations New hires Category changes

Bim Suisse sale

31.12.2017

(a) Executives 32 (12) 11 (1) (5) 25

(b) Middle managers 255 (41) 17 7 (4) 234

(c) Office staff 261 (21) 12 (6) (10) 236

Total employees 548 (74) 40 - (19) 495


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Employee training and developmentAlso in 2017 Banca Intermobiliare continued with the annual and periodic obligatory training and also promoted training courses and refresher and more in-depth training initiatives for staff aimed at the performance of specific activities for various roles with a view to overall development.The main training actions regarded primarily the subjects of Money-laundering, involving the entire commercial network (approximately 174 Relationship Managers, 37 Assistants and 128 administrative staff) and the annual IVASS update. In this regard, training courses were proposed to all the Relationship Managers and Branch Assistants on the subjects of Integrated Asset Consultancy, Asset Protection, Succession and Financial Advice Narration Techniques. In addition, to support better the activities of the commercial network, a cycle of meetings were organised on the services and activities of BIM Fiduciaria, an initiative that will continue in 2018 to involve all the Relationship Managers and Assistants. As regards branch administrative staff, a training course was proposed on presentation of the new 50 euro banknote organised by the Bank of Italy. This initiative involved mainly front-office staff.On the subject of the imminent entry into force of MiFid2 targeted training activities were launched for the Internal Audit and Compliance units; these will continue also in the first half of 2018.For all the personnel of BIM and its subsidiaries, instead, a course in e-learning mode was provided on the specifications related to the rules on market abuse; this will also end in the first quarter of 2018. Finally other actions, of a smaller scope, were carried out. These were provided both a individual training activity (external courses), and for small groups on the basis of the needs of the various units.

Operating StructureBanca Intermobiliare has it registered office in Turin, at Via Gramsci 7, where the Head Office and the registered and administrative offices of its subsidiaries are located. The Bank has 28 branches in Italy and 5 offices of Financial Promoters located mainly in Northern and Central Italy. During the year the Savona branch was closed.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


OTHER ASPECTS

CONSOB REQUEST TO PUBLISH INFORMATION UNDER THE TERMS OF ART 114 OF ITALIAN LEGISLATIVE DECREE NO. 58/98 It should be noted that, with a specific request to publish information under the terms of art 114 of Italian Legislative Decree no. 58/98, sent on 27 April 2017, CONSOB, referring to Banca Intermobiliare’s annual report at 31 December 2016 where it mentions:

• uncertainties on the subject of the going concern assumption as regards Veneto Banca and related effects also on Banca Intermobiliare’s ability to continue as a going concern;

• preparation of the 2017-2020 Business Plan on the basis of approved strategic guidelines;• auditing report on the annual financial statements with a positive judgement but with a call for disclosure on the subject

of uncertainties on the going concern assumption;

asked for supplements to be added to the annual and six-monthly financial reports provided for in the current art. 154-ter of the TUF and the interim reports on operations, if published on a voluntary basis, starting from the Consolidated Interim Report on Operations at 31 March 2017, and, if relevant, the related press releases on the subject of approval of the aforesaid accounting documents, with the following further information:a) the main changes that have occurred in transactions with related parties of this Bank and of the Group it heads compared

to the last financial report approved pursuant of art. 154-ter of the CLF;b) the stage of implementation of any business and financial plans or strategic guidelines approved, highlighting the differences.

Banca Intermobiliare, while preparing the annual financial statements and subsequent interim reports, had highlighted some elements that could have caused doubts about Veneto Banca’s ability to continue as a going concern, indicating also the related effects on the Bank’s ability to continue as a going concern. The Board of Directors of BIM had however decided, in the light of the overall framework of reference, of the initiatives undertaken and in the process of implementation, and after completing the necessary checks, and taking into account the significant uncertainties described above, to prepare the annual financial statements of Banca Intermobiliare on the assumption of the entity being a going concern.During June, following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to compulsory administrative liquidation, decreeing, therefore, the absence of the assumption of these entities being going concerns.In this context the Board of Directors of Banca Intermobiliare launched the activities defined in the context of the “Guidelines of the strategic plan” approved on 10 February 2017 and prepared a “2017-2021 Business Plan”, according to a “stand-alone” logic, approving it on 18 July 2017. During July and August, the parent company Veneto Banca in CAL launched and completed the stages of the procedure for the sale of Banca Intermobiliare, which enabled various interested parties to present non-binding offers, with consequent e performance by the selected bidders of the subsequent due diligence activities. On 29 August 2017, the Shareholder received the offers for assessment admitting: Attestor Capital LLP and BRM Barents SCA to a further stage of the procedure, before signing subsequently an exclusive agreement with Attestor Capital LLP. On 24 October 2017, Veneto Banca S.p.A. in CAL and Trinity Investments Designated Activity Company, an investment firm subject to Irish law and managed by Attestor Capital LLP, signed a sale contract, under the terms of which, conditional on obtainment of the applicable regulatory authorisations, Trinity Investments undertakes to purchase from the CAL 107,483,080 BIM ordinary shares representing a total of 68.807% of the share capital. For further information, please see the introductory part of the present Report on Operations of the Consolidated Financial Statements.With a communication of 5 April 2018, the Bank of Italy made known to Banca Intermobiliare that the European Central Bank had taken, on the same date, the decision “not to oppose” the acquisition by Trinity Investments Designated Activity Company, Attestor Capital LLP, of the controlling equity interest in the capital of Banca Intermobiliare di Investimenti e Gestioni pursuant to the request made on 4 December 2017.

Therefore Banca Intermobiliare decided to prepare the present annual financial statements at 31.12.2017 with the going concern assumption, as reported in the Accounting Policies of Part A of the Notes to Consolidated Financial Statements, pointing out that - there are no longer - the uncertainties highlighted in the Consolidated Half-Yearly


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


Financial Report at 30 June 2017 and in the Consolidated Interim Report on Operations at 30 September 2017, which could have led to significant doubts regarding the going concern assumption for Banca Intermobiliare related to: (i) failure to complete the sale of Banca Intermobiliare; (ii) the decisions that the Supervisory Authority could take in the context of the “Supervisory Review and Evaluation Process (SREP) Decision”, because:i) the group is no longer controlled by Veneto Banca in CAL, the situation of which contributed to affecting

negatively the Bank’s assets and profitability;ii) the business plan presented by Trinity Investments to the Bank of Italy, provides among other things, as made

known in the press releases, for derisking of the impaired loan portfolio and at the same time a capital strengthening of € 121 million.

As regards the requests for specific disclosure under the terms of art. 114 of Italian Legislative Decree no. 58/98 sent on 27 April 2017 by CONSOB we can specify the following:

a) In relation to transactions between BIM and the companies of the former Veneto Banca Group the details of the positions in being at 31.12.2017 compared with the figure for 31.12.2016 are presented below. All the loan exposures and the exposures in financial instruments were transferred/liquidated or acquired by Banca Intesa Sanpaolo in the context of Italian Law Decree no. 99 of 25 June 2017, with the exception of a payable of €/Mln 6. At 31.12.2017 there are still trade receivables, recognised in the balance sheet of Banca Intermobiliare in the items “Other Assets” for secondments of personnel.

Financial exposures to former Veneto Banca Group

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

“Banking Book” financial instruments - 82,602 (82,602) -100%

“Trading Book” financial instruments - 7,444 (7,444) -100%

Financial hedging instruments - (13,431) 13,431 100%

BIM bond loans - (675) 675 100%

Total financial instruments - 75,940 (75,940) -100%

Loans to banks - 331,706 (331,706) -100%

Due to banks (5,982) (381,607) 375,625 98%

Total banking exposure (5,982) (49,901) 43,919 88%

Other assets 64 2,159 (2,095) -97%

Other liabilities - (5,128) 5,128 100%

Total other exposures 64 (2,969) 3,033 102%

EXPOSURE TO VENETO BANCA GROUP (5,918) 23,070 (28,988) -126%

b) In relation to the status of implementation of the business and the strategic guidelines, the Board of Directors of Banca Intermobiliare, as amply illustrated in the present Report on Operations, approved on 18 July 2017 the 2017-2021 Business Plan, prepared according to a “stand-alone” logic, and in substantial consistency with the guidelines of the strategic plan (approved by the Board of Directors of BIM on 10 February 2017). As things stand, assessing the overall results achieved in 2017, no significant differences can be noted with respect to what was provided for in the guidelines and in the plan approved on 18 July 2017 for the period of reference.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


The stage of progress is described below, at the publication date of the present Consolidated Financial Statements at 31.12.2017, and taking also into account the significant events after the reporting date of the envisaged main planning initiatives: a) renewal of the first managerial line of Banca Intermobiliare (selection of highly qualified professional figures


b) completion of the actions to renew the governance of the subsidiaries: in Symphonia SGR defining the new governance structure with renewal of the Board of Directors and appointment of the new Chief Executive Officer; in Bim Fiduciaria appointing the new Chief Executive Officer and launching the process of rationalising and developing the services offered and the organisational activities;

c) establishment of a new Wealth Management unit, with the role of directing the management of complex assets, focusing on “Private & High Net Worth Individual” (HNWI) clients, leveraging the “multi-family office” activities offered by BIM Fiduciaria and BIM’s already consolidated expertise in the field of Corporate Finance activities (namely Capital Markets and M&A) necessary for managing the complex stages of succession and corporate discontinuity;


e) continuation of the activities aimed at reducing credit and counterparty risk, by disbursing only “Lombard loans” to borrowers with high creditworthiness; in addition the process of re-internalising the management of NPLs was completed, facilitating more active management of their recovery. The Bank, in addition, launched a process of updating its lending model that was completed, in the early months of 2018, with approval of the new lending policies and their subsequent expression in parameters and assessment models updated and adopted in preparing the annual financial statements at 31.12.2017;



h) continuation of the planning activities related to the new structure of the Information Technology systems to be created through two distinct steps: in December, in view of the modified structure of the former parent company and the changes made to the operating relations with Veneto Banca and Banca Intesa Sanpaolo, the bank’s IT systems within the systems managed by the current outsourcer were segregated (Step 1); after a careful assessment of the IT system most suitable for the BIM Group, the Board of Directors also confirmed its intention to proceed with migration of the entire IT platform, to another provider (Step 2);

i) definition of a new policy for managing the Bank’s capital geared to a “Capital Light” model, aimed at reducing the risks that may be incurred by the capital of a private bank. This model is characterised by “reduction of RWAs” pursued through, among other things, a process of sales and realisation of non-strategic assets (in particular of the entire property portfolio); “low market risk”, including a Banking Book of a limited amount, with a mitigation of exposure to country risk pursued through diversification of issuers; “low operational risk”, with a service model compliant with the legislation and particularly attentive to ex ante management; “low credit risk”, with a portfolio concentrated exclusively on Lombard exposures.


MA

NAG

EMEN

T R

EPO

RT

TO T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS


DISCLOSURES REQUIRED BY CONSOB COMMUNICATION NO. 0007780/16 OF 28 JANUARY 2016

With Communication No. 0007780 of 28 January 2016 Consob alerted entities that prepare financial statements, leading on from its Communication No 0003907 of 19 January 2015, regarding the aspects highlighted in the public statement released on 27 October 2015 by ESMA, “European common enforcement priorities for 2015 financial statements” in relation to the disclosures that listed companies must make in financial reporting as at 31.12.2015 and later.In particular the communication, which follows on from a similar document published by ESMA (European Securities and Markets Authority) on 27 October (ESMA/2015/1608), identifies areas of the financial statements which should be the subject of particular attention by listed companies in the current macroeconomic environment, also taking into account the supervisory activities carried out in 2015 by the various European supervisory authorities:i) the impact of current market conditions on the information provided in the financial statements;ii) the application of accounting standards relating to the preparation and presentation of the financial statement; iii) the determination and disclosure of the fair value of non-financial assets and liabilities not entered in the

balance sheet; iv) the impacts resulting from the implementation of new standards.

Issuers must also pay particular attention to the financial reporting of joint-control agreements (priority indicated by ESMA also with reference to the financial statements for 2014 and examined in Consob Communication No. 0003907 of 19.01.2015 to which one should refer), and lastly entities are alerted on a number of points about disclosure through the public statement, “Improving the quality of disclosures in the financial statements” (ESMA/2015/1609) dated 27 October 2015 aimed at improving the relevance, coherence and readability of the content of financial reports.

With regard to the impact of current market conditions in the information provided in the financial statements, it should be noted that the assumptions about the future and the causes of uncertainty were analysed, in the parts related to the reference macroeconomic scenario, the business outlook and in the section entitled “market disclosures” in relation to credit, market, liquidity and foreign exchange risks of the present Report on Operations. In reference to the changes of the basic assumptions and discounting rates of valuation models, one should note the following:• in the Notes to the Consolidated financial statements, Part B Assets - Section 13 shows the sensitivity analysis with

respect to the recoverable value of the goodwill entered in the balance sheet;• with regard to the current value of the defined benefit obligations (IAS 36.134), the sensitivity test done by an

external actuary does not detect any concrete economic impacts at a Group level;• with reference to the current value of provisions recorded in the balance sheet, no significant economic impacts are

noted arising from the change in the discounting rates used, also in relation to indemnities relating to agents (an external actuary is used for these discounting purposes).

With reference to the proper preparation and presentation of the financial statements, it should be noted that these have been prepared in line with IAS 7.As regards the call for attention in correctly applying the rules laid down in standard IFRS 13, please refer to the extensive information included in Part A - Accounting Policies, Section 18 in the Notes to the Consolidated financial statements.Lastly, to allow readers to assess the qualitative impacts relating to adoption of IFRS 9, please refer to the description in Part A - Accounting Policies, A.1. – Sect. 5 of the Notes to the Consolidated financial statements.

Torino, 5 Aprile 2018

For the Board of DirectorsThe ChairpersonMaurizio LAURI

CONSOLIDATED FINANCIAL STATEMENTSAT 31 DECEMBER 2017

CONSOLIDATED FINANCIAL STATEMENTS


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS

86 ■ Consolidated financial statements

CONSOLIDATED BALANCE SHEET(Thousands of €)

Assets 31.12.2017 31.12.2016

10. Cash and cash equivalents 1,689 1,669

20. Financial assets held for trading 44,621 97,374

40. Financial assets available for sale 414,540 834,780

60. Loans to banks 108,090 371,245

70. Loans to clients 631,580 843,085

80. Hedging derivatives 1,607 1,327

100. Equity investments 14,365 14,020

120. Tangible fixed assets 94,949 96,521

130. Intangible fixed assets 50,389 50,704

of which: goodwill 49,446 49,446

140. Tax assets

a) current 39,747 16,612

b) deferred taxes 78,498 106,103

- of which pursuant to Law 214/2011 48,925 71,634

150. Non-current assets and disposal groups held for sale 21,357 73,480

160. Other Assets 97,586 92,414

Total assets 1,599,018 2,599,334


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS

Consolidated financial statements ■ 87

CONSOLIDATED BALANCE SHEET(Thousands of €)

Liabilities and equity items 31.12.2017 31.12.2016

10. Due to banks 183,232 509,294

20. Due to clients 985,633 1,286,040

30. Outstanding securities 60,686 304,978

40. Financial liabilities held for trading 39,858 67,969

60. Hedging derivatives 8,906 14,758

80. Tax liabilities

a) current 1,029 643

b) deferred taxes 17,163 18,955

90. Liabilities associated with groups of assets held for sale 7,856 38,914

100. Other liabilities 74,449 89,839

110. Employees’ severance fund 4,367 4,807

120. Provisions for risks and charges:

a) pension fund and similar obligations - -

b) Other Provisions 23,535 25,937

130. Technical reserves - -

140. Valuation reserves 21,992 26,905

170. Reserves 92,664 98,990

180. Issue premiums - 77,823

190. Share Capital 156,209 156,209

200. Treasury shares (-) (29,711) (29,731)

210. Equity attributable to non-controlling interests (+/-) 447 375

220. Profit (Loss) for the year (49,297) (93,371)

Total liabilities and equity 1,599,018 2,599,334


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS


CONSOLIDATED INCOME STATEMENT(Thousands of €)

Income statement items 31.12.2017 31.12.2016pro-forma

10. Interest income and similar items 25,516 42,414

20. Interest expense and similar items (13,733) (20,580)

30. Net interest income 11,783 21,834

40. Fee and commission income 78,266 82,044

50. Fee and commission expenses (19,181) (19,891)

60. Net fee and commission income 59,085 62,153

70. Dividends and similar income 421 1,617

80. Net gains and losses on assets held for trading 6,207 4,493

90. Net profit (loss) on hedging operations (36) (177)

100. Profit (loss) on disposal or repurchase of:

a) loans (156) 1

b) financial assets available for sale 9,355 3,505

c) financial assets held to maturity - -

d) financial liabilities 22 (123)

110. Net gains (losses) on financial assets and liabilities designated at fair value - -

120. Operating income 86,681 93,303

130. Net write-downs/write-backs for impairment of loans:

a) loans (45,876) (91,640)

b) financial assets available for sale (1,854) (2,757)


d) other financial transactions 389 20

140. Net gains and losses on financial operations 39,340 (1,074)

180. Administrative expenses:

a) Personnel costs (44,902) (45,688)

b) other administrative expenses (40,285) (41,280)

190. Net provisions for risks and charges (2,145) (17,680)

200. Net write-downs/write-backs on property, plant and equipment (1,968) (2,076)

210. Net write-downs/write-backs on intangible fixed assets (567) (613)

220. Other operating expenses (income) 2,648 (1,390)

230. Operating costs (87,219) (108,727)

240. profit (Loss) of investments 1,479 1,480

280. Profit (Loss) of continuing operations before tax (46,400) (108,321)

290. Current operations income tax (1,176) 17,402

300. Profit (Loss) of continuing operations after tax (47,576) (90,919)

310. Profit (Loss) of non-current assets held for sale, net of tax (1,651) (2,359)


330. Profit (Loss) for the year attributable to minority interests (70) (93)

340. Profit (Loss) for the year attributable to the parent company (49,297) (93,371)

Earnings per share (Euro) (0.33) (0.62)

Diluted earnings per share (Euro) (0.33) (0.62)


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME(Thousands of €)

Items 31.12.2017 31.12.2016


Other income components after tax not reversed to the income statement

20. Tangible fixed assets - -

30. Intangible fixed assets - -

40. Defined benefit plans 29 (63)

50. Non-current assets held for sale - -

60. Share of valuation reserves of investments valued with equity method - -

Other income components after tax reversed to the income statement

70. Hedging of foreign investments:

80. Exchange rate differences - -

90. Cash flow hedges - -

100. Financial assets available for sale 6,642 (5,125)

110. Non-current assets held for sale (2,298) 320

120. Share of valuation reserves of investments valued with equity method 16 7

130. Total other income components after tax 4,389 (4,862)

140. Comprehensive income (Item 10+130) (44,838) (98,139)

150. Consolidated comprehensive income attributable to non-controlling interests 71 91

160. Consolidated comprehensive income attributable to the parent company (44,909) (98,230)


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFROM 31.12.2016 TO 31.12.2017(Thousands of €)

Bala

nce

at 3

1.12

.201

6

Chan

ge in

ope

ning

bal

ance

Ope

ning

bal

ance

at 0

1.01

.201

7Allocation previous

financial year profit

Changes during the financial year

Grou

p eq

uity

at 3

1.12

.201

7

Equi

ty a

ttrib

utab

le to

non

-con

trol

ling

inte

rest

s at 3

1.12

.201

7

Chan

ges i

n re

serv

es

Equity transactions

Tota

l con

solid

ated

pro

fits d

urin

g th

e ye

ar

Issue

of n

ew sh

ares

Purc

hase

of t

reas

ury

shar

es

Extr

a di

vide

nds

Chan

ge in

equ

ity in

stru

men

ts

Deriv

ativ

es o

f tre

asur

y sh

ares

Stoc

k op

tions

Chan

ges i

n eq

uity

inve

stm

ents

Rese

rves

Divi

dend

s and

ot

her a

lloca

tions

Share Capital:

a) ordinary shares 156,268 x 156,268 - x x - - x x x x - x 156,209 59

b) other shares - x - - x x - - x x x x - x - -

Issue premiums 77,823 x 77,823 (77,823) x - x x x x x x - x - -

Reserves:

a) of profits 101,869 - 101,869 (13,446) x 8,684 - (13) - x x x - x 96,775 319

b) others (2,654) - (2,654) (2,009) x 552 - - - x - - - x (4,111) -

Valuation reserves 26,903 - 26,903 x x (9,302) x x x x x x - 4,389 21,992 (2)

Equity instruments - x - x x x x x x - x x - x - -

Treasury shares (29,731) x (29,731) x x x - 20 x x x x - x (29,711) -

Profit (Loss)for the year (93,278) - (93,279) 93,278 - x x x x x x x - (49,227) (49,297) 70

Total equity 237,200 - 237,200 - - (66) - 7 - - - - - (44,838) 191,857 447

Group equity 236,825 - x - - (66) - 7 - - - - - (44,909) 191,857 -

Equity attributable to non-controlling interests x - 375 - - - - - - - - - - 71 - 447


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFROM 31.12.2015 TO 31.12.2016(Thousands of €)

Esist

enze

al 3

1.12

.201

5

Mod

ifica

sald

i ape

rtur

a

Esist

enze

al 1

.1.2

016

Allocazione risultato esercizio

precedente

Variazioni dell’esercizio

Patr

imon

io n

etto

del

gru

ppo

al 3

1.12

.201

6

Patr

imon

io n

etto

di t

erzi

al 3

1.12

.201

6

Varia

zion

i di r

iserv

e

Operazioni sul patrimonio netto

Redd

itivi

tà co

nsol

idat

a co

mpl

essiv

a es

er-

cizio

Emiss

ione

nuo

ve a

zion

i

Acqu

isto

azio

ni p

ropr

ie

Dist

ribuz

ione

stra

ordi

naria

div

iden

di

Varia

zion

e st

rum

enti

di ca

pita

le

Deriv

ati s

u pr

oprie

azi

oni

Stoc

k op

tions

Varia

zion

i int

eres

senz

e pa

rtec

ipat

ive

Rise

rve

Divi

dend

i e a

ltre

dest

inaz

ioni

Share Capital:

a) ordinary shares 156,209 x 156,268 - x x - - x x x x - x 156,209 59

b) other shares - x - - x x - - x x x x - x - -

Issue premiums 70,025 x 70,025 - x 7,798 x x x x x x - x 77,823 -

Reserves:

a) of profits 89,723 - 89,723 9,015 x 3,151 - (22) - x x x - x 101,644 225

b) others 36,307 - 36,307 (28,806) x (10,155) - - - x - - - x (2,654) -

Valuation reserves 31,764 - 31,764 x x - x x x x x x - (4,861) 26,905 (2)

Equity instruments - x - x x x x x x - x x - x - -

Treasury shares (29,807) x (29,807) x x x - 76 x x x x - x (29,731) -

Profit (Loss) for the year (19,791) - (19,791) 19,791 - x x x x x x x - (93,278) (93,371) 93

Total equity 334,489 - 334,489 - - 794 - 54 - - - - - (98,139) 236,825 375

Group equity 334,205 - x - - 794 - 54 - - - - - (98,231) 236,825 x

Equity attributable to non-controlling interests x - 284 - - - - - - - - - - 91 x 375


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS


CONSOLIDATED STATEMENT OF CASH FLOWS Direct method(Thousands of €)

A. OPERATING ACTIVITIES 31.12.2017 31.12.2016

1. Operations 1,358 (11,593)

- interest received (+) 32,414 43,454

- interest paid (-) (15,061) (20,239)

- dividends and similar income 421 1,617

- net fees and commissions (+/-) 59,085 61,422

- personnel costs (excluding TFR provisions and shares) (44,393) (44,829)

- other costs (-) (52,760) (62,495)

- other income (+) 21,547 9,296

- taxes and duties (643) (283)

- costs/revenues related to groups of assets held for sale and net of tax effects (+/-) 748 464

2. Cash provided/used by financial assets: 924,417 523,663

- financial assets held for trading 53,586 101,632

- financial assets available for sale 426,530 253,813

- loans to clients 167,432 275,368

- loans to banks: demand 273,001 205,465

- loans to banks: other loans and receivables (10,334) (368,289)

- other assets 14,202 55,674

3. Cash provided/used by financial liabilities: (925,107) (508,927)

- due to banks: demand 27,276 12,807

- due to banks: other payables (353,386) (206,621)

- due to clients (300,310) (217,304)

- outstanding securities (243,013) (101,313)

- financial liabilities held for trading (28,111) (16,328)

- other liabilities (27,563) 19,832

Net cash provided/used by operating activities 668 3,143


CON

SOLI

DAT

ED F

INAN

CIAL

STA

TEM

ENTS


B. INVESTING ACTIVITIES 31.12.2017 31.12.2016

1. Cash provided by: - -

- sales of subsidiaries and business divisions - -

2. Cash used by: (648) (3,286)

- purchase of tangible assets (396) (3,216)

- purchase of intangible assets (252) (70)

Net cash provided/used by investing activities (648) (3,286)

C. FUNDING ACTIVITIES

- issue/purchase of treasury shares - -

- distribution of dividends and other purposes - -

Net cash provided/used by funding activities - -

NET CASH PROVIDED/USED DURING THE FINANCIAL YEAR 20 (143)

RECONCILIATION

Balance sheet items Amount

31.12.2017 31.12.2016

Opening cash and cash equivalents 1,669 1,812

Net total cash provided/used during the financial year 20 (143)

Net total cash provided/used during the financial year 1,689 1,669


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A

96 ■ Notes to the consolidated financial statements - Part A


A.1 - GENERAL

Section 1 - Declaration of compliance with International Accounting Standards

The consolidated financial statements of Banca Intermobiliare were prepared in accordance with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS), as these have been endorsed by the European Commission based on the procedures set forth under Regulation (EC) 1606 of 19 July 2002 and as provided for in Italian Legislative Decree 38/05.

Section 2 - General principles of preparation

The consolidated financial statements consist of the balance sheet, income statement, comprehensive income statement, statement of changes in equity, statement of cash flows and the notes to the financial statements and are accompanied by the report on operations, as well as the certification of the Managing Director and the Financial Reporting Manager pursuant to art. 154-bis, para. 5, of Italian Legislative Decree 58/1998.The consolidated financial statements have been prepared on a going concern basis in accordance with the accruals concept and using the historical cost criterion modified in relation to the valuation of financial assets and liabilities held for trading, available for sale and those designated at fair value, and all existing derivative contracts the valuation of which was performed according to the fair value principle.The book values of assets and liabilities subject to hedging were adjusted to take into account any changes in fair value on the portion attributable to the hedged risk. Offsetting of assets and liabilities and costs and revenues is performed only if required or allowed by a standard or interpretation.In accordance with the provisions of art. 5, paragraph 2, of Italian Legislative Decree No. February 28, 2005, n. 38, the consolidated financial statements are prepared using the Euro as currency. In particular, pursuant to the instructions issued by the Bank of Italy, the financial statement amounts are expressed in thousands of Euro, as are the numbers indicated in the notes.In order to take account of changes in the provisions of the Italian Civil Code on financial statements following the entry into force of the reform of company law (Italian Legislative Decree No. 6 of 17 January 2003 and the delegated measures enforceable under Italian Law No, 366 of 3 October 2001), the information in the Notes to the financial statements, unless otherwise provided for by the special regulations of the Bank of Italy, have been properly and accordingly integrated.With reference to the financial statements and the Notes, by virtue of art. 9 of Italian Legislative Decree no. 38 of 28 February 2005, the Bank has applied the provisions set forth in Bank of Italy Circular no. 262 of 22 December 2005 as currently applicable, adding information as required by the International Accounting Standards or where considered appropriate in terms of importance or significance.The financial statements and the notes present, besides the amounts related to the reference period, also the corresponding comparative data referred to the financial statements for the financial year ended 31 December 2016.Furthermore, the document was prepared in accordance with the Consob regulations.

Information on the business as a going concernThese Consolidated Financial Statements have been prepared on a going concern basis. In this regard, the joint coordination group of the Bank of Italy, CONSOB and ISVAP on the subject of application of the IASs/IFRSs issued their document No. 2 of 6 February 2009 entitled “Information to be provided in financial reports on the going concern assumption, on financial risks, on tests for impairment of assets and on the uncertainties in the use of estimates” and asked Directors to perform accurate assessments on the existence of the going concern assumption in compliance with the provisions in IAS 1. In particular, paragraphs 23-24 of IAS 1 establish that: “When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern”.

Part A - ACCOUNTING POLICIES

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A

Notes to the consolidated financial statements - Part A ■ 97


Banca Intermobiliare, while preparing the 2016 annual financial statements and subsequent interim reports, had highlighted some elements that could have caused doubts about Veneto Banca’s ability to continue as a going concern, indicating also the related effects on the Bank’s ability to continue as a going concern. In particular, in the absence of deconsolidation of Banca Intermobiliare from the Veneto Banca Group, a possible unfavourable development in the continuity of the parent company, could have prevented Banca Intermobiliare from implementing the guidelines of the strategic plan approved during 2017, with effects on the use of the going concern assumption in the preparation of its financial statements.The Board of Directors of BIM had however decided, in the light of the overall framework of reference, of the initiatives undertaken and in the process of implementation, and after completing the necessary checks, and taking into account the significant uncertainties described above, to prepare the 2016 annual financial statements of Banca Intermobiliare on the assumption of the entity being a going concern.

The Bank of Italy appointed the liquidators of Veneto Banca and the Oversight Committee of the same who, implementing the ministerial indications are overseeing:1. the continuation, where necessary, of the company’s business or of certain branches of activity for the technical time

necessary to implement the planned sales;2. the disposal of corporate assets and liabilities in accordance with the binding offer formulated by the transferee

identified as Intesa Sanpaolo S.p.A., which will take over the relationships of the transferor without a break; 3. the sale to Società per la Gestione di Attività S.G.A (in which the public has a stake) of impaired loans and other

assets not disposed of. In the context of the said decree, Banca Intermobiliare, as confirmed on its website by the Bank of Italy with news of 26 June 2017, does not come within the perimeter of Art. 3 among the assets acquired by Intesa Sanpaolo S.p.A. and is continuing its operations in an orderly manner, ensuring the continuity of the existing relationships with its clients.

The placing in compulsory administrative liquidation of Veneto Banca did not adversely affect the process of deconsolidating Banca Intermobiliare from the Veneto Banca Group, as besides stressed by the liquidators themselves in a press release communicating, in the context of realising its assets, that they had begun a process aimed at the sale of its controlling equity interest in Banca Intermobiliare.

With a press release of 6 July 2017, Veneto Banca in C.A.L. announced the launch of the activities for the sale of the stake held in BIM. Following the non-binding offers received, the liquidators, with the aid of their financial advisor Lazard & Co S.r.l., selected a limited number of entities, all of high international standing and which have expressed an interest in acquiring the equity investment held by Veneto Banca in BIM in the current configuration of the corporate perimeter of the company, including the total portfolio of impaired loans. Access to the data (Data Room) began on 24 July 2017. To protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG.

On 29 August 2017, the Shareholder received the offers for assessment admitting: Attestor Capital LLP and BRM Barents SCA to a further stage of the procedure, before signing subsequently an exclusive agreement with Attestor Capital LLP. On 24 October 2017, Veneto Banca S.p.A. in CAL and Trinity Investments Designated Activity Company, an investment firm subject to Irish law and managed by Attestor Capital LLP, signed a sale contract, under the terms of which, conditional on obtainment of the applicable regulatory authorisations, Trinity Investments undertakes to purchase from the CAL 107,483,080 BIM ordinary shares representing a total of 68.807% of the share capital. For further information, please see the introductory part of the present Report on Operations of the Consolidated Financial Statements at 31.12.2017.In a press release Trinity Investments stated that after completion of the Banca Intermobiliare sale contract a full takeover bid will be launched on the BIM shares outstanding, and it will begin immediate implementation of a complex reorganisation of BIM, as per the business plan presented to the Bank of Italy on applying for authorisation, based on a significant manoeuvre of de-risking of BIM’s assets by deconsolidating the bank’s entire portfolio of impaired assets and on a capital strengthening operation in 2018 for a total amount of € 121 million.

With a communication of 5 April 2018, the Bank of Italy made known to Banca Intermobiliare that the European Central Bank had taken, on the same date, the decision “not to oppose” the acquisition by Trinity Investments Designated Activity Company, Attestor Capital LLP, of the controlling equity interest in the capital of Banca Intermobiliare di Investimenti e Gestioni pursuant to the request made on 4 December 2017.

In addition, as regards the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August we can report:i) Positive resolution of appeal no. G.R. 10995/2017 presented to the RAC by Barents Reinsurance S.A. against

the Compulsory Administrative Liquidation of Veneto Banca for the cancellation, after the adoption of appropriate precautionary measures, also by a single judge, of the operation to sell the majority stake in Banca Intermobiliare

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



by the Liquidators to Attestor. With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM, and referring the dispute in question to the jurisdiction of the Ordinary Court.

ii) Positive resolution of the appeal presented on 5 February 2018 by Barents to the Council of State (general register number 900 of 2018) for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.

At the same time, during the second half of the year, Banca Intermobiliare continued with the activities of restructuring, relaunch and development approving, at the Board meeting of 18 July 2017, the “2017-2021 Business Plan”, updating the “strategic guidelines ” and the “long-term financial and economic projections” - already approved at the beginning of the year - which highlight the bank’s sustainability over time on a “stand alone” basis and assuming that a new shareholder will acquire, very soon, in the context of the liquidation process, the majority stake held by Veneto Banca in C.A.L.. In particular the bank worked on the following main planning initiatives:a) renewal of the first managerial line of Banca Intermobiliare (selection of highly qualified professional figures








h) continuation of the planning activities related to the new structure of the Information Technology systems to be created through two distinct steps: in December, in view of the modified structure of the former parent company and to the changes made to the operating relations with Veneto Banca and Banca Intesa Sanpaolo, the bank’s IT systems within the systems managed by the current outsourcer were segregated (Step 1); after a careful assessment of the IT system most suitable for the BIM Group, the Board of Directors also confirmed its intention to proceed with migration of the entire IT platform, to another provider (Step 2);

i) definition of a new policy for managing the Bank’s capital geared to a “Capital Light” model, aimed at reducing the risks that may be incurred by the capital of a private bank. This model is characterised by: “reduction of RWAs”

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



pursued through, among other things, a process of sales and realisation of non-strategic assets (in particular of the entire property portfolio); “low market risk”, including a Banking Book of a limited amount, with a mitigation of exposure to country risk pursued through diversification of issuers; “low operational risk”, with a service model compliant with the legislation and particularly attentive to ex ante management; “low credit risk”, with a portfolio concentrated exclusively on Lombard exposures.

At 31 December 2017 the economic and financial figures meant that regulatory capital and liquidity ratios were stably above the regulatory requirements.Banca Intermobiliare confirmed an operating profit, despite the situation of the majority shareholder and the non-timely activation of the activities preparatory to the sale of BIM, all elements that had repercussions, in terms of both deposits and profitability. The loss for the period fell by 47.2% compared to the 2016 loss and in line with respect to what was provided for in the 2017-2021 business plan, and determined by the write-downs made, following the process of reviewing the loan portfolio. The loss for the period, in fact, was mostly attributable to the results of the revisions of the estimates regarding the foreseeable losses on loans, in the light of the most up-to-date information made available, both as regards the economic and financial situation of clients, and the evolution of the value of the guarantees received.As regards financial risk management, during the year no critical situations arose, as illustrated above in the report on operations and in the notes to the statements, Part E “Information on risks and related hedging policies”. In particular, as regards liquidity, we can note that, although with a drop of direct deposits, the launch of the restructuring of BIM into a Capital-Light bank has made it possible to prevent the emergence of particular tensions. In the context of preparing the annual financial statements we can note the positive results of the check regarding the recoverability of deferred tax assets (probability test), the assessment of goodwill (impairment test) and the absence of indicators (trigger events) of permanent impairment losses of its assets in general and mainly of its property investments and equity investments recognised among its assets. The procedures used for the testing and the results thereof are described specifically within the Notes.

Finally, on 9 February 2018, Banca Intermobiliare approved the 2018 budget, carrying out the managerial actions that will make it possible to achieve the results provided for in the plan, despite the fact that the delay in the process of sale of the Bank had impacts on the amount of AUM and on the company’s overall profitability.

Following the aforementioned Bank of Italy communication of 5 April 2018, although some uncertainties remain on implementation of the business plan as it is based by its very nature also on events which are beyond the control of the directors, the imminent completion of the BIM Group sale contract removes the uncertainties highlighted in the Consolidated Half-Yearly Financial Report at 30 June 2017 and in the Consolidated Interim Report on Operations at 30 September 2017, which could have led to significant doubts regarding the going concern assumption for Banca Intermobiliare in relation to: (i) failure to complete the sale of Banca Intermobiliare; (ii) the decisions that the Supervisory Authority could take in the context of the “Supervisory Review and Evaluation Process (SREP) Decision”, because:i) the group is no longer controlled by Veneto Banca in CAL, the situation of which contributed to affecting



On the basis of all of the above the Board of Directors of the Bank therefore decided that, in the light of the overall framework of reference outlined above, of the initiatives taken and being implemented and considering the state of the information available in relation to the above, the annual financial statements at 31 December 2017 are prepared according to the going concern assumption.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 3 - Consolidation scope and methods

Preparation criteriaThe consolidated financial statements include the financial and economic results of the consolidating company Banca Intermobiliare and its direct and indirect subsidiaries.The consolidation scope is determined in accordance with the provisions contained in IFRS 10 “Consolidated financial statements”, which came into force as of 1 January 2014, as indicated in the paragraph on “Changes to IAS/IFRS accounting standards” below, to which please refer for further details. According to the aforesaid standard, the requirement of control is the basis of consolidation of all entity types and it applies when an investor has at the same time:• the power to decide on the relevant activities of the entity;• is exposed or benefits from variable returns resulting from the relationship with the entity;• has the ability to exercise its power to affect the amount of its returns (link between power and returns).

IFRS 10 thereby establishes that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, by virtue of a legal right or for a mere factual situation and also be exposed to variability of results derived from such power. Banca Intermobiliare has therefore consolidated all the entity types when all three control elements are present.

Within the scope of Banca Intermobiliare no entity of which the majority of voting rights are not held has been the subject of consolidation.The reporting date of the consolidated financial statements coincides with the annual reporting date of the parent company Banca Intermobiliare and of all the consolidated companies. Controlled entities are subject to consolidation from the date on which Banca Intermobiliare acquires control and they cease to be consolidated from the moment in which such control ceases to apply. The existence of control is subject to a continuous process of evaluation, if facts and circumstances indicate some variation in one or more of the three elements constituting the control requirement.The full consolidation method consists of transferring the balance sheet and income statement items of subsidiaries on a straight-line basis. The book value of equity investments in companies fully integrated in the consolidation, owned by the Consolidating Company or other companies controlled by it, is offset - in relation to assets and liabilities assumed under the investments - by a corresponding item in Group shareholders’ equity, adjusted as necessary for the purposes of alignment with the accounting standards of reference. Balance sheet assets and liabilities, off-balance-sheet transactions, income and expenses and significant profits and losses between the companies included in the consolidation scope have been eliminated.Operating results of a subsidiary disposed of are included in the consolidated income statement up to the date of sale, i.e. the date on which the consolidating company ceases to have control over the subsidiary. The difference between the consideration of the sale of the subsidiary and the book value of its assets less its liabilities at the date of transfer is recognised in the consolidated income statement as a gain or loss on the sale of the subsidiary. Non-controlling interests in the consolidated balance sheet are indicated separately from the consolidating company’s liabilities and shareholders’ equity. The portion pertinent to non-controlling interests is presented separately also in the income statement.Equity investments over which the consolidating company exercises a significant influence (so-called set of“associates”) are measured using the equity method. If an associate uses accounting standards other than those used by the holding company, adjustments are made to the associate’s financial statements that are used by the holding company for application of the equity method.

Consolidation scopeAt 31.12.2017 the consolidation scope had changed with respect to the situation of the previous year following the sale of the equity investment in Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA completed on 18 October 2017 and the subsequent purchase from the said BIM Suisse of the entire share capital of Patio Lugano S.A.

We must specify that the Board of Directors, at its meeting on 9 and 10 February 2017, had defined Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A., Patio Lugano S.A. and Bim Insurance Brokers S.p.A. as non-strategic equity investments; therefore, starting from 31.12.2016 these equity investments had been reclassified, on the basis of the conditions provided for in the international accounting standard IFRS 5, from the item “Equity investments” to the item “Non-current assets and disposal groups held for sale”. During 2017 the position of Bim Insurance Brokers was reviewed and it was reclassified among controlled investees (subsidiaries).

The following table indicates the list of exclusively-controlled investee companies included in the consolidation scope.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



1. EQUITY INVESTMENTS IN COMPANIES CONTROLLED EXCLUSIVELY

Company name Operational headquarters

Registered Office

Form ofcontrol (1)

Investment relationship % votes available (2)

Investor company

% shareholding

Symphonia SGR S.p.A. Turin Turin 1 Bim 100%

Bim Fiduciaria S.p.A. Turin Turin 1 Bim 100%

Bim Immobiliare S.r.l Turin Turin 1 Bim 100%

Patio Lugano S.A. Lugano Lugano 1 Bim 100%

Immobiliare D S.r.l Turin Turin 1 Bim 100%

Paomar Terza S.r.l. Turin Turin 1 Bim 100%

Key:(1) Form of control: 1= Majority of voting rights at the shareholders’ meeting(2) Votes available at ordinary shareholders’ meetings, distinguishing between actual and potential. Unless otherwise indicated, the stake corresponds to the percentage votes

available in ordinary shareholders’ meetings.

2. SIGNIFICANT ASSUMPTIONS AND ASSESSMENTS TO DETERMINE THE CONSOLIDATION SCOPEIn accordance with paragraph 7 (a), of IFRS 12, the significant assumptions and assessments are described as adopted by Banca Intermobiliare and its subsidiaries to establish the existence of control over another entity. According to the international accounting standard IFRS 10 “Consolidated Financial Statements”, in force since 1 January 2014, the control requirement is the basis of consolidation of all entity types and applies when an investor has at the same time:a) the power to decide on the relevant activities of the entity;b) is exposed or benefits from variable returns resulting from the relationship with the entity;c) has the ability to exercise its power over the investee to affect the amount of its returns (link between power and

returns).IFRS 10 therefore establishes that, in order to have control, the investor must have the ability to direct the relevant activities of the entity, by virtue of a legal right or for a mere factual situation and also be exposed to variability of results derived from such power. Banca Intermobiliare therefore consolidates all entity types when all three control elements are present.

a) The existence of power over the investeeIn accordance with paragraph 10 of IFRS 10 “an investor has power over an investee entity when it has valid rights which give it the current capacity to direct relevant activities, i.e. activities that significantly affect the returns of the investee”.The definition puts emphasis on the concepts of “relevant activities” and “valid rights”: the first are those that can affect an entity’s performance11, while the latter are the factors which confer power over the relevant activities and may result either from possession of instruments representing the investee’s capital or from other factors such as contractual agreements. The key steps of IFRS 10 which must be taken into consideration are the following:“To hold power over an investee, an investor must be the holder of existing rights that give it the actual capacity to conduct the relevant activities. In determining whether it holds power, an entity needs to consider only the substantive rights and rights that are not protective” (see IFRS 10, paragraph B9);“In determining the existence of control, an investor must consider its potential voting rights and also of other parties to determine if it has power. Potential voting rights are rights to obtain the voting rights of an investee, such as those arising from convertible securities or options, including forward contracts. Such potential voting rights must only be considered if they are substantive” (see IFRS 10, paragraph B47);“In order for a right to be substantive, the holder must have the ability to exercise this right” also “to be substantive, the rights must also be exercisable when it is necessary to take decisions on the conduct of relevant activities” (see IFRS 10, paragraphs B22-B24). In Appendix A of IFRS 10, protective rights are defined as follows: “Rights designed to protect the interest of the party holding those rights without giving that party power over the entity to which those rights relate.”Some examples of rights which, individually or cumulatively, may confer power on an investor, are contained in Appendix B of IFRS 10:a) rights in the form of voting rights (or of potential voting rights) of an investee;b) rights of appointment, subsequent appointment or dismissal of key management personnel of the investee that have

the ability to conduct the relevant activities;

11 Paragraph B11 of IFRS 10 provides the following examples of relevant activities: “a) the sale or purchase of goods and services, b) managing financial assets until maturity, c) selection, acquisition or divestment of assets, d) research and development of new products or processes, e) the definition of a funding structure or funding procurement structure”.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



c) rights of appointment or removal of another entity conducting the relevant activities;d) rights to instruct the investee to begin operations that benefit the investor, or to prohibit any changes thereto; ande) other rights (such as rights to make decisions specified in a management contract) that give the holder thereof the

ability to conduct relevant activities (see IFRS 10, paragraph B15).

IFRS 10 also addresses the possibility that an investor which holds less than a majority of the voting rights is still able to exercise power over the investee. This condition can be achieved for example through:• a contractual agreement between the investor and the other holders of the voting rights or other contractual

arrangements;• the voting rights of the investor: when the votes exercisable by other investors are distributed over a large number

of entities that do not act together or through agreements focused on the expression of a common vote, an investor that owns less than a majority of the voting rights may still be able to control the investee (see. IFRS 10, paragraph B41-B45). This case is commonly defined as de facto control;

• potential voting rights: “In determining the existence of control, an investor must consider its potential voting rights and also of other parties to determine if it has power. Potential voting rights are rights to obtain the voting rights of an investee, such as those arising from convertible securities or options, including forward contracts. Such potential voting rights must only be considered if they are substantive” (see IFRS 10, paragraph B47);

• a combination of the factors listed above: “When combined with voting rights, the rights specified in a contractual agreement may be sufficient to confer on an investor the effective ability to conduct production processes or other financial or management activities of an investee, which significantly affect the returns of the investee itself” (Cf. IFRS 10, paragraph B40).

b) Exposure to the variability of results achieved by the companyAccording to paragraph 15 of IFRS 10 “an investor is exposed, or has the right to variable returns from its relationship with the investee when the returns that are derived from this relationship are likely to vary in relation to the economic performance of the investee. The returns of the investor may be only positive, only negative or, on the whole, positive and negative”.

c) The ability to use that same power to influence the results of the companyParagraph 17 of IFRS 10 states that “An investor controls an investee if, in addition to having the power over it and exposure or the right to variable returns from its relationship with the investee, it also has the ability to exercise its power to affect the return arising from this relationship”.

In this regard it is necessary to recall the contents of paragraphs B58-B72 of IFRS 10 on the subject of delegated power. In particular, according to paragraph B58 “When an investor with rights to make decisions (an entity with decision-making power) determines if it controls an investee, it must determine whether it is a principal or an agent. An investor must also determine whether another entity with rights to make decisions is acting as its agent. An agent is a party primarily engaged to work on behalf of and for the benefit of a third party (the principal, or principals) and, therefore, does not control the investee when it exercises its decision-making authority. It may happen that sometimes the power of a principal is held and exercised by an agent, but on behalf of the principal. An entity with decision-making power is not an agent simply because third parties can enjoy the benefits from its decisions”.On the basis of these concepts and on the entry into force of the standard in question, Banca Intermobiliare carried out a comprehensive survey on the equity investments held in order to examine whether the first of the three characteristic elements of control may apply to them, and that is the power over relevant activities. If that examination had revealed that the Banca Intermobiliare did not hold sufficient rights to take independent decisions about the relevant activities of the investees, it would not have been necessary to verify the remaining elements of control (exposure to the variability of the results and the link between power and variable returns), because, as is specifically required by IFRS 10, the coexistence of all three elements is needed in order for there to be a controlling relationship.The assessment of the existence of control is carried out continuously by Banca Intermobiliare whenever there are new elements and/or variations of existing elements that may impact on the entities in which investments are held. The same process of evaluation is also conducted at the start of every new investment relationship in general.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



3. INVESTMENTS IN SUBSIDIARIES CONTROLLED EXCLUSIVELY WITH SIGNIFICANT NON-CONTROLLING INTERESTS

3.1 THIRD-PARTY INTERESTS, THE AVAILABILITY OF THIRD-PARTY VOTES AND DIVIDENDS PAID TO THIRD PARTIES

Company name Third-party interests

Availability of votes of third

parties %

Dividends paid to third parties

(€/thousand)

Bim Insurance Brokers S.p.A. 12 49.00% 49.00% -

3.2 INVESTMENTS WITH SIGNIFICANT THIRD-PARTY INTERESTS: ACCOUNTING INFORMATION

Company name Total Assets

Cash and cash

equivalents

Financial assets

Tangible fixed assets and intangible

fixed assets

Financial liabilities

Shareholders’ equity

Bim Insurance Brokers 1,762 - 661 3 - 914

Company name Net interest income

Operating income

Operating costs

Profit(Loss)

of continuing operations before tax

Profit (Loss)

of continuing operations after tax

Profit (Loss)

of groups of assets

held for sale, net of tax

Profit(Loss)

for the year

Otherincome

components after tax

Comprehensive income

Bim Insurance Brokers 7 676 (458) 218 145 - 145 3 148

4. SIGNIFICANT RESTRICTIONSAs at 31.12.2017 there were no significant restrictions for Banca Intermobiliare as defined in paragraph 13 of IFRS 12. In particular, the accounting standard defines as “significant restrictions” (e.g. legal, contractual and regulatory restrictions) those which limit the ability to access the assets or to use them and extinguish liabilities, such as: (i) those that restrict the ability of a parent company or its subsidiaries to transfer cash or other assets; or (ii) guarantees or other provisions that may restrict dividends and capital distributions.

5. ADDITIONAL INFORMATIONAs required by paragraph 11 of IFRS 12, please note that the reporting date of the financial statements of subsidiaries used in the preparation of the consolidated financial statements coincides with that of the consolidating company (31 December 2017).

CONSOLIDATION METHODS

Full consolidationThe full consolidation method consists of transferring the balance sheet and income statement items of subsidiaries on a straight-line basis. After attribution of equity and income to non-controlling interests, the value of the equity investment is cancelled against the value of the subsidiary’s residual equity.Subsidiaries are considered to be all those companies and entities on which Intermobiliare Bank has the power to control the company’s financial and operating policies; this is normally done when more than half of the voting rights are held.The existing or potential voting rights that can be exercised on the reporting date are taken into account in order to verify whether the consolidating company holds control.Subsidiaries are fully consolidated from the date on which control was effectively transferred to the consolidating company.

12 Stake recognised among “Non-current assets and disposal groups held for sale”

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Subsidiaries are excluded from the consolidation scope from the date on which control is transferred away from the consolidating company.Where there is loss of control of a company which is part of the consolidation scope, the consolidated financial statements include the result for the proportion of the period during which the consolidating company had maintained control. The financial statements of the subsidiaries are usually prepared by adopting for each reporting date, the same accounting standards as for the parent company. In the consolidation adjustments are made to render uniform the items which are influenced by the application of different accounting standards.

Consolidation using the equity methodThe equity method involves the initial recognition of the equity investment at cost and its subsequent adjustment on the basis of the company’s share of the subsidiary’s shareholders’ equity. The differences between the value of the equity investment and the subsidiary’s equity are handled according to the criterion adopted for full consolidation differences.Associates are all companies over which Bank Intermobiliare is able to exercise significant influence, although the conditions of control do not exist. This influence is presumed to exist where Banca Intermobiliare holds a percentage of voting rights between 20% and 50%, or when – although with lower voting rights - Banca Intermobiliare has the power to participate in the determination of financial and managerial policies by virtue of specific legal ties, such as participation in shareholder agreements.After the acquisition, the portion of the profits and losses applicable to the Group are accounted for in the consolidated income statement, and any changes in the reserves subsequent to the acquisition are handled as consolidated reserves.If there is evidence that the value of an equity investment may have been reduced, the recoverable value of the investment is assessed, taking into account the present value of future cash flows that the investment may generate, including its final disposal value. If the recoverable value is lower than the book value, the difference between the two is recognised in the income statement. For the consolidation of investments in associated companies, the most recently-approved financial statements of the companies were used.

Conversion of the financial statements in currencies other than the EuroThe financial statements of companies operating in areas other than the Eurozone have been converted into Euro by applying the exchange rates in force on the annual reporting date to the asset and liability items on the balance sheet, and the average exchange rates for the year to the income statement items.The exchange differences of the financial statements of these companies, deriving from application of differing exchange rates for assets and liabilities and the income statement, are allocated to the valuation reserves item. Exchange difference in the equities of investee companies are also recognised in valuation reserves. All exchange differences are reversed back to the income statement in the year in which the equity investment is sold.In the consolidated financial statements of Banca Intermobiliare, the economic and financial situation of the Swiss subsidiary Patio Lugano and the results of the sale of the former subsidiary Bim Suisse were determined in Swiss Francs and converted into Euro.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 4 - Events subsequent to the reporting date

The Board of Directors of Banca Intermobiliare announced its preliminary results in a press release on 9 February 2018 and then examined the draft consolidated financial statements on 21 March 2018, and authorised their publication as provided for by law.It should be noted that, subsequent to 31 December 2017 and up to the date of approval of this financial report,there have been no corporate events that may have significant consequences on the results and financial position shown herein with the exception of what is presented below. With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC ruled on the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August 2017. On the basis of the reconstruction of the events and an in-depth examination of the nature of the actions challenged and the rules applied, the RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM and referring the dispute in question to the jurisdiction of the Ordinary Court.On 5 February 2018 Barents presented an appeal to the Council of State (general register number 900 of 2018) for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.On 7 March 2018, the Director with assignments Giorgio Angelo Girelli informed the Board of Directors of Banca Intermobiliare that he had concluded on that date with Trinity Investments an agreement that provided for his resignation from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the shares of Veneto Banca S.p.A. in CAL, envisaged in the coming weeks.

With a communication of 5 April 2018, the Bank of Italy made known to Banca Intermobiliare that the European Central Bank had taken, on the same date, the decision “not to oppose” the acquisition by Trinity Investments Designated Activity Company, Attestor Capital LLP, of the controlling equity interest in the capital ofBanca Intermobiliare di Investimenti e Gestioni pursuant to the request made on 4 December 2017.

Section 5 - Other aspects

Use of estimates and assumptions in the preparation of the consolidated financial statementsAs required by the aforementioned joint paper issued by Bank of Italy/IVASS/Consob, it should be noted that the estimation processes have been completed relating to the carrying value of the most important valuation items listed in the balance sheet as at 31 December 2017, as required by the applicable accounting standards. These processes are based largely on estimates of future recoverability of the values recorded in the balance sheet according to the rules dictated by the regulations in force and were carried out with the going concern assumption, i.e. regardless of any cases of forced liquidation of the items being valued. On this point, please read carefully the assessments made by the Directors on the going concern assumption. The estimates were primarily used to determine the fair value of financial instruments and shareholdings, for the assessment of loans, for the determination of allocations to provisions for risks and charges, for the quantification of current and deferred taxes and estimated recoverability of deferred tax assets. The survey confirms the recognition values of the items mentioned at 31 December 2017. The Directors also formulated their best estimates on the basis of the information available.

In relation to loan exposures to clients, as stated in previous financial reports, the loan portfolio was the subject of an overall review carried out in the fourth quarter of 2016 - which had taken into account also all the valuation differences that had emerged in the context of the inspection launched by the ECB and completed at the beginning of February 2017 - and continued also throughout financial year 2017. In this context the Bank launched an updating process relating to the management and assessment processes and to the control systems on lending. This was completed in the early months of 2018 with approval of the new policyand the related regulations, the contents of which were adopted in preparing the financial statements at 31.12.2017.It should be noted, however, that value adjustments in the face of individual loans are estimated on the basis of the emerging evidence as a result of careful and continuous monitoring of the development of existing relations with borrower clients and their economic and financial situation. Banca Intermobiliare, in evaluating its exposures at31 December 2017, adopted the necessary precautions also taking into account the available objective elements. With particular reference to the realisation of assets obtained as guarantees of credit lines granted, when represented by real estate assets, the estimated realisable value and the expected recovery times could be very difficult to estimate, owing to the performance of the property market. We cannot, therefore, exclude the possibility that the estimated realisable value of non-performing loans recognised in the financial statements may vary as a result of deviations

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



between the estimated values of real estate collateral, used to determine the related value adjustments, and the cash flows that are actually realised, and/or as a result of differences in the timing of recoveries.With regard to impaired loans, the assumption that the book value is a reasonable approximation of fair value is based on the fact that the absence of a sufficiently large number of transactions for these financial assets does not allow recognition of observable market parameters, with particular reference to the components making up the discounting rate (which would also include the market premium for risks and uncertainties). Because of this, the estimated fair value is largely determined by the current portfolio management model and by the related recovery mode and does not appear specifically influenced by the evolution of the rates of return required by the market. The internal procedures for calculating the fair value (the so-called “exit price”) of the loans portfolio is therefore more sensitive to forecasts about losses in value, as the result of a subjective assessment, expressed by the manager of the position, with reference to the estimate of expected cash flows from recovery and to the related time scales. It is not possible, therefore, to exclude the possibility that the price of any sale to third parties may differ in negative terms from the fair value indicated for balance sheet purposes.

With specific reference to the quantification of deferred tax assets and liabilities and the estimated recoverability of Deferred Tax Assets (DTAs), the Bank carried out the “probability test” in accordance with IAS 12, in order to assess the likelihood of realising adequate future taxable income to absorb the DTAs recognisable at 31 December 2017. We must point out that the information considered for the purpose of the probability test presents several elements of uncertainty including, among others: i) the risk that amendments of the tax legislation may in future limit the reportability of the tax losses made by the

Bank, reduce the tax rates with a consequent reduction in the amount of DTAs recoverable or entail impacts, even significant ones, on the taxable income of coming years;

ii) risk that the future economic results (and the consequent taxable incomes) generated by the Bank will be less than those considered in the probability test;

iii) risk that the significant uncertainties highlighted in discussing the going concern assumption may determine the cancellation of the DTAs.

The possible occurrence of such circumstances could lead to significant adjustments in future years, of the carrying amounts of DTAs shown in the financial statements at 31 December 2017.

With reference to the use of estimates and to the assumptions made for determining provisions for risks for legal cases and disputes the following disclosure is provided. The main types of actions brought against the bank relate to bankruptcy revocatory actions, to actions on the subject of compound interest and to actions related to investment services, typical of the performance of a banking business. In the face of such disputes, Banca Intermobiliare and its subsidiaries have carried out an analytical assessment of each single case in order to establish prudent allocations to provisions for risks and charges in order to cover any losses. Quantification of the same entails however valuation difficulties that involve both the an debeatur and the quantum debeatur, as well as the times of any manifestation of the liability which are particularly evident if the proceeding launched is in its initial stage and/or the related enquiry stage is in progress.The estimate of liabilities is therefore based on the information available each time, but also implies, owing to the numerous uncertainties deriving from the legal proceedings and/or from the inspections, significant elements of judgement. It is therefore not possible to exclude that the legal disputes and inspections may lead, in future, to contingent liabilities not included in provisions for risks and charges, nor that the provisions set aside for risks and charges may be insufficient to cover the liabilities deriving from a more negative than expected outcome of the proceedings and/or assessments, with consequent possible negative effects on the economic and financial situation. In addition the said liabilities could also be affected by losses deriving from retroactive changes in the regulatory framework, and those consequent to the conclusion of settlement agreements.

The specific items “provisions for risks” and “tax assets” of Part B of the notes to the financial statements and in the report on operations, to which you are referred, detail the risk positions for court cases and revocatory actions or tax disputes in progress which are the most significant for Banca Intermobiliare and its subsidiaries.

The main areas for which subjective assessments are used by management are:• the quantification of losses due to the reduction of loan values and, in general, of other financial assets;• the determination of the fair value of financial instruments to be used for the financial statements;• the use of valuation models for the recognition of the fair value of financial instruments which are not quoted on

active markets;• the assessment of the sustainability of the value of goodwill and intangible fixed assets;• quantifying provisions for staff and provisions for risks and charges;• use of estimates and assumptions for determination of the current taxes and the extent to which deferred tax assets

can be recovered;• demographic assumptions (relating to the estimated mortality of the insured population) and financial assumptions

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



(deriving from the possible evolution of financial markets), used in structuring insurance products and defining the basis for calculating the additional reserves.

The description of the accounting policies applied to the main balance sheet amounts provides the details required for identification of the major assumptions and subjective valuations used in preparing the consolidated financial statements for the year. For more detailed information regarding the composition and the related book values of the items for which estimates were used, please see the specific sections of the notes.

Accounting for negative income components on financial assetsThe gradual reduction of interest rates guided by the European Central Bank led to the recording of negative income components on loans, with the consequent need to define the correct accounting treatment with which the same are recognised in the income statement.For the purposes of preparing the present annual financial statements and in line with what was done in the previous financial year, Banca Intermobiliare recognised the aforesaid negative components under the item “interest expense and similar items”, thus aligning the classification of these expenses in the financial statements with the regulatory one. By analogy, the same treatment is reserved for the positive economic components accrued on financial liabilities, which are therefore to be recognised under the item “interest income and similar items”. For completeness of disclosure we can note that at 31 December 2017:• negative interest accrued on financial assets amounted to €/thou 77.1 (€/thou 283.3 at 31.12.2016);• positive interest accrued on financial liabilities amounted to €/thou 244.6 (€/thou 804.5 at 31.12.2016).

Amendments to the IAS /IFRSThe same accounting standards and methods that were used in preparing the consolidated annual financial statements for the year ended 31 December 2016 were adopted in preparing the financial statements for the year ended 31 December 2017. Please refer to the earlier financial statements for additional information to that provided below regarding the IASs/IFRSs and related SIC/IFRIC Interpretations endorsed by the European Commission up to 31 December 2017, the application of which is mandatory from 1 January 2018.The introduction of new standards, amendments and interpretations, which are listed in summary form below, did not however significantly affect the consolidated financial statements.

International accounting standards endorsed at 31.12.2017 and in force from 2017• Reg. 1989/2017 - Amendments to IAS 12 “Income Taxes”, with specific reference to the recognition of deferred tax

assets and, more in detail, for the purpose of clarifying the accounting for such assets referred to debt instruments carried at fair value.

• Reg. 1990/2017 - Amendments to IAS 7 “Statement of Cash Flows” in order to promote improvement of the disclosure about an entity’s financing activities.

The accounting standard applicable, obligatorily and for the first time, starting from 2017, is made up of a number of limited amendments made to the accounting standards already in force, endorsed by the European Commission during 2017. These amendments, however, are not particularly significant for the company.

International accounting standards endorsed at 31.12.2017 with subsequent application• Regulation (EU) 2016/1905 of 22/09/2016, which adopts IFRS 15 Revenue from Contracts with Customers, aimed

at improving the accounting reporting of revenue and therefore overall the comparability of revenue in financial statements;

• Regulation (EU) no. 2017/1986 which adopts IFRS 16 Leases, aimed at improving the accounting reporting of leasing contracts;

• Regulation (EU) no. 2017/1987 which adopts the amendments to IFRS 15 Revenue from Contracts with Customers - Clarifications to IFRS 15. The amendments aim at specifying a number of requisites and at providing further transition relief for entities that apply the Standard;

• Regulation (EU) no. 2017/1988 which adopts the amendments to IFRS 4 “Joint Application of IFRS 9 Financial Instruments” and IFRS 4 “Insurance Contracts”;

Regulation (EU) 2067/2016 endorsing the international accounting standard IFRS 9 “Classification, Measurement and Impairment of Financial Instruments” issued by the IASB on 24 July 2014.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



IFRS 9 “Financial instruments”The international accounting standard IFRS 9, issued by the IASB in July 2014 was endorsed by the European Commission with Regulation no. 2067/2016 and replaces – starting from 1 January 2018 - IAS 39. IFRS 9 is divided into three different areas of classification and measurement of financial instruments, impairment and hedge accounting. As regards the classification and measurement of financial instruments, the standard IFRS 9 introduces a model for which the classification of financial assets is guided, on the one hand, by the characteristics of the related contractual cash flows (“SPPI test - Solely Payment of Principal and Interest”) and on the other by the operational intention (“business model”) for which such assets are held. Financial assets according to IFRS 9 can be classified in three categories: a) Financial assets measured at amortised cost b) Financial assets measured at fair value through profit or loss c) Financial assets measured at fair value through other comprehensive incomeFinancial assets can be recognised at amortised cost or at fair value through shareholders’ equity only if it is demonstrated that the same give rise to cash flows that are exclusively payments of principal and interest. Equity securities are always measured at fair value through profit or loss, unless the company chooses (on initial recognition), for shares not held for trading purposes, to present value changes in a shareholders’ equity reserve that will never be transferred to the income statement, even in the event of sale of the financial instrument. As regards financial liabilities, no substantial changes are introduced with respect to the current standard on their classification and measurement. The only change is the accounting treatment of own credit risk: for financial liabilities designated at fair value (so-called liabilities in fair value option) the standard requires fair value changes of financial liabilities attributable to a change in own credit risk to be recognised in shareholders’ equity, unless this treatment creates or amplifies an accounting asymmetry in profit for the period; while the residual amount of fair value changes of liabilities must be recognised in the income statement.With reference to impairment, for instruments measured at amortised cost and at fair value through shareholders’ equity (other than equity instruments) a model based on the concept of Expected Loss is introduced in place of the current Incurred Loss, so as to recognise losses more promptly. The expected losses on the basis of allocation of the staging are accounted for in the 12 following months (Stage 1) or over the entire residual life of the asset being measured, if the credit quality of the financial instrument has suffered “significant” deterioration compared to the initial measurement (Stage 2) or if it is “Impaired” (Stage 3). The standard therefore entailed the following allocation of financial assets:• performing financial assets “Stage 1” with value adjustments in the following 12 months, or “Stage 2” in the

presence of a significant increase in credit risk with recognition of “lifetime” value adjustments determined through comparison between Probabilities of Default at the date of initial recognition and at the reporting date;

• non-performing financial assets “Stage 3” with alignment to the accounting and regulatory definitions of default already present today and recognition of “lifetime” value adjustments.

The forward-looking information associated with, among other things, the evolution of the macroeconomic scenario was included in the calculation of the Expected Credit Losses (ECLs).Finally, with reference to hedge accounting, the new model related to hedging tends to align the accounting presentation with risk management activities and to strengthen the disclosure of the risk management activities undertaken by the entity that prepares the financial statements.For a detailed description of the planning activities and of the related results please see the disclosure provided in the Report on Operations – Section Development and organisation activities.

IFRS 15 - Revenue from contracts with customersThe new accounting standard IFRS 15 - Revenue from Contracts with Customers was endorsed with the publication of Regulation no. 1950/2016 (subsequently amended by Regulation 1987/2017) and it came into force starting from 1 January 2018. This standard amends, replacing them, the accounting standards in force on revenue recognition and in particular IAS 18 - Revenue and IAS 11 – Construction Contracts, as well as the related interpretations. IFRS 15 provides for the following changes:• Single accounting standard for recognition of revenue (sales of goods and performance of services);• approach by “steps” for recognition of revenue:

- identification of the contract with the customer (with the requirement in some cases to consider several contracts in the accounts as a single contract) and identification of the “performance obligations”, providing for separate accounting of goods and services if they are “distinct”;

- determination of the transaction price and its division among the “performance obligations” of the contract on the basis of the stand-alone selling prices of each distinct good or service;

- recognition of the revenue in the moment of fulfilling the “performance obligations”, which occurs through transferring a good or performing a service and may be satisfied at a certain point in time or over a period of time.

• attribution of the total transaction prices to each of the commitments contained in the sale contract.Application of the new standard could determine impacts depending on the types of transactions measured (above all when estimates will be made on the variable components) and on the sector in which the entity operates

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



(telecommunications and residential properties are the two sectors considered most affected). From an initial analysis carried out on the main cases of existing revenue coming from contracts with clients, there are no differences from the current accounting treatment.

IFRS 16 - LeasesOn 13 January 2016, the IASB issued the final version of the IFRS 16 “Leases”. The new IFRS 16 will be applicable from 1 January 2019, once it has been approved by the EU. The IFRS 16 changes the current set of international accounting standards and interpretations on leasing in force, and in particular IAS 17. IFRS 16 introduces a new definition of leasing and confirms the current distinction between the two types of leasing (operational and financial) with reference to the accounting model which the lessor must apply. With reference to the accounting model to be applied by the lessee, the new standard requires that, for all types of leases, there must be recognition of an asset that represents the right to use of the asset that is being leased and, at the same time, the payables related to the fees included in the leasing contract.At the time of initial recognition that asset is assessed on the basis of the cash flows associated with the leasing contract, including, in addition to the current value of the lease payments, the initial direct costs associated with the lease and any costs required to proceed with the recovery of the asset at the end of the contract. After initial registration, this asset will be assessed according to the provisions for property, plant and equipment and, therefore, at cost less depreciation and any impairment, at the “redetermined amount” or at fair value in accordance with IAS 16 or IAS 40. Currently, Banca Intermobiliare and its subsidiaries have no existing lease contracts.

Reclassification of economic balances from previous years - Bank of Italy financial statement formatsPursuant to IAS 8, it is confirmed that neither the accounting policies nor the accounting estimates for the year 2016 have been changed and that there have been no significant changes in contingent liabilities.Again in accordance with the provisions of IAS 8 it should be noted that there were no reclassifications of data at 31 December 2016 compared to what was previously published, also in view of the rather insignificant effects of the application of new or revised standards with the exception of what is reported below.Given that in preparing the 2016 annual financial statements, the subsidiaries Banca Intermobiliare di Investimenti e Gestioni Suisse S.A. (Including Patio Lugano SA) and Bim Insurance Brokers S.p.A. had been classified as non-current assets held for sale on the basis of the accounting standard IFRS 5, we must specify that:• in virtue of the decision of the BIM Board of Directors to no longer consider the subsidiary Bim Insurance Brokers

as a “non-current asset held for sale” the accounting balances of the subsidiary were restated line by line with respect to the figures published at 31.12.2016 the balances of which had been presented according to the accounting standard IFRS 5;

• on 18 October 2017, following fulfilment of the conditions precedent, the sale contract was completed for 100% of the share capital of Bim Suisse SA by Banca Zarattini & Co SA and Banca Intermobiliare S.p.A. and at the same time the purchase by Banca Intermobiliare of the property company Patio Lugano - previously owned by Bim Suisse - was completed. Therefore the said equity investment was classified both at 31.12.2016 and at 31.12.2017 under the item non-current assets held for sale.

The impacts of this reclassification have therefore been represented in the reclassified (economic and financial) “pro-forma” financial statements and in the income statement of the consolidated financial statements - Bank of Italy Circular 262.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Reconciliation of economic balances comparative data – Bank of Italy 262 Formats

(Thousands of €)

Income statement items 31.12.2016 Reclassifyeconomic

31.12.2016revised

10. Interest income and similar items 42,411 3 42,414

20. Interest expense and similar items (20,579) (1) (20,580)

30. Net interest income 21,832 2 21,834

40. Fee and commission income 81,050 994 82,044

50. Fee and commission expenses (19,628) (263) (19,891)

60. Net fee and commission income 61,422 731 62,153

70. Dividends and similar income 1,617 - 1,617

80. Net gains and losses on assets held for trading 4,493 - 4,493

90. Net profit (loss) on hedging operations (177) - (177)

100. Profit (loss) on disposal or repurchase of:

a) loans 1 - 1

b) financial assets available for sale 3,505 - 3,505

c) financial assets held to maturity - - -

d) financial liabilities (123) - (123)

120. Operating income 92,570 733 93,303

130. Net write-downs/write-backs for impairment of loans:

a) loans (91,640) - (91,640)

b) financial assets available for sale (2,757) - (2,757)

c) financial assets held to maturity - - -

d) other financial transactions 20 - 20

140. Net gains and losses on financial operations (1,807) 733 (1,074)


a) Personnel costs (45,362) (326) (45,688)

b) other administrative expenses (41,148) (132) (41,280)

190. Net provisions for risks and charges (17,680) - (17,680)

200. Net write-downs/write-backs on property, plant and equipment (2,063) (13) (2,076)

210. Net write-downs/write-backs on intangible fixed assets (613) - (613)

220. Other operating expenses (income) (1,416) 26 (1,390)

230. Operating costs (108,282) (445) (108,727)

240. profit (Loss) of investments 1,480 - 1,480

280. Profit (Loss) of continuing operations before tax (108,609) 288 (108,321)

290. Current operations income tax 17,499 (97) 17,402

300. Profit (Loss) of continuing operations after tax (91,110) 191 (90,919)

310. Profit (Loss) of non-current assets held for sale, net of tax (2,168) (191) (2,359)

320. Profit (Loss) for the year (93,278) - (93,278)

330. Profit (Loss) for the year attributable to minority interests (93) - (93)

340. Profit (Loss) for the year attributable to the parent company (93,371) - (93,371)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Reclassification of balances of previous years - “reclassified” financial statements published in the report on operationsThe comparative data of the “reclassified” financial statements published in the Report on Operations in this annual report, were restated in order to provide an immediate reading of the quantitative economic and financial data of the period. In particular the economic and financial balances related to the subsidiary Bim Insurance Broker (BIB) and to the related intercompany (IC) relationships were restated, following the cessation of the conditions requiredby IFRS 5, from “Non-current assets held for sale” to the single items restated line by line.

Reconciliation of economic balances comparative data - Reclassified Statements

(Thousands of €)

31.12.2016published

Reclassifications 31.12.2016pro-formaBIB I.C.

Interest income and similar items 42,411 3 - 42,414

Interest expense and similar items (20,579) (1) - (20,580)

Net interest income 21,832 2 - 21,834

Fee and commission income 81,050 989 5 82,044

Fee and commission expenses (20,982) (257) (6) (21,245)

Net fee and commission income 60,068 732 (1) 60,799

Dividends 1,617 - - 1,617

Net gains (losses) on trading instruments 4,493 - - 4,493

Transactions on AFS securities and financial liabilities 3,382 - - 3,382

Net gains (losses) on hedging instruments (177) - - (177)

Net gains (losses) on financial operations 9,315 - - 9,315

Operating income 91,215 734 (1) 91,948

Personnel expenses (44,008) (326) (44,334)

Other administrative expenses (41,148) (143) 11 (41,280)

Operating amortisation and depreciation (2,676) (13) (2,689)

Other operating expenses (income) (1,416) 36 (10) (1,390)

Operating costs (89,248) (446) 1 (89,693)

Operating profit (loss) 1,967 288 - 2,255

Net write-downs on loans and other financial transactions (91,619) - - (91,619)

Net provisions for risks and charges (17,680) - - (17,680)

Net profit (loss) of subsidiaries carried at equity 1,480 - - 1,480

Profit (loss) before non-recurring components (105,852) 288 - (105,564)

Write-downs on financial instruments (2,757) - - (2,757)

Profit (loss) before tax (108,609) 288 - (108,321)

Income tax for the period 17,499 98 (195) 17,402

Profit (Loss) of current operations after tax (91,110) 386 (195) (90,919)

Profit (Loss) of assets held for sale, net of tax (2,168) (191) (2,359)

Consolidated profit (loss) (93,278) 386 (386) (93,278)

Profit (Loss) pertaining to non-controlling interests (93) (93)

Consolidated Profit (Loss) of group (93,371) 386 (386) (93,371)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Reconciliation of balance sheet balances comparative data - Reclassified Statements

(Thousands of €)

31.12.2016published

Reclassifications 31.12.2016pro-formaBIB I.C.

Cash 1,669 (1) 2 1,670

Loans:

- Receivables from clients for performing loans 507,719 (475) 950 508,194

- Receivables from clients: other 335,366 - - 335,366

- Loans to banks 371,245 (527) 527 371,245

Financial assets

- Held for trading 97,374 - - 97,374

- Available for sale 834,780 (457) 914 835,237

- Hedging derivatives 1,327 - - 1,327

Fixed assets:

- Equity investments 14,020 - - 14,020

- Intangible and tangible 97,779 (30) 60 97,809

- Goodwill 49,446 - - 49,446

Property held for sale 21,900 - - 21,900

Non-current assets held for sale 73,480 - (1,578) 71,902

Other asset items 193,229 (88) 177 193,318

Total Assets 2,599,334 (1,578) 1,052 2,598,808

Payables:

- Due to banks 509,294 - - 509,294

- Due to clients 1,286,040 (27) (473) 1,285,540

Outstanding securities 304,978 - - 304,978


- Held for trading 67,969 - - 67,969

- Hedging derivatives 14,758 - - 14,758

Specific provisions 30,744 (47) 94 30,791

Non-current liabilities held for sale 38,914 - (812) 38,102

Other liability items 109,437 (739) 1,478 110,176

Shareholders’ equity 237,200 4 (4) 237,200

Total liabilities 2,599,334 (809) 283 2,598,808

Measurement of loan exposures – classification under IAS 8Also for 2017, the Banca Intermobiliare Group continued to carry out a number of refinements in the activities of classifying and measuring loan exposures to reflect certain operating decisions related to the credit monitoring processes. In consideration of the materiality of the impacts on the 2017 financial statements, particular attention was paid by the Bank in order to determine the proper classification of the aforesaid actions pursuant to IAS 8. The analyses showed that the changes in classifications and assessment of credit exposures at 31 December 2017 benefited from new information referring to facts and events which occurred subsequently also with reference to the usability and reliability of the information, or to new developments, such as changes in the circumstances on which the estimate was based or on the greater experience acquired after the date of preparation of the financial statements for the previous year (IAS 8, paragraph 5). This upgrade process necessarily on a continuous basis, based on the observation of the reference internal

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



and external context, with the aim of pursuing the best estimate of the recoverable amount - an estimate that by definition has some elements of uncertainty, as shown more clearly in the previous paragraph “Use of estimates in the preparation of the consolidated financial statements”.

CONSOB inspection and sanctioning processSanctioning proceedings for violation of disclosure requirements on Repo Operations.On 23 December 2016 CONSOB notified Banca Intermobiliare that it had opened sanction proceedings, considering that the disclosure transparency obligations provided for in the legislation had been breached with reference to three transactions of major significance with Related Parties, consisting of “Repurchase Agreement” (Repo) transactionsin favour of the Parent Company Veneto Banca S.p.A.. With resolution no. 20099 of 30 August 2017, notified to Banca Intermobiliare on 29 September 2017, CONSOB imposed on Banca Intermobiliare a fine of a total of €/thou 470. Within the deadline of 30 days from the notification, Banca Intermobiliare, lodged an appeal under art. 195 of the Consolidated Law on Finance (TUF) with the Court of Appeal. Banca Intermobiliare has considered thatthe sanction measure may be cancelled or at least the amount imposed is likely to be reduced; provisions were therefore set aside of €/thou 235.

Sanctioning proceedings against corporate officers pursuant to arts. 190 and 195 of Legislative Decree No. 58 of 24 February 1998, and, by way of joint liability, against Banca Intermobiliare.On 19 January 2017 - following the inspection conducted in the period 2015-2016 - CONSOB notified the Bank of the launch of sanctioning proceedings against 29 corporate officers – between administrative officers and managers - as it considered that the legislation on investment services had been infringed.After obtaining access to the records, the Bank delivered the counterclaims on 21 April 2017. In the meantime, the necessary planning activities were launched for remedying the anomalies found. On 16 November 2017 the Administrative Sanctions Office presented the proposed sanctions to the Commission, for 28 of the 29 officers,from a minimum of € 7,500 to a maximum of € 85,500 per capita, for a total of €/Mln 1,080: an amount for which the Bank is merely jointly liable with the obligation of recourse.Against the allegations described above, on 15 December 2017, Banca Intermobiliare presented its counter-arguments contesting, among other things, its passive joint liability and the amount of the same. Although the Commission’s decision is pending and taking into account the fragmentation of the sanctions, for prudential reasons, and only in the event that any and all of the amounts paid in advance cannot be recovered, it was decided to set aside a provision of €/thou 100.


Sanctioning proceedings against BIM for infringement of the combined provisions of art. 114, paragraph 5, of Legislative Decree No. 58 of 1998 and art. 5 of CONSOB Regulation No. 17221/2010, art. 114, paragraph 1, of Legislative Decree No. 58/1998, as implemented by art. 109 of CONSOB Regulation n. 11971/1999 - which in turn invokes art. 66 of the same Regulation - as well as art. 114, paragraph 5, of Italian Legislative Decree No. 58/1998, in conjunction with art. 6 of Regulation No 17221/2010.CONSOB, considered that the combined provisions of arts 114, paragraph 5, of the CLF and art. 5 of the TRP Regulation and arts 114, paragraph 5, of the aforementioned Decree and art. 6 of the said Regulation were infringed, in relation to a transaction of major significance with related parties, carried out on 7 August 2014, consisting of the sale to Veneto Banca of the 67.22% equity interest in the share capital of Banca IPIBI Financial Advisory S.p.A. (now Banca Consulia S.p.A.) held by BIM, a company controlled by Veneto Banca and subject to activity of direction of coordination by the same. After granting access to the records of the proceedings and assessing the overall defensive position, with resolution no. 19822 of 21 December 2016, CONSOB expressed its conclusions stating that the alleged infringements appeared proven and established the related penalties to be paid by BIM, totalling €/thou 25. The sanction was paid on 24 November 2017.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



“ECB” Inspection of the former Parent Company Veneto Banca and indirectly of BIMIn October 2016, the ECB had initiated a further inspection at the Parent Company Veneto Banca and therefore indirectly of Banca Intermobiliare, with the aim of evaluating, with reference to the perimeter of Italian banks belonging to the Veneto Banca Group, the management of credit and counterparty risk and the risk control systems. With reference to Banca Intermobiliare, the inspectors had analysed a sample of loans, with reference to the date of 30.06.2016, having a gross exposure amounting to €/Mln 536 and identified €/Mln 375 relating to impaired exposures (57.4% of the total impaired portfolio) and €/Mln 162 relating to the performing portfolio (28.4% of the gross exposure of performing loans to clients). As of today, Banca Intermobiliare, in the light of the corporate evolution of the former Parent Company Veneto Banca now in compulsory administrative liquidation, considers it improbable that the process of communicating the results of the inspections will be formalised. As of today, they have not been received either from the inspection team, or from the former Parent Company Veneto Banca.We can specify that Banca Intermobiliare had adopted precisely, already in the 2016 annual financial statements, the indications destined to reflect in the accounts the points raised during the inspection. In addition the BIM Board of Directors, also to implement the guidelines of the Business Plan, launched an updating process relating to the management and assessment processes and to the control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the financial statements at 31.12.2017.

Tax audits of Banca Intermobiliare, Symphonia and BIM Vita As regards the tax audits that involved Banca Intermobiliare and its investee companies Symphonia SGR and Bim Vita, information on the objections raised, on the years covered by the inspections, on the petitum and any charges payable by the company is provided in Part B Section 14 - “Tax assets and tax liabilities” in the Notes to the Consolidated Financial Statements.

DTA payment Fee under art. 11 of Decree Law No. 59 of 3 May 2016Article 11 of Decree Law No. 59 of 3 May 2016, converted with amendments by Law No. 119 of 30 June 2016, had introduced the possibility to opt for the payment of an annual guarantee fee in order to keep unchanged the arrangements of transformability of “qualified” DTAs (Deferred Tax Assets), having regard to the report from the European Commission that considered these regulations as a form of State aid with the granting of a tax credit for the amount of the DTAs, where the recoverability of the DTA was allowed beyond the amount of taxes (IRES and IRAP) actually paid prior to the measurement and use of the tax credit from DTAs.The legislation in question establishes that the transformability of noble deferred tax assets resulting from recognised in the accounts from 2008 onwards, deriving from write-downs of loans or goodwill (so-called noble DTAs), is permitted only and to the extent that the taxpayer has paid - in advance with respect to the recognition and use of the credit - taxes to the Financial Administration (DTA type 1). In this way the mechanism of conversion and use of these tax credits cannot be considered as an advantage for the taxpayer but represents the return of amounts already paid to the Tax Authority. For the conversion of deferred tax assets which instead do not correspond to tax already paid to the Tax Authority (DTA type 2), the option is provided for to pay an annual guarantee fee agreed as 1.5% of the difference between the amount of deferred tax assets recognised in the accounts between the year of first recognition (2008 for IRES, 2013 for IRAP) and the year of reference (31.12 of the previous year) and the amount of the taxes (IRES and IRAP) paid to the Tax Authority in the same period. The Decree specifies that the option for conversion of DTA type 2 was to be considered irrevocable and valid up to 2029, and implicitly exercised when paying the first yearly fee, the deadline for which was set at 1 August 2016. A number of changes to the rules in question were introduced by the “Save Savings” decree (Italian Law Decree 237/2016) converted by Italian Law no. 15 of 17/2/2017. The most significant relates to postponement for one year of the effectiveness of the rules pursuant to Italian Law Decree no. 59/2016. With this change, the payment of the fee, originally due for the period from 2015 to 2029, has in practice been deferred to the period from 2016 to 2030, meaning that the first payment made in July 2016 is attributed to that tax year, rather than to the previous period 2015.In virtue of exercising the option, in the present annual financial statements the expense of the guarantee fee for financial year 2017 (of €/Mln 0.45) was accounted for among “other administrative expenses” and for approximately the same amount what was prudentially ascertained in 2016 among “other administrative expenses”, for financial year 2015 was restated among contingent assets.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Voluntary intervention scheme of the Interbank Deposit Protection FundWith reference to the expenses regarding the banking system, we can note in particular that, following the formal expression of interest of Crédit Agricole-Cariparma in purchasing the equity investment in CR Cesena, Cassa di Risparmio di Rimini and Cassa di Risparmio di San Miniato, on 21 December 2017 the Voluntary Scheme signedwith Crédit Agricole-Cariparma the contract for recapitalisation and sale of the three Savings Banks, and the subscription of junior and mezzanine securities with underlying NPLs of the said Banks.To finance this intervention the Voluntary Scheme resolved in the third quarter an increase in its financial endowment of a further €/Mln 95 in part used for the operation to recapitalise the Banks in preparation for the sale and €/Mln 170 for subscription of the securitised notes for a total outlay of €/Mln 634, while the remaining €/Mln 6 will be liquid assets held by the Voluntary Scheme. At the closing of the operation the total gross expense chargeable to Banca Intermobiliare incurred during 2017 was approximately €/thou 430.

Independent Audit of accountsThe financial statements for the period ended 31 December 2017 were audited by PricewaterhouseCoopers S.p.A..

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A2 - INFORMATION ON THE MAIN BALANCE SHEET ITEMS

Following are the accounting principles applied in the preparation of the consolidated financial statements. The presentation of the accounting standards is made with reference to the classification, recognition, valuation and derecognition of the various asset and liability items. The sections on non-valued balance sheet items were not reported.

Section 1 - Financial assets held for trading

Classification criteriaItems classified as financial assets held for trading include financial instruments held with the intention of generating short-term profits from price variations in those instruments, and derivative contracts not designated as hedges, in particular:• quoted and unquoted debt securities;• listed equity securities;• unlisted equities only if their fair value can be determined reliably;• derivative contracts, except for those designated as hedging instruments, which have a positive fair value on the

reporting date; if the fair value of a derivative contract subsequently becomes negative, it is recognised among financial liabilities held for trading.

A derivative is a financial instrument or other contract which has all three of the following characteristics:a) its value changes with the changes of a specific interest rate, the price of a financial instrument, the price of a

commodity, the exchange rate of a foreign currency, a price or interest rate index, a credit rating, a credit index or other variables;

b) it does not require a net initial investment or requires a net initial investment lower than that required in other types of contracts from which similar reactions may be expected with the changing of market factors;

c) it will be settled at a future date.The category is comprised of financial and credit derivatives. The first includes forward purchase and sale agreements on securities and currencies, derivative contracts with underlying security and those without an underlying security connected to interest rates, indices or other assets, and derivative contracts on currencies.Credit derivatives are contracts that allow the underlying credit risk to be transferred from a specific asset of the entity purchasing the hedge to the entity selling the hedge. The object of these transactions is the credit risk of the final buyer.Included in derivative contracts are those which are embedded in other complex financial instruments which have been recognised separately from the host instrument since:• the economic characteristics and risks of the embedded derivative are not strictly related to the economic

characteristics and risks of the primary contract;• the embedded instruments, even if separated, satisfy the definition of derivative;• the hybrid instruments they belong to are not measured at fair value with recognition of the changes in the value in

the income statement.

Recognition criteriaThe initial recognition of financial assets is the settlement date for debt securities and equity securities, and the signing date for derivative contracts.Upon initial recognition, financial assets held for trading are recognised at cost, intended as the fair value of the instrument, without considering costs or income on the transaction that are directly attributable to the instrument, which are instead immediately recognised in the income statement.Any derivatives embedded in complex contracts, not strictly related to the contracts but with characteristics that satisfy the definition of a derivative, are separated from the primary contract and assessed at fair value, as financial assets held for trading, whereas the relevant reference accounting criterion is applied to the primary contract. This separation is performed if:• the economic characteristics and risks of the embedded derivative are not strictly related to the economic



Valuation criteriaFollowing initial recognition, financial assets held for trading are measured at fair value, while any changes are recognised in profit and loss. For the fair value calculation of financial instruments quoted on an active market, the market prices are used

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



(demand-supply prices or average prices). In the absence of an active market, the estimation methods and valuation models used take into account all risk factors related to the instruments and are based on data obtainable on the market, i.e.: methods based on the valuation of quoted instruments with similar characteristics, discounted cash flow calculations, option price calculation models, values identified from recent comparable transactions.Gains and losses realised from the transfer or from repayment, and gains and losses not realised as a result of changes in the fair value of the trading book, are classified in the income statement under item 80 “Gains and losses on assets held for trading”.Equity securities and related derivative instruments for which a reliable fair value cannot be calculated in accordance with the guidelines indicated above, are maintained at cost, adjusted with respect to confirmed losses due to a reduction in value.

Derecognition criteriaFinancial assets held for trading are derecognised when contractual rights to cash flows deriving from the assets expire or when essentially all related risks and benefits are transferred along with a transferred financial asset.If the Bank sells a financial asset classified as part of its trading book, the asset is eliminated as of the date of transfer (settlement date).Securities received as part of a transaction which contractually calls for their sale at a later date, and securities transferred as part of a transaction which contractually calls for their repurchase, are not recognised in or reversed from the financial statements.

Section 2 - Financial assets available for sale

Classification criteriaNon-derivative financial assets which are not otherwise classified as Receivables, Assets held for trading, Assets measured at fair value or Assets held to maturity are included in this category. In particular, included under this item is interest on equity interests not held for trading purposes and not qualifying as controlled, linked or jointly controlled.

Recognition criteriaThe initial recognition of financial assets is the settlement date for debt securities and equity securities, and the disbursement date for loans.On initial recognition, the assets are entered at cost, intended as the fair value of the instrument, including transaction costs or income directly attributable to the instrument. If recognition occurs after the reclassification of Assets held to maturity, the recognition value is represented by the fair value at the time of the transfer.

Valuation criteriaFollowing initial recognition, assets available for sale continue to be assessed at fair value, with remuneration from the instrument, calculated using the IRR method, recorded on the income statement, whereas gains and losses deriving from a change in fair value are allocated to a specific Shareholders’ Equity Reserve until the financial asset is derecognised or a loss of value is confirmed. At the time of disposal or recognition of a loss of value, the accumulated gains or losses are transferred to the income statement.For confirmation of situations leading to a loss due to impairment and the calculation of the relevant amount, the Bank, making use of its valuation experience, uses all available information based on facts already verified and on data obtainable at the valuation date.With regard to debt securities, the data considered essentially relevant for the purposes of verifying any impairment losses are as follows:• the existence of significant financial difficulties of the issuer, confirmed by breach of contract or failure to make

interest or capital payments;• the likelihood that bankruptcy proceedings will be instigated;• the disappearance of an active market for financial instruments;• the deterioration of economic conditions affecting borrower/issuer cash flows;• the declassification of the issuer’s credit rating, when accompanied by other negative information on the issuer’s

financial position.With regard to equity securities, data considered relevant for the purposes of identifying impairment losses include the verification of changes occurring in the technological, market, economic or legal sector in which the issuer operates. A significant or protracted decrease of the fair value of an equity instrument below its cost is considered to be objective evidence of impairment.Losses due to the impairment of equity securities cannot be written back to the income statement unless the reasons for the impairment cease to apply. Therefore, these write-backs are made to the specific equity reserve. Write-backs related to debt securities are recorded in the income statement, up to the impairment amount recognised therein.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



With regard to debt securities classified as available for sale, the recognition of related yield based on the amortised cost method is recognised in the financial statements and counterbalanced in the income statement in a similar way to the effects of exchange rate variations.By contrast, changes in exchange rates which concern equity instruments available for sale are recognised in a specific equity reserve.Equity securities for which a reliable fair value cannot be calculated in accordance with the guidelines indicated above, are maintained at cost, adjusted with respect to confirmed impairment losses.Impairment tests take place on each annual or interim reporting date.If the reasons for the impairment cease to exist as a result of an event occurring after recognition of the impairment, the amounts are written back and recorded in the income statement in the case of loans or debt securities, and to shareholders’ equity in the case of equity securities. The amount of the write-back cannot exceed the amortised cost that the instrument would have had without the aforementioned adjustments. For details regarding the proceduresfor determining fair value and the methods used for impairment, please refer to Section 18 “Additional Information” of this Part A.2, “Criteria for the determination of fair value” and “impairment of available-for-sale financial instruments” respectively.

Derecognition criteriaFinancial assets are derecognised when contractual rights to cash flows deriving from the assets expire or when essentially all related risks and benefits of the financial asset are transferred.

Section 4 - Loans and receivables

Classification criteriaLoans and receivables include loans to clients and banks, either disbursed directly or acquired via third parties, which involve fixed or calculable payments and are not quoted on an active market or not originally classified as financial assets available for sale, held for trading or designated at fair value.The loans and receivables item also includes trade loans, repurchase agreements, receivables originating from financial leasing operations and unlisted debt securities acquired by subscription or private placement, with determined or calculable payments, in which the presence of the lending aspect is more pronounced than the financial aspect and the purchase is substantially equivalent to a loan granted.Also included in the loans and receivables item are loans originating in the context of the factoring business against advances on the portfolio received with recourse which remains recognised in the financial statements of the transferor counterparty. As regards receivables purchased without recourse, these are included in the loans and receivables item, after ascertainment of the non-existence of contractual clauses that alter significantly the exposure to the risk of the transferee company.

Recognition criteriaThe initial recognition of a loan is the disbursement date or, in the case of debt securities, the settlement date, based on the fair value of the financial instrument, equal to the sum disbursed or subscription price, including costs/income directly attributable to the individual loan and calculable as from the original transaction, even if settled at a later date. Costs which, albeit with the above characteristics, are subject to repayment by the borrower or can be included among standard internal administrative costs, are excluded.For any loan transactions concluded with different terms and conditions than the market terms, the fair value is measured using the appropriate evaluation techniques; the difference compared to the amount granted or the subscription price is recognised directly in the income statement.Repurchase agreement contracts with a compulsory repurchase or resale commitment are entered in the financial statements as deposit or lending operations. In particular, spot sale and forward repurchase transactions are entered in the financial statements as payables for the actual spot price received, whereas spot purchase and forward resale transactions are entered as receivables for the actual spot price paid.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Valuation criteriaAfter initial recognition, loans are measured at their amortised cost, equal to the initial recognition value decreased/increased by the capital repayments, write-downs/write-backs and amortisation - calculated by the effective interest rate method – of the difference between the total disbursed and that repayable on expiry, normally attributable to the costs/income relating directly to each individual loan. The actual interest rate is identified by calculating the rate equal to the current value of future cash flows on the loan, for capital and interest, to the amount allocated inclusive of loan-related costs/income. This accounting method, using financial logic, allows distribution of the economic effect of costs/income across the expected residual life of the loan. The estimate of the flows and the contractual duration of the loan take into account all of the contractual clauses that could influence the amounts and maturities (such as early repayments and the various options that can be exercised), but without considering potential losses on the loan. The effective interest rate initially recognised is the one that is always used to discount expected cash flows and to determine the amortised cost after initial recognition.The amortised cost method is not used for short-term loans for which the effect of application of the discounting logic is considered negligible; they are therefore measured at historical cost. A similar measurement criterion is used for loans without a specific maturity date or which can be revoked.At every annual or interim reporting date, loans are assessed to identify those which, following the occurrence of events after their recognition, show objective evidence of a possible impairment.The main information taken into account for this test is:• the existence of significant financial difficulties of the borrower/issuer, confirmed by breach of contract or failure to

make interest or capital payments;• the likelihood that bankruptcy proceedings will be instigated;• the deterioration of economic conditions affecting borrower/issuer cash flows;• difficulty of the country in which the borrower/issuer resides to service its debt;• the lowering of the credit rating of the borrower/issuer when accompanied by other negative information on the

issuer’s financial position;• the trends in specific business sectors.Existing guarantees are also taken into account for the valuation.As regards the classification of impaired exposures under the various risk categories (non-performing loans, probable defaults and impaired past-due exposures), the Bank refers to the provisions issued by the Bank of Italy.The classification is carried out by the operating structures with the appropriate powers, with the exception of loans past-due/over-the-limit for over 90 days, for which classification is carried out using automatic procedures.These impaired loans, with the exception of those past due, are the subject of an analytical assessment process starting from exposures of more than € 250,000. Non-performing loans and probable defaults below this threshold are measured collectively.Exposures that are past-due and/or over-the-limit for more than 90 days are the subject of collective valuation analytically applying percentages determined on a flat-rate basis on historical/statistical bases.The total write-down for each loan is equal to the difference between its book value at the time of valuation (amortised cost) and the present value of expected future cash flows, calculated by applying the original effective interest rate.If the original interest rate of a financial asset being discounted to the present is not available, or retracing it is excessively burdensome, the average rate recorded on positions with similar characteristics is applied. Expected cash flows take into account the expected recovery times, the estimated realisable value of any guarantees securing the positions and any costs expected to be incurred in recovery of the loan exposure. Cash flows relating to loans for which recovery is expected in the short term are not discounted.In particular, as regards non-performing loans, above the threshold of € 250,000, all positions are analysed in detail to determine the procedure with which the recovery value will be calculated, while a recovery amount is forecast that is discounted on the basis of the average recovery time, as determined by the competent corporate units.Probable defaults, namely watchlist items and impaired concessions (forborne non-performing positions), of more than € 250,000 are evaluated analytically identifying a recovery forecast which is discounted to the present. Positions with exposures that are lower than the aforesaid limit are subject to collective valuation analytically applying percentages determined on a flat-rate basis on historical/statistical bases.Restructured loans, included among probable defaults, are exposures to counterparties with which agreements have been concluded that provide for the concession of a payment moratorium for the debt and the contemporary renegotiation of terms and conditions at lower than market rates. Any sacrifices of principal are valued analytically, including in the write-downs the discounted expense any renegotiation of the rate at terms and conditions lower than the original contractual rate.Loans for which objective impairment has not been identified on an individual basis which are therefore usually performing loans, including loans granted to counterparties residing in countries at risk, are measured for impairment collectively, based on a methodology that includes the parameters of the calculation model provided by the Basel II provisions, represented by PD (probability of default) and LGD (loss given default).This assessment is applied to uniform loan categories with similar characteristics in terms of credit risk and the related percentage losses are estimated by taking into account historic records, which allow the estimation of latent loss of

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



value in each loan category.The original effective interest rate of each loan remains unchanged over time unless restructuring has led to a variation in the contractual interest rate or if, in practice, it becomes non-interest bearing.The write-down is entered in the income statement.The original value of the loans is written back in subsequent periods to the extent to which the reasons for the adjustment cease to apply provided the valuation can objectively be connected an event that occurred after the said adjustment. The write-back is entered in the income statement, and cannot in any event exceed the amortised cost which would have applied in the absence of previous write-downs. The positive effects connected to the discounting effect from the progressive reduction of the estimated time required for recovery of the written down loan are included in the write backs.At every annual and interim reporting date, any additional write-downs or write-backs are recalculated on a differential basis with reference to the entire performing loan portfolio at that date.

Derecognition criteriaLoans are derecognised from balance sheet assets when they are deemed to be definitively irrecoverable or if they were transferred with all risks and benefits connected to them. However, if the risks and benefits relating to transferred loans are retained, these continue to be included under assets in the financial statements, until legal ownership of the loan has been fully transferred.In the event that it is not possible to confirm the substantial transfer of risks and benefits, the loans are derecognised from the financial statements if no form of control over them has been retained. Otherwise, the retention, even in part, of said control leads to maintaining the loans in the financial statements to the extent of their residual involvement, measured by the exposure to changes in value of transferred loans and to changes in their cash flows.

