Prospectus UBI Banca Covered Bond Programme

Prospectus
reference to the parameters used to calculate the first amortisation instalment), rendered fixed instalments
starting from 1 January 2009 and thereafter applied on the outstanding debt for the entire duration of the loan.
The difference between the amount of the instalments payable in accordance with the original amortisation plan
and the amount of the fixed instalments so calculated will then be debited to an ancillary loan account accruing
interest at the rate of IRS for 10 years plus a margin of 0.50 per cent per annum and repayable after the
repayment of the renegotiated loan with the same fixed instalments. As of today it is unclear what impact this
legislation will have on the residential mortgages loan market in Italy and on the level of prepayments which the
Guarantor may experience, irrespective whether or not the Sellers (or the Issuer) elect to adhere itself to the
convention.
The Bersani Decree also provides that any provision imposing a prepayment penalty in case of early redemption
of mortgage loans is void with respect to mortgage loan agreements entered into, with an individual as borrower,
on or after 2 February 2007 (being the date on which the Bersani Decree entered into force) for the purpose of
purchasing or refurbishing real estate properties destined to residential purposes or to carry out the borrower's
own professional and economic activity.
With respect to loan agreements entered into prior to the enactment of the Bersani Decree (i.e., prior to 2
February 2007), article 7, paragraph 5 of the Bersani Decree provided that the Italian banking association
("ABI") and the main national consumer associations were entitled to reach, within three months from 2
February 2007, an agreement regarding the equitable renegotiation of prepayment penalties within certain
maximum limits calculated on the residual amount of the loans (in each instance, the "Substitutive Prepayment
Penalty"). Had ABI and the relevant consumer associations failed to reach an agreement, the Bank of Italy
would have determined the Substitutive Prepayment Penalty by 2 June 2007.
The agreement reached on 2 May 2007 between ABI and national consumer associations (the "Prepayment
Penalty Agreement") contains the following main provisions (as described in an ABI press release dated May
2007):
(i)
(ii)
(iii)
with respect to variable rate loan agreements – the Substitutive Prepayment Penalty should not exceed
0.50 per cent, and should be further reduced to: (a) 0.20 per cent, in case of early redemption of the loan
carried out within the third year from the final maturity date; and (b) zero, in case of early redemption of
the loan carried out within two years from the final maturity date;
with respect to fixed rate loan agreements entered into before 1 January 2001 – the Substitutive
Prepayment Penalty should not exceed 0.50 per cent. and should be further reduced to: (a) 0.20 per cent.
in case of early redemption of the loan carried out within the third year from the final maturity date; and
(b) zero, in case of early redemption of the loan carried out within two years from the final maturity date.
with respect to fixed rate loan agreements entered into after 31 December 2000 – the Substitutive
Prepayment Penalty should be equal to: (a) 1.90 per cent. if the relevant early redemption is carried out
in the first half of loan's agreed duration; (b) 1.50 per cent. if the relevant early redemption is carried out
following the first half of loan's agreed duration, provided however that the Substitutive Prepayment
Penalty should be further reduced to: (x) 0.20 per cent. in case of early redemption of the loan carried out
within three-years from the final maturity date; and (y) zero, in case of early redemption of the loan
carried out within two years from the final maturity date.
The Prepayment Penalty Agreement introduces a further protection for borrowers under a "safeguard" equitable
clause (the "Clausola di Salvaguardia") in relation to those loan agreements which already provide for a
prepayment penalty in an amount which is compliant with the thresholds described above. In respect of such
loans, the Clausola di Salvaguardia provides that:
(i)
(ii)
if the relevant loan is either: (x) a variable rate loan agreement; or (y) a fixed rate loan agreement entered
into before 1 January 2001; the amount of the relevant prepayment penalty shall be reduced by 0.20 per
cent.;
if the relevant loan is a fixed rate loan agreement entered into after 31 December 2000, the amount of the
relevant prepayment penalty shall be reduced by (x) 0.25 per cent. if the agreed amount of the
prepayment penalty was equal or higher than 1.25 per cent.; or (y) 0.15 per cent. if the agreed amount of
the prepayment penalty was lower than 1.25 per cent.
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