INDEX OF DEFINED TERMS - Banca di Legnano

Level: 2 – From: 2 – Wednesday, July 21, 2010 – 14:35 – eprint6 – 4247 Section 03
Regulatory Matters
4. Distributions
The Issuer’s funds for cash distributions to its stockholders and payment of the Issuer’s
indebtedness, including debt securities, are derived from a variety of sources, including cash and
temporary investments. The primary source of such funds, and funds used to pay principal and interest on
its indebtedness, is dividends received from its banking subsidiaries. Each of its banking subsidiaries is
subject to various regulatory policies and requirements relating to the payment of dividends, including
requirements to maintain capital above regulatory minimums. The appropriate federal regulatory authority
is authorized to determine under certain circumstances relating to the financial condition of a bank or bank
holding company that the payment of dividends would be an unsafe or unsound practice and to prohibit
payment thereof.
In addition, the ability of the Issuer and its banking subsidiaries to pay dividends may be affected
by the various minimum capital requirements and the capital and non-capital standards established under
FDICIA, as described above. The right of the Issuer, its stockholders, and its creditors to participate in any
distribution of the assets or earnings of its subsidiaries is further subject to the prior claims of creditors of
the respective subsidiaries.
5. Source of Strength
According to Federal Reserve Board policy, bank holding companies are expected to act as a source
of financial strength to each subsidiary bank and to commit resources to support each such subsidiary. This
support may be required at times when a bank holding company may not be able to provide such support.
Similarly, under the cross-guarantee provisions of the Federal Deposit Insurance Act, in the event of a loss
suffered or anticipated by the FDIC, either as a result of default of a banking subsidiary or related to the
FDIC assistance provided to a subsidiary in danger of default, the other banking subsidiaries of a bank
holding company may be assessed for the FDIC’s loss, subject to certain exceptions.
6. Deposit Insurance
Deposits placed at the Issuer’s U.S. banking subsidiaries are insured by the FDIC subject to limits
and conditions of applicable law and the FDIC’s regulations. In 2009, FDIC insurance coverage limits
were temporarily increased from $100,000 to $250,000 per customer until December 31, 2013. The FDIC
administers the Deposit Insurance Fund (the “DIF”), and all insured depository institutions are required to
pay assessments to the FDIC that fund the DIF. Assessments are required if the ratio of the DIF to insured
deposits in the United States falls below 1.15 per cent. As a result of the ongoing instability in the
economy and the failure of other U.S. depository institutions, the DIF ratio currently is below the required
level and the FDIC has adopted a restoration plan that will result in substantially higher deposit insurance
assessments for all depository institutions over the coming years. On December 30, 2009, the FDIC
required all depository institutions to prepay deposit insurance assessments for the next three years in
order to provide liquidity to the DIF. Deposit insurance assessment rates are subject to change by the FDIC
and will be impacted by the overall economy and the stability of the banking industry as a whole.
7. Transactions with Affiliates
The Issuer’s U.S. banking subsidiaries are subject to restrictions under federal law that limit certain
types of transactions between the Issuer’s banking subsidiaries and their non-bank affiliates. In general, the
Issuer’s U.S. banking subsidiaries are subject to quantitative and qualitative limits on extensions of credit,
purchases of assets and certain other transactions involving the Issuer and its non-bank affiliates.
Transactions between the Issuer’s U.S. banking subsidiaries and their non-bank affiliates are required to be
on arms length terms.
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