Section 6 - Hedging transactions

Classification criteriaThis item includes derivative contracts designated as effective hedging instruments which have a positive/negative fair value as at the reporting date.

Type of hedgeRisk hedging transactions are aimed at neutralising potential losses from a specific element or group of elements, which are attributable to a specific risk, using the gains recognised on a different element or group of elements if that particular risk should actually occur.The hedge types used are:1) fair value hedge, the aim of which is to cover exposure to changes in fair value in an item subject to a specific risk;2) cash flow hedge, the aim of which is to cover exposure to changes in future cash flows attributed to a specific risk

linked with items in the financial statements;3) hedge of an investment in a foreign currency: this relates to the hedging of the risk of an investment in a foreign

company which is expressed in a foreign currency.In the consolidated financial statements of Banca Intermobiliare the only types of hedges used are those in point 1).

Valuation criteriaHedging derivatives are measured at fair value:• for a fair value hedge, the change in the fair value of the hedged element is offset with a change in the fair value of

the hedged instrument. This offsetting is recognised through the recognition in the income statement of the changes in the value of the hedged element (insofar as the change is produced by the underlying risk factor) and the hedging instrument recognised at its fair value. Any difference, which represents the partial ineffectiveness of the hedge, consequently comprises the net economic effect;

• for cash flow hedges, the changes in the fair value of the derivative are recognised in equity only insofar as the effective portion of the hedge and they are recognised in the income statement only when, in regard to the hedged item, a change in the cash flows occurs which requires offsetting. Any ineffectiveness is allocated to the income statement.

The derivative instrument is designated as a hedge only if there is formal documentation of the relation between the hedged instrument and the hedging instrument and if it is highly effective at the time the hedge begins and, prospectively, throughout the life of the hedge.The effectiveness of the hedge depends on the extent to which the changes in the fair value of the hedged instrument or the related cash flows expected from it are offset by those from the hedging instrument. Therefore, effectiveness is measured against the aforementioned changes, taking into account the intent of the company at the time the hedgeis established.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



There is effectiveness (within a range of 80-125%), when the changes and the fair value (or of the cash flows) of the hedging financial instrument neutralise almost entirely the changes in the hedged instrument, for the element of risk which is being hedged.The measurement of the effectiveness of a hedge takes place at each reporting date using:• prospective tests which justify application of the hedge accounting, as they prove the expected effectiveness of the

hedge in future years;• retrospective tests, which show the degree of effectiveness of the hedge achieved during the period to which they

refer. In other words, they measure how much the actual results have deviated from the perfect hedge.

Derecognition criteriaHedging derivatives are derecognised from the balance sheet assets in the event of disposal when this has entailed the transfer of all the risks and benefits connected to the said derivatives. If the tests do not confirm the effectiveness of the hedge, the hedge accounting, in accordance with what is described above, is interrupted and the hedging derivative contract is reclassified among trading instruments.If the hedge is terminated for reasons other than realisation of the hedged element, the changes in the latter’s value, recognised in the financial statements until such time as the hedge was effective, are recognised in the income statement using the amortised cost method for interest-bearing financial instruments or in a lump sum in other cases.

Section 7 - Equity investments

Classification criteriaThe item includes the interests held in associates and jointly-controlled companies.Considered as associates, therefore, are companies in which a 20% holding is possessed or a greater share of voting rights and companies which for particular legal considerations, such as a shareholders’ agreement, must be considered as subject to considerable influence, whereas joint control subsists when agreements of a contractual, shareholder or other nature exist for the equal management of activities and appointment of directors. In the consolidated financial statements of Banca Intermobiliare, there is only one interest held in an associated company and no equity investment subject to joint control.

Recognition criteriaEquity investments are recognised in the balance sheet at their book value.

Valuation criteriaAt each reporting date, the purchase value is aligned to the net equity share of the investee company. If thereis evidence that the value of an equity investment may have been reduced, the recoverable value of the investment is assessed, taking into account the present value of future cash flows that the investment may generate, including its final disposal value.If the recovery value proves less than the book value, the related difference is recorded in the income statement, in item “Gains/(losses) on equity investments”. If the reasons for impairment no longer exist as a result of an event occurring after recognition of the reduction in value, a write-back is performed and entered in the income statement.

Derecognition criteriaEquity investments are derecognised from the balance sheet when contractual rights to cash flows deriving from the assets expire or when essentially all related risks and benefits are transferred along with a transferred equity investment.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 8 - Tangible fixed assets

Classification criteriaTangible fixed assets items include land, instrumental buildings, technical plants, furniture, furnishings and fixtures of any kind. These are tangible assets held for use in the production or supply of goods and services, for rental to third parties, or for administrative purposes and that may be considered as usable over more than one financial period.This item also includes assets used under financial leasing even though legal ownership of such assets remains with the lessor.Instrumental buildings are those that are owned to provide services or for administrative purposes, whereas real estate investments are those owned to earn rental income and/or capital gains.The cost for leasehold improvements are included among tangible fixed assets, though they are separable from the assets themselves (when the aforementioned costs do not involve autonomous operation and use, but future economic benefits are expected to result from them, they are recorded among “other assets” and are depreciated in the shorter of the expected useful life of the improvements and the residual duration of the lease). The amounts paid for the acquisition and restructuring of goods that have not yet entered the production process and the depreciation of which has therefore not begun are added to the value of property, plant and equipment.

Recognition criteriaTangible fixed assets are initially recorded at cost, which, in addition to the purchase price, includes any other ancillary charges directly attributable to the purchase and implementation of the asset. Extraordinary maintenance costs leading to an increase in future economic benefits are recorded as an increase in the asset value, whereas other ordinary maintenance costs are recorded in the income statement.

Criteria for measurement and recognition of income componentsProperty, plant and equipment items, including non-instrumental buildings, are measured at cost, less any depreciation and loss of value, according to the “cost model” set forth under paragraph 30 of IAS 16.These fixed assets are systematically depreciated on a straight-line basis for the duration of their useful life, except in the case of:• land, whether purchased individually or incorporated in the value of the buildings, since it has an indefinite useful

life. In the event that their value is incorporated in the value of the building, by virtue of applying the component approach, they are considered assets that are separate from the building; the division between the value of the land and the value of the building takes place on the basis of appraisals made by independent experts only for properties classified as “ground - air space”,

• artistic heritage, since the useful life of a work of art cannot be estimated and its value is normally destined to increase over time.

For assets acquired during the course of the year, depreciation is calculated on a daily basis starting from the date use of the asset began. For assets transferred and/or sold during the year, depreciation is calculated on a daily basis up to the date of transfer and/or the sale.The depreciation rates deemed appropriate to represent the deterioration of the fixed assets over time are shown here: instrumental real estate assets 2.13%, cars and the like 25%, electronic machines 20%, bullet-proof counters 20%, furniture 15%, other plants, machinery and equipment 15%, furniture and ordinary office equipment 12%. If there is evidence that a tangible asset has become impaired, a comparison is made between the cost price and recovery price of the asset, equal to the lower of the fair value, net of any sales costs, and the related usage value of the asset, intended as the current value of future cash flows deriving from the asset. Any adjustments are recognised in the income statement.If the reasons for recording the loss no longer apply, a write-back is performed, which may not exceed the value that would have applied to the asset, net of depreciation calculated in the absence of previous losses of value.

Derecognition criteriaA tangible fixed asset is written-off from the balance sheet at the time of its disposal, or when the asset is permanently retired from active use and no future economic benefits are expected from its disposal. Capital gains and losses from the sale or transfer of tangible assets are the differences between the net consideration received and the asset’s book value and are recognised in the income statement on the day they are derecognised.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 9 - Intangible fixed assets

Classification criteriaIAS 38 defines intangible assets as identifiable non-monetary assets with no physical substance. The following characteristics must be present in order to an asset to be defined as intangible:• they must be identifiable;• control of the related resource;• existence of future economic benefits.In the absence of any one of the above characteristics, the expense for acquiring or generating the asset internally is recognised as a cost in the period in which it is incurred.Goodwill, included under intangible fixed assets as the positive difference between purchase price and fair value of the assets and liabilities purchased in the context of business combinations, is represented, pursuant to IFRS 3, by the economic benefits resulting from assets which cannot be individually identified, nor be separately registered in the accounting records. Other intangible assets are recognised as such if they can be so identified and originate from legal or contractual rights.

Recognition and measurement criteriaAn intangible asset may be recognised as goodwill when the positive difference between the fair value of the acquired equity elements and the acquisition cost of the investment represents the future income capacity of the investment (goodwill).If this difference proves negative (badwill) or if goodwill shows no future income from the investee, the difference is recognised directly in the income statement.On an annual basis (or whenever there is evidence of impairment) an impairment test is performed on the adequacy of the goodwill value. For this purpose, the cash generating unit is identified to which goodwill should be attributed.Any reduction in value is determined on the basis of the difference between the book value of goodwill and its recovery value, if lower. This recovery value is equal to the lower between the fair value of the cash generating unit, net of any sales costs, and its related value in use. The resulting adjustments are recorded in the income statement.Other intangible assets are recognised at cost, adjusted for any ancillary charges, only if it is likely that future economic benefits attributable to the asset will be realised and if the cost of the asset can be reliably determined.The cost of intangible fixed assets is amortised on a straight-line basis throughout its related useful life. If the useful life cannot be defined, no amortisation is carried out, and instead a periodic verification is performed to determine if the book value of fixed assets is adequate.The amortisation rates deemed appropriate to represent the deterioration of intangible assets over time are shown here: software 33% or 20%, brands 10%, leasehold improvements 8%.At each reporting date, if there is evidence of impairment, the recoverable value of the asset is estimated. The amount of the impairment, which is recorded in the income statement, is equal to the difference between the book value of the asset and its recoverable value.

Derecognition criteriaAn intangible asset is derecognised from the balance sheet at the time of its disposal or when no future economic benefits can be expected.Amortisation is calculated on a straight-line basis.

Section 10 - Non-current assets held for sale

These items are classified as non-current assets/liabilities and groups of assets/liabilities held for sale when the sale is considered highly probable. In particular, such assets/liabilities are valued at the lower of carrying value and fair value less costs of disposal. In the event that the assets held for sale are depreciable, the depreciation process is discontinued with effect from the time of classification among non-current assets held for sale.The related income and expenses are stated in the income statement in a separate item, net of any tax effects; in this case, the same economic information is represented in a separate entry for comparative periods presented in the financial statements.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 11 - Current and deferred taxes

The company observes the effects related to current, prepaid and deferred taxes applying the tax rates in force on the date of preparation of the financial statements, also taking into account the expected taxes due to opting for the national tax consolidation for the period 2015-2017.Income taxes are recognised in the income statement except for those which are related to items that are recognised directly in equity.The provision for income tax is determined on the basis of a prudent forecast of the current, prepaid and deferred tax payable. In particular, prepaid and deferred taxes are calculated on the basis of temporary differences – without time limits – between the attributed value of an asset or liability according to statutory criteria and the corresponding values assumed for tax purposes. Deferred tax assets are recognised on the balance sheet to the extent that there is a likelihood of their recovery, evaluated on the basis of the ability of the company to generate continuously positive taxable income.The probability of recovering the taxes prepaid for goodwill, other intangible assets and written-down loans is considered certain based on the provisions of the law that provide for transformation into a tax credit in the case of a statutory and/or fiscal loss for the period. In particular:• in the case of a statutory loss, prepaid taxes for goodwill, other intangible assets and loan write-downs will be partially

transformed into a tax credit pursuant to the provisions of art. 2, par. 55 of Italian Legislative Decree no. 225 of 29 December 2010, converted with amendments into Italian Law no. 10 of 26 February 2011. The transformation becomes effective from the date the separate financial statements in which the loss is recognised are approved by the shareholders’ meeting, as indicated in art. 2 (56) of the aforesaid Italian Law Decree 225/2010;

• if there is a tax loss during the year, the related deferred tax assets, only insofar as the portion generated by deductions referring to the goodwill, other intangible assets and the write-down of receivables, will be the object of the transformation into a tax credit due to the provisions of article 2, paragraph 56-bis of the aforementioned Decree Law. 225/2010, introduced by article 9 of Italian Legislative Decree 201 of 6 December 2011, converted with amendments into Italian Law 214 of 22 December 2011. The aforementioned transformation becomes effective from the filing date of the tax return related to the year in which the loss is incurred.

Deferred tax liabilities are entered in the balance sheet.The amount of the tax provisions is furthermore adjusted in order to cover expenses that could arise from assessments or disputes with tax authorities.Assets and liabilities booked for deferred taxes are systematically measured in order to take into account any changes in the regulations or tax rates, as well as possible different subjective situations concerning the interested companies.

Section 12 - Provisions for risks and charges

Classification criteriaProvisions for risks and charges include provisions relating to legal obligations or those associated with employment situations or disputes, also of a tax nature, originating from a past event for which a disbursement is likely in order to fulfil the said obligations, provided that a reliable estimate can be made of the related amount.Consequently, the recognition of a provision occurs if and only if: i) there is a current (legal or implicit) obligation as a result of a past event; ii) it is probable that in order to fulfil the obligation, resources embodying economic benefits will need to be used; iii) a reliable estimate can be made of the amount resulting from the fulfilment of the obligation.

Recognition and measurement criteria The amount recognised as a provision is the best estimate of expenditure required for fulfilling the existing obligation at the reporting date and reflects the risks and uncertainties that inevitably characterise a plurality of facts and circumstances. Where the time element is significant, provisions are discounted at current market rates. The provision and the increases due to the time factor are recognised in the Income Statement.

Derecognition criteriaThe provision is reversed when the use of resources embodying economic benefits in order to fulfil the obligation becomes unlikely, or the obligation is extinguished. Provisions for risks and charges also include contractual allowances owed whose measurement is carried out according to the actuarial criteria under the IAS 37 accounting standard.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 13 - Debiti e titoli in circolazione

Classification criteriaPayables to banks, payables to clients, outstanding securities and subordinated liabilities include the various forms of funding (interbank and client) and deposits (certificates of deposit and bonds in issue), net of any repurchased amounts including for re-negotiation purposes.

Recognition criteriaThe first recognition of these financial liabilities takes place upon receiving the deposits or issuing the debt securities.The initial recognition is performed on the basis of the fair value of the liability, normally equal to the sum collected or the issue prices, increased by any additional costs/income directly related to the deposit or issue transaction and not repaid by the indebted party. Internal costs of an administrative nature are excluded.The component of convertible bonds which has the characteristics of a liability is recognised in the balance sheet as a liability net of issuing costs. On issue, the fair value of the debt component is determined using the market price of an equivalent non-convertible bond; said amount, classified as a long-term payable, is adjusted by the amortised cost method until the date of its extinguishment through conversion or redemption. The remaining part of the amount collected is attributed to the conversion option and recorded under item 160 “equity instruments” of shareholders’ equity.

Valuation criteriaAfter initial recognition, financial liabilities are measured at their amortised cost according to the effective interest rate method. Short-term or on-demand liabilities in which the time factor is negligible are an exception to this rule and they continue to be recognised at their collection value with any costs incurred recorded in the income statement on a straight-line basis for the contractual duration of the liability.

Derecognition criteriaThese financial liabilities are derecognised from the balance sheet only when they expire or are extinguished.Derecognition may also take place if previously issued securities are repurchased. The difference between the book value of the redeemed liability and the amount paid to repurchase it is recognised in the income statement. The placement of treasury shares on the market after their repurchase is considered as a new issue with recognition at the new placement price, without any effect on the income statement.

Section 14 - Financial liabilities held for trading

Classification criteriaThis item includes the negative value of trading derivative contracts designated at fair value and liabilities, also designated at fair value, originating from technical exposure generated from securities trading.

Valuation criteriaAll trading liabilities are measured at fair value as determined according to the procedures set forth in the Section on “financial assets held for trading”.

Section 16 - Foreign currency transactions

Initial recognitionThe functional currency, that is the Euro, is that of the economic environment in which the company operates and coincides with the accounting currency. Transactions in foreign currency are recorded at the time of their initial recognition in the currency of account applying the foreign currency exchange rate valid on the transaction date.

Subsequent recognitionUpon closure of the annual or interim financial statements, financial statement items in a foreign currency are valued as follows:• monetary items are converted at the exchange rate in effect on the balance sheet closing date;• non-monetary items are valued at their historic cost, converted using the exchange rate in effect on the date of the

transaction;• non-monetary items are valued at fair value, converted using the exchange rate in effect on the closing date.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Exchange rate differences deriving from monetary element settlements or from conversions to rates other than the original rates applied or from conversions of the previous financial statements are recorded in the income statement in the period in which they arise.When a gain or loss relating to a non-monetary element is recorded under shareholders’ equity, any exchange difference relating to that element is also recorded under shareholders’ equity. Otherwise, when a gain or loss is recorded in the income statement, any related exchange difference is also recorded in the income statement. Costs and revenues in a foreign currency are recognised using the exchange rate in effect at the time of recognition.

Section 18 - Other information

Employees’ severance fundThe employees’ severance fund is recognised on the basis of its actuarial value, determined by independent actuaries. For actuarial purposes, the Projected Unit Credit method is used, which involves a forecast of future outlay based on historic statistical analysis and the demographic curve, and financial actuarial valuation of cash flows based on the market interest rate. Contributions paid in each financial period are considered as separate units, recorded and valued individually in order to determine the final obligation. The actuarial rate used is determined as the average of corporate securities rates relating to the valuation date, weighted on the basis of the percentage of the amount paid and prepaid, for each maturity, with respect to the total to be paid or prepaid up to the final extinguishment date of the entire obligation. In recent years there has been a worsening of bond issuers’ ratings, both at the public entity and the corporate level; due to this, there has been a reduction in the market for highly rated securities. Pursuant to IAS 19 regarding identification of the discounting rate to use for actuarial valuations, it was considered more representative of actual current financial market performances to take as a reference bonds denominated in Euro with an issuer rating of at least A (Standard & Poor) or Aa1 (Moody’s), that is a rating which, while fulfilling the “high quality” requirements if IAS 19, also makes it possible to have an adequately-sized reference basket.The service costs for this scheme are recorded under personnel costs as the net total of contributions paid, contributions relevant to previous periods yet to be recognised, interest accrued, expected revenues deriving from implementation of the scheme and any actuarial gains/losses.Actuarial gains and losses are immediately recognised in shareholders’ equity.

Treasury sharesAny treasury shares held are recorded as a reduction in shareholders’ equity.Likewise, their original cost and profits or losses deriving from their subsequent sale are recorded as movements in shareholders’ equity.

Share-based paymentsStaff remuneration plans based on shares are recognised in the income statement, with a corresponding increase in equity, based on the fair value of the financial instruments granted on the date of assignment, dividing the charge along the period covered by the plan. When there are options, their fair value is calculated using a model that considers, in addition to information such as the price of exercise and the life of the option, the current price of the shares and their expected volatility, expected dividends and the risk-free interest rate and even the specific characteristics of the existing plan. The pricing model separately assesses the option and probability of realization of the conditions upon which the options were granted. The combination of the two values provides the fair value of the assigned instrument. Any reduction in the number of assigned financial instruments is accounted for as a cancellation of a part thereof.

Valuation reservesValuation reserves are determined as a function of valuation rules indicated for the assets and liabilities concerned. e.g. assets available for sale. These reserves also include the impact from the first application of IAS.This item includes valuation reserves for financial assets available for sale and for tangible and intangible assets revalued upon first time application of IAS/IFRS.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Recognition of revenuesRevenues are recognised when they are received or when it is probable that the future economic benefits will be received and these benefits can be measured reliably. In particular:• the interests are recognised pro rata on the basis of the contractual interest rate or the effective interest rate if

amortised cost is used;• dividends are recognised in the income statement when they are distributed “IAS 18, par. 30.c”;• revenue deriving from brokerage on financial instruments for trading, calculated as the difference between the

transaction price and the fair value of the instrument, is recognised in the income statement at the time the transaction is recognised if the fair value can be calculated with reference to recent parameters or transactions observed in the same market on which the instrument is traded;

• other fees and commissions are recognised on an accruals basis.

Property held for saleProperties originating from credit recoveries have been recognised and valued in the balance sheet under item 160 “Other Assets” based on IAS 2. The value recognised is equal to the purchase or sale value including and costs that can be capitalised. The values of properties recognised in the balance sheet are adjusted if there is impairment based on new market values that are lower than the recognition amount.

Procedure for impairment testing of goodwillThe goodwill recognised following acquisitions is tested for impairment according to IAS 36. For the purposes of the test, once goodwill is allocated to a cash generating unit (CGU), the book value and the recoverable value of such units is examined, the latter being the higher of the fair value, net of any costs of sales and the value in use.The standard furthermore establishes that impairment testing can be carried out at any time during the financial year, provided this is done with reference to the same period in all the years. Additionally it establishes that the calculation of the annual amount can be considered valid in terms of the subsequent impairment test of the CGU, provided the probability that the actual recoverable value is lower than the book value of the CGU is remote. This judgement may be based on the analysis of events that have taken place and the circumstances that subsequently modified the most recent impairment test.To this end, we can specify that a detailed and complete impairment test is carried out on all intangible assets and equity investments when preparing the consolidated annual financial statements. In application of the above, the impairment test was correctly carried out for the preparation of the financial statements for 2017.When preparing the interim financial reports, steps were taken to assess the existence of signs that goodwill might have suffered impairment due to the occurrence of changes or particularly important situations of discontinuity with respect to the values and assumptions taken as reference in the end of year recognition. From the analysis made in the preparation of the interim reports, there were no elements which would have necessitated a review of the adequacy of the value of goodwill recorded in the balance sheet.It should be stressed that the parameters and information that are used to verify the recoverability of goodwill (in particular, the foreseeable cash flows for the CGU and the discounting rates used) are significantly influenced by the economic situation and the market.Additional information is available in the notes, Part B “Information on the consolidated balance sheet,” Section 13of the assets.

Tests for impairment of tangible and intangible assetsTangible and intangible assets with a finite useful life are subjected to impairment tests if there is an indication that the carrying amount of the asset can no longer be recovered. The recoverable value is determined with reference to the fair value of the asset, net of costs to sell or to the value in use if this can be determined, and if it is higher than the fair value.As regards properties, held for any reason, the fair value is mainly determined on the basis of an appraisal. The impairment loss is recognised only if the fair value, net of costs to sell or the value in use, is lower than the carrying amount for a prolonged period.As regards intangible assets with an indefinite life, all the factors on which the estimate of the recoverable value of the same was based are continually and constantly monitored, in order to identify quickly any potential critical elements.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Criteria for determination of the fair value of financial instrumentsFair value is the price that could be received for the sale of an asset or which would be payable upon transfer of an asset in an arm’s length transaction on the valuation date. The financial statement rules apply the fair value criterion as the major criterion for the measurement of financial instruments, with measurement at cost (or amortised cost) being considered a secondary criterion.IAS 39 (par. 46 et seq.) sets fair value as the criteria for measuring financial assets and liabilities belonging to the following categories:• held for trading financial assets (HFT);• available-for-sale financial assets (AFS);• derivative instruments, regardless of their purpose;• financial liabilities held for trading (IAS 39 par. 9).

The following are excluded from measurement at fair value:• financial assets classified as “held-to-maturity investments” (HTM) or “loans and receivables” (L&R): their

measurement is provided at cost;• equity instruments for which fair value cannot be measured reliably: measurement at cost is required for these

instruments as well;• financial liabilities not held for trading which are not measured at fair value: measurement is carried out using the

amortised cost method.The measurement of fair value therefore has an effect on a large part of the balance sheet items, or in terms of their impact on the income statement or equity, or for additional information purposes.On 11 December 2012, the European Union adopted IFRS 13, the application of which is mandatory from 1 January 2013 for all companies that use IASs/IFRSs for the drafting of financial statements.IFRS 13 provides an updated definition of fair value, compared to the one provided previously in IAS 39. In particular, IFRS 13 introduces the concepts of “price” and “transaction between market participants”; with regard to the first element the standard (par. 24-26) specifies that the price is the consideration received/paid to sell/transfer the asset/liability, regardless of the fact that it can be observed directly or estimated using other measurement techniques. The standard (para. 15-21) also states that use of a price as a measure of fair value assumes that the transaction takes place in the principal market (the market with the highest volume/level of activity) or, in its absence, the most advantageous market (the market which maximises the amount received to sell/minimises the amount to pay to buy).With regard to the “market participants,” IFRS 13 (par. 3, 22 and 23) underlines that the fair value, whether taken from the market or measured using measurement techniques, must include the assumptions used by the market participants, including those regarding risk.Therefore, pursuant to IAS/IFRS, the market price is used for the measurement of the fair value of financial instruments, if they are instruments which are traded on active markets.If there is no active market, the fair value is determined using measurement techniques that maximise the use of observable data and assumptions used by the market participants, including assumptions regarding risk. In this sense, fair value must accurately reflect the credit risk of the counterparty (IFRS 13 par. 56) and include the risk of default of the company itself (IFRS 13 par. 42).

The criteria for the determination of the “fair value of the securities” are:

Securities listed on an active market:The fair value of the financial instruments traded on an “active market” is assumed to be:• for equity securities and debt securities listed on Borsa Italia, the reference price13 of the last working day of the

exchange;• for equity or debt securities listed on foreign exchanges, the reference price (Bloomberg trade price or another

equivalent price) of the last day of the period, provided the price of the instrument is sufficiently “liquid” and/or considered to be reliable;

• for shares in UCIs (Undertakings and collective investments and Sicavs) the official price (Bloomberg trade price or another equivalent price) of the share on the last trading day of the reference period;

• for all types of instruments in general, when available and reliable, the price provided by other sources of information such as Bloomberg, independent qualified contributors (e.g. Banca Imi, UBM, etc.) or alternative trading platforms where the financial instrument is objectively priced on a continuous basis;

• for equity securities included in the portfolio of available for sale assets, the fair value is assumed to be the market price on the last trading day of the year.

13 On Borsa Italia the Reference Price of the trading sessions is the average weighted price of the last 10% of the quantity traded.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Securities listed on an inactive market:“When no price as specified above is available or deemed to be reliable, the fair value of financial instruments traded on an “inactive market” is considered to be”:• for debt securities, not listed on an Official Stock Exchange or for which a market has not been identified or by

default, the following are considered:- Bloomberg’s BGN quotation, if there is evidence of sufficient continuity of the price quotation;- the quotation of a single contributor, if there is evidence of sufficient continuity of the price quotation;- any prices provided by other sources considered to be adequate, such as Bloomberg’s BVAL quotation;- internal valuation models.

If it is necessary to use an internal model, the plain vanilla debt securities are valued by applying the “discounted cash flow model”, according to a process consisting of the following phases:• mapping of the cash flows expected from the instrument and distribution thereof throughout its contractual life; • selection of the discounting curve for the cash flows that incorporates the credit risk of the issuer;• calculation of the present value of the instrument on the measurement date.

For structured securities, the fair value is determined by breaking the security down into a portfolio of elementary instruments: the fair value of the structured product can thus be obtained by adding the individual valuations of the elementary instruments into which it has been broken down, in particular:• The fair value of the plain vanilla bond component (the “naked” bond) is determined using the discounted cash flow

model illustrated above;• the fair value of the optional component can be obtained through valuation models of the options (see paragraph on

“Criteria for the determination of the fair value of derivative contracts”).

The credit risk of the issuer is generally estimated through the market quotation of the credit default swap (hereinafter also “CDS”) or through other market data that is observable and directly/indirectly express the issuer’s credit risk.

• for investments in equity instruments IFRS 13 makes reference to several measurement techniques for the purpose of determining the fair value of instruments representing unlisted non-controlling equity packages, and of packages that represent associated equity investments. The choice of the measurement methodology to be applied is entrusted to the investor taking account of specific events and circumstances, as also the information available with reference to the equity investment being analysed. The preference for one method with respect to another, and above all the specific inputs used as part of the same, affect, in practice, the level of fair value reached. IFRS 13 makes reference to the following methodological approaches, without however imposing any type of hierarchy in the context of the same:

- Market approaches Market approaches are based on the idea of comparability with respect to other market operators assuming

that the value of an asset (or a business line or a company) can be determined comparing it to similar assets (or business lines or companies) for which market prices are available. In the presence of this relevant information, therefore, an investor is capable of determining the fair value of an unlisted equity instrument taking as reference:a) the prices paid in the context of sale transactions of equity instruments of the same investee identical or

similar to that of the equity investment (“direct transactions”);b) the multiples deducible:

- from the prices paid in the context of merger and acquisition transactions (“transaction multiples”);- from comparable companies on the basis of the respective stock exchange capitalisations (“stock exchange

multiples” or “trading multiples”).• Fundamental approaches The fundamental approaches are based on the assumption that the future flows (cash or dividends) are convertible

into a single current value (discounted to the present). In particular, the main approaches that fall within this category include:

a) Methods based on the discounting of future flows (Discounted Cash Flow, Dividend Discount Model),b) Appraisal Value,c) Adjusted Net Asset Value (for the measurement, in particular, of holdings of equity investments),d) Residual approaches (Adjusted shareholders’ equity and Cost).

In keeping with the provisions of IFRS 13, it is necessary to ascertain, according to the specific case, any need to apply certain adjustments to the economic value resulting from the application of the aforementioned valuation approaches for the purposes of determining the fair value of the equity investment being analysed. In particular, IFRS 13 mentions a number of adjustments, leaving in any case to the judgement of the valuer the ascertainment of the effective applicability of the same or the need to consider others on the basis of the features of the company being assessed and the specific circumstances. The possible adjustments in question are the following:

- Discount for Lack Of Marketability - DLOM,- Control Premium,

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



- Discount for Lack Of Control - DLOC. The DLOM and the DLOC are adjustments which reduce the economic value of the equity investment.

If certain conditions exist, these negative adjustments could be counterbalanced by the Control Premium. A detailed illustration of the measurement methods and adjustments to the fair value is provided in the “Technical

document for the fair value measurement of financial instruments” which is annexed to the current “fair value measurement” policy on the subject.

• as regards open undertakings for collective investments (“UCIs”), generally characterised by high levels of transparency and liquidability, the valuation is made on the basis of the official NAV (without adjustments) communicated by the asset management company (SGR) or by the fund administrator or taken from an information provider. This NAV represents the amount at which the units can be liquidated in a short time on the initiative of the possessor. In the case of undertakings in collective investments (UCIs) (typically set up in a closed form) characterised, on the contrary, by high levels of illiquidity (for example, real estate or private equity funds), the process of measuring fair value could entail the opportunity to make corrections to the NAV, in particular, applying an illiquidity discount. The applicability of this adjustment should be verified in the light of the valuations carried out by the intermediary that manages the fund for the purposes of quantifying the NAV. Any consideration by this of illiquidity discounts in the context of valuation of the single assets of the fund could make it inopportune to apply a further illiquidity discount to the NAV. More details on the measurement of the fair value of specific reference clusters and an illustration of the methods with which to make any corrections are provided in the aforementioned “Technical document for the fair value measurement of financial instruments”.

• for contracts insuring capital, the redemption value pursuant to the issuers’ regulation.

The criteria for the determination of “fair value of derivative contracts”, are as follows:• for derivative contracts traded on regulated markets the fair value is the market price of the last trading day

of the period;• for over the counter (OTC) derivatives the fair value of the derivative instruments is determined using measurement

models which are specific for the type of instrument and the definition of market parameters that are adequate for correctly supplying this information (as provided for in the EMIR). In accordance with IFRS 13, in measuring the fair value of OTC derivatives, Banca Intermobiliare:

- takes into account factors related to the credit risk of the counterparty or the Bank (Credit Valuation Adjustment - CVA or Debit Valuation Adjustment - DVA) and calculated on the basis of the current deal level market value (CDLMV), with appropriate add-on and the loss given default (LGD) and probability of default (PD) of the parties involved;

- if there are bilateral collateralisation agreements (e.g. Credit Support Annexes) involving the establishment of adequate collateral to hedge transactions in OTC derivatives:- it does not apply the calculation of CVA or DVA to transactions falling within this classification, due to the

presence of techniques to mitigate credit risk;- it uses a specific discount curve built on the overnight interest rates (OIS discounting curves) in accordance

with the rate of return of the forms of collateral used;- due to the increase in credit spreads and liquidity inherent in money market rates after the financial crisis of 2008,

it uses different term structures of interest rates (so-called multiple curves evaluation) to proceed, on the one hand, with the discounting of cash flows and, on the other, with the estimates of future cash flows (forwarding) depending on the different maturities of the index underlying the derivative rate;

- regardless of the accounting classification of OTC derivatives in the portfolio managed according to the purpose of hedging or trading, it uses specific market data from different data providers (e.g. Reuters, Bloomberg, SuperDerivatives, MarkIt, etc.), chosen from time to time depending on the quality of the data provided for each market segment, and depending on the nature of the derivative;

- for derivatives subject to central clearing (as defined by the EMIR regulations), the fair value used by the clearing house is used.

The fair value is generally the market value on the reference date, determined according to the following procedures, depending on the type of contract:

- interest rate contracts: the market value is represented by the “replacement cost”, which is determined by discounting the differences, on the settlement dates, between the flows calculated at the contract rates and the expected flows calculated at objectively defined market rates, at the end of the year for a remaining maturity of an equal length;

- options on securities and other instruments: the market value is represented by the “theoretical premium” on the date of reference, which is determined using the Black & Scholes formula or other equivalent criteria;

- forward transactions on exchange: the market value is represented by the “forward” exchange rate on the aforementioned date, for maturities corresponding to those of the transactions under valuation;

- forward transactions on securities, commodities or precious metals: the market value is represented by the

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



“forward” price on the above-mentioned date, for maturities corresponding to those of the underlying asset;- for particularly complex derivatives, the fair value of the instrument as provided by qualified operators may be used.

Loans and receivables:The measurement of the fair value of the Bank’s loans and receivables is carried out by applying the “discounted cash flow model” according to a process with following phases:• mapping of the cash flows expected and distribution thereof throughout its contractual life;• selection of the discount curve for the cash flows;

- if loans are being measured, the “Loan Credit Risk” curve is used, which incorporates the Bank’s credit risk;- if the receivables are being measured, the race could free curve is used the result of which is adjusted by its credit

risk component;• calculation of the present value of loans/receivables on the measurement date. Own bonds issued:The calculation of the fair value of bonds issued by the Bank is carried out by applying an adequate valuation technique defined on the basis of the security’s financial structure and the indications set forth for the debt securities classified in an inactive market.For the Bank’s debt securities, the quantification of the credit risk is achieved through specific calculation processes that provide for the assignment of specific credit spreads diversified by maturity. To this end, the Bank has developed an internal measurement model associated with the determinations of the Group’s credit curve.

Impairment of available-for-sale financial instruments (AFS)Among other things, IAS 39 provides guidance for the accounting and valuation of available-for-sale (AFS) financial instruments. To this end, the standard indicates that a gain (or a loss) on an available-for-sale financial instrument must be recognised directly in equity until the financial asset is eliminated. At that time, the overall gain (or the loss) which was previously recognised in equity must be recognised in the income statement.However, if objective evidence exists that the asset has become impaired, the cumulative loss which is recognised directly in equity must be written off and recognised in the income statement, even if the financial asset has not been eliminated (impairment) (paragraph 67).Paragraph 68 furthermore specifies that the “amount of the total loss that is written off equity and recognised in the income statement must be the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, minus any impairment losses on that financial asset which was previously recognised in the income statement”. Therefore, the entire negative equity reserve must be allocated to the income statement if there is indication of impairment. The difference between the book value and the recoverable value is the impairment.Financial assets in the available-for-sale portfolio are therefore tested for impairment whenever there is objective evidence that a financial asset has become impaired and, in any case, on each reporting date, as required by paragraph 58.The process of identifying impairment is divided into three distinct phases:• identification of financial instruments to be taken into consideration as potential indications of impairment exist;• verification on a quantitative level of signs of impairment objectively lead to valuations to be considered as critical;• itemised analysis of the identified financial instruments according to well defined methodologies.Therefore, from an essential point of view, this process aims to support the decision to consider a loss as being permanent based on a methodology of automatic steps aimed at identifying the potentially impaired financial instruments and their appropriate accounting treatment.

The criteria applied to identify situations of impairment in the AFS portfolio distinguish between equity securities and debt securities.

For equity securities a check is carried out to determine whether the accumulated impairment from the acquisition up to the test date which has been recognised in Equity is:1. higher than 40% of the acquisition value; or2. whether it is ongoing for a period of more than 24 months.If one of the two cases above applies, the financial instrument is automatically written down and the value adjustment recognised in the income statement.There are furthermore quantitative filters which are used to examine the portfolio for impairment of those financial instruments which, while not falling under the two cases above, have nevertheless become impaired by over 30% compared to the average weighted acquisition value. Whenever the application of these filters indicates that impairment may exist, a qualitative/fundamental analysis is carried out.The qualitative analysis takes into account the elements which support or contrast the value adjustment. Among those to be considered as supporting existence of impairment are the following:• the durability, i.e. the long-lasting nature of a negative market situation over a specific period of time;• verification of disappearance of the financial instrument from an active market and/or the very low level of any

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



prices available;• discovery of serious financial difficulties faced by the issuer, with any contractual violations that have already occurred

which involve failure to pay interest or capital within the agreed upon terms;• revision downwards of the rating assigned by a specialised rating company, by over two levels;• debt restructuring of the issuer already underway;• the existence of loans granted by a bank belonging to the Group to the issuer which, given the presence of loss events

as provided for in the supervisory regulations, are classified as “non-performing loans” or “watchlist” loans and written down individually.

On the other hand, the elements that indicate non-existence of impairment include recovery of price levels, even if partial, after the date on which the measurement took place (financial statements, half-yearly or quarterly report).

For debt securities the qualitative aspect prevails and therefore the checks involve whether the issuer: • posted negative financial results or results which differed significantly from the declared budgets or forecast figures in

multiple year business plans which were disclosed to the market; • announced or initiated bankruptcy or debt restructuring proceedings; • underwent a revision downwards of the rating assigned by a specialised rating company, by over two levels; • is in serious financial difficulties, with any contractual violations that have already occurred which involve failure to

pay interest or capital within the agreed upon terms; • and that all the above could indicate the possibility/probability that the financial instrument will not be paid at the

time of its stated maturity.If the above-mentioned qualitative analysis indicates that there exist objective possibilities of even partial impairment, the financial instrument is written down and the value adjustment is recognised in the income statement.As for the equity securities, there are quantitative filters for the debt securities as well which are used in examining those financial instruments which, while not exhibiting the traits mentioned above, nevertheless have impairment in excess of 30% compared to the average weighted acquisition price. When the application of these filters indicates potential impairment, a qualitative/fundamental analysis takes place focusing on the same elements as for the equity instruments, with regular payments of interest and equity by the issuer, including potentially also insofar as instruments other than those existing in the portfolio being among the elements indicating the non-existence of impairment.For both equity and debt securities, the qualitative fundamental phase is nevertheless focused on valuation of the credit portfolio (including ratings and CDSs, if available, similarly to the qualitative filters for bonds) and retrospective financial statement analysis (last 3 financial statements), including verification of the dividend distribution policy, etc.If the analysis indicates that there are clear signs of evident impairment, the financial instrument is written down and the value adjustment is recognised in the income statement.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A3 - INFORMATION ON TRANSFERS BETWEEN PORTFOLIOS OF FINANCIAL ASSETS

Changes to IAS 39 and IFRS 7 of 13 October 2008In October 2008, the International Accounting Standard Board (IASB) published an amendment to IAS 39 in IFRS 7, which was adopted under European Union Regulation 1004 of 15 October 2008. The changes made authorise only under “rare circumstances” - such as for example the serious crisis that struck financial markets during the third quarter of 2008 - the amendment of a portfolio of certain financial instruments; in particular:• provided a financial asset is no longer held for sale or purchased for the short term, it can be reclassified as HTM

(held to maturity), L&R (loans and receivables) or AFS (available for sale);• a financial asset consisting of unlisted securities can be reclassified from the AFS (available for sale) portfolio to the

L&R portfolio, as well as the HTM portfolio as already allowed by the IAS.The purpose of this amendment is to resolve the problem of the loss of significance of certain market listings in the case of illiquid markets and/or markets undergoing panic situations, by allowing financial institutions and the companies applying the IAS/IFRS in general, to reduce the volatility of the income statement (if the securities in question belong to the trading book) and the balance sheet (if the securities belong to the available for sale portfolio. For reclassifications made by 31 October 2008, the standard provides an interim rule which allows the effect of such a reclassification to be applied to earlier periods up to 1 July 2008, thus identifying the crisis in the financial markets which constituted the rare circumstance for application of the amendment.To cover the need for comparability of the information with the preceding financial statements, the obligation to add an appropriate disclosure was stipulated. This disclosure must show the profits and losses that would have been recognised if this option had not been used.

A.3.1 Reclassified financial assets: book value, fair value and impact on total profitability

(Thousands of €)

Type of financial instrument

Source portfolio

Target portfolio

Book value at 31.12.2017

Fair value at 31.12.2017

Income components with no transfer

(before taxes)

Income components reported during the financial

period (before taxes)

Valutational Other Valutational Other

Debt securities HFT AFS 5,005 5,005 69 4,007 69 4,101

UCIs units HFT AFS 1,039 1,039 (29) (1,476) (29) (1,476)

Equity Securities HFT AFS 396 396 26 - 26 -

Total 82,065 82,065 714 1,577 714 1,547

The table mainly lists the (residual) portfolio which was reclassified in 2008 by Banca Intermobiliare – considering the global economic crisis at the time as a rare circumstance that can justify the use of the reclassification of the portfolio – by applying the amendment to IAS 39. It should be noted that on 5 February 2016, the Board of Directors of Symphonia passed a resolution for the only unlisted equity registered in the category “Assets held for trading” to be reclassified into the category “Assets available for sale”, taking into account that the difficult situation in the financial markets would not have allowed an activity of trading to be pursued in the short term for that instrument. In 2017, the Banca Intermobiliare Group made no reclassification of its portfolio.

A.3.2 Reclassified financial assets: effects on total profitability before transferNot applicable, see paragraph A.3.1

A.3.3 Transfer of financial assets held for tradingNot applicable, see paragraph A.3.1

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.3.4 Effective interest rate and projected cash flows from reclassified assetsNot applicable, see paragraph A.3.1

A4 - INFORMATION ON FAIR VALUEINFORMATION OF A QUALITATIVE NATURE

To increase the coherence and comparability of the fair value measurements, in May 2011 the International Accounting Standard Board (IASB) published IFRS 13 “Fair Value Measurement,” which was adopted under European Union Regulation No. 1255 of 11 December 2012, applicable from 1 January 2013. IFRS 13 establishes that the measurements of financial instruments at fair value be classified on the basis of a fair value hierarchy characterised by three levels (para. 76-90) which reflects the significance of the inputs are used in the measurements. On the basis of this standard, there are the following levels of fair value:• Level 1 of fair value: the inputs from valuation of the instrument are prices listed for identical instruments in active

markets to which there is access on the measurement date;• Level 2 of fair value: the inputs for the valuation of the instrument are different from the listed prices as above, which

are observable directly or indirectly on the market;• Level 3 of fair value: the inputs for the valuation of the instrument are not based on observable market data.As indicated in the regulation, the hierarchy of the approaches adopted for determination of the fair value of all financial instruments (equities, UCIs, bonds, bond loans issued and derivatives) attributes absolute priority to the official prices available on active markets for the assets and liabilities to be measured and, if not available, to the measurement of assets and liabilities based on significant quotations, or which refer to assets and liabilities that are similar. Finally, residually, measurement techniques can be used which are based on non-observable inputs and therefore which are more discretionary in nature.The Banca Intermobiliare Group classifies its own financial instruments by decreasing level of fair value quality on the basis of the following principles:• Level 1, the fair value is the market price of the financial instrument itself which is being measured, obtained based

on quotations (without adjustments) expressed by an Official Stock Exchange. Financial instruments with fair value of Level 1 are equities and debt securities which are listed on an official market, if this market is considered to be sufficiently liquid, and derivatives and mutual funds quoted on an official market.

• Level 2, the measurement of fair value is based on the quotations expressed by markets other than an official stock exchange, on significant measurements which can be obtained from a reliable information provider, or prices determined using an appropriate calculation method based on observable market parameters. The usage of these calculation methods makes it possible to reproduce the measurements of the unlisted Financial Instruments on active markets through the usage of “market” parameters, that is parameters the value of which is deduced from quotations of Financial Instruments present on active markets. As an example, the following are classified as financial instruments with fair value of level 2:

- Equities listed on an official market, the volumes and trading frequencies of which are insufficient to ensure that the instrument is appropriately liquid;

- Debt securities measured using the market prices provided by individual contributors or other information sources (Bloomberg BGN, BVAL., etc.);

- Debt securities measured using measurement techniques, if the input data used for the measurement (e.g. forward structures of risk-free rates, credit spreads, etc.) are directly or indirectly observable on the market, or if the measurement is carried out using methods of comparison (the comparable approach);

- Unquoted derivatives which are measured through measurement techniques, if the input data used for the measurement are observable directly or indirectly on the market;

- UCIs for which a NAV is published at least every month.• Level 3, the measurement of the fair value is carried out using different inputs, including discretionary parameters,

that is parameters the value of which cannot be deduced from the quotations for financial instruments present on active markets (the model valuation). If such discretionary parameters significantly influence the final valuation, it follows that if there is no direct observation of all parameters on the market, the analyst will need to make estimates and assumptions. Finally, all instruments that do not fulfil the requirements for classification in the above-mentioned levels are classified as financial instruments with fair value level 3.

For the procedures used by the Banca Intermobiliare Group to determine fair value and the relative definitions of active and non-active markets, for the purposes of financial statement measurements and disclosures to provide in the notes to the financial statements, please see paragraph 18 “Criteria for the determination of the fair value of financial instruments” under “Other Information” Part A.2 - Section 17 of these Notes.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.1 Fair value levels 2 and 3: valuation techniques and inputs usedFor assets and liabilities measured at fair value on a recurring basis, for which the prices that are directly observable on active markets are not available, it is necessary to determine a fair value based on the “comparable approach” and the “model valuation” as defined in the paragraph above.It is hereby noted that the only items measured at fair value on a recurring basis are financial assets and liabilities as shown below in greater detail.• Debt securities: these are measured using the method of discounting the expected cash flows (the discounted cash

flow model), appropriately corrected to take into account the issuer risk. On the other hand, for structured securities, the security is broken down into a portfolio of elementary instruments: the fair value of the structure product can thus be obtained by adding the individual measurements of the elementary instruments into which it has been broken down, so that the fair value of the bond component is determined through the discounted cash flow model, while the fair value of the optional component is measured through an option valuation model.

• Unlisted equity securities: these are measured with reference to direct transactions on the same security or similar securities observed in a congruous timeframe compared to the valuation date, using the new market multiples method for comparable companies and, alternatively, financial, equity, and profit and loss valuation methods.

• Investments in UCIs: these are measured on the basis of the NAV taking as a reference the value of the underlying investments proportionally to the percentage of shares; if the necessary information is not available, a secondary model is used which takes as a reference the NAV (net asset value) provided by the management company. If it is not possible to obtain the official NAV on the measurement date, the fair value is calculated taking into account the last official NAV, which is adjusted for claims and redemptions that took place during the measurement. These types of investments are usually private equity funds, real estate funds and hedge funds.

• Over The Counter (OTC) derivatives: these are measured on the basis of multiple models, depending on the input factors (interest rate risk, volatility, exchange risk, price risk, etc.) which influence the relative measurement and with account taken of the “fair value adjustment,” described in detail in Section 18 “Criteria for the determination of the fair value of financial instruments” under “Other Information” Part A.2 of these Notes.

The techniques and parameters for determination of the fair value, and the criteria for assignment of the fair value hierarchy are defined and formalised in a special policy for “Fair value measurement of financial instruments”.The reliability of the fair value measurement is also guaranteed by the verification activities carried out by the Risk Management Unit, which is obviously independent from the front office units which hold positions. The Risk Management function periodically reviews the list of pricing models to use for implementation of the fair value measurement policy.

A.4.2 Processes and sensitivity of the measurementsThe non-observable parameters able to influence the assessment of instruments classified as level 3 consist mainly of estimates and assumptions underlying the models used to measure investments in equity securities and shares in UCIs.For these investments no quantitative analysis of the fair value sensitivity was performed compared to the change of unobservable inputs, because the fair value was derived from third party sources without any adjustments or it was the result of a model whose inputs are specific for the entity being valued (e.g. assets of the company) and for which it cannot reasonably be expected to provide for alternative values.

A.4.3 Fair value hierarchyWith regard to the division of balance sheet items and the disclosures on the transfers between fair value levels, the relative details are provided under paragraphs A.4.5.2 and A.4.5.3 below, with the note that, for securities in position up to 31 December 2017 with a level of fair value that is different compared to the existing one at the end of 31 December 2016, it was assumed that the transfer between levels took place with reference to the existing balances at the beginning of the reference period.

A.4.4 Additional informationAs at 31 December 2017, there was no information to report pursuant to IFRS 13, paragraphs 51, 93 (i) and 96 since:• there were no assets measured at fair value based on the “highest and best use”;• no use was made of the possibility to measure fair value the level of overall exposure of the portfolio, in order to take

into account the offsetting of the credit risk and the market risk of a specific group of financial assets or liabilities.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



INFORMATION OF A QUANTITATIVE NATURE

A.4.5 Fair value hierarchy

A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: distribution for fair value levels.

Financial assets/liabilities measured at fair value as at 31.12.2017

(Thousands of €)

Financial assets/liabilities measured at fair value Level 1 Level 2 Level 3 Total

1. Financial assets held for trading 21,250 23,152 219 44,621

2. Financial assets designated at fair value - - - -

3. Financial assets available for sale 377,541 24,923 12,076 414,540

4. Hedging derivatives - 1,607 - 1,607

5. Tangible fixed assets - - - -

6. Intangible fixed assets - - - -

Total 398,791 49,682 12,295 460,768

1. Financial liabilities held for trading 24,533 15,325 - 39,858

2. Financial liabilities designated at fair value - - - -


Total 24,533 24,231 - 48,764


(Thousands of €)








Total 761,332 163,236 8,913 933,481

1. Financial liabilities held for trading 14,186 53,617 166 67,969



Total 14,186 68,375 166 82,727

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3)

Financial assetsheld

for trading

Financial assets

designated at fair value

Financial assets

available for sale

Hedging derivatives

Tangible fixed assets

Intangiblefixed assets

1. Opening balance 744 - 8,169 - - -

2. Increases - - 3.907

2.1 Purchases - - - - - -

2.2 Profits allocated to: - -

2.2.1 Income Statement - - - - - -

- of which: Capital gains - - - - - -

2.2.2 Equity x x - x - -

2.3 Transfers from other levels - - - - - -

2.4 Other increases - - 3,907 - - -

3. Decreases (525) -

3.1 Sales - - - - - -

3.2 Redemptions - - - - - -

3.3 Losses allocated to: - -

3.3.1 Income Statement - - - - - -

- of which Capital losses - - - - - -

3.3.2 Equity x x - x - -

3.4 Transfers to other levels - - - - - -

3.5 Other decreases (525) - - - - -

4. Closing balance 219 - 12,076 - - -

The sensitivity analysis of equity securities classified as financial assets available for sale (level 3 fair value), in consideration of the models used to determine the fair value - based essentially on the balance sheet entries of the companies involved - is not relevant because it is not directly attributable to the movements of exogenous parameters.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.5.3 Annual changes in financial liabilities designated at fair value (level 3)

Financial liabilities held

for trading

Financial liabilitiesdesignated at fair value

Hedging derivatives

1. Opening balance 166 - -

2. Increases - - -

2.1 Issues - - -

2.2 Losses allocated to:

2.2.1 Income Statement - - -

- of which: Capital losses - - -

2.2.2 Equity - x -

2.3 Transfers from other levels - - -

2.4 Other increases - - -

3. Decreases (166)

3.1 Redemptions (166) - -

3.2 Repurchases - - -

3.3 Profits allocated to: -


- of which Capital gains - - -

3.3.2 Equity - x -

3.4 Transfers to other levels - - -

3.5 Other decreases - - -

4. Closing balance - - -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non recurring basis: distribution for fair value levels

2017 2016

BV Level 1 Level 2 Level 3 BV Level 1 Level 2 Level 3

1. Financial assets held to maturity - - - - - - - -

2. Loans to banks 108,090 - 108,090 - 371,245 - 361,257 9,861

3. Loans to clients 61,580 - - 631,580 843,085 - - 837,141

4. Tangible assets held for investment purposes - - - - - - - -

5. Non-current assets and disposal groups held for sale 21,357 - 600 20,759 73,480 1,241 27,509 44,756

Total 761,027 - 108,690 652,338 1,287,810 1,241 388,768 891,758

1. Due to banks 183,232 - 183,232 - 509,294 - 509,294 -

2. Due to clients 985,633 - 985,633 - 1,286,040 - 1,286,040 -

3. Outstanding securities 60,686 - 60,686 - 304,978 - 297,641 -

4. Liabilities associated with assets held for sale 7,856 - 7,691 165 38,914 84 35,147 3,683

Total 1,237,881 - 1,237,432 165 2,139,226 84 2,128,122 3,683

A5 - INFORMATION ON “DAY ONE PROFIT/LOSS”Pursuant to IFRS 7, paragraph 28, Banca Intermobiliare and its subsidiaries did not carry out any transactions in the year requiring accounting for “day one profit/loss”.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B

140■ Notes to the consolidated financial statements - Part B


ASSETS

SECTION 1 - CASH AND CASH EQUIVALENTS - ITEM 101.1 Cash and cash equivalents: breakdown

2017 2016

a) Cash 1,689 1,669

b) Demand deposits at Central Banks - -

Total 1,689 1,669

SECTION 2 – FINANCIAL ASSETS HELD FOR TRADING - ITEM 202.1 Financial assets held for trading: breakdown by type

Items/Amounts 2017 2016

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

A. On-balance-sheet assets

1. Debt securities 20,925 7,592 218 31,327 11,356 571

1.1 Structured securities 496 3,620 - 4,404 1,590 -

1.2 Other debt securities 20,429 3,972 218 26,923 9,766 571

2. Equity securities 320 - 1 332 1 -

3. Shares in UCIs - 170 - - 15 -

4. Loans - - - - - -

4.1 Reverse repurchase agreements - - - - - -

4.2 Other - - - - - -

Total A 21,245 7,762 219 31,659 11,372 571

B. Derivative Instruments

1. Financial derivatives: 5 15,342 - - 53,350 173

1.1 for trading 5 15,342 - - 53,350 173

1.2 connected with fair value option - - - - - -

1.3 other - - - - - -

2. Credit derivatives - 48 - - 249 -

2.1 for trading - 48 - - 249 -


2.3 other - - - - - -

Total B 5 15,390 - - 53,599 173

Total (A+B) 21,250 23,152 219 31,659 64,971 744

Part B - INFORMATION ON THE CONSOLIDATED BALANCE SHEET

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B

Notes to the consolidated financial statements - Part B ■ 141


2.2 Financial assets held for trading: breakdown by borrower/issuer


A. ON-BALANCE-SHEET ASSETS

1. Debt securities 28,735 43,254

a) Governments and Central Banks 18,658 14,397

b) Other public entities 2,930 -

c) Banks 786 23,132

d) Other issuers 6,361 5,725

2. Equity securities 321 333

a) Banks - 2

b) Other issuers: 321 331

- insurance companies - -

- financial companies 12 -

- non-financial companies 309 331

- others - -

3. Shares in UCIs 170 15

4. Loans - -

a) Governments and Central Banks - -

b) Other public entities - -

c) Banks - -

d) Other parties - -

Total A 29,226 43,602

B. DERIVATIVE INSTRUMENTS

a) Banks

- fair value 8,910 34,082

b) Clients

- fair value 6,485 19,690

Total B 15,395 53,772

Total (A+B) 44,621 97,374

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 4 – FINANCIAL ASSETS AVAILABLE FOR SALE – ITEM 40

4.1 Financial assets available for sale: breakdown by type



1. Debt securities 377,395 24,923 20 703,874 73,147 3

1.1 Structured securities 2,042 - - - 9,985 -


2. Equity securities 146 - 3,853 10,253 63 2,122

2.1 Designated at fair value 146 - 3,642 10,253 63 2,114

2.2 Carried at cost - - 211 - - 8

3. Shares in UCIs - - 8,203 15,546 23,728 6,044

4. Loans - - - - - -

Total 377,541 24,923 12,076 729,673 96,938 8,169

4.2 Financial assets available for sale: breakdown by borrower/issuer





c) Banks 34,633 177,523


2. Equity securities 3,999 12,438

a) Banks 7 2,930

b) Other issuers: 3,992 9,508

- insurance companies - 706

- financial companies 149 187

- non-financial companies 3,632 8,474

- others 211 141

3. Shares in UCIs 8,203 45,318

4. Loans - -



c) Banks - -


Total 414,540 834,780

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



4.3 Financial assets available for sale covered by micro-hedges

2017 2016

Subject to fair value micro-hedging: 301,066 548,633

1. Interest rate risk 301,066 548,633

2. Price risk - -

3. Exchange rate risk - -

4. Credit risk - -

5. Other risks - -

Subject to cash flow micro-hedging: - -

1. Interest rate risk - -


3. Other - -

Total 301,066 548,633

The hedging activities carried out are attributable to the hedging, by using interest rate swaps (IRSs), of the fair value mainly of Italian BTPs in asset swaps and marginally of other securities.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 6 - LOANS TO BANKS - ITEM 60

6.1 Loans to banks: breakdown by type

Type of transaction/Amounts 2017 2016

BV FV BV FV


A. Loans to Central Banks

1. Term deposits - x x x - x x x

2. Mandatory reserve - x x x - x x x

3. Reverse repurchase agreements - x x x - x x x

4. Others - x x x - x x x

B. Loans to banks - -

1. Loans

1.1. Current accounts and demand deposits 66,783 x x x 317,753 x x x

1.2. Term deposits 10,140 x x x 13,646 x x x

1.3. Other loans: - x x x - x x x

- Reverse repurchase agreements 16,056 x x x 12,269 x x x

- Financial leasing - x x x - x x x

- Others 15,111 x x x 17,590 x x x

2. Debt securities - 9,987

2.1 Structured securities - x x x - x x x

2.2 Other debt securities - x x x 9,987 x x x

Total 108,090 - 108,090 - 371,245 - 361,257 9,861

Key:FV = fair valueBV = book value

The Mandatory Reserve at the Bank of Italy of €/Mln 10.1 is kept, starting from 23 July 2017, indirectly through an intermediary credit institution (Intesa Sanpaolo S.p.A.) under the terms of the authorisation issued by the Central Bank in turn under the terms of Art. 10 of the ECB Regulation on the application of minimum obligatory reserves and in virtue of contractual agreements signed by the parties. Previously the obligation was fulfilled through Veneto Banca S.p.A.. The fair value of receivables due from banks was assumed to be equal to the book value taking account of the counterparties and as the relationships are short-term and executed at arm’s length, except for debt securities (present only in the comparative figure) for which fair value has been determined.

6.2 Loans to banks subject to micro-hedgingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

6.3 Financial leasingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 7 - LOANS TO CLIENTS - ITEM 707.1 Loans to clients: breakdown by type

Type of transaction/Amounts 2017

Book value Fair value

Non impaired

Impaired Level 1 Level 2 Level 3

Purchased Others

Loans

1. Current accounts 180,662 - 150,348 x x x

2. Reverse repurchase agreements - - - x x x

3. Mortgages 156,167 - 83,636 x x x

4. Credit cards, personal loans and loans secured by one-fifth of salary 1,621 - 12 x x x

5. Financial leasing - - - x x x

6. Factoring - - - x x x

7. Other loans 47,689 - 11,445 x x x

Debt securities

8. Structured securities - - - x x x

9. Other debt securities - - - x x x

Total (book value) 386,139 - 245,441 678,120



Non impaired


Purchased Others

Loans



3. Mortgages 198,381 - 119,008 x x x




7. Other loans 48,418 - 9,908 x x x

Debt securities



Total (book value) 547,312 - 295,773 837,274

With regard to impaired loans, the assumption that the book value is a reasonable approximation of fair value is based on the fact that the absence of a sufficiently large number of transactions for these financial assets does not allow recognition of observable market parameters, with particular reference to the components making up the discounting rate (which would also include the market premium for risks and uncertainties). Because of this, the estimated fair value is largely determined by the current portfolio management model and by the related recovery mode and does not appear specifically influenced by the evolution of the rates of return required by the market. The internal procedures for

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



calculating the fair value (the so-called “exit price”) of the loans portfolio is therefore more sensitive to forecasts about losses in value, as the result of a subjective assessment, expressed by the manager of the position, with reference to the estimate of expected cash flows from recovery and to the related time scales. It is not possible, therefore, to exclude the possibility that the price of any sale to third parties may differ in negative terms from the fair value indicated for balance sheet purposes.The fair value of the loans to clients corresponds to the sum of the future cash flows from existing loans, including interest, discounted on the basis of a risk-free interest curve. The expected nominal future flows are corrected for the losses expected using the probability of default (PD) and loss given default (LGD) parameters attributed to specific classes of risk. The calculation of the fair value is carried out for every individual medium/long term financing relationship, while for“on demand” accounts the fair value is conventionally set as equal to the carrying amount.As for the credit quality and the level of risk of the loan portfolio, please see the information in the Consolidated Report on Operations under “Loans and other amounts due from clients” in Part A - Accounting Policies (A2 Part relating to main balance sheet items) and Part E - Information on risks and related hedging policies - Section “Credit risk”.

7.2 Loans to clients: breakdown by borrower/issuer


Non impaired

Impaired Non impaired

Impaired

Purchased Others Purchased Others

1. Debt securities issued by:

a) Governments - - - - - -

b) Other public entities - - - - - -

c) Other issuers - - - - - -

- non-financial companies - - - - - -

- financial companies - - - - - -

- insurance companies - - - - - -

- others - - - - - -

2. Loans to: 386,139 - 245,441 547,312 - 295,773



c) Other parties 386,139 - 245,441 547,312 - 295,773

- non-financial companies 126,577 - 190,162 190,189 - 216,124

- financial companies 66,168 - 3,037 84,053 - 15,076


- others 193,394 - 52,242 273,070 - 64,573

Total 386,139 - 245,441 547,312 - 295,773

7.3 Loans to clients subject to micro-hedgingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

7.4 Financial leasingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 8 - HEDGING DERIVATIVES - ITEM 808.1 Hedging derivatives: composition by type of hedge and levels

FV 2017 NV 2017 FV 2016 NV 2016


A) Financial Derivatives

1) Fair Value - 1,607 - 67,390 - 1,327 - 77,390

2) Cash flows - - - - - - - -

3) Foreign investment - - - - - - - -

B) Credit derivatives

1) Fair Value - - - - - - - -

2) Cash flows - - - - - - - -

Total - 1,607 - 67,390 - 1,327 - 77,390

Key:FV = Fair valueNV = Notional Value

8.2 Hedging derivatives: breakdown by hedged portfolio and type of hedge

Transactions/Type of hedge Fair Value Cash flows

Fore

ign

inve

stm

ents

Micro

Mac

ro

Micr

o

Mac

ro

Inte

rest

ra

te ri

sk

Exch

ange

ra

te ri

sk

Cred

it ris

k

Price

risk

Oth

er ri

sks

1. Financial assets available for sale 1,319 - - - - x x

2. Loans - - - x - x - x x

3. Financial assets held to maturity x - - x - x - x x

4. Portfolio x x x x x - x - x

5. Other transactions - - - - - x - x -

Total assets 1,319 - - - - - - - -

1. Financial liabilities 288 - - x - x - x x


Total liabilities 288 - - - - - - - -

1. Expected transactions x x x x x x x x x

2. Portfolio of financial assets and liabilities x x x x x - x - -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 10 - EQUITY INVESTMENTS - ITEM 10010.1 Equity investments: information about equity investment relationshipsAt 31 December 2017 there were no equity investments in joint ventures, but only one equity investment subject to significant influence. BIM Vita S.p.A., owned equally by Banca Intermobiliare and UnipolSai, is subject to the direction and coordination of Unipol Gruppo Finanziario S.p.A., and is part of the Unipol Insurance Group.

Company name Registered office

Operational headquarters

Form of control (a)

Investment relationship% votes

available (b)

Investor company Stake %

B. Companies subject to significant influence

1. Bim Vita S.p.A. Turin Turin 8 Banca Intermobiliare S.p.A. 50%

Key:(a) Form of control: 8 Associated company(b) Actual votes that can be exercised at shareholders’ meeting: unless otherwise indicated the stake corresponds to the available percentage of actual votes in the shareholders’

meeting; there are no potential votes other than actual ones.

As regards the comparative figure, at 31 December 2016 there were no equity investments in jointly-controlled companies.

10.2 Significant stakes: book value, fair value and dividends received

Company name Book value

Fair value

Dividends received

Companies subject to significant influence

1. Bim Vita S.p.A. 14,365 n.a. -

The financial and economic situation used for consolidation is that referring to 31.12.2017, approved by the Board of Directors of the company; in particular, the investee prepared its annual financial statements in accordance with national accounting standards and prepared the economic and financial situation in accordance with international accounting standards for the purposes of preparing the consolidated financial statements of Banca Intermobiliare.The analysis does not detect any lasting impairment of the investment. The fair value of the investment is not indicated as it is an unlisted share.

10.3 Partecipazioni significative: informazioni contabili

Company name Cash and cash equivalents

Financial assets

Non-financial assets


Non-financial liabilities

Total revenues

Net interest income

B. Significant stakes: accounting information

1. Bim Vita S.p.A. 17,467 665,777 12,796 86,096 581,214 116,263 6,849

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



The table shows the data obtained from the economic and financial situation at 31.12.2017 (IAS Package) prepared for the BIM consolidated financial statements and approved by the Board of Directors of BIM Vita.

Company name Profit (Loss) of continuing

operations before tax

Profit (Loss) of continuing

operations after tax

Profit (Loss) of groups

of assets held for sale,

net of tax

Profit (Loss) for

the year

Other income

componentsafter tax


B. Companies subject to significant influence

1. Bim Vita S.p.A. 3,217 2,959 2,959 2,959 33 2,992

10.4 Non-significant stakes: accounting informationNot applicable.

10.5 Equity investments: annual changes

2017 2016

A. Opening balance 14,020 13,683

B. Increases 1,495 1,487

B.1 Purchases -

B.2 Write-backs 1,479 1480

B.3 Revaluations -

B.4 Other changes 16 7

C. Decreases (1,150) (1,150)

C.1 Sales -

C.2 Write-downs -

C.4 Other changes (1,150) (1,150)

D. Closing balance 14,365 14,020

E. Total revaluations - -

F. Total adjustments - -

The change is entirely attributable to the associate Bim Vita S.p.A.. The B2 item relates to the increase due to the result for the year while item B4 relates to the change in the net equity share.

10.6 Significant assumptions and assessments to determine the existence of joint control or significant influenceReference should be made to extensive explanations in Part A – Accounting Policies – Section 3 – Consolidation area and methods.

10.7 Commitments related to equity investments in joint venturesAt 31 December 2017 there were no equity investments in joint ventures.

10.8 Commitments related to investments in companies subject to significant influenceAt 31 December 2017 there were no commitments or contingent liabilities related to equity investments in companies subject to significant influence.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



10.9 Significant restrictionsAt 31 December 2017 in respect of equity investments in companies subject to significant influence, there are no significant restrictions as referred to in paragraphs 13 and 22 (a) of IFRS 12.

10.10 Additional informationThe date of the separate financial statements of the company under significant influence (31 December 2017) coincides with the reporting date of the consolidated financial statements of Banca Intermobiliare.

SECTION 12 - TANGIBLE FIXED ASSETS - ITEM 12012.1 Tangible assets for business use: breakdown of assets carried at cost

Assets/Amounts 2017 2016

1. Owned assets

a) land 54,142 54,390

b) buildings 38,681 39,500

c) furniture 566 559

d) electronic equipment 708 1,022

e) other 852 1,050

2. Assets held under financial leasing - -

a) land - -

b) buildings - -

c) furniture - -

d) electronic equipment - -

e) other - -

Total 94,949 96,521

This item includes tangible assets (property, plant, equipment and other tangible assets) for functional use as covered by IAS 16; these tangible assets have not undergone lasting impairment losses or write-backs.

12.2 Tangible assets held for investment purposes: breakdown of assets carried at costAs at 31.12.2017 there existed no tangible assets held for investment purposes as governed by IAS 40.

12.3 Tangible assets for business use: breakdown of revalued assetsThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

12.4 Tangible assets held for investment purposes: breakdown of assets carried at fair valueThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



12.5 Tangible assets for business use: annual changes

Land Buildings Furniture Electronic systems

Other Total

A. Opening gross balance 54,142 50,027 9,413 6,090 9,213 128,885

A.1 Net total write-downs - (10,279) (8,854) (5,068) (8,162) (32,363)

A.2 Opening net balance 54,142 39,748 559 1,022 1,051 96,522

B. Increases: -

B.1 Purchases - 120 128 1 13 262

B.2 Capitalised improvement costs - - - - - -

B.3 Write-backs - - - - - -

B.4 Increases in fair value allocated to -

a) shareholders’ equity - - - - - -

b) income statement - - - - - -

B.5 Positive exchange differences - - - - - -

B.6 Transferred from property held for investment purposes - - - - - -

B.7 Other changes - - 148 10 471 629

C. Decreases: -

C.1 Sales - - (32) (22) (389) (443)

C.2 Depreciation - (1,173) (185) (303) (293) (1,954)

C.3 Write-downs for impairment allocated to -


b) income statement - (14) - - - (14)

C.4 Decreases in fair value allocated to - - - - - -



C.5 Negative exchange differences - - - - - -

C.6 Transfers to:

a) Tangible assets held for investment purposes - - - - - -

b) assets held for sale - - - - - -

C.7 Other changes - (52) - - (52)

D. Closing balance 54,142 38,681 566 708 853 94,949

D.1 Net total write-downs - (15,029) -8,267 -4352 (73864) (35,512)

D.2 Closing gross balance 54,142 53,709 8,833 5,060 8,717 130,461

E. Valuation at cost

12.6 Tangible assets held for investment purposes: annual changesThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

12.7 Commitments to purchase tangible assetsAt 31 December 2017, there were no commitments to purchase tangible assets of any significant amount.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 13 - INTANGIBLE FIXED ASSETS - ITEM 13013.1 Intangible assets: breakdown by type of asset


Finite life Indefinite life Finite life Indefinite life

A.1 Goodwill

A.1.1 pertaining to the group x 49,446 x 49,446

A.1.2 pertaining to minority interests x - x -

A.2 Other intangible assets

A.2.1 Assets carried at cost:

a) Intangible fixed assets generated internally - - - -

b) Other assets 943 - 1,258 -

A.2.2 Assets designated at fair value:


b) Other assets - - - -

Total 943 49,446 1,258 49,446

The goodwill recognised in the balance sheet as of 31.12.2017 totalled €/thou 49,466, and is entirely attributable to the goodwill entered in the consolidated financial statements of Banca Intermobiliare for the acquisition in 2003 of the investee Symphonia SGR.

Please note that the value of the GCU as at 31.12.2017 regarding the equity investment in Symphonia SGR (entered in the balance sheet at a carrying amount of more than the accounting shareholders’ equity) showed recoverable values that justify the capital gains recognised as goodwill. Thus, it was not necessary to apply any impairment to the goodwill.

Paragraph 13.3 “Other information” in this section provides the methodologies used for the impairment tests including the information required by IAS 36.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



13.2 Intangible assets: annual changes

GoodwillOther intangible fixed assets:

generated internallyOther intangible fixed

assets: otherTotal

Fin. Indef. Fin. Indef.

A. Opening balance 49,446 - - 1,259 - 50,705

A.1 Net total write-downs - - - - - -

A.2 Opening net balance 49,446 - - 1,259 - 50,705

B. Increases

B.1 Purchases - - - 252 - 252

B.2 Increases in internal intangible fixed assets x - - - - -

B.3 Write-backs x - - - - -

B.4 Increases in fair value

- to shareholders’ equity x - - - - -

- to the income statement x - - - - -

B.5 Positive exchange rate differences - - - - -

B.6 Other changes - - - - - -

C. Decreases - -

C.1 Sales - - - - - -

C.2 Write-downs

- Depreciation x - - (567) - (567)

- Write-downs - - - - - -

+ shareholders’ equity x - - - - -

+ income statement - - - - - -

C.3 Decreases in fair value - - - - - -



C.4 Transfers to non-current assets held for sale - - - -

C.5 Negative exchange rate differences - - - - -

C.6 Other changes - - - (1) - (1)

D. Closing balance 49,446 - - 943 - 50,389

D.1 Net total of value adjustments - - - (567) - (567)

E. Closing gross balance 49,446 - - 1,510 - 50,956

F. Valuation at cost

13.3 Additional informationBased on the requirements of IAS 38, paragraphs 122 and 124, we specify the following:• there are no revalued intangible assets; consequently there are no impediments to the distribution to the shareholders

of capital gains related to revalued intangible assets;• there are no intangible assets acquired by way of a government grant;• there are no intangible assets which have been used as collateral against a debt;• there exist no significant contractual commitments for the purchase of intangible assets at 31.12.2017;• there are no intangible assets which constitute the object of leasing operations.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



Information on the methodology used for performing impairment testing on goodwillWith respect to losses relating to goodwill value recorded in the consolidated financial statements and resulting from acquisitions of shareholdings or business units, Banca Intermobiliare prepares the impairment test, at least once a year or more frequently in the presence of loss indicators, in accordance with international accounting standard IAS 36 and with the internal procedure. The outcomes of the impairment test, as required by the joint statement of the Bankof Italy/Consob/IVASS of 3 March 2010 were subject to approval by the Board of Directors in advance with respect to the moment of approval of the annual financial statements. The description and amount of the goodwill recognised in the consolidated financial statements of Banca Intermobiliare are presented below:

Goodwill

(Thousands of €)

31.12.2017 31.12.2016

Description of the goodwill

Goodwill from the consolidation of Symphonia SGR 49,446 49,446

Impairment test In evaluating the goodwill of Symphonia SGR, the measurement approach used was based on the results of the Dividend Discount Model method compared with the Market Multiples method. For the purposes of identifying the “recoverable value” of the Cash Generating Unit (CGU) subject to impairment to be compared to the related book value, the appropriate measurements were made taking into consideration the following methods/assumptions:

• as input data economic-financial and equity projections specifically calculated for the company to cover a forecast time horizon of 4 years. The estimates were determined in keeping with the guidelines of the 2017-2021 Business Plan of Banca Intermobiliare approved by the Board of Directors of the same on 18 July 2017 and taking into account the 2018 Budget approved at the board meeting of 9 February 2018;

• as regards the application of the Dividend Discount Model (DDM) the following valuations were made:- the DDM was applied by providing for the full distribution of future distributable profits of the company being

valued; on the other hand, prudentially there was no provision for the distribution of the company’s Excess Capital over the regulatory minimum. The method provides that the value of a company should be equal to the sum of the future cash flows generated over a specific time period and the present value of a perpetual yield defined on the basis of a sustainable dividend for the years subsequent to the plan (Terminal Value). The estimate of the economic value of the cash generating units over and above a specific time period constructed on economic and financial data deriving from actual end of year results, budgets and/or specific analyses was based on the consequent relative sustainable evolution of profitability;

- the “long-term growth rate” used for the calculation of the Terminal Value, was set at 1%, in line with the estimates of medium-term growth for Italy with the rate used for the 2016 annual financial statements.

- the discounting rate of cash flows of 9.65% was obtained on the basis of the Capital Asset Pricing Model by applying the following formula:

Cost of Capital = (Risk Free Rate) + (Equity Risk Premium) x (Beta of the Sector)

using in detail:- for the Risk Free Rate, the gross yield of a German BUND with a residual life of 10 years, equal to 0.43%

(source: Bloomberg, 31 December 2017);- for establishing the Equity Risk Premium, reference was made to the latest figures (January 2018) of Aswath

Damodaran, Stern School of Business, New York (www.stern.nyu.edu). The Risk Premium used, which includes country risk, was 7.3%;

- for calculating the Beta, a significant sample of comparable companies was selected, which could be used to calculate an “average Beta”. Considering the high volatility in the financial markets, it was considered more appropriate to use an observation time horizon of 5 years with a weekly observation frequency. In this way, the Beta was calculated to be 1.27;

• with reference to the application of the market multiples method - according to which the value of a company’s economic capital is estimated on the basis of multiples, obtained as a ratio between the value attributed to comparable companies and the related income, capital and financial quantities deemed significant - the following

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



valuations were carried out:- M&A Multiples - a panel of M&A operations from the sector in which the company operates was identified and

the multiples deemed most significant were calculated and applied to the quantities of the company being valued.- Stock Exchange Multiples - a panel of national and international listed companies from the sector was identified and

the multiples deemed most significant were calculated and applied to the quantities of the company being valued.

• application of the methods used led to identifying a recoverable value of €/Mln 171, much higher than the carrying amount of the equity investment and such as to justify the goodwill recognised in the financial statements. The comparison with the multiples method did not reveal significant differences.

The table below summarises the calculation of the recoverable value of goodwill related to Symphonia made on the figure of 31.12.2017.

(Millions of €)

Goodwill Recoverable amount Book value Added value

76.1 (sep. fin. state. 31.12.2017) 47.9

49.4 171 105.7 (cons. fin. state. 31.12.2017) 21.7

To conclude, measurement of the recoverability of goodwill was carried out using the DDM method described above. It is worth remembering that the comparison methods used to check the soundness of this figure, that is the M&A and Stock Exchange multiples methods, approximate the fair value of this asset. Therefore we can reasonably conclude that also using the fair value measurement no element would have emerged that would have entailed the need for impairment of the same.

Sensitivity analysisIn order to test the soundness of the book value of Symphonia, a specific sensitivity analysis was implemented on the valuation using the DDM. In particular, the most important variables in relation to the specific nature of Symphonia were put under stress i.e. the assets under management (AUM) and the net profitability generated by them.It was then found that, by assuming a 15% reduction of the AUM and a 10% reduction of the contextual net profitability throughout the period of the plan, the impairment test was passed.

ConclusionsFrom the analyses carried out, the impairment test was passed and no long-term impairment of goodwill was found. For this reason, the measurements of the equity investment recorded in the financial statements at a book value higher than reported shareholders’ equity showed recoverable values that justify the surplus values recognised as goodwill.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 14 - TAX ASSETS AND LIABILITIES - ITEM 140 OF ASSETS AND ITEM 80 OF LIABILITIESDetails regarding current and prepaid/deferred taxation are provided below.


Current tax assets 39,747 16,612

Deferred tax assets 78,498 106,103

of which there is an offsetting entry in the income statement 78,320 103,218

of which there is an offsetting entry under shareholders’ equity 178 2,885

Total 118,245 108,522

Current tax liabilities 1,029 643

Deferred tax liabilities 17,163 18,955


of which there is an offsetting entry under shareholders’ equity 3,012 2,833

Total 18,192 19,598

14.1 Deferred tax assets: breakdownThe deferred tax assets have been recognised in respect of deductible temporary differences. The types of temporary differences which led to the recognition of “deferred tax assets” include:

2017 2016

Banking Group

Other Banking Group

Other

A. Gross deferred tax assets 76,309 2,189 103,933 2,170

Loans 31,698 - 47,025 -

Other financial instruments 434 - 4,290 -

Goodwill 17,226 - 24,609 -

Long-term charges - - - -

Property, plant and equipment 107 2,189 107 2,170

Provisions for risks and charges 4,552 - 5,152 -

Entertainment expenses - - - -

Personnel costs 74 - 109 -

Tax losses 20,691 - 20,696 -

Unused tax credits to be deducted - - - -

Other 1,527 - 1,945 -

B. Offset against deferred tax liabilities - - - -

C. Net deferred tax assets 76,309 2,189 103,933 2,170

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



Items/Amounts IRES IRAP Total

Write-down of loans to clients 29,892 1,806 31,698

Entertainment expenses - - -

Write-down of equity investments - - -

Securities and derivatives 405 29 434

Administrative costs 48 - 48

Allocations to provisions for risks and charges 4,552 - 4,552

Tangible and intangible fixed assets 2,296 - 2,296

Other 36,569 2,901 39,470

Total 73,762 4,736 78,498

14.2 Deferred tax liabilities: breakdownThe types of temporary differences which led to the recording of the “deferred tax liabilities” regard:

2017 2016

Banking Group

Other Banking Group

Other

A. Gross deferred tax liabilities

A1. Gains to be divided into instalments - - - -

A2. Goodwill - - - -

A3. Property, plant and equipment 5,002 9,124 4,934 10,997

A4. Financial instruments 3,037 - 3,024 -

A5. Personnel costs - - - -

A6. Other - - - -

B. Offset against deferred tax assets - - - -

C. Net deferred tax liabilities 8,039 9,124 7,958 10,997


Default Interest - - -

Reversal of tax-driven adjustments - - -

Securities and derivatives 2,377 660 3,037

Tangible and intangible fixed assets 10,159 1,131 11,290

Write-downs of loans - - -

Recognition of actuarial losses - - -

Securitisations - - -

Capital gains 2,440 396 2,836

Other - - -

Total 14,976 2,187 17,163

For the quantification of the amounts for accounting recognition, the deductible temporary differences and taxable differences were identified, and this recognition caused effects on the income statements of the years in which the items, that had originated them, had been entered, in terms of higher or lower paid taxes.All taxable and deductible temporary differences were classified as temporally definable inversion differences, identifying as such those for which, in accordance with the rules contained in Consolidated Income Tax Law (TUIR), it was possible to identify the times for re-entry with certainty.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



14.3 Changes in deferred tax assets (with balancing entry in the income statement)

2017 2016

1. Opening balance 103,218 89,910

2. Increases 1,161 26,679

2.1 Deferred tax assets recognised during the year 1,117 26,653

a) relating to previous years - -

b) due to a change in accounting criteria - -

c) write-backs - -

d) other 1,117 26,653

2.2 New taxes or increases in tax rates - -

2.3 Other increases 44 26

3. Decreases (26,059) (13,371)

3.1 Deferred tax assets derecognised during the year (3,339) (2,385)

a) transfers - (2,318)

b) written-off as non-recoverable - -

c) due to a change in accounting criteria - -

d) other (3,339) (67)

3.2 Reductions in tax rates (22,720) (68)

3.3 Other decreases - (10,918)

a) transformation into tax credits pursuant to Law 214/2011 - (7,732)

b) others - (3,186)

4. Closing balance 78,320 103,218

14.3.1 Variazioni delle imposte anticipate di cui alla L. 214/2011 (in contropartita del conto economico)

2017 2016


2. Increases - -

3. Decreases (22,709) (7,732)

3.1 Transfers - -

3.2 Transformation into tax credits (22,709) (7,732)

a) from period losses (22,709) (7,732)

a) from tax losses - -

3.3 Other decreases - -


NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



14.4 Changes in deferred taxes (with balancing entry in income statement)

2017 2016


2. Increases - 3,358

2.1 Deferred taxes recognised during the year - 3,358



c) other - 3,358


2.3 Other increases - -

3. Decreases (1,971) (742)

3.1 Deferred taxes derecognised during the year (1,971) (74)

a) transfers (219) -


c) other (1,752) (74)

3.2 Reductions in tax rates - (527)

3.3 Other decreases - (141)


14.5 Changes in deferred tax assets (with balancing entry in shareholders’ equity)

2017 2016


2. Increases 115 1,474

2.1 Deferred tax assets recognised during the year - 520



c) other - 520

2.2 New taxes or increases in tax rates 115 954


3. Decreases (2,822) (904)

3.1 Deferred tax assets derecognised during the year (2,531) (886)

a) transfers (1,338) (407)



d) other (1,193) (479)

3.2 Reductions in tax rates - -

3.3 Other decreases (291) (18)

4. Closing balance 178 2,885

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



14.6 Changes in deferred taxes (with balancing entry in shareholders’ equity)

2017 2016


2. Increases 2,161 332

2.1 Deferred taxes recognised during the year 937 120



c) other 937 120

2.2 New taxes or increases in tax rates 1,224 212


3. Decreases (1,982) (2,815)

3.1 Deferred taxes derecognised during the year (1,948) (1,116)

a) transfers (1,947) (949)


c) other (1) (167)


3.3 Other decreases (34) (1,699)


14.7 Additional information

The following is information on assets and liabilities for current taxes.

2017 2016

A. Assets for gross current taxes 39,747 16,612

A1. Advance IRES payments - 5,096

A2. Advance IRAP payments 282 3,044

A3. Other credits and withholdings 39,465 8,472

B. Offset against current tax liabilities - -

C. Assets for net current taxes 39,747 16,612

A. Liabilities for gross current taxes 1,029 643

A1. IRES tax payables - -

A2. IRAP tax payables 1,022 635

A3. Other current income tax payables 7 8

B. Offset against current tax assets - -

C. Net current tax liabilities 1,029 643

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



Option for tax consolidationBanca Intermobiliare exercised the option for the system of National Tax Consolidation under the terms of Art. 117 of the TUIR (Consolidated Income Tax Law) for the three years 2015, 2016, 2017.Taking into account that the provisions laid down by Art. 117 of the TUIR states that acceptance of group taxation is permitted only if between the consolidating and the consolidated company there exists a relationship of control, under the terms of Article 2359, paragraph 1, number 1, of the Italian Civil Code, the configuration of the perimeter of companies in the consolidation includes all companies subject to control by Banca Intermobiliare S.p.A., with the following structure:• Banca Intermobiliare S.p.A. as controlling/consolidating company,• Symphonia SGR S.p.A., • BIM Fiduciaria S.p.A. • BIM Immobiliare S.r.l. • Paomar Terza S.r.l., single member, • Immobiliare D S.r.l., single-member,• Bim Insurance Brokers S.p.A. The advantages deriving from the consolidation option consist of the right to adopt - for IRES (corporation tax) purposes - a type of taxation that consists of identifying a single group taxable income equal to the algebraic sum of the taxable incomes of the companies that are part of the same group and, consequently, a single tax liability with regard to the tax authorities due to the possibility of immediate reporting of losses in a company within the tax consolidation group, due to the possibility of offsetting consolidated tax credits with tax liabilities and the transfer, within the scope of consolidation, of unused surplus of aid to economic growth (ACE).

Fiscal transparency optionBanca Intermobiliare and UnipolSai (UFG Group), acting as parent companies of the joint investment in Bim Vita S.p.A., have renewed the option for the fiscal transparency regime pursuant to Art. 115 of the Income Tax Law for the period 2016-2018. This scheme involves the transfer of taxable income (or any tax losses) generated by the investee Bim Vita to the parent companies, with simultaneous transfer of its tax debt for IRES.

Transformation of deferred tax assets into tax credits (italian law decree 225/2010, art. 2, para. 55).During 2017, Banca Intermobiliare proceeded, pursuant to Art. 2, paragraph 55, of Italian Law Decree 225/2010, with the transformation of deferred tax assets (DTAs) into tax credits for a total amount of €/Mln 22.7 following recognition of a loss in the previous year.

Risks associated with existing disputes with the financial administrationBanca Intermobiliare and its investees were the subject of various tax audits by the Financial Administration, in the financial year 2016, and in the previous ones. These activities regarded the determination of taxable incomes declared for the purposes of income taxes and on other levies, and more in general the methods of applying the fiscal legislation in force from time to time. Following is the updated information on the tax audits carried out on Banca Intermobiliare and its investees, launched in the period or which were still ongoing when these annual financial statements were drafted.

1 Tax audits of the company Banca Intermobiliare

1.1 2011 tax audit relating to the tax years 2004, 2008 and 2009With regard to the tax audits of Banca Intermobiliare carried out during 2011, which focused on direct taxes, IRAP (Regional Business Tax) and VAT for a maximum total expense (taxes, penalties and interest) in the event of an adverse outcome of Euro/Mln 12.7, precise information is provided here on the disputes, the state of the legal proceedings, the level of existing liabilities and the allocations made by the company, also on the basis of opinions provided by independent tax consultants.The tax inspection reports were followed by the related assessment notices for 2004, 2008 and 2009 which referred to the deductibility of: trading losses on equities, the write-down of an equity investment that resulted from the enforcement of a guarantee and the non-application of VAT on a commission.Following the assessment notices related to tax year 2004 which were received at the end of 2011 (taxes, penalties and interest amounting to €/Mln 2) relating to trading losses on equities, the initial appeal made by Banca Intermobiliare and its parent company Veneto Banca, was upheld with a ruling filed on 21 February 2013.The Tax Authority - Regional Division of Piedmont - however has lodged an appeal, following which Banca

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



Intermobiliare and Veneto Banca appeared in court to submit the cross appeal. The appeal hearing was held on 13 January 2015 and, with a judgement handed down on 12 February 2015, the Regional Tax Court confirmed the judgement of the first instance. The Office lodged an appeal to the Court of Cassation on 18 September 2015; Banca Intermobiliare presented a counter-appeal within the legal deadline. It was found that the Bank had no charges to pay.

For the assessment notices related to tax year 2008 (taxes, penalties and interest amounting to €/Mln 1.1) and 2009 (taxes, penalties and interest amounting to €/Mln 9.5), relating to the write-down of the IPI security which were served in August 2012, the related appeals were made and on 22 March 2013 provisional payment of one third was made, as the petition for suspension of payment had been rejected. The amount paid on a provisional basis was approximately €/Mln 2.1. With the judgement filed on 4 November 2015 the Provincial Tax Commission accepted the combined appeals for 2008 and 2009, with the award of expenses. Banca Intermobiliare immediately requested cancellation of the registration of the assessed amounts and was reimbursed the one-third sum that had already been paid. As a consequence of the return of the provisional payment, the contingent asset of equal value was cancelled. This totalled €/Mln 2.1, and was identified as a contingent asset at the end of 2013, since it was considered that the condition of virtually certain reimbursement, as provided for in IAS 37, was fulfilled. It was found that the Bank had no charges to pay.On 4 February 2016 the Tax Authority - Piedmont Regional Division - lodged an appeal against the judgement of first instance and Banca Intermobiliare duly made its appearance in the proceedings with a deed dated 4 April 2016. The hearing to deal with the appeal was set for 5 December 2017, but as the company embarked on a process of acceptance/settlement with the Revenues Agency with reference to the same findings contained in the subsequent Inspection Report, related to the years from 2012 to 2015, the Turin RTC ordered a congruous adjournment of the hearing, to enable the parties to arrive at a resolution of the dispute.

With regard to the dispute concerning tax year 2008 (additional taxes and penalties for about €/Mln 0.4 subsequently reduced to €/Mln 0.06 and as of today, cancelled altogether) relating to VAT on Custodian Bank fees, the appeal filed by Banca Intermobiliare, before the Provincial Tax Commission, was upheld with a judgement issued on 15 February 2013. In September 2013, an appeal by the Tax Authority, Piedmont Regional Division, was lodged, against which Banca Intermobiliare joined the proceedings. The hearing to discuss the merits of the appeal was held on 14 April 2015, following which the claim of the office was reduced to €/Mln 0.06 (28.3% of the amount originally requested) with cancellation of the penalties. With the judgement filed on 16 December 2015, the Regional Tax Commission confirmed the first-level judgement accepting Bim’s appeal and ordering the office to pay the expenses. The proposal for an appeal to the Supreme Court put forward by the Regional Inland Revenue Division was rejected by the Attorney General’s Office and, therefore, the cancellation became final.

In December 2014 a notice of assessment for the 2009 tax year was served (higher taxes for about €/Mln 0.064) concerning the applicability of VAT on custodian fees, similar to the situation relating to the tax year 2008. On 6 February 2015 Banca Intermobiliare lodged an appeal and paid, on 27 February 2015, the amount of the taxes due provisionally equal to one third, for an amount of €/Mln 0.03. The hearing to discuss the merits of the case was held on 8 October 2015, while on 3 November 2015 the judgement was filed in which the Provincial Tax Commission rejected the appeal, ordering the Bank to pay one third of the amount due (€/Mln 0.03). Therefore, the amounts paid to the Inland Revenue equal to two thirds of the amount due on the basis of the assessment notice of €/Mln 0.052, which had previously been recognised under Balance Sheet assets (Item 160 - Other Assets), since it was felt that the condition of virtually certain reimbursement as provided for in IAS 37§10 was fulfilled given the presence of a Contingent Asset, were recognised in the income statement (Item 220 - Other operating income/expenses), in keeping with the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration.It should be noted, however, that Banca Intermobiliare proceeded to challenge the judgement of first instance with an appeal served on 2 May 2016 and as at the date of approval of this document, the date for the court proceedings on the merits of the dispute has not yet been fixed.

1.2 2013 Tax audit, relating to tax year 2010In December 2013, the general tax audit for the tax year 2010 carried out by the Tax Authority - Piedmont Regional Department - was concluded (taxes, penalties and interest amounting to €/Mln 2.4 subsequently reduced to €/Mln 1.5) and also concerned certain findings that had emerged in previous inspections.In particular, the findings which had already been raised for the previous years and again contested relate to the deductibility of the year’s quota of the write-down of the IPI security and the applicability of VAT on custodian fees and financial advice. The Tax Inspection Report (PVC) which was served indicated findings against the Bank for which Banca Intermobiliare considered, based also on the legal and tax opinions it solicited, that the probable economic charge could reach €/Mln 0.2, given the nature and reasons underlying the various comments. This amount was therefore allocated in the annual financial statements for the year ended 31.12.2013.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



The Tax Inspection Report was followed by the assessment notices served on 16 December 2015 as regards IRAP and VAT, and on 17 December 2015 as regards IRES, and they included the contents of the Tax Inspection Report in its entirety.On 12 February 2016, the Bank proceeded to submit acquiescence regarding some of the findings and at the same time to pay the related taxes, penalties and interest for a total amount of around €/Mln 0.04 and also to lodge the appeals regarding the other findings and to make the provisional payment of a third of the amount as required by law, totalling approximately €/Mln 0.57. The hearing of the Provincial Tax Commission was held on 10 November 2016. The ruling of the Commission, filed on 5 December 2016, upheld the appeal pertaining to the application of VAT on custodian fees but rejected all the other complaints.When it made the provisional payment of a third of the amount, the Bank decided not to proceed with any allocation and consequently entered the sum of €/Mln 0.57 on the assets side of the Balance Sheet (Item 160 – Other Assets) since it was felt that the condition of virtually certain reimbursement, as provided for in IAS 37 § 10, was fulfilled due to the presence of a Contingent Asset.As of the date of drafting the financial statements at 31.12.2016, bearing in mind the intervening judgement of first instance and the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration, the Bank proceeded to account for these costs in the income statement under Item 220 - Other operating income/expenses for €/Mln 0.57. In line with its desire to try to reach settlements, the Bank allocated, in the financial statements, at 31.12.2016 the sums owed after the judgement of first instance, amounting to a third of the assessed taxes and also the relevant penalties and interest totalling €/Mln 1.06. On 24 February 2017, the Bank made the related payment to the Tax Authority.As regards the Assessment Notice for IRES purposes, Banca Intermobiliare lodged an appeal on 31 May 2017, filing the same at the RTC on 26 June 2017. At the date of preparing the present report the date for the hearing of merit has not yet been set.As regards the Assessment Notice for IRAP and VAT purposes, the Office has lodged an appeal against the acceptance of the objection relating to the Custodian Bank fees. Banca Intermobiliare lodged an appeal against the decision of the PTC, on 5 June 2017.

1.3 2015 tax audit relating to the tax years from 2011 to 2015During 2016 a general tax audit was conducted regarding Direct Taxes, VAT, other taxes and employment legislation for the years 2013, 2014 and 2015 with subsequent extension to the tax years 2011 and 2012.

On 19 October 2016, a Tax Inspection Report for the 2011 tax year was delivered, and this was followed by the Notice of Assessment dated 30 December 2016 (taxes, penalties and interest for €/Mln 0.5), which included findings highly similar to those raised in previous years concerning the treatment of custodian fees in terms of VAT (already disputed for the years 2008, 2009 and 2010), the treatment of advisory fees in terms of VAT pursuant to the MiFID Directive (disputed for 2010) and the deductibility of an eighteenth of the write-down of the IPI Security (disputed for the years 2008 to 2010). On 17 March 2017, Banca Intermobiliare presented an appeal against the Notice of Assessment; at the date of preparing the present financial report a hearing date to discuss the merits of the case has not yet been set. On 14 June 2017 Banca Intermobiliare made the payment, provisionally, of the amount equal to one third of the taxes ascertained, proceeding to reduce by a corresponding amount the provisions for risks set aside at the moment of preparing the financial statements at 31.12.2016.

On 12 December 2016, a Tax Inspection Report was served, relating to the tax years from 2012 to 2015 (liabilities estimated by the internal units to be of €/Mln 8.4); on this occasion also, for the years in question, the findings against the Bank concerned the treatment of advisory fees in terms of VAT pursuant to the MiFID Directive (disputed for 2010 and 2011) and the deductibility of an eighteenth of the write-down of the IPI Security (disputed for the years 2008 to 2011).In accordance with the Bank’s intention to reach a conclusion of the disputes through the current acceptance/settlement procedures used by the Financial Administration, provisions were allocated for an amount equal to one third of the higher taxes indicated within the Tax Inspection Report and of the likely sanctions amounting to €/Mln 2.8.On 4 April 2017, Banca Intermobiliare presented to the Tax Authority - Piedmont Regional Department - an Application for assessment with acceptance under the terms of Italian Legislative Decree 218/1997. At the date of preparing the present financial report, discussions have begun with the DRE Piedmont – Large Taxpayers Office.On 28 December 2017 assessment notices were served regarding the 2012 tax year, because it was assessable only by 31.12.17. On 23 January 2018 the company presented the Application for Assessment with Partial Acceptance for the MiFID VAT finding and gave a mandate to its consultant to present appeals regarding the disputes relating to the IPI write-down and undue offsetting of DTAs.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



2. Tax audit of Symphonia SGRDuring 2015, a general audit was conducted at the subsidiary Symphonia SGR regarding direct and indirect taxation for the tax year 2013, subsequently extended partially to 2011 and 2012. This was concluded in May with the delivery of the Tax Inspection Report. The findings concerned the sale of a business unit and transfer pricing issues. On 9 December 2015, the Assessment Notice was served concerning only the transfer pricing relating to tax year 2011 (taxes, penalties and interest amounting to €/thou 11). On 5 February 2016 the company filed an appeal against the Assessment Notice with a request for mediation due to modest amount; the hearing to deal with the merits was held on 28 November 2016. The Commission of first instance filed its judgement on 13 December 2016, upholding the company’s appeal and cancelling the Assessment Notice.The Revenues Agency served the writ of appeal on 6 June 2017. In November 2017 assessment notices were served on the company regarding the 2012 tax year, related to the finding on transfer prices (taxes, penalties and interest amounting to €/thou 8) and the 2013 tax year, related to the finding on transfer prices and sale of the business unit (taxes, penalties and interest amounting to €/thou 59). On 19 January 2018, the company presented an Application for assessment with acceptance in order to expedite the attempt to close the disputes definitively. In accordance with the intention to reach a conclusion of the disputes with the Financial Administration, provisions were allocated for an amount equal to 50% of the higher taxes assessed and the sanctions amounting to €/thou 45.

3. Tax audit of BIM Vita under tax transparency regimeThe company Bim Vita, 50% owned by Banca Intermobiliare and 50% by UnipolSai, is subject to IRES taxation under the system of fiscal transparency pursuant to Art. 115 of the TUIR (Income Tax Consolidation Act). In November 2014 a tax audit of Bim Vita concerning the 2011 tax year was concluded with notification of the related Tax Inspection Report (PVC).In November and December 2016, Bim Vita and its shareholders BIM and UnipolSai were served assessment notices bearing an adjustment of the taxable income for the individual shareholders of €/thou 55, amounting to higher IRES of €/thou 15 The other shareholder, UnipolSai confirmed its intention to proceed with payment of the amounts requested and thus acquiesce to the assessment notice, though not agreeing in full with its findings, bearing in mind the modest amounts in question and to avoid the lengthy litigation on purely technical aspects.Acknowledging this decision of the other shareholder and given the modest amounts, Banca Intermobiliare decided to align itself with the decision taken by Unipol and proceed with concluding the assessment through acquiescence and so proceeded to allocate the amounts for the higher taxes stated by the Revenues Agency. On 17 January 2017 it made the payment to the Tax Authority of the amounts due.

Probability test on deferred taxesCurrent, prepaid and deferred taxes were determined by applying the tax rates in force on preparing the present financial report, in the country where the parent company and the subsidiaries included in the consolidation are established.IAS 12 requires that the recognition of deferred tax liabilities and assets be performed with the following criteria:• a deferred tax liability should be recognised for all taxable temporary differences;• a deferred tax asset must be recognised for all deductible temporary differences if it is probable that a taxable profit

will be realized against which the deductible temporary difference can be used;• deferred tax assets unaccounted for in a given year - because there was no reason for their recognition, must be

included in the year in which those requirements emerge.The amount of the deferred tax assets recognised in the financial statements must be tested every year (so-called “probability test”) to verify whether the future profitability forecasts are such as to guarantee the re-absorption and justify the recognition and maintenance of the amount in the financial statements.In carrying out the probability test on deferred tax assets recognised in the financial statements as at 31 December 2017 those deriving from deductible temporary differences related to loan write-downs and goodwill (“qualified deferred tax assets” and “qualified temporary differences”) were considered separately. We should note in this regard that, for Italy, from the tax period ended 31 December 2011, the conversion was established of deferred tax assets recognised in the financial statements into tax credits against tax losses arising from the deferred deduction of qualified temporary differences (Art. 2 paragraph 56-bis, Italian Decree Law 225/2010, introduced by art. 9 of Decree Law 201/2011 then converted into Italian Law 214/2011), in addition to that already provided for in the event that the financial statements show a loss for the period (Art. 2, paragraphs 55 and 56, Italian Decree Law 225/2010). The provision was last amended by Law No. 147 of 27 December 2013 (the so-called “Stability Law 2014”) which extended the rules also to deferred tax assets or DTAs, again in relation to the same items, recognised with reference to the regional tax on productive activities (IRAP), as well as to losses on loans of banks and financial institutions, since, with the same Stability Law, the tax treatment was modified aligning it to the value adjustments on receivables, as shown above. These rules introduced an additional and supplementary recovery method which ensures

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



recovery of qualified deferred tax assets in any situation, regardless of the future profitability the company. Indeed, if in a specific year there was an excess of qualified temporary differences compared to the taxable income, the recovery of the relative prepaid taxes would not take place as a reduction of current taxes, but would nevertheless take place through recognition of deferred tax assets on the fiscal loss, convertible into a tax credit pursuant to Article 2, paragraph 56-bis of Italian Legislative Decree 225/2010. The conversion of the prepaid taxes on fiscal losses resulting from qualified temporary differences is therefore a sufficient assumption for recognition of qualified prepaid taxes in the financial statements, implicitly rendering the relative probability test redundant. This approach is also reflected in the joint Bank of Italy, Consob and ISVAP document No. 5 of 15 May 2012 (issued in the context of the Coordination Forum for application of IAS/IFRS), concerning “Accounting treatment of deferred tax assets arising from Italian Law 214/2011”, and in the subsequent IAS ABI document No. 112 of 31 May 2012 (“Tax credit resulting from the processing of deferred tax assets: clarification of the Bank of Italy, Consob and ISVAP in relation to application of IAS/IFRS”).On this basis, the test was structured, in particular:a) in the determination of deferred tax assets, other than those relating to write-downs of receivables and goodwill

(“non-qualified deferred tax assets” - DTAs), included in the financial statements;b) in the analysis of such non-qualified deferred tax assets and deferred tax liabilities included in the financial

statements, distinguishing them according to source type and, therefore, according to foreseeable timing of re-absorption;

c) in the quantification of future foreseeable profitability of Banca Intermobiliare and its subsidiaries, aimed at verifying the capacity to absorb such deferred tax assets referred to in the previous point a);

In line with the decision to opt for tax consolidation for the period 2015-2017, the financial year was managed at a consolidated level for all the companies participating in the option. In particular in order to carry out the probability test the following documentation was used: 2018 Budget (approved by the Board of Directors on 9 February 2018); 2017-2020 Business Plan (approved by the Board of Directors on 18 July 2017) prepared according to a “stand alone” logic and substantially in keeping with the guidelines of the strategic plan (approved by the Board of Directors of BIM of 10 February 2017). Two stressed plans were also prepared. On the basis of the business plan, over a time horizon of 5 years, no difficulties emerge on recovery of non-noble DTAs and those related to the 2016 and 2017 tax losses. The uncertainty about the trends on the financial markets and the possibility that the effects deriving from the entry of the new shareholder may, as already happened during 2017 when transfer of control over Banca Intermobiliare was expected by the end of the year, be postponed for a while with a consequent impact on the implementation times of the plan, led to it being considered not improbable that all or part of the outcomes provided for in the stressed plans may come to pass. In any case in any scenario the DTAs related to financial year 2016 were considered recoverable, while the DTAs related to financial year 2017 are not recoverable in a timeframe of 5 years in all scenarios.On the basis of these considerations, and in continuity with what was done at 31.12.2016 and 30.06.2017, it was decided to keep the non-noble DTAs and those on the 2016 tax losses recognised, while the DTAs on the 2017 tax losses were not recognised. The portion not recognised amounts to about €/Mln 10.7, and is entirely referable to the tax loss accumulated during 2017.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 15 - NON-CURRENT ASSETS AND GROUPS OF ASSETS HELD FOR SALE AND ASSOCIATED LIABILITIES - ITEM 150 IN ASSETS AND ITEM 90 IN LIABILITIES15.1 Non-current assets and asset groups held for sale: breakdown by type of asset

2017 2016

A. Individual assets - -

A.1 Financial assets - -

A.2 Equity investments - -

A.3 Tangible fixed assets - -

A.4 Intangible fixed assets - -

A.5 Other non-current assets - -

Total A - -

of which carried at cost - -

of which designated at fair value (level 1) - -


of which designated at fair value (level 3)

B. Asset groups (sold operational units) -

B.1 Financial assets held for trading - 786

B.2 Financial assets designated at fair value - -

B.3 Financial assets available for sale - 457

B.4 Financial assets held to maturity - -

B.5 Loans to banks - 27,507

B.6 Loans to clients 600 19,623

B.7 Equity investments - -

B.8 Tangible fixed assets 20,678 22,949

B.9 Intangible fixed assets - 211

B.10 Other assets 79 1,947

Total B 21,357 73,480

of which carried at cost 20,757 25,133

of which designated at fair value (level 1) - 1,241

of which designated at fair value (level 2) 600 27,509

of which designated at fair value (level 3) - 19,623

C. Liabilities associated with single assets held for sale - -

C.1 Payables - -

C.2 Securities - -

C.3 Other liabilities - -

Total C - (307)




of which designated at fair value (level 3) -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



D. Liabilities associated with groups of assets held for sale -

D.1 - Due to banks 7,691 -

D.2 Due to clients - 35,147

D.3 Outstanding securities - -

D.4 Financial liabilities held for trading - 84

D.5 Financial liabilities designated at fair value - -

D.6 Provisions - 2,392

D.7 Other liabilities 165 1,291

Total D 7,856 38,914

of which carried at cost - 3,683

of which designated at fair value (level 1) - 84

of which designated at fair value (level 2) 7,691 35,147

of which designated at fair value (level 3) 165 -

The following shows the information required by IFRS 5, paragraph 41 points a), b) and d)


Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. In November 2016, after receiving informal expressions of interest shown by market counterparties for the Swiss investee, Banca Intermobiliare had given a mandate to the advisors Rothschild and Orrick to assess any possibilities of realising the same. During financial year 2017 specific informative material was made available to certain selected counterparties and on 26 April 2017 the advisors received a number of binding offers. On 5 May 2017, Banca Intermobiliare gave Banca Zarattini & Co SA an exclusive period of 30 days starting from 6 June 2017, subsequently extended up to 31 July 2017. On 31.07.2017 Banca Zarattini & Co SA and Banca Intermobiliare S.p.A signed an agreement for the sale of 100% of the share capital of BIM Suisse SA held by BIM. Following fulfilment of the conditions precedent: i) authorisation from the Swiss Supervisory Authority; ii) completion of the purchase by Banca Intermobiliare of the property company Patio Lugano, held by Bim Suisse for Chf/Mln 15.05 and iii) the definition of a receivable position being analysed, on 18.10.2017 the purchase and sale contract was concluded. The initial price agreed of CHF/Mln 40.4 was subject to a “price adjustment” mechanism in relation to the economic result and the performance of the assets managed by Bim Suisse between 30 June and 18 October 2017.Disposal of the equity investment determined a benefit in the income statement of €/Mln 0.7 recognised in the accounting item “profits (losses) of groups of assets held for sale, after tax.

Segment ReportingAs regards segment disclosure, the economic and financial data of the equity investments recognised in 20017 and 2016 among non-current assets held for sale, this disclosure was presented in the “co corre” segment. For more information, refer to Part L - Segment Information in the notes to the consolidated financial statements.

15.2 Additional informationThe disclosure required by IFRS 5 in paragraph 42, is not applicable since there have been no changes to the marketing plan provided for in paragraphs 26 and 29.

15.3 Information on investments in companies subject to significant influence not measured at equityThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 16 - OTHER ASSETS - ITEM 16016.1 Other assets: breakdown

Items/Amounts 31.12.2017 31.12.2016

- Due from inland revenue and other tax authorities 35,690 44,212

of which stamp duty 20,682 27,526

of which administered capital gain 7,370 12,618

- Current account cheques drawn on third parties 13 18

- Security deposits 169 173

- Items in transit between branches 43 -

- Work in process items 11,145 11,294

of which work in progress items for operations with clients 183 124

of which pensions to be settled 3,517 3,774

of which receivable items due from others 1,937 2,310

- Shortages, misappropriations and robberies 1 1

Accrued income not related to Bank items 5 -

- Prepaid expenses not related to Bank items 1,478 1,393

- Leasehold improvements 2,058 2,622

- Other 46,984 32,701

Trade receivables 7,553 744

Receivables for tax consolidation 2,102 568

Tax credits from former VB (now Banca Intesa) 1,822 1,822

Fixed assets recognised in inventory 21,900 21,900

Other loans and receivables 13,607 7,667

TOTAL 97,586 92,414

Regarding the fixed assets recognised as inventory originating from loan recoveries and measured according to IAS 2 - Inventories, one should refer to the Report on Operations “Operating Figures and Balance Sheet Data”.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



LIABILITIES

SECTION 1 - DUE TO BANKS - ITEM 101.1 Due to banks: breakdown by type

Transaction type/Group components 2017 2016

1. Due to central banks - -

2. Due to banks 183,232 509,294

2.1 Current accounts and demand deposits 143,461 119,367

2.2 Term deposits 13,008 505

2.3. Loans 20,963 374,580

2.3.1 Repurchase agreements 20,963 374,580

2.3.2 Other - -

2.4 Payables for commitments to repurchase Bank equity instruments - -

2.5 Other payables 5,800 14,842

Total 183,232 509,294

Fair value - level 1 - -

Fair value - level 2 183,233 509,294


Total Fair value 183,233 509,294

The payables are recognised at their nominal value which was assumed to be representative of the fair value since these are short-term liabilities settled at arm’s length. As regards the accounting treatment of “long-term structured repurchase agreements”, it should be noted that no transactions of this type have been implemented.

1.2 Details of Item 10 “Due to banks”: subordinated debtVoce non applicabile per il consolidato di Banca Intermobiliare.

1.3 Details of Item 10 “Due to banks”: structured debtThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

1.4 Due to banks covered by specific hedgesThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

1.5 Payables related to financial leasingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 2 - AMOUNTS DUE TO CLIENTS - ITEM 20 2.1 Amounts due to clients: breakdown by type

Transaction type/Group components 2017 2016

1. Current accounts and demand deposits 840,951 1,186,760

2. Term deposits 118,275 97,603

3. Loans 1,875 857

3.1 Repurchase agreements 1,875 857

3.2 Other - -

4. Payables for commitments to repurchase own equity instruments - -

5. Other payables 24,532 820

Total 985,633 1,286,040


Fair value - level 2 985,633 1,286,040


Total Fair value 985,633 1,286,040

2.2 Details of Item 20 “Amounts due to Clients”: subordinated debtThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

2.3 Details of Item 20 “Amounts due to Clients”: structured debtThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

2.4 Amounts due to clients subject to micro-hedgingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

2.5 Payables related to financial leasingThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 3 - OUTSTANDING SECURITIES - ITEM 303.1 Outstanding securities: breakdown by type

Type of securities/Amounts 2017 2016

Book value

Fair value Book value

Fair value


A. Securities

1. Bonds 60,686 - 60,403 - 304,978 - 297,641 -

1.1 structured 17,608 - 17,453 - 34,724 - 33,506 -

1.2 other 43,078 - 42,950 - 270,254 - 264,135 -

2. Other securities - - - - - - - -

2.1 structured - - - - - - - -

2.2 other - - - - - - - -

Total 60,686 - 60,403 - 304,978 - 297,641 -

3.2 Detail of Item 30 “Outstanding securities”: subordinate securitiesNot applicable.

3.3 Detail of Item 30 “Outstanding securities”: securities covered by micro-hedges

2017 2016

1. Securities subject to micro-hedging of fair value: 17,608 17,608

a) interest rate risk 17,608 17,608

b) exchange rate risk - -

c) other risks - -

2. Hedged items specific to the cash flows: - -

a) interest rate risk - -


c) other - -

Total 17,608 19,330

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 4 - FINANCIAL LIABILITIES HELD FOR TRADING - ITEM 404.1 Financial liabilities held for trading: breakdown by type

Transaction type/Group components

2017 2016

NV FV FV * NV FV FV *Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

A. Cash liabilities

1. Due to banks 18,046 24,533 - - 24,533 11,260 12,957 - - 12,957

2. Due to clients - - - - - 73 1,229 - - 1,229

3. Debt securities - - - - - - - - - -

3.1 Bonds - - - - - - - - - -

3.1.1 Structured - - - - x - - - - x

3.1.2 Other Bonds - - - - x - - - - x

3.2 Other securities - - - - - - - - - -

3.2.1 Structured - - - - x - - - - x

3.2.2 Other - - - - x - - - - x

Total A 18,046 24,533 - - 24,533 11,333 14,186 - - 14,186


1. Financial derivatives

1.1 for trading x - 15,278 - x x - 53,271 166 x

1.2 Connected with the fair value option x - - - x x - - - x

1.3 Other x - - - x x - - - x

2. Credit derivatives

2.1 for trading x - 47 - x x - 346 - x


2.3 Other x - - - x x - - - x

Total B x - 15,325 - x x - 53,617 166 x

Total (A+B) x 24,533 15,325 - x x 14,186 53,617 166 x

* Fair value adjusted for change in credit rating

4.2 Detail of Item 40 “Financial liabilities held for trading”: subordinated liabilitiesThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

4.3 Detail of Item 40 “Financial liabilities held for trading”: structured debtsThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

4.4 Non-derivative financial liabilities held for trading (excluding “technical overdrafts”): annual changesNon-derivative financial liabilities held for trading refer to technical overdrafts exclusively.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B




FV 2017 NV 2017

FV 2016 NV 2016Level 1 Level 2 Level 3 Level 1 Level 2 Level 3


1) Fair Value - 8,906 - 237,760 - 14,758 - 397,660

2) Cash flows - - - - - - - -


B. Credit derivatives

1) Fair Value - - - - - - - -

2) Cash flows - - - - - - - -

Total - 8,906 - 237,760 - 14,758 - 397,660

Key:FV = Fair valueNV = Notional value



Inve

st. f

orei

gn

Micro

Mac

ro

Micr

o

Mac

ro

inte

rest

ra

te ri

sk

exch

ange

ra

te ri

sk

cred

it ris

k

price

ris

k

othe

r ris

ks

1. Financial assets available for sale 8,906 - - - - x - x x

2. Loans - - - x - x - x x


4. Portfolio - - - - - - - x x

5. Other transactions x x x x x x x x -

Total assets 8,906 - - - - - - - -

1. Financial liabilities - - - x - x - x x

2. Portfolio - - - - - - - - x

Total liabilities - - - - - - - - -

1. Expected transactions x x x x x x x x

2. Portfolio of financial assets and liabilities x x x x x x x

SECTION 8 - TAX LIABILITIES - ITEM 80See Section 14 under assets “Tax assets and tax liabilities”.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 9 - LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE - ITEM 90 Please refer to Section 15 under assets “Non-current assets and groups of assets held for sale and associated liabilities”.

SECTION 10 - OTHER LIABILITIES - ITEM 10010.1 Other liabilities: breakdown Items/Amounts 31.12.2017 31.12.2016

- Consolidation adjustments 41 -

- Amounts to be paid to tax authorities 32,649 29,093


of which pensions and F24 form 5,922 6,589

of which taxes on management/funds 1,984 2,115

of which VAT 42 6,111

- Payables to social security agencies 1,669 1,663

- Amounts available to clients 632 29,909

- Other staff payables 3,688 3,682


- Deferred credits not related to Bank items 42 -

- Deferred credits not related to bank items 275 292

- Payables resulting from deterioration in credit commitments 102 491

- Other 30,709 18,256

trade payables 24,843 14,452

other payables 3,925 3,766

payables due to tax consolidation 1,941 38

TOTAL 74,449 89,839

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 11 - EMPLOYEES’ SEVERANCE FUND - ITEM 11011.1 Employees’ severance fund: annual changes

2017 2016


B. Increases

B.1 Changes during the financial year 509 533


C. Decreases

C.1 Severance payments (787) (689)

C.2 Other changes (245) (2,854)


Total 4,367 4,807

11.2 Additional informationIn the light of international accounting standards, and in relation to indications provided by the International Accounting Standard Board (IASB) and the International Financial Reporting Interpretation Committee (IFRIC), the TFR (employee severance indemnity fund) was considered as a defined-benefit plan; in particular the IAS 19 standard defines its accounting treatment, its on-balance sheet exposure as well as the manner of determining the value, which must be calculated using actuarial-type methods.In accordance with IAS 19, the accrued defined benefits (TFR) were subjected to actuarial assessment in accordance with the method of accrued benefits using the “Projected Unit Credit Method” (PUC), as provided for in paragraphs 67-69 of IAS 19.This method computes the TFR no longer as a charge to be settled if the company ceases its activity on the reporting date, but as a gradual provision according to the residual term of service of the staff in its employ.The following table indicates the actuarial assumptions for the calculation of the discounted value of the employees’ severance fund as required by IAS 19.

NEW HIRES 31.12.2017 31.12.2016

Economic assumptions

Annual discounting rate 1.61% 1.62%

Annual inflation rate 1.50% 1.50%

Annual TFR increase rate 2.625% 2.625%

Annual salary increase rate 1.00% 1.00%

Demographic assumptions

Death (source: State General Accounting Department) RGS 48 Mortality Tables RGS 48 Mortality Tables

Disability Table INPS by age and gender Table INPS by age and gender

Retirement age 100% upon achieving AGO requirements 100% upon achieving AGO requirements

Turnover and advances of employees’ severance fund

Incidence of advances 2.00% 2.00%

Turnover frequency Average 5.62% Average 5.64%

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



In particular it should be noted that: • the annual discounting rate used to measure the current value of the obligation has been taken, in line with

paragraph 83 of IAS 19, from the Iboxx Corporate AA index with a duration of 10+ on the valuation date. To this end, a yield was chosen with a duration that is comparable to the duration of the total workers who were the object of the valuations;

• the annual rate of increase of the defined benefit plan, as provided by Article 2120 of the Civil Code, is equal to 75% of inflation plus 1.5 percentage points.

• the annual salary increase rate applied only to Companies with fewer than 50 employees on average in 2006 was determined on the basis of the communications from the Company Managers.

SECTION 12 - PROVISIONS FOR RISKS AND CHARGES - ITEM 12012.1 Provisions for risks and charges: breakdown


1. Company pension provisions

2. Other provisions for risks and charges

2.1 legal disputes 13,245 16,625

2.2 personnel-related charges 311 346

2.3 other 9,979 8,966

Total 23,535 25,937

12.2 Provisions for risks and charges: annual changes

Items/Components Total

Pension provisions Other provisions

A. Opening balance - 25,937

B. Increases - -

B.1 Changes during the financial year - 4,723

B.2 Changes due to the passage of time - -

B.3 Changes due to changes in discount rate - -

B.4 Other changes - -

C. Decreases - -

C1. Utilisation during the year - (7,088)

C.2 Changes due to changes in discount rate - -

C.3 Other changes - (37)

D. Closing balance - 23,535

With reference to the movements of the Fund during the year please refer to the remarks in the Section “Operating figures and consolidated balance sheet data” in the Report on Operations in the consolidated financial statements.

12.3 Company defined-benefit pension provisionsThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



12.4 Provision for risks and charges - other provisionsThe “Provision for risks and charges – other provisions” was established primarily against probable liabilities and risks associated with various kinds of disputes related, inter alia, to client complaints and disputes, tax disputes and contractual indemnities owed, whose measurement was carried out according to actuarial criteria under the IAS 37 accounting standard.


- Disputes and complaints on VB shares 8,963 10,022

- Disputes regarding investment services 4,282 6,603

- Tax Disputes 5,015 4,859

- Indemnities, charges on personnel and other provisions 5,275 4,453

Total provisions for risks and charges 23,535 25,937

SECTION 15 - GROUP EQUITY - ITEMS 140, 160, 170, 180, 190, 200 AND 22015.1 “Capital” and “Treasury shares”: breakdown


Share capital

Ordinary shares 156,209 156,209

Preference shares - -

Treasury shares (29,711) (29,731)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



15.2 Capital - Number of parent bank shares: annual changes

Items/Types Ordinary shares Other

A. Shares outstanding at the beginning of the year

- fully paid 156,209,463 -

- not fully paid -

A.1 Treasury shares (-) (6,581,691) -

A.2 Outstanding shares: opening balance 149,627,772 -

B. Increases

B.1 New issues

- by payment:

- business combinations - -

- conversion of bonds - -

- exercise of warrants - -

- other - -

- free of charge:

- to employees - -

- to directors - -

- other - -

B.2 Sale of treasury shares - -

B.3 Other changes 4,328 -

C. Decreases

C.1 Elimination - -

C.2 Purchase of treasury shares - -

C.3 Company sale transactions - -

C.4 Other changes - -

D. Outstanding shares: closing balance 149,632,100 -

D.1 Treasury shares (+) 6,577,363 -

D.2 Shares outstanding at the end of the year

- fully paid 156,209,463 -

- not fully paid - -

15.3 Capital - Other InformationThis article provides the information required by IAS 1 paragraph 79 concerning each category of shares making up the capital.At 31 December 2017 the share capital of Banca Intermobiliare was equal to €/thou 156,209, divided into 156,209,463 ordinary shares with par value of €1. Pursuant to the Articles of Association, each ordinary share gives the right to one vote in the shareholders’ meeting. The share capital was fully paid-up.As regards reconciliation between the number of outstanding shares at the beginning and at the end of the year and the Treasury shares held by Banca Intermobiliare please refer to table 15.2 “Capital – number of shares: annual changes”. Banca Intermobiliare does not hold any treasury shares indirectly through its subsidiaries and associated companies.

Trading of treasury sharesThe sale/purchase of treasury shares was carried out over the years by Banca Intermobiliare on the basis of the authorisation of the Shareholders’ Meeting in order to preserve them and have their availability - together with the treasury shares already purchased and held by virtue of previous resolutions of the shareholders’ meeting - to: (a) comply with the obligations arising from distribution programs, whether for a consideration or free of charge, of

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



shares or share options to directors, employees and collaborators of BIM or to directors, employees and collaborators of the company controlled by it, as well as for free allocation programs of shares to shareholders; (b) any use as consideration in extraordinary transactions, including exchange of shareholdings, with other entities within operations of interest to BIM.On 17 April 2014, the Shareholders’ Meeting had authorised the Board of Directors to purchase BIM ordinary shares under the terms of art. 2357 of the Italian Civil Code. The authorisation to purchase treasury shares was granted for a maximum period of 18 months and was not subsequently renewed.

Purchases and sales during the financial yearAs at 31 December 2017, the Banca Intermobiliare shares in the portfolio amounted to 6,577,363 against 6,581,691 shares at 31.12.2016. During the year no Bim shares were purchased on the market but 4,328 shares were sold on the market for a total amount of €/thou 6,369.

15.4 Profit reserves: other informationThis article provides the information required by IAS 1 paragraph 79 concerning the nature and purpose of each reserve included in shareholders’ equity.The reserves, whose objectives are to contribute to the Bank’s capital adequacy in relation to current and prospective operations, amounted, as at 31.12.2017, to €/thou 92,664 (€/thou 98,990 as at 31.12.2016) and consisted of:• legal reserve, fed by profits set aside on the Bank pursuant to art. 2430 of the Italian Civil Code and art. 21.1 of the

By-laws, amounting to €/thou 27,873 as at 31.12.2017 (€/thou 31,242 at 31.12.2016);• reserve on shares of the Bank, amounting to €/thou 23,636 as at 31.12.2017 (€/thou 23,636 at 31.12.2016), as seen in

the authorization to purchase and have availability of treasury shares, pursuant to Art. 2357 and 2357-ter of the Civil Code and laid down in Art. 5.4 of the By-laws, granted to the directors by the shareholders’ meeting in previous years;

• other profit reserves, for €/thou 40,585 as at 31.12.2017 (€/thou 41,797 to 31.12.2016) constituted mainly by the sum of undistributed results in previous years on the individual companies and from other available reserves;

• other non-profit reserves, for €/thou 583 as at 31.12.2017 (€/thou 2,653 as at 31.12.2016) formed mainly as a result of the application of international accounting standards on FTA and in subsequent years, other unused reserves in rescheduling the residual losses and other residual consolidation reserves.

15.5 Additional informationAs at 31.12.2017, Bank Intermobiliare did not have any financial instrument with options to sell classified as equity instruments identified in the scope of IAS 1 paragraph 80A, 136A and 137.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



SECTION 16 - NON-CONTROLLING INTERESTS - ITEM 21016.1 Non-controlling interests: breakdown


1. Share Capital 59 59

2. Issue premiums - -

3. Reserves 318 225

4. (Treasury shares) - -

5. Valuation reserves - (2)

6. Equity instruments - -

7. Profit (Loss) for the year 70 93

Total 447 375

The non-controlling interests are related to Bim Insurance Brokers S.p.A. in which Banca Intermobiliare holds a 51% stake.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



ADDITIONAL INFORMATION1. Guarantees and commitments

Transactions 2017 2016

1) Financial guarantees issued 14,186 18,112

a) Banks 3 333

b) Clients 14,183 17,779

2) Trade guarantees issued 33 93

a) Banks - -

b) Clients 33 93

3) Irrevocable commitments to issue funds 17,102 45,400

a) Banks 4 984

i) usage certain 4 984

ii) usage uncertain - -

b) Clients 17,098 44,416

i) usage certain - 895

ii) usage uncertain 17,098 43,521

4) Commitments underlying credit derivatives: protective sales 3,969 5,516

5) Assets used to secure third party obligations - -

6) Other commitments - 20,122

Total 35,290 89,243

2. Assets used to secure own liabilities and commitments

Portfolios 2017 2016


2. Financial assets designated at fair value - -


4. Financial assets held to maturity - -

5. Loans to banks 4,735 -

6. Loans to clients - -


Total 139,061 425,014

Item 1 “Financial assets held for trading” refers for an amount of €/Mln 10, to securities which have been committed in deposits with repurchase agreements. Item 3 “Financial assets available for sale” refers for an amount of €/Mln 13 to secure banker’s drafts and of €Mln 59,to securities which have been committed in deposits with repurchase agreements.With reference to funding operations guaranteed with securities not recognised in the balance sheet assets, it should be noted that no operations of this kind were carried out in the year in progress.

3. Information on operating leasesThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



4. Breakdown of investments to cover unit-linked and index-linked policiesThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

5. Asset management and trading on behalf of others Type of service 2017

1. Order execution on behalf of clients 7,834,548

a) Purchases 3,673,334

1. settled 3,673,326

2. not settled 8

b) Sales 4,161,214

1. settled 4,160,972

2. not settled 242

2. Asset management portfolios 3,797,100

a) individual 1,334,563

b) collective 2,462,538

3. Custody and administration of securities 2,276,544

a) third-party securities on deposit: connected with the custodian bank activity (excluding portfolio management) -

1. securities issued by companies included in consolidation -

2. other securities -

b) third-party securities on deposit (excluding portfolio management): other 918,985

1. securities issued by companies included in consolidation 38,693

2. other securities 880,292

c) third-party securities deposited with third parties 918,613

d) owned securities deposited with others 438,946

4. Other transactions 5,016,584

The “Other transactions” item encompassed other services rendered to third parties other than the execution of orders on behalf of clients; in particular, this involves the receipt and transmission of orders for securities and derivatives traded on foreign markets on which the Banca Intermobiliare is not a direct participant and executor.

Financial assets and liabilities which were offset in the balance sheet, or subject to master netting agreements or similar agreementsThe standard IFRS 7 with reference to the disclosure on offsetting agreements requires specific information to be provided on the financial instruments that have been offset in the balance sheet in accordance with IAS 32 or that can potentially be offset, on fulfilment of certain conditions, but presented in the balance sheet with open balances as they are settled by “framework offsetting agreements or similar agreements” which however do not observe the criteria laid down in IAS 32§42. In providing disclosure of such agreements, the standard also requires an entity to take into account the effects of received and given real financial guarantees (including guarantees in cash).In this regard, it should be pointed out that, on the basis of the analysis made within the Group, there are no existing netting agreements which would require the offsetting of balances in the balance sheet pursuant to IAS 32§42. Therefore in tables 5 and 6 below, the columns regarding the “Amount of financial assets/liabilities which were offset on the balance sheet” show no values.Conversely, as regards the instruments that may potentially be subject to offsetting, under certain specific conditions, that are to be exhibited in tables 6 and 7 below in the columns “Correlated amounts not subject to on-balance sheet offsetting”, it should be noted that there are in the Group some “ISDA Master Agreements” and offsetting agreements with clearing houses and clients.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



With regard to financial derivatives used for trading and hedging, it should be noted that:• those that have a positive fair value amount to €/Mln 24, of which €/Mln 21 secured by netting agreements, as

indicated in table 6 (column a);• those that have a negative fair value amount to €/Mln 44, of which €/Mln 31 million secured by netting agreements,

as indicated in table 7 (column a).With regard to securities lending operations, it is worth highlighting that tables 6 and 7 below show transactions involving the provision of guarantees in cash that come within the full availability of the provider, as they are the only transactions that are represented in the balance sheet. For the purposes of reconciliation with the balance sheet balances of the securities lending operations and repo transactions that are part of netting agreements or similar, it should be noted that the aforementioned operations are represented among “Repurchase and reverse repurchase agreements” shown in the tables with the breakdown of loans and liabilities to banks and clients, depending on the type of counterparty, contained in part B – Information on the balance sheet. The related measurement criterion is amortised cost.For the purposes of compiling tables 6 and 7, in line with IFRS 7 and with the instructions in Circular No 262/2015 of Bank of Italy, please note that:• the effects of potential offsetting of balance sheet figures for financial assets and liabilities are shown in column (d)

“financial instruments”, together with the fair value of the real financial guarantees represented by securities;• the effects of potential offsetting of the exposure with the related cash guarantees are listed in column (e) “Cash

deposits received/given under warranty”.Such effects are computed for each counterparty assisted by a master netting agreement within the limitations of the net exposure shown in column (c). Depending on the aforesaid compilation procedures, the net credit/debit exposure to the counterparty is indicated in column (f) “Net amount” in tables 6 and 7 below.

6. Financial assets which were offset, or subject to framework settlement or similar agreements

Technical forms Gross amount

of financial assets

(a)

Amount of financial liabilities

which were offset on

balance sheet (b)

Net amount of financial

assets reported in the balance

sheet (c=a-b)

Correlated amounts not subject to on-balance

sheet offsetting

Net amount 2017

(f=c-d-e)

Net amount 2016

Financial instruments

(d)

Cash deposits received

under warranty

(e)

1. Derivatives 21,631 - 21,631 17,262 - 4,369 12,428

2. Repurchase agreements - - - - - - -

3. Securities lending - - - - - - -

4. Other - - - - - - -

Total 2017 21,631 - 21,631 17,262 - 4,369 x

Total 2016 42,951 - 42,951 29,035 x 13,916

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



7. Financial liabilities which were offset, or subject to framework settlement or similar agreements

Technical forms Gross amount

of financial liabilities

(a)

Amount of the

financial assets offset

in the balance sheet

(b)

Net amount of financial liabilities

reported in the balance

sheet (c=a-b)


sheet offsetting

Net amount 2017

(f=c-d-e)

Net amount 2016


(d)


under war-ranty

(e)

1. Derivatives 30,918 - 30,918 17,262 - 13,656 20,775



4. Other - - - - - - -

Total 2017 30,918 - 30,918 17,262 - 13,656 x

Total 2016 49,810 - 49,810 29,035 - x 20,775

8. Securities lending transactionsDuring financial year 2017, Banca Intermobiliare carried out securities lending transactions, against payment of a commission to various providers. These transactions, carried out with top level clients, made it possible for Banca Intermobiliare to use refinanceable securities (with the Central Bank or other collateralised markets), as an additional liquidity buffer.

Operation Type of securities Nominal quan-tity 31.12.2017

Nominal quan-tity 31.12.2016

Securities obtained from securities lending Equity Securities 1,688,758 334,211

Securities delivered with securities lending - third-party lending Equity Securities - -

Securities delivered with securities lending - bank lending Equity Securities - -

TOTAL 1,688,758 334,211

Owned securities Equity Securities 1,688,758 334,211

9. Information on jointly-controlled activitiesNot applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C

Notes to the consolidated financial statements - Part C ■ 185


SECTION 1 - INTEREST - ITEMS 10 AND 201.1 Interest income and similar items: breakdown

Items/Types Debt securities

Loans Other transactions

Total 2017

Total 2016

1. Financial assets held for trading 818 - - 818 3,881

2. Financial assets designated at fair value - - - - -

3. Financial assets available for sale 11,201 - - 11,201 16,428

4. Financial assets held to maturity - - - - -

5. Loans to banks 148 586 - 734 1,395

6. Loans to clients - 12,763 - 12,763 20,710

7. Hedging derivatives x x - - -

8. Other assets x x - - -

Total 12,167 13,349 - 25,516 42,414

1.2 Interest income and similar items: hedging transaction differentialsRefer to table 1.5 interest expense and similar items: hedging transaction differentials.

1.3 Interest income and similar items: other information

1.3.1 Interest income on financial assets in foreign currency


Interest income on financial assets in foreign currency 401 351

1.3.2 Interest income on financial leasing transactionsThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

1.4 Interest expense and similar items: breakdown

Items/Types Payables Securities Other transactions

Total2017

Total2016

1. Due to central banks - x - - -

2. Due to banks 422 x 118 540 702

3. Due to clients 4,441 x 5 4,446 5,519

4. Outstanding securities x 4,449 - 4,449 9,331

5. Financial liabilities held for trading 207 (6) - 201 882

6. Financial liabilities designated at fair value - - - - -

7. Other liabilities and provisions x x - - -

8. Hedging derivatives x x 4,097 4,097 4,146

Total 5,070 4,443 4,220 13,733 20,580

Part C - INFORMATION ON THE CONSOLIDATED INCOME STATEMENT

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C

186 ■ Notes to the consolidated financial statements - Part C


1.5 Interest expense and similar items: hedging transaction differentials

Items 2017 2016

A. Positive hedging transaction differentials 2,045 2,656

B. Negative hedging transaction differentials (6,142) (6,802)

C. Balance (A-B) (4,097) (4,146)

1.6 Interest expense and similar items: other information

1.6.1 Interest expenses on liabilities in foreign currency

Items 2017 2016

Interest expenses on financial liabilities in foreign currency 92 103

1.6.2 Interest expenses on liabilities for financial leasing transactionsThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 2 - COMMISSIONS AND FEES - ITEMS 40 AND 502.1 Fee and commission income: breakdown

Type of services/Amounts 2017 2016

a) guarantees issued 105 183

b) credit derivatives - -

c) management, brokering and consulting services: 74,990 78,140

1. trading of financial instruments 9,121 13,872

2. trading of foreign currencies 362 645

3. portfolio management 51,370 47,226

3.1. individual 17,750 20,021

3.2. collective 33,620 27,205

4. custody and administration of securities - -

5. custodian bank activity - -

6. placement of securities 164 361

7. order receipt and transmission 989 1,418

8. advisory services 1,668 2,185

8.1. relating to investments 1,445 1,786

8.2 relating to financial structure 223 399

9. distribution of third party services 11,316 12,433

9.1 asset management portfolios 8,122 8,455

9.1.1. individual - -

9.1.2. collective 8,122 8,455

9.2. insurance products 3,194 3,978

9.3. other products - -

d) collection and payment services 166 143

e) securitisation servicing - -

f) servicing for factoring transactions - -

g) tax collection services - -

h) management of multilateral trading facilities - -

i) current account maintenance and management 1,225 1,781

j) other services 1,780 1,797

Total 78,266 82,044

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



2.2 Fee and commission expenses: breakdown

Services/Amounts 2017 2016

a) guarantees received 2 2


c) management and brokering services 18,535 19,050


2. trading of foreign currencies - -

3. portfolio management: 15,348 15,618

3.1 own 9,183 9,712

3.2 delegated by third parties 6,165 5,906

4. custody and administration of securities 141 179

5. placement of securities - -

6. off-site proposals for financial instruments. products and services - -


e) other services 609 807

Total 19,181 19,891

SECTION 3 - DIVIDENDS AND SIMILAR INCOME - ITEM 703.1 Dividends and similar income: breakdown

Items/Income 2017 2016

Dividends Income on shares

in UCIs


in UCIs

A. Financial assets held for trading 34 - 368 -

B. Financial assets available for sale 335 52 1,078 171

C. Financial assets designated at fair value - - - -

D. Equity investments - x - x

Total 369 52 1,446 171

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 4 - GAINS AND LOSSES ON ASSETS HELD FOR TRADING - ITEM 804.1 Gains and losses on assets held for trading: breakdown

Transactions/Income components 2017

capital gains

trading gains

capital losses

trading losses

net profit (loss)

1. Financial assets held for trading 405 4,601 (189) (1,655) 3,162

1.1 Debt securities 371 3,534 (187) (1,367) 2,351

1.2 Equity securities 9 1,060 (2) (283) 784

1.3 Shares in UCIs 25 7 - (5) 27

1.4. Loans - - - - -

1.5 Other - - - - -

2. Financial liabilities held for trading 158 180 (288) (1,112) (1,062)

2.1 Debt securities 5 24 (154) (965) (1,090)

2.1 Payables - - - - -

2.2 Other 153 156 (134) (147) 28

3. Other financial assets and liabilities: exchange differences x x x x 1,139

4. Derivative Instruments 2,599 19,212 (2,708) (19,843) 2,968

4.1 Financial derivatives: 2,424 16,187 (2,533) (16,739) 3,047

- On debt securities and interest rates 2,424 6,977 (2,533) (6,397) 471

- On equity securities and stock indices - 9,206 - (10,338) (1,132)

- On currencies and gold - - - - 3,708

- Others - 4 - (4) -

4.2 Credit derivatives 175 3,025 (175) (3,104) (79)

Total 6,207

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C




capital gains

trading gains

capital losses

trading losses

net profit (loss)

1. Financial assets held for trading 595 5,656 (661) (7,186) (1,596)

1.1 Debt securities 537 3,962 (658) (5,541) (1,700)

1.2 Equity securities 57 1,648 (2) (1,602) 101

1.3 Shares in UCIs 1 46 (1) (43) 3

1.4. Loans - - - - -

1.5 Other - - - - -

2. Financial liabilities held for trading 27 628 (318) (322) 15

2.1 Debt securities - 601 (59) (322) 220

2.1 Payables - - - - -

2.2 Other 27 27 (259) - (205)

3. Other financial assets and liabilities: exchange differences x x x x 1,432



- On debt securities and interest rates 1,559 8,642 (1,215) (7,865) 1,121

- On equity securities and stock indices 450 21,766 (444) (22,652) (880)

- On currencies and gold - - - - 4,661

- Others - 262 - (255) 7


Total 4,493

SECTION 5 - NET GAINS (LOSSES) ON HEDGING OPERATIONS - ITEM 905.1 Net profit (loss) on hedging operations: breakdown

Componenti reddituali/Valori 2017 2016

A. Income related to:

A.1 Fair value hedging derivatives 16,713 5,410

A.2 Hedged financial assets (fair value) 3,374 7,974

A.3 Hedged financial liabilities (fair value) 165 -

A.4 Financial derivatives to hedge cash flows - -

A.5 Assets and liabilities in foreign currency - -

Total income on hedging operations (A) 20,252 13,384

B. Costs related to:

B.1 Fair value hedging derivatives (15,334) (8,942)

B.2 Hedged financial assets (fair value) (4,954) (4,419)

B.3 Hedged financial liabilities (fair value) - (200)

B.4 Financial derivatives to hedge cash flows - -

B.5 Assets and liabilities in foreign currency - -

Total costs on hedging operations (B) (20,288) (13,561)

C. Net profit (loss) on hedging operations (A - B) (36) (177)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 6 - GAINS (LOSSES) ON DISPOSAL OR REPURCHASE - ITEM 1006.1 Gains (losses) on disposal or repurchase: breakdown

Items/Income components 2017 2016

Gains Losses Net profit (loss)


Financial assets

1. Loans to banks 26 - 26 - - -

2. Loans to clients 1 (183) (182) 1 - 1

3. Financial assets available for sale 14,316 (4,961) 9,355 5,484 (1,979) 3,505

3.1 Debt securities 10,408 (2,497) 7,911 4,723 (1,561) 3,162

3.2 Equity securities 2,537 (592) 1,945 639 (345) 294

3.3 Shares in UCIs 1,371 (1,872) (501) 122 (73) 49

3.4. Loans - - - - - -

4. Financial assets held to maturity - - - - - -

Total assets 14,343 (5,144) 9,199 5,485 (1,979) 3,506


1. Due to banks - - - - - -

2. Due to clients - - - - - -

3. Outstanding securities 47 (25) 22 325 (448) (123)

Total liabilities 47 (25) 22 325 (448) (123)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 8 - NET WRITE-DOWNS/WRITE-BACKS FOR IMPAIRMENT - ITEM 1308.1 Net write-downs/write-backs for impairment of loans: breakdown

Transactions/Income components Write-downs (1) Write-backs (2) Total2017

Total2016Specific Of

portfolioSpecific Of portfolio

Write-offs Other A B A B

A. Loans to banks

- Loans

- Debt securities

B. Loans to clients (438) (58,244) - - 11,601 - 1,205 (45,876) (91,640)

Purchased impaired loans - - - - - - - - -

- Loans - - x - - x x - -

- Debt securities - - x - - x x - -

Other loans and receivables (438) (58,244) - - 11,601 - 1,205 (45,876) (91,640)

- Loans (438) (58,244) - - 11.601 - 1,205 (45,876) (91,640)

- Debt securities - - - - - - - - -

C. Total (438) (58,244) - - 11,601 - 1,205 (45,876) (91,640)

Key:A = From interest B = Other write-backs

The estimation of the flows calculated using the methodology based on the parameters of “probability of default” and “loss given default” resulted in a coverage of performing loans with a percentage higher than that of the previous year. For more details on the evaluation criteria, please refer to the information in Part A - Accounting policies, Section “4. Loans”. In “write-backs - from interest” are reversals of write-downs connected with the passage of time, corresponding to the accrued interest during the financial year based on the original effective interest rate previously used to calculate write-downs.

8.2 Net write-downs for impairment of financial assets available for sale: breakdown

Transactions/Income components Write-downs Specific

Write-backsSpecific

Total2017

Total2016

Write-offs Other From interest

Other write-backs

A. Debt securities - (95) - - (95) (303)

B. Equity securities - (443) x x (443) (1,388)

C. UCIs shares - (1.316) x - (1,316) (1,066)

D. Loans to banks - - - - - -

E. Loans to clients - - - - - -

F. Total - (1,854) - - (1,854) (2,757)

The specific write-downs on available-for-sale financial assets were determined on the basis of the impairment policy described in Part A “Accounting Policies” of the notes to the consolidated financial statements. The breakdown by security, subject to “impairment” is presented below:

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



Description of the securities Amount of the write-down

A. Debt securities (95)

ABENGOA FIN.6%EUR (6)

SV FITD 17/50 JUNIOR (89)

B. SHARES (443)

AEDES ORD RAGG. (16)

BCA MEDIO FRIULI VG (41)

SV FITD CR CESENA (347)

SV FITD CR S MINIATO (21)

SV FITD CR RIMINI (18)

C. UCIs shares (1,316)

BIM MK NEUTR SPOK A (5)

FDO IMM LEOPARDI (36)

CHARME III CL.A NOM. (1,275)

F. Total (1,854)

8.3 Net write-downs for impairment of financial assets held to maturity: breakdownThis item is not applicable to the consolidated financial statements of Banca Intermobiliare.

8.4 Net write-downs for impairment of other financial transactions: breakdown

Transactions/Income components Rettifiche di valore Riprese di valore Total2017




A. Guarantees issued - - - - - - 389 389 20

B. Credit derivatives - - - - - - - - -

C. Commitments to disburse funds - - - - - - - - -

D. Other transactions - - - - - - - - -

E. Total - - - - - - 389 389 20

Key: A = From interest; B = Other write-backs

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 11 - ADMINISTRATIVE EXPENSES - ITEM 18011.1 Personnel costs: breakdown

Type of cost/Amounts 2017 2016

1) Employees 45,410 46,453

a) wages and salaries 32,438 32,945

b) social security costs 8,687 8,950

c) employee severance fund 43 36

d) pension expenses 414 434

e) provision to employees’ severance fund 510 551

f) provision to pension fund and similar obligations: - -

- defined contribution - -

- defined benefits - -

g) contributions to supplementary external retirement benefit funds: 1,990 2,175

- defined contribution 1,990 2,175


h) costs related to share-based payments - -

i) other employee benefits 1,328 1,362

2) Other working staff 414 192

3) Directors and statutory auditors 1,993 1,458

4) Retired staff - -

5) Cost recoveries for employees seconded to other companies (3,341) (3,365)

6) Cost reimbursements for employees of third parties seconded to the company 426 950

Total (44,902) (45,688)

11.2 Average number of employees by category

2017 2016

Employed personnel

a) executives 28 28

b) middle managers 250 250

c) remaining employed staff 213 218

Total employed personnel 491 496

Other staff 10 10

11.3 Company defined-benefit pension provisions: total costsNot applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



11.4 Other employee benefits

2017 2016

Cafeteria tickets 436 497

Rentals of property for employees 68 14

Contribution to the corporate welfare fund 519 518

Others 305 333

Total 1,328 1,362

11.5 Other administrative expenses: breakdown


Property rentals 2,219 2,297

Furniture and property maintenance expenses 787 794

Other property expenses 338 341

Telephone, postal and data transmission expenses 6,667 7,952

Electricity, heating and water 814 919

Equipment and software leases 1,079 1,109

Electronic processing 5,332 4,680

System support and software rental 1,282 1,252

Advertising and entertainment 255 722

Legal and notary services 1,985 1,259

Miscellaneous advisory and other services 5,543 2,558

Subscriptions, magazines, newspapers 247 299

Transportation 964 996

Credit information and searches 62 70

Insurance companies 1,260 1,241

Supervision, security and transportation of valuables 57 59

Cleaning expenses 487 517

Charitable and other donations 43 69

Printing and stationery 316 422

Ordinary contributions, BRRD mechanisms and DGS loan 1,154 4,080

Membership fees and union dues 654 664

General Overheads 560 548

Other expenses 1,082 895

Indirect taxes and duties 1,600 1,921

Services provided by Group companies 5,498 5,616

Total 40,285 41,280

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 12 - NET ALLOCATIONS TO PROVISIONS FOR RISKS AND CHARGES - ITEM 19012.1 Net allocations to provisions for risks and charges: breakdown


Net allocations to provisions for risks and charges for:

- legal disputes (609) (12,361)

- personnel-related charges (310) (346)

- other expenses (1,226) (4,973)

Total (2,145) (17,680)

As regards the difference with respect to the previous year please see the explanation provided in the report on operations.

SECTION 13 - NET WRITE-DOWNS/WRITE-BACKS ON TANGIBLE FIXED ASSETS - ITEM 20013.1 Net write-downs/write-backs on property, plant and equipment: breakdown

Assets/Income components 2017 2016

Amortisation (a)

Net write-downs

for impairment (b)

Write-backs(c)

Net profit (loss)

(a+b-c)

Amortisation (a)

Net write-downs

for impairment (b)

Write-backs(c)

Net profit (loss)

(a+b-c)

A. Tangible fixed assets

A.1 Owned assets (1,954) (14) - (1,968) (2,076) - - (2,076)

- Business use (1,954) (14) - (1,968) (2,076) - - (2,076)

- For investment - - - - - - - -

A.2 Assets held under financial leasing - - - - - - - -

- Business use - - - - - - - -


Total (1,954) (14) - (1,968) (2,076) - - (2,076)

Write-downs for impairment of €/thou 14 are related to the property located in Cuneo in view of new appraisal values.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 14 - NET WRITE-DOWNS/WRITE-BACKS ON INTANGIBLE FIXED ASSETS - ITEM 21014.1 Net write-downs/write-backs on intangible fixed assets: breakdown

Assets/Income components 2017 2016

Amortisation (a)

Net write-downs

for impairment (b)

Write-backs(c)

Net profit (loss)

Amortisation (a)

Net write-downs

for impairment (b)

Write-backs(c)

Net profit (loss)

A. Intangible fixed assets

A.1 Owned assets (567) - - (567) (613) - - (613)

- Generated internally by the company - - - - - - - -

- Other (567) - - (567) (613) - - (613)


Total (567) - - (567) (613) - - (613)

SECTION 15 - OTHER OPERATING INCOME AND EXPENSES - ITEM 22015.1 Other operating expenses: breakdown

Type of cost/Amounts 31.12.2017 31.12.2016

- Contingent liabilities not related to bank items 741 2,576

- Charges for thefts and robberies - 1

- Depreciation of expenses for leasehold improvements 564 585

- Definition of disputes and claims 4,785 2,845

- Other miscellaneous expenses 56 1,115

Total 6,146 7,122

15.2 Other operating income: breakdown

Type of cost/Amounts 31.12.2017 31.12.2016

- Contingent assets not related to bank items 6,808 3,306

- Property rental income 1,710 1,804

- Recovery for services rendered to group companies - 95

- Recovery of legal and notary expenses 20 48

- Recovery of postal expenses 96 117

- Other income 160 362

Total 8,794 5,732

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 16 - PROFIT (LOSS) OF INVESTMENTS: BREAKDOWN - ITEM 24016.1 Profit (loss) of investments: breakdown

Income components/Segments 2017 2016

1) Jointly-controlled companies

A. Income - -

1. Revaluations - -

2. Gains on disposal - -

3. Write-backs - -

4. Other income - -

B. Costs - -

1. Write-downs - -

2. Write-downs for impairment - -

3. Losses on disposal - -

4. Other expenses - -

Net profit (loss) - -

2) Companies subject to significant influence

A. Income 1,479 1,480

1. Revaluations -

2. Gains on disposal -

3. Write-backs -

4. Other income 1,479 1,480

B. Costs - -

1. Write-downs -

2. Write-downs for impairment -

3. Losses on disposal -

4. Other expenses -

Net profit (loss) 1,479 1,480

Total 1,479 1,480

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 20 - INCOME TAXES FOR THE YEAR ON ORDINARY ACTIVITIES - ITEM 29020.1 Income taxes for the year on ordinary activities: breakdown

Income components/Segments 2017 2016

1. Current tax payable (-) (932) (1,239)

2. Changes in current tax payable for previous years (+/-) (31) (93)

3. Reduction in current taxes payable for the year (+) 2 309

3.bis Decrease in current taxes for the year for income tax pursuant to Law 214/201 22,709 7,733

4. Change in deferred tax assets (+/-) (24,895) 13,308

5. Change in deferred tax liabilities (+/-) 1,971 (2,616)

6. Accrued income tax for the year (-) (-1+/-2+3+/-4+/-5) (1,176) 17,402

20.2 Reconciliation between theoretical and actual reported tax burden Component/Amounts 31.12.2017

Theoretical tax burden 7,783

Tax exempt revenues:

Dividends 2,184

IRAP portion which is deductible from IRES 22

Aid for Economic Growth (Aiuti alla Crescita Economica - ACE). (3)

Other tax exempt income 2,785

Non-deductible costs

Valuation of available-for-sale securities (117)

Gain under tax transparency regime (508)

Other non-deductible costs (1,116)

Other

Recognition of deferred taxes for capital gains on assets 1,418

Prepaid taxes and changes in taxes for previous periods (276)

Alignment of deferred tax asset rates for tax consolidation taxable income (13,348)

Actual tax burden (1,176)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 21 - GAINS (LOSSES) ON NON-CURRENT ASSETS HELD FOR SALE, AFTER TAX - ITEM 31021.1 Profit (loss) on groups of assets held for sale, net of tax: breakdown

Income components/Amounts 2017 2016

1. Income 3,103 4,353

2. Expenses (5,312) (6,809)

3. Result of evaluations of the group of assets and associated liabilities - -

4. Capital gains (losses) 748 -

5. Taxes and duties (190) 97

Profit (loss) (1,651) (2,359)

21.2 Detail of income taxes relating to groups of assets/liabilities held for sale

2017 2016

1. Current taxes (-) (190) 116

2. Change in deferred tax assets (+/-) - -

3. Change in deferred tax liabilities (+/-) - -

4. Income taxes for the year (-1+/-2 +/-3) (190) 116

SECTION 22 - PROFIT (LOSS) FOR THE YEAR ATTRIBUTABLE TO NON-CONTROLLING INTERESTS - ITEM 33022.1 Detail of item 330 “Profit for the year attributable to non-controlling interests”

2017 2016

Profit (loss) for the year attributable to non-controlling interests (70) (93)

SECTION 23 - OTHER INFORMATIONThere is no additional information to report other than that provided in the sections above.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



SECTION 24 - EARNINGS PER SHARE24.1 Average number of diluted ordinary shares

2017 2016

Attributable profit

(€/thou.)

Weighted average of

ordinary shares

Euro

Attributable profit

(€/thou.)

Weighted average of

ordinary shares

Euro

Earnings per share

Basic EPS (49,297) 149,628,958 (0.329) (93,371) 149,616,570 (0.624)

Diluted EPS (49,297) 149,628,958 (0.329) (93,371) 149,616,570 (0.624)


IAS 33 requires indication of earnings per share, commonly known as EPS, which is calculated according to the following definitions:i) Basic earnings per share (EPS Base) is calculated as the ratio of the net profit (or loss) for the year attributable to

ordinary shareholders in relation to the average number of outstanding ordinary shares;ii) Diluted earnings per share (Diluted EPS) is calculated as the ratio of the net profit (or loss) for the year attributable

to ordinary shareholders in relation to the average number of outstanding ordinary shares taking into account the diluting effects of converting the bond into shares.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

D

202 ■ Notes to the consolidated financial statements - Part D


DETAILED STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME(Thousands of €)

Items Gross amount Income tax Net amount

10. Profit (Loss) for the year x x (49,228)


20. Tangible fixed assets - - -

30. Intangible fixed assets - - -

40. Defined benefit plans 37 (8) 29

50. Non-current assets held for sale - - -

60. Share of valuation reserves of investments valued with equity method: - - -

Other income components reversed to the income statement

70. Hedging of foreign investments:

a) changes in fair value - - -

b) transfer to income statement - - -

c) other changes - - -

80. Exchange rate differences:

a) changes in value - - -



90. Cash flow hedges:




100. Financial assets available for sale:

a) changes in fair value 10,332 (3,006) 7,326

b) transfer to income statement

- write-downs due to impairment 1,854 (481) 1,372

- capital gains/losses (2,664) 609 (2,055)


110. Non-current assets held for sale:



c) other changes (2,298) - (2,298)

120. Share of valuation reserves of investments valued with equity method:


b) transfer to income statement

- write-downs due to impairment - - -

- capital gains/losses - - -

c) other changes 16 - 16

130. Total other income components 7,276 (2,886) 4,390

140. Comprehensive income (Item 10+130) (41,952) (2,886) (44,838)

150. Consolidated comprehensive income attributable to non-controlling interests 72 (1) 71

160. Parent bank’s consolidated comprehensive income (42,023) (2,885) (44,908)

Part D - CONSOLIDATED COMPREHENSIVE INCOME

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E

Notes to the consolidated financial statements - Part E ■ 203


In following part E “Information on risks and relative hedging policies” some tables provide information for the entire Banking Group, where requested by Circular no. 262. We can note that, according to regulations, reference is made to companies excluded from the Banking Group for insurance companies (in our case Bim Vita S.p.A. consolidated using the equity method) and other real estate companies (Bim Immobiliare S.r.l., Immobiliare D S.r.l., Paomar Terza S.r.l. Patio Lugano S.A. and Bim Insurance Brokers S.p.A.).

INTERNAL CONTROL SYSTEM

The internal control system of Banca Intermobiliare and its subsidiaries is structured with different levels of control, including:• line control (first level), aimed at ensuring proper conduct of the operations; these are then checks carried out by the

same production facilities, which are generally incorporated in the procedures or performed on back-office activities;• controls on risks and compliance (second level) performed through the Risk Management, Compliance,

Anti-Money Laundering Departments and by the Financial Reporting Manager. These checks are intended to ensure, among other things: the proper implementation of the risk management process, the compliance with operational limits assigned to the various functions and compliance with standards by corporate operations;

• internal audit (third level) - these activities aim to identify anomalous trends or violations of procedures or of internal and external regulations as well as assessing the overall functionality of the internal control system.

The overall risk management of Banca Intermobiliare and its subsidiaries has been performed over the last few years by a process presided over and coordinated by the former Parent Company Veneto Banca, discussed with the Board of Directors of BIM and with the aid of the head offices of BIM and of the former Parent Company. Following Italian Law Decree no. 99, which placed Veneto Banca in compulsory administrative liquidation, the routine performance of the activities previously outsourced by BIM to Veneto Banca has been ensured (by Veneto Banca personnel transferred under the guidance of Banca Intesa Sanpaolo), in such a way as to enable these activities to gradually come back within BIM. Their risk management, compliance and internal audit activities are carried out by non-operating and independent departments. Up to 30 September 2017 the activities were performed according to a centralised model by the then Parent Company Veneto Banca with Bim personnel seconded to the same. Starting from 1 October, the Compliance and Internal Audit Departments were set up, with appointment of internal managers and re-entry of people previously seconded.As regards the Risk Management control function, on 1 October the Risk Management Department was created, and it is now managing the activities in outsourcing and their gradual re-internalisation planned in the early months of 2018.The activity of the Financial Reporting Manager outsourced to the former Parent Company Veneto Banca was internalised during the second half of 2017 after the latter was placed in liquidation.

Basic principlesThe Banca Intermobiliare Group attributes a significant importance to risk monitoring and management, aiming for a complete and integrated representation of the risks.The Group’s risk propensity and appetite are illustrated and summarised in the Group Risk Appetite Framework approved by the Board of Directors. The framework represents the perimeter and frame within which the management of the risks assumed is organised, defining the overall risk profile.The oversight of the risk profile defined is organised with a series of supervision limits and thresholds defined in such a way as to be able to safeguard and observe, including in stress conditions, minimum levels of solvency, liquidity and profitability.

In particular the intention is to maintain at adequate levels:• capital solidity, monitoring the Common Equity Ratio, the Total Capital Ratio and the Leverage Ratio;• liquidity, both short-term and structural, monitoring the internal limits of Liquidity Coverage Ratio,

Net Stable Funding Ratio and Funding/Lending Gap Ratio;• profitability and risk, monitoring the Cost/ Income Ratio, the NOP/RWA Ratio and the MINT/RWA Ratio.

The governance model defined for the risk management and control process of Banca Intermobiliare and its subsidiaries is based on:• separation between risk management and risk control processes;• development of risk management and control processes in accordance with the hierarchical structure

of the Group and the Bank through a process of delegation.

Part E - INFORMATION ON RISKS AND RELATED HEDGING POLICIES

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E

204 ■ Notes to the consolidated financial statements - Part E


The Board of Directors defines the strategies and its role is one of direction, guidance and verification of compliance with the risk governance structure; in particular, it defines risk propensity by identifying clear lines of responsibility and establishing specific operating limits.The General Manager implements the risk governance, management and control process by ensuring that the latter complies with the strategic guidelines defined by the Board of Directors.

Risk Management DepartmentThe Parent Company’s Risk Management Department has the responsibility for ensuring the measurement and integrated control of the risks to which the Bank and its subsidiaries are exposed, in keeping with the provisions of the Supervisory Authority and with international “best practice”. In particular it performs and coordinates the following functions and/or activities:• it governs the macro-process of defining, approving, implementing and monitoring the Group’s Risk Appetite

Framework (RAF) with the support of the other units involved;• it launches the process of implementing the strategic plan and the budget in the various metrics defined in the RAF;• it checks continuously the adequacy of the risk and operating limit management process;• it ensures the measurement and the control of the Group’s exposure to the various types of risk identified;• it oversees the monitoring of the Group’s significant risks developing management reporting on risk measurement

(Key Risk Indicators) and on the monitoring of the limits identified for each risk;• it quantifies the total exposure for each risk factor, determining the related capital absorptions;• it checks correct performance of the monitoring of trends on the individual loan exposures assessing, in addition, the

congruity of provisions, the compliance of the verification process, the consistency of the classifications, the adequacy of the recovery process and the risks deriving from the use of credit risk attenuation techniques;

• it prepares the annual update of the criteria for identifying the Most Significant Transactions (MSTs) and provides an opinion in advance on such transactions;

• it reports quarterly to the Corporate Bodies, in the context of the Tableau de Bord of the risks, the situation of the Group’s overall risk profile; it compares it with the Risk Appetite Framework, highlighting any situations that require action by the Board of Directors.

The Risk Management Department also performs specific activities regarding the potential risks deriving from investment services provided by the Bank to its clients including:• the pricing of financial instruments which are not listed on regulated markets and that are present in client portfolios

under administration;• continual monitoring of client operations in relation to listed derivatives and OTC instruments;• management of the margins in relation to clients operating in Over-the-Counter derivatives;• verification and monitoring of the level of liquidity/complexity of financial products which are traded and present in

client portfolios with reference to the Consob rules on the subject:• continual monitoring of the investment activity of clients in verifying adequacy/appropriateness of the operations

carried out with respect to the MiFID risk profiles in terms of the portfolio Value at Risk and concentration (for issuer/sector/single instrument).

The perimeter of the risks identified and overseen is structured as follows:• credit and counterparty risk: this category includes concentration risk, the residual risk and the second-level audits in

the lending field;• market risk of the trading book;• financial risk of the banking book;• liquidity risk and interest rate risk;• operational risk;• strategic risk;• reputational risk, to which the Group pays particular attention also through defining processes for risk management

and mitigation and for protecting the company’s image.

Besides credit, market, banking book financial and operational risks, dealt with in detail in the following paragraphs as required by the Bank of Italy instructions, the Group has identified and oversees the following other risks:

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Strategic riskBank of Italy Circular no. 285 defines strategic risk as the current or prospective risk of a drop in profits or in capital deriving from changes of the operating context or from mistaken corporate decisions, inadequate implementation of decisions, low reactivity to changes in the competitive context.Analysing and defining strategic risk we can identify two components:• “pure strategic risk” the impacts of which derive from mistaken corporate decisions, lack of success in implementing

the corporate strategic plan or low reactivity to changes in the competitive context;• “business risk” connected with the volatility of volumes and margins also with respect to the budget forecasts generally

due to modifications and changes in the competitive context, in customer behaviour or in technological development.Strategic risk is assessed with a qualitative and quantitative analysis based on the trend in differences between the forecast figure (budget) and the final result. Then as regards specifically the component of strategic risk associated with the business the approach used can be seen as concerning Earnings at Risk.

Reputational riskReputational risk is defined as the current or prospective risk of a drop in profits or in capital deriving from a negative perception of the Group’s image by clients, counterparties, shareholders, investors or Supervisory Authorities.In the context of preventive management of this type of risk particular attention is paid to:• completeness of the mapping of business processes, aimed at limiting the emergence of risk factors and at subjecting

to certain responsibilities;• timeliness and effectiveness of actions when conflict situations arise;• careful process of selection, assessment, training and development of the Group’s personnel;• compliance of the external communication processes to the principles of correctness and transparency and

assignment to the Bank’s Investor Relations Officer of the tasks of coordinating and controlling the activities;• continual attention to all stakeholders, primarily clients but also employees and counterparties, developing correct

relationships based on mutual trust;• acceptance of the Ethical Code of Conduct;• attention reserved for the construction of remuneration and incentive systems, excluding elements that may also

indirectly give a reason for incorrect conduct by operators.To protect also clients’ interests and the Group’s reputation, great attention is paid to defining and managing clients’ risk tolerance, identifying several risk propensity profiles according to and on the basis of the customer’s objective and subjective characteristics.The marketing of financial products is also governed by precise prior assessments of the risk inherent in the products on both the bank’s side and the customer’s side (portfolio risk, illiquidity, complexity, concentration, knowledge and consistency with the investment objectives).

Compliance UnitThe activities of the Compliance Unit is to govern, according to a “risk-based” approach, the management of the risk of non-compliance with respect to corporate activities, ensuring that internal procedures are adequate to prevent this risk.To this end, the Compliance Unit:a) identifies continuously rules applicable to the Bank and assesses their impact on business processes and procedures;b) coordinates all activities and monitoring aimed at ensuring compliance with rules and regulations, making

programming more efficient and activating them in order to prevent behaviour that could lead to judicial or administrative sanctions, generate significant financial losses or reputational damage (resulting in economic damage);

c) promotes within the Bank compliance with laws, regulations, rules, codes and any other binding arrangement for the activities carried out by the Bank, to minimize the risk of non-compliance and to contribute to the diffusion of the “culture of compliance”.

The Compliance Unit is mainly involved in the following activities:• supporting the corporate structures in defining the assessment methods pertaining to the risk of regulatory non-

compliance; • identifying suitable procedures for preventing detected risks, with the possibility of requesting their adoption;

verifying their adequacy and proper application;• ongoing identification of the regulations applicable to the bank and measurement/assessment of the impact on the

corporate processes and procedures; • proposals for organisational and procedural changes aimed at ensuring adequate management of the non-compliance

risks identified;• preparing information flows for the corporate bodies and structures involved (e.g. operational risk management and

internal audit departments); • verifying the direct organisational information flows (structures, procedures including operational and commercial)

suggested for the prevention of non-compliance risk.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



The Compliance Unit must be involved in assessing compliance with applicable regulations prior to the launching of any new projects that the bank intends to undertake and in preventing and managing conflicts of interests, among the various activities as well as in regard to the employees and the corporate officers. The Unit collaborates in identifying remuneration policies by assessing compliance thereof in regard to the regulatory framework, both external and internal.

Anti-Money Laundering UnitThe Anti-Money Laundering Unit has the task of governing the risk of non-compliance with regard to anti-money laundering, countering terrorist financing and management of embargoes through:• defining general principles to be adopted in the company with reference to AML;• continuously monitoring the legislative framework ensuring the adequacy of processes and procedures and evaluating

organizational and procedural changes;• preparing periodic reporting to the corporate bodies, the senior management and supervisory bodies;• providing advice to Group companies and to the Network;• checking the adequacy of training plans with reference to AML prepared by the Human Resources Department.• performing second level controls relevant to the following thematic areas: adequate checks on clients (simplified,

ordinary and strengthened), correct population of the Single IT Archive, cash movements, clients belonging to sectors with high risk of money laundering;

• managing the authorisation process for opening ongoing relations with politically exposed persons and trusts;• analysing suspicious transactions reported by operating structures for their transmission, if deemed necessary, to the

Financial Intelligence Unit of the Bank of Italy according to the instructions given by the Delegated Owner;• managing the aggregate anti-money laundering reports.

Financial Reporting ManagerThe Financial Reporting Manager operates observing the provisions of art. 154-bis of the Consolidated Law on Finance (TUF) adopting what is laid down in “Italian Law 262/2005 – Financial Reporting Manager”.The oversight of the quality of accounting and financial disclosure is based on examining together:• of the organisational settings and controls, conducted with a programme of checks on a continuous basis to assess

the adequacy and enforcement of administrative and accounting procedures for the management of the data needed for the correct and truthful representation of the financial position on a separate and consolidated basis of Banca Intermobiliare in the economic and financial statement documents and any other financial communications;

• the completeness and consistency of the information given to the market, strengthening the ordinary processes of internal communications with regular acquisition of structured and disciplined information flows; the units of Banca Intermobiliare and its subsidiaries ensure regular communication of events relevant to accounting and financial reporting, especially with regard to the major risks and uncertainties to which they are exposed, facilitating the ongoing relationship with the structures from which the Financial Reporting Manager requires timely provision of any further information.

The Financial Reporting Manager, in relation to the functions of supervision and oversight, under the terms of art. 154-bis of the TUF:• signs, together with the General Manager, the attestations on the separate and consolidated financial statements

under the terms of art. 154-bis TUF, paragraph 5, on the adequacy and effective application of the administrative and accounting procedures, compliance with the international accounting standards, correspondence of the documents with the figures in the accounting books and records, ability of the same to provide a true and correct picture of the capital, economic and financial situation and a reliable analysis of the performance, the operating profit or loss and the main risks to which the Group is exposed;

• attests that the documents and communications distributed to the market correspond to the figures in the accounting documents, books and records, under the terms of art. 154-bis TUF, paragraph 2.

The Financial Reporting Manager has defined the work programme in relation to the legal formalities (preparation of the procedures and management of the auditing activities) making sure that the development is oriented in keeping with the criteria outlined in the “Operating Regulation Italian Law 262/2005 – Financial Reporting Manager” and that application of the control approaches is fully consistent with the methods assumed as a reference, which reflect international standards derived from the CoSO Framework, to ensure a uniform application of the auditing process and the measurement criteria.After completing the stage of the assessment process on the administrative and accounting procedures, the Financial Reporting Manager prepares every six months a specific informative report which includes:• information concerning the corporate framework of reference and the system of controls on the financial disclosure;• the work perimeter to which the programme of audits carried out in the year on the administrative and accounting

procedures refers;

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



• a summary and the details of the audits carried out and the anomalies encountered, with a precise indication of the actions aimed at reinstating full functionality of the controls;

• a final summary judgement.This informative report is presented to the Board of Directors and to the Board of Statutory Auditors, and a copy is sent to the Compliance, Internal Audit and Operations Departments, each for their respective areas of responsibility, and to the 231/2001 Oversight Committee.We can note that, following the internalisation of the activities related to the Financial Reporting Manager, which took place during the second half of 2017, the audit activities related to 2017 were performed by Banca Intermobiliare with the support of external consultants.As regards the first half of 2017 the Self-Assessment procedure was used for the entire process of assessing the adequacy of the corporate processes and of the related controls by Banca Intermobiliare, while on approval of the annual financial statements tests were carried out on the whole of 2017 in the context of the two clusters “Finance” and “Lending” on the Parent Company Banca Intermobiliare. As regards instead the Parent Company “Administration” cluster Self-Assessment activity was carried out (in line with what was done in previous years). The test activity, in general, resulted in a high number of effective tests. Controls were found to be effective although with a number of issues. For these controls specific remedial action was defined; this must be implemented during 2018 and must be audited afterwards.The mitigation actions must be activated also in the context of the plan to revise Banca Intermobiliare’s organisational structure.In 2018 the methods and procedures related to the Financial Reporting Manager must be redefined in order to make them consistent and adequate for the new organisational and operating structure. On the basis therefore of an overall assessment of the activities performed it is possible to express a judgement of adequacy on the existing processes and controls which, therefore, enable a truthful and correct representation of the economic and financial position of Banca Intermobiliare.As regards Art. 15 of the Consob Market Regulation no. 20249 of 28 December 2017 (in force since 3 January 2018) which governs the conditions for listing of companies controlling companies established and regulated by laws of States that do not belong to the European Union, we can note that these rules do not apply to Banca Intermobiliare’s subsidiaries, in relation to what is laid down in paragraph 2 of the aforementioned article 15 because they are not significantly important according to the provisions pursuant to title VI, chapter II, of the regulation adopted by Consob with resolution no. 11971 of 1999 as amended.

BIM Internal AuditThe Internal Audit activity is carried out with the objective of assessing the completeness, adequacy, functionality and reliability of the Internal Control System of the Bank and the Group as a whole. The Internal Audit Unit, in accordance with the legislative provisions and with a view to full autonomy and independence, reports to the Board of Directors and is structured according to an organisational model aimed at achieving in full a processes/risks approach.

In general, Internal Audit: • ensures, observing the guidelines of the audit plan approved by the Body with a strategic supervisory function,

constant, independent and objective oversight of the Group’s entire Internal Control and Risk Management System;• checks the regularity of the various corporate activities, including outsourced ones and the evolution of risks both at

the Bank’s head office, and at the Branches and in the subsidiaries. The frequency of inspections is in keeping with the activity carried out and the risk propensity; random and unannounced inspections are however also performed;

• checks the regularity of the operations and the trend of risks and assesses the functionality of the overall internal control system, in order to pursue also the improvement of the effectiveness and efficiency of the organisation, the safeguarding of the value of the Bank and the Group, the reliability and integrity of the accounting and operating information, and the compliance of the transactions with the policies established by the Governance Bodies and the internal and external regulations;

• brings to the attention of the Corporate Bodies possible improvements to the risk management policies, the measuring instruments and the procedures.

Internal Audit is responsible for performing the following activities: • monitoring system: based on a set of measures/indicators that make it possible to have an overview of the

main financial figures and to intercept, for the individual process stages considered, the risk/anomaly events. The indicators are analysed both at the aggregate level and in detail, to investigate problematic aspects of risk management inherent in the relevant process, with the objective of using the evidence that emerges to plan targeted actions, in situ or remote;

• audit checks: in-depth or targeted tasks, aimed at checking the adequacy and functionality of the corporate processes and the related internal control system;

• remote checks: precise enquiries carried out on the basis of the evidence that emerges from monitoring activities through processing and analysing data coming directly from the various corporate archives;

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



• follow up: process of assessing the degree of resolution of the critical issues found during previous actions;• prevention and study activities: activities to analyse the risks of internal fraud and serious irregularities in the

context of the Group’s current operations and investigation and ascertainment of criminal actions and events or those considered of particular significance;

• other extraordinary controls: other unplanned audit activities, made necessary following the findings of other controls and/or at the request of Corporate Bodies.

SECTION 1 - RISKS RELATING TO THE BANKING GROUPIn this section we present detailed information on monitoring and risk detection in accordance with current legislation (see Circular No. 262 of December 2005 and subsequent amendments) that specifically provides for the provision of information on risk profiles indicated, their management and hedging policies implemented, and operations on financial derivatives.The types of risk considered, which coincide with those that relate mainly to the typical commercial and financial operations of Banca Intermobiliare are caused by:• credit risk;• market risk, which includes:

1. interest rate risk;2. price risk;3. exchange rate risk;

• liquidity risk;• operational risks.

Banca Intermobiliare has set its criteria of prudence, limiting as much as possible its exposure to risk through a constant and careful risk control, which is reflected in a management model based on:• clear identification of responsibility in risk-taking processes;• adoption of measurement and control systems aligned to international best practices;• clear separation between organizational units governing risk and the functions appointed to control them.

These guidelines have been explained and formalised in specific policies for relevant risks, approved by the Board of Directors of Banca Intermobiliare. These documents are intended to regulate the definition and the boundaries of regulated risk, significant indicators subject to periodic monitoring, supervisory thresholds and operating limits, methods for managing over-the-limit positions, stress tests applied and the organizational structure delegated to perform regulated activities.

1.1 - CREDIT RISK

INFORMATION OF A QUALITATIVE NATURE

1. General informationThe lending activity of Banca Intermobiliare, even if this is not its core business, is actively focused on private clients, holding a complementary role to the primary activity of investment in financial instruments as well as management and structuring of client assets and fostering of long-term client loyalty. Although carried out with careful analysis of the lending and monitoring of the quality of exposures, the credit management carried out in previous years has led to substantial growth in the amount of impaired exposures. During 2017 the activity, begun in the fourth quarter of 2016, of analytically re-examining the status of the lending positions continued, with particular reference to adjustment of write-downs for impairment of loans. Following this review, the measurement of the loan portfolio currently appears appropriate in the light of the changed market environment. With the approval of the guidelines of the strategic development plan, an immediate cessation of lending to “corporate clients” was decided, as it was deemed a type of business entirely inconsistent with Private Banking and that created a huge amount of non-performing loans, penalising the development and growth of BIM. It was therefore decided that Banca Intermobiliare would only provide Lombard loans to Private clients, with a rigorous and precise process of assessment of the creditworthiness of such loans. The existing corporate loan portfolio, already heavily adjustedto the highest levels of the market, is today managed in a “run off” manner, evaluating each initiative and option aimed at possible further realisation.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



2. Credit risk management policies

2.1 Organisational factorsIn accordance with the definition used in the literature and within the industry, credit risk means the possibilitythat an unexpected change in the creditworthiness of debtors could cause a corresponding unexpected change in the market value of their exposure with reference to Banca Intermobiliare. The organisational structure of the bank ensures an adequate process for monitoring and managing credit risk, following the logic which separates business and control departments.The Board of Directors is exclusively entrusted with functions and powers related to the determination of policies that affect the general management of the company’s business operations. With reference to internal controls, the Board of Directors approves strategic guidelines as well as risk management policies in addition to the organisational structure of the bank.The system of delegation required by the internal policy approved by the Board of Directors is significant; this system assigns specific powers to certain company bodies and departments in relation to deliberations on credit lines.The management of the credit process occurs in two distinct phases:• the initial lending phase;• during the entire relationship with the counterparty.In order to manage the loan portfolio with the highest level of punctuality and professionalism, Banca Intermobiliare deemed it opportune to concentrate all the phases related to the assumption and control of risk within the General Management Department of the bank, thereby obtaining - through the specialisation of resources and the separation of duties at all decision levels – a high degree of homogeneity when granting credit lines and strong monitoring of the individual positions.

For the most important loan positions (Significant probable defaults, Probable defaults restructured and/or being restructured, non-performing loans), Banca Intermobiliare made use, up to June 2017, of the relevant units present in the former Parent Company Veneto Banca. In October 2017 the re-internalisation of the activities related to management of the “Non Performing Loans” portfolio was completed. The process for loan disbursement is regulated by a policy approved by the BIM Board in February 2018 which defines the roles of the company bodies and units involved. With reference to and in compliance with the system of delegated powers provided for by the Board of Directors specific responsibilities have been assigned for assessing and assuming risk. In particular, the branch offices of the bank have a low level of deliberative autonomy in assuming credit risk and, in any case, the procedure for the analysis of the individual proposals is always implemented by the General Management. On the other hand, the branches are delegated the responsibility for regional business development, in addition to client relations management.Lending activities are centralised within the Loan Division, which includes:• Credit Line Unit, within the Ordinary Loans Department, which is entrusted with preliminary investigative

activities as well as with assessing the creditworthiness of applicants;• Credit Line Secretariat, within the same Ordinary Loans Department, which handles all activities connected with

the provision and confirmation of guarantees collected which are not centralised with the Specific Offices of the Parent Bank;

• Problem Loans Unit, which is responsible for monitoring the quality of individual credit lines as well as verifying, over time, any collateral used to secure the credit lines. It also follows the activity of recovering the irregular and watchlist positions under the powers delegated by the Board of Directors.

• Loans in Dispute Unit, which is responsible for the activity of managing positions classified as Bad, in the context of the powers delegated by the Board of Directors making use, where necessary, of the support of external lawyers.

2.2 Management, measurement and control systemsSystems for the management, measurement and control of credit risk are developed within an organisational environment that involves the entire process cycle from the initial investigative phase to the periodical review and monitoring phases.During the initial investigative phase, the bank internally and externally investigates clients that will potentially receive credit and reaches a final decision by considering the overall information on the economic party; this information is the result of direct knowledge of the clients and of the economic environment in which they operate.The initial investigative activities relating to the operational process which will lead to disbursement and the periodic review are implemented in order to grant a suitable credit to each individual case, in accordance with both the autonomous repayment capacity of the party and the technical format of the credit line, plus any collateral guarantees.

In line with the method used by the former Parent Company Veneto Banca, Banca Intermobiliare used the risk parameters (PD and LGD) according to an IRB-like approach, in accordance with the principles of Basel 2, the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD IV).

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



As regards the PD parameter, which the Bank adopted to measure the risk level associated with individual counterparties, through differentiated models according to the segments to which the counterparty belongs (Retail and Corporate), it is capable of assigning to all clients an evaluation of their risk level, according to the performance data and financial information that characterise them. The rating assigned to each counterparty was used in the processes of loan disbursement and renewal, in the authorisation processes and for monitoring purposes up to November 2017. As regards the LGD parameter, a model was used based on historical recovery data concerning non-performing positions (workout LGD), differentiated on the basis of the characteristics of the relationship. The PD and LGD parameters were used, according to the provisions of the IAS/IFRS international accounting standards, also to calculate the accounting adjustments including the flat-rate provisions set aside on performing loans and impaired loans under the threshold.Since it left the Veneto Banca Group the rating model, in being up to November 2017, has no longer been used by Banca Intermobiliare. Meetings are currently in progress with external suppliers in order to obtain a new rating engine in line with the Bank’s needs.

Credit risk is managed with the aid of procedures and tools which allow a timely identification of positions that present particular anomalies. On the basis of data showing impairment factors, loans are classified as Performing/Watchlist, Impaired Past-due Exposure, Probable Default - Restructured, Probable Default - Impaired Forborne, Significant Impaired Past-due Exposure, Probable Default - Watchlist or Non-performing. Credit controls are based on activities which are implemented with different frequencies (daily, weekly, monthly, quarterly and annually), all of which are dedicated to the recording (automatic and manual) of indices which could warn of potential impairment in the quality of the authorised credit line: anomalous trends of the relationships, loss of value of ancillary guarantees, negative returns on the system (Central Credit Register, CAI, CERVED, etc.).

Banca Intermobiliare uses the risk management and monitoring applications supplied by the IT provider SEC: GDC (acronym for Gestione Del Credito or Management Of Credit) and Ge.Sco. (acronym for Gestione Sconfinamenti or Management of Over-the Limit Positions) which allow for improved focusing on the irregularities that characterise individual positions, identifying the managerial action plans aimed at removing them and/or more effective monitoring and hedging of credit risk, assigning also the management classification considered to be the most appropriate.

Anomalous trends of the relationships: • daily auditing activities in relation to overdrafts (overdrafts procedure of Cedacri), which are automatically managed

on the basis of the grid of powers of authorisation delegated by the Board of Directors to the various departments within the company;

• weekly monitoring of the main over-the-limit exposures or exposures which have past-due instalments;• monthly reporting of Impaired Past-due Exposure positions, pre Impaired Past-due Exposure and pre Impaired Past-due

Exposure positions, with subsequent weekly monitoring thereof and identification of the best credit risk management strategies;

• periodic monitoring of audit activities, for cases with expired credit lines assigned for internal validation.

Loss of value of ancillary guarantees:• weekly audit of the suitability of secured guarantees through the Idea “Collateral monitoring” application;• annual verification of appropriateness of mortgage guarantees using Nomisma and for exposures exceeding €/Mln 3

and three-yearly audits with checks by independent technical experts commissioned by the competent Parent-Bank functions.

Negative returns on the system:• verification of anomalies that are automatically detected with reference to return feeds from Bank of Italy;• verification of the client reports from CAI;• verification every two weeks of negative notifications extracted from Cerved.

As regards concentration risk (as defined in the current legislation, that is the risk deriving from exposures to single counterparties or groups of related clients - concentration by single borrower or single name - or counterparties operating in the same economic segment or geographical area - geo-sectoral concentration), concentrations involving the various business segments and involving economic groups most exposed in relation to the Group are monitored.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



2.3 Credit risk mitigation techniquesIn the development of the operational process which leads to the allocation of a credit line, the assessment of creditworthiness is, first of all, based on the effective capacity of the debtor to meet its obligations and its capacity to generate adequate cash flows (defined by the Supervisory Body as the “debt fulfilment” capacity of the debtor). In connection with the granting of credit lines, Banca Intermobiliare acquires secured guarantees on financial instruments, real guarantees on properties as well as personal guarantees (independent guarantee agreements and/or sureties).A prudential spread is applied to the value of the secure guarantees which varies in relation to the types of pledge securities; given the rotating nature of the pledges acquired, the congruity of the secured guarantees is monitored on a weekly basis using the Idea “collateral monitoring” procedure, which makes it possible to compare the current value of the guarantees with their historic value. The haircuts required by internal regulations are applied to the acquisition of mortgage guarantees; these are primarily differentiated on the basis of the type of property and the purposes for which the loan is requested. As required by the rules issued by the Supervisory Body, the values of the guarantees themselves are updated periodically.The guarantees received by the Bank are drafted with contractual methods based on consistent sector standards and with the most recent legal developments.To mitigate credit/counterparty risk, margining contracts are stipulated; their aim is to guarantee Bank exposure with clients in relation to OTC (Over The Counter) financial instruments. The monitoring of these positions is implemented by the Risk Management Department. ISDA contracts (International Swaps and Derivatives Association contracts, considered to be the market benchmark contract) are utilised to mitigate counterparty risk; these contracts allow the bank to benefit from a regulatory framework which guarantees against the potential netting/unwinding of positions with insolvent counterparties.

2.4 Impaired financial assetsIn Banca Intermobiliare impaired receivables are managed by specialised structures set up within the Loans Department. In October 2017 a new Loans in Dispute Unit was set up to manage Non-Performing Loans. Previously the largest doubtful positions, restructured loan positions and/or positions being restructured and non-performing loans were, in fact, managed by specific units of the former Parent Company, Veneto Banca.

The Problem Loans Unit carries out the following activities:• it monitors periodically the quality of the assets;• it suggests classification of the positions into the various risk classes;• it manages Impaired Past-due Exposure and Probable Default (Watchlist, Restructured and Impaired Forborne) positions

within the powers established by the board of directors;• it supplies assistance and advisory services to the network for the stipulation of payback and renegotiation agreements

in support of clients;• it carries out actions aimed at recovering loans that are in default within the autonomous framework attributed to it;• proposes detailed allocations on watch list positions in excess of €/thou 250;• it manages the negotiation and conclusion of restructuring or renegotiation agreements; • for the more significant positions, subsequent to the resolution to classify the loan as watchlist by the competent body,

it manages the activities related to conclusions of agreements for repayment, declaration of default and, in the event of a negative outcome of the latter, handles the transition of the loan to “non-performing”;

• it provides instructions regarding the eventual revocation of credit lines;• it provides instructions regarding the eventual severing of relations;• it carries out a periodic verification on the congruity of the provisions set aside on the positions being managed;• it handles all the stages regarding recovery of positions that have become non-performing, calculating the necessary

value adjustments.

The Loans in Dispute Unit carries out the following activities:• Legal management of court cases launched in order to protect and recover loans classified as bad; • Legal management of court cases launched in order to protect and recover loans with classification different from bad; • Management of property foreclosures for probable default positions after serving of the notice pursuant to art.498 of

the Code of Civil Procedure; • Out-of-court management of loans of a modest amount and/or of loans without guarantees usefully enforceable and

for which it is not economically convenient to take court action; • Management and administration, from the accounting point of view, of loans classified as bad; • Performance of first-level audits for the areas of responsibility of the Unit; • Engagement and management of fiduciary lawyers; • Assessment of the recoverability of loans at the moment of classification as bad and subsequent analytical write-

downs for impairment.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



The assessment criteria for impaired financial assets refer to the related Problem Loan Management Policy issued by the former Parent Company Veneto Banca and implemented over the past years by Banca Intermobiliare. Since February 2018 Banca Intermobiliare has had an autonomous Lending Policy and, in the context of this, a specific Regulation for the classification, measurement and writing off of financial assets. These criteria specify:a. for non-performing loans, analytical assessments on positions over €/thou 250, flat-rate for lower amounts;b. for probable defaults - watch-list and forborne non-performing positions, analytical assessments on positions over

€/thou 250, flat-rate for lower amounts;c. for the probable defaults - restructured loans, analytical assessments, which can incorporate in the write-downs

the discounted charge of any renegotiation of the rate at conditions below the original contractual rate;d. for past-due and impaired exposures, these are written down on a flat-rate basis by applying certain percentages based

on historical/statistical data.

It should be noted that, with reference to the EBA provisions on the subject, the internal regulations have introduced the definition of “forbearance”, distinguishing the two main categories of “forborne performing” and “forborne non-performing”. The same provisions set out the characteristics for which in the case of “new forbearance”, in view of the financial difficulties of the customer, the same can be understood as a measure of forbearance. The provisions also define the time limit of permanence in the status of “forborne” for those positions with tolerance measures, depending on the type of classification. At the same time as the introduction of new rules regarding “forborne measures”, a series of computer-based systems were introduced through which, by using the concession and credit management application systems, one can map specific forborne positions. For quantification of exposure of forborne credits please refer to the following quantitative information in Section A “Credit Quality”. The management of these loans is based on observing the principle of cost-effectiveness and, in this context, we favour out-of-court solutions with short-term payments with rather than judicial actions in view of their cost and their duration. In any case a remarkable quickness of recourse to legal action is assured where the seizable assets appear sufficient for complete recovery of the receivable or of a significant portion. Normally, we use external law firms on which we focus the majority of ordinary activities of recovery.

The assessment of non-performing loans is updated during all phases of the credit recovery management depending on changes in fact and in law, and in any case at least every quarter. At least quarterly, the forecasts are also updated on passive lawsuits other than debt recovery (claw-back, lawsuits relating to investment services, disputes on payment cheques, etc.). Monthly and/or quarterly reports are prepared for the General Manager. This information is also brought to the attention of the Board of Directors, for any appropriate resolutions, and of the Board of Statutory Auditors.

As regards, finally, the factors that determine return to performing status of positions in probable default there are no predefined rules, but this is performed on a case by case basis, subject to assessment of termination of the conditions that generated the impairment, with a special resolution passed by the competent body.

In 2017, Banca Intermobiliare did not purchase any impaired receivables.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E




A. CREDIT QUALITY

A.1 IMPAIRED AND PERFORMING CREDIT EXPOSURES: AMOUNTS, VALUE ADJUSTMENTS, MOVEMENTS, ECONOMIC AND TERRITORIAL DISTRIBUTION

A.1.1 Distribution of financial assets by portfolio and credit quality (book values)

Portfolios/quality Non-performing loans

Probable defaults

Impaired expired

exposures

Non-impaired past-due

exposures

Non-impaired assets

Total

1. Financial assets available for sale - - - - 402,338 402,338


3. Loans to banks - - - - 108,090 108,090

4. Loans to clients 150,209 93,019 2,213 28,308 357,831 631,580

5. Financial assets designated at fair value - - - - - -

6. Financial assets held for sale - - - - 600 600

Total 2017 150,209 93,019 2,213 28,308 868,859 1,142,608

Total 2016 159,934 129,653 6,186 17,075 1,726,093 2,038,941

The Forborne Exposures of the “Loans to clients” portfolio, were €/Mln 118.4 for non-performing loans, €/Mln 57.3for Probable Defaults. In Non-impaired assets forborne exposures were €/Mln 18.5.

Details of non-impaired past-due exposuresIFRS 7 requires that for each financial asset that has not seen a reduction in value, the seniority should be provided of the past-due payments that are recognised when the counterparty fails to pay on the contractually due deadlines.On the basis of the definition of expired exposures provided by the aforesaid principle, the above table gives an analysis of seniority of exposures in relation to which the customer has failed to fulfil the payment of the amount due within the time provided for contractually. In addition, the amount indicated in the above table refers to overall exposure, regardless that is of the past-due instalment, which generally represents a non-significant proportion of the loan.

Exposure at 31.12.2017

Net non-impaired

exposures

Net non-past-due

exposures

Non-impaired past-due exposure

up to 3 months

From more than 3 months

to 6 months


to 1 year

More than 1 year

Loans to banks 108,090 - x x x x

Loans to clients 386,139 357,831 27,539 479 290 -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Exposure at 31.12.2016

Net non-impaired

exposures

Net non-past-due

exposures


up to 3 months


to 6 months


to 1 year

More than 1 year


Loans to clients 547,312 530,237 12,090 3,775 1,209 433

A.1.2 Distribution of credit exposures by portfolio they belong to and credit quality (gross and net values)

Portfolios/quality Impaired assets Non-impaired assets Total (net

exposure)Gross

exposureSpecific

adjustmentsNet

exposureGross

exposureSpecific

adjustmentsNet

exposure

A. Banking Group

1. Financial assets available for sale - - - 402,338 - 402,338 402,338

2. Financial assets held to maturity - - - - - - -

3. Loans to banks - - - 108,090 - 108,090 108,090

4. Loans to clients 623,051 (377,610) 245,441 388,989 (2,850) 386,139 631,580

5. Financial assets designated at fair value - - - - - - -

6. Financial assets held for sale - - - 600 - 600 600

Total 2017 623,051 (377,610) 245,441 900,017 (2,850) 897,167 1,142,608

Total 2016 631,014 (335,241) 295,773 1,746,359 (3,191) 1,743,168 2,038,941

Portfolios/quality Assets of evident low credit quality Other Assets

Accumulated capital losses

Exposure on the balance sheet

Net Exposure

1. Financial assets held for trading - 136 43,994

2. Hedging derivatives - - 1,607

Total 2017 - 136 45,601

Total 2016 - - 114,691

“Blank settlement” and “settlement for ongoing concerns”In its letter of 10 February 2014, the Bank of Italy requested us to provide adequate information on the size and evolution of the exposures subject to “blank settlements” and “settlements for ongoing concerns” which are to be classified within the impaired assets. In particular, the debtor may lodge an appeal for a “blank settlement” with creditors and shall accompany the application with only the financial statements for the past three financial years and the nominative list of creditors, reserving the right to submit the proposal, the plan and the additional documentation provided for, within a time limit set by the Court between sixty and one hundred and twenty days (in case of justified reasons, the time limit may be extended by an additional 60 days). Within that period the debtor also has the opportunity to ask the Court to approve a debt rescheduling agreement.On the other hand, the provision for “settlement for ongoing concerns” allows debtors in a state of crisis to present a settlement plan involving one of the following three assumptions: (i) continuation of the business by the debtor itself, (ii) sale of the company in the financial year, (iii) transfer of the company to one or more companies, also a newly-established one.The changes (law 134/2012 conversion of Italian Law Decree 83/2012 - so-called “Development Decree”-and Italian Law 98/2013 conversion of Italian Law Decree 69/2013) were introduced with the aim of promoting the early

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



emergence of the entrepreneur’s compliance difficulties and to encourage the continuation of business under certain conditions.With reference to the situation of Banca Intermobiliare, we should specify that at 31 December 2017 in the loan portfolio with loans to clients there are gross exposures for “blank settlements” and “settlements for ongoing concerns” for €/Mln 11.2 (€/Mln 5.8 at 31.12.2016), classified as probable defaults.

A.1.3 Banking group - On- and off-balance-sheet loan exposures to banks: gross and net values and maturity bands

Type of exposures/values Gross exposure

Spec

ific w

rite-

dow

ns

Port

folio

val

ue

adju

stm

ents

Net E

xpos

ureImpaired assets Performing

loans

Up to

3

mon

ths

From

mor

e th

an 3

mon

ths

to 6

mon

ths

From

mor

e th

an 6

mon

ths

to 1

yea

r

Ove

r 1 y

ear

A. CASH EXPOSURES

a) Non-performing loans - - - - x - - -

- of which: forborne exposures - - - - x - - -

b) Probable defaults - - - - x - - -


c) Impaired past-due exposures - - - - x - - -


d) Non-impaired past-due exposures x x x x - - - -

- of which: forborne exposures x x x x - - - -

e) Other non-impaired exposures x x x x 143,509 - - 143,509


TOTAL A - - - - 143,509 - - 143,509

B. OFF-BALANCE-SHEET EXPOSURES

a) Impaired - - - - - - -

b) Non-impaired x x x x 11,234 - - 11,234

TOTAL B - - - - 11,234 - - 11,234

TOTAL A+B - - - - 154,743 - - 154,743

A.1.4 Banking Group: On-balance-sheet loan exposures to banks: trend of gross impaired exposuresNot applicable.

A.1.4 bis Banking Group: On-balance-sheet loan exposures to banks: trend of gross forborne exposures distinguished by credit qualityNot applicable.

A.1.5 Banking Group: On-balance-sheet loan exposures to banks: overall value adjustmentsNot applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.1.6 Banking Group: On- and off-balance-sheet loan exposures to clients: gross and net values and maturity bands


Spec

ific w

rite-

dow

ns

Port

folio

val

ue a

djus

t -m

ents

Net E

xpos

ureImpaired assets Peform-

ing

Up to

3

mon

ths

From

mor

e th

an 3

mon

ths

to 6

mon

ths

From

mor

e th

an 6

mon

ths

to 1

yea

r

Ove

r 1 y

ear

A. CASH EXPOSURES

a) Non-performing loans 118 655 2,872 475,561 x (328,997) - 150,209

- of which: forborne exposures 118 - 2,024 116,300 x (85,019) - 33,423

b) Probable defaults 47,880 5,531 32,244 55,583 x (48,219) - 93,019

- of which: forborne exposures 30,309 1,403 8,581 17,002 x (18,895) - 38,400

c) Impaired past-due exposures 5 2,358 244 - x (394) - 2,213


d) Non-impaired past-due exposures x x x x 28,700 - (392) 28,308


e) Other non-impaired exposures x x x x 761,374 - (2,458) 758,916

- of which: forborne exposures x x x x 18,572 - (113) 18,459

TOTAL A 48,003 8,544 35,360 531,144 790,074 (377,610) (2,850) 1,032,665

B. OFF-BALANCE-SHEET EXPOSURES -

a) Impaired 618 - - - x (1) x 617

b) Non-impaired - - - - 64,468 - (102) 64,366

TOTAL B 618 - - - 64,468 (1) (102) 64,983

TOTAL A+B 48,621 8,544 35,360 531,144 854,542 (377,611) (2,952) 1,097,648

The amount of impaired forborne exposures, which in the “cure period” do not present past-due amounts included in the past-due band “Up to 3 months”, were at 31.12.2017 a gross amount of €/thou 32,234 and a net amount of €/thou 26,464 (at 31.12.2016 gross amount of €/thou 22,191 and net amount of €/thou 17,911) of which probable defaults for the following categories:• watchlist and restructured for a gross amount of €/thou 13,855 and a net amount of €/thou 10,253 (at 31.12.2016

gross amount of €/thou 10,887 and net amount of €/thou 9,420);• forborne non-performing positions for a gross amount of €/thou 18,379 and a net amount of €/thou 16,211

(at 31.12.2016 gross amount of €/thou 11,304 and net amount of €/thou 8,491).

Non-performing loans with debtors subject to insolvency proceduresBank of Italy Circular No. 272 of 30 July 2008 (and subsequent updates) provides for the right to proceed to derecognise any non-performing loans for the portion of the amount deemed unrecoverable. The regulation states that conditions for derecognition of the loan include the decision taken by the competent corporate bodies which, with specific deliberation, have definitively taken note of the non-recoverability of all or part of a claim or have waived recovery on the grounds of cost-effectiveness. Banca Intermobiliare did not avail itself of this option in 2017, or in prior years.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.1.7 Banking group - On-balance-sheet loan exposures to clients: movements of gross impaired exposures

Description/Category Non-performing loans

Probable defaults

Impaired expired exposures

A. Opening gross exposure 446,068 177,500 7,447

- of which: exposures transferred but not derecognised - - -

B. Increases 43,378 45,892 6,746

B.1 Inflows from performing credit exposures 818 30,043 6,675

B.2 transfers from other categories of impaired exposures 41,588 11,533 1

B.3 other increases 972 4,316 70

C. Decreases (10,240) (82,154) (11,586)

C.1 Outflows from performing credit exposures - (2,921) (321)

C.2 derecognitions (142) - -

C.3 collections (9,322) (37,654) (478)

C.4 realisations on sales - - -

C.5. losses on disposal - - -

C.6 transfers to other categories of impaired exposures (768) (41,567) (10,787)

C.7 other decreases (8) (12) -

D. Closing gross exposure 479,206 141,238 2,607


A.1.7 bis Banking group - On-balance-sheet loan exposures to clients: trend of gross forborne exposures distinguished by credit quality

Description/Category Forborne exposures: impaired

Forborne exposures: non-impaired

A. Opening gross exposure 171,074 29,075

- of which: exposures transferred but not derecognised - -

B. Increases - -

B.1 inflows from performing exposures not subject to forbearance 8,589 5,227

B.2 inflows from performing exposures not subject to forbearance 6,554 x

B.3 inflows from exposures subject to non-performing forbearance x 2,302

B.4 other increases 9,369 336

C. Decreases - -

C.1 outflows from performing exposures not subject to forbearance x -

C.2 outflows from performing exposures subject to forbearance (2,302) x

C.3 outflows from performing exposures subject to non-performing forbearance - (6,554)

C.4 derecognitions x -

C.5 collections (16,102) (11,816)

C.6 realisations on sales - -

C.7 losses on sales - -

C.8 other decreases (1,445) -

D. Closing gross exposure 175,737 18,572


NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.1.8 Banking Group - On-balance-sheet loan exposures to clients: trend of overall value adjustments

Description/Category Non-performing loans Probable defaults Impaired expired exposures

Total Of which forborne



A. Opening overall adjustments 286,136 69,423 47,846 18,554 1,261 -

- of which: exposures transferred but not derecognised - - - - - -

B. Increases 48,723 18,116 24,522 14,789 975 -

B.1 Value adjustments 35,484 8,701 22,309 14,789 975 -

B.2 losses on sales 183 - - - - -

B.3 transfers from other categories of impaired exposures 13,056 9,415 2,213 - - -B.4 other increases - - - - - -

C. Decreases (5,862) (2,520) (24,149) (14,448) (1,842) -

C.1. write-backs - - - - - -

C.2. write-backs for collection (3,337) (762) (10,772) (5,033) (6) -

C.3. gains on sales - - - - - -

C.4. derecognitions (142) (1,758) - - - -

C.5 transfers to other categories of impaired exposures (429) - (13,053) (9,415) (1,788) -

C.6 other decreases (1,954) - (324) - (48) -

D. Closing overall adjustments 328,997 85,019 48,219 18,895 394 -


NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.2 CLASSIFICATION OF EXPOSURES ON THE BASIS OF EXTERNAL AND INTERNAL RATINGSBanca Intermobiliare, for the purposes of determining the Internal Capital for credit risk, uses the standardised approach (comprehensive method) which is required for determining the supervisory requirements associated with credit risk. The standardised methodology provides the subdivision of exposures into various classes (portfolios) on the basis of the nature of the counterparty, the technical characteristics of the relationship or the methods of implementation of the latter; in addition, diversified weighting coefficients are applied to each portfolio.

In particular Banca Intermobiliare, for the purpose of determining the weighting factors of exposures, uses the following credit ratings issued by the specialized agencies as per ECA/ECAI Communication chosen under Circular no. 263 (Tit. II, Chap. 1, Part One, Section II, par. 2.1):

Portfolios ECA/ECAI Rating characteristics

Exposures with reference to central administrations and central banks DBRS Ratings Limited Unsolicited

Exposures with reference to multilateral development banks Moody’s Solicited

Exposures with reference to companies and other parties Moody’s Solicited

Exposures with reference to undertakings for collective investments (UCIs) Moody’s Solicited

Portfolios ECA/ECAI

Positions with reference to securitisations that have a short-term rating Standard & Poor’s Moody’s - Fitch

Positions with reference to securitisations that do not have a short-term rating Standard & Poor’s Moody’s - Fitch

As for other exposures not included within the regulatory classes listed above, reference is made to the various weighting factors which are provided by the regulations themselves for the standardised methodology.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.2.1 Banking group - On- and off-balance sheet loan exposures divided by external rating classes Exposures External rating classes Without

ratingTotal 2017AAA/AA- A+/A- BBB+/BBB- BB+/BB- B+/B- Below B-

A. On-balance-sheet exposures 2,512 495 380,759 11,593 42 - 788,976 1,184,377

B. Derivatives - - - - - - 12,643 12,643

B.1 Financial derivatives - - - - - - 8,674 8,674

B.2 Credit derivatives - - - - - - 3,969 3,969

C. Guarantees issued - - - - - - 14,219 14,219

D. Commitments to issue funds - - - - - - 41,547 41,547

E. Other - - 532 - 84 - 5,731 6,347

Total 2,512 495 381,291 11,593 126 - 863,116 1,259,133

Exposures External rating classes Without rating

Total 2016AAA/AA- A+/A- BBB+/BBB- BB+/BB- B+/B- Below B-

A. On-balance-sheet exposures 16,106 4,988 662,822 36,537 4,988 46 1,455,456 2,180,943

B. Derivatives - - - - - - 26,918 26,918





E. Other 10 823 33,289 11,054 374 - 3,789 49,339

Total 16,116 5,811 696,111 47,591 5,362 46 1,534,728 2,305,765

A.2.2 Distribution of on- and off-balance sheet loan exposures divided by internal rating classes Not applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.3 DISTRIBUTION OF GUARANTEED LOAN EXPOSURES BY TYPE OF GUARANTEE

A.3.1 Banking group - guaranteed loan exposures with banks

Valu

e of

net

exp

osur

e Collateral (1) Personal guarantees (2) Total 2017

(1)+(2)Credit derivatives Credit commitments

C L

N Other derivativesRe

al E

stat

e -

mor

tgag

es

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er g

uara

ntee

s re

al

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balan-ce-sheet loan exposures: 16,056 - - 15,153 - - - - - - - - - - 15,153

1.1. Totally guaranteed 16,056 - - 15,153 - - - - - - - - - - 15,153

- of which impaired

1.2. partially guaranteed - - - - - - - - - - - - - - -

- of which impaired - - - - - - - - - - - - - - -

2. Guaranteed “off-balan-ce sheet” loan exposures:

2.1. Totally guaranteed - - - - - - - - - - - - - - -




Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er g

uara

ntee

s re

al

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balan-ce-sheet loan exposures: 12,269 - - 12,151 - - - - - - - - - - 12,151


- of which impaired



2. Guaranteed “off-balan-ce sheet” loan exposures:





NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.3.2 Banking group - guaranteed loan exposures to clients

Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er g

uara

ntee

s re

al

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balan-ce-sheet loan exposures: 561,934 365,103 - 110,246 18,707 - - - - - - - 251 36,072 530,379

1.1. Totally guaranteed 485,332 331,118 - 105,299 14,817 - - - - - - - 251 33,772 485,257

- of which impaired 178,635 147,061 - 6,987 1,213 - - - - - - - - 23,347 178,608

1.2. partially guaranteed 76,602 33,985 - 4,947 3,890 - - - - - - - - 2,300 45,122

- of which impaired 47,124 31,592 - 2,658 - - - - - - - - - 2,300 36,550

2. Guaranteed “off-balan-ce sheet” loan exposures: 12,981 - - 7,904 1,006 - - - - - - - - 3,985 12,895

2.1. Totally guaranteed 11,736 - - 6,996 1,004 - - - - - - - - 3,735 11,735


2.2. partially guaranteed 1,245 - - 908 2 - - - - - - - - 250 1,160

- of which impaired 250 - - - - - - - - - - - - 250 250

Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er g

uara

ntee

s re

al

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ks

Othe

r pub

lic e

ntiti

es

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balan-ce-sheet loan exposures: 769,720 437,843 - 186,445 31,835 - - - - - - - - 58,944 715,067

1.1. Totally guaranteed 653,425 397,343 - 160,996 26,219 - - - - - - - - 54,448 639,006


1.2. partially guaranteed 116,295 40,500 - 25,449 5,616 - - - - - - - - 4,496 76,061

- of which impaired 44,955 16,061 - 9,204 97 - - - - - - - - 4,496 29,858

2. Guaranteed “off-balan-ce sheet” loan exposures: 18,867 300 - 9,344 1,475 - - - - - - - - 7,478 18,597



2.2. partially guaranteed 5,438 300 - 1,591 6 - - - - - - - - 3,271 5,168

- of which impaired 3,271 - - - - - - - - - - - - 3,271 3,271

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



B. DISTRIBUTION AND CONCENTRATION OF LOAN EXPOSURES

B.1 BANKING GROUP - DISTRIBUTION OF ON- AND OFF-BALANCE SHEET LOAN EXPOSURES TO CLIENTS (BOOK VALUES) BY SEGMENT

Exposures/counterparties Governments Other public entities Financial companiesNe

t exp

osur

e

Valu

e ad

just

men

ts

spec

ific

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Valu

e ad

just

men

ts

spec

ific

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Valu

e ad

just

men

ts

spec

ific

Valu

e ad

just

men

ts o

f por

tfol

io

A. On-balance sheet exposures

A.1 Non-performing loans - - - - - - 2,431 16,989 -

- of which: forborne exposures - - - - - - 410 11,882 -

A.2 Probable defaults - - - - - - 606 461 -

- of which: forborne exposures - - - - - - - - -

A.3 Impaired past-due exposures - - - - - - - - -

- of which: forborne exposures - - - - - - - - -A.4 Other exposures 373,477 - - 2,930 - - 72,072 - 573

- of which: forborne exposures - - - - - - - -

TOTAL A 373,477 - - 2,930 - - 75,109 17,450 573

B. Off-balance sheet exposures

B.1 Non-performing loans - - - - - -

B.2 Probable defaults - - - - - - - - -

B.3 Other impaired assets - - - - - -

B.4 Other exposures 25,180 - - - 12,060 1

TOTAL B 25,180 - - - - - 12,060 - 1

Total 2017 398,657 - - 2,930 - - 87,169 17,450 574

Total 2016 598,907 - - - - x 110,340 17,687 649

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Exposures/counterparties Insurance companies Non-financial companies Other parties

Net e

xpos

ure

Valu

e ad

just

men

ts

spec

ific

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Valu

e ad

just

men

ts

spec

ific

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Valu

e ad

just

men

ts

spec

ific

Valu

e ad

just

men

ts o

f por

tfol

io


A.1 Non-performing loans - - - 114,988 261,571 - 32,790 50,437 -

- of which: forborne exposures - - - 22,561 66,833 - 10,452 6,304 -

A.2 Probable defaults - - - 73,178 38,267 - 19,235 9,491 -

- of which: forborne exposures - - - 26,478 14,437 - 11,922 4,458 -

A.3 Impaired past-due exposures - - - 1,996 354 - 217 40 -

- of which: forborne exposures - - - - - - - - -

A.4 Other exposures 205 - - 145,638 - 1,238 192,902 - 1,039

- of which: forborne exposures - - - 17,277 - 106 1,182 - 7

TOTAL A 205 - - 335,800 300,192 1,238 245,144 59,968 1,039



B.2 Probable defaults - - - 269 - - 348 1 -


B.4 Other exposures - - 14,718 45 10,824 57

TOTAL B - - - 14,987 - 45 11,172 1 57

Total 2017 205 - - 350,787 300,192 1,283 256,316 59,969 1,096

Total 2016 - - - 498,204 261,069 2,148 391,208 56,516 856

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



B.2 BANKING GROUP - GEOGRAPHICAL DISTRIBUTION OF ON- AND OFF-BALANCE SHEET LOAN EXPOSURES TO CLIENTS (BOOK VALUES)

Exposures/geographical areas ITALY OTHER EUROPEAN COUNTRIES

AMERICA ASIA REST OF WORLD

Espo

sizio

ne n

etta

Rett

ifich

e di

val

ore

com

ples

sive

Espo

sizio

ne n

etta

Rett

ifich

e di

val

ore

com

ples

sive

Espo

sizio

ne n

etta

Rett

ifich

e di

val

ore

com

ples

sive

Espo

sizio

ne n

etta

Rett

ifich

e di

val

ore

com

ples

sive

Espo

sizio

ne n

etta

Rett

ifich

e di

val

ore

com

ples

sive


A.1 Non-performing loans 149,772 328,734 420 243 17 20 - - - -

A.2 Probable defaults 93,018 48,219 1 - - - - - - -

A.3 Impaired past-due exposures 2,213 394 - - - - - - - - A.4 Other exposures 781,422 2,834 5,096 11 194 1 507 4 5 -

TOTAL 1,026,425 380,181 5,517 254 211 21 507 4 5 -


B.1 Non-performing loans - - - - - - - - - -

B.2 Probable defaults 617 1 - - - - - - - -

B.3 Impaired past-due exposures - - - - - - - - - - B.4 Other exposures 49,832 96 12,936 7 14 - - - - -

TOTAL 50,449 97 12,936 7 14 - - - - -

TOTAL 2017 1,076,874 380,278 18,453 261 225 21 507 4 5 -

TOTAL 2016 1,582,118 338,602 6,705 283 9,202 39 413 1 221 -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



B.3 BANKING GROUP - GEOGRAPHICAL DISTRIBUTION OF ON- AND OFF-BALANCE SHEET LOAN EXPOSURES TO BANKS (BOOK VALUES)

Exposures/geographical areas ITALY OTHER EUROPEAN COUNTRIES


Net e

xpos

ure

Tota

l adj

ustm

ents

Net e

xpos

ure

Tota

l adj

ustm

ents

Net e

xpos

ure

Tota

l adj

ustm

ents

Net e

xpos

ure

Tota

l adj

ustm

ents

Net e

xpos

ure

Tota

l adj

ustm

ents


A.1 Non-performing loans - - - - - - - - - -

A.2 Probable defaults - - - - - - - - - -

A.3 Impaired past-due exposures - - - - - - - - - -

A.4 Other exposures 121,520 - 21.714 - 144 - - - 131 -

TOTAL 121,520 - 21.714 - 144 - - - 131 -



B.2 Probable defaults - - - - - - - - - -

B.3 Other impaired assets - - - - - - - - - -

B.4 Other exposures 1,451 - 3,559 - - - - - - -

TOTAL 1,451 - 3,559 - - - - - - -

TOTAL 2017 122,971 - 25,273 - 144 - - - 191 -

TOTAL 2016 597,487 - 64,101 - 45 - - - 191 -

B.4 LARGE EXPOSURES (IN ACCORDANCE WITH SUPERVISORY REGULATIONS)Presented below is the disclosure of the consolidated financial statements of Banca Intermobiliare related to “large exposures” as per Regulation (EU) no. 680/2014 Annex IX which establishes the implementing technical standards on the subject of large exposures under the terms of Regulation (EU) no. 575/2013. The supervisory body defines “large exposure” as the exposure of an entity to a customer or a group of connected clients, when its value is equal to or greater than 10% of its Own Funds.

A customer is an individual person or a “group of connected clients” this being two or more persons who together constitute a unified whole as regards risk, since:

a) one of the persons has the power to control the other or others, whether directly or indirectly (a “legal” connection);

b) regardless of the existence of relationships of control, there are among the persons in question relations which are such that, in all probability, if one of them were to be in a position of financial difficulty, particularly insofar as raising funds or repaying debts, the other, or all the others, could encounter difficulties in repaying their debts (an “economic” connection).

At 31 December 2017, there existed certain risk positions, weighted as the specific rules require, which constitute “large exposures” pursuant to the supervisory regulations. As required by the Bank of Italy, consolidated large exposures are presented below with an indication of the book value and the weighted value.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Exposure to large exposures

(Millions of €)

31.12.2017 31.12.2016


a) Amount 984 262 2,072 310

b) Number 12 12 13 13

Exposure to large exposures - by category

(Millions of €)

31.12.2017 31.12.2016


Impaired 3 74 70 4 110 96

Clients 5 101 60 3 131 101

Bim Group companies 1 161 30 - - -

Former Veneto Banca Group companies - - - 1 1,013 28

Banks 1 134 102 3 85 85



At 31.12.2017, excluding from the 12 positions a leading Italian banking group, the exposure towards the companies of the Banca Intermobiliare Banking Group and the institutions (Italian Ministry of the Economy and the Cassa di Compensazione e Garanzia (the Clearing House)), the remaining positions consist of 5 “performing” loan exposures and 3 “impaired” loan exposures for a total weighted exposure of approximately €/Mln 130. Of these one position exceeds the parameters pursuant to Art. 395 paragraph 1 of Regulation (EU) no. 575/2013 (CRR) and relates to the exposure to an impaired customer for which Banca Intermobiliare is studying the possibility of disposing of the receivable.

C. ASSET SECURITISATION AND TRANSFER OPERATIONS

Not applicable.

D. INFORMATION ON STRUCTURED ENTITIES (OTHER THAN COMPANIES FOR SECURITISATION)

Not applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



E. TRANSFER OPERATIONS

A. Financial assets which were transferred but not derecognised


The transactions mainly involve the use of securities in the portfolio for short- and medium/long-term repurchase agreements or securities lending.


E.1 Banking Group - Financial assets transferred but not derecognised: book value and full value

Categories/Portfolio


Financial assets


Financial assets available

for sale

Financial assets held to maturity

Loans to banks

Loansto clients

Total

A B C A B C A B C A B C A B C A B C 2017 2016

A. On-balance- sheet assets

1. Debt securities - - - - - - 48,188 - - - - - - - - - - - 48,188 412,194

2. Equity securities - - - - - - - - - - - - - - - - - - - -

3. UCIs - - - - - - - - - - - - - - - - - - - -

4. Loans - - - - - - - - - - - - - - - - - - - -

B. Derivative Instruments - - - - - - - - - - - - - - - - - - - -

TOTAL 2017 - - - - - - 48,188 - - - - - - - - - - - 48.,188 x

of which impaired - - - - - - - - - - - - - - - - - - - x

TOTAL 2016 8,337 - - - - - 403,857 - - - - - - - - - - - x 412,194

of which impaired - - - - - - - - - - - - - - - - - - x -

Key:A = transferred financial assets that were recognised in full (book value)B = transferred financial assets that were recognised in part (book value)C = transferred financial assets that were recognised in part (full value)

At 31 December 2017, transfer operations that did not involve derecognition of the underlying financial assets were represented by repurchase agreements. For repurchase agreements, the non-derecognition of the security that was the subject of spot sales, comes from the fact that the Bank substantially retains all the risks and benefits associated with the security, having the obligation to repurchase at a forward rate established in the contract. The transferred securities thus continue to be represented in their relevant accounting portfolios; the consideration for the sale is recognised under payables due to banks or to clients, depending on the type of counterparty.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



E.1 Banking group - Financial liabilities related to financial assets transferred but not derecognised: book value

Liability/Asset portfolio Financial assets held for trading

Financial assets


Financial assets

available for sale


Loans to banks

Loans to clients

Total 2017

1. Due to clients

a) in connection with fully booked assets 1,875 - - - - - 1,875

b) in connection with partially booked assets - - - - - - -

2. Due to banks

a) in connection with fully booked assets - - 20,963 - - - 20,963


3. Outstanding securities - - - - - -

a) in connection with fully booked assets - - - - - -

b) in connection with partially booked assets - - - - - -

TOTAL 2017 1,875 - 20,963 - - - 22,838

TOTAL 2016 8,199 - 367,238 - - - 375,437

This table includes liabilities recognised among the payables “Due to clients” or “Due to banks” in relation to transfers of financial assets that did not result in derecognition, as shown at the bottom of the previous table E.1.

E.3 Disposals with liabilities affecting the sold assets exclusively: fair valueNot applicable.

B. Financial assets sold and fully derecognised with recognition of continuing involvement

Not applicable.

F. BANKING GROUP - MODELS FOR MEASURING CREDIT RISK

Please refer to the information of a qualitative nature on credit risk (2.2 Management, measurement and control system).

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1.2 - BANKING GROUP - MARKET RISK

General informationThe governance model defined for the risk management and control process of Banca Intermobiliare and its subsidiaries is based on:• separation between risk management and risk control processes;• development of risk management and control processes in accordance with the Bank’s hierarchical structure and

through a process of delegation.The Board of Directors defines the strategies and its role is one of direction, guidance and verification of compliance with the risk governance structure; in particular, it defines the propensity to market risk by identifying clear lines of responsibility and establishing specific operating limits.The General Manager implements the risk governance, management and control process by ensuring that the latter complies with the strategic guidelines defined by the Board of Directors.The Risk Committee - in relation to all the risks to which the bank is exposed - assesses and approves methodologies and procedures as appropriate, as well as methods for reporting to senior management, in accordance with the strategic guidelines of the Board of Directors. The Risk Management Department - in relation to the management of market risk - is responsible for:• ensuring consistency of internal regulations with the strategies expressed by the Board of Directors in relation to the

assumption of risk;• defining the market risk management model;• proposing the structure of operating limits and supervisory thresholds at the bank level on the basis of the operations

within the Financial Markets Division and market trends;• monitoring the daily operating limits and supervisory thresholds, in compliance with the frequency established by

Group Policies;• verifying proposals for corrective action in relation to the management of cases where risk limits and supervisory

thresholds are exceeded;• identifying - in conjunction with the Financial Markets Division - the market risk contained in new financial

products to be included within the portfolio;• drafting reports to be sent to governance bodies and operational departments of the Group involved in the

management of market risk, including evidence of any potential anomalies.

In regard to market risks, the overall exposure in terms of Value at Risk (VaR) is measured daily and the gain and loss component of the trading books is monitored daily as well. Periodically an assessment is also carried out of the impact on the proprietary portfolio of different development scenarios of the main risk factors (interest rate risk, credit spread, etc…).

Trading book and banking bookIn relation to the integrated management of Banca Intermobiliare’s risks and capital, particular significance is assigned to the presence of the market and/or financial risks to which the Trading book and the Banking book are exposed. The management and quantification of market and/or financial risks is based on a daily analysis of the sensitivity and vulnerability of the proprietary portfolios to adverse market trends in relation to the following risk factors:• exchange rates• interest rates• volatility• stocks and indices• credit spreads• investment funds

In particular, the analysis is structured on different levels which differ in terms of purposes and methodology:1. monitoring of the operating limits as set by the Board of Directors in terms of maximum positions (stock limits);2. monitoring of the overall limits and limits for each operating portfolio in terms of Value at Risk and Stop Loss;3. Stress testing.

For each type of trading activity/strategy, specific operating limits for assumption of risk - both quantitative and qualitative - are defined and compliance with these limits is constantly monitored by the Risk Management Department. In particular, the limits defined by the Board of Directors and adopted in the financial risk policy are based on:• limits in terms of Value at Risk;• concentration limits with the definition of maximum positions (stocks);• limits in terms of daily and monthly stop loss;• financial maximums that limit transactions on an individual exposure (limits for issuer / country / segment).

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Operational Value at RiskThe calculation of the Value at Risk, for management purposes, is done daily; the approach used is of historic simulation with the confidence interval of 99% and a time horizon of 10 days.This type of approach was chosen for three primary reasons:1. no a priori assumptions are made with reference to the distribution of returns;2. the correlation between risk factors is implicitly incorporated without the need for an ad hoc estimate;3. the approach is appropriate for all types of linear and non-linear financial instruments.

The historical simulation of Value at Risk consists of a method involving the full revaluation of all financial contracts on the basis of historical scenarios of risk variables, and assumes that the future distribution of returns of risk factors will be equal to their historical distribution. As the Value at Risk is a summary indicator which does not capture completely all the possible cases of contingent losses, oversight of market risks was supplemented with further analyses and measurements, in particular scenario analyses and stress tests on the risk factors to which the portfolios are exposed. In the presence of optional components sensitivity measures are also used; these enable more accurate measurement and profiling of risks.The system used by Banca Intermobiliare for position keeping, pricing and risk management activity, is the Murex application. We must specify that the operational Value at Risk model is not used for calculating the capital requirements on market risks for supervisory reports to the Bank of Italy, for which the standard approach as provided for in the prudential supervisory rules is adopted.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Trading book - Value at Risk 99% 10 days(effect on net operating income)The precise VaR figure at 31.12.2017 was €/Mln 0.505. The distribution of the VaR among the various segments is as follows:

VaR Trading Book (in €/Mln.) 31.12.2017 31.12.2016

VaR Trading Book - equities/funds 0.074 0.283

VaR Trading Book - bonds 0.698 0.123

VaR Trading Book - change - -

VaR Trading Book (diversified VaR) 0.505 0.264

Annual average VaR (diversified VaR) 0.673 1.145

Annual minimum VaR (diversified VaR) 0.258 0.224

Annual maximum VaR (diversified VaR) 1.070 1.904

The daily trend of the Value at Risk for the Trading Book during 2017 is presented below.

Trading Book - Value at Risk

1,200,000

1,000,000

800,000

600,000

400,000

200,000

dec-17nov-17oct-17sep-17aug-17jul-17jun-17may-17apr-17mar-17feb-17jan-17

0

The 2017 RAF (Risk Appetite Framework), approved by the Board of Directors of Banca Intermobiliare, defined, for the own account trading activity, a total limit in terms of Value at Risk of €/Mln 6; the average use of this risk budget was 11.2%.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Banking book - Value at Risk 99% 10 days(effects on shareholders’ equity)The specific figure at 31.122017 was €/Mln 2.268.The distribution of the VaR among the various segments is as follows:

VaR Banking Book (in €/Mln.) 31.12.2017 31.12.2016

VaR Banking Book - equities/funds 0.158 4.698

VaR Banking Book - bonds 2.645 9.739

VaR overall Banking Book (diversified VaR) 2.268 15.257

Annual average VaR (diversified VaR) 6.239 13.488

Annual minimum VaR (diversified VaR) 2.268 7.966

Annual maximum VaR (diversified VaR) 15.191 18.198

Following is the performance of the value at risk for the Banking Book (AFS) during 2017.

Banking Book - Value at Risk

12,000,000

14,000,000

16,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0dec-17nov-17oct-17sep-17aug-17jul-17jun-17may-17apr-17mar-17feb-17jan-17

The 2017 RAF (Risk Appetite Framework), approved by the Board of Directors of Banca Intermobiliare, defined, for the activity performed in the AFS portfolio, a total limit in terms of Value at Risk of €/Mln 25; the average use of this risk budget was 24.9%.

The VaR, defined for the purposes of obtaining a reasonable estimate of potential losses under normal market conditions, is not proposed and does not cover the analysis of extreme events.The use of stress testing allows the investigation of the impact on the portfolio in particularly adverse conditions, capturing the residual risk and providing information complementary to the VaR.The proprietary portfolio is in fact periodically “stressed” in order to assess its “robustness” under adverse market conditions.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1.2.1 INTEREST RATE RISK AND PRICE RISK - REGULATORY TRADING BOOK


A. General information

Interest rate riskThe strategies underlying the investment policies of the trading book exposed to interest rate risk are essentially the following:• medium/long-term position aimed at assuming directional risk (interest rate and credit risk) on high-quality

government securities;• medium/long-term position aimed at assuming directional risk (interest rate and credit risk) on corporate securities

issued by companies with ratings of at least BBB- or on bonds issued by Italian banks or by “high quality” countries;• arbitrage activities with the assumption of relative and non-directional risk through the hedging of interest rate and/

or credit risk on any category of bonds;• trading operations on high-quality government securities;• trading operations on corporate securities issued by companies with ratings of less than BBB- and/or low quality

government securities.With reference to the strategies summarised above, listed derivative instruments are essentially used for partial hedging against interest rate risk and against potential exchange rate risk for assets that are not in Euro.

Price riskThe strategies underlying the investment policies of the trading book, which is exposed to price risk, are essentially the following:• Arbitrage operations on securities subject to tender offers, mergers (M&A), share capital increases implemented

within the domestic market or in foreign markets; • Positions assumed through the acquisition/sale of Italian and foreign stock securities as well as of convertible bonds

and the related derivative instruments;• Positions involving options on securities and stock indices;• Dividend transactions;• Volatile trading transactions.Transactions involving financial instruments that are not part of the Euro area are generally hedged against the risk of exchange rate fluctuations.

B. Management processes and measurement methods for interest rate risk and price risk

Interest rate riskAs specified in the introduction to Section 2 related to “Market risks”, the management and quantification of interest rate risk is structured along different levels (Operating limits resolved by the Board of Directors, Value at Risk, stress testing).

Price riskWith reference to the first levels of analysis and monitoring of price risk (operating limits deliberated by the Board of Directors, Value at Risk, and stress testing), the same considerations made in the introductory paragraph to Section 2, “Market risks” are applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E




1. Supervisory trading book: distribution by residual duration (re-pricing date) of financial assets and liabilities in cash and financial derivatives

This table has not been provided given that an interest rate sensitivity analysis was supplied on the basis of internal models or other methodologies, such as those illustrated under point 3.

2. Supervisory trading book: distribution of exposure in equity securities and stock indices within the primary countries of the listing market


3. Supervisory trading book: internal models and other methodologies for sensitivity analysis

Interest rate riskThe interest rate risk of the trading book is monitored in terms of Value at Risk and scenario analysis. In particular, a sensitivity analysis is implemented; this allows the measurement of the values of positions within proprietary portfolios following a “shock” to the interest rate curve. Parallel movements are considered, whether upwards are downwards of 100 and 200 basis points on the Euro area yield curve. The effects on the net operating income and the economic result were exclusively quantified for positions classified as HFT and whose mark-to-market changes are directly reflected in the income statement.

Sensitivity analysis of the trading book (Effects on the net operating income - in €/Mln.)

Risk Scenario 31.12.2017 31.12.2016

Interest Rate Euro std + 100 bps (0.296) (0.549)

Interest Rate Euro std - 100 bps 0.319 0.530



NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Price and volatility riskThe price risk of the trading book is monitored in terms of Value at Risk and scenario analysis. In particular, a sensitivity analysis is implemented; it allows the measurement of the values of stock positions within proprietary portfolios following changes in prices and volatility. The effects on net operating income and the economic result were exclusively quantified for positions classified as HFT and whose mark-to-market changes are recognised directly in the income statement.

Sensitivity analysis of the trading book (Effect on net operating income)

Risk Scenario 31.12.2017 31.12.2016

Equity Equity -5% 0.374 0.100

Equity Equity +5% (0.374) (0.100)


Equity Equity +10% (0.748) (0.201)


Equity Equity +20% (1.496) (0.402)


Equity Equity +40% (2.993) (0.804)

Risk Scenario 31.12.2017 31.12.2016

Equity Volatility - 5% - -

Equity Volatility + 5% - -


Equity Volatility + 10% - -


Equity Volatility + +20% - -

1.2.2 INTEREST RATE AND PRICE RISK – BANKING BOOK


A. General information, management procedures and measurement methods for interest rate risk and price risk

Interest rate riskThe interest rate risk related to the banking book primarily derives from:• risks associated with temporal misalignment of deadlines and the repricing of assets, liabilities and off-balance sheet

positions in the short and long term (repricing risk);• risks related to variations in inclination and shape of the yield curve (yield curve risk);• risks deriving from hedging an exposure to an interest rate, with an exposure to a rate that is repriced in slightly

different conditions (basis risk); • risks deriving from options, including embedded options, for example in the event of reimbursement from product

consumers with fixed rates when market rates vary (option risk).Loans granted to clients (for the purposes of developing trading activities in financial markets) are disbursed at variable rates and primarily have short-term or on-demand maturities. The management choices adopted are based on measuring the interest rate risk for the purposes of minimizing the volatility of net interest income or minimizing the volatility of overall economic value when the structure of the interest rates is modified.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Price riskThe price risk of the Banking book is represented by equity security, hedge fund and mutual investment fund positions which are held for primarily strategic purposes. These are primarily positions of a directional nature and can be operationally classified under the finance division (investments in alternative funds, securities within the AFS portfolio); despite not having the pre-requisites required to be considered as part of the trading book, they are managed by the division which implements trading activities and are monitored in terms of Value at Risk and strategic shareholdings.

B. Fair value hedges

The hedging is carried out at an integrated level for the entire Group by the Financial Markets Department in order to protect against changes in the fair value of deposits and loans caused by market movements in the interest rate curve.The types of derivatives used are interest rate swaps (IRS), cross currency swaps (CCS) and interest rate options (IRO). The hedges made are in turn replicated in the market so that the hedge corresponds to valid requirements in order to be inserted in the Hedge Accounting module, in compliance with the IAS compliant qualification at the consolidated financial statement level.

C. Cash flow hedges

No hedging activities are carried out to hedge interest rate risk by means of “cash flow hedges”.


1. Banking book: distribution by residual duration (re-pricing date) of financial assets and liabilities


2. Banking book: internal models and other methodologies for sensitivity analysis

Interest rate riskThe interest rate risk of the banking book is monitored with the help of a sensitivity analysis that makes it possible to measure the changes in the value of the positions of the assets in the proprietary financial portfolios following the “shock” of the interest rate curve. Parallel movements of 100/200 bps in the Euro area market interest rate curve are taken into account.

Sensitivity analysis: banking book (only debt securities of the AFS portfolio)

Risk Scenario 31.12.2017 31.12.2016





NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Inoltre, è effettuata un’analisi di sensitività relativa a tutto il Banking Book.

Sensitivity analysis: banking book (overall)(Values expressed in percentage points)

Risk index due to shift (+/-) +100 bp -100 bps

Economic value at risk / Regulatory Capital 0.58% 0.91%

Banca Intermobiliare has an exposure to interest rate risk that is substantially neutral to the variations in interest rates. As a consequence, the economic value at risk is fully compatible with the Regulatory Capital and significantly lower than the warning threshold (20% with reference to the Regulatory Capital for a shift in the interest rate curve of 200 bps). As indicated in Part F - Section 2 of the notes to the consolidated financial statements to which you are referred, the consolidated regulatory capital and capital ratios are shown for information only and have been provided on a voluntary basis.

Price riskThe Price risk of the “banking book” is monitored in terms of Value at risk (as regards the investments made in the AFS, HTM and L&R portfolio) and scenario analysis.In particular a sensitivity analysis is carried out that measures the change in value of the equity positions in the proprietary portfolios as a result of fluctuations in prices and a change in credit spreads with respect to debt securities.

Sensitivity analysis: banking book (only active)

Risk Scenario 31.12.2017 31.12.2016

Equity Equity -10% (0.937) (5.496)

Equity Equity +10% 0.937 5.496

Equity Equity -20% (1.874) (10.992)

Equity Equity +20% 1.874 10.992

Equity Equity -40% (3.749) (21.983)

Equity Equity +40% 3.749 21.983

Risk Scenario 31.12.2017 31.12.2016

Credit Curve Credit Curve - 100 bps 17.594 24.007

Credit Curve Credit Curve + 100 bps (15.645) (21.073)

Credit Curve Credit Curve - 200 bps 37.445 51.553

Credit Curve Credit Curve + 200 bps (29.599) (39.689)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1.2.3 EXCHANGE RATE RISK


A. General information, management processes and measurement methods for exchange rate risk

The strategies underlying the investment policies of the trading book which is exposed to exchange rate risk are essentially the following:• trading on foreign currencies in the short term through the use of spot contracts;• positions on foreign currencies through purchase/sale of options and negotiation of Forex Swap and Forward

contracts.

Management processes and measurement methods for exchange rate riskThe price risk of the trading book is monitored in terms of Value at Risk.

Operating limits deliberated by the Board of DirectorsA limit was placed in terms of VaR and a stop loss on a daily and monthly basis was placed on the proprietary account trading position.

Sensitivity AnalysisAs far as the foreign exchange position, the exposure in 2017 on trading operations always stayed well below the limits established by the policy on Financial Risks.The Internal Policy does not envisage specific stress tests with regard to the foreign exchange exposure.

B. Exchange rate risk hedges

As regards the hedging of exchange-rate risk, the operational hedging of assets and liabilities in foreign currencies is managed by the Parent Company Banca Intermobiliare.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E




1. Distribution of assets, liabilities and derivatives by currency of denomination

Items Currencies

USD Pounds Yen Canadian Dollars

Swiss Francs Other currencies

A. Financial assets 12,267 7,696 47 44 7,392 2,066

A.1 Debt securities - - - - - 2

A.2 Equity securities - - - - - -

A.3 Loans to banks 11,496 7,093 47 - 1,691 889

A.4 Loans to clients 771 603 - 44 5,701 1,175

A.5 Other financial assets - - - - - -

B. Other assets - - - - - -

C. Financial liabilities (8,092) (7,856) (28) (170) (888) (1,447)

C.1 - Due to banks (4) (109) (27) (136) (370) (1,288)

C.2 Due to clients (8,088) (7,747) (1) (34) (518) (159)

C.3 Debt securities - - - - - -

C.4 Other financial liabilities - - - - - -

D. Other liabilities - - - - - -

E. Financial derivatives (1,106) (4,435) (37) 30 (5,572) (411)

- Options 1 - - 1 - -

+ Long positions 240,976 7,301 26,731 299 554 7,367

+ Short positions (240,975) (7,301) (26,731) (298) (554) (7,367)

- Others (1,107) (4,435) (37) 29 (5,572) (411)

+ Long positions 209,031 44,987 37,965 58 4,261 30,475

+ Short positions (210,138) (49,422) (38,002) (29) (9,833) (30,886)

Total assets 462,274 59,984 64,743 401 12,207 39,908

Total liabilities (459,205) (64,579) (64,761) (497) (11,275) (39,700)

Imbalance (+/-) 3,069 (4,595) (18) (96) 932 208

2. Internal models and other methodologies for sensitivity analysis

The exchange rate risk of the trading book is monitored in terms of Value at risk and scenario analysis. In particular, a sensitivity analysis is implemented; this makes it possible to measure the values of positions in proprietary portfolios following a change in exchange rates and volatility of +/- 1%. The effects on net operating income and the economic result were exclusively quantified for positions classified as HFT and whose mark-to-market changes are recognised directly in the income statement.

Given the composition of the Banca Intermobiliare S.p.A. trading book at 31 December 2017, the foreign exchange risk is negligible.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1.2.4 DERIVATIVE INSTRUMENTS

This section includes financial and credit derivatives traded autonomously and derivatives embedded in structured instruments.

A. FINANCIAL DERIVATIVES

A.1 Regulatory trading book: end-of-period notional values

Underlying assets/Type of derivatives 2017 2016

Over the counter

Central Counterparties

Over the counter


1. Debt securities and interest rates 216,956 - 223,940 -

a) Options 50,392 - 82,934 -

b) Swaps 160,295 - 138,209 -

c) Forwards - - - -

d) Futures 6,269 - 2,797 -

e) other - - - -

2. Equity securities and stock indices 5,167 - 29,829 -

a) Options 5 - 20,738 -

b) Swaps - - 9,091 -

c) Forwards - - - -

d) Futures 5,162 - - -

e) other - - - -

3. Currencies and gold 2,225,136 - 5,787,577 -

a) Options 1,748,469 - 4,917,152 -

b) Swaps - - - -

c) Forwards 476,667 - 870,425 -

d) Futures - - - -

e) other - - - -

4. Goods - - 20,634 -

5. Other underlying assets - - - -

Total 2,447,259 - 6,061,980 -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.2 Banking book: end-of-period notional values

A.2.1 Of hedging

Underlying assets/Type of derivatives 2017 2016

Over the counter

CentralCounterparties

Over the counter


1. Debt securities and interest rates 305,150 475,050 -

a) Options - - - -

b) Swaps 305,150 - 475,050 -

c) Forwards - - - -

d) Futures - - - -

e) other - - - -

2. Equity securities and stock indices - - - -

a) Options - - - -

b) Swaps - - - -

c) Forwards - - - -

d) Futures - - - -

e) other - - - -

3. Currencies and gold - -

a) Options - - - -

b) Swaps - - - -

c) Forwards - - - -

d) Futures - - - -

e) other - - - -

4. Goods - - - -


Total 305,150 - 475,050 -

A.2.2 Other derivativesNot applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.3 Financial derivatives: gross positive fair value – breakdown by product

Portfolios/Types of derivatives Positive fair value

2017 2016

Over the counter


Over the counter


A. Regulatory trading book 15,346 - 53,524 -

a) Options 9,493 - 41,447 -

b) Interest rate swaps 3,127 - 2,421 -

c) Cross currency swaps - - - -

d) Equity swaps - - 21 -

e) Forwards 2,726 - 9,635 -

f) Futures - - - -

g) Others - - - -

B. Banking book - for hedging 1,607 - 1,327 -

a) Options - - - -



d) Equity swaps - - - -

e) Forwards - - - -

f) Futures - - - -

g) Others - - - -

C. Banking book - other derivatives - - - -

a) Options - - - -

b) Interest rate swaps - - - -



e) Forwards - - - -

f) Futures - - - -

g) Others - - - -

Total 16,953 - 54,851 -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.4 Financial derivatives: gross negative fair value – breakdown by product

Portfolios/Types of derivatives Negative fair value

2017 2016

Over the counter


Over the counter

Central Coun-terparties

1. Regulatory trading book 15,278 - 33,538 -

a) Options 9,456 - 24,786 -




e) Forwards 2,688 - 6,034 -

f) Futures - - - -

g) Others - - - -

2. Banking book - for hedging 8,906 - 15,807 -

a) Options - - - -




e) Forwards - - - -

f) Futures - - - -

g) Others - - - -

3. Banking book - other derivatives - - - -

a) Options - - - -




e) Forwards - - - -

f) Futures - - - -

g) Others - - - -

Total 24,184 - 49,345 -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.5 OTC financial derivatives: regulatory trading book - notional values positive and negative gross notional & fair values by counterparty - contracts not falling under clearing agreements

Contracts not falling under clearing agreements

Governments and Central

Banks

Other public

entities

Banks Financial companies

Insurance companies

Non-financial companies

Other parties

1. Debt securities and interest rates - - 6,269 - - 50,980 -

- notional value - - 6,269 - - 48,696 -

- positive fair value - - - - - 1,881 -

- negative fair value - - - - - - -

- future exposure - - - - - 403 -

2. Equity securities and stock indices - - 5,482 - - - -

- notional value - - 5,167 - - - -

- positive fair value - - 5 - - - -


- future exposure - - 310 - - - -

3. Currencies and gold - - 64,716 128,994 - 9,482 81,509

- notional value - - 62,855 125,978 - 9,172 78,938

- positive fair value - - 634 1 - 227 1,556

- negative fair value - - 265 1,755 - - 227

- future exposure - - 962 1,260 - 83 788

4. Other valuables - - - - - - -

- notional value - - - - - - -

- positive fair value - - - - - - -


- future exposure - - - - - - -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.6 OTC financial derivatives: banking book - positive and negative gross notional and fair values by counterparty - contracts falling under clearing agreements Contracts falling under clearing agreements


Banks

Other public

entities


Insurance companies


Other parties

1. Debt securities and interest rates - - 141,893 26,066 - 153 -

- notional value - - 136,648 25,192 - 152 -

- positive fair value - - 1,524 607 - 1 -

- negative fair value - - 3,721 267 - - -

2. Equity securities and stock indices - - - - - - -




3. Currencies and gold - - 1,133,747 832,398 - - -

- notional value - - 1,121,892 826,300 - - -

- positive fair value - - 6,741 2,169 - - -

- negative fair value - - 5,114 3,929 - - -





A.7 OTC financial derivatives: banking book - positive and negative gross notional and fair values by counterparty - contracts not falling under clearing agreementsNot applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



A.8 OTC financial derivatives: banking book - positive and negative gross notional and fair values by counterparty - contracts falling under clearing agreements



Banks

Other public

entities


Insurance companies


Other parties

1. Debt securities and interest rates

- notional value - - 305,150 - - - -

- positive fair value - - 1,607 - - - -

- negative fair value - - 8,906 - - - -

2. Equity securities and stock indices - - - - - - -




3. Currencies and gold - - - - - - -








Total - - 315,663 - - - - A.9 Residual life of OTC financial derivatives: notional values

Underlying assets / Residual duration Up to one year

More than one year and up to five years

Over 5 years

Total

A. Regulatory trading book 2,220,768 163,965 62,526 2,447,259

A.1 Financial derivatives on debt securities and interest rates 129,084 25,346 62,526 216,956

A.2 Financial derivatives on equity securities and stock indices 5,167 - - 5,167

A.3 Financial derivatives on exchange rates and gold 2,086,517 138,619 - 2,225,136

A.4 Financial derivatives on other valuables - - - -

B. Banking book 238,550 - 66,600 305,150

B.1 Financial derivatives on debt securities and interest rates 238,550 - 66,600 305,150

B.2 Financial derivatives on equity securities and stock indices - - - -

B.3 Financial derivatives on exchange rates and gold - - - -

B.4 Financial derivatives on other valuables - - - -

Total 2017 2,697,868 163,965 195,726 3,057,559

Total 2016 6,392,630 456,435 163,015 7,012,080 A.10 OTC financial derivatives: counterparty risk / financial risk - Internal models

Banca Intermobiliare does not utilise internal models of the EPE type for the purposes of measuring counterparty and financial risk; instead, the bank uses a method based on current values.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



B. CREDIT DERIVATIVES

B.1 Credit derivatives: end-of-period notional values

Transaction categories Regulatory trading book Banking book

On a single party

On multiple parties (basket)

On a single party


1. Protective purchases

a) Credit default products 5,003 - - -

b) Credit spread products - - - -

c) Total rate of return swaps - - - -

d) Others - - - -

Total 2017 5,003 - - -

Total 2016 7,692 - - -

2. Protective sales - - -

a) Credit default products - - - -



d) Others 3,969 - - -

Total 2017 3,969 - - -

Total 2016 7,692 - - -

B.2 OTC credit derivatives: gross positive fair value - breakdown by product


2017 2016

1. Regulatory trading book 48 249

a) Credit default products 48 249

b) Credit spread products - -

c) Total rate of return swaps - -

d) Others - -

2. Banking book – for hedging - -

a) Credit default products - -



d) Others - -

Total 48 249

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



B.3 OTC credit derivatives: gross negative fair value - breakdown by product


2017 2016





d) Others - -

2. Banking book – for hedging - -

a) Credit default products - -



d) Others - -

Total 48 346

B.4 OTC credit derivatives: positive and negative gross notional & fair values by counterparty - contracts not falling under clearing agreementsNot applicable.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



B.5 OTC credit derivatives: positive and negative gross notional & fair values by counterparty - contracts falling under clearing agreements

Contracts falling under clearing agreements


Banks

Other public

entities


Insurance companies


Other parties

Regulatory trading book


- notional value - - 5,003 - - - -


- negative fair value - - 42 - - - -

2. Protective sales

- notional value - - - 3,970 - - -

- positive fair value - - - 42 - - -

- negative fair value - - - 5 - - -

Banking book - - - - - - -

1. Protective purchases - - - - - - -




2. Protective sales - - - - - - -




B.6 Residual life of credit derivatives: notional values

Underlying assets / Residual duration Up to one year

More than one year and up to five years

Over5 years

Total

A. Regulatory trading book - 8,972 - 8,972

A.1 Derivatives on loans with “qualified” reference obligation - - - -

A.2 Derivatives on loans with “non-qualified” reference obligation - 8,972 - 8,972

B. Banking book - - - -

B.1 Derivatives on loans with “qualified” reference obligation - - - -

B.4 Derivatives on loans with “non-qualified” reference obligation - - - -

Total 2017 - 8,972 - 8,972

Total 2016 - 13,208 - 13,208 B.7 Credit derivatives: counterparty risk/financial risk - Internal modelsBanca Intermobiliare does not utilise internal models of the EPE type for the purposes of measuring counterparty and financial risk; instead, the bank uses a method based on current values.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



C. FINANCIAL AND CREDIT DERIVATIVES

C.1 Financial derivatives and credit derivatives: net fair value and future exposure by counterparty


Banks

Other public

entities


Insurance companies


Other parties

1) Bilateral agreements: financial derivatives - - 22,748 - - 1 -

- positive fair value - - 4,368 - - 1 -


- future exposure - - 6,218 - - - -

- net counterparty risk - - - - - - -

2) Bilateral agreements: credit derivatives - - - - - - -





3) “Cross product” agreements - - 212 4,294 - - -


- negative fair value - - 112 1,383 - - -

- future exposure - - 100 2,911 - - -


NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1.3 - BANKING GROUP - LIQUIDITY RISK


A. General information, management processes and measurement methods for liquidity risk

Liquidity risk typically appears in the form of default with reference to an entity’s payment obligations, and may assume various forms depending on where this risk is generated. With reference to definitions that are shared at an international level, a distinction must be made between: • Funding liquidity risk: risk that the bank will be unable to cope with efficiently with its cash outflows, expected and

unexpected, current and future, and the needs of “collateral”, without affecting the daily operations or the financial position of the bank itself;

• Market liquidity risk: risk that the bank will be unable to liquidate a financial asset without incurring capital losses due to the low liquidity of the reference market or disorders in the same.

The rules on liquidity - introduced in the European Union in June 2013 with publication of Regulation (EU) 575/2013 and Directive 2013/36/EU - were updated at the beginning of 2015 with publication in the Official Journal of the European Union of the Commission Delegated Regulation 2015/61 with regard to Liquidity Coverage Requirement for Credit Institutions (Liquidity Coverage Ratio – LCR), which supplemented the legislative rules. With Delegated Regulation 2015/61, starting from 1 October 2015, banks are obliged to observe the new short-term indicator according to a gradual adjustment process (“phase-in”) provided for in art. 38 (60% from 1 October 2015, 70% from 1 January 2016, 80% from 1 January 2017 and 100% from 1 January 2018).The liquidity risk Governance Guidelines were updated and made compliant on adoption of these regulatory provisions.

The fundamental principles on which the Group’s liquidity policy is based are:• clear definition of the guidelines for managing liquidity approved by the top management;• existence of an operating structure which works within a system of operating limits and a structure of autonomous

control;• continual availability of adequate liquidity reserves in relation to the chosen risk tolerance threshold;• assessment of the impact of different scenarios, including stress scenarios, on the incoming and outgoing flows and on

the qualitative and quantitative adequacy of the liquidity reserves.

The organisational and managerial framework developed is based on and provides for:i) a “liquidity policy”: through which the financial position of the bank is defined through specific models measuring

short-term liquidity and medium/long-term liquidity (maturity ladder). The use of “scenario techniques” is provided for; these hypothesize the occurrence of events which may modify certain items within the various brackets that constitute the maturity ladder.

ii) a “contingency policy”: this defines the objectives, processes and intervention strategies which are applied in case of situations of stress or crisis, thereby clarifying the organisation model of reference and the pre-alarm indicators – and their related trigger points – which identify the manifestation of these events.

The short-term liquidity policy aims at ensuring an adequate level and opportune balancing between incoming and outgoing cash flows. To this end and in keeping with the risk tolerance threshold defined, the system of operating limits is structured providing for two short-term indicators on a time horizon at T+1, T+2, T+5, T+10 and T+20 (Cumulated Gap = Net Flows - Counterbalancing Capacity) and at one month (Liquidity Coverage Ratio - LCR).As regards the LCR indicator at ensuring that the Group maintains an adequate level of uncommitted high-quality liquid assets (HQLAs – High Quality Liquid Assets), which can be converted into cash to meet the need for liquidity on a time horizon of thirty days in the presence of a stress scenario specified by the supervisory regulations. The Liquidity Coverage Ratio measures the ratio between: (i) the value of the stock of HQLAs and (ii) the net total of cash outflows calculated according to the scenario parameters established by the regulations.As regards structural liquidity, the Group provides for the adoption of the regulatory requirement for structural liquidity laid down by Basel III: Net Stable Funding Ratio (NSFR). This indicator is aimed at guaranteeing that the Group’s assets and liabilities have a sustainable maturity structure and it is structured so as to ensure that assets with a time horizon of more than one year are financed with at least a minimum amount of stable liabilities. The regulatory requirement NSFR is still in an observation period before effective entry into force.Adequate and timely disclosure on the evolution of market conditions and on the Bank’s position is issued to the Corporate Bodies and the Committees, in order to ensure full knowledge of the significant and prevalent risk factors .

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E




The liquidity indicators presented above remained for the whole of financial year 2017 within the regulatory and operational risk limits provided for in the Group’s current Liquidity Policy.

At 31.12.2017 the Liquidity Coverage Ratio (LCR) was 114.9% (136.4% at 31.12.2016 on a separate basis) and remained above the regulatory limit current until 31 December 2017 of 80%, as laid down in Circular no. 285. Starting from 1 January 2018 the said limit will be 100%.

As regards the Net Stable Funding Ratio (NSFR) indicator, for which a regulatory limit is not yet provided for, and which is therefore calculated only for management and monitoring purposes, at 31 December 2017 the indicator was 86.07% in line with the figure for the previous year.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1. Time distribution by contractual residual duration of financial assets and liabilities

Currency of denomination: EUR

Items/Time distribution On demand

From more than

1 day to 7 days

From more than

7 days to 15 days

From more than

15 days to 1 month

From more than

1 month to 3 months

From more than

3 months to 6 months

From more than

6 months to 1 year

From more than

1 year to 5 years

Over 5 years

Indefinitelife

On-balance-sheet assets 237,925 5,289 1,412 27,462 17,196 21,663 29,781 550,047 265,524 10,140

A.1 Government securities - - 11 2 1,111 566 572 168,547 167,658 -

A.2 Other debt securities - - 60 1 2,286 275 2,497 39,247 8,820 -

A.3 UCIs units 8,202 - - - - - - 170 - -

A.4 Loans 229,723 5,289 1,341 27,459 13,799 20,822 26,712 342,083 89,046 10,140

- banks 71,446 5,289 - - - - - - - 10,140

- clients 158,277 - 1,341 27,459 13,799 20,822 26,712 342,083 89,046 -

Cash liabilities (996,606) - (635) (507) (74,429) (86,219) (27,565) (23,738) (18,549) -

B.1 Deposits and current accounts (969,402) - (635) (507) (18,273) (86,219) (9,613) (15,768) (119) -

- banks (144,631) - - - (13,000) - - - - -

- clients (824,771) - (635) (507) (5,273) (86,219) (9,613) (15,768) (119) -

B.2 Debt securities - - - - (35,188) - (17,952) (7,970) - -

B.3 Other liabilities (27,204) - - - (20,968) - - - (18,430) -

“Off-balance sheet” operations 678 11,501 (44) 309 (125) (386) (217) 1,789 2,507 -

C.1 Financial derivatives with exchange of capital 102 11,501 (44) 8 21 (1) 1 (14) (1) -

- Long positions 102 65,121 6,386 73,465 211,347 105,990 10,014 1,494 - -

- Short positions - (53,620) (6,430) (73,457) (211,326) (105,991) (10,013) (1,508) (1) -

C.2 Financial derivatives without exchange of capital (7) 166 - 301 (146) (492) (220) - - -

- Long positions 3,127 166 - 301 - 318 760 - - -

- Short positions (3,134) - - - (146) (810) (980) - - -

C.3 Deposits and receivable loans - - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.4 Irrevocable commitments to issue funds (4,420) - - - - 107 2 1,803 2,508 -

- long positions 341 - - - - 107 2 1,803 2,508 -

- short positions (4,761) - - - - - - - - -

C.5 Financial guarantees issued - - - - - - - - - -

C.6 Financial guarantees received - - - - - - - - - -

C.7 Credit derivatives with exchange of capital 5,003 - - - - - - - - -

- long positions 5,003 - - - - - - - - -

- short positions - - - - - - - - - -

C.8 Credit derivatives without exchange of capital - - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



Currency of denomination: Other currencies

Items/Time distribution On demand

From more than

1 day to 7 days

From more than

7 days to 15 days

From more than

15 days to 1 month

From more than

1 month to 3 months

From more than

3 months to 6 months

From more than

6 months to 1 year

From more than

1 year to 5 years

Over 5 years

Indefinitelife

On-balance-sheet assets 12,942 - - 2 - - - (44) - -

A.1 Government securities - - - - - - - - - -

A.2 Other debt securities - - - 2 - - - - - -

A.3 UCIs units - - - - - - - - - -

A.4 Loans 12,942 - - - - - - (44) - -

- banks 21,216 - - - - - - - - -

- clients (8,274) - - - - - - (44) - -

Cash liabilities (18,481) - - - - - - - - -

B.1 Deposits and current accounts (18,481) - - - - - - - - -

- banks (1,934) - - - - - - - - -

- clients (16,547) - - - - - - - - -

B.2 Debt securities - - - - - - - - - -

B.3 Other liabilities - - - - - - - - - -

“Off-balance sheet” operations

C.1 Financial derivatives with exchange of capital (101) (11,478) 44 2 1 (1) 1 2 - -

- long positions - 83,554 12,117 121,797 229,184 109,446 31,905 22,001 - -

- short positions (101) (95,032) (12,073) (121,795) (229,183) (109,447) (31,904) (21,999) - -

C.2 Financial derivatives without exchange of capital - - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -


- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.4 Irrevocable commitments to issue funds - - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -



C.7 Credit derivatives with exchange of capital - - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -


- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E



1.4 - BANKING GROUP - OPERATIONAL RISK


A. General information, management processes and measurement methods for operational risk

IOperational risk is defined as the risk of sustaining losses that derive from the inadequacy or malfunctioning of procedures, human resources and internal systems or by external events. This type also includes losses caused by fraud, human error, interruptions in operations, unavailability of systems, contractual default or natural catastrophes. It also includes legal risk. This definition, however, excludes strategic risk (losses sustained as a result of incorrect strategic assessments on the part of management) and reputational risk (losses of market share, given that the image of the companies is associated with negative events).

Operational risk can be attributed to the following types of events:• internal fraud, where the risk of loss derives from actions, in which at least one internal party is involved, which

generate frauds, undue appropriation or actions aimed at eluding the regulations, legislation or• corporate policies;• external fraud, where the risk of loss derives from actions committed by third parties which generate frauds, undue

appropriation or actions aimed at eluding the current legislation;• contract and safety in the workplace, where the risk of losses derives from actions not compliant with the laws or

agreements on the subject of employment, health and safety in the workplace, from the payment of compensation due for personal injuries or episodes of discrimination or non-application of equal conditions;

• clients, products and business practices, where the risk of loss derives from non-observance, unintentional or owing to negligence, of a professional obligation in relation to specific clients (including fiduciary and suitability requirements), or from the nature or conception of a product;

• damage to tangible assets, where the risk of loss derives from damage to tangible assets caused by a natural disaster or by other events;

• breakdowns and faults in systems, where the risk of losses is due to interruptions in operations, malfunctions or unavailability of systems;

• execution, delivery and management of processes, where the risk of losses is due to errors in completing the operations or managing the processes, in relations with commercial counterparties or suppliers.

Three calculation methods for the capital requirement are provided; these are characterised by increasing levels of complexity in the measurement of exposure to risk and by stricter organisational oversight methods in terms of corporate governance mechanisms and processes for identifying, managing and controlling risk: BIA - Basic Indicator Approach, TSA - Traditional Standardised Approach, AMA - Advanced Measurement Approaches. With reference to the measurement of the prudential requirement, Banca Intermobiliare uses - for regulatory purposes - the Basic Indicator Approach, BIA, which provides the application of a single regulatory coefficient (15%) to the indicator of company operational volumes which is identified as the arithmetic average of the relevant indicator of the last 3 financial years.The Operational Risk Management process can be primarily divided into three macro-phases:Identification: localisation of operational loss events which could arise in relation to assets, businesses and responsibility centres. For this purpose, the Central Risk Management Department uses a specific organisational model which is based on an orderly and homogeneous segmentation of all company processes and within the corresponding centres of responsibility, in accordance to the business line map required by regulations pertaining to capital requirements.Measurement: the analysis, by means of estimates and losses supplied by operational organisational structures, of negative economic effects which the Group may sustain.Management and mitigation: identification of the areas in which risk exposure is particularly significant and the consequent definition - with the support of any affected operational organisational structures – of mitigation actions which can be implemented with greater priority and which must be presented to senior management for approval. The Business Continuity Plan and the Disaster Recovery Plan are active within the Group. Its objective is to prepare organisational oversight systems and technological infrastructures which aim to reduce - to within limits considered acceptable - any damages deriving from sensational events, thereby guaranteeing that the re-activation of critical processes and the coordination of activities until the restoration of full operations occur in accordance with the established time periods and methods.In 2017 of the Loss Data Collection activities of the Group continued.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E




The Risk Management Department analyses the loss data collected. This activity involves researching and recording the “gross effective losses” and provides the census of losses which are equal to or more than Euro 500. They are classified by event type, risk factor and loss type. As of 2009, a web based tool is fully operational and allows detailed statistical calculations to be implemented on historical data.

Non-compliance with reporting obligations 2.8%

Non-compliance with deadlines or other responsibilities 11.1%

Disruptions in operational processes and organizational models 11.1%

Unauthorized activities 2.8%

Adequacy, disclosure and fiduciary relationships 5.6%

Operating systems 5.6%

Employment ratio 8.3%

Customers, products and professional practices 30.6%

Missed or incorrect data entry 22.2%

Frequency of events - Distribution for Event Type

Non-compliance with reporting obligations 0.1%

Non-compliance with deadlines or other responsibilities 0.5%

Disruptions in operational processes and organizational models 2.5%

Unauthorized activities 2.7%

Adequacy, disclosure and fiduciary relationships 50.5%

Operating systems 0.1%

Employment ratio 13.6%

Customers, products and professional practices 29.5%

Missed or incorrect data entry 0.5%

Gross effective loss - Distribution for Event Type

The analysis of the allocation data by Event Type shows that the greatest impact (50.5% of gross effective loss) is attributable to “Adequacy, disclosure and fiduciary relationships” while the highest frequency (30.6% of the frequency of events) is attributable to the category related to “Customers, products and professional practices”.

SECTION 2 - RISKS OF INSURANCE COMPANIESBanca Intermobiliare only has a stake in the insurance company Bim Vita SpA held jointly with 50% each with Fondiaria-Sai now UnipolSai (UGF Group).

SECTION 3 - RISKS OF OTHER COMPANIESSee details at the beginning of part E “Information on risks and related hedging policies”.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F

258 ■ Notes to the consolidated financial statements - Part F


SECTION 1 - CONSOLIDATED EQUITYA. INFORMATION OF A QUALITATIVE NATURE

The consolidated equity is the equity of Banca Intermobiliare and its subsidiaries and consists of all those elements that are not defined as assets or liabilities by the measuring and quantification methods established by International Accounting Standards.In particular, the change in the consolidated equity takes place with account taken of the following aspects:• compliance with the requirements of the supervisory regulations;• monitoring of the risks connected to the banking activity.In regard to the minimum capital requirements reference is made to the mandatory parameters established by the supervisory regulations.

B. INFORMATION OF A QUANTITATIVE NATURE

The composition and the amount of assets of the Group and its components is shown in Part B, Section 15 of the balance sheet, Liabilities - Assets of the Group, in these notes.

B.1 Consolidated equity: breakdown by type of company

Items/Amounts Banking Group

Insurance companies

Other companies

Eliminations and adjustments on consolidation

Total

Share Capital 161,075 - 330 (5,137) 156,268

Issue premiums 30 - - (30) -

Reserves 91,702 - 1,015 266 92,983

Equity instruments - - - - -

(Treasury shares) (29,711) - - - (29,711)

Valuation reserves:

- Financial assets available for sale 8,511 - - - 8,511

- Tangible fixed assets - - - - -

- Intangible fixed assets - - - - -

- Hedging of foreign investments - - - - -

- Cash flow hedges - - - - -

- Exchange rate differences - - - - -

- Non-current assets held for sale - - - - -

- Actuarial gains (losses) on defined benefit pension plans (858) - - - (858)

- Portion of valuation reserves related to investee companies accounted for using the equity method - - - 329 329

- Special revaluation laws 16,504 - 28,866 (31,359) 14,011

Profit (loss) for the year (+/-) of group and non-controlling interests (33,607) - (212) (15,410) (49,229)

Total 213,646 - 29,999 (51,341) 192,304

Part F - INFORMATION ON CONSOLIDATED EQUITY

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F

Notes to the consolidated financial statements - Part F ■ 259


The table above indicates the components of the reported shareholders’ equity, adding that of the group to that of non-controlling interests, divided by type of business being consolidated. In particular the column related to the Banking Group shows the amount resulting from the consolidation of the Banca Intermobiliare investees that belong to the Banca Intermobiliare Banking Group as defined in the consolidation scope of the report on operations of the consolidated financial statements. The amounts from the consolidation of companies not belonging to the Banca Intermobiliare Banking Group are indicated under Other Companies. The adjustments necessary to obtain the figure to present on the financial statements as indicated under Consolidation Eliminations and Adjustments.

B.2 Valuation reserves for financial assets available for sale: breakdown

Assets/Amounts Banking Group

Insurance companies

Other Firms/Businesses

Eliminations and adjustments on consolidation

Total

Positive reserve

Negative reserve

Positive reserve

Negative reserve

Positive reserve

Negative reserve

Positive reserve

Negative reserve

Positive reserve

Negative reserve

1. Debt securities 5,324 (314) - - - - 5,324 (314)

2. Equity securities 3,129 73 - - - - 3,129 73

3. Shares in UCIs 301 (2) - - - - 301 (2)

4. Loans - - - - - - - -

Total 8,754 (243) - - - - - - 8,754 (243)

B.3 Valuation reserves for financial assets available for sale: annual changes

Debt securities Equity Securities Shares in UCIs Loans

1. Opening balance 996 2,320 (1,449) -

2. Increases 7,827 2,502 2,875 -

2.1 Increase in fair value 6,348 1,809 741 -

2.2 Transfer to income statement of negative reserves 1,479 693 2,134 -

for impairment 64 428 881 -

for sale 1,415 265 1,253 -

2.3 Other changes - - - -

3. Decreases (3,813) (1,621) (1,127) -

3.1 Decrease in fair value (262) (457) (925) -

3.2 Adjustments for impairment - 71 - -

3.3 Transfer to income statement of positive reserves: from sales (3,551) (1,235) (202) -


4. Closing balance 5,010 3,202 299 -

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F



B.4 Valuation reserves related to defined benefit plans: annual changes

Defined benefit plans

1. Opening balance (888)

2. Increases (8)

- Discounting to the present -

- Other changes (8)

3. Decreases 38

- Discounting to the present 38

- Other changes -

4. Closing balance (858)

SECTION 2 - OWN FUNDS AND BANKING REGULATORY CAPITAL RATIOSBanca Intermobiliare calculated its own funds and the banking regulatory requirements on the basis of the Bank of Italy Circular No. 285 (Supervisory provisions for banks) of 17 December 2013 and subsequent amendments, Circular No. 286 (“Instructions for completing prudential reports for banks and stockbroking companies”) and Circular No. 154 which governs the reporting schedules and technical aspects related to regulatory reporting.The regulations issued by the Bank of Italy assimilate the harmonised rules for banks and investment firms contained in Regulation (EU) no. 575/2013 (“CRR”) and in Directive 2013/36/EU (“CRD IV”) transposing into the European Union the standards defined by the Basel Committee on banking supervision (the so-called “Basel III”) to limit the risk of insolvency of financial intermediaries by defining for all financial intermediaries the rules for calculating regulatory capital, risk assets and prudential requirements.

European RegulationsWith Regulation (EU) no. 1024/2013 of 15 October 2013, the European Central Bank (ECB) was given specific tasks relating to prudential supervision of credit institutions, in cooperation with the national supervisory authorities of the member countries, in the framework of the Single Supervisory Mechanism (SSM). Since 4 November 2014 the ECB in collaboration with the Bank of Italy, has been responsible for the prudential supervision of “significant banks”, as identified in the list published by the ECB on 4 September 2014.

Prudential supervision of Banca IntermobiliareWith effect from 4 November 2014, Veneto Banca (in its capacity as “significant bank”) and indirectly Banca Intermobiliare as its subsidiary, were placed under the direct supervision of the European Central Bank, in cooperation with the Bank of Italy. On 25 June 2017 Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. were placed in compulsory administrative liquidation with Italian Law Decree no. 99 at the order of the Ministry of the Economy and Finance, following the decisions of the European Authorities on the proposal of the Bank of Italy.Subsequently the competent authorities launched a process of assessing the qualification of Banca Intermobiliare as a significant supervised subject for the purpose of a possible classification of the Bank as less significant. With a letter dated 1 August 2017 the ECB had announced its intention to change the classification of the Bank to less significant, giving Banca Intermobiliare the possibility of presenting observations within the deadline of two weeks. Banca Intermobiliare, with a letter dated 4 August 2017, confirmed its agreement with this decision.Therefore, on 7 August 2017, the Governing Council of the European Central Bank communicated to Banca Intermobiliare that it was classified as a “less significant” supervised institution and therefore was no longer classified as a significant supervised institution in the meaning pursuant to Art. 6, paragraph 4, of Regulation (EU) no. 1024/2013. In particular the ECB based its decision on the following points:iv) Subsequent to the withdrawal of the licence of Veneto Banca S.p.A. Banca Intermobiliare is now a branch of a

legal entity which is not classifiable as a credit institution, financial holding company or mixed financial holding company under the terms, respectively, of points 1, 20) or 21) of ‘article 4, paragraph 1, of Regulation (EU) no. 575/2013. Consequently the Supervised Institution is assessed separately in order to determine whether one of the criteria pursuant to article 6, paragraph 4, of Regulation no. 1024/2013 is met;

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F



v) Banca Intermobiliare is no longer part of a significant supervised group and does not meet any other criterion of significance pursuant to article 6 paragraph 4, of Regulation (EU) no. 1024/2013. In particular, neither the significance thresholds based on its importance for the national economy nor the significance thresholds based on cross-border activities are met.

vi) There is not even any indication that any criterion of significance will be met in the next three years.

Following this decision, the direct supervision on Banca Intermobiliare ended one month after notification of the said decision and at the same time Banca Intermobiliare was made subject to the direct supervision of the Bank of Italy under the terms of articles 46, paragraphs 1 and 3, and 52, paragraph 3, of Regulation (EU) no. 468/2014 (ECB/2014/17). Under the rules on “Own Funds” and “Capital ratios”, the calculations were made by taking into account the transitional measures currently in force, as well as the so-called “prudential filters” and regulatory adjustments and including among its Own Funds only profits certified by persons outside the entity (articles 4 (121), 26 (2) and 36 (1) point (a) of the CRR) according to the procedures confirmed by the Bank of Italy in its Communication dated 22 January 2016 “Calculability of period or end-of-year profits in Common Equity Tier 1”.The consolidated minimum capital requirements for 2017 obtained from a reading of the legislation currently in force are the following:• CET 1 5.75%: 4.5% + 1.25% (Capital Conservation Buffer, hereinafter CCB)• TIER 1 7.25%: 6% + 1.25% (CCB)• TCR 9.25%: 8% + 1.25% (CCB)

The consolidated minimum capital requirements expected for 2019 will be:• CET 1 7%: 4.5% + 2.5% (CCB)• TIER 1 8.5%: 6% + 2.5% (CCB)• TCR 10.5%: 8% + 2.5% (CCB)

2.2 Banking Own FundsOwn Funds constitute the main reference point in the assessments of the Supervisory Body on the stability of the individual banks and the banking system in general. The most important prudential control instruments, namely the requirements against credit, counterparty, market and operational risks are based on them. In particular, the capital adequacy of a bank is assessed in relation to the amount of the ratio between regulatory capital (made up of Common Equity Tier 1 Capital, Additional Tier 1 Capital and Tier 2 Capital) and the total of risk-weighted assets. For specific supervisory rules, the ratio between total regulatory capital and the risk-weighted assets must not be less than 8%.

A. INFORMATION OF A QUALITATIVE NATURE

The Basel III regulations specify that Own Funds must be made up of the following levels of capital:• Tier 1 Capital, consisting of:

i) Common Equity Tier 1 - CET1 Capital;ii) Additional Tier 1 - AT1 Capital;

• Tier 2 - T2 Capital.

1. Common Equity Tier 1 - CET1 CapitalThe set of elements that make up the Common Equity Tier 1 are equity instruments, share premiums, reserves and the share of earnings not distributed and/or allocated to reserves, valuation reserves, after deduction of treasury shares, intangible fixed assets, and any losses recorded in previous years as well asother elements, deductible on the basis of thresholds namely:• goodwill and other intangible fixed assets;• deferred tax assets related to future income not arising from temporary differences;• insignificant investments in CET1 instruments issued by companies in the financial sector;• deferred tax assets related to future income arising from temporary differences;• significant investments in CET1 instruments issued by companies in the financial sector.There are also a number of transitional arrangements which impact on CET1: in the case of Bank Intermobiliare these provisions are applied to valuation reserves (OCI) and to deferred tax assets based on future profitability that do not derive from temporary differences.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F



2. Additional Tier 1 - AT1 CapitalThe AT1 category typically includes equity instruments other than ordinary shares (which are calculated in the Common Equity) and that meet the regulatory requirements for inclusion in this level of Regulatory Capital (e.g. savings shares). For Bank Intermobiliare there are no instruments of these types.

3. Tier 2 – T2 CapitalThe Tier 2 Capital consists normally of hybrid capital instruments and subordinated liabilities (and their issue premiums, if any), net of regulatory deductions. For all subordinated liabilities (with respect to deposits and senior creditors), early repayment is permitted only on authorisation from the Supervisory Authority and in the event of liquidation they are repaid only after the other creditors not equally subordinated. For Banca Intermobiliare no hybrid instruments or subordinated liabilities are present.


Consolidated regulatory capital

(Thousands of €)

31.12.2017 31.12.2016

A. Common Equity Tier 1 (CET1) before application of prudential filters 191,857 236,825

of which CET1 instruments subject to transitional provisions - -

B. CET1 prudential filters (+/-) (390) (579)

C. CET1 before items to be deducted and the effects of the transitional arrangements (A +/- B) 191,467 236,246

D. Items to be deducted from CET1 (73,289) (73,928)

E. Transitional arrangements - Impact on CET1 (+/-) 2,543 (5,157)

F. Common Equity Tier 1 – CET1 (C – D +/-E) 120,721 157,161

G. Additional Tier 1 Capital (AT1) before items to be deducted and effects of transitional arrangements - -

of which AT1 instruments subject to transitional provisions - -

H. Items to be deducted from AT1 - -

I. Transitional arrangements - Impact on AT1 (+/-), including instruments issued by subsidiaries and included in the AT1 due to transitional rules - -

L. Additional Tier 1 – AT1 (G - H +/- I) - -

M. Tier 2 Capital (T2) before items to be deducted and effects of transitional arrangements - -

of which T2 instruments subject to transitional provisions - -

N. Items to be deducted from T2 - -

O. Transitional arrangements - Impact on T2 (+/-), including instruments issued by subsidiaries and included in the T2 due to transitional rules 884 2,599

P. Total Tier 2 Capital - T2 (M - N + /- O) 884 2,599

Q. Total Regulatory Capital (F + L + P) 121,605 159,760

Following entry into force of Regulation (EU) 445/2016, at 31.12.2017, 80% of the realised gains and losses on financial instruments recognised in the “Financial assets available for sale” portfolio were included in the calculation of the capital ratios (on full implementation, in 2018, the realised gains and losses will be included at 100%). The comparative figure included, according to the legislation in force at the time, 60% of the unrealised gains and losses with the exception of government securities the unrealised results of which were not included.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F



2.2 Capital adequacy


Capital adequacy is one of the main strategic objectives. As a result, prospective analyses and checks on final balances are performed constantly to help maintain an adequate capital surplus which, in addition to compliance with the minimum capital requirements, ensures adequate room for growth.Regulatory Capital, risk-weighted assets and capital ratios are determined based on the harmonized rules for banks and investment firms contained in Directive 2013/363/EU (CRD IV) and Regulation (EU) 575/2013 (CRR) of 26 June 2013, which transfer to the EU the standards defined by the Basel Committee on Banking Supervision (the so-called “Basel III”), and based on the Bank of Italy Circulars no. 285 and n. 286 (issued in 2013) and no. 154 (updated also in 2013).The regulatory provisions relating to Own Funds involve the gradual introduction of regulations, through a transitional period (until the end of 2018) during which some elements that will become computable or deductible in full in the Common Equity, will impact on CET 1 only for a percentage share; normally the residual percentage compared to the applicable one is calculated/deducted from Additional Tier 1 and Tier 2 or considered among the risk-weighted assets. The prudential ratios as at 31 December 2017 therefore take account of the adjustments provided for by the transitional arrangements for 2017.The risk-weighted assets substantially include those related to credit risk, market risk and operational risk.The European standards confirm the setting of “Basel II” in the field of credit risk and make limited changes with regard to the provisions of Directives 2006/48/EC and 2006/49/EC. Credit risk can be calculated using the standardised approach or according to the internal-ratings-based (IRB) approach. Banca Intermobiliare has chosen the application of the standardised approach for calculating credit risk.The CRR, within the scope of the market risk, confirms - in general - the previous legislation. The capital requirements thus continue to be able to be determined, in accordance with a comprehensive legal framework, according to a standardised approach (method chosen by our institution), or an approach based on internal models.The requirement for the “operational risk”, understood as “the risk of sustaining losses that derive from the inadequacy or malfunctioning of procedures, human resources and internal systems or by external events” is calculated using the basic approach.

The following table shows the minimum individual regulatory capital ratios required by the Basel III agreement:

2017 2018 2019

CET1 + Buffer 5.75% 6.375% 7%

AT1 + Buffer 7.25% 7.875% 8.5%

TCR + Buffer 9.25% 9.875% 10.5%

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F




Unweightedamounts

Weighted amounts/requirements

31.12.2017 31.12.2016 31.12.2017 31.12.2016

A. RISK ASSETS

A.1 Credit and counterparty risk

1. Standardised approach 1,441,831 1,954,647 843,590 1,061,111

2. Internal ratings-based approach -

2.1 Basic -

2.2 Advanced -

3. Securitisations -

B. REGULATORY CAPITAL REQUIREMENTS

B.1 Credit and counterparty risk 67,487 84,889

B.2 Credit valuation adjustment risk 342 657

B.3 Settlement risk - -

B.4 Market risks 3,396 2,264

1. Standard approach - -

2. Internal models - -

3. Concentration risk - -

B.5 Operational risk - -

1. Basic approach 15,125 17,816

2. Standardised approach - -

3. Advanced approach - -

B.6 Other prudential requirements 6,123 7,313

B.7 Other calculation elements - -

B. Total prudential requirements 92,473 112,939

C. RISK ASSETS AND REGULATORY RATIOS

C.1 Risk-weighted assets 1,155,907 1,411,739

C.2 CET 1/Risk-weighted assets (CET1 Capital Ratio) 10.44% 11.13%

C.3 Tier 1/Risk-weighted assets (Tier 1 Capital Ratio) 10.44% 11.13%

C.4 Total Regulatory Capital/Risk-weighted assets (Total Capital Ratio) 10.52% 11.32%

We can note that the “Fully Phased” CET1 at 31.12.2017 would come out at 10.22% estimated by applying the fully-implemented parameters to the balance sheet data.


Notes to the consolidated financial statements - Part F and G ■ 265

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F AN

D G

SECTION 3 - INSURANCE EQUITY AND ADEQUACY RATIOSNot applicable.

SECTION 4 - CAPITAL ADEQUACY OF THE FINANCIAL CONGLOMERATENot applicable.

During the year no business combinations were carried out.

Part G - BUSINESS COMBINATIONS OF COMPANIES OR BUSINESS UNITS

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H

266 ■ Notes to the consolidated financial statements - Part H


1. Information on the remuneration of executives with strategic responsibilities

The amount of remuneration paid during the year to managers with strategic responsibilities, i.e. directors, statutory auditors, the general manager and managers of the Central Departments of the Consolidating Company (reporting directly to the General Manager) is as follows:

Remuneration paid to executives with strategic responsibility (Thousands of €) 31.12.2017 31.12.2016

Directors 1,471 918

Statutory auditors 522 520

Executives 2,849 1,927

Total 4,842 3,365

The emolument to directors and statutory auditors includes the indemnities for the position due to them, refunds of expenses, and where due VAT and contribution expenses. The remuneration of the managers includes the total remuneration paid as well as the employee severance indemnities matured during the period, both fixed and variable, and the amounts paid by the Bank into the employee Pension Fund.

2. Information on transactions with related parties

The categories of related parties, as defined in IAS 24, which are relevant to Banca Intermobiliare are:• the parent bank;• the subsidiaries which are directly controlled by or belong to the Banca Intermobiliare Group;• the direct associates and their subsidiaries;• the associates which belong to the Banca Intermobiliare Group and their subsidiaries;• the key management personnel, this being the directors, statutory auditors, and the top management of Banca

Intermobiliare;• the close relatives of the managers with strategic responsibilities, who are (i) the individual’s partner and children,

(ii) the children of the partner and (iii) the persons who are dependent on the individual or his/her partner;• the companies which are controlled, jointly controlled and associated with managers with strategic responsibilities or

their close relatives.

All of the Bank’s transactions with related parties were carried out in compliance with standards of substantial and procedural correctness under conditions similar to those for transactions with unrelated parties pursuant to Consob Regulation no. 17221/2010 as amended, on the regulation of Transactions with Related Parties, disclosure and transparency obligations regarding certain Transactions with Related Parties. They are also in harmony with the supervisory provisions introduced by the Bank of Italy on 12 December 2011 in regard to risk assets and conflicts of interest of banks and banking groups in terms of their “associated parties,” issued in implementation of Art. 53, para. 4 et seq. of the Consolidated Law on Banking (TUB) and in compliance with Interministerial Committee for Credit and Savings (CICR) resolution 277 of 29 July 2008.

To this end the Board of Directors of Banca Intermobiliare approved, on 14 December 2017 - following the favourable opinion expressed by the Independent Directors’ Committee for Transactions with Associated Parties, the “Regulation for Transactions with Associated Parties,” which replaced the “Regulation for Transactions with Related Parties,” of June 2012.This new Regulation implements both the rules issued by Consob - which cover the various cautionary investigations that must be carried out by the structures of the Bank and of the subsidiaries when transacting with related parties, in order to meet the needs of substantial correctness of the transactions requiring, among other things, a detailed examination of the reasons, interests and effects regarding the equity, economic and financial aspects and conditions of the transaction - and the supervisory regulations introduced by the Bank of Italy.

The “Regulation for Transactions with Associated Parties”:• identifies a subjective, common perimeter that defines the associated parties as a category consisting of related parties

and parties related to the latter, as defined by the Consob regulations and the Bank of Italy regulations;

Part H - RELATED PARTY TRANSACTIONS

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H

Notes to the consolidated financial statements - Part H ■ 267


• applies a subjective, common perimeter which defines the transactions with associated parties, distinguishing between Transactions of Major or Minor Significance and Excluded Transactions, in keeping with the Consob and Bank of Italy regulations;

• governs the principles at the base of the processes and decision-making procedures related to Transactions with Associated Parties, observing the indications and principles laid down by the Consob and Bank of Italy regulations;

• establishes the perimeter of application within the Banca Intermobiliare Group.

It also aims to monitor and limit the assumptions of risk assets that the Bank or the Group can hold with the various related persons, rendering them commensurate to the significant equity volumes set for the group or individual supervisory purposes.The Regulation identifies appropriate rules that ensure transparency and correctness both substantially and procedurally as regards transactions with Related Parties, as well as the established terms and conditions for compliance with the related disclosure obligations, including those provided for in the provisions of the law and the applicable regulations.In the new Regulation the procedures that must be applied in regard to decision-making profiles differ depending on whether:• the operation is excluded from application of the guidelines because it is for a small amount (meaning each

Transaction with a Related Party, the unit value of which is not in any case more than € 250.000);• the transaction is of minor significance, meaning that the amount is higher than the threshold assigned for small

amounts as above but is not classified as a major transaction and/or in not one of the exempted cases (ordinary transactions conducted at arm’s length);

• the transaction is of major significance, if the amount exceeds the threshold of 5% of the indicators defined by Consob and by the Bank of Italy;

• the transaction is with related parties in which Art. 136 of Italian Legislative Decree No. 385/1993 (Consolidated Law on Banking - TUB) is applicable;

• the transaction falls under the competence of the shareholders’ meeting.

In the process for the approval of transactions with related parties, a qualified role is carried out by the Independent Directors’ Committee for Transactions with Associated Parties, established within the Board of Directors and consisting of 3 standing members who possess the requirements of independence provided for in art. 148, par. 3 of the CLF, the articles of association and those established by any regulations applicable to the sector. The Committee’s operations are governed by a specific regulation and, where considered necessary, it can employ independent experts in relation to the significance, particular economic or structural characteristics of the transaction or the nature of the related party.All transactions - that are “not insignificant” and “not exempt” - which involve Banca Intermobiliare with a related party fall under the deliberative competence of the Body or unit called upon to express an opinion, after the favourable opinion of the Independent Directors’ Committee.In relation to transactions carried out by subsidiaries with related parties of Banca Intermobiliare, the Regulation states that:• “transactions with related parties carried out by Banca Intermobiliare through an Italian or foreign subsidiary”, means

all transactions in which Banca Intermobiliare, on the basis of an applicable internal regulation or on the basis of the provisions of the law or the articles of association, must examine or approve these transactions, regardless of the body or the department of Banca Intermobiliare, called upon to express an opinion in this regard;

• all transactions concluded autonomously by subsidiaries of Banca Intermobiliare with related parties of the latter are governed, only for the purposes of calculation of the cumulative transactions and the disclosure requirements, according to a well-defined procedure.

The Regulation also defines the general criteria for the information to be provided to the Board of Directors and to the Board of Statutory Auditors on related-party transactions completed in the reference period by the Bank. The disclosure must cover all transactions, even if they are exempt from the resolution procedure, for a total amount equal to or higher than the threshold set; bank deposits and intra-group loans, regardless of amount, are excluded provided they are carried out with subsidiaries without significant interests of other related parties being involved.We must also note that, if the related party is one of the individuals considered significant pursuant to article 136 TUB, the special resolution procedure established by the banking law is also applicable. This requires prior unanimous resolution by the board of directors and the favourable vote of all members of the board of statutory auditors, requiring also the involvement of the committee of independent directors called upon to carry out the role of:• informed party, which receives a simple disclosure beforehand in the case of a transaction of lesser importance, or• an active party, during the screening of the case to be carried out for transactions of greater importance.

To this end, it is noted that all transactions that fall into the category “obligations of bank representatives” pursuant to Art. 136 of the TUB were subject to specific resolutions of the board according to the relevant procedure indicated by the Bank of Italy.Furthermore, the obligations set forth in the Italian Civil Code regarding the interests of directors pursuant to art. 2391 of the Civil Code still apply. These require that all Directors disclose the interests they hold, on their own behalf or on that of third parties, which could be of significance in the performance of their management duties with regard to

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H



a specific transaction. Pursuant to the aforementioned provision, the resolutions pertaining to these transactions fall under the competence of the Board of Directors, including when they take place with related parties in which Directors hold an interest on their own behalf or that of third parties and therefore must observe the obligation to refrain from carrying out the transaction and instead have the board carry it out pursuant to Article 2391 of the Italian Civil Code.In regard to transactions carried out by the Bank with other related parties, it is hereby specified that no atypical and/or unusual transactions occurred; transactions of this type, besides, were not carried out with individuals other than related parties either.

Transactions of major significanceDuring 2017 no transactions classifiable as of major significance were carried out by the Banca Intermobiliare Group with related parties.

Transactions of minor significanceThe transactions during the period concluded with intra-group related parties and corporate executives, the close relatives of the executives and subjects controlled by the latter, fall within the normal operations of Banca Intermobiliare, and are fully compliant with the relevant regulations.

Excluded transactionsThe ordinary or recurrent transactions that took place in 2017 with related parties, including the intra-group parties, fall within the ordinary operations of the bank and are usually carried out at arm’s length and in any case on the basis of assessments that are economically convenient to both parties, pursuant to the internal procedures which have been defined.The credit and debit balances in existence as at 31 December 2017 which apply to related parties are of an amount that is not significant overall compared to the equity of the bank.

Transactions with executives with strategic responsibilitiesThe loans, guarantees issued and deposits connected with Directors and Statutory Auditors and Managers with strategic responsibilities, including amounts relating to transactions carried out in observance of art. 136 of Italian Legislative Decree No. 385/93 with companies in which the aforementioned persons have an interest, consist of the following:

Thousands of €) 2017 2016

Directors Statutory auditors

Executives with strategicresponsibilities

Total authorised (credit) - - 486 298

Loans (used) (*) - - 478 262

Endorsement loans (used) (*) - - - -

Direct deposits (*) - - 778 632

Indirect deposits (*) - - 1,897 2,155

Interest income (**) - - 1 -

Interest expenses (**) - - 4 6

Fee and commission income and other income (**) - - 3 7

Fee and commission expenses (**) - - - -

(*) Balances at 31 December 2017/2016(**) Collected/paid throughout 2017/2016

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H

Notes to the consolidated financial statements - Part H ■ 269


Related-party transactionsFollowing are the main relations of a financial and economic nature with related parties other than directors, statutory auditors and managers with strategic responsibilities, as indicated in the previous table.The assets and liabilities are mainly due to relations of a financial nature, which are part of the normal banking operations, and connected to the need to rationally and effectively cover liquidity needs at the Group level. All transactions are carried out at arm’s length.

(Thousands of €) Receivables from loans

granted


Other financial assets available

for sale

Hedging derivatives

Other assets

A. Parent bank

Veneto Banca S.p.A. CAL - - - - 64

B. Group companies

C. Affiliated companies

BIM Vita S.p.A. - - - - 40

D. Associates of the Parent Bank - - - - -

Total related parties 31.12.2017 - - - - 104

Total related parties 31.12.2016 331,706 7,540 82,652 1,327 2,159

(Thousands of €) Payables for loans/deposits

received

Bondsissued


for trading

Hedgingderivatives

Other liabilities

A. Parent bank

Veneto Banca S.p.A. CAL 5,982 - - - -

B. Group companies


BIM Vita S.p.A. - - - - -

D. Associates of the Parent Bank - - - - -

Total related parties 31.12.2017 5,982 - - - -

Total related parties 31.12.2016 384,347 675 96 14,758 5,135

The interest income and interest expense represent the remuneration at market rates of the loans granted and received or the bonds subscribed and issued. Fee and commission income represents the remuneration paid to the Bank’s sales network for placement of the products of the Group companies; the other revenues refer to reimbursement of the personnel cost for Bank staff seconded to Group companies or services provided to the latter. The other costs are entirely attributable to various administrative expenses incurred for services provided to the Bank by various Group companies.

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H



(Thousands of €) Interestincome

Interest expenses

Other expenses(-)/operating (+) income

Dividends collected

Fee and commission

income and other earnings

Fee and commission

expenses and other

costs

A. Parent bank

Veneto Banca S.p.A. CAL 1,180 (70) 1,466 - 42 (4,544)

B. Group companies


BIM Vita S.p.A. - - - 1,150 2,263 -

D. Associates of the Parent Bank

Sec - - - - - (1,487)

Total related parties 2017 1,180 (70) 1,466 1,150 2,305 (6,031)

Total related parties 2016 4,668 (556) (8,998) 1,150 2,955 (3,808)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

I

Notes to the consolidated financial statements - Part I ■ 271


This part provides information on share-based payment agreements (IFRS 2), which on the balance sheet are recognised among “other liabilities” or “reserves” (liability item 160).As at 31.12.2017 Banca Intermobiliare and the subsidiary Symphonia have existing payment agreements based on own financial instruments (ordinary Bim shares and Symphonia UCIs/GPM), as established in the document “Remuneration policies 2014” approved by the Shareholders’ Meeting on 17 April 2015, relevant to year 2014 and with a “holding period” of 12 months following assignment of the instruments (May 2018).

The above agreements were within the scope of the incentive system in favour of certain managers of the subsidiary Symphonia (Remuneration Plan A) and certain sales representatives of the Bim network (Remuneration Plan B).

In order to execute Plan B, in 2017 the entitled persons were assigned Bim Shares from the proprietary portfolio held by the issuer. In line with regulations, the unit price of the shares was determined by the average of the prices recorded in the 30 days preceding the date of assignment.

After the approval of the aforementioned document “Remuneration policies 2014”, Banca Intermobiliare entered an overall cost in the accounts for the two plans in line with IFRS 2 amounting to €/thou 157.During 2017 according to the provisions in Plan B, a total of 4,328 Banca Intermobiliare shares were assigned amounting to €/thou 6.

Part I - SHARE-BASED PAYMENT AGREEMENTS

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

L

272 ■ Notes to the consolidated financial statements - Part L


This section describes the consolidated equity and income statement results for the period articulated according to the operating segments in which Banca Intermobiliare and its subsidiaries are divided; the segments have been identified based on the indications of IFRS 8. The above standard specifies that the information presented must be structured in accordance with the reporting system used by management to analyse operating performance. Based on this standard, Banca Intermobiliare has identified the following business segments: Clients, Finance, Corporate Center and “Non-Core”. The “Non-Core” segment was introduced starting from the financial reporting for the 2016 data, following the guidelines of the strategic plan, which provides for the disbursement of Lombard loans and the “run off” management of impaired loans and of non-core performing loans.The Client Segment covers all typical transactions of private banking such as management and consulting in the area of investment services, distribution of managed savings products (in the form of individual and collective asset management portfolios), securities brokerage and ancillary activities such as lending services. The Client Segment includes the operations of the Parent Company, Banca Intermobiliare, related to the services mentioned above and for Symphonia SGR, BIM Fiduciaria and BIM Insurance Brokers.

The Finance Segment refers to the banking book and trading book activities, and intermediation of OTC instruments and exchange rates performed on the proprietary portfolio, the management of the Treasury interbank activities, and the interest rate and liquidity risk management carried out by Banca Intermobiliare.

The Corporate Centre Segment consists of the Parent Company’s General Management and the corporate bodies, in addition to activities in support of the Group’s governance bodies. The Corporate Centre has responsibility for the imputed interest associated with the notional treasury unit. Finally, this segment includes the operations of BIM Immobiliare, Immobiliare D and Paomar.

The “Non-Core” Segment identifies all the non-performing credit positions, probable defaults, performing loans with counterparts that are corporate clients and the BIM assets held for sale, the company held for sale Patio Lugano and the result of the sale of the equity investment in Bim Suisse..

The Client Segment recorded operating net interest income down 45.5% owing to the reduction in loans (€/Mln -85.6 in 2017). Net fees and commissions fell by -3.7% on an annual basis due to the reduction in trading commissions and fees on assets under management, trends generated mainly by the fall in balances of indirect deposits. We can note the positive contribution of the performance fee on Symphonia products of €/Mln 14.5 (against €/Mln 4.5 for 2016). As a consequence, the net operating income decreased by -7.4% year on year (€/Mln 61.8 against €/Mln 66.8). The net operating costs of the Client Segment decreased from 2016 (-6.6%).

The Finance Segment recorded in 2016 a profit before tax €/Mln 20.3, an increase over 2016 (+14.1%). The reduction of net interest (-31.9% from 2016) was generated by lower margins on securities in the position and by a reduction of annual average balances of approximately €/Mln 500. Gains on financial operations increased by more than 71%, thanks to the capital gains generated by the sale of banking book securities. The reduction of the balances derives from implementation of the derisking strategy defined by the strategic plan. As a consequence net operating income amounted to €/Mln 26.1 (up +7.7% compared to 2016). Operating costs increased by approximately €/Mln 0.3 compared to 2016 while write-downs linked to financial instruments came out at €/Mln 1.9 (against €/Mln 2.8 for 2016).

The net operating income of the Corporate Center Segment incorporates the positive effect of the notional treasury level at net interest income level (in addition to the operating income from non-interest bearing equity investments and equity related to real estate companies and shareholders’ equity). Gross overheads recorded a significant increase compared to 2016 (€/Mln 18.1 against €/Mln 15.4) owing to extraordinary expenses of approximately €/Mln 4.4 attributable to projects to re-internalise outsourced activities and to reorganise the Bank, and to the due diligence activities associated with the Bim sale process.Lastly, we should note net allocations to provisions for risks and charges - amounting to about €/Mln 2, with sharply down from the figure of €/Mln 17.9 recognised in 2016

The “Non-Core” Segment shows the operating net interest income on non-performing loan positions, probable defaults and performing loans with corporate counterparts. The income suffered from a downward variation due to the major cost of funding related to non-performing positions in the 2017 assessments compared to 2016. Write-downs on loans fell year on year going from €/Mln -97.6 in 2016 to €/Mln -46.2 in 2017.

Part L - SEGMENT INFORMATION

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

L

Notes to the consolidated financial statements - Part L ■ 273


Consolidated operating figures by segment

(Thousands of €)

CONSOLIDATED Clients Finance Corporate Centre

Non-core Total

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Net interest 3,252 5,970 10,174 14,929 4,613 (1,943) (6,256) 2,877 11,783 21,834

Net fee and commission income 58,547 60,799 - - - - - - 58,547 60,799

Net gains (losses) on financial operations 32 - 15,936 9,315 - - - - 15,968 9,315

- of which: dividends and similar income - - 420 1,617 - - - - 421 1,617

Operating income 61,831 66,768 26,110 24,245 4,613 (1,943) (6,256) 2,877 86,298 91,948

Gross operating expenses (64,696) (69,095) (3,970) (3,707) (18,174) (15,427) (329) (73) (87,169) (88,302)

Other operating income/expenses (260) (428) - - 2,894 (962) - - 2,633 (1,390)

Net operating costs (64,956) (69,523) (3,970) (3,707) (15,280) (16,389) (329) (73) (84,536) (89,692)

Operating profit (loss) (3,125) (2,754) 22,140 20,538 (10,667) (18,331) (6,585) 2,804 1,762 2,256

Net value adjustments on loans - - - - 544 5,949 (46,187) (97,567) (45,643) (91,618)

Net allocations to provisions for risks and charges (180) 200 - - (1,965) (17,880) - - (2,145) (17,680)

Profit (loss) of equity investments accounted for using equity method 2,023 1,480 - - (544) - - - 1,479 1,480

Profit (loss) before non-recurring components (1,282) (1,074) 22,140 20,538 (12,633) (30,263) (52,772) (94,763) (44,546) (105,562)

Gains (losses) on disposal and valueadjustments on financial instruments - - (1,854) (2,757) - - - - (1,854) (2,757)

Profit (loss) before tax (1,282) (1,074) 20,286 17,781 (12,633) (30,263) (52,772) (94,763) (46,400) (108,319)

NOT

ES T

O T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

L

274 ■ Notes to the consolidated financial statements - Part L


Breakdown by business segment: consolidated balance sheet figuresThe Client Sector recorded in 2017 a reduction of loans of €/Mln 85.6 (-32.3%), a reduction in outstanding securities of €/Mln 244, (-80.1%) and in demand deposits of €/Mln 300 (-23.3%). The Finance Sector recorded a net financial position of €/Mln -74 (€/Mln -140 in 2016) and a reduction in financial assets (net of liabilities) of about €/Mln 440 (-51.7%). The “Non-Core” Segment recorded a reduction in amounts due from clients of €/Mln 126 due to the higher coverage of the impaired positions and the reduction of the corporate performing component.

Consolidated balance sheet figures by segment

(Thousands of €)

CONSOLIDATED Clients Finance Corporate Centre

Non-core Total

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Cash 1 1 1,688 1,669 - - - - 1,689 1,670

Loans to clients 179,617 265,266 - - - - 451,963 578,293 631,580 843,560

Loans to banks 1,760 2,036 106,330 369,209 - - - - 108,090 371,245

Hedging derivatives - - 1,607 1,327 - - - - 1,607 1,327

Financial assets held for trading 172 17 44,448 97,357 - - - - 44,621 97,374

Available-for-sale assets 872 598 413,668 834,639 - - - - 414,540 835,237

Equity investments 14,365 14,020 - - - - - - 14,365 14,020

Investments 67,943 68,365 - - 77,395 78,889 - - 145,339 147,255

Other assets 14,462 6,596 - - 201,498 208,622 - - 215,959 215,218

Non-current assets held for sale - - - - - - 21,357 71,902 21,357 71,902

TOTAL ASSETS 279,193 356,899 567,741 1,304,201 278,893 287,512 473,321 650,196 1,599,147 2,598,808

Due to banks 3,105 - 180,126 509,294 - - - - 183,232 509,294

Due to clients 985,633 1,285,540 - - - - - - 985,633 1,285,540

Outstanding securities 60,686 304,978 - - - - - - 60,686 304,978

Financial liabilities held for trading - - 39,858 67,969 - - - - 39,858 67,969


Provisions and other liabilities 26,697 7,364 - - 93,975 133,603 - - 120,672 140,967

Shareholders’ equity 53,173 47,732 - - 139,130 189,468 - - 192,304 237,200

Non-current liabilities held for sale - - - - - - 7,856 38,102 7,856 38,102

TOTAL LIABILITIES 1,129,295 1,645,614 228,891 592,021 233,105 323,071 7,856 38,102 1,599,147 2,598,808

ANNEXES TO THE CONSOLIDATED FINANCIAL STATEMENTS


AN

NEX

1 –

IND

EPEN

DEN

T A

UD

ITO

RS’

FEE

S R

ELAT

ED

276 ■ Annex 1 - Independent auditors’ fees related


Annex 1 - Independent auditors’ fees related to the consolidated financial statements

DISCLOSURE OF FEES PAID FOR AUDITING SERVICES AND FOR SERVICES OTHER THAN THE AUDITING OF THE CONSOLIDATED FINANCIAL STATEMENTS

1. Information disclosure obligation

Pursuant to the provisions of art. 149-duodecies of the Consob Issuer Regulations (No. 11971/99), the following table provides the information regarding the fees paid to PricewaterhouseCoopers S.p.A..

2. Information of quantitative nature

Type of services Entity supplying the service

Recipient Fees (€/thousand)

Independent auditing PWC Parent Company 117

Independent auditing PWC Subsidiaries 84

Other services

- signing of tax returns PWC Parent Company 6

- other attestations PWC Parent Company 2

- other attestations PWC Subsidiaries 6

- Auditing of the annual accounts of the UCIs (1) PWC Subsidiaries 183

Total 398

(1) These fees are not presented in the income statement of the Group companies because they are chargeable to subscribers of the UCIs managed.

The consideration paid for the auditing indicated in the table include the amounts paid during 2017 and refer to services rendered in the same year which refer partly to the conclusion of the audit of the 2016 financial statements and partly to activities carried out during the year in relation to the audit of the 2017 financial statements.

REPORTS ON THE CONSOLIDATED FINANCIAL STATEMENTS


REP

OR

TS O

N T

HE

CON

SOLI

DAT

ED F

INA

NCI

AL

STAT

EMEN

TS

278 ■ Reports on the consolidated financial statements


INDEPENDENT AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS


IND

EPEN

DEN

T A

UD

ITO

RS’

REP

OR

T

280 ■ Independent Auditors’ Report

IND

EPEN

DEN

T A

UD

ITO

RS’

REP

OR

T

Independent Auditors’ Report ■ 281

IND

EPEN

DEN

T A

UD

ITO

RS’

REP

OR

T


SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2017XXXVI FINANCIAL YEAR

Board of Directors5 April 2018

REGISTERED OFFICE: VIA GRAMSCI, 7 10121 TURIN

SHARE CAPITAL€ 156,209,463 FULLY PAID-UP

BANK CODE NO. 3043.7BANKS REGISTER NO. 5319

TURIN COMPANY REGISTER OFFICE NO. 02751170016

CHAMBER OF COMMERCE OF TURIN REA NO. 600548 TAX ID CODE/ VATNO. 02751170016

REGISTERED IN THE REGISTER OF BANKS WITH NO. 5319

A SUBSCRIBER TO THE NATIONAL COMPENSATION FUND AND TO THE INTERBANK DEPOSIT PROTECTION FUND

PARENT COMPANY OF THE BANKING GROUP

(Registered with the Register of Banking Groups on 3.11.2017 code No. 3043)

FINANCIAL STATEMENTS31 DECEMBER 2017

REPORT ON OPERATIONSON THE FINANCIAL STATEMENTS

FINANCIAL STATEMENTS AT 31.12.2017

REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS

292 ■ Report on operations on the financial statements

MAIN BANCA INTERMOBILIARE DATA

BANCA INTERMOBILIARE SUMMARY DATA

ECONOMIC VALUES (expressed as €/thou.) 1

31.12.2017 31.12.2016 Changeabsolute

Change%

Net interest income 12,546 22,915 (10,369) -45.2%

Operating income 67,944 83,207 (15,263) -18.3%

Operating profit (loss) (4,492) 5,990 (10,482) N/a

Profit (loss) before non-recurring components (52,529) (104,219) 51,690 49.6%

Profit (loss) before tax (54,383) (106,976) 52,593 49.2%

Profit (loss) for the year (43,115) (83,094) 39,979 48.1%

FINANCIAL FIGURES (in €/million)31.12.2017 31.12.2016 Change

absoluteChange

%

Total deposits 6,189 7,542 (1,353) -17.9%

Direct deposits 1,084 1,625 (541) -33.3%

Invested assets (assets under administration and custody) 5,105 5,917 (812) -13.7%

Loans to clients 668 882 (214) -24.3%

- of which performing loans to clients 397 562 (165) -29.4%

- of which net impaired assets 245 296 (51) -17.2%

Total Assets 1,542 2,513 (971) -38.6%

EQUITY (in €/million) AND CAPITAL RATIOS31.12.2017 31.12.2016 Change

absoluteChange

%

Shareholders’ equity 142.5 179.0 (37) -20.7%

Own Funds 124.5 156.9 (32) -20.4%

Surplus of Own Funds 45.1 53.6 (9) -16.8%

Capital conservation buffer 12.4 8.1 4 49.4%

Total RWAs 1,069.9 1,382.7 (313) -22.6%

CET1 - Fully Phased 2 12.21% 12.13% 0.07 N/a

CET1 - Phased in 11.56% 11.33% 0.23 N/a

T1 - Additional Tier 1 11.56% 11.33% 0.23 N/a

TCR - Total Capital Ratio 11.64% 11.35% 0.29 N/a

Index of capitalisation 1.46 1.42 0.04 2.5%

1 The economic values have been reclassified compared to the income statement required by Bank of Italy Memorandum 262 of 2005 as currently applicable so as to achieve better representation of the results. Please see the notes beneath the table of the reclassified consolidated income statement.

2 The CET1 – Fully Phased - was calculated not applying the exceptions deriving from the transitional provisions provided for in Memorandum No. 285.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS

Report on operations on the financial statements ■ 293

PROFITABILITY INDICES31.12.2017 31.12.2016 Change

points %

Net interest income/Net operating income 18.5% 27.5% -9.1

Net fees and commissions/Net operating income 46.4% 46.5% -0.1

Operating profit (loss)/Net operating income -6.6% 7.2% -13.8

Cost/Income ratio (including other operating charges/income) 106.6% 92.8% 13.8

Net profit (loss)/Average net equity (ROE) -26.8% -37.3% 10.5

Net profit (loss)/Total Assets (ROA) -2.1% -3.0% 0.9

CREDIT QUALITY RATIOS31.12.2017 31.12.2016 Change

points %

Net impaired assets/Loans to clients 36.7% 33.5% 3.2

- of which Net non-performing loans/Loans to clients 22.5% 18.1% 4.4

- of which net probable defaults/Loans to clients 13.9% 14.7% -0.8

Percentage coverage of impaired assets 60.6% 53.1% 7.5

- of which Percentage coverage of non-performing loans 68.6% 64.1% 4.5

- of which Percentage coverage of probable defaults 34.1% 27.0% 7.1

OPERATING STRUCTURE31.12.2017 31.12.2016 Change

absoluteChange

%

Number of employees and collaborators (total) 475 505 (30) -5.9%

- of which Private Bankers 149 164 (15) -9.1%

Number of Banca Intermobiliare branches 28 29 (1) -3.4%

RATIOS PER EMPLOYEE (Thousands of €.) 31.12.2017 31.12.2016 Change

absoluteChange

%

Net operating income/Average number of employees 175 196 (22) -11.0%

Personnel costs/Average number of employees 90 87 4 4.1%

Total assets/Number of employees 3,246 4,976 (1,730) -34.8%

INFORMATION ON BANCA INTERMOBILIARE STOCK31.12.2017 31.12.2016 Change

absoluteChange

%

Number of outstanding ordinary shares 149,632,100 149,627,772 4,328 0.0%

Unit equity on shares outstanding 0.95 1.20 (0.25) -20.8%

Official price per ordinary share during the year

average 0.45 1.00 (0.55) -55.2%

minimum 1.19 1.60 (0.41) -25.7%

maximum 1.52 2.24 (0.72) -32.1%

Basic EPS (basic EDP) - EUR (0.288) (0.555) 0.267 N/a

Diluted EPS (basic EDP) - EUR (0.288) (0.555) 0.267 N/a


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


RECLASSIFIED STATEMENTS OF THE SEPARATE FINANCIAL STATEMENTS

RECLASSIFIED INCOME STATEMENT OF THE SEPARATE FINANCIAL STATEMENTS3

(Thousands of €)

2017 2016 Changeabsolute

Change%

Interest income and similar items 26,308 43,555 (17,247) -39.6%

Interest expense and similar items (13,762) (20,640) 6,878 33.3%

Net interest income 12,546 22,915 (10,369) -45.2%

Fee and commission income 41,066 49,383 (8,317) -16.8%

Fee and commission expenses (9,571) (10,709) 1,138 10.6%

Net fee and commission income 31,495 38,674 (7,179) -18.6%

Dividends 8,387 13,919 (5,532) -39.7%

Net gains (losses) on trading instruments 6,175 4,493 1,682 37.4%

Transactions on AFS securities and financial liabilities 9,377 3,383 5,994 177.2%

Net gains (losses) on hedging instruments (36) (177) 141 79.7%

Net gains (losses) on financial operations 23,903 21,618 2,285 10.6%

Operating income 67,944 83,207 (15,263) -18.3%

Personnel expenses (36,575) (37,734) 1,159 3.1%

Other administrative expenses (36,728) (36,803) 75 0.2%

Operating amortisation and depreciation (893) (1,016) 123 12.1%

Other operating expenses (income) 1,760 (1,664) 3,424 N/a

Operating costs (72,436) (77,217) 4,781 6.2%

Operating profit (loss) (4,492) 5,990 (10,482) -175.0%

Disposal and net value adjustments on loans (45,528) (91,598) 46,070 50.3%

Net provisions for risks and charges (1,965) (17,880) 15,915 89.0%

Net value adjustments on equity investments (544) (731) 187 25.6%

Profit (loss) before non-recurring components (52,529) (104,219) 51,690 49.6%

Write-downs on financial instruments (1,854) (2,757) 903 32.8%

Profit (loss) before tax (54,383) (106,976) 52,593 49.2%

Income tax for the period 1,987 23,882 (21,895) -91.7%

Profit (Loss) of current operations after tax (52,396) (83,094) 30,698 36.9%

Profit (Loss) of assets held for sale, net of tax 9,281 - 9,281 100.0%

Profit (Loss) for the year (43,115) (83,094) 39,979 48.1%

3 In order to better represent the results (compared to the income statement shown in the Financial Statements Section) the costs relating to the variable component of the remuneration of the private bankers who are employees were reclassified from “Personnel costs” to “Fee and commission expenses” for €/thou 1,354 at 31.12.2016 and for €/thou 3,684 at 31.12.2015).

The item “Transactions on AFS securities and financial liabilities” includes the Bank of Italy Memorandum No. 262 balance sheet items 100 a) and 100 d). The item “Write-downs of loans” includes the Bank of Italy Mem. No. 262 balance sheet items 100 a), 130 a) and 130 d). The item “operating amortisation and depreciation” includes the Bank of Italy Mem. No. 262 balance sheet items 170 and 180.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


RECLASSIFIED BALANCE SHEET4 OF THE SEPARATE FINANCIAL STATEMENTS(Thousands of €)

ASSETS 31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016published

Cash 1,688 1,669 19 1.1% 1,669

Loans:

- Loans to clients for performing loans 397,300 561,609 (164,309) -29.3% 561,609

- Loans to clients other 270,452 320,592 (50,140) -15.6% 320,592

- Loans to banks 106,330 369,209 (262,879) -71.2% 369,209

Financial assets:

- for trading 44,448 97,357 (52,909) -54.3% 97,357

- Available for sale 413,668 834,639 (420,971) -50.4% 834,639

- For hedging 1,607 1,327 280 21.1% 1,327

Fixed assets:

- Equity investments 99,298 99,298 - 0.0% 99,237

- Intangible and tangible 4,329 4,926 (597) -12.1% 4,926

Property held for sale 7,100 7,100 - 0.0% 7,100

Assets held for sale 13,029 24,714 (11,685) -47.3% 24,775

Other asset items 182,471 190,615 (8,144) -4.3% 190,615

Total assets 1,541,720 2,513,055 (971,335) -38.7% 2,513,055

LIABILITIES 31.12.2017 31.12.2016 Changeabsolute

Change%

31.12.2016published

Payables:

- Due to banks 180,126 511,460 (331,334) -64.8% 511,460

- Due to clients 1,022,724 1,320,127 (297,403) -22.5% 1,320,127

Outstanding securities 60,686 304,978 (244,292) -80.1% 304,978


- for trading 39,858 68,000 (28,142) -41.4% 68,000

- for hedging 8,906 14,758 (5,852) -39.7% 14,758

Specific provisions 27,276 30,291 (3,015) -10.0% 30,291

Other liability items 59,644 84,424 (24,780) -29.4% 84,424

Shareholders’ equity 142,500 179,017 (36,517) -20.4% 179,017

Total liabilities 1,541,720 2,513,055 (971,335) -38.7% 2,513,055

4 In order to provide a better representation of operations, the reclassified balance sheet details differ from the Bank of Italy formats for the reclassification of assets arising from recovery claims from item 160 “Other assets” to the item “Property held for sale” (€/thou 7,100 at 31.12.2017 and at 31.12.2016). The comparative figure at 31.12.2016 was restated in the “pro forma” column in order to take into account the recognition in the item equity investments of the subsidiary Bim Insurance Brokers no longer considered a non-current asset held for sale.

The entry “Other asset items” includes the Bank of Italy Mem. No. 262 balance sheet items 130 and 150 net of the properties mentioned above. The item “Specific provisions” includes the Bank of Italy Mem. No. 262 balance sheet items 110 and 120. The item “Other liability items” includes the Bank of Italy Mem. No. 262 balance sheet items 80 and 100.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


OPERATING FIGURES AND BALANCE SHEET DATA

TOTAL CLIENT ASSETS

Total client assets amounted to €/Bln 6.2 net of duplications and recorded a fall of 17.9% compared to the figure at 31.12.2016. The change was due to outflows of assets resulting from the termination of Private Bankers.


(Millions of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Direct deposits 1,084 1,625 (541) -33.3%

Indirect deposits 5,105 5,917 (812) -13.7%



(Millions of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

DIRECT DEPOSITS

Due to clients 1,023 1,320 (297) -22.5%

Payables represented by securities 61 305 (244) -80.0%

total direct deposits 1,084 1,625 (541) -33.3%

INDIRECT DEPOSITS

Assets under administration 5,105 5,917 (811) -13.7%

total invested assets 5,105 5,917 (811) -13.7%


Direct depositsDeposits and other securities at 31.12.2017 of €/Bln 1.1 (€/Bln 1.6 as at 31.12.2016) were down by 33.3% yoy. In particular there was a reduction in current accounts of clients and payables consisting of bonds issued by Banca Intermobiliare.

Indirect depositsInvested Assets, entirely made up of assets under administration, amounted to €/Mln 5.1 against €/Mln 5.9 at 31.12.2016.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


LOANS AND OTHER RECEIVABLES FROM CLIENTS

During 2017, the activity of reducing loan exposure to clients continued. These activities were provided for in the “guidelines” approved on 10 February 2017 and repeated in the “2017-2021 Business Plan” approved by the B.o.D. of BIM on 18 July 2017, where, among other things, the decision was confirmed to stop lending to corporate clients, to concentrate on “Lombard” exposures to Private clients.Performing loans to clients therefore recorded a reduction of 29.3% going down from an exposure of €/Mln 561.6 at the beginning of the year to the current €/Mln 397.3. In absolute terms the reduction was €/Mln 164.3. As regards impaired exposures the net decrease, of approximately €/Mln 48.9, was mainly due to the higher provisions set aside in the year. Impaired assets went down from €/Mln 295.7 at 31.12.2016 to the current €/Mln 246.8.As illustrated in previous reports, starting from the fourth quarter of 2016 and for the whole of 2017, Banca Intermobiliare carried out an overall analytical review of the status of the loan positions according to a rigorous provisions policy in the context of the revisions of the estimates regarding foreseeable losses, in the light of the most up-to-date information made available, both as regards the economic and financial situation of clients, and the evolution of the value of the guarantees received. With reference to the updating of its lending policies, as provided for in the Business Plan, the Bank began an updating process, which was completed in the early months of 2018 with the approval of new policies, and subsequent development of updated parameters and valuation models adopted in preparing the annual financial statements at 31.12.2017. The valuation carried out on the basis of the policy determined in financial year 2017 net value adjustments on receivables for a total of €/Mln 45.5 significantly down compared to the previous year (€/Mln 91.6 at 31.12.2016).

Quantitative information on loan exposures at 31.12.2017 is provided below.

Details of loans to clients

(Thousands of €)

31.12.2017 31.12.2016 Change absolute

Change %

Performing loans to clients 397,300 561,609 (164,309) -29.3%

Other loans to clients 270,452 320,592 (50,140) -15.6%

TOTAL LOANS TO CLIENTS 667,752 882,201 (214,449) -24.3%

As at 31.12.2017, loans to clients amounted to €/Mln 667.8 (€/Mln 882.2 at 31.12.2016) down by 24.3% owing mainly to the contraction of performing loans and the reduction of net impaired assets.

Performing loans to clients

(Thousands of €)

31.12.2017 31.12.2016 Change absolute

Change %

Current account overdrafts 231,619 350,199 (118,580) -33.9%

Mortgages 156,167 198,381 (42,214) -21.3%

Short-term loans 7,892 11,007 (3,115) -28.3%

Securities lending with clients 1,622 2,022 (400) -19.8%

Total performing loans to clients 397,300 561,609 (164,309) -29.3%


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Performing loans to clients amounted to €/Mln 397.3 (€/Mln 561.6 at 31.12.2016) down by 29.3%, with a coverage rate of 0.6%, unchanged compared to the 0.6% of 31.12.2016. Compared to the system data published in the aforementioned “Financial Stability Report” we can note a lower coverage rate of “performing assets” compared to the average of “Less Significant Banks” of 0.7% and in line compared to that of “Significant Banks” 0.6%.The composition of the loan portfolio to clients for performing loans, according to the various forms, was as follows: 58.3% was made up of current account overdrafts (€/Mln 231.6), 39.3% of mortgage loans (€/Mln 156.2), 2% of short-term loans (€/Mln 7.9) and 0.4% of other loans. Loans are mainly secured by rotating pledges or property mortgages, with a suitable spread according to prudential parameters required by the loan policy and regularly monitored.

Other receivables from clients

(Thousands of €)

31.12.2017 31.12.2016 Change absolute

Change %

Margins with clearing houses/non-banking brokers 25,089 24,884 205 0.8%


Total other receivables from clients 270,452 320,592 (50,140) -15.6%

Other receivables from clients, of €/Mln 270.5 as at 31.12.2017, fell compared to €/Mln 320.6 as at 31.12.2016, mainly due to the reduction of 17% in impaired assets, amounting to €/Mln 50.3, following the higher provisions set aside in the year.

Net impaired assetsThe following provides information relating to net impaired assets according to the classification provided for in the regulations issued by the Bank of Italy on regulatory reporting (Circular No. 272) and preparation of financial statements (Circular No. 262), which envisage, for impaired assets, classification as “non-performing loans”, “probable defaults”, “expired exposures”.


(Thousands of €)

31.12.2017 31.12.2016 Change absolute

Change %




Net impaired on-balance-sheet assets 245,363 295,708 (50,345) -17.0%

The exposure of net impaired assets amounted to €/Mln 245.4 down by 17% compared to 31.12.2016, mainly due to the significant write-downs that were made during the year. The coverage rate of “impaired assets” amounted to 60.6% (53.1% as at 31.12.2016) above the average system figure (47.5% referring to the category of “Non-Significant Banks”).


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS



(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change %Net

ExposureNet

Exposure





The exposure of net impaired assets amounted to €/Mln 245.4, down by 17% compared to 31.12.2016 owing mainly to the reclassification as non-performing of positions classified among probable defaults for which increased write-downs were recognised at 31.12.2017. In particular gross exposures saw an increase in gross bad positions of €/Mln 33.1, and a reduction instead in gross probable defaults of €/Mln 36.4 and in past-due exposures of €/Mln 4.8. The change in value adjustments saw instead an increase of a total of €/Mln 42.4 due mainly to non-performing positions. The coverage rate of “impaired assets” was 60.6% (53.1% at 31.12.2016) higher than the average figure for the industry (47.5% referred to the category of “Non-Significant Banks”).

Gross and net exposure of impaired on-balance-sheet assets

(Thousands of €)

31.12.2017

Gross exposure


Net Exposure

Percentagecoverage



Past-due exposures 2,607 (394) 2,213 15.1%

Impaired on-balance-sheet assets 622,804 (377,441) 245,363 60.6%

31.12.2016

Gross exposure


Net Exposure

Percentagecoverage



Past-due exposures 7,447 (1,261) 6,186 16.9%

Impaired on-balance-sheet assets 630,895 (335,187) 295,708 53.1%


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Credit quality ratiosAs regards credit quality, the table below shows the coverage rates of loan exposures to clients divided into “performing assets” and “impaired assets”.

company data system data

31.12.2017 31.12.2016 30.06.2017

Performing assets 0.7% 0.6% 0.7%

Impaired assets 60.6% 53.1% 47.5%

a) Non-performing loans 68.7% 64.1% 60.8%

b) Probable defaults 34.1% 27.0% 29.4%

c) Past-due 15.1% 16.9% 9.5%

The “company data” relating to 31.12.2017 and to 31.12.2016 were compared with the “system data” inferable from the latest Bank of Italy publication in the “Financial Stability Report 2/2017” released on 17 November 2017 and prepared on the basis of the final figures at 30.06.2017. In particular, a decision was taken to compare the data of Banca Intermobiliare with the relevant category of “Non-Significant Banks” (supervised by the Bank of Italy in close collaboration with the ECB).

Exposure to large exposures (separate financial statements of Banca Intermobiliare) Presented below is the accounting disclosure related to “large exposures” as per Regulation (EU) No. 680/2014 Annex IX which establishes the implementing technical standards under the terms of Regulation (EU) No. 575/2013. The supervisory body defines “large exposures” as receivables from a customer or a group of connected clients, the value of which is equal to or more than 10% of Own Funds.

Large exposures

(Millions of €)

31.12.2017 31.12.2016


a) Ammontare 970 250 2.072 310

b) Numero 11 11 13 13

Large exposures - by category

(Millions of €)

31.12.2017 31.12.2016


Impaired 3 74 70 4 110 96

Clients 4 89 48 3 131 101

Bim Group companies 1 161 30 1 1,013 28

Banks 1 134 102 3 85 85




REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


As of 31.12.2017, excluding from the 11 positions a leading Italian banking group, the exposure towards the companies of the Banca Intermobiliare Banking Group and the 2 institutions (Italian Ministry of the Economy and the Cassa di Compensazione e Garanzia (the Clearing House)), the remaining positions consist of 4 “performing” loan exposures and 3 “impaired” loan exposures for a total weighted exposure of approximately €/Mln 118. Of these one position exceeds the parameters pursuant to Art. 395 paragraph 1 of Regulation (EU) no. 575/2013 (CRR) and relates to the exposure to an impaired customer for which Banca Intermobiliare is studying the possibility of disposing of the receivable. For further information relating to the on- and off-balance-sheet exposures to clients please see Part E “Information on risks and related hedging policies” in the Notes to the Consolidated and Separate Financial Statements at 31.12.2017.

EXPOSURE TO THE BANKING SYSTEM

Net financial position

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Loans

Current accounts and demand deposits 65,031 315,752 (250,721) -79.4%

Term deposits 10,140 13,646 (3,506) -25.7%

Securities lending and repurchase agreements 16,057 12,269 3,788 30.9%

Income for on-demand derivative operations 15,102 17,555 (2,453) -14.0%

Debt securities - 9,987 (9,987) -100.0%

Total loans to banks 106,330 369,209 (262,879) -71.2%

Payables

Current accounts and other on-demand deposits (143,458) (123,328) (20,130) 16.3%

Term deposits (13,008) (505) (12,503) 2475.8%

Repurchase agreements (20,965) (374,583) 353,618 -94.4%

Other payables (2,695) (13,044) 10,349 -79.3%

Total due to banks (180,126) (511,460) 331,334 -64.8%

TOTAL NET FINANCIAL POSITION (73,796) (142,251) 68,455 -48.1%

During 2017 Banca Intermobiliare reduced to zero its net financial position in relation to the former parent company Veneto Banca and forged new relationships with several counterparties in order to optimise the financing and investment needs.In particular the net financial position with banks, a debt of €/Mln 73.8, decreased by 48.1% compared the figure at 31.12.2016 which had closed with a debit balance of €/Mln 142.3. Receivables from banks amounted to €/Mln 106.3, recording a decrease of 71.2% compared to 31.12.2016, owing mainly to the lower positive balance present in reciprocal accounts. Payables to banks amounted to €/Mln 180.1 down compared to €/Mln 511.5 in being at 31.12.2016, mainly as a result of the lower exposure in securities lending and in repurchase agreements.For a description of the interest rate risk and liquidity risk management strategies, one should refer to the management report to the consolidated financial statements Section “Market Disclosures” - “Information on risks and factors influencing profitability” and the disclosure in Part E “Information on risks and related hedging policies” - the “Market Risks” Section of the Notes to the consolidated financial statements for the qualitative data and the separate financial statements for the quantitative data.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


FINANCIAL INSTRUMENTS

Financial instruments breakdown

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Securities portfolio

High frequency trading (HFT) assets 29,053 43,584 (14,531) -33.3%

Trading liabilities (24,533) (14,185) (10,348) 73.0%

Available-for-sale assets (AFS) 413,668 834,639 (420,971) -50.4%

Debt securities (L&R) - 9,987 (9,987) -100.0%


Derivatives portfolio

High frequency trading (HFT) assets 15,395 53,773 (38,378) -71.4%

Trading liabilities (15,325) (53,815) 38,490 -71.5%

Total derivatives portfolio 70 (42) 112 N/a

TOTAL FINANCIAL INSTRUMENTS 418,258 873,983 (455,725) -52.1%

The total exposure in financial instruments is made up primarily of on-balance-sheet assets (securities portfolio) held both for “trading book” and “banking book” purposes, and marginally of derivative assets (derivatives portfolio).At 31.12.2017, the total of financial instruments amounted to €/Mln 418.3, and was down compared to the €/Mln 874 of the financial year ended 31.12.2016. The reduction in the securities portfolio - which began towards the end of 2016 - continued also during 2017, in order to limit the Bank’s exposure to market and counterparty risks, thorough a Banking Book of a limited size and mitigation of exposure to country risk through diversification of issuers. In absolute terms, the investments in on-balance-sheet financial instruments recorded a decrease of 52.2%, in particular due to the reduction in assets available for sale which went down from €/Mln 834.6 at 31.12.2016 to the current €/Mln 413.7. As for the derivatives portfolio, the volumes fell sharply compared to the 2016 end-of-year figure. At 31.12.2017 Banca Intermobiliare no longer had any exposure in financial instruments to the former Parent Company Veneto Banca (€/Mln 7.4 at 31.12.2016). Below, investments in financial instruments per portfolio type are listed.


(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Trading securities

- Debt securities 28,732 43,251 (14,519) -33.6%

- Equity securities 321 333 (12) -3.6%


Trading derivative instruments

- Financial derivatives 15,347 53,524 (38,177) -71.3%

- Credit derivatives 48 249 (201) -80.7%

Total derivatives portfolio 15,395 53,773 (38,378) -71.4%

TOTAL FINANCIAL ASSETS HELD FOR TRADING 44,448 97,357 (52,909) -54.3%


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


“Financial assets held for trading” consist of 65% from the “securities portfolio” (45% at 31.12.2016) and the “derivatives portfolio” for the remaining 35% (55% at 31.12.2016).

The “securities portfolio” recorded an exposure of €/Mln 29.2, of which 99% consisted of debt securities, mainly to Governments and Central Banks and of Italian and European Bank bonds with average maturity of less than three years. Banca Intermobiliare’s exposure to the Italian State is €/Mln 0.7 (€/Mln 13.6 at 31.12.2016) which represents 2.3% of the total portfolio of securities held for trading.

The “derivatives portfolio”, composed primarily of exchange rate derivatives traded between clients and institutional counterparties, presented at 31.12.2017 an exposure in derivatives of €/Mln 15.4, recognised among trading assets, substantially offset with the derivative instruments recognised among trading liabilities. The exposure in derivatives decreased sharply compared to the figure at 31.12.2016 which was €/Mln 53.8 recording a gradual decline throughout the year.


(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%


Cash liabilities 24,533 14,185 10,348 73.0%

Trading derivative instruments 15,325 53,815 (38,490) -71.5%

TOTAL FINANCIAL LIABILITIES HELD FOR TRADING 39,858 68,000 (28,142) -41.4%

“Financial liabilities held for trading” amounted to €/Mln 39.9 down by 41.4% compared to 31.12.2016. These liabilities consist of €/Mln 24.5 of cash liabilities and €/Mln 15.3 of derivative instruments.The financial liabilities refer to technical overdrafts on equity securities and debt securities for which arbitrations are under way with trading derivatives entered among financial assets held for trading. In particular the increase recorded in the period involved “relative value” strategies on government exposures. Trading derivative instruments consist mainly of cross currency swaps balanced with similar derivative contracts on currencies, entered among financial assets held for trading.From an economic point of view, the trading portfolio (securities and derivatives), during 2017, generated revenue of €/Mln 6.8 (€/Mln 7.7 at 31.12.2016), of which: net interest and dividends of €/Mln 0.6 (€/Mln 3.4 at 31.12.2016) and net trading gain of €/Mln 6.2 (€/Mln 4.5 at 31.12.2016).


(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%


- Equity securities 3,788 12,298 (8,510) -69.2%

- Debt securities 401,678 777,023 (375,345) -48.3%

- Shares in UCIs 8,202 45,318 (37,116) -81.9%

TOTAL FINANCIAL ASSETS AVAILABLE FOR SALE 413,668 834,639 (420,971) -50.4%

The “portfolio of financial assets available for sale” at 31.12.2017 recorded a decrease of 50.4% (amounting to €/Mln 421), which affected mainly investments related to the debt security segment. The significant reduction came in the context of the Bank’s strategy of reducing Market Risk as illustrated above. As regards the breakdown we can note, also for the “banking book”, a high concentration of debt securities, approximately 97.1% of the total of the segment. These debt securities were mainly allocated to the treasury portfolio and consisted of short/medium-term government bonds of Italian and European issuers. Banca Intermobiliare’s exposure to the Italian State is €/Mln 358.8 (€/Mln 589.4 as at 31.12.2016) which represents 86.7% of the total portfolio of financial assets available for sale.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


At 31.12.2017 Banca Intermobiliare’s exposure to the former Parent Company Veneto Banca had been completely liquidated (€/Mln 82.6 at 31.12.2016).

With regard to the economic results recorded in the period, financial assets available for sale generated revenueof €/Mln 15 (€/Mln 14.2 at 31.12.2016), of which: net interest income and dividends of €/Mln 11.6 (€/Mln 17.7 at 31.12.2016); spreads relating to existing hedges of a negative €/Mln 4.1 (a loss of €/Mln 4.1 at 31.12.2016); a positive result from the sale of securities of €/Mln 9.4 (€/Mln 3.5 at 31.12.2016); net hedging gain of €/Mln 0.036 (a loss of €/Mln 0.177 at 31.12.2016); impairment of €/Mln 1.9 (€/Mln 2.8 at 31.12.2016).

Debt securities Loans & Receivables

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Debt securities Loans&Receivables

- Debt securities due to banks - 9,987 (9,987) -100.0%

- Debt securities due to clients - - - -

TOTAL DEBT SECURITIES LOANS & RECEIVABLES - 9,987 (9,987) -100.0%

At 31.12.017 there were no longer any securities recognised in the Loans & Receivables portfolio. The comparative balance at 31.12.2017 consisted of 2 bank bonds, not quoted on active markets, which had been acquired as “private placements” and were not held for trading. One bond of €/Mln 5 reached maturity in February 2017, while the second maturing in January 2018 of €/Mln 4.9 was sold on the market during October.

Outstanding securities

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Bond issues

- structured 17,608 34,724 (17,116) -49.3%

- other 43,078 270,254 (227,176) -84.1%

TOTAL OUTSTANDING SECURITIES 60,686 304,978 (244,292) -80.1%

Outstanding securities, made up entirely of bond loans issued by Banca Intermobiliare, amounted to €/Mln 60.7. The 80.1% reduction compared to the previous year was due to repayments made of securities at maturity. No new bond issues were place in the period. At 31.12.2017 fixed-rate issues represent 58% of the total debt in issue while floating-rate issues account for 42%. As regards bond issues we can note that they will reach maturity for €/Mln 35 in 2018, €/Mln 17.3 in 2019 and €/Mln 8 in 2021.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Hedging derivatives At 31.12.2017, the positive balances of hedging derivatives amounted to €/Mln 1.6 (€/Mln 1.3 at 31.12.2016), and the negative balances amounted to €/Mln 8.9 (€/Mln 14.8 at 31.12.2016). The hedging activities carried out in the period are mainly attributable to “fair value” hedging of Italian BTPs in “asset swaps” recognised among financial assets available for sale and to bond loans issued.During 2017, there was a reduction in the volumes of hedging derivative contracts following the lower exposure of the “banking book”. The breakdown by type of instrument hedged is presented below.

(Thousands of €) Positivefair value

Negative fair value

NotionalValue




TOTAL at 31.12.2017 1,607 (8,906) 305,150

(Thousands of €) Positivefair value

Negative fair value

NotionalValue




TOTAL at 31.12.2016 1,327 (14,759) 475,050

For more information please see the notes to the present annual financial statements and in particular as regards the accounting aspects Part A - Accounting Policies and as regards market risks Part E - Information on risks and related hedging policies.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


SPECIFIC PROVISIONS

The specific provisions at 31.12.2017 amounted to €/Mln 27.3 down compared with the figure at 31.12.2016 by 10%.

Specific provisions

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Provisions for risks and charges 23,313 25,881 (2,568) -9.9%

Employee severance fund 3,963 4,410 (447) -10.1%

TOTAL SPECIFIC PROVISIONS 27,276 30,291 (3,015) -10.0%

At 31.12.2017, “Provisions for risks and charges” amounted to €/Mln 23.3 (9.9% compared to 31.12.2016) and were established primarily against probable liabilities and risks associated with various kinds of disputes related, inter alia, to customer complaints and disputes, tax disputes and contractual indemnities owed, which were measured according to actuarial criteria under the IAS 37 accounting standard. The “Employee severance indemnity fund” at 31.12.2017 amounted to €/Mln 3.4, with a decrease of 10.1% compared to 31.12.2016. The fund is recognised in the accounts on the basis of its actuarial value determined by independent actuaries.

Provisions for risks and charges

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Disputes and complaints on VB shares 8,963 10,022 (1,059) -10.6%

Disputes regarding investment services 4,282 6,603 (2,321) -35.2%

Tax Disputes 4,970 4,859 111 2.3%

Other disputes and complaints 5,098 4,397 701 15.9%

PROVISIONS FOR RISKS AND CHARGES 23,313 25,881 (2,568) -9.9%

During the year 2017 an overall amount of net allocations was included in the income statement totalling €/Mln 2, (€/Mln 17.9 at 31.12.2016).

In particular in relation to disputes and complaints received by BIM from clients regarding the trading of Veneto Banca shares the provisions in being at 31.12.2017 were €/Mln 8.9 (compared to a petitum of €/Mln 20.8). We can specify that the determination of provisions for risks did not take into account Banca Intermobiliare clients that have accepted the former Parent Company’s Settlement Offer the costs of which are all chargeable to Veneto Banca. The Board of Directors of Veneto Banca passed a resolution on 9 January 2017, to initiate a group settlement initiative under which the former Parent Company had proposed a pre-set flat-rate, all-inclusive compensation, by way of settlement, to a large section of its shareholder base (without this being able to be inferred, even implicitly,as recognition of liability), of 15% for each Veneto Banca share purchased or subscribed, respectively, from or at a bank of the Veneto Banca Group in the period between 1 January 2007 and 31 December 2016, net of any sales and some other kinds of operations described in the settlement offer regulations, with all charges to be paid directly by it.On 11 April 2017, the Board of Directors of Veneto Banca, after assessing the definitive result of the Settlement Offer (final acceptances of 54,374 shareholders, equivalent to 72.6% of the total), had resolved to waive the condition precedent that entailed reaching 80% of acceptances and to proceed, and consequently, it paid the compensation due to the shareholders that had accepted the Settlement Offer.781 Banca Intermobiliare clients accepted the Settlement Offer for which against a disputed amount of €/Mln 20.5 the compensation paid was €/Mln 3.4.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


The following provides summary information on the inspections and tax audits carried out on Banca Intermobiliare and its subsidiaries in the period or which were still ongoing as at 31.12.2017. Please refer to the information in the Notes to the financial statements for further details.

“ECB” Inspection of the former Parent Company Veneto Banca and indirectly of BIM In October 2016, the ECB had initiated a further inspection at the Parent Company Veneto Banca and therefore indirectly of Banca Intermobiliare, with the aim of evaluating, with reference to the perimeter of Italian banks belonging to the Veneto Banca Group, the management of credit and counterparty risk and the risk control systems. With reference to Banca Intermobiliare, the inspectors had analysed a sample of loans, with reference to the date of 30.06.2016, having a gross exposure amounting to €/Mln 536 and identified €/Mln 375 relating to impaired exposures (57.4% of the total impaired portfolio) and €/Mln 162 relating to the performing portfolio (28.4% of the gross exposure of performing loans to clients). As of today, Banca Intermobiliare, in the light of the corporate evolution of the former Parent Company Veneto Banca now in compulsory administrative liquidation, considers it improbable that the process of communicating the results of the inspections will be formalised. As of today, they have not been received either from the inspection team, or from the former Parent Company Veneto Banca.We can specify that Banca Intermobiliare had adopted precisely, already in the 2016 annual financial statements, the indications destined to reflect in the accounts the points raised during the inspection. In addition the BIM Board of Directors, also to implement the guidelines of the Business Plan, had launched an updating process relating to the management and assessment processes and to the control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the financial statements at 31.12.2017. CONSOB inspections and sanctioning processesSanctioning proceedings for violation of disclosure requirements on Repo Operations.On 23 December 2016 CONSOB notified Banca Intermobiliare that it had opened sanction proceedings, considering that the disclosure transparency obligations provided for in the legislation had been breached with reference to three transactions of major significance with Related Parties, consisting of “Repurchase Agreement” (Repo) transactions in favour of the Parent Company Veneto Banca S.p.A.. With resolution no. 20099 of 30 August 2017, notified to Banca Intermobiliare on 29 September 2017, CONSOB imposed on Banca Intermobiliare a fine of a total of €/thou 470. Within the deadline of 30 days from the notification, Banca Intermobiliare, lodged an appeal under art. 195 of the Consolidated Law on Finance (TUF) with the Court of Appeal. Banca Intermobiliare has considered that the sanction measure may be cancelled or at least the amount imposed is likely to be reduced. It has therefore set aside a provision of €/thou 235.

Sanctioning proceedings against corporate officers pursuant to arts. 190 and 195 of Legislative Decree No. 58 of 24 February 1998, and, by way of joint liability, against Banca Intermobiliare.On 19 January 2017 - following the inspection conducted in the period 2015-2016 - CONSOB notified the Bank of the launch of sanctioning proceedings against 29 corporate officers – between administrative officers and managers - as it considered that the legislation on investment services had been infringed.After obtaining access to the records, the Bank delivered the counterclaims on 21 April 2017. In the meantime, the necessary planning activities were launched for remedying the anomalies found. On 16 November 2017, the Administrative Sanctions Office presented the proposed sanctions to the Commission, for 28 of the 29 officers, from a minimum of € 7,500 to a maximum of € 85,500 per capita, for a total of €/Mln 1.080: an amount for which the Bankis merely jointly liable with the obligation of recourse.Against the allegations described above, on 15 December 2017, Banca Intermobiliare presented its counter-arguments, contesting, among other things, its passive joint liability and the amount of the same. Although the Commission’s decision is pending and taking into account the fragmentation of the sanctions, for prudential reasons, and only in the event that any and all of the amounts paid in advance cannot be recovered, it was decided to set aside a provision of €/thou 100. Sanctioning proceedings against corporate officers for infringements of art. 149, paragraph 1, letter a) of Legislative Decree No. 58 of 1998, and, by way of joint liability, against BIM.With resolution no. 19821 of 21 December 2016 CONSOB, considering that the legislation on transactions of major significance with related parties had been breached, in relation to the sale to Veneto Banca of the 67.22% equity interest in the share capital of Banca IPIBI Financial Advisory S.p.A. (now Banca Consulia S.p.A.) determined sanctions, chargeable to the auditing body (former members of the board of statutory auditors) under the terms of art. 193, paragraph 3, of the CLF, for a total of €/thou 85. All the statutory auditors paid the amount of the sanction.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Sanctioning proceedings against BIM for infringement of the combined provisions of art. 114, paragraph 5, of Legislative Decree No. 58 of 1998 and art. 5 of CONSOB Regulation No. 17221/2010, art. 114, paragraph 1, of Legislative Decree No. 58/1998, as implemented by art. 109 of CONSOB Regulation n. 11971/1999 - which in turn invokes art. 66 of the same Regulation - as well as art. 114, paragraph 5, of Italian Legislative Decree No. 58/1998, in conjunction with art. 6 of Regulation No 17221/2010.CONSOB, considered that the combined provisions of arts 114, paragraph 5, of the CLF and art. 5 of the TRP Regulation and arts 114, paragraph 5, of the aforementioned Decree and art. 6 of the said Regulation were infringed, in relation to a transaction of major significance with related parties, carried out on 7 August 2014, consisting of the sale to Veneto Banca of the 67.22% equity interest in the share capital of Banca IPIBI Financial Advisory S.p.A. (now Banca Consulia S.p.A.) held by BIM, a company controlled by Veneto Banca and subject to activity of direction of coordination by the same. After granting access to the records of the proceedings and assessing the overall defensive position, with resolution no. 19822 of 21 December 2016, CONSOB expressed its conclusions stating that the alleged infringements appeared proven and established the related penalties to be paid by BIM, totalling €/thou 25. The sanction was paid on 24 November 2017.

Tax audits of Banca Intermobiliare As regards the tax audits that involved Banca Intermobiliare information was provided on the objections raised, on the years covered by the inspections, on the petitum and on any charges payable by the company in Part B - Section 13 “Tax assets and tax liabilities” of the Notes to the Separate Financial Statements.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


SUBSIDIARY AND ASSOCIATED COMPANIES

Equity investments

(Thousands of €)

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016published

Investments in wholly-owned subsidiaries

- Symphonia SGR SpA 76,124 76,124 - - 76,124

- Bim Fiduciaria SpA 465 465 - - 465

- Bim Insurance Broker SpA 61 61 - - -

- Bim Immobiliare Srl 2,470 2,470 - - 2,470

- Immobiliare D Srl 39 39 - - 39

- Paomar Terza Srl 10,201 10,201 - - 10,201

Total exclusive subsidiaries 89,360 89,360 - - 89,299

Companies subject to significant influence

- Bim Vita SpA 9,938 9,938 - - 9,938

Total companies subject to significant influence 9,938 9,938 - - 9,938

TOTAL EQUITY INVESTMENTS 99,298 99,298 - - 99,237

On 31.07.2017 Banca Zarattini & Co SA and Banca Intermobiliare S.p.A. signed an agreement for the purchase and sale of 100% of the capital of Bim Suisse S.A. held by Banca Intermobiliare and recognised in the financial statements at 31.12.2016 among non-current assets held for sale. Following the fulfilment of the conditions precedent, among which authorisation from the Swiss Supervisory Authority, Banca Intermobiliare, as per the agreements signed, purchased the shares of the property company Patio Lugano, held by Bim Suisse for Chf/Mln 15.05 on 18.10.2017. With reference to the comparative figure of the subsidiary Bim Insurance Brokers, the equity investment had been reclassified among assets held for sale, because the Board of Directors, at the meeting on 9 and 10 February 2017, had defined the said equity investment as non-strategic. On 31 May 2017 the Board of Directors had decided not to proceed any longer with the disposal of BIM Insurance Brokers S.p.A..


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


PROPERTY, PLANT AND EQUIPMENT, AND INTANGIBLE ASSETS

The fixed assets, a total of €/thou 4,329, down compared to €/thou 4,926 at 31.12.2016. Property, plant and equipment amounted to €/thou 4,155 and mostly regarded furniture, fittings and devices in use at the headquarters and branches. Intangible fixed assets amounted to €/thou 174 and mainly consist of software.

Fixed assets

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Fixed assets:

- Property, plant and equipment 4,155 4,601 (446) -9.7%

- Intangibles 174 325 (151) -46.5%

TOTAL FIXED ASSETS 4,329 4,926 (597) -12.1%

PROPERTY HELD FOR SALE

The properties deriving from credit recovery operations were transferred, for more correct presentation and better legibility of the accounting data, in the reclassified balance sheet from the item “Other assets” to the item “Properties held for sale” and measured according to the international accounting standard IAS 2 - Inventories. At 31.12.2017, the exposure on the balance sheet of property held for sale amounted to €/Mln 7.1 (unchanged compared to 31.12.2016). As defined in the 2017-2021 business plan, the entire property portfolio comes within the scope of the process of disposing of and realising non-strategic assets.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


NON-CURRENT ASSETS/LIABILITIES HELD FOR SALE

31.12.2017 31.12.2016pro-forma

Changeabsolute

Change%

31.12.2016

Non-current assets held for sale:

- Bim Suisse - 24,714 - -100% 24,714

- Patio Lugano 13,029 13,029 100% -

- Bim Insurance Brokers - - - - 61

TOTAL NON-CURRENT ASSETS HELD FOR SALE 13,029 24,714 - - 24,775

As from 31.12.2016 and on the basis of IFRS 5, Banca Intermobiliare had reclassified its controlling stakes in BIM Suisse (including its subsidiary Patio Lugano S.A.) and in BIM Insurance Brokers S.p.A. from the item “Equity investments” to the item “Non-current assets and disposal groups held for sale”.

Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. In November 2016, after receiving informal expressions of interest shown by market counterparties for the Swiss investee, Banca Intermobiliare had given a mandate to the advisors Rothschild and Orrick to assess any possibilities of realising the same. During the financial year 2017 specific informative material was made available to certain selected counterparties and on 26 April 2017 the advisors received a number of binding offers. On 5 May 2017, Banca Intermobiliare gave Banca Zarattini & Co SA an exclusive period of 30 days starting from 6 June 2017, subsequently extended up to 31 July 2017. On 31.07.2017 Banca Zarattini & Co SA and Banca Intermobiliare S.p.A signed an agreement for the sale of 100% of the share capital of BIM Suisse SA held by BIM. Following fulfilment of the conditions precedent: i) authorisation from the Swiss Supervisory Authority; ii) completion of the purchase by Banca Intermobiliare of the property company Patio Lugano, held by Bim Suisse for Chf/Mln 15.05 and iii) definition of a receivable position being analysed, on 18.10.2017 the purchase and sale contract was concluded. The initial price agreed of CHF/Mln 40.4 was subject to a “price adjustment” mechanism when the economic result and the performance of the assets managed by Bim Suisse between 30 June and 18 October were known. Disposal of the equity investment determined a benefit in the income statement, under the item Profit (Loss) of assets held for sale, after tax of €/Mln 9.3.

Bim Insurance Brokers S.p.A. On 31 May 2017 the Board of Directors had decided not to proceed any longer with the disposal of BIM Insurance Brokers S.p.A..


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


OTHER ASSET AND LIABILITY ITEMS

The “Other assets items” amounting to €/Mln 182.5 (€/Mln 190.6 as at 31.12.2016) consisted of “Tax assets” totalling €/Mln 114.8 (€/Mln 118.8 at 31.12.2016) and “Other Assets” totalling €/Mln 67.6 (€/Mln 71.8 at 31.12.2016).

Other asset items

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Tax assets 114,833 118,844 (4,011) -3.4%

a) current 38,975 15,348 23,627 153.9%

b) deferred 75,858 103,496 (27,638) -26.7%

Other Assets 67,638 71,771 (4,133) -5.8%

TOTAL OTHER ASSET ITEMS 182,471 190,615 (12,155) -6.4%

The “Tax assets” consist of “Current tax assets” for €/Mln 39 and “Deferred Tax Assets” (DTAs) for €/Mln 75.9 of which referring primarily to prepaid taxes convertible into tax credits, pursuant to art. 2, paragraph 55, of ItalianLaw Decree 225/2010 and subsequent regulatory changes, for €/Mln 48.9 (€/Mln 31.7 for write-downs on loans and €/Mln 17.2 for realignment of goodwill performed according to Italian Legislative Decree 98/11).

DTAs - Deferred Tax Assets

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Noble DTAs 48,925 71,634 (22,709) -31.7%

- generated on loans 31,699 47,025 (15,326) -32.6%

- generated on goodwill 17,226 24,609 (7,383) -30.0%

Non-noble DTAs 6,242 11,166 (4,924) -44.1%

DTAs from tax losses 20,691 20,696 (5) 0.0%

Total DTAs - Deferred Tax Assets 75,858 103,496 (27,638) -26.7%

It should be noted that during 2017, steps were taken, pursuant to Art. 2, paragraph 55, of Italian Law Decree 225/2010, to convert the deferred tax assets into tax credits for Banca Intermobiliare for a total amount of €/Mln 22.7, since for the same a loss had been recognised in the previous financial year.At the moment of setting aside the deferred taxation for 31.12.2017, the Bank allocated non-noble DTAs, while it has not yet allocated DTAs deriving from the tax loss of the period.

The “Other assets” amounted to €/Mln 67.6 (€/Mln 71.8 as at 31.12.2016) with a reduction compared to the previous financial year, and mainly consisted of tax receivables from the Tax Authority amounting to €/Mln 31 (€/Mln 38.4 at 31.12.2016), and items being processed totalling €/Mln 11.1 (€/Mln 11.3 at 31.12.2016).


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Other liability items

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Passività fiscali 3.037 3.024 13 0,4%

a) correnti - - - -

b) differite 3.037 3.024 13 0,4%

Altre passività 56.607 81.400 (24.793) -30,5%

TOTALE ALTRE VOCI DEL PASSIVO 59.644 84.424 (24.767) -29,3%

The “Other liability items” amounted to €/Mln 59.6 (€/Mln 84.4 as at 31.12.2016), and included “Tax liabilities” of €/Mln 3 (€/Mln 3 as at 31.12.2016), and “Other liabilities” of €/Mln 56.6 (€/Mln 81.4 at 31.12.2016). “Other liabilities” consist mainly of taxes payable to the Tax Authority for €/Mln 18 (€/Mln 20.3 to 31.12.2016), sums available to clients of €/Mln 0.6 (€/Mln 29.9 at 31.12.2016) and trade payables totalling €/Mln 23.3 (€/Mln 12.9 at 31.12.2016).


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


SHAREHOLDERS’ EQUITY AND REGULATORY AGGREGATES

The total Shareholders’ equity for Banca Intermobiliare as at 31.12.2017, including the result for the period amounted to €/Mln 142.5 down compared to €/Mln 179 recorded in the previous year.

Shareholders’ equity

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Share Capital 156,209 156,209 - -

Treasury shares (-) (29,711) (29,731) 20 -0.1%

Reserves 51,405 56,691 (5,286) -9.3%

Issue premiums - 77,823 (77,823) -100.0%

Valuation reserves 7,712 1,119 6,593 589.2%

Profit (Loss) for the year (43,115) (83,094) 39,979 -48.1%

TOTAL EQUITY 142,500 179,017 (36,517) -20.4%

The change in equity during the period, amounting to €/Mln 36.5, was determined mainly by the loss for the period of €/Mln 43.1. The loss for the period of the separate financial statements at 31.12.2016 of Banca Intermobiliare of €/Mln 83.1 was entirely covered by using equity reserves (€/Mln 77.8 of Share premium reserve, €/Mln 3.4 of Legal Reserve and €/Mln 1.9 of Other Reserves).

Movimentazione in sintesi del patrimonio netto individuale

(Thousands of €)

Equity at 31.12.2016 179,017

Treasury shares 20

Purchase and sale of treasury shares 20

Valuation reserves 6592

Valuation reserves for adjustment of the fair value of the AFS portfolio 6600

Actuarial gains (losses) on defined benefit pension plans (8)

Issue premiums (77,823)

Use of the equity reserves to cover losses brought forward (77,823)

Reserves (5,285)

Result carried forward from previous year (5,271)

Profit (loss) from trading of own issued securities (14)

Changes on the result 39,979

Reversal of result from previous year 83,094

Profit (loss) for the period (43,115)

Equity at 31.12.2017 142,500

Details of changes in equity in the separate financial statements for 2017 are reported in the specific table in the “Financial statements” Section. For details relating to changes in treasury shares, see the information in Part B - Section 14 in the Notes to the Separate Financial Statements.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Separate prudential supervisionAt 31.12.2017, despite the significant loss in the period and the simultaneous reduction in shareholders’ equity, we can confirm that there is adequate capital strength in relation to the criteria set out in the Basel III agreement. Own Funds were reduced to €/Mln 124.5 (€/Mln 156.9 as at 31.12.2016), and the surplus of Own Funds over weighted risk assets amounted to €/Mln 40 (€/Mln 53.6 at 31.12.2016). The Capital conservation buffer amounted to €/Mln 12.4, up compared to €/Mln 8.1 at 31.12.2016.

Supervisory aggregates on a separate basis

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Own Funds 124,543 156,891 (32,348) -20.6%

Surplus of Own Funds 5 45,078 53,585 (8,507) -15.9%

Capital conservation buffer 6 12,416 8,071 4,345 53.8%

Separate Own Funds

(Thousands of €)

31.12.2017 31.12.2016






E. Transitional arrangements - Impact on CET1 (+/-) 2,596 (448)


G. Additional Tier 1 Capital (AT1) before items to be deducted and effects of transitional arrangements -

of which AT1 instruments subject to transitional provisions -

H. Items to be deducted from AT1 -

I. Transitional arrangements - Impact on AT1 (+/-), including instruments issued by subsidiaries and included in the AT1 due to transitional rules -

L. Additional Tier 1 – AT1 (G - H +/- I) -

M. Tier 2 Capital (T2) before items to be deducted and effects of transitional arrangements -

of which T2 instruments subject to transitional provisions -

N. Items to be deducted from T2 -

O. Transitional arrangements - Impact on T2 (+/-), including instruments issued by subsidiaries and included in the T2 due to transitional arrangements 841 210

P. Total Tier 2 Capital - T2 (M - N + /- O) 841 210


Following entry into force of Regulation (EU) 2016/445 of the ECB, at 31.12.2017, 80% of the realised gains and losses on financial instruments recognised in the “Financial assets available for sale” portfolio were included in the calculation of the capital ratios (on full implementation, in 2018, the realised gains and losses will be included at 100%). The comparative figure included, according to the legislation in force at the time, 60% of the unrealised gains and losses with the exception of government securities the unrealised results of which were not included.

5 Surplus of Own Funds: difference between “Own Funds” and “Risk-weighted assets” (not including own requirements for specific provisions).6 Capital conservation buffer: this is a reserve aimed at preserving the minimum level of regulatory capital in times of adverse market through setting aside capital resources

of high quality in periods not characterised by market tensions, and is 1.25% of risk-weighted assets (at 31.12.2016 the ratio was 0.625% of risk-weighted assets).


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Separate capital requirements (weighted amounts)

(Thousands of €)

Risk type 31.12.2017 31.12.2016 Change absolute

Change%

Credit and counterparty risk 63,878 86,492 (22,614) -26.1%

Market risks 3,341 2,189 1,152 52.6%

Operational risk 12,246 14,625 (2,379) -16.3%

Other calculation elements 6,123 7,313 (1,190) -16.3%

Total separate capital requirements 85,588 110,619 (25,031) -22.6%

Separate Risk Weighted Assets (RWAs) 7

(Thousands of €)

Risk type 31.12.2017 31.12.2016 Change absolute

Change%

Credit and counterparty risk 798,481 1,081,153 (282,672) -26.1%

Market risks 41,762 27,361 14,401 52.6%

Operational risk 153,074 182,818 (29,744) -16.3%

Other calculation elements 76,537 91,409 (14,872) -16.3%

Total consolidated capital requirements 1,069,854 1,382,741 (312,887) -22.6%

During the year, the risk-weighted assets related to credit and counterparty risk declined by €/Mln 282.7 owing essentially to the contraction of loans to clients and the reduction in the “financial assets available for sale ” securities portfolio. The RWAs related to operational risk also fell (-16.3% yoy) as did other minimum requirements (-16.3% yoy), while market risks increased by €/Mln 14.4. Following the trend in Risk Weighted Assets, the capital requirements at 31.12.2017 decreased by €/Mln 25.

Separate regulatory capital ratios

31.12.2017 31.12.2016 Change absolute

CET1 - Fully Phased 12.45% 12.13% 0.32

CET1 - Phased in 11.56% 11.33% 0.23

T1 - Additional Tier 1 Capital 11.56% 11.33% 0.23

TCR - Total Capital Ratio 11.64% 11.35% 0.29

Index of capitalisation 8 1.46 1.42 0.04

At 31.12.2017 CET 1 -Fully Phased, estimated applying the parameters indicated on full implementation in force from 1 January 2019, came out at 12.45% while CET 1 - Phased in was 11.56%, growing compared to the 11.33% recorded at 31 December 2016.We can note that the consolidated regulatory capital ratios of Banca Intermobiliare at 31.12.2017 were higher than the minimum levels required by the Basel III accord, both in relation to Phased In (CET1 5.75%, T1 7.25% and TCR 9.25%) and in relation to the Fully Phased-In requirements in force at 1.1.2019 (CET1 7%, T1 8.5% and TCR 10.5%). For further quantitative and qualitative information, please see the notes to the separate financial statements Part F “Information on capital” Section 2 - “The capital and capital ratios”.

7 Risk-Weighted Assets including specific requirements8 Index of capitalisation: difference between “Own Funds” and “Total Capital Requirements”.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


ECONOMIC RESULTS

In the economic explanatory notes and comments below, the reclassified economic results of Banca Intermobiliare for financial year 2017 have been analysed and compared to the same period in 2016.

Net interest income

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Interest income

- financial assets held for trading 817 3,875 (3,058) -78.9%

- financial assets available for sale 11,202 16,431 (5,229) -31.8%

- on loans to banks 719 1,395 (676) -48.5%

- on loans to clients 13,570 21,854 (8,284) -37.9%

Total interest income 26,308 43,555 (17,247) -39.6%

Interest expenses

- on payables due to banks and other lenders (514) (725) 211 -29.1%

- on payables due to clients (4,495) (5,556) 1,061 -19.1%

- outstanding securities (4,449) (9,331) 4,882 -52.3%

- financial liabilities held for trading (207) (882) 675 -76.5%

- others: hedging derivatives (4,097) (4,146) 49 -1.2%

Total interest expense (13,762) (20,640) 6,878 -33.3%

NET INTEREST INCOME 12,546 22,915 (10,369) -45.2%

As at 31.12.2017, net interest income stood at €/Mln 12.5 with a decrease of 45.2%, YOY (€/Mln 22.9 at 31.12.2016), as a result of the de-risking strategy, which involves a gradual reduction of exposures to corporate clients and of the securities portfolio, and of reinvestment of securities maturing at lower interest rates.

Net interest income - Financial investments

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Net interest “trading book”

- financial assets held for trading 817 3,875 (3,058) -78.9%

- financial liabilities held for trading (207) (882) 675 -76.5%

Total “trading book” interest 610 2,993 (2,383) -79.6%

Net “banking book” interest

- financial assets available for sale 11,202 16,431 (5,229) -31.8%

- hedging differentials (4,097) (4,146) 49 -1.2%

Total “banking book” interest 7,105 12,285 (5,180) -42.2%

Net interest income - Financial investments 7,715 15,278 (7,563) -49.5%


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Net interest income on financial investments (“trading book”, “banking book” and related “hedging differentials”) came out at €/Mln 7.7, a decrease of 49.5% compared to €Mln 15.3 of 31.12.2016 also as a result of the reductionin overall exposure to (trading book and banking book) debt securities from €/Mln 830.3 at 31.12.2016 to €/Mln 430.5 at 31.12.2017. The reduction in the securities portfolio – which began already towards the end of 2016 – continued also during 2017 in order to limit the Bank’s exposure to market and counterparty risks, also in a strategy involving the “derisking” in relation to countries at the greatest risk and reinvestment of securities maturing at lower interest rates. The net interest income of the “trading book” amounted to €/Mln 0.6 (€/Mln 3 at 31.12.2016) and was down by 79.6%, as was the net interest income of the “banking book” which recorded a reduction of 49.5% to €/Mln 7.7 (€/Mln 15.3 at 31.12.2016).

Net interest income - Clients

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Interest income on loans to clients 13,570 21,854 (8,284) -37.9%

Interest expenses on payables due to clients (4,495) (5,556) 1,061 -19.1%

Interest expenses on outstanding securities (4,449) (9,331) 4,882 -52.3%

Net interest income - Clients 4,626 6,967 (2,341) -33.6%

Net interest income from clients (loans and direct deposits from clients) amounted to €/Mln 4.6 at 31.12.2017, down compared to 31.12.2016. Interest income from clients fell in the year by €/Mln 8.3, owing to the contraction in the balances of performing loans. As for the charges paid to clients on direct deposits, the decrease was €/Mln 1.1 on client deposits and €/Mln 4.9 on bond loans.

Net interest income - Banking System

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Interest income on loans to banks 719 1,395 (676) -48.5%

Interest expenses on payables due to banks and otherfinancing bodies (514) (725) 211 -29.1%

Net interest income – Banking System 205 670 (465) -69.4%

Net interest income from the banking system was €/thou 205 at 31.12.2017, down compared to €/thou 670 recorded in the previous year. The positive effect is mainly due to the reduction of the average net financial position in relation to banks.

Operating income

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

NET INTEREST INCOME 12,546 22,915 (10,369) -45.2%

Net fee and commission income 31,495 38,674 (7,179) -18.6%

Net gains (losses) on financial operations 23,903 21,618 2,285 10.6%

OPERATING INCOME 67,944 83,207 (15,263) -18.3%


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


The operating income amounted to €/Mln 67,9 down compared to 31.12.2016 (-18.3%), thanks to the slight drop in net fees and commissions and to the excellent performance of proprietary portfolio management which therefore totally offset the drop in net interest income.

Net fee and commission income

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Fee and commission income

- trading, administration and order collection 10,636 16,295 (5,659) -34.7%

- distribution of third-party services 27,442 29,384 (1,942) -6.6%

of which for performance on individual asset managements 768 61 707 1159.0%

of which for performance on collective asset managements 3,250 1,648 1,602 97.2%

- financial advice 1,668 2,194 (526) -24.0%

- other fees and commissions 1,320 1,510 (190) -12.6%

Total fee and commission income 41,066 49,383 (8,317) -16.8%

Fee and commission expenses

- return to commercial network (8,249) (9,190) 941 -10.2%

- trading and administration (935) (1,152) 217 -18.8%

- other services (387) (367) (20) 5.4%

Total fee and commission expenses (9,571) (10,709) 1,138 -10.6%

TOTAL NET FEE AND COMMISSION INCOME 31,495 38,674 (7,179) -18.6%

Fee and commission income reached €/Mln 41.1 down compared to €/Mln 49.4 recorded on 31.12.2016. The decrease regarded the administered segment down 34.7% and a reduction in deposits, while the distribution of third-party services fell by 6,6%.Performance fees grew compared to the previous year and amounted to €/Mln 4,018. Fee and commission expenses amounted to €/Mln 31.4 down by 18.6% compared to 31.12.2016.The item “returns to commercial network,” in addition to the remuneration of the financial promoters of Banca Intermobiliare, consisted of commission returns paid to other institutional distributors. For operational purposes, as indicated at the bottom of the reclassified income statement, the variable components of the remuneration of private bankers who are employees were also reclassified under fee and commission expenses and recognised in the financial statements under “Personnel expenses”.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS



(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%


Dividends 8,387 13,919 (5,532) -39.7%

Net gains (losses) on trading instruments 6,175 4,493 1,682 37.4%

Transactions on AFS securities and financial liabilities 9,377 3,383 5,994 177.2%

Net gains (losses) on hedging instruments (36) (177) 141 -79.7%

NET GAINS (LOSSES) ON FINANCIAL OPERATIONS 23,903 21,618 2,285 10.6%

At 31.12.2017, net gains (losses) on financial operations came out at €/Mln 23.9 up compared to €/Mln 21.6 recorded at 31.12.2016, thanks to the profits made on sales of securities recognised among financial assets available for sale, in the context of the aforementioned “derisking” strategy.

Dividendi

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Dividends and similar income

- from financial assets held for trading 34 368 (334) -90.8%

- from financial assets available for sale 386 1,249 (863) -69.1%

- from equity investments 7,967 12,302 (4,335) -35.2%

Total dividends 8,387 13,919 (5,532) -39.7%

Dividends recorded during the year amounted to €/Mln 8.4 down compared to €/Mln 13.9 at 31.12.2016. Dividends from equity investments consisted for €/Mln 6.8 of the amount paid by the subsidiary Symphonia SGR (€/Mln 11.2 in 2016) and €/Mln 1.150 by Bim Vita (€/Mln 1.150 for 2016).


(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%


- On-balance-sheet financial instruments 2,067 (1,578) 3,645 -231.0%

- Derivative instruments 2,968 4,639 (1,671) -36.0%

Total financial instruments (on-balance-sheet and derivatives) 5,035 3,061 1,974 64.5%

- Other financial assets and liabilities: exchange rate differences 1,140 1,432 (292) -20.4%

Total net trading gains (losses) 6,175 4,493 1,682 37.4%

Net gains (losses) on trading instruments amounted at 31.12.2017 to €/Mln 6.2, up compared with the result of the previous year which had closed at €/Mln 4.5. In particular net gains (losses) on trading instruments (on-balance-sheet and derivatives), generated revenue of €/Mln 5 up compared to €/Mln 3.1 in financial year 2016.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS



(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%


- financial assets available for sale 9,355 3,505 5,850 166.9%

- financial liabilities 22 (122) 144 N/a

Total gains (losses) on the sale of other financial instruments 9,377 3,383 5,994 177.2%

Gains on the sale of other financial instruments recorded an excellent performance, coming out at €/Mln 9.4 at 31.12.2017, against €/Mln 3.4 at 31.12.2016. The result benefited mainly from sales of securities recognised among “financial assets available for sale” of which €/Mln 7.9 for debt securities, €/Mln 1.9 for equity securities, while sales of UCIs units recorded a loss of €/Mln 0.5. Net gains (losses) on “financial liabilities” refers to marginal financial operations related to the activity of repurchasing own bonds.

Net gains (losses) on hedging instrumentsFinally, gains (losses) on financial operations recorded a loss of hedging activities of €/Mln 0.036 (a loss of €/Mln 0.177 at 31.12.2016) owing to the ineffective part related to activities to hedge the fair value of some securities.

Operating profit (loss)

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

OPERATING INCOME 67,944 83,207 (15,263) -18.3%

Operating costs (72,436) (77,217) 4,781 -6.2%

OPERATING PROFIT (LOSS) (4,492) 5,990 (10,482) N/a

Operating costs amounting to €/Mln 72.4 (€/Mln 77.2 at 31.12.2016) were down by 6.2% yoy.

Operating costs

(Thousands of €)

31.12.2017 31.12.2016 Changeabsolute

Change%

Administrative expenses (73,303) (74,537) 1,234 -1.7%

- personnel expenses (36,575) (37,734) 1,159 -3.1%

- other administrative expenses (36,728) (36,803) 75 -0.2%

Operating amortisation and depreciation (893) (1,016) 123 -12.1%

Other operating expenses (income) 1,760 (1,664) 3,424 N/a

OPERATING COSTS (72,436) (77,217) 4,781 -6.2%

Operating costs amounting to €/Mln 72.4 (€/Mln 77.2 at 31.12.2016) declined by 6.2% YoY, thanks both to the reduction in administrative expenses and to the improvement in other operating income and expenses. Net of extraordinary expenses of approximately €/Mln 4.4 due to projects for the re-internalisation of outsourced activities,


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


for reorganisation of the Bank and activities that led to signing of the BIM sale contract, operating costs would have recorded a significant reduction of 11.9%.

Personnel expenses amounted to €/Mln 36.6 at 31.12.2017, and were in line with 31.12.2016. Personnel costs consist of salaries and related employed personnel expenses (adjusted for the secondment of personnel into and out of the former Parent Company), emoluments to directors and the board of statutory auditors; also, in order to give a better operational presentation, the variable part of the remuneration of employees belonging to the commercial network has been reclassified among fee and commission expenses.

Other administrative expenses, including the extraordinary expenses mentioned above, amounted to €/Mln 36.6, down by 3.1% compared to 31.12.2016. Net of extraordinary expenses, the yoy comparison shows expenses down 12.2%. The major cost items include charges related to the maintenance and leasing of real estate for the branches, expenditure relating to info providers and data transmission and costs relating to outsourcing and legal services and various advice.

Operating amortisation and depreciation totalled €/Mln 0.9 at 31.12.2017 and was down compared to the previous period by 12.1%. We can remind you that the properties from credit recovery operations which were disclosed in the balance sheet, were recognised pursuant to the international accounting standard “IAS 2” and therefore were not depreciated.

Other operating income/expenses mainly include income from rents on properties used for purposes other than the main business, expenses for improvements of assets owned by third parties, costs for settling disputes and transactions that exceeded the amount allocated to the provision for risks and charges, charges for the payment of penalties and interest to the tax authorities and other contingent assets and liabilities for costs and revenues which do not accrue to the period. As of 31.12.2017 other operating expenses and income were a positive €/Mln 1.8 (€/Mln 1.7 at 31.12.2016) owing mainly to contingent assets.

Current profit (loss)In order to make the reclassified profit and loss account more clearly readable, the current result is shown as “profit (loss) before non-recurring components” which is the operating profit (loss) less value adjustments and sales of loans, net provisions set aside for risks and net value adjustments on equity investments.

Profit (loss) before non-recurring components

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

OPERATING PROFIT (LOSS) (4,492) 5,990 (10,482) -175.0%

Net value adjustments on loans (45,528) (91,598) 46,070 -50.3%

Net provisions for risks and charges (1,965) (17,880) 15,915 -89.0%

Net value adjustments on equity investments (544) (731) 187 -25.6%

PROFIT (LOSS) BEFORE NON-RECURRING COMPONENTS (52,529) (104,219) 51,690 -49.6%

As of 31.12.2017, there was a loss before non-recurring components of €/Mln 52.5 (a loss of €/Mln 104.2 as at 31.12.2016) after calculating net value adjustments on loans, net provisions set aside for risks and charges and net value adjustments on equity investments for a total of €/Mln 48.

“Net write-downs on loans” amounted to €/Mln 45.5, a decrease of 50.3% compared to the write-downs made at 31.12.2016 (€/Mln 91.6). The provisions set aside during the period were made in keeping with the current policies, which provide for periodic revisions of estimates regarding foreseeable losses, with reference both to the economic and financial situation of clients, and to the evolution of the value of the guarantees received.

As regards “net allocations to provisions for risks and charges” of €/Mln 2 (€/Mln 17.9 at 31.12.2016) during the period provisions for risks were updated both for positions in being at the end of the year, and in relation to the new disputes and claims raised against the company. For more information please see what was previously illustrated in the section “Provision for risks and charges”.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


Net value adjustments on equity investments are attributable to the write-down for capital grants of the subsidiaries Paomar Terza for €/thou 444 and Immobiliare D for €/thou 100. The previous year had been affected for €/Mln 0.7 by the write-down booked on the investee Immobiliare D.

Profit (loss) before tax

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

PROFIT (LOSS) BEFORE NON-RECURRING COMPONENTS (52,529) (104,219) 51,690 -49.6%

Write-downs on financial instruments (1,854) (2,757) 903 -32.8%

PROFIT (LOSS) BEFORE TAX (54,383) (106,976) 52,593 -49.2%

As of 31.12.2017 “write-downs on financial instruments” amounted to €/Mln 1.9 (€/Mln 2.8 at 31.12.2016) after the results of the impairment test performed on the AFS portfolio, according to the methods described in Part A “Accounting policies” of the Notes to the Separate Financial Statements. Write-downs in the period regarded mainly the private equity fund Charme III for €/Mln 1.3 and €/Mln 0,4 for bank securities coming from the interventions of the Interbank Deposit Protection Fund (Cesena-S. Miniato-Rimini).

Profit (Loss) on continuing operations after tax

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

PROFIT (LOSS) BEFORE TAX (54,383) (106,976) 52,593 -49.2%

Income tax for the period 1,987 23,882 (21,895) -91.7%

PROFIT (LOSS) FROM CONTINUING OPERATIONS AFTER TAX (52,396) (83,094) 30,698 -36.9%

There was a loss on continuing operations after tax at 31.12.2016 of €/Mln 52.4, compared to a loss of €/Mln 83.1 at 31.12.2016. The current and deferred tax burden was a negative €/Mln 2 (a profit of €/Mln 23.9 at 31.12.2016). The probability test on deferred taxation confirmed the recoverability of the deferred tax assets recognised in the previous year, while no deferred tax assets were set aside on the tax losses of financial year 2017.

Profit (loss) for the year

(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

PROFIT (LOSS) FROM CONTINUING OPERATIONS AFTER TAX (52,396) (83,094) 30,698 -36.9%

Profit (Loss) of assets held for sale, net of tax 9,281 - 9,281 100.0%

PROFIT (LOSS) FOR THE YEAR (43,115) (83,094) 39,979 -48.1%

There was a loss for the period to 31.12.2017 of €/Mln 43.1 (a loss of €/Mln 83.1 at 31.12.2016) after determining the result of the sale of the subsidiary Bim Suisse for €/Mln 9.3 recognised in the accounting item profit (loss) of assets held for sale, after tax.


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


COMPREHENSIVE INCOME

During the year, the comprehensive income of Banca Intermobiliare was a negative €/thou 36,523 (a negative €/thou 88,300 at 31.12.2016).


(Thousands of €)

31.12.2017 31.12.2016 ChangeAbsolute

Change%

Profit (Loss) for the year (43,115) (83,094) 39,979 -48.1%

Change in the “AFS” valuation reserves 6,569 (5,156) 11,725 -227.4%

Defined benefit plans 23 (50) 73 -146.0%

COMPREHENSIVE INCOME (36,523) (88,300) 51,777 -58.6%

The most significant change concerned the movements in valuation reserves, and in particular the one concerning the valuation of financial assets available for sale that went from a negative €/thou 5,156 to a positive €/thou 6,569 profit at 31.12.2017.

For additional information regarding the comprehensive income please see the statements section of the separate financial statements (“Statement of Comprehensive Income”) and Part D of the notes to the separate financial statements (“Breakdown of Comprehensive Income”).

OTHER ASPECTS

See the Banca Intermobiliare directors’ report on operations with regard to the following topics:• 2017-2021 Business Plan• Business plan implementation status• Results of equity investments• Market Disclosures• Development and organisation activities • Management and auditing activities• Other aspects

Please refer to the relevant parts of the notes to the financial statements for the following topics:• Part E - Information on risks and related hedging policies • Part F - Information on equity• Part H - Inter-group transactions and transactions with related parties • Part I - Share-based payment agreements • Part L - Segment information


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


MAIN POST-BALANCE-SHEET EVENTS

The Board of Directors of Banca Intermobiliare announced its preliminary results in a press release on 9 February 2018 and then examined the draft consolidated financial statements on 21 March 2018, and authorised their publication as provided for by law.It should be noted that, subsequent to 31 December 2017 and up to the date of approval of this financial report there have been no corporate events that may have significant consequences on the results and financial position shown herein with the exception of what is presented below.

With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC ruled on the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August 2017. On the basis of the reconstruction of the events and an in-depth examination of the nature of the actions challenged and the rules applied, the RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM, and referring the dispute in question to the jurisdiction of the Ordinary Court.

On 5 February 2018 Barents presented an appeal to the Council of State (general register number 900 of 2018) for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.

On 7 March 2018, the Director with assignments Giorgio Angelo Girelli informed the Board of Directors of Banca Intermobiliare that he had concluded on that date with Trinity Investments an agreement that provided for his resignation from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the equity interest in Banca Intermobiliare held by Veneto Banca S.p.A. in CAL.


GOING CONCERN

In the light of the overall framework of reference, of the initiatives taken and being implemented and considering the status of the information available, about which information was provided in the Notes to the Separate Financial Statements Part A - Accounting Policies - Section 2 - Paragraph “Going concern”, the Board of Directors of Banca Intermobiliare prepared the annual financial statements at 31 December 2017 on the assumption that the bank would continue as a going concern.

BUSINESS OUTLOOK

Signing of the contract for the sale of BIM by Veneto Banca CAL and Trinity Investments is the turning point for the relaunch of the Bank. The new corporate group is a leading player at the international level that pursues long-term investment strategies acquiring assets in which to provide skills and capital, for the purpose of making them attractive operating platforms in profitable business segments. For the purposes of obtaining the regulatory authorisations, Trinity Investments has presented a business plan up to 2021 which provides for an overall reorganisation of BIM. Implementation of the plan also involves the deconsolidation of the entire portfolio of impaired assets to be achieved through self-securitisation, and a capital strengthening operation planned for 2018 for €/Mln 121


REP

OR

T O

N O

PER

ATIO

NS

ON

TH

E FI

NAN

CIAL

STA

TEM

ENTS


PROPOSAL FOR ALLOCATING PROFIT OF THE YEARDear Shareholders,We would like to submit to your attention the financial statements of 1 January - 31 December 2017 comprising the Balance Sheet, the Income Statement, the Comprehensive Income Statement, the Statement of Changes in Equity, the Statement of Cash Flows, the Notes to the Financial Statements and the Report on Operations.

We propose to cover the loss for financial year 2017 amounting to € 43,115,398 in the financial statements of Banca Intermobiliare by using the “Legal Reserve” and carrying forward the difference.

Losses to be covered

Loss for the period 2017 € 43,115,398

Use of equity reserves for covering losses

Legal Reserve € (27,872,997)

Losses for the year brought forward € 15,242,401

Turin, 05 April 2018

For the Board of DirectorsThe ChairpersonMaurizio LAURI


FINANCIAL STATEMENTS

FIN

ANCI

AL S

TATE

MEN

TS

328 ■ Financial statements


BALANCE SHEET(in Euro)

Assets 31.12.2017 31.12.2016

10. Cash and cash equivalents 1,687,669 1,669,075

20. Financial assets held for trading 44,448,284 97,356,738

40. Financial assets available for sale 413,667,506 834,638,919

60. Loans to banks 106,330,112 369,209,371

70. Loans to clients 667,751,607 882,200,681

80. Hedging derivatives 1,606,934 1,326,645

100. Equity investments 99,298,210 99,237,013

110. Tangible fixed assets 4,155,035 4,600,844

120. Intangible fixed assets 173,560 325,478

of which: - goodwill - -

130. Tax assets

a) current 38,975,080 15,348,249

b) deferred 75,858,058 103,496,166

- of which convertible into tax credits (Law No. 214/2011) 48,924,929 71,634,201

140. Non-current assets and disposal groups held for sale 13,028,789 24,774,898

150. Other Assets 74,739,525 78,870,369

Total assets 1,541,720,369 2,513,054,446

FIN

ANCI

AL S

TATE

MEN

TS

Financial statements ■ 329


BALANCE SHEET(in Euro)

Liabilities and equity items 31.12.2017 31.12.2016

10. Due to banks 180,126,204 511,459,837

20. Due to clients 1,022,724,408 1,320,126,602

30. Outstanding securities 60,686,232 304,977,719

40. Financial liabilities held for trading 39,858,359 68,000,227

60. Hedging derivatives 8,906,043 14,758,274

80. Tax liabilities

a) current - -

b) deferred 3,037,484 3,023,748

100. Other liabilities 56,604,954 81,399,641

110. Employees’ severance fund 3,963,225 4,409,967

120. Provisions for risks and charges:

a) pension fund and similar obligations - -

b) other provisions 23,313,152 25,881,355

130. Valuation reserves 7,711,733 1,119,473

160. Reserves 51,405,866 56,689,684

170. Issue premiums - 77,822,945

180. Share Capital 156,209,463 156,209,463

190. Treasury shares (-) (29,711,356) (29,730,906)

200. Profit (Loss) for the year (+/-) (43,115,398) (83,093,583)

Total liabilities and equity 1,541,720,369 2,513,054,446

FIN

ANCI

AL S

TATE

MEN

TS



INCOME STATEMENT(in Euro)

Items 31.12.2017 31.12.2016

10. Interest income and similar items 26,308,011 43,554,761

20. Interest expense and similar items (13,762,003) (20,639,829)

30. Net interest income 12,546,008 22,914,932

40. Fee and commission income 41,066,271 49,383,046

50. Fee and commission expenses (9,032,798) (9,355,408)

60. Net fee and commission income 32,033,473 40,027,638

70. Dividends and similar income 8,387,021 13,919,037

80. Net gains and losses on assets held for trading 6,174,903 4,493,031

90. Net profit (loss) on hedging operations (36,206) (176,915)

100. Net gains and losses on disposal or repurchase of:

a) loans (155,965) 1,317

b) financial assets available for sale 9,354,695 3,505,310


d) financial liabilities 22,169 (122,625)

120. Operating income 68,326,098 84,561,725

130. Net value adjustments for impairment of:

a) loans (45,761,130) (91,619,472)

b) financial assets available for sale (1,853,808) (2,756,818)


d) other financial transactions 388,933 20,406

140. Net gains and losses on financial operations 21,100,093 (9,794,159)


a) Personnel costs (37,113,119) (39,087,838)

b) other administrative expenses (36,728,413) (36,802,652)

160. Net provisions for risks and charges (1,964,980) (17,880,177)

170. Net write-downs/write-backs on tangible fixed assets (673,899) (738,382)

180. Net write-downs/write-backs on intangible fixed assets (218,872) (278,225)

190. Other operating expenses (income) 1,759,504 (1,663,113)

200. Operating costs (74,939,779) (96,450,387)

210. profit (Loss) of investments (544,000) (731,400)

250. Profit (Loss) of continuing operations before tax (54,383,686) (106,975,946)

260. Current operations income tax 1,987,257 23,882,363

270. Profit (Loss) of continuing operations after tax (52,396,429) (83,093,583)

280. Profit (Loss) of groups of assets held for sale, net of tax 9,281,031 -

290. Profit (Loss) for the year (43,115,398) (83,093,583)

Earnings per share (Euro) (0.29) (0.56)

Diluted earnings per share (Euro) (0.29) (0.56)

FIN

ANCI

AL S

TATE

MEN

TS



COMPREHENSIVE INCOME STATEMENT(Thousands of €)

Voci 31.12.2017 31.12.2016




30. Intangible fixed assets - -

40. Defined benefit plans 23 (50)



Other income components after tax reversed to the income statement

70. Hedging of foreign investments: - -

80. Exchange rate differences - -

90. Cash flow hedges - -

100. Financial assets available for sale 6,569 (5,156)



130. Total other income components after tax 6,592 (5,206)

140. Comprehensive income (Item 10+130) (36,523) (88,300)

FIN

ANCI

AL S

TATE

MEN

TS



STATEMENT OF CHANGES IN EQUITYFROM 31.12.2016 TO 31.12.2017(Thousands of €)

Bala

nce

at 3

1.12

.201

6

Chan

ge in

ope

ning

bal

ance

Ope

ning

bal

ance

at 0

1.01

.201

7

Allocation previous financial

year profit


Equi

ty a

t 31.

12.2

017

Chan

ges

in re

serv

es

Equity transactions

Com

preh

ensiv

e In

com

e fo

r the

yea

r

Issue

of n

ew sh

ares

Purc

hase

of t

reas

ury

shar

es

Extr

a di

vide

nds

Chan

ge in

equ

ity in

stru

men

ts

Deriv

ativ

es o

f tre

asur

y sh

ares

Stoc

k op

tions

Rese

rves

Divi

dend

s and

oth

er

allo

catio

ns

Share Capital:

a) ordinary shares 156,209 x 156,209 - x x - - - - - - - 156,209

b) other shares - x - - x x - - - - - - - -

Issue premiums 77,823 x 77,823 (77,823) x - - x x x x x x -

Reserves:

a) of profits 54,844 - 54,844 (3,369) x - - (14) - x x x x 51,461

b) others 1,846 - 1,846 (1,902) x - - - - x - - x (56)

Valuation reserves 1,120 - 1,120 x x - x x x x x x 6,592 7,712

Equity instruments - x - x x x x x x - x x x -

Treasury shares (29,731) x (29,731) x x x - 20 x x x x x (29,711)

Profit (Loss) for the year (83,094) - (83,094) 83,094 - x x x x x x x (43,115) (43,115)

Total equity 179,017 - 179,017 - - - - 6 - - - - (36,523) 142,500

FIN

ANCI

AL S

TATE

MEN

TS



STATEMENT OF CHANGES IN EQUITYFROM 31.12.2015 TO 31.12.2016(Thousands of €)

Bala

nce

at 3

1.12

.201

5

Chan

ge in

ope

ning

bal

ance

Ope

ning

bal

ance

at 0

1.01

.201

6

Allocation previous financial

year profit


Equi

ty a

t 31.

12.2

016

Chan

ges i

n re

serv

es

Equity transactions

Com

preh

ensiv

e In

com

e fo

r the

yea

r

Issue

of n

ew sh

ares

Purc

hase

of t

reas

ury

shar

es

Extr

a di

vide

nds

Chan

ge in

equ

ity in

stru

men

ts

Deriv

ativ

es o

f tre

asur

y sh

ares

Stoc

k op

tions

Rese

rves

Divi

dend

s and

oth

er

allo

catio

ns

Share Capital:

a) ordinary shares 156,209 x 156,209 - x x - - - - - - - 156,209

b) other shares - x - - x x - - - - - - - -

Issue premiums 70,025 x 70,025 - x 7,798 - x x x x x x 77,823

Reserves:

a) of profits 59,861 - 59,861 (28,806) x (4,996) - (21) - x x x x 54,844

b) others 33,058 - 33,058 - x (2,406) - - - x - - x 1,846

Valuation reserves 6,326 - 6,326 x x - x x x x x x (5,206) 1,120

Equity instruments - x - x x x x x x - x x x -

Treasury shares (29,807) x (29,807) x x x - 76 x x x x x (29,731)

Profit (Loss) for the year (28,806) - (28,806) 28,806 - x x x x x x x (83,094) (83,094)

Total equity 266,866 - 266,866 - - 396 - 55 - - - - (88,300) 179,017

FIN

ANCI

AL S

TATE

MEN

TS



STATEMENT OF CASH FLOWS Direct method(Thousands of €)

A. OPERATING ACTIVITIES 31.12.2017 31.12.2016

1. Operations (5,370) (22,410)

- interest received (+) 33,207 44,600

- interest paid (-) (15,090) (20,300)

- dividends and similar income 420 1,617

- net fees and commissions (+/-) 32,033 40,028

- personnel costs (excluding TFR provisions and shares) (36,825) (38,784)

- other costs (-) (49,023) (58,596)

- other income (+) 20,627 9,296

- taxes and duties - (271)

- costs/revenues related to discontinued operations net of the tax effect (+/-) 9,281 -

2. Cash provided/used by financial assets: 916,481 451,044

- financial assets held for trading 53,742 100,913

- financial assets available for sale 427,184 253,762

- loans to clients 170,491 252,812

- loans to banks: demand 245,295 208,410

- loans to banks: other loans and receivables 17,096 (401,637)

- other assets 2,673 36,784

3. Cash provided/used by financial liabilities: (930,447) (437,642)

- due to banks: demand 20,207 17,506

- due to banks: other payables (351,589) (194,037)

- due to clients (297,306) (169,271)

- outstanding securities (243,013) (103,321)

- financial liabilities held for trading (28,142) (16,493)

- other liabilities (30,604) 27,974

Net cash provided/used by operating activities (19,336) (9,008)

FIN

ANCI

AL S

TATE

MEN

TS



B. INVESTING ACTIVITIES 31.12.2017 31.12.2016

1. Cash provided by: 32,680 12,302

- sales of equity investments 24,713 -

-dividends received on equity investments 7,967 12,302

2. Cash used by: (13,325) (3,308)

- purchase of equity investments (13,029) -

- purchase of tangible assets (228) (3,078)

- purchase of intangible assets (68) (230)

Net cash provided/used by investing activities 19,355 8,994

C. FUNDING ACTIVITIES - -

- issue/purchase of treasury shares - -

Net cash provided/used by funding activities - -

NET CASH PROVIDED/USED DURING THE FINANCIAL YEAR 19 (14)

RECONCILIATION

Balance sheet items Amount

31.12.2017 31.12.2016

Opening cash and cash equivalents 1,669 1,683

Net total cash provided/used during the financial year 19 (14)

Net total cash provided/used during the financial year 1,688 1,669

NOTES TO FINANCIAL STATEMENTS


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A

338 ■ Notes to financial statements - Part A


A.1 - GENERAL

Section 1 - Declaration of compliance with International Accounting Standards

The financial statements of Banca Intermobiliare were prepared in accordance with the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS), as these have been endorsed by the European Commission based on the procedures set forth under EC Regulation 1606 of 19 July 2002 and as provided for by Legislative Decree 38/05.

Section 2 - General principles of preparation

The financial statements consist of the balance sheet, income statement, comprehensive income statement, statement of changes in equity, statement of cash flows and the notes to the financial statements and are accompanied by the report on operations, as well as the certification of the Financial Reporting Manager, pursuant to art. 154-bis, par. 5, of Italian Legislative Decree 58/1998.The separate financial statements have been prepared on a going concern basis in accordance with the accruals concept and using the historical cost criterion modified in relation to the measurement of financial assets and liabilities held for trading, available for sale and those designated at fair value, and all existing derivative contracts the measurement of which was performed according to the fair value principle.The book values of assets and liabilities subject to hedging were adjusted to take into account any changes in fair value on the portion attributable to the hedged risk. Offsetting of assets and liabilities and costs and revenues is performed only if required or allowed by a standard or interpretation.In accordance with the provisions of art. 5, paragraph 2, of Italian Legislative Decree No. 38 of 28 February 2005, the financial statements are prepared using the Euro as accounting currency. In particular, pursuant to the instructions issued by the Bank of Italy, the financial statement amounts are expressed in thousands of Euro, as are the numbers indicated in the notes.In order to take account of changes in the provisions of the Italian Civil Code on financial statements following the entry into force of the reform of company law (Italian Legislative Decree No. 6 of 17 January 2003 and the measures delegated to be enforceable under Italian Law No, 366 of 3 October 2001), the information in the Notes to the Financial Statements, unless otherwise provided for by the special regulations of the Bank of Italy, have been properly and accordingly integrated.With reference to the financial statements and the Notes, by virtue of art. 9 of Italian Legislative Decree no. 38 of 28 February 2005, the Bank has applied the provisions set forth in Bank of Italy Circular no. 262 of 22 December 2005 as currently applicable, adding information as required by the International Accounting Standards or where considered appropriate in terms of importance or significance.The financial statements and the notes present, besides the amounts related to the reference period, also the corresponding comparative data referred to the financial statements for the financial year ended 31 December 2016.Furthermore, the document was prepared in accordance with the Consob regulations.

Information on the business as a going concernThese Separate Financial Statements have been prepared on a going concern basis. In this regard, the joint coordination group of the Bank of Italy, CONSOB and ISVAP on the subject of application of the IASs/IFRSs issued their document No. 2 of 6 February 2009 entitled “Information to be provided in financial reports on the going concern assumption, on financial risks, on tests for impairment of assets and on the uncertainties in the use of estimates” and asked Directors to perform accurate assessments on the existence of the going concern assumption in compliance with the provisions in IAS 1. In particular, paragraphs 23-24 of IAS 1 establish that: “When preparing financial statements, management shall make an assessment of an entity’s ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern”.

Banca Intermobiliare, while preparing the 2016 annual financial statements and subsequent interim reports, had highlighted some elements that could have caused doubts about Veneto Banca’s ability to continue as a going concern,

Part A - ACCOUNTING POLICIES

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A

Notes to financial statements - Part A ■ 339


indicating also the related effects on the Bank’s ability to continue as a going concern. In particular, in the absence of deconsolidation of Banca Intermobiliare from the Veneto Banca Group, a possible unfavourable development in the continuity of the parent company, could have prevented Banca Intermobiliare from implementing the guidelines of the strategic plan approved during 2017, with effects on the use of the going concern assumption in the preparation of its financial statements.The Board of Directors of BIM had however decided, in the light of the overall framework of reference, of the initiatives undertaken and in the process of implementation, and after completing the necessary checks, and taking into account the significant uncertainties described above, to prepare the 2016 annual financial statements of Banca Intermobiliare on the assumption of the entity being a going concern.

During June, following the decisions of the European Authorities and in accordance with Italian Law Decree no. 99 of 25 June 2017, the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, made Banca Popolare di Vicenza S.p.A. and Veneto Banca S.p.A. subject to compulsory administrative liquidation, decreeing, therefore, the absence of the assumption of these entities being going concerns.

The Bank of Italy appointed the liquidators of Veneto Banca and the Oversight Committee of the same who, implementing the ministerial indications are overseeing:1. the continuation, where necessary, of the company’s business or of certain branches of activity for the technical time

necessary to implement the planned sales;2. the disposal of corporate assets and liabilities in accordance with the binding offer formulated by the transferee

identified as Intesa Sanpaolo S.p.A., which will take over the relationships of the transferor without a break; 3. the sale to Società per la Gestione di Attività S.G.A (in which the public has a stake) of impaired loans and other

assets not disposed of.In the context of the said decree, Banca Intermobiliare, as confirmed on its website by the Bank of Italy with news of 26 June 2017, does not come within the perimeter of Art. 3 among the assets acquired by Intesa Sanpaolo S.p.A. and is continuing its operations in an orderly manner, ensuring the continuity of the existing relationships with its clients.

The placing in compulsory administrative liquidation of Veneto Banca did not adversely affect the process of deconsolidating Banca Intermobiliare from the Veneto Banca Group, as besides stressed by the liquidators themselves in a press release communicating, in the context of realising its assets, that they had begun a process aimed at the sale of its controlling equity interest in Banca Intermobiliare.

With a press release of 6 July 2017, Veneto Banca in C.A.L. announced the launch of the activities for the sale of the stake held in BIM. Following the non-binding offers received, the liquidators, with the aid of their financial advisor Lazard & Co S.r.l., selected a limited number of entities, all of high international standing and which have expressed an interest in acquiring the equity investment held by Veneto Banca in BIM in the current configuration of the corporate perimeter of the company, including the total portfolio of impaired loans. Access to the data (Data Room) began on 24 July 2017. To protect all the stakeholders, the Board of Directors of BIM chose as financial advisor Deutsche Bank AG.

On 29 August 2017, the Shareholder received the offers for assessment admitting: Attestor Capital LLP and BRM Barents SCA to a further stage of the procedure, before signing subsequently an exclusive agreement with Attestor Capital LLP. On 24 October 2017, Veneto Banca S.p.A. in CAL and Trinity Investments Designated Activity Company, an investment firm subject to Irish law and managed by Attestor Capital LLP, signed a sale contract, under the terms of which, conditional on obtainment of the applicable regulatory authorisations, Trinity Investments undertakes to purchase from the CAL 107,483,080 BIM ordinary shares representing a total of 68.807% of the share capital. For further information, please see the introductory part of the present Report on Operations of the Consolidated Financial Statements at 31.12.2017.

In a press release Trinity Investments stated that after completion of the Banca Intermobiliare sale contract a full takeover bid will be launched on the BIM shares outstanding, and it will begin immediate implementation of a complex reorganisation of BIM, as per the business plan presented to the Bank of Italy on applying for authorisation, based on a significant manoeuvre of de-risking of BIM’s assets by deconsolidating the bank’s entire portfolio of impaired assets and on a capital strengthening operation in 2018 for a total amount of € 121 million.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



In addition as regards the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August we can report:i) Positive resolution of appeal no. G.R. 10995/2017 presented to the RAC by Barents Reinsurance S.A. against

the Compulsory Administrative Liquidation of Veneto Banca for the cancellation, after the adoption of appropriate precautionary measures, also by a single judge, of the operation to sell the majority stake in Banca Intermobiliare by the Liquidators to Attestor. With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM, and referring the dispute in question to the jurisdiction of the Ordinary Court.

ii) Positive resolution of the appeal presented on 5 February 2018 by Barents to the Council of State (general register number 900 of 2018) for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.

At the same time, during the second half of the year, Banca Intermobiliare continued with the activities of restructuring, relaunch and development approving, at the Board meeting of 18 July 2017, the “2017-2021 Business Plan”, updating the “strategic guidelines ” and the “long-term financial and economic projections” - already approved at the beginning of the year - which highlight the bank’s sustainability over time on a “stand alone” basis and assuming that a new shareholder will acquire, very soon, in the context of the liquidation process, the majority stake held by Veneto Banca in C.A.L.. In particular the bank worked on the following main planning initiatives:a) renewal of the first managerial line of Banca Intermobiliare (selection of highly qualified professional figures








h) continuation of the planning activities related to the new structure of the Information Technology systems to be created through two distinct steps: in December, in view of the modified structure of the former parent company and to the changes made to the operating relations with Veneto Banca and Banca Intesa Sanpaolo, the bank’s IT

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



systems within the systems managed by the current outsourcer were segregated (Step 1); after a careful assessment of the IT system most suitable for the BIM Group, the Board of Directors also confirmed its intention to proceed with migration of the entire IT platform, to another provider (Step 2);

i) definition of a new policy for managing the Bank’s capital geared to a “Capital Light” model, aimed at reducing the risks that may be incurred by the capital of a private bank. This model is characterised by: “reduction of RWAs” pursued through, among other things, a process of sales and realisation of non-strategic assets (in particular of the entire property portfolio); “low market risk”, including a Banking Book of a limited amount, with a mitigation of exposure to country risk pursued through diversification of issuers; “low operational risk”, with a service model compliant with the legislation and particularly attentive to ex ante management; “low credit risk”, with a portfolio concentrated exclusively on Lombard exposures.

At 31 December 2017 the economic and financial figures meant that regulatory capital and liquidity ratios were stably above the regulatory requirements. Banca Intermobiliare confirmed an operating profit, despite the situation of the majority shareholder and the non-timely activation of the activities preparatory to the sale of BIM, all elements that had repercussions, in terms of both deposits and profitability. The loss for the period fell by 47.2% compared to the 2016 loss and in line with respect to what was provided for in the 2017-2021 business plan, and determined by the write-downs made, following the process of reviewing the loan portfolio. The loss for the period, in fact, was mostly attributable to the results of the revisions of the estimates regarding the foreseeable losses on loans, in the light of the most up-to-date information made available, both as regards the economic and financial situation of clients, and the evolution of the value of the guarantees received.As regards financial risk management, during the year no critical situations arose, as illustrated above in the report on operations and in the notes to the statements, Part E “Information on risks and related hedging policies”. In particular, as regards liquidity, we can note that, although with a drop of direct deposits, the launch of the restructuring of BIM into a Capital-Light bank has made it possible to prevent the emergence of particular tensions. In the context of preparing the annual financial statements we can note the positive results of the check regarding the recoverability of deferred tax assets (probability test), the assessment of goodwill (impairment test) and the absence of indicators (trigger events) of permanent impairment losses of its assets in general and mainly of its property investments and equity investments recognised among its assets. The procedures used for the testing and the results thereof are described specifically within the Notes.Finally, on 9 February 2018, Banca Intermobiliare approved the 2018 budget, carrying out the managerial actions that will make it possible to achieve the results provided for in the plan, despite the fact that the delay in the process of sale of the Bank had impacts on the amount of AUM and on the company’s overall profitability.

Following the aforementioned Bank of Italy communication of 5 April 2018, although some uncertainties remain on implementation of the business plan as it is based by its very nature also on events which are beyond the control of the directors, the imminent completion of the BIM Group sale contract removes the uncertainties highlighted in the Consolidated Half-Yearly Financial Report at 30 June 2017 and in the Consolidated Interim Report on Operations at 30 September 2017, which could have led to significant doubts regarding the going concern assumption for Banca Intermobiliare in relation to: (i) failure to complete the sale of Banca Intermobiliare; (ii) the decisions that the Supervisory Authority could take in the context of the “Supervisory Review and Evaluation Process (SREP) Decision”, because:i) the group is no longer controlled by Veneto Banca in CAL, the situation of which contributed to affecting



On the basis of all of the above the Board of Directors of the Bank therefore decided that, in the light of the overall framework of reference outlined above, of the initiatives taken and being implemented and considering the state of the information available in relation to the above, the annual financial statements at 31 December 2017 are prepared according to the going concern assumption.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 3 - Events subsequent to the reporting date

The Board of Directors of Banca Intermobiliare announced its preliminary results in a press release on 9 February 2018 and then examined the draft consolidated financial statements on 21 March 2018, and authorised their publication as provided for by law.It should be noted that, subsequent to 31 December 2017 and up to the date of approval of this financial report, there have been no corporate events that may have significant consequences on the results and financial position shown herein with the exception of what is presented below.

With judgement no. 1127 of 2018, the Second Section Bis of the Lazio RAC ruled on the appeal lodged by Barents against the rejection of the offer made by the said Barents on 29 August 2017. On the basis of the reconstruction of the events and an in-depth examination of the nature of the actions challenged and the rules applied, the RAC declared that the Administrative Court did not have jurisdiction over the dispute, acknowledging the private-law nature of the procedure for the sale of the controlling stake in BIM and referring the dispute in question to the jurisdiction of the Ordinary Court.On 5 February 2018 Barents presented an appeal to the Council of State (general register number 900 of 2018) for the cancellation and/or revision, after precautionary suspension, of the judgement handed down in simplified form no. 1127/2018, issued by the Lazio RAC with which the Court of First Instance declared that the Administrative Court did not have jurisdiction in G.R. no. 10995/2017. The Council of State ruled on 12 February 2018 against a precautionary suspension and on 1 March 2018 rejected the appeal.

On 7 March 2018, the Director with assignments Giorgio Angelo Girelli informed the Board of Directors of Banca Intermobiliare that he had concluded on that date with Trinity Investments an agreement that provided for his resignation from the position held, on the occasion of the formalisation of the acquisition by Trinity Investments of the shares of Veneto Banca S.p.A. in CAL.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 4 - Other aspects

Use of estimates and assumptions in preparing the financial statementsAs required by the aforementioned joint paper issued by Bank of Italy/IVASS/Consob, it should be noted that the estimation processes have been completed relating to the carrying value of the most important valuation items listed in the balance sheet as at 31 December 2017, as required by the applicable accounting standards. These processes are based largely on estimates of future recoverability of the values recorded in the balance sheet according to the rules dictated by the regulations in force and were carried out with the going concern assumption, i.e. regardless of any cases of forced liquidation of the items being valued. On this point, please read carefully the assessments made by the Directors on the going concern assumption. The estimates were primarily used to determine the fair value of financial instruments and shareholdings, for the assessment of loans, for the determination of allocations to provisions for risks and charges, for the quantification of current and deferred taxes and estimated recoverability of deferred tax assets. The survey confirms the recognition values of the items mentioned at 31 December 2017. The Directors also formulated their best estimates on the basis of the information available.

In relation to loan exposures to clients, as stated in previous financial reports, the loan portfolio was the subject of an overall review carried out in the fourth quarter of 2016 - which had taken into account also all the valuation differences that had emerged in the context of the inspection launched by the ECB and completed at the beginning of February 2017 - and continued also throughout financial year 2017. In this context the Bank launched an updating process relating to the management and assessment processes and to the control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the financial statements at 31.12.2017.It should be noted, however, that value adjustments in the face of individual loans are estimated on the basis of the emerging evidence as a result of careful and continuous monitoring of the development of existing relations with borrower clients and their economic and financial situation. Banca Intermobiliare, in evaluating its exposures at 31 December 2017, adopted the necessary precautions also taking into account the available objective elements. With particular reference to the realisation of assets obtained as guarantees of credit lines granted, when represented by real estate assets, the estimated realisable value and the expected recovery times could be very difficult to estimate, owing to the performance of the property market. We cannot, therefore, exclude the possibility that the estimated realisable value of non-performing loans recognised in the financial statements may vary as a result of deviations between the estimated values of real estate collateral, used to determine the related value adjustments, and the cash flows that are actually realised, and/or as a result of differences in the timing of recoveries.With regard to impaired loans, the assumption that the book value is a reasonable approximation of fair value is based on the fact that the absence of a sufficiently large number of transactions for these financial assets does not allow recognition of observable market parameters, with particular reference to the components making up the discounting rate (which would also include the market premium for risks and uncertainties). Because of this, the estimated fair value is largely determined by the current portfolio management model and by the related recovery mode and does not appear specifically influenced by the evolution of the rates of return required by the market. The internal procedures for calculating the fair value (the so-called “exit price”) of the loans portfolio is therefore more sensitive to forecasts about losses in value, as the result of a subjective assessment, expressed by the manager of the position, with reference to the estimate of expected cash flows from recovery and to the related time scales. It is not possible, therefore, to exclude the possibility that the price of any sale to third parties may differ in negative terms from the fair value indicated for balance sheet purposes.

With specific reference to the quantification of deferred tax assets and liabilities and the estimated recoverability of Deferred Tax Assets (DTAs), the Bank carried out the “probability test” in accordance with IAS 12, in order to assess the likelihood of realising adequate future taxable income to absorb the DTAs recognisable at 31 December 2017. We must point out that the information considered for the purpose of the probability test presents several elements of uncertainty including, among others: i) the risk that amendments of the tax legislation may in future limit the reportability of the tax losses made by the

Bank, reduce the tax rates with a consequent reduction in the amount of DTAs recoverable or entail impacts, even significant ones, on the taxable income of coming years;

ii) risk that the future economic results (and the consequent taxable incomes) generated by the Bank will be less than those considered in the probability test;

iii) risk that the significant uncertainties highlighted in discussing the going concern assumption may determine the cancellation of the DTAs.

The possible occurrence of such circumstances could lead to significant adjustments in future years, of the carrying amounts of DTAs shown in the financial statements at 31 December 2017.

With reference to the use of estimates and to the assumptions made for determining provisions for risks for legal cases and disputes the following disclosure is provided. The main types of actions brought against the bank relate to bankruptcy

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



revocatory actions, to actions on the subject of compound interest and to actions related to investment services, typical of the performance of a banking business. In the face of such disputes, Banca Intermobiliare and its subsidiaries have carried out an analytical assessment of each single case in order to establish prudent allocations to provisions for risks and charges in order to cover any losses. Quantification of the same entails however valuation difficulties that involve both the an debeatur and the quantum debeatur, as well as the times of any manifestation of the liability which are particularly evident if the proceeding launched is in its initial stage and/or the related enquiry stage is in progress.The estimate of liabilities is therefore based on the information available each time, but also implies, owing to the numerous uncertainties deriving from the legal proceedings and/or from the inspections, significant elements of judgement. It is therefore not possible to exclude that the legal disputes and inspections may lead, in future, to contingent liabilities not included in provisions for risks and charges, nor that the provisions set aside for risks and charges may be insufficient to cover the liabilities deriving from a more negative than expected outcome of the proceedings and/or assessments, with consequent possible negative effects on the economic and financial situation. In addition the said liabilities could also be affected by losses deriving from retroactive changes in the regulatory framework, and those consequent to the conclusion of settlement agreements.The specific items “provisions for risks” and “tax assets” of Part B of the notes to the financial statements and in the report on operations, to which you are referred, detail the risk positions for court cases and revocatory actions or tax disputes in progress which are the most significant for Banca Intermobiliare.The main areas for which subjective assessments are used by management are:• the quantification of losses due to the reduction of loan values and, in general, of other financial assets;• the determination of the fair value of financial instruments to be used for the financial statements;• the use of valuation models for the recognition of the fair value of financial instruments which are not quoted on

active markets;• the assessment of the sustainability of the value of goodwill and intangible fixed assets;• quantifying provisions for staff and provisions for risks and charges;• use of estimates and assumptions for determination of the current taxes and the extent to which deferred tax assets

can be recovered;• demographic assumptions (relating to the estimated mortality of the insured population) and financial assumptions

(deriving from the possible evolution of financial markets), used in structuring insurance products and defining the basis for calculating the additional reserves.

The description of the accounting policies applied to the main balance sheet amounts provides the details required for identification of the major assumptions and subjective valuations used in preparing the consolidated financial statements for the year. For more detailed information regarding the composition and the related book values of the items for which estimates were used, please see the specific sections of the notes.

Accounting for negative income components on financial assetsThe gradual reduction of interest rates guided by the European Central Bank led to the recording of negative income components on loans, with the consequent need to define the correct accounting treatment with which the same are recognised in the income statement.For the purposes of preparing the present annual financial statements and in line with what was done in the previous financial year, Banca Intermobiliare recognised the aforesaid negative components under the item “interest expense and similar items”, thus aligning the classification of these expenses in the financial statements with the regulatory one. By analogy, the same treatment is reserved for the positive economic components accrued on financial liabilities, which are therefore to be recognised under the item “interest income and similar items”. For completeness of disclosure we can note that at 31 December 2017:• negative interest accrued on financial assets amounted to €/thou 77.1 (€/thou 283.3 at 31.12.2016);• positive interest accrued on financial liabilities amounted to €/thou 244.6 (€/thou 804.5 at 31.12.2016).

Amendments to the IAS /IFRSThe same standards and accounting methods that were used in preparing the separate annual financial statements for the year ended 31 December 2016 were also used in preparing the financial statements for the year ended 31 December 2017. Please refer to the previous financial statements for additional information to that provided below regarding the IASs/IFRSs and related SIC/IFRIC Interpretations endorsed by the European Commission up to 31 December 2017, the application of which is mandatory from 1 January 2018.The introduction of new standards, amendments and interpretations, which are listed in summary form below, did not however significantly affect the separate financial statements.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



International accounting standards endorsed at 31.12.2017 and in force from 2017• Reg. 1989/2017 - Amendments to IAS 12 “Income Taxes”, with specific reference to the recognition of deferred tax

assets and, more in detail, for the purpose of clarifying the accounting for such assets referred to debt instruments carried at fair value.

• Reg. 1990/2017 - Amendments to IAS 7 “Statement of Cash Flows” in order to promote improvement of the disclosure about an entity’s financing activities.

The accounting standard applicable, obligatorily and for the first time, starting from 2017, is made up of a numberof limited amendments made to the accounting standards already in force, endorsed by the European Commission during 2017. These amendments, however, are not particularly significant for the company.

International accounting standards endorsed at 31.12.2017 with subsequent application• Regulation (EU) 2016/1905 of 22/09/2016, which adopts IFRS 15 Revenue from Contracts with Customers, aimed

at improving the accounting reporting of revenue and therefore overall the comparability of revenue in financial statements;

• Regulation (EU) no. 2017/1986 which adopts IFRS 16 Leases, aimed at improving the accounting reporting of leasing contracts;

• Regulation (EU) no. 2017/1987 which adopts the amendments to IFRS 15 Revenue from Contracts with Customers - Clarifications to IFRS 15. The amendments aim at specifying a number of requisites and at providing further transition relief for entities that apply the Standard;

• Regulation (EU) no. 2017/1988 which adopts the amendments to IFRS 4 “Joint Application of IFRS 9 Financial Instruments” and IFRS 4 “Insurance Contracts”;

Regulation (EU) 2067/2016 endorsing the international accounting standard IFRS 9 “Classification, Measurement and Impairment of Financial Instruments” issued by the IASB on 24 July 2014.

IFRS 9 “Financial instruments”The international accounting standard IFRS 9, issued by the IASB in July 2014 was endorsed by the European Commission with Regulation no. 2067/2016 and replaces - starting from 1 January 2018 - IAS 39. IFRS 9 is divided into three different areas of classification and measurement of financial instruments, impairment and hedge accounting. As regards the classification and measurement of financial instruments, the standard IFRS 9 introduces a model for which the classification of financial assets is guided, on the one hand, by the characteristics of the related contractual cash flows (“SPPI test - Solely Payment of Principal and Interest”) and on the other by the operational intention (“business model”) for which such assets are held. Financial assets according to IFRS 9 can be classified in three categories: a) Financial assets measured at amortised cost b) Financial assets measured at fair value through profit or loss c) Financial assets measured at fair value through other comprehensive incomeFinancial assets can be recognised at amortised cost or at fair value through shareholders’ equity only if it is demonstrated that the same give rise to cash flows that are exclusively payments of principal and interest. Equity securities are always measured at fair value through profit or loss, unless the company chooses (on initial recognition), for shares not held for trading purposes, to present value changes in a shareholders’ equity reserve that will never be transferred to the income statement, even in the event of sale of the financial instrument. As regards financial liabilities, no substantial changes are introduced with respect to the current standard on their classification and measurement. The only change is the accounting treatment of own credit risk: for financial liabilities designated at fair value (so-called liabilities in fair value option) the standard requires fair value changes of financial liabilities attributable to a change in own credit risk to be recognised in shareholders’ equity, unless this treatment creates or amplifies an accounting asymmetry in profit for the period; while the residual amount of fair value changes of liabilities must be recognised in the income statement.With reference to impairment, for instruments measured at amortised cost and at fair value through shareholders’ equity (other than equity instruments) a model based on the concept of Expected Loss is introduced in place of the current Incurred Loss, so as to recognise losses more promptly. The expected losses on the basis of allocation of the staging are accounted for in the 12 following months (Stage 1) or over the entire residual life of the asset being measured, if the credit quality of the financial instrument has suffered “significant” deterioration compared to the initial measurement (Stage 2) or if it is “Impaired” (Stage 3). The standard therefore entailed the following allocation of financial assets:• performing financial assets “Stage 1” with value adjustments in the following 12 months, or “Stage 2” in the

presence of a significant increase in credit risk with recognition of “lifetime” value adjustments determined through comparison between Probabilities of Default at the date of initial recognition and at the reporting date;

• non-performing financial assets “Stage 3” with alignment to the accounting and regulatory definitions of default already present today and recognition of “lifetime” value adjustments.

The forward-looking information associated with, among other things, the evolution of the macroeconomic scenario

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



was included in the calculation of the Expected Credit Losses (ECLs).Finally, with reference to hedge accounting, the new model related to hedging tends to align the accounting presentation with risk management activities and to strengthen the disclosure of the risk management activities undertaken by the entity that prepares the financial statements.For a detailed description of the planning activities and of the related results please see the disclosure provided in the Report on Operations - Section Development and organisation activities.

IFRS 15 - Revenue from contracts with customersThe new accounting standard IFRS 15 - Revenue from Contracts with Customers was endorsed with the publication of Regulation no. 1950/2016 (subsequently amended by Regulation 1987/2017) and it came into force starting from 1 January 2018. This standard amends, replacing them, the accounting standards in force on revenue recognition and in particular IAS 18 - Revenue and IAS 11 - Construction Contracts, as well as the related interpretations. IFRS 15 provides for the following changes:• Single accounting standard for recognition of revenue (sales of goods and performance of services);• approach by “steps” for recognition of revenue:

- identification of the contract with the customer (with the requirement in some cases to consider several contracts in the accounts as a single contract) and identification of the “performance obligations”, providing for separate accounting of goods and services if they are “distinct”;

- determination of the transaction price and its division among the “performance obligations” of the contract on the basis of the stand-alone selling prices of each distinct good or service;

- recognition of the revenue in the moment of fulfilling the “performance obligations”, which occurs through transferring a good or performing a service and may be satisfied at a certain point in time or over a period of time.

• attribution of the total transaction prices to each of the commitments contained in the sale contract.Application of the new standard could determine impacts depending on the types of transactions measured(above all when estimates will be made on the variable components) and on the sector in which the entity operates (telecommunications and residential properties are the two sectors considered most affected). From an initial analysis carried out on the main cases of existing revenue coming from contracts with clients, there are no differences from the current accounting treatment.

IFRS 16 - LeasesOn 13 January 2016, the IASB issued the final version of the IFRS 16 “Leases”. The new IFRS 16 will be applicable from 1 January 2019, once it has been approved by the EU. The IFRS 16 changes the current set of international accounting standards and interpretations on leasing in force, and in particular IAS 17. IFRS 16 introduces a new definition of leasing and confirms the current distinction between the two types of leasing (operational and financial) with reference to the accounting model which the lessor must apply. With reference to the accounting model to be applied by the lessee, the new standard requires that, for all types of leases, there must be recognition of an asset that represents the right to use of the asset that is being leased and, at the same time, the payables related to the fees included in the leasing contract.At the time of initial recognition that asset is assessed on the basis of the cash flows associated with the leasing contract, including, in addition to the current value of the lease payments, the initial direct costs associated with the lease and any costs required to proceed with the recovery of the asset at the end of the contract. After initial registration, this asset will be assessed according to the provisions for property, plant and equipment and, therefore, at cost less depreciation and any impairment, at the “redetermined amount” or at fair value in accordance with IAS 16 or IAS 40. Currently, Banca Intermobiliare and its subsidiaries have no existing lease contracts.

Reclassification of balances of previous years - “reclassified” financial statements published in the report on operationsFollowing the decision of the Board of Directors of Banca Intermobiliare to no longer consider the company Bim Insurance Brokers S.p.A. a “Non-current asset held for sale”, as it was previous defined when the “guidelines of the strategic development plan” were approved, the subsidiary was reconsidered strategic and reclassified among existing equity investments.The comparative figures have therefore been restated, as required by the international accounting standard IFRS 5, compared to the figures published in the annual financial statements at 31.12.2016.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Reconciliation of economic balances comparative data - Bank of Italy 262 Formats

(Thousands of €)

31.12.2016published

Reclassify 31.12.2016pro-forma

Assets

100. Equity investments 99,237 61 99,298

140. Non-current assets and disposal groups held for sale 24,775 (61) 24,714

Reclassification of balances of previous years - “reclassified” financial statements published in the report on operationsPursuant to IAS 8, it is confirmed that neither the accounting policies nor the accounting estimates for the year 2016 have been changed and that there have been no significant changes in contingent liabilities.Always in accordance with the provisions of IAS 8 it should be noted that there were no reclassifications of data as at 31 December 2016 compared to what was previously published, also in view of the rather insignificant effects of the application of new or revised standards.In virtue of the decision of the Board of Directors of Banca Intermobiliare to no longer consider the company Bim Insurance Brokers S.p.A. a “Non-current asset held for sale”, as it was previous defined when the “guidelines of the strategic development plan” were approved, the subsidiary was reconsidered strategic and reclassified among existing equity investments.The comparative figures have therefore been restated, as required by the international accounting standard IFRS 5, compared to the figures published in the annual financial statements at 31.12.2016.

Reconciliation of balance sheet balances comparative data - Reclassified Statements

(Thousands of €)

31.12.2016published

Reclassify 31.12.2016pro-forma

Fixed assets:

- Equity investments 99,237 61 99,298

- Intangible and tangible 4,926 - 4,926

Non-current assets held for sale 24,775 (61) 24,714

Measurement of loan exposures - classification under IAS 8Also for 2017, Banca Intermobiliare continued to carry out a number of refinements in the activities of classifying and measuring loan exposures to reflect certain operating decisions related to the credit monitoring processes. In consideration of the materiality of the impacts on the 2017 financial statements, particular attention was paid by the Bank in order to determine the proper classification of the aforesaid actions pursuant to IAS 8. The analyses showed that the changes in classifications and assessment of credit exposures at 31 December 2017 benefited mostly from new information, referring to facts and events which occurred subsequently also with reference to the usability and reliability of the information, or to new developments, such as changes in the circumstances on which the estimate was based or on the greater experience acquired after the date of preparation of the financial statements for the previous year (IAS 8, paragraph 5). This upgrade process necessarily on a continuous basis, based on the observation of the reference internal and external context, with the aim of pursuing the best estimate of the recoverable amount - an estimate that by definition has some elements of uncertainty, as shown more clearly in the previous paragraph “Use of estimates in the preparation of the separate financial statements”.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



CONSOB inspection and sanctioning processSanctioning proceedings for violation of disclosure requirements on Repo Operations.On 23 December 2016 CONSOB notified Banca Intermobiliare that it had opened sanction proceedings, considering that the disclosure transparency obligations provided for in the legislation had been breached with reference to three transactions of major significance with Related Parties, consisting of “Repurchase Agreement” (Repo) transactions in favour of the Parent Company Veneto Banca S.p.A.. With resolution no. 20099 of 30 August 2017, notified to Banca Intermobiliare on 29 September 2017, CONSOB imposed on Banca Intermobiliare a fine of a total of €/thou 470. Within the deadline of 30 days from the notification, Banca Intermobiliare, lodged an appeal under art. 195 of the Consolidated Law on Finance (TUF) with the Court of Appeal. Banca Intermobiliare has considered that the sanction measure may be cancelled or at least the amount imposed is likely to be reduced; provisions were therefore set aside of €/thou 235.

Sanctioning proceedings against corporate officers pursuant to arts. 190 and 195 of Legislative Decree No. 58 of 24 February 1998, and, by way of joint liability, against Banca Intermobiliare.On 19 January 2017 - following the inspection conducted in the period 2015-2016 - CONSOB notified the Bank of the launch of sanctioning proceedings against 29 corporate officers - between administrative officers and managers - as it considered that the legislation on investment services had been infringed.After obtaining access to the records, the Bank delivered the counterclaims on 21 April 2017. In the meantime, the necessary planning activities were launched for remedying the anomalies found. On 16 November 2017 the Administrative Sanctions Office presented the proposed sanctions to the Commission, for 28 of the 29 officers, from a minimum of € 7,500 to a maximum of € 85,500 per capita, for a total of €/Mln 1,080: an amount for which the Bank is merely jointly liable with the obligation of recourse.Against the allegations described above, on 15 December 2017, Banca Intermobiliare presented its counter-arguments contesting, among other things, its passive joint liability and the amount of the same. Although the Commission’s decision is pending and taking into account the fragmentation of the sanctions, for prudential reasons, and only in the event that any and all of the amounts paid in advance cannot be recovered, it was decided to set aside a provision of €/thou 100.


Sanctioning proceedings against BIM for infringement of the combined provisions of art. 114, paragraph 5, of Legislative Decree No. 58 of 1998 and art. 5 of CONSOB Regulation No. 17221/2010, art. 114, paragraph 1, of Legislative Decree No. 58/1998, as implemented by art. 109 of CONSOB Regulation n. 11971/1999 - which in turn invokes art. 66 of the same Regulation - as well as art. 114, paragraph 5, of Italian Legislative Decree No. 58/1998, in conjunction with art. 6 of Regulation No 17221/2010.CONSOB, considered that the combined provisions of arts 114, paragraph 5, of the CLF and art. 5 of the TRP Regulation and arts 114, paragraph 5, of the aforementioned Decree and art. 6 of the said Regulation were infringed, in relation to a transaction of major significance with related parties, carried out on 7 August 2014, consisting ofthe sale to Veneto Banca of the 67.22% equity interest in the share capital of Banca IPIBI Financial Advisory S.p.A. (now Banca Consulia S.p.A.) held by BIM, a company controlled by Veneto Banca and subject to activity of direction of coordination by the same. After granting access to the records of the proceedings and assessing the overall defensive position, with resolution no. 19822 of 21 December 2016, CONSOB expressed its conclusions stating that the alleged infringements appeared proven and established the related penalties to be paid by BIM, totalling €/thou 25. The sanction was paid on 24 November 2017.

“ECB” Inspection of the former Parent Company Veneto Banca and indirectly of BIMIn October 2016, the ECB had initiated a further inspection at the Parent Company Veneto Banca and therefore indirectly of Banca Intermobiliare, with the aim of evaluating, with reference to the perimeter of Italian banks belonging to the Veneto Banca Group, the management of credit and counterparty risk and the risk control systems. With reference to Banca Intermobiliare, the inspectors had analysed a sample of loans, with reference to the date of 30.06.2016, having a gross exposure amounting to €/Mln 536 and identified €/Mln 375 relating to impaired exposures (57.4% of the total impaired portfolio) and €/Mln 162 relating to the performing portfolio (28.4% of the gross exposure of performing loans to clients). As of today, Banca Intermobiliare, in the light of the corporate evolution of the former Parent Company Veneto Banca now in compulsory administrative liquidation, considers it improbable that the process

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



of communicating the results of the inspections will be formalised. As of today, they have not been received eitherfrom the inspection team, or from the former Parent Company Veneto Banca.We can specify that Banca Intermobiliare had adopted precisely, already in the 2016 annual financial statements, the indications destined to reflect in the accounts the points raised during the inspection. The BIM Board of Directors, also to implement the guidelines of the Business Plan, had launched an updating process relating to the management and assessment processes and to the control systems on lending. This was completed in the early months of 2018 with approval of the new policy and the related regulations, the contents of which were adopted in preparing the financial statements at 31.12.2017.

Tax audits of Banca Intermobiliare As regards the tax audits that involved Banca Intermobiliare information on the objections raised, on the years covered by the inspections, on the petitum and on any charges payable by the company is provided in Part B - Section 13 “Tax assets and tax liabilities” of the Notes to the Separate Financial Statements.

DTA payment Fee under art. 11 of Decree Law No. 59 of 3 May 2016Article 11 of Decree Law No. 59 of 3 May 2016, converted with amendments by Law No. 119 of 30 June 2016, had introduced the possibility to opt for the payment of an annual guarantee fee in order to keep unchanged the arrangements of transformability of “qualified” DTAs (Deferred Tax Assets), having regard to the report from the European Commission that considered these regulations as a form of State aid with the granting of a tax credit for the amount of the DTAs, where the recoverability of the DTA was allowed beyond the amount of taxes (IRES and IRAP) actually paid prior to the measurement and use of the tax credit from DTAs.The legislation in question establishes that the transformability of noble deferred tax assets resulting from recognised in the accounts from 2008 onwards, deriving from write-downs of loans or goodwill (so-called noble DTAs), is permitted only and to the extent that the taxpayer has paid - in advance with respect to the recognition and use of the credit - taxes to the Financial Administration (DTA type 1). In this way the mechanism of conversion and use of these tax credits cannot be considered as an advantage for the taxpayer but represents the return of amounts already paid to the Tax Authority. For the conversion of deferred tax assets which instead do not correspond to tax already paid to the Tax Authority (DTA type 2), the option is provided for to pay an annual guarantee fee agreed as 1.5% of the difference between the amount of deferred tax assets recognised in the accounts between the year of first recognition (2008 for IRES, 2013 for IRAP) and the year of reference (31.12 of the previous year) and the amount of the taxes (IRES and IRAP) paid to the Tax Authority in the same period. The Decree specifies that the option for conversion of DTA type 2 was to be considered irrevocable and valid up to 2029, and implicitly exercised when paying the first yearly fee, the deadline for which was set at 1 August 2016. A number of changes to the rules in question were introduced by the “Save Savings” decree (Italian Law Decree 237/2016) converted by Italian Law no. 15 of 17/2/2017. The most significant relates to postponement for one year of the effectiveness of the rules pursuant to Italian Law Decree no. 59/2016. With this change, the payment of the fee, originally due for the period from 2015 to 2029, has in practice been deferred to the period from 2016 to 2030, meaning that the first payment made in July 2016 is attributed to that tax year, rather than to the previous period 2015.In virtue of exercising the option, in the present annual financial statements the expense of the guarantee fee for financial year 2017 (of €/Mln 0.45) was accounted for among “other administrative expenses” and for approximately the same amount what was prudentially ascertained in 2016 among “other administrative expenses”, for financial year 2015 was restated among contingent assets.

Independent Audit of accountsThe separate financial statements for the period ended 31 December 2017 were independently audited by PricewaterhouseCoopers S.p.A..

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A2 - INFORMATION ON THE MAIN BALANCE SHEET ITEMS

The following are the accounting standards applied in the preparation of the separate financial statements. The presentation of the accounting standards is made with reference to the classification, recognition, valuation and derecognition of the various asset and liability items. The sections on non-valued balance sheet items were not reported.

Section 1 - Financial assets held for trading

Classification criteriaItems classified as financial assets held for trading include financial instruments held with the intention of generating short-term profits from price variations in those instruments, and derivative contracts not designated as hedges, in particular:• quoted and unquoted debt securities;• listed equity securities;• unlisted equities only if their fair value can be determined reliably;• derivative contracts, except for those designated as hedging instruments, which have a positive fair value on the

reporting date; if the fair value of a derivative contract subsequently becomes negative, it is recognised among financial liabilities held for trading.

A derivative is a financial instrument or another contract, which has all three of the following characteristics:a) its value changes with the changes of a specific interest rate, the price of a financial instrument, the price of a

commodity, the exchange rate of a foreign currency, a price or interest rate index, a credit rating, a credit index or other variables;

b) it does not require a net initial investment or requires a net initial investment lower than that required in other types of contracts from which similar reactions may be expected with the changing of market factors;

c) it will be settled at a future date.The category is comprised of financial and credit derivatives. The first includes forward purchase and sale agreements on securities and currencies, derivative contracts with underlying security and those without an underlying security connected to interest rates, indices or other assets, and derivative contracts on currencies.Credit derivatives are contracts that allow the underlying credit risk to be transferred from a specific asset of the entity purchasing the hedge to the entity selling the hedge. The object of these transactions is the credit risk of the final buyer.Included in derivative contracts are those which are embedded in other complex financial instruments which have been recognised separately from the host instrument since:• the economic characteristics and risks of the embedded derivative are not strictly related to the economic



Recognition criteriaThe initial recognition of financial assets is the settlement date for debt securities and equity securities, and the signing date for derivative contracts.Upon initial recognition, financial assets held for trading are recognised at cost, intended as the fair value of the instrument, without considering costs or income on the transaction that are directly attributable to the instrument, which are instead immediately recognised in the income statement.Any derivatives embedded in complex contracts, not strictly related to the contracts but with characteristics that satisfy the definition of a derivative, are separated from the primary contract and assessed at fair value, as financial assets held for trading, whereas the relevant reference accounting criterion is applied to the primary contract. This separation is performed if:• the economic characteristics and risks of the embedded derivative are not strictly related to the economic



NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Valuation criteriaFollowing initial recognition, financial assets held for trading are measured at fair value, while any changes are recognised in profit and loss. For the fair value calculation of financial instruments quoted on an active market, the market prices are used (demand-supply prices or average prices). In the absence of an active market, the estimation methods and valuation models used take into account all risk factors related to the instruments and are based on data obtainable on the market, i.e.: methods based on the valuation of quoted instruments with similar characteristics, discounted cash flow calculations, option price calculation models, values identified from recent comparable transactions.Gains and losses realised from the transfer or from repayment, and gains and losses not realised as a result of changes in the fair value of the trading book, are classified in the income statement under item 80 “Gains and losses on assets held for trading”.Equity securities and related derivative instruments for which a reliable fair value cannot be calculated in accordance with the guidelines indicated above, are maintained at cost, adjusted with respect to confirmed losses due to a reduction in value.

Derecognition criteriaFinancial assets held for trading are derecognised when contractual rights to cash flows deriving from the assets expire or when essentially all related risks and benefits are transferred along with a transferred financial asset.If the Bank sells a financial asset classified as part of its trading book, the asset is eliminated as of the date of transfer (settlement date).Securities received as part of a transaction which contractually calls for their sale at a later date, and securities transferred as part of a transaction which contractually calls for their repurchase, are not recognised in or reversed from the financial statements.

section 2 - Financial assets available for sale

Classification criteriaNon-derivative financial assets which are not otherwise classified as Receivables, Assets held for trading, Assets measured at fair value or Assets held to maturity are included in this category. In particular, included under this item is interest on equity interests not held for trading purposes and not qualifying as controlled, linked or jointly controlled.

Recognition criteriaThe initial recognition of financial assets is the settlement date for debt securities and equity securities, and the disbursement date for loans.On initial recognition, the assets are entered at cost, intended as the fair value of the instrument, including transaction costs or income directly attributable to the instrument. If recognition occurs after the reclassification of Assets held to maturity, the recognition value is represented by the fair value at the time of the transfer.

Valuation criteriaFollowing initial recognition, assets available for sale continue to be assessed at fair value, with remuneration from the instrument, calculated using the IRR method, recorded on the income statement, whereas gains and losses deriving from a change in fair value are allocated to a specific Shareholders’ Equity Reserve until the financial asset is derecognised or a loss of value is confirmed. At the time of disposal or recognition of a loss of value, the accumulated gains or losses are transferred to the income statement.For confirmation of situations leading to a loss due to impairment and the calculation of the relevant amount, the Bank, making use of its valuation experience, uses all available information based on facts already verified and on data obtainable at the valuation date.With regard to debt securities, the data considered essentially relevant for the purposes of verifying any impairment losses are as follows:• the existence of significant financial difficulties of the issuer, confirmed by breach of contract or failure to make

interest or capital payments;• the likelihood that bankruptcy proceedings will be instigated;• the disappearance of an active market for financial instruments;• the deterioration of economic conditions affecting borrower/issuer cash flows;• the declassification of the issuer’s credit rating, when accompanied by other negative information on the issuer’s

financial position.With regard to equity securities, data considered relevant for the purposes of identifying impairment losses include the verification of changes occurring in the technological, market, economic or legal sector in which the issuer operates.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A significant or protracted decrease of the fair value of an equity instrument below its cost is considered to be objective evidence of impairment.Losses due to the impairment of equity securities cannot be written back to the income statement unless the reasons for the impairment cease to apply. Therefore, these write-backs are made to the specific equity reserve. Write-backs related to debt securities are recorded in the income statement, up to the impairment amount recognised therein.With regard to debt securities classified as available for sale, the recognition of related yield based on the amortised cost method is recognised in the financial statements and counterbalanced in the income statement in a similar way to the effects of exchange rate variations.By contrast, changes in exchange rates which concern equity instruments available for sale are recognised in a specific equity reserve.Equity securities for which a reliable fair value cannot be calculated in accordance with the guidelines indicated above, are maintained at cost, adjusted with respect to confirmed impairment losses.Impairment tests take place on each annual or interim reporting date.If the reasons for the impairment cease to exist as a result of an event occurring after recognition of the impairment, the amounts are written back and recorded in the income statement in the case of loans or debt securities, and to shareholders’ equity in the case of equity securities. The amount of the write-back cannot exceed the amortised cost that the instrument would have had without the aforementioned adjustments.For details regarding the procedures for determining fair value and the methods used for impairment, please refer to Section 17 “Additional Information” of this Part A.2, “Criteria for the determination of fair value” and “impairment of available-for-sale financial instruments” respectively.

Derecognition criteriaFinancial assets are derecognised when contractual rights to cash flows deriving from the assets expire or when essentially all related risks and benefits of the financial asset are transferred.

Section 4 - Loans and receivables

Classification criteriaLoans and receivables include loans to clients and banks, either disbursed directly or acquired via third parties, which involve fixed or calculable payments and are not quoted on an active market or not originally classified as financial assets available for sale, held for trading or designated at fair value.The loans and receivables item also includes trade loans, repurchase agreements, receivables originating from financial leasing operations and unlisted debt securities acquired by subscription or private placement, with determined or calculable payments, in which the presence of the lending aspect is more pronounced than the financial aspect and the purchase is substantially equivalent to a loan granted.Also included in the loans and receivables item are loans originating in the context of the factoring business against advances on the portfolio received with recourse which remains recognised in the financial statements of the transferor counterparty. As regards receivables purchased without recourse, these are included in the loans and receivables item, after ascertainment of the non-existence of contractual clauses that alter significantly the exposure to the risk of the transferee company.

Recognition criteriaThe initial recognition of a loan is the disbursement date or, in the case of debt securities, the settlement date, based on the fair value of the financial instrument, equal to the sum disbursed or subscription price, including costs/income directly attributable to the individual loan and calculable as from the original transaction, even if settled at a later date. Costs which, albeit with the above characteristics, are subject to repayment by the borrower or can be included among standard internal administrative costs, are excluded.For any loan transactions concluded with different terms and conditions than the market terms, the fair value is measured using the appropriate evaluation techniques; the difference compared to the amount granted or the subscription price is recognised directly in the income statement.Repurchase agreement contracts with a compulsory repurchase or resale commitment are entered in the financial statements as deposit or lending operations. In particular, spot sale and forward repurchase transactions are entered in the financial statements as payables for the actual spot price received, whereas spot purchase and forward resale transactions are entered as receivables for the actual spot price paid.

Valuation criteriaAfter initial recognition, loans are measured at their amortised cost, equal to the initial recognition value decreased/increased by the capital repayments, write-downs/write-backs and amortisation - calculated by the effective interest rate method - of the difference between the total disbursed and that repayable on expiry, normally attributable

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



to the costs/income relating directly to each individual loan. The actual interest rate is identified by calculating the rate equal to the current value of future cash flows on the loan, for capital and interest, to the amount allocated inclusive of loan-related costs/income. This accounting method, using financial logic, allows distribution of the economic effect of costs/income across the expected residual life of the loan. The estimate of the flows and the contractual duration of the loan take into account all of the contractual clauses that could influence the amounts and maturities (such as early repayments and the various options that can be exercised), but without considering potential losses on the loan. The effective interest rate initially recognised is the one that is always used to discount expected cash flows and to determine the amortised cost after initial recognition.The amortised cost method is not used for short-term loans for which the effect of application of the discounting logic is considered negligible; they are therefore measured at historical cost. A similar measurement criterion is used for loans without a specific maturity date or which can be revoked.At every annual or interim reporting date, loans are assessed to identify those which, following the occurrence of events after their recognition, show objective evidence of a possible impairment.The main information taken into account for this test is:• the existence of significant financial difficulties of the borrower/issuer, confirmed by breach of contract or failure to

make interest or capital payments;• the likelihood that bankruptcy proceedings will be instigated;• the deterioration of economic conditions affecting borrower/issuer cash flows;• difficulty of the country in which the borrower/issuer resides to service its debt;• the lowering of the credit rating of the borrower/issuer when accompanied by other negative information on the

issuer’s financial position;• the trends in specific business sectors.Existing guarantees are also taken into account for the valuation.As regards the classification of impaired exposures under the various risk categories (non-performing loans, probable defaults and impaired past-due exposures), the Bank refers to the provisions issued by the Bank of Italy.The classification is carried out by the operating structures with the appropriate powers, with the exception of loans past-due/over-the-limit for over 90 days, for which classification is carried out using automatic procedures.These impaired loans, with the exception of those past due, are the subject of an analytical assessment process starting from exposures of more than € 250,000. Non-performing loans and probable defaults below this threshold are measured collectively.Exposures that are past-due and/or over-the-limit for more than 90 days are the subject of collective valuation analytically applying percentages determined on a flat-rate basis on historical/statistical bases.The total write-down for each loan is equal to the difference between its book value at the time of valuation (amortised cost) and the present value of expected future cash flows, calculated by applying the original effective interest rate.If the original interest rate of a financial asset being discounted to the present is not available, or retracing it is excessively burdensome, the average rate recorded on positions with similar characteristics is applied. Expected cash flows take into account the expected recovery times, the estimated realisable value of any guarantees securing the positions and any costs expected to be incurred in recovery of the loan exposure. Cash flows relating to loans for which recovery is expected in the short term are not discounted.In particular, as regards non-performing loans, above the threshold of € 250,000, all positions are analysed in detail to determine the procedure with which the recovery value will be calculated, while a recovery amount is forecast that is discounted on the basis of the average recovery time, as determined by the competent corporate units.Probable defaults, namely watchlist items and impaired concessions (forborne non-performing positions), of more than € 250,000 are evaluated analytically identifying a recovery forecast which is discounted to the present. Positions with exposures that are lower than the aforesaid limit are subject to collective valuation analytically applying percentages determined on a flat-rate basis on historical/statistical bases.Restructured loans, included among probable defaults, are exposures to counterparties with which agreements have been concluded that provide for the concession of a payment moratorium for the debt and the contemporary renegotiation of terms and conditions at lower than market rates. Any sacrifices of principal are valued analytically, including in the write-downs the discounted expense any renegotiation of the rate at terms and conditions lower than the original contractual rate.Loans for which objective impairment has not been identified on an individual basis which are therefore usually performing loans, including loans granted to counterparties residing in countries at risk, are measured for impairment collectively, based on a methodology that includes the parameters of the calculation model provided by the Basel II provisions, represented by PD (probability of default) and LGD (loss given default).This assessment is applied to uniform loan categories with similar characteristics in terms of credit risk and the related percentage losses are estimated by taking into account historic records, which allow the estimation of latent loss of value in each loan category.The original effective interest rate of each loan remains unchanged over time unless restructuring has led to a variation in the contractual interest rate or if, in practice, it becomes non-interest bearing.The write-down is entered in the income statement.The original value of the loans is written back in subsequent periods to the extent to which the reasons for the

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



adjustment cease to apply provided the valuation can objectively be connected an event that occurred after the said adjustment. The write-back is entered in the income statement, and cannot in any event exceed the amortised cost which would have applied in the absence of previous write-downs. The positive effects connected to the discounting effect from the progressive reduction of the estimated time required for recovery of the written down loan are included in the write backs.At every annual and interim reporting date, any additional write-downs or write-backs are recalculated on a differential basis with reference to the entire performing loan portfolio at that date.

Derecognition criteriaLoans are derecognised from balance sheet assets when they are deemed to be definitively irrecoverable or if they were transferred with all risks and benefits connected to them. However, if the risks and benefits relating to transferred loans are retained, these continue to be included under assets in the financial statements, until legal ownership of the loan has been fully transferred.In the event that it is not possible to confirm the substantial transfer of risks and benefits, the loans are derecognised from the financial statements if no form of control over them has been retained. Otherwise, the retention, even in part, of said control leads to maintaining the loans in the financial statements to the extent of their residual involvement, measured by the exposure to changes in value of transferred loans and to changes in their cash flows.

Section 6 - Hedging transactions

Classification criteriaThis item includes derivative contracts designated as effective hedging instruments which have a positive/negative fair value as at the reporting date.

Type of hedgeRisk hedging transactions are aimed at neutralising potential losses from a specific element or group of elements, which are attributable to a specific risk, using the gains recognised on a different element or group of elements if that particular risk should actually occur. The hedge types used are:1) fair value hedge, the aim of which is to cover exposure to changes in fair value in an item subject to a specific risk;2) cash flow hedge, the aim of which is to cover exposure to changes in future cash flows attributed to a specific risk

linked with items in the financial statements;3) hedge of an investment in a foreign currency: this relates to the hedging of the risk of an investment in a foreign

company which is expressed in a foreign currency.Banca Intermobiliare has used only the type of hedge set forth under 1).

Valuation criteriaHedging derivatives are measured at fair value:• for a fair value hedge, the change in the fair value of the hedged element is offset with a change in the fair value of

the hedged instrument. This offsetting is recognised through the recognition in the income statement of the changes in the value of the hedged element (insofar as the change is produced by the underlying risk factor) and the hedging instrument recognised at its fair value. Any difference, which represents the partial ineffectiveness of the hedge, consequently comprises the net economic effect;

• for cash flow hedges, the changes in the fair value of the derivative are recognised in equity only insofar as the effective portion of the hedge and they are recognised in the income statement only when, in regard to the hedged item, a change in the cash flows occurs which requires offsetting. Any ineffectiveness is allocated to the income statement.

The derivative instrument is designated as a hedge only if there is formal documentation of the relation between the hedged instrument and the hedging instrument and if it is highly effective at the time the hedge begins and, prospectively, throughout the life of the hedge.The effectiveness of the hedge depends on the extent to which the changes in the fair value of the hedged instrument or the related cash flows expected from it are offset by those from the hedging instrument. Therefore, effectiveness is measured against the aforementioned changes, taking into account the intent of the company at the time the hedge is established.There is effectiveness (within a range of 80-125%), when the changes and the fair value (or of the cash flows) of the hedging financial instrument neutralise almost entirely the changes in the hedged instrument, for the element of risk which is being hedged.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



The measurement of the effectiveness of a hedge takes place at each reporting date using:• prospective tests which justify application of the hedge accounting, as they prove the expected effectiveness

of the hedge in future years;• the retrospective tests, which show the degree of effectiveness of the hedge reached during the period to which

they refer. In other words, they measure how much the actual results have deviated from the perfect hedge.

Derecognition criteriaHedging derivatives are derecognised from the balance sheet assets in the event of disposal when this has entailed the transfer of all the risks and benefits connected to the said derivatives. If the tests do not confirm the effectiveness of the hedge, the hedge accounting, in accordance with what is described above, is interrupted and the hedging derivative contract is reclassified among trading instruments.If the hedge is terminated for reasons other than realisation of the hedged element, the changes in the latter’s value, recognised in the financial statements until such time as the hedge was effective, are recognised in the income statement using the amortised cost method for interest-bearing financial instruments or in a lump sum in other cases.

Section 7 - Equity investments

Classification criteriaLa voce include le interessenze detenute in società controllate, collegate e soggette a controllo congiunto. Sono considerate controllate le imprese nelle quali la consolidante, direttamente o indirettamente, possiede più della metà dei diritti di voto o quando pur con una quota di diritti di voto inferiore la consolidante ha il potere di nominare la maggioranza degli amministratori della partecipata o di determinare le politiche finanziarie e operative della stessa. Nella valutazione dei diritti di voto si tiene conto anche dei diritti “potenziali” che siano correntemente esercitabili o convertibili in diritti di voto effettivi in qualsiasi momento dalla società.Si considerano collegate le società in cui si detiene il 20% o una quota superiore dei diritti di voto e le società che per particolari legami giuridici, quali la partecipazione a patti di sindacato, devono considerarsi sottoposte a influenza notevole, mentre sussiste controllo congiunto quando vi sono accordi contrattuali, parasociali o di altra natura, per la gestione paritetica dell’attività e la nomina degli amministratori.

Recognition criteriaEquity investments are recognised in the balance sheet at their book value.

Valuation criteriaIf there is evidence that the value of an equity investment may have been reduced, the recoverable value of the investment is assessed, taking into account the present value of future cash flows that the investment may generate, including its final disposal value.If the recovery value proves less than the book value, the related difference is recorded in the income statement, in item “Profit/(loss) from equity investments”. If the reasons for impairment no longer exist as a result of an event occurring after recognition of the reduction in value, a write-back is performed and entered in the income statement.

Derecognition criteriaEquity investments are derecognised from the balance sheet when contractual rights to cash flows deriving from the assets expire or when essentially all related risks and benefits are transferred along with a transferred equity investment.

Section 8 - Tangible fixed assets

Classification criteriaTangible fixed assets items include land, instrumental buildings, technical plants, furniture, furnishings and fixtures of any kind. These are tangible assets held for use in the production or supply of goods and services, for rental to third parties, or for administrative purposes and that may be considered as usable over more than one financial period. This item also includes assets used under financial leasing even though legal ownership of such assets remains with the lessor.Instrumental buildings are those that are owned to provide services or for administrative purposes, whereas real estate investments are those owned to earn rental income and/or capital gains.The cost for leasehold improvements are included among tangible fixed assets, though they are separable from the assets themselves (when the aforementioned costs do not involve autonomous operation and use, but future economic benefits

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



are expected to result from them, they are recorded among “other assets” and are depreciated in the shorter of the expected useful life of the improvements and the residual duration of the lease). The amounts paid for the acquisition and restructuring of goods that have not yet entered the production process and the depreciation of which has therefore not begun are added to the value of property, plant and equipment.Tangible fixed assets which fulfil the conditions set forth in IFRS 5 are classified under “non-current assets and disposal groups held for sale”.

Recognition criteriaTangible fixed assets are initially recorded at cost, which, in addition to the purchase price, includes any other ancillary charges directly attributable to the purchase and implementation of the asset. Extraordinary maintenance costs leading to an increase in future economic benefits are recorded as an increase in the asset value, whereas other ordinary maintenance costs are recorded in the income statement.

Criteria for measurement and recognition of income componentsProperty, plant and equipment items, including non-instrumental buildings, are measured at cost, less any depreciation and loss of value, according to the “cost model” set forth under paragraph 30 of IAS 16.These fixed assets are systematically depreciated on a straight-line basis for the duration of their useful life, except in the case of:• land, whether purchased individually or incorporated in the value of the buildings, since it has an indefinite useful

life. In the event that their value is incorporated in the value of the building, by virtue of applying the component approach, they are considered assets that are separate from the building; the division between the value of the land and the value of the building takes place on the basis of appraisals made by independent experts only for properties classified as “ground - air space”,

• artistic heritage, since the useful life of a work of art cannot be estimated and its value is normally destined to increase over time.

For assets acquired during the course of the year, depreciation is calculated on a daily basis starting from the date use of the asset began. For assets transferred and/or sold during the year, depreciation is calculated on a daily basis up to the date of transfer and/or the sale.

The depreciation rates deemed appropriate to represent the deterioration of the fixed assets over time are shown here: instrumental real estate assets 2.13%, cars and the like 25%, electronic machines 20%, bullet-proof counters 20%, furniture 15%, other plants, machinery and equipment 15%, furniture and ordinary office equipment 12%.

If there is evidence that a tangible asset has become impaired, a comparison is made between the cost price and recovery price of the asset, equal to the lower of the fair value, net of any sales costs, and the related usage value of the asset, intended as the current value of future cash flows deriving from the asset. Any adjustments are recognised in the income statement.If the reasons for recording the loss no longer apply, a write-back is performed, which may not exceed the value that would have applied to the asset, net of depreciation calculated in the absence of previous losses of value.

Derecognition criteriaA tangible fixed asset is written-off from the balance sheet at the time of its disposal, or when the asset is permanently retired from active use and no future economic benefits are expected from its disposal. Capital gains and losses from the sale or transfer of tangible assets are the differences between the net consideration received and the asset’s book value and are recognised in the income statement on the day they are derecognised.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 9 - Intangible fixed assets

Classification criteriaIAS 38 defines intangible assets as identifiable non-monetary assets with no physical substance. The following characteristics must be present in order to an asset to be defined as intangible:• they must be identifiable;• control of the related resource;• existence of future economic benefits.In the absence of any one of the above characteristics, the expense for acquiring or generating the asset internally is recognised as a cost in the period in which it is incurred.Goodwill, included under intangible fixed assets as the positive difference between purchase price and fair value of the assets and liabilities purchased in the context of business combinations, is represented, pursuant to IFRS 3,by the economic benefits resulting from assets which cannot be individually identified, nor be separately registered in the accounting records. Other intangible assets are recognised as such if they can be so identified and originatefrom legal or contractual rights.

Recognition and measurement criteriaAn intangible asset may be recognised as goodwill when the positive difference between the fair value of the acquired equity elements and the acquisition cost of the investment represents the future income capacity of the investment (goodwill).If this difference proves negative (badwill) or if goodwill shows no future income from the investee, the difference is recognised directly in the income statement.On an annual basis (or whenever there is evidence of impairment) an impairment test is performed on the adequacy of the goodwill value. For this purpose, the cash generating unit is identified to which goodwill should be attributed.Any reduction in value is determined on the basis of the difference between the book value of goodwill and its recovery value, if lower. This recovery value is equal to the lower between the fair value of the cash generating unit, net of any sales costs, and its related value in use. The resulting adjustments are recorded in the income statement.Other intangible assets are recognised at cost, adjusted for any ancillary charges, only if it is likely that future economic benefits attributable to the asset will be realised and if the cost of the asset can be reliably determined.The cost of intangible fixed assets is amortised on a straight-line basis throughout its related useful life. If the useful life cannot be defined, no amortisation is carried out, and instead a periodic verification is performed to determine if the book value of fixed assets is adequate.The amortisation rates deemed appropriate to represent the deterioration of intangible assets over time are shown here: software 33% or 20%, brands 10%, leasehold improvements 8%.At each reporting date, if there is evidence of impairment, the recoverable value of the asset is estimated. The amount of the impairment, which is recorded in the income statement, is equal to the difference between the book value of the asset and its recoverable value.

Derecognition criteriaAn intangible asset is derecognised from the balance sheet at the time of its disposal or when no future economic benefits can be expected. Amortisation is calculated on a straight-line basis.

Section 10 - Non-current assets held for sale

These items are classified as non-current assets/liabilities and groups of assets/liabilities held for sale when the sale is considered highly probable. In particular, such assets/liabilities are valued at the lower of carrying value and fair value less costs of disposal. In the event that the assets held for sale are depreciable, the depreciation process is discontinued with effect from the time of classification among non-current assets held for sale.The related income and expenses are stated in the income statement in a separate item, net of any tax effects; in this case, the same economic information is represented in a separate entry for comparative periods presented in the financial statements.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 11 - Current and deferred taxes

The company observes the effects related to current, prepaid and deferred taxes applying the tax rates in force on the date of preparation of the financial statements, also taking into account the expected taxes due to opting for the national tax consolidation for the period 2015-2017. Income taxes are recognised in the income statement except for those which are related to items that are recognised directly in equity.The provision for income tax is determined on the basis of a prudent forecast of the current, prepaid and deferred tax payable. In particular, deferred tax assets and liabilities are calculated on the basis of temporary differences - without time limits - between the attributed value of an asset or liability according to statutory criteria and the corresponding values assumed for tax purposes.Deferred tax assets are recognised on the balance sheet to the extent that there is a likelihood of their recovery, evaluated on the basis of the ability of the company to generate continuously positive taxable income.The probability of recovering the taxes prepaid for goodwill, other intangible assets and written-down loans is considered certain based on the provisions of the law that provide for transformation into a tax credit in the case of a statutory and/or fiscal loss for the period. In particular:• in the case of a statutory loss, prepaid taxes for goodwill, other intangible assets and loan write-downs will be partially

transformed into a tax credit pursuant to the provisions of art. 2, par. 55 of Italian Legislative Decree no. 225 of 29 December 2010, converted with amendments into Italian Law no. 10 of 26 February 2011. The transformation becomes effective from the date the separate financial statements in which the loss is recognised are approved by the shareholders’ meeting, as indicated in art. 2 (56) of the aforesaid Italian Law Decree 225/2010;

• if there is a tax loss during the year, the related deferred tax assets, only insofar as the portion generated by deductions referring to the goodwill, other intangible assets and the write-down of receivables, will be the object of the transformation into a tax credit due to the provisions of article 2, paragraph 56-bis of the aforementioned Decree Law. 225/2010, introduced by article 9 of Italian Legislative Decree 201 of 6 December 2011, converted with amendments into Italian Law 214 of 22 December 2011. The aforementioned transformation becomes effective from the filing date of the tax return related to the year in which the loss is incurred.

Deferred tax liabilities are entered in the balance sheet.The amount of the tax provisions is furthermore adjusted in order to cover expenses that could arise from assessments or disputes with tax authorities.Assets and liabilities booked for deferred taxes are systematically measured in order to take into account any changes in the regulations or tax rates, as well as possible different subjective situations concerning the interested companies.

Sezione 12 - Fondi per rischi ed oneri

Classification criteriaProvisions for risks and charges include provisions relating to legal obligations or those associated with employment situations or disputes, also of a tax nature, originating from a past event for which a disbursement is likely in order to fulfil the said obligations, provided that a reliable estimate can be made of the related amount.Consequently, the recognition of a provision occurs if and only if: i) there is a current (legal or implicit) obligation as a result of a past event; ii) it is probable that in order to fulfil the obligation, resources embodying economic benefits will need to be used; iii) a reliable estimate can be made of the amount resulting from the fulfilment of the obligation.

Recognition and measurement criteria The amount recognised as a provision is the best estimate of expenditure required for fulfilling the existing obligation at the reporting date and reflects the risks and uncertainties that inevitably characterise a plurality of facts and circumstances. Where the time element is significant, provisions are discounted at current market rates. The provision and the increases due to the time factor are recognised in the Income Statement.

Derecognition criteriaThe provision is reversed when the use of resources embodying economic benefits in order to fulfil the obligation becomes unlikely, or the obligation is extinguished. Provisions for risks and charges also include contractual allowances owed whose measurement is carried out according to the actuarial criteria under the IAS 37 accounting standard.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Section 13 - Payables and outstanding securities

Classification criteriaPayables to banks, payables to clients, outstanding securities and subordinated liabilities include the various forms of funding (interbank and client) and deposits (certificates of deposit and bonds in issue), net of any repurchased amounts including for re-negotiation purposes.

Recognition criteriaThe first recognition of these financial liabilities takes place upon receiving the deposits or issuing the debt securities.The initial recognition is performed on the basis of the fair value of the liability, normally equal to the sum collected or the issue prices, increased by any additional costs/income directly related to the deposit or issue transaction and not repaid by the indebted party. Internal costs of an administrative nature are excluded.The component of convertible bonds which has the characteristics of a liability is recognised in the balance sheet as a liability net of issuing costs. On issue, the fair value of the debt component is determined using the market price of an equivalent non-convertible bond; said amount, classified as a long-term payable, is adjusted by the amortised cost method until the date of its extinguishment through conversion or redemption. The remaining part of the amount collected is attributed to the conversion option and recorded under item 160 “equity instruments” of shareholders’ equity.

Valuation criteriaAfter initial recognition, financial liabilities are measured at their amortised cost according to the effective interest rate method. Short-term or on-demand liabilities in which the time factor is negligible are an exception to this rule and they continue to be recognised at their collection value with any costs incurred recorded in the income statement on a straight-line basis for the contractual duration of the liability.

Derecognition criteriaThese financial liabilities are derecognised from the balance sheet only when they expire or are extinguished.Derecognition may also take place if previously issued securities are repurchased. The difference between the book value of the redeemed liability and the amount paid to repurchase it is recognised in the income statement. The placement of treasury shares on the market after their repurchase is considered as a new issue with recognition at the new placement price, without any effect on the income statement.

Section 14 - Financial liabilities held for trading

Classification criteriaThis item includes the negative value of trading derivative contracts designated at fair value and liabilities, also designated at fair value, originating from technical exposure generated from securities trading.

Valuation criteriaAll trading liabilities are measured at fair value as determined according to the procedures set forth in the Section on “financial assets held for trading”.

Section 16 - Foreign currency transactions

Initial recognitionThe functional currency, that is the Euro, is that of the economic environment in which the company operates and coincides with the accounting currency. Transactions in foreign currency are recorded at the time of their initial recognition in the currency of account applying the foreign currency exchange rate valid on the transaction date.

Subsequent recognitionUpon closure of the annual or interim financial statements, financial statement items in a foreign currency are valued as follows:• monetary items are converted at the exchange rate in effect on the closing date;• non-monetary items are valued at their historic cost, converted using the exchange rate in effect on the date of the

transaction;• non-monetary items are valued at fair value, converted using the exchange rate in effect on the closing date.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Exchange rate differences deriving from monetary element settlements or from conversions to rates other than the original rates applied or from conversions of the previous financial statements are recorded in the income statement in the period in which they arise.When a gain or loss relating to a non-monetary element is recorded under shareholders’ equity, any exchange difference relating to that element is also recorded under shareholders’ equity. Otherwise, when a gain or loss is recorded in the income statement, any related exchange difference is also recorded in the income statement. Costs and revenues in a foreign currency are recognised using the exchange rate in effect at the time of recognition.

Section 17 - Other information

Employees’ severance fundThe employees’ severance fund is recognised on the basis of its actuarial value, determined by independent actuaries. For actuarial purposes, the Projected Unit Credit method is used, which involves a forecast of future outlay based on historic statistical analysis and the demographic curve, and financial actuarial valuation of cash flows based on the market interest rate. Contributions paid in each financial period are considered as separate units, recorded and valued individually in order to determine the final obligation. The actuarial rate used is determined as the average of corporate securities rates relating to the valuation date, weighted on the basis of the percentage of the amount paid and prepaid, for each maturity, with respect to the total to be paid or prepaid up to the final extinguishment date of the entire obligation. In recent years there has been a worsening of bond issuers’ ratings, both at the public entity and the corporate level; due to this, there has been a reduction in the market for highly rated securities. Pursuant to IAS 19 regarding identification of the discounting rate to use for actuarial valuations, it was considered more representative of actual current financial market performances to take as a reference the bonds denominated in Euro with an issuer rating of at least A (Standard & Poor) or Aa1 (Moody’s), that is a rating which, while fulfilling the “high quality” requirements if IAS 19, also makes it possible to have an adequately sized reference basket.The service costs for this scheme are recorded under personnel costs as the net total of contributions paid, contributions relevant to previous periods yet to be recognised, interest accrued, expected revenues deriving from implementation of the scheme and any actuarial gains/losses.Actuarial gains and losses are immediately recognised in shareholders’ equity.

Treasury SharesAny treasury shares held are recorded as a reduction in shareholders’ equity.Likewise, their original cost and profits or losses deriving from their subsequent sale are recorded as movements in shareholders’ equity.

Share-based paymentsStaff remuneration plans based on shares are recognised in the income statement, with a corresponding increase in equity, based on the fair value of the financial instruments granted on the date of assignment, dividing the charge along the period covered by the plan. When there are options, their fair value is calculated using a model that considers, in addition to information such as the price of exercise and the life of the option, the current price of the shares and their expected volatility, expected dividends and the risk-free interest rate and even the specific characteristics of the existing plan. The pricing model separately assesses the option and probability of realization of the conditions upon which the options were granted. The combination of the two values provides the fair value of the assigned instrument. Any reduction in the number of assigned financial instruments is accounted for as a cancellation of a part thereof.

Valuation reservesValuation reserves are determined as a function of valuation rules indicated for the assets and liabilities concerned. e.g. assets available for sale. These reserves also include the impact from the first application of IAS.This item includes valuation reserves for financial assets available for sale and for tangible and intangible assets revalued upon first time application of IAS/IFRS.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Recognition of revenuesRevenues are recognised when they are received or when it is probable that the future economic benefits will be received and these benefits can be measured reliably. In particular:• the interests are recognised pro rata on the basis of the contractual interest rate or the effective interest rate if

amortised cost is used;• dividends are recognised in the income statement when they are distributed “IAS 18, par. 30.c”;• revenue deriving from brokerage on financial instruments for trading, calculated as the difference between

the transaction price and the fair value of the instrument, is recognised in the income statement at the time the transaction is recognised if the fair value can be calculated with reference to recent parameters or transactions observed in the same market on which the instrument is traded;

• other fees and commissions are recognised on an accruals basis.

Property held for saleProperties originating from credit recoveries have been recognised and measured in the balance sheet under item 150 “Other Assets” based on IAS 2. The value recognised is equal to the purchase or sale value including and costs that can be capitalised. The values of properties recognised in the balance sheet are adjusted if there is impairment based on new market values that are lower than the recognition amount.

Tests for impairment of tangible and intangible assetsTangible and intangible assets with a finite useful life are subjected to impairment tests if there is an indication thatthe carrying amount of the asset can no longer be recovered. The recoverable value is determined with reference to the fair value of the asset net of costs to sell or to the value in use if this can be determined and if it is higher than the fair value.As regards properties, held for any reason, the fair value is mainly determined on the basis of an appraisal. The impairment loss is recognised only if the fair value, net of costs to sell or the value in use, is lower than the carrying amount for a prolonged period.As regards intangible assets with an indefinite life, all the factors on which the estimate of the recoverable value of the same was based are continually and constantly monitored, in order to identify quickly any potential critical elements.

Criteria for determination of the fair value of financial instrumentsFair value is the price that could be received for the sale of an asset or which would be payable upon transfer of an asset in an arm’s length transaction on the valuation date. The financial statement rules apply the fair value criterion as the major criterion for the measurement of financial instruments, with measurement at cost (or amortised cost) being considered a secondary criterion. IAS 39 (par. 46 et seq.) sets fair value as the criteria for measuring financial assets and liabilities belonging to the following categories:• held for trading financial assets (HFT);• available-for-sale financial assets (AFS);• derivative instruments, regardless of their purpose;• financial liabilities held for trading (IAS 39 par. 9).

The following are excluded from measurement at fair value:• financial assets classified as “held-to-maturity investments” (HTM) or “loans and receivables” (L&R): their

measurement is provided at cost;• equity instruments for which fair value cannot be measured reliably: measurement at cost is required for these

instruments as well;• financial liabilities not held for trading which are not measured at fair value: measurement is carried out using the

amortised cost method.

The measurement of fair value therefore has an effect on a large part of the balance sheet items, or in terms of their impact on the income statement or equity, or for additional information purposes.On 11 December 2012, the European Union adopted IFRS 13, the application of which is mandatory from 1 January 2013 for all companies that use IASs/IFRSs for the drafting of financial statements.IFRS 13 provides an updated definition of fair value, compared to the one provided previously in IAS 39. In particular, IFRS 13 introduces the concepts of “price” and “transaction between market participants”; with regard to the first element the standard (par. 24-26) specifies that the price is the consideration received/paid to sell/transfer the asset/liability, regardless of the fact that it can be observed directly or estimated using other measurement techniques. The standard (para. 15-21) also states that use of a price as a measure of fair value assumes that the transaction takes place in the principal market (the market with the highest volume/level of activity) or, in its absence, the most advantageous market (the market which maximises the amount received to sell/minimises the amount to pay to buy).

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



With regard to the “market participants,” IFRS 13 (par. 3, 22 and 23) underlines that the fair value, whether taken from the market or measured using measurement techniques, must include the assumptions used by the market participants, including those regarding risk.Therefore, pursuant to IASs/IFRSs, the market price is used for the measurement of the fair value of financial instruments, if they are instruments which are traded on active markets.If there is no active market, the fair value is determined using measurement techniques that maximise the use of observable data and assumptions used by the market participants, including assumptions regarding risk. In this sense, fair value must accurately reflect the credit risk of the counterparty (IFRS 13 par. 56) and include the risk of default of the company itself (IFRS 13 par. 42).

The criteria for the determination of the “fair value of the securities” are:

Securities listed on an active market:The fair value of the financial instruments traded on an “active market” is assumed to be:• for equity securities and debt securities listed on Borsa Italia, the reference price9 of the last working day of the

exchange;• for equity or debt securities listed on foreign exchanges, the reference price (Bloomberg trade price or another

equivalent price) of the last day of the period, provided the price of the instrument is sufficiently “liquid” and/or considered to be reliable;

• for shares in UCIs (Undertakings and collective investments and Sicavs) the official price (Bloomberg trade price or another equivalent price) of the share on the last trading day of the reference period;

• for all types of instruments in general, when available and reliable, the price provided by other sources of information such as Bloomberg, independent qualified contributors (e.g. Banca Imi, UBM, etc.) or alternative trading platforms where the financial instrument is objectively priced on a continuous basis;

• for equity securities included in the portfolio of available for sale assets, the fair value is assumed to be the market price on the last trading day of the year.

Securities listed on an inactive market:“When no price as specified above is available or deemed to be reliable, the fair value of financial instruments traded on an “inactive market” is considered to be”:• for debt securities, not listed on an Official Stock Exchange or for which a market has not been identified or by

default, the following are considered:- Bloomberg’s BGN quotation, if there is evidence of sufficient continuity of the price quotation;- the quotation of a single contributor, if there is evidence of sufficient continuity of the price quotation;- any prices provided by other sources considered to be adequate, such as Bloomberg’s BVAL quotation;- internal valuation models.

If it is necessary to use an internal model, plain vanilla debt securities are measured by applying the “discounted cash flow model”, according to a process consisting of the following phases:

- mapping of the cash flows expected from the instrument and distribution thereof throughout its contractual life; - selection of the discounting curve for the cash flows that incorporates the credit risk of the issuer;- calculation of the present value of the instrument on the measurement date.

For structured securities, the fair value is determined by breaking the security down into a portfolio of elementary instruments: the fair value of the structured product can thus be obtained by adding the individual valuations of the elementary instruments into which it has been broken down, in particular:

- The fair value of the plain vanilla bond component (the “naked” bond) is determined using the discounted cash flow model illustrated above;

- the fair value of the optional component can be obtained through valuation models of the options (see paragraph on “Criteria for the determination of the fair value of derivative contracts”).

The credit risk of the issuer is generally estimated through the market quotation of the credit default swap (hereinafter also “CDS”) or through other market data that is observable and directly/indirectly express the issuer’s credit risk.

• for investments in equity instruments IFRS 13 makes reference to several measurement techniques for the purpose of determining the fair value of instruments representing unlisted non-controlling equity packages, and of packages that represent associated equity investments. The choice of the measurement methodology to be applied is entrusted to the investor taking account of specific events and circumstances, as also the information available with reference to the equity investment being analysed. The preference for one method with respect to another, and above all the specific inputs used as part of the same, affect, in practice, the level of fair value reached. IFRS 13 makes reference to the following methodological approaches, without however imposing any type of hierarchy in the context of the same:

9 On Borsa Italia the Reference Price of the trading sessions is the average weighted price of the last 10% of the quantity traded.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



- Market approaches Market approaches are based on the idea of comparability with respect to other market operators assuming

that the value of an asset (or a business line or a company) can be determined comparing it to similar assets (or business lines or companies) for which market prices are available. In the presence of this relevant information, therefore, an investor is capable of determining the fair value of an unlisted equity instrument taking as reference:a) the prices paid in the context of sale transactions of equity instruments of the same investee identical

or similar to that of the equity investment (“direct transactions”);b) the multiples deducible:

- from the prices paid in the context of merger and acquisition transactions (“transaction multiples”);- from comparable companies on the basis of the respective stock exchange capitalisations (“stock exchange

multiples” or “trading multiples”).

- Fundamental approaches The fundamental approaches are based on the assumption that the future flows (cash or dividends) are

convertible into a single current value (discounted to the present). In particular, the main approaches that fall within this category include:a) Methods based on the discounting of future flows (Discounted Cash Flow, Dividend Discount Model),b) Appraisal Value,c) Adjusted Net Asset Value (for the measurement, in particular, of holdings of equity investments),d) Residual approaches (Adjusted shareholders’ equity and Cost).

In keeping with the provisions of IFRS 13, it is necessary to ascertain, according to the specific case, any need to apply certain adjustments to the economic value resulting from the application of the aforementioned valuation approaches for the purposes of determining the fair value of the equity investment being analysed. In particular, IFRS 13 mentions a number of adjustments, leaving in any case to the judgement of the valuer the ascertainment of the effective applicability of the same or the need to consider others on the basis of the features of the company being assessed and the specific circumstances. The possible adjustments in question are the following:- Discount for Lack Of Marketability - DLOM,- Control Premium,- Discount for Lack Of Control - DLOC.

The DLOM and the DLOC are adjustments which reduce the economic value of the equity investment. If certain conditions exist, these negative adjustments could be counterbalanced by the Control Premium.

A detailed illustration of the measurement methods and adjustments to the fair value is provided in the “Technical document for the fair value measurement of financial instruments” which is annexed to the current “fair value measurement” policy on the subject.

• as regards undertakings for collective investments (“UCIs”), generally characterised by high levels of transparency and liquidability, the valuation is made on the basis of the official NAV (without adjustments) communicated by the asset management company (AMC) or by the fund administrator or taken from an information provider. This NAV represents the amount at which the units can be liquidated in a short time on the initiative of the possessor. In the case of undertakings in collective investments (UCIs) (typically set up in a closed form) characterised, on the contrary, by high levels of illiquidity (for example, real estate or private equity funds), the process of measuring fair value could entail the opportunity to make corrections to the NAV, in particular, applying an illiquidity discount. The applicability of this adjustment should be verified in the light of the valuations carried out by the intermediary that manages the fund for the purposes of quantifying the NAV. Any consideration by this of illiquidity discounts in the context of valuation of the single assets of the fund could make it inopportune to apply a further illiquidity discount to the NAV. More details on the measurement of the fair value of specific reference clusters and an illustration of the methods with which to make any corrections are provided in the aforementioned “Technical document for the fair value measurement of financial instruments”.

• for capitalising insurance contracts, the redemption value pursuant to the issuers’ regulation.• The criteria for the determination of “fair value of derivative contracts”, are as follows:• for derivative contracts traded on regulated markets the fair value is the market price of the last trading day of the

period;• for over the counter (OTC) derivatives the fair value of the derivative instruments is determined using measurement

models which are specific for the type of instrument and the definition of market parameters that are adequate for correctly supplying this information (as provided for in the EMIR). In accordance with IFRS 13, in measuring the fair value of OTC derivatives, Banca Intermobiliare:

- takes into account factors related to the credit risk of the counterparty or the Bank (Credit Valuation Adjustment - CVA or Debit Valuation Adjustment - DVA) and calculated on the basis of the current deal level

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



market value (CDLMV), with appropriate add-on and the loss given default (LGD) and probability of default (PD) of the parties involved;

- if there are bilateral collateralisation agreements (e.g. Credit Support Annexes) involving the establishment of adequate collateral to hedge transactions in OTC derivatives:- it does not apply the calculation of CVA or DVA to transactions falling within this classification, due to the

presence of techniques to mitigate credit risk;- it uses a specific discount curve built on the overnight interest rates (OIS discounting curves) in accordance

with the rate of return of the forms of collateral used;- due to the increase in credit spreads and liquidity inherent in money market rates after the financial crisis of 2008,

it uses different term structures of interest rates (so-called multiple curves evaluation) to proceed, on the one hand, with the discounting of cash flows and, on the other, with the estimates of future cash flows (forwarding) depending on the different maturities of the index underlying the derivative rate;

- regardless of the accounting classification of OTC derivatives in the portfolio managed according to the purpose of hedging or trading, it uses specific market data from different data providers (e.g. Reuters, Bloomberg, SuperDerivatives, MarkIt, etc.), chosen from time to time depending on the quality of the data provided for each market segment, and depending on the nature of the derivative;

- for derivatives subject to central clearing (as defined by the EMIR regulations), the fair value used by the clearing house is used.

The fair value is generally the market value on the reference date, determined according to the following procedures, depending on the type of contract:

- interest rate contracts: the market value is represented by the “replacement cost”, which is determined by discounting the differences, on the settlement dates, between the flows calculated at the contract rates and the expected flows calculated at objectively defined market rates, at the end of the year for a remaining maturity of an equal length;

- options on securities and other instruments: the market value is represented by the “theoretical premium” on the date of reference, which is determined using the Black & Scholes formula or other equivalent criteria;

- forward transactions on exchange: the market value is represented by the “forward” exchange rate on the aforementioned date, for maturities corresponding to those of the transactions under valuation;

- forward transactions on securities, commodities or precious metals: the market value is represented by the “forward” price on the above-mentioned date, for maturities corresponding to those of the underlying asset;

- for particularly complex derivatives, the fair value of the instrument as provided by qualified operators may be used.

Loans and receivables:The measurement of the fair value of the Bank’s loans and receivables is carried out by applying the “discounted cash flow model” according to a process with following phases:• mapping of the cash flows expected and distribution thereof throughout its contractual life;• selection of the discount curve for the cash flows;

- if loans are being measured, the “Loan Credit Risk” curve is used, which incorporates the Bank’s credit risk;- if the receivables are being measured, the race could free curve is used the result of which is adjusted by its credit

risk component;• calculation of the present value of loans/receivables on the measurement date. Own bonds issued:The calculation of the fair value of bonds issued by the Bank is carried out by applying an adequate valuation technique defined on the basis of the security’s financial structure and the indications set forth for the debt securities classified in an inactive market.For the Bank’s debt securities, the quantification of the credit risk is achieved through specific calculation processes that provide for the assignment of specific credit spreads diversified by maturity. To this end, the Bank has developed an internal measurement model associated with the determinations of the Group’s credit curve.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



Impairment of available-for-sale financial instruments (AFS)Among other things, IAS 39 provides guidance for the accounting and valuation of available-for-sale (AFS) financial instruments. To this end, the standard indicates that a gain (or a loss) on an available-for-sale financial instrument must be recognised directly in equity until the financial asset is eliminated. At that time, the overall gain (or the loss) which was previously recognised in equity must be recognised in the income statement.However, if objective evidence exists that the asset has become impaired, the cumulative loss which is recognised directly in equity must be written off and recognised in the income statement, even if the financial asset has not been eliminated (impairment) (paragraph 67).Paragraph 68 furthermore specifies that the “amount of the total loss that is written off equity and recognised in the income statement must be the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, minus any impairment losses on that financial asset which was previously recognised in the income statement”. Therefore, the entire negative equity reserve must be allocated to the income statement if there is indication of impairment. The difference between the book value and the recoverable value is the impairment.Financial assets in the available-for-sale portfolio are therefore tested for impairment whenever there is objective evidence that a financial asset has become impaired and, in any case, on each reporting date, as required by paragraph 58.The process of identifying impairment is divided into three distinct phases:• identification of financial instruments to be taken into consideration as potential indications of impairment exist;• verification on a quantitative level of signs of impairment objectively lead to valuations to be considered as critical;• itemised analysis of the identified financial instruments according to well defined methodologies.Therefore, from an essential point of view, this process aims to support the decision to consider a loss as being permanent based on a methodology of automatic steps aimed at identifying the potentially impaired financial instruments and their appropriate accounting treatment.

The criteria applied to identify situations of impairment in the AFS portfolio distinguish between equity securities and debt securities.

For equity securities a check is carried out to determine whether the accumulated impairment from the acquisition upto the test date which has been recognised in Equity is:1. higher than 40% of the acquisition value; or2. whether it is ongoing for a period of more than 24 months.If one of the two cases above applies, the financial instrument is automatically written down and the value adjustment recognised in the income statement. There are furthermore quantitative filters which are used to examine the portfolio for impairment of those financial instruments which, while not falling under the two cases above, have nevertheless become impaired by over 30% compared to the average weighted acquisition value. Whenever the application of these filters indicates that impairment may exist, a qualitative/fundamental analysis is carried out.The qualitative analysis takes into account the elements which support or contrast the value adjustment. Among those to be considered as supporting existence of impairment are the following:• the durability, i.e. the long-lasting nature of a negative market situation over a specific period of time;• verification of disappearance of the financial instrument from an active market and/or the very low level of any prices

available;• discovery of serious financial difficulties faced by the issuer, with any contractual violations that have already occurred

which involve failure to pay interest or capital within the agreed upon terms;• revision downwards of the rating assigned by a specialised rating company, by over two levels;• debt restructuring of the issuer already underway;• the existence of loans granted by a bank belonging to the Group to the issuer which, given the presence of loss events

as provided for in the supervisory regulations, are classified as “non-performing loans” or “watchlist” loans and written down individually.

On the other hand, the elements that indicate non-existence of impairment include recovery of price levels, even if partial, after the date on which the measurement took place (financial statements, half-yearly or quarterly report).

For debt securities the qualitative aspect prevails and therefore the checks involve whether the issuer:• posted negative financial results or results which differed significantly from the declared budgets or forecast figures in

multiple year business plans which were disclosed to the market;• announced or initiated bankruptcy or debt restructuring proceedings;• underwent a revision downwards of the rating assigned by a specialised rating company, by over two levels;• is in serious financial difficulties, with any contractual violations that have already occurred which involve failure to

pay interest or capital within the agreed upon terms;• and that all the above could indicate the possibility/probability that the financial instrument will not be paid at the

time of its stated maturity.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



If the above-mentioned qualitative analysis indicates that there exist objective possibilities of even partial impairment, the financial instrument is written down and the value adjustment is recognised in the income statement.As for the equity securities, there are quantitative filters for the debt securities as well which are used in examining those financial instruments which, while not exhibiting the traits mentioned above, nevertheless have impairment in excess of 30% compared to the average weighted acquisition price. When the application of these filters indicates potential impairment, a qualitative/fundamental analysis takes place focusing on the same elements as for the equity instruments, with regular payments of interest and equity by the issuer, including potentially also insofar as instruments other than those existing in the portfolio being among the elements indicating the non-existence of impairment.For both equity and debt securities, the qualitative fundamental phase is nevertheless focused on valuation of the credit portfolio (including ratings and CDSs, if available, similarly to the qualitative filters for bonds) and retrospective financial statement analysis (last 3 financial statements), including verification of the dividend distribution policy, etc.If the analysis indicates that there are clear signs of evident impairment, the financial instrument is written down and the value adjustment is recognised in the income statement.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A3 - DISCLOSURE ON TRANSFERS BETWEEN PORTFOLIOS OF FINANCIAL ASSETS

Changes to IAS 39 and IFRS 7 of 13 october 2008In October 2008, the International Accounting Standard Board (IASB) published an amendment to IAS 39 in IFRS 7, which was adopted under European Union Regulation 1004 of 15 October 2008. The changes made authorise only under “rare circumstances” - such as for example the serious crisis that struck financial markets during the third quarter of 2008 - the amendment of a portfolio of certain financial instruments; in particular:• provided a financial asset is no longer held for sale or purchased for the short term, it can be reclassified as HTM

(held to maturity), L&R (loans and receivables) or AFS (available for sale);• a financial asset consisting of unlisted securities can be reclassified from the AFS (available for sale) portfolio to the

L&R portfolio, as well as the HTM portfolio as already allowed by the IAS.The purpose of this amendment is to resolve the problem of the loss of significance of certain market listings in the case of illiquid markets and/or markets undergoing panic situations, by allowing financial institutions and the companies applying the IAS/IFRS in general, to reduce the volatility of the income statement (if the securities in question belong to the trading book) and the balance sheet (if the securities belong to the available for sale portfolio. For reclassifications made by 31 October 2008, the standard provides an interim rule which allows the effect of such a reclassification to be applied to earlier periods up to 1 July 2008, thus identifying the crisis in the financial markets which constituted the rare circumstance for application of the amendment.To cover the need for comparability of the information with the preceding financial statements, the obligation to add an appropriate disclosure was stipulated. This disclosure must show the profits and losses that would have been recognised if this option had not been used.

A.3.1 Reclassified financial assets: book value, fair value and impact on total profitability

(Millions of €)

Type of financial instrument

Source portfolio

Target portfolio

Book value at 31.12.2017

Fair value at 31.12.2017

Income components with no transfer

(before taxes)

Income components reported during the financial period

(before taxes)

Valutational Other Valutational Other

Debt securities Hft Afs 5,005 5,005 69 4,007 69 4,101

UCIs units Hft Afs 1,039 1,039 (29) (1,476) (29) (1,476)

Equity Securities Hft Afs 396 396 26 - 26 -

Total 6,440 6,440 66 2,531 66 2,625

The table mainly lists the (residual) portfolio which was reclassified in 2008 by Banca Intermobiliare - considering the global economic crisis at the time as a rare circumstance that can justify the use of the reclassification of the portfolio - by applying the amendment to IAS 39. In 2017, Banca Intermobiliare made no reclassification of its portfolio.

A.3.2 Reclassified financial assets: effects on total profitability before transferNot applicable, see paragraph A.3.1.

A.3.3 Transfer of financial assets held for tradingNot applicable, see paragraph A.3.1.

A.3.4 Effective interest rate and projected cash flows from reclassified assetsNot applicable, see paragraph A.3.1.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A4 - INFORMATION ON FAIR VALUEINFORMATION OF A QUALITATIVE NATURE

To increase the coherence and comparability of the fair value measurements, in May 2011 the International Accounting Standard Board (IASB) published IFRS 13 “Fair Value Measurement,” which was adopted under European Union Regulation No. 1255 of 11 December 2012, applicable from 1 January 2013. IFRS 13 establishes that the measurements of financial instruments at fair value be classified on the basis of a fair value hierarchy characterised by three levels (para. 76-90) which reflects the significance of the inputs are used in the measurements. On the basis of this standard, there are the following levels of fair value:• Level 1 of fair value: the inputs from valuation of the instrument are prices listed for identical instruments in active

markets to which there is access on the measurement date;• Level 2 of fair value: the inputs for the valuation of the instrument are different from the listed prices as above, which

are observable directly or indirectly on the market;• Level 3 of fair value: the inputs for the valuation of the instrument are not based on observable market data.As indicated in the regulation, the hierarchy of the approaches adopted for determination of the fair value of all financial instruments (equities, UCIs, bonds, bond loans issued and derivatives) attributes absolute priority to the official prices available on active markets for the assets and liabilities to be measured and, if not available, to the measurement of assets and liabilities based on significant quotations, or which refer to assets and liabilities that are similar. Finally, residually, measurement techniques can be used which are based on non-observable inputs and therefore which are more discretionary in nature.

Banca Intermobiliare classifies its own financial instruments by decreasing level of fair value quality on the basis of the following principles:• Level 1, the fair value is the market price of the financial instrument itself which is being measured, obtained based

on quotations (without adjustments) expressed by an Official Stock Exchange. Financial instruments with fair value of Level 1 are equities and debt securities which are listed on an official market, if this market is considered to be sufficiently liquid, and derivatives and mutual funds quoted on an official market.

• Level 2, the measurement of fair value is based on the quotations expressed by markets other than an official stock exchange, on significant measurements which can be obtained from a reliable information provider, or prices determined using an appropriate calculation method based on observable market parameters. The usage of these calculation methods makes it possible to reproduce the measurements of the unlisted Financial Instruments on active markets through the usage of “market” parameters, that is parameters the value of which is deduced from quotations of Financial Instruments present on active markets. As an example, the following are classified as financial instruments with fair value of level 2:

- Equities listed on an official market, the volumes and trading frequencies of which are insufficient to ensure that the instrument is appropriately liquid;

- Debt securities measured using the market prices provided by individual contributors or other information sources (Bloomberg BGN, BVAL., etc.);

- Debt securities measured using measurement techniques, if the input data used for the measurement (e.g. forward structures of risk-free rates, credit spreads, etc.) are directly or indirectly observable on the market, or if the measurement is carried out using methods of comparison (the comparable approach);

- Unquoted derivatives which are measured through measurement techniques, if the input data used for the measurement are observable directly or indirectly on the market;

- UCIs for which a NAV is published at least every month.• Level 3, the measurement of the fair value is carried out using different inputs, including discretionary parameters,

that is parameters the value of which cannot be deduced from the quotations for financial instruments present on active markets (the model valuation). If such discretionary parameters significantly influence the final valuation, it follows that if there is no direct observation of all parameters on the market, the analyst will need to make estimates and assumptions. Finally, all instruments that do not fulfil the requirements for classification in the above-mentioned levels are classified as financial instruments with fair value level 3.

For the procedures used by Banca Intermobiliare to determine fair value and the relative definitions of active and non-active markets, for the purposes of financial statement measurements and disclosures to provide in the notes to the financial statements, please see paragraph 18 “Criteria for the determination of the fair value of financial instruments” under “Other Information” Part A.2 - Section 17 of these Notes.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.1 Livelli di fair value 2 e 3: tecniche di valutazione e input utilizzatiFor assets and liabilities measured at fair value on a recurring basis, for which the prices that are directly observable on active markets are not available, it is necessary to determine a fair value based on the “comparable approach” and the “model valuation” as defined in the paragraph above.It is hereby noted that the only items measured at fair value on a recurring basis are financial assets and liabilities as shown below in greater detail.• Debt securities: these are measured using the method of discounting the expected cash flows (the discounted cash

flow model), appropriately corrected to take into account the issuer risk. On the other hand, for structured securities, the security is broken down into a portfolio of elementary instruments: the fair value of the structure product can thus be obtained by adding the individual measurements of the elementary instruments into which it has been broken down, so that the fair value of the bond component is determined through the discounted cash flow model, while the fair value of the optional component is measured through an option valuation model.

• Unlisted equity securities: these are measured with reference to direct transactions on the same security or similar securities observed in a congruous timeframe compared to the valuation date, using the new market multiples method for comparable companies and, alternatively, financial, equity, and profit and loss valuation methods.

• Investments in UCIs: these are measured on the basis of the NAV taking as a reference the value of the underlying investments proportionally to the percentage of shares; if the necessary information is not available, a secondary model is used which takes as a reference the NAV (net asset value) provided by the management company. If it is not possible to obtain the official NAV on the measurement date, the fair value is calculated taking into account the last official NAV, which is adjusted for claims and redemptions that took place during the measurement. These types of investments are usually private equity funds, real estate funds and hedge funds.

• Over the Counter (OTC) derivatives: these are measured on the basis of multiple models, depending on the input factors (interest rate risk, volatility, exchange risk, price risk, etc.) which influence the related measurement and with account taken of the “fair value adjustment,” described in detail in the paragraph “Criteria for the determination of the fair value of financial instruments” under “Other Information” Part A.2 - Section 17 of these Notes.

The techniques and parameters for determination of the fair value, and the criteria for assignment of the fair value hierarchy are defined and formalised in a special policy for “Fair value measurement of financial instruments”.The reliability of the fair value measurement is also guaranteed by the verification activities carried out by the Risk Management Unit, which is obviously independent from the front office units which hold positions. The Risk Management function periodically reviews the list of pricing models to use for implementation of the fair value measurement policy.

A.4.2 Processes and sensitivity of the measurementsThe non-observable parameters able to influence the assessment of instruments classified as level 3 consist mainly of estimates and assumptions underlying the models used to measure investments in equity securities and shares in UCIs.For these investments no quantitative analysis of the fair value sensitivity was performed compared to the change of unobservable inputs, because the fair value was derived from third party sources without any adjustments or it was the result of a model whose inputs are specific for the entity being valued (e.g. assets of the company) and for which it cannot reasonably be expected to provide for alternative values.

A.4.3 Fair value hierarchyWith regard to the division of balance sheet items and the disclosures on the transfers between fair value levels, the relative details are provided under paragraphs A.4.5.2 and A.4.5.3 below, with the note that, for securities in position up to 31 December 2017 with a level of fair value that is different compared to the existing one at the end of 31 December 2016, it was assumed that the transfer between levels took place with reference to the existing balances at the beginning of the reference period.

A.4.4 Additional informationAs at 31 December 2017, there was no information to report pursuant to IFRS 13, paragraphs 51, 93 (i) and 96 since:• there were no assets measured at fair value based on the “highest and best use”;• no use was made of the possibility to measure fair value the level of overall exposure of the portfolio, in order to take

into account the offsetting of the credit risk and the market risk of a specific group of financial assets or liabilities.

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A




A.4.5 Fair value hierarchy

A.4.5.1 Assets and liabilities measured at fair value on a recurring basis: distribution for fair value levels.


(Thousands of €)








Total 398,127 49,513 12,083 459,723

1. Financial liabilities held for trading 24,533 15,325 - 39,858



Total 24,533 24,231 - 48,764


(Thousands of €)








Total 761,328 163,222 8,773 933,323

1. Financial liabilities held for trading 14,185 53,649 166 68,000



Total 14,185 68,407 166 82,758

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.5.2 Annual changes in assets measured at fair value on a recurring basis (level 3)

Financial assetsheld for trading

Financial assets


Financial assetsavailablefor sale

Hedging derivatives

Tangible fixed assets

Intangible fixed assets

1. Opening balance 744 - 8,029 - - -

2. Increases - - -

2.1 Purchases 95 - 3,658 - - -

2.2 Profits allocated to: - - -

2.2.1 Income Statement 7 - - - - -

- of which: Capital gains 2 - - - - -

2.2.2 Equity - - 2,135 - - -

2.3 Transfers from other levels - - - - - -

2.4 Other increases 4 - - - - -

3. Decreases - - -

3.1 Sales (421) - (1,865) - - -

3.2 Redemptions - - - - - -

3.3 Losses allocated to: - - -

3.3.1 Income Statement - - 16 - - -

- of which Capital losses - - - - - -

3.3.2 Equity - - (109) - - -

3.4 Transfers to other levels (202) - - - - -

3.5 Other decreases (10) - - - - -

4. Closing balance 219 - 11,864 - - -

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.5.3 Annual changes in financial liabilities designated at fair value (level 3)

Financial liabilitiesheld for trading

Financial liabilitiesdesignated at fair value

Hedging derivatives

1. Opening balance 166 - -

2. Increases

2.1 Issues - - -

2.2 Losses allocated to:


- of which: Capital losses - - -

2.2.2 Equity x x -

2.3 Transfers from other levels - - -

2.4 Other increases - - -

3. Decreases

3.1 Redemptions (166) - -

3.2 Repurchases - - -

3.3 Profits allocated to:


- of which Capital gains - - -

3.3.2 Equity x x -

3.4 Transfers to other levels - - -

3.5 Other decreases - - -

4. Closing balance - - -

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

A



A.4.5.4 Assets and liabilities not measured at fair value or measured at fair value on a non recurring basis: distribution for fair value levels

Assets and liabilities not measured at fair value or measured at fair value on a non-recurring basis

2017 2016

BV Level 1 Level 2 Level 3 BV Level 1 Level 2 Level 3

1. Financial assets held to maturity - - - - - - - -

2. Loans to banks 106,330 - 106,330 - 369,209 - 359,223 9,861

3. Loans to clients 667,752 - - 661,165 882,201 - - 876,257

4. Tangible assets heldfor investment purposes - - - - - - - -

5. Non-current assets and disposal groups held for sale 13,029 - - 24,775 24,775 - - 24,775

Total 787,111 - 106,330 685,940 1,276,185 - 359,223 910,893

1. Due to banks 180,126 - 180,126 - 511,460 - 511,460 -

2. Due to clients 1,022,724 - 1,022,724 - 1,320,127 - 1,320,127 -

3. Outstanding securities 60,686 - 60,403 - 304,978 - 297,641 -

4. Liabilities associatedwith assets held for sale - - - - - - - -

Total 1,263,536 - 1,263,253 - 2,136,565 - 2,129,228 -

A5 - INFORMATION ON “DAY ONE PROFIT/LOSS”Pursuant to IFRS 7, paragraph 28, Banca Intermobiliare did not carry out any transactions requiring accounting for“day one profit/loss”.

374 ■ Notes to financial statements - Part B

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


ASSETS

SECTION 1 - CASH AND CASH EQUIVALENTS - ITEM 101.1 Cash and cash equivalents: breakdown

2017 2016

a) Cash 1,688 1,669

b) Demand deposits at Central Banks - -

Total 1,688 1,669

SECTION 2 - FINANCIAL ASSETS HELD FOR TRADING - ITEM 202.1 Financial assets held for trading: breakdown by type




1. Debt securities 20,922 7,592 218 31,324 11,356 571

1.1 Structured securities 496 3,620 - 4,404 1,590 -


2. Equity securities 320 - 1 332 1 -

3. Shares in UCIs - - - - - -

4. Loans - - - - - -

4.1 Reverse repurchase agreements - - - - - -

4.2 Other - - - - - -

Total A 21,242 7,592 219 31,656 11,357 571


1. Financial derivatives: 5 15,342 - - 53,351 173

1.1 for trading 5 15,342 - - 53,351 173


1.3 other - - - - - -

2. Credit derivatives - 48 - - 249 -

2.1 for trading - 48 - - 249 -


2.3 other - - - - - -

Total B 5 15,390 - - 53,600 173

Total (A+B) 21,247 22,982 219 31,656 64,957 744

Part B - INFORMATION ON THE BALANCE SHEET

Notes to financial statements - Part B ■ 375

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


2.2 Financial assets held for trading: breakdown by borrower/issuer


A. ON-BALANCE-SHEET ASSETS



b) Other public entities 2,930 -

c) Banks 786 23,132


2. Equity securities 321 333

a) Banks - 2

b) Other issuers: 321 331

- insurance companies - -

- financial companies 12 -

- non-financial companies 309 331

- others - -

3. Shares in UCIs - -

4. Loans - -



c) Banks - -


Total A 29,053 43,584

B. DERIVATIVE INSTRUMENTS

a) Banks 8,910 34,083

b) Clients 6,485 19,690

Total B 15,395 53,773

Total (A+B) 44,448 97,357


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 4 - FINANCIAL ASSETS AVAILABLE FOR SALE - ITEM 40

4.1 Financial assets available for sale: breakdown by type



1. Debt securities 376,734 24,924 20 703,873 73,147 3

1.1 Structured securities 2,042 - - - 9,985 -


2. Equity securities 146 - 3,642 10,253 63 1,982

2.1 Designated at fair value 146 - 3,642 10,253 63 1,982

2.2 Carried at cost - - - - - -

3. Shares in UCIs - - 8,202 15,546 23,728 6,044

4. Loans - - - - - -

Total 376,880 24,924 11,864 729,672 96,938 8,029

4.2 Financial assets available for sale: breakdown by borrower/issuer





c) Banks 34,633 177,523


2. Equity securities 3,788 12,298

a) Banks 7 2,930

b) Other issuers: 3,781 9,368

- insurance companies - 706

- financial companies 149 187

- non-financial companies 3,632 8,475

- others - -

3. UCIs units 8,202 45,318

4. Loans - -



c) Banks - -


Total 413,668 834,639


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


4.3 Financial assets available for sale subject to micro-hedging

2017 2016

Subject to fair value micro-hedging: 301,066 472,110

1. Interest rate risk 301,066 472,110

2. Price risk - -


4. Credit risk - -

5. Other risks - -

Subject to cash flow micro-hedging: - -

1. Interest rate risk - -


3. Other - -

Total 301,066 472,110

The hedging activities carried out are attributable to the hedging, by using interest rate swaps (IRSs), of the fair value mainly of Italian BTPs in asset swaps and marginally of other securities.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 6 - LOANS TO BANKS - ITEM 60

6.1 Loans to banks: breakdown by type


BV FV BV FV


A. Loans to Central Banks

1. Term deposits - x x x - x x x

2. Mandatory reserve - x x x - x x x

3. Repurchase agreements - x x x - x x x

4. Others - x x x - x x x

B. Loans to banks 106,330 x x x 369,209 x x x

1. Loans 106,330 x x x 359,222 x x x

1.1. Current accounts and demand deposits 65,031 x x x 315,752 x x x

1.2. Term deposits 10,140 x x x 13,646 x x x

1.3. Other loans: 31,159 x x x 29,824 x x x

- Reverse repurchase agreements 16,057 x x x 12,269 x x x

- Financial leasing - x x x - x x x

- Others 15,102 x x x 17,555 x x x

2. Debt securities - x x x 9,987 x x x

2.1 Structured securities - x x x - x x x

2.2 Other debt securities - x x x 9,987 x x x

Total 106,330 106,330 - 369,209 105,919 25,100

Key:FV = fair valueBV = book value

The Mandatory Reserve at the Bank of Italy of €/Mln 10.1 is kept, starting from 23 July 2017, indirectly through an intermediary credit institution (Intesa Sanpaolo S.p.A.) under the terms of the authorisation issued by the Central Bank in turn under the terms of Art. 10 of the ECB Regulation on the application of minimum obligatory reserves and in virtue of contractual agreements signed by the parties. Previously the obligation was fulfilled through Veneto Banca S.p.A..The fair value of receivables due from banks was assumed to be equal to the book value taking account of the counterparties and as the relationships are short-term and executed at arm’s length, except for debt securities (present only in the comparative figure) for which fair value has been determined.

6.2 Loans to banks subject to micro-hedgingThis item is not applicable to Banca Intermobiliare.

6.3 Financial leasingThis item is not applicable to Banca Intermobiliare.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 7 - LOANS TO CLIENTS - ITEM 707.1 Loans to clients: breakdown by type



Non Impaired


Purchased Others

Loans 422,389 - 245,363 x x x



3. Mortgages 156,167 - 83,636 x x x




7. Other loans 32,982 - 11,367 x x x

Debt securities - - - x x x



Total 422,389 - 245,363 - - 661,165



Non Impaired


Purchased Others

Loans 586,493 - 295,708



3. Mortgages 198,381 - 119,008 x x x




7. Other loans 35,892 - 9,844 x x x

Debt securities - -

8. Structured securities - - x x x


Total 586,493 - 295,708 - - 876,375

With regard to impaired loans, the assumption that the book value is a reasonable approximation of fair value is based on the fact that the absence of a sufficiently large number of transactions for these financial assets does not allow recognition of observable market parameters, with particular reference to the components making up the discounting rate (which would also include the market premium for risks and uncertainties). Because of this, the estimated fair value is largely determined by the current portfolio management model and by the related recovery mode and does not appear specifically influenced by the evolution of the rates of return required by the market. The internal procedures


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


for calculating the fair value (the so-called “exit price”) of the loans portfolio is therefore more sensitive to forecasts about losses in value, as the result of a subjective assessment, expressed by the manager of the position, with reference to the estimate of expected cash flows from recovery and to the related time scales. It is not possible, therefore, to exclude the possibility that the price of any sale to third parties may differ in negative terms from the fair value indicated for balance sheet purposes.The fair value of the loans to clients corresponds to the sum of the future cash flows from existing loans, including interest, discounted on the basis of a risk-free interest curve. The expected nominal future flows are corrected for the losses expected using the probability of default (PD) and loss given default (LGD) parameters attributed to specific classes of risk. The calculation of the fair value is carried out for every individual medium/long term financing relationship, while for “on demand” accounts the fair value is conventionally set as equal to the carrying amount.As for the credit quality and the level of risk of the loan portfolio, please see the information in the Consolidated Report on Operations under “Loans and other amounts due from clients” in Part A - Accounting Policies (A2 Part relating to main balance sheet items) and Part E - Information on risks and related hedging policies - Section “Credit risk”.

7.2 Loans to clients: breakdown by borrower/issuer


Non Impaired

Impaired Non Impaired

Impaired

Purchased Others Purchased Others

1. Debt securities issued by:



c) Other issuers - - - - - -

- non-financial companies - - - - - -

- financial companies - - - - - -


- others - - - - - -

2. Loans to: 422,389 - 245,363 586,493 - 295,708



c) Other parties 422,389 245,363 586,493 295,708

- non-financial companies 179,614 - 190,083 243,864 - 216,125

- financial companies 66,013 - 3,037 69,771 - 15,070


- others 176,762 - 52,243 272,858 - 64,513

Total 422,389 - 245,363 586,493 - 295,708

7.3 Loans to clients subject to micro-hedgingNot applicable.

7.4 Financial leasingNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



FV 2017 NV 2017 FV 2016 NV 2016



1) Fair Value - 1,607 - 67,390 - 1,327 - 77,390

2) Cash flows - - - - - - - -


B) Credit derivatives

1) Fair Value - - - - - - - -

2) Cash flows - - - - - - - -

Total - 1,607 - 67,390 - 1,327 - 77,390

Key:FV = Fair valueNV = Notional Value



Fore

ign

inve

stm

ents

Micro

Mac

ro

Micr

o

Mac

ro

Inte

rest

ra

te ri

sk

Exch

ange

ra

te ri

sk

Cred

it ris

k

Price

risk

Oth

er

risks


2. Loans - - - x - x - x x




Total assets 1,319 - - - - - - - -

1. Financial liabilities 288 - - x - x - x x


Total liabilities 288 - - - - - - - -

1. Expected transactions x x x x x x x x x



NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 10 - EQUITY INVESTMENTS - ITEM 10010.1 Equity investments: information about equity investment relationships

Company name Registered Office

Operational headquarters

% stake% votes available

A. Companies under exclusive control

Symphonia SGR S.p.A. Turin Turin 100%

Bim Fiduciaria S.p.A. Turin Turin 100%

Bim Insurance Brokers S.p.A. Turin Turin 51%

Bim Immobiliare S.r.l. Turin Turin 100%

Immobiliare D S.r.l. Turin Turin 100%

Paomar Terza S.r.l. Turin Turin 100%

B. Companies under joint control

C. Companies subject to significant influence

Bim Vita S.p.A. Turin Turin 50%

Compared to 31.12.2016 we can note the change in the perimeter of equity investments held by Banca Intermobiliare following the sale of the subsidiary Banca Intermobiliare di investimenti e Gestioni (Suisse) S.A. and the directors’ decision to revise the classification of Bim Insurance Brokers from “Non-current assets held for sale” to the item “Equity investments”.Unless otherwise indicated, the stake corresponds to the percentage of effective votes available in ordinary shareholders’ meetings. There are no potential votes other than the effective ones.

10.2 Significant stakes: book value, fair value and dividends receivedThe information for this section is not provided, in accordance with the law, for banks which draw up consolidated financial statements.

10.3 Significant stakes: accounting informationThe information for this section is not provided, in accordance with the law, for banks which draw up consolidated financial statements.

10.4 Non-significant stakes: accounting informationThe information for this section is not provided, in accordance with the law, for banks which draw up consolidated financial statements.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


10.5 Equity investments: annual changes

2017 2016


B. Increases 605 301

B.1 Purchases - -

B.2 Write-backs - -

B.3 Revaluations - -


C. Decreases (544) (25,506)

C.1 Sales - -

C.2 Write-downs (544) (731)

C.3 Other changes - (24,775)


E. Total revaluations - -

F. Total adjustments (24,627) (24,083)

Item B.4 “Other changes” refers mainly to the capital grants for the subsidiaries Paomar Terza for €/thou 444 and Immobiliare D for €/thou 100 and in part to the re-entry into the item of the equity investment in Bim Insurance Brokers, following the decision of the Board of Directors of 31 May 2017 to no longer proceed with the disposal, previously recognised among non-current assets for a total of €/thou 61. The comparative figure refers to the increase in the capital grant made in 2016 in favour of the subsidiary Paomar Terza.Item C.2 “Value adjustments” refers to the write-downs of capital grants described above on Paomar Terza and Immobiliare D. The comparative figure consists of the write-down of the subsidiary Immobiliare D for alignment with its value in shareholders’ equity.Item C.3 “Other changes” comparative on 2016 refers to the reclassification of shareholdings in Bim Suisse and in Bim Insurance Brokers among non-current assets and groups of assets held for sale.

10.6 Commitments related to equity investments in joint venturesAt 31 December 2017 there were no equity investments in joint ventures.

10.7 Commitments related to investments in companies subject to significant influence At 31 December 2017 there were no commitments or contingent liabilities related to equity investments in companies subject to significant influence.

10.8 Significant restrictionsAt 31 December 2017 in respect of equity investments in companies subject to significant influence, there were no significant restrictions as referred to in paragraphs 13 and 22 (a) of IFRS 12.

10.9 Additional informationThe reporting dates of all the companies subject to significant influence used in preparing the separate financial statements coincide with that of the consolidating company (31 December 2017).


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 11 - TANGIBLE FIXED ASSETS - ITEM 11011.1 Tangible assets for business use: breakdown of assets carried at cost


1. Owned assets 4,155 4,601

a) land - -

b) buildings 2,735 2,823

c) furniture 521 505

d) electronic equipment 678 979

e) other 221 294

2. Assets held under financial leasing - -

a) land - -

b) buildings - -

c) furniture - -

d) electronic equipment - -

e) other - -

Total 4,155 4,601

This item includes tangible assets (furniture, plant, equipment and other tangible assets) for business use as covered by IAS 16; these tangible assets have not undergone lasting impairment losses or write-backs.

11.2 Tangible assets held for investment purposes: breakdown of assets carried at costAs at 31.12.2017 there existed no Tangible assets held for investment purposes as governed by IAS 40.

11.3 Tangible assets for business use: breakdown of revalued assets Not applicable.

11.4 Tangible assets held for investment purposes: breakdown of assets carried at fair valueNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


11.5 Tangible assets for business use: annual changes

Land Buildings Furniture Electronic systems

Other Total

A. Gross opening balance - 2,910 6,642 4,472 6,178 20,202

A.1 Net total write-downs - (87) (6,137) (3,493) (5,884) (15,601)

A.2 Opening net balance - 2,823 505 979 294 4,601

B. Increases: -

B.1 Purchases - - 119 - 12 -

B.2 Capitalised improvement costs - - - - - -

B.3 Write-backs - - - - - -

B.4 Increases in fair value allocated to - - - - -



B.5 Positive exchange differences - - - - - -

B.6 Transferred from property held for investment purposes - - - - - -

B.7 Other changes - - 92 8 440 -

C. Decreases: - - - - -

C.1 Sales - - (31) (22) (390) -

C.2 Depreciation - (87) (164) (287) (135) -

C.3 Write-downs for impairment allocated to - - - - -



C.4 Decreases in fair value allocated to - - - - -



C.5 Negative exchange differences - - - - - -

C.6 Transfers to: - - - - -

a) Tangible assets held for investment purposes - - - - - -

b) assets held for sale - - - - - -

C.7 Other changes - (1) - - - -

D. Closing balance - 2,735 521 678 221 4,155

D.1 Net total write-downs - (174) (6,301) (3,780) (6,019) (16,274)

D.2 Closing gross balance - 2,909 6,822 4,458 6,240 20,429

E. Valuation at cost - 2,735 521 678 221 4,155

11.6 Tangible assets held for investment purposes: annual changesNot applicable.

11.7 Commitments to purchase tangible assetsAt 31 December 2017, there were no commitments to purchase tangible assets of any significant amount.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 12 - INTANGIBLE FIXED ASSETS - ITEM 12012.1 Intangible assets: breakdown by type of asset


Finite life Indefinite life Finite life Indefinite life

A.1 Goodwill x - x -

A.2 Other intangible assets - - - -

A.2.1 Assets carried at cost:


b) Other assets 174 - 325 -

A.2.2 Assets designated at fair value:


b) Other assets - - - -

Total 174 - 325 -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


12.2 Intangible assets: annual changes

Goodwill Other intangible fixed as-sets: generated internally

Other intangible fixed assets: other

Total

Fin. Indef. Fin. Indef.

A. Opening balance - - - 10,815 - 10,815

A.1 Net total write-downs - - - (10,490) - (10,490)

A.2 Opening net balance - - - 325 - 325

B. Increases - - 68 - 68

B.1 Purchases - - 68 - 68

B.2 Increases in internal intangible fixed assets x - - - - -

B.3 Write-backs x - - - - -

B.4 Increases in fair value - - - - -



B.5 Positive exchange rate differences - - - - - -

B.6 Other changes - - - - - -

C. Decreases - - (219) - (219)

C.1 Sales - - - - - -

C.2 Write-downs - - (219) - (219)

- Depreciation x - - (219) - (219)

- Write-downs - - - - -

+ shareholders’ equity x - - - - -

+ income statement - - - - - -

C.3 Decreases in fair value - - - - -



C.4 Transfers to non-current assets held for sale - - - - - -

C.5 Negative exchange rate differences - - - - - -

C.6 Other changes - - - - - -

D. Closing balance - - - 174 - 174

D.1 Net total of value adjustments - - - (10,709) - (10,709)

E. Closing gross balance - - - 10,883 - 10,883

F. Valuation at cost - - - 174 - 174

12.3 Additional informationBased on the requirements of IAS 38, paragraphs 122 and 124, we specify the following:• there are no revalued intangible assets; consequently there are no impediments to the distribution to the shareholders

of capital gains related to revalued intangible assets;• there are no intangible assets acquired by way of a government grant;• there are no intangible assets which have been used as collateral against a debt;• there exist no significant contractual commitments for the purchase of intangible assets at 31.12.2017;• there are no intangible assets which constitute the object of leasing operations.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 13 - TAX ASSETS AND LIABILITIES - ITEM 130 OF ASSETS AND ITEM 80 OF LIABILITIESDetails of the current, deferred and prepaid taxes recognised with reference to temporary deductible differences are provided below.


Current tax assets 38,975 15,348

Deferred tax assets 75,858 103,496


of which there is an offsetting entry under shareholders’ equity 180 2,886

Total 114,833 118,844

Current tax liabilities - -

Deferred tax liabilities 3,037 3,024

of which there is an offsetting entry in the income statement 25 190

of which there is an offsetting entry under shareholders’ equity 3,012 2,834

Total 3,037 3,024

13.1 Deferred tax assets: breakdownThe types of temporary differences which led to the recognition of “deferred tax assets” include:

2017 2016

A. Gross deferred tax assets 75,858 103,496

A1. Loans (including securitised assets) 31,699 47,025

A2. Other financial instruments 181 4,037

A3. Goodwill 17,226 24,609

A4. Long-term charges - -

A5. Property, plant and equipment 107 107

A6. Provisions for risks and charges 4,402 5,045

A7. Entertainment expenses - -

A8. Personnel costs 26 32

A9. Tax losses 20,691 20,696

A10. Unused tax credits to be deducted - -

A11. Other 1,526 1,945

B. Offset against deferred tax liabilities - -

C. Net deferred tax assets 75,858 103,496


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B



Write-down of loans to clients 29,892 1,806 31,698

Entertainment expenses - - -

Write-down of equity investments - - -

Securities and derivatives 152 29 181

Administrative costs - - -

Allocations to provisions for risks and charges 4,402 - 4,402

Tangible and intangible fixed assets 107 - 107

Other 36,569 2,901 39,470

Total 71,122 4,736 75,858

13.2 Deferred tax liabilities: breakdownThe types of temporary differences which led to the recording of the “deferred tax liabilities” regard:

2017 2016

A. Gross deferred tax liabilities 3,037 3,024

A1. Gains to be divided into instalments - -

A2. Goodwill - -

A3. Property, plant and equipment - -

A4. Financial instruments 3,037 3,024

A5. Personnel costs - -

A6. Other - -

B. Offset against deferred tax assets - -

C. Net deferred tax liabilities 3,037 3,024


Default Interest - - -

Reversal of tax-driven adjustments - - -

Securities and derivatives 2,377 660 3,037

Tangible and intangible fixed assets - - -

Write-downs of loans - - -

Recognition of actuarial losses - - -

Securitisations - - -

Capital gains - - -

Other - - -

Total 2,377 660 3,037


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


13.3 Changes in deferred tax assets (with balancing entry in the income statement)

2017 2016


2. Increases 1,094 24,478

2.1 Deferred tax assets recognised during the year 1,094 24,478



c) write-backs - -

d) other 1,094 24,478



3. Decreases (26,026) (10,918)

3.1 Deferred tax assets derecognised during the year

a) transfers - -


c) change in accounting criteria - -

d) other (3,306) -

3.2 Reductions in tax rates (22,720) -

3.3 Other decreases - (10,918)

a) transformation into tax credits pursuant to Law 214/2011 - (7,732)

b) others - (3,186)


13.3.1 Changes in deferred tax assets pursuant to Law 214/2011 (with a balancing entry in the income statement)

2017 2016


2. Increases - -

3. Decreases (22,709) (7,732)

3.1 Transfers - -

3.2 Transformation into tax credits (22,709) (7,732)

a) from period losses (22,709) (7,732)

a) from tax losses - -




NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


13.4 Changes in deferred taxes (with balancing entry in income statement)

2017 2016

1. Opening balance 190 190

2. Increases - -

2.1 Deferred taxes recognised during the year - -



c) other - -



3. Decreases (165) -

3.1 Deferred taxes derecognised during the year (165) -

a) transfers - -


c) other (165) -



4. Closing balance 25 190

13.5 Changes in deferred tax assets (with balancing entry in shareholders’ equity)

2017 2016


2. Increases 115 1,474

2.1 Deferred tax assets recognised during the year - 520



c) other - 520

2.2 New taxes or increases in tax rates 115 954


3. Decreases (2,821) (904)

3.1 Deferred tax assets derecognised during the year (2,821) (904)

a) transfers (1,338) (407)



d) other (1,192) (479)


3.3 Other decreases (291) (18)

4. Closing balance 180 2,886


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


13.6 Changes in deferred taxes (with balancing entry in shareholders’ equity)

2017 2016


2. Increases 2,160 331

2.1 Deferred tax assets recognised during the year 937 120



c) other 937 120

2.2 New taxes or increases in tax rates 1,223 211


3. Decreases (1,982) (2,813)

3.1 Deferred tax assets derecognised during the year (1,948) (1,116)

a) transfers (1,947) (949)


c) due to a change in accounting criteria (1) (167)


3.3 Other decreases (34) (1,697)



A) Current tax assets2017 2016

A. Assets for gross current taxes 38,975 15,348

A1. Advance IRES payments - 5,096

A2. Advance IRAP payments - 1,983

A3. Other credits and withholdings 38,975 8,269

B. Offset against current tax liabilities - -

C. Assets for net current taxes 38,975 15,348

B) Liabilities for current taxes2017 2016

A. Liabilities for gross current taxes - -

A1. IRES tax payables - -

A2. IRAP tax payables - -

A3. Other current income tax payables - -

B. Offset against current tax assets - -

C. Net current tax liabilities - -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


Option for tax consolidationBanca Intermobiliare exercised the option for the system of National Tax Consolidation under the terms of Art. 117 of the TUIR (Consolidated Income Tax Law) for the three years 2015, 2016, 2017.Taking into account that the provisions laid down by Art. 117 of the TUIR states that acceptance of group taxation is permitted only if between the consolidating and the consolidated company there exists a relationship of control, under the terms of Article 2359, paragraph 1, number 1, of the Italian Civil Code, the configuration of the perimeter of companies in the consolidation includes all companies subject to control by Banca Intermobiliare S.p.A., with the following structure:• Banca Intermobiliare S.p.A. as controlling/consolidating company,• Symphonia SGR S.p.A., • BIM Fiduciaria S.p.A. • BIM Immobiliare S.r.l. • Paomar Terza S.r.l., single member, • Immobiliare D S.r.l., single-member,• Bim Insurance Brokers S.p.A.. The advantages deriving from the consolidation option consist of the right to adopt – for IRES (corporation tax) purposes - a type of taxation that consists of identifying a single group taxable income equal to the algebraic sum of the taxable incomes of the companies that are part of the same group and, consequently, a single tax liability with regard to the tax authorities due to the possibility of immediate reporting of losses in a company within the tax consolidation group, due to the possibility of offsetting consolidated tax credits with tax liabilities and the transfer, within the scope of consolidation, of unused surplus of aid to economic growth (ACE).

Fiscal transparency optionBanca Intermobiliare and UnipolSai (UFG Group), acting as parent companies of the joint investment in Bim Vita S.p.A., have renewed the option for the fiscal transparency regime pursuant to Art. 115 of the Income Tax Law for the period 2016-2018. This scheme involves the transfer of taxable income (or any tax losses) generated by the investee Bim Vita to the parent companies, with simultaneous transfer of its tax debt for IRES.

Transformation of deferred tax assets into tax credits (Italian Law Decree 225/2010, art. 2, para. 55).During 2017, Banca Intermobiliare proceeded, pursuant to Art. 2, paragraph 55, of Italian Law Decree 225/2010, with the transformation of deferred tax assets (DTAs) into tax credits for a total amount of €/Mln 22.7 following recognition of a loss in the previous year.

Risks associated with existing disputes with the financial administrationBanca Intermobiliare and its investees were the subject of various tax audits by the Financial Administration, in the financial year 2016, and in the previous ones. These activities regarded the determination of taxable incomes declared for the purposes of income taxes and on other levies, and more in general the methods of applying the fiscal legislation in force from time to time. Following is the updated information on the tax audits carried out on Banca Intermobiliare and its investees, launched in the period or which were still ongoing when these annual financial statements were drafted.

1 Tax audits of the company Banca Intermobiliare

1.1 2011 tax audit relating to the tax years 2004, 2008 and 2009With regard to the tax audits of Banca Intermobiliare carried out during 2011, which focused on direct taxes, IRAP (Regional Business Tax) and VAT for a maximum total expense (taxes, penalties and interest) in the event of an adverse outcome of Euro/Mln 12.7, precise information is provided here on the disputes, the state of the legal proceedings, the level of existing liabilities and the allocations made by the company, also on the basis of opinions provided by independent tax consultants.The tax inspection reports were followed by the related assessment notices for 2004, 2008 and 2009 which referred to the deductibility of: trading losses on equities, the write-down of an equity investment that resulted from the enforcement of a guarantee and the non-application of VAT on a commission.Following the assessment notices related to tax year 2004 which were received at the end of 2011 (taxes, penalties and interest amounting to €/Mln 2) relating to trading losses on equities, the initial appeal made by Banca Intermobiliare and its parent company Veneto Banca, was upheld with a ruling filed on 21 February 2013.The Tax Authority - Regional Division of Piedmont - however has lodged an appeal, following which Banca


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


Intermobiliare and Veneto Banca appeared in court to submit the cross appeal. The appeal hearing was held on 13 January 2015 and, with a judgement handed down on 12 February 2015, the Regional Tax Court confirmed the judgement of the first instance. The Office lodged an appeal to the Court of Cassation on 18 September 2015; Banca Intermobiliare presented a counter-appeal within the legal deadline. It was found that the Bank had no charges to pay.

For the assessment notices related to tax year 2008 (taxes, penalties and interest amounting to €/Mln 1.1) and 2009 (taxes, penalties and interest amounting to €/Mln 9.5), relating to the write-down of the IPI security which were served in August 2012, the related appeals were made and on 22 March 2013 provisional payment of one third was made, as the petition for suspension of payment had been rejected. The amount paid on a provisional basis was approximately €/Mln 2.1. With the judgement filed on 4 November 2015 the Provincial Tax Commission accepted the combined appeals for 2008 and 2009, with the award of expenses. Banca Intermobiliare immediately requested cancellation of the registration of the assessed amounts and was reimbursed the one-third sum that had already been paid. As a consequence of the return of the provisional payment, the contingent asset of equal value was cancelled. This totalled €/Mln 2.1, and was identified as a contingent asset at the end of 2013, since it was considered that the condition of virtually certain reimbursement, as provided for in IAS 37, was fulfilled. It was found that the Bank had no charges to pay.On 4 February 2016 the Tax Authority - Piedmont Regional Division - lodged an appeal against the judgement of first instance and Banca Intermobiliare duly made its appearance in the proceedings with a deed dated 4 April 2016. The hearing to deal with the appeal was set for 5 December 2017, but as the company embarked on a process of acceptance/settlement with the Revenues Agency with reference to the same findings contained in the subsequent Inspection Report, related to the years from 2012 to 2015, the Turin RTC ordered a congruous adjournment of the hearing, to enable the parties to arrive at a resolution of the dispute.

With regard to the dispute concerning tax year 2008 (additional taxes and penalties for about €/Mln 0.4 subsequently reduced to €/Mln 0.06 and as of today, cancelled altogether) relating to VAT on Custodian Bank fees, the appeal filed by Banca Intermobiliare, before the Provincial Tax Commission, was upheld with a judgement issued on 15 February 2013. In September 2013, an appeal by the Tax Authority, Piedmont Regional Division, was lodged, against which Banca Intermobiliare joined the proceedings. The hearing to discuss the merits of the appeal was held on 14 April 2015, following which the claim of the office was reduced to €/Mln 0.06 (28.3% of the amount originally requested) with cancellation of the penalties. With the judgement filed on 16 December 2015, the Regional Tax Commission confirmed the first-level judgement accepting BIM’s appeal and ordering the office to pay the expenses. The proposal for an appeal to the Supreme Court put forward by the Regional Inland Revenue Division was rejected by the Attorney General’s Office and, therefore, the cancellation became final.

In December 2014 a notice of assessment for the 2009 tax year was served (higher taxes for about €/Mln 0.064) concerning the applicability of VAT on custodian fees, similar to the situation relating to the tax year 2008. On 6 February 2015 Banca Intermobiliare lodged an appeal and paid, on 27 February 2015, the amount of the taxes due provisionally equal to one third, for an amount of €/Mln 0.03. The hearing to discuss the merits of the case was held on 8 October 2015, while on 3 November 2015 the judgement was filed in which the Provincial Tax Commission rejected the appeal, ordering the Bank to pay one third of the amount due (€/Mln 0.03). Therefore, the amounts paid to the Inland Revenue equal to two thirds of the amount due on the basis of the assessment notice of €/Mln 0.052, which had previously been recognised under Balance Sheet assets (Item 160 - Other Assets), since it was felt that the condition of virtually certain reimbursement as provided for in IAS 37§10 was fulfilled given the presence of a Contingent Asset, were recognised in the income statement (Item 220 - Other operating income/expenses), in keeping with the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration.It should be noted, however, that Banca Intermobiliare proceeded to challenge the judgement of first instance with an appeal served on 2 May 2016 and as at the date of approval of this document, the date for the court proceedings on the merits of the dispute has not yet been fixed.

1.2 2013 Tax audit, relating to tax year 2010In December 2013, the general tax audit for the tax year 2010 carried out by the Tax Authority - Piedmont Regional Department - was concluded (taxes, penalties and interest amounting to €/Mln 2.4 subsequently reduced to €/Mln 1.5) and also concerned certain findings that had emerged in previous inspections.In particular, the findings which had already been raised for the previous years and again contested relate to the deductibility of the year’s quota of the write-down of the IPI security and the applicability of VAT on custodian fees and financial advice. The Tax Inspection Report (PVC) which was served indicated findings against the Bank for which Banca Intermobiliare considered, based also on the legal and tax opinions it solicited, that the probable economic charge could reach €/Mln 0.2, given the nature and reasons underlying the various comments. This amount was therefore allocated in the annual financial statements for the year ended 31.12.2013.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


The Tax Inspection Report was followed by the assessment notices served on 16 December 2015 as regards IRAPand VAT, and on 17 December 2015 as regards IRES, and they included the contents of the Tax Inspection Report in its entirety.On 12 February 2016, the Bank proceeded to submit acquiescence regarding some of the findings and at the same time to pay the related taxes, penalties and interest for a total amount of around €/Mln 0.04 and also to lodge the appeals regarding the other findings and to make the provisional payment of a third of the amount as required by law, totalling approximately €/Mln 0.57. The hearing of the Provincial Tax Commission was held on 10 November 2016. The ruling of the Commission, filed on 5 December 2016, upheld the appeal pertaining to the application of VAT on custodian fees but rejected all the other complaints.When it made the provisional payment of a third of the amount, the Bank decided not to proceed with any allocation and consequently entered the sum of €/Mln 0.57 on the assets side of the Balance Sheet (Item 160 - Other Assets) since it was felt that the condition of virtually certain reimbursement, as provided for in IAS 37 § 10, was fulfilled due to the presence of a Contingent Asset.As of the date of drafting the financial statements at 31.12.2016, bearing in mind the intervening judgement of first instance and the Bank’s intention to reach a conclusion of the disputes through the current settlement procedures used by the Financial Administration, the Bank proceeded to account for these costs in the income statement under Item 220 - Other operating income/expenses for €/Mln 0.57. In line with its desire to try to reach settlements, the Bank allocated, in the financial statements, at 31.12.2016 the sums owed after the judgement of first instance, amounting to a third of the assessed taxes and also the relevant penalties and interest totalling €/Mln 1.06. On 24 February 2017, the Bank made the related payment to the Tax Authority.As regards the Assessment Notice for IRES purposes, Banca Intermobiliare lodged an appeal on 31 May 2017, filing the same at the RTC on 26 June 2017. At the date of preparing the present report the date for the hearing of merit has not yet been set.As regards the Assessment Notice for IRAP and VAT purposes, the Office has lodged an appeal against the acceptance of the objection relating to the Custodian Bank fees. Banca Intermobiliare lodged an appeal against the decision of the PTC, on 5 June 2017.

1.3 2015 tax audit relating to the tax years from 2011 to 2015During 2016 a general tax audit was conducted regarding Direct Taxes, VAT, other taxes and employment legislation for the years 2013, 2014 and 2015 with subsequent extension to the tax years 2011 and 2012.

On 19 October 2016, a Tax Inspection Report for the 2011 tax year was delivered, and this was followed by the Notice of Assessment dated 30 December 2016 (taxes, penalties and interest for €/Mln 0.5), which included findings highly similar to those raised in previous years concerning the treatment of custodian fees in terms of VAT (already disputed for the years 2008, 2009 and 2010), the treatment of advisory fees in terms of VAT pursuant to the MiFID Directive (disputed for 2010) and the deductibility of an eighteenth of the write-down of the IPI Security (disputed for the years 2008 to 2010). On 17 March 2017, Banca Intermobiliare presented an appeal against the Notice of Assessment; at the date of preparing the present financial report a hearing date to discuss the merits of the case has not yet been set. On 14 June 2017 Banca Intermobiliare made the payment, provisionally, of the amount equal to one third of the taxes ascertained, proceeding to reduce by a corresponding amount the provisions for risks set aside at the moment of preparing the financial statements at 31.12.2016.

On 12 December 2016, a Tax Inspection Report was served, relating to the tax years from 2012 to 2015 (liabilities estimated by the internal units to be of €/Mln 8.4); on this occasion also, for the years in question, the findings against the Bank concerned the treatment of advisory fees in terms of VAT pursuant to the MiFID Directive (disputed for 2010 and 2011) and the deductibility of an eighteenth of the write-down of the IPI Security (disputed for the years 2008 to 2011).In accordance with the Bank’s intention to reach a conclusion of the disputes through the current acceptance/settlement procedures used by the Financial Administration, provisions were allocated for an amount equal to one third of the higher taxes indicated within the Tax Inspection Report and of the likely sanctions amounting to €/Mln 2.8.On 4 April 2017, Banca Intermobiliare presented to the Tax Authority - Piedmont Regional Department - an Application for assessment with acceptance under the terms of Italian Legislative Decree 218/1997. At the date of preparing the present financial report, discussions have begun with the DRE Piedmont - Large Taxpayers Office.On 28 December 2017 assessment notices were served regarding the 2012 tax year, because it was assessable only by 31.12.17. On 23 January 2018 the company presented the Application for Assessment with Partial Acceptance for the MiFID VAT finding and gave a mandate to its consultant to present appeals regarding the disputes relating to the IPI write-down and undue offsetting of DTAs.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


Probability test on deferred taxesCurrent, prepaid and deferred taxes were determined by applying the tax rates in force when these financial statements were prepared, in the country where the company is established.IAS 12 requires that the recognition of deferred tax liabilities and assets be performed with the following criteria:• a deferred tax liability should be recognised for all taxable temporary differences;• a deferred tax asset must be recognised for all deductible temporary differences if it is probable that a taxable profit

will be realised against which the deductible temporary difference can be used. • deferred tax assets unaccounted for in a given year - because there was no reason for their recognition, must be

included in the year in which those requirements emerge.

LThe amount of the deferred tax assets recognised in the financial statements must be tested every year (so-called “probability test”) to verify whether the future profitability forecasts are such as to guarantee the re-absorption and justify the recognition and maintenance of the amount in the financial statements.In carrying out the probability test on deferred tax assets recognised in the financial statements at 31 December 2017 those deriving from deductible temporary differences related to loan write-downs (“qualified deferred tax assets” and “qualified temporary differences”) were considered separately. We should note in this regard that, for Italy, from the tax period ended 31 December 2011, the conversion was established of deferred tax assets recognised in the financial statements into tax credits against tax losses arising from the deferred deduction of qualified temporary differences (Art. 2 paragraph 56-bis, Italian Decree Law 225/2010, introduced by art. 9 of Decree Law 201/2011 then converted into Italian Law 214/2011), in addition to that already provided for in the event that the financial statements show a loss for the period (Art. 2, paragraphs 55 and 56, Italian Decree Law 225/2010). The provision was last amended by Law No. 147 of 27 December 2013 (the so-called “Stability Law 2014”) which extended the rules also to deferred tax assets or DTAs, again in relation to the same items, recognised with reference to the regional tax on productive activities (IRAP), as well as to losses on loans of banks and financial institutions, since, with the same Stability Law, the tax treatment was modified aligning it to the value adjustments on receivables, as shown above. These rules introduced an additional and supplementary recovery method which ensures recovery of qualified deferred tax assets in any situation, regardless of the future profitability the company. Indeed, if in a specific year there was an excess of qualified temporary differences compared to the taxable income, the recovery of the relative prepaid taxes would not take place as a reduction of current taxes, but would nevertheless take place through recognition of deferred tax assets on the fiscal loss, convertible into a tax credit pursuant to Article 2, paragraph 56-bis of Italian Legislative Decree 225/2010. The conversion of the prepaid taxes on fiscal losses resulting from qualified temporary differences is therefore a sufficient assumption for recognition of qualified prepaid taxes in the financial statements, implicitly rendering the relative probability test redundant. This approach is also reflected in the joint Bank of Italy, Consob and ISVAP document No. 5 of 15 May 2012 (issued in the context of the Coordination Forum for application of IAS/IFRS), concerning “Accounting treatment of deferred tax assets arising from Italian Law 214/2011”, and in the subsequent IAS ABI document No. 112 of 31 May 2012 (“Tax credit resulting from the processing of deferred tax assets: clarification of the Bank of Italy, Consob and ISVAP in relation to application of IAS/IFRS”).On this basis, the test was structured, in particular:a) in the determination of deferred tax assets, other than those relating to write-downs of receivables and goodwill

(“non-qualified deferred tax assets” - DTAs), included in the financial statements;b) in the analysis of such non-qualified deferred tax assets and deferred tax liabilities included in the financial

statements, distinguishing them according to source type and, therefore, according to foreseeable timing of re-absorption;

c) in the quantification of Banca Intermobiliare’s future foreseeable profitability, aimed at verifying the capacity to absorb such deferred tax assets referred to in the previous point a).

In line with the decision to opt for tax consolidation for the period 2015-2017, the financial year was managed at a consolidated level for all the companies participating in the option.

In particular in order to carry out the probability test the following documentation was used: 2018 Budget (approved by the Board of Directors on 9 February 2018); 2017-2020 Business Plan (approved by the Board of Directors on 18 July 2017) prepared according to a “stand alone” logic and substantially in keeping with the guidelines of the strategic plan (approved by the Board of Directors of BIM of 10 February 2017). Two stressed plans were also prepared. On the basis of the business plan, over a time horizon of 5 years, no difficulties emerge on recovery of non-noble DTAs and those related to the 2016 and 2017 tax losses. The uncertainty about the trends on the financial markets and the possibility that the effects deriving from the entry of the new shareholder may, as already happened during 2017 when transfer of control over Banca Intermobiliare was expected by the end of the year, be postponed for a while with a consequent impact on the implementation times of the plan, led to it being considered not improbable that all or part of the outcomes provided for in the stressed plans may come to pass. In any case in any scenario the DTAs related to financial year 2016 are recoverable, while not in all scenarios are the DTAs related to financial year 2017


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


recoverable in a timeframe of 5 years.On the basis of these considerations, and in continuity with what was done at 31.12.2016 and 30.06.2017, it was decided to keep the non-noble DTAs and those on the 2016 tax losses recognised, while the DTAs on the 2017 tax losses were not recognised. The portion not recognised amounts to about €/Mln 10.7, and is entirely referable to the tax loss accumulated during 2017.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 14 - NON-CURRENT ASSETS AND ASSET GROUPS HELD FOR SALE - ITEM 140 IN ASSETS AND ITEM 90 IN LIABILITIES14.1 Attività non correnti e gruppi di attività in via di dismissione: composizione per tipologia di attività

2017 2016

A. Individual assets

A.1 Financial assets - -

A.2 Equity investments 13,029 24,775

A.3 Tangible fixed assets

A.4 Intangible fixed assets

A.5 Other non-current assets

Total A 13,029 24,775

of which carried at cost 13,029 24,775




B. Asset groups (sold operational units)

B.1 Financial assets held for trading - -

B.2 Financial assets designated at fair value - -

B.3 Financial assets available for sale - -

B.4 Financial assets held to maturity - -

B.5 Loans to banks - -

B.6 Loans to clients - -

B.7 Equity investments - -

B.8 Tangible fixed assets - -

B.9 Intangible fixed assets - -

B.10 Other assets - -

Total B - -





C. Liabilities associated with single assets held for sale

C.1 Payables - -

C.2 Securities - -

C.3 Other liabilities - -

Total C - -






NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


D. Liabilities associated with groups of assets held for sale

D.1 - Due to banks - -

D.2 Due to clients - -

D.3 Outstanding securities - -

D.4 Financial liabilities held for trading - -

D.5 Financial liabilities designated at fair value - -

D.6 Provisions - -

D.7 Other liabilities - -

Total D - -





The following shows the information required by IFRS 5, paragraph 41 points a), b) and d)


Banca Intermobiliare di Investimenti e Gestioni (Suisse) S.A. In November 2016, after receiving informal expressions of interest shown by market counterparties for the Swiss investee, Banca Intermobiliare had given a mandate to the advisors Rothschild and Orrick to assess any possibilities of realising the same. During financial year 2017 specific informative material was made available to certain selected counterparties and on 26 April 2017 the advisors received a number of binding offers. On 5 May 2017, Banca Intermobiliare gave Banca Zarattini & Co SA an exclusive period of 30 days starting from 6 June 2017, subsequently extended up to 31 July 2017. On 31.07.2017 Banca Zarattini & Co SA and Banca Intermobiliare S.p.A signed an agreement for the sale of 100% of the share capital of BIM Suisse SA held by BIM. Following fulfilment of the conditions precedent: i) authorisation from the Swiss Supervisory Authority; ii) completion of the purchase by Banca Intermobiliare of the property company Patio Lugano, held by Bim Suisse for Chf/Mln 15.05 and iii) the definition of a receivable position being analysed, on 18.10.2017 the purchase and sale contract was concluded. The initial price agreed of CHF/Mln 40.4 was subject to a “price adjustment” mechanism in relation to the economic result and the performance of the assets managed by Bim Suisse between 30 June and 18 October 2017. Disposal of the equity investment determined a benefit in the income statement, under the item Profit (Loss) of assets held for sale, after tax of €/Mln 9.3.

14.2 Additional informationThe disclosure required by IFRS 5 in paragraph 42, is not applicable since there have been no changes to the marketing plan provided for in paragraphs 26 and 29.

14.3 Information on shareholdings in companies subject to significant influence not measured using the equity methodNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 15 - OTHER ASSETS - ITEM 15015.1 Other assets: breakdown

Items/Amounts 31.12.2017 31.12.2016

- Due from inland revenue and other tax authorities 31,028 38,393


of which administered capital gain 7,370 12,618

- Current account cheques drawn on third parties 13 18

- Coupons and payable securities - -

- Security deposits 148 150

- Revenue stamps and other valuables - -

- Gold, silver and precious metals - -

- Own bills - difference between portfolio account and transferor account - -

- Others’ bills - difference between portfolio account and transferor account - -

- Items in transit between branches 43 -


work in progress items for clients’ operations abroad 604 124

pensions to be settled 3,439 3,774

receivable items due from others 2,006 2,310

- Shortages, misappropriations and robberies 1 1

- Accrued income not related to Bank items - -

- Prepaid expenses not related to Bank items 1,111 957

- Leasehold improvements 2,058 2,622

- Other 29,193 25,436

Trade receivables 7,220 655

Receivables for tax consolidation 6,061 3,745

Tax receivables from VB 1,822 1,822

Intercompany receivables 6,937 7,020

Fixed assets recognised in inventory 7,100 7,100

Other loans and receivables 53 5,093

TOTAL 74,740 78,870

Regarding the fixed assets recognised in inventory originating from loan recoveries and measured according to IAS 2 - Inventories, please see the Report on Operations “Operating Figures and Balance Sheet Data”.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


LIABILITIES

SECTION 1 - DUE TO BANKS - ITEM 101.1 Due to banks: breakdown by type


1. Due to central banks - -

2. Due to banks

2.1 Current accounts and demand deposits 143,458 123,328

2.2 Term deposits 13,008 505

2.3. Loans

2.3.1 Repurchase agreements 20,965 374,583

2.3.2 Other - -

2.4 Payables for commitments to repurchase Bank equity instruments - -

2.5 Other payables 2,695 13,044

Total 180,126 511,460


Fair value - level 2 180,126 511,460


Total fair value 180,126 511,460

The payables are recognised at their nominal value which was assumed to be representative of the fair value since these are short-term liabilities settled at arm’s length. As regards the accounting treatment of “long-term structured repurchase agreements”, it should be noted that no transactions of this type have been implemented.

1.2 Details of Item 10 “Due to banks”: subordinated debtNot applicable.

1.3 Details of Item 10 “Due to banks”: structured debtNot applicable.

1.4 Due to banks covered by specific hedgesNot applicable.

1.5 Payables related to financial leasingNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 2 - AMOUNTS DUE TO CLIENTS: ITEM 20 2.1 Amounts due to clients: breakdown by type


1. Current accounts and demand deposits 878,065 1,220,847

2. Term deposits 118,275 97,603

3. Loans

3.1 Repurchase agreements 1,875 857

3.2 Other - -

4. Payables for commitments to repurchase own equity instruments - -

5. Other payables 24,509 820

Total 1,022,724 1,320,127


Fair value - level 2 1,022,724 1,320,127


Total fair value 1,022,724 1,320,127

2.2 Details of Item 20 “Amounts due to Clients”: subordinated debtNot applicable.

2.3 Details of Item 20 “Amounts due to Clients”: structured debtNot applicable.

2.4 Amounts due to clients subject to micro-hedgingNot applicable.

2.5 Payables related to financial leasingNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 3 - OUTSTANDING SECURITIES - ITEM 303.1 Outstanding securities: breakdown by type

Type of securities/Amounts 2017 2016

Book value

Fair value Book value

Fair value


A. Securities

1. bonds 60,686 - 60,403 - 304,978 - 297,641 -

1.1 structured 17,608 - 17,453 - 34,724 - 33,506 -

1.2 other 43,078 - 42,950 - 270,254 - 264,135 -

2. other securities - - - - - - - -

2.1 structured - - - - - - - -

2.2 other - - - - - - - -

Total 60,686 - 60,403 - 304,978 - 297,641 -

3.2 Detail of Item 30 “Outstanding securities”: subordinate securitiesNot applicable .

3.3 Outstanding securities subject to micro-hedging

2017 2016

1. Securities subject to micro-hedging of fair value:

a) interest rate risk 17,608 17,796


c) other risks - -

2. Hedged items specific to the cash flows:

a) interest rate risk - -


c) other -

Total 17,608 17,796


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 4 - FINANCIAL LIABILITIES HELD FOR TRADING - ITEM 40Financial liabilities held for trading: breakdown by type

Type of transaction/Amounts

2017 2016

NV FV FV * NV FV FV *Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

A. Cash liabilities

1. Due to banks 18,046 24,533 - - 24,533 11,259 12,956 - - 12,956

2. Due to clients - - - - - 73 1,229 - - 1,229

3. Debt securities

3.1 Bonds

3.1.1 Structured - - - - x - - - - x

3.1.2 Other bonds - - - - x - - - - x

3.2 Other securities

3.2.1 Structured - - - - x - - - - x

3.2.2 Other - - - - x - - - - x

Total A 18,046 24,533 - - 24,533 11,332 14,185 - - 14,185


1. Financial derivatives

1.1 for trading x - 15,278 - x x - 53,303 166 x


1.3 Other x - - - x x - - - x

2. Credit derivatives

2.1 for trading x - 47 - x x - 346 - x


2.3 Other x - - - x x - - - x

Total B x - 15,325 - x x - 53,649 166 x

Total (A+B) x 24,533 15,325 - x x 14,185 53,649 166 x

* Fair value adjusted for change in credit rating

4.2 Detail of Item 40 “Financial liabilities held for trading”: subordinated liabilitiesNot applicable.

4.3 Detail of Item 40 “Financial liabilities held for trading”: structured debtsNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 6 - HEDGING DERIVATIVES - ITEM 606.1 Hedging derivatives: breakdown by type of hedge and levels

Fair Value 2017 NV 2017

Fair Value 2016 NV 2016Level 1 Level 2 Level 3 Level 1 Level 2 Level 3


1) Fair Value - 8,906 - 237,760 - 14,758 - 397,660

2) Cash flows - - - - - - - -


B. Credit derivatives

1) Fair Value - - - - - - - -

2) Cash flows - - - - - - - -

Total - 8,906 - 237,760 - 14,758 - 397,660

Key:NV = Notional Value



Inve

st. f

orei

gn

Micro

Mac

ro

Micr

o

Mac

ro

inte

rest

ra

te ri

sk

exch

ange

ra

te ri

sk

cred

it ris

k

price

ris

k

othe

r ris

ks


2. Loans - - - x - x - x x




Total assets 8,906 - - - - - - - -

1. Financial liabilities - - - x - x - x x


Total liabilities - - - - - - - - -

1. Expected transactions x x x x x x - x x


SECTION 8 - TAX LIABILITIES - ITEM 80See Section 13 under assets “Tax assets and tax liabilities”.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 9 - LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE - ITEM 80Please refer to Section 14 under assets “Non-current assets and groups of assets held for sale and associated liabilities”.

SECTION 10 - OTHER LIABILITIES - ITEM 10010.1 Other liabilities: breakdown Items/Amounts 31.12.2017 31.12.2016

- Amounts to be paid to tax authorities 18,048 20,339


of which pensions and F24 form 5,922 6,589

- Payables to social security agencies 1,440 1,633

- Amounts available to clients 632 29,908

- Other staff payables 2,187 3,204


- Deferred credits not related to bank items 142 176

- Payables resulting from deterioration in credit commitments 102 491

- Other 29,417 19,196

trade payables 23,273 12,983

other payables 3,970 3,770

payables due to tax consolidation 2,174 2,443

Total 56,605 81,400


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


SECTION 11 - EMPLOYEES’ SEVERANCE FUND - ITEM 11011.1 Employees’ severance fund: annual changes

2017 2016


B. Increases 324 459

B.1 Changes during the financial year 288 304


C. Decreases (771) (705)

C.1 Severance payments (734) (688)

C.2 Other changes (37) (17)


11.2 Additional informationIn the light of international accounting standards, and in relation to indications provided by the International Accounting Standard Board (IASB) and the International Financial Reporting Interpretation Committee (IFRIC), the TFR (employee severance indemnity fund) was considered as a defined-benefit plan; in particular the IAS 19 standard defines its accounting treatment, its on-balance sheet exposure as well as the manner of determining the value, which must be calculated using actuarial-type methods.In accordance with IAS 19, the accrued defined benefits (TFR) were subjected to actuarial assessment in accordance with the method of accrued benefits using the “Projected Unit Credit Method” (PUC), as provided for in paragraphs 67-69 of IAS 19.This method computes the TFR no longer as a charge to be settled if the company ceases its activity on the reporting date, but as a gradual provision according to the residual term of service of the staff in its employ.The following table indicates the actuarial assumptions for the calculation of the discounted value of the employees’ severance fund as required by IAS 19.

NEW HIRES 31.12.2017 31.12.2016

Economic assumptions

Annual discounting rate 1.61% 1.62%

Annual inflation rate 1.50% 1.50%

Annual TFR increase rate 2.625% 2.625%

Annual salary increase rate 1.00% 1.00%

Demographic assumptions

Death (source: State General Accounting Department) RGS 48 Mortality Tables RGS 48 Mortality Tables

Disability Table INPS by age and gender Table INPS by age and gender

Retirement age 100% upon achieving AGO requirements 100% upon achieving AGO requirements

Turnover and advances of employees’ severance fund

Incidence of advances 2.00% 2.00%

Turnover frequency Average 5.62% Average 5.64%


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


In particular it should be noted that: • the annual discounting rate used to measure the current value of the obligation has been taken, in line with

paragraph 83 of IAS 19, from the Iboxx Corporate AA index with a duration of 10+ on the valuation date. To this end, a yield was chosen with a duration that is comparable to the duration of the total workers who were the object of the valuations;

• the annual rate of increase of the defined benefit plan, as provided by Article 2120 of the Civil Code, is equal to 75% of inflation plus 1.5 percentage points.

• the annual salary increase rate applied only to Companies with fewer than 50 employees on average in 2006 was determined on the basis of the communications from the Company Managers.

SECTION 12 - PROVISIONS FOR RISKS AND CHARGES - ITEM 12012.1 Provisions for risks and charges: breakdown


1. Company pension provisions - -

2. Other provisions for risks and charges 23,313 25,881

2.1 legal disputes 13,245 16,625

2.2 personnel-related charges 176 346

2.3 other 9,892 8,910

Total 23,313 25,881

12.2 Provisions for risks and charges: annual changes

Pension provisions Other provisions Total

A. Opening balance - 25,881 25,881

B. Increases - 4,543 4,543

B.1 Changes during the financial year - 4,543 4,543

B.2 Changes due to the passage of time - - -

B.3 Changes due to changes in discount rate - - -

B.4 Other changes - - -

C. Decreases - (7,111) (7,111)

C1. Utilisation during the year - (7,088) (7,088)

C.2 Changes due to changes in discount rate - - -

C.3 Other changes - (23) (23)

D. Closing balance - 23,313 23,313

With reference to the movements of the Fund during the year one should refer to the remarks in the Section “Operating figures and balance sheet data” in the Management Report to the financial statements.

12.3 Company defined-benefit pension provisionsNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


12.4 Provision for risks and charges - other provisionsThe “Provision for risks and charges – other provisions” was established primarily against probable liabilities and risks associated with various kinds of disputes related, inter alia, to client complaints and disputes, tax disputes and contractual indemnities owed, whose measurement was carried out according to actuarial criteria under the IAS 37 accounting standard.

Items/Amounts 31.12.2017 31.12.2016

Disputes and complaints against Veneto Banca Shares 8,963 10,022

Other disputes and complaints against clients 4,282 6,603

Tax Disputes 4,970 4,859

Indemnities, charges on personnel and other allocations 5,098 4,397

Total provisions for risks and charges 23,313 25,881

SECTION 14 - COMPANY EQUITY - ITEMS 130, 150, 160, 170, 180, 190 AND 20014.1 “Capital” and “Treasury shares”: breakdown

Items/Amounts 31.12.2017 31.12.2016

Share capital

Ordinary shares 156,209 156,209

Preference shares - -

Treasury shares (29,711) (29,731)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


14.2 Capital - Number of shares: annual changes

Items/Types Ordinary shares Other

A. Shares outstanding at the beginning of the year

- fully paid 156,209,463 -


A.1 Treasury shares (-) (6,581,691) -

A.2 Outstanding shares: opening balance 149,627,772 -

B. Increases

B.1 New issues - -

- by payment:

- business combinations - -

- conversion of bonds - -

- exercise of warrants - -

- other - -

- free of charge:

- to employees - -

- to directors - -

- other - -

B.2 Sale of treasury shares - -

B.3 Other changes 4,328 -

C. Decreases

C.1 Elimination - -

C.2 Purchase of treasury shares - -

C.3 Company sale transactions - -

C.4 Other changes -

D. Outstanding shares: closing balance 149,632,100 -

D.1 Treasury shares (+) 6,577,363 -

D.2 Shares outstanding at the end of the year

- fully paid 156,209,463 -


14.3 Capital: other informationThis article provides the information required by IAS 1 paragraph 79 concerning each category of shares making up the capital.At 31 December 2017 the share capital of Banca Intermobiliare was equal to €/thou 156,209, divided into 156,209,463 ordinary shares with par value of €1. Pursuant to the Articles of Association, each ordinary share gives the right to one vote in the shareholders’ meeting. The share capital was fully paid-up.As regards reconciliation between the number of outstanding shares at the beginning and at the end of the year and the Treasury shares held by Banca Intermobiliare please refer to table 15.2 “Capital – number of shares: annual changes”. Banca Intermobiliare does not hold any treasury shares indirectly through its subsidiaries and associated companies.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


Trading of treasury sharesThe sale/purchase of treasury shares was carried out over the years by Banca Intermobiliare on the basis of the authorisation of the Shareholders’ Meeting in order to preserve them and have their availability - together with the treasury shares already purchased and held by virtue of previous resolutions of the shareholders’ meeting - to: (a) comply with the obligations arising from distribution programs, whether for a consideration or free of charge, of

shares or share options to directors, employees and collaborators of BIM or to directors, employees and collaborators of the company controlled by it, as well as for free allocation programs of shares to shareholders;

(b) any use as consideration in extraordinary transactions, including exchange of shareholdings, with other entities within operations of interest to BIM.

On 17 April 2014, the Shareholders’ Meeting had authorised the Board of Directors to purchase BIM ordinary shares under the terms of art. 2357 of the Italian Civil Code. The authorisation to purchase treasury shares was granted for a maximum period of 18 months and was not subsequently renewed.

Purchases and sales during the financial yearAs at 31 December 2017, the Banca Intermobiliare shares in the portfolio amounted to 6,577,363 against 6,581,691 shares at 31.12.2016. During the year no Bim shares were purchased on the market but 4,328 shares were sold on the market for a total amount of €/thou 6,369.

14.4 Profit reserves: other informationThis article provides the information required by IAS 1 paragraph 79 concerning the nature and purpose of each reserve included in shareholders’ equity.The reserves, whose objectives are to contribute to the Bank’s capital adequacy in relation to current and prospective operations, amounted, as at 31.12.2017, to €/thou 51,406 (€/thou 56,691 as at 31.12.2015) and consisted of:• “Legal reserve”, fed by earmarked profits pursuant to art. 2430 of the Italian Civil Code and art. 21.1 of the Articles

of Association, amounting to €/thou 27,873 as at 31.12.2016 (€/thou 31,242 at 31.12.2016);• “Reserve on treasury shares”, amounting to €/thou 23,636 as at 31.12.2016 (€/thou 23,636 at 31.12.2016), as provided

for in the authorisation to purchase and dispose of treasury shares, pursuant to Art. 2357 and 2357-ter of the Italian Civil Code and laid down in Art. 5.4 of the By-laws, granted to the directors by the shareholders’ meeting in previous years, of which €/thou 29,711 for treasury shares in the portfolio and for the negative amount of €/thou 6,088 relating to trading gains and losses on treasury shares;

• “Other reserves” with a negative value of €/thou 90 as at 31.12.2017 (negative for €/thou 90 as at 31.12.2016) consisting of the sum of results from transition to IAS shown in previous financial years.

It should also be noted that the additional effects generated by the transitions to IAS/IFRS, which are intended to evolve over time and be accounted for in equity (they will enter the income statement at the time of realisation or settlement of the corresponding assets or liabilities), were placed, conversely, among the “Valuation reserves”. For more information, please refer to section F - “Information on Equity” in these notes to the financial statements.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


As required by the Bank of Italy regulations, we hereby provide the information indicated in art. 2427, paragraph 7-bis of the Italian civil code.

Items Amount Possibility of use

Available portion

Summary of uses over last three years

to cover losses

for other uses

Share Capital 156,209 - - -

Issue premiums - a-b-c - 88,385 -

Reserves

Legal reserve 27,873 a-b-1 27,873 3,369 -

Undivided profit reserve - a-b-c 67,420 -

Reserve for purchase of treasury shares - - - 7,837

Reserve for treasury shares 29,711 - - 57

IAS transition reserves (FTA) (90) - - -

Other reserves

- non-conversion of convertible bonds - a-b-c - 17,666 2,852

- stock options - a-b - 13,041 -

- gains/losses from treasury share trading (6,088) - - -

Valuation reserves

Valuation reserves for assets available for sale 8,409 - - 2,637

Valuation reserves actuarial benefit plans (698) - - -

Treasury shares in portfolio (29,711) - - 55

Profit (Loss) for the year (43,115) - - -

Total 142,500 27,873

Non-distributable share 27,873

Remaining distributable share -

Possibility of use: Additional information:a = share capital increase 1 - Can be used to increase the share capital of more than one fifth of the share capitalb = to cover losses 2 - Reserves unavailable pursuant to art. 6 of Italian Legislative Decree 38/2005, letter bc = for distribution to shareholders

14.5 Equity instruments: breakdown and annual variationsNot applicable.

14.6 Additional informationAs at 31.12.2017, Bank Intermobiliare did not have any financial instrument with options to sell classified as equity instruments identified in the scope of IAS 1 paragraph 80A, 136A and 137.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


ADDITIONAL INFORMATION1. Guarantees and commitments

Transactions 2017 2016

1) Financial guarantees issued 14,186 18,112

a) Banks 3 333

b) Clients 14,183 17,779

2) Trade guarantees issued 33 93

a) Banks - -

b) Clients 33 93

3) Irrevocable commitments to issue funds 17,102 45,400

a) Banks 4 984

i) usage certain 4 984

ii) usage uncertain - -

b) Clients 17,098 44,416

i) usage certain - 895

ii) usage uncertain 17,098 43,521

4) Commitments underlying credit derivatives: protective sales 3,969 5,516

5) Assets used to secure third party obligations - -

6) Other commitments - 20,122

Total 35,290 89,243

2. Assets used to secure own liabilities and commitments

Portfolios 2017 2016


2. Financial assets designated at fair value - -


4. Financial assets held to maturity - -

5. Loans to banks 4,735 -

6. Loans to clients - -


Total 139,061 425,014

Item 1 “Financial assets held for trading” refers for an amount of €/Mln 10, to securities which have been committed in deposits with repurchase agreements. Item 3 “Financial assets available for sale” refers for an amount of €/Mln 13 to secure banker’s drafts and of €/Mln 59, to securities which have been committed in deposits with repurchase agreements.With reference to funding operations guaranteed with securities not recognised in the balance sheet assets, it should be noted that no operations of this kind were carried out in the year in progress.

3. Information on operating leasesNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


4. Asset management and trading on behalf of others Type of service 2017

1. Order execution on behalf of clients 7,834,548

a) Purchases 3,673,334

1. settled 3,673,326

2. not settled 8

b) Sales 4,161,214

1. settled 4,160,972

2. not settled 242

2. Asset management portfolios -

a) individual -

b) collective -

3. Custody and administration of securities 2,276,544

a) third-party securities on deposit: connected with the custodian bank activity (excluding portfolio management) -

1. securities issued by companies included in consolidation -

2. other securities -

b) third-party securities on deposit (excluding portfolio management): other 918,985

1. securities issued by companies included in consolidation 38,693

2. other securities 880,292

c) third-party securities deposited with third parties 918,613

d) owned securities deposited with others 438,946

4. Other transactions 5,016,584

The “Other transactions” item encompassed other services rendered to third parties other than the execution of orders on behalf of clients; in particular, this involves the receipt and transmission of orders for securities and derivatives traded on foreign markets on which the Banca Intermobiliare is not a direct participant and executor.

5. Financial assets which were offset, or subject to framework settlement or similar agreements

Technical forms Gross amount of financial

assets (a)

Amountof financial liabilities

which were offset

on balance sheet

(b)

Net amount of financial

assets reported in the balance

sheet (c=a-b)

Correlated amounts not subject to

on-balance-sheet offsetting

Net amount 2017

(f=c-d-e)

Net amount 2016


(d)


under warranty

(e)

1. Derivatives 21,631 - 21,631 17,262 - 4,369 12,428



4. Other - - - - - - -

Total 2017 21,631 - 21,631 17,262 - 4,369 x

Total 2016 37,574 - 37,574 25,146 - x 12,428


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

B


6. Financial liabilities which were offset, or subject to framework settlement or similar agreements

Technical forms Gross amount of financial liabilities

(a)

Amount of the

financial assets offset

in the balance sheet

(b)

Net amount of financial liabilities

reported in the balance

sheet (c=a-b)


sheet offsetting

Net amount 2017

(f=c-d-e)

Net amount 2016


(d)


under warranty

(e)

1. Derivatives 30,918 - 30,918 17,262 - 13,656 18,815



4. Other - - - - - - -

Total 2017 30,918 - 30,918 17,262 - 13,656 x

Total 2016 43,961 - 43,961 25,146 - x 18,815

7. Securities lending transactionsIn financial year 2017, Banca Intermobiliare carried out securities lending transactions, against payment of a commission to various providers. These transactions, carried out with top level clients, made it possible to use refinanceable securities (with the Central Bank or other collateralised markets), as an additional liquidity buffer.

Operation Type of securities

Nominal quantity 31.12.2017

Nominal quantity 31.12.2016

Securities obtained from securities lending Equity Securities 1,688,758 334,211

Securities delivered with securities lending - third-party lending Equity Securities - -

Securities delivered with securities lending - bank lending Equity securities - -

TOTAL 1,688,758 334,211

Owned securities Equity securities 1,688,758 334,211

8. Information on jointly-controlled assetsNot applicable.

416 ■ Notes to financial statements - Part C

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 1 - INTEREST - ITEMS 10 AND 201.1 Interest income and similar items: breakdown

Items/Types Debt securities

Loans Other transactions

Total 2017

Total2016

1. Financial assets held for trading 817 - - 817 3,875

2. Financial assets available for sale 11,202 - - 11,202 16,431

3. Financial assets held to maturity - - - - -

4. Loans to banks 148 571 - 719 1,395

5. Loans to clients - 13,570 - 13,570 21,854

6. Financial assets designated at fair value - - - - -

7. Hedging derivatives - - - - -

8. Other Assets - - - - -

Total 12,167 14,141 - 26,308 43,555

1.2 Interest income and similar items: hedging transaction differentialsNothing has been entered in the following table because the balance of positive and negative differentials, accrued on “hedging derivatives” has a negative balance, so one should refer to table 1.5 “Interest expense and similar items: hedging transaction differentials”.

1.3 Interest income and similar items: other information

1.3.1 Interest income on financial assets in foreign currency

Voci/Valori 2017 2016

Interest income on financial assets in foreign currency 401 351

1.3.2 Interest income on financial leasing transactionsNot applicable.

Part C - INFORMATION ON THE INCOME STATEMENT

Notes to financial statements - Part C ■ 417

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


1.4 Interest expense and similar items: breakdown

Items/Types Payables Securities Other transactions

Total2017

Total2016

1. Due to central banks - x - - -

2. Due to banks 396 x 118 514 725

3. Due to clients 4,495 x - 4,495 5,556

4. Outstanding securities x 4,449 - 4,449 9,331

5. Financial liabilities held for trading 207 - - 207 882

6. Financial liabilities designated at fair value - - - - -

7. Other liabilities and provisions x x - - -

8. Hedging derivatives x x 4,097 4,097 4,146

Total 5,098 4,449 4,215 13,762 20,640 1.5 Interest expense and similar items: hedging transaction differentials

2017 2016

A. Positive hedging transaction differentials 2,045 2,656

B. Negative hedging transaction differentials (6,142) (6,802)

C. Balance (A-B) (4,097) (4,146)

1.6 Interest expense and similar items: other information

1.6.1 Interest expenses on liabilities in foreign currency

2017 2016

Interest expenses on financial liabilities in foreign currency 92 103

1.6.2 Interest expenses on liabilities for financial leasing transactionsNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 2 - COMMISSIONS AND FEES - ITEMS 40 AND 502.1 Fee and commission income: breakdown

Type of services/Amounts 2017 2016

a) guarantees issued 105 183


c) management, brokering and consulting services: 39,746 47,873


2. trading of foreign currencies 362 644

3. portfolio management - -

3.1. individual - -

3.2. collective - -

4. custody and administration of securities - -

5. custodian bank activity - -


7. order receipt and transmission 989 1,418

8. advisory services 1,668 2,194

8.1. relating to investments 1,445 1,795

8.2 relating to financial structure 223 399

9. distribution of third party services 27,442 29,384

9.1. portfolio management 25,176 26,400

9.1.1. individual 5,520 6,591

9.1.2. collective 19,656 19,809

9.2. insurance products 2,266 2,984

9.3. other products - -


e) securitisation servicing - -

f) servicing for factoring transactions - -

g) tax collection services - -

h) management of multilateral trading facilities - -

i) current account maintenance and management 773 894

j) other services 276 290

Total 41,066 49,383


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


2.2 Fee and commission income: product and service distribution channels

Channels/Amounts 2017 2016

a) at own branches: 80,224 85,529



3. third-party services and products 80,060 85,168

b) offered off-site: - -



3. third-party services and products - -

c) other distribution channels: - -



3. third-party services and products - -

2.3 Fee and commission expenses: breakdown

Services/Amounts 2017 2016

a) guarantees received 2 2


c) management and brokering services 8,646 8,988


2. trading of foreign currencies - -

3. portfolio management: 5,459 5,555

3.1 own - -

3.2 delegated by third parties 5,459 5,555

4. custody and administration of securities 141 179


6. off-site proposals for financial instruments. products and services - -


e) other services 350 332

Total 9,033 9,355


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 3 - DIVIDENDS AND SIMILAR INCOME - ITEM 703.1 Dividends and similar income: breakdown

Items/Income 2017 2016


in UCIs


in UCIs

A. Financial assets held for trading 34 - 368 -

B. Financial assets available for sale 334 52 1,078 171

C. Financial assets designated at fair value - - - -

D. Equity investments 7,967 x 12,302 x

Total 8,335 52 13,748 171

SECTION 4 - GAINS AND LOSSES ON ASSETS HELD FOR TRADING - ITEM 804.1 Gains and losses on assets held for trading: breakdown


Capital gains

Trading gains

Capital losses

Trading losses

Net profit (loss)

1. Financial assets held for trading 380 4,592 (189) (1,655) 3,128

1.1 Debt securities 371 3,532 (187) (1,367) 2,349

1.2 Equity securities 9 1,060 (2) (283) 784

1.3 Shares in UCIs - - - (5) (5)

1.4. Loans - - - - -

1.5 Other - - - - -

2. Financial liabilities held for trading 159 180 (288) (1,112) (1,061)

2.1 Debt securities 5 24 (154) (965) (1,090)

2.2 Payables - - - - -

2.3 Other 154 156 (134) (147) 29

3. Financial assets and liabilities: exchange rate differences x x x x 1,140



- On debt securities and interest rates 2,424 6,977 (2,534) (6,397) 470

- On equity securities and stock indices - 9,207 - (10,338) (1,131)

- On currencies and gold x x x x 3,708

- Others - 4 - (4) -


Total 6,175


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C



Capital gains

Tradinggains

Capital losses

Trading losses

Net profit (loss)

1. Financial assets held for trading 596 5,657 (660) (7,186) (1,593)

1.1 Debt securities 538 3,962 (658) (5,541) (1,699)

1.2 Equity securities 57 1,648 (2) (1,602) 101

1.3 Shares in UCIs 1 47 - (43) 5

1.4. Loans - - - - -

1.5 Other - - - - -

2. Financial liabilities held for trading 27 628 (318) (322) 15

2.1 Debt securities - 601 (59) (322) 220

2.2 Payables - - - - -

2.3 Other 27 27 (259) - (205)

3. Financial assets and liabilities: exchange rate differences x x x x 1,432



- On debt securities and interest rates 1,560 8,642 (1,214) (7,865) 1,123

- On equity securities and stock indices 450 21,765 (444) (22,653) (882)

- On currencies and gold x x x x 4,658

- Others - 262 - (255) 7


Total 4,493

SECTION 5 - NET GAINS (LOSSES) ON HEDGING OPERATIONS -ITEM 905.1 Net profit (loss) on hedging operations: breakdown


A. Income related to:

A.1 Fair value hedging derivatives 16,713 5,411

A.2 Hedged financial assets (fair value) 3,374 7,974

A.3 Hedged financial liabilities (fair value) 165 -

A.4 Financial derivatives to hedge cash flows - -

A.5 Assets and liabilities in foreign currency - -

Total income on hedging operations (A) 20,252 13,385

B. Costs related to:

B.1 Fair value hedging derivatives (15,334) (8,943)

B.2 Hedged financial assets (fair value) (4,954) (4,419)

B.3 Hedged financial liabilities (fair value) - (200)

B.4 Financial derivatives to hedge cash flows - -

B.5 Assets and liabilities in foreign currency - -

Total costs on hedging operations (B) (20,288) (13,562)

C. Net profit (loss) on hedging operations (A - B) (36) (177)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 6 - GAINS (LOSSES) ON DISPOSAL OR REPURCHASE - ITEM 1006.1 Gains (losses) on disposal or repurchase: breakdown

Items/Income components 2017 2016



Financial assets

1. Loans to banks 26 - 26 - - -

2. Loans to clients 1 (183) (182) 1 - 1

3. Financial assets available for sale 14,316 (4,961) 9,355 5,484 (1,979) 3,505

3.1 Debt securities 10,408 (2,497) 7,911 4,723 (1,561) 3,162

3.2 Equity securities 2,537 (592) 1,945 639 (345) 294

3.3 Shares in UCIs 1,371 (1,872) (501) 122 (73) 49

3.4. Loans - - - - - -


Total assets 14,343 (5,144) 9,199 5,485 (1,979) 3,506


1. Due to banks - - - - - -

2. Due to clients - - - - - -

3. Outstanding securities 47 (25) 22 325 (448) (123)

Total liabilities 47 (25) 22 325 (448) (123)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 8 - NET WRITE-DOWNS/WRITE-BACKS FOR IMPAIRMENT - ITEM 1308.1 Net write-downs/write-backs for impairment of loans: breakdown

Transactions/Income components Write-downs Write-backs Total2017




A. Loans to banks - - - - - - - - -

- Loans - - - - - - - - -


B. Loans to clients (438) (58,129) - - 11,601 - 1,205 (45,761) (91,619)

Purchased impaired loans - - - - - - - - -

- Loans - - x - - - x - -

- Debt securities - - x - - - x - -

Other loans and receivables (438) (58,129) - - 11,601 - 1,205 (45,761) (91,619)

- Loans (438) (58,129) - - 11,601 - 1,205 (45,761) (91,619)


C. Total (438) (58,129) - - 11,601 - 1,205 (45,761) (91,619)


The estimation of the flows calculated using the methodology based on the parameters of “probability of default” “loss given default” resulted in a coverage of performing loans with a percentage lower than that of the previous year. For more details on the evaluation criteria, please refer to the information in Part A - Accounting policies, Section “4. Loans”. In “write-backs - from interest” are reversals of write-downs connected with the passage of time, corresponding to the accrued interest during the financial year based on the original effective interest rate previously used to calculate write-downs.

8.2 Net write-downs for impairment of financial assets available for sale: breakdown

Transactions/Income components Specific write-downs

Write-backsSpecific

Total2017

Total2016

Write-offs Other From interest

Other write-backs

A. Debt securities - (95) - - (95) (303)

B. Equity securities - (443) x x (443) (1,388)

C. UCIs shares - (1,316) x - (1,316) (1,066)

D. Loans to banks - - - - - -

E. Loans to clients - - - - - -

F. Total - (1,854) - - (1,854) (2,757)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


The specific write-downs on financial assets available for sale were determined on the basis of the impairment policy described in Part A “Accounting Policies” of the notes to the financial statements. The breakdown by security subject to “impairment” is presented below:

Description of the securities Amount of the write-down

A. Debt securities (95)

ABENGOA FIN.6%EUR (6)

SV FITD 17/50 JUNIOR (89)

B. SHARES (443)

AEDES ORD RAGG. (16)

BCA MEDIO FRIULI VG (41)

SV FITD CR CESENA (347)

SV FITD CR S MINIATO (21)

SV FITD CR RIMINI (18)

C. UCIs shares (1,316)

BIM MK NEUTR SPOK A (5)

FDO IMM LEOPARDI (36)

CHARME III CL.A NOM. (1,275)

F. Total (1,854)

8.3 Net write-downs for impairment of financial assets held to maturity: breakdownNot applicable.

8.4 Net write-downs for impairment of other financial transactions: breakdown

Transactions/Income components Write-downs Write-backs Total2017




A. Guarantees issued - - - - - - 389 389 20

B. Credit derivatives - - - - - - - - -

C. Commitments to disburse funds - - - - - - - - -

D. Other transactions - - - - - - - - -

E. Total - - - - - - 389 389 20



NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 9 - ADMINISTRATIVE EXPENSES - ITEM 1509.1 Personnel costs: breakdown


1) Employees 38,655 41,113

a) wages and salaries 27,657 29,247

b) social security costs 7,325 7,854

c) employee severance fund 24 33

d) pension expenses 385 426

e) allocation to employees’ severance fund 288 304

f) provision to pension fund and similar obligations: - -

- defined contribution - -


g) contributions to supplementary external retirement benefit funds: 1,878 2,066

- defined contribution 1,878 2,066


h) costs related to share-based payments - -

i) other employee benefits 1,098 1,183

2) Other working staff 11 65

3) Directors and statutory auditors 1,407 925

4) Retired staff - -

5) Cost recoveries for employees seconded to other companies (3,282) (3,973)

6) Cost recoveries for employees of third parties seconded to the company 322 958

Total 37,113 39,088

9.2 Average number of employees by category

2017 2016

Employed personnel

a) executives 21 21

b) middle managers 196 222

c) remaining employed staff 170 177

Total employed personnel 387 420

Other staff 2 4

9.3 Company-defined benefit pension provisions: total costsNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


9.4 Other employee benefits

2017 2016

Cafeteria tickets 385 440

Rentals of property for employees 68 14

Contribution to the corporate welfare fund 502 518

Others 143 211

Total 1,098 1,183

9.5 Other administrative expenses: breakdown


Property rentals 4,196 4,261

Furniture and property maintenance expenses 622 595

Other property expenses 467 312

Telephone, postal and data transmission expenses 5,534 6,647

Electricity, heating and water 689 713

Equipment and software leases 876 942

Electronic processing 4,289 4,075

System support and software rental 1,062 1,012

Advertising and entertainment 174 573

Legal and notary services 1,675 991

Miscellaneous advisory and other services 5,203 1,530

Subscriptions, magazines, newspapers 234 281

Transportation 818 825

Credit information and searches 62 70

Insurance companies 1,236 1,227

Supervision, security and transportation of valuables 44 48

Cleaning expenses 423 447

Charitable and other donations 43 69

Printing and stationery 150 271

Ordinary BRRD/FNR mechanisms and DGS loan 1,154 4,079

Membership fees and union dues 587 587

Other expenses 884 545

Indirect taxes and duties 792 1,095

Services provided by Group companies 5,514 5,608

Total 36,728 36,803


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 10 - NET ALLOCATIONS TO PROVISIONS FOR RISKS AND CHARGES - ITEM 16010.1 Net allocations to provisions for risks and charges: breakdown


Net allocations to provisions for risks and charges for:

- legal disputes (609) (12,361)

- personnel-related charges (130) (346)

- other expenses (1,226) (5,173)

Total (1,965) (17,880)

As regards the difference with respect to the previous year please see the explanation provided in the report on operations.

SECTION 11 - NET WRITE-DOWNS/WRITE-BACKS ON TANGIBLE FIXED ASSETS - ITEM 17011.1 Net write-downs/write-backs on property, plant and equipment: breakdown

Assets/Income components

2017 2016

Amortisation(a)

Net write-downs

for impairment

(b)

Write-backs (c)

Net profit (loss)

(a+b-c)

Amortisation(a)

Net write-downs

for impairment

(b)

Write-backs (c)

Net profit (loss)

(a+b-c)

A. Tangible fixed assets

A.1 Owned assets (674) - - (674) (738) - - (738)

- Business use (674) - - (674) (738) - - (738)



- Business use - - - - - - - -


Total (674) - - (674) (738) - - (738)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 12 - NET WRITE-DOWNS/WRITE-BACKS ON INTANGIBLE FIXED ASSETS - ITEM 18012.1 Net write-downs/write-backs on intangible fixed assets: breakdown

Assets/Income components

2017 2016

Amortisation(a)

Net write-downs

for impairment (b)

Write-backs(c)

Net profit (loss)

(a+b-c)

Amortisation(a)

Net write-downs

for impairment (b)

Write-backs(c)

Net profit (loss)

(a+b-c)

A. Intangible fixed assets

A.1 Owned assets (219) - - (219) (278) - - (278)

- Generated internally by the company - - - - - - - -

- Other (219) - - (219) (278) - - (278)


Total (219) - - (219) (278) - - (278)

SECTION 13 - OTHER OPERATING INCOME AND EXPENSES - ITEM 19013.1 Other operating expenses: breakdown


- Contingent liabilities not related to bank items 613 2,366

- Charges for thefts and robberies - -

- Depreciation of expenses for leasehold improvements 564 585

- Definition of disputes and claims 4,786 2,845

- Other miscellaneous expenses 18 26

- Impairment of fixed assets recognised in inventory - -

Total 5,981 5,822

13.2 Other operating income: breakdown


- Contingent assets not related to bank items 6,540 3,254

- Property rental income 129 -

- Recovery for services rendered to group companies 166 456

- Recovery of legal and notary expenses 10 47

- Recovery of postal expenses 96 117

- Other income 800 285

Total 7,741 4,159


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 14 - PROFIT (LOSS) OF INVESTMENTS - ITEM 21014.1 Profit (loss) of investments: breakdown


A. Income -

1. Revaluations -

2. Gains on disposal -

3. Write-backs -

4. Other income -

B. Costs (544) (731)

1. Write-downs (544) (731)

2. Write-downs for impairment - -

3. Losses on disposal - -

4. Other expenses - -

Net profit (loss) (544) (731)

Write-downs of equity investments made for realignment to accounting shareholders’ equity amounted to €/thou 544 of which €/thou 444 for the subsidiary Paomar III and €/thou 100 for the subsidiary Immobiliare D (€/thou 731 at 31.12.2016).

SECTION 18 - INCOME TAXES FOR THE YEAR ON ORDINARY ACTIVITIES - ITEM 26018.1 Income taxes for the year on ordinary activities: breakdown


1. Current tax payable (-) 4,047 2,589

2. Changes in current tax payable for previous years (+/-) (1) -

3. Reduction in current taxes payable for the year (+) - -

3.bis Decrease in current taxes for the year due to income tax credits pursuant to Law 214/2011 (+) 22,709 7,733

4. Change in deferred tax assets (+/-) (24,933) 13,560

5. Change in deferred tax liabilities (+/-) 165 -

6. Accrued income tax for the year (-) (-1+/-2+3+3 bis+/-4+/-5) 1,987 23,882

Component/Amounts 2017 2016

IRES 2,274 23,914

IRAP (287) (32)

Total tax for the year 1,987 23,882


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


18.2 Reconciliation between theoretical and actual reported tax burden Component/Amounts 2017

Theoretical IRES tax burden 12,376


Dividends 2,184

gains on disposal of equity investments (Pex regime) 2,510

other minor -


valuation of available-for-sale securities (117)

other non-deductible costs (485)

pro rata share of interest expense per Art. 96 of the Income Tax Consolidation Act -

figurative interest expenses, bond issues -

Non-deductible capital loss on equity investments ("Pex" scheme) -

other minor

Other

prepaid taxes for previous periods -

profits from transparent companies (508)

Additional reversal on recognition of DTAs on tax loss (13,519)

Higher IRES due in relation to previous year (168)

Actual tax burden 2,274

Component/Amounts 2017

Theoretical IRAP tax burden -


50% of dividends -


non-deductible costs -

pro-rata share of interest expenses pursuant to Art. 6 of Italian Legislative Decree 446/97 -

10% of administrative expenses -

10% of amortisation and depreciation -

other minor -

Other

prepaid taxes for available-for-sale valuation (392)

higher IRAP due in relation to previous year 104

Actual tax burden (287)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 19 – GAINS (LOSSES) ON NON-CURRENT ASSETS HELD FOR SALE, AFTER TAX – ITEM 28019.1 Profit (loss) on groups of assets held for sale, net of tax: breakdown


1. Income - -

2. Expenses - -

3. Result of evaluations of the group of assets and associated liabilities - -

4. Capital gains (losses) 9,379 -

5. Taxes and duties (98) -

Profit (loss) 9,281 -

19.2 Detail of income taxes relating to groups of assets/liabilities held for sale

2017 2016

1. Current taxes (-) (98) -

2. Change in deferred tax assets (+/-) - -

3. Change in deferred tax liabilities (+/-) - -

4. Income taxes for the year (-1+/-2 +/-3) (98) -

SECTION 20 - OTHER INFORMATIONThere is no additional information to report other than that provided in the sections above.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

C


SECTION 21 - EARNINGS PER SHAREIAS 33 requires indication of earnings per share, commonly known as EPS, which is calculated according to the following definitions:• “Basic EPS”, calculated dividing the net profit by the weighted average of ordinary shares issued;• “Diluted EPS”, calculated dividing the net profit by the weighted average of outstanding ordinary shares, taking into

account also the classes of instruments with dilutive effects.

21.1 Average number of diluted ordinary sharesThe average of ordinary shares used as denominator in the calculation of Basic EPS was determined using the number of outstanding ordinary shares at the end of each month, net of treasury shares in the portfolio at the same dates.The average of ordinary shares used as denominator of the calculation of Diluted EPS was determined using the number of outstanding ordinary shares at the end of each month (net of treasury shares in the portfolio at the same dates) and of those potentially outstanding.

2017 2016

Profit (loss) attributable

(€/thou.)

Weighted average of

ordinary shares

Euro

Profit (loss) attributable

(€/thou.)

Weighted average of

ordinary shares

Euro

Earnings per share

Basic EPS (43,115) 149,628,958 (0.288) (83,094) 149,616,570 (0.555)

Diluted EPS (43,115) 149,628,958 (0.288) (83,094) 149,616,570 (0.555)

21.2 Additional informationPlease see the disclosure provided in the previous point.

Notes to financial statements - Part D ■ 433

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

D


BREAKDOWN OF TOTAL PROFITABILITY(Thousands of €)

Items Gross amount

Income tax Net amount

10. Profit (Loss) for the year x x (43,115)


40. Benefit plans 31 (8) 23

Other income components reversed to the income statement

100. Financial assets available for sale

a) changes in fair value 10,255 (3,004) 7,251


- write-downs due to impairment 1,854 (481) 1,373

- capital gains/losses (2,664) 609 (2,055)


130. Total other income components 9,476 (2,884) 6,592

140. Comprehensive income (Item 10+130) (33,639) (2,884) (36,523)

Part D - STATEMENT OF COMPREHENSIVE INCOME

434 ■ Notes to financial statements - Part E

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


In this part of the Notes to the financial statements, information of a quantitative nature will be provided in relation to the risks of Banca Intermobiliare. For information of a qualitative nature in relation to the risk management procedures, please refer to the description provided in the notes to the consolidated financial statements - Part E.

SECTION 1 - CREDIT RISKINFORMATION OF A QUANTITATIVE NATURE

A. CREDIT QUALITY

A.1 IMPAIRED AND NON-IMPAIRED LOAN EXPOSURES: AMOUNTS, VALUE ADJUSTMENTS, TRENDS, ECONOMIC AND TERRITORIAL DISTRIBUTION

A.1.1 Distribution of financial assets by portfolio and credit quality (book values)

Portfolios/quality Non-performing loans

Probable defaults

Impaired expired

exposures

Non-impaired past-due

exposures

Non-impaired assets

Total

1. Financial assets available for sale - - - - 401,678 401,678


3. Loans to banks - - 106,330 106,330

4. Loans to clients 150,209 92,941 2,213 28,308 394,081 667,752

5. Financial assets designated at fair value - - - - - -

6. Financial assets held for sale - - - - - -

Total 2017 150,209 92,940 2,213 28,308 902,090 1,175,760

Total 2016 159,900 129,622 6,186 17,075 1,715,651 2,028,434

The Forborne Exposures of the “Loans to clients” portfolio, were €/Mln 118.4 for non-performing loans, €/Mln 57.3for Probable Defaults. In Non-impaired assets forborne exposures were €/Mln 18.5.

Details of non-impaired past-due exposuresIFRS 7 requires that for each financial asset that has not seen a reduction in value, the seniority should be provided of the past-due payments that are recognised when the counterparty fails to pay on the contractually due deadlines.On the basis of the definition of expired exposures provided by the aforesaid principle, the above table gives an analysis of seniority of exposures in relation to which the customer has failed to fulfil the payment of the amount due within the time provided for contractually. In addition, the amount indicated in the above table refers to overall exposure, regardless that is of the past-due instalment, which generally represents a non-significant proportion of the loan.

Part E - INFORMATION ON RISKS AND RELATED HEDGING POLICIES

Notes to financial statements - Part E ■ 435

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


Net non-impaired

exposures

Net non-past-due

exposures


up to3 months

From morethan 3 months

to 6 months


to 1 year

More than1 year


Loans to clients 422,389 394,081 27,539 479 290 -

A.1.2 Distribution of loan exposures by portfolio they belong to and loan quality (gross and net values)

Portfolios/quality Impaired assets Non-impaired assets Totale(esposizione

netta)Gross

exposureSpecific

adjustmentsNet

exposureGross

exposurePortfolio

adjustmentsNet

exposure

1. Financial assets available for sale - - - 401,678 - 401,678 401,678

2. Financial assets held to maturity - - - - - - -

3. Loans to banks - - 106,330 - 106,330 106,330

4. Loans to clients 622,803 (377,440) 245,363 425,239 (2,850) 422,389 667,752

5. Financial assets designated at fair value - - - - - - -

6. Financial assets held for sale - - - - - - -

Total 2017 622,803 (377,440) 245,363 933,247 (2,850) 930,397 1,175,760

Total 2016 630,895 (335,187) 295,708 1,735,917 (3,191) 1,732,726 2,028,434

Portfolios/quality Assets of evident low credit quality Other Assets

Accumulated capital losses

Net exposure Net exposure

1. Financial assets held for trading - 136 43,991

2. Hedging derivatives - - 1,607

Total 2017 - 136 45,598

Total 2016 - - 98,351

“Blank settlement” and “settlement for ongoing concerns”In its letter of 10 February 2014, the Bank of Italy requested us to provide adequate information on the size and evolution of the exposures subject to “blank settlements” and “settlements for ongoing concerns” which are to be classified within the impaired assets. In particular, the debtor may lodge an appeal for a “blank settlement” with creditors and shall accompany the application with only the financial statements for the past three financial years and the nominative list of creditors, reserving the right to submit the proposal, the plan and the additional documentation provided for, within a time limit set by the Court between sixty and one hundred and twenty days (in case of justified reasons, the time limit may be extended by an additional 60 days). Within that period the debtor also has the opportunity to ask the Court to approve a debt rescheduling agreement.On the other hand, the provision for “settlement for ongoing concerns” allows debtors in a state of crisis to present a settlement plan involving one of the following three assumptions: (i) continuation of the business by the debtor itself, (ii) sale of the company in the financial year, (iii) transfer of the company to one or more companies, also a newly-established one.The changes (law 134/2012 conversion of Italian Law Decree 83/2012 - so-called “Development Decree”- and Italian Law 98/2013 conversion of Italian Law Decree 69/2013) were introduced with the aim of promoting the early emergence of the entrepreneur’s compliance difficulties and to encourage the continuation of business under certain conditions.With reference to the situation of Banca Intermobiliare, we should specify that at 31 December 2017 in the loan portfolio with loans to clients there are gross exposures for “blank settlements” and “settlements for ongoing concerns” for €/Mln 11.2 (€/Mln 5.8 at 31.12.2016), classified as probable defaults.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.1.3 On- and off-balance-sheet loan exposures to banks: gross and net values and maturity bands


Spec

ific w

rite-

dow

ns

Port

folio

val

ue

adju

stm

ents

Net E

xpos

ure

Impaired assets Non-impaired assets

Up to

3 m

onth

s

From

mor

e th

an 3

mon

ths

Up

to 6

mon

ths

From

mor

e th

an 6

mon

ths

Up to

one

yea

r

Ove

r 1 y

ear

A. CASH EXPOSURES

a) Non-performing loans - - - - x - x -

- of which: forborne exposures - - - - x - x -

b) Probable defaults - - - - x - x -


c) Impaired past-due exposures - - - - x - x -


d) Non-impaired past-due exposures x x x x - x - -

- of which: forborne exposures x x x x - x - -

e) Other non-impaired exposures x x x x 141,750 x - 141,750

- of which: forborne exposures x x x x - x - -

TOTAL A - - - - 141,750 - - 141,750


a) Impaired - - - - x - x -

b) Non-impaired x x x x 11,234 x - 11,234

TOTAL B - - - - 11,234 - - 11,234

TOTAL A+B - - - - 152,984 - - 152,984

A.1.4 On-balance-sheet loan exposures to banks: trend of gross impaired exposuresNot applicable.

A.1.4bis On-balance-sheet loan exposures to banks: trend of gross forborne exposures distinguished by credit qualityNot applicable.

A.1.5 Impaired on-balance-sheet loan exposures to banks: trend of overall value adjustmentsNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.1.6 On- and off-balance-sheet loan exposures to clients: gross and net values and maturity bands


Spec

ific w

rite-

dow

ns

Port

folio

val

ue

adju

stm

ents

Net E

xpos

ure

Impaired assets Non-impaired assets

Up to

3 m

onth

s

From

mor

e th

an 3

mon

ths

Up to

6 m

onth

s

From

mor

e th

an 6

mon

ths

Up to

one

yea

r

Ove

r 1 y

ear

A. CASH EXPOSURES

a) Non-performing loans 118 655 2,872 475,481 x (328,917) x 150,209

- of which: forborne exposures 118 - 2,024 116,300 x (85,019) 33,423

b) Probable defaults 47,879 5,531 32,245 55,415 x (48,129) x 92,941

- of which: forborne exposures 30,309 1,403 8,581 17,002 x (18,895) x 38,400

c) Impaired past-due exposures 5 2,358 244 - x (394) x 2,213


d) Non-impaired past-due exposures x x x x 28,700 - (392) 28,308

- of which: forborne exposures x x x x - - 0 0

e) Other non-impaired exposures - - - - 791,530 - (2,458) 789,072

- of which: forborne exposures x x x x 18,572 x (113) 18,459

TOTAL A 48,002 8,544 35,361 530,896 820,230 (377,440) (2,850) 1,062,743


a) Impaired 618 - - - - (1) - 617

b) Non-impaired - - - - 63,737 - (102) 62,904

TOTAL B 618 - - - 63,737 (1) (102) 63,521

TOTAL A+B 48,620 8,544 35,361 530,896 883,237 (377,441) (2,952) 1,126,265

The amount of impaired forborne exposures, which in the “cure period” do not present past-due amounts included in the past-due band “Up to 3 months”, were at 31.12.2017 a gross amount of €/thou 32,234 and a net amount of €/thou 26,464 (at 31.12.2016 gross amount of €/thou 22,191 and net amount of €/thou 17,911) of which probable defaults for the following categories:• watchlist and restructured for a gross amount of €/thou 13,855 and a net amount of €/thou 10,253 (at 31.12.2016

gross amount of €/thou 10,887 and net amount of €/thou 9,420);• forborne non-performing positions for a gross amount of €/thou 18,379 and a net amount of €/thou 16,211

(at 31.12.2016 gross amount of €/thou 11,304 and net amount of €/thou 8,491).

Non-performing loans with debtors subject to insolvency proceduresBank of Italy Circular No. 272 of 30 July 2008 (and subsequent updates) provides for the right to proceed to derecognise any non-performing loans for the portion of the amount deemed unrecoverable. The regulation states that conditions for derecognition of the loan include the decision taken by the competent corporate bodies which, with specific deliberation, have definitively taken note of the non-recoverability of all or part of a claim or have waived recovery on the grounds of cost-effectiveness. Banca Intermobiliare did not avail itself of this option in 2017, or in prior years.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.1.7 On-balance-sheet loan exposures to clients: trend of gross impaired exposures

Description/Category Non-performing loans

Probable defaults


A. Opening gross exposure 445,980 177,468 7,447


B. Increases 43,378 45,742 6,746

B.1 inflows from performing exposures 818 29,894 6,675

B.2 transfers from other categories of impaired exposures 41,588 11,533 1

B.3 other increases 972 4,316 70

C. Decreases (10,232) (82,142) (11,586)

C.1 outflows from performing exposures - (2,921) (321)

C.2 derecognitions (59) - -

C.3 collections (9,405) (37,654) (478)

C.4 realisations on sales - - -

C.5 losses on sales - - -

C.6 transfers to other categories of impaired exposures (768) (41,567) (10,787)

C.7 other decreases - - -

D. Closing gross exposure 479,126 141,070 2,607


A.1.7 bis On-balance-sheet loan exposures to clients: trend of gross forborne exposures distinguished by credit quality

Description/Category Forborne exposures: impaired

Forborne exposures: non-impaired

A. Opening gross exposure 171,074 29,075


B. Increases

B.1 inflows from performing exposures not subject to forbearance 8,589 5,227

B.2 inflows from performing exposures not subject to forbearance 6,554 x

B.3 inflows from exposures subject to non-performing forbearance x 2,302

B.4 other increases 9,369 336

C. Decreases

C.1 outflows from performing exposures not subject to forbearance x

C.2 outflows from performing exposures subject to forbearance (2,302) x

C.3 outflows from performing exposures subject to non-performing forbearance (6,554)

C.4 derecognitions x -

C.5 collections (16,102) (11,816)

C.6 realisations on sales - -

C.7 losses on sales - -

C.8 other decreases (1,445) -

D. Closing gross exposure 175,737 18,572



NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.1.8 On-balance-sheet loan exposures to clients: trend in overall value adjustments

Description/Category Exposures Non-performing loans

Probable defaults


Total of which: forborne

exposures


exposures


exposures

A. Opening overall adjustments 286,080 69,423 47,846 18,554 1,261 -


B. Increases 48,697 18,116 24,432 14,788 976 -

B.1 Value adjustments 35,458 8,701 22,219 14,788 976 -

B.2 losses on sales 183 - - - - -

B.3. transfers from other categories of impaired exposures 13,056 9,415 2,213 - - -

B.4 other increases - - - - - -

C. Decreases (5,860) (2,520) (24,149) (14,447) (1,843) -

C.1. write-backs - - - - - -

C.2. write-backs for collection (3,337) (762) (10,772) (5,033) (6) -

C.3. gains on sales - - - - - -

C.4. derecognitions (142) (1,758) - - - -

C.5 transfer to other categories of impaired exposures (429) - (13,053) (9,415) (1,788) -

C.6 other decreases (1,952) - (324) - (48) -

D. Closing overall adjustments 328,917 85,019 48,129 18,895 394 -



NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.2 CLASSIFICATION OF EXPOSURES ON THE BASIS OF EXTERNAL AND INTERNAL RATINGSBanca Intermobiliare, for the purposes of determining the Internal Capital for credit risk, uses the standardised approach (comprehensive method) which is required for determining the supervisory requirements associated with credit risk. The standardised methodology provides the subdivision of exposures into various classes (portfolios) on the basis of the nature of the counterparty, the technical characteristics of the relationship or the methods of implementation of the latter; in addition, diversified weighting coefficients are applied to each portfolio.

In particular Banca Intermobiliare, for the purpose of determining the weighting factors of exposures, uses the following credit ratings issued by the specialized agencies as per ECA/ECAI Communication chosen under Circular 263 (Tit. II, Chap. 1, Part One, Section II, par. 2.1):

Portfolio ECA/ECAI Rating characteristics

Exposures with reference to central administrations and central banks DBRS Ratings Limited Unsolicited

Exposures with reference to multilateral development banks Moody’s Solicited

Exposures with reference to companies and other parties Moody’s Solicited

Exposures with reference to undertakings for collective investments (UCIs) Moody’s Solicited

Portfolio ECA/ECAI

Positions with reference to securitisations that have a short-term rating Standard & Poor’s Moody’s - Fitch

Positions with reference to securitisations that do not have a short-term rating Standard & Poor’s Moody’s - Fitch

As for other exposures not included within the regulatory classes listed above, reference is made to the various weighting factors which are provided by the regulations themselves for the standardised methodology.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.2.1 Distribuzione delle esposizioni creditizie per cassa e “fuori bilancio” per classi di rating esterni Exposures External rating classes Without

ratingTotal 2017AAA/AA- A+/A- BBB+/BBB- BB+/BB- B+/B- Below B-

A. On-balance-sheet loan exposures 2,512 495 380,759 11,593 42 - 817,295 1,212,696

B. Derivatives 12,643 12,643





E. Other - - 532 - 84 - 5,731 6,347

Total 2,512 495 381,291 11,593 126 - 891,434 1,287,451

Exposures External rating classes Withoutrating

Total 2016AAA/AA- A+/A- BBB+/BBB- BB+/BB- B+/B- Below B-

A. On-balance-sheet loan exposures 1,317 4,639 455,630 26,603 4,635 - 981,908 1,474,732

B. Derivatives 25,341 25,341





E. Other - 532 7,717 9,144 - - 11,471 28,863

Total 1,317 5,171 463,347 35,747 4,635 - 1,159,518 1,669,734

A.2.2 Distribution of on- and off-balance sheet loan exposures by internal rating classes Not applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.3 DISTRIBUTION OF GUARANTEED LOAN EXPOSURES BY TYPE OF GUARANTEE

A.3.1 Guaranteed loan exposures to banks

Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er co

llate

ral

Gove

rnm

ents

and

ce

ntra

l ban

ks

Oth

er p

ublic

en

titie

s

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ks

Oth

er p

ublic

en

titie

s

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balance sheet loan exposures:





2. Guaranteed “off-balance sheet” loan exposures:





Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er co

llate

ral

Gove

rnm

ents

and

ce

ntra

l ban

ks

Oth

er p

ublic

en

titie

s

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ks

Oth

er p

ublic

en

titie

s

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balance sheet loan exposures:





2. Guaranteed “off-balance sheet” loan exposures:






NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.3.2 Guaranteed loan exposures to clients

Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er co

llate

ral

Gove

rnm

ents

and

ce

ntra

l ban

ksO

ther

pub

lic

entit

ies

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ksO

ther

pub

lic

entit

ies

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balancesheet loan exposures:

1.1. Totally guaranteed 485,332 331,117 - 105,299 14,816 - - - - - - - 251 33,771 485,254


1.2. partially guaranteed 123,146 33,985 - 4,947 3,890 - - - - - - - 40,000 2,300 85,122

- of which impaired 47,124 31,592 - 2,658 - - - - - - - - - 2,300 36,550

2. Guaranteed “off-balancesheet” loan exposures:





Valu

e of

net

exp

osur



C L

N Other derivatives

Real

Est

ate

- m

ortg

ages

Real

est

ate

- fin

ancia

l lea

sing

Secu

ritie

s

Oth

er co

llate

ral

Gove

rnm

ents

and

ce

ntra

l ban

ksO

ther

pub

lic

entit

ies

Bank

s

Oth

er p

artie

s

Gove

rnm

ents

and

ce

ntra

l ban

ksO

ther

pub

lic

entit

ies

Bank

s

Oth

er p

artie

s

1. Guaranteed on-balancesheet loan exposures:

1.1. Totally guaranteed 562,871 368,276 - 142,177 14,057 - - - - - - - - 38,272 562,782


1.2. partially guaranteed 133,244 32,063 - 9,711 4,196 - - - - - - - 40,000 3,437 89,407

- of which impaired 51,555 29,670 - 5,242 88 - - - - - - - - 3,437 38,437

2. Guaranteed “off-balancesheet” loan exposures:

2.1. Totally guaranteed 12,228 - - 7,019 924 - - - - - - - - 4,285 12,228





NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


B. DISTRIBUTION AND CONCENTRATION OF CREDIT EXPOSURES

B.1 DISTRIBUTION OF ON- AND OFF-BALANCE-SHEET LOAN EXPOSURES TO CLIENTS (BOOK VALUES) BY SECTOR

Exposures/counterparties Governments Other public entities Financial companies

Net e

xpos

ure

Spec

ific

writ

e-do

wns

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Spec

ific

writ

e-do

wns

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Spec

ific

writ

e-do

wns

Valu

e ad

just

men

ts o

f por

tfol

io


A.1 Non-performing loans - - - - 2,431 16,990

- of which: forborne exposures - - - - 410 11,882

A.2 Probable defaults - - - - 606 461

- of which: forborne exposures - - - - - -

A.3 Impaired past-due exposures - - - - - -


A.4 Other exposures 373,474 - 2,930 - 71,917 574


TOTAL (A) 373,474 - - 2,930 - - 74,954 17,451 574



B.2 Probable defaults - - - - - -


B.4 Other exposures 25,180 - - - 12,060 1

TOTAL (B) 25,180 - - - - - 12,060 - 1

Total 2017 398,654 - - 2,930 - - 87,014 17,451 575

Total 2016 598,906 - - - - - 96,064 17,687 649


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


Exposures/counterparties Insurance companies Non-financial companies Other parties

Net e

xpos

ure

Spec

ific

writ

e-do

wns

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Spec

ific

writ

e-do

wns

Valu

e ad

just

men

ts o

f por

tfol

io

Net e

xpos

ure

Spec

ific

writ

e-do

wns

Valu

e ad

just

men

ts o

f por

tfol

io


A.1 Non-performing loans - - 114,988 261,563 32,790 50,364

- of which: forborne exposures - - 22,561 66,833 10,452 6,304

A.2 Probable defaults - - 73,099 38,197 19,236 9,471

- of which: forborne exposures - - 26,478 14,437 11,923 4,458

A.3 Impaired past-due exposures - - 1,996 354 217 40


A.4 Other exposures 205 - 192,092 1,239 176,762 1,037

- of which: forborne exposures - - 17,277 106 1,182 7

TOTAL (A) 205 - - 382,175 300,114 1,239 229,005 59,875 1,037



B.2 Probable defaults - - 269 - 348 1


B.4 Other exposures - - 14,718 45 10,824 57

TOTAL (B) - - - 14,987 - 45 11,171 1 57

Total 2017 205 - - 397,162 300,114 1,284 240,176 59,876 1,094

Total 2016 - - - 496,192 261,063 2,148 371,095 56,467 857


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


B.2 TERRITORIAL DISTRIBUTION OF ON- AND OFF-BALANCE SHEET LOAN EXPOSURES TO CLIENTS (BOOK VALUES)

Exposures/geographical areas ITALY OTHER EUROPEANCOUNTRIES


Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts


A.1 Non-performing loans 149,772 328,654 420 243 17 20 - - - -

A.2 Probable defaults 92,940 48,129 1 - - - - - - -

A.3 Impaired past-due exposures 2,213 394 - - - - - - - -

A.4 Other exposures 811,579 2,834 5,096 11 193 1 507 4 5 -

TOTAL 1,056,504 380,011 5,517 254 210 21 507 4 5 -



B.2 Probable defaults 617 1 - - - - - - - -

B.3 Impaired past-due exposures - - - - - - - - - -

B.4 Other exposures 49,832 95 12,936 7 14 - - - - -

TOTAL 50,449 96 12,936 7 14 - - - - -

TOTAL 2017 1,106,953 380,107 18,453 261 224 21 507 4 5 -

TOTAL 2016 1,556,614 338,545 5,816 284 1,192 39 413 1 222 -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


B.3 TERRITORIAL DISTRIBUTION OF ON- AND OFF-BALANCE SHEET LOAN EXPOSURES TO BANKS (BOOK VALUES)

Exposures/geographical areas ITALY OTHER EUROPEANCOUNTRIES


Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts

Net e

xpos

ure

Ove

rall

valu

e ad

just

men

ts


A.1 Non-performing loans - - - - - - - - - -

A.2 Probable defaults - - - - - - - - - -

A.3 Impaired past-due exposures - - - - - - - - - -

A.4 Other exposures 119,761 - 21,714 - 144 - - - 131 -

TOTAL 119,761 - 21,714 - 144 - - - 131 -



B.2 Probable defaults - - - - - - - - - -

B.3 Impaired past-due exposures - - - - - - - - - -

B.4 Other exposures 1,451 - 3,559 - - - - - - -

TOTAL 1,451 - 3,559 - - - - - - -

TOTAL 2017 121,212 - 25,273 - 144 - - - 131 -

TOTAL 2016 595,301 - 36,745 - 45 - - - 159 -

B.4 LARGE EXPOSURESPresented below is the disclosure of the separate financial statements of Banca Intermobiliare related to “large exposures” as per Regulation (EU) no. 680/2014 Annex IX which establishes the implementing technical standards on the subject of large exposures under the terms of Regulation (EU) no. 575/2013. The supervisory body defines “large exposure” as the exposure of an entity to a customer or a group of connected clients, when its value is equal to or greater than 10% of its Own Funds.

A customer is an individual person or a “group of connected clients” this being two or more persons who together constitute a unified whole as regards risk, since:a) one of the persons has the power to control the other or others, whether directly or indirectly (a “legal”

connection);b) regardless of the existence of relationships of control, there are among the persons in question relations which are

such that, in all probability, if one of them were to be in a position of financial difficulty, particularly insofar as raising funds or repaying debts, the other, or all the others, could encounter difficulties in reimbursing their debts (an “economic” connection).

At 31 December 2017, there existed certain risk positions, weighted as the specific rules require, which constitute “large exposures” pursuant to the supervisory regulations. As required by the Bank of Italy, the separate large exposures are presented below with an indication of both the book value and the weighted value.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


Exposure to large exposures

(Millions of €)

31.12.2017 31.12.2016


a) Amount 970 250 2,072 310

b) Number 11 11 13 13

Exposure to large exposures - by category

(Millions of €)

31.12.2017 31.12.2016


Impaired 3 74 70 4 110 96

Clients 4 89 48 3 131 101

Banca Intermobiliare Group 1 161 30 1 1,013 28

Banks 1 134 102 3 85 85


Total large exposures 11 970 250 13 2.072 310

As of 31.12.2017, excluding from the 11 positions a leading Italian banking group, the exposure towards the companies of the Banca Intermobiliare Banking Group and the 2 institutions (Italian Ministry of the Economy and the Cassa di Compensazione e Garanzia (the Clearing House)), the remaining positions consist of 4 “performing” loan exposures and 3 “impaired” loan exposures for a total weighted exposure of approximately €/Mln 118. Of these one position exceeds the parameters pursuant to Art. 395 paragraph 1 of Regulation (EU) no. 575/2013 (CRR) and relates to the exposure to an impaired customer for which Banca Intermobiliare is studying the possibility of disposing of the receivable.

C. SECURITISATION TRANSACTIONS

Not applicable.

D. DISCLOSURE ON STRUCTURED ENTITIES NOT CONSOLIDATED IN THE ACCOUNTS (OTHER THAN VEHICLE COMPANIES FOR SECURITISATION)

Not applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


E. DISPOSALS

A. Financial assets which were transferred but not derecognised


The transactions mainly involve the use of securities in the portfolio for short and medium long term repurchase agreements or securities lending.


E.1 Financial assets which were transferred but not derecognised: book value and full value

Categories/Portfolio


Financial assets designated at fair value

Financial assets availablefor sale

Financial assets held

to maturity

Loans to banks

Loans to clients

Total

A B C A B C A B C A B C A B C A B C 2017 2016


1. Debt securities - - - - - - 48,188 - - - - - - - - - - - 48,188 403,857

2. Equity securities - - - - - - - - - x x x x x x x x x - -

3. UCIs - - - - - - - - - x x x x x x x x x - -

4. Loans - - - - - - - - - - - - - - - - - - - -

B. Derivative Instruments - - - x x x x x x x x x x x x x x x - -

TOTAL 2017 - - - - - - 48,188 - - - - - - - - - - - 48,188 x

of which impaired - - - - - - - - - - - - - - - - - - - x

TOTAL 2016 - - - - - - 403,857 - - - - - - - - - - - x 403,857

of which impaired - - - - - - - - - - - - - - - - - - x -

Key:A = transferred financial assets that were recognised in full (book value)B = transferred financial assets that were recognised in part (book value)C = transferred financial assets that were recognised in part (full value)

At 31 December 2017, the transfer operations that did not involve the derecognition from the balance sheet of the underlying financial assets were represented solely by operations of repurchase agreements and securities lending.For REPOs and securities lending operations, the non-derecognition of the security that was the subject of spot sales comes from the fact that the Bank substantially retains all the risks and benefits associated with the security, having the obligation to repurchase at a forward rate established in the contract. The transferred securities thus continue to be represented in their relevant accounting portfolios; the consideration for the sale is recognised under payables due to banks or to clients, depending on the type of counterparty.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


E.2 Financial liabilities related to financial assets which were transferred but not derecognised: book value

Liability/Asset portfolio Financial assets held for trading

Financial assets designated at

fair value

Financial assets available for

sale


Loans to banks

Loans to clients

Total 2017

1. Due to clients

a) in connection with fully booked assets 1,875 - - - - - 1,875


2. Due to banks

a) in connection with fully booked assets - - 20,963 - - - 20,963


TOTAL 2017 1,875 - 20,963 - - - 22,838

TOTAL 2016 8,200 - 367,238 - - - 375,438

This table includes liabilities recognised among the payables “Due to clients” or “Due to banks” in relation to transfers of financial assets that did not result in derecognition, as shown at the bottom of the previous table E.1.

E.3 Disposals with liabilities affecting the sold assets exclusively: fair valueNot applicable.

B. Financial assets sold and fully derecognised with recognition of continuing involvement

Not applicable.

E.4 Covered bond operationsNot applicable.

F. MODELS FOR MEASURING CREDIT RISK

Please refer to the information of a qualitative nature on credit risk (2.2 Management, measurement and control system).


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


SECTION 2 - MARKET RISK

2.1 INTEREST RATE RISK AND PRICE RISK - REGULATORY TRADING BOOK


This section includes only financial instruments (assets and liabilities) that are part of the “regulatory trading book” as defined in Circular 286 of 17 December 2013 regarding supervisory reporting on market risks. Therefore it excludes any operations allocated in the balance sheet to the trading portfolio, such as: loans or derivatives separated from assets or liabilities measured at amortised cost or from own-issued securities.The qualitative information about the measurement of interest rate risk and price risk related to the regulatory trading book is provided in the notes to the consolidated financial statements - Part E to which reference is made.


1. Regulatory trading book: distribution by residual duration (re-pricing date) of on-balance sheet financial assets and liabilities and financial derivatives


2. Regulatory trading book: distribution of exposure in equity securities and stock indices within the primary countries of the listing market

This table has not been drafted given that a price risk sensitivity analysis was supplied on the basis of internal models or other methodologies, such as those illustrated in point 3.

3. Regulatory trading book: internal models and other methodologies for sensitivity analysis

Interest rate riskThe interest rate risk of the trading book is monitored in terms of Value at Risk and scenario analysis. In particular, a sensitivity analysis is implemented; this allows the measurement of the values of positions within proprietary portfolios following a “shock” to the interest rate curve. Parallel movements are considered, whether upwards are downwards of 100 and 200 basis points on the Euro area yield curve. The effects on the net operating income and the economic result were exclusively quantified for positions classified as HFT and whose mark-to-market changes are directly reflected in the income statement.

Sensitivity analysis of the trading book

(Effects on the net operating income - in €/Mln)

Risk Scenario 31.12.2017 31.12.2016

Interest Rate Euro std + 100 bp (0.296) (0.549)

Interest Rate Euro std - 100 bp 0.319 0.530



Price and volatility riskThe price risk of the trading book is monitored in terms of Value at Risk and scenario analysis. In particular, a sensitivity analysis is implemented; it allows the measurement of the values of stock positions within proprietary portfolios following changes in prices and volatility. The effects on net operating income and the economic result were exclusively quantified for positions classified as HFT and whose mark-to-market changes are recognised directly in the income statement.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


Sensitivity analysis of the trading book (Effect on net operating income)

Risk Scenario 31.12.2017 31.12.2016


Equity Equity +5% (0.374) (0.100)


Equity Equity +10% (0.748) (0.201)


Equity Equity +20% (1.496) (0.402)


Equity Equity +40% (2.993) (0.804)

Risk Scenario 31.12.2017 31.12.2016

Equity Volatility -5% - -

Equity Volatility +5% - -





2.2 INTEREST RATE AND PRICE RISK - BANKING BOOK


The “banking book” consists of all financial assets and liabilities, not included in the trading book referred to in Section 2.1. The qualitative information about the measurement of interest rate risk and price risk on the banking book is provided in the Notes to the consolidated financial statements - Part E to which one should refer.


1. Banking book: distribution by residual duration (re-pricing date) of financial assets and liabilities

This table has not been drafted given that an interest rate and price risk sensitivity analysis was supplied on the basis of internal models or other methodologies, such as those illustrated in point 2.

2. Banking book: internal models and other methodologies for sensitivity analysis

Interest rate riskThe interest rate risk of the banking book is monitored with the help of a sensitivity analysis that makes it possible to measure the changes in the value of the positions of the assets in the proprietary financial portfolios following the “shock” of the interest rate curve. Parallel movements of 100/200 bps in the Euro area market interest rate curve are taken into account.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


Sensitivity analysis: banking book (only debt securities of the AFS portfolio)

Risk Scenario 31.12.2017 31.12.2016





In addition, a sensitivity analysis is performed on all the banking book.

Sensitivity analysis: banking book (overall)(Values expressed in percentage points)

Risk index due to shift (+/-) +100 bp -100 bp

Economic value at risk / Regulatory Capital 0.58% 0.91%

Banca Intermobiliare has an exposure to interest rate risk that is substantially neutral to the variations in interest rates. As a consequence, the economic value at risk is fully compatible with the Regulatory Capital and significantly lower than the warning threshold (20% with reference to the Regulatory Capital for a shift in the interest rate curve of 200 bps). As indicated in Part F - Section 2 of the notes to the consolidated financial statements to which you are referred, the consolidated regulatory capital and capital ratios are shown for information only and have been provided on a voluntary basis.

Price riskThe Price risk of the “banking book” is monitored in terms of Value at Risk (as regards the investments made in the AFS, HTM and L&R portfolio) and scenario analysis.In particular a sensitivity analysis is carried out that measures the change in value of the equity positions in the proprietary portfolios as a result of fluctuations in prices and a change in credit spreads with respect to debt securities.

Sensitivity analysis: banking book (only active)

Risk Scenario 31.12.2017 31.12.2016

Equity Equity -10% (0.937) (5.496)

Equity Equity +10% 0.937 5.496

Equity Equity -20% (1.874) (10.992)

Equity Equity +20% 1.874 10.992

Equity Equity -40% (3.749) (21.983)

Equity Equity +40% 3.749 21.983

Risk Scenario 31.12.2017 31.12.2016

Credit Curve Credit Curve – 100 bp 17.594 24.007

Credit Curve Credit Curve + 100 bp (15.645) (21.073)

Credit Curve Credit Curve – 200 bp 37.445 51.553

Credit Curve Credit Curve + 200 bp (29.599) (39.689)


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


2.3 EXCHANGE RATE RISK


This section includes all the assets and liabilities (on- and off-balance sheet) in foreign currencies, including transactions in Euro linked to the performance of currency exchange rates. Gold transactions are also assimilated to currency relationships. Information of a qualitative nature on the measurement of exchange rate risk is provided in the Notes to the consolidated financial statements - Part E.


1. Distribution of assets, liabilities and derivatives by currency of denomination

Items Currencies

USD Pounds Yen Canadian Dollars

Swiss Francs

Other currencies

A. Financial assets 12,267 7,696 47 44 7,393 2,066

A.1 Debt securities - - - - - 2

A.2 Equity securities - - - - - -

A.3 Loans to banks 11,496 7,093 47 - 1,691 889

A.4 Loans to clients 771 603 - 44 5,701 1,175

A.5 Other financial assets - - - - - -

B. Other assets - - - - - -

C. Financial liabilities (8,092) (7,857) (28) (170) (887) (1,447)

C.1 Due to banks (4) (109) (27) (136) (370) (1,288)

C.2 Due to clients (8,088) (7,747) (1) (34) (518) (159)

C.3 Outstanding securities - - - - - -

C.4 Financial liabilities - - - - - -

D. Other liabilities - - - - - -

E. Financial derivatives (1,107) (4,433) (36) 29 (5,574) (411)

- Options - - - - - -

+ Long positions 240,975 7,301 26,731 298 554 7,367

+ Short positions (240,975) (7,301) (26,731) (298) (554) (7,367)

- Others (1,107) (4,434) (36) 29 (5,573) (411)

+ Long positions 209,031 44,987 37,965 58 4,261 30,475

+ Short positions (210,138) (49,421) (38,001) (29) (9,834) (30,886)

Total assets 462,273 59,984 64,743 401 12,207 39,908

Total liabilities (459,205) (64,579) (64,761) (498) (11,275) (39,700)

Imbalance (+/-) 3,068 (4,595) (17) (97) 931 209

2. Internal models and other methodologies for sensitivity analysis

The exchange rate risk of the trading book is monitored in terms of Value at Risk and scenario analysis. In particular, a sensitivity analysis is implemented; this makes it possible to measure the values of positions in proprietary portfolios following a change in exchange rates and volatility of +/- 1%. The effects on net operating income and the economic result were exclusively quantified for positions classified as HFT and whose mark-to-market changes are recognised directly in the income statement. Given the composition of the Banca Intermobiliare S.p.A. trading book at 31 December 2017, the foreign exchange risk is negligible.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


2.4 DERIVATIVE INSTRUMENTS

This section includes financial and credit derivatives traded autonomously and derivatives embedded in structured instruments.

A. FINANCIAL DERIVATIVES

A.1 Regulatory trading book: end-of-period notional values

Underlying assets/types of derivatives 2017 2016

Over the counter


Over the counter



a) Options 50,394 - 82,936 -

b) Swaps 160,295 - 138,209 -

c) Forwards - - - -

d) Futures 6,269 - 2,797 -

e) other - - - -

2. Equity securities and stock indices 5,167 - 29,829 -

a) Options 5 - 20,738 -

b) Swaps - - 9,091 -

c) Forwards - - - -

d) Futures 5,162 - - -

e) other - - - -

3. Currencies and gold 2,225,135 - 5,789,093 -

a) Options 1,748,468 - 4,917,149 -

b) Swaps - - - -

c) Forwards 476,667 - 871,944 -

d) Futures - - - -

e) other - - - -

4. Goods - - 20,634 -


Total 2,447,260 - 6,063,498 -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.2 Banking book: end-of-period notional values

A.2.1 Of hedging

Underlying assets/type of derivatives 2017 2016

Over the counter


Over the counter



a) Options - - - -

b) Swaps 305,150 - 475,050 -

c) Forwards - - - -

d) Futures - - - -

e) other - - - -

2. Equity securities and stock indices - - - -

a) Options - - - -

b) Swaps - - - -

c) Forwards - - - -

d) Futures - - - -

e) other - - - -

3. Currencies and gold - - - -

a) Options - - - -

b) Swaps - - - -

c) Forwards - - - -

d) Futures - - - -

e) other - - - -

4. Goods - - - -


Total 305,150 - 475,050 -

A.2.2 Other derivativesNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.3 Financial derivatives: gross positive fair value - breakdown by product

Underlying assets/type of derivatives Positive fair value

2017 2016

Over the counter


Over the counter



a) Options 9,493 - 41,447 -




e) Forwards 2,726 - 9,635 -

f) Futures - - - -

g) Others - - - -


a) Options - - - -




e) Forwards - - - -

f) Futures - - - -

g) Others - - - -


a) Options - - - -




e) Forwards - - - -

f) Futures - - - -

g) Others - - - -

Total 16,953 - 54,830 -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.4 Financial derivatives: gross negative fair value - breakdown by product


2017 2016

Over the counter


Over the counter



a) Options 9,456 - 41,440 -




e) Forwards 2,688 - 9,581 -

f) Futures - - - -

g) Others - - - -


a) Options - - - -




e) Forwards - - - -

f) Futures - - - -

g) Others - - - -


a) Options - - - -




e) Forwards - - - -

f) Futures - - - -

g) Others - - - -

Total 24,184 - 68,227 -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.5 OTC financial derivatives - regulatory trading book: notional values, positive and negative gross notional & fair values by counterparty - contracts not falling under clearing agreements



Banks

Other public

entities


Insurance companies


Other parties


- notional value - - 6,269 - - 48,697 -

- positive fair value - - - - - 1,881 -


- future exposure - - - - - 403 -

2. Equity securities and stock indices

- notional value - - 5,167 - - - -



- future exposure - - 310 - - - -

3. Currencies and gold

- notional value - - 62,856 125,978 - 9,172 78,936

- positive fair value - - 634 1 - 227 1,556

- negative fair value - - 265 1,755 - - 227

- future exposure - - 962 1,260 - 83 788

4. Other valuables






NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.6 OTC financial derivatives - regulatory trading book: notional values, positive and negative gross notional & fair values by counterparty - contracts falling under clearing agreements Contracts falling under clearing agreements


Banks

Other public

entities


Insurance companies


Other parties


- notional value - - 136,648 25,192 - 152 -

- positive fair value - - 1,524 607 - 1 -

- negative fair value - - 3,721 268 - - -

2. Equity securities and stock indices




3. Currencies and gold

- notional value - - 1,121,892 826,301 - - -

- positive fair value - - 6,741 2,169 - - -

- negative fair value - - 5,114 3,928 - - -

4. Other valuables




A.7 OTC financial derivatives - banking book: positive and negative gross notional and fair values by counterparty - contracts not falling under clearing agreementsNot applicable.

A.8 OTC financial derivatives - banking book: positive and negative gross notional and fair values by counterparty - contracts falling under clearing agreementsNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


A.9 Residual life of OTC financial derivatives: notional values

Underlying assets / Residual duration Up to one year More than one year and up to five years

Over 5 years

Total

A. Regulatory trading book 2,220,768 163,965 62,527 2,447,260

A.1 Financial derivatives on debt securities and interest rates 129,085 25,346 62,527 216,958

A.2 Financial derivatives on equity securities and stock indices 5,167 - - 5,167

A.3 Financial derivatives on exchange rates and gold 2,086,516 138,619 - 2,225,135

A.4 Financial derivatives on other valuables - - - -

B. Banking book 238,550 - 66,600 305,150

B.1 Financial derivatives on debt securities and interest rates 238,550 - 66,600 305,150

B.2 Financial derivatives on equity securities and stock indices - - - -

B.3 Financial derivatives on exchange rates and gold - - - -

B.4 Financial derivatives on other valuables - - - -

Total 2017 2,459,318 163,965 129,127 2,752,410

Total 2016 5,980,597 452,435 105,516 6,538,548 A.10 OTC financial derivatives: counterparty risk / financial risk - Internal models

Banca Intermobiliare does not utilise internal models of the EPE type for the purposes of measuring counterparty and financial risk; instead, the bank uses a method based on current values.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


B. CREDIT DERIVATIVES

B.1 Credit derivatives: end-of-period notional values

Transaction categories Regulatory trading book Banking book

On a single party


On a single party



a) Credit default products 5,003 - - -



d) Others - - - -

Total 2017 5,003 - - -

Total 2016 7,692 - - -

2. Protective sales

a) Credit default products - - - -



d) Others - - - -

Total 2016 - - - -

Total 2015 - - - -

Credit derivatives refer to Credit Default Swaps with underlying bond securities.

B.2 OTC credit derivatives: gross positive fair value - breakdown by product


2017 2016



b) Credit spread products -

c) Total rate of return swaps -

d) Others -

2. Banking book – for hedging -

a) Credit default products -

b) Credit spread products -

c) Total rate of return swaps -

d) Others -

Total 48 249

B.3 OTC credit derivatives: gross negative fair value - breakdown by productNot applicable.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


B.4 OTC credit derivatives: positive and negative gross notional & fair values by counterparty - contracts not falling under clearing agreementsNot applicable.

B.5 OTC credit derivatives: positive and negative gross notional & fair values by counterparty - contracts falling under clearing agreements

Contracts falling under clearing agreements


Banks

Other public

entities


Insurance companies


Other parties

Regulatory trading book


- notional value - - 5,003 - - - -


- negative fair value - - 42 - - - -

2. Protective sales

- notional value - - - 3,969 - - -

- positive fair value - - - 42 - - -

- negative fair value - - - 5 - - -

Banking book





2. Protective sales




B.6 Residual life of credit derivatives: notional values

Underlying assets / Residual duration Up to one year More than one year and up to five years

Over 5 years

Total

A. Regulatory trading book - 8,972 - 8,972

A.1 Derivatives on loans with “qualified” reference obligation - - - -

A.2 Derivatives on loans with “non-qualified” reference obligation - 8,972 - 8,972

B. Banking book - - - -

B.1 Derivatives on loans with “qualified” reference obligation - - - -

B.2 Derivatives on loans with “non-qualified” reference obligation - - - -

Total 2017 - 8,972 - 8,972

Total 2016 - 13,208 - 13,208 B.7 Credit derivatives: counterparty risk and financial risk - Internal modelsBanca Intermobiliare does not utilise internal models of the EPE type for the purposes of measuring counterparty and financial risk; instead, the bank uses a method based on current values.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


C. FINANCIAL AND CREDIT DERIVATIVES

C.1 OTC Financial derivatives and credit derivatives: net fair value and future exposure by counterparty


Banks

Otherpublic

entities


Insurance companies


Other parties

1) Bilateral agreements: financial derivatives

- positive fair value - - 4,368 - - 1 -


- future exposure - - 6,218 - - - -


2) Bilateral agreements: credit derivatives





3) “Cross product” agreements


- negative fair value - - 112 1,383 - - -

- future exposure - - 100 2,911 - - -


This table includes the financial derivatives shown in Tables A.6 and A.8 and the credit derivatives shown in Table B.5.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


SECTION 3 - LIQUIDITY RISK


The qualitative information about the main sources of liquidity risk, management policies and the organisational structure responsible for monitoring such risks as well as the internal systems of measurement and liquidity risk controls are described in the notes to the consolidated financial statements - Part E to which one should refer.


The liquidity indicators presented above remained for the whole of financial year 2017 within the regulatory and operational risk limits provided for in the Group’s current Liquidity Policy.

At 31.12.2017 the Liquidity Coverage Ratio (LCR) was 114.9% (136.4% at 31.12.2016 on a separate basis) and remained above the regulatory limit current until 31 December 2017 of 80%, as laid down in Circular no. 285. Starting from 1 January 2018 the said limit will be 100%.

As regards the Net Stable Funding Ratio (NSFR) indicator, for which a regulatory limit is not yet provided for, and which is therefore calculated only for management and monitoring purposes, at 31 December 2017 the indicator was 86.07% in line with the figure for the previous year.


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


1. Time distribution by contractual residual duration of financial assets and liabilities

Currency of denomination: Euro

Items/Time distribution On demand From more than 1 day to 7 days

From more than 7 days to 15 days

From more than 15 days to 1 month

From more than 1

month to 3 months

From more than 3

months to 6 months


to 1 year

From more than 1 year to 5 years

Over 5 years

Indeterminate

On-balance-sheet assets 265,539 5,289 1,412 27,462 17,196 21,663 29,782 549,876 265,522 10,140

A.1 Government securities - - 11 2 1,111 566 572 168,547 167,656 -

A.2 Other debt securities - - 60 1 2,286 275 2,497 39,247 8,820 -

A.3 UCIs units 8,202 - - - - - - - - -

A.4 Loans 257,337 5,289 1,341 27,459 13,799 20,822 26,713 342,082 89,046 10,140

- banks 69,686 5,289 - - - - - - - 10,140

- clients 187,651 - 1,341 27,459 13,799 20,822 26,713 342,082 89,046 -

Cash liabilities (1,029,221) - (635) (507) (74,429) (86,219) (27,565) (23,739) (18,549) -

B.1 Deposits and current accounts (1,002,017) - (635) (507) (18,273) (86,219) (9,613) (15,769) (119) -

- banks (141,525) - - - (13,000) - - - - -

- clients (860,492) - (635) (507) (5,273) (86,219) (9,613) (15,769) (119) -

B.2 Debt securities - - - - (35,188) - (17,952) (7,970) - -

B.3 Other liabilities (27,204) - - - (20,968) - - - (18,430) -

“Off-balance sheet” operations - - - - - - - - - -

C.1 Financial derivatives with exchange of capital 102 11,502 (44) 7 20 - 1 (14) (1) -

- long positions 102 65,122 6,386 73,464 211,346 105,991 10,014 1,494 - -

- short positions - (53,620) (6,430) (73,457) (211,326) (105,991) (10,013) (1,508) (1) -

C.2 Financial derivatives without exchange of capital (7) 166 - 301 (146) (492) (220) - - -

- long positions 3,127 166 - 301 - 318 760 - - -

- short positions (3,134) - - - (146) (810) (980) - - -


- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.4 Irrevocable commitments to issue funds (4,420) - - - - 107 2 1,803 2,508 -

- long positions 341 - - - - 107 2 1,803 2,508 -

- short positions (4,761) - - - - - - - - -



C.7 Credit derivatives with exchange of capital 5,003 - - - - - - - - -

- long positions 5,003 - - - - - - - - -

- short positions - - - - - - - - - -


- long positions - - - - - - - - - -

- short positions - - - - - - - - - -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


Currency of denomination: other currencies

Items/Time distribution On demand From more than 1 day to 7 days

From more than 7 days to 15 days

From more than 15 days to 1 month

From more than 1

month to 3 months

From more than 3

months to 6 months


to 1 year

From more than 1 year to 5 years

Over 5 years

Indeterminate

On-balance-sheet assets 29,490 - - 2 - - - 44 - -

A.1 Government securities - - - - - - - - - -

A.2 Other debt securities - - - 2 - - - - - -

A.3 UCIs units - - - - - - - - - -

A.4 Loans 29,490 - - - - - - 44 - -

- banks 21,217 - - - - - - - - -

- clients 8,274 - - - - - - 44 - -

Cash liabilities (18,481) - - - - - - - -

B.1 Deposits and current accounts (18,481) - - - - - - - -

- banks (1,934) - - - - - - - - -

- clients (16,547) - - - - - - - - -

B.2 Debt securities - - - - - - - - -

B.3 Other liabilities - - - - - - - - -

“Off-balance sheet” operations (101) (11,479) 43 2 1 (1) - 2 -

C.1 Financial derivatives with exchange of capital (101) (11,479) 43 2 1 (1) - 2 -

- long positions - 83,554 12,117 121,797 229,184 109,446 31,904 22,001 - -

- short positions (101) (95,033) (12,073) (121,795) (229,183) (109,447) (31,904) (21,999) - -

C.2 Financial derivatives without exchange of capital - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.3 Deposits and receivable loans - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.4 Irrevocable commitments to issue funds - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.5 Financial guarantees issued - - - - - - - - -

C.6 Financial guarantees received - - - - - - - - -

C.7 Credit derivatives with exchange of capital - - - - - - - - -

- long positions - - - - - - - - - -

- short positions - - - - - - - - - -

C.8 Credit derivatives without exchange of capital - - - - - - - - -

- long positions 48 - - - - - - - - -

- short positions (48) - - - - - - - - -


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

E


SECTION 4 - OPERATIONAL RISKSFor information on methods for identifying and monitoring operational risks, please refer to the description provided in the Notes to the consolidated financial statements - Part E.

Notes to financial statements - Part F ■ 469

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F


SECTION 1 - COMPANY EQUITYA. INFORMATION OF A QUALITATIVE NATURE

Equity consists of all those elements that do not fall within the definition of assets or liabilities according to the methods of measurement and quantification established by the international accounting standards.The shareholders’ equity consists of the share capital, reserves and profit (loss) for the period. With regard to the adequacy of the capital resources of the Bank, the equity management takes into account:• compliance with the requirements of the supervisory regulations;• monitoring of the risks connected to the banking activity;• support to business development projects.For more qualitative information one should refer to the notes to the consolidated financial statements - Part F “Information on consolidated equity” Section 1 “Information of a qualitative nature”. As for the minimum capital requirements, reference is made to the obligatory parametersestablished by the Supervisory Regulations and you are referred to Section 2 - Own Funds and regulatory capital ratios Part F of the notes to the separate financial statements.


B.1 Company equity: breakdown


1. Share Capital 156,209 156,209

2. Issue premiums - 77,823

3. Reserves

- Profit

a) legal 27,873 31,242

b) statutory - -

c) treasury shares 23,623 23,636

d) other (36) (36)

- other (54) 1,849

3.bis Advances on dividends

4. Equity instruments - -

5. (Treasury shares) (29,711) (29,731)

6. Valuation reserves:

- Financial assets available for sale 8,409 1,839

- Tangible fixed assets - -

- Intangible fixed assets - -

- Hedging of foreign investments - -

- Cash flow hedges - -

- Exchange rate differences - -

- Non-current assets held for sale - -

- Actuarial gains (losses) on defined benefit pension plans (698) (720)

- Portion of valuation res. related to investee companies accounted for using the equity method

- Special revaluation laws - -

7. Profit (loss) for the year (43,115) (83,094)

Total 142,500 179,017

Part F - INFORMATION ON EQUITY

470 ■ Notes to financial statements - Part F

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F


B.2 Valuation reserves of financial assets available for sale: breakdown

Assets/Amounts 31.12.2017 31.12.2016

Positive reserve

Negative reserve

Positive reserve

Negative reserve

1. Debt securities 5,325 (314) 4,929 (3,930)

2. Equity securities 3,128 (29) 2,557 (268)

3. Shares in UCIs 301 (2) 395 (1,844)

4. Loans - - - -

Total 8,754 (345) 7,881 (6,042)

B.3 Valuation reserves of financial assets available for sale: annual changes

Debt securities Equity securities Shares in UCIs Loans

1. Opening balance 999 2,288 (1,448) -

2. Increases 7,825 2,503 2,874 -

2.1 Increase in fair value 6,346 1,810 152 -

2.2 Transfer to income statement of negative reserves 1,479 693 2,722 -

for impairment 64 428 1,469 -

for sale 1,415 265 1,253 -


3. Decreases (3,813) (1,692) (1,127) -

3.1 Decrease in fair value (262) (457) (925) -

3.2 Adjustments for impairment - - - -

3.3 Transfer to income statement of positive reserves: from sales (3,551) (1,235) (202) -


4. Closing balance 5,011 3,099 299 -

B.4 Valuation reserves related to defined benefit plans: annual changes

Defined benefit plans

1. Opening balance (720)

2. Increases

- Discounting to the present -

- Taxes (8)

3. Decreases

- Discounting to the present

- Taxes 30

4. Closing balance (698)

Notes to financial statements - Part F ■ 471

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F


SECTION 2 - OWN FUNDS AND REGULATORY CAPITAL RATIOS2.1 Own funds


The information of a qualitative nature on Own Funds and capital ratios was provided in the Notes to the Consolidated Financial Statements - Part F to which you are referred.


31.12.2017 31.12.2016






E. Transitional arrangements - Impact on CET1 (+/-) 2,596 (448)


G. Additional Tier 1 Capital (AT1) before items to be deducted and effects of transitional arrangements - -

of which AT1 instruments subject to transitional provisions - -

H. Items to be deducted from AT1 - -

I. Transitional arrangements - Impact on AT1 (+/-), including instruments issued by subsidiaries and included in the AT1 due to transitional rules - -

L. Additional Tier 1 – AT1 (G - H +/- I) - -

M. Tier 2 Capital (T2) before items to be deducted and effects of transitional arrangements - -

of which T2 instruments subject to transitional provisions - -

N. Items to be deducted from T2 - -

O. Transitional arrangements - Impact on T2 (+/-), including instruments issued by subsidiaries and included in the T2 due to transitional arrangements 841 210

P. Total Tier 2 Capital - T2 (M - N + /- O) 841 210


Following entry into force of Regulation (EU) 445/2016, at 31.12.2017, 80% of the realised gains and losses on financial instruments recognised in the “Financial assets available for sale” portfolio were included in the calculation of the capital ratios (on full implementation, in 2018, the realised gains and losses will be included at 100%). The comparative figure included, according to the legislation in force at the time, 60% of the unrealised gains and losses with the exception of government securities the unrealised results of which were not included.

472 ■ Notes to financial statements - Part F

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

F


2.2 Capital adequacy


The information of a qualitative nature on capital ratios was provided in the Notes to the Consolidated Financial Statements - Part F to which you are referred.

The following table shows the minimum individual regulatory capital ratios required by the Basel III agreement:

2017 2018 2019

CET1 + Buffer 5.75% 6.375% 7%

AT1 + Buffer 7.25% 7.875% 8.5%

TCR + Buffer 9.25% 9.875% 10.5%


Unweighted amounts

Weighted amounts/requirements

31.12.2017 31.12.2016 31.12.2017 31.12.2016

A. RISK ASSETS

A.1 Credit and counterparty risk

1. Standardised approach 1,460,143 2,385,048 794,206 1,072,934

2. Internal ratings-based approach -

2.1 Basic -

2.2 Advanced -

3. Securitisations -

B. REGULATORY CAPITAL REQUIREMENTS

B.1 Credit and counterparty risk 63,536 85,835

B.2 Credit valuation adjustment risk 342 657

B.3 Settlement risk - -

B.4 Market risks - -

1. Standard approach 3,341 2,189

2. Internal models - -

3. Concentration risk - -

B.5 Operational risk - -

1. Basic approach 12,246 14,625

2. Standardised approach - -

3. Advanced approach - -

B.6 Other calculation elements 6,123 7,313

B.7 Total prudential requirements 85,588 110,619

C. RISK ASSETS AND REGULATORY RATIOS

C.1 Risk-weighted assets 1,069,854 1,382,741

C.2 CET 1/Risk-weighted assets (CET1 Capital Ratio) 11.56% 11.33%

C.3 Tier 1/Risk-weighted assets (Tier 1 Capital Ratio) 11.56% 11.33%

C.4 Total Regulatory Capital/Risk-weighted assets (Total Capital Ratio) 11.64% 11.35%


NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

G a

nd H

Notes to financial statements - Part G and H ■ 473

During the year there were no business combinations of companies or company divisions.

For information of a qualitative nature regarding the notions of related parties for Banca Intermobiliare, for the types of intra-group transactions and for the governance of the company, please refer to Part H “Related Party Transactions” in the notes to the consolidated financial statements.

1. Information on the remuneration of executives with strategic responsibilities

The amount of remuneration paid during the year to managers with strategic responsibilities, i.e. directors, statutory auditors, the general manager and managers of the Central Departments of the Consolidating Company (reporting directly to the General Manager) is as follows:

Remuneration paid to executives with strategic responsibility (Thousands of €) 31.12.2017 31.12.2016

Directors 1,039 555

Statutory auditors 368 369

Executives 2,532 1,527

Total 3,939 2,451

The emolument to directors and statutory auditors includes the indemnities for the position due to them, refunds of expenses, and where due VAT and contribution expenses. The remuneration of the managers includes the total remuneration paid as well as the employee severance indemnities matured during the period, both fixed and variable, and the amounts paid by the Bank into the employee Pension Fund.

2. Information on transactions with related partiesThe categories of related parties, as defined in IAS 24, which are relevant to Banca Intermobiliare are:• the parent bank;• the subsidiaries which are directly controlled by or belong to the Banca Intermobiliare Group;• the direct associates and their subsidiaries;• the associates which belong to the Banca Intermobiliare Group and their subsidiaries;• the key management personnel, this being the directors, statutory auditors, and the top management of Banca

Intermobiliare;• the close relatives of the managers with strategic responsibilities, who are (i) the individual’s partner and children,

(ii) the children of the partner and (iii) the persons who are dependent on the individual or his/her partner;• the companies which are controlled, jointly controlled and associated with managers with strategic responsibilities

or their close relatives.

Part H - RELATED PARTY TRANSACTIONS

Part G - BUSINESS COMBINATIONS OF COMPANIES OR BUSINESS UNITS

474 ■ Notes to financial statements - Part H

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H


Transactions of major significanceDuring 2017 no transactions classifiable as of major significance were carried out by Banca Intermobiliare with related parties.

Transactions of minor significanceThe transactions during the period concluded with intra-group related parties and corporate executives, the close relatives of the executives and subjects controlled by the latter, fall within the normal operations of Banca Intermobiliare, and are fully compliant with the relevant regulations.

Excluded transactionsThe ordinary or recurrent transactions that took place in 2017 with related parties, including the intra-group parties, fall within the ordinary operations of the bank and are usually carried out at arm’s length and in any case on the basis of assessments that are economically convenient to both parties, pursuant to the internal procedures which have been defined.The credit and debit balances in existence as at 31 December 2017 which apply to related parties are of an amount that is not significant overall compared to the equity of the bank.

Transactions with executives with strategic responsibilitiesThe loans, guarantees issued and deposits connected with Directors and Statutory Auditors and Managers with strategic responsibilities, including amounts relating to transactions set up in observance of art. 136 of Italian Legislative Decree No. 385/93 with companies in which the aforementioned persons have an interest, consist of the following:

(Thousands of €) 2017 2016

Directors Statutory auditors

Executives with strategicresponsibilities

Total authorised (credit) - - 486 298

Loans (used) (*) - - 478 262

Endorsement loans (used) (*) - - - -

Direct deposits (*) - - 778 632

Indirect deposits (*) - - 1,897 2,155

Interest income (**) - - 1 -

Interest expenses (**) - - 4 6

Fee and commission income and other income (**) - - 3 7

Fee and commission expenses (**) - - - -

(*) Balances at 31 December 2017/2016(**) Collected/paid throughout 2017/2016

Notes to financial statements - Part H ■ 475

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H


Related-party transactionsFollowing are the main relations of a financial and economic nature with related parties other than directors, statutory auditors and managers with strategic responsibilities, as indicated in the previous table.

(Thousands of €) Receivables from loans

granted


Other financial assets

available for sale

Hedging derivatives

Otherassets

A. Parent bank

Veneto Banca S.p.A. CAL - - - - 64

B. Subsidiaries

Bim Fiduciaria S.p.A. - - - - 184

Bim Immobiliare S.r.l. 46,544 - - - 990

Bim Insurance Brokers S.p.A. - - - - 59

Bim Suisse S.A. - - - - -

Immobiliare D S.r.l. 2,169 - - - 750

Paomar S.r.l 4,414 - - - 4

Symphonia SGR S.p.A. - - - - 9,476


Bim Vita S.p.A. - - - - 40

Total related parties 2017 53,127 11,567

Total related parties 2016 385,700 7,540 82,652 1,327 8,819

(Thousands of €) Payables for loans/deposits

received

Bondsissued


for trading

Hedging derivatives

Other liabilities guarantees and commitments

A. Parent bank

Veneto Banca S.p.A. CAL 5,982 - - - -

B. Subsidiaries

Bim Fiduciaria S.p.A. 925 - - - 32

Bim Immobiliare S.r.l. 481 - - - 168

Bim Insurance Brokers S.p.A. 536 - - - 105

Bim Suisse S.A. - - - - -

Immobiliare D S.r.l. 856 - - - 202

Paomar S.r.l - - - - -

Symphonia SGR S.p.A. 34,316 - - - -


Bim Vita S.p.A. - - - - -

Total related parties 2017 43,096 - - - 507

Total related parties 2016 421,893 975 128 14,758 5,128

The assets and liabilities indicated above are mainly due to relations of a financial nature, which are part of the normal banking operations, and connected to the need to rationally and effectively cover liquidity needs at the Group level. All transactions are carried out at arm’s length.

476 ■ Notes to financial statements - Part H

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

H


(Thousands of €) Interestincome

Interest expenses

Other expenses(-)/operating(+) income

Dividends collected

Fees and com-missions and

other revenue

Fees and com-missions and other costs

A. Parent bank

Veneto Banca S.p.A. CAL 1,180 (70) 1,466 - 42 (2,516)

B. Companies belonging to the Group

Bim Fiduciaria S.p.A. - (1) (76) - - 45

Bim Immobiliare S.r.l. 705 - (10) - - (2,344)

Bim Insurance Brokers SpA - (7) (9) - 3 -

Bim Suisse S.A. - - - - - -

Immobiliare D S.r.l. 25 (2) - - - (100)

Paomar Terza S.r.l. 77 - - - - (444)

Symphonia SGR S.p.A. - (27) (346) 6,817 17,051 117

C. Affiliated companies - - - - - -

Bim Vita S.p.A. - - - 1,150 2,263 -

Total related parties 2017 1,987 (107) 1,025 7,967 19,359 (6,729)

Total related parties 2016 5,813 616 (10,655) 12,302 20,792 38

The interest income and interest expense represent the remuneration at market rates of the loans granted and received or the bonds subscribed and issued. The dividends received are dividends which were received during the year. Fee and commission income represents the remuneration paid to the Bank’s sales network for placement of the products of the Group companies; the other revenues refer to reimbursement of the personnel cost for Bank staff seconded to Group companies or services provided to the latter. The other costs are entirely attributable to various administrative expenses incurred for services provided to the Bank by various Group companies.

Information required by Article 2497 bis of the Italian Civil CodeDuring financial year 2017 Banca Intermobiliare was part of the Veneto Banca Banking Group and was subject to the activity of “management and coordination” of Veneto Banca S.p.A. as the Parent Bank under the terms of Italian Legislative Decree no. 385/1993 (Consolidated Law on Banking - TUF) until 25 June 2017, when the Ministry of the Economy and Finance, on the proposal of the Bank of Italy, placed Veneto Banca S.p.A. in compulsory administrative liquidation with Italian Law Decree no. 99. Since that date Banca Intermobiliare has no longer been subject to coordination activity by Veneto Banca, while it became the “civil law” parent company in relation to its subsidiaries; starting from 30.09.2017 Banca Intermobiliare, entered in the register of banking groups, has exercised management and coordination activity in relation to the smaller perimeter of the financial and instrumental subsidiaries (Symphonia SGR; Bim Immobiliare; BIM Fiduciaria) also under the terms of the TUF.

Notes to financial statements - Part I ■ 477

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

I


This part provides information on share-based payment agreements (IFRS 2), which on the balance sheet are recognised among “other liabilities” or “reserves” (liability item 160).As at 31.12.2017 Banca Intermobiliare and the subsidiary Symphonia have existing payment agreements based on own financial instruments (ordinary Bim shares and Symphonia UCIs/GPM), as established in the document “Remuneration policies 2014” approved by the Shareholders’ Meeting on 17 April 2015, relevant to year 2014 and with a “holding period” of 12 months following assignment of the instruments (May 2018).

The above agreements were within the scope of the incentive system in favour of certain managers of the subsidiary Symphonia (Remuneration Plan A) and certain sales representatives of the Bim network (Remuneration Plan B).

In order to execute Plan B, in 2017 the entitled persons were assigned Bim Shares from the proprietary portfolio held by the issuer. In line with regulations, the unit price of the shares was determined by the average of the prices recorded in the 30 days preceding the date of assignment.

After the approval of the aforementioned document “Remuneration policies 2014”, Banca Intermobiliare entered an overall cost in the accounts for the two plans in line with IFRS 2 amounting to €/thou 157.During 2017 according to the provisions in Plan B, a total of 4,328 Banca Intermobiliare shares were assigned amounting to €/thou 6.

Part I - SHARE-BASED PAYMENT AGREEMENTS

478 ■ Notes to financial statements - Part L

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

L


This section describes results of Banca Intermobiliare represented according to the operating segments into which the bank’s activities are divided; the segments have been identified on the basis of the indications of the accounting standard IFRS 8. The above standard specifies that the information presented must be structured in accordance with the reporting system used by management to analyse operating performance. On the basis of this standard, Banca Intermobiliare has identified the following business segments: Clients, Finance, Corporate Center and “Non-Core”. The “Non-Core” segment was introduced starting from the financial reporting for the 2016 data, following the guidelines of the strategic plan, which provides for the disbursement of Lombard loans and the “run off” management of impaired loans and of non-core performing loans.

The Client Segment covers all typical transactions of private banking such as management and consulting in the area of investment services, distribution of managed savings products (in the form of individual and collective asset management portfolios), securities brokerage and ancillary activities such as lending services to private clients. This segment also includes the management of strategic equity investments in Group companies that carry out activities with clients (Symphonia SGR, Bim Fiduciaria, and Bim Insurance Brokers). The equity investment in Bim Suisse (disposed of on 18.10.2017) was reclassified at the end of 2016 among assets held for sale and, consequently, moved to the “Non-Core” segment.

The Finance Segment identifies all the banking book and trading book activities, and intermediation of OTC instruments and exchanges performed on the proprietary portfolio, the management of the Treasury interbank activities, and the interest rate and liquidity risk management carried out by Banca Intermobiliare.

The Corporate Centre consists of the General Management of Banca Intermobiliare and the Corporate Bodies, in addition to activities that support the operations of governance bodies and not the two specific businesses. This area also includes responsibility for the management of strategic equity investments other than those attributed to the Client Sector and for the imputed interest associated with the notional treasury unit.

The “Non-Core” segment identifies all the non-performing credit positions, probable defaults, performing loans with counterparts that are corporate clients and assets held for sale (equity investment in Patio Lugano and the result of the sale of the equity investment in Bim Suisse).

The Clients Segment recorded operating net interest income of €/Mln -1.3, sharply down from 2016. The downward trend in loans to private clients continued, with approximately €/Mln -88. Net fees and commissions fell by 20.9% on an annual basis due to the reduction in assets managed and a lower contribution of trading commissions and commissions on assets under management. The contribution of performance fees collected on Symphonia SGR products was positive (€/Mln 4 against €/Mln 1.7 in the previous year). Dividends related to the subsidiary Symphonia SGR were down (from €/Mln 9.1 to €/Mln 6.8) while those of the investee Bim Vita were stable (€/Mln 1.1). As a consequence, net operating income decreased by 28.6% year on year (€/Mln 38.2 against €/Mln 53.5). Operating costs fell compared to those of 2016 owing to a reduction in personnel expenses, following terminations of commercial personnel, and savings on administrative expenses (in particular on info providers).

The Finance Segment recorded in 2017 a pre-tax profit up 14.1% year on year owing to the combined effect of:• a reduction of net interest (-31.9%) generated by lower margins on securities in the position and a reduction of annual

average balances of approximately €/Mln 500;• an increase in the gains on financial operations of more than 71%, thanks to the sale of banking book securities.The reduction of the balances derives from implementation of the derisking strategy defined by the strategic plan.Net operating income amounted to €/Mln 26.1 (up +7.7% compared to 2016). Operating costs increased by €/Mln 0.3 on an annual basis. Write-downs associated with financial instruments amounted in 2017 to €/Mln 1.9 (€/Mln 2.8 for 2016). Profit (loss) before tax for the Finance Sector fell from €/Mln 17.8 in 2016 to €/Mln 20.3 for 2017.The net operating income of the Corporate Center includes the effect of the notional treasury at a level of net interest income (in addition to the operating income from non-interest bearing equity investments and shareholdings related to the real estate companies and shareholders’ equity), an effect that generated a sharp improvement in net interest income year-on-year. Gross overheads recorded a significant increase compared to 2016 (€/Mln 17.9 against€/Mln 14.7) owing to extraordinary expenses of approximately €/Mln 4.4 attributable to projects to re-internalise outsourced activities and to reorganise the Bank, and to the due diligence activities associated with the Bim sale process. Net operating costs fell slightly compared to 2016. Provisions for risks amounted to €/Mln -2, sharply down from the figure of €/Mln 17.9 recorded in 2016.

Part L - SEGMENT INFORMATION

Notes to financial statements - Part L ■ 479

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

L


The “Non-Core” segment shows the operating net interest income on non-performing loan positions, probable defaults and performing loans with corporate counterparts. The income suffered from a downward variation due to the higher cost of funding related to non-performing positions in the 2017 assessments compared to 2016. Write-downs on loans fell year on year going from €/Mln -97.6 in 2016 to €/Mln -46.2 in 2017.

Operating figures by business segment

(Thousands of €)

INDIVIDUAL Clients Finance Corporate Centre

Non-Core Total

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Net interest (1,274) 2,501 10,174 14,929 11,052 3,604 (7,407) 1,881 12,546 22,915

Net fee and commission income 31,495 38,674 - - - - - - 31,495 38,674

Net gains (losses) on financial operations 7,967 12,302 15,936 9,315 - - - - 23,903 21,618

- of which: dividends and similar income 7,967 12,302 420 1,617 - - - - 8,387 13,919

Operating income 38,189 53,477 26,110 24,245 11,052 3,604 (7,407) 1,881 67,944 83,206

Gross operating expenses (51,977) (57,119) (3,970) (3,707) (17,920) (14,653) (329) (73) (74,196) (75,553)

Other operating income/expenses 1,760 (1,663) 1,760 (1,663)

Net operating costs (51,977) (57,119) (3,970) (3,707) (16,160) (16,317) (329) (73) (72,437) (77,216)

Operating profit (loss) (13,788) (3,642) 22,140 20,538 (5,109) (12,713) (7,736) 1,808 (4,493) 5,990

Net value adjustments on loans - - - - 658 5,969 (46,187) (97,567) (45,528) (91,598)

Net allocations to provisions for risks and charges - - - - (1,965) (17,880) - - (1,965) (17,880)

Net value adjustments on equityinvestments - - - - (544) (731) - - (544) (731)

Profit (loss) before non-recurring components (13,788) (3,642) 22,140 20,538 (6,959) (25,355) (53,922) (95,759) (52,530) (104,219)

Gains (losses) on disposal and value adjustments on financial instruments - - (1,854) (2,757) - - - - (1,854) (2,757)

Adjustments - other - - - - - - - -

Profit (loss) before tax (13,788) (3,642) 20,286 17,781 (6,959) (25,355) (53,922) (95,759) (54,384) (106,976)

480 ■ Notes to financial statements - Part L

NOT

ES T

O F

INA

NCI

AL

STAT

EMEN

TS -

PA

RT

L


Breakdown by business segment: balance sheet figures for Bank IntermobiliareThe Client Sector recorded in 2017 a reduction of loans of €/Mln 88 (-29%), a reduction in outstanding securities of €/Mln 244 (-80.1%) and in demand deposits of €/Mln 297 (-22.5%).The Finance Sector recorded a net financial position of €/Mln -74 (€/Mln -142 in 2016) and a reduction in financial assets (net of liabilities) of about €/Mln 440 (-51.7%). The “Non-Core” Segment recorded a reduction in loans to clients of €/Mln 126 as a result of the greater coverage of impaired positions and a reduction in the corporate performing component.

Balance sheet figures by business segment

(Thousands of €)

INDIVIDUAL Clients Finance Corporate Centre

Non-core Total

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016

Cash - - 1,688 1,669 - - - - 1,688 1,669

Loans to clients 215,788 303,907 - - - - 451,963 578,293 667,752 882,201

Loans to banks - - 106,330 369,209 - - - - 106,330 369,209


Financial assets held for trading - - 44,448 97,357 - - - - 44,448 97,357

Available-for-sale assets - - 413,668 834,639 - - - - 413,668 834,639

Equity investments 86,589 86,589 - - 12,709 12,709 - - 99,298 99,298

Investments - - - - 4,329 4,926 - - 4,329 4,926

Other assets - - - - 189,701 197,715 - - 189,701 197,715

Non-current assets held for sale - - - - - - 13,029 24,714 13,029 24,714

TOTAL ASSETS 302,378 390,497 567,741 1,304,201 206,739 215,350 464,992 603,007 1,541,849 2,513,054

Due to banks - - 180,126 511,460 - - - - 180,126 511,460

Due to clients 1,022,724 1,320,127 - - - - - - 1,022,724 1,320,127

Outstanding securities 60,686 304,978 - - - - - - 60,686 304,978

Financial liabilities held for trading - - 39,858 68,000 - - - - 39,858 68,000


Provisions and other liabilities - - - - 87,047 114,715 - - 87,047 114,715

Shareholders’ equity - - - - 142,500 179,017 - - 142,500 179,017

TOTAL LIABILITIES 1,083,411 1,625,104 228,891 594,218 229,548 293,732 - - 1,541,849 2,513,054

ANNEXES TO THE FINANCIAL STATEMENTS

SEPARATE FINANCIAL STATEMENTSAT 31 DECEMBER 2017

AN

NEX

2 -

IND

EPEN

DEN

T A

UD

ITO

RS’

FEE

S R

ELAT

ED

482 ■ Annex 2 - Independent auditors’ fees related

FINANCIAL STATEMENTS AT 31.12.2017 Annex 2 – Independent auditors’ fees related to the Financial Statements

DISCLOSURE OF FEES PAID FOR AUDITING SERVICES AND FOR SERVICES OTHER THAN AUDITING OF THE FINANCIAL STATEMENTS

1. Information disclosure obligation

Art. 2427, par. 16 bis and Art. 149 duodecies of the CONSOB Issuers Regulations No. 11971 introduced specific requirements in relation to the disclosure of auditing fees.

2. Information of quantitative nature

Type of services Entity supplyingthe service

Recipient Fees(€/thousand)

Independent auditing PWC Banca Intermobiliare 117

Other services

- agreed auditing procedures PWC Banca Intermobiliare 6

- signing of tax returns PWC Banca Intermobiliare 2

Total 125

The consideration paid for the auditing indicated in the table includes the amounts paid during 2017 and refers to services rendered in the same year which refer partly to the conclusion of the audit of the 2016 financial statementsand partly to activities carried out during the year in relation to the audit of the 2017 financial statements.

REPORTS ON THEFINANCIAL STATEMENTS


CER

TIFI

CATI

ON

OF

THE

FIN

AN

CIA

L ST

ATEM

ENTS

484 ■ Certification of the financial statements



THE STATUTORY AUDITORS’ REPORT

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT

486 ■ The Statutory Auditors’ Report

BANCA INTERMOBILIARE S.p.A. Financial Statements at 31 December 2017

Board of Statutory Auditors Report to the Shareholders’ Meeting under the terms of art. 153 of Italian Legislative Decree No. 58/1998 (Consolidated Law

on Finance - T.U.F.) and art. 2429, para. 3, of the Italian Civil Code.

1

Dear Shareholders, The current Board, appointed by the Shareholders’ Meeting of 05.04.2016, which shall remain in office until the Shareholders’ Meeting called to approve the financial statements at 31.12.2018, and is made up as follows:

• Mr Luca Maria Manzi Board Chairman, • Mrs Elena Nembrini Regular statutory auditor, • Mr Enrico Maria Renier Regular statutory auditor, • Mrs Alide Lupo Alternate statutory auditor, • Mr Michele Piana Alternate statutory auditor.

During the 2017 financial year, the Board of Statutory Auditors conducted its supervisory function in accordance with the law, based on the code of conduct for the Board of Statutory Auditors of listed companies issued by the National Institute of Chartered Accountants [Consiglio Nazionale del Dottori Commercialisti e degli Esperti Contabili] (published in 2015 and currently being updated) and the Italian Stock Exchange (CONSOB), including the directives in Borsa Italiana S.p.A.’s Corporate Governance Code.

The Board of Statutory Auditors has verified that its members are qualified to carry out their functions in terms of having the professional and integrity requirements, time available and independence, and a check has been done that the limits on the accumulation of appointments set by legislation have been complied with, where applicable.

In March 2018, the Board of Statutory Auditors also internally conducted a self-assessment exercise, aimed at identifying any points of weakness or, on the contrary, any strengths with regard to the qualitative/quantitative composition of the Board.

The self-assessment process for the 2017 financial year was conducted autonomously by the Board of Statutory Auditors, without the aid of external consultants.

The outcomes of the process have been reported by the Chair of the Board of Statutory Auditors to BIM’s Board of Directors.

In so far as it is responsible, the Board of Statutory Auditors has reviewed the draft financial statements for Banca Intermobiliare S.p.A. and the consolidated financial statements at 31 December 2017 prepared by the Company’s Board of Directors, and forwarded to the Board of Statutory Auditors.

In addition to complying with legislation, this report takes into account the directives issued by CONSOB in Communication DEM/1025564 of 6 April 2001 and subsequent amendments and supplements.

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT

The Statutory Auditors’ Report ■ 487




2

1. Considerations on the most significant transactions

Operational performance

Operational performance is outlined in the Report on Operations, under the paragraph “Operating results and trends”. The significant facts reported by the Board of Directors are summarised below:

• Situation of the majority shareholder Veneto Banca which led, in June 2017, to the process of compulsory administrative liquidation

• Commitment by the Board of Directors and management to contain the negative effects deriving from the situation of the majority shareholder Veneto Banca

• Transfer of the majority stake

• The new Board of Directors defined the guidelines for the strategic development plan.

As regards operating results, the Consolidated Financial Statements reports a negative result of € 49.3 million which, although in line with what was forecast in the Business Plan and better than the loss incurred in 2016, substantially deriving from adjustments to loans (€ 45.6 million), demonstrates the proposed need for an operational turnaround. Of particular concern is the reduction, albeit forecast, in client assets under management which, at 31 December 2017, came to € 7.4 billion.

Corporate events On 25 June 2017, the former parent company Veneto Banca was placed in compulsory administrative liquidation.

On 19 July 2017, with Order ECB/SSM/2017 - 49300W9STRUCJ2DLU64/31, the ECB revoked the licence of the former parent company Veneto Banca S.p.A. (hereinafter also referred to as “VB in C.A.L.”), with its consequent removal from the register of banking groups.

This order brought about:

• on the one hand, an acceleration of the sale of the shareholding in BIM by “VB in C.A.L.”;

• on the other hand, the need for BIM to take on the role of the banking group’s parent company itself, bringing under its control a whole series of functions that had until then been concentrated within the former Veneto Banca, the first

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





3

being the level two and three control functions themselves. Therefore, by virtue of the shareholdings possessed, and having taken on the characteristics required pursuant to the Supervisory Provisions for banks for acquiring the status of Parent Company, BIM requested its inclusion on the register of banking groups on 30 September 2017.

On 3 November 2017, with Order no. 1310282/17, the Bank of Italy reported that “Gruppo Banca Intermobiliare di Investimenti e Gestioni S.p.A” would be included on the register referred to in article 64 of the Consolidated Law on Banking [Testo Unico Bancario] as of 30 September 2017.

As regards the procedure for the sale by VB in C.A.L. of its controlling stake in BIM, as outlined in the Management Report, on 24 October 2017 “VB in C.A.L.” reported that, on that date, it had entered into a contract of sale to Trinity Investments Designated Activity Company, an investment company established under Irish law and managed by Attestor Capital LLP.

Execution of the sale of Banca Intermobiliare was subject to the condition precedent of obtainment of the authorisation from the European Central Bank for the transfer of the shareholding.

On 5 April 2018, the Bank of Italy communicated the decision that had been taken by the European Central bank, on the same date, “not to oppose” the acquisition by Trinity Investments Designated Activity Company of the controlling equity interest in the capital of Banca Intermobiliare di Investimenti e Gestioni.

Business Plan On 18 July 2017, in accordance with the guidelines set out in the strategic plan approved on 10 February 2017, the Board of Directors prepared the Bank’s Business Plan for 2017-2021 according to the stand-alone logic, as outlined in the Management Report to the Financial Statements, in the section containing the 2017-2021 Business Plan.

The Report contains the main KPIs (key performance indicators) at 2021, as well as the drivers for achieving them.

The Management Report also outlines the current state of implementation of the Business Plan, as well as the possible revisions that the Business Plan’s KPIs could incur due to the capital increase planned by Trinity Investments and its intention to sell the portfolio of NPLs [non-performing loans].

By virtue of that Plant, the Board of Statutory Auditors must in any case report that the Veneto Banca crisis, followed by the delay in the obtaining of a majority shareholder, is resulting in an outflow of Private Bankers (without it having been

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





4

possible to recruit the required new bankers) and a consequent progressive reduction in assets under administration, in both direct and indirect deposits.

Consequently, the continuation of a situation of uncertainty could compromise the achievement of the envisaged KPI within the planned time frame.

The Board hopes that the transfer of the shareholding from “VB C.A.L.” to the new shareholder will make it possible to definitively move beyond the uncertainty that has characterised recent times.

Furthermore, there has been a delay in the adoption of a new IT systems platform which, in addition to causing the problems with the controls, as will be discussed later, could also delay the planned efficiency initiatives and the recovery of reputation, as provided for by the Plan. Administrative Body On 16 May 2017, Vice Chairperson Mr Giampaolo Provaggi resigned from his position with immediate effect.

Mr Provaggi also covered the role of Chairperson of the Control and Risks Committee and was a member of the Committee of Independent Directors for transactions with related parties.

On 24 May 2017 the Board of Directors co-opted Mr Paolo Ciccarelli as his replacement.

Having verified that the new Chairperson met the independence requirements provided for by the legislation currently in force, the Board of Directors also appointed him as a member of the Control and Risks Committee, giving him the role of Chairperson, and a member of the Committee of Independent Directors for transactions with related parties.

On 21 June 2017, Ms Anna Maria Chiodaroli resigned from her position as member of the Board of Directors with immediate effect, due to the serious family circumstances that had arisen, which would not have allowed her to dedicate the necessary time to fulfilling the duties assigned to her.

Ms Chiodaroli, independent director, also covered the role of Chairperson of the Appointments Committee and was a member of the Control and Risks Committee and Committee of Independent Directors for transactions with related parties.

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





5

Following the resignation, on 21 June 2017, of the Independent Director Anna Maria Chiodaroli, former Chairperson of the Appointments Committee and member of the Control and Risks Committee, Remuneration Committee and Committee of Independent Directors for transactions with related parties, on 18 July 2017 the Board of Directors - having verified that the Directors Paolo Ciccarelli, Simona Heidempergher, Michele Odello, Alessandro Potestà, Daniela Toscani and Maria Alessandra Zunino De Pignier met the independence requirements provided for by the Borsa Italiana [Italian Stock Exchange] Code of Governance and article 148, paragraph 3, of the T.U.F. [Consolidated Law on Finance] - proceeded to add new members to the aforementioned Committees, appointing:

• Ms Daniela Toscani as a member of the Control and Risks Committee and Committee of Independent Directors for transactions with related parties;

• Mr Alessandro Potestà as Chairperson of the Appointments Committee;

• Ms Maria Alessandra Zunino de Pignier as a member of the Remuneration Committee.

The Board of Directors therefore decided that it did not necessarily need to co-opt a new Director to replace Ms Chiodaroli, requiring the Shareholders’ Meeting to appoint the new member of the Administrative Body, given that it must confirm or replace Mr Ciccarelli in any case.

Significant events subsequent to the end of the 2017 financial year The significant events subsequent to the close of the financial year and referred to in the Management Report by the Directors essentially relate to the acquisition of the new controlling Shareholder.

a) Appeal fined by Barents In particular, it outlines the conclusion to the administrative proceedings lodged by Barents against the rejection of the offer made by said Barents on 29 August 2017 for the acquisition of the BIM shares held by Veneto Banca.

In fact, on 12 February 2018 the Council of State ruled against a precautionary suspension and rejected the appeal on 1 March 2018.

b) Agreement entered into by and between Mr Girelli and Trinity Investments Designated Activity Company

On 7 March 2018, the Board of Directors and the market were informed that the Director with assignments Mr Giorgio Girelli had entered into an agreement with Trinity Investments Designated Activity Company, an investment company established under Irish law and belonging to the Attestor group, which provided for his resignation from the position held at Banca Intermobiliare di Investimenti e

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





6

Gestioni S.p.A, on the occasion of the closing of the acquisition by Trinity Investments of the shares of Veneto Banca S.p.A. in C.A.L.

From the information acquired, the announced resignations should therefore only take effect from the moment that the Trinity Fund acquires the shares from VB in C.A.L.

c) The Supervisory Authority’s notice of authorisation for the transfer of the controlling shareholding in Banca Intermobiliare was received on 5 April 2018.

Organisational Model pursuant to Legislative Decree 231/2001 On 9 February 2018, the Board of Directors approved an updated version of the Management and Organisation Model pursuant to Legislative Decree 231/2001, prepared by the Bank’s Operations Division, which is responsible both for the preparation of the new internal rules and the adaptation of the Organisational Model to the new corporate situation.

The updating of the Model has made it possible:

• to adopt the new provisions which extended the scope of application of Legislative Decree 231/2001;

• to adapt the ‘231 Model’ to the profound changes to BIM’s operational and governance structure;

• to adapt the structure of the 231 Model Protocols to the prevailing market conditions, based on an approach based on areas at risk of the commission of predicate offences, rather than offences.

The process to revise and update the Model concluded in January 2018: after the updated version had been validated by management it was submitted to the Supervisory Body, together with the opinion of the Compliance Department.

2. Atypical and/or unusual transactions, including intra-group transactions and those with related parties

During the financial period, no transactions entered into by the Bank with third parties, intra-group transactions or transactions with related parties which may be defined as atypical or unusual came to light.

3. Assessment regarding the adequacy of the information provided in the

Explanatory Note, related to intra-group and related parties’ transactions

During the period, the Board of Statutory Auditors obtained information from the Directors on the activities carried out and the most significant economic, financial and asset transactions carried out by the Company. It should be noted that the Board of Directors of Banca Intermobiliare approved, on 14 December 2017 - following the favourable opinion expressed by the Independent Directors’ Committee for Transactions with Associated Parties, the

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





7

“Regulation for Transactions with Associated Parties,” which replaced the “Regulation for Transactions with Related Parties,” of June 2012. This new Regulation implements both the rules issued by CONSOB - which cover the various cautionary investigations that must be carried out by the structures of the Bank and of the subsidiaries when transacting with related parties, in order to meet the needs of substantial correctness of the transactions requiring, among other things, a detailed examination of the reasons, interests and effects regarding the equity, economic and financial aspects and conditions of the transaction - and the supervisory regulations introduced by the Bank of Italy. Section H of the Notes to the consolidated financial statements and the Notes to the annual financial statements analytically classified, reviewed and recorded the transactions and processes followed with related parties, as required by IAS 24. The Board reports that during 2017, as stated in part H of the Explanatory Notes to the Consolidated Financial Statements and the Bank’s Financial Statements, no transactions classifiable as of major significance were carried out by the Banca Intermobiliare Group with related parties. As regards transactions with Directors, Statutory Auditors and Managers with strategic responsibilities, it must be pointed out that at 31.12.2017 the Bank had no operations underway with Directors or Statutory Auditors whereas, like in 2016, it did have transactions underway with Managers with strategic responsibilities. The Board of Statutory Auditors can conclude that the information on transactions with related parties provided in the Explanatory Note is adequate.

4. The Independent Auditor’s reports on the consolidated financial statements and annual financial statements, information requests and activities of the Internal Control and Audit Committee

The Board of Statutory Auditors monitored the independent audit of the annual and consolidated financial statements.

In relation to the draft annual Financial Statements and the Consolidated Financial Statements for 31 December 2017, on 5 April 2018 the Auditor PricewaterhouseCoopers S.p.A., issued the Audit Reports on both the Consolidated Financial Statements and the annual Financial Statements, giving a positive opinion with no findings, as reported below:

“In our opinion the Consolidated Financial Statements provide a true and correct representation of the Group’s capital and financial situation at 31 December 2017, as well as of the economic results and cash flows for the financial year ending on said date, in accordance with the International Financial Reporting Standards adopted by the European Union and the provisions issued in implementation of article 9 of Legislative Decree no. 38/05 and article 43 of Legislative Decree no. 136/15”.

“In our opinion the annual Financial Statements provide a true and correct representation of the Bank’s capital and financial situation at 31 December 2017, as well as of the economic results and cash flows for the financial year ending on

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





8

said date, in accordance with the International Financial Reporting Standards adopted by the European Union and the provisions issued in implementation of article 9 of Legislative Decree no. 38/05 and article 43 of Legislative Decree no. 136/15”.

with only one call for disclosure relating to business as a going concern: “We draw attention to what is reported in the Explanatory Note to the Annual Financial Statements, Part A1 ‘General information’, Section 2 ‘General principles of preparation, Information on the business as a going concern’, in which the Directors report on the evolution of the situation of its own Parent Company Veneto Banca which, following the decisions by the European Authorities, was placed in compulsory administrative liquidation, as well as the analysis conducted by the Directors in relation to the factors on the basis of which it was deemed appropriate to use ‘business as a going concern’ as the basis for the preparation of the Financial Statements In that context, Veneto Banca in C.A.L. continued the process of de-consolidation of its own shareholding in Banca Intermobiliare di Investimenti e Gestioni SpA, and this led to the signing, on 24 October 2017, of a sale contract between Veneto Banca SpA in C.A.L. and Trinity Investments Designated Activity Company, an investment firm subject to Irish law and managed by Attestor Capital LLP, conditional on obtainment of the applicable regulatory authorisations. Under these circumstances, on 18 July 2017 Banca Intermobiliare di Investimenti e Gestioni SpA approved the “2017-2021 Business Plan”, updating the “strategic guidelines” and the “long-term financial and economic projections” - already approved at the beginning of the year - which highlight the sustainability over time on a “stand alone” basis assuming that a new shareholder will acquire, very soon, in the context of the liquidation process, the majority stake previously held by the Parent Company. Finally, on 9 February 2018, Banca Intermobiliare approved the 2018 budget, carrying out the managerial actions that will make it possible to achieve the results provided for in the plan, despite the fact that the delay in the process of sale of the Bank had impacts on the amount of Assets Under Management (AUM) and on the company’s overall profitability. With a communication of 5 April 2018, the Bank of Italy made known to Banca Intermobiliare that the European Central Bank had taken, on the same date, the decision “not to oppose” the acquisition by Trinity Investments Designated Activity Company, Attestor Capital LLP, of the controlling equity interest in the capital of Banca Intermobiliare di Investimenti e Gestioni pursuant to the request made on 4 December 2017. Following the aforementioned communication issued by the Bank of Italy on 5 April 2018, although some uncertainty remained in relation to the fulfilment of the business plan, as it was by its very nature based on events beyond the control of the Directors, by virtue of the imminent execution of the BIM Group sale contract, the Bank’s Board of Directors decided that, in the light of the overall framework of reference outlined above, of the initiatives taken and being implemented and considering the state of the information available in relation to the above, the

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





9

annual financial statements at 31 December 2017 can be prepared according to the going concern assumption. Our opinion does not contain any findings in relation to that aspect”. As is known, the Independent Auditor’s report for public-interest entities was significantly amended by Legislative Decree 39/2010 and European Regulation 537/2014.

The most significant change was the inclusion in the report of a section containing a description of what the Auditor considers to be the most significant risks of error in the financial statements and the responses that the auditor has established in order to address those risks.

The auditors are also obliged to state some factual information on the audit assignment, such as the date of appointment and the duration of the entire assignment.

They must also:

• provide an explanation as to the extent to which the audit of the accounts was capable of finding irregularities, including fraud;

• confirm that the audit findings are in line with the additional Report;

• declare that no prohibited services have been provided other than the accounting audit (NAS) and that the auditor or independent auditor have remained independent in their performance of the audit;

• state any service, in addition to the independent auditing of the accounts, that the Auditor has provided to the entity being audited or its subsidiaries and that it has not been reported on in the Management Report of financial statements.

In turn, in its capacity as the Internal Control and Audit Committee, the Board of Statutory Auditors must monitor the independent audit of the annual and consolidated financial statements. In this context, the so-called Additional Report to the Internal Control and Audit Committee (ICAC) takes on particular importance. Said committee is responsible for reporting the outcome of the independent audit to the administrative body of the entity being audited, and sending said body the additional report referred to in article 11 of the Regulation. This obligation represents the last step in a reporting process which sees the auditor provide information on the audit activity and the Internal Control and Audit Committee provide useful information on the corporate context and the relative risks, which is helpful for the correct preparation of the auditing activities. As part of its activities, the Board of Statutory Auditors has held ongoing meetings with the Independent Auditor (11 meetings from 25 May 2017 to 5 April 2018) and also received the “Audit report” on the Consolidated Financial Statements and Annual Financial Statements. The “Additional Report” referred to in article 11 of the Regulation will also form part of the information provided by the Auditor.

In fact, this additional report replaces and significantly adds to the Report on Fundamental Issues and, on the basis of the Additional Report, the Board of Statutory Auditors is called to analyse the methodological approach adopted by the

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





10

Auditor, based on the information acquired in the interaction between the ICAC and the Auditor during the course of the work. The content of the Additional Report will then be submitted by this Board of Statutory Auditors to the Board of Directors, accompanied by any observations. In its capacity as the Internal Control and Audit Committee, the Board of Statutory Auditors received the preliminary annual confirmation of independence from the Independent Auditor on 4 April 2018.

In fact, article 19, paragraph 1, sub-paragraph e) of Legislative Decree 39/2010 stipulates that the Board, in its capacity as the Internal Control and Audit Committee, must perform numerous activities aimed at protecting and verifying the auditor’s independence.

Therefore, among other things, the ICAC must:

• obtain information on the auditor’s independence requirements (to this end, risks posed by conflicts of interest, and personal interests deriving from the possession of financial instruments issued or backed by the entity being audited, are taken into consideration, for example);

• verify compliance with the provisions of article 17 with regard to the minimum period that must have passed since the end of any previous auditing assignment;

• monitor the auditor’s compliance with the requirements contained in article 10-bis and article 6 of the Regulation during the acceptance and continuation of the audit assignment.

The Auditor also has the duty to assess and document any threats to its own independence.

Article 6 of the Regulation establishes that the Auditor is obliged to confirm to the ICAC in writing, annually, that it, its partners, members of senior management and managers who perform the independent audit of the accounts are independent from the entity being audited.

In particular, pursuant to the provisions of European Regulation 537/2014 and the requirements contained in paragraph 17, sub-paragraph a) of International Standard on Auditing (ISA Italia) 260, the Independent Auditor has confirmed that, on the basis of the information obtained and checks carried out, and taking account of the regulatory and professional principles governing audit activity, in the period from 1 January 2017 to 4 April 2018, the principles on ethics contained in articles 9 and 9-bis of Legislative Decree 39/2010 were respected and that no situations that have compromised its independence have been found.

The Independent Auditor has also confirmed that, pursuant to International Standard on Auditing (ISA Italia) 260, no relationships or other aspects in relation to Banca Intermobiliare di Investimenti e Gestioni S.p.A. that could reasonably have an effect on independence were found. Moreover, in its Report on the Audit, the Independent Auditor stated that it had not provided additional services during the financial year. As regards the issues addressed with the Independent Auditor, these concerned: the process of preparing the Financial Statements and the audit procedures, with

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





11

particular reference to the European audit reform; the limited audit on the half-yearly financial statements; the updates regarding the introduction of IFRS 9 and the key aspects of the audit (KAM), such as the recoverability of deferred tax assets, loans to customers, the valuation of goodwill and the impairment of Symphonia. Many in-depth analyses were also conducted in relation to the issue of the business as a going concern, with a mutual exchange of views.

5. Consolidated statement of a non-financial nature On 29 September 2014 the European Council adopted the Directive on the reporting of non-financial information and information on diversity, which had already been approved by the European Parliament in its plenary session on 15 April 2014.

In implementation of 2014/95/EU, Italy issued Legislative Decree no. 254/2016 on 30 December 2016.

It affects entities which meet the following criteria:

• Large company;

• More than 500 employees on average (at the consolidated level for Groups);

• Public-interest entity, or listed company, credit institution, insurance company or other company considered as such by the national legislation by virtue of its nature, activity, size or corporate form.

Public-interest entities which are parent companies of a large group prepare a consolidated statement every financial year which includes the data for the parent company and its fully consolidated subsidiaries.

The disclosure of a non-financial nature is aimed at ensuring an understanding of the company’s business as regards significant subjects with particular attention to environmental and social issues, and matters related to the personnel, respect for human rights, and combating active and passive corruption.

In particular, the non-financial statement must contain:

• a description of the corporate management and organisational model for the company’s activities, including any organisational and management models adopted pursuant to Legislative Decree 231/01

• the main risks, generated or incurred, in relation to the aforementioned issues that derive from the business activity, its products, services or commercial relationships, including the supply and sub-contracting chains, where relevant

• a description of the policies applied by the company in relation to aspects considered significant, including the due diligence procedures applied; moreover, the Company must be able to describe the outcomes of those implemented policies in order to provide a full and concise representation of the

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





12

results, and the operations and activities carried out

• the fundamental non-financial performance indicators pertaining to the company’s specific activity.

The Banca Intermobiliare Group, in adoption of the CONSOB Regulation implementing Italian Legislative Decree no. 254 of 30 December 2016, is obliged to prepare the annual statement of a non-financial nature, or Non-Financial Statement (“NFS”) as a large public-interest entity (“PIE”) with reference to art. 2 of the Decree.

As provided for by article 5 of Italian Legislative Decree 254/16, the document constitutes a separate report, containing specific wording, in order to bring it in line with the Consolidated non-financial statement provided for by the legislation.

To the extent necessary to ensure understanding of the Banca Intermobiliare Group’s business, its performance, its results and the impact produced by the same, the consolidated declaration includes the data of Banca Intermobiliare and of its fully-consolidated subsidiaries.

To this end Banca Intermobiliare has launched and coordinated a work group in order to involve the corporate Departments in preparing the disclosure.

The process of defining the significant aspects was developed in line with the main international standards, identifying the Stakeholders of reference, the significant issues and finally the materiality matrix. To prepare the statement corporate meetings were organised in order to collect all the information necessary and useful for describing the business model, the policies practised by the company and the main risks generated or incurred.

As regards the publication methods, Banca Intermobiliare made use of the possibility granted by art. 5 of the Decree and therefore publishes the consolidated NFS in a report separate from the annual Financial Statements.

The Report was subject to the approval and review of the corporate bodies, and to a check by the independent auditor Deloitte, which issued the relevant report on 5 April 2018: “Independent Auditors’ Report on the consolidated non-financial statement under the terms of article 3, para. 10, of Legislative Decree254/2016 and of article 5 of CONSOB Regulation No. 20267”.

The report is made up of the following paragraphs:

• subject of the limited audit

• the responsibility of the Directors and Board of Statutory Auditors for the NFS

• the independence of the independent auditor and quality control company

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





13

• responsibility of the independent auditor

• conclusions In particular, in its conclusions, the Auditor states:

“On the basis of the work carried out, nothing came to our attention that would suggest that the Banca Intermobiliare Group’s NFS for the year ended 31.12.2017 was not prepared, in all relevant aspects, in compliance with the requirements of articles 3 and 4 of the Decree and the GRI standards with reference to the selection of GRI standards”.

6. Submission of reports pursuant to Art. 2408 of the Italian Civil Code, initiatives undertaken and relative outcomes.

The Board of Statutory Auditors received no reports pursuant to article 2408 of the Civil Code during the financial year.

7. Any complaints received, initiatives undertaken and the relative outcomes

Following the reports submitted in the previous financial years, the Company has analysed the most significant transactions that took place in the previous financial years. However, the specific enforceability of the liability action is still being assessed by the appointed professionals.

As regards complaints received from the Bank during the 2017 financial year, there were 47 of them, of which 24 were in the first half and 23 were in the second half

However, 108 complaints were closed, of which 65 were in the first half and 43 were in the second half of the year.

8. Opinions issued pursuant to law during the financial year

During the 2017 financial year, the Board of Statutory Auditors issued the following opinions in terms of the law: - On 18 January 2017, opinions pursuant to article 2389 of the Civil Code

relating to the remuneration proposals for (i) the General Manager and (ii) the Director with assignments;

- On 25 January 2017, opinion on the Internal Audit Department’s annual plan of checks;

- on 20 October 2017, favourable opinion on the update to the Internal Audit Department’s annual plan of checks;

- on 14 December 2017, opinion on the issuing of the new Regulation for transactions with Associated Parties.

The Board of Statutory Auditors was also consulted, in terms of the Supervisory regulations (Bank of Italy Circular No. 285 of 17 November 2013 and subsequent amendments and supplements, Part I, title IV, chapter 3, section III, no. 1) and the Corporate Governance Code (criteria 7.C.1 and 7.C.2) regarding the following

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





14

appointments:

• on 25 January 2017, on the appointment of the new Reference Persons for BIM’s Internal Audit and Compliance Departments;

• on 29 January 2017, on the appointment of the new Managers of BIM’s Internal Audit and Compliance Departments;

• on 14 November 2017, on the appointment of the Manager of the Risk Management Department.

9. Frequency and number of meetings of the Board of Directors,

Shareholders’ Meetings, meetings of the Board of Statutory Auditors and the Control and Risk Committee

The current Board of Statutory Auditors held 21 meetings during the 2017 financial year, lasting on average 3 hours each.

During the period, the Board of Statutory Auditors took part in all 34 Board of Directors’ meetings. In the person of the Chairman or other delegated members, the Board also took part in 23 Control and Risk Committee meetings, in 6 out of the 13 Appointments Committee meetings, in 9 out of the 11 Remuneration Committee meetings, and in the Shareholders’ Meeting of 21 April 2017.

In terms of Circular 263/2006, 15th revision, the Board of Statutory Auditors was assigned the functions of Supervisory Body as from 1 June 2014, pursuant to Legislative Decree No. 231/2001.

With reference to Legislative Decree No. 231 of 8 June 2001, it should be noted that for some time now, the Company has adopted an organisation and management model, which has recently been updated, with the content thereof consistent with general market practices.

Furthermore, the Board of Statutory Auditors also kept in close contact with the Company’s other control bodies (Independent auditors, Senior Executive in charge) and was in constant dialogue with all BIM’s control Departments.

10. Remarks on compliance with correct administration standards

The Board of Statutory Auditors diligently took part in the activities of all corporate bodies, as detailed in the paragraph above, and gathered information and monitored, in so far as it was responsible and in exercising its prerogative, the Company’s compliance with the standards of correct administration.

Based on the work carried out and the information acquired, this Board of Statutory Auditors can conclude that during the period in question, the Company operated in compliance with correct administration standards.

For the sake of completeness, the Board notes that there remains a credit position (Major Exposures) which exceeds the parameters of article 395 of EU Regulation 575/2013.

This position relates to an impaired loan which BIM is assessing the possibility of

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





15

transferring.

11. Remarks on the adequacy of the organisational structure

In so far as it is responsible, the Board of Statutory Auditors periodically acquired information and monitored the adequacy of the Company’s organisational structure.

Veneto Banca’s placement in liquidation and the transfer of the business branch to Intesa San Paolo brought amount the transfer to Intesa San Paolo of human resources responsible for the functions previously outsourced to Veneto Banca.

Faced with this situation, BIM has been forced to accelerate the process of internalising the functions which had previously been entrusted to the Parent Company.

Therefore, the previously planned internalisation of the control functions (Internal Audit, Compliance/Anti-Money Laundering and Risk Management) was accompanied by the internalisation process for a great deal of activities within various functions which were originally carried out by the former Parent Company; these included the following operational areas, among others: Loans, Corporate Affairs, Human Resources, Finance, Commercial, Operations, Planning and Control.

This required the definition of a new internal regulatory framework, as well as the establishment of a new operational model, particularly in relation to the Corporate Affairs and Legal Function and the Operations Function.

Without prejudice to the need to adapt the IT system with the identification of a new provider, as already outlined in the previous Board of Statutory Auditors’ Report on the Financial Statements at 31.12.2016, the placing of Veneto Banca in liquidation has led to the need to proceed, in the meantime, with an internal migration of the applications currently in use to the supplier SEC Servizi, in order to separate the BIM systems from the areas managed jointly with those of the Group’s former Parent Company Veneto Banca.

It is therefore necessary to point out that the effort made to achieve a new structure at BIM, in the second half of 2017 and the first few months of 2018, was enormous.

In many cases satisfactory results have already been achieve, whereas in other cases it is still not objectively possible to assess the full measure of the system’s reliability, which will certainly require an adjustment period.

Alongside those problems, which we could define as physiological, the Board remains concerned about the delay in the adoption of a definitive IT platform that makes it possible to perform controls in the most efficient manner possible and, at the same time, increase the efficiency of operations, including in terms of commercial development.

In fact, the Board believes that the adequacy, reliability and security of the IT system require sufficient human resources which, to date, do not appear to be present and capable of dealing with such a delicate problem, especially in a

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





16

financial context.

12. Remarks on the adequacy of the internal audit system and on any

corrective action undertaken and/or to be undertaken

The Board of Statutory Auditors acquired information and monitored the adequacy of the internal audit system, and the system’s overall functioning in general, including jointly with the Control and Risk Committee with regard to subjects and profiles of mutual interest, albeit in line the strict separation of each of their roles, meetings and in-depth analyses.

The level two and three controls previously outsourced to the Parent Company were re-internalised with effect from 1 October 2017, with the creation of the autonomous banking group of which BIM is the parent company.

The Audit and Compliance Reference Persons were appointed Managers of the Group’s Internal Audit Department and Manager of the Group’s Compliance and Anti-Money Laundering Function, respectively.

The role of Risk Management Department Manager was temporarily given to the Manager of the Compliance Department, pending the identification of an external person capable of performing said role.

The appointment of the person to fill the role of Risk Department Manager only took place in November, with the new staff member only commencing service in the first few days of January 2018.

The re-internalisation of the Internal Audit Department did not entail any particular problems, but rather contributed to the improvement of the quality of information flows, since the Reference Person remained the same. Moreover, this Department has an adequate organisational structure.

As regards the Compliance Department, we also consider that, in view of the specific professional skills required to perform a private activity, the Bank should be structured so as to hire a Reference Person who will be subsequently capable of filling the role of Department Manager. In short, the Compliance Department has an adequate organisational structure, in spite of some staff changes.

However, in order to express an opinion on the adequacy of that Department, one must consider the considerable weight that it has and will have on the structure in order to both fill the gaps highlighted by the CONSOB Inspection and bring the consequent proposed Remediation Plan to completion, and to continue the introduction of the new MIFID 2 regulation, which substantially changes the Bank’s service model.

The Board will only be able to express a definitive opinion once these two hurdles have been fully overcome.

As regards the Anti-Money Laundering Department, its creation from scratch, with the identification of a single Manager of the Compliance Department and Anti-Money Laundering Department, would seem to have brought about an

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





17

improvement in terms of the management activities previously performed by the Group’s Parent Company Veneto Banca, making it possible to overcome those delays in reporting which had been one of the aspects highlighted by the Bank of Italy Inspection conducted on the Veneto Banca Group in 2016. Moreover, there are still issues that require attention in the operational phases, in terms of adequate checks on clients; consequently, the activity is deemed to be potentially at risk.

Risk Management was always the control function deemed to be the least adequate by this Board of Statutory Auditors, since the Group’s former Parent Company Veneto Banca had always demonstrated little sensitivity to BIM’s specific problems, as a private bank.

Therefore, the Board of Statutory Auditors has previously asked the Bank to look for adequate resources to structure the department so as to make it able to act in autonomy, including through a Reference Person role.

Unfortunately, the search for resources capable of managing the department went on until the end of 2017, bringing about a particularly critical situation due to the fact that, when the Group was created, the Compliance and Anti-Money Laundering Manager also had to take on responsibility for the Risk Management department on an interim basis.

In 2018, the addition of the new staff member and the creation of the ad hoc organisational unit would finally seem to be producing the expected results, confirming that the Parent Company has overcome the problems raised by Risk Management.

13. Remarks on the adequacy of the administrative - accounting system and its reliability in correctly representing operations

The Board of Statutory Auditors monitored the adequacy of the administrative-accounting system and its reliability in correctly representing operations, based on periodic meetings and exchanges of information with the Independent Auditor and Senior Executive in charge.

The Board of Statutory Auditors also monitored the issuer’s financial disclosure process.

Based on the outcomes and the certification without any findings by the Senior Executive in charge and the Independent Auditor regarding the separate and consolidated financial statements, the Board of Statutory Auditors can conclude that the administrative-accounting system is adequate and reliable in correctly representing operations.

The Board of Statutory Auditors makes mention of all the information contained in the Notes to the Financial Statements in the section relating to the accounting policies, above all with reference to the general principles for preparing and the premise of the business as a going concern. In addition to this, there is the information relating to the complexity of the use estimations and assumptions in the preparation of the Consolidated Financial Statements and the Annual Financial Statements, in terms of the credit exposure to clients, the recoverability of deferred

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





18

tax assets (DTAs), and - in the Consolidated Financial Statements only - the valuation of Symphonia’s goodwill. These problems, as well as the call for disclosure in relation to the business as a going concern, were considered in the Audit to be key aspects in the context of the audit of the Annual Financial Statements (assessment of loans to clients and the recoverability of deferred tax assets) and Consolidated Financial Statements (valuation of loans to clients, the recoverability of deferred tax assets and valuation of goodwill).

In fact, these sections detail the valuation problems relating to impaired loans, the DTAs, the risks and charges provision estimates, and generally make reference to the fact that management needs to utilise subjective assessments on a series of subjects.

In his report, the Financial Reporting Manager signed the certification relating to the statutory and consolidated financial statements as at 31.12.2017, expressing “a judgement of adequacy on the existing processes and controls which, therefore, enable a truthful and correct representation of the economic and financial position of BIM”.

14. Monitoring relationships with subsidiaries and adequacy of the orders given pursuant to article 114, paragraph 2, of the Consolidated Law on Finance.

In its capacity as a banking Parent Company as of 30 September 2017, Banca Intermobiliare performs management and coordination activities in relation to the companies in its banking group and, pursuant to the civil code, all of its subsidiaries. The perimeter of the BIM banking group is made up of the Parent Company BIM and its subsidiaries Symphonia SGR S.p.A. and BIM Fiduciaria S.p.A., companies subject to management and coordination activity pursuant to the terms of the Consolidated Law on Banking, as well as the instrumental subsidiary BIM Immobiliare S.r.l. The subsidiary Patio Lugano S.A. and the real estate companies Paomar Terza S.r.l. and Immobiliare D S.r.l. are also excluded from the banking group but included in the consolidated financial statements. Due to the creation of an autonomous group due to the separation from the former Parent Company Veneto Banca, the Board has deemed it important to perform its coordination function with the Boards of Statutory Auditors of the subsidiaries. To that end, it was decided to call at least one six-monthly meeting with all Boards of the subsidiaries, or at least with their Chairpersons. In this regard, on 30 January 2018, this Board met the Group’s Boards of Statutory Auditors in order to check that there were not any significant facts. In particular, the problems concerning the remediation plans from any inspections, the impact of governance, and the effects of the introduction of MIFID 2 were all addressed with the subsidiary Symphonia SGR S.p.A. The problem concerning the Business Plan was also addressed with Symphonia.

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





19

The problems linked to the company’s relaunch were also addressed with the Board of BIM Fiduciaria S.p.A, including in terms of the new developments in the Group’s activity. It should be noted that, for the subsidiary Symphonia SGR S.p.A., the Internal Audit, Compliance and Anti-Money Laundering control functions are concentrated in the Parent Company, whereas Risk Management is currently managed by a Director. The Anti-Money Laundering and Internal Audit departments are centralised at BIM Fiduciaria; however, the exchange of information is enhanced by the presence in its Board of Statutory Auditors of Ms Nembrini, a member of the Board of Statutory Auditors of the Parent Company Banca Intermobiliare. It is acknowledged that the Parent Company approved the ‘Information Flows Regulation’, which governs the exchange of information with Subsidiaries, on 20 October 2017, and that said Regulation was send to them to be adopted. Pursuant to article 114, paragraph 2, of the Consolidated Law on Finance, the subsidiaries were given specific instructions to provide all information necessary to fulfil the reporting obligations provided for by law. In respect of the real estate companies BIM Immobiliare Srl, Immobiliare D Srl and Paomar Terza Srl, in the absence of a Board of Statutory Auditors, reference was made to Mr Mauro Valesani in his capacity as Sole Director and 262 Senior Executive in charge.

15. Subscription to the Corporate Governance Code for the corporate

governance of listed companies

With regard to the rules of corporate governance, BIM subscribes to the Corporate Governance Code approved by the Corporate Governance Committee of Borsa Italiana SpA., which is accessible to the public on the Committee for Corporate Governance website.

The Board of Statutory Auditors reviewed the annual Report on Corporate Governance and the ownership structure for the period, checking it complied with the standards issued by Borsa Italiana, and that the information it contained was adequate.

In this regard, the Board of Statutory Auditors reports:

- That it has noted that the Board of Directors, in a specific resolution, confirmed the adequacy of its composition and its functioning in compliance with Bank of Italy requirements.

- That it checked that the Board of Directors correctly applied the criteria and procedures it had set to ascertain the independence of its members.

- That it found that the Board of Directors conducted a check on the positions covered, so as to avoid any interlocking, pursuant to article 36 of Decree Law 201/2011.

- That, in accordance with what was set out above, it has checked that its own

THE

STAT

UTO

RY

AU

DIT

OR

S’ R

EPO

RT





20

members meet the independence requirements, based on the same procedures as those adopted by the Directors.

16. Closing remarks

In taking the above into account, having considered the reports issued by the Independent Auditor, having noted the certifications issued by the Senior Executive in charge of preparing corporate accounts, in so far as it is responsible, the Board of Statutory Auditors does not find impediments to the approval of the draft annual financial statements at 31 December 2017.

***

The above Report on the Financial Statements at 31 December 2017 was approved with the unanimous consensus of all members of the Board of Statutory Auditors. Turin, 5 April 2018

On behalf of the Board of Statutory Auditors

The Chairperson

Luca Maria Manzi

INDEPENDENT AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS


IND

EPEN

DEN

T A

UD

ITO

RS’

REP

OR

T


Banca Intermobiliare BranchesTurin head office and branch 10121 - Via Gramsci, 7 Tel. 011-08281 Fax 011-0828800

Alba branch 12051 - Via P. Belli, 1 Tel. 0173-445811 Fax 0173-445838

Arzignano branch 36071 - Piazza Marconi, 21 Tel. 0444-470111 Fax 0444-470136

Asti branch 14100 - Via Bonzanigo, 34 Tel. 0141-533211 Fax 0141-533235

Bassano del Grappa branch 36061 - Via Bellavitis, 5 Tel. 0424-211811 Fax 0424-211835

Bergamo branch 24121 - Via F. Petrarca, 3 Tel. 035-19906411 Fax 035-19906435

Bologna branch 40124 - Via De’ Pignattari, 1 Tel. 051-2966011 Fax 051-2966035

Chivasso branch 10034 - Via Teodoro II, 2 Tel. 011-9110111 Fax 011-9110132

Cuneo branch 12100 - Corso Nizza, 2 Tel. 0171-467111 Fax 0171-467145

Florence branch 50132 - Piazza Frà Girolamo Savonarola, 22 Tel. 055-2267111 Fax 055-2267135

Genoa branch 16121 - Via XX Settembre, 31/4 Tel. 010-5767711 Fax 010-5767760

Ivrea branch 10015 - Via Palestro, 16 Tel. 0125-232711 Fax 0125-232735

Milan branch 20121 - Corso Matteotti, 5 Tel. 02-777071 Fax 02-77707492

Milan branch 20123 - Via Meravigli, 4 Tel. 02-99968111 Fax 02-99968235

Modena branch 41100 - Via Farini, 56 Tel. 059-2059211 Fax 059-2059240

Naples branch 80133 - Via Medina, 40 Tel. 081-2523411 Fax 081-2523435

Padua branch 35137 - Corso Milano, 22 Tel. 049-8241211 Fax 049-8241235

Pavia branch 27100 - Piazza Belli, 9 Tel. 0382-379111 Fax 0382-20432

Pesaro branch 61100 - Via Giusti, 6 Tel. 0721-688811 Fax 0721-688835

Piacenza branch 29100 - Via San Siro, 18 Tel. 0523-073311 Fax 0523-073335

Pordenone branch 33170 - Corso Vittorio Emanuele II, 21/G Tel. 0434-237111 Fax 0434-237135

Rome branch 00198 - Via Donizetti, 14 Tel. 06-85509611 Fax 06-85509696

Thiene branch 36016 - Viale Montegrappa, 6/L Tel. 0445-803611 Fax 0445-803637

Treviso branch 31100 - P.za S. Andrea, 6 Tel. 0422-585511 Fax 0422-585535

Varese branch 21100 - Via Leopardi, 1 Tel. 0332-291611 Fax 0332-291635

Venice branch 30124 - Palazzo Bembo - San Marco, 4793 Tel. 041-2714011 Fax 041-2714036

Verona branch 37121 - Corso Cavour, 39 Tel. 045-8050811 Fax 045-8050838

Vicenza branch 36100 - Contrà Ponte San Michele, 3 Tel. 0444-578111 Fax 0444-578135

Parent CompanyVeneto Banca S.p.A. in compulsory administrative liquidation Montebelluna (TV) - Piazza G.B. Dall’Armi, 1

The Banca Intermobiliare CompaniesSymphonia SGR S.p.A. Turin - Via Gramsci, 7

Bim Fiduciaria S.p.A. Turin - Via Gramsci, 7

Bim Vita S.p.A. Turin - Via Gramsci, 7

Bim Insurance Brokers S.p.A. Turin - Via Gramsci, 7

Bim Immobiliare S.r.l. Turin - Via Gramsci, 7

ContactsOur website www.bancaintermobiliare.com

Certified email: [email protected]

Banca Intermobiliare telephone number +39 011.08.28.1

516 ■ National network

Corporate websitewww.bancaintermobiliare.com

Telephone, Banca Intermobiliare:+39 011 - 0828.1

BANCA INTERMOBILIARE DI INVESTIMENTI E GESTIONI S.p.A.Via Gramsci, 7 - 10121 TURINTel. +39 011. 08.28.1 Fax +39 011. 08.28.800Website: www.bancaintermobiliare.com E-mail: [email protected] email: [email protected]

Parent CompanyVENETO BANCA S.p.A. LCA (Compulsory administrative liquidation)

Piazza G.B. Dall’Armi n. 1- 31044 Montebelluna (TV) (Registered office)

Via Feltrina Sud, 250 - 31044 Montebelluna (TV)

(Administrative Headquarters)

The Banca Intermobiliare CompaniesSYMPHONIA SGR S.p.A.10121 Turin – Via A. Gramsci, 7Tel. +39 02.77.7071 - Fax +39 02.77.707350Website: www.symphonia.it E-mail: [email protected] post: [email protected]

BIM FIDUCIARIA S.p.A.10121 Turin - Via Gramsci, 7Tel. +39 011.08.28.270 - Fax +39 011.08.28.852Website: www.bancaintermobiliare.comE-mail: [email protected]

BIM VITA S.p.A.10121 Turin - Via Gramsci, 7Tel. +39 011.08.28,411 - Fax +39 011.08.28,800Website: www.bimvita.it E-mail: [email protected]

BIM INSURANCE BROKERS S.p.A.Lloyd’s Correspondent

10121 Turin - Via Gramsci, 7Tel. +39 011.08.28.416 Fax +39 011.08.28.823Website: www.bimbrokers.it E-mail: [email protected]

BIM IMMOBILIARE S.R.L.10121 Turin - Via A. Gramsci, 7Tel. +39 011. 08.28.1 Fax +39 011. 08.28.800

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2017XXXVI FINANCIAL YEAR

CON

SOLI

DAT

ED A

ND

SEP

ARAT

E FI

NAN

CIAL

STA

TEM

ENTS

AT

31 D

ECEM

BER

201

7 -

XXXV

I FIN

ANCI

AL Y

EAR

the banca intermobiliare companies · of veneto banca in cal and at the meetings with the top...

Documents